Annual Report - Jet Airways

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14th Annual Report 2005-06 


Contents 

Corporate Information ............................................................................................. 2 

Notice of the 14th Annual General Meeting ............................................................ 4 

Directors’ Report.................................................................................................... 14 

Management Discussion and Analysis ................................................................... 24 

Corporate Governance Report and Shareholder Information .................................. 34 

Auditors’ Certificate on Corporate Governance Report ........................................... 50 

Auditors’ Report .................................................................................................... 51 

Balance Sheet........................................................................................................ 56 

Profit and Loss Account ......................................................................................... 57 

Cash Flow Statement ............................................................................................. 58 

Notes and Schedules forming part of Balance Sheet & Profit and Loss Account ...... 60 

Balance Sheet Abstract and Company’s General Business Profile ............................ 92 

1

Jet Airways (India) Limited 

Board of Directors 

(As on 16 th August 2006) 

Mr. Naresh Goyal 

Mr. Ali Ghandour 

Mr. Victoriano P. Dungca 

Mr. Charles A. Adams 

Mr. Javed Akhtar 

Mr. I. M. Kadri 

Mr. P. R. S. Oberoi 

Mr. Aman Mehta 

Dr. Vijay L. Kelkar 

Mr. S. G. Pitroda 

Mr. Yash Raj Chopra 

Mr. Shah Rukh Khan 

Dr. Pierre J. Jeanniot 

Mr. Saroj K. Datta 

Statutory Auditors 

Chairman 

Executive Director 

Deloitte Haskins & Sells 

Chaturvedi & Shah 

Chartered Accountants 


12, Dr. Annie Besant Road, Laxmi Towers 

Opp. Shiv Sagar Estate 

“A” Wing, Bandra-Kurla Complex, 

Worli, Mumbai - 400 018 Mumbai - 400 051 

Legal Advisors 

Gagrats 

Nirmal, 12th Floor, 

Nariman Point, 

Mumbai - 400 021 

Registered Office 

Registrar & Share Transfer Agent 

S. M. Centre Karvy Computershare Private Limited 

Andheri-Kurla Road, Karvy House, 46, Avenue 4, 

Andheri (East), 

Street No. 1, Banjara Hills, 

Mumbai - 400 059 Hyderabad - 500 034 

Bankers to the Company 

Abu Dhabi Commercial Bank 

Corporation Bank 

Citibank N.A. 

Calyon Bank 

DBS Bank Limited 

Deutsche Bank AG 

HDFC Bank Limited 

The Hongkong & Shanghai Banking 

Corporation Limited 

Canara Bank 

ICICI Bank Limited 

Industrial Development Bank of India Limited 

ING Vysya Bank Limited 

Kotak Mahindra Bank Limited 

Standard Chartered Bank 

State Bank of India 

UTI Bank Limited 

Dena Bank 

2


Management 

(As on 16 th August 2006) 

Mr. Wolfgang Prock-Schauer Chief Executive Officer 

Mr. Saroj K. Datta Executive Director 

Mr. Dale Moss Chief Operating Officer 

Mr. Garry Kingshott Chief Commercial Officer 

Mr. Carl Saldanha Chief Financial Officer 

Mr. Raja Parthasarathy Executive Vice President - Finance 

Ms. Anita Goyal Executive Vice President - Marketing & Sales 

Capt. Werner Borchert 

Vice President - Flight Operations 

Mr. Sepp Heinrich Vice President - Technical 

Mr. Sitham Nadarajah Vice President - Technical (Projects) 

Capt. Ray Heiniger 


Capt. Gustav Baldauf 


Mr. B. P. Baliga Vice President - Support Services 

Capt. K. Mohan 

Vice President - Flight Operations (Special Projects) 

Mr. P. K. Sinha Vice President - Passenger Sales 

Dato' K. Jeyakanthan 

Vice President - Engineering Services 

Mr. Poh Leong Choo Vice President - Inflight & Catering Services 

Mr. Prasun Sengupta Vice President - Corporate Administration 

Ms. Nandini Verma Vice President - Corporate Affairs & Public Relations 

Mr. N. Hariharan Vice President - Office of the Chairman 

Mr. Rajesh Sharma Vice President - Controller 

Mr. Ashok Barimar General Counsel & Vice President - Legal 

Ms. Ragini Chopra Vice President - North India 

Mr. Gaurang Shetty Vice President - Marketing 

Ms. Sonu Kripalani Vice President - Passenger Sales (India) 

Mr. Sarat Chandran Vice President - Human Resources & Development 

Mr. Anind Datta Vice President - Purchase and Properties 

Mr. V. Raja Vice President - Asia Pacific 

Mr. Mike Johnson Vice President - Engineering & Maintenance 

Mr. Narendra Mehra Company Secretary 

3


Notice 

Notice is hereby given that the Fourteenth Annual General Meeting of the Members of Jet Airways (India) 

Limited will be held on Wednesday, 20th September, 2006 at 3:30 p.m. at Nehru Centre Auditorium, Discovery of 

India Building, Dr. Annie Besant Road, Worli, Mumbai 400 018 to transact the following business:- 

ORDINARY BUSINESS 

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2006 and the Profit and Loss 

Account for the year ended on that date and the Reports of the Directors and Auditors thereon. 

2. To declare a dividend on Equity Shares for the Financial Year ended 31st March, 2006. 

3. To appoint a Director in place of Mr. Javed Akhtar, who retires by rotation and being eligible, offers himself 

for re-appointment. 

4. To appoint a Director in place of Mr. Saroj K. Datta, who retires by rotation and being eligible, offers himself 


5. To appoint a Director in place of Mr. Ali Ghandour, who retires by rotation and being eligible, offers himself 


6. To appoint a Director in place of Mr. Victoriano P. Dungca, who retires by rotation and being eligible, offers 

himself for re-appointment. 

7. To appoint Auditors to hold office from the conclusion of the 14th Annual General Meeting until the 

conclusion of the 15th Annual General Meeting, and to fix their remuneration. 

SPECIAL BUSINESS 

8. Appointment of Mr. Yash Raj Chopra as a Director 

To consider and, if thought fit, to pass, with or without modification(s), if any, the following resolution as an 

Ordinary Resolution: 

“RESOLVED THAT Mr. Yash Raj Chopra, who had been appointed as a Director of the Company with effect 

from 17th April, 2006 and who, in terms of Section 260 of the Companies Act, 1956 and Article 48 of the 

Articles of Association, holds office of directorship up to the date of the 14th Annual General Meeting and 

in respect of whom the Company has received a Notice in writing from a Member under Section 257 of the 

Companies Act, 1956 signifying his intention to propose Mr. Yash Raj Chopra as a candidate for the office of 

Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.” 

9. Appointment of Mr. Shah Rukh Khan as a Director 



“RESOLVED THAT Mr. Shah Rukh Khan, who had been appointed as a Director of the Company with effect 

from 16th August, 2006 and who, in terms of Section 260 of the Companies Act, 1956 and Article 48 of the 



Companies Act, 1956 signifying his intention to propose Mr. Shah Rukh Khan as a candidate for the office 

of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.” 

4


10. Appointment of Dr. Pierre J. Jeanniot as a Director 



“RESOLVED THAT Dr. Pierre J. Jeanniot, who had been appointed as a Director of the Company with effect 

from 16th August, 2006 and who, in terms of Section 260 of the Companies Act, 1956 and Article 48 of the 



Companies Act, 1956 signifying his intention to propose Dr. Pierre J. Jeanniot as a candidate for the office of 

Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.” 

11. Re-appointment and remuneration of Executive Director 

To consider and, if thought fit, to pass, with or without modification(s), if any, the following resolution as a 

Special Resolution: 

“RESOLVED THAT pursuant to the provisions of Sections 198, 269 read with Schedule XIII, Sections 309, 

310, 311 and other applicable provisions, if any, of the Companies Act, 1956, approval of the Members of 

the Company be and is hereby accorded to the re-appointment of Mr. Saroj K. Datta as Executive Director of 

the Company, for the period from the conclusion of the 14th Annual General Meeting until the conclusion 

of the 15th Annual General Meeting or 30th September, 2007, whichever is earlier, upon the terms and 

conditions as set out in the Explanatory Statement annexed hereto, with authority to the Board of Directors 

to alter and vary the terms and conditions of the said re-appointment in such manner as may be agreed to 

between the Board of Directors and Mr. Saroj K. Datta.” 

12. Payment of Commission to Non-executive Directors for the Financial Year 2006-07 



“RESOLVED THAT pursuant to the provisions of Sections 198, 309, 310 and other applicable provisions, if 

any, of the Companies Act, 1956 and subject to such statutory approvals as may be necessary, the 

Non-executive Directors of the Company be paid, as Commission for the Financial Year 2006-07, a sum not 

exceeding 1% of the net profits of the Company calculated in accordance with provisions of Sections 198, 

349, 350 and other provisions, if any, of the Companies Act, 1956, subject to a ceiling of 

Rs. 6,00,000 (Rupees Six Lac Only), per Non-executive Director, in addition to the sitting fees for attending 

the Meetings of the Board of Directors or any Committee thereof.” 

13. Reclassification of Authorised Share Capital of the Company 



“RESOLVED THAT pursuant to the provisions of Sections 13, 16, 94 and all other applicable provisions, if 

any, of the Companies Act, 1956 and subject to such approvals, consents, sanctions and permissions of 

appropriate authorities, departments or bodies as may be necessary, and Article 9 of the Articles of Association 

of the Company, consent of the Members of the Company be and is hereby accorded to reclassify the 

Company’s existing Authorised Share Capital from Rs. 2000,000,000/- (Rupees Two Thousand Million only) 

divided into 130,000,000 (One Hundred and Thirty Million) Equity Shares of Rs. 10/- (Rupees Ten only) each 

5


and 70,000,000 (Seventy Million) Preference Shares of Rs. 10/- (Rupees Ten only) each, to 

Rs. 2000,000,000/- (Rupees Two Thousand Million only) divided into 180,000,000 (One Hundred and 

Eighty Million) Equity Shares of Rs. 10/- (Rupees Ten only) each and 20,000,000 (Twenty Million) Preference 

Shares of Rs. 10/- (Rupees Ten only) each.” 

14. Alteration of Memorandum of Association of the Company 



“RESOLVED THAT pursuant to the provisions of Sections 16 and all other applicable provisions, if any, of the 

Companies Act, 1956 and subject to such approvals, consents, sanctions and permissions of appropriate 

authorities, departments or bodies as may be necessary, the consent of the Members of the Company be and 

is hereby accorded to the alteration of the Memorandum of Association of the Company by substituting the 

existing Clause V (a) in place and stead thereof by the following new Clause V(a): 

V(a) The Authorised Share Capital of the Company is Rs. 2000,000,000/- (Rupees Two Thousand Million 

only) divided into 180,000,000 (One Hundred and Eighty Million) Equity Shares of Rs. 10/- (Rupees Ten 

only) each and 20,000,000 (Twenty Million) Preference Shares of Rs. 10/- (Rupees Ten only) each, 

capable of being increased in accordance with the Company’s regulations and provisions of the 

Companies Act, 1956.” 

15. Alteration of Articles of Association of the Company 



“RESOLVED THAT pursuant to the provisions of Section 31 and all other applicable provisions, if any, of the 

Companies Act, 1956 and subject to such approvals, consents, sanctions and permissions of appropriate 

authorities, departments or bodies as may be necessary, the consent of the Members of the Company be and 

is hereby accorded to the alteration of the Articles of Association of the Company by substituting the existing 

Article 4(a) in place and stead thereof of the following new Article 4(a) : 

4(a) The Authorised Share Capital of the Company is Rs. 2000,000,000/- (Rupees Two Thousand Million 

only) divided into 180,000,000 (One Hundred and Eighty Million) Equity Shares of Rs. 10/- (Rupees Ten 

only) each and 20,000,000 (Twenty Million) Preference Shares of Rs. 10/- (Rupees Ten only) each. 

By Order of the Board of Directors 

Dated : 16th August, 2006 

NARENDRA MEHRA 

Company Secretary 

Registered Office : 

S. M. Centre, 

Andheri-Kurla Road, 


Mumbai 400 059 

6


Notes 

1. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of Item Nos. 8 to 

15 of the Notice is annexed hereto. The relevant details of persons seeking re-appointment/appointment as 

Directors under Item Nos. 3 to 10 above, as required by Clause 49 of Listing Agreement entered into with the 

Stock Exchanges, are also annexed. 

2. A Member entitled to attend and vote, is entitled to appoint a Proxy to attend and vote, instead 

of himself and the Proxy need not be a Member of the Company. Proxies, in order to be effective, 

must be duly filled, stamped, signed and deposited at the Registered Office of the Company not later than 

48 hours before the commencement of the Meeting. Proxies submitted on behalf of limited companies, 

societies, partnership firms, etc. must be supported by appropriate resolution/authority as applicable, issued 

on behalf of the appointing organisation. 

3. The Register of Members and Share Transfer Books of the Company will be closed from Saturday, 9th September, 

2006 to Wednesday, 20th September, 2006, both days inclusive. The dividend, if declared, at the Meeting, will 

be paid on or after Monday, 25th September, 2006 but within the statutory time limit of 30 days, to those 

Members entitled thereto whose names appear on the Register of Members of the Company at the close of 

business hours on Friday, 8th September, 2006. In respect of Equity Shares held in dematerialised form in the 

Depository System, dividend thereon will be payable to the beneficial owners of the Equity Shares as at the close 

of business hours on Friday, 8th September, 2006 as per details furnished by the Depositories for this purpose. 

4. Members holding Equity Shares in dematerialised form are hereby informed that bank particulars registered 

against their respective depository accounts will be used by the Company for payment of the dividend. The 

Company or its Registrar and Share Transfer Agent cannot act on any request received directly from the 

Members holding Equity Shares in dematerialised form, for any change of bank particulars or bank mandates. 

Such changes are to be advised only to the respective Depository Participants of the Members. 

5. Members holding Equity Shares in physical form are requested to advise any change of address immediately 

to the Company’s Registrar and Share Transfer Agent, Karvy Computershare Private Limited. Members holding 

Equity Shares in dematerialised form must send advice about change in address to their respective Depository 

Participants and not to the Company. 

6. All correspondence regarding Equity Shares of the Company should be addressed to the Company’s Registrar 

and Share Transfer Agent, Karvy Computershare Private Limited [UNIT: Jet Airways (India) Limited] at Karvy 

House, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034. 

7. As per the provisions of the Companies Act, 1956, nomination facility is available to the Members, in respect 

of the Equity Shares held by them. Nomination forms can be obtained from the Company’s Registrar and 

Share Transfer Agent. 

8. As a measure of austerity, copies of the Annual Report will not be distributed at the Annual General Meeting. 

Members are requested to bring their copies of the Annual Report to the Meeting. 

9. Members who wish to obtain information concerning the Accounts or Operations of the Company may send 

their queries at least 7 days before the Annual General Meeting, to the Company Secretary at the Registered 

Office of the Company. 

10. Copies of all documents referred to in the Notice and Explanatory Statement annexed thereto are available 

for inspection at the Registered Office of the Company between 11:00 a.m. to 1:00 p.m. on all working days 

till the date of the Annual General Meeting. 

7


EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956 

The following Explanatory Statements set out all material facts relating to Item Nos. 8 to 15 of the accompanying Notice: 

Item No. 8 

Mr. Yash Raj Chopra had been appointed as an Additional Director on the Board of Directors of the Company with 

effect from 17th April, 2006. Pursuant to Section 260 of the Companies Act, 1956, Mr. Yash Raj Chopra holds 

office up to the date of the 14th Annual General Meeting, and is eligible for appointment. The Company has 

received a Notice from a Member along with requisite deposit, under Section 257 of the Companies Act, 1956, 

signifying his intention to propose the appointment of Mr. Yash Raj Chopra as a Director of the Company. If 

appointed, Mr. Yash Raj Chopra shall hold office as such, and his period of office shall be liable to determination 

by retirement of Directors by rotation. 

Attention of the Members is invited to the information on Mr. Yash Raj Chopra, a Director, recommended for 

appointment, which is annexed hereto. 

No Director, except Mr. Yash Raj Chopra, is, in any way, concerned or interested in the Resolution. 

The Board of Directors recommends the Resolution for the approval of the Members. 

Item No. 9 

Mr. Shah Rukh Khan had been appointed as an Additional Director on the Board of Directors of the Company with 

effect from 16th August, 2006. Pursuant to Section 260 of the Companies Act, 1956, Mr. Shah Rukh Khan holds 



signifying his intention to propose the appointment of Mr. Shah Rukh Khan as a Director of the Company. If 

appointed, Mr. Shah Rukh Khan, shall hold office as such, and his period of office shall be liable to determination 


Attention of the Members is invited to the information on Mr. Shah Rukh Khan, a Director, recommended for 


No Director, except Mr. Shah Rukh Khan, is, in any way, concerned or interested in the Resolution. 


Item No. 10 

Dr. Pierre J. Jeanniot had been appointed as an Additional Director on the Board of Directors of the Company with 

effect from 16 th August, 2006. Pursuant to Section 260 of the Companies Act, 1956, Dr. Pierre J. Jeanniot holds 

8




signifying his intention to propose the appointment of Dr. Pierre J. Jeanniot as a Director of the Company. If 

appointed, Dr. Pierre J. Jeanniot shall hold office as such, and his period of office shall be liable to determination 


Attention of the Members is invited to the information on Dr. Pierre J. Jeanniot, a Director, recommended for 


No Director, except Dr. Pierre J. Jeanniot, is, in any way, concerned or interested in the Resolution. 


Item No. 11 

Mr. Saroj K. Datta has been a Director of the Company since March, 1993 and has been re-appointed as Executive 

Director from time to time. His present term as Executive Director of the Company expires on the conclusion of the 

14th Annual General Meeting. 

Subject to the approval of the Members at the 14th Annual General Meeting and other statutory approvals, if 

required, the Board of Directors approved of the re-appointment of Mr. Saroj K. Datta as Executive Director of the 

Company for the period from the conclusion of the 14th Annual General Meeting until the conclusion of the 

15th Annual General Meeting or 30th September, 2007, whichever is earlier. 

Mr. Saroj K. Datta holds a Masters degree in Economics from Delhi University and has over 40 years of experience 

in Civil Aviation in India and abroad. Mr. Saroj K. Datta has been involved with the Company since its inception. 

Keeping in view the qualification and experience of Mr. Saroj K. Datta, the Board of Directors is of the view that his 

re-appointment as Executive Director will be beneficial to the Company. 

The remuneration payable to Mr. Saroj K. Datta on his re-appointment, as approved by the Remuneration & 

Compensation Committee of the Board of Directors, is as follows: 

i. Salary and Allowances: 

Basic Salary : Rs. 2,50,000/- per month 

Other Allowances : Not exceeding Rs. 1,40,000/- per month 

ii. 

Perquisites: 

In addition to the Salary and Allowances aforesaid, Mr. Saroj K. Datta shall be entitled to Perquisites (evaluated 

as per Income Tax Rules, wherever applicable and at actual cost to the Company in other cases) such as free 

furnished accommodation, use of Company’s car, telephone at residence, medical reimbursement, leave and 

travel benefits, provident fund, gratuity and all other benefits, in accordance with the Rules of the Company. 

9


iii. 

Minimum remuneration: 

Notwithstanding anything to the contrary herein contained, where in the financial year during the tenure of 

the Executive Director, the Company has no profits or its profits are inadequate, the Company will pay 

remuneration by way of salary, allowances and perquisites as specified above. 

In compliance with the provisions of Section 309 of the Companies Act, 1956, the terms and conditions of 

re-appointment of Mr. Saroj K. Datta, as specified above, are now being placed before the Members for approval. 

This statement may be treated as an abstract of the terms and conditions governing the re-appointment of and 

payment of remuneration to the Executive Director pursuant to Section 302 of the Companies Act, 1956. 

No Director, except Mr. Saroj K. Datta, is, in any way, concerned or interested in the Resolution. 


Item No. 12 

In order to remunerate the Non-executive Directors of the Company for increased responsibilities entrusted upon 

them under the law, the current trends and commensurate with the time devoted and the contribution made by 

them, the Board of Directors of the Company, at their Meeting held on 29th July, 2006 has approved, subject to 

such statutory approvals as may be necessary, payment as commission, to be paid to the Non-executive Directors 

of the Company, for the Financial Year 2006-07, a sum not exceeding 1% of the net profits of the Company, 

calculated in accordance with provisions of Section 198, 349 and 350 of the Companies Act, 1956, subject to a 

ceiling of Rs. 6,00,000/- (Rupees Six Lac Only) per Non-executive Director, in addition to the sitting fees for 

attending the Meetings of the Board of Directors or any Committee thereof. 

Section 309(4) of the Companies Act, 1956 also requires a Special Resolution to be passed by the Members of the 

Company in General Meeting for payment of remuneration by way of commission to Non-executive Directors of 

the Company. 

All Non-executive Directors of the Company are concerned or interested in the Resolution to the extent of the 

remuneration that may be received by them and their respective shareholding, if any. 


Item Nos. 13, 14 and 15 

Presently the Authorised Share Capital of the Company is Rs. 2000,000,000/- (Rupees Two Thousand Million only) 

divided into 130,000,000 (One Hundred and Thirty Million) Equity Shares of Rs. 10/- (Rupees Ten only) each and 

70,000,000 (Seventy Million) Preference Shares of Rs. 10/- (Rupees Ten only) each. The Company has an Issued, 

Subscribed and Paid up Share Capital of 86,334,011 (Eighty Six Million Three Hundred and Thirty Four Thousand 

and Eleven) Equity Shares aggregating to Rs. 863,340,110/- (Rupees Eight Hundred Sixty-Three Million Three 

Hundred Forty Thousand and One Hundred and Ten only). 

10


The Company has received the approval of the Members on 28th February, 2006 for the issuance of up to USD 

800,000,000 (United States Dollars Eight Hundred Million) by way of Foreign Currency Convertible Bonds/ Global 

Depository Receipts/ American Depository Receipts/ Equity Shares/ other securities as appropriate. 

As the issuance of such instruments will, at a point of time, require the Company to issue additional Equity Shares, 

which will lead to increase in the Equity Share Capital. Hence it is proposed to re-classify the Authorised Share 

Capital of the Company into 180,000,000 (One Hundred and Eighty Million) Equity Shares of Rs.10/- (Rupees Ten 

Only) each and 20,000,000 (Twenty Million) Preference Shares of Rs.10/- (Rupees Ten only) each respectively. 

Consequently Clause V(a) of the Memorandum of Association and Article 4(a) of the Articles of Association will 

correspondingly have to reflect the changes and hence the existing Clause V(a) of the Memorandum of Association 

and Article 4(a) of the Articles of Association will require substitution. 

The consent of the Members is being sought in accordance with the provisions of Sections 13, 16, 31, 94 and 

other applicable provisions, if any, of the Companies Act, 1956 and the Articles of Association of the Company. 

All the Directors of the Company are interested in these Resolutions to the extent of their respective shareholdings 

in the Company. 

The Board of Directors recommends these Resolutions for the approval of the Members. 

By Order of the Board of Directors 

Dated: 16th August, 2006 

NARENDRA MEHRA 


Registered Office: 

S. M. Centre, 

Andheri-Kurla Road, 


Mumbai 400 059 

11


Details of the Directors seeking re-appointment at the 14th Annual General Meeting 

Particulars 

Mr. Javed Akhtar 

Mr. Saroj K. Datta 

Mr. Ali Ghandour 


Date of Birth 

17th January, 1945 

3rd May, 1936 

28th May, 1931 

23rd April, 1936 

Date of Appointment 

Qualifications 

Expertise in specific 

functional area 

1st March, 1993 

Bachelor of Arts Masters degree in Aeronautical Engineer from MBA from Cornell 

Economics from Delhi 

University 

New York University University, U.S.A. and is a 

Certified Public Accountant 

from the U.S.A. 

Mr. Javed Akhtar is a wellknown 

poet, lyricist, 

screenplay and scriptwriter 

and is a famous media 

personality. Mr. Javed 

Akhtar has won the Filmfare 

Award fourteen times, and 

is a five-time National Award 

winner for the best lyricist. 

1st March, 1993 

Mr. Saroj K Datta has over 

40 years of experience in civil 

aviation in India and abroad. 

He joined Air India in 1962 

and rose to the position of 

Deputy Director, Planning 

and International Relations 

in 1977. In 1987, he left 

Air India to join in a senior 

position in Kuwait Airways. 

He has been involved with 

the Company since its 

inception and is currently 

the Executive Director of the 

Company. 

19th February, 1998 

Mr. Ali Ghandour has over 

50 years of experience in the 

civil aviation industry. He was 

an advisor to the late King 

Hussein of Jordan and was 

earlier the Chairman of the 

Royal Jordanian Airlines. He 

has also been associated 

with the development of a 

number of airlines in the 

Middle East. 

25th January, 1999 


has had a long and 

distinguished career with 

Philippine Airlines and retired 

as its Executive Vice 

President. He is currently a 

financial advisor based in 

California, U.S.A. 

Directorships held in 

other Public 

Companies (excluding 

foreign and private 

companies) 

None 

None 

None 

None 

Memberships/ 

Chairmanships of 

Committees in Public 

Companies 

None 

None 

None 

None 

Shareholding, if any, 

in the Company 

5990 Equity Shares 


None 

None 

12


Details of the Directors seeking appointment at the 14th Annual General Meeting 

Particulars 

Mr. Yash Raj Chopra 

Mr. Shah Rukh Khan 

Dr. Pierre J. Jeanniot 

Date of Birth 

18th September, 1932 

2nd November, 1965 

9th April, 1933 

Date of Appointment 

17th April, 2006 

16th August, 2006 

Bachelor of Arts, Economics (Hons.) 

Mass Media Course from Jamia Millia 

Islamia, New Delhi 

16th August, 2006 

Bachelor of Science from Sir George 

Williams University (now Concordia) 

and Business Administration at McGill 

University and Statistical Mathematics 

from New York University Doctorat 

Honoris Causa, University of Quebec 

Honorary, Doctorate in International 

Law, Concordia University and Doctor 

of Science, Honoris Causa, McGill 

University 

Qualifications 

Bachelor of Arts 

Expertise in specific 

functional area 

Mr. Yash Raj Chopra is a well-known 

Producer and Director from the Indian 

Film Industry. Mr. Chopra has had a 

distinguished career spanning over five 

decades in the Indian Film 

Industry. His work has been 

recognized in India and overseas and 

he has received several prestigious 

awards for his outstanding 

contribution to Indian Cinema. These 

include the National and Filmfare 

Awards, the BBC Asia Awards (in 

1998 and 2001), the Dr. Dadabhai 

Naoroji Millennium Lifetime 

Achievement Award (in 2001), the 

Dadasaheb Phalke Award (in 2001) 

and the Priyadarshini Award to name 

a few. Mr. Chopra has also been 

awarded a Certificate of Recognition 

from the British Tourist Authority and 

British Film Commission for 

promoting tourism in the U.K. 

through his films. In 2005, Mr. Chopra 

was conferred the Padma Bhushan, 

one of the Country’s highest civilian 

honours. 

Mr. Shah Rukh Khan is a well-known 

Actor from the Indian Film Industry. 

He is the recipient of Thirteen Filmfare 

Awards, three National Honours 

including Best Indian Citizen Award 

in 1997, Rajiv Gandhi Award for 

Excellence in 2002. In 2005, Mr. Khan 

was conferred the Padma Shri, one of 

the prestigious civilian honours 

conferred annually by the Government 

of India. He is also recognized as a 

cultural ambassador of India to the 

rest of the world. 

Dr. Pierre J. Jeanniot is a prominent, 

distinguished and widely 

acknowledged contemporary leader of 

the aviation industry. Dr. Jeanniot was 

Director General and CEO of the 

International Air Transport Association 

(IATA) from 1993 to 2002. He is 

now Director General Emeritus of 

IATA, in recognition of his 

outstanding contribution to 

international civil aviation. From 1984 

to 1990 Dr. Jeanniot held the position 

of President and CEO of Air Canada. 

He is currently Chairman of Thales 

Canada Inc. Dr. Jeanniot has served 

on the Board of Directors of 

various airlines, telecommunications 

companies, airports, air navigation 

consultancies, and publishing houses. 

He is also President of Jinmag Inc., a 

management and investment 

company which he created in 1990, 

providing advice to various 

international civil aviation authorities 

and companies. 

Directorships held in 

other Public 

Companies (excluding 

foreign and private 

companies) 

None 

None 

None 

Memberships/ 

Chairmanships of 

Committees in Public 

Companies 

None 

None 

None 

Shareholding, if any, 

in the Company 


None 

None 

13


Directors’ Report 

To the Members, 

1. Your Directors have pleasure in presenting their Fourteenth Annual Report together with the Audited Statement 

of Accounts for the Financial Year ended 31 st March, 2006. 

HIGHLIGHTS 

2. The Financial Highlights for the year under review compared to the Previous Financial Year (Previous Year) are 

given below: 

Financial Highlights 

Particulars Year ended Year ended 

31 st March, 2006 31 st March, 2005 

Rs. in lac 

Rs. in lac 

GROSS REVENUE 613,547 442,017 

Profit before Interest, Depreciation & Tax 137,027 129,282 

Interest 24,160 25,369 

Profit before Depreciation & Tax 112,867 103,913 

Depreciation 40,641 45,700 

Profit before Taxation & Adjustments 72,226 58,213 

Provision for Tax 14,441 4,604 

Deferred Tax 12,581 14,410 

Profit after Taxation 45,204 39,199 

Profit / (Loss) brought forward 14,967 (11,801) 

Profit available for Appropriation 60,171 27,398 

APPROPRIATIONS 

Transfer to Capital Redemption Reserve – 5,558 

Transfer to General Reserve 4,521 3,920 

Proposed Dividend 5,180 2,590 

Income Tax on Proposed Dividend 727 363 

Transfer to Balance Sheet 49,743 14,967 

Note: 1 lac = 100,000 

60,171 27,398 

14


DIVIDEND 

3. The Board of Directors has recommended a dividend of Rs. 6 per Equity Share (Previous Year: Rs. 3 per Equity 

Share). The dividend together with tax on distributed profits will absorb a sum of Rs. 5,907 lac (Previous Year: 

Rs. 2,953 lac) and will be paid to those Members whose names appear on the Register of Members of the 

Company as at the close of business hours on 8 th September, 2006. 

REVIEW OF OPERATIONS 

4. The Operating Highlights are given below 

Operating Parameters Year ended Year ended 

Apr 05-Mar 06 Apr 04-Mar 05 

Number of Departures 104,833 96,417 

Available Seat Kilometers (ASKMs) Million 13,300 9,808 

Revenue Passenger Kilometers (RPKMs) Million 9,576 6,992 

Passenger Load Factor % 72.0% 71.3% 

Revenue Passengers (Numbers) 9,556,562 8,142,739 

Average fleet size during period 49.5 41.3 

Average Head Count 

Gross 8,285 7,082 

Net 7,241 5,652 

5 During the year under review, air travel in India continued to show strong growth, both domestic and 

international. The Company carried 9.56 million revenue passengers, an increase of 17.4% over the Previous 

Year. Revenue Passenger Kilometers (RPKms) grew by 37% to 9,576 million. Operating Revenues at 

Rs. 569,373 lac were 31.2% higher than the Previous Year. 

6. The Company’s performance was impacted by high costs of Aviation Turbine Fuel (ATF), caused mainly by 

rising crude prices, which has affected the airline industry worldwide. Increased competition in both domestic 

and international markets also impacted the yield per passenger. 

7. As on 31 st March, 2006, the Company operated 315 domestic flights and 14 international flights daily, 

compared to 260 domestic and 4 international daily flights respectively, as on 31 st March, 2005. During the 

year under review, the Company added the following routes and frequencies to its scheduled operations: 

15


New Routes - Domestic 

Delhi-Nagpur-Delhi 

Mumbai-Raipur-Mumbai 

Bangalore-Thiruvananthapuram-Bangalore 

Chennai-Thiruvananthapuram-Chennai 

New Routes International 

Mumbai-Singapore-Mumbai 

Chennai-Kuala Lumpur-Chennai 

Chennai-Singapore-Chennai 

Mumbai-London (Heathrow)-Mumbai 

Delhi-London (Heathrow)-Delhi 

Additional frequencies – Domestic 

Delhi-Pune-Delhi Bangalore-Delhi-Bangalore Mumbai-Coimbatore-Mumbai 

Delhi-Mumbai-Delhi Bangalore-Chennai-Bangalore Chennai-Coimbatore-Chennai 

Mumbai-Jaipur-Mumbai Delhi-Guwahati-Delhi Mumbai-Ahmedabad-Mumbai 

Mumbai-Bangalore-Mumbai Chennai-Kolkata-Chennai Pune-Bangalore-Pune 

Bangalore-Hyderabad-Bangalore 

Chennai-Mumbai-Chennai 

New Night Flights – Domestic 

Mumbai-Chennai-Mumbai 

Delhi-Kolkata-Delhi 

Mumbai-Kolkata-Mumbai 

During the year under review, the Company was privileged to introduce a charter service for the Defence 

Forces on the Delhi-Thoise-Delhi sector. 

8. The international flights introduced during the year have been well received. The Company’s seat factors 

have been increasing steadily in these very competitive routes. 

FLEET 

9. During the year under review, the Company added seven Boeing 737-800s, one Boeing 737-700 and three 

Airbus 340-300E aircraft to its fleet. All these aircraft are on operating leases. The fleet size as on 31 st March, 

2006 was 53 aircraft compared to 42 aircraft as on 31 st March, 2005. 

10. During the year under review, an Airbus 340-300E aircraft was wet leased by the Company to two airlines for 

a short-term period in each case. 

16


11. The Company has entered into Purchase Agreements for ten Boeing 737 Next Generation aircraft, Purchase 

Agreements for ten Boeing 777 Extended Range and/or Long Range aircraft and Purchase Agreements for 

ten Airbus 330-200 aircraft. The Boeing 737 aircraft are to be delivered between April 2006 and October 

2007, the first of which has been delivered; and the Boeing 777 and the Airbus 330 aircraft are scheduled 

to be delivered over Financial Years 2007-08 and 2008-09. 

12. The Company has entered into a General Terms Agreement (GTA) for GE engines for the Boeing 777 and the 

Airbus 330 aircraft. 

SALE AND LEASEBACK OF AIRCRAFT 

13. During the year under review, the Company sold and leased back five Boeing 737 aircraft (two Boeing 737- 

800s and three Boeing 737-400s). These are older aircraft in the fleet, and their market value was significantly 

higher than book value. The total sale proceeds were Rs. 46,225 lac and after repayment of loans generated 

a cash surplus of Rs. 17,745 lac. The Company’s profit attributable to this transaction was Rs. 27,064 lac. 

SAHARA AIRLINES LIMITED (PRE- AND POST-BALANCE SHEET EVENTS) 

14. The Company entered into a Share Purchase Agreement (SPA) on 18 th January, 2006 with Sahara Airlines 

Limited (SAL) and the shareholders of SAL to acquire 100% of the paid-up share capital of SAL for a total 

consideration of Rs. 200,000 lac, and subject to terms and conditions as set out in the SPA. The total 

proposed consideration was kept in an escrow account. The Company also advanced a sum of Rs.18,000 lac 

to SAL for its normal business operations. 

15. The SPA provided, inter alia, that the acquisition would be completed by 23 rd March, 2006, subject to receipt 

of statutory approvals. These approvals were not received by that date and the parties entered into an 

Amended Agreement whereby, inter alia, the date for completion of the sale was extended until 21 st June, 

2006 and an amount of Rs. 50,000 lac (out of the Rs. 200,000 lac) was paid as an advance to a shareholder 

of SAL, against a pledge of 100% of the shares of SAL and a personal guarantee of Mr. Subrata Roy Sahara. 

16. The Company also entered into a Consultancy Agreement with SAL with effect from 4 th April, 2006, whereby 

a team from the Company assisted SAL in its day-to-day operations. 

17. All approvals specified in the Conditions Precedent in the SPA with SAL and its shareholders were not 

received by 21 st June, 2006. As per the applicable provisions, the SPA, therefore, stood terminated. The 

Consultancy Agreement was also terminated. The question as to whether the SPA has automatically stood 

terminated or not, and the consequences thereof, as well as the right of the Company to receive the amount 

17


of consideration lying in the escrow as well as amounts partly paid, as and by way of an advance to one of the 

Selling Shareholders of SAL, are presently the subject matter of legal proceedings pending in the High Court 

in Mumbai, the District Court in Lucknow and the Supreme Court of India. The parties have also invoked the 

Arbitration Clause contained in the SPA. 

OTHER POST BALANCE SHEET EVENTS 

18. As mentioned earlier, the Company took delivery of the first of the 10 Boeing 737-800 aircraft for which firm 

orders have been placed in April 2006. Six more deliveries of Boeing 737-800 aircraft are scheduled during 

2006-07. 

19. In June 2006, the Company took delivery of one Airbus 330-200 aircraft on operating lease. A second Airbus 

330-200 aircraft that has been taken on operating lease is scheduled to be delivered in January 2007. 

20. The Company had entered into an agreement to wet-lease a Boeing 767 aircraft from another airline in June 

2006, which subsequently stood terminated. 

21. As on 16 th August, 2006 the fleet size is 55 aircraft. 

22. The Company has introduced a second Mumbai-London (Heathrow)-Mumbai frequency effective 10 th July, 

2006. The Company commenced operations on the Amritsar-London (Heathrow)-Amritsar sector on 

4 th August, 2006. The Company intends to commence operations on the Delhi-Singapore-Delhi sector in 

September 2006. 

23. The Company implemented a fuel surcharge of Rs. 300 per sector on domestic tickets in May 2006. This 

surcharge was increased by Rs. 200 per sector in July 2006. A further increase of Rs. 150 has been implemented 

effective 8 th August, 2006. The Company has levied sector-wise fuel surcharges on tickets purchased on 

international routes. The Company has begun hedging a portion of the fuel purchased outside India for its 

international operations . 

24. The Company proposes to sell and leaseback four Boeing 737-700s. The sale and leaseback is proposed to 

be effectuated during the course of the Financial Year 2006-07. 

25. Between 1 st April, 2006 and 16 th August, 2006 the Company has repaid Rs. 500 lac towards a long-term 

loan. During this period, the Company has also drawn down long-term foreign currency loans totalling 

$223.7 million. 

18


INFORMATION UNDER CLAUSE 49: CHANGES IN ACCOUNTING POLICIES 

26. In Previous Financial Years, credits from the Forward Sales Account for unutilized tickets, were made in cases 

where claims for refund were not made for 24 months. With effect from Fiscal 2006, due to factors such as 

a more complex fare structure currently in force compared to the past, the trend in utilization and the 

conditions applicable to certain categories of tickets, credits from the Forward Sales Account are based on 

historical statistics and data and Management’s best estimates and the Company’s refund policy. 

27. In Previous Financial Years, the amounts spent towards acquiring rights with regard to certain Landing Slots 

at an overseas airport were amortized over a period not exceeding 10 years. With effect from Fiscal 2006, the 

Company, considering industry experience and practices, has revised the amortization period to 20 years . 

RESPONSES TO COMMENTS IN THE ANNEXURE TO THE AUDITOR’S REPORT 

28. Reference is drawn to points 17 and 21 of the Annexure to the Auditors’ Report and your Directors’ responses 

in relation to the same are as under: 

Point 17: Advances totalling Rs. 36,789 lac were required to be paid towards the end of the Financial Year in 

order to comply with contractual obligations. These amounts were paid out of short-term sources as bridge 

financing arrangement and will be replaced by a long-term source(s) in the Financial Year 2006-07. These 

advances consist of Rs. 19,903 lac for pre-delivery payments for aircraft and Rs. 16,886 lac for property. 

Point 21: Fraudulent use of credit cards occurs in on-line transactions owing to the anonymity this purchasing 

method provides. In order to mitigate such incidents, an additional security feature has been built into the 

Company’s web-booking engine effective 10 th March, 2006. 

DIRECTORS’ RESPONSIBILITY STATEMENT 

29. As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that: 

i. in the preparation of the Annual Accounts, the applicable accounting standards have been followed, 

along with proper explanation relating to material departures; 

ii. 

the Directors have selected such accounting policies and applied them consistently and made judgements 

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 the Financial Year and of the profit of the Company for that year; 

19


iii. 

iv. 

the Directors have taken proper and sufficient care for the maintenance of adequate accounting records 

in accordance with the provisions of the said Act for safeguarding the assets of the Company and for 

preventing and detecting fraud and other irregularities; 

the Directors have prepared the Annual Accounts on a going concern basis. 

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE 

30. Particulars as prescribed pursuant to 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 these items are given 

below: 

a. Conservation of Energy: 

The Company has during the year under review continued to rigorously monitor fuel consumption of 

all aircraft on an on-going basis, and taken various measures to optimize consumption. The Company 

has specified that all new aircraft that have been ordered are fitted with winglets, and all new aircraft 

delivered during the Financial Year have been fitted with winglets. These reduce fuel consumption 

significantly. The Company continues to ensure the highest levels of safety and reliability of its aircraft, 

with rigorous maintenance programmes. 

b. Technology Absorption 

 

Commissioning of hangar facility, Mumbai Airport: 

The Company completed the construction of its hangar facility at Mumbai airport during the 

Financial Year. The commissioning of this maintenance hangar complex at Mumbai with workshop 

and allied facilities will enable the airline to carry out ‘C’ Checks, line checks, storage and minor 

rectification of engines, composite structural repair and, in due course, heavy maintenance or ‘D’ 

Checks. This will reduce maintenance costs and enhance operational efficiency particularly in view 

of requirements arising out of the fleet expansion. 

 

Training of Pilots: 

During the year under review, the Company continued to give pilots endorsement and refresher 

training for Boeing 737 aircraft at the Company’s Simulator Training Centre at Mumbai. The 

training was conducted by the Company’s own instructors. The Company has ordered a second 

Boeing 737 Full Flight Simulator, which is scheduled to be installed and ready for training in 

December 2006. The Company’s Pilots were given endorsement and refresher training for ATR 

20


aircraft at ATR’s simulator facility at Bangkok, and the training was also conducted by the Company’s 

own instructors. 

 

IT initiatives: 

The Enterprise Resource Programme (ERP) of the Company was upgraded and extended to new 

areas like human resources, payroll and enhanced management information system (MIS) reporting. 

The Company implemented automation of the planning and scheduling function by introducing 

a state-of-the-art system that optimizes the revenue potential and usage of aircraft. The system is 

automatically integrated into systems used by other operational departments and has eliminated 

duplication of work. The Company’s engineering maintenance and inventory control system was 

also upgraded. The Company introduced ‘web check-in’, which allows passengers who have 

electronic tickets to check-in and print a boarding pass using the Internet. The Company also 

enabled e-ticketing for the travel trade whereby travel agents can offer e-tickets to passengers. 

c. Foreign Exchange Earnings and Outgo: 

The particulars of Foreign Exchange Earnings and utilization during the year under review are given in 

Note No. 14.2, 14.3 and 14.4 of Schedule ‘S’ of the Accounts. Foreign currency exposures are disclosed 

in Note No. 10 (ii) of Schedule ‘S’ of the Accounts. 

DIRECTORS 

31. Mr. J. R. Gagrat who was a Director of the Company since 1994 passed away on 5 th April, 2006. Mr. J.R. Gagrat, 

one of the country’s most distinguished legal professionals, was deeply involved with and committed to the 

Company and played a key role in its growth and development. His loss is deeply mourned by the Board of 

Directors and Management, who place on record his invaluable contribution to the Company. 

32. Mr. Javed Akhtar, Mr. Ali Ghandour, Mr. Victoriano P. Dungca, Directors, and Mr. Saroj K. Datta, Executive 

Director, retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for 

re-appointment. 

33. Pursuant to Section 260 of the Companies Act, 1956, and Article 48 of the Articles of Association of the 

Company, Mr. Yash Raj Chopra was appointed as an Additional Director on the Board of Directors of the 

Company with effect from 17 th April, 2006. Mr. Chopra is a pre-eminent film director and a recipient of the 

Padma Bhushan. Mr. Chopra holds office up to the date of the ensuing Annual General Meeting. 

21



Company, Mr. Shah Rukh Khan was appointed as an Additional Director on the Board of Directors of the 

Company with effect from 16 th August, 2006. Mr. Shah Rukh Khan holds office up to the date of the ensuing 

Annual General Meeting. 


Company, Dr. Pierre J. Jeanniot was appointed as an Additional Director on the Board of Directors of the 

Company with effect from 16 th August, 2006. Dr. Jeanniot holds office up to the date of the ensuing Annual 

General Meeting. 

36. The Directors recommend the re-appointment of Mr. Saroj K. Datta as Executive Director of the Company, 

whose present term expires on the conclusion of the 14 th Annual General Meeting. 

AUDITORS 

37. The Statutory Auditors, Messieurs Deloitte Haskins & Sells and Messieurs Chaturvedi & Shah, Chartered 

Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness 

to accept the office, if re-appointed. At the said Meeting, Members will be requested to appoint 

Statutory Auditors for the Financial Year 2006-07 and to fix their respective remuneration. 

PARTICULARS OF EMPLOYEES 

38. Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of 

Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the 

provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to 

all Members excluding the Statement containing the particulars of Employees to be provided under Section 

217(2A) of the Act. Any Member interested in obtaining such particulars may inspect the same at the 

Registered Office of the Company between 11:00 a.m. to 1:00 p.m. on all working days till the date of the 

14 th Annual General Meeting. 

CORPORATE GOVERNANCE 

39. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement relating 

to Corporate Governance, as amended from time to time. A separate section on Corporate Governance forms 

part of the Annual Report and the Certificate from the Company’s Statutory Auditors on compliance with the 

provisions of Corporate Governance is annexed to the Corporate Governance Report. 

22


CORPORATE SOCIAL RESPONSIBILITY 

40. The Company supports an in-flight collection programme viz. “The Magic Box” to support “SAVE THE 

CHILDREN”, a voluntary organization wholly committed to the welfare, survival, protection, participation and 

development of the underprivileged children of India. Jet Airways has also engaged the services of Shraddha 

Charitable Trust - a well-known Non-Government Organization (NGO) - which trains and provides post 

school vocation to the mentally challenged and autistic. The Company has chosen and placed bulk orders for 

one of the Trust’s in-house products, which are used inflight. 

41. As in the Previous Financial Year, the Company made available an aircraft and crew for a ‘Flight of Fantasy’ for 

underprivileged children. The event was in co-operation with partner corporates and NGOs. 

ACKNOWLEDGEMENTS 

42. Your Directors place on record their appreciation for the contributions of the members of the Management 

Team and all employees for their continued hard work, dedication and commitment to maintaining the 

Company’s service standards, during the year under review. 

43. Your Directors place on record their appreciation for the support rendered by the Company’s General Sales 

Agents and their associates, Travel Agents and other members of the travel trade for their continued efforts 

in promoting the Company. 

44. Your Directors also take this opportunity to thank the Ministry of Civil Aviation, Government of India, the 

Director General of Civil Aviation (DGCA), and the Airports Authority of India (AAI) for their support and 

guidance. Your Directors are also grateful to the Reserve Bank of India, the Ministry of Finance, Ministry of 

Company Affairs, Government of India, National Stock Exchange of India Limited, Bombay Stock Exchange 

Limited, the US Ex-Im Bank, Financial Institutions and Banks, the Boeing Company, Airbus Industrie, Avion de 

Transport Regionale, engine manufacturers and the lessors of our aircraft for their support, and look forward 

to their continued support. 

For and on behalf of the Board of Directors 

Date : 16 th August, 2006 

Place : London 

NARESH GOYAL 

Chairman 

23


Management Discussion and Analysis 

1. Industry Structure and Developments 

1.1 The Indian aviation industry showed continued growth during the Financial Year under review. Positive 

economic factors – including high GDP growth, industrial performance, corporate profitability and 

expansion, higher disposable incomes and growth in consumer spending – were, in combination 

with the wider availability of low fares, key drivers of this growth. 

1.2 The progressive environment for civil aviation has attracted new domestic carriers, and the increase in 

capacity has increased competition in the domestic sector. 

1.3 At the same time, the growth in international traffic has seen international carriers increase the 

number of flights to and from India. More flights are now offered from cities other than Mumbai and 

Delhi, which had hitherto been the principal gateways for international traffic. 

1.4 The Government continued to give civil aviation priority. The Government has laid considerable emphasis 

in improving infrastructure particularly with regard to addressing the increasing congestion of airports 

located in major metropolitan cities. The management and modernization of Mumbai and Delhi 

Airports have been handed over to private parties, which are operating these airports. 

1.5 The airline industry in India, as well as overseas, was affected by the high cost of Aviation Turbine Fuel 

(ATF), arising out of the continued rise in international crude prices. 

2. Analysis of Operational Performance in Fiscal 2006 Compared to Fiscal 2005 

Revenues 

2.1 Our total revenues increased by 38.8% from Rs. 44,202 million in Fiscal 2005 to Rs. 61,355 million in 

Fiscal 2006. This increase was primarily due to the increase in passenger and cargo revenues as well as 

non-operational revenue from the sale and leaseback of aircraft. 

24


Passenger Revenues 

2.2 Passenger Revenues increased by 29.2% from Rs. 40,765 million in Fiscal 2005 to Rs. 52,663 million 

in Fiscal 2006. This increase was due to a 17.4% increase in the number of revenue passengers carried 

in Fiscal 2006 compared to Fiscal 2005, and higher load factors achieved, 72% in Fiscal 2006 compared 

to 71.3% in Fiscal 2005. With a significantly larger fleet the available seat kilometres (ASKMs) offered 

in Fiscal 2006 also went up by 35.6%. The following fare increases implemented during the year also 

contributed to the increase in the revenue earnings: 

12% on Indian Rupee fares effective April 15, 2005 

12% on US Dollar fares effective July 15, 2005 

10% on Indian Rupee fares effective October 14, 2005 

Revenues from Excess Baggage and Courier 

2.3 Excess Baggage and Courier Revenues increased by 20.9% from Rs. 421 million in Fiscal 2005 to 

Rs. 509 million in Fiscal 2006. Excess baggage revenues increased by 28.1% from Rs. 146 million in 

Fiscal 2005 to Rs. 187 million in Fiscal 2006, primarily due to an increase in the number of revenue 

passengers. Courier revenues increased by 17.1% from Rs. 275 million in Fiscal 2005 to Rs. 322 million 

in Fiscal 2006, primarily due to increased tonnage carried in Fiscal 2006. 

Revenues from Cargo 

2.4 Revenues from carriage of cargo increased by 65.2% from Rs. 1,856 million in Fiscal 2005 to Rs. 3,067 

million in Fiscal 2006, primarily because tonnage carried increased from 98,840 tonnes in Fiscal 2005 

to 115,715 tonnes in Fiscal 2006. This increase in tonnage was largely due to the commencement of 

long-haul international operations to London using wide-body aircraft, which have significantly higher 

cargo-carrying capacity than other aircraft in the fleet 

Other Revenues 

2.5 Other Revenues increased by 106.8% from Rs. 338 million in Fiscal 2005 to Rs. 699 million in Fiscal 

2006. The increase was primarily on account of two factors; firstly higher cancellation charges collected 

in Fiscal 2006 compared to Fiscal 2005, primarily from discounted fares and “Check Fares”; and 

secondly on account of income from wet-leasing of an aircraft, for temporary periods, to other airlines 

in Fiscal 2006. 

25


Non-Operating Revenues 

2.6 Non-Operating Revenues increased by over 400% from Rs. 822 million in Fiscal 2005 to Rs. 4,417 

million in Fiscal 2006. The principal reason was the sale in March 2006 of five of the Company’s 

aircraft [and which were then leased back], which resulted in a profit of Rs. 2,706 million. The increase 

in other Non-Operating Revenues was driven primarily by the following: 

interest earned on bank and other deposits increased by 81% from Rs. 306 million in Fiscal 2005 

to Rs. 554 million in Fiscal 2006; 

profit on sale of investments increased by 377.3% from Rs. 110 million in Fiscal 2005 to Rs. 525 

million in Fiscal 2006; 

 

 

Other Income increased by 21% from Rs. 181 million in Fiscal 2005 to Rs. 219 million in Fiscal 

2006; and 

write-back of provision for aircraft maintenance no longer required increased by 200% from 

Rs. 120 million in Fiscal 2005 to Rs. 360 million in Fiscal 2006. 

Expenses 

Expenditure - 2005-06 Expenditure - 2004-05 

Aircraft Fuel 

2.7 Fuel costs increased by 59.6% from Rs. 10,517 million in Fiscal 2005 to Rs. 16,789 million in Fiscal 

2006. This increase was due to a 19.3% increase in block hours from 153,857 hours in Fiscal 2005 to 

183,543 hours in Fiscal 2006 and increases in average cost of fuel from Rs. 26.72 per litre in Fiscal 

2005 to Rs. 31.84 per litre in Fiscal 2006 viz. an increase of 19.2%. 

26


Other Operating Expenses 

2.8 Other Operating Expenses increased by 39% from Rs. 9,433 million in Fiscal 2005 to Rs. 13,111 

million in Fiscal 2006. The break up is given in the table below: 

Particulars Year Ended 31 st March, Increase/ 

2006 2005 (Decrease) 

(Rs. Millions) (Rs. Millions) (%) 

Maintenance and repairs 3,109 2,874 8.2 

Variable rentals 1,241 695 78.6 

Landing, navigation and other airport charges 3,505 2,388 46.8 

Insurance 690 491 40.5 

General and administrative 4,566 2,985 53.0 

Total 13,111 9,433 39.0 

 

 

 

 

 

The increase in maintenance and repair costs was essentially due to higher block and flight 

hours, as well as the increase in the size of the fleet during Fiscal 2006. 

The increase in variable rentals is essentially on account of higher block hours during Fiscal 

2006. Further, the wide-bodied aircraft introduced during Fiscal 2006 have significantly higher 

cost per flight hour as compared to other aircraft in the fleet. 

The increase in landing, navigation and other airport charges was primarily due to an increase in 

the number of flights operated [104,833 in Fiscal 2006 compared to 96,417 in Fiscal 2005]; as 

well as the expansion of international operations. 

The increase in insurance costs was due to the increase in the fleet value insured consequent to 

the increase in the size of the fleet in Fiscal 2006. 

The increase in general and administrative costs is attributable to: 

increased costs of inflight and passenger amenities due to the increased number of 

passengers flown, 

higher travelling expenses mainly incurred with regard to new international routes, which 

commenced in Fiscal 2006. 

higher rentals for premises in Fiscal 2006 were firstly, due to the revision of rents of certain 

premises where agreements had expired and were renewed; and, secondly, due to new 

27


premises taken on rent to meet the requirements of the Company’s expansion programme 

and of training; and thirdly because of commensurate increases in renovation, repairs and 

maintenance costs and 

 

increased expenditure with regard to information technology and communication, to 

meet operational and administrative requirements as well as the upgrade and extension 

of the Company’s Enterprise Resource Programme (ERP). 

Employee Remuneration and Benefits 

2.9 Expenses pertaining to Employee Remuneration and Benefits increased by 51.4% from Rs. 3,747 

million in Fiscal 2005 to Rs. 5,672 million in Fiscal 2006. This increase reflects increases in salaries and 

benefits, as well as the increase in average headcount from 7,082 during Fiscal 2005 to 8,285 during 

Fiscal 2006. To meet operational requirements in Fiscal 2006, the Company employed expatriate 

pilots on short-term contracts, which also contributed to the increase in payroll and related costs. 

Selling and Distribution Costs 

2.10 Selling and Distribution Costs increased by 38.4% from Rs. 5,591 million in Fiscal 2005 to Rs. 7,740 

million in Fiscal 2006. This increase is attributable to: 

 

 

 

increase of 29.7% in costs related to Computerised Reservation Systems (CRS) and Global 

Distribution Systems (GDS) from Rs. 1,036 million in Fiscal 2005 to Rs. 1,344 million in Fiscal 

2006 essentially due to the increase in the number of passengers; 

increase of 34.3% in commission costs paid to General Sales Agents (GSAs) and travel agents 

from Rs. 4,208 million in Fiscal 2005 to Rs. 5,653 million in Fiscal 2006. This was due to the 

increased passenger revenues and revised productivity-based incentives given to travel agents. 

The increase was partly offset by an agreement to reduce the overriding commission paid to our 

General Sales Agent (GSA) in India from 3% to 2% for passenger revenues and from 2.5% to 2% 

for cargo revenues with effect from 1 st April, 2005; and 

increase in advertisement expenses incurred in Fiscal 2006, which was in part due to advertising 

for the launch of international operations to Singapore, London (Heathrow) and Kuala Lumpur. 

Aircraft Rentals 

2.11 Aircraft Rentals increased by 118.5% from Rs. 1,986 million in Fiscal 2005 to Rs. 4,340 million in Fiscal 

2006, due to the induction of more leased aircraft during Fiscal 2006; including wide-bodied aircraft 

for long-haul international operations. This was offset to a small extent by the reduction in lease 

rentals negotiated with lessors at the time of renewal of leases of certain aircraft. 

28


Depreciation 

2.12 We recorded a decrease in Depreciation costs of 11.1% from Rs. 4,570 million in Fiscal 2005 to 

Rs. 4,064 million in Fiscal 2006 due to the reduction in the written down value of aircraft and other 

assets being depreciated. In Previous Financial Years, the amounts spent towards acquiring rights with 

regard to certain Landing Slots at an overseas airport were amortized over a period not exceeding 10 

years. With effect from Fiscal 2006, the Company, considering industry experience and practices, has 

revised the amortization period to 20 years . 

Interest Expense 

2.13 Interest Expenses decreased by 4.8% from Rs. 2,537 million in Fiscal 2005 to Rs. 2,416 million in Fiscal 

2006, due to a decrease in average indebtedness. 

Profit before Taxation 

2.14 Profit before Taxation increased by 24.1% from Rs. 5,821 million in Fiscal 2005 to Rs. 7,223 million in 

Fiscal 2006. 

Profit after Taxation 

2.15 Profit after Taxation increased by 15.3% from Rs. 3,920 million in Fiscal 2005 to Rs. 4,520 million in 

Fiscal 2006. Provision for Tax for the year increased by 42.1% from Rs. 1,901 million in Fiscal 2005 to 

Rs. 2,702 million in Fiscal 2006. 

3. Initiatives 

Information Technology 

3.1 The Company upgraded and expanded its Enterprise Resource Programme (ERP) system. This exercise 

has streamlined a number of work processes and the augmented system covers a number of new 

areas. 

3.2 IT systems and applications in other important areas were also upgraded. 

Jet Privilege 

3.3 The Company, on a continuous basis, strives to improve its award-winning customer loyalty programme, 

Jet Privilege. The membership base continues to grow and, as on 31 st July, 2006 stood at 702,708. 

Engineering and Maintenance 

3.4 The construction of the hangar facility at Mumbai Airport was completed during Fiscal 2006. 

29


4. Outlook 

4.1 The near-term outlook for the Company remains challenging, notwithstanding the continuing growth 

of domestic and international passenger traffic and the positive economic conditions prevailing. Fuel 

prices remain a key variable. Domestic yields remain under pressure, with the significant increase in 

industry-wide capacity. The Company is using its Yield Management System effectively to offer part of 

its capacity at fares to match low fare carriers and discounted fares offered by other competing airlines 

but with certain terms and conditions not applicable to higher fares, and at the same time, optimizing 

the revenue per flight. 

4.2 While maintaining its focus on its core domestic operations, the Company continues to drive its 

international expansion. The Company is further planning, subject to approvals, flights to several 

other international destinations. The Company competes and will be competing with established 

larger international airlines on these routes. There is intense competition in these markets often 

leading to significant discounting of fares. There is, therefore, a lead-time to establish profitability in 

each new route. 

5. Human Resources 

5.1 Industrial relations throughout the network remained cordial during Fiscal 2006. We maintain our 

endeavours to ensure that the salary structure of employees is commensurate with market conditions. 

5.2 The total number of employees as on 31 st March, 2006 was 8,815 compared to 7,598 as on 31 st 

March, 2005. Recruitment and training continues to take place to meet the future increase in fleet size 

and new aircraft type(s), deliveries of which will commence in Fiscal 2008. A second Boeing 737 Next 

Generation Full Flight Simulator is scheduled to be operational in December 2006. The two simulators 

will meet pilot training needs of our existing and future Boeing 737 aircraft. 

6. Awards 

6.1 The Company continued to receive recognition for the excellence of its airline services. During the year 

under review, the Company received the following awards: 

 

 

 

The ‘Emerging Airline Award’ of the well-known international aviation journal, Air Finance, in 

April 2005. 

The ‘Industry Impact Award’, at the Annual Freddie Awards, for introduction of the ‘Dynamic 

Tier Review’ in our Jet Privilege Programme in April 2005. 

The Economic Times Award for Corporate Excellence for Emerging Company of the Year 

2004-05, in November 2005. 

30


 

 

 

 

 

TTG Travel Asia’s award as the Best Domestic Airline for 2005, in October 2005; this is the third 

time the Company has won this award. 

India’s Most Customer Responsive Company for 2005 in the “Travel and Tourism: Transportation” 

category, at the Avaya Global Connect Customer Responsiveness Awards presented by The 

Economic Times, in December 2005. 

The Galileo Express Travel & Tourism award for the ‘Best Domestic Airline’ at the Galileo Express 

Travel & Tourism Awards, 2005 in December 2005. 

The BML Munjal Award for Excellence in Learning and Development in the private sector category 

awarded by Hero Mindmine, in January 2006. 

The Star of the Industry Award for the Best Domestic Airline for 2005 awarded by the ITM 

Institute of Hotel Management, in February 2006. 

6.2 In April 2006, at the South Asia Travel Tourist Exchange (SATTE), the Company was awarded “Indian 

Domestic Airline with Spectacular Growth” and “India’s Most Popular Domestic Airline”. 

6.3 In April 2006, at the Annual Freddie Awards, the Jet Privilege Programme won the Best Customer 

Service Award and Best Bonus Promotion Award, among loyalty programmes offered by airlines from 

Japan, Australia, Asia and Pacific regions. 

7. Internal Control Systems 

7.1 The Company has a proper and adequate system of internal controls commensurate with its size and 

nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are 

authorized, recorded and reported properly and applicable statutes, codes of conduct and corporate 

policies are duly complied with. 

7.2 The Internal Audit Department reviews the adequacy and efficacy of the key internal controls. The 

scope of the audit activity is guided by the annual audit plan, which is approved by the Audit Committee 

of the Board. 

7.3 The Company’s Audit Committee comprises four Non-executive Directors: Mr. Aman Mehta (Chairman), 

Dr. Vijay L. Kelkar, Mr. Victoriano P. Dungca and Mr. Javed Akhtar. One of the objectives of the Audit 

Committee is to review the reports submitted by the Internal Audit Department and to monitor 

follow-up and corrective action by Management. 

7.4 The Company has a corporate compliance procedure to ensure that all laws, rules and regulations 

applicable to our industry are complied with. Based on confirmation from all departmental heads, the 

31


Chief Executive Officer places before the Board a Corporate Compliance Certificate at every Board 

Meeting. 

7.5 The Company Secretary is the designated Compliance Officer to ensure compliance with SEBI regulations 

and with our Listing Agreement with National Stock Exchange of India Limited and Bombay Stock 

Exchange Limited. 

7.6 The Executive Director is the Compliance Officer with regard to the ‘Jet Airways Code of Conduct for 

Prevention of Insider Trading’ and Public Spokesman for the ‘Jet Airways Code of Corporate Disclosure 

Practices for Prevention of Insider Trading’. 

7.7 The Company has a process of both external and internal safety audits for each area of operation. The 

Company is in full compliance with all laws, rules and regulations relating to airworthiness, air safety 

and other statutory operational requirements. 

7.8 The Company, as part of its Risk Management strategy, reviews, on a continuous basis, its strategies, 

processes, procedures and guidelines to effectively identify and mitigate risks. Further, the management 

has developed a procedure to ensure adequate disclosures of key risks and mitigation initiatives to the 

Audit Committee of the Board. 

8. Opportunities, Risks, Concerns and Threats 

8.1 We are preparing to take advantage of the continuing growth in air travel to, from and within India. 

8.2 The growth in air transport (both passenger and cargo) has been found to be closely associated with 

growth in Gross Domestic Product (GDP) both in India and other countries. The outlook for the Indian 

economy remains favourable with the Reserve Bank of India projecting an 8% growth for Fiscal 2007. 

8.3 We, therefore, expect continued growth in both business and leisure air travel. While historically, 

business travelers have formed the majority of domestic air travelers, increasing income levels and the 

emergence of flexible fare schemes, have encouraged and will continue to encourage leisure travelers, 

particularly those who have hitherto traveled by train in premium classes. 

8.4 The Indian tourism market has been growing at a significant pace over the past few years. Travel and 

tourism expenditure in India is expected to achieve an annualized real growth of 8.8% over the 10- 

year period from Fiscal 2004 to Fiscal 2014 (as per Tourism of India 2003 statistics, World Travel & 

Tourism Council India 2004 Report). According to a recent report by the World Travel & Tourism 

Council, India’s 10-year growth rate in demand for travel and tourism between 2006 and 2015 is 

ranked third among 174 countries included in the forecast. This is also expected to encourage air 

travel in India. 

32


8.5 Our principal concern remains the volatility in crude oil prices and its impact on the price of Aviation 

Turbine Fuel (ATF), which is the single largest head of our operating expenditure. Crude oil prices have 

continued to rise in Fiscal 2007 and the Company has introduced fuel surcharges in Fiscal 2007 and 

the Company has begun hedging a portion of the fuel purchased outside India for its international 

operations . The effective cost of ATF purchased for international operations in India is lower than that 

purchased for domestic operations as excise duty is not charged, and further the purchase of ATF by 

designated carriers is exempt from the payment of sales taxes levied by the State Governments. 

8.6 During Fiscal 2006 four new domestic carriers commenced operations, and the proposed expansion 

in capacity by existing and new airlines will mean a more competitive domestic environment. As we 

enter new markets overseas, we will increasingly compete with well-established airlines. We believe 

pressure on yields will continue in the near term. We are continuously monitoring the market and 

undertaking various revenue enhancement measures including pricing initiatives in order to respond 

to competitive factors. 

8.7 We will also have to compete with other airlines for access to airport facilities, parking bays for aircraft 

and prime time departure slots. The expansion of existing operators and the entry of new carriers will 

increase the demand for skilled personnel such as pilots, engineers and cabin crew. We continue to 

give the highest priority to employee training and employee retention programmes, to meet our 

future manpower needs. 

8.8 The airline business is affected by economic cycles and by domestic and international political events. 

We believe that the economic growth in India and the region will continue to be buoyant over the next 

few years. At the same time, socio-political and natural calamities, events such as terrorism and 

terrorist threats, regional conflicts, epidemics and floods can affect or disrupt our business and 

financial performance. We will, therefore, continue to pursue and implement strategies to reduce unit 

costs. 

8.9 The Company is involved in legal cases filed by or against it in various courts of law. There are also 

certain claims by or against the Company. There is no certainty as regards the likely outcome of these 

cases and claims as also the period within which these may be concluded. Please refer to Note No. 2 

of the Notes to Accounts and paragraphs 14 to 17 of the Directors’ Report under the heading “Sahara 

Airlines Ltd. (Pre- and Post-Balance Sheet Events)”. 

Certain statements in this Management Discussion and Analysis describing the Company may be ‘forwardlooking 

statements’ within the meaning of applicable securities laws and regulations. Actual results could differ 

materially from those expressed or implied. Important factors that could make a difference to the Company’s 

future operations include economic conditions affecting air travel in India and overseas, change in Government 

Regulations, changes in Central and State taxation, fuel prices and other factors. 

33


Corporate Governance Report 

(Information given in this Report relates to the Financial Year ended 31st March, 2006) 

COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE 

The Company recognizes that good Corporate Governance is essential to build and retain the confidence of its 

stakeholders. To this end, the Company’s philosophy on Corporate Governance is to endeavour to ensure: 

 

 

 

that systems and procedures which monitor compliance with laws, rules and regulations are in place in each 

area of its business 

that relevant information regarding the Company and its operations is disclosed, disseminated and easily 

available to its stakeholders, and 

that the Board of Directors is kept fully informed of 

 

 

 

all material developments in the Company, 

the risks in its business and its operations 

the rationale for management’s decisions and recommendations 

so that the Board of Directors can effectively discharge its responsibilities to our stakeholders 

1. BOARD OF DIRECTORS 

i. Composition 

The Board of Directors of the Company consists of 12 Directors including 4 Independent Directors. 

Mr. Naresh Goyal is the Chairman and Mr. Saroj K. Datta is the Executive Director. The Board of Directors 

including the Independent Directors comprise of senior, competent and highly respected persons from 

their respective fields. 

ii. 

Other Directorships/Memberships 

The Company has a Non-executive Chairman and the number of Independent Directors is one-third of 

the total strength of the Board. The Company is in compliance with the requirements of Clause 49 of 

the Listing Agreement as regards composition of the Board. 

34


Name of Director Position/Category Other Directorships / Mandatory Number 

Committee memberships 

Directorships Committee 

Committee 

of Shares 

held 

in other Chairman Member 

Public Cos. 

Mr. Naresh Goyal Promoter & None None None 9995 

Non-executive Chairman 

(as a Nominee 

of Tail Winds 

Limited) 

Mr. Ali Ghandour Non-executive Director None None None Nil 

Mr. Victoriano P. Dungca Non-executive Director None None None Nil 

Mr. Charles A. Adams Non-executive Director None None None Nil 

Mr. J. R. Gagrat* Non-executive Director None None None Nil 

Mr. Javed Akhtar Independent Director None None None 2220 

Mr. I. M. Kadri Non-executive Director 2 None 1 Nil 

Mr. P. R. S. Oberoi Non-executive Director 12 1 1 Nil 

Mr. Aman Mehta Independent Director 3 2 4 Nil 

Dr. Vijay L. Kelkar Independent Director 8 None 1 Nil 

Mr. S. G. Pitroda Independent Director None None None Nil 

Mr. Saroj K. Datta Executive Director None None None 553 

* Expired on 5th April, 2006 

iii. 

Attendance at the Board Meetings during the Financial Year 2005-06 and the last Annual 

General Meeting 

Nine Board Meetings were held during the Financial Year 2005-06. The gap between any two Board 

Meetings did not exceed four months. The dates on which the Board Meetings were held are as 

follows: 

17th May, 2005, 20th July, 2005, 27th September, 2005, 29th October, 2005, 3rd January, 2006, 

10th January, 2006, 11th January, 2006, 19th January, 2006 and 21st January, 2006. 

35


Name of Director No. of Meetings Attendance at Annual General Meeting 

attended held on 


Mr. Naresh Goyal 8 Yes 

Mr. Ali Ghandour 4 Yes 

Mr. Victoriano P. Dungca 8 Yes 

Mr. Charles A. Adams 4 Yes 

Mr. J. R. Gagrat* 3 Yes 

Mr. Javed Akhtar 7 Yes 

Mr. I. M. Kadri 7 No 

Mr. P. R.S. Oberoi 1 No 

Mr. Aman Mehta 6 Yes 

Dr. Vijay L. Kelkar 6 Yes 

Mr. S. G. Pitroda Nil No 

Mr. Saroj K. Datta 9 Yes 


2. AUDIT COMMITTEE 

In terms of the Listing Agreement executed by the Company with Stock Exchanges, and pursuant to Section 

292A of the Companies Act, 1956, the Company has complied with the requirements of Clause 49 of the 

Listing Agreement as regards composition of the Audit Committee. 

The terms of reference of the Audit Committee are comprehensive and cover the matters specified for the 

Audit Committees under the Listing Agreement with the Stock Exchanges. 

i. Composition, names of Members, Chairman and attendance at Meetings during the Financial 

Year 2005-06 

The Company has a qualified and an Independent Audit Committee as required under Clause 49 of the 

Listing Agreement. Mr. Javed Akhtar was inducted in the Audit Committee on 20th July, 2005 and 

currently its constitution is as under: 

36


Name of the Member Designation Category/Position 

Mr. Aman Mehta Chairman Independent Director 

Dr. Vijay L. Kelkar Member Independent Director 

Mr. Victoriano P. Dungca Member Non-executive Director 

Mr. Javed Akhtar Member Independent Director 

ii. Meetings and attendance during the Financial Year 2005-06 

Five Meetings of the Audit Committee were held during the Financial Year 2005-06. The dates on which 

the Audit Committee Meetings were held are as follows: 

5th April, 2005, 17th May, 2005, 20th July, 2005, 29th October, 2005 and 21st January, 2006. 

Name of the Member 

No. of Meetings attended 

Mr. Aman Mehta 5 

Dr. Vijay L. Kelkar 4 

Mr. Victoriano P. Dungca 3 

Mr. Javed Akhtar 2 

3. REMUNERATION & COMPENSATION COMMITTEE 

i. Terms of Reference 

The Remuneration & Compensation Committee shall determine the Compensation Policy and other 

benefits for Executive Directors and the Senior Management. 

ii. 

Composition, names of Members and Chairman 

On 20th July, 2005, the Remuneration Committee was renamed as ‘Remuneration & Compensation 

Committee’ with induction of Mr. Javed Akhtar and Mr. Aman Mehta into the Committee. At present, 

the Members of the Remuneration & Compensation Committee are as under: 


Dr. Vijay L. Kelkar Chairman Independent Director 

Mr. Victoriano P. Dungca Member Non-executive Director 

Mr. Charles A. Adams Member Non-executive Director 


Mr. Aman Mehta Member Independent Director 

37


iii. Meetings and attendance during the Financial Year 2005-06 

During the Financial Year 2005-06, only one Meeting of the Remuneration & Compensation Committee 

was held on 20th July, 2005 and all the Members were present for the same. 

iv. 

Remuneration Policy 

At present, the Non-executive Directors of the Company are entitled only to Sitting fees and commission, 

which is decided by the Board of Directors and approved by the shareholders. The Remuneration 

payable to the Executive Director will be determined by the Remuneration & Compensation Committee. 

v. Details of remuneration of Directors for the Financial Year 2005-06 

Name of the Director Basic Allowances Perquisites Retirement Sitting Commission Total 

Salary Benefits Fees Payable 

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) 

Mr. Naresh Goyal Nil Nil Nil Nil 130,000 600,000 730,000 

Mr. Ali Ghandour Nil Nil Nil Nil 50,000 600,000 650,000 

Mr. Victoriano P. Dungca Nil Nil Nil Nil 180,000 600,000 780,000 

Mr. Charles A. Adams Nil Nil Nil Nil 95,000 600,000 695,000 

Mr. J. R. Gagrat* Nil Nil Nil Nil 30,000 600,000 630,000 

Mr. Javed Akhtar Nil Nil Nil Nil 185,000 600,000 785,000 

Mr. I. M. Kadri Nil Nil Nil Nil 155,000 600,000 755,000 

Mr. P. R. S. Oberoi Nil Nil Nil Nil 5,000 600,000 605,000 

Mr. Aman Mehta Nil Nil Nil Nil 185,000 600,000 785,000 

Dr. Vijay L. Kelkar Nil Nil Nil Nil 155,000 600,000 755,000 

Mr. S. G. Pitroda Nil Nil Nil Nil Nil 600,000 600,000 

Mr. Saroj K. Datta 2,406,250 1,121,070 985,530 521,971 245,000 Nil 5,279,821 


The Company paid/due and payable Rs. 22,321,285 as Professional Fees to Law Firms in which Mr. J. R. 

Gagrat*, Director of the Company, was a Partner. 

38


4. INVESTORS’ GRIEVANCES COMMITTEE 

i. Composition, names of Members and Chairman 

The Company has an Investors’ Grievances Committee to specifically look into the redressal of the 

Shareholders’/Investors’ complaints. The Members of the Investors’ Grievances Committee are as 

under: 


Mr. I. M. Kadri Chairman Non-executive Director 

Mr. Charles A. Adams Member Non-executive Director 

Mr. Saroj K. Datta Member Executive Director 

ii. Meetings and attendance during the Financial Year 2005-06 

Three Meetings of the Investors’ Grievances Committee were held during the Financial Year 2005-06. 

The dates on which the said Meetings were held are as follows: 

28th June, 2005, 29th October, 2005 and 21st January, 2006. 

Name of the Member 

No. of Meetings attended 

Mr. I. M. Kadri 3 

Mr. Charles A. Adams 2 

Mr. Saroj K. Datta 3 

iii. 

Name and designation of Compliance Officer 

Mr. Narendra Mehra, Company Secretary is the Compliance Officer under Clause 47 of the Listing 

Agreement after taking over the charge from Mr. A. R. Rajaram who had resigned from the services of 

the Company on 28th February, 2006. 

39


iv. 

Details of Shareholders’ complaint/queries 

Opening Balance Received Attended To Pending 

Nil 1690 1690 Nil 

5. SELECTION COMMITTEE 

A committee had been specifically constituted as required by the Director’s Relatives (Office or Place of Profit) 

Rules, 2003 and as prescribed under Section 314 of the Companies Act, 1956, to consider the selection and 

appointment of Mrs. Anita Goyal, as Executive Vice President – Marketing and Sales. The Members of the 

Selection Committee were as under: 



Mr. Aman Mehta Member Independent Director 

The Selection Committee met once during the Financial Year 2005-06 on 12th August, 2005 and 

thereafter was dissolved, as the purpose for which it was constituted had been fulfilled. 

6. GENERAL BODY MEETINGS 

i. Location and time for the last three Annual General Meetings: 

Date Venue Time 

20th September, 2003 S. M. Centre, Andheri-Kurla Road, 5:00 p.m. 

Andheri (East), Mumbai 400 059 

29th September, 2004 S. M. Centre, Andheri-Kurla Road, 5:00 p.m. 


27th September, 2005 Nehru Centre Auditorium, 3:30 p.m. 

Discovery of India Building, 

Dr. Annie Besant Road, Worli, Mumbai 400 018 

40


Extraordinary General Meeting: 

The Company held an Extraordinary General Meeting on 28th February, 2006, which approved, inter 

alia, raising of funds by the Company by the issue of Equity Shares/Global Depository Receipts (GDRs)/ 

American Depository Receipts (ADRs)/ Foreign Currency Convertible Bonds (FCCBs)/ or other Securities. 

ii. 

Whether any special resolutions passed in the previous three Annual General Meetings: 

Year 



Subject 

None 

None 

27th September, 2005 • Re-appointment and remuneration of Executive Director 

• Payment of sitting fees to Directors and compensation to 

Non-executive Directors 

• Appointment of Mrs. Anita Goyal as Executive Vice-President – 

Marketing & Sales 

iii. 

Whether special resolutions were put through postal ballot last year, details of voting pattern, 

person who conducted the postal ballot exercise, proposed to be conducted through postal 

ballot and procedures for postal ballot. 

There was no Special Resolution which was required to be passed by the Postal Ballot. No Special 

Resolution is proposed to be passed at the ensuing Annual General Meeting, by Postal Ballot. 

7. DISCLOSURES 

i. Disclosures on materially significant related party transactions i.e. transactions of the Company 

of material nature, with its promoters, the Directors or the management, their subsidiaries or 

relatives etc. that may have potential conflict with the interests of the Company at large. 

None of the transactions with any of the related parties were in conflict with the interest of the 

Company. 

41


ii. 

Details of non-compliance by the Company, penalties, and strictures imposed on the Company 

by Stock Exchange or SEBI or any statutory authority on any matter related to capital 

markets, during the last three years. 

No penalties and strictures have been imposed on the Company. It has been regular in complying with 

the requirements specified by the Stock Exchanges, Securities & Exchange Board of India and other 

Statutory Authorities. 

iii. 

Code of Conduct 

The Board of Directors has laid down a Code of Business Conduct and Ethics for all Members of the 

Board and the Senior Management of the Company. The same has been posted on the Company’s 

website. All Members of the Board and the Senior Management personnel have affirmed their 

compliance with the said Code. A declaration to this effect signed by the Executive Director is given 

below: 

I hereby confirm that: 

The Company has obtained from all the Members of the Board and the Senior Management of the 

Company, affirmation that they have complied with the Code of Business Conduct and Ethics for all 

Members of the Board and the Senior Management in respect of the Financial Year 2005-06. 

Saroj K. Datta 


iv. 

ED/CFO Certification 

A Certificate from the Executive Director and the Chief Financial Officer, on the Financial Statements and 

other matters of the Company for the Financial Year ended 31st March, 2006, was placed before the Board. 

v. Risk Management 

The Company has laid down procedures to inform Board Members about the risk assessment and 

minimization procedures, which are periodically reviewed by the Board. 

42


Shareholder Information 

1. Date and time of Annual Wednesday, 20th September, 2006 at 3:30 p.m. 

General Meeting 

2. Venue Nehru Centre Auditorium, Discovery of India Building, Dr. Annie 

Besant Road, Worli, Mumbai 400 018 

3. Financial Year 1st April, 2005 to 31st March, 2006 

4. Book Closure Date Saturday, 9th September, 2006 to Wednesday, 20th September, 

2006 (both days inclusive) for AGM and payment of Dividend. 

5. Dividend Payment Date The Dividend, if declared, shall be paid on or after 25th September 

2006, but within the statutory time limit of 30 days. 

6. Registered Office S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059 

7. Compliance Officer Mr. Narendra Mehra, Company Secretary 

8. Website Address www.jetairways.com 

1. FINANCIAL CALENDAR 

The Company has announced/expects to announce the unaudited Quarterly Results for the Financial Year 

2006-07, as per the following schedule: 

First Quarter : Announced on 29th July, 2006 

Second Quarter : On or before 31st October, 2006 

Third Quarter : On or before 31st January, 2007 

The Audited Financial Results of the Company for the Financial Year 2006-07 will be announced before 

30th June, 2007, which will include the Financial Results for the Fourth Quarter of the Financial Year 2006-07. 

2. MEANS OF COMMUNICATION 

i. Half-yearly/Yearly Report sent to the household of each shareholder 

The Company publishes financial results (quarterly/half-yearly/annual) in major newspapers after the 

same are approved by the Board. The financial results are also simultaneously posted on the Company’s 

website. Hence, no separate quarterly or half-yearly report is mailed to the Shareholders. 

43


ii. 

Quarterly results – which newspapers normally published in 

The Quarterly Financial Results are normally, published by the Company in The Economic Times and/or 

Business Standard and/or the Hindustan Times and in the Maharashtra Times and/or Navbharat Times. 

iii. 

Any website, where quarterly results are displayed; whether it also displays official news releases 

The Quarterly Financial Results and official news are posted on the Company’s website at 

www.jetairways.com. 

iv. 

The presentations made to institutional investors or to the analysts 

The Company selectively makes presentations to the Institutional Investors/ Banks/ Analysts after 

announcement of financial results. 

v. Whether the Management Discussion and Analysis is a part of the Annual Report or not 

Yes. This is provided elsewhere in the Annual Report. 

3. LISTING ON STOCK EXCHANGES 

The Company’s Equity Shares are listed on the following Stock Exchanges : 

National Stock Exchange of India Limited (NSE) 

“Exchange Plaza” 

Bandra-Kurla Complex, Bandra (East), 

Mumbai – 400 051 

Bombay Stock Exchange Limited (BSE) 

P. J. Towers 

Dalal Street, Fort, 

Mumbai – 400 001 

Listing Fees for the Financial Year 2006-07 have been paid to both the above Stock Exchanges. 

44


4. STOCK CODE 

National Stock Exchange of India Limited : JETAIRWAYS 

Bombay Stock Exchange Limited : 532617 

ISIN Nos. in NSDL and CDSL : INE802G01018 

5. MARKET PRICE DATA (HIGH, LOW DURING EACH MONTH IN LAST FINANCIAL YEAR) 

Month JETAIRWAYS on BSE JETAIRWAYS on NSE 

High Low Volume High Low Volume 

(Rs.) (Rs.) (Nos.) (Rs.) (Rs.) (Nos.) 

April 2005 1379.00 1159.70 2267692 1382.75 1159.00 6328537 

May 2005 1354.40 1260.00 1312415 1349.50 1260.00 3702102 

June 2005 1361.00 1228.20 1239298 1360.00 1183.90 3790290 

July 2005 1344.00 1252.00 503988 1342.00 1210.10 1458587 

August 2005 1277.00 1106.50 721434 1275.00 1105.95 2427074 

September 2005 1200.00 1053.50 1004864 1175.80 1055.00 3033761 

October 2005 1252.00 973.00 1288336 1250.00 970.55 3417680 

November 2005 1247.90 1006.20 1030974 1246.90 1007.00 2833094 

December 2005 1280.00 1100.00 939237 1276.90 1091.55 3375079 

January 2006 1224.80 975.20 2796443 1207.00 975.10 8195777 

February 2006 1015.10 891.15 3062470 1016.95 772.90 7823417 

March 2006 1025.00 917.00 1599508 1013.00 914.00 4012761 

45


6. PERFORMANCE OF SHARE PRICE OF THE COMPANY IN COMPARISON TO THE BSE AND NSE 

INDICES 

Jet Airways vs BSE Sensex 

Jet Airways vs NIFTY 

46


7. REGISTRAR AND TRANSFER AGENT 

Karvy Computershare Private Limited 

Karvy House, 46, Avenue 4, 

Street No. 1, Banjara Hills, 

Hyderabad 500 034 

Phone : 040 2342 0818 

Fax : 040 2342 0814 

E-mail : madhusudhan@karvy.com 

Contact Person : Mr. M. S. Madhusudan, Asst. General Manager 

8. SHARE TRANSFER SYSTEM 

99.99% of the issued Equity Shares of the Company are in the dematerialized form. Transfers of these shares 

are done through the depositories with no involvement of the Company or its Registrars. 

As regards transfer of shares held in physical form, the transfer documents can be lodged with the Company’s 

Registrars – Karvy Computershare Private Limited at the above mentioned address or at the Registered Office 

of the Company. 

There was no transfer of shares in physical form during the Financial Year 2005-06. 

9. DEMATERIALIZATION OF SHARES AND SECRETARIAL AUDIT 

The Company has arrangements with National Securities Depository Limited (NSDL) and Central Depository 

Services (India) Limited (CDSL), to facilitate holding and trading of Company’s Equity Shares in electronic 

form. Over 99.99% of the Company’s Equity Shares are held in electronic form. The Company’s Equity Shares 

are regularly traded on NSE and BSE. 

For the Financial Year ended 31st March, 2006, M/s. T. M. Khumri & Co., Company Secretaries, carried out a 

Secretarial Audit to reconcile the total admitted capital with NSDL and CDSL and total issued and listed 

capital. The Secretarial Audit Reports for all the quarters of the said financial year confirm that the total 

issued/paid-up capital is in agreement with the total number of Equity Shares in physical form and the total 

number of dematerialized Shares held with NSDL and CDSL. 

47


10. DISTRIBUTION OF SHAREHOLDING AS ON 31ST MARCH, 2006 

Sr. No. Category Number of % of Amount % of Amount 

Shareholders Shareholders (Rs.) 

From –To 

1 1-5000 140333 99.67 23338970 2.70 

2 5001-10000 190 0.13 1402430 0.16 

3 10001-20000 97 0.07 1437000 0.17 

4 20001-30000 38 0.03 959490 0.11 

5 30001-40000 17 0.01 601580 0.07 

6 40001-50000 13 0.01 597460 0.07 

7 50001-100000 26 0.02 2079610 0.24 

8 100001 & above 88 0.06 832923570 96.48 

Total 140802 100.00 863340110 100.00 

11. SHAREHOLDING PATTERN AS PER CLAUSE 35 OF THE LISTING AGREEMENT AS ON 

31ST MARCH, 2006 

Sr. No. Category No. of Shares held % of Shares 

A. Promoters Holding 

1. Promoters 69067205 80.00% 

2. Persons acting in concert 553 0.00% 

B. Non-promoters Holding 

3. Institutional Investors 

(a) Mutual Funds and UTI 2503189 2.90% 

(b) Banks, Financial Institutions, Insurance, 1898779 2.20% 

Companies (Central/ State Govt. Institutions / 

Non-Governmental Institutions) 

(c) FIIs 9074567 10.51% 

Others 

(a) Private Corporate Bodies 966268 1.12% 

(b) Indian Public 2632049 3.05% 

(c) NRIs/OCBs 58492 0.07% 

(d) Any Other 132909 0.15% 

Total 86334011 100.00% 

48


12. OUTSTANDING GDRs/ ADRs/ WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, 

CONVERSION DATE AND LIKELY IMPACT ON EQUITY 

As on 31st March, 2006, the Company did not have any outstandingGDRs/ ADRs/ Warrants or any Convertible 

Instruments. 

13. PLANT LOCATIONS 

In view of the nature of the Company’s business viz., provision of scheduled air services, the Company 

operates from various offices in India and abroad but does not have any manufacturing plant. 

14. ADOPTION OF NON-MANDATORY REQUIREMENTS UNDER THE LISTING AGREEMENT 

The Company has adopted the Non-mandatory requirement as regards provisions relating to Remuneration 

Committee. The quarterly results are extensively published in the financial newspapers, posted on the 

Company’s website and sent to the Shareholders on request. Adoption of other non-mandatory requirements 

will be considered by the Company. 

15. INVESTOR COMPLAINTS 

Investor complaints are given top priority by the Company and are replied to promptly by the Investors’ 

Service Cell located at the Corporate Secretarial Department and also by the Registrars and Share Transfer 

Agent of the Company. It is the endeavour of the Company that Investor Complaints are attended to within 

48 hours of receipt. The Company has attended to all investors’ grievances/correspondences. 

16. ADDRESS FOR CORRESPONDENCE 



S. M. Centre, Andheri-Kurla Road, 


Telephone : (022) 28527744 

Fax : (022) 28527745 

E-mail : nmehra@jetairways.com 

Website : www.jetairways.com 

49


Auditors’ Certificate on Compliance of Conditions of Corporate 

Governance 

To the Members of 


We have examined the compliance of conditions of corporate governance by Jet Airways (India) Limited (“the 

Company”), for the year ended on 31st March, 2006, as stipulated in Clause 49 of the Listing Agreement of the 

said company with stock exchanges. 

The compliance of conditions of corporate governance is the responsibility of the Company’s management. Our 

examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the 

compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on 

the financial statements of the Company. 

In our opinion and to the best of our information and according to the explanations given to us, we certify that 

the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned 

Listing Agreement. 

We further state that such compliance is neither an assurance as to the future viability of the Company nor the 

efficiency or effectiveness with which the management has conducted the affairs of the Company. 

For Deloitte Haskins & Sells 


For Chaturvedi & Shah 


R. Salivati C. D. Lala 

Partner 

Partner 

Membership No.: 34004 Membership No.: 35671 

Place : Mumbai 

Date : 29th July, 2006 

50


Auditors’ Report 

The Members of Jet Airways (India) Limited 

We have audited the attached Balance Sheet of Jet Airways (India) Limited (“the Company”) as at March 31, 2006, and the Profit 

and Loss Account and Cash Flow Statement for the year ended on that date both annexed thereto. These financial statements are 

the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based 

on our audit. 

1. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that 

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 

management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a 

reasonable basis for our opinion. 

2. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report ) (Amendment) 

Order 2004 (together the ‘Order’), issued by the Central Government of India in terms of Section 227(4A) of the Act , and 

on the basis of such checks as we considered appropriate, and according to the information and explanations given to us, 

we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent 

applicable to the Company. 

3. Further, to our comments in the Annexure referred to in paragraph 2 above, we report that: 

(a) 

(b) 

(c) 

(d) 

(e) 

We have obtained all the information and explanations, which to the best of our knowledge and belief were 

necessary for the purposes of our audit; 

In our opinion, proper books of account as required by law have been kept by the Company so far as appears from 

our examination of those books; 

The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with 

the books of account; 

In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report 

comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act 1956; 

On the basis of written representations received from the directors, as on March 31, 2006, and taken on the record 

by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2006 

from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act 

1956; 

51


(f) 

In our opinion and to the best of our information and according to the explanations given to us, the said accounts 

read together with the Significant Accounting Policies and notes thereon give the information required by the 

Companies Act, 1956, in the manner so required, and present a true and fair view, in conformity with the accounting 

principles generally accepted in India; 

(i) in so far as it relates to the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2006; 

(ii) 

(iii) 

in so far as it relates to the Profit and Loss Account, of the profit for the year ended on that date; and 

in so far as it relates to the Cash Flow Statement, of the cash flows for the year ended on that date. 

FOR DELOITTE HASKINS & SELLS 


FOR CHATURVEDI & SHAH 


R. SALIVATI C.D. LALA 

Partner 

Partner 

M. No. 34004 M. No. 35671 

Mumbai 

Dated : 29 th April, 2006 

52


Annexure to the Auditors’ Report 

(Referred to in paragraph 2 of our report of even date) 

1) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of 

fixed assets. 

b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased 

periodic manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its 

assets. The company is in the process of reconciling assets physically verified during the year with the book records. 

c) A substantial part of the fixed assets has not been disposed off during the year; accordingly provisions of clause 4 

(i) (c) of Companies (Auditor’s Report) Order, 2003 are not applicable to the Company. 

2) a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of 

verification is reasonable. 

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification 

of inventories followed by the management were reasonable and adequate in relation to the size of the Company 

and the nature of its business. 

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper 

records of its inventories and no material discrepancies were noticed on physical verification. 

3) According to the information and explanations given to us the Company has not granted/taken loans, secured or unsecured, 

to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 

1956. Therefore, the provisions of clause 4(iii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the 

company. 

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures 

commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and 

with regard to rendering of services. There is no sale of goods. During the course of our audit, we have not observed any 

continuing failure to correct major weaknesses in internal controls. 

5) In respect of contracts or arrangements referred to in section 301 of the Companies Act 1956, to the best of our knowledge 

and belief and according to the information and explanations given to us: 

a) The particulars of contracts or arrangements have been entered in the register maintained under that section. 

b) Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable 

having regard to prevailing market prices at the relevant time. 

6) According to information and explanations given to us, the Company has not accepted deposits from the public. Therefore 

the provisions of clause 4(vi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company. 

7) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its 

business. 

53


8) Maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub section (1) of 

section 209 of the Companies Act, 1956. Therefore the provisions of clause 4(viii) of the Companies (Auditor’s Report) 

Order, 2003 are not applicable to the company 

9) In respect of Statutory dues : 

a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues, including 

Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income tax, Sales tax, Wealth 

Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues. 

b) According to the information and explanation given to us, no undisputed amounts, payable in respect of income 

tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears, as at March 31, 2006 for a 

period of more than six months from the date they become payable. 

c) According to the information and explanations given to us, there are no dues of sales tax, income tax, service tax, 

custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute other than 

the following: 

Name of statute Nature of the dues Amount Period to Forum where 

(Rs. lac) which the dispute is 

amount relates pending 

IATT Rules, 1989 IATT Interest & Penalty 426 2003-04 Commissioner of Customs (Appeals), 

New Delhi 

IATT Rules, 1989 IATT Interest & Penalty 47 2001-02 Commissioner of Customs (Appeals), New 

Delhi 

B.M.C. Act, 1988 Octroi Dues 2,899 2000-01 Mumbai High Court 

10) The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses 

during the financial year covered by the audit and the immediately preceding financial year. 

11) In our opinion and according to the information and explanations given to us, the company has not defaulted in the 

repayment of dues to financial institutions and banks. There were no debentures issued during the year or outstanding at 

the beginning of the year. 

12) We are of the opinion that the company has maintained adequate records where the company has granted loans and 

advances on the basis of security by way of pledge of shares, debentures and other securities. 

13) In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 

4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company. 

14) The Company has not dealt, other than in units, or traded in shares, securities, debentures or other investments during the 

year. In our opinion and according to information and explanations given to us the Company has dealt in units of Mutual 

Funds for which the Company has maintained proper records of transactions and contracts. All the investments have been 

held by the company in its own name. 

54


15) In our opinion and according to information and explanations given to us, the Company has not given guarantees for loans 

taken by others from banks or financial institutions. Therefore, the provisions of clause 4(xv) of the Companies (Auditor’s 

Report) Order, 2003 are not applicable to the company. 

16) In our opinion, and according to the information and explanations given to us, the term loans have been applied for the 

purpose for which they were raised. 

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the 

company, we report that funds raised on short-term basis have not been used for long-term investment except Rs.36,789 

lac utilized for extending certain capital advances. 

18) According to the information and explanations given to us, the company has not made preferential allotment of shares to 

parties and companies covered in the register maintained under Section 301 of the Companies Act 1956. Therefore, the 

provisions of clause 4(xviii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company. 

19) According to the information and explanations given to us, during the period covered by our audit report, the Company 

has not issued any debentures and no debentures were outstanding at the beginning of the year. Therefore, the provisions 

of clause 4(xix) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company. 

20) We have verified the end use of money raised by public issue and the same has been disclosed in the notes to the financial 

statements. 

21) According to the information and explanations given to us and on the basis of examination of the records, no fraud on or 

by the Company was noticed or reported during the year except fraudulent use of credit cards for booking of tickets 

amounting to Rs.372 lac. 

FOR DELOITTE HASKINS & SELLS 


FOR CHATURVEDI & SHAH 


R. SALIVATI C.D. LALA 

Partner 

Partner 

M. No. 34004 M. No. 35671 

Mumbai 


55


Balance Sheet as at March 31, 2006 

As at 

As at 

Schedule March 31, 2006 March 31, 2005 

No. Rs. in lac Rs. in lac 

I. SOURCES OF FUNDS 

1. Shareholders’ Funds : 

a) Share Capital 

Equity A 8,633 8,633 

8,633 8,633 

b) Reserves and Surplus B 221,955 192,383 

230,588 201,016 

2. Subordinated Debt - 33,411 

3. Loan Funds : 

a) Secured Loans C 20,602 6,000 

b) Unsecured Loans D 468,958 257,073 

489,560 263,073 

4. Deferred Tax Liability (Ref. Note 19 of Schedule S) 32,066 19,485 

Total 752,214 516,985 

II. APPLICATION OF FUNDS 

1. Fixed Assets : E 

a) Gross Block 437,206 520,209 

b) Less : Depreciation 224,958 259,346 

c) Net Block 212,248 260,863 

d) Capital Work-in-progress 266,567 3,202 

478,815 264,065 

2. Investments F 18,723 159,573 

3. Current Assets, Loans and Advances : 

a) Inventories G 40,525 33,252 

b) Sundry Debtors H 43,315 25,231 

c) Cash and Bank Balances I 210,425 122,424 

d) Loans and Advances J 113,488 23,533 

407,753 204,440 

Less : Current Liabilities and Provisions 

a) Current Liabilities K 106,562 77,317 

b) Provisions L 46,515 33,776 

153,077 111,093 

Net Current Assets 254,676 93,347 

Total 752,214 516,985 

Significant Accounting Policies and Notes to Accounts 

S 

As per our attached report of even date 

For and on behalf of the Board 

For DELOITTE HASKINS & SELLS 

For CHATURVEDI & SHAH 

Chartered Accountants Chartered Accountants Javed Akhtar 

Director 

R. SALIVATI C.D. LALA Saroj K. Datta 

Partner Partner Executive Director 



Narendra Mehra 


56


Profit and Loss Account for the year ended March 31, 2006 

For the 

For the 

Year ended Year ended 

Schedule March 31, 2006 March 31, 2005 

No. Rs. in lac Rs. in lac Rs. in lac 

INCOME : 

Operating Revenues M 569,373 433,801 

Non - Operating Revenues N 44,174 8,216 

Total 613,547 442,017 

EXPENDITURE : 

Employees Remuneration and Benefits O 56,715 37,474 

Aircraft Fuel Expenses 167,893 105,173 

Selling & Distribution Expenses P 77,402 55,906 

Other Operating Expenses Q 131,111 94,325 

(including Maintenance, Airport Charges, etc) 

Aircraft Lease Rentals (Refer Note 4 of Schedule S) 43,399 19,857 

Depreciation/ Amortisation 47,482 54,721 

Less : Depreciation on amount added on Revaluation 

charged to Revaluation Reserve 6,841 9,021 

40,641 45,700 

Interest R 24,160 25,369 

Total 541,321 383,804 

PROFIT BEFORE TAXATION 72,226 58,213 

Income Tax Expenses 

Current Tax ( including provision for Wealth Tax 13,406 4,604 

Rs.7 lac, Previous Year Rs.4 lac) 

Deferred Tax 12,581 14,410 

Fringe Benefit Tax 1,035 - 

PROFIT AFTER TAXATION 45,204 39,199 

Balance Brought Forward 14,967 (11,801) 

PROFIT AVAILABLE FOR APPROPRIATION 60,171 27,398 

Less : Appropriations 

Transferred to Capital Redemption Reserve - 5,558 

Transferred to General Reserve 4,521 3,920 

4,521 9,478 

PROFIT AVAILABLE FOR DISTRIBUTION 55,650 17,920 


Income Tax on Dividend 727 363 

BALANCE CARRIED TO BALANCE SHEET 49,743 14,967 

Earnings per share of Rs 10 each (Ref. Note 18 of Schedule S) 

Basic (in Rupees) 52.36 52.29 

Diluted (in Rupees) 32.04 8.72 

Significant Accounting Policies and Notes to Accounts 

S 






Director 







57


Statement of Cash Flow for the year ended March 31, 2006 

For the Year ended For the Year ended 

March 31, 2006 March 31, 2005 

Rs. in lac 

Rs. in lac 

A. Cash Flow from Operating Activities 

Net Profit before tax 72,226 58,213 

Adjustments for : 

Depreciation /Amortisation & Stock Obsolescence 42,589 47,527 

(Profit)/Loss on sale of Fixed Assets (Net) (27,037) 345 

(Profit) on sale of Investments / Dividend on Investments (5,253) (1,380) 

Interest expense 24,160 25,369 

Interest on Bank & Other Deposits (5,542) (3,064) 

Excess Provision no longer required (4,101) (1,882) 

Provision for doubtful debts no longer required (20) (6) 

Provision for Leave Encashment & Gratuity 2,627 735 

Exchange difference on translation (Net) (1,468) (822) 

Provision for doubtful debts 247 281 

Bad Debts written off 14 - 

Inventory scrapped during the year 2,325 3,446 

Operating profit before working capital changes 100,767 128,762 

Changes in Inventories (11,546) (3,781) 

Changes in Sundry Debtors (18,427) (1,272) 

Changes in Loans & Advances (26,513) (853) 

Changes in Current Liabilities and Provisions 29,863 17,317 

Cash generated from operations 74,144 140,173 

Income tax refunded/paid (13,392) (4,666) 

Wealth tax paid (4) (3) 

Net cash from operating activities 60,748 135,504 

B. Cash Flow from Investing Activities 

Capital Expenditure - Aircraft & Others (279,457) (9,871) 

Proceeds from sale of fixed assets 46,282 52 

Purchase of Investments (545,424) (508,116) 

Changes in Fixed Deposits with Banks (Refer Note No. 2 below) 34,549 (35,917) 

Interest Received on Bank & Other Deposits 5,367 2,596 

Deposit in Escrow Account (Refer Note No. 3 below) (150,000) - 

Advance paid as per Share Purchase Agreement (50,000) - 

(Refer Note No 11 of Schedule S) 

Sale of Investments 691,527 372,985 

Dividend Received - 280 

Net cash used for investing activities (247,156) (177,992) 

carried forward (247,156) (177,992) 

58


Statement of Cash Flow for the year ended March 31, 2006 

For the Year ended For the Year ended 

March 31, 2006 March 31, 2005 

Rs. in lac 

Rs. in lac 

brought forward (247,156) (177,992) 

C. Cash flows from Financing Activities 

Proceeds from issue of Share Capital - 156,696 

Preference Shares repayment - (6,983) 

Premium on Redemption of Preference Shares - (5,852) 

Share Issue Expenses paid - (2,103) 

Increase / (Decrease) in Term Loans & subordinated Debt 191,738 (27,558) 

Interest paid (30,005) (22,668) 

Dividend paid (including Tax on Dividend) (2,950) - 

Net cash from financing activities 158,783 91,533 

Net change in cash (A+B+C) (27,625) 49,045 

Cash and cash equivalents at beginning of the year 50,401 1,356 

Cash and cash equivalents at end of the year 22,776 50,401 

(Refer Note No. 1 & 3 below) 

Note : 

1) Cash and Cash equivalents for the period ended March 31, 2006 includes unrealised loss of Rs.2 lac (Previous Year 

unrealised loss of Rs. 83 lac) on account of translation of foreign currency bank balances. 

2) Fixed Deposits with banks with maturity period of more than three months including interest accrued thereon and 

Fixed Deposits under lien are not included in Cash and Cash equivalents. 

3) Cash & Cash Equivalents at the end of the year excludes Rs. 150,000 lac being balance in Escrow Account as per the 

terms of the Share Purchase Agreement (SPA) entered into for the acquisition of Sahara Airlines Limited. (Refer Note 

No.11 of Schedule S) . 






Director 







59


Schedules to the Balance Sheet as at March 31, 2006 

As at 

As at 

March 31, 2006 March 31, 2005 

Rs. in lac Rs. in lac 

SCHEDULE A : 

SHARE CAPITAL 

Authorized 

130,000,000 (Previous Year 130,000,000) Equity Shares of Rs.10/- each 13,000 13,000 

70,000,000 (Previous Year 70,000,000) Preference Shares of Rs 10/- each 7,000 7,000 

20,000 20,000 

Issued, Subscribed and Paid up 

Equity: 

86,334,011 Equity Shares (Previous Year - 86,334,011) 

of Rs.10/- each fully paid up 8,633 8,633 

(69,067,205 Shares held by the holding company,Tail Winds Limited 

& its nominee. Previous Year 69,067,205 Shares) 

(Of the above, 9,402,900 shares are allotted as fully paid 

bonus shares by Capitalization of Profit, Previous Year 9,402,900 Shares) 

Total 8,633 8,633 

60



As at 

As at 

March 31, 2006 March 31, 2005 

Rs. in lac Rs. in lac Rs. in lac 

SCHEDULE B : 

RESERVES and SURPLUS 

Capital Reserve 

Balance as per Last Balance Sheet * * 

Nominal Value of investments in SITA received free of cost 

(See Note 1 of Schedule ‘F’ - Investments) 

(*Rs. 2/-, Previous year Rs.2/-) - * 

* * 

Capital Redemption Reserve 

Balance as per Last Balance Sheet 5,558 - 

Transferred from Profit & Loss Account - 5,558 

5,558 5,558 

Share Premium 


Received on Issue of Equity Shares - 155,272 

Less : Adjustments 

a) Premium on redemption of Cumulative Convertible 

Redeemable Preference Shares - 5,852 

b) Share Issue Expenses - 8,002 

141,418 141,418 

Revaluation Reserve 

Balance as per Last Balance Sheet 25,927 38,757 

Less : Adjustment /Reversal during the year 2,884 3,809 

Less : Depreciation for the year on amount added on Revaluation 

transferred to Profit & Loss Account 6,841 9,021 

16,202 25,927 

Contingency Reserve 

Balance as per Last Balance Sheet - 593 

Less: Transferred to General Reserve - 593 

- - 

General Reserve 


Add: Transferred from Contingency Reserve - 593 

Add: Transferred from Profit & Loss Account 4,521 3,920 

9,034 4,513 

Surplus Balance in Profit and Loss Account 49,743 14,967 

Total 221,955 192,383 

61



As at 

As at 

March 31, 2006 March 31, 2005 


SCHEDULE C : 

SECURED LOANS 

From Banks 16,602 - 

(Loans from Banks are secured by hypothecation of Stocks, 

Debtors & Movable Fixed Assets other than Aircraft and/or 

by lien on Bank Deposits) 

From Financial Institutions 4,000 6,000 

(Secured by hypothecation of Simulator & other accessories thereto) 

Total 20,602 6,000 

SCHEDULE D : 

UNSECURED LOANS 

Short Term Loans: 


Other Loans: 


From Financial Institutions 43,500 - 

From Others 

Outstanding Hire Purchase/Finance Lease Instalments 196,698 257,073 

[Instalments due within one year Rs. 20,791 lac 

(Previous Year - Rs.27,841 lac)] 

409,480 257,073 

Total 468,958 257,073 

62



SCHEDULE - E 

FIXED ASSETS 

Rs. in lac 

NATURE OF ASSETS GROSS BLOCK (At Cost /Valuation) DEPRECIATION/AMORTISATION NET BLOCK 

As at Additions Deductions/ As at Upto For the Deductions Upto As at As at 

01.04.2005 during Adjustments 31.03.2006 31.03.2005 Year 31.03.2006 31.03.2006 31.03.2005 

the year 

PLANT & MACHINERY - 82 - 82 - 8 - 8 74 - 

FURNITURE AND FIXTURES 1,601 432 18 2,015 1,055 214 12 1,257 758 546 

ELECTRICAL FITTINGS 1,535 244 14 1,765 668 157 10 815 950 867 

DATA PROCESSING EQUIPMENT 5,444 1,022 121 6,345 3,869 975 121 4,723 1,622 1,575 

OFFICE EQUIPMENT 2,664 440 6 3,098 1,329 251 4 1,576 1,522 1,335 

GROUND SUPPORT EQUIPMENT 4,278 445 51 4,672 2,185 331 38 2,478 2,194 2,093 

VEHICLES 598 442 164 876 388 76 108 356 520 210 

GROUND SUPPORT VEHICLES 3,503 870 28 4,345 2,498 489 27 2,960 1,385 1,005 

AIRCRAFT & SPARE ENGINE 487,918 1,338 103,597 385,659 242,184 42,631 81,550 203,265 182,394 245,734 

CAPITAL EXPENDITURE ON LEASED AIRCRAFT 2,930 2,069 - 4,999 1,428 831 - 2,259 2,740 1,502 

CAPITAL EXPENDITURE ON LEASED PROPERTY 1,000 - - 1,000 791 150 - 941 59 209 

SIMULATOR 5,138 - - 5,138 2,506 426 - 2,932 2,206 2,632 

INTANGIBLE ASSETS 

(Other than internally generated) 

SOFTWARE 1,198 667 - 1,865 443 356 - 799 1,066 755 

LANDING RIGHTS 2,402 9,799 - 12,201 2 375 - 377 11,824 2,400 

TRADEMARKS - 3,146 - 3,146 - 212 - 212 2,934 - 

TOTAL 520,209 20,996 103,999 437,206 259,346 47,482 81,870 224,958 212,248 260,863 

PREVIOUS YEAR 516,181 8,629 4,601 520,209 205,021 54,721 397 259,346 260,863 311,160 

CAPITAL WORK IN PROGRESS INCLUDING 

CAPITAL ADVANCE FOR PURCHASE OF AIRCRAFT 

AND OTHER ASSETS 266,567 3,202 

47482 

NOTE : 

1) All the Aircraft are acquired on Hire-purchase/Finance Lease basis and do not include Aircraft taken on Operating lease. Such Aircraft are charged by the Hirers / Lessors 

against the financing arrangements obtained by them. 

2) Additions to Aircraft includes Rs.1,338 lac (Previous Year net of Rs.(-) 436 lac) on account of exchange difference (net) during the year. 

Capital Work in Progress includes Rs.373 lac (Previous Year Rs. Nil lac) on account of exchange difference (net) during the year. 

3) Aircraft were revalued on 31 st March, 2002 with reference to the current prices; amount added on revaluation was Rs. 72,996 lac; the revalued amount substituted for 

historical cost on 31 st March, 2002 was Rs. 342,860 lac. 

Deduction from Gross Block during the year includes Rs.31,060 lac (Previous Year Rs. Nil lac) being reversal of amount added on revaluation in respect of aircraft sold 

and leased back . 

4) Useful life of Intangible Assets : 

Software - 3 years 

Landing Rights - upto 20 years (Refer Note No.7 of Schedule S) 

Trademarks - 10 years 

63



As at 

As at 

March 31, 2006 March 31, 2005 


SCHEDULE F : 

INVESTMENTS 

Long Term 

18 Shares (Previous Year 18 Shares) held with Societe Internationale de 

Telecommunications Aeronautiques * * 

(S.I.T.A S.C) * (Rs. 2/-, Previous year Rs.2/-) 

NOTES : 

1. These investments have been received free of cost from 

SITA SC for participation in their Computer Reservation System 

and have been accounted at a nominal value of Rs. 2/- (Previous Year Rs. 2/-) by 

crediting to Capital Reserve. 

2. The transfer of this investment is restricted to other Depository Certificate 

holders for e.g. Air Transport members, etc. 

Current 

Investments in Mutual Funds - Traded (Debt Schemes) 

Schemes As at As at Face As at As at 

March 31, March 31, Value/ March 31, March 31, 

2006 2005 Unit 2006 2005 

(Rs.) 

No. of No. of Rs. in Rs. in 

Units Units lac lac 

# # 

Growth Plan 

Kotak Mahindra Mutual Fund 35,370,418 207,022,919 10.00 4,159 22,781 

JM Mutual Fund 29,835,170 140,313,757 10.00 3,000 14,397 

Prudential ICICI Mutual Fund 4,752,607 92,085,659 10.00 564 11,507 

DSP Merrill Lynch Mutual Fund 294,923 1,000.00 3,000 - 

DSP Merrill Lynch Mutual Fund 94,181,923 10.00 15,250 

UTI Mutual Fund 20,466,744 49,406,208 10.00 4,000 5,281 

LIC Mutual Fund 31,741,245 - 10.00 4,000 - 

Principal Mutual Fund 43,857,512 10.00 4,500 

Deutsche Mutual Fund 38,637,264 10.00 4,000 

HDFC Mutual Fund 96,790,620 10.00 10,601 

Birla Sun Life Mutual Fund 79,452,234 10.00 8,311 

HSBC Mutual Fund 222,040,554 10.00 22,701 

Reliance Mutual Fund 53,530,385 10.00 5,501 

Tata Mutual Fund 167,463,629 10.00 17,153 

Tata Mutual Fund 533 1,000.00 6 

ING Vysya Mutual Fund 61,851,076 10.00 6,375 

Standard Chartered Mutual Fund 107,210,671 10.00 11,209 

18,723 159,573 

64



As at 

As at 

March 31, 2006 March 31, 2005 


Market Value As at As at 

31-March- 31-March- 

2006 2005 


Growth Plan 

Kotak Mahindra Mutual Fund 4,205 22,959 

JM Mutual Fund 3,185 14,484 

Prudential ICICI Mutual Fund 564 11,537 

DSP Merrill Lynch Mutual Fund 3,014 15,266 

UTI Mutual Fund 4,019 5,333 

LIC Mutual Fund 4,019 - 

Principal Mutual Fund - 4,511 

Deutsche Mutual Fund - 4,010 

HDFC Mutual Fund - 10,664 

Birla Sun Life Mutual Fund - 8,339 

HSBC Mutual Fund - 22,841 

Reliance Mutual Fund - 5,512 

Tata Mutual Fund - 17,258 

ING Vysya Mutual Fund - 6,410 

Standard Chartered Mutual Fund - 11,244 

Total 19,006 160,368 

Note : The market price is based on the repurchase price declared by the respective funds 

# Refer Note No. 3 of Schedule S 

Total 18,723 159,573 

65



As at 

As at 

March 31, 2006 March 31, 2005 


SCHEDULE G : 

INVENTORIES (At Lower of Cost or Net Realisable Value) 

i) Rotables, Consumable stores and tools 44,623 38,953 

Less : Provision for Obsolescence /Slow & Non-Moving items 

(Refer Note 1 (L) of Schedule S) 8,223 7,016 

36,400 31,937 

ii) Fuel 115 61 

iii) Other Stores Items 4,010 1,254 

Total 40,525 33,252 

SCHEDULE H : 

SUNDRY DEBTORS 

(Unsecured) 

a) Debts (Outstanding for a period exceeding six months) 1,059 828 

b) Other Debts 43,030 24,950 

44,089 25,778 

Less : Provision for Doubtful Debts 774 547 

43,315 25,231 

As at 

As at 

NOTE : 31-03-2006 31-03-2005 

1) Considered good 43,315 25,231 

Considered doubtful 774 547 

44,089 25,778 

2) Debtors include Rs. 73 lac (Previous Year Rs 68 lac) due from 

private company in which the Company’s Director is a 

director/member. 

Total 43,315 25,231 

66



As at 

As at 

March 31, 2006 March 31, 2005 


SCHEDULE I : 

CASH AND BANK BALANCES 

Cash on hand (includes cheques on hand Rs. 312 lac 331 570 

Previous Year Rs. 553 lac) 

Balance with Scheduled banks : 

a) In Current Account 1,620 1,609 

b) In Escrow Account (Refer Note No. 11 of Schedule S) 150,000 - 

c) In Fixed Deposit Account* 57,153 116,705 

[including margin deposit Rs.12,693 lac and Rs 13,963 lac 

given as collateral for overdraft and other loans 

(Previous Year Rs.Nil and Rs.7,396 lac respectively)] 

Add : Interest accrued 788 812 

209,892 119,696 

Balance with other banks : 

In Current Account : 

a) Citibank N.A, Johannesberg South Africa 

Maximum balance outstanding during the year 

Rs.93 lac (Previous Year Rs.294 Lac) 16 31 

b) National Bank of Kuwait 


Rs. 28 lac (Previous Year Rs.29 lac) 1 - 

c) Barclays Business Premium GBP Account, UK 


Rs. 6,477 lac (Previous Year N.A.) 87 - 

d) Barclays Bank - PLC - USD 


Rupees 149 (Previous Year Rs.10 Lac) - - 

e) HSBC CCF - Paris - Euro 


Rs.831 lac (Previous Year Rs.671 Lac) - 670 

f) Deutsche Bank AG - Frankfurt - Euro 


Rs. 816 lac (Previous Year Rs.498 Lac) 124 498 

g) Barclays Bank - PLC - GBP 


Rs. 2,185 lac (Previous Year Rs.1,522 lac) - 1,522 

h) DBS Bank Ltd. - Singapore - SGD 


Rs.1,030 lac (Previous Year N.A.) 246 - 

i) DBS Bank Ltd -Disbursement, Singapore - SGD 


Rs.78 lac (Previous Year N.A.) - - 

j) HSBC Bank - Brussels - 


Rs.32 lac (Previous Year N.A.) 25 - 

k) Barclays GBP Intetrest Account, UK 



l) Barclays Bank - PLC - Euro Account 


Rs.13 lac (Previous Year Rs.7 lac) 13 7 

m) ICICI Bank UK Ltd., UK 



n) Bank of America - USD A/c, USA 


Rs.22 lac (Previous Year N.A.) 21 - 

533 2,728 

* Refer Note No.3 of Schedule S 

Total 210,425 122,424 

67



As at 

As at 

March 31, 2006 March 31, 2005 


SCHEDULE J : 

LOANS and ADVANCES 

(Unsecured unless otherwise stated and Considered Good ) 

Loans (Refer Note No.11 of Schedule S) 10,000 - 

Advances Recoverable in Cash or in kind or for value to be Received 69,295 7,541 

(Includes Secured to the extent of Rs. 50,000 lac - 

Refer Note No.11 of Schedule S) 

Deposits with Airport Authorities & others 13,545 8,736 

(Including margin deposit Rs 2,587 lac (Previous Year Rs. 3,827 lac) 

Balances with Customs Authorities 6 6 

Advance Tax & Tax deducted at Source 20,642 7,250 

Total 113,488 23,533 

Note : Deposits & Advances include Rs. 603 lac (Previous Year 

Rs 618 lac ) placed with private limited companies in which the 

company’s director is a director / member. 

SCHEDULE K : 

CURRENT LIABILITIES 

Sundry Creditors 

Outstanding dues to small scale industries - - 

Others 25,152 23,479 

25,152 23,479 

Other Current Liabilities 33,404 22,336 

Interest Accrued but not due on loans 962 3,242 

Forward Sales (net) (Passenger/Cargo) 35,129 21,885 

Balance with Scheduled Banks in Current Account 

overdrawn as per books 11,847 6,375 

Balance with Other Banks in Current Account 

overdrawn as per books 61 - 

Unclaimed Dividend * 3 - 

Unclaimed Share Application Money * 4 - 

* Note : These figures do not include any amounts due and 

outstanding to be credited to the Investor Education 

& Protection Fund 

Total 106,562 77,317 

SCHEDULE L : 

PROVISIONS 

Wealth Tax 12 9 

Income Tax 20,291 6,892 

Fringe Benefit Tax 1,035 - 


Income Tax on Dividend 727 363 

Gratuity 2,690 1,378 

Leave Encashment 596 541 

Others 15,984 22,003 

Total 46,515 33,776 

68


Schedules to the Profit and Loss Account for the year ended March 31, 2006 

For the 

For the 


March 31, 2006 March 31, 2005 


SCHEDULE M : 

OPERATING REVENUE 

Passenger 526,629 407,649 

Excess Baggage 5,089 4,213 

Cargo 32,738 19,642 

Less: Service Tax 2,072 1,083 

30,666 18,559 

Other Revenue 6,989 3,380 

Total 569,373 433,801 

SCHEDULE N : 

NON-OPERATING REVENUE 

Interest on Bank & Other Deposits 5,542 3,064 

[Tax Deducted at Source Rs.1,226 lac (Previous Year Rs 472 lac)] 

Exchange difference (Net) - 71 

Profit on Sale and Lease back of Aircraft 27,064 - 

Profit on Sale of Current Investments (Net) 5,253 1,100 

Dividend on Current Investments - 280 

Provision for aircraft maintenance no longer required 3,600 1,197 

Excess Provision written back 501 685 

Provision for Doubtful Debts no longer required 20 6 

Other Income (including Interest on Income Tax Refund of 2,194 1,813 

Rs.2 lac, Previous Year Rs. 50 lac ) 

Total 44,174 8,216 

SCHEDULE O : 

EMPLOYEES REMUNERATION AND BENEFITS (Net) 

Salaries, Wages, Bonus & Allowances 49,039 34,273 

Contribution to Provident Fund & ESIC 1,344 1,011 

Provision for Gratuity 1,441 386 

Provision for Leave Encashment 1,186 349 

Staff Welfare Expenses 3,705 1,455 

Total 56,715 37,474 

69



For the 

For the 


March 31, 2006 March 31, 2005 


SCHEDULE P : 

SELLING & DISTRIBUTION EXPENSES 

Computerised Reservation System Cost (Net) 13,437 10,355 

Commission 56,526 42,081 

Others 7,439 3,470 

Total 77,402 55,906 

SCHEDULE Q : 

OTHER OPERATING EXPENSES 

Aircraft Variable Rentals 12,408 6,952 

Aircraft Insurance & Other Insurance 6,896 4,908 

Landing, Navigation & Other Airport Charges 35,046 23,878 

Aircraft Maintenance (including Customs Duty and 

Freight, where applicable) 

Component Repairs, Recertification, Exchange, 

Consignment Fees and Aircraft Overhaul 21,269 18,809 

Lease of Aircraft Spares incl. Engine 1,565 905 

Consumption of Stores & Spares (net) 6,312 7,196 

(including items scrapped / written off Rs. 2,325 lac, 

Previous Year Rs. 3,446 lac) 

Provision for Spares Obsolescence 1,948 1,827 

31,094 28,737 

Inflight & Other Pax Amenities 21,452 14,370 

Communication Cost (Net) 1,803 1,424 

Travelling & Subsistence 7,109 3,590 

Rent 3,221 2,744 

Rates & Taxes 60 174 

Repairs & Maintenance 

Leased Premises 186 102 

Others 2,644 1,989 

2,830 2,091 

Electricity 928 740 

Commission to Directors (Refer Note No. 13 of Schedule S) 66 - 

Directors’ Sitting Fees 14 1 

Miscellaneous Expenses (Including Printing & Stationery, 

Bank Charges etc.) 6,492 4,090 

Provision for Bad & Doubtful Debts 247 281 

Bad Debts Written off 14 - 

Exchange difference (Net) 1,404 - 

Loss on scrapping of Fixed Asset - 306 

Loss on sale of Fixed Assets other than Aircraft (Net) 27 39 

Total 131,111 94,325 

70



For the 

For the 


March 31, 2006 March 31, 2005 


SCHEDULE R : 

INTEREST 

Hire Purchase - Finance Charges 22,422 20,754 

Interest on Subordinated Debt 455 4,021 

Interest on Fixed Loan from Banks and Financial Institutions 3,074 540 

Interest on Bank overdraft 292 12 

Interest on Short Term Loans from Banks 1,482 43 

27,725 25,369 

Less : Capitalised during the Year 3,565 - 

24,160 25,369 

Total 24,160 25,369 

SCHEDULE ‘S’ 

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 

I. SIGNIFICANT ACCOUNTING POLICIES 

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS : 

The financial statements have been prepared on an accrual basis under the historical cost convention with the 

exception of certain aircraft which have been revalued and comply with the generally accepted accounting principles 

in India including the mandatory accounting standards issued by the Institute of Chartered Accountants of India and 

the provisions of the Companies Act, 1956. 

B. USE OF ESTIMATES : 

The presentation of financial statements in conformity with generally accepted accounting principles requires estimates 

and assumptions to be made that affect the reported amount of assets and liabilities on the date of the 

financial statements and the reported amount of revenue and expenses during the reporting period. Differences 

between the actual result and estimates are recognised in the period in which the results are known / materialised. 

C. REVENUE RECOGNITION : 

Passenger and Cargo income is recognised on flown basis, i.e. when the service is rendered. 

The sale of tickets / airway bills (sales net of refunds) are initially credited to the “Forward Sales Account”. Income 

recognised as indicated above is reduced from the Forward Sales Account and the balance is shown under Current 

Liabilities. 

The unutilized balances in Forward Sales Account are recognized as income based on historical statistics, data and 

management estimates and considering Company’s refund policy. 

71


D. COMMISSION : 

As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognised 

only on flown basis. 

E. EMPLOYEE RETIREMENT BENEFITS : 

The company makes regular contribution to Provident Fund and this contribution is charged to Profit and Loss 

Account. Provisions for Gratuity and Leave Encashment Benefit are made on the basis of actuarial valuation and 

charged to Profit and Loss Account. 

F. FIXED ASSETS : 

a) Fixed assets are stated at cost and includes amount added on revaluation less accumulated depreciation and 

impairment loss, if any. All costs relating to acquisition and installation of fixed assets upto the time the assets 

get ready for their intended use are capitalised. 

The cost of improvements to Leased Properties as well as customs duty/modification cost incurred on aircraft 

taken on operating lease have been capitalised and disclosed appropriately. 

b) INTANGIBLE ASSETS : 

1. Landing Rights acquired from other airlines are recognised at cost and amortised over a period not 

exceeding 20 years. Amortization period exceeding 10 years is applied considering industry experience 

and expected asset usage. The company performs annual impairment test in such cases. 

2. Trademarks are amortised over 10 years. 

3. Computer Software is amortised over 36 months. 

c) ASSETS TAKEN ON LEASE : 

(i) 

(ii) 

Operating Lease: Rentals are expensed with reference to the Lease Term and other considerations. 

Finance Lease (Hire Purchase): The lower of the fair value of the assets and the present value of the 

minimum lease rentals is capitalised as Fixed Assets with corresponding amount shown as Lease Liability 

(Outstanding Hire Purchase/Finance lease Instalments). The principal component of the lease rentals is 

adjusted against the leased liability and interest component is charged to the Profit and Loss Account. 

G. IMPAIRMENT OF ASSETS : 

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is 

charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss 

recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount. 

H. DEPRECIATION/AMORTISATION : 

Depreciation has been provided on Written Down Value method at the rates and in the manner prescribed under the 

schedule XIV to the Companies Act, 1956 on fixed assets, other than expenditure incurred on improvements of assets 

acquired on operating lease, which are written off evenly over the balance period of the lease. 

72


On revalued assets, depreciation is charged over the residual life and the additional charge of depreciation is withdrawn 

from the Revaluation reserve. 

Intangible assets are amortised on straight line basis. 

I. INVESTMENTS : 

Current Investments are carried at lower of cost and quoted / fair value. Long Term Investments are stated at cost. 

Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary 

in the opinion of the management. 

J. BORROWING COSTS : 

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost 

of the asset. Other borrowing costs are recognised as an expense in the period in which they are incurred. 

K. FOREIGN EXCHANGE TRANSACTIONS : 

(a) 

(b) 

(c) 

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the 

time of the transaction. 

Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of 

monetary items which are covered by forward exchange contracts, the difference between the year end rate 

and rate on the date of the contract is recognized as exchange difference and the premium paid on forward 

contracts has been recognized over the life of the contract. 

Any income or expense on account of exchange difference either on settlement or on translation is recognized 

in the Profit and Loss Account except in cases where they relate to acquisition of fixed assets in which case they 

are adjusted to the carrying cost of such assets. 

L. INVENTORIES : 

Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower. Cost is determined using the Weighted 

Average formula. In respect of reusable items such as rotables, galley equipment and tooling etc., NRV takes into 

consideration provision for obsolescence and wear and tear based on the estimated useful life of the aircraft derived 

from Schedule XIV of the Companies Act, 1956 and also provisioning for non-moving /slow moving items. 

M. AIRCRAFT MAINTENANCE & REPAIRS COST : 

Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine maintenance and repair costs are expensed as incurred 

except where such overhaul cost in respect of Engines/ APU are covered by third party maintenance agreement and 

these are accounted in accordance therewith. 

N. TAXATION : 

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the 

Income Tax Act, 1961. 

Deferred tax resulting from “timing differences” between book and taxable profit is accounted for using the tax rates 

and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is 

recognised and carried forward only to the extent that there is a reasonable/virtual certainty that the asset will be 

realised in future. 

73


O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS : 

Provisions involving a substantial degree of estimation in measurement are recognised when there is a present 

obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities 

are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the 

financial statements. 

P. SHARE ISSUE EXPENSES : 

Issue Expenses are adjusted against the Share Premium Account. 

Q. ACCOUNTING FOR FINANCIAL DERIVATIVES 

The company uses derivative instruments to hedge its exposure to movements in interest rates. The objective of these 

derivative instruments is to reduce the risk or cost to the company and is not intended for trading or speculation 

purposes. 

Financial Derivative instruments are considered as off-balance sheet items and cash flows arising therefrom are 

recognized in the books of account as and when the settlements take place in accordance with the terms of the 

respective contracts over the tenor thereof. The gain/loss accrued on unsettled financial derivative instruments is 

taken to the Profit & Loss account on the reporting date. 

II. 

NOTES TO ACCOUNTS 

1. Estimated amount of Contracts remaining to be executed on capital account net of advances, not provided for : 

Amount (Rs. in lac) 

Tangible Assets 963,614 (Previous Year - Rs. 295,815 lac) 

Intangible Assets Nil (Previous Year - Rs. 5,200 lac) 

2. CONTINGENT LIABILITY : 

(a) 

Unprovided Income Tax demands which are under appeals Rs. 375 lac (Previous Year Rs.375 lac). 

(b) Unprovided claims against the Company, pending Civil and Consumer suits of Rs. 1,044 lac (Previous Year Rs. 844 

lac). 

(c) 

(d) 

(e) 

(f) 

(g) 

Unprovided Inland Air Travel Tax demands which are under appeal Rs. 473 lac (Previous Year Rs. Nil) 

Unprovided claims for Octroi amounts to Rs. 2,899 lac (Previous Year Rs. 2,899 lac). 

Disputed claims against the company towards Landing & Navigation Charges amounts to Rs.2,009 lac. (Previous 

Year Rs.1,951 lac). 

Disputed claims against the company towards Ground Handling charges amounts to Rs. 3,226 lac (Previous Year 

Rs.2,622 lac). 

Letters of Credit outstanding are Rs. 31,727 lac (Previous Year Rs. 14,638 lac) and Bank Guarantees outstanding 

are Rs. 5,975 lac (Previous Year Rs. 6,511 lac). 

74


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. The Company has raised Rs. 156,696 lac through a public issue of shares during the year 2004-2005 the proceeds of 

which have been utilised as follows :- 


Particulars 31-Mar-2006 31-Mar-2005 

Balance as per last Balance Sheet 144,285 Nil 

Gross proceeds of the Fresh Issue Nil 156,696 

Less: Share Issue Expenses adjusted against Share Premium (Net) (8,002) Nil 

Sub Total (A) 136,283 156,696 

Utilization of proceeds 

Repayment of debts and redemption of CCRPS 66,799 12,411 

Capital Expenditure 33,897 Nil 

General Corporate Expenses 12,805 Nil 

Total Out Flow (B) 113,501 12,411 

Unutilized Balance (A – B) 22,782 144,285 

Unutilized balance deployed in 

Investment in Mutual Funds 18,159 105,829 

Fixed Deposit with Bank 4,623 38,456 

The Company has reclassified the utilisation of funds during the year. 

4. Aircraft Lease Rentals are stated net of sub-lease rentals of Rs. 1,646 lac (Previous Year Rs. 1,567 lac). 

5. Hitherto, credits were taken from Forward Sales Account for unutilized ticket, where a claim for refund has not been 

made for the past two years. From the current year for the tickets sold on or after 1 st April 2004, due to various 

factors including complex pricing structure, trend of utilization, ticketing conditions and in line with industry practice, 

credit for unutilized tickets have been taken from Forward Sales Account based on the historical statistics, data and 

Management estimates and the Company’s refund policy. Accordingly, during the current year credit has been taken 

for Rs. 6,330 lac from Forward Sales Account. Consequently credit on account of said write back for the year ending 

31 st March, 2006 is higher by Rs.4,279 lac and profit before tax for the year is higher by the same amount. 

6. During the year , the Company has by way of assignment from Jet Enterprises Pvt. Ltd. acquired the absolute right, 

title and interest in the ‘Jet Airways’ trademark /other variations thereof and certain other related trademarks. Pursuant 

thereto assignment deeds and requisite forms have been filed with the Trademark Registries in India and overseas 

jurisdictions. 

75


7. Hitherto, the acquisition cost of Landing Rights were amortised over a period not exceeding 10 years. The Company 

has since reviewed the amortization period in respect of certain Landing Rights acquired at overseas airport for an 

infinite period; considering industry experience and has changed the same to 20 years. As a result of this change, the 

amortization for the year is lower by Rs. 121 lac and the profit before tax is higher by the same amount. 

8. During the year the Company purchased and sold Current Investments in Debt Schemes of various Mutual Funds as 

detailed below : 

MUTUAL FUND NO. OF UNITS COST OF UNITS 

(In lac) 

(In lac) 

Birla Mutual Fund 2,527 27,485 

DB Mutual Fund 3,662 40,302 

DSP ML Mutual Fund 1,340 15,420 

HDFC Mutual Fund 2,355 28,941 

HSBC Mutual Fund 4,204 44,727 

ING Vysya Mutual Fund 3,346 34,931 

JM Mutual Fund 2,641 28,696 

Kotak Mutual Fund 3,444 41,649 

LIC Mutual Fund 4,346 50,630 

Principal Mutual Fund 4,095 43,706 

Prudential Mutual Fund 5,362 68,131 

Reliance Mutual Fund 994 12,100 

Standard Chartered Mutual Fund 4,408 48,215 

Tata Mutual Fund 1,455 25,960 

Templeton Mutual Fund 83 1,000 

UTI Mutual Fund 800 14,808 

9. (a) Prior Period credits included in the determination of the net profit are towards Inventory Obsolescence Rs. 166 

lac (Previous Year Rs. Nil) and Other Expenses Rs. 104 lac (Previous Year Rs. Nil). 

(b) 

Prior period debits included in the determination of the net profit for the year are towards Interest on Rupee 

loans Rs. Nil (Previous Year Rs. 41 lac), and provision for disputed damage charges levied by Statutory Authority 

amounting to Rs. Nil.(Previous Year Rs. 244 lac). 

76


10. Disclosure on Derivatives 

(i) The Company has entered into the following derivative instruments : 

(a) 

Forward Exchange Contracts which are not intended for trading or speculative purposes, but for hedge 

purposes, entered into by the company as on 31 st March, 2006 are as follows: 

Currency Amount Amount Buy/Sell Cross Currency 

(USD in lac) (Rs. in lac) 

US Dollar 32 1,431 Buy Rupees 

(b) 

Interest Rate Swaps to hedge against fluctuations in interest rate changes: 

No. of Contracts: 14 

Notional Principal: 

Rs. 233, 918 lac 

(ii) 

The foreign currency exposures that have not been hedged by any derivative instrument or otherwise as on 31 st 

March, 2006 are as follows: 

Particulars 

Amount 

(Rs. in lac) 

Assets (Receivables) 27,250 

Liability ( Payable) 32,713 

Long Term Loans for purchase of Aircraft* 112,772 

*Includes Loans payable after 5 years Rs. 11,153 lac 

The payables and receivables shown above offer a natural hedge to the Company against movement of foreign 

exchange currency rates. 

The above disclosures have been made consequent to an announcement by the Institute of Chartered 

Accountants of India in December, 2005, which is applicable to the financial periods ending on or after 31 st 

March, 2006. Therefore, figures for the previous year have not been disclosed. 

11. Jet Airways (India) Limited, Sahara Airlines Limited (SAL) and the current Shareholders of SAL executed a Share 

Purchase Agreement (SPA) on 18 th January, 2006, whereby the Company would acquire 100% of the fully Paid-up 

Share Capital of SAL, for cash, at a total consideration of Rs. 200,000 lac from the current Shareholders of SAL, 

subject to the requisite regulatory approvals. In accordance with the terms of the SPA, the Company had established 

an Escrow Account with ICICI Bank Limited and deposited a sum of Rs.200,000 lac towards the agreed consideration 

for the purchase. 

In addition, the Company also provided a loan of Rs. 10,000 lac to SAL for its normal business operations. 

The SPA provided, inter alia, that the Closing of the acquisition transaction would have to be achieved within 65 days 

from the date of the SPA. However, since the regulatory approvals were not received, the Company, SAL and its 

Shareholders agreed to extend the deadline by an additional 90 days i.e. until 21 st June, 2006 under an amendment 

agreement. 

77


As per this amendment agreement, the Company has, out of the agreed consideration of Rs. 200,000 lac, extended 

Rs. 50,000 lac to the Shareholders of SAL, as an advance out of the agreed consideration against 100% pledge of 

SAL’s shares. 

The SPA also provides that in an event, the transaction is not consummated by 21 st June,, 2006 (the new Closing Date), 

due to non-receipt of regulatory approvals (or for any other reason), the advance (without interest) will be returned 

to the Company. 

12. PAYMENT TO AUDITORS : 



(a) As Audit Fees 110 110 

As Tax Audit Fees 6 6 

(b) As Advisor or in any other capacity in respect of: : 

Company Law Nil 20 

Tax Matters 50 52 

(c) 

In any other manner 

For Prospectus related reports/ certificates 

Concerning Initial Public Offer Nil 198 

Other Certification, etc 35 3 

(d) For reimbursement of expenses 2 9 

Total 203 398 

Payments for services other than audit include Rs. 5 lac (Previous Year Rs. 25 lac) to a firm where partners of one of 

the Statutory Auditors are partners 

13. MANAGERIAL REMUNERATION : 

(i) Details of Managerial Remuneration : 



(i) Salary and Allowances 35 32 

(ii) Contribution to Provident Fund and Provision for Gratuity 5 4 

(iii) Perquisites 10 10 

(iv) Commission to Non-Executive Directors 66 Nil 

(v) Sitting Fees 14 1 

Total 130 46 

78


(ii) Computation of Profit under Section 349 of the Companies Act, 1956 


Particulars 

31-Mar-06 

Profit before taxation as per Profit and Loss Account 72,226 

Add : 

Managerial Remuneration 130 

Provision for Doubtful Debts 247 377 

72,603 

Less : 

Profit on sale of Investments 5,253 

Provision for Doubtful Debts no longer required 20 5,273 

Profit for the purpose of Director’s Commission 67,330 

Commission to Non-Executive Directors subject to a ceiling of 1% of 

Profits as computed above 673 

Commission payable as per Shareholders’ approval 66 

No Commission was paid to any of the Directors during the previous year and therefore the computation of 

Profits u/s 349 of the Companies Act 1956 have not been disclosed 

14. Additional information pursuant to paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956. 

14.1 Value of imports calculated on CIF Basis : 


Particulars 2005-06 2004-05 

Components & Spares 13,141 8,160 

Capital Goods 1,064 2,872 

14.2 Earnings in Foreign Exchange : 


Particulars 2005-06 2004-05 

Passenger & Cargo Revenue 88,953 60,420 

Sale of Aircraft 46,225 Nil 

Sub Lease Income 1,758 Nil 

Interest on Bank Account 152 Nil 

Other Income 178 162 

79


14.3 Expenditure in Foreign Currency : 


Particulars 2005-06 2004-05 

Aircraft Lease Rentals (Net) 54,189 27,250 

Communication (Gross) 17,040 13,285 

Aircraft Overhaul, Maintenance & 

Component Support Services 20,987 15,455 

Commission 13,081 7,294 

Fuel Cost 10,555 699 

Landing Rights (Intangible Assets) 9,799 2,402 

Landing & Navigation Charges 7,141 1,029 

Inflight Passenger Amenities 5,242 107 

Travelling 1,860 187 

Hire Purchase Finance Charges 3,066 3,508 

Payroll Costs 6,016 153 

Advertisement & Sales Promotion 1,249 168 

Ground and Cargo Handling 1,059 10 

Professional/Consultancy 996 247 

Insurance 306 4,496 

Premium on redemption of Preference Shares Nil 5,852 

Share Issue Expenses Nil 1,108 

Others 1,432 965 

14.4 Remittance in foreign currency on account of dividend : 


Particulars 2005-06 

Number of Non Resident Shareholders to whom remittance was made 1 

Number of Equity Shares held by them 69,057,205 

Amount of Dividend paid 2,072 

Year to which dividend relates 2004-05 

No Dividend was declared/paid for the financial year 2003-04 and therefore the same has not been disclosed. 

80


14.5 Value of Components & Spare Parts Consumed : 


2005-06 % 2004-05 % 

Imported 5,611 89 6,696 93 

Indigenous 701 11 500 7 

Total 6,312 100 7,196 100 

15. SEGMENT REPORTING : 

The Company is operating in a single business segment i.e. Air Transportation and as such all business activities revolve 

around this segment. Hence, there is no separate primary reportable segment as required by AS - 17 on ‘Segment 

Reporting’ issued by the ICAI. 

Secondary segmental reporting is performed on the basis of the geographical segments as under 


Geographical Segment 2005-06 

(i) 

Segment Revenue 

- Within India 503,225 

- Outside India 66,148 

Total Revenue 569,373 

(ii) Carrying cost of Segment Assets* - 

(iii) Expenditure incurred on Tangible & Intangible Segment Assets * - 

* Fixed Assets & other Assets used in the company’s business cannot be identified to any of the reportable segments, 

as they are used interchangeably between segments. 

The proportion of international operations revenue to the total revenue was insignificant during the Previous Year and 

therefore has not been reported separately. 

16. RELATED PARTY TRANSACTIONS : 

As per Accounting Standard - 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of 

India, the disclosure of transactions with the related party as defined in the Accounting Standard are given below: 

81


(i) List of Related Parties with whom transactions have taken place and Relationships : 

Sr. No. Name of the related party Nature of relationship 

(1) Tailwinds Ltd. Holding Company 

(2) Naresh Goyal Controlling Shareholder of Holding Company 

(3) Anita Goyal Relative of controlling shareholder of Holding Company 

(4) Saroj K. Datta Key Managerial Personnel 

(5) Jetair Private Ltd. Associate Companies 

(6) Jet Enterprises Private Ltd 

(7) Jet Airways LLC 

(8) Jet Airways of India Inc. 

(9) Jetair Tours Private Ltd. 

(10) Vimpal Holding Private Ltd. 

(11) International Cargo Carriers Private Ltd. 

(12) Jetair Worldwide AG 

(13) National Travel Services Associate Partnership firm 

(ii) Transactions during the year ended 31 st March, 2006 and balances with related parties : 


Sr. No. Nature of Holding Relative of controlling Controlling Key Associate 

Transactions Co. shareholder of Shareholder of Managerial Companies 

Holding Company Holding Company Personnel 

(A) Remuneration 52 50 

(0.40) (46) 

(B) Sitting Fees 1.3 2.45 

(0.15) (0.20) 

(C) Commission paid 6 

to Directors 

(Nil) 

(D) Agency 13,255 

Commission (12,669) 

(E) Rent paid 142 

(104) 

(F) Expenses -5,915 

Reimbursed (net) (-6,061) 

(Staff Costs / 

Communication 

Costs, Rent) 

82



Sr. No. Nature of Holding Relative of controlling Controlling Key Associate 

Transactions Co. shareholder of Shareholder of Managerial Companies 

Holding Company Holding Company Personnel 

(G) Trademark Fees Nil 

(635) 

(H) Purchase of Assets 33 

(10) 

(I) Deposits & 620 

Advance for (618) 

Leased Premises 

(J) Sundry Creditors 1,138 

(219) 

(K) Sundry Debtors 73 

(68) 

(L) Share Capital 6,907 1 0.06 

(Equity (6,907) (1) (0.06) 

Contribution) 

(M) Purchase of 3,045 

Trademark 

(Nil) 

(N) Dividend Paid 2,072 0.30 0.02 

(Nil) (Nil) (Nil) 

(Figures in brackets indicate 31 st March, 2005 figures) 

83


(iii) 

Statement of Material Transactions 


Associate Companies 

Jetair Pvt. Ltd. 

- Agency Commission 10,080 

(10,914) 

- Rent Paid 44 

(44) 

- Expenses Reimbursed (net) -5,920 

(Staff Costs/ Communication Costs, Rent) (-6,061) 

- Purchase of Assets Nil 

(10) 

- Deposits & Advance for Leased Premises 268 

(268) 

- Sundry Creditors 580 

(6) 

- Sundry Debtors 73 

(68) 



Jet Airways LLC 

- Agency Commission 2,473 

(1,282) 


(159) 


84




Jet Airways of India Inc. 

- Agency Commission 702 

(473) 


(Nil) 

- Expenses Reimbursed 5 

(Staff Costs/ Communication Costs, Rent) 

(Nil) 

- Deposits & Advances for Leased Premises 17 

(Nil) 

- Assets Purchased 33 

(Nil) 


(45) 



Jet Enterprises Pvt. Ltd. 


(60) 

- Trademark Fees Nil 

(635) 

- Advance given and returned back during the year 2,500 

(Nil) 

- Deposits for Leased Premises 335 

(350) 

- Trademark Purchase 3,045 

(Nil) 


(9) 


85


17. The Company has entered into Finance and Operating Lease agreements. As required under the Accounting Standard 

19 on ‘Leases’ issued by the Institute of Chartered Accountants of India, the future minimum lease payments on 

account of each type of lease are as follows: - 

(A) 

Finance Leases/Hire Purchase 


Particulars Future Minimum Present Value of Finance Charges 

Lease Payments Future Minimum 

Lease Payment 

As at 

As at 

31 st March ‘06 31 st March ‘06 

Aircraft 

Less than 1 year 36,974 20,791 16,183 

(46,346) (27,841) (18,505) 

Between 1 and 5 years 158,561 113,304 45,257 

(173,354) (117,691) (55,663) 

More than 5 years 71,297 62,603 8,694 

(126,924) (111,541) (15,383) 

Total 266,832 196,698 70,134 

(346,624) (257,073) (89,551) 

(Figures in brackets indicates 31 st March, 2005 figures) 

The salient features of a Hire Purchase/ Finance Lease Agreement are : 

 

 

 

 

Option to purchase the aircraft either during the term of the Hire Purchase on payment of the outstanding 

Principal amount or at the end of the Hire Purchase term on payment of a nominal option price. 

In the event of default, the Hirer/ Lessee is responsible for payment of all costs of the Owner including the 

financing cost, and other associated costs. Further a right of repossession is available to the Owner/ 

Lessor. 

The Hirer/ Lessee is responsible for maintaining the aircraft as well as insuring the same. 

In the case of Hire Purchase/Finance Lease the property passes to the Hirer/Lessee, on the payment of a 

nominal option price at the end of the term. 

(B) 

Operating Leases 

(1) The Company has taken various residential / commercial premises under cancellable operating leases. 

These lease agreements are normally renewed on expiry. 

(2) The Company has taken on operating lease aircraft & spare engines the future minimum lease payments 

in respect of which, as at 31 st March, 2006 are as follows : 

86



Particulars 

Total Lease Payments 

Aircraft & Spare Engines 

Less than 1 year 58,650 

(23,505) 

Between 1 and 5 years 94,994 

(43,038) 

More than 5 years 18,347 

(7,082) 

Grand Total 171,991 

(73,625) 

Aircraft given on sub – lease 

Less than 1 year -1,718 

(-1,633) 

Between 1 and 5 years -2,282 

(-3,922) 

More than 5 years 

NIL 

(NIL) 

Grand Total -4,000 

(-5,555) 


The Salient features of an Operating Lease agreement are : 

 

 

 

 

 

 

Monthly rentals paid in form of fixed and variable rental. Variable Lease Rentals are payable on a pre 

determined rate payable on the basis of actual flying hours. Additionally, the predetermined rates of 

Variable Rentals are subject to the annual escalation as stipulated in the respective leases. 

The Company does not have an option to buyback nor does it generally have an option to renew the 

leases. 

In case of delayed payments, penal charges are payable as stipulated. 

In case of default, in addition to repossession of the aircraft, damages including liquidated damages as 

stipulated are payable. 

The Lessee is responsible for maintaining the aircraft as well as insuring the same. The Lessee is eligible to 

claim reimbursement of costs as per the terms of the lease agreement. 

The leases are non-cancellable. 

(3) The lease rental expense recognised: Rs. 60,815 lac (Previous Year Rs. 30,607 lac), it includes Rs. 74 lac 

(Previous Year Rs. Nil) recognised as lease rental expenses on account of sale and lease back of aircraft. 

87


18. EARNINGS PER SHARE (EPS) : 

The earnings per Equity Share, computed as per the requirements of Accounting Standard 20 “Earnings Per Share” 

issued by the Institute of Chartered Accountants of India, is as under: 


2005-2006 2004-2005 

Net Profit after tax 45,204 39,199 

Less : Annualised return on Cumulative Preference Shares Nil 1,037 

Balance Profit attributable to Equity Shareholders (A) 45,204 38,162 

Add : Return on Preference Shares (See above) Nil 1,037 

Add : Interest (net) on Institutional Loan with Convertibility clause 302 3,706 

Adjusted Net Profit for Diluted Earnings per Share (B) 45,506 42,905 

Weighted no. of Equity Shares outstanding during the year (C) 86,334,011 72,986,537 

No of Equity Shares resulting from the potential conversion of 

Institutional Loan 55,685,000 323,839,626 

No of Equity Shares resulting from the conversion of CCRPS Nil 95,169,498 

Weighted no. of Diluted Equity Shares outstanding 

during the year (Nos.) (D) 142,019,011 491,995,661 

Nominal Value of Equity Shares (Rs.) 10 10 

Basic EPS (Rs.) (E = A/C) 52.36 52.29 

Diluted EPS (Rs.) (F = B/D) 32.04 8.72 

19. The Deferred Tax Liability as at 31 st March 2006 comprises of the following: 


Particulars 2005-06 2004-05 

Deferred Tax Liability 

Related to Fixed Assets 33,444 30,672 

Deferred Tax Asset 

Unabsorbed Depreciation Nil 10,345 

Other Disallowances under Income Tax Act, 1961 1,378 842 

Provision for Deferred Tax Liability (Net) 32,066 19,485 

20. As per Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of 

Chartered Accountants of India, given below are movements in provision for Frequent Flyer Programme, Redelivery 

of Aircraft, Aircraft Maintenance Costs and Engine Repairs Costs. 

88


(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. 

The cost of allowing free travel to members as contractually agreed under the Frequent Flyer Programme is 

accounted considering the members’ accumulated mileage on an incremental cost basis. The movement in the 

provision during the year is as under: - 


Particulars 2005-06 2004-05 

Opening Balance 1,321 1,184 

Add: - Additional Provisions during the year 928 631 

Less: - Amounts used during the year 614 494 

Less: - Unused Amounts reversed during the year - - 

Closing Balance 1,635 1,321 

(b) Redelivery of Aircraft : 

The company has in its fleet aircraft on operating lease. As contractually agreed under the lease agreements, the 

aircraft have to be redelivered to the lessors at the end of the lease term in the stipulated technical condition. 

Such redelivery conditions would entail costs for technical inspection, maintenance checks, repainting 

costs prior to its redelivery and the cost of ferrying the aircraft to the location as stipulated under the lease 

agreement. 

The company therefore provides for such redelivery expenses, as contractually agreed, in proportion to the 

expired lease period. 


Particulars 2005-06 2004-05 


Add:- Additional Provisions during the year 471 201 

Less:- Amounts used during the year - - 

Less:- Unused Amounts reversed during the year - 272 


89


The cash outflow out of the above provisions as per the current terms under the lease agreements are as under: - 

Year Aircraft Amount (Rs. in lac) 

2006-07 3 388 

2007-08 14 1,091 

2008-09 6 323 

2009-10 2 1 

2011-12 2 33 

2012-13 7 98 

Total 1,934 

(c) Aircraft Maintenance Costs : 

Certain heavy maintenance checks including overhaul of Auxiliary Power Units need to be performed at specified 

intervals as enforced by the Director General of Civil Aviation in accordance with the Maintenance Program 

Document laid down by the manufacturers. The movements in the provisions for such costs are as under: - 


Particulars 2005-06 2004-05 


Add:- Additional Provisions during the year * 482 162 

Less: - Amounts used during the year 2,773 978 

Less: - Unused Amounts reversed during the year 3,092 1,060 


* Additions are on account of Exchange fluctuation. 

(d) Engine Repairs Cost : 

The aircraft engines have to undergo shop visits for overhaul and maintenance at specified intervals as per the 

Maintenance Program Document. The same was provided for on the basis of hours flown at a pre-determined 

rate. 


Particulars 2005-06 2004-05 


Add:- Additional Provisions during the year * 214 55 

Less: - Amounts used during the year 1,288 381 

Less: - Unused Amounts reversed during the year 346 60 


* Additions are on account of Exchange fluctuation. 

90


21. Pending resolution of representation made by the Board of Airline Representatives in India “BAR (I)” to the statutory 

authorities regarding non levy of Fringe Benefit Tax on free/ concessional tickets issued by the airline companies, no 

provision for the same is made in the books of accounts amounting to Rs. 284 lac. 

22. 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 year’s 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. 

Signatures to Schedules ‘A’ to ‘S’ 






Director 







91


Balance Sheet Abstract and Company’s General Business Profile 

I. Registration Details 

Registration No. 

6 6 2 1 3 

State Code 

1 1 

II. 

Balance Sheet Date 

3 1 0 3 2 0 0 6 

Date Month Year 

Capital raised during the year (Amount in Rs. Thousands) 

Public Issue 

Bonus Issue 

N I L 

N I L 

( 1 4 2 4 5 1 ) 

Rights Issue 

N I L 

( N I L ) 

Private Placement 

( N I L ) 

N I L 

( N I L ) 

III. 

Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) 

Total Liabilities 

Total Assets 

7 5 2 2 1 4 0 5 

7 5 2 2 1 4 0 5 

( 5 1 6 9 8 5 4 0 ) 

( 5 1 6 9 8 5 4 0 ) 

Sources of Funds 

Paid-up Capital 

8 6 3 3 4 0 

Reserves & Surplus 

2 2 1 9 5 5 0 8 

( 8 6 3 3 4 0 ) 

( 1 9 2 3 8 3 0 0 ) 

Subordinated Debt 

N I L 

( 3 3 4 1 1 0 0 ) 

Secured Loans 

2 0 6 0 2 1 2 

Unsecured Loans 

4 6 8 9 5 7 8 1 

( 6 0 0 0 0 0 0 ) 

Deferred Tax Liability 

3 2 0 6 5 6 4 

( 2 5 7 0 7 3 4 8 ) 

( 1 9 4 8 4 5 2 ) 

Application of Funds 

Net Fixed Assets 

4 7 8 8 1 4 9 2 

Investments 

1 8 7 2 3 1 8 

( 2 6 4 0 6 5 3 9 ) 

( 1 5 5 9 7 3 0 1 ) 

Net Current Assets 

2 5 4 6 7 5 9 5 

( 9 3 3 4 7 0 0 ) 

Accumulated Losses 

N I L 

Miscellaneous Expenditure 

N I L 

( N I L ) 

( N I L ) 

92


IV. 

Performance of the Company (Amount in Rs. Thousands) 

Turnover 

6 1 3 5 4 6 6 0 

( 4 4 2 0 1 7 0 0 ) 

Profit/Loss Before Tax 

7 2 2 2 5 5 8 

( 5 8 2 1 2 2 2 ) 

Total Expenditure 

5 4 1 3 2 1 0 2 

( 3 8 3 8 0 4 7 8 ) 

Profit/Loss After Tax 

4 5 2 0 3 9 6 

( 3 9 1 9 9 0 0 ) 

Earnings per Share in (Rs.) 

5 2 . 3 6 

( 5 2 . 2 9 ) 

Dividend Rate @ % 

Equity 

Preference 

6 0 

6 0 

( 3 0 ) 

( – ) 

( – ) 


V. Generic Names of Three Principal Products of Company (as per Monetary terms) 

Item Code No. (ITC Code) N O T A P P L I C A B L E 


Javed Akhtar 

Director 

Saroj K. Datta 






93

Annual Report - Jet Airways

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