Annual Report cb smile - Jet Airways

Significant Accounting Policies and Notes forming part of Consolidated Accounts (contd.)
3. CONTINGENT LIABILITIES:
a) Income Tax demands which are under appeals and Others Rs. 85,705 lakhs (Previous Year Rs. 103,570 lakhs)
b) Service Tax demands which are under appeals and Others Rs. 113,563 lakhs (Previous Year Rs. 78,674 lakhs).
c) Sales Tax demands which are under appeals Rs. 6 lakhs (Previous Year Rs.6 lakhs) and the same has been
deposited with the authorities.
d) Claims against the Company, pending Civil and Consumer suits of Rs. 6,536 lakhs (Previous Year Rs. 5,149
lakhs).
e) Inland Air Travel Tax demands which are under appeal Rs.426 lakhs (Previous Year Rs. 473 lakhs) against which
the amount of Rs. 105 lakhs (Previous Year Rs. 117 lakhs) is deposited with the Authorities.
f) Claims for Octroi amounts to Rs. 2,899 lakhs (Previous Year Rs. 2,899 lakhs).
g) Disputed claims against the company towards Ground Handling charges amount to Rs. 5,738 lakhs (Previous
Year Rs. 5,477 lakhs).
h) Letters of Credit outstanding are Rs. 96,735 lakhs (Previous Year Rs. 86,780 lakhs) and Bank Guarantees
outstanding are Rs. 99,570 lakhs (Previous Year Rs. 95,134 lakhs).
i) Claims against the Company not acknowledged as debt Rs. 63,708 lakhs (Previous Year Rs. 63,708 lakhs) claim
filed by erstwhile selling shareholders of Sahara Airlines Limited - Refer note no. 5 (a) for details.
4.
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.
DISCLOSURE ON DERIVATIVES
a) The Holding Company has entered into certain derivative contracts viz. interest rate swaps (IRS), currency
options, IRS cum currency swaps, etc in order to hedge and manage its foreign currency exposures towards
future export receivables and foreign currency borrowings. Such derivative contracts which are in the nature
of firm commitments and highly probable forecast transactions are entered into by the Company for hedging
purposes only and does not use the same for trading or speculation purposes.
Nominal amounts of derivatives contracts entered into by the Company and outstanding as on 31st March, 2010
amount of Rs.126,036 lakhs (Previous Year Rs.165,638 lakhs). The category-wise break-up thereof is as under:
Amount (Rs. in lakhs)
Particulars 2009-10 2008-09
No. of Amount No. of Amount
Contracts Contracts
Interest Rate Swaps 3 106,413 3 120,206
Currency Options 1 12,123 1 18,259
Currency Swaps - - 1 12,173
IRS cum Currency Swaps 1 7,500 2 15,000
The Holding Company, based on the Announcement of The Institute of Chartered Accountants of India
“Accounting for Derivatives” along with the principles of prudence as enunciated in Accounting Standard
(AS-1) “Disclosure of Accounting Polices” the Company has accounted for outstanding derivative contracts at
fair values as at the balance sheet date.
On that basis, the fair value of the derivative instruments as at 31st March, 2010 aggregating to Rs. 7,045 lakhs
has been credited (Previous Year Rs. 10,073 lakhs has been debited) to the Profit and Loss Account and
disclosed as exceptional item in the current year. The charge on account of derivative losses has been computed
on the basis of MTM values based on the confirmations from the counter parties.
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