Annual Report cb smile - Jet Airways

Significant Accounting Policies and Notes forming part of Consolidated Accounts (contd.)
b) The foreign currency exposures that have not been hedged by any derivative instrument or otherwise as on
31st March, 2010 are as follows:
Particulars INR Equivalent USD Equivalent
(Rs. in lakhs) (USD in lakhs)
Current Assets 57,798 1,288
(98,334) (1,979)
Current Liabilities 115,829 2,580
(111,299) (2,225)
Interest accrued but not due on Loans 2,752 61
(3,745) (74)
Long Term Loans for purchase of Aircraft* 734,339 16,355
(904,823) (17,840)
Other Loans payable 68,307 1,521
(79,697) (1,670)
(Figures in brackets indicate 31st March, 2009 figures)
*Includes Loans payable after 5 years – Rs. 430,591 lakhs (Previous year Rs. 585,847 lakhs)
5. a) The Company has equity and preference investments aggregating to Rs. 164,500 lakhs in Jet Lite (India)
Limited, a wholly owned subsidiary, and an amount of Rs. 68,207 lakhs advanced as interest free loan as on
31st March, 2010. The said subsidiary has improved its financial position by earning a profit for the year ending
31st March 2010, however, the Company continues to show a negative net-worth. A reputed valuer has recently
valued the equity interest in the subsidiary based on its business plans, which supports the carrying value of
such investment and loan outstanding. The Company continues to provide financial support to subsidiary’s
operations to further such business plans and expects improved performance in the future. Accordingly, the
financial statements of the subsidiary company have been prepared on “Going Concern” basis and no provision
is considered necessary at this stage in respect of its investments and loans outstanding from the said
subsidiary company at the year end.
b) (i) In the year 2007-08, the Company acquired 100% shares of Sahara Airlines Limited (SAL) (Now known
as Jet Lite (India) Limited) as per Share Purchase agreement with erstwhile shareholders of SAL (“Selling
Shareholders”) and ‘Consent Terms and Consent Award’ for a lump-sum price of Rs. 146,500 lakhs, out
of which, Rs. 91,500 lakhs was paid on or before the acquisition date. The balance Rs. 55,000 lakhs was
payable in four interest free annual equal installments commencing on or before 30th March, 2008. Out
of Rs. 55,000 lakhs, two annual installments aggregating Rs. 18,792 lakhs have been paid after deducting
Rs. 8,708 lakhs, which the Company had paid to income tax department in respect of demands on SAL
for periods prior to the execution of the Share Purchase Agreement. The installment due on or before
30th March, 2010 for Rs. 13,750 lakhs has been deposited with the registry of Bombay High Court as per
the order passed by the Honorable Bombay High Court.
Balance installment payable of Rs. 13,750 lakhs as on 31 st March, 2010 has been disclosed under the
separate head “Deferred payment liability towards Investment in wholly owned subsidiary company”.
Aggrieved by such deduction from 1 st and 2 nd installments due under the Consent Terms and Consent
Award dated 12 th April, 2007, the Selling Shareholders on 30 th March, 2009 filed an Execution Application
for recovery of an amount of Rs. 99,958 lakhs. The claim by Selling Shareholders of Rs. 99,958 lakhs
includes acceleration of three installments each of Rs. 13,750 lakhs plus deduction of Rs. 3,708 lakhs
made from 1st installment paid in March, 2008 and demanding further Rs. 55,000 lakhs towards increase
in lump-sum purchase consideration for the breach of the Consent Terms in payment of installments by
the Company after deducting tax dues of earlier years of SAL.
105