Annual Report cb smile - Jet Airways

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Significant Accounting Policies and Notes to Accounts (contd.) K. BORROWING COSTS : Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred. L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION : a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement/restatement (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be. b) Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets and in other cases accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ and amortised over the balance term of the long term monetary item or 31 st March, 2011 whichever is earlier. c) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognized in the Profit and Loss Account. Any profit / loss arising on cancellation of forward exchange contract is recognized as income or expense of the year. Premium / discount arising on such forward exchange contracts is amortised as income / expense over the life of contract. M. INVENTORIES : Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. 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. N. AIRCRAFT MAINTENANCE & REPAIRS COST : Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine maintenance and repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms. O. TAXES : 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, as the case may be, that the asset will be realised in future. P. SHARE ISSUE EXPENSES : Issue Expenses are adjusted against the Share Premium Account. 60
Significant Accounting Policies and Notes to Accounts (contd.) Q. SALE AND LEASE BACK TRANSACTION: Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used. R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS: Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any is accounted based on the principles of prudence as enunciated in Accounting Standard 1(AS - 1) “Disclosure of Accounting Policies”. S. 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. II. NOTES TO ACCOUNTS 1) Estimated amount of Contracts remaining to be executed on capital account (net of advances), not provided for: Tangible Assets Rs. 1,238,107 lakhs (Previous Year - Rs. 1,430,940 lakhs) 2) CONTINGENT LIABILITIES : a) Service Tax demands which are under appeals are Rs. 78,427 lakhs (Previous Year Rs. 55,237 lakhs). b) Sales Tax demands which are under appeals are Rs. 6 lakhs (Previous Year Rs. 6 lakhs) and the same has been deposited with the authorities. c) Claims against the Company, pending Civil and Consumer suits of Rs. 4,291 lakhs (Previous Year Rs. 2,780 lakhs). d) 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. e) Claims for Octroi amounts to Rs. 2,899 lakhs (Previous Year Rs. 2,899 lakhs). f) Disputed claims against the company towards Ground Handling charges amount to Rs. 5,738 lakhs (Previous Year Rs. 5,477 lakhs). g) Letters of Credit outstanding are Rs. 89,307 lakhs (Previous Year Rs. 79,133 lakhs) and Bank Guarantees outstanding are Rs. 89,891 lakhs (Previous Year Rs. 85,144 lakhs). h) Corporate Guarantee given to Banks and Financial Institution against credit facilities, and to Lessor against financial obligations extended to Subsidiary Company as under: (Amount in Rs. lakhs) Amount of guarantee Outstanding Amounts against the guarantee 73,318 70,736 (86,720) (71,187) (Figures in brackets indicate 31 st March, 2009 figures) 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. 61
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Letter from the Chairman The year 2
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Letter from the Chairman (contd.) n
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Financial Highlights 200000 175000
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Corporate Information Board of Dire
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Notice Notice is hereby given that
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Notice (contd.) RESOLVED FURTHER TH
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Notice (contd.) Notes : 1. A MEMBER
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Significant Accounting Policies and
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City Facts (contd.) Chennai Airport
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City Facts (contd.) Port Blair Airp
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City Facts (contd.) Dubai Airport:
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Annual Report cb smile - Jet Airways

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