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14th Annual Report 2005-06

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 Companys General Business Profile ............................ 92

Jet Airways (India) Limited

Board of Directors
(As on 16 August 2006)
th

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

Chairman

Executive Director
Chaturvedi & Shah Chartered Accountants Laxmi Towers A Wing, Bandra-Kurla Complex, Mumbai - 400 051

Statutory Auditors
Deloitte Haskins & Sells Chartered Accountants 12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate Worli, Mumbai - 400 018

Legal Advisors
Gagrats Nirmal, 12th Floor, Nariman Point, Mumbai - 400 021

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

Registrar & Share Transfer Agent


Karvy Computershare Private Limited Karvy House, 46, Avenue 4, Street No. 1, Banjara Hills, 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

14th Annual Report 2005-06

Management
(As on 16 August 2006)
th

Mr. Mr. Mr. Mr. Mr. Mr. Ms. Capt. Mr. Mr. Capt. Capt. Mr. Capt. Mr. Dato' Mr. Mr. Ms. Mr. Mr. Mr. Ms. Mr. Ms. Mr. Mr. Mr. Mr. Mr.

Wolfgang Prock-Schauer Saroj K. Datta Dale Moss Garry Kingshott Carl Saldanha Raja Parthasarathy Anita Goyal Werner Borchert Sepp Heinrich Sitham Nadarajah Ray Heiniger Gustav Baldauf B. P. Baliga K. Mohan P. K. Sinha K. Jeyakanthan Poh Leong Choo Prasun Sengupta Nandini Verma N. Hariharan Rajesh Sharma Ashok Barimar Ragini Chopra Gaurang Shetty Sonu Kripalani Sarat Chandran Anind Datta V. Raja Mike Johnson Narendra Mehra

Chief Executive Officer Executive Director Chief Operating Officer Chief Commercial Officer Chief Financial Officer Executive Vice President - Finance Executive Vice President - Marketing & Sales Vice President - Flight Operations Vice President - Technical Vice President - Technical (Projects) Vice President - Flight Operations Vice President - Flight Operations Vice President - Support Services Vice President - Flight Operations (Special Projects) Vice President - Passenger Sales Vice President - Engineering Services Vice President - Inflight & Catering Services Vice President - Corporate Administration Vice President - Corporate Affairs & Public Relations Vice President - Office of the Chairman Vice President - Controller General Counsel & Vice President - Legal Vice President - North India Vice President - Marketing Vice President - Passenger Sales (India) Vice President - Human Resources & Development Vice President - Purchase and Properties Vice President - Asia Pacific Vice President - Engineering & Maintenance Company Secretary

Jet Airways (India) Limited

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. 2. 3. 4. 5. 6. 7. 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. To declare a dividend on Equity Shares for the Financial Year ended 31st March, 2006. To appoint a Director in place of Mr. Javed Akhtar, who retires by rotation and being eligible, offers himself for re-appointment. To appoint a Director in place of Mr. Saroj K. Datta, who retires by rotation and being eligible, offers himself for re-appointment. To appoint a Director in place of Mr. Ali Ghandour, who retires by rotation and being eligible, offers himself for re-appointment. To appoint a Director in place of Mr. Victoriano P. Dungca, who retires by rotation and being eligible, offers himself for re-appointment. 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 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. 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 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. 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.

14th Annual Report 2005-06

10. Appointment of Dr. Pierre J. Jeanniot 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 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 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 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 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, 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 To consider and, if thought fit, to pass, with or without modification(s), if any, the following resolution as an Ordinary Resolution: 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 Companys 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

Jet Airways (India) Limited

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 To consider and, if thought fit, to pass, with or without modification(s), if any, the following resolution as a Ordinary Resolution: 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 Companys regulations and provisions of the Companies Act, 1956. 15. Alteration of Articles of Association of the Company 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 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 NARENDRA MEHRA Company Secretary Dated : 16th August, 2006 Registered Office : S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059

14th Annual Report 2005-06

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. 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. 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. 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. Members holding Equity Shares in physical form are requested to advise any change of address immediately to the Companys 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. All correspondence regarding Equity Shares of the Company should be addressed to the Companys 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. 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 Companys Registrar and Share Transfer Agent. 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. 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.

2.

3.

4.

5.

6.

7.

8. 9.

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.

Jet Airways (India) Limited

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 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. 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 by retirement of Directors by rotation. Attention of the Members is invited to the information on Mr. Shah Rukh Khan, a Director, recommended for appointment, which is annexed hereto. No Director, except Mr. Shah Rukh Khan, 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. 10 Dr. Pierre J. Jeanniot had been appointed as an Additional Director on the Board of Directors of the Company with effect from 16 August, 2006. Pursuant to Section 260 of the Companies Act, 1956, Dr. Pierre J. Jeanniot holds
th

14th Annual Report 2005-06

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 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 by retirement of Directors by rotation. Attention of the Members is invited to the information on Dr. Pierre J. Jeanniot, a Director, recommended for appointment, which is annexed hereto. No Director, except Dr. Pierre J. Jeanniot, 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. 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 Other Allowances 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 Companys 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. : : Rs. 2,50,000/- per month Not exceeding Rs. 1,40,000/- per month

Jet Airways (India) Limited

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

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14th Annual Report 2005-06

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 NARENDRA MEHRA Company Secretary Dated: 16th August, 2006 Registered Office: S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059

11

Jet Airways (India) Limited

Details of the Directors seeking re-appointment at the 14th Annual General Meeting
Particulars Date of Birth Date of Appointment Qualifications Mr. Javed Akhtar 17th January, 1945 1st March, 1993 Bachelor of Arts Mr. Saroj K. Datta 3rd May, 1936 1st March, 1993 Masters degree in Economics from Delhi University 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. Mr. Ali Ghandour 28th May, 1931 19th February, 1998 Aeronautical Engineer from New York University Mr. Victoriano P. Dungca 23rd April, 1936 25th January, 1999 MBA from Cornell University, U.S.A. and is a Certified Public Accountant from the U.S.A. Mr. Victoriano P. Dungca 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.

Expertise in specific functional area

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.

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.

Directorships held in other Public Companies (excluding foreign and private companies) Memberships/ Chairmanships of Committees in Public Companies Shareholding, if any, in the Company

None

None

None

None

None

None

None

None

5990 Equity Shares

553 Equity Shares

None

None

12

14th Annual Report 2005-06

Details of the Directors seeking appointment at the 14th Annual General Meeting
Particulars Date of Birth Date of Appointment Qualifications Mr. Yash Raj Chopra 18th September, 1932 17th April, 2006 Bachelor of Arts Mr. Shah Rukh Khan 2nd November, 1965 16th August, 2006 Bachelor of Arts, Economics (Hons.) Mass Media Course from Jamia Millia Islamia, New Delhi Dr. Pierre J. Jeanniot 9th April, 1933 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 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.

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 Countrys 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.

Directorships held in other Public Companies (excluding foreign and private companies) Memberships/ Chairmanships of Committees in Public Companies Shareholding, if any, in the Company

None

None

None

None

None

None

355 Equity Shares

None

None

13

Jet Airways (India) Limited

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 31st 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
st

Year ended 31 March, 2006 Rs. in lac


st

Year ended 31 March, 2005 Rs. in lac 442,017 129,282 25,369 103,913 45,700 58,213 4,604 14,410 39,199 (11,801) 27,398

GROSS REVENUE Profit before Interest, Depreciation & Tax Interest Profit before Depreciation & Tax Depreciation Profit before Taxation & Adjustments Provision for Tax Deferred Tax Profit after Taxation Profit / (Loss) brought forward Profit available for Appropriation APPROPRIATIONS Transfer to Capital Redemption Reserve Transfer to General Reserve Proposed Dividend Income Tax on Proposed Dividend Transfer to Balance Sheet

613,547 137,027 24,160 112,867 40,641 72,226 14,441 12,581 45,204 14,967 60,171

4,521 5,180 727 49,743 60,171

5,558 3,920 2,590 363 14,967 27,398

Note: 1 lac = 100,000

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14th Annual Report 2005-06

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 8th September, 2006. REVIEW OF OPERATIONS 4. The Operating Highlights are given below Operating Parameters Year ended Apr 05-Mar 06 Number of Departures Available Seat Kilometers (ASKMs) Million Revenue Passenger Kilometers (RPKMs) Million Passenger Load Factor % Revenue Passengers (Numbers) Average fleet size during period Average Head Count Gross Net 5 8,285 7,241 7,082 5,652 104,833 13,300 9,576 72.0% 9,556,562 49.5 Year ended Apr 04-Mar 05 96,417 9,808 6,992 71.3% 8,142,739 41.3

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 Companys 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 31st 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 31st March, 2005. During the year under review, the Company added the following routes and frequencies to its scheduled operations:

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Jet Airways (India) Limited

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 Delhi-Mumbai-Delhi Mumbai-Jaipur-Mumbai Mumbai-Bangalore-Mumbai Bangalore-Hyderabad-Bangalore Bangalore-Delhi-Bangalore Bangalore-Chennai-Bangalore Delhi-Guwahati-Delhi Chennai-Kolkata-Chennai Chennai-Mumbai-Chennai Mumbai-Coimbatore-Mumbai Chennai-Coimbatore-Chennai Mumbai-Ahmedabad-Mumbai Pune-Bangalore-Pune

New Night Flights Domestic


Mumbai-Chennai-Mumbai Mumbai-Kolkata-Mumbai Delhi-Kolkata-Delhi

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

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14th Annual Report 2005-06

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 737800s 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 Companys 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 18th 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 23rd 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 21st 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 4th 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 21st 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

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Jet Airways (India) Limited

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 16th August, 2006 the fleet size is 55 aircraft. 22. The Company has introduced a second Mumbai-London (Heathrow)-Mumbai frequency effective 10th July, 2006. The Company commenced operations on the Amritsar-London (Heathrow)-Amritsar sector on 4th 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 8th 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 1st April, 2006 and 16th 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.

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14th Annual Report 2005-06

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 Managements best estimates and the Companys 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 AUDITORS 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 Companys web-booking engine effective 10th 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

Jet Airways (India) Limited

iii.

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;

iv.

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 Companys Simulator Training Centre at Mumbai. The training was conducted by the Companys 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 Companys Pilots were given endorsement and refresher training for ATR

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14th Annual Report 2005-06

aircraft at ATRs simulator facility at Bangkok, and the training was also conducted by the Companys 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 Companys 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 5th April, 2006. Mr. J.R. Gagrat, one of the countrys 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 17th 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

Jet Airways (India) Limited

34. Pursuant to Section 260 of the Companies Act, 1956, and Article 48 of the Articles of Association of the Company, Mr. Shah Rukh Khan was appointed as an Additional Director on the Board of Directors of the Company with effect from 16th August, 2006. Mr. Shah Rukh Khan holds office up to the date of the ensuing Annual General Meeting. 35. Pursuant to Section 260 of the Companies Act, 1956, and Article 48 of the Articles of Association of the Company, Dr. Pierre J. Jeanniot was appointed as an Additional Director on the Board of Directors of the Company with effect from 16th 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 14th 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 14th 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 Companys Statutory Auditors on compliance with the provisions of Corporate Governance is annexed to the Corporate Governance Report.

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14th Annual Report 2005-06

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 Trusts 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 Companys service standards, during the year under review. 43. Your Directors place on record their appreciation for the support rendered by the Companys 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 NARESH GOYAL Chairman Date : Place : 16th August, 2006 London

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Jet Airways (India) Limited

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 1.3 The progressive environment for civil aviation has attracted new domestic carriers, and the increase in capacity has increased competition in the domestic sector. 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 2. 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. 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.

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14th Annual Report 2005-06

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.

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Jet Airways (India) Limited

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 Companys 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%.

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14th Annual Report 2005-06

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, 2006 (Rs. Millions) Maintenance and repairs Variable rentals Landing, navigation and other airport charges Insurance General and administrative To t a l 3,109 1,241 3,505 690 4,566 13,111 2005 (Rs. Millions) 2,874 695 2,388 491 2,985 9,433 Increase/ (Decrease) (%) 8.2 78.6 46.8 40.5 53.0 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

Jet Airways (India) Limited

premises taken on rent to meet the requirements of the Companys 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 Companys 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 1st 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.

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14th Annual Report 2005-06

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 31st 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.

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Jet Airways (India) Limited

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 31st March, 2006 was 8,815 compared to 7,598 as on 31st 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.

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14th Annual Report 2005-06

TTG Travel Asias award as the Best Domestic Airline for 2005, in October 2005; this is the third time the Company has won this award. Indias 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 Indias 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 Companys 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

Jet Airways (India) Limited

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 8.2 We are preparing to take advantage of the continuing growth in air travel to, from and within India. 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 10year 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, Indias 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.

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14th Annual Report 2005-06

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 Companys 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

Jet Airways (India) Limited

Corporate Governance Report


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

COMPANYS 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 Companys 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 managements 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.

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14th Annual Report 2005-06

Name of Director

Position/Category

Other Directorships / Mandatory Committee memberships Directorships Committee in other Public Cos. Chairman Committee Member

Number of Shares held

Mr. Naresh Goyal

Promoter & Non-executive Chairman

None

None

None

9995 (as a Nominee of Tail Winds Limited) Nil Nil Nil Nil 2220 Nil Nil Nil Nil Nil 553

Mr. Ali Ghandour Mr. Victoriano P. Dungca Mr. Charles A. Adams Mr. J. R. Gagrat* Mr. Javed Akhtar Mr. I. M. Kadri Mr. P. R. S. Oberoi Mr. Aman Mehta Dr. Vijay L. Kelkar Mr. S. G. Pitroda Mr. Saroj K. Datta

Non-executive Director Non-executive Director Non-executive Director Non-executive Director Independent Director Non-executive Director Non-executive Director Independent Director Independent Director Independent Director Executive Director

None None None None None 2 12 3 8 None None

None None None None None None 1 2 None None None

None None None None None 1 1 4 1 None None

* 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

Jet Airways (India) Limited

Name of Director

No. of Meetings Attendance at Annual General Meeting attended held on 27th September, 2005 8 4 8 4 3 7 7 1 6 6 Nil 9 Yes Yes Yes Yes Yes Yes No No Yes Yes No Yes

Mr. Naresh Goyal Mr. Ali Ghandour Mr. Victoriano P. Dungca Mr. Charles A. Adams Mr. J. R. Gagrat* Mr. Javed Akhtar Mr. I. M. Kadri Mr. P. R.S. Oberoi Mr. Aman Mehta Dr. Vijay L. Kelkar Mr. S. G. Pitroda Mr. Saroj K. Datta * Expired on 5th April, 2006

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

14th Annual Report 2005-06

Name of the Member Mr. Aman Mehta Dr. Vijay L. Kelkar Mr. Victoriano P. Dungca Mr. Javed Akhtar ii.

Designation Chairman Member Member Member

Category/Position Independent Director Independent Director Non-executive Director Independent Director

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 Mr. Aman Mehta Dr. Vijay L. Kelkar Mr. Victoriano P. Dungca Mr. Javed Akhtar No. of Meetings attended 5 4 3 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: Name of the Member Dr. Vijay L. Kelkar Mr. Victoriano P. Dungca Mr. Charles A. Adams Mr. Javed Akhtar Mr. Aman Mehta Designation Chairman Member Member Member Member Category/Position Independent Director Non-executive Director Non-executive Director Independent Director Independent Director

37

Jet Airways (India) Limited

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 Salary (Rs.) (Rs.) (Rs.) Allowances Perquisites Retirement Benefits (Rs.) Sitting Fees (Rs.) Commission Payable (Rs.) (Rs.) Total

Mr. Naresh Goyal Mr. Ali Ghandour Mr. Victoriano P. Dungca Mr. Charles A. Adams Mr. J. R. Gagrat* Mr. Javed Akhtar Mr. I. M. Kadri Mr. P. R. S. Oberoi Mr. Aman Mehta Dr. Vijay L. Kelkar Mr. S. G. Pitroda Mr. Saroj K. Datta

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 985,530

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 521,971

130,000 50,000 180,000 95,000 30,000 185,000 155,000 5,000 185,000 155,000 Nil 245,000

600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000

730,000 650,000 780,000 695,000 630,000 785,000 755,000 605,000 785,000 755,000 600,000

2,406,250 1,121,070

Nil 5,279,821

* Expired on 5th April, 2006 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.

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14th Annual Report 2005-06

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: Name of the Member Mr. I. M. Kadri Mr. Charles A. Adams Mr. Saroj K. Datta ii. Designation Chairman Member Member Category/Position Non-executive Director Non-executive Director Executive Director

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 Mr. I. M. Kadri Mr. Charles A. Adams Mr. Saroj K. Datta No. of Meetings attended 3 2 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

Jet Airways (India) Limited

iv.

Details of Shareholders complaint/queries Opening Balance Nil Received 1690 Attended To 1690 Pending Nil

5.

SELECTION COMMITTEE
A committee had been specifically constituted as required by the Directors 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: Name of the Member Mr. Javed Akhtar Mr. Aman Mehta Designation Member Member Category/Position Independent Director 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 20th September, 2003 Venue S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059 29th September, 2004 S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059 27th September, 2005 Nehru Centre Auditorium, Discovery of India Building, Dr. Annie Besant Road, Worli, Mumbai 400 018 3:30 p.m. 5:00 p.m. Time 5:00 p.m.

40

14th Annual Report 2005-06

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 20th September, 2003 29th September, 2004 27th September, 2005 Subject None None 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

Jet Airways (India) Limited

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 Companys 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 Executive Director

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.

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14th Annual Report 2005-06

Shareholder Information
1. Date and time of Annual General Meeting 2. Venue Nehru Centre Auditorium, Discovery of India Building, Dr. Annie Besant Road, Worli, Mumbai 400 018 3. 4. Financial Year Book Closure Date 1st April, 2005 to 31st March, 2006 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. 7. 8. Registered Office Compliance Officer Website Address S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059 Mr. Narendra Mehra, Company Secretary www.jetairways.com Wednesday, 20th September, 2006 at 3:30 p.m.

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 Second Quarter Third Quarter : : : Announced on 29th July, 2006 On or before 31st October, 2006 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 Companys website. Hence, no separate quarterly or half-yearly report is mailed to the Shareholders.

43

Jet Airways (India) Limited

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 Companys 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 Companys 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.

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14th Annual Report 2005-06

4.

STOCK CODE
National Stock Exchange of India Limited Bombay Stock Exchange Limited ISIN Nos. in NSDL and CDSL : : : JETAIRWAYS 532617 INE802G01018

5.

MARKET PRICE DATA (HIGH, LOW DURING EACH MONTH IN LAST FINANCIAL YEAR)
Month JETAIRWAYS on BSE High (Rs.) April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 1379.00 1354.40 1361.00 1344.00 1277.00 1200.00 1252.00 1247.90 1280.00 1224.80 1015.10 1025.00 Low (Rs.) 1159.70 1260.00 1228.20 1252.00 1106.50 1053.50 973.00 1006.20 1100.00 975.20 891.15 917.00 Volume (Nos.) 2267692 1312415 1239298 503988 721434 1004864 1288336 1030974 939237 2796443 3062470 1599508 JETAIRWAYS on NSE High (Rs.) 1382.75 1349.50 1360.00 1342.00 1275.00 1175.80 1250.00 1246.90 1276.90 1207.00 1016.95 1013.00 Low (Rs.) 1159.00 1260.00 1183.90 1210.10 1105.95 1055.00 970.55 1007.00 1091.55 975.10 772.90 914.00 Volume (Nos.) 6328537 3702102 3790290 1458587 2427074 3033761 3417680 2833094 3375079 8195777 7823417 4012761

45

Jet Airways (India) Limited

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

14th Annual Report 2005-06

7.

REGISTRAR AND TRANSFER AGENT


Karvy Computershare Private Limited Karvy House, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034 Phone Fax E-mail Contact Person : : : : 040 2342 0818 040 2342 0814 madhusudhan@karvy.com 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 Companys 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 Companys Equity Shares in electronic form. Over 99.99% of the Companys Equity Shares are held in electronic form. The Companys 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

Jet Airways (India) Limited

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


Sr. No. Category Number of Shareholders From To 1 2 3 4 5 6 7 8 1-5000 5001-10000 10001-20000 20001-30000 30001-40000 40001-50000 50001-100000 100001 & above Total 140333 190 97 38 17 13 26 88 140802 99.67 0.13 0.07 0.03 0.01 0.01 0.02 0.06 100.00 23338970 1402430 1437000 959490 601580 597460 2079610 832923570 863340110 2.70 0.16 0.17 0.11 0.07 0.07 0.24 96.48 100.00 % of Shareholders Amount (Rs.) % of Amount

11. SHAREHOLDING PATTERN AS PER CLAUSE 35 OF THE LISTING AGREEMENT AS ON 31ST MARCH, 2006
Sr. No. Category A. Promoters Holding 1. 2. B. 3. Promoters Persons acting in concert Institutional Investors (a) Mutual Funds and UTI (b) Banks, Financial Institutions, Insurance, Companies (Central/ State Govt. Institutions / Non-Governmental Institutions) (c) FIIs Others (a) Private Corporate Bodies (b) Indian Public (c) NRIs/OCBs (d) Any Other Total 966268 2632049 58492 132909 86334011 1.12% 3.05% 0.07% 0.15% 100.00% 9074567 10.51% 2503189 1898779 2.90% 2.20% 69067205 553 80.00% 0.00% No. of Shares held % of Shares

Non-promoters Holding

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14th Annual Report 2005-06

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 Companys 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 Companys 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


Company Secretary Jet Airways (India) Limited S. M. Centre, Andheri-Kurla Road, Andheri (East), Mumbai 400 059 Telephone : (022) 28527744 Fax : (022) 28527745 E-mail : nmehra@jetairways.com Website : www.jetairways.com

49

Jet Airways (India) Limited

Auditors Certificate on Compliance of Conditions of Corporate Governance


To the Members of Jet Airways (India) Limited 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 Companys 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 Chartered Accountants R. Salivati Partner Membership No.: 34004 Place : Mumbai Date : 29th July, 2006 For Chaturvedi & Shah Chartered Accountants C. D. Lala Partner Membership No.: 35671

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14th Annual Report 2005-06

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 Companys 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 (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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) 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; (b) 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; (d) 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;

(c)

(e)

51

Jet Airways (India) Limited

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

FOR CHATURVEDI & SHAH Chartered Accountants

R. SALIVATI Partner M. No. 34004 Mumbai Dated : 29th April, 2006

C.D. LALA Partner M. No. 35671

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14th Annual Report 2005-06

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. A substantial part of the fixed assets has not been disposed off during the year; accordingly provisions of clause 4 (i) (c) of Companies (Auditors Report) Order, 2003 are not applicable to the Company. 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. 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.

c)

2)

a)

c)

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 (Auditors 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) b) The particulars of contracts or arrangements have been entered in the register maintained under that section. 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 (Auditors Report) Order, 2003 are not applicable to the company. In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.

7)

53

Jet Airways (India) Limited

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 (Auditors Report) Order, 2003 are not applicable to the company 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. 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. 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: Nature of the dues Amount (Rs. lac) Period to which the amount relates 2003-04 Forum where dispute is pending Commissioner of Customs (Appeals), New Delhi Commissioner of Customs (Appeals), New Delhi Mumbai High Court

9)

b)

c)

Name of statute

IATT Rules, 1989

IATT Interest & Penalty

426

IATT Rules, 1989

IATT Interest & Penalty

47

2001-02

B.M.C. Act, 1988 10)

Octroi Dues

2,899

2000-01

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. 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.

11)

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. 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 (Auditors Report) Order, 2003 are not applicable to the company. 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.

13)

14)

54

14th Annual Report 2005-06

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 (Auditors Report) Order, 2003 are not applicable to the company. 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. 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.

16)

17)

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 (Auditors 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 (Auditors 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. 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.

21)

FOR DELOITTE HASKINS & SELLS Chartered Accountants

FOR CHATURVEDI & SHAH Chartered Accountants

R. SALIVATI Partner M. No. 34004 Mumbai Dated : 29th April, 2006

C.D. LALA Partner M. No. 35671

55

Jet Airways (India) Limited Balance Sheet as at March 31, 2006


Schedule No. I. SOURCES OF FUNDS 1. Shareholders Funds : a) Share Capital Equity b) 2. 3. Reserves and Surplus As at March 31, 2006 Rs. in lac As at March 31, 2005 Rs. in lac

A B

8,633 8,633 221,955 230,588 -

8,633 8,633 192,383 201,016 33,411 6,000 257,073 263,073 19,485 516,985

Subordinated Debt Loan Funds : a) Secured Loans b) Unsecured Loans Deferred Tax Liability (Ref. Note 19 of Schedule S) Total

C D

20,602 468,958 489,560 32,066 752,214

4.

II. APPLICATION OF FUNDS 1. Fixed Assets : a) Gross Block b) Less : Depreciation c) d) 2. 3. Net Block Capital Work-in-progress

E 437,206 224,958 212,248 266,567 F G H I J 478,815 18,723 40,525 43,315 210,425 113,488 407,753 520,209 259,346 260,863 3,202 264,065 159,573 33,252 25,231 122,424 23,533 204,440 77,317 33,776 111,093 93,347 516,985

Investments Current Assets, Loans and Advances : a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Loans and Advances

Less : Current Liabilities and Provisions a) Current Liabilities b) Provisions Net Current Assets Total Significant Accounting Policies and Notes to Accounts As per our attached report of even date For DELOITTE HASKINS & SELLS Chartered Accountants R. SALIVATI Partner

K L

106,562 46,515 153,077 254,676 752,214

S For and on behalf of the Board

For CHATURVEDI & SHAH Chartered Accountants C.D. LALA Partner

Javed Akhtar Director Saroj K. Datta Executive Director Narendra Mehra Company Secretary

Place : Mumbai Dated : 29th April, 2006

56

14th Annual Report 2005-06 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 Non - Operating Revenues Total EXPENDITURE : Employees Remuneration and Benefits Aircraft Fuel Expenses Selling & Distribution Expenses Other Operating Expenses (including Maintenance, Airport Charges, etc) Aircraft Lease Rentals (Refer Note 4 of Schedule S) Depreciation/ Amortisation Less : Depreciation on amount added on Revaluation charged to Revaluation Reserve Interest Total PROFIT BEFORE TAXATION Income Tax Expenses Current Tax ( including provision for Wealth Tax Rs.7 lac, Previous Year Rs.4 lac) Deferred Tax Fringe Benefit Tax PROFIT AFTER TAXATION Balance Brought Forward PROFIT AVAILABLE FOR APPROPRIATION Less : Appropriations Transferred to Capital Redemption Reserve Transferred to General Reserve PROFIT AVAILABLE FOR DISTRIBUTION Proposed Dividend Income Tax on Dividend BALANCE CARRIED TO BALANCE SHEET Earnings per share of Rs 10 each (Ref. Note 18 of Schedule S) Basic (in Rupees) Diluted (in Rupees) Significant Accounting Policies and Notes to Accounts As per our attached report of even date For DELOITTE HASKINS & SELLS Chartered Accountants R. SALIVATI Partner O P Q 47,482 6,841 R 40,641 24,160 541,321 72,226 13,406 12,581 1,035 45,204 14,967 60,171 4,521 4,521 55,650 5,180 727 49,743 52.36 32.04 S For and on behalf of the Board For CHATURVEDI & SHAH Chartered Accountants C.D. LALA Partner Javed Akhtar Director Saroj K. Datta Executive Director Narendra Mehra Company Secretary Place : Mumbai Dated : 29th April, 2006 M N 569,373 44,174 613,547 56,715 167,893 77,402 131,111 43,399 433,801 8,216 442,017 37,474 105,173 55,906 94,325 19,857 54,721 9,021 45,700 25,369 383,804 58,213 4,604 14,410 39,199 (11,801) 27,398 5,558 3,920 9,478 17,920 2,590 363 14,967 52.29 8.72

57

Jet Airways (India) Limited Statement of Cash Flow for the year ended March 31, 2006
For the Year ended March 31, 2006 Rs. in lac A. Cash Flow from Operating Activities Net Profit before tax Adjustments for : Depreciation /Amortisation & Stock Obsolescence (Profit)/Loss on sale of Fixed Assets (Net) (Profit) on sale of Investments / Dividend on Investments Interest expense Interest on Bank & Other Deposits Excess Provision no longer required Provision for doubtful debts no longer required Provision for Leave Encashment & Gratuity Exchange difference on translation (Net) Provision for doubtful debts Bad Debts written off Inventory scrapped during the year Operating profit before working capital changes Changes in Inventories Changes in Sundry Debtors Changes in Loans & Advances Changes in Current Liabilities and Provisions Cash generated from operations Income tax refunded/paid Wealth tax paid Net cash from operating activities B. Cash Flow from Investing Activities Capital Expenditure - Aircraft & Others Proceeds from sale of fixed assets Purchase of Investments Changes in Fixed Deposits with Banks (Refer Note No. 2 below) Interest Received on Bank & Other Deposits Deposit in Escrow Account (Refer Note No. 3 below) Advance paid as per Share Purchase Agreement (Refer Note No 11 of Schedule S) Sale of Investments Dividend Received Net cash used for investing activities carried forward 72,226 42,589 (27,037) (5,253) 24,160 (5,542) (4,101) (20) 2,627 (1,468) 247 14 2,325 100,767 (11,546) (18,427) (26,513) 29,863 74,144 (13,392) (4) 60,748 For the Year ended March 31, 2005 Rs. in lac 58,213 47,527 345 (1,380) 25,369 (3,064) (1,882) (6) 735 (822) 281 3,446 128,762 (3,781) (1,272) (853) 17,317 140,173 (4,666) (3) 135,504

(279,457) 46,282 (545,424) 34,549 5,367 (150,000) (50,000) 691,527 (247,156) (247,156)

(9,871) 52 (508,116) (35,917) 2,596 372,985 280 (177,992) (177,992)

58

14th Annual Report 2005-06 Statement of Cash Flow for the year ended March 31, 2006
For the Year ended March 31, 2006 Rs. in lac brought forward C. Cash flows from Financing Activities Proceeds from issue of Share Capital Preference Shares repayment Premium on Redemption of Preference Shares Share Issue Expenses paid Increase / (Decrease) in Term Loans & subordinated Debt Interest paid Dividend paid (including Tax on Dividend) Net cash from financing activities Net change in cash (A+B+C) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (Refer Note No. 1 & 3 below) 191,738 (30,005) (2,950) 158,783 (27,625) 50,401 22,776 156,696 (6,983) (5,852) (2,103) (27,558) (22,668) 91,533 49,045 1,356 50,401 (247,156) For the Year ended March 31, 2005 Rs. in lac (177,992)

Note : 1) Cash and Cash equivalents for the period ended March 31, 2006 includes unrealised loss of Rs.2 lac (Previous Year 2) 3) unrealised loss of Rs. 83 lac) on account of translation of foreign currency bank balances. 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. 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) . For and on behalf of the Board For CHATURVEDI & SHAH Chartered Accountants C.D. LALA Partner Javed Akhtar Director Saroj K. Datta Executive Director Narendra Mehra Company Secretary Place : Mumbai Dated : 29th April, 2006

As per our attached report of even date For DELOITTE HASKINS & SELLS Chartered Accountants R. SALIVATI Partner

59

Jet Airways (India) Limited Schedules to the Balance Sheet as at March 31, 2006
As at March 31, 2006 Rs. in lac SCHEDULE A : SHARE CAPITAL Authorized 130,000,000 (Previous Year 130,000,000) Equity Shares of Rs.10/- each 70,000,000 (Previous Year 70,000,000) Preference Shares of Rs 10/- each As at March 31, 2005 Rs. in lac

13,000 7,000 20,000

13,000 7,000 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 (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 8,633 8,633

60

14th Annual Report 2005-06 Schedules to the Balance Sheet as at March 31, 2006
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/-) As at As at March 31, 2006 March 31, 2005 Rs. in lac Rs. in lac

* * 5,558 5,558 5,558 155,272

Capital Redemption Reserve Balance as per Last Balance Sheet Transferred from Profit & Loss Account

5,558 -

Share Premium Balance as per Last Balance Sheet Received on Issue of Equity Shares Less : Adjustments a) Premium on redemption of Cumulative Convertible Redeemable Preference Shares b) Share Issue Expenses

141,418 -

141,418

5,852 8,002 141,418 38,757 3,809 9,021 16,202 25,927 593 593 593 3,920 9,034 49,743 221,955 4,513 14,967 192,383

Revaluation Reserve Balance as per Last Balance Sheet Less : Adjustment /Reversal during the year Less : Depreciation for the year on amount added on Revaluation transferred to Profit & Loss Account

25,927 2,884 6,841

Contingency Reserve Balance as per Last Balance Sheet Less: Transferred to General Reserve General Reserve Balance as per Last Balance Sheet Add: Transferred from Contingency Reserve Add: Transferred from Profit & Loss Account

4,513 4,521

Surplus Balance in Profit and Loss Account Total

61

Jet Airways (India) Limited Schedules to the Balance Sheet as at March 31, 2006
Rs. in lac SCHEDULE C : SECURED LOANS From Banks (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 (Secured by hypothecation of Simulator & other accessories thereto) Total 4,000 6,000 As at As at March 31, 2006 March 31, 2005 Rs. in lac Rs. in lac

16,602

20,602

6,000

SCHEDULE D : UNSECURED LOANS Short Term Loans: From Banks Other Loans: From Banks From Financial Institutions From Others Outstanding Hire Purchase/Finance Lease Instalments [Instalments due within one year Rs. 20,791 lac (Previous Year - Rs.27,841 lac)] 409,480 Total 468,958 257,073 257,073 59,478 169,282 43,500 196,698 257,073

62

Schedules to the Balance Sheet as at March 31, 2006

SCHEDULE - E FIXED ASSETS Rs. in lac


GROSS BLOCK (At Cost /Valuation) As at Additions Deductions/ 01.04.2005 the year during Adjustments 31.03.2006 31.03.2005 Year As at Upto For the Deductions Upto As at As at DEPRECIATION/AMORTISATION NET BLOCK

NATURE OF ASSETS

31.03.2006 31.03.2006 31.03.2005

63
1,198 2,402 520,209 516,181 667 9,799 3,146 20,996 8,629 103,999 4,601 1,865 12,201 3,146 437,206 520,209 443 356 2 375 212 259,346 47,482 205,021 54,721 47482

1,601 1,535 5,444 2,664 4,278 598 3,503 487,918 2,930 1,000 5,138

82 432 244 1,022 440 445 442 870 1,338 2,069 -

18 14 121 6 51 164 28 103,597 -

82 2,015 1,765 6,345 3,098 4,672 876 4,345 385,659 4,999 1,000 5,138

8 1,055 214 668 157 3,869 975 1,329 251 2,185 331 388 76 2,498 489 242,184 42,631 1,428 831 791 150 2,506 426

12 10 121 4 38 108 27 81,550 -

8 1,257 815 4,723 1,576 2,478 356 2,960 203,265 2,259 941 2,932

74 758 950 1,622 1,522 2,194 520 1,385 182,394 2,740 59 2,206

546 867 1,575 1,335 2,093 210 1,005 245,734 1,502 209 2,632

PLANT & MACHINERY FURNITURE AND FIXTURES ELECTRICAL FITTINGS DATA PROCESSING EQUIPMENT OFFICE EQUIPMENT GROUND SUPPORT EQUIPMENT VEHICLES GROUND SUPPORT VEHICLES AIRCRAFT & SPARE ENGINE CAPITAL EXPENDITURE ON LEASED AIRCRAFT CAPITAL EXPENDITURE ON LEASED PROPERTY SIMULATOR INTANGIBLE ASSETS (Other than internally generated) SOFTWARE LANDING RIGHTS TRADEMARKS TOTAL PREVIOUS YEAR CAPITAL WORK IN PROGRESS INCLUDING CAPITAL ADVANCE FOR PURCHASE OF AIRCRAFT AND OTHER ASSETS 81,870 397 799 377 212 224,958 259,346

1,066 11,824 2,934 212,248 260,863

755 2,400 260,863 311,160

14th Annual Report 2005-06

266,567

3,202

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 31st 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 31st 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

Jet Airways (India) Limited Schedules to the Balance Sheet as at March 31, 2006
As at March 31, 2006 Rs. in lac 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 March 31, 2006 No. of Units Growth Plan Kotak Mahindra Mutual Fund JM Mutual Fund Prudential ICICI Mutual Fund DSP Merrill Lynch Mutual Fund DSP Merrill Lynch Mutual Fund UTI Mutual Fund LIC Mutual Fund Principal Mutual Fund Deutsche Mutual Fund HDFC Mutual Fund Birla Sun Life Mutual Fund HSBC Mutual Fund Reliance Mutual Fund Tata Mutual Fund Tata Mutual Fund ING Vysya Mutual Fund Standard Chartered Mutual Fund 20,466,744 31,741,245 35,370,418 207,022,919 29,835,170 140,313,757 4,752,607 294,923 94,181,923 49,406,208 43,857,512 38,637,264 96,790,620 79,452,234 222,040,554 53,530,385 167,463,629 533 61,851,076 107,210,671 92,085,659 10.00 10.00 10.00 1,000.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 1,000.00 10.00 10.00 4,000 4,000 4,159 3,000 564 3,000 22,781 14,397 11,507 15,250 5,281 4,500 4,000 10,601 8,311 22,701 5,501 17,153 6 6,375 11,209 18,723 159,573 As at March 31, 2005 No. of Units Face As at Value/ March 31, Unit 2006 (Rs.) Rs. in lac # As at March 31, 2005 Rs. in lac #

As at March 31, 2005 Rs. in lac

64

14th Annual Report 2005-06 Schedules to the Balance Sheet as at March 31, 2006
As at March 31, 2006 Rs. in lac
Market Value As at 31-March2006 Rs. in lac Growth Plan Kotak Mahindra Mutual Fund JM Mutual Fund Prudential ICICI Mutual Fund DSP Merrill Lynch Mutual Fund UTI Mutual Fund LIC Mutual Fund Principal Mutual Fund Deutsche Mutual Fund HDFC Mutual Fund Birla Sun Life Mutual Fund HSBC Mutual Fund Reliance Mutual Fund Tata Mutual Fund ING Vysya Mutual Fund Standard Chartered Mutual Fund Total 4,205 3,185 564 3,014 4,019 4,019 19,006 22,959 14,484 11,537 15,266 5,333 4,511 4,010 10,664 8,339 22,841 5,512 17,258 6,410 11,244 160,368 As at 31-March2005 Rs. in lac

As at March 31, 2005 Rs. in lac

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

Jet Airways (India) Limited Schedules to the Balance Sheet as at March 31, 2006
As at March 31, 2006 Rs. in lac Rs. in lac SCHEDULE G : INVENTORIES (At Lower of Cost or Net Realisable Value) i) Rotables, Consumable stores and tools Less : Provision for Obsolescence /Slow & Non-Moving items (Refer Note 1 (L) of Schedule S) As at March 31, 2005 Rs. in lac

44,623 8,223 36,400 115 4,010 40,525

38,953 7,016 31,937 61 1,254 33,252

ii) Fuel iii) Other Stores Items Total SCHEDULE H : SUNDRY DEBTORS (Unsecured) a) b) Debts (Outstanding for a period exceeding six months) Other Debts 1,059 43,030 44,089 774

828 24,950 25,778 547 43,315 25,231

Less : Provision for Doubtful Debts

NOTE : 1) Considered good Considered doubtful

As at 31-03-2006 43,315 774 44,089

As at 31-03-2005 25,231 547 25,778

2)

Debtors include Rs. 73 lac (Previous Year Rs 68 lac) due from private company in which the Companys Director is a director/member. Total 43,315 25,231

66

14th Annual Report 2005-06 Schedules to the Balance Sheet as at March 31, 2006
As at March 31, 2006 Rs. in lac Rs. in lac
SCHEDULE I : CASH AND BANK BALANCES Cash on hand (includes cheques on hand Rs. 312 lac Previous Year Rs. 553 lac) Balance with Scheduled banks : a) In Current Account b) In Escrow Account (Refer Note No. 11 of Schedule S) c) In Fixed Deposit Account* [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 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) b) National Bank of Kuwait Maximum balance outstanding during the year Rs. 28 lac (Previous Year Rs.29 lac) c) Barclays Business Premium GBP Account, UK Maximum balance outstanding during the year Rs. 6,477 lac (Previous Year N.A.) d) Barclays Bank - PLC - USD Maximum balance outstanding during the year Rupees 149 (Previous Year Rs.10 Lac) e) HSBC CCF - Paris - Euro Maximum balance outstanding during the year Rs.831 lac (Previous Year Rs.671 Lac) f) Deutsche Bank AG - Frankfurt - Euro Maximum balance outstanding during the year Rs. 816 lac (Previous Year Rs.498 Lac) g) Barclays Bank - PLC - GBP Maximum balance outstanding during the year Rs. 2,185 lac (Previous Year Rs.1,522 lac) h) DBS Bank Ltd. - Singapore - SGD Maximum balance outstanding during the year Rs.1,030 lac (Previous Year N.A.) i) DBS Bank Ltd -Disbursement, Singapore - SGD Maximum balance outstanding during the year Rs.78 lac (Previous Year N.A.) j) HSBC Bank - Brussels Maximum balance outstanding during the year Rs.32 lac (Previous Year N.A.) k) Barclays GBP Intetrest Account, UK Maximum balance outstanding during the year Rs.12 lac (Previous Year N.A.) l) Barclays Bank - PLC - Euro Account Maximum balance outstanding during the year Rs.13 lac (Previous Year Rs.7 lac) m) ICICI Bank UK Ltd., UK Maximum balance outstanding during the year Rs.860 lac (Previous Year N.A.) n) Bank of America - USD A/c, USA Maximum balance outstanding during the year Rs.22 lac (Previous Year N.A.) * Refer Note No.3 of Schedule S Total 210,425 122,424

As at March 31, 2005 Rs. in lac

331 1,620 150,000 57,153

570 1,609 116,705

788 209,892

812 119,696

16 1 87 124 246 25 13 21 533

31 670 498 1,522 7 2,728

67

Jet Airways (India) Limited Schedules to the Balance Sheet as at March 31, 2006
As at March 31, 2006 Rs. in lac Rs. in lac SCHEDULE J : LOANS and ADVANCES (Unsecured unless otherwise stated and Considered Good ) Loans (Refer Note No.11 of Schedule S) Advances Recoverable in Cash or in kind or for value to be Received (Includes Secured to the extent of Rs. 50,000 lac Refer Note No.11 of Schedule S) Deposits with Airport Authorities & others (Including margin deposit Rs 2,587 lac (Previous Year Rs. 3,827 lac) Balances with Customs Authorities Advance Tax & Tax deducted at Source Total Note : Deposits & Advances include Rs. 603 lac (Previous Year Rs 618 lac ) placed with private limited companies in which the companys director is a director / member. SCHEDULE K : CURRENT LIABILITIES Sundry Creditors Outstanding dues to small scale industries Others Other Current Liabilities Interest Accrued but not due on loans Forward Sales (net) (Passenger/Cargo) Balance with Scheduled Banks in Current Account overdrawn as per books Balance with Other Banks in Current Account overdrawn as per books Unclaimed Dividend * Unclaimed Share Application Money * Note : These figures do not include any amounts due and outstanding to be credited to the Investor Education & Protection Fund Total SCHEDULE L : PROVISIONS Wealth Tax Income Tax Fringe Benefit Tax Proposed Dividend Income Tax on Dividend Gratuity Leave Encashment Others Total As at March 31, 2005 Rs. in lac

10,000 69,295 13,545 6 20,642 113,488

7,541 8,736 6 7,250 23,533

25,152 25,152 33,404 962 35,129 11,847 61 3 4

23,479 23,479 22,336 3,242 21,885 6,375 -

106,562

77,317

12 20,291 1,035 5,180 727 2,690 596 15,984 46,515

9 6,892 2,590 363 1,378 541 22,003 33,776

68

14th Annual Report 2005-06 Schedules to the Profit and Loss Account for the year ended March 31, 2006
For the Year ended March 31, 2006 Rs. in lac Rs. in lac SCHEDULE M : OPERATING REVENUE Passenger Excess Baggage Cargo Less: Service Tax 32,738 2,072 30,666 6,989 569,373 For the Year ended March 31, 2005 Rs. in lac

526,629 5,089

407,649 4,213 19,642 1,083 18,559 3,380 433,801

Other Revenue Total SCHEDULE N : NON-OPERATING REVENUE Interest on Bank & Other Deposits [Tax Deducted at Source Rs.1,226 lac (Previous Year Rs 472 lac)] Exchange difference (Net) Profit on Sale and Lease back of Aircraft Profit on Sale of Current Investments (Net) Dividend on Current Investments Provision for aircraft maintenance no longer required Excess Provision written back Provision for Doubtful Debts no longer required Other Income (including Interest on Income Tax Refund of Rs.2 lac, Previous Year Rs. 50 lac ) Total SCHEDULE O : EMPLOYEES REMUNERATION AND BENEFITS (Net) Salaries, Wages, Bonus & Allowances Contribution to Provident Fund & ESIC Provision for Gratuity Provision for Leave Encashment Staff Welfare Expenses Total

5,542 27,064 5,253 3,600 501 20 2,194

3,064 71 1,100 280 1,197 685 6 1,813

44,174

8,216

49,039 1,344 1,441 1,186 3,705 56,715

34,273 1,011 386 349 1,455 37,474

69

Jet Airways (India) Limited Schedules to the Profit and Loss Account for the year ended March 31, 2006
For the Year ended March 31, 2006 Rs. in lac Rs. in lac SCHEDULE P : SELLING & DISTRIBUTION EXPENSES Computerised Reservation System Cost (Net) Commission Others Total SCHEDULE Q : OTHER OPERATING EXPENSES Aircraft Variable Rentals Aircraft Insurance & Other Insurance Landing, Navigation & Other Airport Charges Aircraft Maintenance (including Customs Duty and Freight, where applicable) Component Repairs, Recertification, Exchange, Consignment Fees and Aircraft Overhaul Lease of Aircraft Spares incl. Engine Consumption of Stores & Spares (net) (including items scrapped / written off Rs. 2,325 lac, Previous Year Rs. 3,446 lac) Provision for Spares Obsolescence Inflight & Other Pax Amenities Communication Cost (Net) Travelling & Subsistence Rent Rates & Taxes Repairs & Maintenance Leased Premises Others Electricity Commission to Directors (Refer Note No. 13 of Schedule S) Directors Sitting Fees Miscellaneous Expenses (Including Printing & Stationery, Bank Charges etc.) Provision for Bad & Doubtful Debts Bad Debts Written off Exchange difference (Net) Loss on scrapping of Fixed Asset Loss on sale of Fixed Assets other than Aircraft (Net) Total For the Year ended March 31, 2005 Rs. in lac

13,437 56,526 7,439 77,402

10,355 42,081 3,470 55,906

12,408 6,896 35,046

6,952 4,908 23,878

21,269 1,565 6,312

18,809 905 7,196

1,948 31,094 21,452 1,803 7,109 3,221 60 186 2,644 2,830 928 66 14 6,492 247 14 1,404 27 131,111

1,827 28,737 14,370 1,424 3,590 2,744 174 102 1,989 2,091 740 1 4,090 281 306 39 94,325

70

14th Annual Report 2005-06 Schedules to the Profit and Loss Account for the year ended March 31, 2006
For the Year ended March 31, 2006 Rs. in lac Rs. in lac SCHEDULE R : INTEREST Hire Purchase - Finance Charges Interest on Subordinated Debt Interest on Fixed Loan from Banks and Financial Institutions Interest on Bank overdraft Interest on Short Term Loans from Banks For the Year ended March 31, 2005 Rs. in lac

22,422 455 3,074 292 1,482 27,725 3,565 24,160

20,754 4,021 540 12 43 25,369 25,369 25,369

Less : Capitalised during the Year

Total

24,160

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 Companys refund policy.

71

Jet Airways (India) Limited

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. 3. c) Trademarks are amortised over 10 years. Computer Software is amortised over 36 months.

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.

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14th Annual Report 2005-06

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) 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. (c) 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.

(b)

73

Jet Airways (India) Limited

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 Intangible Assets 2. CONTINGENT LIABILITY : (a) (b) Unprovided Income Tax demands which are under appeals Rs. 375 lac (Previous Year Rs.375 lac). Unprovided claims against the Company, pending Civil and Consumer suits of Rs. 1,044 lac (Previous Year Rs. 844 lac). 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). 963,614 Nil (Previous Year - Rs. 295,815 lac) (Previous Year - Rs. 5,200 lac)

(c) (d) (e)

(f)

(g)

74

14th Annual Report 2005-06

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 :Amount (Rs. in lac) Particulars Balance as per last Balance Sheet Gross proceeds of the Fresh Issue Less: Share Issue Expenses adjusted against Share Premium (Net) Sub Total (A) Utilization of proceeds Repayment of debts and redemption of CCRPS Capital Expenditure General Corporate Expenses Total Out Flow (B) Unutilized Balance (A B) Unutilized balance deployed in Investment in Mutual Funds Fixed Deposit with Bank The Company has reclassified the utilisation of funds during the year. 4. 5. Aircraft Lease Rentals are stated net of sub-lease rentals of Rs. 1,646 lac (Previous Year Rs. 1,567 lac). 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 1st 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 Companys 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 31st 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. 18,159 4,623 105,829 38,456 66,799 33,897 12,805 113,501 22,782 12,411 Nil Nil 12,411 144,285 31-Mar-2006 144,285 Nil (8,002) 136,283 31-Mar-2005 Nil 156,696 Nil 156,696

75

Jet Airways (India) Limited

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 (In lac) Birla Mutual Fund DB Mutual Fund DSP ML Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund JM Mutual Fund Kotak Mutual Fund LIC Mutual Fund Principal Mutual Fund Prudential Mutual Fund Reliance Mutual Fund Standard Chartered Mutual Fund Tata Mutual Fund Templeton Mutual Fund UTI Mutual Fund 2,527 3,662 1,340 2,355 4,204 3,346 2,641 3,444 4,346 4,095 5,362 994 4,408 1,455 83 800 COST OF UNITS (In lac) 27,485 40,302 15,420 28,941 44,727 34,931 28,696 41,649 50,630 43,706 68,131 12,100 48,215 25,960 1,000 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). 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).

(b)

76

14th Annual Report 2005-06

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 31st March, 2006 are as follows: Currency Amount (USD in lac) 32 Amount (Rs. in lac) 1,431 Buy/Sell Cross Currency

US Dollar (b)

Buy

Rupees

Interest Rate Swaps to hedge against fluctuations in interest rate changes: No. of Contracts: Notional Principal: 14 Rs. 233, 918 lac

(ii)

The foreign currency exposures that have not been hedged by any derivative instrument or otherwise as on 31st March, 2006 are as follows: Particulars Amount (Rs. in lac) 27,250 32,713 112,772

Assets (Receivables) Liability ( Payable) Long Term Loans for purchase of Aircraft* *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 31st 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 18th 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 21st June, 2006 under an amendment agreement.

77

Jet Airways (India) Limited

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 SALs shares. The SPA also provides that in an event, the transaction is not consummated by 21st 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 : Amount (Rs. in lac) Particulars (a) As Audit Fees As Tax Audit Fees (b) As Advisor or in any other capacity in respect of: : Company Law Tax Matters (c) In any other manner For Prospectus related reports/ certificates Concerning Initial Public Offer Other Certification, etc (d) For reimbursement of expenses Total Nil 50 20 52 31-Mar-06 110 6 31-Mar-05 110 6

Nil 35 2 203

198 3 9 398

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 : Amount (Rs. in lac) Particulars (i) (ii) (iii) (iv) (v) Salary and Allowances Contribution to Provident Fund and Provision for Gratuity Perquisites Commission to Non-Executive Directors Sitting Fees Total 31-Mar-06 35 5 10 66 14 130 31-Mar-05 32 4 10 Nil 1 46

78

14th Annual Report 2005-06

(ii)

Computation of Profit under Section 349 of the Companies Act, 1956 Amount (Rs. in lac) Particulars Profit before taxation as per Profit and Loss Account Add : Managerial Remuneration Provision for Doubtful Debts 130 247 377 72,603 Less : Profit on sale of Investments Provision for Doubtful Debts no longer required Profit for the purpose of Directors Commission Commission to Non-Executive Directors subject to a ceiling of 1% of Profits as computed above Commission payable as per Shareholders approval 5,253 20 5,273 67,330 31-Mar-06 72,226

673 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 : Amount (Rs. in lac) Particulars Components & Spares Capital Goods 14.2 Earnings in Foreign Exchange : Amount (Rs. in lac) Particulars Passenger & Cargo Revenue Sale of Aircraft Sub Lease Income Interest on Bank Account Other Income 2005-06 88,953 46,225 1,758 152 178 2004-05 60,420 Nil Nil Nil 162 2005-06 13,141 1,064 2004-05 8,160 2,872

79

Jet Airways (India) Limited

14.3 Expenditure in Foreign Currency : Amount (Rs. in lac) Particulars Aircraft Lease Rentals (Net) Communication (Gross) Aircraft Overhaul, Maintenance & Component Support Services Commission Fuel Cost Landing Rights (Intangible Assets) Landing & Navigation Charges Inflight Passenger Amenities Travelling Hire Purchase Finance Charges Payroll Costs Advertisement & Sales Promotion Ground and Cargo Handling Professional/Consultancy Insurance Premium on redemption of Preference Shares Share Issue Expenses Others 14.4 Remittance in foreign currency on account of dividend : Amount (Rs. in lac) Particulars Number of Non Resident Shareholders to whom remittance was made Number of Equity Shares held by them Amount of Dividend paid Year to which dividend relates 2005-06 1 69,057,205 2,072 2004-05 20,987 13,081 10,555 9,799 7,141 5,242 1,860 3,066 6,016 1,249 1,059 996 306 Nil Nil 1,432 15,455 7,294 699 2,402 1,029 107 187 3,508 153 168 10 247 4,496 5,852 1,108 965 2005-06 54,189 17,040 2004-05 27,250 13,285

No Dividend was declared/paid for the financial year 2003-04 and therefore the same has not been disclosed.

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14th Annual Report 2005-06

14.5 Value of Components & Spare Parts Consumed : Amount (Rs. in lac) 2005-06 Imported Indigenous Total 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 Amount (Rs. in lac) Geographical Segment (i) Segment Revenue - Within India - Outside India Total Revenue (ii) (iii) Carrying cost of Segment Assets* Expenditure incurred on Tangible & Intangible Segment Assets * 503,225 66,148 569,373 2005-06 5,611 701 6,312 % 89 11 100 2004-05 6,696 500 7,196 % 93 7 100

* Fixed Assets & other Assets used in the companys 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

Jet Airways (India) Limited

(i)

List of Related Parties with whom transactions have taken place and Relationships : Sr. No. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Name of the related party Tailwinds Ltd. Naresh Goyal Anita Goyal Saroj K. Datta Jetair Private Ltd. Jet Enterprises Private Ltd Jet Airways LLC Jet Airways of India Inc. Jetair Tours Private Ltd. Vimpal Holding Private Ltd. International Cargo Carriers Private Ltd. Jetair Worldwide AG National Travel Services
st

Nature of relationship Holding Company Controlling Shareholder of Holding Company Relative of controlling shareholder of Holding Company Key Managerial Personnel Associate Companies

Associate Partnership firm

(ii)

Transactions during the year ended 31 March, 2006 and balances with related parties : Amount (Rs. in lac)

Sr. No.

Nature of Transactions

Holding Co.

Relative of controlling Controlling shareholder of Shareholder of Holding Company Holding Company

Key Managerial Personnel

Associate Companies

(A)

Remuneration

52 (0.40) 1.3 (0.15) 6 (Nil)

50 (46) 2.45 (0.20)

(B)

Sitting Fees

(C)

Commission paid to Directors Agency Commission Rent paid

(D)

13,255 (12,669) 142 (104) -5,915 (-6,061)

(E)

(F)

Expenses Reimbursed (net) (Staff Costs / Communication Costs, Rent)

82

14th Annual Report 2005-06

Amount (Rs. in lac) Sr. No. Nature of Transactions Holding Co. Relative of controlling Controlling shareholder of Shareholder of Holding Company Holding Company Key Managerial Personnel Associate Companies

(G) (H)

Trademark Fees Purchase of Assets

Nil (635) 33 (10) 620 (618)

(I)

Deposits & Advance for Leased Premises

(J)

Sundry Creditors

1,138 (219)

(K)

Sundry Debtors

73 (68)

(L)

Share Capital (Equity Contribution)

6,907 (6,907)

1 (1)

0.06 (0.06)

(M)

Purchase of Trademark Dividend Paid 2,072 (Nil) 0.30 (Nil) 0.02 (Nil)

3,045 (Nil)

(N)

(Figures in brackets indicate 31st March, 2005 figures)

83

Jet Airways (India) Limited

(iii)

Statement of Material Transactions Amount (Rs. in lac) Associate Companies Jetair Pvt. Ltd. Agency Commission 10,080 (10,914) 44 (44) -5,920 (-6,061) Nil (10) 268 (268) 580 (6) Sundry Debtors 73 (68) Amount (Rs. in lac) Associate Companies Jet Airways LLC Agency Commission 2,473 (1,282) Sundry Creditors 251 (159) (Figures in brackets indicate 31st March, 2005 figures)

Rent Paid

Expenses Reimbursed (net) (Staff Costs/ Communication Costs, Rent) Purchase of Assets

Deposits & Advance for Leased Premises

Sundry Creditors

84

14th Annual Report 2005-06

Amount (Rs. in lac) Associate Companies Jet Airways of India Inc. Agency Commission Rent Paid 702 (473) 38 (Nil) Expenses Reimbursed (Staff Costs/ Communication Costs, Rent) Deposits & Advances for Leased Premises 5 (Nil) 17 (Nil) Assets Purchased 33 (Nil) Sundry Creditors 264 (45) Amount (Rs. in lac) Associate Companies Jet Enterprises Pvt. Ltd. Rent Paid 60 (60) Trademark Fees Nil (635) Advance given and returned back during the year 2,500 (Nil) 335 (350) 3,045 (Nil) 43 (9)

Deposits for Leased Premises

Trademark Purchase

Sundry Creditors

(Figures in brackets indicate 31st March, 2005 figures)

85

Jet Airways (India) Limited

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 Amount (Rs. in lac) Particulars Future Minimum Lease Payments As at 31st March 06 Aircraft Less than 1 year 36,974 (46,346) 158,561 (173,354) 71,297 (126,924) 266,832 (346,624) 20,791 (27,841) 113,304 (117,691) 62,603 (111,541) 196,698 (257,073) 16,183 (18,505) 45,257 (55,663) 8,694 (15,383) 70,134 (89,551) Present Value of Future Minimum Lease Payment As at 31st March 06 Finance Charges

Between 1 and 5 years

More than 5 years

Total

(Figures in brackets indicates 31st 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. The Company has taken on operating lease aircraft & spare engines the future minimum lease payments in respect of which, as at 31st March, 2006 are as follows :

(2)

86

14th Annual Report 2005-06

Amount (Rs. in lac) Particulars Aircraft & Spare Engines Less than 1 year 58,650 (23,505) 94,994 (43,038) 18,347 (7,082) 171,991 (73,625) Total Lease Payments

Between 1 and 5 years

More than 5 years

Grand Total

Aircraft given on sub lease Less than 1 year -1,718 (-1,633) -2,282 (-3,922) NIL (NIL) -4,000 (-5,555)

Between 1 and 5 years

More than 5 years

Grand Total

(Figures in brackets indicates 31st March, 2005 figures) 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.

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Jet Airways (India) Limited

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: Amount (Rs. in lac) 2005-2006 Net Profit after tax Less : Annualised return on Cumulative Preference Shares Balance Profit attributable to Equity Shareholders Add : Return on Preference Shares (See above) Add : Interest (net) on Institutional Loan with Convertibility clause Adjusted Net Profit for Diluted Earnings per Share Weighted no. of Equity Shares outstanding during the year No of Equity Shares resulting from the potential conversion of Institutional Loan No of Equity Shares resulting from the conversion of CCRPS Weighted no. of Diluted Equity Shares outstanding during the year (Nos.) Nominal Value of Equity Shares (Rs.) Basic EPS (Rs.) Diluted EPS (Rs.) 19. (E = A/C) (F = B/D) (D) (B) (C) (A) 45,204 Nil 45,204 Nil 302 45,506 86,334,011 55,685,000 Nil 142,019,011 10 52.36 32.04 2004-2005 39,199 1,037 38,162 1,037 3,706 42,905 72,986,537 323,839,626 95,169,498 491,995,661 10 52.29 8.72

The Deferred Tax Liability as at 31st March 2006 comprises of the following: Amount (Rs. in lac) Particulars Deferred Tax Liability Related to Fixed Assets Deferred Tax Asset Unabsorbed Depreciation Other Disallowances under Income Tax Act, 1961 Provision for Deferred Tax Liability (Net) Nil 1,378 32,066 10,345 842 19,485 33,444 30,672 2005-06 2004-05

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.

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14th Annual Report 2005-06

(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: Amount (Rs. in lac) Particulars Opening Balance Add: - Additional Provisions during the year Less: - Amounts used during the year Less: - Unused Amounts reversed during the year Closing Balance 2005-06 1,321 928 614 1,635 2004-05 1,184 631 494 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. Amount (Rs. in lac) Particulars Opening Balance Add:- Additional Provisions during the year Less:- Amounts used during the year Less:- Unused Amounts reversed during the year Closing Balance 2005-06 1,463 471 1,934 2004-05 1,534 201 272 1,463

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Jet Airways (India) Limited

The cash outflow out of the above provisions as per the current terms under the lease agreements are as under: Year 2006-07 2007-08 2008-09 2009-10 2011-12 2012-13 Total (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: Amount (Rs. in lac) Particulars Opening Balance Add:- Additional Provisions during the year * Less: - Amounts used during the year Less: - Unused Amounts reversed during the year Closing Balance * 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. Amount (Rs. in lac) Particulars Opening Balance Add:- Additional Provisions during the year * Less: - Amounts used during the year Less: - Unused Amounts reversed during the year Closing Balance * Additions are on account of Exchange fluctuation. 2005-06 3,841 214 1,288 346 2,421 2004-05 4,227 55 381 60 3,841 2005-06 15,377 482 2,773 3,092 9,994 2004-05 17,253 162 978 1,060 15,377 Aircraft 3 14 6 2 2 7 Amount (Rs. in lac) 388 1,091 323 1 33 98 1,934

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14th Annual Report 2005-06

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. 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 years 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.

22.

Signatures to Schedules A to S As per our attached report of even date For DELOITTE HASKINS & SELLS Chartered Accountants R. SALIVATI Partner For and on behalf of the Board For CHATURVEDI & SHAH Chartered Accountants C.D. LALA Partner Javed Akhtar Director Saroj K. Datta Executive Director Narendra Mehra Company Secretary Place : Mumbai Dated : 29th April, 2006

91

Jet Airways (India) Limited Balance Sheet Abstract and Companys General Business Profile
I. Registration Details Registration No. Balance Sheet Date II. 6 3 6 1 2 1 0 3 3 2 0 0 6 State Code Year Bonus Issue N ( Rights Issue N ( III. N I I L L ) ( N 1 4 2 4 5 I 1 L ) Private Placement N I I L L ) ( N N I I L L ) 1 1

Date Public Issue

Month

Capital raised during the year (Amount in Rs. Thousands)

Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities 7 ( 5 1 5 6 2 9 2 8 1 5 4 4 0 0 5 ) ( 5 Total Assets 7 1 5 6 2 9 2 8 1 5 4 4 0 0 5 )

Sources of Funds Paid-up Capital 8 ( 8 6 6 3 3 3 3 4 4 0 0 )

Reserves & Surplus 2 ( 1 9 2 2 1 3 9 8 5 3 5 0 0 0 8 )

Subordinated Debt N ( 3 3 4 1 1 0 I 0 L ) Unsecured Loans 2 ( 6 0 3 ( 1 9 0 0 2 4 6 0 0 8 0 0 6 4 2 0 5 5 1 0 6 2 2 ) 4 ) Investments 7 4 8 0 8 6 1 5 4 3 9 9 2 ) ( 1 5 1 5 8 9 7 7 2 3 3 0 1 1 8 ) ( 2 4 5 6 7 8 0 9 7 5 3 7 4 8 8 1 )

Secured Loans

Deferred Tax Liability

Application of Funds Net Fixed Assets 4 ( 2 6

Net Current Assets 2 ( 9 5 3 4 3 6 4 7 7 5 0 9 0 5 )

Miscellaneous Expenditure N ( N I I L L )

Accumulated Losses N ( N I I L L )

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14th Annual Report 2005-06

IV.

Performance of the Company (Amount in Rs. Thousands) Turnover 6 ( 4 4 1 2 3 0 5 1 4 7 6 0 6 0 0 ) ( 3 Total Expenditure 5 8 4 3 1 8 3 0 2 4 1 7 0 8 2 )

Profit/Loss Before Tax 7 ( 5 8 2 2 2 1 2 2 5 2 5 2 8 )

Profit/Loss After Tax 4 ( 3 9 5 1 2 9 0 9 3 0 9 0 6 )

Earnings per Share in (Rs.) 5 ( 5 2 2 . . 2 3 9 6 )

Dividend Rate @ % 6 Equity 6 ( Preference ( ( ) ) 3 0 0 ) 0

(Figures in brackets indicates 31st March, 2005 figures) 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

For and on behalf of the Board Javed Akhtar Director Saroj K. Datta Executive Director Narendra Mehra Company Secretary Place : Mumbai Dated : 29th April, 2006

93

JET AIRWAYS (INDIA) LIMITED


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

ATTENDANCE SLIP
14th Annual General Meeting PLEASE FILL THE ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL. Joint shareholders may obtain additional slip on request. DP ID No. : ___________________ Regd. Folio/Client ID No.: ___________________

I am/We are a registered shareholder/proxy for the registered shareholder of the Company and hereby record my/our presence at the Fourteenth Annual General Meeting of the Company 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.

NAME OF THE SHAREHOLDER/PROXY (IN BLOCK LETTERS)

SIGNATURE OF THE SHAREHOLDER/PROXY

Note: Shareholder/Proxy Holder wishing to attend the Meeting must bring the Attendance Slip to the Meeting and handover the same at the entrance, duly signed.

JET AIRWAYS (INDIA) LIMITED


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

PROXY
14th Annual General Meeting I/We ........................................................................of ............................................................................. in the district of ..................................................................................................being a Member/Members of Jet Airways (India) Limited, Mumbai, hereby appoint ..............................of.....................................in the district of.....................................or failing him/her, .........................of.............................................in the district of .............................as my/our proxy to attend and vote for me/us and on my/our behalf at the Fourteenth Annual General Meeting of the Company to 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. Signed this....................................day of............................2006. Regd. Folio/Client ID No. DP ID No. No. of Shares Signature Note: The Proxy completed in all respects must be deposited at the Registered Office of the Company not less than 48 hours before the time of holding of the Meeting. : : : Affix Revenue Stamp of Rs. 1.00

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