BOARD OF DIRECTORS Dr.

Vijay Mallya, Chairman & CEO

Capt. G. R. Gopinath, Vice Chairman

Capt. K.J. Samuel

Mr. A.K. Ravi Nedungadi

Mr. Vijay Amritraj

Mr. Anil Kumar Ganguly

Mr. Piyush G. Mankad

Dr. Naresh Trehan

Diwan Arun Nanda

Mr. Ghyanendra Nath Bajpai

COMPANY SECRETARY Mr. N. Srivatsa

CHIEF FINANCIAL OFFICER Mr. A. Raghunathan

AUDITORS M/s. B. K. Ramadhyani & Co.

Chartered Accountants
4B, 4th Floor, 68, Chitrapur Bhavan,
8th Main, 15th Cross, Malleswaram,
Bangalore – 560 055

REGISTERED OFFICE UB Tower, Level 12, UB City,

24, Vittal Mallya Road,
Bangalore – 560 001

1
 Report of the Directors

To The Members, financial year of the other companies in the UB Group,

of which your Company is a constituent, the Board of
Your Directors present the 13th Annual Report along with the
Directors of your Company decided that your Company
Audited Accounts of your Company for the nine-month period
should present one single financial statement to the Members
ended March 31, 2008.
commencing April 1, 2008 (the Appointed Date under the
As Members are aware, the investment by the UB Group Scheme) and ending on March 31,2009. As a consequence, the
during calendar year 2007 presented your Company with an reporting period for the accounts being placed before you is for a
opportunity to actively pursue various synergies between the period of nine months from July 1, 2007 to March 31, 2008.
UB Group owned erstwhile Kingfisher Airlines and your Company.
Operations
Your Directors retained the services of the reputed international
Your Company’s operations during the nine month period ended
consulting firm Accenture to advise your Company on how best
March 31, 2008 comprises the Scheduled Airline operations of
to exploit synergy benefits. Accenture, after a detailed study,
your Company for the period July 1, 2007 to March 31, 2008
advised that the Commercial Airline Division of the erstwhile
and the Charter Services operations for the period July 1, 2007 to
Kingfisher Airlines be merged into your Company and that the
December 31 , 2007 and have resulted in:
Charter Services Division Undertaking of your Company be
(Rs in millions)
hived off into a separate entity, with a view to consolidating the
Nine month Year ended
two scheduled commercial airline businesses to create a more
period ended June 30, 2007
competitive business, both in scale and scope of operations.
March 31, 2008
Such consolidation would help in optimizing cost, revenue and
Gross Income 15454 19899
capital synergies and lead to overall enhancement in shareholder
Earnings before financial (2379) 932
value. Accordingly, pursuant to a Composite Scheme of charges, lease rentals,
Arrangement (“the Scheme”) approved by the Members and depreciation & amortization
the Creditors, inter alia, of your Company, and sanctioned by the and taxes (EBITDAR)
Hon’ble High Court of Karnataka at Bangalore vide the Hon’ble Add/Less : Depreciation & 366 439
Court’s order dated June 16, 2008, the Commercial Airline Division Amortisation
Undertaking of the erstwhile Kingfisher Airlines was de-merged Lease Rentals 3547 4031
and transferred into your Company. The Appointed Date for the Financial charges 779 624
de-merger is April 1, 2008. The Charter Services Division Loss before taxes (7071) (4162)
Undertaking of your Company, was transferred on a slump sale Provision for taxes (4945) 34
(incl. FBT)
basis as a part of the aforesaid Scheme into a new Company
Net Profit/(Loss) from ordinary (2126) (4196)
named Deccan Charters Limited upon receipt by Deccan Charters
activities after tax
Limited of the requisite Permit for operating Non-Scheduled Air
Extraordinary items 245 0
Transport Services from the regulatory authorities, on October 10,
Net loss after tax (1881) (4196)
2008. The Appointed Date for the said slump sale is January 1,
2008. On September 5, 2008, the name of the erstwhile Kingfisher Scheduled Airline Operations
Airlines Limited was changed to Kingfisher Training and Aviation Your Company is a significant player in the Indian domestic
Services Limited and the name of your Company was changed to aviation sector and during the period under review had the
Kingfisher Airlines Limited, as envisaged in the Scheme. widest reach covering more destinations than any other domestic
carrier.
In view of the de-merger Appointed Date being April 1, 2008,
and with a view to present to the shareholders a transparent Since inception till March 31, 2008, your Company carried
financial statement of the airline business post-integration approximately 17.5 million passengers, with a fleet of 41 aircraft,
and to enable your Company to synchronize its accounting a schedule of 255 flights daily and a route network covering 61
year as April 1 to March 31 every year in line with the uniform destinations.

2
Report of the Directors (Contd.)
Your Company inducted 4 aircraft (3 Airbus A320s and 1
ATR 72-500) and returned 4 aircraft (4 ATR 42-320s) during
the period under review. The domestic aviation industry continued
to witness capacity expansion by all airline operators and the
competition continues to be stiff among all operators putting
pressure on yields. The rising fuel costs during the period and
increase in other operating costs, combined to cause an operating
loss during the period. Individual items of the financial statements
are more fully discussed in the section titled “Management
Discussion and Analysis”.
As a major step towards exploiting the synergies between the
two groups, during the period under review, the brand “Air
Deccan” was re-branded as “Deccan” with imagery identical to
the “Kingfisher” brand.
Subsequent to the period under review, the brand “Deccan” was
phased out and your Company now offers the following classes
of service:
Kingfisher First – Premium Business class of service
Kingfisher Class – Premium Economy class of service
Kingfisher Red – Low fare basic class of service
Your Company commenced international operations on
September 3, 2008 with daily flights on the Bangalore – London
sector.
For a predominant part of calendar year 2008, oil
prices continued to shoot up and coupled with the
exorbitant rates of taxes on Aviation Turbine Fuel in India, put the
Civil Aviation industry in India under severe pressure. Recession in
economies worldwide and the economic meltdown culminating
in the collapse of the financial markets and the slump in the
aviation industry worldwide (with quite a few airlines filing for
bankruptcy), has further aggravated the situation, with avenues
for funding temporarily blocked.
The Government of India has recognized the crisis the aviation
industry is facing and has initiated a dialogue with all the airlines
in India to discuss measures to enable the aviation industry to tide
over the crisis and become substantially viable for the future.
Charter Services
The Charter Services Undertaking of your Company has,
subsequent to the period under review, been transferred on a
going-concern basis for a consideration of Rs. 69.10 crores, to
Deccan Charters Limited in accordance with the Scheme. The
Appointed Date for the transfer is January 1, 2008.
Accordingly, the report for the year under review on the Charter
Services operations relates to the period July 1, 2007 to December
31, 2007. During the said period, the Charter Services Operations
continued to perform satisfactorily and increased its presence in
off shore flying for the oil sector.
The operations of ferrying pilgrims at Sri Mata Vaishnodevi Temple
in Jammu based on an arrangement with the Temple Trust, which
commenced four years back, yielded significant revenue for your
Company. Your Company also commenced ferrying operations
for the Amarnath Yatra. The customer base for and the revenue
from the technical services offered by your Company increased
significantly. Your Company offered third party maintenance as
well as operational and maintenance services to large Indian
corporates. The avionics maintenance facility established to
offer maintenance of helicopter radio equipment commenced
operations. During the period under review, there has been an
increased focus on trading in Bell helicopter spare parts.
Subsidiaries
Subsequent to the period under review, your Company has
incorporated a "wholly owned" overseas subsidiary named
Northway Aviation Limited for the purpose of financing pre-
delivery payments and aircraft acquisition.
Subsequent to the period under review, your Company has
acquired the entire share capital of Vitae India Spirits Limited as a
result of which the said company has become a "wholly owned"
subsidiary of your Company.
Outlook
The integration of the entire commercial airline business into your
Company pursuant to the Scheme has resulted in a consolidated
entity having a fleet size of 86 aircraft, network coverage of
64 cities operating over 400 flights a day and a market share
of over 25%. The synergy benefits mapped out by Accenture
are likely to be realized over a period of time and your Directors
are hopeful that this will reflect in the financial results of your
Company once the economy emerges from this recessionary
phase and the Government of India takes necessary measures to
boost the prospects of the aviation industry, particularly through
tax reforms.
Given the slow-down in the air travel market, profitability
remains a concern for airlines in the short term, given high cost
of operations. However, the UB Group has faith in the future
of the Indian aviation industry as Civil Aviation growth goes
3

hand in hand with GDP growth. The Indian economy is a trillion
dollar economy growing at 7% per annum, despite the current
economic situation. Civil Aviation is a key engine of this growth
where there is no rail or surface transport alternative given the size
and geography of the sub-continent. Passenger traffic in India has
grown from 14 million in 2005 to over 43 million in 2008. Your
Company is well-poised to meet the dynamic challenges faced
by the industry in the short term as well as to take advantage of
the growth potential in the long term. The reduction of prices of
aviation fuel and reduction of sales tax on such fuel which is under
active consideration of the government together with introduction
of stringent cost reduction and control measures will have positive
impact on the working results of your Company and sufficient
future taxable income will be available against which the deferred
tax asset can be realized.
In view of operating losses incurred during the year, your Directors
do not recommend payment of any dividend.
Capital
During the year under review, your Company’s Authorised Share
Capital was increased from Rs.150,00,00,000 (Rupees One
Hundred Fifty Crores only) to Rs.500,00,00,000 (Rupees Five
Hundred Crores only ) comprising of 40,00,00,000 (Forty Crores)
Equity Shares of Rs.10/- each and 1,00,00,000 (One Crore)
Preference Shares of Rs.100/- each.
Subsequent to the period under review, pursuant to and in
terms of the Scheme, an aggregate of :
1. 130,033,350 Equity Shares of Rs. 10/- each of your Company
were allotted to the equity shareholders of Kingfisher Training
and Aviation Services Limited (erstwhile Kingfisher Airlines
Limited) in the ratio of 3 equity shares of your Company
for every 7 shares held by them in Kingfisher Training and
Aviation Services Limited (erstwhile Kingfisher Airlines
Limited); and
2. 9,700,000 6% Redeemable Non-Cumulative Preference
Shares of Rs.100/- each of your Company were allotted to the
preference shareholders of Kingfisher Training and Aviation
Services Limited (erstwhile Kingfisher Airlines Limited) in
the ratio of 1 preference share of your Company for every
preference share held by them in Kingfisher Training and
Aviation Services Limited (erstwhile Kingfisher Airlines
Limited).
4
Report of the Directors' (Contd.)
Consequent upon the said allotment of equity shares as
mentioned above, United Breweries (Holdings) Limited along
with its subsidiaries holds 60.49% of the paid up share capital
of your Company and therefore your Company has become a
Subsidiary of United Breweries (Holdings) Limited.
Change of Name
Pursuant to and as envisaged in the Scheme, the name of your
Company was changed from Deccan Aviation Limited to Kingfisher
Airlines Limited w.e.f. September 5, 2008. The Fresh Certificate
of Incorporation consequent upon Change of Name has been
received from the Registrar of Companies, Karnataka.
Depository System
The trading in the equity shares of your Company is under
compulsory dematerialization mode. As of date, equity shares
representing 88% of the equity share capital are in dematerialized
form. As the depository system offers numerous advantages,
members are requested to take advantage of the same and avail
of the facility of dematerialization of your Company’s shares.
Auditors’ Report
As regards the observations in para 4 of the Auditors’ Report, the
relevant Notes to Accounts are self-explanatory.
In para 5 of the Auditors’ Report, the Statutory Auditors have
qualified their report by remarking that the receipt of subsidy
from aircraft manufacturers should be recognised as income on
an systematic basis over the period necessary to match them with
related costs which they are intended to compensate though
the accounting treatment does not appear to be covered by the
Accounting Standard (AS)–19 (Accounting for Leases) issued by
the Institute of Chartered Accountants of India. In the opinion of
the Directors:
(1) The lessor of the Aircraft is a person other than the Aircraft
manufacturer and the lease contract is independent of the
contract with Aircraft manufacturer.
(2) The termination, if any, of the lease contract does not in any
event breach the conditions for the grant of subsidy by the
Aircraft manufacturer.
(3) The subsidy value, referred to in Para 5 of the Audit Report
have been received by the Company during the 15 months
period ended June 30, 2006. As per Section 28 (iv) of the
Income Tax Act 1961, and precedents available under Income
Report of the Directors (Contd.)
Tax laws, including pronouncements of the Apex Court,
the revenue arising out of support packages will be
treated as income for taxation purposes and therefore,
it would not be prudent for the Company to treat the
said revenues differently in the books of Accounts and for
Taxation purposes.
(4) In the event of non compliance of the contract with the
Aircraft manufacturer, the resultant possibility of recovery
of subsidy granted by the Aircraft manufacturer has
been disclosed as contingent liability and this accounting
treatment adopted by the Company is also based on the
well established principle of differentiation of revenue
receipt and Capital receipt.
In view of the above, in the opinion of the Company, the
accounting treatment of the support package, received from the
Aircraft manufacturer, as Income in the year of accrual and receipt
is in order.
As regards the observations in para 11(a) of the Auditors’ Report,
the Note number 22 to Notes to Accounts (Schedule 22) is self-
explanatory.
As regards the observations in the Annexure to the Auditors’
Report, the Company has taken/is taking necessary steps to ensure
improvement in certain procedures and also for compliance with
the relevant laws.
Directors
Captain K J Samuel, Mr. Vijay Amritraj and Mr. Anil Kumar
Ganguly retire by rotation and, being eligible, offer themselves
for reappointment.
Subsequent to the period under review, the following Directors
resigned from the Board of Directors of your Company:
Mr. Hitesh Patel w.e.f . July 07, 2008
Ms. Bala Deshpande w.e.f. September 10, 2008
Mr. S N Ladhani w.e.f. October 01, 2008
Lt. Gen. N S Narahari w.e.f .October 14, 2008
Prof. P N Thirunarayana w.e.f. October 14, 2008
Col. Jayanth K Poovaiah w.e.f. October 15, 2008
Capt. G R Gopinath and Capt. K J Samuel resigned from
their executive positions as Managing Director and Executive
Director respectively w.e.f. October 16, 2008 and continue as
Non-Executive Directors.
Subsequent to the period under review, Mr. Piyush G. Mankad,
Dr. Naresh Trehan, Diwan Arun Nanda and Mr. Ghyanendra
Nath Bajpai were appointed as Additional Directors on October
15, 2008 and hold office up to the date of the ensuing Annual
General Meeting of your Company Notices in writing have been
received from Members signifying their intention to propose
the appointment of Mr. Piyush Mankad, Dr. Naresh Trehan,
Diwan Arun Nanda and Mr. Ghyanendra Nath Bajpai as
Directors of your Company at the ensuing Annual General
Meeting.
Auditors
M/s. B K Ramadhyani & Co., your Company's Auditors are eligible
for re-appointment at the Annual General Meeting and it is
necessary to fix their remuneration.
Listing of Shares of Your Company
The equity shares of your Company are listed on the Bombay
Stock Exchange Limited and the National Stock Exchange of India
Limited. The listing fee for the year 2007-08 has been paid to
these Stock Exchanges.
Subsequent to the period under review, 130,033,350 Equity
Shares of Rs. 10/- each of your Company issued and allotted
to the equity shareholders of Kingfisher Training and Aviation
Services Limited (erstwhile Kingfisher Airlines Limited) pursuant to
the Scheme, have been listed on the Stock Exchanges where the
existing equity shares of your Company are presently listed.
Annual General Meeting
Your Company has obtained extension of time up to December 31,
2008, from the Registrar of Companies, Karnataka, Bangalore, for
holding the Annual General Meeting for the nine-month period
ended March 31, 2008.
Corporate Governance
A report on Corporate Governance is annexed separately as
part of this Report along with a certificate of compliance from
a Company Secretary in practice. Necessary requirements of
obtaining certifications/ declarations in terms of Clause 49 have
been complied with.
Management Discussion and Analysis
Pursuant to Clause 49 of the Listing Agreement with the
Stock Exchanges, Management Discussion and Analysis Report is
annexed and forms an integral part of the Annual Report.
5

Human Resources
Employee relations remained cordial. Particulars required under
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
provisions of Section 219(1)(b)(iv) of the Companies Act, 1956,
the Report and Accounts are being sent to all the 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 your Company between 11:00 a.m. to
1:00 p.m. on all working days till the date of the 13 Annual
th
General Meeting.
Employee Stock Option Plan (ESOP)
During the period from July 1, 2007 to March 31, 2008, the
Company allotted 328385 Equity Shares of Rs. 10/- each against
the exercise of equivalent vested options. The said shares have
been listed on the Bombay Stock Exchange Limited and The
National Stock Exchange of India Limited. Considering the options
forfeited and exercised, the outstanding stock options granted
under ESOP 2005 were 1,084,065 and under ESOP 2006 were
2,401,600 as on March 31, 2008.
During the year 731,400 options have been granted
afresh under ESOP 2006 which will vest from September,
2008 and February, 2009 over a period of four anniversaries
thereof.
Disclosures as required by Clause 12 of the SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme),
Guidelines 1999 are annexed to this Report.
Conservation of Energy, Research and Development,
Technology Absorption, Foreign Exchange Earnings and
Outgo
The particulars as prescribed under section 217(1)(e) of the
Companies Act, 1956 and the rules framed there under are not
applicable to your Company.
The relevant information relating to Foreign Exchange Earnings
and Outgo appear in the Note Nos. 9 to 11 of Schedule 22 to the
Financial Statements.
6
Report of the Directors (Contd.)
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956,
in relation to financial statements for the nine-month
period ended March 31, 2008, your Board of Directors report
that:
• in the preparation of the Accounts for the nine-month period
ended March 31, 2008, the applicable accounting standards
have been followed along with proper explanation relating to
material departures;
• accounting policies have been selected and applied
consistently and that the judgments and estimates made
are reasonable and prudent so as to give a true and fair
view of the state of affairs of your Company as at March
31, 2008 and of the Loss of your Company for the
nine-month period ended March 31, 2008;
• proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the
assets of your Company and for preventing and detecting
fraud and other irregularities;
• the accounts for the nine-month period ended
March 31, 2008, have been prepared on a going concern
basis.
Thank You
Your Directors place on record their sincere appreciation for
the continued support from shareholders, customers, the
Government of India especially the Ministry of Civil Aviation
and the Directorate General of Civil Aviation, the various State
Governments, Airports Authority of India, banks and financial
institutions, suppliers, other business associates and employees.
Your Directors also wish to place on record their appreciation of
the continued co-operation and support received from the Original
Equipment Manufacturers, financing and leasing companies and
banks for their continued support and understanding.
For and on Behalf of the Board of Directors
Bangalore Dr. Vijay Mallya
October 15, 2008 Chairman
Report of the Directors (Contd.)

StocK Options granted during the year under the ESOP 2005 & 2006
Disclosures as required by Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines
1999
Sl.No Particulars (ESOP 2006) (ESOP 2005)
(a) Options granted 2,731,400 3,621,900
(b) The Pricing formula Rs. 65/- Rs. 65/-
(c ) Options vested Nil 632,840
(d) Options exercised Nil 328,385
(e) The total number of shares arising as a result of exercise of options Nil 328,385
(f) Options lapsed 330,000 1,820
(g) Variation of terms of options Nil Nil
(h) Money realized by exercise of options Nil 21,345,025
(i) Total no. of options in force 2,401,600 1,084,065
(j) Employee wise details of options granted:
(i) Senior managerial personnel
Ajay Bhatkal 50,000 -
Anand Ramachandran 50,000 -
Arun Kumar 30,000 -
Arvind Saksena - 45,000
Balakrishna Shabaraya K. 20,000 10,000
Devesh Desai 50,000 50,000
Jayanth K Poovaiah 2,20,000 154,000
Preetham Phillip 1,00,000 136,000
Ramki Sundaram 680,000 -
N Srivatsa 50,000 -
Navodit Mehra 25,000 23,000
Vivek Agnihotri 50,000 -
Nalin Gagrani 50,000 -
Sagar Rathod 30,000 -
(ii) Any other employee who received a grant in any one year of option amounting to 5% or more of Nil Nil
option granted during the year.
(iii) Identified employees who were granted options, during any one year, equal to or exceeding 1% of Nil Nil
the issued capital (excluding outstanding warrants and conversions) of the Company at the time of
the grant
(k) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in N.A
accordance with Accounting Standard AS-20
(l) Method of accounting followed for value of charge on stock options (as per the Guidance Note on Intrinsic Value Intrinsic Value
Stock Based compensation by ICAI)
(m) Difference of amount of ESOP charge calculated as per the Intrinsic Value Method and the fair value Rs. 584,876,16
of the options (Black Scholes Method)
(n) Proforma Earning Per Share if the Charge have been accounted in accordance with fair value method
(Black Scholes Method)
(o) (i) Weighted-averaged exercise prices Rs. 65.00 Rs. 65.00
and
(ii) weighted-average fair values of options Rs. 137.93 Rs. 78.54
for options whose exercise price either equals or exceeds or is less than the market price of the stock

(p) A description of the method and significant assumptions used during the year to estimate the fair
values of options :
(i) risk-free interest rate (%) 8.00
(ii) expected life (years) 5.19
(iii) expected volatility (%) 51.60
(iv) expected dividends (%) Nil
(v) the price underlying share in market at the time of option grant
Month & year of grant Intrinsic value determined
(Rs.)
June 2005 62.97
December 2005 62.97
April 2007 49.90
September 2007 83.80
February 2008 91.95

Note: 3,621,900 options have been granted under the ESOP 2005, which scheme has since been discontinued. With effect from
January 1, 2006, your Company has adopted ESOP 2006 under which 731,400 options were further granted during the period ended
March 31, 2008 in addition to 2,000,200 options which were granted during the year ended June 30, 2007.

7
 Corporate Governance

1. Company’s Philosophy on Corporate Governance of Directors comprised of 12 directors out of which

Your Company is committed to excellence in corporate
governance practices and recognizes that good corporate
governance is a continuous exercise. Your Company aims
at achieving transparency, accountability, equity and ethics
in all facets of its operations and in all interaction with its
stakeholders. Your Company believes that all its operations
and actions must result in enhancement of overall
shareholder value over a sustained period of time without
compromising in any way compliance with laws and
regulations.
2. Board of Directors
During the period under review, your Company’s Board
3 were Executive Directors and 9 were Non-Executive
Directors.
During the period under review, Seven Board Meetings
were held on August 20, 2007, September 27, 2007,
October 31, 2007, December 19, 2007, January 31, 2008,
February 21, 2008 and March 18, 2008.
Attendance of each Director at the Board Meetings and
the last Annual General Meeting during the period under
review and details of number of outside Directorships and
Committee position held by each of the Directors as on date
are given below:

Sl. Name of the Director Category of Directorship No. of Board Attendance at # No. of Other No. of Committees
No. Meetings last AGM held Companies in (other than your
attended on December, which Director Company) in which
19, 2007 Chairman/Member
1. Dr. Vijay Mallya Non-Executive 5 Yes 22 1
Non-Independent (Chairman of 1)
Vice Chairman (from October 31, 2007)
Non-Executive
Non-Independent
Chairman (from April 22, 2008)
Managing Director designated Chairman & CEO
(from October 16, 2008)
2. Capt. G R Gopinath Non-Independent 7 Yes 4 Nil
Managing Director (till October 15, 2008 ) and
Vice Chairman and Non-Executive Director
(from October 16, 2008)
3. Capt. K J Samuel Non-Independent 5 No 2 Nil
Executive Director (till October 15, 2008) and
Non-Executive Director (from October 16, 2008)
4. Mr. A K Ravi Nedungadi Non-Executive 5 Yes 11 5
Non-Independent (Chairman of 2)
5. Lt. Gen. (Retd.) N S Narahari Non-Executive 5 No Nil Nil
Independent
Chairman (till April 22, 2008) and
Non-Executive
Independent Director (from April 22, 2008) 1
6. Mr. S N Ladhani Non-Executive 7 Yes 14 Nil
Non-Independent Director2
7. Mr. Vijay Amritraj Non-Executive 1 No 3 6
Independent Director
8. Col. Jayanth K Poovaiah Executive 6 Yes 1 Nil
Non-Independent Director3
9. Ms. Bala Deshpande Non-Executive 1 No 12 5
Non-Independent Director 4 (Chairperson of 2)
10. Prof P N Thirunarayana Non-Executive 3 No 1 1
Independent Director5

8
Corporate Governance (Contd.)

Sl. Name of the Category of No. of Board Attendance at # No. of Other No. of Committees
No. Director Directorship Meetings last AGM held Companies in (other than the
attended on December which Director Company) in which
19, 2007 Chairman/ Member
11. Mr. Anil Kumar Ganguly Non-Executive 6 Yes Nil Nil
Independent Director
12. Mr. Hitesh Harshad Patel Non-Executive 5 Yes Nil Nil
Non-Independent Director6
13. Mr. Piyush Mankad* Non-Executive N.A. N.A. 12 9
Independent Director (Chairman of 2)
14. Dr. Naresh Trehan* Non-Executive N.A. N.A. 12 2
Independent Director (Chairman of 1)
15. Diwan Arun Nanda* Non-Executive N.A. N.A. 12 3
Independent Director (Chairman of 2)
16. Mr.Ghyanendra Nath Non-Executive N.A. N.A. 17 10
Bajpai* Independent Director (Chairman of 5)

NOTE: Mr. Vishnu Singh Rawal, Alternate Director to Mr. S N. Ladhani

# The above details are in respect of their Directorship only in
Indian Companies.
a. Out of 22 other Companies in which Dr. Vijay Mallya is a
Director, 7 are Private Limited Companies and 2 Section 25
Companies.
b. Out of 4 other Companies in which Capt. G R Gopinath is a
Director, 3 are Private Limited Companies.
c. Out of 2 other Companies in which Capt. K J Samuel is a
Director, 1 is a Private Limited Company.
d. Out of 11 other Companies in which Mr. A K Ravi Nedungadi
is a Director, 3 are Private Limited Companies and 1 Section
25 Company.
e. Out of 14 other Companies in which Mr. S N Ladhani is a
Director, 12 are Private Limited Companies.
f. Out of 3 other Companies in which Mr. Vijay Amritraj is a
Director, 2 are Private Limited Companies.
g. Out of 12 other Companies in which Ms. Bala Deshpande is
a Director, 4 are Private Limited Companies.
h. Out of 12 other Companies in which Dr.Naresh Trehan is a
Director, 8 are Private Limited Companies.
i. Out of 12 other Companies in which Diwan Arun Nanda is
a Director, 7 are Private Limited Companies.
j. Out of 17 other Companies in which Mr.Ghyanendra Nath
Bajpai is a Director, 6 are Private Limited Companies and 1
Section 25 Company.
1
Ceased to be Director w.e.f October 14, 2008.
2
Ceased to be Director w.e.f October 1, 2008.
3
Ceased to be Director w.e.f October 15, 2008.
4
Ceased to be Director w.e.f September 10, 2008.
5
Ceased to be Director w.e.f October 14, 2008.
6
Ceased to be Director w.e.f July 7, 2008.
* Appointed Additional Director on October 15, 2008.
also ceased to be director w.e.f. October 1, 2008 upon the
resignation of Mr. S.N. Ladhani as Director.
The current constitution of the Board of Directors of your
Company is as follows:
• Dr. Vijay Mallya – Chairman & Managing Director designated
Chairman & CEO
• Capt. G.R.Gopinath–Vice Chairman–Non–Executive Director
• Capt. K.J.Samuel–Non–Executive Director
• Mr. A. K. Ravi Nedungadi–Non–Executive Director
• Mr. Vijay Amritraj–Non–Executive Independent Director
• Mr. Anil Kumar Ganguly–Non–Executive Independent Director
• Mr. Piyush Mankad–Non–Executive Independent Director
• Dr. Naresh Trehan–Non–Executive Independent Director
• Diwan Arun Nanda–Non–Executive Independent Director
• Mr. Ghyanendra Nath Bajpai–Non–Executive Independent
Director
DISCLOSURE REGARDING APPOINTMENT AND
REAPPOINTMENT OF DIRECTORS
Directors retiring by rotation and seeking re-appointment
Capt. K.J. Samuel, a Graduate from National Defence
Academy is a recipient of the ‘Sena Medal’ for gallantry.
After being commissioned into the Indian Army in 1971,
he fought in the 1971 war against Pakistan. He is an experienced
helicopter pilot. He took voluntary retirement in 1992 as a
Lieutenant Colonel. He is a qualified flying instructor and a DGCA
Examiner. He was a Co-Promoter and co-founder of Deccan
Aviation Limited.

9
 Corporate Governance (Contd.)

Details of Capt. K.J. Samuel’s Directorships in other Indian management, corporate governance, audit, taxation, international
Companies are as under:- marketing and project control. He was the Whole-time Director
of Britannia Industries Limited and was the Managing Director of
Other Directorships Position held
Nabisco Brands (Malaysia). He was also the President of the India
Deccan Cargo Private Limited Director & Member Builders Corporation group of companies. He is also a
Deccan Charters Limited Director philanthropist and is involved in social welfare activities
Capt. K.J. Samuel holds 7,956,807 shares constituting 2.99% of relating to education and child health.
the paid up capital in your Company. Mr. Anil Kumar Ganguly does not hold any Directorship/
Mr. Vijay Amritraj was a recipient of the Padma Shri, a Committee Membership in other Indian Companies.

designated United Nations Messenger of Peace and a recipient of Mr. Anil Kumar Ganguly does not hold any shares in your
the International Sportsman of the Year Award for the year 1987. Company.
He was the youngest player to play Davis Cup for any country. He
New Directors
subsequently served India in the Davis Cup for 20 years and led
India to Davis Cup finals twice in 1974 and 1987. He founded Mr. Piyush Mankad was appointed as an Additional Director
the BAT (Britannia Amritraj Tennis) Academy in India and also (categorized as an Independent Director) of your Company on
held the position of President of the ATP (Association of Tennis October 15, 2008 and holds office as Director upto the date of
this Annual General Meeting.
Professionals).
Mr. Piyush Mankad was a distinguished member of the Indian
Details of Mr. Vijay Amritraj’s Directorships and Committee
Administrative Service and served in the Cabinet Committee in
Memberships in other Indian Companies are as under:
the Ministry of Finance. He also serves on the board of various
Other Directorships Position held companies as an Independent Director.
Lam Sports Group Private Limited Director Details of Mr. Piyush Mankad’s Directorships and Committee
First Serve Entertainment (India) Private Limited Director Memberships in other Indian Companies are as under:
Hotel Leela Venture Limited Director
Other Directorships Position held
Mr. Vijay Amritraj holds the following other Committee positions: Tata International Limited Independent Director
Tata Elxsi Limited Independent Director
Name of the Committee Position held Tata Power Limited Independent Director
Audit Committee M & M Financial Services Limited Independent Director
Lam Sports Group Private Limited Member Mahindra Forgings Limited Independent Director
First Serve Entertainment (India) Private Limited Member United Breweries (Holdings ) Limited Independent Director
Hotel Leela Venture Limited Member Max India Limited Independent Director
Icra Limited Independent Director
Shareholders/Investors Grievance Committee Mysore Cements Limited Chairman
Lam Sports Group Private Limited Member SRF Limited Independent Director
First Serve Entertainment (India) Private Limited Member Noida Toll Bridge Company Limited Independent Director
Hotel Leela Venture Limited Member DSP Merrill Lynch Fund Managers Limited Independent Director

Mr. Vijay Amritraj does not hold any shares in your Company. Mr. Piyush Mankad holds the following other Committee
positions:
Mr. Anil Kumar Ganguly is a fellow member of the Institute Name of the Committee Position held
of Chartered Accountants of India. He has over four decades Audit Committee
of experience in various facets of corporate management, such Tata International Limited Member
as finance, accounting, audit, taxation and corporate affairs. DSP Merrill Lynch Fund Managers Limited Member
He also has rich experience in sales and marketing in India as Noida Toll Bridge Company Limited Member
well as overseas and knowledge in areas of corporate finance, Mysore Cements Limited Member

10
Corporate Governance (Contd.)

Name of the Committee Position held Other Directorships Position held

SRF Limited Member Jubilant Organisys Limited Director
Raksha TPA Private Limited Director and holding more than
2% of the paid up capital
Shareholders/Investors Grievance Committee
Trasa Investments Private Limited Director
Mysore Cements Limited Chairman
Wah India Private Limited Director and holding more than
Noida Toll Bridge Company Limited Member 2% of the paid up capital
Max India Limited Member Punj Lloyd Limited Director
Tata Elxsi Limited Chairman Naresh Trehan Holdings Private Limited Director and holding more than
2% of the paid up capital
Mr. Piyush Mankad does not hold any shares in your Company. Shrumps Real Estates Limited Director and holding more than
2% of the paid up capital
Dr. Naresh Trehan was appointed as an Additional Director
Dr. Naresh Trehan holds the following other Committee
(categorized as an Independent Director) of your Company on
positions:
October 15, 2008 and holds office as Director upto the date of
this Annual General Meeting. Name of the Committee Position held
Audit Committee
Dr. Naresh Trehan is India’s leading Cardiothoracic and Punj Lloyd Limited Member
Vascular Surgeon. Dr. Naresh Trehan trained in general surgery
and subsequently cardiac surgery at premier institutions in U.S. Shareholders/Investors Grievance
(NYU Medical Centre) and held important academic and clinical Committee
Punj Lloyd Limited Chairman
positions at the New York University Medical Center, Bellevue
Hospital of the city of New York and Veterans Administration He is also a member of the Remuneration Committee of Punj
Hospital (Manhattan), U.S.A. His pioneering work in the field of Lloyd Limited.
coronary artery bypass surgery was at the New York University
Dr. Naresh Trehan does not hold any shares in your Company.
Medical Centre, New York, USA. In 1988, despite a successful
career in United States he returned to India and started Escorts Diwan Arun Nanda was appointed as an Additional Director
Heart Institute and Research Centre - a pioneering state-of-the- (categorized as an Independent Director) of your Company on
art heart institute in India. He is the Executive Director and Chief October 15, 2008 and holds office as Director upto the date of
Cardiothoracic and Vascular Surgeon of Escorts Heart Institute this Annual General Meeting.

and Research Centre. He is the Chairman of Global Health Private Diwan Arun Nanda is the Chairman and Managing Director of
Limited. He is a recipient of both Padma Bhushan and Padma Rediffusion DY&R Pvt. Ltd, India and is also on the Global Partners
Shree awards from the President of India for distinguished service Board of Y & R Advertising, USA. Diwan Arun Nanda holds a
in the field of Surgery and Medicine. Dr. Trehan serves on the Bachelors Degree in Commerce from Loyola College, Chennai
board of several companies. University, and a Post Graduate Diploma in Management from the
Indian Institute of Management, Ahmedabad. He was a member
Details of Dr. Naresh Trehan’s Directorships and Committee of the Board of Directors of Air India, a member of the Jawaharlal
Memberships in other Indian Companies are as under:- Nehru Centenary Committee (a part of the Cabinet Secretariat
of the Government of India) and President of the Advertising
Other Directorships Position held
Agencies Association of India (1993-1995 and 1999-2000).
Afsan Health Resorts Private Director and holding more than
Limited 2% of the paid up capital Details of Diwan Arun Nanda’s Directorships and Committee
Dabur Pharma Limited Director Memberships in other Indian Companies are as under:-
Dr. Naresh Trehan & Associates Director and holding more than
Health Services Private Limited 2% of the paid up capital Other Directorships Position held
Globerian India Private Limited Director Rediffusion – DY & R Private Limited Director & Shareholder
Global Health Private Limited Director and holding more than Rediff.com India Limited Director & Shareholder
2% of the paid up capital Rediffusion Holdings Private Limited Director & Shareholder

11
 Corporate Governance (Contd.)

Other Directorships Position held Other Directorships Position held

Wunderman India Private Limited Director Mandhana Industries Limited Director
Everest Brand Solutions Private Director Kshitij Investment Advisory Company Limited Director
Limited Indivision Investment Advisors Limited Director
Showdiff Worldwide Private Limited Director Future Ventures India Limited Director
Klass Equipment Private Limited Director & Shareholder Dalmia Cement (Bharat) Limited Director
Arion Horse Co. Private Limited Director & Shareholder Intiuit Consulting Private Limited Director
Clariant Chemicals (India) Limited Director Invent Asset Securitisation & Reconstruction Director
Eveready Industries (India) Limited Director Company Private Limited
Mastek Limited Director Infomerics Valuation & Rating Private Limited Director
Oriental Hotels Limited Director Nitesh Estates Private Limited Director
Apnaloan.com Services Private Limited Director
Diwan Arun Nanda holds the following other Committee Invent ARC Private Limited Director
positions: IDE India (Section 25 Company) Director

Name of the Committee Position held Mr. Ghyanendra Nath Bajpai holds the following other Committee
Audit Committee positions:
Clariant Chemicals (India) Limited Member
Name of the Committee Position held
Mastek Limited Chairman
Audit Committee
Shareholders/Investors Grievance Committee Mandhana Industries Limited Member
Clariant Chemicals (India) Limited Chairman Emaar MGF Land Limited Member
Future Capital Holdings Limited Member
Diwan Arun Nanda does not hold any shares in your Company. Dalmia Cement (Bharat) Limited Member
Future Generali India Life Insurance Company Limited Chairman
Mr. Ghyanendra Nath Bajpai was appointed as an Additional Future Generali India Insurance Company Limited Chairman
Director of your Company (categorized as an Independent Future Ventures India Limited Chairman
Director) on October 15, 2008 and holds office as Director upto
the date of this Annual General Meeting. Shareholders/Investors Grievance Committee
Emaar MGF Land Limited Chairman
Mr. Ghyanendra Nath Bajpai holds a Master’s Degree in Commerce Future Capital Holdings Limited Chairman
from the University of Agra and a Degree in Law (LLB) from the The Dhanalakshmi Bank Limited Member
University of Indore. He has been the Chairman of the Securities
Mr. Ghyanendra Nath Bajpai does not hold any shares in your
and Exchange Board of India (SEBI), the Life Insurance Corporation
Company.
of India (LIC), and Non-Executive Chairman of National Stock
Exchange of India Limited. 3. AUDIT COMMITTEE
He received among others the “Outstanding Contribution to the The Audit Committee was constituted on December 21, 2005
Development of Finance” award from the Prime Minister of India, to meet the requirements under both the Listing Agreement
Dr. Manmohan Singh. and Section 292A of the Companies Act, 1956.

Details of Mr. Ghyanendra Nath Bajpai’s Directorships and During the period under review, Three meetings of the
Committee Memberships in other Indian Companies are as Committee were held on September 27, 2007, October 29,
under:- 2007 and January 31, 2008. The details of attendance by
members of the Committee are as below:
Other Directorships Position held
Future Generali India Life Insurance Director Members Category No. of
Company Limited Meetings
Attended
Future Generali India Insurance Company Limited Director
Mr. Anil Kumar Ganguly Non-Executive 3
Emaar MGF Land Limited Director
Independent
The Dhanalakshmi Bank Limited Director Lt. Gen. N. S. Narahari Non-Executive 2
Future Capital Holdings Limited Director Independent

12
Corporate Governance (Contd.)

Members Category No. of • Such other matters as may from time to time be
Meetings required by any statutory, contractual or other
Attended regulatory requirements to be attended to by the Audit
Prof. P. N. Thirunarayana Non-Executive 1
Committee.
Independent
Mr. S. N. Ladhani Non-Executive 3 Consequent upon the resignation of Directors and
Non-Independent appointment of Additional Directors as mentioned
Ms. Bala Deshpande Non-Executive Nil hereinabove, the Audit Committee has been
Non-Independent
reconstituted on October 15, 2008 and the current
The terms of reference to the Audit Committee cover the composition of the Audit Committee is as given
areas mentioned under Clause 49 of the Listing Agreement below:
and Section 292A of the Companies Act, 1956, (besides •  Mr. Anil Kumar Ganguly- Chairman
some other functions as are referred to it by the Board of •  Diwan Arun Nanda
Directors) which are as follows:- •  Dr. Naresh Trehan
• Regular review of accounts, accounting policies, •  Mr. A .K. Ravi Nedungadi
disclosures, etc.
4. SHARE ALLOTMENT, TRANSFERS AND INVESTOR
• Review of the major accounting entries based on
GRIEVANCE COMMITTEE
exercise of judgment by management and review of
significant adjustments arising out of audit. The Share Allotment, Transfers and Investor Grievance
• Qualifications in the draft audit report. Committee was constituted on December 21, 2005 to
• Establishing and reviewing the scope of the independent operate in terms of the provisions related thereto in the
audit including the observations of the auditors and Listing Agreements with the Stock Exchanges and/or the
review of the quarterly, half-yearly and annual financial provisions as prescribed or may be prescribed in this regard
statements before submission to the Board. by the Companies Act, 1956.
• The Committee shall have post audit discussions with During the period under review, the Committee comprised
the independent auditors to ascertain any area of of the following Directors:
concern.
• Mr. Anil Kumar Ganguly - Chairman
• Establishing the scope and frequency of internal audit,
• Lt Gen N S Narahari
reviewing the findings of the internal auditors and
• Mr. S N Ladhani
ensuring the adequacy of internal control systems.
• Capt K J Samuel
• To look into reasons for substantial defaults in the
• Col. Jayanth K Poovaiah
payment to depositors, debenture holders, shareholders
and creditors. Mr. N Srivatsa, Company Secretary, is the Compliance
• To look into the matters pertaining to the Director’s Officer.
Responsibility Statement with respect to compliance During the period under review, Nine meetings of the
with Accounting Standards and Accounting Policies. Committee were held on August 20, 2007, August 27,
• Compliance with Stock Exchange legal requirements 2007, September 24, 2007, November 14, 2007, December
concerning financial statements to the extent 14, 2007, January 4, 2008, February 8, 2008, March 3, 2008
applicable. and March 18, 2008 respectively. The attendance of the
• The Committee shall look into any related party Directors at these Committee meetings is as below.
transactions i.e., transactions of your Company of a
Members Category No. of Meetings
material nature, with promoters or management, their
Attended
subsidiaries or relatives etc., that may have potential Mr. Anil Kumar Ganguly Non-Executive 9
conflict with the interests of Company at large. Independent
• Appointment and remuneration of statutory and Lt Gen N S Narahari Non-Executive 7
internal auditors. Independent

13
 Corporate Governance (Contd.)

Members Category No. of Meetings “Remuneration and Compensation Committee” on October

Attended 15, 2008. The Committee is authorized, apart from the
Mr. S N Ladhani Non-Executive 6 matters referred to above, to formulate and implement
Non-Independent Employee Stock Option Scheme(s).
Capt K J Samuel Executive 6
Non-Independent The current composition of the Commitee is as given
Col. Jayanth K Poovaiah Executive 8 below :
Non-Independent • Diwan Arun Nanda - Chairman
During the period under review, 26 complaints were • Mr. Anil Kumar Ganguly
received and replied/redressed to the satisfaction of the • Mr. A K Ravi Nedungadi
shareholders. Remuneration of Directors
Consequent upon the resignation of Directors and The details of remuneration paid to the Directors during the period
appointment of Additional Directors as mentioned under review are given below:
hereinabove, the Committee has been reconstituted on a) Remuneration of Executive Directors
October 15, 2008 and the current composition of the
Name of the Director Salary payable Actual Salary
Committee is as given below:
(Rs.) paid (Rs.)
• Mr. Anil Kumar Ganguly - Chairman
Capt. G R Gopinath 22.50 lakhs 22.50 lakhs
• Mr. A K Ravi Nedungadi Managing Director
• Capt. K J Samuel Capt. K J Samuel 11.16 lakhs 11.16 lakhs
Executive Director
5. REMUNERATION COMMITTEE Col. Jayanth K Poovaiah 18.00 lakhs 13.70 lakhs
Executive Director
The Remuneration Committee was constituted on March
16, 2005. The Committee is authorized, inter alia, to deal b) Sitting fees of Non-Executive Directors
with matters relating to framing policies and compensation
Name of the Director Fees paid for attending
including salaries and salary adjustments, incentives, bonuses, Board/ Committee
promotion, benefits, stock options and performance targets Meetings (Rs.)
of top executives, remuneration of Directors, strategies for Dr. Vijay Mallya 1,00,000
attracting and retaining employees, employee development Lt. Gen. (Retd.) N S Narahari 2,00,000
programmes and other key issues referred by the Board of Mr. S N Ladhani` 2,30,000
Directors of your Company. Mr. Vijay Amritraj 20,000
Mr. A K Ravi Nedungadi 1,00,000
During the period under review, the Committee comprised Ms. Bala Deshpande Nil
of the following Directors: Prof. P N Thirunarayana 70,000
• Mr. S N Ladhani Mr. Anil Kumar Ganguly 2,50,000
• Ms. Bala Deshpande Mr. Hitesh Patel 1,00,000
• Lt Gen N S Narahari None of the Non-Executive Directors of your Company
• Prof. P N Thirunarayana have any pecuniary relationship or transaction with your
• Mr. Anil Kumar Ganguly Company.
Mr. N Srivatsa, Company Secretary, is the Secretary to the c) Shareholding of Non Executive Directors during the period
Committee. under review
During the period under review, no meetings of the Apart from Mr. S N Ladhani who held 798 equity shares of
Committee were held. Rs. 10/- each of your Company, no other Non-Executive
Consequent upon the resignation of Directors and Director held shares in your Company as on March 31,
2008.
appointment of Additional Directors as mentioned
hereinabove, the Remuneration Committee and the ESOP None of the Non-Executive Directors own any shares on
Committee were merged into one committee namely beneficial basis during the period under review.

14
Corporate Governance (Contd.)

d) Employee Stock Option to Directors During the period under review, pursuant to Section 192A of the
Col. Jayanth K Poovaiah - Executive Director was granted Companies Act, 1956, your Company conducted the Postal Ballot
options under the Employee Stock Option Plan of your exercise following the provisions and rules framed under the Act
Company as follows: for conducting Postal Ballot.
Scheme No. of options granted
The details/ results of the Postal Ballot exercise so conducted are
ESOP 2005 154,000 as under:
ESOP 2006 220,000
Date of Date of Description Result
6. GENERAL BODY MEETINGS Notice Scrutinizer’s
of Postal Report
The details in respect of the last three Annual General Ballot
Meetings are furnished as under: February April 14, Special Resolution under Carried with
21, 2008 2008 Section 372A of the requisite
Financial Date Time Venue Companies Act, 1956 majority.
Year for increase in limits for Number of
making investments, votes cast in
2004-2005 October 22, 10.00.a.m. Jakkur Aerodrome,
loans, advances and favour -1157
2005 Bellary Road,
guarantees upto an Number of
Bangalore - 560 064
amount of Rs.1,000 votes cast
2005-2006 December 11, 10.30.a.m. Dr. Ambedkar crores (Rupees One against - 64
2006 Bhavan, Millers Road, Thousand Crores only)
Vasanthnagar,
Bangalore -560 052 The Postal Ballot exercise was conducted by Mr. G. Krishna,
2006-2007 December 19, 4.00.p.m. Senate Hall, Company Secretary in practice, Scrutinizer appointed for this
2007 Hotel Capitol, purpose.
3 Raj Bhavan Road,
Bangalore - 560001 7. DISCLOSURES
During the period under review, there were no materially
All the resolutions set out in the Notices, including significant related party transactions with your Company's
Special Resolutions were passed by the Shareholders. promoters, the Directors or the management, their subsidiaries
or relatives etc., that may have potential conflict with the
Since the date of the last Annual General Meeting, one
interests of your Company at large. Details of related party
Extra Ordinary General Meeting was held on March 18, 2008 transactions form part of Notes to Accounts.
at which a Special Resolution was passed for the issue and
Your Company has complied with all the statutory
allotment of shares under Section 81(1A) and other applicable
requirements comprised in the Listing Agreements/
provisions of the Companies Act, 1956 for an amount not Regulations/Guidelines/ Rules of the Stock Exchanges /SEBI/
exceeding Rs.1600 crores (Rupees One Thousand Six Hundred other statutory authorities.
Crores).
There were no instances of non-compliance by your
Meeting of the Equity Shareholders of your Company to Company nor have any penalties, strictures been imposed by
approve the Composite Scheme of Arrangement mentioned Stock Exchanges or SEBI or any statutory authority since
incorporation of your Company on any matter related to
hereinabove convened and held by the Hon’ble High Court
capital markets.
of Karnataka on April 17, 2008 approved the Composite
Scheme of Arrangement as modified. 8. MEANS OF COMMUNICATION
The unaudited quarterly and half-yearly results are sent to all
Postal Ballot the Stock Exchanges where the shares of your Company are
Your Company has not passed any resolution at the above listed. The results are normally published in Business Standard
Annual General Meetings which was required to be passed and Kannada Prabha.

through Postal Ballot as per the provisions of the Companies Act, The results are displayed on your Company’s website
1956 ("the Act") and the rules framed thereunder. www.flykingfisher.com.

15
 Corporate Governance (Contd.)

9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion & Analysis Report forms part of this Annual Report.

10. GENERAL SHAREHOLDERS’ INFORMATION

a) Annual General Meeting
Date December 26, 2008
Time 2.45 p.m.
Venue Dr. Ambedkar Bhavan, Millers Road, Vasanthnagar, Bangalore -560052
b) Financial period July 1, 2007 to March 31, 2008
c) Dates of Book Closure Tuesday, December 23, 2008 to Friday, December 26, 2008 (both days inclusive)
d) Dividend Payment Date Your Company has not declared any divided for the period July 1, 2007
to March 31, 2008
e) Listing Fees The listing fees for the year 2008-09 have been paid to both the Stock Exchanges where your
Company’s equity shares are listed.
f) Registered Office UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001.
( w.e.f June 2, 2008)
g) Listing on Stock Exchanges in India Bombay Stock Exchange Limited,
P J Towers, Dalal Street , Mumbai 400 001
National Stock Exchange of India Limited
Exchange Plaza, C/1, Block G, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051
h) Stock Code BSE- 532747
NSE-SYMBOL-AIRDECCAN (upto October 5, 2008)
NSE- SYMBOL- KFA (w.e.f October 6, 2008)
i) ISIN No. INE438H01019
The listing fees for the year 2007-08 have been paid to both the Stock Exchanges.
j) Financial Calendar for the period April 1, 2008 to March 31, 2009 is as given below:
First Quarterly Results By October 31, 2008
Second Quarterly Results By October 31, 2008
Third Quarterly Results By January 31, 2009
Fourth Quarterly Results By April 30, 2009

k) Market Price Data

The shares of your Company are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The
table below sets out the monthly high and low quotations of the shares traded during the period under review. Your Company’s
Management cautions the readers that the share price performance shown in the table below should not be considered to be
indicative of the share price in the future.

l) Share Price of your Company

ON BSE ON NSE
Month High (Rs.) Low (Rs.) Close (Rs.) Volume (Nos.) High (Rs.) Low (Rs.) Close (Rs.) Volume (Nos.)
July, 2007 150.15  132.10  140.70 2985393  145.02 140.22 142.25 10103442
August, 2007 146.25  130.20  140.90  4453383 141.15 135.75 138.10 12420935
September, 2007  151.95  140.00  146.25  6110760  145.59 142.38 143.70 28664830
October, 2007 168.50  135.00  152.70  8066245  157.67 146.43 152.45 20218583
November, 2007  267.00  142.70  242.90  35434211  184.99 167.95 176.34 74153462
December, 2007  335.00  243.50  276.90  29925085  293.45 264.82 276.49 84577905
January, 2008  307.00  132.20  173.90  9670949  248.53 224.57 234.96 31672054
February, 2008  206.70  154.55  169.70  5327075  185.86 171.51 177.78 18442918
March, 2008 167.00  100.30  122.05  3788822  138.15 125.08 130.94 13643435

16
Corporate Governance (Contd.)

Your Company’s performance for the period from July 1, 2007 to March 31, 2008 vis-à-vis BSE Sensex

Your Company vis-à-vis BSE

Your Company vis-à-vis NSE

17
 Corporate Governance (Contd.)

m) Registrar and Share Transfer Agents

Karvy Computershare Pvt. Ltd.
Plot No. 17-24, Vittal Rao Nagar,
Madhapur, Hyderabad - 500 081
Tel No. : 91-040- 23420816-824
Fax No. : 91- 040- 23420814
Email ID : einward.ris@karvy.com

n) Share Transfer System

The power to consider and approve share transfers/ transmission/ transposition/ consolidation/ subdivision etc. has been delegated
to a Committee of Directors as indicated under the heading "Share Allotment, Transfers and Investor Grievance Committee". The
Committee generally meets once a month. The requirements under the Listing Agreement/ Statutory regulations in this regard are
being followed.

o) Distribution of Shareholding as on March 31, 2008

Equity Shares held Shareholders Shares held %

1 - 5000 49559 5012117 3.69
5001 - 10000 1223 996089 0.73
10001 - 20000 555 847786 0.62
20001 - 30000 155 403745 0.30
30001 - 40000 79 277475 0.20
40001 - 50000 87 413324 0.30
50001 - 100000 131 978423 0.72
100001 & Above 161 126869544 93.42
Total 51950 135798503 100.00

p) Shareholding Pattern as on March 31, 2008

Sl. No. Name of shareholder No. of shares % of holding

1. Promoters 67572591 49.76
2. Mutual Funds/ UTI 13612587 10.02
3. Financial Institutions / Banks 4955 0.00
4. Venture Capital Funds 1081839 0.80
5. Insurance Companies 1254420 0.92
6. Bodies Corporate 11300689 8.32
7. Individuals 33240994 24.48
8. Trusts 647 0.00
9. Clearing Members 555461 0.41
10. Foreign Institutional Investors 1894008 1.39
11. Foreign Corporate Bodies 4453138 3.28
12. Non Resident Indians 121374 0.09
13. Foreign Nationals 705800 0.52
Total 135798503 100.00

18
Corporate Governance (Contd.)

q) Percentage of Shares held in Physical & Electronic Form as on March 31, 2008

Sl.No. Category Holders Total Shares % To Equity

1. Physical 29 20672375 15.22
2. NSDL 38184 99382285 73.18
3. CDSL 13737 15743843 11.59
Total 51950 135798503 100.00 

Your Company has not issued GDRs/ADRs/Warrants or any convertible instruments.

r) Dematerialisation of Shares
84.77% of the paid-up capital is held in dematerialized form as on March 31, 2008 and 87.66% as on date.

s) Insider Trading
All the Directors and Senior Management Personnel have affirmed compliance of "The Code of Business Conduct and Ethics"
as suggested under the SEBI (Prohibition of Insider Trading) Regulations, 1992 and have executed Indemnity Bonds thereof,
individually.

t) Address for Correspondence

Shareholder correspondence should be addressed to your Company’s Registrar and Share Transfer Agents:
Karvy Computershare Pvt. Ltd.
Plot No. 17-24, Vittal Rao Nagar
Madhapur
Hyderabad - 500 081
Tel No.: 91-040- 23420816-824
Fax No.: 91-040- 23420814
Email ID : einward.ris@karvy.com
Investors may also write to or contact Mr. N Srivatsa, Company Secretary at:
Kingfisher Airlines Limited
(formerly Deccan Aviation Limited)
35/2, Cunningham Road, Bangalore 560 052
Tel.: 91- 080-41148190-99
Fax : 91-080-22352645/41148849
Email : N. Srivatsa@flykingfisher.com

In compliance with the provisions of Clause 47(f) of the Listing Agreement with the Stock Exchanges, an exclusive email id, viz
investor.relations@flykingfisher.com has been designated for registering complaints by investors, which has been displayed on the
website of your Company www.flykingfisher.com.

NON MANDATORY REQUIREMENTS

a. Remuneration Committee Your Company has constituted a "Remuneration and Compensation" Committee.
b. Shareholders Rights Your Company’s half-yearly results are published in English and Kannada newspapers. Hence the
same are not sent to the shareholders.
c. Training of Board Members The Board of Directors comprises of well experienced and accomplished members and their formal
training is considered not necessary.
d. Whistle Blower Policy Your Company has a Whistle Blower Policy in place.

19
 Corporate Governance (Contd.)

CERTIFICATE OF THE PRACTISING COMPANY SECRETARY IN RESPECT OF

COMPLIANCE OF CORPORATE GOVERNANCE

To,

The Members of Kingfisher Airlines Limited (formerly Deccan Aviation Limited)

Bangalore

I have examined the compliance of conditions of Corporate Governance by Kingfisher Airlines Limited (formerly Deccan Aviation Limited)
for the nine-month period from July 1, 2007 to March 31, 2008 as stipulated in Clause 49 of the Listing Agreement of the said Company
with the Stock Exchanges.

The compliance of the conditions of Corporate Governance is the responsibility of the management. My examination was limited
to procedures and implementation thereof adopted by the Company for ensuring the compliance with the conditions of Corporate
Governance as stipulated in the above mentioned Listing Agreement.

In my opinion and to the best of our information and according to the explanations given to me, I certify that, the Company has complied
with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.

I 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.

Bangalore G. Krishna
October 15, 2008 Company Secretary
Membership No. ACS-9716
CP-5793

CEO / CFO Certificate

In terms of the requirement of the amended Clause 49, the Certificates from CEO / CFO have been obtained.

On behalf of the Board of Directors

Bangalore Capt. G R Gopinath

October 15, 2008 Vice Chairman & Managing Director

DECLARATION REGARDING AFFIRMATION OF CODE OF CONDUCT

In accordance with Clause 49 I (D) under the Listing Agreement with the Stock Exchanges, I hereby confirm that all the Directors and
Senior Management Personnel have affirmed compliance of the aforesaid Code of Conduct of the Company for the nine-month period
from July 1, 2007 to March 31, 2008 and a confirmation to that effect has been given by each of them.

Bangalore Capt. G R Gopinath

October 15, 2008 Vice Chairman & Managing Director

20
Management Discussion and Analysis Report
1. Industry structure and developments
a. The Indian economy continued to be buoyant during
2007-08, providing a positive framework for the
aviation industry in the country. Economic momentum,
positive demographics, an inherent ‘latent demand’
for air travel as well as significant steps initiated
towards development of airport infrastructure at major
metropolitan cities augur well for the industry.
b. However, increase in crude prices during the period
under review resulted in a surge in Aviation Turbine
Fuel (ATF) costs worldwide. In addition, input costs in
India are also higher than other countries on account
of various duties, taxes and levies. Fare and surcharge
increases implemented by airlines as a result of the
higher input costs have resulted in a slow-down in
demand for air travel.
c. Capacity growth continued to be in excess of
growth in market demand during 2007-08. Fares
below break-even levels in case of routes with
marked over-capacity along with the impact of
higher input costs have significantly contributed
towards industry losses of around USD 1 billion during
2007-08.
d. Progressive policies implemented by the Government
of India including liberalization of the Air Services
Agreement with various countries have further
strengthened India’s place as a preferred global
destination. Even as Indian carriers expanded their
footprints worldwide, various international carriers
have increased their operations into India. Apart from
major metropolitan cities, international carriers have
also included various tier II and tier III cities as part of
their India network.
e. Marking the successful foray of public-private
partnerships in the infrastructure segment in the
country, state-of-the-art greenfield airports at
Hyderabad and Bangalore commenced commercial
operations. In addition, the planned modernization of
Kolkata and Chennai airports, 35 non-metro airports
have been identified for development based on the
public-private partnership format. This, in addition, to
other significant policy measures by the Government
has provided a positive direction to the aviation industry
in the country.
2. Segment–wise or Product-wise performance
a. During the period under review, your Company operated
in a single business segment, i.e. of providing scheduled
and non- scheduled air transportation services.
b. Further, during the period under report, your Company
operated only in India and did not have operations
outside India.
c. Accordingly, no separate segment disclosures for
primary business segment and geographical disclosures
are required to be given.
3. Outlook
a. Given the slow-down in the air travel market, profitability
remains a concern for airlines in the short term given
high cost of operations.
b. From a long term perspective though, air travel
continues to have immense growth potential in the
country with regard to both domestic and international
air traffic providing for increased opportunity to connect
metropolitan and regional centers across the country as
well as provide seamless connectivity between major
Indian destinations and the rest of the world.
c. Your Company is well poised to meet the dynamic
challenges faced by the industry in the short term as
well as to take advantage of the growth potential in the
long term.
4. Internal control systems and their adequacy
a. Your 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 authorised,
recorded and reported properly and applicable statutes,
codes of conduct and corporate policies are duly
complied with.
b. 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.
21
 Management Discussion and Analysis Report (Contd.)
c. Your Company’s Audit Committee comprises of five
Non–Executive Directors: Mr A K Ganguly, Chairman,
Prof. P N Thirunarayana, Mr. S N Ladhani, Ms. Bala
Deshpande and Lt Gen N S Narahari. 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. The Audit Committee has been
reconstituted on October 15, 2008 and comprises of
Mr. Anil Kumar Ganguly- Chairman, Diwan Arun Nanda,
Dr. Naresh Trehan and Mr. A .K. Ravi Nedungadi.
d. Your Company has a Corporate Compliance Procedure
to ensure that all laws, rules and regulations applicable
to our industry are complied with. A Corporate
Compliance Certificate is placed at Board Meetings
periodically.
e. 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.
f. Your Company has a process of both external and
internal safety audits for each area of operation. Your
6. Analysis
Company is in compliance with all laws, rules and
regulations relating to airworthiness, air safety and
other statutory operational requirements.
g. Your 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.
5. Consolidation of the scheduled airline business pursuant
to the Scheme
a. In June 2007, the UB Group, one of the India's largest
conglomerates, acquired a controlling stake in your
Company via preferential allotment of shares followed
by open offer and market purchase from public
shareholders.
b. In order to benefit from consolidation in terms of
synergy benefits, the Board of Directors of your
22
Company, based on the advice of a reputed consultancy
firm, Accenture, decided to de-merge and transfer the
commercial ariline division undertaking of the erstwhile
Kingfisher Airlines into your Company to creat a more
competitive business, both in scale and scope of
operations.
c. The UB Group initiated new branding strategies
and implementation of the new look for the fleet of
aircraft in place of the earlier "Air Deccan" branding.
Most importantly the UB Group focused on providing
a higher quality of care and service to its guests at all
customer touch points and towards implementation of
better operational strategies.
d. By adding Kingfisher Red to its service class, Kingfisher
Airlines provides passengers with three classes of
fares, Kingfisher First (business class); Kingfisher Class
(premium economy class) and Kingfisher Red (low fare
economy class).
e. Kingfisher Airlines is now able to cater to the entire
spectrum of the air travel market providing relevant
services to the ‘price-seeker’, the ‘value-seeker’ as well
as the ‘service-seeker’.
of operational performance for the
nine-month period ended March 31, 2008
The current financial period is for nine months from July
1, 2007 to March 31, 2008 and is, therefore, not strictly
comparable with the results of the previous financial
period of 12 months from July 1, 2006 to June 30, 2007
(Fiscal 2007). The Charter operations reflected are for a period
of six months from July 1, 2007 to December 31, 2007 and
airline operations represent only scheduled airline operations
of former Deccan.
Income
Management Discussion and Analysis Report (Contd.)
a. Our total income stood at Rs. 15,454.43 million during
the nine-month period from July 1, 2007 to March 31,
2008. Income from operations formed 93.27% of total
income at Rs. 14,413.95 million.
b. Revenue from sale of tickets and related income at
Rs. 14,030.25 million formed 90.78% of total income.
During the period July 1, 2007 to March 31, 2008,
apart from expansion of our network as a group, we
also undertook intensive rationalization of routes thus
reducing overlaps and optimizing fleet deployment
across the network.
c. Revenues from Helicopter charter and other services
stood at Rs.349.56 million during the nine-month
period from July 1, 2007 to March 31, 2008.
d. Other income stood at Rs.1,040.48 million during the
nine-month period from July 1, 2007 to March 31,
2008. This includes profit on transfer of aircraft/engine
purchase rights of Rs.249.70 million. We also earned
certain credits from aircraft/engine manufacturers
amounting to Rs. 366.72 million, which accrued during
the period under review.
Expenditure
Total expenditure stood at Rs.22,524.93 million during the
nine-month period from July 1, 2007 to March 31, 2008.
a. Aircraft fuel expenses: Expenditure on fuel stood at
Rs. 8,892.96 million during the nine-month period from
July 1, 2007 to March 31, 2008. Average fuel prices
increased progressively during the period under review
and were up +28% during March 2008 as compared to
June 2007.
b. Aircraft engine/lease rentals: Aircraft/engine lease
rentals stood at Rs. 3,547.33 million during the nine-
month period from July 1, 2007 to March 31, 2008.
During the period under review, we added 1 ATR and 3
Airbus A320s on lease, which added to the lease rentals
on our existing fleet.
c. Employee remuneration and benefits (personnel
costs): Employee remuneration and benefits stood
at Rs.2,461.06 million during the nine-month period
from July 1, 2007 to March 31, 2008. The upswing in
personnel costs is mainly on account of:
• Increase in the number of employees as demanded
by our expanding operations. Our total number
of employees as of March 31, 2008 was 3,178 as
compared to 3,099 employees as of June 30, 2007;
• Increase in salaries, particularly those of pilots, co-
pilots and engineers, as a result of increased demand
caused by the deployment of additional aircraft by
existing and new airlines; and
• Ramp up of personnel on account of planned
international expansion.
d. Other operating expenses: Other operating expenses
stood at Rs. 6,478.86 million during the nine-month
period from July 1, 2007 to March 31, 2008. The
same is impacted by the increase in level of operations
during the period under review as compared to previous
years.
e. Interest and finance charges: Interest and finance
charges were at Rs.778.78 million during the
nine-month period from July 1, 2007 to March 31,
2008. These expenses include the interest on two ATRs
acquired on a hire purchase basis and one ATR obtained
on ownership basis and financed by a local financial
company.
f. Depreciation and amortization: Depreciation
charges were Rs.182.81 million during the nine-month
period from July 1, 2007 to March 31, 2008. These
expenses reflect principally the depreciation on two ATRs
acquired on a hire purchase basis and one ATR obtained
on ownership basis and financed by a local financial
company. Amortization charges stood at Rs.183.13
million during the nine-month period from July 1, 2007
to March 31, 2008.
23

g. Provision for tax: Our total tax expense, comprising
fringe benefit tax, was Rs.35.49 million during the
nine-month period from July 1, 2007 to March 31,
2008.
h. Loss after tax expense for the period under review:
Loss after tax during the nine-month period from July 1,
2007 to March 31, 2008 was Rs. 1,881.36 million.
7. Material developments in Human Resources
Industrial Relations front, including number of people
employed
a. The total number of employees as of March 31, 2008
was 3,178 as compared to June 30, 2007 was 3,099.
b. There were no material developments as regards human
resources / industrial relations front during the period
under review.
8. Opportunities and Threats, Risks and Concerns
a. Your Company has undertaken a phased approach
towards capacity additions as well as expansion in
both the domestic and international markets. We will
be closely monitoring market developments as well
as the macro-economic environment in the country
from a global perspective. We are well-placed to take
advantage of emerging business and tourist destinations
in the country as well as augment services in case of
established routes in order to further strengthen our
domestic network. Progressive policies initiated by the
Government as regards new bilateral agreements with
various countries provide conducive framework for
expansion of international operations.
b. Your Company continues to be at the forefront
with regard to undertaking measures to improve
profitability / reduce losses, including:
• Planning for reduced / phased capacity induction
• Deferring of aircraft deliveries
• Rationalization of route structures
• Optimization of human resources including cross-
utilization
• Review of distribution channels and costs
• Representations to the Ministry of Civil Aviation
for relief in case of ATF costs, reduction of landing
24
Management Discussion and Analysis Report (Contd.)
and navigation charges, against levy of additional
airport charges, flexibility in case of Route Dispersal
Guidelines, permission for self-handling at all
airports, etc.
c. Your Company expects to optimize costs especially
on account of the positive impact of synergies post
consolidation thus, reaping economies of scale.
/
d. The intense volatility in the prices of Aviation Turbine
Fuel (ATF) as witnessed in the past few months continues
to have significant impact on airline profitability.
Discussions are ongoing with the Ministry of Civil
Aviation for suitable reduction in the levy of taxes and
duties on the ATF. Your Company is also seeking to
manage the adverse effects of steep increases in ATF
prices by actively managing fuel consumption. Crude
prices have shown a downward trend in the post
balance sheet period from October 2008 which will
impact the next fiscal.
e. The domestic market in the country continues to witness
overcapacity in case of certain routes. However, with
slow-down in capacity expansion, airlines are expected
to rationalize capacity as well as pricing policies going
forward.
f. Government initiatives remain on track as regards
aviation infrastructure development including efforts to
reduce congestion at key airports such as Mumbai and
Delhi. The public-private partnership format has been
successful in case of the design and development of
both Bangalore and Hyderabad international airports
and the same is expected to be extended to other
airports.
g. The slow-down in global economies could adversely
impact air traffic in the country in case of both domestic
and international routes. Besides, factors such as
political instability, weather conditions, bird hits,
increased security measures and epidemics, force
majeure events, terrorist attacks and other acts of
violence or war involving India, or other countries and
other acts or potential acts of violence or war or natural
calamity (including epidemics and other events) could
adversely impact the aviation industry.
Management Discussion and Analysis Report (Contd.)

9. Awards and accolades Cautionary Statement

Significant awards and accolades received by Kingfisher
Statements in the management discussion and analysis
Airlines during the period under review include:
describing your Company’s objectives, projections, estimates,
a. India’s only 5 star airline, and the worlds only 5 Star expectations may be ‘forward-looking statement’ within the
domestic Airline rated by Skytrax. 
meaning of applicable securities laws and regulations. Actual
b.   Awarded  the 'NDTV Profit Business Leadership Award
results could differ materially from those expressed or implied.
for Aviation'
Important factors that could make a difference to your
c. Rated as Asia Pacific’s “Top Airline Brand” in a survey
Company’s operations include economic conditions in the
conducted by TNS on 'Asia Pacific's Top 1,000 Brands'
domestic markets and overseas markets in which your Company
for 2008 (2007 – Singapore Airlines).  
d.     Voted India’s Second Most Buzziest Brand  of  2007 in operates, changes in the Government Regulations, tax laws and
survey conducted by agencyfaqs.com.  other statutes and incidental factors.

25

TO
THE MEMBERS OF KINGFISHER AIRLINES LIMITED
(FORMERLY KNOWN AS DECCAN AVIATION LIMITED)
1. We have audited the attached Balance Sheet of Kingfisher
Airlines Limited (formerly known as Deccan Aviation
Limited) (“the Company”) as at March 31, 2008, the
Profit and Loss Account and the Cash Flow Statement for
the period ended on that date, annexed thereto. These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. 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.
3. As required by the Companies (Auditor’s Report) Order,
2003 issued by the Central Government of India` in terms
of sub-section (4A) of section 227 of the Companies Act,
1956 (“the Act”), as amended by the Companies (Auditor’s
Report) (Amendment) Order, 2004 (herein after collectively
referred to as the “Order”) we enclose in the annexure a
statement on matters specified in paragraphs 4 and 5 of
the Order.
4. The working results for the nine months ended March
31, 2008 are after charging off sums of Rs.28,270,478
and Rs.2,628,571 towards amortization of training and
preoperative expenses respectively based on the Company’s
accounting policy of amortizing the said expenditure
over a period of 3 years. The corresponding amounts
for the year ended June 30, 2007 were Rs.86,443,502
and Rs.16,358,447 respectively. We are of the opinion
that such accounting treatment is not in accordance with
(AS) 26 on “Intangible Assets” issued by the Institute of
Chartered Accountants of India and such expenses were
required to be written off to the profit and loss account as
and when incurred.
26
AUDITORS’ REPORT
5. Other Income for the fifteen months ended June 30,
2006 included a sum of Rs.267,220,000 towards certain
subsidy provided to the Company by one of its suppliers
in conjunction with lease of aircrafts on operating lease
basis. The previous auditors had reported that they were
of the opinion that such accounting treatment was not
in accordance with Accounting Standard 19 on “Leases”
and the subsidy should be recorded on a straight-line
basis over the period of the lease. Their audit report on
the financial statements for the fifteen months ended June
30, 2006 was modified in this matter. We concur with the
views of the said auditors in principle that such subsidy
should be recognized on a systematic basis in the Profit
and Loss Account over the periods necessary to match
them with the related costs, which they are intended to
compensate although the matter does not appear to be
covered explicitly by the said AS 19.
6. We further report that, except for the effect, if any, of
the matters stated in paragraph 11(a) below and para 4
of the annexure, whose effect are not ascertainable, had
the observations made in paragraphs 4 & 5 above been
considered, the loss after tax for the period ended March
31, 2008 would have been Rs.1,814,834,524 (June 30,
2007 – Rs.4,045,462,520) as against the reported loss of
Rs.1,881,361,073 (June 30, 2007, – Rs. 4,195,761,015),
the debit balance in profit and loss account as at March
31, 2008 would have been Rs.9,845,694,445 (June 30,
2007 – Rs.8,021,206,713) as against a reported figure of
Rs.9,677,557,223 (June 30, 2007 – Rs.7,786,542,942),
deferred revenue expenses as at June 30, 2007 would
have been Rs. 256,624,965 as against the reported figure
of Rs.287,524,014 and other liabilities would have been
Rs.680,362,049 (June 30, 2007 – Rs.982,925,507) as
against the reported figure of Rs.512,224,827 (June 30,
2007 – Rs.779,160,785).
7. Without qualifying our opinion, attention of the members
of the Company is invited to note 15 of schedule 22,
regarding purchase of goods and services during the
period ended June 30, 2006 and year ended March 31,
2005 amounting to Rs. 4,286,665 from certain parties in
respect of which the approval of the Central Government
as required under sections 297 of the Act are yet to be
received.
AUDITORS’ REPORT (Contd.)
Further to our comments in the annexure referred to
above, we report that:
8. We have obtained all the information and explanations,
which to the best of our knowledge and belief were
necessary for the purpose of our audit.
9. In our opinion, the Company has kept proper books of
account as required by Law so far as appears from our
examination of those books.
10. The Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with
the books of account.
11 (a) Attention of the members is invited to note 22 of schedule
22 regarding recognition of deferred tax credit during the
period aggregating to Rs.4,984,997,384 by virtue of which
its loss for the period and debit balance in Profit and Loss
Account each stand reduced by the said amount. In view of
explanation 1 to clause 17 of Accounting Standard 22, we
cannot express any independent opinion in the matter.
(b) In our opinion, subject to the effect of the matters stated
in paras 4 and 11(a) above, the Balance Sheet, Profit &
Loss Account and Cash Flow Statement dealt with by this
report comply in all material respects, with the mandatory
Accounting Standards referred to in sub-section (3C) of
section 211 of the Act.
12. On the basis of written representations received
from Directors as on March 31, 2008 and taken on
record by the Board of Directors, we report that
none of the Directors of the Company, are disqualified
as on March 31, 2008 from being appointed as a director,
under clause (g) of sub-section (1) of section 274 of the
Act.
13. In our opinion and to the best of our knowledge and
according to the information and explanations given to us,
the said accounts subject to note 31 of schedule 22 and
read with other notes on accounts, give the information
required by the Act in the manner so required and subject
to the effect of the matters stated in paras 4 to 6 & 11(a)
above, our observations in para 4 of the annexure and
note 34 of schedule 22 regarding certain accounts being
under review and reconciliation (effect thereof on revenue
not ascertainable) give a true and fair view in conformity
with the accounting principles generally accepted in India
i. In the case of the Balance Sheet, of the state of affairs
of the Company as at March 31, 2008;
ii. In the case of Profit and Loss account, of the loss for
the nine months ended on that date; and
iii. In the case of Cash Flow statement, of the cash flows
for the nine months ended on that date.
For B K RAMADHYANI & CO
Chartered Accountants
(R Satyanarayana Murthi)
Bangalore Partner
October 15, 2008 Membership No.24248
27

[AS REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN
DATE TO THE MEMBERS OF KINGFISHER AIRLINES LIMITED
(FORMERLY KNOWN AS DECCAN AVIATION LIMITED,
BANGALORE)]
1. a. The Company has maintained proper records showing full
particulars including quantitative details and situation of
fixed assets.
b. We have been informed that a portion of the fixed assets
have been physically verified by the management during
the period and that no material discrepancies were
observed on such verification. However, a comprehensive
verification of all fixed assets and updating of location
particulars in the asset records need to be carried out.
c. There was no substantial disposal of fixed assets during
the period except for slump sale of assets of charter
operations of the Company based on a Composite Scheme
of Arrangement between the Company, Deccan Charters
Limited and their respective Shareholders/Creditors
under Section 391 to 394 of the Companies Act, 1956
as approved by the Honorable High Court of Karnataka.
However, this has not affected the ability of the Company
to be a going concern
2. a. Management has not conducted physical verification
of inventory at reasonable intervals during the period.
However, the same has been verified as at June 30, 2008.
b. The procedures of physical verification of inventories
followed by the management are reasonable and adequate
in relation to the size of the Company and the nature of
its business.
c. No material discrepancies were noticed on physical
verification.
3. a. As informed, the Company has not granted any loans,
secured or unsecured to companies, firms or other parties
covered in the register maintained under Section 301 of
the Act.
b. As informed, the Company has not taken any loans,
secured or unsecured from companies, firms or other
parties covered in the register maintained under Section
301 of the Act.
4. In our opinion and according to the information and explanation
given to us, and taking into consideration management’s
representation that a large number of items are of a special
nature for which alternative quotations cannot be obtained,
there are adequate internal control procedures commensurate
with the size of the Company and the nature of its business
for the purchases of inventory and fixed assets. However,
28
AnneXure to the AUDITORS’ REPORT
internal control procedures in respect of sale of services (refer
notes 36 and 37 of schedule 22) and payroll/employee benefits
need to be strengthened to make the same commensurate
with the size of the Company and the nature of its business
and for the sale of services. During the course of our audit,
no continuing failure to correct major weakness in internal
controls has been noticed.
5. a. According to the information and explanations given to
us, we are of the opinion that transactions that need to be
entered into the register maintained under section 301 of
the Companies Act, 1956 have been so entered.
b. Further, contracts or arrangements referred to in section
301 of the Act and aggregating to Rs. 500,000 or more per
party have been entered into at prices which are reasonable
as compared to similar services rendered by other parties
except in respect of cargo income of Rs. 34,137,161 where
we are unable to make any comments on reasonability
of rates since there are no similar transactions with third
parties at the relevant time.
6. The Company has not accepted any deposits from the public.
7. The Company has an internal audit system commensurate
with the size and nature of its business.
8. To the best of our knowledge and as explained, the Central
Government has not prescribed the maintenance of cost
records under Section 209(1) (d) of the Act for the products
of the Company.
9. a. Undisputed statutory dues in respect of service tax,
withholding taxes, provident fund, fringe benefit tax and
employees’ state insurance dues have not been regularly
deposited with the appropriate authorities, and there have
been delays in many cases. Undisputed statutory dues in
respect of investor education and protection fund, customs,
excise duty, cess and wealth tax as applicable, have
generally been regularly deposited with the appropriate
authorities. Since to the best of our knowledge, the Central
Government has till date not prescribed the amount of
cess payable under Section 441A of the Act, no comments
in this respect have been made.
b. According to the information and explanations given to
us, there are no undisputed amounts payable as at the
period end in respect of provident fund, employees’ state
insurance, investor education and protection fund, income
tax, wealth tax, sales tax, customs duty, excise duty, service
tax and cess for a period of more than six months from the
date they became payable.
AnneXure to the AUDITORS’ REPORT (Contd.)
c. According to the information and explanations given to
us, there are no dues of sales tax, wealth tax, service tax,
customs duty, excise duty and cess, which have not been
deposited on account of any dispute.
10. The Company’s accumulated losses at the end of the financial
period were more than fifty percent of its net worth. The
Company has incurred cash losses during the financial period
and in the immediately preceding financial year.
11. Based on our audit procedures and as per the information
and explanations given by the management, the Company
has defaulted in repayment of loans and interest to banks and
financial institutions. The unpaid overdue interest to banks as
at March 31, 2008 was Rs.20,893,067. There were no dues
payable to the debenture holders.
12. According to the information and explanations given to us
and based on the documents and records produced to us, the
Company has not granted loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities. Accordingly, the provisions of the clause 4(xii) of the
Order are not applicable to the Company.
13. In our opinion, the Company is not a chit fund or a nidhi,
mutual benefit fund/society. Accordingly, the provisions of the
clause 4(xiii) of the Order are not applicable to the Company.
14. In our opinion the Company is not dealing in or trading
in shares, securities, debentures and other investments.
Accordingly, the provisions of clause 4(xiv) of the Order are
not applicable to the Company.
15. According to the information and explanations given to us,
the Company has not given guarantees during the period
for loans taken by others from banks or financial institutions.
Accordingly, the provisions of clause 4(xv) of the Order are not
applicable to the Company.
16. Based on information and explanations given to us
by the management, term loans taken during the
period have been applied for the purpose for which they were
obtained.
17. According to the information and explanations given to us
and on an overall examination of the balance sheet of the
company, we report that no funds raised on short- term basis
have been used for long term investment.
18. The Company has not made any preferential allotment
of shares to parties or companies covered in the register
maintained under Section 301 of the Act. Accordingly, the
provisions of clause 4(xviii) of the Order are not applicable to
the Company.
19. There were no debentures outstanding at any time during the
period. Accordingly, the provisions of clause 4(xix) of the Order
are not applicable to the Company
20. We have verified the end use of money raised by public issue
during the period ended June 30, 2006 and incurred during
the current period under review and the same has been
disclosed in the notes to the financial statements (Refer note
5 of schedule 22).
21. As per the information and explanations furnished to us by
the management, no material frauds on or by the Company
and causing material misstatements to financial statements
have been noticed or reported during the course of our audit,
except for charge backs received by the Company aggregating
to Rs.66.43 million from credit card service providers due to
misutilisation of credit cards by third parties (Refer note 37 of
schedule 22).
For B K RAMADHYANI & CO
Chartered Accountants
(R Satyanarayana Murthi)
Bangalore Partner
October 15, 2008 Membership No.24248
29
 Balance Sheet as at March 31, 2008

As at As at
Schedule March 31, 2008 June 30, 2007
(Rupees) (Rupees)

SOURCES OF FUNDS
Shareholders’ Funds
Capital 1 1,357,985,030 1,354,701,180
Employee stock options outstanding (Net of deferred compensation cost) 100,878,940 110,136,854
Reserves and surplus 2 10,207,416,756 10,168,677,178
11,666,280,726 11,633,515,212
Loan Funds
Secured loans 3 5,923,827,595 7,167,092,683
Unsecured loans 4 3,420,000,000 2,000,000,000
9,343,827,595 9,167,092,683

TOTAL 21,010,108,321 20,800,607,895

APPLICATION OF FUNDS
Fixed Assets 5
Gross block 3,223,346,285 3,407,716,141
Less: Accumulated depreciation 435,531,097 337,407,916
Net block 2,787,815,188 3,070,308,225
Capital work in progress including capital advances 3,462,459,288 3,576,198,612
6,250,274,476 6,646,506,837

Investments 6 - 4,135,370

Deferred Tax Asset (Refer Note 22 of Schedule 22) 4,984,997,384 -

Current Assets, Loans and Advances

Inventories 7 486,435,481 616,226,308
Sundry debtors 8 271,606,013 352,422,874
Cash and bank balances 9 2,801,223,361 8,170,495,277
Loans and advances 10 2,146,583,990 1,603,746,713
Other current assets 11 890,145,440 157,717,304
6,595,994,285 10,900,608,476
Less: Current Liabilities and Provisions
Current liabilities 12 6,569,976,348 4,755,353,226
Provisions 13 95,177,231 69,397,055
6,665,153,579 4,824,750,281
Net current assets (69,159,294) 6,075,858,195
Miscellaneous Expenditure
(to the extent not written off or adjusted)
Deferred revenue expenditure 14 166,438,532 287,564,014
Preliminary expenses 15 - 537
166,438,532 287,564,551

Profit and Loss Account 9,677,557,223 7,786,542,942

TOTAL 21,010,108,321 20,800,607,895

Notes to Accounts 22

As per our report of even date

For B.K.Ramadhyani & Co. For and on behalf of the Board of Directors
Chartered Accountants
per Satyanarayana Murthi Dr. Vijay Mallya Capt. G. R. Gopinath
Partner Chairman Vice Chairman &
Membership No. 200/24248 Managing Director
Bangalore Ramki Sundaram N. Srivatsa
October 15, 2008 Chief Financial Officer Company Secretary

30
Profit and Loss account for the nine months ended March 31, 2008

For Nine months For year

ended ended
Schedule
March 31, 2008 June 30, 2007
(Rupees) (Rupees)

INCOME
Income from Operations 16 14,413,948,838 16,221,266,262
Other income 17 1,040,483,067 3,677,613,451
Total 15,454,431,905 19,898,879,713

EXPENDITURE
Direct operating expenses 18 17,610,771,082 19,208,178,247
Personnel, administrative and general expenses 19 3,348,541,716 3,610,981,950
Employee stock compensation cost 11,420,490 40,728,801
Advertisement and business promotion expenses 409,474,678 137,610,147
Finance and banking charges 20 778,781,448 623,981,221
Amortisation of deferred revenue expenditure 21 183,131,655 262,482,038
Depreciation 182,807,412 176,688,023
Preliminary expenses written off - 2,152
Total 22,524,928,481 24,060,652,579
Loss before extra ordinary items (7,070,496,576) (4,161,772,866)
Profit on sale of charter services operations undertaking 244,598,527 -
Loss before tax expense (6,825,898,049) (4,161,772,866)
Deferred tax credit (4,980,026,734) -
Provision for Fringe benefit tax 35,489,758 33,988,149
Total tax expense (4,944,536,976) 33,988,149
Loss after tax expense for the period / year (1,881,361,073) (4,195,761,015)
Balance of loss brought forward from previous year (7,786,542,942) (3,590,781,927)
Add: Provision for Gratuity and Leave Encashment as on July 1, 2007 in terms 9,653,208 -
of transitional provisions of AS 15 (revised)
Loss carried to Balance Sheet (9,677,557,223) (7,786,542,942)
Loss per share before extraordinary items, par value of (14.85) (42.24)
Rupees 10 per share - Basic and Diluted
Loss per share after extraordinary items, par value of (13.87) (42.24)
Rupees 10 per share - Basic and Diluted
Weighted average number of equity shares - basic and diluted 135,668,051 99,326,445

Notes to Accounts 22

As per our report of even date

For B.K.Ramadhyani & Co. For and on behalf of the Board of Directors
Chartered Accountants
per Satyanarayana Murthi Dr. Vijay Mallya Capt. G. R. Gopinath
Partner Chairman Vice Chairman &
Membership No. 200/24248 Managing Director
Bangalore Ramki Sundaram N. Srivatsa
October 15, 2008 Chief Financial Officer Company Secretary

31
 Schedules to the Balance Sheet as at March 31, 2008

As at As at
March 31, 2008 June 30, 2007
(Rupees) (Rupees)

Schedule - 1

Capital

Authorised capital

400,000,000 equity shares of Rupees 10/- each (June 30th, 2007 -

150,000,000 equity shares of Rupees 10/- each) 4,000,000,000 1,500,000,000

10,000,000 Preference shares of Rupees 100/- each (June 30th, 2007 - Nil) 1,000,000,000 -

Total 5,000,000,000 1,500,000,000

Issued and subscribed capital

135,798,503 equity shares of Rupees 10/- each (June 30th, 2007 -

135,470,118 equity shares of Rupees 10/- each) 1,357,985,030 1,354,701,180

Paid up capital

135,798,503 equity shares of Rupees 10/- each (June 30th, 2007 -

135,470,118 equity shares of Rupees 10/- each) 1,357,985,030 1,354,701,180

1,357,985,030 1,354,701,180

Notes:
(1)  Out of the above, 27,284,390 equity shares of Rupees 10/- each (June 30th, 2007 - 27,284,390 equity shares of Rupees
10/- each) have been allotted as fully paid up bonus shares by capitalisation of securities premium of Rupees 253,750,200
(June 30th, 2007 - Rupees 253,750,200) and balance in Profit & Loss Account of Rupees 19,093,700 (June 30, 2007 -
Rupees 19,093,700)
(2) Also refer note 4 and note 18 in Schedule 22

Schedule - 2

Reserves and Surplus

Securities premium account

Balance at the beginning of the period/year 10,168,677,178 4,774,482,830

Add: Received during the period/year 38,739,578 5,394,194,348

10,207,416,756 10,168,677,178

Note:

(1) Also refer note 4 in schedule 22

32
Schedules to the Balance Sheet as at March 31, 2008 (Contd.)

As at As at
March 31, 2008 June 30, 2007
(Rupees) (Rupees)
Schedule - 3
Secured Loans
Term loans from banks (Rupee loans) 1,546,621,925 1,797,654,960
Cash credit facility from banks 172,970,477 1,869,104,516
Short Term loans from banks 2,485,281,100 1,526,360,863
Vehicle loans from banks/financial institutions 10,300,130 16,320,442
Interest accrued and due on term loans 20,893,067 50,303,165
Finance lease obligations 12,451,329 22,408,143
Hire purchase loan from others 1,045,765,757 1,142,869,803
Term loans from financial institutions and others 629,543,810 742,070,791
5,923,827,595 7,167,092,683
Notes:
(1) Term loans from banks and cash credit facility from banks are secured by a first charge on the current assets and fixed assets of the
Company, including hypothecation of the present and future goods and including book debts, and documents of title to goods
and collateral security of personal property of relative of directors. Further, Term loans of Rupees 1,541,088,068 (June 30, 2007 -
Rupees 1,720,642,423) are secured by the assignment of the aircraft purchase agreement entered into for purchase of aircraft and
by personal guarantee of directors.
(2) Short term loans from banks during the year are secured by lien on fixed deposits and during the previous year secured by first
charge on all stock in trade both present and future and all the present and future book debts of the company.
(3) Vehicle loans are secured by the hypothecation of the respective assets.
(4) Finance lease is secured by the hypothecation of the respective assets.
(5) Hire purchase loans are secured by the hypothecation of the respective assets. Also refer note 20 in schedule 22.
(6) Term loan of Rupees 542,252,163 (June 30, 2007 - Rupees 671,017,797) from a financial company is secured by the hypothecation
of the aircraft and helicopter, assignment of documents of title to such asset and personal guarantee of one of the directors.
(7) Term loan (foreign currency) of Rupees 87,291,648 (June 30, 2007 - Rupees 71,052,994) from a financial institution is secured by
a second priority on the mortgage of the aircraft obtained on hire purchase.
(8)      Amounts repayable within one year Rupees 3,699,214,795 (June 30, 2007 - Rupees 1,695,569,439).

SCHEDULE - 4
Unsecured Loans
From Banks 3,400,000,000 2,000,000,000
From Others 20,000,000 -
3,420,000,000 2,000,000,000

Note:

(1) Amounts repayable within one year Rupees 320,000,000 (June 30, 2007 - Rupees 2,000,000,000).

33
34
Schedule - 5
Fixed Assets Amount in Rupees
Gross Block Depreciation Net Block
Class of Assets As at Additions Deletions As at As at Additions Deletions As at As at As at
01 July March 31, July 01, March 31, March 31, June 30,
2007 2008 2007 2008 2008 2007
Tangible Assets
Freehold Land 501,059 - 501,059 - - - - - - 501,059
Building on rented land 18,378,540 86,826,174 18,618,894 86,585,820 1,942,693 755,074 2,109,705 588,062 85,997,758 16,435,847
Building on freehold
4,201,780 - 4,201,780 - 348,152 34,244 382,396 - - 3,853,628
land
Building- leasehold
40,618,797 19,192,753 - 59,811,550 5,961,923 2,794,040 - 8,755,963 51,055,587 34,656,874
improvements
Helicopters 496,814,811 - 496,814,811 - 50,657,068 12,673,566 63,330,634 - - 446,157,743
Aircrafts 2,103,729,586 - - 2,103,729,586 147,149,488 88,918,597 - 236,068,085 1,867,661,501 1,956,580,098
Plant & Machinery
81,864,251 31,120,955 2,999,460 109,985,746 6,050,803 3,102,769 592,342 8,561,230 101,424,516 75,813,448
(others)
Tools and Equipments 209,650,374 24,661,023 13,278,143 221,033,254 20,042,111 8,500,917 2,480,362 26,062,666 194,970,588 189,608,263
Computers 102,765,941 20,380,641 6,236,547 116,910,035 29,272,032 14,709,969 1,956,794 42,025,207 74,884,828 73,493,909
Office Equipments 73,523,973 19,771,477 8,175,453 85,119,997 12,028,410 1,750,782 2,314,108 11,465,084 73,654,913 61,495,563
Furniture & Fixtures 58,434,047 29,738,603 10,167,418 78,005,232 11,806,069 5,564,705 3,277,304 14,093,470 63,911,762 46,627,978
Electrical Installations 14,667,964 12,067,167 - 26,735,131 1,384,684 865,895 - 2,250,579 24,484,552 13,283,280
Vehicles 43,684,404 616,863 16,063,430 28,237,837 10,491,633 2,363,023 8,240,585 4,614,071 23,623,766 33,192,771
Improvements to leased
38,721,777 112,170,266 - 150,892,043 21,594,345 25,199,020 - 46,793,365 104,098,678 17,127,432
aircrafts
Improvements to other
- 24,762,585 - 24,762,585 - 3,444,496 - 3,444,496 21,318,089 -
leased assets
Intangible assets
Softwares 53,351,727 11,378,633 - 64,730,360 11,693,423 9,756,937 - 21,450,360 43,280,000 41,658,304
Leased Assets
Plant & Machinery 66,807,110 - - 66,807,110 6,985,082 2,373,378 - 9,358,460 57,448,650 59,822,028
Total 3,407,716,141 392,687,140 577,056,995 3,223,346,286 337,407,916 182,807,412 84,684,230 435,531,098 2,787,815,188 3,070,308,225
Previous year 2,473,320,252 1,017,441,127 83,045,238 3,407,716,141 164,012,632 176,688,023 3,292,739 337,407,916

Notes:
(1) Assets given on operating lease March 31, June 30,
2008 2007
Rupees Rupees
Helicopters
Gross Block 11,347,500 11,347,500
Depreciation during the period/year 317,730 635,460
Accumulated depreciation 2,409,615 2,091,885
Less : Transferred to Deccan Charters Limited 8,937,885 -
Net Block - 9,255,615
(2) Exchange gain/(loss) (net) capitalised to Fixed assets during the period - Nil (June 30, 2007 Rs.88,898,284).
(3) Additions and deletions do not include aircraft/engines in respect of which rights to purchase have been transferred. (Also refer note 17 of Schedule 22).
(4) Deletions include assets transferred on slump sale to Deccan Charters Limited
Schedules to the Balance Sheet as at March 31, 2008 (Contd.)
Schedules to the Balance Sheet as at March 31, 2008 (Contd.)

As at As at
March 31, 2008 June 30, 2007
(Rupees) (Rupees)

Schedule 6
Investments
Long Term (At cost)
Trade (unquoted), fully paid up
Nil (June 30, 2007 - 960,000) equity shares of Srilankan Rupees 10/- each fully - 4,134,870
paid up in Deccan Aviation (Lanka) Private Limited
Others (unquoted)
National savings certificate - 500
- 4,135,370
Aggregate value of unquoted investments at cost - 4,135,370

Schedule 7:
Inventories
(At cost or net realisable value, whichever is lower)
Rotables, stores, spares and components 486,435,481 616,226,308
486,435,481 616,226,308

Schedule 8:
Sundry Debtors (Unsecured)
Debts outstanding for a period exceeding six months
- Considered good 2,089,661 9,333,707
- Considered doubtful - 17,605,011
Other debts, considered good 269,516,352 343,089,167
Less: Provision for doubtful debts - (17,605,011)
271,606,013 352,422,874

Schedule 9:
Cash and Bank Balances
Cash on hand 4,987,725 2,270,147
Bank balances with scheduled banks
- In current accounts 53,381,489 4,218,239,196
- In fixed deposit accounts 2,405,760,098 3,629,004,782
- Margin money deposit against bank guarantees and letters of credit 337,094,049 320,981,152
issued by banks
2,801,223,361 8,170,495,277

35
 Schedules to the Balance Sheet as at March 31, 2008 (Contd.)

As at As at
March 31, 2008 June 30, 2007
(Rupees) (Rupees)
SCHEDULE 10 :
Loans and Advances
(Unsecured - considered good)
Advances recoverable in cash or in kind or for value to be received 1,746,460,480 1,297,436,816
Deposits with government bodies, customs authorities and others 115,516,880 133,589,146
Advance income taxes, net of provisions 95,709,334 25,401,622
Other receivables 38,031,944 10,688,680
Interest accrued on fixed deposits 150,865,352 128,429,757
Dues from Deccan Aviation (Lanka) Private Limited - 8,200,692
[Maximum amount outstanding - Rupees 8,226,247 during the period
(June 30, 2007 - Rupees 8,226,247)]
2,146,583,990 1,603,746,713
Note:
(1) Advances recoverable in cash or in kind include Rupees 4,238,764 (June 30, 2007 Rupees 6,918,109) due from Deccan
Cargo Pvt Ltd., in which some of the directors of the company are interested as directors. Maximum amount outstanding
Rupees 20,760,269 (June 30, 2007 Rupees 6,918,109).
(2) Maximum amount due at any time from directors Rupees Nil (June 30,2007 Rupees179,458)

SCHEDULE 11 :
Other Current Assets
Receivable from Deccan Charters Limited
Other assets 759,671,550 -
130,473,890 157,717,304
890,145,440 157,717,304

SCHEDULE 12 :
Current Liabilities
Sundry creditors for goods, services and expenses 4,064,512,996 2,451,070,946
Advances from customers 1,540,127,091 1,235,701,252
Training deposits, net of training expenses incurred 231,284,289 195,600,828
(Also refer Note 25 of Schedule - 22)
Other security deposit - 20,000,000
Book overdraft 154,024,950
Unclaimed dividend 276,075 707,912
Dues to directors - 14,437
Interest accrued but not due on loans 67,526,120 73,097,066
Other liabilities 512,224,827 779,160,785
6,569,976,348 4,755,353,226
Notes:
(1) Training deposits are net of training expenses incurred amounting to Rupees 248,003,688 (June 30, 2007 -
Rupees 225,580,872), less amortised during the period Rupees 61,280,041 (June 30, 2007 - Rupees 67,528,046)

36
Schedules to the Balance Sheet as at March 31, 2008 (Contd.)

As at As at
March 31, 2008 June 30, 2007
(Rupees) (Rupees)
SCHEDULE 13 :
Provisions
Provision for wealth tax 175,795 64,000
Provision for fringe benefit tax 17,107,945 11,714,850
Provision for gratuity 38,434,073 35,115,726
Provision for leave encashment 39,459,418 22,502,479
95,177,231 69,397,055

SCHEDULE - 14 :
Deferred Revenue Expenditure
Training expenses 243,442,624 243,442,624
Preoperative expenses 48,933,164 48,933,164
Share/debenture issue expenditure 364,052,302 363,326,170
Less: Accumulated amortisation - Training expenses (243,442,624) (215,172,146)
Less: Accumulated amortisation - Preoperative expenses (48,933,164) (46,304,593)
Less: Accumulated amortisation - Share / debenture issue expenditure (197,613,770) (106,661,205)
166,438,532 287,564,014

Schedule 15 :
Preliminary Expenses
Opening balance - 2,689
Less : Accumulated amortisation - 2,152
- 537

37
 Schedules to Profit and Loss account for the nine months ended March 31, 2008

For Nine months For year

ended ended
March 31, 2008 June 30, 2007
(Rupees) (Rupees)

SCHEDULE - 16:
Income from Operations
Sale of airline tickets and related income (Refer note 36 & 37 in Schedule 22) 14,030,252,225 15,574,125,656
Helicopter charter and other services 349,559,452 647,140,606
Cargo Income 34,137,161
14,413,948,838 16,221,266,262

Schedule 17:
Other Income
Advertisement income 6,293,160 11,328,744
Interest on bank deposits (gross) 189,755,634 172,455,086
[Tax deducted at source Rupees 53,060,097 (June 30, 2007 Rupees 4,178,138)]
Profit on transfer of aircraft/engine purchase rights [Refer note 9 in Schedule 22] 249,701,063 2,884,623,064
Lease rentals received 1,943,778 4,221,360
Foreign exchange gain, net 155,500,977 232,087,992
Miscellaneous income (Also refer note 26 in Schedule 22) 437,288,455 372,897,204
1,040,483,067 3,677,613,451

SCHEDULE - 18:
Direct Operating Expenses
Aircraft fuel expenses 8,892,963,244 9,795,000,968
Aircraft insurance 195,398,207 367,900,801
Aircraft hire charges 18,300,093 6,025,908
Aircraft/Engine repairs and maintenance 2,219,873,000 2,274,977,774
Spares and components consumed (including amortisation of rotables) 437,856,573 459,417,260
Aircraft/Engine lease rentals 3,547,325,084 4,030,487,825
General crew expenses 105,596,584 41,363,623
Training expenses 97,301,337 120,701,577
Airport related charges 1,178,998,077 1,455,328,882
Ground handling charges 423,492,727 445,831,035
Discount and Commission to agents other than sole selling agents 27,986,599 41,358,779
Other expenses 465,717,242 310,702,885
17,610,808,767 19,349,097,317
Excess provision written back (37,685) (140,919,069)
17,610,771,082 19,208,178,247
SCHEDULE - 19 :
Personnel, Administrative and General Expenses
Salaries and allowances 2,408,366,016 2,437,258,208
Contribution to provident and other funds 33,985,769 32,195,797
Staff welfare expenses 7,285,495 7,698,972
Traveling and conveyance 209,921,584 279,874,545
Rent 87,979,633 84,714,663

38
Schedules to Profit and Loss account for the nine months ended March 31, 2008 (Contd.)

For Nine month For year

ended ended
March 31, 2008 June 30, 2007
(Rupees) (Rupees)

SCHEDULE - 19 :
Personnel, Administrative and General Expenses (Contd.)
Rates and taxes 50,562,806 37,144,155
Insurance 11,222,087 18,049,487
Professional and consultancy charges 307,498,379 467,467,093
Repairs and maintenance
- Machinery 3,755,757 2,441,903
- Building 657,006 1,659,136
- Others 41,479,693 17,006,329
Telephone, communication and networking 110,383,825 165,921,584
Miscellaneous expenses 66,878,731 48,952,061
Director’s sitting fees 1,100,000 780,000
Bad debts written off - 713,007
Provision for doubtful debts 7,464,935 9,105,010
3,348,541,716 3,610,981,950

SCHEDULE - 20 :
Finance and Banking Charges
Bank charges (including other related transaction fees) 275,031,752 282,721,606
Interest expense - fixed loans (also refer note 16 in schedule 22) 219,703,223 119,439,315
Interest expense - other loans 284,046,473 221,820,300
778,781,448 623,981,221

SCHEDULE - 21 :
Amortisation
Amortisation of training expenses 89,550,519 155,748,843
Amortisation of preoperative expenses 2,628,571 16,358,447
Amortisation of share/debenture issue expenses 90,952,565 90,374,748
183,131,655 262,482,038

Note:
(1) Includes Rupees 61,280,041 (June 30, 2007 - Rupees 67,528,046), pertaining to training expenses reflected net of deposits under
Schedule 12.

39
 Schedules forming part of accounts for the nine months ended March 31, 2008

SCHEDULE- 22

Notes to the financial statements for the nine months ended March 31, 2008

1. Background
Kingfisher Airlines Limited (Formerly known as Deccan Aviation Limited) (“the Company”) is engaged in rendering scheduled and
unscheduled aircraft passenger services, including helicopter charter services. The Company was incorporated on June 15, 1995
as a private limited company and converted itself into a public limited company on January 31, 2005. Consequently the Company
changed its name from Deccan Aviation Private Limited to Deccan Aviation Limited. On June 12, 2006, the Company’s shares were
listed on the Bombay Stock Exchange Limited and the National Stock Exchange Limited, pursuant to the Company’s initial public
offer of shares. The Company changed its name from Deccan Aviation Limited to Kingfisher Airlines Limited, with effect from
September 5, 2008.

2. Statement of significant accounting policies

(a) Basis of preparation
The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (“GAAP”) under
the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specified in the
Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the
Securities and Exchange Board of India. Accounting policies have been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting
policy hitherto in use. Further, the financial statements are presented in the general format specified in Schedule VI to the
Companies Act, 1956 (‘the Act’).

(b) Use of estimates

The presentation of financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Although these estimates are based on management's best knowledge of current events and actions the Company may
undertake in future, actual results ultimately may differ from the estimates.

(c) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured. Revenue from charter services is recognized based on services provided and billed as per the terms of
the contracts with the customers provided that the collection is reasonably certain. Revenue from sale of tickets of the airline
operations is recognized in the period in which the service is provided, i.e. on flown basis. Such revenue is net of the statutory
fee to be collected from customers as per government regulations. Unearned revenue represents flight seats sold but not yet
flown and is included under Advances from customers. The same is released to the profit and loss account as the services
are rendered. Miscellaneous fees charged for reservation/changes/cancellation of flight tickets are recognised as revenues
immediately on accrual basis to the extent the same are not refundable.

Lease income from assets given under operating lease is recognised in the Profit and Loss account on a straight-line basis over
the lease term.

Interest income is recognized on the time proportionate method when the right to receive income is established and that
collection is reasonably certain. Income from sale of advertisement space is recognized on accrual basis over the period the
advertisements are displayed.

The Company enters into barter arrangements with other parties for advertising in exchange for the Company's advertising
in the other party's media or in exchange for other services or goods. Such transactions are recorded at the fair value of the
services/goods received from the other party, or at the fair value of the services provided by the Company if it is not feasible
to determine the fair value of the services/goods received.

40
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

(d) Fixed assets and Intangible assets

Fixed assets and Intangible assets are stated at cost of acquisition less accumulated depreciation/amortization and impairment
losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its
intended use and also includes cost of modification and improvements to leased assets. Borrowing costs relating to acquisition
of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets not
ready for intended use before such date are disclosed under capital work-in-progress.

(e) Depreciation
Depreciation on fixed assets, except software, leased assets and leasehold improvements, is provided on a straight line basis at
the rates prescribed under Schedule XIV to the Companies Act, 1956, which are estimated to be the useful life of fixed assets
by the management. Additions are depreciated on a pro-rata basis from the month following the date of installation till the
date the assets are sold or disposed.

Leasehold improvements on operating leases are depreciated over the shorter of the period of the lease and their estimated
useful lives. Assets leased under finance lease are depreciated as stated below.

Intangible assets comprise software, which is depreciated over a period of 3-6 years, based on estimated useful life as
ascertained by the management.

Individual assets costing less than Rs 5,000 are depreciated in full in the year/period of acquisition.

(f) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as a part of the cost of the
assets. Other borrowing costs are recognised as an expense in the period in which they are incurred.

(g) Leases
Where the Company is a lessee
Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of
the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of
the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management
fees, legal charges and other initial direct costs are capitalised.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalised leased
assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term, are
classified as operating leases. Operating lease payments including expenses incurred for bringing the leased asset to its
working condition for intended use are recognised as an expense in the Profit and Loss account on a straight-line basis over
the lease term. Lease subsidy is recognized in the profit and loss account immediately, based on the Company’s entitlements
under the terms of arrangement with the parties.

Profit or loss on sale and leaseback arrangements resulting in operating leases are recognised immediately in case the transaction
is established at a fair value, else the excess over the fair value is deferred and amortised over the period for which the asset is
expected to be used. In case of sale and leaseback arrangement resulting in a finance lease, any excess or deficiency of sales
proceeds over the carrying value is deferred and amortised over the lease term in proportion to the depreciation of the leased
asset.

41
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

(g) Leases (Contd.)

Where the Company is a lessor
Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Profit and Loss account
on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and
Loss account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss
account.

(h) Impairment of assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment,
depreciation is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised
impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not
increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(i) Maintenance costs

In respect of aircraft, aircraft engines and helicopters, the Company has entered into maintenance arrangements. Such
maintenance expenses are charged to the profit and loss account on an accrual basis under the terms of the agreements
entered into by the Company. Such expenses are determined based on fixed monthly amounts including charges based on
flight hours, cycles, etc.

(j) Inventory
Inventories are valued at lower of cost or net realisable value. Cost includes custom duty, freight and other charges as
applicable. Cost is determined on a weighted average basis at the scheduled aircraft passenger services division while it is
determined based on the specific identification method at the helicopter charter services division In respect of reusable items
such as rotables, provision for obsolescence is made based on the estimated useful life of the aircraft as derived from Schedule
XIV to the Companies Act, 1956.

(k) Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments.
All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in
value is made to recognise a decline other than temporary in the value of the investments.

(l) Employee benefits

i. Defined Contribution Plan
The Company contributes on a defined contribution basis to Employee’s Provident Fund and Employee Pension Scheme
towards post employment benefits, all of which are administered by the respective Government authorities and has no
further obligation beyond making its contribution which is expected in the year in which it pertains.

ii. Defined Benefit Plan

The Company has a defined benefit plan namely Gratuity for all its employees. The liability for the defined benefit plan
of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year-end, which is
calculated using Projected Unit Credit Method.

42
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

(l) Employee benefits (Contd.)

iii. Other long-term employee benefits
The employees of the Company are entitled to leave as per the leave policy of the Company. The Liability in respect of
unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the
year-end and charged to the Profit and Loss Account.

(m) Income taxes

Tax expense comprises current, deferred and fringe benefit tax. Current income tax and fringe benefit tax are measured at
the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act, 1961. Deferred income
taxes reflects the impact of current period timing differences between taxable income and accounting income for the period
and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted
or substantively enacted as at the balance sheet date. Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be
realized. Deferred tax assets are recognized on carry forward of unabsorbed depreciation and tax losses only if there is virtual
certainty that such deferred tax assets can be realized against future taxable profits. Unrecognized deferred tax assets of earlier
years are re-assessed and recognized to the extent that it has become reasonably certain that future taxable income will be
available against which such deferred tax assets can be realized.

(n) Foreign currency transactions

(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction;
and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are
reported using the exchange rates that existed when the values were determined.

(iii) Exchange differences

Exchange differences arising on the settlement of monetary items or on reporting Company's monetary items at rates
different from those at which they were initially recorded during the period, or reported in previous financial statements,
are recognized as income or as expenses in the period in which they arise.

(iv) Forward exchange contracts

The Company uses forward exchange contracts to hedge its exposure to movements in foreign exchange rates. The
Company does not use the forward exchange contracts for trading or speculation purposes. In respect of foreign currency
monetary assets or liabilities in respect of which forward exchange contract is taken, the premium or discount arising at
the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognised in the statement of profit and loss in the period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or
as expense for the period. Pursuant to The Institute of Chartered Accountants of India’s announcement ‘Accounting for
Derivatives’, the Company marks-to-market all such outstanding derivative contracts at the end of the period and the
resulting mark-to-market losses, if any, are recognized in the Profit and Loss Account.

43
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

(o) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders
(after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding
during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled
to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of
equity shares outstanding during the period is adjusted for events of bonus issue; bonus element in a rights issue to existing
shareholders; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders
and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential
equity shares.

(p) Provisions
A provision is recognised when an enterprise has a present obligation as a result of past event; and it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions
are not discounted to their present value and are determined based on best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(q) Preliminary expenses

Preliminary expenses are written off over a period of ten years on a straight- line basis.

(r) Deferred revenue expenses

Share/debenture issue expenses, training expenses and pre-operative expenses are amortised over a period of three years on
a straight- line basis following the year of incurring the expenses.

(s) Stock option compensation expense

The Company accounts for stock option compensation expense based on the intrinsic value of the options granted which is
the difference between the fair value of the share underlying the option and the exercise price of the option determined at
the grant date. Compensation expense is amortised over the period of vesting on a straight-line basis. The accounting value
of the options net of deferred compensation expense is reflected as Employee stock option outstanding.

3. Slump Sale of the Non-Scheduled Air transport Services ( Passenger) (Charter Service Operations) to Deccan Charters
Limited (DCL)
The Honorable High Court of Karnataka vide their order dated June 16, 2008 interalia approved the transfer of the charter services
operations to DCL pursuant to a composite scheme of arrangement between Kingfisher Airlines Limited (Currently known as
Kingfisher Training and Aviation Services Limited), DCL, the Company and their respective shareholders and creditors (“Scheme”).
In terms of the Scheme, the appointed date is January 1, 2008 and the effective date being the later of the date on which certified
copies of the order of the High Court of Karnataka sanctioning the Scheme are filed with Registrar of Companies and DCL obtaining
a non-scheduled operators permit in terms of the extant civil aviation rules. Since both the formalities have been completed before
the date these financial statements (“FS”) have been approved by the Board of Directors of the Company, necessary effect has
been given in the FS for the same. The profit earned by the Company by virtue of the slump sale of Rs.244,598,527 has been
shown separately in the Profit and Loss Account.

4. Share Capital
During the year, the Company has allotted 328,385 equity shares under the Employee Stock Option Plan at Rs. 10/- each at a
premium of Rs. 55 per share.

44
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

5. The Company raised an aggregate amount of Rs.36,328 lakhs through a public issue of shares during the period ended June 30,
2006. The proceeds of the issue has been utilized as follows:
Rs. in lakhs
Particulars March 31, 2008 June 30, 2007
Balance as per last Balance Sheet 16,712 21,833
Less: Share issue expenses Nil 1,167
Sub total (A) 16,712 20,666
Utilization of proceeds
Repayment of debts 1,345 200
Capital Expenditure 500 645
Setting up of infrastructure at airports 259 566
General Corporate Expenses 13,143 236
Marketing development initiatives Nil 2,307
Total Out Flow (B) 15,247 3,954
Unutilized balance (A – B) 1,465 16,712

The Board of Directors of the Company at its meeting held on March 18, 2008 approved the transfer of Rs. 13,143 lakhs to the
head ‘General Corporate Purpose’ from savings in other heads, based on legal opinion.

6. Commitments and contingent liabilities not provided for:

As at March 31, As at June 30,

Particulars
Estimated amount of contracts
remaining to be executed on capital
account and not provided for (net of
advances)
Guarantees given by Banks
Letters of credit outstanding
Claims against the Company not
acknowledged as debts (including
civil and customer suits) in the normal
course of business
Redelivery and other costs in respect of Not ascertainable
assets taken on operating lease at the
end of the lease period
Amounts payable, if any for breach of Not ascertainable
contractual obligations
Remarks
2008 (Rs) 2007 (Rs)
67,709,799,738 74,740,367,367
2,946,740,641 2,469,332,785 Pertains to guarantees given by banks to
Airport Authorities, lessors and others.
Nil 46,628,930 Pertains to letters of credit issued by banks to
suppliers of spares, stores and components.
174,971,134 112,977,316 Pertains to litigations filed against the
Company which are pending with various
authorities.
Not ascertainable In respect of the operating lease agreements,
the Company is required to return the
Aircrafts as per prescribed terms. However,
considering on-going maintenance of
aircrafts, a reliable estimate cannot be made
of redelivery costs.
Not ascertainable

The Company has entered into agreements for purchase of aircrafts/engines under which the Company has commitments to
purchase aircrafts/engines over a period stipulated in the agreements. Such agreements involve complex pricing arrangements
wherein the Company receives discounts/credits on such purchases, which are based on the commitments to purchase, which
the Company is confident to fulfill currently. Accordingly, the amount of contingent liability, if any, as at the balance sheet date is
currently not ascertainable.

45
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

In addition to the above, there are certain arbitration proceedings with customers/suppliers/ contractors, in respect of which claims
are currently not ascertainable.
The management believes, based on internal assessment and/or legal advice, that the probability of an ultimate adverse
decision and outflow of resources of the Company is not probable and accordingly, no provision for the same is considered
necessary.

7. Managerial remuneration

Nine months ended Twelve months ended

Particulars March 31, 2008 June 30, 2007
(Rs) (Rs)

Salaries and allowances*

• Captain G R Gopinath 2,250,000 3,000,000
• Captain K J Samuel 1,116,000 1,488,000
• Mohan Kumar (resigned during the year 2006-07) ** Nil 1,750,000
• Vishnu Rawal 1,800,000 2,400,000
• Jayant Poovaiah 1,370,000 1,662,750

Directors’ sitting fees 1,100,000 780,000

* Does not include provisions for gratuity and leave encashment, as the same are made on the basis of an actuarial valuation
determined at the overall Company level.
** Excludes Rs. 25 million paid as non compete fees after he resigned as a director

8. Auditors’ remuneration

Nine months ended Twelve months ended

Particulars March 31, 2008 June 30, 2007
(Rs) (Rs)
Statutory audit fees 4,000,000 3,500,000
Tax audit fees* 575,000 250,000
Other services, such as certification** 177,500 909,925
Out of pocket expenses (including service tax) 587,409 574,026
Total 5,339,909 5,233,951

* Payable to another firm of chartered accountants.

** Includes fees paid to the previous auditor.

9. Earnings in foreign currency (on accrual basis)

Nine months ended Twelve months ended

Particulars March 31, 2008 June 30, 2007
(Rs) (Rs)
Charter service fees 38,606,705 69,007,667
Lease rentals 1,921,600 4,221,360
Miscellaneous Income 208,989,119 383,344,031
Profit on transfer of aircraft/engine purchase rights 249,791,344 2,884,623,064

46
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

10. CIF value of imports

Nine months ended Twelve months ended

March 31, 2008 June 30, 2007
Particulars
(Rs) (Rs)
Capital goods 51,058,736 976,380,759
Stores, Spares & Components 333,587,448 512,010,711

11. Expenditure in foreign currency (on accrual basis)

Nine months ended Twelve months ended

Particulars March 31, 2008 June 30, 2007
(Rs) (Rs)
Salaries and allowances 583,029,085 552,169,120
Traveling & Conveyance 7,877,116 18,721,513
Professional & Consultancy expenses 90,455,048 418,735,314
Training expenses 112,181,349 109,957,819
Aircraft and other maintenance expenses 1,525,024,832 2,240,430,766
Lease rentals 3,547,325,084 3,978,614,931
CRS charges 53,537,426 88,670,579
Others 1,803,015 2,179,958
Interest 50,655,855 84,690,090

12. Value of components and spare parts consumed

Nine months ended Twelve months ended

Particulars
March 31, 2008 June 30, 2007
(Rs) % (Rs) %
Imported 352,817,857 81 367,528,273 80
Indigenous 85,038,716 19 91,888,988 20
Total 437,856,573 100 459,417,260 100

13. Revenues from sale of airline tickets are net of passenger service fee of Rs. 986,827,894 for the period ended
March 31, 2008 (Previous year Rs. 1,524,209,098).

14. a) Buildings constructed at a cost of Rs. 8,873,587 are on land rented from the State Government, which lease has been
transferred to DCL. Such rental agreement is renewable on an annual basis. The Company is in the process of entering into an
appropriate arrangement with DCL.
b) Buildings Constructed at a cost of Rs. 86,585,821 are on land belonging to the Airport Authority of India. Such rental
agreements are renewable on a periodic basis.

15. The Company is in the process of obtaining approvals of the Central Government under section 297 of the Companies Act, 1956
in respect of the following:

• Purchase of goods of Rs. 836,665 during the period ended June 30,2006 and year ended March 31, 2005 from a firm in
which one of the directors of the company is interested;

• Purchase of services of Rs. 3,450,000 during the period ended June 30, 2006 and year ended March 31, 2005 from a private
company in which one of the directors of the Company is also a director.

The Company has opted to compound any alleged non compliance with the provisions of the Companies Act, 1956 and the
matter is in progress.

47
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

16. During the period, the Company has capitalized interest on borrowings for purchase of fixed assets amounting to Rs.148,604,879
(June 30, 2007– Rs. 151,416,125) under AS 16 – Borrowing Costs.

17. a) The Company has transferred aircraft/engine purchase rights to a third party and has simultaneously, leased the same on an
operating lease from such third party.
b) Profit on transfer of aircrafts purchase rights includes a sum of Rs. Nil (Previous year Rs.2,705,700,000) arising out of aircraft
purchase contract for a consideration receivable by the Company in 4 trenches over a period of 15 months. The first and
second trenches of consideration were recognized as income during the previous year.
18. Employee stock option plan [ESOP]
On March 16, 2005, the shareholders of the Company approved an employee stock option plan [ESOP 2005]. Further on December
21, 2005, the Board of Directors approved the ESOP 2006 scheme, which will govern issuance of options on or after January 1,
2006. Options issued under ESOP 2005 would continue to be governed under ESOP 2005. The shareholders have approved the
issuance of 8,181,779 options in aggregate subject to a maximum of 10% of the aggregate number of issued and outstanding
equity shares (calculated on an as converted basis), under both the options put together. The Plans cover all employees of the
Company including Directors other than promoter directors.

During the period ended March 31, 2008 (June 30, 2007 – 2,000,200), the Company issued 731,400, options under
ESOP 2006 scheme at an exercise price of Rs. 65 per share [of Rs 10 par value], convertible into 731,400
(June 30, 2006 - 2,000,200) equity shares of Rs 10/- each. These options vest over a period of 4 to 5 years. The options are
exercisable within a period of 5 years from the vesting date.

Details of number and weighted-average exercise prices of options are given below:

Period ended Year ended

March 31, 2008 June 30, 2007
Number of Weighted Number of Weighted
Particulars options average options average
exercise exercise
price (per price (per
share) (Rs) share) (Rs)
Outstanding at the beginning of the period/year 3,414,470 65 3,289,700 65
Granted during the period/year 731,400 65 2,000,200 65
Exercised during the period/year 328,385 65 102,240 65
Forfeited during the period/year 331,820 65 1,773,190 65
Outstanding at the end of the period/year 3,485,665 65 3,414,470 65
Exercisable at the end of the period/year 304,455 65 647,340 65

The weighted average price of the share on exercise date was Rs. 176.04
The weighted average contractual remaining life of the options is 7.33 years as at March 31, 2008.
The Company determined an intrinsic value, based on the fair value of the shares on the date of grant, as follows:

Intrinsic value
Month & year of grant determined
(Rs.)
June 2005 62.97
December 2005 62.97
April 2007 49.90
September 2007 83.80
February 2008 91.95

48
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

The Company recorded a deferred compensation expense of Rs. 11,420,490 (June 30, 2007-Rs. 40,728,801) during the year, net
of forfeitures for the options issued.

Rs. Rs.
Accounting value of stock options outstanding 215,183,132
Less:
Deferred stock compensation expense 125,724,682
Amortized during the period 11,420,490
114,304,192
Employee stock option outstanding account 100,878,940

The following table illustrates the effect on net loss per share if the Company had applied the fair value method under Black-
Scholes model to measure stock-based compensation.

Period ended Year ended

March 31, 2008 June 30, 2007
Rs. Rs.
Net loss after tax as reported (after extraordinary item) 1,881,361,073 4,195,761,015
Less: Compensation expense as recognized 11,420,490 40,728,801
Add: Compensation expense under the fair value method (Black Scholes Method) 69,908,106 6,995,123
Net loss after tax, pro forma (after extraordinary item) 1,939,848,689 4,162,027,337

Loss per share as reported, basic and diluted (Rs 10 par value) 13.87 42.24
Loss per share, pro forma, basic and diluted (Rs 10 par value) 14.30 41.90

The following assumptions were used in determination of the fair value of the Company’s stock options for pro forma net loss per
share disclosures using the Black-Scholes option-pricing model.

For options For options

issued during issued during
the period the year ended
ended June 30, 2007
March 31, 2008
Risk free interest rate (%) 8.00 8.13
Weighted average expected life (years) 5.19 5.21
Expected volatility (%) 51.60 23.95
Expected dividends - -

19. a) Related party disclosures

Names of related parties

Dr. Vijay Mallya, Capt. G.R Gopinath, Capt. KJ Samuel, Capt. Vishnu
Key Management Personnel
Rawal, Mr. Ramki Sundaram and Col Jayant Pooviah
a) Deccan Aviation (Lanka) Private Limited (‘DAPL’) (till transfer of
Associate company the relevant investments to DCL pursuant to Scheme)
b) Kingfisher Radio Limited
Enterprises owned or significantly influenced by a) Deccan Cargo Private Limited
key management personnel or their relatives b) Deccan Charters Limited
or persons who have control or significant
influence over the Company
Relatives of Key Managerial Personnel Mr Joseph Samuel, son of Capt. K J Samuel

49
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

19. a) Related party disclosures (Contd.)

(Amount in Rupees)
Enterprises owned or
significantly influenced
by key management
Key
Associate personnel or their relatives
management
company or persons who have
personnel
control or significant
influence over the
Company
Transactions during the year/period
Helicopter lease rentals earned (Deccan Mar-08 1,943,778
Aviation (Lanka) Private Limited ) Jun-07 4,221,360
Mar-08 450,000
Rent Expense (Capt. G.R Gopinath)
Jun-07 674,623
Mar-08 -
Investment by Kingfisher Radio Limited (*)
Jun-07 352,222,310
Mar-08 10,288,523
Remuneration (Mr. Ramki Sundaram)
Jun-07 N.A.
Interest income on advances Mar-08 2,000,000
(Mr. Ramki Sundaram) Jun-07 NA
Expenses incurred on behalf of Deccan Cargo Mar-08 20,899,364
Private Limited Jun-07 6,918,109
Reimbursement of expenses incurred on Mar-08 23,578,709
behalf of Deccan Cargo Private Limited. Jun-07 Nil
Consideration receivable on slump sale of the Mar-08 690,000,000
charter services operations (DCL) Jun-07
Book value of assets transferred on Slump Mar-08 807,793,919
Sale (DCL) Jun-07 -
Mar-08 331,404,752
Liabilities transferred on Slump Sale (DCL)
Jun-07 -
Assets given on lease (at gross block) (Deccan Mar-08 -
Aviation (Lanka) Private Limited) Jun-07 11,347,500
Receivables for lease rentals and expense Mar-08 -
reimbursements (Deccan Aviation (Lanka)
Private Limited)
Jun-07 8,200,692
Reimbursements receivable from Deccan Cargo Mar-08 4,238,764
Private Limited Jun-07 6,918,109
Mar-08 -
Dues by / (to) the Company
Jun-07 14,437
Mar-08 752,947,510
Net amount receivable from DCL
Jun-07 -
Dues to the Company Mar-08 25,000,000
(Mr. Ramki Sundaram) Jun-07 N.A.

* Excludes share premium of Rs. 5,107,223,495.

Remuneration paid to directors is disclosed elsewhere in the notes to accounts.
Salaries paid Rs. 1,903,548 (June 30, 2007 – Rs. 1,855,037) during the period ended March 31, 2008, to a relative of
one of the directors of the Company. Balance due to such person as at March 31, 2008 is Rs. 195,613 (June 30, 2007 –
Rs. 174,474).
Some of the key managerial personnel have given personal guarantees. In addition to key managerial personnel, their relatives
have offered collateral securities to banks and financial institutions against the loans taken by the Company from such banks
and financial institutions.

50
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

b) List of Associate Companies other than Related Parties

City Properties Maintenance Company Bangalore Limited
Deccan Charters Limited(formerly Kingfisher Aviation Training Limited)
H. Parsons Pvt. Limited
Inversiones Mirabel, S.A
Kingfisher Aviation Training Limited(formerly Kingfisher Training Academy Limited)
Kingfisher Training and Aviation Services Limited (formerly Kingfisher Airlines Limited)
Kingfisher Finvest India Limited (formerly Kingfisher Radio Limited)
Mangalore Chemicals & Fertilizer Limited
McDowell Holdings Limited
Mendocino Brewing Co.Inc, U.S.A
Pixray India Limited
Releta Brewing Company LLC
Rigby International Corp
Rubic Technologies Inc
UB Electronic Instruments Limited
UB Engineering Limited
UB Infrastructure Projects Limited
UB International Trading Limited
UB Overseas Limited
UBHL (BVI) Limited
UBSN Limited
United Breweries (Holdings) Limited
United Breweries International (UK) Limited
United Breweries of America Inc, Delaware
United Racing & Bloodstock Breeders Limited
United Spirits Limited
WIE Engineering Limited (Under Liquidation)

20. Leases and Hire Purchase

The Company has entered into operating and finance lease agreements. Disclosures required under AS 19 on “Leases” is as given
below:

Operating leases
Operating lease arrangements comprise of leases of aircraft, helicopters, spare engines and office premises. The salient features of
operating lease agreements for aircrafts, helicopters and spare engines are as follows:

• Lease periods range up to twelve years and are usually non-cancelable. (Lease periods ranged up to 10 years as at March 31,
2008).
• Lease rentals are usually fixed over the term of the lease while some arrangements are subject to adjustments linked to the
Libor rates movements.
• The Company also has agreements for maintenance and lease of stores and spares for such aircrafts for which fixed and
variable rentals are paid. Variable rentals are paid on a pre determined rate payable on the basis of actual flying hours/cycles.
Such variable rentals are subject to annual escalations as stipulated in the agreements. However, the Company is eligible to
claim reimbursement of maintenance costs to the extent eligible under the agreements.

51
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

20. Leases and Hire Purchase (Contd.)

• The Company does not have an option to buy the aircraft or helicopters and spare engines or to renew the leases.
• In case of default by the Company, in addition to repossession of the aircraft, penalties are stipulated in the agreements.
• The Company is required to deposit a commitment fee and a security deposit with the lessor or provide a letter of credit for
such amounts.
• Operating lease agreements for office & residential premises are mainly for a non cancelable period of three years. The leased
premises can be renewed at terms mutually agreeable to the Company and the lessor.

Nine Months Twelve months

ended ended
Particulars
March 31, 2008 June 30, 2007
(Rs) (Rs)
Lease and maintenance contributions for the period/year 4,296,865,197 4,059,020,329
Minimum Lease Payments and maintenance contributions:
- Not later than one year 5,005,020,373 4,603,511,189
- Later than one year but not later than five years 14,804,893,980 15,065,145,736
- Later than five years 6,054,677,852 3,436,391,847

In addition to the above, the Company has entered into agreements to lease aircrafts/engines in respect of which the
aircrafts/engines are pending delivery/the lease is yet to commence as at March 31, 2008. The above table of
minimum lease payments does not include amounts that may become payable in respect of leases yet to commence as at
March 31, 2008.

Finance leases
Finance lease arrangements relate to ground handling and related equipments. The lease period is for three years with interest
rates ranging from 10.5% to 12% per annum and the Company has an option to renew the lease at the end of the initial lease
term. The Company pays fixed lease rentals over the period of the lease whereby the net present value of the minimum lease
payments amount substantially to the cost of the assets.

Nine months Twelve months

ended ended
Particulars
March 31, 2008 June 30, 2007
(Rs.) (Rs)
Total minimum lease payments at the balance sheet date in case of balance fixed
non cancelable lease term. 13,224,748 24,600,868
Less : amount representing finance charges 773,419 2,192,725
Present value of minimum lease payments (Rate of interest 11% p.a.) 12,451,329 22,408,143
Lease payments for the period/year 11,376,164 20,033,312
Minimum Lease Payments :
Not later than one year [Present Value Rs. 11,085,438as on March 31,2008 11,840,904 15,015,660
(Previous Year Rs.13,297,664)]
Later than one year but not later than five years [Present Value Rs.1,365,891 as on
March 31,2008 (Previous Year Rs. 9,110,479)] 1,383,844 9,585,208

52
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

Hire purchase arrangements

During the period ended June 30, 2006, the Company entered into hire purchase agreements in respect of aircrafts. The salient
features of hire purchase agreements for aircrafts are as follows:
• Term is for 10 years
• Option to purchase the aircraft either during the term of the hire purchase arrangement 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 Company is responsible for payment of all costs of the owner including the financing costs and
other associated costs. Further a right of possession is available to the owner.
• The Company is responsible for maintaining the aircraft as well as insuring the same.

March 31, 2008 June 30, 2007

Particulars
(Rs) (Rs)
Total minimum hire purchase installments at the balance sheet date in case of balance 1,275,061,395 1,419,685,138
fixed non- cancelable term.
Present value of minimum hire purchase installments 1,045,765,757 1,142,869,803
Payments for the year /period 163,546,508 228,152,967
Hire purchase payments:
Not later than one year [Present value Rs. 104,782,068 as on March 31, 2008] (June 153,419,815 159,120,528
30,2007 Rs. 103,068,176)]
Later than 1 Year but not later than 5 years [Present value Rs. 472,942,105 as on 614,182,513 625,982,190
March 31, 2008] (June 30, 2007 Rs. 465,206,316)]
Later than 5 years [Present value Rs. 468,041,583 as on March 31, 2008] 507,459,067 634,582,420
(June 30, 2007 Rs574,595,311)

Assets given on lease

The Company had given one helicopter to Deccan Aviation (Lanka) Private Limited under an operating lease
arrangement. Lease rental income recognized in the Profit and Loss account amounts to Rs 1,943,778 (Previous year Rs.
4,221,360).
21. Segment disclosures
The Company operates in a single business segment, i.e. of providing scheduled and unscheduled air transportation services.
Further, the Company currently operates only in India and does not have operations outside India. Accordingly, no separate
segment disclosures for primary business segment and geographical disclosures are required to be given.

22. Deferred taxes

As at As at
Particulars March 31, 2008 June 30, 2007
(Rs.) (Rs.)
Liability
On account of depreciation on fixed assets 248,606,809 151,482,433
On account of timing differences in recognition of expenditure 54,516,158 23,188,975
Deferred tax liability 303,122,966 174,671,408
Asset
On account of timing differences in recognition of expenditure 26,475,997 25,791,139
On account of Unabsorbed losses and depreciation under the Income Tax Act, 5,261,644,353 148,880,269
1961
Deferred tax asset 5,288,120,350 174,671,408
Net deferred tax asset 4,984,997,384 Nil

53
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

Deferred tax asset on unabsorbed depreciation and business losses has been recognized on the basis of business plan prepared
by the management, which takes into account certain future receivables arising out of contractual obligations. The reduction of
prices of aviation fuel and reduction of sales tax on such fuel, which is under active consideration of the government together with
introduction of stringent cost reduction and control measures, will have positive impact on the working results of the Company.
The management is of the opinion that there is virtual certainty supported by convincing evidence that sufficient future taxable
income will be available against which the deferred tax asset can be realized.

23. Loss per share (EPS)

Nine months ended Twelve months
Particulars
March 31, 2008 ended June 30, 2007
After extraordinary items
Loss for computation of basic and diluted EPS (Rs) (1,881,361,073) (4,195,761,015)
Before extraordinary items
Loss before extraordinary items and tax expense (Rs) (7,070,496,576) (4,161,772,866)
Add: Tax expense after reworking deferred tax credit on account of 5,055,194,220 33,988,149
extraordinary item (Rs)
Loss for computation of basic and diluted EPS (Rs) (2,015,302,356) (4,195,761,015)
Weighted average number of shares considered for basic EPS 135,668,051 99,326,445
(Rs 10 par value)
Add: Effect of employee stock options* - -
Weighted average number of shares considered for diluted EPS 135,668,051 99,326,445

* The effect of employee stock options on weighted average number of shares for diluted EPS is not considered since their effect
is anti-dilutive.

24. The Company had entered into forward contracts for US dollars 5 million to hedge foreign currency liabilities (payables) as at June
30, 2007. There were no forward contracts or derivative contracts outstanding as at March 31, 2008.

The foreign currency exposures that have not been hedged by any derivative instrument or otherwise are as follows:

As at March 31, As at June 30,

Particulars 2008 2007
(Rs) (Rs)
Assets ( Receivables) 603,401,891 447,555,250
Liabilities ( Payables) 1,435,136,366 564,222,519
Hire Purchase loan for aircrafts and other term loan from financial institution 1,135,759,325 1,219,272,438

25. In respect of certain training costs which are initially funded by the employee, the Company has an obligation to reimburse the
employee such training costs in case the employee fulfills certain employment conditions under the terms of agreement with
the Company. The Company has made a provision of Rs. 61,280,041 for the period ended March 31, 2008 (June 30, 2007 –
Rs. 67,528,046).

26. Miscellaneous income for the period ended March 31, 2008 includes Rs. 148,900,000 (June 30, 2007 - Rs. 256,602,800) towards
lease subsidy received by the Company.

27. Other Direct Operating Expenses for the period ended March 31, 2008 is net of credit memorandum of Rs. 208,989,119 (June 30,
2007 – Rs. 119,680,500 )

54
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

28. Employee Benefits:

a) Contribution to defined benefit plans

Nine months
ended March
31, 2008
(Rs.)
Gratuity Plan
(Unfunded)
I) Change in benefit obligation:
Defined benefit obligation (DBO), at the beginning of the period (July 1, 2007) 35,115,726
Excess provision as at July 1, 2007 credited to opening reserves credited as per transitional (2,110,336)
provision of AS 15 (Revised)
Service Cost 8,188,329
Interest Cost 2,525,225
Actuarial loss / (gain) 1,639,753
Benefits paid (519,230)
Liability pertaining to charter service operations transferred to DCL (6,405,394)
Defined benefit obligation at the end of the period 38,434,073
II) Components of cost for the period ended March 31, 2008:
Service cost 8,188,329
Interest on defined benefit obligation 2,525,225
Expected return on plan assets Nil
Net actuarial gain recognized in the year 1,639,753
Net gratuity recognized in the Profit and Loss Account 12,353,307
III) Actuarial assumptions
Discount rate (p.a) 8.10%
Salary Escalation Rate (p.a) 8% for first 3 years
and 6% thereafter
Retirement Age (other than pilots) 60 years
Retirement Age (pilots) 65 years
Mortality Rates of LIC (1994-
1996) mortality table

Withdrawal Rate Withdrawal Rates

Age (years) p.a. (%)
21-30 15%
31-34 10%
35-44 5%
45-50 3%
51-54 2%
55 & above 1%

Note: This being the first period of implementation of AS 15 (revised), corresponding figures for previous year have not been
furnished.

b) 1 Contribution to Defined Contribution Plans

1 Contribution to provident and other funds Rs. 21,743,735 (June 30, 2007 Rs. 17,404,229).

55
 Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

29. As part of the rapid expansion plans, the Company incurred significant expenditure on in house trainers towards training of pilots
and technical engineers. Although, such in house training costs are not covered under bond or are not recoverable from the
employees, the Company has deferred such costs as management believes that the economic benefits of such training costs will
flow to the enterprise over a period. Such training costs are being amortized over a period of three years following the year in
which the expenses are incurred. As at March 31, 2008 and June 30, 2007 a net sum of Rs. Nil and Rs.28,270,478, respectively
have been reflected as ‘Training Expenses’ under Deferred Revenue Expenses.

30. During the years ended March 31, 2004 and 2005, the Company incurred certain expenses prior to commencement/expansion of
operations. The Company has deferred these expenses to be written off over a period of three years following the year in which
the expenses are incurred. As at March 31, 2008 and June 30, 2007 a net sum of Rs. Nil and Rs.2,628,571, respectively have been
reflected as ‘Preoperative Expenses’ under Deferred Revenue Expenses.

31. The Company has initiated the process of obtaining confirmation from suppliers regarding the registration under the MSME Act
“Micro Small and Medium Enterprises Development Act 2006”. The suppliers are not registered wherever the confirmations are
received and in other cases, the Company is not aware of their registration status and hence information relating to outstanding
balance or interest due is not disclosed as it is not determinable.

32. Details of non-resident shareholdings:

Particulars March 31, 2008 June 30, 2007

Number of non resident share holders 451 444
Number of shares held by non resident shareholders 16,936,357 14,394,208

33. Discontinuing Operation: (In Rupees)

Particulars March 31, 2008 June 30, 2007

  Continuing Discontinuing Continuing Discontinuing
Operations Operations Operations Operations
Total Assets 17,997,704,677 16,999,779,618 839,035,616
-
Total Liabilities 16,008,981,174 - 13,681,103,704 310,739,260
Income 15,110,957,179 343,474,726 19,234,781,265 664,098,448
Expenditure 22,158,125,096 366,803,385 23,496,400,883 564,251,696
Profit/(Loss) after tax expense for the period / (1,856,732,414) (24,628,659) (4,261,619,620) 99,846,752
year
Net cash flow from / (used in)        
a. Operating activities (5,590,405,275)  175,193,393  (5,705,885,665) 180,067,049
b. Investing activities 141,924,096  (3,720,513)  1,327,545,624 (132,728,931)
c. Financing activities 106,436,839  (198,700,456) 9,972,987,391 (36,237,387)

34. Accounts with certain creditors, loans and advances are under review and reconciliation. Adjustments, if any will be made on
completion of such review/ reconciliation.

35. The Company has incurred substantial losses and a part of its net worth has been eroded. However, having regard to the Scheme by
virtue of which the Scheduled Air Transport Services (Passenger) Division of Kingfisher Airlines Limited (Currently called Kingfisher
Training and Aviation Services Limited) has been de-merged with the Company with April 1, 2008 as the appointed date, the
synergies expected there from, the recently launched international operations and group support, the financial statements have
been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of
assets and liabilities.

56
Schedules forming part of accounts for the nine months ended March 31, 2008 (Contd.)

36. The Company’s Centralized Ticket Reservation System (CRS) had not fully stabilized and there were certain errors and inconsistencies
in certain reports generated there from. The Company has migrated to a new system in August 2008. Working backwards from
the data migrated to the new system, the Company believes that the revenue recognized during the period under review is true in
all material respects. Adjustments if any to the revenue so recognized will be made after stabilization of new system and cleansing
of data base.

37. A large portion of the business has originated through usage of credit card as a form of payment of tickets by the passengers. The
Company has received chargeback, aggregating Rs. 66.43 million, from credit card service providers due to misutilization of credit
cards by third parties.

38. Pursuant to the issuance of Companies (Accounting Standards) Rules, 2006 by Ministry of Corporate Affairs and withdrawal of the
announcement "Treatment on exchange differences under AS 11 (revised 2003), The effects of changes in Foreign Exchange Rates
vis-a-vis Schedule VI to the Companies Act, 1956", by ICAI, the Company has applied AS 11 for restatement of Capital Advances
and Foreign currency borrowings for acquisition of fixed assets. In view of the application of the new rules, the Company's loss
for the period is less by Rs. 83 lakhs.

39. The previous year’s figures are for year ended June 30, 2007, while those of current period are for nine months ended March 31,
2008. Hence the same are not comparable. The previous year’s figures have been regrouped / reclassified wherever necessary to
conform to the current period’s presentation.

As per our report of even date

For B.K.Ramadhyani & Co. For and on behalf of the Board of Directors
Chartered Accountants

per Satyanarayana Murthi Dr. Vijay Mallya Capt. G. R. Gopinath

Partner Chairman Vice Chairman &
Membership No. 200/24248 Managing Director

Bangalore Ramki Sundaram N. Srivatsa

October 15, 2008 Chief Financial Officer Company Secretary

57
 Cash Flow Statement for nine months ended March 31, 2008

For the nine months For year ended

ended March, 31 2008 June, 30 2007
(Rs) (Rs)

A. Cash flows from operating activities

Loss before tax expense (6,825,898,049) (4,161,772,866)
Adjusted for:
Depreciation 182,807,412 176,688,023
Provision for wealth tax 175,375 64,000
Employee stock compensation cost 11,420,490 40,728,801
Amortisation 183,131,655 262,482,038
Interest expense 284,046,473 341,259,615
Preliminary expenses written off - 2,152
Profit on transfer of aircraft/engine purchase rights (249,791,344) (2,884,623,064)
Profit from slump sale of Charter business undertaking (244,598,527)
(Profit) / Loss on sale of assets 90,281 (4,479,468)
Interest income (189,755,634) (172,455,086)
Provision for Doubtful debts 7,464,935 9,105,010

Operating loss before working capital changes (6,840,906,933) (6,393,000,845)

Movement in working capital:

Decrease/(increase) in sundry debtors 88,281,796 (230,890,373)
Decrease/(increase) in inventories 129,790,827 (43,582,027)
Decrease/(increase) in loans and advances (713,985,398) 314,349,993
Decrease/(increase) in other current assets (42,428,136) (8,260,399)
(Decrease)/increase in current liabilities & provisions 2,063,565,615 893,928,852

Cash (used in)/generated from operations (5,315,682,229) (5,467,454,799)

Direct tax paid including fringe benefit tax (net of refunds) (99,529,652) (58,363,817)

Net cash (used in)/generated from operating activities (5,415,211,881) (5,525,818,616)

B.  Cash flows from investing activities

Purchase of fixed assets and changes in capital work in progress (278,947,800) (1,829,765,711)
Proceeds from sale/disposal of fixed assets 40,000 84,231,967
Proceeds from transfer of aircrafts/engine purchase rights 249,791,344 2,884,623,064
Interest received 167,320,039 53,475,650
Deferred revenue expenses - 2,251,723

Net cash used in investing activities 138,203,583 1,194,816,693

58
Cash Flow Statement for nine months ended March 31, 2008 (Contd.)

For the nine months For year ended

ended March, 31 2008 June, 30 2007
(Rs) (Rs)

C. Cash flows from financing activities

Proceeds from issue of share capital 21,345,024 5,760,637,405

Share/debenture issue expenses paid (726,132) (188,424)
Proceeds from term loans (including hire purchase) 413,537,401 1,144,040,756
Repayment of term loans (including hire purchase) (880,221,774) (1,251,392,967)
Change in overdraft facility (including book overdraft & short term loan) 958,920,237 1,010,688,744
Change in cash credit facility (1,696,134,039) 1,586,449,478
Finance lease obligation (9,956,814) (16,759,142)
Unsecured Loans received 4,460,000,000 2,427,500,000
Unsecured Loans repaid (3,040,000,000) (462,500,000)
Interest paid (319,027,521) (261,725,846)

Net cash generated from financing activities (92,263,618) 9,936,750,004

Net change in cash and cash equivalents (A+B+C) (5,369,271,916) 5,605,748,081

Cash and cash equivalents at the beginning of the period/ year 8,170,495,277 2,564,747,196

Cash and cash equivalents at the end of the period/ year (Note below) 2,801,223,361 8,170,495,277

Notes :
Refer Schedule 9 for details of cash and cash equivalents.

As per our report of even date

For B.K.Ramadhyani & Co. For and on behalf of the Board of Directors
Chartered Accountants

per Satyanarayana Murthi Dr. Vijay Mallya Capt. G. R. Gopinath

Partner Chairman Vice Chairman &
Membership No. 200/24248 Managing Director

Bangalore Ramki Sundaram N. Srivatsa

October 15, 2008 Chief Financial Officer Company Secretary

59
 BALANCE SHEET ABSTRACT

Statement Pursuant to Part IV of Schedule VI to the Companies Act, 1956

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
I Registration Details
Registration Number L 8 5 1 1 0 K A 1 9 9 5 P L C 0 1 8 0 4 5
Balance Sheet Date 3 1 - 0 3 - 2 0 0 8

II Capital Raised during the period (Amount in Thousands)

Public issue N I L Rights issue N I L
Bonus Shares N I L Private Placement 0 0 0 3 5 2 2 2 2

III Position of Mobilisation and Deployment of Funds (Amount in Thousands)

Total Liabilities 0 2 1 0 1 0 1 0 8 Total Assets 0 2 1 0 1 0 1 0 8
Sources of funds
Paid-up Capital 0 0 1 3 5 7 9 8 5 Reserves & Surplus 0 1 0 2 0 7 4 1 6
Secured Loans 0 0 5 9 2 3 8 2 8 Unsecured Loans 0 0 3 4 2 0 0 0 0
Application of Funds
Net Fixed Assets 0 0 6 2 5 0 2 7 4 Investments 0 0 0 0 0 0 0 0 0
Net Current Assets (-) 0 0 0 6 9 1 5 9 MISCELLANEOUS EXPENDITURE 0 0 0 1 6 6 4 3 9
Accumulated Losses 0 0 9 6 7 7 5 5 7

IV Performance of Company (Amount in Thousands)

Turnover 0 1 5 4 5 4 4 3 2 Total Expenditure 0 2 2 5 2 4 9 2 8
PROFIT Before Tax (-) 7 0 7 0 4 9 6 PROFIT AFTER TAX (-) 1 8 8 1 3 6 1
EARNING PER SHARE (In Rs.) (-) 1 4 . 8 5 Dividend rate % N I L

V Generic NameS of PrinciplE Products / Services of Company

Item Code No. (ITC Code) n a
Product Description A I R C R A F T C H A R T E R S

A I R L I N E O P E R A T I O N S
For and on behalf of the Board of Directors

Dr. Vijay Mallya Capt. G. R. Gopinath

Chairman Vice Chairman &
Managing Director

Bangalore Ramki Sundaram N. Srivatsa

October 15, 2008 Chief Financial Officer Company Secretary

60
NOTES

61
 NOTES

62
NOTES

63
 NOTES

64