KFA ANNUAL REPORT-3

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Dr. Vijay Mallya The Team S. R. Gupte G. N. Bajpai Sanjay Aggarwal CEO Hitesh Patel Executive Vice President Rajesh Verma Executive Vice President Bharath Raghavan Chief Legal Offcer Company Secretary Manoj Chacko Executive Vice President A. Raghunathan Chief Financial Offcer Ravi Nedungadi Anil Kumar Ganguly Vijay Amritraj Piyush Mankad Report of the Directors 2 Corporate Governance Report 10 Management Discussion Analysis Report 20 Auditors’ Report 29 Balance Sheet 34 Proft and Loss Account 35 Schedules 36 Cash Flow Statement 67 Accounts of the Subsidiary 70 C O N T E N T S C O N T E N T S

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1 BOARD OF DIRECTORS Dr. Vijay Mallya Chairman Managing Director Mr. Subhash R. Gupte Vice Chairman Mr. A. K. Ravi Nedungadi Mr. Vijay Amritraj Mr. Anil Kumar Ganguly Mr. Piyush G. Mankad Mr. Ghyanendra Nath Bajpai PRESIDENT CFO - THE UB GROUP Mr. A. K. Ravi Nedungadi CHIEF EXECUTIVE OFFICER Mr. Sanjay Aggarwal CHIEF FINANCIAL OFFICER Mr. A. Raghunathan CHIEF LEGAL OFFICER COMPANY SECRETARY Mr. Bharath Raghavan AUDITORS M/s. B. K. Ramadhyani Co. Chartered Accountants 4B 4 th Floor 68 Chitrapur Bhavan 8 th Main 15 th Cross Malleswaram Bangalore – 560 055 REGISTERED OFFICE UB Tower Level 12 UB City 24 Vittal Mallya Road Bangalore – 560 001

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2 Report of the Directors To The Members Your Directors present the 16th Annual Report along with the Audited Accounts of your Company for the year ended March 31 2011. Operations Your Company’s operations during the year ended March 31 2011 have resulted in: Rs. in million Year ended Year ended March 31 2011 March 31 2010 Gross Income 64956 52710 Earnings before financial charges lease rentals depreciation amortization and taxes EBITDAR 11243 4036 Add/Less: Depreciation Amortization 2410 2173 Lease Rentals 9840 10938 Financial charges 13129 11026 Profit/ Loss before taxes 14137 20100 Provision for taxes including FBT 4934 7707 Net Profit / Loss from ordinary activities after tax 9203 12393 Foreign exchange translation difference 158 502 Exceptional Item 912 3577 Net Profit / Loss after tax 10274 16472 Scheduled Airline Operations During the year under review your Company had a domestic market share of 19.8 and carried more than 12 million passengers across both domestic and international sectors. Fleet size of aircraft used in scheduled operations stood at 66 aircraft at year end and an average schedule comprised of 366 domestic and 28 international flights daily over a route network as on March 31 2011 covering 59 domestic and 8 international destinations. During the year under review 14 of the Airbus A320 family aircraft in your Company’s fleet which use the V2500 engines manufactured by IAE International Aero Engines AG “IAE” had to be grounded due to technical problems relating to the engines. Your Company has made arrangements with IAE to perform maintenance and support work on its entire fleet of engines including undertaking those measures identified by the United States Federal Aviation Administration and other support work to improve on- wing performance. By March 31 2011 your Company had re-introduced ten aircraft back into service and the balance have also since been inducted into operations. The grounding of aircraft resulted in a 10 1222 million seat kilometres drop in domestic capacity. Despite the drop in domestic capacity by 10 your Company’s domestic passenger count increased by 2.6 demonstrating sharply improved productivity. During the year under review your Company undertook a further expansion in its international operations by introduction of a new wide-body route from Delhi to Hong Kong and narrow- body routes from Delhi to Kathmandu and from Delhi and Mumbai to Bangkok and Dubai. Your Company is the only Indian airline to be a member- elect of oneworld which is the premier global airline alliance. It brings strong brand recognition comprising leading airlines such as American Airlines British Airways Cathay Pacific Qantas and Finnair. oneworld serves airports in 150 countries through 9000 daily flights with member airlines based in every continent. Kingfisher Airlines’ code share arrangements with British Airways has accelerated the growth trajectory of your Company into key international markets providing enhanced connectivity and traffic. Your Company has achieved market share leadership in most of the international sectors where operations have been launched within a short span of 1 to 2 years of launch. This resulted in your Company’s combined domestic and international capacity increasing by 9.2 1365 million seat kilometers while the total passenger count has increased by 8.9. Your Company has continued major initiatives during the year to reduce distribution costs implement fuel management systems improve aircraft utilization and re- negotiate general contracts in order to enforce revenue and cost competitiveness. To enhance consumer connect your Company continued its focus on various marketing and commercial initiatives including tie-ups with corporate houses to get premium business. Campaigns to leverage and promote your Company’s network reach and product offerings were launched. During the year under review your Company won the coveted award for the best frequent flyer program in category ‘Best Promotion for Redemption’ and ‘Best Loyalty Credit Card’ at Frequent Travellers Awards 2011. In view of operating losses incurred during the year your Directors do not recommend payment of any dividend.

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3 Report of the Directors Contd. Subsidiaries The statement of your Company’s interest in its only subsidiary Vitae India Spirits Limited as at March 31 2011 prepared in accordance with the provisions of Section 2123 of the Companies Act 1956 is attached to the Balance Sheet. Outlook Your Company is one of India’s largest domestic carriers by passengers flown and cities served. Your Company has continued to enjoy market leadership with a wide network reach in India a growing international presence an awarded frequent flyer program and wide distribution. The country’s economy continues to be strong with GDP growth estimates being maintained in the range of 8 - 8.5. Passenger traffic has been buoyant in the current year as recovery continues on the back of a strengthening macro-economic environment. Domestic seat capacity is expected to expand lower than growth in demand enabling improved revenue performance for the industry. In fact your Company has achieved load factors in excess of 80 in the current year. To further improve consumer franchise various marketing initiatives and enhanced customer loyalty programs have been undertaken. Your Company is optimistic of improved performance in the current year primarily driven by improving domestic and international passenger revenue the benefits of debt recast together with lowered interest burden and various other initiatives taken by your Company to lower direct operating costs. Debt Recast Package During the year under review your Company has implemented a Debt Recast Package with its consortium of bankers salient features of which are: 1 a i Rs.7501 million of Loan from the bankers was converted into 7.5 Compulsorily Convertible Preference Shares. The 7.5 Compulsorily Convertible Preference Shares were thereafter converted into equity shares in accordance with the pricing regulations of the Securities and Exchange Board of India SEBI. ii Rs. 5531 million of Loan from the bankers was converted into 8 Cumulative Redeemable Preference Shares redeemable at par after 12 years. iii Repayment of the balance loans was rescheduled with a moratorium on repayment of principal of 2 years and step-up repayment over the subsequent 7 years. iv Interest for the period July 1 2010 to March 31 2011 on loans from the banks was converted into a funded interest term loan repayable in 9 years including 2 years moratorium. v Interest rate on loans reduced by over 300 bps. vi Additional fund based loan facilities of Rs.7683.2 million and non-fund based facilities of Rs.4444 million sanctioned by the banks. vii Part of the working capital limits of Rs.2974 million converted into working capital term loans. b Loans from Promoters of Rs. 6480 million were converted into 7.5 Compulsorily Convertible Preference Shares and thereafter into equity shares pricing as per SEBI regulations. Also the terms of 6 Redeemable Preference Shares of Rs. 970 million issued to the Promoters were varied so that they became 6 Compulsorily Convertible Preference Shares which thereafter were converted into equity shares pricing as per SEBI regulations. Consequent to a and b above your Company’s paid-up equity capital stood increased from Rs. 2659088830 to Rs. 4977792230 on March 31 2011. 2 Loans / Inter corporate deposits from certain business associates aggregating to Rs.7093 million were converted into 70931985 8 optionally convertible debentures of Rs.100/- each “OCDs” which are convertible into equity shares for a period of 18 months from their issue after which they are redeemable. These OCDs are convertible into equity shares at the option of the holder and at a conversion price to be determined as per applicable SEBI regulations with reference to the date of conversion. As a result it is not presently possible to determine either the date of conversion of the OCDs or the number of equity shares which may be issued and allotted if and when OCDs are converted. It is proposed that the terms of the OCDs be varied such that in the event the Board decides to undertake the Rights Issue which is to occur prior to 18 months from the date of allotment of the OCDs the OCDs shall become redeemable in part or in full and in one or more tranches at the option of the Board and in such quantity as may be mutually agreed by the Board and the holders of the OCDs. The redemption proceeds of OCDs along with accrued interest are to be appropriated towards subscription to equity shares in the rights issue. In the event the rights issue has not opened for subscription

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4 Report of the Directors Contd. or after opening for subscription has not successfully closed during the period of 18 months from the date of allotment of the OCDs the OCDs shall be governed by their original terms of issue. Approval of the Members is being sought at the Annual General Meeting for such variation in the terms of the said OCDs. Capital During the year under review your Company’s Authorised Share Capital was increased from Rs. 10000000000/- comprising of 900000000 Equity Shares of Rs. 10/- each and 10000000 Preference Shares of Rs. 100/- each to Rs. 42500000000/- comprising of 1650000000 Equity Shares of Rs. 10/- each and 260000000 Preference Shares of Rs. 100/- each at the Annual General Meeting held on September 30 2010. Subsequently at the Extraordinary General Meeting held on December 20 2010 the Authorised Share Capital was re-classified into 1650000000 Equity Shares of Rs. 10/- each and 2600000000 Preference Shares of Rs. 10/- each. Consequent upon the implementation of the Debt Recast Package the Issued Subscribed and Paid- up Share Capital of your Company has increased from Rs. 3629088830/- divided into 265908883 Equity Shares of Rs. 10/- each and 9700000 6 Redeemable Non-Cumulative Preference Shares of Rs. 100/- each to Rs. 10508792230/- divided into 497779223 Equity Shares of Rs. 10/- each and 553100000 8 Cumulative Redeemable Preference Shares of Rs. 10/- each. Depository System The trading in the equity shares of your Company is under compulsory dematerialization mode. As of date equity shares representing 90.49 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 observations in para 4 of Auditors’ Report the Statutory Auditors have qualified their report by remarking that the receipt of subsidy from aircraft manufacturers should be recognized 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 4 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 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. The fair market value of these Aircraft is not easily ascertainable due to the unique specifications of the Aircraft. Therefore the management has obtained the valuation report for Aircraft of similarly type from a leasing company to ascertain the fair market value which is higher than the sale price of these Aircraft. This is also supported by the fact that the insurance value to be covered as per respective Lease Agreement is much more than the sale value of the Aircraft. As regards the observations in para 6 of the Auditors’ Report the Company has adopted the Exposure draft on Accounting Standard – 10 Revised ‘Tangible Fixed Assets’ which allows such costs on major repairs and maintenance incurred to be amortized over the incremental life of the asset. The Company has extended the same treatment to costs incurred on major repairs and maintenance for engines pertaining to aircrafts acquired on Operating Lease. As regards the observations in para 13a of the Auditors’ Report the Note number 16 to Notes to Accounts Schedule 19 is self explanatory.

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5 Report of the Directors Contd. 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 compliance with relevant laws. Directors Mr. Ghyanendra Nath Bajpai and Mr. Subhash R. Gupte Directors retire by rotation and being eligible offer themselves for re-appointment. During the year under review Dr. Naresh Trehan resigned from the Board of Directors of your Company effective August 11 2010. Subsequent to the year under review Diwan Arun Nanda has tendered his resignation from the Board of Directors of your Company. His resignation will be effective September 5 2011. Auditors M/s. B. K. Ramadhyani Co your Company’s Auditors have confirmed that they are eligible for re-appointment at the ensuing Annual General Meeting and it is proposed to re-appoint them and to fix their remuneration. Listing of Shares of Your Company All 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 2011-12 has been paid to these Stock Exchanges. 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 the Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report. Human Resources Employee relations remained cordial. The information as are required to be provided in terms of Section 2172A of the Companies Act 1956 read with the amended Companies Particulars of Employees Rules 1975 have been included as an annexure to this Report. Employee Stock Option Plan ESOP 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 2171e of the Companies Act 1956 and the rules framed thereunder are not applicable to your Company. The relevant information relating to Foreign Exchange Earning and Outgo appears in the Notes Nos. 6 to 8 of Schedule 19 to the Financial Statements. Directors’ Responsibility Statement Pursuant to Section 2172AA of the Companies Act 1956 in relation to the Financial Statements of your Company for the year ended March 31 2011 the Board of Directors reports that: l in the preparation of the Accounts for the year ended March 31 2011 the applicable accounting standards have been followed along with proper explanation relating to material departures l 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 2011 and of the Loss of your Company for the year ended March 31 2011 l 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 l the accounts for the year ended March 31 2011 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 the Reserve Bank of India lending banks and financial institutions suppliers other business associates and employees. For and on Behalf of the Board of Directors Mumbai Dr. Vijay Mallya August 25 2011 Chairman Managing Director

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6 ANNEXURE TO DIRECTORS REPORT STATEMENT OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217 2A OF THE COMPANIES ACT 1956 AND COMPANIES PARTICULARS OF EMPLOYEES RULES 1975 Employed throughout the year and in receipt of remuneration in aggregate of not less than Rs. 6000000 per annum SL. NO. NAME AGE DESIGNATION / NATURE OF DUTIES REMUNERATION RS. QUALIFICATION EXPERIENCE IN YRS DATE OF COMMENCEMENT OF EMPLOYMENT PARTICULARS OF PREVIOUS EMPLOYMENT 1 A.S. PEDNEKAR 51 CHECK PILOT 7304110.52 B.A. 29 09.05.2005 Air Deccan 2 ABHINAV DEV SHARMA 29 CHECK PILOT 6441396.00 B. Sc 5 06.08.2005 Jet Airways 3 AJAY KUKREJA 49 EXAMINER 6829158.00 10+2 ATPL 29 14.05.2004 Air Deccan 4 AKSHAY RENAVIKAR 44 CHECK PILOT 6481863.00 HSC 20 03.01.2005 Jet Airways 5 ALFREDO FEDERICO GUT 51 CAPTAIN 6185454.00 ATPL 4 24.05.2006 AIR ACES 6 AMIT AGARWAL 41 SR. VICE PRESIDENT - CORPORATE DEVEL- OPMENT PLANN 8511360.00 MTECH 18 09.02.2010 Delta 7 AMIT BAJAJ 44 EXAMINER 6297648.00 HSC 21 01.02.2005 Air Sahara 8 ANGEL ARMANDO BARCEN 45 CAPTAIN 7094489.36 ATPL 4 31.03.2006 AIR ACES 9 ANSHU SAGAR KALRA 49 EXAMINER 6554602.00 Bsc 24 09.05.2005 IAF 10 ARMANDO BENJAMIN HERNANDEZ DUENAS 49 CAPTAIN 7691293.00 ATPL 10 01.06.2007 Taca International Airlines 11 ASHOK VARDHAN SINGH DEO 44 INSTRUCTOR 6318712.00 B.A. 13 29.04.2006 Alliance Air 12 ATUL A. KUCHERIA 37 CHECK PILOT 6230384.00 B. Sc 5 15.12.2005 Jet Airways 13 BED PRAKASH UPRETI 48 CAPTAIN 6826257.00 MA 4 01.04.2005 Necon Air 14 BEER SINGH YADAV 48 CAPTAIN 6058236.00 ATPL 22 22.10.2008 Air Sahara 15 BHANUMOHAN KAILA 44 VP - TRADE SALES WEST SOUTH INDIA 6047537.00 B.A. DHM PGDBM 19 01.12.2006 United Spirits Ltd. 16 BOBBY P GOLSHANI 42 CAPTAIN 6186492.48 ATPL 18 07.11.2008 American Eagle 17 C V S RAVI 54 EXAMINER 6780473.00 HSC 28 21.01.2005 Air Sahara 18 CARLOS ALEJANDRO PAR 57 CAPTAIN 6125769.00 Pilot in command in ATR 42-500 3 02.04.2007 Atlantic Airlines 19 CHITSIME ARTHUR WALE 46 CAPTAIN 6033458.00 BScchemistryATPL 3 23.04.2007 Precision 20 DILAWER SINGH BASRAON 44 CAPTAIN 6107686.00 HSC 20 10.01.2005 Ranbaxy Lab. Ltd. 21 DIMITRIOS SIPSAS 59 CAPTAIN 6455452.00 ATPL 10 27.01.2010 Olympic Aviation 22 DINESH KANT SHARMA 50 EXAMINER 6629372.00 BSC 25 03.01.2005 IAF 23 DULEEPKUMAR DAVID JO 58 CAPTAIN 8834160.00 ATPL 34 18.04.2008 Sri Lankan Airways 24 DUMISANI MOYO 50 CAPTAIN 7330739.00 ATPL 13 01.06.2007 Oman Air 25 EDGAR ARTHUR KAUNDA 57 CAPTAIN 6036330.00 ATPL 4 11.04.2006 Precision Air 26 ERWIN HAROLDO PEREZ 45 CAPTAIN 6946921.00 ATPL 4 24.05.2006 Air Aces 27 G R MOHAN 60 DGM - FLIGHT OPERATIONS BLR/HYD 6719616.00 Msc. MAeSL 38 03.01.2005 Blue Dart Aviation 28 G SHIV KUMAR 48 EXAMINER 6540645.00 MSC.LLB 25 01.09.2005 IAF 29 GEOFFREY JESUDASON 65 Chief Examiner A320 7800810.00 HSC 39 13.09.2004 Indian Airlines 30 GHEORGHE POPA 58 CAPTAIN 6095585.00 ATPL 5 03.03.2005 Air Tarom 31 HARVINDER SINGH VIRK 44 INSTRUCTOR 6185080.00 B.A. 17 09.05.2005 Alliance Air 32 HITESH PATEL 47 EXECUTIVE VICE PRESIDENT 25622258.00 MBA 27 18.01.2005 Jet Blue 33 HOLGER GALLO MANRIQU 51 CAPTAIN 6131841.00 ATPL 5 20.09.2005 Air Aces 34 INDIRA S. MITTRA 45 DGM - FLIGHT OPERATIONS MAA / CCU 7797047.00 ATPL 19 01.01.2009 Air Deccan 35 IVAN JALALUDDIN 47 EXAMINER 6577017.00 HSC / ATPL 22 17.02.2008 Air India 36 JUAN NICOLAS SANCHEZ 44 CAPTAIN 6118277.68 ATPL 4 06.04.2006 AIR ACES 37 KADATHANAD RAGHAVAN 48 CHECK PILOT 6473566.00 10+2 ATPL 28 15.01.2005 Air Deccan 38 KARL BAHADUR WYKES 43 CHECK PILOT 7005454.00 HSC 19 03.01.2005 Jet Airways 39 KRISHNAMURTHY SHANKAR 48 CAPTAIN 6060637.00 HSC 24 09.05.2005 IAF 40 LJUPCO NIKODINOVSKI 53 CAPTAIN 6210315.00 ATPL 11 16.11.2009 JAT Airways 41 LUIS ANGEL ARAYA ARA 39 CAPTAIN 6162234.57 ATPL 4 08.05.2006 AIR ACES 42 MAHESH KULKARNI 41 CHECK PILOT 6176248.00 10+2 ATPL 21 01.07.2005 Air Deccan 43 MAHESH KUMAR SHARMA 42 CHECK PILOT 6571671.00 10+2 ATPL 22 09.06.2003 Air Deccan 44 MANOJ CHACKO 41 EVP - COMMERCIAL 8184360.00 MBA 18 21.12.2009 AMEX 45 MASSOUD K MOGHADAM 53 CAPTAIN 6359713.00 ATPL 16 03.07.2007 Aseman Airlines Iran 46 MAURO OLIVIER DE CAS 53 CAPTAIN 6816695.48 ATPL 5 14.06.2005 Total Airlines 47 MOHNISH S. CHADDA 45 EXAMINER SECONDED FLIGHT OPERA- TIONS INSPECTOR DG 7000291.00 HSC 23 07.11.2005 Air Lanka 48 MUKUL GUPTA 45 CHECK PILOT 6314605.00 B.Com. 16 22.04.2006 Alliance Air 49 MURALI RAMACHANDRAN 42 SR. VICE PRESIDENT - GROUND SERVICES 6195406.00 IHM 18 01.11.2008 Jet Airways 50 NARINDER SINGH 51 CHECK PILOT 6383619.00 M.Sc. 24 06.02.2006 Indian Navy 51 NAY KO KO NAING 35 CAPTAIN 6605215.00 ALTP 13 02.12.2008 Myanmar Airways 52 NIELS PEDER TERNVING 63 CAPTAIN 8938523.48 ALTP 27 25.07.2008 Scandinavian Airways 53 NIKET DEEP KALRA 42 CHECK PILOT 6712844.00 MBA 19 03.01.2005 IAF 54 NITIN ANAND 40 HEAD - FLIGHT SAFETY 7379630.00 HSC 16 23.11.2006 Air Deccan 55 P. ABHIJIT BHUSHAN 48 AVP - FLIGHT OPERATIONS 8208891.00 HSC 24 03.01.2005 Jet Airways 56 PAUL HENRY MOULINIER 46 CAPTAIN 6104303.00 ATPL 3 25.04.2007 Santa Barbara Airlines 57 PETER ANDREW FIWA 45 CAPTAIN 6119456.00 Deg.in C EngATPLTRI 4 17.08.2006 Air Malawi 58 PONNI CHELVAN A 32 CHECK PILOT 7336026.00 10+2 ATPL 12 30.09.2005 Air Deccan 59 POPESCU SORIN COSTEL 55 CAPTAIN 6644321.00 ATPL 26 20.10.2009 Air Tarom 60 PRAFULL JAGDEV THAKUR 53 CHECK PILOT 6166993.00 B.Com. 25 27.03.2006 Alliance Air

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7 STATEMENT OF PARTICULARS OF EMPLOYEES Contd. SL. NO. NAME AGE DESIGNATION / NATURE OF DUTIES REMUNERATION RS. QUALIFICATION EXPERIENCE IN YRS DATE OF COMMENCEMENT OF EMPLOYMENT PARTICULARS OF PREVIOUS EMPLOYMENT 61 PRAMOD SHARMA 49 EXAMINER 6708036.00 HSC 26 07.03.2006 Indian Airlines 62 PRAVEEN SHARMA 50 CHECK PILOT 6058870.00 MSC 29 01.10.2005 Tata Steel 63 PRITPAL SINGH ARORA 49 INSTRUCTOR 6738470.00 B.Sc 21 05.02.2008 Sri Lankan Airlines 64 RAJESH BHAT 47 EXAMINER 6725486.00 MSC 24 01.10.2005 IAF 65 RAJESH MALIK 42 INSTRUCTOR 6804214.00 HSC 19 24.06.2005 Singapore Airlines 66 RAJESH VERMA 52 EXECUTIVE VICE PRESIDENT 12809220.00 B.A. PGDBM 26 20.06.2006 Jet Airways 67 RAJIV KOTHIYAL 52 EXAMINER 7339850.00 10+2 ATPL 26 01.01.2009 Air Deccan 68 RAJKUMAR 49 CHECK PILOT 6371129.00 10+2 ATPL 29 03.04.2004 Air Deccan 69 RAJU RAJBANSHI 49 CAPTAIN 6013646.00 ATPL 5 16.06.2005 Roval Nepal Airlines 70 RAKESH KAPOOR 46 EXAMINER 6708360.00 10+2 ATPL 19 15.04.2008 IAF 71 RANBIR MOHAN 62 EXAMINER 7232588.00 10+2 ATPL 41 18.09.2009 Indian Airlines 72 RAUL ABRAHAM ALANIZ 52 CAPTAIN 6166389.00 ATPL 3 16.02.2007 Taca Airlines 73 RAVI NATHAN 51 CAPTAIN 6057764.00 10+2 ATPL 30 08.06.2003 Air Deccan 74 RENATO STORINO 56 CAPTAIN 7055116.00 ATPL 5 14.12.2005 Total Airlines 75 RICARDO JARAMILLO 40 CAPTAIN 6589192.00 ATPL 8 01.05.2007 Serca Aeroturto EL Dorado Bogata 76 RISHI RAJ CHATTERJEE 38 EXAMINER 6789378.00 H.S.C. 13 02.11.2006 Air Deccan 77 ROBBIN LOMBE MUBANGA 59 CAPTAIN 6403870.00 ATPL 15 11.12.2007 Air Bissau 78 RONALD NAGAR 61 SR. VP - OPERATIONS TRAINING 11228960.00 ISC 36 19.02.2008 Indian Airlines 79 SAMARJEET SINGH CHEE 35 DGM - FLIGHT OPERATIONS DEL 7003995.00 10+2 ATPL 9 01.01.2009 Air Deccan 80 SAMEER MEHRA 47 CHECK PILOT 6505657.00 Graduate of National Defence Academy 14 04.08.2005 Indian Navy 81 SAMIR SHAH 54 EXAMINER 6445170.00 HSC 24 03.01.2005 IAF 82 SAMIR SHEOPORI 59 CHECK PILOT 6765331.00 HSC 29 03.01.2005 Alliance Air 83 SANDEEP KAKKAR 44 CHECK PILOT 6121410.00 B.A. 15 01.10.2006 Air Sahara 84 SANJAY N. MANDAVIA 38 CHECK PILOT 6619360.00 HSC 15 03.01.2005 Jet Airways 85 SANJEEV MARWAH 43 AVP - FLIGHT OPERATIONS TRAINING 8282099.00 HSC 20 07.03.2006 Indian Airlines 86 SERGIO CARRASCO 42 CAPTAIN 7425892.00 ATPL 4 21.02.2006 Air Aces 87 SERGIO ESTUARDO VALD 50 CAPTAIN 6111982.00 ATPL 3 16.02.2007 Taca Airlines 88 SHAILENDU RANJAN 37 CAPTAIN 6033158.00 B. Sc 11 01.09.2005 Academy of Carver aviation 89 SIDDHARTHA KAUSHAL 37 FLEET MANAGER A320 6638406.00 H.S.C. 9 28.05.2006 Slik Air Private Limited 90 SIKANDAR SHARMA 32 MANAGER - FOQA A320 6661042.00 HSC 10 15.01.2005 Jet Airways 91 SOURAV SINHA 45 SR. VICE PRESIDENT CHIEF INFORMA- TION OFFICER 7506610.00 MTECH 19 27.06.2008 Qatar Airways 92 SRINIVAS RAO 43 GM - PERFORMANCE ENGINEERING 7974979.00 B.Sc. 22 03.10.2006 Sri Lankan Air ways 93 STEVEN HADDAWAY 54 CAPTAIN 7019647.03 ATPL 20 01.06.2007 United Airlines 94 SUBIR MUKERJEE 50 CAPTAIN 6068113.00 BSC 26 27.06.2005 Jindal Steels 95 SUMANT MISRA 45 DGM - FLIGHT OPERATIONS BOM/PNQ 7804305.00 HSC 21 15.06.2005 Singapore Airlines 96 SURINDER KUMAR BHAT 52 CHECK PILOT 6177203.00 M.Sc. 18 01.07.2005 IAF 97 SYRUS S. MAZDA 55 CAPTAIN 6067560.00 HSC 30 01.09.2005 Blue Dart Aviation 98 TALMAT AMAR FERMAT 62 CAPTAIN 6835556.00 ATPL 21 02.05.2008 Air Algeria 99 TEJVIR SINGH TOMAR 53 CHECK PILOT 6433674.00 HSC 27 06.08.2005 IAF 100 THEMIYA ABEYWICKRAMA 47 CAPTAIN 8834160.00 ATPL 20 15.03.2008 Sri Lankan Airways 101 UDAY MANOHAR KOLHATKAR 53 CHECK PILOT 6344493.00 HSC 27 03.01.2005 Air Deccan 102 URMEZ PHIROZ MUGASETH 43 CAPTAIN 6226392.00 HSC 19 16.08.2005 Air Sahara 103 VARINDAR NATH SHARMA 58 SENIOR EXECUTIVE PILOT 6054360.00 10+2 CHPL 37 21.09.2009 Global Vectra Helicopter/IAF 104 VERNON SALDANHA 44 CHECK PILOT 6594659.00 Diploma In Hotel Manage- ment 16 14.02.2008 Sri Lankan Airlines 105 VIJAY K. ARORA 58 EXECUTIVE DIRECTOR - GLOBAL SALES 8674904.00 B.A. 34 01.12.2006 United Spirits Limited 106 VIJAY KUMAR AGARWAL 48 CHECK PILOT 6363278.00 ATPL 23 01.10.2008 Indigo 107 VIKRAM KAPOOR 43 INSTRUCTOR 6331228.00 B.Com. 13 03.10.2006 Sahara Airlines 108 VIMAL ROY 39 DEPUTY CHIEF - FLIGHT SAFETY 8093239.00 HSC 15 03.01.2005 Jet Airways 109 VISHOK MANSINGH 47 AVP - ENGINEERING LOGISTICS SYSTEMS 6097860.00 BE 22 05.08.2008 Blue Dart Aviation Limited 110 XERXES HOMI BUHARIWA 38 CAPTAIN 6125921.00 ATPL 14 13.10.2008 Jet Airways 111 YE NAING HTUN 38 CAPTAIN 6061325.74 ATPL 5 01.07.2009 Myanmar Airways 112 YVES JEAN DUMONT 38 CAPTAIN 6411031.00 ATPL 6 16.11.2007 DHL 113 ZORAN RAKIC 50 CAPTAIN 7362609.00 ATPL 16 01.06.2007 Jet Airways

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8 Employed for part of the year and were in receipt of remuneration at the rate of not less than Rs. 500000 per month STATEMENT OF PARTICULARS OF EMPLOYEES Contd. Notes : 1. Remuneration as shown above includes Salary House Rent Allowance Companys contribution to Provident Fund value of Residential Accommodation and monetary value of perquisites as per Income Tax Rules. 2. No Employee is on Contract Employment. Other Terms and Conditions are as per Service Rules of the Company from time to time. For and on Behalf of the Board of Directors Mumbai Dr. Vijay Mallya August 25 2011 Chairman Managing Director SL. NO. NAME AGE DESIGNATION / NATURE OF DUTIES REMUNERATION RS. QUALIFICATION EXPERI- ENCE IN YRS DATE OF COMMENCEMENT OF EMPLOYMENT PARTICULARS OF PREVIOUS EMPLOYMENT 1 AMRIT RAJ MAHARJAN 41 CAPTAIN 6206934.00 ATPL 13 01.06.2007 Air Deccan 2 ANG GELU SHERPA 42 CAPTAIN 577311.84 ALTP 16 01.01.2010 ROYAL NEPAL AIRLINES 3 ANTIONE DIADHIOU 61 CAPTAIN 5221556.89 ATPL 4 10.01.2006 ASCENA AIR 4 ASHAN TISSA DILHAN D 43 CAPTAIN 1706090.00 ATPL 17 01.01.2011 Srilankan Airlines 5 ASHISH AGARWAL 33 CHECK PILOT 5895207.08 Intermediate 7 03.01.2006 Alliance Air 6 AUNG MYINT 58 CAPTAIN 2702369.50 ATPL 11 01.10.2008 Myanmar Airways 7 AVINASH SHROFF 36 VP - E-COMMERCE 2650667.00 POST GRADUATE IN BUSI- NESS ADMINISTRATION 16 01.12.2010 Cox Kings India Ltd. 8 AZZEDDINE BENZIANI 59 CAPTAIN 1612705.71 ATPL 32 05.01.2011 Onur Air 9 BHUPINDER SINGH SANDHU 44 CAPTAIN 5047789.33 B.Sc. 16 21.03.2006 Indian Airlines 10 BOGOMIR CAS 61 CAPTAIN 773764.93 ATPL 33 20.02.2011 Adria Airways 11 CARLOS SANTOS 59 CAPTAIN 683924.29 ATPL 20 11.02.2011 Wataniya Airways 12 CHHATTAR SINGH TOMAR 54 SR. VICE PRESIDENT - ENGINEERING MAINTENANCE 7120172.94 B.E. Mechanical 29 21.05.2007 Jet Airways 13 FREDRICK CHOLA 54 CAPTAIN 3409061.03 ATPL 12 10.07.2007 Air Mauritius 14 GEORGIOS BRILAKIS 59 CAPTAIN 5784805.00 ATPL 28 28.04.2010 Olympic Airlines 15 IOANITA FLORIAN 59 CAPTAIN 6402761.27 ATPL 13 09.11.2007 TAROM 16 JACKSON JOHN SAGAWA 55 CAPTAIN 5416578.10 ATPL 5 17.11.2005 ANTRAKAIR 17 JAVIER E TRIGO MARIN 43 CAPTAIN 3019097.06 ATPL 16 16.10.2008 American Eagle 18 JUAN CARLOS PALAEZ M 44 CAPTAIN 1345898.46 Line Pilot 6 09.04.2004 ACES AIRLINES 19 JUAN CARMONA 45 CAPTAIN 2224869.80 Basic Aviation Education 4 10.01.2005 ACES S.A. COLOMBIA 20 KARUNYA SUKUMAR 33 CAPTAIN 677439.82 10+2 ATPL 12 16.09.2003 Air Deccan 21 KYEE MYINT BO 56 CAPTAIN 5744948.00 ATPL 33 01.05.2010 Air Mandalay 22 LAWRENCE FREDRICK HICKS J R 32 CAPTAIN 5077530.19 ATPL 10 02.08.2010 Religare Airlines 23 LUIS CRISANTO GARME 51 CAPTAIN 5514748.52 ATPL 32 10.05.2010 LTA Linea Turistica Aerotuy 24 MAAS HAMZA DEANE 60 LINE CAPTAIN 2942281.00 ALTP 25 01.05.2009 Srilankan Airlines 25 MANINDER SINGH 51 CAPTAIN 5353566.77 ATPL 21 20.08.2008 SpiceJet 26 NAVEEN CHAWLA 41 VP - INTERNATIONAL SALES 5991246.00 MBA 20 19.04.2010 Qatar Airways 27 NAVINDER PALL PURI 59 VICE PRESIDENT - FLIGHT OPERATIONS 8647280.00 M.A. 41 01.11.2007 Jet Airways 28 NEVILLE DINSHAW BHIC 41 CAPTAIN 6116076.68 ATPL 15 13.10.2008 Jet Airways 29 NGANIWE JATO KALINGA 53 CAPTAIN 5448007.86 ATPL 4 31.08.2006 AIR MALAWI 30 RANDAL PATRICK ROACH 66 CAPTAIN 1231973.27 ATPL 4 26.07.2006 AIR JAMAICA 31 RENE LORENZANO 58 CAPTAIN 1072519.00 ATPL 38 08.01.2011 Lamas Deccan 32 ROBERT ROWLEY MAC LN 35 CAPTAIN 2830037.68 ATPL 24 12.08.2008 American Eagle 33 S. VENKATACHARY 32 CAPTAIN 5594380.17 B. A 7 13.07.2006 TVS Motor Company 34 SAILESH NIRAULA 39 CAPTAIN 1840728.00 ATPL 2 22.03.2008 BUDDHA AIR 35 SANDRO BUTELLI 52 CAPTAIN 693215.86 ATPL 10 14.02.2011 Bangkok Airways 36 SANJAY AGGARWAL 43 CEO 19497058.00 MS 16 27.09.2010 Spice Jet 37 T. BASKAR 45 INSTRUCTOR 1521812.00 B.Sc. 14 23.08.2006 Indian Airlines 38 U. A. JOGLEKAR 66 CAPTAIN 3083740.90 HSC 40 25.04.2005 Air Deccan 39 VINAYAK KATAMBLE 34 CAPTAIN 523491.87 10+2 ATPL 13 05.12.2003 Air Deccan

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9 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 Nil Nil b The Pricing formula Rs. 65/- Rs. 65/- c Options vested 44220 20000 d Options exercised Nil Nil e The total number of shares arising as a result of exercise of options Nil Nil f Options lapsed 872820 149970 g Variation of terms of options Nil Nil h Money realized by exercise of options Nil Nil i Total no. of options in force 145400 325200 j Employee wise details of options granted: i Senior managerial personnel Nil Nil ii Any other employee who received a grant in any one year of option amounting to 5 or more of option granted during the year. Nil Nil iii Identified employees who were granted options during any one year equal to or exceeding 1 of the issued capital excluding outstanding warrants and conversions of the Company at the time of the grant Nil Nil k Diluted Earnings Per Share EPS pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard AS-20 N.A. N.A. l Method of accounting followed for value of charge on stock options as per the Guidance Note on Stock Based compensation by ICAI Intrinsic Value Intrinsic Value m Difference of amount of ESOP charge calculated as per the Intrinsic Value Method and the fair value of the options Black Scholes Method Rs.20907162 n Proforma Earning Per Share if the Charge have been accounted in accordance with fair value method Black Scholes Method Rs. 40.08 o iWeighted-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 N.A. N.A. ii expected life years N.A. N.A. iii expected volatility N.A. N.A. iv expected dividends Nil Nil v the price underlying share in market at the time of option grant N.A. N.A.

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10 1. Company’s Philosophy on Corporate Governance 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. Your Company is committed to social obligations and has initiated steps to participate in the “Green Initiative in Corporate Governance” undertaken by the Ministry of Corporate Affairs by allowing paperless compliances by companies through electronic mode details of which are set out under “Means of Communication”. Your Company welcomes this move which will reduce paper consumption to a great extent and allow public at large to contribute towards a greener environment. 2. Board of Directors During the financial year under review until August 11 2010 your Company’s Board of Directors comprised 9 Directors 1 Executive Director and 8 Non-Executive Directors. Consequent upon the resignation of Dr. Naresh Trehan effective August 11 2010 your Company’s Board of Directors comprised 8 Directors 1 Executive Director and 7 Non-Executive Directors. Thereafter consequent upon the resignation of Diwan Arun Nanda subsequent to the year under review which resignation to be effective September 5 2011 your Companys Board of Directors will comprise 7 Directors 1 Executive Director and 6 Non-Executive Directors. The constitution of the Board of Directors of your Company effective September 5 2011 will be as follows: • Dr. Vijay Mallya – Chairman Managing Director • Mr. Subhash R. Gupte – Vice Chairman 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 • Mr. Ghyanendra Nath Bajpai – Non – Executive Independent Director During the year under review Seven Board Meetings were held i.e. on May 28 2010 July 22 2010 August 31 2010 November 13 2010 November 14 2010 November 25 2010 and February 11 2011. Corporate Governance Attendance of each Director at the Board Meetings during the year under review and at the last Annual General Meeting and details of number of outside Directorships and Committee positions held by each of your Directors as on date are given below: Sl. No. Name of the Director Category of Directorship No. of Board Meetings attended Attendance at last AGM held on September 30 2010 No. of Other Companies in which Director No. of Committees other than your Company in which Chairman/ Member 1. Dr. Vijay Mallya Managing Director designated as “Chairman CEO” till September 26 2010 Managing Director designated as “Chairman Managing Director" from September 27 2010 1 6 Yes 19 Nil 2. Mr. Subhash R. Gupte Vice Chairman Non-Executive Non-Independent Director 2 7 Yes 10 6 Chairman of 4 3. Mr. A. K. Ravi Nedungadi Non-Executive Non-Independent Director 7 Yes 9 4 Chairman of 1 4. Mr. Vijay Amritraj Non-Executive Independent Director 1 Yes 3 6 5. Mr. Anil Kumar Ganguly Non-Executive Independent Director 6 Yes 2 Nil

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11 Sl. No. Name of the Director Category of Directorship No. of Board Meetings attended Attendance at last AGM held on September 30 2010 No. of Other Companies in which Director No. of Committees other than your Company in which Chairman/ Member 6. Mr. Piyush Mankad Non-Executive Independent Director 4 Yes 12 10 Chairman of 2 7. Dr. Naresh Trehan Non-Executive Independent Director 3 0 N.A N.A. N.A. 8. Diwan Arun Nanda Non-Executive Independent Director 4 4 No 11 3 Chairman of 2 9. Mr. Ghyanendra Nath Bajpai Non-Executive Independent Director 5 Yes 20 9 Chairman of 5 NOTE: The above details are in respect of their Directorship only in Indian Companies. a. Out of 19 other companies in which Dr. Vijay Mallya is a Director 6 are Private Limited companies and 2 companies incorporated under Section 25 of the Companies Act 1956. b. Out of 10 other companies in which Mr. Subhash R. Gupte is a Director 2 are Private Limited companies and 2 are companies incorporated under Section 25 of the Companies Act 1956. c. Out of 9 other companies in which Mr. A. K. Ravi Nedungadi is a Director 3 are Private Limited companies and 1 is a company incorporated under Section 25 of the Companies Act 1956. d. Out of 3 other companies in which Mr. Vijay Amritraj is a Director 2 are Private Limited companies. e. Out of 12 other companies in which Mr. Piyush Mankad is a Director 1 is Private Limited Company. f. Out of 11 other companies in which Diwan Arun Nanda is a Director 6 are Private Limited companies. g. Out of 20 other companies in which Mr. Ghyanendra Nath Bajpai is a Director 5 are Private Limited companies and 1 is a company incorporated under Section 25 of the Companies Act 1956. 1 Ceased to be Chief Executive Officer w.e.f. September 27 2010. 2 Appointed as Vice- Chairman w.e.f. July 22 2010. 3 Ceased to be Director w.e.f. August 11 2010. 4 Will cease to be Director w.e.f. September 5 2011. Corporate Governance Contd. DISCLOSURE REGARDING RE-APPOINTMENT OF DIRECTORS Directors retiring by rotation and seeking re-appointment Mr. Ghyanendra Nath Bajpai holds a Master’s Degree in Commerce from the University of Agra and a Degree in Law LLB from the University of Indore. He has been the Chairman of the Securities and Exchange Board of India SEBI the Life Insurance Corporation of India LIC and Non-Executive Chairman of National Stock Exchange of India Limited. He received among others the "Outstanding Contribution to the Development of Finance” award from the Prime Minister of India Dr. Manmohan Singh. The details of his Directorships in other Indian Companies are as under: Other Directorships Position held Future Generali India Life Insurance Company Limited Director Future Generali India Insurance Company Limited Director Emaar MGF Land Limited Director Dhanlaxmi Bank Limited Director Future Capital Holdings Limited Director Mandhana Industries Limited Director Future Ventures India Limited Director Nitesh Estates Limited Director New Horizons India Limited Director PNB Housing Finance Limited Director Usha Martin Limited Director Micromax Informatics Limited Director Walchandnagar Industries Limited Director Dalmia Cement Bharat Limited Director

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12 Other Directorships contd. Position held Intuit Consulting Private Limited Director Invent Asset Securitisation Reconstruction Company Private Limited Director Infomerics Valuation Rating Private Limited Director IDE India Section 25 Company Director Apnapaisa Private Limited Director Invent ARC Private Limited Director He holds the following other Committee positions: Name of the Committee Position held Audit Committee Mandhana Industries Limited Member Emaar MGF Land Limited Member Future Capital Holdings Limited Member Future Generali India Insurance Company Limited Chairman Future Generali India Life Insurance Company Limited Chairman Future Ventures India Limited Chairman Dalmia Cement Bharat Limited Member Shareholders/Investors Grievance Committee Future Generali India Insurance Company Limited Chairman Future Generali India Life Insurance Company Limited Chairman Mr. Ghyanendra Nath Bajpai does not hold any shares in your Company. Mr. Subhash R. Gupte is a Chartered Accountant with over four decades of corporate financial administration and personnel experience. He has over two decades experience in the Aviation Industry and served as the Acting Chairman and Managing Director of Air India prior to joining the UB Group. He is the Vice-Chairman of the UB Group and has served in that capacity for over 19 years. The details of his Directorships in other Indian Companies are as under: Other Directorships Position held Aventis Pharma Limited Director Mangalore Chemicals Fertilizers Limited Director Millennium Beer Industries Limited Director Shaw Wallace Breweries Limited Director UB Electronic Instruments Limited Chairman United Spirits Limited Director United Helicharters Private Limited Chairman VJM Media Private Limited Chairman Other Directorships Contd. Position held Federation of Indian Chambers of Commerce Industry FICCI Executive Committee Member SWEW Benefit Company Managing Committee Member He holds the following other Committee positions : Name of the Committee Position held Audit Committee Aventis Pharma Limited Chairman Millennium Beer Industries Limited Chairman Mangalore Chemicals Fertilizers Limited Member United Spirits Limited Member Shareholders/Investors Grievance Committee Aventis Pharma Limited Chairman Millennium Beer Industries Limited Chairman Mr. Subhash R. Gupte does not hold any shares in your Company. 3. AUDIT COMMITTEE The Audit Committee was constituted on December 21 2005 to meet the requirements under both the Listing Agreement and Section 292A of the Companies Act 1956. During the year under review meetings of the Committee were held on May 27 2010 July 22 2010 November 14 2010 and February 11 2011. The details of attendance by members of the Committee are as below: Members Category No. of Meetings Attended Mr. Anil Kumar Ganguly Non-Executive/ Independent 4 Mr. A. K. Ravi Nedungadi Non-Executive/ Non-Independent 4 Dr. Naresh Trehan Non-Executive/ Independent Nil Diwan Arun Nanda Non-Executive/ Independent 3 Mr. Subhash R. Gupte Non-Executive/ Non-Independent 4 Mr. Ghyanendra Nath Bajpai inducted into the Committee during the year on November 13 2010 Non-Executive/ Independent 1 Ceased to be Director / Member of the Committee with effect from August 11 2010. Will cease to be Director / Member of the Committee with effect from September 5 2011. Corporate Governance Contd.

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13 The terms of reference to the Audit Committee cover the areas mentioned under Clause 49 of the Listing Agreement and Section 292A of the Companies Act 1956 besides some other functions as are referred to it by the Board of Directors which are as follows: • Regular review of accounts accounting policies disclosures etc. • Review of the major accounting entries based on exercise of judgment by management and review of significant adjustments arising out of audit. • Qualifications in the draft audit report. • Establishing and reviewing the scope of the independent audit including the observations of the auditors and review of the quarterly half-yearly and annual financial statements before submission to the Board. • The Committee shall have post audit discussions with the independent auditors to ascertain any area of concern. • Establishing the scope and frequency of internal audit reviewing the findings of the internal auditors and ensuring the adequacy of internal control systems. • To look into reasons for substantial defaults in the payment to depositors debenture holders shareholders and creditors. • To look into the matters pertaining to the Directors’ Responsibility Statement with respect to compliance with Accounting Standards and Accounting Policies. • Compliance with Stock Exchange legal requirements concerning financial statements to the extent applicable. • The Committee shall look into any related party transactions i.e. transactions of the Company of a material nature with promoters or management their subsidiaries or relatives etc. that may have potential conflict with the interests of company at large. • Appointment and remuneration of statutory and internal auditors. • Such other matters as may from time to time be required by any statutory contractual or other regulatory requirements to be attended to by the Audit Committee. 4. SHARE ALLOTMENT TRANSFERS AND INVESTOR GRIEVANCE COMMITTEE The Share Allotment Transfers and Investor Grievance Committee was constituted on December 21 2005 to operate in terms of the provisions related thereto in the Listing Agreements with the Stock Exchanges and/or the provisions as prescribed or may be prescribed in this regard by the Companies Act 1956. During the year under review the said Committee comprised of the following Directors: • Mr. Anil Kumar Ganguly - Chairman • Mr. Subhash R. Gupte • Mr. A. K. Ravi Nedungadi Inducted into the Committee during the year on May 28 2010. Mr. N. Srivatsa was the Compliance Officer of the Company till July 7 2010 and Mr. Bharath Raghavan Chief Legal Officer Company Secretary is the Compliance Officer of the Company with effect from July 8 2010. During the year under review two meetings of the Committee were held on April 21 2010 and September 30 2010. The attendance of your Directors at the Committee meetings is as below: Members Category No. of Meetings Attended Mr. Anil Kumar Ganguly Non-Executive/ Independent 2 Mr. Subhash R. Gupte Non-Executive/ Non-Independent 1 Mr. A. K. Ravi Nedungadi Non-Executive/ Non-Independent 2 During the year under review 10 complaints were received and replied/redressed to the satisfaction of the shareholders. Corporate Governance Contd.

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14 5. REMUNERATION COMPENSATION COMMITTEE The Remuneration Committee originally constituted on March 16 2005 was reconstituted as the Remuneration Compensation Committee on October 15 2008. The Committee is authorized inter alia to deal with matters relating to framing policies and compensation including salaries and salary adjustments incentives bonuses promotion benefits stock options and performance targets of top executives remuneration of Directors strategies for attracting and retaining employees employee development programmes and other key issues referred by the Board of Directors of your Company. During the year under review the Committee comprised of the following Directors: • Diwan Arun Nanda - Chairman • Mr. Anil Kumar Ganguly • Mr. A. K. Ravi Nedungadi Will cease to be Director / Member of the Committee with effect from September 5 2011. Mr. N. Srivatsa Company Secretary was the Secretary to the Committee till July 7 2010 and Mr. Bharath Raghavan Chief Legal Officer Company Secretary is the Secretary to the Committee with effect from July 8 2010. During the year under review no meetings of the Committee were held. a Sitting fees of Non-Executive Directors : Name of the Director Fees paid for attending Board/Committee Meetings Rs. Mr. Subhash R. Gupte 190000 Mr. A. K. Ravi Nedungadi 220000 Mr. Vijay Amritraj 20000 Mr. Piyush Mankad 80000 Mr. Anil Kumar Ganguly 200000 Dr. Naresh Trehan Nil Diwan Arun Nanda 110000 Mr. Ghyanendra Nath Bajpai 110000 None of the Non-Executive Directors of your Company have any pecuniary relationship or transaction with your Company. b Shareholding of Non Executive Directors during the year under review: None of the Non-Executive Directors owned any shares on beneficial basis during the year under review. 6. GENERAL BODY MEETINGS The details in respect of the last three Annual General Meetings are furnished as under: Financial Year Date Time Venue 2007-2008 December 26 2008 02.45 p.m. Dr. Ambedkar Bhavan Millers Road Vasanthnagar Bangalore – 560 052. 2008-2009 September 29 2009 02.45 p.m. Good Shepherd Auditorium Opp. St. Joseph’s Pre-University College Residency Road Bangalore – 560 025. 2009-2010 September 30 2010 12.45 p.m. Good Shepherd Auditorium Opp. St. Joseph’s Pre-University College Residency Road Bangalore – 560 025. All the resolutions set out in the Notices including Special Resolutions were passed by the Shareholders. Postal Ballot Your Company has not passed any resolution at the above Annual General Meetings which was required to be passed through Postal Ballot as per the provisions of the Companies Act 1956 “the Act” and the rules framed thereunder. Your Company has not conducted any Postal Ballot exercise for passing any resolution during the year under review. 7. DISCLOSURES During the year under review there were no materially significant related party transactions with your Company’s promoters the Directors or the management Corporate Governance Contd.

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15 10. GENERAL SHAREHOLDERS’ INFORMATION a Annual General Meeting Date September 28 2011 Time 11.30 a.m. Venue Good Shepherd Auditorium Opp. St. Joseph’s Pre-University College Residency Road Bangalore -560 025. b Financial Year April 1 2010 to March 31 2011 c Dates of Book Closure September 23 2011 to September 28 2011 both days inclusive d Dividend Payment Date Your Company has not declared any dividend for the period April 1 2010 to March 31 2011. e Listing Fees The listing fees for the year 2011-12 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. 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 - KFA i ISIN No. INE438H01019 j Financial Calendar for the period April 1 2011 to March 31 2012 is as given below: First Quarterly Results By August 14 2011 Second Quarterly Results By November 14 2011 Third Quarterly Results By February 14 2012 Fourth Quarterly Results By May 15 2012 k Market Price Data The shares of the 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 year 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. their subsidiaries or relatives that may have potential conflict with the interests of your Company at large. Details of related party transactions form part of Notes to Accounts. Your Company has complied with all the statutory requirements comprised in the Listing Agreement / Regulations / Guidelines / Rules of the Stock Exchanges / SEBI / other statutory authorities. No penalties or strictures have been imposed by the Stock Exchanges or SEBI or any statutory authority since incorporation of your Company on any matter related to capital markets. 8. MEANS OF COMMUNICATION The unaudited quarterly and half-yearly results are sent to all the Stock Exchanges where the shares of your Company are listed. The results are normally published in Business Standard and Vijaya Karnataka. The results and presentation to analysts/ investors are displayed on your Company’s website www.flykingfisher.com. The Ministry of Corporate Affairs has undertaken a “Green Initiative in Corporate Governance” by allowing paperless compliances by companies through electronic mode pursuant to which companies can now send various notices/ documents including annual reports through electronic mode to the registered e-mail addresses of its Members. This welcome move will reduce paper consumption to a great extent and allow public at large to contribute towards a greener environment. It will also save costs on paper and postage ensure prompt receipt of communication and avoid loss in postal transit. Considering all these aspects your Company has taken a step forward to participate in this initiative by sending letter dated July 6 2011 to all Members intimating them about the said initiative. We are sure that as responsible citizens Members will whole-heartedly support and co-operate with your Company in the implementation of this initiative. 9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management Discussion Analysis Report forms part of this Annual Report. Corporate Governance Contd.

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16 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. April 2010 52.70 46.30 49.60 22402524 52.60 46.60 49.70 52805957 May 2010 50.30 39.20 44.85 9144948 50.25 39.30 44.85 23897383 June 2010 49.95 42.00 49.55 14452766 50.00 42.00 49.55 39370766 July 2010 53.95 48.40 52.95 19498152 53.95 48.15 52.95 52627854 August 2010 64.50 50.10 59.35 53827727 64.50 50.00 59.35 126499615 September 2010 75.50 59.75 74.10 56240377 75.45 59.85 74.15 145987585 October 2010 91.00 72.65 76.10 61702858 86.90 72.65 76.10 158645088 November 2010 90.40 61.60 66.75 38390599 90.15 61.25 66.80 116356004 December 2010 73.80 56.50 66.20 26604415 73.90 56.35 66.30 78560046 January 2011 67.70 49.70 50.60 14252361 67.70 49.60 50.65 43455993 February 2011 50.90 36.85 37.75 20781556 51.00 36.80 37.75 58399899 March 2011 43.50 37.05 39.90 15053738 42.30 37.05 39.80 50169479 The Company’s performance for the period from April 1 2010 to March 31 2011 vis-à-vis BSE SENSEX NSE NIFTY. Your Company vis-à-vis BSE Your Company vis-à-vis NSE Corporate Governance Contd.

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17 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 - 44655000 Fax No. : 91 - 040 - 23420814 Email : einward.riskarvy.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 meets when necessary. The requirements under the Listing Agreement/ Statutory regulations in this regard are being followed. o Distribution of Shareholding as on March 31 2011 Shareholding of nominal value Rs. Shareholders Share Amount Number to total In Rs. to total upto - 5000 87349 88.70 113588550 2.28 5001 - 10000 5809 5.90 48528720 0.97 10001 - 20000 2503 2.54 39289790 0.79 20001 - 30000 856 0.87 22395740 0.45 30001 - 40000 398 0.40 14452700 0.29 40001 - 50000 414 0.42 19880810 0.40 50001 - 100000 548 0.56 41753140 0.84 100001 and above 596 0.61 4677902780 93.98 Total 98473 100.00 4977792230 100.00 p Shareholding Pattern as on March 31 2011 Sl. No. Name of Shareholder No. of shares of holding 1. Promoters 291757626 58.61 2. Mutual Funds / UTI 3915184 0.79 3. Financial Institutions / Banks 116426338 23.39 4. Insurance Companies 1136595 0.23 5. Bodies Corporate 28693469 5.76 6. Individuals 38172157 7.67 7. Trusts 517059 0.10 8. Clearing Members 1554903 0.31 9. Foreign Institutional Investors 13793712 2.77 10. Non Resident Indians 1105835 0.23 11. Foreign Nationals 705800 0.14 12. Overseas Corporate Bodies 545 0.00 Total 497779223 100.00 q Percentage of Shares held in Physical Electronic Form as on March 31 2011 Sl. No. Category Holders Total Shares To Equity 1. Physical 55 238713358 47.95 2. NSDL 65819 151912361 30.52 3. CDSL 32599 107153504 21.53 Total 98473 497779223 100.00 Your Company has not issued GDRs/ADRs/Warrants. Loans / Inter corporate deposits from certain business associates aggregating to Rs.7093 million were converted into 70931985 8 optionally convertible debentures of Rs.100/- each “OCDs” which are convertible into equity shares for a period of 18 months from their issue after which they are redeemable. These OCDs are convertible into equity shares at the option of the holder and at a conversion price to be determined as per applicable SEBI regulations with reference to the date of conversion. As a result it is not presently possible to determine either the date of conversion of the OCDs or the number of equity shares which may be issued and allotted if and when OCDs are converted. It is proposed that the terms of the OCDs be varied such that in the event the Board decides to undertake the Rights Issue which is to occur prior to 18 months from the date of allotment of the OCDs the OCDs shall become redeemable in part or in full and in one or more tranches at the option of the Board and in such quantity as may be mutually agreed by the Board and the holders of the OCDs. The redemption proceeds of OCDs along with accrued interest are to be appropriated towards subscription to equity shares in the rights issue. In the event the rights issue has not opened for subscription or after opening for subscription has not successfully closed during the period of 18 months from the date of allotment of the OCDs the OCDs shall be governed by their original terms of issue. Approval of the Members is being sought at the Annual General Meeting for such variation in the terms of the said OCDs. r Dematerialisation of Shares 52.05 of the paid-up capital was held in dematerialized form as on March 31 2011 and 90.49 as on date. Corporate Governance Contd.

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18 s Code of Conduct In compliance with Clause 49 of the Listing Agreement with the Stock Exchanges the Company has adopted a Code of Business Conduct and Ethics for its Board Members and Senior Management Personnel a copy of which is available at the Company’s website www.flykingfisher.com. All members of the Board and senior management personnel affirmed compliance with the Code for the year ended March 31 2011 and a declaration to this effect signed by the CEO forms part of this report. Pursuant to the requirements of SEBI Prohibition of Insider Trading Regulations 1992 the Company has adopted a ‘Code of Conduct for Prevention of Insider Trading”. This Code is applicable to all the Directors and designated employees of the Company. 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 - 44655000 Fax No. : 91-040 - 23420814 Email ID : einward.riskarvy.com Investors may also write to or contact Mr. Bharath Raghavan Chief Legal Officer Company Secretary at: Kingfisher Airlines Limited The Qube 6th Floor A/2 M. V. Road Marol Andheri East Mumbai – 400 059 Tel No. : 91-022-28566000 Fax No. : 91-022-28566225 In compliance with the provisions of Clause 47f of the Listing Agreement with the Stock Exchanges an exclusive email Id viz investor.relationsflykingfisher. com has been designated for registering complaints by investors which has been displayed on the website of your Company www.flykingfisher.com. u Clause 5A of the Listing Agreement The Company’s Registrar Transfer Agents are in the process of sending reminders to the shareholders whose shares remain unclaimed. If no response is received after three reminders the unclaimed shares shall be transferred to one folio in the name of “Unclaimed Suspense Account” and the voting rights on such shares shall remain frozen till the rightful owners claims the shares. Your Company is taking all necessary actions to ensure compliance with clause 5A of the Listing Agreement. NON MANDATORY REQUIREMENTS a. Remuneration Committee Your Company has constituted a “Remuneration 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. Corporate Governance Contd.

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19 CERTIFICATE ON CORPORATE GOVERNANCE The Members of Kingfisher Airlines Limited We have examined the compliance of conditions of Corporate Governance by Kingfisher Airlines Limited for the year ended March 31 2011 as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges in India. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that in respect of investor grievances received during the year ended March 31 2011 no grievances are pending against the Company as per records maintained by the Company and presented to the Share Allotment Transfers and Investor Grievance Committee. We further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. Bangalore M. R. GOPINATH August 25 2011 Company Secretary in practice FCS 3812 CP 1030 CEO / CFO CERTIFICATE In terms of the requirement of the amended Clause 49 of the Listing Agreement with the Stock Exchanges the certificates from CEO / CFO have been obtained. On behalf of the Board of Directors Mumbai Dr. Vijay Mallya August 25 2011 Chairman Managing Director DECLARATION REGARDING AFFIRMATION OF CODE OF CONDUCT In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges the Board Members and Senior Management personnel of the Company have affirmed compliance with the Code of Business Conduct and Ethics of the Company for the financial year ended March 31 2011. Mumbai Sanjay Aggarwal August 25 2011 Chief Executive Officer

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20 1. Industry structure and development a. The global economy is on a hesitant path towards recovery. The outlook for India though continues to remain positive with the real Gross Domestic Product GDP growth for 2010-11 estimated at over 8.6. Air traffic growth shows a strong correlation with economic growth. b. The global airline industry in 2010-11 demonstrated strong recovery with industry load factors and passenger volumes back to pre-recession levels. Overall it was a much better year for the global airline industry. c. International Air Transport Association IATA that represents 230 airlines comprising over 93 of scheduled international traffic across 118 countries has forecast global airline traffic growth of nearly 5 primarily driven by the demand growth in Asia Pacific and Middle-East regions. d. Jet fuel continues to remain a significant element of cost with IATA forecasts pegging this element at 30 of operating costs in 2011 up from 26 in 2010 with an average crude oil price of over US 100 per barrel. In India fuel costs are higher than international benchmarks due to the incidence of custom duties and high state sales taxes. 2. Industry Operating Environment a. As per the International Air Transport Association IATA outlook for June 2011 the global airline industry is forecasted to produce a net profit of US 4 billion in 2011. This is half of IATA’s original outlook for 2011 and the revision in the forecast was forced by demand shocks due to the earthquake and tsunami in Japan and political turmoil in the Middle-East coupled with the rise in crude oil prices. However profitability is forecast to be higher in regions where capacity is closely matched or lags demand. This is especially true for the Asia-Pacific region which is expected to produce over 50 of the global airline industry’s net profit in 2011. b. For the year under review the domestic passenger traffic in India increased by more than 19 over the previous year. The domestic industry capacity grew by only 12 during the same period and this led to a record industry load factor of 78 an increase of 6 percentage points over the previous year. c. Yields remained stable over the year and premium traffic has experienced growth. The rise in fuel prices towards the end of the year compelled the industry to pass on a portion of the price increase to the consumer through revision of fuel surcharge. 3. Segment–wise or product-wise performance of the airline During the year under review your Company ended with a domestic market share of 19.8 in FY11. The airline carried more than 12 million passengers across domestic and international sectors. Fleet size of aircraft used in scheduled operations at year end comprised of 66 aircraft having an average schedule of 366 domestic and 28 international flights daily and a route network covering 59 domestic and 8 international destinations. Reflecting your Company’s uniquely flexible network model which is capable of calibrating seat offerings in response to shifts in demand Kingfisher Airlines offers the following classes of world class service: • Kingfisher First – Premium Business class of service • Kingfisher Class – Premium Economy class of service • Kingfisher Red – Low fare class of service DOMESTIC SECTOR a. During the year under review your Company was the single largest player in the Indian domestic aviation sector and had the widest reach covering more destinations and carrying more passengers than any other domestic carrier. b. The airline achieved a seat factor of 83 in the year under review an improvement of 11 percentage points over the previous year. c. As a result of the above measures your Company’s domestic operations have shown steady improvement. • The airline’s domestic EBITDAR margin improved from 12.8 in FY10 to 19.8 in FY11. • The airline’s RASK Revenue per Available Seat Kilometer on domestic operations improved by 19 for FY11 over FY10. • The airline’s CASK Cost per Available Seat Kilometer on domestic operations reduced by 7 over FY10 on the back of several cost saving initiatives including expat pilot reduction fuel consumption reduction etc. Management Discussion and Analysis Report

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21 INTERNATIONAL SECTOR During the year under review your Company undertook a further expansion in its international operations by introduction of a new wide-body route from Delhi to Hong Kong and narrow- body routes from Delhi to Kathmandu and from Delhi and Mumbai to Bangkok and Dubai. Your Company is the only Indian airline to be a member- elect of oneworld which is the premier global airline alliance. It brings strong brand recognition comprising leading airlines such as American Airlines British Airways Cathay Pacific Qantas and Finnair. oneworld serves airports in 150 countries through 9000 daily flights with member airlines based in every continent. Kingfisher Airlines’ code share arrangements with British Airways has accelerated the growth trajectory of your Company into key international markets providing enhanced connectivity and traffic. Your Company has achieved market share leadership in most of the international sectors where operations have been launched within a short span of 1 to 2 years of launch. 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 authorized 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 guided by the Audit Committee of the Board. c. One of the objectives of the Companys Audit Committee is to review the reports submitted by the Internal Audit Department and to monitor follow-up and corrective actions by Management. d. Your Company has a compliance procedure to ensure that all laws rules and regulations applicable to it are complied with. e. The Company Secretary is the designated Compliance Officer to ensure compliance with Securities and Exchange Board of India regulations and with the 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 Company is in full 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. Analysis of operational performance for the period ended March 31 2011 The current financial period is for the twelve month period from April 2010 to March 2011 FY11. Financial Results of Operations: FY11 FY10 Rs. million Rs. million difference Income Passenger 56210 47106 19 Cargo 4519 2452 84 Excess Baggage 306 156 96 Rebooking charges/ cancellation 1299 965 34 Other Income 2622 2031 29 Total Income 64956 52710 23 Expenditure Employees’ costs 6760 6888 2 Aircraft / engine lease rentals 9840 10938 10 Aircraft fuel expenses 22740 18030 26 Operating and other expenses 24213 23756 2 Depreciation/ Amortisation 2410 2173 11 Interest Finance charges 13129 11026 19 Exceptional Item 912 3577 75 Foreign exchange translation difference 158 502 69 Total expenditure inc. exceptional item 80162 76890 4 Management Discussion and Analysis Report Contd.

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22 Income Your Company’s total income stood at Rs. 64956 million during the twelve month period from April 2010 to March 2011. a. Income from services formed 96 of total income at Rs. 64956 million. Domestic revenues recorded for the period under review was Rs. 47731 million as against Rs. 45220 million in FY10. This was despite the fact that the airline deployed 11 lesser seats YoY on account of capacity rationalization in its domestic operations. b. During the twelve-month period ending 31 March 2011 your Company’s International revenues increased to Rs. 14602 million an increase of over 167 as compared to Rs. 5460 million in the previous year ended March 2010. The growth increased disproportionate to capacity increase reflecting higher capacity utilisation on an expanded network. c. Other Operating Income which comprised duty free entitlement stood at Rs. 1263 million during the twelve month period ending 31 March 2011 an increase of 475 as compared to Rs. 220 million in the previous year ended 31 March 2010. d. Other income stood at Rs. 1359 million during the twelve month period from April 2010 to March 2011 a decrease of 25 when compared to the previous year. Other Income comprised mainly of liabilities no longer required written back of Rs. 730 million. Expenditure Total expenditure including exceptional items stood at Rs. 80163 million during the twelve month period from April 2010 to March 2011 an increase of 4 when compared to the previous year ended March 2010. a. Aircraft fuel expenses: Expenditure on fuel stood at Rs. 22740 million during the twelve month period from April 2010 to March 2011 accounting to 28 of the total costs. While the average fuel prices have come down from a high of Rs. 74 per litre in August 2008 prices have steadily risen through the year and ended 34 higher than prices at beginning of the year. Domestic ATF price movement in INR is given below: Your Company has been able to contain overall fuel costs by a combination of route rationalization which saw cut on capacity on unprofitable routes and fuel consumption saving programs. b. Aircraft Engine/Lease Rentals: Aircraft/engine lease rentals stood at Rs. 9840 million during the twelve month period from April 2010 to March 2011. Your Company operated 67 aircraft scheduled and non scheduled in the year under review 13 of which are owned through finance leases and 54 are held under operating leases. c. Employee Remuneration and Benefits Personnel Costs: Employee remuneration and benefits stood at Rs. 6760 million during the twelve month period from April 2010 to March 2011. Your Company saw a reduction of 2 costs on employee remuneration. The headcount for the airline for the period ending March 2011 was 7317 as against an average of 7681 employees in the previous year ending March 2010. The employees per aircraft ratio declined in line with the fleet rationalization programs. d. Other Operating Expenses: Other operating expenses stood at Rs. 24213 million during the twelve month period from April 2010 to March 2011. While Airport and Ground handling charges increased by 17 YoY amounting to over Rs. 940 million Aircraft Maintenance costs reduced by 9 resulting in a cost saving of over Rs 370 million. e. Interest and Finance Charges: Interest and finance charges amounted to Rs.13129 million during the twelve month period from April 2010 to March 2011. Loan funds reduced to Rs. 70571 million as against Rs. 79226 million. The airline incurred interests of Rs. 11199 million on fixed and other Management Discussion and Analysis Report Contd.

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23 loans as against Rs. 10077 million incurred in FY10. Bank charges and guarantee commission stood at Rs. 1916 million for the year under review as compared to Rs. 888 million in the previous year ended March 2010. f. Depreciation and Amortization: Depreciation charges were Rs. 2030 million during the year ended March 31 2011 versus Rs. 1628 million in the previous year ended March 2010. Amortization charges stood at Rs. 380 million during the year ended March 31 2011 versus Rs. 545 million in FY10. 6. Material developments in Human Resources / Industrial Relations front including number of people employed a. The number of employees for the year under review was 7317. b. There were no material developments as regards human resources / industrial relations front during the period under review. 7. Your Company’s major initiatives undertaken in FY11 and planned initiatives for FY12 7.1 Initiatives undertaken in the year under review to enhance your Company’s cost competitiveness: • Increased aircraft utilization. • Implemented an effective Fuel Management system that has proven results. • Re-negotiated several aircraft leases to reduce lease rentals. • Removal of expats from the A320 fleet and reduction on the ATR fleet. • Comprehensive MRO agreement with IAE for engine maintenance. • Only airline in India to implement SMS Safety Management System. • Your Company has moved from GSA handling to self handling in North India and Hong Kong markets. • Your Company is in the process of changing its technology interface for its website to reduce website costs. 7.2 Initiatives undertaken in the year under review to enhance your Company’s revenue productivity: • Improvement in increasing network traffic flows by introducing point of sale control and network pricing techniques. • Increased focus on higher customer retention by focusing on return traffic. • Continue the improvements started in Revenue Management processes and systems to deliver higher revenues for your Company. • Improvements in cargo revenues through revenue management opportunities. 7.3 Catering and Airport Services related initiatives undertaken in the year under review to enhance your Company’s revenue productivity and cut further costs: • Catering: o Your Company introduced the Buy on Board concept on all its Kingfisher Red flights with effect from January 15 2011. This change has reduced our catering expenditure while earning a commission on total sales. o Your Company introduced Regional Menus across all Domestic stations giving the widest range of cuisines offered in Indian skies which has been highly appreciated by all our discerning travelers. • Airport Services: Operations Excellence: o First airline in India to achieve 100 Bar Coded Boarding Pass. o First Indian carrier to have introduced a Centralized Load Control Unit. This unit handles aircraft documentation for all our flights throughout the network. o Only airline in the country to have received the coveted “Gate Check” status from the UK immigration and Border Protection in view of its excellent track record since the inception of services to London. o Only Indian Carrier to aggressively promote and use Kiosk check-in facility at 4 Metros. o Exclusive Kingfisher First Lounges opened at DEL T3 International. o First airline globally to successfully introduce Radio Frequency Identification Device RFID technology enabling real-time tracking of cargo. Management Discussion and Analysis Report Contd.

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24 o Launched Kingfisher Cargo Kingfisher Xpress web portals giving complete product information. Revenue / Cost Related Initiatives o Excess baggage allowance was amended downwards. This brought in additional revenue in the year under review of approximately Rs. 120 million. o Launched Kingfisher Xpress – a new initiative of "Kingfisher Cargo" offering "Door-To- Door" cargo services and the first of its kind in India and in Asia Pacific by an airline offering direct service to the end customers – which generated incremental revenue of Rupees 520 million in the first year of operations. The following initiatives are proposed to be implemented during the current financial year: o Promotion of Web check-in and common user kiosks at airports including priority services for guests using this facility. This will allow your Company to rationalize its manpower. o Develop a Centralized Baggage Handling Unit to effectively track control and monitor baggage related issues. o Use of Customer Relationship Management tool to manage Guest Experience of Platinum guests. o Starting "Valuable Cargo" business on domestic international network. o Increase bonded cargo movement upon receiving approval at BOM and DEL. o Launching online cargo booking engine in Kingfisher Cargo Xpress web portals. o Add 70 new locations to Kingfisher Xpress network. o Implementation of E-Airway Bill at all cargo operational locations. 7.4 Marketing and Commercial Initiatives undertaken during the year under review to enhance your Company’s consumer connect : • To aggressively drive choice for Kingfisher First our business class product to corporate flyers. • To win market share in key markets through innovative offers for consumers. • To leverage properties such as Force India and Royal Challengers Bangalore IPL team and offer unique experiences to our guests. • To further strengthen our relationship with travel agents. • Increase penetration in the corporate segment. • Increased rigor in driving sales from global markets. Domestic operations: • Your Company commenced flight operations to new sectors such as Mysore and Belgaum during the year 2010-11 and thereby continued to remain the widest airline network in India covering 67 domestic destinations and international destinations. • During the year under review your Company developed and successfully executed consumer and trade promotions which contributed towards incremental revenue for FY 2010-11 as well as built consumer and guest engagement through interactive contests across the social media network. • Your Company has launched media campaigns covering print radio on ground activation and outdoors to promote awareness and increase loads on new sector launches and reinstated sectors across 20 top markets and remained India’s most visible airline brand in the country. • Your Company also undertook several product enhancement activities such as the introduction of the new English movie channel/ Air Premiere English Indian regional movies and world cinema to cater to the diverse tastes of consumers. It also increased the depth of In-flight Entertainment with increased number of movies and television programs music and games. International operations: • Your Company commenced 4 new international destinations out of Delhi i.e. Delhi - Hong Kong Delhi – Bangkok Delhi – Dubai and Delhi – Kathmandu and 2 out of Mumbai i.e. Mumbai – Bangkok and Mumbai – Dubai. This was supported by a mega marketing blitz to create awareness of sectors. Management Discussion and Analysis Report Contd.

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25 • Your Company joined hands with British Airways in a codeshare agreement on flights to India Sri Lanka the United Kingdom and Europe. As codeshare partner Kingfisher Airlines flight numbers are placed on 9 routes from the United Kingdom and Europe i.e. Aberdeen Edinburgh Glasgow Manchester Amsterdam Brussels Dusseldorf Lisbon and Paris while the British Airways’ code is placed on 11 domestic Indian routes and one route to Sri Lanka operated by your Company. • Your Company also launched various promotions offers during lean season. This included companion free offer free gift vouchers on on- board sale tie-up with ‘Visa Facilitation Services’ around the world that helped in enhancing productivity in various sectors. 7.5 Marketing Initiatives and launches proposed to further improve consumer connect: • Launch of Business Mileage – our privilege program for the SME segment. • Promote our website as the preferred channel of booking. • Reinforce brand imagery through a new thematic campaign. • Continue to leverage properties such as Force India and Royal Challengers Bangalore to provide unique experiences to guests and trade. • Extension of King Miles as a preferred loyalty currency by increasing width of partners. • Increased Customer Relationship Management based analytics and campaigns. 7.6 Key Marketing Initiatives from King Club: King Club achieved key milestones in the year 2010-11. Your Company has exclusively partnered with the prestigious Starwood Preferred Group in India allowing King Club members to earn Star-points which can be converted into King Miles and earn King Club rewards faster. King Club announced an auto sweep cobranded credit card in association with ICICI Bank and MasterCard in September 2010. To cater to the different needs of customers the card is available in 3 variants – World Platinum and Titanium. The cards are powered by a uniquely rewarding miles program coupled with exclusive travel and lifestyle privileges for discerning customers. Some key benefits of the card include accelerated miles earnings for all card spends bonus miles on joining and renewal complimentary upgrade vouchers complimentary membership of King Club and a wide range of special offers on shopping golfing dining and more. The miles earned can be redeemed for free flight tickets and upgrade vouchers on your Company’s Airline. King Club launched the first of its kind loyalty program in India – Little Wings for young flyers aged between 2 to 12 years. Upon enrollment the young flyers get a passport filled with fun trivia and which can be autographed by the onboard captain every time they fly. Apart from this our young members can also earn King Miles which can be redeemed by the parent/guardian for free flights and many exciting rewards with every Kingfisher Airlines flight. From the overall oneworld perspective King Club has successfully entered into a bilateral frequent flyer partnership with British Airways and Finnair allowing King Club members to earn and redeem King Miles by flying on these airlines anywhere in the world. Similar rewarding partnerships with American Airlines and Cathay Pacific Airways is expected to follow during the FY 2012. 8. Your Company and oneworld Alliance Your Company is a member – elect of oneworld the world’s leading quality Airline Alliance that brings 12 of the biggest and best names in the Airline Industry. OJSC Siberia Airlines S7 – the leading Airline from Russia has since fully integrated into the oneworld Alliance and your Company is scheduled to be the next integrated Carrier followed closely by Air Berlin. On 6 June 2011 oneworld Alliance announced the addition of Malaysia Airlines to the oneworld family as member-elect. The complex 15-18 month integration process began toward the latter part of 2010 and is now well on track Management Discussion and Analysis Report Contd.

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26 for complete integration of your Company into the alliance in the 4 th fiscal quarter of 2011-12. oneworld Alliance was once again voted the world’s best Alliance for the eighth year running. As the only Alliance with a Member Airline based in just about every Continent oneworld continues to advance its membership cause globally in what is considered to be competitive “white space” areas. To reiterate some of the macro benefits that your Company will have by joining the Alliance: • Access to 800 Airports served in 150 Countries. • Access to market share and network synergies without significant addition of financial investments. • Access to landing/parking slots typically leased to larger Carriers. • Opportunities for co-location at various key Airports globally. • Opportunities for co-location of global Sales offices with potential of cost reduction in these areas. • Global co-branding holistically and on a bilateral basis. • Significant enhancement of the Customer proposition of your Company with respect to Top- Tier Qualifying miles Top-Tier recognition and Global Lounge Access. • Review of joint cost saving opportunities e.g. where feasible – joint fuel purchase. • Implementation of Management "best practices". In addition to the above your Company has undertaken commitment to implement a number of code-shares with not only carriers within the oneworld Alliance but also significant globally positioned and independent carriers. 9. Your Company’s Outlook a. Your Company which commenced scheduled airline operations in August 2003 continues to be perched atop the industry as India’s single largest domestic carrier by passengers flown. Despite forced capacity reduction due to unplanned grounding of aircraft your airline recorded 19.8 market share whilst serving over 90 of the addressable passenger base in India with an unparalleled wide and far-reaching domestic network. Supplementing its status further as India’s best airline your Company has maintained its record of securing an impressive line-up of awards from global aviation experts including the "Best Airlines in India and Central Asia". Your Company continues to be rated as India’s only "5-Star Airline" by Skytrax. b. The Indian economy continues its strong growth trajectory with GDP growth estimated to be around 8 for 2011-12 and is a significant contributor to growth of the global economy. c. Passenger traffic continues to rise backed by strong macro-economic fundamentals and sustained growth across most industry sectors. Industry traffic increased by over 20 in 2010-11 compared to 2009-10 and such growth is forecasted to sustain through 2011-12. d. Yields are expected to remain stable given the demand/supply situation. e. Fuel price has shown steep increase in the last quarter of 2010-11 and as future price movements remain uncertain industry experts believe jet fuel price will correspond to an average crude oil price of around US100 per barrel. Airline operators will need to continue partial offsetting of any fuel price hike through fuel surcharge in the ticket prices. f. After announcing its first-ever positive annual EBITDA your Company has budgeted for future years of operating profit even in the wake of high fuel prices. This will primarily be driven by capacity addition through phased recovery of grounded aircraft growth of premium traffic higher yields and a focused cost reduction plan. Management Discussion and Analysis Report Contd.

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27 g. International operations have now stabilized and are headed for profitability. Your Company looks forward to further expansion of its international network subject to government and regulatory authority approvals. 10. Opportunities and Threats Risks and Concerns a. Your Company has undertaken a phased and pragmatic approach to capacity addition as well as further market expansion. Progressive policies initiated by the Government of India as regards new bilateral agreements with various countries provide an opportunity to expand international operations. b. Your Company will continue to closely monitor key market trends as well as macro-economic environment in the country from a global perspective. Given the strength of its domestic network and stable international operations your Company is well-placed to take advantage of emerging business and tourist destinations in the country as well as augment services on established routes to further strengthen the domestic network. c. Your Company continues to demonstrate leadership by proactively reviewing and undertaking measures to maximize profits and reduce losses including: • Planning for phased capacity addition over and above recovery of grounded aircraft. • Continuously reviewing the mix of the full- service and low-cost airline business models. • Strengthening route structures and overall airline network. • Improving aircraft utilization. • Focusing on driving revenue premium through strong yield management. • Optimizing human resources through right- sizing cross-utilization and process automation. • Comprehensively reviewing costs across all key functions. • Reviewing sales and distribution channels and associated costs. d. Your Company continues to actively manage fuel consumption in a bid to contain the adverse impact of steep increases in jet fuel prices. e. Sales tax on jet fuel in India continues to be significantly higher compared to global markets. Sales Tax is currently a State subject and follows an Ad Valorem methodology. The airline industry has made several representations to both the Central and State governments seeking reduction in sales rate on jet fuel as well as proposing a rationalization of the tax structure to a fixed rate that eliminates direct exposure to sales tax because fluctuations in crude oil price. A change in the fuel regime on these lines would provide a significant upside to the airline’s operations as fuel constitutes nearly 40 of the operating cost. f. The current FDI policy of the Government of India does not allow foreign airlines to invest in domestic operators. However a 49 investment is allowed to foreign institutional investors. The government is currently considering extending this to foreign airlines as well based on representations made by domestic carriers. This change in policy could provide your Company with better access to equity capital and strategic business partners. g. The Government of India has been making significant progress with respect to aviation infrastructure development in the country and thereby reduce air traffic congestion at key airports. The results are already showing with the opening of the modern world-class Terminal-3 at Delhi. Expediting these initiatives in other key metros such as Mumbai and Kolkata coupled with focus on some of the fast-growing Tier-2 and Tier-3 airports will benefit your Company by allowing a richer consumer experience. 11. Awards Accolades a Your Company has continued to remain India’s most awarded airline with the following prestigious awards from which include ‘India’s Favourite Full Service Airline’ for the year 2010 by Outlook Traveller Awards. The Outlook Traveller Awards is a reader survey award conducted by the Nielsen Company where readers are polled through the magazine and the Outlook Traveller website. It is an authoritative benchmark of consumer preferences Management Discussion and Analysis Report Contd.

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28 in travel and tourism across 17 categories including hotels airlines and holiday destinations. b Recognized as ‘Power Brand of India’ for the year 2010-11 by Power Brands India and “India’s Most Promising And Admired Aviation Company” award at the India Leadership Conclave Awards. c Voted Most Preferred Domestic Airline - Low Cost Carrier Most Preferred Domestic airline - Economy Class at CNBC Awaaz travel awards 2010. d Voted second runner up for fleet size below 25 aircraft equipped with IFE at the Passenger Choice Awards 2010. e King Club the frequent flyer program of your Company won laurels at the prestigious Frequent Traveler Awards 2010 which include the Best Program of the Year Best Elite Program Best Loyalty Credit Card Best Redemption Ability and Best Earning Promotion from Middle East Asia and Oceania region being the only airline from India to make it to the top. The Frequent Traveler Awards are voted for by frequent travelers worldwide allowing them to rate the loyalty programs of the airlines and hotels from their point of view. Over a million people from more than 200 countries worldwide participated casting online ballots choosing their favorite loyalty programs and campaigns. Cautionary Statement Statements in the management discussion and analysis describing your Company’s objectives projections estimate expectations may be ‘forward-looking statement’ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Company’s operations include economic conditions in the domestic markets and overseas markets in which your Company operates changes in the Government Regulations tax laws and other statutes and incidental factors. Management Discussion and Analysis Report Contd.

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29 1. We have audited the attached Balance Sheet of Kingfisher Airlines Limited formerly known as Deccan Aviation Limited “the Company” as at March 31 2011 the Profit and Loss Account and the Cash Flow Statement for the year 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. Other Income for the fifteen months ended June 30 2006 included a sum of Rs. 2672.20 Lacs 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. To The MeMbers of Kingfisher Airlines liMiTed 5. As reported in paragraph 6 of our report dated July 28 2009 the Company novated its rights in certain aircrafts purchase agreements during the year ended March 31 2009 in favor of certain lessors and took such aircrafts back on operating lease from the same persons. The Company incurred a loss of Rs. 14437.15 Lacs on such novation including interest on loans borrowed for making pre-delivery payments to aircraft manufacturers of Rs. 5305.34 Lacs. As already reported in the said report in the absence of an independent valuation report we had relied on the representations of the management that the novation was not established at fair value the fair value of the aircrafts is at least equal to or more than the cost of acquisition and the preconditions specified in AS 19 for deferring the said loss are satisfied. We do not express any independent opinion in the matter. 6. Attention is invited to note 27 of schedule 19 regarding method of accounting of costs incurred on major repairs and maintenance of engines of aircrafts taken on operating lease during the year aggregating to Rs.12256.85 lacs year ended March 31 2010 Rs. 20700.76 lacs which have been included under fixed assets and amortized over the estimated useful life of the repairs. In our opinion this accounting treatment is not in accordance with current accounting standards. 7. Attention is invited to note 28 of Schedule 19 regarding use fees payable by the Company in respect of certain assets taken on operating lease aggregating to Rs 5576.45 Lacs as maintenance reserves in accordance with its understanding. Pending formalization of the matter with the relevant lessor we do not express any independent opinion in the matter. 8. We further report that except for the effect if any of the matters stated in paragraph 5 and 7 above and 13a below paragraph 1b of the annexure to this report and notes 23 and 25 of schedule 19 whose effect are not ascertainable had the observations made in paragraphs 4 6 above been considered the loss after tax for the year ended March 31 2011 would have been Rs.104951.58 Lacs March 31 2010 – Rs.175350.66 Lacs as against the reported loss of Rs.102739.80 Lacs March 31 2010 – Rs 164722.06 Lacs debit balance in profit and loss account as at March 31 2011 would have been Rs.548493.43.Lacs March 31 2010 – Rs. 443541.85 lacs as against the reported figure of Rs. 534847.43 Lacs March 31 Auditors report

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30 2010 – Rs. 432107.63 Lacs other liabilities would have been Rs. 58553.65 Lacs March 31 2010 – Rs.44043.05 Lacs as against the reported figure of Rs.58275.12 Lacs March 31 2010 – Rs.43311.74. Lacs and fixed assets excluding capital work in progress would have been Rs. 137071.61 Lacs March 31 2010 – Rs. 139061.17 Lacs as against the reported figure of Rs. 157188.69 Lacs March 31 2010 – Rs.155451.42 Lacs. 9. Attention of the members is invited to note 24 of schedule 19 regarding the financial statements of the Company having been prepared on a going concern basis notwithstanding the fact that its net worth is completely eroded. The appropriateness of the said basis is interalia dependent on the Company’s ability to infuse requisite funds for meeting its obligations. Further to our comments in the annexure referred to above we report that: 10. 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. 11. 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. 12. The Balance Sheet Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account. 13. a Attention of the members is invited to note 16 of schedule 19 regarding recognition of deferred tax credit during the year aggregating to Rs. 49341.80 Lacs year ended March 31 2010 Rs.76463.31lacs Total amount recognized up to March 31 2011 Rs. 292778.31 Lacs by virtue of which its loss for the year and debit balance in Profit and Loss Account stand reduced by Rs. 49341.80 Lacs year ended March 31 2010 Rs. 76463.31 Lacs and Rs. 292778.31 Lacs as at March 31 2010 Rs.243436.51 Lacs respectively. 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 paragraphs 4 to 6 and 13a 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. 14. On the basis of written representations received from Directors as on March 31 2011 and taken on record Auditors report Contd. by the Board of Directors we report that none of the Directors of the Company are disqualified as on that date from being appointed as a director under clause g of sub-section 1 of section 274 of the Act. 15. 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 21 of schedule 19 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 paragraphs 4 to 8 13a above note 23 of schedule 19 regarding certain accounts detailed in the said note being under review and reconciliation and note 25 of schedule 19 regarding the basis of computation of unearned revenue as at March 31 2011 Data of number of unflown tickets and their average value based on which management has estimated the amount of unearned revenue not being drawn from accounting records could not be verified by us 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 2011 ii. In the case of Profit and Loss account of the loss for the year ended on that date and iii. In the case of Cash Flow Statement of the cash flows for the year ended on that date. For b. K. rAMAdhYAni Co. Chartered Accountants Firm registration number: 002878S Place : Bangalore shyam ramadhyani Date : June 29 2011 Partner Membership No. 019522 b. K. ramadhyani Co. Chartered Accountants 4B Chitrapur Bhavan No. 68 8 th Main 15 th Cross Malleswaram Bangalore – 560 055

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31 Annexure to the Auditors report As referred To in PArAgrAPh 3 of oUr rePorT of eVen dATe To The MeMbers of Kingfisher Airlines liMiTed 1. a. The Company has maintained records showing full particulars including quantitative details and situation of fixed assets. However comprehensive description of assets and current location are to be incorporated in the asset records after completion of reconciliation referred to in paragraph 1b below. b. Fixed assets have been physically verified by the management during the year. Pending completion of reconciliation which is reportedly in progress discrepancies if any cannot be ascertained refer note 30 of schedule 19. c. There was no substantial disposal of fixed assets during the year. 2. a. Management has conducted physical verification of inventory at reasonable intervals during the year. 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 taken loans from four companies covered in the register maintained under section 301 of the Act. The total loan amount outstanding as at year end was Rs. 6554.14 lacs and the maximum amount outstanding at any time during the year were Rs. 113433.14 lacs. The rate of interest and terms and conditions on which the said loans are taken is not prima-facie prejudicial to the interests of the Company. No stipulations for repayment have been prescribed and as such no comments regarding regularity of payments are being made. 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 purchased 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 sale of services subject to note 25 of schedule 19. Internal controls in respect of purchase of fixed assets to be strengthened. Subject to our observations in paragraph 1b above and note 25 of schedule 19 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. 5.00 lacs or more per party have been entered into at prices which are reasonable as compared to similar services rendered to / by other parties except in respect of advertisement sales promotional expenses of Rs 630.65 lacs and miscellaneous income of Rs.787.36 lacs where we are unable to make any comments on reasonability of rates since there were 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 2091 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 investor education and protection fund and employees’ state insurance dues have not been regularly deposited with the appropriate authorities. Undisputed statutory dues in respect of wealth tax customs excise duty cess 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

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32 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:- i No amounts were outstanding as at year end on account of undisputed amounts payable in respect of investor education and protection fund sales tax customs duty excise duty and cess for a period of more than six months from the date they became payable. ii Undisputed amounts payable in respect of employees state insurance of Rs.0.75 lacs provident fund of Rs.43.80 lacs tax deducted at source of Rs. 42297.52 lacs service tax of Rs.1047.76 lacs professional tax of Rs.2.46 lacs In all cases relating to the years 2008-09 2009- 2010 and 2010 - 2011 and fringe benefit tax of Rs. 450.70 lacs balance of tax and interest for the financial year 2008-09 were outstanding for a period of more than six months from the date they became payable excluding applicable interest in all cases except in respect of fringe benefits tax to the extent identified pending review and reconciliation of the relevant accounts. The due dates for these amounts are as per respective statutes. c. According to the information and explanations given to us the following dues have not been deposited with the concerned authorities on account of dispute Year Amount Rs in lacs Pending before Tax deducted at source 2006-07 and 2007-08 333.25 Commissioner of Income Tax Appeals Estimated total liability arising out of rejection of approvals under section 1015A of the Income Tax Act 1961. 6019.06 Delhi High Court. In certain cases writs proposed by the Company are yet to be filed. service Tax 2004-05 to 2007-08 448.63 Customs Excise and Service Tax Appellate Tribunal January 2005 to September 2007 16164.30 Customs Excise and Service Tax Appellate Tribunal. Annexure to the Auditors report Contd. 10. The Company’s accumulated losses at the end of the financial year were more than fifty percent of its net worth. The Company has incurred cash losses during the financial year 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. Delays were noticed in payment of interest principal on several occasions during the year. The unpaid overdue installments and interest to banks and institutions as at March 31 2011 were Rs.3750.00 lacs and Rs.2066.14 lacs respectively. The unpaid installments fell due on December 31 2010. Unpaid interest relate to the months of December 2010 to March 2011. There were no dues payable to the debenture holders as at March 31 2011. 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 4xii 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 4xiii 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 4xiv 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 year for loans taken by others from banks or financial institutions. Accordingly the provisions of clause 4xv 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 year have been applied for the purpose for which they were obtained wherever specified by the bank in the relevant sanction letters.

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33 Annexure to the Auditors report Contd. 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 funds raised on short- term basis to an aggregate extent of Rs.279659.60 Lacs has been used for long term investment as at March 31 2011. 18. The Company has made preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. In our opinion the price at which such shares were issued is prima facie not prejudicial to the interests of the Company. 19. Debentures issued during the year are unsecured. Accordingly the provisions of clause 4xix of the Order are not applicable to the Company. 20. The Company has not raised any money by public issue during the year. Accordingly the provisions of clause 4xx of the Order are not applicable to the Company. 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 from credit card service providers due to misutilisation of credit cards by third parties of Rs.107.76 lacs. For b. K. rAMAdhYAni Co. Chartered Accountants Firm registration number: 002878S Place : Bangalore shyam ramadhyani Date : June 29 2011 Partner Membership No. 019522 b. K. ramadhyani Co. Chartered Accountants 4B Chitrapur Bhavan No. 68 8 th Main 15 th Cross Malleswaram Bangalore – 560 055

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34 Balance Sheet as at March 31 2011 Schedules As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 105087.92 36290.89 Employees Stock Option Outstanding Net of deferred compensation cost 295.09 748.17 Reserves and Surplus 2 134345.16 8022.19 239728.17 45061.25 Loan Funds Secured Loans 3A 518452.82 484242.55 Unsecured Loans 3B 187254.71 308017.12 705707.53 792259.67 TOTAL 945435.70 837320.92 APPLICATION OF FUNDS Fixed Assets 4 Gross Block 225425.92 204813.71 Less : Accumulated Depreciation / Amortisation 68237.23 49362.29 Net Block 157188.69 155451.42 Capital Work-in-Progress 67334.63 98060.50 224523.32 253511.92 Investments 5 5.00 5.00 Foreign Currency Monetary Item Translation Difference Account - 2798.27 Deferred Tax Asset Deferred Tax Asset 328690.40 284103.11 Less: Deferred Tax Liability 35912.09 40666.60 292778.31 243436.51 Current Assets Loans and Advances Inventories 6 18764.55 16487.74 Sundry Debtors 7 44052.70 32248.53 Cash and Bank Balances 8 25236.25 20646.70 Other Current Assets 9 223.93 238.83 Loans and Advances 10 209105.16 176088.58 297382.59 245710.38 Less: Current Liabilities and Provisions 11 Current Liabilities 410474.14 350136.49 Provisions 6210.78 4676.53 416684.92 354813.02 Net Current Assets 119302.33 109102.64 Initial Cost on Leased Aircrafts 12 12583.97 14564.23 Profit and Loss Account 534847.43 432107.63 TOTAL 945435.70 837320.92 Notes and additional information 19 As per our report of even date For B. K. Ramadhyani Co. For and on behalf of the Board of Directors Chartered Accountants Shyam Ramadhyani Dr. Vijay Mallya A. K. Ganguly A. K. Ravi Nedungadi Partner Chairman Managing Director Director Director Membership No. 019522 Bangalore Bangalore A. Raghunathan Bharath Raghavan June 29 2011 May 23 2011 Chief Financial Officer Chief Legal Officer Company Secretary

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35 Profit and Loss Account for the year ended March 31 2011 As per our report of even date For B. K. Ramadhyani Co. For and on behalf of the Board of Directors Chartered Accountants Shyam Ramadhyani Dr. Vijay Mallya A. K. Ganguly A. K. Ravi Nedungadi Partner Chairman Managing Director Director Director Membership No. 019522 Bangalore Bangalore A. Raghunathan Bharath Raghavan June 29 2011 May 23 2011 Chief Financial Officer Chief Legal Officer Company Secretary Schedules 2010-2011 Rs. in Lacs 2009-2010 Rs. in Lacs INCOME Income from Services 13 623337.90 506791.82 Duty free Credit entitlement 12626.17 2195.62 Other Income 14 13592.16 18116.67 TOTAL 649556.23 527104.11 EXPENDITURE Employees Costs 15 67600.85 68875.49 Aircraft Fuel Expenses 227402.58 180298.76 Aircraft / Engine Lease Rentals 98399.56 109381.52 Operating and Other Expenses 16 242126.40 237564.95 Depreciation / Amortisation on fixed assets 20302.45 16279.75 Amortisations 17 3801.31 5449.00 Financial Charges 18 131294.00 110258.63 TOTAL 790927.15 728108.10 Loss before foreign exchange translation difference exceptional item and Tax expense 141370.92 201003.99 Add : Exceptional Item 9124.65 35765.47 Foreign Exchange Translation Difference 1582.72 5022.09 Loss after foreign exchange translation difference exceptional item but before Tax expense 152078.29 241791.55 Provision for Tax expense - Current Tax - - - Deferred Tax Charge 49341.80 76463.31 - Fringe Benefit Tax Net of provision for tax no longer required written back 3.31 606.18 Loss After Tax expense 102739.80 164722.06 Balance in Profit and Loss Account - Loss balance brought forward from previous year 432107.63 257658.57 Foreign exchange Gain in respect of long term monetary items adjusted - 14590.50 Less: Adjustment for depreciation pertaining to previous year - 3544.03 Less: Amortisation of foreign exchange gain for previous year - 8407.53 - 9727.00 Loss carried to Balance Sheet 534847.43 432107.63 Loss per share before exceptional items par value Rs 10/- basic and diluted in Rupees 37.85 52.96 Loss per share after exceptional item par value Rs 10/- basic and diluted in Rupees 40.16 61.95 Weighted average number of equity shares in nos. 266544144 265908883 Notes and additional information 19

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36 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 1 Share Capital Authorised: 1650000000 March 31 2010 - 900000000 Equity shares of Rs. 10/- each 165000.00 90000.00 2600000000 March 31 2010 - 10000000 Preference shares of Rs. 10/- each March 31 2010 Rs. 100/- each 260000.00 10000.00 425000.00 100000.00 Issued Subscribed and Paid-up : 497779223 March 31 2010 - 265908883 Equity shares of Rs. 10/- each. 49777.92 26590.89 Nil March 31 2010 - 9700000 Preference Shares of Rs. 100/- each. - 9700.00 553100000 March 31 2010 - Nil 8 Cumulative Redeemable Preference Shares of Rs. 10/- each. 55310.00 - 105087.92 36290.89 Notes: 1 130033350 equity shares and 9700000 6 redeemable non cumulative preference shares were allotted during the year 2008 - 2009 pursuant to the Scheme of Arrangement under sections 391 to 394 of the Companies Act 1956 approved by the honourable High Court of Karnataka dated June 16 2008 which resulted in demerger of the scheduled airline business of Kingfisher Training and Aviation Services Limited. 2 27284390 March 31 2010 - 27284390 equity shares of Rs. 10/- each have been allotted as fully paid up bonus shares by capitalisation of securities premium of Rs. 2537.50 Lacs March 31 2010 - Rs. 2537.50 Lacs and balance in Profit Loss Account of Rs. 190.94 Lacs March 31 2010 - Rs. 190.94 Lacs. 3 Movement of share capital number during the year 2010-2011 is as follows: Particulars Equity shares of Rs. 10 each 6 redeemable preference shares of Rs 100 each 8 cumulative redeemable preference shares of Rs 10 each 7.5 compulsorily convertible preference shares CCPS of Rs 10 each 6 CCPS of Rs 10 each At the beginning of the year 265908883 9700000 - - - Issued during the year 231870340 - 553100000 1398100000 97000000 497779223 9700000 553100000 1398100000 97000000 Amendment of terms and conditions to result in 97000000 6 CCPS - 9700000 - - - Converted into equity shares - - - 1398100000 97000000 At the close of the year 497779223 - 553100000 - - Notes: a 7.5 CCPS of Rs 10 each were issued in conversion of loans and interest due to banks and certain promoter companies in terms of the Master Debt Recast Agreement dated December 21 2010 MDRA. b 8 cumulative redeemable preference shares of Rs 10 each were issued in conversion of loans and interest due to banks in terms of the MDRA. c 216826916 15043424 Equity shares were issued in conversion of 7.5 CCPS and 6 CCPS respectively. 4 Number of shares held by the holding company its subsidiaries as certified by the management Equity Shares - 276640305 March 31 2010 - 161100604 6 Redeemable Preference Shares - Nil March 31 2010 - 9700000 5 8 cumulative redeemable preference shares are redeemable at par not later than the expiry of 12 years from the date of allotment. 6 Optionally Convertible Debentures OCDs vide schedule 3B shall each be optionally converted into equity shares of the Company of the face value of Rs. 10/- each at the option of the holder at such time as may be determined by the Board which shall be not later than 18 months from the date of allotment of the OCDs and at a conversion price determined in accordance with the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations 2009.

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37 As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 2 Reserves and Surplus Securities Premium Balance as at the beginning of the year 8022.19 8022.19 Add: Received during the year 126322.97 - Balance as at the end of the year 134345.16 8022.19 SCHEDULE - 3A Secured Loans A. Term Loans from Banks 422307.49 302888.92 B. Cash Credit / Overdraft facility from Banks 28256.44 50734.57 C. Short Term Loans from Banks - 47846.84 D. Vehicle Loan from Banks - 3.05 E. Finance Lease Obligations 61040.75 72537.66 F. Term Loan from Others 6848.14 10231.51 518452.82 484242.55 Notes: 1. Securities Offered: A Term Loans from banks are secured as given below: Assignment of right under purchase agreement entered with aircraft manufacturer for purchase of the aircrafts As at As at 16927.26 33721.08 March 31 2011 March 31 2010 Additionally to be secured by second charge on fixed assets 1943.28 6474.82 Additionally by personal guarantee of a director of the Company 641.54 2825.35 Hypothecation of certain aircrafts 6363.04 - Other Term Loans / Cash credit / Overdraft facilities from Banks: Secured by hypothecation of all movables assets of the Company both fixed and current other than fixed assets acquired on hire purchase/lease basis and aircrafts but including Helicopters all trade marks and goodwill of the companyall credit card receivables IATA collections and other receivables of the company and mortgage of Kingfisher House 427273.63 367749.25 The company has also furnished non disposal undertakings in respect of aircrafts taken on finance lease/ hire purchase aircraft The securties referred to above shall rank pari passu interest amongst the lenders Personal guarantee of a director of the Company. B Vehicle Loans are secured by the hypothecation of the respective assets - 3.05 C Finance Lease is secured by the hypothecation of the respective assets 61040.75 72537.66 D Term Loans from others are secured as given below: Hypothecation of Aircraft and assignment of documents of title to such assets 5161.81 5120.16 Second priority on mortgage of aircraft 1677.65 1508.91 Hypothecation of furnitures fixtures - 768.66 Hypothecation of ground handling equipments 8.68 2833.78 E Amount Repayable within One year 45494.88 143873.55 2. Previous years data rearranged inline with the securities position prevailing as on 31st March 2011. Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd.

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38 As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 3B Unsecured Loans A. Long Term Loan from Banks 49905.96 107674.65 B. Short Term Loan from Banks 5761.53 83605.41 C. Term Loan from Others 60655.23 116737.06 D. 8 Optionally Convertible Debentures 70931.99 - 187254.71 308017.12 Notes: A Short Term Loan guaranteed by a director 1105.00 20650.46 B Long Term Loan guaranteed by a director 49905.96 - C Term loan from others guaranteed by a director 10000.00 - D Amount Repayable within One year 56360.76 194844.95 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd.

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39 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd. SCHEDULE - 4 FIXED ASSETS Rs. in Lacs Gross Block Depreciation / Amortisation Net Block Particulars As at April 1 2010 Additions during the year Deletions during the year As at March 31 2011 As at April 1 2010 For the year On Deletions As at March 31 2011 As at March 31 2011 As at March 31 2010 Owned Assets Intangible Assets Computer Software 1484.21 680.97 - 2165.18 924.36 420.06 - 1344.42 820.76 559.85 Trademarks 100.00 - - 100.00 83.56 16.44 - 100.00 - 16.44 Design - Aircraft Interiors 246.46 - - 246.46 117.32 35.21 - 152.53 93.93 129.14 Non Compete Fees 3000.00 - - 3000.00 1301.64 600.00 - 1901.64 1098.36 1698.36 Tangible Assets Land Buildings 3010.87 - - 3010.87 71.40 49.08 - 120.48 2890.39 2939.47 Building on Rented Land 903.89 - - 903.89 64.03 14.73 - 78.76 825.13 839.86 Leasehold Improvements - on Buildings 2732.63 869.63 27.71 3574.55 1273.25 765.31 18.05 2020.51 1554.04 1459.38 - on Aircraft 28863.52 12834.50 - 41698.02 9478.16 9465.75 - 18943.91 22754.11 19385.36 Ground Support and Other Equipment 12831.50 287.27 1.40 13117.37 2361.04 599.33 0.55 2959.82 10157.55 10470.46 Computers 5575.55 220.14 240.36 5555.33 2631.13 889.09 208.26 3311.96 2243.37 2944.42 Office Equipment 1740.08 70.67 86.62 1724.13 365.61 101.79 82.41 384.99 1339.14 1374.47 Furniture and Fixtures 4103.98 674.38 29.17 4749.19 1097.08 337.94 21.24 1413.78 3335.41 3006.90 Vehicles 2926.42 103.41 - 3029.83 770.24 282.69 - 1052.93 1976.90 2156.18 Aircraft Helicopter 16802.28 6353.50 - 23155.78 2093.90 1262.41 - 3356.31 19799.47 14708.38 Leased Assets Aircrafts 120492.32 - 1097.00 119395.32 26729.57 5462.62 1097.00 31095.19 88300.13 93762.75 204813.71 22094.47 1482.26 225425.92 49362.29 20302.45 1427.51 68237.23 157188.69 155451.42 Previous Year 189180.24 25219.16 9585.69 204813.71 31628.58 19823.78 2090.07 49362.29 Capital Work-in-Progress 67334.63 98060.50 224523.32 253511.92 Notes : 1 Certain Trademarks are pending registration. 2 Land and Buildings were purchased for a consolidated amount. Value of Land and Buildings have not been segregated. Depreciation has been provided on the entire amount. 3 Additions to leasehold improvements - aircrafts includes Rs. 12256.85 Lacs March 31 2010 - Rs. 20700. 26 Lacs representing cost of major engine repairs to aircrafts taken on operating lease Refer note 27 on schedule 19. 4 a Additions includes foreign currency monetary translation differences capitalised - Rs. Nil March 31 2010 - Rs. 1097.00 Lacs net. b Depreciation for the year includes Nil 2009-2010 - Rs. 3544.03 Lacs representing amortisation of foreign currency monetary translation differences relating to 2008 - 2009. 5 Additions and deletions do not include aircrafts in respect of which rights to purchase have been transferred.

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40 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd. As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 5 Investments Long Term at Cost Trade unquoted fully paid up In Subsidiary 50000 Equity Shares in Vitae India Spirits Limited of Rs. 10/- each fully paid up 5.00 5.00 5.00 5.00 Aggregate value of unquoted investments at cost 5.00 5.00 SCHEDULE - 6 Inventories Rotables Tools and Engineering Consumables 16573.68 13826.24 Less: Provision for Obsolescence 543.71 643.71 16029.97 13182.53 Inflight Stores and Consumables 2585.65 3196.44 Fuel 148.93 108.77 18764.55 16487.74 SCHEDULE - 7 Sundry Debtors Unsecured and considered good unless otherwise stated Considered Good Debts for the period a exceeding six months 2169.03 1602.51 Other Debts 41883.67 30646.02 44052.70 32248.53 Considered Doubtful Debts for a period exceeding six months 80.00 - Less: Provision for doubtful debts 80.00 - - - 44052.70 32248.53

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41 As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 8 Cash and Bank Balances Cash on hand 120.19 107.65 Balances with Scheduled Banks: - On Current Accounts 7069.36 4232.81 - On Deposit Accounts 16418.00 15555.92 Includes Rs. 99.81 Lacs March 31 2010 - Rs. 90.50 Lacs pledged with airport authorities and Rs. 13862.79 Lacs March 31 2010 - Rs. 9090.49 Lacs under lien with banks towards guarantees / letters of credit issued by them. Balances with Non Scheduled Banks: - On Current Accounts 1628.70 750.32 Closing balance as at the year end First Commerce Bank - I 1297 March 31 2010 2155 First Commerce Bank - II 901 March 31 2010 979 HSBC Bank UK- I GBP 65629 March 31 2010 GBP 35490 HSBC Bank UK- II GBP 104250 March 31 2010 GBP 144897 HSBC Bank UKEURO II EURO 59526 March 31 2010 EURO 438869 HSBC Bank UK USD 172430 March 31 2010 5523 Citibank New York USD 584167 March 31 2010 62208 Citibank Dhaka - I BDT 59576072 March 31 2010 BDT 50417120 Citibank Dhaka - II BDT 62890 March 31 2010 BDT 256631 Royal Bank of Canada CAD34393 March 31 2010 CAD 16243 HSBC Bank Hongkong HKD 739339 March 31 2010 Nil HSBC Bank Singapore SGD 418984 March 31 2010 Nil HSBC Bank Dubai AED 991305 March 31 2010 Nil HSBC Bank Thailand THB 17901296 March 31 2010 Nil Citibank New York USD 1672 March 31 2010 NIL HSBC INR Current Account Rs. 15915054 March 31 2010 NIL Maximum amount outstanding during the year First Commerce Bank - I 2155 March 31 2010 131843 First Commerce Bank - II 979 March 31 2010 1000 HSBC Bank UK- I GBP 5697598 March 31 2010 GBP 1137114 HSBC Bank UK- II GBP 5516515 March 31 2010 GBP 1027264 HSBC Bank UKEURO II EURO 1212413 March 312010 EURO 438869 HSBC Bank UKUSD 1818804 March 312010 101440 Citibank New York USD 3426207 March 31 2010 1786516 Citibank Dhaka - I BDT 65638630 March 31 2010 BDT 51543342 Citibank Dhaka - II BDT 15015210 March 31 2010 BDT428243 Royal Bank of Canada CAD 1223827 March 31 2010 CAD 31131 HSBC Bank Hongkong HKD 739191 March 31 2010 NIL HSBC Bank Singapore SGD 418984 March 31 2010 NIL HSBC Bank Dubai AED 5901792 March 31 2010 NIL HSBC Bank Thailand THB 42521107 March 31 2010 NIL Citibank New York USD 5334734 March 31 2010 NIL HSBC INR Current Account Rs. 685497132 March 31 2010 NIL Includes Cash of Rs. 2.87 Lacs March 31 2010 Rs. 2.87 Lacs on which restriction is placed by the High Court of Karnataka 25236.25 20646.70 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd.

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42 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd. As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 9 Other Current Assets Accrued interest on Deposits with Banks 223.93 236.89 Receivable from Deccan Charters Limited - 1.94 223.93 238.83 SCHEDULE - 10 Loans and Advances Unsecured and considered good unless otherwise stated Advances recoverable in cash or in kind or for value to be received Considered Good 87845.43 77279.48 Considered Doubtful Advances 527.21 - Less: Provision for doubtful advances 527.21 - - - Deposits with Lessors towards: - Aircraft 12438.81 12342.90 - Aircraft Major Maintenance 73253.38 61011.97 85692.19 73354.87 Deposits with : - Airport Authorities 2137.55 1913.55 - Other Parties 6322.62 7278.70 8460.17 9192.25 Duty Free Credit Entitlement Receivable 14464.36 2486.09 Service Tax Credit Receivable 9888.50 12046.32 Tax Deducted at Source/Tax paid under protest 2754.51 1729.57 209105.16 176088.58

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43 Schedules annexed to and forming part of the Balance Sheet as at March 31 2011 Contd. As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs SCHEDULE - 11 Current Liabilities and Provisions Current Liabilities: Sundry Creditors 286316.26 260266.04 Deposits 2285.80 2889.95 Advances Received / Forward Sales Refer note 25 on schedule 19 61354.40 40639.45 Gain on sale and lease back transaction 573.98 615.40 Less : Income for the year 41.42 41.42 532.56 573.98 Interest Accrued but not due on Loans 1703.89 599.03 Temporary Overdrawn Bank Balances 3.35 1694.62 Unclaimed Dividend 2.76 2.76 Stamp Duty Payable pursuant to the Scheme - 158.92 Other Liabilities 58275.12 43311.74 410474.14 350136.49 Provisions: Provision for Wealth Tax 6.40 6.40 Fringe Benefit Tax 450.70 643.82 Gratuity 1476.15 1056.35 Leave Encashment / Compensated Absences 1411.78 1239.62 Frequent Flyer Scheme 2165.75 1730.34 Provision for Contingencies 700.00 - 6210.78 4676.53 SCHEDULE - 12 Initial Cost on Leased Aircrafts Refer note 3s on Schedule 19 Per last Balance sheet 860.26 1961.43 Less: Amortised during the year 260.61 1101.17 599.65 860.26 Loss on novation / assignment of rights interest on loans taken for financing pre delivery payments per last Balance Sheet 13703.97 14683.37 Additions during the year - 807.54 Less: Amortised during the year 1719.65 1786.94 11984.32 13703.97 12583.97 14564.23

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44 Schedules annexed to and forming part of the Profit and Loss Account for the year ended March 31 2011 2010-2011 Rs. in Lacs 2009-2010 Rs. in Lacs SCHEDULE - 13 Income from Services Passenger 562098.26 471059.75 Cargo 45194.52 24517.20 Excess Baggage 3052.79 1555.23 Rebooking Charges / Cancellation 12992.33 9659.64 623337.90 506791.82 Net of credit card chargeback amount of Rs. 107.76 Lacs Previous Year - Rs. 475.44 Lacs SCHEDULE - 14 Other Income Interest on deposits with banks gross Tax deducted at Source - Rs. 71.01 Lacs Previous Year - Rs. 118.03 Lacs 873.42 919.13 Income on sale and lease back transaction 41.42 41.42 Profit on sale / settlement of claims on account of Fixed Assets net - 249.70 Miscellaneous Income 5378.73 4051.79 Liability no longer required written back net 7298.59 12854.63 13592.16 18116.67 SCHEDULE - 15 Employees Costs Salaries and Allowances 65059.86 66879.13 Contribution to Provident other funds 893.97 684.56 Gratuity 489.19 211.99 Leave encashment / Compensated absences 277.69 50.81 Staff welfare 1333.24 1111.77 Employee Compensation Cost 453.10 62.77 67600.85 68875.49 Includes Rs. 29.34 Lacs relating to prior years

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45 Schedules annexed to and forming part of the Profit and Loss Account for the year ended March 31 2011 Contd. 2010-2011 Rs. in Lacs 2009-2010 Rs. in Lacs SCHEDULE - 16 Operating and Other Expenses Landing Parking Housing and Navigation Charges 43336.91 39696.36 Ground Handling 22353.61 16577.63 Aircraft Maintenance : - Maintenance and Component Support Services 28562.91 32670.48 - Stores and Spares Consumed 5668.88 4088.77 - Others 3065.88 4253.82 37297.67 41013.07 Insurance: - Aircraft 7276.45 5617.39 - Others 371.95 540.38 7648.40 6157.77 Inflight and Other Amenities 21960.76 18949.84 Selling and Distribution 27846.86 29307.54 Commission paid to selling agents 19497.40 15981.73 Discounts other than trade discounts 4025.46 7824.49 Rent 4854.44 5477.55 Rates and Taxes 691.63 426.99 Rates and Taxes - Service Tax 3803.05 7069.13 Repairs and Maintenance - Buildings 67.70 144.73 Repairs and Maintenance - Others 2183.17 1550.67 Advertising and Sales Promotion 14537.25 15248.02 Communication 2592.66 3284.05 Electricity 664.78 756.43 Printing and Stationery 509.34 480.08 Legal and Professional Fees 9451.40 9710.40 Travelling Conveyance Boarding expenses 6558.53 6939.70 Hire Charges 4338.09 5527.29 Training 1815.20 2466.65 Recruitment 149.75 122.40 Directors fees 9.30 9.30 Loss on sale of Fixed Assets net 54.75 - Provision for Contingencies 700.00 - Bad Debts written off 1136.02 - Provision for Doubtful Debts/ Advances 607.21 - Miscellaneous expenses 3435.06 2843.13 242126.40 237564.95 Includes Rs. 570.60 Lacs relating to prior years Includes Rs. 560.68 Lacs relating to prior years Includes amortisation of inventory Rs. 418.95 Lacs. Includes Rs. 197.46 Lacs relating to prior years Includes Rs. 7.41 Lacs relating to prior years Includes Rs. 49.02 Lacs relating to prior years

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46 2010-2011 Rs. in Lacs 2009-2010 Rs. in Lacs SCHEDULE - 17 Amortisations Initial Costs amortised on Leased Aircrafts 1980.26 2888.11 Amortisation of Share issue expenses - 450.88 Amortisation of slot charges 1821.05 2110.01 3801.31 5449.00 SCHEDULE - 18 Financial Charges Interest 111892.92 100766.60 Bank charges and guarantee commission 19151.08 8883.92 Others 250.00 608.11 131294.00 110258.63 Includes Rs. 89955.28 Lacs Previous year Rs. 55208.92 lacs on fixed loans Includes Rs. 1500.73 Lacs relating to prior years. Schedules annexed to and forming part of the Profit and Loss Account for the year ended March 31 2011 Contd.

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47 SCHEDULE - 19 Notes to the financial statements for the year ended March 31 2011 1. Background Kingfisher Airlines Limited formerly known as Deccan Aviation Limited “the Company” is engaged in rendering scheduled and unscheduled aircraft passenger and cargo services including 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 scheduled airline business of Kingfisher Training and Aviation Services Limited “KTASL” previously known as Kingfisher Airlines Limited demerged on a going concern basis with the Company with effect from April 1 2008 as the demerger appointed date vide scheme of arrangement approved by the honourable High Court of Karnataka vide its order dated June 16 2008 under sections 391 to 394 of the Companies Act 1956 ‘Scheme”. The helicopter charter division of the Company was also hived off pursuant to the Scheme. The Company changed its name from Deccan Aviation Limited to Kingfisher Airlines Limited with effect from September 5 2008. 2. Demerger of the commercial airline division of KTASL a Order of the Karnataka High Court in form 42 of the Companies Court Rules 1949 in respect of the Scheme is yet to be passed. b Documentation in respect of transfer of certain assets and liabilities taken over pursuant to Scheme to the name of the Company are pending. The Company is in the process of transfer of charges created by KTASL to its name in respect of securities granted for loans so taken over by the Company in consultation with the Registrar of Companies. 3. Statement of significant accounting policies a Basis of preparation The financial statements have been 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 In preparation of the financial statements in conformity with generally accepted accounting principles estimates and assumptions where necessary have been made based on management’s best knowledge and experience. Accordingly actual results may differ from such estimates. c Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and 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 and cargo operations is recognized in the period in which the service is provided i.e. on flown / carried basis. Such revenue is net of statutory fees to be collected from customers as per government Schedules forming part of accounts for the year ended March 31 2011

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48 c Revenue recognition Contd. regulations. Unearned revenue represents consideration on sale of passenger tickets and cargo against which the Company has to provide services in future periods and is included under Advances received / Forward sales. The same is released to the profit and loss account as the services are rendered. Fees for passenger initiated changes and cancellations of tickets are recognized as revenue in the period in which such changes / cancellations are effected. Interest income is recognized on a 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 Companys advertising in the other partys 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. 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 and the cost of fixed assets not ready for intended use as of the balance sheet date are disclosed under capital work-in-progress. e Depreciation Depreciation on fixed assets except non-compete fees trademarks design – aircraft interiors software 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 date of installation till the date the assets are sold or disposed. - Non-compete fees are amortized over the period of agreement i.e. five years. - Trademarks are amortized over the period of four years. - Design – Aircraft Interiors are amortized over the period of seven years. - Software is depreciated over a period of 1 - 4 years based on estimated useful life as ascertained by the management. - Leasehold improvements on operating leases are depreciated over the shorter of the period of the lease and their estimated useful lives. - Cost of major maintenance and overhaul of the engines are amortized over the period of estimated useful life of the repairs 3 years. - Movable cabins and mobile phones are depreciated over the period of five and two years respectively on a straight-line method. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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49 f Borrowing Costs Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as a part of the cost of the assets. Other borrowing costs are recognized as an expense in the period in which they are incurred. Borrowing costs include amortization of ancillary costs incurred in connection with the arrangement of borrowings. The unamortized portion of ancillary costs incurred in connection with the arrangement of borrowings is included under ‘Loans and Advances’. 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 capitalized 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 capitalized. If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term. Leases where the lessors effectively retain 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 recognized as an expense in the Profit and Loss account on a straight- line basis over the lease term. Profit or loss on sale and leaseback arrangements resulting in operating leases are recognized 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. If the sale price is below the fair value and the loss is compensated by future lease payments at below market price the same is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the fair value at the time of sale and lease back transaction is less than the carrying amount of the asset a loss equal to the amount of difference between the carrying amount and fair value is recognised immediately. In case of sale and lease back 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. 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 recognized 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 recognized 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. Payments made to lessors for major maintenance expenditure as per the related maintenance agreements comprising fixed period-based amounts and variable activity-based amounts are initially considered as maintenance deposits and expensed as and when maintenance expenditure is incurred/termination of agreements. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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50 j Inventory Inventories are valued at lower of cost or net realizable value. Cost of engineering inventories is determined on first in first out basis except at one of the divisions where the weighted average basis was followed till December 31 2008. In respect of reusable items such as rotables special tools etc provision for amortization / obsolescence is made based on the estimated useful life of the aircraft as derived from schedule XIV to the Companies Act 1956. In-flight inventory is valued on weighted average basis while inventory of fuel is valued on the basis of last fuel uplifted rates in respective aircrafts. k Investments Investments that are readily realizable 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 recognize 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 employees’ provident fund and pension scheme towards post employment benefits all of which are administered by the respective government authorities. The Company also contributes to social security schemes in respect of its employees at certain overseas offices. It 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. Actuarial gains and losses are adjusted in the Profit and Loss Account. 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. Actuarial gains and losses are adjusted in the Profit and Loss Account. m Income taxes Tax expense comprises current deferred and fringe benefit taxes. 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 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. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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51 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 and foreign currencies at the date of the transaction. ii. Conversion Foreign currency monetary items are reported at rate prevailing on the balance sheet date. 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 Companys 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 except that the Company has availed the option provided by notification No. G.S.R. 225E dated March 31 2009 issued by the Ministry of Corporate Affairs read with accounting standard 11 in respect of foreign exchange differences in respect of long term monetary assets and liabilities. 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 amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized 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 recognized 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. 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 relevant 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. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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52 p Provisions A provision is recognized 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 Deferred revenue expenses Share issue expenses are amortized over a period of three years on a straight- line basis following the year of incurring the expenses. r 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 amortized 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. s Initial costs on leased aircrafts Expenses directly attributable and incurred in relation to aircrafts acquired on operating lease arrangement are deferred and amortized over the period of lease of aircrafts. Such expenses interalia include initial borrowing costs incurred on pre delivery payments for aircrafts till the Company novates / assigns the right to acquire the aircrafts in favor of the lessors. t Incentives from aircraft manufacturers Incentives from aircraft manufacturers are credited to Profit and Loss Account in the year when such incentives are made available to the Company as per the terms of aircraft purchase agreements. This includes incentives granted for the purpose of meeting certain revenue expenses. u Commission Commission to travel agents is recognized when the corresponding revenues are recognized as income on flown / carriage basis. 4. Commitments and contingent liabilities not provided for: Rs. in Lacs Particulars As at March 31 2011 As at March 31 2010 Remarks a. Estimated amount of contracts remaining to be executed on capital account and not provided for net of advances as certified by management 2227287.48 2267640.57 Pertains to acquisition of aircrafts other capital assets in future. b. Guarantees / letters of credit given by banks on behalf of the Company 128636.99 71331.52 Pertains to guarantees and letters of credit given / issued by banks to Airport Authorities lessors suppliers of spares stores components and others. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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53 Particulars As at March 31 2011 As at March 31 2010 Remarks c. Claims against the Company not acknowledged as debts including civil and customer suits in the normal course of business to the extent ascertainable 21923.74 26418.00 Pertains to litigations filed against the Company which are pending with various authorities / arbitration including National Consumer Disputes Redressal Commission Consumers’ Disputes Forums Courts Civil Court and invoices / claims of suppliers and service providers not accepted by the Company. The Company has a claim against one of the parties to an extent of Rs. Nil as at March 31 2010 Rs. 10100.00 Lacs. d. Demands raised by Income Tax authorities under appeal 1399.71 1336.84 An aggregate sum of Rs. 1060.17 lacs paid has been included under ‘Loans and Advances’. e. Demands and show cause notices raised by service tax authorities 23392.50 6928.51 The Company has preferred/furnished appeals/objections /is in the process of replying. Amount indicated does not include any demands that may be raised for other years based on the stand taken by tax authorities in orders passed/show cause notices issued. f. Show cause notices raised by entry tax authorities 14.37 Nil The Company has furnished objections. g. Lease rentals payable in respect of assets taken on operating lease in the event of the Company not meeting certain contractual obligations 13216.86 Nil The Company has taken certain assets from a lessor on operating lease. The lessor has undertaken to waive the lease rentals in the event the Company meets certain contractual obligations. The Company is confident of meeting these obligations h. Redelivery and other costs in respect of assets taken on operating lease at the end of the lease period Not ascertainable Not ascertainable In respect of operating leases the Company is required to return the aircrafts as per prescribed terms. However the lease periods are extendable for a longer period and considering on going maintenance of aircrafts a reliable estimate cannot be made of the redelivery costs. i. Amounts payable if any for breach of contractual obligations Not ascertainable Not ascertainable Schedules forming part of accounts for the year ended March 31 2011 Contd. 4. Commitments and contingent liabilities not provided for: Contd. Rs. in Lacs

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54 Particulars As at March 31 2011 As at March 31 2010 Remarks j. Liability for deduction of tax at source on lease payments in respect of aircrafts and engines where agreements were entered into with lessors on or before March 31 2007 excluding interest 17993.99 8644.15 a The Company has filed applications under section 1015A of the Income Tax Act 1961 with the Central Board of Direct Taxes CBDT seeking exemption from deduction of tax which are pending. These are being followed up by the Company. b In respect of agreements involving tax of Rs.6019.06 Lacs up to March 31 2011 applications made by the Company have been rejected. In respect of certain agreements the Company has filed writs before the Delhi High Court. In respect of others the Company will do so shortly. k. True up charges payable to a service provider difference between guaranteed volume of business and actual Nil 2608.87 Based on legal advice the Company has disputed the amount of the said charges payable as computed by the service provider and has sought refund of amounts paid wherever applicable. The Company has also contended that the relief agreement executed is not binding. Amount paid so far has been included in loans and advances. Such claim of the Company has been disputed by the concerned service provider. The Company is in the process of examining options open to it in the matter. l. Lease rentals claimed by a vendor in respect of spare engines supplied not acknowledged as debt Nil 4596.57 Certain aircraft engines supplied by a vendor failed prematurely and the Company has incurred substantial amounts on repair and overhaul of the same. Pending repair and overhaul of the said engines the Company has taken certain spare engines on lease from the said vendor. The Company has preferred claims against the said vendor and has requested the party to conclude arrangements to settle matter at zero cost to it. The party has submitted without prejudice a term sheet for settlement of the matter which envisages waiver of the lease rentals payable. m. Arrears of fixed cumulative preference dividends including tax thereon 4305.89 Nil Arrears of fixed cumulative preference dividends on CCPS till date of conversion and cumulative redeemable preference shares and tax thereon. Reclassified Schedules forming part of accounts for the year ended March 31 2011 Contd. 4. Commitments and contingent liabilities not provided for: Contd. Rs. in Lacs

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55 4. Commitments and contingent liabilities not provided for: Contd. 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 amount of contingent liability if any as at the balance sheet date is not ascertainable. 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. 5. Auditors’ remuneration Rs. in Lacs Particulars 2010-2011 2009-2010 Statutory audit fees 60.00 50.00 Other services limited review certification etc 56.25 50.05 Out of pocket expenses reimbursed 3.21 2.45 Total 119.46 102.50 excluding service tax 6. Earnings in Foreign Currency on accrual basis: Rs. in Lacs Particulars 2010-2011 2009-2010 Passenger / cargo revenue 83248.76 68466.78 Profit / Loss on transfer of assets Nil 1421.86 7. CIF value of imports as certified by management Rs. in Lacs Particulars 2010-2011 2009-2010 Capital goods 7336.71 626.07 Stores Spares Components 7088.72 3142.56 8. Expenditure in foreign currency on accrual basis Rs. in Lacs Particulars 2010-2011 2009-2010 Salaries Traveling Conveyance Professional Consultancy expenses Training expenses Aircraft and other maintenance expenses Lease rentals Ticket distribution and reservation system Interest Fuel Purchase Airport Charges Ground Handling Redelivery costs Others 9039.73 3115.97 2515.31 986.81 34025.74 98399.56 27108.04 3476.65 39841.23 13629.23 6024.96 2061.63 2892.37 11112.62 2128.45 3909.59 2145.77 63820.64 109381.52 27238.15 4524.28 30618.22 6823.39 3868.98 22755.80 7290.08 Recast Schedules forming part of accounts for the year ended March 31 2011 Contd.

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56 9. Value of components and spare parts consumed as certified by Management Rs. in Lacs Particulars 2010-2011 2009-2010 Amount Amount Imported 1463.38 26 2332.16 57 Indigenous 4205.50 74 1756.61 43 Total 5668.88 100 4088.77 100 10. a Buildings constructed at a cost of Rs. 88.74 Lacs are on land rented from the State Government for which lease has been transferred to Deccan Charters Limited DCL. Such rental agreement is renewable on an annual basis. The Company has in turn entered into a rental arrangement with DCL. b Buildings constructed at a cost of Rs. 865.86 Lacs are on land belonging to the Airport Authority of India. Such rental agreements are renewable on a periodical basis. 11. a Capital work-in-progress includes capitalized interest on borrowings for purchase of fixed assets. The movement in the account is given below: Rs. in Lacs Particulars 2010-2011 2009-2010 Opening Balance 12328.29 19355.96 Add: Interest capitalized during the year 4682.14 6154.67 Less: Deletions on account of delivery and cancellation of orders of aircrafts 441.77 13182.34 Closing Balance 16568.66 12328.29 An aircraft wise schedule of interest capitalized is under preparation and review. b Capital work in progress includes Rs. 2098.25 lacs paid for purchase of a flight simulator. The Company is to pay the balance consideration and take delivery of the asset. The Company is exploring various options to fund the balance consideration payable. Management is confident that it will be in a position to fund the balance consideration take delivery of the flight simulator. Accordingly the said amount is considered good of recovery. 12. 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 8181779 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. During the year ended March 31 2011 no options under ESOP 2006 scheme have been issued. Details of number and weighted-average exercise prices of options are given below: Particulars 2010-2011 2009-2010 Number of options Weighted average exercise price per share In Rupees Number of options Weighted average exercise price per share In Rupees Outstanding at the beginning of the year 822310 65.00 1793180 65.00 Granted during the year Nil Nil Nil Nil Exercised during the year Nil Nil Nil Nil Forfeited during the year 351710 65.00 363470 65.00 Outstanding at the end of the year 470600 65.00 1429710 65.00 Exercisable at the end of the year 426380 65.00 822310 65.00 Schedules forming part of accounts for the year ended March 31 2011 Contd.

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57 The weighted average contractual remaining life of the options is 5.71 years as at March 31 2011. The Company has determined intrinsic values based on the fair value of the shares on the date of grant as follows: Month year of grant Intrinsic value determined In Rupees June 2005 62.97 December 2005 62.97 April 2007 49.90 September 2007 83.80 February 2008 91.95 The Company has written back deferred compensation expense of Rs.453.10 Lacs Previous year - Rs. 62.77 Lacs during the year on account of forfeiture of options issued. Rs. in Lacs Accounting value of stock options outstanding 298.36 Less: Deferred stock compensation expense to be amortized in future years 3.27 Employee stock option outstanding 295.09 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. Rs. in Lacs Particulars 2010-2011 2009-2010 Net loss after tax as reported after extraordinary items 102739.80 164722.06 Add: Compensation expense as recognized 453.10 62.77 Add: Arrears of fixed cumulative preference dividends including tax thereon 4305.89 Nil Total 107498.79 164784.83 Less: Compensation expense under the fair value method Black Scholes Method 662.17 89.87 Net Loss after tax proforma used for computation of loss per share after extra ordinary items 106836.62 164694.96 Loss per share as reported basic and diluted Rs. 10 par value in Rupees 40.16 61.95 Loss per share pro forma basic and diluted Rs. 10 par value in Rupees 40.08 61.94 The Company has not issued any options during the year. Accordingly the assumptions 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 have not been furnished. The Board of Directors of the Company are yet to formulate the stock option plan to the employees of the commercial airline division of KTASL taken over by the Company pursuant to clause 11.1 of the Scheme. Schedules forming part of accounts for the year ended March 31 2011 Contd. 12. Employee Stock Option Plan ESOP Contd.

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58 13. Related Party Disclosures Parties identified by the Management and relied upon by the auditors: Names of related parties Holding Company United Breweries Holdings Limited Fellow Subsidiaries Kingfisher Finvest India Limited KFIL formerly known as Kingfisher Radio Limited and subsequently renamed as Kingfisher Finvest India Limited UB Infrastructure Projects Limited UBIPL Kingfisher Training and Aviation Services Limited KTASL UBSN Limited Subsidiary of the Company Vitae India Spirits Limited Key Management Personnel KMPs Dr. Vijay Mallya Mr. Sanjay Aggarwal from September 27 2010 Rs. in lacs Transactions during the year Holding Company Fellow Subsidiaries Subsidiary KMPs Remuneration to Mr. Sanjay Aggarwal Mar-11 212.22 Mar-10 NA Guarantee and security commission expense Mar-11 5800.95 40.33 5086.90 Mar-10 4948.20 17.50 License fees expense Mar-11 617.68 Mar-10 642.50 Interest expense Mar-11 6324.80 1512.91 133.79 Mar-10 2493.86 1892.30 164.77 Reimbursement of expenses Mar-11 0.14 Nil Mar-10 0.62 1.44 0.06 Purchase of goods/Services Mar-11 0.64 Mar-10 Income from rendering of services Mar-11 Mar-10 Loans borrowed Mar-11 57511.59 5000.00 Mar-10 13962.00 11300.00 1000.00 Loans repaid Mar-11 25500.00 24500.00 Mar-10 3067.54 700.00 Outstanding payablenet of receivables Mar-11 12303.56 2712.01 470.99 0.62 Mar-10 32122.75 20850.38 1814.28 0.28 Outstanding receivables net of payable Mar-11 76.69 0.06 Mar-10 Nil 0.06 Loans due by the Company converted into 7.5 CCPS Mar-11 63300.00 1500.00 Mar-10 Nil Nil Conversion of 6 redeemable non cumulative preference shares of Rs. 100 each to 6 CCPS of Rs. 10 each Mar-11 9700.00 Mar-10 Nil Schedules forming part of accounts for the year ended March 31 2011 Contd.

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59 Rs. in lacs Transactions during the year Holding Company Fellow Subsidiaries Subsid- iary KMPs Equity shares allotted by the Company pursuant to conversion of CCPS face value Mar-11 11321.34 232.63 Mar-10 Nil Nil Guarantees given on behalf of the Company for loans taken other liabilities Mar-11 1685295.00 617563.12 Mar-10 698546.06 279956.42 Investments held by the Company in Vitae India Spirits Limited Mar-11 5.00 Mar-10 5.00 UBIPL KFIL KTASL UBSN Limited conversion of interest other dues payable as loan of Rs. 9239.00 Lacs and Rs. 2370.00 Lacs respectively. Dr. Vijay Mallya Excludes amortization of amounts paid in prior years of Rs. 221.69 Lacs Entitled to free use of Company car telephone. Excludes accrued leave encashment and gratuity since the same have been recognized for the Company as a whole and cannot be determined at an employee level NA: Not applicable In addition the Company has derived revenue from certain related parties from sale of tickets / cargo space in the normal course of business. These have not been quantified shown separately. 14. Leases and Hire Purchase a 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 and spare engines. The salient features of such lease agreements are as follows: • Lease periods range up to twelve years and are usually non-cancelable. • 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. • 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. Schedules forming part of accounts for the year ended March 31 2011 Contd. 13. Related Party Disclosures Parties identified by the Management and relied upon by the auditors: Contd.

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60 Schedules forming part of accounts for the year ended March 31 2011 Contd. Rs. in Lacs Particulars 2010-2011 2009-2010 Lease contributions for the year excluding maintenance reserves for aircrafts and engines 98399.56 109381.52 Minimum lease payments contributions - Not later than one year 93616.34 100419.03 - Later than one year but not later than five years 264319.46 314551.95 - Later than five years 103822.35 172918.21 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 was yet to commence as at March 31 2011. 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 2011. Finance leases Rs. in Lacs Particulars 2010-2011 2009-2010 Total minimum lease payments at the balance sheet date in case of balance fixed non cancelable lease term 76630.00 92087.81 Less: Amount representing finance charges 15589.25 19550.15 Present value of minimum lease payments 61040.75 72537.66 Lease payments for the year 9985.54 13763.13 Minimum Lease Payments : Not later than one year Present Value as at March 31 2011 Rs. 9126.57 Lacs As at March 31 2010 Rs. 13047.38 Lacs 13133.68 17311.57 Later than one year but not later than five years Present Value as at March 31 2011 Rs. 37687.80 Lacs As at March 31 2010 Rs. 34803.42 Lacs 47258.46 46694.54 Later than 5 years Present value as at March 31 2011 Rs 14226.38 Lacs As at March 31 2010 Rs 24686.86 Lacs 16237.86 28081.70 Salient features of Finance Lease Agreement Aircraft: • Monthly aircraft lease rentals are paid in the form of fixed rentals. • The Company is responsible for keeping the aircraft airworthy in all respects and in good condition and insuring the same throughout the lease period. • The Company has an option to purchase the aircraft either during the term of the lease on payment of the outstanding principal amount or at the end of the lease term on payment of a nominal option price. • In the event of default the Lessee is responsible for payment of all costs of the Owner including financing costs and other associated costs. Further a right of repossession is available to the Owner / Lessor. b In addition the Company has entered into cancelable leasing arrangements for office and residential premises which are renewable at mutual consent. Lease rentals of Rs. 4854.44 lacs Previous year - Rs. 5477.55 Lacs have been included under the head “Operating and Other Expenses - Rent” under Schedule 16 in the Profit and Loss Account. 14. Leases and Hire Purchase Contd.

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61 15. Segment disclosures a Geographical segments – Considering the internal reporting framework the Company has considered geographical segments as the primary segments. Such segments consist of domestic air transportation within India and international air transportation outside India. Rs. in Lacs Particulars Domestic sectors International sectors Total Revenue 2010-11 477314.68 146023.22 623337.90 2009-10 452204.66 54587.16 506791.82 Segment results - gain / loss before tax and interest 2010-11 77600.05 7810.91 69789.14 2009-10 33548.94 34008.46 459.52 Less: Interest and finance charges 2010-11 131294.00 2009-10 110258.63 Depreciation and other amortisations 2010-11 24103.76 2009-10 21728.75 Other unallocable expenditure 2010-11 81980.63 2009-10 88869.38 Exceptional items and foreign exchange translation differences 2010-11 10707.37 2009-10 40787.56 Add: Unallocable income 2010-11 26218.33 2009-10 20312.29 Total loss before tax expense 2010-11 152078.29 2009-10 241791.55 Recast The value of assets and liabilities capital expenditure incurred during the year and depreciation on fixed assets segment wise cannot be segregated and identified to any reportable segment. Note: The above data is as certified by management since part of the data is drawn from non-financial records. b Business segments The Company operates in a single business segment i.e. of providing scheduled and unscheduled air transportation services. Accordingly no separate segment disclosures for business segments are required to be given. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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62 16. Deferred taxes Rs. in Lacs Particulars As at March 31 2011 As at March 31 2010 Liability On account of depreciation on fixed assets 31829.22 35828.73 On account of timing differences in recognition of expenditure 4082.87 4837.87 Deferred tax liability A 35912.09 40666.60 Asset On account of timing differences in recognition of expenditure 936.99 976.49 On account of disallowance under section 40a ia 66115.48 58522.54 On account of Unabsorbed losses and depreciation under the Income Tax Act 1961 261637.93 224604.08 Deferred tax asset B 328690.40 284103.11 Net deferred tax asset B – A 292778.31 243436.51 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 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. 17. Provisions In accordance with Accounting Standard – 29 ‘Provisions Contingent Liabilities and Contingent Assets’ following is the movement in provision towards cost for frequent flyer program. Frequent Flyer Program: The Company has a Frequent Flyer Program King Club wherein passengers who fly frequently are entitled to accumulate miles to their credit. Passengers are eligible to redeem such miles in the form of tickets either on the Company or its partners’ airlines. The cost of allowing free travel to members is accounted considering the members’ accumulated mileage on an incremental basis. However in the light of inadequate historical data the Company has not factored costs that would be incurred by it while estimating provisions required in case eligible passengers redeem such miles for services/ tickets of partners. The movement in the provision towards cost for frequent flyer program during the year is as under: Rs. in Lacs Particulars As at March 31 2011 As at March 31 2010 Opening Balance 1730.34 902.49 Add: Provision during the year 1445.24 1038.64 Less: Amounts utilized during the year 1009.83 210.79 Closing Balance 2165.75 1730.34 The outflow with regard to above would depend upon utilization of accumulated mileage by the members and hence the Company is not able to reasonably ascertain the timing of outflow. Leave encashment / compensated absences The movement in the provision towards cost of leave encashment / compensated absences during the year is as under: Rs. in Lacs Particulars As at March 31 2011 As at March 31 2010 Opening Balance 1239.62 1329.13 Add: Provision during the year 277.68 50.81 Less: Amounts utilized during the year 105.52 140.32 Closing Balance 1411.78 1239.62 Schedules forming part of accounts for the year ended March 31 2011 Contd.

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63 18. Loss per share EPS Rs. in Lacs Particulars 2010-2011 2009-2010 After exceptional items Loss as per Profit and Loss Account 102739.80 164722.06 Arrears of fixed cumulative preference dividends including tax thereon 4305.89 Nil Loss for computation of basic and diluted EPS 107045.69 164722.06 Before exceptional items Loss before exceptional items and tax expense 142953.64 206026.08 Arrears of fixed cumulative preference dividends including tax thereon 4305.89 Nil Less: Tax expense after reworking deferred tax credit on account of exceptional items. 46378.00 65189.09 Loss for computation of basic and diluted EPS 100881.53 140836.99 Weighted average number of shares considered for basic EPS Rs 10 par value – nos. 266544144 265908883 Weighted average number of shares considered for diluted EPS - nos. 266544144 265908883 The effect of employee stock options and options vested in certain lenders / debenture holders to convert their outstanding to equity on weighted average number of shares for diluted EPS is not considered since their effect is anti-dilutive. 19. There were no forward or derivative contracts outstanding as at March 31 2011 and March 31 2010. Foreign currency exposures as at March 31 2011 and March 31 2010 that had not been hedged by any derivative instrument or otherwise are estimated as follows: Rs. in Lacs Particulars As at March 31 2011 As at March 31 2010 Capital Advances 50301.17 84855.64 Prepaid Maintenance Reserve 73253.38 61011.97 Other Assets Receivables 39864.59 34063.19 Finance Lease for aircrafts and other term loan from financial institution 67888.89 76880.36 Other Liabilities Payables 54018.29 122143.08 20. Employee Benefits: a Contribution to defined benefit plans-gratuity plan unfunded as certified by the management Rs. in Lacs Particulars 2010-2011 2009-2010 I Change in benefit obligation: Defined benefit obligation DBO at the beginning of the year 1056.35 911.04 Service Cost 337.09 341.00 Interest Cost 108.70 91.87 Past service cost- vested benefit 8.50 Actuarial loss / gain 34.90 220.88 Benefits paid 69.39 66.68 Defined benefit obligation at the end of the year 1476.15 1056.35 Schedules forming part of accounts for the year ended March 31 2011 Contd.

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64 Particulars 2010-2011 2009-2010 II Components of cost for the year: Service cost 337.09 341.00 Interest on defined benefit obligation 108.70 91.87 Past service cost- vested benefit 8.50 Net actuarial gain recognized in the year 34.90 220.88 Net gratuity recognized in the Profit and Loss Account 489.19 211.99 III Actuarial assumptions: Discount rate p.a. 8 8 Salary Escalation Rate p.a. 5 5 Retirement Age 58 years 58 years Mortality Rates of LIC 1994-1996 mortality table Rates of LIC 1994-1996 mortality table Withdrawal rate 2 2 b Contribution to defined contribution plans Contribution to provident fund Rs. 193.10 Lacs Previous year - Rs. 602.13 Lacs. Contribution to social security schemes Rs. 200.01 Lacs Previous year - Rs. 198.23 Lacs. 21. The Company is not aware of the registration status of its suppliers regarding registration under the MSME Act 2006 “Micro Small and Medium Enterprises Development Act 2006”. Accordingly information relating to outstanding balance or interest due have not been disclosed as it is not determinable. 22. Details of non-resident shareholdings as certified by management: Particulars As at March 31 2011 As at March 31 2010 Number of nonresident share holders 1073 789 Number of shares held by nonresident shareholders 44286393 41900829 23. Accounts of certain creditors debtors loans advances advances on capital account bank accounts passenger service fees and charges payable to airport operators service tax payable including under reverse mechanism input service tax credit recognized are subject to review / reconciliation / confirmation. Adjustments if any will be made on completion of such review / reconciliation / receipt of confirmations. 24. The Company has incurred substantial losses and its net worth has been eroded. However having regard to improved passenger and cargo load in recent months improvement in economic sentiment and business prospects cost savings schemes being implemented premature termination of certain lease / purchase contracts recently launched international routes route rationalization programs the master debt recast agreement signed with banks in December 2010 augmentation of capital by conversion of a part of loans from banks and group companies capital raising plans etc 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. Schedules forming part of accounts for the year ended March 31 2011 Contd. 20. Employee Benefits : Contd.

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65 25. The Companys centralized ticket reservation system CRS does not support captured of unearned revenue. Accordingly such unearned revenue has been estimated by management by multiplying the estimated aggregate number of unflown tickets as on the reporting date by the average estimated tickets value prevailing in each of the months to which such unflown ticket relate to. Management is taking continuing steps to streamline the process of determination of unearned revenue. 26. The Companys Cargo Revenue Management CRM system is yet to stabilized. Mistakes noticed in revenue recognized sundry Debtors and other relevant accounts have been corrected to the extent identified. The Companys of the view that unadjusted differencies will not be material. Management is taking steps to further steemline the process in stabilized system. 27. Accounting of costs on major repairs and maintenance of its engines: During the current and immediate previous year the Company has adopted the exposure draft on Accounting Standard - 10 Revised Tangible Fixed Assets’ which allows costs on major repairs and maintenance incurred to be amortized over the incremental life of the asset. The Company has extended the same treatment to costs and maintenance on engines pertaining to aircrafts acquired on operating lease. Such expenditure has been included in ‘Lease hold improvements- Aircrafts’ vide schedule of fixed assets. This accounting policy has been confirmed by an independent expert and in the opinion of the management has resulted in a fair depiction of the working results and the state of affairs of the company. But for such accounting practice the loss before after tax for the year would have been higher by Rs. 3726.83 Lacs and Rs. 2517.66 Lacs respectively. 28. Use fees payable by the Company in respect of certain assets taken on operating lease aggregating to Rs. 5576.45 lacs have in accordance with the Company’s understanding been treated as maintenance reserves. In terms of the Company’s accounting policy these fees are initially included under Loans and Advances and are expensed out to the Profit and Loss Account at the time of incurrence of major expenditure /termination of agreements. The Company is taking steps to formalize this understanding with the relevant lessor. 29. The Company has not prepared consolidated financial statements CFS as required by the AS 21 since the transactions of subsidiary during the year/its assets and liabilities were not material. 30. Fixed assets have been physically verified by the management during the year. Pending completion of reconciliation discrepancies if any have not been finalized and adjusted. As a matter of abundant caution provision of Rs. 500 lakhs has been made for the possible effect of any discrepancies. 31. Details of exceptional items: Rs. in lacs Particulars 2010-11 2009-10 Costs incurred on account of premature termination of lease/purchase contracts 3965.52 35765.47 Amount paid/ provided as payable to a service provider on settlement of disputes 5159.13 Nil Total 9124.65 35765.47 32. Previous year’s figures have been regrouped / reclassified wherever necessary to conform to the current year’s presentation. Schedules forming part of accounts for the year ended March 31 2011 Contd.

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66 For and on behalf of the Board of Directors Dr. Vijay Mallya A. K. Ganguly A. K. Ravi Nedungadi Chairman Managing Director Director Director Bangalore A. Raghunathan Bharath Raghavan May 23 2011 Chief Financial Officer Chief Legal Officer Company Secretary Statement pursuant to Section 212 of the Companies Act 1956 related to the Subsidiary Company Particulars Vitae India Spirits Limited 1. Financial year of the Subsidiary ended on March 31 2011 2. Shares of the Subsidiary held by the Company on the above date: a Number face value 50000 Equity Shares of Rs.10/- each b Extent of holding 100 3. Net aggregate amount of profits/losses of the Subsidiary so far as they concern members of Kingfisher Airlines Limited: a For the financial year of the Subsidiary i Dealt within the accounts of the Company for the year ended March 31 2011 Rs. Lacs NIL ii Not Dealt with the accounts of the Company for the year ended March 31 2011 Rs. Lacs 2.43 b For the previous financial year of the subsidiary since it became a subsidiary i Dealt within the accounts of the Company for the previous financial year ended March 31 2010 Rs. Lacs NIL ii Not Dealt with the accounts of the Company for the previous financial year ended March 31 2010 Rs. Lacs 2.05

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67 2010-2011 Rs. in Lacs 2009-2010 Rs. in Lacs A. Cash Flow from Operating Activities Loss Before Tax 152078.29 241791.55 Adjustments for : Depreciation / Amortisation on fixed assets 20302.45 16279.75 Provision for Gratuity 419.80 145.31 Provision for Leave Encashment / Compensated Absences 172.16 89.51 Provision for Frequent Flyer Scheme 435.41 827.85 Initial Costs amortised on Leased Aircrafts 1980.26 2888.11 Amortisation of Share issue expenses - 450.88 Amortisation of slot charges 1821.05 2110.01 Employee Compensation Income / Expense 453.10 62.76 Baddebts written off 1136.02 - Provision for Doubtful Debts/ Advances 607.21 - Provision for Contingencies 700.00 - Profit / Loss on sale of assets 54.75 249.70 Interest expense 111892.92 100766.60 Interest Income on deposits with Banks 873.42 919.13 Unrealised Exchange Gain on Short term liabilities 2798.28 3873.77 140993.79 118273.64 Operating Loss Before Working Capital Changes 11084.50 123517.91 Adjustment for changes in working capital: Increase / decrease in inventories 2276.82 1763.04 Increase / decrease in sundry debtors 13020.20 4825.24 Increase / decrease in Loans and Advances and Other Current Assets 32518.84 39369.59 Increase / decrease in Current Liabilities and Provisions 60144.55 3436.66 12328.69 42521.21 Add : Taxes paid including fringe benefit tax 1021.63 469.67 Net Cash used in / from Operating Activities 222.56 166508.79 B. Cash Flow From Investing Activities Movement in fixed assets including changes in Capital work-in -progress 8631.40 27217.12 Sale of fixed assets - 7745.32 Initial Costs incurred on Leased Aircrafts - 807.54 Slot charges incurred during the year 1827.67 2849.78 Repayment of Finance Lease obligation during the year principal portion 11496.91 8869.58 Interest on deposits with Banks 888.33 1077.76 Net Cash used in / from Investing Activities 3804.85 23513.30 Cash Flow Statement for the year ended March 31 2011

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68 Cash Flow Statement for the year ended March 31 2011 Contd. 2010-2011 Rs. in Lacs 2009-2010 Rs. in Lacs C. Cash Flow from Financing Activities Repayments/ Proceeds from Loans from Banks and Others net 92314.61 241284.35 Interest Paid 84142.77 94828.83 Net Cash used in / from Financing Activities 8171.84 146455.52 Net increase / decrease in Cash and Cash equivalents 4589.55 3460.00 Cash and Cash equivalents at beginning of the year 20646.70 17186.70 Cash and Cash equivalents at the end of the year 25236.25 20646.70 As at March 31 2011 Rs. in Lacs As at March 31 2010 Rs. in Lacs Cash and Cash equivalents comprise Cash in Hand 120.19 107.65 Balance with Banks 25116.06 20539.05 TOTAL 25236.25 20646.70 Notes: 1 The above cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard - 3. 2 Figures in bracket indicate cash inflow. 3 Previous years figures have been regrouped/ rearranged to conform with current years classifications. As per our report of even date For B. K. Ramadhyani Co. For and on behalf of the Board of Directors Chartered Accountants Shyam Ramadhyani Dr. Vijay Mallya A. K. Ganguly A. K. Ravi Nedungadi Partner Chairman Managing Director Director Director Membership No. 019522 Bangalore Bangalore A. Raghunathan Bharath Raghavan June 29 2011 May 23 2011 Chief Financial Officer Chief Legal Officer Company Secretary

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69 Balance Sheet Abstract For and on behalf of the Board of Directors Dr. Vijay Mallya A. K. Ganguly A. K. Ravi Nedungadi Chairman Managing Director Director Director Bangalore A. Raghunathan Bharath Raghavan May 23 2011 Chief Financial Officer Chief Legal Officer Company Secretary excluding Employee Stock Option Outstanding includes initial Cost on Lessed Aircrafts and Deferred Tax Asset and Foreign Currency Monetary item Translation Difference Account Date Month Year includes Deferred Tax Asset + - + - + - + - Additional Information Pursuant to Part IV of Schedule VI to the Act BALANCE SHEET ABSTRACT AND COMPANYS 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 STATE CODE 0 8 BALANCE SHEET DATE 3 1 - 0 3 - 2 0 1 1 II CAPITAL RAISED DURING THE YEAR Amount in Rs. Thousands PUBLIC ISSUE N I L RIGHTS ISSUE N I L BONUS ISSUE N I L PRIVATE PLACEMENT 1 9 5 1 2 0 0 0 III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS Amount in Rs. Thousands TOTAL LIABILITIES 1 3 6 2 1 2 0 6 2 TOTAL ASSETS 1 3 6 2 1 2 0 6 2 including shareholders Funds SOURCES OF FUNDS PAID-UP CAPITAL 1 0 5 0 8 7 9 2 RESERVES SURPLUS 1 3 4 3 4 5 1 5 SECURED LOANS 5 1 8 4 5 2 8 2 UNSECURED LOANS 1 8 7 2 5 4 7 1 APPLICATION OF FUNDS NET FIXED ASSETS 2 2 4 5 2 3 3 1 MISCELLANEOUS EXPENDITURE N I L INVESTMENTS 5 0 0 Please tick appropriate box + for Positive - for Negative  NET CURRENT ASSETS 1 8 6 0 5 9 9 4 ACCUMULATED LOSSES 4 3 2 1 0 7 6 5 IV PERFORMANCE OF COMPANY Amount in Rs. Thousands TURNOVER including other income 6 4 9 5 5 6 2 2 TOTAL EXPENDITURE 8 0 1 6 3 4 5 0 Please tick appropriate box + for profit - for Loss  Please tick appropriate box + for Profit - for Loss  PROFIT/LOSS BEFORE TAX 1 5 2 0 7 8 2 8 PROFIT/LOSS AFTER TAX 1 0 2 7 3 9 7 9 Please tick appropriate box + for Positive - for Negative  EARNING PER SHARE In Rs. 4 0 . 1 6 DIVIDEND RATE – – V GENERIC NAMES OF PRINCIPLE PRODUCTS / SERVICES OF COMPANY as per monetary terms ITEM CODE NO. ITC CODE PRODUCT DESCRIPTION Not Applicable Airline Services

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70 VITAE INDIA SPIRITS LIMITED Directors Report To The Members Your Directors present the 3rd Annual Report along with the Audited Accounts of your Company for the financial year ended March 31 2011. Operations Your Company has not carried on any business during the year under review. For the financial year ended March 31 2011 your Company has incurred a loss of Rs. 38833/- comprising mainly of professional charges. Share Capital The Authorised Issued Subscribed and Paid up Equity Share Capital of your Company remains unchanged at Rs. 500000/- divided into 50000 equity shares of Rs. 10/- each. Your Company continues to remain a wholly owned subsidiary of Kingfisher Airlines Limited. Directors Mr. A. Raghunathan Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Auditors M/s Vishnu Ram Co. your Company’s Auditors have confirmed that they are eligible for re-appointment at the ensuing Annual General Meeting and it is proposed to re-appoint them and to fix their remuneration. Conservation of Energy Research and Development Technology Absorption Foreign Exchange Earnings and Outgo The particulars as prescribed under section 2171e of the Companies Act 1956 and the rules framed there under are not applicable to your Company. Foreign Exchange Earnings and Outgo There is no earning or outgoing of Foreign Exchange during the year under review. Directors’ Responsibility Statement In terms of the provisions of Section 2172AA of the Companies Act 1956 the Directors of your Company hereby confirm that: • in the preparation of the Accounts for the year ended March 31 2011 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 at March 31 2011 and of the loss of your Company for the year ended March 31 2011 • 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 year ended March 31 2011 have been prepared on a going concern basis. Particulars of Employees’ Remuneration Your Company has no employees on its payroll and accordingly the provisions of Section 2172A of the Companies Act 1956 read with the Companies Particulars of Employees Rules 1975 are not applicable. For and on Behalf of the Board of Directors Bangalore A. Raghunathan Bharath Raghavan May 23 2011 Director Director

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71 To The Members of VITAE INDIA SPIRITS LIMITED 1. We have audited the attached Balance Sheet of VITAE INDIA SPIRITS LIMITED as at 31st March 2011 the Profit and Loss Account and also the Cash Flow Statement for the year 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 the 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. Further to our comments in the annexure referred to above we report that: i 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. ii In our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books. iii The Balance Sheet the Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account. Auditors’ Report iv In our opinion the Balance Sheet Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section 3C of section 211 of the Companies Act 1956 v On the basis of written representations received from the directors and taken on record by the Board of Directors we report that none of the directors are disqualified as on 31st March 2011 from being appointed as a director in terms of clause g of sub-section 1 of section 274 of the Companies Act 1956.. vi In our opinion and to the best of our information and according to the explanations given to us the said accounts together with the notes thereon give the information required by the Companies Act 1956 1 of 1956 in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India a in the case of the Balance Sheet of the state of affairs of the Company as at 31-03-2011 b in the case of the Profit and Loss account of the loss for the year ended on that date and c in the case of the Cash Flow Statement of the cash flows for the year ended on that date. For Vishnu Ram Co. Chartered Accountants S. Vishnumurthy Proprietor Bangalore Membership No. 22715 May 23 2011 Firm Registration No. 004742S

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72 Re: VITAE INDIA SPIRITS LIMITED Referred to in paragraph 3 of our report of even date a There were no fixed assets. Therefore the provisions of clause 4ia to 4ic of the Companies Auditor’s Report Order 2003 are not applicable to the Company. b There were no stocks of goods. Therefore the provisions of clause 4iia to 4iic of the Companies Auditor’s Report Order 2003 are not applicable to the Company. c The company has not granted any loans to companies firms or other parties covered in the register maintained under section 301 of the Companies Act 1956. Therefore the provisions of clause 4iiia to 4iiid of the Companies Auditor’s Report Order 2003 are not applicable to the Company. d The company has not taken any loans from companies firms or other parties covered in the register maintained under section 301 of the Companies Act 1956. Therefore the provisions of clause 4iiie to 4iiig of the Companies Auditor’s Report Order 2003 are not applicable to the Company. e In our opinion and according to the information and explanations given to us there are adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory fixed assets and with regard to the sale of goods and services. During the course of audit we have not observed any continuing failure to correct major weaknesses in internal controls. f According to the information and explanations given to us there are no transactions that need to be entered into the register maintained under section 301 of the Companies Act 1956. Therefore the provisions of clause 4va of the Companies Auditor’s Report Order 2003 are not applicable to the company. g In our opinion and according to the information and explanation given to us there have not been any transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act 1956. Therefore the provisions of clause 4vb of the Companies Auditor’s Report Order 2003 are not applicable to the company. h The company has not accepted any deposits from the public in contravention of the provisions of sections 58A 58AA and any other relevant provisions of the Act and the Companies Acceptance of deposits Rules 1975. Therefore the provisions of clause 4vi of the Companies Auditor’s Report Order 2003 are not applicable to the company. i The paid up capital of the company does not exceed Rs. 50 lakhs. There has not been any turnover during the year. Therefore the provisions with regard to internal audit of clause 4vii of the Companies Auditor’s Report Order 2003 are not applicable to the company. j Provisions with regard to maintenance of cost records under section 2091d of the Companies Act 1956 are not applicable to this company. k The company is regular in depositing with appropriate authorities undisputed statutory dues including income tax and other material statutory dues applicable to it. Further since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act 1956 we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. l According to the information and explanations given to us no undisputed amounts payable in respect of income tax wealth Annexure to the Auditors’ Report tax service tax sales tax customs duty and excise duty were in arrears as at 31-3-2011 for a period of more than six months from the date they became payable. m According to the information and explanations given to us there are no dues of sales tax income tax customs duty wealth tax service tax and excise duty which have not been deposited on account of any dispute. n The company has been registered for a period of less than five years. Therefore the provisions of clause 4x of the Companies Auditor’s Report Order 2003 are not applicable to the company. o The company has not taken any loans from banks or financial institutions nor issued any debentures. Therefore the provisions of clause 4xi of the Companies Auditor’s Report Order 2003 are not applicable to the company. p The company has not granted any loans on the basis of security by way of pledge of shares debentures and other securities. Therefore the provisions of clause 4xii of the Companies Auditor’s Order 2003 are not applicable to the company. q The company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4xiii of the Companies Auditor’s Report Order 2003 are not applicable to the company. r The company is not dealing in or trading in shares securities debentures and other investments. Therefore the provisions of clause 4xiv of the Companies Auditor’s Report Order 2003 are not applicable to the company. s The company has not given any guarantees for loans taken by others from banks or financial institutions. Therefore the provisions of clause 4xv of the Companies Auditor’s Report Order 2003 are not applicable to the company. t The company has not raised any term loans during the year. Therefore the provisions of clause 4xvi of the Companies Auditor’s Report Order 2003 are not applicable to the company. u 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. v According to the information and explanations given to us the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. Therefore the provisions of clause 4xviii of the Companies Auditor’s Report Order 2003 are not applicable to the company. w According to the information and explanations given to us the company has not issued any debentures during the year. Therefore the provisions of clause 4xix of the Companies Auditor’s Report Order 2003 are not applicable to the company. x During the year the company has not raised any money by public issue. Therefore the provisions of clause 4xx of the Companies Auditor’s Report Order 2003 are not applicable to the company. y According to the information and explanations given to us no fraud on or by the company has been noticed or reported during the course of our audit. For Vishnu Ram Co. Chartered Accountants S. Vishnumurthy Bangalore Proprietor May 23 2011 Membership No. 22715 Firm Registration No. 004742S

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73 Balance Sheet as at March 31 2011 Schedule As at 31-03-2011 Rupees As at 31-03-2010 Rupees I. SOURCES OF FUNDS 1 Shareholders’ funds a Share capital 1 500000 500000 b Reserves and surplus - - 2 Loan funds a Secured loans - - b Unsecured loans - - 500000 500000 II. APPLICATION OF FUNDS 1 Fixed Assets - - 2 Investments - - 3 Current assets loans and advances a Inventories - - b Sundry debtors - - c Cash and bank balances 2 343178 343406 d Loans and advances - - 343178 343406 Less: Current liabilities and provisions: a Current liabilities 3 86562 47957 b Provisions - - 86562 47957 Net current assets 256616 295449 4 a Miscellaneous expenditure to the extent not written off or adjusted - - b Profit loss account 243384 204551 500000 500000 Significant Accounting Policies and Notes on Accounts 4 Schedules referred to above and the notes thereon form an integral part of the Balance Sheet. For and on behalf of the Board of Directors of Per our report of even date Vitae India Spirits Limited For Vishnu Ram Co. Chartered Accountants Bangalore A. Raghunathan Bharath Raghavan S. Vishnumurthy May 23 2011 Director Director Proprietor Membership No. 22715 Firm Registration No. 004742S

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74 Schedule Year ended 31-03-2011 Rupees Year ended 31-03-2010 Rupees Income - - Expenditure: Bank charges 228 228 Filing fees - 7226 Printing Stationery - 800 Professional charges 38605 41363 Miscellaneous expenses - 2000 38833 51617 Loss for the year before tax provision 38833 51617 Less: Income tax provision - - Loss for the year after tax provision 38833 51617 Loss of the previous year brought forward 204551 152934 Balance carried forward to the Balance Sheet 243384 204551 Earnings per share Basic/Diluted in Rs. 0.78 1.03 Significant Accounting Policies and Notes on Accounts 4 Schedules referred to above and notes thereon form an integral part of the Profit Loss Account. Profit and Loss Account for the year ended March 31 2011 For and on behalf of the Board of Directors of Per our report of even date Vitae India Spirits Limited For Vishnu Ram Co. Chartered Accountants Bangalore A. Raghunathan Bharath Raghavan S. Vishnumurthy May 23 2011 Director Director Proprietor Membership No. 22715 Firm Registration No. 004742S

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75 As at 31-03-2011 Rupees As at 31-03-2010 Rupees Schedule 1 Share Capital Authorised 50000 Equity Shares of Rs.10 Each 500000 500000 Issued subscribed and paid up 50000 Equity Shares of Rs.10 Each 500000 500000 All the shares are held by the holding company KingfisherAirlines Ltd. and its nominees 500000 500000 Schedule 2 Cash and bank balances Cash in hand 600 600 Balance in current account with Syndicate Bank 342578 342806 343178 343406 Schedule 3 Current Liabilities Vishnu Ram Co. 74495 35890 G Krishna 6067 6067 Kingfisher Airlines Limited 6000 6000 86562 47957 Schedules to the Balance Sheet

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76 Schedules forming part of the Accounts Schedule 4 Notes forming part of the accounts A. Basis for preparation 1. Accounting Convention: The financial Statements are prepared under the historical cost convention having due regard to the fundamental accounting assumptions of going concern consistency accrual and in compliance with the mandatory accounting standards as specified in the Companies Accounting Standards Rules 2006. 2. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managements best knowledge of current events and actions actual results could differ from these estimates. B. Significant Accounting Policies 1. Tax expense: Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 2. Revenue recognition: All revenues are generally recognized on accrual basis except where there is an uncertainty of ultimate realization. 3. Provision and contingencies: 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 its present value and are determined based on management 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 management estimates. 4. Earning per Share: The basic earning / loss per share are computed by dividing the net profit / loss attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the period. 5. Related party transaction: Transactions between the related parties are disclosed as per Accounting Standard 18 - Related Party Disclosure specified by the Companies Accounting Standards Rules 2006. Accordingly disclosures regarding names of the transacting related party description of the relationship between the parties nature of transactions and the amount outstanding as at end of the accounting year are made. C. Notes to accounts 1. Retirement benefits: Since there are no employees on the rolls of the company no provision for gratuity or leave salary is made in the financial statements. 2. Figures in the Balance Sheet Profit and Loss account and schedules have been rounded off to the nearest rupee. 3. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. Nil.

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77 4. Related Party Disclosures: i List of related parties: Sl. No. Name of the related party Nature of relationship 1. United Breweries Holdings Limited Ultimate Holding Company 2. Kingfisher Airlines Limited Holding Company 3. Kingfisher Finvest India Limited Fellow Subsidiary 4. Kingfisher Training Aviation Services Ltd. Fellow Subsidiary 5. Bangalore Beverages Limited Fellow Subsidiary 6. UB Electronic Instruments Limited Fellow Subsidiary 7. UB Infrastructure Projects Limited Fellow Subsidiary 8. UB International Trading Limited Fellow Subsidiary 9. City Properties Maintenance Company Bangalore Limited Fellow Subsidiary 10. Kingfisher Aviation Training Limited Fellow Subsidiary 11. Rigby International Corp. Fellow Subsidiary 12. United Breweries of America Inc. Delware Fellow Subsidiary 13. Inversiones Mirabel S A Fellow Subsidiary 14. Mendocino Brewing Company Inc. USA Fellow Subsidiary 15. Rubic Technologies Inc. Fellow Subsidiary 16. Releta Breweing Company LLC Fellow Subsidiary 17. UBSN Limited Fellow Subsidiary 18. United Breweries International U.K. Limited Fellow Subsidiary 19. UB Overseas Limited Fellow Subsidiary 20. UBHL BVI Fellow Subsidiary 21. UB Sports Limited Fellow Subsidiary ii Related Party Transactions: Sl. No. Nature of Transactions Holding Company 1 Kingfisher Airlines Limited 2010 – 11 2009-10 Share capital Rs. 500000 Rs. 500000 Advance received towards expenses - Rs. 6000 5. The company has adopted Accounting Standard - 20 on “Earning Per Share” specified in the Companies Accounting Standards Rules 2006 for calculation of EPS and the disclosures in this regard are as given below: Particulars Year ended 31.03.2011 Year ended 31.03.2010 Rupees Rupees Net loss after tax 38833 51617 Weighted average number of equity shares of Rs. 10/- each outstanding during the year No. of shares 50000 50000 Basic / diluted earnings per share Rs not annualised 0.78 1.03 6. Segment information is not furnished since there is no reportable segment. 7. Information under paragraph of 3 4C and 4D of part II of Schedule VI of the Companies Act 1956 are not furnished as they are not applicable. Schedules forming part of the Accounts Contd. For and on behalf of the Board of Directors of Per our report of even date Vitae India Spirits Limited For Vishnu Ram Co. Chartered Accountants Bangalore A. Raghunathan Bharath Raghavan S. Vishnumurthy May 23 2011 Director Director Proprietor Membership No. 22715 Firm Registration No. 004742S

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78 Year ended 31-03-2011 Rupees Year ended 31-03-2010 Rupees I. Cash Flow from operating activities Profit / Loss before tax 38833 51617 Adjustment for : Increase in current liabilites 38605 28500 Net cash used in operating activities 228 23117 II. Cash flows from investing activities - - III. Cash flow from financing activities - - Net increase in cash cash equivalents 228 23117 Cash and cash equivalents at the beginning of the year 343406 366523 Cash and cash equivalents at the end of the period 343178 343406 Cash and cash equivalents comprises of: Cash on hand 600 600 Balance at Bank 342578 342806 343178 343406 Note : The cash flow is prepared under the indirect method as mentioned under AS - 3 Cash Flow Statements. Cash Flow Statement for the year ended March 31 2011 For and on behalf of the Board of Directors of Per our report of even date Vitae India Spirits Limited For Vishnu Ram Co. Chartered Accountants Bangalore A. Raghunathan Bharath Raghavan S. Vishnumurthy May 23 2011 Director Director Proprietor Membership No. 22715 Firm Registration No. 004742S

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79 Balance Sheet Abstract BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I Registration Details Registration No. 08/045717 State Code 08 Balance Sheet Date March 31 2011 II Capital raised during the year Amount in Rs. Thousands Public Issue NIL Rights Issue NIL Bonus Issue NIL Private Placement 500.00 III Position of Mobilisation and Deployment of Funds Amount in Rs. Thousands Total Liabilities 500.00 Total Assets 500.00 Sources of Funds: Paid up Capital 500.00 Reserves Surplus NIL Share application money NIL Unsecured Loans NIL Secured Loans NIL Deferred tax NIL Application of Funds: Net Fixed Assets NIL Investments NIL Net Current Assets 256.62 Misc. Expenditure NIL Accumulated loss 243.38 IV Performance of Company Amount in Rs. Thousands Total income NIL Total Expenditure 38.83 Profit Loss before tax 38.83 Profit Loss after tax 38.83 Earning per Share in Rs. 0.78 Dividend rate NIL V Generic Names of Three Principal Products/Services of Company as per monetary terms Item Code No. ITC Code Not applicable Product description Not applicable For and on behalf of the Board of Directors of Vitae India Spirits Limited Bangalore A. Raghunathan Bharath Raghavan May 23 2011 Director Director

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AFFIX RS. 1/- REVENUE STAMP Kingfisher Airlines Limited Regd. Office: UB Tower Level 12 UB City 24 Vittal Mallya Road Bangalore - 560 001 ATTENDANCE SLIP I hereby record my presence at the SIXTEENTH ANNUAL GENERAL MEETING of the Company being held on Wednesday September 28 2011 at 11.30 a.m. at Good Shepherd Auditorium Opp. St. Josephs Pre-university College Residency Road Bangalore 560 025. SIGNATURE OF THE ATTENDING MEMBER/PROXY Folio No. : DP Client ID No. : No. of Shares : NOTE: 1. The Meeting is for Members of the Company only. Members are requested not to bring non-members or children. 2. The Company will accept only the Attendance slip of a person personally attending the Meeting as a Member or a valid Proxy duly registered in time with the Company. The Company will not accept Attendance Slip from any other person even if signed by a Member. 3. Member/Proxy holder attending the Meeting should bring his/her copy of the Annual Report for reference at the Meeting. 4. To facilitate Members registration of attendance will commence at 10.45 a.m. on September 28 2011. Kingfisher Airlines Limited Regd. Office: UB Tower Level 12 UB City 24 Vittal Mallya Road Bangalore - 560 001 PROXY FORM I/We________________________________________________of_______________________________________________being a Member / Members of KINGFISHER AIRLINES LIMITED do hereby appoint _______________________________________ of ____________________________ _______________________or failing him/her _______________________________________ of_____________________________________ as my /our proxy to vote for me/ us and on my/our behalf at the Sixteenth Annual General Meeting of the Company to be held on Wednesday September 28 2011 at 11.30 a.m. and at any adjournment or adjournments thereof. Signed this ____________________day of September 2011. Signature across the stamp _________________________________________________ Name ______________________________________________________________________ Registered Folio No. _________________________________________________________ DP Client ID No. ___________________________________________________________ NOTE : The Proxy Form duly completed must reach the Registered Office of the Company not later than 48 hours before the time for holding the Meeting. A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote instead of himself and the Proxy need not be a Member. Members are advised that no gifts will be distributed at the Annual General Meeting

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1 Kingfisher Airlines Limited Registered Office: UB Tower Level 12 UB City 24 Vittal Mallya Road Bangalore - 560 001 NOTICE NOTICE IS HEREBY GIVEN OF THE SIXTEENTH ANNUAL GENERAL MEETING of the Company to be held at Good Shepherd Auditorium Opposite St. Joseph’s Pre-University College Residency Road Bangalore – 560 025 on Wednesday September 28 2011 at 11.30 a.m. for the following purposes: 1. To receive and consider the accounts for the year ended March 31 2011 and the reports of the Auditors and Directors thereon 2. To elect a Director in the place of Mr. Ghyanendra Nath Bajpai who retires by rotation and being eligible offers himself for re-appointment 3. To elect a Director in the place of Mr. Subhash R. Gupte who retires by rotation and being eligible offers himself for re-appointment 4. To appoint Auditors and fix their remuneration. The retiring Auditors M/s. B. K. Ramadhyani Co. are eligible for re-appointment 5. To consider and if thought fit to pass with or without modification the following Resolution as a Special Resolution: “RESOLVED THAT in accordance with 1. the provisions of Section 81 and all other applicable provisions if any of the Companies Act 1956 as amended the “Companies Act” including any amendments or re-enactment thereof for the time being in force 2. the provisions of the Securities and Exchange Board of India Employees Stock Option Scheme and Employees Stock Purchase Scheme Guidelines 1999 “the SEBI ESOP Guidelines” including any amendments of the Guidelines for the time being in force 3. the provisions of the Memorandum and Articles of Association of the Company 4. the provisions of the listing agreement entered into by the Company with the Stock Exchanges where the shares of the Company are listed 5. the provisions of Foreign Exchange Management Act 1999 as amended and guidelines rules and regulations framed thereunder and subject to 1. applicable statutes guidelines regulations laws and subject to such approvals consents permissions or sanctions as may be applicable of the Government of India the Securities and Exchange Board of India the Reserve Bank of

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2 NOTICE Contd. India the Foreign Investment Promotion Board and any other appropriate authorities institutions or bodies the “Approvals” and 2. such conditions as may be prescribed by any of the concerned authorities while granting any such Approvals which may be agreed to in its sole discretion by the board of directors of the Company hereinafter called the “Board” which term shall be deemed to include the Remuneration Compensation Committee constituted by the Board to exercise its powers including the powers conferred by this resolution the consent authority and approval of the Company be and is hereby accorded to the Board to introduce and implement an Employees Stock Option Plan 2011 hereinafter referred to as “ESOP 2011” the salient features of which are detailed in the Explanatory Statement to this Notice to create offer issue and allot at any time in one or more tranches to or for the benefit of such persons who are in permanent employment of the Company whether working in India or overseas including Directors of the Company whether whole-time or otherwise hereinafter referred to as “Employee” or “Employees” except employees who are Promoters or belong to the Promoter Group of the Company under ESOP 2011 such number of equity shares and/or equity linked instruments including options and/or any other instruments or securities which could result in issue / allotment of equity shares hereinafter collectively referred to as “Securities” of the face value of Rs.10/- each of the Company not exceeding 25000000 equity shares of Rs. 10/- each and at such price and on such terms and conditions as may be determined by the Board in accordance with the terms of ESOP 2011. RESOLVED FURTHER THAT the Securities may be allotted in accordance with ESOP 2011 directly to such Employees or through any appropriate mechanism including through an existing trust or a trust or any other entity which may be setup in any permissible manner and that ESOP 2011 may also contain provisions for providing any financial assistance to the Employees / the trust / entity to acquire purchase or subscribe to the Securities. RESOLVED FURTHER THAT the number of Securities specified above to be issued / allotted pursuant to this resolution and the price of acquisition payable by the Securities grantees shall be proportionately adjusted in the event of corporate actions such as stock splits / consolidations rights issues bonus issues merger amalgamation demerger sale of divisions and all such other actions which may call for proportionate adjustment in the number of Securities without affecting any other rights or obligations of the Securities grantees. RESOLVED FURTHER THAT the new equity shares to be issued and allotted by the Company upon exercise of Securities from time to time shall rank pari passu in all respects with the then existing equity shares of the Company including dividend to be declared if any for the concerned financial year. RESOLVED FURTHER THAT the Board be and is hereby authorized to take all actions and necessary steps for listing of the Equity Shares to be allotted under ESOP 2011 on the Stock Exchanges where the Equity Shares of the Company are listed as per the provisions of the Listing Agreements with the Stock Exchanges concerned the SEBI ESOP Guidelines and other applicable laws and regulations. RESOLVED FURTHER THAT the existing Employees Stock Option Plan 2006 ESOP 2006 be and is hereby discontinued effective September 28 2011 and no further options shall be granted in terms of ESOP 2006 provided that those options already granted to Employees under ESOP 2006 which have not vested or are validly vested but not exercised under the terms and conditions of ESOP 2006 shall survive and be governed in accordance with the terms and conditions of ESOP 2006.

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3 NOTICE Contd. RESOLVED FURTHER THAT for the purpose of giving effect to this resolution the Board be and is hereby authorised to do all such acts deeds matters and things as it may in its absolute discretion deem necessary to give effect to this resolution and with power on behalf of the Company to settle any question difficulties or doubts that may arise in this regard without requiring any further consent or approval of the Members of the Company.” 6. To consider and if thought fit to pass with or without modification the following Resolution as a Special Resolution: “RESOLVED THAT pursuant to Section 31 and other applicable provisions if any of the Companies Act 1956 the existing Article 16 1 b of Articles of Association of the Company be and is hereby substituted with the following Article: “Such offer shall be open for subscription for a minimum period of fifteen days and for a maximum period of thirty days.” 7. To consider and if thought fit to pass with or without modification the following Resolution as an Ordinary Resolution: “RESOLVED THAT subject to: i the relevant provisions of Section 81 and all other applicable provisions if any of the Companies Act 1956 including any statutory modifications or re-enactment thereof for the time being in force the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations 2009 as amended hereinafter referred to as the “SEBI Regulations” ii all other applicable laws rules regulations and guidelines of the Securities and Exchange Board of India hereinafter referred to as the “SEBI” Foreign Exchange Management Act 1999 along with the rules and regulations framed thereunder as amended from time to time and any other applicable laws rules regulations guidelines notifications and circulars in force and applicable provisions of the Memorandum and Articles of Association of the Company and the Listing Agreement entered into by the Company with the stock exchanges where the equity shares of the Company hereinafter referred to as the “Equity Shares” are currently listed hereinafter referred to as the “Stock Exchanges” iii requisite approvals consents permissions and/or sanctions of inter alia the SEBI the Stock Exchanges the Reserve Bank of India “RBI” the Foreign Investment Promotion Board as may be required and all other authorities entities and parties as may be required and subject to such conditions as may be prescribed by any of them while granting any such approval consent permission and/or sanction the consent authority and approval of the Company be and is hereby accorded to the board of directors of the Company hereinafter referred to as the “Board” which term shall be deemed to include any committee or committees constituted/ to be constituted by the Board to exercise its powers including the powers conferred by this resolution to create issue offer allot and list on the Stock Exchanges Equity Shares of face value of Rs. 10/- each fully paid up on rights basis in such ratio and in one or more tranches for an aggregate amount not exceeding Rs. 20000000000/- Rupees Twenty Thousand Million only inclusive of such premium as decided by the Board “Rights Issue” to the equity shareholders of the Company whose names appear on the Register of Members or on the list of depositories as beneficial owners as at the end of the business hours on such date as may hereafter be fixed for the purpose by the Board hereinafter referred to as the “Record Date” or to such person or persons who may or may not be shareholders of the Company in whose favour in full or in part the rights may be renounced by respective shareholders on such terms and conditions as the Board may in its absolute discretion think fit in consultation with the Lead Managers to the Rights Issue and /or such other persons as it may think fit and subject to the terms and conditions as may be mentioned in the Letter of Offer Abridged Letter of Offer and Composite Application Form collectively referred to as “Issue Documents”. RESOLVED FURTHER THAT the details of all monies utilized out of the Rights Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such monies have been utilised and the form in which such unutilized monies have been invested.

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4 RESOLVED FURTHER THAT the said new equity shares proposed to be issued pursuant to the proposed Rights Issue shall rank pari passu in all respects with the then existing fully paid-up Equity Shares in the capital of the Company including dividend to be declared if any for the concerned financial year. RESOLVED FURTHER THAT notwithstanding the above the Board shall be entitled to increase or decrease the size of the Rights Issue the kind of security to be issued and vary modify and alter the ratio of Equity Shares to be issued pursuant to the Rights Issue to the existing Equity Shares and other terms and conditions as it may deem fit and expedient in the interest of the Company including to extend the time for acceptance of the offer made pursuant to the Rights Issue from time to time either generally or in respect of any particular applicants or dispose of the same in its absolute discretion to such persons whether or not members of the Company and in such manner as the Board may deem fit. RESOLVED FURTHER THAT the Board be and is hereby authorized to take all decisions relating to the Rights Issue including but not limited to timing for the Rights Issue final pricing fixing the Record Date the size of the Rights Issue appointment and ratification of appointment of various intermediaries and other advisors for the Rights Issue such as inter alia lead managers and legal advisers to the Rights Issue bankers to the Rights Issue monitoring agency registrar and printers decide on the fees and other terms and conditions of appointment of such intermediaries and advisors to prepare and finalize along with the legal advisor and the Lead Managers the draft letter of offer and the Issue Documents do all requisite filings with SEBI the Stock Exchanges and any other concerned authority to execute all documents and contracts for the Rights Issue including the Issue Agreement with the Lead Managers memorandum of understanding with the registrar to the Rights Issue and underwriting agreement if any to determine and finalize the Rights Issue price approve and confirm the allotment of the Equity Shares pursuant to the Rights Issue and do all such acts deeds matters and things as it may in its absolute discretion deem fit proper necessary or expedient for and incidental and ancillary to the Rights Issue and in the best interest of the Company without requiring any further approval of the Equity Shareholders. RESOLVED FURTHER THAT the Board or any official of the Company authorized in writing by the Board shall have all powers and authority to prepare file finalize modify reapply redo make necessary changes and do all such acts deeds matters and things that are necessary in respect of the draft letter of offer and the Issue Documents all approvals thereunder and as required under applicable law and to approach SEBI the Stock Exchanges and/or any other statutory authority to submit/resubmit any such documentation in this regard. RESOLVED FURTHER THAT the Board or any official of the Company authorized in writing by the Board be and are hereby severally authorized to sign and execute all documents on behalf of the Company and to do all such further acts deeds matters or things as may be required to give effect to above resolutions.” 8. To consider and if thought fit to pass with or without modification the following Resolution as a Special Resolution: “RESOLVED THAT subject to: i the provisions of Section 811A and other applicable provisions if any of the Companies Act 1956 including any amendment thereto or statutory modifications or re-enactments thereof for the time being in force ii the regulations/guidelines if any issued/prescribed by the Government of India the Securities and Exchange Board of India “SEBI” including the provisions of Chapter VII and other applicable provisions of the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations 2009 as amended the “SEBI Regulations” and the Reserve Bank of India and in accordance with the relevant provisions of the Memorandum and Articles of Association of the Company the listing agreements entered into by the Company with the respective stock exchanges where the equity shares of the Company are listed and all other concerned and relevant authorities from time to time to the extent applicable and subject to such approvals of relevant NOTICE Contd.

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5 statutory/governmental authorities and subject to such other approvals as may be required and applicable and further subject to such terms and conditions or modifications thereto as may be prescribed by any of the above while granting such approvals the consent authority and approval of the Company be and is hereby accorded to the board of directors of the Company hereinafter referred to as the “Board” which term shall be deemed to include any committee or committees constituted/to be constituted by the Board to exercise its powers including the powers conferred by this resolution to amend the terms and conditions of the following 70931985 8 Optionally Convertible Debentures of face value of Rs. 100/- Rupees One Hundred only each “OCDs”: Allottee Number of OCDs held Distinctive Nos. From To Star Investments Private Limited 19977570 1 19977570 Margosa Consultancy Private Limited 24970264 19977571 44947834 Redect Consultancy Private Limited 25984151 44947835 70931985 Total 70931985 such that in the event the Company undertakes a rights issue which is to occur prior to 18 months from the date of allotment of the OCDs i.e. prior to 2 nd July 2012 the OCDs shall become redeemable prior to the expiry of 18 months from the date of allotment of the OCDs in part or in full and in one or more tranches at the option of the Board and in such quantity as may be mutually decided by the Board along with the holders of the OCDs provided that the amounts due to the holders of the OCDs upon such early redemption along with interest accrued till the date of redemption shall be appropriated towards subscription to equity shares in the rights issue of the Company by the OCD holders and/ or persons acting in concert with the OCD holders and such amounts shall not be repaid to the holders of the OCDs prior to the expiry of 18 months from the date of allotment of the OCDs subject to not triggering an open offer under the provisions of the SEBI Substantial Acquisition of Shares and Takeovers Regulations 1997 including any statutory modifications or re-enactment thereof for the time being in force. RESOLVED FURTHER THAT in the event a rights issue has not opened for subscription or after opening for subscription has not successfully closed during the period of 18 months from the date of allotment of the OCDs as set out hereinabove the OCDs shall be governed by their original terms of issue. RESOLVED FURTHER THAT the Board be and is hereby authorized for the purpose of giving effect to the redemption of the OCDs to do all such acts deeds matters and things as it may at its absolute discretion deem necessary or appropriate for such purpose without being required to seek any further clarification consent or approval of the Members and that the Members shall be deemed to have given their approval thereto expressly by the authority of this resolution. RESOLVED FURTHER THAT the Board be and is hereby authorized to delegate all or any of its powers to any official authorized in writing by the Board as it may consider appropriate to give effect to the aforesaid resolutions including to execute any documents on behalf of the Company before any governmental authorityies/Depositories/Stock Exchanges or any other regulatory body and to appoint any professional advisers/consultants/legal advisors in that regard.” Registered Office: By Order of the Board UB Tower Level 12 UB City 24 Vittal Mallya Road Bharath Raghavan Bangalore - 560 001 Chief Legal Officer Company Secretary August 25 2011 NOTICE Contd.

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6 Notes : 1. Please refer to the explanatory statement given hereunder. 2. A SHAREHOLDER ENTITLED TO ATTEND THE MEETING AND VOTE THEREAT MAY APPOINT A PROXY TO ATTEND AND VOTE ON HIS BEHALF ONLY ON A POLL. SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. The proxy form duly completed must reach the Registered Office of the Company not later than forty-eight hours before the time appointed for the holding of the Meeting. 3. The Register of Members and Share Transfer Books will remain closed from Friday September 23 2011 to Wednesday September 28 2011 both days inclusive. 4. Members are required to intimate immediately to the Company’s Registrars and Transfer Agents M/s Karvy Computershare Private Limited 17-24 Vittal Rao Nagar Madhapur Hyderabad – 500 081 Telephone No: 040-44655000 Fax. No: 040- 23420814 any change in their Registered addresses along with PIN Code Number. 5. Members holding shares in the same name or same order of names under different ledger folios are requested to apply for consolidation of such folios to the Company’s Registrars and Transfer Agents at the address stated in Note No. 4 above. 6. Members may please address all their documents/correspondence relating to the equity shares of the Company directly to the Company’s Registrars and Transfer Agents at the address stated in Note No.4 above. 7. Nomination facility for shares is available for Members. The prescribed format in this regard can be obtained from Company’s Registrars and Transfer Agents at the address stated in Note No. 4 above. 8. The Company’s equity shares are under compulsory dematerialisation. Accordingly trading of these shares through the Stock Exchanges would be facilitated if the share certificates are dematerialised. Members holding shares in physical form are advised to consider opening of a Demat Account with an authorised Depository Participant and arrange for dematerializing their shareholdings in the Company. 9. In terms of Section 205A and 205C of the Companies Act 1956 the amount of dividend declared for the financial year 2003-04 and thereafter remaining unpaid for a period of seven years from the due date of payment shall hereafter be transferred to the Investor Education and Protection Fund. 10. Members attending the Annual General Meeting are requested to bring with them the following: a. Members holding shares in dematerialised form their DP Client ID Numbers. b. Members holding shares in physical form their Folio Numbers. c. Copy of the Annual Report and Notice as no copies thereof would be distributed at the Meeting. d. The Attendance Slip duly completed and signed in terms of specimen signature lodged with the Company. The Company would accept Attendance Slip from a Member actually attending the Meeting or from the person attending as a proxy under a valid proxy form registered with the Company not less than 48 hours prior to the Meeting. Attendance Slips of Members/valid proxies not personally present at the Meeting or relating to Proxies which are invalid will not be accepted from any other Member/person. The Meeting is for Members or their proxies only. Please avoid being accompanied by non-Members/children. NOTICE Contd.

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7 11. As Members are aware the Ministry of Corporate Affairs has undertaken a “Green Initiative in Corporate Governance” by allowing paperless compliances by companies through electronic mode pursuant to which companies can now send various notices/ documents including annual reports through electronic mode to the registered e-mail addresses of its Members. This welcome move will reduce paper consumption to a great extent and allow public at large to contribute towards a greener environment. It will also save costs on paper and postage ensure prompt receipt of communication and avoid loss in postal transit. Your Company has taken a step forward to participate in this initiative by sending letter dated July 6 2011 to all Members intimating them about the said initiative. Members who wish to receive annual reports and other communication from the Company by electronic delivery and have not intimated their email id to the Company may please do so by sending a mail to investor.relationsflykingfisher.com duly indicating their registered folio number / D. P. Client ID number. 12. The Company has designated an exclusive email Id viz. investor.relationsflykingfisher.com to enable the investors to post their grievances and monitor its redressal. 13. Documents referred to in the Notice and Explanatory Statement are open for inspection at the Registered Office of the Company on all working days Monday to Friday between 10.00 a.m and 4.00 p.m upto the date of the Meeting and will also be available for inspection at the Meeting. EXPLANATORY STATEMENT PURSUANT TO SECTION 1732 OF THE COMPANIES ACT 1956 Item No. 5 In view of the expanding operations of the Company and the unique nature of the aviation industry the board of directors of the Company hereinafter referred to as “the Board” which term shall include the ‘Remuneration Compensation Committee’ of the Board has approved the implementation of an Employees Stock Option Plan 2011 ESOP 2011 for retaining and rewarding key management personnel subject to approval of the Members. The salient features of ESOP 2011 as required to be provided under clause 6.2 of the SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines 1999 are as follows: a The total number of options to be granted - The maximum number of options that can be granted under ESOP 2011 shall be such number that are exercisable into and result in not more than 25000000 equity shares of a face value of Rs. 10/- each of the Company subject to such other adjusted figure for any bonus stock splits or consolidations or other re-organisation of the capital structure of the Company as may be applicable from time to time. Each such option shall confer a right upon the Employee to apply for one Equity Share of the Company in accordance with the terms and conditions of ESOP 2011. If an option expires or becomes un-exercisable without having been exercised in full the unpurchased equity shares which were subject thereto shall become available for future grants or sale. b Identification of classes of Employees entitled to participate in the ESOP - Such permanent Employees and Directors as may be decided by the Board in its sole discretion from time to time but excluding the Employees who are Promoters or belong to the Promoter Group of the Company shall be entitled to be granted options under ESOP 2011. c Requirements of vesting and period of vesting - The options granted shall vest after one year but before five years from the date of grant in one or more tranches subject to the terms and conditions of vesting as may be decided by the Board in its sole discretion from time to time. The vesting of options may be subject to various parameters comprise tenure and/or performance of the Company and/or performance of the individual Employee and/or performance of his functional area and / or such other parameters or any combination thereof as may be decided by the Board in its sole discretion. The specific vesting schedule and conditions / requirements subject to which vesting would take place would be outlined in the document given to the option grantee at the time of grant of options. NOTICE Contd.

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8 d Maximum period within which the options shall be vested - The maximum period within which options shall vest shall be five years from the date of grant unless a shorter period is provided for by the Board in its sole discretion. e Exercise price or pricing formula - The Exercise Price at which the Employee shall be entitled to acquire the equity shares pursuant to the options granted and vested in him/her under ESOP 2011 shall subject to not being less than the face value of the shares be decided by the Board at its sole discretion at the time of granting options. f Exercise period and process of exercise - The exercise period would commence from the date of vesting and will expire on completion of five years from the date of vesting of options or such earlier period as may be determined by the Board in its sole discretion. The options will be exercisable by the Employees by a written application to the Company to exercise the options in such manner and on execution of such documents as may be prescribed by the Board from time to time in its sole discretion. The options will lapse qua the Employee if not exercised by the Employee within the specified exercise period unless otherwise decided by the Board at its sole discretion. The options may also lapse qua the Employee under certain circumstances even before the expiry of the specified exercise period as may be decided by the Board at its sole discretion. All options that have lapsed or remain unexercised shall be available for future grants under ESOP 2011. g The appraisal process for determining the eligibility of Employees to the ESOP - The Board shall determine the eligibility criteria for the Employees and Directors of the Company in its sole discretion. The eligibility criteria may inter alia include parameters based on individual performance grade of and / or length of service of Employees or such other parameters or a combination thereof as may be deemed appropriate by the Board at its sole discretion. h Maximum number of options to be issued per Employee and in aggregate - Not more than 25000000 options / Equity Shares are proposed to be offered and allotted in aggregate under ESOP 2011. Currently it is not proposed to offer and allot options/ Equity Shares equivalent to or more than 1 of the issued and paid-up equity share capital of the Company existing as on the date of grant of options to any single Employee in any one year under ESOP 2011. However the Board may in its sole discretion decide to grant options / Equity Shares to any single Employee equal to or in excess of this limit in any one year in which case the same shall be subject to the Company complying with applicable laws including SEBI Regulations. i Corporate Action - The number of options granted and /or the exercise price will be proportionately adjusted in the event of corporate actions such as stock splits / consolidation rights issues bonus issues merger amalgamation demerger sale of divisions and all such other actions which may call for proportionate adjustment in the number of options and / or the exercise price. j Disclosure of Accounting Policies - The Company shall conform to the accounting policies prescribed by the Securities and Exchange Board of India SEBI and any other authorities in this regard. k The method which the Company shall use to value its options whether fair value or intrinsic value - The Company shall follow the intrinsic value method for computing the compensation cost if any for the options granted. The difference between the employee compensation cost so calculated and the Employee compensation cost that would have been recognized if the Company had used the fair value method and its impact on the profits and earnings per share would be disclosed in the Directors Report. The fair value would be determined using the Black – Scholes model. NOTICE Contd.

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9 l Other terms – The Board shall have the absolute authority to vary modify or alter the terms of ESOP 2011 in its sole discretion provided that such variation modification or alteration is not detrimental to the interest of the Employees. The Securities may be allotted in accordance with ESOP 2011 directly to such Employees or through any appropriate mechanism including through an existing trust or a trust or any entity which may be setup in any permissible manner and that ESOP 2011 may also contain provisions for providing any financial assistance to the Employees / the trust / entity to acquire purchase or subscribe to the Securities. Clause 6 of the SEBI ESOP Guidelines requires that any ESOP scheme offering stock options to employees of a company must be approved by the members of such company by way of a special resolution. Further as ESOP 2011 would entail further shares to be offered to persons other than existing Members of the Company consent of the Members is sought pursuant to the provisions of Section 81 and all other applicable provisions if any of the Companies Act 1956. Discontinuation of Employees Stock Option Plan 2006 - The existing Employees Stock Option Plan 2006 ESOP 2006 shall be discontinued effective September 28 2011 and no further options shall be granted in terms of ESOP 2006 provided that those options already granted to Employees under ESOP 2006 which have not vested or are validly vested but not exercised under the terms and conditions of ESOP 2006 shall survive and be governed in accordance with the terms and conditions of ESOP 2006. Any Director who may be granted options / Equity Shares at the sole discretion of the Board will be deemed to be concerned or interested in this item of business to the extent of the options / Equity Shares that may be granted to them under ESOP 2011. Your Directors recommend the Special Resolution set out in Item No. 5 of the Notice for approval by the Members. Item No. 6 As per Article 16 1b of the existing Articles of Association of the Company Shareholders shall be given at least 30 days to accept an offer of shares made by the Company pursuant to a Rights issue. As per Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations 2009 “SEBI ICDR Regulations” the offer should be kept open for a minimum period of 15 days and maximum period of 30 days. It is accordingly proposed to substitute the current Article 16 1b to align it with the SEBI ICDR Regulations. Your Directors recommend the Special Resolution set out in Item No. 6 of the Notice for approval by the Members. None of the Directors is interested or concerned in the said Resolution. Item Nos. 7 8 The Company requires funds for the purposes of the business of the Company in order to inter alia meet its working capital requirements for future expansion plans and to achieve the objectives set forth below and has explored various options for fresh issue of equity shares including a GDR issue in order to raise funds. However despite its best efforts the Company has been unable to undertake such a fresh issue of equity shares due to adverse market conditions and other factors. As a result the board of directors of the Company “Board” wishes to raise funds by undertaking an issue of equity shares on a rights basis with the issue size not exceeding Rs. 20000000000/- “Rights Issue”. NOTICE Contd.

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10 At the present time there are 70931985 8 Optionally Convertible Debentures of face value of Rs. 100/- Rupees One Hundred only each of the Company “OCDs” held by Star Investments Private Limited Margosa Consultancy Private Limited and Redect Consultancy Private Limited collectively the “OCD holders” which were issued and allotted on January 3 2011. As per the present terms of issue and allotment of the OCDs the OCDs are convertible at the option of the OCD holders into equity shares at such time as may be decided by the Board of Directors within a period of 18 months from their date of issue i.e. before 2 nd July 2012 subsequent to which they would be redeemable. The OCD holders had indicated their intention to convert the OCDs into equity shares simultaneously with the raising of further capital by the Company by way of a GDR issue or issue of any other equity-based securities provided that the conversion would not trigger an open offer under the SEBI Substantial Acquisition of Shares and Takeovers Regulations 1997 including any statutory modifications or re-enactment thereof for the time being in force “SEBI Takeover Regulations”. As the promoters of the Company currently hold more than 55 of the shares/voting rights in the Company the OCD holders who are persons acting in concert with the promoters of the Company in connection with the issue and conversion of the OCDs would not be able to convert the OCDs without triggering the SEBI Takeover Regulations. As a result if the terms of the OCDs are not varied it is likely that the Company may be obliged to redeem the OCDs at the end of the 18 month period from issue of the OCDs in the event the conversion option is not exercised which would result in a substantial cash outflow from the Company. It is proposed that the terms of the OCDs be varied such that in the event the Board decides to undertake a Rights Issue which is to occur prior to 18 months from the date of allotment of the OCDs the OCDs shall become redeemable in part or in full and in one or more tranches at the option of the Board and in such quantity as may be mutually agreed by the Board and the holders of the OCDs. The amounts due to the holders of the OCDs upon such early redemption along with accrued interest until redemption is to be appropriated towards subscription to equity shares in the Rights Issue of the Company by the OCD holders and / or persons acting in concert with the OCD holders and such amounts shall not be repaid to the holders of the OCDs subject to not triggering an open offer under the provisions of the SEBI Takeover Regulations. The OCD holders have consented in writing to such variation in the terms of the OCDs. In the event the Board undertakes the Rights Issue in order for the Rights Issue to be successful under the SEBI ICDR Regulations 2009 and to reduce the likelihood of having to redeem the OCDs at the expiry of 18 months from their date of issue it is presently contemplated that a subject to the approval of the promoters/promoter group entities the promoters/ promoter group of the Company renounce their entitlement in the Rights Issue in favour of the OCD holders in part or in full b the terms of the OCDs are varied in the manner indicated above making them redeemable prior to the Rights Issue and c the OCDs are redeemed prior to the Rights Issue in part or in full and in one or more tranches at the option of the Board and in such quantity as may be mutually agreed by the Board and the OCD holders and the amounts which become due to the OCD holders upon such early redemption including accrued interest are utilized as share application money/ subscription money by the OCD holders or persons acting in concert with the OCD holders to subscribe to equity shares of the Company in the Rights Issue. Further the Board shall have the right to allot any unsubscribed portion of the Rights Issue to any third party including to the OCD holders to the extent of any part of the redemption proceeds that may remain after subscription to the entitlement of the promoters/promoter group in the Rights Issue renounced in favour of the OCD holders subject to not triggering an open offer under the provisions of the SEBI Takeover Regulations. It is contemplated that the extent of renunciation of rights entitlement and the utilization of OCD redemption proceeds as described hereinabove would be fully disclosed in the offering documents related to the Rights Issue. NOTICE Contd.

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11 The proposed variation in the terms of the OCDs which is subject to the undertaking of the Rights Issue as described hereinabove would i facilitate raising of fresh funds by the Company through a successful rights issue ii reduce the liabilities of the Company in connection with amounts which may be payable to the OCD holders upon redemption of the OCDs at the expiry of 18 months from their allotment and iii reduce the interest expenditure in the books of the Company since early redemption of the OCDs would reduce the interest burden of the Company by eliminating the obligation to pay the coupon on the OCDs for the remaining period. It may be noted that in the event a Rights Issue has not opened for subscription or after opening for subscription has not successfully closed during the period of 18 months from the date of allotment of the OCDs as set out hereinabove the OCDs shall be governed by their original terms of issue. Further it may be noted that the actions contemplated hereinabove including the undertaking of the Rights Issue by the Company would be subject to such consents from regulatory authorities and/or other entities/parties as may be applicable. While the present resolutions are not required to be passed by the Members they are being placed before the Members for consent in the interests of good corporate governance. Your Directors recommend the Ordinary Resolution and Special Resolution set out in Item Nos. 7 and 8 respectively of the Notice for approval by the Members. None of the Directors is concerned or interested in the said resolutions except i Dr. Vijay Mallya who may be deemed to be interested in the said resolutions in his capacity as a promoter shareholder of the Company to the extent of his shareholding as well as in his capacity as a Director/ Chairman of the Company as well as of United Breweries Holdings Limited the holding company and part of the Promoter Group of the Company and ii Mr. Piyush Mankad who may be deemed to be interested in the said resolutions in his capacity as a Director of the Company as well as of United Breweries Holdings Limited the holding company and part of the Promoter Group of the Company. Registered Office: By Order of the Board UB Tower Level 12 UB City 24 Vittal Mallya Road Bharath Raghavan Bangalore - 560 001 Chief Legal Officer Company Secretary August 25 2011 NOTICE Contd.

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Board of Directors Dr. Vijay Mallya Ravi Nedungadi Vijay Amritraj G.N. Bajpai Anil Kumar Ganguly S.R. Gupte Piyush Mankad Bharath Raghavan Chief Legal Officer Company Secretary Report of the Directors 2 Corporate Governance Report 10 Management Discussion Analysis Report 20 Auditors’ Report 29 Balance Sheet 34 Profit and Loss Account 35 Schedules 36 Cash Flow Statement 67 Accounts of the Subsidiary 70 CONTENTS The Team Hitesh Patel Executive Vice President A. Raghunathan Chief Financial Officer Rajesh Verma Executive Vice President Manoj Chacko Executive Vice President Sanjay Aggarwal Chief Executive Officer CONTENTS

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