AVIATION INDUSTRY IN INDIA

Overview of Airlines industry in India The Aviation industry in India encompasses a wide range of services related to air transport such as passenger and cargo airlines, unscheduled service operators --- private jets and helicopters, airport management, and support services like Maintenance, Repairs and Overhaul (MRO), ground handling, in-flight catering, and training The Aviation sector has reaped massive benefit from the entry of private carriers, especially from those of the low fare ones. The growth of the airlines sector has caused a sharp upturn in demand for allied services including MRO, ground handling, and catering services. The booming aviation industry, along with its tertiary services, has wreaked a major talent crunch, boosting opportunities for training service providers. The ever-expanding Indian economy and increased demand for trade has pushed the need for air cargo services to a new high. Increasing number of entrants in the sector has forced airports to expand their cargo handling capacities. Aviation has been recognized as one of the fastest growing sectors in India. With the modernization, technological development and fleet expansion, the Indian Aviation Sector has experienced drastic changes in the recent past. Now, a large number of people prefer to travel by air transport due to the lack of time and rising disposable income. Consequently, the domestic and international air traffic in the aviation sector has been registering a phenomenal growth over the past few years. In FY 2010, the domestic air traffic stood at approximately 46 million against 40 million in FY 2009, an increase of about 15 per cent. Similarly, the total domestic cargo grew by more than 15 per cent to reach at approximately 390000 tonnes in FY 2010. The report titled Indian Aviation Sector: An Analysis on Three of its major players provides a comprehensive and crisp analysis of the current status and future growth prospects of the Indian aviation sector. Further, the report profiles major airline service providers in the country including Air India, Jet Airways and Kingfisher to describe the industry competitive scenario. Besides this, the report also provides information on the various issues and challenges, which if not addressed might hamper the growth of the sector. Finally, the report concludes with providing the future outlook of the industry.

Growth of Indian Aviation industry The Indian Civil Aviation market grew at a CAGR of 18%, being valued round US$ 5.6 billion in 2008. Further statistics revealed that the air traffic in August 2009 was a double digit figure. The domestic airliners flew 3.67 million passengers in August 2009, as against 2.92 million in the corresponding period of 2007, up by 26%. The Centre for Asia Pacific Aviation (CAPA) has estimated that the domestic traffic will go up by 25% to 30% till 2010 along with a surge in the international traffic by 15%. There would be more than 100 million passengers by 2010. Then again by 2020, Indian airports will in all probability handle over 100 million passengers every year. The investment plans to the tune of US$ 9 billion has been made by the Aviation Ministry for modernizing the existing airports by 2010. In terms of domestic passengers' volume, US have always been the leader with followers in the league like China, Japan and India. The number of domestic flights went up by 69% from 2005 to 2008, with the domestic aviation sector growing at 9-10%.

Mergers & Acquisitions in Aviation Sector Mergers and acquisitions ("M&A") are strategic decisions taken for maximization of a company's growth by enhancing its production and marketing operations. They are being used in a wide array of fields in order to gain strength, expand the customer base, cut competition or enter into a new market or product segment. Aviation sector is one of the least researched sectors in India as it has limited number of players. However, as the sector is growing rapidly, it becomes essential to have knowledge about the sector and the activities which are taking place in the sector. The dynamic growth and potential in the Indian aviation sector can be gauged from the statement of the civil aviation minister of India, Mr. Praful Patel - Indias civil aviation industry will attract investments worth more than US$150 billion in the next 10 years. The aviation market and scenario in India has seen major developments in the last 5 years. Not merely has the market grown very rapidly, but the industry has seen, M&A, the entry of a number of new carriers with aggressive pricing policies and significant additions of capacity leading to cut-throat competition. This paper makes an attempt to give a brief overview of the meaning of M&A, and the regulations dealing with the same in India; it then tries to comprehensively deal with the

Aviation Industry in India and M&A in the aviation sector. Finally, it offers few important cases dealing with M&A in the said sector both at domestic and international front.

Brief Overview Merger A merger is a combination of two or more businesses into one business. Laws in India use the term 'amalgamation' for merger. Under section 2(1B) of the Income Tax Act, 1961 amalgamation is defined as mixing up or uniting together. It is a process where one company blends with another company (both being existing companies and carrying on business). Provided that following conditions are met with:

1. All properties are transferred to the amalgamated company. 2. All liabilities are transferred to the amalgamated company. 3. Shareholders holding at least 3/4th in the value of shares of the amalgamating company become shareholders of the amalgamated company.

TYPES OF MERGERS Horizontal Mergers A Horizontal Mergers occurs when one firm combines with the other in the same line of business. This kind of merger takes place between entities engaged in competing businesses which are at the same stage of the industrial process. Vertical mergers Vertical mergers refer to the combination of two entities at different stages of the industrial or production process. For example, the merger of a company engaged in the construction business with a company engaged in production of brick or steel would lead to vertical integration.

Conglomerate Mergers A conglomerate merger occurs when unrelated enterprises combine. The principal reason for a conglomerate merger is utilization of financial resources, enlargement of debt capacity, and increase in the value of outstanding shares by increased leverage and earnings per share, and by lowering the average cost of capital. Acquisition An acquisition or takeover is the purchase by one company of controlling interest in the share capital, or all or substantially all of the assets and/or liabilities, of another company. A takeover may be friendly or hostile.

Regulations governing M&A in India Before going into the issues pertaining to M&A of airlines, we will first have a look at the current policy framework for M&A in India. Regulations governing M&A in India may be divided in to the following categories: 1. National M&A transactions a) Companies Act, 1956. b) Companies Court Rules, 1959. c) Income Tax Act, 1961. d) Central Sale Tax Act, 1956. e) Indian Stamp Act, 1899 f) Competition Act, 2002 (It has been enacted but is not yet fully enforced) 2. M&A transactions involving listed companies a) The Securities and Exchange Board of India (SEBI) Regulations b) Listing Agreements 3. International M&A Transactions a) Foreign Exchange Management Act, 1999

Aviation Sector Aviation is, by its very nature, a critical part of the infrastructure of the country and has important ramifications for the development of tourism and trade, the opening up of inaccessible areas of the country and for providing stimulus to business activity and economic growth. The airline industry has to operate in a competitive world. Many airlines are unable to survive in their present set up and have to streamline their operations through cost cutting measures. Merging with another airline provides a possible method to improve airline operations and reduce costs by sharing the available resources and eliminating duplication of service.

Classification of Indian Aviation sector The Indian civil aviation can be broadly classified into the following categories:Scheduled Air Transport Service means an air transport service undertaken between the two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public. Non-Scheduled Operation means an air transport service other than scheduled air transport service and that may be on charter basis and/or non-scheduled basis. The operator is not permitted to publish time schedule and issue tickets to passengers. An air cargo service means air transportation of cargo and mail. Passengers are not permitted to be on these operations. It may be on scheduled or non-scheduled basis. These operations are to destinations within India. For operations outside India, the operator has to take specific permission of Directorate General of Civil Aviation demonstrating his capacity for conducting such operations.

REGULATORY AUTHORITIES IN AVIATION INDUSTRY Ministry of Civil Aviation The Ministry of Civil Aviation is the nodal Ministry responsible for policy formulation, development and regulation of the Civil Aviation sector in India. The Ministry also handles the planning and implementation of schemes for the growth and expansion of civil air transport, airport facilities, air traffic services and carriage of passengers and goods by air.

Directorate General of Civil Aviation (DGCA) DGCA is an attached office of Ministry of Civil Aviation. It is a principal regulatory body for Civil Aviation in India and primarily deals with safety issues. It is responsible for: regulation of air transport service to/from/within India, enforcement of civil air regulations, air safety and airworthiness standards, coordinating all regulatory functions with International Civil Aviation Organisation.

Airports Authority of India (AAI) AAI was constituted by an Act of Parliament and came into being on 1st April 1995 by merging erstwhile National Airports Authority and International Airports Authority of India. The merger brought into existence a single Organization entrusted with the responsibility of creating, upgrading, maintaining and managing civil aviation infrastructure both on the ground and air space in the country. AAI manages 125 airports, which include 11 International Airport, 08 Customs Airports, 81 Domestic Aairports and 27 Civil Enclaves at Defence airfields

Bureau of Civil Aviation Security (BCAS) BCAS is an independent department under the Ministry of Civil Aviation. Its main responsibility is to lay down standards and measures in respect of security of civil flights at International and domestic airports in India.

Federation of Indian Airlines (FIA) FIA is an apex industry body which has been formed by the scheduled carriers in India. FIA as the voice of India's airline industry works to identify and take up issues on behalf of the industry, with various regulatory authorities, government departments and other key stake-holders. The functioning of the FIA is guided by an Executive Council, comprising chiefs of each of the member airlines.

Legal framework The important laws relevant to civil aviation are: a) The Aircraft Act, 1934 which controls the manufacture, possession, use, operation, sale, import and export of air craft. Also relevant is the Aircraft Rules, 1937. b) The Carriage by Air Act, 1972. c) The Air Corporations (Transfer of Undertakings and Repeal) Act, 1994. d) The Civil Aviation Policy. e) The Civil Aviation Requirements.

Trends in Aviation Industry Consolidation in aviation sector: In aviation industries the rise in the number of alliances will help in promote the growth of aviation sector in India. The number of passengers traveling by air is on the rise: By 2025 passenger boarding expected to double and by the same time aircraft operations are expected to triple. For the traveling public, price is paramount in choosing a carrier: Travelers are choosing the lowest price option with the help of the Internet and round-the-clock search facility. Even business travelers, who have been less price-sensitive, are resisting fare increases. Travelers are not giving preference to brand but the only premiums they are willing to pay for are time-of-day and direct flights. Capacity is growing without much constraint: The new aircrafts have been ordered by Indian carriers for delivery in the coming period, without clear plans to retire older planes. Cost structures will continue to handicap legacy carriers as they compete with newer airlines, as well as with overseas carriers: Great threats are being posed by

the low cost carriers to legacy carriers, as a result of which they are reshuffling their pricing policies. Apart from this, they are also facing competition from overseas players. Oil prices are not expected to fall: Aviation Turbine Fuel (ATF) prices have increased in line with the rise in international oil prices. Because of this there is a marginal increase in airfares. Outsourcing: Private airlines are famous to hire foreign pilots or retired personnel from the Air Force or PSU (Public Sector Undertaking) airlines, in senior management positions. Airlines are also famous to take on contract employees such as cabin crew, ticketing and check-in agents.

Reasons for boom in Aviation Industry in India Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident Indian) investment up to 100 per cent is permissible in the domestic airlines through the automatic route that is without the RBI (Reserve Bank of India) or government approval. However, the government policy bars foreign airlines from taking a stake, directly or indirectly, in a domestic airline company. Low entry barriers: Nowadays, venture capital of $10 million or less is enough to launch an airline. Attraction of foreign shores: Jet and Sahara have gone international by starting operations, first to SAARC countries, and then to South-East Asia, the UK, and the US. After five years of domestic operations, many domestic airlines too will be entitled to fly overseas. Rising income levels and demographic profile: Though India's GDP (per capita) is still very low as compared to the developed country standards, India is shining, at least in metro cities and urban centres, where IT and BPO industries have made the young generation prosperous. Demographically, India has the highest percentage of people in age group of 20-50 among its 50 million strong middle class, with high earning potential. All this contributes for the boost in domestic air travel, particularly from a low base of 18 million passengers. Untapped potential of India's tourism: Tourist arrivals in India are expected to grow exponentially, especially due to the open sky policy between India and the SAARC countries and the increase in bilateral entitlements with European countries, and US.

PROBLEMS FACED BY AVIATION INDUSTRY Indian airline Industry is beset with many problems, which consist of high price of ATF, scarcity of skilled labour, quick fleet expansion, rise in labour costs and price competition among the players. However, the major issue that poses a challenge for the airline industry in India is infrastructure limitation which is required to be rapidly upgraded. Airline M&A Airline M&A are on the rise across the globe. These M&A are highly strategic involving several considerations. Airline M&A bear serious implications for travelers as well as airline employees. The airlines industry is abuzz with news of M&A. In the last few years airline M&A have been a growing trend in several countries across the globe. However, M&A in the aviation industry are highly strategic in nature and are undertaken after taking into consideration several important factors.

CASES OF AIRLINE M&A IN INDIA Air India and Indian Airlines For long decades after its independence, India was served by two state run aviation companies Air India which served the international market and Indian Airlines which served the domestic market. Even though the two were started with a lot of capital and initial performance was nothing short of remarkable, it was not long that the two companies started to feel the restrictions and stress of a socialistic shackled system. In the recent years, the opening of Indian aviation sector for private players meant that the competition was getting too much for the two. The solution was found by the Indian government in the form of merger of both the entities. The Government of India, on March 1, 2007, approved the merger of Air India and Indian Airlines to improve operational synergy and increase productivity. Consequent to the above, a new Company viz National Aviation Company of India Limited was incorporated under the Companies Act, 1956 on March 30, 2007. The company became registered on March 30, 2010. The merger was to help the new entity compete with large global airlines. Following the merger of the two companies, it was decided that a combined identity should evolve. Since Air India was a globally and nationally recognized brand name, the

operational brand name of the company remained Air India and the Maharaja continued to reign as the mascot of the new airline.

Benefits The key benefits to Indian Airlines and Air India on account of this merger were as under: The merger had created a mega company with combined revenue of Rs. 15000 crores. The new entity had seen a number of changes in its operating model. It was much less restricted by government control and is therefore much more agile and could churn better returns than the two different entities. Since the two companies had come together, they had also been able to bring together their best practices and reduced the overall operational cost as well as administrative cost by a considerable margin. Air-India would have a combined fleet of 112 aircraft and would be among the top 10 airlines in Asia and among the leading 30 airlines globally.

Indian Aviation - Market Size India is currently the ninth largest aviation market in the world, according to a report Indian Aerospace Industry Analysis, by research firm RNCOS. The government's open sky policy has attracted many foreign players to enter the market and the industry is growing in terms of both players and the number of aircrafts. Given the strong market fundamentals, it is expected that the civil aviation market will register more than 16 per cent CAGR during 2010-2013. Recording the strongest growth in the world, India's domestic aviation market has tripled in the past five years, according to a latest report of the International Air Transport Association (IATA). Indias domestic air travel market continued to show impressive growth in the first four months of 2011, with passenger numbers increasing 18.4% to 19.0 million passengers. Apr-2011 passenger numbers increased 11.5% to 4.67 million passengers, based on India Directorate General of Civil Aviation data, marking the eighth consecutive month of double-digit growth and following growth of 21% in Jan-2011, 18.5% in Feb-2011 and 23.5% in Mar-2011. Indias domestic market has seen passenger growth now for 23 consecutive months.

Passengers Carried (in Lakhs)

2010 190.02 200 150 100 50 0 YoY MoM 41.88 160.42 2011

Growth YoY -(+18.4%) MoM - (+11.5)

46.71

Source: Indian Ministry of Civil Aviation

Indian Aviation - Market Players India is one of the flourishing global aviation markets. As per Airport Authority of India (AAI) statistics, there are 127 airports in India which incorporates 13 international, 80 domestic, 28 civil and 7 custom airports. Moreover India has around 1091 registered aircrafts. Over the years there has been steady growth in the number of private players establishing their business in India due to increasing liberalization and deregulation. Hence, at present aviation industry consist of three types of players namely, Full cost carriers, Low cost carriers (LCC) and other start-up airlines. Market share statistics for May 2011 indicates a neck-to-neck tiff between Kingfisher and IndiGo with 21.00 and 19.6 per cent of market share respectively. However, if the figures for Jet Airways (18.2 per cent) and JetLite (7.3 per cent) are combined, then the Jet Airways group of airlines leads with 25.5 per cent of the market. The remaining market shares belong to Air India (13.8 per cent), Spicejet (14.0 per cent) and GoAir (6.1 per cent) and others (0.6 per cent).

The market share of Indian carriers as on June 2011 in the domestic aviation market is shown below:

Market Share of Indian Carriers Domestic

6.10% 14.00% 13.80% 21.00% 19.60% 25.50% Jet Airways Group Kingfisher IndiGo NACIL SpiceJet GoAir

Source: Indian Ministry of Civil Aviation

Role of Aviation Industry in India GDP The Role of Aviation Industry in India GDP in the past few years has been phenomenal in all respects. The Aviation Industry in India is the most rapidly growing aviation sector of the world. With the rise in the economy of the country and followed by the liberalization in the aviation sector, the Aviation Industry in India went through a complete transformation in the recent period.

Role of Aviation Industry in India GDP-Growth Factors The growth in the Indian economy has increased the Gross Domestic Product above 8% and this high growth rate will be sustained for a good number of years Air traffic has grown enormously and expected to have a growth which would be above 25% in the travel segment In the present scenario around 12 domestic airlines and above 60 international airlines are operating in India With the growth in the economy and stability of the country India has become one of the preferred locations for the trade and commerce activities

The growth of airlines traffic in Aviation Industry in India is almost four times above international average Aviation Industry in India have placed the biggest order for aircrafts globally Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia

Role of Aviation Industry in India GDP-Future Challenges Initializing privatization in the airport activities Modernization of the airlines fleet to handle the pressure of competition in the aviation industry Rapid expansion plans for the major airports for the increased flow of air traffic Immense development for the growing Regional Airports

After having an overview on the Aviation Sector of India we will look forward into the top aviation companies in India and how they have performed in the last few years. Major Players in aviation industry The players in aviation industry can be categorized in three groups: Public players: Air India, Indian Airlines and Alliance Air Private players : Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan, Go Air lines, Paramount Airways Start up players: Omega Air, Magic Air, Premier Star Air & MDLR Airlines.

Out of all these companies the one on which we are going to mainly concentrate are Jet Airways, Kingfisher Airlines and Spicejet.

JET AIRWAYS

Company overview Jet Airways is the leading Private airline company in India. After a varied experience and training with airlines such as Lebanese International Airlines and Royal Jordanian Airlines, Naresh Goyal founded Jetair Limited in 1974 with the aim of providing sales and marketing representation to foreign airlines in India. By 1992, Jetair had become one of Indias largest GSAs. Seizing the new opportunities in a liberalized economy, Jet Airways (India) Limited came into being on April 1st 1992 with its first flight operating on May 5th 1993 on the Mumbai-Ahmedabad-Mumbai sector. Indian aviation industry is, today, over 50 years old. For more than 40 of these years it was monopolized by the State owned Indian Airlines. In 1992, Government announced its open skies policy, allowing the entry of private airlines. Company has an unbeatable record of on time flights and providing world-class frequent flyer benefits to its customers, through its alliances with British Airways, KLM Royal Dutch Airlines and Northwest Airlines. Company was the first airline in India to receive the World Travel Market Global Award, the world's premier global travel event in London. Company has also won the H&FS Domestic Airline of the Year Award four times and Citibank Diners Club chose it as India's best domestic airline for excellence in service. By doing rapid expansion in the network, company earned the prestigious Air Transport World Award 2001 for Market Development. Company makes every effort to provide service of the highest standard to its customers, both on ground and inflight, thats why it is the most favorable airline of business class customers. Jet Airways is one of the few airlines in the world to receive the ISO 9001 certification for our in-flight services.

Products & Services Jet Airways has achieved this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations. Jet Airways is the market leader in indian private airline segment and attained this brand in a short span of around 12 years. Customer satisfaction with the brand is always very high, reflected in customer loyalty with the airline through its rapidly growing Frequent Flyer Program, Jet Privilege. Airline has promoted several domestic tourist destinations through its distribution and connectivity networks. While building traffic to these destinations, it has also contributed to the growth of employment and businesses connected to the tourism sector, quite apart from substantial foreign exchange earnings. These achievements are even more noteworthy in the environment of the lack of infrastructure and facilities such as terminals, lounges, warehouses

and hangars, the high cost of aviation turbine fuel and the different and high levels of local taxes in many states. Jet Airways operates over 180 flights daily to 45 destinations across the country including London (Heathrow), Kuala Lumpur, Singapore, Colombo and Kathmandu. Company has the youngest fleet of aircraft in India, consisting of the modern Airbus 340 300E, Boeing 737-400/700/800/900 and the ATR 72-500. Jet Airways plans a major staff cut, due to the prevailing economic meltdown. Currently, Jets employee strength stands at 12,000. It is learnt that Jet is looking to bring it below 10,000 in a phased manner. Jet Airways currently has an aircraft to employee ratio of 1:145 which it wants to scale down quite sharply. It is believed that the company has already started giving pink slips, with about 50 employees being laid off over the past one week. In April, Jet also reduced salaries by 10-25% across employee categories.

M & A in Jet Airways Jet Airways and Sahara Airlines The two carriers share the same history; both began their operations as air taxi operators and later became full service carriers. Jet and Sahara both used to compete on international routes prior to merger. Jet Airways, which commenced operations on May 5, 1993, has within a short span of 14 years established its position as a market leader. The airline has had the distinction of being repeatedly adjudged India's 'Best Domestic Airline' and has won several national and international awards.

Background Jet Airways and the Shareholders of Sahara Airlines Limited had concluded a Share Purchase Agreement on January 18, 2006 whereby Jet Airways was to acquire the 100% shares of Sahara Airlines Limited for a Total Consideration of Rs. 2,000 crores. The original 65 day Term of the Agreement expired in March 2006. This was mutually extended to 21st June 2006, at which time Jet Airways also paid an advance of Rs. 500 Crores. At the expiry of the extended period, disputes arose between the parties as to whether or not the agreement had terminated (for non fulfillment of some conditions). These disputes

were referred for hearing to an Arbitral Tribunal. However, before the commencement of Arbitral Proceedings, the two parties successfully resolved their disputes and were able to draw up a Settlement Agreement and the Arbitral Proceedings were disposed off in terms of the same agreement. On 20th April, 2007, Jet acquired 100% stake in Air Sahara 15 months after signing the original purchase agreement. Jet purchased its arch rival for 1,450 crores which was 35 % less than the price agreed in 2006. Jet rebranded Sahara as Jetlite and announced that the new entity would offer reduced frills but would be over and above low cost carrier (LCC) in terms of service. The private sector Jet-Sahara combine ended the dominating role of the public sector with the new corporate commanding as much as 32% of the domestic market space.

BENEFITS Jet Airways firmly believed that the acquisition of Sahara Airlines Limited would enable it to derive significant commercial and economic benefits keeping in view the then state of the domestic aviation industry.

The key benefits to Jet Airways on account of this acquisition were as under: A strong platform and a larger operational base for future growth. A wider and a more effective coverage of the Indian market and giving the two airlines a very strong position especially in the metro markets. Increased prime time departures and frequencies through a subsidiary. Obtain access to skilled personnel such as Pilots and Engineers, categories of which there was a significant shortage in India. Unit cost savings and improved levels of productivity due economies of scale and common utilization of facilities and resources, arising particularly from common maintenance and training facilities, airport handling facilities, enhanced purchasing power, finance and administrative set-ups, etc. Clear value proposition for the customers in the form of wider network coverage, enhanced and convenient connections and better service levels on a larger scale of operations. Increased availability of airport infrastructure facilities and availability of a larger operational base for future expansion.

Since Sahara Airlines would operate as an independent carrier with its own Operating Permit, it would have access to available traffic rights for international operations.

Another important benefit that Jet Airways derived from the acquisition of Sahara Airlines was that their order for the additional 10 B737NG aircraft which were scheduled for delivery between June 2009 and August 2011 thereby enabled Jet Airways to have access to additional aircraft to expand its fleet. This represented substantial additional intangible assets for Jet Airways since it had no aircraft on order and delivery positions were not available before 2011 or only available at a premium. The acquisition of Sahara Airlines gave Jet Airways the opportunity to reassess its strategy and use this carrier to provide an innovative service concept of higher quality than current no-frills carriers.

CRITICAL ANALYSIS: JET AIRWAYS-AIR SAHARA: A STRATEGIC MISTAKE Centre for Asia Pacific Aviation is of the view that the acquisition of Air Sahara by Jet Airways was maybe the carriers first major strategic error. Allowing Sahara to exit from the market would have resulted in a market correction that would have been to the benefit of all players. Jet incurred a high acquisition price and has been funding operating losses ever since. The process of integration has been difficult and costly and continues to negatively impact Jet Airways. It is reported that Jet Airways has yet to settle the full purchase price for the carrier, reflecting the state of its financial situation. Jet Airways bottom line has been further impacted by an aggressive international expansion which stretched the carriers resources and damaged investor confidence. The airline has since been forced to cut a number of existing routes and halt new services as it consolidates its overseas network. To address the overcapacity in its long haul fleet, Jet Airways has leased a number of wide body aircraft to Gulf Air and Oman Air. STOCK PERFORMANCE SINCE LISTED ON MARKET Year 2011 2010 2009 2008 2007 2006 2005 High 782.2 926.35 605.95 1023 1049.8 1224.8 1379 Low 250.9 395.7 115.25 119.25 533.35 475.1 973

FINANCIALS

JET AIRWAYS (INDIA) LTD. : SHARE HOLDING

Share Holding Pattern as on FaceValue Share Holder 30/06/2011 10.00 No. Of Shares 31/03/2011 10.00 No. Of Shares 69057210 11548 0 69068758 31/12/2010 10.00 No. Of Shares 69057210 11548 0 69068758

% Holding 79.99 0.01 0.00 80.00

% Holding 79.99 0.01 0.00 80.00

% Holding 79.99 0.01 0.00 80.00

PROMOTER'S HOLDING Foreign Promoters 69057210 Indian Promoters 11548 Person Acting in Concert 0 Sub Total 69068758 NON PROMOTER'S HOLDING Institutional Investors Mutual Funds and UTI 5480632 Banks Fin. Inst. and 2681763 Insurance FII's 4977332 Sub Total 13139727 Other Investors Private Corporate Bodies 896981 NRI's/OCB's/Foreign 165773 Others GDR/ADR 0 Directors/Employees 0 Government 0 Others 185398 Sub Total 1248152 General Public 2877374 GRAND TOTAL 86334011

6.35 3.11 5.77 15.22 1.04 0.19 0.00 0.00 0.00 0.21 1.45 3.33 100.00

5856485 2662033 3981106 12499624 1668121 129764 0 0 0 122226 1920111 2845518 86334011

6.78 3.08 4.61 14.48 1.93 0.15 0.00 0.00 0.00 0.14 2.22 3.30 100.00

5306013 2624559 5656954 13587526 783553 75063 0 0 0 490484 1349100 2328627 86334011

6.15 3.04 6.55 15.74 0.91 0.09 0.00 0.00 0.00 0.57 1.56 2.70 100.00

QUARTERLY FINANCIALS
(Rs. in Crore) June ' 11 1st Quarter March ' 11 4th Quarter 3,232.16 39.86 0.00 0.00 1,279.74 379.72 0.00 339.79 0.00 0.00 1,098.49 0.00 134.42 254.00 Dec ' 10 3rd Quarter Sep ' 10 2nd Quarter 3,105.04 35.60 0.00 0.00 994.21 320.86 0.00 318.60 0.00 0.00 1,000.58 0.00 470.79 249.30 June ' 10 1st Quarter 2,965.01 58.20 0.00 0.00 995.92 306.53 0.00 269.65 0.00 0.00 990.62 0.00 402.29 274.47

Sales Other Income Stock Adjustment Raw Material Power And Fuel Employee Expenses Excise Admin And Selling Expenses Research And Development Expenses Expenses Capitalised Other Expeses Provisions Made Operating Profit Interest

3,541.60 40.79

1,563.69 361.40 339.38

3,474.62 40.55 0.00 0.00 1,096.83 335.08 0.00 333.68 0.00 0.00 1,075.55 0.00 633.48 250.59

1,155.75 121.38 214.23

Gross Profit Depreciation Taxation Net Profit / Loss Extra Ordinary Item Prior Year Adjustments Equity Capital Equity Dividend Rate Agg.Of Non-Prom. Shares (in lacs) Agg.Of Non PromotoHolding(%) OPM(%) GPM(%) NPM(%) EPS (in Rs.)

-52.06 223.47 -33.61 -123.16 118.76 86.33 172.65 100.00 3.42 -1.45 -3.43 -14.27

-79.72 219.76 -65.97 -124.46 112.27 -3.22 86.33 0.00 172.65 20.00 4.15 -2.43 -3.80 -14.42

423.44 230.52 99.64 118.23 24.95 0.00 86.33 0.00 172.65 20.00 18.23 12.04 3.36 13.70

257.09 233.96 0.03 12.40 -10.70 0.00 86.33 0.00 172.65 20.00 15.16 8.18 0.39 1.44

186.02 226.38 0.02 3.52 43.90 0.00 86.33 0.00 172.65 20.00 13.56 6.15 0.11 0.41

JET AIRWAYS (INDIA) LTD.: RATIO ANALYSIS

March ' 11 12 Months PER SHARE RATIOS Adjusted E P S (Rs.) Adjusted Cash EPS (Rs.) Reported EPS (Rs.) Reported Cash EPS (Rs.) Dividend Per Share Operating Profit Per Share (Rs.) Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) Free Reserves Per Share (Rs.) PROFITABILITY RATIOS Operating Margin (%) Gross Profit Margin (%) Net Profit Margin (%) Adjusted Cash Margin (%) Adjusted Return On Net Worth (%) Reported Return On Net Worth (%) Return On long Term Funds (%) LEVERAGE RATIOS Long Term Debt / Equity Total Debt/Equity Owners fund as % of total Source Fixed Assets Turnover Ratio LIQUIDITY RATIOS Current Ratio Current Ratio (Inc. ST Loans) Quick Ratio Inventory Turnover Ratio PAYOUT RATIOS Dividend payout Ratio (Net Profit) Dividend payout Ratio (Cash Profit) Earning Retention Ratio -18.24 87.23 1.12 106.60 0.00 190.07 301.67 301.67 1,479.93 -83.33 12.84 5.71 0.07 5.81 -6.04 0.37 5.62 5.18 5.18 16.19 0.71 1.09 1.09 0.93 17.97 0.00 0.00 100.00 March ' 10 12 Months -70.21 41.21 -54.17 57.26 0.00 244.11 95.80 306.03 1,209.09 79.35 20.18 10.97 -4.41 3.35 -73.29 -56.54 12.12 11.94 16.80 5.61 0.59 1.02 0.33 0.86 4,349.40 0.00 0.00 0.00 March ' 09 12 Months -192.53 -88.30 -46.60 57.62 0.00 69.32 149.97 365.68 1,340.28 133.52 5.17 -2.60 -3.44 -6.52 -128.38 -31.07 -1.41 9.33 12.61 7.34 0.62 1.26 0.37 1.09 7,370.16 0.00 0.00 0.00 March ' 08 12 Months -93.12 -3.03 -29.31 60.78 0.00 87.32 214.50 527.24 1,020.58 198.05 8.55 -0.27 -2.83 -0.29 -43.41 -13.66 0.74 5.63 6.49 13.35 0.53 0.95 0.60 0.77 2,143.82 0.00 0.00 0.00 March ' 07 12 Months -25.69 22.27 3.24 51.20 6.00 119.89 243.81 259.15 817.50 227.36 14.66 8.79 0.39 2.69 -10.53 1.32 9.53 2.75 2.88 25.79 1.28 1.38 1.07 1.18 5,601.41 216.89 13.70 127.32

Cash Earnings Retention Ratio COVERAGE RATIOS Adjusted Cash Flow Time Total Debt Financial Charges Coverage Ratio Fin. Charges Cov.Ratio (Post Tax) COMPONENT RATIOS Material Cost Component(% earnings) Selling Cost Component Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed Long term assets / Total Assets Bonus Component In Equity Capital (%)

100.00 17.90 1.77 1.89 0.00 0.00 44.58 0.00 0.75 10.89

100.00 39.06 1.24 1.27 0.00 9.43 39.11 0.00 0.79 10.89

0.00 0.00 0.48 1.34 0.00 9.49 42.29 0.00 0.79 10.89

0.00 0.00 0.82 1.50 0.00 11.15 29.47 0.00 0.76 10.89

68.49 31.49 1.24 1.49 0.00 11.34 26.39 0.00 0.67 10.89

VALUATION Although, the Aviation sector is getting new players and the competition in the Indian Sky is to intensify in the years to come, but due to its Unique Business class model and rapid expansion in international operations will drive companys revenue in future. Aviation turbine fuel (ATF) costs around 30% of the overall revenue of the company, with the cooling off of the ATF prices, companys profitability will improve in the quarters to come. At current PE ratio 242.64 16th September of its FY2011 estimated earnings. We recommend investors to BUY Jet Airways for Mid-term investment horizon target is around Rs 350 and for Short term is around Rs 300.

KINGFISHER AIRLINES

Company Overview Kingfisher Airlines (Kingfisher) is a Bangalore based private airline company of the UB (United Breweries) Group. UB Group started its aviation business with launching of Kingfisher in 2005. UB Group currently operates different lines of businesses such as beverages, alcohol, pharmaceutical, media, research and development, international trading, fertilizers and infrastructure development. Kingfisher is operating its passenger and cargo transport service between different cities in India. The company operates as Full Service Carrier (FSC). On 23rd November 2007, the company has announced its expansion of routes network with three new services and additional two new destinations such as Lucknow and Khajuraho. With the launch of these new services, Kingfisher operates 218 flights a day serving 37 destinations with a fleet of 36 new aircrafts as on 23rd November 2007.

FINANCIALS

KINGFISHER AIRLINES LTD. : QUARTERLY FINANCIALS

(Rs. in Crore) June ' 11 1st Quarter Sales 1,881.64 Other Income 29.37 Stock Adjustment 0.00 Raw Material 0.00 Power And Fuel 845.13 Employee Expenses 173.67 Excise 0.00 Admin And Selling Expenses 0.00 Research And Devlopment 0.00 Expenses Expenses Capitalised 0.00 Other Expeses 887.58 Provisions Made 0.00 Operating Profit -24.74 Interest 305.80 Gross Profit -301.18 Depreciation 86.55 Taxation -126.57 Net Profit / Loss -263.54 Extra Ordinary Item -4.79 Prior Year Adjustments 0.00 Equity Capital 497.78 Equity Dividend Rate 0.00 Agg.Of Non-Prom. Shares (in lacs) 2,060.22 Agg.Of Non PromotoHolding(%) 41.39 March ' 11 4th Quarter 1,677.64 -58.48 0.00 0.00 668.43 172.06 0.00 0.00 0.00 0.00 859.74 0.00 -22.59 289.85 -370.91 61.88 -159.21 -355.54 -81.95 0.00 497.78 0.00 2,060.22 41.39 Dec ' 10 3rd Quarter 1,658.70 17.29 0.00 0.00 540.15 168.03 0.00 0.00 0.00 0.00 927.61 0.00 22.91 339.60 -299.40 61.28 -126.19 -253.69 -19.19 0.00 265.91 0.00 896.91 33.73 Sep ' 10 2nd Quarter 1,382.72 132.94 0.00 0.00 479.89 172.51 0.00 0.00 0.00 0.00 808.79 0.00 -78.47 362.26 -307.79 52.99 -131.47 -230.82 -1.51 0.00 265.91 0.00 896.91 33.73 June ' 10 1st Quarter 1,640.58 44.18 0.00 0.00 585.57 163.40 0.00 0.00 0.00 0.00 809.11 0.00 82.50 321.24 -194.56 64.89 -76.52 -187.35 -4.42 0.00 265.91 0.00 896.91 33.73

OPM(%) GPM(%) NPM(%) EPS (in Rs.)

-1.31 -15.76 -13.79 -5.29

-1.34 -22.90 -21.95 -7.14

1.38 -17.86 -15.13 -9.54

-5.67 -20.30 -15.22 -8.68

5.02 -11.54 -11.12 -7.05

KINGFISHER AIRLINES LTD: SHARE HOLDING

Share Holding Pattern as on FaceValue Share Holder 03/06/2011 31/03/2011 10.00 No. Shares 31/12/2010 10.00 No. Shares

10.00 No. Of Shares PROMOTER'S HOLDING Foreign Promoters 28680501 Indian Promoters 263077125 Person Acting in Concert 0 Sub Total 291757626 NON PROMOTER'S HOLDING Institutional Investors Mutual Funds and UTI 2595925 Banks Fin. Inst. and 117473333 Insurance FII's 14404687 Sub Total 134473945 Other Investors Private Corporate Bodies 28292971 NRI's/OCB's/Foreign 1824533 Others GDR/ADR 0 Directors/Employees 0 Government 0 Others 1557251 Sub Total 31674755 General Public 39872897 GRAND TOTAL 497779223

% Holding 5.76 52.85 0.00 58.61

Of

% Holding 5.76 52.85 0.00 58.61

Of

% Holding 10.79 55.48 0.00 66.27

28680501 263077125 0 291757626

28680501 147537424 0 176217925

0.52 23.60 2.89 27.01 5.68 0.37 0.00 0.00 0.00 0.31 6.36 8.01 100.00

3915184 117562933 13793712 135271829 28693469 1812180 0 0 0 2071962 32577611 38172157 497779223

0.79 23.62 2.77 27.18 5.76 0.36 0.00 0.00 0.00 0.42 6.54 7.67 100.00

12279810 1258245 15626840 29164895 24936453 1513347 0 0 0 3086436 29536236 30989827 265908883

4.62 0.47 5.88 10.97 9.38 0.57 0.00 0.00 0.00 1.16 11.11 11.65 100.00

Kingfisher Airlines Ltd: Ratio Analysis

March ' 11 12 Months PER SHARE RATIOS Adjusted E P S (Rs.) Adjusted Cash EPS (Rs.) Reported EPS (Rs.) Reported Cash EPS (Rs.) Dividend Per Share Operating Profit Per Share (Rs.) Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) Free Reserves Per Share (Rs.) Operating Margin (%) -18.49 -13.65 -20.64 -15.80 0.00 0.08 -59.29 -59.29 127.76 -107.45 0.06 March ' 10 12 Months -51.54 -43.36 -61.95 -53.78 0.00 9.39 -146.61 -146.61 190.59 -166.01 4.92 March ' 09 12 Months -60.67 -54.22 -60.50 -54.05 0.00 -20.80 -79.93 -79.93 198.16 -94.05 -10.49 March ' 08 9 Months June ' 07 12 Months

-18.64 -15.94 -13.85 -11.16 0.00 -23.95 14.64 14.64 107.24 2.68 -22.32

-55.05 -51.81 -30.97 -27.73 0.00 -19.37 28.40 28.40 132.89 15.46 -14.57

Gross Profit Margin (%) Net Profit Margin (%) Adjusted Cash Margin (%) Adjusted Return On Net Worth (%) Reported Return On Net Worth (%) Return On long Term Funds (%) Long Term Debt / Equity Total Debt/Equity Owners fund as % of total Source Fixed Assets Turnover Ratio LIQUIDITY RATIOS Current Ratio Current Ratio (Inc. ST Loans) Quick Ratio Inventory Turnover Ratio PAYOUT RATIOS Dividend payout Ratio (Net Profit) Dividend payout Ratio (Cash Profit) Earning Retention Ratio Cash Earnings Retention Ratio COVERAGE RATIOS Adjusted Cash Flow Time Total Debt Financial Charges Coverage Ratio Fin. Charges Cov.Ratio (Post Tax) COMPONENT RATIOS Material Cost Component(% earnings) Selling Cost Component Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed Long term assets / Total Assets Bonus Component In Equity Capital (%)

-3.72 -15.81 -10.45 0.00 0.00 -2.45 0.00 0.00 -85.48 2.82 1.45 1.45 0.69 33.89 0.00 0.00 0.00 0.00 0.00 0.10 0.40 0.89 0.00 13.09 0.00 0.27 5.48

1.71 -32.04 -22.43 0.00 0.00 4.76 0.00 0.00 -99.65 2.53 1.34 0.78 0.57 4,659.30 0.00 0.00 0.00 0.00 0.00 0.14 0.36 0.80 13.55 13.79 0.00 0.31 10.26

-13.02 -27.43 -24.58 0.00 0.00 -7.90 0.00 0.00 -63.14 2.85 1.09 0.64 0.52 5,738.39 0.00 0.00 0.00 0.00 0.00 0.02 0.29 0.97 12.97 4.54 0.00 0.43 10.26

-23.58 -12.50 -14.38 -147.04 -109.29 -36.52 3.54 4.95 16.80 4.61 1.71 0.96 0.87 0.00 0.00 0.00 0.00 0.00 0.00 -0.63 0.65 3.00 5.83 3.42 0.00 0.34 20.09

-15.55 -22.92 -38.34 -209.52 -117.87 -36.27 0.98 2.38 29.56 5.37 2.33 0.79 2.20 28.80 0.00 0.00 0.00 0.00 0.00 -0.49 0.19 2.55 0.99 18.56 0.00 0.38 20.14

Kingfisher Airlines-Air Deccan Kingfisher Airlines, a premium Full-Service Carrier, is a private airline based in Bangalore, India. Currently, it holds the status of India's largest domestic airline, providing world-class facilities to its customers. Owned by Vijay Mallya of United Beverages Group, Kingfisher Airlines started its operations on May 9, 2005, with a fleet of 4 brand new Airbus - A320, a flight from Mumbai to Delhi to start with. Air Deccan is Indias first LCC. It was founded and operated by Deccan Aviation Ltd. by Captain Gopinath in 2003 with regular scheduled flights from Bangalore to Mangalore and Hubli. When it started its operations, Deccan was known popularly as the common man's airlines. Air Deccan triggered price wars in the Indian Skies which forced other players to match Air Deccans prices. In 2007, Kingfisher Airlines acquired a 26% equity stake in Air Deccan and became the largest single shareholder in Deccan Aviation Ltd. It was agreed that Kingfisher would continue to serve the corporate and business travel while Air Deccan would focus on serving

the low fare segment but with improved financial prospects for both carriers. Kingfisher later increased its stake to 46%, and took control of the management of Air Deccan, upgrading it to a value-based airline with higher airfare and repositioned it as 'Simplifly Deccan'. Air Deccan airlines merged with Kingfisher Airlines and decided to operate as a single entity from April, 2008. Following the merger of Deccan with Kingfisher, in August 2008, Kingfisher renamed Deccan as Kingfisher Red. After the merger, the company has a combined fleet of 71 aircrafts, connects 70 destinations and operates 550 flights in a day. The combined entity has a market share of 33%.

Benefits The key benefits to Kingfisher Airlines and Air Deccan on account of this were as under: Legally, if an airline wants to operate overseas it must have a domestic status of having operated for 5 yrs and therefore in case of kingfisher operating overseas became easier. Besides, operational synergies (engineering, inventory management and ground handling services, maintenance and overhaul), the management and staff of both the airlines would be integrated. They would be stronger vis-a-vis lessons, aircraft manufacturers, and will also spend less on training and employees. The merger would create a more competitive business in scale and there would be scope to emerge as market leader.

Critical Analysis: Kingfisher Airlines-Deccan: Not as easy as it sounded The Kingfisher Airlines acquisition of Air Deccan is another case of underestimating the challenges of merging two carriers. It is a venture that has proved to be costly. However, integrating such different carriers (one, a classic low cost airline and the other a 5 star carrier), has proven to be extremely difficult. The huge combined network and distinct inflight products of the two carriers, has created duplication and confusion about the brand. This has been damaging to Kingfisher, with repercussions for its financial performance. The combined entity today has a large network and diverse operations that are proving to be hard to manage.

VALUATION

Although, the Aviation sector is getting new players and the competition in the Indian Sky is to intensify in the years to come, but due to its Unique Business class model and rapid expansion in international operations will drive companys revenue in future. Aviation turbine fuel (ATF) costs around 30% of the overall revenue of the company, with the cooling off of the ATF prices, companys profitability will improve in the quarters to come. As it can be seen around from todays market conditions many of the companies in Aviation sector are in trouble making losses its advisable for the investors to not to lose their interest in the companies as from the long term point of view as the growing passenger carriers the stock price of many of the companies is going to go up in next 5 to 10 years. At current P/E Ratio of -1.17 on 23rd September of its FY2011 earnings. We recommend investors to BUY Kingfisher Airlines Ltd for Mid-term investment horizon target is around Rs 35 and for Short term is around Rs 28. Investors should invest in Kingfisher Airlines rights issue. The company is raising capital through rights issue and low price of crude oil will give benefit to company. The stock is looking good. It can give attractive return in future.

SPICE JET SpiceJet is a low-cost airline headquartered in Gurgaon, India. It began service in May 2005 and by 2008, it was India's second-largest low-cost airline in terms of market share. SpiceJet was voted as the best low-cost airline in South Asia and Central Asia region by Skytrax in 2007. SpiceJet is a budget airline operating in India and is a reincarnation of ModiLuft. It was formed by Ajay Singh, Sanjay Malhotra and the Kansagra family. It aims to compete with Indian Railways for those passengers who travel in the air conditioned coaches of the latter. On 15 July 2008 billionaire Wilbur Ross suggested he would invest 345 crore

(US$76.94 million) in the airline. SpiceJet accepted an offer in principle from a US-based private equity firm that would make these funds available. Indian media baron Kalanidhi Maran acquired 37.7% in the business in June 2010.SpiceJet flies to 22 destinations across India, Nepal and Sri Lanka. It commenced international operations with flights from Chennai to Colombo, Sri Lanka on 7 October 2010, and flights from New Delhi to Kathmandu, Nepal on 9 October 2010.

SPICEJET LTD.: QUARTERLY FINANCIALS

(Rs. in Crore) June ' 11 1st Quarter 945.64 3.34 0.00 0.00 505.17 76.93 0.00 0.00 0.00 0.00 430.32 0.00 -66.78 5.99 -69.43 2.54 0.00 -71.96 0.00 0.00 March ' 11 4th Quarter 768.23 -9.62 0.00 0.00 107.04 45.41 0.00 0.00 0.00 0.00 676.13 0.00 -60.35 1.17 -71.14 2.52 -15.03 -58.62 2.28 -2.28 December ' 10 3rd Quarter 830.13 7.18 0.00 0.00 599.26 80.79 0.00 0.00 0.00 0.00 36.05 0.00 114.04 0.97 120.25 2.29 23.51 94.45 0.00 0.00 September ' 10 2nd Quarter 628.17 12.62 0.00 0.00 260.80 52.93 0.00 0.00 0.00 0.00 310.96 0.00 3.49 1.37 14.73 2.10 2.52 10.11 0.00 0.00 June ' 10 1st Quarter 716.86 7.56 0.00 0.00 259.13 62.01 0.00 0.00 0.00 0.00 328.71 0.00 67.00 3.60 70.96 2.00 13.74 55.22 0.00 0.00

Sales Other Income Stock Adjustment Raw Material Power And Fuel Employee Expenses Excise Admin And Selling Expenses Research And Devlopment Expenses Expenses Capitalised Other Expeses Provisions Made Operating Profit Interest Gross Profit Depreciation Taxation Net Profit / Loss Extra Ordinary Item Prior Year Adjustments

Equity Capital Equity Dividend Rate Agg.Of Non-Prom. Shares (in lacs) Agg.Of Non PromotoHolding(%) OPM(%) GPM(%) NPM(%) EPS (in Rs.)

405.38 0.00 2,488.50 61.39 -7.06 -7.31 -7.58 -1.78

405.38 0.00 2,488.50 61.39 -7.85 -9.37 -7.72 -1.45

405.38 0.00 2,488.50 61.39 13.73 14.36 11.27 2.33

385.23 0.00 3,541.47 91.93 0.55 2.29 1.57 0.26

328.04 0.00 2,969.59 90.53 9.34 9.79 7.62 1.68

SPICEJET LTD.: SHARE HOLDING

Share Holding Pattern as on : FaceValue Share Holder 30/06/2011 31/03/2011 10.00 No. Shares 31/12/2010 10.00 No. Shares

10.00 No. Of Shares PROMOTER'S HOLDING Foreign Promoters 0 Indian Promoters 156528305 Person Acting in Concert 0 Sub Total 156528305 NON PROMOTER'S HOLDING Institutional Investors Mutual Funds and UTI 49020489 Banks Fin. Inst. and 0 Insurance FII's 41181067 Sub Total 90201556 Other Investors Private Corporate Bodies 53474236 NRI's/OCB's/Foreign 20141312 Others GDR/ADR 0 Directors/Employees 0 Government 0 Others 1300736 Sub Total 74916284 General Public 83731920 GRAND TOTAL 405378065

% Holding 0.00 38.61 0.00 38.61

Of

% Holding 0.00 38.61 0.00 38.61

Of

% Holding 0.00 38.61 0.00 38.61

0 156528305 0 156528305

0 156528305 0 156528305

12.09 0.00 10.16 22.25 13.19 4.97 0.00 0.00 0.00 0.32 18.48 20.66 100.00

60982883 210036 48013050 109205969 47266899 27641139 0 0 0 2387503 77295541 62348250 405378065

15.04 0.05 11.84 26.94 11.66 6.82 0.00 0.00 0.00 0.59 19.07 15.38 100.00

66473371 214524 65803428 132491323 39412266 26660434 0 0 0 816580 66889280 49469157 405378065

16.40 0.05 16.23 32.68 9.72 6.58 0.00 0.00 0.00 0.20 16.50 12.20 100.00

SPICEJET LTD.: RATIO ANALYSIS

March ' 11 12 Months PER SHARE RATIOS Adjusted E P S (Rs.) Adjusted Cash EPS (Rs.) Reported EPS (Rs.) Reported Cash EPS (Rs.) Dividend Per Share Operating Profit Per Share (Rs.) Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) Free Reserves Per Share (Rs.) PROFITABILITY RATIOS Operating Margin (%) Gross Profit Margin (%) Net Profit Margin (%) Adjusted Cash Margin (%) Adjusted Return On Net Worth (%) Reported Return On Net Worth (%) Return On long Term Funds (%) LEVERAGE RATIOS Long Term Debt / Equity Total Debt/Equity Owners fund as % of total Source Fixed Assets Turnover Ratio LIQUIDITY RATIOS Current Ratio Current Ratio (Inc. ST Loans) Quick Ratio Inventory Turnover Ratio PAYOUT RATIOS Dividend payout Ratio (Net Profit) Dividend payout Ratio (Cash Profit) Earning Retention Ratio Cash Earnings Retention Ratio COVERAGE RATIOS Adjusted Cash Flow Time Total Debt Financial Charges Coverage Ratio Fin. Charges Cov.Ratio (Post Tax) COMPONENT RATIOS Material Cost Component(% earnings) Selling Cost Component Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed Long term assets / Total Assets Bonus Component In Equity Capital (%) 2.55 2.77 2.50 2.72 0.00 1.66 7.92 7.92 71.03 -17.79 2.33 2.02 3.41 3.79 32.74 32.02 34.70 0.27 0.27 78.64 25.24 0.58 0.58 0.55 141.50 0.00 0.00 100.00 100.00 0.76 13.23 10.82 0.00 0.00 0.00 0.00 0.62 0.00 March ' 10 12 Months 1.75 2.07 2.77 3.09 0.00 17.77 -14.15 -14.15 90.17 -24.90 19.70 19.35 3.02 2.25 0.00 0.00 994.35 0.00 0.00 -386.69 24.73 0.66 0.63 0.65 148.16 0.00 0.00 100.00 100.00 8.76 1.14 1.18 0.00 8.21 2.73 0.00 0.38 0.00 March ' 09 12 Months -15.57 -15.27 -14.13 -13.82 0.00 -2.16 -17.82 -17.82 70.10 -28.29 -3.07 -3.50 -19.43 -21.00 0.00 0.00 288.98 0.00 0.00 -817.10 20.70 0.73 0.67 0.71 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.11 0.00 5.94 8.82 0.00 0.31 0.00 March ' 08 12 Months March ' 07 10 Months

-8.03 -7.60 -5.50 -5.07 0.00 0.13 1.16 1.16 53.81 -8.95 0.24 -0.35 -9.60 -13.27 -690.69 -473.12 18.01 13.98 19.30 4.92 17.36 1.00 0.76 0.99 6,815.74 0.00 0.00 0.00 0.00 0.00 0.32 0.54 0.00 6.27 13.48 0.00 0.41 0.00

-5.62 -5.38 -2.94 -2.70 0.00 -1.14 7.67 7.67 26.61 -2.33 -4.27 -5.18 -10.39 -19.02 -73.30 -38.32 1.17 2.08 2.34 29.92 12.21 0.69 0.65 0.68 1,123.59 0.00 0.00 0.00 0.00 0.00 0.08 0.53 0.00 3.09 15.93 0.00 0.62 0.00

VALUATION

Although, the Aviation sector is getting new players and the competition in the Indian Sky is to intensify in the years to come, but due to its Unique Business class model and rapid expansion in international operations will drive companys revenue in future. Aviation turbine fuel (ATF) costs around 30% of the overall revenue of the company, with the cooling off of the ATF prices, companys profitability will improve in the quarters to come. As it can be seen around from todays market conditions many of the companies in Aviation sector are in trouble making losses its advisable for the investors to not to lose their interest in the companies as from the long term point of view as the growing passenger carriers the stock price of many of the companies is going to go up in next 5 to 10 years. At current P/E Ratio of 9.22 on 23rd September of its FY2011 earnings. We recommend investors to BUY Spicejet Ltd. for Mid-term investment horizon target is around Rs 45 and for Short term is around Rs 32. Investors should invest in Spicejet with a stoploss of Rs 21. The stock has strong support at Rs 20-21. It can give attractive return in future.