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Deccan Aviation Ltd has informed BSE that the Hon’ble High Court of Karnataka at Bangalore, have sanctioned the Composite Scheme of Arrangement between Kingfisher Airlines Ltd, Deccan Aviation Ltd and Deccan Charters Ltd (”the Scheme”) by an Order dated June 16, 2008. The certified copies of the Order of the Hon’ble High Court of Karnataka at Bangalore dated June 16, 2008, sanctioning the Scheme has been received and a copy of the same has been filed with the Registrar of Companies, Karnataka at Bangalore on July 02, 2008, making the Scheme effective.

Deccan Aviation Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 17, 2008, has considered the letters received from Capt G R Gopinath, Capt K J Samuel and Mr. Vishnu Singh Rawal requesting to be declassified from Promoter / Promoter Group category of the Company, and inter alia, approved the following:

1. That the name of Capt G R Gopinath, Director shall be excluded from the Promoter category of the Company and in any future correspondence including documents or filings with the Stock Exchanges / other statutory authorities. etc., or with the shareholders, the name of Capt G R Gopinath shall not be included in the Promoter / Promoter Group of the Company.

2. That the name of Capt K J Samuel, Director shall be excluded from the Promoter category of the Company and in any future correspondence including documents or filing with the Stock Exchanges / other statutory authorities etc., or with the shareholders, the name of Capt K J Samuel, Director shall not be included in the Promoter / Promoter Group of the Company.

3. That the name of Mr. Vishnu Singh Rawal, shall be excluded from the Promoter category of the Company and in any future correspondence including documents or filings with the Stock Exchanges / other statutory authorities, etc., or with the shareholders, the name of Mr. Vishnu Singh Rawal shall not be included in the Promoter / Promoter Group of the Company.

Deccan Aviation Ltd has informed BSE that the members of the Company by way of Postal Ballot have passed the special resolution relating to increase in limits of inter corporate loans and investments upto a sum not exceeding Rs 1000 crores regardless that the aggregate of the loans, securities including guarantees and investments may exceed the percentages prescribed under Section 372A of the Companies Act, 1956, with requisite majority.

Deccan Aviation Ltd has informed BSE that pursuant to an Order of the Hon’ble High Court of Karnataka, separate Meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors of the Company will be held on April 17, 2008, for the purpose of considering, and if thought fit, approving, with or without modification(s), the arrangement embodied In the Composite Scheme of Arrangement between Kingfisher Airlines Ltd, Deccan Charters Ltd and Deccan Aviation Ltd.

Deccan Aviation Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 18, 2008, has approved the transfer of the unutilised amounts against stated purposes as disclosed in the Company’s IPO Prospectus representing savings, and / or funds no longer required to be utilised for the purposes as stated in the Company’s IPO Prospectus, for utilisation under General Corporate purposes.

Chapter III of the prospectus Issued by the Company relating to the IPO has outlined the objects of the issue and the projected requirements of funds for each of these objects. The proceeds of the issue were to be utilised as follows:

1. Description: Setting up a training centre
Estimated Funds Requirement: Rs 656.69 million

2. Description: Setting up a hangar facility for basic and medium level maintenance checks at Chennai
Estimated Funds Requirement: Rs 400.20 million

3. Description: Setting up Infrastructure at airports
Estimated Funds Requirement: Rs 170.83 million

4. Description: Market Development Initiatives
Estimated Funds Requirement: Rs 458.20 million

5. Description: Debt repayment
Estimated Funds Requirement: Rs 1327.50 million

6. Description: General Corporate Purposes
Estimated Funds Requirement: Rs 419.53 million

7. Description: Issue Expenses
Estimated Funds Requirement: Rs 205.86 million

The prospectus provides that the estimations for the deployment of the proceeds for each object were arrived at, based on Internal management estimates, at the time of the IPO. It is also set forth in the prospectus that, the balance amount of the issue proceeds available after meeting the funds requirements for items (1) to (5) above, and the issue expenses, would be deployed for general corporate purposes.

Owing to the dynamic state of the Aviation Industry and the circumstances of the Company, there have been savings in the estimated Costs, relating to the stated purposes, as also non utilisation of funds outlay in respect of certain stated purposes.

As a result, in terms of the aforesaid Board Resolution, out of the balance of IPO proceeds, an amount of Rs 13,142.00 lakhs would be transferred to the head “General Corporate Purposes” for the Quarter ended March 31, 2008, from out of savings / non utilisation in respect of stated purposes as under:

- Setting up a training centre : Rs 6567.00 lakhs

- Setting up a hangar facility for basic and medium level maintenance checks at Chennai: Rs 2856.00 lakhs

- Setting up infrastructure at airports : Rs 883.00 lakhs

- Market Development Initiatives: Rs 750.00 lakhs

- Debt Repayment: Rs 2086.00 lakhs

Accordingly, the funds utilised under the heading General Corporate purposes as of March 31, 2008 would be Rs 22,439 lakhs as against the estimated Rs 4,195.30 lakhs stated in the
Prospectus.

Deccan Aviation Ltd has informed BSE that the members of the Company, by way of Postal Ballot, will consider the following Resolution :

a. To authorise the Board for lending the Company?s funds by way of loan, or provide security including guarantees in connection with a loan availed / to be availed, by Kingfisher Airlines Ltd (KFA) and to invest by way of subscription, purchase or otherwise, in the securities of the said KFA on such terms and conditions as the Board may deem fit.

b. The overall limit for the said loans, securities including guarantees and investments, as aforesaid shall be a sum not exceeding Rs 1000 crores regardless that the aggregate of the loans, securities including guarantees, and investments may exceed the percentages prescribed under section 372A of the Act

c. Authorising the Board to determine the manner and, amount which it shall make as loan to KFA, extend / issue security including guarantee in connection with a loan availed / to be availed by the KFA and, invest in the Securities of the KFA within the above mentioned limits.

d. Authorising the Board to delegate all or any of the above powers to the Committee of Directors or the Managing / Whole-time-Director of the Company and generally to do all such acts, deeds, matters and things that may be necessary, proper, expedient, or incidental for the purpose of giving effect to this resolution.

The Board of Directors at their meeting held February 21, 2008, have appointed Mr. G Krishna, Practising Company Secretary or failing him Mr. Sudhir V Hulyalkar, Practising Company Secretary as Scrutinizer to receive and scrutinize the completed Postal Ballot papers received from the members and for conducting the Postal Ballot process in fair and transparent manner.

The duly completed postal forms should reach the Scrutinizer not later than close of working hours on April 07, 2008.

The Scrutinizer will submit the report to the Chairman of the Company after completion of the Scrutiny of the Postal Ballot forms and the result will be announced by any one of the Directors on April 14, 2008.

Deccan Aviation Ltd has informed BSE that in the limited review report of the Company for the quarter ended December 31, 2007, the Auditors of the Company have made the following observations:

“1. The results for the quarter ended December 31, 2007 are after charging off sums of Rs
56 lakhs (for the three months ended December 31, 2006 Rs 209 lakhs)(for the six months period ended December 31, 2007 Rs 283 lakhs) (for the six months period ended December 31,2006 Rs 412 lakhs)(for the year ended June 30, 2007 Rs 864 lakhs) and Rs 1 lakhs (for the three months ended December 31, 2006 Rs 40 lakhs) (for the six months period ended December 31, 2007 Rs 25 lakhs) for the six months period ended December 31,2006 Rs 85 lakhs)(for the year ended June 30, 2007 Rs 164 lakhs) towards amortization of training and preoperative expenses respectively based on the Company’s accounting policy of amortizing the said expenditure over a period of 3 years. The Auditors are of the opinion that such accounting treatment is not in accordance with (AS,) 26 on ‘Intangible Assets’ issued by the Central Government and such expenses are required to be written Off to the profit and loss account as and when incurred. Such unamortized training and preoperative expenses as at December 31, 2007 are Rs Nil (December 31, 2006 Rs 735 lakhs) (June 30, 2007 Rs 283 lakhs) and Rs 1 lakh (December 31, 2006 Rs 131 lakhs,) (June 30, 2007 Rs 26 lakhs) respectively.

2. Other Income for the fifteen months ended June 30, 2006 included a sum of Rs 2,672 lakhs 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 (AS) 19-Accounting for lease issued by the Central Government 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. The Auditor 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.

3. Other Income for the quarter ended December 31, 2007 included a sum of Rs 493 lakhs (December 31, 2006 Rs 553 lakhs) (six months ended December 31, 2007 Rs 989 lakhs) (six months ended December 31, 2006 Rs 1,702 lakhs) (year ended June 30, 2007 Rs 2,247 lakhs) towards lease subsidy provided to the Company by one of its suppliers in the aim of supporting the former in the leasing of new aircrafts of a certain make. The management has adduced the following reasons in support of the accounting treatment followed by it:

a) General subsidies by aircraft suppliers towards supporting the Company’s fleet expansion are to be treated as income.

b) The relevant subsidies received are not in any way linked to the Company taking specific aircrafts on lease basis.

c) The relevant subsidies are not refundable to the said supplier even if the Company does not take any aircrafts on lease or in the event of termination of agreements in respect of any aircrafts that it may have taken on lease.

d) The Company’s entitlement to the said subsidy accrues based on timelines given in the agreement and is not in any way linked to the Company taking aircrafts on lease.

e) The Company is contingently liable to refund the said amounts to the said supplier in the event of the principal supply agreement being terminated in accordance with certain clauses of the said agreement. Management believes that the probability of such termination as of date is remote.

The previous statutory auditors had opined that such subsidy should be deferred and accounted for appropriately at a future date and their limited review report on the financial statements for the three months ended September 30, 2006 was modified in the matter.

On an overall appreciation of the relevant agreements, the Auditor concur with the accounting treatment adopted by the Company expressly relying on the representations of the management that the probability of termination of the said principal supply agreement is remote as of date. This aspect would need to be validated on every reporting date till all obligations under the said agreement are fulfilled.

4. The Auditors further report that, had the observations made in paragraphs 1 & 2 above been considered,

a. The unaudited working results fur the quarter ended December 31, 2007 would have been a loss of Rs 18910 lakhs (Six months ended December 31, 2007 - loss of Rs 43857 lakhs,) (year ended June 30, 2007 - loss Rs 40455 lakhs,) (three months ended December 31, 2006 - profit of Rs 1332 lakhs) (six months ended December 31, 2006 - loss Rs 2600 lakhs,) as against the reported unaudited loss of Rs 19086 lakhs (Six months ended December 31, 2007 - loss of Rs 44403 lakhs) (year ended June 30, 2007 loss Rs 41958 lakhs) (three months ended December 31, 2006 profit Rs 964 lakhs) (six months ended December 31, 2006 loss Rs 3335 lakhs) and

b. The reserves excluding revaluation reserves as at June 30, 2007 would have been a credit of Rs 22576 lakhs as against a reported figure of credit of Rs 24923 lakhs.”

Further, in respect of the observations in the limited review report, the management has clarified as follows:

“Para 1:
As part of the rapid expansion plans, the Company incurred significant expenditure on in house trainers towards training of pilots and technical engineers. Although, such in house training costs are not covered under bond or are not recoverable from the employees, the Company has deferred such costs as management believes that the economic benefits of such training costs will flow to the enterprise over a period. Such training costs have been amortised over a period of three years following the year in which they are incurred the loss of the amortisation being quarter ended December 31, 2007.

During the years ended March 31, 2004 and 2005, the Company incurred certain expenses prior to commencement / expansion of operations. The Company has deferred these expenses to be Written off over a period of three years following the year in which the expenses are incurred. As at December 31, 2007, a net sum of Rs 1 lakhs has been reflected as ‘Preoperative expenses’ under Deferred Revenue Expenses.

Para 2:
The Company his placed substantial orders for acquisition of Aircrafts from Aircraft manufacturers, to be delivered till the year 2012. These manufacturers, with a view to supporting the expansion and development of the Company’s fleet, have provided support in various forms including financial support. Some forms of support are towards reduction of the aircraft price and some forms of support are towards supporting the Company’s fleet expansion. As per the Airline Guidelines No. 3 issued by IATA (The International Air Transport Association), support which enables fleet expansion may be treated as income. The Company has treated such amounts which have been received by the Company towards lease subsidy, as income and accordingly included the same under Miscellaneous Income.

The Statutory Auditors in the Limited Review Report have stated that the matter does not appear to be covered explicitly by AS 19, while concurring with the views of the previous Statutory Auditors, 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.

In the opinion of the Directors as stated in their report to the members for the period ended June 30, 2007 :

(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 Paras 2 of the Limited Review Report have been received by the Company during the periods ended June 30, 2006 and September 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, accounting of the support package, received from the Aircraft manufacturer, as Income in the year of accrual and receipt is in order.”

Deccan Aviation Ltd has informed BSE that an Extra Ordinary General Meeting (EGM) of the members of the Company will be held on March 18, 2008, inter alia, to transact the following business:

1. To offer, issue and allot, on such occasion(s), in one or more tranches, as may be determined by the Board in the course of domestic and / or international offering(s), to domestic and / or foreign institutions, non-resident Indians, Indian public Companies, corporate bodies, approved mutual funds, banks, insurance Companies, pension funds, by way of Qualified Institutions Placement (”QIP”) to Qualified Institutional Buyers in terms of the Securities & Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (”SEBI (DIP) Guidelines”) (”QIBs”), individuals or otherwise, whether or not such investors are existing shareholders of the Company through a public issue and / or on a private placement basis equity shares and / or convertible securities any other capital bonds / instruments, debentures, preference shares convertible or non convertible including but not limited to Global Depository Receipts (GDRs) and / or American Depository Receipts (ADRs) / Foreign Currency Convertible Bonds (ECCBs), Foreign Currency Exchangeable Bonds (FCEBs) as per the Foreign Currency Exchangeable Bonds Scheme, 2008, Fully / Partly Convertible Debentures, partly or fully paid-up equity / debt instruments (”Securities”) as allowed under SEBI (DIP) Guidelines, such that the total amount raised through the aforesaid Securities shall not exceed Rs 1,600 crores (Rupees One Thousand Six Hundred Crores) (including greenshoe, it any), of incremental funds for the Company (”Issuance”), subject to necessary provisions & approvals.

2. To increase the Authorised Share Capital of the Company from Rs 150,00,00,000 (Rupees One Hundred Fifty Crores) to Rs 500,00,00,000 (Rupees Five Hundred Crores) by creation of an additional 25,00,00,000 (Twenty Five Crores) Equity shares of Rs 10/- each and 1,00,00,000 (One Crore) Preference Shares of Rs 100/- each in the share capital of the Company & consequential amendments in the Memorandum of Association of the Company.

Deccan Aviation Ltd has informed BSE that an Extra Ordinary General Meeting (EGM) of the members of the Company will be held on March 18, 2008, to seek the approval of the members for further issue of capital, increase in Authorised Share Capital and consequential amendments to the Memorandum of Association of the Company.

Deccan Aviation Ltd has informed BSE that the ESOP Committee at its meeting held on February 12, 2008 has granted 280400 options to the employees on the following primary terms:

1. the options granted be vested in tranches over a period of four years from the time of grant;

2. the options can be exercised within a period of five years from the date they vest;

3. the exercise price at which the options are being granted is Rs 65 per option;

4. the number of options vesting as a percentage of the options granted is in the ratio of
20/20/20/30.

5. Other terms as per ESOP Plan 2006;

6. Fringe Benefit Tax as may be applicable and the Company policy thereof.