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PROJECT REPORT ON WORKING CAPITAL ANALYSIS OF AIR INDIA

A REPORT SUBMITTED TO TRINITY INSTITUTE OF PROFESSIONAL STUDIES, AFFILIATED TO GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY DWARKA INSTITUTIONAL AREA, NEW DELHI Submitted to Submitted by Mr. V. Chopra Anikesh Brahma (Senior Finance Manager) Enroll no: 05920601509 Air India (Delhi)

PREFACE

The project Working Capital Analyzation has been carried out with a view point of understanding the financial system, Capital Structure and Working Capital of the organization Air India, which is a government of India enterprises. As per the objective the project, we have tried to explain, analyze and interpret the different aspects & entities related to working capital of the organization, its dynamic nature (position) and its effect on the organizations overall performance, we have also made an effort to analyze the current financial performance of Air India. During our project period as well as in this project report we are committed to make some required recommendations (if any) to the organization in order to make the objective of the project a real success.

CERTIFICATE

This is to certify that the project work done on AN ANALYSIS OF WORKING CAPITAL OF AIR INDIA submitted to Trinity institute of professional studies, Dwarka is in partial fulfillment of the requirement for the award of Bachelor of Business Administration, is a bonafied work carried out by us at Department of Finance of Air India at Air India Complex, Indira Gandhi International Airport Terminal-II, New Delhi. A copy of the report has been submitted to V. Chopra Senior Manager Finance, Air India. Date: 08/08/2011

Name: Anikesh Brahma

ACK NOWLEDGEMENT
I wish to pay respected thanks to MR. Hardev Singh (Finance Manager, NACIL(A), New Delhi) for giving us a precious opportunity to undergo our summer training in such a prestigious organization. It is their support that we succeed to know as well as feel the environment of a prestigious public sector unit (PSU) so closely. At the same time we would like to pay our sincere thanks to our faculty Mr.Yogesh Kumar (HR Dept) for his full support during my summer training as at all the time he motivated me to work efficiently and effectively in the organization . At last but not the least we would like to thanks all the faculty members of our institute, Rawal Institute of Management for all the support we got from them in one way or the other.

DECLERATIO N

This is to be taken into consideration that we have made our best effort to achieve the objective of the project i.e. to analyze the Working Capital & Financial Performance of AIR INDIA, but the correctness of analyzation outcome & its conclusion is subject to the data available to us. It should be taken into notice that as per the company policy as a management trainee we were restricted only to the public data of the company. We would have been in a better situation to report the analyzation outcome and conclusion in case we would have got some more data & relevant information. Still we have tried our level best in the area. ANIKESH BRAHMA

TABLES OF CONTENTS 1. INTRODUCTION 2. OBJECTIVE 3. COMPANY PROFILE 4. CURRENT ISSUES 5. METHODOLOGY 6. DESCRIPTION OF DATA 7. DATA
BALANCE SHEET OF LAST FIVE YEARS PROFIT AND LOSS A/C OF LAST FIVE YEARS TEN YEARS STATISTICS

8. ANALYSIS OF FINANCIAL REPORT 9. WORKING CAPITAL ANALYZATION 10.


CONCLUSION

INTRODUCTION

The project Working Capital Analyzation has been carried out with a view point of understanding the financial system, Capital Structure and Working Capital of the organization Air India, which is a government of India enterprises. As per the objective the project, we have tried to explain, analyze and interpret the different aspects & entities related to working capital of the organization, its dynamic nature (position) and its effect on the organizations overall performance, we have also made an effort to analyze the current financial performance of Air India. DETAILS The data used in the project is taken from the Directors Report of Air India, the website of the company & other reliable sources of the organization. ANALYZATION OUTCOMES Performance of Air India in last three years. By analyzing both Revenue & Expenditure along with the Profit & Loss Account of the company we find that there is An increase in the total revenue by 19.65%. (1.3) An overall increase of 22.47% in the expenditure of the company. (2.3) An overall decrease of 84.5% in the Net Profit of the company. In conclusion we can easily say that although the company has managed a marginal increase in its business, but at the same time it failed to control its expenses, resulting an overall loss of 84.5%, whereas the industry has managed a profit of around 8%. ---

Working Capital Since from 1998-99 the working capital of AIR INDIA was negative, but all of a sudden there is major jump of Rs 14462.7 million i.e. (193.87%) in the working capital, which has brought it to a positive figure of Rs 7002.8 million in financial year 2005-06 from (-)Rs 7459.9million. It clearly means that either there is a huge increase in the volume of its Current Assets or decrease in the value of Current Liabilities or respective change. BREAK UP OF WORKING CAPITAL OF LAST FIVE YEARS FIGURES IN MILLION

PARTICULARS Current Assets Current Liabilities Working Capital

2001-02 19170.6 21509 -2338.4

2002-03 18044.2 24985.2 -6941

%Change -5.87 16.16 -196.83

2003-04 18875.5 28091.4 -9215.9

%Change 4.61 12.43 -32.77

2004-05 21124.2 28584.1 -7459.9

%Change 11.91 1.75 19.05

2005-06 31625 24622.2 7002.8

%Change 49.71 -13.86 193.87

Reasons ILLUSTRATION OF REASON FOR THE INCREASE IN WORKING CAPITAL

PARTICULARS INVENTORIES SUNDRY DEBTORS CASH & BANK BALANCES OTHER CURRENT ASSETS LOANS & VADVANCES CURRENT LIABILITIES

2005-06 4613.6 14484.2 1879.1 301.1 10347 24622.2

2004-05 3534.5 10457.4 2317.6 358.2 4464 28761.1

DIFFERENCE 1079.1 4026.8 -438.5 -57.1 5883 -4138.9

The four main reasons are major changes in Inventories Sundry debtors Loans & advances Current liabilities

During the analysis we found that Air Indias working Capital has changed from negative to positive in financial year 2005-06 which is not considered to be an excellent management practice in todays scenario, as attaining negative working capital through efficient managerial tactics is one of the prime objective of todays firms and in a service sector it becomes a little easier job for the managers to attain negative working capital as most of the revenue comes in advance to the company, in case of Air India also almost all the revenue i.e. from ticketing (passengers) cargo etc (except ticketing from Government Of India (GOI)) come in advance, at the same time the company enjoys a credit period for payment of its expenditures, so it is quite possible for company to attain negative working capital, all it just need is a good & a little aggressive management policies, which is the demand of the current scenario. At the same time we need to keep it into consideration that Air India is a public sector company and profit earning is not the prime goal of the company, it shares a responsibility towards the nation & it is serving the nation same dedication from the last seven decades and more.

INTRODUCTION Working capital is a financial metric which represents the amount of day-by-day operating liquidity available to a business. Also known as operating capital, it is calculated as current assets minus current liabilities. A company can be endowed with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash. So we can say that Working capital is the area from which the performance of any firm manipulated in a short term, so it becomes a subject of great attention & efficient management for a firm. The project Working Capital Analyzation has been carried out with a view point of understanding the financial system, Capital Structure and Working Capital of the organization Air India, which is a the national flag carrier of India with a worldwide network of passenger and cargo services. It is one of the two state-owned airlines in the country, the other being Indian Airlines. Its main bases are Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport, New Delhi with hubs at Chennai International Airport. The airline connects 95 destinations around the world, including 12 gateways in India with Air India Express, which is a fully-owned subsidiary of Air India. As per the objective the project, we have tried to explain, analyze and interpret the different aspects & entities related to working capital of the organization, its dynamic nature (position) and its effect on the organizations overall performance.During our project period as well as in this project report we are committed to make some required recommendations (if any) to the organization in order to make the objective of the project a real success.

OBJECTIVE
PRIMARY OBJECTIVE: The project has been done with a prime objective of analyzing, understanding & interpreting the dynamic nature & position of the Working Capital of Air India and the main factors behind its dynamic nature, along with its effect on the over all performance of the Air India.

INTERMIDIATERY OBJECTIVES In the process we were always focused on our intermediate objectives of understanding the Financial System of the organization & its Capital Structure. During the project period as well as in the project report we were always committed to make some required recommendations (if any) to the organization in order to make the objective of the project a real success.

COMPANYS PROFILE Air India is the national flag carrier of India with a worldwide network of passenger and cargo services. It is one of the two state-owned airlines in the country, the other being Indian Airlines. Its main bases are Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport, New Delhi with hubs at Chennai International Airport. The airline connects 95 destinations around the world, including 12 gateways in India with Air India Express, which is a fully-owned subsidiary of Air India.

AIR-INDIA. The journey & milestones so far... Air India was founded as Tata Airlines in 1932, a division of Tata Sons Ltd. (now Tata Group) by J. R. D. Tata. On October 15, 1932 the founder, J. R. D. Tata flew a single engined De Havilland Puss Moth registered VT-and carrying air mail (postal mail of Imperial Airways) from Karachi's Drigh Road Aerodrome to Bombay's Juhu Airstrip via Ahmedabad. The aircraft continued to Madras via Bellary piloted by Royal Air Force pilot Nevill Vincent. Following the end of World War II, regular commercial service was restored in India and Tata Airlines became a public limited company on 29 July 1946 under the name Air India. In 1948 49% of the airline was acquired by the Government of India, with an option to purchase an additional 2%. In return, the airline was granted status to

operate international services from India as the designated flag carrier under the name Air India International. On 1 August1953, the Government of India exercised its option to purchase a majority stake in the carrier and Air India International Limited was born as one of the fruits of the Air Corporations Act that nationalised air transportation industry. At the same time all domestic services were transferred to Indian Airlines. In 1954, the airline took delivery of its first L-1049 Super Constellations and inaugurated services to Singapore, Bangkok, Hong Kong and Tokyo. Air India International entered the jet age in 1960 when its first Boeing 707, named Nandadevi and registered VT-DJJ, was delivered. Jet services to New York via London were inaugurated that same year in May 1960. On June 8, 1962 the airline's name was officially truncated to Air India. On June 11, 1962 Air India became the world's first all-jet airline. In 1970, Air India moved its offices to down town Bombay. The next year, the airline took delivery of its first Boeing 747-200 named Emperor Ashoka and registered VT-EBD. This coincided with the introduction of the 'Palace In The Sky' livery and branding. A distinctive feature of this livery is the paintwork around each aircraft window, in the cusped arch style of windows in Indian palaces. In 1986 Air India took delivery of the Airbus A310. The airline is the largest operator of this type in passenger service. In 1988, Air India also took delivery of two Boeing 747-300s in mixed passenger-cargo configuration.

Close-up on an Air India Boeing 747-400 In 1989, to supplant its "Flying Palace" livery, Air India introduced a new livery that was mostly white but had a golden sun on a red tail. Only applied to around a half of Air India's fleet, the new livery did not succeed, as the Indian flying public complained about the phasing out of the classic colours. The new livery was dropped after two years and the old scheme was returned. Since then, Air India has been hesitant to radically change the paint scheme, instead opting for minor updates and face lifts. In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-400 named Konark and registered VT-ESM made history by operating the first non-stop flight between New York and Delhi. In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to its second US gateway at Chicagos O'Hare International Airport. In 1999, the airline opened its dedicated Terminal 2-C at the newly renamed Chatrapati Shivaji International Airport in Mumbai.

The 21st century has seen Air India introduce new services to Shanghai in China, as well as two new US gateways at Newark Liberty International Airport (EWR) and Los Angeles (LAX). In March 2004, Air India started non-stop flights from Ahmedabad's Sardar Vallabhbhai Patel International Airport to London, Heathrow, making it the third station from India (after Mumbai and Delhi). In December 2004, Air India leased three Boeing 777-222ER aircraft from United Airlines. With these three new B777s, Air India was able to introduce three new routes: Delhi-Frankfurt-Los Angeles, London. European hub speculation The Serbian media reported in early January 2007 that Air India is considering a partnership with Jat Airways which may result in a new venture airline that would feed passengers onto Air India's flights, through Belgrade. Details are still sketchy but it appears that Air India hopes to use Belgrade Nikola Tesla Airport as a hub for flights to North America (US and Canada) and possibly Europe. [1] Delhi-Amritsar-Birmingham-Toronto, and Delhi-Dhaka-Kolkata-

CURRENT ISSUES
Merged airline boasts combined fleet size of over 112 aircraft, rank among the top 30 airlines in the world Air India to offer seamless transfer of passengers from an Indian domestic point to an international destination. The Ministry of Corporate Affairs, Government of India formally announced the merger of Air India and Indian Airlines today at New Delhi. The new company formed under the name National Aviation Company of India Limited (NACIL) will have Shri V. Thulasidas as the Chairman and Managing Director and Shri Vishwapati Trivedi as the Joint Managing Director. The merged airline will fly under the brand of Air India both domestically and internationally. The new airline will have a combined fleet size of over 112 aircraft, comparable to the best airlines in the Asian region and will rank among the top 30 airlines in the world. As part of its fleet acquisition programme of 111 aircraft, the new airline will be inducting 21 new aircraft (7 Boeing 777, 10 A-320 family aircraft and 4 Boeing 737-800) this year itself. Air India launched its inaugural daily, non-stop Mumbai New York flight with the first Boeing 777 200 LR aircraft. The first non-stop India US flight by a domestic carrier was also the first of the series to sport the new Air India branding. Talking about the rationale behind the merger, Air India CMD, Shri. V Thulasidas said The merger of Air India and Indian will provide an integrated international and domestic footprint, which will benefit passengers significantly. Domestic and international flights will seamlessly integrate, allowing passengers to check in for their international flight from any domestic point in India. He also added that The merger safeguards the employees with an assurance that all will be secured as a result of the merger. All current

benefits and perquisites and career progression will be protected and all employees will be better off as a result of the merger.

The merger will provide an opportunity to fully leverage strong assets, capabilities, infrastructure and skilled and experienced manpower available with both the companies to the optimum potential. It will also provide a large and growth oriented company for the people in larger public interest; provide maximum flexibility to achieve financial and capital restructuring through revaluation of assets; and provide an increased thrust and focus on airline support businesses. The synergy benefit will be over Rs 800 crores and will be realized once the integration is completed. The new fleet brings in a product and service level that is the best in class, and will now include in-flight entertainment, better seats and enhanced in-flight service. A combined schedule now means better connectivity to the largest international airline in India as well as improved service to various domestic points in India. An improved frequent flier program is in the pipeline along with a dedicated holiday packages website with new offerings to various global destinations. The consumer is a clear winner in the merger, having a muchimproved product and superior service quality. Apart from the main Passenger Airline, other revenue generating divisions such as Cargo, Low Cost Carrier (LCC), Gro und handling and MRO will gain increased focus in the merged entity and will be managed as a separate Strategic Business Unit (SBU) under the corporate umbrella of the merged organization. The new cargo airline, Air India Cargo is in the process of acquiring freighter aircraft by way of conversion of B-737 and A-310 passenger aircraft. The first A-310 freighter aircraft has already started operations to the Gulf and Europe while the B-737 freighter will be operating in the North-East Region. The new Cargo airline is targeting a freighter fleet of almost 10 aircraft over the next year. Under the brand of Air India Express, the low cost carrier will fly on both domestic and international routes. Positioned as a value airline, it will serve markets that require point to point connectivity at a lower price point. Air India Express will have a brand new fleet with in-flight

entertainment, meal service and other services that distinguish it from traditional low cost carriers. The new MRO and Ground Handling SBUs of Air India will allow greater focus on these aviation service areas that have a huge potential for growth in the fast growing Indian aviation scenario and bring in new revenue streams for the airline

METHODOLOGY

For the achievement of the above specified objective it was very essential to have a very systematic approach, so that we cover each & every relevant point and can make a correct interpretation & conclusion. For this these points were essential:1. To have a good understanding of the current financial System of the organization. Reason:A good understanding of the current financial System of the organization can only give the correct idea of the financial potential of the company, the flow of the liquidity in the system as well as the flaws (if any) in the system. Available opportunities: - Working in the organization for two months.

2. To have sufficient information for the analyzation.

Reason:We can make a correct interpretation & conclusion only after analyzation of sufficient required information, analyzation of in complete information may lead to wrong interpretation as well as conclusion. Available opportunity: - Balance Sheets, Directors Report, Internet etc.

3. To have a pool of experienced & analytical brain. It is always nice to have a pool of analytical brain because, diversity in the way of thinking leads to a conclusion having a diverse acceptance. Available opportunities: - Pool of highly experienced faculty, experienced trainee, friends etc.

4. To have a sufficient resources for depth understanding of the financial functionality of the organization.

Reason: One of the most important things for any project is availability of its relevant resources, in absence of which the conclusion may vary from the actual facts & position. Available opportunities: - Online financial system of the organization, which connects its bases all over the world, having enough consistency in the transaction throughout the system.

FLOW CHART OF ANALYZATION METHODOLOGY AIR NDIAS FINANCIAL SYSTEM REVENUE EXPENDITURE GOI-INTERFACE CLAIMS SALARIES

PERFORMANCE- REPORT (1996-2006)

CLASSIFICATION INTERPRETATION RELATIONSHIP ESTABLISHMENT CONCLUSION / RECEMENDATION

A N A L Y Z A T I O N

CLASIFICATION Most research studies result in a large volume of raw data which must be reduced into homogeneous groups if we are to get meaningful relationships. This fact necessitates classification of data which happens to be the process of arranging data in groups or classes on the basis of common characteristics. Data having a common characteristic are placed in one class and in this way the entire data get divided in to number of groups or classes. INTERPRETATION The process of drawing inferences from the facts collected after analytical and/or experimental study is called Interpretation. Infact it is a search process of broader meaning of research findings. The task of interpretation has two major aspects: (1). The effort to establish continuity in research through linking the results of a given study with those of another. (2). The establishment of some explanatory concepts. In one sense interpretation is concerned with relationship within the collected data, partially overlapping analysis. Thus, interpretation is the device through which the factor that seems to explain what has been observed by researcher in the course of the study can be better understood and it also provide a theoretical conception which can serve as a guide for further researches.

DESCRIPTION OF DATA
As per the objective, the most important thing is the relevant data, as it is the data on which the whole analysis has to be done, & in absence of which the objective was impossible to achieve. It was equally important that the data should be reliable & correct, to have a correct analysis. REQUIRED DATA As per the objective, the required data was the financial data of the organization Example: Annual financial reports. Directors report. Balance sheets. Profit & Loss Account etc. TYPES OF DATA On the basis of source & method of data collection, the data are classified into types Primary Data. Secondary Data.

Data Collection:- The data can be collected from the primary & secondary sources, which are as follow: 1. Primary data; - It is collected through following methods: a) b) Personal Interview. Companies Annual Report. 2. Secondary data: - It is collected through the following sources:

a) .

Website of Air India.

NATURE OF DATA REQUIRED As per the objective there was a requirement of mostly quantitative data, that too of financial nature, i.e. the data of the past performance of the company.

SOURCES OF DATA As per the nature of the required data, the main source of it was the companys past performance records. And the most reliable sources were companys Annual financial reports (1995-96 to 2005-06). Directors report (1995-96 to 2005-06). Balance sheet (1995-96 to 2005-06). Profit & Loss Account (1995-96 to 2005-06). Website etc. Based on the source of the data we can consider the data used in the project to be Secondary Data.

APPENDIX DATA Balance sheet as at March 31st, 2001 Particulars I. Sources of funds: Shareholders funds a) Capital b) Reserve & Surplus Loan Funds a) Secured Loans b) Unsecured loans 31902.1 Deferred Tax Liability (Net) Total II. Application of funds 1. Fixed Assets a) Gross Block Less Depreciation b) Net Block c) Capital work in progress 2. Investments Current Assets Loans & Advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions a)Current Liabilities b) Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Deferred Revenue Expenditure Profit & Loss Account Total Schedule FIGURES IN MILLION March 31,2001

A B C D

1538.4 2223.7 21302 10600.1

3762.1

35664.2 E 70776.8 33567.5 37209.3 167.2 F G H I J K L 19895.6 2973.7 22869.3 (2451.2) 125.7 35664.2 3515.4 7164.7 6223.3 326.5 3188.2 20418.1

37376.5 613.2

Balance sheet as at March 31st, 2002 Particulars I. Sources of funds: Shareholders funds a) Capital b) Reserve & Surplus Loan Funds c) Secured Loans d) Unsecured loans Deferred Tax Liability (Net) Total II. Application of funds 1. Fixed Assets a) Gross Block Less Depreciation b) Net Block c) Capital work in progress 2. Investments Current Assets Loans & Advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions a)Current Liabilities b) Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Deferred Revenue Expenditure Profit & Loss Account Total Schedule

FIGURES IN MILLION March 31,2002

A B C D

1538.4 2378.2 20036.6 8867.9

3916.6

28904.5 32821.1

E 72014.2 37617.2 34397.0 59.4 F G H I J K L 18463.8 3045.2 21509.0 (2338.4) 77.8 32821.1 3230.4 7302.8 4660.7 313.6 3663.1 19170.6

34456.4 625.3

Balance sheet as at March 31st, 2003 Particulars I. Sources of funds: Shareholders funds a) Capital b) Reserve & Surplus Loan Funds e) Secured Loans f) Unsecured loans Deferred Tax Liability (Net) Total II. Application of funds 1. Fixed Assets a) Gross Block Less Depreciation b) Net Block c) Capital work in progress 2. Investments Current Assets Loans & Advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions a)Current Liabilities b) Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Deferred Revenue Expenditure Profit & Loss Account Total Schedule

FIGURES IN MILLION March 31,2003

A B C D

1538.4 1580.3 15069.2 6533.5

3118.7

21602.7 3401.9 28123.3

E 71325.8 38720.2 32605.6 148.6 F G H I J K L 21481.4 3503.8 24985.2 (6941.0) 115.7 1583.6 28123.3 3416.6 8997.7 1893.4 295.7 3440.8 18044.2

32754.2 610.8

Balance sheet as at March 31st, 2004 Particulars I. Sources of funds: Shareholders funds a) Capital b) Reserve & Surplus Loan Funds g) Secured Loans h) Unsecured loans Deferred Tax Liability (Net) Total II. Application of funds 1. Fixed Assets a) Gross Block Less Depreciation b) Net Block c) Capital work in progress 2. Investments Current Assets Loans & Advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions a)Current Liabilities b) Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Deferred Revenue Expenditure Profit & Loss Account Total Schedule

FIGURES IN MILLION March 31,2004

A B C D

1538.4 920.1 9177.7 5579.3

2458.5

14757 2611.1 19826.6

E 71023 42820.7 2820.3 171.2 F G H I J K L 24590.9 35005 28091.4 (9215.9) 3469.5 9283.7 1872.8 267.2 3982.3 18875.5

28373.5 596.7

72.3 19826.6

Balance sheet as at March 31st, 2005 Particulars I. Sources of funds: Shareholders funds a) Capital b) Reserve & Surplus Loan Funds i) Secured Loans j) Unsecured loans Deferred Tax Liability (Net) Total II. Application of funds 1. Fixed Assets a) Gross Block Less Depreciation b) Net Block c) Capital work in progress 2. Investments Current Assets Loans & Advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions a)Current Liabilities b) Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Deferred Revenue Expenditure Profit & Loss Account Total Schedule

FIGURES IN MILLION March 31,2006

A B C D

1538.4 1711.2 5659.5 6957.4

3249.6

12616.9 2147.1 18013.6

E 71216 46411.8 24804.2 219.1 F G H I J K L 25182.4 3571.2 28753.6 (7629.4) 3534.5 10437.3 2317.6 358.2 4476.6 21124.2

25023.3 582.6

37.1 18013.6

Balance sheet as at March 31st, 2006 Particulars I. Sources of funds: Shareholders funds a) Capital b) Reserve & Surplus Loan Funds k) Secured Loans l) Unsecured loans Deferred Tax Liability (Net) Total II. Application of funds 1. Fixed Assets a) Gross Block Less Depreciation b) Net Block c) Capital work in progress 2. Investments Current Assets Loans & Advances a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions a)Current Liabilities b) Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Deferred Revenue Expenditure Profit & Loss Account Total Schedule

FIGURES IN MILLION March 31,2006

A B C D

1538.4 1859.6 12432.4 23786.7

3398.0

3619.1 2086.4 41703.5

E 71098.8 49144.3 21954.5 11853.3 F G H I J K L 21049.8 3572.4 24622.2 7002.8 4613.6 14484.2 1879.1 301.1 10347 31625

33807.8 870.2

22.7 41703.5

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31st,2001 FIGURES IN MILLION Schedu Particulars le 2000-01 I Revenue 1.Traffic N 39065. i)Scheduled Services 1 ii)Others 4890.7 43955.8 2.Handling, Servicing and Incidental O 4771.3 Operating Revenue 48727.1 3.Other (Net) P 3513.9 Total Revenue 52,241.00 II) Expenses 1.Payments to Provisions for employees including Crew Allowances Q 9669.5 2.Fuel & Oil 9885.9 3.Navigation, Landing,Housing & Parking 2835.9 4.Hire lease & Rental Charges 3093.2 5.Handling Charges 2155.7 6.Material Consumed 2960.2 7.Passenger Amenities 2113 8.Commission (Net) 4132.3 9.Communication Charges i)Resevation Systems 773.1 ii)Others 519.5 1292.6 10.Travelling Expenses: i)Crew 1339.9 ii)Others 270.6 1610.5 11.Depreciation 4103 12.Other Expenses R 4844.3 Total Operating Expenses II 48696.1 III Profit Before Interest, Prior Period I-II 3544.9 Exchange Loss, Taxation & extraordinary Items Interest S 2478.5 Prior Period Adjustments (Net) T 787.8 Exchange Loss 659 3925.3 Profit Before Taxation -380.4 Less: Provision for Taxation(including wealth tax) 2.7 Profit/ Loss before extraordinary Items -383.1 Extra Ordinary Items (Net) U -60.9 Loss after Extra Ordinary Items For the Year -444

Balance Brought Forward Profit & Loss account Balance Carried to Balance Sheet

-8897.2 M -9341.2

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31st,2002 Particulars I Revenue 1.Traffic i)Scheduled Services ii)Others 2.Handling, Servicing and Incidental Operating Revenue 3.Other (Net) Total Revenue II) Expenses 1.Payments to Provisions for employees including Crew Allowances 2.Fuel & Oil 3.Navigation, Landing,Housing & Parking 4.Hire lease & Rental Charges 5.Handling Charges 6.Material Consumed 7.Passenger Amenities 8.Commission (Net) 9.Communication Charges i)Resevation Systems ii)Others 10.Travelling Expenses: i)Crew ii)Others 11.Depreciation 12.Other Expenses Total Operating Expenses II III Profit Before Interest, Prior Period I-II Excange Loss, Taxation & extraordinary Items Interest Prior Period Adjustments (Net) Exchange Loss Profit Before Taxation Less: Provision for Taxation(including wealth tax) Profit/ Loss before extraordinary Items Extra Ordinary Items (Net) Profit/Loss after Extra Ordinary Items For the Year Balance Brought Forward Schedule N 36884.2 5820.2 O P 42704.4 4809.2 47513.6 2815.8 50,329.40 FIGURES IN MILLION 2000-02

9862.8 9098.4 2937 3051.5 2367.9 3134 1906.1 3727.6 835.5 550.9 1441.1 243.5 1386.4 1684.6 4439.5 4463.1 48058.9 2270.5

S T

1576.2 360.4 155.8

2092.4 178.1 12.8

165.3 -10.9 154.4 -9341.2

Profit & Loss account Balance Carried to Balance Sheet

-9186.8

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31st,2003 FIGURES IN MILLION Schedul Particulars e 2000-03 I Revenue 1.Traffic N i)Scheduled Services 40265.2 ii)Others 6524 46789.2 2.Handling, Servicing and Incidental O 5969.9 Operating Revenue 52759.1 3.Other (Net) P 3819.6 Total Revenue 56,578.70 II) Expenses 1.Payments to Provisions for employees including Crew Allowances Q 10441.1 2.Fuel & Oil 11113.3 3.Navigation, Landing,Housing & Parking 3332 4.Hire lease & Rental Charges 3651.1 5.Handling Charges 2806.3 6.Material Consumed 2832.9 7.Passenger Amenities 2350.2 8.Commission (Net) 3650.9 9.Communication Charges i)Resevation Systems 1144.9 ii)Others 532.9 1677.8 10.Travelling Expenses: i)Crew 1824.1 ii)Others 332.7 2156.8 11.Depreciation 4595 12.Other Expenses R 6048.9 Total Operating Expenses II 54656.3 III Profit Before Interest, Prior Period I-II 1922.4 Excange Loss, Taxation & extraordinary Items Interest S 746.7 Prior Period Adjustments (Net) T 55.7 802.4 Profit Before Extra Ordinary Items & Taxation 1120 Extra Ordinary Items (Net) U Profit/Loss Before Taxation 1120 Less: Provision for Taxation Current Year 100 Earlier Year 1.5 101,5

Add Deferred Tax Benefit Profit Loss After Taxation Balance Brought Forward Profit & Loss Account Balance Carried To Balance Sheet

1018.5 320.1 1338.6 -9186.8 M -7848.2

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31st,2004 FIGURES IN MILLION Particulars I Revenue 1.Traffic i)Scheduled Services ii)Others 2.Handling, Servicing and Incidental Operating Revenue 3.Other (Net) Total Revenue II) Expenses 1.Payments to Provisions for employees including Crew Allowances 2.Fuel & Oil 3.Navigation, Landing,Housing & Parking 4.Hire lease & Rental Charges 5.Handling Charges 6.Material Consumed 7.Passenger Amenities 8.Commission (Net) 9.Communication Charges i)Resevation Systems ii)Others 10.Travelling Expenses: i)Crew ii)Others 11.Depreciation 12.Other Expenses Total Operating Expenses II III Profit Before Interest, Prior Period I-II Excange Loss, Taxation & extraordinary Items Interest Prior Period Adjustments (Net) Profit Before Extra Ordinary Items & Taxation Extra Ordinary Items (Net) Profit/Loss Before Taxation Less: Provision for Taxation Current Year Schedu le N 45783 7459.9 O P 53242.9 6636.9 59879.8 2484.6 62,364.40 2000-04

11123.8 13397.5 4020.1 4943.2 3775.7 2797.9 2861.6 3593.3 1184 598.8 2563.9 374.8 1782.8 2938.7 4433.1 5704.7 61042.2 1322

S T

396.3 847.3 1243.6 78.4 65.5 143.9 11.4

Earlier Year Add Deferred Tax Benefit Profit Loss After Taxation Balance Brought Forward Profit & Loss Account Balance Carried To Balance Sheet 11.4 132.5 790.8 923.3 -7848.2 M -6924.9

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31st,2005 FIGURES IN MILLION Schedul Particulars e 2000-05 I Revenue 1.Traffic N i)Scheduled Services 56743 ii)Others 8604.1 65347.1 2.Handling, Servicing and Incidental O 10,534.60 Operating Revenue 75881.7 3.Other (Net) P 418.2 Total Revenue 76,299.90 II) Expenses 1.Payments to Provisions for employees including Crew Allowances Q 11821.4 2.Fuel & Oil 21877.4 3.Navigation, Landing,Housing & Parking 5132.8 4.Hire lease & Rental Charges 6831.9 5.Handling Charges 4515.7 6.Material Consumed 3946 7.Passenger Amenities 3731.9 8.Commission (Net) 3768.4 9.Communication Charges i)Resevation Systems 1258.1 ii)Others 552.8 1810.9 10.Travelling Expenses: i)Crew 2862.7 ii)Others 344.3 3207 11.Depreciation 4260.3 12.Other Expenses R 4485.1 Total Operating Expenses II 75388.8 III Profit Before Interest, Prior Period I-II 911.1 Excange Loss, Taxation & extraordinary Items Interest S 323.8 Prior Period Adjustments (Net) T -64.1 259.7 Profit Before Extra Ordinary Items & Taxation 651.4 Extra Ordinary Items (Net) U -150 Profit/Loss Before Taxation 501.4 Less: Provision for Taxation 1.8 499.6 Add Deferred Tax Benefit 464 Profit Loss After Taxation 963.6 Balance Brought Forward Profit & Loss account Balance Carried to Balance Sheet 963.6

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31st,2006 FIGURES IN MILLION Sched Particulars ule 2000-06 I Revenue 1.Traffic N i)Scheduled Services 63310.5 ii)Others 11238.6 74549.1 13,788.0 2.Handling, Servicing and Incidental O 0 Operating Revenue 88337.1 3.Other (Net) P 4112.4 92,449.5 Total Revenue 0 II) Expenses 1.Payments to Provisions for employees including Crew Allowances Q 12443.7 2.Fuel & Oil 31407.7 3.Navigation, Landing,Housing & Parking 5778.1 4.Hire lease & Rental Charges 9438.9 5.Handling Charges 5056.2 6.Material Consumed 4651.8 7.Passenger Amenities 3782.5 8.Commission (Net) 4377.1 9.Communication Charges i)Resevation Systems 1269.7 ii)Others 595 1864.7 10.Travelling Expenses: i)Crew 3318.6 ii)Others 492.8 3811.4 11.Depreciation 4061.9 12.Other Expenses R 5659 Total Operating Expenses II 92333 III Profit Before Interest, Prior Period I-II 116.5 Excange Loss, Taxation & extraordinary Items Interest S 838.8 Prior Period Adjustments (Net) T -846.6 -7.8 Profit Before Extra Ordinary Items & Taxation 124.3 Extra Ordinary Items (Net) U Profit/Loss Before Taxation 124.3 Less: Provision for Current Tax i)Fringe Benefit Tax 34.1 ii)Wealth Tax 1.5 35.6

Add Deferred Tax Benefit Profit Loss After Taxation Balance Brought Forward Profit & Loss account Balance Carried to Balance Sheet Balance Sheet

60.7 149.4 791.1 940.5

TEN YEAR STATISTICS-I


Particulars FINANCE : Operating Revenue Operating Expences Operating Profit/Loss Toatl Revenue Total Expances Net Surplus/(deficit) Before tax Tax Net Surplus/(deficit) After tax Operating Cost Per ATKM Yield per Rtkm(Schd.Serv Rev/Rtkm) Operating Ratio(Ratio of Operating expenses to Operating Revenue) SELECTED BALANCE SHEET ITEMS: Current Assets Current Liabilities Net Working Capital Fixed Assets Loan Funds Capital Net Worth OPERATIONS: Revenue Hours Flown Available Seats Kilometers(Schd. Serv) Available Seats Kilometers(Total) Available Tonne Kilometers (Schd. Serv) Available tonne Kilometers (Total) TRAFFIC: Revenue Passengers Carried(Total) Frieght Tonnes carried(Total) Revenue Passengers Kilometers(Schd. Serv) Revenue Passenger Kilometers(Toatl) Passenger Tonnes Kilometers Cargo Tonnes -Kilometers(Incl Ex Bagg.) Mail Tonnes Kilometers Revenue Tonnes Kilometers(Schd Serve) Charters Tonnes kilometers Total Revenue Tonnes Kilometers LOAD FACTOR (SCHD SERVICES) : Passenger Overall Acft Utilisation-Rev Hrs. per Annum PERSONNEL: No. of staff(Year End) AvailableTonnes kilometers Per Employee Revenue Tonnes per Employee Units (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.) (Rs.) (%) 2005-06 8833.7 9233.3 -399.3 9251.02 9232.52 18.5 3.56 14.94 21.52 26.78 104.52 2004-05 7588.17 7538.88 49.29 7676.39 7579.85 96.54 0.18 96.36 20.52 26.5 99.35 2003-04 6146.65 6113.71 32.94 6331.78 6238.07 93.71 1.38 92.33 20.49 25.81 99.46 2002-03 5275.91 5465.63 -189.72 5689.88 5545.87 144.01 10.15 133.86 21.9 25.8 103.6

(Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (No.) (Million) (Million) (Million) (Million) (Million)

3162.5 2462.5 700.28 3380.78 3621.91 153.84 546.26

2112.42 2858.41 -745.99 2502.33 1261.69 153.84 552.91

1887.55 2809.14 -921.59 2837.35 1475.7 153.84 499.72

1804.42 2498.52 -694.1 3275.42 2160.27 153.84 482.12

147043 30965.9 31704.4 4193.2 4290.3

129378 27137.6 27711.8 3600.4 3674.5

107893 21624.7 22293.6 2897.5 2984

91318 18093.2 18715.6 12415.9 2495.5

(No.) (No.) (Million) (Million) (Million) (Million) (Million) (Million) (Million) (Million)

4436863 95681 20511.1 20876.2 1866.5 483.4 13.9 2363.8 33.2 2397

4447142 105146 18950 19184.4 1724.5 482.2 11.3 2218 21.2 2239

3835222 88828 15249.7 15549.3 1388.1 372.2 13.5 1773.9 27.4 1801.3

3456031 96860 12962.7 13251 1180 371.3 9.7 1561 26.5 1587.5

(%) (%) (NO.) (No.) (No.) (No.) (No.)

66.2 56.4 4103

69.8 61.6 3846

70.5 61.2 3586

71.6 64.6 3280

15884 339400 189600

15914 294300 179300

15572 237500 143400

16068 190700 121300

TEN YEAR STATISTICS-III


Particulars FINANCE : Operating Revenue Operating Expences Operating Profit/Loss Toatl Revenue Total Expances Net Surplus/(deficit) Before tax Tax Net Surplus/(deficit) After tax Operating Cost Per ATKM Yield per Rtkm(Schd.Serv Rev/Rtkm) Operating Ratio(Ratio of Operating expenses to Operating Revenue) SELECTED BALANCE SHEET ITEMS: Current Assets Current Liabilities Net Working Capital Fixed Assets Loan Funds Capital Net Worth OPERATIONS: Revenue Hours Flown Available Seats Kilometers(Schd. Serv) Available Seats Kilometers(Total) Available Tonne Kilometers (Schd. Serv) Available tonne Kilometers (Total) TRAFFIC: Revenue Passengers Carried(Total) Frieght Tonnes carried(Total) Revenue Passengers Kilometers(Schd. Serv) Revenue Passenger Kilometers(Toatl) Passenger Tonnes Kilometers Cargo Tonnes -Kilometers(Incl Ex Bagg.) Mail Tonnes Kilometers Revenue Tonnes Kilometers(Schd Serve) Charters Tonnes kilometers Total Revenue Tonnes Kilometers LOAD FACTOR (SCHD SERVICES): Passenger Overall Acft Utilisation-Rev Hrs. per Annum PERSONNEL: No. of staff(Year End) AvailableTonnes kilometers Per Employee Revenue Tonnes per Employee Units (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.crores) (Rs.) (Rs.) (%) 1997-98 3837.21 4029.84 -129.63 4174.16 4355.17 -181.01 -181.01 16.48 21.95 105.02 1996-97 3533.19 3945.82 -412.63 3817.78 4114.72 -296.94 -296.94 15.76 20.2 111.68

(Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (Rs.Crores) (No.) (Million) (Million) (Million) (Million) (Million)

2303.15 2119.42 183.73 3984.34 3649.21 153.84 579.61

2011.29 2182.94 -171.65 4001.69 3154.54 153.84 738.07

84065 16933.3 18067.3 2293.7 2445.7

89571 17652 18041.1 2452.1 2504.3

(No.) (No.) (Million) (Million) (Million) (Million) (Million) (Million) (Million) (Million)

3062980 90689 11422.4 11955 1040.3 406.2 7.4 1453.8 48.7 1502.5

2950558 88962 11588.6 11752.1 1055.6 422.2 6.8 1484 14.9 1499.5

(%) (%) (NO.) (No.) (No.) (No.) (No.)

67.5 63.4 2717

65.7 60.5 2712

18751 160400 98600

18250 167000 100000

ANALYSIS OF FINANCIAL REPORTS & WORKING CAPITAL

DECLEARATION This is to be taken in to consideration that the source of every financial data used in the analysis is .the Directors Reports of Air India released in different financial year (mentioned in the bibliography in the last of the project report). All the figures used in the Project Report are in Million.

INTRODUCTION TO THE SOURCES OF REVENUE

PASSENGER. HANDLING & SERVICING. FREIGHT. UNUTILIZED SERVICES. CHARTER HAJ. BLOCK SPACE AGREEMENT. OTHER INCOME. POOL RECEIPTS. PROVISION FOR OBSOLESCENCE. ROYALITY FROM AICL. CHARTER VVIP. EXCESS BAGGAGE & MAIL.

INTRODUCTION TO THE SOURCES OF REVENUE

FUEL & OIL. INSURANCE. CREW COST. SALARIES & STAFF COST. PRIOR PERIOD ADJUSTMENT. INTEREST ON WORKING CAPITAL. INTEREST ON AIRCRAFT LOANS. OTHER EXPENSES . RENT, RATES, TAXES & COMM. HIRE OF AC. HIRE OF AC HAJ. DRY LEASE CHARGES. DEPRECIATION & OBSOLESCANCE. PASSENGER AMENITIES. AGENCY COMMISSIONS. LANDING HANDLING & NAVIGATION. MATERIAL & REPAIRS.

1. ANALYZATION OF MAJOR CONSTITUENTS OF REVENUE OF THE LAST THREE YEARS Particulars SCHEDULED SERVICES Passenger Excess Baggage Mail Cargo Total OTHERS Charter Pool Block Seat Arrangement Royalty from Air India Charters Ltd 2003-04 40787.3 562.0 201.0 4232.7 53242.9 2814.5 1991.4 2654.0 2004-05 50527.0 491.0 201.6 5523.4 65347.1 3106.1 2084.0 3414.0 %Change 23.88 -12.63 0.2 30.49 22.73 10.36 4.65 28.64 15.34 18.90 -18.23 71.18 28.1 39.42 23.71 2005-06 56883.9 419.2 247.6 5759.8 63310.5 4880.3 2064.8 3297.2 996.3 11238.6 5152.1 4077.5 4558.4 13788.0 4112.4 92449.5 %Change 12.58 14.62 22.82 4.2 -3.1 57.12 -0 .1 -3.42 30.62 6.65 214.26 3.46 30.88 196.45 19.65

Total 7459.9 8604.1 HANDLING ,SERVICING & INCIDENTAL REVENUE Handling & Servicing 4062.9 4831.0 Income from Unutilized Services 1586.7 1297.5 Incidental 2574.0 4406.1 Total 8223.6 10534.6 Others 995.0 1387.2 TOTAL 62461.5 77268.9

1. ANALYZATION OUTCOME 1) By analyzing the above table we can conclude that there is an increase in the revenue from the Passenger, Cargo, Incidental & Handling & Servicing every year, but the thing to be mark is that it is increasing at a diminishing rate i.e. year after year Air-India has failed to maintain the rate of increase in its business in these sources of its revenue. -- (1.1) 2) The another point to be consider is that the business from the Charter is regularly doing well, also the market dynamics & forecasting released by IATA (International

Air Traffic Association) says that a vast increase in this business is expected from this segment of aviation industry in the next few years (reason is the improving economic situation of the country as well as liberalization). -- (1.2) 3) Also there is an increase in the total revenue by 19.65%. -- (1.3)

2.MAJOR CONSTITUENTS OF EXPENCE OF THE LAST THREE YEARS PARTICULARS Payments Fuel & Oil Navigation, Landing Housing & Parking Hire & Lease Rental Charges Handling Charges Material Consumed Passenger Amenities Commission Communication Charges Traveling Expenses Depreciation Other Expenses TOTAL 200304 11123. 8 13397. 5 4020.1 4943.2 3445.7 2797.9 2861.6 3593.3 1782.8 2938.7 4433.1 5799.4 61137. 1 200405 11821. 4 21877. 4 5132.8 6831.9 4515.7 3946 3731.9 3768.4 1810.9 3207 4260.3 4485.1 75388. 8 %Chang e 6.27 63.29 27.68 38.21 31.05 41.03 30.41 4.87 6.26 9.13 -3.9 -22.66 23.31 200506 12443. 7 31407. 7 5778.1 9438.9 5056.2 4651.8 3782.5 4377.1 1864.7 3811.4 4061.9 5659.0 92333 %Change 5.26 43.56 12.57 38.16 11.97 17.89 1.36 16.15 2.97 18.85 -4.65 26.17 22.47

2. ANALYZATION OUTCOME 1) On analyzing the above table we can conclude that there is a regular increase in expense due to Fuel & Oil of around 50% every year. -- (2.1) 2) A major increase in Other Expenses of 26.17% is also another reason in overall increase in expenditure of the company, where as last year it was decreased by 22.66%. -- (2.2) 3) There is an overall increase of 22.47% in the expenditure of the company. -- (2.3)

3. ANALYZATION OF FINANCIAL PERFORMANCE OF AIR INDIA

100000 80000 60000 40000 20000

92510.2 92325.2 76763.9 75798.5 63317.8 62380.7 56898.8 55458.7 50329.4 50162.2 52788.4 53232.4

149.4

963.6

923.3

1338.6

154.4 -444

0 -20000

2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 EXPENDITURE NET PROFIT/LOSS

REVENUE

3. ANALYSATION OF FINANCIAL PERFORMANCE OF AIR-INDIA

PARTICULARS REVENUE EXPENDITUR E NET PROFIT

2001-02 50329.4 50162.2 154.1

2002-03 56898.8 55458.7 1338.6

%Chang e 13.05 10.56 766.97

2003-04 63317.8 62380.7 923.3

%Chang e 11.28 12.48 -31.02

2004-05 76763.9 75798.5 963.6

%Chang e 21.23 21.51 4.36

2005-06 92510.2 92325.2 149.4

%Chang e 20.51 21.8 -84.49

Conclusion By analyzing both the table of Revenue & Expenditure along with the Profit & Loss Account of the company we find An increase in the total revenue by 19.65%. An overall increase of 22.47% in the expenditure of the company. An overall decrease of 84.5% in the Net Profit of the company. -- (1.3) -- (2.3) --(3.1)

In conclusion we can easily say that although the company has managed a marginal increase in its business, but at the same time it failed to control its expenses, resulting an overall loss of 84.5%, whereas the industry has managed a profit of around 8%.

4.ANALYZATION OF SOURCES OF FUNDS

38305.5 40000 35000 28904.5 30000 25004.6 25000 17368.1 20000 14764 15000 10000 3398 3249.6 2458.5 3118.7 3916.6 5000 0 2005-06 2004-05 2003-04 2002-03 2001-02 SHARE HOLDERS' FUNDS LOAN FUNDS

4. ANALYZATION OF SOURCES OF FUNDS

PARTICULARS Share Holders Funds Loan Funds TOTAL

2001-02 3916.6 28904.5 32821.1

2002-03 3118.7 25004.6 28123.3

%Change -20.37 -13.49 -14.31

2003-04 2458.5 17368.1 19826.6

%Change -21.17 -30.54 -29.5

2004-05 3249.6 14764 18013.6

%Change 32.18 -14.99 -9.14

2005-06 3398 38305.5 41703.5

%Change 4.56 159.45 131.51

ANALIZATION OUTCOMES

Share Holder Fund is almost similar every year.

--(4.1)

Loan Fund is decreasing every Year from financial Year 2001 to Financial Year 2005, but there is a sudden increase of 159.45% resulting an over all increase of 131.51% in the total fund of the company in just one financial year. --(4.2)

5. ANALYSATION OF SHARE HOLDERS FUND

PARTICULARS Capital Reserves & Surplus TOATL

2001-02 1538.4 2378.2 3916.6

2002-03 1538.4 1580.3 3118.7

%Chang e 0 -33.55 -20.37

2003-04 1538.4 920.1 2458.5

%Chang e 0 -61.31 -21.17

2004-05 1538.4 1711.2 3249.6

%Change 0 85.98 32.18

2005-06 1538.4 1859.6 3398

%Change 0 8.67 4.56

ANALIZATION OUTCOMES Capital fund is absolutely equal every year, i.e. there is no any change in it. In year 2001-02 & 2003-04 there is a decrease in the Reserve & Surplus because of the loss in their previous years. --(5.1) --(5.12)

In year 2004-05 & 2005-06 there is an increase in the Reserve & Surplus part because of the profit in their previous years.(5.3)

6. ANALISATION OF LOAN FUNDS

PARTICULARS Secured Loans Unsecured Loans TOTAL

2001-02 20036.6 8867.9 28904.5

2002-03 15069.2 6533.5 21602.7

%Change -24.79 -26.32 -25.26

2003-04 9177.7 5579.3 14757

%Change -39.1 -14.60 -31.69

2004-05 5659.5 6957.4 12616.9

%Change -38.33 24.7 -14.5

2005-06 12432.4 23786.7 36219.1

%Chang e 119.67 241.9 187.07

ANALYZATION OUTCOME

The company has reduced its Long Term Loan from 2001-02 to 2004-05 but in just one financial year i.e.2004-05 to 2005-06 there is a huge increase of 187.07% (Secured 119.67% and 241.9%) due to the Loan Term Loan it has taken from an American Bank. --(6.1)

7. APPLICATION OF FUNDS

35000 30000 25000 20000 15000 10000 5000 0

33807.8
31 625 2 8584 .1 28091 .4

32754.2 28373.5
249 85.2 1887 5.5 1 8044 .2

34456.4

25023.3 24 622.2
211 24.2

21509 1 917 0.6

2005-06

2004-05

2003-04

2002-03

2001-02

FIXED ASSETS CURRENT LIABILITIES & PROVISIONS

CURRENT ASSETS, LOANS & ADVANCES

8. FIXED ASSETS

PARTICULARS Gross Block Less: Depreciation Net Block Capital Work In Progress TOTAL

2001-02 72014.2 37617.2 34397 59.4 34456.4

2002-03 71325.8 38720.2 32605.6 148.6 32754.2

%Change -9.56 2.93 -5.2 150.17 -4.94

2003-04 71023 42820.7 28202.3 171.2 28373.5

%Change -0.4 10.59 -13.5 15.21 -13.37

2004-05 71216 46411.8 24804.2 219.1 25023.3

%Change 0.27 8.39 -12.05 27.98 -11.80

2005-6 71098.8 49144.3 21954.5 11853.3 33807.8

%Change -0.16 5.88 -11.49 5310 35.10

There is a regular increase in the depreciation of the assets of the company.

--(8.1)

Due to regular increase in the depreciation the Net Block of the company has decreased regularly.--(8.1) In the Capital Work in Progress there was a regular but a steady increase, but due to a heavy investment in the acquisition of new aircrafts (paid an advance of Rs11634.2 million) in year 2005-06 there is an sudden increase of 5310%. --(8.3)

9. ANALIZATION OF CURRENT ASSETS

PARTICULARS Inventories Sundry Debtors Cash & Bank Balance Other Current Assets Loans & Advances

2001-02 3230.4 7302.8 4709.5 313.6 3614.3

2002-03 3416.6 8997.7 1893.4 295.7 3440.8

%Change 5.76 23.21 -60 -5.7 -4.8

2003-04 3469.5 9283.7 1872.8 267.2 3982.3

%Change 1.55 3.18 -1.1 -9.64 15.74

2004-05 3534.5 10457.4 2317.6 358.2 4464

%Change 1.87 12.64 23.75 34.06 12.1

2005-06 4613.6 14484.2 1879.1 301.1 10347

%Change 30.53 38.51 -18.92 -15.94 131.79

10. CURRENT LIABILITIES

PARTICULARS Current Liabilities Provisions TOTAL

2001-02 18463.8 3045.2 21509

2002-03 21481.4 3503.8 24985.2

%Change 16.34 15.06 16.16

2003-04 24440.8 3650.6 28091.4

%Change 13.78 4.19 12.43

2004-05 25182.4 3571.2 28753.6

%Change 3.03 -2.17 2.36

2005-06 21049.8 3572.4 24622.2

%Change -16.41 0.03 -14.37

WORKING CAPITAL ANALYZATION WHAT IS WORKING CAPITAL? Working capital is a financial metric which represents the amount of day-by-day operating liquidity available to a business. Also known as operating capital, it is calculated as current assets minus current liabilities. A company can be endowed with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash. So we can say that Working Capital is the area from which the performance of any firm can be manipulated in short run, so it becomes a subject of great attention & efficient management for a firm. Thus we can illustrate it like this

WORKING CAPITAL = CURRENT ASSETS

Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact:

Accounts Receivable (Current Asset) Inventory (Current Assets), and Accounts payable (Current Liability)

In addition, the current (payable within 12 months) portion of debt is critical, because it represents a short-term claim to current assets. Common types of short-term debt are bank loans and lines of credit. A positive change (increase) in working capital indicates that the business has either increased Current Assets (that is received cash, or other current assets) or has decreased Current Liabilities, for example has paid off some short-term creditors. TYPES OF WORKNG CAPITAL

WORKING CAPITAL

1. GROSS WORKING CAPITAL

2. NET WORKING CAPITAL

1. GROSS WORKING CAPITAL

WORKING CAPITAL = CURRENT ASSETS Gross Working Capital refers to the firms investment in Current Assets. Current Assets are the assets which can be converted into cash within an accounting year and include cash, short term securities, debtors, (account receivable or book debts), bills receivable and stock (inventories).

2. NET WORKING CAPITAL NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES

Net Working Capital refers to the difference between current assets and current liabilities. Current Liabilities are those claims of outsiders which are expected to mature for payment within an accounting year an include creditors (accounts payable), bills payables and outstanding expenses. Net Working Capital can be positive or negative i.e.

NET WORKING CAPITAL

1. POSITIVE WORKING CAPITAL

2. NEGATIVE WORKING CAPITAL

1. POSITIVE WORKING CAPIATAL A Positive Net Working Capital will Arise when current assets exceeds current liabilities.

How a Positive Working Capital exists

RMC

2. NEGATIVE WORKING CAPIATAL A Negative Net Working Capital occurs when current liabilities are in excess of current assets. How negative working capital is achieved

AGG
RMCP

NEGATIVE WORKING CAPITAL IN CONTEXT OF AIR INDIA

11. WORKING CAPITAL OF AIR INDIA

40000 30000 20000 10000 0 -10000

31625 24622.2 21124.2

28584.1

28091.4 18875.5

24985.2 18044.2 19170.6 21509

7002.8

-7459.9

-9215.9

-6941

-2338.4

2005-06

2004-05

2003-04

2002-03

2001-02

CURRENT ASSETS, LOANS & ADVANCES CURRENT LIABLITIES & PROVISIONS WORKING CAPITAL

12. ANALYZATION OF WORKING CAPITAL OF LAST FIVE FINANCIAL YEARS

ANALYZATION OUTCOMES PARTICULARS 2001-02 2002-03 %Change Current Assets 19170.6 18044.2 -5.87 Current Liabilities 21509 24985.2 16.16 Working Capital -2338.4 -6941 -196.83

2003-04 18875.5 28091.4 -9215.9

%Change 4.61 12.43 -32.77

2004-05 21124.2 28584.1 -7459.9

%Change 11.91 1.75 19.05

2005-06 31625 24622.2 7002.8

%Change 49.71 -13.86 193.87

Since from 1998-99 the working capital of AIR INDIA is negative, but all of a sudden there is major jump of Rs 14462.7 million i.e.(193.87%) in the working capital, which has brought it to a positive figure of Rs 7002.8 million in financial year 2005-06 from (-)Rs 7459.9million. --(12.1)

It clearly means that either there is a huge increase in the volume of its Current Assets or decrease in the value of Current Liabilities or respective change. Now we need to look behind the reason and its source of such a huge change in just one financial year.

13. BREAK-UP OF CURRENT ASSETS

16000 14000 12000 10000 8000 6000 4000 2000 0

14484.2

10347

10457.4 9283.7 8997.7 7302.8 4709.5 3614.3 3440.8 3230.4

4613.6 3534.5 1879.1 301.1 2317.6

4464 3469.5

3982.3

3416.6

1872.8 267.2

1893.4 295.7 313.6

358.2

2005-06 2004-05 2003-04 2002-03 2001-02


SUNDRY DEBTORS OTHER CURRENT ASSETS

INVENTORIES CASH & BANK BALANCES LOANS & ADVANCES

13. ANALIZATION OF CURRENT ASSETS

PARTICULARS Inventories Sundry Debtors Cash & Bank Balance Other Current Assets Loans & Advances

2001-02 3230.4 7302.8 4709.5 313.6 3614.3

2002-03 3416.6 8997.7 1893.4 295.7 3440.8

%Change 5.76 23.21 -60 -5.7 -4.8

2003-04 3469.5 9283.7 1872.8 267.2 3982.3

%Change 1.55 3.18 -1.1 -9.64 15.74

2004-05 3534.5 10457.4 2317.6 358.2 4464

%Change 1.87 12.64 23.75 34.06 12.1

2005-06 4613.6 14484.2 1879.1 301.1 10347

%Change 30.53 38.51 -18.92 -15.94 131.79

13. ANALYZATION OUTCOMES 1) The inventory of the company was almost same till the year 2004-05, but in the year 2005-06 the inventory has suddenly increased by 131.79%. 2) There is a regular increase in the Sundry Debtors of the company. --(13.1) --(13.2)

3) Cash & Bank Balance & Other Current Assets of the company is almost same decreased every year except in the year 2004-05. --(13.3) 4) In Loans & Advances there was marginally ups & downs, but in the year 2005-06 all of a sudden it has jumped to a figure of Rs10347 million i.e. 131.79% of change from the previous year. --(13.4)

14. BREAK-UP OF INVENTORIES 14. INVENTORIES

8000 7000 6000 5000 4000 3000 2000 1000 0

7401.1 6504.2 5858.3 4205.5 3469.5 3442.4 3534.5 2032.6 205.3 406 749.1 4613.6

2003-04

2004-05
Loose Tools

2005-06

Stores & Spare Parts Less: Provision for Obsolescence TOTAL

Goods -in-Transit

PARTICULARS Stores & Spare Parts Loose Tools Less: Provision for Obsolescence Goods -in-Transit TOTAL

2003-04 7401.1 68.6 4205.5 205.3 3469.5

2004-05 6504.2 66.7 3442.4 406 3534.5

%Change -12.12 -2.77 -18.15 97.76 1.87

2005-06 5858.3 38.8 2032.6 749.1 4613.6

%Change -9.93 -41.83 -40.95 84.58 30.53

ANALYZATION OUTCOMES The value of Store & Spares Parts & Loose Tools is constantly decreasing. --(14.1)

The value for Provision for Obselence was also decreasing regularly till the year 2004-05, in the year 2005-06 it has severely decreased by 40.95%, this has lead an increase in the overall value of the inventory by 30.53% in the 2005-06. (14.2)

15. SUNDARY DEBTORS

15000 10000 5000 0


5607.3 3676.5 1118 1123.7 5.6 9283.7 5825.6 3676.5 1118 944 15.9 848.9 10,457.40 7233.97250.3

14484.2

867.9 19

2003-04

2004-05

2005-06

Unsecured Considered Good Considered Good Less : Provision for Doubtful Debts

Unsecured Considered Doubtful Considered Doubtful TOTAL

16. BREAK-UP OF SUNDRY DEBTORS

PARTICULARS 2003-04 2004-05 %Change UNSECURED (Debts Outstanding for a period exceeding Six Months) Considered Good 3676.5 4621.9 25.71 Considered Doubtful 1118.0 932.7 -16.57 OTHER DEBTS Considered Good 5607.3 5815.4 3.71 Considered Doubtful 5.6 11.3 101.78 Less : Provision for Doubtful Debts 1123.7 944.0 -15.99 TOTAL 9283.7 10,437.3 12.43

2005-06 7233.9 848.9 7250.3 19.0 867.9 14484.2

%Change 56.18 -8.53 24.45 19.5 -8.06 38.51

16. ANALYZATION OUTCOMES The unsecured debtors of the company are increasing constantly year after year (i.e. by 15.85% in year 2004-05 & by 45.5% in year 2005-06, which is not good for any company. --(16.1)

The other Debts of the company is also increasing at an alarming rate of (3.7% in year 2004-05 to 24.4% in year 2005-06). --(16.2) The good thing is that the Provision for Doubtful Debts is decreasing year after year. --(16.3)

17. CASH & BANK BALANCES

2500 2000 1500 1000 500 0


138.3 28.2 1137.6 568.7 159.7 2.6 1872.8

2317.6 1879.1

1128.4 1026.9

890.5 822.6

165.5 0.5

2003-04

2004-05
Remittances in Transit TOTAL

2005-06
In Current Account

Cash on Hand In Deposit Account

17. CASH AND BANK BALANCES

ANALYZATION OUTCOME The cash and Bank Balances of the company is fluctuating every year, this could be due to different scale of operations every PARTICULARS 2003-04 Cash on Hand 138.3 Remittances in Transit 28.2 BALANCES WITH BANKS In Current Account 568.7 In Deposit Account 1137.6 TOTAL 1872.8 year. 2004-05 159.7 2.6 1128.4 1026.9 2317.6 %Change 15,47 90.78 98.42 -9.73 23.75 2005-06 165.5 0.5 890.5 822.6 1879.1 %Change 3.63 -80.77 -21.08 -19.89 -18.92 --(17.1)

18. OTHER CURRENT ASSETS

400 350 300 250 200 150 100 50 0

358.2 301.1 259.6 267.2 234.9 206.7

123.3

94.4

7.6

2003-04

2004-05

2005-06 TOTAL

Interest Accrued on Deposits

Interest Accrued on Loans

18. OTHER CURRENT ASSETS PARTICULARS Interest Accrued on Deposits Interest Accrued on Loans TOTAL 2003-04 7.6 259.6 267.2 2004-05 123.3 234.9 358.2 %Change 1522.37 -9.51 34.05 2005-06 94.4 206.7 301.1 %Change -23.48 -12 -15.94

ANALYZATION OUTCOMES The Interest Accrued on Deposits has fluctuated in these years as it increased in year 2004-05 but decreased in 2005-06. --(18.1) Interest Accrued on Loans has continuously decreased in the whole period of last three years. These two has resulted an overall decrease of 15.94% in the financial year 2005-06. --(18.2) --(18.3)

19 .LOANS & ADVANCES

12000 10000 8000 6000 4000 2000 0


3982.3 4476.6 10347

8757.7

2842.9 1500.9 1386.8 210.1 208.7 511.8 164


770.9 311.8 115.3 435.7 635.5 112.4 428 413.4

2003-04

2004-05
Indian Air Lines Ltd

2005-06

Subsidiary Companies ADVANCES RECOVERLABLE IN CASH IN KIND Advance Payment of Taxes & Tax Deducted at sources TOTAL

Deposits with Customs,DGCA,Contrl Airports etc Staff Advances

19. LOANS & ADVANCES

PARTICULARS Subsidiary Companies Indian Air Lines Ltd Advances Recoverable in Cash or in Kind or for value to be received Deposits with Customs, DGCA, Controller of Airports, etc Advance Payment of Taxes & Tax Deducted at sources Staff Advances TOTAL

2003-04 511.8 1386.8 1500.9 164 210.1 208.7 3982.3

2004-05 770.9 2842.9 115.3 311.8 435.7 4476.6

%Change 50.62

2005-06 635.5 8757.7 112.4 428.0 413.4 10347.0

%Change -17.56

89.41 -29.69 48.4 108.77 12.41

208.05 -2.51 37.27 -5.12 131.13

ANALYZATION OUTCOMES The Advances Recoverable in Cash or in kind or for value to be received has a growth in almost all the year but in the year 2005-06 it has taken a major jump of 208.5% (i.e. of Rs 8668.29 million in absolute terms). --(19.1)

In the Advance payment of Taxes and Tax Deducted at Sources also there is a major jump of 37.27% (i.e. Rs 116.8 million in absolute terms) against a mere increase of Rs101.7 million in the year 2003-04.--(19.2)

Other than the above two all the others have seen a relatively minor fluctuation. Because of so high jump in Advances Recoverable in Cash or in kind or for value to be received & an additional increase in Advance payment of Taxes and Tax Deducted at Sources the Loans & Advance has shown a overall major jump (increase) of 131.13% (I.e. of Rs5870.4 million in absolute terms) in just one financial year 2005-06. --(19.3)

Ultimately this has played a major role in the increase of Current Asset of the company in just one financial year 2005-06 from the previous year. --(19.4)

20. BREAK-UP OF CURRENT LIABILITIES

30000 25000 21509 20000 15000 10000 5000 0 2001-02 2002-03 Current Liabilities 3045.2 3503.8 18463.8 21481.4 24985.2 24440.8

28091.4 24622.2 21049.8

3650.6

3572.4 2005-06

2003-04 Provisions TOTAL

20. BREAK-UP OF CURRENT LIABILITIES

PARTICULARS Current Liabilities Provisions TOTAL

2001-02 18463.8 3045.2 21509

2002-03 21481.4 3503.8 24985.2

%Change 16.34 15.06 16.16

2003-04 24440.8 3650.6 28091.4

%Change 13.78 4.19 12.43

2004-05 25182.4 3571.2 28753.6

%Change 3.03 -2.17 2.36

2005-06 21049.8 3572.4 24622.2

%Change -16.41 0.03 -14.37

ANALYZATION OUTCOME Current Liabilities of the company has shown a slow increase till 2004-05, but in the financial year 2005-06 it has taken a major downfall of 16.41% (i.e. Rs 4132.6 million in absolute terms. --(20.1) --(20.2)

In the Provision the company has shown a very small fluctuation every year.

The major downfall in Current Liabilities has resulted an overall decrease of 14.37% (i.e. Rs 4131.4 million in absolute terms) in the Current Liabilities of the company, ultimately this has played a major role in bringing the Working Capital of the company from negative to positive. --(20.3)

21. ANALYZATION OF CURRENT LIABILITIES PARTICULARS Sundry Creditors Interest Accrued But Not Due Advances from Customers Other Liabilities TOTAL 2003-04 11200.7 21.9 11329.6 1888.6 24440.8 2004-05 12686 32 10889.8 1574.6 25182.4 %Change 13.26 46.12 -3.88 -16.63 3.03 2005-06 14742 149.8 4833.8 1324.2 21049.8 %Change 16.21 368.12 -55.61 -15.9 -16.41

21. ANALYZATION OUTCOMES The company has shown a small fluctuation in major constituents of Current liabilities except Advances from the Customer & other liabilities. --(21.1) The Advances from the Customer has decreased heavily by 55.9% (i.e. Rs 6056.00 million in absolute terms) & --(21.2) Other Liabilities has shown a decrease of 15.9% (i.e. Rs 250.4 million in absolute terms). --(21.3)

The major decrease in the above two constituents Current Liabilities has decreased its overall figure from Rs 25183.4 million to Rs21049 million i.e. a decrease of 16.41%. --(21.4)

22. ANALYZATION OF PROVISION PARTICULARS 2003-04 2004-05 %Change 2005-06 %Change Income Tax 127.1 126.3 -0.6 126.7 .03 Wealth Tax 1.5 1.6 6.66 1.6 0 Fringe Benefit Tax 34.1 Gratuity 2199.7 2016.4 -8.33 2071.7 2.74 Leave Encashment 1034.2 927.5 -10.32 990.1 6.75 Post Retirement Medical Benefits 253.7 266.3 4.96 299.8 12.58 Frequent Flyer Program 34.4 63.6 84.88 48.4 23.9 Proposed Dividend 153.8 Tax On Dividend 15.7 TOTAL 3650.6 3571.2 2.17 3572.4 0.03 The Provision of the company has not shown any major change in this period, there is just a slight increase of 0.03% in the year 200-06 against a decrease of 2.17% in the previous year. --(22.1)

FACTS AND FINDINGS Since from 1998-99 the working capital of AIR INDIA was negative, but all of a sudden (There is major jump of Rs 14462.7 million i.e.(193.87%) in the working capital, which PARTICULARS 2005-06 2004-05 DIFFERENCE INVENTORIES SUNDRY DEBTORS CASH & BANK BALANCES OTHER CURRENT ASSETS LOANS & VADVANCES CURRENT LIABILITIES 4613.6 14484.2 1879.1 301.1 10347 24622.2 3534.5 10457.4 2317.6 358.2 4464 28761.1 1079.1 4026.8 -438.5 -57.1 5883 -4138.9

has brought it to a positive figure of Rs 7002.8 million in financial year 2005-06 from Rs 7459.9million.It clearly means that either there is a huge increase in the volume of its Current Assets or decrease in the value of Current Liabilities or respective change. Now we need to look behind the reason and its source of such a huge change in just one financial year.)

1. There is huge increase in its Sundry Debtors (I.e. from Rs 10457.4 million in 2004-05 to Rs 14484.2 million in 2005-06). The details are as follows: The unsecured debtors of the company are increasing constantly year after year (i.e. by 15.85% in year 2004-05 & by 45.5% in year 2005-06, which is not good for any company.

The other Debts of the company is also increasing at an alarming rate of (3.7% in year 2004-05 to 24.4% in year 2005-06).

The good thing is that the Provision for Doubtful Debts is decreasing year after year. NOTE: Debtor of a company may increase due to increase in the scale of operation (i.e. increase in business) of the company, but in this particular case the increase in Debtors is much more that the increase in business of the company. Its major part is Outstanding Debts, which clearly illustrates that AIR INDIA has not met its requirement to realize its own money on time from its Debtors. Another reason can the Revenue Settlement System of the company, in which the money gets stuck into the lengthy settlement system of the company for a long time, making its own money unavailable to be used quickly PROBLEM IS CALLED FLOAT It is always a responsibility of the management to control and minimize the float as it impacts adversely the Working Capital of the company and so on its performance.

Note: (For details refer table 16) 2. There is also a huge increase of Rs 5883.00 million in the Loan & Advances paid by the company in comparison to the last financial year 2004-05, resulting an increase in Current Assets & Working Capital Because of so high jump in Advances Recoverable in Cash or in kind or for value to be received & an additional increase in Advance payment of Taxes and Tax Deducted at Sources the Loans & Advance has shown a overall major jump (increase) of 131.13% (I.e. of Rs5870.4 million in absolute terms) in just one financial year 2005-06. Ultimately this has played a major role in the increase of Current Asset of the company in just one financial year 2005-06 from the previous year. Note: (For details refer table 19) 3. In the Inventories the value of Provision for Obselence was decreasing regularly till the year 2004-05, in the year 2005-06 it has severely decreased by 40.95%, this has mainly given an impact of an increase in the overall value of the inventory by 30.53% ( i.e. Rs1079.1 in absolute terms) in the year 2005-06. Note: (Provision for Obselence is an item which states those entities which are doubtful to be recovered, So a decrease in its value is always desirable for any company) Note: (For details refer table 14) 4. There is also a decrease of Rs 4138.9 million ( i.e of 16.81%) in its Current Liabilities ( mainly due to loss of Advances from the Customers by Rs 6113.2 million from financial year 2004-05) which is not considered ideal for any healthy company, as loosing Current Liabilities directly means loosing interest free sources of funding. Note: (For details refer table 21)

Conclusion

COMPOSITE OUTCOME During the analysis we found that Air Indias working Capital has changed from negative to positive in financial year 2005-06 which is not considered to be an excellent management practice in todays scenario, as attaining negative working capital through efficient managerial tactics is one of the prime objective of todays firms and in a service sector it becomes a little easier job for the managers to attain negative working capital as most of the revenue comes in advance to the company, in case of Air India also almost all the revenue i.e. from ticketing (passengers) cargo etc (except ticketing from Government Of India (GOI)) come in advance, at the same time the company enjoys a credit period for payment of its expenditures, so it is quite possible for company to attain negative working capital, all it just need is a good & a little aggressive management policies, which is the demand of the current scenario.

CONCLUDING STATEMENT:

In conclusion it can be said that Air India since from its origin as a public enterprises, it is serving to the country to the best of its ability, in the process, it has also faced many stages of market and still considered to be a strong player of the Indian aviation Industry. On the basis of the analysis we can deduce the fact that the company is not performing to the best of its expectation from its financial point of view, which is really essential for a company for its existence, in this dynamic competitive aviation market, which has changed rapidly after the liberalization, the company needs to be a little more aggressive with strong policies, especially from financial point of view, as it is definitely not among the best profitable players of the aviation industry . At the same time we would like to remind that although it is not making huge profit in terms of money, but it should not be forgotten that Air India is a public enterprises holding a responsibility towards the nation, in terms of serving the nation which it is doing from decades by providing many selfless services to the society and the nation.

BIBLIOGRAPHY SOURCES OF DATA Directors Report of Air India 2001-02. Directors Report of Air India 2002-03. Directors Report of Air India 2003-04. Directors Report of Air India 2004-05. Directors Report of Air India 2005-06.

WEBSITES REFFERED www.airindia.com www.goole.com www.wikkipedia.com www.iata.org