project on fund flow analysis in air india ltd.,

1. INDUSTRY PROFILE

Aviation Industry in India is one of the fastest growing aviation industries in the world. With

the liberalization of the Indian aviation sector, aviation industry in India has undergone a

rapid transformation. From being primarily a government-owned industry, the Indian aviation

industry is now dominated by privately owned full service airlines and Low Cost Carriers

(LCC). Private airlines account for around 75% share of the domestic aviation market.

Earlier air travel was a privilege only a few could afford, but today air travel has become

much cheaper and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when the first air

flight between Karachi and Delhi was started by the Indian State Air Services in

collaboration with the UK based Imperial Airways. It was an extension of London-

Karachi flight of the Imperial Airways. In 1932, JRD Tata founded Tata Airline, the first

Indian airline. At the time of independence, nine air transport companies were carrying both

air cargo and passengers. These were Tata Airlines, Indian National Airways, Air service of

India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry

Airways. After partition Orient Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air India

International Ltd in collaboration with Air India (earlier Tata Airline) with a capital of

Rs.2,00,00,000/- and a fleet of three Lockheed constellation aircraft. The inaugural flight of

Air India International Ltd took off on June 8, 1948 on the Mumbai-London air route. The

Government nationalized nine airline companies vide the Air Corporations Act, 1953.

Accordingly it established the Indian Airlines Corporation (IAC) to cater to domestic air

travel passengers and Air India International (AI) for international air travel passengers. The

assets of the existing airline companies were transferred to these two corporations. This Act

ensured that IAC and AI had a monopoly over the Indian skies. A third government-owned

airline, Vayudoot, which provided feeder services between smaller cities, was merged with

IAC in 1994. These government-owned airlines dominated Indian aviation industry till the

mid-1990s.

AMC Engineering College

In April 1990, the Government adopted open-sky policy,it means unrestricted access by any

carrier into the sovereign territory of a country without any written agreement specifying

capacity, ports of call or schedule of services. In other words an Open Skies policy would

allow the foreign airline of any country or ownership to land at any port on any number of

occasions and with unlimited seat capacity. There would be no restriction on the type of

aircraft used, no demand for certification, no regularity of service and no need to specify at

which airports they would land. Defined in this manner, it is not surprising that Open Skies

policies are adopted only by a handful of countries, most commonly those that have no

national carriers of their own and that have only one or two airports. No sovereign country of

any eminence practices Open Skies least of all the European Union, UK, USA, Japan,

Australia or countries in South East Asia.and allowed air taxi- operators to operate flights

from any airport, both on a charter and a non-charter basis and to decide their own flight

schedules, cargo and passenger fares. In 1994, the Indian Government, as part of its open sky

policy, ended the monopoly of IA and AI in the air transport services by repealing the Air

Corporations Act of 1953 and replacing it with the Air Corporations (Transfer of

Undertaking and Repeal) Act, 1994. Private operators were allowed to provide air transport

services. Foreign direct investment (FDI) of up to 49% equity stake and NRI (Non Resident

Indian) investment of up to 100% equity stake were permitted through the automatic FDI

route in the domestic air transport services sector. However, no foreign airline could directly

or indirectly hold equity in a domestic airline company.

By 1995, several private airlines had ventured into the aviation business and accounted for

more than 10% of the domestic air traffic. These included Jet Airways Sahara, NEPC

Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental Aviation, and

Damania Airways. But only Jet Airways and Sahara managed to survive the competition.

Meanwhile, Indian Airlines, which had dominated the Indian air travel industry, began to lose

market share to Jet Airways and Sahara. Today, Indian aviation industry is dominated by

private airlines and these include low cost carriers such as Deccan Airlines, GoAir and

SpiceJetetc, who have made air travel affordable.


Airline industry in India is plagued with several problems. These include high Aviation

Turbine Fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet

expansion, and intense price competition among the players. But one of the major challenges

facing Indian aviation industry is infrastructure constraint. Airport infrastructure needs to be

upgraded rapidly if Indian aviation industry has to continue its success story. Some steps

have been taken in this direction. Two of India's largest airports-Mumbai and New Delhi-

were privatized recently. Two Greenfield airports are coming up at Bangalore and Hyderabad

in southern India. Investments are pouring into almost all aspects of the industry, including

aircraft maintenance, pilot training and air cargo services. The future prospects of Indian

aviation sector look bright.

Airlines:

Size:-Of a total number of 454 airports and airstrips in India, 16 are designated as

international airports. The Airports Authority of India (AAI) owns and operates 97 airports.

A recent report by Centre for Asia Pacific Aviation (CAPA), Over the next 12 years, India's

Civil Aviation Ministry aims at 500 operational airports. The Government aims to attract

private investment in aviation infrastructure. India has been witnessing a very strong phase of

development in the past few months. Many domestic as well as international players are

showing interest in the growth and development of the aviation sector with immense focus on

the development of the airports. Indian private airlines Jet, Sahara, Kingfisher, Deccan,

Spicejet - account for around 60% of the domestic passenger traffic. Some have now started

international flights. For the next years to come India is poised with strong focus on the

development of its airport to meet the international standards. The government is planning

modernization of the airports to establish a standard. The newly developed airports will help

releasing pressure on the existing airport in the country

Plans:-A projected investment of USD 8.5 billion has been planned for the development of

Indian airports during the 11th plan. Mumbai and Delhi airports have already been privatized.

These two airport are being upgraded at an estimated investment of US$ 4 billion for the

period 2006-16. Development of airport infrastructure is a focus area for the Government.

There has been a significant uptrend in domestic and international air travel.


AAI has planned a heavy investment of USD 3.07 billion over the next five years. Out of it

43 per cent will be for the three metro airports in Kolkata, Chennai and Trivandrum. The rest

will be invested in upgrading other non-metro airports and in the modernization of the

existing aeronautical facilities.

Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years. It is

estimated that the data will cross 100 million passengers per annum by 2010

Cargo traffic to grow at over 20% per annum. over the next five years, crossing 3.3

million tonnes by 2010

Major investments planned in new airports and up gradation of existing airports

100% FDI is permissible for existing airports; FIPB approval required for FDI beyond

74%.

100% FDI under automatic route is permissible for greenfield airports.

49% FDI is permissible in domestic airlines under the automatic route, but not by

foreign airline companies.

100% equity ownership by Non Resident Indians (NRIs) is permitted.

AAI Act amended to provide legal framework for airport privatization.

100% tax exemption for airport projects for a period of 10 years.

Open Sky Policy of the Government and rapid air traffic growth have resulted in the

entry of several new privately owned airlines and increased frequency/flights for

international airlines.

Initiatives:-The Committee on Infrastructure has initiated several policy measures that

would ensure time-bound creation of world-class airports in India. A comprehensive civil

aviation policy is on the anvil. An independent Airports Economic Regulatory Authority Bill

for economic regulation is also under consideration.

The policy of open skies introduced some time ago has already provided a powerful

spurt in traffic growth that has exceeded 20% per annum during the past two years.

Major airports such as Chennai and Kolkata are also proposed to be taken up for

modernization through the PPP route.

To ensure balanced airport development around the country, a comprehensive plan for

the development of other 35 non-metro airports is also under preparation. These


measures are expected to bring a total investment of Rs. 40,000 crore (USD 8.312

billion) for modernization of the airport infrastructure.

A Model Concession Agreement is also being developed for standardizing and

simplifying the PPP transactions for airports, on the analogy of the highways sector.

This would include upgrading of the ATC services at the airports. Issues relating to

customs, immigration and security are also being resolved in a manner that enhances

the efficiency of airport usage.

A greenfield airport is already operational at Bangalore and the one at Hyderabad,

built by private consortia at a total investment of over USD 800 million, will be

operational soon.

A second greenfield airport being planned at Navi Mumbai is planned to be developed

using public-private partnership (PPP) mode at an estimated cost of USD 2.5 billion.

35 other city airports are proposed to be upgraded through PPP mode where an

investment of USD 357 million is being considered over the next three years.

Potential:-

High demand for investments in aviation infrastructure.

Favorable demographics and rapid economic growth point to a continued boom in

domestic passenger traffic and international outbound traffic.

Greenfield airport projects planned in resort destinations and emerging metros such as

Goa, Pune, Navi Mumbai, Greater Noida and Kannur.

International inbound traffic will also grow rapidly with increasing investment and

trade activity and as India’s rich heritage and natural beauty are marketed to

international leisure travelers.

Modernization / up-gradation of metro airports induction of partners for Chennai,

Kolkata expected subsequently

SME lending, a largely untapped market, presents a significant opportunity. This

accounts for 40% of the industrial output and 35% of direct exports.

Airlines Market Share:-

Airlines Market Share Percentage share Seat factor


(in lakhs) (in %)

Air India (Domestic) 7.62 18.2 72.9

Jet Airways 7.66 18.3 74.2

Jet Lite 3.18 7.6 78.1

Kingfisher 8.98 21.4 75.8

Spice Jet 5.27 12.6 81.0

Paramount 0.13 0.3 85.0

Go Air 2.46 5.9 78.0

IndiGo 6.58 15.7 82.4

Market Share (in lakhs)

Air India (Domestic)Jet AirwaysJet LiteKingfisherSpice JetParamountGo AirIndiGo


2. COMPANY PROFILE

Air India is the national flag carrier of India with a worldwide network of passenger and

cargo services and also having in-house maintenance, repair and overhaul capabilities to

support its present fleet of owned and leased aircrafts.

Air India’s Department of Engineering has obtained the coveted ISO-9002 Certification for

its engineering facilities for maintenance of its fleet of Aircrafts and family of Engines and

APU’s - also included are such services provided at other operators and customers

The crucial function of procurement of spares, components and related materials required for

the maintenance of Air India’s entire fleet of aircrafts and Customer Engines is performed by

the Aircraft Spares Procurement Group of Materials Management Department in close

coordination with Materials Planning Division of Engineering Department, Regional Offices

of MMD at New York and London, Cargo Offices and Freight Forwarder’s at various On-

line Stations, Finance Department and large spectrum of Vendors from all over the world.

a. Background and inception of the company:

The national flag carrier of India with a worldwide network of passenger and cargo

services, Air India is the only government-owned airline in the country, having recently

merged with Indian Airlines. With its main base at Chhatrapati Shivaji International Airport,

Mumbai and Indira Gandhi International Airport, Delhi, Air India connects 146 international

and domestic destinations around the world, including 12 gateways in India with Air India

Express, a fully-owned subsidiary of Air India. Air India plans to join Star Alliance and has

ordered 27 Boeing 787 (+7 options), to be delivered after 2009.

In 1932, Air India began its journey under the aegis of Tata Airlines, a division of Tata Sons

Ltd. (now Tata Group). Following World War II in 1946, regular commercial service was

restored in India and Tata Airlines became a public limited company under the name of Air

India. Under the Air Corporations Act of 1953, the Government nationalized the air

transportation industry and Air India International Limited was born. In 1960, Air India flew


its first international flight to New York via London. In 1962, Air India became the world's

first all-jet airline and its name was officially truncated to Air India.

In 2007, the Government of India announced that Indian would be merged into Air India. As

part of the merger process, a new company called the National Aviation Company of India

Limited (now called Air India Limited) was established, into which both Air India (along

with Air India Express) and Indian (along with Alliance Air) would be merged. Once the

merger was completed, the airline - called Air India - would continue to be headquartered in

Mumbai and would have a fleet of over 130 aircraft.

b. Nature of Business Carried:-

Air India Limited mainly concentrated on aviation sector and few other services which is separately maintained and managed by Air India Limited. It has its own subsidiaries. They are as follows:

Air India Air Transport Services Limited (AIATSL)Air India Air Transport Services Limited (AIATSL) is a Public Sector Undertaking (PSU) of the Government of India. AIATSL is a subsidiary of Air India and is headquartered in Mumbai, India. The company provides ground handling services (cargo, passenger, baggage) at various airports in India. The Company has authorized Share Capital of Rs.500 crores divided into 42,56,36,820 Equity Shares of Rs.10/- and 74,36,318 Redeemable Preference Shares of Rs.100/- each and present paid-up capital comprises 15,38,36,427 fully paid equity shares of Rs.10/- each amounting to Rs.153.84 Crores

Air India Charters Limited (AICL)

Air India Charters Limited (AICL) is a Public Sector Undertaking (PSU) of the Government of India. Headquartered in Mumbai, India, this subsidiary of Air India operates low cost carrier Air India Express from India to the Gulf and Southeast Asia. AICL operates flights from airports in Kerala, Punjab and Mangalore to Dubai, Abu Dhabi, Al Ain, Muscat and Salalah in the Middle East and Singapore in the east. Air India Charters has charters flying throughout India. It works with other charter companies including Vibha Lifesavers for air ambulance and Hi Flying aviation for its general charters in India.


Air India Engineering Services Limited:It is one of the subsidiaries which provides assistance to the Air India Limited., That is helps in ground handling services and other services

Hotel Corporation of India Limited:The company has authorized Share Capital of Rs. 41 crores dividend into 41,00,000 Equity Shares of 100/- each and its present paid up capital comprises of 40,60,000 fully paid up equity shares of Rs.100/- amounting to Rs.40.60 crores. The entire share capital of the company is held by Air India Ltd and its Nomimees.

c. VISION, MISSION and QUALITY POLICY

Company’s Mission:

To be rated among the top five airlines in Asia Pacific by customers and distribution

partner

Effective and efficient services to passengers.

Company’s Vision:

To rationalize all business processes around passenger and departure control

applications using industry standards with a view to enhance revenues and reduce

cost.

Upgrade participation levels with various Global Distribution System (GDS) to the

highest level.

Provide for various modes of booking and check-in and thus extend the convenience

to the customers.

Timely and accurate revenue determination per flight departure due to uplift of e-

ticket coupons and speedier interline settlements.

Ensure that NACIL hosted system has incorporated latest Industry Standards (IS)

changes relevant for all PSS applications as per requirements.

Provide the customers using the airline IBE for passenger services an experience to

cherish.

Provide a world class Frequent Flyer system with comprehensive interface with other

frequent flyer systems of Global Alliances partner airlines.


Quality Policy:

ISO-9002 Certification for its engineering facilities for maintenance of its fleet

Assist the Sectional heads in purchase of project related equipments,

preparation of management reports and budgetary controls.

Participation in review meetings and deliberations in appropriate

forums.

Interact with System Group in DIT regarding issues encountered in

System and their timely resolution.

Obtain price catalogues from various vendors and update the System.

Assist Sectional and Divisional heads in administration and job

allocation to staff.

Interact with clearing agencies for sea shipments and bulk supplies such

as tires, lubricants, oils, chemicals, etc.

Assist Sectional and Divisional heads in vendor development,

performance review, etc.

Any additional job allotted from time to time.

d. Product and Services Profile:

Product Profile:-

Air India mainly concentrated on these following products:

Airline

Ground Handling Services

Hotels

Services

Air India has had a number of aircraft in its fleet. Below is a list of current and former Air

India, Tata Sons Aviation Department and Tata Airlines aircraft (includes leased-in aircraft):


Fleet:

Air India has had a number of aircraft in its fleet. Below is a list of current and former Air

India, Tata Sons Aviation Department and Tata Airlines aircraft (includes leased-in aircraft):

Air India fleet (excl. subsidiaries) as of November 2011:

Aircraft Airbus

A319

Airbus

A320-

200

Airbus

A321-

200

Airbus

A330-

200

Boeing

747-

400

Boeing

777-

200LR

Boeing

777-

300ER

Boeing

787-8

Total

In

Service

24 18 20 2 5 8 12 - 89

Fleet info:-

The Boeing customer code for Air India is 37, meaning a model name of, for example, a 747-

437 (an Air India 747-400). As of May 2010, the average age of the Air India fleet is 9.5

years.

First Boeing 787 is to be delivered in March 2012.

Air India's Boeing 787 will be powered by General Electric GEnx.

New aircraft orders

On 11 January 2006, Air India announced an order for fifty eight jets - eight Boeing 777-

200LR Worldliners, twenty-three Boeing 777-300ER and twenty seven Boeing 787-8

Dreamliners

The airlines received its first Boeing 777-200LR aircraft on 26 July 2007 and Boeing 777-

300ER on 10 October 2007.

In April 2010, the airline has orderd three Boeing 777-300ERs.


Service Profile:-

Frequent flyer programme:-

Flying Returns is Air India's frequent flyer programme. The programme is also shared by all

other Air India Limited carriers.

Premium lounges:-

The Maharaja Lounge (English: "Emperor's Lounge") is offered to First and Business class

passengers. Air India shares lounges with other international airlines at international airports

that do not have a Maharaja Lounge available. There are five Maharaja Lounges, one at each

of the five major destinations of Air India, which are as following:

International:

London Heathrow Airport

John F. Kennedy International Airport (New York)

India:

Bengaluru International Airport (Bangalore)

Chhatrapati Shivaji International Airport (Mumbai)

Indira Gandhi International Airport (Delhi)

Rajiv Gandhi International Airport (Hyderabad)

In-flight entertainment:-

Air India's Boeing 777-200LR/-300ER as well as some refurbished Boeing 747-400 aircraft

use the Thales Top Series IFE systems for onboard in-flight entertainment. Airbus A310s do

not have personal LCD screens. Airbus A330s have widescreen displays in Business and

Economy classes but no personal IFEs.


e. Area of Operation – Global / National / Regional:

Domestic Stations

1 AGARTALA 32 KHAJURAHO

2 AGATTI 33 KOCHI

3 AHMEDABAD 34 KOLKATA

4 ALLAHABAD 35 KOZHIKODE

5 AIZAWL 36 KULLU

6 AMRITSAR 37 LEH

7 AURANGABAD 38 LILABARI

8 BAGDOGRA 39 LUCKNOW

9 BANGALORE 40 MADURAI

10 BHOPAL 41 MANGALORE

11 BHUBANESHWAR 42 MUMBAI

12 CHANDIGARH 43 NAGPUR

13 CHENNAI 44 PATNA

14 COIMBATORE 45 PORT BLAIR

15 DELHI 46 PUNE

16 DIBRUGARH 47 PUTTAPARTHI

17 DIMAPUR 48 RAIPUR

18 GAYA 49 RANCHI

19 GOA 50 SHILLONG

20 GUWAHATI 51 SILCHAR

21 GWAILOR 52 SRINAGAR

22 HYDERABAD 53 SURAT

23 IMPHAL 54 TEZPUR

24 INDORE 55 THIRUVANANTHAPURAM

25 JABALPUR 56 TIRUCHIRAPALLI

26 JAIPUR 57 TIRUPATI

27 JAMMU 58 UDAIPUR

28 JAMNAGAR 59 VADODARA

29 JODHPUR 60 VARANASI

30 JORHAT 61 VISAKHAPATNAM

31 KANPUR

International stations


1 BAHRAIN 10 KUALA LUMPUR

2 BANGKOK 11 KUWAIT

3 COLOMBO 12 LAHORE

4 DHAKA 13 MALE

5 DOHA 14 MUSCAT

6 DUBAI 15 RAS-AL-KHAIMAH

7 FUJAIRAH 16 SHARJAH

8 KABUL 17 SINGAPORE

9 KATHMANDU 18 YANGON

Stations operated by Code Share flights

1 CHITTAGONG

2 DHAKA

3 TASHKENT

Offline Stations

1 AGRA

2 BHAVNAGAR

3 BHILAI

4 BHUJ

5 DARJEELING

6 DEHRADUN

7 DHARAMSALA

8 HUBLI

9 JAISALMER

10 MYSORE

11 RAJKOT

12 SHIMLA

13 VIJAYAWADA


f. Ownership Pattern:

Authorised:-The company currently having 4,875,645,020 Equity shares of Rs.10 each

(Previous Year 1,375,645,020 Equity shares) & 12,440,498 Redeemable Preference Shares of

Rs.100 each (Previous Year 12,440,498 Redeemable Preference shares)

Issued, Subscribed and Paid up:-945,000,000 Equity shares of Rs.10 each fully paid

up (Previous Year 145,000,000 Equity Shares) & (Of the above 144,950,000 Equity Shares

were issued pursuant of Amalgamation)

g. Competitors Information:

Air India Limed having following competitors:

Jet Airways

British Airways

King Fisher

Emirates

Jet Airways

Logo

Parent Company Tailwinds Limited

Sector Airlines

Tagline/ Slogan The Joy of Flying

USP Premium Airline, High Class

STP

Segment Passengers preferring comfort

Target Group Corporate, Upper Middle Class

Positioning Premium

SWOT Analysis

Strength 1. Has created a good image among the Indian fliers

2. Trusted Airline by the Corporates

Weakness 1. Competition from the LCCs


Opportunity 1. Strongly positioned in the International routes

2. Has presence in every segment

Threats 1. LCCs eating up the market share

2. Rising Fuel Costs

3. Rising Labour Costs

Competition

Competitors 1.Kingfisher

2.Air India

British Airways

Logo

Parent Company International Airlines Group

Sector Airlines

Tagline/ Slogan To fly. To serve. The world's favourite airline; Upgrade to

British Airways

USP Premium Airline, Upper Middle Class, Middle Class

STP

Segment Passengers Preferring Comfort / reliability

Target Group Corporates / Upper Middle Class / Middle Class

Positioning Premium

SWOT Analysis

Strength 1. Strong Backing of UK Govt

2. Strong Hub in UK

3. Strong brand presence and excellent global presence

Weakness 1. Severe Competition from Cash Rich Middle Eastern

Airlines

Opportunity 1. The Heathrow Terminal is a major hub across the world and

it has a major presence here

2.Expanding its global operations

Threats 1. Rising Fuel Costs



3. Increasing Competition in European Market

Competition

Competitors 1.Virgin Airlines

2.British Midland

3.Lufthansa

4.Emirates

5.Jet Airways

Kingfisher Airlines

Logo

Parent Company United Breweries Group

Sector Airlines

Tagline/ Slogan Fly The Good Times

USP Premium Airline, High Class

STP

Segment Passengers preferring comfort

Target Group Corporate, Upper Middle Class

Positioning Premium

SWOT Analysis

Strength 1. Has created a good image among Indian fliers

2. Strong backing from promoters

Weakness 1. Heavy Debt

2. Poor On time Performance

Opportunity 1. Reputation of providing the best amenities in Indian skies

Threats 1. LCCs eating up the market share

2. Rising Fuel Costs


Competition

Competitors 1.Jet Airways

2.Air India


Emirates

Logo

Parent Company The Emirates Group

Sector Airlines

Tagline/ Slogan Be good to yourself, Fly Emirates; Fly Emirates. Keep

Discovering

USP Premium Airline, Upper Middle Class, Middle Class

STP

Segment Passengers Preferring Comfort / reliability

Target Group Corporates / Upper Middle Class / Middle Class

Positioning Premium

SWOT Analysis

Strength 1. Strong Backing of Dubai Govt

2. Advantage of Being Present in Oil Rich Emirate

3. Strong Hub in Dubai

4. Satisfied Customer and Preferred Airline of Customers

Weakness 1. Relying Heavily on International Onward Moving Traffic

Opportunity 1. Brand New Fleet. Leverage this and also improve the

customer confidence in the airline

Threats 1. Increasing Competition in Middle East Market

Competition

Competitors 1.Etihad

2.Qatar Airways

3.Jet Airways

4.Air India Express

h. Infrastructural Facilities:


Air India is the 16th largest airline in Asia. Its commitment to build “Your Palace in the Sky” i.e., Air India’s sincere slogan, virtually comes true. The national airline of India carries the day despite the financial crisis casted a long shadow. Flies from its main base Mumbai, Air India connects a worldwide network of passenger and carries out cargo services in over 100 cities around the globe. Air India is persistent on giving seamless flying service to wide network of passengers.

There are different approach are there to developing infrastructure. It is not enough to state what we want and allocate funds. For the Old Guard, who see an aspirational statement with budgetary allocations as the panacea, to comprehend this requires a true paradigm shift, as with Newton and the apple. A new social paradigm, as it were, so that we learn to set realistic goals, makes practicable work plans, and then executes them.

This applies to first-order infrastructure, such as energy, transport, and communications, as also to second-order infrastructure that we lack, or where processes need rationalization, as in selling agricultural produce across the country, or getting aviation fuel at the same price everywhere. These second-order elements are:

i) Organized markets — as integrated, end-to-end chains — from input and production, to transportation and storage, to marketing and distribution, including all taxation, and

ii) finance, including insurance.

i. Awards and recognitions

Preferred International Airline award for travel and hospitality from Awaz Consumer

Awards 2006

Best International West Bound Airline out of India for three successive years by

Galileo Express Travel World Award

Best Corporate Social Responsibility Initiative. by Galileo Express Travel World

Award

Best Short-Haul International Airline by Galileo Express Travel World Award 2008

The Mercury Award for the years 1994 and 2003, from the International Flight

Catering Association, for finest in-flight catering services.


Amity Corporate Excellence Award instituted by the Amity International Business

School, Noida, Uttar Pradesh to honour Corporates with distinct vision, innovation,

competitiveness and sustenance.

Reader’s Digest Trusted Brand Award

Dun and Bradstreet Award (D&B)- first in terms of revenue out of the top airline

companies out of India

Best South Asian Airline award by readers of TTG Asia, TTG China, TTG Mice and

TTG-BT Mice China, all renowned Mice and business travel publications.

Cargo Airline of the Year at the 26th Cargo Airline of the Year Awards

The airline entered the Guinness Book of World Records for the most people

evacuated by a civil airliner. Over 111,000 people were evacuated from Amman to

Mumbai – a distance of 4,117 km, by operating 488 flights in association with Indian,

from 13 August to 11 October 1990 – lasting 59 days. The operation was carried out

during Persian Gulf War in 1990 to evacuate Indian expatriates from Kuwait and Iraq.

The Montreal Protocol Public Awareness Award was awarded to Air India by

the United Nations for environmental protection, especially in the ozone layer.

World's first all-jet airline- June 1962

World's largest operator of Airbus A310-300

Air India's security department became the first aviation security organization in the

world to acquire ISO 9002 certification (31 January 2001).

Air India's Department of Engineering has obtained the ISO 9002 for its Engineering

facilities for meeting international standards.

j. Work Flow Model (End to End):-



REQUEST FLIGHT

CHECK AVAILABILITY

PROVIDE FLIGHT DETAILS

PROVIDE FLIGHT CHOICES AND PRICES

SELECT FLIGHT

REQUEST PAYMENTPAY FOR TICKET

BOOK FLIGHTCONFIRM SEAT RESERVATION

ISSUE TICKET

CHECK IN

DOCUMENTATIONLUGGAGE VERIFICATION

JOURNEY

CHECK OUT

DEPARTURE

k. Future Growth and Prospects:

Air India flies out stranded passengers from Leh: Air India operated three special flights

between Delhi and Leh on Sunday, 8th August 2010 to evacuate stranded tourists and

passengers from Leh.

Air India opens franchise for Pratt & Whitney Eco Power Engine washing: The National

Aviation Company of India Ltd, operating under the brand name Air India, has signed an

agreement with Pratt & Whitney to establish an Eco Power engine wash service at Mumbai

International Airport.

Air India - Melbourne’s newest international airline: Melbourne Airport welcomed Air

India’s announcement that they will commence daily direct services from Melbourne to Delhi

from November 1 this year.

Air India & MADC sign Land Lease Agreement for aircraft maintenance base at

Nagpur: Air India and Maharashtra Airport Development Company Ltd. (MADC), on 8th

June 2010, has signed a Land Lease Agreement for 50 acres of land in the SEZ area near

Nagpur Airport.

Air India has resumed the normal schedule of operations: Air India has resumed the

normal schedule of operations across the entire network from today; with the total passenger

bookings on the IC coded flights crossing 32,000.

Air India signs agreement to become GEnx service provider:GE Aviation and India’s

national carrier Air India have signed a GE Branded Services Agreement (GBSA) under

which GE Aviation will provide technical support as Air India offers maintenance, repair and

overhaul (MRO) services for the GEnx-1B engine and further advances its plans to become a

global MRO service provider.

Air India Airbus 320 lands at India Aviation: The first of the new generation Airbus A320

aircraft on order joined the Air India fleet today, with the arrival of a mint fresh aircraft at

Begumpet Airport, Hyderabad, where India Aviation 2010, India’s first civilian air show is


on. The aircraft also becomes the 74th own aircraft of the 111 on order, to join Air India’s

fleet.

Ex-Im Bank, Air India conclude $1 billion financing transaction: The Export-Import

Bank of the United States (Ex-Im Bank) and the National Aviation Company of India Ltd.

(NACIL, also known as Air India) today held a signing ceremony to celebrate the $1.1 billion

Ex-Im Bank-supported financing of U.S.- manufactured aircraft sold by The Boeing Co. to

NACIL.

Air India registers all round Improvement in performance: An impressive increase of

24.8 per cent in passenger carriage and 14.4 per cent rise in load factor reflects a significant

improvement in Air India’s operating performance in the quarter October-December 2009, as

compared to the same period last year.

Air India to remain merged entity: The merger of Air India (erstwhile) and Indian Airlines

was approved by the Government on 1 March, 2007 and a new company vis. National

Aviation Company of India Limited (NACIL) was incorporated on 30 March, 2007 with the

brand name of ‘Air India’. The merger of two airlines was envisaged to provide following

benefits.

Air India’s Engineering achieves significant financial gains: Air India has assembled,

tested and delivered CF6 80C2 Engine S/No: 695 296 belonging to a Customer routed

through Aerostar, earning approx. USD 300,000 in December 2009. Air India had recently

entered in to a strategic marketing alliance with Aerostar Asset Management, a Dubai based

Company, to form “The A Team” for providing Engine repair management solutions to

Operators in the Gulf and Middle East region to begin with.

Air India: Deployment of new aircraft helps increase carriage in 2009: The Year 2009

will undoubtedly go down in the history of civil aviation in India, and globally, as one of the

worst years.

Air India to operate special flights to Port Blair, Goa for tourists: Air India will operate

additional flights to augment capacity to popular holiday destinations - Port Blair and Goa,

thus ensuring that tourists from various States of India and all over the world, are not

disappointed for want of seats on a flight. With scheduled flights of all airlines being booked

during this peak season, Air India has stepped in by deploying additional capacity.


3. McKinsey 7S Model:

A model of organizational effectiveness that postulates that there are seven internal factors of

an organization that needs to be aligned and reinforced in order for it to be successful. The 7S

Model was developed at McKinsey & Co. consulting firm in the early 1980s by consultants

Tom Peters and Robert Waterman, authors of the management bestseller "In Search of

Excellence."

1. Strategy

The concept of strategy includes purposes, missions, objectives, goals and major

actions plans and policies. They are as follows:

Aggressive pricing: Air India’s economy-class passengers can upgrade to business class by

paying Rs. 4,000 for distances up to 750km and Rs.6,000 for longer distances at the counters

in 17 airports


Turnaround Strategy:

The government will soon spell out a comprehensive turnaround plan for flag carrier Air

India, which is burdened with a cumulative loss of Rs.22,165 crore and struggling to even

pay wages to employees, parliament was informed Friday."There are two plans under

consideration -- one is the turnaround plan and the other is a financial restructuring plan

which is being considered by a group of ministers,"

Strategic Relationships:

Strategic Alliance with Lufthansa (LH)MOU signed in August 2003

Joint capacity plan till 2007

Additional frequencies –AI : 22 (18 via Frankfurt to USA) - LH: 15•LH to provide AI

commercially viable slots at Frankfurt•19 slot pairs provided till winter 2004 (in

exchange for 4 additionalfrequencies)

Reciprocal World-wide Free Flow Code Share & FFP Cooperation under

implementation

Special Prorate Agreement implemented in November 2003

Cooperation in IT/MRO/Cargo being pursued

Air India developing relationship with other Star Alliance partners – United Airlines

& Air Canada Joint Marketing

Special Prorate Agreement

Reciprocal code share

FFP cooperation

Will pursue FFP cooperation with other domestic airlines in India togenerate

incremental revenue streams

Will continue existing code shares with existing 14 airline partners & pursue such

relationships with other airlines

May also consider becoming a full-fledged member of a globalalliance in the future


2. Structure:-

Air India Ltd., extended its operations all over the world and the quality services improves by

dividing and sub allocation of duties and responsibilities to their each department heads and

sub-ordinates. The Air India Ltd., functions are flow from superiors to sun-ordinates.


3. System:

Air India Ltd., providing quick response and fast services to their customers and to

survive in aviation industry by competing with other Airlines. So they are using these

technologies and set of procedures to handling the customers as well as their

employees.

Ground Handling

Information Technology

Security

CargoTechnology Up gradation

IT Projects

Revenue Management

PROS implemented

Ticketing Time-Limit software implemented

Direct connect with GDS’s

Integrated computerization system for MMD

Disposal of surplus/redundant inventory

Implementation of Unit Load Device management system

Disaster recovery site at remote location

Air India Express IT Infrastructure

Data Mart for CRS sales data

Ramp Assistance Billing System for GSD/Finance

Online Financial Information System (FINESS)

4. Style:

This is one of the domestic airlines in India offering an extensive network of cargo and

passenger services. This airline company was honored a 4 star rating for its safety and

cabin procedures from Skytrax airline for its best basic and luxury comfort.Flights to

Air India can be booked conveniently to various destinations. International tickets are

also easily available, besides the air fares from the US to India is economical in


comparison to other carriers. Air India is popular amidst NRIs traveling to India for

holidays.

5. Staff:

Staff is one of the important asset for every company who having the innovative ideas

in the operations of the company by their smart and skillful work and very difficult to

retain them in the organizations.

Increased manpower productivity

Comprehensive HR Policy with focus on Motivation, Training & Development,

Multi-skilling, Scientific

job description & objective performance appraisal Special dispensations obtained

from DGCA Operating Crew – Increased Flight Time Limits

Settlement to be reached with pilots

Cabin Crew - Executive crew to fly as per DGCA time-off

RegulationsComputerization of Operating/Cabin crew scheduling

Out-sourcing/Hiving-off Non-Core activities already out-sourced

Printing Press

Crew/Employee TransportPotential for out-sourcing

Medical Services

Payroll

Revenue Accounting

Canteen

Civil WorksHiving off to subsidiaries

6. Skill:

The term skills include those characteristics, which are developed over a period of

time, under result out of the interaction of number of factors, performing certain task

successfully over a period of time, the kind of people in the organization, the top

management style, the organization structure etc.,

Negotiation Skills: With the need to reduce costs and squeeze margins in a highly

competitive market, it’s vital you equip your people with the most effective


negotiation skills. Whether they’re managing complementary income streams or

negotiating contracts with clients, travel agents and partners, this program will

transform their ability to achieve a profitable outcome with each and every deal that’s

made.

Creative Problem Solving: Airline industry professionals need to be able to generate

novel solutions to manage such economic pressures. This program will dramatically

shift the way your people think about problems, releasing the potential to develop

innovative solutions that inspire business growth.

Developing a unified vision for future success: with the pressures facing today’s

airline industry, it’s vital your executives can come together to agree on a strategic

vision that will give your organization the competitive edge. Our Executive

Development Program is proven to be highly successful at creating a unified

executive team using tailor-made solutions for business success

7. Shared Values:

The idea of Shared Values is often confused with value sharing. The former a more

universal presumption about a set of beliefs and the latter a calculated measure of

utility. In a service industry, delivering value to customers demands a highly evolved

understanding of meeting needs and desires. For example, how well does an airline

deliver on an individual’s hope to be with family on the holidays? Can that same

airline deliver on another individual’s hope to get to a distant meeting and back for

another commitment? Calculating the costs of delivering value is trivial by

comparison, in that the components are concrete, not fuzzy. Air India was able to gain

market share over competitors focusing on being the low-cost airline provider and

inspiring employees to deliver on that shared value. Every decision made at the

corporate level hinges on that principle and the results are clear in their resilience in

spite of the hostile economic climate and changing regulatory environment that daily

challenges their operating costs.


4. SWOT Analysis

Strengths of AIR INDIA:-

Air India has been the largest air carrier in India in terms of traffic volume and

company assets.

It owns the most updated fleet and competent repairs and maintenance expertise.

Its information systems are advanced and compatible with its operation and service.

It has a good reputation in both international and domestic markets, quality service

and the age-old Goodwill that has still kept it alive in the interests of the rescue

operators.

Has financial backing of the Government

Weaknesses of AIR INDIA:-

Air India is operating across broad international and domestic markets competing

with world leading giant airlines as well as local small operators. This lack of clarity

on the strategic direction largely dilutes its capabilities and confuses its brand within

markets.

Low profitability and utilization of capacity.

Growing Competitor base and entry of Low-Cost Carriers (LCC’s)

The airline’s high-cost structure and the compulsions of being a public sector unit are

the reasons and it had been making a loss and shall continue to make losses for some

more quarters.

Opportunities of AIR INDIA:-

India airline industry is growing faster and will continue to grow as the GDP

increases, and the trend is predicted to continue once the slowdown recedes.

Worldwide deregulations make the skies more accessible; the route agreement is

easier to be achieved. The number of foreign visitors and investors to India is

increasing rapidly.


Complementary industry like tourism will increase demand for airline service. The

Civil Aviation Ministry’s strong regulation and protection provides opportunities for

consolidation and optimization.

Customers are getting wealthier, tend to be less price-conscious and prefer to choose

quality service over cost.

Best time for introducing LCC’s

Threats for AIR INDIA:-

Air India faces imminent aggressive competition from world leading airlines and

price wars triggered by domestic players.

The Indian Railway Ministry has dramatically improved speed and services in their

medium/long distant routes, attracting passengers away from air service, with prices

almost at par with the low cost carriers


5. Analysis of Financial Statement:

PROFIT AND LOSS ACCOUNT FOR THE YEAR OF 2008-09 & 2009-10 (Rupees in Million)

PARICULARS 2007-08 2008-09 2009-10

I. Revenue:

1. Traffic

i. Scheduled Services

107,612.6

0

100,515.4

0

100,146.4

0

ii. Others 15,365.40 19,281.60 17,227.80

2. Handling, Servicing and Incidental 13,405.50 12,448.20 13,662.00

Operating Revenue

136,383.5

0

132,245.2

0

131,086.2

0

3. Others 16,191.20 2,548.60 2,936.50

Total Revenue

152,574.7

0

134,793.8

0

134,022.7

0

II. Expenses:

1. Payments to and Provisions for employees

including Crew Allowances 32,245.00 33,388.50 33,567.20

2. Insurance 851.3 861.8 914.70

3. Aircraft Fuel and Oil 62,525.10 70,606.40 50,150.20

4. Navigation, Landing, Housing and Parking 9,698.40 9,290.90 10,604.40

5. Aircraft Material Consumed 9,583.70 5,560.50 4,262.70

6. Outside Repairs – Aircraft 7,196.00 5,533.60 8,031.50

7. Hire of Aircraft 13,777.00 15,225.00 11,774.90

8. Handling Charges 5,460.90 5,290.60 6,045.50

9. Passenger Amenities 5,929.30 4,865.60 4,838.10

10. Booking Agency Commission 6,150.00 4,360.50 4,083.70

11. Communication Charges:

i. Reservation Systems 2,466.90 2,456.80 3,246.20

ii. Others 1,534.10 1,667.50 1,652.10

12. Travelling Expenses:


i. Crew 2,422.40 2,571.90 2,226.80

ii. Others 953.00 1,032.80 909.60

13. Depreciation 8,954.60 10,920.90 13,917.40

Less: Transfer from Capital Reserve -1,338.00 19.50

Add: Transfer to Capital Reserve related to Previous

Period 1,338.00

14. Other Expenses 10,132.90 13,993.20 9,583.20

Total Operating Expenses

178,542.6

0

188,964.5

0

165,806.7

0

III. Loss before Interest, Prior Period

-

25,967.90

-

54,170.70 31,784.00

Adjustments and Taxation

Add: i. Interest and finance charges 7,013.00 16,658.80 24,343.50

ii. Prior Period Adjustments (Net) - 1,056.80 208.10

I. Loss before Extra-Ordinary Items and

Taxation

Less: Extra Ordinary Items (Net) 826.60

II. Loss before Taxation

-

32,980.90

-

71,886.30 55,509.00

Add: Provision for current tax

i. Fringe Benefit Tax 123.5 122

ii. Wealth Tax 2.5 14.4 15.4

Add: Provision for previous year tax

i. Wealth Tax

Less/Add: Deferred Tax Benefit

i. For Current Year 10,845.30 15,930.80

ii. As per AS-11 Notification 621

IV. Loss after Taxation 22,261.60 55,482.60 55,524.40

Balance Brought Forward 22,261.60

V. Loss Carried to Balance Sheet/General

Reserve 22,261.60 77,744.20 55,524.40

BALANCE SHEET FOR THE YEAR OF 2008-09 & 2009-10 (Rupees in Million)


Particulars 2007-08 2008-09 2009-10

I. SOURCES OF

FUNDS:

Shareholder’s Funds:

a. Capital 1,450.00 14,500.00 9,450.00

b. Reserves and Surplus 78,942.90 633.5 624.8

Loan Funds:

a. Secured Loans 28,917.50 23,659.50 65,907.10

b. Unsecured Loans 155,216.50 168,764.90 184,761.10

Future Lease Obligations 116,887.50 133,559.60

TOTAL 264,526.90 311,395.40 394,302.60

II. APPLICATION OF

FUNDS:

Fixed Assets:

a. Gross Block 186,545.60 243,294.00 328,410.50

Less: Depreciation 7,601.20 18,380.50 31,990.60

b. Net Block 178,944.40 224,913.50 296,419.90

c. Capital Work-in-

Progress 39,726.30 50,113.70 24,656.20

Investments: 901.2 1,231.80 1,219.30

Deferred Tax Assets (Net): 11,873.40 28,424.20 28,425.20

Foreign Currency, Monetary

Items 1,528.00 99.50

Translation Difference Account

Current Assets, Loans and Advances:

a. Inventories 10,016.10 9,642.10 8,677.80

b. Sundry Debtors 26,134.10 24,731.00 25,791.10

c. Cash and Bank Balances 10,845.00 11,396.40 5,284.70

d. Other Current Assets 318.90 561.60 768.10

e. Loans and Advances 15,602.10 11,175.90 14,466.50

Less: Current Liabilities and Provisions

a. Current Liabilities 42,861.80 42,282.90 55,466.70


b. Provisions 9,234.30 10,040.90 10,929.90

Net Current Assets 10,820.00 5,183.20 -11,408.40

Profit and Loss Account 22,261.60 54,890.90

TOTAL 264,526.90 311,395.40 394,302.60

6. Learning Experience:

Air India Ltd., is one of the leading public sector aviation company which having the

major share in the aviation industry. It’s very difficult to maintain and manage the

affairs of the company with the competition from many private sectors. It’s having lot

of transactions in each day and the records are maintained systematically and the

officials of Air India Ltd., are well co-ordinated helps the smoothening in flow of

work.

This project helps to make a thorough study of the company’s activities especially in

the fund flow of the organization and to acquire practical knowledge in this filed. It

also provided to understand the work force the strategy, the identification of the skills,

the sharing of the work i.e. designation done in the public sector enterprise. It was a

good learning experience in the analysis of the balance sheet got to know the

application of the loans and applications and the tabulation. This study will be of

great benefit for the future career.

It’s an opportunity to know about the industrial world. Being within the company

helped to learn how the Management theories and concept are applied in an

organization. It helps to interact with the top level executives and to see how the

managers deal with the figures and numbers and how the handle the work pressure.


More over the project was a good exposure to learn about the working conditions of

the organization.


PART –B

A. GENERAL INTRODUCTION

Air India takes the fund flow statement to analyze the funds from the various resources, their

application of the funds and the uses of the statement for their further verification. The

company uses the statement of sources and application of funds to show the difference

between the aggregate of sources and total application as either increase or decrease in

working capital. This variation in working capital can be verified by preparing a unlike

statement of sources and application, it is prepared with the help of current assets and current

liabilities.

To certain extent it acts as a measuring tool of income and expenditure, fund flow are used

as a base for the financial planning and budgeting and to the company’s warning agent i.e.,

indicates the financial dangers a heading the company.

FUND FLOW STATEMENT {OR} FUNDS MANAGEMENT:

Balance sheet and profit and loss account two most important financial statements which are

prepared at the end of the financial year. Balance sheet shows financial position of

undertaking i.e. assets and liabilities, as on a particular data.

The profit and loss account shows the results of operations i.e., profit or loss during the

financial year.

In the course of business operations, various assets, liabilities and capital undergo various

changes during the financial year. The knowledge of such changes and reasons of these

changes id extremely useful to management of the company. Therefore additional statements.

Is known as “statement of changes in financial position”

MEANING OF ‘FUNDS’:


The term ‘funds’ has different meanings. However for the purpose of fund flow statement the

term ‘funds’ means “Net working capital” also known as ‘Net current assets’ it is defined as

the difference between current assets and current liabilities.

FUNDS =Current assets- Current liabilities.

CURRENT ASSESTS:

The term assets means cash and such other assets which are reasonably expected to be

realized in cash or sold or consumable during the normal operating cycle of the business.

Thus the term current assets including the following:

1. Cash and bank balance

2. Accounts receivable i.e., debtor and bills receivable

3. Stocks of raw materials [ work in progress and finished goods ]

4. Temporary or short term Investment

5. Prepayment.

6. Accrued income.

CURRENT LIABILITY:

The term current liabilities includes all such obligations which are likely to mature

within one year in the normal course of business operations and which are paid out of current

assets or by creating current liabilities.

The board categories of current liabilities are:

1. Accounts payable i.e., creditors and bills payables

2. Outstanding expenses [E.g.: wages, rent, commission...]

3. Bank overdrafts.

4. Income receivable in advance

5. Dividends payable.

6. Provision for taxation – may be current or non – current

7. Provision for doubtful debts.

8. Proposed dividends – may be current or non – current.


Flow of fund arises when the net effect of a transaction is to increase or decrease the amount

of working capital. When a transaction results in increase of fund, such a transaction is said to

be a “source of fund”. On the other hand, if a transaction results in the decrease of fund.

Such a transaction is said to be an “application of fund”.

STATEMENT OF PROBLEM:

As a statutory obligation, every organization has to prepare financial statements at

end of each financial year to know the exact financial position or the profit position and the

capital growth of the organization. The financial statement like P&L account and Balance

sheet gives a summary of company’s resources, profits or losses at a particular period of time.

These statements exhibit the financial events occurred in a given period of time. From this

point of view the financial statements fulfills the objective of organization very well.

But there are certain important financial matters, which can be known only through analysis

of these financial statements. Thus, it is important to know what funds are available during

the period. This underlines the importance of statement prepared to report movement of

funds. Thus the problem taken for study “FUND FLOW ANALYSIS”.

OBJECTIVES OF THE STUDY

Funds Flow Statement is an analytical tool in the hands of financial manager. The basic

purpose of this statement is to indicate on historical basis the changes in the working capital

i.e., where funds came from and were there are used during a given period.

The utility of this statement can be measured on the basis of its contributions to the financial

management. It generally serves the following purposes:-

1. Analysis of Financial Position: The basic purpose of preparing the statement is to have a

rich into the financial operations of the concern. It analyses how the funds were obtained and


used in the past. In this sense, it is a valuable tool for the finance manager for analyzing the

past and future plans of the firm and their impact on the liquidity. He can deduce the reasons

for the imbalances in uses of funds in the past an take necessary corrective actions. In

analyzing the financial position of the firm, the Funds Flow Statement answers to such

questions as-

a. Why were the net current assets of the firm down, though the net income was up or vice

versa?

b. How was it possible to distribute dividends in absence of or in excess of current income for

the period ?

c. How was the sale proceeds of plant and machinery used ?

d. How was the sale proceeds of plant and machinery used ?

e. How were the debts retired ?

f. What became to the proceeds of share issue or debenture issue ?

g. How was the increase in working capital financed ?

h. Where did the profits go?

Though it is not an easy job to find the definite answerers to such questions because funds

derived from a particular source re rarely used for a particular purpose. However, certain

useful assumptions can often be made and reasonable conclusions are usually not difficult to

arrive at.

2. Evaluation of the Firm's Financing: One important use of the statement is that it evaluates

the firm' financing capacity. The analysis of sources of funds reveals how the firm's financed

its development projects in the past i.e., from internal sources or from external sources. It also

reveals the rate of growth of the firm.

3. An Instrument for Allocation of Resources: In modern large scale business, available

funds are always short for expansion programmes and there is always a problem of allocation

of resources. It is, therefore, a need of evolving an order of priorities for putting through their

expansion programmes which are phased accordingly, and funds have to be arranged as

different phases of programmes get into their stride. The amount of funds to be available for

these projects shall be estimated by the finance with the help of Funds Flow Statement. This

prevents the business from becoming a helpless victim of unplanned action.


4. A Tool of Communication to Outside World: Funds Flow Statement helps in gathering the

financial states of Business. It gives an insight into the evolution of the present financial

position and gives answer to the problem 'where have our resources been moving? In the

present world of credit financing, it provides a useful information to bankers, creditors,

financial, it provides a useful information’s and government etc. regarding amount of loan

required, its proposes, the terms of repayment an sources for repayment of loan etc. the

financial manager gains a confidence born out of a study of Funds Flow Statement. In fact, it

carries information regarding firm's financial policies to the outside world.

5. Future Guide: An analysis of Funds Flow Statements of several years reveals certain

valuable information for the financial manager for planning the future financial requirements

of the firm and their nature too i.e. Short term, long-term or midterm. The management can

formulate its financial policies based on information gathered from the analysis of such

statements. Financial manager can rearrange the firm's financing more effectively on the

basis of such information along with the expected changes in trade p payables and the various

accruals. In this way, it guides the management in arranging its financing more effectively.

SCOPE OF THE STUDY

The project contains the profile of the company i.e. Air India Limited where the project work

was undertaken. It contains details regarding how Fund is managed at Air India Limited and

also where fund comes & gone statements at Air India Limited.

This study gives the information about financial aspects of Air India Limited from to 2007 to

2010. This study was done in the time duration of 9 weeks from the information provided by

concerned officials of Air India Limited.

The study of various financial statements through techniques of “fund flow analysis” is

confined to Air India Limited.

Fund flow analyses of financial performance from financial statement May guides propose

use of available funds, and it gives early warnings of coming financial dangers. The purpose


of funds flow analysis is to calculate net increase or decrease in working capital of business

during a period.

The study has employed three important aspects in order to analyze the utilization and

application of funds, with the help of various graphs.

Funds flow statement

Working capital statement

Ratio analysis

Current ratio

Liquid ratio

RESEARCH METHODOLOGY

The chief criteria for the validity of any research study lies in its methodology. An enquiry

would prove a failure if it is not done along certain methodical lines.

The method of study adapted to carry out the project work is mainly through personal enquiry

with the Account’s Manager. The study comprises of the company‘s operations and the

techniques followed by them.

The data extracted from the annual reports of the company was analyzed and further reduced

to tables. To make it pictorial and easier to grasp and understand the data was represented in

graphical forms.

SOURCES OF THE STUDY:


This is the study entirely based on:

Personal discussion.

Annual reports

Published sources.

Simple statistical analyses.

There are mainly two types of data sources they are as follows:

PRIMARY DATA:

The data are originally collected by an investigator or agency for the first time for a

statistical investigation and used by them in the statistical investigation and used by them in

the statistical analysis and termed as primary data this data are collected directly from the

source for first time.

SECONDARY DATA:

The data published or unpublished which have already been collected and processed

by some agency or person and take over from there and used by any other agency for their

statistical work and termed as secondary data as for as second agency is concerned. The

second agency if and when it possible and files one who late uses this data.

Both primary and secondary data have collected for the study purpose primary interviewing

certain executive who were and work experience in the nature in order to gain as such as

information as possible.

Most of the data collected is secondary in nature and include:

Annual report of the company.

Other books and accounts maintained by the company.

Internet

Text books relating to financial management, management accounting

LIMITATIONS OF THE STUDY:

The fund flow statement has a number of uses; however, it has certain limitations also, which

are listed below:

It provides only some additional information as regards changes in working capital.


It should be remembered that a funds flow statements is not a substitute of an income

statement or a balance sheet.

One has to concentrate on the cash management rather the than financial

management.

It is essentially historic in nature and projected funds flow statement cannot be

prepared with much accuracy.

One has to concentrate on the cash management rather than the financial

management.

B. ANALYSIS & INTERPRETATION

FUND FLOW STATEMENT


In every concern, the funds flow in from different sources and similarly funds are invested in

various sources of investment.

It is continuous process. The study and control of this funds-flow process (i.e., the uses and

sources of funds) is the main objective of financial management to assess the soundness and

the solvency of the enterprise.

The funds-flow-statement is a report on financial operations changes, flow or movements

during the period. It is a statement which shows the sources an application of funds or it

shows how the activities of a business are financed in a particulate period. In other words,

such a statement shows how the financial resources have been used during a particular period

of time. It is, thus, a historical statement showing sources and application of funds between

the two dates designed especially to analyze the changes in the financial conditions of an

enterprise.

Various titles are used for this statement such as 'Statement of sources and Application of

Funds', 'Summary of Financial operations,' 'Changes in Financial Position', 'Fund received

and Disbursed', 'Funds Generated and Expended', Changes in Working Capital”, “Statement

of Fund' etc. Title of Funds Flow Statement has been modified from time to time. Really it

is very difficult to find a short time for such statement which carries much to the readers

regarding its contents and functions.

STATEMENT OF CHANGES IN WORKING CAPITAL

The statement of sources and application of funds shows the difference between the

aggregate of sources and total application as either increase or decrease in working capital.

This variation in working capital can be verified by preparing a unlike statement of sources

and application, is prepared with the help of only current assets and current liabilities.

SOURCES OF FUNDS:

Transactions that increase working capital are sources of funds. Some of them are:

Funds from Operations.

Funds from issue of Share Capital.

Funds from Issue of Debentures and Acceptance of Public Deposits


Sale of Fixed Assets.

APPLICATION OF FUNDS:

The following are application of funds

Loss from operations.

Purchase of fixed assets.

Repayment of loans.

Payment of dividend.

Increase in working capital.

Other applications such as embezzlement, compensation, donations etc. Involving

cash is an application of fund.

FUNDS FROM OPERATIONS:

Sales are the major sources of cash-inflow an at the same time cost of goods sold and

expenses are the main sources of cash-outflow.

The difference of these two [i.e., Sales-(cost of goods sold + expenses)] is net profits or net

income from operations. Such income from operation differs from the net profits shown by

the profit and loss account because profit and loss account incorporates certain items which

do not affect the flow (inflow or outflow) of funds. Profit and loss account is, therefore,

adjusted accordingly in order to calculate the profits from operations.

Table 1: SHARE CAPITAL OF Air India Ltd.,

Particulars 2007-08 2008-09 2009-10Equity Shares 1450 1450 9450


Graph:-

2007-08 2008-09 2009-100

100020003000400050006000700080009000

10000

Equity Shares

Equity Shares

Analysis & Interpretation:

In 2008 the company having 1450 million worth of share capital and this is continued till

2010 and there is no changes were made in 2009 but in 2010 the company issued 8000

million worth of equity shares to raise the fund and it is a sources of funds so it should be

appear as source in fund flow statement

Source: Annual Report of the Company

Table 2: SECURED LOANS OF Air India Ltd.,

Years Secured Loans Percentage

2008 28917.5 100

2009 23659.5 81.8172387

2010 65907.1 278.5650584


Graph:

2008 2009 20100

10000

20000

30000

40000

50000

60000

70000

Secured Loans

Secured Loans

Analysis & Interpretation: It is inferred from the chart that the company had a

maximum of secuerd loan in the year 2010 Rs. 65907.1 million i.e., 197% when compared to

the years of 2008 and when analysed with the percentage 2009 has a decrease of 18.18% .

Source: Annual Report of the Company.

Table 3: UNSECURED LOANS OF AIR INDIA LTD.,

Years Unsecured Loans Percentage

2008 155216.5 100

2009 168764.9 108.7287112


2010 184761.1 109.4783927

Graph:

2008 2009 2010140000145000150000155000160000165000170000175000180000185000

Unsecured Loans

Secured Loans

Interpretation & Analysis: Company having unsecured loans in its business. In 2008 the

company has 155216.5 million of unsecured loans, in 2009 it increases to 168764.9 million

which increases the liability of the firm and it leads to increase in liability is sources of fund

which increases its debt balance, 2010 the company loans increases to 184761.1 million

which shows the company having lots of borrowing which increases the liability leads to

sources of funds


Table 4: INCOME OF AIR INDIA LTD.,

PARICULARS 2007-08 2008-09 2009-10

Scheduled Services107,612.6

0100,515.4

0100,146.4

0

Others 15,365.40 19,281.60 17,227.80


Handling, Servicing and Incidental 13,405.50 12,448.20 13,662.00

Others 16,191.20 2,548.60 2,936.50

Total Revenue152,574.7

0134,793.8

0133,972.7

0

Percentage 10088.34610

299.39084

7

Graph:

Sched

uled Se

rvices

Others

Handlin

g, Se

rvicin

g and In

ciden

tal

Others

Total

Reven

ue0.00

20,000.0040,000.0060,000.0080,000.00

100,000.00120,000.00140,000.00160,000.00180,000.00

2007-082008-092009-10

Analysis & Interpretation: The company is getting huge revenue in 2008, 2009 and

2010 in scheduled services provided to the customers but comparing to 2008 in 2009 it

decreases to 88.34% & 2010 99.39% but comparing to 2009 it’s increasing.


Table 5: EXPENDITURE OF AIR INDIA LTD.,

Expenses: 2008 2009 2010Payments to and Provisions for employees including Crew Allowances 32,245.00 33,388.50 33,567.20


Insurance 851.3 861.8 914.70Aircraft Fuel and Oil 62,525.10 70,606.40 50,150.20Navigation, Landing, Housing and Parking 9,698.40 9,290.90 10,604.40Aircraft Material Consumed 9,583.70 5,560.50 4,262.70Outside Repairs – Aircraft 7,196.00 5,533.60 8,031.50Hire of Aircraft 13,777.00 15,225.00 11,774.90Handling Charges 5,460.90 5,290.60 6,045.50Passenger Amenities 5,929.30 4,865.60 4,838.10Booking Agency Commission 6,150.00 4,360.50 4,083.70Communication Charges: 4001 4124.3 4898.3Travelling Expenses: 3,375.40 3,604.70 3,136.40Depreciation 7616.6 12258.9 13,897.90

Other Expenses 10,132.90 13,993.20 9,583.20

Total Operating Expenses 178,542.60 188,964.50 165,788.70

Percentage 100 105.51527 86.020881

Graph:

0

100000

200000

Expenses: Payments to and Provisions for employees including Crew Allowances

Insurance

Aircraft Fuel and Oil Navigation, Landing, Housing and Parking

Aircraft Material Consumed

Outside Repairs – Aircraft Hire of Aircraft Handling ChargesPassenger Amenities Booking Agency Commission Communication Charges:Travelling Expenses: Depreciation Other ExpensesTotal Operating Expenses

Analysis & Interpretation: The company’s expenses are 178,542.60 million,

188,964.50 million and 165,788.70 million in the year of 2008, 2009 and 2010 respectively.

In all the 3 years company’s major expenses from Aircraft fuel and oil and the payment of

salary and other allowances which makes the company having deficit in their a/c. These


expenses not compensated with the revenue generation where the scheduled service is a

major share of revenue.


Table 6: CASH AT BANK OF AIR INDIA LTD.,

Cash and Bank BalancesParticulars 2008 2009 2010

Cash and Cheque on Hand 89.7 209 65.4Remittances in Transit 489.4 19.3 0.8Balance in Current A/c 5763.9 2419.8 1531.1Deposits in Banks 4502 8748.3 3687.4

Total 10845 11396.4 5284.7

Percentages 100 105.0843707 48.72936837

Graph:

20082009

2010

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Cash and Cheque on HandRemittances in TransitBalance in Current A/cDeposits in Banks

Analysis & Interpretation:


In all the years cash and Cheque and remittances are low but current balances are in

decreasing order from the subsequent year. In 2008 and 2010 the company maintaining

approximately same level of deposits in its bank but in 2009 the bank balance increased by

the more deposits received which enables the firms liquidity positions.


Table 7: LOANS AND ADVANCE OF AIR INDIA LTD.,

Year Loans & Advances Percentage

2008 15602.1 100

2009 11175.9 71.630742

2010 14466.5 92.7214926

Graph:

2008 2009 20100

2000

4000

6000

8000

10000

12000

14000

16000

Loans & Advances

Loans & Advances

Interpretation & Analysis:

In 2008 the loans and advances was Rs. 15602.1 million and in 2009 its decreases to 71%

comparing to 2008, and it increases to Rs. 14466.5 million in 2010 but decreases comparing

to 2008.


Table 8: NET CURRENT INCOME OF AIR INDIA LTD.,


Years Net Current Assets Percentage2008 20054.3 1002009 54161.9 270.0762432010 9701.2 48.37466279

Graph:

2008 2009 20100

10000

20000

30000

40000

50000

60000

Net Current Assets

Net Current Assets

Analysis & Interpretation: It is inferred from the chart that the company had taken the

higest income in the year 2009 Rs.54161.90 million as compared to the other previous year

and has the lowest income amount taken in the year 2010 Rs.9701.2 million The percentage

of the year 2009 has been 170% in 2010 it decreases to 48%.


Table 9: Investments of AIR INDIA LTD.,


LONG TERM INVESTMENTSPARTICULARS 2007-08 2008-09 2009-10

Shares in Subsidiary Com 707.5 707.5 707.5Trade Investments 161.4 504.5 504.2Other Investment (Non-Trade) 24.7 12.2 0QUOTED (Trade) 7.6 7.6 7.6Total Investments 901.2 1231.8 1219.3Percentage 100 136.6844208 135.2973813

Graph:

2007-082008-09

2009-10

0

200

400

600

800

1000

1200

1400

Shares in Subsidiary ComTrade InvestmentsOther Investment (Non-Trade)QUOTED (Trade)Total Investments

Interpretation & Analysis:

Company also made some investments. In 2008 the company’s investment was 901.2 million,

and in 2009 it increases to 1231.8 million it means that the company uses its funds in

purchasing the investments. In 2010 the company having 1219.30 million of investment and

it decreases by comparing to previous years and it means sale of investments during the year

and it appears in the sources of funds and appears in fund flow statement’s sources side.


Calculation Of Working capital for the Year 2010


Table No: 10

Changes in Working Capital (Rs in Million)

Particulars 2009 2010

Changes in WC

Increase Decrease

CURRENT ASSETS

Inventory 9642.1 8677.8 964.3

Sundry Debtors 24731 25791.1 1060.1

Cash and Bank Balances 11396.4 5284.7 6111.7

Other Current Assets 561.6 768.1 206.5

Total Current Assets 46,331.10 40521.7

CURRENT LIABILITIES

Sundry Creditors 24750.7 38189.4 13438.7

Amount due to wholly subsidiary com 36 27.2 8.8

Interest accrued but not due 71.2 218 146.8

Advances from customer 7795.8 8652.6 857

Other Liabilities 9629.2 8379.5 1249.7

Other Provisions 10929.9 10040.9 889

Total Current Liabilities 53212.8 65507.6

Total Working Capital -6,881.70 -24,985.90 3414.1 21518.5

3414.1

Decrease in Working Capital 18104.4

Calculation of Funds from operation for the Year 2010


Table No: 11

Particulars 2009-10

Net Profit Brought to Balance Sheet 54890.9

Add: Non Fund items charged to the Debit Side of

P&L A/c

Provision for Bad & Doubtful & Advances 1688.1

Provisions for Obsolescence 282.1

Loss on Sale of Fixed Assets 408.1

Depreciation 13917

Transfer to Capital Reserves

16295.3

71186.2

Less: Non Fund items charged to the Credit Side of

P&L a/c

Profit on Sale of Fixed Assets

Dividend from Long Term Investments 44.6

Provisions 795.7

Transfer from Capital Reserves 19.5

Transfer from General Reserves 633.5

P&L a/c Opening Balance in Balance sheet 77744.2

79237.5

Funds Lost From Operations -8051.3

Funds Flow Statement for the year 2010:


Table No:12

2009-10SOURCES

Issue of Shares 8000Loans Borrowed:Secured Loans 42247.6Unsecured Loans 15996.2Decrease in Working Capital 18104.4Sale of Investments 12.5

Future Lease Obligations 16672.1

Total 101032.8Applications/Uses

Loans Repaid:Secured LoansPurchase of Fixed Assets 60067.1Purchase of InvestmentsFunds Lost From Operations 8051.3

Payment made towards other Liabilities 32914.4

Total 101032.8

Analysis & Interpretation: In 2010 the company’s working capital has decreased to

18104.4 million comparing to 2009 and it mainly because of current assets are less

comparing to current liabilities which is appeared in the sources side in fund flow statement.

The company also purchased fixed assets during this year. In this year company issued 8000

excess shares to raise the fund and also they sold some part of investments too.


Table No:13



Changes in WCIncrease

Decrease

CURRENT ASSETS

Inventory10,016.1

0 9642.1 374

Sundry Debtors26,134.1

0 24731 1403.1Cash and Bank Balances 10845 11396.4 551.4Other Current Assets 321.2 561.6 240.4

Total Current Assets47,316.4

046,331.1

0CURRENT LIABILITIESSundry Creditors 27485.4 24750.7 2734.7Amount due to wholly subsidiary com 184 36 148Interest accrued but not due 38.1 71.2 33.1Advances from customer 7705.6 7795.8 90.6Other Liabilities 7448.7 9629.2 2180.5Other Provisions 9234.5 8932.5 302

Total Current Liabilities 52096.3 51215.4

Total Working Capital-

4,779.90-

4,884.30 3976.5 4081.33976.5




Table No:14

Particulars 2008-09

Net Profit Brought to Balance Sheet

Add: Non Fund items charged to the Debit Side of

P&L A/c

Provision for Bad & Doubtful & Advances 332.9

Provisions for Obsolescence 805.2

Loss on Sale of Fixed Assets

Depreciation 18380.5

Transfer to Capital Reserves 1338.9

20857.5

20857.5

Less: Non Fund items charged to the Credit Side of

P&L a/c

Profit on Sale of Fixed Assets 1046.2

Dividend from Long Term Investments 72.1

Provisions 999.4

Transfer from Capital Reserves

Transfer from General Reserves 77744.2

P&L a/c Opening Balance in Balance sheet 22261.6

102123.5

Funds Lost From Operations -81266


Funds Flow Statement for the year 2009

Table No: 152008-09

SOURCESIssue of SharesLoans Borrowed:Secured LoansUnsecured Loans 92558.1Decrease in Working Capital 104.8Sale of Investments

Future Lease Obligations 53997.4


Loans Repaid:Secured Loans 5258Purchase of Fixed Assets 55312.6Purchase of Investments 330.6Funds Lost From Operations 81266


Total 146660.3

Analysis & Interpretation: Comparing with 2008, in 2009 the company working

capital has decreased to 104.8 million and the company’s funds lost from operations is 81266

million which is appeared in application side in balance sheet. In this year the company

borrowed the secured loans and repaid some portion of unsecured loans and also they

purchased some investment as well as some fixed assets.



Table No: 16

Changes in Working Capital (Rs in Million)


Changes in WCIncrease

Decrease

CURRENT ASSETSInventory 7351.3 10016.1 2664.8Sundry Debtors 14406 26134.1 11728.1Cash and Bank Balances 3053.6 10845 7791.4Other Current Assets 248.6 318.9 70.3

Total Current Assets25,059.5

047,314.1

0 22254.6CURRENT LIABILITIESSundry Creditors 8241.3 27485.5 19244.1Amount due to wholly subsidiary com 400 184 216Interest accrued but not due 146.3 38.1 108.2Advances from customer 4734.2 7705.6 2971.4Advances from Staff-Nerul Complex 49.1 49.1Other Liabilities 1813.2 5635.5Other Provisions 3676.8 5557.5

Total Current Liabilities 19060.9 35413.2 373.3 33408.5

Total Working Capital 5,998.6011,900.9

0 22627.9 33408.522627.9



Table No: 17

Statement Showing Funds from Operations (Rs in Million)

Particulars 2007-08Net Profit Brought to Balance Sheet 22261.6Add: Non Fund items charged to the Debit Side of P&L A/cProvision for Bad & Doughtfull & Advances 238Provisions for Obsolescence 3089Depreciation 7601.2

Transfer to Capital Reserves78942.

9

89871.1112132.

7Less: Non Fund items charged to the Credit Side of P&L


a/cProfit on Sale of Fixed Assets 4698.2Dividend from Long Term Investments 1010.8P&L a/c Opening Balance in Balance sheet 2673.3 8382.3

Funds Lost From Operations103750.

4

Funds Flow Statement for the year 2008

Table No: 18

FUND FLOW STATEMENT 2007-08

2007-08SOURCES

Issue of SharesLoans Borrowed: 10780.6Funds from Operations 108424.7Decrease in Working Capital 103750.4

Sale of Investments 5.8


Redemption of shares 88.4Purchase of Fixed Assets 179978.4


Total 222961.5

Analysis & Interpretation: In 2008, the company’s working capital has been decreases

to Rs. 10780.6 millions but they have Rs. 103750.4 million as funds from operations. During

this year they decreased the number of shares to 1450 and also they taken loans both secured

and unsecured for expansion and sold some portions of investments too.


Conclusion:

Summary of Funds from Operation for various Years:

Table No: 19

YearsFunds From Operations

2009-10 -8051.32008-09 -812662007-08 108424.7

2009-10 2008-09 2007-08

-100000

-50000

0

50000

100000

150000

Funds From Operations

Funds From Operations

According to the above calculated funds flow statement, the funds from operation

of the company has declined over the. This is due to the fluctuation of the company’s profits

over the years. These shows that the company is not able to achieve its targets in concern to

the projects undertaken.

These suggest that the company need to assess its resources and try to generate

more profits out of the projects undertaken by them.


FINDINGS:

Company’s current asset was 47,316.40 million, 46,331.10 million and 40521.7

million in 2008, 2009, 2010 respectively over the current liabilities of 52096.3

million, 51215.4 million, 65507.6 million which is over the current ratio which

decreases the company’s flow of funds during the past 3 years.

In 2008 and 2009 its share capital was 1450 million but later on in 2010 they

increased it to 9450 million which helps the company to survive even in loss.

In 2008 because of amalgamation the company having capital reserve in its account

and later on in 2009 the general reserve and surplus was 633.5 million, 2010 it’s 624.8

million which is mainly because of the company undergoing loss of 77,744.2 million

in 2009.

The secured loans in 2008 was 17966.3 million, in 2009 it was increases to 23659.5

million and again its increases to 65907.1 million in 2010. It increased because of

payment of insured value of aircraft and some hypothecations.

Unsecured loans were155216.5 million, 168764.9 million, 184761.1 million in 2008,

2009 and 2010 respectively. It includes 7000 million worth of debentures during the

year of 2010.

Future lease obligation was not held in 2008 but in 2009 it is 116887.5 million and it

increases to 133599.6 million. It represents that Govt. of India given guarantee up to

the extent.

The fixed assets was 218670.7 million, 275027.2 million and 321076.1 million in

2008, 2009 and 2010 respectively which is in increasing order. They purchased huge

assets in subsequent years. Fixed assets also include some work-in-progress/process.


Investment was 901.2 million, 1231.8million and 1219.3 million in 2008, 2009 and

2010 respectively. These investment includes unquoted long term investments of

subsidiary company, trade investments, other investments i.e., non-trade and quoted

i.e., trade investments.

The company is getting huge revenue of 152574.7 million, 134793.8 million, and

134022.7 million in 2008, 2009 and 2010 respectively. In this main part of income

came from passengers and cargo. It helps the company’s total revenue to increase.

The company also bearing huge expenses of 178542.6 million, 188964.5 million,

165806.7 million in 2008, 2009 and 2010 respectively. In that payment made on fuel

and oil and payments to the employees including crew allowances paying the main

role in increasing the expenses.

Company also having some interest and financial charges, prior period adjustments

and some tax payment including fringe benefit tax and wealth taxes.

OBSERVATIONS

Only Government organization that has been professionally managed.

It has received numerous awards.

Air India Limited is administered and controlled by the Government of India.

It has got a neat segmentation of Departments.

Air India Limited having the major share in Aviation Industry

Schedules are maintained effectively for their passengers.

Air India Limited having its own subsidiaries which helps them to better

services to their passengers.

C. CONCLUSIONS:

From the findings it is inferred that the company should concentrate on the

capital so there could be expansion of the business activities.


The funds from the operations have negative balance i.e. in the working

capital the company needs to take steps to avoid the deficit of the business.

The company is in the profitable condition is low as the expenses is

consistently increasing over the income during subsequent years.

The company must think over the strategy over the fuel and oil which makes

the huge payment leads to reduce the income of the business.

It could be concluded that the funds from operation calculation is important as it shows the

working capital of the company and the profit and loss apportion account and finally the

funds from operation which in need sites the need for funds in the future and the sources that

could be polled out from.

C.RECOMMENDATIONS

The company should maintain proper liquidity position by increasing the liquid assets

such as cash and bank balance, sundry debtors, and other current assets and decrease


the current liabilities like sundry creditors, advances from customers and etc., which

enables the company’s working capital in favorable positions

The company should try to reduce the cost of fuel which is more expensive or try to

avoid the frequent flying which is not profitable to them

Company should increase its scheduled services which fetch the company’s revenue

and helps them to reduce the other cost occurred during the travelling.

The payment and allowances are more which leads to reduce the profitability

positions of the company and try to reduce unnecessary allowances provided to

employees and also to the passengers.

Company should increase its share capital instead of raising funds from secured loans

and unsecured loans help them to reduce the burden of payment of interest.

Company should have the control over its expenses over the income which helps the

company to earn the profit.

Using open sky policy the company should extend its network and fetch more profit

through services provided to customers like premium classes.

The flow of funds is inadequate so the company should invest and utilize the money

in best way where the company can get more return.

It is advisable to the company that to increase its maintenance cost charge for

premium and other classes helps to earn the income from it


Company should maintain some reserve as general reserve which helps them to

compensate in future uncertainties.

D. ANNEXTURE

Balance Sheet As at 31 st March 2008 , 2009, 2010:

Particulars 2007-08 2008-09 2009-10I. SOURCES OF FUNDS: Shareholder’s Funds:a. Capital 1,450.00 14,500.00 9,450.00


b. Reserves and Surplus 78,942.90 633.5 624.8

Loan Funds:a. Secured Loans 28,917.50 23,659.50 65,907.10b. Unsecured Loans 155,216.50 168,764.90 184,761.10Future Lease Obligations 116,887.50 133,559.60TOTAL 264,526.90 311,395.40 394,302.60II. APPLICATION OF FUNDS:Fixed Assets:a. Gross Block 186,545.60 243,294.00 328,410.50Less: Depreciation 7,601.20 18,380.50 31,990.60b. Net Block 178,944.40 224,913.50 296,419.90c. Capital Work-in-Progress 39,726.30 50,113.70 24,656.20

Investments: 901.2 1,231.80 1,219.30Deferred Tax Assets (Net): 11,873.40 28,424.20 28,425.20Foreign Currency, Monetary Items 1,528.00 99.50Translation Difference Account

Current Assets, Loans and Advances:a. Inventories 10,016.10 9,642.10 8,677.80b. Sundry Debtors 26,134.10 24,731.00 25,791.10c. Cash and Bank Balances 10,845.00 11,396.40 5,284.70d. Other Current Assets 318.90 561.60 768.10e. Loans and Advances 15,602.10 11,175.90 14,466.50

Less: Current Liabilities and Provisionsa. Current Liabilities 42,861.80 42,282.90 55,466.70b. Provisions 9,234.30 10,040.90 10,929.90

Net Current Assets 10,820.00 5,183.20 -11,408.40Profit and Loss Account 22,261.60 54,890.90TOTAL 264,526.90 311,395.40 394,302.60

E.BIBILIOGRAPHY

1) M.N.ARORA (2006), ‘Management Accounting 1st edition’ pg -2.1 to 2.20 Published

by Mrs.Meena Pandey, Himalaya Publishing House. Mumbai-400004

2) Website www.himpub.com


3) Dr .JAWAHAR LAL (2008) reprint, ‘Accounting for management 4th edition’ pg -

174 to 192 Published by Mrs.Meena Pandey,Himalaya Publishing House.Mumbai-

400004

4) Website www.himpub.com

5) I.M.PANDEY(2009) reprint, ‘ Financial management 9th edition’ pg -583 to 591

Published by Vikas Publishing Pvt House Ltd Noida-201301

6) Website www.vikaspublising.com

7) Annual reports of Air India Ltd.,

8) www.businesstoday.intoday.in

9) www.airindia.com

10) Management Accounting By, B.S Raman

11) WEBSITE: www.airindia.com


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