Financial Analysis of Air India

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  • Topic: Balance sheet, Air India, Generally Accepted Accounting Principles
  • Pages : 14 (4403 words )
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  • Published : May 9, 2012
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A REPORT ON FINANCIAL ANALYSIS OF AIR INDIA

COURSE: MBA in Logistics and Supply Chain Management
SUBJECT: Financial Analysis for Managers
ID No: EAC0911598
12/28/2011
Christy Christopher Devassy

TABLE OF CONTENT 01
I. Executive Summary……………………………………… 02 II. Company Profile…………………………………………… 03 III. Financial Ratio’s……………………………………… ……04 a) Profitability Ratio……………………………………..04 b) Efficiency Ratio…………………………………………08 c) Liquidity Ratio………………………………………….06 d) Gearing Ratio………………………………………09

IV. Horizontal Analysis……………………………………….09 V. Vertical Analysis…………………………………………...10 VI. Comparison with Jet Airways………………………..11 VII. SWOT analysis……………………………………………….12 VIII. Conclusion……………………………………………………14 IX. Recommendation and suggestions…………… ….15

X. Reference………………………………………………………16 XI. Appendix……………………………………………………….17

(NOTE: All calculations are done in the appendix)

Executive Summary

The purpose of this study is to provide readers with comprehensive analysis of the financial reports of Air India from the year 2007-2010. The financial analysis of Air India highlights financial health of the airline, its strength and weakness and its ability to create value to its shareholders. The study introduces a brief overview of the company and its area of operation and activities in the first section. Further, the profitability ratio, efficiency ratio and gearing ratio is calculated over the study period to analyze capital structure, scope of international operations, recent stock performance and dividend policies. In the next section, the horizontal analysis of the financial statements is carried out taking 2007 as base year for each 2008, 2009 and 2010 to understand the variation of individual balance sheet items over the study period. The financial statement of the Air India was compared with Jet airways to examine how efficiently Air India managed its domestic and international operations. However, there was practical difficulty of comparing a government owned carrier and private carrier. Finally, the conclusion gives brief overview of the study period with valuable recommendations for better financial management.

Company Profile

In July 1932, J.R.D Tata established Tata Airline as a division of Tata sons, currently known as Tata Group. Tata sons opened the first aviation sector in India and he used his fleet for private purpose. Later the Indian government acquired the Tata Airlines in 1953 and nationalized by its name to Air India, as the public limited company on 29th July, 1946. Now Air India is the flagship and national airline of India. They launched their first service from Bombay to London on 8th June, 1948. On August 1st, 1953 the Indian government purchased 2% stakes and become the major shareholder. The Government approved to merge Air India and Indian Airlines, the merged airlines was titled Air India International. Air India is known as the National Aviation Company India Limited. Indian Airlines operates the domestic sector. Their central hubs are in Chhatrapati Shivaji International Airport in Mumbai and Indira Gandhi International Airport in Delhi. Air India operates 115 Airbus and Boeing which runs 49 domestic and 26 international destinations in 19 countries which operates the flights to Asia, Middle East, Europe and North America. In May 2004 Air India established a low cost subsidiary service and titled it Air India Express. It is a low cost carrier service and operates in Gulf countries and Southeast Asia. REASONS FOR MERGER:

* Generate the largest airline in Asia.
* Increase world rank to number 31 in revenue terms, as against the recent ranks for IA (67) and AI (48). * Provide an opportunity to fully leverage strong assets, capabilities and infrastructure. * Provide an opportunity to leverage skilled and experienced manpower to the optimum potential Air India was critically facing...
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