AIR INDIA

Air India



Air India

Introduction

Air India is an airline carrier based in India, the company comprised of a group of airline carriers and different companies offering tourism and travel services throughout the world. The air India group is also engaged in providing international air craft trading, commercial air transportation, air craft rental, passenger transport, spare parts trading, cargo services, telecommunications devices trading, documents transfer services, aviation training, maintenance and air craft repairs.

Financial analysis

Air India is a public limited company and Mr. Rohit Nandan is the Chairman of the company. Air India has a very low debt in the capital structure and the company is mainly financed through equity financing (Bailey 2002, 45).

Capital structure

From Year

To Year

Class Of Share

Authorized Capital

Issued Capital

Paid Up Shares (Nos)

Paid Up Face Value

Paid Up Capital

2005

2006

Equity Share

425.64

153.84

153836427

10

153.84

Ratio analysis

 

Mar ' 09

Mar ' 08

Mar ' 07

Mar ' 06

Mar ' 05

Per share ratios

Adjusted EPS (Rs)

-375.27

-153.53

-51.80

-14.52

0.20

Adjusted cash EPS (Rs)

-290.73

-101.00

-25.88

11.98

28.12

Reported EPS (Rs)

-382.64

-153.53

-29.12

0.97

6.26

Reported cash EPS (Rs)

-298.09

-101.00

-3.20

27.47

34.19

Dividend per share

-

-

-

-

1.00

Operating profit per share (Rs)

-306.62

-238.22

-67.11

63.32

70.22

Book value (excl rev res) per share (Rs)

14.37

400.91

-7.03

22.09

21.12

Book value (incl rev res) per share (Rs.)

14.37

400.91

-7.03

22.09

21.12

Net operating income per share (Rs)

912.04

940.58

548.56

574.23

493.26

Free reserves per share (Rs)

-

-153.53

-17.38

11.74

10.78

Profitability ratios

Operating margin (%)

-33.61

-25.32

-12.23

11.02

14.23

Gross profit margin (%)

-42.88

-30.91

-16.95

6.42

8.62

Net profit margin (%)

-41.16

-14.59

-4.85

0.16

1.26

Adjusted cash margin (%)

-31.27

-9.59

-4.31

2.03

5.68

Adjusted return on net worth (%)

-2,611.66

-38.29

-

-65.74

0.95

Reported return on net worth (%)

-2,662.95

-38.29

-

4.39

29.65

Return on long term funds (%)

-17.40

-10.71

-8.61

29.49

65.88

Leverage ratios

Long term debt / Equity

148.35

3.17

-

7.00

2.14

Total debt/equity

148.35

3.17

-

10.66

3.88

Owners fund as % of total source

0.66

23.99

-1.43

8.57

20.48

Fixed assets turnover ratio

0.54

0.73

1.30

1.24

1.07

Liquidity ratios

Current ratio

1.66

1.44

2.17

1.18

0.68

Current ratio (inc. st loans)

1.66

1.44

2.17

0.50

0.44

Quick ratio

0.93

1.02

1.81

1.01

0.56

Inventory turnover ratio

13.72

13.62

11.48

117.92

186.90

Payout ratios

Dividend payout ratio (net profit)

-

-

-

-

17.59

Dividend payout ratio (cash profit)

-

-

-

-

3.22

Earning retention ratio

-

-

-

100.00

-448.54

Cash earnings retention ratio

-

-

-

100.00

96.09

Coverage ratios

Adjusted cash flow time total debt

-

-

-

19.66

2.92

Financial charges coverage ratio

-2.52

-2.62

-1.05

1.18

1.54

Fin. charges cov.ratio (post tax)

-1.59

-1.09

0.79

1.41

1.73

Component ratios

Material cost component (% earnings)

-

-

-

-

-

Selling cost Component

-

-

-

5.23

5.31

Exports as percent of total sales

0.16

0.13

0.11

-

-

Import comp. in raw mat. consumed

-

-

-

-

-

Long term assets / total Assets

0.75

0.74

0.54

0.52

0.54

Bonus component in equity capital (%)

-

-

-

-

-

Past Five Year Ratio Analysis

Liquidity ratios

2009

2008

2007

2006

2005

Current ratio

1.66

1.44

2.17

1.18

0.68

Current ratio (inc. st loans)

1.66

1.44

2.17

0.50

0.44

Quick ratio

0.93

1.02

1.81

1.01

0.56

Inventory turnover ratio

13.72

13.62

11.48

117.92

186.90

The liquidity ratio analysis of the company has shown that the company has been facing problems as the current ratios have declined from 2.17 (2007) to 1.44 (2008) but in 2009 it can be observe that the company is performing well and a positive increase can be observe in 2009 by 1.66. This decline in the liquidity ratios is no surprise as the overall economic condition of the world economy is going through a recession. Especially Middle East and Asia are facing huge problems in the real estate and tourism sector which has significantly affected the profitability of the company (Brenner 2005, 119).

Profitability ratios

Operating margin (%)

-33.61

-25.32

-12.23

11.02

14.23

Gross profit margin (%)

-42.88

-30.91

-16.95

6.42

8.62

Net profit margin (%)

-41.16

-14.59

-4.85

0.16

1.26

Adjusted cash margin (%)

-31.27

-9.59

-4.31

2.03

5.68

Adjusted return on net worth (%)

-2,611.66

-38.29

-

-65.74

0.95

Reported return on net worth (%)

-2,662.95

-38.29

-

4.39

29.65

Return on long term funds (%)

-17.40

-10.71

-8.61

29.49

65.88

The analysis of the profitability ratios of the company is also showing a conservative trend overall. There is a significant decline in the gross profit margin of the company due to the ever increasing and intense competition in the airline industry. The market price of the share has also decreased. To sum it up, the overall performance of the company in terms of the profitability ratios is not encouraging and thus it requires a change ...