A Study On Working Capital Management at Air India

“A STUDY ON WORKING CAPITAL MANAGEMENT AT AIR INDIA”
Dissertation Report submitted in partial fulfilment of the requirements for the award of the
Degree of
MASTER OF BUSINESS ADMINISTRATION
OF
BANGALORE UNIVERSITY
By,
Himabindu V
Registration No: 20SKCMD046
Under the guidance of
Prof. Chiranth. R
Assistant Professor
Department Of Management Studies – MBA
Bangalore University
2022-2023
BANGALORE UNIVERSITY
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Name of the student : Himabindu V
Registration Number : 20SKCMD046
Title of Project : A Study on Working Capital
Management at Air India
Name of the Guide : Prof. Chiranth.R
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DECLARATION BY THE STUDENT
I Himabindu V, student of MBA 2020-2022 batch of Acharya Institute of
Management and science declare that Dissertation entitled “A study on Working
Capital Management at Air India” is the result of the dissertation report work
carried out by me under the guidance of prof. Chiranth.R, a faculty of AIMS in
partial fulfilment for the award of Master’s Degree in Business Administration by
Bangalore University.
I also declare that this dissertation report is the outcome of my own efforts and that
it has not been submitted to any other university or institute for the award of any
other degree or diploma or certificate.
Place: Bangalore Name: Himabindu V
Date: Register no: 20SKCMD046

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TABLE OF CONTENTS
CHAPTER TITLE PAGE

NO
1. Introduction 1
Industry Profile 2
Theoretical background of the study 3
Importance of the topic 4-10
Need to study the topic 10-22
2. Review of Literature and Research Design 23
Review of literature and Gaps 24-26
Statement of the Problem 27
Scope of the study 27
Objectives of the study 27
Sampling 28
Tools for Data Collection 28
Data Analysis 28
Limitations of study 29
3. Industry Profile 31-44
4. Data Analysis and Interpretation 45
Data Analysis 46-72

5. Findings, Conclusions and Suggestions 73
Summary of Findings 74
Conclusion 75
Suggestions to the organization 76
Bibliography and Annexure 77-91
LIST OF TABLES
Table no Description Page no
4.1.1 Statement of Changes in Working Capital for the 47

year 2016-2017
year 2017-2018
year 2018-2019
4.1.4 Statement of Changes in working Capital for the year 53
2019-2020
year 2020-2021
1 Table shows the Current Assets 56
2 Table shows the Current Liability 58
3 Table shows the Working Capital 60
4 Table shows the Current Ratio 63
5 Table shows the Quick Ratio 65
6 Table shows the Absolute liquid ratio 67
7 Table shows the Working Capital Turnover Ratio 69
8 Table shows the Current Assets to Total Assets Ratio 71

LIST OF GRAPHS
Graph Description Page no
no
1 Graph showing the Current Assets 57
2 Graph showing the Current Liabilities 59
3 Graph showing the working Capital 61
4 Graph showing the Current Ratio 64
5 Graph showing the Quick Ratio 66
6 Graph showing the Absolute Liquid Ratio 68
7 Graph showing the Working Capital Turnover Ratio 70
8 Graph showing the Current Assets to Total Asset Ratio 72

CHAPTER-1
INTRODUCTION
1
INDUSTRIAL PROFILE
Aviation
The most prevalent use of the term "aviation" is to describe mechanical air travel that involves the
use of an aeroplane. The two main types of aircraft are planes and helicopters, however most
modern definitions of the word "aviation" go beyond this to include the use of autonomous aircraft,
such as drones.
Aviation industry Vs. Airline industry

Although the terms "aviation industry" and "plane industry" are occasionally thought to be
interchangeable, they actually depict very different things. An organisation that provides air
transportation services for passengers or freight is known as an aircraft, and this industry is
collectively referred to as the carrier business.
However, the aviation industry as a whole only includes a small portion of the aircraft sector. In
addition to carriers, the aviation industry also includes aircraft manufacturers, analysts, experts in
air safety, companies involved in military avionics, and, increasingly, companies that develop,
manufacture, or may develop drones.
Aviation industry is mainly divided into 2 main categories they are as follows
1. Civil aviation
2. Military aviation
2
WORKING CAPITAL
Working capital management addresses the issues that come up while attempting to manage
current assets, current liabilities, and their interaction. The phrase “current assets” refer to assets
that may or will be turned into cash in the normal course of business within a year without losing
value or interfering with the business operations. Cash marketable securities, accounts receivable,
and inventory make up the majority of current assets. Current Liabilities are obligations that, at
the time they are assumed, are expected to be settled using the company’s current assets or
revenues within a year of the obligation’s inception. Accounts payable, bills payable, Bank
Overdraft, and Outstanding Expense make up the core of Current Liabilities. Working Capital
Management aims to maintain a sufficient level of working capital by managing the company’s
assets and liabilities. This is because the company risks being insolvent and perhaps being driven
into bankruptcy if it cannot maintain an adequate amount of operating capital.
WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES
CONCEPT OF WORKING CAPITAL
A financial term known as “working capital” (abbreviated as “WC”) that measures the operating
liquidity that a company, organisation, or other body, including a government entity, has available
to it. Working capital is often described as the difference between current assets and current
liabilities. To determine if current assets are enough to cover current liabilities or not, it is helpful
to understand the notion of working capital. Additionally, it shows whether the company is solvent.
A company’s working capital could be thought of as its lifeblood. Effective management can
significantly increase a company’s chances of success, whereas ineffective management can
ultimately bring about the failure of a once-promising enterprise. The additional costs incurred by
the company as a result of poor working capital analysis is crucial for both internal and external
analysis because of how closely it relates to a business’s present day-to-day activities.
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DEFINITION
“Working capital is the difference between money coming in and going out. It is the net cash flow,
to put it another way. It is characterised as “the difference between current assets and current
liabilities and provision”.
SCOPE OF WORKING CAPITAL
The administration of capital, inventories, accounts receivable, cash, and work-in-progress

systems are all included in the field of working capital. Tables, ratios, and graphs are used to
analyse financial performance in relation to working capital, and recommendations are made for
the company’s capacity utilisation system and working capital practises.
VARIOUS TYPES OF WORKING CAPITAL
 Gross working capital: Investment in current assets by the company are referred to as
gross working capital. The assets that can be converted into cash within a fiscal year are
known as current assets, and they include cash, short-term securities, debtors, bills
receivable, and shares.
 Net working capital: The difference between current assets and current liabilities is
referred to as net working capital. Creditors (accounts payable), bills payable, and unpaid
expenses are examples of current liabilities because they are scheduled to mature for
payment within an accounting year. Positive or negative working capital is possible. When
current assets exceed current obligations, there will be a positive net working capital. When
current obligations exceed current assets, there is a negative net working capital.
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 Permanent working capital: The amount of capital required to be in cash or current assets
in order to continue operating a business is known as permanent working capital. It also
displays the absolute minimum amount of all current assets needed to maintain minimally
uninterrupted business operations.
 Variable working capital: When we need working capital that is greater than permanent
working capital, as may occasionally be the case, we will refer to this excess as temporary
working capital. We don’t require this kind of funding for routine business operations.
FACTORS AFFECTING THE WORKING CAPITAL
 Nature of business: An organization’s need for working capital largely depends on the
type of company it conducts. For example, a trading company needs a lot of working capital
to invest in stocks, receivables, cash, etc. less money must be spent on fixed assets. For
example, shipbuilding requires a lot of working capital since the cost of raw materials
consumed relative to the total cost of manufacturing is high.
 Size of the business: The size of the business’s operations determines the quantity of
working capital typically increases with the size of the business unit, and vice versa.
 Production cycle: The duration of a product’s manufacturing process is referred to as its

“production cycle”. It includes the period of time from the acquisition of raw materials to
the conclusion of the manufacturing process that results in the manufacture of
commodities. The longer the manufacturing cycle, the more money will be invested,
increasing the need for working capital and vice versa.
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 Seasonality of Operation: Businesses with pronounced seasonality in their activities
typically have significantly variable working capital needs. Think about a company that
makes air conditioners, for instance. In the summer, air conditioner sales are at their highest
and fall off significantly in the winter. Such a company’s need for working capital is likely
to rise noticeably throughout the summer and fall and noticeably during winter. In contrast,
a business that produces consumer goods like soap, oil, tooth paste, etc., which have
generally consistent year-round sales, tends to have a predictable working capital demand.
 Business cycle: Business cycles have an impact on the need for working cash. When prices
are rising and the economy is in a boom, there is a tendency to hold huge inventories of
both raw materials and completed items in the hope of increasing profits. A significant
amount of working capital is locked up during a depression, the other sort of business cycle,
as inventories remain unsold and book debts are unpaid.
 Production policy: A business with pronounced seasonal sales fluctuations may adopt a
production strategy that lessens the dramatic variability in working capital needs. For
instance, an air conditioner manufacturer might choose to keep production at a constant
level throughout the year as opposed to ramping it up at the busiest time of the year. Such
a choice might decrease variations in the needs for working capital.
 Credit policy: The firm’s credit policy, which establishes the volume of receivables, also
establishes the quantity of working capital. If the company has a lax credit policy, it will
need a high level of working capital; conversely, if the company’s credit policy forbids
extending credit to customers, it will need a low level of working capital.
 Growth and expansion of business: More working capital is needed for expanding issues
than for those that are static. Though it fluctuates with economic situations and business
practises, it makes sense to assume a higher amount of working capital in a rising concern
to meet its expanding wants of money for its expansion and/or diversification
programmers.
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 Profit Appropriation: Due to high- quality products or effective marketing, certain
businesses have a dominant position in the market. On the other hand, a business
experiencing fierce competition can experience poor profit margins. If the net profit is
earned in cash, a large net profit margin helps with working capital. The amount of working
capital needed will be determined by how well the cash on hand is utilised. The way
earnings are applied has an impact on the contribution to working capital, which in turn
has an impact on taxation, depreciation, reserve policy, etc.
 Dividend policy: In businesses when a conservative dividend policy is maintained, there

is a well-established link between dividend and working capital. The dividend policy is
altered as a result of changes in working capital.
 Price level changes: The finance management should also foresee how changes in price
levels would affect the company’s need for working capital. Rising price levels typically
necessitate more working capital since more investments are needed to maintain the same
level of current assets. Depending on their pricing strategies, the nature of their products,
their ability to pass on the price increase to the client, etc., different businesses will
experience varied repercussions of rising price levels.
 Operation efficiency: The management’s operational effectiveness is a significant factor

in determining the amount of working capital. A company with efficient operations may
cut down on waste, use resources wisely, and hence require much less working capital.
 Operating cycle: Operating cycle is the amount of time required to complete the cycle of
events listed below:
1. Cash to inventory conversion.
2. The transformation of stock into receivables.
3. The cash conversion of receivables.
The need for working capital will increase if the operating cycle is long, and vice versa.
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 Market conditions: larger inventories of finished items are needed when competition is
fierce in order to quickly satisfy clients who might not be willing to wait because competing
producers are prepared to meet their needs. It might be necessary to extend even more
favourable lending conditions to entice clients in a fiercely competitive market. As a result
of increased investment in completed goods inventories and accounts receivable, working
capital requirements are frequently significant. A company may manage with a lower
inventory of finished items if the market is robust and competition is low since customers
can be served more slowly.
 Conditions of Supply: The availability of raw materials, spare parts, and stores depends
on the supply situation. The company can function with low stockpiles if supply is fast and
sufficient. To assure production continuity, the company would need to buy supplies as
they were available and maintain significant average inventories if the supply were
unpredictable and scarce. When production activities take place year-round but the raw
material is only available periodically, a similar approach may need to be applied.
ADVANTAGE OF ADEQUATE MANAGEMENT CAPITAL
To keep the firm functioning smoothly, adequate working money is crucial. Without sufficient
operating capital, no business can operate successfully.
Business solvency: By ensuring continuous production, enough working capital contributes to

maintaining the solvency of the company.
• Goodwill: Having enough working cash enables a business to make on-time payments and
preserve its goodwill.
• Simple loan: Having enough working capital increases solvency and credit standing, which
makes it possible to obtain loans from banks and other lenders with simple terms.
• Cash discount: A company with enough operating capital can also take advantage of cash
discounts on purchases, which lowers costs.
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• Consistent material supply: Enough working capital guarantees consistent raw material supply
and uninterrupted production.
• Regularly paying employees pay checks and other daily obligations: This improves employee
satisfaction, boosts employee morale, boosts productivity, lowers costs, and increases profitability.
• Exploiting advantageous market conditions: If a business has enough working capital, it may
take advantage of favourable market conditions by hanging onto its inventory for higher prices
and buying its needs in bulk when prices are cheaper.
• Crisis management skills: During a depression, one can deal with the problem.
• Quick and consistent return on investments: A company with adequate working capital can
pay dividends to its investors promptly and consistently, which builds their confidence and allows
it to acquire additional capital in the future.
• Strong morale: A business with enough working capital benefits from a climate of security,
confidence, and high morale, which boosts productivity.
DISADVANTAGES OF INADEQUATE WORKING CAPITAL

A lack of working cash can lead to numerous financial issues for businesses. Inadequate working
capital may occasionally be one of the main reasons for a company organisation to close. Lack of
working capital prevents timely acquisition of raw materials as well as timely payment of labour
and other expenses. A company with limited working capital will experience the following
drawbacks:
1. The business cannot seize new chances or adjust to change.
2. Discounts from trade are lost. A business that has enough operating capital can finance larger
inventories and so place big orders.
3. Cash rebates are forfeited.
4. Some businesses will make an effort to get their debtors to pay up front.
5. The benefits of being able to grant consumers a credit line are given up.
6. Financial repute is damaged as a result of late payments to trade debtors.
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DISADVANATGE OF EXCESSIVE WORKING CAPITAL
1. A business cannot achieve the desired rate of return on its assets if it has an excessive amount
of working capital, which results in ideal funds that make no profit for the company.
2. Excessive working capital causes irrational purchases and inventory build-up. Thus, there is a
higher likelihood of waste, theft, and losses related to inventories.
3. A high incidence of bad debts is a result of excessive working capital, which also implies a high
number of borrowers and poor credit practises.
4. It might make the company's operations less efficient overall.
5. A company's relationships with banks and other financial institutions may not be maintained if
it has an excessive amount of working capital.
6. Share values could decrease as a result of lower rates of return on investments.
WORKING CAPITAL
INTRODUCTION
Working capital management refers to choices made in relation to cash on hand and short-term
borrowing. This entail controlling the interaction between a company's short-term assets and short-
term obligations. Working capital management seeks to maintain the company's ability to operate
and to ensure that it has enough cash flow to pay down maturing short-term debt as well as
impending operating expenses.
DEFINITION
The process of controlling operations and procedures involving working capital. This level of
management acts as a system of checks and balances to make sure that the quantity of money
coming into the organisation is sufficient to support its operations. Using the current level of assets
and liabilities, this continuing process must be assessed. Implementing short-term decisions that
may or may not carry over to the following earnings period is a possible task for working capital
management.
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OBJECTIVE OF WORKING CAPITAL MANAGEMENT
A firm's short-term assets and short-term liabilities are related in working capital management.
The purpose of working capital management is to make sure a business can carry on with its
operations and has the resources to pay off maturing short-term debt as well as impending
operating bills. Managing cash, accounts receivable and payable, and inventories are all parts of
managing working capital.
PRINCIPLES OF WORKING CAPITAL MANAGEMENT
Principle of risk variation:

Risk here refers to a company's inability to keep enough liquid assets on hand to cover its
obligations. When working capital varies in relation to sales, a company is taking on different
amounts of risk, which increases the possibility of profit or loss. A company has a greater chance
of profit or loss as it takes on more risk. The degree of risk rises as working capital as a percentage
of revenue declines.
Principle of cost of capital:

This idea emphasises the many financial sources because each has a unique cost of capital. It
should be kept in mind that risk and the cost of capital move in opposite directions. Therefore, the
cost of capital decreases as more risk capital is invested.
Principle of equity position:

This principle states that a firm's equity position must appropriately justify the amount of working
capital spent in a component. Every rupee put into working capital should increase the company's
value.
Principle of maturity of payment:

Every attempt should be made by a corporation to link payment maturities to its flow of internally
generated funds. The maturities of a corporation should differ as little as possible from one another.
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SOURCES OF WORKING CAPITAL
Loans from financial institutions:

The possibility is typically ruled out because financial institutions do not finance needs for working
capital. Additionally, not all businesses can use this facility, and it is impractical for small
businesses.
Floating on debentures:
The likelihood of a successful flotation of debentures appears to be very low. Debenture floating
is yet to gain traction in the Indian capital market. Private sector debt offerings from businesses
that aren't affiliated with certain reputable and well-known organisations typically don't succeed
in drawing in investors.
Accepting public deposits:

Public deposits are the next option. The problem of stealing public deposits is closely tied to the
company's reputation when it seeks to solicit public deposits. However, low profitability is a
widespread issue across a wide range of businesses.
Issue of shares:
The issuance of additional shares could be one strategy to increase the equity base with the goal
of financing additional working capital requirements. Indian companies also find themselves in a
difficult situation in this situation. Success of a capital issuance is quite unlikely due to low profit
margin and lack of company understanding.
Raising funds by internal financing:

Since final product prices are regulated and do not allow businesses to make enough money to
pay fair dividends and retain enough cash to cover margin money requirements to finance more
working assets, many businesses find it difficult to raise equity through operational profits.
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COMPONENTS OF WORKING CAPITAL MANAGEMENT
1. Inventory management
2. Cash management
3. Receivables management
INVENTORY MANAGEMENT
Meaning
Working capital management has various components, one of which is inventory management. To
ensure ongoing production and sales, an organization must retain its stock, raw materials,
components, spare parts, or work in progress. In most cases, the inventory will receive more than
60% of the working capital. Consequently, inventory management has received a great deal of
attention in the field of financial management.
Objectives of Inventory Management

 To eliminate wastage and to prevent loss from theft, breakage, and deterioration.
 To maintain a steady supply of raw materials to support ongoing production.
 To maximise opportunities and cut costs associated with purchases.
 To introduce a method for managing inventories using science.
 To promptly meet the final consumers' demand for goods by supplying the appropriate
material at the appropriate time, from the appropriate sources, and at the appropriate price.
 To prevent improper or excessive material storage.
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TOOLS OF INVENTORY MANAGEMENT
 Fixation of levels:
It is a tool that allows inventories to be maintained by setting several levels, including
Maximum level, Re-order level, Minimum level, and Danger level. Fixation levels are
determined by taking into account a number of variables, including the type of raw material
used, the cost, the lead time, the availability of the material, and other aspects.
 Maximum level:
It is a level that has been specified for materials above which they shouldn't be stored.
Materials kept at levels higher than necessary cause the company several financial and
managerial issues.
 Reorder level:
Re-order is the predetermined quantity for the materials that indicates how quickly they
must be purchased from the market. When the stock hits this point, the store's controller
submits a request to buy the stock. to preserve storage objects at their highest level.
 Minimum level:
It is the level at which the store manager makes a prompt decision about the acquisition of
materials. Production could stop if the person in control of shops acted carelessly.
 Danger level:
It's the limit beyond which material storage shouldn't be substandard. It also suggests that
plans for prompt material purchases are required.
 ABC Analysis:
This process involves grading the materials as AB and C to create categories. Grade A
materials are expensive, high in value, scarce, tightly overseen, and controlled. Materials
of grade C are more expensive in terms of value but higher in quality and given less care.
Materials of Grade B have a moderate value and are kept in a moderate quantity under
moderate management.
 Economic Order Quantity:

The number of items that should be ordered in order to have the lowest order placement
and carrying costs. Carrying costs include capital costs, storage costs, insurance costs, and
spoiling costs.
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1. Perpetual inventory system: Continuous stock checking is another name for it.
Using this method, entries are created in various registers for the supplies as they are
received and distributed. All throughout the year, materials are physically verified.
Consequently, it is recognised as a pricy inventory control method.
2. VED Analysis: It is the best technique for the automotive industry, particularly for
maintaining spare parts. Each component is categorised into
 Vital: Responsibility for the production of a product will be attentively watched.
 Essential: Even although its level of stock is only relatively high, it lacks crucial
supplies.
 Desirable: Component maintenance is optional.
 FSN Analysis: This approach groups the items in accordance with the movements.
1. Fast moving items: They are preserved in great quantities and their movement is
closely monitored.
2. Slow moving items: are rarely required by the manufacturing department,

therefore limited monitoring will be kept.
3. Non-moving items: are infrequently needed by the production division. As a

result, only a small stock is maintained.
4. Periodical inventory valuation: With this strategy, inventory appraisal and

checking will be done periodically, typically twice or three times per year. The
company's regular operations will be suspended for one or two days during this time
in order to conduct a thorough stock valuation.
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CASH MANAGEMENT
MEANING
The most movable asset a company has is cash. Money, checks, money orders, and bank draughts
are all included. Making sure that a company has enough cash on hand to cover its needs without
being excessively or insufficiently so is known as cash management. It simply refers to the
management of cash.
OBJECTIVES OF CASH MANAGEMENT
 To make cash payments: The holding's goal is to cover the various kinds of expenses
that will be incurred throughout business operations. To fulfil its duties, the company needs
continue to be financially stable.
 To maintain minimum cash reserve: The company shouldn't keep excessively

large cash reserves in order to fulfil obligations on schedule. A surplus of funds should be
put to use.
MOTIVES OF HOLDING CASH
1. Transaction motive: for daily transactions such as payments, dividends, costs,

and purchases.
2. Precautionary motive: for addressing unanticipated occurrences.
3. Speculative motive: for making investments in lucrative prospects when they

become available.
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IMPORTANCE OF CASH MANAGEMENT
Since cash is the company's most important and least productive asset, cash management
is given more attention than other current assets. It is important because it is utilised to fulfil
business responsibilities. But because cash is a waste of resources, the goal of cash management
is to keep the company's cash position appropriate so that it can employ any excess cash in a
beneficial way. The difficulty of precisely predicting cash flows and the fact that inflows and
outflows of cash do not always coincide make effective cash management essential.
RECEIVABLES MANAGEMENT
MEANING OF RECEIVABLES
Receivables are sums that are owed to the company as a result of the sale of products or services
in the regular course of business. As part of its present assets, these are claims made against its
clients. Customers, trade receivables, account receivables, and book debts are other names for
receivables. Customers' accounts receivable are maintained. It depends on the company's credit
policy as to how long credit is granted and how much money is owed. In order to stay competitive
and boost sales and profits, receivables must be maintained or purchased.
ACCOUNT RECEIVABLE MANAGEMENT

Accounts receivable are above rolling accounts and are a permanent investment. In order for
working capital to flow easily, the finance manager must decide on the level of this account
appropriately. The "account receivable management" process is involved in keeping debtors at an
ideal level, determining credit limits, creating sales, and getting the debtors to pay up quickly.
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DETERMINENTS OF ACCOUNT RECEIVABLE
 Credit sales volume:

Many businesses may engage in "Credit Sales" in an effort to boost profits and boost sales.
Accounts receivable will increase in proportion to the volume of credit sales. The custom
that already existing in that firm will also affect how much credit is sold. Credit policy
must be widely implemented by the company if it depends on credit sales to promote its
products.
 Credit policies:
The firm's credit policy is a significant additional factor that affects the volume of
"Accounts Receivable." The term "Credit Policy" refers to the rules established for granting
credit sales, including (1) the time frame for debt collection and (2) the permitted types of
discounts. Evaluation of the creditworthiness of the customer, collection practises, etc.
With changes in the economy, credit policies also shift.
 Business terms:
The terms and conditions governing credit sales can affect the number of accounts
receivable. These ailments consist of
1. The time frame for returning the purchase amount
2. The permitted discounts' kinds.
Time period:
The amount of accounts receivable is dependent on how long customers are given to pay off their
trade obligation. The credit sales will increase and the quantity of the accounts receivable will
increase the longer the period permitted.
Discount
Customers can receive discounts from traders in one of three categories:
1. Trade discounts
2. Cash discounts
3. Quantity discounts.
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 Competition: Competition is another aspect that affects the quantity of the accounts
receivable. A company will have a lax credit policy in a competitive economy, which raises
the size of the accounts receivable. They compete for customers by promoting sales, which
inevitably leads to lax credit terms. When businesses are fiercely competing, credit policies
will be so lax that everyone will be able to buy things on credit.
 Location: The size of receivables also depends on the location of the business unit. If a
company is situated in a remote area, it is compelled to implement a credit policy that
appeals to customers. Customer development will be good if the product is exclusive, and
location won't be an issue.
 New products: When new products are introduced, the company is required to maintain
a liberal lending policy throughout the period until the product becomes popular with
consumers. The size of accounts receivable grows logically as a result.
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COMPONENTS OF WORKING CAPITAL
So, the core idea of working capital management theory is the relationship between current
assets and current liabilities. Current assets are those assets that, in the normal course of business,
can or will be converted into cash within a year without losing value or interfering with the
operation of the company. The major elements are
 Current assets
 Current liabilities
Current Assets Current Liabilities
Cash in hand and Bank balance Bank Overdraft
Bills receivable Bills Payable or Account Payable
Sundry Debtors Sundry Creditors
Short term Loans and Advances Short term loans, advances and deposits
Accrued Incomes Accrued or outstanding expenses
Inventories of stock as:
Raw Materials
Work in Process
Stores and Spaces
Finished Goods
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FORMAT
Statement of working capital estimation
Amount Amount
Particulars
(Rs.) (Rs.)
A. Estimation of Current Assets: XXX

i) Raw materials XXX
ii) Work-in-process XXX
Raw materials (full cost) XXX
XXX
Direct labour (to the extent of completed stage) XX
Overheads (to the extent of completed stage) XX
iii) Finished goods inventory
iv) Debtors
v). Cash balance required
Total Current Assets XXX
B. Estimation of Current Liabilities: XXX

i) Creditors
ii) Expenses
Overheads XX XXX
Labour XX
Total Current Liabilities XXX
C. Working Capital (A-B) XXX

+Contingency (Percentage on working capital i.e. C) XXX
D. Working Capital Required XXXX
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ECONOMIC ORDER QUANTITY (EOQ)
The inventory control tool known as EOQ identifies the optimal sequence at which inventory costs
are at their lowest.
ASSUMPTIONS
 Throughout the time period, the product is in continual and consistent demand.
 Lead time, or the period between ordering and receiving, is constant.
 The cost of the product is constant per unit.
 The cost of keeping inventory is based on average inventory.
 The price of ordering is constant, and
 The goods will satisfy all demand (no back orders are allowed).
EOQ = 2 AO / CC
Using A as the annual use
O = Cost per order for ordering
Annual carrying cost, expressed as a unit
Price per unit times percentage-based carrying cost per unit equals CC.
 When more complicated cost equations are present, the aforementioned straightforward
technique will not be adequate to estimate EOQ.
22
CHAPTER-2
REVIEW OF LITERATURE AND RESEARCH DESIGN
23
REVIEW OF LITERATURE AND GAPS
Imran & Noursheen (2010), Working capital is a notion that encompasses both current assets and
current liabilities. Gross working capital, sometimes referred to as circulating capital, is the total
of current assets. Working capital management's primary goal is to maintain a consistent level of
working capital that is neither too little nor too much. Working capital is defined as the difference
between current assets and current liabilities, or "Net Working Capital." In addition to being
sufficient to satisfy current liabilities, working capital must also provide a respectable margin of
safety.
Gill et al. (2010) used data from 88 American companies listed on the New York Stock Exchange
over a three-year period, from 2005 to 2007, to derive the conclusions of Lazaridis and Tryfonidis.
According to their research, there is a statistically significant correlation between the cash
conversion cycle and profitability, which was determined by gross operating profit, as in Lazaridis
and Tryfonidis' earlier studies.
Nilsson et al. (2010) In their paper on the company's impact on working capital management in
Swedish businesses, analysed the effects of these traits on the cash conversion cycle, a metric for
evaluating working capital management. Profitability, operating cash flow, firm size, sales growth,
current ratio, quick ratio, debt ratio, and Pearson correlation and multiple regressions were utilised
for data analysis and hypothesis testing. The company also had these features.
Giroud and Mueller (2011) emphasize that poor corporate governance reduces firm value in non-
competitive industries while accounting for market rivalry. Furthermore, CEO traits may be the
cause of the endogeneity issue. Instead of focusing on long-term performance, the company's main
executives are more concerned with obtaining short-term profitability (Kayani et al. 2019).
Haq et al. (2011) Using information from 14 companies in the cement industry in Pakistan's
Khyber Pakhtunkhwa Province (KPK), an empirical study of the relationship between working
capital management and profitability was conducted. The study's secondary data, which covered
the six-year period from 2004 to 2009, was compiled from financial reports that are traded on the
Karachi Stock Exchange. Working capital management and profitability are found to have a
moderately positive link based on correlation coefficient and multiple regression analysis.
Baos-Caballero et al. (2014) brings out a non-linear relationship between working capital and
firm value for a sample of UK-based businesses, indicating that there is an ideal level of working
capital that maximizes business profits. Additionally, the ideal amount is determined by the
financing restrictions; according to the authors, the ideal working capital level is lower for
businesses with financial restrictions.
24
De Almeida and Eid (2014) conclude that increasing the level of working capital at the beginning
of a fiscal year reduces the value of the company using data on Brazilian public corporations for
the years 1995 to 2009. Additionally, Ukaegbu (2014) found that cash conversion cycles had a
detrimental impact on a panel of manufacturing companies in Egypt, Kenya, Nigeria, and South
Africa between 2005 and 2009 in terms of net operating profit.
Mun and Jang (2015) demonstrate a concave influence of working capital on firm value,
supporting the idea of an ideal working capital level for US firms from a particular industry
(restaurants), spanning the period of 1963–2012.
Habib and Huang (2016) conclude that positive working capital decreases profitability, while a
negative working capital affects profitability positively, using the case of Pakistan, by employing
panel least squares estimate, panel fixed effect, and panel generalised technique of movement.
Li (2016) suggests numerous approaches to deal with endogeneity, including GMM, instrumental
variables, fixed effects models, lagged dependent variables, and control variables. Endogeneity is
acknowledged as an issue in corporate finance. In addition to utilizing conventional least squares,
the current econometric analysis also makes use of the fixed-effects and panel-corrected standard
errors models. The advantages of panel-corrected standard errors model, which takes into account
firm-level heteroscedasticity and contemporaneous correlations across firms, and fixed-effects
regression analysis, which fully accounts for factors that might influence firm profitability in a
particular year, serve as the justification. Furthermore, Li claims that the combination of the
techniques (fixed effects and useful control variables) appears to be effective in reducing
endogeneity problems (2016).
Afrifa and Padachi (2016) also show, using panel data regression techniques, the concave
relationship between working capital level (measured by the cash conversion cycle) and business
profitability for a sample of 160 listed firms over the period of 2005–2010.
Shrivastava et al. (2017) demonstrate negative effects of a prolonged cash conversion period on
profitability for India using both traditional panel analysis and Bayesian methods.
Elbadry (2018), Practices in working capital management not only make businesses less profitable
but also make them run more efficiently. Managers should therefore focus on implementing
working capital management methods correctly.
25
Moussa (2018), working capital management (as measured by the cash conversion cycle) and
business profitability have a positive association. Moussa (2018) looks at the effect of working
capital management on the performance of 68 industrial firms in Egypt from 2000 to 2010. The
author makes the observation that stock markets in less developed economies do not achieve the
WCM's maximum efficiency.
Nguyen, M., and Nguyen (2018). Analyze the connection between working capital management
and company profitability and show how it has a favourable impact on the performance of
Vietnamese listed companies from 2008 to 2014. According to Amponsah-Kwatiah and Asiamah,
listed manufacturing companies in Ghana show a favourable correlation between many aspects of
working capital and profitability (2020). Furthermore,
Goncalves et al. (2018)'s analysis of UK unlisted enterprises between 2006 and 2014 provides
further evidence that WCM efficiency raises profitability.
Chang (2018), using data from a sample of 31,612 businesses from 46 countries between 1994
and 2011, further supports the idea that a conservative working capital management approach can
improve a company's performance.
Tsuruta (2018) reports that working capital has a short-term negative impact on firm performance
but a long-term beneficial influence on firm performance using data from more than 100,000 small
enterprises in Japan. Based on GMM technique, Altaf and Shah (2018) demonstrate the inverted
U-shape link between WCM and company profitability for a sample of 437 nonfinancial Indian
enterprises. Based on a panel of high-growth companies from Central, Eastern, and South-Eastern
Europe between the years of 2006 and 2015, Bot, oc and Anton (2017) report an inverted U-shape
association between working capital level and company profitability.
Lyngstadaas (2020), in the US, listed industrial firms' greater financial performance has been
linked to more effective working capital management.
Wang et al. (2020), It is a straightforward idea to make sure a business can close the gap between
short-term assets and short-term liabilities. Cash, inventory, accounts receivable, and accounts
payable are its four constituent parts.
26
STATEMENT OF THE PROBLEM:
The study’s primary goal is to examine AIR INDIA’s working capital problem.
Working capital analysis is primarily concerned with the link between numerous financial
parameters of a company as shown by a single set of financial statements. It is a method of
analysing the relationship between the various components of a financial statement in order to
have a better understanding of the company’s situation and performance.
SCOPE OF THE STUDY:

The Study was conducted in AIR INDIA Bangalore, the aim of the study is to analyse the working
capital management of the company.
The importance of the study is very significant. This is because without the working capital
no company can continue its day-to-day business activities.
The use of the study is that by following the methodology of these study one can get a hint
of the working capital of the AIRLINE INDUSTRY. Moreover, this method of study can be used
to find out the management of working capital in AIR INDIA.
OBJECTIVES OF THE STUDY:

 To determine the impact of current assets and current liabilities on the functioning of the
company.
 To analyse the Comparative working capital strategy of the company.
 To evaluate the impact of working capital on futuristic approach of the company.
27
SAMPALING:
SAMPLING TECHNIQUE:
Convenience sampling will be used to generate the relevant proposal.
SAMPLING FRAME:
Sampling frame is from Air India.
SAMPLING UNIT:
5 years of sampling unit of Air India.
TOOLS FOR DATA COLLECTION:

For this study the tools that can be used for gathering data is
 Comparative Balance sheet
 Ratio Analysis
DATA ANALYSIS:
SECONDARY DATA:
The secondary data is collected from the company’s websites, journals, books and other related
articles.
28
LIMITATIONS OF STUDY:
1. The most important factor is time. Shortly after starting, the study was completed in just two
months.
2.Executives from Air India were reluctant to answer questions. A thorough discussion was not
feasible because of the tight work schedule.
3. The study's focus is restricted to gathering the financial data from the company's annual reports
in light of the aforementioned objectives and then analysing the data to recommend workable
solutions for various issues relating to financial performance.
4.The findings of the study are based on the information retrieved by the selected unit.
5. The analysis is limited to just Five years of data study (from the year 2017-2021) the financial
analysis.
29
CHAPTER-3
INDUSTRY PROFILE
30
INTRODUCTION
Bharat Ratna J.R.D. Tata founded an airline in 1932, realising his ambition and beginning the
journey that would become Air India. His love of flying, which led him to become the first Indian
to acquire a commercial pilot's licence, ignited the beginnings of Air India with the introduction
of a mail service from then-Bombay to Karachi via Ahmedabad. Since becoming nationalised in
1953, Air India has grown to become a significant domestic and international brand.
After joining Star Alliance, the largest global aviation consortium, in July 2014, Air India's
international connection, which spans cities in Europe, the USA, the UK, Africa, the Gulf, Asia,
and Australia, was reinforced. Additionally, the airline serves every rural region of our nation. It
has always supported the country and its citizens in times of need and has been crucial in
evacuation operations during emergencies like the Gulf War, the Covivirus outbreak, and the
current Ukraine conflict.
After re-joining the Tata Group on January 27, 2022, Air India is ready to take off, reinventing its
objectives and strategy with an eye toward overall excellence and customer-centric procedures.
Mr. Ratan Tata, Chairman Emeritus, Tata Sons, welcomed Air India's new customers and
expressed excitement about working together to make Air India the preferred airline in terms of
passenger comfort and service.
HISTORY
1932: JRD Tata started the first scheduled service. At that time, the airline flew passengers and
mail between Karachi, Ahmedabad, Mumbai, Bellary, and Chennai. The company's first aircraft
was a Havilland Puss Moth. Its range was 714 miles, and its cruising speed was 100 mph. When
compared to the Boeing 747, whose wingspan is 195 feet and 8 inches, it had a 36 foot and 9-inch
wingspan.
1932-33: De Havilland Leopard Moth DH-85 was created from the Puss Moth.
1935: Four-seater biplane de Havilland Fox Moth DH-83 was added to Tata Airlines' fleet.
1937: The Waco YQC-6 was unveiled as the airline launched service between Bombay, Indore,
Bhopal, Gwalior, and Delhi. On November 6, 1937, JRD Tata once more piloted the initial flight.
1938: The Dragon Rapide DH-89 has been added to Tata Airlines' fleet. This was the very first
aeroplane to have a radio installed.
31
1939: Routes operated by Tata Airlines were expanded to include Thiruvananthapuram, Delhi,
Colombo, Lahore, and a few intermediate locations.
1946: After World War II, Tata Airlines underwent a public company conversion and changed its
name to Air-India Limited.
1948: Air-India International Limited was established as international services between Bombay
(Mumbai) and Cairo, Geneva, and London began.
1953: India created two businesses, one for domestic services and the other for foreign services,
and nationalised all domestic airlines. The company responsible for domestic flights was known
as the Indian Airlines Corporation after it amalgamated Air-India Limited with six other carriers.
The company providing the overseas service was known as Air-India International Corporation.
1962: Air-India is the shortened name for Air-India International Corporation.
2001: The Atal Bihari Vajpayee-led NDA government launched the first such attempt to sell the
airline strategically. The equity of 40% of Air-India was put up for sale.
2005: After dropping the hyphen from its name, Air-India changed to Air India. The move was
made in an effort to obtain a competitive edge in computerised reservation searches as more and
more ticket sales started to go online.
2007: Indian Airlines, a division of Air India, amalgamated with it.
2018: The national airline, which by that point had accrued debt over Rs 50,000 crore and other
obligations, was put up for sale once more by the government. This time, though, the government
chose to retain 24% of the airline's stock. It didn't get even one bid.
2020: In January 2020, Air India was back up for strategic sale. This time, the government
announced that it would sell all of its stock in the business. It gave a deadline of December 14 in
October. At least two proposals were submitted, one by Tata Sons and the other by a group that
included some Air India workers and a US-based financial investment company called Interups
Inc. Ajay Singh, the promoter for SpiceJet, was also competing.
2021: The Centre requested that Tata Sons and SpiceJet, the two qualifying interested bidders,
submit their final offers in April. A panel of ministers accepted a recommendation from officials
to favour Tata Sons' offer over Ajay Singh's, sealing the purchase for the company.
2022: The transfer of ownership from Government of India to Tata sons.
32
ABOUT TATA GROUP
The Tata Group, which has its global headquarters in India and 30 enterprises spread across 10
industries, was established by Jamsetji Tata in 1868. The organisation has operations in more than
100 nations on six continents, with the goal of "improving the quality of life of the people we serve
internationally through long-term stakeholder value generation based on Leadership with Trust."
Tata Sons serves as the main investment holding company and is the corporation that promotes
the Tata businesses. The charitable trusts that assist the fields of education, health, the arts, and
culture hold 66% of Tata Sons' equity share capital.
ABOUT AIR INDIA BRAND
LOGO
A red swan (symbolising flight) with orange spokes is included in the Air India emblem. The wheel
is modelled after the Ashoka Chakra, which represents the wheel of ethical duty and is also present
on the Indian Flag, underscoring the profound connection to India's cultural past.
33
MASCOT-THE MAHARAJ
"For want of a better term, we refer to him as a Maharajah. However, his blood is not blue. Bobby
Kooka, who created the enduring Maharajah mascot for Air India, remarked, "He may seem like
royalty, but he isn't regal.
Maharajah had established himself since his debut in 1946. The Maharajah was originally a
wealthy Indian potentate who stood for courtesy and refinement. He was created by Bobby Kooka,
who was then Air India's commercial director, and Umesh Rao, an artist of JWT Ltd., in Mumbai.
With his moustache, striped turban, aquiline nose, and closed eyelids, his makers gave him a
unique personality.
The amiable and adaptive Maharajah gained notoriety as he travelled the globe spreading Air
India's advertising themes. His antics, mannerisms, and jokes have been crucial in promoting the
reputation of Air India and its offerings. Maharajah is an extremely genuine individual with his
distinct flair, humour, and charm. He extends his unmistakable grin to the furthest reaches of the
globe, becoming a friend to every Air India traveller.
34
Board of Directors
THE AIR INDIANS

To connect homes and hearts while providing world-class service to our international clients, Air
India employs a committed and professional personnel from all across India and overseas.
To make our fleet fly high, teams of pilots, flight attendants, aircraft and ground engineers, flight
dispatchers, simulator maintenance engineers, flight safety auditors, catering and ticketing and
reservations and customer services, ground handling, and security work with precision like a well-
oiled machine under the support of software technologists, information technology, market
planning, route planning, finance, personnel, and materials management departments, among other
departments.
But Air India is more than simply a company that flies passengers and goods; it also serves as the
nation's wings, with every Air Indian rising to the occasion and prioritising the needs of the country
and its citizens over their own worries in times of need. Over the years, Team Air India has planned
numerous heroic evacuations from the Gulf or Yemen, Wuhan or Ukraine. In difficult times, the
Vande Bharat mission was incredibly difficult. 8,077,755 individuals returned home on 58,895
flights that the AI group conducted.
35
Numerous athletes who work for Air India have represented their country with distinction at
prestigious international competitions, making both Air India and India proud. Air India has been
developing young athletes, many of whom have gone on to become champions and have received
the highest national sporting honours. The company is proud of the many legends from Air India
who have excelled in sports such as cricket, hockey, carom, chess, shooting, and others.
Air India is proud of the accomplishments of its female employees who succeed in all aspect of
business, including the cockpit, aircraft cabin, engineering units, ramp, office desks, and board
rooms throughout our network. More than 200 of our pilots, as well as top directors and aircraft
engineers, are women, making up more than 30% of our entire workforce. On the Delhi-San
Francisco-Delhi sector, female Air India pilots and crew members have flown the longest all-
female round-the-world voyage. To emphasise that hands that rock the cradle can also make an
airline soar high, women at Air India have been making their mark in every aspect of operation.
Every Air Indian is motivated by the belief that "If I don't do it then who will" as they strive for
excellence to provide our passengers with world-class service.
36
OUR FLEET
37
Awards and Recognitions:
In honour of its efforts to maintain operations throughout the COVID-19 pandemic, Air India
Express has been awarded the coveted "Wings India Award 2022" by the Ministry of Civil
Aviation and FICCI.
At a ceremony that took place on March 25, 2022, alongside WINGS INDIA 2022, Asia's biggest
exhibition on civil aviation, Mr. Aloke Sigh, Chief Executive Officer of Air India Express, was
presented with the honour by Shri. Jyoti Aditya Scindia, Hon'ble Minister of Civil Aviation.
The airline operated 488 flights in cooperation with Indian Airlines between August 13 and
October 11, 1990, spanning a total of 59 days, and set a record for the greatest evacuation by a
civil airliner by transporting nearly 111,000 passengers from Amman to Mumbai over a distance
of 4,117 kilometres. To remove Indian expats from the area during the Persian Gulf War in 1990,
an operation was carried out.
The International Flight Culinary Association gave the airline The Mercury Award for the best in-
flight catering services in 1994 and 2003.
The security division of Air India became the first aviation security organisation in the world to
receive ISO 9002-1994 accreditation (January 31, 2001).
For its engineering facilities to meet global standards, the Department of Engineering at Air India
has achieved the ISO 9002 certification.
PRODUCT AND SERVICES OFFERED

 Cabin Services
 Catering Services
 Ramp Services
 Passenger Services
 Field Operation Services
 Medical Services
38
AIR INDIA PASSENGER OPERATION
Domestically, there are nine scheduled destinations: Thiruvananthapuram, Amritsar, Bangalore,
Chennai, New Delhi, Goa, Hyderabad, Kochi, Kolkata, and Kozhikode.
There are a number of international destinations that are currently on the schedule, including Abu
Dhabi, Al Ain, Bahrain, Bangkok, Birmingham, England, Chicago, Dammam, Dar es Salaam,
Doha, Dubai, Frankfurt, Hong Kong, Jakarta, Jeddah, Kuala Lumpur, Kuwait, London, Los
Angeles, Muscat, Nairobi, New York, Osaka, Paris, Riyadh, Salalah, Shanghai, Seoul, Singapore,
Tokyo, and Toronto.
There are now 44 destinations served by Air India around the globe. In order to increase coverage,
it also has code-sharing arrangements with numerous foreign airlines. The airline transported 3.39
million passengers for the fiscal year that ended in March 2003, and its load factor was 71.6%,
significantly higher than the 66.6% load rate seen the year before. The airline works to uphold the
highest in-flight standards and has received a 4-star certification from skytrax airline quality
evaluation for its cabin safety practises. There are three different seat types available: First class,
Executive class, and Economy class. First class travellers can choose between flatbed seats.
Additionally, the airline has a frequent flyer programme both independently and in association
with a number of its partnerships. In a few locations within India, the airline also provides First
and Executive class passengers with access to opulent lounges in its ground facilities. Since June
1, 2003, Air-India has offered duty-free shopping on board its flights under the name "sky bazaar,"
which means Market in the Sky.
AIR INDIA CARGO OPERATION

The first Asian airline to operate freighters was Air-India, which started its freighter operations in
1954 with a Douglas DC-3 Dakota aircraft. The airline currently offers frequent Cargo flights to
numerous locations across the globe. On a few destinations, the airline has arrangements for
ground truck transportation as well.
As a participating member of IATA, Air-India transports all kinds of cargo, including dangerous
products (hazardous materials) and live animals, as long as the shipments are submitted in
accordance with the relevant IATA regulations.
39
Air India has created a homegrown inventory management system for the import/export of goods
at the Mumbai facility. This handles all aspects of cargo management, supports EDI messaging
with Indian Customs, and mostly eliminates the paper correspondence that currently exists
between Customs, Airlines, and the custodians. Additionally, this replaces the human handling
and binning of cargo by Air India at the Mumbai facility.
CABIN SEVICES:
Long-haul flights are conducted using Boeing 777-200LR/777-300ER and 747-400 aircraft, which
are set up with three classes. The Airbus A321 and Boeing 787 Dreamliner both have a two-class
layout. Airbus A320 aircraft are either configured with all-economy seating or with two classes
for domestic and short-haul international flights. The whole economy configuration is available
on Airbus A319 aircraft. All international flights and local flights longer than 90 minutes are served
with meals by Air India.
VISION AND MISSION STATEMENT
VISION: To become the most effective and popular LCC in India on both domestic and
international routes by consistently going above and beyond for customers in terms of comfort,
convenience, and price.
MISSION: Being the pinnacle of Indian hospitality, providing the best service possible, serving
as India’s national carrier, and facilitating hassle-free travel both within India and beyond the
globe.
40
THE AIR INDIANS
To connect homes and hearts while providing world-class service to our international clients, Air
India employs a committed and professional personnel from all across India and overseas.
To make our fleet fly high, teams of pilots, flight attendants, aircraft and ground engineers, flight
dispatchers, simulator maintenance engineers, flight safety auditors, catering and ticketing and
reservations and customer services, ground handling, and security work with precision like a well-
oiled machine under the support of software technologists, information technology, market
planning, route planning, finance, personnel, and materials management departments, among other
departments.
But Air India is more than simply a company that flies passengers and goods; it also serves as the
nation's wings, with every Air Indian rising to the occasion and prioritising the needs of the country
and its citizens over their own worries in times of need. Over the years, Team Air India has planned
numerous heroic evacuations from the Gulf or Yemen, Wuhan or Ukraine. In difficult times, the
Vande Bharat mission was incredibly difficult. 8,077,755 individuals returned home on 58,895
flights that the AI group conducted.
Numerous athletes who work for Air India have represented their country with distinction at
prestigious international competitions, making both Air India and India proud. Air India has been
developing young athletes, many of whom have gone on to become champions and have received
the highest national sporting honours. The company is proud of the many legends from Air India
who have excelled in sports such as cricket, hockey, carom, chess, shooting, and others.
Air India is proud of the accomplishments of its female employees who succeed in all aspect of
business, including the cockpit, aircraft cabin, engineering units, ramp, office desks, and board
rooms throughout our network. More than 200 of our pilots, as well as top directors and aircraft
engineers, are women, making up more than 30% of our entire workforce. On the Delhi-San
Francisco-Delhi sector, female Air India pilots and crew members have flown the longest all-
female round-the-world voyage. To emphasise that hands that rock the cradle can also make an
airline soar high, women at Air India have been making their mark in every aspect of operation.
Every Air Indian is motivated by the belief that "If I don't do it then who will" as they strive for
excellence to provide our passengers with world-class service.
41
ACCIDENTS AND INCIDENTS
A failure of an engine pylon-to-wing attachment caused the Air India Flight 132 Emperor Vikram
Aditya, a Boeing 747-200B (registered VT-EBO) carrying 215 people (195 passengers and 20
crew) and travelling on the London-Delhi-Bombay route, to catch fire as it touched down at the
Delhi airport on May 7, 1990. Although there were no casualties, the aircraft could not be repaired
and was written off.
Babbar Khalsa militants allegedly put a suitcase bomb aboard Air India Flight 182 Emperor
Kanishka, a Boeing 747-200B (registered VT-EFO), on June 23, 1985, to avenge the Indian
Government's attack on the Golden Temple in June 1984. When the plane went down in the
Atlantic Ocean off the coast of Cork, Ireland, it was on the first leg of its voyage from Montreal to
London to Delhi to Bombay. 22 crew members and all 307 passengers perished.
SWOT ANALYSIS
42
Strengths
The essential elements of Air India's business that provide it a competitive edge in the market are
examined when examining the company's strengths. The strength of a brand can be attributed to a
variety of things, such as its financial standing, skilled personnel, distinctiveness of its products,
and intangible assets like brand value. The Air India Strengths in the SWOT Analysis are listed
below.
1.Strong support from the Indian government is a major plus for Air India.
2. Air India acquires a brand-new fleet of aircraft
3. Air India is renowned for its distinctive and premium "Maharaja" advertising.
4. The business is present in more than 20 different nations.
5. Around 50 Indian cities are serviced by Air India.
6. Effective branding and advertising have raised brand value
7. Online ticketing and inexpensive costs have boosted Air India's revenues.
8. The airline provides lounge facilities, in-flight entertainment, etc.
9. The merger of Indian Airlines and Air India has improved the airline's business operations.
Weakness
A brand's shortcomings are specific areas of its business that can be improved to strengthen its
position. Some flaws can be described as qualities that the business lacks or in which the
competition excels. The Air India SWOT Analysis has the following weaknesses:
1. Political meddling and labour issues are Air India's top concerns.
2. A financial crisis that affects employee payment
43
Opportunities
Any brand has the potential to improve in some areas, which could result in more sales.
Opportunities for a brand can include geographic growth, product enhancements, improved
communication, etc. The SWOT analysis of Air India identified the following opportunities:
1. A loyal customer base can grow Air India's company. It can also take advantage of a brand-new
fleet.
2. The organisation can profit from more travel options and overseas locations
3. Addressing workforce-related internal concerns can significantly improve operations and image.
Threats
Any firm may face risks in the form of elements that could harm its operations. Threats can come
from a variety of sources, including increased rival activity, shifting governmental priorities,
alternative goods or services, etc. The following are the threats identified in Air India's SWOT
analysis:
1. Increasing labour costs may have an impact on Air India's operational costs
2. Increasing fuel prices have a direct influence on operating costs.
Losing Market share to other airlines may have an impact on Air India's business.
44
CHAPTER-4
DATA ANALYSIS
45
COMPARATIVE BALANCE SHEET: 4.1
In a typical balance sheet, assets and liabilities are shown as of a specific date. The value of the
company's assets and liabilities on two separate dates is shown on the comparative balance sheet.
It assists in comparing the balance sheets of two years and aids in determining how the values have
changed. Two columns on a comparative balance sheet are used to record the data from the current
and prior years. The increasing figures are shown in a third column. The decline figures are
displayed in a fourth column.
Comparative balance sheets show whether or not the company is progressing in a positive or
negative way. For researching business trends, it is quite helpful.
46
COMPARATIVE BALANCE SHEET FOR THE YEAR 2016-
2017(TABLE 4.1.1)
PARTICULAR 2016(RS) 2017(RS) INCREASE DECREASE
CURRENT ASSETS
Inventories 15011.1 12767.0 - 2244.1
Cash and Bank balance 8054.9 7351.4 - 703.5
Short term loans and advances 6718.8 10826.0 4107.2 -
Other current assets 77600.0 14385.8 - 63214.2
TOTAL CURRENT ASSETS 107384.8 45330.2 4107.2 66161.8
CURRENT LIABILITIES
Current liabilities 225601.8 218890.8 6711 -
Short term provision 2081.2 2076.5 4.7 -
TOTAL CURRENT 227683 220967.3 6715.7 -

LIABILITIES
Working capital - - 2608.5 66161.8
Net decrease in working capital - - 63553.3 -
TOTAL 66161.8 66161.8
47
Interpretation:
In the year 2016-2017 the company has seen decrease in the current assets of RS. 66161.8 and the
current liabilities are increased to RS. 6715.7. when we compare the current assets are more than
current liabilities.
48
2018(TABLE 4.1.2)
CURRENT ASSETS
Inventories 10846.4 9031.9 - 1814.5
Cash and Bank balance 7351.4 7428.8 77.4 -
Short term loans and advance 147.5 121.9 - 25.6
Other current assets 20483 19358.4 - 1124.6
TOTAL CURRENT ASSETS 38828.3 35941 77.4 2964.7
CURRENT LIABILITIES
Current liabilities 287905.4 382169.5 - 94264.1
Short term provision 1863.9 2112.7 - 248.8
TOTAL CURRENT 289769.3 384282.2 - 94512.9

LIABILITIES
TOTAL 91548.2 91548.2
49
Interpretation:
In the year 2017- 2018 the current assets have been decreased to 2964.7, while the current liabilities
are also decreased to 94512.9. Here both current assets and current liabilities are decreased, it may
not, but it will affect the liquidity position of the company.
50
2019(TABLE 4.1.3)
CURRENT ASSETS
Inventories 9031.9 8063.8 - 968.1
Short term loans and advance 121.9 145.8 23.9 -
TOTAL CURRENT ASSETS 35941 29298.8 1027.4 7669.5

CURRENT LIABILITIES
Current liabilities 385082.1 641810.8 - 256728.7
TOTAL CURRENT 387194.9 643928 - 256733.1

LIABILITIES
TOTAL 249063.6 249063.6
51
Interpretation:
From the year 2018-19 the current assets the current assets have increased to 7996.5 and current
liabilities has decreased to 256733.1. Here we can see that the when we compare both the current
liabilities are more than the current assets.
52
2020(TABLE 4.1.4)
CURRENT ASSETS
Inventories 8063.8 9471.3 1407.5 -
Short term loans and advance 145.8 175.5 29.7 -
Other current assets 12657.0 13264.4 607.4 -
TOTAL CURRENT ASSETS 29298.9 36015.3 6716.4 -
CURRENT LIABILITIES
Current liabilities 642417.0 527576.7 114840.3 -
TOTAL CURRENT LIABILITIES 644534.2 529749.5 114840.3 55.6
Working capital 108123.9 55.6
Net decrease in working capital - 108068.3
TOTAL 108123.9 108123.9
53
Interpretation:
From the year 2019-2020 the company’s current assets are increased to RS. 6716.4 and the current
liabilities are increased to RS. 114840.3. Here both the current assets and current liabilities of the
company are increased.
54
2021(TABLE 4.1.4)
PARTICULARS 2020(RS) 2021(RS) INCREASE DECREASE
CURRENT ASSETS
Inventories 9471.3 6626.6 - 2844.7
Cash and Bank balance 13104.1 12354.2 - 749.9
Short term loans and advances 175.5 86.3 - 89.2
TOTAL CURRENT ASEETS 36015.3 28994.9 - 7020.4
CURRENT LIABILITIES
Current Liabilities 527576.7 580533.4 - 52956.7
Short term provisions 2172.8 2519.5 - 346.7
TOTAL CURRENT 529749.5 583052.9 - 53303.4

LIABILITIES
Working capital - - - 46283
Net decrease in working capital - - 46283 -
TOTAL 46283 46283
55
Interpretation:
From the year 2020-2021 the current assets of the company are decreased to RS.7020.4 and the
current liabilities are decreased to RS.53303.4. here we can see that both the current assets and
current liabilities are decreased.
CURRENT ASSETS
An asset that a business owns and that may be quickly sold or used to generate liquid cash is known
as a current asset. A company's ability to use the money on a daily basis and pay current business
expenses makes a current asset a significant feature. In other words, an asset whose estimated
lifespan is one year or less can be said to fall under the definition of current assets.
Table Showing the current assets of the Company
Table 1
Year Current Assets (RS) Percentage Change
2017 45330.2 100%
2018 35911.9 20.78%
2019 29298.9 18.41%
2020 36015.3 -22.92%
2021 28994.9 19.49%
56
Graph Showing Current Assets of the Company
Graph 1
Current Assets For 2017-2021

120%
100%
100%
80%
60%
Percentage
40%
20.78% 18.41% 19.49%

20%
0%
2017 2018 2019 2020 2021
-20%
-22.92%
-40%
Year
Interpretation:
From the above graph we can understand that the Current Assets of the company has been started
decreasing from year to year and again started increasing in the year 2021. The decrease in
percentage from year to year is not a good sign for the company.
57
CURRENT LIABILITY
Current liabilities are the financial obligations of an organisation that are due within a year or
during a regular operating cycle. The operational period, also known as the cash conversion cycle,
is the amount of time needed for a business to purchase inventories and convert sales into liquid
cash.
Table showing the Current Liability of the company
Table 2
Year Current Liabilities (RS) Percentage Change
2017 220967.3 100%
2018 384282.2 73.91%
2019 643928 67.56%
2020 529749.5 17.73%
2021 583052.9 10.06%
58
Graph Showing the Current Liabilities of the Company
Graph 2
Current Liabilties for the year 2017-2021

120%
100%
100%
80%
73.91%
67.56%
Percentage
60%
40%
20% 17.73%
10.06%
0%
2017 2018 2019 2020 2021
Year
Interpretation:
From the above graph we can understand that the current liabilities of the company has been
decreasing from the year 2017 to 2021 which means it’s a good sign for a company, the debts are
been decreased and the company is doing well.
59
WORKING CAPITAL
Working capital is a sign of an organization's short-term financial position and a gauge of
its general effectiveness. It is calculated and directly displayed in the balance sheet by deducting
current assets from current liabilities.
Working capital is another metric used to assess a company's financial stability. The firm will be
healthier if there is a greater gap between what a corporation owns and what a person owns in the
short term.
The company will have negative working capital and may have to shut down if it owes more than
it owns.
Table showing the working Capital of the Company
Table 3
Year Current Current Working Percentage

Assets (RS) Liabilities (Rs) Capital of Working
(RS) Capital
2017 45330.2 220967.3 -175637.1 100%
2018 35911.9 384282.2 -348370.3 98.35%
2019 29298.9 643928 -614629.1 76.42%
2020 36015.3 529749.5 -493734.2 -19.67%
2021 28994.9 583052.9 -554058 12.22%
60
Graph Showing the Working Capital of the Company
Graph 3
Working Capital for the year 2017-2021

120%
100% 98.35%
100%
80% 76.42%
60%
Percentage
40%
20% 12.22%
0%
2017 2018 2019 2020 2021
-20%
-19.67%
-40%
Year
Interpretation:
From the above graph we can see that the working capital of the company has been fluctuating
from year to year. From 2017-2019 the working capital has been gone on decreasing and in the
year 2020 it has a negative value. In the year 2021 it has a positive value.
61
RATIO ANALYSIS AND INTERPRETATTION:
A helpful technique for financial analysis is ratio analysis. A ratio analysis is a quantitative
assessment of the financial performance of a corporation. It provides crucial details on the
profitability, solvency, operational effectiveness, and liquidity positions of the company in
addition to the profitability, solvency, and operational effectiveness of the financial statements.
The ratio can be used to qualitatively evaluate a company's financial performance and summarise
large amounts of financial data.
Objectives of Ratio Analysis:

• Improve the readability of accounting data.
• Ascertain the liquidity, also known as the short- and long-term solvency. The ability of a firm to
fulfil its immediate financial obligations. On the other hand, a company's ability to fulfil its long-
term obligations is referred to as long-term solvency.
• Assess the effectiveness of the business's activities.
• Look at the company's profitability. help with comparative analysis, including within- and
between-firm comparisons.
CURRENT RATIO:
The ability of a business to pay down short-term debt is gauged by the current ratio. The current
ratio analyses whether a company will generate enough cash flow over the next 12 months to pay
its debts. The current ratio can also show how effectively a business can turn its goods into cash
or how efficient its operating cycle is. The current ratio is also known as the working capital ratio.
Current Ratio= Current Assets/current Liabilities
Standard Ratio = 2:1
62
Table 4: Showing the Current Ratio for Five years
Year Current Assets Current Current Ratio
Liabilities
2017 45330.2 220967.3 0.21
2018 35911.9 384282.2 0.09
2019 29298.9 643928 0.05
2020 36015.3 529749.5 0.07
2021 28994.9 583052.9 0.05
Analysis: The above table represents the current ratio of Air India. The current ratio in the year
2017 was 0.21, in 2018 it was decreased to 0.09 and in the year 2019 the ratio was decreased to
0.05, and in the year 2020 it has increased to 0.07 and in the year 2021 it was decreased to 0.05.
63
Graph 4: Showing the Current Ratio
Current Ratio
0.25
0.21
0.2
0.15
Ratio
0.1 0.09
0.07
0.05 0.05
0.05
0
2017 2018 2019 2020 2021
Year
Interpretation:
The above graph shows the current ratio of Air India for five years. The ideal Current ratio is 2:1.
It is the realationship between total current assets and current liabilities. In all the current ratio is
more than 1 so it indicates that firm may have a favoured in current obligation.
64
QUICK RATIO:
The quick ratio assesses a company's ability to meet short-term obligations with its most liquid
assets (near cash or quick assets). Current assets known as "quick assets" have the potential to be
quickly turned into cash at their book values. The quick ratio is used as an indicator for businesses.
Quick Ratio= Current Assets-Inventory/Current Liabilities
Table 5: Showing the Quick Ratio for Five years

Year Quick Assets Quick Liabilities Quick Ratio
2017 51135.5 310540.6 0.16
2018 50260.9 440905.9 1.12
2019 45737.4 706259.9 0.06
2020 43920.9 595983.9 0.07
2021 36576.2 616369.6 0.06
Analysis:
The above table shows the Quick ratio of Air India. Quick ratio in the year 2017 was 0.16, in 2018
it was increased to 1.12, in the year 2019 it was decreased to 0.06, in 2020 it has to 0.07 and in
2021 it was decreased to 0.06.
65
Graph 5: Showing the Quick Ratio
Quick Ratio
1.2
1.12
0.8
Ratio
0.6
0.4
0.2 0.16
0.06 0.07 0.06
0
2017 2018 2019 2020 2021
Year
Interpretation:
The above graph shows the Quick ratio. The Quick ratio is an indicator of an organization’s quick-
time period liquidity role and measures a corporation’s ability to satisfy its quick-time period
obligations with the maximum liquid belongings. Quick ratio is lower than 1:1 it shows that the
company depends on a lot on stock or other assets to pay its short-term liabilities. A high Quick
ratio means that the firms is liquid and has ability to meet its current liabilities.
66
ABSOLUTE LIQUID RATIO:
The cash ratio is another name for this. By assessing the amount of cash, cash equivalents, or
invested money there are in current assets to cover current obligations, the cash ratio further refines
both the current ratio and the quick ratio as a measure of the company's liquidity.
Absolute Liquid Ratio=Absolute Liquid Liabilities/Current Liabilities
Absolute Liquid Assets=Cash in hand and bank + Marketable Securities
Standard Ratio = 1:2
Table 6: Showing Absolute Liquid Ratio for five years
Year Absolute Liquid Current Absolute Liquid

Assets (Rs) Liabilities (Rs) Ratio
2017 63902.5 220967.3 0.29
2018 59292.8 384282.2 0.15
2019 53801.2 643928 0.08
2020 53392.2 529749.5 0.10
2021 43202.8 583052.9 0.07
Analysis:
The table shows the Absolute Liquid Ratio of Air India. In the year 2017 the ratio was 0.29, and
in 2018 it has decreased to 0.15, in the year 2019 again decreased to 0.08, in the year 2020 it has
increased to 0.10 and again in 2021 it was decreased to 0.07.
67
Graph 6: Showing the Absolute Liquid Ratio
Absolute Liquid Ratio

0.35
0.3 0.29
0.25
0.2
Ratio
0.15
0.15
0.1
0.1
0.08
0.07
0.05
0
2017 2018 2019 2020 2021
Year
Interpretation:
From the above graph we can see that the absolute liquid ratio of the company is relatively lower
than one. So, it represents the company’s day-to-day cash management has been in a poor
condition.
68
WORKING CAPITAL TURNOVER RATIO
The working capital turnover ratio shows how quickly net working capital is used up.
This ratio shows how frequently working capital is changed over the course of a year.
Working capital turnover ratio = Sales/Net working capital
Table showing the working capital turnover ratio for five years
Table 7
YEAR SALES(RS) Net Working Working Capital

Capital Turnover Ratio
2017 221776.8 66161.8 3.35
2018 239004.8 91548.2 2.61
2019 264305.9 249063.6 1.06
2020 285244.4 108123.9 2.64
2021 121040.5 46283 2.66
69
Graph showing working capital turnover ratio of the company
Graph:7
Working capital turnover ratio for the year 2017-2021

4
3.5 3.35
3
2.61 2.64 2.66
2.5
Ratio
1.5
1.06
1
0.5
0
2017 2018 2019 2020 2021
Year
70
CURRENT ASSETS TO TOTAL ASSET
It provides information on the overall amount of money invested for working capital and highlights
the significance of a company's current assets. How much of that portion of total assets is made up
of current assets should be noted because they play a key role in creating working capital and
actively contribute to increasing liquidity.
Current Assets to Total Asset Ratio= Total Assets/Current Assets
Table 8: showing Current Assets to Total Asset

Year Current Assets Total Assets Current Assets to
Total Asset
2017 45330.2 459152.1 10.13
2018 35911.9 519895.3 14.48
2019 29298.9 523521.8 17.87
2020 36015.3 717424.0 19.92
2021 28994.9 633172.3 21.84
Analysis: The above table shows the Current Assets to Total Asset ratio of Air India. In the year
2017 it was 10.13, and it was increased to 14.48, and again it was increased to 17.87 in the year
2019, in 2020 also there is an increase to 19.92 and in the year 2020 it was again increased to
21.84. The Current Assets to Total asset ratio are gone increasing from year to year comparatively.
71
Graph 8: Showing Current Assets to Total Asset Ratio
Current Assets to Total Asset Ratio

25
21.84
19.92
20
17.87
15 14.48
Ratio
10.13
10
0
2017 2018 2019 2020 2021
Year
Interpretation:
From the above graph we can see that the current asset to total assets ratio of the company, it
started to gradually increasing from year to year. It shows that the overall assets of the company
are good.
72
CHAPTER-5
FINDINGS, SUGGESTIONS AND CONCLUSIONS
73
Findings
 The company's current assets have been steadily declining over the years, which is not a
good sign for the business.
 The company's current liabilities significantly started decreasing from the year 2017-2021.
 The company's working capital has fluctuated over the years of 2017 to 2021, which is not
a positive sign for the business.
 The company's current ratio, which compares current assets to current liabilities, was 0.21
in 2017 and decreased steadily throughout the years.
 The company's cash ratio, also known as its absolute liquid ratio, was 0.29 in 2017,
however it has steadily declined since then. The management has not been very effective
in using the company's short-term assets and liabilities to drive sales, as can be seen from
this.
 The firm's fast ratio, also known as acid test ratio, was 0.16 in 2017 and in 2021 it was
0.06. However, in the next subsequent years, the quick ratio of the company declined,
which is not a positive omen for the company.
74
Conclusion:
Each and every firm depends on its financial well-being. It is crucial to the efficient
operation of the firm.
The study at Air India, "A STUDY ON WORKING CAPITAL." carries out with the goal of
analysing and interpreting the business's financial performance. Ratio analysis and other crucial
financial statement analysis methods were used in the examination of the organisation.
One of the company's greatest assets is its well-trained, skilled workforce, which must be utilised
to the fullest extent possible for the organization's overall success across India.
My overall finding was that by creating an appropriate study strategy, it was possible to identify
the issue and gather pertinent information based on financial statement analysis tools to assess the
company's financial performance. The company is performing fantastic, in my opinion. It enjoys
a stellar reputation among its clients and has had steady expansion throughout the years. However,
it needs to improve in a few crucial areas if it wants to perform better and avoid failing.
One of the biggest causes of business failure is ineffective cash flow management. Even if there is
a paper profit, there may still be issues if there is not enough cash flow to pay creditors. We can
utilise the net operating loss to request tax refunds for previous or upcoming tax years if we failed
to account for capital expenses and/or make an exemption. I learned more and gained more
experience thanks to this study. I would now want to thank the company for their efforts and strong
performance.
75
Suggestions:
 The business must figure out a way to increase current assets while decreasing credit sales
to cover rising obligations.
 The corporation was maintaining a very low liability, but in the present year, its liability
position increased, and in the years that followed, it decreased.
 The company's working capital was low and it suffered a loss the year before, but it
increased its net current working capital this year to cover its ongoing expenses.
 The corporation must reduce its current liabilities and increase more on its current assets
in order to preserve its current ratio position.
 The firm has managed to increase its liquid position in order to preserve stability and
conduct the business properly. The company's liquid position had fluctuated in previous
years.
 The company's long-term debt position and owners' fund have stayed unchanged
throughout the previous years; therefore, in order to maximise profit, the firm must either
expand or repay its long-term debt.
76
BIBLIOGRAPHY
WEBSITES REFFERED
 WWW.AIRINDIA.COM
BOOKS REFFERED
 Cost and Financial Analysis by S P Jain and K L Narang.
 Cost and Financial Analysis by S K Gupta, N Gupta and Putney.
REPORTS REFFERED
 Annual Reports of Air India.
77
BALANCE SHEET AS AT 31 MARCH 2017
Particulars Note No. As at March 31, 2017 As at March 31, 2016
I EQUITY AND LIABILITIES :
Shareholders' Funds
a) Share Capital 2 267,530.0 214,960.0
b) Reserves and Surplus 3 (468,047.2) (412,269.5)
(200,517.2) (197,309.5)
Share Application Money Pending AllotmentNon- 2(C) 1,372.1 29,290.0
current Liabilities
a) Long Term Borrowings 4 335,498.4 358,063.8
b) Other Long Term Liabilities 5(B) 586.4 666.7
c) Long Term Provisions 6 11,671.8 11,393.6
347,756.6 370,124.1
Current Liabilities
a) Short Term Borrowings 7 125,714.3 145,508.8
b) Trade Payables 5 (A) 93,176.5 80,093.0
c) Other Current Liabilities 5 (B) 89,573.3 76,727.1
d) Short Term Provisions 6 2,076.5 2,081.2
310,540.6 304,410.1
TOTAL 506,514.7
II ASSETS : 459,152.1
Non-current Assets
a) Fixed Assets 8
(i) Tangible Assets (Property, Plant & Equipment) 294,963.5 283,298.8
(ii) Intangible Assets 628.4 1,223.4
(iii) Capital Work-in-Progress 2,320.9 6,734.0
13.5 13.5
(iv) Intangible Assets under development
297,926.3 291,269.7
b) Non-Current Investments 9 16,717.7 16,717.8
c) Deferred Tax Assets (net) 47 28,425.2 28,425.2
d) Long Term Loans and Advances 10 52,019.3 43,602.9
e) Long Term Trade Receivables 11 61.6 47.4
f) Other Non-Current Assets 12 99.5 36.8
380,099.8
Current Assets 395,249.6
a) Inventories 13 12,767.0 15,011.1
b) Trade Receivables 11 18,572.3 19,030.1
c) Cash and Bank Balances 14 7,351.4 8,054.9
d) Short Term Loans and Advances 10 10,826.0 6,718.8
e) Other Current Assets 12 14,385.8 77,600.0
126,414.9
TOTAL 63,902.5 506,514.7
459,152.1
78
Particulars Note As at 31st March 2018 As at 31st March 2017
ASSETS :
1 Non-current Assets
(i) Property, Plant & Equipment 1 264,655.9 281,669.2
(ii) Capital Work-in-Progress 1 813.6 2,773.2
(iii) Investment Property 1 9,919.6 15,112.4
(iv) Intangible Assets 1 401.5 628.4
(v) Intangible Assets under 1 82.9 13.5
development
275,873.5 300,196.7
(vi) Financial Assets :
a) Investments 2 17,461.6 17,415.1
b) Trade Receivables 3 57.3 61.6
c) Loans 4 3,056.0 2,765.8
d) Others 5 39,189.8 25,846.2
59,764.7 46,088.7
(vii) Income Tax Assets (Net) 7 2,591.3 2,821.1
(viii)Deferred Tax Assets (net) 51 28,425.2 28,425.2
(ix) Other Non-Current Assets 6 6,029.5 21,055.2
372,684.2 398,586.9
2. Current Assets
(i) Inventories 8 9,031.9 10,846.4
(ii) Financial Assets :
a) Trade Receivables
3 17,767.2 16,501.8
b) Cash and Cash Equivalents
9 1,886.0 2,239.8
c) Bank Balances other than
10 5,542.8 5,111.6
(b) above
d) Loans
4 121.9 147.5
e) Others
5 4,872.3 3,730.2
30,190.2 27,730.9
(iii) Income Tax Assets (Net)
7 741.4 577.6
(iv) Other Current Assets
6 20,483.0
59,292.8 59,637.9
3 Assets held for Sale
87,918.3 597.3
TOTAL
519,895.3 458,822.1
79
Particulars Note As at 31st March 2018 As at 31st March 2017
EQUITY AND LIABILITIES :

1 Equity
(i) Equity Share Capital 11 286,902.1 267,530.0
(ii) Other Equity 12 (535,839.2) (480,881.1)
(248,937.1) (213,351.1)
2 Liabilities
Non-current Liabilities
a) Financial Liabilities
(i) Borrowings 13 302,275.3 335,498.4
(ii) Trade Payables 14 - -
(iii) Other Fiancial Liabilities 15 166.7 170.3
302,442.0 335,668.7
b) Provisions 16 25,484.5 22,352.5
c) Other Non Current Liabilities 17 - -
327,926.5 358,021.2
Current Liabilities
(i) Borrowings 18 219,554.9 129,513.1
(ii) Trade Payables 14 82,157.0 89,527.1
(iii) Other Financial Liabilities 15 80,457.6 68,865.2
382,169.5 287,905.4
b) Other Current Liabilities 17 56,623.7 24,382.7
c) Provisions 16 2,112.7 1,863.9
440,905.9 314,152.0
TOTAL
519,895.3 458,822.1
80
Note
Particulars No. As at March 31, 2019 As at March 31, 2018
ASSETS :
1 Non-current Assets
(ii) Capital Work-in-Progress 1 726.7 813.6
iii) Investment Property 1 4,377.7 9,919.6
(iv) Intangible Assets 1 194.7 401.5
(v) Intangible Assets under development 1 12.5 82.9
260,596.2 275,873.5
(vi) Financial Assets :
a) Investments 2 9,330.7 17,461.6
b) Trade Receivables 3 - -
c) Loans 4 3,316.4 3,056.0
d) Others 5 11,200.3 39,189.8
23,847.4 59,707.4
(vii) Income Tax Assets (Net) 7 2,264.1 2,780.3
viii) Deferred Tax Assets (net) 50 28,425.2 28,425.2
(ix) Other Non-Current Assets 6 5,877.6 6,045.5
321,010.5 372,831.9
2 Current Assets
(i) Inventories 8 8,063.8 9,031.9
a) Trade Receivables 3 19,921.0 17,824.5
b) Cash and Cash Equivalents 9 2,452.2 1,886.0
c) Bank Balances other than (b) above 10 5,980.1 5,542.8
d) Loans 4 145.8 121.9
e) Others 5 3,122.5 4,875.8
31,621.6 30,251.0
(iii) Income Tax Assets (Net) 7 1,458.8 468.4
(iv) Other Current Assets 6 12,657.0 19,358.4
53,801.2 59,109.7
3 Assets held for Sale 10.1 148,710.1 87,918.3
Total 523,521.8 519,859.9
81
Note
Particulars As at March 31, 2019 As at March 31, 2018
No.
EQUITY AND LIABILITIES :
1 Equity
(ii) Other Equity 12 (621,315.7) (535,839.2)
(294,663.6) (248,937.1)
2 Liabilities
(i) Borrowings 13 82,999.6 299,622.5
(ii) Trade Payables
a) Total outstanding dues of micro en- 14 - -
terprises and small enterprises
b)Totaloutstandingdues of creditorsother than 14 - -
microenterprisesandsmallenterprises
(ii) Other Fiancial Liabilities 15 47.9 111.8
83,047.5 299,734.3
b) Provisions 16 28,271.8 25,484.5
111,319.3 325,218.8
Current Liabilities
(i) Borrowings 18 276,303.4 219,554.9
(ii) Trade Payables
a) Total outstanding dues of micro en- 14 163.7 156.6
terprises and small enterprises
b)Totaloutstandingdues of creditorsother than 14 81,879.3 80,640.2
microenterprisesandsmallenterprises
(iii) Other Financial Liabilities 15 283,464.4 84,730.4
641,810.8 385,082.1
c) Provisions 16 2,117.2 2,112.8
706,259.9 443,578.2
3 Liabilities classified as held for sale 17.1 606.2 -
Total 523,521.8 519,859.9
82
Particulars Note As at March 31, 2020 As at March 31, 2019
No.
ASSETS:
Non-Current Assets
(ii) Right of use Assets 1 202,905.4 -
(iii Capital Work-in-Progress 1 1,001.1 726.7
)
(iv Investment Property 1 4,375.7 4,377.7
)
(v Intangible Assets 1 64.3 194.7
)
(vi Intangible Assets under development 1 12.5 12.5
)
459,646.3 260,596.2
(vii Financial Assets :
)
a) Investments 2 9,103.0 9,330.7
c) Loans 4 4,039.9 3,316.4
d) Others 5 10,676.7 10,838.1
23,819.6 23,485.2
(viii) Income Tax Assets (Net) 7 1,918.1 2,264.1
(ix Deferred Tax Assets (net) 49 28,425.2 28,425.2
)
(x Other Non-Current Assets 6 169.7 5,854.8
)
513,978.9 320,625.5
Current Assets
(i) Inventories 8 9,471.3 8,063.8
d) Loans 4 175.5 145.8
e) Others 5 2,874.6 3,122.5
29,910.3 32,194.8
(iii) Income Tax Assets (Net) 7 746.2 1,458.8
53,392.2 54,374.4
Assets held for Sale 10.1 150,052.9 148,734.7
TOTAL 717,424.0 523,734.6
83
No.
EQUITY AND LIABILITIES:
Equity
(ii) Other Equity 12 (701,203.2) (621,315.7)
(374,551.1) (294,663.6)
Receipts from Air India Assets Holding Ltd. 28(iii) 218,434.8 -
(AIAHL) towards Restructuring
Liabilities
(i) Borrowings 13 55,118.4 82,999.6
(ii) Lease Liabilities 44 184,416.1 -
239,578.0 83,047.5
b) Provisions 16 37,576.5 28,271.8
c) Other Non Current Liabilities 17 401.9 -
277,556.4 111,319.3
Current Liabilities
(i) Borrowings 18 250,869.4 276,303.4
(ii) Lease Liabilities 44 27,684.2 -
(iii Trade Payables
)
a) Total outstanding dues of micro enterprises 14 267.1 163.7
and small enterprises
b) Total outstanding dues of creditors other 14 100,667.7 82,485.5
than micro enterprises and small enterprises
(iv AIAHL Intermediary Settlement Account 28(iii) 5,026.2 -
)
(v Other Financial Liabilities 15 143,062.1 283,464.4
)
527,576.7 642,417.0
c) Provisions 16 2,172.8 2,117.2
595,983.9 707,078.9
TOTAL 717,424.0 523,734.6
84
No.
ASSETS:
Non-current Assets
(ii) Right of use Assets 1 178,719.3 202,905.4
(iii) Capital Work-in-Progress 1 0.1 1,001.1
(iv) Investment Property 1 4,373.7 4,375.7
(v) Intangible Assets 1 14.1 64.3
(vi) Intangible Assets under development 1 12.5 12.5
400,034.3 459,646.3
(vii) Financial Assets :
a) Investments 2 9,033.4 9,103.0
c) Loans 4 4,477.2 4,039.9
d) Others 5 11,764.4 10,676.7
25,275.0 23,819.6
(viii) Income Tax Assets (Net) 7 1,046.2 1,918.1
(ix) Deferred Tax Assets (net) 49 28,425.2 28,425.2
(x) Other Non-Current Assets 6 266.5 169.7
455,047.2 513,978.9
Current Assets
(i) Inventories 8 6,626.6 9,471.3
d) Loans 4 86.3 175.5
e) Others 5 2,839.8 2,874.6
26,648.4 29,910.3
(iii) Income Tax Assets (Net) 7 - 746.2
43,202.8 53,392.2
Assets held for Sale 10.1 134,922.3 150,052.9
TOTA 633,172.3 717,424.0
L
85
No.
EQUITY AND LIABILITIES:
Equity
(ii) Other Equity 12 (772,101.0) (701,203.2)
(445,448.8) (374,551.1)
Receipts from Air India Assets Holding Ltd. 28(iii) 217,549.5 218,434.8
(AIAHL) towards Restructuring
Liabilities
(i) Borrowings 13 55,110.7 55,118.4
(ii) Lease Liabilities 152,018.6 184,416.1
207,180.6 239,578.0
b) Provisions 16 36,400.4 37,576.5
c) Other Non Current Liabilities 17 1,121.0 401.9
244,702.0 277,556.4
Current Liabilities
(i) Borrowings 18 307,165.5 250,869.4
(ii) Lease Liabilities 27,328.7 27,684.2
(iii) Trade Payables
a) Total outstanding dues of micro enterprises 14 157.8 267.1
and small enterprises
b) Total outstanding dues of creditors other than 14 92,558.2 100,667.7
micro enterprises and small enterprises
(iv) AIAHL Intermediary Settlement Account 28(iii) 5,879.5 5,026.2
(v) Other Financial Liabilities 15 147,443.7 143,062.1
580,533.4 527,576.7
c) Provisions 16 2,519.5 2,172.8
d) Current Tax Liabilities 381.4 -
616,369.6 595,983.9
TOTAL 633,172.3 717,424.0
86
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31
MARCH 2017
Particulars Note No. 2016-17 2015-16
I Revenue
1. Revenue from Operation 15
i) Scheduled Trafc Services 171,969.3 169,184.1
ii) Non-Scheduled Trafc Services 12,343.5 11,340.5
iii) Other Operating Revenue 34,283.3 21,583.6
Revenue from Operation 218,596.1 202,108.2
II 2. Other Income 16 3,180.7 3,995.1
III Total Revenue (I+II) 221,776.8 206,103.3
IV Expenses
1. Aircraft Fuel & Oil 63,375.8 58,454.0
2. Other Operating Expenses 17 98,059.1 84,442.0
3. Employee Benet Expenses 18 25,578.3 23,455.2
4. Finance Costs 19 42,358.7 44,740.0
5. Depreciation and Amortization 20 16,095.1 18,677.8
6. Other Expenses 21 16,405.5 14,453.2
7. Prior Period Adjustments (Net) 22 (3,897.9) (608.9)
257,974.6
Total Expenses 243,613.3
(36,197.8)
V (Loss) before Exceptional and Extraordinary (III-IV)Items (37,510.0)
and Tax
(12,981.6)
VI Exceptional Items (Net) 23 (49,179.4)
VII (Loss) before Extraordinary Items and Tax (V+VI) -
(8,472.3) (37,510.0)
VIII Extra Ordinary Items (Net) 24
(57,651.7)
IX (Loss) before Tax (VII+VIII)X (857.8)
-
Tax Expenses : (38,367.8)
(57,651.7)
XI (Loss) after Tax for the year (IX-X) -
XII Earning per Share of Rs. 10 each 48 (Rs.2.27) (38,367.8)
Basic and Diluted before extra-ordinary items (Rs.2.66)
Basic and Diluted after extra-ordinary items (Rs.2.18)
(Rs.2.23)
87
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDING 31
MARCH 2018
Particulars Note No. 2017-18 2016-17

I Revenue
1. Revenue from Operations 19
i) Scheduled Trafc Services 191,359.6 172,192.1
ii) Non-Scheduled Trafc Services 13,085.9 12,171.8
Revenue from Operation 230,036.7 218,270.7
II 2. Other Income 20 8,968.1 3,700.3
IV Expenses
3. Employee Benet Expenses 22 29,126.4 25,645.9
4. Finance Costs 23 44,640.9 42,845.7
25 16,535.1 15,713.3
6. Other Expenses
291,258.3
Total Expenses 263,332.5
(52,253.5)
V (Loss) before Exceptional Items and Tax (III-IV)VI (41,361.5)
(1,123.9)
Exceptional Items (Net) 26 (21,453.9)
(53,377.4)
VII (Loss) before Tax (V+VI) (62,815.4)
-
VIII Tax Expenses :
(53,377.4)
IX (Loss) after Tax for the year (VII-VIII)X -
Other Comprehensive Income (62,815.4)
Items that will not be reclassied to Prot & Loss and itsrelated
income tax effect :
i) Re-measurements of the Dened Benet Plans
ii) Fair value changes on Equity Instruments throughother (150.9) (1,696.9)
comprehensive income 46.6 (16.7)
Other Comprehensive Income for the year (104.3) (1,713.6)
XI Total Comprehensive Income for the period(IX+X) (53,481.7) (64,529.0)
XII Earning per equity share of face value of Rs. 10 eachBasic & 52
Diluted (Rs.1.97) (Rs.2.9)
88
MARCH 2019
Note
Particulars No. 2018-19 2017-18
I Revenue
i) Scheduled Traffic Services 224,005.6 191,359.6
ii) Non-Scheduled Traffic Services 15,343.6 13,085.9
Revenue from Operations 255,088.3 229,481.3
II 2. Other Income 20 9,217.6 8,968.1
II Total Revenue (I+II) 264,305.9 238,449.4
I Expenses
I 1. Aircraft Fuel & Oil 100,344.6 73,626.9
V 2. Other Operating Expenses 21 131,113.9 110,099.8
3. Employee Benefit Expenses 22 30,052.3 29,463.9
4. Finance Costs 23 47,113.0 44,640.9
6. Other Expenses 25 24,550.8 17,321.5
Total Expenses 349,053.9 291,826.8
(Loss) before Exceptional Items and Tax (III- (84,748.0) (53,377.4)
IV) - -
V Exceptional Items (Net) (84,748.0) (53,377.4)
VI (Loss) before Tax (V+VI) - -
VII Tax Expenses : (84,748.0) (53,377.4)
VII (Loss) after Tax for the year (VII-
IIX VIII)Other Comprehensive Income - -
X Items that will not be reclassified to Profit & Loss andits
related income tax effect : (863.8) (150.9)
i) Re-measurements of the Defined Benefit Plans 48.2 46.6
ii) Fair value changes on Equity Instruments throughother
comprehensive income (815.6) (104.3)
Other Comprehensive Income for the year (85,563.6) (53,481.7)
Total Comprehensive Income for the year 51
XI (IX+X (Rs.2.90) (Rs.1.97)
XI )Earning per equity share of face value of Rs. 10 each Basic
I & Diluted
89
MARCH 2020
Particulars Note 2019-20 2018-19
No.
I Revenue
II 2. Other Income 20 8,138.3 9,217.6
IV Expenses
4. Finance Costs 23 39,192.6 47,113.0
6. Other Expenses 25 49,400.9 25,122.1
Total Expenses 362,901.7 349,625.2
V (Loss) before Exceptional Items and Tax (III-IV) (77,657.3) (84,748.0)
VI Exceptional Items (Net) - -
VI (Loss) before Tax (V+VI) (77,657.3) (84,748.0)
I
VII Tax Expenses : - -
I
IX (Loss) after Tax for the year (VII-VIII) (77,657.3) (84,748.0)
X Other Comprehensive Income
Items that will not be reclassified to Profit & Loss and - -
its related income tax effect :
i)Re-measurements of the Defined Benefit (1,943.2) (863.8)

Plans (227.7) 48.2
ii) Fair value changes on Equity Instrumentsthrough - -
other comprehensive income
iii) Income Tax on the above
Other Comprehensive Income/(Loss) for the year (2,170.9) (815.6)
XI Total Comprehensive Income/(Loss) for the year (IX+X) (79,828.2) (85,563.6)
XI Earning per equity share of face value of Rs. 10 each 50
I
Basic (Rs.2.38) (Rs.2.90)
Diluted (Rs.2.38) (Rs.2.90)
90
MARCH 2021
Particulars Note 2020-21 2019-20
No.
I Revenue
II 2. Other Income 20 17,607.5 8,138.3
IV Expenses
4. Finance Costs 23 38,363.7 39,192.6
6. Other Expenses 25 12,282.2 49,400.9
Total ExpensesV 190,833.3 362,901.7
(Loss) before Exceptional Items and Tax (III- (69,792.8) (77,657.3)
VI Exceptional Items (Net) - -
VII (Loss) before TaxVIII IV) (69,792.8) (77,657.3)
Tax Expenses :
i) Tax for earlier years (V+VI) 381.4 -
(Amount settled under ‘Vivad Se Vishwas’ Scheme) (70,174.2) (77,657.3)
IX (Loss) after Tax for the year
X Other Comprehensive Income
Items that will not be reclassified to Profit & Loss andits (VII-
related income tax effect : VIII) (595.5) (1,943.2)
i) Re-measurements of the Defined Benefit Plans (69.4) (227.7)
ii) Fair value changes on Equity Instruments throughother
comprehensive income - -
iii) Income Tax on the above (664.9) (2,170.9)
Other Comprehensive Income/(Loss) for the year (70,839.1) (79,828.2)
XI Total Comprehensive Income/(Loss) for the year (Rs.2.15) (Rs.2.38)
XII Earning per equity share of face value of Rs. 10 eachBasic 50 (Rs.2.15) (Rs.2.38)
Diluted
(IX+X)
91
92

A Study On Working Capital Management at Air India

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“A STUDY ON WORKING CAPITAL MANAGEMENT AT AIR INDIA”

MASTER OF BUSINESS ADMINISTRATION

Registration No: 20SKCMD046

Under the guidance of

Department Of Management Studies – MBA

Registration Number : 20SKCMD046

Title of Project : A Study on Working Capital

Management at Air India

Name of the Guide : Prof. Chiranth.R

Similar content (%) Identified : 8%

(Acceptable maximum limit of similarity 25%)

ID number(s) in Original (Urkund) : (D143829456)

Signature of Guide Signature of the Principal/Director

Place: Bangalore Name: Himabindu V

Date: Register no: 20SKCMD046

CHAPTER TITLE PAGE

Data Analysis 46-72

4.1.1 Statement of Changes in Working Capital for the 47

3 Table shows the Working Capital 60

4 Table shows the Current Ratio 63

5 Table shows the Quick Ratio 65

6 Table shows the Absolute liquid ratio 67

7 Table shows the Working Capital Turnover Ratio 69

8 Table shows the Current Assets to Total Assets Ratio 71

2 Graph showing the Current Liabilities 59

3 Graph showing the working Capital 61

4 Graph showing the Current Ratio 64

5 Graph showing the Quick Ratio 66

6 Graph showing the Absolute Liquid Ratio 68

7 Graph showing the Working Capital Turnover Ratio 70

8 Graph showing the Current Assets to Total Asset Ratio 72

Aviation industry Vs. Airline industry

WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES

CONCEPT OF WORKING CAPITAL

SCOPE OF WORKING CAPITAL

The administration of capital, inventories, accounts receivable, cash, and work-in-progress

VARIOUS TYPES OF WORKING CAPITAL

FACTORS AFFECTING THE WORKING CAPITAL

 Production cycle: The duration of a product’s manufacturing process is referred to as its

 Dividend policy: In businesses when a conservative dividend policy is maintained, there

 Operation efficiency: The management’s operational effectiveness is a significant factor

ADVANTAGE OF ADEQUATE MANAGEMENT CAPITAL

Business solvency: By ensuring continuous production, enough working capital contributes to

DISADVANTAGES OF INADEQUATE WORKING CAPITAL

1. The business cannot seize new chances or adjust to change.

3. Cash rebates are forfeited.

6. Financial repute is damaged as a result of late payments to trade debtors.

4. It might make the company's operations less efficient overall.

6. Share values could decrease as a result of lower rates of return on investments.

PRINCIPLES OF WORKING CAPITAL MANAGEMENT

Principle of risk variation:

Principle of cost of capital:

Principle of equity position:

Principle of maturity of payment:

Loans from financial institutions:

Accepting public deposits:

Raising funds by internal financing:

Objectives of Inventory Management

 To maintain a steady supply of raw materials to support ongoing production.

 To maximise opportunities and cut costs associated with purchases.

 To introduce a method for managing inventories using science.

 To prevent improper or excessive material storage.