Group Number – 6Dheeraj ChaubeyMohit ShuklaMrigankshiVenkat

Introduction

• Owned by “Dr. Vijay Mallya” of United Beverages Group.

• Started its operations on May 9, 2005, a flight from Mumbai to Delhi.

• Kingfisher the largest carrier in the shrinking domestic Indian market

• December 2009, Kingfisher Airlines had the second largest share in India's domestic air travel market.

• Passenger growth increased 61.1% year-on-year in Mar-2009

Rise Of The King

• First airline in India to operate with all new aircrafts.

• First airline in the country to order the “Airbus A380”.

• Offers several unique services to its customers.

• First Indian airline to have in-flight entertainment (IFE) systems on every seat even on domestic flights.

• Alliance was formed with Dish TV to provide live TV in-flight.

Achievements

• Kingfisher Red, Kingfisher Airline's low-cost class on domestic routes.

• Kingfisher Airlines has received three global awards at the Skytrax World Airline Awards 2010

• Brand Leadership Award.

• India's only 5 Star airline, rated by Skytrax and 6th airline in the world

Start of the crisis

• Ever since the airline commenced operations in 2005, it has been reporting losses.

• In 2008, more losses due to economic downturn.

• After acquiring Air Deccan, Kingfisher suffered a loss of over 1,000 crore for three consecutive years.

• By early 2012, the airline accumulated losses of over Rs 7,000 crore

Contd….

• By Feb 2012, Kingfisher has been declared NPA by following banks

– SBI

– Bank of Baroda

– PNB

– IDBI

– Central bank

– BOI

– Corporation Bank

• Loss> US$1.50 billion

Total Dues

Current Ratio• A liquidity ratio that measures a company's ability to pay short-term obligations. The higher

the current ratio, the more capable the company is of paying its obligations.

Current Asset :- All assets that are  expected to be converted into cash within one year Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash. 

Current Liabilities:- A company's debts or obligations that are due within one year. Current liabilities include short term debt, accounts payable, accrued liabilities and other debts.

CR = Current Assets / Current Liabilities.

Current Ratio

(Rs in Crs)

Quick Ratio

• An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most “liquid assets”. The higher the quick ratio, the better the position of the company

[Liquid Assets = Current Assets – (Inventories + prepaid expenses)]

Liquid Asset:- Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market.

QR= Liquid Assets/ Current Liabilities..

Quick Ratio

(Rs in Crs)

Gross Profit Ratio

• Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales.

Net sales means that sales minus sales returns.

Gross profit would be the difference between net sales and cost of goods sold

Gross Profit Ratio = (Gross profit / Net sales) × 100

Gross Profit Ratio

DEBT-EQUITY RATIO

DEBT-EQUITY RATIO

YEAR 2011 2010 2009 2008 2007

TOTAL DEBT 7057.08 7922.60 5665.56 934.38 916.71

YEAR 2011 2010 2009 2008 2007

TOTAL EQUITY -2951.20 -3870.47 -2125.35 188.78 373.68

YEAR/ RATIO 2011 2010 2009 2008 2007

D/B RATIO -2.39 (0.00) -2.04 (0.00) 2.66 ( 0.00) 4.94 2.45

(Rupees in crores)

FIXED ASSET TURNOVER RATIO

FIXED ASSET TURNOVER RATIO

YEAR 2011 2010 2009 2008 2007

F.S RATIO 2.90 2.57 4.73 5.80 5.52

(Rupees in crores)

NET WORKING CAPTIAL

• It is the difference of Current Assets and Current Liabilities.

• NWC = Current Assets – Current Liabilities

• Net Working Capital is a measurement of the operating liquidity available for a company to use in developing and growing its business.

• If NWC is high, it indicates that  an entity has a working capital deficiency,

• If NWC is low, it indicates that an entity has a working capital deficit.

NET WORKING CAPTIAL

YEAR 2011 2010 2009 2008 2007

C.A 3105.10 2637.17 2199.69 659.59 1090.06

YEAR 2011 2010 2009 2008 2007

C. L 4172.28 3554.57 3540.23 676.60 493.49

YEAR/ RATIO 2011 2010 2009 2008 2007

NWC -1067.18 -917.4 -1340.54 -17.01 596.57

(Rupees in crores)

EARNINGS PER SHARE

• Earnings per share serves as indicator of a company's profitability.

EPS= Net profit available to equity-holders

Number of ordinary shares outstanding

• Earnings per share is generally considered to be the single most important variable in determining a share's price.

EARNINGS PER SHAREYEAR 2011 2010 2009 2008 2007

EPS -20.64 -61.95 -60.50 -13.85 -30.97

(Rupees in crores)

FINANCIAL LEVERAGE

• The degree to which an investor or business is utilizing borrowed money.

FINANCIAL LEVERAGE= TOTAL ASSETS

OWNER’S EQUITY.

• Financial leverage is a way for achieving bigger results with relatively small amount of capital/financial resources.

• Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find new lenders in the future.

FINANCIAL LEVERAGE

YEAR 2011 2010 2009 2008 2007

F.L -1.39 -1.04 -1.66 5.94 3.45

(Rupees in crores)

Equity Ratio

• The equity ratio is a financial ratio indicating the relative proportion of equity used to finance a company's assets.

Equity Ratio=(Total Shareholders Equity)/(Total Assets)

• A high ER would expose creditors to a higher risk.

• ER should neither be very high nor very low.

Equity Ratio

2011 2010 2009 2008 2007

-2951.20 -3870.47 -2125.35 188.78 373.68

4105.88 4052.13 3540.21 1123.16 1290.39

-0.71877 -0.955169 -0.600345 0.168079 0.289586

• The ratio measures a company's capital structure , financial solvency , and degree of leverage, at a particular point in time.

Debt To Total Capital Ratio=Total Debt/Total Assets

Debt: Is an obligation owed by one party (the debtor) to a second party

DEBT TO TOTAL CAPITAL RATIO :

DEBT TO TOTAL CAPITAL RATIO :

2011 2010 2009 2008 2007

7057.08 7922.60 5665.56 934.38 916.71

4105.88 4052.13 3540.21 1123.16 1290.39

1.7187 1.9551 1.6003 0.8319 0.71041

(Rupees in crores)

Inventory Turnover Ratio

• It is a measure of the number of times inventory is sold or used in a time period such as a year.

• Inventory Turnover Ratio :(Cost of goods sold) / (Average Inventory).

• Cost of goods sold = (Sales) – (Gross Profit).

• Cost of goods sold (COGS) refer to the inventory costs of those goods a business has sold during a particular period.

• Average Inventory = (Opening Stock + Closing Stock) / 2.

•  Inventory : describes the goods and materials that a business holds for the ultimate purpose of resale.

Indicates how fast inventory is sold. High ITR indicates higher liquidity.

Inventory Turnover Ratio

2011 2010 2009 2008 2007

5289.34 4747.92 5822.37 1781.46 2062.61

182.2 159.285 97.945 55.13 -

29.03040615 29.80770317 59.44530093 32.31380374 -

RETURN ON CAPITAL EMPLOYED

• A ratio that indicates the efficiency and profitability of a company's capital investments.

• ROCE should always be higher than the rate at which the company borrows, otherwise any increase in borrowing will reduce shareholders' earnings.

ROCE = EBIT-OTHER INCOME AVRAGE LONGTERM ASSET USED + NWC

RATIO/YR

2011 2010 2009 2008 2007

ROCE 0 0 0 0 0

RETURN ON CAPITAL EMPLOYED

• A ratio used to determine how easily a company can pay interest on outstanding debt.

• The lower the ratio, the more the company is burdened by debt expense. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses.

INTEREST COVERAGE RATIO

INTEREST COVERAGE RATIO = EBIT INTEREST

INTEREST COVERAGE RATIO

RATIO/ YR 2011 2010 2009 2008 2007

ICR -0.16 -0.87 -1.77 -7.76 -10.29

CORPORATE GOVERNANCE

• Act ethically, deli gently, openly, honestly in good faith with integrity.

• Act in a good faith responsibility and due fair.

• Dedicate best effort for welfare of the customer.

• Conduct our self in a professional, courtesy and respectful manner.

CORPORATE GOVERNANCE

• Uphold legal standard vigoursly.

• Act for the welfare investor and stake holder.

• Involve in the best interest of company and the stakeholder.

• Maintain the confidentiality of all material non-public information about the company its business and affairs.

Saving The Ship• All 18 lenders agreeing to cut interest

rates and convert part of loans to equity.

• Lenders have converted Rs.650 crore debt into preference shares which will be converted into equity when the airline lists on the Luxembourg Stock Exchange by selling GDR’s.

• Besides the Rs.1,400 crore debt which will be converted into preference shares.

• Kingfisher Airlines has pledged its brand as collateral with its lender consortium for Rs.4,100 crore.

Result

# From To Months Total Income Cost Net Profit EPS

1 Apr-05 Jun-06 15 1,352 1,689 -337 -682 Jul-06 Jun-07 12 2,142 2,562 -420 -423 Jul-07 Mar-08 9 1,546 1,734 -188 -114 Apr-08 Mar-09 12 5,577 7,186 -1,609 -555 Apr-09 Mar-10 12 5,271 6,918 -1,647 -546 Apr-10 Mar-11 12 6,496 7,523 -1,027 -167 Apr-11 Sep-11 6 3,410 4,142 -732 n/a

Total     78 25,793 31,754 -5,960

Thank You