A Case Study of Air India & Kingfisher Airlines Aniruddha
Total Page：16
File Type：pdf, Size：1020Kb
ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 1, January 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ – & ANIRUDDHA SARKAR*; SUVARUN GOSWAMI** *Junior Research Fellow, Dep of Commerce, The University of Burdwan , Burdwan -713104 , *Assistant Professor in Commerce , Rishi Bankim Chnadra Evening College , Naihati , North 24 Parganas , West Bengal , ABSTRACT India's infrastructure has been improving slowly but steadily over recent year with foreign investors increasingly keen to invest in the sector. Infrastructure Sector Growth Rate in India has been on the rise in the last few years. The Growth Rate of the Infrastructure Sector GDP has grown due to several reasons and this in its turn has given a major boost to the country's economy. In the present article an endeavor has been made to throw some light on the financial performance of Indian Aviation sector means of a comparative study between Air India and Kingfisher Airlines, key infrastructure sector. The financial performance has been with the help of some key Finally the study ends with some valid suggestions which deserve the attention of the management of both the companies under study and Government. KEYWORDS: Infrastructure, Indian Airways, Financial Performance, PI, UI & EL. ______________________________________________________________________________ Infrastructure is the basic physical and organizational structure needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, power grids, telecommunications, and so forth. Viewed functionally, infrastructure facilitates the production of goods and services; for example, roads enable the transport of raw materials to a factory, and also for the distribution of finished products to markets. In some contexts, the term may also include basic social services such as schools and hospitals. In military parlance, the term refers to the buildings and permanent installation necessary for the support, redeployment, and operation of military forces. " " " " In this connection "hard" infrastructure refers to the large physical networks necessary for the functioning of a modern industrial nation, whereas "soft" infrastructure refers to all the www.zenithresearch.org.in institutions which are required to maintain the econom , health and cultural/social standards of a 35 ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 1, January 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ country, such as the financial system, the education system, the health care system, the system of government and law enforcement, as well as emergency services T " " a) Transportation infrastructure b) Energy infrastructure c) Water management infrastructure d) Communications infrastructure e) Solid waste management f) Earth monitoring and measurement networks a) Institutional infrastructure b) Industrial infrastructure c) Social infrastructure------------------------------------------------------------------------- d) Cultural, sports and recreational infrastructure The Sectors like Airports, Power, Telecommunications, Roadways, and Railways tc constitute the Infrastructure Sector. According to IDFC sources total investment requirement is as follows: US$ billions Power: 162 Roads; 81 Airports: 9 Telecommunications: 47 Railways: 66 Others: 80 Total Requirement = 455 www.zenithresearch.org.in 36 ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 1, January 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ Over the past four years, the Indian Economy consistently recorded growth rates in excess of 8.5% per annum resulting in rapidly increasing infrastructure spending. Total infrastructure spending is expected to increase from US$ 24 billion in 2005 to US$ 47 billion in 2009. (FICCI). Total investment requirement in the infrastructure sector over the next five years US$ 445 billion. K I S India's infrastructure has been improving slowly but steadily over recent years, with foreign investors increasingly keen to invest in the sector. Here are some key facts about India's infrastructure sector: India, Asia's third-largest economy, expects to invest about US 500 billion in infrastructure, mainly in power, telecommunication, roads, railways and oil pipelines, in the five years ending March 2012. India will need to spend more than US 1 trillion on infrastructure from 2010 to 2019, with roads requiring US 427 billion, power US 288 billion and railways US 281 billion, according to Goldman Sachs. Infrastructure investment is relatively low compared with some countries in Asia. Around 7.5% of GDP is invested in infrastructure, with plans to increase that to about 10% at the end of the 2008-2012 five-year plans. Private investment will likely contribute 36%, or US 186 billion, to total infrastructure investment by the end of the 2008-2012 five-year plans, up from 25% for the 2002-07 periods. India will issue tax-free infrastructure bonds with a minimum ten of 10 years, which will have the potential to raise about US 6.5 billion in fiscal year 2010-11, according to government estimates, the number could rise in 2011-12. Infrastructure Sector Growth Rate in India GDP has been on the rise in the last few years. The Growth Rate of the Infrastructure Sector in India GDP has grown due to several reasons and this in its turn has given a major boost to the country's economy. ECONOMY OF INDIA India gross domestic product (GDP) means the total value of all the services and goods that are manufactured within the borders of the country within the specified period of time. www.zenithresearch.org.in www.zenithresearch.org.in 37 ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 1, January 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ The Indian economy is the twel biggest in the whole world for it has the GDP of US$ 1.09 trillion in 2007. The economy of India is the second major growing economy in the whole world for it has the GDP growing at the rate of 9.4% in 2006- 07. THE INFRASTRUCTURE SECTOR IN INDIA The Infrastructure Sector in India was after independence completely in the hands of the public sector and this hampered the growth of this sector. India's less spending on real estate, power; telecommunications, construction, and transportation prevented the country from sustaining very high rates of growth. The amount that India was spending on the Infrastructure Sector was 6% of GDP or US$ 31 billion in 2002. THE CONTRIBUTION OF THE INFRASTRUCTURE SECTOR IN THE INDIA GDP Infrastructure Sector Growth Rate in India GDP came to 3.5% in 1996-97 and the next year, this figure was 4.6%. The Growth Rate of the Infrastructure Sector in India GDP increased after the Indian government opened the sector to 100% foreign direct investment (FDI). This was done in order to boost the Infrastructure Sector in the country. The result of opening the sector to the private sector has been that Infrastructure Sector Growth Rate in India GDP has increased at the rate of 9%. It is estimated that the Growth Rate of the Infrastructure Sector in India GDP will grow at the rate of 8.5% between 2006 and 2010. The biggest ongoing project in the Infrastructure Sector in India is the Golden Quadrilateral, which is improving the main roads that connect the four cities of Chennai, Mumbai, Delhi, and Kolkata. THE GOVERNMENT OF INDIA MUST BOOST THE INFRASTRUCTURE SECTOR Infrastructure Sector Growth Rate in India GDP thus has increased over the last few years due to the efforts that have been made by the Indian government. The government of India must continue to take steps to improve the Infrastructure Sector in the country. For this in its turn will help to boost the Indian economy in future. 1) To assess in details the entire infrastructure sector scenario in India especially Airlines Sector, being a key infrastructure sector. 2) To evaluate the financial performance of both the companies by taking into consideration the two major financial dimensions i.e. liquidity and profitability of the companies under study. www.zenithresearch.org.in www.zenithresearch.org.in 3) To make a comparative analysis between a public sector and a private sector by considering their respective financial performance. 38 ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 1, January 2012, ISSN 2249 8826 Online available at http://zenithresearch.org.in/ The Data base of the article is secondary in nature. All the data relating to companies under study have been collected from the published Financial Statements .The period of data is from 2000-01 to 2006-07 i.e. seven years financial position has been taken into consideration. There was no partiality neither in selection of company nor in selection of industry have they been selected on random basis for illustrative purpose. Among the companies one company is a public sector Undertakings i.e. Air India and another is Kingfisher which is a private company. In the present study the liquidity and profitability position ha been taken into consideration by calculating different key liquidity and profitability ratios in order to judge their financial performance for the period under study. For comparative analysis purpose the liquidity and profitability ratios of the companies have been exhibited in composite manner along with their diagrammatic representation. For assessing the degree of relationship between the working capital management and profitability Pearson‟s simple correlation coefficient has been used and Student‟ test has been applied to test the significance of the results of the empirical study. For measuring the overall efficiency of working capital management, at first the performance index has been calculated by using the following formula : Mi PIMWC = [Σ Mi (t-1)/ t]/ N × IT ……………………………………………… (1) Where, I T = turnover index or sales index defined as St / S (t-1) Mi = Individual group of current assets.