Aviation Project Report

8/2/2019 Aviation Project Report

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AVIATION INDUSTRY IN INDIA

Overview of Airlines industry in India

The Aviation industry in India encompasses a wide range of services related to air

transport such as passenger and cargo airlines, unscheduled service operators --- private jets

and helicopters, airport management, and support services like Maintenance, Repairs and

Overhaul (MRO), ground handling, in-flight catering, and training

The Aviation sector has reaped massive benefit from the entry of private carriers,

especially from those of the low fare ones. The growth of the airlines sector has caused a

sharp upturn in demand for allied services including MRO, ground handling, and catering

services. The booming aviation industry, along with its tertiary services, has wreaked a major

talent crunch, boosting opportunities for training service providers. The ever-expanding

Indian economy and increased demand for trade has pushed the need for air cargo services to

a new high. Increasing number of entrants in the sector has forced airports to expand their

cargo handling capacities.

Aviation has been recognized as one of the fastest growing sectors in India. With the

modernization, technological development and fleet expansion, the Indian Aviation Sectorhas experienced drastic changes in the recent past. Now, a large number of people prefer to

travel by air transport due to the lack of time and rising disposable income. Consequently, the

domestic and international air traffic in the aviation sector has been registering a phenomenal

growth over the past few years. In FY 2010, the domestic air traffic stood at approximately

46 million against 40 million in FY 2009, an increase of about 15 per cent. Similarly, the total

domestic cargo grew by more than 15 per cent to reach at approximately 390000 tonnes in

FY 2010.

The report titled Indian Aviation Sector: An Analysis on Three of its major

players provides a comprehensive and crisp analysis of the current status and future growth

prospects of the Indian aviation sector. Further, the report profiles major airline service

providers in the country including Air India, Jet Airways and Kingfisher to describe the

industry competitive scenario. Besides this, the report also provides information on the

various issues and challenges, which if not addressed might hamper the growth of the sector.

Finally, the report concludes with providing the future outlook of the industry.


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Growth of Indian Aviation industry

The Indian Civil Aviation market grew at a CAGR of 18%, being valued round US$

5.6 billion in 2008. Further statistics revealed that the air traffic in August 2009 was a double

digit figure. The domestic airliners flew 3.67 million passengers in August 2009, as against

2.92 million in the corresponding period of 2007, up by 26%. The Centre for Asia Pacific

Aviation (CAPA) has estimated that the domestic traffic will go up by 25% to 30% till 2010

along with a surge in the international traffic by 15%. There would be more than 100 million

passengers by 2010. Then again by 2020, Indian airports will in all probability handle over

100 million passengers every year. The investment plans to the tune of US$ 9 billion has

been made by the Aviation Ministry for modernizing the existing airports by 2010.

In terms of domestic passengers' volume, US have always been the leader with

followers in the league like China, Japan and India. The number of domestic flights went up

by 69% from 2005 to 2008, with the domestic aviation sector growing at 9-10%.

Mergers & Acquisitions in Aviation Sector

Mergers and acquisitions ("M&A") are strategic decisions taken for maximization of a

company's growth by enhancing its production and marketing operations. They are being

used in a wide array of fields in order to gain strength, expand the customer base, cut

competition or enter into a new market or product segment.

Aviation sector is one of the least researched sectors in India as it has limited number

of players. However, as the sector is growing rapidly, it becomes essential to have knowledge

about the sector and the activities which are taking place in the sector. The dynamic growth

and potential in the Indian aviation sector can be gauged from the statement of the civil

aviation minister of India, Mr. Praful Patel - Indias civil aviation industry will attractinvestments worth more than US$150 billion in the next 10 years. The aviation market and

scenario in India has seen major developments in the last 5 years. Not merely has the market

grown very rapidly, but the industry has seen, M&A, the entry of a number of new carriers

with aggressive pricing policies and significant additions of capacity leading to cut-throat

competition.

This paper makes an attempt to give a brief overview of the meaning of M&A, and

the regulations dealing with the same in India; it then tries to comprehensively deal with the


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Aviation Industry in India and M&A in the aviation sector. Finally, it offers few important

cases dealing with M&A in the said sector both at domestic and international front.

Brief Overview

Merger

A merger is a combination of two or more businesses into one business. Laws in India

use the term 'amalgamation' for merger. Under section 2(1B) of the Income Tax Act, 1961

amalgamation is defined as mixing up or uniting together. It is a process where one company

blends with another company (both being existing companies and carrying on business).

Provided that following conditions are met with:

1. All properties are transferred to the amalgamated company.

2. All liabilities are transferred to the amalgamated company.

3. Shareholders holding at least 3/4th in the value of shares of the amalgamating company

become shareholders of the amalgamated company.

TYPES OF MERGERS

Horizontal Mergers

A Horizontal Mergers occurs when one firm combines with the other in the same line

of business. This kind of merger takes place between entities engaged in competing

businesses which are at the same stage of the industrial process.

Vertical mergers

Vertical mergers refer to the combination of two entities at different stages of the

industrial or production process. For example, the merger of a company engaged in the

construction business with a company engaged in production of brick or steel would lead to

vertical integration.


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Conglomerate Mergers

A conglomerate merger occurs when unrelated enterprises combine. The principal

reason for a conglomerate merger is utilization of financial resources, enlargement of debt

capacity, and increase in the value of outstanding shares by increased leverage and earnings

per share, and by lowering the average cost of capital.

Acquisition

An acquisition or takeover is the purchase by one company of controlling interest in

the share capital, or all or substantially all of the assets and/or liabilities, of another company.

A takeover may be friendly or hostile.

Regulations governing M&A in India

Before going into the issues pertaining to M&A of airlines, we will first have a look at

the current policy framework for M&A in India. Regulations governing M&A in India may

be divided in to the following categories:

1. National M&A transactionsa) Companies Act, 1956.

b) Companies Court Rules, 1959.

c) Income Tax Act, 1961.

d) Central Sale Tax Act, 1956.

e) Indian Stamp Act, 1899

f) Competition Act, 2002 (It has been enacted but is not yet fully enforced)

2. M&A transactions involving listed companiesa) The Securities and Exchange Board of India (SEBI) Regulations

b) Listing Agreements

3. International M&A Transactionsa) Foreign Exchange Management Act, 1999


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Aviation Sector

Aviation is, by its very nature, a critical part of the infrastructure of the country and

has important ramifications for the development of tourism and trade, the opening up of

inaccessible areas of the country and for providing stimulus to business activity and

economic growth.

The airline industry has to operate in a competitive world. Many airlines are unable to

survive in their present set up and have to streamline their operations through cost cutting

measures. Merging with another airline provides a possible method to improve airline

operations and reduce costs by sharing the available resources and eliminating duplication of

service.

Classification of Indian Aviation sector

The Indian civil aviation can be broadly classified into the following categories:-

Scheduled Air Transport Service means an air transport service undertaken between the two

or more places and operated according to a published time table or with flights so regular or

frequent that they constitute a recognizably systematic series, each flight being open to use by

members of the public.

Non-Scheduled Operation means an air transport service other than scheduled air

transport service and that may be on charter basis and/or non-scheduled basis. The operator is

not permitted to publish time schedule and issue tickets to passengers.

An air cargo service means air transportation of cargo and mail. Passengers are not

permitted to be on these operations. It may be on scheduled or non-scheduled basis. These

operations are to destinations within India. For operations outside India, the operator has totake specific permission of Directorate General of Civil Aviation demonstrating his capacity

for conducting such operations.


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REGULATORY AUTHORITIES IN AVIATION INDUSTRY

Ministry of Civil Aviation

The Ministry of Civil Aviation is the nodal Ministry responsible for policy

formulation, development and regulation of the Civil Aviation sector in India. The Ministry

also handles the planning and implementation of schemes for the growth and expansion of

civil air transport, airport facilities, air traffic services and carriage of passengers and goods

by air.

Directorate General of Civil Aviation (DGCA)

DGCA is an attached office of Ministry of Civil Aviation. It is a principal regulatorybody for Civil Aviation in India and primarily deals with safety issues. It is responsible for:

regulation of air transport service to/from/within India, enforcement of civil air regulations, air safety and airworthiness standards, coordinating all regulatory functions with International Civil Aviation Organisation.

Airports Authority of India (AAI)

AAI was constituted by an Act of Parliament and came into being on 1st April 1995

by merging erstwhile National Airports Authority and International Airports Authority of

India. The merger brought into existence a single Organization entrusted with the

responsibility of creating, upgrading, maintaining and managing civil aviation infrastructure

both on the ground and air space in the country. AAI manages 125 airports, which include 11

International Airport, 08 Customs Airports, 81 Domestic Aairports and 27 Civil Enclaves at

Defence airfields

Bureau of Civil Aviation Security (BCAS)

BCAS is an independent department under the Ministry of Civil Aviation. Its main

responsibility is to lay down standards and measures in respect of security of civil flights at

International and domestic airports in India.


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Federation of Indian Airlines (FIA)

FIA is an apex industry body which has been formed by the scheduled carriers in

India. FIA as the voice of India's airline industry works to identify and take up issues on

behalf of the industry, with various regulatory authorities, government departments and other

key stake-holders. The functioning of the FIA is guided by an Executive Council, comprising

chiefs of each of the member airlines.

Legal framework

The important laws relevant to civil aviation are:

a)

The Aircraft Act, 1934 which controls the manufacture, possession, use, operation,sale, import and export of air craft. Also relevant is the Aircraft Rules, 1937.

b) The Carriage by Air Act, 1972.c) The Air Corporations (Transfer of Undertakings and Repeal) Act, 1994.d) The Civil Aviation Policy.e) The Civil Aviation Requirements.

Trends in Aviation Industry

Consolidation in aviation sector: In aviation industries the rise in the number ofalliances will help in promote the growth of aviation sector in India.

The number of passengers traveling by air is on the rise: By 2025 passengerboarding expected to double and by the same time aircraft operations are expected to

triple.

For the traveling public, price is paramount in choosing a carrier : Travelers arechoosing the lowest price option with the help of the Internet and round-the-clock

search facility. Even business travelers, who have been less price-sensitive, are

resisting fare increases. Travelers are not giving preference to brand but the only

premiums they are willing to pay for are time-of-day and direct flights.

Capacity is growing without much constraint: The new aircrafts have been orderedby Indian carriers for delivery in the coming period, without clear plans to retire older

planes.

Cost structures will continue to handicap legacy carriers as they compete withnewer airlines, as well as with overseas carriers: Great threats are being posed by


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the low cost carriers to legacy carriers, as a result of which they are reshuffling their

pricing policies. Apart from this, they are also facing competition from overseas

players.

Oil prices are not expected to fall: Aviation Turbine Fuel (ATF) prices haveincreased in line with the rise in international oil prices. Because of this there is a

marginal increase in airfares.

Outsourcing: Private airlines are famous to hire foreign pilots or retired personnelfrom the Air Force or PSU (Public Sector Undertaking) airlines, in senior

management positions. Airlines are also famous to take on contract employees such as

cabin crew, ticketing and check-in agents.

Reasons for boom in Aviation Industry in India

Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-ResidentIndian) investment up to 100 per cent is permissible in the domestic airlines through

the automatic route that is without the RBI (Reserve Bank of India) or government

approval. However, the government policy bars foreign airlines from taking a stake,

directly or indirectly, in a domestic airline company.

Low entry barriers: Nowadays, venture capital of $10 million or less is enough tolaunch an airline.

Attraction of foreign shores: Jet and Sahara have gone international by startingoperations, first to SAARC countries, and then to South-East Asia, the UK, and the

US. After five years of domestic operations, many domestic airlines too will be

entitled to fly overseas.

Rising income levels and demographic profile: Though India's GDP (per capita) isstill very low as compared to the developed country standards, India is shining, at

least in metro cities and urban centres, where IT and BPO industries have made the

young generation prosperous. Demographically, India has the highest percentage of

people in age group of 20-50 among its 50 million strong middle class, with high

earning potential. All this contributes for the boost in domestic air travel, particularly

from a low base of 18 million passengers.

Untapped potential of India's tourism: Tourist arrivals in India are expected togrow exponentially, especially due to the open sky policy between India and the

SAARC countries and the increase in bilateral entitlements with European countries,

and US.


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PROBLEMS FACED BY AVIATION INDUSTRY

Indian airline Industry is beset with many problems, which consist of high price of

ATF, scarcity of skilled labour, quick fleet expansion, rise in labour costs and price

competition among the players. However, the major issue that poses a challenge for the

airline industry in India is infrastructure limitation which is required to be rapidly upgraded.

Airline M&A

Airline M&A are on the rise across the globe. These M&A are highly strategic

involving several considerations. Airline M&A bear serious implications for travelers as well

as airline employees. The airlines industry is abuzz with news of M&A. In the last few years

airline M&A have been a growing trend in several countries across the globe. However,

M&A in the aviation industry are highly strategic in nature and are undertaken after takinginto consideration several important factors.

CASES OF AIRLINE M&A IN INDIA

Air India and Indian Airlines

For long decades after its independence, India was served by two state run aviation

companies Air India which served the international market and Indian Airlines which served

the domestic market. Even though the two were started with a lot of capital and initial

performance was nothing short of remarkable, it was not long that the two companies started

to feel the restrictions and stress of a socialistic shackled system. In the recent years, the

opening of Indian aviation sector for private players meant that the competition was getting

too much for the two. The solution was found by the Indian government in the form of

merger of both the entities.

The Government of India, on March 1, 2007, approved the merger of Air India and

Indian Airlines to improve operational synergy and increase productivity. Consequent to the

above, a new Company viz National Aviation Company of India Limited was incorporated

under the Companies Act, 1956 on March 30, 2007. The company became registered on

March 30, 2010. The merger was to help the new entity compete with large global airlines.

Following the merger of the two companies, it was decided that a combined identity

should evolve. Since Air India was a globally and nationally recognized brand name, the


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operational brand name of the company remained Air India and the Maharaja continued to

reign as the mascot of the new airline.

Benefits

The key benefits to Indian Airlines and Air India on account of this merger were as under:

The merger had created a mega company with combined revenue of Rs. 15000 crores. The new entity had seen a number of changes in its operating model. It was much less

restricted by government control and is therefore much more agile and could churn

better returns than the two different entities.

Since the two companies had come together, they had also been able to bring togethertheir best practices and reduced the overall operational cost as well as administrative

cost by a considerable margin.

Air-India would have a combined fleet of 112 aircraft and would be among the top 10airlines in Asia and among the leading 30 airlines globally.

Indian Aviation - Market Size

India is currently the ninth largest aviation market in the world, according to a report

Indian Aerospace Industry Analysis, by research firm RNCOS. The government's open sky

policy has attracted many foreign players to enter the market and the industry is growing in

terms of both players and the number of aircrafts. Given the strong market fundamentals, it is

expected that the civil aviation market will register more than 16 per cent CAGR during

2010-2013.

Recording the strongest growth in the world, India's domestic aviation market has

tripled in the past five years, according to a latest report of the International Air Transport

Association (IATA). Indias domestic air travel market continued to show impressive growth

in the first four months of 2011, with passenger numbers increasing 18.4% to 19.0 million

passengers. Apr-2011 passenger numbers increased 11.5% to 4.67 million passengers, based

on India Directorate General of Civil Aviation data, marking the eighth consecutive month of

double-digit growth and following growth of 21% in Jan-2011, 18.5% in Feb-2011 and

23.5% in Mar-2011. Indias domestic market has seen passenger growth now for 23

consecutive months.


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Source: Indian Ministry of Civil Aviation

Indian Aviation - Market Players

India is one of the flourishing global aviation markets. As per Airport Authority of

India (AAI) statistics, there are 127 airports in India which incorporates 13 international, 80

domestic, 28 civil and 7 custom airports. Moreover India has around 1091 registered aircrafts.

Over the years there has been steady growth in the number of private players establishing

their business in India due to increasing liberalization and deregulation. Hence, at present

aviation industry consist of three types of players namely, Full cost carriers, Low cost carriers

(LCC) and other start-up airlines.

Market share statistics for May 2011 indicates a neck-to-neck tiff between Kingfisher

and IndiGo with 21.00 and 19.6 per cent of market share respectively. However, if the figures

for Jet Airways (18.2 per cent) and JetLite (7.3 per cent) are combined, then the Jet Airways

group of airlines leads with 25.5 per cent of the market. The remaining market shares belongto Air India (13.8 per cent), Spicejet (14.0 per cent) and GoAir (6.1 per cent) and others (0.6

per cent).

0

50

100

150

200

YoY MoM

160.42

41.88

190.02

46.71

Passengers Carried (in Lakhs)

2010 2011

Growth

YoY -(+18.4%)

MoM - (+11.5)


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The market share of Indian carriers as on June 2011 in the domestic aviation market is

shown below:

Source: Indian Ministry of Civil Aviation

Role of Aviation Industry in India GDP

The Role of Aviation Industry in India GDP in the past few years has been

phenomenal in all respects. The Aviation Industry in India is the most rapidly growing

aviation sector of the world. With the rise in the economy of the country and followed by the

liberalization in the aviation sector, the Aviation Industry in India went through a complete

transformation in the recent period.

Role of Aviation Industry in India GDP-Growth Factors

The growth in the Indian economy has increased the Gross Domestic Product above8% and this high growth rate will be sustained for a good number of years

Air traffic has grown enormously and expected to have a growth which would beabove 25% in the travel segment

In the present scenario around 12 domestic airlines and above 60 international airlinesare operating in India

With the growth in the economy and stability of the country India has become one ofthe preferred locations for the trade and commerce activities

25.50%

21.00%

19.60%

13.80%

14.00%

6.10%

Market Share of Indian Carriers

Domestic

Jet Airways Group

Kingfisher

IndiGo

NACIL

SpiceJet

GoAir


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The growth of airlines traffic in Aviation Industry in India is almost four times aboveinternational average

Aviation Industry in India have placed the biggest order for aircrafts globally Aviation Industry in India holds around 69% of the total share of the airlines traffic in

the region of South Asia

Role of Aviation Industry in India GDP-Future Challenges

Initializing privatization in the airport activities Modernization of the airlines fleet to handle the pressure of competition in the

aviation industry

Rapid expansion plans for the major airports for the increased flow of air traffic Immense development for the growing Regional Airports

After having an overview on the Aviation Sector of India we will look forward into

the top aviation companies in India and how they have performed in the last few years.

Major Players in aviation industry

The players in aviation industry can be categorized in three groups:

Public players: Air India, Indian Airlines and Alliance Air Private players : Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan,

Go Air lines, Paramount Airways

Start up players: Omega Air, Magic Air, Premier Star Air & MDLR Airlines.

Out of all these companies the one on which we are going to mainly concentrate are Jet

Airways, Kingfisher Airlines and Spicejet.


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JET AIRWAYS

Company overview

Jet Airways is the leading Private airline company in India. After a varied experience

and training with airlines such as Lebanese International Airlines and Royal Jordanian

Airlines, Naresh Goyal founded Jetair Limited in 1974 with the aim of providing sales and

marketing representation to foreign airlines in India. By 1992, Jetair had become one of

Indias largest GSAs. Seizing the new opportunities in a liberalized economy, Jet Airways

(India) Limited came into being on April 1st 1992 with its first flight operating on May 5th

1993 on the Mumbai-Ahmedabad-Mumbai sector. Indian aviation industry is, today, over 50

years old. For more than 40 of these years it was monopolized by the State owned Indian

Airlines. In 1992, Government announced its open skies policy, allowing the entry of private

airlines. Company has an unbeatable record of on time flights and providing world-class

frequent flyer benefits to its customers, through its alliances with British Airways, KLM

Royal Dutch Airlines and Northwest Airlines. Company was the first airline in India to

receive the World Travel Market Global Award, the world's premier global travel event in

London. Company has also won the H&FS Domestic Airline of the Year Award four times

and Citibank Diners Club chose it as India's best domestic airline for excellence in service.

By doing rapid expansion in the network, company earned the prestigious Air Transport

World Award 2001 for Market Development. Company makes every effort to provide service

of the highest standard to its customers,both on ground and inflight, thats why it is the most

favorable airline of business class customers. Jet Airways is one of the few airlines in the

world to receive the ISO 9001 certification for our in-flight services.

Products & Services

Jet Airways has achieved this pre-eminent position by offering a high quality of

service and reliable, comfortable and efficient operations. Jet Airways is the market leader in

indian private airline segment and attained this brand in a short span of around 12 years.

Customer satisfaction with the brand is always very high, reflected in customer loyalty with

the airline through its rapidly growing Frequent Flyer Program, Jet Privilege. Airline has

promoted several domestic tourist destinations through its distribution and connectivity

networks. While building traffic to these destinations, it has also contributed to the growth of

employment and businesses connected to the tourism sector, quite apart from substantial

foreign exchange earnings. These achievements are even more noteworthy in theenvironment of the lack of infrastructure and facilities such as terminals, lounges, warehouses


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and hangars, the high cost of aviation turbine fuel and the different and high levels of local

taxes in many states.

Jet Airways operates over 180 flights daily to 45 destinations across the country

including London (Heathrow), Kuala Lumpur, Singapore, Colombo and Kathmandu.

Company has the youngest fleet of aircraft in India, consisting of the modern Airbus 340

300E, Boeing 737-400/700/800/900 and the ATR 72-500.

Jet Airways plans a major staff cut, due to the prevailing economic meltdown.

Currently, Jets employee strength stands at 12,000. It is learnt that Jet is looking to bring it

below 10,000 in a phased manner. Jet Airways currently has an aircraft to employee ratio of

1:145 which it wants to scale down quite sharply. It is believed that the company has already

started giving pink slips, with about 50 employees being laid off over the past one week. In

April, Jet also reduced salaries by 10-25% across employee categories.

M & A in Jet Airways

Jet Airways and Sahara Airlines

The two carriers share the same history; both began their operations as air taxi

operators and later became full service carriers. Jet and Sahara both used to compete on

international routes prior to merger.

Jet Airways, which commenced operations on May 5, 1993, has within a short span of

14 years established its position as a market leader. The airline has had the distinction of

being repeatedly adjudged India's 'Best Domestic Airline' and has won several national and

international awards.

Background

Jet Airways and the Shareholders of Sahara Airlines Limited had concluded a Share

Purchase Agreement on January 18, 2006 whereby Jet Airways was to acquire the 100%

shares of Sahara Airlines Limited for a Total Consideration of Rs. 2,000 crores. The original

65 day Term of the Agreement expired in March 2006. This was mutually extended to 21st

June 2006, at which time Jet Airways also paid an advance of Rs. 500 Crores.

At the expiry of the extended period, disputes arose between the parties as to whether

or not the agreement had terminated (for non fulfillment of some conditions). These disputes


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were referred for hearing to an Arbitral Tribunal. However, before the commencement of

Arbitral Proceedings, the two parties successfully resolved their disputes and were able to

draw up a Settlement Agreement and the Arbitral Proceedings were disposed off in terms of

the same agreement.

On 20th April, 2007, Jet acquired 100% stake in Air Sahara 15 months after signing

the original purchase agreement. Jet purchased its arch rival for 1,450 crores which was 35 %

less than the price agreed in 2006. Jet rebranded Sahara as Jetlite and announced that the

new entity would offer reduced frills but would be over and above low cost carrier (LCC) in

terms of service. The private sector Jet-Sahara combine ended the dominating role of the

public sector with the new corporate commanding as much as 32% of the domestic market

space.

BENEFITS

Jet Airways firmly believed that the acquisition of Sahara Airlines Limited would

enable it to derive significant commercial and economic benefits keeping in view the then

state of the domestic aviation industry.

The key benefits to Jet Airways on account of this acquisition were as under:

A strong platform and a larger operational base for future growth.

A wider and a more effective coverage of the Indian market and giving the twoairlines a very strong position especially in the metro markets.

Increased prime time departures and frequencies through a subsidiary. Obtain access to skilled personnel such as Pilots and Engineers, categories of which

there was a significant shortage in India.

Unit cost savings and improved levels of productivity due economies of scale andcommon utilization of facilities and resources, arising particularly from common

maintenance and training facilities, airport handling facilities, enhanced purchasing

power, finance and administrative set-ups, etc.

Clear value proposition for the customers in the form of wider network coverage,enhanced and convenient connections and better service levels on a larger scale of

operations.

Increased availability of airport infrastructure facilities and availability of a largeroperational base for future expansion.


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Since Sahara Airlines would operate as an independent carrier with its own OperatingPermit, it would have access to available traffic rights for international operations.

Another important benefit that Jet Airways derived from the acquisition of Sahara

Airlines was that their order for the additional 10 B737NG aircraft which were scheduled for

delivery between June 2009 and August 2011 thereby enabled Jet Airways to have access to

additional aircraft to expand its fleet. This represented substantial additional intangible assets

for Jet Airways since it had no aircraft on order and delivery positions were not available

before 2011 or only available at a premium.

The acquisition of Sahara Airlines gave Jet Airways the opportunity to reassess its

strategy and use this carrier to provide an innovative service concept of higher quality than

current no-frills carriers.

CRITICAL ANALYSIS: JET AIRWAYS-AIR SAHARA: A STRATEGIC MISTAKE

Centre for Asia Pacific Aviation is of the view that the acquisition of Air Sahara by

Jet Airways was maybe the carriers first major strategic error. Allowing Sahara to exit from

the market would have resulted in a market correction that would have been to the benefit of

all players. Jet incurred a high acquisition price and has been funding operating losses ever

since. The process of integration has been difficult and costly and continues to negatively

impact Jet Airways. It is reported that Jet Airways has yet to settle the full purchase price for

the carrier, reflecting the state of its financial situation.

Jet Airways bottom line has been further impacted by an aggressive international

expansion which stretched the carriers resources and damaged investor confidence.

The airline has since been forced to cut a number of existing routes and halt new services as it

consolidates its overseas network. To address the overcapacity in its long haul fleet, Jet

Airways has leased a number of wide body aircraft to Gulf Air and Oman Air.

STOCK PERFORMANCE SINCE LISTED ON MARKET

Year High Low

2011 782.2 250.9

2010 926.35 395.7

2009 605.95 115.25

2008 1023 119.25

2007 1049.8 533.35

2006 1224.8 475.1

2005 1379 973


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FINANCIALS

JET AIRWAYS (INDIA) LTD. : SHARE HOLDING

Share Holding Pattern as

on

30/06/2011 31/03/2011 31/12/2010

FaceValue 10.00 10.00 10.00Share Holder No. Of

Shares%

HoldingNo. Of

Shares%

HoldingNo. Of

Shares%

Holding

PROMOTER'S HOLDINGForeign Promoters 69057210 79.99 69057210 79.99 69057210 79.99

Indian Promoters 11548 0.01 11548 0.01 11548 0.01

Person Acting in Concert 0 0.00 0 0.00 0 0.00

Sub Total 69068758 80.00 69068758 80.00 69068758 80.00

NON PROMOTER'S HOLDING

Institutional Investors

Mutual Funds and UTI 5480632 6.35 5856485 6.78 5306013 6.15

Banks Fin. Inst. and

Insurance

2681763 3.11 2662033 3.08 2624559 3.04

FII's 4977332 5.77 3981106 4.61 5656954 6.55

Sub Total 13139727 15.22 12499624 14.48 13587526 15.74

Other Investors

Private Corporate Bodies 896981 1.04 1668121 1.93 783553 0.91

NRI's/OCB's/ForeignOthers

165773 0.19 129764 0.15 75063 0.09

GDR/ADR 0 0.00 0 0.00 0 0.00

Directors/Employees 0 0.00 0 0.00 0 0.00

Government 0 0.00 0 0.00 0 0.00

Others 185398 0.21 122226 0.14 490484 0.57

Sub Total 1248152 1.45 1920111 2.22 1349100 1.56

General Public 2877374 3.33 2845518 3.30 2328627 2.70

GRAND TOTAL 86334011 100.00 86334011 100.00 86334011 100.00

QUARTERLY FINANCIALS

(Rs. in Crore)

June ' 11

1st Quarter

March '

11

4th

Quarter

Dec ' 10

3rd Quarter

Sep ' 10

2nd

Quarter

June '

10

1st

Quarter

Sales 3,541.60 3,232.16 3,474.62 3,105.04 2,965.01Other Income 40.79 39.86 40.55 35.60 58.20

Stock Adjustment 0.00 0.00 0.00 0.00

Raw Material 0.00 0.00 0.00 0.00

Power And Fuel 1,563.69 1,279.74 1,096.83 994.21 995.92

Employee Expenses 361.40 379.72 335.08 320.86 306.53

Excise 0.00 0.00 0.00 0.00

Admin And Selling Expenses 339.38 339.79 333.68 318.60 269.65

Research And DevelopmentExpenses

0.00 0.00 0.00 0.00

Expenses Capitalised 0.00 0.00 0.00 0.00

Other Expeses 1,155.75 1,098.49 1,075.55 1,000.58 990.62

Provisions Made 0.00 0.00 0.00 0.00Operating Profit 121.38 134.42 633.48 470.79 402.29

Interest 214.23 254.00 250.59 249.30 274.47


19/29

Gross Profit -52.06 -79.72 423.44 257.09 186.02

Depreciation 223.47 219.76 230.52 233.96 226.38

Taxation -33.61 -65.97 99.64 0.03 0.02

Net Profit / Loss -123.16 -124.46 118.23 12.40 3.52

Extra Ordinary Item 118.76 112.27 24.95 -10.70 43.90

Prior Year Adjustments -3.22 0.00 0.00 0.00

Equity Capital 86.33 86.33 86.33 86.33 86.33

Equity Dividend Rate 0.00 0.00 0.00 0.00

Agg.Of Non-Prom. Shares (inlacs)

172.65 172.65 172.65 172.65 172.65

Agg.Of NonPromotoHolding(%)

100.00 20.00 20.00 20.00 20.00

OPM(%) 3.42 4.15 18.23 15.16 13.56

GPM(%) -1.45 -2.43 12.04 8.18 6.15

NPM(%) -3.43 -3.80 3.36 0.39 0.11

EPS (in Rs.) -14.27 -14.42 13.70 1.44 0.41

JET AIRWAYS (INDIA) LTD.: RATIO ANALYSIS

March '

11

12 Months

March '

10

12 Months

March '

09

12 Months

March '

08

12 Months

March '

07

12 Months

PER SHARE RATIOS

Adjusted E P S (Rs.) -18.24 -70.21 -192.53 -93.12 -25.69

Adjusted Cash EPS (Rs.) 87.23 41.21 -88.30 -3.03 22.27

Reported EPS (Rs.) 1.12 -54.17 -46.60 -29.31 3.24

Reported Cash EPS (Rs.) 106.60 57.26 57.62 60.78 51.20

Dividend Per Share 0.00 0.00 0.00 0.00 6.00

Operating Profit Per Share (Rs.) 190.07 244.11 69.32 87.32 119.89

Book Value (Excl Rev Res) Per Share

(Rs.)

301.67 95.80 149.97 214.50 243.81

Book Value (Incl Rev Res) Per Share(Rs.)

301.67 306.03 365.68 527.24 259.15

Net Operating Income Per Share (Rs.) 1,479.93 1,209.09 1,340.28 1,020.58 817.50

Free Reserves Per Share (Rs.) -83.33 79.35 133.52 198.05 227.36

PROFITABILITY RATIOS

Operating Margin (%) 12.84 20.18 5.17 8.55 14.66

Gross Profit Margin (%) 5.71 10.97 -2.60 -0.27 8.79

Net Profit Margin (%) 0.07 -4.41 -3.44 -2.83 0.39

Adjusted Cash Margin (%) 5.81 3.35 -6.52 -0.29 2.69

Adjusted Return On Net Worth (%) -6.04 -73.29 -128.38 -43.41 -10.53

Reported Return On Net Worth (%) 0.37 -56.54 -31.07 -13.66 1.32

Return On long Term Funds (%) 5.62 12.12 -1.41 0.74 9.53LEVERAGE RATIOS

Long Term Debt / Equity 5.18 11.94 9.33 5.63 2.75

Total Debt/Equity 5.18 16.80 12.61 6.49 2.88

Owners fund as % of total Source 16.19 5.61 7.34 13.35 25.79

Fixed Assets Turnover Ratio 0.71 0.59 0.62 0.53 1.28

LIQUIDITY RATIOS

Current Ratio 1.09 1.02 1.26 0.95 1.38

Current Ratio (Inc. ST Loans) 1.09 0.33 0.37 0.60 1.07

Quick Ratio 0.93 0.86 1.09 0.77 1.18

Inventory Turnover Ratio 17.97 4,349.40 7,370.16 2,143.82 5,601.41

PAYOUT RATIOS

Dividend payout Ratio (Net Profit) 0.00 0.00 0.00 0.00 216.89

Dividend payout Ratio (Cash Profit) 0.00 0.00 0.00 0.00 13.70

Earning Retention Ratio 100.00 0.00 0.00 0.00 127.32


20/29

Cash Earnings Retention Ratio 100.00 100.00 0.00 0.00 68.49

COVERAGE RATIOS

Adjusted Cash Flow Time Total Debt 17.90 39.06 0.00 0.00 31.49

Financial Charges Coverage Ratio 1.77 1.24 0.48 0.82 1.24

Fin. Charges Cov.Ratio (Post Tax) 1.89 1.27 1.34 1.50 1.49

COMPONENT RATIOS

Material Cost Component(% earnings) 0.00 0.00 0.00 0.00 0.00

Selling Cost Component 0.00 9.43 9.49 11.15 11.34

Exports as percent of Total Sales 44.58 39.11 42.29 29.47 26.39Import Comp. in Raw Mat. Consumed 0.00 0.00 0.00 0.00 0.00

Long term assets / Total Assets 0.75 0.79 0.79 0.76 0.67

Bonus Component In Equity Capital (%) 10.89 10.89 10.89 10.89 10.89

VALUATION

Although, the Aviation sector is getting new players and the competition in the Indian

Sky is to intensify in the years to come, but due to its Unique Business class model and rapid

expansion in international operations will drive companys revenue in future. Aviation

turbine fuel (ATF) costs around 30% of the overall revenue of the company, with the cooling

off of the ATF prices, companys profitability will improve in the quarters to come. At

current PE ratio 242.64 16th September of its FY2011 estimated earnings. We recommend

investors to BUY Jet Airways for Mid-term investment horizon target is around Rs

350 and for Short term is around Rs 300.


21/29

KINGFISHER AIRLINES

Company Overview

Kingfisher Airlines (Kingfisher) is a Bangalore based private airline company of the

UB (United Breweries) Group. UB Group started its aviation business with launching of

Kingfisher in 2005. UB Group currently operates different lines of businesses such as

beverages, alcohol, pharmaceutical, media, research and development, international trading,

fertilizers and infrastructure development. Kingfisher is operating its passenger and cargo

transport service between different cities in India. The company operates as Full Service

Carrier (FSC). On 23rd November 2007, the company has announced its expansion of routes

network with three new services and additional two new destinations such as Lucknow and

Khajuraho. With the launch of these new services, Kingfisher operates 218 flights a day

serving 37 destinations with a fleet of 36 new aircrafts as on 23rd November 2007.

FINANCIALS

KINGFISHER AIRLINES LTD. : QUARTERLY FINANCIALS

(Rs. in Crore)

une ' 11

1stuarter

March ' 11

4thQuarter

Dec ' 10

3rdQuarter

Sep ' 10

2ndQuarter

June ' 10

1stQuarter

Sales 1,881.64 1,677.64 1,658.70 1,382.72 1,640.58

Other Income 29.37 -58.48 17.29 132.94 44.18

Stock Adjustment 0.00 0.00 0.00 0.00 0.00

Raw Material 0.00 0.00 0.00 0.00 0.00

Power And Fuel 845.13 668.43 540.15 479.89 585.57


Excise 0.00 0.00 0.00 0.00 0.00

Admin And Selling Expenses 0.00 0.00 0.00 0.00 0.00

Research And DevlopmentExpenses

0.00 0.00 0.00 0.00 0.00

Expenses Capitalised 0.00 0.00 0.00 0.00 0.00

Other Expeses 887.58 859.74 927.61 808.79 809.11

Provisions Made 0.00 0.00 0.00 0.00 0.00

Operating Profit -24.74 -22.59 22.91 -78.47 82.50

Interest 305.80 289.85 339.60 362.26 321.24

Gross Profit -301.18 -370.91 -299.40 -307.79 -194.56

Depreciation 86.55 61.88 61.28 52.99 64.89

Taxation -126.57 -159.21 -126.19 -131.47 -76.52

Net Profit / Loss -263.54 -355.54 -253.69 -230.82 -187.35

Extra Ordinary Item -4.79 -81.95 -19.19 -1.51 -4.42

Prior Year Adjustments 0.00 0.00 0.00 0.00 0.00

Equity Capital 497.78 497.78 265.91 265.91 265.91

Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00

Agg.Of Non-Prom. Shares (in lacs) 2,060.22 2,060.22 896.91 896.91 896.91Agg.Of Non PromotoHolding(%) 41.39 41.39 33.73 33.73 33.73


22/29

OPM(%) -1.31 -1.34 1.38 -5.67 5.02

GPM(%) -15.76 -22.90 -17.86 -20.30 -11.54

NPM(%) -13.79 -21.95 -15.13 -15.22 -11.12

EPS (in Rs.) -5.29 -7.14 -9.54 -8.68 -7.05

KINGFISHER AIRLINES LTD: SHARE HOLDINGShare Holding Pattern

as on

03/06/2011 31/03/2011 31/12/2010

FaceValue 10.00 10.00 10.00

Share Holder No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

PROMOTER'S HOLDINGForeign Promoters 28680501 5.76 28680501 5.76 28680501 10.79

Indian Promoters 263077125 52.85 263077125 52.85 147537424 55.48

Person Acting in Concert 0 0.00 0 0.00 0 0.00

Sub Total 291757626 58.61 291757626 58.61 176217925 66.27

NON PROMOTER'S HOLDING

Institutional InvestorsMutual Funds and UTI 2595925 0.52 3915184 0.79 12279810 4.62

Banks Fin. Inst. andInsurance

117473333 23.60 117562933 23.62 1258245 0.47

FII's 14404687 2.89 13793712 2.77 15626840 5.88

Sub Total 134473945 27.01 135271829 27.18 29164895 10.97

Other Investors

Private Corporate Bodies 28292971 5.68 28693469 5.76 24936453 9.38

NRI's/OCB's/ForeignOthers

1824533 0.37 1812180 0.36 1513347 0.57

GDR/ADR 0 0.00 0 0.00 0 0.00

Directors/Employees 0 0.00 0 0.00 0 0.00

Government 0 0.00 0 0.00 0 0.00

Others 1557251 0.31 2071962 0.42 3086436 1.16

Sub Total 31674755 6.36 32577611 6.54 29536236 11.11

General Public 39872897 8.01 38172157 7.67 30989827 11.65

GRAND TOTAL 497779223 100.00 497779223 100.00 265908883 100.00

Kingfisher Airlines Ltd: Ratio Analysis

March '

11

12

Months

March '

10

12

Months

March '

09

12

Months

March '

08

9 Months

June ' 07

12

Months

PER SHARE RATIOS

Adjusted E P S (Rs.) -18.49 -51.54 -60.67 -18.64 -55.05

Adjusted Cash EPS (Rs.) -13.65 -43.36 -54.22 -15.94 -51.81

Reported EPS (Rs.) -20.64 -61.95 -60.50 -13.85 -30.97

Reported Cash EPS (Rs.) -15.80 -53.78 -54.05 -11.16 -27.73


Operating Profit Per Share (Rs.) 0.08 9.39 -20.80 -23.95 -19.37

Book Value (Excl Rev Res) Per Share(Rs.)

-59.29 -146.61 -79.93 14.64 28.40


-59.29 -146.61 -79.93 14.64 28.40

Net Operating Income Per Share (Rs.) 127.76 190.59 198.16 107.24 132.89Free Reserves Per Share (Rs.) -107.45 -166.01 -94.05 2.68 15.46

Operating Margin (%) 0.06 4.92 -10.49 -22.32 -14.57


23/29

Gross Profit Margin (%) -3.72 1.71 -13.02 -23.58 -15.55

Net Profit Margin (%) -15.81 -32.04 -27.43 -12.50 -22.92

Adjusted Cash Margin (%) -10.45 -22.43 -24.58 -14.38 -38.34

Adjusted Return On Net Worth (%) 0.00 0.00 0.00 -147.04 -209.52

Reported Return On Net Worth (%) 0.00 0.00 0.00 -109.29 -117.87

Return On long Term Funds (%) -2.45 4.76 -7.90 -36.52 -36.27



Owners fund as % of total Source -85.48 -99.65 -63.14 16.80 29.56Fixed Assets Turnover Ratio 2.82 2.53 2.85 4.61 5.37

LIQUIDITY RATIOS

Current Ratio 1.45 1.34 1.09 1.71 2.33


Quick Ratio 0.69 0.57 0.52 0.87 2.20

Inventory Turnover Ratio 33.89 4,659.30 5,738.39 0.00 28.80

PAYOUT RATIOS





COVERAGE RATIOSAdjusted Cash Flow Time Total Debt 0.00 0.00 0.00 0.00 0.00

Financial Charges Coverage Ratio 0.10 0.14 0.02 -0.63 -0.49


COMPONENT RATIOS



Exports as percent of Total Sales 13.09 13.79 4.54 3.42 18.56

Import Comp. in Raw Mat. Consumed 0.00 0.00 0.00 0.00 0.00


Bonus Component In Equity Capital(%)

5.48 10.26 10.26 20.09 20.14

Kingfisher Airlines-Air Deccan

Kingfisher Airlines, a premium Full-Service Carrier, is a private airline based in

Bangalore, India. Currently, it holds the status of India's largest domestic airline, providing

world-class facilities to its customers. Owned by Vijay Mallya of United Beverages Group,

Kingfisher Airlines started its operations on May 9, 2005, with a fleet of 4 brand new Airbus

- A320, a flight from Mumbai to Delhi to start with.

Air Deccan is Indias first LCC. It was founded and operated by Deccan Aviation Ltd.

by Captain Gopinath in 2003 with regular scheduled flights from Bangalore to Mangalore

and Hubli. When it started its operations, Deccan was known popularly as the common man's

airlines. Air Deccan triggered price wars in the Indian Skies which forced other players to

match Air Deccans prices.

In 2007, Kingfisher Airlines acquired a 26% equity stake in Air Deccan and became

the largest single shareholder in Deccan Aviation Ltd. It was agreed that Kingfisher would

continue to serve the corporate and business travel while Air Deccan would focus on serving


24/29

the low fare segment but with improved financial prospects for both carriers.

Kingfisher later increased its stake to 46%, and took control of the management of Air

Deccan, upgrading it to a value-based airline with higher airfare and repositioned it as

'Simplifly Deccan'. Air Deccan airlines merged with Kingfisher Airlines and decided to

operate as a single entity from April, 2008. Following the merger of Deccan with Kingfisher,

in August 2008, Kingfisher renamed Deccan as Kingfisher Red. After the merger, the

company has a combined fleet of 71 aircrafts, connects 70 destinations and operates 550

flights in a day. The combined entity has a market share of 33%.

Benefits

The key benefits to Kingfisher Airlines and Air Deccan on account of this were as

under:

Legally, if an airline wants to operate overseas it must have a domestic status ofhaving operated for 5 yrs and therefore in case of kingfisher operating overseas

became easier.

Besides, operational synergies (engineering, inventory management and groundhandling services, maintenance and overhaul), the management and staff of both the

airlines would be integrated. They would be stronger vis-a-vis lessons, aircraft

manufacturers, and will also spend less on training and employees.

The merger would create a more competitive business in scale and there would bescope to emerge as market leader.

Critical Analysis: Kingfisher Airlines-Deccan: Not as easy as it sounded

The Kingfisher Airlines acquisition of Air Deccan is another case of underestimating

the challenges of merging two carriers. It is a venture that has proved to be costly. However,

integrating such different carriers (one, a classic low cost airline and the other a 5 star

carrier), has proven to be extremely difficult. The huge combined network and distinct in-

flight products of the two carriers, has created duplication and confusion about the brand.

This has been damaging to Kingfisher, with repercussions for its financial performance. The

combined entity today has a large network and diverse operations that are proving to be hard

to manage.


25/29

VALUATION


Sky is to intensify in the years to come, but due to its Unique Business class model and rapid

expansion in international operations will drive companys revenue in future. Aviation


off of the ATF prices, companys profitability will improve in the quarters to come.

As it can be seen around from todays market conditions many of the companies in Aviation

sector are in trouble making losses its advisable for the investors to not to lose their interest

in the companies as from the long term point of view as the growing passenger carriers the

stock price of many of the companies is going to go up in next 5 to 10 years.

At current P/E Ratio of -1.17 on 23rd September of its FY2011 earnings. We recommend

investors to BUY Kingfisher Airlines Ltd forMid-term investment horizon target is

around Rs 35 and for Short term is around Rs 28.

Investors should invest in Kingfisher Airlines rights issue. The company is raising capital

through rights issue and low price of crude oil will give benefit to company. The stock is

looking good. It can give attractive return in future.


26/29

SPICE JET

SpiceJet is a low-cost airline headquartered in Gurgaon, India. It began service in

May 2005 and by 2008, it was India's second-largest low-cost airline in terms of market

share. SpiceJet was voted as the best low-cost airline in South Asia and Central Asia region

by Skytrax in 2007. SpiceJet is a budget airline operating in India and is a reincarnation of

ModiLuft. It was formed by Ajay Singh, Sanjay Malhotra and the Kansagra family. It aims to

compete with Indian Railways for those passengers who travel in the air conditioned coaches

of the latter.

On 15 July 2008 billionaire Wilbur Ross suggested he would invest 345 crore

(US$76.94 million) in the airline. SpiceJet accepted an offer in principle from a US-based

private equity firm that would make these funds available. Indian media baron Kalanidhi

Maran acquired 37.7% in the business in June 2010.SpiceJet flies to 22 destinations across

India, Nepal and Sri Lanka. It commenced international operations with flights from Chennai

to Colombo, Sri Lanka on 7 October 2010, and flights from New Delhi to Kathmandu, Nepal

on 9 October 2010.

SPICEJET LTD.: QUARTERLY FINANCIALS

(Rs. in Crore)

June ' 11

1st

Quarter

March ' 11

4th

Quarter

December '

10

3rd Quarter

September '

10

2nd Quarter

June ' 10

1st

Quarter

Sales 945.64 768.23 830.13 628.17 716.86

Other Income 3.34 -9.62 7.18 12.62 7.56

Stock Adjustment 0.00 0.00 0.00 0.00 0.00

Raw Material 0.00 0.00 0.00 0.00 0.00

Power And Fuel 505.17 107.04 599.26 260.80 259.13


Excise 0.00 0.00 0.00 0.00 0.00

Admin And Selling Expenses 0.00 0.00 0.00 0.00 0.00Research And DevlopmentExpenses

0.00 0.00 0.00 0.00 0.00

Expenses Capitalised 0.00 0.00 0.00 0.00 0.00

Other Expeses 430.32 676.13 36.05 310.96 328.71

Provisions Made 0.00 0.00 0.00 0.00 0.00

Operating Profit -66.78 -60.35 114.04 3.49 67.00

Interest 5.99 1.17 0.97 1.37 3.60

Gross Profit -69.43 -71.14 120.25 14.73 70.96

Depreciation 2.54 2.52 2.29 2.10 2.00

Taxation 0.00 -15.03 23.51 2.52 13.74

Net Profit / Loss -71.96 -58.62 94.45 10.11 55.22

Extra Ordinary Item 0.00 2.28 0.00 0.00 0.00Prior Year Adjustments 0.00 -2.28 0.00 0.00 0.00


27/29


28/29

SPICEJET LTD.: RATIO ANALYSIS

March '

11

12

Months

March '

10

12

Months

March '

09

12

Months

March '

08

12 Months

March '

07

10 Months

PER SHARE RATIOS

Adjusted E P S (Rs.) 2.55 1.75 -15.57 -8.03 -5.62Adjusted Cash EPS (Rs.) 2.77 2.07 -15.27 -7.60 -5.38

Reported EPS (Rs.) 2.50 2.77 -14.13 -5.50 -2.94

Reported Cash EPS (Rs.) 2.72 3.09 -13.82 -5.07 -2.70


Operating Profit Per Share (Rs.) 1.66 17.77 -2.16 0.13 -1.14

Book Value (Excl Rev Res) Per Share(Rs.)

7.92 -14.15 -17.82 1.16 7.67


7.92 -14.15 -17.82 1.16 7.67

Net Operating Income Per Share (Rs.) 71.03 90.17 70.10 53.81 26.61

Free Reserves Per Share (Rs.) -17.79 -24.90 -28.29 -8.95 -2.33

PROFITABILITY RATIOSOperating Margin (%) 2.33 19.70 -3.07 0.24 -4.27

Gross Profit Margin (%) 2.02 19.35 -3.50 -0.35 -5.18

Net Profit Margin (%) 3.41 3.02 -19.43 -9.60 -10.39

Adjusted Cash Margin (%) 3.79 2.25 -21.00 -13.27 -19.02

Adjusted Return On Net Worth (%) 32.74 0.00 0.00 -690.69 -73.30

Reported Return On Net Worth (%) 32.02 0.00 0.00 -473.12 -38.32

Return On long Term Funds (%) 34.70 994.35 288.98 18.01 1.17

LEVERAGE RATIOS



Owners fund as % of total Source 78.64 -386.69 -817.10 4.92 29.92

Fixed Assets Turnover Ratio 25.24 24.73 20.70 17.36 12.21LIQUIDITY RATIOS

Current Ratio 0.58 0.66 0.73 1.00 0.69


Quick Ratio 0.55 0.65 0.71 0.99 0.68

Inventory Turnover Ratio 141.50 148.16 0.00 6,815.74 1,123.59

PAYOUT RATIOS





COVERAGE RATIOS

Adjusted Cash Flow Time Total Debt 0.76 8.76 0.00 0.00 0.00

Financial Charges Coverage Ratio 13.23 1.14 0.02 0.32 0.08


COMPONENT RATIOS



Exports as percent of Total Sales 0.00 2.73 8.82 13.48 15.93

Import Comp. in Raw Mat. Consumed 0.00 0.00 0.00 0.00 0.00


Bonus Component In Equity Capital (%) 0.00 0.00 0.00 0.00 0.00


29/29

VALUATION


Sky is to intensify in the years to come, but due to its Unique Business class model and rapidexpansion in international operations will drive companys revenue in future. Aviation


off of the ATF prices, companys profitability will improve in the quarters to come.

As it can be seen around from todays market conditions many of the companies in

Aviation sector are in trouble making losses its advisable for the investors to not to lose their

interest in the companies as from the long term point of view as the growing passenger

carriers the stock price of many of the companies is going to go up in next 5 to 10 years.

At current P/E Ratio of 9.22 on 23rd September of its FY2011 earnings. We

recommend investors to BUY Spicejet Ltd. forMid-term investment horizon target is

around Rs 45 and for Short term is around Rs 32. Investors should invest in Spicejet with a

stoploss of Rs 21. The stock has strong support at Rs 20-21. It can give attractive return in

future.

Aviation Project Report

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