A Summer Training Project Report On: "Working Capital" at Air India Limited

A
Summer Training Project Report
On
“WORKING CAPITAL”
At
AIR INDIA LIMITED
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF
MASTERS OF BUSINESS ADMINISTRATION (FINANCE)
TRAINING SUPERVISOR SUBMITTED BY
MR. RAHUL BHATNAGAR JYOTI SAINI
MANAGER ROLL NO.: 180101040026
{FINANCE} MBA-FINANCE
HARYANA SCHOOL OF BUSINESS
GURU JAMBHESHWAR UNIVERSITY OF SCIENCE AND TECHNOLOGY
HISAR, HARYANA
(SESSION 2018-2020)
DECLARATION
I Jyoti Saini, Roll No. 180101040026 MBA (FINANCE) IIIrd Semester of the Haryana School of
Business hereby declare that the Sumer Training report entitled “A STUDY ON WORKING
CAPITAL MANAGEMENT” at AIR INDIA LTD. is an original work and the same has not
been submitted to any other institute for the award of any other degree.
I also declare that I have done my work very sincerely and accurately up to my knowledge and
information provided to me. Even if any mistake or error is found in the report, I request my
readers to point out such errors and guide me to remove such errors to avoid such mistakes in
future.
Faculty’s Signature Candidate’s Signature
(Signature of Director/Principal of the Institute)

CERTIFICATE
This is to certify that JYOTI SAINI student of Guru Jambheshwar University of

Science & Technology, Hisar, Haryana has completed his practical training with AIR
INDIA LIMITED successfully. The duration of the training was from 3rd June 2019 to
26th July 2019.
During the training we found him sincere, hardworking and technically sound & result
oriented. He worked well as part of a team during his tenure.
We take this opportunity to thank and wish him all the best for future endeavors.
For AIR INDIA LIMITED
Authorized signatory
PREFACE
Summer training is essential for the fulfillment of MBA curriculum. The practical knowledge is
far different from the bookish knowledge that a student achieves in an institution. Theoretical
knowledge just provides the base and it’s not sufficient to produce a good manager that’s why
the practical knowledge is needed.
I have done my project report on the topic “WORKING CAPITAL”. The project report
focuses on the important aspect of WORKING CAPITAL MANAGEMENT. AIR INDIA
provides necessary inputs required to complete my project report.
It is a splendid experience to work with the professionals and get to know a lot of things. The
successful completion of this project was a unique experience for me and achieved a great
knowledge.
Therefore the research product is an essential requirement for the student of MBA. This research
project helps the student to utilize their skill properly. So in accordance with the requirement of
the MBA I prepared this report.
JYOTI SAINI
MBA FINANCE
180101040026
ACKNOWLEDGEMENT
I would like to express my gratitude to all those who have been instrumental in the preparation
of my project report.
I am thankful to the organization AIR INDIA, PALAM for providing me the opportunity to
undertake this internship study and allowing me to carry out my project.
I am deeply grateful to my company guide and mentor, Mr RAHUL BHATNAGAR, who

guided me to take this project and helped me bring it to conclusion. I am thankful to him for his
continuous support, advice and words of encouragement.
I am also grateful to Prof. N.S. Malik, the director of Haryana School of Business, for him
guidance and for giving me an opportunity to work.
Finally I would express my deep regards for all those who directly and indirectly helped me to
execute my project.
Jyoti Saini
MBA FINANCE (F)
Haryana School of Business

SL.NO. CONTENTS PAGE NO.
1 CHAPTER 1
INTRODUCTIONTO THE INDUSTRY 9 TO 20

1.1 COMPANY PROFILE
1.2 MISSION
1.3 OJECTIVE
1.4 VISION
1.5 INCORPORATION
1.6 BRAND LOGO
1.7 OPERATIONS
1.8 FLEET
1.9 SWOT ANALYSIS
2 CHAPTER 2
RESEARCH METHODOLOGY 21 TO 23
2.1 PURPOSE OF THE STUDY
2.2 SIGNIFICANCE OF THE STUDY
2.3 OBJECTIVE OF RESEARCH
2.4 NATURE OF DATA
2.5 RESEARCH DESIGN
2.6 SCOPE OF THE RESEARCH
2.7 RESEARCH METHOD
3 CHAPTER 3
DAILY ACTIVITY REPORT 24 TO 25
4 CHAPTER 4
INTRODUCTION OF WORKING CAPITAL 26 TO 46

4.1 WHAT IS WORKING CAPITAL
4.2 NEED OF WORKING CAPITAL
4.3 WORKING CAPITAL MANAGEMENT
4.4 CLASSIFICATION WORKING CAPITAL
4.5 WORKING CAPITAL CYCLE
4.6 INVENTORY MANAGEMENT
4.7 CASH MANAGEMENT
4.8 RECEIVABLES MANAGEMENT
4.9 MANAGING PAYABLES
4.10 FINANCING CURRENT ASSETS
4.11 ADVANTAGE OF ADEQUATE WORKING
CAPITAL
4.12 FACTORS AFFECCTING W.C. MGNMT
CHAPTER 5
5 ANALAYSIS OF WORKING CAPITAL 47 TO 62

5.1 WORKING CAPITAL FINANCING
5.2 CASH MANAGEMENT
5.3 WORKING CAPITAL RATIO
5.5 PAYABLES MANAGEMENT
5.7 LIMITATIONS OF THE STUDY
6 CHAPTER 6
CONCLUSION 63 TO 65
7 CHAPTER 7
BIBLOGRAPHY 66
1. INTRODUCTION TO THE INDUSTRY
AIR INDIA
1.1 COMPANY PROFILE

Air India, formerly Air-India, airline founded in 1932 (as Tata Airlines) that grew into an
international airline owned by the Indian government; it serves southern and east Asia,
the Middle East, Europe, Africa, the United States, and Canada. Headquarters are
in Bombay(Mumbai).
The first scheduled service was inaugurated in 1932 by J.R.D. Tata, flying mail and passengers
between Karāchi, Ahmadābād, Bombay, Bellary, and Madras. By 1939 routes had been
extended to Trivandrum, Delhi, Colombo, Lahore, and intermediate points. After World War II,
in 1946, Tata Airlines was converted into a public company and renamed Air-India Limited.
Two years later, to inaugurate international services between Bombay (Mumbai)
and Cairo, Geneva, and London, Air-India International Limited was formed.
In 1953 India nationalized all Indian airlines, creating two corporations—one for domestic
service, called Indian Airlines Corporation (merging Air-India Limited with six lesser lines), and
one for international service, Air-India International Corporation. The latter’s name was
abbreviated to Air-India in 1962. In the following decades as India’s flag carrier, the airline
extended its international routes to all continents except South America and Australia, and it
expanded its cargo operations. To gain a competitive advantage in computerized reservation
searches, the airline removed the hyphen from its name in 2005 to become Air India.
1.2 MISSION
 To create and maintain consumers and customers of international transportation by providing

competitive superior package of services and generate a sustainable surplus by keeping the
assets in a new and contemporary state and deploy the net surplus for growth and for
justifiable reward to the stakeholder.
 To generate a net inflow of foreign exchange and seek its progressive enlargement through a
larger share of the international market.
 To contribute through competitive success of Air India Ltd. To the national preparedness for
the inevitable progressive globalisation of the economy by generating confidence in the
Indian business genius.
 To inspire people to make India win and take pride in India and Air-India Limited.
 To enhance its competitive market standing and image as an international carrier.
 To achieve the highest level of safety of operations.
 To provide safe, efficient, adequate, economical and properly co-ordinate international air-
services, and to develop such services to the best advantage.
 To provide high standards of services to passengers and customers on ground and in the air.
 To achieve, maintain and improve its rightful place in the international air transport industry.
 To make an increasing contribution to the national economy and maximize revenues with
efficient fleet utilization and route network.
 To promote international tourism to India and to improve the nations foreign exchange
resources.
 To assist in the promotion of nation’s export trade.
 To improve the national economy by encouraging local skills and technology to get
equipment and materials other than aircraft, indigenously manufactured with the intention to
curtail imports steadily.
 To promote healthy relations with the various employee’s unions for ensuring employee’s
co-operation in the performance of the company’s activities.
 To provide wider participation amongst its employees in management functions.

1.3 Objective:
Achieve unit revenue, unit cost, profitability and service level target, based on benchmark
parameters.
1.4 Vision:
 To rationalize all business processes around passenger and departure control applications
using industry standards with a view to enhance revenues and reduce cost.
 Upgrade participation levels with various Global Distribution Systems (GDS) to the
highest level.
 Provide for various modes of booking and check-in and thus extend the convenience to
the customers.
 Timely and accurate revenue determination per flight departure due to uplift of e-ticket
coupons and speedier interline settlements.
 Ensure that NACIL hosted system has incorporated latest Industry Standard (IS) changes
relevant for all PSS applications as per requirements.
 Provide the Customers using the airline IBE for passenger services an experience to
cherish. Provide a world class Frequent Flyer system with comprehensive interface with
other frequent flyer systems of Global Alliances partner airlines.
1.5 INCORPORATION
Air India Limited
Type State Owned Enterprise
Industry Aviation
Founded 30 March 2007
Headquarters Airlines House, New Delhi
Key people Ashwani Lohani

(Chairman & MD)[1]
 Airline
Services
 Ground Handling
Services
 Hotels
 Services
Revenue ₹142.551
billion(US$2.1 billion) (2011)[2]
Owner Government Of India
Number of 28,085 (2011)

employees
Subsidiaries  Hotel Corporation of India

Limited
 Air India Air Transport
Services Limited
 Air India Engineering
Services Limited
 Air India Express
 Alliance Air[3]
Website www.airindia.com
1.6 The Air India Brand

Logo/Livery
"The logo of the new airline is a red coloured flying swan with the 'Konark Chakra' in orange,
placed inside it. The flying swan has been morphed from Air India's characteristic logo, 'The
Centaur', whereas the 'Konark Chakra' is reminiscent of Indian's logo".
The new logo features prominently on the tail of the aircraft. While the aircraft is ivory in
colour, the base retains the red streak of Air India. Running parallel to each other are the orange
and red speed lines from front door to the rear door, subtly signifying the individual identities
merged into one. The brand name 'Air India' runs across the tail of the aircraft.
The Maharajah
'We call him a Maharajah for want of a better description. But his blood isn't blue. He may look
like royalty, but he isn't royal.' These are the words of Bobby Kooka, the man who conceived the
Maharajah.
This now familiar lovable figure first made his appearance in Air India way back in 1946, when
Bobby Kooka as Air India's Commercial Director and Umesh Rao, an artist with J.Walter
Thompson Ltd., Mumbai, together created the Maharajah.
The Maharajah began merely as a rich Indian potentate, symbolizing graciousness

and high living. And somewhere along the line his creators gave him a distinctive personality:
his outsized moustache, the striped turban and his aquiline nose.
What began as an attempt as a design for an inflight memo pad grew to take Air India's sales and
promotional messages to millions of travellers across the world. Today, this naughty diminutive
Maharajah of Air India has become a world figure. He can be a lover boy in Paris, a sumo
wrestler in Tokyo, a pavement artist, a Red Indian, a monk... he can effortlessly flirt with the
beauties of the world. And most importantly, he can get away with it all. Simply because he is
the Maharajah!
He has completed 56 years and become the most recognizable mascot the world
over. His antics, his expressions, his puns have allowed Air India to promote it's services with a
unique panache and an unmatched sense of subtle humour. In fact he has won numerous national
and international awards for Air India for humour and originality in publicity.
And as with all great men, he too has had his critics. But the millions of travellers whose lives he
has touched far outnumber them. In fact, to them, the Maharajah with his inimitable style, charm
and wit is a very real person. He's almost like a friend to every Air India traveller. A friend who
reaches out with warmth and hospitality, even to the farthest corners of the world.
1.7 Air India Operations:
Air India flies to a total of 84 destinations including 48 domestic destinations and 36

international destinations in 24 countries across four continents around the world. Air India has
major primary hubs at Indira Gandhi International Airport, New Delhi and secondary hub at
ChhatrapatiShivaji International Airport, Mumbai .
Domestic Operations:
International Operations:
NETWORK OF AIR
Air India serves 9 domestic destinations and 16 international destinations in 10 countries.
Together with its subsidiaries the group connects 93 destinations worldwide in 24 countries
across Africa, Asia, Europe and North America.
1.8 Fleet
As of July 2018, the Air India fleet consists of the following aircraft:
Air India Fleet
Passengers
In
Aircraft Orders Notes
Service
F J Y Total
— 8 114 122
Airbus A319-100 22 — 6 Aircraft stored[83]
— — 144 144
— — 168 168
Airbus A320-200 26 —
— 12 138 150
To be dry-leased from Jan

Airbus A320neo — 14 — 12 150 162[84]
2017[85][86]
Airbus A321-200 20 — — 12 170 182
Boeing 747-400 5 — 12 26 385 423
Boeing 777-200LR 3 — 8 35 195 238
Boeing 777-300ER 12 3 4 35 303 342 To be delivered in 2018
Boeing 787–8 21 6 — 18 238 256 2 are expected end of 2016
23
Total 108
Fleet information
In 1932, Air India started operations with De Havilland Puss Moth. It inducted its first Boeing
707–420 named Gauri Shankar (registered VT-DJJ), thereby becoming the first Asian airline to
induct a jet aircraft in its fleet and on 4 August 1993, Air India took the delivery of its first
Boeing 747–400 named Konark (registered VT-ESM). The airline's first Boeing 777-200LR
aircraft was delivered on 26 July 2007, which was named Andhra Pradesh. Air India received its
first Boeing 777-300ER aircraft on 9 October 2007 and the aircraft was named asBihar. Air
India received its first Boeing 787 dreamliner aircraft on 6 September 2012 and commenced
flights on 19 September 2012.
Apart from the Boeing aircraft, Air India also operates a wide range of Airbus aircraft. In 1989,
Indian Airlines introduced the Airbus A320-200 aircraft, which Air India now uses to operate
both domestic and international short haul flights. In 2005, Indian Airlines introduced the
smaller, A319, which are now used mainly on domestic and regional routes. After the merger in
2007, Air India inducted the biggest member of the A320 family, the A321, to operate mainly on
international short haul and medium haul routes. At the same time, Air India leased the Airbus
A330s to operate on medium-long haul international routes. As of February 2013, Air India
operates 62 Airbus A320 family aircraft. Air India One (also referred to as AI-1 or AIC001) is
the call sign of any Air India aircraft carrying the Prime Minister, President or theVice
President. Air India One operates on one of the five Boeing 747-400s that Air India currently
owns as VIP flights. Customised Embraer 135 and Boeing Business Jetsare also used.
1.9 SWOT ANALYSIS

For a country of continental size like India, a strong reliable and efficient civil aviation sector
goes a long way in promoting and sustaining tourism. Air India being the undoubted leader in
this industry cannot operate in a vacuum. It need to keep its eyes and ears open to survive in the
liberalized economy of our country, which has paved a way for any private airline to operate
along with it. The internal and external environment contained various strengths, weakness,
opportunities and threats which need to be identified.
SWOT Analysis of Air India
Strength
 Strong backing by the Government of India

 Brand new fleet of aircraft and owns most updated fleet
 Its information systems are advanced
 Known for its unique and high quality “Maharaja” advertising
 Presence in nearly 54 countries
 Flying to 61 destinations within India
Weakness
 Labour problem and political intervention is a cause of worry

 Financial crises leading to payment issues of employees
 Low profitability and utilization of capacity
 Airline high cost structure and compulsion of being a public sector unit are the reasons it
had been making a loss
Opportunities
 Dedicated set of customers

 Can leverage on brand new fleet
 Expansion of routes and international destinations
 Solving international issues regarding workforce can highly boost image and operations
 The routes agreement is easier to achieve
 The number of foreign visitors and investors to India is increasing rapidly
 Complementary industry like tourism will increase demand for airline services
 Customers are getting wealthier, tend to be less price conscious and prefer to choose
quality service over cost
Threats
 Rising labour costs

 Rising fuel costs
 Faces imminent aggressive competition from world leading airlines and price wars
triggered by domestic players
 Losing market share due to other airlines
2. RESEARCH METHODOLOGY
Research is a common parlance refers to searching for knowledge. One can also define research
as a scientific search for pertinent information on a special topic. In fact research is an art of
scientific investigation.
2.1 Purpose Of Study
Proper management of working capital is essential to a company’s fundamental financial

health and operational success as a business. A hallmark of good business management is the
ability to utilize working capital management to maintain a solid balance between growth,
profitability and liquidity.
A business uses working capital in its daily operations; working capital is the difference between
a business' current assets and current liabilities or debts. Working capital serves as a metric for
how efficiently a company is operating and how financially stable it is in the short-term. The
working capital ratio, which divides current assets by current liabilities, indicates whether a
company has adequate cash flow to cover short-term debts and expenses.
2.2 Significance of study

The current assets of a typical manufacturing firm account for over half of its total assets. For a
distribution company, they account for even more. Excessive levels of current assets can easily
result in a firm realizing a substandard return on investment. However, firms with too few
current assets may incur shortage and difficulties in maintaining smooth operations.
For small companies, current liabilities are the principal source of external financing. These do
not have access to the longer term capital markets capital markets, other than to acquire a
mortgage on a building. The fast growing but larger company also makes use of current liability
financing. For these reasons, the financial manager and staff devote a considerable portion of
their time to working capital matters. The management of cash, marketable securities, accounts
receivable, accounts payable, accruals, and other means of short-term financing is the direct
responsibility of the financial manager; only the management of inventories is not. Moreover,
these management responsibilities require continuous day-to-day supervision. Unlike dividend
and capital structure decisions, you cannot study the issue, reach a decision, and set the matter
aside for many months to come. Thus, working capital management is important, if for no other
reason than the proportion of the financial managerâ€™s time that must be devoted to it. More
fundamental, however, is the effect that working capital decisions have on the companyâ€™s
risk, return, and share price.
2.3 OBJECTIVE OF RESEARCH:
The Objective of research have been analysed are as follows:
1. Operating Cycle
2. Cash Management
3. Financing of Working capital
4. Inventory Management
2.4 NATURE OF DATA
There are several ways of collecting the appropriate data which differ considerably in context of
money, cost, time and other sources at the disposable of the researcher.
There are two types of data:
 Primary data
 Secondary data
 Primary Data
Primary data are those which are collected afresh and for the first time, and thus happen to be
original in character. I have used
 Direct communication with respondent, and
 Observation
 Secondary Data
Secondary data are those which have already been collected by someone else and have already
been passed through statistical process.
In this project report, both types of data have been used.

2.5 RESEARCH DESIGN
Research design is concerned with makings specific questions. Good research design should
make it possible to draw valid inferences from data in terms of generalization, association and
causality. There are many types of research designs but, my project involves Analytical &
Descriptive research design.
2.6 SCOPE OF THE STUDY
 The study is extended to the finance department OF AIR INDIA LTD.

 The study is limited based on data provided by the company’s financial statements. So
the limitations of the statements are equally applicable of this study.
 The study conducted on working capital management of AIR INDIA LIMITED.Covers
all the financial area of working capital including how it invests their fundsand how it
analyses.
2.7 RESEARCH METHODS
Research methods may be understood as those methods/techniques that are used for conduction
of research. All those methods which are used by the researcher during the course of studying
his research problem are termed as research methods. Keeping in view, the research methods can
be put into following three groups:
 In the first group we include those methods which are concerned with the collection of
data. These methods will be used where the data already available are sufficient to arrive
at the required solution.
 The second group consists of those statistical techniques which are used to establish
relationships between the data and the unknown.
 The third group consists of those methods which are used to evaluate the accuracy of the
obtained results.
3. Daily Activity Report
Date List of activities for the day My learning for the day
03-JUNE- Introduction to AIR INDIA Learn about company.
2019
04-JUNE- ECS Basic concepts of ECS.

2019
To
06-JUNE
2019
07-JUNE- ZFI’S Knowledge of ZFI and entries in
2019 excel.
10-JUNE- ZFI’S Hotel bills.

2019
To
21-JUNE-
2019
24-JUNE- SAP Knowledge of SAP and vender
2019 payment.
To
26-JUNE-
2019
27-JUNE- Vendor bill entries Knowledge about Vendor bills
2019
To
29-JUNE-
2019
01-JULY- Entries in SAP How entries are paased in SAP
2019
To
06-JULY-
2019
08-JULY- Entries regarding Payment of Vendors Payment system known
2019
To
13-JULY-
2019
15-JULY- SAP Hospital bills entries in sap
2019
And
20-JULY-
2019
22-JULY- Talked about report
2019
23-JULY- Preparing Project Report Various aspects of Report making
2019
To
26-JULY-
2019
29-JUlY- Take a day off to have fun with other Quality time
2019 interns
30-JULY- Training Certificate taken Bid farewell to the staff employees.
2019
4. INTRODUCTION TO WORKING CAPITAL
“Working Capital is the Life-Blood and Controlling Nerve Centre ofa business”
Management is an art of anticipating and preparing for risks, uncertainties and overcoming
obstacles. An essential precondition for sound and consistent assets management is establishing
the sound and consistent assets management policies covering fixed as well as current assets. In
modern financial management, efficient allocation of funds has a great scope, in finance and
profit planning, for the most effective utilization of enterprise resources, the fixed and current
assets have to be combined in optimum proportions.
Working capital in simple terms means the amount of funds that a company requires for
financing its day-to-day operations. Finance manager should develop sound techniques of
managing current assets.
4.1 WHAT IS WORKING CAPITAL?
Working capital refers to the investment by the company in short terms assets such as cash,
marketable securities. Net current assets or net working capital refers to the current assets less
current liabilities.
Symbolically, it means,
Net Current Assets = Current Assets Current Liabilities.
In accounting,” Working capital is the difference between the inflow and outflow of funds. In
other words, it is the net cash inflow. It is defined as the excess of current assets over current
liabilities and provisions. In other words, it is net current assets or net working capital.
Working capital represents the total of all current assets. In other words it is the Gross working
capital, it is also known as Circulating capital or Current capital for current assets are rotating in
their nature.A study of working capital is of major importance to internal and external analysis
because of its close relationship with the day-to-day operations of a business. Working Capital is
the portion of the assets of a business which are used on or related to current operations, and
represented at any
The funds required and acquired by a business may be invested to two types of assets:
1. Fixed Assets.
2. Current Assets
Fixed assets arethose which yield the returns in the due course of time. The various decisions
like in which fixed assets funds should be invested and how much should be invested in the
fixed assets etc. are in the form of capital budgeting decisions. This can be said to be fixed
capital management.
Other types of assets are equally important i.e. CurrentAssets.
These types of assets are required to ensure smooth and fluent business operations and can be
said to be life blood of the business. There are two concepts of working capital — gross and net.
Gross working capital refers to gross current assets. Net working capital refers to the difference
between current assets and current liabilities. The term current assets refers to those assets held
by the business which can be converted into cash within a short period of time of say one year,
without reduction in value. The main types of current assets are stock, receivables and cash. The
term current liabilities refer to those liabilities, which are to be paid off during the course of
business, within a short period of time say one year. They are expected to be paid out of current
assets or earnings of the business. The current liabilities mainly consist of sundry creditors, bill
payable, bank overdraft or cash credit, outstanding expenses etc.
The working capital management precisely refers to management of current assets. A firm’s
working capital consists of its investment in current assets, which include short-term assets such
as:
 Cash and bank balance,

 Inventories,
 Receivables (including debtors and bills),
 Marketable securities.
 Working capital is commonly defined as the difference between current assets and
4.2 NEED FOR WORKING CAPITAL

Working Capital is an essential part of the business concern. Every business concern must
maintain certain amount of Working Capital for their day-to-day requirements and meet the
short-term obligations.
Working Capital is needed for the following purposes.
1. Purchase of raw materials and spares: The basic part of manufacturing process is, raw
materials. It should purchase frequently according to the needs of the business concern.
Hence, every business concern maintains certain amount as Working Capital to purchase raw
materials, components, spares, etc.
2. Payment of wages and salary: The next part of Working Capital is payment of wages
and salaries to labour and employees. Periodical payment facilities make employees perfect
in their work. So a business concern maintains adequate the amount of working capital to
make the payment of wages and salaries.
3. Day-to-day expenses: A business concern has to meet various expenditures regarding the
operations at daily basis like fuel, power, office expenses, etc.
4. Provide credit obligations: A business concern responsible to provide credit facilities to

the customer and meet the short-term obligation. So the concern must provide adequate
Working Capital.
4.4 WORKING CAPITAL MANAGEMENT
To start any business, First of all we need finance and the success of that business entirely
depends on the proper management of day-to-day finance and the management of this short term
capital or finance of the business is called Working Capital Management.
Working Capital is the key difference between the long term financial management and short
term financial management in terms of the timing of cash. Working capital management is a
short term financial management. Working capital management is concerned with the problems
that arise in attempting to manage the current assets, the current liabilities & the inter
relationship that exists between them. The current assets refer to those assets which can be easily
converted into cash in ordinary course of business, without disrupting the operations of the firm.
Working capital management or short-term financial management is a significant facet of
financial management. It is important due to 2 reasons:
 Investment in current assets represents a substantial portion of total investment

 Investment in current assets and the level of current liabilities have to be geared quickly
to changes in sales.
Working capital involves activities such as arranging short-term finance, negotiating favorable
credit terms, controlling the movement of cash, administrating accounts receivables, and
monitoring the investment in inventories also take a great deal of time.
Management of working capital is concerned with the problem that arises in attempting to
manage the current assets, current liabilities. The basic goal of working capital management is to
manage the current assets and current liabilities of a firm in such a way that a satisfactory level
of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations
are bad for any firm. There should be no shortage of funds and also no working capital should be
ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its
probability, liquidity and structural health of the organization. So working capital management is
three dimensional in nature as:
 It concerned with the formulation of policies with regard to profitability, liquidity and
risk.
 It is concerned with the decision about the composition and level of current assets.
 It is concerned with the decision about the composition and level of current liabilities.
COMPOSITION OF WORKING CAPITAL
 Major Current Assets

1) Cash in hand and cash at bank
2) Bills receivables
3) Sundry debtors
4) Short term loans and advances.
5) Inventories of stock as:
a. Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6) Temporary investment of surplus funds.
7) Prepaid expenses
8) Accrued incomes.
9) Marketable securities.
 Major Current Liabilities

1) Accrued or outstanding expenses.
2) Short term loans, advances and deposits.
3) Dividends payable.
4) Bank overdraft.
5) Provision for taxation , if it does not amt. to app. Of profit.
6) Bills payable.
7) Sundry creditors.
The gross working capital concept is financial or going concern concept whereas net working
capital is an accounting concept of working capital. Both the concepts have their own merits.
The gross concept is sometimes preferred to the concept of working capital for the following
reasons:
 It enables the enterprise to provide correct amount of working capital at correct time.
 Every management is more interested in total current assets with which it has to operate
then the source from where it is made available.
 It take into consideration of the fact every increase in the funds of the enterprise would
increase its working capital.
 This concept is also useful in determining the rate of return on investments in working
capital.
The Goal of Capital Management is to manage the firm s current assets & liabilities, so that the
satisfactory level of working capital is maintained. If the firm can not maintain the satisfactory
level of working capital, it is likely to become insolvent & may be forced into bankruptcy. To
maintain the margin of safety current asset should be large enough to cover its current assets.
Main theme of the theory of working capital management is interaction between the current
assets & current liabilities.
4.4 CLASSIFICATION OF WORKING CAPITAL
Gross Working
Capital
On The Basis Of
Concept
Net Working
Capital
Kinds Of Regular Working

Working Capital Capital
Fixed Working
Capital
Reserve Working
Capital
On The Basis Of
Time
Seasonal
Working Capital
Variable
Working Capital
Special Working
Capital
Working capital may be classified in two ways:

 On the basis of concept.
 On the basis of time.
On the basis of concept working capital can be classified as gross working capital and net
working capital. On the basis of time, working capital may be classified as:
1. Permanent or fixed working capital.
2. Temporary or variable working capital
1. PERMANENT OR FIXED WORKING CAPITAL
Permanent or fixed working capital is minimum amount which is required to ensure effective
utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has
to maintain a minimum level of raw material, work- in-process, finished goods and cash balance.
This minimum level of current assets is called permanent or fixed working capital as this part of
working is permanently blocked in current assets. As the business grow the requirements of
working capital also increases due to increase in current assets.
2. TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary or variable working capital is the amount of working capital which is required to
meet the seasonal demands and some special exigencies. Variable working capital can further be
classified as seasonal working capital and special working capital. The capital required to meet
the seasonal need of the enterprise is called seasonal working capital. Special working capital is
that part of working capital which is required to meet special exigencies such as launching of
extensive marketing for conducting research, etc.
The extra working capital needed to support t he changing production and sales
activities, is called variable or functioning or temporary working capital.
Temporary working capital differs from permanent working capital in the sense that is required
for short periods and cannot be permanently employed gainfully in the business.
ON THE BASIS OF TIME
On the basis of time working capital can be classified as gross working capital and net working
capital:
1. Gross Working Capital

2. Net Working Capital
Gross working capital: - It is referred as total current assets.
Focuses on,
 Optimum investment in current assets:

Excessive investments impairs firm s profitability, as idle investment earns nothing. Inadequate
working capital can threaten solvency of the firm because of its inability to meet its current
obligations. Therefore there should be adequate investment in current assets.
 Financing of current assets:
Whenever the need for working capital funds arises, agreement should be made quickly. If
surplus funds are available they should be invested in short term securities.
Net working capital (NWC) defined by 2 ways,

 Difference between current assets and current liabilities
 Net working capital is that portion of current assets which is financed with long term
funds.
NET WORKING CAPITAL = CURRENT ASSETS CURRENT

LIABILITIES
If the working capital is efficiently managed then liquidity and profitability both will improve.
They are not components of working capital but outcome of working capital. Working capital is
basically related with the question of profitability versus liquidity & related aspects of risk.
4.5 WORKING CAPITAL CYCLE
Working capital cycle indicates the length of time between firms’s paying for materials entering
into stock and receiving the cash from sale of finished goods. In a manufacturing firm, the
duration of time required to complete the sequence of events is called operating cycle.
In case of a manufacturing company, the operating cycle is the length of time necessary to
complete the following cycle of events –
 Conversion of cash into raw materials
 Conversion of raw materials into work-in-progress
 Conversion of work-in-progress into finished goods
 Conversion of finished goods into accounts receivables
 Conversion of accounts receivable into cash
The above operating cycle is repeated again and again over the period depending upon the nature
of the business and type of product etc. the duration of the operating cycle for the purpose of
estimating working capital is equal to the sum of duration allowed by the suppliers.
Working capital cycle can be expressed as

R+W+F+D+C
Where,
R - Raw material storage period = avg. stock of raw material / avg. cost of production per day
W – Work in progress holding period = avg. work in progress inventory / avg. cost of production
per day
F – Finished goods storage period = avg. stock of finished goods / avg. cost of goods sold per
day
D – Debtors collection period = avg. book debts / avg. credit sales per day
C – Credit period availed = avg. trade creditors avg. credit purchases per day.
RAW
CASH
MATERIAL
DEBTORS &
RECEIVABLES WORK IN
PROGRESS
SALES FINISH
GOODS
 INVENTORIES
Inventories constitute the most important part of the current assets of large majority of
companies. On an average the inventories are approximately 60% of the current assets in public
limited companies in India. Because of the large size of inventories maintained by the firms, a
considerable amount of funds is committed to them. It is therefore, imperative to manage the
inventories efficiently and effectively in order to avoid unnecessary investment.
 NATURE OF INVENTORIES
Inventories are stock of the product of the company is manufacturing for sale and components
makeup of the product. The various forms of the inventories in the manufacturing companies
are:
1. Raw Material: It is the basic input that is converted into the finished product through the
manufacturing process. Raw materials are those units which have been purchased and stored
for future production.
2. Work-in-progress: Inventories are semi-manufactured products. They represent product that
need more work they become finished products for sale.
3. Finished Goods: Inventories are those completely manufactured products which are ready
for sale. Stocks of raw materials and work-in-progress facilitate production, while stock of
finished goods is required for smooth marketing operations. Thus, inventories serve as a link
between the production and consumption of goods.
 INVENTORY MANAGEMENT TECHNIQUES
In managing inventories, the firm’s objective should be to be in consonance with the shareholder
wealth maximization principle. To achieve this, the firm should determine the optimum level of
inventory. Inefficient inventory control results in unbalanced inventory and inflexibility-the firm
may sometimes run out of stock and sometimes pile up unnecessary stocks.
 EOQ MODEL
 ABC ANALYSIS
4.7 CASH MANAGEMENT
SOURCES OF CASH:
Sources of additional working capital include the following:
 Existing cash reserves

 Profits (when you secure it as cash!)
 Payables (credit from suppliers)
 New equity or loans from shareholders
 Bank overdrafts or lines of credit.
 Long-term loans
If you have insufficient working capital and try to increase sales, you can easily over-stretch
the financial resources of the business. This is called overtrading.
 EARLY WARNING SIGNS INCLUDE:
 Pressure on existing cash

 Exceptional cash generating activities e.g. offering high discounts for early cash
payment
 Bank overdraft exceeds authorized limit.
 Seeking greater overdrafts or lines of credit
 Part-paying suppliers or other creditors
 Paying bills in cash to secure additional supplies
 Management pre-occupation with surviving rather than managing
 Frequent short-term emergency requests to the bank (to help pay wages, pending
receipt of a cheque).
Cash flow can be significantly enhanced if the amounts owing to a business are collected
faster. Every business needs to know.... who owes them money.... how much is owed.... how
long it is owing.... for what it is owed.
LATE PAYMENTS ERODE PROFITS AND CAN LEAD TO BAD DEBTS.
Slow payment has a crippling effect on business; in particular on small businesses whom can
least afford it. If you don't manage debtors, they will begin to manage your business as you
will gradually lose control due to reduced cash flow and, of course, you could experience an
increased incidence of bad debt.
The following measures will help manage debtors:
1. Have the right mental attitude to the control of credit and make sure that it gets the
priority it deserves.
2. Establish clear credit practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff, suppliers and customers.
4. Be professional when accepting new accounts, and especially largerones.
5. Check out each customer thoroughly before you offer credit. Use credit agencies, bank
references, industry sources etc.
6. Establish credit limits for each customer and stick to them.
7. Continuously review these limits when you suspect tough times are coming or if
operating in a volatile sector.
8. Keep very close to your larger customers.
9. Invoice promptly and clearly.
10. Consider charging penalties on overdue accounts.
11. Consider accepting credit /debit cards as a payment option.
12. Monitor your debtor balances and aging schedules, and don't let any debts get too old.
Debtors due over 90 days (unless within agreed credit terms) should generally demand
immediate attention. Look for the warning signs of a future bad debt. For example…..
1. Longer credit terms taken with approval, particularly for smaller orders.
2. Use of post-dated checks by debtors who normally settle within agreed terms.
3. Evidence of customers switching to additional suppliers for the same goods.
4. New customers who are reluctant to give credit references.
5. Receiving part payments from debtors.
Here are few ways in collecting money from debtors: -
 Develop appropriate procedures for handling late payments.

 Track and pursue late payers
 Get external help if you own efforts fail.
 Don’t feel guilty asking for money. Its yours and you are entitled to it.
 Make that call now. And keep asking until you get some satisfaction.
 In difficult circumstances, take what you can now and agree terms for the remainder, it
lessens the problem.
 When asking for your money, be hard on the issue – but soft on the person. Don’t give the
debtor any excuses for not paying.
 Make that your objective is to get the money, not to score points or get even.
4.9 MANAGING PAYABLES (CREDITORS)
Creditors are a vital part of effective cash management and should be managed carefully to
enhance the cash position.
Purchasing initiates cash outflows and an over-zealous purchasing function can create liquidity
problems.
Consider the following: -
 Who authorizes purchasing in your company - is it tightly managed or spread among a

number of (junior) people?
 Are purchase quantities geared to demand forecasts?
 Do you use order quantities, which take account of stock holding and purchasing costs?
 Do you know the cost to the company of carrying stock?
 How many of your suppliers have a return policy?
 Are you in a position to pass on cost increases quickly through price increases to your
customers?
 If a supplier of goods or services lets you down can you charge back the cost of the delay?
There is an old adage in business that "if you can buy well then you can sell well".
Management of your creditors and suppliers is just as important as the management of your
debtors. It is important to look after your creditors- slow payment by you may create ill feeling
and can signal that your company is inefficient (or in trouble!).
Remember that a good supplier is someone who will work with you to enhance the future
viability and profitability of your company.
4.10 FINANCING CURRENT ASSETS
The firm has to decide about the sources of funds, which can be availed to make investment in
current assets.
 LONG TERM FINANCING
It includes ordinary share capital, preference share capital, and debentures, long term
borrowings from financial institutions and reserves and surplus.
 SHORT TERM FINANCING
It is for a period less than one year and includes working capital funds from banks, public
deposits, commercial paper etc.
Depending on the mix of short and long term financing, the company can follow any of the
following approaches.
 MATCHING APPROACH
In this, the firm follows a financial plan, which matches the expected life of assets with the
expected life of source of funds raised to finance assets. When the firm follows this approach,
long term financing will be used to finance fixed assets and permanent current assets and short
term financing to finance temporary or variable current assets.
 CONSERVATIVE APPROACH
In this, the firm finances its permanent assets and also a part of temporary current assets with
long term financing. In the periods when the firm has no need for temporary current assets, the
long-term funds can be invested in tradable securities to conserve liquidity. In this the firm has
less risk of facing the problem of shortage of funds.
 AGGRESSIVE APPROACH
In this, the firm uses more short term financing than warranted by the matching plan. Under an
aggressive plan, the firm finances a part of its current assets with short term financing.
4.11 IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL
 Solvency of the business: Adequate working capital helps in maintaining the solvency of the
business by providing uninterrupted of production.
 Goodwill: Sufficient amount of working capital enables a firm to make prompt payments and
makes and maintain the goodwill.
 Easy loans: Adequate working capital leads to high solvency and credit standing can arrange
loans from banks and other on easy and favorable terms.
 Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on
the purchases and hence reduces cost.
 Regular Supply of Raw Material: Sufficient working capital ensures regular supply of raw
material and continuous production.
 Regular Payment Of Salaries, Wages And Other Day TO Day Commitments: It leads to the
satisfaction of the employees and raises the morale of its employees, increases their
efficiency, reduces wastage and costs and enhances production and profits.
 Exploitation of Favorable Market Conditions: If a firm is having adequate working capital
then it can exploit the favorable market conditions such as purchasing its requirements in
bulk when the prices are lower and holdings its inventories for higher prices.
 Ability to Face Crises: A concern can face the situation during the depression.
 Quick And Regular Return On Investments: Sufficient working capital enables a concern to
pay quick and regular of dividends to its investors and gains confidence of the investors and
can raise more funds in future.
 High Morale: Adequate working capital brings an environment of securities, confidence,
high morale which results in overall efficiency in a business.
 EXCESS OR INADEQUATE WORKING CAPITAL
Every business concern should have adequate amount of working capital to run its business
operations. It should have neither redundant or excess working capital nor inadequate nor
shortages of working capital. Both excess as well as short working capital positions are bad for
any business. However, it is the inadequate working capital which is more dangerous from the
point of view of the firm.
 DISADVANTAGES OF INADEQUATE WORKING CAPITAL
Every business needs some amounts of working capital. The need for working capital arises due
to the time gap between production and realization of cash from sales. There is an operating
cycle involved in sales and realization of cash. There are time gaps in purchase of raw material
and production; production and sales; and realization of cash.
Thus working capital is needed for the following purposes:
· For the purpose of raw material, components and spares.
· To pay wages and salaries
· To incur day-to-day expenses and overload costs such as office expenses.
· To meet the selling costs as packing, advertising, etc.
· To provide credit facilities to the customer.
· To maintain the inventories of the raw material, work-in-progress, stores and spares and
finished stock.
For studying the need of working capital in a business, one has to study the business under
varying circumstances such as a new concern requires a lot of funds to meet its initial
requirements such as promotion and formation etc. These expenses are called preliminary
expenses and are capitalized. The amount needed for working capital depends upon the size of
the company and ambitions of its promoters. Greater the size of the business unit, generally
larger will be the requirements of the working capital.
4.12 FACTORS AFFECTING WORKING CAPITAL MANAGEMENT
The amount of working capital required depends upon a number of factors which can be stated
as below
 NATURE OF BUSINESS:
Some businesses are such, due to their very nature, that their requirement of fixed capital is more
rather than working capital. These businesses sell services and not the commodities and not the
commodities and that too on cash basis. As such, no funds are blocked in piling inventories and
also no funds are blocked in receivables. E.g. Public utility services like railways, electricity
boards, infrastructure oriented projects etc. Their requirement of working capital is less. On the
other hand, there are some business like trading activity, where the requirement of fixed capital
is less but more money is blocked in inventories and debtors. Their requirement of the working
capital is more.
 LENGTH OF PRODUCTION CYCLE:
In some business like machine tool industry, the time gap between the acquisitions of raw
material till the end of final production of finished product itself is quite high. As such more
amounts may be blocked either in raw materials, or work in progress or finished goods or even
in debtors. Naturally, their needs of working capital are higher. On the other hand, if the
production cycle is shorter, the requirement of working capital is also less.
 SIZE AND GROWTH OF BUSINESS:
In very small companies the working capital requirements are quite high overheads, higher
buying and selling costs etc. As such, the medium sized companies positively have an edge over
the small companies. But if the business starts growing after a certain limit, the working capital
requirements may be adversely affected by the increasing size.
 BUSINESS I TRADE CYCLES:
If the company is operating in the period of boom, the working capital requirements may be
more as the company may like to buy more raw material, may increase the production and sales
to take the benefits of favourable markets, due to the increased sales, there may be more and
more amount of funds blocked in stock and debtors etc. Similarly, in case of depression also, the
working capital requirements may be high as the sales in terms of value and quantity may be
reducing, there may be unnecessary piling up of stocks without getting sold, the receivables may
not be recovered in time etc.
 RATE OF STOCK TURNOVER:
There is an inverse co-relationship between the question of working capital and the velocity or
speed with which the sales are affected. A firm having a high rate of stock turnover wuill needs
lower amt. of working capital as compared to a firm having a low rate of turnover.
 CREDIT POLICY:
The firm’s credit policy directly affects the working capital requirement. If the firm
has liberal credit policy, hence the more credit period will be provided to the debtors so this
will lead to more working capital requirement. With the liberal credit policy
operating cycle length increases and vice versa.
 PRODUCTION POLICY:
If the policy is to keep production steady by accumulating inventories it will require higher
working capital.
 SEASONAL VARIATIONS:
In certain industries like raw material is not available throughout the year. They have to buy raw
material in bulk during the season to ensure an uninterrupted flow and process them during the
year. Generally, during the busy season, a firm requires larger working capital than in slack
season.
 EARNING CAPACITY AND DIVIDEND POLICY:
Some firms have more earning capacity than other due to quality of their products, monopoly
conditions, etc. Such firms may generate cash profits from operations and contribute to their
working capital. The dividend policy also affects the requirement of working capital. A firm
maintaining a steady high rate of cash dividend irrespective of its profits needs working capital
than the firm that retains larger part of its profits and does not pay so high rate of cash dividend.
 PRICE LEVEL CHANGES:
Changes in the price level also affect the working capital requirements. Generally rise in prices
leads to increase in working capital.
Others FACTORS:
 Operating efficiency.
 Management ability.
 Irregularities of supply.
 Import policy.
 Asset structure.
 Importance of labor.
 Banking facilities, etc
5. ANALAYSIS OF WORKING CAPITAL
Data Collection
Data collection for the stated objective involved both primary and secondary data. While the
primary data constituted mainly discourse from staff, secondary data included annual reports,
schedules and detailed MIS statements of the firm which were strictly confidential and my guide
prohibited me from sharing data from them.
The existing problems in the company were actually illustrated by the company guide and other
employees. The company was facing challenges from a lot of departments and had many issues
to address. For specific details pertaining to a sub-department say banking for example, I spoke
to the employees of that sub-department and a lot of details were collected from them. Similarly,
I was sent to various departments of the firm to know about departments and the impact it would
have on the entire structure as a whole. This served two-fold purpose- one, it increased
knowledge of the business and two, it helped in problem definition and data analysis. These
details mainly constituted the primary data.
For exact problem details within the working capital structure of the company, the annual report
for year 2017-2018 was studied. Deeper details were retrieved from the company’s MIS sheets
which had details about creditors, debtors, cash accounts, etc. This secondary data was
paramount in conducting analysis of the problem and helped arrive at decisions and suggestions.
For the project report, methods of data collection also has an importantrole in connection with
accuracy & exact information. So, I adopted secondary method of data collection.
Secondary Data:
I have also collected the information, figures& data in connection withthe preparation of
project report from Balance-sheet & annual report of AirIndia Ltd from annual report of Air
India Express Ltd for comparative analysis,from the Internet in connection with the where about
of the aviation Industry. Ihave also collected the information about cash management services
providedby the bank to the company.
Sources of Data:-
Sources of collection of data for a project report has a very importantrole. So, the sources must
be very reliable. For this purpose, I did my best effortsto get proper & correct information.
(A) I have taken the figures, information & data in connection with Profit &LossA/c,
Balance Sheet, Cash Flow Statement from the annual report of the Industry & through
website of the Industry which are most important for cash managementsystem.
(B) I have also got the figures, data & information in connection with Air IndiaFrom the
website of the Air India for the purpose of comparative analysis like Balance Sheet & Ratio
analysis.
(C) With the help of Internet, I have got the information, data &figures aboutthe aviation
industry, beginning of aviation industry in India, RecentDevelopments of steel industry, history
of the aviation industry, global & Indianscenario of the aviation industry.
(D) I have also got the figures, information & data from the Accounts Manager& other
staff of the Industry with the discussion personally, regarding working of the Industry with
banks
Instrument Used
The use of reliable, necessary & authentic instrument are the most important for Working
capital management. Instrument must be used accordingto the requirement of the company. A
finance manager of the Industry must bevery careful in this matter. Vouchers, daybook, main
cashbook, petty cashbook,cheque book, Bank Pay-in- slip, Bank Draft, Bankers Cheque, Bank
Statementsof Ledger, Bank Reconciliation Statement, Bank Book are being used by
thecompany.
Data Analysis
The data collected so far was then carefully studied to illustrate the various areas of concern
within Working Capital Management for Air India Limited and bring out the key problem
issues. Careful analysis of various components of Working Capital Structure actually revealed
that the firm has a lot of opportunities within each head that could be resorted to and taken
advantage of. The various areas of concern are-
- Funds Generation & Working Capital Financing

- Cash Management and Alternative revenue generation
- Receivables Management
- Payables Management
- Inventory Management
5.1 Funds Generation & Working Capital Financing

The Achilles heel of the entire financial turmoil that has strapped the national carrier in the
recent years lies in its working capital financing and the portfolio of loans taken to cover up on
its working capital gap.
FY 2017-18 Rs in Crore
Secured Loans 10708.04
Unsecured Loans 19890.14
Future Lease Obligations 13030.82
Total Loans 43629
Table 1: Total Loans
Working Capital loan 18659.96
Total Debt 43629
Working Capital loan as % of total

debt 42.77%
Total 2: WC Loan
From the analysis of the past years figures it has been observed that on an average over the past
4 years the working capital loans constitute of about 42%-46% of the total debt and the interest
rate charged on borrowings for working capital has been of a substantially higher spread in
comparison to the prevailing interest rate in the economy. An exorbitant rate of 11.5% has struck
the company hard and it therefore, plans to reduce this interest rate as a part of its debt
restructuring plan. These high interest rates and the high leverage for the firm have depicted a
significant dip in all evaluative financial parameters.
Working Capital Loans 18659.96
Interest Payment born for WC loans 2145.82
Average Interest rate (on WC loans ) 11.5%
Table 3: Interest Rate
The high leverage of the firm can be concluded from its debt to equity ratio of approximately
19.6:1 as indicated by the table below.
Total Debt (including lease obligations) 43629
Total Equity 2225.47
D/E 19.60
Table 4: Debt Equity Ratio
A glance at the above mentioned exhibits depicts the financial leverage of the firm and acts as a
classic example of how the financial leverage can adversely impact the bottom line of a
company. A debt to equity ratio of 19.6:1 makes the firm highly leveraged such that in times of a
boom, the profits would soar above normal whereas, in downturns, the bottom-line would be
adversely hit and this is evident of Air India.
The debt to equity ratio can be said to have improved when compared to last fiscal year. Last
year, the ratio was around 40:1 and was mainly due to huge loans and low shareholder’s equity.
The reason behind low shareholder’s equity in 2016-17 is that Air India took special permission
from the Government Of India to write off its losses with the reserves and surplus amount in the
year 2015-16.
However, the secured loans increased by almost 13 folds in 2017-18 for buying three Boeing
777-300 aircrafts; the main reason behind comparatively low D/E ratio is the equity infusion of
Rs 12,000 crore in 2017-18.
It should also be noted that there has been slow influx of capital over the years through
government since the major chunk of the funding to the organisation is through the means of
public sector banks. These banks have been co-axed into granting loans to a highly leveraged
firm since they share a common route, had there been a free market condition these banks
would’ve pressed for a much larger equity base for the debt to go through thereby, reducing the
impact of leverage on the firm but that hasn’t been the case.
Another factor to be considered has been the merger of the domestic and the international
carrier. Post-merger, the carrier though acts as one on paper but the operations are completely
different, there are two separate loans and OD accounts maintained and are subscribed for at
different interest rates. It was not realized that the company could have actually benefitted by
uniting them at a cheaper interest rate.
Another major hindrance in internal working capital financing through retained earnings has
been the continuance of loss making flights and the removal of certain profitable flights. To
illustrate the point, looking at flights of the nature of Delhi – New York, the company bears an
annual loss of Rs 1100 crore solely due to this leg. Due to political reasons, the company is
forced is still forced to run this flight every year. Similarly, there are numerous examples of
certain profitable flights being shut down under the political clout.
5.2 Cash Management and Alternative Revenue Generation

This section presents the cash management practices of the firm and alternative means of
revenue generation that bring in c ash to the company.
Cash Inflow
The firm follows a divisional strategy in the management of cash. The inflow of cash is a
channelized procedure according to which the funds flow from a local collection to regional to a
central collection and is stored at each period till a certain threshold value and a certain period
(from a week at local level to a fortnight at regional level and then to national level) is reached.
The cash flow process has been illustrated below, in pictorial form.
ARD- Area Revenue
Department National Revenue
Collection
Regional Revenue
Collection (ARD's)
Local Revenue
Collection (ARD's)
Figure 1: Revenue system

An opportunity arises amidst the holding periods of cash, where there is no movement of cash
but it is held in the local or regional accounts at regional levels. There isn’t any investment of the
cash even for short terms, rather it is held at those levels in current account yielding negative
economic returns. Thus, an opportunity lies in the investment of funds in money market mutual
funds which yield a better return opportunity than the present method followed. The firm can
select this investment strategy as an alternative to park in its cash better. The investment should
be selective in terms of exposure to highly liquid assets (T bills, Call market) thus ensuring easy
exit and the fund should be traded at high volumes. Amongst the high volume funds HDFC and
UTI have exhibited good returns and easier exits. Investment in these funds would generate
returns from its cash holding annually.
The table given below shows a comparison of existing returns on cash and the possible returns if
cash is invested in money market mutual funds.
Cash and Bank Balances 416.44
Rate of return with investment in money market 7%
Alternative revenue generation 29.15
Table 1: Alternate Revenue Generation
Cash outflow
The procedure and methodology followed by the company in its cash outflow and expense
tabulation is localised and there isn’t a central level itemisation of the purchases and the cash
outflow until the accounts are developed. There is a hierarchical allotment of a lump sum
amount from the national to the regional level and further to the localised centres but there isn’t
a dedicated department for this particular purpose. This allotment is dependent on the business
generation by the particular region and their requirement of cash for the continuous delivery. If
the requirement isn’t fulfilled, there is an emergency fund maintained in the revenue collection
account which could be availed as per need of the firm and these could be accessed by the
immediate approval of predetermined individuals at various levels. Depending on the amount
needed, the set of approvals needed varies along with the amount that is needed to be accessed
within the revenue accounts.
So, while the cash management system that is in place works well and there is continuous MIS
reporting of the entire procedure, the firm exhibits liquidity crunch in various forms and
overlooks certain areas where the revenue could be generated in various innovative means for
the firm. Another thing to be noted is that there are large chunks of firm’s liquid cash deposited
in various FD’s and other deposits which act as the security of various bank guarantees that have
been availed for various uses by the firm.
5.3 Working Capital Ratios

Here we will discuss about the key working capital ratios that show how a firm manages its
resources.
Current ratio
Current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations.
The Current Ratio formula is:
Current Ratio = Current Assets / Current Liabilities

The exhibit below shows the current ratio of Air India Limited and relevant calculations.
Total Current Assets 5393.15
Total Current Liabilities 8487.9
Current Ratio 0.63
Table 2: Current ratio

The ratio is mainly used to give an idea of the company's ability to pay back its short-term
liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The value
of current ratio clearly shows that Air India does not have enough current assets to back its
Current ratio value has come down from 0.82 in 2016-17 to 0.63 in 2017-18. This clearly is a
bad sign for the company as its current liabilities have increased and are backed up by almost the
same amount of current assets as in FY2016-17. The increase in current liabilities is due to
increase in sundry creditors which form the major portion of current liabilities.
Liquid Ratio
It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm
to pay its short term obligations as and when they become due.
Calculated by:
Total Current Assets minus Inventories 4717.19
Liquid Ratio 0.55
Table 3: Liquid Ratio

This ratio reiterates the fact that Air India is unable to back its current liabilities with cash and
liquid assets. Current assets are majorly dependant on sundry debtors because being an airline
firm and that too a government held firm, the firm has to take care of all government trips across
the world and within the country. So government forms a major part of debtors along with some
private airlines for which Air India provides maintenance and ground handling services at the
airports.
A look at the above two ratios determine how the firm has a gap in its working capital which
isn’t fulfilled by the firm as in the fact that the liabilities keep on growing and the assets don’t
materialize with respect to the liabilities in the current form and the firms likelihood in meeting
its obligations is low and that has been the recent trend with Air India.
5.4 Receivables Management
As observed from the financial data of the past four years the major chunk of Air India’s
current assets is contributed by the debtors in terms of percentage debtors constituted for
about 45-50% of the current assets in the period under study. The debtor in Air India for
concerned and differentiating purposes could be classified into government agencies and non-
government agencies.
Air India implements different standards and different policies for both and these would be
discussed in further details in credit policy. Also there is significant amount of debtors in long
term vicinity for greater than 2 and 3 years of presence in the balance sheet. Now as already
seen AI has been observing a widening working capital gap and in the assets a major chunk is
depicted by debtors who are only virtually accounted for and realistically absent. This further
leads to less contribution in assets and thus a further more widening WC gap and it leads into
a vicious circle until these debtors are cleared out. The effect is depicted using the figures for
the financial year 2017-18 in the table given below.

Total Current assets 5393.15
Sundry Debtors 2837.62
Debtors as % of total current assets 52.62%
Table 8: Debtors as % of total current assets
From the table we can see that more than half of the current assets are dependent on sundry
debtors. As stated above, debtors constitute of government and non-governmentorganizations.

Majority of the debtors fall under the government organization category as AirIndia being the
national airlines of the country has to cater to all travel needs of thegovernment and its officials.
Indian Air Force, DGCA, Ministry of Economic Affairs,Ministry of Home Affairs are some of
the major debtors to Air India.
Also to be pointed out that huge amount of debt to the firm is more that 3 years old andalmost
the same amount of debt is two to three years old. The company has a policy ofconsidering debts
more than three years old as bad debts and not recoverable. So this affectsthe profit of the
company in a negative manner. Indian Air Force is a major debtor as it bookscharter flights from
Air India during a war or emergency situations and make huge paymentdefaults. Air India staff
sometimes has to write a letter to the Prime Minister’s Office to getthe payments. And even after
taking such a step, full payments are still not made sometimes.
The debtors under the non-government organizations mainly consist of private airlines allacross
the world. These airlines usually take ground handling services from the company. AirIndia has
agreements and contracts with many foreign airline firms thus providingintermediate travelling
services to their customers. For example if a person wants to fly fromFrance to Pune and has his
ticket booked with Air France then he is taken to New Delhiairport by Air France. But from
there on Air India takes the customer to Pune airport. So there are many such kind of agreements
with many airlines across the world and within thecountry.
Here also the debts are divided year wise from 1 to 2 years, 2 to 3 years and more than 3
years. Debts that have been there for more than three years are bad debts and again negatively
impact the profit of the firm. One such example can be of Go Air airline which is still there in
the books of the firm as a debtor for more than three years. But the company was shut down a
few years ago therefore, payment default. Aviation industry is a kind of industry where many
new competitors come and go so there are many companies that are debtors to Air India but
have been shut down a few years ago.
Now let’s look at the Debtors turnover ratio.
Debtors Turnover Ratio = Total Sales / Debtors
Net Sales 13974.39
Sundry Debtors 2837.62
Debtors turnover ratio 4.92
Debtors turnover in terms of number of days 74.12
Table 9: Debtors Turnover Ratio
The ratio comes out to be 4.92 and debtors turnover in terms of number of days is 74 days.
Air India allows a credit period of 60 days to government organizations and a credit period of
30 days to non- government organizations, on an average. Period may vary depending upon
the party with which the company deals. I have used net sales in the formula as the figure for
credit sales was not available to me because I was posted in the northern region and details
for the other regions were not accessible. Therefore the value of the ratio is not accurate.
The firm’s financial condition in terms of its receivables management raises serious doubtson
the credit policies (credit standards, credit periods, collection efforts).
Credit Standards
From the analysis of the debtors’ schedule, it could be easily made out that the firm doesn’t
incorporate generic and uniform credit standards but they vary with the relationship of the AI
with the borrower. Now the borrowers to the firm can arise from two levels – one is via IATA
(Air Traffic Association), or non IATA.
IATA Borrower
An IATA member is bound to allow borrowings to all other IATA members by the decree of
association into the body. Thus, Air India cannot impose any restrictions or even guarantees on
an IATA member for any sort of borrowing. Here the standards are imposed by IATA and the
standards are stringent enough to avoid most scenarios of defaults and disputes amongst member
organisations. The IATA debtors for Air India are negligible in the long term borrowers and
default prone borrowers list. Also these debts are realized in a limited amount of time barring
which an interest is also charged.
The Non IATA Borrower

The non IATA borrower to Air India can arise from various means and can range for a large
variety of organisations, these could be non IATA airlines with a bilateral contract with the
national government (Uzbekistan), IAF, government agencies for transport of people and goods,
other domestic fliers for services rendered, training school contract firms amongst others. A
major culprit in the long term and overdue debts are the non IATA borrowers and they
contribute to more than 90% of these long term debts.
A bilateral agreement with non IATA airlines is a government linked connection and for Air
India such a connection is formed by the Ministry of Civil Aviation. The problem arises here
since the credit standards are sacrificed in lieu of forming a political connection. Citing the
example of the Uzbek national carrier, the ministry here sought a bank guarantee which
amounted to only 1/3rd of the entire credit period’s flying activity related debts. Now the Uzbek
carrier defaulted and without a guarantee for the remaining 2/3rd amount, AI could recover only
the 1/3rd amount and this happened at another instance with the same organisation and still the
credit standards weren’t changed.
Another major debtor for AI has been the IAF or Indian Air Force. The IAF seeks a lot of
supplies and services from AI in terms of the maintenance and incorporation of newer
technologies in its fleet of aircrafts and the payment for all these services depends on the budget
availability for the defence activities by the government. These payments could be as delayed as
18 months as observed in the debtors schedule and there isn’t any penalty or interest charge
borne on the delay of availability of this amount. Thus AI had to forego potential earnings since
they did not have any rigid policies regarding delays in payments. Also The IAF has four Boeing
aircrafts bought by Air India and even the repairing and maintenance is done by the company
thus creating another source of payment default.
Government Agencies like AAI or the parliament or any other public sector unit is allowed to
use the flight services offered by AI by the means of voucher, which they could present at the AI
counters and avail the required facilities against the voucher. Now as a standard procedure the
voucher is filed for along with the travel claim of the person which is at the end of the financial
year whilst it shows up in the book of AI from the point a person uses a voucher. Thus the debtor
period could range from a period of a year to a month and AI foregoes any opportunity to earn or
receive the payments swiftly. Many a times these vouchers are used or filed for thus causing a
permanent debtor presence in Air India accounts that can’t be removed. Thus, there is a need for
a more efficient and less cumbersome system whereby the payments could be settled at a
monthly or quarterly basis thereby, not increasing the administrative workload by much and
letting Air India control its receivables in a much better manner. Also the treatment of
government agencies as sister organisations without any sort of connection in their processes
hinders the policies.
The private carriers and the training school facilities have much better structured credit policies
and collection efforts which have prompt payment collections and mutual agreements on the
policies thus this area doesn’t hinder the growth as much.
The credit period and the collection efforts are governed by the credit standards that AI follows
with respect to the particular organisation and the control over these parameters is limited within
the hands of the management. It is governed by the common head in ministry of corporate affairs
and the autonomy of the organisation is sacrificed for in the whole fiasco.
5.5 Payables Management

The payables management in Air India is similar to the context of its receivables management, in
the sense that IATA payables are governed under the IATA norms and the same scrutiny is
pressed on Air India as the other member airlines. Same is the case with non IATA members,
where the policies are governed by the political clout and scrutiny of the other airlines.
The government organisations such as AAI or Ashok Hotel follow a sort of sister organisation
relationship with Air India. AI comes in as a major borrower from organisations such as these
and their standards towards AI are much more lenient and relaxed in comparison to any private
carrier within the Industry. But there is much more to this scenario.
A major change in the payables management for Air India comes in the form of development of
Delhi International Airport Limited (DIAL) by GMR as well as the Hyderabad airport. Now
these airports were under the administration of AI whereby Air India was supposed to earn
revenue from the maintenance as well security functions of these airports. Therefore, AI hired a
fleet of employees to manage as well as run these operations. The revenue earned compensated
for their costs borne and even contributed profit to the extent of Rs 50 crore per annum. But with
the development of DIAL these functions were transferred under the flagship of GMR which
was now going to run its own operations. As a result, AI was left with an excess fleet of
employees on its payrolls without any revenues. Due to airport management now under the aegis
of GMR, AI had to pay fee to GMR in accordance to its usage of the airport and services.
Another factor that has added to Air India’s payables is the fact that the government co-axes AI
to be the pioneer at almost all new developments such as the T3 terminal, or a kiosk at the new
Reliance Delhi airport metro for example. This in turn adds to the costs at already debt ridden
organisation.
Another Major creditor for Air India has been the fuel companies. The rising fuel prices have hit
AI badly due to the global oil prices shooting up and regulation of oil prices by the government
has been pinching these oil companies which are carried onto AI as a ripple effect.
If we look at the breakup of the total current liabilities of the company, sundry debtors form the
major part of it as shown in the exhibit below.
Sundry Creditors 4594.43
Creditors as % of total current liabilities 66.35%
Table 4: Creditors as % of total current liabilities

Creditors usually form 60-70% of the total current liabilities. In the FY 2017-18, creditors
increased from Rs 3.8 crore, previous year to Rs 4.6 crore. This huge increment is due to
increase in the price of ATF (Air Turbine fuel) and oil in general.
Companies that provide spare parts and foreign goods, fuel and oil, GMR for parking, landing
fee, outside repair firms, food and catering firms like Taj Hotels, AAI for navigational charges
and banks that provide OD services are the major creditors to Air India.
When talking about the creditors, it is mandatory to discuss about Creditors turnover ratio. It
signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include
both sundry creditors and bills payable.
Creditors Turnover Ratio = Credit Purchase / Average Trade Creditors
Net Sales 13974.39
Sundry Creditors 4594.43
Creditors Turnover Ratio 3.04
Ratio in terms of number of days 120
Table 5: Creditors Turnover Ratio

The creditors turnover ratio comes out to be 3.04 and 120 days in terms of number of days. This
means that Air India has to make payments to its creditors within 120 days. If we compare
creditors turnover period with the days within which debtors have to pay, that is 74 days, then it
can be observed that the firm has a comfortable time period of almost 50 days to pay its creditors
after the debtors have paid.
Looking at the two ratios above, the firm can be said to be in a comfortable position but a huge
creditors turnover period affects the credit worthiness of the firm in a negative way.
So in general, the policy is based on the fact that Air India is cash strapped and that it doesn’t
have the choice to avail any cash discounts over its payments. The viability and the benefits
from availing the cash discounts haven’t been accounted for. Also considering the scale at which
AI operates, it has the ability to negotiate discounts in a much better manner in comparison to
the other carriers prevalent in India.
5.6 Inventory Management
A key component of the Working Capital structure of any firm which requires a major
consideration is its inventory. But in the aviation sector, the inventory constituted is majorly of
the nature of aircraft essentials and it can’t be omitted. As per policy norms, it is essential to hold
certain number of spare parts for a period that lasts as long as the aircraft in contention. Air India
has to buy prescribed amount of spare parts with every aircraft it buys. The spare parts are
accounted for in inventory for a period of 5 years and are then scrapped off at a certain amount.
Even though Air India maintains a huge inventory, it’s an unavoidable and essential expense to
be borne by AI because of the industry norms.
Air India has to incur huge maintenance cost and handling costs for maintaining such large
amount of inventories. Recently Air India sold Rs 32 crore of obsolete inventory/spare parts for
Rs 8 crore.
One more problem with the maintenance of inventory is counting of spare parts. These parts can
range from a huge engine of a Boeing to a simple nut and bolt so counting is done manually. The
firm has its own unit in place for carrying out above mentioned activity. So after the counting is
done by internal unit, an external unit does it again that is outsourced. In case of any
discrepancy, the shortage and verification committee takes desired action and solves the
problem. This whole process of counting and maintaining of inventory by two teams takes a lot
of time and also makes a whole in the pocket.
5.7 LIMITATIONS OF THE STUDY
 These studies only concentrated the quantitative method.

 The report is prepared in accordance with information provided and certain assumptions,
as real values are confidential.
 The study is limited to eight weeks therefore I can’t learn much detail about the project.
 It was difficult getting time and access to senior level Finance manager (who had to be
talked to, to get required information) due to their busy schedules and prior
commitments.
6. Conclusion and Recommendation
On a whole while interning in Air India we came to understand the overall functionality of the
industry in the detailed manner, along with the smaller yet vital roles of the business. The entire
experience helps in understanding on how a government owned organization has a difference in
its operation vis-à-vis and with additional numerous limitations still manages to survive. The
enhanced complications in the finances and the business operations are observed and how are
they tackled with within the given constraints. But it also points out the atrocities that are faced
by a government organisation and the constrained ability to tackle with any sort of difficulty
leaves the organisation handicapped. Thus it can be made out specially in the aviation sector
how there is a need for a policy change by the government to make the national carrier be at par
with the other prevalent carriers of similar size otherwise it might end up being locked in a
vicious circle.
Another key learning out of the entire experience has been the impact inorganic growth could
take if it is not implemented in a proper and unified manner and a differentiated behavior within
the organisation could drive it towards different achievements and hinder the growth of the
organisation in a holistic manner.
Recommendation
As per the analysis done above, some of the recommendations for Air India are cited below-
 The foremost change needed is to implement the merger at the grass route level. The
process needs to be streamlined and the flow as for a single unit rather than two different
units needs to be developed. This would save on time as well as administrative expenses.
This would also reduce redundant work and allow the firm to benefit as a whole by
leveraging its size. In fact, due to improper change management during merger, a lot of
friction still exists between employees of erstwhile Indian and those of erstwhile Air
India. So, amalgamation of both units into one should be of primary importance to the
firm without which no harmony could be realised within the firm.
 A major decision is required in the form of a credit policy especially in the voucher
system. Air India should look at a much more prompt and reliable system or an advance
payment/deposit system, which would maintain their books cleaner and not account for
any unrealisable transactions in the financial statements or it would weed such entries
out. Also the credit policy should be maintained in a manner to evaluate its alternatives
with the other firms in contention.
 Another change that should be initiated in the credit policy should be the implementation
of an interest charge on delayed payments to benefit the organisation out of its credit
policy. With debtors like IAF, Air India should develop a smoother and continuous
payment process rather than a one shot delayed payment process at the budget allocation
or financial year completion and with existence of interest charge this would be easier to
develop.
 Adapt to industry wide operational norms rather than one off government dictated norms
whereby the firm would be subjected to the same amount of expenses as the private
carriers and not additional expenses.
 AI needs evaluation and assessment of profits out of availing trade discounts rather than
just dispatching them and considering the cost post-discount vis-à-vis the cost borne on
not availing these discounts.
 Offer trade discounts to prompt payers to the extent of the desired margin. This would
increase the flow of cash within the firm thus bringing down the cost borne in the
overdraft account.
 Streamlining and modifying the revenue collection efforts such that the collected
revenues are able to generate better returns than the money market mutual funds over a
small threshold period and adding to the bottom line.
 Streamlining and centralising the expenses so as to avail bulk expense discounts
wherever possible and bring down the possible costs.
 A major problem for Air India has been to realise the current liabilities into current
assets which further deteriorates with time and this has hampered the financial health of
the firm. Re-evaluation of the credit policies and much more judicial control over the
current liabilities can help to improve this over time. Plus alternative revenue generation
can improve the current assets.
 An assessment of the current debts and renegotiation of the cost of debt is essential for
the firm since the firm has a high chunk of debt. The firm has numerous underutilized
and redundant assets which could be realized at present value to bring down the financial
leverage. Also the firm should try and renegotiate the cost of capital with the bankers as
they have already recovered more than the principle at a high interest and rule of 72. It
should leverage the high worthiness of this debt to the banker to leverage a lower cost of
debt.
 The inventory management system is not very efficient at Air India which causes huge
costs and also takes up a lot of time. So a more efficient way of counting and
maintenance of inventory should be done, probably by computerizing the whole process.
Limitations
Every study, analysis has some limitations and boundaries, which are present and applicable to
this particular summer internship project as well. This report could have been better had there
been no limitations.
The various limitations encountered while doing this study are mentioned below: -
 The project is based on the working capital management practices at Air India for the
financial year 2010-11. However, ideally one should have conducted the study based on
complete data of the most recent financial year, that is FY2015-16 but this could not
happen as Air India comes out with the financial statements, 8 months after the
completion of a financial year. And also they’ve only made the statements of 2010-11
available on their website.
 Data required for analysis purpose was also taken from the MIS reports of the company
but I wasn’t allowed to quote that data directly from the sheets or regenerate in any form.
 I was posted in the northern region office of Air India so could get perspective of
employees working in this particular region only. Also the MIS reports available to me
were of northern region. Air India’s work process is divided into four regions and one
registered office spread all across India so it was not possible to gather data from all
those regions.
 Details regarding the debt restructuring and equity infusion plans were not known to the
employees apart from what came in the newspapers. So data with respect to above two
topics were taken from secondary sources.
6. BIBLIOGRAPHY
COMPANY REPORTS
 Annual reports of AIR INDIA
2016-17
2017-18
BOOKS REFERRED
 Khan, M.Y. 2011, Financial Management, Tata McGraw-Hill, New Delhi.

 IM Pandey., 2010, Financial Management, New Delhi, 11th edition.
WEBLIOGRAPHY
 http://www.airindia.in/
 http://www.airindia.in/AnnualReport.htm?30
https://medium.com/@shivam.writekraft/working-capital-management-a-case-
study-of-air-india-ltd-www-writekraft-com-183c874f95fb
 http://www.airindia.in/writereaddata/Portal/FinancialReport/1_468_1_8-annual-
report-201718.pdf
 http://www.airindia.in/writereaddata/Portal/FinancialReport/1_469_1_9-annual-
report-201718.pdf

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Summer Training Project Report

AIR INDIA LIMITED

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

MASTERS OF BUSINESS ADMINISTRATION (FINANCE)

TRAINING SUPERVISOR SUBMITTED BY

MR. RAHUL BHATNAGAR JYOTI SAINI

MANAGER ROLL NO.: 180101040026

HARYANA SCHOOL OF BUSINESS

GURU JAMBHESHWAR UNIVERSITY OF SCIENCE AND TECHNOLOGY

Faculty’s Signature Candidate’s Signature

(Signature of Director/Principal of the Institute)

This is to certify that JYOTI SAINI student of Guru Jambheshwar University of

For AIR INDIA LIMITED

I am deeply grateful to my company guide and mentor, Mr RAHUL BHATNAGAR, who

MBA FINANCE (F)

Haryana School of Business

INTRODUCTIONTO THE INDUSTRY 9 TO 20

DAILY ACTIVITY REPORT 24 TO 25

INTRODUCTION OF WORKING CAPITAL 26 TO 46

5 ANALAYSIS OF WORKING CAPITAL 47 TO 62

1.1 COMPANY PROFILE

 To create and maintain consumers and customers of international transportation by providing

 To enhance its competitive market standing and image as an international carrier.

 To achieve the highest level of safety of operations.

 To assist in the promotion of nation’s export trade.

 To provide wider participation amongst its employees in management functions.

Air India Limited

Type State Owned Enterprise

Founded 30 March 2007

Headquarters Airlines House, New Delhi

Key people Ashwani Lohani

Owner Government Of India

Number of 28,085 (2011)

Subsidiaries  Hotel Corporation of India

1.6 The Air India Brand

The Maharajah began merely as a rich Indian potentate, symbolizing graciousness

1.7 Air India Operations:

Air India flies to a total of 84 destinations including 48 domestic destinations and 36

To be dry-leased from Jan

Airbus A321-200 20 — — 12 170 182

Boeing 747-400 5 — 12 26 385 423

Boeing 777-200LR 3 — 8 35 195 238

Boeing 777-300ER 12 3 4 35 303 342 To be delivered in 2018

Boeing 787–8 21 6 — 18 238 256 2 are expected end of 2016

1.9 SWOT ANALYSIS

SWOT Analysis of Air India

 Strong backing by the Government of India

 Labour problem and political intervention is a cause of worry

 Dedicated set of customers

 Rising labour costs

2.1 Purpose Of Study

Proper management of working capital is essential to a company’s fundamental financial

2.2 Significance of study

The Objective of research have been analysed are as follows:

3. Financing of Working capital

2.4 NATURE OF DATA

In this project report, both types of data have been used.

2.6 SCOPE OF THE STUDY

 The study is extended to the finance department OF AIR INDIA LTD.

2.7 RESEARCH METHODS

04-JUNE- ECS Basic concepts of ECS.

10-JUNE- ZFI’S Hotel bills.