About Aviation Industry

The civil aviation industry in India has emerged as one of the fastest growing industries in the
country during the last three years. India has become the third largest domestic aviation
market in the world and is expected to overtake UK to become the third largest air passenger*
market by 2024 The airline company that we have selected is InterGlobe Aviation ,i.e., the
largest airline in India.

About InterGlobe Aviation

InterGlobe Enterprises Limited provides aviation management, travel related services, and
hotel development and management services. The company provides air and cruise transport
management services, including passenger and cargo, route, destination, charter requirement,
and cruise brands management It is mainly known for its budget airline branded as INDIGO.

About Comparative Cash Flow Statement

A significant instrument for evaluating the financial situation of an organization is the cash
flow statement. During two financial years, it may signify cash position shifts. The adequacy
of the cash position must be judged to help the company's success story. This analysis is
focused on 2-3 consecutive years of financial figures disclosed by the firm. The cash flow
statement contains details on an enterprise's cash receipts and payments over a given period.
It offers valuable details that compliments the account and balance sheet of profit and loss. A
cash flow statement is a declaration that provides a comprehensive description of the change
in the cash of a company over a given period by showing the sources and uses of cash during
that period by the company. It classifies cash flow during the period from operating,
investing and financing activities. Accordingly the sufficiency of cash position is concluded
and some recommendation is made to overcome the scenario.
 Comparative Cash Flow Statement of InterGlobe Aviation Ltd.

InterGlobe Aviation (INDIGO) Cash Flow Statement

(In Rs cr.) 31 March, 31 March, Absolute Percentage

cr.) 2020 2019 Change Change (%)
A. Cash flows from operating
activities
Loss before tax (2,556.69) (1,473.78) (1,082.91) 73.4784024752677
Adjustments for:
Depreciation and amortisation expense 39,739.29 7,595.80 32,143.49 423.174517496511
Finance cost on lease liabilities 13,644.50 - - -
Unrealised foreign exchange loss (net) 13,122.27 3,546.06 9,576.21 270.052114177425
Interest accretion on provisions and 4,564.57 3,496.52 1,068.05 30.5460858224749
other financial liabilities measured at
amortised cost
Marked to market gain on current (4,595.12) (2,229.07) (2,366.05) 106.145163678126
investments
Interest income from bank deposits (2,571.70) (4,344.11) 1,772.41 (40.8003020181349)
Non cash incentives, claims and credits (2,164.89) (2,594.56) 429.67 (16.5604187222496)
(net)
Net gain on sale of current investments (1,930.57) (1,615.92) (314.65) 19.4718797960295
Interest income from financial assets at (986.56) (755.46) (231.1) 30.5906335212983
amortised cost
Employee stock option scheme expense (99.15) (133.28) 34.13 (25.6077430972389)
Liabilities no longer required written (76.67) (263.81) 187.14 (70.9374170804746)
back
Interest on borrowings measured at 336.48 317.11 19.37 6.10829049856517
amortised cost
Redelivery and overhaul cost 160.79 307.66 -146.87 -47.7377624650588
Property, plant and equipment written 104.04 70.21 33.83 48.18401937046
off
Loss on sale of property, plant and 49.26 0.81 48.45 5981.48148148148
equipment (net)
Bad debts written off 13.45 8.65 4.8 55.4913294797688
Impairment loss on trade receivables 3.70 6.91 -3.21 -46.4544138929088
Advance write off 0.60 1.16 -0.56 -48.2758620689655
Impairment loss on deposits 8.37 8.37 -
Deferred rent amortisation (included in 693.48 -693.48 -100
aircraft and engine rentals (net))
(In Rs cr.) 31 March, 31 March, Absolute Percentage
2020 2019 Change Change (%)
Finance lease charges on finance lease 1,119.55 -1,119.55 -100
obligations measured at amortised cost
Impact of Ind AS 115 - Revenue from 24.55 -24.55 -100
contract with customers

Operating profit before working 56,765.97 3,778.48 52,987.49 1,402.34935741356

capital changes

Adjustments for:
Increase in loans, other financial (5,350.98) (9,254.00) 3,903.02 (42.1765722930625)
assets, and other assets
Increase in inventories (746.87) (282.14) (464.73) 164.71609839087

Increase in trade payables, other 21,188.88 14,115.38 7,073.5 50.1120054862143

financial liabilities, other liabilities
Decrease/ (increase) in trade 1,011.08 (1,406.80) 2,417.88 -171.870912709696
receivables
Increase in deferred incentives 25,767.83 -25,767.83 -100

Cash generated from operating 72,868.08 32,718.75 40,149.33 122.710464183381

activities
Income tax paid (3,150.26) (963.34) - -

Net cash generated from operating 69,717.82 31,755.41 37,962.41 119.546275736953

activities

B. Cash flows from investing

activities
Purchase of mutual funds / shares / (230,557.46) 150,080.54) - -
fixed rate non-convertible debentures

Proceeds from sale of mutual funds / 207,256.58 152,198.98 55,057.6 36.1747496599517

shares / fixed rate non-convertible
debentures
(In Rs cr.) 31 March, 31 March, Absolute Percentage
2020 2019 Change Change (%)

Investment in deposits (94,209.29) (110,132.31) 15,923.02 (14.4580822830285)

Proceeds from maturity of deposits 78,752.90 - -

94,706.15

Interest received 3,692.97 5,008.76 -1,315.79 -26.2697753535805

Purchase of property, plant and (10,883.06) (17,115.62) 6,232.56 (36.4144565023061)

equipment and intangible assets
Proceeds from sale of property, plant 267.38 54.07 213.31 394.507120399482
and equipment
0 -

Net cash used in investing activities (45,679.98) (25,360.51) (20,319.47) 80.1224817639708

C. Cash flows from financing

activities

Repayment of lease liabilities (8,707.56) - - -

Finance charges paid on lease (13,374.50) - - -

liabilities
Proceeds from secured loans 420.61 483.54 -62.93 -13.0144352070149

Repayment of secured loans - -2,561.93 - -

Interest paid on secured loans (340.10) (292.65) (47.45) 16.2139073979156

Finance lease charges paid - -770 - -

Final dividend paid (1,922.53) (2,306.36) 383.83 (16.6422414540661)

(In Rs cr.) 31 March, 31 March, Absolute Percentage
2020 2019 Change Change (%)

Corporate dividend tax paid (395.34) (474.09) 78.75 (16.6107701069417)

Securities premium received on 240.69 - - -

account of issue of shares
Proceeds from issue of shares on 3.89 - - -
exercise of stock options scheme

Net cash used in financing activities (24,074.84) (5,921.58) (18,153.26) 306.561086736986

Net increase/ (decrease) in cash and (37.00) 473.32 -510.32 -107.817121609059

cash equivalents during the year
(A+B+C)

Effect of exchange rate changes on (56.51) 103.67 -160.18 -154.509501302209

cash and cash equivalents held in
foreign currency

D. Cash and cash equivalents at the

beginning of the year
Cash on hand 48.89 30.31 18.58 61.2999010227648

Balance with banks:

• On current accounts 5,593.13 5,511.87 81.26 1.47427279670965

• On deposit accounts 1,642.15 1,165.00 477.15 40.9570815450644

E. Cash and cash equivalents as at

the end of the year

Cash on hand 53.38 48.89 4.49 9.18388218449581

Balance with banks:

• On current accounts 1,526.41 5,593.13 -4,066.72 -72.7091986061472

• On deposit accounts 5,610.87 1,642.15 3,968.72 241.678287610754

Total 7,190.66 7,284.17 -93.51 -1.28374269134301

Source : Annual Report from Company's website

 Operating Activities

Cash generated by production and sales of business is reflected under this head. It
comparatively denotes inflow of cash from operating activities and outflow of cash for
business operating expenses. E.g. cash from operation is the revenue net of expenses.

Reason for fluctuations:

 The loss before tax has increased by 73% due to increase in the number of routes some
of which proved to be unprofitable. India has seen an increase in air travel in past
couple of years. This in turn increase the demand for newer routes in the domestic
aviation market.

 Since, airlines have a huge investment in assets that depreciate a lot, i.e., airplanes,
Indigo’s depreciation expense increased by 423%.

 We can also notice that operating profit before working capital changes is increased by
over 1400% in the period because of the substantial decrease in various provisions,
finance cost and other expenses.

 We can see an increase in loans, other financial assets, and other assets which shows
that company has many financial assets in the market.

 It has reduced trade receivables as well which shows that there is less amount to be
received by debtors. Also we can see that the inventory is increasing this is because of
increase in sales. The company has increased the inventory levels in order to meet the
demand.

 The trade payables, other financial liabilities, other liabilities has increased by over 50%
because company has invested in expanding its operations. Trade payable includes
amount to be paid to Airbus for new aircraft acquisition.

 The overall Net Cash generated from operating activities has increased by over 120% to
Rs 69,717 crores.
 Investing activities

This section denotes cash invested in long term assets e.g. purchase of machinery and
other long term assets as well as other current assets such as purchase of equity shares of
other company etc. and cash receipts from such investing activities e.g. dividend received,
interest received sales of machinery and scrap etc

Reason for fluctuations:

 Airlines have to invest in government bonds as a part of rule and regulations off the
aviation ministry. There is an increase in bonds by 15% to meet regulatory norms in a
bid to expand operations.

 The main source of cash used from investing activities is proceeds from maturity of
deposits that it had made.

 Payment for purchase of property and equipment declined by 36.4%. This shows that
the major expansion had taken place in FY2018-19.

 There has been an increase in the car outflow by investment activities because of high
purchases of non-convertible debentures. There has been a significant increase in the
holding of long-term maturity due to which there has been an increase in investing
activities by 80.12%.

Financing activities

This section of Cash flow statement denotes cash generated from activities to finance the
business operation. E.g. cash receipt on account of issue of equity shares or debentures
etc. and cash paid to such stake holders. Dividend to equity shares or interest on
debenture etc.

Reasons for fluctuation:

 Repayment of lease liabilities was the major source of cash outflow which arises in the
FY20 only as the lease was taken years before and was due in this year. This stood at Rs
8,707 cr. This was relating to the lease of aircrafts and other equipment.
 Interest paid on secured loans increased by 16.4%. This may be attributed to the increase in
financing through long-term loans.

 There was also a decline of 16.6% in the Final dividend paid to shareholders. This can be
attributed to changes in the dividend payment policy of the company. Correspondingly,
there was also a fall in Corporate Dividend tax paid by the same percentage.

 The company also issued fresh shares in the FY20 which were issued at a premium.

 Hence, Cash outflow due to financing activities increased by 306.56%.

Conclusion

.We can notice very high fluctuations in the cashflow statement of the company because of
the lots of changes in the business environment in which the company operates in. There
were lots of economic changes happening in the country due to which we can see lots of
fluctuations.

There is a 1.28% decrease in the overall cashflow statement because it is heavily impacted
by the investing activities. Also we can see that the financing activity has seen reduced in
cash used which is primarily as a of payment of lease terms, interest and other financial
expenses. This show the expansion strategy of the company and the future goal to expand
into the Indian Domestic aviation market and keep its position as the “King of the India
Skies”
References:

https://in.finance.yahoo.com/quote/INDIGO.BO/cash-flow?p=INDIGO.BO&.tsrc=fin- srch

https://www.goindigo.in/information/investor-relations/annual-report.html