FINANCIAL MANAGEMENT

Long term fund analysis

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INDIGO

IndiGo is an Indian low-cost airline headquartered in Gurugram, Haryana,

India. It is the largest airline in India by passenger’s carried and fleet size, with
a 60.4% domestic market share as of July 2020. It is also the largest individual
Asian low-cost carrier in terms of jet fleet size and passengers carried, and the
sixth largest carrier in Asia with over 6.4 crore (64 million) passengers carried
in financial year 2018–19. The airline operates 1,500 flights every day to 87
destinations – 63 domestic and 24 international. It has its primary hub at Indira
Gandhi International Airport, Delhi.The airline was founded as a private
company by Rahul Bhatia of InterGlobe Enterprises and Rakesh Gangwal in
2006. It took delivery of its first aircraft in July 2006 and commenced
operations a month later. The airline became the largest Indian carrier by
passenger market share in 2012. The company went public in November 2015.
HISTORY OF COMPANY
IndiGo was founded in 2006 as a private company by Rahul Bhatia of
InterGlobe Enterprises and Rakesh Gangwal. InterGlobe had a 51.12% stake in
IndiGo and 47.88% was held by Gangwal's Virginia-based company Caelum
Investments. IndiGo placed a firm order for 100 Airbus A320-200 aircraft in
June 2005 with plans to begin operations in mid-2006. IndiGo took delivery of
its first aircraft on 28 July 2006, nearly a year after placing the order. It
commenced operations on 4 August 2006 with a service from New Delhi to
Imphal via Guwahati. By the end of 2006, the airline had six aircraft, and nine
more were acquired in 2007. In December 2010, IndiGo replaced state-run
carrier Air India as the third largest airline in India, behind Kingfisher Airlines
and Jet Airways with a passenger market share of 17.3%.In 2011, IndiGo placed
an order for 180 Airbus A320 aircraft in a deal worth US$15 billion. In January
2011, after completing five years of operations, the airline got permission to
launch international flights.[19] In December 2011, the DGCA expressed
reservations that the rapid expansion could impact passenger safety.In
February 2012, IndiGo took delivery of its 50th aircraft, less than six years after
it began operations. For the quarter ending March 2012, IndiGo was the most
profitable airline in India and became the second largest airline in India in
terms of passenger market share. On 17 August 2012, IndiGo became the
largest airline in India in terms of market share surpassing Jet Airways, six years
after commencing operations.In January 2013, IndiGo was the second-fastest-
growing low-cost carrier in Asia behind Indonesian airline Lion Air. In February
2013, following the announcement of the Civil Aviation Ministry that it would
allow IndiGo to take delivery of only five aircraft that year, the airline planned
to introduce low-cost regional flights by setting up a subsidiary. Later, IndiGo
announced that it planned to seek permission from the ministry to acquire four
more aircraft, therefore taking delivery of nine aircraft in 2013. As of March
2014, IndiGo is the second-largest low-cost carrier in Asia in terms of seats
flown.In August 2015, IndiGo placed an order for 250 Airbus A320neo aircraft
worth $27 billion, making it the largest single order ever in Airbus history.
IndiGo announced a ₹3,018 crore (US$420 million) initial public offering on 19
October 2015 which opened on 27 October 2015. In December 2019, the
airline became first Indian airline to operate 1,500 daily flights. On 31
December 2019, it became India's first airline to have a fleet size of more than
250 aircraft
Long term fund ( statement taken from money control)

NON-CURRENT 2021 2020 2019 2018 2017  

LIABILITIES

Long Term 381.63 346.59 2,193.67 2,241.37 2,395.71  

Borrowings

Deferred Tax 0.00 0.00 64.42 369.53 161.81  

Liabilities [Net]

Other Long Term 23,082.68 18,875.60 7,536.77 5,121.12 3,966.02  

Liabilities

Long Term 552.29 563.50 275.82 196.89 122.39  

Provisions

TOTAL NON- 24,016.60 19,785.68 10,070.68 7,928.91 6,645.93

CURRENT
LIABILITIES

From the statement above we can infer that comparing last three years in
2019 the borrowed 2193.67 cr . and in 2020 it have been decreased to
346.59cr. it was the end of 2020 the covid 19 breakdown caused global closing
of airlines. Because of the pandemic cause the long term borrowing have been
slightly increases from 346.59cr to 381.63 cr. As a profitable venture by looking
into the statement we can see the growth that the long term borrowing from
2017 to 2020 was decreasing. It shows the profitability. Last year the
borrowing increases because of pandemic restrictions.
IndiGo posted a consolidated net loss of ₹870.81 crore in the March quarter,
from a year-ago profit of ₹596 crore. This was due to a surge in cost, amid
tepid revenue growth, which was compounded by flight restrictions to
international sectors that saw a rise in covid-19 cases. The airline's net debt
stood at ₹23,551.6 crore on 30 June, up 27.8% from the year-ago period.
over the past year, INDIGO has reduced its debt from ₹26b to ₹25b – this
includes long-term debt. With this reduction in debt, INDIGO currently has
₹71b remaining in cash and short-term investments for investing into the
business. Additionally, INDIGO has produced ₹39b in operating cash flow in the
last twelve months, leading to an operating cash to total debt ratio of 159%,
meaning that INDIGO’s current level of operating cash is high enough to cover
debt. This ratio can also be a sign of operational efficiency as an alternative to
return on assets. In INDIGO’s case, it is able to generate 1.59x cash from its
debt capital.
The flight company has been emerging as debt free company as 2020 but the
pandemic forces them to raise the fund.

 The board of directors of InterGlobe Aviation Limited, which operates the

country's largest domestic airline IndiGo, has approved raising up to ₹4,000
crore through a qualified institutions placement. In mid-august 2020 approved
the raising of funds for an aggregate amount not exceeding ₹4,000 crores
through an issue of equity shares by way of a qualified institutions placement
QIP is a capital-raising tool through which listed companies can sell shares,
fully and partly convertible debentures, or any securities, other than warrants
that are convertible into equity shares, to qualified institutional buyers.

In 2020 the debt equity share stood at 1.96 in 2019 and 2018 .35 and .47
respectively.
The debt-equity ratio is a measure of the relative contribution of the creditors
and shareholders or owners in the capital employed in business. Simply stated,
ratio of the total long term debt and equity capital in the business is called the
debt-equity ratio. A debt-to-equity ratio is one of the metrics you can use to
evaluate a company’s health—specifically, whether or not the company is
standing on stable financial ground.
The debt-to-equity ratio tells you how much debt a company uses to finance its
operations.
For instance, if a company has a debt-to-equity ratio of 1.5, then it has RS 1.5
of debt for every RS 1 of equity.
Generally, a good debt-to-equity ratio is anything lower than 1.0. A ratio of 2.0
or higher is usually considered risky. Here the company debt-equity ratio is
1.96 it shows high risk that the company borrowings is high. Comparing
previous year the ratios are less than 1 so the company is in stable and less
risk.

BALANCE SHEET OF MAR MAR 20 MAR 19 MAR 18 MAR 17  

INTERGLOBE AVIATION (in Rs. 21
Cr.)

  12 12 mths 12 mths 12 mths 12 mths  

mths

EQUITIES AND LIABILITIES  

SHAREHOLDER'S FUNDS  

Equity Share Capital 384.91 384.80 384.41 384.41 361.47  

TOTAL SHARE CAPITAL 384.91 384.80 384.41 384.41 361.47  

Reserves and Surplus - 5,461.2 6,513.8 6,693.0 3,417.7  

314.00 5 2 4 5

TOTAL RESERVES AND - 5,461.2 6,513.8 6,693.0 3,417.7  

SURPLUS 314.00 5 2 4 5

TOTAL SHAREHOLDERS FUNDS 70.91 5,856.5 6,938.9 7,077.4 3,779.2

6 1 5 2
Looking into the equity share capital we can identify that slight increase. The
company is having a stable equities shareholders for the last few years.
Looking into 2021 slight increase. It shows the increase of issue of shares. The
total shareholder fund shows a negative. Huge difference comparing to the
past few years. The company has raised their fund through issuing share.
Looking into the reserve and surplus it have been negative figure it shows that
the company exhaust the reserve and surplus. Main reason is the pandemic
effects.

Operating Profit -25.46 4038.15 -205.44 2956.51 2143.30

EBITDA 1010.88 5574.40 1119.50 3903.37 2932.37

Depreciation 4698.69 3973.61 759.58 436.88 457.25

Other Write-offs .00 .00 .00 .00 .00

EBIT -3687.81 1600.78 359.92 3466.49 2475.12

Interest 2141.98 1875.87 508.96 339.81 330.78

EBT -5829.79 -275.09 -149.05 3126.68 2144.34

Taxes .00 -26.93 -305.18 884.30 485.15

Profit and Loss for the Year -5829.79 -248.16 156.13 2242.37 1659.19

Non-Recurring Items .00 1.10 -3.06 .00 .00

Other Non-Cash Adjustments .00 .00 .00 .00 .00

Other Adjustments .00 -1.10 3.06 .00 .00

REPORTED PAT -5829.79 -248.16 156.13 2242.37 1659.19

The shares in Rs in lakhs are 2021 2020 2019 2018 2017

Shares in Issue (Lakhs) 3849.10 3847.96 3844.07 3844.07 3614.68
EPS = PAT/NO OF EQUITY SHARES
2021= -5829.79/3849.10 = -151.458
2020= -248.16/3847.96 = -6.449
2019= 156.13/3844.07 = 4.06
2018= 2242.37/3844.07 = 58.33
2017= 1659.19/3614.68 = 45.90

Here we can infer that the EPS have been reduced negatively in last two years.
It shows that the earnings to equity shareholders have been reduced
negatively. In the last year it is because of pandemic affect. In last two years
the airline companies cannot work throughout.

Through this analysis we can find that the company have been effected widely.
So the borrowings of past two years have been increase. As their plan they are
making the company to debt free but all the plan have been braked by covid
pandemic