KINGFISHER AIRLINES

MANAGEMENT CONTROL SYSTEMS

SUBMITTED TO: PROF. NARENDER

SUBMITTED BY: SWAGATA GIRI VIKRANT SHINDE PRATIKSHA NIKHILESH JINDAL AMIT KUMAR

(10BSPHH010818) (10BSPHH010732) (10BSPHH010 (10BSPHH010 (10BSPHH010942)

Contents
Introduction: ................................................................................................................................................3 Objective and Scope: ...................................................................................................................................3 Organization Structure: ................................................................................................................................3 Management Style: ......................................................................................................................................4 Culture: ........................................................................................................................................................4 Control Processes: .......................................................................................................................................5 Rewards: ......................................................................................................................................................6 Rewards to Employees: ............................................................................................................................. 6 Rewards to the Company: ......................................................................................................................... 6 Rewards to Loyal Customers: .................................................................................................................... 7 Communication: ..........................................................................................................................................7 Internal Communication ........................................................................................................................... 7 External Communication........................................................................................................................ 8 Co-ordination: ............................................................................................................................................9 Recommendations: ....................................................................................................................................9 Conclusion: ................................................................................................................................................9 Exhibit I ......................................................................................................................................................10 Management Team ....................................................................................................................................10

Introduction:
Kingfisher Airlines is one of the leading private players in the Indian aviation industry. Incorporated in 1995 as Deccan Aviation, the company is engaged in the business of providing passenger services and helicopter charter services. The name was changed to Kingfisher Airlines in the year 2008. The airline is part of UB Group owned by Dr. Vijay Mallya. This airline offers three unique classes of services Kingfisher First (Business class), Kingfisher Class (Premium economy) and Kingfisher Red (Low fare). The company owns two subsidiaries namely Northway Aviation and Vitae India Spirits. Northway Aviation is engaged in the business of financing pre-delivery payments and aircraft acquisition. Kingfisher Airlines is only five star airlines in the Indian skies and is known for providing world class in flight services to its passengers.

Objective and Scope:

The objective of the study is to understand the following about Kingfisher Airlines: y y y y y Organization Structure of the company Management Style and Culture adopted by the managing authorities Control Processes implemented for improved efficiency and smooth functioning Rewards systems used for the internal employees Co-ordination and Communication within and outside the organization

All the above mentioned elements of the organization have been described in detail in order to have a complete understanding of the systems and processes in place for attaining improved efficiency, maintaining better relationships with all the stakeholders for achieving long term sustainability.

Organization Structure:
The structure that is followed at Kingfisher Airlines is a balanced functional matrix structure where teams of employees are frequently used to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. A project manager is assigned to oversee the project. Power is shared equally between the project manager and the functional managers. It brings the best aspects of functional and projective organizations.

Management Style:
The management style adopted by Kingfisher Airlines is democratic in nature as employees are given immense freedom to express their opinions and are encouraged to participate in decision making. The standards for business conduct provide that, Kingfisher Airlines upholds ethical and legal standards vigorously, as they pursue their financial objectives and the Company, the Board and senior management personnel do not compromise honesty and integrity. The members of the Board and Senior Management Personnel of the Company acknowledge and accept:

The responsibility to carry out their duties in an honest and business like manner and within the scope of their authority, as set forth in the general laws of the land where they operate and in the Memorandum of Association and Articles of Association of the Company, Corporate Governance Guidelines.

They are entrusted with and responsible for the oversight of the assets and business affairs of the Company in an honest, fair, diligent and ethical manner, and with the duty to make and enact informed decisions and policies in the best interests of the Company and its stakeholders.

Accordingly, the Board has adopted this Code and the Directors and Senior Management Personnel are expected to adhere to the standards of loyalty, good faith, and the avoidance of conflict of interest.

Suspected violation of the code is reported to the Chairman of the Board or the Chairman of the Audit Committee. All reported violations are appropriately investigated. Directors who violate the Code may be subject to sanctions, up to and including a request to resign as Director or the Boards seeking removal of the Director, where permitted by applicable law.

Culture:
The organization has an informal culture and an open door policy to make the place more employee friendly. The intense focus on quality of relationships, and Kingfishers willingness to invest long term in the maintenance of relationships among the managers, employees, and business partners forms its most distinctive organizational competency. Kingfishers commitment and passion for the shared goals, shared knowledge, and mutual respect, joins with frequent, timely, problem-solving communication to form a powerful force called Relational Coordination which forms an integral part of coordination and communication within the organization and is imbibed well within the organizational culture. Also, Employees are encouraged to be themselves at work and to openly recognize major events in the lives of employees and their families. Fun is taken seriously. This kind of culture helps bridge the work and 4

family divide. Additionally, Kingfisher uses Cross-functional, not functional performance measures to encourage participants to focus on learning rather than blaming when things go wrong. This avoids finger pointing and is useful in measuring performance.

Control Processes:
The control process involves carefully collecting information about a system, process, person, or group of people in order to make necessary decisions about each. Managers set up control systems that consist of four key steps establish standards to measure performance, measure actual performance, compare performance with standards and take corrective actions. This is done in order to achieve efficiency and desired organizational goals. In regards to Kingfisher airlines: Kingfisher Airlines has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly and applicable statutes, codes of conduct and corporate policies are duly complied with.

The Internal audit department reviews the adequacy and efficacy of the key internal controls, guided by the Audit Committee of the Board. One of the objectives of the Audit Committee is to review the reports submitted by the Internal Audit Department and to monitor follow-up and corrective action by Management.

The company has a compliance procedure to ensure that all laws, rules and regulations applicable to it are complied with.

The Company Secretary is the designated as the Compliance Officer to ensure compliance with SEBI regulations and with the Listing Agreement with National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

It has a process of both external and internal safety audits for each area of operation. It is in full compliance with all laws, rules and regulations relating to airworthiness, air safety and other statutory operational requirements.

As part of its Risk Management strategy, its strategies, processes, procedures and guidelines are reviewed on a continuous basis to effectively identify and mitigate risks. Further, the Management has developed a procedure to ensure adequate disclosures of key risks and mitigation initiatives which are also reported to the Audit Committee of the Board.

Kingfisher Airlines has also reengineered Guest Processing Functions by entering into a strategic partnership with Sabre Airline Solutions. With the implementation of Sabre Airline Solutions` passenger reservations and departure control systems, the Sabre Sonic Passenger Solutions, Kingfisher Airlines manages its reservations, pricing, ticketing and reporting efficiently. By doing so, Kingfisher Airlines can now benefit from the integration, consistency of service and crossdepartment best practices. It is a single vendor engagement for more than 20 enterprise applications.

Kingfisher Airlines is also among the first in India to offer the latest range of check-inoptions for its guests, including "Web check-in" facilities and "Roving agents" that use mobile devices to check in guests to help alleviate check-in queues at airports.

Rewards:
Rewards to Employees:
Employee Stock Option Plan (ESOP): During the period from July 1, 2009 to March 31, 2010, the Company allotted 328385 Equity Shares of Rs. 10/- each against the exercise of equivalent vested options for its employees. During the year 731,400 options have been granted afresh under ESOP 2009 which will vest from September, 2009 and February, 2010 over a period of four anniversaries thereof.

Rewards to the Company:

y y y y '5-STAR AIRLINE' award by Skytrax for 3rd consecutive year, 2010 Best Airline in India and Central Asia, Best Economy Class Seats and Staff Service Excellence Award for airlines in India and Central Asia in World Airline Awards,2010. 'Indias Favourite Airline' in HT MARS Consumer Satisfaction Survey , 2009

'Best Airline in India and Central Asia', 'Best Cabin Crew-Central Asia' for Kingfisher Airlines and 'Best Low-Cost Airlines in India and Central Asia' for Kingfisher Red services in SKYTRAX World Airline Awards, 2009.

Rewards to Loyal Customers:

y King Club is the membership card offered to the clients who frequently fly with Kingfisher airlines. It involves benefits such as Bonus King Miles, Complimentary Business Travel Insurance, Traveler Services, Emergency Services and other membership rewards. Along with basic membership there are four Membership Tiers within King Club; King Red, King Silver, King Gold and King Platinum. Each tier offers a unique and expanding suite of valuable benefits and exclusive privileges.

Kingfisher Airlines Inked Strategic Alliance with American Express. The partners announced the launch of Indias first airline corporate charge card program specifically targeted at the small to medium sized enterprise (SME) market. It involves benefits such as 8% corporate rebate, business savings plus program, reduces administrative cost for companies, optional spending limits, MIS to track expenses and savings on travel, online program management.

Communication:
In today's global business environment, effective organizational communication--internal and external-has a significant impact on an organization's success. Effective communication is a prerequisite for implementing organizational strategies as well as for managing day to day activities through people. So communication is not an issue to be taken lightly.

Internal Communication (communication with employees)

Kingfisher Airlines build and sustain relationships with employees through: y y y Shared goal Shared knowledge Mutual respect

Kingfishers commitment and passion for shared goals, shared knowledge and mutual respect joins with frequently, timely and problem solving communication forms a powerful force. This habit of sharing ideas and knowledge brings benefit across the business.

Practices used for building high performance relationships with employees: y Lead with credibility and care: The top management team has built trust over time by being upfront and consistent in their message. The employees are made to think and act like owners. Kingfisher has been known for saturating its people with information that will help them better understand the company and its mission, customers and competition. It is known for leaders leading leaders. y Invest in frontline leadership: Supervisors are there to advice the frontline employees which makes problem solving an easy task. y Hire and train for relational competence: Training is geared towards building functional expertise as well as relational competency. Most positions are filled through internal promotions and through lateral moves across departments creating a great deal of internal job mobility and therefore opportunities for learning about other parts of the operation. y Use conflicts to build relationships: Informational gathering meetings suggesting that conflicting parties have to bare their souls to achieve reconciliation. y Create boundary spanners: The operation agent is at the centre of the communication among the various functional groups to get the plane uploaded, serviced and reloaded. They manage the flow of information across boundaries. Also engage in relationship building, developing and mutual respect among fellow employees. y Make union your partners not adversaries: Respectful relationship between company management and unions chosen by frontline employees appear to set the tone for respectful relationships throughout the company.

External Communication (communication with customers & suppliers)

External communication covers how a provider interacts with those outside their own organization like suppliers, customers, local authorities and other organizations. Many services require customers to participate in creating the service product. In the airline industry, it is very important for the company to consider the customers as a part of the company in order to serve them better. The inseparability of services leads to customer being the co-producer.

The customer base of Kingfisher Airlines includes Business Class travelers, Corporate, Leisure travelers, Students, King Club members. Communication with customers by Kingfisher Airlines is carried out through: y Advertisements in television, newspapers, business magazines, etc 8

y y y

Very famous Kingfisher Yearly Calendar Sponsorship to various events Loyalty programs like King Club

Most people think of clear communications in terms of their customers. But contacts with those who supply services and products is also crucial. Kingfisher Airlines always emphasizes to build the relationships with the airport it services, air traffic controllers and aircraft manufacturers. Suppliers for Kingfisher Airlines includes HPCL which is Kingfisher Airline's largest aviation turbine fuel (ATF) supplier & Lufthansa Technik who are the leading provider for maintenance, repair and overhaul (MRO) of airplanes, components and engines.

Coordination:
Kingfisher Airlines believes in the development of building long term relationships with its employees, suppliers and customers. Hence, Relational Coordination is a powerful tool adopted by Kingfisher Airlines. Impact of coordination on efficiency and quality of services provided: y y y Reduction in turnaround time. Decrease in consumer complaints. Decrease in flight delays.

Also, Flexible job boundaries help to build stronger relationships between functions, improving coordination between them to form Relational Coordination.

Recommendations:
Certain recommendations to Kingfisher Airlines would be: y In the culture of Kingfisher Airlines, too much of importance is given to the informal approach and the fun aspect. So in this regard, more professional attitude needs to be brought in, otherwise some taken for granted assumptions may creep in amongst the employees. y Secondly, though the decentralized process of decision making has been successful so far, in the near future more layering is required to keep a control over the entire system.

Conclusion:
The importance of control in management cannot be underestimated. It involves control protocol, employee behavior, and other ethics along with the kind of organization structure and culture, management style and communication systems. It is important to have proper systems in place in order to continue to have balanced growth for an organization.

Exhibit I Management Team

Kingfisher Airlines is led by a dynamic, extremely talented and experienced team: Board of Directors y y y y y y y y Dr. Vijay Mallya, Chairman & CEO Mr. Subhash Gupte, ViceChairman, The UB Group Mr. Piyush Mankad Mr. A.K. Ravi Nedungadi Mr. Diwan Arun Nanda Mr. V.K. Rekhi Dr. Naresh Trehan Mr. Rup Pillai

Operating Team y y y y y y y y y y y y y y y y y y y y Mr. A. Raghunathan, Executive Vice President and CFO Mr. Hitesh Patel, Executive Vice President Mr. Rajesh Verma, Executive Vice President Mr. Amit Agarwal, Senior Vice President- Corporate Development & Planning Captain D D Gandhi, Vice President Operations Chandrashekhar Nene, Vice President IT Mr. C.S. Tomar, VP- Engineering & Maintenance Bharat Raghavan, Assistant Vice President - Legal and Secretarial Ms. Rubi Arya, Assistant Vice President HR Mr. Ajit Bhagchandani, General Manager - In-Flight-Services Mr. Ashwani Khanna, General Manager - Airport Services Mr. Bhupesh Joshi, General Manager Airports Capt Jesudasan, Chief Examiner Captain K. Ravindran, General Manager - Flight Safety Major Leslie Ojjit Missal, General Manager Security Mr. Ratan Ratnakar, General Manager - Revenue Optimization 14 Mr. Sanjay Bahadur, General Manager - Corporate Affairs Mr. Shailesh Borkar, General Manager Finance Mr. Umesh Rindani, General Manager - Revenue Accounts 10

y y y y y y

Mr. S.K. Ghorai, General Manager - Quality Control Captain Sanjeev Marwah, GM-Flight Ops (A320) Capt PA Bhushan, GM-Flight Operations (ATR) Mr. Gaurav Rathore, General Manager - Quality & Guest Commitment Mr. Vijay Nair, General Manager Cargo Mr. V. Seetharaman, General Manager - Engineering

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