MANAGING IN ECONOMIC VOLATILITY

By:
Dinesh Tiwari B39 Pankaj Singh Parihar B53 Keshav Lagwal B64 Vipin N Nair B65 Deepak Raj Joshi B66 Pankaj Deswal B68

Introduction
Incorporated in 1995 as Deccan Aviation

The name was changed to Kingfisher Airlines in 2008

MD: Dr Vijay Mallya No 2 Airline in India before 2011 Market Cap: Rs 7500 million, Revenue: Rs 1400 million Now on the verge of Bankruptcy Total debt : Rs 1.35 billion Began with a share price: Rs 64 Current share price: Rs 9.31

CAUSE AND EFFECT DIAGRAM

Addl loan of 1000 cr
Bank converted 750 cr to equity (23% stake in KFA)

Restructuring of debt No assets to sell or mortgage

Decline in passengers Flight cancellations

Strikes and attrition Delay in salary payment

BPCL filed court case Owes Rs 890 cr to fuel suppliers

Hyd and Bgl asked for landing charges

Undisclosed landing charges to AAI

Debt of Rs 7000 crore

Hostile Economic Climate

Operational loss of Rs 1027 cr last year

Dec in EPS

16 Consecutive quarterly losses High Borrowing rate Weakening rupee

High expenses

Dec in profit margin

From 240 to 175 flights per day

Inc fuel prices

20% of earnings paid as interest

Price war

28 planes left as compared to 64

High Competition

19 aircrafts returned since 2009

Perspective

Key Result Critical Metric Area Result Critical success Perspective Key Result Key Result Critical Metric Perspective Key Metric Metric Factor Area success Area Area success Factor Factor

Current Target Business Action Required Value Value Initiative Current Target Action Current Current Target Business Target Business Business Action Action Value Required Value Value ValueValue Initiative Value Initiative Initiative Required Required

Organisation 1) Retention Efficient Hire HR Lots of Judicious Team Retention of Finance Restru Economical Routing Operational off Customer Optimum Bulk order, Keeping Rs High PayIncreaseInclusion of FDI in Involvement Moderate Increaseon Allow FDI Price Operation 1)1) Covering Changes Reducing Concentrate al Learning of talent HR persons money being use of building talent by (Performance Pricing cture of Investors (Satisfaction) Reducing accumulate 7000Cr low profit costs are Debt pricingSecuritization ( pricing sales, Discrimination (Excellence) Untapped in the Routes 4-5 revenue domestic and Growth departme with spent on funds activities incentives/perks/ ) Debt Selling Reduce off cost per potential Policies d NPAsticket debt by 30% to cities high market debts) Negotiation nt proven promotional bonus operational with Banks for cities and per mitigate track extravaganza investment cost start year operatio record flights to nal cost 2) those Cost Reducing Efficient Providing Yearly cost toHuge rate Adhere High ProfitBetter Reducing Better Render Reducing Cutting ascutting by Loss Generatio Financial costing Lease Burden Service Service schedule of service quality at services as cities Debt n promised 10 15% No fleet Cancellatio compared low price to increase promised Equity cash inflow cuts or n to 2) payment of Adequate Reduce Salary not To pay To inculcate To maintain the 2)Ratio Seek Seek govt. cancellatio16 Tocompetitor govt get Seek Fresh salaries fund unnecess being paid the salary sense of cost and profit n subsidiaries in support consecutive into confidence and investment ary and clear loyalty with optimum fuel prices quarterly profit good business from investors expendit the towards the utilization of losses plan to boost ure unpaid company resource confidence in salary govt

Gantt Chart
Tasks / Activities Team Building activities Inculcate sense of loyalty towards the company Retention of talent by incentives/perks/bonus Fresh investment from investors to boost confidence in govt.
W W W W W W W W W W1 W1 W1 W1 W1 W1 W1 W1 W1 W1 W2 W2 W2 W2 W2 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4

Allow FDI
Render services as promised Price Discrimination Reducing Lease Burden to increase cash inflow Negotiation with Banks for investment Involvement of Investors

Project Scope
Initiative Dependencies
Statement of work Expected results
Analyzing the current structure of debt and restructure it.
Current economical and Financial environment Stakes of parties involved in debt lending Legal structure regarding aviation industry Restructuring the debt taken from various parties and easing financial pressure on the company Conversion of debt into equity shares from lenders and promoters Increased loan tenures Low borrowing costs

Timelines Budget Constraints

April 2012 March 2013 (Fiscal year) As required