Financial reporting &

analysis
IMB 2 Red – Group 6
Gaurav Dabas
Krishna Prasanna
Muskan Goyal
Pankti Shah
Parag Karnekar
Shahida Anware
Supriya Jangre
 MAIN OBJECTIVE
Our main objective is to understand the
aviation industry, through comparative
analysis between Indigo and Spice Jet.
Understand the Financial Statements and
compare relative “soundness” of the
company (also with the industry).
Give a judgement on which company
performs better for investment.
 About the industry
 India is the 9th largest Aviation Market in the
world with a size around US $16 billion and
poised to be the 3rd largest by 2020.
 Civil aviation sector has been growing steadily
registering a growth of 13.8% during the last 10
years
 India is rapidly building capabilities to emerge as
a preferred destination for manufacturing of
aerospace components.
 India is among the top 5 fastest growing aviation
markets globally with 275 million new passengers.
As per IATA’s latest report on the Indian
Aviation Industry, these were the key
findings:

Indian Aviation is growing fast

Air transport makes a significant economic
contribution to India
India will soon be the third largest domestic
market (behind the US and China)
India's international market is growing
more slowly than domestic
The Indian outbound air cargo market
topped 1 million tonnes in 2017 (+16.9% on
2016)
 About the company
Indigo Spice Jet
 IndiGo (InterGlobe Aviation  SpiceJet Limited is an Indian
Limited) is an Indian low-cost low-cost airline headquartered
airline headquartered at Gurgaon, in Gurgaon, India.
Haryana, India. It is the  It is the second largest airline in
largest airline in India by the country by number of
passengers carried and fleet size, domestic passengers carried,
with a 47.0% domestic market with a market share of 13.6% as
share as of August 2019. of March 2019.
 It is the seventh largest carrier in  The airline operates 312 daily
Asia with over 46 million flights to 55 destinations,
passengers carried in 2017. The including 47 Indian and 7
airline operates flights to 82 international destinations from
destinations – 60 domestic and 22 its hubs at Delhi, Kolkata,
international. Mumbai and Hyderabad.
 About the company
Indigo Spice Jet
 It has its primary hub  Established as air taxi
at Indira Gandhi provider ModiLuft in 1994
International Airport, Delhi.
 It took delivery of its first and then re-christened as
aircraft in July 2006 and Spice Jet in 2004.
commenced operations a  The airline operated its
month later.
 The airline became the first flight in May 2005.
largest Indian carrier in The airline operates a fleet
passenger market share in of Boeing 737 and
2012.
 The company went public
Bombardier Dash 8
in November 2015. aircraft.
 Ratio Analysis
PROFITABILITY RATIOS
Indigo Spice Jet

2019 2018 2017 2019 2018 2017

-
Return On Equity(%) 2.26 31.68 43.90 90.13 -70.71
1,318.80

Return on Assets (%) 0.68 11.72 10.62 -7.16 16.14 14.76

Net Profit Margin(%) 0.54 9.74 8.92 -3.46 7.26 6.95

ANALYSIS
 RATIO ANALYSIS
LIQUIDITY RATIOS
Indigo Spice Jet
2019 2018 2017 2019 2018 2017

Current Ratio 0.81 0.86 0.85 0.64 0.63 0.40

Quick Ratio 0.79 0.85 0.83 0.73 0.73 0.44

Inventory Turn Over

134.77 125.64 113.89 66.36 62.68 71.17
Ratio
Working Capital
-6256 -4520 -4992 -22500 -21568 -17591
(Days)
ANALYSIS
 RATIO ANALYSIS
SOLVENCY RATIOS
Indigo Spice Jet

2019 2018 2017 2019 2018 2017

-
Debt Equity Ratio 0.32 0.32 0.63 -2.78 -1.68
18.03

Interest Coverage
0.71 10.20 7.48 -4.64 15.47 13.02
Ratio
ANALYSIS
Other Relevant financial and
non-financial info
INDIGO

 Market share of 47.0% as of August, 2019

 Despite being a market leader in the Indian air carrier industry,
IndiGo reported a loss before tax of nearly 1.5 billion rupees at the
end of fiscal year 2019.
 Indigo airline’s low cost and no-frills approach to domestic flying
had been cited as one of the factors leading to its relative success in
India.
 According to the Directorate-General of Civil Aviation, IndiGo
airline carried over 43 million passengers during the fiscal year 2017.
 It was first among the country’s most punctual airlines with over 89
percent on-time arrivals. As a carrier that also had the least
complaints from the customer
 Recognized as ‘Great Place to Work for in India’ for 8 years in a row
 Spice Jet
 Market share of 12.8% as of August, 2019
 Spice Jet get India's “best airline award” at wings
India 2018
 Instead of competing with other airlines on busy
metro routes, the company's strategy has been to
link metro and non-metro destinations.
 Spice Jet targets cargo unit IPO amid e-commerce
boom
 Spice Jet post highest ever profit for Q1 at 262
crore.
 Spice Jet Standalone June 2019 Net sales at INR
3002.07crore up 34.27 Y-O-Y
 SPICEJET
STRENGTHS:
 Has strong backing by its promoters
 Is one of the largest low cost carriers in India
 Advantages in operations, low debt to keep it steady

WEAKNESSES:
 Low market share of SpiceJet due to presence of
significant competition
 Has limited destinations and international presence-
 Eagerness to follow aggressive discount fares in hopes of
increasing passenger load
 SpiceJet’s move to become the prime mover by being the
first airline flying to smaller cities hurt them badly
 INDIGO
STRENGTHS:
 Larger portion of revenue from auxiliary sources-
 Fuel burden strategy
 Cost cutting by controlling the employee-aircraft ratio (Efficiency)
 Operational Cost strategy Indigo gets its C checks done in Srilanka -
IndiGo’s strategy is to provide more capacity on select routes, rather
than spread itself thinly over several.

WEAKNESSES:
 Track record on environment consideration is not very encouraging
 Indigo Aviation business model can be easily replicated even with
the number of patents and copyrights the company possess.
 Lack of Work force diversity in domestic market
Conclusion