The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last few 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. Aviation industry is one of the most important industries of any country because of its economic and social viability. The aviation industry not only contributes to Gross Domestic Product (GDP) of the country but it also improves employment statistics of the country. Aviation industry also plays a vital role in execution of domestic and international trade. In India nearly 25 airlines companies operating out of which major portion of market share were captured by InterGlobe Aviation Ltd. i.e Indigo Airlines, approximately 48% of market share hold by Indigo Airlines as of November, 2019. It started its business operations on 4th August, 2006. In the financial year 2018-19, Indigo Airlines has generated revenue of Rs. 298.2 billion and earned profit of Rs.1.6 billion by carrying 64 million passenger. In the present paper at attempt was made to analyse the profitability of Indigo Airlines during the last decade using various profitability ratios and statistical measures at appropriate places.

1. Profitability Analysis of Indigo Airlines - A study
Rupesh Yadav
Research Scholar
Department of commerce
The University of Burdwan
Presented at Surendranath Evening College on 27.02.2019

2. Introduction
 The civil aviation industry in India has emerged as one of the fastest growing industries in the
country during the last few 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. Aviation industry is one of the most important industries of any country because of its
economic and social viability. The aviation industry not only contributes to Gross Domestic
Product (GDP) of the country but it also improves employment statistics of the country. Aviation
industry also plays a vital role in execution of domestic and international trade. In India nearly 25
airlines companies operating out of which major portion of market share were captured by
InterGlobe Aviation Ltd. i.e Indigo Airlines, approximately 48% of market share hold by Indigo
Airlines as of November, 2019. It started its business operations on 4th August, 2006. In the
financial year 2018-19, Indigo Airlines has generated revenue of Rs. 298.2 billion and earned
profit of Rs.1.6 billion by carrying 64 million passenger. In the present paper at attempt was made
to analyse the profitability of Indigo Airlines during the last decade using various profitability
ratios and statistical measures at appropriate places.

3. Review of Related Literature
Kathiravan and Venkateswar (2019) made a study on the Relationship between crude oil price changes and airlines price. For this
study six airlines companies and three crude oil markets were selected according to market capitalization for the period from
January 1, 2007 to November 30, 2018 by using various statistical tool and techniques such as mean, median, standard deviation.
The study revealed that Air India, Indigo, Jet Airways and Spice Jet experienced statistically significant relationships between
their stock returns and crude oil price.
Ali and Divya (2019) conducted a comparative study on the extent of impact of changes in WC on financial health of Air India
and Indigo Airlines during the period 2011-12 to 2016-17. The study found that the performance of Indigo Airlines was far better
as compared to Air India during the period under study.
Muthu and Devi (2019) studied the WCM of Jet Airways and Indigo Airlines Airways for the period 2013-14 to 2017-18. In this
study the efficiency of WCM was ascertained using ratio analysis technique. The study concluded that the performances of both
the airline companies were satisfactory during the period under study
Kalpana and Muthusamy (2018) carried out a study in which the WCM of three selected airline companies was analysed for the
period 2010-11 to 2016-17 by using various standard ratios. Relevant statistical tools were used in analysing and interpreting the
data. The study also used Y-score model to assess WCM efficiency. The study revealed that all the selected companies performed
well in managing their WC during the period under study.
Kulkarni (2018) in her study on the Analysis of Z Score for BSE listed Airline companies in India. For the study six airline
companies were taken up during the study period 2015-16 to 2017-18 by using Altman’s Z score for non manufacturing firms. The
findings of the study showed that Indian airline industry was running into a high risk of financial distress during the period under
study.

4. Objective of the study
To analyze the trend in profitability of the company under study by using some profitability
indicators.
To ascertain the status of the company in respect of its profitability more precisely applying
comprehensive rank score.
To examine the nature and extent of relationship between the selected profitability indicators of
the company and its determinants.
To measure the joint effect of the determinants on the selected profitability indicator of the
company under study.

5. Methodology
 The present paper is analytical in nature and completely based on secondary data.
The data of Indigo Airlines for the period 2009-10 to 2018-19 used in the present
study were collected from secondary sources i.e. Capitaline Corporate Database of
Capital Market Publishers (I) Ltd., Mumbai. For measuring profitability of the
company under study, six ratios namely, gross profit ratio (GPR), net profit ratio
(NPR), operating profit ratio (OPR), return on capital employed (ROCE), and return
on net worth (RONW) were used. ROCE was also taken as a overall profitability
measure in the present study. In the present study FATR, ITR, DTR and CTR were
taken as the determinants of profitability. While analysing the profitability of Indigo
Airlines the simple statistical tools like arithmetic mean (AM), statistical technique
like Spearman’s rank correlation analysis and statistical tests, namely t test and F
test were applied at appropriate places.
,

6. Empirical results and discussion
In Table I, an attempt was made to analyze the profitability of Indigo Airlines by using some selected
profitability indicators. In this table the average values of the selected profitability indicators were ascertained
by applying arithmetic mean. For identifying the nature of trend in each of the liquidity indicators during the
period under study, linear trend equation was fitted and in order to test whether the slopes of the trend lines
were statistically significant or not, t-test was conducted
Table 1
Indigo Airlines
Ratios relating to Profitability
Ratio
YEAR GPR NPR OPR ROCE RONW
2009-10 22.25 21.14 24.19 35.67 426.63
2010-11 15.08 16.96 16.25 32.88 342.08
2011-12 2.34 2.30 3.41 5.03 36.93
2012-13 11.72 8.56 12.51 31.28 173.48
2013-14 6.31 4.27 7.41 9.77 85.58
2014-15 15.43 9.37 16.51 28.12 317.71
2015-16 20.63 12.31 22.80 37.83 126.5
201617 14.00 8.93 16.19 26.17 51.03
2017-18 15.48 9.74 17.27 24.99 36.35
2018-19 2.14 0.55 4.12 0.19 -3.26
Average 12.54 9.41 14.07 23.19 159.30
Maximum 22.25 21.14 24.19 37.83 426.63
Minimum 2.14 0.55 3.41 0.19 -3.26
Slope -0.509 -1.129 -0.422 -1.399 -35.439
t-value 0.642 1.819 0.512 0.946 2.860*
*Significant at 10 percent level
** Significant at 5 percent level
***Significant at 1 percent level
Source: Compiled And ComputedFrom Capitaline CorporateDatabase Of Capital Market Publishers(I). Ltd Mumbai

7. Empirical results and discussion
In Table II for the purpose of ascertaining the profitability status of Indigo Airlines more precisely, a
composite rank test based on the sum of the scores of the separate individual ranking was made. Under this
a too high value implies a more favorable profitability position and ranking was done in that order. While
ascertaining the ultimate rank, the principle that the lower the point scored the more favorable is the
profitability position was adopted.
.
Table II
Indigo Airlines
Statement of ranking in order of Profitability
Year
GPR
(A)
NPR(B
)
OPR
(C)
ROCE
(D) RONW(E)
Profitability Rank
Sum of
Ranks Ri =
(AR + BR
+…. + ER)
Ultimate
Rank
Average of
ultimate
rank
AR BR CR DR ER
2009-10 22.25 21.14 24.19 35.67 426.63 1 1 1 2 1 6 1
5.42010-11 15.08 16.96 16.25 32.88 342.08 5 2 5 3 2 17 3
2011-12 2.34 2.30 3.41 5.03 36.93 9 9 10 9 8 45 9
2012-13 11.72 8.56 12.51 31.28 173.48 7 7 6 4 4 28 6
2013-14 6.31 4.27 7.41 9.77 85.58 8 8 8 8 6 38 8
2014-15 15.43 9.37 16.51 28.12 317.71 4 5 4 5 3 21 4
5.62015-16 20.63 12.31 22.80 37.83 126.5 2 3 2 1 5 13 2
2016-17 14.00 8.93 16.19 26.17 51.03 6 6 7 6 7 32 7
2017-18 15.48 9.74 17.27 24.99 36.35 3 4 3 7 9 26 5
2018-19 2.14 0.55 4.12 0.19 -3.26 10 10 9 10 10 49 10
Source: Compiled And Computed From Capitaline Corporate Database Of Capital Market Publishers (I). Ltd Mumbai

8. Empirical results and discussion
In Table III, it was attempted to ascertain the nature and extent of relationship between the earning
capability of Indigo Airlines and its determinants for the entire study period through Spearman’s
correlation coefficient between ROCE and each of the selected measures relating to assets
management efficiency. These correlation coefficients were tested by t test.
Table III
Indigo Airlines
Analysis of correlation between Selected Profitability Measure and its Determinants of Indigo Airlines
Correlation
Between
Correlation
Measure
ROCE
and
FATR
ROCE
and
ITR
ROCE
and
DTR
ROCE
and
CTR
Spearman -0.286 -0.327 0.139 0.138
*Significant at 10 percent level
** Significant at 5 percent level
***Significant at 1 percent level
Source: Compiled And Computed From Capitaline Corporate Database Of Capital Market Publishers (I). Ltd Mumbai

9. Empirical results and discussion
In Table IV for identifying the factors making significant contribution towards changing the profitability of Indigo
Airlines during the study period, multiple regression analysis was made. The joint effect of FATR, ITR, DTR and CTR of
the company on its ROCE was measured using the analysis of multiple correlation coefficients (R). The partial
regression coefficients were tested by t test while F test was applied to examine whether the multiple correlation was
significant or not. Enough care was also taken in selecting the independent variables (FATR, ITR, DTR and CTR) to
estimate the dependent variable (ROCE).
Table IV
Indigo Airlines
Analysis of Multiple Correlation and Multiple Regression of Selected Profitability Measure on its Determinants
Regression Equation: ROCE = α+ β1. FATR+ β2. ITR+ β3.DTR+ β4.CTR+e
35.685
β1 -5.119***
β2 -0.054
β3 0.107
β4 -0.037
R 0.205
R2 0.452***
(15.976)
* Significant at 10 per cent level
**Significant at 5 per cent level
***Significant at 1 per cent level
Source: Compiled And Computed From Capitaline Corporate Database Of Capital Market Publishers (I). Ltd Mumbai.

10. Concluding Remarks
A significant declining trend in RONW of Indigo Airlines was observed during the
study period.
All five profitability indicators used in the study showed downward trend during
the period under study. It can be concluded that the profitability status of the
company declined with the passage of time during the period under study.
The net outcome derived from the comprehensive rank test indicates that the
profitability status of the company was almost same in the both the halves during the
period under study.
The study also reveals that not a single efficiency indicator made any notable
contribution for enhancing the overall profitability of the company during the period
under study.
The fixed assets management, inventory management, debtors management and
cash management of the company contributes only 45.2% towards enhancing the
overall profitability of the concern during the period under study. So, the company
should adopt suitable measures to eradicate such inefficiencies.
.

11. Thank You