Project Report on Telecom Industry by Puneet Jain 082 MBA , DIAS

PROJECT REPORT

ON

FINANCIAL COMPARISON OF BSNL WITH OTHER

MAJOR PLAYERS IN THE INDUSTRY

A Report submitted in partial fulfillment of requirements for

Master in Business Administration, GGSIPU

Training Period: June-July, 2009

Submitted By:

PUNEET JAIN

Enroll. No. 0821233908

Summer Training Project Report

UNDER THE GUIDANCE OF

Internal Guide: - External Guide:-

Mrs. Haritika Chhatwal Mr. Raj Pal Nanda

(Faculty) C.A.O (NTR region)

DIAS (GGSIPU) BSNL

DELHI INSTITUTE OF ADVANCE STUDIES

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STUDENT UNDERTAKING

I, Puneet Jain hereby declares that the project report “Financial comparison of BSNL

with other Major players in telecom industry” assigned to me at BSNL during my

training session for the partial fulfillment of MBA degree from DELHI INSTITUTE OF

ADVANCE STUDIES, affiliated to IP UNIVERSITY is the original work of me and the

information provided by me is authentic and true to the best of my knowledge.

This project work has not been submitted by anyone to any other institution or university

for the award of MBA or any other degree.

PUNEET JAIN (MBA III SEMESTER)

Acknowledgement

The success of any project study depends upon a number of factors among which the

proper guidance from the experts in the industry and a faculty plays an important role.

I take this opportunity to convey my sincere thanks and gratitude to all those who have

directly or indirectly helped and contributed towards the completion of this project.

I take here a great opportunity to express my sincere and deep sense of gratitude to

Lecturer Mrs. Hartika Chhatwal , for giving us an opportunity to work on this project.

The support & guidance from madam, was of great help & it was extremely valuable. I

would like to express my gratitude to madam for her constant support and

encouragement.

I take this platform to convey my gratitude to the officials of BSNL for their prompt

response and guidance. I would like to express my gratitude to Mr. Raj Pal Nanda

(Chief Accounts Officer, TR Section, Finance) for his constant support and

encouragement. Without his outright support and prompt response, it would not be

possible to do any justice as well as bring authenticity to the project.

Puneet Jain

Executive Summary

This is a brief report of eight weeks Summer Internship project titled “Financial

Comparison of BSNL with Other major players in Telecom Industry” conducted in

Northern Telecom Region, Eastern Court, and BSNL. This report examines the analysis

of the statement like Balance sheets and Profit and Loss A/c of past five years to know

the performance of the company in comparison with other players in the industry.

Data of BSNL is collected from the company’s annual reports and the data of other

players like Airtel, Idea, TATA and MTNL is searched on their websites. Then data of all

these companies are arranged in the uniform manner so that financial factors can be

drawn out easily.

With the help of theoretical knowledge on the part of ratios and cash flow, all the

relevant ratios of each and every company for past five years have been founded. With

the help of regression analysis projected performance of various companies for 2009-10

have been forecasted. After a thorough study and discussion with the company’s

professional, comments were taken so that Interpretation of these ratios became easy and

accurate.

After analyzing the project, it can be concluded that despite of having good liquid assets

BSNL is having weak financial position as compared to any other private player in the

industry. Company’s performance have been deteriorated over the years and if the trend

remains continue than it have been projected that company will have to suffer net losses

in the upcoming year 2009-10. So, it is high time for the company to take some strict

measure to meet the intense competitive industry. Hence it have been advised for the

company to use cost cutting like voluntary retirement of useless chunk employees as it is

having highest no. of useless employees and having golden handshake with the highly

intellectual professionals in the industry especially form Bharti Airtel. Similarly various

other recommendations have been given in the project.

TABLE OF CONTENT

S. No. Particulars

Chapter 1 Research Study

1.1 Objectives of Study

1.2 ResearchMethodology

1.2.1 Research Design

1.2.2 Data collection

Chapter 2 Company Profile

2.1 Industry Profile

2.2 Company Profile (BSNL)

2.2.1 Board of Directors

2.2.2 Basic Service offered

2.2.3 Organisation Structure

2.2.4 Accounting Policies of

2.3 Competitors Profile

2.3.1 Bharti Airtel

2.3.2 Reliance Comm

2.3.3 Vodafone

2.3.4 Idea Cellular

2.3.5 Aircel

2.3.6 MTNL

2.3.7 BPL Mobile

2.3.8 HFCL Infotel

Chapter 3 Literature Review

Chapter 4 Conceptual Framework

4.1 Essentials of Financial Statement

4.2 Parties Interested

4.3 Tools of Financial Analysis

4.3.1 Ratio Analysis

4.3.2 Cash Flow Statements

Chapter 5 Finding And Analysis

5.1 Current Ratio

5.2 Earning Per Share

5.3 Debtor Turnover Ratio

5.4 Debt Equity Ratio

5.5 Return on Capital Employed

5.6 Price Earning Ratio

5.7 Net Profit Margin Ratio

5.8 Analysis of Cash Flows

5.8.1 Net Cash From operating Activities

5.8.2 Net Cash Used in Investing Activities

5.8.3 Net Cash Used in Financing Activities

Chapter 6 Conclusion

6.1 Conclusion

6.2 Suggestions

Chapter 7 Limitations

Chapter 8 Bibliography

Chapter 9 Annexure

BSNL P&L (5 Years)

BSNL Balance Sheet (5 Years)

BSNL Cash Flows (5 Years)

Bharti Airtel Balance Sheet (5 Years)

Bharti Airtel P&L (5 Years)

Bharti Airtel Cash Flows (5 Years)

MTNL Balance Sheet (4 Years)

MTNL P&L (4 Years)

MTNL Cash Flows (4 Years)

Idea Balance Sheet (4 Years)

Idea P&L (4 Years)

Idea Cash Flows (3 Years)

Tata Comm P&L (5 Years)

Tata Comm Balance Sheet (5 Years)

Tata Comm Cash Flows (5 Years)

Chapter 10 Miscellaneous

Chapter 1Chapter 1Chapter 1Chapter 1

RESEARCH

STUDY

1.1 OBJECTIVES OF THE STUDY

The basic objective of doing the project is to :

� Analyze the financial statements of past 5 years of BSNL and

Other major competitors in the telecom industry.

� Predict the performance in next year (2009-10) on the basis of

last 5 year performance.

� Describe the trends of various financial factors of BSNL over

past 5 years.

� Studying the relationship among the various financial factors as

disclosed in the financial statements of various companies in

the Indian telecomm Industry.

Minor objectives are:

1. Know the Financial Position: The basic objective of studying the Financial

statements of the company is to know the financial position of the company.

2. Help in planning: Financial Analysis helps in planning and forecasting. Over a

period of time, a firm or industry develops certain norms that indicate future

success & failure.

3. Inter- Intra firm Comparison: Ratio Analysis provides the data for inter-firm

comparison as well as intra firm comparison. Ratios highlight the factors

associated with successful and unsuccessful firms. They also reveal attractiveness

and unattractiveness of the firm in the industry, over-valued and under-valued

firms.

1.2 RESEARCH METHODOLOGY

Methodology is the basic framework and the approach that has to be followed to carry

out the approach used to collect the data, the sources of primary data, i.e., from where

and how it has been collected.

� Research is a diligent and systematic inquiry or investigation into a subject in

order to discover or revise facts, theories, applications etc.

� Methodology is system of methods followed by particular discipline.

Thus, Research Methodology is the way how we conduct our research.

In the present project report type of research conducted is Quantitative research.

Exploratory research is undertaken which involves extensive scanning of secondary data.

For my project most of the finance related books have been considered . The best

websites are considered which gives all the efficient and effective information.

References for the project are from the websites and books and the company’s annual

reports.

It is assured that the project has been completed with full dedication, sincerity and

required intensity of hard work.

1.2.1 RESEARCH DESIGN

It helps to tackle the problem of bringing various phases of research under control. The

research design helps to design the decision with respect to:

• What type of data is needed?

• From where data can be found?

• What period of time study include?

• How much material will be needed?

• What technique of gathering data will be adopted?

• How will data be analyzed?

Generally three types of research are included in research design. These are as follows:

� Exploratory research

� Descriptive and diagnostic research

� Experimental research

In the present project report both primary and secondary data is taken so descriptive and

exploratory research is done. This research focuses on discovery of insights and

relationships among various financial factors among various companies.Companies

which are taken as a sample of Indian Telecom Industry is based on the market share.2

from the Top five companies and 2 from the Bottom five companies (Ratings have been

provided to 10 companies in the telecom industry according to their respective market

share )have been considered for comparison with BSNL.

1.2.2 DATA COLLECTION

Sources of secondary data are

(a) Authenticated company’s website on Internet.

(b) Annual reports provided by BSNL,Bharti Airtel and MTNL of financial year

2004-05, 2005-06, 2006-07, 2007-08, 2008-09.


COMPANY

PROFILE

2.1 INDUSTRY PROFILE

Today the Indian telecommunications network with over 375 Million subscribers is

second largest network in the world after China. India is also the fastest growing telecom

market in the world with an addition of 9- 10 million monthly subscribers. The tele-

density of the Country has increased from 18% in 2006 to 33% in December 2008,

showing a stupendous annual growth of about 50%, one of the highest in any sector of

the Indian Economy. The Department of Telecommunications has been able to provide

state of the art world-class infrastructure at globally competitive tariffs and reduce the

digital divide by extending connectivity to the unconnected areas. India has emerged as a

major base for the telecom industry worldwide. Thus Indian telecom sector has come a

long way in achieving its dream of providing affordable and effective communication

facilities to Indian citizens. As a result common man today has access to this most needed

facility. The reform measures coupled with the proactive policies of the Department of

Telecommunications have resulted in an unprecedented growth of the telecom sector.

The thrust areas presently are:

1. Building a modern and efficient infrastructure ensuring greater competitive

environment

2. With equal opportunities and level playing field for all stakeholders.

3. Strengthening research and development for manufacturing, value added services.

4. Efficient and transparent spectrum management

5. To accelerate broadband penetration

6. Universal service to all uncovered areas including rural areas.

7. Enabling Indian telecom companies to become global players.

Recent things to watch in Indian telecom sector are:

1. 3G and BWA auctions

2. MVNO

3. Mobile Number Portability

4. New Policy for Value Added Services

5. Market dynamics once the recently licensed new telecom operators start rolling

out

6. Services.

7. Increased thrust on telecom equipment manufacturing and exports.

8. Reduction in Mobile Termination Charges as the cost per line has substantially

reduced

9. Due to technological advancement and increase in traffic.

India's telecom sector has shown massive upsurge in the recent years in all respects of

industrial growth. From the status of state monopoly with very limited growth, it has

grown in to the level of an industry. Telephone, whether fixed landline or mobile, is an

essential necessity for the people of India. This changing phase was possible with the

economic development that followed the process of structuring the economy in the

capitalistic pattern. Removal of restrictions on foreign capital investment and industrial

de-licensing resulted in fast growth of this sector. At present the country's telecom

industry has achieved a growth rate of 14 per cent. Till 2000, though cellular phone

companies were present, fixed landlines were popular in most parts of the country, with

government of India setting up the Telecom Regulatory Authority of India, and measures

to allow new players country, the featured products in the segment came in to

prominence. Today the industry offers services such as fixed landlines, WLL, GSM

mobiles, CDMA and IP services to customers. Increasing competition among players

allowed the prices drastically down by making the mobile facility accessible to the urban

middle class population, and to a great extend in the rural areas. Even for small

shopkeepers and factory workers a phone connection is not an unreachable luxury. Major

players in the sector are BSNL, MTNL, Bharti Teleservices, Hutchison Essar, BPL, Tata,

Idea, etc. With the growth of telecom services, telecom equipment and accessories

manufacturing has also grown in a big way.

Indian Telecom sector, like any other industrial sector in the country, has gone through

many phases of growth and diversification. Starting from telegraphic and telephonic

systems in the 19th century, the field of telephonic communication has now expanded to

make use of advanced technologies like GSM, CDMA, and WLL to the great 3G

Technology in mobile phones. Day by day, both the Public Players and the Private

Players are putting in their resources and efforts to improve the telecommunication

technology so as to give the maximum to their customers.

TELECOM SUBSCRIBER BASE IN INDIA

Indian telecommunication Industry is one of the fastest growing telecom market in the

world. The mobile sector has grown from around 10 million subscribers in 2002 to

reach 150 million by early 2007 registering an average growth of over 90%. The two

major reasons that have fuelled this growth are low tariffs coupled with falling handset

prices.

Surprisingly, CDMA market has increased it market share upto 30% thanks to Reliance

Communication. However, across the globe, CDMA has been loosing out numbers to

popular GSM technology, contrary to the scenario in India.

The other reason that has tremendously helped the telecom Industry is the regulatory

changes and reforms that have been pushed for last 10 years by successive Indian

governments. According to Telecom Regulatory Authority of India (TRAI) the rate of

market expansion would increase with further regulatory and structural reforms.

Even though the fixed line market share has been dropping consistently, the overall

(fixed and mobile) subscribers have risen to more than 200 million by first quarter

of 2007. The telecom reforms have allowed the foreign telecommunication companies to

enter Indian market which has still got huge potential. International telecom companies

like Vodafone have made entry into Indian market in a big way.

Currently the Indian Telecommunication market is valued at around $100 billion (Rupees

400,000 crore). Two telecom players dominate this market - Bharti Airtel with 27%

market share and Reliance Communication with 20% along with other players like BSNL

(Bharat Sanchar Nigam Limited) and AT&T. One segment of the market that has been

puzzling is broadband Internet. Despite the manner in which the country’s Internet

market has been booming, India’s move into high-speed broadband Internet access has

been distinctly slow. And, while there appears to be considerable enthusiasm amongst the

population for the Internet itself, this has not been reflected in broadband subscription

numbers. In 2006 India witnessed a good surge in broadband users with the total

subscriber base in the country expanding by almost 200% to just over 2 million by

years end. Despite this surge, broadband penetration in India still remains around

only 0.2%; broadband services still account for only 25% of the total Internet subscriber

base, still in itself comparatively low. So, if 70% of total population is rural, the scope for

growth in this Industry is unprecedented.

The Ministry of Communications and Information Technology (MCIT) is has very

aggressive plans to increase the pace of growth, targeting 250 million telephone

subscribers by end-2007 and 500 million by 2010. Most of the expansion in subscribers is

set to occur in rural India. India’s rural telephone density has been languishing at around

1.9%. The subscriber addition rate has been strong in the last 12 months but the

regulatory developments will increase competition and thus curtail the long-term growth

rates of individual companies. The savings through the setting of tower companies will

partly go towards the higher capex and opex costs from more stringent spectrum

allocation norms for the incumbents.

The Telecommunications sector has been consistently adding more than 7 million

subscribers for the last 6 months, a very healthy net addition rate infact. All the private

operators GSM as well as the CDMA operators have been very consistent in their

performance. The sector provides very strong revenue as well as earnings visibility over

the next 12 months. However the recent regulatory developments are seem to be negative

for the telecom companies as it will increase the number operators per circle which will

intensify competition.

PSU Operators Subscriber Base

Private Operators Subscribers Base

2.2 COMPANY PROFILE

BSNL( BHARAT SANCHAR NIGAM LIMITED)

Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest

Telecommunications Company providing comprehensive range of telecom services in

India: Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service,

MPLS-VPN, VSAT, VoIP services, IN Services etc. Within a span of five years it has

become one of the largest public sector unit in India.

It has about 47.3 million line basic telephone capacity, 4 million WLL capacity, 20.1

Million GSM Capacity, more than 37382 fixed exchanges, 18000 BTS, 287 Satellite

Stations, 480196 Rkm of OFC Cable, 63730 Rkm of Microwave Network connecting 602

Districts, 7330 cities/towns and 5.5 Lakhs villages.

BSNL is the only service provider, making focused efforts and planned initiatives to

bridge the Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in

the country to beat its reach with its wide network giving services in every nook & corner

of country and operates across India except Delhi & Mumbai.

BSNL is numero uno operator of India in all services in its license area. The company

offers vide ranging & most transparent tariff schemes designed to suite every customer.

BSNL cellular service, CellOne, has more than 17.8 million cellular customers, garnering

24 percent of all mobile users as its subscribers. That means that almost every fourth

mobile user in the country has a BSNL connection. In basic services, BSNL is miles

ahead of its rivals, with 35.1 million Basic Phone subscribers i.e. 85 per cent share of the

subscriber base and 92 percent share in revenue terms.

BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers

who access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account

Less Internet (CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country.

BSNL has set up a world class multi-gigabit, multi-protocol convergent IP infrastructure

that provides convergent services like voice, data and video through the same Backbone

and Broadband Access Network. At present there are 0.6 million DataOne broadband

customers.

2.2.1 BOARD OF DIRECTORS

Corporate structure of BSNL Board consists of CMD & Five full time Directors,

Human Resource (HR), Consumer Mobility, Consumer Fixed Access, Finance,

Enterprise, who manage the entire gamut of BSNL operations. There are five

other Directors in the full Board of BSNL.

Board of Directors Designation

Shri Kuldeep Goyal CMD

Shri S.D. Saxena Director (Finance)

Shri Rajesh Wadhwa Director - Consumer Fixed Access

(CFA)

Shri R.K.Aggarwal Director - Consumer Mobility (CM)

Shri Rajendra Singh Director - Enterprise

Shri Gopal Das Director (HR)

Shri J.S.Deepak (I.A.S.) Govt. Director

2.2.2 Basic Services offered by the BSNL

The Basic telephone Services offered by the BSNL are:

1. Internet: Keeping the global network networked, the countrywide

Internet Services of BSNL includes Internet dial up/Leased Access service,

for web browsing and E-mail Applications.

2. ISDN: Integrated Service Digital Network Service of BSNL utilizes a

unique digital network providing high speed and high quality voice, data

and image transfer over the same line. It can facilitate both desktop video

& high quality video conferencing.

3. Intelligent Network Service: Intelligent Network Service (In service)

offers various value-added services such as:

- Free Phone Services (FPH)

- India Telephone Card (Prepaid Card)

- Account Card Calling (ACC)

- Virtual Private Network (VPN)

- Tele-voting

- Premium Rate Service (PRM)

- Universal Access Number (UAN)

4. Sulabh: It is the best available incoming-only plan. If anyone require the

landline b-fone predominantly for receiving incoming calls only, BSNL

brings you Sulabh Plan. The rentals in this plan are extremely low. If you

desire to make outgoing calls, this facility can also be given separately (or

one can also use ITC Cards with Sulabh Plan). These plans are now very

popular.

5. WLL (Wireless Land Line): There are two versions of WLL. These are

explained as follows:

- WLL Fixed (FWT): It is the Fixed Wireless Transmission. In this case, there

is a small box fitted with a small antenna at one’s premises and a normal

telephone instrument is connected to the box. There is no Telephone

copper wire connection as in the conventional telephone.

- WLL Mobile: In this case, Subscriber can carry a small handset of CDMA

technology. There is no antenna or any other equipment at your premises.

Branded as Tarang, this is the most reliable and affordable service giving

one’s the best of both fixed line & mobile telephone.

6. Mobile Services: BSNL’s Cellular Service is the India’s growing Cellular

Service. BSNL’s Cellular Service has taken the cellular telephone to the

masses through innovative technology and strategic pricing. This

ambitious service uses state-of-the-art GSM technology to attain global

excellence and leadership. BSNL’s entry into this sector has brought GSM

cellular service at an affordable cost to the common man. Customers have

respond tremendous faith in BSNL and it has enrolled over 1.07 crores

Cellular customers.

7. BSNL Internet Service: BSNL, India’s no.1, Internet Service Provider,

provides Internet service throughout the country (except Delhi and

Mumbai). Sancharnet Card: BSNL has also launched Internet Card. This

card is a prepaid Internet Access Card.

8. BSNL Broadband: The Broadband service from BSNL is widely used by

almost all the companies of India.

2.2.3 Organizational Structure of BSNL

2.2.4 ACCOUNTING POLICIES OF BSNL

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of Bharat Sanchar Nigam Limited(BSNL) are prepared under

the historical cost convention adopting the accrual method of accounting in accordance

with Indian Generally Accepted Accounting Principles and in accordance with the

provisions of the Companies Act, 1956 (the “Act”).

2. REVENUE RECOGNITION

Income from services is accounted for on accrual basis and in conformity with

Accounting Standard– 9 of ICAI. Accordingly,

a) Revenue for all services is recognized when earned and are realizable at the time of

billing. Unbilled revenues from the billing date to the end of the year are recorded as

accrued revenue during the period in which the services are provided. Provision is made

in respect of bills considered to be disputed (by the management), debts outstanding for

more than two years and for debts due for less than 2 years, to the extent considered

necessary by the management.

b) Installation Charges recovered from subscribers at the time of new telephone

connections are recognized as income in the first year of the billing.

c) In terms of an arrangement between the Department of Telecommunications (“DoT”)

and the Company, the charges for telecommunication services and other infrastructural

services provided by BSNL to DoT are neither being billed nor provided for.

d) Sale proceeds of scrap arising from maintenance and project works are taken into

miscellaneous income in the year of sale.

e) Income from SIMs, recharge coupons of Mobile, Prepaid Calling Cards, and Prepaid

internet connection cards are treated as income of the year in which the payment is

received since the extent of use of these cards within the financial year could not be

ascertained.

f) Wherever there is uncertainty in realization of income, such as liquidated damages,

claims on Government Departments & local authorities etc., these are recognized on

collection basis.

3. FIXED ASSETS

3.1 Fixed assets are carried at cost less depreciation. Cost includes directly related

establishment and other expenses including employee remuneration and benefits, directly

identifiable to the construction or creation of the assets.

3.2 Expenditure on replacement of assets, equipments, instruments and rehabilitation

works is capitalized if, in the opinion of the management, it results in enhancement of

revenue generating capacity.

3.3 Assets are capitalized to the extent completion certificates have been obtained,

wherever applicable.

3.4 The cost of stores and materials at the time of issue to a project is debited to CWIP.

3.5Cables are capitalized as and when ready for connection to the main system.

3.6Intangible assets are stated at cost of acquiring the same less accumulated depreciation

/amortization.

4. DEPRECIATION/AMORTIZATION

Depreciation is provided based on the Written Down Value Method at the rates

prescribed in Schedule XIV to the Companies Act, 1956 except for Subscriber

Installation. The Subscriber Installation is depreciated over the useful life of 5 years on

Written Down Value method. Assets costing up to Rs. 5,000 are depreciated fully in the

year of purchase. Similarly, partition works costing up to Rs. 2,00,000 are depreciated

fully in the year of construction. The depreciation on machinery & tools used both for

project and maintenance work is charged to profit and loss account instead of

capitalization. All telephone exchange buildings, administrative offices and captive

consumption assembling premises/workshops are considered as normal building and not

as factory building. Accordingly depreciation is charged uniformly. Intangible assets such

as Entry License Fee for Telecom Service operations are amortized over the license

period (i.e. 20 years) and standalone computer software applications are amortized over

the license period subject to maximum of 10 years as per straight line method.

5. IMPAIRMENT OF ASSETS

Assets, which are impaired by disuse or obsolescence, are segregated from the concerned

assets category and shown as ‘Decommissioned Assets’ and provision made for the loss,

if any, due to the difference between their net carrying cost and the net realizable value.

6. INVESTMENTS

Long-term investments are carried at cost, after providing for any diminution in value, if

such diminution is of a permanent nature.

7. INVENTORIES

Inventories are valued at cost or net realizable value as the case may be - cost ascertained

generally on weighted average method; obsolete/non moving inventories are valued at net

realizable value.

8. TAXES ON INCOME

Taxes on Income for the current period are determined on the basis of taxable income and

tax credits computed in accordance with the provisions of the Income Tax Act, 1961. In

accordance with the AS-22, Deferred Tax Liability is recognized on the timing

differences between accounting income and the taxable income for the period taking into

consideration the contents of Accounting Standard Interpretations 3 and quantified using

the tax rates in force or substantively enacted as on the Balance Sheet date. Deferred Tax

Assets are recognized and carried forward to the extent there is a virtual certainty that

such deferred tax assets can be realized.

9. PROVISIONS

Provisions are recognized when the Company has a present obligation as a result of past

events; it is more likely than not that an outflow of resources will be required to settle the

obligation; and the amount has been reliably estimated.

10. CONTINGENT LIABILITIES

Liabilities, though contingent, are provided for if there are reasonable chances of

maturing such liabilities as per management. Other contingent liabilities and claims, not

acknowledged as debts, are disclosed by way of notes.

11. EARNING PER SHARE

Earning Per Share ("EPS") comprises the Net Profit after tax (excluding extraordinary

income net of tax). The number of shares used in computing Basic & Diluted EPS is the

weighted average number of shares outstanding during the year.

2.3 COMPETITOR PROFILE

Market Share of Telecom Companies as on 31st Jan’09

TOP FIVE COMPANIES

The Top five companies, on the basis of ‘Market Share’ as on 31st January, 2009 are:

1. Bharti Airtel Ltd.

2. Reliance Communications Ltd.

3. Vodafone Essar Ltd.

4. BSNL

5. Idea Cellular + Spice

2.3.1 BHARTI AIRTEL LTD.

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti

Group has a diverse business portfolio and has created global brands in the

telecommunication sector. Airtel comes from Bharti Airtel Limited, India’s largest

integrated and the first private telecom services provider with a footprint in all the 23

telecom circles. Bharti Airtel since its inception has been at the forefront of technology

and has steered the course of the telecom sector in the country with its world class

products and services. The businesses at Bharti Airtel have been structured into three

individual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services

& Enterprise Services. The mobile business provides mobile & fixed wireless services

using GSM technology across 23 telecom circles while the Airtel Telemedia Services

business offers broadband & telephone services in 95 cities and has recently launched

India's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise services

provide end-to-end telecom solutions to corporate customers and national & international

long distance services to carriers. All these services are provided under the Airtel brand.

The company served an aggregate of 88,270,194 customers as of December 31, 2008; of

whom 85,650,733 subscribed to GSM services and 2,619,461 use the Telemedia Services

either for voice and/or broadband access delivered through DSL. Bharti Airtel is the

largest wireless service provider in the country, based on the number of subscribers as of

December 31, 2008. They also offer an integrated suite of telecom solutions to their

enterprise customers, in addition to providing long distance connectivity both nationally

and internationally. They have recently forayed into media by launching their DTH and

IPTV Services. All these services are rendered under a unified brand "Airtel".

2.3.2 RELIANCE COMMUNICATIONS LTD.

Reliance Communications is the flagship company of the Anil Dhirubhai Ambani Group

(ADAG) of companies. Listed on the National Stock Exchange and the Bombay Stock

Exchange, it is India’s leading integrated telecommunication company with over 71

million customers.

Their business encompasses a complete range of telecom services covering mobile and

fixed line telephony. It includes broadband, national and international long distance

services and data services along with an exhaustive range of value-added services and

applications. Our constant endeavour is to achieve customer delight by enhancing the

productivity of the enterprises and individuals we serve.

Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002,

coinciding with the joyous occasion of the late Dhirubhai Ambani’s 70th birthday, was

among the initial initiatives of Reliance Communications. It marked the auspicious

beginning of Dhirubhai’s dream of ushering in a digital revolution in India. Today, the

company can proudly claim that they were instrumental in harnessing the true power of

information and communication, by bestowing it in the hands of the common man at

affordable rates.

They endeavour to further extend their efforts beyond the traditional value chain by

developing and deploying complete telecom solutions for the entire spectrum of society.

It was established in the year 2004 as Reliance Infrastructure Developers Private Limited,

Reliance Communications started laying 60,000 route kilometers of a pan-India fibre

optic backbone with high capacity, integrated (wireless and wireline), convergent (voice,

data and video) digital network and to offer services spanning the entire infocomm value

chain. It is capable of delivering a range of services spanning the entire infocomm

(information and communication) value chain, including infrastructure and services for

enterprises as well as individuals, applications, and consulting.

2.3.3 VODAFONE ESSAR LTD.

Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced

operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license

for Mumbai. Vodafone Essar now has operations in 22 circles with over 65.92 million

customers**. The company is a joint venture of Essar Communication Holdings Ltd and

the UK-based Vodafone Group. Vodafone has partnered with the Essar Group as their

principal joint venture partner for the Indian market. They are in the business of cellular

telephony. Over the years, Vodafone Essar, under the Hutch brand, has been named the

‘Most Respected Telecom Company’, the ‘Best Mobile Service in the country’ and the

‘Most Creative and Most Effective Advertiser of the Year’.

Vodafone is the world’s leading international mobile communications company. It

currently has equity interests in 27 countries across 5 continents and 40 partner networks

with over 289 million proportionate customers worldwide. Vodafone has partnered with

the Essar Group as its principal joint venture partner for the Indian market.

Essar Global Limited (EGL) is a diversified business group spanning the manufacturing

and services sectors of Steel, Energy, Power, Communications, Shipping & Logistics,

and Projects. The group has operations and investments in India, Canada, USA, Africa,

the Middle East, the Caribbean and South East Asia and employs 30,000 people

worldwide.

Vodafone Essar Ltd provides services like 2G, which are based on 1800 Mhz and

900Mhz GSM digital technology. They offers voice and data services. In addition, they

offers postpaid connections activation, prepaid SIM cards and recharge coupons sale,

service activation/deactivation, postpaid tariff plan change, customer query resolution,

prepaid/postpaid SIM card replacement and upgradation, mobile number change, and

information on and subscription of value added services through stores.

**Figures from Cellular Operators Association of India, February 28, 2009

2.3.4 IDEA CELLULAR LTD. + SPICE

DEA Cellular is a publicly listed company, having listed on the Bombay Stock Exchange

(BSE and the National Stock Exchange (NSE) in March 2007. Idea Cellular Ltd.

is India's leading GSM mobile services operator. It has licenses to operate in 11 circles.

The company has a customer base of over 17 million. It is the first cellular company to

launch music messaging with Cellular Jockey, Background Tones, Group Talk, a voice

portal with Say IDEA and a complete suite of mobile email Services.

A brand known for many firsts, Idea was the first to launch GPRS and EDGE in the

country. Idea has received international recognition for its path-breaking innovations

when it won the GSM Association Award for "Best Billing and Customer Care Solution"

for 2 consecutive years.

IDEA Cellular is part of the Aditya Birla Group, India's first truly multinational

corporation. The group operates in 25 countries, and is anchored by over 1,25,000

employees belonging to 25 nationalities.

The Indian telecommunications market for mobile services is divided into 22 "Service

Areas" classified into "Metro", Category "A", Category "B" and Category "C" service

areas by the Government of India. These classifications are based principally on a Service

Area's revenue generating potential

Customer Service and Innovation are the drivers of this Cellular Brand. A brand known

for their many firsts, IDEA is the only operator to launch General Packet Radio Service

(GPRS) and EDGE in the country. IDEA has seen phenomenal growth since its

inception, the company's footprint idea is to first achieve critical mass, then drill deep

instead of spreading thin, however, does not increasing geographic footprint only, it also

drills deep and successfully attempts to provide excellent network coverage in all its

circles of operations.

BOTTOM FIVE COMPANIES

The Bottom five companies, on the basis of ‘Market Share’ as on 31st January, 2009 are:

1. Aircel Cellular Ltd. + Dishnet

2. Mahanagar Telephone Nigam Ltd. (MTNL)

3. BPL Mobile Communications Ltd.

4. HFCL Infotel Ltd.

5. Shyam Telecom Ltd.

2.3.5 AIRCEL + DISHNET

The Aircel Group is a joint venture between Maxis Communications Berhad of Malaysia

and Apollo Hospital Enterprise Ltd of India, with Maxis Communications holding a

majority stake of 74%.

Aircel commenced operations in 1999 and became the leading mobile operator in Tamil

Nadu within 18 months. In December 2003, it launched commercially in Chennai and

quickly established itself as a market leader – a position it has held since.

Aircel began its outward expansion in 2005 and met with unprecedented success in the

Eastern frontier circles. It emerged a market leader in Assam and in the North Eastern

provinces within 18 months of operations. Till today, the company gained a foothold in

14 circles including Chennai, Tamil Nadu, Assam, North East, Orissa, Bihar, Jammu &

Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala, Andhra Pradesh, Karnataka

and Delhi.

The Company has currently gained a momentum in the space of telecom in India post the

allocation of additional spectrum by the Department of Telecom, Govt. of India for 13

new circles across India. These include Delhi (Metro), Mumbai (Metro), Andhra Pradesh,

Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra & Goa, Rajasthan,

Punjab, UP (West) and UP (East).

Aircel has won many awards and recognitions. Voice and Data gave Aircel the highest

rating for overall customer satisfaction and network quality in 2006. Aircel emerged as

the top mid-size utility company in Business world’s ‘List of Best Mid-Size Companies’

in 2007. Additionally, Tele.net recognized Aircel as the best regional operator in 2008.

With over 16 million customers in the country, Aircel, the fastest growing telecom

company in India, has revved up plans to become a full-fledged national operator by end

of 2009.

2.3.6 MTNL

Mahanagar Telephone Nigam Limited (MTNL) was set up in 1st April of the year 1986

by the Government of India to upgrade the quality of telecom services, expand the

telecom network, introduce new services and to raise revenue for telecom development

needs of India's key metros, Delhi (the political capital) and Mumbai (the business capital

of India). The company has also been in the forefront of technology induction by

converting 100% of its telephone exchange network into the state-of-the-art digital mode.

MTNL as a company, over last nineteen years, grew rapidly by modernizing the network,

incorporating the State-of-the-art technologies and a customer friendly approach. The

Company providing various types of telecommunication services including Telephone,

telex, wireless, data communication, telematic and other like forms of communication

(Internet).

First digital exchange world technology brought to India by the company during the year

1986. Phone Plus services was offered by the company in the year 1988, it gives

multiplied benefits to telephone users. During the year 1992, the company introduced

Voice Mail Service. MTNL had introduced the Integrated Services Digital Network

(ISDN) services in the period of 1996. Apart from this IVRS (Interactive Voice Response

System) like local assistance changed number information, and fault booking system

ensuring round the clock service, a CD-ROM version of the telephone directory and an

on-line directory enquiry through PC was introduced during the year 1997. To facilitate

the clientele, MTNL launched the country's first toll-free service in Delhi in the period of

1998. During the year 1999, MTNL brought in the most widely using service called

Internet (Network of Networks), the extreme level of information exchange.

During the year 2001, the company launched GSM Cellular Mobile service under the

brand name Dolphin and in the same year MTNL also launched Wireless in Local Loop

(WLL) Mobile services under the brand name Garuda.

The Company established Wi-Fi & digital certification services in the identical year.

MTNL bagged the award for excellence in cost reduction in the year 2004. State of the

art training centre of the company 'CETTM' was commissioned in the year of 2004. The

Company introduced the broadband services under the brand name of 'TRI BAND'

during the year 2005. MTNL-STPI IT Services Ltd is a 50:50 Joint Venture between

Software Technology Parks of India (STPI) and the company. The Company has

restructured Millennium Telecom Ltd (MTL) as a Joint Venture company of MTNL and

BSNL with 51% and 49% equity participation respectively.

To remain market leader in providing world class Telecom and IT related services at

affordable prices, the company partaking its all efforts in the same business area and

MTNL wants to become a global player, also find a place in the Fortune 500' companies.

2.3.7 BPL MOBILE COMMUNICATIONS LTD.

BPL Mobile Communications Limited popularly known as BPL Mobile is an India-based

telecommunication service providing company. BPL Mobile Communications Limited is

an offshoot of the legendary business conglomerate ESSAR group. BPL Mobile

Communications Limited was established in the year 1995 and it is presently operating in

only in the city of Mumbai. BPL Mobile Communications Limited has revolutionized the

Indian mobile telecommunication industry. Within a short span of time the subscriber

base of BPL Mobile Communications Limited has reached the 1 million mark. This

gigantic mobile telecommunication company of India has grown in leaps and bounds and

it offers seamless service to its customers spread across Mumbai. Further, BPL Mobile

has gained tremendous popularity due to its competitive pricing of tariffs. BPL Mobile

offers high-class mobile service to its wide pool of Mumbai subscribers.

Further, it ranks very high on parameters like, customer satisfaction, billing

performance, voice quality etc and was thus ranked first in the category of Global System

for Mobile Communications (GSM) and Code Division Multiple Access (CDMA) of

mobile service providers, operating in Mumbai. Superior coverage and optimum sound

clarity are the strengths of BPL Mobile. BPL Mobile Communications Limited provides

its customers with world class mobile services, through the use of state-of-the-art

technology and network and this includes use of unique network design, the Qualnet,

Camel Phase 2 Intelligent Network (IN) platform and GPRS facilitating ultra modern

services like Multimedia Messaging Services (MMS), mobile browsing and Java based

mobile phone games. Mr. S. Subramaniam, CEO of the company, heads this leading

telecommunication company of India.

The products and services offered by BPL Mobile Communications Limited are as

follows -

• Prepaid Connections

• Postpaid Connections

• Prepaid Recharge Coupons

• Bill Payments

• Value Added Services (VAS)

• Service Inquiries

• SIM Replacements

• Handset Sales

2.3.8 HFCL INFOTEL LTD.

Incorporated on 2 Aug.'46, The Investment Trust of India (ITI) is managed by chairman

and managing director B K Kothari. During 2002-03 the name of the Company changed

to HFCL Infotel Ltd, as part of Company's diversification and restructuring programme,

HFCL Infotel Ltd ('transferor Company') a telecommunication Company operating in the

Punjab Circle merged with the Company through a Scheme of Amalgamation and

decided to hive off the business of Hire Purchase, Finance, Leasing and Securities

Trading by way of an outright sale with effect from 1st September 2002 to its wholly

owned subsidiary 'Rajam Finance & Investments Company (India) Ltd' now renamed as

'The Investment Trust of India Ltd'

Other group companies are Kothari Sugars and Chemicals and Madras Safe Deposit. In

Sep.'94, it came out with a rights issue of 21.79 lac shares (premium: Rs 30) aggregating

Rs 8.72 cr, to augment long-term working capital. The company is mainly engaged in

hire purchase, lease financing and investments. Its clients include individuals, firms as

well as corporate bodies.

ITI's business activities include sugar, petrochemicals, industrial alcohol, etc. It has two

subsidiaries -- ITI Pioneer AMC and ITI Capital Markets. ITI Pioneer AMC has

promoted Kothari Pioneer Mutual Fund. ITI has invested 55% of its capital in ITI Pioneer

AMC and the remaining 45% has been subscribed to by Pioneering Management

Corporation, US. During 1995-96, ITI Pioneer AMC Limited ceased to be a subsidiary of

the company. During 1997-98, The Company’s holding in ITI Capital Market Ltd was

sold to Kothari Pioneer AMC Ltd.

During 2003-04, The Company launched its Prepaid Mobile product and a complete

range of innovative value Added Services and Data products were launched in May 2004,

by the introduction of DSL-high speed Internet product. The company became the first

service provider to have launched DSL services in the state of Punjab and Chandigarh.

During 2004-05, The Company expanded its services to 125 cities/towns with 2.47 lacs

subscribers in Punjab.

The company is planning a venture into Video and Cable TV Services and making triple

play services by an expansion into the neighbouring states of Punjab. A wholly owned

subsidiary, Connect Broadband Services Limited was formed on July 2004, for the above

purpose.

The Company's services namely, Fixed Line Telephoney, Mobile Telephoney,

Broadband Internet Access and Data Networking Access are offered under the brand

name 'CONNECT'.


LITERATURE

REVIEW

Anderson (2008), in his single executive interview titled “Developing a route to market

strategy for mobile communications in rural India An interview with Gurdeep Singh,

Operations Director, Uttar Pradesh, Hutch India” suggests that managers need to go

beyond traditional approaches to serving the poor, and innovate by taking into account

the unique institutional context of developing markets. His practical implication says that

the experience of Hutchison Essar in India provides some important lessons for mobile

network operators (MNOs) and other firms in other developing markets who are hoping

to serve the rural poor: Hutchison has recognized the value of corporate and non-

corporate partners. The company has proactively established relationships with individual

entrepreneurs, and has provided has provided development support to other partners such

as distributors. The company has recognized the value of leveraging existing local

institutions, and has seen gaps in local infrastructure or missing services as potential

opportunities rather than barriers to growth. The company has seen the rural market as an

opportunity – not just an obligation to be served because of universal service obligations.

Also this article demonstrates that MNOs can deliver availability and affordability to

achieve increased individual or household penetration through business model

innovation.

Mani (2008) addresses a number of issues arising from the growth of telecom services in

India since the mid-1990s. It also discusses a number of spillover effects for the rest of

the economy and one of the more important effects is the potential to develop a major

manufacturing hub in the country for telecom equipment and for downstream industries

such as semiconductor devices. The telecom industry in India could slowly become an

example of the service sector acting as a fillip to the growth of the manufacturing sector.

A beginning towards this has been made. The formation of a Telecom Equipment Export

Forum and the announcement of the Indian Semiconductor Policy 2007 are steps in this

direction. Success crucially depends on the response of the private sector to these

incentives. Given the importance that a regulatory agency can play in this crafting, no

effort should be lost in strengthening the powers of the TRAI. The benefits to the Indian

economy from having both a strong services and manufacturing segments in the telecom

sector cannot be undermined.

Narayana (2008) estimates the contribution of telecommunication (or telecom) services

to aggregate economic growth in India. Estimated contribution is distinguished between

public and private sectors to highlight the impact of telecom privatization on economic

growth. Knowledge of policy determinants of demand of telecom services is shown to be

essential to enhance growth contribution of telecom services. Using a recent sample

survey data from Karnataka State in South India, price and income determinants of

demand for telecom services are estimated by capacity of telephone exchanges.

Estimation results offer evidence for significant negative own price elasticity and positive

income elasticity of demand for telecom services.

Sharma (2009) deals with the major challenges faced by India’s telecom equipment

manufacturing sector, which lags behind telecom services. Only 35% of the total demand

for telecom equipment in the country is met by domestic production. This is not

favourable to long-term sustained growth of the telecom sector. The country is also far

behind in R&D spending when compared to other leading countries. India needs to see an

increase in R&D investment, industry-academia-government partnership, better quality

doctoral education and incentives to entrepreneurs for start-ups in telecom equipment

manufacturing. In 2006-07, 65% of the total consumption of equipment was met through

imports. This trend has far-reaching implications for the economy and should not be

allowed to continue for long. In a country like India which has a problem of massive

unemployment, the manufacturing sector should be promoted to create more employment

opportunities.

Shah (February, 2009), has analysed Indian telecom industry and studied the sector

keeping in mind three companies; namely Bharti, R.Comm and idea in the background of

recent global meltdown. The study suggests that though there is no sign of slowdown in

this sector, but surely a strong turmoil is going on in the industry. The study states that

the sector is fairly immune from the current economic downturn & does provide a good

defensive bet in medium term. With the help of newer technologies, wireless penetration

is expected to increase in the near future, which is basically fuelling the growth of the

sector. While the 3G / Broadband adoption would ensure long term growth momentum,

the article has thoroughly investigated about the intense competitive scenario, pricing

pressure, high capital intensity & substantial regulatory uncertainties currently faced by

the industry. The article has also described the cause of being relatively safe of this

industry. The causes described by Shah are increasing rural coverage, rising affordability,

declining handset/subscription costs, substantially low tariffs & established

brand/distribution. However, the study also cautions the telecom industry that a steeper

economic slowdown could start impacting the subscriber usage patterns as well as

operator capital investments & thereby could substantially restrict revenue growth rates

going forward.


CONCEPTUAL

FRAMEWORK

Analysis of Financial Statements/Financial Analysis/Financial Statements Analysis

Financial Statements are the summarized statements of accounting data produced at the

end of the accounting process by an enterprise through which it communicates

accounting information to the external users. The external users can be investors, lenders,

suppliers and trade creditors, customers, government and their agencies, public at large

and employees. Analysis of Financial Statements is a systematic process of the critical

examination of the financial information contained in the financial statements in order to

understand and make decisions regarding the operations of the firm.

Customarily, a set of financial statements include:

(i) Balance Sheet

(ii) Profit and Loss Account

(iii) Schedules and notes forming part of the Balance Sheet and Profit & Loss Account

4.1 Essentials of Financial Statements

1. Accurate information

2. Understandability

3. Comparable

4. Verifiable

5. Relevant

6. Timeliness

4.2 Parties interested in Financial Statements or Users of Financial

Statements

1. Investors and Potential Investors

2. Creditors

3. Customers

4. Employees and Trade Unions

5. Government and its Agencies

6. Stock Exchange

4.3 Tools of Analysis of Financial Statements

� Ratio Analysis

� Cash Flow Statements

4.3.1 RATIO ANALYSIS

A Ratio gives the mathematical relationship between one variable and another. Ratio

analysis helps in valuing the firm in quantitative terms. Ratios are classified as follows:

1. Liquidity Ratios

2. Turnover Ratios

3. Profitability Ratios

4. Ownership Ratios

1. Liquidity Ratios

Liquidity implies firm’s ability to pay its debts in short run. This ability can be

measured by Liquidity Ratios. Current Ratio and Quick Ratio are the two ratios which

directly measure Liquidity. Receivables turnover Ratio and Inventory Turnover Ratio

are the two ratios which in directly measure Liquidity.

A. Current ratio = Current Assets Current Liabilities

Current assets which are converted into cash within one year.

Current liabilities are liabilities which are to be repaid within a period of 1

year.

IDEAL RATIO = 2:1

B. Quick ratio or Liquid ratio or Acid Test ratio = Quick Assets/Liquid Assets Current Liabilities

Quick Assets = Current Assets – Inventories- Prepaid expenses

Ratio of quick assets to quick liabilities. Quick assets which can be converted

into cash very quickly. Quick liabilities are liabilities which have to be

necessarily paid with in 1 year.

IDEAL RATIO = 1:1

2. Turnover Ratios (Activity Ratios)

A. Accounts Receivable Turnover ratio or Debtors Turnover Ratio

= Net Credit Sales Average Accounts Receivables

Average Accounts Receivables = Opening receivables + Closing receivables 2

It shows the Relationship between debtors and sales

B. Inventory Turnover Ratio = Cost of goods Sold Average Inventory

It indicates no. of times stock has been turned into sales in a year

Ideal Ratio = 8

Cost of goods sold = Sales – gross profit

Average Inventory = Opening Stock + Closing Stock 2 Stock Conversion Period = Cost of goods Sold * No of days in a

year/Average Inventory

C. Creditors Turnover ratio = Net Credit Purchases Average Creditors

Average Creditors = Opening Creditors + Closing Creditors 2 Relation ship between Creditors and Purchases

3. Profitability or Efficiency Ratios

These Ratios measure the efficiency of forms activities and its ability to generate profits.

(i) Gross Profit Margin Ratio

(ii) Net Profit Margin Ratio

(iii) Return On Equity

(i) Gross Profit Margin Ratio = Gross Profit

Net Sales

Gross Profit = Sales – Cost of goods sold

Net Sales = Sales – Sales Return - Excise Duty

There is no Ideal Ratio. Higher the ratio better will be the performance of

the business.

(ii) Net Profit Margin Ratio = Net Profit

Net Sales

It measures the overall efficiency of production, administration, selling,

financing, pricing and tax management. It shows the result of overall

operation of the firm.

4. Ownership Ratios

Capital Structure Ratios

a) Debt Equity Ratio = Debt Equity

= Long Term Liabilities + Current Liabilities Share Holders Funds

Ratio 2 or Less – Exposes Its Creditors Lesser Risk

Ratio >2 – Exposes Its Creditors Higher Risk

4.3.2 CASH FLOW STATEMENT

Introduction of Cash

Cash, the most liquid asset, and also referred to as the life blood of a business enterprise

is of vital importance to the daily operation of business firms. Its efficient management is

crucial to the solvency of business because cash is the focal point of the fund flow in a

business. ‘Cash’ refers to the cash as well as bank balance of the company to the end of

the accounting period, as reflected in the balance sheet of the company. While the profits

reflects the earning capacity of the company and cash reflects its liquidity position.

Introduction of Cash Flow

CASH FLOW is the movement of cash and its equivalents. It includes the inflow and the

outflow of cash during a particular period. All transactions which lead to increase in cash

and cash equivalents are classified as inflows of cash and all those transactions which

lead to decrease in cash and cash equivalents are classified as outflows of cash.

Cash Flow Statement is prepared with an objective to highlight the sources

and uses of cash and cash equivalents for a period. Cash Flow Statement is classified

under operating activities, investing activities and financing activities.


ANALYSIS

AND

INTERPRETATION

RATIO ANALYSIS

5.1 CURRENT RATIO

Projected

S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

1 BSNL 1.75 1.98 2.46 2.47 2.25 2.63

2 MTNL. 1.29 1.34 1.34 1.35 1.35 1.37

3 TATA TELECOM 1.84 1.19 1.08 1.44 1.31 1.13

4 BHARTI AIRTEL 0.47 0.44 0.47 0.57 0.69 0.70

5 IDEA CELLULAR 2.45 0.74 0.87 0.43 0.36 0.21

IDEAL RATIO = 2:1

Figure 5.1

Interpretation of figure 5.1

The two basic components of this ratio are current assets and current liabilities. Current

assets include cash and those assets which can be easily converted into cash within a

short period of time, generally, one year, such as marketable securities or readily

realizable investments, bills receivables, sundry debtors, (excluding bad debts or

provisions), inventories, work in progress, etc. Prepaid expenses should also be included

in current assets because they represent payments made in advance which will not have to

be paid in near future.

Current liabilities are those obligations which are payable within a short period of tie

generally one year and include outstanding expenses, bills payable, sundry creditors,

bank overdraft, accrued expenses, short term advances, income tax payable, dividend

payable, etc.

A relatively high current ratio is an indication that the firm is liquid and has the ability to

pay its current obligations in time and when they become due. On the other hand, a

relatively low current ratio represents that the liquidity position of the firm is not good

and the firm shall not be able to pay its current liabilities in time without facing

difficulties. An increase in the current ratio represents improvement in the liquidity

position of the firm while a decrease in the current ratio represents that there has been a

deterioration in the liquidity position of the firm. A ratio equal to or near 2 : 1 is

considered as a standard or normal or satisfactory. The idea of having double the current

assets as compared to current liabilities is to provide for the delays and losses in the

realization of current assets. However, the rule of 2 :1 should not be blindly used while

making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a

better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason

that current ratio measures the quantity of the current assets and not the quality of the

current assets. If a firm's current assets include debtors which are not recoverable or

stocks which are slow-moving or obsolete, the current ratio may be high but it does not

represent a good liquidity position.

Current Ratio of BSNL is increasing for each subsequent year i.e. from 1.75 in year

2004-05 to 2.25 in 2008-09. Forecast on the basis of regression analysis for the year

2009-10 current ratio is 2.63. This indicates that the company can successfully pay off its

debt while at the same time still have cash left over to continue operating. This is also

because of slow nature of Debt collection which makes company less liquid than what it

looks like in the trend.

The Current Ratio of MTNL and Tata Telecom is flatter over the subsequent year which

means company is maintaining significant liquidity over the period of time. Their

projected current ratio of the year 2009-10 is somewhat similar to the 2008-2009 i.e. 1.37

is projected for 2009-10 and 1.35 is the actual of 2008-09 for the MTNL.

Current Ratio of Bharti Airtel Ltd. is 0.69 for the year 2008-2009. This means that the

company is having fewer assets to cover the liability and also the investors should be

weary of the fact that the company cannot pay off its short-term debt if necessary

Current Ratio of IDEA is declining over the period of time i.e. 2.45in the year 2004-05 to

.36 for the year 2008-2009 and projected to be reduced till 0.21 for the year 2009-10.

This means that the company is having fewer assets to cover the liability and also the

investors should be weary of the fact that the company cannot pay off its short-term debt

if necessary and hence company’s liquidity position is very bad as compared to any other

telecom operator.

Conclusion

From the above figure we can easily state that among all the telecom operator BSNL is

having highest current ratio and it represent that BSNL is having very good liquidity and

can pay off their short term liability very easily as they are marinating huge cash reserves.

5.2 Earning Per Share

Projected


1 BSNL 15.65 15.28 14.03 4.44 1.15 1.08

2 MTNL. 15.05 9.21 7.4 6.46 5.45 2.129

3 TATA TELECOM 26.54 16.83 16.44 10.68 18.1 10.809

4 BHARTI AIRTEL 6.53 10.62 21.27 32.9 40.79 49.662

5 IDEA CELLULAR 0.1 0.56 1.94 3.96 3.96 5.44

Figure 5.2

Interpretation of Figure 5.2

The earnings per share is a good measure of profitability and when compared with EPS

of similar companies, it gives a view of the comparative earnings or earnings power of

the firm. EPS ratio calculated for a number of years indicates whether or not the earning

power of the company has increased.

EPS of majority of the company have been reduced significantly except Bharti Airtel and

Idea Cellular. Earning Per Share of BSNL have been reduced from 15.65 (2004-05) to

1.15 (2008-09) and projected from the regression analysis that it will reduce in 2009-10

to 1.08. This may be mainly because of decrease in income of services over the period of

time. Decrease in income from services can be attributed to increase in competitive

rivalry as various international players like Vodafone and Reliance came into the Indian

market with improved technology and made tariff wars to attract the customers.

EPS of Bharti Airtel have been increased significantly over the years i.e. 6.53 (2004-

05) to 40.79 (2008-09) and projected to be 49.662(2009-10).This is because of

improvement of technology by the company over the years as compared to other players

like BSNL which made the company to capture the market share of these companies who

doesn’t go in tandem with the changing technology.

Conclusion

From Earning per Share perspective Bharti Airtel is considered to be most attractive

company as the company’s earning potential have been increased irrespective of the

increase in competition in the Indian telecom market.

Market leaders of 2004-05 like BSNL and MTNL are having tough time because

their market share as well as profit margins has been reduced over the period of time

which leads to significant reduction in the earning power of the companies.

5.3 Debtor Turnover Ratio


1 BSNL 5.03 5.73 6.2 5.92 6.41 6.743

2 MTNL. 3.29 3.51 4.12 4.95 5.365 5.924

3 TATA TELECOM 6.3 5.62 4.78 3.25 3.12 1.995

4 BHARTI AIRTEL 11.38 12.57 14.31 12.28 12.78 13.417

5 IDEA CELLULAR 17.74 20.01 35.89 38.28 47.355 55.105

Figure 5.3


Figure 4.3 represents the Debtor Turnover Ratio of companies over past five year and the

projected ratio for 2009-2010.

A concern may sell goods on cash as well as on credit. Credit is one of the important

elements of sales promotion. The volume of sales can be increased by following a liberal

credit policy. The effect of a liberal credit policy may result in tying up substantial funds

of a firm in the form of trade debtors (or receivables). Trade debtors are expected to be

converted into cash within a short period of time and are included in current assets.

Hence, the liquidity position of concern to pay its short term obligations in time depends

upon the quality of its trade debtors.

Accounts receivable turnover ratio or debtor’s turnover ratio indicates the number of

times the debtors are turned over a year. The higher the value of debtor’s turnover the

more efficient is the management of debtors or more liquid the debtors are. Similarly, low

debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It

is the reliable measure of the time of cash flow from credit sales. There is no rule of

thumb which may be used as a norm to interpret the ratio as it may be different from firm

to firm.

Debtor Turnover Ratio of BSNL is 6.41 for the year 2008-2009. So the debtor velocity

is 365/6.41 which comes out as 56.94 days i.e. BSNL takes on an average 57 days to

collect its money back from the debtors, which is again higher than the industry

standards. Projected Debtor turnover for 2009-10 to improve and reach to 6.74 which

mean on average 54 days to convert the debtors into cash.

Debtor Turnover Ratio of Bharti Airtel Ltd. is 12.78 for the year 2008-2009. So the

debtor velocity is 365/12.78 which comes out as 28.56 days i.e. Bharti takes on an

average 28 days to collect its money back from the debtors, which is again lower than as

compared to the industry. Projected Debtor turnover ratio to improve and reach to 13.41

which mean 27 days to convert debtor into cash.

Debtor Turnover Ratio of IDEA is 47.33 for the year 2008-2009. So the debtor velocity

is 365/47.33 which comes out as 7.71 days i.e. IDEA takes on an average 8 days to

collect its money back from the debtors, which is a good sign for the company and

highest amongst the industry. Projection for 2009-10 is 55.10 which means only 6 days

are taken to convert debtors into cash.

Debtor Turnover Ratio for Tata Telecom is worse amongst the industry and its

position to convert debtors into cash has been deteriorating over the years ie from 6.3 in

2004-05 to 3.12 in 2008-09 which means now they take 117 days to convert debtors into

cash. So it is the sign of unattractiveness of the company.

Debtor Turnover Ratio of MTNL is- 5.36 for the year 2008-2009. So the debtor

velocity is 365/5.36 which comes out as 68 days i.e. MTNL takes on an average 68 days

to collect its money back from the debtors, which is again higher when compared to the

industry standards of 57 days (BSNL).

Conclusion

Among all the players of telecom industry Idea and Bharti both have good liquidity

position because their ability to convert debtors into cash is better from any other player

in the industry which also signifies that their risk of loss due to bad debt will becomes

low. BSNL is maintaining very low debtor turnover ratio which can be because of liberal

credit which they offer to their customers.

5.4 Debt Equity Ratio Projected


1 BSNL 0.31 0.29 0.26 0.24 0.27 0.235

2 TATA TELECOM ------- 0.02 0.03 0.12 0.34 0.39

3 BHARTI AIRTEL 1.1 0.65 0.47 0.33 0.28 0.22

4 IDEA CELLULAR 2.58 4.96 1.95 1.84 1.525 1.002

Figure 5.4


Debt to equity ratio indicates the proportionate claims of owners and the outsiders against

the firms assets. The purpose is to get an idea of the cushion available to outsiders on the

liquidation of the firm. However, the interpretation of the ratio depends upon the

financial and business policy of the company. The owners want to do the business with

maximum of outsider's funds in order to take lesser risk of their investment and to

increase their earnings (per share) by paying a lower fixed rate of interest to outsiders.

The outsider’s creditors) on the other hand, want that shareholders (owners) should invest

and risk their share of proportionate investments. A ratio of 1:1 is usually considered to

be satisfactory ratio although there cannot be rule of thumb or standard norm for all types

of businesses. Theoretically if the owner’s interests are greater than that of creditors, the

financial position is highly solvent. In analysis of the long-term financial position it

enjoys the same importance as the current ratio in the analysis of the short-term financial

position.

Debt-to-Equity Ratio of BSNL is 0.27 for the year 2008-09 which means that company

is using very less debt instruments while it is relying more on the shareholders capital.

This also indicates the company’s assets are primarily supplied with equity.

Debt-to-Equity Ratio of Tata telecom is 0.34 for the year 2008-2009 which means that

company is using its debt instruments in very less quantity while it is relying more on the

shareholders capital. There is the continuous trend in the use of debt instrument by the

company ie. Company was not using debt in 2004-05 and .02 in 2005-06 and expected to

be .39 till 2009-10.

Debt-to-Equity Ratio of Bharti Airtel Ltd. is 0.28 for the year 2008-2009 which means

that company is not using its debt instruments while it is relying more on the shareholders

capital. This also indicates the company’s assets are primarily supplied with equity.

Debt-to-Equity Ratio of Idea cellular is 1.52 for the year 2008-2009, which means that

company using more of debt instruments. This also indicates the company’s assets are

primarily supplied with debt.

Debt-to-Equity Ratio for MTNL is 0 for the year 2009-2010, which means the

company is totally dependent on Equity.

Conclusion

It can be concluded that all the major telecom companies are relying more on the equity

capital and not using debt instrument as the major source for financing the assets. Public

players like MTNL are not using at all and other companies like BSNL are using them in

very low quantity because of risky nature of return of telecom sector over the period of

time.

5.5 RETURN ON CAPITAL EMPLOYED

Projected


1 BSNL 10.09 9.94 9.05 4.97 1.46 0.433

2 MTNL. 10.16 5.95 6.77 6.48 4.785 3.763

3 TATA TELECOM 11.41 11.52 10.28 6.53 6.23 4.589

4 BHARTI AIRTEL 19.27 20.74 29.06 27.95 28.4 32.725

5 IDEA CELLULAR 7.52 10.44 14.96 16.92 20.64 23.912

Figure 5.5


The prime objective of making investments in any business is to obtain satisfactory return

on capital invested. Hence, the return on capital employed is used as a measure of success

of a business in realizing this objective. Return on capital employed establishes the

relationship between the profit and the capital employed. It indicates the percentage of

return on capital employed in the business and it can be used to show the overall

profitability and efficiency of the business.

Return on capital employed ratio is considered to be the best measure of profitability in

order to assess the overall performance of the business. It indicates how well the

management has used the investment made by owners and creditors into the business. It

is commonly used as a basis for various managerial decisions. As the primary objective

of business is to earn profit, higher the return on capital employed, the more efficient the

firm is in using its funds.

Return on Capital Employed Ratio of BSNL is 1.46 for the year 2008-2009, which

indicate that the company is earning 1.46 percent return on the net capital employed by

company that consists of fixed assets, investments and net working capital. ROCE of the

company is deteriorating with each succeeding year because increase in number of

competitor with each year which lead to decrease in market share in due to which income

from services have been declining. Further more investments are required by the co. to

acquire new technology like 3g which will provide return in coming years. As the trend

says the Return on capital will fall in the coming years and will be around .433 percent.

Return on Capital Employed Ratio of MTNL is 4.785 for the year 2008-2009, which

indicate that the company is earning 4.8 percent return on the total capital employed that

consists of fixed assets , investments and net working capital. Projected return on capital

is even worse ie. 3.76 for 2009-10.

Return on Capital Employed Ratio of Tata telecom is 6.23 for the year 2008-2009,

which indicate that the company is earning 6.2 percent return on the total capital

employed that consists of fixed assets, investments and net working capital. Projected

return on capital is even worse ie. 4.58 For 2009-10.

Return on Capital Employed Ratio of Bharti is 28.4 for the year 2008-2009, which



is even better i.e. 32.76 For 2009-10. Company is having positive trend of return on

capital employed.

Return on Capital Employed Ratio of Idea is 20.64 for the year 2008-2009, which



is even better ie. 23.91 for 2009-10.It is the one of the few company in telecom sector

with positive trend of return on capital employed.

Conclusion

Return on capital employed is one of the key ratios that determine the fate of the

company in the future. Through the graphs we can easily see that most of the companies

are having negative trend in the past years due to their inability to meet the competition

and rapid changes in technological environment. Only few of the private players like

Bharti and Idea have improved their return on capital and have positive trend in the

returns over the past 5 years. So it is obvious that for the survival of the major public

players like BSNL and MTNL rapid changes in strategies need to be adopted and

structure and polices adopted by Bharti and IDEA needs to be considered and reviewed

by them.

5.6 Price Earning Ratio Projected

S. No. Telecom Players 2004-05 2005-06

2006-07 2007-08 2008-09 2009-10

1 BSNL --------- 59% 34% 8% 2% 1%

2 MTNL. 8% 5% 4% 3% 1% 1%

3 TATA TELECOM 13% 7% 7% 4% 7% 3%

4 BHARTI AIRTEL 26% 27% 35% 30% 28% 31%

5 IDEA CELLULAR 2% 18% 23% 29% 39% 48%

Figure 5.6


A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated as:

In general, a high P/E suggests that investors are expecting higher earnings growth in the

future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the

whole story by itself. It's usually more useful to compare the P/E ratios of one company

to other companies in the same industry, to the market in general or against the

company's own historical P/E. It would not be useful for investors using the P/E ratio as a

basis for their investment to compare the P/E of a technology company (high P/E) to a

utility company (low P/E) as each industry has much different growth prospects.

Conclusion

From the figure 4.6 we can easily state that only expectation of investors of Bharti and

Idea is growing i.e. the P/E ratio of Bharti Airtel and Idea is growing with each

successive year but expectation from Idea is growing at increasing rate which means idea

is one of the emerging leader in the industry and its expectations have been outperformed

from the entire industry i.e. According to the projection of 2009-10 P/E of Bharti is 31%

whereas Idea is 48%. P/E of BSNL was the highest in 2005-06 when it was the leader of

the industry but as the time passes expectation of the investors have been declined and

now it is only 8 % and projected to be only 5%.

5.7 NET PROFIT MARGIN RATIO Projected


1 BSNL 30.4 24.7 22.5 9.3 2 -3.88

2 MTNL. 16.1 9.7 8.5 7.7 3.9 1.26

3 TATA TELECOM 22.2 12.1 11.2 8.9 13.25 7.2

4 BHARTI AIRTEL 14.8 17.8 22.5 24 22.58 26.864

5 IDEA CELLULAR 1.6 6.2 11.4 15.3 20.2 24.83

Figure 5.7


This ratio also indicates the firm's capacity to face adverse economic conditions such as

price competition, low demand, etc. Obviously, higher the ratio the better is the

profitability. But while interpreting the ratio it should be kept in mind that the

performance of profits also be seen in relation to investments or capital of the firm and

not only in relation to sales.

Net Profit Ratio of BSNL is 2 for the year 2008-2009, which is lower in comparison

with the industry ratio. This shows that BSNL had to pay other indirect expenses which

led to fall in the net profit. Through fig 4.8 we can also see that there is continuously

negative trend from year 2004-05 to 2009-10.If this trend continues than according to my

projection company would be in net loss in 2009-10 and the ratio would be around -3.88.

Net Profit Ratio of Bharti Airtel Ltd. is 22.58% for the year 2008-2009 which is higher

in comparison with the industry ratio, so this goes to show the efficiency of the operation

of the company. Company’s trend line shows that company is earning greater profits in

each successive year which makes company attractive in the industry. If the trend

continues than projected ratio for 2009-10 will be 26.86 % .

Net Profit Ratio of IDEA is 20.2 for the year 2008-2009 which is higher in comparison

with the industry ratio. According to the previous five year trends this company is one of

the fastest growing company and its profits are increasing at increasing rate as compared

to Bharti Airtel. So projection for 2009-10 will be 24.83 through regression analysis.

Net Profit Ratio of MTNL is 3.9 for the year 2008-2009, which is lower in comparison

with the industry ratio. It shows the inefficiency amongst the public sector undertaking.

Profits of the company are decreasing at an increasing rate which shows that highly

negative trend for the company and if it continues than projected ratio for 2009-10 will be

1.26.

Net Profit Ratio of TATA Telecom is 13.25 for the year 2008-2009, which is lower in

comparison with the industry ratio. Profits of the company is rebounded the year 2008-09

but on the whole company is providing negative trend line of its net profits and if it

continues than projected ratio for 2009-10 will be 7.2 .

Conclusion:

Net profit ratio shows that Bharti Airtel and Idea cellular are having positive trend in past

five years. Company’s like BSNL and MTNL have to work hard to break out their

negative trend. Completely new attitude and professional management have to be adopted

by these public sector undertakings to compete with the private players like Bharti &

Idea.

5.8 ANALYSIS OF CASH FLOWS

Interpretation

Cash from operations represents the inflow of cash from primary activities of business.

From the above figure it is clearly stated that Cash from operations is highest of BSNL

17496.6 cr in 2004-05 but gradually it have been decreased to 6843.81cr which

represents the loss of revenue by the company in its primary activities. On the other hand

Companies like Bharti and Idea have increased their cash from operations in each

subsequent year and gained majority of revenue of telecom sector. In 2004-05 Bharti

Airtel is having 3005.89 cr as cash from operations which have increased to 11853.15 cr

in 2008-09 and if this trend continues than it will reach to 14676.96 cr in 2009-10.

So, Public sector companies like BSNL and MTNL have to take cost cutting measures as

adopted by Bharti and Idea to gain the revenues from its business.

5.8.1 Net Cash From Operating Activities Projected


1 BSNL 17469.6 18709.05 14139.96 10981.84 6843.81 4935.215

2 MTNL. 1212.71 213.31 357.64 2487.81 2060.275 2457.238

3 TATA TELECOM 323.24 1013.78 559.2 303.08 1086.67 902.042

4 BHARTI AIRTEL 3005.89 4547.2 8107.95 10459.85 11853.15 14676.96

5 IDEA CELLULAR ---- 822.15 1605.11 2502.22 3170.496 4010.531

Interpretation

Cash used in investing activities represents cash outflow in procurement of Long term

assets which will yield return in the future. From the above figure it is clearly stated that

Cash used in investing activities is highest of BSNL 6478 cr in 2004-05 but gradually it

have been decreased which represents the lack of investments in long term assets by the

company as compared to other players in the industry. On the other hand Companies like

Bharti and Idea have increased their investments in assets in each subsequent year and

due to which they have enjoyed better returns in telecom sector. In 2004-05 Bharti Airtel

is having 2330.30 cr as cash from operations which have increased to 10894 cr in 2008-

09 and if this trend continues than it will reach to 14702 cr in 2009-10.

5.8.2 Cash Used in Investing Activities Projected


1 BSNL 6,478.17 6,500.83 3,266.88 3,724.85 7,438.14 5,224.96

2 MTNL. 785.01 277.08 259.74 692.32 429.69 400.14

3 TATA TELECOM (76.44) 894.19 647.83 716.69 2,005.71 2,033.64

4 BHARTI AIRTEL 2,330.30 5,000.30 7,975.10 11,648.00 10,894.00 14,702.07

5 IDEA CELLULAR ---- 286.94 2,275.09 5,956.18 7,993.26 10,827.88

Interpretation

Cash used in financing activities represents the outflow of cash for the purpose of

procurement of funds for business. From the above figure it is clearly stated that Cash

used by the BSNL in financing activities is highest in 2004-05 and it have been

increasing in each subsequent years which represent that BSNL is continuously engaged

in payment of dividends and interest for the borrowed funds and they are not raising

funds from market. On the other hand Companies like Bharti and Idea have decreased

their cash used in financing activities in each subsequent year which means that they have

raised equity and debt in the subsequent years to fund their assets due to which cash from

financing activities is increased in each year , which is good indicator for these

companies

5.8.3 Cash Used in Financing Activities Projected


1 BSNL 612 3,560 4,000 4,158 1,823 3736.835

2 MTNL. 423.09 395.24 287.49 294.83 227.03 177.777

3 TATA TELECOM 208.09 97.23 52.79 -389.14 -1204.38 -1240.48

4 BHARTI AIRTEL 4.2309 -376.35 -340.13 -898.03 672 56.50164

5 IDEA CELLULAR ---------- -558.01 -2340.07 -2131.29 -3106.7112 -3893.35


CONCLUSION

Conclusion

From the above finding and analysis various inferences can be drawn out which are as

follows :

• BSNL is having highest current ratio which represents that BSNL is having very

good liquidity position and can pay off their short term liability very easily as they

are maintaining huge cash reserves.

• From Earning per Share perspective Bharti Airtel is considered to be most

attractive company as the company’s earning potential have been increased

irrespective of the increase in competition in the Indian telecom market.

• Market leader of 2004-05 BSNL is having tough time because its market share as

well as profit margins has been reduced over the period of time which leads to

significant reduction in the earning power of the companies.

• Among all the players of telecom industry Idea and Bharti both have good debt

collection power because their ability to convert debtors into cash is better from

any other player in the industry which also signifies that their risk of loss due to

bad debt is least. BSNL is maintaining very low debtor turnover ratio which can

be because of liberal credit which they offer to their customers but it may prove

dangerous to the company.

• All the major telecom companies are relying more on the equity capital and not

using debt instrument as the major source for financing the assets. Public players

like MTNL are not using at all and other companies like BSNL are using them in

very low quantity because of risky nature of return of telecom sector.

• Return on capital employed is one of the key ratios that determine the fate of the

company in the future. Through the graphs we can easily see that most of the

companies are having negative trend in the past years due to their inability to meet

the competition and rapid changes in technological environment. Only few of the

private players like Bharti and Idea have improved their return on capital and

have positive trend in the returns over the past 5 years.

• P/E of BSNL was the highest in 2005-06 when it was the leader of the industry

but as the time passes expectation of the investors have been declined and now it

is only 2 % and projected to be only 1%.

• Net profit ratio shows that Bharti Airtel and Idea cellular are having positive trend

in past five years. Company’s like BSNL and MTNL have to work hard to break

out their negative trend.

• Cash from operations was highest of BSNL 17496.6 cr in 2004-05 but gradually it

had been decreased to 6843.81cr which represents the loss of revenue by the

company in its primary activities. On the other hand Companies like Bharti and

Idea have increased their cash from operations in each subsequent year and gained

majority of revenue of telecom sector.

• Cash used in investing activities is highest of BSNL 6478 cr in 2004-05 but

gradually it have been decreased which represents the lack of investments in long

term assets by the company as compared to other players in the industry. On the

other hand Companies like Bharti and Idea have increased their investments in

assets in each subsequent year and due to which they have enjoyed better returns

in telecom sector.

• Cash used in financing activities is highest in 2004-05 and it have been increasing

in each subsequent years which represent that BSNL is continuously engaged in

payment of dividends and interest for the borrowed funds and they are not raising

funds from market. On the other hand Companies like Bharti and Idea have

decreased their cash used in financing activities in each subsequent year which

means that they have raised equity and debt in the subsequent years to fund their

assets due to which cash from financing activities is increased in each year ,

which is good indicator for these companies

So from the above inferences it can be concluded that BSNL is having very weak

financial position as compared to Bharti Airtel and Idea Cellular. Trends of previous 5

years have shown that company has slowly deteriorated his position ie. From the leader

to loser.If the same trend continues in the next few years than we can see death of this

giant company.

6.2 SUGGESTIONS

From the personal observations and the above analysis various subjective recommendations which can be given to the company as follows:

• It is the right time to cut down the employee’s force, by giving them voluntary

retirement or by any other method and give chance to new guns.

• Use better & high tech methods of advertising, so that more & more subscriber

attract towards BSNL.

• Should try to decrease expenditure especially in the employee’s remuneration &

benefit area.

• Should increase the service quality as well as better customer care service.

• Should work towards 3 G phones, means high speed streaming video, gaming,

video messaging, and even mobile TV.

• There are several global players keen to enter India. Like Telenor, China mobile,

Telephonic, SK telecom, NTT DoComo, Orson. Their entry will make the market

even more competitive. So, should be ready for new competition.

• Provide better customer care service and provide them maximum satisfaction.


LIMITATIONS

LIMITATIONS

Though the project is completed with proper planning and guidance with full dedication

but still various limitations that have to be faced in the process of research are as follows:

• Limited Time:- Although the staff at BSNL was highly cooperative and devoted

their valuable time but because of time constraint they were not able to devote

much time with us.

� Lack of enthusiasm on the part of officials to provide the required data.

� Lack of experience: There was no prior experience in the field of study , so it

became difficult to analyze and interpret the financial statements of the

companies.

� Difficult to obtain the data of 2004-05 and 2005-06 as companies only maintains

data of 3 years in their operating systems and rest at some other place.

� Uniformity of Content and Mode of preparation of financial statements was not

there among the various companies. So it became difficult to compare among

each other.


BIBLIOGRAPHY

BIBLIOGRAPHY

Information has been sourced from namely, books, newspapers, journals,

industry portals, government agencies, industry news and developments and

through access to database.

� http://www.BSNL.co.in

� http://www.Google.com

� http://www.traigov.in

� http://www.Airtel.co.in

� http://www.Vodafone.co.in

� http://www.Reliance.co.in

� http://www.Idea.co.in

� http://www.capitaline.com/

� http://www.wikipedia.org/

� http://www.oecd.org/

� http://www.legalserviceindia.com/

� http://www.dot.gov.in/

� http://www.economictimes.indiatimes.com/

� http://www.ibef.org/

� http://www.domain-b.com/

� http://www.trai.gov.in/

� http://www.perry4law.wordpress.com/

� http://www.indianembassy.org/

� http://www.financialexpress.com

� http://www.pib.nic.in/

� Annual Reports of BSNL of the years: 2004-05, 2005-06, 2006-07, 2007-08 and

2008-09.

� Sharma Seema and Lokesh Singla (2009), “Telecom equipment Industry:

Challenges and Prospects”

� R.P. Rustagi, Financial Management, Edition 2007-08

� S.N. Maheshwari, Financial Management, Edition 2006-07

� T.S Grewal, Analysis of Financial Statements, Edition 2007-08


ANNEXURE

ANNEXURE

BSNL

CONSOLIDATED PROFIT AND LOSS ACCOUNT

31st March

2005

31st March

2006

31st March

2007

31st March

2008

31st March

2009

Particulars

(Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh)

INCOME Income from Services 3,345,004 3,613,894 3,461,621 3,235,953 3,026,857 Other Income 264,001 403,764 509,890 569,387 554,335 3,609,005 4,017,658 3,971,511 3,805,340 3,581,192

EXPENDITURE Employees' Remuneration and Benefits 839,302 742,063 730,897 880,891 1,136,323 Licence fee and Spectrum fee 330,236 352,305 331,169 315,213 264,635 Administrative, Operating and Other Expenses 805,196 1,049,689 1,091,628 1,111,675 1,137,797 Financial Expenses 2,929 108,980 77,941 86,254 44,325 Depreciation 962,486 937,669 914,931 969,610 852,341 2,940,149 3,190,706 3,146,566 3,363,643 3,435,421

Profit before Prior period

items 668,856 826,952 824,945 441,697 145,771

Prior period items (Net) -40,550 -40,550 -9,564 3,458 -18,608

Profit before

Extraordinary items 615,418 786,402 815,381 445,155 127,163

Extraordinary items 176,590 58,296 ------ ------

Profit before taxation 792,008 844,698 815,381 445,155 127,163

Current Tax 78,816 80,130 96,229 136,094 132,322 MAT Credit - -- -19,470 -2,171 0 Deferred Tax -175,933 -134,002 -45,795 6,448 -66,569 Fringe Benefit Tax 992 4,100 3700 3,700 3,800 Wealth Tax -130,196 501 130 145 125

Profit for the year after

taxation 1,018,329 893,969 780,587 300,939 57,485

Appropriation : Interim Dividends on Equity Share Capital 20,000 37,500 50,000 30,000 0 Proposed Dividends: On Equity & Preference

97,500 80,000 67,500 120,00 0

Share Capital

Tax on Dividends 16,288 16,479 18,484 25,493 0 Transfer to General Reserve 203,666 178,794 156,117 60,188 0 Surplus carried to Balance Sheet 680,875 581,196 488,486 65,258 57,485

Net Profit 1,018,329 893,969 780,587 300,939 57,485

Earnings Per Share (In

Rs.) Basic earnings per equity share 15.65 15.28 14.03 4.44 1.15

BSNL

CONSOLIDATED BALANCE SHEET

Particulars As at 31st

March

2005

As at 31st

March,

2006

As at 31st

March, 2007

As at 31st

March, 2008

As at 31st

March,

2009

Shareholder’s Funds

Capital 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000

Reserves And Surplus 6,027,911 6,825,651 7,444,802 7,562,825 7,613,358

Loan Funds

Unsecured Loans 822,089 728,393 554,366 338,887 341,384

Deferred Tax Liability-Net

304,402 170,400 124,605 131,053 64,484

1,126,491 898,793 678,971 469,940 405,868

APPLICATIONS OF

FUNDS

Fixed Assets 8,404,402 8,974,444 9,373,773 9,282,765 9,269,226

Gross Block 10,410,216 11,169,203 11,864,901 12,457,823 13,224,291

Less:-Depreciation 4,233,309 5,150,354 6,071,511 6,987,974 7,792,203

Net Block 6,176,907 6,018,849 5,793,390 5,469,849 5,432,088

Capital Work-In-Progress

457,226 382,048 256,860 266,562 492,864

Decommissioned Assets

8,045 7,346 6,444 389 4,644

6,642,178 6,408,243 6,056,694 5,736,800 5,929,596

INVESTMENTS 20,000 20,000 20,000 20,000 20,000

Current Assets, Loan

and Advances

Inventories 224,535 278,922 242,847 322,006 457,258

Sundry Debtors 663,703 630,205 558,066 546,551 472,054

Cash and Bank Balances

2,193,113 3,057,948 3,745,296 4,055,158 3,813,430

Other Current Asset - Accrued interest

14,368 63,627 114,148 137,687 137,687

Loans and Advances 752,160 923,207 714,431 744,441 944,880

3,847,879 4,953,909 5,374,788 5,805,843 5,774,861

Less : Current

Liabilities and

Provisions

Current Liabilities 1,461,541 1,612,324 1,667,919 1,739,788 2,072,702

Provisions 738,616 888,223 514,858 606,321 493,878

2,200,157 2,500,547 2,182,777 2,346,109 2,566,580

Net Current Assets 1,647,722 2,453,362 3,192,011 3,459,734 3,208,281

Inter/Intra

CircleRemittance 94,502 92,839 105,068 66,231 111,349

Total 8,404,402 8,974,444 9,373,773 9,282,765 9,269,226

BSNL

CASH FLOW STATEMENT

PARTICULARS

Year ended 31st

March 2005

Year ended 31st

March 2006

Year ended 31st

March 2007

Year ended 31st

March 2008

Year ended 31st March

2009

(Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh)

A. Cash flow from

operating activities: Net (loss)/profit before tax but after Prior period and Extraordinary items 792,008 844,698 815,381 445,155 127,163

Adjustments for:

Depreciation

962,486 937,669 914,931 969,610 852,341 Prior period depreciation

54,293 21,231 8,288 5,106 4,189 Interest/Finance charges

2,929 108,980 77,941 86,254 44,325 Interest Income

-80,052 -173,340 -281,123 -403,324 -388,504 Loss/(Profit) on Fixed Assets sold -618 -851 -800 -2,002 -2,165 Debts / Advances Written off 73,437 47,059 35,340 70,926 91,453 Provision for Bad and Doubtful Debts

26,403 159,518 127,875 47,899 85,640 Excess provision written back -39,532 -19,133 -21,676 -80,829 -117,014 Prior Period item other than depreciation -855 19,320 1,276 -8,565 14,419 Extraordinary Items

-176,590 -58,296 - 3,865 Other Provision

258,941 1,080,844 181,942 1,224,099 102,518 964,570 147,595 832,670 176,091 764,640

Operating profit before working capital changes

1,872,852 2,068,797 1,779,951 1,277,825 891,803

Adjustments for changes in working capital - Inter Circle Remittance

-4,202 1,663 -12,229 38,837 -45,118 - Sundry Debtors

-77,517 -94,637 -131,465 -62,838 -83,612 - Other Receivables

-59,867 -170,397 -67,776 -54,335 -152,971 - Trade and Other Payables

-44,175 -185,760 145,474 -117,897 -685 -212,155 65,923 -12,413 326,506 44,805

Cash generated from

operations 1,687,092 1,950,900 1,567,796 1,265,412 936,608

-Taxes paid -117,576 -118,971 -152,524 -175,793 -237,808

- Extraordinary Items 176,590 58,296 -

- Prior Period item other than depreciation 855 59,869 -19,320 -79,995 -1,276 -153,800 8,565 -167,228 -14,419 -252,227

Net cash from operating

activities 1,746,960 1,870,905 1,413,996 1,098,184 684,381

B. Cash flow from

Investing activities:

Inventories Purchased/Sale

-572 -54,539 24,723 -76,049 -132,712 Purchase of fixed assets

-976,301 -882,441 -815,313 -717,309 -860,242 Capital Work in Progress

125,689 78,066 125,505 -9,231 -226,409 Proceeds from Sale of fixed assets 133,273 84,750 107,795 50,319 36,597 Interest Received

70,094 124,081 230,602 379,785 438,952 Net cash used in investing

activities -647,817 -650,083 -326,688 -372,485 -743,814 C. Cash flow from

financing activities: -

Proceeds from long term borrowings -3,679 -93,696 -174,027 -300,000 Interest Paid

-3,068 -108,358 -77,700 -1,767 -41,901 Interim Dividend Paid

-22,614 -42,759 -50,000 -30,000 - Dividend Paid

-31,800 -111,174 -80,000 -67,500 -120,000 Dividend Distribution Tax Paid - -18,233 -16,570 -20,394 Net cash used in financing

activities -61,161 -355,986 -399,960 -415,837 -182,295

Net Increase/(Decrease) in

Cash and Cash

Equivalents 1,037,982 864,835 687,348 309,862 -241,728 Opening Cash and cash

equivalents 1,155,133 2,193,113 3,057,948 3,745,296 4,055,158 Cash and cash equivalent

2,193,113 3,057,948 3,745,296 4,055,158 3,813,430

Cash and cash

equivalents comprise 179,993 3,094 2,704 2,569 2,415 Cash, Cheques and Drafts

(in hand)

Balances with banks 2,013,120 2,193,113 3,054,854 3,057,948 3,742,592 3,745,296 4,052,589 4,055,158 3,811,015 3,813,430

BHARTI AIRTEL

BALANCE SHEET

Particulars As at 31st

March

2005

As at 31st

March,

2006

As at 31st

March,

2007

As at 31st

March,

2008

As at 31st

March,

2009

Rs. in crore Rs. in crore Rs. in crore Rs. in crore Rs. in crore

Sources Of Funds

Total Share Capital 1,853.37 1,893.88 1,895.93 1,897.91 1,898.24

Equity Share Capital 1,853.37 1,893.88 1,895.93 1,897.91 1,898.24

Share Application Money 2.72 12.13 30 57.63 116.22

Preference Share Capital 0 0 0 0 0

Reserves 2,675.38 5,437.42 9,515.21 18,283.82 25,627.38

Revaluation Reserves 2.13 2.13 2.13 2.13 2.13

Networth 4,533.60 7,345.56 11,443.27 20,241.49 27,643.97

Secured Loans 3,959.88 2,863.37 266.45 52.42 51.73

Unsecured Loans 1,034.41 1,932.92 5,044.36 6,517.92 7,661.92

Total Debt 4,994.29 4,796.29 5,310.81 6,570.34 7,713.65

Total Liabilities 9,527.89 12,141.85 16,754.08 26,811.83 35,357.62

Application Of Funds

Gross Block 13,240.63 17,951.74 26,509.93 28,115.65 37,266.70

Less: Accum. Depreciation 3,475.64 4,944.86 7,204.30 9,085.00 12,253.34

Net Block 9,764.99 13,006.88 19,305.63 19,030.65 25,013.36

Capital Work in Progress 994.46 2,341.25 2,375.82 2,751.08 2,566.67

Investments 931.9 719.7 705.82 10,952.85 11,777.76

Inventories 31.58 17.74 47.81 56.86 62.15

Sundry Debtors 715.74 1,076.17 1,418.52 2,776.46 2,550.05

Cash and Bank Balance 174.96 201.81 239.11 200.86 153.44

Total Current Assets 922.28 1,295.72 1,705.44 3,034.18 2,765.64

Loans and Advances 1,354.85 1,937.54 3,160.02 5,103.13 5,602.83

Fixed Deposits 209.17 105.61 541.35 302.08 2,098.16

Total CA, Loans & Advances 2,486.30 3,338.87 5,406.81 8,439.39 10,466.63

Deffered Credit 0 0 0 0 0

Current Liabilities 4,458.80 6,735.36 9,809.83 12,400.38 13,832.49

Provisions 249.32 537.44 1,232.84 1,961.95 634.4

Total CL & Provisions 4,708.12 7,272.80 11,042.67 14,362.33 14,466.89

Net Current Assets -2,221.82 -3,933.93 -5,635.86 -5,922.94 -4,000.26

Miscellaneous Expenses 58.35 7.94 2.66 0.2 0.09

Total Assets 9,527.88 12,141.84 16,754.07 26,811.84 35,357.62

Contingent Liabilities 3,017.26 4,740.34 7,615.04 7,140.59 4,104.25

Book Value (Rs) 24.44 38.71 60.19 106.34 145.01

BHARTI AIRTEL

PROFIT AND LOSS A/C

PARTICULARS

31st

March

2005

31st

March

2006

31st

March

2007

31st

March

2008

31st

March

2009

---------------------------------------RS. IN CRORE --------------------------------

Income

Sales Turnover 8,142.44 11,259.12 17,851.61 25,761.11 34,048.32

Excise Duty 0 0 0 0 0

Net Sales 8,142.44 11,259.12 17,851.61 25,761.11 34,048.32

Other Income -1,707.95 26.94 105.62 104.04 -1,261.75

Stock Adjustments 11.57 -13.84 30.07 9.05 5.29

Total Income 6,446.06 11,272.22 17,987.30 25,874.20 32,791.86 Expenditure

Raw Materials 83.67 53.56 52.16 42.9 17.7

Power & Fuel Cost 0 0 0 0 0

Employee Cost 475.86 734.2 1,076.95 1,297.88 1,397.54

Other Manufacturing Expenses 2,365.51 3,299.73 5,017.27 7,339.01 8,627.13

Selling and Admin Expenses 1,951.25 2,804.85 4,030.48 5,892.50 9,385.68

Miscellaneous Expenses 280.05 314.37 444.28 535.46 1,409.89 Preoperative Exp Capitalised 0 0 0 0 0

Total Expenses 5,156.34 7,206.71 10,621.14 15,107.75 20,837.94

Operating Profit 2,997.67 4,038.57 7,260.54 10,662.41 13,215.67

PBDIT 1,289.72 4,065.51 7,366.16 10,766.45 11,953.92

Interest 317 236.81 282.07 393.43 434.16

PBDT 972.72 3,828.70 7,084.09 10,373.02 11,519.76

Depreciation 1,019.36 1,432.34 2,353.30 3,166.58 3,206.28

Other Written Off 161.34 127.39 137.8 266.07 178.82

Profit Before Tax -207.98 2,268.97 4,592.99 6,940.37 8,134.66

Extra-ordinary items 22.23 17.64 9.92 -60.67 -46.15

PBT (Post Extra-ord Items) -185.75 2,286.61 4,602.91 6,879.70 8,088.51

Tax 353.6 273.68 566.79 632.43 321.78

Reported Net Profit 1,210.67 2,012.08 4,033.23 6,244.19 7,743.84

Total Value Addition 5,072.66 7,153.15 10,568.98 15,064.84 20,820.24

Preference Dividend 0 0 0 0 0

Equity Dividend 0 0 0 0 379.65

Corporate Dividend Tax 0 0 0 0 64.52 Per share data (annualised)

Shares in issue (lakhs) 18,533.67 18,938.79 18,959.34 18,979.07 18,982.40

Earning Per Share (Rs) 6.53 10.62 21.27 32.9 40.79

Equity Dividend (%) 0 0 0 0 20

Book Value (Rs) 24.44 38.71 60.19 106.34 145.01

BHARTI AIRTEL

CASH FLOW STATEMENT

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

------------------------------IN RS CRORE-------------------

Net Profit Before Tax 1564.28 2285.8 4601.37 6972.54 8161.54

Net Cash From Operating Activities 3005.89 4547.2 8107.95 10459.9 11853.2

Net Cash (used in)/from

Investing Activities -2330.3 -5000.3 -7975.1 -11648 -10894

Net Cash (used in)/from Financing Activities -423.09 376.35 340.13 898.03 -672

Net (decrease)/increase In Cash and Cash Equivalents 252.5 -76.71 473.03 -290.53 286.77

Opening Cash & Cash Equivalents 131.63 384.14 307.43 793.47 503.31

Closing Cash & Cash Equivalents 384.14 307.43 780.46 502.94 790.08

MTNL

BALANCE SHEET

Particulars

As at

31st

March

2005

As at

31st

March,

2006

As at

31st

March,

2007

As at

31st

March,

2008

Sources Of Funds

Total Share Capital 630 630 630 630

Equity Share Capital 630 630 630 630

Share Application Money 0 0 0 0

Preference Share Capital 0 0 0 0

Reserves 10,313.83 10,606.77 10,999.30 11,291.36

Revaluation Reserves 0 0 0 0

Networth 10,943.83 11,236.77 11,629.30 11,921.36

Secured Loans 0 0 0 0

Unsecured Loans 0 0 0 0

Total Debt 0 0 0 0

Total Liabilities 10,943.83 11,236.77 11,629.30 11,921.36

Aplication of Funds

Gross Block 14,252.25 14,854.15 15,291.35 15,842.58

Less: Accum. Depreciation 7,783.62 8,285.40 8,887.68 9,522.78

Net Block 6,468.63 6,568.75 6,403.67 6,319.80

Capital Work in Progress 651.51 554.36 779.29 981.7

Investments 397.47 418.72 441.4 557.39

Inventories 186.6 137.82 221.28 160.71

Sundry Debtors 1,761.15 1,415.10 965.2 941.8

Cash and Bank Balance 180.11 159.35 161.8 130.73

Total Current Assets 2,127.86 1,712.27 1,348.28 1,233.24

Loans and Advances 10,758.82 10,364.54 11,857.45 10,502.84

Fixed Deposits 2,337.29 1,899.05 1,707.00 3,239.05 Total CA, Loans & Advances 15,223.97 13,975.86 14,912.73 14,975.13

Deffered Credit 0 0 0 0

Current Liabilities 6,194.15 5,289.44 5,683.31 5,626.00

Provisions 5,603.60 5,105.72 5,446.15 5,445.82

Total CL & Provisions 11,797.75 10,395.16 11,129.46 11,071.82

Net Current Assets 3,426.22 3,580.70 3,783.27 3,903.31

Miscellaneous Expenses 0 114.25 221.65 159.17

Total Assets 10,943.83 11,236.78 11,629.28 11,921.37

Contingent Liabilities 6,742.15 7,650.00 4,267.27 3,369.72

Book Value (Rs) 173.71 178.36 184.59 189.23

MTNL

Profit and Loss A/c

31st March

2005

31st March

2006

31st

March

2007

31st March

2008

Particulars (Rs. in

Crore)

(Rs. in

Crore)

(Rs. in

Crore)

(Rs. in

Crore)

Income

Sales Turnover 5,602.34 5,568.41 4,909.32 4,722.52

Excise Duty 0 0 0 0

Net Sales 5,602.34 5,568.41 4,909.32 4,722.52

Other Income 236 380.93 512.11 405.38

Stock Adjustments 0 0 0 0

Total Income 5,838.34 5,949.34 5,421.43 5,127.90

Expenditure

Raw Materials 0 0 0 0

Power & Fuel Cost 140.16 155.85 160.79 188.34

Employee Cost 1,932.20 1,941.13 1,750.99 1,580.95

Other Manufacturing Expenses 77.51 68.63 75.95 93.62

Selling and Admin Expenses 2,027.55 2,426.37 1,021.57 951.86

Miscellaneous Expenses 90.46 148.27 1,007.97 1,005.55

Preoperative Exp Capitalised -96.31 -64.38 0 -21.01

Total Expenses 4,171.57 4,675.87 4,017.27 3,799.31

Operating Profit 1,430.77 892.54 892.05 923.21

PBDIT 1,666.77 1,273.47 1,404.16 1,328.59

Interest 35.81 24.44 11.78 12.09

PBDT 1,630.96 1,249.03 1,392.38 1,316.50

Depreciation 588.01 646.7 683.18 704.06

Other Written Off 0 0 0 0

Profit Before Tax 1,042.95 602.33 709.2 612.44

Extra-ordinary items 179.17 84.76 299.59 212.12

PBT (Post Extra-ord Items) 1,222.12 687.09 1,008.79 824.56

Tax 267.24 93.7 326.65 224.83

Reported Net Profit 948.43 580.29 466.03 406.82

Total Value Addition 4,171.57 4,675.86 4,017.27 3,799.31

Preference Dividend 0 0 0 0

Equity Dividend 283.5 252 252 252

Corporate Dividend Tax 39.28 35.34 37.21 42.83 Per share data (annualised)

Shares in issue (lakhs) 6,300.00 6,300.00 6,300.00 6,300.00

Earning Per Share (Rs) 15.05 9.21 7.4 6.46

Equity Dividend (%) 45 40 40 40

Book Value (Rs) 173.71 178.36 184.59 189.23

Mahanagar Telephone Nigam Cash Flow

------------------- in Rs. Cr. -------------------

Mar '05 Mar '06 Mar '07 Mar '08

Net Profit Before Tax 1215.67 671.36 792.68 631.65

Net Cash From Operating Activities 1212.71 213.31 357.64 2487.81

Net Cash (used in)/from -785.01 -277.08 -259.74 -692.32

Investing Activities

Net Cash (used in)/from Financing Activities -463.4 -395.24 -287.49 -294.83

Net (decrease)/increase In Cash and Cash Equivalents -35.71 -459 -189.59 1500.66

Opening Cash & Cash Equivalents 2553.1 2517.4 2058.4 1868.7

Closing Cash & Cash Equivalents 2517.4 2058.4 1868.81 3369.36

IDEA CELLULAR

Balance Sheet

Particulars As at

31st

March

2005

As at

31st

March,

2006

As at

31st

March,

2007

As at

31st

March,

2008

------------------- in Rs. Cr. -------------------

Sources Of Funds

Total Share Capital 2,742.53 2,742.53 2,592.86 2,635.36

Equity Share Capital 2,742.53 2,259.53 2,592.86 2,635.36

Share Application Money 0 0 0 3.76

Preference Share Capital 0 483 0 0

Reserves -

1,695.74 -

1,574.00 -413.71 906.91

Revaluation Reserves 0 0 0 0

Networth 1,046.79 1,168.53 2,179.15 3,546.03

Secured Loans 1,692.75 1,470.75 3,539.77 5,454.43

Unsecured Loans 1,005.28 1,444.85 710.74 1,060.33

Total Debt 2,698.03 2,915.60 4,250.51 6,514.76

Total Liabilities 3,744.82 4,084.13 6,429.66 10,060.79

Mar '05 Mar '06 Mar '07 Mar '08 Application Of Funds

Gross Block 3,577.49 3,975.11 8,229.61 12,791.22

Less: Accum. Depreciation 899.99 1,157.63 2,637.18 3,123.83

Net Block 2,677.50 2,817.48 5,592.43 9,667.39

Capital Work in Progress 64.62 95.91 506.52 941.13

Investments 307.03 307.03 13.83 569.93

Inventories 13.47 8.81 17.91 27.62

Sundry Debtors 109.8 90.82 152.48 198.59

Cash and Bank Balance 151.89 40.12 122.76 147.67

Total Current Assets 275.16 139.75 293.15 373.88

Loans and Advances 899.3 1,408.64 560.82 950.88

Fixed Deposits 0 88.97 1,696.97 349.38

Total CA, Loans & Advances 1,174.46 1,637.36 2,550.94 1,674.14

Deffered Credit 0 0 0 0

Current Liabilities 478.76 762.24 2,180.21 2,709.98

Provisions 0 11.39 53.84 81.82

Total CL & Provisions 478.76 773.63 2,234.05 2,791.80

Net Current Assets 695.7 863.73 316.89 -1,117.66

Miscellaneous Expenses 0 0 0 0

Total Assets 3,744.85 4,084.15 6,429.67 10,060.79

Contingent Liabilities 0 213.92 1,236.57 2,308.87

Book Value (Rs) 3.82 3.03 8.4 13.44

Idea Cellular

Profit & Loss A/c

Particulars

31st March

2005

31st

March

2006

31st

March

2007

31st

March

2008

------------------- in Rs. Cr. -------------------

Income

Sales Turnover 1,625.42 2,007.07 4,366.40 6,719.99

Excise Duty 0 0 0 0

Net Sales 1,625.42 2,007.07 4,366.40 6,719.99

Other Income 9.67 5.2 27.64 184.17

Stock Adjustments 0 -0.01 -1.2 0

Total Income 1,635.09 2,012.26 4,392.84 6,904.16

Expenditure

Raw Materials 0.03 0.04 4.06 0.01

Power & Fuel Cost 0 37.86 109.46 224.4

Employee Cost 103.36 115.08 251.43 332.88

Other Manufacturing Expenses 172.26 626.41 1,388.33 2,643.43

Selling and Admin Expenses 0 439.02 959.34 974.08

Miscellaneous Expenses 755.44 18.22 38.69 53.87

Preoperative Exp Capitalised 0 -0.04 -0.08 0

Total Expenses 1,031.09 1,236.59 2,751.23 4,228.67

Operating Profit 594.33 770.47 1,613.97 2,491.32

PBDIT 604 775.67 1,641.61 2,675.49

Interest 255.04 308.25 478.26 695.85

PBDT 348.96 467.42 1,163.35 1,979.64

Depreciation 237.78 262.88 563.67 756.85

Other Written Off 84.49 84.66 108.14 119.91

Profit Before Tax 26.69 119.88 491.54 1,102.88

Extra-ordinary items 2.53 8.61 5.23 13.97

PBT (Post Extra-ord Items) 24.16 128.49 496.77 1,116.85

Tax 0 2.9 6.99 72.5

Reported Net Profit 26.69 125.6 502.06 1,044.36

Total Value Addition 1,031.06 1,236.54 2,747.16 4,228.66

Preference Dividend 0 0 0 0

Equity Dividend 0 0 0 0

Corporate Dividend Tax 0 0 0 0

Per share data (annualised)

Shares in issue (lakhs) 27,425.27 22,595.27 25,928.61 26,353.61

Earning Per Share (Rs) 0.1 0.56 1.94 3.96

Equity Dividend (%) 0 0 0 0

Book Value (Rs) 3.82 3.03 8.4 13.44

Idea Cellular

Cash Flow

Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths

------------------- in Rs. Cr. -----

--------------

Net Profit Before Tax 125.6 502.06 1044.36

Net Cash From Operating Activities 822.15 1605.11 2502.22


Investing Activities 286.94 2275.09 5956.18

Net Cash (used in)/from Financing Activities 558.01 2340.07 2131.29 Net (decrease)/increase In Cash and Cash Equivalents 22.8 1670.09 1322.67

Opening Cash & Cash Equivalents 151.89 149.64 1819.73

Closing Cash & Cash Equivalents 129.09 1819.73 497.06

Tata Communications

Profit & Loss A/c

31st March

2005

31st

March

2006

31st

March

2007

31st

March

2008

31st

March

2009

------------------- in Rs. Cr. -------------------

Particulars

Income

Sales Turnover 3,303.04 3,780.95 4,041.83 3,283.30 3,749.43

Excise Duty 0 0 0 0 0

Net Sales 3,303.04 3,780.95 4,041.83 3,283.30 3,749.43

Other Income 512.39 124.62 105.83 173.25 473.58

Stock Adjustments 0 0 0 0 0

Total Income 3,815.43 3,905.57 4,147.66 3,456.55 4,223.01

Expenditure

Raw Materials 1.65 1.95 1.61 10.63 11.2

Power & Fuel Cost 34.61 37.93 43.09 0 0

Employee Cost 141.28 209.06 243.69 242.43 340.07

Other Manufacturing Expenses 1,859.76 2,127.36 2,258.37 1,936.25 1,943.03

Selling and Admin Expenses 401.31 338.67 376.15 323.08 423.1

Miscellaneous Expenses 70.62 115.03 165.19 125.36 180.75

Total Expenses 2,509.23 2,830.00 3,088.10 2,637.75 2,898.15

Operating Profit 793.81 950.95 953.73 645.55 851.28

PBDIT 1,306.20 1,075.57 1,059.56 818.8 1,324.86

Interest 9.62 13.56 16.74 44.82 196.7

PBDT 1,296.58 1,062.01 1,042.82 773.98 1,128.16

Depreciation 244.15 359.56 391.33 301.31 425.27

Other Written Off 0 0 0 0 0

Profit Before Tax 1,052.43 702.45 651.49 472.67 702.89

Extra-ordinary items 1.38 45.3 69.19 16.76 5.88

PBT (Post Extra-ord Items) 1,053.81 747.75 720.68 489.43 708.77

Tax 297.61 207.18 244.07 145.52 197.54

Reported Net Profit 756.37 479.54 468.56 304.46 515.95

Total Value Addition 2,507.58 2,828.06 3,086.49 2,627.12 2,886.95

Preference Dividend 0 0 0 0 0

Equity Dividend 171 128.25 128.25 128.25 128.25

Corporate Dividend Tax 24.31 17.99 21.8 21.8 21.8 Per share data (annualised)

Shares in issue (lakhs) 2,850.00 2,850.00 2,850.00 2,850.00 2,850.00

Earning Per Share (Rs) 26.54 16.83 16.44 10.68 18.1

Equity Dividend (%) 60 45 45 45 45

Book Value (Rs) 200.98 212.67 223.14 229.73 238.53

Tata Communications

Balance Sheet Particulars

As at 31st

March

2005

As at 31st

March,

2006

As at 31st

March,

2007

As at 31st

March,

2008

As at 31st

March,

2009

------------------- in Rs. Cr. -------------------

Sources Of Funds

Total Share Capital 285 285 285 285 285

Equity Share Capital 285 285 285 285 285

Share Application Money 0 0 0 0 0

Preference Share Capital 0 0 0 0 0

Reserves 5,443.05 5,776.17 6,074.50 6,262.34 6,513.05

Revaluation Reserves 0 0 0 0 0

Networth 5,728.05 6,061.17 6,359.50 6,547.34 6,798.05

Secured Loans 0 0 0 0 1,288.82

Unsecured Loans 0 98.25 197.61 777.8 1,039.05

Total Debt 0 98.25 197.61 777.8 2,327.87

Total Liabilities 5,728.05 6,159.42 6,557.11 7,325.14 9,125.92 Application Of Funds

Gross Block 3,182.68 4,099.64 4,582.98 4,352.65 5,890.00

Less: Accum. Depreciation 835.65 1,091.08 1,428.81 1,363.75 1,792.06

Net Block 2,347.03 3,008.56 3,154.17 2,988.90 4,097.94

Capital Work in Progress 513.17 147.81 340.44 543.77 536.38

Investments 1,200.58 2,499.34 2,673.58 2,103.77 2,723.67

Inventories 1.97 3.8 4.72 5.45 1.56

Sundry Debtors 608.95 737.57 955.19 1,063.13 1,342.22

Cash and Bank Balance 22.26 245.66 79.31 79.63 109.21

Total Current Assets 633.18 987.03 1,039.22 1,148.21 1,452.99

Loans and Advances 1,626.10 1,511.19 1,383.20 2,991.94 3,209.51

Fixed Deposits 1,386.87 11.22 25 0 263.16

Total CA, Loans & Advances 3,646.15 2,509.44 2,447.42 4,140.15 4,925.66

Deffered Credit 0 0 0 0 0

Current Liabilities 1,713.70 1,740.40 1,779.37 2,200.17 2,869.12

Provisions 265.17 265.32 279.13 251.28 288.61

Total CL & Provisions 1,978.87 2,005.72 2,058.50 2,451.45 3,157.73

Net Current Assets 1,667.28 503.72 388.92 1,688.70 1,767.93

Miscellaneous Expenses 0 0 0 0 0

Total Assets 5,728.06 6,159.43 6,557.11 7,325.14 9,125.92

Contingent Liabilities 2,280.87 2,947.63 11,624.10 5,140.02 8,449.09

Book Value (Rs) 200.98 212.67 223.14 229.73 238.53

Tata Communications

Cash Flow

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

------------------- in Rs. Cr. -------------------

Net Profit Before Tax 632.54 754.35 744.54 461.18 462.44

Net Cash From Operating Activities 323.24 1013.78 559.2 303.08 1086.67


Investing Activities 76.44 -894.19 -647.83 -716.69 -2005.71

Net Cash (used in)/from Financing Activities -208.09 -97.23 -52.79 389.14 1204.38

Net (decrease)/increase In Cash and Cash Equivalents 191.6 22.36 -141.49 -24.51 285.34

Opening Cash & Cash Equivalents 30.19 222.26 244.53 103.04 78.53

Closing Cash & Cash Equivalents 222.26 244.53 103.04 78.53 363.87


MISCELLANEOUS

Project Report on Telecom Industry by Puneet Jain 082 MBA , DIAS

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Transcript of Project Report on Telecom Industry by Puneet Jain 082 MBA , DIAS