AJAY 1presentation

8/7/2019 AJAY 1presentation

1/15

SLOWDOWN OF

MTNL- CAUSES

AND REMEDIES


2/15

OBJECTIVE OF THE STUDY To study the existing situations & proceedings of the

Financial department of the organization

And research on why the MTNL lack in the Indiantelecom industry

To suggest measures for improving the management offinances


3/15

ABOUT MTNLy MTNL was set up on 1st April, 1986 by the Government

of India to upgrade the quality of telecom services,

expand the telecom network, introduce new servicesand to raise revenue for telecom development needs ofIndias key metros

y MTNL is one of Asias largest telecom operating

companies


4/15

The Govt. of India currently holds 56.25% stake in thecompany

MTNL has joint ventures with United Telecom Limited(UTL) to explore various telecom opportunities in

Nepal. MTNL has 26.68% stake in it MTNL has set up its 100% subsidiary, Mahanagar

Telephone Mauritius Limited. (MTML) in Mauritius,for providing basic, mobile and international long

distance services as second operator in Mauritius


5/15

SERVICE PROVIDED BY MTNLy Basic landline services

y Dolphin mobile services

y Garuda mobile sevicesyJadoo mobile services

y Broadband services


6/15

RESEARCH METHODOLOGY DATA COLLECTION METHOD

Proposed project involves collection of data from secondary sources such as

magazines, newspapers, web sites, reports

Whereas published secondary sources will used as prime documents for thestudy. The major among these is the Annual Reports of the company for thefinancial years 2007-08, 2008-09, 2009-10

Analysis & Interpretation of Data

Various statistical & financial analysis tools will be used per requirement of thestudy. The major amongst those will be Ratio Analysis, Comparativestatements, diagrams & charts


7/15

RATIO ANALYSIS AND FINANCIAL

POSITION OF THE MTNLy Current Ratio :y Current Ratio=current assets/ current liabilitiesy Years 2008 2009

Current Ratio 1.45 1.418

An ideal current ratio is 2:1. In 2008, it is 1.45 which decreases to 1.418 in 2009 .Itshows the short term financial position of the company is decreasing i.e. thecompany is not in a position to pay its current liabilities in time

y Return on Investment (%):y Return on Investment = Net Profit before Tax / Net Worthy Years 2008 2009

ROI(%) 5.29 2.18

Return on capital employed ratio is considered to be the best measure ofprofitability in order to assess the overall performance of the business. It indicateshow well the management has used the investment made by owners and creditorsinto the business. Higher the return on capital employed, the more efficient thefirm is in using its funds


8/15

y Operating Ratio :

y Operating Ratio = [(Cost of goods sold + Operating expenses) / Net sales] 100

y Year 2008 2009

y Operating Ratio 84.51% 96%Operating ratio shows the operational efficiency of the business. Lower

operating ratio shows higher operating profit and vice versa. An operating ratioranging between 75% and 80% is generally considered as standard formanufacturing concerns

The increase in this ratio indicates the decrease in operational efficiency of

the businessy Earnings Per Share (EPS) Ratio :

y EPS = NET INCOME-DIVIDEND ON PREFERRED STOCK/AVERAGEOUTSTANDING SHARES

y Year 2008 2009

y EPS 9.32 3.36

yThe earnings per share is a good measure of profitability and when comparedwith EPS of similar companies, it gives a view of the comparative earnings orearnings power of the firm

The decrease in EPS from the last year shows that the earning power of thecompany has decreased


9/15

y Dividend Payout Ratio :

y Dividend Payout Ratio = Dividend per Equity Share / Earnings per Share

y Year 2008 2009

y DPR 42.91 29.76

y The payout ratio and the retained earning ratio are the indicators of the amount ofearnings that have been ploughed back in the business. The lower the payout ratio,the higher will be the amount of earnings ploughed back in the business and viceversa. A lower payout ratio or higher retained earnings ratio means a strongerfinancial position of the company

y The decrease in this ratio shows higher retained earning to build a strong financialposition of the company in long run

y P/E Ratio :

y Price Earnings Ratio = Market price per equity share / Earnings per share

y Year 2008 2009

yP/E Ratio 1.072 2.976

y Price earnings ratio helps the investor in deciding whether to buy or not to buy theshares of a particular company at a particular market price.Generally, higher theprice earning ratio the better it is. If the P/E ratio falls, the management shouldlook into the causes that have resulted into the fall of this ratio.The increase in P/Eratio is a good sign to investors to buy its shares for long term profit


10/15

SWOT Analysis of MTNL (Mahanagar Telephone Nigam Limited)

STRENGTHS-

y MTNL is one of the NAVRATNA companies

y The company enjoys large consumer base in NEW DELHI

y Being a Govt. company, it enjoys a strong reliability among users

y High on cash

WEAKNESSES-

y Poor marketing

ySlow on implementation

y It does not provide good network

y Bureaucratic organizational structure

OPPORTUNITIES-

y There is a strong growth in telecom industry

y It can provide value added services i.e., e-banking, e- reservation

y It can cover others metros ( Bangalore and Kolkata) of IndiaTHREATS-

y Private players in telecom industry

y Competitors regularly come up with new attractive call rates, tariff vouchers and valueadded services

y Competitors continuously improving their distribution channel


11/15

COMPETITIVENESS OF MTNLy Customer base of 5.92 million

y MTNL has good brand awareness among the people

y First company to launch 3G in Indiay Launch affordable mobile phone connection

y Its a govt. undertaking, so the company get exemptionand subsidies for operation


12/15

LIMITATIONy The MTNL has long hierarchy, which leads to delay in

decision making

yDelay in technology application. Eg garuda com, 3G

y Under utilization of resources

y Poor after sale services


13/15

FINDINGS AND CONCLUSIONy Out of the past four years, in 3 years MTNL recorded a

decrease in the profit and in 2 years, a decrease in theincome, but the expenditure has continuously increased

y Companys Current Ratio fell very short of the ideal, whichshows an inadequate margin of safety to the creditors,company has no sufficient cash to pay its liabilities. Due tothe shortage of working capital in the business, company istrading out of its resources

y Employee remuneration & benefits area is a area of majorconcern because there is no impact of profit or loss on thisarea and expenditure on employees is simultaneously rising


14/15

RECOMMENDATIONS

y It is right time to cut down the employees force, bygiving them voluntary retirement or by any other

methods and give chance to new gunsy Use better and high technology methods of

advertising so that more and more subscribers attracttowards MTNL

yShould try to decrease expenditure especially in theemployees remuneration and benefit area

y Should increase the service quality as well as bettercustomer care service


15/15

THANK YOU

Documents

AJAY 1presentation