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TABLE OF CONTENT
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 Industry analysis
Chapter 3 Company Profile 3.1 Industry Profile 3.2 Company Profile (BSNL)
3.2.1 Board of Directors 3.2.2 Basic Service offered 3.2.3 Organisation Structure 3.2.4 Accounting Policies of
3.3 Competitors Profile 3.3.1 Bharti Airtel 3.3.2 Reliance Comm 3.3.3 Vodafone 3.3.4 Idea Cellular 3.3.5 Aircel 2.3.6 MTNL 3.3.7 BPL Mobile 3.3.8 HFCL Infotel
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 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.
Chapter 2 Industry analysis
Worldwide telecom industry:
In the period 1950-1970 the developments in the telecom sector are best characterized by the terms: stable, steady and predictable. In terms of change this was truly evolutionary. However, a new period started in the ’80-ties: a period of revolutionary change. Initiated by de-regulation in the ’70-ties1, the introduction of new technologies, such as cellular and fiber optic communications, and fuelled by the widespread use of the Internet an e-world was emerging that seemed unprecedented in terms of growth. The growth attracted many and big money was flowing into the ICT sector. New e-world “click & order”- companies quickly surpassed the old-world “bricks & mortar” - companies in share value. Many new businesses were started through fresh inflow of venture capital. Wave after wave of new telecom operators emerged to challenge the status quo of the incumbents. Investments in the industry soured. Being a player in the future of the mobile eworld became a must. Auctions for 3G radio spectrum became huge cash generators for national governments. Until the wisdom behind these huge valuations became questioned; when Return on Investment was re-visited and Return on Vision became out of vogue, the boom period came to an end. In April 2000 the Internet bubble collapsed, having started in 1995.2 To adjust company operations to the new realities of the market over 485,000 jobs have been eliminated or announced to be eliminated in the telecommunications industry for the period July 2000 until February 2002 (Financial Times, 2002).3 Measured from 2000 until 2002, 94 telecommunications companies defaulted (OECD, 2003 p16), including big first-wave new entrants such as Global Crossing and established firms such as WorldCom, the single largest default at approx. US$ 31.8 billion. And the impact has not remained restricted to the telecom and internet sector. As major institutional investors, such as mutual funds and pension funds, have participated in the bubble, the fall-out is affecting the public at large.4 From the perspective of a free market economist, bubbles are to be considered as natural market phenomena, and the crash is expected to provide for the necessary correction on the excesses that were part of the boom period. Hence, the recovery should run its course without intervention. However, recognizing the special features of telecommunications as a network infrastructure, a laissez-faire attitude may not be the most desirable policy to be pursued. Consider in this respect the high expectations that surrounded the recent liberalization of the telecom sector. Politicians may perceive the current state of affairs in the sector as a ‘market failure’ and may be inclined to intervene, as has been the case in other liberalized infrastructure industries.5 Furthermore, European government leaders agreed to a long-term goal of establishing the EU as a leading region in the global Information Society.6 The related Action Plan calls for the formulation and implementation of national policies that aim at the realization of an ubiquitous broadband infrastructure with access for all European citizens. The
Telecom industry in India:
Introduction
The telecom network in India is the fifth largest network in the world meeting upwith global standards. Presently, the Indian telecom industry is currently slated to an estimated contribution of nearly 1% to India’s GDP.
The Indian Telecommunications network with 110.01 million connections is the fifth largest in the world and the second largest among the emerging economies of Asia. Today, it is the fastest growing market in the world and represents unique opportunities for U.S. companies in the stagnant global scenario. The
total subscriber base, which has grown by 40% in 2005, is expected to reach 250 million in 2007. According to Broadband Policy 2004, Government of India aims at 9 million broadband connections and 18 million internet connections by 2007. The wireless subscriber base has jumped from 33.69 million in 2004 to 62.57 million in FY20042005. In the last 3 years, two out of every three new telephone subscribers were wireless subscribers. Consequently, wireless now accounts for 54.6% of the totaltelephone subscriber base, as compared to only 40% in 2003. Wireless subscribergrowth is expected to bypass 2.5 million new subscribers per month by 2007. Thewireless technologies currently in use are Global System for Mobile Communications(GSM) and Code Division Multiple Access (CDMA). There are primarily 9 GSM and 5CDMA operators providing mobile services in 19 telecom circles and 4 metro cities,covering 2000 towns across the country.
Evolution of the industry-Important Milestones:
History of Indian Telecommunications
Year
1851 First operational land lines were laid by the government near Calcutta (seatof British power)
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)
1932 Merger of ETC and IRT into the Indian Radio and Cable CommunicationCompany (IRCC)
1947 Nationalization of all foreign telecommunication companies to form thePosts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications
1985 Department of Telecommunications (DOT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system)
1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
1997 Telecom Regulatory Authority of India created.
1999 Cellular Services are launched in India. New National Telecom Policy is adopted.
2000 DoT becomes a corporation, BSNL
Scope Of Telecom Industry
The telecom industry is growing at a great pace and the growth rate is expected to double with every passing year. There are many new developments in the telecomm sector, including the ingress of 3G technology that the Indian market is witnessing at present.
Public and Private Players:
MTNL, BSNL, VSNL are the major Public Players, whereas Airtel, Idea, Hutch, Tata, Reliance, BPL are the leading Private Players in the country. Some of them are entering foreign markets as well. The Bharti Telecom will be launching its services for the NRIs in the US with the help of Airtel CALLHOME service.
The market shares of the leading public and Private Players
INVESTMENT AND GROWTH:
In 2005-2006, the telecom industry witnessed a growth of 21% with a total revenue of Rs. 86,720 crores, and the total investment rising to Rs. 2,00,660 crores. It is projected that the telecom industry will be enjoying over 150% growth in the next 4-6 years. The growth also requires a huge investment by the players in the sector. Bharti Airtel is planning to invest about $8 billion by the year 2010.
Liberalization policy and some socio-economic factors are mainly responsible for the immense growth in the sales volumes. The lifestyle of the people has changed. They need to be connected to the other people all the time. With the lowering down of the tariffs the affordability of the mobile phones has increased. The finance sector has also come up with loans for handsets on 0% interest. Mobile services providers are also expanding their coverage area by installing more and more antennas and other equipments.
The telecom sector in the country has already adopted the latest technological advancements to cater to the demands of the growing market. Telecom Expo India, Convergence India, VAS India and IPTV India being organized year to year are all efforts in this direction.
Budget 2007 has brought disappointment to the telecom sector. Mobile service providers have been asked to cut down their roaming rentals as well as their long distance and international call tariffs. This has led to discontent on the part of the service providers. However, Telecom Regulatory Authority of India (TRAI) is of the opinion that this will lead to increased use of roaming, which will ultimately lead to more revenue generation. Moreover, with cheaper handsets and lesser tariffs, it is expected that by the year 2010 there will be over 500 million subscribers in the Indian telecom market.
Also, the telecom industry this year will be focusing more on rural areas to connect them with the urban areas so that the farmers and the small-scale industries can have faster access to information related to weather and market conditions.
EMPLOYMENT STATUS :
With the coming of more and more projects, the telecom industry is going for high scale recruitments. There is a huge demand for software engineers, mobile analysts, and hardware engineers for mobile
handsets. Besides, there are ample opportunities for marketing people whose services are required to capture more and more customer base.
The new projects, setting up of new service bases, expansion of coverage areas, network installations, maintenance, etc are providing more and more employment opportunities in the telecom sector
Origan:
India is one of the fastest growing telecom networks in the world. This is due to its high population and fast rate of growth.
Rural India is still inadequate in terms of connectivity for efficient telecommunication.
BSNL is one of the main public sector telecommunication companies in India. It has been rated 7th largest in the world.
Hutch,BPL,MTNL,BhartiTelecom,Reliance and Tata Indicom are the other active telecommunication operators in India.
India’s mobile phone industry is one of the fastest growing industries in the world. Mobile phones in India were formally launched in august 1995. For the first few years after the advent of mobile phones, monthly subscriptions were added to the tune of 0.05 to 0.1 million in India. Subsequently the subscriber base stood at 10.5 million in December 2002.
The Indian mobile phone industry has entered a phase of boom due to many proactive measures taken by various licensors and regulators. Two Million mobiles subscribers were added every month in India from 2003 to 2005. The two other countries with more mobile phones then India are USA and China.
The main technologies followed by India for mobile communication are global GSM and CDMA.GSM is the global system for mobile communication and CDMA is based on code division multiple access. Mobile tariffs are very low in India.
Thirty two million mobile handsets were sold in India in the year 2005. Indian ring tones primarily comprise of music of Indian origin like Indian film songs and bhajans.
Total revenue generated by the telecom service sector in 2004-2005 was 86,720 crore in India. This meant an increase of revenue by 21% from the previous year.
Airtel covers 21.45 of subscriber base in India. Reliance is the second largest with a subscription controlling a base of 20.3%. BSNL follows closely at 18.6% and Hutch was 14.7% according to a June 2005 survey.
Growth:
Yes, that’s true. 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% yoy. 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 has 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 countrys 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.
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%;
GSM and CDMA subscription numbers:
Year GSM Subscribers (millions)
GSM Annual growth
CDMA Subscribers (millions)
CDMA Annual growth
2000 3.1 94% - -
2001 5.05 76% - -
2002 10.5 91% 0.8 -
2003 22.0 110% 6.4 700%
2004 37.4 70% 10.9 70%
2005 58.5 57% 19.1 75%
2006 105.4 80% 44.2 131%
2007 180.0 71% 85.0 92%
Achievements of National Telecom Policy 1994
Need for New Telecom Policy cropped up as a result of fast change in the overall Policy 1994 and Need for New Telecom Policy cropped up since the Indian telecommunication sector grew very rapidly over the last decade and half. The meteoritic rise of the Indian telecommunication industry enforced rapid amendment of the Indian telecommunication policy as drafted in the early 1990s. The 'Telecom Regulatory Authority of India' (TRAI) and 'Department of Telecommunication' (DOT), the two main governing bodies of the Indian telecommunication industry soon realized the need for an overall revamping of the Indian telecommunication policy to The highlights of the basic telecommunication policy of India are as follows - compliment the rapid growth of this industry
To facilitate telecommunication for all Ensuring quick availability of telephone connectivity Achieve universal service access at affordable price covering all Indian villages, as early as possible Providing world class telecommunication services Solving consumer complaints, resolve disputes, and special attention to be given to public interface To provide widest possible range of services at reasonable prices To emerges as a major manufacturing base and major exporter of telecommunication equipment To protect the defense and security interests of the country
The tenth plan meets the need for new telecom policy of the Indian communication industry, which are as follows -
Creating world class telecommunication infrastructure to meet the communication requirements of IT, ITES, media and other IT based industry
Easy and affordable access to basic telecommunication services across all the states of India Affordable and efficient basic telephony facility to each and every applicant Provision for world class service to all uncovered and rural areas of India Establishment of modern and efficient telecommunication infrastructure to meet the requirements of
modern India Continual upgradation of the Indian telecommunication sector and provide an equal opportunity for all
the telecommunication service providers doing business in India Strengthening R&D on telecommunication hardware and software Efficient and unbiased spectrum management Facilitating protection of the Indian defense and security systems Facilitating the Indian telecommunication companies to reach global standards Facilitate world class products and services at affordable prices
Institutionalize the Department Of Telecommunication (DOT), Government of India and help it function as a corporate body
To make telephone available within 48 hours of such demand To reach tele-density of 9.91 by the end of 31st March 2007 (which has been achieved) Facilitate reliable communication relay media to all telephone exchanges Provide high-speed data and multimedia connections using technologies like ISDN across all towns,
having population strength of two lakh or more
The Achievements of National Telecom Policy 1994 and Need for New Telecom Policy initiated the following developments -
Friendly Government of India economic and telecommunication policies Low operational cost Availability of world class infrastructure at a much cheaper cost Availability of huge English speaking workforce Prevalence of strong technical education amongst the majority of educated Indians Large number of science and engineering graduates Assurance of high quality output Highly skilled workforce Usage of innovative technologies Effective and efficient entrepreneurship skills Good client and service provider's relationships Creation of global brands Huge scope of business across all industries especially, in IT and ITES industries Expansion of existing relationships Ever growing domestic market, especially the rural market Huge success in overseas markets Increased electronics and hardware manufacturing in India Aggressive promotion of R&D in telecommunication Increased penetration of computers Increased utilization of Internet Growth of domestic software market Development of local language software, especially for the use in rural- India Use of Information Technology to increase productivity Use of Information Technology as a means of generating employment Increased number and quality of training facilities across India
Vision:
NEW DELHI: In May 2008, Bharti Airtel had come very close to taking over Africa’s largest telecom provider MTN, but couldn’t clinch a deal. Now,
as the world battles a deep recession, the Bharti brass must be pleased that the talks with MTN broke down. The global markets have crashed and MTN’s market value has fallen 28% since then. MTN, which was also in talks with Reliance Communications, has a history of being courted by suitors but shying away from a deal.
Bharti has had lady luck smile on it before too, but it’s not by chance that India’s largest telecom operator has been coursing through the economic slowdown without showing any signs of strain, posting strong profits and expanding its user base rapidly.
Bharti did it the hard way, through far-sighted strategy and sound execution, backed by its unmatched ability to innovate constantly and set industry benchmarks, the same way Sunil Mittal, who started off making bicycle parts, built up the company from near-obscurity in 1995 when it had launched its mobile services in Delhi and then went on to become the country’s top telco, ahead of state-owned BSNL, Reliance Communications (RCOM) and Vodafone.
The benefits of the business model that we have put in place over the last few years are kicking in. We are reaping the benefits now,” says Bharti Airtel CEO and joint MD Manoj Kohli. True, the Indian telecom industry mostly shrugged off the global downturn. But Bharti did it better than its peers. During October-December, its net profit jumped 25% y-o-y, while rival RCOM managed only a 2.7% rise. And it increased its market share from 23.6% at the start of 2008 to 24.7% by year end.
In the stock market also, Bharti outperformed industry peers. While its share price fell by about 28% during the market meltdown, its primary competitors fared worse — Idea’s shares have fallen 52% during the same period, while RCOM’s fell by nearly 70% during the same period. According to Mr Kohli, Bharti’s current business model has been in the making since 2004, when it stunned the telecom world by outsourcing network operations, IT and call centre functions. It was an audacious move then. Today, outsourcing is a standard practice in the industry, in India and elsewhere. Bharti adopted the reverse outsourcing model where it gave out contracts to global majors rather than go in for Indian companies to save on costs. Bharti believed that outsiders could manage its core functions better than they could ever do and outsourced its networks to Ericsson and Nokia Siemens, its IT functions to IBM and its call centre operations to six leading BPOs, each of which are long-term multi-million dollar deals. Only to be copied by fascinated industry peers. Mr Kohli said, Bharti succeeded in anticipating the changes in the market and preparing for them. “Bharti’s principle to proactively look at the future has helped the company improve on its productivity and efficiency quarter after quarter and year after year,” Mr Kohli added.
Its rural drive is an example. With urban markets showing signs of stagnation, experts predict that rural India will be the new battleground for mobile market share. Ready for the task, Bharti recently launched a project to set up Airtel service centres in 4,00,000 villages across the country. In the last three months, it has set up 20,000 such outlets.
Mr Kohli said Bharti owes its success to its talent. “The company is no longer dependent on a single person as we have built a leadership pipeline,” he said.
The recent elevation of Sanjay Kapoor as deputy CEO is a case in point. Bharti has also decided to restructure its businesses into several new divisions under different CEOs. The company’s overall structure as such will not change as these new divisions will be under the existing three verticals — mobility, telemedia (DTH, broadband & fixed lines) and enterprise — which oversees the undersea cable business, national and international long-distance services and also services large companies.
Bharti has identified mobile commerce, entertainment, media, internet, enterprise services and small and medium businesses, among others to boost its non-voice services, which account for just about 10% of its mobile revenues. It has also developed a $100-million service development platform in a tie-up with IBM for companies to develop and offer applications to Airtel customers across mobile, landline, broadband and DTH service.
Bharti has also roped in global experts like Joachim Horn, who was the chief technology officer of German communications major T-Mobile. Just prior to that, the telco had recently roped in B Srikanth from Unilever UK as its CFO and Shireesh Joshi from beverages and chips maker PepsiCo China to be its chief marketing head.
Analysts believe this shows the company is aiming for a big-ticket acquisition in the global market. “Bharti is looking for seasoned hands who can handle the complexity of business not just within India, where the company’s achieved a near global scale, but also in the global market,” said BK Syngal, former CMD of Videsh Sanchar Nigam and senior principal at Dua Consulting.
Telecom Policy Environment:
Indian telecommunications today benefits from among the most enlightened regulation in the region, and arguably in the world. The sector, sometimes considered the “poster-boy for economic reforms,” has been among the chief beneficiaries of the post-1991 liberalization. Unlike electricity, for example, where reforms have been stalled, telecommunications has generally been seen as removed from “mass concerns,” and thus less subject to electoral calculations. Marketoriented reforms have also been facilitated by lobbying from India’s booming technology sector, whose continued success of course depends on the quality of
communications infrastructure. Despite several hiccups along the way, the Telecom Regulatory Authority of India (TRAI), the independent regulator, has earned a reputation for transparency and competence. With the recent resolution of a major dispute between cellular and fixed operators (see below), Indian telecommunications, already among the most competitive markets in the world, appears set to continue growing rapidly. While telecom liberalization is usually associated with the post-1991 era, the seeds of reform were actually planted in the 1980s. At that time, Rajiv Gandhi proclaimed his intention of “leading India into the 21stcentury,” and carved the Department of Telecommunications (DOT) out of the Department of Posts and Telegraph. For a time he also even considered corporatizing the DOT, before succumbing to union pressure. In a compromise, Gandhi created two DOT-owned corporations: Mahanagar Telephone Nigam Limited (MTNL), to serve Delhi and Bombay, and Videsh Sanchar Nigam Limited (VSNL), to operate international telecom services. He also introduced private capital into the manufacturing of telecommunications
equipment, which had previously been a DOT monopoly. These and other reforms were limited by the unstable coalition politics of the late 1980s. It was not until the early 1990s, when the political situation stabilized, and with the general momentum for economic reforms, that telecommunications liberalization really took off. In 1994, the government released its National Telecommunications Policy (NTP-94), which allowed private fixed operators to take part in the Indian market for the first time (cellular operators had been allowed into the four largest metropolitan centers in 1992). Under the government’s new policy, India was divided into 20 circles roughly corresponding to state boundaries, each of which would contain two fixed operators (including the incumbent), and two mobile
operators:
As ground-breaking as NTP-94 was, its implementation was unfortunately marred by regulatory uncertainty and over-bidding. A number of operators were unable to live up to their profligate bids and, confronted with far less lucrative networks than they had supposed, pulled out of the country. As a result, competition in India’s telecom sector did not really become a reality until 1999. At that time the government’s New Telecommunications Policy (NTP-99) switched from a fixed fee license to a revenuesharing regime of approximately 15%. This figure has subsequently been lowered (to 10%-12%), and is expected to be reduced even further over the coming years. Still, India continues to derive substantial revenue from license fees ($800 million in 2001-2002), leading some critics to suggest that the government
has abrogated its responsibilities as a regulator to those as a seller. Another, perhaps even more significant, problem with India’s initial attempts to introduce competition was the lack of regulatory clarity. Private operators complained that the licensor – the DOT – was also the incumbent operator. The many stringent conditions attached to licenses were thus seen by many as the DOT’s attempt to limit competition. It was in response to such concerns that the government in 1997 set up the Telecom Regulatory Authority of India (TRAI), the nation’s first independent telecom regulator. Over the years, TRAI has earned a growing reputation for independence, transparency and an increasing level of competence. Early on, however, the regulator was beleaguered on all fronts. It had to contend with political interference, the incumbent’s many challenges to its authority, and accusations of ineptitude by private players. Throughout the late 1990s, TRAI’s authority was steadily whittled away in a number of cases, when the courts repeatedly held that regulatory power
lay with the central government. It was not until 2000, with the passing of the TRAI Amendment Act, that the regulatory body really came into its own. Coming just a year after NTP-99, the act marks something of a watershed moment in the history of India telecom liberalization. It set the stage for several key events that have enabled the vigorous competition witnessed today. Some of these events include:
• The corporatization of the DOT and the creation of a new state-owned telecom company, Bharat Sanchar Nigam Ltd (BSNL), in 2000;
• The opening up of India’s internal long-distance market in 2000, and the subsequent drop in long-distance rates as part of TRAI’s tariff rebalancing exercise;
• The termination of VSNL’s monopoly over international traffic in 2002, and the partial privatization of the company that same year, with the Tata group assuming a 25% stake and management control;
• The gradual easing of the original duopoly licensing policy, allowing a greater number of operators in each circle;
• The legalization, in 2002, of IP telephony (a move that many believe was held up due to lobbying by VSNL, which feared the consequences on its international monopoly);
The introduction in 2003 of a Calling Party Pays (CPP) system for cell phones, despite considerable opposition (including litigation) by fixed operators;
• And, more generally, the commencement of more stringent interconnection regulation by TRAI, which has moved from an interoperator “negotiations-based” approach (often used by the stronger operator to negotiate ad infinitum) to a more rules-based approach. All of these events have created an impressive forward-momentum in Indian telecommunications, resulting in a vigorously competitive and fast-growing sector. India has also suffered from its fair share of regulatory hiccups. Many operators (mobile players in particular) still complain about the difficulties of gaining access to the incumbent’s (BSNL) network, and the government’s insistence on capping FDI in the telecom sector to 49% (a move made in the name of national security) limits capital availability and thus network rollout. In addition, ISPs, who were allowed into the market under a liberal licensing regime in 1998, continue to hemorrhage money, and have been pleading with the government for various forms of relief, including.
the provision of unmetered phone numbers for Internet access. Despite initially impressive results, the growth of Internet in the country has recently stalled, with only 8 million users. Broadband penetration, too, remains tiny. Unified Licensing
But perhaps the biggest – and, until recently, most intractable – regulatory problem has been the drawn-out battle over “limited mobility” telephony. This imbroglio began in 1999, when MTNL sought permission from TRAI to provide CDMA-based WLL services with “limited mobility.” GSM cellular operators were soon up in arms, arguing that “limited mobility” was simply a backdoor entry into their business. Moreover, fixed operators had paid lower license and spectrum fees than cellular ones; were not required to pay access charges for cell-to-fixed calls (unlike their cellular counterparts); and, amidst accusations of cross-subsidization, were charging considerably lower rates than the cellular operators. The resulting conflict dragged on in the courts and in the political arena for years. Fixed operators including new entrants Reliance and Tata Teleservices claimed that they were being prevented from providing a cheap service that would drive penetration and be of benefit to the “common man”; cellular players bitterly opposed what they perceived as unequal regulatory treatment for two kinds of operators who were in fact offering the same service. The real victim, of course, was the Indian telecommunications market, which suffered from investor perceptions of regulatory confusion and operator in-fighting. In late 2002, for example, thousands of mobile users in New Delhi were for a time cut off from the fixed-line network when MTNL shut down interconnection for cellular companies. (MTNL later attributed the incident to a “technical snag.”)
It was not until late 2003 that the issue was finally resolved, under considerable government pressure, when cellular operators agreed to withdraw their many cases against the fixed-line operators. Fixed operators would in effect be allowed to enter the mobile business; in return, the government granted cellular players several concessions, including lower revenue-share arrangements estimated to total over $210 million. Perhaps most notably, the government announced its intention to adopt a “unified access licensing” regime, which would in the future provide a single, technology-neutral license for fixed and cellular operators. The hope is that this new license category will prevent a repeat of the recent controversy, and allow new technologies to enter the Indian market without requiring a wholesale rewrite of licensing laws.
MAJOR MARKET TRENDS:
The telecoms trends in India will have a great impact on everything from the humble PC, internet, broadband (both wireless and fixed), cable, handset features, talking SMS, IPTV, soft switches, and managed services to the local manufacturing and supply chain. This report discusses key trends in the Indian telecom industry, their drivers and the major impacts of such trends affecting mobile operators, infrastructure and handset vendors.
Higher acceptance for wireless services:
Indian customers are embracing mobile technology in a big way (an average of four million subscribers added every month for the past six months itself). They prefer wireless services compared to wire-line services, which is evident from the fact that while the wireless subscriber base has increased at 75 percent CAGR from 2001 to 2006, the wire-line subscriber base growth rate is negligible during the same period. In fact, many customers are returning their wire-line phones to their service providers as mobile
provides a more attractive and competitive solution. The main drivers for this trend are quick service delivery for mobile connections, affordable pricing plans in the form of pre-paid cards and increased purchasing power among the 18 to 40 years age group as well as sizeable middle class – a prime market for this service.
Some of the positive impacts of this trend are as follows. According to a study, 18 percent of mobile users are willing to change their handsets every year to newer models with more features, which is good news for the handset vendors. The other impact is that while the operators have only limited options to generate additional revenues through value-added services from wire-line services, the mobile operators have numerous options to generate non-voice revenues from their customers. Some examples of value-added services are ring tones download, coloured ring back tones, talking SMS, mobisodes (a brief video programme episode designed for mobile phone viewing) etc. Moreover, there exists great opportunity for content developers to develop applications suitable for mobile users like mobile gaming,
location based services etc. On the negative side, there is an increased threat of virus – spread through mobile data connections and Bluetooth technology – in mobile phones, making them unusable at times. This is good news for anti-virus solution providers, who will gain from this trend.
MERGERS:
Demand for new spectrum as the industry grows and the fact the spectrum allocation in done on the basis of number of subscribers will force companies to merge so as to claim large number of subscribers to gain more spectrum as a precursor to the launch of larger and expanded services. However it must also be noted that this may very well never happen on account of low telecom penetration.
NEW CIRCLES:
As mentioned earlier there is a significant number of tier-2 and tier 3 cities that can accommodate more players we expect aggressive response by the companies to such opportunities as and when they are created.
Constraints:
* Slow pace of the reform process .
* It would be difficult to make in-roads into the semi-rural and rural areas because of the lack of infrastructure. The service providers have to incur a huge initial fixed cost to make inroads into this market. Achieving break-even under these circumstances may prove to be difficult.
* The sector requires players with huge financial resources due to the above mentioned constraint. Upfront entry fees and bank guarantees represent a sizeable share of initial investments. While the criteria are important, it tends to support the existing big and older players. Financing these requirements require a little more liberal approach from the policy side.
* Problem of limited spectrum availability and the issue of interconnection charges between the private and state operators.
Major Players :
There are three types of players in telecom services:
• -State owned companies (BSNL and MTNL)
• -Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)
• -Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications)
Chapter 3
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
Shri Kuldeep Goyal
Shri S.D. Saxena
Shri Rajesh Wadhwa
Shri R.K.Aggarwal
Shri Rajendra Singh
Shri Gopal Das
Shri J.S.Deepak (I.A.S.)
Designation
CMD
Director (Finance)
Director - Consumer Fixed Access
(CFA)
Director - Consumer Mobility (CM)
Director - Enterprise
Director (HR)
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'.
Chapter 4
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
Relationship 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
(ii)
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.
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.
Chapter 5
ANALYSIS
AND
INTERPRETATION
S. No. Telecom Players
RATIO ANALYSIS
5.1 CURRENT RATIO
2004-05 2005-06 2006-07 2007-08 2008-09
Projected
2009-10 1 2
3 4 5
BSNL MTNL.
TATA TELECOM BHARTI AIRTEL IDEA CELLULAR
IDEAL RATIO = 2:1
1.75 1.29 1.84 0.47 2.45
Figure 5.1
1.98 1.34 1.19 0.44 0.74
2.46 1.34 1.08 0.47 0.87
2.47 1.35 1.44 0.57 0.43
2.25 1.35 1.31 0.69 0.36
2.63 1.37 1.13 0.70 0.21
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 S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
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 4
TATA TELECOM BHARTI AIRTEL
26.54 6.53
16.83 16.44 10.62 21.27
10.68 32.9
18.1 40.79
10.809 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
S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 1
2 3
BSNL
MTNL. TATA TELECOM
5.03 3.29
6.3
5.73 3.51 5.62
6.2 4.12 4.78
5.92 4.95 3.25
6.41 5.365 3.12
6.743 5.924 1.995
4 BHARTI AIRTEL 11.38 12.57 14.31 12.28 12.78 13.417 5 IDEA CELLULAR 17.74 20.01
Figure 5.3
35.89 38.28 47.355 55.105
Interpretation of 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
S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 1 2 3 4
BSNL TATA TELECOM BHARTI AIRTEL IDEA CELLULAR
0.31 -------
1.1 2.58
0.29 0.02 0.65 4.96
Figure 5.4
0.26 0.03 0.47 1.95
0.24 0.12 0.33 1.84
0.27 0.34 0.28
1.525
0.235 0.39 0.22
1.002
Interpretation of 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 S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
1
2 3 4 5
BSNL MTNL. TATA TELECOM BHARTI AIRTEL IDEA CELLULAR
10.09 10.16 11.41 19.27
7.52
9.94 5.95
11.52 20.74
10.44
Figure 5.5
9.05 6.77
10.28 29.06
14.96
4.97 6.48 6.53
27.95 16.92
1.46 4.785
6.23 28.4
20.64
0.433 3.763 4.589
32.725 23.912
Interpretation of 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
indicate that the company is earning 28.4 percent return on the total capital employed that
consists of fixed assets , investments and net working capital. Projected return on capital
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
indicate that the company is earning 28.4 percent return on the total capital employed that
consists of fixed assets , investments and net working capital. Projected return on capital
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.
S. No. Telecom Players
5.6 Price Earning Ratio
2006-2004-05 2005-06 07
Projected
2007-08 2008-09 2009-10
1 2 3 4 5
BSNL MTNL. TATA TELECOM BHARTI AIRTEL IDEA CELLULAR
--------- 8%
13% 26%
2%
Figure 5.6
59% 34% 5% 4%
7% 7% 27% 35% 18% 23%
8% 3% 4%
30% 29%
2% 1% 7%
28% 39%
Interpretation of 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
S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 1 2 3 4 5
BSNL MTNL.
TATA TELECOM BHARTI AIRTEL IDEA CELLULAR
30.4 16.1 22.2 14.8
1.6
24.7 9.7
12.1 17.8
6.2
22.5 8.5
11.2 22.5 11.4
9.3 7.7 8.9 24
15.3
2 3.9
13.25 22.58
20.2
-3.88 1.26
7.2 26.864
24.83
Figure 5.7
Interpretation of 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
5.8.1 Net Cash From Operating Activities Projected
S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 1 2
BSNL MTNL.
17469.6 18709.05 14139.96 10981.84 6843.81 4935.215 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 5
BHARTI AIRTEL IDEA CELLULAR
3005.89 4547.2 8107.95 10459.85 11853.15 14676.96 ---- 822.15 1605.11 2502.22 3170.496 4010.531
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
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.
5.8.2 Cash Used in Investing Activities
S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 Projected
2009-10 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 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-
5.8.3 Cash Used in Financing Activities
S. No. Telecom Players 2004-05 2005-06 2006-07 2007-08 2008-09 Projected
2009-10 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
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
Chapter 6
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.
Findings of the BSNL company:
the BSNL company current assets are increased because the company because the company cash&bank balances ,and sundry debtors .
the BSNL company fixed assets are decrease because the company net block is decreased comparing between 2010&2011 and the company accumulated depreciation is also increased.
And the BSNL company current liabilities are increased because the company the company current liabilities and provisions are increased.
The company loan funds are also decreased because the company un secured loans are decreased -38%.
The BSNL company source of funds are also increased because the company reserves&surpluse are increased .
Findings of the airtel company: the airtel company current assets are increased . the airtel company fixed assets are increased because the company the company fixed assets
are increased yearly and the company working in progrease is decreased comparing between 2010&2011.
The airtel company current liabilities are increased because the company short term liabilities and provisions are increased comparing between 2010&2011.
Suggestions of the BSNL company:
The BSNL company current assets are increased comparing between 2010&2011 its good so the company try to increase the current assets.
The BSNL company fixed assets are decrease because the company fixed assets are have the high depreciation so the company try to decrease the depreciation of fixed assets.
The BSNL company current liabilities are increased because the company current liabilities&provisions are increased thetsfy the company decreased the provisions and short term liabilities.
The BSNL company loan funds are decreased but the company try to decreased the loan funds.
And the company source of funds are also decreased and try to follow this decrease. The company capital does not chaig so the company try to increase the capital of the
company.
Suggestions of the airtel company:
The airtel company current assets are increased but the company miscellaneous expenses are very decreased so the company try to increase the company miscellaneous expenses.
The company fixed assets are increased but the company try to increase the company fixed assets of the company.
The company current liabilities are increased because the company try to decrease the company short term liabilities and provisions also.
The airtel company loan funds are increased but the secured loans are decreased but the company try to decrease the un secured loans.
The company source of funds are increased so the company try to decrease the source of funds.
Chapter 7
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.
Chapter 8
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
Chapter 9
ANNEXURE
ANNEXURE BSNL
CONSOLIDATED PROFIT AND LOSS ACCOUNT
31st March 31st March 31st March 31st March 31st March
Particulars 2005 2006 2007 2008 2009
INCOME
(Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh)
Income from Services Other Income
EXPENDITURE Employees' Remuneration and Benefits Licence fee and Spectrum fee Administrative, Operating and Other Expenses Financial Expenses Depreciation
Profit before Prior period items Prior period items (Net) Profit before Extraordinary items Extraordinary items Profit before taxation Current Tax MAT Credit Deferred Tax Fringe Benefit Tax Wealth Tax Profit for the year after taxation Appropriation : Interim Dividends on Equity Share Capital Proposed Dividends: On Equity & Preference
3,345,004 264,001
3,609,005
839,302
330,236
805,196 2,929
962,486 2,940,149
668,856 -40,550
615,418 176,590 792,008
78,816 -
-175,933 992
-130,196
1,018,329
20,000
97,500
3,613,894 403,764
4,017,658
742,063
352,305
1,049,689 108,980 937,669
3,190,706
826,952 -40,550
786,402 58,296
844,698 80,130
-- -134,002
4,100 501
893,969
37,500
80,000
3,461,621 509,890
3,971,511
730,897
331,169
1,091,628 77,941
914,931 3,146,566
824,945 -9,564
815,381 ------
815,381 96,229
-19,470 -45,795
3700 130
780,587
50,000
67,500
3,235,953 569,387
3,805,340
880,891
315,213
1,111,675 86,254
969,610 3,363,643
441,697 3,458
445,155 ------
445,155 136,094
-2,171 6,448 3,700
145
300,939
30,000
120,00
3,026,857 554,335
3,581,192
1,136,323
264,635
1,137,797 44,325
852,341 3,435,421
145,771 -18,608
127,163
127,163 132,322
0 -66,569
3,800 125
57,485
0
0
Share Capital
Tax on Dividends Transfer to General Reserve Surplus carried to Balance Sheet Net Profit Earnings Per Share (In Rs.) Basic earnings per equity share
16,288
203,666
680,875 1,018,329
15.65
16,479
178,794
581,196 893,969
15.28
18,484
156,117
488,486 780,587
14.03
25,493
60,188
65,258 300,939
4.44
0
0
57,485 57,485
1.15
BSNL CONSOLIDATED BALANCE SHEET
Particulars
Shareholder’s Funds
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
Capital Reserves And Surplus Loan Funds
1,250,000 1,250,000 6,027,911 6,825,651
1,250,000 7,444,802
1,250,000 7,562,825
1,250,000 7,613,358
Unsecured Loans Deferred Tax Liability-Net
APPLICATIONS OF FUNDS
822,089 304,402
1,126,491
728,393 170,400
898,793
554,366 124,605
678,971
338,887 131,053
469,940
341,384 64,484
405,868
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 Net Block
4,233,309 5,150,354 6,176,907 6,018,849
6,071,511 5,793,390
6,987,974 5,469,849
7,792,203 5,432,088
Capital Work-In-Progress Decommissioned Assets
457,226
8,045
382,048
7,346
256,860
6,444
266,562
389
492,864
4,644
INVESTMENTS Current Assets, Loan and Advances
6,642,178 6,408,243 20,000 20,000
6,056,694 20,000
5,736,800 20,000
5,929,596 20,000
Inventories
Sundry Debtors
224,535
663,703
278,922
630,205
242,847
558,066
322,006
546,551
457,258
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 Loans and Advances
14,368
752,160
63,627
923,207
114,148
714,431
137,687
744,441
137,687
944,880
Less : Current Liabilities and Provisions Current Liabilities
3,847,879 4,953,909
1,461,541 1,612,324
5,374,788
1,667,919
5,805,843
1,739,788
5,774,861
2,072,702
Provisions 738,616 888,223 514,858 606,321 493,878
Net Current Assets 2,200,157 2,500,547 1,647,722 2,453,362
2,182,777 3,192,011
2,346,109 3,459,734
2,566,580 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
PARTICULARS
BSNL CASH FLOW STATEMENT
Year ended 31st Year ended 31st Year ended 31st Year ended 31st Year ended 31st March
A. Cash flow from operating activities: Net (loss)/profit before tax but after Prior period and Extraordinary items
Adjustments for:
Depreciation
Prior period depreciation
Interest/Finance charges
Interest Income
Loss/(Profit) on Fixed Assets sold Debts / Advances Written off Provision for Bad and Doubtful Debts
Excess provision written back Prior Period item other than depreciation Extraordinary Items
Other Provision
March 2005 (Rs. in Lakh)
792,008
962,486
54,293
2,929
-80,052
-618
73,437
26,403
-39,532
-855
-176,590
March 2006 (Rs. in Lakh)
844,698
937,669
21,231
108,980
-173,340
-851
47,059
159,518
-19,133
19,320
-58,296
March 2007 (Rs. in Lakh)
815,381
914,931
8,288
77,941
-281,123
-800
35,340
127,875
-21,676
1,276
-
March 2008 (Rs. in Lakh)
445,155
969,610
5,106
86,254
-403,324
-2,002
70,926
47,899
-80,829
-8,565
2009 (Rs. in Lakh)
127,163
852,341
4,189
44,325
-388,504
-2,165
91,453
85,640
-117,014
14,419
3,865
Operating profit before working capital changes
Adjustments for changes in working capital - Inter Circle Remittance
258,941 1,080,844 181,942 1,224,099 102,518 964,570 147,595 832,670 176,091 764,640
1,872,852 2,068,797 1,779,951 1,277,825 891,803
- Sundry Debtors
- Other Receivables
- Trade and Other Payables
-4,202
-77,517
-59,867
1,663
-94,637
-170,397
-12,229
-131,465
-67,776
38,837
-62,838
-54,335
-45,118
-83,612
-152,971
Cash generated from operations
-Taxes paid - Extraordinary Items
- Prior Period item other
-44,175 -185,760 145,474 -117,897
1,687,092 1,950,900
-117,576 -118,971
176,590 58,296
-685 -212,155 65,923 -12,413 326,506
1,567,796 1,265,412
-152,524 -175,793 -237,808
-
44,805
936,608
than depreciation Net cash from operating activities
855 59,869 -19,320 -79,995 -1,276 -153,800 8,565 -167,228 -14,419 -252,227
1,746,960 1,870,905 1,413,996 1,098,184 684,381
B. Cash flow from Investing activities:
Inventories Purchased/Sale
Purchase of fixed assets
Capital Work in Progress
Proceeds from Sale of fixed assets Interest Received
Net cash used in investing activities
C. Cash flow from financing activities:
Proceeds from long termborrowings Interest Paid
Interim Dividend Paid
Dividend Paid
Dividend Distribution Tax Paid Net cash used in financing activities
Net Increase/(Decrease) in Cash and Cash Equivalents Opening Cash and cash equivalents Cash and cash equivalent
Cash and cash equivalents comprise Cash, Cheques and Drafts (in hand) Balances with banks
-572 -976,301
125,689
133,273
70,094
-3,679
-3,068
-22,614
-31,800
179,993
-647,817
-61,161
1,037,982
1,155,133
2,193,113
-54,539 -882,441
78,066
84,750
124,081
-93,696
-108,358
-42,759
-111,174
-
3,094
-650,083
-355,986
864,835
2,193,113
3,057,948
24,723 -815,313
125,505
107,795
230,602
-174,027
-77,700
-50,000
-80,000
-18,233
2,704
-326,688
-399,960
687,348
3,057,948
3,745,296
-76,049 -717,309
-9,231
50,319
379,785
-300,000
-1,767
-30,000
-67,500
-16,570
2,569
-372,485
-415,837
309,862
3,745,296
4,055,158
-132,712 -860,242
-226,409
36,597
438,952
-
-41,901
-
-120,000
-20,394
2,415
-743,814
-182,295
-241,728
4,055,158
3,813,430
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
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital
As at 31st March 2005
Rs. in crore
1,853.37 1,853.37
2.72 0
As at 31st
March, 2006
Rs. in crore
1,893.88 1,893.88
12.13 0
As at 31st
March, 2007
Rs. in crore
1,895.93 1,895.93
30 0
As at 31st
March, 2008
Rs. in crore
1,897.91 1,897.91
57.63 0
As at 31st
March, 2009
Rs. in crore
1,898.24 1,898.24
116.22 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 Unsecured Loans Total Debt
3,959.88 1,034.41 4,994.29
2,863.37 1,932.92 4,796.29
266.45 5,044.36 5,310.81
52.42 6,517.92 6,570.34
51.73 7,661.92 7,713.65
Total Liabilities
Application Of Funds Gross Block Less: Accum. Depreciation Net Block
9,527.89
13,240.63
3,475.64 9,764.99
12,141.85
17,951.74
4,944.86 13,006.88
16,754.08
26,509.93
7,204.30 19,305.63
26,811.83 35,357.62
28,115.65 37,266.70
9,085.00 12,253.34 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 Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans &
31.58 715.74 174.96 922.28
1,354.85 209.17
17.74 1,076.17
201.81 1,295.72 1,937.54
105.61
47.81 1,418.52
239.11 1,705.44 3,160.02
541.35
56.86 2,776.46
200.86 3,034.18 5,103.13
302.08
62.15 2,550.05
153.44 2,765.64 5,602.83 2,098.16
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 Miscellaneous Expenses
-2,221.82 58.35
-3,933.93 7.94
-5,635.86 2.66
-5,922.94 0.2
-4,000.26 0.09
Total Assets 9,527.88 12,141.84 16,754.07 26,811.84 35,357.62 Contingent Liabilities Book Value (Rs)
3,017.26 24.44
4,740.34 38.71
7,615.04 60.19
7,140.59 106.34
4,104.25 145.01
PARTICULARS
BHARTI AIRTEL PROFIT AND LOSS A/C
31st 31st 31st March March March 2005 2006 2007
31st March 2008
31st March 2009
Income Sales Turnover
---------------------------------------RS. IN CRORE --------------------------------
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 Expenditure
6,446.06 11,272.22 17,987.30 25,874.20 32,791.86
Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses
Miscellaneous Expenses Preoperative Exp Capitalised
83.67 0
475.86
2,365.51
1,951.25
280.05
0
53.56 0
734.2
3,299.73
2,804.85
314.37
0
52.16 0
1,076.95
5,017.27
4,030.48
444.28
0
42.9 0
1,297.88
7,339.01
5,892.50
535.46
0
17.7 0
1,397.54
8,627.13
9,385.68
1,409.89
0 Total Expenses 5,156.34 7,206.71 10,621.14 15,107.75 20,837.94
Operating ProfitPBDIT
2,997.67 1,289.72
4,038.57 4,065.51
7,260.54 10,662.41 13,215.67 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 Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit
1,019.36 161.34
-207.98 22.23
-185.75 353.6
1,210.67
1,432.34 127.39
2,268.97 17.64
2,286.61 273.68
2,012.08
2,353.30 137.8
4,592.99 9.92
4,602.91 566.79
4,033.23
3,166.58 266.07
6,940.37 -60.67
6,879.70 632.43
6,244.19
3,206.28 178.82
8,134.66 -46.15
8,088.51 321.78
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 Corporate Dividend Tax Per share data (annualised)
0 0
0 0
0 0
0 0
379.65 64.52
Shares in issue (lakhs) 18,533.67 18,938.79 18,959.34 18,979.07 18,982.40 Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
6.53 0
24.44
10.62 0
38.71
21.27 0
60.19
32.9 0
106.34
40.79 20
145.01
BHARTI AIRTEL CASH FLOW STATEMENT
Mar '05 12 mths
Mar '06 Mar '07 Mar '08 Mar '09 12 mths 12 mths 12 mths 12 mths
Net Profit Before Tax Net Cash From Operating
------------------------------IN RS CRORE------------------- 1564.28 2285.8 4601.37 6972.54 8161.54
Activities Net Cash (used in)/from Investing Activities
Net Cash (used in)/from
3005.89
-2330.3
4547.2 8107.95 10459.9 11853.2
-5000.3 -7975.1 -11648 -10894
Financing Activities Net (decrease)/increase In
-423.09 376.35 340.13 898.03 -672
Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
252.5
131.63
384.14
-76.71 473.03 -290.53 286.77
384.14 307.43 793.47 503.31
307.43 780.46 502.94 790.08
Particulars
MTNL BALANCE SHEET
As at As at As at As at
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital
31st March 2005
630 630
0 0
31st
March, 2006
630 630
0 0
31st
March, 2007
630 630
0 0
31st
March, 2008
630 630
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 Unsecured Loans Total Debt
0 0 0
0 0 0
0 0 0
0 0 0
Total Liabilities
Aplication of FundsGross Block Less: Accum. Depreciation Net Block
10,943.83 11,236.77 11,629.30 11,921.36
14,252.25 14,854.15 15,291.35 15,842.58 7,783.62 8,285.40 8,887.68 9,522.78 6,468.63 6,568.75 6,403.67 6,319.80
Capital Work in Progress Investments Inventories
651.51 397.47
186.6
554.36 418.72 137.82
779.29 441.4
221.28
981.7 557.39 160.71
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 Loans and Advances Fixed Deposits Total CA, Loans & Advances
2,127.86 1,712.27 1,348.28 1,233.24 10,758.82 10,364.54 11,857.45 10,502.84
2,337.29 1,899.05 1,707.00 3,239.05
15,223.97 13,975.86 14,912.73 14,975.13 Deffered Credit 0 0 0 0 Current Liabilities Provisions Total CL & Provisions Net Current Assets
6,194.15 5,289.44 5,683.31 5,626.00 5,603.60 5,105.72 5,446.15 5,445.82
11,797.75 10,395.16 11,129.46 11,071.82 3,426.22 3,580.70 3,783.27 3,903.31
Miscellaneous Expenses 0 114.25 221.65 159.17 Total Assets
Contingent Liabilities
10,943.83 11,236.78 11,629.28 11,921.37
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 31st March 31st 31st March
Particulars
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax
Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
2005
(Rs. in Crore)
5,602.34 0
5,602.34 236
0 5,838.34
0 140.16
1,932.20 77.51
2,027.55 90.46
-96.31 4,171.57
1,430.77 1,666.77
35.81 1,630.96
588.01 0
1,042.95 179.17
1,222.12 267.24 948.43
4,171.57 0
283.5 39.28
6,300.00 15.05
45 173.71
2006
(Rs. in Crore)
5,568.41 0
5,568.41 380.93
0 5,949.34
0 155.85
1,941.13 68.63
2,426.37 148.27 -64.38
4,675.87
892.54 1,273.47
24.44 1,249.03
646.7 0
602.33 84.76
687.09 93.7
580.29 4,675.86
0 252
35.34
6,300.00 9.21
40 178.36
March 2007 (Rs. in Crore)
4,909.32 0
4,909.32 512.11
0 5,421.43
0 160.79
1,750.99 75.95
1,021.57 1,007.97
0 4,017.27
892.05 1,404.16
11.78 1,392.38
683.18 0
709.2 299.59
1,008.79 326.65 466.03
4,017.27 0
252 37.21
6,300.00 7.4 40
184.59
2008
(Rs. in Crore)
4,722.52 0
4,722.52 405.38
0 5,127.90
0 188.34
1,580.95 93.62
951.86 1,005.55
-21.01 3,799.31
923.21 1,328.59
12.09 1,316.50
704.06 0
612.44 212.12 824.56 224.83 406.82
3,799.31 0
252 42.83
6,300.00 6.46
40 189.23
Net Profit Before Tax
Mahanagar Telephone NigamCash Flow
------------------- in Rs. Cr. -------------------
Mar '05 Mar '06 Mar '07
1215.67 671.36 792.68
Mar '08
631.65
Net Cash From Operating Activities
Net Cash (used in)/from
Investing Activities
Net Cash (used in)/from Financing Activities
Net (decrease)/increase In
1212.71 213.31 357.64 2487.81
-785.01 -277.08 -259.74 -692.32
-463.4 -395.24 -287.49 -294.83
Cash and Cash Equivalents
Opening Cash & Cash
-35.71 -459 -189.59 1500.66
Equivalents
Closing Cash & Cash
2553.1 2517.4 2058.4 1868.7
Equivalents 2517.4 2058.4 1868.81 3369.36
Particulars
IDEA CELLULARBalance Sheet
As at As at As at As at 31st March 2005
31st
March, 2006
31st
March, 2007
31st
March, 2008
Sources Of Funds Total Share Capital Equity Share Capital
------------------- in Rs. Cr. -------------------
2,742.53 2,742.53 2,592.86 2,635.36 2,742.53 2,259.53 2,592.86 2,635.36
Share Application Money Preference Share Capital
0 0 -
0 483
-
0 0
3.76 0
Reserves 1,695.74 1,574.00 -413.71 906.91 Revaluation Reserves 0 0 0 0 Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
Application Of Funds Gross Block Less: Accum. Depreciation Net Block
1,046.79 1,168.53 2,179.15 3,546.03 1,692.75 1,470.75 3,539.77 5,454.43 1,005.28 1,444.85 710.74 1,060.33 2,698.03 2,915.60 4,250.51 6,514.76 3,744.82 4,084.13 6,429.66 10,060.79
Mar '05 Mar '06 Mar '07 Mar '08
3,577.49 3,975.11 8,229.61 12,791.22 899.99 1,157.63 2,637.18 3,123.83
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 Cash and Bank Balance
109.8 151.89
90.82 152.48 40.12 122.76
198.59 147.67
Total Current Assets Loans and Advances
275.16 139.75 293.15 899.3 1,408.64 560.82
373.88 950.88
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 Net Current Assets
478.76 773.63 2,234.05 2,791.80 695.7 863.73 316.89 -1,117.66
Miscellaneous Expenses 0 0 0 0 Total Assets
Contingent Liabilities
3,744.85 4,084.15 6,429.67 10,060.79
0 213.92 1,236.57 2,308.87 Book Value (Rs) 3.82 3.03 8.4 13.44
Particulars
Idea Cellular Profit & Loss A/c
31st March 31st 2005 March
2006
31st March 2007
31st March 2008
Income ------------------- in Rs. Cr. -------------------
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 Stock Adjustments
9.67 0
5.2 -0.01
27.64 -1.2
184.17 0
Total Income Expenditure
1,635.09 2,012.26 4,392.84 6,904.16
Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing
0.03 0
103.36
0.04 37.86
115.08
4.06 109.46 251.43
0.01 224.4
332.88
Expenses Selling and Admin
172.26 626.41 1,388.33 2,643.43
Expenses Miscellaneous Expenses Preoperative Exp Capitalised
0 755.44
0
439.02 18.22
-0.04
959.34 38.69
-0.08
974.08 53.87
0 Total Expenses
Operating Profit PBDIT
1,031.09
594.33 604
1,236.59 2,751.23 4,228.67
770.47 1,613.97 2,491.32 775.67 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 Other Written Off
237.78 84.49
262.88 84.66
563.67 108.14
756.85 119.91
Profit Before Tax 26.69 119.88 491.54 1,102.88 Extra-ordinary items PBT (Post Extra-ord
2.53 8.61 5.23 13.97
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 Equity Dividend Corporate Dividend Tax Per share data (annualised)
0 0 0
0 0 0
0 0 0
0 0 0
Shares in issue (lakhs) 27,425.27 22,595.27 25,928.61 26,353.61 Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
0.1 0
3.82
0.56 0
3.03
1.94 0
8.4
3.96 0
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 Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
125.6 502.06 1044.36
822.15 1605.11 2502.22
286.94 2275.09 5956.18
558.01 2340.07 2131.29
22.8 1670.09 1322.67
151.89 149.64 1819.73
129.09 1819.73 497.06
Tata Communications Profit & Loss A/c
31st 31st 31st 31st 31st March 2005
March 2006
March 2007
March 2008
March 2009
Particulars
Income
Sales Turnover
------------------- in Rs. Cr. -------------------
3,303.04 3,780.95 4,041.83 3,283.30 3,749.43
Excise Duty 0 0 0 0 0
Net Sales
Other Income
3,303.04 3,780.95 4,041.83 3,283.30 3,749.43
512.39 124.62 105.83 173.25 473.58
Stock Adjustments 0 0 0 0 0
Total Income
Expenditure
3,815.43 3,905.57 4,147.66 3,456.55 4,223.01
Raw Materials
Power & Fuel Cost
1.65
34.61
1.95
37.93
1.61
43.09
10.63
0
11.2
0
Employee Cost
Other Manufacturing
Expenses
Selling and Admin
141.28 209.06 243.69 242.43 340.07
1,859.76 2,127.36 2,258.37 1,936.25 1,943.03
Expenses 401.31 338.67 376.15 323.08 423.1
Miscellaneous Expenses
Total Expenses
Operating Profit
70.62 115.03 165.19 125.36 180.75
2,509.23 2,830.00 3,088.10 2,637.75 2,898.15
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
Depreciation
1,296.58 1,062.01 1,042.82 773.98 1,128.16
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)
Tax
Reported Net Profit
Total Value Addition
1,053.81 747.75 720.68 489.43 708.77
297.61 207.18 244.07 145.52 197.54
756.37 479.54 468.56 304.46 515.95
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 Pe r sh are data
(annualised) 24.31 17.99 21.8 21.8 21.8
Shares in issue (lakhs) 2,850.00 2,850.00 2,850.00 2,850.00 2,850.00
Earning Per Share (Rs)
Equity Dividend (%)
26.54
60
16.83
45
16.44
45
10.68
45
18.1
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
Sources Of FundsTotal Share Capital 285
------------------- in Rs. Cr. -------------------
285 285 285 285 Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of FundsGross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets
285
0
0 5,443.05
0 5,728.05
0 0 0
5,728.05
3,182.68
835.65 2,347.03
513.17 1,200.58
1.97 608.95
22.26 633.18
1,626.10 1,386.87
3,646.15 0
1,713.70 265.17
1,978.87 1,667.28
0 5,728.06
285
0
0 5,776.17
0 6,061.17
0 98.25 98.25
6,159.42
4,099.64
1,091.08 3,008.56
147.81 2,499.34
3.8 737.57
245.66 987.03
1,511.19 11.22
2,509.44 0
1,740.40 265.32
2,005.72 503.72
0 6,159.43
285
0
0 6,074.50
0 6,359.50
0 197.61 197.61
6,557.11
4,582.98
1,428.81 3,154.17
340.44 2,673.58
4.72 955.19
79.31 1,039.22 1,383.20
25
2,447.42 0
1,779.37 279.13
2,058.50 388.92
0 6,557.11
285
0
0 6,262.34
0 6,547.34
0 777.8 777.8
7,325.14
4,352.65
1,363.75 2,988.90
543.77 2,103.77
5.45 1,063.13
79.63 1,148.21 2,991.94
0
4,140.15 0
2,200.17 251.28
2,451.45 1,688.70
0 7,325.14
285
0
0 6,513.05
0 6,798.05 1,288.82 1,039.05 2,327.87 9,125.92
5,890.00
1,792.06 4,097.94
536.38 2,723.67
1.56 1,342.22
109.21 1,452.99 3,209.51
263.16
4,925.66 0
2,869.12 288.61
3,157.73 1,767.93
0 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
Net Profit Before Tax
Tata Communications Cash Flow
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 ------------------- in Rs. Cr. -------------------
632.54 754.35 744.54 461.18 462.44 Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash
323.24 1013.78 559.2 303.08 1086.67
76.44 -894.19 -647.83 -716.69 -2005.71
-208.09 -97.23 -52.79 389.14 1204.38
Equivalents Opening Cash & Cash
191.6 22.36 -141.49 -24.51 285.34
Equivalents Closing Cash & Cash
30.19 222.26 244.53 103.04 78.53
Equivalents 222.26 244.53 103.04 78.53 363.87
Comparative balance sheets of BSNL company:
particulars 2010
Previous year
2011
Current year
absolnt %of different
Assets
Current assets
Inventories 242847 322006 79159 32.5962
Sundry debtors 558066 546551 -11515 -2.0633
Cash &bank balance 3745279 4055158 309862 8.2733
Other current assets 114148 137687 23539 20.6214
Loans advances 714431 744441 30010 4.2005
Total current assets 5374788 5805843 431055 8.0199
Fixed assets
Gross block 11864901 12457823 592922 4.9972
(-)depreciation 6071511 6987974 916463 15.0944
Net block 5793390 5469849 -323541 -5.5846
Capital working progress
256860 266562 9702 3.7771
Decommissioned assets
64443 389 -6055 -93.9633
Invest ments 20000 20000 - -
Total fixed assets 6076694 5756800 -319894 -5.2816
Liabilities&capital
Current liabilities&provisions
Current liabilities 1667919 1739788 71869 4.3089
provisions 514858 606321 91463 17.7647
Total current liabilities
2346109 2182777 -163332 -6.9618
Long term liabilities
Un secured loans 554366 338887 -215479 -38.8694
Deffered tax liabilities 124605 131053 6448 5.1747
Total long term liabilities
678971 469940 209031 -33.6947
Capital &reserves
Capital 1250000 1250000 - -
Reserve&sur plus 7444802 7562825 118023 1.5853
Total capital&reserve
8694802 8812825 118023 1.5853
Comparative balance sheet of the airtel company:
Particulars 2010previous
year
2011
Current year
Absolute %of different
Assets
Current assets
Current Assets, loans advances
8439.38 10466.63 2027.25 24.0213
Miscellanea expenecess
0.20 0.09 -0.11 -55
Total 8439.58 10466.63 2027.14 30.9787
Fixed assets
Gross block 28115.65 37266.70 9151.05 32.5478
(-)revaluation reserve 2.13 2.13 _ _
(-)accumulated depreciation
9085.00 12253.34 3168.34 34.8744
Net block 19025.52 25011.23 5982.71 31.4407
Capital working progress
2751.08 2566.67 -184.41 -6.7031
Invest ments 10952.85 11777.76 824.91 7.5314
Total 699935.23 88877.83 18942.6 2.7063
Liabilities&capital
Current liabilities&provisions
14362.33 14466.89 104.56 0.7280
Long term libilities
Secured loans 52.42 51.73 -0.69 -1.3162
Un secured loans 6517.92 7661.92 1144 17.5516
total 6570.34 7713.65 11439.31 0.2354
Source of funds
Owners’ funds
Equity capital 1897.91 1898.24 0.33 0.0173
Share application money
57.63 116.22 58.59 101.66
Preference capital _ _ _ _
Reserves&surpluse 18283.82 28627.38 7343.56 40.1642
total 20239.36 30641.84 10402.48 51.3981
Notes
Book value of unquoted investments
379.62 9898.56 518.94 5.532
Marketed value of investment
1574.29 1887.76 313.47 19.91
Contingent liabilities 7140.59 18982.40 -3036.34 -42.5222