PROJECT REPORT

ON
FINANCIAL COMPARISON OF BSNL WITH OTHER
MAJOR PLAYERS IN THE INDUSTRY
A Report submitted in partial fulfillment of requirements for
Master in Business Administration, GGSIPU
Training Period: June-July, 2009
Submitted By:
PUNEET JAIN
Enroll. No. 0821233908
Summer Training Project Report
UNDER THE GUIDANCE OF
Internal Guide: External Guide:Mrs. Haritika Chhatwal Mr. Raj Pal Nanda
(Faculty) C.A.O (NTR region)
DIAS (GGSIPU)
BSNL

DELHI INSTITUTE OF ADVANCE STUDIES

(APPROVED BY AICTE, HRD MINISTRY, GOVT. OF INDIA)
AFFILIATED TO GURU GOBIND SINGH INDRAPRASTHA
UNIVERSITY, DELHI

PLOT NUMBER- 6, SECTOR- 25, ROHINI, DELHI- 110085

STUDENT UNDERTAKING

I, Puneet Jain hereby declares that the project report Financial comparison of BSNL
with other Major players in telecom industry assigned to me at BSNL during my
training session for the partial fulfillment of MBA degree from DELHI INSTITUTE OF
ADVANCE STUDIES, affiliated to IP UNIVERSITY is the original work of me and the
information provided by me is authentic and true to the best of my knowledge.

This project work has not been submitted by anyone to any other institution or university
for the award of MBA or any other degree.

PUNEET JAIN
(MBA III SEMESTER)

Acknowledgement
The success of any project study depends upon a number of factors among which the
proper guidance from the experts in the industry and a faculty plays an important role.

I take this opportunity to convey my sincere thanks and gratitude to all those who have
directly or indirectly helped and contributed towards the completion of this project.

I take here a great opportunity to express my sincere and deep sense of gratitude to
Lecturer Mrs. Hartika Chhatwal , for giving us an opportunity to work on this project.
The support & guidance from madam, was of great help & it was extremely valuable. I
would like to express my gratitude to madam for her constant support and
encouragement.

I take this platform to convey my gratitude to the officials of BSNL for their prompt
response and guidance. I would like to express my gratitude to Mr. Raj Pal Nanda
(Chief Accounts Officer, TR Section, Finance) for his constant support and
encouragement. Without his outright support and prompt response, it would not be
possible to do any justice as well as bring authenticity to the project.

Puneet Jain

Executive Summary
This is a brief report of eight weeks Summer Internship project titled Financial
Comparison of BSNL with Other major players in Telecom Industry conducted in
Northern Telecom Region, Eastern Court, and BSNL. This report examines the analysis
of the statement like Balance sheets and Profit and Loss A/c of past five years to know
the performance of the company in comparison with other players in the industry.

Data of BSNL is collected from the companys annual reports and the data of other
players like Airtel, Idea, TATA and MTNL is searched on their websites. Then data of all
these companies are arranged in the uniform manner so that financial factors can be
drawn out easily.

With the help of theoretical knowledge on the part of ratios and cash flow, all the
relevant ratios of each and every company for past five years have been founded. With
the help of regression analysis projected performance of various companies for 2009-10
have been forecasted. After a thorough study and discussion with the companys
professional, comments were taken so that Interpretation of these ratios became easy and
accurate.

After analyzing the project, it can be concluded that despite of having good liquid assets
BSNL is having weak financial position as compared to any other private player in the
industry. Companys performance have been deteriorated over the years and if the trend
remains continue than it have been projected that company will have to suffer net losses
in the upcoming year 2009-10. So, it is high time for the company to take some strict
measure to meet the intense competitive industry. Hence it have been advised for the
company to use cost cutting like voluntary retirement of useless chunk employees as it is
having highest no. of useless employees and having golden handshake with the highly
intellectual professionals in the industry especially form Bharti Airtel. Similarly various
other recommendations have been given in the project.

TABLE OF CONTENT
S. No.

Particulars

Chapter 1 Research Study

1.1 Objectives of Study
1.2 ResearchMethodology
1.2.1 Research Design
1.2.2 Data collection
Chapter 2 Company Profile
2.1 Industry Profile
2.2 Company Profile (BSNL)
2.2.1 Board of Directors
2.2.2 Basic Service offered
2.2.3 Organisation Structure
2.2.4 Accounting Policies of
2.3 Competitors Profile
2.3.1 Bharti Airtel
2.3.2 Reliance Comm
2.3.3 Vodafone
2.3.4 Idea Cellular
2.3.5 Aircel
2.3.6 MTNL
2.3.7 BPL Mobile
2.3.8 HFCL Infotel
Chapter 3 Literature Review
Chapter 4 Conceptual Framework
4.1 Essentials of Financial Statement
4.2 Parties Interested
4.3 Tools of Financial Analysis
4.3.1 Ratio Analysis
4.3.2 Cash Flow Statements
Chapter 5 Finding And Analysis
5.1 Current Ratio
5.2 Earning Per Share
5.3 Debtor Turnover Ratio

5.4
5.5
5.6
5.7
5.8

Debt Equity Ratio

Return on Capital Employed
Price Earning Ratio
Net Profit Margin Ratio
Analysis of Cash Flows
5.8.1 Net Cash From operating Activities
5.8.2 Net Cash Used in Investing Activities
5.8.3 Net Cash Used in Financing Activities

Chapter 6 Conclusion
6.1 Conclusion
6.2 Suggestions
Chapter 7 Limitations
Chapter 8 Bibliography
Chapter 9 Annexure
BSNL P&L (5 Years)
BSNL Balance Sheet (5 Years)
BSNL Cash Flows (5 Years)
Bharti Airtel Balance Sheet (5 Years)
Bharti Airtel P&L (5 Years)
Bharti Airtel Cash Flows (5 Years)
MTNL Balance Sheet (4 Years)
MTNL P&L (4 Years)
MTNL Cash Flows (4 Years)
Idea Balance Sheet (4 Years)
Idea P&L (4 Years)
Idea Cash Flows (3 Years)
Tata Comm P&L (5 Years)
Tata Comm Balance Sheet (5 Years)
Tata Comm Cash Flows (5 Years)
Chapter 10 Miscellaneous

CHAPTER 1

RESEARC
H

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 companys 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:
1 What type of data is needed?
2 From where data can be found?
3 What period of time study include?
4 How much material will be needed?
5 What technique of gathering data will be adopted?
6 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
(1) Authenticated companys website on Internet.
(2)Annual reports provided by BSNL,Bharti Airtel and MTNL of financial year
2004-05, 2005-06, 2006-07, 2007-08, 2008-09.

CHAPTER 2

COMPAN
Y

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 teledensity 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 countrys Internet
market has been booming, Indias 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. Indias rural telephone density has been languishing at around
1.9%. The subscriber addition rate has been strong in the last 12 months but the
regulatory developments will increase competition and thus curtail the long-term growth
rates of individual companies. The savings through the setting of tower companies will
partly go towards the higher capex and opex costs from more stringent spectrum
allocation norms for the incumbents.
The Telecommunications sector has been consistently adding more than 7 million
subscribers for the last 6 months, a very healthy net addition rate infact. All the private
operators GSM as well as the CDMA operators have been very consistent in their
performance. The sector provides very strong revenue as well as earnings visibility over
the next 12 months. However the recent regulatory developments are seem to be negative
for the telecom companies as it will increase the number operators per circle which will
intensify competition.

PSU Operators Subscriber Base

Private Operators Subscribers Base

2.2

COMPANY PROFILE

BSNL( BHARAT SANCHAR NIGAM LIMITED)

Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest
Telecommunications Company providing comprehensive range of telecom services in
India: Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service,
MPLS-VPN, VSAT, VoIP services, IN Services etc. Within a span of five years it has
become one of the largest public sector unit in India.

It has about 47.3 million line basic telephone capacity, 4 million WLL capacity, 20.1
Million GSM Capacity, more than 37382 fixed exchanges, 18000 BTS, 287 Satellite
Stations, 480196 Rkm of OFC Cable, 63730 Rkm of Microwave Network connecting 602
Districts, 7330 cities/towns and 5.5 Lakhs villages.

BSNL is the only service provider, making focused efforts and planned initiatives to
bridge the Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in
the country to beat its reach with its wide network giving services in every nook & corner
of country and operates across India except Delhi & Mumbai.

BSNL is numero uno operator of India in all services in its license area. The company
offers vide ranging & most transparent tariff schemes designed to suite every customer.

BSNL cellular service, CellOne, has more than 17.8 million cellular customers, garnering
24 percent of all mobile users as its subscribers. That means that almost every fourth
mobile user in the country has a BSNL connection. In basic services, BSNL is miles

ahead of its rivals, with 35.1 million Basic Phone subscribers i.e. 85 per cent share of the
subscriber base and 92 percent share in revenue terms.
BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers
who access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account
Less Internet (CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country.
BSNL has set up a world class multi-gigabit, multi-protocol convergent IP infrastructure
that provides convergent services like voice, data and video through the same Backbone
and Broadband Access Network. At present there are 0.6 million DataOne broadband
customers.

2.2.1 BOARD OF DIRECTORS

Corporate structure of BSNL Board consists of CMD & Five full time
Directors, Human Resource (HR), Consumer Mobility, Consumer Fixed
Access, Finance, Enterprise, who manage the entire gamut of BSNL
operations. There are five other Directors in the full Board of BSNL.
Board of Directors

Designation

Shri Kuldeep Goyal

CMD

Shri S.D. Saxena

Director (Finance)

Shri Rajesh Wadhwa

Director - Consumer Fixed Access

(CFA)

Shri R.K.Aggarwal

Director - Consumer Mobility (CM)

Shri Rajendra Singh

Director - Enterprise

Shri Gopal Das

Director (HR)

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

Govt. Director

2.2.2 Basic Services offered by the BSNL

The Basic telephone Services offered by the BSNL are:

1. Internet:

Keeping

the

global

network

networked,

the

countrywide Internet Services of BSNL includes Internet dial

up/Leased

Access

service,

for

web

browsing

and

E-mail

Applications.

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

a unique digital network providing high speed and high quality
voice, data and image transfer over the same line. It can
facilitate both desktop video & high quality video conferencing.

3. Intelligent Network Service: Intelligent Network Service

(In service) offers various value-added services such as:
- Free Phone Services (FPH)
- India Telephone Card (Prepaid
Card)

Account

Card

Calling

(ACC)
-

Virtual

Private

Network

(VPN) - Tele-voting
- Premium Rate Service (PRM)
- Universal Access Number (UAN)

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

require the landline b-fone predominantly for receiving incoming
calls only, BSNL brings you Sulabh Plan. The rentals in this plan
are extremely low. If you desire to make outgoing calls, this
facility can also be given separately (or one can also use ITC
Cards with Sulabh Plan). These plans are now very popular.

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

These are explained as follows:

1- WLL Fixed (FWT): It is the Fixed Wireless Transmission. In this

case, there is a small box fitted with a small antenna at ones
premises and a normal telephone instrument is connected to the
box. There is no Telephone copper wire connection as in the
conventional telephone.

2- 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 ones the best of both fixed line &
mobile telephone.

6. Mobile Services: BSNLs Cellular Service is the Indias growing

Cellular Service. BSNLs 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.
BSNLs 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, Indias 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,
1) 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.
2) Installation Charges recovered from subscribers at the time of new telephone
connections are recognized as income in the first year of the billing.
3) 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.
4) Sale proceeds of scrap arising from maintenance and project works are taken into
miscellaneous income in the year of sale.
5) 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 Jan09

TOP FIVE COMPANIES

st

The Top five companies, on the basis of Market Share as on 31 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, Indias 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 (SBUs) - 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 Indias 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 Ambanis 70th birthday, was
among the initial initiatives of Reliance Communications. It marked the auspicious
beginning of Dhirubhais 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 worlds 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

st

The Bottom five companies, on the basis of Market Share as on 31 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 worlds 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 1 Prepaid Connections

1 Postpaid Connections
2 Prepaid Recharge Coupons
3 Bill Payments
4 Value Added Services (VAS)
5 Service Inquiries
6 SIM Replacements
7 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 Companys 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 3

LITERATUR
E

REVIEW

Anderson (2008), in his single executive interview titled Developing a route to market
strategy for mobile communications in rural India An interview with Gurdeep Singh,
Operations Director, Uttar Pradesh, Hutch India suggests that managers need to go
beyond traditional approaches to serving the poor, and innovate by taking into account
the unique institutional context of developing markets. His practical implication says that
the experience of Hutchison Essar in India provides some important lessons for mobile
network operators (MNOs) and other firms in other developing markets who are hoping
to serve the rural poor: Hutchison has recognized the value of corporate and noncorporate partners. The company has proactively established relationships with individual
entrepreneurs, and has provided has provided development support to other partners such
as distributors. The company has recognized the value of leveraging existing local
institutions, and has seen gaps in local infrastructure or missing services as potential
opportunities rather than barriers to growth. The company has seen the rural market as an
opportunity not just an obligation to be served because of universal service obligations.
Also this article demonstrates that MNOs can deliver availability and affordability to
achieve increased individual or household penetration through business model
innovation.
Mani (2008) addresses a number of issues arising from the growth of telecom services in
India since the mid-1990s. It also discusses a number of spillover effects for the rest of
the economy and one of the more important effects is the potential to develop a major
manufacturing hub in the country for telecom equipment and for downstream industries
such as semiconductor devices. The telecom industry in India could slowly become an
example of the service sector acting as a fillip to the growth of the manufacturing sector.
A beginning towards this has been made. The formation of a Telecom Equipment Export
Forum and the announcement of the Indian Semiconductor Policy 2007 are steps in this
direction. Success crucially depends on the response of the private sector to these
incentives. Given the importance that a regulatory agency can play in this crafting, no
effort should be lost in strengthening the powers of the TRAI. The benefits to the Indian
economy from having both a strong services and manufacturing segments in the telecom
sector cannot be undermined.
Narayana (2008) estimates the contribution of telecommunication (or telecom) services
to aggregate economic growth in India. Estimated contribution is distinguished between
public and private sectors to highlight the impact of telecom privatization on economic
growth. Knowledge of policy determinants of demand of telecom services is shown to be
essential to enhance growth contribution of telecom services. Using a recent sample
survey data from Karnataka State in South India, price and income determinants of
demand for telecom services are estimated by capacity of telephone exchanges.

Estimation results offer evidence for significant negative own price elasticity and positive
income elasticity of demand for telecom services.
Sharma (2009) deals with the major challenges faced by Indias telecom equipment
manufacturing sector, which lags behind telecom services. Only 35% of the total demand
for telecom equipment in the country is met by domestic production. This is not
favourable to long-term sustained growth of the telecom sector. The country is also far
behind in R&D spending when compared to other leading countries. India needs to see an
increase in R&D investment, industry-academia-government partnership, better quality
doctoral education and incentives to entrepreneurs for start-ups in telecom equipment
manufacturing. In 2006-07, 65% of the total consumption of equipment was met through
imports. This trend has far-reaching implications for the economy and should not be
allowed to continue for long. In a country like India which has a problem of massive
unemployment, the manufacturing sector should be promoted to create more employment
opportunities.
Shah (February, 2009), has analysed Indian telecom industry and studied the sector
keeping in mind three companies; namely Bharti, R.Comm and idea in the background of
recent global meltdown. The study suggests that though there is no sign of slowdown in
this sector, but surely a strong turmoil is going on in the industry. The study states that the
sector is fairly immune from the current economic downturn & does provide a good
defensive bet in medium term. With the help of newer technologies, wireless penetration
is expected to increase in the near future, which is basically fuelling the growth of the
sector. While the 3G / Broadband adoption would ensure long term growth momentum,
the article has thoroughly investigated about the intense competitive scenario, pricing
pressure, high capital intensity & substantial regulatory uncertainties currently faced by
the industry. The article has also described the cause of being relatively safe of this
industry. The causes described by Shah are increasing rural coverage, rising affordability,
declining handset/subscription costs, substantially low tariffs & established
brand/distribution. However, the study also cautions the telecom industry that a steeper
economic slowdown could start impacting the subscriber usage patterns as well as
operator capital investments & thereby could substantially restrict revenue growth rates
going forward.

CHAPTER 4

CONCEPTUA
L
FRAMEWOR
K

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:
(1)

Balance Sheet

(2)

Profit and Loss Account

(3)

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 firms 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
1=Net Credit Sales
Average Accounts Receivables
Average Accounts Receivables = Opening receivables + Closing receivables 2

It shows the Relationship between debtors and sales

B. Inventory Turnover Ratio = Cost of goods Sold

Average Inventory
It indicates no. of times stock has been turned into sales in a year
Ideal Ratio = 8
Cost of goods sold = Sales gross profit
Average Inventory

Opening Stock + Closing Stock

2
Stock Conversion Period = Cost of goods Sold * No of days in a

year/Average Inventory
C. Creditors Turnover ratio =

Net Credit Purchases

Average Creditors

Average Creditors = Opening Creditors + Closing Creditors

2
Relation ship between Creditors and Purchases
3. Profitability or Efficiency Ratios
These Ratios measure the efficiency of forms activities and its ability to generate profits.
(1)

Gross Profit Margin Ratio

(2)

Net Profit Margin Ratio

(3)

Return On Equity

(i)

Gross Profit Margin Ratio =

Gross Profit
Net Sales

Gross Profit = Sales Cost of goods sold

Net Sales = Sales Sales Return - Excise Duty
There is no Ideal Ratio. Higher the ratio better will be the performance of
the business.
(ii)

Net Profit Margin Ratio =

Net Profit
Net Sales

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

financing, pricing and tax management. It shows the result of overall
operation of the firm.
4. Ownership Ratios
Capital Structure Ratios
a) Debt Equity Ratio = Debt Equity

1=

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
INTERPRETATIO
N

RATIO ANALYSIS

5.1 CURRENT RATIO

Projected

S. No.
Telecom Players
1
BSNL

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

2009-10

2.25
1.35
1.31
0.69
0.36

2.63

1.75

1.98

2.46

2.47

MTNL.

1.29

1.34

1.34

1.35

TATA TELECOM

1.84

1.19

1.08

1.44

BHARTI AIRTEL

0.47

0.44

0.47

0.57

IDEA CELLULAR

2.45

0.74

0.87

0.43

IDEAL RATIO = 2:1

Figure 5.1

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 companys 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.
1

Telecom Players
BSNL

2004-05

2005-06 2006-07

2007-08

2008-09

2009-10

15.65

15.28

14.03

4.44

1.15

1.08

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
10.62

16.44
21.27

10.68
32.9

18.1
40.79

10.809
49.662

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 doesnt go
in tandem with the changing technology.
Conclusion
From Earning per Share perspective Bharti Airtel is considered to be most attractive
company as the companys 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.
1

Telecom Players
BSNL

2004-05

2005-06

2006-07 2007-08 2008-09

2009-10

5.03

5.73

6.2

5.92

6.41

6.743

3.29

3.51

4.12

4.95

5.365

5.924

MTNL.

TATA TELECOM

6.3

5.62

4.78

3.25

3.12

1.995

BHARTI AIRTEL

11.38

12.57

14.31

12.28

12.78

13.417

IDEA CELLULAR

17.74

20.01

35.89

38.28

47.355

55.105

Figure 5.3

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 debtors turnover ratio indicates the number of
times the debtors are turned over a year. The higher the value of debtors 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
1
BSNL
2
3

TATA TELECOM
BHARTI AIRTEL

IDEA CELLULAR

2004-05

2005-06 2006-07

2007-08 2008-09

2009-10
0.235

0.31

0.29

0.26

0.24

0.27

------1.1

0.02
0.65

0.03
0.47

0.12
0.33

0.34
0.28

0.39
0.22

2.58

4.96

1.95

1.84

1.525

1.002

Figure 5.4

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 outsiders
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 owners 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 companys 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 companys 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 companys 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.
1

Telecom Players
BSNL

MTNL.

3
4

TATA TELECOM
BHARTI AIRTEL

IDEA CELLULAR

2004-05

2005-06 2006-07 2007-08 2008-09

2009-10

10.09

9.94

9.05

4.97

1.46

0.433

10.16
11.41

5.95
11.52

6.77
10.28

6.48
6.53

4.785
6.23

3.763

19.27

20.74

29.06

27.95

28.4

4.589
32.725

7.52

10.44

14.96

16.92

20.64

23.912

Figure 5.5

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.

5.6 Price Earning Ratio

Projected
S. No.
1

Telecom Players
BSNL

2004-05

2005-06

200607

--------8%

59%
5%

34%
4%

8%
3%

1%

1%
1%

2007-08 2008-09
2%

2009-10

MTNL.

3
4

TATA TELECOM
BHARTI AIRTEL

13%
26%

7%
27%

7%
35%

4%
30%

7%
28%

3%
31%

IDEA CELLULAR

2%

18%

23%

29%

39%

48%

Figure 5.6

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.
1

Telecom Players
BSNL

2004-05

2005-06 2006-07

2007-08

2008-09

2009-10

2
3.9
13.25
22.58
20.2

-3.88
1.26
7.2
26.864
24.83

30.4

24.7

22.5

9.3

MTNL.

16.1

9.7

8.5

7.7

TATA TELECOM

22.2

12.1

11.2

8.9

BHARTI AIRTEL

14.8

17.8

22.5

24

IDEA CELLULAR

1.6

6.2

11.4

15.3

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. Companys 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. Companys 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.
1

Telecom Players
BSNL

2004-05

2005-06

2006-07 2007-08 2008-09

2009-10

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
323.24
1013.78
559.2
303.08 1086.67 902.042
TATA TELECOM
14
BHARTI AIRTEL 3005.89 4547.2 8107.95 10459.85 11853.15 14676.96
5
IDEA CELLULAR
---- 822.15 1605.11 2502.22 3170.496 4010.531
2

MTNL.

Interpretation
Cash from operations represents the inflow of cash from primary activities of business.
From the above figure it is clearly stated that Cash from operations is highest of BSNL
17496.6 cr in 2004-05 but gradually it have been decreased to 6843.81cr which
represents the loss of revenue by the company in its primary activities. On the other hand
Companies like Bharti and Idea have increased their cash from operations in each
subsequent year and gained majority of revenue of telecom sector. In 2004-05 Bharti
Airtel is having 3005.89 cr as cash from operations which have increased to 11853.15 cr
in 2008-09 and if this trend continues than it will reach to 14676.96 cr in 2009-10. So,
Public sector companies like BSNL and MTNL have to take cost cutting measures as
adopted by Bharti and Idea to gain the revenues from its business.

5.8.2 Cash Used in Investing Activities

Projected

S. No.
1
2

3
4

15

Telecom Players
BSNL

2004-05 2005-06 2006-07

2007-08

2008-09

6,478.17 6,500.83 3,266.88

3,724.85
7,438.14
785.01
277.08
259.74
692.32
429.69
MTNL.
(76.44)
894.19
647.83
716.69
2,005.71
TATA TELECOM
2,330.30 5,000.30 7,975.10 11,648.00 10,894.00
BHARTI AIRTEL
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 200809 and if this trend continues than it will reach to 14702 cr in 2009-10.

2009-10
5,224.96
400.14
2,033.64
14,702.07

5.8.3 Cash Used in Financing Activities

Projected

S. No.
1

Telecom Players
BSNL

MTNL.

TATA TELECOM
BHARTI AIRTEL
IDEA CELLULAR

2004-05
612
423.09
208.09
4.2309
----------

2005-06 2006-07 2007-08

2008-09

2009-10

4,158
294.83

1,823
227.03

3736.835
177.777

97.23
52.79
-389.14
-376.35
-340.13
-898.03
-558.01 -2340.07 -2131.29

-1204.38
672
-3106.7112

-1240.48
56.50164
-3893.35

3,560
395.24

4,000
287.49

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

CONCLUSIO
N

Conclusion
From the above finding and analysis various inferences can be drawn out which are as
follows :
1 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.
2 From Earning per Share perspective Bharti Airtel is considered to be most
attractive company as the companys earning potential have been increased
irrespective of the increase in competition in the Indian telecom market.
3 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.
4 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.
5 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.
6 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.

1 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%.
2 Net profit ratio shows that Bharti Airtel and Idea cellular are having positive trend
in past five years. Companys like BSNL and MTNL have to work hard to break
out their negative trend.
3 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.
4 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.
5 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:
1 It is the right time to cut down the employees force, by giving them voluntary
retirement or by any other method and give chance to new guns.

2 Use better & high tech methods of advertising, so that more & more
subscriber attract towards BSNL.

3 Should try to decrease expenditure especially in the employees remuneration &

benefit area.
4 Should increase the service quality as well as better customer care service.

5 Should work towards 3 G phones, means high speed streaming video, gaming,
video messaging, and even mobile TV.

6 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.
7 Provide better customer care service and provide them maximum satisfaction.

CHAPTER 7

LIMITATION
S

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:

1 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

BIBLIOGRAPH
Y

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

ANNEXUR
E

ANNEXURE
BSNL
CONSOLIDATED PROFIT AND LOSS ACCOUNT
31st March
2005

31st March
2006

31st March
2007

31st March
2008

31st March
2009

(Rs. in Lakh)

(Rs. in Lakh)

(Rs. in Lakh)

3,345,004
264,001
3,609,005

3,613,894
403,764
4,017,658

3,461,621
509,890
3,971,511

3,235,953
569,387
3,805,340

3,026,857
554,335
3,581,192

839,302

742,063

730,897

880,891

1,136,323

330,236

352,305

331,169

315,213

264,635

805,196
2,929
962,486
2,940,149

1,049,689
108,980
937,669
3,190,706

1,091,628
77,941
914,931
3,146,566

1,111,675
86,254
969,610
3,363,643

1,137,797
44,325
852,341
3,435,421

668,856
-40,550

826,952
-40,550

824,945
-9,564

441,697
3,458

145,771
-18,608

615,418
176,590
792,008
78,816
-175,933
992
-130,196

786,402
58,296
844,698
80,130
--134,002
4,100
501

815,381
-----815,381
96,229
-19,470
-45,795
3700
130

445,155
-----445,155
136,094
-2,171
6,448
3,700
145

127,163

1,018,329

893,969

780,587

300,939

57,485

20,000

37,500

50,000

30,000

97,500

80,000

67,500

120,00

Particulars
INCOME
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

(Rs. in Lakh) (Rs. in Lakh)

127,163
132,322
0
-66,569
3,800
125

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

16,479

18,484

25,493

203,666

178,794

156,117

60,188

680,875
1,018,329

581,196
893,969

488,486
780,587

65,258
300,939

57,485
57,485

15.65

15.28

14.03

4.44

1.15

BSNL
CONSOLIDATED BALANCE SHEET
Particulars

As at 31st
March
2005

Shareholders Funds
Capital
Reserves And Surplus
Loan Funds
Unsecured Loans
Deferred Tax LiabilityNet
APPLICATIONS OF
FUNDS
Fixed Assets
Gross Block
Less:-Depreciation
Net Block
Capital Work-InProgress
Decommissioned
Assets
INVESTMENTS
Current Assets, Loan
and Advances
Inventories
Sundry Debtors
Cash and Bank
Balances
Other Current Asset Accrued interest
Loans and Advances

st

As at 31
March,
2006

st

As at 31
March, 2007

st

As at 31
March, 2008

st

As at 31
March,
2009

1,250,000
6,027,911

1,250,000
6,825,651

1,250,000
7,444,802

1,250,000
7,562,825

1,250,000
7,613,358

822,089
304,402

728,393
170,400

554,366
124,605

338,887
131,053

341,384
64,484

1,126,491

898,793

678,971

469,940

405,868

8,404,402
10,410,216
4,233,309
6,176,907
457,226

8,974,444
11,169,203
5,150,354
6,018,849
382,048

9,373,773
11,864,901
6,071,511
5,793,390
256,860

9,282,765
12,457,823
6,987,974
5,469,849
266,562

9,269,226
13,224,291
7,792,203
5,432,088
492,864

8,045

7,346

6,444

389

4,644

6,642,178
20,000

6,408,243
20,000

6,056,694
20,000

5,736,800
20,000

5,929,596
20,000

224,535

278,922

242,847

322,006

457,258

663,703
2,193,113

630,205
3,057,948

558,066
3,745,296

546,551
4,055,158

472,054
3,813,430

14,368

63,627

114,148

137,687

137,687

752,160

923,207

714,431

744,441

944,880

3,847,879

4,953,909

5,374,788

5,805,843

5,774,861

Less : Current
Liabilities and
Provisions

Current Liabilities
Provisions

1,461,541 1,612,324
738,616
888,223
2,200,157
2,500,547

1,667,919
1,739,788 2,072,702
514,858
606,321
493,878
2,182,777
2,346,109
2,566,580

Net Current Assets

Inter/Intra
CircleRemittance

Total

1,647,722

2,453,362

3,192,011

3,459,734

3,208,281

94,502

92,839

105,068

66,231

111,349

8,404,402

8,974,444

9,373,773

9,282,765

9,269,226

BSNL
CASH FLOW STATEMENT
PARTICULARS

Year ended 31st

March 2005

Year ended 31st

March 2006

Year ended 31st

March 2007

Year ended 31st

March 2008

Year ended 31st March

2009

(Rs. in Lakh)

(Rs. in Lakh)

(Rs. in Lakh)

(Rs. in Lakh)

(Rs. in Lakh)

A. Cash flow from

operating activities:
Net (loss)/profit before tax
but after Prior period and
Extraordinary items

792,008

844,698

815,381

445,155

127,163

Adjustments for:
Depreciation
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

962,486

937,669

914,931

969,610

852,341

54,293

21,231

8,288

5,106

4,189

2,929

108,980

77,941

86,254

44,325

-80,052

-173,340

-281,123

-403,324

-388,504

-618

-851

-800

-2,002

-2,165

73,437

47,059

35,340

70,926

91,453

26,403

159,518

127,875

47,899

85,640

-39,532

-19,133

-21,676

-80,829

-117,014

-855

19,320

1,276

-8,565

14,419

-176,590

-58,296

3,865

Other Provision
258,941
Operating profit before
working capital changes

1,080,844

181,942

1,872,852

1,224,099

102,518

2,068,797

964,570

147,595

1,779,951

832,670

176,091

1,277,825

764,640
891,803

Adjustments for changes in

working capital
- Inter Circle Remittance
-4,202

1,663

-12,229

38,837

-45,118

-77,517

-94,637

-131,465

-62,838

-83,612

-59,867

-170,397

-67,776

-54,335

-152,971

- Sundry Debtors
- Other Receivables
- Trade and Other Payables

-44,175

Cash generated from

operations

-Taxes paid
- Extraordinary Items
- Prior Period item other
than depreciation
Net cash from operating
activities

-185,760

145,474

1,687,092

-118,971

176,590

58,296
59,869
1,746,960

-685

1,950,900

-117,576

855

-117,897

-19,320

-212,155

65,923

1,567,796

-152,524

-12,413

326,506

1,265,412

-175,793

44,805
936,608

-237,808

-79,995
1,870,905

-1,276

-153,800
1,413,996

8,565

-167,228
1,098,184

-14,419

-252,227
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

-572

-54,539

24,723

-76,049

-132,712

-976,301

-882,441

-815,313

-717,309

-860,242

125,689

78,066

125,505

-9,231

-226,409

133,273

84,750

107,795

50,319

36,597

70,094

124,081

230,602

379,785

438,952

Net cash used in investing

activities

-647,817

-650,083

-326,688

C. Cash flow from

financing activities:
Proceeds from long term
borrowings
Interest Paid

-743,814

-372,485

-3,679

-93,696

-174,027

-300,000

-3,068

-108,358

-77,700

-1,767

-22,614

-42,759

-50,000

-30,000

-31,800
Dividend Distribution Tax
Paid
Net cash used in financing activities

-111,174

-80,000

-67,500

-120,000

-18,233

-16,570

-20,394

Interim Dividend Paid

Dividend Paid

Net Increase/(Decrease) in
Cash and Cash
Equivalents
Opening Cash and cash equivalents
Cash and cash equivalent

-41,901
-

-61,161

-355,986

-399,960

-415,837

-182,295

1,037,982

864,835

687,348

309,862

-241,728

1,155,133

2,193,113

3,057,948

3,745,296

4,055,158

2,193,113
Cash and cash
equivalents comprise
Cash, Cheques and Drafts
(in hand)
Balances with banks

179,993

2,013,120

3,057,948

3,094

2,193,113

3,054,854

3,745,296

2,704

3,057,948

3,742,592

2,415

2,569

3,745,296

3,813,430

4,055,158

4,052,589

4,055,158

3,811,015 3,813,430

BHARTI AIRTEL
BALANCE SHEET
Particulars

As at 31st
March
2005

As at 31 st
March,
2006

As at 31 st
March,
2007

As at 31 st
March,
2008

As at 31 st
March,
2009

Rs. in crore

Rs. in crore

Rs. in crore

Rs. in crore

Rs. in crore

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt

1,853.37
1,853.37
2.72
0
2,675.38
2.13
4,533.60
3,959.88
1,034.41
4,994.29

1,893.88
1,893.88
12.13
0
5,437.42
2.13
7,345.56
2,863.37
1,932.92
4,796.29

1,895.93
1,895.93
30
0
9,515.21
2.13
11,443.27
266.45
5,044.36
5,310.81

1,897.91
1,897.91
57.63
0
18,283.82
2.13
20,241.49
52.42
6,517.92
6,570.34

1,898.24
1,898.24
116.22
0
25,627.38
2.13
27,643.97
51.73
7,661.92
7,713.65

Total Liabilities

9,527.89

12,141.85

16,754.08

26,811.83

35,357.62

13,240.63

17,951.74

26,509.93

28,115.65

37,266.70

3,475.64
9,764.99
994.46
931.9
31.58
715.74
174.96
922.28
1,354.85
209.17

4,944.86
13,006.88
2,341.25
719.7
17.74
1,076.17
201.81
1,295.72
1,937.54
105.61

7,204.30
19,305.63
2,375.82
705.82
47.81
1,418.52
239.11
1,705.44
3,160.02
541.35

9,085.00
19,030.65
2,751.08
10,952.85
56.86
2,776.46
200.86
3,034.18
5,103.13
302.08

12,253.34
25,013.36
2,566.67
11,777.76
62.15
2,550.05
153.44
2,765.64
5,602.83
2,098.16

2,486.30
0
4,458.80
249.32
4,708.12

3,338.87
0
6,735.36
537.44
7,272.80

5,406.81
0
9,809.83
1,232.84
11,042.67

8,439.39
0
12,400.38
1,961.95
14,362.33

10,466.63
0
13,832.49
634.4
14,466.89

Application Of Funds
Gross 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
Contingent Liabilities
Book Value (Rs)

-2,221.82
58.35
9,527.88
3,017.26
24.44

-3,933.93
7.94
12,141.84
4,740.34
38.71

-5,635.86
2.66
16,754.07
7,615.04
60.19

-5,922.94
0.2
26,811.84
7,140.59
106.34

-4,000.26
0.09
35,357.62
4,104.25
145.01

BHARTI AIRTEL
PROFIT AND LOSS A/C

PARTICULARS

31st
March
2005

31st
March
2006

31st
March
2007

31st
March
2008

31st
March
2009

---------------------------------------RS. IN CRORE --------------------------------

Income
Sales Turnover
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

8,142.44
0
8,142.44
-1,707.95
11.57
6,446.06

11,259.12
0
11,259.12
26.94
-13.84
11,272.22

17,851.61
0
17,851.61
105.62
30.07
17,987.30

25,761.11
0
25,761.11
104.04
9.05
25,874.20

34,048.32
0
34,048.32
-1,261.75
5.29
32,791.86

83.67
0
475.86

53.56
0
734.2

52.16
0
1,076.95

42.9
0
1,297.88

17.7
0
1,397.54

2,365.51

3,299.73

5,017.27

7,339.01

8,627.13

1,951.25

2,804.85

4,030.48

5,892.50

9,385.68

280.05

314.37

444.28

535.46

1,409.89

0
5,156.34

0
7,206.71

0
10,621.14

0
15,107.75

0
20,837.94

2,997.67
1,289.72
317
972.72
1,019.36
161.34
-207.98
22.23
-185.75
353.6
1,210.67
5,072.66
0

4,038.57
4,065.51
236.81
3,828.70
1,432.34
127.39
2,268.97
17.64
2,286.61
273.68
2,012.08
7,153.15
0

7,260.54
7,366.16
282.07
7,084.09
2,353.30
137.8
4,592.99
9.92
4,602.91
566.79
4,033.23
10,568.98
0

10,662.41
10,766.45
393.43
10,373.02
3,166.58
266.07
6,940.37
-60.67
6,879.70
632.43
6,244.19
15,064.84
0

13,215.67
11,953.92
434.16
11,519.76
3,206.28
178.82
8,134.66
-46.15
8,088.51
321.78
7,743.84
20,820.24
0

Equity Dividend

379.65

Corporate Dividend Tax

Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)

64.52

18,533.67
6.53
0
24.44

18,938.79
10.62
0
38.71

18,959.34
21.27
0
60.19

18,979.07
32.9
0
106.34

18,982.40
40.79
20
145.01

BHARTI AIRTEL
CASH FLOW STATEMENT

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

Mar '05
Mar '06 Mar '07 Mar '08 Mar '09
12 mths
12 mths 12 mths 12 mths 12 mths
------------------------------IN RS CRORE------------------1564.28
2285.8 4601.37 6972.54 8161.54
3005.89

4547.2

8107.95

10459.9 11853.2

-2330.3

-5000.3

-7975.1

-11648

-10894

-423.09

376.35

340.13

898.03

-672

252.5

-76.71

473.03

-290.53

286.77

131.63

384.14

307.43

793.47

503.31

384.14

307.43

780.46

502.94

790.08

MTNL
BALANCE SHEET
Particulars

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Aplication of Funds
Gross 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
Contingent Liabilities
Book Value (Rs)

As at
31st
March
2005

As at
st
31
March,
2006

As at

As at

31st

31st

March,
2007

March,
2008

630
630
0
0
10,313.83
0
10,943.83
0
0
0
10,943.83

630
630
0
0
10,606.77
0
11,236.77
0
0
0
11,236.77

630
630
630
630
0
0
0
0
10,999.30 11,291.36
0
0
11,629.30 11,921.36
0
0
0
0
0
0
11,629.30 11,921.36

14,252.25
7,783.62
6,468.63
651.51
397.47
186.6
1,761.15
180.11
2,127.86
10,758.82
2,337.29

14,854.15
8,285.40
6,568.75
554.36
418.72
137.82
1,415.10
159.35
1,712.27
10,364.54
1,899.05

15,291.35 15,842.58
8,887.68 9,522.78
6,403.67 6,319.80
779.29
981.7
441.4
557.39
221.28
160.71
965.2
941.8
161.8
130.73
1,348.28 1,233.24
11,857.45 10,502.84
1,707.00 3,239.05

15,223.97
0
6,194.15
5,603.60
11,797.75
3,426.22
0
10,943.83

13,975.86
0
5,289.44
5,105.72
10,395.16
3,580.70
114.25
11,236.78

14,912.73 14,975.13
0
0
5,683.31 5,626.00
5,446.15 5,445.82
11,129.46 11,071.82
3,783.27 3,903.31
221.65
159.17
11,629.28 11,921.37

6,742.15
173.71

7,650.00
178.36

4,267.27
184.59

3,369.72
189.23

MTNL
Profit and Loss A/c

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

31st March
2005

31st March
2006

31st
March
2007

31st March
2008

(Rs. in
Crore)

(Rs. in
Crore)

(Rs. in
Crore)

(Rs. in
Crore)

5,602.34
0
5,602.34
236
0
5,838.34

5,568.41
0
5,568.41
380.93
0
5,949.34

4,909.32
0
4,909.32
512.11
0
5,421.43

4,722.52
0
4,722.52
405.38
0
5,127.90

0
140.16
1,932.20
77.51
2,027.55
90.46
-96.31
4,171.57

0
155.85
1,941.13
68.63
2,426.37
148.27
-64.38
4,675.87

0
160.79
1,750.99
75.95
1,021.57
1,007.97
0
4,017.27

0
188.34
1,580.95
93.62
951.86
1,005.55
-21.01
3,799.31

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

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

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

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

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

Per share data (annualised)

Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)

6,300.00
15.05
45
173.71

6,300.00
9.21
40
178.36

6,300.00
7.4
40
184.59

6,300.00
6.46
40
189.23

Mahanagar Telephone Nigam

Cash Flow
------------------- in Rs. Cr. ------------------Mar '05

Mar '06

Mar '07

Mar '08

Net Profit Before Tax

1215.67

671.36

792.68

631.65

Net Cash From Operating

Activities

1212.71

213.31

357.64

2487.81

Net Cash (used in)/from

-785.01

-277.08

-259.74

-692.32

Net Cash (used in)/from

Financing Activities

-463.4

-395.24

-287.49

-294.83

Net (decrease)/increase In
Cash and Cash Equivalents

-35.71

-459

-189.59

1500.66

Opening Cash & Cash

Equivalents

2553.1

2517.4

2058.4

1868.7

Closing Cash & Cash

Equivalents

2517.4

2058.4

1868.81

3369.36

Investing Activities

IDEA CELLULAR
Balance Sheet
Particulars

As at
31st
March
2005

As at
31st

March,
2006

As at
st
31
March,
2007

As at
st
31
March,
2008

------------------- in Rs. Cr. ------------------Sources Of Funds

Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross 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
Contingent Liabilities
Book Value (Rs)

2,742.53
2,742.53
0
0
1,695.74
0
1,046.79
1,692.75
1,005.28
2,698.03
3,744.82
Mar '05

2,742.53
2,259.53
0
483
1,574.00
0
1,168.53
1,470.75
1,444.85
2,915.60
4,084.13
Mar '06

2,592.86
2,592.86
0
0

2,635.36
2,635.36
3.76
0

3,577.49
899.99
2,677.50
64.62
307.03
13.47
109.8
151.89
275.16
899.3
0
1,174.46
0
478.76
0
478.76
695.7
0
3,744.85

3,975.11
1,157.63
2,817.48
95.91
307.03
8.81
90.82
40.12
139.75
1,408.64
88.97
1,637.36
0
762.24
11.39
773.63
863.73
0
4,084.15

8,229.61 12,791.22
2,637.18 3,123.83
5,592.43 9,667.39
506.52
941.13
13.83
569.93
17.91
27.62
152.48
198.59
122.76
147.67
293.15
373.88
560.82
950.88
1,696.97
349.38
2,550.94 1,674.14
0
0
2,180.21 2,709.98
53.84
81.82
2,234.05 2,791.80
316.89 -1,117.66
0
0
6,429.67 10,060.79

0
3.82

213.92
3.03

-413.71
906.91
0
0
2,179.15 3,546.03
3,539.77 5,454.43
710.74 1,060.33
4,250.51 6,514.76
6,429.66 10,060.79
Mar '07
Mar '08

1,236.57
8.4

2,308.87
13.44

Idea Cellular
Profit & Loss A/c
Particulars

31st March
2005

31st
March
2006

31st
March
2007

31st
March
2008

------------------- in Rs. Cr. ------------------Income

Sales Turnover
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)

1,625.42
0
1,625.42
9.67
0
1,635.09

2,007.07
0
2,007.07
5.2
-0.01
2,012.26

4,366.40
0
4,366.40
27.64
-1.2
4,392.84

6,719.99
0
6,719.99
184.17
0
6,904.16

0.03
0
103.36

0.04
37.86
115.08

4.06
109.46
251.43

0.01
224.4
332.88

172.26

626.41

1,388.33

2,643.43

0
755.44

439.02
18.22

959.34
38.69

974.08
53.87

0
1,031.09

-0.04
1,236.59

-0.08
2,751.23

0
4,228.67

594.33
604
255.04
348.96
237.78
84.49
26.69
2.53

770.47
775.67
308.25
467.42
262.88
84.66
119.88
8.61

1,613.97
1,641.61
478.26
1,163.35
563.67
108.14
491.54
5.23

2,491.32
2,675.49
695.85
1,979.64
756.85
119.91
1,102.88
13.97

24.16
0
26.69
1,031.06
0
0
0

128.49
2.9
125.6
1,236.54
0
0
0

496.77
6.99
502.06
2,747.16
0
0
0

1,116.85
72.5
1,044.36
4,228.66
0
0
0

27,425.27
0.1
0
3.82

22,595.27
0.56
0
3.03

25,928.61 26,353.61
1.94
3.96
0
0
8.4
13.44

Idea Cellular
Cash Flow

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

Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths
------------------- in Rs. Cr. -----------------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 March
2005

31st
31st
31st
31st
March March March March
2006
2007
2008
2009

------------------- in Rs. Cr. -------------------

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
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)

3,303.04
0
3,303.04
512.39
0
3,815.43

3,780.95
0
3,780.95
124.62
0
3,905.57

4,041.83
0
4,041.83
105.83
0
4,147.66

3,283.30 3,749.43
0
0
3,283.30 3,749.43
173.25 473.58
0
0
3,456.55 4,223.01

1.65
34.61
141.28

1.95
37.93
209.06

1.61
43.09
243.69

1,859.76

2,127.36

2,258.37

1,936.25 1,943.03

401.31
70.62
2,509.23
793.81
1,306.20
9.62
1,296.58
244.15
0
1,052.43
1.38
1,053.81
297.61
756.37
2,507.58
0
171
24.31

338.67
115.03
2,830.00
950.95
1,075.57
13.56
1,062.01
359.56
0
702.45
45.3
747.75
207.18
479.54
2,828.06
0
128.25
17.99

376.15
165.19
3,088.10
953.73
1,059.56
16.74
1,042.82
391.33
0
651.49
69.19
720.68
244.07
468.56
3,086.49
0
128.25
21.8

323.08
125.36
2,637.75
645.55
818.8
44.82
773.98
301.31
0
472.67
16.76
489.43
145.52
304.46
2,627.12
0
128.25
21.8

2,850.00
26.54
60
200.98

2,850.00
16.83
45
212.67

2,850.00
16.44
45
223.14

2,850.00 2,850.00
10.68
18.1
45
45
229.73 238.53

10.63
0
242.43

11.2
0
340.07

423.1
180.75
2,898.15
851.28
1,324.86
196.7
1,128.16
425.27
0
702.89
5.88
708.77
197.54
515.95
2,886.95
0
128.25
21.8

Tata Communications
Balance Sheet
Particulars

As at 31
March,
2006

As at 31st
March
2005

st

As at 31
March,
2007

st

As at 31
March,
2008

st

As at 31
March,
2009

st

------------------- in Rs. Cr. ------------------Sources Of Funds

Total Share Capital
Equity Share Capital
Share Application
Money
Preference Share
Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross 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
Contingent Liabilities

285
285

285
285

285
285

285
285

285
285

0
5,443.05
0
5,728.05
0
0
0
5,728.05

0
5,776.17
0
6,061.17
0
98.25
98.25
6,159.42

0
6,074.50
0
6,359.50
0
197.61
197.61
6,557.11

0
6,262.34
0
6,547.34
0
777.8
777.8
7,325.14

0
6,513.05
0
6,798.05
1,288.82
1,039.05
2,327.87
9,125.92

3,182.68

4,099.64

4,582.98

4,352.65

5,890.00

835.65
2,347.03

1,091.08
3,008.56

1,428.81
3,154.17

1,363.75
2,988.90

1,792.06
4,097.94

513.17
1,200.58
1.97
608.95

147.81
2,499.34
3.8
737.57

340.44
2,673.58
4.72
955.19

543.77
2,103.77
5.45
1,063.13

536.38
2,723.67
1.56
1,342.22

22.26
633.18
1,626.10
1,386.87

245.66
987.03
1,511.19
11.22

79.31
1,039.22
1,383.20
25

79.63
1,148.21
2,991.94
0

109.21
1,452.99
3,209.51
263.16

3,646.15
0
1,713.70
265.17
1,978.87
1,667.28

2,509.44
0
1,740.40
265.32
2,005.72
503.72

2,447.42
0
1,779.37
279.13
2,058.50
388.92

4,140.15
0
2,200.17
251.28
2,451.45
1,688.70

4,925.66
0
2,869.12
288.61
3,157.73
1,767.93

0
5,728.06
2,280.87

0
6,159.43
2,947.63

0
6,557.11
11,624.10

0
7,325.14
5,140.02

0
9,125.92
8,449.09

Book Value (Rs)

200.98

212.67

223.14

229.73

238.53

Tata Communications
Cash Flow
Mar '05
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

632.54

Mar '06 Mar '07 Mar '08 Mar '09

------------------- in Rs. Cr. ------------------754.35
744.54 461.18
462.44

323.24

1013.78

559.2

76.44

-894.19

-647.83

-208.09

-97.23

-52.79

389.14

1204.38

191.6

22.36

-141.49

-24.51

285.34

30.19

222.26

244.53

103.04

78.53

222.26

244.53

103.04

78.53

363.87

303.08

1086.67

-716.69 -2005.71

CHAPTER 10

MISCELLANEOU
S