AIRTELS SOURCES OF FUNDS:

From the balance sheet the Sources of Funds can be seen are: Shareholders Fund a) Share Capital b) Reserves and Surplus Loan Fund a) Secured Loans b) Unsecured Loans Deferred Tax NET Current Liabilities a) Liabilities b) Provisions

Shareholders fund is the owned by the company. Both the outsider fund and shareholders fund constitute the total funds for the company. Total funds of the company can be calculated as follows: ( Rs. in Millions) Shareholders Fund Share Capital Reserves and Surplus Total Owned Fund (1) Loan Fund Secured Loans Unsecured Loan Deferred Tax-Net Current Liabilities Liabilities Provisions Total Outsiders Fund (2) Total Fund of Airtel (1+2) 18,988 4,19,342 4,38,330

171 1,18,804 1,18,975 5,276 1,24,251 1,47,963 6,276 1,54,239 5,92,569

After analyzing the balance sheet we can see that the company has obtain major proportion of the fund from its shareholders fund(Rs. 4,38,330 millions) where as a comparatively lesser amount from its outsiders fund(Rs. 1,54,239 millions).

In the shareholders fund there are share capital and reserves and surplus. Share capital constitutes Rs. 18,988 millions and reserves and surplus contributes Rs. 4,19,342 millions. From the above we can see that reserves and surplus contributes a majority of amount as compared to share capital. In the case of loan fund, secured loans is Rs. 171 millions and unsecured loans is Rs. 1,18,804 millions. Airtel does not issue any Debentures to obtain funds, as there is no debenture issue mentioned in the companys balance sheet. The total funds obtained by the company as obtained from the statement is Rs.5,92,569 which is used for long term investments and acquisition and maintenance of fixed assets.

LONG-TERM SOURCES OF FUNDS- Share capital, reserves and surplus, deferred tax-net, secured loans and unsecured loans are long-term funds for an organization. As per the stated schedules for Shareholders Fund, both Share Capital of the company (Issued, Subscribed and Paid-up Shares of Rs. 5.00 each fully paid) which totals to Rs. 18,988 millions and Reserves & Surplus (consisting of General Reserves, Capital Reserve, Securities Premium, Reserve for Business Restructuring, Debenture Redemption Reserve) amounting to Rs. 4,19,342 are part of the long term sources of funds.

SHORT-TERM SOURCES OF FUNDS- As per the given schedules, Current liabilities and provisions and unsecured loans are short-term funds for an organization. In current liabilities (Sundry Creditors, Advance Billing and Prepaid Card Revenue, Advance Received from the customers, Interest accrued but not due on loans, other Liabilities) accounts for Rs. 1,47,963 millions and where as provisions (Gratuity, Leave Encashment, Proposed Dividend, Tax on Dividend and others) accounts for Rs. 6,276.

COMMENTSFrom the above data it is clearly seen that Airtel is depending upon its own funds for long-term investments. Balances of reserves and surplus are used for long-term investments. A majority of fund comes from retained earnings or ploughing back of profits. Such phenomenon is also known as Self-financing. The company has not issued any debentures to fund their long-term investments. . This shows the companys tendency to avoid risk which comes with taking issue of debentures. But the company is missing a chance of reducing its cost of capital by gaining more returns from the issues of debentures. The company is availing both secured loan and unsecured loan. For unsecured loan, security is not required which can be used for long-term operations. As per the schedule, the company can repay the unsecured loan within 1 year as it is short-term in nature. Provisions and current liabilities are used as short-term finance for the operation of the business. As short-term liabilities have a payment period of one year that is why it can be said that the company undertakes a certain amount of risk in using this. As the company is depending upon the retained earnings or ploughing back profits for long-term investments this shows that the company is earning surplus and can pay liquid cash for short-term payments of the business.

Receivables Management Receivables are a direct result of credit sales are resorted to, by a firm to push up its sales which ultimately result in pushing up the profits earned by the firm. At the same time, selling goods on credit results in blocking of funds in accounts receivables. Additional funds are, therefore, required for the operating needs of the business which involve extra costs in terms of interest. Moreover, increase in receivables also increases the chances of bad debts. Thus, creation of accounts receivables is beneficial as well as dangerous to the firm. The financial manager needs to follow a policy of using cash funds economically to the extent possible in extending receivables without adversely affecting the chances of increasing sales and making more profits. Management of accounts receivables may, therefore, be defined as, the process of making decision relating to the investment of funds in receivables which will result in maximising the overall return on the investment of the firm. Thus, the objective of receivables management is to promote sales and projects until the level where the return on investment in further finding of receivables is less than the cost of funds raised to finance that additional credit.