PROJECT REPORTONFINANCIAL COMPARISON OF BSNL WITH OTHER MAJOR

PLAYERS IN THE INDUSTRYA Report submitted in partial fulfillment of requirements forMaster in

Business Administration, GGSIPUTraining Period: June-July, 2009Submitted By:PUNEET
JAINEnroll. No. 0821233908Summer Training Project ReportUNDER THE GUIDANCE OFInternal
Guide: - External Guide:-Mrs. Haritika Chhatwal Mr. Raj Pal Nanda(Faculty) C.A.O (NTR
region)DIAS (GGSIPU) BSNLDELHI INSTITUTE OF ADVANCE STUDIES((AA
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STUDENT UNDERTAKING
I,
Puneet Jain
hereby declares that the project report Financial comparison of BSNLwith other Major players in
telecom industry assigned to me at BSNL during mytraining session for the partial fulfillment of MBA
degree from DELHI INSTITUTE OFADVANCE STUDIES, affiliated to IP UNIVERSITY is the original
work of me and theinformation 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 universityfor 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 havedirectly 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 toLecturer

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. Iwould like to express my gratitude to madam for her constant support
andencouragement.I take this platform to convey my gratitude to the officials of
BSNL
for their promptresponse and guidance. I would like to express my gratitude to
Mr. Raj Pal Nanda(Chief Accounts Officer, TR Section, Finance)
for his constant support andencouragement. 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 analysisof the statement like Balance sheets and Profit and Loss A/c of past five
years to knowthe 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 allthese companies are arranged in the
uniform manner so that financial factors can bedrawn out easily.With the help of theoretical knowledge
on the part of ratios and cash flow, all therelevant ratios of each and every company for past five years
have been founded. Withthe help of regression analysis projected performance of various companies for
2009-10have been forecasted. After a thorough study and discussion with the companys professional,
comments were taken so that Interpretation of these ratios became easy andaccurate.After analyzing the
project, it can be concluded that despite of having good liquid assetsBSNL is having weak financial
position as compared to any other private player in theindustry. Companys performance have been
deteriorated over the years and if the trendremains continue than it have been projected that company will
have to suffer net lossesin the upcoming year 2009-10. So, it is high time for the company to take some
strictmeasure to meet the intense competitive industry. Hence it have been advised for thecompany to use
cost cutting like voluntary retirement of useless chunk employees as it ishaving highest no. of useless
employees and having golden handshake with the highlyintellectual professionals in the industry
especially form Bharti Airtel. Similarly variousother recommendations have been given in the project.
TABLE OF CONTENT
S. No. Particulars
Chapter 1
Research Study
1.1 Objectives of Study1.2 ResearchMethodology1.2.1 Research Design1.2.2 Data collectionChapter 2
Company Profile
2.1 Industry Profile2.2 Company Profile (BSNL)2.2.1 Board of Directors2.2.2 Basic Service offered2.2.3
Organisation Structure2.2.4 Accounting Policies of 2.3 Competitors Profile2.3.1 Bharti Airtel2.3.2
Reliance Comm2.3.3 Vodafone2.3.4 Idea Cellular 2.3.5 Aircel2.3.6 MTNL2.3.7 BPL Mobile2.3.8 HFCL
InfotelChapter 3
Literature Review
Chapter 4
Conceptual Framework
4.1 Essentials of Financial Statement4.2 Parties Interested4.3 Tools of Financial Analysis4.3.1 Ratio
Analysis4.3.2 Cash Flow StatementsChapter 5
Finding And Analysis
5.1 Current Ratio5.2 Earning Per Share5.3 Debtor Turnover Ratio

5.4 Debt Equity Ratio5.5 Return on Capital Employed5.6 Price Earning Ratio5.7 Net Profit Margin
Ratio5.8 Analysis of Cash Flows5.8.1 Net Cash From operating Activities5.8.2 Net Cash Used in
Investing Activities5.8.3 Net Cash Used in Financing ActivitiesChapter 6
Conclusion
6.1 Conclusion6.2 SuggestionsChapter 7
Limitations
Chapter 8
Bibliography
Chapter 9
Annexure
BSNL P&L (5 Years)BSNL Balance Sheet (5 Years)BSNL Cash Flows (5 Years)Bharti Airtel Balance
Sheet (5 Years)Bharti Airtel P&L (5 Years)Bharti Airtel Cash Flows (5 Years)MTNL Balance Sheet (4
Years)MTNL P&L (4 Years)MTNL Cash Flows (4 Years)Idea Balance Sheet (4 Years)Idea P&L (4
Years)Idea Cash Flows (3 Years)Tata Comm P&L (5 Years)Tata Comm Balance Sheet (5 Years)Tata
Comm Cash Flows (5 Years)Chapter 10
Miscellaneous

Chapter 1Chapter 1Chapter 1Chapter 1
RESEARCH STUDY
1.1 OBJECTIVES OF THE STUDY
The basic objective of doing the project is to :


Analyze the financial statements of past 5 years of BSNL andOther major competitors in the telecom
industry.


Predict the performance in next year (2009-10) on the basis oflast 5 year performance.


Describe the trends of various financial factors of BSNL overpast 5 years.


Studying the relationship among the various financial factors asdisclosed in the financial statements of
various companies inthe Indian telecomm Industry.
Minor objectives are:
1.

Know the Financial Position: The basic objective of studying the Financialstatements 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 futuresuccess & failure.3.

Inter- Intra firm Comparison: Ratio Analysis provides the data for inter-firmcomparison as well as intra
firm comparison. Ratios highlight the factorsassociated with successful and unsuccessful firms. They also
reveal attractivenessand unattractiveness of the firm in the industry, over-valued and under-valuedfirms.

1.2 RESEARCH METHODOLOGY
Methodology is the basic framework and the approach that has to be followed to carryout the approach
used to collect the data, the sources of primary data, i.e., from whereand how it has been collected.


Research is a diligent and systematic inquiry or investigation into a subject inorder 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 bestwebsites are considered which
gives all the efficient and effective information.References for the project are from the websites and
books and the companys annualreports.It is assured that the project has been completed with full
dedication, sincerity andrequired intensity of hard work.
1.2.1 RESEARCH DESIGN
It helps to tackle the problem of bringing various phases of research under control. Theresearch design
helps to design the decision with respect to:


What type of data is needed?


From where data can be found?


What period of time study include?


How much material will be needed?


What technique of gathering data will be adopted?


How will data be analyzed?Generally three types of research are included in research design. These are as
follows:




Exploratory research


Descriptive and diagnostic research


Experimental researchIn the present project report both primary and secondary data is taken so descriptive
andexploratory research is done. This research focuses on discovery of insights andrelationships among
various financial factors among various companies.Companieswhich are taken as a sample of Indian
Telecom Industry is based on the market share.2from 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 marketshare )have been considered for comparison with BSNL.
1.2.2 DATA COLLECTION
Sources of secondary data are
(a) Authenticated companys website on Internet.(b) Annual reports provided by BSNL,Bharti Airtel and
MTNL of financial year 2004-05, 2005-06, 2006-07, 2007-08, 2008-09.

Chapter 2Chapter 2Chapter 2Chapter 2
COMPANY PROFILE
2.1 INDUSTRY PROFILE
Today the Indian telecommunications network with over 375 Million subscribers issecond largest
network in the world after China. India is also the fastest growing telecommarket in the world with an
addition of 9- 10 million monthly subscribers. The tele-density of the Country has increased from 18% in
2006 to 33% in December 2008,showing a stupendous annual growth of about 50%, one of the highest in
any sector of the Indian Economy. The Department of Telecommunications has been able to providestate
of the art world-class infrastructure at globally competitive tariffs and reduce thedigital divide by
extending connectivity to the unconnected areas. India has emerged as amajor base for the telecom
industry worldwide. Thus Indian telecom sector has come along way in achieving its dream of providing
affordable and effective communicationfacilities to Indian citizens. As a result common man today has
access to this most neededfacility. 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 competitiveenvironment2.

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 management5.

To accelerate broadband penetration6.

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 auctions2.

MVNO3.

Mobile Number Portability4.

New Policy for Value Added Services
5.

Market dynamics once the recently licensed new telecom operators start rollingout6.

Services.7.

Increased thrust on telecom equipment manufacturing and exports.8.

Reduction in Mobile Termination Charges as the cost per line has substantiallyreduced9.

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 hasgrown in to the level of an industry. Telephone, whether fixed landline or
mobile, is anessential necessity for the people of India. This changing phase was possible with
theeconomic development that followed the process of structuring the economy in thecapitalistic pattern.
Removal of restrictions on foreign capital investment and industrialde-licensing resulted in fast growth of
this sector. At present the country's telecomindustry has achieved a growth rate of 14 per cent. Till 2000,
though cellular phonecompanies were present, fixed landlines were popular in most parts of the country,
withgovernment of India setting up the Telecom Regulatory Authority of India, and measuresto allow
new players country, the featured products in the segment came in to prominence. Today the industry
offers services such as fixed landlines, WLL, GSMmobiles, CDMA and IP services to customers.
Increasing competition among playersallowed the prices drastically down by making the mobile facility
accessible to the urbanmiddle class population, and to a great extend in the rural areas. Even for
smallshopkeepers 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 accessoriesmanufacturing has also grown in a big way.Indian
Telecom sector, like any other industrial sector in the country, has gone throughmany phases of growth
and diversification. Starting from telegraphic and telephonicsystems 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 3GTechnology in mobile
phones. Day by day, both the Public Players and the PrivatePlayers are putting in their resources and
efforts to improve the telecommunicationtechnology 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 theworld.
The mobile sector has grown from around 10 million subscribers in 2002 toreach 150 million by early 2007 registering
an average growth of over 90%.
The twomajor 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
RelianceCommunication. 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 regulatorychanges and reforms that have been pushed for last 10 years by
successive Indiangovernments. 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 quarterof 2007
. The telecom reforms have allowed the foreign telecommunication companies toenter Indian market
which has still got huge potential. International telecom companieslike Vodafone have made entry into
Indian market in a big way.Currently the Indian Telecommunication market is valued at around $100
billion (Rupees400,000 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 Internetmarket 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 subscriptionnumbers. In 2006 India witnessed a good surge in broadband users with the
totalsubscriber base in the country expanding by almost 200% to just over 2 million byyears end
. Despite this surge,
broadband penetration in India still remains aroundonly 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
veryaggressive plans to increase the pace of growth, targeting 250 million telephonesubscribers by end-
2007 and 500 million by 2010. Most of the expansion in subscribers isset to occur in rural India. Indias
rural telephone density has been languishing at around1.9%. The subscriber addition rate has been strong
in the last 12 months but theregulatory developments will increase competition and thus curtail the long-
term growthrates of individual companies. The savings through the setting of tower companies will partly
go towards the higher capex and opex costs from more stringent spectrumallocation norms for the
incumbents.The Telecommunications sector has been consistently adding more than 7 millionsubscribers
for the last 6 months, a very healthy net addition rate infact. All the privateoperators 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 negativefor the telecom companies as it will increase the number operators
per circle which willintensify 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 largestTelecommunications
Company providing comprehensive range of telecom services inIndia: 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, 20.1Million GSM Capacity, more than 37382
fixed exchanges, 18000 BTS, 287 SatelliteStations, 480196 Rkm of OFC Cable, 63730 Rkm of
Microwave Network connecting 602Districts, 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 inthe 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 companyoffers vide
ranging & most transparent tariff schemes designed to suite every customer.BSNL cellular service,
CellOne, has more than 17.8 million cellular customers, garnering24 percent of all mobile users as its
subscribers. That means that almost every fourthmobile 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 thesubscriber base
and 92 percent share in revenue terms.BSNL has more than 2.5 million WLL subscribers and 2.5 million
Internet Customerswho access Internet through various modes viz. Dial-up, Leased Line, DIAS,
AccountLess 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 infrastructurethat provides convergent
services like voice, data and video through the same Backboneand Broadband Access Network. At
present there are 0.6 million DataOne broadbandcustomers.

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 fiveother Directors in the full Board of BSNL.
Board of Directors Designation
Shri Kuldeep Goyal CMDShri 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
- EnterpriseShri 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 countrywideInternet 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 aunique digital network providing high
speed and high quality voice, dataand 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 thelandline b-fone predominantly for
receiving incoming calls only, BSNLbrings you Sulabh Plan. The rentals in this plan are extremely low. If
youdesire to make outgoing calls, this facility can also be given separately (orone can also use ITC Cards
with Sulabh Plan). These plans are now verypopular.



5.

WLL (Wireless Land Line):
There are two versions of WLL. These areexplained as follows:

-

WLL Fixed (FWT): It is the Fixed Wireless Transmission. In this case, thereis a small box fitted with a
small antenna at ones premises and a normaltelephone instrument is connected to the box. There is no
Telephonecopper wire connection as in the conventional telephone.
-

WLL Mobile: In this case, Subscriber can carry a small handset of CDMAtechnology. There is no
antenna or any other equipment at your premises.Branded as Tarang, this is the most reliable and
affordable service givingones the best of both fixed line & mobile telephone.
6.

Mobile Services:
BSNLs Cellular Service is the Indias growing CellularService. BSNLs Cellular Service has taken the
cellular telephone to themasses through innovative technology and strategic pricing. Thisambitious
service uses state-of-the-art GSM technology to attain globalexcellence and leadership. BSNLs entry into
this sector has brought GSMcellular service at an affordable cost to the common man. Customers
haverespond tremendous faith in BSNL and it has enrolled over 1.07 croresCellular customers.
7.

BSNL Internet Service:
BSNL, Indias no.1, Internet Service Provider,provides Internet service throughout the country (except
Delhi andMumbai). Sancharnet Card
:
BSNL has also launched Internet Card. Thiscard is a prepaid Internet Access Card.
8.

BSNL Broadband:
The Broadband service from BSNL is widely used byalmost all the companies of India.


2.2.3 Organizational Structure of BSNL