INTRODUCTION :

Name of the Company

Bharti Airtel

Name of the Chairman

Mr. Sunil Bharti Mittal

Listed in

NSE/BSE

Financial Year end

March 31

Bharti Airtel Limited is a leading global telecommunications company with

operations in 20 countries across Asia and Africa. Headquartered in New Delhi,
India, the company ranks amongst the top 4 mobile service providers globally in
terms of subscribers. In India, the company's product offerings include 2G, 3G
and 4G wireless services, mobile commerce, fixed line services, high speed DSL
broadband, IPTV, DTH, enterprise services including national & international long
distance services to carriers. Bharti Airtel had nearly 287 million customers
across its operations at the end of Dec 2013.
Bharti Airtel Ltd was incorporated in the year 1995 with the name Bharti TeleVentures Ltd. The company was promoted by Bharti Telecom Ltd, a company
incorporated under the laws of India. The name of the company was changed
from Bharti Tele-Ventures to Bharti Airtel Ltd with effect from April 24, 2006, to
reflect their brand essence, objective and the nature of their business activities.
Bharti Airtel Ltd was incorporated in the year 1995 with the name Bharti TeleVentures Ltd. The company was promoted by Bharti Telecom Ltd, a company
incorporated under the laws of India. By 2003-04, the company acquired licenses
in all the circles in India. During the year 2004-05, the company and Videsh
Sanchar Nigam Ltd entered into an agreement to share the company's national
long distance network for 15 years for a consideration of Rs 5,000 million. During
the year 2010-11, Airtel won the 'Most Preferred Cellular Service Provider Brand'
award in the CNBC Awaaz Consumer Awards 2010 for the 6th year in a row.
During the year, the company launched 3G Services in 9 of 13 circles with 3G
spectrum. The company launched their New Vision for India and South Asia 'By
2015, Airtel will be the most loved brand, enriching the lives of millions' inspiring
and directing all stakeholders for the next stage of growth'

INDUSTRY OVERVIEW :
India's telecommunication network is the second largest in the world based
on the total number of telephone users (both fixed and mobile phone). [7] It has
one of the lowest call tariffs in the world enabled by the mega telephone
networks and hyper-competition among them. India's telephone subscriber base
expanded at a CAGR of 19.22 percent to 1,002 million over FY0715. India has
the world's third-largest Internet user base.
Given the expected huge growth in wireless broadband adoption and the new
government's thrust towards "Digital India", operators are bracing themselves
and are committing to build up next-generation network infrastructure. The
ongoing expansion of the mobile ecosystem, coupled with demand for highbandwidth applications and services such as video and gaming, is keeping the
pressure on the industry to increase the availability and quality of broadband

connectivity. Carriers will continue to pursue technological advancements to

handle demand, including offloading some mobile bandwidth needs to Wi-Fi,
which is proving an effective complement to mobile networks. At the same time,
long-term spectrum availability, spectrum efficiency, small cells and continued
backhaul improvements are likely to be a key focus to assure continued mobile
broadband momentum.

FINANCIAL STATEMENT ANALYSIS

1.Balance Sheet:
Compared to 2010 huge increase in Intangible assets was seen because
of increase in purchase of licenses for 3G spectrum
The common stock remains almost constant throughout 2010-14, with a
major contribution to Shareholders equity coming from earnings.
There was a huge difference between the Total Liabilities and Total
Stockholder's equity throughout, with Stockholders equity contributing
majorly to the overall increase in the right side of balance sheet.
The company has significantly invested in intangible assets for the years
2011-13, whereas tangible assets have nearly remained the same.
Airtel has hugely invested in Bharti Airtel International in countries like
Singapore, Netherlands, Mauritius which resulted in 144% increase in
noncurrent investments in the year 2013. Increasing trend throughout the
whole period shows company has plans for international investments
Long term loans and advances went up by 62% because of advance
payment for Spectrum in 2014. Long-term borrowings have increased from
2010 to 2013 by 86% but decreased again in 2014 showing that the
company had paid off its debts in 2014
2. Income Statement:
Gross Profit has increased consistently from 2010 to 2014, but there was a
consistent decrease in Net Income partially due to increasing in Operating
expenses. Also, Operating Expenses are more than 60% of Gross Profits
Cost of Goods Sold went down from by more than 80% from 2010 to 2014
as the company is majorly a service provider
Income from Other sources has increased by more than 50% in 2013
because of increase in Dividend Income from the subsidiaries and Net
foreign exchange gain
3. Cash Flow Statement:
Airtel has been carrying negative cash flows on its balance sheet in 2010
and 2011 due to its high investment and financial activities.
Such investments paid off in 2012, which resulted in high cash inflows
from operating activities and thereby positive overall cash flows.
In 2013, the net change in cash flows again slipped to negative, due to
increasing in Long-term borrowings. However, good performance in 2014
led to an increase of over 500%.
Airtel on an average is carrying ending cash balance of 3197.2 million over
the last five years forming only 0.41% of the total assets.
This low cash balance could be problematic in the future as it could cause
liquidity problems.
The overall cash flow of the company is very marginal as most of the cash
generated from operating activities are being used for investing activities.

RATIO ANALYSIS:
Liquidity Ratios:
The current ratio and quick ratio of this company are around 0.3 for the
period considered but in the year 2012, they spiked up to 0.73. This is
because in that particular year company issued a huge amount of shortterm loans & advances which led to a significant increase in its current
assets. This lower current and quick ratio indicate its low liquidity and its
reduced short-term ability to pay its maturing obligations and meet any
unexpected needs of cash.
Turnover/Efficiency Ratios:
Being a telecommunication company, it does not have a significant
amount of inventory but an increase in its inventory turnover ratio shows
that the company is improving on managing its inventory well.It also has
good receivables turnover that shows its ability to collect cash faster from
its customers. These both led to decrease in operating cycle which shows
its growing efficiency.
Solvency:
The company has maintained a lower debt to equity ratio throughout the
period considered which shows that the company is not much dependent
on long-term borrowings. But there is a significant decrease in interest
coverage ratio that shows that there is a significant increase in the
interest expenses against any proportionate increase in EBIT. This comes
as a matter of concern for the company as the expenses may further get
increased and lower its profitability.
Profitability:
The company has a constant gross margin. However, the operating profit
margin and net profit margin has decreased over the period. This is
because though there is an increase in gross sales; operating expenses
and interest expenses have increased over the time. This shows that the
company has not been able to match up its revenues as compared to its
expenses and hence should be more cautious about its total expenses in
the future.
The ROA figures of the company has declined over the years which shows
that though the total assets of the company has increased over the
years ;the net income has not proportionately increased to that indicating
that the company has not been able to utilize its assets fully for
generating net income leading to low profitability of the assets.
The ROE figures of the company have decreased over the period
considered which shows that although the company's total equity has
increased; it has not been able to generate significant returns on the
same.
The company has witnessed a decline in its profit for four consecutive years, but
it started to rise again in 2014.

COMPETITOR ANALYSIS :
Liquidity And Profitability Ratios :

Liquidity:To ascertain the liquidity of the three companies, we will consider

two ratios current ratio and the quick ratio. We observe that all the
companies had high current ratios in 2010, but it eventually got decreased
from 1 to less than 1 to because of spectrum auctions.
Airtel has lower current ratios and quick ratios over the years whereas Tata
Communications maintained a better ratio among all the competitors
ranging around 0.9 which implies that if the firm liquidated all of its current
assets at the recorded value, it would only be able to cover 91% of its
current liabilities. The ratio for Airtel is far less ranging around 0.35, and This
may come across as a cause of concern when it comes to meet unexpected
outcomes and may result in emergency loans.

Efficiency Ratios:
As we can see Airtel has higher Inventory Turnover ratio which shows that it is
better capable of converting its inventory soon to revenue. In the Receivables
Turnover ratio, Idea has the highest values which indicates its ability to collect
it's receivables soon. If Airtel has to be more efficient, it should try to collect it's
receivables soon which in turn will lead to reduction in operating cycle.
Inventory Turnover

35000
30000
25000
20000

Airtel
Idea

15000

Tata Communications

10000
5000
0
2010

2011

2012

2013

2014

Receivables Turnover
35
30
25
20

Airtel
Idea

15

Tata Communications

10
5
0
2010

2011

2012

2013

2014

Solvency Ratios:
Debt to equity ratio: Airtels debt to equity ratio was consistently around 0.1
whereas for Idea and Tata the corresponding value is around 0.5. A major
change in the Debt to equity ratio was seen for Tata in 2014 where the value is
as low as 0.02. This is because Tata has paid off a significant amount of its Long-

term liabilities in 2014. Lower debt to equity shows that these companies assets
have been funded by equity more than debts implying a lower degree of financial
risk and low-interest expenses.

Interest Coverage Ratio: The ratio for Airtel has decreased from 17.8 to 7.2
during 2010-14, Tata has managed to bring up this value to 14.5 in the year
2014 compared to 6.5 in 2013. For Idea, the value has fluctuated between 6.6 to
5.1 from 2010-14. Higher Interest Coverage ratio means that the companies
were able to meet their Interest expenses through their operating incomes.

Profitability about sales:

For profitability about sales we looked at the three types of margins

gross profit margin, operating profit margin and profit margin for all three
companies. In terms of gross profit margin, All the companies fare well
because COGS for telecom companies is very low, so gross profit margins
remain nearly equal to net sales.

Airtel mostly outperforms its competitors when it comes to Operating

Profit Margin and Net Profit margin. This is primarily due to the high
operating costs that the competitors have in comparison with Airtel. It
again reiterates the fact that Airtel is efficient in minimizing its Operating
expenses and efficiently using its resources by selling not Although
margin is decreasing for all the companies till 2013, Airtel fared well
among the competitors.
Considering the typical situation of Tata Communications, huge
margin(90%) of its net income comes from subsidiaries. This is not an
ideal situation, and operating profit margin is only 7.25 which show the
bad state of company operations. The idea doesn't fare well in any of the
parameters with operating and net margins 12% and 6% respectively.