TABLE OF CONTENTS

S.No. Topic

1. Chapter – 1 INTRODUCTION

2. Chapter – 2 COMPANY PROFILE

3. Chapter – 3 LITERATURE REVIEW

4. Chapter – 4 OBJECTIVE

5. Chapter – 5 METHODOLOGY

6. Chapter – 6 RESULTS

7. Chapter – 7 RECOMMENDATIONS

8. Chapter – 8 CONCLUSIONS & IMPLICATIONS

9. Chapter -9 BIBLIOGRAPHY
 Chapter – 1

INTRODUCTION
WORKING CAPITAL - OVERALL VIEW
Working Capital management is the management of assets that are current in nature.
Current assets, by accounting definition are the assets normally converted in to cash in
a period of one year. Hence working capital management can be considered as the
management of cash, market securities receivable, inventories and current liabilities.
In fact, the management of current assets is similar to that of fixed assets the sense
that is both in cases the firm analyses their effect on its profitability and risk factors,
H differ on three major aspects.
1. In managing fixed assets, time is an important factor discounting and
compounding aspects of time play an important role in capital budgeting and a
minor part in the management of current assets.
2. The large holdings of current assets, especially cash, may strengthen the firm’s
liquidity position, but is bound to reduce profitability of the firm as ideal car
yield nothing.
3. The level of fixed assets as well as current assets depends upon the expected
sales, but it is only current assets that are ad the fluctuation in the short run u a
business.
To understand working capital better we should have basic knowledge about the
various aspects of working capital. To start with, there are two concepts of working
capital:
 Gross Working Capital
 Net working Capital
Gross Working Capital: Gross working capital, which is also simply known as
working capital, refers to the firm’s investment in current assets: Another aspect of
gross working capital points out the need of arranging funds to finance the current
assets. The gross working capital concept focuses attention on two aspects of current
assets management, firstly optimum investment in current assets and secondly in
financing the current assets. These two aspects will help in remaining away from the
two danger points of excessive or inadequate investment in current assets. Whenever
a need of working capital funds arises due to increase in level of business activity or
for any other reason the arrangement should be made quickly, and similarly if some
surpluses are available, they should not be allowed to lie ideal but should be put to
some effective use.
Net Working Capital: The term net working capital refers to the difference between
the current assets and current liabilities. Net working capital can be positive as well as
negative. Positive working capital refers to the situation where current assets exceed
current liabilities and negative working capital refers to the situation where current
liabilities exceeds current assets. The net working capital helps in comparing the
liquidity of the same firm over time. For purposes of the working capital
management, therefore Working Capital can be said to measure the liquidity of the
firm. In other words, the goal of working capital management is to manage the current
assets and liabilities in such a way that a acceptable level of net working capital is
maintained.
Importance of working capital management:
Management of working capital is very much important for the success of the
business. It has been emphasized that a business should maintain sound working
capital position and also that there should not be an excessive level of investment in
the working capital components. As pointed out by Ralph Kennedy and Stewart MC
muller, “the inadequacy or mis-management of working capital is one of a few
leading causes of business failure.

Determinants of Working Capital

There is no specific method to determine working capital requirement for a business.
There are a number of factors affecting the working capital requirement. These factors
have different importance in different businesses and at different times. So a thorough
analysis of all these factors should be made before trying to estimate the amount of
working capital needed. Some of the different factors are mentioned here below :-
Nature of business: Nature of business is an important factor in determining the
working capital requirements. There are some businesses which require a very
nominal amount to be invested in fixed assets but a large chunk of the total
investment is in the form of working capital. There businesses, for example, are of the
trading and financing type. There are businesses which require large investment in
fixed assets and normal investment in the form of working capital.
Size of business : It is another important factor in determining the working capital
requirements of a business. Size is usually measured in terms of scale of operating
cycle. The amount of working capital needed is directly proportional to the scale of
operating cycle i.e. the larger the scale of operating cycle the large will be the amount
working capital and vice versa.
Business Fluctuations: Most business experience cyclical and seasonal fluctuations
in demand for their goods and services. These fluctuations affect the business with
respect to working capital because during the time of boom, due to an increase in
business activity the amount of working capital requirement increases and the reverse
is true in the case of recession. Financial arrangement for seasonal working capital
requirements are to be made in advance.
Production Policy: As stated above, every business has to cope with different types
of fluctuations. Hence it is but obvious that production policy has to be planned well
in advance with respect to fluctuation. No two companies can have similar production
policy in all respects because it depends upon the circumstances of an individual
company.
Firm’s Credit Policy: The credit policy of a firm affects working capital by
influencing the level of book debts. The credit term are fairly constant in an industry
but individuals also have their role in framing their credit policy. A liberal credit
policy will lead to more amount being committed to working capital requirements
whereas a stern credit policy may decrease the amount of working capital requirement
appreciably but the repercussions of the two are not simple. Hence a firm should
always frame a rational credit policy based on the credit worthiness of the customer.
Availability of Credit: The terms on which a company is able to avail credit from its
suppliers of goods and devices credit/also affects the working capital requirement. If a
company in a position to get credit on liberal terms and in a short span of time then it
will be in a position to work with less amount of working capital. Hence the amount
of working capital needed will depend upon the terms a firm is granted credit by its
creditors.
Growth and Expansion activities: The working capital needs of a firm increases as
it grows in term of sale or fixed assets. There is no precise way to determine the
relation between the amount of sales and working capital requirement but one thing is
sure that an increase in sales never precedes, the increase in working capital but it is
always the other way round. So in case of growth or expansion the aspect of working
capital needs to be planned in advance.
Price Level Changes: Generally increase in price level makes the commodities
dearer. Hence with increase in price level the working capital requirements also
increases. The companies which are in a position to alter the price of these
commodities in accordance with the price level changes will face less problems as
compared to others. The changes in price level may not affect all the firms in same
way. The reactions of all firms with regards to price level changes will be different
from one other.
CIRCULATION SYSTEM OF WORKING CAPITAL
In the beginning the funds are obtained from the issue of shares, often supplemented
by long term borrowings. Much of these collected funds are used in purchasing fixed
assets and remaining funds are used for day to day operation as pay for raw material,
wages overhead expenses. After this finished goods are ready for sale and by selling
the finished goods either account receivable are created and cash is received. In this
process profit is earned. This account of profit is used for paying taxes, dividend and
the balance is ploughed in the business.
Working capital is considered to efficiently circulate when it turns over quickly. As
circulation increases, the investment in current assets will decrease. Total Assets is the
sum of all assets, current and fixed. The asset turnover ratio measures the ability of a
company to use its assets to efficiently generate sales. The higher the ratio indicates
that the company is utilizing all its assets efficiently to generate sales. Companies
with low profit margins tend to have high asset turnover.
Bharit Airtel.
Ratios useful to analyze working capital management
(A) Efficiency Ratios
2011-12 2012-13

1. Working Capital Turnover (times) 4.84 10.23

2. Current Assets Turnover (times) 1.78 2.98
3. Inventory turnover (times) 9.49 9.20
(B) Liquidity Ratio and Solvency Ratio
1. Current Ratio 1.02 0.65
2. Quick Ratio 1.37 0.75
3. Debt Equity Ratio 0.29 0.24

The Company generates healthy operational cash flows and maintains

sufficient cash and financing arrangements to meet its strategic
objectives. It deploys a robust cash management system to ensure timely
servicing of its liquidity obligations. The Company has also been able
to arrange for adequate liquidity at an optimized cost to meet its
business requirements and has minimized the amount of funds tied-up in
the current assets.

As of March 31, 2012, the Company has cash and cash equivalents of Rs.
20,300 Mn and short term investments of Rs. 18,132 Mn. During the year
ended March 31, 2012, the Company generated operating free cash flow of
Rs. 101,319 Mn. The net debt - EBITDA ratio as on March 31, 2012 was at
and the net debt - equity ratio was at 1.29. The net debt in USD
terms decreased from USD 13,427 Mn as on March 31, 2011 to USD 12,714
Mn as on March 31, 2012.

On further analysis, inventory constitutes a major proportion of total current assets.

Among its various components, raw materials, stocks, spared and finished goods in
particular need further analysis as here stand out to the problem areas.
 Schedule of Changes in Working Capital

Particulars Amount
Assets 31 March 2013 31 March 2012
Gross Block 71911.80 63885.40
(-) Acc. Depreciation 28729.20 23444.60
Net Block 43182.60 40440.80
Capital Work in Progress 1030.80 4466.50
Investments 28199.10 12337.80
Sundry Debtors 2246.80 2134.50
Cash and Bank 362.70 481.20
Loans and Advances 12859.10 20430.80
Total Current Assets 15470.70 23078.60

Current Liabilities 20061.70 16067.20

Provisions 695.50 697.50
Total Current Liabilities 20757.20 16764.70

Working capital (CA-CL)

Working Capital (5286.5) 6313.90

Cash Flow of Bharti Airtel

Chapter – 2

COMPANY PROFILE
Bharti Airtel Limited

Bharti Airtel to Observe Silent period from June 30, 2012

New Delhi June 25, 2011 : Bharti Airtel, India’s leading private telecom services
provider would observe a 'Silent Period' from the close of business on June 30, 2011
(Wednesday), till the declaration of results for the first quarter ending June 30, 2011,
as a commitment towards highest level of corporate governance.
Details about the quarterly and annual results announcement and the earnings call will
be made available on the website.
The practice of silent period does not refrain the company and its representatives from
any press conference & public dissemination of information. The observation of silent
period is only a practice and hence does not imply any legal obligation for the
company under any circumstances.
About Bharti Airtel Limited: Bharti Airtel Limited, a group company of Bharti
Enterprises, is among Asia’s leading integrated telecom services providers with
operations in India, Sri Lanka and Bangladesh. The company has an aggregate of
around 138 million customers across its operations. Bharti Airtel has been ranked
among the six best performing technology companies in the world by Business Week.
Bharti Airtel is structured as four strategic business units - Mobile, Telemedia,
Enterprise and Digital TV. The mobile business offers services in India, Sri Lanka
and Bangladesh. The Telemedia business provides broadband, IPTV and telephone
services in 89 Indian cities. The Enterprise business provides end-to-end telecom
solutions to corporate customers and national and international long distance services
to carriers. The Digital TV business provides DTH Airtel’s national high-speed optic
fiber network currently spans over 126,357 Rkms across India. Airtel's international
network infrastructure includes ownership of the i2i submarine cable system and
consortium ownership in five global undersea cable systems, SEA-ME-WE 4, EIG, I-
ME-WE, AAG and Unity. For more information, visit www.airtel.in
Bharti Airtel
Airtel comes to you from Bharti Airtel Limited, one of Asia’s leading integrated
telecom services providers with operations in 19 countries across Asia and Africa.
Bharti Airtel since its inception, has been at the forefront of technology and has
pioneered several innovations in the telecom sector.
The company is structured into four strategic business units - Mobile, Telemedia,
Enterprise and Digital TV. The mobile business offers services in India, Sri Lanka
and Bangladesh. The Telemedia business provides broadband, IPTV and telephone
services in 89 Indian cities. The Digital TV business provides Direct-to-Home TV
services across India. The Enterprise business provides end-to-end telecom solutions
to corporate customers and national and international long distance services to telcos.
Vision and Values
Our vision
By 2020 we will build India's finest conglomerate by:

 Always empowering and backing our people

 Being loved and admired by our customers and -respected by our partners
 Transforming millions of lives and making a positive impact on society
 Being brave and unbounded in realizing our dreams
Our values
Empowerment
We respect the opinions and decisions of others. We encourage and back people to do
their best
Entrepreneurship
We always strive to change the status quo. We Innovate with new ideas and energise
with a strong passion and entrepreneurial spirit.
Transparency
We believe we must work with honesty, trust and the innate desire to do good.
Impact
Are driven by the desire to create a meaningful difference in society
Flexibility
We are ever willing to learn and adapt to the environment, our partners and the
customer's evolving needs.
Bharti Airtel Limited (BSE: 532454) formerly known as Bharti Tele-Ventures LTD
(BTVL) is an Indian company offering telecommunication services in 19 countries. It
is the largest cellular service provider in India, with more than 141 million
subscriptions as of August 2011[update] Bharti Airtel is the world's third largest,
single-country mobile operator and fifth largest telecom operator in the world with a
subscriber base of over 180 million It also offers fixed line services and broadband
services. It offers its telecom services under the Airtel brand and is headed by Sunil
Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve this
Cisco Gold Certification. To earn Gold Certification, Bharti Airtel had to meet
rigorous standards for networking competency, service, support and customer
satisfaction set forth by Cisco. The company also provides land-line telephone
services and broadband Internet access (DSL) in over 96 cities in India. It also acts as
a carrier for national and international long distance communication services. The
company has a submarine cable landing station at Chennai, which connects the
submarine cable connecting Chennai and Singapore.
It is known for being the first mobile phone company in the world to outsource
everything except marketing and sales and finance. Its network (base stations,
microwave links, etc.) is maintained by Ericsson and Nokia Siemens Network,
business support by IBM and transmission towers by another company. Ericsson
agreed for the first time, to be paid by the minute for installation and maintenance of
their equipment rather than being paid up front. This enables the company to provide
pan-India phone call rates of Rs. 1/minute (U$0.02/minute). During the last financial
year [2010-10], Bharti has roped in a strategic partner Alcatel-Lucent to manage the
network infrastructure for the Telemedia Business.
The company is structured into four strategic business units - Mobile, Telemedia,
Enterprise and Digital TV. The mobile business offers services in 18 countries across
the Indian Subcontinent and Africa. The Telemedia business provides broadband,
IPTV and telephone services in 89 Indian cities. The Digital TV business provides
Direct-to-Home TV services across India. The Enterprise business provides end-to-
end telecom solutions to corporate customers and national and international long
distance services to telcos.
Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber
base, behind China Mobile and China Unicom. In India, the company has a 30.7%
share of the wireless services market. In January 2011, company announced that
Manoj Kohli, Joint Managing Director and current Chief Executive Officer of Indian
and South Asian operations, will become the Chief Executive Officer of the
International Business Group from 1 April 2011. He will be overseeing Bharti's
overseas business. Current Dy. CEO, Sanjay Kapoor, will replace Manoj Kohli and
will be the CEO, effective from 1 April 2011.
Airtel digital TV launches two attractive offers for new customers this festive
season
- Offer 1: Now get 4 month free subscription to Economy Pack with all new Airtel
digital connections @Rs.1690
- Offer 2: Purchase a new Airtel digital TV connection for just Rs. 999
New Delhi, October 7, 2011 : Airtel digital TV, the DTH arm of Bharti Airtel, today
announced two powerful combos on new subscriptions for customers across India.
The Limited Period Offers come on the eve of the festival season.
Offer 1: Customers purchasing a new Airtel digital TV connection @ Rs.1690 need
not recharge their Airtel digital TV accounts for the next 4 months. They would be
entitled to 4 months free subscription to the Economy Pack (around 150 popular
channels, worth Rs.200+taxes) thereby enabling them to make the move to the next
generation DTH technology on Airtel, for an effective price of just Rs.806!
Offer 2: New customers who purchase a new Airtel digital TV connection for Rs.999
and get started with an initial recharge of just Rs.200.
Announcing the offers, Sugato Banerji, CMO-DTH Services, Bharti Airtel, said "We
believe that these two new entry offers will provide yet another compelling reason for
customers to join the growing Airtel digital TV family. By significantly bring down
the Total Cost of Ownership these offers will make it more easier for more customers,
to move to the next generation home entertainment options like Airtel digital TV."
Airtel digital TV – the DTH service from Bharti Airtel – has 3.8 million customers
and is one of the leading national level DTH service in the country which offers its
customers MPEG 4 with DVBS 2 – currently the most advanced digital broadcasting
technologies available in the world after HD broadcasting. Additionally, Airtel digital
TV was the first to bring many firsts to the DTH segment in India including a
Universal Remote which operates both the Set Top Box and TV set as well as several
unique Interactive Applications. Airtel digital TV recorder was the first to offer the
capability to record live television, anytime, anywhere and recently added HD
services to its portfolio. Users can also update themselves on the latest stock news. All
this is backed by 24x7 customer care. Airtel digital TV launched its services in
October 2009.
About Bharti Airtel Limited : Bharti Airtel Limited is a leading global
telecommunications company with operations in 19 countries across Asia and Africa.
The company offers mobile voice & data services, fixed line, high speed broadband,
IPTV, DTH, turnkey telecom solutions for enterprises and national & international
long distance services to carriers. Bharti Airtel has been ranked among the six best
performing technology companies in the world by BusinessWeek. Bharti Airtel had
over 188 million customers across its operations at the end of August 2011. To know
more visit www.airtel.in
Services
Mobile Services
Airtel is the name of the company's mobile services brand. It operates in 19 countries
and the Channel Islands. It is the 5th largest mobile operator in the world in terms of
subscriber base. Airtel's network consists of 3G and 2G services depending on the
country of operation.
Airtel
In India, the company's mobile service is branded as Airtel. It has nationwide
presence and is the market leader with a market share of 30.07% (as of May 2011).
On 19 October 2004, Airtel announced the launch of a Black Berry Wireless Solution
in India. The launch is a result of a tie-up between Bharti Tele-Ventures Limited and
Research In Motion (RIM).
The Apple iPhone 3G was rolled out in India on 22 August 2009 by Airtel &
Vodafone. Both the cellular service providers rolled out their Apple iPhone 3GS in
the first quarter of 2011. However, high prices and contract bonds discouraged
consumers and it was not as successful for both the service providers as much as the
iPhone is successful in other markets of the world.
On May 18, 2011, 3G spectrum auction was completed and Airtel will have to pay the
Indian government Rs. 12,295 crores for spectrum in 13 circles, the most amount
spent by an operator in this auction. Airtel won 3G licences in 13 telecom circles of
India: Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh
(West), Rajasthan, West Bengal, Himachal Pradesh, Bihar, Assam, North East,
Jammu & Kashmir. Bharti is expecting to launch its 3G service by December 2011.
On 20 September 2011, Bharti Airtel said that it has given contracts to Ericsson India,
Nokia Siemens Networks (NSN) and Huawei Technologies to set up infrastructure for
providing 3G services in the country. These vendors will plan, design, deploy and
maintain 3G-HSPA (third generation, high speed packet access) networks in 13
telecom circles where the company has won 3G licences. While Bharti Airtel has
awarded network contracts for seven 3G circles to Ericsson India, NSN would
manage networks in three circles. Chinese telecom equipment vendor Huawei
Technologies has been introduced as the third partner for three circles.
Subscriber base in India

The Airtel subscriber base according to Cellular Operators Association of India

(COAI) as of August 2011 was:
Metros
 Chennai - 2,877,029
 Delhi - 6,950,079
 Mumbai - 3,201,916
 Kolkata - 2,947,042
"A" Circle
 Andhra Pradesh - 14,240,429
 Gujarat - 5,980,024
 Karnataka - 13,434,418
 Maharashtra - 7,209,072
 Tamil Nadu - 8,744,937
"B" Circle
 Haryana - 1,580,398
 Kerala - 3,332,095
 Madhya Pradesh - 7,496,236
 Punjab - 5,171,278
 Rajasthan - 11,004,105
 Uttar Pradesh (East) - 8,534,334
 Uttar Pradesh (West) - 4,923,409
 West Bengal - 6,644,688
"C" Circle
 Assam - 2,683,243
 Bihar - 12,600,521
 Himachal Pradesh - 1,452,709
 Jammu and Kashmir - 1,751,239
 North Eastern States - 1,612,005
 Orissa - 4,840,243
Airtel is the market leader in India with about 31.18% market share of 481 million
GSM mobile connections as of August 2011.
Criticism
There has been lot of criticism about Airtel for its unauthorised VAS activation. Many
of its services were activated automatically according to a complaint forum. In return
Airtel launched STOP/START 121 services for such issues.
Airtel-Vodafone (Jersey and Guernsey)
On 1 May 2007, Jersey Airtel and Guernsey Airtel, both wholly owned subsidiaries of
the Bharti Group, announced they would launch mobile services in the British Crown
Dependency islands of Jersey and Guernsey under the brand name Airtel-Vodafone
after signing an agreement with Vodafone.
Airtel Lanka
In December 2009, Bharti Airtel rolled out 3.5G services in Sri Lanka in association
with Singapore Telecommunications. Airtel's operation in Sri Lanka, known as Airtel
Lanka, commenced operations on 12 January 2010. Airtel Lanka has 1.4 million
mobile customers in Sri Lanka, across 20 administrative districts.
Airtel in Bangladesh
In January 2011, it was announced that the Bangladesh Telecommunications
Regulatory Commission (BTRC) had given Bharti Airtel the go ahead to acquire a
70% stake in the Bangladesh business of Abu Dhabi based Warid Telcom. The latter
had till date invested a total of $600 million, with plans to bring their Bangladesh
investments to the $1 billion mark. Airtel's 70% stake in the company is said to be at a
cost of an initial $300 million. The service is being operated under the brand name
Warid Telecom.
Warid Telecom covers the entire country and has over 2.5 million customers.
Airtel in Africa
On 14, February 2011 a statement issued by Zain Ghana, said "the Board of Directors
of Kuwait's Zain Group, after its meeting on February 14, 2011, issued a resolution to
accept a proposal received from Bharti Airtel Limited (Bharti) to enter into exclusive
discussions until 25 March 2011, regarding the sale of its African unit, Zain Africa
BV." The offer was for $10.7 billion. The deal would provide Bharti access to 15
more countries in the region, adding around 40.1 million subscribers to its already 125
million-plus user base. The combined revenue of the two entities would be around
$12 billion.
The deal ran into hurdles after the government of the of Gabon had come out against
the deal, but later approved the sale. The government of Congo Republic had also said
Bharti-Zain deal broke law. There was also a dispute about minority ownership of
Zain's operations in Nigeria, the biggest market in the deal. Minority shareholder
Econet was seeking to overturn a 2006 deal by Zain - then called Celtel - in which it
bought a majority stake in Nigerian mobile operator Vee Networks Ltd, now Zain
Nigeria. On 8, June 2011, Bharti said the Nigeria ownership dispute had been settled.
On 8, June 2011, Bharti Airtel, in the largest ever telecom takeover by an Indian firm,
completed a deal to buy Kuwait-based Zain Telecom's businesses in 15 African
countries for $10.7 billion. The transaction is the largest ever cross-border deal in an
emerging market and will result in combined revenues of about $13 billion."The
overall integration should be complete by the end of this financial year.
On September 1, 2011, Chairman and Managing Director Sunil Bharti Mittal said that
Bharti Airtel Ltd would change its Africa operations brand from Zain to Airtel by 15
October 2011.
Airtel Seychelles
On August 11, 2011, Bharti Airtel announced that it would acquire 100% stake in
Telecom Seychelles for US$62 million taking its global presence to 19 countries.
Telecom Seychelles began operations in 1998 and operates 3G, Fixed Line, ship to
shore services satellite telephony, among value added services like VSAT and
Gateways for International Traffic across the Seychelles under the Airtel brand. The
company has over 57 percent share of the mobile market of Seychelles.
Airtel announced plans to invest US$10 million in its fixed and mobile telecoms
network in the Seychelles over three years , whilst also participating in the Seychelles
East Africa submarine cable (SEAS) project. The US$34 million SEAS project is
aimed at improving the Seychelles’ global connectivity by building a 2,000 km
undersea high speed link to Dar es Salaam in Tanzania.
Telemedia
The Telemedia business provides services in 89 Indian cities and consists of two
brands.
Airtel Broadband provides broadband and IPTV services. Airtel provides both capped
as well as unlimited download plans. The maximum speed available for home users is
16Mbps.
Airtel Fixed Line which provides fixed line services.
Airtel has about 3.15 million wireline customers, of which 42.6% are
broadband/internet subscribers as of August 2011. Until September 18, 2004, Bharti
provided fixed-line telephony and broadband services under the Touchtel brand.
Bharti now provides all telecom services including fixed-line services under a
common brand "Airtel".
Digital Televison
Main article: Airtel Digital TV
The Digital TV business provides Direct-to-Home (DTH) TV services across India
under the brand name Airtel Digital TV. It started services on 9 October 2009 and has
about 32.44 million customers as of August 2011.
Enterprise
The Enterprise business provides end-to-end telecom solutions to corporate customers
and national and international long distance services to telcos through its nationwide
fiber optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs,
ISP and international bandwidth access through the gateways and landing stations.
Merger talks
In May 2009, it emerged that Bharti Airtel was exploring the possibility of buying the
MTN Group, a South Africa-based telecommunications company with coverage in 21
countries in Africa and the Middle East. The Financial Times reported that Bharti was
considering offering US$45 billion for a 100% stake in MTN, which would be the
largest overseas acquisition ever by an Indian firm. However, both sides emphasize
the tentative nature of the talks, while The Economist magazine noted, "If anything,
Bharti would be marrying up," as MTN has more subscribers, higher revenues and
broader geographic coverage. However, the talks fell apart as MTN group tried to
reverse the negotiations by making Bharti almost a subsidiary of the new company.
In May 2011, Bharti Airtel again confirmed that it is in Talks with MTN and
companies have now agreed discuss the potential transaction exclusively by July 31,
2011. Bharti Airtel said in a statement "Bharti Airtel Ltd is pleased to announce that it
has renewed its effort for a significant partnership with MTN Group".
Talks eventually ended without agreement, due to the South African government
opposition
Consecutively for four years 1997,1998,1999 and 2000, AirTel has been voted as the
Best Cellular Service in the country and won the coveted
Techies award.
AirTel has consistently strived hard to, not only deliver as per customer expectation,
but also go beyond that. According to its those at AirTel, their vision, mission and
values are as follows….
VISION
To make mobile communications a way of life and be the customers' first choice
MISSION
We will meet the mobile communication needs of our customers through :
◆ Error-free service delivery
◆ Innovative products and services
◆ Cost efficiency
VALUES
We will always put our customers first. We will always trust and respect each other.
We will respect our associates as we respect each other. We will work together
through a process of continuous improvement
Airtel (Bharti Airtel Ltd.)
Bharti Airtel Limited was incorporated on July 7, 1995 for promoting investments in
telecommunications services. Its subsidiaries operate telecom services across India.
Bharti Airtel is India's leading private sector provider of telecommunications services
based on a strong customer base consisting of 50 million total customers, which
constitute, 44.6 million mobile and 5.4 million fixed line customers, as of March 31,
2011.
Airtel comes to us from Bharti Airtel Limited - a part of the biggest private integrated
telecom conglomerate, Bharti Enterprises. Bharti provides a range of telecom
services, which include Cellular, Basic, Internet and recently introduced National
Long Distance. Bharti also manufactures and exports telephone terminals and cordless
phones. Apart from being the largest manufacturer of telephone instruments in India,
it is also the first company to export its products to the USA. Bharti has also put its
footsteps into Insurance and Retail segment in collaboration with Multi- National
giants. Bharti is the leading cellular service provider, with a footprint in 23 states
covering all four metros and more than 50 million satisfied customers.
SERVICES

 Airtel Prepaid
 Strong Network Coverage
  Other Services
 Voice Mail
 SMS (Short Messaging Service)
 Subscription Alerts
 Airtel Live!
 Airtel Live! WAP Services: Airtel Live! Voice Services:
 Airtel Live! SIM Services.
 Airtel Live! SMS Services
 Hello Tunes
 121@airtelindia.com.
Airtel Postpaid
 Easy Billing
 Easy Payment Options. Anytime Anywhere
 Long Distance Calling Facility
 Widest Roaming - National and International
 GPRS - Roaming
Say it. In more than just words, with Services from Airtel
 Conference call
 Missed call alert
 Subscription Alerts
 Airtel Live!
 GPRS (General Packet Radio Services)
 Get the EDGE
Business Divisions
Bharti Airtel offers GSM mobile services in all the 23-telecom circles of India and is
the largest mobile service provider in the country, based on the number of customers.
The group focuses on delivering telecommunications services as an integrated
offering including mobile, broadband & telephone, national and international long
distance and data connectivity services to corporate, small and medium scale
enterprises.
The group offers high speed broadband internet with a best in class network. With
Landline services in 94 cities we help you stay in touch with your friends & family
and the world.
The Company compliments its mobile and broadband & telephone services with
national and international long distance services. It has over 35,016 route kilometers
of optic fibre on its national long distance network. For international connectivity to
east, it has a submarine cable landing station at.
Bharti Airtel Limited
(A Bharti Enterprise)
Bharti Airtel is one of India's leading private sector providers of telecommunications
services based on an aggregate of 42,685,530 customers as on May 31, 2009,
consisting of 40,743,725 GSM mobile and 1,941,805 broadband & telephone
customers.
The businesses at Bharti Airtel have been structured into three individual strategic
business units (SBU’s) - mobile services, broadband & telephone services (B&T) &
enterprise services. The mobile services group provides GSM mobile services across
India in 23 telecom circles, while the B&T business group provides broadband &
telephone services in 94 cities. The enterprise services group has two sub-units -
carriers (long distance services) and services to corporates. All these services are
provided under the Airtel brand.
Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National
Stock Exchange of India Limited (NSE).
Partners
The company has a strategic alliance with SingTel. The investment made by SingTel
is one of the largest investments made in the world outside Singapore, in the
company.
The company’s mobile network equipment partners include Ericsson and Nokia. In
the case of the broadband and telephone services and enterprise services (carriers),
equipment suppliers include Siemens, Nortel, Corning, among others. The Company
also has an information technology alliance with IBM for its group-wide information
technology requirements and with Nortel for call center technology requirements. The
call center operations for the mobile services have been outsourced to IBM Daksh,
Hinduja TMT, Teletech & Mphasis.

Chapter – 3
LITERATURE REVIEW
CIRCULATION SYSTEM OF WORKING CAPITAL
In the beginning the funds are obtained from the issue of shares, often supplemented
by long term borrowings. Much of these collected funds are used in purchasing fixed
assets and remaining funds are used for day to day operation as pay for raw material,
wages overhead expenses. After this finished goods are ready for sale and by selling
the finished goods either account receivable are created and cash is received. In this
process profit is earned. This account of profit is used for paying taxes, dividend and
the balance is ploughed in the business.
Working capital is considered to efficiently circulate when it turns over quickly. As
circulation increases, the investment in current assets will decrease. Current assets
turnover ratio speaks about the efficiency of Airtel in the utilization of current assets.
Fast turnover current assets results in a better rate on investment.
Table showing Current assets turnover ratio

Year Ratio (in times)

2011-12 1.38
2012-13 0.74

Ratio (in times)

1.5
1.38

1
0.74
0.5 Ratio (in times)

0
2011‐12 2012‐13
BHARTI AIRTEL SERVICES LTD.

Ratios useful to analyze Working Capital Management

2011-12 2012-13
(A) Liquidity and Solvency Ratio
1. Long Term Debt Equity Ratio 0.18 0.17

2. Quick Ratio 0.75 1.37

3. Debt Equity Ratio 0.57 0.08

(B) Management Efficiency Ratios

Ratio/Year 2012-13 2011-12
Debtors Turnover Ratio 20.70 23.14

Fixed Assets Turnover Ratio 0.82 0.84

Total Assets Turnover Ratio 0.90 0.84
Asset Turnover Ratio 0.69 0.71
Number of Days In Working Capital -53.47 43.95

Interpretation (Ratio Analysis)

 As shown by current assets turnover ratio, the utilisation of current assets in
terms of sales has shown a decreasing trend which shows that current assets
has been effectively used to achieve sales.
 Again if we look at the efficiency with which individual elements of working
capital have been utilised, the picture of inventory turnover is not very bright
and moved on a same trend.
 Receivables turnover also shows a declining trend.
 As we look at the extent of liquidity of working capital, we notice that the
ration shows a increasing trend.
 If we analyse the structural health of working capital, the proportion of current
assets to total asests has been appropriate during this period.
Our analysis above indicates the areas of concern to management in making best
possible use of resources. Decreasing efficiency in the use of current assets hints of
the possibility of problems in working capital management.
On further analysis, inventory constitutes a major proportion of total current assets.

Cash Flow of Bharti Airtel

Sources March 2013 (in cr) March 2012 (in cr)

 Net Profit Before Tax 6454.80 6956.20
Net Cash From Operating Activities 13884.70 11437.80
Net Cash (used in)/from (10725.90) (12611.80)
Investing Activities
Net Cash (used in)/from Financing (3185.70) 1400.80
Activities
Net (decrease)/increase In Cash and (26.90) 226.80
Cash Equivalents
Opening Cash & Cash Equivalents 354.80 128.00
Closing Cash & Cash Equivalents 327.90 354.80

Interpretation (Cash Flow Statement)

 In the year 2012-13 cash from operation is more from previous years. The
company should take appropriate steps in order to continue the trend.
 In the 2012-13 company has major spending in terms of spending in form of
Acquisition/subscription/investment in subsidiaries.
 Out of total cash flow from operating activites there has been increase in trade and
other payables.

COMPARISON OF OPERATING CYCLE OF BHARTI AIRTEL SERVICES LTD WITH

VODAFONE ESSAR MOBILE SERVICES LTD.

Operating cycle

A direct result of our interest in both liquidity and activity ratios in the concept of a
firm’s operating cycle. A firm’s operating cycle is the length of time from the
commitment of cash for purchases until the collection of receivables resulting from
the sale of goods or services. It is as if we start a stop watch when the purchase raw
material and stop the watch only when we receive cash after the finished goods have
been sold. The time appearing on our watch (usually in days) is the firm’s operating
cycle.

Operating Cycle (Bharti Airtel Services Ltd.) 2012

Total 47 days

Operating Cycle (VODAFONE ESSAR MOBILE SERVICES LTD.) 2012

Total 45 days (Approx.)

Our Analysis clearly indicates that Bharti Airtel has improved its operating cycle from
the year 2011. It needs to improve its operating cycle in coming years to achieve
profitability.

CONCEPTS OF WORKING CAPITAL

There are two broad concepts of working capital:
a) Gross Concept
b) Net Concept
Gross working capital, simply called as working capital, refers to the firm’s
investment in current assets. Net working capital refers to the difference between
current assets and current liabilities.
The two concepts of working capital i.e., gross and net are not exclusive; rather they
have equal significance from the point of view of the management.
The gross working capital concept focuses attention on two aspects of current asset
management:
a) Optimum investment in current assets
b) Financing of current assets
Net working capital, being the difference between current assets and current
liabilities, is a qualitative concept. It focuses attention on: -
a) Indicates the position if the firm
b) Suggests the extent to which working capital needs may be financed by
permanent sources of funds.
“An expert is someone who knows all the answers if you ask the right questions.”
DETERMINANTS OF WORKING CAPITITAL
A firm should plan its operations in such a way that it should neither have too much
nor too little working capital. The total working capital requirement is determined by
a wide variety of factors. It should be however noted that these factors affect different
enterprises differently. They also vary from time to time. In general, these are some of
the factors, which are involved, in the proper assessment of the quantum of working
capital required.
1) GENERAL NATURE OF BUSINESS
The working capital requirements of an enterprise are basically related to the conduct
of the business. Enterprises fall into some broad categories depending on the nature of
their business. For instance, public utilities have certain features, which have a
bearing on their working capital needs. The two relevant features are:
a) Cash nature of business, i.e., cash sale
b) Sale of services rather than commodities.
In view of these features they do not maintain big inventories and have, therefore,
probably the latest requirement of working capital. At the other extreme are the
trading and financial enterprises. The nature of their business is such that they have to
maintain a sufficient amount of cash, inventories and book debts. They have
necessarily to invest proportionately large amounts in working capital.
2) PRODUCTION CYCLE
Another factor, which has a bearing on the quantum of working capital, is the
production cycle. The term ‘production’ or ‘manufacturing cycle’ refers to the time
involved in the manufacturing of goods. It covers the time span between the
procurement of the raw materials and the completion of the manufacturing process
leading to the production of finished goods. Funds will have to be necessarily tied-up
during the process of manufacture, necessitating enhanced working capital. In other
words, there is some gap before raw materials become finished goods. To sustain such
activities the need for working capital is obvious. The longer the time span (i.e., the
production cycle), the larger will be the funds tied-up and, therefore, the larger the
working capital needed and vice-versa. There are enterprises, which due to the nature
of business will have a shorter operating cycle. A distillery, which has an aging
process, has relatively to make a heavy investment in inventory. The bakery provides
the other extremes. The bakeries sell their products at short intervals and have a very
high inventory turnover. The investment in inventory and, consequently, working
capital is not large.
3) BUSINESS CYCLE
The working capital requirements are also determined by the nature of the business
cycle. Business fluctuations lead to cyclical and seasonal changes, which, in turn,
cause a shift in the working capital position, particularly for temporary working
capital requirements. The variations in business conditions may be in two directions:
1) Upward phase when boom conditions prevail
2) Downswing phase when economic activities are marked by a decline.
During the upswing of business activity the need for working capital is likely to grow
to cover the lag between increased sales and receipt of cash as well as to finance
purchase of additional material to cater to the expansion of the level of the activity.
Additional funds may be required to invest in the plant and machinery to meet the
increased demand. The downswing phase of the business cycle will have exactly and
opposite effect on the level of working capital requirement. The decline in the
economy is associated with a fall in the volume of sales which, in turn, will lead to
fall in the level of inventories and book debts. The need for working capital in the
recessionary conditions is bound to decline. In brief, business fluctuations influence
the size of working capital mainly through the effect on inventories. The response of
inventory to business cycles is mild or violent according to the mild or violent nature
of the business cycle.
4) CREDIT POLICY
The level of working capital is also determined by credit policy, which relates to sales
and purchases. The credit policy influences the requirement of the working capital in
two ways:
a) Through credit terms granted by the firm to its customers/buyers of goods.
b) Credit terms available to the firm from its creditors.
The credit terms granted to the customers have a bearing on the magnitude of the
working capital by determining the level of book debts. The credit sales will result in
higher book debts (receivables). Higher book debts will mean more working capital.
On the other hand, if liberal credit terms are available from the suppliers of the goods
(trade creditors), the need for working capital will be less. The working capital
requirements of a business are, thus, affected by the terms of purchase and sale and
the role given to credit by a company in its dealings with the creditors and the debtors.
3) PROFIT LEVEL
The level of profits earned differs from to enterprise to enterprise. In general, the
nature of the products, hold on the market, quality of management and monopoly
power would by and large determine the profit earned by the firm. A priori, it can be
generalised that a firm dealing in a high quality product, having a good marketing
arrangement and enjoying monopoly power in the market is likely to earn high profits
and vice-versa. Higher profit margin would improve the prospects of generating more
internal funds thereby contributing to the working capital pool. The net profit is a
source of working capital to the extent that it has been earned in cash. The cash profit
can be found by adjusting non-cash items such as depreciation, outstanding expenses
and losses written off, in the net profit. But, in practice, the net cash inflows from
operations cannot be considered as cash available for use at the end of the cash cycle.
Even as company’s operations are in progress, cash is used for augmenting stock,
book debts and fixed assets. It must, therefore, be seen that cash generation has been
used for furthering the use of enterprise. It is in this context that elaborate planning
and projections of expected activities and the resulting cash inflows on a day to day,
week to week and month to month basis assume importance because steps can then be
taken to deal with surplus and deficit cash.
The availability of internal funds for working capital requirements is determined not
merely by the profit margin but also on the manner of appropriating profits. The
availability of such funds would depend upon the profit appropriations for taxation,
dividend, reserves and depreciation.
No person was ever honoured for what he received. Honour has been the reward for
what he gave.”
NEED FOR WORKING CAPITAL

The need for working capital (gross) or current assets can not be over emphasized. As
the objective of financial decision making is to maximize the shareholder’s wealth, it
is necessary to generate sufficient profits. The extent to which profits can be earned
will naturally depend upon the magnitude of the sales, among other things. A
successful sales program is, in other words, necessary for earning profits by any
business enterprise. However, sales do not convert into cash instantly; there is
invariably a time lag between the sale of goods and the receipt of cash. There is,
therefore, a need for working capital in the form of current assets to deal with the
problem arising out of the lack of immediate realisation of cash against goods sold.
Therefore, sufficient working capital is necessary to sustain sales activity.
Technically, this is referred to as the operating or cash-cycle. The operating cycle can
be said to be at the heart of the need for working capital. The continuing flow from
cash to suppliers, to inventory, to accounts receivable and back into cash. The cycle
refers to the length of time necessary to complete the following cycle of events:
1) Conversion of cash into inventory.
2) Conversion of raw materials into work in progress
3) Conversion of work in progress into finished goods
4) Conversion of finished goods into account receivable
5) Conversion of account receivable into cash

“Make no little plans, they have no magic t stir man’s blood.. Make big plans,
aim high in hope and work”

If it were possible to complete the sequences instantaneously, there would be no need

for current assets (working capital). But since it is not possible, the firm is forced to
have current assets. Since cash inflows and cash inflows do not match, firms have to
necessarily keep cash or invest in short-term liquid securities so that they will be in
position to meet obligations when they become due. Similarly, firm must have
adequate inventory to guard against the possibility of not being able to meet a demand
for their products. Adequate inventory, therefore, provides a cushion against being out
of stock. If firms have to be competitive, they must sell goods to their customers on
credit, which necessitates the holding of accounts receivable. It is in these ways that
an adequate level of working capital is absolutely necessary for smooth sales activity
which, in turn, enhances the owner’s wealth.
“Being ignorant is not so much a shame as being unwilling to learn to do the
things the right way.”

PERMANENT AND TEMPORARY WORKING CAPITAL:

The operating cycle thus, creates the need for current assets (working capital). To
explain this continuing need of current assets, a distinction should be drawn between
permanent and temporary working capital.
The need for current assets arises, as already observed, because of the cash cycle.
Business activity does not come to an end after the realization of cash from the
 customer. For a company, the process is continuous and, hence, the need for the
regular supply of working capital. However, the magnitude of working capital
required will not be constant, but will fluctuate. To carry on business a certain
minimum level of working capital is necessary on a continuous and uninterrupted
basis. For all practical purposes, this requirement will have to be met permanently as
with other fixed assets. This requirement is referred to as permanent or fixed working
capital.
Any amount over and above the permanent level of working capital is temporary,
fluctuating or variable working capital. This portion of the required working capital is
needed to meet fluctuations in demand consequent upon changes in production
and sales as a result of seasonal changes. ‘Obstacles are those frightful things you
see when you take your eyes off the goal.”

Both kinds of working capital are necessary to facilitate the sales process through the
operating cycle. Temporary working capital is created to meet liquidity requirements
that are of a purely transient nature.

“The quality of a persons life is in direct proportion to their commitment to

excellence, regardless of their chosen field of endeavor.”

SOURCES OF FINANCE FOR WORKING CAPITAL

The sources of finance for working capital may fall into four categories, namely:
1) BANK FINANCE
2) COMMERCIAL PAPER
3) FIXED DEPOSITS
4) INTER CORPORATE DEPOSITS.
The relative importance of these sources from country and from time to time depending on the
environment. In India, the primary sources for financing working capital are trade credit and short
term bank credit. According to an estimate, both these sources together finance about three fourth
of the working capital requirements of the industry:

Chapter-4
 OBJECTIVES
 The main objective of the study is to have an insight into the current practices
of the company with regards to management of various elements of working
capital.
 Apart from the above more specifically the present study is conducted to find
out the following.
 To what extent the management of working capital in Airtel, which is one of
the leading concern in the fastener industry contribute to the overall objective
of the firm i.e. Wealth examination.
 To study management policies regarding inventory management, whether the
management have applied various inventory control techniques for proper
utilization of resources.
 To analysis the nature, effectiveness and style of functioning of various
process of payments.
 To make aware the different methods of payments that are available for the
foreign transaction, and
 To suggest the best and appropriate method of payment of foreign transaction,
and
 Also to keep in mind the other aspects of the methods this can effect the
organization.
Scope of the Study
As we were seen as a liability towards the organization since there was no
contribution from our side towards, nobody actually paid any attention towards
Working Capital.
It was very difficult to actually take out relevant information from the Comparative Study with
Vodafone were very hesitant to let us meet the company.

Chapter-5

METHODOLOGY
MANAGERIAL USEFULNESS OF THE STUDY
This type of analysis helps the management of the company to plan its future polices
according to the external environment. Any sound research must have an proper
design to achieve the required result, this study id constructed on the basis of
descriptive design.
The methodology, I have adopted for my study is the various tools, which basically
analyze critically financial position of to the organization:
I. COMMON-SIZE P/L A/C
II. COMMON-SIZE BALANCE SHEET
III. COMPARTIVE P/L A/C
IV. COMPARTIVE BALANCE SHEET
V. TREND ANALYSIS
VI. RATIO ANALYSIS
The above parameters are used for critical analysis of financial position. With the
evaluation of each component, the financial position from different angles is tried to
be presented in well and systematic manner. By critical analysis with the help of
different tools, it becomes clear how the financial manager handles the finance
matters in profitable manner in the critical challenging atmosphere, the
recommendation are made which would suggest the organization in formulation of a
healthy and strong position financially with proper management system.
I sincerely hope, through the evaluation of various percentage, ratios and
comparative analysis, the organization would be able to conquer its in
efficiencies and makes the desired changes.

ANALYSIS OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS:

Financial statement is a collection of data organized according to logical and

consistent accounting procedure to convey an under-standing of some financial
aspects of a business firm. It may show position at a moment in time, as in the case of
balance sheet or may reveal a series of activities over a given period of time, as in the
case of an income statement. Thus, the term ‘financial statements’ generally refers to
the two statements
(1) The position statement or Balance sheet.
(2) The income statement or the profit and loss Account.
OBJECTIVES OF FINANCIAL STATEMENTS:
According to accounting Principal Board of America (APB) states
The following objectives of financial statements: -
1. To provide reliable financial information about economic resources and obligation
of a business firm.
2. To provide other needed information about charges in such economic resources and
obligation.
3. To provide reliable information about change in net resources (recourses less
obligations) missing out of business activities.
4. To provide financial information that assets in estimating the learning potential of
the business.
LIMITATIONS OF FINANCIAL STATEMENTS:
Though financial statements are relevant and useful for a concern, still they do not
present a final picture a final picture of a concern. The utility of these statements is
dependent upon a number of factors. The analysis and interpretation of these
statements must be done carefully otherwise misleading conclusion may be drawn.
Financial statements suffer from the following limitations: -
1. Financial statements do not given a final picture of the concern. The data given in
these statements is only approximate. The actual value can only be determined when
the business is sold or liquidated.
2. Financial statements have been prepared for different accounting periods, generally
one year, during the life of a concern. The costs and incomes are apportioned to
different periods with a view to determine profits etc. The allocation of expenses and
income depends upon the personal judgment of the accountant. The existence of
contingent assets and liabilities also make the statements imprecise. So financial statement
are at the most interim reports rather than the final picture of the firm.
3. The financial statements are expressed in monetary value, so they appear to give
final and accurate position. The value of fixed assets in the balance sheet neither
represent the value for which fixed assets can be sold nor the amount which will be
required to replace these assets. The balance sheet is prepared on the presumption of a
going concern. The concern is expected to continue in future. So fixed assets are
shown at cost less accumulated deprecation. Moreover, there are certain assets in the
balance sheet which will realize nothing at the time of liquidation but they are shown
in the balance sheets.
4. The financial statements are prepared on the basis of historical costs Or original
costs. The value of assets decreases with the passage of time current price changes are
not taken into account. The statement are not prepared with the keeping in view the
economic conditions. the balance sheet loses the significance of being an index of
current economics realities. Similarly, the profitability shown by the income
statements may be represent the earning capacity of the concern.
5. There are certain factors which have a bearing on the financial position and
operating result of the business but they do not become a part of these statements
because they cannot be measured in monetary terms. The basic limitation of the
traditional financial statements comprising the balance sheet, profit & loss A/c is that
they do not give all the information regarding the financial operation of the firm.
Nevertheless, they provide some extremely useful information to the extent the
balance sheet mirrors the financial position on a particular data in lines of the
structure of assets, liabilities etc. and the profit & loss A/c shows the result of
operation during a certain period in terms revenue obtained and cost incurred during
the year. Thus, the financial position and operation of the firm.
FINANCIAL STATEMENT ANALYSIS
It is the process of identifying the financial strength and weakness of a firm from the
available accounting data and financial statements. The analysis is done
CALCULATIONS OF RATIOS
Ratios are relationship expressed in mathematical terms between figures, which are
connected with each other in some manner.
CLASSIFICATION OF RATIOS
 Ratios can be classified in to different categories depending upon the basis of
classification

The traditional classification has been on the basis of the financial statement to which
the determination of ratios belongs.
These are:-
Profit & Loss account ratios
Balance Sheet ratios
Composite ratios

RESEARCH DESIGN

For the proper analysis of data simple statistical techniques such as percentage were
use. It helped in making more accurate generalization from the data available.
TOOLS OF ANALYSIS
It is essential to use a systematic research methodology for the assessment of a project
because without the use of a research methodology analysis of any company or
organization will not be possible.
In the present analysis mostly secondary data have been used. Its is worth a white to
mention that I have used the following types of published data:
 Balance sheet
 Profit & Loss A/c
 Schedules

LIMITATIONS OF THE STUDY

Non monetary aspects are not considered making the results unreliable.
Different accounting procedures may make results misleading.
In spite of precautions taken there are certain procedural and technical limitations.
Accounting concepts and conventions cause serious limitation to financial analysis.
Lack of sufficient time to exhaust the detail study of the above topic became a
hindering factor in my research.
Chapter-6

RESULTS – REPORT OF DATA COLLECTION

1. CURRENT RATIO
 CURRENT RATIO= Current Assets/ Current Liabilities

31.03.12 31.03.13
0.38 0.44

0.5
0.44 0.38

0.3
0.4

0.2

31.03.12 31.03.13
0.1

0
Interpretation:-

As we know that ideal current ratio for any firm is 2:1. If we see the current ratio of the company for
last three years it has increased from last year. The current ratio of company is more than the ideal
ratio. This depicts that company’s liquidity position is sound. Its current assets are more than its
current liabilities.

2. QUICK RATIO
QUICK RATIO = Liquid Assets/ Current liabilities

31.03.12 31.03.13
0.47 0.44
 0.5

0.4 0.47
0.44

0.3

0.2

0.1
31.03.12 31.03.13
0

Interpretation :

A quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in

time. The ideal quick ratio is 1:1. Company’s quick ratio is more than ideal ratio. This shows

company has no liquidity problem.

3. INVENTORY TURNOVER OR STOCK TURNOVER RATIO:

Inventory Turnover Ratio is calculated by dividing sold by average inventory.

Average inventory =Average of opening and Closing balance of the inventory.
Inventory Turnover Ratio = Cost of Goods Sold/ Average inventory

31.03.12 31.03.13
5 724.61
46.68

800

700
724.61
600
546.78
500

400

300

200 31.03.12 31.03.13

100

0
Interpretation: This ratio shows how rapidly the inventory is turning into receivable through sales,
shows that the company’s inventory management technique is more efficient as compare to last year.

4. Debtors Turnover Ratio

Debtors Turnover Ratio is calculated by dividing credit sales by average debtor

(including bills receivables)

Total Credit Sales

Debtors Tunover Ratio 
Average Debtor

31.03.12 31.03.13
12.05 12.35

Interpretation :

This ratio indicates the speed with which debtors are being converted or turnover into sales. The higher the values
or turnover into sales. The higher the values of debtors turnover, the more efficient is the management of credit.
But in the company the debtor turnover ratio is decreasing year to year. This shows that company is not utilizing
its debtors efficiency. Now their credit policy become liberal as compare to previous year.

15

12.05 12.35
10
5

0 31.03.12 31.03.13

5. Average Collection Period

Average Collection Period is calculated by dividing the number of days in a year (generally taken
as 360) by the Debtors Turnover Ratio.

Average Collection Period= 360/Debtors Turnover Ratio

31.03.12 31.03.13
 360/12.05 360/12.35

30 days 29 days

30
30 29

25
20
Days

15
10

5
2012 20 3
1
0

Interpretation:

The average collection period measures the quality of debtors and it helps inanalyzing the
efficiency of collection efforts. It also helps to analysis the credit policy adopted by company. In
the firm average collection period increasing year to year. It shows that the firm has Liberal Credit
policy. These changes in policy are due to competitor’s credit policy.

FINANCIAL RESULTS AND RESULTS OF OPERATIONS

In line with the amended statutory guidelines, the Company has adopted IFRS(International Financial
Reporting Standards) for consolidation of accounts from the financial year 2010-11 onwards. Consolidated
and Standalone financial highlights of the operations of the Company are as follows:
Consolidated Financial Highlights
LIQUIDITY

The Company generates healthy operational cash flows and maintains sufficient cash
and financing arrangements to meet its strategic objectives. It deploys a robust cash
management system to ensure timely servicing of its liquidity obligations. The
Company has also been able to arrange for adequate liquidity at an optimized cost to
meet its business requirements and has minimized the amount of funds tied-up in
the current assets.

As of March 31, 2012, the Company has cash and cash equivalents of Rs.
20,300 Mn and short term investments of Rs. 18,132 Mn. During the year
ended March 31, 2012, the Company generated operating free cash flow of
Rs. 101,319 Mn. The net debt - EBITDA ratio as on March 31, 2012 was at
2.56 and the net debt - equity ratio was at 1.29. The net debt in USD
terms decreased from USD 13,427 Mn as on March 31, 2011 to USD 12,714
Mn as on March 31, 2012.

The Company manages the short-term liquidity to generate optimum

returns by deploying surpluses albeit only in the debt and money market
instruments including in high rated liquid and income debt fundschemes, fixed
maturity plans, bank fixed deposits and other similar instruments.

The Company is comfortable with its present liquidity position and foreseeable
liquidity needs. It has adequate facilities in place and robust cash flows to meet
liquidity requirements for executing its business plans and meeting with any evolving
requirements. The Company also enjoys strong access to capital markets across debt,
equity and hybrids.
Chapter -7
RECOMMENDATIONS
The study conducted on working capital management of Bharti Airtel shows the
evaluation of management performance in this regard. Major findings and suggestions
thereon are narrated as under:
 Current assets comprise/a significant portion of total investment in assets of
the company. There is fluctuating and rather increasing trend of this ratio
during the period which shows management in-efficiency in managing
working capital in relation to total investment. Further current assets to fixed
assets ratio also shows on fluctuating trend during the study period which
substantiate above mentioned criterion of in-effectiveness in management of
working capital by the company.
 Assets turnover ratio for the given years of study shows stagnant trend which
is due to significant increase in sales.
 The ratio used for analysis of liquidity position is current ratio and quick ratio.
This ratio reveals that company has sound liquidity position throughout the
period of study. Company should maintain significant balance in terms of
resources to improve these ratios.

 Inventory turnover ratio depict the fluctuating trend which indicates the accumulation
of inventory in turn which cause loss to the company by way of deterioration of stock,
interest loss on blockage of stock etc. Further composition of inventory reveals that
portion of individual element of inventory has fluctuating trend which indicates that
management has no policy in respect of inventory management
 Debtors Turnover ratio reveals a decreasing trend during the period of study and
average collection period ranges have not improved. It reveals that management has no
specific policy in respect of debtor’s management

Keeping in view of detailed analysis of study and our findings mentioned in above paragraphs,
the following suggestions shall be helpful in increasing the efficiency in working capital
management.
 Company should make a policy in respect of investment of excess cash, if any; in
marketable securities and overall cash policy should be introduced
 In case of inventory management ABC analysis, FSN technique, VED
technique should be adopted to increase the efficiency of inventory
management. Further a inventory monitoring system should be introduced to
avoid holding of excess inventory.
 Management should develop a credit policy and proper self realisation system
from customers so that efficient and effective management of accounts
 receivable can be ensured. This will significantly improve the profitability and
liquidity of the company.

 Purchase policy regarding raw material, consumables, tools and packing materials etc.
should be introduced which ultimately helps in planning of inventory, availment of
maximum trade! cash discount and availment of maximum credit period from
suppliers.
Chapter-8

CONCLUSIONS & IMPLICATIONS

Bifurcation of credit limits
Bifurcation of cash credit limits into a demand loan portion and a fluctuating
cash credit component has not found acceptance either on the part of the banks
or the borrowers. Such bifurcation may not serve the purpose of better credit
planning by narrowing gap between sanctioned limits and the extent of
utilization thereof.
2. Reduction in over dependence on bank finances
The need for reducing the over dependence of the medium and large
borrowers both in private and public sectors on bank finance for their
production / trading purposes is recognized. The net surplus cash generation
on established industrial unit should be utilized partly at least for reducing
borrowing for working capital purposes.
3. Increase in owner’s contribution
In order to ensure that the borrowers do enhance their contributions working
capital and to improve their current ratio, it is necessary to place them under
the second method of sending recommended by hand on committee which
would give a minimum current ration of 1.33:1. As many of the borrowers
may not be immediately in a position to work under the second method of
lending the excess borrowings should be segregated and treated as working
capital term loan which should be made repayable loan, it should be charged at
higher rate of interest.
4. AD-HOC or temporary Limits
Borrowers should be discouraged from approaching banks frequently for ad-
hoc or temporary limits in excess of sanctions and limit to meet unforeseen
contingencies.
Banks should charge additional interest of 1% pa over normal rate on these 1
limits.

5. Separation of Normal Non-Peak Level & Peak Level Requirements

While assessing the credit requirement, the bank should appraise and the
separate limits or the normal non-peak level as also or the ‘peak level’ or
requirement indicating also the periods during which the separate limits would
 be extended to all borrowers having working capital of Rs. 10 lacs and above.
One of the imp. Criteria for deciding such limit should be the borrowers’
utilization of cr. Limits in the past.
7. Temporary Accommodation through loan
If any ad-hoc or temporary accommodation is req. in excess of the sanctioned
limit to meet unproven contingencies the additional finance should be given,
where necessary, through a separate demand loan A/C
Or a separate non-operable cash Cr. A/C. There should be a stiff penalty for
such demand loan or non-operable cash cr. Portion, ablest 2% above the
normal rate unless the RBI exempts such penalty. The discipline may be made
applicable in cases involving working capital limits of Rs. 10 lacs and above.
7. Penal Information
The borrower should be asked to give his quarterly requirements of funds
before the commencement of the quarter on the basis of his budget, the actual
requirements being within the sanctioned limit for the particular peak
level/non-peak level periods. Drawings of less than or in excess of the
operative limit so fined (with a tolerance o 10% either way) but not exceeding
the sanctioned limit would be subject to a penalty to be fined by the RBI from
time to time. For the time being, the penalty may be fixed at 2% p.a. The
borrower would be required to submit his budgeted requirements in triplicate
& a copy of each would be sent immediately by the branch to the controlling
office and head office for record. The penalty would be applicable only in
respect of parties enjoying cr. Limits of Rs. 10 lacs and above subject to
certain exemptions.
8. Info. Systems
The non-submission of the returns in time is partly due to certain features in
the forms themselves. To get over this difficulty, simplified forms have been
proposed. As the quarterly info. System is part and parcel of the revised style
of lending under the cash cr. System, I the borrower does not submit the return
within the prescribed time, he should be penalized by charging the whole
 outstanding in the A/C at a penal rate of mt., 1% p.a. more than the
contracted date for the advance from the due date of the return till the date
of its actual submission.
After completing this project it can now be concluded that an after great
effect on Airtel. Working Capital (Airtel) to very important in which have
higher unit value.
After doing my survey I have concluded that most of the consumer prefers to buy because Airtel
give the excellent after sale service than any other brand. and their after sale service is also very
good. But beside these points I have concluded on my survey that sharp give the better after sale
service than any brand. Airtel give the prompted after sale service than any other company most of
the customer are satisfied with the after sale service of Airtel and attitude of compliant handler is
very sensitive.

Prime lending rate:

The RBI had given the total freedom of changing the rate of interest on the amount
of credit facilities, which are extended by it. The banks has now been advised to
stick to concept of PLR, which is the minimum rate of interest, which every bank
can charge from its clients and constituents. It keeps on a changing as per the
direction of RBI. Factors taken into consideration which fixing actual ROI:
1. The project / product
2. The promoter
3. The prospects
4. The performance of the group co.
5. Promoters contribution in the project.
6. The structural ratios like the debt equity ratio.
7. The earlier operation of the a/c.
8. The submission of QIS
9. The timely submission of the production/sales figure etc.
10. The difference between actuals and projections
 BIBLIOGRAPHY

Books
 Khan M.Y. and Jain P.K., Financial Management
 Dalal Street Journal
 Annual Report – Bharti Airtel
 Financial Express
 Seth, A.K., (2003); International Financial Management
 Vij, Madhu, (2002); Multinational Financial Management
 Apte, P.G., (2003); International Financial Management
 Rajwade, A.V., (2003); Foreign Exchange International Finance and Risk
Management
 Avadhani, V.E., (2003); Global Business Finance
 Majumdar, Bhaskar, (2002); Concept and Practice of Global Finance
 Global Trade And Investment Finance – Lawrence Tuller
 Corporate Finance IMT Gaziabad

WEBSITE:
 www.airtelindia.com
 http://www.hinduonnet.com/2004/12/22/stories/2004122202441700.htm
 http://bhartiairtel.in/index.php?id=14
 http://bhartiairtel.in/index.php?id=264
 http://bhartiairtel.in/index.php?id=265
 http://bhartiairtel.in/index.php?id=company_profile
 http://economictimes.indiatimes.com/bharti-
airtel- ltd/balancesheet/companyid-2718.cms
 http://www.moneycontrol.com/annual-report/bhartiairtel/directors-
report/BA08#BA08
 http://www.moneycontrol.com/financials/bhartiairtel/financial-
graphs/operating-profit-ebitda-percentage/BA08
 http://www.indianotes.com/research-analysis/company/company-
financial.php?cc=MTUyMDAwMjIuM