Comparative Statement Analysis of BSNL

A Summer Training Project Report On

“Comparative Comparative Statement Analysis” Analysis Of

Bharat Sanchar Nigam Limited GMTD Gwalior (M. P.) IN THE PARTIAL FULFILLMENT OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION 2009-2010

Affiliated to jiwaji University, Gwalior

Submitted to : Mrs. Ritu Singh (HOD) MBA

Submitted by Reena Gupta MBA (Finance) III sem

Acknowledgement Executive Summary

Chapter-1 Introduction 1.1. 1.2. 1.3.

1.4. 1.5.

Overview of the BSNL Objectives of the study Profile of the Organisation o Overview of BSNL Gwalior Circle o Vision, Mission & objectives o Products o Management Profile o Fact Sheet o Revenues Strategies o Policy of Accounting and finance Comparative Study SWOT Analysis

Chapter-2 Research Methodology 2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 2.8.

Statement of the Problem Research Design Methodology Sampling Techniques used Selection of Sample Size Data Collection Statistical Tools Used Limitations of the Study

Chapter-3 Data Analysis and Findings 3.1. 3.2. 3.3. 3.4. 3.5. 3.6. 3.7.

Introduction Comparative Balance Sheet of BSNL 2008 & 2007 Comparative Balance Sheet of BSNL 2007 & 2006 Comparative Balance Sheet of BSNL 2006 & 2005 Comparative Balance Sheet of BSNL 2005 & 2004 Comparative Balance Sheet of BSNL 2004 & 2003 Common Sheet of BSNL

Chapter-4 Conclusion and Suggestions 4.1. 4.2. 4.3. 4.4.

Finding Analysis Conclusion Suggestions

Appendix Bibliography

ACKNOWLEDGEMENT I

had

sincerely

expressed

my

ineptness

&

gratitude

towards

Mr. Ram Sadal (AO-SBP) of B.S.N.L. GWALIOR, for giving me an opportunity to join this esteem organization for 45 days of summer training. My summer training in B.S.N.L. GWALIOR, of duration 45 days has been quite successful. During my stay for 45 days, I had received full co-operation from employees and officers of the Bharat Sanchar Nigam Limited Gwalior. The practical visualization of the summer training has helped me to understand a lot of practical things. In order to acquire myself to the task of the organization and to analyze them, I met staff who helped by their kind co-operation and guidance. During the training they have been giving the practical knowledge. I would be pleased to thank Mr. Chandrshekhar This Acknowledgement would be incomplete if I fail to express my deep gratitude towards all the staff of BSNL who gave me a lot of support. I would be special thank to our college faculty Mrs. Ritu Singh (HOD), Mr. Rakesh Rajput, Mr. Sudeep Shrivastava and Ms. Jyoti Jain

under

supervision this topic. This Acknowledgement would be incomplete if I fail to express my deep gratitude towards all the facility of NRI College of Management who gave me a lot of support and guidance. Last but not least I would be special gratitude to our all friends who heartening me to complete this project.

EXECUTIVE SUMMARY This project is based on Balance sheet and profit and loss accounts of the Bharat Sanchar Nigam Limited. It is done to find out whether the BSNL are improving our capital structure or not.

Further, in this Project

Chapter 1 includes the introduction of the company wherein I told about the Objectives of the study and profile of the Bharat Sanchar Nigam Limited.

Chapter 2 includes the Research Methodology wherein I have discussed the Research Design and Various sources of the Data Collection.

Chapter 3 includes the Data analysis and Findings wherein I have analyze the data collected from the departmental records, annual reports and web site records.

Chapter 4 represents the conclusion and the suggestions based on the departmental records and annual report.

Chapter 1 Chapter 1

Introduction of BSNL

Type

Communication Service Provider

Availability

Countrywide except Delhi & Mumbai

Owner

The Government of India

Key people

S.D. Saxena (CFO); A.K. Sinha (CEO)

Founded

19th century, incorporated 2000

Website

www.bsnl.in

1.1 Overview of the BSNL: BSNL is India's oldest and largest Communication Service Provider (CSP). Currently BSNL has a customer base of 64.8 million (Basic & Mobile telephony). It has footprints throughout India except for the metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As on March 31, 2007 BSNL commanded a customer base of 33.7 million Wireline, 3.6 million CDMA-WLL and 27.5 million GSM Mobile subscribers. BSNL's earnings for the Financial Year ending March 31, 2006 stood at INR 401.8b (US$ 9.09 b) with net profit of INR 89.4b (US$ 2.02 billion). Today, BSNL is India's largest Telco and one of the largest Public Sector Undertaking of the country with authorized share capital of US$ 3.95 billion (INR 17,500 Crores) and networth of US$ 14.32 billion.

1.2 Objective of Study: The main objective of this study is to carry on brief study on “Analysis of five year balance sheet of BSNL through comparative balance sheet in Comparative Statement” through this I am able to get the difference of various assets and liabilities of the BSNL.

Other objectives of this project are as follows: •

To identify the various assets amount of the BSNL with respect to Annual Repots of the BSNL.

•

Comparative study of five year Annual reports.

•

To study the various departments for come to know all condition of BSNL Gwalior city center.

1.3 Profile of Organisation: Over Views of Organisation History The foundation of Telecom Network in India was laid by the British sometime in 19th century. The history of BSNL is linked with the beginning of Telecom in India. In 19th century and for almost entire 20th century, the Telecom in India was operated as a Government of India wing. Earlier it was part of erstwhile Post & Telegraph Department (P&T). In 1975 the Department of Telecom (DoT) was separated from P&T. DoT was responsible for running of Telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. It is a well known fact that BSNL was carved out of Department of Telecom to provide level playing field to private telecoms.Subsequently in 1990s the telecom sector was opened up by the Government for Private investment, therefore it became necessary to separate the Government's policy wing from Operations wing. The Government of India corporatised the operations wing of DoT on October 01, 2000 and named it as Bharat Sanchar Nigam Limited (BSNL).BSNL operates as a public sector.

Main Services being provided by BSNL BSNL provides almost every telecom service, however following are the main Telecom Services being provided by BSNL in India:1. Universal Telecom Sevices : Fixed wireline services & Wireless in Local loop (WLL) using CDMA Technology called bfone and Tarang respectively. BSNL is dominant operator in fixed line. As on March 31, 2007 (end of financial year) BSNL had 76% share of fixed and WLL phones.

BSNL Mobile

Pre-paid Mobile

2. Cellular Mobile Telephone Services: BSNL is major provider of Cellular Mobile Telephone services using GSM platform under brandname Cellone. Pre-paid Cellular services of BSNL are know as Excel. As on March 31, 2007 BSNL had 17% share of mobile telephony in the country.

BSNL Broadband 3. Internet: BSNL is providing internet as dial-up connection (Sancharnet) and ADSL-Broadband Dataone. BSNL has around 50% marketshare in broadband in India. BSNL has planned aggressive rollout in broadband for current financial year. 4. Intelligent Network (IN): BSNL is providing IN services like televoting, toll free calling, premium calling etc.

BSNL Present & Future Since its corporatisation in October 2000, BSNL has been actively providing connections in both Urban and Rural areas and the efficiency of the company has drastically improved from the days when one had to wait for years to get a phone connection to now when one can get a connection in even hours. Pre-activated Mobile connections are available at many places across India. BSNL has also unveiled very cost-effective Broadband internet access plans (DataOne) targeted at homes and small businesses. At present BSNL enjoy's 47% of market share of ISP services.

Year of Broadband 2007

Former Indian Communications Minister Thiru Dayanidhi Maran had declared year 2007 as "Year of Broadband" in India and BSNL is gearing up to provide 5 million Broadband connectivity by the end of 2007. BSNL has upgraded existing

Dataone (Broadband) connections for a speed of up to 2 Mbit/s without any extra cost. This 2 Mbit/s broadband service is being provided by BSNL at a cost of just US$ 5.5 per month. Further, BSNL is planning to upgrade its broadband services to Triple play (telecommunications) in 2007. BSNL has been asked to add 108 million customers by 2010 by Former Indian Communications Minister Thiru Dayanidhi Maran. With the frantic activity in the communication sector in India, the target appears achievable, however due to intense competition in Indian Telecom sector in recent past BSNL's growth has slowed down. BSNL is pioneer of Rural Telephony in India. BSNL has recently bagged 80% of US$ 580 m (INR 2,500 crores) Rural Telephony project of Government of India.

Challenges During Financial Year 2007-2008 (From April 01, 2006 to March 31, 2007) BSNL has added 9.6 million new customers in various telephone services taking its customer base to 64.8 million. BSNL's nearest competitor Bharti Airtel is standing at a customer base of 39 million. However, despite impressive growth shown by BSNL in recent times, the Fixed line customer base of BSNL is declining. In order to woo back its fixed-line customers BSNL has brought down long distance calling rate under OneIndia plan, however, the success of the scheme is not known. However, BSNL faces bleak fiscal 2006-2007 as users flee, which has been accepted by the CMD BSNL. Presently there is an intense competition in Indian Telecom sector and various Telcos are rolling out attractive schemes and are providing good customer services. However, BSNL being legacy operator and its conversion from a Government Department, earns lot of criticism for its poor customer service. Although in recent past there have been tremendous improvement in working of BSNL but still it is much below the Industry's Expectations. A large aging (average age 49 years(appx)) workforce (300,000 strong), which is mostly semiilletrate or illeterate is the main reason for the poor customer service. Further, the Top management of BSNL is still working in BSNL on deputation basis holding Government employee status thus having little commitment to the

organisation. Although in coming years the retirement profile of the workforce is very fast and around 25% of existing workforce will retire by 2010, however, still the workforce will be quite large by the industry standards. Quality of the workforce will also remain an issue. Access Deficit Charges (ADC, a levy being paid by the private operators to BSNL for provide service in non-lucarative areas especially rural areas) has been slashed by 37% by TRAI, w.e.f. April 01, 2007. The reduction in ADC may hit the bottomlines of BSNL.

BSNL at Gwalior Circle BSNL Gwalior Circle office is situated in City Center area. This office is undertaking of Bhopal office. This office are works various areas like Marketing, Planning, Administrative, Operation & Management and Finance. Each department works under GM telecom district. GM delegates our some duties to DGM. DGM is the head of the department. These posts are highly responsible because DGM is the main person of the department and DGM gives various approvals of works. This approval leaves various effect of the department like financial, working efficiency, functions of departments and field officer works. Basically BSNL city center works in departmental approaches or functions. This office provides a support to other departments or employees of BSNL. In this office calculated various function of employees like salary of employees, departmental information, various tenders, payment of vendors, departmental expenditure of general provident funds etc. But this office run a collection center this collection center collect various telephones/mobiles/broadband bills.

Vision •

To become the largest telecom Service Provider.

Mission •

To provide world class State-of-art technology telecom services to its customers on demand at competitive prices.

•

To Provide world class telecom infrastructure in its area of operation and to contribute to the growth.

Objective MP Telecom looks over the management, control and operation of the telecom network with the following aims and objective •

To build a high degree of customer confidence by sustaining quality and reliability in service.

•

To upgrade the quality of telecom service to international level.

•

Provision of telephone connections on demand in all the villages of M.P.

•

Expansion of new services like Internet, Intelligent Network, ISDN, Internet Telephony, Video Conferencing, Broadband etc.

•

Popularize Broadband Services and to be on-demand in the whole State.

•

Expansion of Cellular Mobile Telephone to all towns.

•

To open Internet Kiosks (Cafe's) at all Block Head Quarters.

•

To improve the quality of present services being given to the subscribers.

•

To open more Customer Service Centers and upgrade the existing Customer Service Centers for better and friendly Customer care.

•

Modernize PSTN network by making RSUs & AN-RAX.

•

Plantation of Trees to make environment Clean & Green.

•

To raise necessary financial resources for its developmental needs.

•

To increase accessibility of services, by providing a large number of Local and NSD/ISD Public Call Offices (PCOs) so as to reach out to the masses.

Products •

BSNL LANDLINE

•

BSNL MOBILE POSTPAID PREPAID UNIFIED MESSAGING GPRS/WAP/MMS DEMOs TARIFF

•

BSNL WLL

•

INTERNET SERVICES NETWORK BROADBAND WI-FI CO-LOCATION SERVICE BSNL WEB HOSTING DIAL UP INTERNET SMS& BULK SMS

•

BSNL BROADBAND

•

BSNL MANAGED NETWORK SERVICES

•

BSNL MPLS-VPN

•

ISDN

•

LEASED LINE

•

INTELLIGENT NETWORK FREE PHONE SERVICE PREMIUM RATE SERVICE INDIA TELEPHONE CARD VIRTUAL PRIVATE NETWORK (VPN) VOICE VPN UNIVERSAL NUMBER UNIVERSAL PERSONAL NUMBER TELE VOTING

•

VIDEO CONFERENCING

•

AUDIO CONFERENCING

•

TELEX/ TELEGRAPH

•

EPABX EPABX FREE EPABX CENTREX

•

HVNET

•

INMARSAT

•

TRANSPONDER

Management Profile Chief General Manager (CGM) Mr. Hinduja

GM Telecom District Mr. Prashant Trivedi

Deputy General Manager (DGM)

DGM

DGM

(Marketing, Planning & Admin)

(Operation & Management)

(Finance)

Mr. Prashant Trivedi

Mr. Vijay Dixit

Mr. S. D. Tyagi

Chief Accounting Officer TR (COTR) Account officer TR 1st Mr. S.S. Bahdoriya

AO Mob. Mr. Manoj yadav

CO Strategic Business Plans (COSBP) AO Telecom Revenue 2nd Mr. SC Jain

AO SBP Mr. Ram Sadal

AO Pay Mr. Naagar

AO Cash Mr. Ram Avatar

Jr. Account Officer Mr. R.S. Yogik

Section Supervisor Mr. Chandrshekhar

Sr. Trunk Supervisor Mr. K.N. Duwedi

Peon Mr. Gyasi Ram

Organisation Functional Structure of BSNL Gwalior Circle SBP Department

Fact sheets The Company Bharat Sanchar Nigam Limited (known as BSNL) is a public sector communications company in India. It is the largest telecommunication company in India and the sixth largest in the world. Its headquarters are at Statesman House, Barakhamba Road, New Delhi. It has the status of Mini-ratana - a status assigned to reputed Public Sector companies in India. During the current financial year, the management based on physical verification of fixed assets and inventory and reconciliation of various heads of assets and liabilities in the subsidiary and general ledgers which has resulted into increase/decrease in the following assets and liabilities taken over as on 01st October 2000 amounting to net reduction in the assets of Rs. 5,910 lakh (P.Y. - Rs. 25,452 lakh): In pursuance of the Memorandum of Understanding dated 30th September 2000 executed between Government of India and BSNL, all assets and liabilities in respect of business carried on by DTS and DTO were transferred to the Company with effect from 01st October 2000 at a provisional value of Rs. 6,300,000 lakh and up to previous financial year BSNL has identified net assets of Rs. 6,352,028 lakh against it.

General Information

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# #



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)

Revenues Strategies The telecom sector is the most competitive sector post liberalization. This has resulted in a movement from growth based business model that emphasized growth in numbers to profit-based model where the success is measured by margins. BSNL as part of the transition has to adopt both cost reduction and revenue enhancement measures, which would directly impact profitability. It is evident that there is a declining trend in basic services and there is stagnation in cellular revenues. Revenue maximization strategies will have two components, one internal to the organization and the other external. The internal aspect would involve an initiative for change of process, technology, organizational structure etc. In this context, revenue assurance is the key to improving the bottom line for BSNL. This is proactive strategy to capture all revenues due for the services provided. Presently, BSNL generates bills through different softwares across the zones of operation, which are disintegrated and provide only basic solutions. The industry standard for revenue leakage is about 3 to 7% percent of revenue, which in money terms translates to about Rs.2100 crores for BSNL. Therefore plugging revenue leakages is just the first and most obvious part of a Revenue Assurance initiative. The key concerns for BSNL for effective revenue realization are – The delay in customer billing after activation Time lag between calls generated and billed Scope of fraud Non-availability of uniform database. Therefore the focus should be on immediate implementation of CDR based billing. This would require huge investment but the return would more than commensurate. The software should be scalable and be able to incorporate all the next generation value added services. The implementation of CDR based system will also generate the following benefits: Plugging of leakage of revenue. Formulation of appropriate marketing strategies –

Accounting Policies Basis of Preparation of Financial Statements The

financial

statements

of

Bharat

Sanchar

Nigam

Limited (the

“Company” or “BSNL”) are prepared under the historical cost convention adopting the accrual method of accounting in accordance with Indian Generally Accepted Accounting Principles

and in accordance

with the provisions of the

Companies Act, 1956 (the “Act”).

Revenue Recognition Income from services is accounted for on accrual basis and in conformity with Accounting Standard – 9 of ICAI. Accordingly, a) Revenue for all services is recognized when earned and are realizable at the time of billing. Unbilled revenues from the billing date to the end of the year are recorded as accrued revenue during the period in which the services are provided. Provision is made in respect of bills considered to be disputed (by the management), debts outstanding for more than two years and for debts due for less than 2 years, to the extent considered necessary by the management. b) Installation Charges recovered from subscribers at the time of new telephone connections are recognized as income in the first year of the billing. c) In terms of the arrangement between Department of Telecommunications (“DoT”) and the Company, the charges for telecommunication services and other infrastructural services provided by BSNL to DoT are neither being billed nor provided for. d) Sale proceeds of scrap arising from maintenance and project works are taken into miscellaneous income in the year of sale. e) Income from SIMs, recharge coupons of Mobile, Prepaid Calling Cards, and Prepaid internet connection cards are treated as income of the year in which the payment is received since the extent of use of these cards within the financial year could not be ascertained. f) Wherever there is uncertainty in realization of income, such as liquidated damages, claims on Government Departments & local authorities etc., these are recognized on collection basis. g) The claims on account of reimbursement for provision of infrastructure,

operation and maintenance of Village Public Telephones (VPTs) and Rural Household Connections (RDELs) receivable from U.S.O. fund are accounted for as revenue on account of the fact that the claim for infrastructure cannot be credited to the concerned asset account since the claim amount could not be segregated asset wise. h) Other income by way of interest on loans to employees, security deposit with Government Departments and local authorities, being not material, are accounted for on collection.

Fixed Assets a) Fixed assets are carried at cost less depreciation. Cost includes directly related establishment and other expenses including employee remuneration and benefits, directly identifiable to the construction or creation of the assets. b) Expenditure

on replacement

of

assets, equipments,

instruments

and

rehabilitation works is capitalized if, in the opinion of the management, it results in enhancement of revenue generating capacity. c) Assets are capitalized to the extent completion certificates have been obtained, wherever applicable. d) The cost of stores and materials at the time of issue to a project, is debited to CWIP. e) Apparatus and plants principally consisting of telephone exchanges, transmission equipments and air conditioning plants etc. are capitalized as and when an exchange is commissioned and put to use. f) Cables are capitalized as and when ready for connection to the main system. g) Intangible assets are stated at cost of acquiring the same less accumulated depreciation / amortization.

Depreciation/Amortization Depreciation is provided based on the Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except for Subscriber Installation. The Subscriber Installation is depreciated over the useful life of 5 years on Written Down Value method. Assets costing up to Rs. 5,000 are depreciated fully

in the year

of

purchase. Similarly, partition works costing up to Rs. 2,00,000 are depreciated fully in the year of construction. The

depreciation on machinery

&

tools

used both for

project

and

maintenance work is charged to profit and loss account instead of capitalization. All telephone exchange buildings, administrative offices and captive consumption assembling premises/workshops are considered as normal building and not as factory building. Accordingly depreciation is charged uniformly. Intangible assets such as Entry License Fee for Telecom Service operations are amortized over the license period (i.e. 20 years) and standalone computer software applications are amortized over the license period subject to maximum of 10 years as per straight line method.

Impairment Of Assets Assets, which are impaired by disuse or obsolescence, are segregated from the concerned assets category and shown as ‘Decommissioned Assets’ and provision made for the loss, if any, due to the difference between their net carrying cost and the net realizable value.

Investments Long-term investments are carried at cost, after providing for any diminution in value, if such diminution is of a permanent nature.

Inventories Inventories are valued at cost or net realizable value as the case may be - cost ascertained generally on weighted average method; obsolete/non moving inventories are valued at net realizable value.

Foreign Currency Transactions a) Transactions in foreign currency are recorded at the exchange rate prevailing on

the date of the transaction i.e. on the date of payment or

receipt as the case may be. b) All Foreign Currency Liabilities and monetary assets are stated at the exchange rate prevailing as at the date of Balance Sheet and the difference taken to Profit and Loss Accounts as Exchange Fluctuation Loss or Gain.

Extraordinary Items Extra-ordinary items of income and expenditure, as covered by AS – 5, are disclosed separately.

Manufacturing Expenses Expenses incurred at Factory units are allocated to the cost of the manufactured products.

Prior Period Items Items of Income/expenditure exceeding Rs. 5 lakh are only considered for being treated as 'prior period items'.

Taxes on Income Taxes on Income for the current period are determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961. In accordance with the AS-22, Deferred Tax Liability is recognized on the timing differences between accounting income and the taxable income for the period taking into consideration the contents of Accounting Standard Interpretations 3 and quantified using the tax rates in force or substantively enacted as on the Balance Sheet date. Deferred Tax Assets are recognized and carried forward to the extent there is a virtual certainty that such deferred tax assets can be realized.

Provisions Provisions are recognized when the Company has a present obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Contingent Liabilities Liabilities, though contingent, are provided for if there are reasonable chances of maturing such liabilities as per management. Other contingent liabilities, barring frivolous claims, not acknowledged as debts, are disclosed by way of notes.

Earning Per Share Earning Per Share ("EPS") comprises the Net Profit after tax (excluding extraordinary income net of tax). The number of shares used in computing Basic & Diluted EPS is the weighted average number of shares outstanding during the year.

Segment Reporting The primary segment consists of ‘basic’ and ‘cellular’ services provided. The manufacturing activities have not been treated as a separate segment since such activities are essentially carried on as support service to other segments. The following specific accounting policies have been followed for segment reporting: Segment Revenue includes service income and other income directly identifiable with/allocable to the segment. Income/expense, which relates to the Company, as a whole and not allocable to

individual

business

segment

is

included

in

“Un-allocable

Corporate

Income/expense respectively”. Expenses that are directly identifiable with/allocable to segments are considered for determining Segment Results. Segment Assets and Liabilities include those directly identifiable with the respective segments. Un-allocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment

Finance Policy of BSNL Standards of Financial Proprieties Ever officer incurring or authorizing expenditure from public funds should be guided by high standards of financial propriety. Every officer should also enforce financial order and strict economy at every step and see that all relevant financial rules and regulations are observed, by his own officer and by subordinates disbursing officers. Among the principles on which emphasis is generally laid are the following: 1. Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money. 2. The expenditure should be prima-facie more that the occasion demands. 3. No authority should exercise its powers of sanctioning expenditure to pass an order which be directly or indirectly to its own advantages. 4. Expenditure from pubic moneys should not be incurred for benefit of a person or section of the people unlessa. a claim for the amount could be enforce in a Court of Law, or b. the expenditure is in pursuance of a recognised policy or custom. 5. The amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not on the whole a source of profit to the recipients. 6. The responsibility and accountability of every authority delegated with financial powers to procure any item or service on Government account is total and indivisible. Government expects that the authority a concerned will have the public interest uppermost in its mind while making a procurement decision. The responsibility is not discharged merely by the selection of the cheapest offer. 7. Whenever called for, the concerned authority must place on record in precise terms, the considerations which weighed with it while talking the procurement decision.

1.4 Comparative Study Between Years 008-2007: During the current financial year, the management based on physical verification of fixed assets and inventory and reconciliation of various heads of assets and liabilities in the subsidiary and general ledgers which has resulted into increase/decrease in the following assets and liabilities taken over as on 01st October 2000 amounting to net reduction in the assets of Rs.5,910 lakh (P.Y. - Rs. 25,452 lakh): Figures in Lakhs of Rupees

up to march 31, 2007

up to march 31, 2008

Absolute change Rs.

Percentage Change (%)

Fixed Assets

5,417,921

5,416,697

(1,224)

-0.02

Capital WIP

503,112

502,631

(481)

-0.10

Inventory

188,647

188,681

34

0.02

Sundry Debtors

682,740

684,430

1,690

0.25

39,448

39,448

-

0.00

2,086

2,138

52

2.49

6,833,954

6,834,025

71

0.001

391,656

393,704

2,048

0.52

12,525

12,158

(367)

-2.93

29,454

29,099

(355)

-1.21

38,283

42,666

4,383

11.45

Particulars Assets

Advance to contactors Deposit with Electricity Board/other Total A Liabilities Customer Deposits Earnest Money Deposits Security Deposit from Contractors/ Suppliers Working Expense Liability as on 1st October 2000 Contractors Bills payable as on 1st October 2000

10,008

10,280

272

2.72

Net Assets taken over by the Company

6,352,028

6,346,118

(5,910)

-0.09

Total B

6,833,954

6,834,025

71

0.001

Interpretation of Comparative Balance Sheet The comparative balance sheet of the company reveals that during 2008 there has been on increase in final assets of Rs. 1224 lakh i.e. 0.02% while long term liabilities to other side have relative increase by Rs. 4383 lakh and contractor bill pay has increased by Rs 272 lakh. This fact depicts the policy of the company is to purchase fixed assets from the long-term sources of finance there by not affect the working capital.

Current assets have increased by Rs. 1261 lakh and advance of contractor not increased on the other hand there has been an increase in inventories amount Rs. 34 lakh. The current liabilities have increased by Rs. 4582 lakh i.e. 0.06%. This further confirms that the company has revised long term finances.

The overall financial position of the company is satisfactory.

1.5 SWOT Analysis: STRENGTHS: •

Pan-India reach

•

Experienced telecom service provider

•

Total telecom service provider

•

Huge Resources (financial & technical pool)

•

Huge customer base

•

Most trusted telecom brand

•

Transparency in billing

•

Easy deployment of new services

•

Copper in last mile can be used for easy broadband deployment

•

Huge Optical Fibre network and associated bandwidth

WEAKNESSES: •

Non-optimization of network capabilities

•

Poor marketing strategy

•

Bureaucratic organizational set up

•

Inflexibility in mindset (DOT period legacies)

•

Limited number of value added services

•

Poor franchisee network

•

Legacy of poor service image

•

Huge and aged manpower

•

Procedural delays

•

Lack of strategic alliances

•

Problems

associated

with

incumbency

like

outdated

technologies,

unproductive rural assets, social obligations, political interference, •

Poor IT penetration within organization

•

Poor knowledge Management

OPPORTUNITIES •

Tremendous market growing at 20 lac customers per month

•

Untapped broadband services

•

Untouched international market

•

Can capitalize on public sector image to grab government’s ICT initiatives

•

ITEB service markets

•

Diversification of business to turn-key projects

•

Leveraging the brand image to source funds

•

Almost un-invaded VSAT market

•

Fuller utilization of slack resources

•

Can make a kill through deep penetration and low cost advantage

•

Broaden market expected from convergence of broadcasting, telecom and entertainment industry

THREATS •

Competition from private operators

•

Keeping pace with fast technological changes

•

Market maturity in basic telephone segment

•

Manpower churning

•

Multinational eyeing Indian telecom market

•

Private operators demand for sharing last mile

•

Decreasing per line revenues due to competitive pricing

•

Private operators demand to do away with ADC can seriously effect revenues

•

Populist policies of government like “OneIndia” rates

Chapter 2 Chapter 2

Research Methodology Methodology

2.1

Statement of Problem: The research is carried on in a proper planned and systematic manner. The research was particularly based departmental research. We have to move to various department and meet people which include their names and contact numbers given by BSNL training and Planning department. During the department we have to know about to departmental works by explaining the working process of a particular department. Each department presences section supervisors this SS will provide various data of relative department and give opportunity to handling the working process and resolve our doubts.

2.2

Research Design & Methodology:

Research The research design of this project is exploratory. Though each research study has its own specific purpose but the research design of this project on BSNL is exploratory in nature as the objective is the development of the hypothesis rather than their testing. The research designs methods of financial analysis. Through of comparative balance sheet in comparative statement, I am studying on balance sheet of BSNL of five year. So taking comparative statement, I am going to analyzed of five years balance sheet of BSNL

Methodology Every project work is based on certain methodology, which is a way to systematically solve the problem or attain its objectives. It is a very important guideline and lead to completion of any project work through observation, data collection and data analysis.

“Research Methodology comprises of defining & redefining problems, collecting, organizing & evaluating data, making deductions & researching to conclusions.” According to Clifford Woody, Accordingly, the methodology used in the project is as follows: Defining the objectives of the study Framing of questionnaire keeping objectives in mind (considering the objectives)

Feedback from the employees, Analysis of feedback, Conclusion, findings and suggestions.

2.3

Sampling Technique Used: This research has used convenience sampling technique.

2.4

Sampling technique: Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient

2.5

Selection of Sample Size: Survey of each department.

2.6

Sources of Data Collection: Research will be based on two sources: 1. Primary data 2. Secondary data

1) Primary Data: Survey: Primary data was collected by departmental survey for BSNL.

2) Secondary Data: Secondary data will consist of different literatures like books which are published, articles, internet, the company manuals and websites of company- www.bsnl.com. In order to reach relevant conclusion, research work needed to be designed in a proper way. This research methodology also includes:Familiarization with the concept of finance and its various merits, demerits. Thorough study of the information collected. Conclusions based on findings.

2.6

Statistical Tools Used The main statistical tools used for the collection and analyses of data in this project are: Bar Diagrams

Line Charts

Limitations of Study

2.7

Financial analysis is a powerful mechanism of determining financial strengths and weaknesses of a firm but, the analysis is based on the information available in the financial statements. We has also careful about the impact of price level chances, windows-dressing of financial statements, changes in accounting policies of BSNL, accounting concepts and conventions, and personal judgments etc. Due to the following unavoidable and uncontrollable factors the factors, the result might not be accurate. Some of the problems faced while conducting the survey are as follows:Chances of some biasness could not be eliminated. A majority of respondents show lack of cooperation and are biased towards their own opinions.

Some of the important Limitations of financial analysis are however, summed up as below: It is only a study of interim reports. Financial analysis is based upon only monetary information and non-monetary factors are ignored. As the financial statements are prepared on the basis of a going concern, it does not give exact position. Thus accounting concepts and conventions cause a serious limitation to financials analysis. Changes in accounting procedure by a firm may often make financial analysis misleading. Analysis is only a means and not an end in itself. We interpretation and draw own conclusion

Different people may interpret the same analysis in different ways.

has to make

Chapter 3

Chapter 3 Calculation of Data

3.1

Introduction Financial statements are prepared primarily for decision making. They play a

dominant role in setting the framework of managerial decisions. But the information provided in the financial statement is not an end in itself as no managerial can be drawn from these statement alone. However, the information provided in the financial statement is of immense use in making decision through analysis and interpretation of financial statements. Financial analysis is ‘the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the item of the balance sheet and the profit and loss account’. There are various methods used in analyzing financial statements, such as comparative statements, trend analysis, common-size statement, schedule of change in working capital, funds flow and cash flow analysis, cost-volume-profit analysis and ratio analysis. The term financial analysis’, also know as analysis and interpretation of financial statement, refers to the process of determining financial strengths and weaknesses of the firm of the firm by establishing strategic relationship between the item the balance sheet, profit and loss account and other operative data. “Financial analysis is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firm’s position and performances” According to Matclf and Titard “Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by single set-of statements and a study of the trend of these factors as shown in a series of statement”. According to Myers The term ‘financial statement analysis’ include both ‘analysis’ and ‘interpretation’. The analysis and interpretation of financial analysis statements is essential to bring out the mystery behind the figure in financial statements. Financial statement is an attempt to determine the significance and meaning of the financial statement data so the forecast may be made of the future earning, ability to pay interest and maturities and profitability of a sound dividend policy.

Types of Financial Analysis I can classify various types of financial analysis into different categories depending upon (i) the material used, and (ii) the method of operation followed in the analysis or the modus operandi of analysis.

(i) On the basis of material used: According to material used, financial analysis can be of two types (a) external analysis and (b) internal analysis.

a. External Analysis: This analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. These outsiders include investors, potential investors, creditors, potential creditors, government agencies, credit agencies and the general public. For financial analysis, this external party to the firm depends almost entirely on the published financial statement. External analysis, thus serves only a limited purpose. However, the changes in the government regulations requiring business firm makes available more detailed information to the public through audited accounts have considerably improved the position of the external analysis.

b. Internal Analysis: The analysis conducted by persons who have access to the internal accounting records of a business firm is known as internal analysis. Such an analysis can, therefore, be performed by executive and employees of the organization as well as government agencies which have statutory powers vested in them. Financial

analysis for managerial purpose is the internal type of analysis that can be effected depending upon the purpose to be achieved.

(ii) On the basis of modus operandi: According to the method of operation followed in the analysis financial can also be of two types: (a) horizontal analysis (b) vertical analysis.

a. Horizontal Analysis: Horizontal analysis refers to the comparison of financial data of a company for several years. Thus figure for this type of analysis are presented horizontally over a number of columns. The figures of the various years are compared with standard or base years. A base year chosen as beginning point. This type of analysis is also called ‘Dynamic Analysis’ as it is based on the data from year to year rather than on data of any one year. The horizontal analysis makes it possible to focus attention on items that have changed significantly during the period under review. Comparison of an item over several periods with a base year may show a trend developing. Comparative statement and trend percentages are two tools employed in horizontal analysis.

b. Vertical Analysis: Vertical analysis refers to the study of relationship of the various items in the financial statements of one accounting period. In this types of analysis the figure from financial statement of a year are compared with a base selected from the same year’s statement. It is also knows as ‘Static Analysis’. Common-size financial analysis statement and financial ratio are the tools employed in vertical analysis. Since vertical analysis considers data for one time period only, it is not conducive to a proper analysis of financial statements. However, it may be used along with horizontal analysis to make it more effective and meaningful.

Procedure of Financial Statements There are three steps involved in the analysis of financial statements. These are: (i) selection (ii) classification (iii) interpretation, the first step involves selection of information (data) relevant to the purpose of analysis of financial statements. The second step involved is the methodical classification of the data and the third step include drawing and conclusions. The following procedure is adopted for the analysis and interpretation of financial statements: 1. The analysis should acquaint himself with the principal and postulates of accounting. He should know the plans and policies of the management so that he may be able to find out whether these plans properly executed or not. 2. The extent of analysis should be determined so that the sphere of work may be decided. If the aim is to find out the earning capacity of the enterprise than analysis of income statement will be undertaken. On the other hand. If financial position is to be studied then balance sheet analysis will be necessary. 3. The financial data given in the statement should be re-organized and rearranged. It will involve the grouping of similar data under same heads, breaking done of individuals components of statements according to nature. The data is reduced to a standard form. 4. A relationship is established among financial among financial statements with the help tools and techniques of analysis such as ratio, trends, common size, funds flow etc. 5. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decisiontalking. 6. The conclusions drawn from interpretation are presented to the management in the form if reports.

Methods or Devices of Financial Analysis The analysis and interpretation of financial statements is used to determine the financial position and result of operation as well. A number of methods or devices are used to study the relationship between different statements. An effort is made to use those devices which clearly analysis position of the enterprise. The following methods of analysis are generally used:

Comparative Statement Trend analysis Common Size Statement Cash Flow Analysis Funds flows Ratio analysis Cost – volume - Profit analysis . Comparative Statement: Comparative balance sheet analysis is the study of the trend of the same items, group of item and computed item in two or more balance sheets of the same business enterprise on different data.

Trend analysis: This method determines the direction upwards and involves the computation of the percentage relationship that each statement item bears to the same item in base year.

Common size Statement: The common size statements balance sheet statements are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities and total sales. Total assets are taken as 100 and different assets are expressed as a percentage of the total, similarly various liabilities are taken as a part of total liabilities.

Cash flow Statement: Cash flow statement is a statement which describes the inflow (sources) and outflow (uses) of cash and cash equivalent in an enterprise during a specified period of time.

Ratio Analysis: Ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions.

Cost – Volume – Profit Analysis: Cost – Volume – Profit Analysis is a technique for studying the relationship between cost, volume and profit. Profit of an understanding depend upon a large number of factors. But the most important of these factors are the cost of manufacture, volume of sales and the selling prices of the product.

Comparative Statements The comparative financial statements of the financial position at different positions; at time. The elements of financial position are shown in a comparative form so as to given an idea of financial position at two or more periods. Any statement prepared in a comparative form will be covered in comparative statements. From practical point of view , generally two financial statements (balance sheet and income statement) are prepared in comparative form for financial analysis purpose. Not only the comparison of the figures of two financial position and operative results. The comparative statement show : •

Absolute figures ( rupee amounts )

•

Changes in absolute figures i.e., increase or decrease in absolute figures.

•

Absolute data in terms of percentages.

•

Increase or decrease in terms of percentages.

The financial data will be comparative only when same accounting principles are used in preparing these statements. In case of any deviation in the use of accounting principles this fact must be mentioned at the foot of financial statements and the analyst should be careful in using these statements. The two comparative statements are (i) Balance sheet, and (ii) income statement.

Comparative Balance Sheet The comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheet of the same business enterprise on different dates. The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning at the end of period and these changes can help in forming an opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increases in figures. The fourth column may be added for added for giving percentages of increases or decrease.

3.2

Comparative Balance Sheet of BSNL 2008 & 2007 Table 3.1

Particular SOURCES OF FUNDS shareholder's Funds Capital Reserve and Surplus Loan Funds Unsecured Loans Deferred Tax Liability - net Total APPLICATION OF FUNDS Fixed Assets gross block Less:Deperecation Net Block Capital Work in Progress Decommissioned Assets Investment Current Assets,Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets-Accrued intrest Loan and Andvances Less:Current Liabilities and Provision Current Liabilities Provision Net Current Assets Inter/Intra Circle Remittance Total

2008

2007

Incr./Decr.

%

1250000 7562825

1250000 7444802

0 118023

0 1.59

338887 131053 9282765

554366 124605 9373773

(215479) 6448 (91008)

-38.87 5.17 -0.97

12457823 6987974 5469849 266562 389 5736800 20000

11864901 6071511 5793390 256860 6444 6056694 20000

592922 916463 (323541) 9702 (6055) (319894) 0

5.00 15.09 -5.58 3.78 -93.96 -5.28 0

322006 546551 4055158 137687 744441 5805843

242847 558066 3745296 114148 714431 5374788

79159 (11515) 309862 23539 30010 431055

32.60 -2.06 8.27 20.62 4.20 8.02

1739788 606321 2346109 3459734 66231 9282765

1667919 514858 2182777 3192011 105068 9373773

71869 91463 163332 267723 (38837) (91008)

4.31 17.76 7.48 8.39 -36.96 -0.97

Comparative Balance Sheet In Rs. 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0

year 2008

Inter/Intra Circle

Provision

Loan and

Cash and Bank

Inventories

Decommissione

Net Block

Unsecured

Capital

year 2007

Figure 3.1: Comparative Balance Sheet Chart

Comparative Balance Sheet In % 40 20 Inter/Intra Circle

Provision

Loan and

Inventories

Cash and Bank

(80)

Decommissione

(60)

Net Block

(40)

Unsecured

(20)

Capital

0

percentages

(100) (120)

Figure 3.2: Comparative Balance Sheet Chart in %

Procedure of Comparative Balance Sheet 1. The Comparative balance sheet has two columns for the data of original balance sheet. 2. Third column is used to show increases in figures. 3. The Fourth column may be added for giving percentages of increase or decrease.

Interpretation of Comparative Balance Sheet (Table 3.1) The comparative balance sheet of the company reveals that during 2008 there has been on decrease in fixed assets of Rs. 319894 lakh i.e. -5.28% while long term liabilities to outsiders have relatively decrease by Rs. 91008 lakh i.e. -0.97. This fact depicts the policy of the company is to not purchase fixed assets from the long-term sources of finance there by not affect the working capital.

Current assets have increased by Rs. 163,332 lakh and cash and bank balances also increased Rs. 309,862 i.e. 8.27%, investments not increased on the other hand there has been an increase in inventories amount Rs. 79,159 lakh i.e.32.60%. The current liabilities have increased by Rs. 163,332 lakh i.e. 7.84 %. This further confirms that the company has revised long term finances.

The overall financial position of the company is satisfactory.

3.3

Comparative Balance Sheet of BSNL 2007 & 2006 Table 3.2

Particular

2007

SOURCES OF FUNDS shareholder's Funds Capital Reserve and Surplus Loan Funds Unsecured Loans Deferred Tax Liability - net Total APPLICATION OF FUNDS Fixed Assets gross block Less: Deprecation Net Block Capital Work in Progress Decommissioned Assets Investment Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets-Accrued interest Loan and Advances Less:Current Liabilities and Provision Current Liabilities Provision Net Current Assets Inter/Intra Circle Remittance Total

2006 Incr./Decr. %

1250000 7444802

1250000 6825651

0 619151

0 9.07

554366 124605 9373773

728393 170400 8974444

(174027) (45795) 399329

-23.89 -26.88 4.45

11864901 6071511 5793390 256860 6444 6056694 20000

11169203 5150354 6018849 382048 7346 6408243 20000

695698 921157 (225459) (125188) (902) (351549) 0

6.23 17.89 -3.75 -32.77 -12.28 -5.49 0

242847 558066 3745296

278922 630205 3057948

(36075) (72139) 687348

-12.93 -11.45 22.48

114148 714431 5374788

63627 923207 4953909

50521 (208776) 420879

79.40 -22.61 8.50

1667919 514858 2182777 3192011 105068 9373773

1612324 888223 2500547 2453362 92839 8974444

55595 (373365) (317770) 738649 12229 399329

3.45 -42.04 -12.71 30.11 13.17 4.45

Compararive Balance Sheet In Rs. 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0

year 2007

Inter/Intra Circle

Provision

Loan and

Cash and Bank

Inventories

Decommissione

Net Block

Unsecured

Capital

year 2006

Figure 3.3: Comparative Balance Sheet Chart

Comparative Balance Sheet In % 100 80 60 40 20

percentages Inter/Intra Circle

Provision

Loan and

Cash and Bank

Inventories

Decommissione

-60

Net Block

-40

Unsecured

-20

Capital

0

Figure 3.4: Comparative Balance Sheet Chart in %

Procedure of Comparative Balance Sheet 1. The Comparative balance sheet has two columns for the data of original balance sheet. 2. Third column is used to show increases in figures. 3. The Fourth column may be added for giving percentages of increase or decrease.

Interpretation of Comparative Balance Sheet (Table 3.2) The comparative balance sheet of the company reveals that during 2007there has been a decrease in fixed assets of 351,549 i.e. -5.49% while long term liabilities to outsiders have increased by Rs. 399329 i.e. 4.45%. There has also been increase of Rs. 619151 lakhs, i.e. 9.07% in reserves and surplus of the company. Thus, the company has used long-term resources to finance additional working capital.

The current assets have increased by Rs. 420879 lakhs, i.e. 8.50% and cash and bank balance has increased by Rs. 687348 lakhs, on the other hand , The current liabilities have increased only by Rs. 55595 lakhs, i.e. 3.45%.

Inventories have decreased from Rs. 278922 iakhs to Rs. 242847 lakhs, i.e. 12.93% which shows that there have increased in demand. It is better for business.

The overall financial position of the company is satisfactory.

3.4

Comparative balance sheet of BSNL 2006 & 2005 Table 3.3

Particular SOURCES OF FUNDS shareholder's Funds Capital Reserve and Surplus Loan Funds Unsecured Loans Deferred Tax Liability - net

2006

Total APPLICATION OF FUNDS Fixed Assets gross block Less: Deprecation Net Block Capital Work in Progress Decommissioned Assets Investment Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets-Accrued interest Loan and Advances Less: Current Liabilities and Provision Current Liabilities Provision Net Current Assets Inter/Intra Circle Remittance Total

2005 Incr./Decr. %

1250000 6825651

1250000 6027911

0 797740

0 13.23

728393 170400 8974444

822089 304402 8404402

(93696) (134002) 570042

-11.40 -44.02 6.78

11169203 5150354 6018849 382048 7346 6408243 20000

10410216 4233309 6176907 457226 8045 6642178 20000

758987 917045 (158058) (75178) (699) (233935) 0

7.29 21.66 -2.56 -16.44 -8.69 -3.52 0

278922 630205 3057948

224535 663703 2193113

54387 (33498) 864835

24.22 -5.05 39.43

63627 923207 4953909

14368 752160 3847879

49259 171047 1106030

342.84 22.74 28.74

1612324 888223 2500547 2453362 92839 8974444

1461541 738616 2200157 1647722 94502 8404402

150783 149607 300390 805640 (1663) 570042

10.32 20.26 13.65 48.89 -1.76 6.78

Comparative Balance Sheet In Rs. 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0

year 2006

Inter/Intra Circle

Provision

Loan and

Cash and Bank

Inventories

Decommissione

Net Block

Unsecured

Capital

year 2005

Figure 3.5: Comparative Balance Sheet Chart

Comparative Balance Sheet in %

Inter/Intra Circle

Provision

Loan and

Cash and Bank

Inventories

Decommissione

Net Block

Unsecured

percentages

Capital

400 350 300 250 200 150 100 50 0 -50 -100

Figure 3.6: Comparative Balance Sheet Chart in %

Procedure of Comparative Balance Sheet 1. The Comparative balance sheet has two columns for the data of original balance sheet. 2. Third column is used to show increases in figures. 3. The Fourth column may be added for giving percentages of increase or decrease.

Interpretation of Comparative Balance Sheet (Table 3.3) The comparative balance sheet of the company reveals that during 2006 there has been a decrease in fixed assets of Rs. 233935 lakhs, i.e. 3.52% while long-term liabilities to outsiders have increased by Rs. 570042 lakhs, i.e.6.78%. There has also been increase by Rs. 797740 lakhs, i.e. 13.23% in reserve and surplus of the company. Thus, the company has used long term resources to finance additional working capital.

The current assets have increased by Rs. 1106030 lakhs, i.e. 28.74% and cash has increased by Rs. 864835 lakhs. On the other hand, there has been increased in inventories amounting to Rs. 54387 lakhs. The current liabilities have increased only by Rs. 150783 lakhs, i.e. 10.32%. These further confirm that the company has raised long term finance even for the current assets resulting into an improvement in the liquidity position of

the company.

The overall financial position of the company is satisfactory.

3.5

Comparative Balance Sheet of BSNL 2005 & 2004 Table 3.4

Particular SOURCES OF FUNDS shareholder's Funds Capital Reserve and Surplus Deferred Government Grant Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability

2005

Total APPLICATION OF FUND Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in-Progress Decommissioned Assets Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balance Other Current Assets-Accrued interest Loans and Advances Less: Current Liabilities and Provision Liabilities Provision Net Current Assets Intra/Inter Circle Remittance Total

2004 Incr./Decr.

%

1250000 6027911

125000000 505183259 7200000

(123750000) (499155348) (7200000)

-99.00 -98.81 -100.00

822089 304402 8404402

75376842 48033540 760793641

(74554753) (47729138) (752389239)

-98.91 -99.37 -98.90

10410216 4233309 6176907 457226 8045 6642178 20000

952878982 324262136 628616846 58549917 1477395 688644158 2000000

(942468766) (320028827) (622439939) (58092691) (1469350) (682001980) (1980000)

-98.91 -98.69 -99.02 -99.22 -99.46 -99.04 -99.00

224535 663703 2193113

23437496 39794505 115574751

(23212961) (39130802) (113381638)

-99.04 -98.33 -98.10

14368 752160 3847879

97040202 275846954

14368 (96288042) (271999075)

-99.22 -98.61

1461541 738616 2200157 1647722 94502 8404402

149280684 58866140 208146824 67700130 2449353 760793641

(147819143) (58127524) (205946667) (66052408) (2354851) (752389239)

-99.02 -98.75 -98.94 -97.57 -96.14 -98.90

Comparative Balance Sheet In Rs. 700000000 600000000 500000000 400000000 300000000 200000000 100000000 0

year 2005

Net Current

Liabilities

Other

Sundory

Investments

Capital

Deferred Tax

Deferred

Capital

year 2004

Figure 3.7: Comparative Balance Sheet Chart

Comparative Balance Sheet In Rs. Net Current

Liabilities

Other

Sundory

Capital

Investments

-97.00

Deferred Tax

-96.00

Deferred

-95.00

Capital

-94.00

percentages -98.00 -99.00 -100.00 -101.00

Figure 3.8: Comparative Balance Sheet Chart in %

Procedure of Comparative Balance Sheet 1. The Comparative balance sheet has two columns for the data of original balance sheet. 2. Third column is used to show increases in figures. 3. The Fourth column may be added for giving percentages of increase or decrease

Interpretation of Comparative Balance Sheet (Table 3.4) The comparative balance sheet of the company reveals that during 2005there has been a decrease in fixed assets i.e. –99.46 % while long term liabilities to outsiders have decreased by i.e. 98.94%. In this year company face profit decrease problem but company having profit

The overall financial position of the company is satisfactory but compare 2004 company profit are not satisfactory.

3.6

Comparative Balance Sheet of BSNL 2004 & 2003 Table 3.5

Particular SOURCES OF FUNDS shareholder's Funds Capital Reserve and Surplus Deferred Government Grant Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability

2004

Total APPLICATION OF FUND Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in-Progress Decommissioned Assets Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Less: Current Liabilities and Provision Liabilities Provision Net Current Assets Intra/Inter Circle Remittance Total

2003 Incr./Decr.

%

125000000 505183259 7200000

125000000 434218011 7200000

0 70965248 0

0 16.34 0

75376842 48033540 760793641

5100000 78864381 38289125 688671517

(5100000) (3487539) 9744415 72122124

-100.00 -4.42 25.45 10.47

952878982 324262136 628616846 58549917 1477395 688644158 2000000

853406778 223305948 630100830 92650554 1170342 723921726 2000000

99472204 100956188 (1483984) (34100637) 307053 (35277568) 0

11.66 45.21 -0.24 -36.81 26.24 -4.87 0

23437496 39794505 115574751 97040202 275846954

30532810 29451975 34396844 68085928 162467557

(7095314) 10342530 81177907 28954274 113379397

-23.24 35.12 236.00 42.53 69.79

149280684 58866140 208146824 67700130 2449353 760793641

173100827 33898939 206999766 (44532209) 7282002 688671519

(23820143) 24967201 1147058 112232339 (4832649) 72122122

-13.76 73.65 0.55 -252.03 -66.36 10

Comparative Balance Sheet In Rs.

year 2004

Net Current

Liabilities

Cash and Bank

Inventories

Decommissione

Net Block

Unsecured

Deferred

year 2003

Capital

700000000 600000000 500000000 400000000 300000000 200000000 100000000 0 (100000000)

Figure 3.9: Comparative Balance Sheet Chart

Comparative Balance Sheet In % 300 200 100

Net Current

Liabilities

Cash and Bank

Inventories

Net Block

Decommissione

-300

Unsecured

-200

Deferred

-100

percentages Capital

0

Figure 3.10: Comparative Balance Sheet Chart in %

Procedure of Comparative Balance Sheet 1. The Comparative balance sheet has two columns for the data of original balance sheet. 2. Third column is used to show increases in figures. 3. The Fourth column may be added for giving percentages of increase or decrease

Interpretation of Comparative Balance Sheet (Table 3.5) The comparative balance sheet of the company reveals that during 2004 there has been decrease in fixed assets of Rs. 35277568 lakhs, i.e. 4.87% while long-term liabilities to outsiders have increased Rs. 72122122 lakhs, i.e. 10.00%. There has also been increase of Rs. 70965248 lakhs, i.e. 16.34% in reserve and surplus of the company. Thus, the company has used long-term resources to finance additional working capital.

The current assets have increased by Rs. 113379397 lakhs, i.e. 69.79%. There has been increased in cash by Rs. 81177907 lakhs, i.e. 35.12%.

There has been decreased in inventories amounting to 7095314 lakhs, i.e.23.24% and there has also been decreased liabilities amounting to 23820145 lakhs, i.e. 13.37%. which shows that the company is going on profit.

The overall financial position of the company is satisfactory.

3.7

Common Sheet of BSNL Table 3.6 2008 1250000 7562825 0 338887 0 131053 5736800 20000 322006 546551 4055158 137687 744441 2346109 3459734 66231

Capital Reserve and Surplus Deferred Government Grant Unsecured Loans Secured Loans Deferred Tax Liability - net Fixed Assets Investment Inventories Sundry Debtors Cash and Bank Balances Other Current Assets-Accrued intrest Loan and Andvances Current Liabilities Net Current Assets Inter/Intra Circle Remittance

2007 1250000 7444802 0 554366 0 124605 6056694 20000 242847 558066 3745296 114148 714431 2182777 3192011 105068

2006 1250000 6825651 0 728393 0 170400 6408243 20000 278922 630205 3057948 63627 923207 2500547 2453362 92839

2005 1250000 6027911 0 822089 0 304402 6642178 20000 224535 663703 2193113 14368 752160 2200157 1647722 94502

2004 125000000 505183259 7200000 75376842 0 48033540 688644158 2000000 23437496 39794505 115574751 0 97040202 208146824 67700130 2449353

800000000 700000000 600000000

2008

500000000

2007

400000000

2006

300000000

2005

200000000

2004

100000000

2003

Figure 3.11: Common Chart

Net Current

Loan and

Cash and

Inventories

Fixed

Secured

Deferred

-100000000

Capital

0

2003 125000000 434218011 7200000 78864381 5100000 38289125 723921726 2000000 30532810 29451975 34396844 0 68085928 206999766 -44532209 7282002

Chapter 4 Conclusion and Suggestions

4.1

Finding:

According to my survey and calculating the important points are: •

Financial position of BSNL is not much good.

•

The comparative balance sheet of BSNL reveals that after year 2004, decrease the capital in year 2005 and same capital continue to year 2008 yet.

•

Financial position of BSNL was much better in 2004 compression to all year.

•

There are not good coordination in departments of BSNL.

•

Working process of BSNL take long time.

•

Handwriting work is more than computerizing work.

•

Qualification of employees is not match his posts.

•

Salary of employees is much better.

•

At present time, investment of BSNL is less than compression year 2004.

4.2 Analysis: From the calculation it was found that amongst year 2004 to 2008, •

In year 2004, financial position of BSNL is good based on year 2003.

•

In year 2005, financial position of BSNL is not good based on year 2003, because in year 2005, capital has decreased and also investment.

•

In year 2006, financial condition of BSNL is improved based on year 2005 not year 2003.

•

In year 2007, financial position of BSNL is satisfactory based on year 2005 and 2006 but not improved based on year 2003 and 2004.

•

In year 2008, financial position of BSNL is good based on year 2005 , 2006 and 2007 even than is not improved based on year 2003 and 2004.

•

In year 2004, inventories are decreased based on year 2003. which, we can see in graph. This is better. But in year 2008, inventories are increased based on year 2005 , 2006 , 2007. this is not good of BSNL because increase in inventories than decrease in demand.

4.3 Conclusion: After overhauling the five years balance sheet of BSNL and all condition, I have to reached this conclusion that; •

There was much good financial position of BSNL in year 2004 comparison 2003 and present year.

•

There was more investment in year 2004 because of this, year 2004 have earn more profit based on year 2003 and compare the present year. If there are more investment than financial position of BSNL may be improved and earn more profit at present time.

•

Working process of BSNL is take very long time because of which, BSNL is not being able to progress. So improved the working process.

•

BSNL are facing the capital problem because of which financial position of BSNL are affected.

•

BSNL are paying more taxes. Because of paying more taxes, financial position of BSNL are affected.

•

Overall at present time, financial position of BSNL is not good based on year 2003 – 2004.

•

There was earned more profit in year 2004 but year by year BSNL is on loss.

4.5

Suggestion:

The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations: •

There should be increase in investment of BSNL. So that could be earned more profit. Because, if investment will be high than profit will be earned high.

•

There should be improved the working process of BSNL. Because working process of BSNL is take more time.

•

Departments of BSNL do not have good coordination. So there should be good coordination in departments of BSNL. If coordination will have good in departments, than there will not has to face any problem in proper work.

•

Time to time, there should be provided training of employee. So that they could take information about the new technology of them proper working process.

•

There should be good communication between each departments of BSNL.

•

There should be computerized work in BSNL. But also at this time, paper work are continue to see in many department.

Appendix

Bibliography

Bibliography •

Management Accounting Shashi K. Gupta & R.K. Sharma

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Financial Management I.M. Pandey.

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Research Paper: Financial Analysis Hampton John J. Financial Decision Making, Second Ed p.75

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Web sites o www.bsnl.co.in o www.google.com o www.mpbsnl.com

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Annual Reports of BSNL 2006-2008.

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Departmental Records