Financial Statement Analysis of BSNL

 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 Fact Sheet o Revenues Strategies o Management Profile o Products o Policy of Accounting and finance Comparative Study SWOT Analysis

1 2 3 6 7 8 9 10 11 13 19 21

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

23 23 24 25 25 25 25 26

Chapter-3 Data Analysis and Findings 3.1.

3.2. 3.3. 3.4. 3.5.

Introduction Comparative statement of BSNL Trend Analysis of Profit Common Size Balance Sheet Cash flow Statement

27 32 35 36

Chapter-4 Conclusion and Suggestions 4.1.

4.2. 4.3. 4.4. 

Finding Analysis Conclusion Suggestions

Appendix

44 44 45 46 47-50

1

 Bibliography

51

2

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 CDMAWLL 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.

3

1.2 Objective of Study: The main objective of this study is to carry on brief study on “Analysis of Financial 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 Two year Annual reports.

•

To study the various departments for the needs of assets and use-less assets amount of BSNL Gwalior city center.

4

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

5

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

6

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

7

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.

8

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.

9

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 No. of Revenue District Population No. of Tehsil Block H.Q. Total Villages No. of Villages(Inhabited)

2 1,629,881 6 7 1221 1108

10

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 –

11

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

12

Products •

•

BSNL LANDLINE

      

PHONE PLUS SERVICE NEW TELEPHONE CONNECTION PERMANENT CONNECTION CONCESSION IN RENTALS SHIFT OF TELEPHONE TRANSFER OF TELEPHONE TELEPHONE TARIFF

      

POSTPAID PREPAID UNIFIED MESSAGING GPRS/WAP/MMS DEMOs TARIFF SMS & BULK SMS

BSNL MOBILE

•

BSNL WLL

•

INTERNET SERVICES

         •

NETWORK BROADBAND TYPES OF ACCESS WI-FI CO-LOCATION SERVICE BSNL WEB HOSTING INTERNET TARIFF DIAL UP INTERNET SMS& BULK SMS

BSNL BROADBAND

    

REGISTER ONLINE TARIFF USO FUNDED RURAL BROADBAND FAQ CHECK USAGE

•

BSNL MANAGED NETWORK SERVICES

•

BSNL MPLS-VPN

•

ISDN

 

ISDN TARIFF

13

•

LEASED LINE

 

LEASED LINE TARIFF

14

•

INTELLIGENT NETWORK

        •

VIDEO CONFERENCING

   •

•

•

•

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

OVERVIEW TARIFF FAQ

AUDIO CONFERENCING

  

OVERVIEW TARIFF FAQ

    

OVERVIEW SERVICES ON I NET USING ON I NET I NET CONNECTIONS TARIFF

I NET

TELEX/ TELEGRAPH

 

TELEX/ TELEGRAPH TARIFF

    

EPABX FREE EPABX TARIFF CENTREX CENTREX TARIFF

EPABX

•

HVNET

•

RABMN

•

INMARSAT

•

KU-BAND

•

TRANSPONDER

15

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.

16

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.

17

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 18

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.

19

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

20

Policy of Finance 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.

21

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

Particulars Assets Fixed Assets Capital WIP Inventory Sundry Debtors Advance to contactors Deposit with Electricity Board/other Total A

up to march 31, 2007

up to march 31, 2008

5,417, 921 503, 112 188, 647 682, 740 39, 448 2, 086 6,833,9 54

5,416,6 97 502,6 31 188,6 81 684,4 30 39,4 48 2,1 38 6,834,02 5

391, 656 12, 525 29, 454

393,7 04 12,1 58 29,0 99

38, 283

42,6 66

10, 008 6,352, 028 6,833,9 54

10,2 80 6,346,1 18 6,834,02 5

Absolute change Rs.

Percentage Change (%)

(1,224)

-0.02

(481)

-0.10

34

0.02

1,690

0.25

-

0.00

52

2.49

71

0.001

2,048

0.52

(367)

-2.93

(355)

-1.21

4,383

11.45

272

2.72

(5,910)

-0.09

71

0.001

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 Net Assets taken over by the Company Total B

22

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.

23

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

24

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

25

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.



Our Team moved various departments like SBP, Pay and Cash and meet Accounting Officer of each department. This officer is provide a huge working knowledge of our department.



Each department presences a section supervisor this SS will provide various data of relative department and give opportunity to handling the working process and resolve our doubts.

Research Design: 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.

26

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.

According to Clifford Woody, “Research Methodology comprises of defining & redefining problems, collecting, organizing & evaluating data, making deductions & researching to conclusions.” 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.

27

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

Convenience 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

Selection of Sample Size: For the survey of departments.

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.

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

Pie Charts



Bar Diagrams



Line Charts 28

Limitations of Study 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:

Time and cost constraints were also there.



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.



It does not consider changes in price level.



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

has to make

interpretation and draw own conclusion Different people may interpret the same analysis in different ways.

29

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.

30

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

31

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.

32

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.

33

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

•

Ratio 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.

34

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.

35

3.2

Comparative Statement of BSNL year 2007 & 2008 Table 3.1 Comparative Balance Sheet for the year ended 2007 and 2008 as at 31 March 2007 (Rs. In Lakh)

Particulars SOURCES OF FUNDS Shareholder's Funds Capital Reserves and Surplus Loans Funds Unsecured Loans Deferred Tax liability TOTAL APPLICATION OF FUNDS Fixed Assets Gross block Less: Depreciation Net Block Capital Working-in-Progress Decommissioned Assets

Investments Current, Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current assets -Accrued Interest Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provision Net Current Assets Inter/Intra Circle Remittance TOTAL

as at 31 March 2008 (Rs. In Lakh)

Increase/ Decrease

Increase/ Decrease

(Rs. In Lakh)

(Percentages)

1,250,000 7,444,802

1,250,000 7,562,825

118,023

0

554,366 124,605 9,373,773

338,887 131,053 9,282,765

(215,479) 6,448 (91,008)

-38.87 5.17 -0.97

11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694

12,457,823 6,987,974 5,469,849 266,562 389 5,736,800

592,922 916,463 (323,541) 9,702 (6,055) (319,894)

5.00 15.09 -5.58 3.78 -93.96 -5.28

20,000

20,000

242,847 558,066 3,745,296 114,148 714,431 5,374,788

322,006 546,551 4,055,158 137,687 744,441 5,805,843

79,159 (11,515) 309,862 23,539 30,010 431,055

32.60 -2.06 8.27 20.62 4.20 8.02

1,667,919 514,858 2,182,777 3,192,011 105,068 9,373,773

1,739,788 606,321 2,346,109 3,459,734 66,231 9,282,765

71,869 91,463 163,332 267,723 (38,837) (91,008)

4.31 17.76 7.48 8.39 -36.96 -0.97

1.59

-

0.00

36

Figure 3.1: Comparative Balance Sheet chart

Figure 3.2 Comparative Balance Sheet in % Chart

37

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 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.

38

3.3

Trend Analysis (Profit of BSNL) Table 3.2 Years 2005 2006 2007 2008

2005

Profit before Tax Amount (Rs.) in Percentages Lakh 792,008.00 100.00 844,698.00 815,381.00 445,155.00

2006

106.65 102.95 56.21

2007

Figure 3.3: Trend Profit chart

Procedure of Calculation Trends 4. One year is taken as a base: year 2005 taken as a base year 5. The figure of base year are taken 100 6. Trend percentages are calculated in relation to base year. Figure in other year is less than the figure in base year trend percentage will be less than 100 and it will be more than 100 if figure is more than base year figure. Each year’s figure is dived by the base year’s figure.

Interpretation Profit before tax has substantially decreased. In four year period it has more than doubled. The comparative decrease in profit is much lower in 2008 as compared to 2006 and 2007. The expansion of the firm is not possible. The overall performance of the concern is not good on the basis of profit.

39

3.4

Common Size Balance Sheet of BSNL year 2007 and 2008 Table 3.3 Common Size Balance Sheet for the year ended 2007 and 2008 Particulars

SOURCES OF FUNDS Shareholder's Funds Capital Reserves and Surplus Loans Funds Unsecured Loans Deferred Tax liability TOTAL APPLICATION OF FUNDS Fixed Assets Gross block Less: Depreciation Net Block Capital Working-in-Progress Decommissioned Assets

Investments Current, Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current assets -Accrued Interest Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provision Net Current Assets Inter/Intra Circle Remittance TOTAL

as at 31 March 2007 (Rs. In Lakh)

as at 31 March 2008 (Rs. In Lakh)

%

%

1,250,000 7,444,802

13.34 79.42

1,250,000 7,562,825

13.47 81.47

554,366 124,605 9,373,773

5.91 1.33 100.00

338,887 131,053 9,282,765

3.65 1.41 100.00

11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694

126.58 64.77 61.80 2.74 0.07 64.61

12,457,823 6,987,974 5,469,849 266,562 389 5,736,800

134.20 75.28 58.92 2.87 0.00 61.80

20,000

0.21

20,000

0.22

242,847 558,066 3,745,296 114,148 714,431 5,374,788

2.59 5.95 39.96 1.22 7.62 57.34

322,006 546,551 4,055,158 137,687 744,441 5,805,843

3.47 5.89 43.68 1.48 8.02 62.54

1,667,919 514,858 2,182,777 3,192,011 105,068 9,373,773

17.79 5.49 23.29 34.05 1.12 100.00

1,739,788 606,321 2,346,109 3,459,734 66,231 9,282,765

18.74 6.53 25.27 37.27 0.71 100.00

40

Figure 3.4 Common size Balance Sheet chart

Procedure of Common-Size Balance Sheet 1. The total assets are taken as 100 and different assets are expressed as a percentages of the total 2. Similarly, various liabilities are taken as a part of total liabilities. 3. This statement is also known as component percentages or 100 percent statement because every individual item is stated as a percentage of the total 100. The short comings in comparative statement and trend percentage where changes in items could not be compared with the totals have been covered up.

41

Interpretation An analysis of patter of financing of both the years shows that year 2007 is more traditionally financed as compared to year 2008. The BSNL has depended more on its own reserves and surplus as is shown by balance sheet. Out of total reserve 81.47% of the funds are proprietor’s funds. In year 2007 funds are 79.42% which shows that this company has depend more upon outsider funds. In the present day economic world generally, companies depend more on outsiders’ funds. In this context both years have good finical planning but year 2008 is more financed on traditional lines. Both years are suffering from adequacy of working capital. The percentage of current assets is more than the percentage of current liabilities in both the year.

In

the year 2008 BSNL is suffering more form working capital position than the second than the second year because current assets are more then current liabilities i.e. 25.27% and this percentage is 23.29% in the 2007. A close look at the balance sheet shows that investments in fixed asset have been not financed from working capital in both years. In 2007 fixed account for 64.61% of the total assets while long-term funds account for 5.91% of total funds. In year 2008 fixed account for 61.80 whereas long term funds account for 3.65% of total instead of using long-term funds. Both the year BSNL is not facing working capital problem.

42

3.5

Cash Flow Statement of BSNL Table 3.4 BHARAT SANCHAR NIGAM LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008

PARTICULARS A. Cash flow from operating activities: Net (loss)/profit before tax but after Prior period and Extraordinary items Adjustments for: Depreciation Prior period depreciation Interest/Finance charges Interest Income Loss/(Profit) on Fixed Assets sold Debts / Advances Written off Provision for Bad and Doubtful Debts Excess provision written back Prior Period item other than depreciation Other Provision Operating profit before working capital changes Adjustments for changes in working capital : - Inter Circle Remittance - Sundry Debtors - Other Receivables - Trade and Other Payables Cash generated from operations -Taxes paid - Prior Period item other than depreciation Net cash from operating activities B. Cash flow from Investing activities: Inventories Purchased Purchase of fixed assets Capital Work in Progress Proceeds from Sale of fixed assets Interest Received Net cash used in investing activities

Year ended 31st March 2008 (Rs. in Lakh)

Year ended 31st March 2007 (Rs. in Lakh)

445155

Year ended 31st March 2006 (Rs. in Lakh)

815381

Year ended 31st March 2005 (Rs. in Lakh)

844698

792008

969610 5106 86254 (403324) (2002) 70926

914931 8288 77941 (281123) (800) 35340

937669 21231 108980 (173340) (851) 47059

962486 54293 2929 (80052) (618) (73437)

47899 (80829)

127875 (21676)

159518 (19133)

26403 (39532)

(8565) 147595

832670

1276 102518

1277825

38837 (62838) (54335) 65923

(12413) 1265412

(175793) 8565

964570 1779951

(12229) (131465) (67776) (685)

(212155) 1567796

(152524) (167228)

(1276)

1098184

(76049) (717309) (9231) 50319 379785

1224099

(153800)

1663 (94637) (170397) 145474

38976

1413996

(117897) 1950900

1080844 1872852

(4202) (77517) (59867) (44174)

(185760) 1687092

(117576) (79995)

177444

1870905

(54539) (882441) 78066 84750 124081 (326688)

(855) 229227

2068797

(118971)

24723 (815313) 125505 107795 230602 (372485)

19320 123646

59868 1746960

(572) (976301) 125689 133273 70094 (650083)

(647817)

43

C. Cash flow from financing activities: Proceeds from long term borrowings Interest Paid Interim Dividend Paid Dividend Paid Dividend Distribution Tax Paid Net cash used in financing activities

(300000) (1767) (30000) (67500) (16570)

(174027) (77700) (50000) (80000) (18233)

(93696) (108358) (42759) (111174)

(3679) (3068) (22614) (31800)

(415837)

(399960)

(355987)

(61161)

309862

687348

864835

1037982

Opening Cash and cash equivalents

3745298

3057950

2193115

1155133

Cash and cash equivalents as at 31.03.2008

4055160

3745298

3057950

2193115

Net Increase/(Decrease) in Cash and Cash Equivalents

Cash and cash equivalents comprise Cash, Cheques and Drafts (in hand) Balances with banks

2569 4052589

4055158

2704 3742592

3745296

3094 3054854

3057948

179993 2013120

Figure 3.5 Net Increase/Decrease in cash and cash equivalents

44

2193113

Figure 3.6 Cash flow from various heads

Procedure of Cash Flow Statement Cash flow statement is not a substitute of income statement, i.e. a profit and loss account, and a balance sheet. It provides additional information and explain the reasons for changes in cash and cash equivalent. The basic information required for the preparation of cash flow statements is obtained from the following sources: i.

Comparative balance sheets as two points of time, i.e. in the beginning and at the end of accounting period.

ii.

Income statement of the current accounting period or the profit and loss account.

iii. Some selected additional data to extract the hidden transaction. Step I.

Compute the net increase or decrease in cash and cash equivalents by making a comparison of these accounting given in the comparative balance sheet.

Step II.

Calculate the net cash flow provided operating activities by analysis the profit and loss account balance sheet and additional information.

Step III.

Calculate the net cash flow from investing activities.

Step IV.

Calculate the net cash floe from financing activities.

45

Step V.

Prepare a formal cash flow statement highlighting the net cash flow from operating.

Step VI.

Make an aggregate of net cash flow the three activities and ensure that the total net cash flow is equal to the net increase or decrease in cash and cash equivalent as calculated in step I.

Step VII.

Repot significant non-cash flow statement e.g., purchase of machinery against issue of share capital or redemption of debenture in exchanges fro share capital.

Interpretation Cash Flow from Operating Activities Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. The operating activities are calculates 2005 to 2008. This activity is shown that the cash flow of operating activities. The year of 2005 net cash is Rs. 1746960 in lakh, year 2006 cash Rs. 1870905 lakh, year 2007 cash from operating Rs. 1413996 lakh and year 2008 cash from operating activities Rs. 1098184 laks. This operating shown cash shown is reduction of cash flow of operating activity. In 2008 operating goes down because net profit is goes down in comparison year 2006 and tax paid is goes high so net cash from operating activities goes down in comparison year 2006.

Cash Flow from Investing Activities This activity disclose of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intend to generate future income and cash flow. This activity is shown that the cash flow of investing activities. The year of 2005 net cash is Rs. -647817 in lakh, year 2006 cash Rs. -650083 lakh, year 2007 cash from investing Rs. -326688 lakh and year 2008 cash from investing activities Rs. -372485 laks. This calculation shown investing payments. In 2008 investing activities goes down because purchase of fixed assets is Rs. 717309 laks. In this year investing money is goes down in comparison year 2006 and interest receiving is goes high so net cash using in investing activities goes down in comparison year 2006.

46

Cash Flow from Financing Activities This activity disclose of cash flows arising from financing activities is important because the claim on future cash flows by providers of funds (both capital and borrowings) to the enterprises. This activity is shown that the cash flow of financing activities. The year of 2005 net cash is Rs. -61161 in lakh, year 2006 cash Rs. -355987 lakh, year 2007 cash from financing Rs. -399960 lakh and year 2008 cash from financing activities Rs. -415837 laks. This calculation shown investing payments. In 2008 financing activities goes upward because taking long term borrowing is Rs. 300000 laks comparison year 2006 because in this year borrowing is Rs. 3676 lakh. Overall cash flow net cash and cash equivalent is decreased in comparison previous year

47

Findings According to my survey and calculation the noteworthy points are: •

Mostly year BSNL suffers in losses.

•

BSNL build fixed assets; these assets will give effect in profit of BSNL.

•

Highly dues of intra/inter circle transfer of funds which is leave our effect in liabilities side in balance sheet.

•

Coordination’s of departments are not satisfactory.

•

Qualification of employees is not match his posts.

•

Revenues policies of BSNL are not properly implied.

•

Departmental process so long.

•

Proper computerizing of department are not satisfactory.

Analysis: From the calculation it was found that amongst year 2006 to 2008. •

In year 2006 is good for BSNL because in this year profit goes 106% on base of year 2005.

•

In year 2007 is fine for BSNL because in this year profit goes approximately 103% on base of year 2005.

•

In year 2008 is underprivileged for BSNL because in this year profit will be only 56.21% on base of year 2005. In this year BSNL suffer payments liabilities. The current liabilities will increase 25%.

•

In year 2006 to 2008 cash position is goes decrease. We saw the graph of cash I analysis the cash position are not satisfactory at this time. BSNL is a 6th largest telecom company in the world but at this time BSNL suffers cash, capital problems.

48

Conclusion After overhauling the all situation that boosted a number of Pvt. Companies associated with multinational in the Telecom Sector to give be relevant competition to the other established company in private sector, we come at the conclusion that •

There are very cut tough competitions among the private telecom companies on the level of new trend of advertising to silence a major part of Customers.

•

BSNL is not left behind in the present race of advertisement.

•

The entry of more Pvt. players in the telecom Sector have expanded the product segment to meet the different level of the requirement like 3G, Broadband, phone line, cable connection in on wire line to provide of the customers. It has brought about greater choice to the customers.

•

Over all in BSNL facing short of employees and present employees are not working properly.

•

Some employees working faith full for BSNL but retirement of BSNL employees is too much. Each month large number of employees will retired by BSNL.

•

BSNL facing of over capitalization problem. This problem generated by decommissioned assets.

•

This organization paid large amount of taxes. This taxes leave over effect earning per shares (EPS).

49

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

There is a need for better promotion for the investment & services.

•

More returns should be provided on revenues policies.

•

As the BSNL provides the telecom facility to its customers. It should provide this facility by tie up with the other organizations as well.

•

Recruit new qualified employees technical or non technical.

•

Working hour will increase to employees.

•

Create new accounting or finance policies. This policies will provide help generate revenues.

•

Launch better plans for according to customers. Plans will be flexible nature

•

Maintain Communication of each department.

•

BSNL is computerized but today some department work with papers. These employees are not handle computer because they can’t that.

•

Departmental processes so long I suggest make a short process of work to departmental.

50

51

52

53

54

55

56

57

Bibliography •

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

•

Financial Management I.M. Pandey.

•

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

•

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

•

Annual Reports of BSNL 2006-2008.

•

Departmental Records.

58