Comparative Statment Analysis of Bsnl

A CAPSTONE PROJECT REPORT On “COMPARATIVE ANALYSIS OF FINACIAL POSITION” Of PUBLIC BANKS AS PER THEIR HIGHEST NETWORTH

In the partial fulfillment of the degree of B.com (Hons) 2010-2011

Prepared by:Rajpreet kaur Priya Soni Abhinav Kuma

1

CONTENTS  Preface  Acknowledgement  Executive summary Chapter 1 Introduction 1.1

Overview of the BSNL

1.2

Objective of the study

1.3

Profile of the organization

1.4

-

Overviews of the organization

-

History

-

Main services being provided by BSNL

-

BSNL present and future

-

Challenges

-

Vision

-

Mission

-

Objects

-

Products

-

The company (Fact sheet)

-

Revenue strategies

SWOT Analysis

Chapter 2 Research Methodology 2.1

Statement of the problems

2.2

Research design

2.3

Methodology

2.4

Sampling techniques used

2

2.5

Selection of sample size

2.6

Data collection

2.7

Statistics tools used

2.8

Limitations

Chapter 3 Introduction to financial analysis 3.1

Introduction -

Types of financial data

-

Procedure of financial statements

-

Methods and devices of financial accounting

-

Comparative statements

Chapter 4 Data collection and Analysis Comparative balance sheet 

Balance sheet of BSNL year ending 2006















Trend analysis of bsnl



Overall analysis

Chapter 4 Conclusion and Suggestions 4.1

Findings

4.2

Conclusion

4.3

Suggestions

3

PREFACE As the part of my B.Com (Hons) curriculum I was required to undergo summer training in a business organization for six weeks. I approached BHARAT SANCHAR NIGAM LIMITTED for this purpose and got an opportunity to get training from Mr. Kuldeep singh who readily agreed to extend his cooperation. The project was assigned to me by the organization. The topic of my project was “Comparative analysis of the financial position of the BSNL”. In this record I have put my best efforts to compile the data to the highest level of accuracy and give my views to the best of my judgment.

4

ACKNOWLEDGEMENT I had sincerely expressed my ineptness & gratitude towards Mr. Ram Sadal (AO-SBP) of B.S.N.L. bhogpur, for giving me an opportunity to join this esteem organization for 45 days of summer training.

My summer training in B.S.N.L. Bhogpur, of duration 45 days has beenquite successful. During my stay for 45 days, I had received full co-operation from employees and officers of the Bharat Sanchar Nigam Limited, Bhogpur. 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. Kuldeep Singh. 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 Miss Suruchi Juneja , Mr. Rakesh Arora under supervision this topic. This Acknowledgement would be incomplete if I fail to express my deep gratitude towards all the facility of Lovely honors school of business 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.

5

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 introduction to financial analysis. Chapter 4includes the Data collection and analysis wherein I have analyze the data collected from the departmental records, annual reports and web site records. Chapter 5 represents the conclusion and the suggestions based on the departmental Records and annual

6

CHAPTER 1 Introduction of BSNL

7

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, 2007BSNL 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 net worth of US$14.32 billion .

1.2 Objective of Study: The main objective of this study is to carry on brief study on “Financial Overview Of Telecom Sector in India” 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 the needs of assets.

8

1.3

Profile of Organization:

Overviews of Organization 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 corporatized 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 Services: 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, 2010 (end of financial year) BSNL had 76% share of fixed and WLL phones. 9

1. Cellular Mobile Telephone Services: BSNL is major provider of Cellular Mobile Telephone services using GSM platform under brand name Cellone. Pre-paid Cellular services of BSNL are known as Excel. As on March 31, 2010 BSNL had 17% share of mobile telephony in the country.

BSNL Mobile

Pre-paid Mobile

2. Internet: BSNL is providing internet as dial-up connection (Sancharnet) and ADSLBroadband Dataone. BSNL has around 50% market share in broadband in India. BSNL has planned aggressive rollout in broadband for current financial year.

BSNL Broadband 3. Intelligent Network (IN): BSNL is providing IN services like tele-voting, toll free calling, premium calling etc.

BSNL Present & Future

Since its corporatization 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 (Data One) targeted at homes and small businesses. At present BSNL enjoys 47% of market share of ISP services.

10

Year of Broadband 2007

Former Indian Communications Minister Thiru Dayanidhi Maran had declared year 2010 as "Year of Broadband" in India and BSNL is gearing up to provide 5 million Broadband connectivity by the end of 2010. BSNL has upgraded existing Data one (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 2010. 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 2009-2010 (From April 01, 2009 to March 31,2010 ) 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 One India plan, however, the success of the scheme is not known. However, BSNL faces bleak fiscal 2009-2010 as users flee, which has been accepted by the CMD BSNL. Presently there is an intense competition in Indian Telecom sector and various Telco‟s are rolling out attractive schemes and are providing good customer services. However, 11

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 semi-illiterate or illiterate 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 organization. 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

quite large by the industry standard. Quality of the workforce

will also remain an issue.

VISION TO BECOME THE LARGEST TELECOM

SERVICE PROVIDER IN SOUTH EAST ASIA.

MISSION To provide world class State-of-art technology telecom services on demand at affordable price. To provide world class telecom infrastructure to develop country's economy.

Objects

-To be the Lead Telecom Services Provider. -To provide quality and reliable fixed telecom service to our customer and thereby increase customer's confidence. 12

-To provide mobile telephone service of high quality and become no. 1 GSM operator in its area of operation. -To provide point of interconnection to other service provider as per their requirement promptly. -To facilitate R & D activity in the country. -Contribute towards: *National Plan Target of 500 million subscriber base for India by 2012. *Broadband customer

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 13

•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

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. 14

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 October2000 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 September2000 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

2

Population

1,629,881

No. of Tehsil

6

Block H.Q.

7

Total Villages

1221

No. of Villages(Inhabited)

1108

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. 15

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 software‟s 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 –

Finance Policy of BSNL : Standards of Financial Proprieties

16

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 recognized 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 imprecise terms, the considerations which weighed with it while talking the procurement decision.

1.5 SWOT Analysis: 17

STRENGTHS: •Pan-India reaches •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 lakh 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

18

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 “One India” rates

CHAPTER 2 Research Methodology

19

2.1

Statement of Problem: The research is carried on in a proper planned and systematic manner.

20

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 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 and 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:

21

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.

2.6Sources 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.

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

Line Charts

2.8 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 22

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 has to make Interpretation and draw own conclusion Different people may interpret the same analysis in different ways

CHAPTER 3 Calculations of data 23

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

24

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 andTitard “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. 25

(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 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.

26

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.

27

3. The financial data given in the statement should be re-organized and re-arranged. 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 decision-talking. 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

28

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. Profits 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

29

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 informing 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.

BHARAT SANCHAR NIGM LIMITED (BALANCE SHEET AS AT MARCH 31st, 2006) SOURCES OF FUNDS Shareholders fund Capital

As at march,2006 (Rs in lakh) 1,250,000 30

As at march,2005 (Rs in lakh) 1,250,000

Increase/Decrease % change 0

0

Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total

6,825,651

6,027,911

797,740

11.68738

728,393 170,400 8,974,444

750,089 304,402 8,404,402

-21,696 -134,002 570,042

-2.97861 -78.6397 6.351836

11,169,203 5,150,354 6,018,849 382,048 7,346 6,408,243 20,000

10,410,216 4,233,309 6,176,907 457,226 8,045 6,642,178 20,000

758,987 917,045 -158,058 -75,178 -699 -233,935 0

6.795355 17.80548 -2.62605 -19.6776 -9.51538 -3.65053 0

63,627 278,922 630,205 3,057,948.00 923,207 4,953,905

14,368 224,535 663,703 2,193,113 752,160 3,847,849

49,259 54,387 -33,498 864,835 171,047 1,106,056

77.41839 19.499 -5.31541 28.28155 18.52748 22.32695

1,612,324 888,223 2,500,547 2,453,362 92,839 8,974,444

1,461,541 738,616 2,200,157 1,647,722 94,502 8,404,402

Interpretation of Comparative Balance Sheet

31

150,783 9.351904 149,607 16.84341 300,390 12.01297 805,640 32.8382 -1,663 -1.79127 570,042 6.351836392

The comparative balance sheet of the company reveals that during 2006 there has been a decrease in fixed assets of Rs. 233,935 lakhs, i.e. 3.65% while long-term liabilities to outsiders have increased by Rs. 570,042 lakhs, i.e.6.35%. There has also been increase by Rs. 797,740 lakh, i.e. 11.68% in reserve and surplus of the company. Thus, it shows that the company has used long term resources to finance additional working capital. As the company‟s reserves and surpluses are also showing 11.68% increase it reflects that company‟s profits are increasing in year 2006 in comparison to year 2005

The current assets have increased by Rs. 1,106,056 lakhs, i.e. 22.3% and cash has increased by Rs. 864,835 lakhs. On the other hand, there has been increased in inventories amounting to Rs. 54,387 lakhs. The current liabilities have increased only by Rs. 150,783 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.

BHARAT SANCHAR NIGM LIMITED (BALANCE SHEET AS AT MARCH 31st, 2007 32

SOURCES OF FUNDS Shareholders fund Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total

As at As at march,2007 (Rs march,2006 (Rs in lakh) in lakh)

Increase/Decrease

% change

1,250,000 7,444,802

1,250,000 6,825,651

0 619,151

0 8.316554288

554,366 124,605 9,373,773

728,393 170,400 8,974,444

-174,027 -45,795 399,329

-31.39207671 -36.75213675 4.260066891

11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694 20,000

11,169,203 5,150,354 6,018,849 382,048 7,346 6,408,243 20,000

695,698 921,157 -225,459 -125,188 -902 -351,549 0

5.863496038 15.17179167 -3.891659288 -48.73783384 -13.99751707 -5.804305121 0

114,148 242,847 558,066 3,745,296.00 714,431 5,374,788

63,627 278,922 630,205 3,057,948.00 923,207 4,953,905

50,521 -36,075 -72,139 687,348 -208,776 420,883

44.25920734 -14.85503218 -12.92660725 18.35230113 -29.2226961 7.830690252

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

1,612,324 888,223 2,500,547 2,453,362 92,839 8,974,444

55,595 -373,365 -317,770 738,649 12,229 399,329

3.333195437 -72.51805352 -14.55806067 23.14055309 11.63912895 4.260066891

33

Interpretation of Comparative Balance Sheet The comparative balance sheet of the company reveals that during 2007 there has been a decrease in fixed assets of 351,549 i.e. -5.49% while long term liabilities to outsiders have increased by Rs. 399,329 i.e. 4.45%. There has also been increase of Rs. 619,151 lakhs, i.e. 9.07% in reserves and surplus of the company. The current assets have increased by Rs. 420,879 lakhs, i.e. 8.50% and cash and bank balance has increased by Rs. 687,348 lakhs, as company might have sold its fixed assets as above company is showing decrease in fixed assets this year, thus it results in increase in cash balance of the company. On the other hand, the current liabilities have increased only by Rs. 55,595 lakhs, i.e. 3.45%. 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.Inventories have decreased from Rs. 278922 lakhs to Rs. 242,847 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

BHARAT SANCHAR NIGM LIMITED (BALANCE SHEET AS AT MARCH 31st, 2008 34


As at march,2008 (Rs in lakh)


% change Increase/Decrease

1,250,000 7,562,825

1,250,000 7,444,802

338,887 131,053 9,282,765

554,366 124,605 9,373,773

0 0 118,023 1.560567645 0 -215,479 -63.5843216 6,448 4.920146811 -91,008 -0.98039754

12,457,823 6,987,974 5,469,849 266,562 389 5,736,800 20,000

11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694 20,000

592,922 4.759435096 916,463 13.1148599 -323,541 -5.91498961 9,702 3.639678574 -6,055 -1556.55527 -319,894 -5.57617487 0 0

137,687 322,006 546,551 4,055,158.00 744,441 5,805,843

114,148 242,847 558,066 3,745,296.00 714,431 5,374,788

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

17.09602214 24.5830823 -2.10684822 7.641181922 4.031212682 7.424503212

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

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

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

4.130905605 15.08491377 6.961824877 7.738253866 -58.6387039 -0.98039754

35

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 lakhi.e.32.60%. The current liabilit ies 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

BHARAT SANCHAR NIGM LIMITED (BALANCE SHEET AS AT MARCH 31st, 2009) 36



As at march,2008 (Rs % change in lakh) Increase/Decrease

1,250,000 7,613,358

1,250,000 7,562,825

0 0 50,533 0.663741282

341,384 64,484 9,269,226

338,887 131,053 9,282,765

2,497 0.731434396 -66,569 -103.23336 -13,539 -0.14606398

13,224,291 7,792,203 5,432,088 492,864 4,644 5,929,596 20,000

12,457,823 6,987,974 5,469,849 266,562 389 5,736,800 20,000

766,468 804,229 -37,761 226,302 4,255 192,796 0

5.795909966 10.32094518 -0.69514706 45.915709 91.62360034 3.251418815 0

87,239 457,258 472,054 3,813,430.00 944,880 5,774,861

137,687 322,006 546,551 4,055,158.00 744,441 5,805,843

0 -50,448 -57.8273479 135,252 29.57892481 -74,497 -15.7814572 -241,728 -6.33886029 200,439 21.21316993 -30,982 -0.53649776

2,072,702 493,878 2,566,580 3,208,281 111,349 9,269,226

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

332,914 16.06183619 -112,443 -22.7673636 220,471 8.590069275 -251,453 -7.83762395 45,118 40.51944786 -13,539 -0.14606398

37

Interpretation of comparative balance sheet The comparative balance sheet of the company reveals that during year 2009 there has been increase in fixed assets of Rs 192,796 lakhs i.e. 3.25% while outside liabilities to outsiders have decreased by Rs 13,539 lakhs i.e. 0.14%. There has also been increase by Rs 50,533 lakhs i.e. 0.66% in reserves and surpluses of the company. This all shows that company is in good position and running in profits as company is purchasing fixed assets also and keeping some amount in reserves also. Current assets have decreased by Rs. 30,982 lakh and cash and bank balances also decreased Rs. 241,728 i.e. 6.33%, investments not increased on the other hand there has been an increase in inventories amount Rs. 135,252 lakh i.e. 29.57%,this reveals that company is using its cash in purchasing inventory in year 2009,thus its cash balance gets reduced in year 2009 as compared to year 2008.The current liabilities have decreased by Rs. 13,539 lakh i.e. 0.14%.This further confirms that the company has revised long term finances. The overall financial position of the company is satisfactory

BHARAT SANCHAR NIGM LIMITED (BALANCE SHEET AS AT MARCH 31st, 2010) SOURCES OF FUNDS


Shareholders fund 38

As at amrch,2009 (Rs in lakh)

Increase/Decrease

% change

Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total

1,250,000 7,397,566

1,250,000 7,613,358

0 -215,792

0 -2.91706759

153,370 12,384 8,813,320

341,384 64,484 9,269,226

-188,014 -52,100 -455,906

-122.588511 -420.704134 -5.17292008

16,046,962 8,658,930 1,388,032 596,523 7,897 7,992,452 20,000

13,224,291 7,792,203 5,432,088 492,864 4,644 5,929,596 20,000

17.59006471 10.00963168 -291.351784 17.37720088 41.19285805 25.81005178 0

85,521 505,833 474,457 3,034,340.00 1,397,028 5,497,179

87,239 457,258 472,054 3,813,430.00 944,880 5,774,861

2,822,671 866,727 -4,044,056 103,659 3,253 2,062,856 0 0 -1,718 48,575 2,403 -779,090 452,148 -277,682

4,277,642 557,602 4,835,244 661,935 138,933 8,813,320

2,072,702 493,878 2,566,580 3,208,281 111,349 9,269,226

-2.00886332 9.602971732 0.506473716 -25.6757647 32.36499197 -5.05135452

2,204,940 51.54568802 63,724 11.428223 2,268,664 46.91932817 -2,546,346 -384.682182 27,584 19.85417431 -455,906 -5.17292008

Interpretation of Comparative Balance Sheet The comparative balance sheet of the company reveals that during 2010 there has been a increase in fixed assets of Rs. 2,062,856 lakhs, i.e.25.81% while long-term liabilities to outsiders 39

have decreased by Rs. 455,906 lakhs, i.e.5.17%. There has also been decrease by Rs.215,792 lakh, i.e. 2.91% in reserve and surplus of the company. Thus, the company has used long term resources to finance additional working capital.

The current assets have decreased by Rs. 277,682 lakhs, i.e. 5.05% and cash has decreased by Rs. 779,090 lakhs. On the other hand, there has been increased in inventories amounting to Rs. 48,575 lakhs. Here in this year company has utilized its cash in purchasing more inventory and fixed assets as above also it shows increase in fixed assets. The current liabilities have decreased only by Rs 455,906 lakhs, i.e. 5.17%. The overall financial position of the company is satisfactory.

BHARAT SANCHAR NIGAM LIMITED Absolute amounts SOURCES OF FUNDS Shareholders fund Capital

2005 1,250,000

2006 1,250,000

2007 1,250,000 40

2008 1,250,000

2009

2010

1,250,000 1,250,000

Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liabilityNet Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- inprogress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total

6,027,911

6,825,651

7,444,802

7,562,825

750,089

728,393

554,366

338,887

304,402 8,404,402

170,400 8,974,444

124,605 9,373,773

131,053 9,282,765

64,484 12,384 9,269,226 8,813,320

10,410,216 4,233,309 6,176,907

11,169,203 5,150,354 6,018,849

11,864,901 6,071,511 5,793,390

12,457,823 6,987,974 5,469,849

13,224,291 16,046,962 7,792,203 8,658,930 5,432,088 1,388,032

457,226 8,045 6,642,178 20,000

382,048 7,346 6,408,243 20,000

256,860 6,444 6,056,694 20,000

266,562 389 5,736,800 20,000

14,368 63,627 114,148 224,535 278,922 242,847 663,703 630,205 558,066 2,193,113 3,057,948.00 3,745,296.00 752,160 923,207 714,431 3,847,849 4,953,905 5,374,788

7,613,358 7,397,566 341,384 153,370

492,864 4,644 5,929,596 20,000

596,523 7,897 7,992,452 20,000

137,687 87,239 85,521 322,006 457,258 505,833 546,551 472,054 474,457 4,055,158.00 3,813,430.00 3,034,340.00 744,441 944,880 1,397,028 5,805,843 5,774,861 5,497,179

1,461,541 738,616 2,200,157 1,647,722

1,612,324 888,223 2,500,547 2,453,362

1,667,919 514,858 2,182,777 3,192,011

1,739,788 606,321 2,346,109 3,459,734

2,072,702 493,878 2,566,580 3,208,281

4,277,642 557,602 4,835,244 661,935

94,502 8,404,402

92,839 8,974,444

105,068 9,373,773

66,231 9,282,765

111,349 138,933 9,269,226 8,813,320

Trend percentages(base year 2005) SOURCES OF FUNDS

2005

2006

2007

2008

2009

2010

Shareholders fund Capital

100

100

100 41

100

100

100

Reserves and Surpluses

100

113.23410

123.505506

125.4634483

126.3017652

122.721885

Unsecured loans

100

97.107543

73.9066964

45.17957202

45.51246585

20.446907

Deferred tax liability- Net

100

55.978607

40.9343565

43.05260806

21.18382928

4.06830441

Total

100

106.78266

111.534087

110.4512254

110.2901313

104.865522

Gross Block

100

107.29079

113.973629

119.6692076

127.0318599

154.146292

less: Depreciation

100

121.66260

143.422344

165.0712008

184.0688454

204.542829

Net Block

100

97.441146

93.791115

88.55320308

87.94187771

22.4713113

Capital work- in- progress

100

83.557802

56.177907

58.29983422

107.7943949

130.465678

Decommissioned Assets

100

91.311373

80.099440

4.835301429

57.72529521

98.160348

100

96.478037

91.185361

86.3692602

89.27186233

120.328784

Investments Current Assets and Loans & Advances

100

100

100

100

100

100

Accrued Interest (Net)

100

442.83825

794.45991

958.2892539

607.1756682

595.218541

Inventories

100

124.22205

108.15552

143.4101588

203.6466475

225.280246

Sundry Debtors

100

94.952863

84.083694

82.34873128

71.124283

71.4863425

Cash & Bank balance

100

139.43412

170.77533

184.9041978

173.8820571

138.357668

Loans & Advances

100

122.74077

94.983913

98.97375558

125.622208

185.735482

100

128.74478

139.68292

150.885416

150.080239

142.86368

Liabilities

100

110.31671

114.12057

119.037919

141.816206

292.68026

Provisions

100

120.25504

69.705774

82.0887985

66.8653265

75.492813

100

113.65311

99.210056

106.633708

116.654402

219.76813

Net current assets

100

148.89417

193.72266

209.970735

194.710090

40.172735

Intra/Inter Circle Remittance

100

98.24024

111.180716

70.08423102

117.8271359

147.015936

Total

100

106.78266

111.534087

110.4512254

110.2901313

104.865522

Loan Funds

Applications of Funds Fixed assets

Less: Current Liabilities and provisions

INTERPRETATION OF TREND ANALYSIS OF BALANCE SHEET WITH THE HELP OF CHARTS 1. SHARE CAPITAL 42

Share capital 100 100 100 100 100 100

Year 2005 2006 2007 2008 2009 2010

Figure 1

Share capital 120 100 80 60

Share capital

40 20 0 2005

2006

2007

2008

2009

Interpretation: The chart of share capital shows that it remain same in the all 6 years from 2005 to 2010 i.e. 1,250,000.

2. RESERVES AND SURPLUSES

Year

Reserves and 43

surpluses 2005

100

2006

113.23 123.5 125.46 126.3 122.72

2007 2008 2009 2010

Reserves and surpluses 140 120 100 80 Reserves and surpluses

60 40 20 0 2005

2006

2007

2008

2009

2010

INTERPRETATION: The above chart shows that reserves and surpluses of the company is constantly increasing from year 2005 up to year 2009 even though there is a slight increase, this shows that company is transferring more and more profits in reserves and surpluses year by year. This way company is investing more profits in the growth of the company. But in year 2010 there is a slight decrease in reserves and surplus as compared to the previous year which indicates company is investing its amount somewhere else in other projects.

3. UNSECURED LOAN

44

Year

Unsecured Loan

2005

100

2006

97.1 73.9 45.17 45.51 20.44

2007 2008 2009 2010

Unsecured Loan 120 100 80 60

Unsecured Loan

40 20 0 2005

2006

2007

2008

2009

2010

Interpretation: This chart shows that unsecured loans are decreasing year by year as comparative to the base year 2005 which is good for the business that company is reducing its risk as unsecured loans are not collateralized by a lien on specific assets of the borrower in case of liquidation of the company or failure to meet the terms of repayment.

4. DEFERREFD TAX LIABILITY

Year

deferred tax liability

2005

100 45

2006 2007 2008 2009 2010

55.97 40.93 43.05 21.18 4.06

deferred tax liability 120 100 80 60

deferred tax liability

40 20 0 2005

2006

2007

2008

2009

2010

Interpretation: This chart shows that deferred tax liabilities are continuously decreasing in all the five years as comparative to the base year 2005 which is a good sign for a business as this is a liability which may or may not be realized during any given year. Thus company‟s risk is reducing every year by year. But it has slightly increased in year 2008 as comparative t year 2006 but if we see it in comparison of base year it shows a huge decrease. Overall deferred tax liability chart shows a improving condition of the company. 5. TOTAL CAPITAL EMPLOYED

Year 2005 2006 2007

Total Capital employed 100 106.78 111.53 46

2008 2009 2010

110.45 110.29 104.86

Total Capital employed 114 112 110 108 106 104 102 100 98 96 94

Total Capital employed

2005

2006

2007

2008

2009

2010

INTERPRETATION: This chart shows that there is continues increase in the capital employed from year 2005 to year 2006 which refers that company is employing more and more capital year by year to run its business. But in year 2008 it decreased and remains almost constant in next year also and there is a further decrease in capital employed in year 2010. As Capital employed is the value of the assets that contribute to a company's ability to generate revenue i.e. its liquidity. Thus it shows that company’s position is going bit down as comparative to the first three years.

6. TOTAL FIXED ASSETS

Year

Total Fixed Assets

2005

100

2006

96.47

47

2007

91.18

2008

86.36

2009

89.27

2010

120.32

Total Fixed Assets 140 120 100 80 Total Fixed Assets

60 40 20 0 2005

2006

2007

2008

2009

2010

Interpretation: This chart shows that fixed assets are continuously showing decrease up to year 2008 as comparative to base year 2005. There is decrease in fixed assets in year 2009 also as comparative to base year but when we see it in comparison of year 2008 its showing a slight increase, but in year 2010 there is a huge increase in fixed assets as comparative to base year. As the benefits that a business obtains from a fixed asset extend over several years. For example, a company may use the same piece of production machinery for many years, whereas a company-owned motor car used by a salesman probably has a shorter useful life. By accepting that the life of a fixed asset is limited, the accounts of a business need to recognize the benefits of the fixed asset as it is "consumed" over several years. Thus increase in the fixed assets is not bad but it is somewhere good for the business.

7. INVESTMENTS

Year 2005 2006 2007

Investments 100 100 100

48

2008 2009 2010

100 100 100

Investments 120 100 80 60

Investments

40 20 0 2005

2006

2007

2008

2009

2010

Interpretation: The above chart shows that the investments of the company remain same in all the six years. There is no change in the investments of the company.

8. TOTAL CURRENT ASSETS, LOANS AND ADVANCES

49

Year

Total current assets, loans and advances

2005 2006 2007 2008 2009 2010

100 128.74 139.68 150.88 150.08 142.86

Toatal current assets,loans and advances 160 140 120 100 Toatal current assets,loans and advances

80

60 40 20

0 2005 2006 2007 2008 2009 2010

Interpretation: This chart shows that there is a continuous increase in the total current assets, loans and advances as comparative to the base year 2005. Current asset is an indication to an outside creditor, whether the company has got the ability to meet its immediate payment obligation or not. Thus increasing current asset indicates the corporate poor inventory management and inability to recover its dues.

9. TOTAL CURRENT LIABILITIES AND PROVISIONS

50

Total current liabilities and provisions 100 113.65 99.21 106.63 116.65 219.76

Year 2005 2006 2007 2008 2009 2010

Total current liabilities and provisions 250 200 150 Total current liabilities and provisions

100 50 0 2005

2006

2007

2008

2009

2010

Interpretation: This chart shows an increase in current liabilities and provisions for all the years except year 2007 in 2007 there is a slight decrease i.e 99.21%as comparative to the base year 2005. As provisions are increasing that means company is facing losses which is not a good sign for a BSNL.

10. NET CURRENT ASSETS Year

Net current assets 51

2005 2006 2007 2008 2009 2010

100 148.89 193.72 209.97 194.71 40.17

Net current assets 250 200 150 Net current assets

100 50 0 2005

2006

2007

2008

2009

2010

Interpretation: This chart shows that there is a continuous increase in the net current assets except year 2010 as in that year there is a huge decrease in net current assets of the company as comparative to the base year 2005. The assets of a business that can be applied to its operation is called net current assets. As the chart shows the increase in net current assets of the company it is good for the company as company is having the money to carry its operartions. But year 2010 shows huge decrease thus the position of company is not satisfactory in year 2010 as it doesn‟t have the enough sources to run its operations.

52

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.

53

•The comparative balance sheet of BSNL reveals that capital continues to be same from year 2005 till 2010 i.e. Rs1,250,000 •Financial position of BSNL remains satisfactory in all the six years and does not shows the much improvement in the growth of the company as investments and capital continues to be same in all the 6 financial years •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. •Investment also remain same in BSNL from last five years i.e. Rs 20,000

4.2 Analysis: From the calculation it was found that amongst year 2005 to 2010,

54

In year 2006 company‟s position has bettered in comparison to year 2005 as year 2006 is showing increase in reserves and surpluses hence resulting in increase in profits of the company. Year 2007 shows the better picture of the company as comparative to year 2006 In year 2008 company has sold some of its fixed assets, thus balance sheet is showing decrease in fixed assets and increase in cash and bank balance of the company. Overall there is bit increase in the profits of the company in year 2008 as comparative to the previous years. In year 2009 there is increase in fixed assets and decrease in current assets i.e. company has purchased fixed assets during this year. Ts year even shows a slight increase in the profits also. Overall position is satisfactory. In year 2010 again company has purchased huge amount of fixed asstes and kept less amount in their reserves as comparative to the previous years. Overall position of the BSNL is satisfactory in all the years its neither too excellent nor too bad.

4.3 Conclusion After overhauling the five years balance sheet of BSNL and all condition, I have to reached this conclusion that; •There was not much good financial position of BSNL in year 2010 as comparison to 2005 and previous years. 55

•There was no change in investment of the company in all the 6 years. 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 is facing the capital problem because of which financial position of BSNL are affected. •BSNL is paying more taxes. Because of paying more taxes, financial position of BSNL are affected. •Overall at present time, financial position of BSNL is good based on year 2005-2006 •There was earned more profit in year 2004 but year by year BSNL is on loss.

4.4

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.

56

•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

57

BIBLIOGRAPHY

Bibliography •Management Accounting Shashi K. Gupta & R.K. Sharma •Financial Management I.M. Pandey. 58

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

www.bsnl.co.in



www.google.com



mpbsnl.com

•

Annual Reports of BSNL 2005-2010.

•

Departmental Records

59

60

Comparative Statment Analysis of Bsnl

Recommend Documents