FINANCIAL MANAGEMENT REPORT ON FINANCIAL ANALYSIS OF BHARAT SANCHAR NIGAM LIMITED
SUBMITTED BY:JASPREET KAUR ROLL NO. 19 FI-1
Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest Telecommunications Company providing comprehensive range of telecom services in India: Wire line, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN Services etc. Within a span of five years it has become one of the largest public sector units in India.
BSNL has installed Quality Telecom Network in the country and now focusing on improving it, expanding the network, introducing new telecom services with ICT applications in villages and wining customer's confidence. Today, it has about 47.3 million line basic telephone capacity, 4 million WLL capacity, 20.1 Million GSM Capacity, more than 37382 fixed exchanges, 18000 BTS, 287 Satellite Stations, 480196 Rkm of OFC Cable, 63730 Rkm of Microwave Network connecting 602 Districts, 7330 cities/towns and 5.5 Lakhs villages.
BSNL is the only service provider, making focused efforts and planned initiatives to bridge the Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in the country to beat its reach with its wide network giving services in every nook & corner of country and operates across India except Delhi & Mumbai. Whether it is inaccessible areas of Siachen glacier and North-eastern region of the country. BSNL serves its customers with its wide bouquet of telecom services. .
BSNL is numero uno operator of India in all services in its license area. The company offers vide ranging & most transparent tariff schemes designed to suite every customer. .
BSNL cellular service, CellOne, has more than 17.8 million cellular customers, garnering 24 percent of all mobile users as its subscribers. That means that almost every fourth mobile user in the country has a BSNL connection. In basic services, BSNL is miles ahead of its rivals, with 35.1 million Basic Phone subscribers i.e. 85 per cent share of the subscriber base and 92 percent share in revenue terms.
BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers who access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account Less Internet (CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country.
BSNL has set up a world class multi-gigabit, multi-protocol convergent IP infrastructure that provides convergent services like voice, data and video through the same Backbone and Broadband Access Network. At present there are 0.6 million Data One broadband customers. The company has vast experience in Planning, Installation, network integration and Maintenance of Switching & Transmission Networks and also has a world class ISO 9000 certified Telecom Training Institute.
Scaling new heights of success, the present turnover of BSNL is more than Rs.351,820 million (US $ 8 billion) with net profit to the tune of Rs.99,390 million (US $ 2.26 billion) for last financial year. The infrastructure asset on telephone alone is worth about Rs.630, 000 million (US $ 14.37 billion).
BSNL plans to expand its customer base from present 47 millions lines to 125 million lines by December 2007 and infrastructure investment plan to the tune of Rs. 733 crores (US$ 16.67 million) in the next three years.
The turnover, nationwide coverage, reach, comprehensive range of telecom services and the desire to excel has made BSNL the No. 1 Telecom Company of India.
BSNL Company Description
Bharat Sanchar Nigam Limited (BSNL) is India's leading telecommunications provider and the country's largest public-sector firm. BSNL provides local-exchange access and domestic long-distance services through a network of more than 47 million access lines covering most of India. It also offers wireless communications, data and Internet services, as well as business voice and data services. The company is still controlled by the government, as is one of India's other large phone companies, Mahanagar Telephone Nigam Limited (MTNL). Plans to merge the two companies have been discussed but seem to be on hold.
Industries Where BSNL Competes
o o o o
Fixed-line Voice Services Providers (primary) Data Services Teleconferencing Services Providers Telemetry & Telematics Services Providers
All BSNL Customer Service Centers (CSCs) now remain open on all seven days from 8.00 AM to 8.00 PM without any break for all activities’ Cheque deposit machines have also been installed in many cities, so that customers can make payments 24X7 at their convenience. With a view to simplify and offer customer friendly services, more than one Bfone connections can be applied on a single application form. Accordingly, a single demand note would be issued to the customer in respect of all the connections applied for. Shifting charges for local as well as all India shifting of fixed telephone (bfone) has been abolished. Majority of the local network is built up on jelly filled and OFC for trouble free service
Internal Distribution Points (DPs) being provided in the customer premises to eliminate the faults arising out of overhead wires. Extensive use of digital loop carrier (DLC)/Wireless in Local Loop (WLL) system for improving reliability of external plant Establishing call centers across the nation to provide single window solutions and convenience to customers
Incorporation Year Chairman Managing Director Company Secretary Auditor Registered Office Telephone Fax E-mail Website Face Value (Rs) BSE Code BSE Group NSE Code Bloomberg Reuters ISIN Demat Market Lot Listing Financial Year End Book Closure Month AGM Month Registrar's Name & Address
Kuldeep Goyal H C Pant Thakur Vaidyanath Aiyar & Co Statesman House, B-148 Barakhamba Road, New Delhi, 110001, Delhi 91-11-23353395 91-11-23353389 http://www.bsnl.co.in 10
Not Listed 03
MCS Limited, Sri Venkatesh Bhawan, 212-A 91-11-6494830/649483 91-11-6494152
Corporation Bank ICICI Bank Ltd Punjab National Bank State Bank of India
Remune rations -
Designation Chairman & Managing Director Director (Operation)
Name Kuldeep Goyal
JR Gupta SD Director (Finance) Saxena Director Rajendr (Marketing & a Singh Commer.) Director (Human Gopal Resources) Das Director Company Secretary M Sahu HC Pant
Latest Equity (Rs in Crs) Latest Reserve (Rs in Crs) Latest Book Value(Unit Curr.) Latest EPS(Unit Curr.) Latest P/E Ratio 52 Week High(Unit Curr.) 52 Week Low(Unit Curr.) Market Capitalisation (Rs in Crs) Stock Exchange Dividend Yield % 5,000.00 74,448.02 158.90 13.88 0.00 0.00 0.00 0.00 0.00
1- NET PROFIT RATIO :
NET PROFIT RATIO= NET PROFIT /NET SALES* 100
YEARS NET PROFIT NET SALES -
2005 10183.29 33450.04
2006 8939.69 36138.94
NET PROFIT RATIO 2005 = 8939.69/36138.94*100=24.73 NET PROFIT RATIO 2006 =10183.29/33450.04*100=30.44
In the year 06’ the company had a ratio of 30.44, where as in the year 05’ it had a ratio of 24.73. This shows that there had been a subsequent increase in the net profit ratio of the company as compared to the previous year. There has been a subsequent increase in the net sales of the company, but there had been a reduction in the net profit of the company. The elements responsible in the reduction of net profit is increased staff cost and other expenditure, as well as huge reduction in the other income.
2-INVENTORY TURN OVER RATIO:
INVENTORY TURN OVER RATIO = COGS/INVENTORY COGS = OPENING STOCK+NET PURCHASES+DIRECT EXPENSES-CLOSING STOCK YEARS COGS INVENTORY 2005 98.4 2245.35 2006 (543.87) 2789.22
INVENTORY TURNOVER RATIO 2005=98.4/2245.35 = 0.044 INVENTORY TURNOVER RATIO 2006 = (543.87)/2789.22 =(0.194)
In the year 06’ the company had a ratio of (0.194) and in the year 05’ the company had a ratio of 0.044. This shows that the ratio has decreased, which signifies that the company’s inventory stays in store for a long time. This can be easily seen by the increase in the inventories of the company.
3-GROSS PROFIT RATIO:
GROSS PROFIT RATIO = GROSS PROFIT/NET SALES*100 YEARS GROSS PROFIT NET SALES 2005 17535.02 33450.04 2006 17810.66 36138.94
GROSS PROFIT RATIO 2005=17535.02/33450.04 *100 = 52.42 GROSS PROFIT RATIO 2006 =17810.66/36138.94*100 = 49.30
In the year 06’ the company’s ratio was 49.30 as compared to 05’ it had a ratio of 52.42.The factor which is majorly contributing to this change is reduction in it direct cost. This is showing the managements efficiency in implementing cost reduction techniques. The other reason contributing to the change is increase in sales. 4-RETURN ON INVESTMENT:
RETURN ON INVESTMENT= NETPROFIT/INVESTMENT*100 YEARS NET PROFIT INVESTMENT 2005 10183.29 200 2006 8939.69 200
RETURN ON INVESTMENT 2005=10183.29/200*100=5091.645 RETURN ON INVESTMENT 2006 = 8939.69/200*100=4469.84
In the year 06’ the company had a ratio of 4469.84 as compared to the year 05’ it was 5091.645.there has been reduction in the current year’s ratio as compared to the previous year. The factor that contributed to this change was the change in the capital employed due to the issue of equity shares and increase in reserves and surpluses of the company
5-RETURN ON EQUITY:
RETURN ON EQUITY= NET PROFIT AVAILABLE TO
NET PROFIT AVAILABLE TO EQUITY AVERAGE EQUITY
RETURN ON EQUITY 2005 RETURN ON EQUITY 2006
= 500/12500*100 = 4 = 500/12500*100 = 4
In the year 06’ the company had a ratio of 4 and in the year 05’ it had a ratio of 4. Here we can see that in both years company’s return on equity revealing the efficiency of the management in using the owner’s fund ,which is same.
6-DEBTORS TURNOVER RATIO:
YEARS NET CREDIT SALES AVG. DEBTORS
2005 33450.04 6637.03
2006 36138.94 6302.05
DEBTORS TURNOVER RATIO2005 =33450.04/36138.94=5.039 DEBTORS TURNOVER RATIO2006 =36138.94/6302.05=5.734
In the year 06’ the company had a ratio of 5.734 where as in the year 05’ it had a ratio of 5.039. this shows that there has been an increase in the ratio in the current year as compared to the previous year. This increase is due to the increase in net credit sales of the company.This shows the company’s efficiency in cash collection.
7- CAPITAL TURNOVER RATIO-
CAPITAL TURNOVER RATIO = COGS/AVG.CAPITAL
EMPLOYED AVG. CAPITAL EMPLOYED 2005= EQUITY 2005+EQUITY 2006/2 AVG. CAPITAL EMPLOYED 2006= EQUITY 2005+EQUITY2006/2 AVG. CAPITAL 2005 = (12500+12500)/2=12500 AVG.CAPITAL 2006 = (12500+12500)/2=12500 CAPITAL TURNOVER RATIO2005= 98.4/12500=0.0078 CAPITAL TURNOVER RATIO2006=(543.87)/12500=(0.0435)
CURRENT RATIO –CURRENT ASSET/CURRENT LIABILITY YEARS CURRENT ASSET CURRENT LIABILITY 2005 38478.79 22001.57 2006 49539.09 25005.47
CURRENT RATIO2005 =3848.79/22001.57 = 1.74 CURRENT RATIO2006 =49539.09/25005.47 = 1.98
In the year 07’ the company had a current ratio of 4.38 and in the year 06’ the company had a ratio of 3.85.This shows that there is a comparative increase in the ratio revealing greater margin of safety to the creditors. These changes are due to the decrease in current liabilities and considerable amount of increase in current assets. The increase in current asset is due to major increase in sundry debtors and cash and bank balances. This is the main reason for the increase in the ratio.