ANALYSIS OF TELECOM SECTOR

A PROJECT REPORT

Submitted by

SHRUTHI SHETTY
Batch 2012-14

in partial fulfillment for the award of the degree of

MASTER OF MANAGEMENT STUDIES

Under the Guidance of

Prof. Pooja Dave

THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH KANDIVALI MUMBAI

BONAFIDE CERTIFICATE

This is to certify that this project report ANALYSIS ON TELECOM SECTOR is a bonafide work of MISS SHRUTHI SHETTY in part completion of the MASTER OF MANAGEMENT STUDIES has been done under my guidance. The project is in nature of original work that has not so far been submitted for any degree of this university. References of work and relative sources of information have been given at the end of the project.

Signature or the candidate

(SHRUTHI SHETTY) Forwarded through the research guide

Signature of the guide

PROF. POOJA DAVE

ACKNOWLEDGEMENT

Its a great privilege that I have done my project in such a well-organized and diversified organization. I am great full to all those who helped and supported me in completing the project.

First of all I would sincerely like to thank Mr. VIKRAM JAIN (Branch Manager, Goregaon,Mumbai), for his valuable guidance and kind co-operation during the project. I am highly grateful to Mr. Vishal Menon (Business Associates of Reliance Securities Ltd.) for the help provided by them in various forms.

I am also thankful to our director Dr. R M KUMAR and my project guide Prof. Pooja Dave for helping me in completing the project. Last but not least, I am also thankful to all college staff and my friends for helping me directly or indirectly in my project.

EXECUTIVE SUMMARY

Internship gives an in hand experience to the management students and also gives an exposure to the actual corporate environment.

The objective of this internship was to get an insight about working of the financial markets and to find out ways to determine the best investment options for the investors.

This report attempts to provide a unified overview of the telecom sector with reference to 2 companies i.e Bharti Airtel and Idea along with its fundamental. The main objective of the analysis here is to find out trends by which decisions can be made to maximize returns from proposed investments.

TABLE OF CONTENT

INTRODUCTION 1.1 1.2 1.3 1.4 1.5 1.6

Topic INTRODUCTION BACKGROUND / RATIONALE OF STUDY OBJECTIVE OF THE STUDY SCOPE OF STUDY METHODOLOGY LIMITATION

Page No. 6 6 6 7 7 8

COMPANY PROFILE 2.1 2.2 2.3 2.4 2.5 JOB DESCRIPTION IMPORTANT TERMINOLOGIES FUNDAMENTAL ANALYSIS 5.1 5.2 SECTORAL ANALYSIS COMPANY ANALYSIS 5.2.1 AIRTEL 5.2.2 IDEA 5.3 CONCLUSION LEARNINGS GLOSSARY BIBLIOGRAPHY APPENDIX COMPARISON OF AIRTEL & IDEA 29 35 41 44 45 46 48 49 12 VISION OF THE COMPANY BOARD OF DIRECTORS MANAGEMENT PEDIGREE PRODUCTS OFFERED BY RELIANCE SECURITIES 9 9 9 10 10 11 11

1.1 INTRODUCTION
India is a developing country and economy is increasing at very steady speed. Financial market of India is also providing good returns for the investors. Equities are playing a major role in contribution of capital to the business from the beginning. Introduction of shares concept, large numbers of investors are showing interest to invest in stock market. To invest in a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. As we all know firsthand, humans expectations are neither easily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis and Technical analysis) becomes less important than knowing what other investors expect it to sell for. But there is usually a fairly strong consensus of a stock's future earnings that the average investor cannot disprove Fundamental analysis and technical analysis can co-exist in peace and complement each other. Since all the investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental or technical analysis.

1.2 BACKGROUND / RATIONALE OF STUDY

Rational of the study is understand how Telecom Sector in India is performing and is it worth investing money in the companies in that sector .

1.3 OBJECTIVES OF THE STUDY

The objective of this project is to deeply analyze Indian telecom Sector for investment purpose by monitoring the growth rate and performance on the basis of historical data. The main objectives of the Project study are: 6

Detailed analysis of Telecom Sector which is gearing towards international standards

Analyze the impact of qualitative factors on industrys and companys prospects

Comparative analysis of 4 tough competitors like Bharti airtel,idea cell,REL com ltd,TATA comm through fundamental and Technical analysis.

Suggesting as to which companys shares would be best for an investor to invest.

1.4 SCOPE OF STUDY

The scope of the study is to understand how telecom sector is performing in India and to analyze various companies in that sector and providing investors detail information about it. Analysis is done on the basis of the data of last 4 years. Analysis is done on those companies.

1.5 METHODOLOGY
This study is exploratory in nature and the approach adopted is case study method where the data source is purely secondary in nature. The method used for the project is Fundamental Analysis .Fundamental analysis is a technique that attempts to determine a security's value by focusing on underlying factors that affect a company's actual business and its future prospects.

Fundamental analysis would further include Quantitative Analysis Balance Sheet / Ratios / Cash Flow Qualitative Analysis

1.6 LIMITATION
This study has been conducted purely to understand fundamental analysis of Telecom Sector. The study is restricted to these 2 companies based on Fundamental analysis. The study is limited to the companies having equities. Detailed study of the topic was not possible due to limited size of the project. There was a constraint with regard to time allocation for the research study i.e. for a period of 2 months.

2. COMPANY PROFILE: RELIANCE SECURITIES

2.1 VISION OF COMPANY: By 2015, it will be a company that is known as: "The most profitable, innovative, and most trusted financial services company in India and in the emerging markets". In achieving this vision, the company will be both customer-centric and innovation-driven.

2.2 BOARD OF DIRECTORS

Anil Dhirubhai Ambani: Chairman Rajendra P Chitale: Director V N Kaul: Director Amitabh Jhunjhunwala: Vice Chairman Bidhubhusan Samal: Director

2.3 MANAGEMENT
Vikrant Gugnani - Executive director Sanjay Wadhwa - Chief Financial Officer Ganesh Pai - Head Compliance Hitesh Agrawal - Head Research

2 .4 PEDIGREE
Reliance Securities, the broking arm of Reliance Capital is the one of the Indias leading retail broking houses in India, providing customers with access to equities, equity options and commodities futures, wealth management, wealth management services, mutual funds, IPOs and investment banking.

Reliance Securities has over 7 lac retail broking accounts through its pan India presence with over 6,500 outlets.

2.5 PRODUCTS OFFERED BY RELIANCE SECURITIES

Asset Management Insurance Commercial Finance Broking and Distribution Other Businesses Mutual Fund, Offshore Fund, Pension fund, Portfolio Management Life Insurance, General Insurance Mortgages, Loans against Property , SME Loans, Loans for Vehicles, Loans for Construction Equipment, Business Loans, Infrastructure financing Equities, Commodities and Derivatives, Wealth Management Services, Portfolio Management Services, Investment Banking, Foreign Exchange, Third Party Products Private Equity, Institutional Broking, Asset Reconstruction, Venture Capital

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3. JOB DESCRIPTION
The internship involved two aspects of training that was to be provided to us viz. finance and marketing. The finance aspect involved training departed to us with regards to analysing a sector and 2 companies fundamentally and then giving a recommendation as to whether the sector and/or the companies are worth investing in. This training was imparted over the period of the internship in sessions taken thrice a week. The marketing aspect involved selling products given to us by the company for which deadlines were given and had points associated to it to judge the performance.

4. IMPORTANT TERMINOLOGIES IN FUNDAMENTAL ANALYSIS

FUNDAMENTAL ANALYSIS

Involves analysing the quantitative and qualitative fundamental factors that help in valuation or comparative analysis of the company without taking into consideration the stock market fluctuation of the share price of the company.

QUANTITATIVE FACTORS

All the factors analysed while doing a fundamental analysis involving quantitative aspects such as ratio analysis, balance sheet and cash flow analysis, etc.

QUALITATIVE FACTORS

All the factors analysed in a fundamental analysis involving qualitative fundamentals of a company that cannot be measured quantitatively but are still important for analysing the company in a holistic way.

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MACRO ECONOMIC FACTORS

Those factors which directly or indirectly affect the sector or the company but exist in the external environment and which cannot be controlled is known as macro-economic factors. These include Political factors, economy related factors, etc.

CORPORATE GOVERNANCE

Corporate Governance involves proper rules and regulations regarding how the company is run and how it is managed. It helps in proper functioning of the organisation and in an ethical manner.

RATIO ANALYSIS

A company is financially analysed by calculating the ratios which help in quantifying the performance of the company and understand the performance in terms of competitors and the industry as well as for various other purposes.

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5. FUNDAMENTAL ANALYSIS OF TELECOM SECTOR:

In todays information age, the telecommunication industry has a vital role to play. Considered as the backbone of industrial and economic development, the industry has been aiding delivery of voice and data services at rapidly increasing speeds, and thus, has been revolutionising human communication. The telecommunications industry has emerged as a key driver of the global economic recovery. The unprecedented growth of high-speed mobile Internet traffic, particularly for wireless data and video, has transformed the industry into the most evolving, inventive and keenly contested space. The telecom industry has been divided into two major segments, that is, fixed and wireless cellular services. With increasing number of people, mobile is no longer a nice-to-have; its embedded in their daily lives and integrated into the workplace. Moreover, consumers are starting to see beyond the monthly bill and derive more value from the features, functionality and applications on their devices. With fourth generation (4G) technology rolling out, as well as other technologies to enhance broadband access, along with new devices and services exploiting it, data usage will continue to expand exponentially, and the overall value equation to consumers should move in the same direction. Higher speeds and widespread adoption of mobile also are expected to enable additional traction in vertical markets, especially in banking, mobile payments, automotive telematics and health care. These incremental services will present new opportunities and also drive even more data needs. The key challenges for telecom in the near term may be spectrum availability and the continued hearty capital requirements to build/enhance/upgrade networks. The projected increase in data usage will outpace the technological advances of 4G, driving toward a potential spectrum shortage in as early as a year or two. With the appropriate focus, it shouldnt inhibit innovation, but it will 13

require technical solutions and also escalate pressure for the government to unlock more spectrum, on a timely basis, to allow for further mobile broadband network expansion. There would also be continued consolidation in the marketplace, driven primarily by the need for scale, spectrum positioning and vertical market development.

BASIC MODEL OF A TELECOM COMPANY

A brief description of the four major segments that make up the telecom industry is as follows: I. Wireless/Mobile/Cellular services:
The cellular mobile service providers (CMSPs) make available mobile telephone services where by a customer on possession of a handset and obtaining a connection by way of SIM card (for GSM based technology phones) is able to connect to the network.
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of the service provider. This is a wireless service that allows the customer to connect with other wireless customers as also wire line customers. A CMSP derives its revenues by way of tariff charges for outgoing calls made by subscribers on its network.

II. Fixed line services: The fixed (wireline) services are dominantly provided for by the PSUs (BSNL and MTNL) in India. A customer can obtain a connection where by a wireline provides him with the last mile connectivity on the national telecom network. Although this had been a dominant mode of telecommunication in the past, it is fast being replaced with mobile telephony, which has the advantage of connectivity on the move. The fundamental business of a fixed line operator is almost similar to that of a CMSP, in terms of ARPU and Subscriber base.

III. Internet/Broadband: The Internet services are provided either by telecom service providers or independent Internet service providers (ISP) who deal exclusively in providing this service. There are two forms of Internet that are currently popular - the dial-up connections and the broadband connections. While both these forms are used for transmitting and receiving data, a broadband connection (Internet access that allows minimum download speed of 256 kilo bits per second from the point of presence of the service provider) allows you to transmit data at faster rate. IV. Enterprise services: These services are used by large and medium corporates for data transfer between their offices and/or their suppliers' offices, which may be spread in a city, or a country, or even across continents. The need of users to have a seamless connectivity with their associates is what drives this business for telecom companies. Considering that this business takes care of data transfer needs of corporates, who are not as 'affordability'
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conscious as the individuals, telecom companies generally earn higher margins on Enterprise services than they earn on any of the other three business lines. IT and BPO sectors, whose business is so data dependent, are the major users of Enterprise services. GLOBAL SCENARIO:
Research firm Ovum reported that worldwide revenues of telecom sector were more than $2 trillion in 2012, an improvement of 2% year over year. Mobile service providers account for nearly 60% of the total revenue. Economic uncertainty around the globe is not expected to be a significant factor for mobile in 2013. A few years ago, there was concern about whether the slow economy would push consumers to drop their mobile devices, but the trend has proven to be the opposite. And this has been at various demographic levels and across a broad range of the mobile marketplace. In fact, last year it was estimated that the U.S. mobile ecosystem generated economic activity of nearly $200 billion enough to make it equivalent to one of the top 50 largest economies in the world. Companies need to remain focused on marketplace growth and innovation in other strategic areas, particularly vertical industries and the cloud. The expanding array of data services provides tremendous value to consumers, in turn creating value for all of the companies in the mobile ecosystem. As the consumer market matures, connected things and enterprise services offer new growth opportunities. In addition to supporting their customer base, companies also need to revisit their core fundamentals around shareholder value including blocking and tackling activities such as asset efficiency, cost control and service improvement. As noted, spectrum availability presents more uncertainty for mobile. Companies will have to decide which technological solutions smaller cell sites, leveraging non-licensed spectrum, spectrum sharing, etc. to apply to alleviate constraints in the short-term while awaiting a longer-term policy fix.

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INDIAN SCENARIO:
The Indian telecommunications industry is one of the fastest growing in the world. Government policies and regulatory framework implemented by Telecom Regulatory Authority of India (TRAI) have provided conducive environment for service providers. This has made the sector more competitive, while enhancing the accessibility of telecommunication services at affordable tariffs to the consumers. In the last two decades, the Indian Telecom Sector and mobile telephony in particular has caught the imagination of India by revolutionizing the way we communicate, share information; and through its staggering growth helped millions stay connected. This growth, however, has and continues to be at the cost of the Climate, powered by an unsustainable and inefficient model of energy generation and usage. Simultaneously, this growth has also come at significant and growing loss to the state exchequer, raising fundamental questions on the future business and operation model of the Telecom sector. The telecom industry has witnessed significant growth in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs acting as catalysts for the growth in subscriber base. The growth story and the potential have also served to attract newer players in the industry, with the result that the intensity of competition has kept increasing. The sector expected to witness up to US$ 56.3 billion investments and the market will cross the US$ 101 billion mark in five years. The Indian telecom sector has witnessed tremendous growth over the past decade. Today, the Indian telecom network is the second largest in the world after China. A liberal policy regime and involvement of the private sector have played an important role in transforming this sector. The total number of telephones has increased from 429.73 million on 31 March 2009 to 926.55 million on 31December 2011. The telecom industry has witnessed significant growth in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs acting as catalysts for the growth in subscriber base. The growth story and the potential have also served to attract newer players in the industry, with the result that the intensity of competition has kept

increasing. Also, broadband segment has seen significant growth with total internet subscribers reaching 20.99 million in September 2011, which includes 13.30 broadband subscribers. Liberalization of the sector has not only led to rapid growth but also helped a great deal towards maximization of consumer benefits, evident from a huge fall in tariffs. Telecom sector has witnessed a continuous rising trend in the total number of telephone subscribers and hence the teledensity has increased.

CURRENT INDIAN SCENARIO:

FY12 saw the continuance of growth for the Indian telecom market, which witnessed a 12% YoY increase in its subscriber base during the 12-month period. At the end of March 2012, the countrys total telecom subscriber base (fixed plus mobile) stood at about 951 m. The tele-density level stood at about 76% by the end of the fiscal.

Growth remained robust in the GSM mobile space. GSM added 115 m subscribers during the year. After a robust 46% YoY increase in subscriptions during FY11, the growth in GSM industry has slowed down to 17% YoY in FY12. The year saw the apex court of the country cancelling the disputed 2G licenses that were issued in 2008. The cancellation caused the exit of Etisalat and Batelco from the sector.

During FY12, India's mobile subscriber base grew by 13% YoY, from 812 m to 919 m, while the fixed subscriber base declined by about 7%, from 34.73 m to about 32.71m

GROWTH IN TELECOM
Key factors, which will fuel the growth of the sector include increased access to services owing to launch of newer telecom technologies like 3G and BWA, better devices, changing consumer behavior and the emergence of cloud technologies. A majority of the investments will go into the capital expenditure for setting up newer networks like 3G and developing the backhaul, among other things. Subscriber Base

The mobile subscriber base in India is estimated rise by 9 per cent to 696 million connections this year, according to technology researcher Gartner. The mobile service penetration in the country is currently at 51 per cent and is expected to grow to 72 per cent by 2016. Mobile Value Added Services (MVAS)

India's current MVAS industry has an estimated size of US$ 2.7 billion. The industry derives its revenues majorly from the top five to six products such as game based applications, music downloads, etc, which continue to form close to 80 per cent of VAS revenues. The Indian MVAS industry estimated to grow to US$ 10.8 billion by 2015, with the next wave of growth in subscriptions expected to come from semi-urban and rural areas. Mobile Number Portability (MNP)

Mobile Number Portability requests increased from 41.88 million subscribers at the end of March 2012 to 45.89 million at the end of April 2012. In the month of April 2012 alone, 4.01 million requests have been made for MNP. Handsets

The mobile handset market's revenues in India will grow from US$ 5.7 billion in 2010 to US$ 7.8 billion in 2016, according to the study. India is the second largest mobile handset market in the world and is set to become an even larger market with unit shipment of 208.4 million in 2016 at a CAGR of 11.8 per cent from 2010 to 2016. The Indian handset market witnessed a 14.1 per cent growth in 2011 to touch a total volume of 182 million handsets. The market continues to be dominated by Nokia with a share of 37.2 per cent, followed by Samsung with 14.9 per cent, G'Five with 7.5 per cent, and Micromax

with 5.8 per cent. Domestic and Chinese handset makers such as Micromax, G'Five, Karbonn, Spice, Maxx and Lava, have garnered a strong presence in the Indian market due to their featurerich, localised products and low price points.

Key Developments
Telecom Regulatory Authority of India (TRAI) has revealed that the country's mobile subscriber base has increased from 893.84 million in December 2011 to 903.73 million in January 2012

Telecom operators added 9.88 million mobile subscribers in January 2012 The overall tele-density reached 77.57 per cent Broadband subscriber base increased from 13.30 million at the end of December 2011 to 13.42 million at the end of January 2012

Telecom users in rural areas have grown at a faster pace compared to their urban counterparts in the last five years, a CAG report said India added around 20 million subscriptions of the estimated 140 million net additions in mobile subscriptions across the world during the April-June quarter in 2012, said a report by Ericsson

The Indian telecom sector is a very capital intensive sector and involves high value investments. Correspondingly, the mobile phone industry is also experiencing a parallel upward surge, and a parallel enhancement in technologies used. With the liberalization of the Indian economy, the telecom sector has become very attractive for mergers and acquisitions latest being SingTel increasing its stake in Bharti telecom.

Employment Opportunities According to analysts, the sector would generate employment opportunities for about 10 million people direct employment for 2.8 million people and indirect employment for about 7 million. The total revenue of the Indian telecom sector grew by 7% to 283,207crore ($ 56.5 billion) in 2011, while revenues from telecom equipment segment

stood at 117,039 crore ($ 23.35 billion). Energy saving initiatives With an ambition to be diesel free by 2020, telecom companies are retrofitting their towers every year. Many telecom tower companies currently use renewable energy sources such as solar, biogas and wind besides hydroelectric power, for individual towers. Bharti Airtel, one of the largest telecom service providers in India, has been testing and implementing various energy saving options for the last two-three years. Additionally, the e-bill initiative is estimated to save as many as 24,000 trees a year.

Value addition by VAS Some of the recent developments in this area are M-Commerce, focus on localization, availability of content in vernacular languages and availability of mobile TV. The expected revenue from VAS will be around $4 billion by 2015.

IMPACT OF UNION BUDGET ON TELECOM SECTOR:

Overall, budget 2013 failed to bring any major surprise for the telecom sector. Finance Minister did not address any of the long pending demands of industry including the much awaited infrastructure tag to telecom players, high service taxes, spectrum allocation and FDI. There is no denying the fact that telecom sector plays a vital role in the economic development of the country as for every 10% of the population using basic services (voice and SMS) in the country, national gross domestic product rises by 0.5%, and for Internet and other non-voice communications (data), the same penetration adds 1% according to the report by DoT. However, the cancellation of 122 licences last year and high spectrum fee reduced sales across the ecosystem and led to negligible spending in network rollouts. Moreover, sector has been hit by high service tax levies in the recent past. Although the Union budget 2013 failed to bring clarity on issues that were hindering the growth of otherwise fastest growing industry, HOPES ARE ON THE National Telecom Policy/Spectrum Enactment act to be announced this year which is expected to address most of the issues concerning Telecom sector

CHALLENGES OF THE TELECOM SECTOR:

Rapidly Falling ARPU

The competitive intensity in the telecom industry in India is one of the highest in the world and has lead to sustained fall in realisation for the service providers. Intense competitive pressure and cut throat pricing has resulted in declining ARPUs. With increasing number of new entrants in the telecom space the competitive intensity is likely to continue, putting further downward pressures on the telecom tariffs. Thus, the telecom companies might have to grapple with further decline in ARPUs, going forward. Further, with the telecom companies moving their focus to the rural areas for driving the future subscriber growth they might not witness a commensurate increase in revenues. In fact, the risk of steep decline in ARPUs will increase going forward as the telecom companies penetrate rural markets that are characterised by higher concentration of lowincome, low-usage customers. A higher-than-expected decline in ARPU poses a risk of reduction in margins of service providers. Alternatively, telecom operators are turning their focus to steadily increasing the minutes of usage (MoU) to counter the sustained fall in ARPUs. Likewise, the growth of the VAS is also crucial for some improvement in the ARPUs of operators. Lack of Telecom Infrastructure

Lack of telecom infrastructure in semi-rural and rural areas could be one of the major hindrances in tapping the huge rural potential market, going forward. The service providers have to incur a huge initial fixed cost to enter rural service areas. Further, as many rural areas in India lack basic infrastructure such as road and power, developing telecom infrastructure in these areas involve greater logistical risks and also extend the time taken to roll out telecom services. The lack of trained personnel in the rural area to operate and maintain the cellular infrastructure, especially passive infrastructure such as towers, is also seen as a hurdle for extending telecom services to the under penetrated rural areas.

Rural Areas Continue to Remain Under Penetrated

A rural teledensity of merely 15% point towards the fact that a majority of Indian population still do not have access to telecom services. The rural India seems to have remained untouched by the telecom revolution witnessed in the last few years. A huge 'digital divide', which is reflected by the enormous difference of 74% between the urban and rural teledensity, reiterates this fact. However, with the urban markets reaching a saturation point, the telecom service providers are penetrating rural areas for driving future growth. Thus, the service providers entering new rural markets might witness substantial increase in subscriber base. The expansion in the rural areas, however, has increased the risk of further decline in the ARPUs. Nonetheless the revenue growth from these regions is unlikely to match the surge in the subscriber base. Excessive Competition

Another major concern that has come to the forefront in the recent past has been heightened competitive intensity in the industry that has correspondingly fuelled the price war between industry players. The Indian wireless market is one of the worlds most competitive markets, with 12 operators across 23 wireless circles and 6 to 8 competing operators in each circle. The auction of new 3G licences and the introduction of mobile number portability (MNP) are likely to heat up competition in the industry, going forward. Spectrum is the most important resource that is required for providing mobile services. Given that spectrum is a finite resource, the availability of the same would be inversely proportional to the number of operators. Thus, larger the number of service providers smaller will be the amount of spectrum available to each of them. Scarcity of spectrum leads to higher capex on deployment of mobile networks for the operators as they need more cell sites to improve service quality. Further the growing usage of spectrum and the resultant scarcity may lead to re-use of spectrum and increase chances of congestion in networks leading to constraints on service quality. Evidently, the competition in the industry is expected to intensify further with the entry of new players, both domestic as well as foreign players. With the competitive intensity of the industry already at such high levels new operators might find it difficult to gather significant share in Indian telecom market. While the new players may benefit from a faster network rollout through

tower sharing, they will face challenges in terms of high subscriber acquisition costs and lower ARPU customers. Price War Between the Service Providers Putting Pressure on Margins

The ever-increasing competitive intensity in the sector, with licenses and spectrum in several circles allotted to newer operators, is also a concern and could lead to unrealistic pricing levels to grab subscribers. The pricing strategy of per second billing already has taken the price war between telecom operators to the next level. The intensifying price war could put significant downward pressure on the industry revenue growth. Further, the ongoing price war and the concomitant decline in telecom traffic could raise the entry barrier for new companies. Spectrum Allocation

3G Spectrum availability is one of the major concerns for the industry. Lack of adequate spectrum which is the most integral part of the mobile telephony sector could hamper its growth severely. However, the spectrum allotment has been the most controversial issues in the Indian telecom sector. The smooth process of scheduled 3G and BWA spectrum allocation is likely to be one of the key factors affecting the industry dynamics, going forward. Given the highly-competitive nature of the Indian telecom industry on one hand, and limited licenses in the 3G network on the other, the risk of excessive biding by the service providers has increased. Irrational bidding, especially in some circles, might render 3G services financially-unviable. Further, there exists a risk of delay in allotment of proposed spectrum to the service providers who have successfully bid for the 3G spectrum. Regulatory Charges

The regulatory charges in the telecom sector have a complicated structure because multiple levies impede the smooth implementation of telecom projects in India. Given the continuouslydeclining ARPUs, and the extremely-low tariffs, sustianing the current growth rates of the industry requires urgent attention towards rationalising the convoluted tax structure in the sector.

TRAI has recommended to the DoT committee to phase out the multiple levies in this sector with a single levy in a phased manner. Further with regard to license fees, which currently stand at 6%-10% of total revenue, TRAI has suggested that it be reduced at a uniform rate of 6% across all licences. Lower Broadband Penetration

The Indian economy remains highly underpenetrated in terms of broadband connections. High cost of devices (PC and laptop), high internet charges and lower wireline connections have been some of the major factors inhibiting broadband penetration. Broadband is one of the key catalysts for economic development and major initiatives by both the government and service providers are needed to increase its penetration

PORTERS FIVE FORCE:

Supply:

Intense competition has resulted in prompt service to the subscribers. However, smaller towns and villages continue to have waiting periods on account of non-availability of adequate infrastructure.

Demand:

Given the low penetration levels in the country and continuously falling tariffs, demand will continue to remain higher in the foreseeable future across all the segments.

Barriers To Entry: High capital investments Older and well-established players who have a nationwide network License fee Continuously evolving technology, and o Falling tariffs

Bargaining Power Of Suppliers:

Improved competitive scenario and commoditization of telecom services has led to reduced bargaining power for services providers.

Bargaining Power Of Customers:

A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.

Competition:

The entry of fourth cellular player and commencement of WLL services has resulted in intense competition in the bigger cities. Reducing tariffs will hurt the new entrants, as they will be unable to recover their high capital investments.

Threat of substitute: Internet Telephony eating into the revenue of GSM/CDMA telephony.

MARKET-SHARE OF THE MAJOR PLAYERS IN THE TELECOM SECTOR:

Key Players With new players coming in, the intensity of competition in the industry has increased, especially over the last four years. The market share of telecom operators of the telecom companies reflects the fragmented nature of the industry, with as many as 15 players. As of April 30, 2012, Bharti telecom led the market with 19.94 per cent share, Reliance (16.58 per cent), Vodafone (16.41 per cent), Idea (12.4 per cent), BSNL (10.51 per cent), Tata (8.77 per cent), Aircel (6.93 per cent), with the remaining share being held by other smaller operators.

Telecom Operator wise Market Share Bharti is far ahead with close 20% market share in India, Reliance (16.58%) and Vodafone (16.41) are having a close battle. Reliance currently has 154 million subscribers as compared to 152.5 million of Vodafone. Uninor, who is one of the late entrants in Indian Telecom market now has over 45 million subscribers and accounts for close to 5 percent of Indian mobile market share

GOVERNMENT POLICY
Government Initiative The Cabinet has given its approval to National telecom Policy (NTP) 2012. The policy directs new initiatives, which includes free roaming, unrestricted Net telephony and a new unified licensing regime for operators. The policy also endorses a boost to broadband expansion and an increase in local manufacturing of telecom equipment. The National Science and Technology Entrepreneurship Development Board (NSTEDB), the Department of Science and Technology (DST), Government of India, Technopark and MobME Wireless have joined hands to set up the Startup Village - Indian Telecom Innovation Hub in Kerala. The country's first Public Private Partnership (PPP) telecom business incubator is a step to support new product initiatives and turn them into successful ventures. TRAI is also doing its bit to achieve the aim of carbon emission reduction under which operators are directed to achieve carbon reduction to the extent of 5 per cent by 2012-13, 12 per cent by 2016-17 and 17 per cent by 2018-19. Concerning these norms under 'Green Telephony', TRAI has further mandated for all the operators that at least 50 per cent of all rural towers and 20 per cent of all urban towers are to be powered by hybrid power by 2015. FDI Policy in Telecom Foreign direct investment (FDI) in telecom sector (including radio paging, cellular mobile, and basic telephone services) during April-March 2011-12 stood at US$ 1,997 million, as per the Department of Industrial Policy & Promotion (DIPP) data. Total telephone subscriber base in the country reached 952.91 million at the end of April 2012 from 951.34 million at the end of March 2012. Total Wireless subscriber base increased from 919.17 million in March 2012 to 921.02 million at the end of April 2012. Wireline subscription stood at 31.89 million at the end of April 2012. Overall tele-density has reached 78.71. Total Broadband subscriber base has increased from 13.79 million at the end of March 2012 to 13.95 million at the end of April 2012, there by showing a monthly growth of 1.13 per cent.

COMPANY ANALYSIS:

1. BHARTI AIRTEL: (BSE Code: 532454 ; NSE Code: BHARTIARTL)

OVERVIEW: Bharti Airtel is one of the world's leading providers of telecommunication services with presence in 20 countries including India, Sri Lanka, Bangladesh and 17 countries in the African continent. The Company served an aggregate of 251.65 Mn customers as on March 31, 2012 providing mobile, voice and data solutions using 2G, 3G and 4G technologies. The Company provides fixed line voice and data solutions to 3.3 Mn customers in 87 cities in India. Headquartered in New Delhi, India, the company ranks amongst the top 5 mobile service providers globally in terms of subscribers. In India, the company's product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had over 246 million customers across its operations at the end of February 2012.

VISION OF THE COMPANY: By 2015 airtel will be the most loved brand, enriching the lives of millions.

Enriching lives means putting the customer at the heart of everything we do. We will meet their needs based on our deep understanding of their ambitions, wherever they are. By having this focus we will enrich our own lives and those of our other key stakeholders. Only then will we be thought of as exciting, innovation, on their side and a truly world class company."

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BUSINESS DESCRIPTION: Provides GSM mobile services in all the 22 telecom circles in India, Srilanka, Bangladesh and now in 16 countries of Africa. Provides telemedia services (fixed line and broadband services through DSL) in 87 cities in India. Provides an integrated suite of Enterprise solutions, in addition to providing long distance connectivity both Nationally and Internationally. We also offer DTH and IPTV Services.

MANAGEMENT STRUCTURE: Chairman Sunil Bharti Mittal

JMD & CEO (India) Gopal Vittal

MD & CEO (International) Manoj Kohli Executive Director Human Resources Krish Shankar

DirectorConsumer Business#

Director B2B#

Supply Chain*

Director, Market Operations Ajai Puri

Director, Customer Experience Raghunath Mandava

Director Network Services Group Jagbir Singh

CFO Nilanjan Roy

Director Legal & Regulatory Jyoti Pawar

Director IT #

*Moti Gyamlani (Global Head Supply Chain ) reports to the MD of Bharti Airtel Ltd with direct responsibility for India SCM function # To be appointed.

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QUANTITATIVE ANALYSIS:
Ratio Analysis for the last 3 years and comments over the performance of the Company Overall Profitability Ratios: Profitability ratios are used to analyze the profitability of the company. Different stakeholders will have different perspective on the profitability ratios. These ratios measures the results of business operations or overall performance and effectiveness of the firm

2012 Gross Profit Margin (%) Net Profit Margin (%) Return on Networth (%) Return on Capital Employeed (%) 14.45 3.08 4.38 8.86

2011 18.95 11.95 14.69 11.15

2010 25.81 21.78 23.13 22.1

Comment: The overall Profitability of the company has decreased in 2011-12 compared to 2010-11.

Gross profit ratio has declined from 25.81% in 2010 to 18.95 % in 2011 & 14.45 % in 2012, even though the overall sales has increased showing that the cost of goods sold has increased.

Net profit ratio has also declined from 21.78 % in 2010 to 11.95% in 2011 and 3.08 % in 2012. This fall is an indication of decreasing overall efficiency and profitability of the firm, though the sales have increased.

Return on equity (ROE) also known as Return on Net Worth is also declining from 23.13 % in 2010 to 14.69 % in 2011 to 4.38 in 2012 , indicating shareholders funds are not being utilized

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efficiently. This decreasing ROE also indicates that return earned by equity shareholders as compared to last year. It can be inferred that the company is paying low dividend, decline in

profits is the main reason for this.

ROCE has decreased from 22.21 in 2010 to 11.15 in 2011to 8.86 in 2012. The ROCE is decreasing because of the global economic downturn and the issues in telecom sector namely 2G fraud affecting the entire telecom sector.

Capital structure/Long term solvency/Gearing ratios: Long-term solvency ratios convey a firms ability to meet the interest cost and repayments schedules of its long-term obligations. 2012 Debt Equity Ratio 1.36 2011 1.16 2010 0.25

Interest Coverage Ratio (%)

4.82

7.85

21.42

Comments: Debt equity ratio indicates that the proportion of funds provided by long-term lenders in comparison to the funds provided by the owners is only 0.25 in 2010.This portion has further increases to 1.16 in 2011 and 1.36 in 2012. It shows that the long-term solvency position of the company This may be due to high financial needs of the company eventually leading to high debt for the company. Interest Coverage Ratio has decreased from 21.42 in 2010 to 7.85 in 2011 and to 4.82 in 2012. It shows company is capable to meeting its interest obligations from operating earnings. Since the company has started its operations in African countries, the interest coverage ratio has come down.

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Efficiency Ratios: Fixed Assets turnover ratio = Sales / Fixed Assets. This ratio gives an indication of how efficiently a company uses its fixed assets in doing its business. 2012 Fixed Asset turnover ratio Inventory Turnover Ratio 0.61 546.68 2011 0.73 278.01 2010 0.61 864.48

Comments: Fixed Asset turnover ratio has decreased from 0.73 in 2011 to 0.61 in 2012. It indicates that

although the company has utilized assets efficiently but when compared to previous year the efficiency level is not so good.
As sales has increased, Inventory Turnover ratio has also increased from 278.01 in 2011 to 546.68 in 2012 showing higher liquidity of the inventory.

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Liquidity Ratios/Short term solvency: These are the ratios measures the short-term solvency or financial position of a firm. These ratios are calculated to comment upon the short- term paying capacity of a concern of the firms ability to meet its current obligation. 2012 Current Ratio (X) Quick Ratio (X) Comments: The current ratio of the companyis 0.65 in 2010 & 0.44 in 2011 which does not show the good liquidity position, as it is much below than the standard norms of 2:1. In the year 2012, it decreased to 0.38 , as the current liabilities is increasing at a faster pace as compared to the current assets. 0.38 0.47 2011 0.44 0.32 2010 0.65 0.67

The quick ratio of 0.67 in 2010 & 0.32 in 2011 is lower as compared to the standard norms of 1:1. In 2012, it has increased to 0.47, and is greater than the earlier years which show that the company can meet its current financial obligations in a little better with the available quick funds in hand. .

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2. IDEA CELLULAR (BSE Code: 532822 ; NSE Code: IDEA)

OVERVIEW
Idea Cellular is an Aditya Birla Group Company, India's first truly multinational corporation. Idea is a panIndia integrated GSM operator offering 2G and 3G services, and has its own NLD and ILD operations, and ISP license. With revenue in excess of $4 billion; revenue market share of nearly 15%; and subscriber base of over 121 million in FY 2013, Idea is Indias 3rd largest mobile operator. Idea ranks among t he Top 10 country operators in the world with a traffic of over 1.5 billion minutes a day.

Ideas robust pan-India coverage is built on a network of over 100,000 2G and 3G cell sites, spread across over 55,000 towns in India.

Using the latest in technology, Idea provides world-class service delivery through the most extensive network of customer touch points, comprising of nearly 4,500 exclusive Idea outlets, and over 7,000 call centre seats. Ideas customer service delivery platform is ISO 9001:2008 certified, making it the only operator in the country to have this standard certification for all 22 service areas and the corporate office.

Idea offers a range of high-speed mobile broadband devices including Android based 3G smartphones, dongles etc. Ideas wide portfolio of 3G smartphones offer the latest in 3G applications and high-end data services such as Idea TV, games, social networking etc. at most affordable prices.

Idea has been a pioneer in introducing customized product offerings for segmented customers. It is the first mobile operator to introduce innovative value added services in the Indian telephony market, and has remained ahead of the industry in data product offerings. 35

Idea has received several national and international recognitions for its path-breaking innovations in mobile telephony products and services. Idea won the prestigious NDTV Business Leadership Award in the Telecom category for its solid, consistent performance in 2012. It was the Winner of ET Telecom Awards 2012, in the categories - Customer Experience Enhancement, Excellence in Marketing, and Innovative Products. Idea also won the Best Ad Campaign of the Year award for the popular Honey Bunny campaign at the Tele.Net Telecom Awards 2012.

Idea won the Best Brand Campaign at the esteemed World Communication Awards in 2012 & 11. It won the GSM Association Award for Best Billing and Customer Care Solution for two consecutive years, and was awarded Mobile Operator of the Year Award India for 2007 and 2008 at the Annual Asian Mobile News Awards.

Idea is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India.

VALUES OF THE COMPANY:

Integrity - honesty in every action Commitment - deliver on the promise Passion - energized action Seamlessness - boundryless in letter and spirit Speed - one step ahead always

MANAGEMENT TEAM:
Mr. Himanshu Kapania - Managing Director Mr. Ambrish Jain - Deputy Managing Director Mr. Akshaya Moondra - Chief Financial Officer Mr. Anil K Tandon - Chief Technology Officer Mr. Pankaj Kapdeo, Company Secretary

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QUALITATIVE ANALYSIS:

Ratio Analysis for the last 3 years and comments over the performance of the Company Overall Profitability Ratios: Profitability ratios are used to analyze the profitability of the company. Different stakeholders will have different perspective on the profitability ratios. These ratios measures the results of business operations or overall performance and effectiveness of the firm

2012 Gross Profit Margin (%) Net Profit Margin (%) Return on Networth (%) Return on Capital Employeed (%) 13.4 3.7 5.55 10.85

2011 10.44 5.79 7.33 6.93

2010 12.57 7.59 8.42 8.99

Comment:

The above profitability ratios indicate the margin levels of the company. The gross profit margins and net profit margins of the company are important indicators of the health and revenue of the company.

The gross profit margins of Idea cellular seem to be in a healthy position. Over the three years viz. 2012, 2011 and 2010 the gross profit margin seems to be increasing in the three year but takes a fall in 2011. This can be attributed to the high inflation that existed in the country.

Net profit ratio has also declined from 7.59 % in 2010 to 5.79% in 2011 and 3.7% in 2012. This fall is an indication of decreasing overall efficiency and profitability of the firm, though the sales have increased. 37

Return on equity (ROE) also known as Return on Net Worth is also declining from 8.42 % in 2010 to 7.33 % in 2011 to 5.55 in 2012, indicating shareholders funds are not being utilized efficiently. This decreasing ROE also indicates that return earned by equity shareholders as compared to last year. It can be inferred that the company is paying low dividend, decline in

profits is the main reason for this. This ratio being of great interest to the equity shareholders, they may loose interest in the company due to declining RoE.

ROCE has over the three years viz. 2012, 2011 and 2010 seems to be increasing in the three year but takes a fall in 2011.idea cellular gives a return of 10.85% in the year 2012 as compared to that of 6.93% in the year 2011 which states that the company has tried to improve its return on the total capital employed which gives a positive sign on improvement in the overall profitability of the companys performance.

Capital structure/Long term solvency/Gearing ratios: Long-term solvency ratios convey a firms ability to meet the interest cost and repayments schedules of its long-term obligations. 2012 Debt Equity Ratio 0.73 2011 0.83 2010 0.69

Interest Coverage Ratio (%)

3.99

6.81

5.3

Comments: The debt equity ratio is below the ideal ratio of 2:1 which states that company has less of debt and more of owned funds and the company believes in taking less risk.

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Debt equity ratio indicates that the proportion of funds provided by long-term lenders in comparison to the funds provided by the owners is only 0.69 in 2010.This portion has further increases to 0.83 in 2011 and then reduced again to 0.73 in 2012. It shows that the long-term solvency position of the company . Interest Coverage Ratio has increased from 5.3 in 2010 to 6.81 in 2011 and reduced to 3.81 in 2012. This states that the company is not in a good position as compared to its previous year in paying off its interest.

Efficiency Ratios: Fixed Assets turnover ratio = Sales / Fixed Assets. This ratio gives an indication of how efficiently a company uses its fixed assets in doing its business. 2012 Fixed Asset turnover ratio Inventory Turnover Ratio 0.8 210.54 2011 0.7 234.21 2010 0.52 231.15

Comments: Fixed Asset turnover ratio has increased from 0.7 in 2011 to 0.8 in 2012. It indicates that the

company has utilized its assets efficiently to create sales.

Though sales has increased, Inventory Turnover ratio has decreased from 234.21 in 2011 to 210.54 in 2012 showing slow movement of the inventory.

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Liquidity Ratios/Short term solvency: These are the ratios measures the short-term solvency or financial position of a firm. These ratios are calculated to comment upon the short- term paying capacity of a concern of the firms ability to meet its current obligation. 2012 Current Ratio (X) Quick Ratio (X) Comments: The current ratio of the company is 0.86 in 2010 & 0.44 in 2011 which does not show the good liquidity position, as it is much below than the standard norms of 2:1. In the year 2012, it decreased to 0.49, as the current liabilities are increasing at a faster pace as compared to the current assets. 0.49 0.51 2011 0.44 0.46 2010 0.86 0.75

The quick ratio of 0.75 in 2010 & 0.46 in 2011 is lower as compared to the standard norms of 1:1. In 2012, it has increased to 0.51, and is greater than the earlier years which show that the company is trying to improve its liquidity position.

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COMPARISON OF RATIO ANALYSIS:

Ratio Analysis Comparison of Bharti Airtel with Idea Cellular and comments (Standalone ratios)

Overall Profitability Ratios:

Profitability ratios are used to analyze the profitability of the company. Different stakeholders will have different perspective on the profitability ratios. These ratios measures the results of business operations or overall performance and effectiveness of the firm. Airtel Gross Profit Margin (%) Net Profit Margin (%) Return on Networth (%) Return on Capital Employeed (%) 14.45 3.08 4.38 8.86 Idea 13.4 3.7 5.55 10.85

Comment: Gross profit ratio of Airtel is 14.45% and that of Idea is 13.4% that reflects that Airtels sales price of goods sold without corresponding decrease in cost of sales is better than that of Idea. Net profit ratio of Airtel is 3.08% whereas Ideas Net profit ratio is 3.7% that states that Ideas overall efficiency and profitability of the firm is better than that of Airtel, showing that idea is more efficient as compared to Airtel.

Return on equity (ROE) also known as Return on Net Worth of Airtel is 4.38% whereas that of Idea is 5.55% that indicates that shareholders funds are being utilized efficiently better in Idea than Airtel, assuming that the that the company is diversifying its business ROCE of Airtel is 8.86% and that of Idea is 10.85% which shows that Idea is earning slightly higher profits on the investments made by the company than Airtel.

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Capital structure/Long term solvency/Gearing ratios: Long-term solvency ratios convey a firms ability to meet the interest cost and repayments schedules of its long-term obligations. Airtel Debt Equity Ratio Interest Coverage Ratio (%) 1.36 4.82 Idea 0.73 3.99

Comments: Debt equity ratio of Airtel is 1.36 and that of Idea is 0.73 that indicates that the proportion of funds provided by long-term lenders in comparison to the funds provided by the owners by Airtel is less than that of Idea. It also shows that the long-term solvency position of Airtel is sound than Idea.

Interest Coverage Ratio of Airtel is 4.82% and that of Idea is 3.99% that indicates that Airtel is more capable to meeting its interest obligations from operating earnings than Idea.

Efficiency Ratios: Fixed Assets turnover ratio = Sales / Fixed Assets. This ratio gives an indication of how efficiently a company uses its fixed assets in doing its business. Airtel Fixed Asset turnover ratio Inventory Turnover Ratio 0.61 546.68 Idea 0.49 210.54

Comments: Fixed Asset turnover ratio of Airtel is 0.61 and that of Idea is 0.49 that shows that fixed assets in Airtel are optimally utilized for generating revenue than Idea. Inventory Turnover ratio of Airtel is 546.68 and that of Idea is 210.54,this shows that Airtel has high liquidity of the inventory than that of Idea.

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Liquidity Ratios/Short term solvency: These are the ratios measures the short-term solvency or financial position of a firm. These ratios are calculated to comment upon the short- term paying capacity of a concern of the firms ability to meet its current obligation. Airtel Current Ratio (X) Quick Ratio (X) Comments: The current ratio of Idea is 0.49 and that of Airtel is 0.38 showing that both the companies have a bad short term solvency but in comparison Idea is in a better position. 0.38 0.47 Idea 0.49 0.51

The quick ratio of Idea is 0.51 and that of Airtel is 0.49 which is lower as compared to the standard norms of 1:1.The financial position of Idea is quite satisfactory than Airtel.

PE RATIO:
Airtel PE ratio 25.21 Idea 63.44

The Price-Earnings Ratio of Airtel is Rs25.21, which means that the market pays Rs25.21 for every rupee earned by the company and in comparison Idea which is Rs.63.44. This indicates the market confidence in IDEA and its future prospects. The industry average is Rs. 24.82 showing that Idea is overvalued.

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CONCLUSION:
Strong growth in subscriber base, increasing non voice revenues and lowering fixed cost per unit, the Indian telecom service sector is set to report buoyant growth in revenues and profitability in the short to medium term.

There are two key drivers for the growth in this business. First, the enhanced capability of the Company to deliver services on a global basis is attracting new customers and opening up new markets. Second, there is significant growth in the existing customers' businesses globally.

Bharti Airtel, one of the major players in the telecom service provider industry has attained a significant market share in the country with its widespread network, huge subscriber base and quality service. Also, the company to make its presence felt all across the globe, is spreading its wings to international markets.

Idea, is the second largest major player in the telecom sector is improving its services and try to grow in the market. Is the major competitor to Airtel, which again is growing globally

Though Airtel has much better presence in the global markets, it has shown somewhat consistent growth. Whereas Idea has shown a considerable growth over the last three years. The growth is expected in both the companies but Idea will be able to give much better returns than Airtel.

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LEARNINGS:
Fundamental analysis is a vast topic wherein the sector or the company is analysed as well as forecasting is undertaken to take a call on whether investment option should be exercised or not. 1.) A company cannot be analysed in isolation to its sector. If it is analysed in isolation to the whole sector the future predictions might not come true. 2.) Sector analysis is solely based on the macro economic factors in the market and companies performance may not truly uplift the gloom that might be prevalent in the market. However, the same can be said about a company in isolation as its performance may be contradicting to what is happening in the sector. 3.) Ratio analysis does not really need to be done manually as there exist excel sheets where in just putting in the balance sheet will give all the required ratios, with the help of whose proper analysis can be made. 4.) Ratio analysis is not the only factor which is important while analysing a company fundamentally. Fundamental analysis of the company involves analysing the qualitative as well as the quantitative fundamentals of the company. 5.) Without analysing the qualitative factors of the company, one cannot make proper predictions as well as the recommendations of a company as factors such as skills that a company has in terms of their employees. 6.) Deadlines in the corporate sector are tight and are to be met on time. 7.) Punctuality is to be maintained and is a quality that is strongly expected in the corporate world. 8.) In a market there exist different types of organization with regards to the business verticals they operate in. companies exist using the same organization brand name of parent company so as to utilize their goodwill. At the same time there exist company subsidiaries that use different brand names irrespective of the goodwill enjoyed by the parent companys brand name.

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GLOSSARY
Allocation: The process of apportioning costs (or revenue) to products, departments, divisions or other organization units. Annual Reports: The reports issued annually by a company to its shareholders. It basically contains financial statements, management views and future prospects. Annuity: A stream of uniform periodic cash flows. Arbitrage: A simultaneous purchase and sale of a security (or currency) in different markets to derive benefit from price differentials. Bear market: A market operated by bears or one who has a pessimistic approach for the future. Beta: A risk measure based on how the returns on a given security vary in the market. Credit risk: the risk that a party to a contract will default. Cumulative dividends: A feature of preferred stock that requires all past dividends on preferred stocks to be paid before equity dividends are paid. Current assets: Assets which normally gets converted into cash during the operating cycle of the firm. Current liabilities: Liabilities those are generally payable within a year. Depreciation: A write off part of the cost of the asset annually. Derivatives: Instruments whose payoff are derived from the value of other asset. Du pont system: A system of financial analysis, pioneered by the DU pont company, which helps in understanding profitability in terms of profit margin and asset turnover. Equity: The net worth of the firm consisting of the consisting of the paid up capital plus reserves and surplus.asa Financial Intermediaries: Financial institutions that serve as an intermediary between the savers of funds and the users of funds (commercial banks, development banks, mutual funds etc)

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Financial Risk: the risk which arises out of use of debt capital. Forward contract: An agreement between two parties to exchange an asset for cash at a predetermined future date for a price that is specified today. Futures contract: A standardized forward contract is a future contract. Goodwill: intangible assets represented by the excess of purchase price over the book price. Hedging: A method of risk transfer in which an action taken to shield against the possible losses also eliminates the possible gains. Holding company: A company which holds the controlling interest in one or more other companies which are referred to as subsidiaries. Insolvency: The inability of the firm to meet its debt obligation. Market risk: the part of the risk that cannot be eliminated by way of diversification. Its also referred to as market risk or systematic risk. Money market: the financial market for short term loan/funds. Operating cycle: the operating cycle of the business begins with acquisition of raw material and ends with collection for receivables. Options: the right to buy or sell something on or before a given date at a pre determined price. Portfolio: A combination of assets.

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BIBLIOGRAPHY: Websites: www.reliancecapital.in

www.airtel.in www.ideacellular.com www.moneycontrol.com www.insight.dionglobal.in www.trai.gov.in www.waystowealth.com

JOURNALS: CMIE journal

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APPENDIX: BHARTI AIRTEL INCOME STATEMENT:

Particulars Income Operating Income Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Adminstrative Expenses Total Expenses Operating Profit Other Recurring Income Adjusted PBDIT Financial Expenses/ Interest Expenses Depreciation Other Write offs Adjusted PBT Tax Charges Adjusted PAT Minority Interest Share of P/L In Associates Adjusted PAT after Minority Interest Non Recurring Items Other Non Cash adjustments Reported Net Profit Earnings Before Appropriation Equity Dividend Dividend Tax Retained Earnings 12-Mar 71505.8 0 25495.9 3515.9 0 18789.1 47800.9 23704.9 264.3 23969.2 4082.8 13368.1 0 6518.3 2542.8 3975.5 0 0 3975.5 -2041 282.6 2217.1 2217.1 379.8 61.6 1775.7 11-Mar 59467.2 816.9 20188.1 3278.4 0 15212.4 39495.8 19971.4 488.2 20459.6 2534.9 8698 1508.6 7718.1 1817.5 5900.6 0 -5.7 5894.9 1233.9 38.5 7167.3 7173 379.8 61.6 6731.6 10-Mar 41829.46 85.89 10500.87 1702.55 2789.68 9753.97 24832.96 16996.5 235.19 17231.69 769.7 6199.41 355 9907.59 1533.92 8373.67 -198.39 -4.83 8170.45 939.87 52.81 9163.13 28197.36 379.79 64.55 27753.03

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BHARTI AIRTEL BALANCE SHEET:

Particulars Source of Funds Equity Share Capital Share Application Money ESOP Reserves And Surplus ShareHolders Fund Loan Funds Secured Loans Unsecured Loans Total Debt Minority Interest Total Liabilities Application of Funds Gross Block Revaluation Reserves (-) Accumulated Depreciation Net Block / Net Fixed Assets Capital WIP Investments Current Assets (-) Current Liabilities & Provisions Total Net Current Assets Miscellaneous Expenses Not W/O Total Assets 12-Mar 1898.8 0 0 48712.5 50611.3 12089.3 56933.9 69023.2 2769.5 122404 11-Mar 1898.8 0 0 46868 48766.8 7670.5 48979.6 56650.1 2856.3 108273.2 10-Mar 1898.77 0 261.96 37716.06 39876.78 4958.43 5329.71 10288.14 2855.53 53020.46

133582.1 0 0 133582.1 0 1815.6 21663.9 34657.6 -12993.7 0 122404

128874.3 0 0 128874.3 0 622.4 17009.7 38233.2 -21223.5 0 108273.2

72116.34 2.13 21267.28 50846.93 2435.94 5162.07 11462.73 16887.21 -5424.48 0 53020.46

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IDEA CELLULAR INCOME STATEMENT:

Particulars Income Operating Income Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Adminstrative Expenses Total Expenses Operating Profit Other Recurring Income Adjusted PBDIT Financial Expenses/ Interest Expenses Depreciation Other Write offs Adjusted PBT Tax Charges Adjusted PAT Adjusted PAT after Minority Interest Non Recurring Items Other Non Cash adjustments Reported Net Profit Earnings Before Appropriation Retained Earnings 12-Mar 19488.69 141.37 12450.8 938.07 428.12 481.89 14440.26 5048.43 20.84 5069.27 1055.55 2435.69 0 1578.03 332.29 1245.74 1245.74 -567.84 45.09 722.99 1117.94 1117.94 11-Mar 15438.4 41.22 9849.79 794.57 385.82 608.8 11680.19 3758.21 73.46 3831.66 523.56 2145.29 0 1162.82 98.15 1064.67 1064.67 -221.84 55.87 898.71 394.95 394.95 10-Mar 12397.88 30.48 7431.19 634.64 424.48 505.69 9026.47 3371.41 166.93 3538.35 690.63 1812.33 202.58 832.81 104.24 728.57 728.57 148.41 94.14 953.94 -988.21 -988.21

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IDEACELLULAR BALANCE SHEET:

Particulars Source of Funds Equity Share Capital ESOP Preference Capital Reserves And Surplus ShareHolders Fund Loan Funds Secured Loans Unsecured Loans Total Debt Total Liabilities Application of Funds Gross Block (-) Accumulated Depreciation Net Block / Net Fixed Assets Capital WIP Investments Current Assets (-) Current Liabilities & Provisions Total Net Current Assets Total Assets 12-Mar 3308.85 34.95 1.93 9704.5 13050.22 8704.14 2545.55 11249.69 24299.91 11-Mar 3303.27 47.81 1.93 8946.93 12299.93 9176.06 2894.44 12070.5 24370.43 10-Mar 3299.84 44.45 1.93 8026.15 11372.36 7316.62 542.68 7859.3 19231.66

38271.57 11277.78 26993.78 679.85 97.6 5823.52 9294.85 -3471.33 24299.91

33703.79 11212.78 22491.02 3646.69 1020 3681.65 6468.93 -2787.28 24370.43

27064.65 8890.67 18173.98 546.47 1130.37 4142.27 4761.44 -619.17 19231.66

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