Chapter Final

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT
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CHAPTER-1
INDUSTRY ANALYSIS
Today the Indian Telecommunications network with overall 375
Million subscribers is the second largest network in the world after
China. India is also the fastest growing telecom market in the world
with an addition of 9- 10 million monthly subscribers. The
Teledensity of the Country has increased from77.58 at the end of
December 2014 to 78.16 at the end of January
showing a
stupendous annual growth of about 50%, one of the highest in any
sector
of
the
Indian
Economy.
The
Department
of
Telecommunications has been able to provide state of the art worldclass infrastructure at globally competitive tariffs and reduce the
digital divide by extending connectivity to the unconnected areas.
India has emerged as a major base for the telecom industry
worldwide. Thus Indian telecom sector has come a long way in
achieving its dream of providing affordable and effective
communication facilities to Indian citizens. As a result common man
today has access to this most needed facility. The reform measures
coupled with the proactive policies of the Department of
Telecommunications have resulted in an unprecedented growth of
the telecom sector.
The thrust areas presently are:

1. Building a modern and efficient infrastructure ensuring greater
competitive
environment
2. with equal
stakeholders.
opportunities
and
level
playing
field
for
all
3. Strengthening research and development for manufacturing,

Value added Services
4. Efficient and transparent spectrum management.
5. To accelerate broadband penetration.
6. Universal service to all uncovered areas including rural areas.
7. Enabling Indian telecom companies to become global players.
M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE
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Recent things to watch in Indian telecom sector are:

1. 4G and BWA auctions
2. MVNO
3. Mobile Number Portability
4. New Policy for Value Added Services
5. Market dynamics once the recently licensed new telecom
operators start rolling
Out
6. Services.
7. Increased thrust on telecom equipment manufacturing and
exports.
8. Reduction in Mobile Termination Charges as the cost per line has
substantially
Reduced
9. Due to technological advancement and increase in traffic.
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Growth in telecom sector

India's telecom sector has shown massive upsurge in the recent
years in all respects of industrial growth. From the status of state
monopoly with very limited growth, it has grown in to the level of an
industry. Telephone, whether fixed landline or mobile, is an essential
necessity for the people of India. This changing phase was possible
with the economic development that followed the process of
structuring the economy in the capitalistic pattern. Removal of
restrictions on foreign capital investment and industrial de-licensing
resulted in fast growth of this sector. At present the country's
telecom industry has achieved a growth rate of 21 per cent.
Till 2000, though cellular phone companies were present, fixed
landlines were popular in most parts of the country, with
government of India setting up the Telecom Regulatory Authority of
India, and measures to allow new players country, the featured
products in the segment came in to prominence. Today the industry
offers services such as fixed landlines, WLL, GSM mobiles, CDMA and
IP services to customers. Increasing competition among players
allowed the prices drastically down by making the mobile facility
accessible to the urban middle class population, and to a great
extend in the rural areas. Major players in the sector are BSNL,
MTNL, Bharti Teleservices, Hutchison Essar, BPL, Tata, Idea, etc. With
the growth of telecom services, telecom equipment and accessories
manufacturing has also grown in a big way.
Indian Telecom sector, like any other industrial sector in the country,
has gone through many phases of growth and diversification.
Starting from telegraphic and telephonic systems in the 19th
century, the field of telephonic communication has now expanded to
make use of advanced technologies like GSM, CDMA, and WLL to the
great 3G Technology in mobile phones. Day by day, both the Public
Players and the Private Players are putting in their resources and
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efforts to improve the telecommunication technology so as to give

the maximum to their customers.
Indian Mobile Subscriber Growth 2000 -2014 :

With growth in numbers, our Telecom Industry has also evolved. We
now have 4G too. Mobile internet speeds are increasing, and more
and more people are now coming on the Internet thanks to growth in
Smartphones.
We present to you the chart that shows this growth from 3.1
million mobile users to 920 million in 2014.
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TELECOM SUBSCRIBER BASE IN INDIA

History and Growth:
The history of Indian telecom can be started with the introduction
of telegraph. The Indian postal and telecom sectors are one of the
worlds oldest. In 1850, the first experimental electric telegraph line
was started between Calcutta and Diamond Harbour. In 1851, it was
opened for the use of the British East India Company. The Posts and
Telegraphs department occupied a small corner of the Public Works
Department
Indian telecommunication Industry is one of the fastest growing
telecom markets in the world. The Industry has grown over twenty
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times in just ten years, from under 37 million subscribers in the year
2001 to over 846 million subscribers in the year 2011. India has
the world's second-largest mobile phone user base with over 929.37
million users as of May 2012.It has the world's third-largest Internet
user-base with over 137 million as of June 2012.The two major
reasons that have fuelled this growth are low tariffs coupled with
falling handset prices.
Surprisingly, CDMA market has increased it market share upto 70%
thanks to Reliance Communication. However, across the globe,
CDMA has been losing out numbers to popular GSM technology,
contrary to the scenario in India.
The other reason that has tremendously helped the telecom Industry
is the regulatory changes and reforms that have been pushed for
last 10 years by successive Indian governments. According to
Telecom Regulatory Authority of India (TRAI) the rate of market
expansion would increase with further regulatory and structural
reforms. Even though the fixed line market share has been dropping
consistently, the overall (fixed and mobile) subscribers have risen to
more than 200 million by first quarter of 2007. The telecom reforms
have allowed the foreign telecommunication companies to enter
Indian market which has still got huge potential. International
telecom companies like Vodafone have made entry into Indian
market in a big way.
Further developments and milestones
Pre-1902 Cable telegraph
1902 First wireless telegraph station established

between Sagar Island and Sandhead.
1907 First Central Battery of telephones introduced

in Kanpur.
19131914 First Automatic Exchange installed in Shimla.
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1927 Radio-telegraph system between the UK and India,

with Imperial Wireless Chain beam stations at Khadki and Daund.
Inaugurated by Lord Irwin on 23 July by exchanging greetings
with King George V.
1933 Radiotelephone system inaugurated between the UK

and India.
1953 12 channel carrier system introduced.
1960 First subscriber trunk dialing route commissioned

between Lucknow and Kanpur.[citation needed]
1975 First PCM system commissioned between Mumbai City

and Andheri telephone exchanges.
1976 First digital microwave junction.
1979 First optical fibre system for local junction

commissioned at Pune.
1980 First satellite earth station for domestic

communications established at Sikandarabad, [[Uttar Pradesh|
U.P.] Noida Sector 62SCMS].
1983 First analogue Stored Programme Control exchange

for trunk lines commissioned at Mumbai.
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1984 C-DOT established for indigenous development and

production of digital exchanges.
1995 First mobile telephone service started on noncommercial basis on 15 August 1995 in Delhi.
1995 Internet Introduced in India starting with laxmi nagar

Delhi on 15 August 1995
The global telecommunication services market shrank by 0.2% in

2009 to reach a value of $1,217.8 billion. In 2014, the global
telecommunication services market is forecast to have a value of
$1,383.2 billion, an increase of 13.6% since 2009. The global
telecommunication services market grew by 8% in 2009 to reach a
volume of 3.9 billion subscribers. In 2014, the global
telecommunication services market is forecast to have a volume of
4.9 billion subscribers, an increase of 25.1% since 2009.
Two telecom players dominate this market - BhartiAirtel with 22.74%

market share and Idea Cellular along with other players like BSNL
(Bharat Sanchar Nigam Limited) and AT&T. One segment of the
market that has been puzzling is broadband Internet. Despite the
manner in which the countrys Internet market has been booming,
Indias move into high-speed broadband Internet access has been
distinctly slow. And, while there appears to be considerable
enthusiasm amongst the population for the Internet itself, this has
not been reflected in broadband subscription numbers.
According to a study by GSMA, it has been expected that

Smartphones will account for two out of every three mobile
connections globally by 2020 and India is all set to become the
fourth largest Smartphone market.
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India is projected to have 213 million mobile internet users by June

2015, a 23 per cent rise over a six month period, according to
Mobile Internet in India 2014 report. The broadband services userbase in India is expected to grow to 250 million connections by
2017, according to the UK-based GSM Association (GSMA).
The Ministry of Communications and Information Technology

(MCIT) is has very aggressive plans to increase the pace of
growth, targeting 250 million telephone subscribers by end2007 and 500 million by 2010. Most of the expansion in
subscribers is set to occur in rural India. Indias rural telephone
density has been languishing at around 1.9%. So, if 70% of total
population is rural, the scope for growth in this Industry is
unprecedented.
Since 2012, the growth seems to have been stagnated, but the real
reason is that TRAI has taken steps to weed out inactive numbers
from the system. Many mobile operators lost significant amount of
numbers. So while new subscribers were being added, nearly equal
numbers went out of the system and hence the stagnation. Earlier
the active subscriber ratio was nearly 60% which has now
reached to nearly 85 percent.
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Composition of telephone subscribers in India

The wireless segment (96.9 per cent of total telephone
subscriptions) dominates the
market, while the wire line segment
accounts for the rest.
2% 1%
40%
Urban Wireless
57%
Rural Wireless
Urban Wireline
Rural Wireline
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3. MARKET PLAYERS
Key Players
As on 31st October, 2014, the private access service providers held
90.55% market share of the wireless subscribers whereas BSNL and
MTNL, the two PSU access service providers, held only 9.45% market
share. Wireline subscriber base declined from 27.41 million at the
end of September, 2014 to 27.28 million at the end of October,
2014. Net reduction in the wire line subscriber base was 0.12 million
at the monthly decline rate of 0.45%. The share of urban and rural
subscribers in total wire line subscribers were 79.90% and 20.10%
respectively at the end of October, 2014.
The Overall Wireline Tele-density decreased from 2.20 in
September, 2014 to 2.18 in October, 2014, with Urban
Wireline Tele-density and Rural Wireline Tele-density being
5.66 and 0.64 respectively. BSNL and MTNL, the two PSU access
service providers, held 76.06% of the wireline market share.
Wireless market share in terms of total subscribers in India
-BhartiAirtel is the market leader, with a 22.7 per cent share of total
subscription, followed by Vodafone (18.4 per cent share).
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8%
7% 4%
1% 2%
Bharti Airtel
Vodafone
23%
Idea
Reliance
10%
18%
12%
15%
BSNL
Aircel
Tata
Telewings
Sistema
Others
Government Initiatives
The government has fast-tracked reforms in the telecom sector and
plans to clear the proposal allowing spectrum trading and sharing
ahead of the year-end deadline as it wants to lift the business
sentiment for the forthcoming airwave auction. Some of the other
major initiatives taken by the government are as follows:
The Government of Uttar Pradesh (UP) has secured investment
deals valued at Rs 5,000 crore (US$ 804.64 million) for setting
up mobile manufacturing units in the state.
The Government of India plans to roll out free high-speed wi-fi
in 2,500 cities and towns across the country over the next
three years and the programme, involving an investment of up
to Rs 7,000 crore (US$ 1.12 billion), will be implemented by
state-owned Bharat Sanchar Nigam Ltd (BSNL).
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Citizens of India are expected to get a minimum of 2 megabits

per second (MBPS) Wi-Fi speed at every government owned
service point such as railways stations, airports, bus stops,
hospitals and all government departments that deal with the
public on a daily basis.
The Union Cabinet of India has approved the largest ever
telecom spectrum auction that is targeted to fetch at least Rs
64,840 crore (US$ 10.43 billion). The government will sell
380.75 megahertz (MHz) of second generation (2G) spectrum
in three bandsthe premium 900 MHz, 1800 MHz and 800
MHz.
To speed up the national optical fibre network (NOFN) project,
the Department of Telecommunications (DoT) has advised
officials to use public buildings such as post offices, railway
stations and schools.
The Government of Kerala has decided to allow mobile telecom
service providers to set up towers on government land and
buildings. This is the first time that a State Government has
opened its own land, buildings and offices to mobile
companies.
Road ahead
India will emerge as a leading player in the virtual world by having

700 million internet users of the 4.7 billion global users by 2025, as
per a Microsoft report.
With the governments favourable regulation policies and 4G
services hitting the market, rapid growth is expected in the Indian
telecommunication sector in the next few years. Also, with
developments in this sector, services such as security and
surveillance, remote monitoring of ATM machines, home automation,
traffic management, retail, logistics and grid energy could eventually
facilitate optimisation of resources. Even after achieving astounding
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growth over the past few years, Indian telecom market has still a
huge untapped potential to grow further.
With a large population, India is yet to have complete access to

telecommunications across the length and breadth of India. With
overall tele-density in India still being 66.17% and rural tele-density
at 31.22%, there is significant growth opportunity for the sector,
especially in rural areas, especially with 3G and BWA yet to make
significant inroads.
The future progress of telecom in India is very promising. The

addition of over 18 million connections per month during 2010 puts
the telecom sector on a strong footing. The target of 600 million
telephones by the end of 11th five year plan has already been
achieved in February, 2010.Rural tele-density target has been set at
40% by 2014. Industry estimates suggest that there is a potential to
reach beyond one billion telephones in India by 2015.
According to industry estimates, the revenues of the Indian telecom

industry are projected to reach US$ 45 billion by 2012, compared
with US$ 33 billion in 2009. It has also been projected that the users
for the broadband base are going to reach 100 million mark by
2014, particularly after the telecom companies roll out their 3G
services, as per a research study conducted by Crisil.
Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015
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Investment Policy
With daily increasing subscriber base, there have been a lot of
investments and developments in the sector. The industry has
attracted FDI worth US$ 16,994.68 million during the period April
2000 to January 2015, according to the data released by
Department of Industrial Policy and Promotion (DIPP).
At present 74% to 100% FDI is permitted for various telecom
services. 100% FDI is permitted in the area of telecom equipment
manufacturing and provision of IT enabled services. This has made
telecom one of major sectors attracting FDI inflows in India.
For Basic and cellular, Unified Access Services, National /
International Long Distance, V-Sat, Public Mobile Radio Trunked
Services (PMRTS), Global Mobile Personal Communications Services
(GMPCS) and other value added telecom services - FDI up to 74%
(including FDI, FII, NRI, FCCBs, ADRs, GDRs, convertible preference
shares, and proportionate foreign equity in Indian promoters/
Investing Company) is permitted. FDI up to 49% is permitted under
automatic route and beyond 49% by relevant FIPB guidelines.
For ISP (with gateways), end to end bandwidth and Radio Paging
Service - FDI up to 74% is permitted subject to licensing and security
requirements. Here also, FDI up to 49% is permitted under
automatic route and beyond 49% by FIPB guidelines.
For ISP (without gateway), Infrastructure Providers providing dark

fibre, right of way, duct space, Tower (Category-I), Electronic Mail
and Voice Mail - FDI up to 100% is allowed subject to the conditions
that such companies would divest 26% of their equity in favour of
Indian public in 5 years, if these companies are listed in other parts
of the world. Again, FDI up to 49% is permitted under automatic
route and beyond 49% by FIPB guidelines.
For manufacture of Telecom Equipments - FDI up to 100% is allowed
through automatic entry route.
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Some of the major developments in the recent past are:
Sterlite Technologies Ltd has announced an annual seed fund

of US$ 100,000 to strengthen Indias investments in broadband
technology research, by investing in Indian start-ups, working
on innovative broadband deployment technologies.
Maxx Mobilink plans to start production of mobile handsets at
its Haridwar plant, beginning with assembling devices from
April 2015. Maxx will invest over Rs 6 crore (US$ 965,615.81)
initially in setting up the R&D laboratory.
Huawei Technologies has won two contracts worth a combined
US$ 120 million from Bharti Airtel and Idea Cellular to upgrade
their wire line networks.
Tata Communications has invested in acquiring capacity in
Seabras-1, a submarine cable being developed between the US
and Brazil, seeking to increase services in the Latin American
region.
Bharti Airtel and IHS Holding have signed an agreement under
which latter will acquire about 1,100 telecom towers across
Zambia and Rwanda.
Ericsson has won a seven-year deal worth more than US$ 1
billion to manage the network of Reliance Communications
across 11 service areas, making the Swedish telecom gear
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maker the only service provider to manage the pan-India

network of a mobile phone operator.
PORTERS FIVE FORCES ANALYSIS ON TELECOM

INDUSTRY
THREAT OF NEW ENTRANTS
Ownership of telecom
license
Cable TV-direct lines,

broadband services
Finance
POWER OF SUPPLIERS
Less Power
THREAT OF SUSTITUTES
Talented engineers &

managers
POWER OF BUYERS
Increased choice-high
bargaining power
Switching costs- Individual
&large business customers
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RIVILARY AMONG EXISTING FIRMS WITHIN AN INDUSTRY
Usage of phone ,competition is high

Price
Value added services
Profitability low
CHAPTER II
COMPANY ANALYSIS
TELEDNA COMMUNICATIONS PRIVATE LIMITED
Details About Company
TELEDNA COMMUNICATIONS PRIVATE LIMITED
is a private
company
In operation since 2001 with the vision of becoming the most responsive as well as
the most respected provider of VAS Solutions globally. TeleDNA has helped and is
helping many mobile service providers and enterprises to increase revenues with its
advanced product suite.
TeleDNA product portfolio has highly scalable and robust platforms which can be
deployed in Tier 1, Tier 2 or Tier 3 mobile operator networks With more than 65
product installations around the world,[4] TeleDNA systems are field proven and have
almost all vendors network interfaces ready. As such, TeleDNA provides very fast
roll-out and short time-to market to service providers.
With many firsts to its credit, TeleDNA as a unique Product company has raised to the
standards of even replacing the competition and gaining about 50% market share in
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providing robust platforms to mobile operators in India. The robustness and scalability
of the platforms has been demonstrated during peak with examples such as messaging
platform handling more than 500 million messages every New Year.
Directors of Company
1. Ramganesh Iyer- B.Tech from IIT, Bombay, IIM, Ahmadabad.
2.Surya Mantha -Engineering degree from IIT Kanpur, MS from Virginia Tech, a PhD from the
University of Utah and an MBA from the William E. Simon School at the University of Rochester.
3. Venu Chittoory- Chartered Accountant.
4. Madan Galla-Madan has a MS in Computer Science from Western Kentucky University.
Company Name:
Teledna Communications Private Limited
Industry:
Telecommunications
Area served
world wide
Head quarters
Bangalore,india
CEO
Year of incorporation:
Udit shanker
2001
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Products
Smart Messaging Platform , Mobile application
distribution platform,
Cell Broadcast Center, Location Based Services Access Platform,
Teledna mobile application
Services
Data Vas technology Provider
Website:
www.teledna.com
Company Address:
AMR Tech park

Bommanahalli
Bangalore, Karnataka
MANAGEMENT TEAM
1. UDIT SHANKER chief Executive Officer
2. ASHISH KATHURIA
Chief Sales Officer
3. V.SWAMINATHAN
Chief Financial Officer
4. ANAND KUMAR H
VP Engineering and Global Delivery
Nature of the Company:

TeleDNA is one of the Mobile VAS (Value Added Services) companies, which develops and markets the VAS
Infrastructure products like SMSC, MMSC, CBC, and SDP along with an Innovative VAS Application Platform, which is
named as mZone. It has its centre in Bangalore, India with its sales and support centers in US and other parts of the
world.
It provides end-to-end integration and customization through the use of various technologies to serve its clients across
the globe. TeleDNAs unique A1 (All in One) messaging VAS Infrastructure Platform is designed and developed to
ensure savings on operational costs with features like Highest TPS to foot Print Ratio, Centralized Anti Spamming and
Geo Redundancy.
TeleDNAs VAS Application Platform provides a variety of applications to Mobile Operators for VAS revenues. TeleDNA
provides Managed Services to enhance VAS revenues for Operators by increasing the bottom lines for the operators.
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Cell Broadcast System is emerging as an important broadcast medium for emergency alerts
worldwide. Disaster management agencies are debating on the possibility of using social medium
for emergency alerts, Smart phones are making this possible.
Cell Broadcast System has made it possible for the agencies to make announcement to millions of
citizens in seconds.
As per GSMA, there will be more than 200 Live LTE Networks in over 70 countries by end of 2015.
Its crucial to have the VAS product
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Industry Classification and segment Description
Basic Definition of a M-VAS:

Value Added Service (VAS) in telecommunication industry refers to non-core
services, the core or basic services being standard voice calls and fax
transmission including bearer services.
The value added services are characterized as under:
Not a form of core or basic service but adds value in total service offering.
Stands alone in terms of profitability and also stimulates incremental
demand for core or basic services.
Can sometimes be provided as stand alone.
Do not cannibalize core or basic service.
Can be add-on to core or basic service and as such can be sold at premium
price.
May provide operational synergy with core or basic services.
Note:
A value added service may demonstrate one or more of these characteristics
and not necessarily all of them.
In some cases, the value added service becomes so closely integrated with
the basic offering that neither the user nor the provider acknowledge or realize
the difference. A classic example is of P2P SMS.
The current Mobile VAS industry being expected to touch Rs 16520 crore
by the end of 2010 from the level of Rs 9700 crore in 2008. (According to
Gartner Report).
M-VAS industry is currently increasing with 12.5% CAGR in India.
platform ready for migration to the next generation network.
MVAS industry is attracting wireless operators, handset manufacturers,

content developers, game makers and music, gaming, SMS based
contests and streaming audio & video.
Telecom Industry is contributing 2.7% in GDP of India. (According to

Financial report 2009).
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M-VAS is contributing 13% to the revenue of telecom. ( for FY 2009).

Currently SMS & CRBT is contributing 55% & 26% respectively to the
total M-VAS revenue.
Currently the revenue sharing between Telco & M-VAS companies is

70:30.
PILLARS OF M-VAS:
INFRASTRUCTURE
Pillars of M-VAS defines the basic structure upon which the M-VAS is depend
on. It has four main structures as:
Technology.
Access Device.
Infrastructure.
Content
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The modes that are available to the end users for the growth of M-VAS. There
are basically five types of Access Modes that are:
SMS with 49% Market share.
IVR with 40% Market share.
GPRS / WAP with 8% Market share.
USSD with 3% Market share.
MMS with < 1% Market share.
Note: The above percentages shows the Market share of access modes only
15%
25%
SMS
40%
20%
IVR
GPRS/WAP
USSD
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VAS Industry Classification:

Broadly the whole Mobile VAS Market is divided into three main segments:
Infotainment.
Entertainment.
M-Commerce or Mobile payment.
Infotainment: These services are characterized by the useful information it

provides to the end user. The user interest comes in from the personal
component and relevance of the content. Apart from mobile, alternate modes
are available to access Information VAS like Newspaper, TV, and Internet. E.g.
of Info VAS is information on movie tickets, news, banking account etc. They
also include user request for information on other product categories like realestate, education, stock updates, etc.
Example of Infotainment:
SMS marketing.
Short Code.
Long Code or Virtual Number.
Entertainment: The key differentiating factor of Entertainment VAS is the

mass appeal it generates. These provide entertainment for leisure time usage.
These not only generate heavy volume (owing to its mass appeal) but also
heavy usage. An example of these kinds of services is Jokes, Bollywood
Ringtones, CRBT (Caller Ring Back Tone) and games.
These services continue to be popular and have been key revenue generators for
the Indian mobile VAS market. This is a high value MVAS and will continue to
show growth. Other popular Entertainment VAS driving the market are dating
and chatting services.
The service was first introduced 2 years back and is now being offered by all the
operators. This service is not only growing fast but also witnessing less churn as
compared to other MVAS. Owing to its sticky nature, it requires comparatively
less marketing efforts and cost.
Entertainment VAS has the potential to remain a key contributor to Mobile VAS
industry. To sustain the MVAS growth, it is the responsibility of the industry to
keep discovering/innovating killer applications like CRBT (Caller Ring Back
Tone) at regular intervals.
M-Commerce or Mobile payment:

These are the services which involve some transaction using the mobile phone.
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Example: Buying movie tickets using mobile phone or transfer of money from
one bank account to the other.
These can broadly be classified into 2 types:
Mobile banking.
Mobile payments.
Almost all the operators are conducting pilot exercises for mCommerce
services using different access modes like GPRS, USSD, STK, etc. A big
boost to mcommerce has come from the RBI which recently came out
with some guidelines.
M-Commerce penetration continues to be small but awareness is
increasing Operators are betting on technologies like USSD to make the
service handset agnostic.
The current marketing focus is primarily on mobile bill payment and mbanking Industry is betting on tripling number of m-Commerce users
within this year.
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RATIO ANALYSIS
FINANCIAL ANALYSIS
Financial analysis is the process of identifying the
financial strengths and weaknesses of the firm and
establishing relationship between the items of the balance
sheet and profit & loss account.
Financial ratio analysis is the calculation and
comparison of ratios, which are derived from the information
in a companys financial statements. The level and historical
trends of these ratios can be used to make inferences about a
companys
financial
condition,
its
operations
and
attractiveness as an investment. The information in the
statements is used by
Trade creditors, to identify the firms ability to meet their
claims i.e. Liquidity position of the company.
Investors, to know about the present and future
profitability of the company and its financial structure.
Management, in every aspect of the financial analysis. It
is the Responsibility of the management to maintain
sound financial condition in the company.
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RATIO ANALYSIS
The term Ratio refers to the numerical and quantitative
relationship between two items or variables. This relationship
can be exposed as
Percentages
Fractions
Proportion of numbers
Ratio analysis is defined as the systematic use of
the ratio to
Interpret the financial statements. So that the strengths and
weaknesses of a
Firm, as well as its historical performance and current
financial condition can
Be determined. Ratio reflects a quantitative relationship helps
to form a
Quantitative judgment.
STEPS IN RATIO ANALYSIS
The first task of the financial analysis is to select the
information relevant to the decision under consideration
from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the
same firm relating to the pas6t or with the industry
ratios. It facilitates in assessing success or failure of the
firm.
Third step is to interpretation, drawing of inferences and report

writing conclusions are drawn after comparison in the shape of
report or recommended courses of action.
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BASIS OR STANDARDS OF COMPARISON

Ratios are relative figures reflecting the relation between variables. They
enable analyst
to draw conclusions regarding financial operations.
They use of ratios as a tool of financial analysis involves the comparison
with related facts. This is the basis of ratio analysis. The basis of ratio
analysis is of four types.
Past ratios, calculated from past financial statements of the firm.
Competitors ratio, of the some most progressive and successful

competitor firm at the same point of time.
Industry ratio, the industry ratios to which the firm belongs to
Projected ratios, ratios of the future developed from the projected or
pro forma financial statements
NATURE OF RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial
statements. It is the process of establishing and interpreting various ratios
for helping in making certain decisions. It is only a means of
understanding of financial strengths and weaknesses of a firm. There are
a number of ratios which can be calculated from the information given in
the financial statements, but the analyst has to select the appropriate
data and calculate only a few appropriate ratios. The following are the four
steps involved in the ratio analysis.
Selection of relevant data from the financial statements depending

upon the objective of the analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm
in the past, or the ratios developed from projected financial
statements or the ratios of some other firms or the comparison with
ratios of the industry to which the firm belongs.
INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent limitations
of ratio analysis should be kept in mind while interpreting them. The
impact of factors such as price level changes, change in accounting
policies, window dressing etc., should also be kept in mind when
attempting to interpret ratios. The interpretation of ratios can be made in
the following ways.
Single absolute ratio

Group of ratios
Historical comparison
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Inter-firm comparison
Projected ratios
GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS

The calculation of ratios may not be a difficult task but their use is not
easy. Following guidelines or factors may be kept in mind while
interpreting various ratios are
Accuracy of financial statements

Objective or purpose of analysis
Selection of ratios
Use of standards
Caliber of the analysis
IMPORTANCE OF RATIO ANALYSIS
Aid to measure general efficiency

Aid to measure financial solvency
Aid in forecasting and planning
Facilitate decision making
Aid in corrective action
Aid in intra-firm comparison
Act as a good communication
Evaluation of efficiency
Effective tool
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LIMITATIONS OF RATIO ANALYSIS
Differences in definitions
Limitations of accounting records
Lack of proper standards
No allowances for price level changes
Changes in accounting procedures
Quantitative factors are ignored
Limited use of single ratio
Background is over looked
Limited use
Personal bias
CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There
are different parties interested in the ratio analysis for knowing the
financial position of a firm for different purposes. Various accounting ratios
can be classified as follows:
1. Traditional Classification
2. Functional Classification
3. Significance ratios
1. Traditional Classification
It includes the following:
Balance sheet (or) position statement ratio: They deal with the
relationship between two balance sheet items, e.g. the ratio of
current assets to current liabilities etc., both the items must,
however, pertain to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios
deal with the relationship between two profit & loss account items,
e.g. the ratio of gross profit to sales etc.,
Composite (or) inter statement ratios: These ratios exhibit the
relation between a profit & loss account or income statement item
and a balance sheet items, e.g. stock turnover ratio, or the ratio of
total assets to sales.
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2. Functional Classification
These include liquidity ratios, long term solvency and leverage
ratios, activity ratios and profitability ratios.
3. Significance ratios
Some ratios are important than others and the firm may classify
them as primary and secondary ratios. The primary ratio is one,
which is of the prime importance to a concern. The other ratios that
support the primary ratio are called secondary ratios.
IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
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Chapter Final

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A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

The thrust areas presently are:

3. Strengthening research and development for manufacturing,

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

Recent things to watch in Indian telecom sector are:

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

Growth in telecom sector

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

efforts to improve the telecommunication technology so as to give

Indian Mobile Subscriber Growth 2000 -2014 :

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

TELECOM SUBSCRIBER BASE IN INDIA

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

Further developments and milestones

Pre-1902 Cable telegraph

1902 First wireless telegraph station established

1907 First Central Battery of telephones introduced

19131914 First Automatic Exchange installed in Shimla.

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1927 Radio-telegraph system between the UK and India,

1933 Radiotelephone system inaugurated between the UK

1953 12 channel carrier system introduced.

1960 First subscriber trunk dialing route commissioned

1975 First PCM system commissioned between Mumbai City

1976 First digital microwave junction.

1979 First optical fibre system for local junction

1980 First satellite earth station for domestic

1983 First analogue Stored Programme Control exchange

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

1984 C-DOT established for indigenous development and

1995 Internet Introduced in India starting with laxmi nagar

The global telecommunication services market shrank by 0.2% in

Two telecom players dominate this market - BhartiAirtel with 22.74%

According to a study by GSMA, it has been expected that

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

India is projected to have 213 million mobile internet users by June

The Ministry of Communications and Information Technology

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

Composition of telephone subscribers in India

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

Citizens of India are expected to get a minimum of 2 megabits

India will emerge as a leading player in the virtual world by having

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

With a large population, India is yet to have complete access to

The future progress of telecom in India is very promising. The

According to industry estimates, the revenues of the Indian telecom

Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

For ISP (without gateway), Infrastructure Providers providing dark

M.S.RAMAIAH INSTITUTE OF MANAGEMENT,BANGALORE

A STUDY ON FINANCIAL STATEMENT ANALYSIS AT TELEDNA COMMUNICATIONS PVT

Some of the major developments in the recent past are: