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JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

(Kukatpally, Hyderabad - 500072, Andhra Pradesh, India)

A PROJECT REPORT ON BUDGETARY CONTROL AT BSNL SUBMITTED BY S.P.MURALI KRISHNA ROLL NO: 09881E0020 (2009-2011) Under the guidance of Mr. RAMESH (Project guide) AND Mr. N.VENKATRAO (Head of the department) TO THE DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION VARDHAMAN COLLEGE OF ENGINEERING, KACHARAM, SHAMSHABAD-501218.

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD.

VARDHAMAN COLLEGE OF ENGINEERING


Accredited by National Board of Accreditation (NBA), New Delhi.

KACHARAM (Village), SHAMSHABAD (Mandal), R.R.Dist.501218 A.P. Ph: 08413253335, 253201. Fax: 08413-253482 E-Mail: principal@vardhaman.ac.in Website: www.vardhaman.ac.in

CERTIFICATE

This is to certify that project titled BUDGETARY CONTROL was successfully Carried out by Mr. S.P.MURALI KRISHNA bearing roll no: 09881E0020 in partial fulfillment of the sessional requirement leasing to the award of the degree in MASTER OF BUSINESSS ADMINISTRATION (MBA) of JNTU during academic year 20092011.

EXTERNAL EXAMINER

FACULTY INCHARGE / HOD


(Department of management studies)

Vardhaman college of Engineering.

VARDHAMAN COLLEGE OF ENGINEERING


Accredited by National Board of Accreditation (NBA), New Delhi.

KACHARAM (Village), SHAMSHABAD (Mandal), R.R.Dist.501218 A.P. Ph: 08413253335, 253201. Fax: 08413-253482 E-Mail: principal@vardhaman.ac.in Website: www.vardhaman.ac.in

CERTIFICATE

This is to certify that project titled BUDGETARY CONTROL is submitted by S.P.MURALI KRISHNA in partial fulfillment of the requirement for the award of Master of Business Administration. This is a record of confide work done by him under my guidance and supervision.

PLACE: HYDERABAD DATE:

Mr.RAMESH (Project guide)

DECLARATION

Date:

I hereby declare that this project report titled BUDGETARY CONTROL submitted by me to Department of Master of Business Administration, VARDHAMAN COLLEGE OF ENGINEERING JNTU is a bonafide work undertaken by me and is not submitted by any other university for the award of any degree/ diploma certificate o published any time before.

Signature of the student (S.P.MURALI KRISHNA) (09881E0020).

ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of any task would be incomplete without mentioning the people who made it possible and whose encouragement and guidance has been a source of inspiration throughout the course of project. I would like to convey my sincere thanks to Mr. N.VENKATRAO, Head of the department and Director Dr. N. DAMODAR REDDY and Mr. RAMESH (project guide) for their inspiration and encouragement and extension of all the facilities of the department for carrying out my project and for guiding me in completing each part of this project with his advices, suggestions and guidance. I would like to express my thanks to Mr. P.R. Ramachandran, (Deputy General Manager, Training Division), NATFM, BSNL Who has kindly permitted me to undertake the project in the organization. I express my deep sense of gratitude and indebtedness to Mr.RAMESH, Accounts Officer, NATFM, my project guide at BSNL organization for his able guidance and continuous support on this project and also I would like to thank Mr. GRP. SARMA who has showed me a path to move further to complete my project without whose endeavor the project would not have been completed. I am also thankful to the entire faculty members of MBA department or providing the necessary information and continuous guidance throughout for making this analysis report. I am also grateful to my parents for their encouragement and congenial atmosphere while doing this project. I would like to express my gratitude to all the people who have helped me in doing this project.

S.P.MURALI KRISHNA

INDEX

CHAPTER: 1 1. INTRODUCTION 2. NEED OF THE STUDY 3. OBJECTIVES OF THE STUDY 4. COLLECTION OF DATA (METHODOLOGY & DATABASE) CHAPTER: 2 1. PROFILE OF INDUSTRY 2. PROFILE OF COMPANY/FIRM 3. REVIEW OF LITERATURE CHAPTER: 3 1. DATA ANALYSIS AND INTERPRETATION CHAPTER: 4 1. FINDINGS AND SUGGESTIONS CHAPTER: 5 1. ANNEXURE 2. QUESTIONNAIRE CHAPTER: 6 1. BIBLIOGRAPHY

CHAPTER - I INTRODUCTION

INTRODUCTION

Present business world is full of competition. Uncertainty and exposed to different types of risks. The complexity of managerial problems has led to the development of various management control techniques and procedures useful for the management in managing the business successfully. In a competitive environment, the effective operation of a concern resulting into the excess of income over expenditure fully depends upon as to what extent the management follow proper planning, effective coordination and dynamic control. For all these aspects. It has become necessary that management should plan for the future finance. This is the basic criteria that a firm has to adopt to maintain its profitability and productivity. The procedure for preparing plan in respect of future financial requirements is generally called Budgeting. It is a forward planning exercise. It involves the preparation in advance of the quantitative as well as the financial statements to indicate the intention of the management in respect of the various aspects of the business. In a broader sense, it is essentially an economic service. Budgeting requires a deeper understanding of the economic system of the environment in which the business concern operates. Budgetary control is used by the business as a method of financial planning for the future. Budgets are prepared for main areas of the businesses-Purchases, Sales, Production, Labour, debtors, Creditors, Cash and provide detailed plans of the business for the next three, six or twelve months. Business need to plan for the future. In large businesses such planning is very formal while and for smaller businesses, it will be less formal. Planning for the future falls into three time scales.  LONG TERM:- From about three years up to, sometimes, as far as twenty years ahead.  MEDIUM TERM:- One to three years ahead.  SHORT TERM:- For the next year. BUDGET :A budget is a financial plan for business , prepared in advance. A budget may be set in money terms or it can be expressed in terms of units. Budgets can be income budgets for money received or expenditure budgets for money spent. Most of the budgets are prepared for the next financial year (the budget period) and are usually broken down into shorter time periods, commonly four-weekly or monthly. This enables budgetary control to be exercised over the budget. The actual results can be monitored against the budget and discrepancies between the two can be investigated and corrective action taken where appropriate.

BUDGETARY CONTROL :Budgetary control is the establishment of budgets relating to the responsibilities of executives of a policy and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of the policy or to provide basis for its revision.

BENEFITS OF BUDGETARY CONTROL:1) IT ASSISTS PLANNING:By formalizing objectives through a budget, a business can ensure that its plans are achievable. It will be able to decide what is needed to produce the output of goods and services and to make sure that everything will be available at right time.
2) IT COMMUNICATES AND CO-ORDINATES:-

Because a budget is agreed by the business, all the relevant managers and staff will be working towards the same end. When the budget is being set, any anticipated problems should be resolved and any areas of potential confusion clarified. All departments should be in a position to play their part in achieving the overall Goals.
3) IT HELPS WITH DECISION-MAKING:-

By planning ahead through budgets, a business can make decisions on how much output in the form of goods or services can be achieved. At the same time, the cost of the output can be planned and changes can be made where appropriate.
4) IT CAN BE USED TO MONITOR AND CONTROL:-

An important reason for producing a budget is that management is able to use budgetary control to monitor and compare the actual results (see diagram below). This is so that action can be taken to modify the operation of the business as time passes, or possibly to change the budget if it becomes unachievable.

5) IT CAN BE USED TO MOTIVATE:A budget can be part of the techniques for motivating managers and other staff to achieve the objectives of the business. The extent to which this happens will depend on how the budget is agreed and set, and whether it is thought to be fair and achievable. The budget may also be linked to rewards (for example, bonuses) where targets are met or exceeded.

BUDGETING PROCESS:Budgeting is the formal procedure of preparing budgets. It involves the following basic steps:A. Objective Determination Stage. B. Goal Determination Stage. C. Strategy Formulation Stage. D. Budget Preparation Stage. A. Objective Determination Stage:The first stage is setting the objectives which are defined as the broad and longrange desired state or position in the future. They are motivational or directional in nature and are expressed in qualitative terms. B. Goal Determination Stage:The second stage is specifying the goals. the term goal represents targets, specific in quantitative terms to be achieved in a specific period of time. The timing of introducing new products, purchase of new plant and machinery and expected rate of return are examples of time and quantity oriented goals. C. Strategy Formulation Stage:The next step involves laying down the strategies. Strategies denote specific methods or courses of action to achieve the goals, for instance, promotion of sales through price reduction or aggressive advertisement and so on. D. Budget Preparation Stage:The last stage in which budgets are actually prepared. The Process can be shown by the following diagram:-

BUDGETING TECHNIQUES:A large part of budgeting involves personal finance planning. All three of the following activities are important when creating a budget that you can live comfortably with, as well as one that helps you prepare for the long term. 1) Zero Based Budgeting. 2) Incremental Budgeting. 3) Zero Sum Budgeting. 1) Zero Based Budgeting:By contrast in zero-based budgeting, each item in the budget must be justified starting from the zero-base. The zero based approach is indifferent to whether the total budget is increasing or decreasing. The advantage of this approach is that it promotes a more efficient allocation of resources, requires manager to find more cost effective ways to improve operation and helps detect inflated budgets. Since everything has to be justified this approach will obviously be more time consuming. 2) Incremental Budgeting:This approach uses a budget prepared using a previous periods budget or actual performance as a base, with incremental amounts added for the new budget period. The advantage of this approach is that it is simple and creates a more stable and consistent environment for managers. However, this approach encourages spending up to the budget so that the budget is maintained for the subsequent year, doesnt respond to changing circumstances and perpetuates misallocations of resources. 3) Zero Sum Budgeting:This approach is used in personal finance to describe the practice of allocating or budgeting every dollar of income received. With this approach, if the budget for one item is increased then some other part of the budget must be adjusted downward so that the total budget remains unchanged.

WHAT BUDGETS ARE PREPARED ? Budgets are planned for specific sections of the business: these budgets can then be controlled by a budget holder, who may be the manager or supervisor of the specific section. Such budgets include: Purchases Budget what the business needs to buy to make/supply the goods it expects to sell. Sales Budget what the business expects to sell. Production Budget how the business will make/supply the goods it expects to sell. Labour Budget the cost of employing the people who will make/supply the goods.

Debtor Budget how much the business will receive from credit sales.
Creditor Budget how much the business will pay for credit purchases. Cash Budget how much money will be flowing in and out of the bank account.

The end result of the budgeting process is often the production of a master budget, which takes the form of forecast operating statements forecast trading and profit and loss account and forecast balance sheet. The master budget is the master plan which shows how all the other budgets work together.

BUDGETARY PLANNING:Many large businesses take a highly formal view of planning the budget and make use of:  A budget manual, which provides a set of guidelines as to who is involved with the budgetary Planning and control process, and how the process is to be conducted.  A budget committee, which organizes the process of budgetary planning and control; this Committee brings together representatives from the main functions of the business E.g. production, sales, administration and is headed by a budget co-ordinator whose job is to Administer and oversee the activities of the committee. In smaller businesses, the process of planning the budget may be rather more informal, with the Owner or manager overseeing and budgeting for all the business functions. Whatever the size of the business it is important, though, that the planning process begins well before the start of the budget period; this then gives time for budgets to be prepared, reviewed, redrafted, and reviewed again before being finally agreed and submitted to the directors or owners for approval. For example, the planning process for a budget which is to start on 1st January might commence in the Previous June, as follows: June:- Budget committee meets to plan next years budgets July:- First draft of budgets prepared August:- Review of draft budgets September:- Draft budgets amended in light of review October:- Further review and redrafting to final version November:- Budgets submitted to directors or owners for approval December:- Budgets for next year circulated to managers January:- Budget period commences

LIMITATIONS OF BUDGETARY CONTROL:Whilst most businesses will benefit from the use of budgets, there are a number of limitations of budgets to be aware of: The Benefit Of The Budget Must Exceed The Cost:Budgeting is a fairly complex process and some businesses particularly small ones may find that the task is too much of a burden in terms of time and other resources, with only limited benefits. Nevertheless, many lenders such as banks often require the production of budgets as part of the business plan. As a general rule, the benefit of producing the budget must exceed its cost. Budget Information May Not Be Accurate:It is essential that the information going into budgets should be as accurate as possible. Anybody can produce a budget, but the more inaccurate it is, the less use it is to the business as a planning and control mechanism. Great care needs to be taken with estimates of sales often the starting point of the budgeting process and costs. Budgetary control is used to compare the budget against what actually happened the budget may need to be changed if it becomes unachievable. The Budget May Demotivate:Employees who have had no part in agreeing and setting a budget which is imposed upon them, will feel that they do not own it. As a consequence, the staff may be demotivated. Another limitation is that employees may see budgets as either a carrot or a stick, i.e. as a form of encouragement to achieve the targets set, or as a form of punishment if targets are missed. Budgets May Lead To Disfunctional Management:A limitation that can occur is that employees in one department of the business may over-achieve against their budget and create problems elsewhere. For example, a production department might achieve extra output that the sales department finds difficult to sell. To avoid such disfunctional management, budgets need to be set at realistic levels and linked and co-ordinated across all departments within the business. Budgets May Be Set At Too Low A Level:Where the budget is too easy to achieve it will be of no benefit to the business and may, in fact, lead to lower levels of output and higher costs than before the budget was established. Budgets should be set at realistic levels, which make the best use of the resources available.

NEED FOR THE STUDY:-

Budgetary control is the essence of a business. Therefore, financial planning is of utmost significance to a businessman. Financial planning is concerned with raising funds and their effective utilization with a view to maximize the wealth of the company. Inspite of good financial plan, the desired may not be achieved if there is no effective control to ensure its implementation. A budget is an important tool for financial planning and control. Preparation of budgets in various fields like Purchases, Salaries, Wages, Production, Sales process of the company on monthly, quarterly and half-yearly basis gives effective control system in financial management and thus makes the management aware of the regular price changes. The budget represents a set of yardsticks or guidelines for use in controlling internal operations of an organization. The management through budget can evaluate the performance of every level of the organization. The discrepancy between planned performance and actual performance is highlighted through budgets. The concept therefore is a blend of principles theories and practice of budgetary control giving rise to single product known as budgetary control. This hence routes for the need for the study budgetary control in BSNL to co-ordinate the different units and activities of the organization with a view to utilize the budget resources judiciously.

OBJECTIVES OF THE STUDY:-

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To know the role of budgetary control in BSNL. To know the total budget employed by BSNL and its actual requirement. To exercise control through comparison of actual results with budgeted one. Whether budgetary control department of BSNL ensure the best use of all available resources to maximize profits. To analyze how budgetary control helps the BSNL to select best course factors. To know how it helps to draw up long range plans with fair measure of accuracy for BSNL.

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CHAPTER:- II INDUSTY PROFILE

INDUSTRY PROFILE
TELE COMMUNICATIONS:India has become one of the fastest-growing mobile markets in the world. The mobile services were commercially launched in August 1995 in India. In the initial 5-6 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after the number of proactive initiatives taken by regulator and licensor, the monthly mobile subscriber additions increased to around 2 million per month in the year 2003-04 and 2004-05. Although mobile telephones followed the New Telecom Policy 1994, growth was tardy in the early years because of the high price of handsets as well as the high tariff structure of mobile telephones. The New Telecom Policy in 1999, the industry heralded several pro consumer initiatives. Mobile subscriber additions started picking up. The number of mobile phones added throughout the country in 2003 was 16 million, followed by 22 million in 2004, 32 million in 2005 and 65 million in 2006. The only country with more mobile phones than India with 246 million mobile phones is China 408. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in the mobile sector. In addition to landline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become lowest in the world. A new mobile connection can be activated with a monthly commitment of US$0.15 only. In 2005 alone 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian mobile market. In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which represented a nearly 50% growth when compared with previous year. In April 2008 the Indian Department of Telecom (DoT) has directed all mobile phone service users to disconnect the usage of unbranded Chinese mobile phones that do not have International Mobile Equipment Identity (IMEI) numbers, because they pose a serious security risk to the country. Mobile network operators therefore planned to suspend the usage of around 30 million mobile phones (about 8% of all mobile in the country) by April 30. Present Scenario:In the fixed line arena, BSNL and MTNL are the incumbents in their respective areas of operation and continue to enjoy the dominant service provider status in the domain of fixed line services. For example BSNL controls 79% of fixed line share in the country.

On the other hand, in the mobile telephony space, Airtel controls 21.4% subscriber base followed by Reliance with 20.3%, BSNL with 18.6%, Vodafone with 14.7% subscriber base (as per June 2005 data). Following list shows the GSM subscriber figure till Jan 2009. 1) 2) 3) 4) 5) 6) 7) 8) Bharti Airtel 8838275833.04% Vodafone Essar 633402423.68% BSNL 4267335715.95% IDEA 4001615314.96% AIRCEL 167613976.27% RELIANCE 103538413.87% MTNL 40038071.50% BPL 20073030.75% All India 267538640

Next Generation Networks:In the Next Generation Networks, multiple access networks can connect customers to a core network based on IP technology. These access networks include fibre optics or coaxial cable networks connected to fixed locations or customers connected through wi-fi as well as to 3G networks connected to mobile users. As a result, in the future, it would be impossible to identify whether the next generation network is a fixed or mobile network and the wireless access broadband would be used both for fixed and mobile services. It would then be futile to differentiate between fixed and mobile networks both fixed and mobile users will access services through a single core network. Indian telecom networks are not so intensive as developed countrys telecom networks and India's teledensity is low only in rural areas. 670,000 route kilometers (419,000 miles) of optical fibers has been laid in India by the major operators, even in remote areas and the process continues. BSNL alone, has laid optical fibre to 30,000 Telephone Exchanges out of their 36 Exchanges. Keeping in mind the viability of providing services in rural areas, an attractive solution appears to be one which offers multiple service facility at low costs. A rural network based on the extensive optical fibre network, using Internet Protocol and offering a variety of services and the availability of open platforms for service development, viz. the Next Generation Network, appears to be an attractive proposition. Fibre network can be easily converted to Next Generation network and then used for delivering multiple services at cheap cost.

AIRTEL Bharti Airtel, formerly known as Bharti Tele-Ventures LTD (BTVL) is India's largest cellular service provider with more than 92 million subscribers as of February 2009. It also offers fixed line services and broadband services. It offers its TELECOM services under the Airtel brand and is headed by Sunil Bharti Mittal. The company also provides telephone services and Internet access over DSL in 14 circles. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 95 cities and has recently launched India's best Direct-to-Home (DTH) service, Airtel digital TV. In India, the company has a 24.6% share of the wireless services market, followed by 17.7% for Reliance Communications and 17.4% for Vodafone Essar. In its monthly press release, following statistics have been presented for end of April 2007. y Bharti Airtel added the highest ever net addition of 5.3 million customers in a single quarter (Q4-FY0607) and also the highest ever net addition of 18 million total subscribers in 2006-07. After the proposed network expansion, an additional 30,000 towers will result in the company achieving 70% population coverage. Bharti has over 39 million users as on March 31, 2007. It has set a target of 125 million subscribers by 2010. Prepaid customers account for 88.5% of Bhartis total subscriber base, an increase from 82.7% a year ago. Non-voice revenues, (SMS, voice mail, call management, hello tunes and Airtel Live) constituted 10% of total revenues during Q4, lower than 10.7% in the Q4 of the previous year. Blended monthly minutes of usage per customer in Q4 was at 475 minutes. Has completed 100% verification of its subscribers and in the process disconnected three lakh (300,000) subscribers. Bharti Airtels is now connecting India to Europe under its Europe India gateway [EIG]project. The company is building 15,000 km 3.84 Terrabit OFC sub-marine

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cable system connecting Europe [London] to India via the Middle East. The Airtel subscriber base according to TRAI - Telecom Regulatory Authority of India as of February 2009[7] was: Kolkata - 2,456,896 Maharashtra - 5,690,609 Gujarat - 3,981,660 Andhra Pradesh - 8,892,353 Karnataka - 9,820,812 Tamil Nadu - 6,003,040 Kerala - 2,169,633 Punjab - 3,754,405 Haryana - 1,248,906 Uttar Pradesh (West) - 2,256,862 Uttar Pradesh (East) - 5,722,386 Rajasthan - 6,704,274 Madhya Pradesh - 4,470,561 West Bengal & Andaman and Nicobar - 3,501,560 Himachal Pradesh - 951,121 Bihar - 7,152,245 Orissa - 2,811,453 Assam - 1,448,389 North Eastern States - 890,054 Jammu & Kashmir - 1,590,935

The total is 91,114,971 or 24.2% of the total 375,742,592 GSM + CDMA mobile connections in India till February 2009; and presently the Number 1 operator in India. In 2009 Airtel also launched in Sri Lanka.

VODAFONE Vodafone Essar, previously Hutchison Essar is a cellular operator in India that covers 23 telecom circles in India. Despite the official name being Vodafone Essar, its products are simply branded Vodafone. It offers both prepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros. Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM technology, offering voice and data services in 23 of the country's 23 license areas. It is among the top three GSM mobile operators of India. Vodafone Essar is owned by Vodafone 52%, Essar Group 33%, and other Indian nationals, 15%. On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion, piping Reliance Communications, Hinduja Group, and Essar Group, which is the owner of the remaining 33%. The whole company was valued at USD 18.8 billion. [2] . The transaction closed on May 8, 2007. The Vodafone subscriber base according to COAI - Cellular Operator Association of India as of Nov 2008 was: City/Circle Nov'2008 Mumbai 4115671 Delhi 3741037 Kolkata 2481872 Chennai 1472340 Gujarat 7241167 A.P. 3430016 Karnataka 3333207 Punjab 1944733 Haryana 1878339 U.P.(E) 5589567 Rajasthan 4343407

UP (W) 3825035 West Bengal 4000994 Maharashtra 3833719 Tamil Nadu 4509341 Kerala 2704412 Orissa 137445 Assam 45486 North East 29814 MP 30213 Bihar 76349 Himachal Pradesh New The total is 5,46,24,809 or 23.38% of the total 233,676,930 GSM mobile connections in India till Sept 2008. Nov 2008 Vodafone Essar 58764164 or 23.57% of total 249349436.

Mahanagar Telephone Nigam Limited MTNL is an Indian Government-owned telephone service provider in the cities of Mumbai, Thane, New Delhi, and Navi Mumbai in India. The company was a monopoly until 2000, when the telecom sector was thrown open to other service providers. MTNL provides fixed line telephones, cellular connection of both GSM Dolphin(Postpaid) and Trump (prepaid) and WLL (CDMA) Garuda-FW And Garuda-Mobile and internet services through dialup and DSL Broadband internet TriBand. MTNL has also started Games on demand, video on demand and IPTV services in India through its Broadband Internet service called TriBand. Phone numbers belonging to MTNL start with the prefix 2 infixed line telephones and WLL & in GSM Mobile services its start from 9869/9969/9868/9968. MTNL also provides other services such as VPN,Internet TelephonyVOIP and leased lines through BSNL and VSNL. MTNL has been actively providing connections in both Mumbai and New Delhi areas and the

efficiency of the company has drastically improved from the days when one had to wait years to get a phone connection to now when one can get a connection in even hours. Pre-activated Mobile connections are available at many places across both Metros. MTNL has also unveiled very cost-effective Broadband Internet access plans (TriBand) targeted at homes and small businesses. At present MTNL enjoys the largest of the market share of ISP services in Mumbai and Delhi. Former Indian Communications Minister Thiru Dayanidhi Maran had declared year 2007 as "Year of Broadband" in India and MTNL is gearing up to provide five million Broadband connectivity by the end of 2007. MTNL has upgraded existing TriBand (Broadband) connections for a speed of up to 2 MB/s without any extra cost. This 2 MB/s broadband service is being provided by MTNL at a cost of just US$5.00 per month. MTNL started 3G services in India under the name of "MTNL 3G Jadoo" Services offered include Video call, Mobile TV and Mobile Broadband with high speed data connectivity up to 2 Mbit/s speed from 11th December 2008, getting India 3G map of the world. MTNL plans to offer 3G services across India by mid-2009. After that MTNL Mobile users would be able to surf the internet with speeds up to 2 Mbit/s on their smart phones. MTNL will be installing 15 lakh 3G lines in the first phase of its 3G roll-out in Mumbai and Delhi (which currently have 40 lakh existing mobile lines).

IDEA Cellular It is a publicly listed company, having listed on the Bombay Stock Exchange (BSE and the National Stock Exchange (NSE) in March 2007. Idea Cellular is a leading GSM mobile service operator with pan India licenses. With a customer base of over 36 million in 15 service areas, operations are soon expected to start in Orissa and Tamil Nadu-the first steps in providing pan India services covering over 90% of India's telephony potential. A frontrunner in introducing revolutionary tariff plans, IDEA Cellular has the distinction of offering the most customer friendly and competitive Pre Paid offerings, for the first time in India in an increasingly segmented market. Customer Service and Innovation are the drivers of this Cellular Brand. A brand known for many firsts, Idea was the first to launch GPRS and EDGE in the country. Idea has received international recognition for its path-breaking innovations when it won the GSM Association Award for "Best Billing and Customer Care Solution" for 2 consecutive years. IDEA Cellular is part of the Aditya Birla Group, India's first truly multinational corporation. The group operates in 25 countries, and is anchored by over 100,000 employees belonging to 25

nationalities. The Group has been adjudged 'The Best Employer in India and among the Top 20 in Asia' by the Hewitt-Economic Times and Wall Street Journal Study 2007. Subscriber Base Idea's subscriber base as of October 2008 according to the [1] is as follows Maharashtra and Goa - 6,260,690 Madhya Pradesh and Chhattisgarh - 4,137,200 Andhra Pradesh - 4,325,204 Kerala - 3,712,887 Gujarat - 3,327,261 Uttar Pradesh (West) & Uttarakhand - 3,372,808 Delhi - 2,216,027 Haryana - 1,341,146 Uttar Pradesh (East) - 1,457,570 Rajasthan - 1,062,526 Himachal Pradesh - 117,253 Mumbai - 178,378 Bihar & Jharkhand - 73,987 Totaling to 31,582,937 or 9.86%(Approx.) of the total 320,330,393[1] mobile connections in India.

Spice Telecom Spice Telecom is the brand name of Spice Communications Limited, a mobile phone service provider in India. Spice Telecom is currently operating in the states of Punjab (India) and Karnataka i.e., in 2 circles of 23 Telecom Circles of India. Spice Communications Limited was promoted by Dilip Modi of Modi Well vest Private Limited, which owns 40.80% of the company. Mod is promoted by Mr. Dilip Modi and Super Infosys. Telekom Malaysia Berhad

owns 39.20% through TMI India Limited, Mauritius. TMI India Limited is a wholly owned subsidiary of TM's international investment holding company TM International Sdn Bhd (TMI). Spice Telecom is a flagship company of MCorp Global (www.mcorpglobal.com) a cellular mobile telephone services provider in India. Launched over ten years ago, Spices cellular services have a customer base of over 4 million as on December 2008 in Punjab and Karnataka. Recently Aditya Birla Group owned Idea Cellular took over the ownership of Spice Telecom for over Rs.270 million. They plan to improve the coverage, customer friendliness and good service. The market share of Spice had fallen down in Karnataka, after their competitors weaned away many of its customers with good service. In spite of lower tariffs Spice could not regain the market share. Now it is hoped that Idea would change it all. Now Spice Telecom have a customer base of 4.4 Million subscribers in both circles.

Bharat Sanchar Nigam Limited BSNL is a public sector telecommunication company in India. It is India's largest telecommunication company with 24% market share as on March 31, 2008. Its headquarters are at Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi. It has the status of Mini Ratna, a status assigned to reputed public sector companies in India. BSNL is India's oldest and largest Communication Service Provider (CSP). Currently has a customer base of 90 million as of June 2008.[1] It has footprints throughout India except for the metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As on March 31, 2008 BSNL commanded a customer base of 31.55 million Wireline, 4.58 million CDMA-WLL and 54.21 million GSM Mobile subscribers. BSNL's earnings for the Financial Year ending March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$ 1.90 billion). BSNL has an estimated market value of $ 100 Billion. The company is planning an IPO within 6 months to offload 10% to public in the Rs 300-400 range valuing the company at over $100 billion. BSNL provides almost every telecom service in India. Following are the main telecom services provided by BSNL: Universal Telecom Services : Fixed Wireline services & Wireless in Local loop (WLL) using CDMA Technology called bfone and Tarang respectively. As of December 31, 2007, BSNL has 81% market share of fixed lines. Cellular Mobile Telephone Services : BSNL is major provider of Cellular Mobile Telephone services using GSM platform under the brand name CellOne[2]. Prepaid cellular services of

BSNL are known as Excel. As of March 31, 2007 BSNL has 17% share of mobile telephony in the country. Internet : BSNL provides internet services through dial-up connection (Sancharnet) as Prepaid, (Net One) as Postpaid and ADSL broadband (Dataone). BSNL has around 50% market share in broadband in India. BSNL has planned aggressive rollout in broadband for current financial year. Intelligent Network (IN) : BSNL provides IN services like televoting, toll free calling, premium calling etc.

BPL Mobile (Loop Mobile) BPL Mobile has had the privilege of serving the communications needs of the financial capital of India for the last 13 years. Now BPL Mobile is being rebranded as Loop Mobile in Mumbai. Loop Mobile, represents growth with continuity. While Loop constantly work towards giving our subscribers a better network, innovative products and a superior mobile telephony experience, its subscribers can be assured of the same focus and commitment in providing the best network coverage, billing accuracy, and an unmatched personalized customer service. Loop Mobile has invested over Rs 300 crore to upgrade to NGIP (Next Generation IP) network. This highly efficient network upgrade enables loop to offer unmatched voice clarity and extensive coverage along with high-speed data services. We are happy to inform you that we are the only GSM network in Mumbai that has met all the TRAI benchmarks on network and service quality parameters again this year. We have also been rated as the best network by Voice & Data, leading Telecom magazine, in their SAARC Mobile Users' Satisfaction Survey 2008. Loop has gained a significant market share of incremental subscriber addition in Mumbai Circle for the last several months. The emphasis on growth is clearly reflected in our growing subscriber base - it crossed the 2-Million subscriber mark in Mumbai Circle in January 2009.

Reliance Communications (formerly Reliance Infocomm) Reliance Telecom and Flag Telecom, is part of Reliance Communications Ventures (RCoVL). It is an Indian telecommunications company. According to National Stock Exchange data, Anil Dhirubhai Ambani controls 66.77 per cent of the company, which accounts for more than 1.36 billion shares.[3] It is the flagship company of the Reliance-Anil Dhirubhai Ambani Group, comprising of power (Reliance Energy), financial services (Reliance Capital) and telecom initiatives of the Reliance ADAG. It uses CDMA2000 1x technology for its existing CDMA mobile services, and GSM-900/GSM-1800 technology for its existing/newly launched GSM services. RelCom is also into Wireline Business throughout India and has the largest optical fiber communication (OFC) backbone architecture [roughly 110,000 km] in the country. Reliance Communications has interests in Direct To Home (DTH) TV also, known as "Big TV". It plans to launch its DTH business by July 2008. Once launched, RelCom will have presence across all B2C communications channel in one of the fastest growing markets in the world. On July 2007, the company announced it is buying US-based managed ethernet and application delivery services company Yipes Enterprise Services for a cash amount of Rs. 1200 crore rupees (equivalent of USD 300 million). The deal was announced complete in a press release in December 2007. In its first overseas acquisition, the Reliance group has amalgamated the United States-based Flag Telecom for $ 211 million [roughly Rs 950 crore (Rs 9.50 billion). On the 30th December 2008, Reliance Communications became the first telecom operator in the history of Indian telecommunications to simultaneously launch its GSM services in 14 circles, namely Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Jammu & Kashmir, Karnataka, Kerala, Maharashtra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh(East & West) thereby establishing itself as a pan-India operator. It already operates GSM services in 8 circles namely Assam, Bihar, Himachal Pradesh, Kolkata, Madhya Pradesh, North Eastern states, Orissa, West Bengal.

TATA Indicom Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies, an Indian conglomerate. It operates under the brand name Tata Indicom in various telecom circles of India. The company forms part of the Tata Group's presence in the Telecommunication Industry in India, along with Tata Teleservices (Maharashtra) Limited (TTML) and TATA COMMUNICATIONS LTD. In February this year, TTSL announced that it would provide CDMA mobile services targeted towards the youth, in a joint venture with Virgin, UK,on a Franchisee model basis. Interestingly, Virgin Mobile is a direct competitor of TTSL in a number of telecom circles across the country. Tata Teleservices is part of the INR Rs. 2,51,543 Crore (US$ 62.5 billion) Tata Group, that has over 87 companies, over 330,000 employees and more than 2.8 million shareholders. With a committed investment of INR 36,000 Crore (USD $7.5 billion) in Telecom (FY 2006), the Group has a presence across the telecom value chain. Tata Teleservices spearheads the Groups presence in the telecom sector. Incorporated in 1996, Tata Teleservices was the first to launch CDMA mobile services in India with the Andhra Pradesh circle. The company acquired Hughes Telecom (India) Limited [now renamed Tata Teleservices (Maharashtra) Limited] in December 2002. With a total Investment of Rs 19,924 Crore, Tata Teleservices has created a Pan India presence spread across 20 circles that includes Andhra Pradesh, Chennai, Gujarat, J & K, Karnataka, Delhi, Maharashtra, Mumbai, North East, Tamil Nadu, Orissa, Bihar, Rajasthan, Punjab, Haryana, Himachal Pradesh, Uttar Pradesh (E), Uttar Pradesh (W), Kerala, Kolkata, Madhya Pradesh and West Bengal. Having pioneered the CDMA 3G1x technology platform in India, Tata Teleservices has established 3G ready telecom infrastructure. It partnered with Motorola, Ericsson, Lucent and ECI Telecom for the deployment of its telecom network. The company is the market leader in the fixed wireless telephony market with a total customer base of over 3.8 million. Tata Teleservices bouquet of telephony services includes Mobile services, Wireless Desktop Phones, Public Booth Telephony and Wireline services. Other services include value added services like voice portal, roaming, post-paid Internet services, 3-way conferencing, group calling, Wi-Fi Internet, USB Modem, data cards, calling card services and enterprise services. Some of the other products launched by the company include prepaid wireless desktop phones, public phone booths, new mobile handsets and new voice & data services such as BREW games, Voice Portal, picture messaging, polyphonic ring tones, interactive applications like news, cricket, astrology, etc. Tata Indicom "Non Stop Mobile" allows pre-paid cellular customers to receive free incoming calls. Tata Teleservices Limited along with Tata Teleservices

(Maharashtra) Limited have a subscriber base of 28 million customers in more than 5,000 towns. Tata Teleservices has also acquired GSM licenses for specific circles in India. Tata Telelservices is an unlisted entity. Tata Group and group firms own about 80 percent of the company, while investor C. Sivasankaran holds 8 percent. Tata Indicom in March 2008, crossed the 24 million subscribers mark in the wireless category with an overall subscriber base of over 25 million. It has a current subscriber base of 24.3 million and a 9.33% cumulative market share. Tata Indicom continues to register the highest CAGR at 113% in the wireless segment with a net base of 12.8 million against a starting base of 11.8 million. (All figures based on March 2008. Figures Available on AUSPI website) Tata Teleservices is no. 2 slot in terms of Market Share in Delhi NCR region with a subscriber base of 3 million. Value Added Services Tata Teleservices, in October 2007 launched Tata Zone, an infotainment portal on Tata Indicom BREW-enabled mobile phones, in Hindi. This service has applications, pricing details, downloads and browsing instructions in Hindi. The rationale behind this was simple: - 66% of all Indians speak Hindi, while less than 5% understand English. Under its VAS bouquet, TTSL offers services such as News, Games, Faith and Prayers, Ringtones, Fun Shows, Video Zone, Song Download Express, Cricket, Internet Surfing, Astrology, Mobile Office, and Remo Mail among others. The quality of these services however is nowhere near the data services provided by cellular operators in developed countries. Tata Indicom plans to provide m-commerce, mobile advertising, mobile TV and social networking under its VAS offerings.

AIRCEL Aircel is a mobile phone service provider in India. It offers both prepaid and postpaid GSM cellular phone coverage throughout Kerala, Tamil Nadu (including Chennai), Andhra Pradesh, Assam, North East India, Orissa, West Bengal (including Kolkata), Jammu and Kashmir, Bihar , Himachal Pradesh & Mumbai. Aircel was founded by NRI businessman C Sivasankaran. [1] Aircel is a joint venture between Maxis Communications Berhad of Malaysia and Apollo Hospital Enterprise Ltd of India. It is Indias seventh largest GSM mobile service provider with a subscriber base of over 17 million. It has a market share of 6.3% among the GSM operators in the country. As on date, Aircel is present in 11 telecom circles (Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, Kerala, North East, Orissa, Tamil Nadu, Karnataka, West Bengal, Delhi) and with licenses secured for the remaining 10 of the 23 telecom circles, the company plans to become a pan-India operator by 2009. Additionally, Aircel has also obtained permission from Department of Telecommunications (DoT) to provide International Long Distance (ILD) and National Long Distance (NLD) telephony services. It is also a category A ISP.

Aircel Business Solutions (ABS), part of Aircel, is an ISO 9000 certified company. ABS is a registered member of WiMAX forum both in the Indian and International Chapters. ABS product range includes enterprise solutions such as Multi Protocol Label Switching Virtual Private Networks (MPLS VPNs), Voice over Internet Protocol (VoIP) and Managed Video Services on wireless platform including WiMAX. Aircel has won many awards for its services. Aircel got the highest rating for overall customer satisfaction and network quality in 2006 by Voice and Data. Aircel was rated as the top mid-size utility company in Business Worlds List of Best Mid-Size Companies in 2007. Moreover, Aircel has been selected as the best regional operator in 2008 by Tele.net. Aircel is headed by shahid Mustafa who was asked to leave Hutchinson Essar Ltd - Mumbai. Aircel are one of the sponsors of the Indian Premier League Cricket Team Chennai Super Kings captained by Mahendra Singh Dhoni.It is also the sponsor for Professional Golf Tour of India from 2009 onwards.

COMPANY PROFILE

COMPANY PROFILE

BSNL HISTORY & ORGANIZATIONAL STRUCTURE

LEARNING GOALS After going through this section, you can be conversant with  BSNL History & organizational structure of BSNL including circle structure  Activities of BSNL & where it stands & the customer relationship activities.

ASPIRATION
y

Be the leading Telecom Service Provider in India with global presence. Create a customer focused organization with excellence in sales, marketing and customer care. Leverage technology to provide affordable and innovative products/services across customer segments Provide a conducive work environment with strong focus on performance Establish efficient business processes enabled by IT

EMERGENCE OF BSNL Technology changes in telecom sector have shown that telecommunication services can be unbundled into local, long distance and international and competition can be introduced in these unbundled network elements to provide much needed impetus to network growth. More over the telecom network growth was by and large fuelled mostly by the internal resources generated by the DOT. As such, underinvestment also restrained net work growth. As such, in line with international trends, India also launched its telecom reforms with the setting-up of two public sector corporations-Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited(VSNL) in 1986 under DOT. MTNL, which was carved out of DOT, took over the operation, maintenance and development of telecom services in two metro cities Mumbai and New Delhi whereas VSNL was mandated to provide impetus to international telecom services. The formation of MTNL was considered to be a sort of precursor to the reform process to be unveiled later on and at the same time ,a sort of fund raising vehicle to the DOT in terms of bonds for the expansion plans of DOT for the rest of the telecom network in the country. In 1992 private operators were allowed to provide value added services, in particular paging and cellular mobile. But the key driver in the telecom reform process came as National Telecom Policy 1994(NTP1994).

National Telecom Policy 1994(NTP94) NTP 94 set forth a few path-breaking objectives:  Telephone on demand  Achievement of Universal Service Obligation  Provisioning of world class services to customers

The significant development was that this policy paved way for the private sector participation in telecom services. In the meanwhile there had been pressure from international bodies such as WTO to review the monopoly status of DOT and VSNL in long distance communications. NTP 94 had not also generated results as expected of due to poor design of auctions and licensing conditions. There was little competition in both basic and cellular services. It was basically duopoly situation private in cellular services and DOT and an additional operator in basic services. To take the telecom reforms further ahead, in 1999 NTP99 was announced to replace NTP 94.

NATIONAL TELECOM POLICY 1999 OBJECTIVES:-

 Availability of telephone on demand  Tele-density of 7 per cent by 2005 and 15 per cent by 2010  To provide internet access to all district head quarters by 2000  To provide high speed data and multimedia capability using technologies including ISDN (Integrated Digital Services Network) to all towns with a population greater than 2 lakhs by 2002  Provision of world class services at reasonable rates  Emergence of India as a major manufacturing and exporting base of Equipment.

HIGHLIGHTS:-

 Migration from license fee regime to revenue sharing regime  Entry of more operators based on recommendations of TRAI and review by every two years.  Licenses to be available for 20 years and extendable by 10 years  Operators eligible for licenses for any number of areas  Both voice and data traffic could be carried by the service provider  The operators are allowed to carry their own intra-circle traffic without seeking an additional license  Participation of CSPs (Cable Service Providers) in providing last mile linkage  Operators could interconnect to any other service provider including another cable service provider which was not earlier allowed  Direct interconnectivity to the VSNL  National and international long distance operation to be opened up.

The core issue in any telecom regulatory reform process is effective separation of basic functions of policy making, operational management and regulation. The interesting point in the context of Indian telecom regulation is that the regulatory body was set up after NTP 1994 and as such all the three roles were played by the DOT until the establishment of TRAI (Telecom Regulatory Authority Of India), a regulatory body, in 1997 to oversee regulatory functions. TRAI came up with its most significant tariff rebalancing exercise by aligning cost with the prices of various network service elements. TRAI suggested significant reduction in long distance tariff and a simultaneous increase in rentals and local call charges. TRAI recommended free competition in long distance services and a land mark policy of open entry in to national long distance services was permitted in 2000. In the meanwhile, policy making and operations continued to be with the DOT much against the established regulatory norm of separation of these two functions for effective regulatory regime. As a culmination of this separation, the DOT operations were undertaken by a newly formed corporate entity called Bharat Sanchar Nigam Limited. October 1, 2000: The then existing Department of telecom operations, Govt. of India became a corporation and was christened Bharat Sanchar Nigam Limited (BSNL) Today, BSNL is No.1 Telecommunications Company and the largest public sector undertaking of India with authorized share capital of $3600 million and net worth of $ 13.85 billion. It has a network of over 45 million lines covering 5000 towns with over 35 million telephone connections and over 4,00,00 route Kms of OFC network. 99.9% of its exchanges have been digitalized. The telephone infrastructure alone is worth about Rs.1,00,000 crore (US $ 21.2 billion) and turnover is of Rs. 25,000 crore (US $ 5.2 billion) CORPORATE STRUCTURE OF BSNL Corporate structure of BSNL Board consists of CMD & Five full time Directors, Human resource (HR), Consumer Mobility, Consumer Fixed Access, Finance, Enterprise, who manage the entire gamut of BSNL operations. There are five other Directors in the full Board of BSNL. Head Quarters of BSNL:BSNL Office Registered Bharat Sanchar Bhavan Harish Chandra Mathur Lane, Janpath, New Delhi110 001

BSNL Office

Corporate

Bharat Sanchar Bhavan Harish Chandra Mathur Lane, Janpath, New Delhi110 001

1.1.

ORGANIZATIONAL STRUCTURE OF BSNL

No sector in India has undergone so much of dynamics as telecom sector .Along with that, structural changes have also taken place. It is also interesting to note that the organizational structure has also responded to the market structure. As long as monopoly market structure existed, the organizational structure was government department playing the all pervasive roles of licensing authority, regulating authority and service provider. But once the telecom sector was opened up to the private players, the organizational structure had to change. In the monopoly set up it was Department of Telecommunications which was the sole provider of telecommunication services. But with the opening up of the sector, as discussed earlier, the three roles stated are being played by three different agencies. 1.2.
CIRCLE STRUCTURE

The circles are of basically two categories- territorial circles and functional circles. The territorial circles provide whole lot of telecom services including voice, data and cellular mobile services to customers. They can be categorized as profit centers. The functional circles inter alia, include project circles and maintenance circles in each region and other functional circles such as telecom stores, telecom factories training centers etc. These are basically cost centers. The project circles are vested with the responsibility of constructing national long distance transmission network such as digital coaxial, digital microwave, optical fiber systems for providing digital interconnectivity among digital trunk automatic exchanges and the maintenance circles with the responsibility of maintaining the same after the construction is over and made over to them. The telecom factories manufacture the store items such as DP box, CT box, modem, line jack units etc for the usage in the network. After decentralization of procurement of various items at the circle level, the role of telecom stores organization has been limited to the procurement of certain items for the requirement of circles in North East and routing of materials produced at telecom factories to various circles. Each circle comprises many SSAs(Secondary Switching Areas).Each SSA corresponds to a telecom district and comprises one or more revenue districts. SSAs are also LDCAs (Long Distance charging Areas). Each SSA is further segmented into SDCAs for the purpose of charging. An SDCA comprises one or more revenue taluk/taluks. This can be diagrammatically presented as under.

LDCA1

Circle1

LDCA2S

Circle2 Intra SDCA calls Inter SDCA calls

LDCA SDCA

Inter LDCA calls

For instance, A.P. Telecom circle is segmented into Twenty Two (22) SSAs. One SSA namely Visakhapatnam is divided in to ten SDCAs as detailed below: S.No. NAME OF SDCA STD CODE EQUIPPED 31.03.05 15696 1312 6840 832 6776 8040 2136 368 1,57,982 6368 CAPACITY AS ON

1 2 3 4 5 6 7 8 9 10

Anakapally Araku Bhimali Chintapalli Chodavaram Narsipatnam Paderu Sileru Visakhapatnam Yellamanchali

08924 08936 08933 08937 08934 08932 08935 08938 0891 08931

STAFF:Distribution of Group-wise staff strength of DoT and BSNL (numbers) as on 31st March 2009 is indicated below: Group A Group B Group C Group D Industrial Workers 2773 7704 48312 198312 42739

Total

299840

2. Revenue

Activities of BSNL & Where it Stands

Service Revenue and other operating income for the last three years are as follows: (RUPEES IN CRORES) 2006-07 2007-08 2008-09 34616 32842 30268

Annual Capital Investment (RUPEES IN CRORES) 2006-07 2007-08 2008-09 6957 5929 7665

Cumulative Capital Outlay (Fixed Assets gross block) (RUPEES IN CRORES) 2006-07 2007-08 2008-09 118649 124578 132243

ROLE OF FINANCIAL WING - HIERARCHY

LEARNING GOALS After going through this section, you can be conversant with  Role of finance wing its hierarchy  Functions of IFAs  Standards of financial propriety.

The basic accounting unit in BSNL is SSA (Secondary Switching Area). As of now, most of these SSAs are headed by an officer of Telecom. Engineering Service in the rank of a principal General Manager/ General Manager. In addition to the other engineering officers, he is supported by a finance officer of the rank of a General Manager/ Dy.General Manager (Finance) as the case may be who is designated as IFA (Internal Financial advisor).

Finance Set-Up in a Circle :-

Finance line-up in a circle is headed at the level of General Manager (Finance). He is the internal finance advisor to the Chief General Manager of the circle .He is also in charge of finance line functions such as billing, vouching, accounting , auditing , budgeting etc . Similarly at each SSA level an SAG/JAG level finance officer is heading the finance functions and reporting to the SSA head. A typical finance set-up in the circle would be as shown in the figure given below:

Circle IFA(GM level)

DGMs

CAOs

AOs

JAOs

SSA IFA(GM/DGM level)

SSA IFA

SSA IFA

CAO(PLG)

CAO(budget)

CAO(TR)

CAO(Accounts)

CAO(FA)

AO(PLG)

AO(Budget)

AO(TR)

AO(TA and Cash)

AO(FA)

JAO(PLG)

JAO(Budget)

JAO(TR)

JAO(Cash and TA)

JAO(FA)

Functions of Internal Finance Advisers A. Finance & Budget:

1. To establish appropriate local procedures to have proper estimation to fund requirement under working expenses and under the various capital and other heads, similarly for revenue forecast. 2. To scrutinize budget proposals thoroughly before sending them to BSNL HQ and to ensure that the due dates for returns are adhered to. To ensure that the Budget is drawn up according to the instructions issued by the BSNL HQ from time to time. 3. To watch and review the progress of expenditure against sanctioned grant by maintenance of necessary control registers and to issue timely warnings to the authorities concerned where warranted by the progress of expenditure. 4. To keep special watch over sensitive grants like T.A. O.T.A. medical expenses etc. to ensure that the prescribed ceilings are not exceeded. 5. To advise the Heads of Circles on all matters falling within the field of their delegated financial powers and to screen all expenditure proposals requiring to be referred to the BSNL HQ and furnish fund availability certificates where prescribed. 6. To evaluate progress/performance of projects and other continuing schemes and to see that the results of such evaluation studies are taken into account in the formation of budget. 7. To scrutinize directory printing/advertisement and other contracts before they are concluded and also check the rent and guarantee cases. 8. To examine the cases relating to sanctions to new posts and to see whether they are justified under the prescribed standards or outside the standards, before they are put up to the Head of the Circle, also match them with budget grants and with special guide lines if any to the extent possible ensure balance distribution of new posts. 9. To ensure that financial discipline is inculcated and maintained in the circle/district under his charge up to the requisite level and to bring to notice of the head of the organizations where repeated failures, lapses are noticed. B. Accounts

1. To see that departmental accounts where necessary are maintained properly in accordance with the requirements of the prescribed rules. 2. To smoothen the working difficulties and clarify for prescribed procedures for preparing /maintaining accounts to the extent they are of local application and to take up with BSNL HQ where they are of all India application. 3. To be in overall charge of maintenance of Corporate accounts. 4. To see effective and purposeful functioning of internal audit in accordance with instructions issued on the subject.

C.

Telecom. Revenue: 1. To keep watch over timely issue of bills by the TR units and in the functioning of the credit control measures with the requisite efficiency. 2. To keep watch over delays reported in receipt of initial and periodical data for billing and take action to eliminate them. 3. To review the bills amount to see that there is no prima facie under billing due to some reason or other by coordinating this with the services provided. 4. To convene and preside over the meeting of the telephone revenue defaulters control Board. 5. To ensure timely clearance of old outstanding by appropriate action and by keeping close watch over the position division-wise and exchange wise also where necessary and instituting action suited to each case. 6. To inspect the TR units and take follow up action on the lapses and deficiencies noticed.

7. To carry out test inspection of the work in the exchange having a direct bearing on billing e.g. meter reading including Spurts/rounds etc, valuation of local calls, control over disconnection notices from A.O.(TR) for non-payment of bills etc. D. General 1. To watch the settlement of audit objections, inspection reports. 2. To co-ordinate the work relating to draft audit paras / PAC recommendations and connected work and to advise the concerned officers/Head of the Circle to give proper attention thereto. (Annexure to DOT Lr. NO. 3-1/74-Fin(COORD) dated 13.12.1974) Standards of Financial Propriety: Every officer incurring or authorizing expenditure from public funds should be guided by high standards of financial propriety. The following are the principles on which emphasis is generally laid. 1. Every Officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as person of ordinary prudence would exercise in respect of expenditure of his own money. 2. The expenditure should not be prima facie more than the occasion demands. 3. No authority should exercise its powers of sanctioning expenditure to pass an order, which will be directly, or indirectly to its own advantage. 4. Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people. 5. The amount of allowances granted to meet expenditure of a particular type should not be on the whole a source of profit to the recipients.

6. The responsibility and accountability of every authority delegated with financial powers to procure any item or service on Government account is total and indivisible. Government expects that the authority concerned will have the public interest uppermost in its mind while making a procurement decision. This responsibility is not discharged merely by the selection of the cheapest offer but must confirm to the following yardsticks of financial propriety: a. Whether the offers have been invited in accordance with governing rules and after following a fair and reasonable procedure in the prevailing circumstances. b. Whether the authority is satisfied that the selected offer will adequately meet the requirement for which it is being procured. c. Whether the price on offer is reasonable and consistent with the quality required. d. Above all, whether the offer being accepted is the most appropriate one taking all relevant factors into account and in keeping with the standards of financial propriety. 7. Whenever called for, the concerned authority must place on record in precise terms, the consideration which weighed with it while taking the procurement decision. (Rule 60 of FHB Vol I)

REGULATORY BODIES

LEARNING GOALS After going through this section, you can be conversant with  An overview of telecom. Regulations.  TRAI- Its Constitution, functions, powers & legal status.  TDSAT- Its Constitution, functions, powers & legal status.

OVER VIEW OF TELECOM. REGULATIONS Why regulate telecommunications? Towards the end of 20th century, there were unprecedented changes in the global telecommunication industry. Many state owned telecommunications operators were privatized. So as to ensure viable competition, a regulatory intervention was felt necessary. The various reasons for a regulatory intervention can be summarized as follows: 1. 2. 3. 4. 5. To authorize or license new operators. To remove barriers to market entry by new operators. To oversee interconnection of new entrants with incumbent operators. To ensure that competitive markets do not fail to serve high cost areas or low income subscribers. To act as referees between the new entrants and incumbent operators.

However, the objectives vary from country to country. Governments in most countries continue to see the telecommunications as an essential public service. Even though, the telecommunications networks are no longer run by them. Governments normally retain a regulatory role to ensure that telecommunication services are supplied in a manner consistent with national perceptions of the public interest. Standard institutional structure in developed market economics: Function Policy development Regulation Net work operations/service provision Responsible organization Govt. Ministry or executive branch Separate regulatory authority Privately or Commercially operated operators.

Two fundamental rules of procedural fairness in common law are: 1. To provide all interested parties with an opportunity to comment or otherwise make their case before making a decision that affects them. This rule is sometimes expressed by means of the Latin maxim Audi alter am pattern or hear the other side. This rule is part of unwritten code of basic procedural fairness applied by regulators. Dont be a judge in your own case. This is based on another Latin maxim: nemo judex in sus causa debet esse.

2.

This will help ensure that justice must not only be done, it must be seen to be done. The Telecom Regulatory authority of India TRAI:- This has been promulgated by enactment of an act called the TELECOM,REGULATORY AUTHORITY OF INDIA, act,1997. This extends to whole of India and is deemed to have come into force on 25.01.1997. This received the assent of The President of India on 29-03-1997. Major changes have been incorporated in the act by a subsequent enactment dated 24.1.2000 called Act 2 of 2000.

IMPORTANT DEFINITIONS: Authority : TRAI Licensee: Means a person licensed for providing specified public telecommunication services. Licensor:- Means the Central Govt. or the telegraph authority who grants a license under section 4 of Indian telegraph Act, 1885. Service provider: Means the Government (as a service provider) and includes a licensee. Telecommunication Service:- Means service of any description(including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means but shall not include broad casting services. Commercial employment: Means employment in any capacity under or agency of, a person engaged in trading, commercial, industrial or financial business in any field and includes also a director of a company or partner of a firm and it also includes setting up practice either independently or as partner of a firm or as an adviser or a consultant.

CONSTITUTION: (i) A Chair Person (ii) Not more than two (2) Whole time members. (iii) Not more than two (2) Part time members.

HEAD QUARTERS: New Delhi.

QUALIFICATION FOR APPOINTMENT AS CHAIR PERSON AND OTHER MEMBERS: This will be made from persons who have special knowledge of, and professional experience in, telecommunication, industry, finance, accountancy, law, Management or Consumer affairs: For appointment of officials who are in govt. service: The person should have held the post of Secretary or Additional secretary, or the post of Additional Secretary and secretary to the Govt. Of India or an equivalent post in the Central Government or the state Govt. for a period of not less than three (3) years.

TERM OF OFFICE:- Not exceeding three(3) years or until they attain the age of sixty five (65) years of age whichever is earlier. Before a person is appointed as the Chairperson, or a member of the TRAI, it is necessary for the Central Govt. to satisfy itself that the person does not have any such financial or other interest as is likely to affect prejudicially his function as such member. An employee of the Govt. on selection as member shall have to retire from service before joining as the Chairperson or a whole time member as the case may be.

RELINQUISHING OF OFFICE: A member may relinquish his office by giving in writing to the Central Govt. a notice of not less than three (3) months. The Chair person or any whole time member ceasing to hold office as such shall (a) be ineligible for further employment under the central govt. or any state govt. or (b) not accept any Commercial employment for a period of one Year from the date he ceases to hold such office. FILLING UP OF VACANCIES: A vacancy caused should be filled up within three (3) months of its occurrence.

POWERS: The chairperson shall have the powers of general superintendence and directions in the conduct of the affairs of the authority. He shall also preside over the meetings of the authority. The Vice chair person shall exercise and discharge such powers and functions of the Chair person as may be prescribed or as may be delegated to him by the authority. The central Govt. may appoint one of the members as vice Chairperson. CONDITIONS FOR REMOVAL AND SUSPENSION OF MEMBER FROM OFFICE: The central Govt. may remove from office any member, whoy y y y y Has been adjudged an insolvent. Has been convicted of an offence which in the opinion of the C.G. involves moral turpitude. Has become physically or mentally incapable of acting as a member. Has acquired such financial or other interest as is likely to affect prejudicially his functions as a member Has so abused his position as to render his continuance in office prejudicial to the public interest.

No such member shall be removed from his office under last two clauses mentioned above, above unless he has been given a reasonable opportunity of being heard in the matter.

MEETINGS Meetings will be presided over by the Chairperson, in his absence by the Vice Chair person or in his absence by any other member chosen by the members present from amongst themselves. All questions which come up before any meeting shall be decided by a majority vote of the members present and voting. In the event of an equality of votes, the chair person or in his absence, the person presiding shall have a second or casting vote.

INVALIDATION OF PROCEEDINGS OF AUTHORITY No act or proceedings of the authority shall be invalid merely by reason of (1) any vacancy in or any defect in the constitution of the Authority or (2) any defect in the appointment of a person acting as a member of the Authority or (3) any irregularity in the procedure of the Authority not affecting the merits of the case. FUNCTIONS OF THE AUTHORITY: The functions of the Authority can be broadly classified under for (4) categories as 1) 2) 3) 4) Recommendatory in nature Regulatory functions Levying of fees and other charges and Administrative & Financial functions.

a) The Authority shall make recommendations either suo motto or on a request from the licensor on the following matters: (i) (ii) (iii) (iv) need and timing for introduction of new service provider. terms & conditions of license to a service provider. revocation of license for non-compliance of terms & conditions of license. measures to facilitate competition and promote efficiency in the operation of telecom. Services so as to facilitate growth in such services; technological improvements in the services provided by the service providers.

(v)

(vi)

type of equipment to be used by the service providers after inspection of equipment used in the net work; measures for the development of telecom. Technology and any other matter relatable to telecom. Industry in general; efficient management of available spectrum;

(v)

(vi)

Recommendations as above made by the authority are not binding upon the central govt.:-

Further, the Central government shall seek the recommendations of the Authority in respect of matters referred to in items (i) & (ii) above. In such a case, the Authority shall forward its recommendations with in a period of sixty days. The Authority during examination of the case for offering its recommendations can call for such information or documents as may be necessary. The Govt. shall supply such information within a period of seven (7) days from receipt of such request Provided also that the Central Govt. may issue a license to a service provider if no recommendations are received from the Authority within the period specified above i.e. 60 days or within such period as may be mutually agreed upon between the central Govt. and the Authority. Provided further if the central govt. comes to a prima facie conclusion that such recommendation cannot be accepted or needs modifications, it shall refer the recommendation back to the Authority for its reconsideration. The Authority may forward its recommendations after considering the reference from the C.G. within fifteen days. The decision of the Central Govt. shall be final in the matter. (b) 1. 2. 3. REGULATORY FUNCTIONS: To ensure compliance of terms & conditions of license. To fix the terms & conditions of inter connectivity between the service providers. To ensure technical compatibility and effective inter-connection between different service providers. To regulate arrangement of sharing of revenue derived from providing telecom. services amongst service providers. To lay down the standards of quality of service to be provided by the service providers

4.

5.

6.

To lay down and ensure the time period for providing local and long distance circuits of telecom. between different service providers. To maintain register of inter-connect agreements. To keep the register open for inspection to any member of public. To ensure effective compliance of Universal service obligations;

7. 8. 9.

( C ) LEVY OF FEES & OTHER CHARGES : To levy fees and other charges at such rates and in respect of such services as may be determined by regulations; (d) Administrative & Financial functions: Perform such other functions including administrative and financial functions as may be entrusted to it by the central government. POWERS OF AUTHORITY : The Authority can call for information and also conduct investigations. (a) Call upon any service provider to furnish information or explanation relating to its affairs (b) Appoint one or more persons to make an inquiry into the affairs of any service provider (c) Direct any of its officers or employees to inspect the books of account or other documents of any service provider The service provider is bound to produce before the Authority making the inquiry, all such books of account or other documents with in such time as may be specified. Every service provider shall maintain such books of account or other documents as may be prescribed. The Authority shall have the power to issue such directions from time to time to the service providers, as it may consider necessary; for proper discharge of functions explained above. APPELATE TRIBUNAL An appellate tribunal to be known as Telecom Disputes Settlement and Appellate Tribunal has been appointed by the Central government vide act 2 of 2000 w.e.f.24.1.2000. The Tribunal will adjudicate any dispute (i) (ii) (iii) Between a licensor and a licensee. Between two or more service providers. Between a service provider and a group of consumers:

EXCEPTIONS: This is not applicable to matters relating to y y y Monopolistic trade practice Restrictive trade practice Unfair trade practice

Which are subject the jurisdiction of the Monopolies and Restrictive Trade Practices commission. Further, the complaint of an individual maintainable under consumer Dispute Redressal Forum or a Consumer Disputes Redressal commission or the national Consumer Redressal Commission will not come under the purview of the above appellate tribunal. The dispute between telegraph authority and any other person maintainable under the telegraph act 1885 will also be outside the purview of this tribunal. The tribunal can hear and dispose an appeal against any direction, decision or order of the Authority under this act. COMPOSITION OF THE APPELLATE TRIBUNAL : It shall consist of Chairperson and not more than two members to be appointed by notification by the Central government. The selection will be done in consultation with the Chief Justice of India. QUALIFICATIONS FOR APPOINTMENT OF CHAIRPERSON AND MEMBERS: CHAIRPERSON: A judge of the Supreme Court of India or the Chief Justice of a High Court. MEMBERS: Secretary to the Govt. Of India or any equivalent post in C.G. Or State Govt. for not less than two (2) years or a person who is well versed in the field of technology, telecommunications, industry, commerce or administration. TERM OF OFFICE: Three (3) years or upper age limit as indicated below: Chairperson: Seventy (70) years Member: Sixty Five (65) years

REVIEW OF LITERATURE

REVIEW OF LITERATURE BUDGETARY CONTROL:INTRODUCTION:Finance is the life blood of a business. Therefore, financial planning is of almost significance to a business man. Financial planning concerned with raising funds and their effective utilizations with a view to maximize the wealth of the company. Inspite of good financial plan, the desire results may not be achieved if there is no effective control to ensure its implementation. A budget is an important tool for financial planning and control. The budget represents a set of yardsticks or guidelines for use in controlling internal operations of an organization. The management, through budget, can evaluate the performance of every level of the organization. The discrepancy between planned performance and actual performance is highlighted through budgets. For effective running of a business, management must know:     Where it intends to go i.e. organizational objectives. How it intends to accomplish its objective i.e. plans. Whether individual plans fit in the overall organizational objective i.e. co-ordination. Whether operations confirm to the plan of operations relating to that period i.e. control.

BUDGETARY CONTROL is the device that a company uses for all these purposes.

WHAT IS A BUDGET ? A budget is a financial plan for a business, prepared in advance. A budget may be set in money terms, e.g. a sales budget of 500,000, or it can be expressed in terms of units, e.g. a purchases budget of 5,000 units to be bought. Budgets can be income budgets for money received, e.g. a sales budget, or expenditure budgets for money spent, e.g. a purchases budget. Most budgets are prepared for the next financial year (the budget period), and are usually broken down into shorter time periods, commonly four-weekly or monthly. This enables budgetary control to be exercised over the budget: the actual results can be monitored against the budget, and discrepancies between the two can be investigated and corrective action taken where appropriate.

MEANING:Planning is the primary function of management. Budgets are the expressions in financial terms of managements plans for operating and financing the business. Budgetary control is essential tool of management for controlling cost and maximizing profit. Budget is defined as a financial and or quantitative statement prepared prior to a defined period of time of the policy to be persuade during that period for the purpose of attaining a given objective. A budget is a plan expressed in quantitative, usually monetary term, covering a specific period of time, usually one year. In other words a budget is a systematic plan for the utilization of manpower and material resources. Budget is prepared in advance and it is based a future plans of actions. It relates to a future period and it is based on objectives to be fulfilled .it is a statement expressed in monitory and or physical units. In a business organization, a budget represents an estimate of future costs and revenues. DEFINITION:A budget is a statement, which shows forecasts of the financial activities of a business to achieve a specific purpose. A budget is basically an estimate of receipts and payments of revenue and capital items in future.

Budgets may be divided into two basic classes: Capital Budgets and Operating Budgets. y y Capital budgets are prepared for estimating proposed expenditures for new projects and requirement of special financing. The operating budgets are prepared for achieving short-term operational goals of the organization. Operating budgets may be sub-divided into various functional budgets.

Different types of operating budgets are prepared for different purposes for ex. Cash budget sales budget, purchase budget, production budget etc. The Nature and Scope of budget: 1. It is prepared in advance and is derived from the long-term strategy of the organization. 2. It relates to future period for which objectives or goals have already been laid down. It is expressed in quantitative form, physical or monetary units, or both. Different types of budgets are prepared for different purposed e.g. Sales Budget, Production Budget, Administrative Expense Budget, Raw-material Budget etc. All these sectional budgets are afterwards integrated into a master budget, which represents an overall plan of the organization.

Importance and Utility of Budgets: A budget helps us in the following ways: 1) It brings about efficiency and improvement in the working of the organization. 2) It is a way of communicating the plans to various units of the organization. By establishing the divisional, departmental, sectional budgets, exact responsibilities are assigned. It thus minimizes the possibilities of buck passing if the budget figures are not met. 3) It is a way or motivating managers to achieve the goals set for the units. 4) It serves as a benchmark for controlling on-going operations. 5) It helps in developing a team spirit where participation in budgeting is encouraged. 6) It helps in reducing wastage and losses by revealing them in time for corrective action. 7) It serves as a basis for evaluating the performance of managers. 8) It serves as a means of educating the managers.

WHAT IS BUDGETARY CONTROL? Budgetary control is the use of the comprehensive system of budgeting aid management in carrying out its functions like planning, co-ordination and control. This system includes:  Division of organization on functional basis into different sections known as a budget centre.  Preparation of separate budgets for each budget centre.  Consolidation of all functional budgets to present overall organizational objectives during the forthcoming budget period.  Comparison of actual level of performance against budgets.  Reporting the variances with proper analysis to provide basis for future course of action. DEFINITION:Budgetary control is that type of control in which controller compares actual result with budget data and identify the difference and correcting the cause of difference. Meaning, Importance and scope of Budgetary control: It is defined as the establishment of budget relating to the responsibility of executive to the requirement of a policy, and a continuous comparison of actual with budgetary results either to secure by individual action the objective of policy or to provide a basis for its revision.

The budgetary control includes the following Establishment of budget Continuous comparison of actual with budgeted target Revision of budget in the light of changed circumstances Budgetary control technique includes the science of planning the budget and utilization of such budget for business planning and control. It corrects the deviations from the pre-planned targets and helps in performance of future activities. No system of planning can be successful without having an effective and efficient system of control. Budgeting is closely connected with control. The exercise of control in the organization with the help of budgets is known as budgetary control. A system of budgetary control should not become rigid. There should be enough scope of flexibility to provide for individual initiative and drive. Budgetary control is an important device for making the organization. More efficient on all fronts. It is an important tool for controlling costs and achieving the overall objectives. OBJECTIVES OF BUDGETARY CONTROL:Portraying with precision, the overall aims of the business and determining targets of performance for each section or department of the business. Laying down the responsibilities of each individual so that everyone knows what is expected of him and how he will be judged. Providing basis for the comparison of actual performance with the predetermined targets and investigation of deviation, if any, of actual performance and expenses from the budgeted figures. It helps to take timely corrective measures. Ensuring the best use of all available resources to maximize profit or production, subject to the limiting factors. Coordinating the various activities of the business and centralizing control, but also making a facility for the management to decentralize responsibility and delegate authority. Engendering a spirit of careful forethought, assessment of what is possible and an attempt at it. It leads to dynamism without recklessness. It also helps to draw up long range plans with a fair measure of accuracy. Providing a basis for revision of current and future policies.

BUDGETARY CONTROL RESPONSIBILITY CENTERS:The responsibility centers enable the managers to monitor organizational functions. A responsibility center can be defined as any functional unit headed by a manager who is responsible for the activities of that unit. There are four types of responsibility centers: Revenue Center:- Organizational units in which outputs are measured in monetary terms but are not directly compared to inputs costs. Expense Center:- Units where inputs are measured in monetary terms but outputs are not. Profit Center:- Where performance is measured by the difference between revenues(outputs) and expenditure(inputs). Inter-departmental sales are often made using transfer- prices. Investment Centers:- Where outputs are compared with the assets employed in producing them i.e. ROI.

ADVANTAGES OF BUDGETARY CONTROL:1. The use of budgetary control system enables the management of a business concern to conduct its business activities in the efficient manner. 2. It is a powerful instrument used by business houses for the control of their expenditure. Its infact provides a yardstick for measuring and evaluating the performance of individuals and their departments. 3. It reveals the deviations to management, from the budgeted figures after making a comparison with actual figures. 4. Effective utilization of various resources like men, material, machinery and money is made possible, as the production is planned after taking them into account. 5. It helps in the review of current trends and framing of future policies. 6. It creates suitable conditions for the implementation of standard costing system in a business organization. 7. It inculcates the feeling of cost consciousness among workers.

PROCESS OF BUDGETARY CONTROL:y y y y y y y Determining objectives. Setting standards. Review of actual performance. Comparison of actual with standards. Finding out variance. If actual results does not match standards then investigate and take corrective actions. If matches then continue.

FEATURES OF BUDGETARY CONTROL: It is prepared in advance and is derived from the long-term strategy of the organization.  It relates to future period for which objectives or goals have already been laid down.  It is expressed in quantative form, physical and monetary units or both.  Different types of budgets are prepared for different purposes e.g. Sales budget, Production budget, Administrative expenses budget, Raw material budget etc. All these sectional budgets are afterwards integrated into a master budget, which represents an overall plan of the organization.

BUDGETARY CONTROL RATIOS:-

Activity Ratio:It is a measure of the level of activity attained over a period of time. It is obtained by expressing the number of standard hours equivalent to the work produced as a percentage of the budgeted hours. Mathematically: Standard hours for actual production x 100 Budgeted hours.

Capacity Ratio:This ratio indicated whether and to what extent budgeted hours of activity are actually utilized. It shows the relationship between the actual number of working hours and the maximum possible number of working hours in a budget period. Mathematically:Actual hours worked x 100 Budgeted hours.

Efficiency Ratio:It indicates the degree of efficiency attained in production. It is obtained by expressing the standard hours equivalent to the work produced as a percentage of the actual hours spent in producing that work. Mathematically:Standard hours for actual production x 100 Actual hours worked.

TYPES OF BUDGETS:-

The budgets are usually classified according to their nature. The following are the types of budges, which are commonly used: A. CLASSIFICATION ACCORDING TO TIME: 1) Long Term Budgets. 2) Short Term Budgets. 3) Current Budgets. B. CLASSIFICATION ACCORDING TO FUNCTIONS: 1) Operating Budgets. 2) Financial Budgets. 3) Master Budgets. C. CLASSIFICATION ACCORDING TO FLEXIBILIITY: 1) Fixed Budgets. 2) Flexible Budgets.

A. CLASSIFICATION ACCORDING TO TIME:

1) Long term Budgets:- The budgets are prepared to depict long term planning of the business. The period of long term budgets varies between five to ten years. The long term planning is done by the top management; it is not generally known to lower levels of management. Long time budgets are prepared for some sectors of the concern such as capital expenditure, research and development , long term finances etc. These budgets are useful for those industries where gestation period is long i.e. machinery, electricity engineering etc.

2) Short term Budgets:- These budgets are generally for one of two years and are in the form of monetary terms. The consumers foods industries like sugar, cotton, textile, etc. use shorter, budgets.

3) Current Budgets:- The period of current budgets is generally of months and weeks. These budgets relate to the current activities of the business, according to ICWA London. A current budget is a budget, which is established for use over a short period of time and is related to current conditions.

B. CLASSIFICATION ON THE BASIS OF FUNCTIONS:1) Operating Budgets:- These budgets relate to the different activities or operation of a firm. The number of such budgets depends upon the size and nature of business. The commonly used operating budgets are: a) Sales budget b) Production budget c) Production cost budget d) Purchases budget e) Raw material budget f) Labour budget g) Plant utilization budget h) Administrative expenses of works overheads budget i) Administrative and selling expenses budget, etc. The operating budget for a firm may be constructed in terms of programmers or responsibility areas, and hence may consist of: i. Programmed budget ii. Responsibility budget. a. Programmed budget:- It consists of expected revenues and costs of various products or projects that are termed as the major programmers of the firm. Such a budget can be prepared for each product line or project showing revenues, costs and the relative profitability of the various programmers. Programmed budgets are thus, useful in locating areas where efforts may be required to reduce costs and increase revenues. They are also useful in determining imbalances and inadequacies in programs so that corrective action may be taken in future. b. Responsibility budgets:- When the operating budget of a firm is constructed in term of responsibility areas it is called the responsibility budgets. However responsibility areas may be classified under three broad categories. i. Cost/ expense center. ii. Profit center iii. Investment center.

2) Financial budgets:- Financial budgets are concerned with cash receipts, disbursements, working capital, capital expenditure, financial position, and results of business operations. The commonly used financial budgets are : a) Cash budget b) Working capital budget c) Capital expenditure budget. d) Income statement budget e) Statement of retained earnings budget f) Budget balance sheet or position statement budget 3) Master budget:- Various functional budgets are integrated into master budget. This budget is prepared by the ultimate integration of separate functional budgets. According to ICWA London The master budget is the summary budget in corporations functional budget. Master budget is prepared by the budget officer and it remains with the top level management. This budget is used to coordinate the activities of various functional departments and also to help as a control device.

C) CLASSIFICATION ON THE BASIS OF FLEXIBILITY:-

1) Fixed Budget:- According to ICWA London, Fixed budget is a budget which is designed to remind unchanged irrespective of the level of activity actual attained. Fixed budgets are suitable under static conditions. If sales , expense and costs can be forecasted with greater accuracy than this budget can be advantageously used. 2) Flexible budget:- A flexible budget consists of a series of budgets for different levels of activity. It therefore varies with the level of activity attained. A flexible budgets is prepared after taking into consideration the unforeseen changes in the condition of the business. A flexible budget is defined as a budget which is by recognizing the differences between the fixed, semi fixed and variable cost is designed to change in relation it the level of activity.

REQUISITES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM:-

For making a budgetary control system successful, following requisites are required: 1) Clarifying Objectives:- The budgets are used to realize objectives of the business. The objectives must be clearly spelt out so that budgets are properly prepared. In the absence of clear goals, the budgets will also be unrealistic. 2) Proper delegation of authority and responsibility: Budget preparation and control is done at every level of management. Even though budgets are finalized at top level but involvement of persons from lower levels of management is essential for their success. This necessitates proper delegation of authority and responsibility. 3) Proper communication system:- An effective system of communication is required for a successful budgetary control. The flow of information regarding budgets should be quick so that these are implemented. 4) Budget Education:- The employees should be properly educated about the benefits of budgeting system. They should be educated about their role in the success of this system.

5) Participation of all employees:- The success of budgetary control system depends upon the participation of all employees of the organization. 6) Flexibility:- Flexibility in budgets is required to make them suitable under changed circumstances.

7) Motivation:- Budgets are to be implemented by human beings. Their successful implementation will depend upon the interest shown by the employees.

CHAPTER III DATA INTERPRETATION AND ANALYSIS

WORKING EXPENDITURE

Allotment of working expenditure budget for FY 2010-11 based on actual expenditure in 2009-10:A. Staff expenses S.no particulars Amount in (000) Amount For the future year 2010-11 816879 57800 1620 621 2977 32076 859 65 6989 95147 395 3473 813 1019714 PART B 14. 15. 16. 17 18 19 ADMINISTRATION EXP. Rent of building Rates & Taxes Water charges Electricity charges Fuel charges Computer stationary 5791 6720 208 67129 1249 1447 4000 2125 125 72000 1435 1500 Amount of the current year 2009-10 818000 57800 1000 100 1000 31000 500 80 2000 94000 125 3123 567 1009295

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Salary Medical allowances for Employee Wages Overtime allowance Leave travel concession Leave salary encashment Uniform Staff welfare and amenities Food allowance Pension contribution Leave salary contribution Employers contribution towards EPF Administrative charges on EPF a/c

20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39.

Insurance Vehicle running expenses Repair & maintenance Travel expenses Conveyance charges Printing Stationary Postal expenses Bank charges Book & periodicals Horticulture expenses Police escort charges/ security guards General expenses Professional charges Meetings Lease charges Business promotion& marketing expenses Advertisement Waiting charges Commission Total Grand Total

43 8059 23533 3758 445 2360 682 6165 83 281 7 29380 8259 425 297 1567 3351 158 557 28451 199955 1219669

43 6578 25000 2456 445 2500 499 5000 83 100 0 26789 6789 425 297 456 1245 345 325 23456 184016 1193311

1200000 1000000 800000 600000 400000 200000 0 2009-10 FY 2010-11


Staff Exp Administration Exp

INTERPRETATION:Staff Expenditure level in the F.Y. 2010-11 was increased by 1.03% and Administration Expenditure level in the F.Y. 2010-11 was also increased by 8.06%. And the total working expenditure has been increased by 2.02%

TOTAL EXPENDITURE OF THE YEARS 2009 AND 2010

Particulars

(Rs. In lakhs) Amount for the year Amount for the year end 31st march 2009. end 31st march 2010. 26187 25342 968541 22192 738 2318 24681 924785 20368 5098

Rates & Taxes Repairs Depreciation Interest Other services EXPENDITURE BOOKED EARLIER NOW REVERSED Salaries and staff expenses Power and fuel Interconnect usage charge USO towers Total

852310 1428 14520 398 1911656

817170 1410 12148 562 1808540

TOTAL EXPENDITURES

1808540 1911656

Year 2009 Year 2010

INTERPRETATION:Total expenditures in the year 2010 was increased by 5.7% when compared to the total expenditure in 2009

CAPITAL EXPENDITURE Allotment of Capital Expenditure Budget for FY 2010-11 Based On Actual Expenditure in 2009-10:Particulars SERVIC E LTS CDMA WILL GENERAL AREA OFC ADMN OFF STAFF QRTS TOTAL G.A. LTS CDMA WILL OFC TOTAL RA LTS CDMA WILL OFC TOTAL TA BUILDIN G 0 0 CABL E 4500 RS. IN 1000 TOTA L 6144 30150 58802 14923 24555 0 0 70334 19423 8013 14700 0 0 14700 59690 67703 0 0 0 0 0 0 0 0 5420 0 6980 0 15607 5420 6144 6980 113507 20413 14700 59690 94804 0 0 0 0

Head of A/C

A&P 3889 58802 9633

L&W 15607

SI

0 0 0 0 0

RURAL AREA

TRIBAL AREA

VAS( BROAD BAND) TOTAL VAS BTY/PP/EWSD/CA/RS/AX E-10 DSPT/SPV/HUB/SOFTWA RE GRAND TOTAL 0 0

0 0 0 0

0 0

0 0

7053 0 94087 87126 21027 13124

7053

215364

Actual capital expenditure in 2009-10:RS. IN 1000 TOTA L 5674 25043 45690 11234 20473 0 10 56912 16234 6578 16000 0 10 16000 45000 51578 0 0 0 0 0 0 0 0 3456 0 7000 0 12345 3456 5674 7000 91216 17044 16000 45000 78044 0 0 0 0

Head of A/C

SERVIC E LTS CDMA WILL

BUILDIN G 24 12 5 0 10 51 10 0

A&P 2000 45678 9234

CABL E 5000

L&W 12345

SI

GENERAL AR

OFC ADMN OFF STAFF QRTS TOTAL G.A. LTS CDMA WILL OFC TOTAL RA LTS CDMA WILL OFC TOTAL TA

RURAL AREA

TRIBAL AREA

VAS( BROAD BAND) TOTAL VAS BTY/PP/EWSD/CA/RS/AX E-10 DSPT/SPV/HUB/SOFTWA RE GRAND TOTAL 61 0

10 10 0 0

0 0

10 10

6789 0 79711 67812 15801 12674

6789

176059

Allotment of capital expenditure budget for FY 20010-11 based on actual expenditure in 2009-10:-

120000 100000 80000 60000 40000 20000 0 2010-11 2009-10


Urban area rural area

INTERPRETATION:Urban area expenditure level in the F.Y. 2010-11 was increased by 24.4% which is, in 2009-10, 91216. Rural area Expenditure level in the F.Y. 2010-11 was also increased by 21.4% which is, in 2009-10, 78044.

RESERVES AND SURPLUS

Particular Capital reserves As per last balance sheet Add : Assets recognized Less : liabilities identified & Transferred to liabilities General reserves As per last balance sheet Add : carried from P&L account Contingency reserves Surplus : Profit and loss account As per last balance sheet Add : carried from P&L Account Total Reserves

As at 31st march 2009 4,040,518 472 6,480 4,033,566

As at 31st march 2008

Absolute change

% change

4,040,518

6,952

0.17

4,63,270 ------

4,63,270 2,00,000 ----

4,63,270 2,00,000 ----

----------

----------

28,59,037 57,485 29,19,522 7589358 28,59,037 7562825 57,485 2.01

DATA ANALYSIS:-

% of reserves from total reserves 2009

38.46% capital reserves 53.14% general reserves contingency reserves 6% 3% surplus

% of reserves from total reserves 2009

37.80% capital reserves 53.40% general reserves contingency reserves 6.12% 2.64% surplus

%change in reserves when compared 2009 to 2008.


2.50%

2.00%

1.50% Column1 1.00% Column2 Column3 0.50%

0.00% capital reserves general reserves contingency reserves surplus

INTERPRETATION:1. With 0.17% capital reserve has been decreased in 2009. 2. The general reserve and contingency reserves remain unchanged with 463270 & 200000 lakhs respectively. 3. Surplus has been increased with 2.01% i.e. 57485 lakhs showing operational and managerial efficiency.

CASH & BANK BALANCE

Particulars

Amount as at 31st march 2008 (Rs. In lakhs)

Amount as at 31st march 2009 (Rs. In lakhs)

Amount as at 31st march 2010 (Rs. In lakhs)

Cash and Cheques in hand Balances with Scheduled banks: - Current Account - Deposit Account Total

2,569

2,704

2976

147,508 3,905,081 4,055,158

147,251 3,595,341 3,745,296

147433 3841857 3992266

Cash & bank balance (Rs. In lakhs)

2010

2009

2008 3500000 3600000 3700000 3800000 3900000 4000000 4100000

INTERPRETATION:Cash & bank level in 2009 to 2008 was decreased by 7.64%. In 2010 income level was increased by 6.18%.

INVESTMENT:-

Particulars

Amount (Rs. In lakhs) 20000

Year 2009

Year 2010

30000

INVESTMENT IN LAKHS

20000 Year 2009 Year 2010 30000

INTERPRETATION:When compared to investments in 2009, the Investments in 2010 were increased by 33.33%.

COMPARATIVE BALANCE SHEET OF BSNL Ltd. 2008-2009 (Rs. in Lakhs)


EFFECT IN WORKING CAPITAL PARTICULARS LIABILITES Shareholders funds Capital Reserves and Surplus Total Loan funds Secured loan Unsecured loans Other funds Current liabilities Liabilities Provisions Total ASSETS Fixed assets Investments Deferred tax Current assets Inventories Sundry debtors Cash & bank balance Other current assets Loans &advances Profit & loss A/C 322006 546551 4055158 137687 744441 66231 242847 558066 3745296 114148 714431 105071 79159 (11515) 309862 23539 30010 (38840) 32.60 (2.06) 8.27 20.62 4.20 (0.97) 5736800 20000 .. 6056694 20000 .. (319894) 0 (5.28) 0 1739788 606321 11628874 1667919 514858 11556553 71869 91463 163332 4.31 17.76 7.48 .. 338887 131053 554366 124608 (215479) 6445 (38.87) 5.17 1250000 7562825 8812825 1250000 7444802 8694802 0 118023 118023 0 1.59 1.59 31-03-2009 31-03-2008 INCREASE/DECREASE PERCENTAGE

Total Net working capital (C.A-C.L)

11628874 3460734

11556553 3192011

72321 268723

8.02 8.42

6000000 5000000 4000000 capital 3000000 2000000 1000000 0 2008 2009 current liabilities current assets

INTERPRETATION:
The above table shows us the comparative balance sheet of Bharat Sanchar Nigam LTD in the year 2008-2009. The capital invested in two years is equal, unsecured loans are decreased and the current liabilities are also increased. The deferred tax assets are increased, the current assets is increased. Provisions are in increasing rate; therefore the organization is facing loss in the scheduled year 38840 and the percentage is 0.97.

COMPARATIVE BALANCE SHEET OF BSNL 2007-2008 (Rs. in Lakhs)

PARTICULARS
LIABILITES Shareholders funds Capital Reserves and Surplus Total Loan funds Secured loan Unsecured loans Other funds Current liabilities Liabilities Provisions Total ASSETS Fixed assets Investments Deferred tax Current assets Inventories Sundry debtors Cash & bank balance Other current assets Loans &advances Profit &loss A/C

31-03-2008

31-03-2007

EFFECT IN WORKING CAPITAL INCREASE/DECREASE PERCENTAGE

1250000 7444802 8694802

1250000 6825651 8075651

0 619151 619151

0 9.07 9.07

554366 124608

728393 170400

(174027) (45795)

(23.89) (26.88)

1667919 514858 10877586 6056694 20000 ..

1612324 888223 11474991 6408243 20000

55595 (373365) (597405)

3.45 (42.04) (12.71)

(351549) 0

(5.49) 0

242847 558066 3745296 114148 714431 1608884

278922 630205 3057948 63627 923207 2593386

(36075) (72139) 687348 50521 (208776) (984502)

(12.93) (11.45) 22.48 79.40 (22.61) (37.96)

Total Net working capital (C.A-C.L)

10877589 1009234

11474991 47185

(597402) 962049

8.50 8.45

INTERPRETATION:
The above table shows us the comparative balance sheet of BSNL in the year 2007-2008. The capital is also equal that is 1250000, unsecured loans are decreased and the current liabilities are also decreased. The current assets are decreased but the cash and sundry debtors balance is increased. Provisions are in increasing rate; therefore the organization is facing loss in the scheduled year 984502 and the percentage 37.96.

Comparative Income & Expenditure statement of BSNL in 2008-2009

Particulars

31-3-08 (Rs in lakhs

31-3-09 (Rs in lakhs

Extent of Increase/ Percentage Decrease 774263 4658

Income: Sale of product and other incomes Expenditure: Manufacturing and other expenses Depreciation/impairment Interest Total Expenditure Profit/loss before extraordinary items Extraordinary items Profit/Loss before taxes Provision for taxation Provision for Fringe benefit tax Deferred tax Profit/Loss for the year Provision for taxation of earlier year written back Provision for bad and doubtful debts written back Balance brought forward as per the sanctioned scheme Balance Carried to Balance sheet Basic and diluted earnings per equity share

1661965

2436228

1480801 33268 23950 1538019 ----123946 300 830 46 (6535) 129351 ---

1613854 15710 14725 1644489 ----791939 300 950 --20846 769843 ---

133314 (17558) (9225) 6767 ----667732 --12 (46) 14311 640185 ---

900 5277 3851 694 ----53759 --1445 100 2189 4937 ---

(3195242) 3065584 66

3065584 2295741 394

(129658) (769843) 328

405 2511 4969

INTERPRETATION:
The above table shows us the common size balance sheet of BHARAT SANCHAR NIGAM LTD in the year 2008-2009 .The income is increased and the total Expenditure is also increased. Profit/loss for the year is increased and the balanced brought forward as per the sanctioned scheme is decreased and the balance carried to balance is decreased. The overall table is decreased on the income.

CHAPTER - IV FINDINGS AND SUGGESTIONS

FINDINGS AND SUGGESTIONS FINDINGS


According to my survey and calculating the important points are: y y Budgeting system of BSNL is good. The comparative study o f actual and expected budget depicts that financial department working good, as expected expenditures are lower than actual. Salary of employees is much better. Budgetary control department makes the organization to use the available resources to its optimum by providing appropriate budgets or estimates. As the BSNL s financial department is making perfect estimates or budgets, it helps to draw up long range plans in the investments and budget policies. After overhauling the Four years balance sheet of BSNL and all condition, I have to reach this conclusion that;  Working process of BSNL is taking very long time because of which, BSNL is not being able to reach desired progress. So improve the working process.  BSNL is facing the capital problem because of which financial position of BSNL are affected.  BSNL is paying more taxes. Because of paying more taxes, financial position of BSNL are affected. y There is very tough competition among the private telecom companies on the level of new trend of advertising to silence a major part of Customers.

y y

SUGGEST ION

The study has provided with the useful data from the respondents and after making analysis of the data following are recommended: y There should be improved the working process of BSNL. Because working process of BSNL is taking more time. y y y There is a need for better promotion for the investment & services. More returns should be provided on revenues policies. .Create new accounting or finance policies. This policies will provide help generate revenues. Budgetary control should be given more importance than before in the organization.

CHAPTER V BIBLIOGRAPHY

REFERENCES
BOOKS   Management Accounting Shashi K. Gupta & R.K. Sharma Financial Management M.R.Agrawal

NEWSPAPERS    Economic Times. Business times Business Standard

WEBSTIES www.bsnl.co.in www.google.com www.yahoo.com www.wikipedia.com Office memorandum of bsnl 2010-11 Departmental Records

y y y y y y