Lovely Professional University

Department of CA

TERM PAPER 0F FINANCIAL MANAGEMENT

SUBMITTED TO:- Mrs. MONIKA UPPAL

SUBMITTED BY:ARPANA ANAND RE3902A10 E33902

MCA-MTECH(CSE)

CONTENTS

ACKNOWLEDGEMENT HISTORY OF THE COMPANY CAPITAL STRUCTURE DIVIDEND POLICY LIQUIDITY POLICY FINANCIAL CREDITS IPO LATEST NEWS OF THE COMPANY CONCLUSION

ACKNOWLEDGMENT

I deem it as my personal duty to thank all those who proved indispensable in the completion of my project. I express mine gratitude towards GOD. I express mine gratitude to my esteemed guide. I would also like to put on record my gratitude Lecture In-charge Mrs. MONIKA UPPAL for giving me valuable and competent guidance in accomplishment of my work.

Finally I am thankful to my friends and all those who helped me in completing the project for the support and co-operation.

HISTORY OF THE COMPANY

Reliance Communications Limited (RCL) is the flagship company of the ANIL DHIRUBHAI AMBANI Group (ADAG), is India's largest private sector information and communications company with over 48 million subscribers. It was established in the year 2004 as Reliance Infrastructure Developers Private Limited, Reliance Communications started laying 60,000 route kilometres of a pan-India fibre optic . The Company's business encompasses a complete range of telecom services covering mobile and fixed line telephony. During the year 2004, the company launched RIM Prepaid with attractive offer, Reliance Infocomm introduced World Card - a Prepaid International calling card for affordable and convenient ISD calls from India, the first regional Customer Contact Centre was launched in Chennai In 2005, RCL only the company introduced, first e-recharge facility in CDMA in India, the company has had joins hands with Air Deccan to offer air ticket booking facility at Reliance WebWorld. Name of the company was changed from Reliance Infrastructure Developers Private Limited to Reliance Communication Ventures Limited in August 2005. India's first Talking Message Service (TMS) enabling the mobile users to send voice messages to not only other mobiles but also fixed wireless phones (FWP) and landlines in Reliance communications network were launched during the year 2006. RCL and Nokia have joined hands to market the Nokia 1255 mobile handset in India at a price of Rs 1,999 during the period of 2006.

Network division of the Reliance Communications Infrastructure Limited was demerged with the Company during the year 2006. The name of the Company was changed from Reliance Communication Ventures Limited to Reliance Communications Limited with effect from 7th June 2006. The Company joined Lenovo and Intel for 'Internet on the Move' in the year 2007. Also in the same year, RCL ties up with Naukri.com for Search Jobs & Classified Ads from Reliance Mobile World. The demerger of Passive Infrastructure division Reliance Communications & Reliance was approved in March of the year 2007. Sunny Days And Nights For Reliance Mobile Subscribers as Reliance Communications ties up with SUN TV to offer video streaming of all SUN TV programs online 24x7. In May of the year 2007, the company bagged West Bengal E-Governance Project. RCL slashed its call rate to US and Canada. It's now just Rs 1.99 per minute and also launched Lifetime Validity Recharge @ Just Rs.499. The tie up was made with Cisco to launch Business Internet Services for SMEs in Pune in the year. As on April 2008, RCL launched Exam Guru, the educational portal, which provides information on exam result, college admissions, exam schedules, admission deadlines, mock tests and also tips for bettering performance During the same month and same year, the company has acquired UK based eWave World, which offers wireless telephony services using WIMAX technology. In May 2008, Reliance Globalcom, a subsidiary of the company, has acquired London based managed network services provider, Vanco Group, for about $77 million (Rs 324 crore).

CAPITAL STRUCTURE
DEBT YEAR LONG TERM (A) Rs.in crs 2007 9454.27 SHORT TERM (B) Rs. in crs 9454.27 18908.54 94.82 2008 2009 19336.43 27313.86 19336.43 27,903.61 38672.86 55217.47 97.40 98.19 1032.01 1022.31 0 0 1032.01 1022.31 2.60 1.82 TOTAL A+B PER. (%) EQUITY SHARE CAPITAL (C) Rs. in crs 1032.01 EQUITY PREFERENCE SHARE CAPITAL (D) Rs. in crs 0 1032.01 5.18 TOTAL C+D PER (%)

GRAPH

ANALYSIS:The company has got the debt more than the equity share. Here the short term and long term debt are almost same and this company is more in risk.

As the above graph shows the percentage of debt is higher than the percentage of equity.

DIVIDEND POLICY
YEARS EAIT NET PROFIT MAR 2005 DEC 2005 MAR 2007 MAR 2008 MAR 2009 (A) 0.00 6.28 2420.58 2601.99 4815.07 NO. OF SHARES (B) 10,000 1,00000 2,044614990.0 0 2064026881.00 2064026801.00 0.0 753.33 9.36 12.4 23.13 EPS D=(A/B) DPS DIVIDEND PER SHARE (C) 0 0 8 15 16 0 0
0.8547

% OF EPS (C/D *100)

1.2096 0.6917

GRAPH

ANANLYSIS:The earnings of the shareholders are very low,in the year of its start both the earnings are 0 and next followed year the earning are very low. So it is clear the earnings is less compared to investment.

LIQUIDITY POSITION

YEARS MAR 2005 DEC 2005 MAR 2007 MAR 2008 MAR 2009

CASH IN HAND CASH IN BANK (A) 0 0 0 0.01 0 (B) 0.01 0.05 68.45 192.65 535.15

OTHERS (C) 0 3158.91 19137.97 17028.20 23272.50

TOTAL A+B+C 0.01 3158.96 19206.42 17220.86 23807.65

GRAPH

ANALYSIS:Here the above graph shows that the company has almost 0 cash in hand n their investment are more. So if v we seen in the long term we can conclude that they have profit in the long term i.e they will be receiving the profit. And they dont have any liquid form of money with them.

FINANCIAL CREDITS

YEARS MAR 2005 DEC 2005

CURRENT ASSETS A 0.1 3,158.96

CURRENT LIBIALITY B 0.1 615.19

% CURRENT ASSETS RATIO (A/B) 1 5.1349

MAR 2007 MAR 2008 MAR 2009

20,107.04 18,515.29 25,543.01

10,732.14 11,238.16 9,365.46

1.8735 1.6475 2.7273

GRAPH

ANALYSIS:From the above table and graph we come to know that at the start i.e in 2005 the company had nil financial credits. As the year passed there was increase in assets and liabilities. From the graph we see that the assets are always more than the liabilities.

IPO
YEARS MAR2005 DEC2005 MAR 2007 MAR2008 MAR 2009 PRICE PER SHARE (A) 5 5 5 5 5 NO. OF SHARES (B) 10,000 1,00000 2,044614990.00 2064026881.00 2064026801.00 TOTAL SHARE RAISED 50000 500000 1022307495 1032013441 1032013401

ANALYSIS:The company has raised its equity share gradually and it was being maintained in constant and its like many investors there

NEWS RELATED TO THE COMPANY

3G auction a winner's curse, says Macquarie Cap

Published on Fri, Apr 09, 2010 at 12:41

Auction of wireless telecoms spectrum to facilitate nation-wide deployment of third generation (3G) and wireless broadband services for the first time is on and would continue till the last circle is auctioned. Post the 3G auction only, the auctions for broadband wireless access (BWA) will start. The entire process might take over a month for completion. Commenting on the same, Shubham Majumder of Macquarie Capital said he expected the panIndia 3G license to cost USD 2 billion and BWA license to cost USD 750 million to USD 1 billion. Bharti Airtels net debt to earnings before interest, taxes, depreciation and amortisation (EBIDTA) will rise to 2.8 times post Zain and 3G borrowing. To me, it looks like a winners curse. For an incumbent like a Bharti or Vodafone, or idea or to some sense Reliance it is almost absolutely strategic and imperative that they get 3G spectrum and also BWA spectrum. They have no option but to big aggressively, he said, adding that the amount of spectrum offering in 3G was low.

Rel Comm has target of Rs 186: Thacker

Published on Wed, Apr 07, 2010 at 11:59

Thacker told CNBC-TV18, "Very clearly telecom is coming back. Rel Comm is making some kind of a come back. We saw Bharti also moving up nicely from Rs 300 levels to around Rs 315 odd levels. Rel Comm after going through good base formation in the range of Rs 172 to Rs 160155 on the lower side for a period of 3 months is now giving a breakout. He further added, It is just early stages but at least the minimum target as a result of this breakout could probably be around Rs 194-195 and the upside could even extent to levels of around Rs 210. Yesterday we saw the breakout happen and today I am expecting some kind of follow up action to happen. The day price target is around Rs 186."

At 11:58 hrs the share was quoting at Rs 179.10, up Rs 1.95, or 1.10% with volumes of 429,911 shares. Market capitalisation stands at Rs 36,966.72 crore. The company touched its 52 week high Rs 359.00 and 52 week low Rs 157.90 on 11 Jun, 2009 and 16 Mar, 2010, respectively. Currently, it is trading -50.11% below its 52-week high and 13.43% above its 52-week low.

Reliance Comm likely to underperform: Sukhani

Published on Thu, Mar 25, 2010 at 17:53

Sudarshan Sukhani of Technical Trends is of the view that Reliance Communications likely to underperform. Sukhani told CNBC-TV18, Reliance Communications is underperforming and its going to do that. Idea Cellular is the number one stock in that field.

Reliance Comm Mar qtr PAT seen at Rs 820 cr: Emkay

Published on Tue, Apr 13, 2010 at 14:47

Emkay Global Financial Services has come out with its earning estimates on Telecommunication sector for the quarter ended March 2010. According to the research firm, Reliance Communication's March quarter sales are expected to go down by 13% to Rs 5337.70 crore on YoY basis. The company's net profit is expected to go down by 37% at Rs 820 crore on YoY basis.

CONCLUSION

Overall , if we see the company has less earnings and the investment it has made is more which will help them to earn the profit in long term.

As we have seen 5 tabular for the study of the company , which shows that the company is having gradual growth and comparatively the profit and earning per share are less. This reliance communication is expected to have a great future and investment in it will be a wise idea if you are expecting to have the profit at long term and ofcourse the part of risk is more here as the company has more debt than the equity.