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A STUDY ON WORKING CAPITAL MANAGEMENT IN BSNL, VISHAKAPATNAM, ANDHRA PRADESH

PROJECT REPORT SUBMITTED FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION By


MR.LUKALAPU LOKESWARA RAO

Under the esteemed Guidance of DR. CHINTAMANI PRASAD PATNAIK, MBA, FINANCE, M.A. English, PGJMC, PGDMM, MPHIL, PhD Assistant Professor, MBA Department, Aditya Institute of Technology and Management, K.Kotturu, Tekkali, SRIKAKULAM DISTRICT, ANDHRA PRADESH.

Aitam School of Computer Science and Management, K, Kotturu, Tekkalli,


2010-2012
DECLARATION I declare that the Project work titled A STUDY ON WORKING
CAPITAL MANAGEMENT IN BSNL,VISHAKAPATNAM, ANDHRAPRADESH.

submitted by me for the award of the degree of Master of Business Administration in the Department of Business Administration, Aitam School of Computer Science and Management, K, Kotturu, Tekkalli, is an original work and it has not been submitted previously in any part or full to this or any other University for the award of any degree or diploma.

Date : RAO)

(LUKALAPU LOKESWARA

DR. CHINTAMANI PRASAD PATNAIK

CERTIFICATE
This is to certify that the Project work titled A STUDY ON WORKING
CAPITAL MANAGEMENT IN BSNL,VISHAKAPATNAM,ANDHRA PRADESH. is a

bonified work done by Mr.lukalapu lokeswara rao under my Supervision And Guidance is an original work and it has not been submitted previously in any part or full to this or any other University for the award of any degree or diploma. I wish him success in all his endeavors.

DR. D. VISHNUMURTHY GUIDE (PRINCIPAL)

RESEARCH

CONTENTS
CHAPTER I I. INTRODUCTION

1.1 INTRODUCTION 1.2 NEED FOR THE STUDY 1.3 OBJECTIVES OF THE STUDT 1.4 METHEDOLOGY OF THE STUDY 1.5 LIMITATIONS OF THE STUY .
CHAPTER II CHAPTER III CCHAPTER Iv 2.INDUSTRIAL PROFILE 3.TEORITICAL FRAME WORK 4.ANALYSIS AND INTERPRETATION 24-41 42-54 55-90

CHAPTER

91-94

5.1 SUMMARY 5.2 FINDINGS & SUGGESTIONS 5.3 CONCLUSION


BIBLIOGRAPHY

CHAPTER 1
WORKING CAPITALMANAGEMENT IN BSNL

1.1

Introduction :

Finance is one of the basic foundations of all kinds of economic activities. Financial management is one integral part of overall management; it is not a totally independent area it is concerned with the acquisition, financing and management of assets with some overall goal in mind. Financial management is important because it has an impact of all the activities of financial management. The basic objective of financial management is to maintain the liquid assets and maximization of the profitability of the firm. Efficient management of every businesses enterprise is closely linked with efficient management of the finance. Maintenance of liquid assets means that the firm has adequate cash in hand to meet its obligations at all times. A business firm is a profit seeking organization profit maximization is also well consideration to be an important objective of financial management.Financial management is mainly concerned with the proper management of finance function. Risk: cost and control considerations are properly balanced in a given situation and there is optimum utilization of funds. Financial management emerged as a distinct field of study at the turn of 20th century.Financial management as an integral part of overall management is not totally independent area. It draws heavily on related disciplines and field of study. Such as economics, accounting, marketing, production and quantitative methods. It helps in profit planning, capital spending, measuring costs. Controlling inventories, accounts receivable, etc. it is essentially helps in optimizing the financial from a given input of funds.A study of financial management with particular reference to the working capital management in the large public sector under taking is a challenging task and endeavor in this direction is to analyze the working capital balances management, receivables and

inventory management. Working capital is the amount required to meet day-to-day operation at the organization. An absence of this makes the functioning of the organization blind. A proper study on working capital management results in prevention of mismanagement and misutilisation of funds.Funds are required for two basic reasons in any organization. First, funds are needed for the creation of productive, capacities and purchase fixed assets. Secondary, to finance a past for the day-to-day running of business which in other words is the working capital.Working capital management takes care of the problem that arises during the management of current assets, his current liabilities and interrelationship that exist between them. Thus it is also known as current asset management and current liabilities from an integral part in the balance sheet of the firm.Working capital is an integral of overall corporate management, the finance corporate management the finance manager has to carry out the finance function is the face of risk cannot be predicated with certainty.

2.1 NEED OF THE STUDY


To know the financial performence To know the financial position of telecommunication in India. To know more information about study topic. To have a personal exposure by visiting the organization for many times. To develop the communication skills by preparing the project. To know the importance of financial statements analysis in the organization. To know the working capital place in the financial management of large scale telecommunications BSNL, MTNL.

1.3

OBJECTIVES OF THE STUDY


To the find financial position of the BSNL in the telecommunication industry. To focus on the working capital management of the BSNL and find out the effective utilization of working capital. To find out the performance of working capital finance in BSNL. To compare the working capital for the past 2 years and find out the causes for increase or decrease in working capital. To know on what basis the working capital been involved in the BSNL Telecommunication.

1.4

METHODOLOGY OF THE STUDY


Methodology mainly classifies two types: 1. Primary data. 2. Secondary data.

Primary data:
Primary data is collected from the office staff and employees in the company through a structured schedules and personal interview. It includes first hand information from within the company. The schedule is especially designed to find out various commissions and other benefits packages to motivate and retain the employees within the company.

Secondary data:
Secondary sources include the information from the management of the company, annual reports of the company, various books, journals and the internet websites.

1.5

LIMITATIONS OF THE STUDY


The limitations that came across during the course of this work are listed as below: o Observing financial performance of BSNL as whole telecommunication industry cannot be judged. o Limited time given to study about their aspects. o The duration of 45 days allotted for this work is insufficient to collect data comprehensively for this study. o For the accounting year 2011-2012 the accounts have not been finalized due to this information relating to this period is not gathered.

CHAPTER-II INDUSTRIAL PROFILE

Like the Ocean that is made of tiny drops, the P&T had a slow and uneasy start. The Sprawling Posts and Telegraphs Department, for instance, occupies a small corner of the public works department, in 1851. Dr. William OShaughnessy who pioneered Telegraph and Telephone in India belonged to the Public Works Department all through the experimental stage. A regular, separate department was opened around 1854 when Telegraph facilities were thrown open to the public.The Telegraph Department during 1854-57 comprised a Superintendent of Telegraphs, with three Deputy Superintendents at Bombay, Madras and Pegu in Burma. There were Inspectors at Indore, Agra, Kanpur and Banaras and an Operating and Maintenance Staff. Dr. William OShaughnessy was the first Superintendent of Electric Telegraphs in India and later become the first Director General. The Indo-European Telegraph Department, which later came to be known as the Overseas Communications, was administered by a Director-in-Chief whose quarters were in London. On 15th February 1888, it was merged with the Director General of the India Telegraph Department. It was decided that the administration reports of the two departments, Indian telegraph and the Indo European Department separated so as to shown how the finances of the country were affected by each unit. The operations of the two separate services. Post Office and Telegraph Department developed side by side. On the eve of World War-1 in 1914, the next big administrative change came. The Postal Department and the Telegraph Department were amalgamated under a single Director General. The process had started in 1912, but it was complete in 1914. During 1923-24, 152 questions relating to the Department were asked and answered in the Indian Legislative Assembly, Posts and Telegraphs has always evoked a great deal of interest from law makers.

A Major reorganization of the Department took place in April, 1925. The accounts of the Indian Posts and Telegraphs were reconstituted to examine the true fiscal profile of the Department. The attempt was imposing a burden on the tax payers or bringing in revenue to the Exchequer, how far each of the four constituent branches of the Department, the Postal, Telegraph and wireless were contributing towards this result. It was further examined, whether the rates charged from the public for the various services were inadequate or excessive. The Posts and Telegraphs, like all public and private undertakings, was a victim of the Universal Financial and economic depression which crashed on the World 1930. During 1931, numerous economy measures had to be introduced according to the advice of the Posts and Telegraphs Sub-Committee to the Retrenchment Committee prescribed over by Sir Cowasjee Jahangir Jr. Naturally, the adoption of the various measures of retrenchment could not but have an adverse effect on the emoluments and interests of the personnel of the Department.From the beginning, P&T set up was run on welfare lines. Profit was not the motto. The annual report of the Department for 1931 said It is the accepted policy of the Government that the department should be so administered that there should be neither any substantial profit nor any substantial loss on its working under normal conditions. As has already been indicated, the achievement of this ideal has not proved possible owing mainly to exceptional economic and trade conditions of recent years. One of the main contributory causes was the revision and improvement of pay of the great bulk of the employees of the department in recent years. This was undertaken with the approval of and indeed under pressure by the Legislative Assembly. While the department is commonly spoken of as a Commercial one though as far as possible it is guided by the commercial considerations in the regulation of its business. It must be realized that in many directions it is debarred from observing strict business principles. Many of the purposes which it is required to serve are un remunerative and notably, in matters relating to the employment and control of staff, the department is bound by a large volume of statutory and other rules, doubtlessly necessary for the regulation of a public service, but which in the aggregate involve many directions of a kind unknown to private commercial concerns.

After the implementation of the Federal Financial Integration Scheme of 1 st April 1950, the administration of the entire network of Telegraph and Telephone systems of the nation, including those previously existing in the former princely states became a major adventure. In 1950 the number of Telephone Exchanges absorbed from princely states was 196. These systems which were working with different degrees of efficiency could fit into the general telecommunication network. The installed capacity of these 196 Exchanges was 13,362 Line with 11,296 working connections. Soon after the absorption, an attempt was made to improve their technical efficiency by replacing absolute and unserviceable equipment and lending well qualified and experienced staff,

simultaneously, isolated exchanges were integrated with the general pool. The more complicated task was acquisition of the staff. Their final absorption in to the different cadres of service in and Telegraphs was a major step.
From P&T to DOT

Till 31st December 1984, the postal, telegraph and telephone services were managed by the Posts & Telegraphs Department. In January 1985, tow separate departments for the posts and telecommunications were created. The accounts of the department initially maintained by the Accountant General of the P&T. However, by April 1972, the Telecommunications accounts were separated. Simultaneously the department also started preparing the balance sheet annually. With the takeover of the accounts from the audit and delegation of larger financial to the field units, Internal Financial Advisors were posted to all the Circles and units.
Birth of DoT :

Rajiv Gandhi initiated the liberalisation of the telecom sector by demonopolising the telecom equipment-manufacturing sector in 1985, allowing private firms to manufacture telephones, while DOT licensed switching technology from various foreign firms. Simultaneously, Rajiv Gandhi also gave a thrust to national development of telecommunications equipment by hiring a non resident Indian engineer called Satyen (Sam) Pitroda in 1984 to start the Center for the Development of Telematics with the goal of designing an indigenous digital telecommunications switch, whose manufacture would be licensed to private firms.

The creation of the Department of Telecom (DoT) was followed by a proposal to change the organisation structure further by carving out the metropolitan areas into separate operating companies also generated debate.The DoTs motives to create MTNL and VSNL could be the access these companies could provide to private capital, which it did not have and needed to supplement plan allocations. In 1986, according to the DoT annual report, two new public corporations, Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were set up to provide decision making autonomy and flexibility and allow public borrowings to supplement internal resources.MTNL was carved out of DOT and took over operations, maintenance and development of telecommunication services in New Delhi and Mumbai. VSNL was set up to plan, operate and develop international telecommunication services in India. Pitroda added another bureaucratic body in 1989 and the Tele- Communication was created with a wide range of executive, administrative and financial powers to formulate and regulate policy and prepare the budget for DoT.

However, the large revenue surpluses generated by MTNL and VSNL caused friction between DOT and the new companies. While the new companies preferred to use their surplus funds for their own expansion, DOT wanted resources transferred in order to pay for network development in other parts of the country. By February 1990, the Telecom Commission was forced to develop a revenue-sharing arrangement between the parent and the siblings.This friction in the 1980s may help explain why the DOT has refused to decentralised operations by carving out other parts of the country into separate organisations. This, despite another government appointed high powered committee on reorganisation of the telecom department recommending in 1991 that the zonal telecom corporations be formed to manage telecom services across the country and a corporation be set up to handle long distance services within India. This committee also laid down the first blue-pring for reforms that were to be witnessed from 1991 onwards by suggesting that Value Added Services should be provided by the Private Sector and production of equipment be undertaken by both Private and Public sectors.By the late 1980s a multitude of factors were impacting the way telecom policy was being formed. The government was attaching greater importance to the goal of expanding

telecommunication services than it did in the first part of the decade. Efforts were also being made through the C-DOT to design an indigenous telecommunications switch, which was suited to the unique Indian environmental conditions and could work through extreme variations of temperature, humidity and dust.India, however, resisted pressures from the developed countries to keep telecommunications from being included, along with banking and finance, outside the main agreement in 1996.However, though reforms had been underway for five years by 1990, and terms like privatisation and liberalisation were used in public debates during the 1980s, the meanings of those terms were different than those which applied to northern market oriented telecommunications analysts. In India, privatization did not refer to selling government enterprises then, but rather donated the licensing of private manufactures to produce telecommunications equipment. Liberalisation, similarly, was used to describe the policies since the mid-80s which both expanded the number of manufacturing licenses available and eased rules for importing electronic equipment. Rarely were wither term mentioned with reference to telecom service provision in the 1980s.
Restructuring the DOT

The Department of Telecommunications or DOT is playing a significant role in the evolution of telecom services in India, Unitl now DOT was like any other government undertaking with a lethargic work culture, but the new private operators seem to have made a serious impact. The DOT is forced to corporate its operations and work culture.India Telecom, the new corporatised DOT, will be the countrys largest Public Sector unit with revenue of Rs.1200 Crores and a surplus of Rs.800 crores. The corporatization will throw up three entities, including India Telecom, which will provide local and long distance communication services throughout the country except Mumbai and New Delhi. These two metros will be dealt by MTNL (as before) and the third corporate will be VSNL for international services.

The functions carried out earlier by the DOT have been segregated. A corporatised DOT implies that its functions of a regulator, service provider and policy maker would be carried out by three different organisations. The setting up of India Telecom will pave the way for a level playing field, though initially it will be a dominant

player, since at least two thirds of the network up to 2007 will be controlled by them. However, there are underlying fears that the telecom giants, India Telecom, MTNL and VSNL could easily indulge in anti-competitive practices such as cross-subsidisation. Also it remains to be seen whether India Telecom as a PSU, will have the requisite autonomy to take on the private sector. Much would depend on the composition of the board of directors and also the redefinition of the role of the Telecom commission.One big way in which the newly corporatised DOT is expected to benefit is by being able to raise finance at will. Earlier, as a departmental undertaking the DOT was restrained from approaching the public for raising funds. MTNL had in the past raised resources for the DOT through bond issues. However, this was expected to change once government holding in MTNL declined. A re-organisation of the DOT had in any case become inevitable, because a lot of DOTs regulatory functions have been hived off to the newly formed TRAI. The latter now has the power to set tariffs, decide on revenue sharing and interconnection charges between operators and ensure that the operators abide by the license conditions. In fact the line of demarcation dividing functions between the two undertakings (DOT and TRAI) was very blurred causing a lot of confusion. This had led to several tussles in the past.All the future relationship (competition, resources raising etc) of MTNL / VSNL with the corporatised DOT would be based on best commercial principles. The synergy of MTNL, VSNL and the corporatised DOT would be utilised to further the growth in this sector.
Structure of Indias Telecommunications Monopoly :

Until 1985, the Indian Telegraph Act of 1885 and the Wireless Telegraph Act 1932 provided the legal basis for the Central governments telecommunications monopoly. Under these laws, posts and telecommunications were combined in one P&T department run by the Ministry of Communications. In the late 1970s and early 1980s protests against poor service by subscribers, politicians, industrialists, and business leaders coincided with global and national pressure for liberalization. As a result, a

parliamentary committee was established in 1981, which recommended numerous structural and service improvements. Under the advice of this committee, Rajiv Gandhi ordered the bifurcation of the Ministry of Posts and Telegraphs in 1985. A separate

Department of Telecommunications (DOT) was established under the Ministry of Communications, and two supposedly autonomous Public Sector Undertakings (PSUs) were created to expand, develop, and manage crucial segments of the Indian telecommunications system. The Mahanagar Telephone Nigam Limited (MTNL) was set up to run services in Delhi (the nations capital) and Mumbai, formerly Bombay (the nations commercial centre) which together account for 25% of the nations phone lines. Telecommunication in the rest of the country continues to be run as a

Government Department because of staff resistance to change. Videsh Sanchar Nigam Limited (VSNL) was set up to run International Services. DOT was established as the exclusive, self-regulating provider of domestic and

long-distance service. The DOT has achieved significant success from 1992-1996, DOT doubled practically every aspect of the telecommunications infrastructure in India, from the number of telephones in service to the long distance route kilometers. DOT did not, however, succeed in reducing the registered waiting list for telephones, and in 1994, the government acknowledged the need to liberalisation Indias telecommunications market.
History of Indian Telecommunications : Year

1851

First operational landlines were laid by the government near Calcutta

(Seat of Birtish power) 1881 1882 1923 1932 Telephone service introduced in India Merger with the postal system Formation of Indian Radio Telegraph Company (IRT) Merger of ETC and IRT into the Indian Radio and Cable

Communication Company (IRCC) 1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph monopoly run by the governments Ministry of Communications.

1985

Department of Telecommunications (DOT) established, an exclusive

provider of domestic and long distance service that would be its own regulator (separate from the postal system) 1986 Conversion of DoT into two wholly government-owned companies : the

Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas. 1997 2000 Telecom Regulatory Authority created. DOT has been converted into Bharat Sanchar Nigam Limited

NATIONAL TELECOM POLICY The Government of India recognizes that provision of world class

telecommunications infrastructure and information is the key to rapid economic and social development of the country. It is critical not only for the development of the information technology industry, but also has widespread ramifications on the entire economy of the country. It is also anticipated that going forward, a major part of the GDP of the country would be contributed by this sector. Accordingly, it is of vital importance of the country that there be a comprehensive and forward looking telecommunications policy which creates an enabling framework for development of this industry.
National telecom policy 1994 Objectives and Achievements

In 1994, the government announced the National Telecom Policy which defined certain important objectives, including availability of telephone on demand, provision of world class services at reasonable prices, ensuring Indias emergence as Major manufacturing / export base of telecom equipment and universal availability of basic telecom services to all villages. It also announced a series of specific targets to be achieved by 1997. As against the National Telecom Policy 1994 target of provision of PCO per 500 Urban population and coverage of all 6 lakhs villages. DOT has achieved an urban PCO penetration of 1 PCO per 522 and has been able to provide telephone coverage to only 3.1 lakhs villages. As regards provision of total telephone lines in the country, DOT has provided 8.73 Million telephone connections against the eighth plan target of 7.5 million lines.

National Telecom Policy 1999 Objective and Targets.

Access to telecommunications is of utmost importance for achievement of the countrys social and economic goals. Availability of affordable and effective communications for the citizens is as the core of the vision and goal of the Telecom Policy. Strive to provided a balance between the provision of universal service to all uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the countrys economy;Encourage development of Telecommunications facilities in remote, hilly and tribal areas of the country.Create a modern and efficient Telecommunications infrastructure taking into account the convergence of Information Technology, Media, Telecom and consumer electronics and thereby propel India into becoming an IT superpower;Convert PCOs wherever justified, into public Teleinfo centers having multimedia capability like ISDN services, remoter database access, government and community information systems etc.,Transform in a time bound manner, the Telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level playing held for all players;Strengthen the research and development efforts in the country and provide an impetus to build world class manufacturing capabilities. Achieve efficiency and transparency in spectrum management. Project the defense & security interests of the country. Enable Indian Telecom Companies to become truly global players. In lines with the above objectives, the specific targets that the National telecom Policy 1999 seeks to achieve would be; Make available telephone on demand by the year 2002 and sustain in thereafter so as to achieve a Tele-density of 7 by the year 2005 and 15 by the year 2010. Encourage development of Telecom in Rural Areas making it more affordable by suitable tariff structure and making rural communication mandatory for all fixed service providers. Increase rural tele density from the current level of 0.4 to 4 by the year 2010 and provide reliable transmission medial in all rural areas.Achieve Telecom coverage of all villages in the country and provide reliable media to all exchanges by the year 2002.

Provided internal access to all district head quarters

Provide high speed data and multimedia capability using Technologies including ISDN to all towns with a population greater than 2 Lacks by the year.
The NTP provides that :

DOT will not be corporatised, which ensures that labor unions have no big issue

to fight. Private sector companies will be issued licenses for statewide operations in

competition with DOT for basic telephones. This establishes a dipole system for 15 years in 21 statewide service areas (or circles); Mobile telephone services will be offered solely by non-DoT private sector

companies, at least two in each service area. The initial license period is 10 years, extendable thererafter in five-year increments; Foreign equity participation will be allowed in public telephone operations of at

least 500,000 basic telephone customers and 100,000 mobile phone customers; Private carriers must commit to public service obligations such as rural area

coverage and public telephones; Interstate and international telecommunications will be the exclusive

monopoly of DOT and its company VSNL.

COMPANY PROFILE
BSNL Type Industry Founded Headquarters State-owned Telecommunications 19th century, incorporated 2000 New Delhi, India Gopal Das (Chairman) & (MD) Key people A.K.Sinha (CEO) S.D.Saxena (CFO) Wireless Products Telephone Internet Television Revenue Owner(s) Employees Website US$ 6.95 billion (2009) Government of India 299,840 March 31, 2009 Bsnl.co.in

INTRODUCTION: Bharat Sanchar Nigam Limited (abbreviated BSNL) is a state-owned telecommunications company headquartered in New Delhi, India. BSNL is one of the largest Indian cellular service providers, with over 75 million subscribers as of October 2010, and the largest land line telephone provider in India. However, in recent years the company's revenue and profit plunged into heavy losses due to intense competition in the Indian telecommunications sector. BSNL is India's oldest and largest communication service provider (CSP). It had a customer base of 90 million as of June 2008. It has footprints throughout India except for the metropolitan cities of Mumbai and New Delhi, which are managed by Mahanagar

Telephone Nigam Limited (MTNL). As of June 30, 2010, BSNL had a customer base of 27.45 million wireline and 72.69 million wireless subscribers.
BHARAT SANCHAR NIGAM LIMITED AN OVERVIEW :

On 01st October 2000, Department created BSNL, a new entity to operate services in different parts of the country as a Public Sector Unit. The Bharat Sanchar Nigam Limited (A Govt. of India Enterprise) head office is situated in Delhi as main office under the chief Managing Director, the same was formed on 1st October-2000. And the BSNL have 23 circles all over India with head of Chief General Manager of each circle.Bharat Sanchar Nigam Limited formed in October, 2000, is Worlds 7th largest Telecommunication Company providing comprehensive range of telecom services in India. Wireline, CDMA, Mobile, GSM Mobile, Internet, Broadband, Carrier Service, MPLS-VPN, VSAT, VOIP services, IN Services etc., Within a span of five years it has become one of the largest public sector unit in India. BSNL has installed Quality Telecom Network in the country and now focusing on improving it, expanding the network, introducing new telecom services with ICT applications in villages and winning customers confidence. Today, it has about 47.3 million line basic telephone capacity, 4 million WLL capacity, 20.1 Million GSM Capacity, more than 37382 fixed exchanges, 18000 BTS, 287 Satellite Stations, 480196 RKMs of OFC Cable, 63730 RKMs of Microwave Network connecting 602 Districts, 7330 Cities/Towns and 5.5 Lakhs villages. BSNL is the only service provider, making focused efforts and planned initiatives to bridge the Rural-Urban Digital Divide ICT Sector. In fact there is no telecom operator in the country to beat its reach with its wide network giving services in every nook & corner of country and operates across India except Delhi & Mumbai. Whether it is inaccessible areas of Siachen Glacier and North-eastern region of the country. BSNL serves its customers with its wide bouquet of telecom services. BSNL

is numero uno operator of India in all services in its license area. The company offers vide raniging & most transparent tariff schemes designed to suite every customer. BSNL cellular service, Cellone, has more than 17.8 million cellular customers, garnering 24 percent of all mobile users as its subscribers. That means that almost every fourth mobile user in the country has a BSNL connection. In basic services, BSNL is miles ahead of its rivals, with 35.1 million basic phone subscribers i.e., 85 percent share of the subscriber

base and 92 percent share in revenue terms. BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers who access Internet through various modes viz., Dial-up, Leased Line, DIAS, Account Less Internet(CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country. BSNL has set up a world class multi-gigabit, multi-protocol convergent IP infrastructure that provides convergent services like Voice, data and video through the same Backbone and Broadband Access Network. At present there 0.6 million Data One broadband customers. The company has vast experience in Planning, Installation, network integration and Maintenance of Switching & Transmission Networks and also has a world class ISO 9000 certified Telecom Training Institute. Scaling new heights of success, the present turnover of BSNL is more than Rs.351,820 million (US $ 8 billion) with net profit to the tune of Rs.99,390 million (US $ 2.26 billion) for last financial year. The infrastructure asset on telephone alone is worth about Rs.630,000 million (US $ 14.37 billion). BSNL plans to expand its customer base from present 47 millions lines to 125 million lines by December, 2007 and infrastructure investment plan to the tune of Rs.733 crores (US $ 16.67 million) in the next three years. The turnover, nationwide coverage, reach, comprehensive range of telecom services and the desire to excel has made BSNL the No.1 Telecom Company of India.has made BSNL the No. 1 Telecom Company of India.

Bharat Sanchar Nigam Limited Visakhapatnam Telecom Division


The Visakhapatnam telecom division was found in 1976 as divisional engineer and it was upgraded as General Manager Telecom district in 1993 and converted as corporation as Name of BSNL in october-2000, At present the visakhapatnam telecom district is having 1.50 lack of land line connection and 1.10 of cellular connections and near about 5 thousand of broad band internet conncetions The revenue performance of BSNL visakhapatnam is 6 crores per month towards Land Line and 4 crores per month towards cell connections. And the BSNL Visakhapatnam is having online network for billing and collections of the revenue and having 95 latest technology of exchanges and optical and cellular networks The visakhapatnam telecom district is having 1800 staff members with various categories.

An overview of the World Class services offered by the BSNL: The plain, old, countrywide telephone Service through 32,000 electronic exchanges. Digitalized Public Switched Telephone Network (PSTN) with a host of Phone plus value additions.BSNL launched Data One broadband service in January 2005 which shall be extended to 198 cities very shortly. The service is being provided on existing copper infrastructure on ADSL2 technology. The minimum speed offered to the customer is 256 Kbps at Rs. 250/- per month only. Subsequently, other services such as VPN, Multimedia, Video Conferencing.Video-on-Demand, Broadcast application etc will be added.Keeping the global network of Networks networked, the countrywide Internet Services of BSNL under the brand name Sanchar Net includes Internet dial up / Leased line access, CLI based access (no account is required) and DIAS service, for web browsing and E-mail applications. You can use your dialup Sancharnet account from any place in India using the same access no 172233, the facility which no other ISP has. BSNL has customer base of more than 1.7 million for Sancharnet service.

Internet Telephony service is also started under the brand name Web Fone, using this you can make calls to a person in UK, USA, Canada and many more countries for as cheap as Rs. 4.50/- per minute only. BSNL also offers Web hosting and co-location services at very cheap rates.
ISDN

Integrated Service Digital Network Service of BSNL utilizes a unique digital network providing high speed and high quality voice, data and image transfer over the same line. It can also facilitate both desktop video and high quality video conferencing.
Intelligent Network

Intelligent Network Service (In Service) offers value-added services, such as: Free Phone Service (FPH) India Telephone Card (Prepaid Card) Account Card Calling (ACC) Virtual Private Network (VPN) Tele-voting Premium Rae Service (PRM)


I-Net

Universal Access Number (UAN) and more Fixed Line Prepaid cards(flpp) Call Now cards

Indias x 0.25 based packet Switched Public Data Network is operational in 104 cities of the country. It offers x 0.25 x 0.28 dial up (PSTN) Connection) and frame. Relay services.

Services:
BSNL provides almost every telecom service in India. Following are the main telecom services provided by BSNL:

Universal Telecom Services: Fixed wire line services & landline in Local

loop (WLL) using CDMA Technology called bfone and Tarang respectively. As of June 30, 2010, BSNL has 75% 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 & Excel (BSNL Mobile). As of June 30, 2010 BSNL has 13.50% share of mobile telephony in the country.

WLL-CDMA Telephone Services: BSNL's WLL (Wireless in

Local Loop) service is a service giving both fixed line telephony & Mobile telephony. Internet: BSNL provides internet services through dial-up connection (Sancharnet) as Prepaid, (NetOne) as Postpaid and ADSL broadband (BSNL Broadband). BSNL holds 55.76% of the market share with reported subscriber base of 9.19 million Internet subscribers with 7.79% of growth at the end of Mar-10. Top 12 Dial-up Service providers, based on the subscriber base, It Also Provides Online Games Via Its Games on Demand (GOD). Intelligent Network (IN): BSNL provides IN services offers value-added services, such as Free Phone Service (FPH), India Telephone Card (Prepaid card), Account Card Calling (ACC), Virtual Private Network (VPN), Tele-

voting, Premium Rae Service (PRM), Universal Access Number (UAN) and more.

3G:BSNL offers the '3G' or the'3rd Generation' services which includes

facilities like video calling, live TV, 3G Video portal, streaming services like online full length movies and video on demand etc. IPTV: BSNL also offers the 'Internet Protocol Television' facility which

enables usto watch television through internet.

FTTH: Fibre To The Home facility that offers a higher bandwidth for data

transfer. This idea was proposed on post-December 2009.

Helpdesk: BSNL's Helpdesk (Helpdesk) provide help desk support to their

customers for their services. Telecom Circles in India:


Andaman & Nicobar Telecom Circle. Dobaspet. Tamilnadu Telecom Circle. Jharkhand Telecom Circle. Bihar Telecom Circle. andhra Pradesh Telecom Circle. Assam Telecom Circle. Chhattisgarh Telecom Circle. Gujarat Telecom Circle. Haryana Telecom Circle. Himachal Pradesh Telecom Circle. Jammu & Kashmir Telecom Circle. Jharkhand Telecom Circle. Karnataka Telecom Circle.

Kerala Telecom Circle. Madhya Pradesh Telecom Circle. Maharashtra Telecom Circle. North East-I Telecom Circle. North East-II Telecom Circle. Orissa Telecom Circle, Rajasthan Telecom Circle. Punjab Telecom Circle, Uttaranchal Telecom Circle.

Metro Districts:

Kolkata Chennai Delhi Mumbai

Project Circles:

Eastern Telecom Project Circle Western Telecom Project Circle Northern Telecom Project Circle Southern Telecom Project Circle IT Project Circle, Pune

Maintenance Regions:

Eastern Telecom Maintenance Region Western Telecom Maintenance Region Northern Telecom Maintenance Region Southern Telecom Maintenance Region

Specialized Telecom Units:

Broad Band Networks (Data Networks).

National Centre For Electronic Switching. Technical & Development Circle.

Production Units:

Telecom Factory, Mumbai. Telecom Factory, Jabalpur. Telecom Factory, Richhai. Telecom Factory, Kolkata.

Present and future: BSNL then known as Department of Telecom had been a near monopoly during the socialist period of the Indian economy. During this period, BSNL was the only telecom service provider in the country MTNL was present only in Mumbai and New Delhi). During this period BSNL operated as a typical state-run organization, inefficient, slow, bureaucratic, and heavily unionised. As a result subscribers had to wait for as long as five years to get a telephone connection. The corporation tasted competition for the first time after the liberalisation of Indian economy in 1991. Faced with stiff competition from the private telecom service providers, BSNL has subsequently tried to increase efficiencies itself. DoT veterans, however, put the onus for the sorry state of affairs on the Government policies, where in all state-owned service providers were required to function as mediums for achieving egalitarian growth across all segments of the society. The corporation (then DoT), however, failed miserably to achieve this and India languished among the most poorly connected countries in the world. BSNL was born in 2000 after the corporatisation of DoT. The efficiency of the company has since improved little a bit. However, the performance level is nowhere near the private players. INDIA BROADBAND: Year of Broadband 2007: 2007 has been declared as "Year of Broadband" in India and BSNL is in the process of providing 5 million Broadband connectivity by the end of 2007. BSNL has upgraded existing Dataone (Broadband) connections for a speed of up to 2 Mbit/s without any extra cost. This 2 Mbit/s broadband service is being provided by BSNL at a cost of

just US$ 11.7 per month (as of 21 July 2008 and at a limit of 2.5GB monthly limit with 0200-0800 hrs as no charge period). Further, BSNL is rolling out new broadband services such.BSNL is planning to increase its customer base to 108 million customers by 2010. BSNL is a pioneer of rural telephony in India. BSNL has recently bagged 80% of US$ 580 m (INR 2,500 crores) Rural Telephony project of Government of India.On the 20th of March, 2009, BSNL advertised the launch of BlackBerry services across its Telecom circles in India. The corporation has also launched 3G services in select cities across the country. Presently, BSNL and MTNL are the only players to provide 3G services, as the Government of India has completed auction of 3G services for private players. BSNL shall get 3G bandwidth at lowest bidder prices of Rs 18,500 crore, which includes Rs 10,186 crore for 3G and Rs 8313crore for BWA.[One crore is 10 million.]BSNL management has paid this money under protest seeking refund. Challenges: During the financial year 2008-2009 (from April 1, 2009 to March 31, 2009) BSNL has added 8.1 million new customers in various telephone services taking its customer base to 75.9 million. BSNL's nearest competitor Bharti Airtel is standing at a customer base of 62.3 million. However, despite impressive growth shown by BSNL in recent times, the fixed line customer base of BSNL is declining. In order to woo back its fixed-line customers BSNL has brought down long distance calling rate under One India plan, however, the success of the scheme is not known. However, BSNL faces bleak fiscal 2009-2010 as users flee. Presently there is an intense competition in Indian Telecom sector and various Telcos are rolling out attractive schemes and are providing good customer services. Access Deficit Charges (ADC, a levy being paid by the private operators to BSNL for provide service in non-lucrative areas especially rural areas) has been slashed by 20% by TRAI, w.e.f. April 1, 2009. The reduction in ADC may hit the bottomlines of BSNL. BSNL has started 3G services in 290 cities and acquired more than 6 Lakh customers. It has planned to roll out 3G services in 760 cities across the country in 201011. Broadband services: The shift in demand from voice to data has revolutionized the very nature of the network. BSNL is poised to cash on this opportunity and has

planned for extensive expansion of the Broadband services. The Broadband customer base of 3.56 Million customers in March'2009 is planned to be increased to 16.00 million by March 2014. Now BSNL is the under top five telecom service provider company in India.

VISION,MISSION&OBJECTIVES,OF BSNL
VISION: To be the large telecommunication provider in asia

MISSION: 1. To provide world class State-of-art technology telecom services to its custemer on demandan and at competetive price on

2. To Provide world class telecom infrastructure in its area of operation and to contributeto the growth of the country's economy.

OBJECTIVES: 1. To be a Lead Telecom Services Provider. and confidence.

2. To provide quality and reliable fixed telecom service to our customer thereby increase customer's

3. To provide mobile telephone service of high quality and become no. 1 GSM operator in its area of operation.

4. To provide point of interconnection to other service provider as per their requirement

promptly.
Contributetowards: 1.National Plan Target of 500 million subscriber base for the country by 2010. 2. Broadband customers base of 20 million in the country by 2010 as per Broadband Policy 3. Providing telephone connection in villages as per government 2004. policy. December

4. Implementation of Triple play as a regular commercial proposition.

BSNL IN VISHAKAPATNAM Visakhapatnam District comprises an area of 11,161 Sq.KMs. Total Population of the District is 38, 32,336.

(Urban: 15, 30,899; Rural: 23, 01,437). BSNL, Visakhapatnam is serving many Major Industries in

Visakhapatnam like HPCL (Hindusthan Petroleum). Coromandel Fertilizers. Hindustan Zinc Ltd. Hindustan Ship Yard, Ship Building Centre. Visakha Dairy. Indian Oil Corporation. BHPV. Essar Steel Pellatisation Plant. L.G Polymers. NALCO (National Aluminum Company). DCI (Dredging Corporation of India). INDIAN NAVY. Educational Institutions like AU, GITAM etc., APEPDCL, GVMC etc., and many more

Visakhapatnam Telecom District is: Having 10 SDCAs consisting of 42 Mandals. Having the New Technology switches like OCB and EWSD along with

CDOT technology.

Having 98 exchanges and 4 DLCs in the SSA o o Urban exchanges: 28 Rural : 70

(Including 12 Tribal exchanges)

Working Lines as on 30-11-2010: Land Line WLL Cellular Connections Prepaid Postpaid Total Broad Band : 107725 (98 exges+4 DLCs). : 9160 (WLL BTSs: 59). :( Cell BTSs: 194). : 232539. : 8126. : 240665. : 31000 (Facility extended to all the exchanges in the VM SSA) Customer Service Centers.

major developments:
Launching of Cellular servicer Launching of WLL Services 01-12-2002 12-03-2004

Commissioning of OAN (Optical Fibre) network Commission of Broadband services March 2005 Commissioning of Cell MSC 11-11-2005

Complete conversion of Landline connections to new technology: 2006 Commissioning of Optical Fibre Ring routes : 2006

Commissioning of WLL MSC Commissioning of Wimax services

08-06-2007 February 2009

PRBT Services commissioned Commissioning of 3G services (With 60 BTSs)

22-04- 2009 31-03-2010

Penetration of Broadband connections against Landline connections:

Year

LL

BB Penetration %ge

2005

151208

4110

2.72

2006

146114

5439

3.72

2007

132335

14096

10.65

2008

118974

20609

17.32

2009

110202

27274

24.75

2010 (till Nov 10)

107725

30829

28.62

Facilities offered to Customers

Year

Facility offered

March 2003 May 2005 July 2005

Mobile van collections ECS facility Collection of bills by banks

May 2008 October 2008

e-seva BSNL PORTAL & online transfer (e-payment)

July2009

AP online services

No of customer service centers: 25 (Urban: 16; Rural 9) Major Media developmentsAfter forming BSNL 1. Three major STM 16 rings formed in Visakhapatnam city to protect all the

exchanges with alternate routes and to give feature of issuing leased circuits from any exchange with STM1 connectivity. 2. Two major STM 16 rings formed in rural exchanges of Visakhapatnam

district with ring protection and to extend the media from any exchange area. 3. Three Nos. of 10G RPR rings with 24 nodes commissioned for Broadband

network in entire Visakhapatnam SSA with ring protection to Broadband Equipment. Developments in Lands & Buildings

Year 2000 2001 2002 2003 2004

Lands Acquisition ----Seethammadhara --Parawava Rambilli, Sabbavaram, Atchutapuram, Tagarapuvalasa, Anandapuram, Madhurawada, Narsipatnam

Construction buildings --Vempadu Seethammadhara Pendurthy ---

of

Cell sites acquired ----4 3 10

2005

---

24

2006 2007

Kasimkota, Nathavaram Rolugunta

----Dabagardens building vertical expansion ---Mindi Tele exge bldg horizontal expansion, Dabagardens Admn bldg, Narsipatnam Tele exge bldg.

3 15

2008 2009

-----

13 4

2010 (till Nov 10)

---

72 sites under Phase V.I

Finally, Visakhapatnam SSA is losing its staff strength gradually .. while strengthening the BSNL year by year !! Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(till Nov 10) Staff strength 2041 2041 2008 1997 1982 1955 1903 1843 1805 1682 1640

GENISIS AND GROWTH:


The Indian Mobile subscriber base has increased in size by a factor of more than one hundred since 2001 when the number of subscribers in the country was approximately 5 million to 706.69 Million by Oct 2010. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. The industry is expected to reach a size of 344,921 crore(US$74.85 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833 crore (US$29.69 billion) during the fiscal, as against 115,382 crore (US$25.04 billion) a year before. A large population, low telephony penetration levels, and a rise in consumers' income and spending owing to strong economic growth have helped make India the fastest-growing telecom market in the world. The first operator is the state-owned incumbent BSNL. BSNL was created by corporatization of the erstwhile Indian Telecommunication Service, a government unit responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Vodafone, Bharti Airtel, Tata Indicom, Idea Cellular, Aircel and Loop Mobile have entered the space. See mobile operators in India. In 2008-09, rural India outpaced urban India in mobile growth rate. Bharti Airtel now is the largest telecom company in India.India's mobile phone market is the fastest growing in the world, with companies adding some 18.98 million new customers in Oct 2010. The total number of telephones in the country crossed the 742.12 million mark in Oct 31st, 2010. The overall tele-density has increased to 62.31% by Oct 31st 2010. In the wireless segment, 18.98 million subscribers were added in Oct 2010. The total wireless subscribers (GSM, CDMA & WLL (F)) base is more than 706 million now. The wireline segment subscriber base stood at 35.43 millio with a decline of 0.14 million as of Oct 31st 2010.

INTRODUCTION OF TELEGRAPH: The postal and telecom sectors had a slow and uneasy start in India. In 1850, the first experimental electric telegraph Line was started between Kolkata and Diamond Harbor. In 1 851, it was opened for the British East India Company. The Posts and Telegraphs department occupied a small corner of the Public Works Department, at that time. Construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (Calcutta) and Peshawar in the north along with Agra, Mumbai (Bombay) through Sandra Ghats, and Chennai in the south, as well as Ootacamund and Bangalore was started in November 1853. Dr. William O'Shaughnessy, who pioneered telegraph and telephone in India, belonged to the Public Works Department. He worked towards the development of telecom throughout this period. A separate department was opened in 1854 when telegraph facilities were opened to the public. INTRODUCTION OF THE TELEPHONE: In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The Anglo-Indian Telephone Company Ltd. approached the Government of India to establish telephone exchanges in India. The permission was refused on the grounds that the establishment of telephones was a Government monopoly and that the Government itself would undertake the work. In 1881, the Government later reversed its earlier decision and a license was granted to the Oriental Telephone Company Limited of England for opening telephone exchanges at Calcutta, Bombay, Madras and Ahmadabad and the first formal telephone service was established in the country. 28 January 1882, is a Red Letter Day in the history of telephone in India. On this day Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and Madras. The exchange in Calcutta named "Central Exchange" was opened at third floor of the building at 7, Council House Street. FURTHER DEVELOPMENTS A Mobile Phone Tower:

1902 - First wireless telegraph station established between Sager Islands and

Sand heads.

1907 - First Central Battery of telephones introduced in Kanpur.

1913-1914 - First Automatic Exchange installed in Shimla. 23 July 1927 - Radio-telegraph system between the UK and India, with

Imperial Wireless Chain beam stations at Khadki and Daund, inaugurated by Lord Irwin by exchanging greetings with King George V.

1933 - Radiotelephone system inaugurated between the UK and India. 1953 - 12 channel carrier system introduced. 1960 - First subscriber trunk dialing route commissioned between Lucknow

and Kanpur.

1975 - First PCM system commissioned between Mumbai City and Andheri

telephone exchanges.

1976 - First digital microwave junction introduced. 1979 - First optical fibre system for local junction commissioned at Pune. 1980 - First satellite earth station for domestic communications established

at Secunderabad, A.P..

1983 - First analog Stored Program Control exchange for trunk lines

commissioned at Mumbai.

1984 - C-DOT established for indigenous development and production of

digital exchanges.

1985 - First mobile telephone service started on non-commercial basis in

Delhi. Emergence as a major player: In 1975, the Department of Telecom (DoT) was separated from Indian Post & Telecommunication Accounts and Finance Service. DoT was responsible for telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. In 1990s the telecom sector was opened up by the Government for private investment as a part of Liberalisation-Privatization-Globalization policy. Therefore, it became necessary to separate the Government's policy wing from its

operations wing. The Government of India corporatised the operations wing of DoT on 1 October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance Communications, Tata Indicom, Vodafone, Loop Mobile, Airtel, Idea etc., successfully entered the high potential Indian telecom market Telecommunications Regulatory Environment in India: LIRNEasia's Telecommunications Regulatory Environment (TRE) index, which summarizes stakeholders perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions: i) market entry; ii) access to scarce resources; iii) interconnection; iv) tariff regulation; v) anti-competitive practices; and vi) universal services; vii) quality of service, for the fixed, mobile and broadband sectors. Revenue and growth: The total revenue in the telecom service sector was 86,720 crore (US$18.8 billion) in 2005-06 as against 71,674 crore (US$15.6 billion) in 2004-2005, registering a growth of 21%. The total investment in the telecom services sector reached 200,660 crore (US$43.5 billion) in 2005-06, up from 178,831 crore (US$38.8 billion) in the previous fiscal. Telecommunication is the lifeline of the rapidly growing Information Technology industry. Internet subscriber base has risen to 100 million in 2010. Out of this 10.52 million were broadband connections. More than a billion people use the internet globally. 1. Under the Bharat Nirman Programme, the Government of India will ensure that 66,822 revenue villages in the country, which have not yet been provided with a Village Public Telephone (VPT), will be connected. However doubts have been raised about what it would mean for the poor in the country. It is difficult to ascertain fully the employment potential of the telecom sector but the enormity of the opportunities can be gauged from the fact that there were 3.7 million Public Call Offices in December 2005 up from 2.3 million in December 2004.The value added services

(VAS) market within the mobile industry in India has the potential to grow from US$500 million in 2006 to a whopping US$10 billion by 2009.

A list of ten states (including the metros Mumbai, Kolkata and Chennai in their respective states) with the largest subscriber base as of Oct 31st 2010[update] is given below: Operator Vodafone Videocon Unitech Tata Teleservices Stel Sistema Subscriber base Market Share 118,038,438 5,616,152 13,748,300 80,817,298 1,867,060 7,121,765 17.08% 0.43% 1.05% 11.47% 0.22% 0.86% 17.37% 0.81% 0.45% 10.84% 0.13% 0.005% 11.31% 21.34% 100% 6.64%

Reliance Communications 119,351,438 MTNL Loop Idea HFCL Infotel Etisalat BSNL Bharti Airtel All India Aircel 5,342,039 3,009,445 76,023,551 1,132,477 70,829 80,739,935 146,293,078 706,691,164 47,519,629

State Uttar Pradesh

Subscriber base 92,867,835

Population (01/08/2010) 199,415,992

Mobile phones per 1000 population 427

Maharashtra Tamil Nadu Andhra Pradesh West Bengal Bihar Karnataka Gujarat Rajasthan Madhya Pradesh India

84,543,727 63,671,528 54,000,379 51,901,967 46,311,291 43,802,688 40,158,662 38,649,784 38,295,896 706,691,164

110,351,688 67,773,611 84,241,069 90,524,849 97,560,027 58,969,294 58,388,625 67,449,102 72,362,313 1,188,783,351

707 881 600 520 430 709 618 535 489 580

A list of ten states (including the metros Mumbai, Kolkata and Chennai in their respective states) with the largest subscriber base as of Oct 31st 2010[update] is given below: State Andhra Pradesh Bihar Gujarat India Karnataka Subscriber base 54,000,379 46,311,291 40,158,662 706,691,164 43,802,688 Population (01/08/2010) 84,241,069 97,560,027 58,388,625 1,188,783,351 58,969,294 72,362,313 110,351,688 67,449,102 67,773,611 199,415,992 90,524,849 Mobile phones per 1000 population 600 430 618 580 709 489 707 535 881 427 520

Madhya Pradesh 38,295,896 Maharashtra Rajasthan Tamil Nadu Uttar Pradesh West Bengal LANDLINES: 84,543,727 38,649,784 63,671,528 92,867,835 51,901,967

Until recently, only the Government-owned BSNL and MTNL were allowed to provide landline phone services through copper wire in India with MTNL operating in Delhi and Mumbai and BSNL servicing all other areas of the country. Private operators such as Touchtel and Tata Teleservices have entered the market however; the primary focus of their business is on the mobile-phone sector. Due to the rapid growth of the cellular phone industry in India, landlines are facing stiff competition from cellular operators. This has forced landline service providers to become more efficient and improve their quality of service. Landline connections are now also available on demand, even in high density urban areas. The breakup of wireline subscriber base in India as of September 2009[update] is given below: Operator BSNL MTNL Bharti Airtel Reliance Communications Tata Teleservices HFCL Infotel Teleservices Ltd All India Subscriber base 28,446,969 3,514,454 2,928,254 1,152,237 1,003,261 165,978 95,181 37,306,334

Internet: India has the world's third largest subscriber base of internet users with 100 million users (of whom 40 million use the internet via mobile phones) as of Dec 2010. Internet penetration in India is one of the lowest in the world which is 8.4% of the population, compared to other nations like United States, Japan or South Korea where internet penetration is significantly higher than in India. The number of broadband connections in India has seen a continuous growth since the beginning of 2006. At the end of Oct 2010, total broadband connections in the country have reached 10.52 million.Broadband in India is more expensive as compared to Western Europe/United Kingdom and United States. After economic liberalization in

1992, many private ISPs have entered the market, many with their own local loop and gateway infrastructures. The telecom services market is regulated by the TRAI and the DoT, which has been known to impose censorship on some websites. Low Speed Broadband (256 kbit/s - 2 mbit/s): The current definition of Broadband in India is speeds of 256 kbit/s. TRAI on July 2009 has recommended raising this limit to 2 Mbit/s.As of October 2010[update], India has 10.52 million broadband users, constituting 6.0% of the population. India ranks one of the lowest providers of broadband speed as compared countries such as Japan, South Korea and France.Because of the increase in Broadband penetration and the quality of service steadily improving, many non-resident Indians are now enjoying the ability to communicate with family in India from around the world. However, many consumers complain that ISPs still fail to provide the advertised speeds - some even failing to meet the 256 kbit/s standards. High Speed Broadband (over 2 Mbit/s):

/sAirtel has launched plans up to 16 Mbit/s on ADSL2+ enabled lines and is

piloting new 30 Mbit/s and 50 Mbit/s plans in limited areas.

Beam Telecom offers plans up to 6 Mbit/s for home users and has 20 Mbit/s

plans available for power users in only Hyderabad city.

BSNL offers ADSL up to 8 Mbit/s in many cities.It also started offering

FTTH speeds ranging from 256Kbps to 100Mbps.

Hayai Broadband will offer FTTH services up to 100 Mbit/s, with an internal

network speed of 1 Gbit/s.


Honesty Net Solutions offers Broadband over Cable at up to 4 Mbit/s. MTNL offers VDSL at speeds up to 20 Mbit/s in selected areas, also

provides bandwidth at speeds of 155 Mbit/s.

Reliance Communications offers 10 Mbit/s and 20 Mbit/s broadband internet

services in selected areas.

Tata Indicom offers 10 Mbit/s, 20 Mbit/s and 100 Mbit/s options under the

"Lightning Plus" tariffs structure.

Tikona Digital Networks Wireless Broadband service which is powered by

OFDM and MIMO 4th Generation (4G) technologies with 2 Mbit/s.

O-Zone Networks Private Limited Pan-India public Wi-Fi hotspot provider

giving wireless broadband up to 2 Mb. MOBILE PHONE COMPANIES OF INDIA: The Mobile phone industry in India is covered in this article. Mobile phones are usually called "mobile phones" or "cell phones" in India. History:

The first mobile phone was launched in India during 1990s

Mobile phone service operators:

Aircel

Aircel, headquarter in New Delhi, India has absorbed Cingular Wireless, and offers 2G service using GSM technology and 3G service using W-CDMA technology.

Airtel

Airtel, with its head offices in both Mumbai, India provides 2G service using CDMA One and 3G service using CDMA2000 technology

BSNL

BSNL, headquartered in New Delhi, is a public listed company and is stateowned. It offers 2G service using GSM and 3G service using W-CDMA. It was the first service provider to introduce 3G services in India.

MTNL

MTNL, headquartered in Mumbai is a public listed company and is state-owned and offers 2G service using CDMA and 3G service using GSM.

Idea Cellular

Idea Cellular, headquarter in Mumbai, has absorbed Cingular Wireless, and offers 2G service using GSM technology and 3G service using W-CDMA technology.

Ping Mobile Tata Indicom

Tata Indicom, with its head offices in both Navi Mumbai provides 2G service using cdmaOne and 3G service using CDMA2000 technology.

Tata DoCoMo

Tata DoCoMo is joint venture Company of Tata Teleservices and NTT DoCoMo

Reliance Communications

Reliance Communications, with its head offices in both Navi Mumbai, Maharashtra provides 2G service using cdmaOne and 3G service using CDMA2000 technology.

Loop Mobile India (Formerly BPL Mobile)

Loop Mobile India, is a mobile phone service provider in Mumbai, Maharashtra, India

Emirates Telecommunications Corporation (formerly SWAN Telecom) Virgin Mobile Vodafone Essar (Formerly Hutchison Essar/Hutch Orange/Hutch

Pink)

Videocon Mobile Service (Formerly Datacom Solutions) Uninor MTS India S Tel

SWOT Analysis:
STRENGTHS:
Pan-India reach Experienced telecom service provider Total telecom service provider Huge Resources (financial & technical pool) Huge customer base Most trusted telecom brand Transparency in billing Easy deployment of new services Copper in last mile can be used for easy broadband deployment Huge Optical Fibre network and associated bandwidth

WEAKNESSES:
Non-optimization of network capabilities Poor marketing strategy Bureaucratic organizational set up Inflexibility in mindset (DOT period legacies) Limited number of value added services Poor franchisee network Legacy of poor service image Huge and aged manpower Procedural delays Lack of strategic alliances Problems associated with incumbency like outdated

technologies,unproductive rural

assets, social obligations, political interference, Poor IT penetration within organization Poor knowledge Management

OPPORTUNITIES
Tremendous market growing at 20 lac customers per month Untapped broadband services Untouched international market Can capitalize on public sector image to grab governments ICT initiatives ITEB service markets Diversification of business to turn-key projects Leveraging the brand image to source funds Almost un-invaded VSAT market Fuller utilization of slack resources Can make a kill through deep penetration and low cost advantage Broaden market expected from convergence of broadcasting, telecom and

entertainment industry

THREATS
Competition from private operators Keeping pace with fast technological changes Market maturity in basic telephone segment

Manpower churning Multinational eyeing Indian telecom market Private operators demand for sharing last mile Decreasing per line revenues due to competitive pricing Private operators demand to do away with ADC can seriously effect Populist policies of government like OneIndia rates

revenues

CHAPTER-III THEORITICAL FRAME WORK

WORKING CAPITAL MANAGEMENT

DEFINITION: Working capital refers to the cash a business requires for day- to-day operations or more specifically, for financing the conversion of raw materials into finished goods, which the company sells for payment. Among the most important items of working capital are level of inventory, accounts receivable, and accounts payable. Analysis looks at these items for signs of companys efficiency & financial strength.

NEED FOR THE STUDY: The need for the working capital to run the day to day business if the firm cannot be over emphasized. Technically working capital management is an integral part of overall financial management. It focuses on the administration of all aspect of current assets namely cash, marketable securities, debtors, stock and current liabilities which have substantial importance in growth of a business concern. Working capital requirements of a firm are influenced by the nature of business fluctuations, size, production cycle operating efficiency, credit policy etc.,trading and financial firms have a very less investment in fixed assets but require large sum of money to be invested in working capital. Hence this concept has great significance for the trading and financial firms as it is directly related to sales growth.

CLASSIFICATION OF WORKING CAPITAL:

CONCEPT On this basis there are two types of Working capital. GROSS WORKING CAPITAL: 1. Optimum investment in current assets. 2. Financing of current assets. Another aspect of gross working capital points to the needs of arranging funds to finance current assets. Whenever a need for working capital funds arises due to an increasing level of business activity, arrangement should be made quickly. NET WORKING CAPITAL: Net working capital refers to the different between the current assets and current liabilities. Current liabilities are those claims of an outsider which are expected to mature for payment with in an accounting year and include creditors, bill payable and outstanding expenses.Net working capital can be positive or negative working capital will

arise if the current assets are more than current liability. Negative working capital will arise if the current liabilities exceed the current assets. TIME BASES: PERMANENT /FIXED WORKING CAPITAL: Permanent or fixed working capital is the minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets, which is continuously required by the enterprise to carry out its normal business operations. For e.g. every firm has to maintain a minimum level of raw materials, working progress finished goods and cash balance .the minimum level of current assets is called perm or fixed working capital, as this part of capital permanently block in current assets. As the business grows the required amount of permanent working capital also increase due to the increase in current assets.

The permanent working capital can be further classified into:

1 .Regular working capital: Regular working capital is required to ensure the circulation of current assets from cash to inventories from inventories to receivables and from receivables to cash and so on. 2. Reserve working capital: It is the excess amount over the requirement for regular working capital which may be provided for contingencies that may arise at unstated periods such as strikes, rises in prices, depressions. TEMPORARY OR VARIABLE WORKING CAPITAL: Temporary or variable working capital is the amount of working capital, which is required to meet the seasonal demand and some special exigencies. Variable working capital can be further classified as A: Seasonal working capital: Most of the enterprise has to provide additional working capital to meet the seasonable and special needs. The capital required to meet seasonal needs of the enterprise is called working capital. B: special working capital: Special working capital is a part of working capital which is required to meet special exigencies like launching of extensive marketing campaigns for conducting research.

Importance of adequate working capital: Working capital is the life blood of any enter prise.Maintaing enough working capital is very essential to maintain smooth running of a business. No business can run successfully without an adequate amount of working capital. The main advantage of maintaining adequate working capital is as follows: 1. Solvency of business Adequate: Adequate working capital helps in maintaining solvency of a business by providing uninterrupted flow of production. 2 .Goodwill: Sufficient working capital enables business men to make

prompt Payment and hence helps them in creating flow of production.

3. Easy loans: A concern having adequate which solvency and good credit standing can arrange loans from bank and other on easy and favorable terms. 4. Cash discounts: Adequate working capital also enables a concern to avail cash discount on the purchases and hence it reduces costs. 5. Regular supply: Sufficient working capital ensures regular supply of raw materials and continues production. 6. Regular payment of salaries wages and other day to day commitment: A company which has ample working capital can make regular payment of salaries wages and other day to day commitments which raises the morale of its employee increasing their efficiency ,reduces wages and costs and enhances production and profits. 7. Exploitation of favorable market conditions: Only concerns with adequate working capital can exploit the favorable market conditions such as purchase its requirements in bulk when prices are lower and by holding its inventories for higher prices. 8. Face business crises: Adequate working capital enables a concern to face business crisis in emergencies such as depression because during such periods generally there is much pressure on the working capital. 9. Quick and regular return on investment: Every investor wants a quick and regular return on his investment. Sufficient working capital enables a concern to pay quick and regular dividend to its inventors as there may not be much pressures on to plough back

the profit. This gains confidence of its investors and creates a favorable market to raise additional funds in the future 10. High morale: Adequacy of working capital creates an environment of security confidences and creates an overall efficiency in the business. NEED FOR ADEQUATE WORKING CAPITAL: The need and importance of adequate working capital for day to day requirement can be hardly underestimated. Every firm must maintain a sound working capital position otherwise its business activities may be adversely affected. The financial manager must see that the firm has sufficient working capital as and when required so that the fixed assets of the firm are optimally used. The objective of financial management is to maximize the shareholders wealth cant be attained if the operations of the firm are not optimized. The every firm must have adequate working capital. DISADVANTAGE OF EXCESSIVE WORKING CAPITAL:

1. Excessive working capital means the idle funds, which earn no profit for the
business ,and hence the business cannot earn a proper rate of return on its investments

2. When there is a redundant working capital it may lead to unnecessary


purchases and accumulation of investments of investors causing more chances of theft waste and losses.

3. Excessive working capital implies excessive debtors and ineffective credit


policy, which may cause higher incidence on bad debts.

4. It may result in to overall inefficiency in the organization. 5. When there is excessive working capital relationships with banks and other
financial institutions may not be maintained.

6. Due to low rate of return on investments the value of shares may also fall 7. The redundant working capital give rise s rise to speculative transactions.
INADEQUATE WORKING CAPITAL: Every business concern should have adequate working capital to run its business operations. It should have neither excess working capital nor inadequate. Both are bad for the business. However inadequate can be more dangerous because:

A concern that has inadequate working capital cant pay its short term

liabilities in time. Thus it will lose its reputation and shall not be able good credit facilities. It can buy its requirements in bulk and cant avail of discounts etc. It becomes difficult for the firm to exploit favorable market conditions The firm cant pay day expenses of its operations and it creates

and undertake profitable project due to lack of working capital.

inefficiency increasing costs and reduces the profits of the business. It becomes impossible to utilize efficiency the fixed assets due to non

availability of liquid funds. The rate of return on investment also falls with the shortage of

working capital. NET WORKING CAPITAL AS A QUALITATIVE CONCEPT: It indicates the liquidity position. Suggests the extent to which working capital needs may be financed

by the permanent sources. A negative working capital position poses threat to the solvency of the firm. Excessive liquidity is also bad for the company as it may lead to mismanagement of current assets. Net working capital also covers the question of judicious mix of long term and short term funds of financing current assets. Therefore working capital should be financed by permanent source of funds such as owners capital debentures long term debt and preference capital. In summary, it is emphasized that both gross and net concept of working capital are equally important for effective management of working capital. The data and problems of each company should be analyzed to determine the amount of working capital. It is not feasible in practice to finance current assets by short term source only. Keeping in view the constraints of individual company a mix of long term finances should be invested in current assets. Since the current assets involve cost of funds they should be put to productive use.

SOURCES OF WORKING CAPITAL: The working capital requirement should be met from both short term as well as long term source of funds. It will be appropriate to meet at least Two-Thirds if not all of the permanent working capital requirements from Long term sources. The financing of working capital through short term sources of funds has the benefits of low cost establishing close relationships with banks. Financial of working capital from long term source provides: Reduction in risk science the need to repay loans at frequent intervals is

eliminated. Increases the liquidity since the firm needed not worry about the payment of

these funds in the near future The finance manager has to make use of both long term and short term sources of funds in such a way that the Overall cost of working capital is the lowest and the funds are available for the period they are really needed. APPROACHES FOR DETERMINING THE FINANCING MIX: There are three basic approaches for determining the working capital financing mix. 1. THE HEDGING APPROCH: According to this approach the maturity of the source of funds should match the Nature of assets to be financed. The approached is therefore also termed as Matching approach it divides the requirements of working capital funds into two categories. Permanent working capital:That is fund which required for the purchase of core current assets such fund do not very over time. 2. THE CONSERVATIVE APPROCH: According to this approach all requirements to working capital should be met from long term sources. The short term source s should be used only for emergencies. The conservative approach is less risky but more costly a compared to the hedging approach. In other words conservative app is low profits, low risk while hedging approach result in high risk and low cost low net working capital. 3. TRADE OFF BETWEEN HEDGING AND CONSERVATIVE APPROACH:

The hedging and conservative approach both can give satisfactory results. The level of such trade off will defer from case to case depending upon perception of the

risk by persons involved in fin decision making. However one way of determining the level of trade off is by finding the average of the minimum and maximum requirement of the working capital during a period. The average working capital so obtained may be filled again either by long term funds or short term funds. DETERMINANTS OF WORKING CAPITAL: The working capital requirement of a concern depends upon a large no. of factors like nature and size of business, the characteristics of their operations, the length of production cycle, rate of stock turnover and the state of economic situation. It is not possible to rank them because all of them are of equal importance and their significance to business changes over time. However the following are important factors generally influencing the working capital requirement. FACTORS:

1. Nature or character of business:


The working capital requirements of a firm basically depend upon the nature of its business. Publics utility undertaking like electricity water supply and railway need a very small amount of working capital because they offer cash sale only and supply services not production and as such no funds are tied up in inventories and receivables. On the other hand trading and financial funds require fewer inventories in fixed assets but have to invest large amounts in current assets like inventories and such they need large amount of working cpital.

2. Size of business/ scale of operations:


The working capital requirements of a concern are directly influenced by the size of its business, which may be measured, by its scale of operations. Greater the size of business unit generally the larger will be the requirement of working capital. However in some cases even a smaller concern will need more working capital due to high over head charges inefficient use of available resources other economic disadvantages of small size.

3. Production policy:
In certain industries the demand is subject to idle fluctuations due to seasonal variations. The requirement of working capital in such cases depends upon the production

policy. The production could be kept either steady by accumulating inventories during slack periods with view to meet high demand during peak season or the production could be curtailed during the slack season.

4. Manufacturing process/length of production cycle:


In manufacturing process the requirements of working capital increase in direct proportion to the length of manufacturing process. Longer the process period of manufacturing longer the manufacturing time. The raw material supplies have to be carried for longer period in the process with progressive increments of labour and service costs before the finished product is obtained.

5. Seasonal variations:
In certain industries raw material is not available throughout the year. They have to buy raw materials in bulk during the season to ensure an uninterrupted flow and process them during the entire year. A huge amount is therefore blocked in the form of inventories during such periods which give rise to more working capital requirement. Generally during the busy season a firm requires larger working capital than in the sick season.

6. Working capital cycle:


In a manufacturing concern the working capital cycle starts with purchase of raw materials and ends with the realization of cash from sales of finished products. This cycle involves purchase of raw materials and stores its conversion into stock of finished products through work in progress with progressive increment of labor and service costs. Conversion of finished stock into sales, debtors and receivables and realization of cash and this cycle continues again from cash to purchase of raw material and so on.

7. Rate of stock Turnover:

There is a high degree of inverse correlation ship between the quantity of working capital and the velocity or speed with which the sales are affected. A firm having high rate of stock turnover will need lower amount of working capital as comp to a firm having low rate of turnover. For e.g. in case of precious stone dealers the stock turnover Is very slow they have to maintain a high variety stocks and the movement of stocks is very slow. Thus the working capital requirements of such a dealer shall be high.

8 .credit policy:
The credit policy of a firm in its dealings with debtors and creditors influences considerably the requirement of working capital. A concern that purchases its requirements on credit and sells its products or services on cash requires lesser amount of working capital. On the other hand a concern buying its requirements for cash and allowing credit to its customers shall need larger amount of working capital as very large amount of funds shall be tide in debtors or Bills receivables.

9. Business cycles:
Business cycles refer to all expense and contained in the business activity. In a period of boom i.e., when the business is prosperous, there is a need for larger amount of working capital, due to increase in sales rise in prices optimal expansion of business etc. on the country in times of depression i.e.,

10. Earning capacity and dividend policy:


Some firms have more earning capacity then others due to quality products. Monopoly conditions etc. such firms with high earnings capacity may generate cash profits from operations and contributing to their working capital. The dividend policy of a concern also influences the requirement of its working capital. A firm that maintains a steady high rate of cash dividend irrespective of its generation of profits needs more working capital then a firm that retains a large part of its profits and does not pay so high a rate of cash dividend.

11. Price-level changes:


Changes in the price level also affect the working capital requirements. Generally the rising prices will require that a firm maintain a high level of working capital as more funds will be required to maintain the same current assets. The effect of rising prices may be different for different firms. Some firms may be affected much while some may not be affected at all.

12. Rate of growth of business:


The working capital requirements of a firm increase with growth and expansion of its business activities. Although it is difficult to determine the relationship between growth in volume of business and growth in working capital of a business, yet it may be concluded for the rate of expansion of a business.

13. Other factors:


Certain other factors such as operational efficiency, Management ability, regularity of supply, Import policy assets structure, Import of labor, banking facilities etc also influence the requirement of working capital.

NATURE OF WORKING CAPITAL


Working capital refers to current assets.

Current Assets:
The assets which are convertible into cash/ equivalent with in a period of one year or less. Those which are required to meet day to day expenses. The fixed assets as well as the current assets require funds. The management of working capital involves different concepts or methodology then techniques used in fixed assets management. The very basis of fixed assets decision process, capital budgeting and

working capital decision process are different. The fixed assets involve the long term perspective and therefore the concept of time value of money is applied in order to discount future cash inflow; whereas working capital time horizon is limited to one year and time value of money concept is not considered. The fixed assets affect the long term profitability of the firm while the current assets affect the short term liquidity position of the firm so, in working capital management the finance manager is faced with a decision involving some consideration as follows: What should be the total investment in working capital of the firm? What should be the level of current assets? What should be the relation different sources to finance working capital requirements?

STUDY OF WORKING CAPITAL MANAGEMENT:


Management of cash balances. Management of accounts Receivables. Management of Inventory.

MANAGEMENT OF CASH BALANCES:


Cash is the most important factor in financial management. It is also important current assets for the operation of a firm or a business. Every activity in n enterprise revolves around the cash. As cash is limited in every enterprise & cant be raised as and when needed, it is therefore desirable that available cash be managed properly. Cash management involves:

a) Controlling level of cash.

b) Controlling outflow of cash. c) Controlling inflow of cash.

CASH MANAGEMENT:
The term cash has two meanings with respect to cash management. In the narrow sense it includes coins and currency notes and other generally accepted equivalents of cash as cheques,drafts and demand deposits .In a broader sense it not only includes cash and equivalents but also Near cash assets like marketable securities and time deposits in banks.

MOTIVES FOR HOLDING CASH:


The firms cash needs may be attributed to following needs: Transaction Motive. Precautionary motive. Speculative Motive.

Transaction Motive:
Firms need cash to meet their transaction needs. The collection of cash is not perfectly synchronized with the disbursement of cash. Hence some cash balance is required as a buffer.

Precautionary motive:
There may be some uncertainty about the magnitude and timing of cash inflow from sale of goods and services, sale of assets and issuance of securities. Likewise there might be uncertainties about the cash outflows on account of purchases or other obligations. To protect itself against such uncertainties a firm requires some cash balance.

Speculative Motive:
Firms would like to tap profit making opportunities from fluctuations in commodity prices security prices interest rates and forex rates. A cash rich firm is better prepared to exploit such bargains.

Meeting cash disbursement:


The basic objective of cash management is to meet all payment and obligations in time. This requires maintenance of sufficient cash funds to meet the payment schedules of raw material suppliers workers and bank etc.

Minimum funds held up as cash balances:


The second objective of cash management is to maintain minimum cash balances. A large amount of cash balance ensures the liquidity and all its advantages but it also implies very high cost as large funds remain idle because cash is a non-earning assets.

Determining optimum cash needs:


There are three approaches to work out optimum balances to be maintained by any firm .These are: 1) Minimum cash model. 2) Minimum cash model with precautionary balances. 3) Cash budget. The first two budgets are mathematical.

CASH BUDGET:
Cash budget is probably the most important device for planning, controlling the use of cash. It aims at maintaining adequate cash balance to meet all cash obligations but at the

same time avoiding the excessive balances. It involves the estimation of all future cash inflow and outflows of the firm over vary intervals of time.

Objectives of cash management:


There are two basic objectives of cash management. They are 1) To meet the cash disbursement needs as per payment schedule. 2) To meet the amount of funds help up as cash balance.

Management of Receivables: Introduction of Receivable:


The well-known from of trade credit is book debt also referred to as debtors or accounts receivables. When a seller extends credit to a buyer mutual trust is implicit in the transaction. This transaction has three dimensions. First it embraces an element of risk which needs to be assumed. Cash transactions covering immediate payment in exchange for goods and services is totally risk less. Second it based on economic value. The economic value in goods passed to the buyer currently in return for an equivalent economic value expected from him later. Third it implies futurity. The payment for value received arises at future date. a) Factors influencing size of receivable: In most of the business enterprise investments in account receivables from a major part of the working capital. The problem of receivables is basically a problem of balancing profitability and liquidity. The factors influencing size of receivables area when a concern wants to expend its activities it will have to enter new markets.

To attract new customers it will give incentives in the form of credit facilities. In the early stages of expansion more credit becomes essential and size of receivables will be more. b) Relationships with profits: The credit policy is followed with a view to increase sales. When sales increase beyond a certain level the additional costs incurred are less than the increase in revenues. The increase in profit will be followed by an increase in size of receivables. c) Credit collection efforts: The collection of credit should be stream lined. The customer should be sent periodical remainders if they fail to pay in time. Efficient credit collection machinery will reduce the size of receivable. d) Habits of customer: The paying habit of customers also has a bearing on size of receivable. The customers may be in the habit of delaying payments even though they are financially sound.

Cost of maintain receivables:


The following of the credit policy to customers means giving funds for customer to use. The concern incurs the following cost on maintaining receivable. a) Cost of financing receivables: When goods and services are provided on credit then concern capital is allowed to be used by the customer. The receivables are financed by the funds supplied by share holder for long term finance and through retained earnings. b) Cost of collection:

A proper collection of receivable is essential for receivable management. The customers who do not pay the money during a stipulated credit period are sent remainders for early payment. In some cases legal recourse may have to be taken for collecting receivables c) Default cost: Some customers may fail to pay the amounts due towards them. The amount which the customer fails to pay is known as the default payments.

POLICY FOR MANAGING THE RECEIVABLES:


The credit policy of any firm should be estimated in such a way that the benefits likely to acquire from it the credit policy should incorporate the following Credit standards: The term credit standard represents the basic criterion for the extension of credit to any customer. This is done with the help of factors such as credit ratings and credit references and various financial factors. The credit standards of the customers of a firm are usually determined by 5Cs namely Capacity: It refers to the ability of the specific customer to manage required sales of business Character: It refers to the integrity of the customer i.e., his willingness to pay his dues Collateral: It refers to the security in the form of assets owned by customers which can be offered by the customers to secure the amount of credit extended to him Capital: It refers to the financial soundness of customers i.e., his capacity to raise required funds

Conditions: It refers to the impact of economic environment of the country on the firm or special circumstances offered by government which may affect the customers to meet the obligations. 2) Credit term: This refers to the stipulations under which the goods are sold to on credit i.e., terms and conditions of trade relating to repayment. The two components are: a) Credit period: It refers to the duration of time for which the credit is extended. This is the period available to the customer to pay off his dues b). Cash discount: It refers to that amount of discount which is given to the customer on paying his debts off with in the stipulated period. Therefore it has implications on the sales volume average collection period, bad debt and profit percent. 3) Collection procedures: The third decision area in management of receivables is the collection policies. The policy must be strict and lenient. Sending a remainder for payments Personal request through the telephone Personal visit to customers Taking help of collecting agencies Taking legal action INVENTORY MANAGEMENT: INTRODUCTION: Every enterprise needs inventory for smooth running of its activities. It serves as a link between production and distribution processes .It also provides a cushion for future price fluctuations. The greater requirements for inventory.

The investment in inventory constitutes the most significant part of the current assets, working capital in most of the undertakings. The purpose of inventory management is to ensure availability of materials in sufficient quantity as and when required. Meaning and nature of inventory: The dictionary meaning of inventory is stock of goods or list of goods. The word inventory is understood differently by different authors.

Nature of inventory:
a) Raw materials: Raw materials from a major input in to the organization .They are required to carry out production activities uninterruptedly. The factors like availability of raw materials and government regulation too affect the stock of materials b) Work in progress: The work in progress is that stage of stock which is ready in between raw materials and finished goods. c) Finished goods: There are goods which are ready for the consumers. The stock of finished goods provides a buffer between the production and market. OBJECTIVES OF INVENTORY MANAGEMENT: The following are the objectives of inventory management: 1) To ensure continuous supply of materials spares and finished goods so that production should not suffer at any time. 2) To maintain investment in inventory at optimum level as required by operational and Sales activities. 3) To keep material cost of production & overall cost to minimum.

4) To eliminate duplication in ordering or replenishing the stock. Tools and techniques of inventory management: The following are the tools for inventory management, Determine the stock levels. Determine the EOQ. ABC analysis. VED analysis. Inventory turnover. FINANCIAL WORKING CAPITAL: Working capital requirement of a concern can be classified as: Permanent working capital. Temporary or variable working capital. The fixed proportion of working capital is generally financed from the long term sources while the temporary or variable working capital requirement of a concern may be financed from short term source of capital. The various sources for the financing of working capital are as follows: Permanent/fixed working capital: Shares. Debentures. Public deposits. Ploughing back of profits. Loans from financial Institutions.

CHAPTER-IV DATA ANALYSIS AND INTERPRETATION


4.1 Calculation of working capital in the year 2005-2006

CURRENT ASSETS: S.NO Particulars (current assets) At the beginning of At the end of the year the year 01-04- 31-03-2006(Rs in lacks)

2005(Rs in lacks) 400 12,300 104,564 65,548 telex 19,365 534 15,500 1,03,125 1,30,333 19,272

1. 2. 3. 4 5.

Building material Lines and wires cables Apparatus and plants Telephone instruments and

6. 7. 8. 9. 10.

Telegraph and telex spares Broad band equipments Raw material(at factory) Finished goods(at factory)

153 1,474 10,562 1,365

155 1,887 10,985 1,258 15,658

Finished stock (at various 15,369 circles)

11. 12.

Stores

19,489

16,015 1,264

Excess/ (short)in inventory 1,856 account

13. 14. 15. 16.

Sundry debtors Cash and bank balances loans and advances inventories Gross working capital/ total (A)

6,63,703 21,93,113 7,52,160 2,24,535 40,85,956

6,30,205 30,57,948 9,23,207 2,78,922 52,06,268

CURRENT LIABILITIES: S.NO Current liabilities At the beginning of At the end of the year the year 01-04- 31-03-2006(Rs lacks) 498365 27,256 in

2005(Rs in lacks) 1. 2. Sundry creditors Advances received 5,64,235 from 65,258

customers & others 3. Deposits from customers & 5,86,565 others 525864

4.

Income received in advance 48,489 against services

47589

5.

Claims payable to DOT

48,753

54,961 17,654

Claims payable to depts of 15,864 government of India Claims payable to government 63,654 companies 8. License fee and transponder 42,696 changes payable 9. 10. 11. Excise duty payable Payable for revised wages 20,984

65,864

45,846

19,631 85,693

Salary and incentive payable to 82,981 employees

12. 13. 14.

Payable to SAARC countries Liabilities for services Liabilities account for

512 61,854

465 59,894 -

construction -

15. 16.

Claims payable for USO tower Other provisions for expenses

40,458

38,658

17. 18.

Other liabilities

14,489

15,856 3,846

Interest accrued but not due on 3,964 deposits Total current liabilities(B) Net working capital (A-B) 16,60,756 24,25,200

15,07,442 36,98,826

INTERPRETATION OF WORKING CAPITAL IN THE YEAR 2005-2006


The above table shows the working capital for the year 20052006 current assets like cables, telephone and telex instruments, finished goods, stores, excess/ (short) in inventory accounts sundry debtors decreased to compare the previous year 2005. REASIONS: Building material, lines and wires, apparatus and plants, telegraph and telex spares, brand band equipments, raw material, finished stock, cash and bank balances, loans and advances and inventories, has increased compare the last year. The current liabilities like claims payable to DOT, claims payable to departments of government of India, claims payable to government companies, license fee and transponder changes payable, salary and income payable to employees and other liabilities were increased by the last year. Finally working capital had increased by in the year 2005-2006.

Calculation of working capital in the year 2006-2007


CURRENT ASSETS: S.NO Particulars (current assets) At the beginning of the At the end of the year 31-03year 01-04-2006(Rs in 2007(Rs in lacks) lacks) 534 15,500 1,03,125 and 1,30,333 466 16,354 1,06,839 83,342

1. 2. 3. 4

Building material Lines and wires cables Apparatus plants

5.

Telephone and telex 19,272 instruments

19,268

6.

Telegraph and telex 155 spares

149

7.

Broad equipments

band 1,887

1,395

8.

Raw factory)

material(at 10,985

11,108

9.

Finished factory)

goods(at 1,258

1,078

10.

Finished stock (at 15,658 various circles)

15,932

11. 12.

Stores Excess/

16,015 (short)in 1,264

13,016 2,186

inventory account 13. 14. Sundry debtors Cash and 6,30,205 bank 30,57,948 5,58,066 37,45,296

balances 15. 16. loans and advances inventories Gross 9,23,207 2,78,922 working 52,06,268 7,14,431 2,42,847 55,31,773

capital/ total (A)

Current liabilities S.NO

At the beginning of the At the end of the year 01-04-2006(Rs in year lacks) 31-03-2007(Rs

in lacks) 5,97,419

1.

Sundry creditors

4,98,365

2.

Advances received from 27,256 customers & others

24,176

3.

Deposits

from 5,25,864

6,13,555

customers & others 4. Income advance services 5. 6. Claims payable to DOT Claims payable 54,961 48,521 12,469 received in 47,589 39,027

against

to 17,654

depts of government of India 7. Claims payable to 65,864 68,584

government companies 8. License fee and 45,846 changes 40,644

transponder payable 9. 10.

Excise duty payable Payable wages for

18,930

revised 19,631

11.

Salary

and

incentive 85,693

84,692

payable to employees

12.

Payable countries

to

SAARC 465

569

13. 14.

Liabilities for services Liabilities construction account

59,894

62,649 -

for -

15.

Claims payable for USO tower

16.

Other

provisions

for 38,658

37,154

expenses 17. 18. Other liabilities Interest accrued 15,856 but 3,846 16,252 3,275

not due on deposits Total liabilities(B) Net working capital (A- 36,98,826 B) INTERPRETATION OF WORKING CAPITAL IN THE YEAR 2006-2007 An analysis balance sheet of the BSNL, for the years 2006-2007 has Rs. 52, 06,268 lacks were as it is 5531773 for the year 2006-2007. There is an increase of 325505 lacks. REASIONS: 38,63,857 current 15,07,442 16,67,916

The total of current assets i.e., gross working capital has been increased than the last year. And also total liabilities increased by the last year.Finally working capital had increased by in the year 2006-2007. Calculation of working capital in the year 2007-2008

S.NO

Particulars (current assets)

At the beginning of the At the end of the year 31-03year 01-04-2007(Rs in 2008(Rs in lacks) lacks) 466 16,354 1,06,839 and 83,342 344 14,696 1,32,359 1,20,566

1. 2. 3. 4

Building material Lines and wires cables Apparatus plants

5.

Telephone

and 19,268

19,257

telex instruments 6. Telegraph and telex 149 spares 7. Broad equipments 8. Raw factory) material(at 11,108 12,572 band 1,395 10,632 150

9.

Finished factory)

goods(at 1,078

952

10.

Finished stock (at 15,932 various circles)

15,348

11. 12.

Stores Excess/

13,016 (short)in 2,186

20,189 150

inventory account 13. 14. Sundry debtors Cash and 5,58,066 5,46,551 40,55,158

bank 37,45,296

balances 15. 16. loans and advances inventories Gross 7,14,431 2,42,847 working 55,31,773 7,44,441 3,22,006 60,15,371

capital/ total (A)

S.NO

Current liabilities

At the beginning of At the end of the the year 01-04- year 31-03-2008(Rs in lacks) 6,06,327

2007(Rs in lacks) 1. Sundry creditors 5,97,419

2.

Advances from others

received 24,176 &

32,802

customers

3.

Deposits

from 6,13,555

5,82,676

customers & others 4. Income received in 39,027 advance services 5. Claims DOT 6. Claims payable to 12,469 19,176 payable to 48,521 37,610 against 48,569

depts of government of India 7. Claims payable to 68,584 79,094

government companies 8. License fee and 40,644 4,662

transponder changes payable 9. 10. Excise duty payable 141 1,21,318

Payable for revised 18,930 wages

11.

Salary and incentive 84,692 payable to employees

83,679

12.

Payable countries

to

SAARC 569

251

13. 14.

Liabilities for services Liabilities

62,649

63,730 1,128

for -

construction account 15. Claims payable for 80

USO tower 16. Other provisions for 37,154 expenses 17. 18. Other liabilities 16,252 13,524 3,241 41,780

Interest accrued but 3,275 not due on deposits Total liabilities(B) Net working capital(A- 38,63,857 B) current 16,67,916

17,39,788

42,75,583

INTERPRETATION OF WORKING CAPITAL IN THE YEAR 2007-2008


An analysis balance sheet of the BSNL, for the years 2007-2008 has Rs. 55,31,773 lacks were as it is 60,15,371 lacks for the year 2007-2008.

REASIONS: There is an increase of 4, 83,598 lacks.The total of current assets i.e., gross working capital has been increased than the last year. The current liabilities has Rs.1667916 lacks where as it is 1739788 lacks for the year 2007-2008. There is an increase of 71872 lacks. Finally working capital had increased by in the year 2007-2008. Calculation of working capital in the year 2008-2009 S.NO Particulars (current assets) At the beginning of At the end of the the year 01-04- year 31-03-2009(Rs

2008(Rs in lacks) 344 14,696 1,32,359 1,20,566 telex 19,257

in lacks) 305 15,395 1,49,346 2,14,607 21,111

1. 2. 3. 4 5.

Building material Lines and wires cables Apparatus and plants Telephone instruments and

6. 7. 8. 9.

Telegraph and telex spares Broad band equipments Raw material(at factory) Finished goods(at factory)

150 10,632 12,572 952

128 16,384 22,127 1,413

10.

Finished stock (at various 15,348 circles)

14,165

11. 12.

Stores

20,189

24,329 63

Excess/ (short)in inventory 150 account

13. 14. 15. 16.

Sundry debtors Cash and bank balances loans and advances inventories Gross working capital/ total (A)

5,46,551 40,55,158 7,44,441 3,22,006 60,15,371

4,72,054 38,13,430 9,44,880 4,57,258 61,66,995

S.NO

Current liabilities

At the beginning of At the end of the the year 01-04- year 31-03-2009(Rs in lacks) 7,95,292 65,889

2008(Rs in lacks) 1. 2. Sundry creditors Advances received 6,06,327 from 32,802

customers & others 3. Deposits from customers & 5,82,676 5,58,034

others 4. Income received in advance 48,569 against services 5. 6. Claims payable to DOT 37,610 27,581 19,185 66,802

Claims payable to depts of 19,176 government of India

7.

Claims

payable

to 79,094

98,145

government companies 8. License fee and transponder 4,662 changes payable 9. 10. 11. Excise duty payable Payable for revised wages 141 1,21,318 133 2,13,758 86,456 (746)

Salary and incentive payable 83,679 to employees

12. 13. 14.

Payable to SAARC countries Liabilities for services Liabilities account for

251 63,730

110 75,112 1,201

construction 1,128

15. 16.

Claims payable for USO tower 80 Other provisions for 41,780

3,330 39,450

expenses 17. 18. Other liabilities 13,524 19,859 3,111

Interest accrued but not due 3,241 on deposits Total current liabilities(B) Net working capital(A-B) 17,39,788 42,75,583

20,72,702 40,94,293

INTERPRETATION OF WORKING CAPITAL IN THE YEAR 2008-09 An analysis balance sheet of the BSNL, for the years 2008-2009 has Rs. 60, 15,371 lacks were as it is 6166995 lacks for the year 2008-2009. There is an increase of 151624 lacks. RESIONS: The total of current assets i.e., gross working capital has been increased than the last year. And total current liabilities also increased by the last year. Net working capital for the year 2008-2009 has Rs. 4275583 lacks where as it is Rs. 4094293 lacks for the year 2008-2009. There is a decrease of 181290 lacks. Calculation of working capital in the year 2009-2010: 1. 2. Sundry creditors Advances received 7,95,292 from 65,889 9,89,466 88,389

customers & others 3. Deposits from customers & 5,58,034 5,25,912

others 4. Income received in advance 66,802 against services 5. Claims payable to DOT 27,581 18,75,599 15,719 98,248

Claims payable to depts of 19,185 government of India Claims payable to government 98,145 companies 8. License fee and transponder (746) changes payable 9. 10. 11. Excise duty payable Payable for revised wages 133 2,13,758

98,173

(42,681)

123 4,12,433 76,318

Salary and incentive payable 86,456 to employees

12. 13. 14.

Payable to SAARC countries Liabilities for services Liabilities account for

110 75,112

69,608 1,253

construction 1,201

15. 16.

Claims payable for USO tower Other provisions for expenses

3,330 39,450

3,422 40,696

17. 18.

Other liabilities

19,859

22,767 2,197

Interest accrued but not due 3,111 on deposits Total current liabilities(B) Net working capital(A-B) 20,72,702 40,94,293

42,77,642 16,65,723

WORKING CAPITAL IN THE YEAR 2009-2010: INTERPRETATION OF WORKING CAPITAL IN THE YEAR 2009-2010 An analysis balance sheet of the BSNL, for the years 2009 -2010 current assets has Rs. 61,66,995 lacks were as it is 5943365 lacks for the year 2009-2010. There is a decrease of 223630 lacks. RESIONS: The total current liabilities have Rs. 2072702 lacks where as it is Rs. 4277642 lacks for the year 2009-2010. There is an increase of 2204940 lacks. Finally net working capital has Rs. 4094293 lacks where as it is Rs. 1665723 lacks for the year 2009-2010. There is a decrease of 2428570.

4.2

TOTAL GROSS WORKING CAPITAL OF BSNL IN FIVE YEARS PERIOD:

YEARS 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

GROSS WORKING CAPITAL(Rs.in lacks) 52,06,268 55,31,773 60,15,371 61,66,995 59,43,365

7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 Gross working capital Series 2 Series 3

TOTAL NETWORKING CAPITAL OF BSNL IN FIVE YEARS PERIOD: YEARS 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 NETWORKING CAPITAL(Rs.in lacks) 36,98,826 38,63,857 42,75,583 40,94,293 16,65,723

4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000

Net working capital (Rs. in lacks)


0 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

INTERPRETATION:
The above table shows networking capital of BSNL in five years to compare the networking capital suddenly got steep decreased. So the organization forms in a critical situation when compare to the previous consecutive years working capital.

Calculation of ratios

1.

Current ratio= current assets/current liabilities

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

current assets 5206268 5531773 6015371 6166995 5943365

current liabilities 1507442 1667916 1739788 2072702 4277642

CURRENT RATIO 3.45 3.31 3.45 2.97 1.38

Interpretation:Here the current ratio has been decreased to 3.31 in the year 2006-2007 from 3.45 in the year 2005-06 again from 2007-08 and 2009-10 the current ratio has been decreased to 1.38. though the current assets have gone up the rate of increase in current liabilities is greater than of current assets .this has been responsible for the decrease of current ratio..

2. Working capital turnover ratio=cost of goods sold/net working capital

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

INCOME SERVICES 3613894 3461621 3235953 3026857 2791344

FROM NET Working capital 3698826 3863857 4275583 4094293 1665723

Working capital turnover ratio 0.977 0.895 0.756 0.739 1.675

Interpretation:An inventory ratio indicates that working capital can be utilized more efficiently. The above table reveals that the ratio has been increased from 0.739 in the year 2008-09 to 1.675 in the year 2009-10.

3. Fixed assets turnover ratio=cost of goods sold / net fixed assets

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

INCOME SERVICES 3613894 3461621 3235953 3026857 2791344

FROM net fixed Fixed assets assets turnover ratio 5470574 0.660 5141763 0.673 4767190 0.678 5077255 0.596 7072773 0.394

Interpretation:-

Generally rise in fixed assets turnover ratio indicates efficient utilization of fixed assets generating sales, while low ratio indicates in efficient management and utilization of fixed assets. Here fixed assets turnover ratio has been decreasing from 2007-08.

4.Capital turnover ratio = cost of goods sold / capital employed

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

INCOME FROM SERVICES/ COST OF GOODS SOLD 3613894 3461621 3235953 3026857 2791344

capital employed 8075651 8694802 8812825 8863358 8647566

Capital turnover ratio 0.447 0.398 0.367 0.341 0.322

Interpretation:The capital turnover ratio is gradually decreasing from the year to year. It also indicates the ratio between cost of goods sold and capital the above table shows that the capital turnover ratio is gradually decreasing from 2005-06 to 2009-10.

4. Current assets to fixed assets ratio= current assets / fixed assets

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

current asserts 5206268 5531773 6015371 6166995 5943365

FIXED ASSERTS 6408243 6056694 5736800 5929596 7992452

CA TO FA ratio 0.812 0.913 1.048 1.040 0.743

Interpretation: Here current assets to fixed assets ratio had increased from 0.812 in the year 2006-07 to 1.40 in the year 2008-09 and it is suddenly decreased to 0.743 in the year 2009-10.

5.Return on assets= net profit before tax/ total assets


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 net profit before tax 844699 815381 445155 127163 -219748

Total assets
11614511 11588467 11752171 12096591 13935817

Return on assets 0.072 0.070 0.037 0.010 -0.015

Interpretation: Here return on assets ratio had been decreased from 0.072 in the year 2005-06 to 0.010 in the year 2008-09 and it was negative in the year 2009-10 that is -0.015.

CHAPTER-5

5.1 SUMMARY

5.2

FINDINGS

5.3 SUGGESTIONS

BIBILOGRAPHY

5.1

SUMMARY

In this project I was gathered information from both primary and secondary data and divided into six stages like introduction,,industryanalysis,company profile,theoriticl frame work and analysis &interpretation. in the bibliography submitted all the information resourses Finance is one of the basic foundations of all kinds of economic activities. Financial management is one integral part of overall management; it is not a totally independent area it is concerned with the acquisition, financing and management of assets with some overall goal in mind. . Working capital is an integral of overall corporate management, the finance corporate management the finance manager has to carry out the finance function is the face of risk cannot be predicted with certainty. Stage-1: In this stage I was collected data from primary and secondary data through internets ,company websites and annual reports of the company. Stage-2: In this stage is industrial profile and company profile.i was collected information of all the telecom companies,regulatory frame work of authoritative bodies.iwas also cosontrated competator analysis and swot analysis of the bsnl company. Stage-3: In this third stage theoritical frame work ,I was consontrated on the working capital and different types of the working capitals.management of the working capitalAnd advantages and disadvantages of the workingcapital.

Stage-4 In this data analysis and interpretation stage I was consontrated all the balance sheets and calculated gross and net profit values. In each year compared with the past perfomence finally I was fond some of the reasions in the flactuation of the net and gross profit values. I was also found the some of the findings in the data analysis and interpretation.i was also calculated some of the working capital rati analysis with the reference of graphical representation.

Stage-5: It is the final stage of the project analysis.in this stage I was fond some of the Findings and suggestions.i was also added the primary and secondary information resourses. In the biblography I was submitted detailed information reguarding authors of the books.

FINDINGS :
Working capital management is an important aspect in financial management of every organization; working capital is required to carry on day-to-day activities of the organization. BSNL also requires working capital for carrying on its activities like any organization. The accounts office of the organization maintains this. Financial position of BSNL is not much good. Working process of BSNL take long time. There is not good coordination in departments of BSNL. Handwriting work is more than computerizing work. Qualification of employees is not match his posts. Salary of employees is much better.

5.2

SUGGESTIONS:
The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations: There should be an improvement the working process of BSNL, because working process of BSNL is takes more time. There should be good coordination between the inter sectional wings of BSNL, if good coordination between the departments then there will be no problem in achieving the targets. There should be good communication between each departments of BSNL. Most of the works are computerized in BSNL, but also at the same time, paper works are being continued in many departments. Being a Communication department, the Dept. should be ideal and paper works are to be minimized. 6. As seen from the statistics, there is no considerable investment noticed in the Mobile sector, there is a more demand in Mobile sector, BSNL has to invest in the growing sector. Then only the BSNL will get sufficient returns on investment.

BIBILOGRAPHY

1.

Financial management

I.M.PANDEY

2.

Financial management

BHABATOSH BANERJEE

3.

Financial management

M.Y.KHAN & JAIN

4.

Websites

www.bsnl.in

www.bsnlindia.com

http://www.business-standard.com

Company Annual Reports

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