 Acknowledgement

 Executive Summary
Chapter-1 Introduction
1.1. Overview of the BSNL 1
1.2. Objectives of the study 2
1.3. Profile of the Organisation 3
o Overview of BSNL Gwalior Circle 6
o Vision, Mission & objectives 7
o Fact Sheet 8
o Revenues Strategies 9
o Management Profile 10
o Products 11
o Policy of Accounting and finance 13
1.4. Comparative Study 19
1.5. SWOT Analysis 21

Chapter-2 Research Methodology

2.1. Statement of the Problem 23
2.2. Research Design 23
2.3. Methodology 24
2.4. Sampling Techniques used 25
2.5. Selection of Sample Size 25
2.6. Data Collection 25
2.7. Statistical Tools Used 25
2.8. Limitations of the Study 26
Chapter-3 Data Analysis and Findings
3.1. Introduction 27
3.2. Comparative statement of BSNL 32
3.3. Trend Analysis of Profit 35
3.4. Common Size Balance Sheet 36
3.5. Cash flow Statement
Chapter-4 Conclusion and Suggestions
4.1. Finding 44
4.2. Analysis 44
4.3. Conclusion 45
4.4. Suggestions 46

 Appendix 47-50

1
 Bibliography 51

2
 Type Communication Service Provider

Availability Countrywide except Delhi & Mumbai

Owner The Government of India

Key people S.D. Saxena (CFO); A.K. Sinha (CEO)

Founded 19th century, incorporated 2000

Website www.bsnl.in

1.1 Overview of the BSNL:

BSNL is India's oldest and largest Communication Service Provider (CSP).
Currently BSNL has a customer base of 64.8 million (Basic & Mobile
telephony). It has footprints throughout India except for the metropolitan cities
of Mumbai and New Delhi which are managed by MTNL . As on March 31, 2007
BSNL commanded a customer base of 33.7 million Wireline, 3.6 million CDMA-
WLL and 27.5 million GSM Mobile subscribers. BSNL's earnings for the
Financial Year ending March 31, 2006 stood at INR 401.8b (US$ 9.09 b) with
net profit of INR 89.4b (US$ 2.02 billion). Today, BSNL is India's largest Telco
and one of the largest Public Sector Undertaking of the country with authorized
share capital of US$ 3.95 billion (INR 17,500 Crores) and networth of US$
14.32 billion.

3
1.2 Objective of Study:
The main objective of this study is to carry on brief study on “Analysis of
Financial Statement” through this I am able to get the difference of various
assets and liabilities of the BSNL.

Other objectives of this project are as follows:

• To identify the various assets amount of the BSNL with respect to
Annual Repots of the BSNL.
• Comparative study of Two year Annual reports.
• To study the various departments for the needs of assets and use-less
assets amount of BSNL Gwalior city center.

4
1.3 Profile of Organisation:

Over views of Organisation

History
The foundation of Telecom Network in India was laid by the British sometime in
19th century. The history of BSNL is linked with the beginning of Telecom in
India. In 19th century and for almost entire 20th century, the Telecom in India
was operated as a Government of India wing. Earlier it was part of erstwhile Post
& Telegraph Department (P&T). In 1975 the Department of Telecom (DoT) was
separated from P&T. DoT was responsible for running of 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. It is a
well known fact that BSNL was carved out of Department of Telecom to provide
level playing field to private telecoms.Subsequently in 1990s the telecom sector
was opened up by the Government for Private investment, therefore it became
necessary to separate the Government's policy wing from Operations wing. The
Government of India corporatised the operations wing of DoT on October 01,
2000 and named it as Bharat Sanchar Nigam Limited (BSNL).BSNL operates as
a public sector.

Main Services being provided by BSNL

BSNL provides almost every telecom service, however following are the main
Telecom Services being provided by BSNL in India:-

1. Universal Telecom Sevices : Fixed wireline services & Wireless in Local

loop (WLL) using CDMA Technology called bfone and Tarang
respectively. BSNL is dominant operator in fixed line. As on March 31,
2007 (end of financial year) BSNL had 76% share of fixed and WLL
phones.

BSNL Mobile Pre-paid Mobile

5
 2. Cellular Mobile Telephone Services: BSNL is major provider of
Cellular Mobile Telephone services using GSM platform under
brandname Cellone. Pre-paid Cellular services of BSNL are know as
Excel. As on March 31, 2007 BSNL had 17% share of mobile telephony
in the country.

BSNL Broadband

3. Internet: BSNL is providing internet as dial-up connection (Sancharnet )

and ADSL-Broadband Dataone. BSNL has around 50% marketshare in
broadband in India. BSNL has planned aggressive rollout in broadband
for current financial year.

4. Intelligent Network (IN): BSNL is providing IN services like tele-

voting, toll free calling, premium calling etc.

BSNL Present & Future

Since its corporatisation in October 2000, BSNL has been actively providing
connections in both Urban and Rural areas and the efficiency of the company has
drastically improved from the days when one had to wait for years to get a phone
connection to now when one can get a connection in even hours. Pre-activated
Mobile connections are available at many places across India. BSNL has also
unveiled very cost-effective Broadband internet access plans (DataOne) targeted
at homes and small businesses. At present BSNL enjoy's 47% of market share of
ISP services.

Year of Broadband 2007

Former Indian Communications Minister Thiru Dayanidhi Maran had declared

year 2007 as "Year of Broadband" in India and BSNL is gearing up to provide 5

6
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$ 5.5 per month. Further, BSNL is planning to upgrade its broadband
services to Triple play (telecommunications) in 2007.

BSNL has been asked to add 108 million customers by 2010 by Former Indian
Communications Minister Thiru Dayanidhi Maran. With the frantic activity in
the communication sector in India, the target appears achievable, however due to
intense competition in Indian Telecom sector in recent past BSNL's growth has
slowed down.

BSNL is 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.

Challenges
During Financial Year 2007-2008 (From April 01, 2006 to March 31, 2007)
BSNL has added 9.6 million new customers in various telephone services taking
its customer base to 64.8 million. BSNL's nearest competitor Bharti Airtel is
standing at a customer base of 39 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 OneIndia plan, however, the success of the
scheme is not known. However, BSNL faces bleak fiscal 2006-2007 as users
flee, which has been accepted by the CMD BSNL.

Presently there is an intense competition in Indian Telecom sector and various

Telcos are rolling out attractive schemes and are providing good customer
services. However, BSNL being legacy operator and its conversion from a
Government Department, earns lot of criticism for its poor customer service.
Although in recent past there have been tremendous improvement in working of
BSNL but still it is much below the Industry's Expectations. A large aging
(average age 49 years(appx)) workforce (300,000 strong), which is mostly semi-
illetrate or illeterate is the main reason for the poor customer service. Further,
the Top management of BSNL is still working in BSNL on deputation basis

7
holding Government employee status thus having little commitment to the
organisation. Although in coming years the retirement profile of the workforce is
very fast and around 25% of existing workforce will retire by 2010, however,
still the workforce will be quite large by the industry standards. Quality of the
workforce will also remain an issue.

Access Deficit Charges (ADC, a levy being paid by the private operators to
BSNL for provide service in non-lucarative areas especially rural areas) has been
slashed by 37% by TRAI, w.e.f. April 01, 2007. The reduction in ADC may hit
the bottomlines of BSNL.

BSNL at Gwalior Circle

BSNL Gwalior Circle office is situated in City Center area. This office is
undertaking of Bhopal office. This office are works various areas like Marketing,
Planning, Administrative, Operation & Management and Finance. Each
department works under GM telecom district.
GM delegates our some duties to DGM. DGM is the head of the
department. These posts are highly responsible because DGM is the main person
of the department and DGM gives various approvals of works. This approval
leaves various effect of the department like financial, working efficiency,
functions of departments and field officer works.
Basically BSNL city center works in departmental approaches or
functions. This office provides a support to other departments or employees of
BSNL. In this office calculated various function of employees like salary of
employees, departmental information, various tenders, payment of vendors,
departmental expenditure of general provident funds etc.
But this office run a collection center this collection center collect various
telephones/mobiles/broadband bills.

8
 Vision
• To become the largest telecom Service Provider.

Mission
• To provide world class State-of-art technology telecom services to its
customers on demand at competitive prices.
• To Provide world class telecom infrastructure in its area of operation and to
contribute to the growth.

Objective
MP Telecom looks over the management, control and operation of the telecom
network with the following aims and objective
• To build a high degree of customer confidence by sustaining quality and
reliability in service.
• To upgrade the quality of telecom service to international level.
• Provision of telephone connections on demand in all the villages of M.P.
• Expansion of new services like Internet, Intelligent Network, ISDN, Internet
Telephony, Video Conferencing, Broadband etc.
• Popularize Broadband Services and to be on-demand in the whole State.
• Expansion of Cellular Mobile Telephone to all towns.
• To open Internet Kiosks (Cafe's) at all Block Head Quarters.
• To improve the quality of present services being given to the subscribers.
• To open more Customer Service Centers and upgrade the existing Customer
Service Centers for better and friendly Customer care.
• Modernize PSTN network by making RSUs & AN-RAX.
• Plantation of Trees to make environment Clean & Green.
• To raise necessary financial resources for its developmental needs.
• To increase accessibility of services, by providing a large number of Local and
NSD/ISD Public Call Offices (PCOs) so as to reach out to the masses.

9
Fact sheets

The Company
Bharat Sanchar Nigam Limited (known as BSNL) is a public sector
communications company in India. It is the largest telecommunication company
in India and the sixth largest in the world. Its headquarters are at Statesman
House, Barakhamba Road, New Delhi. It has the status of Mini-ratana - a status
assigned to reputed Public Sector companies in India.

During the current financial year, the management based on physical verification
of fixed assets and inventory and reconciliation of various heads of assets and
liabilities in the subsidiary and general ledgers which has resulted into
increase/decrease in the following assets and liabilities taken over as on 01st October
2000 amounting to net reduction in the assets of Rs. 5,910 lakh (P.Y. - Rs. 25,452
lakh):
In pursuance of the Memorandum of Understanding dated 30th September
2000 executed between Government of India and BSNL, all assets and liabilities in
respect of business carried on by DTS and DTO were transferred to the Company
with effect from 01st October 2000 at a provisional value of Rs. 6,300,000 lakh and
up to previous financial year BSNL has identified net assets of Rs. 6,352,028 lakh
against it.

General Information
No. of Revenue District 2
Population 1,629,881
No. of Tehsil 6
Block H.Q. 7
Total Villages 1221
No. of Villages(Inhabited) 1108

10
Revenues Strategies
The telecom sector is the most competitive sector post liberalization. This has
resulted in a movement from growth based business model that emphasized growth in
numbers to profit-based model where the success is measured by margins. BSNL as
part of the transition has to adopt both cost reduction and revenue enhancement
measures, which would directly impact profitability.
It is evident that there is a declining trend in basic services and there is
stagnation in cellular revenues. Revenue maximization strategies will have two
components, one internal to the organization and the other external. The internal
aspect would involve an initiative for change of process, technology, organizational
structure etc. In this context, revenue assurance is the key to improving the bottom
line for BSNL. This is proactive strategy to capture all revenues due for the services
provided. Presently, BSNL generates bills through different softwares across the
zones of operation, which are disintegrated and provide only basic solutions. The
industry standard for revenue leakage is about 3 to 7% percent of revenue, which in
money terms translates to about Rs.2100 crores for BSNL. Therefore plugging
revenue leakages is just the first and most obvious part of a Revenue Assurance
initiative. The key concerns for BSNL for effective revenue realization are –
 The delay in customer billing after activation
 Time lag between calls generated and billed
 Scope of fraud
 Non-availability of uniform database.

Therefore the focus should be on immediate implementation of CDR based

billing. This would require huge investment but the return would more than
commensurate. The software should be scalable and be able to incorporate all the next
generation value added services. The implementation of CDR based system will also
generate the following benefits:
 Plugging of leakage of revenue.
 Formulation of appropriate marketing strategies –

11
 Management Profile
Chief General Manager (CGM)
Mr. Hinduja

GM Telecom District
Mr. Prashant Trivedi

Deputy General Manager (DGM) DGM DGM

(Marketing, Planning & Admin) (Operation & Management) (Finance)
Mr. Prashant Trivedi Mr. Vijay Dixit Mr. S. D. Tyagi

Chief Accounting Officer TR (COTR) CO Strategic Business Plans (COSBP)

Account officer TR 1st AO Mob. AO Telecom Revenue 2nd

Mr. S.S. Bahdoriya Mr. Manoj Yadav Mr. SC Jain

AO SBP AO Pay AO Cash

Mr. Ram Sadal Mr. Naagar Mr. Ram Avatar

Jr. Account Officer

Mr. R.S. Yogik

Section Supervisor Sr. Trunk Supervisor Peon

Mr. Chandrshekhar Mr. K.N. Duwedi Mr. Gyasi Ram

Organisation Functional Structure of BSNL Gwalior Circle

SBP Department

12
Products
• BSNL LANDLINE

 PHONE PLUS SERVICE

 NEW TELEPHONE CONNECTION
 PERMANENT CONNECTION
 CONCESSION IN RENTALS
 SHIFT OF TELEPHONE
 TRANSFER OF TELEPHONE
 TELEPHONE TARIFF

• BSNL MOBILE

 POSTPAID
 PREPAID
 UNIFIED MESSAGING
 GPRS/WAP/MMS
 DEMOs
 TARIFF
 SMS & BULK SMS

• BSNL WLL

• INTERNET SERVICES

 NETWORK
 BROADBAND
 TYPES OF ACCESS
 WI-FI
 CO-LOCATION SERVICE
 BSNL WEB HOSTING
 INTERNET TARIFF
 DIAL UP INTERNET
 SMS& BULK SMS

• BSNL BROADBAND

 REGISTER ONLINE
 TARIFF
 USO FUNDED RURAL BROADBAND
 FAQ
 CHECK USAGE

• BSNL MANAGED NETWORK SERVICES

• BSNL MPLS-VPN

• ISDN

 ISDN
 TARIFF

13
• LEASED LINE

 LEASED LINE
 TARIFF

14
• INTELLIGENT NETWORK

 FREE PHONE SERVICE

 PREMIUM RATE SERVICE
 INDIA TELEPHONE CARD
 VIRTUAL PRIVATE NETWORK (VPN)
 VOICE VPN
 UNIVERSAL NUMBER
 UNIVERSAL PERSONAL NUMBER
 TELE VOTING

• VIDEO CONFERENCING

 OVERVIEW
 TARIFF
 FAQ

• AUDIO CONFERENCING

 OVERVIEW
 TARIFF
 FAQ

• I NET
 OVERVIEW
 SERVICES ON I NET
 USING ON I NET
 I NET CONNECTIONS
 TARIFF

• TELEX/ TELEGRAPH

 TELEX/ TELEGRAPH
 TARIFF
• EPABX
 EPABX
 FREE EPABX
 TARIFF
 CENTREX
 CENTREX TARIFF
• HVNET

• RABMN

• INMARSAT

• KU-BAND

• TRANSPONDER

15
Accounting Policies
Basis of Preparation of Financial Statements
The financial statements of Bharat Sanchar Nigam Limited (the
“Company” or “BSNL”) are prepared under the historical cost convention
adopting the accrual method of accounting in accordance with Indian Generally
Accepted Accounting Principles and in accordance with the provisions of the
Companies Act, 1956 (the “Act”).

Revenue Recognition
Income from services is accounted for on accrual basis and in conformity with
Accounting Standard – 9 of ICAI. Accordingly,
a) Revenue for all services is recognized when earned and are realizable at the
time of billing. Unbilled revenues from the billing date to the end of the
year are recorded as accrued revenue during the period in which the
services are provided. Provision is made in respect of bills considered to
be disputed (by the management), debts outstanding for more than two years
and for debts due for less than 2 years, to the extent considered necessary by
the management.
b) Installation Charges recovered from subscribers at the time of new
telephone connections are recognized as income in the first year of the
billing.
c) In terms of the arrangement between Department of Telecommunications
(“DoT”) and the Company, the charges for telecommunication services and
other infrastructural services provided by BSNL to DoT are neither being
billed nor provided for.
d) Sale proceeds of scrap arising from maintenance and project works are taken
into miscellaneous income in the year of sale.
e) Income from SIMs, recharge coupons of Mobile, Prepaid Calling Cards,
and Prepaid internet connection cards are treated as income of the year in
which the payment is received since the extent of use of these cards within the
financial year could not be ascertained.
f) Wherever there is uncertainty in realization of income, such as liquidated
damages, claims on Government Departments & local authorities etc., these
are recognized on collection basis.

16
 g) The claims on account of reimbursement for provision of infrastructure,
operation and maintenance of Village Public Telephones (VPTs) and Rural
Household Connections (RDELs) receivable from U.S.O. fund are accounted
for as revenue on account of the fact that the claim for infrastructure cannot
be credited to the concerned asset account since the claim amount could
not be segregated asset wise.

h) Other income by way of interest on loans to employees, security deposit

with Government Departments and local authorities, being not material, are
accounted for on collection.

Fixed Assets
a) Fixed assets are carried at cost less depreciation. Cost includes directly
related establishment and other expenses including employee remuneration
and benefits, directly identifiable to the construction or creation of the assets.
b) Expenditure on replacement of assets, equipments, instruments and
rehabilitation works is capitalized if, in the opinion of the management, it
results in enhancement of revenue generating capacity.
c) Assets are capitalized to the extent completion certificates have been obtained,
wherever applicable.
d) The cost of stores and materials at the time of issue to a project, is debited to
CWIP.
e) Apparatus and plants principally consisting of telephone exchanges,
transmission equipments and air conditioning plants etc. are capitalized as and
when an exchange is commissioned and put to use.
f) Cables are capitalized as and when ready for connection to the main system.
g) Intangible assets are stated at cost of acquiring the same less accumulated
depreciation / amortization.

Depreciation/Amortization
Depreciation is provided based on the Written Down Value method at the
rates prescribed in Schedule XIV to the Companies Act, 1956 except for
Subscriber Installation. The Subscriber Installation is depreciated over the useful life
of 5 years on Written Down Value method.

17
 Assets costing up to Rs. 5,000 are depreciated fully in the year of
purchase. Similarly, partition works costing up to Rs. 2,00,000 are depreciated fully in
the year of construction.
The depreciation on machinery & tools used both for project and
maintenance work is charged to profit and loss account instead of capitalization.
All telephone exchange buildings, administrative offices and captive consumption
assembling premises/workshops are considered as normal building and not as
factory building. Accordingly depreciation is charged uniformly.
Intangible assets such as Entry License Fee for Telecom Service operations
are amortized over the license period (i.e. 20 years) and standalone computer software
applications are amortized over the license period subject to maximum of 10 years as
per straight line method.

Impairment of Assets
Assets, which are impaired by disuse or obsolescence, are segregated from the
concerned assets category and shown as ‘Decommissioned Assets’ and provision
made for the loss, if any, due to the difference between their net carrying cost and the
net realizable value.

Investments
Long-term investments are carried at cost, after providing for any diminution in
value, if such diminution is of a permanent nature.

Inventories
Inventories are valued at cost or net realizable value as the case may be - cost
ascertained generally on weighted average method; obsolete/non moving inventories
are valued at net realizable value.

Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction i.e. on the date of payment or
receipt as the case may be.
b) All Foreign Currency Liabilities and monetary assets are stated at the

18
 exchange rate prevailing as at the date of Balance Sheet and the
difference taken to Profit and Loss Accounts as Exchange Fluctuation
Loss or Gain.

Extraordinary Items
Extra-ordinary items of income and expenditure, as covered by AS – 5, are disclosed
separately.

Manufacturing Expenses
Expenses incurred at Factory units are allocated to the cost of the manufactured
products.

Prior Period Items

Items of Income/expenditure exceeding Rs. 5 lakh are only considered for being
treated as 'prior period items'.

Taxes on Income
Taxes on Income for the current period are determined on the basis of taxable
income and tax credits computed in accordance with the provisions of the Income
Tax Act, 1961.
In accordance with the AS-22, Deferred Tax Liability is recognized on the
timing differences between accounting income and the taxable income for the
period taking into consideration the contents of Accounting Standard Interpretations
3 and quantified using the tax rates in force or substantively enacted as on the
Balance Sheet date.
Deferred Tax Assets are recognized and carried forward to the extent there is a
virtual certainty that such deferred tax assets can be realized.

Provisions
Provisions are recognized when the Company has a present obligation as a result of
past events; it is more likely than not that an outflow of resources will be
required to settle the obligation; and the amount has been reliably estimated.

19
Contingent Liabilities
Liabilities, though contingent, are provided for if there are reasonable chances of
maturing such liabilities as per management. Other contingent liabilities, barring
frivolous claims, not acknowledged as debts, are disclosed by way of notes.

Earning Per Share

Earning Per Share ("EPS") comprises the Net Profit after tax (excluding extraordinary
income net of tax). The number of shares used in computing Basic & Diluted EPS is
the weighted average number of shares outstanding during the year.

Segment Reporting
The primary segment consists of ‘basic’ and ‘cellular’ services provided. The
manufacturing activities have not been treated as a separate segment since such
activities are essentially carried on as support service to other segments.
The following specific accounting policies have been followed for segment
reporting:
Segment Revenue includes service income and other income directly
identifiable with/allocable to the segment.
Income/expense, which relates to the Company, as a whole and not allocable
to individual business segment is included in “Un-allocable Corporate
Income/expense respectively”.
Expenses that are directly identifiable with/allocable to segments are
considered for determining Segment Results.
Segment Assets and Liabilities include those directly identifiable with the
respective segments. Un-allocable corporate assets and liabilities represent the
assets and liabilities that relate to the Company as a whole and not allocable to any
segment

20
Policy of Finance
Standards of Financial Proprieties
Ever officer incurring or authorizing expenditure from public funds should be guided
by high standards of financial propriety. Every officer should also enforce financial
order and strict economy at every step and see that all relevant financial rules and
regulations are observed, by his own officer and by subordinates disbursing officers.
Among the principles on which emphasis is generally laid are the following:
1. Every officer is expected to exercise the same vigilance in respect of
expenditure incurred from public moneys as a person of ordinary prudence
would exercise in respect of expenditure of his own money.
2. The expenditure should be prima-facie more that the occasion demands.
3. No authority should exercise its powers of sanctioning expenditure to pass
an order which be directly or indirectly to its own advantages.
4. Expenditure from pubic moneys should not be incurred for benefit of a
person or section of the people unless-
a. a claim for the amount could be enforce in a Court of Law, or
b. the expenditure is in pursuance of a recognised policy or custom.
5. The amount of allowances granted to meet expenditure of a particular type
should be so regulated that the allowances are not on the whole a source of
profit to the recipients.
6. The responsibility and accountability of every authority delegated with
financial powers to procure any item or service on Government account is
total and indivisible. Government expects that the authority a concerned
will have the public interest uppermost in its mind while making a
procurement decision. The responsibility is not discharged merely by the
selection of the cheapest offer.
7. Whenever called for, the concerned authority must place on record in
precise terms, the considerations which weighed with it while talking the
procurement decision.

21
1.4 Comparative study between years 008-2007:
During the current financial year, the management based on physical
verification of fixed assets and inventory and reconciliation of various heads of assets
and liabilities in the subsidiary and general ledgers which has resulted into
increase/decrease in the following assets and liabilities taken over as on 01st October
2000 amounting to net reduction in the assets of Rs.5,910 lakh (P.Y. - Rs. 25,452
lakh):
Figures in Lakhs of Rupees

Percentage
up to march up to march Absolute Change
Particulars 31, 2007 31, 2008 change Rs. (%)
Assets
5,417, 5,416,6
Fixed Assets 921 97 (1,224) -0.02
503, 502,6
Capital WIP 112 31 (481) -0.10
188, 188,6
Inventory 647 81 34 0.02
682, 684,4
Sundry Debtors 740 30 1,690 0.25
39, 39,4
Advance to contactors 448 48 - 0.00
Deposit with Electricity 2, 2,1
Board/other 086 38 52 2.49
6,833,9 6,834,02
Total A 54 5 71 0.001
Liabilities
391, 393,7
Customer Deposits 656 04 2,048 0.52
Earnest Money 12, 12,1
Deposits 525 58 (367) -2.93
Security Deposit from 29, 29,0
Contractors/ Suppliers 454 99 (355) -1.21
Working Expense
Liability as on 1st 38, 42,6
October 2000 283 66 4,383 11.45
Contractors Bills
payable as on 1st 10, 10,2
October 2000 008 80 272 2.72
Net Assets taken over 6,352, 6,346,1
by the Company 028 18 (5,910) -0.09
6,833,9 6,834,02
Total B 54 5 71 0.001

22
Interpretation of Comparative Balance Sheet

The comparative balance sheet of the company reveals that during 2008
there has been on increase in final assets of Rs. 1224 lakh i.e. 0.02% while long
term liabilities to other side have relative increase by Rs. 4383 lakh and
contractor bill pay has increased by Rs 272 lakh. This fact depicts the policy of
the company is to purchase fixed assets from the long-term sources of finance
there by not affect the working capital.

Current assets have increased by Rs. 1261 lakh and advance of contractor
not increased on the other hand there has been an increase in inventories amount
Rs. 34 lakh. The current liabilities have increased by Rs. 4582 lakh i.e. 0.06%.
This further confirms that the company has revised long term finances.

The overall financial position of the company is satisfactory.

23
1.5 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

24
Opportunities
• Tremendous market growing at 20 lac customers per month
• Untapped broadband services
• Untouched international market
• Can capitalize on public sector image to grab government’s 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 revenues
• Populist policies of government like “OneIndia” rates

25
Statement of Problem:
The research is carried on in a proper planned and systematic manner.
 The research was particularly based departmental research. We have to move
to various department and meet people which include their names and contact
numbers given by BSNL training and Planning department.
 During the department we have to know about to departmental works by
explaining the working process of a particular department.
 Our Team moved various departments like SBP, Pay and Cash and meet
Accounting Officer of each department. This officer is provide a huge working
knowledge of our department.
 Each department presences a section supervisor this SS will provide various
data of relative department and give opportunity to handling the working
process and resolve our doubts.

Research Design:
The research design of this project is exploratory. Though each research study has its
own specific purpose but the research design of this project on BSNL is exploratory in
nature as the objective is the development of the hypothesis rather than their testing.

26
Methodology
Every project work is based on certain methodology, which is a way to systematically
solve the problem or attain its objectives. It is a very important guideline and lead to
completion of any project work through observation, data collection and data
analysis.

According to Clifford Woody,

“Research Methodology comprises of defining &
redefining problems, collecting, organizing & evaluating data,
making deductions & researching to conclusions.”

Accordingly, the methodology used in the project is as follows: -

Defining the objectives of the study
Framing of questionnaire keeping objectives in mind (considering the objectives)
Feedback from the employees
Analysis of feedback
Conclusion, findings and suggestions.

27
Sampling Technique Used:
This research has used convenience sampling technique.

Convenience sampling technique: Convenience sampling is used in

exploratory research where the researcher is interested in getting an inexpensive
approximation of the truth. As the name implies, the sample is selected because they
are convenient
Selection of Sample Size:
For the survey of departments.

Sources of Data Collection:

Research will be based on two sources:
1. Primary data
2. Secondary data
1) Primary Data:
Survey: Primary data was collected by departmental survey for BSNL.

2) Secondary Data:
Secondary data will consist of different literatures like books which are published,
articles, internet, the company manuals and websites of company- www.bsnl.com.
In order to reach relevant conclusion, research work needed to be designed in
a proper way.
This research methodology also includes:-
 Familiarization with the concept of finance and its various merits, demerits.
 Thorough study of the information collected.
 Conclusions based on findings.

Statistical Tools Used

The main statistical tools used for the collection and analyses of data in this project
are:
 Pie Charts
 Bar Diagrams
 Line Charts

28
Limitations of Study
Financial analysis is a powerful mechanism of determining financial strengths and
weaknesses of a firm but, the analysis is based on the information available in the
financial statements. We has also careful about the impact of price level chances,
windows-dressing of financial statements, changes in accounting policies of BSNL,
accounting concepts and conventions, and personal judgments etc.
Due to the following unavoidable and uncontrollable factors the factors, the result
might not be accurate. Some of the problems faced while conducting the survey are as
follows:-
 Time and cost constraints were also there.
 Chances of some biasness could not be eliminated.
 A majority of respondents show lack of cooperation and are biased towards
their own opinions.
Some of the important Limitations of financial analysis are however, summed up as
below:
 It is only a study of interim reports.
 Financial analysis is based upon only monetary information and non-monetary
factors are ignored.
 It does not consider changes in price level.
 As the financial statements are prepared on the basis of a going concern, it
does not give exact position. Thus accounting concepts and conventions cause
a serious limitation to financials analysis.
 Changes in accounting procedure by a firm may often make financial analysis
misleading.
 Analysis is only a means and not an end in itself. We has to make
interpretation and draw own conclusion
Different people may interpret the same analysis in different ways.

29
3.1 Introduction
Financial statements are prepared primarily for decision making. They play a
dominant role in setting the framework of managerial decisions. But the information
provided in the financial statement is not an end in itself as no managerial can be
drawn from these statement alone. However, the information provided in the financial
statement is of immense use in making decision through analysis and interpretation of
financial statements. Financial analysis is ‘the process of identifying the financial
strengths and weaknesses of the firm by properly establishing relationship between
the item of the balance sheet and the profit and loss account’. There are various
methods used in analyzing financial statements, such as comparative statements, trend
analysis, common-size statement, schedule of change in working capital, funds flow
and cash flow analysis, cost-volume-profit analysis and ratio analysis.
The term financial analysis’, also know as analysis and interpretation of
financial statement, refers to the process of determining financial strengths and
weaknesses of the firm of the firm by establishing strategic relationship between the
item the balance sheet, profit and loss account and other operative data.

“Financial analysis is a process of evaluating the relationship

between component parts of a financial statement to obtain a
better understanding of a firm’s position and performances”
According to Matclf and Titard
“Financial statement analysis is largely a study of relationship
among the various financial factors in a business as disclosed
by single set-of statements and a study of the trend of these
factors as shown in a series of statement”.
According to Myers
The term ‘financial statement analysis’ include both ‘analysis’ and ‘interpretation’.
The analysis and interpretation of financial analysis statements is essential to bring
out the mystery behind the figure in financial statements. Financial statement is an
attempt to determine the significance and meaning of the financial statement data so
the forecast may be made of the future earning, ability to pay interest and maturities
and profitability of a sound dividend policy.

30
Types of Financial Analysis
I can classify various types of financial analysis into different categories
depending upon (i) the material used, and (ii) the method of operation followed in the
analysis or the modus operandi of analysis.

(i) On the basis of material used: According to material used, financial

analysis can be of two types (a) external analysis and (b) internal analysis.

a. External Analysis: This analysis is done by outsiders who do not have

access to the detailed internal accounting records of the business firm.
These outsiders include investors, potential investors, creditors,
potential creditors, government agencies, credit agencies and the
general public. For financial analysis, this external party to the firm
depends almost entirely on the published financial statement. External
analysis, thus serves only a limited purpose. However, the changes in
the government regulations requiring business firm makes available
more detailed information to the public through audited accounts have
considerably improved the position of the external analysis.

b. Internal Analysis: The analysis conducted by persons who have

access to the internal accounting records of a business firm is known as
internal analysis. Such an analysis can, therefore, be performed by
executive and employees of the organization as well as government
agencies which have statutory powers vested in them. Financial

31
 analysis for managerial purpose is the internal type of analysis that can
be effected depending upon the purpose to be achieved.

(ii) On the basis of modus operandi: According to the method of operation

followed in the analysis financial can also be of two types: (a) horizontal
analysis (b) vertical analysis.

a. Horizontal Analysis: Horizontal analysis refers to the comparison of

financial data of a company for several years. Thus figure for this type
of analysis are presented horizontally over a number of columns. The
figures of the various years are compared with standard or base years.
A base year chosen as beginning point. This type of analysis is also
called ‘Dynamic Analysis’ as it is based on the data from year to year
rather than on data of any one year. The horizontal analysis makes it
possible to focus attention on items that have changed significantly
during the period under review. Comparison of an item over several
periods with a base year may show a trend developing. Comparative
statement and trend percentages are two tools employed in horizontal
analysis.

b. Vertical Analysis: Vertical analysis refers to the study of relationship

of the various items in the financial statements of one accounting
period. In this types of analysis the figure from financial statement of a
year are compared with a base selected from the same year’s statement.
It is also knows as ‘Static Analysis’. Common-size financial analysis
statement and financial ratio are the tools employed in vertical
analysis. Since vertical analysis considers data for one time period
only, it is not conducive to a proper analysis of financial statements.
However, it may be used along with horizontal analysis to make it
more effective and meaningful.

32
Procedure of Financial Statements
There are three steps involved in the analysis of financial statements. These
are: (i) selection (ii) classification (iii) interpretation, the first step involves selection
of information (data) relevant to the purpose of analysis of financial statements. The
second step involved is the methodical classification of the data and the third step
include drawing and conclusions.
The following procedure is adopted for the analysis and interpretation of financial
statements:
1. The analysis should acquaint himself with the principal and postulates of
accounting. He should know the plans and policies of the management so that
he may be able to find out whether these plans properly executed or not.
2. The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is to find out the earning capacity of the enterprise than
analysis of income statement will be undertaken. On the other hand. If
financial position is to be studied then balance sheet analysis will be
necessary.
3. The financial data given in the statement should be re-organized and re-
arranged. It will involve the grouping of similar data under same heads,
breaking done of individuals components of statements according to nature.
The data is reduced to a standard form.
4. A relationship is established among financial among financial statements with
the help tools and techniques of analysis such as ratio, trends, common size,
funds flow etc.
5. The information is interpreted in a simple and understandable way. The
significance and utility of financial data is explained for helping decision-
talking.
6. The conclusions drawn from interpretation are presented to the management in
the form if reports.

33
Methods or Devices of Financial Analysis
The analysis and interpretation of financial statements is used to determine the
financial position and result of operation as well. A number of methods or devices are
used to study the relationship between different statements. An effort is made to use
those devices which clearly analysis position of the enterprise.
The following methods of analysis are generally used:
• Comparative Statement
• Trend analysis
• Common Size Statement
• Cash Flow Analysis
• Ratio analysis

Comparative Statement: Comparative balance sheet analysis is the study of the

trend of the same items, group of item and computed item in two or more balance
sheets of the same business enterprise on different data.

Trend analysis: This method determines the direction upwards and involves the
computation of the percentage relationship that each statement item bears to the same
item in base year.

Common size Statement: The common size statements balance sheet statements
are shown in analytical percentages. The figures are shown as percentages of total
assets, total liabilities and total sales. Total assets are taken as 100 and different assets
are expressed as a percentage of the total, similarly various liabilities are taken as a
part of total liabilities.

Cash flow Statement: Cash flow statement is a statement which describes the
inflow (sources) and outflow (uses) of cash and cash equivalent in an enterprise
during a specified period of time.

34
Ratio Analysis: Ratio is a simple arithmetical expression of the relationship of one
number to another. It may be defined as the indicated quotient of two mathematical
expressions.

35
3.2 Comparative Statement of BSNL year 2007 & 2008

Table 3.1
Comparative Balance Sheet
for the year ended 2007 and 2008
as at 31 March as at 31 March Increase/ Increase/
Particulars Decrease Decrease
2007 (Rs. In Lakh) 2008 (Rs. In Lakh)
(Rs. In Lakh) (Percentages)
SOURCES OF FUNDS
Shareholder's Funds
Capital 1,250,000 1,250,000 - 0
Reserves and Surplus 7,444,802 7,562,825 118,023 1.59

Loans Funds
Unsecured Loans 554,366 338,887 (215,479) -38.87
Deferred Tax liability 124,605 131,053 6,448 5.17
TOTAL 9,373,773 9,282,765 (91,008) -0.97
APPLICATION OF FUNDS
Fixed Assets
Gross block 11,864,901 12,457,823 592,922 5.00
Less: Depreciation 6,071,511 6,987,974 916,463 15.09
Net Block 5,793,390 5,469,849 (323,541) -5.58
Capital Working-in-Progress 256,860 266,562 9,702 3.78
Decommissioned Assets 6,444 389 (6,055) -93.96
6,056,694 5,736,800 (319,894) -5.28

Investments 20,000 20,000 - 0.00

Current, Assets, Loans and Advances
Inventories 242,847 322,006 79,159 32.60
Sundry Debtors 558,066 546,551 (11,515) -2.06
Cash and Bank Balances 3,745,296 4,055,158 309,862 8.27
Other Current assets -Accrued Interest 114,148 137,687 23,539 20.62
Loans and Advances 714,431 744,441 30,010 4.20
5,374,788 5,805,843 431,055 8.02
Less: Current Liabilities and Provisions
Current Liabilities 1,667,919 1,739,788 71,869 4.31
Provision 514,858 606,321 91,463 17.76
2,182,777 2,346,109 163,332 7.48
Net Current Assets 3,192,011 3,459,734 267,723 8.39
Inter/Intra Circle Remittance 105,068 66,231 (38,837) -36.96
TOTAL 9,373,773 9,282,765 (91,008) -0.97

36
 Figure 3.1: Comparative Balance Sheet chart

Figure 3.2 Comparative Balance Sheet in % Chart

37
Procedure of Comparative Balance Sheet
1. The Comparative balance sheet has two columns for the data of original
balance sheet.
2. Third column is used to show increases in figures.
3. The Fourth column may be added for giving percentages of increase or
decrease.

Interpretation of Comparative Balance Sheet

The comparative balance sheet of the company reveals that during 2008
there has been on decrease in fixed assets of Rs. 319894 lakh i.e. -5.28% while
long term liabilities to outsiders have relatively decrease by Rs. 91008 lakh i.e.
-0.97. This fact depicts the policy of the company is to not purchase fixed assets
from the long-term sources of finance there by not affect the working capital.

Current assets have increased by Rs. 163,332 lakh and cash and bank
balances also increased Rs. 309,862 i.e. 8.27%, investments not increased on the
other hand there has been an increase in inventories amount Rs. 79,159 lakh
i.e.32.60%. The current liabilities have increased by Rs. 163,332 lakh i.e. 7.84 %.
This further confirms that the company has revised long term finances.

The overall financial position of the company is satisfactory.

38
3.3 Trend Analysis (Profit of BSNL)
Table 3.2
Profit before Tax
Years Amount (Rs.) in
Percentages
Lakh
2005 792,008.00 100.00
2006 844,698.00 106.65
2007 815,381.00 102.95
2008 445,155.00 56.21

2005 2006 2007

Figure 3.3: Trend Profit chart

Procedure of Calculation Trends

4. One year is taken as a base: year 2005 taken as a base year
5. The figure of base year are taken 100
6. Trend percentages are calculated in relation to base year. Figure in other year
is less than the figure in base year trend percentage will be less than 100 and it
will be more than 100 if figure is more than base year figure. Each year’s
figure is dived by the base year’s figure.

Interpretation
Profit before tax has substantially decreased. In four year period it has more
than doubled. The comparative decrease in profit is much lower in 2008 as compared
to 2006 and 2007.
The expansion of the firm is not possible. The overall performance of the
concern is not good on the basis of profit.

39
3.4 Common Size Balance Sheet of BSNL year 2007 and 2008
Table 3.3
Common Size Balance Sheet
for the year ended 2007 and 2008

as at 31 March as at 31 March
Particulars % %
2007 (Rs. In Lakh) 2008 (Rs. In Lakh)

SOURCES OF FUNDS
Shareholder's Funds
Capital 1,250,000 13.34 1,250,000 13.47
Reserves and Surplus 7,444,802 79.42 7,562,825 81.47

Loans Funds
Unsecured Loans 554,366 5.91 338,887 3.65
Deferred Tax liability 124,605 1.33 131,053 1.41
TOTAL 9,373,773 100.00 9,282,765 100.00
APPLICATION OF FUNDS
Fixed Assets
Gross block 11,864,901 126.58 12,457,823 134.20
Less: Depreciation 6,071,511 64.77 6,987,974 75.28
Net Block 5,793,390 61.80 5,469,849 58.92
Capital Working-in-Progress 256,860 2.74 266,562 2.87
Decommissioned Assets 6,444 0.07 389 0.00
6,056,694 64.61 5,736,800 61.80

Investments 20,000 0.21 20,000 0.22

Current, Assets, Loans and Advances
Inventories 242,847 2.59 322,006 3.47
Sundry Debtors 558,066 5.95 546,551 5.89
Cash and Bank Balances 3,745,296 39.96 4,055,158 43.68
Other Current assets -Accrued Interest 114,148 1.22 137,687 1.48
Loans and Advances 714,431 7.62 744,441 8.02
5,374,788 57.34 5,805,843 62.54
Less: Current Liabilities and Provisions
Current Liabilities 1,667,919 17.79 1,739,788 18.74
Provision 514,858 5.49 606,321 6.53
2,182,777 23.29 2,346,109 25.27
Net Current Assets 3,192,011 34.05 3,459,734 37.27
Inter/Intra Circle Remittance 105,068 1.12 66,231 0.71
TOTAL 9,373,773 100.00 9,282,765 100.00

40
 Figure 3.4 Common size Balance Sheet chart

Procedure of Common-Size Balance Sheet

1. The total assets are taken as 100 and different assets are expressed as a
percentages of the total
2. Similarly, various liabilities are taken as a part of total liabilities.
3. This statement is also known as component percentages or 100 percent
statement because every individual item is stated as a percentage of the total
100.

The short comings in comparative statement and trend percentage where

changes in items could not be compared with the totals have been covered up.

41
Interpretation
An analysis of patter of financing of both the years shows that year 2007 is
more traditionally financed as compared to year 2008. The BSNL has depended more
on its own reserves and surplus as is shown by balance sheet. Out of total reserve
81.47% of the funds are proprietor’s funds. In year 2007 funds are 79.42% which
shows that this company has depend more upon outsider funds. In the present day
economic world generally, companies depend more on outsiders’ funds. In this
context both years have good finical planning but year 2008 is more financed on
traditional lines.
Both years are suffering from adequacy of working capital. The percentage of
current assets is more than the percentage of current liabilities in both the year. In
the year 2008 BSNL is suffering more form working capital position than the second
than the second year because current assets are more then current liabilities i.e.
25.27% and this percentage is 23.29% in the 2007.
A close look at the balance sheet shows that investments in fixed asset have
been not financed from working capital in both years. In 2007 fixed account for
64.61% of the total assets while long-term funds account for 5.91% of total funds. In
year 2008 fixed account for 61.80 whereas long term funds account for 3.65% of total
instead of using long-term funds.
Both the year BSNL is not facing working capital problem.

42
 3.5 Cash Flow Statement of BSNL
Table 3.4
BHARAT SANCHAR NIGAM LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008

Year ended 31st Year ended 31st Year ended 31st Year ended 31st
PARTICULARS March 2008 March 2007 March 2006 March 2005
(Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh)
A. Cash flow from operating
activities:
Net (loss)/profit before tax but
after Prior period and
Extraordinary items 445155 815381 844698 792008
Adjustments for:
Depreciation 969610 914931 937669 962486
Prior period depreciation 5106 8288 21231 54293
Interest/Finance charges 86254 77941 108980 2929
Interest Income (403324) (281123) (173340) (80052)
Loss/(Profit) on Fixed Assets sold (2002) (800) (851) (618)
Debts / Advances Written off 70926 35340 47059 (73437)
Provision for Bad and Doubtful
Debts 47899 127875 159518 26403
Excess provision written back (80829) (21676) (19133) (39532)
Prior Period item other than
depreciation (8565) 1276 19320 (855)
Other Provision 147595 832670 102518 964570 123646 1224099 229227 1080844
Operating profit before working
capital changes 1277825 1779951 2068797 1872852

Adjustments for changes in

working capital :
- Inter Circle Remittance 38837 (12229) 1663 (4202)
- Sundry Debtors (62838) (131465) (94637) (77517)
- Other Receivables (54335) (67776) (170397) (59867)
- Trade and Other Payables 65923 (12413) (685) (212155) 145474 (117897) (44174) (185760)
Cash generated from operations 1265412 1567796 1950900 1687092

-Taxes paid (175793) (152524) (118971) (117576)

- Prior Period item other than
depreciation 8565 (167228) (1276) (153800) 38976 (79995) 177444 59868
Net cash from operating
activities 1098184 1413996 1870905 1746960

B. Cash flow from Investing

activities:
Inventories Purchased (76049) 24723 (54539) (572)
Purchase of fixed assets (717309) (815313) (882441) (976301)
Capital Work in Progress (9231) 125505 78066 125689
Proceeds from Sale of fixed assets 50319 107795 84750 133273
Interest Received 379785 230602 124081 70094
Net cash used in investing
activities (372485) (326688) (650083) (647817)

43
C. Cash flow from financing
activities:

Proceeds from long term

borrowings (300000) (174027) (93696) (3679)
Interest Paid (1767) (77700) (108358) (3068)
Interim Dividend Paid (30000) (50000) (42759) (22614)
Dividend Paid (67500) (80000) (111174) (31800)
Dividend Distribution Tax Paid (16570) (18233)
Net cash used in financing
activities (415837) (399960) (355987) (61161)

Net Increase/(Decrease) in Cash

and Cash Equivalents 309862 687348 864835 1037982

Opening Cash and cash

equivalents 3745298 3057950 2193115 1155133

Cash and cash equivalents as at

31.03.2008 4055160 3745298 3057950 2193115

Cash and cash equivalents

comprise
Cash, Cheques and Drafts
(in hand) 2569 2704 3094 179993
Balances with banks 4052589 4055158 3742592 3745296 3054854 3057948 2013120 2193113

Figure 3.5 Net Increase/Decrease in cash and cash equivalents

44
 Figure 3.6 Cash flow from various heads

Procedure of Cash Flow Statement

Cash flow statement is not a substitute of income statement, i.e. a profit and loss
account, and a balance sheet. It provides additional information and explain the
reasons for changes in cash and cash equivalent.
The basic information required for the preparation of cash flow statements is
obtained from the following sources:
i. Comparative balance sheets as two points of time, i.e. in the beginning
and at the end of accounting period.
ii. Income statement of the current accounting period or the profit and loss
account.
iii. Some selected additional data to extract the hidden transaction.
Step I. Compute the net increase or decrease in cash and cash equivalents by making
a comparison of these accounting given in the comparative balance sheet.
Step II. Calculate the net cash flow provided operating activities by analysis the profit
and loss account balance sheet and additional information.
Step III. Calculate the net cash flow from investing activities.
Step IV. Calculate the net cash floe from financing activities.

45
 Step V. Prepare a formal cash flow statement highlighting the net cash flow from
operating.
Step VI. Make an aggregate of net cash flow the three activities and ensure that the
total net cash flow is equal to the net increase or decrease in cash and cash
equivalent as calculated in step I.
Step VII. Repot significant non-cash flow statement e.g., purchase of machinery against
issue of share capital or redemption of debenture in exchanges fro share
capital.

Interpretation
Cash Flow from Operating Activities
Operating activities are the principal revenue-producing activities of the
enterprise and other activities that are not investing or financing activities.
The operating activities are calculates 2005 to 2008. This activity is shown
that the cash flow of operating activities. The year of 2005 net cash is Rs. 1746960 in
lakh, year 2006 cash Rs. 1870905 lakh, year 2007 cash from operating Rs. 1413996
lakh and year 2008 cash from operating activities Rs. 1098184 laks. This operating
shown cash shown is reduction of cash flow of operating activity. In 2008 operating
goes down because net profit is goes down in comparison year 2006 and tax paid is
goes high so net cash from operating activities goes down in comparison year 2006.

Cash Flow from Investing Activities

This activity disclose of cash flows arising from investing activities is
important because the cash flows represent the extent to which expenditures have
been made for resources intend to generate future income and cash flow.
This activity is shown that the cash flow of investing activities. The year of
2005 net cash is Rs. -647817 in lakh, year 2006 cash Rs. -650083 lakh, year 2007
cash from investing Rs. -326688 lakh and year 2008 cash from investing activities Rs.
-372485 laks. This calculation shown investing payments. In 2008 investing activities
goes down because purchase of fixed assets is Rs. 717309 laks. In this year investing
money is goes down in comparison year 2006 and interest receiving is goes high so
net cash using in investing activities goes down in comparison year 2006.

46
Cash Flow from Financing Activities
This activity disclose of cash flows arising from financing activities is
important because the claim on future cash flows by providers of funds (both capital
and borrowings) to the enterprises.
This activity is shown that the cash flow of financing activities. The year of
2005 net cash is Rs. -61161 in lakh, year 2006 cash Rs. -355987 lakh, year 2007 cash
from financing Rs. -399960 lakh and year 2008 cash from financing activities Rs.
-415837 laks. This calculation shown investing payments. In 2008 financing activities
goes upward because taking long term borrowing is Rs. 300000 laks comparison year
2006 because in this year borrowing is Rs. 3676 lakh.

Overall cash flow net cash and cash equivalent is decreased in comparison
previous year

47
Findings
According to my survey and calculation the noteworthy points are:
• Mostly year BSNL suffers in losses.
• BSNL build fixed assets; these assets will give effect in profit of BSNL.
• Highly dues of intra/inter circle transfer of funds which is leave our effect in
liabilities side in balance sheet.
• Coordination’s of departments are not satisfactory.
• Qualification of employees is not match his posts.
• Revenues policies of BSNL are not properly implied.
• Departmental process so long.
• Proper computerizing of department are not satisfactory.

Analysis:
From the calculation it was found that amongst year 2006 to 2008.
• In year 2006 is good for BSNL because in this year profit goes 106% on base
of year 2005.
• In year 2007 is fine for BSNL because in this year profit goes approximately
103% on base of year 2005.
• In year 2008 is underprivileged for BSNL because in this year profit will be
only 56.21% on base of year 2005. In this year BSNL suffer payments
liabilities. The current liabilities will increase 25%.
• In year 2006 to 2008 cash position is goes decrease. We saw the graph of cash
I analysis the cash position are not satisfactory at this time. BSNL is a 6th
largest telecom company in the world but at this time BSNL suffers cash,
capital problems.

48
Conclusion
After overhauling the all situation that boosted a number of Pvt. Companies
associated with multinational in the Telecom Sector to give be relevant competition to
the other established company in private sector, we come at the conclusion that

• There are very cut tough competitions among the private telecom companies
on the level of new trend of advertising to silence a major part of Customers.
• BSNL is not left behind in the present race of advertisement.
• The entry of more Pvt. players in the telecom Sector have expanded the
product segment to meet the different level of the requirement like 3G,
Broadband, phone line, cable connection in on wire line to provide of the
customers. It has brought about greater choice to the customers.
• Over all in BSNL facing short of employees and present employees are not
working properly.
• Some employees working faith full for BSNL but retirement of BSNL
employees is too much. Each month large number of employees will retired by
BSNL.
• BSNL facing of over capitalization problem. This problem generated by
decommissioned assets.
• This organization paid large amount of taxes. This taxes leave over effect
earning per shares (EPS).

49
Suggestions
The study has provided with the useful data from the respondents. There has a lot to
be recommended. Following are the recommendations:
• There is a need for better promotion for the investment & services.
• More returns should be provided on revenues policies.
• As the BSNL provides the telecom facility to its customers. It should provide
this facility by tie up with the other organizations as well.
• Recruit new qualified employees technical or non technical.
• Working hour will increase to employees.
• Create new accounting or finance policies. This policies will provide help
generate revenues.
• Launch better plans for according to customers. Plans will be flexible nature
• Maintain Communication of each department.
• BSNL is computerized but today some department work with papers. These
employees are not handle computer because they can’t that.
• Departmental processes so long I suggest make a short process of work to
departmental.

50
51
52
53
54
55
56
57
Bibliography
• Management Accounting Shashi K. Gupta & R.K. Sharma
• Financial Management I.M. Pandey.
• Research Paper: Financial Analysis Hampton John J. Financial Decision
Making, Second Ed p.75
• Web sites
o www.bsnl.co.in
o www.google.com
o www.mpbsnl.com

• Annual Reports of BSNL 2006-2008.

• Departmental Records.

58