ADVANCE FINANCIAL MANAGEMENT 2013-14

A PROJECT
ON
Project Report on Comparative Study of Sources of Finance
(MTNL and Reliance Communication)
In the subject ADVANCE FINANCIAL MANAGEMENT
SUBMITTED TO
UNIVERSITY OF MUMBAI
FOR SEMESTER-IV
OF MASTER OF COMMERCE
BY
SUNITA KUMARI YADAV
MCOM PART-II AND ROLL NO- 3601
UNDER THE GUIDANCE OF
MRS. MONALI RAY
YEAR- 2013-2014

ADVANCE FINANCIAL MANAGEMENT

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DECLARATION BY THE STUDENT

I, SUNITA KUMARI YADAV student of M COM PART-II Roll Number

3601 hereby declare that the project for the Paper ADVANCE FINANCIAL
MANAGEMENT titled,

Project Report on Comparative Study of Sources of Finance

Submitted by me for semester-III during the academic year 2013-2014, is

based on actual work carried out by me under the guidance and supervision
of MRS. MONALI RAY.
I further state that this work is original and not submitted anywhere else for
any examination.

Signature of Student

EVALUATION CERTIFICATE
This is to certify that the undersigned have assessed and evaluated the project
on

Project Report on Comparative Study of Sources of Finance

Submitted by SUNITA KUMARI YADAV Student of M COM Part-II.

This project is original to the best of our knowledge and has been accepted
for internal assessment.

Internal Examiner

External Examiner vice Principle

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PILLAIS COLLEGE OF ARTS, COMMERCE & SCIENCE
Internal Assessment: Project 40 Marks
Name of Student
Class
Division
Roll

Number.
First Name: SUNITA KUMARI
M COM

Fathers Name: BBS

PART II
3601
Surname: YADAV

Subject: ADVANCE FINANCIAL MANAGEMENT

Topic for the Project:

Project Report on Comparative Study of Sources of Finance

Mark Awarded
Signature
DOCUMENTATION
Internal Examiner (Out of 10 Marks)

External Examiner (Out of 10 Marks)

Presentation (Out of 10 Marks)
Viva and Interaction (Out of 10 Marks)
TOTAL MARKS (Out of 40)

ADVANCE FINANCIAL MANAGEMENT 2013-14

INDEX
S. NO.
TOPIC
PAGE
NO.

1.

Introduction
1

2.

Type of Finance-Definition, Features

1-19

3.

Introduction Of MTNL
19

Balance Sheet And Profit & Loss A/C

2011-12

4.

Introduction Of Reliance
23

Communication
Balance Sheet And Profit & Loss A/C
2011-12
5.

Comparative of Source Of finance

29

between MTNL & Reliance Comm.

6.

Conclusion
30

7.

Bibliography
31

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Introduction
Finance is the lifeblood of business concern, because it is interlinked with all
activities performed by the business concern. In a human body, if blood
circulation is not proper, body function will stop. Similarly, if the finance not
being properly arranged, the business system will stop. Arrangement of the
required finance to each department of business concern is highly a complex
one and it needs careful decision. Quantum of finance may be depending
upon the nature and situation of the business Sources of finance mean the
ways for mobilizing various terms of finance to the industrial concern.
Sources of finance state that, how the companies are mobilizing finance for
their requirements. The companies belong to the existing or the new which
need sum amount of finance to meet the long-term and short-term
requirements such as purchasing of fixed assets, construction of office
building, purchase of raw materials and day-to-day expenses.

SHORT-TERM FINANCE:
The finance is generally required for a period of one year or the business
cycle which may be slightly greater than period. Apart from the long-term
source of finance, firms can generate finance with the help of short-term
sources like loans and advances from commercial banks, moneylenders, etc.
Short-term source of finance needs to meet the operational expenditure of the
business concern. Types of short-term source

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LONG-TERM FINANCE:

The long term finance generally exceeds 5 years period. Finance may be
mobilized by long-term or short-term. When the finance mobilized with large
amount and the repayable over the period will be more than five years, it may
be considered as long-term sources. Share capital, issue of debenture, longterm loans from financial institutions and commercial banks come under this
kind of source of finance. Long-term source of finance needs to meet the
capital expenditure of the firms such as purchase of fixed assets, land and
buildings, etc. Types of long-term sources

MEDIUM-TERM FINANCE:
This is also called intermediate finance. The period of medium term finance
may be 3 to 5 year.

Based on Ownership
Sources of Finance may be classified under various categories based on the
period:

An ownership source of finance include

Shares capital, earnings
Retained earnings
Surplus and Profits
Borrowed capital include
Debenture
Bonds
Public deposits
Loans from Bank and Financial Institutions.

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Based on Sources of Generation
Sources of Finance may be classified into various categories based on the
period.
Internal source of finance includes
Retained earnings
Depreciation funds
Surplus
External sources of finance may be include
Share capital
Debenture
Public deposits
Loans from Banks and Financial institutions

Based in Mode of Finance

Security finance may be include
Shares capital

Debenture

Retained earnings may include

Retained earnings Depreciation funds
Loan finance may include
Long-term loans from Financial Institutions
Short-term loans from Commercial banks.

The above classifications are based on the nature and how the finance is
mobilized from various sources. But the above sources of finance can be
divided into three major classifications:
Security Finance
Internal Finance
Loans Finance

SECURITY FINANCE

If the finance is mobilized through issue of securities such as shares and

debenture, it is called as security finance. It is also called as corporate
securities. This type of finance plays a major role in the field of deciding the
capital structure of the company.

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Characters of Security Finance

Security finance consists of the following important characters:
Long-term sources of finance.
It is also called as corporate securities.
Security finance includes both shares and debentures.
It plays a major role in deciding the capital structure of the company.
Repayment of finance is very limited.
It is a major part of the companys total capitalization.

Types of Security Finance

Security finance may be divided into two major types:
Ownership securities or capital stock.
Creditorship securities or debt capital.

Ownership Securities
The ownership securities also called as capital stock, is commonly called as
shares. Shares are the most Universal method of raising finance for the business
concern. Ownership capital consists of the following

types of securities.
Equity Shares

Preference Shares

No par stock Deferred Shares

EQUITY SHARES
Equity Shares also known as ordinary shares, which means, other than
preference shares. Equity shareholders are the real owners of the company.
They have a control over the management of the company. Equity
shareholders are eligible to get dividend if the company earns profit. Equity
share capital cannot be redeemed during the lifetime of the company. The
liability of the equity shareholders is the value of unpaid value of shares.
Equity shareholders are residual owners who have unrestricted claim on
income and assets. They possess all the voting power in the company. The
rate of dividend on these shares is not fixed. The rate of dividend depends on

the availability of divisible profits and the discretion of the directors. Equity
shareholders have the opportunity of earning high dividend in times of
prosperity. They run the risk of earning nothing in periods of adversity. They
control the company on account of their entitlement to vote at the general
meeting of the company. These shares are purchased by persons who prefer
risk to better return and also wish to have the voice in the management of the
company. The equity share capital is also called as venture capital as there is
a greater risk involved in it.

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TYPES OF EQUITY SHARES:

BONUS SHARES: It refers to issue of shares in place dividend. It is just
capitalization of reserves or conversion of reserves into equity share capital.
A company which has sufficient profits may issue bonus shares.
SWEAT EQITY SHARES: These are the shares issued to the employees of
an organisation. These shares are always issued at a discount. It is a reward to
those employees who have done work for organisation. It helps to motivate
the employees.

Features of Equity Shares

Equity shares consist of the following important features:

Maturity: Equity share capital is the permanent capital as a company is not

under contractual obligation to refund the capital during its life time. Equity
shareholders can demand there capital only in the event of liquidation and too
when funds are left after paying all prior claims. A company cannot compel
the equity shareholders to sell back their shares if they were fully paid-up and
shareholders are engaged in business competitive to the business of the
company. However, equity shareholders can be persuaded to sell their shares.
Claim on Income: Equity shareholders are residual owners. Their claims on
income arise only when the claims of creditors and preference shareholders
have been met. In many cases, residual owners of the creditors. The equity
shareholders cannot legally compel the company to pay dividends to them
even if the company has sufficient income left after distribute profits. It is
internal management which possesses the discretion to distribute profits. It
has entire right to utilise business income in whatever manner it likes. The
rate of dividend is not fixed. It depends upon the availability of profits and
discretion the management.
Claim on Assets: As the equity shareholders are residual owners, they are the
last claimants to assets of the company. In case the company winds up the
business , assets are disposed off to satisfy the claims of the creditors and also
preference shareholders prior to equity shareholders. The equity shareholders
are entitled to receive all the amount left after meeting the business
obligations. As the equity share capital provides a cushion for creditors of the

company.

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Control: The equity shares run the risk of loss. However , the risk is
compensated to some extend as they have controlling power that rests with
residual owners. In fact they have unchallenged voice in management of the
company. The equity shareholders retain control of the company through
voting power. Every equity shareholder has the right to vote on every
resolution placed before the company. A company is managed by the Board
of Directors who control and direct the affairs of the company. However , the
supreme control is endowed with the equity shareholders has the right to
exercise on vote for each share of the stock he owns.
Pre- Emptive Rights: equity shareholders enjoy the power to maintain their
proportion interest in the assets, earning and control of the company. This
power is exercised by the equity shareholders through their to purchase
additional issues of equity shareholders through their right to purchase issues
of equity shares.

PREFERENCE SHARES
The parts of corporate securities are called as preference shares. It is the
shares, which have preferential right to get dividend and get back the initial
investment at the time of winding up of the company. Preference
shareholders are eligible to get fixed rate of dividend and they do not have
voting rights. Preference shares may be classified into the following major
types:
Cumulative preference shares: Cumulative preference shares have right to
claim dividends for those years which have no profits. If the company is
unable to earn profit in any one or more years, C.P. Shares are unable to get
any dividend but they have right to get the comparative dividend for the
previous years if the company earned profit.
Non-cumulative preference shares: Non-cumulative preference shares have
no right to enjoy the above benefits. They are eligible to get only dividend if
the company earns profit during the years. Otherwise, they cannot claim any
dividend.
Redeemable preference shares: When, the preference shares have a fixed
maturity period it becomes redeemable preference shares. It can be
redeemable during the lifetime of the company. The Company Act has
provided certain restrictions on the return of the redeemable preference

shares.

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4. Irredeemable Preference Shares
Irredeemable preference shares can be redeemed only when the company
goes for liquidator. There is no fixed maturity period for such kind of
preference shares.
5. Participating Preference Shares
Participating preference shareholders have right to participate extra profits
after distributing the equity shareholders.
6. Non-Participating Preference Shares
Non-participating preference shareholders are not having any right to
participate extra profits after distributing to the equity shareholders. Fixed
rate of dividend is payable to the type of shareholders.
7. Convertible Preference Shares
Convertible preference shareholders have right to convert their holding into
equity shares after a specific period. The articles of association must
authorize the right of conversion.
8. Non-convertible Preference Shares
There shares, cannot be converted into equity shares from preference shares.

Features of Preference Shares

The following are the important features of the preference shares:

Maturity: Preference shares can be redeemable or irredeemable.

Irredeemable preference shares capital has to be repaid on winding up of the
company. However, the companies (Amendment) Act, 1988 has prohibited
the issue of irredeemable preference share capital or redeemable after the
expiry of a period of 10 years from the date of issue. Thus, companies are
prohibited from issuing the redeemable preference shares greater than 10
years period.
Conversion: Preference shares can be convertible or non-convertible.

Convertible preference shares are those which are convertible in to equity

shares. As against this non-convertible shares are those which are not
convertible in to equity shares.

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Participation in Income: Preference shares can be participating or nonparticipating. Participating preferences have a right to shares the surplus
profits remaining after paying dividend to equity shareholders at affixed rate
as laid down by a company A/A. however non-participating preference shares
do not carry such right. Preference shareholders have priority claim to
dividend over equity shareholders. These shareholders are paid dividend at a
fixed rate which is specified in the agreement. The company can distribute
earning among equity shareholders. The preferences shareholders have no
legal recourse against the company for not distributing dividend even through
it has earned large income.
Claim on Assets: No specific assets are pledged against the preference share
capital. However , they have a claim on the general assets of the company.
The preference shareholders claims on assets are superior to those of equity
shareholders. In the event of dissolution of the company , the preference
shareholders will receive their portion of the proceeds before holders of
equity shares.
Controlling Power: In the ordinary course , the preference shareholders do
not enjoy direct right to participate in the management through voting for
directors and on the other matters. Section 87 of the companies Act 1956 ,
preference shareholders are given on the right to vote on resolutions which
directly affect the rights attached to their preference shares. In respect of this ,
any resolution for winding up the company or the repayment or reduction of
its share capital is to be regarded as directly affecting the rights attached to
the preference shares.

DEBENTURES

Debenture is a creditor ships security which enables a company to raise

finance. A debenture is a written instrument signed by the company under its
common seal acknowledging the debt due by it to its holders. Through this
document the company promises to pay a specific amount of money as stated
their in at affixed date in future together with period payment of interest to
compensate the holders for the use of funds. Debenture loan may be with or
without a cargo on the assets of the company. Thus, debenture is a certificate
issued by a company under its seal acknowledging a debt due by it to its
holders. The company act, 1956 does not define debenture. It merely states
that denture includes debenture stock , bonds and any other securities of a
company whether constituting a change on the assets of the company or not.

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Types of Debentures
Debentures may be divided into the following major types:

Unsecured debentures: Unsecured debentures are not given any security on

assets of the company. It is also called simple or naked debentures. This type
of debentures are treaded as unsecured creditors at the time of winding up of
the company.
Secured debentures: Secured debentures are given security on assets of the
company. It is also called as mortgaged debentures because these debentures
are given against any mortgage of the assets of the company.
Redeemable debentures: These debentures are to be redeemed on the expiry
of a certain period. The interest is paid periodically and the initial investment
is returned after the fixed maturity period.
Irredeemable debentures: These kind of debentures cannot be redeemable
during the life time of the business concern.
Convertible debentures: Convertible debentures are the debentures whose
holders have the option to get them converted wholly or partly into shares.
These debentures are usually converted into equity shares. Conversion of the
debentures may be: Non-convertible debentures, Fully convertible
debentures, Partly convertible debentures
Other types: Debentures can also be classified into the following types.
Some of the common types of the debentures are as follows:
Collateral Debenture
2. Guaranteed Debenture
3. First Debenture
4. Zero Coupon Bond

Zero Interest Bond/Debenture

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Features of Debentures

Maturity period: Debentures consist of long-term fixed maturity period.

Normally, debentures consist of 1020 years maturity period and are
repayable with the principle investment at the end of the maturity period.
Residual claims in income: Debenture holders are eligible to get fixed rate
of interest at every end of the accounting period. Debenture holders have
priority of claim in income of the company over equity and preference
shareholders.
Residual claims on asset: Debenture holders have priority of claims on
Assets of the company over equity and preference shareholders. The
Debenture holders may have either specific change on the Assets or floating
change of the assets of the company. Specific change of Debenture holders
are treated as secured creditors and floating change of Debenture holders are
treated as unsecured creditors.
No voting rights: Debenture holders are considered as creditors of the
company. Hence they have no voting rights. Debenture holders cannot have
the control over the performance of the business concern.
Fixed rate of interest: Debentures yield fixed rate of interest till the maturity
period. Hence the business will not affect the yield of the debenture.

INTERNAL FINANCE

A company can mobilize finance through external and internal sources. A

new company may not raise internal sources of finance and they can raise
finance only external sources such as shares, debentures and loans but an
existing company can raise both internal and external sources of finance for
their financial requirements. Internal finance is also one of the important
sources of finance and it consists of cost of capital while compared to other
sources of finance.
Internal source of finance may be broadly classified into two categories:
Depreciation Funds

Retained earnings

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Depreciation Funds
Depreciation funds are the major part of internal sources of finance, which is
used to meet the working capital requirements of the business concern.
Depreciation means decrease in the value of asset due to wear and tear, lapse
of time, obsolescence, exhaustion and accident.
Generally depreciation is changed against fixed assets of the company at
fixed rate for every year. The purpose of depreciation is replacement of the
assets after the expired period. It is one kind of provision of fund, which is
needed to reduce the tax burden and overall profitability of the company.
There is a controversy among the experts regarding the treatment of
depreciation as a source of funds , argue that funds are raised of finance , a
company would have improved its financial position by charging periodical
depreciation. The experts argue that the depreciation is a non- cash
expenditure and as such , it does not affect the working capital of the
company and therefore , it is not a source of finance. The above arguments
cannot be questioned. It cannot be derived that depreciation being a non-cash
expenditure does not result in to cash outlay. As such, part of the profits
adjusted for depreciation being a non-cash expenditure does not result in to
cash outlay. As such, part of the profits adjusted for depreciation can be used
by management to increase any of the current assets or pay taxes, dividend
etc. Hence depreciation can be considered as a source of finance in a limited
sense. Depreciation can be regarded as a source of finance because of the
following reasons.
(i). Depreciation being non-cash expense, finds its way in to current assets
through charging. (ii). Although depreciation does not raise funds, it certainly
saves funds
(iii). Depreciation result in to reduction of taxable income and hence, income
tax liability for the period is reduced.

Retained Earnings
Retained earnings are another method of internal sources of finance. Actually
is not a method of raising finance, but it is called as accumulation of profits
by a company for its expansion and diversification activities.
Retained earnings are called under different names such as; self finance, inter
finance, and plugging back of profits. According to the Companies Act 1956
certain percentage, as prescribed by the central government (not exceeding
10%) of the net profits after tax of a financial year have to be compulsorily
transferred to reserve by a company before declaring dividends for the year.
Under the retained earnings sources of finance, a part of the total profits is
transferred to various reserves such as general reserve, replacement fund,

reserve for repairs and renewals, reserve funds and secrete.

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LOAN FINANCING
Loan financing is the important mode of finance raised by the company. Loan
finance may be divided into two types:
Long-Term Sources
Short-Term Sources reserves, etc.
TRADE CREDIT
Trade credit is one of the most important sources of short-term finance. Trade
credit refers to the sale of merchandise on non-cash terms by one business
organisation to another. There are three categories of trade credit viz. open
account is better known as accounts, notes payable and trade acceptances.
Open account is better known as accounts payable and is the most prevalent
form of trade credit. Notes payable is used in those situations where formal
acknowledgment of the debt is called for. These notes are called as
promissory notes. In some business lines, the trade acceptance is employed in
place of open account. This kind of credit also involves a formal recognition
of debt. Trade credit terms specified period of time. The credit terms also
include the payment period. Availability of trade credit are dependent on
several factors such nature and extend of competition.
COMMERCIAL BANKS

The commercial banks plays play a significant role in providing industrial

finance to business enterprise. Traditionally, the commercial banks used to
provide short-term loans to the industries. However, the commercial banks
have been providing medium-term and long-term finance to industrial
enterprises. The bank loan can take the form of cash credit, overdrafts, loans
are granted against the security of current assets like inventories, shares,
receivable etc.
LOANS: A loans is an advance to the business enterprise made with or
without security. In respect of a loan, the banker makes a lump-sum payment
to the borrowed or credits his deposit account with the money advanced.
Loan is advanced for a fixed period at an agreed rate of interest. Repayment
of loan may be made either in instalments or at the end of the expiry period.
The borrower has to pay interest on the total amount of advance. Interest
payment has to be made whether he with draws the money from his account
or not.

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CASH CREDIT: A cash credit is a financial arrangement through which the
commercial banks allow the borrower to borrow money up to certain limit.
Cash credit arrangement is ordinarily made against the security of
commodities hypothecated or pledged with the banker. Interest is charged on
the amount actually withdrawn for the actual period of use. Cost of finance is
the interest charged by the bank. The amount can be adjusted as per the need
of finance. The security may be pledge of movable property.
HYPOTHECATION: Under this arrangement, the possession of goods is
not given to the banker. The commodities remain at the disposal and in the go
down of the borrower. The banker is given access to goods whenever he so
desires. The borrowing unit has to furnish periodical return of the stock to the
banker. The banker advances the money only to the borrower in whose
integrity it has full confidence.
PLEDGE: Under this arrangement, the goods are placed in custody of the
banker with its name on the go down where they stored. In the case of pledge,
the borrower does not enjoy the right to deal with them.
OVERDRAFTS: If the borrower requires temporary finance, the banker
may allow him to overdraw on his account with or without security. As
compared to cash credit, overdraft is advantageous to the borrower, since the
borrower has to pay interest only on the actual amount withdrawn by him.
BILLS DISCOUNTED AND PURCHASED: The commercial banks
advance to the borrower by discounting his bill. The account of the customer
is credited with the net amount after deducting the amount of discount. The
banker may discount the bill with or without security from the debtor.
PUBLIC DEPOSITS
In the recent years, business firms are raising short-term finance from their
members, directors and the general public. This is a suitable method of
raising short-term finance. It is a cheaper source of short-term finance as
compared to bank credit. A company cannot accept deposits for a period less
than 6 months and more than 36 months. Raising of finance through public
deposits does not require any security.
BUSINESS FINANCE COMPANIES
Business finance companies are established primarily for providing shortterm and medium-term loans to business firms. As these firms have limited
financial resources, they provide only short-term and medium-term finance,
such business firms raise the financial resources mostly from their owners ad
their relatives or friends. Lending by these business finance companies is

generally secured against accounts receivable, stock and other assets. These
companies may specialise their lending for special purpose such as financing
of consumer durables, transport finance etc.

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ACCRUAL ACCOUNTS
These accounts are spontaneous and self-generating such as wages and taxes.
In case of this source, the amounts become due but are not paid immediately.
There is a time lag between provision of payment of expenses and actual
payment which makes the finance available.
INDIGENOUS BANKERS
These are private individuals business is to provide finance to small and local
business units. They are engaged in providing short-term and medium-term
finance to business units. These bankers charge very high rate of interest and
therefore, they should be approached only as a last resort.
COMMERCIAL PAPER
It is a short term issue of promissory note issued by a company in a private
sector or public sector at a such a interest on face value as may be decided by
the issuing company. It is negotiable by endorsement and delivery.

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Mahanagar Telephone Nigam
Limited (MTNL)

Mahanagar Telephone Nigam Limited (MTNL) was set up in 1st April of the
year 1986 by the Government of India to upgrade the quality of telecom
services, expand the telecom network, introduce new services and to raise
revenue for telecom development needs of India's key metros, Delhi (the
political capital) and Mumbai (the business capital of India).
The company has also been in the forefront of technology induction by
converting 100% of its telephone exchange network into the state-of-the-art
digital mode. MTNL as a company, over last nineteen years, grew rapidly by
modernizing the network, incorporating the State-of-the-art technologies and
a customer friendly approach.
The Company providing various types of telecommunication services including
Telephone, telex, wireless, data communication, telemetric and other like forms
of communication (Internet).

First digital exchange world technology brought to India by the company

during the year 1986. In the year of 1987, Large Scale came to existence,
introduction of push button telephone made dialing easier. Phone plus
services was offered by the company in the year 1988, it gives multiplied
benefits to telephone users. During the year 1992, the company introduced
Voice Mail Service.
MTNL had introduced the Integrated Services Digital Network (ISDN)
services in the period of 1996. In the year 1997, the Wireless in Local loop
was introduced. In addition to phone plus facilities like dynamic locking, call
waiting/call transfer, hot lines etc were extended to the customers. Apart from
this IVRS (Interactive Voice Response System) like local assistance changed
number information, and fault booking system ensuring round the clock
service, a CD-ROM version of the telephone directory and an on-line
directory enquiry through PC was introduced during the year 1997. To
facilitate the clientele, MTNL launched the country's first toll-free service in
Delhi in the period of 1998.

The Company made tied up with Billjunction.com in the year of 2001 to

provide online bill presenting and payment facility to its customers.
The Company launched pre-paid GSM Mobile services under the brand name
Trump during the year 2002, and in the same year MTNL's Email on PSTN
lines were introduced under the brand name mtnl mail.

MTNL had set up a new software venture called ComSoft for developing
communications software in the year 2002, as a part of its strategy to offer valueadded communications software in e-commerce,

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e-governance and intelligent networking.

The Company brought in to market, the CDMA 1x 2000 Technology under

the brand name Garuda 1-x in the year of 2003. During the same period
MTNL introduced pilot project of ADSL based Broadband services and also
launched the Virtual Phone services.
Mahanagar Telephone Mauritius Ltd. bagged second operator license in
Mauritius. The company has joined the hands with Nokia, Samsung for WLL
handsets in the year 2003.
MTNL has set up its 100% subsidiary as Mahanagar Telephone Mauritius
Limited. (MTML) in Mauritius, for providing basic, mobile and international
long distance services as 2nd operator in Mauritius.
Public sector telecom service provider MTNL on June 18th of the year 2008
received the much-awaited International Long Distance (ILD) Licence from
the Department of Telecom (DOT), a development that could signal further
lowering of ISD rates as the PSU is gearing up to carrying its own traffic in
the near future. To remain market leader in providing world class Telecom
and IT related services at affordable prices, the company partaking its all
efforts in the same business area and MTNL wants to become a global player,
also find a place in the Fortune 500' companies.

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RELIANCE COMMUNICATIONS
Reliance Communications Limited is the flagship Company of Reliance Anil
Dhirubhai Ambani Group, India's third largest business house. The company
is India's largest private sector information and communications company,
with over 100 million subscribers. They have established a pan-India, highcapacity, integrated (wireless and wire line), convergent (voice, data and
video) digital network, to offer services spanning the entire info comm. value
chain.
The company shares are listed on the Bombay Stock Exchange Ltd and the
National Stock Exchange Ltd. The company offers the full value chain of
wireless (CDMA and GSM), wire line, national long distance, international,
voice, data, video, Direct-To-Home (DTH) and internet based communications
services under various business units organized into three strategic customerfacing business segments;
Wireless, Global and Broadband.

These strategic business units are supported by passive infrastructure

connected to nationwide backbone of Optic Fiber Network fully integrated
network operation system and by the largest retail distribution and customer
services facilities. The company also owns through their subsidiaries, a
global submarine cable network infrastructure and offers managed services,
managed Ethernet and application delivery services.
The company is India's first telecom service provider offering nationwide
CDMA and GSM mobile services with digital voice clarity. Their mobile
portal, R World, offers the widest range of mobile content spanning ecommerce, m-commerce entertainment, music, news, astrology, cricket,
bollywood, maps, search, one-click set-up, access to email and social
networking.
The company offers the most comprehensive portfolio of enterprise voice,
data, video, internet and IT infrastructure services catering to large, medium
and small enterprises for their communications, networking and IT
infrastructure needs.
Their product portfolio includes national and international private leased
circuits, broadband internet access, audio solutions including Centrex, toll
free services, voice VPN, video conferencing , MPLS-VPN, remote access
VPN, Global MPLS VPN managed internet data centre (IDC) services to
name a few. The company operates nationwide Direct-to-Home satellite

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TV services under its wholly owned subsidiary, Reliance Big TV Limited
(Big TV).

They formed an alliance with Poly com Inc., the global leader in tele
-presence, video and voice solutions, to introduce world's first wireless, highresolution video and CD-quality audio, conferencing service along with
simple-to-use content sharing capabilities - at a bandwidth speed of 256 kbps
at any place. They own and operate the world's largest next generation IP
enabled connectivity infrastructure, comprising over 2,77,000 kilometers of
fibre optic cable systems in India, USA, Europe, Middle East and the Asia
Pacific region.

Company profile
Reliance Communications Limited is the flagship Company of Reliance
Group, one of the leading business houses in India.
Reliance Communications is Indias foremost and truly integrated
telecommunications service provider.
The Company, with a customer base of 161 million as on March 31, 2012
including over 2.5 million individual overseas retail customers, ranks among
the Top 4 Telecom companies in the world by number of customers in a
single country. Reliance Communications corporate clientele includes over
35,000 Indian and multinational corporations including small and medium
enterprises and over 800 global, regional and domestic carriers.
Reliance Communications has established a pan-India, next generation,
integrated (wireless and wire line), convergent (voice, data and video) digital
network that is capable of supporting best-of-class services spanning the
entire communications value chain, covering over 24,000 towns and 600,000
villages.

Mission: Excellence in Communication Arena

To attain global best practices and become a world-class communication
service provider
guided by its purpose to move towards greater degree of sophistication and
maturity.
To work with vigor, dedication and innovation to achieve excellence in
service, quality, reliability, safety and customer care as the ultimate goal.
To earn the trust and confidence of all stakeholders, exceeding their
expectations and make the Company a respected household name.
To consistently achieve high growth with the highest levels of productivity.

To be a technology driven, efficient and financially sound organization.

To contribute towards community development and nation building.
To be a responsible corporate citizen nurturing human values and concern for
society, the environment and above all, the people.

ADVANCE FINANCIAL MANAGEMENT

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To promote a work culture that fosters individual growth, team spirit and
creativity to overcome challenges and attain goals.
To encourage ideas, talent and value systems.
To uphold the guiding principles of trust, integrity and transparency in all
aspects of interactions and dealings.

Reliance Global.com retail expansion

The global calling card market is experiencing extremely high competition.
We have been able to maintain our margins despite the introduction of
aggressive tariffs by other operators both in the US and UK markets. We have
focused on delivering more value to our existing base of over 2.5 million
Reliance Global Call customers through event-based campaigns and Digital
affiliate campaigns. We are operational in USA, UK, Canada, Australia, New
Zeland, Singapore, Hong Kong, Spain, Austria, Belgium, France, Ireland, the
Netherlands and India taking the total number to 14 countries, where
Reliance Global Call is now present.

Telecom Infrastructure
Indian telecom sector has witnessed an exponential growth in the last few
years. The demand for telecom infrastructure in India is driven by the
subscriber growth in the mobile Companies and focus on expansion of rural
market.
Indias tower sector is expected to continue to grow in terms of both capacity
and tenancies in next few years.
With the completion of network footprint expansion, the focus will be on
ensuring delivery of the best QoS to customers and also building up network
capacity as traffic grows.
Telecom Industry structure is impacted due to cancellation of 122 licenses by
the Honble Supreme
Court. Clarity on continuation of the said licenses will emerge in due course
after Government concludes the spectrum auctions and other matters related
to such licenses.

Global
Our global business participates in diverse industry segments, viz.
Global submarine capacity sales;
Gateways facility for international traffics;

National long distance for voice and data;

International voice transit;
International retail voice;
Enterprise connectivity and managed services business.

ADVANCE FINANCIAL MANAGEMENT

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Reliance Communications Ltd was incorporated on July 15, 2004 as a private
limited company with the name of Reliance Infrastructure Developers Pvt
Ltd. In July 25, 2005, the company was converted into public limited
company and the name was changed to Reliance Infrastructure Developers
Ltd.
In August 3, 2005, they further changed their name to Reliance
Communication Ventures Ltd. In August 11, 2005, the equity shares of the
company were acquired by Reliance Industries Ltd and thus the company
became the wholly owned subsidiary of Reliance Industries Ltd
. As per the scheme of arrangement, all the properties, investments, assets and
liabilities related to Telecommunication Undertaking of Reliance Industries
Ltd was transferred and vested in the company on a going concern basis with
effect from December 21, 2005.
Reliance Communications Maharashtra Pvt Ltd became the wholly owned
subsidiary of the company through Reliance Telecom Ltd (RTL) during the
year and merged into RTL, with effect from May 25, 2011.

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COMPARISION

(Amount in Crore)
Particular
MTNL
RELIANCE COMM.
Shareholder Fund
26,907.14
86,005.00

Long Term Fund

81,139.68
27,873.00

Short Term Fund

6,230.68
12,935.00

Equity and Liabilities

2,536.70
45,197.00

In Above table it can be clearly seen comparative analysis on

Source of Finance of two
companies MTNL and Reliance Communication. This shows that

In Shareholder Fund Reliance communication having Rs.

86005.00 which is higher as compare to MTNL where shareholder
fund is Rs.26907.14.

In Long Term Fund Reliance communication having Rs. 27873.00

which is less as compare to MTNL where Long Term fund is
Rs.81139.68 .Its means long term borrowed fund is more used in

MTNL firm.

In Short Term Fund Reliance communication having Rs. 12935.00

which is more as compare to MTNL where Short Term fund is
Rs.6230.68 .Its means Short term borrowed fund is more used in
Reliance Communication firm.

In equity and liabilities Reliance communication having Rs.

45197.00 which is higher as compare to MTNL where shareholder
fund is Rs.2536.70

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CONCLUSION

In assessing the significance of various companies

financial data there are Various sources of financing
available. Not every business can use all of the available
financing choices. Choosing the right financing source is
based on these vital points; business condition and the
interest rate or the other cost of the finance. Some sources
of finance are more flexible than the others, according to
the business situation, while refunding risks should also
be considered.
There are many difficulties involved in raising funds to
finance business activities by developing partnerships that
lead to a variety of key investment opportunities for its
clients.
In a world where the external environment is constantly
changing, it help us by providing them with stability and
certainty.

ADVANCE FINANCIAL MANAGEMENT

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BIBLIOGRAPHY
Advance financial management book
Thanks to MRS. MONALI RAY for help and cooperation for
completing this project
Other site which help us to find matter on related topic are:
http://wiki.answers.com/Q/How_do_you_write_conclusion_in_b
usiness_project
_on_source_of_finance_for_class_11?#slide=1
http://www.slideshare.net/pvmoney/sources-offinance