INTRODUCTION

The India network in India is fifth largest network in the world meeting up with global standards. Presently, the telecom industry is currently slates to an estimated contribution of nearly 1% to India's GDP. Introduction:The Indian Telecommunication network with 110.01 million connections is the fifth largest in the world and second largest among the emerging economics of Asia. Global in the stagnant global scenario. The total subscriber base grown by 40% in 2005, is expected to reach 250 million in 2008. According to Broadband Policy 2004, Government of India aims at 9 million broadband connections and 18 million internet connections by 2008. The wireless subscriber base has jumped from 33.69 million in 2004 to 62.57 million in Fiscal year 2004-2005. In the last 3 year, two out of every three new telephone subscribers were wireless subscribers. Consequently, wireless now accounts for 54.6% of the total telephone subscriber base, as compared to only 40% 2003. Wireless subscriber growth is expected to bypass 2.5 million new subscribers per month by 2008. The wireless technologies currently in use are Global System for Mobile Communication (GSM) and code Division Multiple Access (CDMA). There are primarily 9 GSM and 5 CDMA operators providing mobile services in 19 telecom circles and 4 metro cities, covering 2000 towns across the country.

Evolution of the industry- Important Milestones 1851 First operational lines were laid by the government near Calcutta. 1851 Telephone service introduction in India 1883 Merger with the postal system 1923 Formation o Indian Radio Telegraph Company (IRT) 1932 Merger of ETC and IRT in the Indian Radio and Cable Communication Company 1947 Nationalization of all foreign telecommunication companies to form the posts, Telephone and Telegraph (PTT), a monopoly run the government's Ministry of Communication. 1985 Department of Telecommunication (DOT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system) 1986 Conversion of DOT into two government-owned companies the Vides Samachar Nigam Limited (VSNL)for international telecommunication and Manager Telephone Nigam Limited (MTNL) for service metropolitan areas. 1997 Telephone Regulatory Authority of India created. 1999 Cellular Services are launched in India. New National Telecom Policy is adopted. 2000 DoT becomes a corporation, BSNL

INDIAN TELECOM ENVIRONMENT- a step towards development Indian Telephone today benefits from among the most enlightened regulation in the region, and arguably in the world. The sector, sometimes considered the "poster-boy for economic reforms," has been among the chief beneficiaries of the post -1991 liberalization. Telecommunication has generally been seen as removed from "mass concerns," and thus less subject to electoral calculations. Market oriented reforms have also been facilitates by lobbying from India's booming technology sector, whose continued success of course depends on the quality of communications infrastructure. Despite several hiccups along the way, the Telecom Regulatory authority of India TRAI), the independent regulator, has earned a reputation for transparency and competence. With the recent resolution of a major dispute between cellular and fixed operators (see below), Indian telecommunications, already among the most competitive marks in the world, appears set to continue growing rapidly. At that time, Rajiv Gandhi proclaimed his intention of "leading India into the 21st century," and carved the Department of Telecommunication (DOT) out of the Department of Posts and Telegraph. For a time he also even considered corporatizing the DOT, before succumbing to union pressure. In a compromise, Gandhi created two DOTowned corporations: Mahanagr Telephone Nigam Limited (MTNL), to serve Delhi and Bombay, and Videsh Snachar Nigam Limited (VSNL), to operate international telecom services. He also introduced private capital into the manufacturing of telecommunication equipment, which had previously been a DOT monopoly.

INTRODUCTION OF PRIVATE PLAYERS:It was not until the early 1990s, when the political situation stabilized, and with the general momentum for economic reforms, that telecommunication liberalization really took off. In 1994, the government released its National Telecommunication Policy (NTP- 94), which allowed private fixed operators to take part in the Indian market for the first time (cellular operators had been allowed into the four largest metropolitan centers in 1992). Under the government's new policy, India was divided into 20 circles roughly corresponding to state boundaries, each of which would contain two fixed operators (Including the incumbent), and two mobile operators. As groundbreaking as NTP-94 was, its implementation was unfortunately marred by regulatory uncertainty and over- bidding. A number of operators were unable to live up to their profligate and, confronted with competition in India's telecom sector did not really become a reality until 1999. At that time the revenue sharing regime of approximately 15%. This has subsequently been lowered (to 10% - 12%), and is expected to be reduced even further over the coming years. Still, India continue to derive substantial revenue from license fees ($800 million 20012002); leading some critics to suggest that the government has abrogated its responsibilities as a regulator to those as a seller. Another, perhaps even more significant, problem with Indices initial attempts to introduce competition was lack of regulatory clarity. Private operators complained that the licenser the DOT- was also the incumbent operator. Them any stringent condition attached to licenses were thus seen by many as the DOTs attempt to limit competition. It was in response to such concerns that

the 9 government in 1997 set up the Telecom Regulatory Authority of India (TRAI), The nations first independent telecom regulator. POLICIES ADOPTED BY TRAI Over the years, TRAI has earned a growing reputation for independence transparency and an increasing level of competence. Early on, however, the regulator was beleagured on all fronts, it had to contend with political interference, the incumbents many challenges to its authority, and accusations of ineptitude by private players. It was not until 2000, with the passing of the TRAI Amendment Act, that the regulatory body really came into its own. Coming just a year after NTP-99, the act marks something of a watershed moment in the history of India telecom liberalization. It set the stage for several key events that have the vigorous competitions witnessed today, Some of these events include. The corporatization of the DOT and the creation of a new state owned telecom company, Bharat Sanchar Nigam Ltd (BSNL), in 2000: The opening up of Indias internal long distance market in 2000, and the subsequent drop in long distance rates as party of TRAIs tariff rebalancing exercise. The termination of VSNLs monopoly over international traffic in 2002 and the partial privatization of the company that same year, with the Tata group assuming a 25% stake and management control. the gradual easing of the original duopoly licensing policy, allowing a greater number of operators in each circle. The legalization, in 2002, of IP telephony ( a move that many believe was held up due to lobbying VSNL, which feared the consequences on its
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monopoly). The introduction in 2003 of a calling party (CPP) system for cell phones, despite considerable opposition by fixed operators. And, more generally, the commencement of more stringent interconnection regulation by TRAI, which has moved from an inter operator negotiations based, approach. All of these events have created an impressive forward momentum in Indian telecommunications, resulting in a vigorously competitive and fast- growing sector. In late 2002 for example, thousands of mobile users in New Delhi were for a time cut off from the fixed line network when MTNL shut down interconnection for cellular companies. (MTNL Later attributed the incident to a technical sang.) it was not until late 2003 that the issue was finally resolved, under considerable government pressure, when cellular operators agreed to withdraw their many cases against the fixed - line operators. fixed operators would in effect be allowed to enter the mobile business, in return, the government granted cellular players several concessions, including lower revenue share arrangements estimated to total over $ 210 million. Perhaps most notably, the government announced its intention to adopt a " unified access licensing" regime, which would in the future provide a single, technologies to enter the Indian market without requiring a wholesale rewrite of licensing laws. MAJOR MARKET TRENDS The telecoms trends in India will have a great impact on everything from the humble PC, internet, broadband ( both wireless and fixed), and cable, handset features, talking SMS, IPTV, soft switches, and managed services to the local manufacturing and supply chain. This report discusses key trends in the Indian telecom industry, their drivers and the
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major impact of such trends affecting mobile operators, infrastructure and handset vendors. HIGHER ACCEPTANCE FOR WIRELESS SERVICES Indian customers are embracing mobile technology in a big way (an average of four million subscribers added every month for the past six months itself). They prefer wireless services compared to wire line service, which is evident from the fact that while the wireless subscriber base has increased at 75 percent from 2001 to 20006, the wire line subscriber base growth rate is negligible during the same period. In fact, many customer are returning their wire-line phones o their service provides as mobile provides a more attractive and competitive solution. The main drivers for this trend are quick service delivery for mobile connections, affordable pricing plans in the form of pre-paid cards and increased purchasing power the 18 to 40 years age group as well as sizeable middle class- a prime markets for this service. Some of the positive impacts of this trend are as follows. According to a study, 18 percent of mobile users are willing to change their handsets every year to newer models with more features, which is good news for the handset vendors. The other impact is that while the operators have only limited options to generate additional revenues through value-added services from wire-line services, the mobile operators have numerous options to generate non-voice revenues from their customers. Some examples of value-added services are ring tones download, colored ring back tones, talking SMS, etc. Moreover, there
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exits opportunity content developers to developers to application side, there is an increased threat of virus-spread through mobile data connections and Bluetooth technology- in mobile phones, making them unusable at times. This is good for anti-virus solution providers, who will gain this trend. MERGERS Demand for new spectrum as the industry grows and the fact the spectrum allocation done on the basis of numbers of subscribers will companies to merge son as to claim large number of subscribers to gain more spectrum as a precursor to the launch of larger and expended services. However it must also be noted that this may very well never happen on account of low telecom penetration.

MAJOR PALYERS OF TELECOM INDUSTRY IN INDIA There are three types of players in telecom services: State owned companies types of players in telecom services: Private Indian owned companies (Reliance Infocom, Tata Teleservices,) Foreign investedcompanies (Vodafone-Essar, Bharti Tele- Ventures, Escorate Idea Cellular, BPL Mobile, Spice Communication) BHARAT SNACHAR NIGAM LIMITED On October 1, 2000 the Department of Telecom Operation, Government of India became a corporation and was renamed Bharat Snachar Nigam Limited (BSNL). BSNL is now India's leading Telecommunications Company and the largest public sector undertaking. It has a network of over 45 million lines covering 5000 towns with over 35 million telephone connections. The state-controlled BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance services throughout India (expect Delhi and Mumbai). BSNL will be expanding the network in line with the Tenth five- year plan (1992-97). The aim is to provide a telephone density of 9.9 per hundred by march 2007. BSNL, which became the third the largest GSM operator in country. BSNL is also the largest operator in the Internet market, with a share of per cent of the entire subscriber beds.

BHARTI AIRTEL It was Established in 1985, Bharti has been pioneering force in the telecom sector with many firsts and innovation to its credit, ranging from being the first mobile service in Delhi, first private basic telephone service in the country, first Indian company to provide comprehensive telecom services outside India in Seychelle and first private sector service provider to launch National long Distance Services in India. Bharti Tele-Ventures limited was incorporated on July 7, 1995 for promoting investment in telecommunications services. Its subsidiaries operate telecom services across India. Bharti's operations are broadly handled by two companies: The Mobility group:Which handles the mobile services in 16 circles out

of a goal 23 circles across the country Infotel group:- Which handles the fixed line, broadband, data and satellitebased services. Together they have so far deploys around 23,000 km of opt caliber cables across the country, coupled with approximately 1.500 nods and presence in around 200 locations. the group has a total customer base of 6.45million, of which 5.85 million are mobile and 588.000 fixed line customer, as of January 31, 2004. In mobile, Bharti's footprint extends across 15 circles. Bharti Tele ventures' strategic objective is " to capitalize on the growth opportunities the company believes are available in Indian telecommunication market and consolidates its position to be the leading Mobile services."

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MAHANAGAR TELECOM NIGAM LIMITED MTNL was set up on Ist April 1986 by the Government of India to upgrade the quality of telecom services, expand the telecom network, and 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. In the past 17 years, the company has taken rapid strides to emerge as India's leading and one of Asia's largest telecom operating companies. The company has also been in the for front of technology induction by converting 100% of its telephone exchange network into the state-of the art digital mode. The Govt. of India currently holds 56.26% stake in the company. In the year 2003-04, The company's focus would be not only consolding the gains but also to focus on new areas of enterprise such as joint ventures for projects outside India, entering into national long distance operation, widening the cellular and CDMA- based WL customer base, setting up internet and allied services on all basis. MTNL has over 5 million subscribers and 329,374 mobile subscribers. While the market for fixed wire line phones is stagnation, MTNL faces intense completion from th private players-- Bharti, Vodafone and Idea Cellular, Reliance Infocome -- in mobile services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year 2005-06, a decline of 5.8 percent over the pervious year's annual turnover of Rs. 63.92 billion.

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RELIANCE COMMUNICATION Reliance is a $ 16 billion integrated oil exploration to refinery to power and textiles conglomerate. It is also an integrated telecom services provide with licenses for mobile, fixed, domestic long distance and international services. Reliance Infocom offers a complete range of telecom services, covering mobile and line telephony including broadband, national and international long s\distances, data services and a wide rage of value added services and applications. Reliance India Mobile, the fist infocom initiatives was launched on December 28,2002. This marked the beginning of Reliance's vision. Reliance telecom plans to extend its efforts beyond the traditional value chain to develop and deploy telecom solutions for India's farmers, business, hospital, government and public sector organization. Until recently, Reliance was permitted to provide only "limited mobility" services through its basic services license. However, it has now acquired a unfired access license for 18 circles that permits it to provide the full range services. It has rolled out its CDMS mobile network and enrolled more then 6 million subscribers in one yea to become the country's largest mobile operator. It now wants to increase share and has recently launched pre-paid services. Having captured the voice market, it intends to attack to the broadband markets.

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COMPANY PROFILE
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 Miniratana- a status assigned to reputed Public Sector companies in India. 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

HISTORY OF BSNL
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
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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.

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VISION & MISSION

VISION
To become the largest telecom Service Provider in Asia.

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 of the country's economy.

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OBJECTIVES
To be a Lead Telecom Services Provider.

To provide quality and reliable fixed telecom service to our customer and there by increase customer's confidence.

To provide mobile telephone service of high quality and become no. 1 GSM operator in its area of operation. To provide point of interconnection to other service provider as per their requirement promptly. To facilitate R & D activity in the country. Contribute towards: i. National Plan Target of 500 million subscriber base for the country By December 2010. Broadband customers base of 20 million in India by 2010 as per Broadband Policy 2004. Providing telephone connection in villages as per government proposition. Implementation of Triple play as a regular commercial proposition.

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SERVICES PROVIDED

When it comes to connecting the four corners of the nation, and much beyond, one solitary name lies embedded at the pinnacle - BSNL. A company that has gone past the number games and the quest to attain the position of a leader. It is working round the clock to take India into the future by providing world class telecom services for people of India. BSNL is India's no. 1 Telecom Service provider and most trusted Telecom brand of the Nation. Driven by the very best of telecom technology from chosen global leaders, it connects each inch of the nation to the infinite corners of the globe, to enable you to step into tomorrow. Here is an overview of the World Class services offered by the BSNL:

BASIC TELEPHONE SERVICES The plain old, countrywide telephone service through 32,000 electronic exchanges. Digitalized public switched telephone network (PSTN) with a host of phone plus value additions.

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DATAONE BROADONE BSNL launched Data One broadband service in January 2005 which shall be extended to 198 cities very shortly. The service is being provided on existing copper infrastructure on ADSL2 technology. The minimum speed offered to the customer is 256 Kbps at Rs. 250/- per month only. Subsequently, other services such as VPN, Multicasting, Video Conferencing, Video-onDemand, Broadcast application etc will be added SANCHARINTERNET Keeping the global network of Networks networked, the countrywide Internet Services of BSNL under the brand name SANCHAR NET includes Internet dial up/ Leased line access, CLI based access (no account is required) and DIAS service, for web browsing and E-mail applications. You can use your dialup sancharnet account from any place in India using the same access no 172233, the facility which no other ISP has. BSNL has customer base of more than 1.7 million for sancharnet service. BSNL also offers Web hosting and co-location services at very cheap rates.

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

INTELLIGENT NETWORK

Intelligent Network Service (In Service) offers value-added services, such as: Free Phone Service (FPH) India Telephone Card (Prepaid card) Account Card Calling (ACC) Virtual Private Network (VPN) Premium Rae Service (PRM) Universal Access Number (UAN) and more

I-NET

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India s x.25 based packet Switched Public Data Network is operational in 104 cities of the country. It offers x.25 x.28 leased, x.28 Dial up (PSTN) Connection) and frame relay services.

LEASED LINES & DATACOM BSNL provides leased lines for voice and data communication for various application on point to point basis. It offers a choice of high, medium and low speed leased data circuits as well as dial-up lines. Bandwidth is available on demand in most cities. Managed Leased Line Network (MLLN) offers flexibility of providing circuits with speeds of nx64 kbps upto 2mbps, useful for Internet leased lines and International Principle Leased Circuits (IPLCs).

Cellular Mobile Service BSNL?s GSM cellular mobile service Cellone has a customer base of over 5.2 million. CellOne provides all the services like MMS, GPRS, Voice Mail, E-mail, Short Message Service (SMS) both national and international, unified messaging service (send and receive e-mails) etc. You can use CellOne in over 160 countries worldwide and in 270 cellular networks and over 1000 cities/towns across India. It has got coverage in all National and State Highways and train routes. CellOne offers all India Roaming facility to both pre-paid and post-paid customers (including Mumbai & Delhi).

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WIRELESS IN LOCAL LOOP This is a communication system that connects customers to the Public Switched Telephone Network (PSTN) using radio frequency signals as a substitute for conventional wires for all or part of the connection between the subscribers and the telephone exchange Countrywide WLL is being offered in areas that are non-feasible for the normal network. Helping relieve congestion of connections in the normal cable/wire based network in urban areas. Connecting the remote and scattered rural areas. Limited mobility without any air-time charge

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BSNL GROWTH PLAN

The National Internet Backbone of BSNL consists of 432 Point of Presence ( POP) that gives it the capability of transporting IP traffic from every hook and corner of the country. basis. 2nd in the line of IP network, BSNL commissioned a state-of-the-art Multi Protocol Label Switching (MPLS) NETWORK TAKING India into the next stage of the IP evolution. This network has 10 physical nodes with all district headquarters designated as virtual nodes. This network has opened up a new market segment of secure and reliable Virtual Private Networks (VPNs) for corporate customers. The latest endeavor of BSNL is a world-class multi-gigabit multi-protocol, convergent IP infrastructure which will provide voice, data and video services through the same backbone. In terms of infrastructure for broadband services, this would put India at par with more advanced nations. Designated as NIB-II this will be implemented in the form of four projects. This network provides internet services to more than 1 million dial-up customers including about 3.5 lakh customers on CLI

Project 1 involves building up of MPLS backbone Project 2.1 is for narrow band access Project 2.2 is for broadband access

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Project 3 is to put systems and processes in place to integrate network built in the other projects and provide services like messaging, billing etc. All the above projects in form of NIB-II are at different stages of implementation and as per schedule .They will be operational in the third quarter of this year. The services that will be available to customers when NIB-II is in place: Narrowband and broadband Internet access. Virtual Private Network. Managed OPE Value Added Services like encryption, firewall and NAT Messaging: Plain Vanilla and feature rich Data Center Services: web hosting and web-collocation. Content based Services: e.g. video multicast, video on demand, interactive gaming

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CHALLENGES FACED BY BSNL

During Financial Year 2006-2007 (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 IndianTelecom 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 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.

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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.

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SWOT ANALYSIS OF BSNL

STRENGTH 1 The turnover nationwide coverage nearer comprehensive range of telecom services and the desire to excel has made BSNL the number one telecom company in India. 2 3 4 5 Wide coverage first mover advantage launches new and attractive scheme. Last markets share around 25.1% good service provider. Customer friendly services excess around all over India (Billing transaction) Providers all services under one roof. Largest revenue generating company. BSNL is miles ahead of its with 35.1 in vision basic phone subscriber that is 85% share of subscribe base and 92% share in revenue terms. 6 7 8 9 10 11 BSNL is numeral operator of India in all services in its licenses area. BSNL is only services provider making loused efforts and planned initiative to bridge the rural and urban digital divide ICT sector. BSNL serves its customer with its wide bouquet of telecom services. The company has vast experience in planning. The centralized structure. Net profit - present turnover of BSNL is more than Rs.351820-00 million with net profit to the line of Rs. 99390 million for the last financial year.

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WEAKNESS 1 2 3 4 5 6 7 8 9 BSNL is not so customer friendly . Net work problems like congestion server down problem mainly in the evening time. Because of the large area and due to leased lines the company has incurred high maintenance cost. Lack of proper implementation of services. Inconsistent in working practice. Since the company launched so many brands so the company loosed its special position in consumer minds. Less coordination in working culture or working staff. Brand dilution - Its occurs when consumer is no longer associate with a product or even highly similar product as BSNL lose its luster. Slow pace of the reform process.

OPPORTUNITIES 1 2 3 4 5 BSNL planned to expand its customer base from present 47 millions line to 125 million lines by December 2008. Infrastructure investment planned to the line of Rs. 733 crore in the next three year. Moves toward international market. The company is not limited to basic phone services also capturing other market segment like mobile internet i.e. broad band services. Planning to merger with top MNC's .

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THREATS 1 Since the more telecom companies entered in and Indian market therefore the company faces some threats because of foreign players like Vodaphome, etc. 2 Competitors Strategies - Because of the high competition with the other companies like Airtel Reliance communication, and Vodaphone. The company adopts the law calls rates scheme as a result of which the company may face some problems. 3 4 International competition - the other company provide more features as well as additional services. Financing these requirements require a little more liberal approach from the policy side problem of limited spectrum availability and the issue of interconnection charges between the private and state operators.

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CASH MANAGEMENT
Cash management is a term for certain services offered primarily to larger business customers. This is the procedures for Government agencies to follow to ensure prudent cash management practices when developing and implanting regulations, systems and instruction. These procedures include billings, collections, deposits, disbursements, cash held outside the cash account of the Department and financial data reporting . These procedures also requires the use of timely methods, principally electronic Funds Transfer (EFT) for the collection, deposit, and disbursements of funds. It may be used to describe all bank account such as checking, collection, operation account etc. provided to businesses of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting and auto matched clearing house facilities. Sometimes even a private bank can be hire to provide a cash management service for a company even Bharat Sanchar Nigam Limited also planning to out sources its cash management service. The following is a list of services generally offered by banks and utilized by larger businesses and corporations like BSNL.

Account Reconcilement Services: Balancing a checkbook can be a difficult process for a very large business, since it issues so many checks it can take a lot of human monitoring to understand which checks have not cleared and therefore what the companys true balance is. To get around this, banks have developed a system which allows companies to upload a list of all the checks that they issue on a daily basis, so that at
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the end of the month the bank statement will show not only which checks have cleared, but also which have not. More recentally, banks have used this system to prevent checks from being fraudulently cashed if they are not on the list, a process known as positive pay.

Advanced Web Services: - Most banks have an internet- based system which is more advanced than the one available to consumers. This enables managers to create and authorize special internal logon credentials, allowing employees to send wires and access other cash management features normally not found on the customer web site.

Armored Car Services: - Large retailers who collect a great deal of cash may have the bank pick this cash up via an armored car company, instead of employees depositing the cash.

Automated clearing House: - Services are usually offered by the cash management division of a bank. The automated clearing house is an electronic system used to transfer funds between banks. Companies use this to pay others, especially employees (this is how direct works). Certain companies also use it to collect funds from customers (this is generally how automatic payment plans work). This system is the subject of the ire of some consumer groups, because under this system all banks assume that the company initiating the debit is correct until proven otherwise.

Balance Reporting Services: - Cooperate clients who actively manage their cash balances usually subscribe to secure web-based reporting of
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their account and transaction information at their lead bank. These sophisticated compilations of banking activity may include balances in foreign currencies, as well as those at other banks. They include information on cash position as well as float (e.g. checks in the process of collection). Finally they offer transaction - specific details on all forms of payment activity, including deposits, checks, wire transfer, ACH (automated clearing house debits and credits), investments, etc.

Cash concentration Services: - Large or national chain retailers often are in areas where their primary bank does not have branches. Therefore, they open bank accounts at various local banks in the area. To prevent funds in these accounts from being idle and not earning sufficient interests, many of these companies have an agreement set with their primary bank, whereby their primary bank uses the Automate clearing house to electronically pull the money from these banks into a single interest - bearing bank account.

Lockbox service:- Often companies (such as utilities) which a large number of payments via checks in the mail have the bank set up a post office box for them, open their mail, and deposit any checks found. This is referred to as a lock box services.

Positive Pay: - Positive pay is a service whereby the company electronically shares its check register of all written checks with the bank. The bank therefore will only pay checks listed in that register, with exactly the same specifications as listed in the register (amount, payee, serial number, etc.). This system dramatically reduces checks fraud.
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Sweep Account: - are typically offered by the cash management divisions for a bank. Under this system, excess funds from a companys bank account are automatically moved into money market mutual funds overnight and then moved back the next morning. This allows them to earn interest overnight. This is the primary use of money market mutual funds.

Zero Balance Accounting: - Can be through of as somewhat of a hack. Companies with large numbers of stores or locations can very often be confused if all those stores are depositing into a single bank account. Traditionally, it would be impossible to know which deposits where from which stores, without seeking to view images of those deposits. To help this problem, bank developed a system where each store is given their own bank account, but all the company deposited into the store account is automatically moved into the companys main bank account. This allows the company to look at individual statements for each store. US Banks at the present time, however, are almost all converting their system so that companies can tell which store made a particular deposit, even if these deposits are all being done into one account. Therefore, zero balance accounting is being used less frequently.

Wire Transfer: - A wire transfer is an electronic transfer of funds. Wire transfers can be done by a simple bank account transfer, or by a transfer of cash at a cash office. Banks wire transfer are often the most expedient method for transferring funds between bank account. A bank wire transfer is a message to the receiving bank requesting them to effect
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payment in accordance with the instructions given. The message also includes settlements instructions. The actual wire transfer itself is virtually instantaneous, requiring no longer for transmission than a telephone call.

Controlled Disbursement: - This is another product offered by banks under cash management services. The bank providers a daily report, typically only in the day. That provides the amount of disbursements that would be charged to the customers account. This early knowledge of daily funds requirements allows the customer to invest any surplus in intraday investment opportunities, typically money market. This is different from delayed disbursements, where payments are issued through a remote branch of a bank and customer is able to delay the payment due to increased float time.

Scope and Applicability These procedures apply to all Government agencies, unless specifically exempted by the structure, whose financial transact ration directly or indirectly affect, the cash account of Treasury. The following regulations establish the policy for cash management practices within the Government. Cash management Practices and techniques designed to accelerate and control collections, ensure prompt deposit of receipt, improve control over distribution methods, and eliminate idle cash balance.

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Cash Management Improvements fund- A revolving fund financed by assessments against an agency for noncompliance with collection or deposit improvements. Moneys from this fund will be made available, without fiscal year limitation, for payment or expense increased in developing and implementing selected project that provide for improved methods of collection and deposit. Cash Management Review- A comprehensive and ongoing study of an agencys cash-flows and corresponding cash management process or mechanisms, conducted to identify opportunities for improvements in an agencys cash management practices. This review is a major part of the current assets management review and analysis (CAMRA). Current Assets Management Review and Analysis (CAMRA):- A process to assess and improve the management of Federal agency finances through electronic data collection. The cash management review is a major part of CAMRA. Billings and Collection: - Agencies responsible for the preparation of invoices to individuals and organizations will adhere to the followings. Ensure that and invoice, for either an actual or estimated amount, is prepared and mailed within 5 business days after the day that goods have been shipped or released, services have been rendered, or payment is otherwise due. Agencies may prepare and mail an invoice later than the 5 day time frame if they can demonstrate that it is cost effective to do so.

34

Include a payment due date on the invoice that will not be more than 30 days from the date of the invoice, unless otherwise provided by law. If the value of the goods or services cannot be specifically determined, a bill equal to at least 75 percent of the estimated value will be prepared and mailed within 5 business days. Identify the estimated invoice as being a partial invoice and note that a final invoice will be completed when the value is determined. Prepare and mail a final invoice within 30 days of the submission of an estimated partial invoice. Collections normally are required to be made by EFT and must be arrangement with FMS. When indicated by FMS, agencies will include a statement on the invoice requiring payment by EFT and provide the necessary information for EFT payment by the remitter. Charges for late Payments: - Payment terms as a stated in a contract, debt instrument, or notice of indebtedness (that is, demand latter) are expected to be adhered to by the debtor. If payment is not received by the due date, than agency is expected to purse collection of the debt using the appropriate available methods, and to assess interest, administrative charges, penalties on past due amounts. Collection Mechanism:- All funds are to be collected by EFT when cost effective, practicable, and consistent with current statutory. FMS acknowledges that agencies may find it desirable to utilize a menu mechanisms, if the base remitters is diverse. The mechanisms used for collecting funds for the credit to the account of U.S. Government will be jointly determined by the responsible agency and FMS and must have as
35

their objective the mini nation of total cost to the Government as a whole, including agency direct costs, the cost of purchased services, and the float cost of the money involved in the collection system. Agencies will evaluate new or modified collection flows using the following guidelines and provide recommendations to FMS. When consistent with the above criteria, agencies should generally consider mechanism in the following order of preference.

Automated clearing house (ACH) (the computerized facility for member depositary instructions to process payment orders in machine readable form).

Fed wire (for deposits requiring same day settlement) Debit/ Credit card (when cost effective). Lock box, and Treasurys General Account (TGA). On - Line Payment and collection system (OPAC) or other mechanism for which the agency has voucher and schedule of withdrawals and credit, will be used for the transfer of funds between agencies. Disbursements Mechanisms: - All funds are to be disbursed by EFT when cost effective, practicable, and consist with current statutory authority. Agencies will evaluate new or modified cash flows using the following guidelines and provide recommendations to company. Salary Payment:- ACH will be adopted as the presumed method for paying employees. Direct deposit enrollment forms for establishing regular payment

36

will be designed to use this approach. If required by law, the forms must afford recipients the opportunity to reject EFT without justification. Vendor and Miscellaneous payment:-Each department and agency will authority to require that all contract are paid by EFT in accoourdance with 31 CFR 206, unless a determination is made that it is not in the best interest of the federal Government to do so. EFT will be adopted as the standard method of payment for all Federal program payments originated by agencies or their agents. To maximum extent possible, agencies are required to use vendor Express, which is the mechanisms supporting the movement of Federal agencies vendor and miscellaneous payments from checks and Fed wire to ACH processing. Agencies proposing to use any non- EFT is not feasible or cost effective. FMS will work with each agency to develop and execute individual conversion plans and coordinate agency conversion plans with the Regional Financial centers and the Federal Reserve system. Agency payment: - Agencies will ensure that payment terms, which specify when payment with any organization. Invoices that are authorized for payment by agency including progress and final payments, will be paid in accordance with company rule and regulation or when otherwise due. Accounting system will be designed to ensure that invoices are paid timely and discount are taken when appropriate when agencies take discount after the expiration of the discount period or fail to make timely payments, interest penalties will be paid according to the companys Act. Cash Discount:- Agency payment systems will incorporate that take advantage of cash discount as a matter of routine and eliminate any need for
37

special handling. Such discount will be taken when the discount terms applied in the conversion formula results in an effective interest rate equal to, or greater than, the current value of Funds Rate. The discount period is calculated from the date placed on the proper invoice by the contractor to the discount date. If the invoice is undated, the discount period will being on the date or proper invoice is received by the designed billings office and the date automated . all discount payments must be scheduled for issuances as close as possible to, but no later than, the last day of the discount period the formula, with example, to convert discount terms to an effective annual discount rate to be compared against the current value of Funds Rate are in the figure on this page. Cash Advances Cash held outside Treasury Cash held at personal risk, including imrest funds by distributing officer and cashiers Agencies will make unannounced verification of the cash balances in impress funds at least once each quarter. At least every 6 months, accountable officers shall ensure that such funds are commensurate with actual needs and meet the requirement specified in manual of procedures and instructions for cashiers. Cash on hand shall be maintained at the minimum needed to meet normal requirements. In lieu of cash, agencies must use ACH for small purchases, travel advances, and reimbursements to the maximum extent possible. If using ACH is not cost - effective, practicable, or consists with current statutory authority, agencies will use the Government small purchase card or third party draft.

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All other cash held outside Treasure:- All public moneys must be deposited to the treasurys general account such funds include those held in escrow, sized in connection with law enforcement activities, deposited in court, obtained as a result of an agencys regulatory enforcement authority, and the like. Cash Management Performance: - To ensure effective cash management, the job elements of agency personal responsible for receipts and disbursements should include each management as critical performance measurements. Cash Management Reviews: - An agency is responsible for monitoring efficiency, effectiveness, and profitability in its cash management practices. The monitoring includes a methodology to ensure that an agency review is completed for receipt and disbursements. The review will -Determine if an agency is collecting and disbursing funds by EFT. Determine if an agency is billing, collecting and depositing in a timely manner. Determine if an agency is disbursements according to the prompt payment. Document agency cash flows to include all collections and disbursements. Determine whether an opportunity exists to implement a better mechanism on process, or upgrade an existing mechanism or process. Agencies may be required to perform a comprehensive cash management review every 5 years, the first of such reviews having been performed in 1986. FMS will notify agencies when reviews are scheduled and provide detailed information to the agencies on the process.

39

The Standard formula for measuring interest savings based on benefit days is as follows:Cash follow Amount x Benefit x Current value = Interest 250 (Business Days) Days of Funds Rate savings. Warning Letter: - When FMS has determined that an agency is at fault and may not implement an initiate by the scheduled implementation date, a warning letter will be sent to the designated cash management official. The warning letter will indicate an FMS contact with whom to discuss possible solutions or alternative courses of action. For collection initivatives, the warning letter will also contain

Identification of the initiative and scheduled implementation date. A statement that the implementation scheduled of the initiative is in jeopardy and the basis for this determination. The amount that will be charged based on proposed savings associated with the initiative, if final implementation date is missed and method of calculating charges.

FMSs authority to impose charges. Agencys appropriation to be charged. Approval of Requests for Funds: - The project Selection and approval committee will evaluate all requests and select appropriate projects for funding. The disbursements of moneys from the CMIF to an agency will be made under the authority of the Economy Act (31 U.S.C. 1535). Upon approval, the committee will authorize the transfer of the total amount of approved funds to the project agency or will arrange funding on reimbursable basis. Money will be procedures.
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ADVANTAGES OF CASH MANAGEMENT

ADVANTAGES Cash management service is a flexible, low risk cash product that will ensure your peace of mind and ease of settlement. With real account balances and transaction history, you will know your cash positions are at all time. BENEFITS Settlement of securities transactions. Direct crediting of salary, dividends and other income. ATM and EFTPOS access. Electronic bill payment. Funds transfers to other financial instruction. Online access.

As the demand to move from a thick client to a thin client system increased among corporate clients, and the advantages of doing so were somewhat obvious 2, no corporate or small business wanted to lose functionality in the bargain. Therefore, it was natural to expect that customer's would wanted to have and retain every bit of functionality around the traditional services of collection payment and reporting the main features typically through web based each management can be classified into. Payment management, liquidity management, electronic collection and information reporting, other features such as single sign on and billing engine complete the offering. Interfaces with various payment systems,
41

different services associated with fund transfers (stop payment, cheques imaging, positive pay, retail and corporate lockbox facility, etc.) are all considered pass today by corporate clients. Increasingly, customer's are demanding cross border settlements and integration with mainline treasury functions. Large multinational corporate need multi location collaborative

environments, given the globle nature of their operations. This is especially true for companies with regional treasury centers or the ones operating out of shared services centers, where transactions are initiated in one location and exception approvals are done elsewhere. By web - enabling their cash management services, banks are able to offer them operational flexibility. An obvious advantage that corporate customers want to derive in their adoption of internet based systems is the efficient management of funds and risk management. Corporate treasury are highly conscious of carrying idle cash and want to do everything possible too make judicious use of the funds available. This necessitates the integration between the cash management system deployed within the organization, and the general ledger, accounts receivables and account payables system within the company. The more seamless the integration between these systems, the more timely and accurate will be the reporting function. Benefits From a Bank's Point of view: Just as in the cash of corporate clients, banks also want to move to web based solutions but not at the expense of the functionality. Large corporate usually concentrate their business with two banks and use a third alternate bank for specially products. Creating customers "stickiness" through " one
42

stop- shop" features such as providing consolidated information, can be very rewarding for banks. As banks become more familiar with technological advantages, they too have become more demanding of their vendors. the crux lies in leveraging technologies without compromising on the functionality available . The requirement is to make available tools and services that make the task of the user much easier. There are several new technology features that are demanded by the banks from a web - based cash management systems vendor. Single sign on - integrated information reporting from various back end system such as treasury, cash management, commercial loans, trade finance, etc. Segmentation of customer- traditionally in the retail area, but now increasingly being used to understand and cater to the needs of the corporate and business banking segments. Integration with multiple channels of delivery, as we move into an era of possibly making all functions available to customers across all touch - points and, Real - time reporting and others. Banks, to a certain extent, achieved the above benefits by moving their system from PC banking thick - client solution to web - based business e banking solution. Banks everywhere have been criticized for only seeing a part of the client relationship picture. A fully fledged offering in the form of web based cash management also helps banks to increase fee - based income through value added offering
43

and segment customers, through adjustment of the offering base. On the cost side, automatic entry and STP reduce cost. Centralized handling and consolidations help the banks to scale up without significantly increasing headcount. Web - based cash management, the direct channels for customers to request payment and collection processing, forced the banks to decouple the back - end payment system from their operational system and use web service to connect to the central payment hub. Quickly, banks realized that these web services, designed initially for their cash management system, can be used for multiple operational front - end system such as customer relationship and branch banking.

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OBJECTIVES OF STUDY
A comparative analysis of various cash related function (cash management) in BHARAT SAnchar Nigam Limited. The larges telecom company in India. The project also enlightmens the various day to day activities like operations and collection o cash in the company. And proide budget for all branches and maintain their cash as well as fund flows. Comparative study of cash management service of various banks. Focusing of cash management to know now BSNL meet the payments schedule and to minimize funds committed to cash balance. To study present system of the company and its operations To understand their requirement in terms of functional & operation to understand how decision are made budgeting and what kind o decision problem can be face. To understand the proper role of manager for decision making. The specific objectives are a follows1 ) To analyze whether past transaction and budget has any association or influence in future. 2) To idenify differences inthe comapny's cash book and bank statement find out the error and rectifying it.

45

RESEARCH METHODOLOGY
Bharat Sanchar Nigam Ltd was incorporated in October, 2000, it is world's 7th largest Telecommunications company providing comprehensive range of telecom services in India. BSNL has installed quality telecom network in the country and now focusing on improving it, expanding the network, introducing new telecom services and winning customer's confidence. BSNL is the only services provider, making focused efforts and planned initiatives to bridge the Rural Urban Digital ICT sector. In fact there is no telecom operator in the country to beat its reach with its wide network giving services in every nook and corner of the country and operators across India except Delhi & Mumbai. BSNL serves its customers with its wide bouquet of telecom services. BSNL is numerous operators of India in all services in its licenses area. The company offers vide ranging and most transparent tariff scheme designed to suite every customer. Scaling new highest of success, the present turnover of BSNL is more than Rs. 3,51,820 million with net profit to the tune of Rs. 99,390 million for last financial year. My work is related towards the cash department under the heading cash management in BSNL. I, being a finance student, find is a nice place to start my work. I found the project is worth enough to enter in this sector. As per I have learned that in today world it works in a very impulsive way specially in the telecom industry is where you will find it everywhere. This is what a finance student will dream to do. Every big or small firm is trying to its level best to get as much it can get from the market. competition is what brings the feel of work. the major competitors of BSNL in the market are :
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BHARTI'S AIRTEL RELIANCE INFOCOMM VODAFONE ADITYA BIRLA'S IDEA TATA TELERVICE (INDICOM) MTNL Some small players are also entering into the market. For continuous growth new financial strategies are being formulated from time. I am trying my level best to get into all activities that are possibly liked to the project to increase my knowledge and experience. My project is basically deals with the various cash and banking operation in BSNL. As BSNL is a very large firm so I was to see and study the various financial techniques adopted by the company epically in cash management field. The project deals with a comparative analysis of various banking and cash related function (cash management) in Bharat Sanchar Nigam Ltd, the largest telecom company in India. The project also enlightens the various day to day activities like operation and collection of cash in the company. And provide budget for all branches and maintain their cash as well as fund flows. Cash management is a term for certain services offered primarily to large business customer. It may be used to discussed all banks accounts provide to business of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting and automated clearing house facilities. This project deals with the comprehensive study of different departments of BSNL basically focus on banking and cash. The principal learning of the project is how the fund manager entire day task like
47

operation, collection and making budget for the company. the project also give me opportunities to closely work with fund manager and handling some challenging responsibilities and various banking operation, like reconciliation, analysis of bank statement, departments cash book and rectification of error, In this project, proper performance measurement will be taken which will involve recognition of both, the banking and the cash section. After gathered information about BSNL from various sources like internet and intranet my study will proceed towards the survey to different departments departments. (I) Period of study (A) For analysis of bank company's transaction I use last three financial year data. (B) For comparison based - the report covers data for one financial year. (II) Data collection and sampling To conduct this project, the data for the report like bank statement cash book, budgeting manual will be collected from secondary the data relating schemes are collected from company's website and other search engines such as Google and also from concerned bank. (III) Data collection- The analysis of the survey is based on primary and secondary sources of information as maintained above. The primary data is used to draw some inferences regarding various sections is BSNL and then respective work. The secondary data help to observe various function under
48

like banking,

cash,

account,

marketing,

and finance

cash and banking in BSNL. Closely worked with fund manager and analyzing challenging task like budgeting, various banking operations, reconciliation etc. The project is divided into various parts: 1 In the first part the concept of banking and related terms will be deal with. 2 In the secondary part the comparative analysis of cash management policy of BSNL which consist of : preparation of cash book and bank book. Analysis of Trading account, profit and loss account and balance sheet. Analysis of Telecom revenue How the collection and operation account manage Making budget for the company Account Reconcilement Services: Since balancing a checkbook can be a difficult for a very large business like BSNL, since it issue so many cheques it can take a lot of human monitoring to understand which cheques have not cleared and what the company's true balances. To get around this, banks have developed a system which allows BSNL to upload a list of all the cheques that they issue on a daily basis, so that at the end of the month the bank statement will slow not only which cheques have cleared, but also which have not. and recently, banks have used this system to prevent cheques from being gradually cashed if they are not on the list, this process is also known as positive pay.
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Balance Reporting Services Company manages their cash balances usually subscribe to secure web - based reporting of their amount and transaction information at their lead bank. They include information on cash position as well as 'float' (e.g. cheques in the process of collection ). finally, they offer transaction specific details on all forms of payment activity, including, deposits, cheques. Controlled Disbursement :- This is another activity perform by the company offered by banks under cash management services. The providers a daily report, typically early in the day, that providers the amount to disbursements that would be charged to the company's account This early knowledge of daily funds requirement allows the company to invest any surplus in intraday investment opportunities, typically money market. This is different from delayed disbursements, were payments are issues are remote branch of a banks and customers is able to delay the payment due to increased to float time. With the fast time changing time, organization to contribute to the service industry need to be upgraded with the approach for providing the best of the service. The primary object of the project is to the study of banking and cash related studies in BSNL. To identify the cash need for various departments of BSNL Study of cash management policy of BSNL includes. Comparative study of cash management services of various banks specially Punjab National bank and State bank of India. Focusing of cash management to know the how BSNL meet the payment schedule and to minimize fund committed to cash balance. To study present system of the company and its operation. To understand their requirement in terms of functional and operational.
50

To understand how discuss are made during budgeting and what kind of designs of problem can be face. To understand the proper role of manager for decision making. The specific objectives are as followsi) To analyze whether past transaction and budget has any association or influence in future ii) To identify different in the company's cash book and bank statement find out the early and rectifying it; iii) To compare the performance on early bases by introducing different changes in budget. iv) After gather information about BSNL from various sources like internet and internet my study will processed towards the survey to different departments like banking, cash, account, marketing and finance departments.

51

Limitations of the Study

While working on the project following limitations are experienced.

Obstacle in data collection All the financial data pertaining to the organization can not be disclosed to a summer trainee Limited information may be provide Lack of expertise being a trainee in analyzing data Difficult of excess data of other companies and securities to conduct comparative study Though every care is taken to collect data, information were found missing for one or two months Since huge volume of data are to be analyzed only a few selected scheme which ensured data availability for the period taken is used.

52

RESEARCH FINDINGS
The above ratio for the company is coming out 0.69 which is not so high therefore the company is not used its fixed assets properly. This is one of the most important profitability ratio is indicated how effectively the capital employed in the business is used. In the case of BSNL the ratio is 37.64% the shows the earning capacity of the net assets of the business. The shows the relationship between the internal and internal equity that is both and short term funds. The ratio BSNL Is 5.67:1 It shows that the external equity of the company is approx 5 times of internal equity. The ratio shows the relationship between long term funds that is share holders funds plus long term loans and fixed assets. the ratio indicated long term financial soundness of the business. As the ideal ratio should be more than one for BSNL the fixed assets ratio is 1.46 the shows that the company has more long term funds and financially sounds. This ratio shows short terms financial soundness of the company. The ideal current ratio should be around 2:1 In the case of BSNL it is 3.15. we shows that company is able to meet short term obligation.

53

ANALYSIS AND INTERPRETATION

Cash flows is a term that refers to the amount of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. Measurement of cash flows can be used: To evaluate the statement of performance of a business or project. To determine problems with liquidity. Being profitable does not necessarily mean being liquid. A can fail because of a shortage of cash, even while profitable. To generate project rate of returns. The time of cash flows into and out of projects are used as inputs to financial models such as internal rate of return, and net present value. To examine income or growth of a business when it is believed that accrual accounting concept do not represent economic realities. Alternatively, cash flow can be used to validate the net income generated by accrual accounting. Cash flows in BSNL can be classified into: Operation cash flows: Cash received or expended as a result of the companys core business activities. Investment cash flows: Cash received or expended through capital expenditure, investments or acquisitions. Financing cash flows: Cash received or expended as a result of financial activities, such as interests and dividends.

54

All three together - the net cash flow - are necessary to reconcile the beginning cash balance to the ending cash balance. Cash flows after expenditures affecting payments. I can draw downs or equity injections, that are just shifting of capital but no expenditure as such, are not considered in the net cash flow.

55

Benefits reap by BSNL by using cash flow: The cash flow statement is one of the four main financial statements of a company. The cash flow statement can be examined to determine the shorttime sustainability of a company. If cash is increasing (and operational cash flow is positive), then a company will often be deemed to be healthy in the short - term. Increasing or stable cash balances suggest that a company is able to meet its cash needs, and remain solvent. This information cannot always be seen in the income statement or the balance sheet of a company. For instance, a company may be generating profit, but still have difficulty in remaining solvent. The cash flow statement breaks the sources of cash generation into three sections: Operational cash flows, investing, and financing. This breakdown allows the user of financial statement to determine where the company is deriving its cash for operations. For example, a company may be nationally profitable but generating little operational cash (as may be the case for a company that barters its product rather than selling for cash). In such a case, the company may be deriving additional operating cash by issuing shares, or raising additional debt finance. Companies that have announced significant write downs of assets, particularly goodwill, may have substantially higher cash flows than the announced earning would indicate. Strong cash flow is one of the most attractive aspects of the cell phone business, allowing operators like BSNL to return money to shareholders even as they rack up huge paper losses.

56

In certain cases, cash flows statement may allow careful analysts to detect problems that would not be evident from the other financial statement alone. For example, world com committed an accounting fraud that was discovered in 2002; the fraud consisted primarily of treating ongoing expenses as capital investments, thereby fraudulently boosting net income. Use of one measure of cash flow would potentially have detected that there was no change in overall cash flow. Cash flow statements facilitate decision making by providing a basis for judgments concerning the profitability, financial condition, and financial management of a company. The cash cycle (also known as the operating cycle or the earnings cycle ) in BSNL is the series of transactions or economic events in a given company by : Cash is converted into goods and services. Goods and services are sold to the customers like recharge coupons, sim card.ITC card, etc. Cash is collected from customers by means of telephone, mobile, internet bills etc.

57

CASH FLOW ANALYSIS OF BSNL

The cash flow statement is useful to managers, lenders, and investors because it translates the earning reported on the income statement-which are subject to reporting regulations and accounting decisions - into a simple summary of how much cash the company has generated during the period in question. Under the circle office of BSNL Dehradun the main sub units are BSNL Dehradun BSNL Rishikesh BSNL Haridwar BSNL Mussorie The circle office made budget as well as cash flow statement for the whole Uttaranchal circle. All the transaction as well as collection is done by Punjab National Bank main branch.

58

TABLE - 3 CASH FLOW STATEMENT FOR THE MONT OF JANUARY 2008 PN B Name of SSA/PAU Sr. No. 1 1 Name of the station of bank where collection account is maintained 2 DDN 3713002100315541 3 OB Cash (at the he beginning of day Collections of the day Total Cash remitted bank Closing cash balance OB Cash (at the beginning of day Collections of the day Total Cash remitted
59

the

he

4/1/08

25/1/08

4 99119

7 221478

Last working day date 31/1/08 8 725713

107530 4 117442 3 111375 to 2 60671 0

656123 3 678271 1 605699 8 725713 0

3396058 4121771 464925 56846 0

Rs 3714002100118468

297389 100196 9 297389 100196 9 297389 100196 to 9

388350 388350 388350

VKS 08860021000000233

ME 0331002100059796

bank Closing cash balance OB Cash (at the beginning of day Collections of the day Total Cash remitted to bank Closing cash balance OB Cash (at the beginning of day Collections of the day Total Cash remitted to bank Closing cash balance

0 0

0 1141

0 946

142356 268176 142356 269317 142356 268371 0 0 946 0

130551 131497 130868 629 0

94293 94293 94293 0

219233 219233 219233 0

159574 159574 159574 0

Uttaranchal circle Dehradun 4/1/08 11/1/08 18/01/0 25/01/08 8 LAST WORKI NG DATE 11/1/08 6-A
662757 17182833

1-A
Cr. Bal available at beginning of the day in bank Cash remittance/amount credited by clearing

2-A
1327054 3855846

3-A
0 7721841

4-A
14545 6424200

5- A
592241 9820786

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TT sent by bank to circle focal point branch Bank charges if any debited in collection a/c Excess credit (+) excess debit by bank (-) Credit closing balance at the end of day. Cr . bal available at begging of day in bank Cash remitted /amount credited by clearing TT sent by bank to circle focal point branch Bank charges if any debited in collection a/c Excess credit (+) excess debit by bank (-) Credit closing balance at the end of day. Cr . bal available at begging of day in bank Cash remitted /amount credited by clearing TT sent by bank to circle focal point branch Bank charges if any debited in collection a/c Excess credit (+) excess debit by bank (-) Credit closing balance at the end of day. Cr . bal available at begging of day in bank Cash remitted /amount credited by clearing TT sent by bank to circle focal point branch Bank charges if any debited in collection a/c Excess credit (+) excess debit by bank (-) Credit closing balance at the end of day.

5182375 525 0 0 272299 298367 513000 0 0 57666 0 142356 142356 0 0 0 0 94631 94631 0 0 0

7707106 190 0 14545 57666 567126 550000 0 0 74792 0 291691 291691 390 0 0 0 125909 125909 0 0 0

5846009 495 0 592241 74792 361952 335000 0 0 101744 0 157809 157809 135 0 0 0 43129 43129 0 0 0

9749925 345 0 662757 101744 1130656 1230000 0 0 2400 0 270348 270348 0 0 0 0 219233 219233 0 0 0

141 1540 0 3660878 2400 828762 830000 0 0 1162 0 130868 130868 0 0 0 0 159574 159574 0 0 0

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FUND FLOW ANALYSIS

Fund flow statement depicts the sources where from funds during the current year as compare to the previous year have been received and to allow uses these funds have been applied. The terms funds as referred in the fund flow statements means working capital which is the access of current assets over the current liabilities. It also shows the inflow and outflow funds in BSNL. It reveals the inflow of additional funds during the current year or month as compare to the previous year of month and also utilization of fund. Since BSNL deals with basic phone, mobile, internet etc. therefore the main sources of funds for a company collection of cash from various sources like billing, internet charges etc. which act as cash inflow for the company. On the other hand the company also deals with operations we shows that payment of current liabilities, managing of working capital, Loan or mortgages, purchases of fixed assets, payment of interests, taxes etc. The following data shows the Fund flow of BSNL circle for the month of January, 2008.

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Revenue generated

Working Expenses

telecom Rs.61433303.00 Telegraph Rs. 25924.00 Internet &ITC card Rs. 2115283.00 Misc Rs. 819157.00 TOTAL Rs. 64393667.00 Electric and water charges Rs. 385206.00 Building Rents Rs. 475677.00 Wages Rs. 1002358.00 Marketing Exp. Rs. 1038462.00 Incl. Advertisement & conference Rs. 860158.00 Vehicle running charges Rs. 1160803.00 Police Escort charges Rs. 4519434.00 Security Guards Bank & legal charges Rs. 209294.00 Traveling Exp. Rs. 4463913.00 Admn. Charges Rs. 652464.00 TOTAL Rs. 14767769.00 Rs. 49962.00 Rs. 164497.00 Rs. 5970458.00 RS. 1657894.00 Rs. 1512144.00 Rs. 885853.00 Rs. 42685.00 Rs. 2746413.00 Rs.

Maintenance Expenses Repair of Macinary Expenditure on service Construction of Tower Repairing of Building Maintenance of cables Interconnecting charges General expenses Reparing& maintance of Sub units ` TOTAL 13030086.00

Therefore total working expenses and maintenance is = 167769 + 13030086 = 27797855.00 Therefore fund flow percentage ration = Total of working expenses and maintenance = =
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Total revenue 27797855.00 64393667.00 43.16%

Standard ratio given by the BSNL head office is 30% but for Uttaranchal circle the ratio is coming out 43.16% we shows that the cost incurred in working expenses and maintenance a hire then the revenue received.

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BANK RECONCILITION
Account Reconciliation Service:- Since balancing a checkbook can be a difficult process for a very large business like BSNL, since it issues so many cheques it can take a lot of human monitoring to understand which cheques have not cleared and what the company's true balance is. to get around this, banks have developed a system which allows BSNL to upload a list of all the cheques that they issue on a daily basis, so that at the end of the month the bank statement will show not only which checques have cleared, but also which have not. And recently, banks have used this system to prevent cheques from fraudulently cashed if they are not on the list, this process is also known as positive pay. TABLE- 5 Review of Bank Reconciliation for the month of January 2008 COLLECTION ACCOUNT Name of circle SSA GMTD DEHRADUN PUNJAB NATIONAL BANK Name of the Total Add Add Total col. Deduct Dedu balance as SSA/PAU balance bank other (3+4+5) cheques ct per all as per all charges s deposited other' statement bank not (spec but not s col 6 book included ify) cleared (7+8) in CBBS by bank 2 3 4 5 6 7 8 9 DEHRADUN 31072845 0 0 31072845 2944108 0 150607.00 8.77 RISHIKESH 0 0 0 0 30205.00 0 100945.00 VIKAS 0 0 0 0 0.00 0 0.00 NAGAR MUSSOORIE 0 0 0 0 0 0 0 TOTAL 31072845 31072845 2947129 0 1601552.0 3.77 0

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FINANCIAL ANALYSIS OF BSNL

On October 1st , 2000, BSNL was formed by converting service providing functions of erstwhile DOT to provide level playing field to private Telecoms. Since then BSNL has emerged as the 7 the largest Telecom Operating company in the world. BSNL has played major role in spreading telephones to rural areas of the country at affordable rates. as per TRAL reports " 5.3 lakh villages have been provided access to telecom network through VPTS covering 87% of the villages. Most of the VPTs have been provided by BSNL. BSNL has provided 13.59 million (July 2007) rural DELs in the country". By this statement we can judge the important role played by BSNL right from its inception. Income, Expenditure and Profit: Following Tables shows Income, Expenditure and profit figures of BSNL for the 5 years period since its inception. S. NO 1 2 3 4 5 6 7 year Income (Rs.in crores) TO 11699 24681 25892 33918 36090 41142 47683 Expenditure Profit Profit after (Rs.in before Tax Tax crores) (Rs.in (Rs.in crores) crores) 10669 1030 747 20461 25078 27163 29401 35251 34731 4220 8136 6755 6689 6968 6851 6312 1444 5976 10183 12902 16432

1.10.2000 31.3.2001 2002 2003 2004 2005 2006 2007

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Government has set ambitious targets for Telecom PSUs (MTNL & BSNL) For providing a total of 12.50 crore telephones by December 2008 with a targeted market share of 50%.However overall market share of both PSUs, which, was more than 85% at the time BSNL formation, has declined to less than 37% as on date. BSNL has received 100% reimbursement of license fee from 2001-02 to 2003-04, from 2004 - 05, the reimbursement of license fee is restricted to 2/3rd of license fee paid which will be further restricted to 1/3rd in 2005 06. Therefore, reimbursement will be nil. In the last 4 yrs BSNL Has received total license fee refund of Rs. 8,665 crore (BSNL paid Rs 15,498 crore as license fees) as compensation for providing telecom services in rural areas. BSNL will have to pay income tax on 70% of its profits and only 30% would be exempted. In the absence of such exemption from this year, BSNL will have to resort to borrowing resulting in substantial interest burden. BSNL's expenses on staff shot up by 218.75% in the last four years from Rs. 3,848 crore in 2001-02 to Rs. 8,418 crore in 2006 - 07. For the financial year 2006 - 07, expenses on staff are 28.63% of the total expenses. Similarly, the Administration and operational costs have also increased by 199% from Rs 3,995 crore in 2001 - 02 to Rs. 7,951 crore. For the financial year 2006 - 07, expenses on Administration and operation are 27.05% of the total expenses.

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ANALYSIS OF FINANCIAL STATEMENT (Ratio Analysis) Current Assets = Fixed Assets = Net current Assets = Profit = Rs. 55497 Net fixed assets = Companies net worth = Authorized equity capital of Paid up equity capital Revenue = Profit = Rs. 35.92 Million Rs. 697388 Million Rs. 207629 Million Libarty = Rs. 1463 Million Rs. 57934 crore in the form of land & building and cables. Rs. 84948 crore Rs. 10000 corers Rs. 5000 crores Rs. 39715.00 Rs. 39715.00 Net Profit before Interest & tax Net Profit to Fixed assets ratio = Net fixed Assets = 39715 = 0.69 57934

Since the ratio shows relationship of net profit to fixed assets that is whether the fixed assets are being properly used or not. The above ratio for the company is coming out 0.69 which is not so high therefore the company is not used its fixed assets properly. Return on Investment = Net Profit X 100 Capital employed

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= 39715000X100 105125 = 37.64%

This is one of the most important profitability ratio is indicated how effectively the capital employed in the business is used. In the case of BSNL the ratio is 37.64% the shows the earning capacity of the net assets of the business. Total debt ratio = = external equity Internal equity 84948 = 5.671

15000 The shows the relationship between the internal and internal equity that is both and short term funds. The ratio BSNL Is 5.67:1 It shows that the external equity of the company is approx 5 times of internal equity. Fixed Assets Ratio = 84948 = - 1.46% 57934 The ratio shows the relationship between long term funds that is share holders funds plus long term loans and fixed assets. the ratio indicated long term financial soundness of the business. As the ideal ratio should be more than one for BSNL the fixed assets ratio is 1.46 the shows that the company has more long term funds and financially sounds. Current Assets ratio = 207629
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3.58

57394

This ratio shows short terms financial soundness of the company. The ideal current ratio should be around 2:1 In the case of BSNL it is 3.15. we shows that company is able to meet short term obligation.

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SUGGESTIONS
The organization should try to minimize the expenditure and maximize the recovery of the bad bebts from the defaulters. The company should make such policies which help the organization to increase the no. of subscriber but also help organization in reducing the no. of defaulters. The organizations should build the proper communication 0network which makes the subscriber feel satisfied.

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CONCLUSION
There has been much progress made in India, but there is still much more ground to cover. The cash management market in India is at an important threshold, juxtaposing both traditional paper-based medium the preferred choice for the bulk of the small and medium enterprises segment. Significant investment and effort will also be required by large agencies such as the DOT to improve connectivity and network bandwidth, as well as from industry leaders like SBI to transform and revolutionize the paper clearing. The prospect of moving to substantially more electronic cash management services is clearly possible and imminent. This will herald a new era of significantly more cost-effective and streamlined cash management services-well integrated with operational workflows of corporate. Corporate are increasingly demanding more efficient and costeffective services from their banks are responding to these demands more and more comprehensively, which testifies of the considerable importance of cash management revenues to them BSNL as a business entity has performed well so far even though there are some disturbing trends also like big increase on staff cost and administrative expenditure. BSNL's Staff cost is highest among industry barring only to MTNL. While industry average of staff cost is about 4-6 % of AGR same figure for BSNL is more then 25%. Deposit all constrains of the legacy network and large staff overall performance of BSNL is satisfactory. BSNL does not have substantial debt so out go on part of interest payment is small. BSNL's performance in Mobile business is average. BSNL started getting
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more then 10% of its revenue from this segment at the end of year 2005. More efforts are required on this front. Broadband is other promising area where lot of efforts is required. Marketing of services is not up to the mark and so serious step needs to be taken in this area because customer acquisition and retention is of prime importance in the highly volatile telecom market place where high churning and low customer loyally are the characteristics. Despite all this growth in the Telecom m sector the digital divide is continuously increasing. Gap between urban Tale-density and rural Tele-density is widening. Private players are less interested in high investment oriented and low return paying rural India but for BSNL there is a big opportunity here because BSNL already has a large network of more than 36000 Digital Exchanges connected by OFC backbone. BSNL can harp on its existing infrastructure to position itself as formidable player.

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BIBLIOGRAPHY
Online Resources www.bsnl.com (initial information) www.google.com www.hindu.com www.economicstimes.indatimes.com http://en.wikipedia.org/wiki/Bharat_Sancahr_limited Categories: Telecommunication.companies of India Department Resource
Quality procedure manual of payment department of BSNL company Quality procedure manual of collection department of BSNL company Manual of operation department of company Cash manual of BSNL Manual of Budgeting Fund flow & cash Flow Budgeting statement of previous financial year.

Document Use
BSNL Annual Account Companies Cash Book as well as Bank Book

Books
Financial Management by Khan & Jain for Capital Budgeting. Financial Management by I.M Pandey for Cash Management. Company's Guideline book in which various rules & regulations are mention.

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