Summer Training Project Report

O n

“B U D G E T IN G S Y S Y”T E M
f O

Bharat Sanchar Nigam Limited

Gurgaon

IN THE PARTIAL FULFILLMENT OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION
2010-2011

Affiliated to Rajasthan Technical U niversity, Kota

Submitted to: - Submitted by:-

Ms. Alka Swami Arun Pugaliya
Assistant Professor MBA III Sem
Deptt. of Management Studies)

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 CERTIFICATE OF TRAINING

DATE:

To

Training & Placement Officer

College of Engineering & Technology,

Bikaner.

Ref. No. F31-CET/T&P/2010/24

Sub: Summer Practical Training of MBA student

Dear Sir/Madam,

This is to certify that Mr. Arun Pugaliya S/o Mr. Rajesh Pugaliya student of
your college for the session 2009-2011, has been under practical on-the-
training in our organization during 19-6-2010 to 2-8-2010, both days
inclusive.

During the course of his training he has gone through the working of our
Finance Department which includes Budget Allocation & Data Analysis on
already allotted budget (only for him).

His conduct during the training period was quite pleasing and admirable. He
has been found to be work minded, diligent and punctual.

We wish all success in his career.

Thanking you,

Yours faithfully,

For Bharat Sanchar Nigam Limited (Gurgaon)

(Senior Manager)

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 TO WHOM IT MAY CONCERN

This is certified that the Mr. Arun Pugaliya has undertaken the project report
for Bharat Sanchar Nigam Limited (Gurgaon). He had compiled the project
“------------------------------------------- -----Topic ------------------------------------------”
under my guidance.

The best of my knowledge his work is original & he has done an excellent
work. I wish him all the best in his future endeavors.

DATE: __ / __ / ____

MS ALKA SWAMI

FACULTY M.B.A. (CET, BIKANER)

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 DECLARATION BY THE LEARNER

This is to declare that I have carried out this project work myself in partial
fulfillment of the M.B.A. (MASTER OF BUSINEE ADMINISTRATION) degree.

The work is original has not been copied from anywhere else and has not
been submitted to any other university/ institute for an award of any
degree/diploma.

DATE:

PLACE:

SIGNATURE:

ARUN PUGALIYA

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 PREFACE

The project report on BHARAT SANCHAR NIGAM (GURGAON). has been

prepared as per the syllabus prescribed by the COLLEGE OF ENGINEERING &
TECH. BIKANER for MBA students.

Understanding of both practical and theoretical knowledge is essential in this

competitive world. Training is an important aspect of study. The basic aim of
training in management field is to know how to apply management theory in
practice. Practice makes man perfect, therefore practical studies is very
important for management students.

Practical training helps in comprehending theory of subjects taught in class

room. This is more applicable case of management education. My training at
BHARAT SANCHAR NIGAM (GURGAON) has such effect to complete the
knowledge acquiring the subject of financial Strength analysis. Thus, it is our
moral and obligated duty to take this part of our studies with great
enthusiasm and seriousness and gives them due important.

Last but not least, I received all required information and co-operation from
the organizational various departments. I hope that this report will meet the
education department.

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 ACKNOWLEDGEMWNT

I would like to thanks first of all BHARAT SANCHAR NIGAM (GURGAON) for
acting as guide or taking interest in my summer training for partial
completion of M.B.A. (MASTER OF BUSINESS ADMINISTRATION).

I am very grateful to Mr. -------------------------------- (designation) of BHARAT

SANCHAR NIGAM (GURGAON), for his great cooperation in providing me the
practical on the job training with guidance for the career and preparing my
project report.

I also grateful to my guide Ms. ALKA SWAMI (Lecturer) College of Engineering

& Technology, Bikaner, for her co-operation and kind support for preparing
the final project report. I also want to thank my family and some of close
friends who always increase my moral, ambitions and the way of progress.

At the last but not the least I am very much grateful to our M.B.A.
department of College of Engineering & Technology, Bikaner, for giving as a
great opportunity to do Summer Training and thanks to all my friends or well
wishers who gave me valuable time most willingly and suggestions.

In gratitude

Arun Pugaliya

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 TABLE OF CONTENTS

Chapter No. Content Page No.

Chapter – 01 Introduction to the industry 09
Chapter – 02 Introduction to the organization 13
Chapter – 03 Research methodology 22

:- Statement of problems 23

:- research design & methodology 23

:-Sources of data collection 24

:- objective & limitation of study 24

Chapter – 04 Data analysis and findings

:- Introduction 28

:- Concept of budgeting 29

:- meaning of budgeting 31

:- Type of budgeting 32

:- Budgeting process 34

:- budgeting Techniques 35

:- definition of expanses 36

:- revenues strategies 40

:- Accounting Policies 41

:- Financial Statement 42

:- Financial policy of Bsnl 48

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8
Chapter – 5 Data analysis and interpretation 56
Chapter - 6 SWOT Analysis 60
Chapter – 7 Conclusion & Suggestions 61
Chapter – 8 Biography 64

Chapter 1
9
 Introduction to the Industry
(telecommunication industry)

Indian Telecommunication Industry

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The Indian telecommunications has been zooming up the growth curve at a
feverish pace, emerging as one of the key sectors responsible for India's resurgent
economic growth. India is has surpassed US to become the second largest wireless
network in the world with a subscriber base of over 300 million in April, according
to the Telecom Regulatory Authority of India (Trai).

The telecom industry is one of the fastest growing industries in India. India
has nearly 200 million telephone lines making it the third largest network in
the world .With a growth rate of 45%, Indian telecom industry has the highest
growth rate in the world.
History of Indian Telecommunications started in 1851 when the first operational
land lines were laid by the government near Calcutta (seat of British power).
Telephone services were introduced in India in 1881. In 1883 telephone services
were merged with the postal system. Indian Radio Telegraph Company (IRT) was
formed in 1923. After independence in 1947, all the foreign telecommunication
companies were nationalized to form the Posts, Telephone and Telegraph (PTT),
a monopoly run by the government's Ministry of Communications.
In 1986, two wholly government-owned companies were created:

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The Videsh Sanchar Nigam Limited (VSNL) for international telecommunications
and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan
areas.

In 1990s, telecommunications sector benefited from the general opening up of the

economy. Also, examples of telecom revolution in many other countries, which
resulted in better quality of service and lower tariffs, led Indian policy makers to
initiate a change process finally resulting in opening up of telecom services sector
for the private sector. National Telecom Policy (NTP) 1994 was the first attempt
to give a comprehensive roadmap for the Indian telecommunications sector. In
1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was
formed to act as a regulator to facilitate the growth of the telecom sector.

Telecommunication sector in India can be divided into two

segments:-
1. Fixed Service Provider (FSPs),

2. Cellular Services.

Fixed line services consist of basic services, national or domestic long

distance and international long distance services. The state operators (BSNL and
MTNL), account for almost 90 per cent of revenues from basic services. Private
sector services are presently available in selective urban areas, and collectively
account for less than 5 per cent of subscriptions. However, private services focus
on the business/corporate sector, and offer reliable high- end services, such as
leased lines, ISDN, closed user group and videoconferencing.

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Cellular services can be further divided into two categories: Global System for
Mobile Communications (GSM) and Code Division Multiple Access (CDMA).
The GSM sector is dominated by Airtel, Vodafone-Hutch, and Idea Cellular, while
the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of
international and domestic long distance telephony services are the major growth
drivers for cellular industry. Cellular operators get substantial revenue from these
services, and compensate them for reduction in tariffs on airtime, which along with
rental was the main source of revenue. The reduction in tariffs for airtime, national
long distance, international long distance, and handset prices has driven demand.

SERVICE PROVI DERS IN TELECOMMUNICATION

Some of the service providers in telecommunication in India are:-

1. Airtel

2. Vodafone

3. Reliance

4. Bsnl

5. Idea

6. Tata Indicom

7. Aircel

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 Chapter 2

Introduction to the Organization

BSNL (BHARAT SANCHAR NIGAM LIMITED)

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 Bharat Sanchar Nigam Limited ( known as BSNL, India
C o m m u n i c a t i o n s Corporation Limited) is a public sector communications
company in India. It is the India’s largest telecommunication company with
24% market share as on March 31, 2008. Its headquarters are at Bharat
Sanchar Bhawan, H a r i s h Chandra Mathur Lane, Janpath, and New Delhi. It
has the status of Mini-ratna - a s t a t u s a s s i g n e d t o r e p u t e d P u b l i c
Sector companies in India. BSNL is India’s oldest and largest Communication
S e r v i c e Provider ( CSP). Currently BSNL has a customer base of 72.34
million (Basic& Mobile telephony). It has footprints throughout India except
for the metropolitan cities of Mumbai and New Delhi which are managed
by MT NL.
BSNL is numero Uno operator of India in all services in its license area. The
company offers vide ranging & most transparent tariff schemes designed to suite

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every customer. BSNL cellular service, Cell One, has more than 17.8 million
cellular customers, garnering 24 percent of all mobile users as its subscribers. That
means that almost every fourth mobile user in the country has a BSNL connection.
In basic services, BSNL is miles ahead of its rivals, with 35.1 million Basic Phone
subscribers i.e. 85 per cent share of the subscriber base and 92 percent share in
revenue terms.
BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet
Customers who access Internet through various modes viz. Dial-up, Leased Line,
DIAS, and Account Less Internet (CLI). BSNL has been adjudged as the
NUMBER ONE ISP in the country.
BSNL has set up a world class multi-gigabit, multi-protocol convergent IP
infrastructure that provides convergent services like voice, data and video through
the same Backbone and Broadband Access Network. At present there are 0.6
million Data One broadband customers.
The company has vast experience in Planning, Installation, network integration and
Maintenance of Switching & Transmission Networks and also has a world class
ISO 9000 certified Telecom Training Institute.
Scaling new heights of success, the present turnover of BSNL is more than
Rs.351,820 million (US $ 8 billion) with net profit to the tune of Rs.99,390 million
(US $ 2.26 billion) for last financial year. The infrastructure asset on telephone
alone is worth about Rs.630, 000 million (US $ 14.37 billion).
The turnover, nationwide coverage, reach, comprehensive range of telecom
services and the desire to excel has made BSNL the No. 1 Telecom Company of
India.

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 BSNL

Type State-owned

Industry Telecommunications

Founded 19th century, incorporated

2000

Headquarters New Delhi, India

Key people Gopal Das

(Chairman) & (MD)

Products Wireless
Telephone
Internet
Television

Revenue ▼ US$ 7.03 billion (2009)[1]

Owner(s) Government of India

Employees 357,000 – March 31, 2009[2]

Website Bsnl.co.in

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VISION

BSNL's Vision is to become the largest Telecom Service Provider in Asia. Its
Mission is to provide world class, state-of-art technology telecom services to
its customers on demand at competitive prices and world class telecom
infrastructure in its area of operation and contribute to the growth of India's
economy.

Become a total solution provider company and to provide world class telecom
services at affordable prices.
Become a global telecom company and to find a place in the ‘Fortune 500’
companies.
 To become the largest telecom Service Provider in Asia
 To remain market leader in providing world class Telecom and IT related
services at affordable prices and to become a global player.

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.
Enter into and expand new services viz. Long distance, Cellular mobile, W-
CDMA, Internet / Broadband and ‘IN’ – services and development of telecom
software. Become the largest provider of private networks and leased lines.
Venture into other areas in India and abroad on the strength of our core
competency.

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OBJECTIVES

BSNL's Objectives are to be Lead Telecom Services Provider, provide quality

and reliable fixed telecom service to our customer and increase customer's
confidence, provide mobile telephone service of high quality and become the
No. 1 GSM operator in its area of operation, provide point of interconnection
to other service provider as per their requirement promptly and facilitate
Research & Development activity in the country. BSNL also has the objective
to contribute towards National Plan Target of 500 million subscriber base for
India by 2010, Broadband customers base of 20 million in India by 2010 as
per Broadband Policy 2004, providing telephone connection in villages as per
government policy and Implementation of Triple play as a regular commercial
proposition.

 To be the Lead Telecom Services Provider.

 To provide quality and reliable fixed telecom service to our customer and
thereby 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.

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MAIN SERVICES PROVIDED BY BSNL

BSNL Provides almost every telecome service, however following are the
main telecome services being provided by BSNL in India.

Universal Telecome Services: - Fixed wire line services and wireless in local
loop (WLL) using CDMA Technology called B-fone and Tarang respectively.
BSNL is a domical operator in fixed line. As on December 31, 2007, BSNL had
81% market share of fixed line.

Cell One

BSNL Mobile

Ex-cel

Pre-Paid Mobile

Cellular Mobile Telephone Services: - Bsnl is a major provider of cellular

mobile telephone services using GSM platform under brand name Cellone.
Prepaid cellular services of Bsnl are known as Excel as on march31, 2007 Bsnl
had 17% share of mobile telephony in the country.

BSNL Broadband

BSNL has launched its broadband services under brand name “BSNL
BROADBAND “on 14-01-05. This offers High Speed Internet Access with
speed ranging from 256 Kbps to 8 Mbps. Ever since its inception BSNL is
continuously expanding its broadband network in response to ever growing
demand of broadband service throughout India. Present customer base is 3.56
million, with equipped capacity of 6.1 million. BSNL Broadband service is
available in more than 3800 cities & 83000 villages.

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 The services provided are:-
High Speed Internet Connectivity (up to 8
Mbps)
Band width on Demand (planned)
Virtual Private Network (VPN) service over broadband

Dial VPN services to MPLS VPN customers)

Games on Demand Service
Video tutoring service
VOIP
Video Surveillance service
Entertainment portal.

Internet: - BSNL is providing internet as dialup connection (sancharnet) as

prepaid,(Netone) as postpaid and ADSL-Broadband. Bsnl has around 50% market
share broadband in india.bsnl has planned aggressive role out in broadband for
current financial year.

Intelligent Network (IN):- BSNL is providing IN services like Tele-voting,

Toll- free calling, Premium calling etc..

BSNL Land line: - BSNL is the largest telecom operator in India and is known
to everybody for basic Telephony Services for over 100 years. Presently the
plain old, Countryside telephone service is being provided through 32,00
electronic exchanges, 326 Digital Trunk Automatic Exchange(TAX),
Digitalized public switched telephone Network(PSTN) all interlinked by over
2.4 lakh km of optical fibre cable.

BSNL’s Latest Plans – 3G services & More

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BSNL has awarded the contract to leading telecom equipment maker Ericsson &
Nokia Siemens network for upgrading its technical services.

The high bandwidth of Nokia Siemens Networks' will allow BSNL to deliver high
data and triple-play intensive services such as Video on Demand, Video Multicast,
IPTV, Video Conferencing, and VPN to its many customers.

As part of the contract, Nokia Siemens Networks will deploy its Gigabit Ethernet-
capable IP DSLAMs Surpass hiX5625 (Digital Subscriber Line Access
Multiplexers) and chassis-based access switch (Surpass hiD6615). The company
will also supply end-user devices to enable BSNL provide speeds of up to 24Mbps
for ADSL2+ subscribers over its existing Copper infrastructure. Nokia Siemens
Networks provides a comprehensive portfolio of wireline
and wireless Broadband solutions including xDSL, GE, and GPON (Passive
Optical Networks), Carrier Ethernet, HSDPA, and WiMax.

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 Chapter 3

Research M ethodology

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Statement of Problem:

The research is carried on in a proper planned and systematic manner. The

research was particularly based departmental research. We have to move to
finance department and meet people which include their names and contact
numbers given by BSNL training and Planning department. During the
department we have to know about to departmental works by explaining the
working process..

Research Design & Methodology:

Research
The research design of this project is exploratory. Though each research study
has its own specific purpose but the research design of this project on BSNL is
exploratory in nature as the objective is the development of the hypothesis
rather than their testing.
The research designs methods of financial analysis. Through of comparative
budgets i n comparative statement, I am studying on budgets of BSNL of
fy.2010-11.

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

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

Sources of Data Collection:

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

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

Objective of Study:

The main objective of this study is to carry on brief study on “Analysis of

Budget of financial year 2010-11 of BSNL through this I am able to get
the difference of actual and expected expenses of Bsnl.

Oth er objectives of this project are as follows:

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• To identify the various capital and working expenditures of the BSNL with
respect to Annual budget Reports of the BSNL.
• To study the various departments for come to know all condition of BSNL
Jaipur city center.

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

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 financial analysis misleading.

Analysis is only a means and not an end in itself. We has to make

interpretation and draw own conclusion
Different people may interpret the same analysis in different ways.

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Chapter 3
Data Analysis and Findings

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3.1 INTRODUCTION

Financial Management is that managerial activity which is concerned with the

planning and controlling of the firm’s financial resources.
Financial management focuses on finance manager performing various
tasks as Budgeting, Financial Forecasting, Cash Management, Credit
Administration, Investment Analysis , Funds Management, etc. Which
help in the process of decision making?
Financial management includes management of assets and liabilities in the
long run and the short run.
The management of fixed and current assets, however, differs in three
important ways: Firstly, in managing fixed assets, time is very
important; consequently discounting and compounding aspects of time
element play an important role in capital budgeting and a minor one in
the management of current assets. Secondly, the large holdings of
current assets, especially cash, strengthen firm’s liquidity position but it
also reduces its overall profitability. Thirdly, the level of fixed as well as
current assets depends upon the expected sales, but it is only the current
assets, which can be adjusted with sales fluctuation in the short run.
Here, we will be focusing mainly on management of working
expenses and capital expenses.

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Concept of Budgeting
Overview

Brief description

It is a whole process of designing, implementing and operating budget. It Will help

us with an overall organizational budget as well as with a budget for a specific
Project. It includes tools for estimating costs as well as tips for ensuring that our
budgets meet the needs of our project or organization.

Advantages of Budgeting:-

1. A basis for internal audit for regularly evaluating departmental result

2. Scarce resources can be allocated in an optimal way
3. It forces management to plan ahead so that long term goals are achieved
4. Communication and coordination throughout the firm improves
5. Participation in budget has a motivational impact on the work force
6. Areas of efficiency and inefficiency are identified
7. People are made responsible for items of cost and revenue

Problem in Budgeting:-

1. They are perceived by work force as pressure device imposed by

top management
2. Departmental conflict arises because of competition for resources allocation.
3. They make allowance for task to be performed only in relation to volume
rather than time

Who should be involved in budgeting?

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 Budgeting is a difficult and responsible job. An organization’s ability to do
what it has planned to do and to survive financially depends on the budgeting
process. Whoever does the budgeting must:-

 Understand the values, strategy and plans of the organization or project;

 Understand what it means to be cost effective and cost efficient (see

Glossary of Terms.

 Understand what is involved in generating and raising funds.

Where staff is competent to take full responsibility for the financial side of the
organization or project, the following would normally be involved in the budgeting
process:
o The Finance Manager and/or Bookkeeper;
o The Project Manager and/or Director of the organization or
department.
Where staff lacks confidence to do the budgeting, then Board members can be
brought in. Some Boards have a Finance Committee or a Budget Sub Committee. It
is a good idea to have someone on Board with financial skills. S/he can then help
the staff with budgeting.
The budget is the business of everyone in the organization. At the very least, senior
staff should understand the budget, how it has been drawn up, why it is important,
and how to monitor it.

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Meaning of Budget : -
Budget (from old French baguette, purse) is generally a list of all planned
expenses and revenues. It is a plan for saving and spending.

Budget is an integral part of running any business efficiently and effectively. It serves as
a plan of action for managers as well as a point of comparison at the period's end.

A budget is a document that translates plans into money - money that will need
to be spent to get your planned activities done (expenditure) and money that will
need to be generated to cover the costs of getting the work done (income).

It is an estimate, or informed guess, about, what you will need in monetary terms to
do your work.

Why budget?
Why is it important for an organization, project or department to have a budget?

• The budget is an essential management tool. Without a budget, we

are like a pilot navigating in the dark without instruments..

• The budget forces us to be rigorous in thinking through the

implications of our activity planning. There are times when the
realities of the budgeting process force us to rethink our action
plans.

• Used properly, the budget tells us when we will need

certain amounts of money to carry out our activities.

• The budget enables us to monitor our income and expenditure and

identify any problems.

• The budget is a basis for financial accountability and

transparency. When everyone can see how much should have been
spent and received, they can ask informed questions about
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 discrepancies.

• We cannot raise money from donors unless we have a budget.

Donors use the budget as a basis for deciding whether what we are
asking for is reasonable and well-planned.

• Enable the actual financial operation of the business to be measured against

the forecast.

Who Uses Budgets?

Nearly everyone uses budgets in some form. From the household budget to
the multi-billion dollar budgets used in some corporations, budgets are a pretty
universal
However; a company's budget is a bit more involved. Most companies will
start with a master, or static, budget. A static budget is a budget with numbers
based on planned outputs and inputs for each of the firm's divisions. It's the first
part of budgeting, which determines how much a company has and how much it
will spend.

Types of Budget:-
Budgets can be classified according to Time, Function, and Flexibility.

ACCORDING TO TIME:
1. Long Term Budget
2. Short Term Budget
3. Current Budget
4. Rolling budget

ACCORDING TO FUNCTION:
1. Sales Budget
2. Production Budget
3. Cost of Production Budget
4. Purchase Budget

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5. Personnel budget
6. R & D Budget
7. Capital Expenditure Budget
8. Cash Budget
9. Master Budget

ACCORDING TO EFFICIENCY:
1. Fixed Budget
2. Flexible Budget

Some of these are described below:

Sales budget: The sales budget is an estimate of future sales, often broken down
into both units and dollars. It is used to create company sales goals.
Production budget: Product oriented companies create a production budget which
estimates the number of units that must be manufactured to meet the sales goals.
The production budget also estimates the various costs involved with
manufacturing those units, including labor and material.
Cash Flow/Cash budget: The cash flow budget is a prediction of future cash
receipts and expenditures for a particular time period. It usually covers a period in
the short term future. The cash flow budget helps the business determine when
income will be sufficient to cover expenses and when the company will need to
seek outside financing.
Marketing budget: The marketing budget is an estimate of the funds needed for
promotion, advertising, and public relations in order to market the product or
service.
Project budget: The project budget is a prediction of the costs associated with a
particular company project. These costs include labor, materials, and other related
expenses. The project budget is often broken down into specific tasks, with task
budgets assigned to each.
Revenue budget: The Revenue Budget consists of revenue receipts of government
and the expenditure met from these revenues. Tax revenues are made up of taxes
and other duties that the government levies.
Expenditure budget: A budget type which include of spending data items.

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Budgeting Process:-
Budgeting is the formal procedure of
preparing budgets. It involves the following basic
steps:

a. objective determination stage

b. goal determination stages

c. strategy formulation stage

d. budget preparation stage

Objective Determination Stage:-

The first stage is setting the ‘Objectives’ which are defined as the ‘broad and long-
range desired state or position in the future’. They are motivational or directional in
nature and are expressed in Qualitative terms.

Goal Determination Stage:-

The second stage is specifying the goals.
The term goal represents targets, specific in quantitative terms to be achieved in a
specific period of time. The timing of introducing new Products, purchase of new
plant and machinery and expected rate of return are examples of time and quantity
oriented goals.

Strategy Formulation Stage:-

The next step involves laying down the strategies. Strategies denote specific
methods or courses of action to achieve the goals, for instance, promotion of sales
through price reduction or aggressive advertisement and so on.

Budget preparation stage:-

The last stage in which Budgets are actually prepared.

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Budgeting Techniques:-

A large part of budgeting involves personal finance planning. All three of the
following activities are important when creating a budget that you can live
comfortably with, as well as one that helps you prepare for the long term.

1. Zero based budgeting

2. Incremental budgeting
3. Zero sum budgeting

Zero based budgeting - By contrast, in zero-based budgeting, each item in the

budget must be justified starting from the zero-base. The zero based approach is
indifferent to whether the total budget is increasing or decreasing. The advantage
of this approach is that it promotes a more efficient allocation of resources,
requires manager to find more cost effective ways to improve operations and helps
detect inflated budgets. Since everything has to be justified this approach will
obviously be more time consuming.

Incremental Budgeting -This approach uses a budget prepared using a previous

period’s budget or actual performance as a base, with incremental amounts added
for the new budget period. The advantage of this approach is that it is simple and
creates a more stable and consistent environment for managers. However, this
approach encourages spending up to the budget so that the budget is maintained for
the subsequent year, doesn’t respond to changing circumstances and perpetuates
misallocations of resources.

Zero sum budgeting – This approach is used in personal finance to describe the
practice of allocating or budgeting every dollar of income received. With this
approach, if the budget for one item is increased then some other part of the budget
must be adjusted downward so that the total budget remains unchanged.

Monitoring the Budget:-

A flexible budget modifies the budget to the actual level of performance.

Obviously, if the original budget is prepared for say, one thousand units of a
product, but two thousand units are produced, comparing the original budget to the

36
actual volume of output does not provide meaningful information. Accordingly, the
budgeted costs per unit for all variable costs can be used and multiplied by the
actual volume of output to arrive at the flexible change proportionately to the level
of output for the former and to the level of sales for the latter cost. Fixed costs,
such as rent, however, do not normally change with the level of production or
sales. These budgeted costs, therefore, are not adjusted and left intact even though
the volume of sales and output may be different from the originally budgeted
levels.

Ultimately, a good budget is one which not only uses good budgeting techniques
but is also based on a sound knowledge of the business as well as the external
factors that affect it. The budget serves as a planning tool for the organization as a
whole as well as its subunits. It provides a frame of reference against which actual
performance can be compared. It provides a means to determine and investigate
variances. It also assists the company in planning again based on the feedback
received considering the changing conditions. An attainable, fair, and participatory
budget is also a good tool for communication, employee involvement, and
motivation.

Definition of expenses:-
In common usage an expense or expenditure is an outflow of money to another
person or group to pay for an item or service, or for a category of costs.

In accounting, expense has a very specific meaning. It is an outflow of cash or

other valuable assets from a person or company to another person or company.
This outflow of cash is generally one side of a trade for products or services that
have equal or better current or future value to the buyer than to the seller.
Technically, an expense is an event in which an asset is used up or a liability is
incurred. In terms of the accounting equation, expenses reduce owners ‘equity.

The International Accounting Standards Board defines expenses as:-

Decreases in economic benefits during the accounting period in the form of

outflows or depletions of assets or incurrence’s of liabilities that result in decreases
in equity, other than those relating to distributions to equity participants.

37
Bookkeeping of expenses:-
In double-entry bookkeeping, expenses are recorded as a debit to an expense
account (an income statement account) and a credit to either an asset account or a
liability account, which are balance sheet accounts. An expense decreases assets or
increases liabilities. Typical business expenses include salaries, utilities,
depreciation of capital assets, and interest expense for loans. The purchase of a
capital asset such as a building or equipment is not an expense.

EXPENCES INCURRED BY ANY ORGANISATION:_

In any organization there are two types of expenditures
 capital expenses
 working or operating expenditures

Capital Expenses:-
Capital expenses are expenditures creating future benefits. A capital expenditure is
incurred when a business spends money either to buy fixed assets or to add to the
value of an existing fixed asset with a useful life that extends beyond the taxable
year. these expenses are used by a company to acquire or upgrade physical
assets such as equipment, property, or industrial buildings. In accounting, a capital
expenditure is added to an asset account ("capitalized"), thus increasing the asset's
basis.
Funds used by a company to acquire or upgrade physical assets such as property,
industrial buildings or equipment. This type of outlay is made by companies
to maintain or increase the scope of their operations. These expenditures can
include everything from repairing a roof to building a brand new factory.

Included in capital expenditures are amounts spent on:-

• acquiring fixed assets

• fixing problems with an asset that existed prior to acquisition if it results in a
superior fixture

38
 • preparing an asset to be used in business
• restoring property or adapting it to a new or different use
• starting a new business

Operating Expenses:-
Operating expenses is an ongoing cost for running a product, business, or system.
Its counterpart, a capital expenditure is the cost of developing or providing non-
consumable parts for the product or system. For example, the purchase of
a photocopier is the CAPEX, and the annual paper, toner, power and maintenance
cost is the OPEX. For larger systems like businesses, OPEX may also include the
cost of workers and facility expenses such as rent and utilities.

In business, an operating expense is a day-to-day expense such as sales and

administration, or research & development, as opposed to Production, costs, and
pricing. In short, this is the money the business spends in order turn inventory into
throughput. Operating expenses also include depreciation of plants and machinery
which are used in the production process.

Sometimes the term operating expenses is abbreviated as OPEX, particularly in

internal documents or communications about company earnings. The most
common operating expense is employee salaries and benefits, which is often the
largest single expense for a business. Other items that may be included in a list of
expenses are advertising and marketing costs, office supplies, legal and licensing
fees, office utilities and accounting fees, research and development costs and raw
materials.

Operating expenses include:

 accounting expenses
 license fees
 maintenance and repairs, such as snow removal, trash removal, janitorial
service, pest control, and lawn care
 advertising
 office expenses
 supplies

39
  attorney fees and legal fees
 utilities, such as telephone
 insurance
 property management, including a resident manager
 property taxes
 travel and vehicle expenses
 leasing commissions
 salary and wages
 raw materials

Difference between capital expenses and operating expenses:-

Operating expenses Capital expenses

1. Operating expenses as they relate to real
estate are typically the day to day costs
necessary to operate the property to the
intended use
2. Ex. real estate taxes, insurance, utilities,
repairs and maintenance, etc
Capital expenses are for items that
generally have a useful life beyond one
year
Ex. cost to replace roof, re-paint exterior,
re-pave parking area, etc).

Classification of expenses:-

Basically the expenses are classified in two parts.

 1.fixed expenses
 2.variable expenses

Fixed and variable expenses are the two main components of a company's total
overhead expense.

40
 Fixed expenses:-These are those that do not fluctuate with changes in production
activity level or sales volume,

Variable expenses:-Variable costs are those that respond directly and

proportionately to changes in activity level or volume

Difference between Fixed expenses and Variable expenses:-

Fixed expenses
1. These are those expenses which don't
change with change of production rate
and remain fixed up to certain
measurement base criteria.
2. Ex. rent, insurance, dues and
subscriptions, equipment leases,
payments on loans, depreciation,
management salaries, and advertising
Variable expenses
These are those expenses which change
with the change of units of products but
remain fixed relative to units of product.
Ex. raw materials, hourly wages and
commissions, utilities, inventory, office
supplies, and packaging, mailing, and
shipping costs.

Revenues Strategies

The telecom sector is the most competitive sector post liberalization. This has
resulted in a movement from growth based business model that emphasized
growth in numbers to profit-based model where the success is measured by
margins. BSNL as part of the transition has to adopt both cost reduction and
revenue enhancement measures, which would directly impact profitability.
It is evident that there is a declining trend in basic services and there
is stagnation in cellular revenues. Revenue maximization strategies will have two
components, one internal to the organization and the other external. The internal

41
aspect would involve an initiative for change of process, technology,
organizational structure etc. In this context, revenue assurance is the key to
improving the bottom line for BSNL. This is proactive strategy to capture all
revenues due for the services provided. Presently, BSNL generates bills
through different softwares across the zones of operation, which are
disintegrated and provide only basic solutions. The industry standard for
revenue leakage is about 3 to 7% percent of revenue, which in money terms
translates to about Rs.2100 crores for BSNL. Therefore plugging revenue
leakages is just the first and most obvious part of a Revenue Assurance
Initiative. The key concerns for BSNL for effective revenue realization are –

a. The delay in customer billing after activation

b. Time lag between calls generated and billed Scope of fraud
c. Non-availability of uniform database.

Therefore the focus should be on immediate implementation of CDR based

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

Plugging of leakage of revenue.

Formulation of appropriate marketing strategies –

Accounting policies:-

The specific policies and procedures used by a company to prepare its financial
statements. These include any methods, measurement systems and procedures for
presenting disclosures. Accounting policies differ from accounting principles in
that the principles are the rules and the policies are a company's way of adhering to
the rules

Accounting policies in the context of Bsnl:-

Accounting principles are lenient at times, so the policies of a company can be very
important. Looking into a specific company's accounting policies can signal
whether management is conservative or aggressive when reporting earnings. This
should be taken into account by investors when reviewing earnings reports. Also,
outside accountants that are hired to review a company's financial statements
42
should check the company's policies to ensure they conform to accounting
principles.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:-

The financial statements of Bharat Sanchar Nigam Limited (the

“Company” or “BSNL”) are prepared under the historical cost convention adopting
the accrual method of accounting in accordance with Indian Generally Accepted
Accounting Principles and in accordance with the provisions of the Companies
Act, 1956 (the “Act”).

Revenue Recognition

Income from services is accounted for on accrual basis and in conformity with
Accounting Standard– 9 of ICAI. Accordingly,

a) Revenue for all services is recognized when earned and are realizable at the time
of billing. Unbilled revenues from the billing date to the end of the year are
recorded as accrued revenue during the period in which the services are provided.
Provision is made in respect of bills considered to be disputed (by the
management), debts outstanding for more than two years and for debts due for less
than 2 years, to the extent considered necessary by the management.

b) Installation Charges recovered from subscribers at the time of new telephone

connections are recognized as income in the first year of the billing.

c) In terms of the arrangement between Department of Telecommunications

(“DoT”) and the Company, reciprocal services are not being billed or provided for.

d) Sale proceeds of scrap arising from maintenance and project works are taken
into miscellaneous.

e) Income from SIMs, recharge coupons of Mobile, Prepaid Calling Cards, and
Prepaid internet connection cards are treated as income of the year in which the
payment is received since the extent of use of these cards within the financial year
could not be ascertained.

43
f) Wherever there is uncertainty in realization of income, such as liquidated
damages, claims on Government Departments & local authorities etc., these are
recognized on collection basis.

g) The claims on account of reimbursement for provision of infrastructure,

operation and maintenance of VPTs and Rural Household connections receivable
from U.S.O. fund are accounted for as revenue on account of the fact that the claim
for infrastructure cannot be credited to the concerned asset account since the claim
amount could not be segregated asset wise.

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

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

Fixed Assets

1. Fixed assets are carried at cost less depreciation. Cost includes directly
related establishment and other expenses including employee remuneration
and benefits, directly identifiable to the construction or creation of the assets.

2. Expenditure on replacement of assets, equipments, instruments and

rehabilitation works is capitalized if, in the opinion of the management, it
results in enhancement of revenue generating capacity.

3. Assets are capitalized to the extent completion certificates have been

obtained, wherever applicable.
4. The cost of stores and materials at the time of issue to a project, is debited to
CWIP.

5. Apparatus and plants principally consisting of telephone exchanges,

transmission equipments and air conditioning plants etc. are capitalized as
and when an exchange is commissioned and put to use.

6. Cables are capitalized as and when ready for connection to the main system.

7. Intangible assets are stated at cost of acquiring the same less accumulated
Depreciation /amortization.

Depreciation /Amortization

44
Depreciation is provided based on the Written Down Value method at the rates
prescribed in Schedule XIV to the Companies Act, 1956. Assets costing up to Rs.
5000.00 are depreciated fully in the year of purchase. Similarly, partition works
costing up to Rs. 2, 00,000.00 are depreciated fully in the year of construction.
The depreciation on machinery & tools used both for project and maintenance
work is charged to profit and loss account instead of capitalization.
All telephone exchange buildings, administrative offices and captive consumption
assembling premises/workshops are considered as normal building and not as
factory building. Accordingly depreciation is charged uniformly.
Intangible assets such as Entry License Fee for Telecom Service operations are
amortized over the license period (i.e. 20 years) and standalone computer software
applications are amortized over the license period subject to maximum of 10 years
as per straight line method.

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

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

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

Foreign currency transaction

(i) Transactions in foreign currency are recorded at the exchange rate prevailing on
the date of the transaction i.e. on the date of payment or receipt as the case may be.
(ii) All Foreign Currency Liabilities and monetary assets are stated at the exchange
rate prevailing as at the date of Balance Sheet and the difference taken to Profit and
Loss Accounts as Exchange Fluctuation Loss or Gain.

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

45
 Employee’s benefits
a) In respect of employees of DoT who have opted for absorption in the Company,
and employees on deemed deputation from Government, pension contribution is
provided at the applicable rates as per Government Pension Rules, 1972 and FR &
SR. The pension contribution covers the liability on account of gratuity.

b) The provision for gratuity liability in respect of applicable employees has been
made on the basis of actuarial valuation.

c) Company’s contributions towards Employees Provident Fund are accounted for

on accrual basis and are administered by the Provident Fund Commissioner.

d) For employees on deemed deputation from Government, leave salary

contribution is provided. Such leave salary contribution takes care of leave
encashment of such employees. Leave encashment for other employees has been
provided for outstanding leave on estimated basis.

e) Medical reimbursements and other personal claim bills of existing/retired

employees are accounted for in the current year itself which have been received
before the cutoff date prescribed for finalization of accounts in the concerned
primary accounting unit.

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

Prior period items

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

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

46
forward to the extent there is a virtual certainty that such deferred tax assets can be
realized.

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

Earnings per share

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

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

Expenditure management: - Economy Measures planned by Bsnl for

FY 2010-11:-

With keeping in mind a view of current fiscal situation and then arising out of
insufficient rain in large part of country, and consequent pressure on government’s
resources, bsnl issued further guidelines :-)

1. CUT IN NON PLAN EXPENDITURE:-

47
  For the year end 2010-11 every department shall affect a mandatory cutoff
of 10 %in non plan expenditure under the following head.

a. Domestic and foreign travel expenses

b. Publications
c. Professional services
d. Advertising and publicity
e. Office expenses
f. Pol
g. Other administrative expenses

 No increase in budgetary allocations under the heads of non plan

expenditure, particularly where cuts are now being imposed, will be allowed
at re stage, except under very extraordinary and compelling circumstances.

2. Economy measures:-
The following measures for fiscal prudence and economy will also come in force
with immediate effect:-

1. Seminar and Conference:-

The prescribed expenditure ceilings for holding seminars, conference, workshops
etc should be enforced and a 10% cut on the budgetary allocation for seminar and
conferences shall be effected.
There will be a complete ban on holding of meetings and conference at five star
hotels.

2. Domestic and foreign travel

No travel on government account by air will take place by first class.
All domestic travel on government account by air will take place only by economy
class, irrespective of entitlement..
Where travel is unavoidable, it will be ensured that officers of the appropriate
level dealing with the subject are sponsored instead of those at higher levels. The
size of delegation and the duration of visit will be kept to the absolute minimum.

3. Purchase of vehicles.
Purchase of vehicles, except for operational requirements of the defense forces,
central Para military forces and security related organizations will not be permitted.

48
Finance Policy of BSNL
Standards of Financial Proprieties

Ever officer incurring or authorizing expenditure from public funds should be

guided by high standards of financial propriety. Every officer should also
enforce financial order and strict economy at every step and see that all relevant
financial rules and regulations are observed, by his own officer and by
subordinates disbursing officers. Among the principles on which emphasis is
generally laid are the following:

1. Every officer is expected to exercise the same vigilance in respect of

expenditure incurred from public moneys as a person of ordinary prudence
would exercise in respect of expenditure of his own money.
2. the expenditure should be prima-facie more that the occasion demands.
3. no authority should exercise its powers of sanctioning expenditure to pass an
order which be directly or indirectly to its own advantages.
4. Expenditure from public moneys should not be incurred for benefit of a
person or section of the people unless
4.1 A claim for the amounts could be enforce in a court of law, or
4.2 The expenditure is in pursuance of a recognized policy or custom.
5. The amount of allowances granted to meet expenditure of a particular type
should be so regulated that the allowances are not on the whole a source of profit
to the recipients.
6. The responsibility and accountability of every authority delegated with
financial powers to procure any item or service on Government account is total
and indivisible. Government expects that the authority a concerned will have
the public interest uppermost in its mind while making a procurement decision.
The responsibility is not discharged merely by the selection of the cheapest offer.

7. Whenever called for, the concerned authority must place on record in

precise terms, the considerations which weighed with it while talking the
procurement decision.

49
Expenses incurred by BSNL:-

Allotment of working expenditure budget for FY 2010-11 based on

actual expenditure in 2009-10:-

A. Staff expenses Amount in (000)

1. Salary 816879
2. Medical allowances for Employee 57800
3. Wages 1620
4. Overtime allowance 621
5. Leave travel concession 2977
6. Leave salary encashment 32076
7. Uniform 859
8. Staff welfare and amenities 65
9. Food allowance 6989
10. Pension contribution 95147
11. Leave salary contribution 395
12. Employer’s contribution towards EPF 3473
13. Administrative charges on EPF a/c 813
1019714
PART B ADMINISTRATION EXP.
14. Rent of building 5791
15. Rates & Taxes 6720
16. Water charges 208
17 Electricity charges 67129
18 Fuel charges 1249
19 Computer stationary 1447
20. Insurance 43
21. Vehicle running expenses 8059
22. Repair & maintenance 23533
23. Travel expenses 3758
24. Conveyance charges 445
50
25. Printing 2360
26. Stationary 682
27. Postal expenses 6165
28. Bank charges 83
29. Book & periodicals 281
30. Horticulture expenses 7
31. Police escort charges/ security guards 29380
32. General expenses 8259
33. Professional charges 425
34. Meetings 297
35. Lease charges 1567
36. Business promotion& marketing 3351
expenses
37. Advertisement 158
38. Waiting charges 557
39. Commission 28451
Total 199955
Grand Total 1219669

Actual Working expenditure in 2009-10:-

A. Staff expenses Amount in (000)

1. Salary 818000
2. Medical allowances 57800
3. Wages 1000
4. Overtime allowance 100
5. Leave travel concession 1000
6. Leave salary encashment 31000
7. Uniform 500
8. Staff welfare and amenities 80
9. Food allowance 2000
10. Pension contribution 94000
11. Leave salary contribution 125

51
 12. Employer’s contribution towards EPF 3123
13. Administrative charges on EPF a/c 567
1009295
PART B ADMINISTRATION EXP.
14. Rent of building 4000
15. Rates & Taxes 2125
16. Water charges 125
17 Electricity charges 72000
18 Fuel charges 1435
19 Computer stationary 1500
20. Insurance 43
21. Vehicle running expenses 6578
22. Repair & maintenance 25000
23. Travel expenses 2456
24. Conveyance charges 445
25. Printing 2500
26. Stationary 499
27. Postal expenses 5000
28. Bank charges 83
29. Book & periodicals 100
30. Horticulture expenses 0
31. Police escort charges/ security guards 26789
32. General expenses 6789
33. Professional charges 425
34. Meetings 297
35. Lease charges 456
36. Business promotion& marketing 1245
expenses
37. Advertisement 345
38. Waiting charges 325
39. Commission 23456
Total 184016

52
 Grand Total 1193311

Income (Rs. In lakhs) :-

Excess income booked earlier now reversed (11895) 6438
USO Subsidy 513 8425
Total (11382) 14863

Total expenditure in year end 31st march 2009 (Rs. In lakhs)

Rent, Rates & Taxes 219
Repairs 186
Depreciation 4189
Interest 127
Other services 2811
EXPENDITURE BOOKED EARLIER
NOW REVERSED
Salaries and staff expenses (180)
Power and fuel (2)
Interconnect usage charge (80)
USO towers (44)
Total 7226

Total expenditure in year end 31st march 2008 (Rs. In lakhs)

Rent, Rates & Taxes 193
Repairs (319)
Depreciation 5106
Other services 5098
Interest 175
EXPENDITURE BOOKED EARLIER
NOW REVERSED
Salaries and staff expenses 291
Power and fuel 23
Interconnect usage charges 838
USO Towers Nil
Total 11405
53
Capital expenses:-
Allotment of capital expenditure budget for FY 2009-10 based on actual
expenditure in 2009-10:-
RS.
IN 1000
Head of A/C SERVICE BUILDING A&P CABLE L&W SI TOTAL

LTS 0 3889 4500 15607 6144 30150

CDMA
WILL 0 58802 58802
OFC 9633 14923 24555
GENERAL AREA ADMN
OFF 0 0
STAFF
QRTS 0 0
TOTAL
G.A. 0 70334 19423 15607 6144 113507

LTS 0 8013 5420 6980 20413

CDMA
RURAL AREA WILL 0 14700 14700
OFC 0 59690 59690
TOTAL
RA 0 14700 67703 5420 6980 94804

LTS 0 0 0 0
CDMA
TRIBAL AREA WILL 0 0
OFC 0 0 0
TOTAL
TA 0 0 0 0 0

VAS( BROAD BAND) 0 0 0

TOTAL
VAS 0 0 0 0 0 0

BTY/PP/EWSD/CA/RS/AXE-
10 7053 7053
DSPT/SPV/HUB/SOFTWARE 0

54
 GRAND
TOTAL 0 94087 87126 21027 13124 215364

Actual capital expenditure in 2009-10:-

RS.
IN 1000
Head of A/C SERVICE BUILDING A&P CABLE L&W SI TOTAL

LTS 24 2000 5000 12345 5674 25043

CDMA
WILL 12 45678 45690
OFC 5 9234 11234 20473
GENERAL AR ADMN
OFF 0 0
STAFF
QRTS 10 10
TOTAL
G.A. 51 56912 16234 12345 5674 91216

LTS 10 6578 3456 7000 17044

CDMA
RURAL AREA WILL 0 16000 16000
OFC 0 45000 45000
TOTAL
RA 10 16000 51578 3456 7000 78044

LTS 0 0 0 0
CDMA
TRIBAL AREA WILL 0 0
OFC 0 0 0
TOTAL
TA 0 0 0 0 0

VAS( BROAD BAND) 10 0 10

TOTAL
VAS 0 10 0 0 0 10

BTY/PP/EWSD/CA/RS/AXE-
10 6789 6789
DSPT/SPV/HUB/SOFTWARE 0
GRAND
TOTAL 61 79711 67812 15801 12674 176059

55
RESERVES AND SURPLUS (Rs. In lakh)

Particular As at 31st As at 31st Absolute % change

march march change
2009 2008
Capital reserves
As per last balance sheet 4,040,518
Add : Assets recognized 472
Less : liabilities identified &
Transferred to liabilities 6,480 4,033,566 4,040,518 6,952 017
General reserves
As per last balance sheet 4,63,270
Add : carried from P&L account ------ 4,63,270 4,63,270 ---- ----
Contingency reserves 2,00,000 2,00,000 ---- ----
Surplus : ---- ---- ---- ----
Profit and loss account
As per last balance sheet 28,59,037
Add : carried from P&L
Account 57,485 29,19,522 28,59,037 57,485 2.01

56
 DATA ANALYSIS AND INTERPRETATIONS :-

Allotment of working expenditure budget for FY 2010-11 based on actual

expenditure in 2009-10:-

1200000

1000000

800000
600000 Staff Exp
Administration Exp
400000

200000
0
2010-11 2009-10

INTERPRETATION:-

Staff Expenditure level in the F.Y. 2010-11 was increased by 1.02% and
Administration Expenditure level in the F.Y. 2010-11 was also increased by
7.97%.
Allotment of capital expenditure budget for FY 2009-10 based on actual
expenditure in 2008-09:-

120000

100000

80000

60000 Urban area

rural area
40000

20000

0
2010-11 2009-10

57
INTERPRETATION:-

Urban area expenditure level in the F.Y. 2010-11 was increased by19.63 % and
rural area Expenditure level in the F.Y. 2010-11 was also increased by 17.67%.

Income and Expenditure :-

16000
14000
12000
10000
8000 income
6000 Expenditure
4000
2000
0
2009-10 2008-09

INTERPRETATION:-

Income level in the F.Y. 2009-10 was decreased by 30.5% and expenses In
particular year was decreased by 57.8% based on 2008-09.

RESERVES AND SURPLUS :-

58
INTERPRETATION:-

1. The reserve and surplus has raised from 0.66% from the last year by Rs
50533 lakhs.
2. With 0.17% capital reserve has decreased due to liabilities identified on
2.2 on schedule u.
3. The general reserve contingency reserves remain unchanged from 463270
& 200000 lakhs respectively.
4. Surplus has increased with 2.01% i.e. 57485 lakhs showing operational
and managerial efficiency.

Cash & bank balance (Rs. In lakh)

59
INTERPRETATION:-
Cash & bank level in 2008 to 2009 was decreased by 5.9%. In 2009-2010 income
level was increased by 4.7%. by this interpretation we come to know that income
level growth rate is increased by 10.6%.

INVESTMENT:-

INTERPRETATION:-
Investments in 2009-2010 was increased by 33.33%

60
SWOT Analysis :-

STRENGTHS WEAKNESSES
• Pan-India reach • Non-optimization of network
• Experienced telecom service provider capabilities
• Total telecom service provider • Poor marketing strategy
• Huge Resources (financial & technical • Bureaucratic organizational set up
pool) • Inflexibility in mindset (DOT period
• Huge customer base legacies)
• Most trusted telecom brand • Limited number of value added services
• Transparency in billing • Poor franchisee network
• Legacy of poor service image
• Easy deployment of new services • Huge and aged manpower
• Procedural delays

• Lack of strategic alliances

OPPORTUNITIES THREATS
• Tremendous market growing at 20 lac • Competition from private operators
customers per month • Keeping pace with fast technological
• Untapped broadband services changes
• Untouched international market • Market maturity in basic telephone
• Can capitalize on public sector image to segment
grab government’s ICT initiatives • Manpower churning
• ITEB service markets • Multinational eyeing Indian telecom
market
• Diversification of business to turn-key
projects • Private operators demand for sharing
last mile

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 Chapter 4
Conclusion and Suggestions

According to my survey and calculating the important points are:

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 • Budgeting system of BSNL is good.
• The comparative study o f actual and expected budget depicts that financial
department working good, as expected expenditures are lower than actual.
• Salary of employees is much better.
Conclusion:-
After overhauling the Four years balance sheet of BSNL and all condition, I
have to reach this conclusion that;
 Working process of BSNL is take very long time because of
which, BSNL is not being able to progress. So improved the working
process.
 BSNL is facing the capital problem because of which financial
position of BSNL are affected.
 BSNL is paying more taxes. Because of paying more taxes, financial
position of BSNL are affected.
 There are very cut tough competitions among the private telecom
companies on the level of new trend of advertising to silence a major part of
Customers.
 The entry of more Pvt. players in the telecom Sector have expanded the
product segment to meet the different level of the requirement like
3G,Broadband, phone line, cable connection in on wire line to provide of the
customers. It has brought about greater choice to the customers.

Suggestion
The study has provided with the useful data from the respondents. There has
a lot to be recommended. Following are the recommendations:
There should be improved the working process of BSNL. Because
working process of BSNL is taking more time.
o There is a need for better promotion for the investment & services.

o More returns should be provided on revenues policies.

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 o As the BSNL provides the telecom facility to its customers. It should
provide this facility by tie up with the other organizations as well.

o Recruit new qualified employees technical or non technical.

.
o Create new accounting or finance policies. This policies will provide
help generate revenues.

o Launch better plans for according to customers.

o Maintain Communication of each department.

o BSNL is computerized but today some department work with papers.

These employees are not handle computer because they can’t that.

o Departmental processes so long I suggest make a short process of

work to departmental.

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Bibliography

Bibliography
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BOOKS

 Management Accounting Shashi K. Gupta & R.K. Sharma

 Financial Management M.R.Agrawal

NEWSPAPERS
 Economic Times.
 Business times
 Business Standard

WEBSTIES

• www.bsnl.co.in
• www.google.com
• www.mpbsnl.com
• Wikipedia
• Skype

• Office memorandum of bsnl 2010-11

• Departmental Records

`MAGAZINES

 Business world
 B&P

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