Summer Training Project Report

On

“BUDGETING SYSYTEM” Of

Bharat Sanchar Nigam LimitedGurgaon

IN THE PARTIAL FULFILLMENT OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

2010-2011

Affiliated to Rajasthan Technical University, 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

:- Statement of problems

:- research design & methodology

:-Sources of data collection

:- objective & limitation of study

22

23

23

24

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Chapter – 04 Data analysis and findings

:- Introduction

:- Concept of budgeting

:- meaning of budgeting

:- Type of budgeting

:- Budgeting process

:- budgeting Techniques

:- definition of expanses

:- revenues strategies

:- Accounting Policies

:- Financial Statement

:- Financial policy of Bsnl

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29

31

32

34

35

36

40

41

42

48

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Chapter – 5 Data analysis and interpretation 56

Chapter - 6 SWOT Analysis 60

Chapter – 7 Conclusion & Suggestions 61

Chapter – 8 Biography 64

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Chapter 1 Introduction to the Industry

(telecommunication industry)

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Indian Telecommunication Industry

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 PROVIDERS 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 L imi t ed (known as BSNL, Ind ia

Communicat ions 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

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.

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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

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.

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Venture into other areas in India and abroad on the strength of our core

competency.

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.

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To facilitate R & D activity in the country.

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

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available in more than 3800 cities & 83000 villages.

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 Methodology

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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 in 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-

w w w . bsn l . c o m .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.

Other 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

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make financial analysis misleading.

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

interpretation and draw own conclusion

Different people may interpret the same analysis in different ways.

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Chapter 3Data 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 discrepancies.

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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 Budget2. Short Term Budget3. Current Budget4. Rolling budget

ACCORDING TO FUNCTION:1. Sales Budget2. Production Budget3. Cost of Production Budget4. Purchase Budget5. Personnel budget

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6. R & D Budget7. Capital Expenditure Budget8. Cash Budget9. Master Budget

ACCORDING TO EFFICIENCY:1. Fixed Budget2. 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 budgeting2. Incremental budgeting3. 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 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

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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.

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

preparing an asset to be used in business

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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

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supplies

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 

Capital expenses are for items that generally have a useful life beyond one year

2 . Ex. real estate taxes, insurance, utilities, repairs and maintenance, etc

Ex. cost to replace roof, re-paint exterior, re-pave parking area, etc). 

Classification of expenses:-

Basically the expenses are classified in two parts.

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1.fixed expenses 2.variable expenses

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

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 Variable expenses

1. These are those expenses which don't change with change of production rate and remain fixed up to certain measurement base criteria.

These are those expenses which change with the change of units of products but remain fixed relative to units of product.

2 . Ex. rent, insurance, dues and subscriptions, equipment leases, payments on loans, depreciation, management salaries, and advertising

Ex. raw materials, hourly wages and

commissions, utilities, inventory, office

supplies, and packaging, mailing, and

shipping costs.

Revenues Strategies

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

a. The delay in customer billing after activationb. Time lag between calls generated and billed Scope of fraudc. 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

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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 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.

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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.

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.

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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

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 AssetsAssets, 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.

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

InventoriesInventories 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.

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

Employee’s benefitsa) 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 expensesExpenses incurred at Factory units are allocated to the cost of the manufactured products.

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

Taxes on income

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

Contingent liabilityLiabilities, 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 shareEarnings 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 reportingThe 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 determiningSegment 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:-

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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:-

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 expensesb. Publicationsc. Professional servicesd. Advertising and publicitye. Office expensesf. Polg. 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 travelNo 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.

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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.

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.

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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.

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

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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

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

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35. Lease charges 1567

36. Business promotion& marketing expenses

3351

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

12. Employer’s contribution towards EPF 3123

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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

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33. Professional charges 425

34. Meetings 297

35. Lease charges 456

36. Business promotion& marketing expenses

1245

37. Advertisement 345

38. Waiting charges 325

39. Commission 23456

Total 184016

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)

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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

Capital expenses:-

Allotment of capital expenditure budget for FY 2009-10 based on actual expenditure in 2009-10:-

             RS. IN 1000

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Head of A/C   SERVICE BUILDING A&P CABLE L&W SI TOTAL

GENERAL AREA

             

LTS 0 3889 4500 15607 6144 30150CDMA WILL 0 58802       58802

OFC   9633 14923     24555ADMN OFF 0         0STAFF QRTS 0         0TOTAL G.A. 0 70334 19423 15607 6144 113507

 RURAL AREA

             

LTS 0   8013 5420 6980 20413CDMA WILL 0 14700       14700

OFC   0 59690     59690TOTAL RA 0 14700 67703 5420 6980 94804

TRIBAL AREA

             

LTS     0 0 0 0CDMA WILL   0       0

OFC   0 0     0TOTAL TA   0 0 0 0 0

VAS( BROAD BAND)

             

             

    0     0 0TOTAL VAS 0 0 0 0 0 0

               BTY/PP/EWSD/CA/RS/AXE-10       7053       7053

DSPT/SPV/HUB/SOFTWARE       0        

 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

GENERAL AR

             

LTS 24 2000 5000 12345 5674 25043CDMA WILL 12 45678       45690

OFC   5 9234 11234     20473

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ADMN OFF 0         0STAFF QRTS 10         10TOTAL G.A. 51 56912 16234 12345 5674 91216

 RURAL AREA

             

LTS 10   6578 3456 7000 17044CDMA WILL 0 16000       16000

OFC   0 45000     45000TOTAL RA 10 16000 51578 3456 7000 78044

TRIBAL AREA

             

LTS     0 0 0 0CDMA WILL   0       0

OFC   0 0     0TOTAL TA   0 0 0 0 0

VAS( BROAD BAND)

             

             

    10     0 10TOTAL 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

RESERVES AND SURPLUS (Rs. In lakh)

Particular As at 31st

march 2009

As at 31st

march 2008

Absolute change

% change

Capital reserves As per last balance sheet 4,040,518Add : Assets recognized 472Less : liabilities identified & Transferred to liabilities 6,480 4,033,566 4,040,518 6,952 017

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General reservesAs per last balance sheet 4,63,270Add : carried from P&L account ------ 4,63,270 4,63,270 ---- ----Contingency reserves 2,00,000 2,00,000 ---- ----Surplus : ---- ---- ---- ----Profit and loss accountAs per last balance sheet 28,59,037Add : carried from P&L Account 57,485 29,19,522 28,59,037 57,485 2.01

DATA ANALYSIS AND INTERPRETATIONS :-

Allotment of working expenditure budget for FY 2010-11 based on actual expenditure in 2009-10:-

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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:-

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%.

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Income and Expenditure :-

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 :-

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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)

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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%

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SWOT Analysis :-

STRENGTHS WEAKNESSES

Pan-India reach Experienced telecom service provider Total telecom service provider Huge Resources (financial & technical

pool) Huge customer base Most trusted telecom brand Transparency in billing Easy deployment of new services

Non-optimization of network capabilities

Poor marketing strategy Bureaucratic organizational set up Inflexibility in mindset (DOT period

legacies) Limited number of value added

services Poor franchisee network Legacy of poor service image Huge and aged manpower Procedural delays Lack of strategic alliances

OPPORTUNITIES THREATS

Tremendous market growing at 20 lac customers per month

Untapped broadband services

Untouched international market

Can capitalize on public sector image to grab government’s ICT initiatives

ITEB service markets

Diversification of business to turn-key projects

Competition from private operators

Keeping pace with fast technological changes

Market maturity in basic telephone segment

Manpower churning

Multinational eyeing Indian telecom market

Private operators demand for sharing last mile

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Chapter 4Conclusion and Suggestions

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According to my survey and calculating the important points are:

• 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.

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o More returns should be provided on revenues policies.

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

• w w w . bsn l . c o. i n • w w w . goog l e . c o m • w w w . m p b s n l . c o m

Wikipedia

Skype

• Office memorandum of bsnl 2010-11

• Departmental Records

`MAGAZINES

Business world B&P

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