Financial Analysis of Telecommunication

Sector
Project Report
Managerial Accounting
PGPM 2018-20
Term-I

Submitted by – A-8
Roshan Akhauri 18pgpm036
Anuj Garg 18pgpm006
Rupsa Sarkar 18pgpm038
Gaurav Kumar 18pgpm014
Rakesh Kumar 18pgpm011
Rahul Ahuja 18 pgpm031

Course Faculty-
Dr. Pinku Paul
EXECUTIVE SUMMARY
India is currently the world’s second-largest telecommunications market with a
subscriber base of 1.20 billion and has registered strong growth in the past
decade and half. The Indian mobile economy is growing rapidly and will
contribute substantially to India’s Gross Domestic Product (GDP), according to
report prepared by GSM Association (GSMA) in collaboration with the Boston
Consulting Group (BCG). App downloads in the country grew approximately
215 per cent between 2015 and 2017.
The liberal and reformist policies of the Government of India have been
instrumental along with strong consumer demand in the rapid growth in the
Indian telecom sector. The government has enabled easy market access to
telecom equipment and a fair and proactive regulatory framework that has
ensured availability of telecom services to consumer at affordable prices. The
deregulation of Foreign Direct Investment (FDI) norms has made the sector
one of the fastest growing and a top five employment opportunity generator in
the country.
The Indian telecom sector is expected to generate four million direct and
indirect jobs over the next five years according to estimates by Randstad India.
The employment opportunities are expected to be created due to combination
of government’s efforts to increase penetration in rural areas and the rapid
increase in smartphone sales and rising internet usage.

A detailed analysis of telecom industry has been covered in respect of past

growth and performance. Under this project to better understand the Industry
we have used Fundamental and Technical tools to make Telecom more
authentic n meaningful. We analyse the financial statement (Balance sheet,
profit and loss and cash flow statement) of three years. We used two financial
tools (Trend analysis and Ratio analysis) to understand the financial position of
the company. For trend analysis we have taken 2015-16 as a base year, and for
ratio analysis we have taken liquidity ratio, profitability ratio,
Turnover/efficiency activity ratio, Leverage/Solvency Ratio and Equity Related
Ratio.
OBJECTIVE OF THE PROJECT:

The objective of this project is to deeply analyse the Telecom sector’s financial
statement. Trend Analysis and Ratio Analysis will be done for companies like
Airtel, BSNL and Vodafone.

The main objectives of the project are:

 Detailed analysis of TELECOM sector which is gearing towards
international standards
 Analyse Balance sheet, cash flow statement and profit and loss
statement of TELECOM companies.
 Trend Analysis and Ratio Analysis of Airtel, Vodafone and BSNL.
Company:

Vodafone: Vodafone India was the Indian subsidiary of UK-based Vodafone

Group plc and was a provider of telecommunications services in India with its
operational head office in Mumbai. As of March 2018, Vodafone India had a
market share of 21% with approximately 223 million subscribers and was
the second largest mobile telecommunications network nationally after Airtel.

Airtel: Bharti Airtel Limited (commonly shortened to Airtel and stylised airtel)
is an Indian global telecommunications services company based in New
Delhi, India. It operates in 20 countries across South Asia and Africa. Airtel
provides GSM, 3G, 4G LTE and VoLTE mobile services, fixed line broadband and
voice services depending upon the country of operation. Airtel had also rolled
out its VoLTE technology across all telecom circles except Himachal Pradesh
and Jammu and Kashmir in India and likely to launch soon in these states.[6] It is
the second largest mobile network operator in India and the second largest in
the world with over 429 million subscribers. Airtel was named India's second
most valuable brand in the first ever Brands ranking by Millward
Brown and WPP plc.

BSNL: Bharat Sanchar Nigam Limited (abbreviated BSNL) is an Indian state-

owned telecommunications company headquartered in New Delhi. It was
incorporated on 15 September 2000 and assumed the business of providing
telecom services and network management from the erstwhile Central
Government Departments of Telecom Services (DTS) and Telecom Operations
(DTO) as of 1 October 2000 on a going-concern basis. It is the largest provider
of fixed telephone and broadband services with more than 60% market share,
and is the fifth largest mobile telephony provider in India. BSNL is India's oldest
communication service provider and its history can be traced back to
the British era.
Financial Statement Analysis and Tools:

Trend Analysis:
Horizontal analysis (also known as trend analysis) is a financial statement
analysis technique that shows changes in the amounts of corresponding
financial statement over a period of time. It is a useful tool to evaluate the
trend situations.

The statements for two or more periods are used in horizontal analysis. The
earliest period is usually used as the base period and the items on the
statements for all later periods are compared with items on the statements of
the base period. The changes are generally shown both in unit and percentage.

Unit and percentage changes are computed by using the following formulas:

Example we the unit is Dollar

Horizontal analysis may be conducted for balance sheet, income statement,

schedules of current and fixed assets and statement of retained earnings.

Ratio Analysis:
Ratio analysis is the comparison of line items in the financial statements of
a business. Ratio analysis is used to evaluate a number of issues with an
entity, such as Telecoms liquidity, efficiency of operations, and profitability.
This type of analysis is particularly useful to analysts outside of a business,
since their primary source of information about an organization is Telecoms
financial statements. Ratio analysis is less useful to corporate insiders, who
have better access to more detailed operational information about the
organization. Ratio analysis is particularly useful when used in the following
two ways:
 Trend line. Calculate each ratio over a large number of reporting periods, to
see if there is a trend in the calculated information. The trend can indicate
financial difficulties that would not otherwise be apparent if ratios were
being examined for a single period. Trend lines can also be used to estimate
the direction of future ratio performance.

 Industry comparison. Calculate the same ratios for competitors in the same
industry, and compare the results across all of the companies reviewed.
Since these businesses likely operate with similar fixed asset investments
and have similar capital structures, the results of a ratio analysis should be
similar. If this is not the case, Telecom can indicate a potential issue, or the
reverse - the ability of a business to generate a profit that is notably higher
than the rest of the industry. The industry comparison approach is used for
sector analysis, to determine which businesses within an industry are the
most (and least) valuable.
Financial Analysis of Vodafone

Balance Sheet:

31 March
31 March 2018 2017
Note
Non-current assets
Goodwill 10 26,734 26,808
Other intangible assets 10 16,523 19,412
Property, plant and
equipment 11 28,325 30,204
Investments in associates
and joint ventures 12 2,538 3,138
Other investments 13 3,204 3,459
Deferred tax assets 6 26,200 24,300
Post employment benefits 25 110 57
Trade and other receivables 14 4,026 4,569
1,11,94
1,07,660 7
Current assets
Inventory 581 576
Taxation recoverable 106 150
Trade and other receivables 14 9,975 9,861
Other investments 13 8,795 6,120
Cash and cash equivalents 19 4,674 8,835
24,131 25,542
Assets held for sale 7 13,820 17,195
1,54,68
Total assets 1,45,611 4
Equity
Called up share capital 17 4,796 4,796
1,51,80
Additional paid-in capital 1,50,197 8
Treasury shares -8,463 -8,610
-
1,05,85
Accumulated losses -1,06,695 1
Accumulated other comprehensive income 27,805 30,057
Total attributable to owners of the parent 67,640 72,200
Non-controlling interests 967 1,525
Put options over non-controlling interests - -6
Total non-controlling
interests 967 1,519
Total equity 68,607 73,719
Non-current liabilities
Long-term borrowings 20 32,908 34,523
Deferred tax liabilities 6 644 535
Post employment benefits 25 520 651
Provisions 16 1,065 1,130
Trade and other payables 15 2,843 1,737
37,980 38,576
Current liabilities
Short-term borrowings 20 10,351 12,051
Taxation liabilities 541 661
Provisions 16 891 1,049
Trade and other payables 15 16,242 16,834
28,025 30,595
Liabilities held for sale 7 10,999 11,794
1,54,68
Total equity and liabilities 1,45,611 4

Statement of Profit and Loss:

Consolidated statement of comprehensive income
for the years ended 31 March
2018 2017 2016
Note €m €m €m
- -
Profit/(loss) for the financial year: 2,788 6,079 5,122
Other comprehensive income/(expense):
Items that may be reclassified to the income statement in subsequent
years:
Gains/(losses) on revaluation of available-for-sale investments, net of
tax 9 2 -3
- -
Foreign exchange translation differences, net of tax -1,909 1,201 3,030
Foreign exchange (gains)/losses transferred to the income statement -80 - 282
Fair value (gains)/losses transferred to the income statement - 4 -
Other, net of tax -339 110 56
Total items that may be reclassified to the income statement in - -
subsequent years -2,319 1,085 2,695
Items that will not be reclassified to the income statement in subsequent
years:
Net actuarial (losses)/gains on defined benefit pension schemes,
net of tax 25 -70 -272 174
Total items that will not be reclassified to the income statement in
subsequent years -70 -272 174
- -
Other comprehensive expense -2,389 1,357 2,521
- -
Total comprehensive income/(expense) for the year 399 7,436 7,643
Attributable to:
- -
- Owners of the parent 187 7,535 7,579
– Non-controlling interests 212 99 -64
- -
399 7,436 7,643
Income Statement
Consolidated income statement
for the years ended 31 March
2018 2017 2016
Note €m €m €m
Revenue 2 46,571 47,631 49,810
-
Cost of sales 32,771 -34,576 -36,713
Gross profit 13,800 13,055 13,097
Selling and distribution expenses -4,011 -4,349 -4,603
Administrative expenses -5,644 -6,080 -6,379
Share of results of equity accounted associates and joint ventures -59 47 60
Impairment losses 4 - - -569
Other income/(expense) 3 213 1,052 -286
Operating profit 3 4,299 3,725 1,320
Non-operating expense -32 -1 -3
Investment income 5 685 474 539
Financing costs 5 -1,074 -1,406 -2,046
Profit/(loss) before taxation 3,878 2,792 -190
Income tax credit/(expense) 6 879 -4,764 -4,937
Profit/(loss) for the financial year from continuing operations 4,757 -1,972 -5,127
(Loss)/profit for the financial year from
discontinued operations 7 -1,969 -4,107 5
Profit/(loss) for the financial year 2,788 -6,079 -5,122
Attributable to:
- Owners of the parent 2,439 -6,297 -5,405
– Non-controlling interests 349 218 283
Profit/(loss) for the financial year 2,788 -6,079 -5,122
Trend Analysis:
1. Net Profit/Loss – In 2016 it incurred loss and again in 2017 loss
increased by approx. 20%, then in 2018 it went into profit.

2. Cash flow from operating activities – Cash flow from operating

activities shows a positive balance but it is decreasing year by year, i.e in
Downward trend.

3. Capital Expenditure- An downward trend in Capital Expenditure can be

seen because of decreasing investment in Purchase of property, plant and
equipment.

4. Dividend Paid- It decreased by 10% in 2017, and increased in 2018

5. Net Borrowings- decreasing year by year.

Ratio Analysis:
Liquidity Ratio
Liquidity ratios are a class of financial metrics used to determine a debtor's
ability to pay off current debt obligations without raising external capital.
Liquidity ratios measure a company's ability to pay debt.

Ratio 2018 2017 2016

Current Ratio 0.86 0.83 0.76

Quick Ratio 0.84 0.82 0.71

 Generally, a current ratio of 1-3 is considered healthy for a company, but

here Vodafone’s liquidity ratios are below the healthy ratio, which shows
its inefficiency to pay its short term debts or fulfill cash requirements.
 These are decreasing year to year because decrease in current liabilities is
more than decrease in current assets.

Profitability Ratio
Profitability ratios are a class of financial metrics that are used to assess a
business's ability to generate earnings relative to Telecoms associated
expenses.

Ratio 2018 2017 2016

Gross Profit Ratio 29.63 27.41 26.29

Operating Profit Ratio 9.23 7.82 2.65

 Expenses Ratio 20.40 19.59 23.64

Return on Capital
3.30 2.25 (0.15)
Employed

Return on Equity 4.06 (8.25) (6.15)

 The Gross Profit ratio is increasing because COGS is decreasing.

 Gross Margin Ratio in Telecom Industry can go as high as 80-90%, but it
is way below that.
 In 2018 Return on Capital Employed is near to the average industrial
ROCE which is 3.56 but it is very low in previous years.
 Return on Equity is negative in 2017 & 2016 because of loss incurred by
the company but in 2018 it achieved positive ROE as it went into profits
in 2018.

Turnover Ratio
A turnover ratio represents the amount of assets or liabilities that a company
replaces in relation to its sales. The concept is useful for determining the
efficiency with which a business utilizes its assets.

Ratio 2018 2017 2016

Fixed Asset Turnover

0.43 0.42 0.36
Ratio
Current Asset Turnover
1.93 1.86 1.56
Ratio

Net Asset Turnover Ratio 0.32 0.31 0.29

The asset turnover of Vodafone is increasing which indicates efficiency in
utilizing assets is increasing.

Solvency Ratio
Solvency ratios are primarily used to measure a company's ability to meet its
long-term obligations

Ratio 2018 2017 2016

Debt-Equity Ratio 0.48 0.47 0.44

Equity Ratio 0.47 0.48 0.49

Financial Analysis of Airtel

Balance Sheet
Balance Sheets
As of
As of As of
Particula
March March 31,
rs March
31, 2018 2017
31, 2016
Assets
Non-current assets
Property, plant and equipment 3,81,176 3,12,673 2,58,156
Capital work-in-progress 11,818 28,588 26,898
Intangible assets 7,34,052 6,06,582 2,77,892
Intangible assets under development 84,184 9,715 64,108
Investment in subsidiaries, joint
ventures and associates 4,59,538 6,98,913 6,52,478
Financial assets
- Investments 52 52 52
- Derivative instruments 213 396 154
- Loans and security deposits 10,389 28,861 42,892
- Others 556 598 487
Deferred tax assets (net) 8,875 23,070 27,241
Other non-current assets 39,854 26,622 17,041
Total Non-Current Assets 17,30,707 17,36,070 13,67,399
Current assets
Inventories 39 53 94
Financial assets
- Investments - 8 47,567
- Derivative instruments 634 462 168
- Trade receivables 32,118 31,724 33,047
- Cash and cash equivalents 1,087 466 3,852
- Loans 72,081 43,376 40,552
- Others 8,772 13,959 9,665
Current tax assets (net) 15,297 820 -
Other current assets 32,952 23,342 12,945
Assets-held-for-sale 13,729 - -
Total Current Assets 1,76,709 1,14,210 1,47,890
Financial liabilities
Total Assets 19,07,416 18,50,280 15,15,289
Equity and Liabilities
Equity
Share capital 19,987 19,987 19,987
Other equity 9,92,086 10,97,304 10,37,395
10,12,073 11,17,291 10,57,382
Non-current liabilities
- Borrowings 5,03,421 4,14,570 1,94,209
- Derivative instruments 186 8 121
- Others 21,881 20,736 19,713
Deferred revenue 18,321 16,984 15,887
Provisions 2,330 2,223 1,926
Total Non-Current Liabilities 5,46,139 4,54,521 2,31,856
Current liabilities
Financial liabilities
- Borrowings 65,478 6,999 6,259
- Current maturities of long-term
borrowings 33,451 33,434 13,171
- Derivative instruments 1,662 696 223
- Trade Payables 1,49,698 1,19,706 1,05,769
- Others 55,671 78,772 65,250
Deferred revenue 30,311 29,485 28,726
Provisions 1,291 1,189 1,174
Current tax liabilities (net) - - 507
Other current liabilities 11,642 8,187 4,972
Total Current Liabilities 3,49,204 2,78,468 2,26,051
Total Liabilities 8,95,343 7,32,989 4,57,907
Total Equity and Liabilities 19,07,416 18,50,280 15,15,289

Bharti Airtel Ltd.

Statement of Profit and Loss
Particulars 2018 2017 2016
Income
Revenue from operations 6,22,763 6,03,003 5,54,964
Other income 1,843 1,729 51,930
6,24,606 6,04,732 6,06,894
Expenses
Network operating expenses 1,45,360 1,37,889 95,766
Access charges 80,505 80,236 79,601
License fee / spectrum charges (revenue share) 69,416 69,635 67,062
Employee benefits 17,385 18,648 16,915
Sales and marketing expenses 32,320 32,824 29,564
Other expenses 38,524 39,640 41,151
3,83,510 3,78,872 3,30,059
Profit from operating activities before depreciation, 2,41,096 2,25,860 2,76,835

Depreciation and amortisation 1,22,034 95,753 75,597

Finance costs 52,546 35,453 14,091
Finance income -23,421 -15,708 -
Profit before exceptional items and tax 87,613 1,09,343 89,688
Exceptional items 1,72,708 6,799 -
(Loss) / profit before tax -85,095 1,02,544 89,688
Tax expense
Current tax -45 20,558 31,092
Deferred tax 14,206 4,183 1,246
(Loss) / profit for the year -99,256 77,803 57,350
Trend Analysis:
1. Net Profit/Loss – The net profit increased in 2017 but in year 2018,
Airtel incurred loss.
Reason- Increase in Exceptional Costs which included impact of gains /
losses on divestment of subsidiaries, translation impact in Nigeria due to
transition to market based exchange rate, litigation related assessments,
operating costs on network re-farming & upgradation programmes and
assessment of tax provisions.

2. Cash flow from operating activities – Cash flow from operating

activities shows a positive balance but less as compared to previous
year’s balance. Downward trend can be seen.

3. Capital Expenditure- An upward trend in Capital Expenditure can be

seen because of huge investment in Purchase of property, plant and
equipment.

4. Dividend Paid- Dividend paid had increased 3 times, showing an upward

trend.

5. Net Borrowings- Airtel is a re-payer in 2018 and a borrower in 2017.

Bharti Airtel Ltd.

Trend Analysis
Balance Sheets
Particulars 2018 2017 2016
Assets
Non-current assets
Property, plant and equipment 117.30 99.19 100.00
Capital work-in-progress 34.90 87.04 100.00
Intangible assets 209.85 178.76 100.00
Intangible assets under development 104.32 12.41 100.00
Investment in subsidiaries, joint ventures and associates 55.95 87.72 100.00
Financial assets
- Investments 79.44 81.90 100.00
- Derivative instruments 109.88 210.59 100.00
- Loans and security deposits 19.24 55.11 100.00
- Others 90.70 100.56 100.00
Deferred tax assets (net) 25.88 69.36 100.00
Other non-current assets 185.79 127.94 100.00
Total Non-Current Assets 100.55 103.98 100.00
Current assets
Inventories 32.96 46.17 100.00
Financial assets
- Investments - 0.01 100.00
- Derivative instruments 299.80 225.21 100.00
- Trade receivables 77.21 78.62 100.00
- Cash and cash equivalents 22.42 9.91 100.00
- Loans 141.21 87.60 100.00
- Others 72.10 118.28 100.00
Current tax assets (net) - - -
Other current assets 202.22 147.67 100.00
Assets-held-for-sale - - -
Total Current Assets 94.92 63.24 100.00
Total Assets 100.00 100.00 100.00
Equity and Liabilities
Equity
Share capital 79.44 81.90 100.00
Other equity 75.97 86.62 100.00
76.04 86.54 100.00
Non-current liabilities
Financial liabilities
- Borrowings 205.93 174.82 100.00
- Derivative instruments 122.12 5.41 100.00
- Others 88.18 86.15 100.00
Deferred revenue 91.61 87.55 100.00
Provisions 96.11 94.52 100.00
Total Non-Current Liabilities 187.13 160.54 100.00
Current liabilities
Financial liabilities
- Borrowings 831.08 91.58 100.00
- Current maturities of long-term borrowings 201.76 207.89 100.00
- Derivative instruments 592.07 255.60 100.00
- Trade Payables 112.44 92.69 100.00
- Others 67.78 98.87 100.00
Deferred revenue 83.83 84.06 100.00
Provisions 87.36 82.94 100.00
Current tax liabilities (net) - - 100.00
Other current liabilities 186.01 134.85 100.00
Total Current Liabilities 122.72 100.89 100.00
Total Liabilities 155.33 131.09 100.00
Total Equity and Liabilities 100.00 100.00 100.00

Bharti Airtel Ltd.

Statement of Profit and Loss
Particulars 2018 2017 2016
Income
Revenue from operations 112 109 100
Other income 4 3 100
103 100 100
Expenses
Network operating expenses 152 144 100
Access charges 101 101 100
License fee / spectrum charges (revenue share) 104 104 100
Employee benefits 103 110 100
Sales and marketing expenses 109 111 100
Other expenses 94 96 100
Total Expenses 116 115 100
Profit from operating activities before
depreciation, 87 82 100

Depreciation and amortisation 161 127 100

Finance costs 373 252 100
Finance income 149 100 -
Profit before exceptional items and tax 98 122 100
Exceptional items 2,540 100 -
(Loss) / profit before tax -95 114 100
Tax expense
Current tax 0 66 100
Deferred tax 1,140 336 100
(Loss) / profit for the year -173 136 100

Ratio Analysis:
Liquidity Ratio

Ratio 2018 2017 2016

Current Ratio 0.51 0.41 0.65

Quick Ratio 0.51 0.41 0.65

 Generally, a current ratio of 1-3 is considered healthy for a company, but

here Airtel’s liquidity ratios are way below the healthy ratio, which shows
its inefficiency to pay its short term debts or fulfill cash requirements.
 The current and quick ratios for are same because Airtel being a service
provider, the value of inventory is very less which does not significantly
affect the current ratio.
Profitability Ratio

Ratio 2018 2017 2016

Gross Profit Ratio 65.43 62.47 65.94

Operating Profit Ratio 25.25 23.40 30.08

Expenses Ratio 40.17 39.25 35.86

Return on Capital
6.45 8.32 8.05
Employed

Return of Equity -9.81 0.07 0.05

 The Gross Margin of Airtel is has been consistent from 3 years, and is
considered a healthy ratio.
 Gross Margin Ratio in Telecom Industry can go as high as 80-90%.
 Return on Capital Employed is better than the average industrial ROCE
which is 3.56 and was -6.84 in previous year.
 Return on Equity is negative in 2018 because of loss incurred by the
company. Also return on equity has been very low during the past 2 years.

Turnover Ratio

Ratio 2018 2017 2016

Fixed Asset Turnover

0.57 0.58 0.72
Ratio
Current Asset Turnover
5.40 8.45 6.22
Ratio

Net Asset Turnover Ratio 0.50 0.52 0.61

  The asset turnover of Airtel is decreasing which indicates that the
business is over invested in fixed assets.
 Airtel has invested in hugely in installation of new towers and optic fibre
cables.

Solvency Ratio

Ratio 2018 2017 2016

Debt-Equity Ratio 0.51 0.38 0.19

Equity Ratio 0.53 0.60 0.70

 In general, a high debt-to-equity ratio indicates that a company may not

be able to generate enough cash to satisfy its debt obligations.
 The industrial average Debt-Equity Ratio is 0.78. Airtel is able to
maintain good Debt-Equity Ratio but it is increasing year by year.
 The equity ratio of Airtel is decreasing, which means the company is
financing its capital more from the capital it owns rather than taking debts
which is a good sign.

Conclusion:
Despite all the facts and ratios we have calculated, it can be observed from the
Cash Flow statement, that the company is a Growing Company. Airtel is
raising funds and Investing in Fixed Assets.

CFO= Positive Balance

CFI= Negative Balance

CFF= Positive Balance

Financial Analysis of BSNL

Balance Sheet:
Statement of Profit and Loss:
Trend Analysis:
NET LOSS : The company has been in loss for the past 3 financial years but it
can be seen that the loss has been decreasing with a very minimal rate.

CASH FROM OPERATING : The cash generated from its operating activities
has been increased by a very large amount over its financial years ,thus
showing a UPWARD trend.

CAPITAL EXPENDITURE : The capital expenditure has been decreasing

over the past 3 financial years

DIVIDEND PAID : Dividend is not paid over the years as the company has
been incurring losses over the past financial years.

BORROWINGS : The company has been a borrower in the year 2014-15 and
2015-16 but has repaid a percentage of its loan in the year 2016-2017.

WORKING CAPITAL : The working capital has a negative figure in the year
2014-15 and 2016-17 but in the year 2015-16 it has a positive figure.

Ratio Analysis:
Liquidity Ratio

Ratio 2017 2016 2015

Current Ratio 0.82 1.01 0.75

Quick Ratio 0.33 0.17 0.13

 Generally, a current ratio of 1-3 is considered healthy for a company, but

here BSNL’s liquidity ratio has decreased in year 2017 showing the
inefficiency of the company to pay for its short term liabilities.
 The decrease in current ratio is due to decrease in Inter Circle remittances
while the Current liabilities increased.
Profitability Ratio

Ratio 2017 2016 2015

Net Profit Ratio -0.16 -0.17 -0.16

Operating Profit Ratio 63.98 64.2 67.3

Expenses Ratio 0.03 0.03 0.26

Return on Capital
0.42 0.04 0.02
Employed

Return of Equity -0.01 -0.01 -0.01

 Return on Capital Employed is way lower than the average industrial

ROCE which is 3.56.
 Return on Equity is constantly negative.
 The company is incurring loss because of increased competition. The
positive Cash flow from Investing Activities balance shows that the
company is not investing in any latest technologies to cover up the
profits.

Turnover Ratio

Ratio 2017 2016 2015

Fixed Asset Turnover

0.06 0.05 0.04
Ratio
Current Asset Turnover
0.05 0.05 0.05
Ratio

Net Asset Turnover Ratio 0.49 0.51 0.56

Solvency Ratio

• 2015
• Ratio • 2017 • 2016

• 0.33
• Debt-Equity Ratio • 0.34 • 0.34

• 0.75
• Equity Ratio • 0.73 • 0.74

 In general, a high debt-to-equity ratio indicates that a company may not

be able to generate enough cash to satisfy its debt obligations.
 The industrial average Debt-Equity Ratio is 0.78. BSNL is not able to
maintain good Debt-Equity Ratio, though it has been constant over the
years.
 The equity ratio of BSNL is decreasing, which means the company is
financing its capital more from the capital it owns rather than taking debts
which is a good sign.