managing working capital

Slide 1:

Vs By Aparajitha rai Arun raj Harsha vardhan reddy Praveen Sanchita singh Managing working capital

Indian telecom industry :

Indian telecom industry It started in 1881 In1882 oriental telephone company of England established telephone exchanges In 1985 Department of Telecommunication (DoT) was established In 1986 Dot is converted into two govt owned companies VSNL,MTNL In 1997 Telecom Regulatory Authority of India (TRAI) was created In 2000 DoT became BSNL

Important regulations and laws passed :

Important regulations and laws passed

Indian telecom industry :

Indian telecom industry Indian telecommunication industry experienced many phases of growth from telegraphic to telephonic systems Presently used technologies are GSM, CDMA,WLL,3G Future is of 4G India is one of the biggest telecom markets in the world with both public & private players 8-10 million new customers adds every year which provided $43billion as revenue Govt market share is 82% in fixed land line and private companies has 78% in wireless communication In wire less communication customers prefer GSM to CDMA The minutes of usage is increasing consistently for GSM compared to CDMA even though customers are increasing tariff plans resulted in decline Average revenue per usage

Private player shares :

Private player shares Wireless services have led to a significant growth in the Indian telecom industry. Currently , there are 12 players–Bharti Airtel , Vodafone, Reliance , Tata Teleservices, Idea, Aircel, Spice, BSNL,MTNL , BPL, HFCL and Shyam Telelink–active in this segment. A s compared with 2006–07, the subscriber base of most wireless service providers has increased leading to an increase in their revenues. The subscriber base of Bharti Airtel , a leader in this market , increased from 42.70 million in 2006–07 to 69.38 million in 2007–08, followed by Reliance ( 50.79 million subscribers) and Vodafone (49.20 million subscribers ).

Market share of wireless operators in India :

Market share of wireless operators in I ndia

Major players in India :

Major players in India Bharati Airtel and Reliance communications are the top players in GSM and CDMA respectively Airtel has negative working capital Reliance has positive working capital Reliance dominated CDMA even though it is in GSM it couldn’t dominate Airtel

Shares of GSM and CDMA :

Shares of GSM and CDMA

Bharati Airtel :

Bharati Airtel In 1996 ‘Airtel’ was launched for the first time in Delhi and Himachal Pradesh British Telecom Plc (BT) acquired a stake in the company it is covering 50,000 villages in country it is covering 95 cities for broad band and telephone It is covering three strategic areas :mobile services telemedia services and enterprise services Acquired JT Mobile for providing services in Punjab, Andhra Pradesh and Karnataka. In 2001, India One, India’s first private sector national and international long distance services was launched.

Airtel cont ....:

Airtel cont .... In 2004 joined the $ 1 billion revenue club Became a part owner in SEA-ME-WE-4, a 20000km just generation cable system connecting India with South East Asia, the middle East and Europe. First private operator to launch mobile services in J&K. In 2006, Vodafone acquired 10% economic interest in the company. In 2008, profit crossed $1 billion. Strategic tie up with Microsoft and became the first telecom operator to offer MS Windows mobile 5.0 technology.

Airtel cont ....:

Airtel cont .... In 2007 Airtel crossed 50 million customers Its first company to cross 100 million in 2009 Customer base has increased fro year to year increased revenues by 38% and net profits 23% Revenues increased from 50,369 million to 373,521 from 2004 to 2009 Even company is having strong financial situation it has more current liabilities than to current assets working capital requirements were met efficiently by efficient cash management

Reliance communications :

Reliance communications In 1999 , Reliance Infocomm begins project planning In 2003 , launched international long distance services . In the same year , set a world record by acquiring one million customers in 10 days. Became India's largest mobile service provider within 7 months of commercial launch . in 2003 Customer base touched 5 million . In 2004 , received the Most Promising Service Provider of 2003 . In 2005 , Announced mega rural plan to cover 4 lakh villages and 65 crore Indians by December 2005 . In 2006 , it got listed in BSE and NSE . In 2007 , adds a record 1.4 million subscribers

Reliance cont ....:

Reliance cont .... In the same year , market capitalization topped INR 1 lakh crore on BSE . In 2008 , received start-up GSM spectrum . It is offering its services in 24000 towns and6000000villages It operates worlds largest internet connectivity The companies revenue increased from 190678 to 229485 millions from 2007to 2009 Reliance is positive working capital i.e. current assets =current liabilities Reliance communications net profit up by 70.8% to INR 5,401 crore , revenues higher by 31.8 % to INR 19,068 crore and EBIDTA increases by 43.3% to INR 8,199 crore .

Ratio analysis :

Ratio analysis Payment period =163.5 days Collection period =84.1 days Quick ratio =0.65 Debt equity ratio=0.28 Current ratio=0.69 Cash retention ratio =96.50 Gross profit margin= 29.33 Debtors Turnover Ratio=12.78 MOU=485 Payment period =132.4 days Collection period =123.4 days Quick ratio=2.70 Debt equity ratio=0.60 Current ratio=1.45 Cash retention ratio =72.5 Gross profit margin = 21.84 Debtors Turnover Ratio= 11.72 MOU= 342 Airtel Reliance

Analysis :

Analysis From the ratios and balance sheet view It is made clear that airtel is managing its cash even though it is having more liabilities Payment period is less for airtel which adds plus for its development