Project Topic

Bachelor of Management Studies

Semester V
(2016-2017)

Submitted by
Student Name :- Tejas Shekhar Kanse
Roll no :- 27

M.L .Dahanukar College of commerce

Dixit Road, Vile Parle (E), Mumbai - 400 057
 DECLARATION

I, TEJAS SHEKHAR KANSE the student of T.Y.B.M.S. Semester V (2017- 2018) hereby declare
that I have completed the project on RATIO ANALYSIS OF AIRTEL COMMUNICATION AND
RELIANCE COMMUNICATION.
The information submitted is true and original to the best of my knowledge.

_____________________
(Signature of Student)
TEJAS SHEKHAR KANSE
Roll no 27
M.L .Dahanukar College of commerce
Dixit Road, Vile Parle (E), Mumbai - 400 057
 CERTIFICATE

This is to certify that Mr.TEJAS SHEKHAR KANSE, Roll no: 27 of Third Year B.M.S.,
Semester V (2017- 2018) has successfully completed the project on Date__________ under the guidance
of ___Guide Name :- RASHMI.

___________________ ____ ___________________

Prof. Parveen Nagpal Incharge Principal - Dr. D.M. Doke Course
Coordinator M. L. Dahanukar College of Commerce

COLLEGE SEAL

___________________ ____________________
Prof. Guide Name External Examiner
Project Guide
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my In-charge Principal - Dr. D.M. Doke for providing the necessary
facilities required for completion of this project.
I take this opportunity to thank our Coordinator Parveen Nagpal, for her moral support and
guidance.
I would also like to express my sincere gratitude towards my project guide Prof. Your Guide
Name whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project
 Index
Sr No. Name of the topic Page No.
1
2
INTRODUCTION

 BHARTI AIRTEL LIMITED

Bharti Airtel Limited, the company's existence was marked in the year 1995. It is a leading Indian
telecommunication service provider through three strategic business units namely Mobile
Services, Broadband & Telephone Services and Enterprise Services. The company has started with
providing mobile service to single circle entity and now it grown to offer services to all 23 telecom
circles of India. One of the largest integrated private telecom service providers with an all India
mobile footprint, through a combination of organic and inorganic growth.

During the year 1997-98 Bharti Airtel Ltd becomes the first private telecom operator to obtain a
license to provide basic telephone services in the state of Madhya Pradesh and in the same period
the company forms Bharti BT VSAT Ltd., focused on providing VAST solutions across India and
Bharti BT Internet Ltd. The company acquired JT Mobiles, cellular services operator in Punjab,
Karnataka and Andhra Pradesh and becomes the largest private telecom operator in India during
the period of 1999-2000. Also expands its South Indian footprint by acquiring Skycell, Chennai.

The company acquired a 30.20% equity interest of Telecom Italia in Bharti Telenet and 18.8%
from Bharti Telecom thereby making Bharti Telenet a 100% subsidiary of Bharti Tele-Ventures.
BTVL also holds an effective 74% equity in Bharti Mobile and 100% equity in Bharti Cellular.
Bharti Telenet has entered into license agreements to provide fixed-line services in the Haryana,
Delhi, Tamil Nadu and Karnataka Circles. Airtel launched IndiaOne, India's first private sector
national and international long distance service in the year of 2001-02.

The company incorporated India's first private submarine cable landing station with joint venture
from SingTel in the same year. In 2002-03 the company made a brief corporate restructuring by
merging all the mobile operations into Bharti Cellular Limited and all fixed line, long distance and
data services into Bharat Infotel Limited. Bharti Airtel made a historic strategic partnership with
IBM and Ericsson for outsourcing the company's core IT and network activities and also launched
Blackberry wireless solution India, as a result of an exclusive tie-up with Research in Motion
(RIM). BTVL's two subsidiaries Bharti Cellular Ltd and Bharti Infotel Ltd have been merged with
the company in the year of 2004. Subsequently Bharti Broadband Ltd and Satcom Broadband
Equipment Ltd has become the subsidiaries of the company after the above said merger. During
the year 2005 Bharti Airtel Ltd expand its wing to Rajasthan and North East Circles also by the
acquisition of Bharti Hexacom, which owns Licenses to operate cellular services in the Rajasthan
and North East Circles.

Bharti Airtel Ltd noted as 'Indian Mobile Operator of the Year 2005' by Asian Mobile News,
became the top-most Telecom Company and was featured amongst the top three companies across
the sectors in the ET 500 published in June 2005 and the company Introduced Stock and Portfolio
Tracker on the mobile in association with the Bombay Stock Exchange, it was the first of its kind.
The agreement was emerged with Ericsson and the company in 2005-06 to provide managed
services and expands its GSM/GPRS network into rural India in 15 circles under managed capacity
expansion. During the year 2006-07 Bharti Airtel has entered into agreement with Microsoft to
offer software and services for the Small and Medium business market in India. The company also
has an agreement with Google to offer services on Airtel Mobile. Also an agreement with Adani
Group to connect Mundra Port and special Economic Zone. A Three year contract with Nokia at
an estimated value of US$400 million to expand its managed GSM/GPRS/EDGE networks in eight
Airtel circles and deploy a pan India WAP solution across its networks.

The company was conferred many awards during the year 2006-07, such as Best Indian Carrier
Award in the Telecom Asia Awards 2006, Wireless Service Provider of the year and the
competitive Service Provider of the year award in the Telecom Asia Awards 2006, Most Preferred
Cellular Service Provider Award in the telecom category for the year 2006 at the Awaaz Consumer
Awards 2006, MIS Asia II Excellence Award 2006 for Best Knowledge Management, Most
Customer Responsive Telecom Company in India by the Avaya-Economic Times Global Connect
Awards and Nasscom IT Innovation Award for the Business Model Innovation for the year 2006.
The company received a letter of offer from Telecommunications Regulatory Commission of Sri
Lanka to provide 2G and 3G mobile services in Sri Lanka on January 2007. This was the first
international operation of the company. Bharti Airtel introduced the Blackberry 8800 business
phone in March 2007. Bharti Airtel and GSM Association launched the Global money transfer
pilot project in India. This initiative enable 25 million of NRI's to remit their money to India
through mobile phones.
During the year 2007, the company also incorporated Bharti Airtel (USA) Ltd, Bharti Airtel (UK)
Ltd, Bharti Airtel (Canada) Ltd, Bharti Airtel (Hongkong) Ltd as a wholly owned subsidiary of
the company for providing international calling services and wholesale voice switching and data
products in the respective countries. Bharti Infratel Ltd has been incorporated as a wholly owned
subsidiary with an initial investment of Rs.500000 and also acquired the Submarine Network
Cable System from Network i2i by way of purchase of all the assets or equity for an overall
consideration of US$110 million. In August of the same year Wal-mart formally marked its entry
into India by signing two agreements with Bharti Enterprises.

During January 2008, the company has signed a MoU with VeriSign, Inc agreed to form a strategic
market partnership for jointly launch best-in-class security services, to deliver VeriSign's identity
protection, managed security and fraud detection services, and to support the development of the
next-generation Internet infrastructure in the Indian market. The company has achieved the 60
million-customer marks on February 2008. This landmark has catapulted Bharti Airtel into the
club of top mobile operators in the world in terms of subscriber base. The 60 million-customer
base covers mobile as well as fixed line and broadband customers. Bharti Airtel has overtaken
State-run Bharat Sanchar Nigam Ltd as the largest National Long Distance (NLD) service provider
in terms of revenue, amount of Rs 709 crore. The company has joined hands with five international
companies including Internet giant Google, Global Transit, KDDI Corporation, Pacnet and
SingTel have formed the Unity Bandwidth Consortium which will together invest about $300
million to construct the new high-bandwidth, sub-sea cable system linking the US and Japan. As
on March 2008, Bharti Airtel and Micro Technologies India have tied up to offer micro lost mobile
tracking system to secure the mobile handsets of Airtel subscribers. As on May 2008, in a bid to
gain quicker foothold into the rural areas, Bharti Airtel has formed a joint venture with IFFCO,
which will offer customized mobile services to a target base of 55 million farmers across the
country.

Bharti Airtel Ltd is amongst the fastest growing telecom companies in the world and its moving
to attain the position of most admired brand in India with the three domains as loved by more
customers, targeted by top talent and benchmarked by more business.
Bharti Airtel Limited is an Indian global telecommunications services company
based in New Delhi, India. It operates in 18 countries across South
Asia and Africa. Airtel provides GSM, 3G and 4G LTE mobile services, fixed line
broadband and voice services depending upon the country of operation. Airtel is
also testing VoLTE technology across five cities in India and should roll out the
technology towards the end of 2017. It is the largest mobile network operator in
India and the third largest in the world with 400 million subscribers. Airtel was
named India's second most valuable brand in the first ever Brandz ranking
by Millward Brown and WPP plc.
Airtel is credited with pioneering the business strategy of outsourcing all of its
business operations except marketing, sales and finance and building the 'minutes
factory' model of low cost and high volumes. The strategy has since been adopted
by several operators. Airtel's equipment is provided and maintained
by Ericsson, Huawei, and Nokia Solutions and Networks whereas IT support is
provided by IBM. The transmission towers are maintained by subsidiaries and joint
venture companies of Bharti including Bharti Infratel and Indus Towers in
India. Ericsson agreed for the first time to be paid by the minute for installation
and maintenance of their equipment rather than being paid up front, which allowed
Airtel to provide low call rates of ₹1 (1.6¢ US)/minute.
AIRTEL INDIA

Airtel India is the largest provider of mobile telephony and second largest
provider of fixed telephony in India, and is also a provider
of broadband and subscription television services. It offers its telecom
services under the airtel brand, and is headed by Sunil Bharti Mittal.
 RELIANCE COMMUNICATIONS LIMITED

Reliance Communications Limited (RCL) is the flagship company of the Anil Dhirubhai Ambani
Group (ADAG), is India's largest private sector information and communications company with
over 48 million subscribers. It was established in the year 2004 as Reliance Infrastructure
Developers Private Limited, Reliance Communications started laying 60,000 route kilometres of
a pan-India fibre optic backbone with high capacity, integrated (wireless and wireline), convergent
(voice, data and video) digital network and to offer services spanning the entire infocomm value
chain. It is capable of delivering a range of services spanning the entire infocomm (information
and communication) value chain, including infrastructure and services for enterprises as well as
individuals, applications, and consulting.

The Company's business encompasses a complete range of telecom services covering mobile and
fixed line telephony. It includes broadband, national and international long distance services and
data services along with an exhaustive range of value-added services and applications. During the
year 2004, International wholesale telecommunications service provider, FLAG Telecom
amalgamates with Reliance Gateway, a wholly owned subsidiary of Reliance Infocomm, the
company launched RIM Prepaid with attractive offer, Reliance Infocomm introduced World Card
- a Prepaid International calling card for affordable and convenient ISD calls from India, the first
regional Customer Contact Centre was launched in Chennai. In the same year the company made
partnership with MCI to offer India's First MPLS Global VPN Solution. Introduced Railway Ticket
booking from R World data applications suite of Reliance India Mobile.

In 2005, RCL only the company introduced, first e-recharge facility in CDMA in India, the
company has had joins hands with Air Deccan to offer air ticket booking facility at Reliance
WebWorld. Reliance Infocomm rolls out international roaming facility across several countries to
become the first Indian CDMA operator to offer its customers such a service. The company tied-
up with the Bombay Stock Exchange to make available livestock quotes on its mobile phones
during the same year 2005. The status of the company was changed to Public Limited in July 2005.
Name of the company was changed from Reliance Infrastructure Developers Private Limited to
Reliance Communication Ventures Limited in August 2005. RCL, UK launched Reliance
IndiaCall service in England and Wales enabling callers to make high-quality calls to India from
any landline or mobile phone at economical rates. Reliance Infocomm and China Telecom signed
agreement for telecom services to provide direct telecommunication service, including a global
hubbing service, to subscribers in the both two countries.

India's first Talking Message Service (TMS) enabling the mobile users to send voice messages to
not only other mobiles but also fixed wireless phones (FWP) and landlines in Reliance
communications network were launched during the year 2006. In the same year 2006, RCL listed
on the Bombay Stock Exchange and National Stock Exchange, the company ties up with Disney
to offer on Reliance Mobile World India's first 3D animation on mobile, launched 'Hello Capital
Plan' to enable its subscribers in 19 state capitals to call each other at the local call rate of 40 paise
per minute, T-Com signs contract with FLAG Telecom for Europe-US bandwidth, Reliance
Communications' FALCON Cable System was initiated in the same year. RCL launched Free
Group Term Life Cover for its CDMA subscribers. RCL and Nokia have joined hands to market
the Nokia 1255 mobile handset in India at a price of Rs 1,999 during the period of 2006.

Reliance Infocomm Limited, Ambani Enterprises Private Limited, Reliance Business

Management Private Limited, Formax Commercial Private Limited, Reliance Communications
Technologies Limited, Reliance Software Solutions Private Limited, Reliance Communications
Solutions Private Limited and Panther Consultants Private Limited was amalgamated and the
Network division of the Reliance Communications Infrastructure Limited was demerged with the
Company during the year 2006. The name of the Company was changed from Reliance
Communication Ventures Limited to Reliance Communications Limited with effect from 7th June
2006. The Company joined Lenovo and Intel for 'Internet on the Move' in the year 2007. Also in
the same year, RCL ties up with Naukri.com for Search Jobs & Classified Ads from Reliance
Mobile World. The demerger of Passive Infrastructure division Reliance Communications &
Reliance was approved in March of the year 2007.

Sunny Days And Nights For Reliance Mobile Subscribers as Reliance Communications ties up
with SUN TV to offer video streaming of all SUN TV programs online 24x7. In May of the year
2007, the company bagged West Bengal E-Governance Project. RCL slashed its call rate to US
and Canada. It's now just Rs 1.99 per minute and also launched Lifetime Validity Recharge @ Just
Rs.499. The tie up was made with Cisco to launch Business Internet Services for SMEs in Pune in
the year. After, in July of the same year 2007, the company and QUALCOMM was made
collaboration on CDMA2000 Expansion. The biggest acquisition deal so far, the company bought
US data Communication Company Yipes Holdings' in an all-cash deal for 4300 million (Rs 1200
crore) in July 2007. RCL came forwarded to sale of equity stake in its Tower Company-Reliance
Telecom Infrastructure Limited in July of the year. For air and hotel bookings, the company has
had joins hands with Yatra.com. The money transfer also available in the RCL, such facility was
started in September of the year 2007. The company made strategic partnership with Vanco.

As on April 2008, RCL launched Exam Guru, the educational portal, which provides information
on exam result, college admissions, exam schedules, admission deadlines, mock tests and also tips
for bettering performance. RCL made ties up with International Cricket Council for rankings in
the next eight years. During the same month and same year, the company has acquired UK based
eWave World, which offers wireless telephony services using WIMAX technology. In May 2008,
Reliance Globalcom, a subsidiary of the company, has acquired London based managed network
services provider, Vanco Group, for about $77 million (Rs 324 crore).

Reliance Communications Ltd. (stylised as RCom) is

a telecommunications company headquartered in New Mumbai, India. It is
a subsidiary of Reliance Anil Dhirubhai Ambani Group. The services it
provides include GSM (Voice; 2G, 3G, 4G), fixed line broadband and voice,
and Direct-To-Home (DTH), depending upon its areas of operation in India.
The company plans to shut down its 2G and 3Gservices at the end of
November 2017 as a result of debt and a failed merger with Aircel.
Reliance Communications is the sixth largest telecom operator in India with
85.19 million subscribers, as of 31 July 2017.

RELIANCE COMMUNICATIONS INDIA

Reliance Communications Limited was established in India in 2002.

In the 2010 spectrum auction, the company obtained 3G spectrum in 13
circles Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh, West
Bengal, Himachal Pradesh, Bihar, Odisha, Assam, North East and Jammu
& Kashmir at a licensing fee of ₹ 58,642.9 million.
Reliance Communications reduced the prices of its 3G services by 61% in
May 2012.
Reliance communication partnered with Lenovo to launch their co-
branded Android smartphones in India in 2013.
Reliance communication shut down its CDMA operations in 2016 and
migrated the subscribers to GSM and LTE networks by September 2016.
FINANCIAL STATEMENT OF AIRTEL COMMUNICATION
BALANCE SHEET AS ON 31ST MARCH, 2017.

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 1,998.70 OTHER ADDITIONAL INFORMATION
Total Share Capital 1,998.70 CONTINGENT LIABILITIES, COMMITMENTS
Revaluation Reserves 0.00 Contingent Liabilities 15,058.00
Reserves and Surplus 99,208.60 CIF VALUE OF IMPORTS
Total Reserves and Surplus 99,208.60 Capital Goods 0.00
Total Shareholders Funds 101,207.30 EXPENDITURE IN FOREIGN EXCHANGE
NON-CURRENT LIABILITIES Expenditure In Foreign Currency 11,627.80
REMITTANCES IN FOREIGN CURRENCIES
Long Term Borrowings 50,342.10
FOR DIVIDENDS
Deferred Tax Liabilities [Net] 0.00 Dividend Remittance In Foreign Currency -
Other Long Term Liabilities 4,038.80 EARNINGS IN FOREIGN EXCHANGE
Long Term Provisions 233.00 FOB Value Of Goods -
Total Non-Current Liabilities 54,613.90 Other Earnings 4,906.00
CURRENT LIABILITIES BONUS DETAILS
Short Term Borrowings 6,547.80 Bonus Equity Share Capital 1,566.39
Trade Payables 20,536.90 NON-CURRENT INVESTMENTS
Other Current Liabilities 7,706.60 Non-Current Investments Quoted Market Value 30,296.10
Short Term Provisions 129.10 Non-Current Investments Unquoted Book Value 11,876.40
Total Current Liabilities 34,920.40
Total Capital And Liabilities 190,741.60
ASSETS
NON-CURRENT ASSETS
Tangible Assets 38,117.60
Intangible Assets 73,405.20
Capital Work-In-Progress 1,181.80
Intangible Assets Under Development 8,418.40
Fixed Assets 121,123.00
Non-Current Investments 45,959.00
Deferred Tax Assets [Net] 887.50
Long Term Loans And Advances 1,115.80
Other Non-Current Assets 3,985.40
Total Non-Current Assets 173,070.70
CURRENT ASSETS
Current Investments 0.00
Inventories 3.90
Trade Receivables 3,211.80
Cash And Cash Equivalents 108.70
Short Term Loans And Advances 9,678.40
OtherCurrentAssets 4,668.10
Total Current Assets 17,670.90
Total Assets 190,741.60
PROFIT AND LOSS ACCOUNT BHARTI AIRTEL
INCOME
Revenue From Operations [Gross] 62,276.30
Revenue From Operations [Net] 62,276.30
Total Operating Revenues 62,276.30
Other Income 184.30
Total Revenue 62,460.60
EXPENSES
Purchase Of Stock-In Trade 0.00
Operating And Direct Expenses 29,528.10
Employee Benefit Expenses 1,738.50
Finance Costs 2,912.50
Depreciation And Amortisation Expenses 12,203.40
Other Expenses 7,316.80
Total Expenses 53,699.30
Mar 17

12 mths

Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax 8,761.30

Exceptional Items -17,270.80
Profit/Loss Before Tax -8,509.50
Tax Expenses-Continued Operations
Current Tax 9.50
Less: MAT Credit Entitlement 121.80
Deferred Tax 1,867.30
Tax For Earlier Years -338.90
Total Tax Expenses 1,416.10
Profit/Loss After Tax And Before ExtraOrdinary Items -9,925.60
Profit/Loss From Continuing Operations -9,925.60
Profit/Loss For The Period -9,925.60
Mar 17

12 mths

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE
Basic EPS (Rs.) -24.84
Diluted EPS (Rs.) -24.84
VALUE OF IMPORTED AND INDIGENIOUS RAW MATERIALS
STORES, SPARES AND LOOSE TOOLS
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 399.70
Tax On Dividend 145.90
Equity Dividend Rate (%) 20.00
FINANCIAL STATEMENT IN THE BOOKS OF RELIANCE COMMUNICATION.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH, 2017.

INCOME
Revenue From Operations [Gross] 9,879.00
Less: Excise/Sevice Tax/Other Levies 1,056.00
Revenue From Operations [Net] 8,823.00
Other Operating Revenues 0.00
Total Operating Revenues 8,823.00
Other Income 331.00
Total Revenue 9,154.00
EXPENSES
Operating And Direct Expenses 7,506.00
Employee Benefit Expenses 187.00
Finance Costs 2,409.00
Depreciation And Amortisation Expenses 1,972.00
Other Expenses 935.00
Total Expenses 13,009.00
Mar 17

12 mths

Profit/Loss Before Exceptional, ExtraOrdinary Items And Tax -3,855.00

Exceptional Items 0.00
Profit/Loss Before Tax -3,855.00
Tax Expenses-Continued Operations
Deferred Tax -2,059.00
Tax For Earlier Years 0.00
Total Tax Expenses -2,059.00
Profit/Loss After Tax And Before ExtraOrdinary Items -1,796.00
Profit/Loss From Continuing Operations -1,796.00
Profit/Loss For The Period -1,796.00
Mar 17

12 mths

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE
Basic EPS (Rs.) -7.28
Diluted EPS (Rs.) -7.28
VALUE OF IMPORTED AND INDIGENIOUS RAW MATERIALS
STORES, SPARES AND LOOSE TOOLS
Imported Stores And Spares 0.00
Indigenous Stores And Spares 27.00
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 0.00
Tax On Dividend 0.00
Equity Dividend Rate (%) 0.00
BALANCE SHEET AS ON 31ST MARCH,2017

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 1,244.00 OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
Total Share Capital 1,244.00
COMMITMENTS
Reserves and Surplus 22,840.00 Contingent Liabilities 8,555.00
Total Reserves and Surplus 22,840.00 CIF VALUE OF IMPORTS
Total Shareholders Funds 24,084.00 Stores, Spares And Loose Tools 0.00
NON-CURRENT LIABILITIES Capital Goods 211.00
Long Term Borrowings 18,629.00 EXPENDITURE IN FOREIGN EXCHANGE
Deferred Tax Liabilities [Net] 1,407.00 Expenditure In Foreign Currency 2,011.00
REMITTANCES IN FOREIGN
Other Long Term Liabilities 356.00
CURRENCIES FOR DIVIDENDS
Long Term Provisions 31.00 Dividend Remittance In Foreign Currency -
Total Non-Current Liabilities 20,423.00 EARNINGS IN FOREIGN EXCHANGE
CURRENT LIABILITIES FOB Value Of Goods -
Short Term Borrowings 7,928.00 Other Earnings 1,653.00
Trade Payables 2,435.00 BONUS DETAILS
Other Current Liabilities 17,797.00 Bonus Equity Share Capital -
Short Term Provisions 1,222.00 NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market
Total Current Liabilities 29,382.00 -
Value
Non-Current Investments Unquoted Book
Total Capital And Liabilities 73,889.00 17,090.00
Value
ASSETS CURRENT INVESTMENTS
NON-CURRENT ASSETS Current Investments Quoted Market Value -
Tangible Assets 14,751.00 Current Investments Unquoted Book Value 4,599.00
Intangible Assets 13,797.00
Capital Work-In-Progress 1,130.00
Intangible Assets Under Development 66.00
Fixed Assets 29,744.00
Non-Current Investments 17,090.00
Deferred Tax Assets [Net] 3,558.00
Long Term Loans And Advances 0.00
Other Non-Current Assets 5,466.00
Total Non-Current Assets 55,858.00
CURRENT ASSETS
Current Investments 4,599.00
Inventories 108.00
Trade Receivables 1,636.00
Cash And Cash Equivalents 643.00
Short Term Loans And Advances 6,215.00
OtherCurrentAssets 4,830.00
Total Current Assets 18,031.00
Total Assets 73,889.00
RATIO ANALYSIS
Ratio analysis is the process of determining and interpreting numerical relationship based on financial
statements. It is the technique of interpretation of financial statements with the help of accounting ratios
derived from the balance sheet and profit and loss account.

Basis Of Comparison
Trend Analysis involves comparison of a firm over a period of time, that is, present ratios are compared
with past ratios for the same firm. It indicates the direction of change in the performance – improvement,
deterioration or constancy – over the years.
Interfirm Comparison involves comparing the ratios of a firm with those of others in the same lines of
business or for the industry as a whole. It reflects the firm’s performance in relation to its competitors.

Comparison with standards or industry average

Ways To Interpret Accounting Ratios
Single absolute ratio.
Group ratio.
Historical comparison.
Inter-firm comparison.
Projected ratios.

Classification Of Ratios
Analysis of Short Term Financial Position or Test of Liquidity.
Analysis of Long Term Financial Position or Test of Solvency.
Activity Ratios.
Profitability Ratios.
I. Test Of Liquidity
The liquidity ratios are used to test the short term solvency or liquidity position of the
business.
It enables to know whether short term liabilities can be paid out of short term assets.
It indicates whether a firm has adequate working capital to carry out routine business activity.
It is a valuable aid to management in checking the It is a valuable aid to management in
checking the efficiency with which working capital is being efficiency with which working
capital is being employed.
It is also of importance to shareholders and long term creditors in determining to some extent
the prospects creditors in determining to some extent the prospects of dividend and interest
payment.

Important Ratios In Test Of Liquidity Liquidity

Current ratio.
Quick ratio.
Absolute liquid ratio.
 Current Ratio
It is the most widely used of all analytical devices based on the balance sheet. It establishes
relationship between total current assets and current liabilities.

Current assets
Current ratio=
Current liabilities

AIRTEL RELIANCE
= 17670.90 / 34920.40 = 18031 / 29382
= 0.50 = 0.61

Ideal ratio: 2:1

High ratio indicates under trading and over capitalization. Low ratio indicates over trading and
under capitalization.
 Quick Ratio or Acid Test Ratio
It establishes relationship between liquid assets and liquid liabilities. It is a refinement to
current ratio and second testing device for working capital.

Quick assets
Quick ratio=
Quick liabilities

AIRTEL RELIANCE
= 0.70 = 0.21

Ideal ratio: 1:1

Usually, a high acid test ratio is an indication that the firm is liquid and has ability to meet its current or
liquid liabilities in time and on the other hand a low quick ratio represents that the firm’s liquidity position
is not good.
Absolute Liquidity Ratio
This ratio establishes a relationship between absolute liquid assets to quick liabilities.
Absolute liquid assets
Absolute liquid ratio=
Quick liabilities
AIRTEL RELIANCE

Ideal ratio: 1:2

It means that if the ratio is 1:2 or more than this the concern can be taken as liquid. If the ratio is less
than the standard of 1:2, it means the concern is not liquid.
2. Test Of Solvency
Long term solvency ratios denote the ability of the organisation to repay the loan ability of the
organisation to repay the loan and interest.
When an organization's assets are more When an organization's assets are more than its liabilities is
known as solvent than its liabilities is known as solvent organisation.
Solvency indicates that position of an enterprise where it is capable of meeting enterprise where it is
capable of meeting long term obligations.

Important Ratios In Test Of Solvency

Debt-equity ratio.
Proprietary ratio.
Solvency ratio.
Fixed assets to net worth ratio.
Current assets to net worth ratio.
Current liabilities to net worth ratio.
Capital gearing ratio.
Fixed assets ratio.
Debt servicing ratio.
Dividend coverage ratio.
 Debt Equity Ratio
It Is calculated to measure the relative claims of outsiders and the owners against the firm’s assets.
This ratio indicates the relationship between the outsiders funds and the shareholders’ funds.
Outsiders funds
Debt equity ratio=
Shareholders funds

AIRTEL RELIANCE

= 0.56 = 0.35

Ideal ratio: 2:1;

It means for every 2 shares there is 1 debt. If the debt is less than 2 times the equity, it means the
creditors are relatively less and the financial structure is sound. If the debt is more than 2 times the
equity, the state of long term creditors are more and indicate weak financial structure.
 Proprietary Ratio or Net Worth Proprietary Ratio or Net Worth Ratio
It establishes relationship between the proprietors fund or shareholders funds and the total assets

Proprietary funds Capital employed

Proprietary ratio= Or
Total assets Total liabilities

AIRTEL RELIANCE
= 138793.9 / 190741.60 = 18393 / 73889
= 0.54 = 0.24

Ideal ratio: 0.5:1

Higher the ratio better the long term solvency (financial) position of the company. This ratio indicates
the extent to which the assets of the company can be lost without affecting the interest of the
creditors of the company.
 Solvency Ratio
It expresses the relationship between total assets and total liabilities of a business. This ratio is a small
variant of equity ratio and can be simply calculated as 100-equity ratio
Total assets
Solvency ratio=
Total liabilities

AIRTEL RELIANCE
= 190741.60 /

No standard ratio is fixed in this regard. It may be compared with similar, such organisations to evaluate
the solvency position. Higher the solvency ratio, the stronger is its financial position and vice-versa.
Fixed Assets To Net Worth
It is obtained by dividing the depreciated book value of fixed assets by the amount of proprietors funds.
Net fixed assets
Fixed assets to net worth ratio=
Net worth
AIRTEL RELIANCE
= 121123 / 17249.5 = 29744 / 11351
= 0.70 = 2.62

Ideal ratio: 0.75:1

A higher ratio, say, 100% means that there are no outside liabilities and all the funds employed are those
of shareholders. In such a case the return to shareholders would be lower rate of dividend and this is also
a sign of over capitalization
Fixed Assets To Net Worth
This ratio shows the extent to which ownership funds are sunk into assets with relatively low funds are
sunk into assets with relatively low turnover. When the amount of proprietor's turnover. When the
amount of proprietor's funds exceed the value of fixed assets, apart of funds exceed the value of fixed
assets, apart of the net working capital is provided by the the net working capital is provided by the
shareholders, provided there are no other nonshareholders, provided there are no other noncurrent
assets, and when proprietor’s funds are current assets, and when proprietor’s funds are less than the fixed
assets, creditors obligation less than the fixed assets, creditors obligation have been used to finance a part
of fixed have been used to finance a part of fixed assets. The Yardstick for this measure is 65% assets. The
Yardstick for this measure is 65% for industrial undertakings.
Current Assets To Net Worth Ratio
It is obtained by dividing the value of current assets by the amount of proprietor’s funds. The purpose of
this ratio is to show the percentage of proprietor’s fund investment in current assets.
Current assets
Current assets to net worth ratio =
Proprietor’s fund

AIRTEL RELIANCE
= 17670.90 / 101207.30 = 18031 / 24084
= 0.17 = 0.74

A higher proportion of current assets to proprietor’s fund, as compared with the proportion of fixed assets
to proprietor’s funds is advocated, as it is an indicator of the financial strength of the business, depending
on the nature of the business there may be different ratios for different firms. This ratio must be read
along with the results of fixed assets to proprietor’s funds ratio.
Current Liabilities To Net Worth

It is expressed as a proportion and is obtained by dividing current liabilities by proprietor’s fund.

Current liabilities
Current liabilities to net worth ratio =
Net worth

AIRTEL RELIANCE
= 34920.40 / 17249.5 = 29382 / 11351
= 2.02 = 2.58

Ideal ratio:1:3
This ratio indicates the relative contribution of short term creditors and owners to the capital of an
enterprise. If the ratio is high, it means it is difficult to obtain long term funds by the business.
Capital Gearing Ratio
It expresses the relationship between equity capital and fixed interest bearing securities and fixed
dividend bearing shares.
Fixed interest bearing securities + fixed dividend
CGR=
bearing shares

AIRTEL RELIANCE

Equity shareholders funds

Components of fixed interest bearing securities Components of equity shareholders funds
Debentures Equity share capital
Long-term loans Accumulated reserves & profits
Long-term fixed deposits Less losses and fictitious assets

Interpretation Of Capital Gearing Ratio

When fixed interest bearing securities and fixed dividend bearing shares are higher than equity dividend
bearing shares are higher than equity shareholders funds, the company is said to be ‘highly geared’.
Where the fixed interest hearing securities and fixed dividend bearing shares share equal to equity share
dividend bearing shares share equal to equity share capital it is said to be ‘evenly geared’.
When the fixed interest bearing securities and fixed dividend bearing shares are lower than equity share
dividend bearing shares are lower than equity share capital it is said to be ‘low geared’.
If capital gearing is high, further raising of long term loans may be difficult and issue of equity shares may
loans may be difficult and issue of equity shares may be attractive and vice-versa.
Fixed Assets Ratio
It establishes the relationship between fixed assets and capital employed
Fixed assets
Fixed assets ratio =
Capital employed

AIRTEL RELIANCE
= 121123 / 138793.9 = 29744 / 18393
= 0.87 = 1.61

Ideal ratio: 0.67:1

This ratio enables to know how fixed assets are financed i.e. by use of short term funds or by long term
funds. This ratio should not be more than 1.
Fixed Charges cover or Debt Service Ratio
This ratio is determined by dividing net profit by fixed interest charges
Net profit before deduction of interest and income tax
Debt service ratio=
Fixed interest charges

AIRTEL RELIANCE
= 8761.30 / 1416 = 3855 / 2059
= 6.18 times = 1.87 times

Ideal ratio: 6 or 7 times;

if the ratio is high it means there is higher margin of safety for the long term lenders and as such it is not
difficult for the business to obtain further long term funds and vice-versa. This ratio indicates the financial
ability of the enterprise to meet interest payment out of current earnings
Dividend Cover Ratio
It is the ratio between disposable profit and dividend. Disposable profit refers to profit left over after
paying interest on long term borrowing and income tax.
Net profit after interest and tax
Dividend cover ratio =
Dividend declared
AIRTEL RELIANCE
= 9925.60 / 399.70 = 1796 / 0
= 24.83 = ND

This ratio indicates the ability of the business to maintain the dividend on shares in future. If this ratio is
higher is indicates that there is sufficient amount of retained profit. Even if there is slight decrease in profit
in the future it will not affect payment of dividend in future
 3. Activity Ratio
Activity ratios indicate the performance of an Activity ratios indicate the performance of an
organisation.
This indicate the effective utilization of the various assets of the organisation. various assets of the
organisation.
Most of the ratio falling under this category is based on turnover and hence these ratios are based on
turnover and hence these ratios are called as turnover ratios.

Important Ratios In Activity Ratio

Stock turnover ratio
Debtors turnover ratio.
Creditors turnover ratio.
Wording capital turnover ratio.
Fixed assets turnover ratio.
Current assets turnover ratio.
Total assets turnover ratio.
Sales to networth ratio.
Stock Turnover Ratio
This ratio establishes the relationship between the cost of goods sold during a given period and the
average sock holding during that period. It tells us as to how many times stock has turned over (sold)
during the period. Indicates operational and marketing efficiency. Helps in evaluating inventory policy
to avoid over stocking.
Cost of goods sold
Inventory turnover ratio =
Average stock
Cost of goods sold = sales - gross profit = opening stock + purchases –
closing stock
Opening stock + Closing stock
Average stock =
2
AIRTEL RELIANCE
= = 7.79

Interpretation Of Stock Turnover Ratio

Ideal ratio: 8 times; A low inventory turnover may : 8 times; A low inventory turnover may reflect dull
business, over investment in inventory, reflect dull business, over investment in inventory,
accumulation of stock and excessive quantities of accumulation of stock and excessive quantities of
certain inventory items in relation to immediate certain inventory items in relation to immediate
requirements.
A high ratio may not be accompanied by a relatively A high ratio may not be accompanied by a
relatively high net income as, profits may be sacrificed in high net income as, profits may be sacrificed
in obtaining a large sales volume (unless accompanied obtaining a large sales volume (unless
accompanied by a larger total gross profit). It may indicate under by a larger total gross profit). It may
indicate under investment in inventories. But generally, a high stock investment in inventories. But
generally, a high stock turnover ratio means that the concern is efficient and turnover ratio means
that the concern is efficient and hence it sells its goods quickly.
Debtor Turnover Ratio
This ratio explains the relationship of net credit sales of a firm to its book debts indicating the rate at
which cash is generated by turnover of receivables or debtors.
The purpose of this ratio is to measure the liquidity of the receivables or to find out the period over
which receivables remain uncollected.
Net credit sales
Debtor turnover ratio =
Average Debtors
Opening balance + closing balance
Average debtors =
2
AIRTEL RELIANCE
= = 53.98

Debtors include bills receivables along with book debts.

Interpretation Of Debtor Turnover ratio.

Ideal ratio Ideal ratio: 10 to 12 times; debt collection period of 30 to 36 days is considered
ideal.
A high debtor turnover ratio or low collection period is indicative of sound management period is
indicative of sound management policy.
The amount of trade debtors at the end of period should not exceed a reasonable period should not
exceed a reasonable proportion of net sales. Larger the trade debtors greater the expenses of collection.
 Average Collection Period
The average collection period represents the average number of days for which a firm has to wait
before its receivables are converted into cash.
Number of working day in year
Average collection period =
Debtor turnover ratio
AIRTEL RELIANCE
Creditors Turnover Ratio
This ratio indicates the number of times the creditors are paid in a year. It is useful for creditors in finding
out how much time the firm is likely to take in repaying its trade creditors
Net credit purchases
Creditors turnover ratio =
Average creditors
Opening balance + closing balance
Average creditors =
2
Number of working days
Average payment period =
Creditors turnover ratio
AIRTEL RELIANCE

Interpretation Of Creditor Turnover Ratio

Ideal ratio Ideal ratio: 12 times; debt payment period of 30 days is considered ideal.
Very less creditors turnover ratio, or a high debt payment period may indicate the firms inability in
meeting its obligation in time.
Working Capital Turnover Ratio
This ratio indicates the number of times the working capital is turned over in the course of the year.
Measures efficiency in working capital usage. It establishes relationship between cost of sales and
working capital.
Cost of sales
Working capital turnover ratio =
Average working capital
Opening + closing working capital
Average working capital =
2
AIRTEL RELIANCE

Interpretation of Working Capital Turnover Ratio.

A higher ratio indicates efficient utilization of working capital and a low ratio indicates inefficient
utilization of working capital.
But a very high ratio is not a good situation for any firm and hence care must be taken for any firm and
hence care must be taken while interpreting the ratio.
Fixed Assets Turnover Ratio
This ratio establishes a relationship between fixed assets and sales.
Net sales
Fixed assets turnover ratio =
Fixed assets
AIRTEL RELIANCE
= 954683 / 121123 = 19493 / 29744
= 7.88 = 0.65

Ideal ratio: 5 times A high ratio indicates better utilisation of fixed assets.
A low ratio indicates under utilisation of fixed assets.
Total Asset Turnover Ratio
This ratio establishes a relationship between total assets and sales. This ratio enables to know the efficient
utilisation of total assets of a business.
Net sales
Total assets turnover ratio =
Total assets

AIRTEL RELIANCE
= 95468.30 / 190741.60 = 19493 / 73889
= 0.50 = 0.26

Ideal ratio: 2 times High ratio indicates efficient utilization and ratio less than 2 indicates under utilization.
 Profitability Ratio
Profitability ratios indicate the profit earning capacity of a business.
Profitability ratios are calculated either in relation to sales or in relation to investments.
Profitability ratios can be classified into two categories.
a) General Profitability Ratios.
b) Overall Profitability Ratios.

General Profitability Ratios

Gross profit ratio.
Net profit ratio.
Operating ratio.
Operating profit ratio.
Expense ratio.

Gross Profit Ratio

It expresses the relationship of gross profit to net sales and is expressed in terms of percentage. This ratio
is a tool that indicates the degree to which selling price of goods per unit may decline without resulting in
losses.
Gross profit
Gross profit ratio = X 100
Net sales
AIRTEL RELIANCE
= 23692.90 / 62276.30 * 100 = 526 / 8823 * 100
= 38.04 = 5.96

A low gross profit ratio may indicate unfavorable purchasing, the instability of management to develop
sales volume thereby making it impossible to buy goods in large volume.
Higher the gross profit ratio better the results.
Net Profit Ratio

It expresses the relationship between net profit after taxes to sales. Measure of overall profitability useful
to proprietors, as it gibes an idea of the efficiency as well as profitability of the business to a limited extent.
Net profit after taxes
Net profit ratio = X 100
Net sales

AIRTEL RELIANCE
= 9925.60 / 62276.30 * 100 = 1796 / 8823 *100
= 15.93 = 20.35

Higher the ratio better is the profitability.

Operating Ratio
This ratio establishes a relationship between cost of goods sold plus other operating expenses and net
sales. This ratio is calculated mainly to ascertain the operational efficiency of the management in their
business operations.
Cost of goods sold + operating expenses
Operating ratio =
Net sales
AIRTEL RELIANCE
= 62276.30 + 38583.40 / 62276.30 = 8823 + 8628 / 8823
= 61.95% = 97.78%

Higher the ratio the less favorable it is because it would leave a smaller margin to meet interest, dividend
and other corporate needs. For a manufacturing concern it is expected to touch a percentage of 75% to
85%. This ratio is partial index of over all profitability.
 Operating Profit Ratio
This ratio establishes the relationship between operation profit and net sales.

Operating profit
Operating profit ratio = X 100
Net sales
Operating profit ratio = 100-operating ratio
Operating profit = Net sales – ( cost of goods sold + Administrative and office expenses + selling and
distributive expenses.

AIRTEL RELIANCE
= 23692.90 / 62276.30 *100 = 526 / 8823 *100
= 38.04 % = 5.96 %
Expenses Ratio
It establishes relationship between individual operation expenses and net sales revenue.
Cost of goods sold
1. Cost of goods sold ratio = X 100
Net sales
AIRTEL RELIANCE
= 1:1 = 1:1

Office and admin exp

2. Admin. and office exp ratio = X100
Net sales
AIRTEL RELIANCE
= 5086 / 62276.30 * 100 = 4865 / 8823 *100
= 8.16 = 0.53
 Selling and dist. Exp
3. Selling and distribution ratio = X 100
Net sales
AIRTEL RELIANCE
= 3377.7 / 62276.30 *100 = 3763 / 8823 *100
= 5.42 = 42.64

Non operating expense

4. Non-operating expense ratio = X 100
Net sales
AIRTEL RELIANCE
= 2229.6 / 62276.30 *100 = 2863 / 8823 *100
= 3.58 = 32.44
Test Of Overall Profitability
Return on shareholders investment or Net worth ratio.
Return on equity capital.
Return on capital employed.
Return on total resources.
Dividend yield ratio.
Preference dividend cover ratio.
Equity dividend cover ratio.
Price covering ratio.
Dividend pay out ratio.
Earning per share.
Return On Shareholders Investment
Shareholders investment also called return on proprietor’s funds is the ratio of net profit to proprietor’s
funds. It is calculated by the prospective investor in the business to find out whether the investment would
be worth-making in terms of return as compared to the risk involved in the business.
Net profit (After tax and int)
Return on shareholders investment =
Proprietors funds
AIRTEL RELIANCE
= 3196.50 / 101207.30 = 1796 / 24084
= 0.031 = 0.074

Return On Shareholders Investment

This ratio is of great importance to the present and prospective shareholders as well as the management
of prospective shareholders. As this ratio reveals how well the resources of a firm are being used, higher
the ratio, better are the results. The return on shareholders investment should be compared with the
return of other investment should be compared with the return of other similar firms in the same industry.
The inter firm comparision of this ratio determines whether their comparision of this ratio determines
whether their investments in the firm are attractive or not as the investments in the firm are attractive
or not as the investors would like to invest only where their return is investors would like to invest only
where their return is higher. Similarly, trend ratios can also be calculated for a number of years to get5 an
idea of the prosperity and growth of deterioration in the company’s profitability and efficiency.
Return On Equity Capital
This ratio establishes the relationship between net profit available to equity shareholders ad the amount
of capital invested by them. It is used to compare the performance of company's equity capital with those
of other companies, and thus help the investor in choosing a company with higher return on equity capital.
Net profit – preference dividend
Return on equity capital =
Equity share capital (paid up)

AIRTEL RELIANCE
= - 9.80 = 10.89
Return On Capital Employed
This ratio is the most appropriate indicator of the earning power of the capital employed in the business.
It also acts as a pointer to the management showing the progress or deterioration in the earning capacity
and efficiency of the business.
Net profit before taxes and interest on long – term loans and debentures
Return on capital employed =
Capital employed

AIRTEL RELIANCE
= - 6.36 = 7.97

Ideal ratio: 15%

If the actual ratio is equal ratio is equal to or above 15% It indicates higher productivity of the capital
employed and vice versa
Return of total resources
This ratio acts as an yardstick to assess the efficiency of the efficiency of the operations of the business as
it indicates the extent to which assets employed in the business are utilised to results in net profit.
Net profit
Return on total recourses = X 100
Total assets

AIRTEL RELIANCE
= -9925.60 / 190741.60 * 100 = -1796 / 73889 * 100
= - 5.20 = - 2.43
Dividend Yield Ratio
It refers to the percentage or ratio of dividend paid per share to the market price per share. This ratio
throws light on the effective rate of return on investment, which potential investors may hope to earn.
Dividend paid per equity share
Dividend yield ratio =
Market price per equity share

AIRTEL RELIANCE
=1 = NA
Preference Dividend Cover
It indicates how many times the preference dividend is covered by profits after tax. This ratio measures
the margin o safety for preference shareholders. Such investors normally expect their dividend to be
covered about 3 times by profits available for dividend purpose.
Profit after tax
Preference dividend cover =
Annual programme dividend

AIRTEL RELIANCE
NA NA
Equity Dividend Cover
This ratio indicates the number of times the dividend is covered by the amount of profit available for
equity shareholders.
Net profit after tax - pref dividend
Equity dividend cover =
Dividend paid on equity capital
Earning per equity share
=
Dividend per equity share
AIRTEL RELIANCE
= -24.83 / 1 NA
= -24.83

Ideal ratio: 2 times;

i.e. for every Rs. 100 profits available for dividend, Rs. 50 is retained in the business and Rs. 50 is
distributed. Higher the ratio higher is extent of retained earnings and higher is the degree of certainty
that dividend will be repeated in future.
Price Earning Ratio
It shows how many times the annual earnings the present shareholders are willing to pay to get a share.
This ratio helps investors to know the effect of earnings per share on the market price of the share. This
ratio when calculated for several years can be used as term analysis for predicting future price earning
ratios and therefore, future stock prices.
Average market price per share
Price earning ratio =
Earning per share

AIRTEL RELIANCE
Dividend Pay Out Ratio
This ratio indicates the proportion of earnings available which equity share holders actually receive in the
form of dividend.
Dividend paid per share
Pay out ratio =
Earning per share

AIRTEL RELIANCE
= 1 / -24.83 NA
= 0.04

An investor primarily interested should invest in equity share of a company with high pay out ratio. A
company having low pay out ratio need not necessarily be a bad company. A company having income may
like to finance expansion out of the income, thus low pay out ratio. investor interested in stock price
appreciation may well invest in such a company though the pay out ratio is low.
Earning Per Share

This ratio indicates the earning per equity share. It establishes the relationship between net profit
available for equity shareholders and the number of equity shares.
Net profit available for equity share holders
Earning per share =
Number of equity shares

AIRTEL RELIANCE
= -24.83 = -7.22