FINANCIAL PERFORMANCE OF BSNL

A CASE STUDY OF VISAKHAPATNAM SSA

CHAPTER – 1

1. Introduction :

Bharat Sanchar Nigam Limited is the Public Sector Company which has emerged
from Department of Telecommunications. Basically Department of Telecommunications
is a Service Organization and now being transformed into Bharat Sanchar Nigam
Limited it has became as an Commercial organization which has competition from other
Private Telecom Service Providers. Now before introducing about Bharat Sanchar
Nigam Limited it will be right to mention a brief about the Birth of Telephone,
Telegraph Department thereby the birth of Department of Telecommunications and
History of Telecommunications being the parent organization for Bharat Sanchar Nigam
Limited.
 150 YEARS OF TELECOMMUNICATIONS IN INDIA
FROM PWD TO P&T TO DOT TO BSNL

Like the Ocean that is made of tiny drops, the P&T had a slow and uneasy start.
The Sprawling Posts and Telegraphs Department, for instance, occupies a small corner
of the public works department, in 1851. Dr. William O’Shaughnessy who pioneered
Telegraph and Telephone in India belonged to the Public Works Department all through
the experimental stage. A regular, separate department was opened around 1854 when
Telegraph facilities were thrown open to the public.

The Telegraph Department during 1854-57 comprised a Superintendent of

Telegraphs, with three Deputy Superintendents at Bombay, Madras and Pegu in Burma.
There were Inspectors at Indore, Agra, Kanpur and Banaras and an Operating and
Maintenance Staff. Dr. William O’Shaughnessy was the first Superintendent of Electric
Telegraphs in India and later become the first Director General. The Indo-European
Telegraph Department, which later came to be known as the Overseas Communications,
was administered by a Director-in-Chief whose quarters were in London. On 15 th
February 1888, it was merged with the Director General of the India Telegraph
Department. It was decided that the administration reports of the two departments, Indian
telegraph and the Indo European Department separated so as to shown how the finances
of the country were affected by each unit. The operations of the two separate services.
Post Office and Telegraph Department developed side by side. On the eve of World
War-1 in 1914, the next big administrative change came. The Postal Department and the
Telegraph Department were amalgamated under a single Director General. The process
had started in 1912, but it was complete in 1914. During 1923-24, 152 questions relating
to the Department were asked and answered in the Indian Legislative Assembly, Posts
and Telegraphs has always evoked a great deal of interest from law makers.

A Major reorganization of the Department took place in April, 1925. The

accounts of the Indian Posts and Telegraphs were reconstituted to examine the true fiscal
profile of the Department. The attempt was imposing a burden on the tax payers or
bringing in revenue to the Exchequer, how far each of the four constituent branches of
the Department, the Postal, Telegraph and wireless were contributing towards this result.
It was further examined, whether the rates charged from the public for the various
services were inadequate or excessive.

The Posts and Telegraphs, like all public and private undertakings, was a victim
of the Universal Financial and economic depression which crashed on the World 1930.
During 1931, numerous economy measures had to be introduced according to the advice
of the Posts and Telegraphs Sub-Committee to the Retrenchment Committee prescribed
over by Sir Cowasjee Jahangir Jr. Naturally, the adoption of the various measures of
retrenchment could not but have an adverse effect on the emoluments and interests of the
personnel of the Department.

From the beginning, P&T set up was run on welfare lines. Profit was not the
motto. The annual report of the Department for 1931 said “It is the accepted policy of the
Government that the department should be so administered that there should be neither
any substantial profit nor any substantial loss on its working under normal conditions. As
has already been indicated, the achievement of this ideal has not proved possible owing
mainly to exceptional economic and trade conditions of recent years. One of the main
contributory causes was the revision and improvement of pay of the great bulk of the
employees of the department in recent years. This was undertaken with the approval of
and indeed under pressure by the Legislative Assembly. While the department is
commonly spoken of as a Commercial’ one though as far as possible it is guided by the
commercial considerations in the regulation of its business. It must be realized that in
many directions it is debarred from observing strict business principles. Many of the
purposes which it is required to serve are un remunerative and notably, in matters
relating to the employment and control of staff, the department is bound by a large
volume of statutory and other rules, doubtlessly necessary for the regulation of a public
service, but which in the aggregate involve many directions of a kind unknown to private
commercial concerns.

After the implementation of the Federal Financial Integration Scheme of 1 st April

1950, the administration of the entire network of Telegraph and Telephone systems of
the nation, including those previously existing in the former princely states became a
major adventure. In 1950 the number of Telephone Exchanges absorbed from princely
states was 196. These systems which were working with different degrees of efficiency
could fit into the general telecommunication network. The installed capacity of these 196
Exchanges was 13,362 Line with 11,296 working connections. Soon after the absorption,
an attempt was made to improve their technical efficiency by replacing absolute and
unserviceable equipment and lending well qualified and experienced staff,
simultaneously, isolated exchanges were integrated with the general pool. The more
complicated task was acquisition of the staff. Their final absorption in to the different
cadres of service in and Telegraphs was a major step.

From P&T to DOT

Till 31st December 1984, the postal, telegraph and telephone services were
managed by the Posts & Telegraphs Department. In January 1985, tow separate
departments for the posts and telecommunications were created. The accounts of the
department initially maintained by the Accountant General of the P&T. However, by
April 1972, the Telecommunications accounts were separated. Simultaneously the
department also started preparing the balance sheet annually. With the takeover of the
accounts from the audit and delegation of larger financial to the field units, Internal
Financial Advisors were posted to all the Circles and units.

Birth of DoT :

Rajiv Gandhi initiated the liberalisation of the telecom sector by demonopolising

the telecom equipment-manufacturing sector in 1985, allowing private firms to
manufacture telephones, while DOT licensed switching technology from various foreign
firms. Simultaneously, Rajiv Gandhi also gave a thrust to national development of
telecommunications equipment by hiring a non resident Indian engineer called Satyen
(Sam) Pitroda in 1984 to start the Center for the Development of Telematics with the
goal of designing an indigenous digital telecommunications switch, whose manufacture
would be licensed to private firms.
 The creation of the Department of Telecom (DoT) was followed by a proposal to
change the organisation structure further by carving out the metropolitan areas into
separate operating companies’ also generated debate.

The DoT’s motives to create MTNL and VSNL could be the access these
companies could provide to private capital, which it did not have and needed to
supplement plan allocations. In 1986, according to the DoT annual report, two new
public corporations, Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar
Nigam Limited (VSNL) were set up to provide decision making autonomy and flexibility
and allow public borrowings to supplement internal resources.

MTNL was carved out of DOT and took over operations, maintenance and
development of telecommunication services in New Delhi and Mumbai. VSNL was set
up to plan, operate and develop international telecommunication services in India.
Pitroda added another bureaucratic body in 1989 and the Tele- Communication was
created with a wide range of executive, administrative and financial powers to formulate
and regulate policy and prepare the budget for DoT.

However, the large revenue surpluses generated by MTNL and VSNL caused
friction between DOT and the new companies. While the new companies preferred to
use their surplus funds for their own expansion, DOT wanted resources transferred in
order to pay for network development in other parts of the country. By February 1990,
the Telecom Commission was forced to develop a revenue-sharing arrangement between
the parent and the siblings.

This friction in the 1980’s may help explain why the DOT has refused to
decentralised operations by carving out other parts of the country into separate
organisations. This, despite another government appointed high powered committee on
reorganisation of the telecom department recommending in 1991 that the zonal telecom
corporations be formed to manage telecom services across the country and a corporation
be set up to handle long distance services within India. This committee also laid down
the first blue-pring for reforms that were to be witnessed from 1991 onwards by
suggesting that Value Added Services should be provided by the Private Sector and
production of equipment be undertaken by both Private and Public sectors.
 By the late 1980’s a multitude of factors were impacting the way telecom policy
was being formed. The government was attaching greater importance to the goal of
expanding telecommunication services than it did in the first part of the decade. Efforts
were also being made through the C-DOT to design an
indigenous telecommunications switch, which was suited to the unique Indian
environmental conditions and could work through extreme variations of temperature,
humidity and dust.

India, however, resisted pressures from the developed countries to keep

telecommunications from being included, along with banking and finance, outside the
main agreement in 1996.

However, though reforms had been underway for five years by 1990, and terms
like privatisation and liberalisation were used in public debates during the 1980’s, the
meanings of those terms were different than those which applied to northern market
oriented telecommunications analysts. In India, privatization did not refer to selling
government enterprises then, but rather donated the licensing of private manufactures to
produce telecommunications equipment. Liberalisation, similarly, was used to describe
the policies since the mid-80’s which both expanded the number of manufacturing
licenses available and eased rules for importing electronic equipment. Rarely were
wither term mentioned with reference to telecom service provision in the 1980’s.

Restructuring the DOT

The Department of Telecommunications or DOT is playing a significant role in

the evolution of telecom services in India, Unitl now DOT was like any other
government undertaking with a lethargic work culture, but the new private operators
seem to have made a serious impact. The DOT is forced to corporate its operations and
work culture.

India Telecom, the new corporatised DOT, will be the country’s largest Public
Sector unit with revenue of Rs.1200 Crores and a surplus of Rs.800 crores. The
corporatization will throw up three entities, including India Telecom, which will provide
local and long distance communication services throughout the country except Mumbai
and New Delhi. These two metros will be dealt by MTNL (as before) and the third
corporate will be VSNL for international services.

The functions carried out earlier by the DOT have been segregated. A
corporatised DOT implies that its functions of a regulator, service provider and policy
maker would be carried out by three different organisations. The setting up of India
Telecom will pave the way for a level playing field, though initially it will be a dominant
player, since at least two thirds of the network up to 2007 will
be controlled by them. However, there are underlying fears that the telecom giants,
India Telecom, MTNL and VSNL could easily indulge in anti-competitive practices such
as cross-subsidisation. Also it remains to be seen whether India Telecom as a PSU, will
have the requisite autonomy to take on the private sector. Much would depend on the
composition of the board of directors and also the redefinition of the role of the Telecom
commission.

One big way in which the newly corporatised DOT is expected to benefit is by
being able to raise finance at will. Earlier, as a departmental undertaking the DOT was
restrained from approaching the public for raising funds. MTNL had in the past raised
resources for the DOT through bond issues. However, this was expected to change once
government holding in MTNL declined.

A re-organisation of the DOT had in any case become inevitable, because a lot of
DOT’s regulatory functions have been hived off to the newly formed TRAI. The latter
now has the power to set tariffs, decide on revenue sharing and interconnection charges
between operators and ensure that the operators abide by the license conditions. In fact
the line of demarcation dividing functions between the two undertakings (DOT and
TRAI) was very blurred causing a lot of confusion. This had led to several tussles in the
past.

All the future relationship (competition, resources raising etc) of MTNL / VSNL
with the corporatised DOT would be based on best commercial principles. The synergy
of MTNL, VSNL and the corporatised DOT would be utilised to further the growth in
this sector.
Structure of India’s Telecommunications Monopoly :

Until 1985, the Indian Telegraph Act of 1885 and the Wireless Telegraph Act 1932
provided the legal basis for the Central government’s telecommunications monopoly.
Under these laws, posts and telecommunications were combined in one P&T department
run by the Ministry of Communications. In the late 1970s and early 1980s protests
against poor service by subscribers, politicians, industrialists, and business leaders
coincided with global and national pressure for liberalization. As a result, a
parliamentary committee was established in 1981, which recommended numerous
structural and service improvements. Under the advice of this committee, Rajiv Gandhi
ordered the bifurcation of the Ministry of Posts and Telegraphs in 1985. A separate
Department of Telecommunications (DOT) was established under the Ministry of
Communications, and two supposedly autonomous Public Sector Undertakings (PSUs)
were created to expand, develop, and manage crucial segments of the Indian
telecommunications system.

 The Mahanagar Telephone Nigam Limited (MTNL) was set up to run services in
Delhi (the nation’s capital) and Mumbai, formerly Bombay (the nation’s commercial
centre) which together account for 25% of the nation’s phone lines.
 Telecommunication in the rest of the country continues to be run as a Government
Department because of staff resistance to change.
 Videsh Sanchar Nigam Limited (VSNL) was set up to run International Services.
 DOT was established as the exclusive, self-regulating provider of domestic and long-
distance service.

The DOT has achieved significant success from 1992-1996, DOT doubled practically
every aspect of the telecommunications infrastructure in India, from the number of
telephones in service to the long distance route kilometers. DOT did not, however,
succeed in reducing the registered waiting list for telephones, and in 1994, the
government acknowledged the need to liberalisation India’s telecommunications market.
History of Indian Telecommunications :
Year

1851 First operational landlines were laid by the government near Calcutta (Seat of
Birtish power)
1881 Telephone service introduced in India
1882 Meger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Cable Communication
Company (IRCC)
1947 Nationalization of all foreign telecommunication companies to form the Posts,
Telephone and Telegraph monopoly run by the government’s Ministry of
Communications.
1985 Department of Telecommunications (DOT) established, an exclusive provider of
domestic and long distance service that would be its own regulator (separate from
the postal system)
1986 Conversion of DoT into two wholly government-owned companies : the Videsh
Sanchar Nigam Limited (VSNL) for international telecommunications and
Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
1997 Telecom Regulatory Authority created.
2000 DOT has been converted into Bharat Sanchar Nigam Limited
 NATIONAL TELECOM POLICY

The Government of India recognizes that provision of world class

telecommunications infrastructure and information is the key to rapid economic and
social development of the country. It is critical not only for the development of the
information technology industry, but also has widespread ramifications on the entire
economy of the country. It is also anticipated that going forward, a major part of the
GDP of the country would be contributed by this sector. Accordingly, it is of vital
importance of the country that there be a comprehensive and forward looking
telecommunications policy which creates an enabling framework for development of this
industry.

National telecom policy 1994 – Objectives and Achievements

In 1994, the government announced the National Telecom Policy which defined
certain important objectives, including availability of telephone on demand, provision of
world class services at reasonable prices, ensuring India’s emergence as Major
manufacturing / export base of telecom equipment and universal availability of basic
telecom services to all villages. It also announced a series of specific targets to be
achieved by 1997. As against the National Telecom Policy 1994 target of provision of
PCO per 500 Urban population and coverage of all 6 lakhs villages. DOT has achieved
an urban PCO penetration of 1 PCO per 522 and has been able to provide telephone
coverage to only 3.1 lakhs villages. As regards provision of total telephone lines in the
country, DOT has provided 8.73 Million telephone connections against the eighth plan
target of 7.5 million lines.
National Telecom Policy 1999 – Objective and Targets.

Access to telecommunications is of utmost importance for achievement of the

country’s social and economic goals. Availability of affordable and effective
communications for the citizens is as the core of the vision and goal of the Telecom
Policy.

Strive to provided a balance between the provision of universal service to all

uncovered areas, including the rural areas, and the provision of high-level services
capable of meeting the needs of the country’s economy;

Encourage development of Telecommunications facilities in remote, hilly and

tribal areas of the country.

Create a modern and efficient Telecommunications infrastructure taking into

account the convergence of Information Technology, Media, Telecom and consumer
electronics and thereby propel India into becoming an IT superpower;

Convert PCO’s wherever justified, into public Teleinfo centers having

multimedia capability like ISDN services, remoter database access, government and
community information systems etc.,

Transform in a time bound manner, the Telecommunications sector to a greater

competitive environment in both urban and rural areas providing equal opportunities and
level playing held for all players;

Strengthen the research and development efforts in the country and provide an
impetus to build world – class – manufacturing capabilities.

Achieve efficiency and transparency in spectrum management.

Project the defense & security interests of the country.

 Enable Indian Telecom Companies to become truly global players.

In lines with the above objectives, the specific targets that the National telecom
Policy 1999 seeks to achieve would be;

Make available telephone on demand by the year 2002 and sustain in thereafter
so as to achieve a Tele-density of 7 by the year 2005 and 15 by the year 2010.

Encourage development of Telecom in Rural Areas making it more affordable by

suitable tariff structure and making rural communication mandatory for all fixed service
providers.

Increase rural tele density from the current level of 0.4 to 4 by the year 2010 and
provide reliable transmission medial in all rural areas.

Achieve Telecom coverage of all villages in the country and provide reliable
media to all exchanges by the year 2002.

Provided internal access to all district head quarters

Provide high speed data and multimedia capability using Technologies including
ISDN to all towns with a population greater than 2 Lacks by the year.

The NTP provides that :

 DOT will not be corporatised, which ensures that labor unions have no big issue to
fight.
 Private sector companies will be issued licenses for statewide operations in
competition with DOT for basic telephones. This establishes a dipole system for 15
years in 21 statewide service areas (or circles);
 Mobile telephone services will be offered solely by non-DoT private sector
companies, at least two in each service area. The initial license period is 10 years,
extendable thererafter in five-year increments;
 Foreign equity participation will be allowed in public telephone operations of at least
500,000 basic telephone customers and 100,000 mobile phone customers;
 Private carriers must commit to public service obligations such as rural area coverage
and public telephones;
 Interstate and international telecommunications will be the exclusive monopoly of
DOT and its company VSNL.

BHARAT SANCHAR NIGAM LIMITED – AN OVERVIEW :

On 01st October 2000, Department created BSNL, a new entity to operate

services in different parts of the country as a Public Sector Unit.

The Bharat Sanchar Nigam Limited (A Govt. of India Enterprise) head office is
situated in Delhi as main office under the chief Managing Director, the same was formed
on 1st October-2000. And the BSNL have 23 circles all over India with head of Chief
General Manager of each circle

Bharat Sanchar Nigam Limited formed in October, 2000, is World’s 7 th largest

Telecommunication Company providing comprehensive range of telecom services in
India. Wireline, CDMA, Mobile, GSM Mobile, Internet, Broadband, Carrier Service,
MPLS-VPN, VSAT, VOIP services, IN Services etc., Within a span of five years it has
become one of the largest public sector unit in India. BSNL has installed Quality
Telecom Network in the country and now focusing on improving it, expanding the
network, introducing new telecom services with ICT applications in villages and winning
customer’s confidence. Today, it has about 47.3 million line basic telephone capacity, 4
million WLL capacity, 20.1 Million GSM Capacity, more than 37382 fixed exchanges,
18000 BTS, 287 Satellite Stations, 480196 RKMs of OFC Cable, 63730 RKMs of
Microwave Network connecting 602 Districts, 7330 Cities/Towns and 5.5 Lakhs
villages. BSNL is the only service provider, making focused efforts and planned
initiatives to bridge the Rural-Urban Digital Divide ICT Sector. In fact there is no
telecom operator in the country to beat its reach with its wide network giving services in
every nook & corner of country and operates across India except Delhi & Mumbai.
Whether it is inaccessible areas of Siachen Glacier and North-eastern region of the
country. BSNL serves its customers with its wide bouquet of telecom services. BSNL
is numero uno operator of India in all services in its license area. The company offers
vide raniging & most transparent tariff schemes designed to suite every customer. BSNL
cellular service, Cellone, has more than 17.8 million cellular customers, garnering 24
percent of all mobile users as its subscribers. That means that almost every fourth
mobile user in the country has a BSNL connection. In basic services, BSNL is miles
ahead of its rivals, with 35.1 million basic phone subscribers i.e., 85 percent 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, 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 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). BSNL plans to
expand its customer base from present 47 millions lines to 125 million lines by
December, 2007 and infrastructure investment plan to the tune of Rs.733 crores (US $
16.67 million) in the next three years. 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.has made BSNL the No. 1 Telecom Company of India.
Objectives

Sharing ideas and emotions, Hopes and dreams. News and views, Bringing
people and places closure. It’s a dream coming true in villages, cities and towns across
India, made possible by BSNL. Further BSNL is spearheading the telecom revolutions
and creating opportunities for growth and connecting India to progress through
Innovations in Services, tariffs and customer care. BSNL is creating new bench marks In
ever sphere of Telecom and ringing in a world of change

1. Objective of study :

The objective is
(i) To study the growth of Telecom services (i.e. Basic Services & internet in
the value added services) in India and in particular in Visakhapatnam.
(ii) To study the challenges before BSNL to compete with the private
operators.
(iii) To Study the overall Financial Performance of BSNL at Visakhapatnam
Secondary Switching Area.
(iv) To study the strengths and weakness in the BSNL organization
(v) To suggest the Ways and Means that can improve the Rate of Return in
Financial Performance
(vi) Suggestions for improvement to telecom services offered by BSNL

2. Methodology :

The methodology is on the basis of Secondary data only.

Secondary Data :

The secondary data will be collected from the www, magazines, journals,
Departmental Financial Hand Books and the records available with the department.
Strength of BSNL

1. 45 Million Land line capacity

2. 7.92 crores of customers
3. 37,382 electronic exchanges
4. 4,80,196 R.K.M of optical fiber cable
5. 2.7 Million of internet exchanges
6. 21,12,703 PCOs
7. 3.60 lacks of Manual workers

3. Scope – Limitation :

The scope of the study is to make an analysis of the growth of telecom services in
India and how various new services were introduced. Finding the new ways and
techniques for improving existing services/introducing new services and to give better
services to the customers in the days to come.

The study was confined to mainly the growth of Basic Services in India and in
particular in Visakhapatnam. As far as the Value added services are concerned the
growth of Internet in India and in Visakhapatnam and to make a cooperative study with
the other ISP'’ who are at present operating in Visakhapatnam.

Functional Organization of BSNL at various stages

Chairman&Managing Director(CMD central level)

Under the control of CMD Five main directors and deputy directors are working as
follows
1. Director-Human Resource Development
2. Director-Planning
3. Director-Operations
4. Director-Marketing and New Services
5. Director-Finance
Chief General Manager Telecom(Circle level)
Under the each CGM control five General Managers are working as follows

1. General Manager (HRD)

2. General Manager (Operations)
3. General Manager (Planning)
4. General Manager (Mktg)
5. General Manager (Finanace)

General Manager Telecom(District level)

Under the General manager Control

1.DGM(admn)
2.DGM(operations)
3.DGM(plg)
4.DGM(mktg)
5 DGM(Finance)

Bharat Sanchar Nigam Limited Visakhapatnam Telecom Division

The Visakhapatnam telecom division was found in 1976 as divisional engineer

and it was upgraded as General Manager Telecom district in 1993 and converted as
corporation as Name of BSNL in october-2000, At present the visakhapatnam telecom
district is having 1.50 lack of land line connection and 1.10 of cellular connections and
near about 5 thousand of broad band internet conncetions

The revenue performance of BSNL visakhapatnam is 6 crores per month towards

Land Line and 4 crores per month towards cell connections. And the BSNL
Visakhapatnam is having online network for billing and collections of the revenue and
having 95 latest technology of exchanges and optical and cellular networks

The visakhapatnam telecom district is having 1800 staff members with various
categories.
NEED FOR THE STUDY

At present the telecom sector is drastically increasing in the market, after 1991
new economic policies the changes in the telecom sector is unavoidable and so many
private companies are entered in the telecom sector, Among these sector a lot of
competition was taken place. At present BSNL is the no.1 in land line network and no.4
in cellular network, regarding the accounting procedure the BSNL is adopting the double
entry book keeping system and segmental accounting system.

As the student working as executive in accounts in this organization has taken up

this study the financial accounting as optional and doing the project on financing and
accounting of BSNL and its implications towards development of the firm and its growth
and financial viability of the company, for this I have to learn more and more

An overview of the World Class services offered by the BSNL:

The plain, old, countrywide telephone Service through 32,000 electronic

exchanges. Digitalized Public Switched Telephone Network (PSTN) with a host of
Phone plus value additions.

BSNL launched Data One broadband service in January 2005 which shall be
extended to 198 cities very shortly. The service is being provided on existing copper
infrastructure on ADSL2 technology. The minimum speed offered to the customer is 256
Kbps at Rs. 250/- per month only. Subsequently, other services such as VPN,
Multimedia, Video Conferencing.

Video-on-Demand, Broadcast application etc will be added.

Keeping the global network of Networks networked, the countrywide

Internet Services of BSNL under the brand name Sanchar Net includes Internet
dial up / Leased line access, CLI based access (no account is required) and DIAS service,
for web browsing and E-mail applications. You can use your dialup Sancharnet account
from any place in India using the same access no ‘172233’, the facility which no other
ISP has. BSNL has customer base of more than 1.7 million for Sancharnet service.

Internet Telephony service is also started under the brand name Web Fone, using
this you can make calls to a person in UK, USA, Canada and many more countries for as
cheap as Rs. 4.50/- per minute only. BSNL also offers Web hosting and co-location
services at very cheap rates.

ISDN

Integrated Service Digital Network Service of BSNL utilizes a unique digital

network providing high speed and high quality voice, data and image transfer over the
same line. It can also facilitate both desktop video and high quality video conferencing.

Intelligent Network

Intelligent Network Service (In Service) offers value-added services, such as:

 Free Phone Service (FPH)

 India Telephone Card (Prepaid Card)
 Account Card Calling (ACC)
 Virtual Private Network (VPN)
 Tele-voting
 Premium Rae Service (PRM)
 Universal Access Number (UAN) and more
 Fixed Line Prepaid cards(flpp)
 Call Now cards
I-Net

India’s x 0.25 based packet Switched Public Data Network is operational in 104
cities of the country. It offers x 0.25 x 0.28 dial up (PSTN) Connection) and frame.
Relay services.

Leased Lines & Datacom

BSNL provides leased lines for voice and data communication for various
application on point to point basis. If offers a choice of high, medium and low sped
leased data circuits as well as dial-up lines. Bandwidth is available on demand in most
cities. Managed Leased Line Network (MLLN) offers flexibility of providing circuits
with speeds of n x 64 kbps up to 2mbps, useful for Internet leased lines and International
Principal Leased Circuits (IPLCs).

Cellular Mobile Service:

BSNL’s GSM cellular mobile service Cell One has a customer base of over 5.2
million. Cell One provides all the services like MMS, GPRS, Voice Mail, E-mail, Short
Message Service (SMS) both national and international, unified messing service (Send
and receive e-mails) etc. You can use Cell One in over 160 countries world wide and in
270 cellular networks and over 1000 cities/towns across India. It has got coverage in all
National and State Highways and train routes. Cell One offers all India Roaming facility
to both pre-paid and post-paid customers (including Mumbai & Delhi).
TOTAL NO.OF CONNECTIONS-2,84,23,283( As on 30/06/07)
District Head quarters Covered- 608
Total number of villages Covered-19,81,418
National Highway covered(Km)-51366
State Highway covered(Km)-55300
Railway route covered(KM)-28658
Wireless in Local Loop

This is a communication system that connects customers to the Public switched

telephone network (PSTN) using radio frequency signals as a substitute for conventional
wires for all or part of the connection between the subscribers and the telephone
exchange.
Counter wide WILL is being offered in areas that are non-feasible for the normal
net work.
Helping relieve congestion of connections in the normal cable/wire based
network in urban areas.

Connecting the remote and scattered rural areas.

Limited mobility without any air-time charges

Total No.Of connections -35,99,544 (As on 31/05/07)

 ORGANISATION STRUCTURE

Director (Finance) Director Director Director Director Director Director

(Operations) (C & NS) (Planning) (HRD) (Secretary) (Secretary)

Sr. DDG (TRF) Sr. DDG (PG) Sr.DDG (CS) Sr.DDG (Arch) DDG (Admn) CGMs DDG
Sr. DDG (EFC) Sr. DDG (MS) DDG (NS) Sr.DDG (TFs) DDG (Pers) T Circle / MD
(SP-II)
Sr.DDG Sr.DDG (NW & DDG (Mktg) Sr.DDG (BW) DDG (TRG)
MS) DDG9 (CMTS) Sr.DDG (Elect) DDG (SR) Andaman &
DDG (Reg) Sr.DDG (SW) Nicobar
DDG (TS) Sr.DDG (TX) Andhra
DDG (IT) DDG (MM) Pradesh
CGM (NCES) DDG (LTP) Assam
CGM (T & D) DDG (RN) Bihar
DDG (NM) DDG (TF) Chattigarh
CGM (MTCE, CGM (NETF) Gujarat
Reg) CGM (TFs) Haryana
ETR Jabal Pur Himachal
NTR Mumbai Pradesh
Kolkata Jarkhand
Richhai Jammu &
Kashmir
Karnataka
Kerala
Madhya
Pradesh
Maharastra
North East-I
North East-II
Orissa
Punjab
Rajasthan
Tamilnadu
Uttar Pradesh
(E)
Uttar Pradesh
(W)
Uttaranchal
 CHAPTER - II

1. Orgnisation Profile :
Department of Telecom (DOT) and Bharat Sanchar Nigam Limited
(BSNL) are Government of India Departments under the aegis of Ministry of
Communications. Department of Telecom (DoT) has its role in policy making, licensing
and coordination matters relating to telegraphs, telephones, wireless, data, facsimile and
telematic services and other like forms of communications. In addition, DoT is
responsible for frequency management in the field of radio communication in close
coordination with international bodies. It also enforces wireless regulatory measures for
wireless transmission by users in the country.

Bharat Sanchar Nigam Limited (BSNL) is the premier telecom service

provider of India. BSNL has presence throughout the length and breadth of India. The
main functions of BSNL include planning, engineering, installation, maintenance,
management and operation of voice and non-voice telecommunications services all over
the country.

Mission is “Better Communications”

DoT and BSNL are committed to provide latest in telecommunications

technology and the best of the services to its esteemed customers.

India’s telecom sector is primarily state-owned. The Ministry of

Communications controls the industry. The Ministry has a Telecom Commission that
operates a four-member committee. The member (Services) controls the service
organisations like Videsh Sanchar Nigam Limited (VSNL), Mahanagar Telephone
Nigam Limited (MTNL) and Telecommunications Consultants Inida Limited (TCIL)
besides the Department of Telecommunications (DoT).

The DoT owns and operates the entire national telephone network except
in Mumbai and New Delhi. It is responsible for planning, technology, development,
production and financing the development of telecommunication facilities in India. The
DoT is one of the few profitable public sector institutions. Since it is not a corporate
entity, it does not have to pay taxes and is able to derive full benefit of its revenue.
However, it cannot raise finances directly and has to depend upon budgetary support for
its expansion plans.

MTNL operates basic telephone services in Mumbai and New Delhi. The
traffic in these two cities constitutes upto 23% to total traffic and demand growth of
Direct Exchange Lines (DELs) has also been the highest due to higher purchasing power
of its residents.

VSNL provides international access to the Indian consumers and connects

incoming calls through the DoT and MTNL network. VSNL has a monopoly status
granted to it by the government upto 2004.

The Indian government has formed the Telecom Regulatory Authority of

India (TRAI). The body will regulate the tariffs and inter-connectivity charges among
the various private operators. It will also arbitrate among the various bodies in case of a
dispute.

DoT / BSNL Units :

Telecom Circles
 Andaman & Nicobar Telecom Circle
 Andhra Pradesh Telecom Circle
 Assam Telecom Circle
 Bihar Telecom Circle
 Chhatisgarh Telecom Circle
 Gujarat Telecom Circle
 Haryana Telecom Circle
 Himachal Pradesh Telecom Circle
 Jammu & Kashmir Telecom Circle
 Jharkhand Telecom Circle
 Karnataka Telecom Circle
 Kerala telecom Circle
 Madhya Pradesh Telecom Circle
 Maharashtra Telecom Circle
 North East-I Telecom Circle
 North East-II Telecom Circle
 Orissa Telecom Circle
 Punjab Telecom Circel
 Rajasthan Telecom Circle
 Tamil Nadu Telecom Circle
 UP(E) Telecom Circle
 UP(W) Telecom Circle
 Uttarakhand Telecom Circle
 West Bengal Telecom Circle

Training Institutions :

 Advanced Level Telecom Training Centre

 Bharat Ratna Bimrao Telecom Training Centre
 Regional Telecom Training Centres
 Circle Telecom Training
 District Telecom Training Centres
Other Units
 Telecom Factories
 Telecom Stores
 Railway Electrification Project
 Wireless Planning & Coordination Wing
R & D Unit
 C-Dot
Metro Districts / MTNL
 Mumbai
 Calcutta
 Delhi
 Chennai
Project Circles
 Eastern Telecom Project Circle
 Western Telecom Project Circle
 Northern Telecom Project Circle
 Southern Telecom Project Circle
Maintenance Regions
 Eastern Telecom Maintenance Region
 Western Telecom Maintenance Region
 Northern Telecom Maintenance Region
 Southern Telecom Maintenance Region
Specialised Telecom Units
 Data Networks
 National Centre For Electronic Switching
 Telecom Engineering Centre
 Technical & Development Circle
 Quality Assurance
PSU’s
 ITI Limited
 HTL Limited
 Videsh Sanchar Nigam Limited
 Mahangar Telephone Nigam Limited
 Telecommunications consultants of India Limited

ORGANISATION :

The management of the department vests in the Telecommunication Commission,

which has four full-time members and a Chairman, all of whom are of the rank of
Secretary to the Government of India. There are also four part time ex-officio Members
who are all secretaries to the Government of India. The whole country is divided into 22
telecom circles for operation and management of telecom services. Five public sector
undertakings namely, Hindustan Teleprinters Limited (HTL), Indian Telephone
Industries Limited (ITI), Mahanagar Telephone Nigam Limited (MTNL),
Telecommunications Consultants India Limited (TCIL) and Videsh Sanchar Nigam
Limited (VSNL) function under the overall administrative control of the department.

Besides, DoT has seven factories at Mumbai, Calcutta (Alipore and Gopalpur),
Jabalpur (Wright Town and Richhai). Bhilai and Kharagpur which manufacture various
tyupes of ancillary equipment such as microwave towers, modems, sockets, pay phones
etc.

The Center for Development of Telematics (C-DoT) also functions under the
control of the Ministry of Communications as registered society established to develop
indigenous technology for telematics.

OBJECTIVES :

The following are the some of the objectives of the BSNL :

1. Availability :

- provide telephone on demand (this objective is to be achieved with the participation of

private sector complementing the efforts of the Govt.)

2. Accessibility :

- provide telephone facility in all the villages. (this objective to be achieved

with the participation of private sector supplementing the efforts of DoT)
- to increase the number of telephones in the villages where only single telephone is
working to meet the requirement of increased economic activity.
- Public call offices for every 500 population in urban areas.
- S.T.D. PCOs on National Highways for every 10 Kms.

3. Subscriber Trunk Dialing and Connectivity :

- Provide STD facility to all exchanges.
- All exchanges upto SDCC level to have digital connectivity.
4. Modernisation and upgradation :
- Replace life expired and technologically obsolete switches with digital switches.
- Manual Trunk Services in SSA Headquarters to be computerised.
- Computerised records of cable network.
- Wireless in local loop, HDSL, ADSL and Optical Fibre technologies will be
gradually introduced in the local network.
- Common Channel Signalling No.7 to be introduced upto DHQ level along with
synchronisation of transmission & switching network.
- Introduction of Better and reliable technologies for providing Village Public
Telephones.
- All life expired and unserviceable analogue systems will be replaced with digital
systems.
5.Reliability :

All exchanges will have reliable media.

- Diversity in transmission network between TAXs.
- Network management system for control and management of network.

Physical Targets of the Perspective Plan (2000-2010) :

The assessment of provision of telecom facilities for the perspective plan period
(2000-2010) is indicated below :
1. Direct Exchange Lines lakh lines – 527.86
2. Mobile phones lakh lines – 428.40
3. TAX capacity lakh lines – 65.75
4. Micorwave Rkms – 40500
5. Optical Fible Rkms – 280000
Objectives of the Perspective Plan (2000-2010) :

Consolidation of the network and maintaining high quality of service comparable

to international standards is the key aim of the Plan. Other objectives of the perspective
plan are :
* The telephone connection shall be provided on demand and it shall be sustained.
 The network shall be made fully digital. Al the technologically obsolete analog
exchanges will be replaced with digital exchanges.
 To provide digital transmission links up to all SDCAs during the Ninth plan period.
 Digital connectivity shall be made available to all the exchanges by 2007
 Extensive use of optical fibre system in the local, junction and long distance network
so as to make available sufficient bandwith for the spread of Internet and Information
technology.ISDN services shall be extended to all the district headquarters, subject to
demand.
 To provide intelligent network services, progressively, all over the country.
 To set up internet nodes progressively upto district headquarters’ level.
 Upgrading existing STD/ISD PCOs to full fledged Public Tele-Info Centres (PTIC)
for supporting Multi media capability and Internet Access.
 Replacement of the life expired, analogue coaxial and radio systems.
 Introduction of Wireless technology and optical fibre technology in subscriber loop
will be gradually increased.
 Introduction of latest telecom services like National directory enquiry,
computerisation.
INTRODUCTION ABOUT VISAKHAPATNAM – SSA :
INTRODUCTION

The visakhapatnam telecom division office telegraphs was formed during 1976
under the control of Divisional Engineer telegraphs, Visakhapatnam with a less than 100
telephone connections in Visakhapatnam District. The DE telegraphs had maintained the
entire telegraph and telecom network including Defense Lines from Visakhapatnam to
Ichapuram. Later many telephone Exchanges were commissioned at several places in the
district and number of connections increased to more than 1000 and Divisional Engineer,
telegraphs was formed and separated as Vizianagaram and Srikakulam divisions during
1981. The office of Divisional Engineer, Visakhapatnam is remained as Telecom.
District Engineer, Visakhapatnam and it is upgraded to the level of telecom district
manager during 1993 after reaching its capacity 10,000 connections and a Junior
Administrative Grade Officers from Indian Telecom. Service has been posted as Head of
this Telecom District. 1996-1999 is the golden period for history of telecommunications
and its connectivity is increased. During this period the telephone connections were
increased to more than 10 times and many new electronic exchanges were installed and
the old technology was removed and provided some more additional facilities to
customers. The telecom wing higher to under the department of telecommunications has
been formed as Bharat Sanchar Nigam Limited with effect from 01-10-2000 as a
Corporate Sector. Due to the vase development during this period, the status of this
telecom district is upgraded to the level of General Manager and a Senior Administrative
Grade Officer from Indian Telecom. Service has been posted as Head of this Telecom
District in September 2000. Now the telephone connections are more than 1,50,000 the
General Manager is looking after development activities of the entire district.
Engineering Officers and Finance Officers is one Engineering Officer from Indian
Telecom. Service is working as Deputy General Manager looking after the
Administration and Planning and one Finance officer advisor. These two officers are
assisting to the General Manager for Development activities and to run the
administration in smooth. Divisional Engineers, Sub-Divisional Engineers and Chief
Accounts Officers and Accounts Officers are working under the control of above
mentioned officers respectively. It is very difficult to maintain the entire district at one
point, for easy mice of the entire telecom district has been divided into sub-divisions.
The heads of sub divisions will look after the development activities relate to that sub-
division. Though the telephone density is comparatively less than other developed
districts, the department is providing good services through out the district. Through
services provided in the rural areas is not economical to the department. It is still
continued the services in the public interest. One more happiest news to the
Visakhapatnam District customers that the Bharat Sanchar Nigam Limited,
Visakhapatnm providing cell one services, WLL Services and value added services to the
public.

NEED FOR THE STUDY

Visakhapatnam Telecom District which was under Dept. of Telecommunications,

renamed as Bharat Sanchar Nigam Limited with effect from 01-10-2000. On the said
date the DOT was corporatized. The very corporatisation of Dot has brought tremendous
changes in the basic financial policies of Dept. apart from the Basic Financial Policies,
the regular and routine Financial Practices are also underwent drastic changes. Every
level of Financial Management accountability and responsibilities, transferencies are
fixed. Transference in Financial functions is another importance is which needs to be
studied. This study reveals last five years Financial Positions of Srikakulam telecom
District. This study particularly on Capital Investment, working expenses, Revenue
Earnings and implementation of company Accounting Policies, and Services provided by
the Company. This is very important study how to improve the services to face the
competition from the Private Cellular, Mobile and Basic Services Providers. This study
reveals the investment on Rural Communications.

OBJECTIVES

The main objectives of the study how the BSNL is using its wide range of net
work it will fact the competition from other Private Service providers. The capital
investment, allotment of funds from the Government for Maintenance services in Rural
Areas. The Areas of Capital Investment, Minimization of Maintenance Expenditure.
Maximization of Returns. Better Mtce. Of Services. Implementation of Company
Accounts, Cost Accounting.
 METHODOLOGY

The study will be conducted basing on the financial reports of the Department
and various journals of the Department and view of the Experts of the Department. Rules
and Regulations of Government adopting of norms for development of services. Future
plans of he Department and proposed development works. Introduction of services.
Customer’s views of BSNL services. The Reports of various Audit Reports and Financial
Reports.

SCOPE:

This study in mainly to know the Department Financial position before and after
the formation of BSNL, and future investment areas. Implementation of Company
Accounts in the Department. Tariff implementation.

LIMITATION:

The study is only limited to Financial Aspects of Company Account of BSNL,

Visakhapatnam Telecom District, Financial Management practices such as Capital
investment, Financial sources. Accounting practices, and working Capital practical
practices during the last five years.

PRESENTATION:

The study is structured into five chapters. The first chapter deals with
introduction of about the subject, the need for the study of objectives and methodology
are included in second chapter. The Basic Financial functions are covered in third
chapter. Working Capital Management and accounting practices are mentioned in the
Fourth chapter. The Fifth chapter deals with summary and suggestions.

ORGANIZATION STRUCTURE OF V ISAKHAPATNAM

 BSNL
HEAD OF THE CIRCLE CHIEF GENERAL MANAGER ANDHRA PRADESH
CIRCLE

HEAD OF VISAKHAPATNAM SSA GENERAL MANAGER

DY. GENERAL MANAGER

DY. GENERAL MANAGER (FINANCE)
(PLANNING & MARKETING)

DIVISIONAL ENGINEERS CHIEF ACCOUNTS OFFICER

SUB-DIVISIONAL ENGINEERS ACCOUNTS OFFICERS

JUNIOR TELECOM OFFICERS JUNIOR ACCOUNTS OFFICER

SWOT ANALYSIS :
Strengths of BSNL
1. Brand Name :
BSNL (Former DoT) has created a good brand name over last twenty Years.
Marker research indicates that periople know BSNL and prefer it.

2. Distribution Network :

With an experience of over 50 years, the BSNL (DoT) has a well-developed

distribution network, with nodal points at each state level.

3. Supplier Relationship :

Government suppliers always complain about delay in technical and financial

clearance. BSNL (DoT) has removed all these hurdles by giving some financial powers
to the Chief General Managers of each state without going through the hierarchy.

4. Technology Base :
 Being the control of whole country in telephone network, BSNL (DoT) became a
pioneer in introducing digital and computerised exchanges, computerisation, optical
fibre, fax etc., expanding its technological capabilities far a head of some countries in the
world.

Weaknesses of BSNL :

1. Government Undertaking :

Being a Govt. undertaking, BSNL(DoT) goes with the general concept of

performance of government elsewhere – as lazy, dull, corrupt and inefficiency and
organised set-up with red-tapism. This harms the image of BSNL (DoT).

2. Personnel Strength :

BSNL has all the officials who were earlier working with the DoT. They have
grown up the with the government set-up and have this cultural milieu.

Presently, we have a multiple union system, which has a tendency of opposing the new
technology, new innovations on a continuous basis. This puts a break to several
innovative projects of BSNL.

3. Distribution Channel :

Linemen, who are public interface, on behalf of the department are generally
categorised as taking “Bakshis” for any normal duties of BSNL. This represents a
picture of corrupt practice in BSNL. BSNL being a monopoly generally neglected
public interest, in the past. In the last few years BSNL (DoT) has tried to build up good
public relations, but was only partially successful.
Opportunities for BSNL (DoT) :

1. BSNL (DoT) have a track record of absorbing and adopting new technologies at
much faster rate. Therefore the exists a ready market for these new services to
introduce.
2. BSNL (DoT) is financially independent compared to other government
organisations. This helps the top official of BSNL to plan in advance and strive
for innovations.
3. Being a government organisation, BSNL does not face any major legal or
“liaison” hurdle with government in clearing the projects.
4. With the spread of computerisation in India in the last decade, there is an ever-
growing need for better, reliable and high technological communication system.
5. With privatisation in DoT in the past few years, several private organisations
have developed the capabilities for manufacturing and maintaining
communication equipment. This will help BSNL to collaborate with the
organisations, and make use of their expertise. BSNL should carefully make
complete analysis of these opportunities and try to take full advantage.

Threats :

1. First threat for BSNL is its stability – whether it will remain in its present form or
not?
2. Second is the competition that is building up with the privatisation of few
telecom-equipment manufacturers.
3. Third is a threat from its suppliers like ITI and foreign suppliers. BSNL is
dependent largely on such suppliers.
 CHAPTER-III

 REVENUE ANALYSIS

As seen from the Revenue Statistics, the Revenue is being increased from time to
time. The increase in revenue is due to increase in connections. Working connections as
on 01-04-2009 to 31-03-20010 are furnished hereunder.

Land Line Cell

Working connections as on 31.3.2004 (Land 37205

153437
line)
Working connections as on 31.3.2005 (Land 58750
154148
line)
Working connections as on 31.3.2006 (Land 68184
151208
line)
Working connections as on 31.3.2007 (Land 90883
146114
line)
Working connections as on 31.3.2008 (Land 124266
132335
line)
Due to
increase in
working lines the various sources of Revenue is also increased. The details of Revenue
source wise is from 2003-2004 to 2007-2008 are furnished hereunder.

Year Call Revenue Rental Revenue Circuits Revenue/ Misc. Revenue

IUC
2005-06 982031000 374300000 12626000
2006-07 870365000 390417000 17573000
2007-08 784454000 418838000 115760000 31145000
2008-09 613451000 372727000 28858000 17819000
2009-10 460302000 347334000 57704000 58230000

On Comparison from 2008-09 to 2009-10 the call revenue is decreases Rental

revenue is increased slightly other Revenues also increased simultaneously.
 Call revenue in decreased Rental Revenue is increase slightly and other revenues
also increased simultaneously.

Like wise every year the Call revenue is Decreased due to Down fall in working
connections. Misc. Revenue of 2008-09 includes the Revenue received from WLL.

There is a good progress in Calling Ratio earlier it was between 32 to 35% and
now the calling ratio increased to 45% hence the call revenue is also increased.

DEPRECIATION METHOD AND PERCENTAGES

WRITTEN DOWN METHOD

1. BUILDING -- 5%
2. APARATUS AND PLANTS -- 15.33%
3. Motor vehicles -- 25.89%
4. Cables -- 15.33%
5. Lines & Wires -- 13.91%
6. Installation &Test Eqpt -- 13.91%
7. Masts& Arial’s -- 13.91%
8. Office Machinery -- 13.91%
9. Electrical Appliances -- 13.91%
10. Furniture Fixtures --18.10%
11. Computers --40%
12. Subs Installations –45.08%
 EXPENDITURE ANALYSIS

The Revenue expenditure was also increased simultaneously consequent on

implementation of IDA pay scales to the Staff from 01-10-2000. Some major Revenue
expenditure heads reviewed.

The pay scales of Staff and Officers were upgraded in a phased manner with
effect from 01-10-2000.

As see from the statement of details of expenditure the Revenue Expenditure is

increased as follows.

2008-2009 to 2009-2010 the revenue expenditure increased to 27%, from 2008-

2009 to 2009-2010 the expenditure is increased to 57%, from 2008-2009 to 2009-2010
the expenditure is increased to 2.14% and the from 2008-2009 to 2009-2010 the
expenditure is increased to 11.19%. It is very clear that the overall increase in
expenditure is due increase in salaries. Medical Reimbursement schemes, etc.,

You can see from the details of expenditure statement the expenditure is
gradually decreasing in the heads like Repairs and Maintenance, Travel Expenses,
Building Rent, Wages, Electricity and Fuel. Even though the No. of Exchanges increased
form year to year and its capacity increased from year due to Strict Financial
Management on Electricity and power, the expenditure is decreasing gradually.

Earlier Tour Advances used to sanction in respect of officials on deputation, the

Management has taken good decision to stop the deputation and issued transfers
wherever necessary. Due Management decision the Travel Expenses gradually
decreasing.

Earlier rents were being paid to vacate buildings also, due some problems, the
management settled all the problems of Rented Building and vacated all the vacant
buildings. Due to good management decision we saved some 3 to 4 Lakhs rupees every
year.

The operation Ratio of Revenue expenditure over the Revenue for the last three
years is as follows.

2007-2008 56.67%
2008-2009 53.11%
2009-2010 46.61%

However still the Mtce. Expenditure other than salaries is to be reduced to extent of
ceilings fixed by the Circle Office. Management is taking necessary steps to reduce the
expenditure.

Still the expenditure is to be reduced in all other Mtce. Heads other than salaries.

DETAILS OF EXPENDITURE (REVENUE) IN THOUSANDS

2008-09 Rs.’000 2009-10 Rs.’000

Bonus 11198 Bonus 17172
Diesel & Electricity 48659 Diesel & Electricity 40286
General Expenses 2128 General Expenses 2642
Repairs & Mtce 28595 Repairs & Mtce 25090
OTA 1775 OTA 2322
Salaries 268339 Salaries 274685
Travel Expenses 5556 Travel Expenses 6172
Wages 441 Wages 404
Leave Salary Pension Con 24224 Leave Salary Pension Con 24089
Medical 10603 Medical 22152
Rent 7906 Rent 9708
Misc 5401 Misc 3901
Total 0 Total 0

2008-09 Rs.’000 2009-10 Rs.’000

Bonus 17344 Bonus 19467
Diesel & Electricity 48446 Diesel & Electricity 48458
General Expenses 2958 General Expenses 3279
 Repairs & Mtce 25079 Repairs & Mtce 31514
OTA 1800 OTA 1499
Salaries 283500 Salaries 296409
Travel Expenses 3223 Travel Expenses 4840
Wages 199 Wages 107
Leave Salary Pension Con 25960 Leave Salary Pension Con 26202
Medical 18872 Medical 18324
Rent 8890 Rent 10567
Misc 3901 Misc 4326
Total 0 Total 0

2008-09 Rs.’000
Bonus 19801
Diesel & Electricity 45124
General Expenses 2120
Repairs & Mtce 28429
OTA 1069
Salaries 312152
Travel Expenses 3425
Wages 184
Leave Salary Pension Con 25834
Medical 21133
Rent 9210
Misc 4130
Total 0

CAPITAL EXPENDITURE ANALYSIS

One can easily understand the priorities of investment on seeing the expenditure figures
from 2009-10,Major amount of Capital expenditure incurred on Basic Telephony only.
From 2009 onwards the priorities of the Department are changed and investing capital
expenditure on other Wireless networks.

In Visakhapatnam Cell service started during October 2009, and WLL Exchanges were
installed in 2010 at various places of Visakhapatnam.
As seen from the Capital expenditure figures of 2007-2008, 2008-2009 and 2009-2010
expenditure incurred against Cell services and WLL services. Utilizing the huge
investments allocating in Cell and WLL services, in future the Department is planning to
provide Wireless services in order to avoid dependency on Underground Cable thereby
minimizing the faults.

The Capital expenditure increased from year to year due to up gradation of Technology
in all the Departments will invest on its Optical Fibre Cable network.

The increase in capital expenditure from 2008-2009 to 2009-20010 is as follows.

From 2008 to 2009-20010 39.80% increase in capital investment.

From 2008-2009 to 2009-2010 58.70% increase in capital investment.

From 2008-2009 to 2009-2010 14.67% decrease in capital investment.

From 2008-2009 to 2009-2010 2% increase in capital investment.

CAPITAL EXPENDITURE

2008-09 Rs.’000 2009-2010 Rs.’000

Apparatus & Plants 36763 Apparatus & Plants 116896
Buildings 9135 Buildings 9555
Cables 323840 Cables 112790
Optical Fibre Installations Optical Fibre Installations
Subscribers Installations 54713 Subscribers Installations 76939
Lines & Wires 16186 Lines & Wires 15958
Furniture & Fixures 581 Furniture & Fixures 721
Electrical Fittings 3693 Electrical Fittings
Total 0 Total 0

2008-2009 Rs.’000 2009-2010 Rs.’000

Apparatus & Plants 19967 Apparatus & Plants 20076
Buildings 4181 Buildings 2074
Cables 65933 Cables 15898
Optical Fibre Installations 0 Optical Fibre Installations 0
Subscribers Installations 72437 Subscribers Installations 4103
Lines & Wires 10026 Lines & Wires 1332
Furniture & Fixtures 0 Furniture & Fixures 0
Electrical Fittings 4503 Electrical Fittings 1455
TOTAL 0 TOTAL 0

2008-2009 (Rs.’000)
Apparatus & Plants 93297
Buildings 6409
Cables 39886
Optical Fibre Installations 81107
Subscribers Installations 11637
Lines & Wires 1965
Furniture & Fixtures 0
Electrical Fittings 2342
Cell Service 0
Total 0
 PROFORMA-II

COMPONENT WISE DETAILS FIXED ASSETS/ACCUMULATED DEPRECIATION AS ON 31-03-2010 OF

visakhapatnam SSA
NET
GROSS BLOCK ACCUMULATED DEPRECIATION
BLOCK
Depreciation
Opening Closing Opening Closing Closing Closing
Sl. Component Additions during the
Balance as Deductions Balance Balance Balances Balances Balances
No. Particulars during the year 2009
at during the as at as at as at as at as at
year deduction
1.4.2009 year 2009 31-03- 01-04- 31-03- 31-03- 31-03-
2009-10 during the
(in Rs.) 2010 2009 2010 2010 20074
year
01. Land 94182068 NIL NIL NIL NIL
02. Buildings NIL NIL NIL NIL
03. Apparatus & NIL NIL NIL NIL
Plants
04. Motor NIL NIL NIL NIL
Vehicles
05. Cables NIL NIL NIL NIL
06. Lines & NIL NIL NIL NIL
Wires
07. Subs. NIL NIL NIL NIL
Installations
08. IT Equipment NIL NIL NIL NIL
09. Masts & NIL NIL NIL NIL
Aerials
10. Office NIL NIL NIL NIL
Machinery
11. Elect. Fittings NIL NIL NIL NIL
& Appl.
12. Furniture & NIL NIL NIL NIL
FTTGS
13. Computers NIL NIL NIL NIL
TOTAL NIL NIL NIL NIL
 COMPONENT WISE DETAILS FIXED ASSETS/ACCUMULATED DEPRECIATION IN RUPEES AS ON 2007-2008 OF
VISAKHAPATNAM SSA
GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK
Closing
Opening Closing Closing
Additions Deductions Opening Depreciation Deduction Balances as at
Sl. Component Particulars Balance as at Balance as at Balances as at
during the during the year Balance as at during the year during
No. 1.4.2009 31-03-2010
year 2010 2009 01-04-2009 2009 the year 31-03-2010
In Rs. (Col 2+3+4) 31-03-2010
(Col 6+7+8)
1 2 3 4 5 6 7 8 9 10
01. Land 1816740 1816740 1816740
02. Buildings 66933861 997128 67930989 5503664 3124635 8628299 59302690
03. Apparatus & Plants 407524590 68111821 20211273 455425138 95320565 51268392 4280415 142308542 313116596
04. Motor Vehicles 557250 557250 290811 68981 359792 197458
05. Cables 591944502 107594313 699538815 116403092 81719639 198122731 501416084
06. Lines & Wires 67483981 4798342 72282323 16807781 7355059 24162840 48119483
07. Subs. Installations 4095031 2937958 7032989 288627 677914 966541 6066448
08. IT Equipment 0 7122664 7122664 1667447 1667447 5455217
09. Masts & Aerials 53604784 53604784 16563414 5152455 21715869 31888915
10. Office Machinery 2549752 149990 2699742 726058 281719 1007777 1691965
11. Elect. Fittings & Appl. 41875487 2716158 44591645 8010044 4936068 12946112 31645533
12. Furniture & FTTGS 2171704 105610 2277314 650642 276142 926784 1350530
13. Computers 17454208 17454208 7325556 4051461 11377017 6077191
TOTAL 1258011890 194533984 20211273 1432334601 267890254 160579912 4280415 424189751 1008144850
 CHAPTER-IV

Accounting Policy of BSNL

After reading this section you will be conversant with accounting policy relating to:

 Income and Expenditure

 Revenue Recognition
 Fixed Assets
 Purchase and Inventory
 Prior Period Items
 Foreign Currency Transactions
 Other Items

In accordance with As-1, BSNL has set of the following accounting policies.

INCOME & EXPENDITURE

The accounts are prepared under the historical cost convention adopting the accrual
method of accounting except for the following items which are accounted on cash
basis:

Annual recurring charges for overlapping financial years.

Interest on loans and advances to employees and on security deposits with

government and local authorities as per government rules interest on employee
loans/advances recovered after recovery of the principal.

Interest income/liquidated damages when reliability is uncertain.

REVENUE RECOGNITION

Revenue is recognition on accrual basis, including the cases of subscribers whose

dispute are pending resolution, till permanent disconnection and closure of suspension
of revenue realization due to court proceedings, are made to the extent considered
necessary by the Management. Provision is made against amount of disputed billings.
Revenue is respect of service connection is recognized when the recoverability is
established.

Sale proceeds of scrap arising from maintenance and project work are taken
miscellaneous income in the year of sale.

Sale proceeds of telecom factories from organization outside BSNL will be taken into
other income.

FIXED ASSETS

Fixed assets are carried at cost less depreciation. Cost includes allocated established
expenses since BSNL is a service oriented organization it has to create its
infrastructure for rendering service by installing telecom equipment with accessories
thereto. Installation of these equipment is a continuous process and the BSNL has
adopted a policy regarding capitalization of these assets to the extent completion
certificates have been issued, whenever applicable.

Capitalization policy of various assets is presented below:

1 Land As and when possession of the land is taken and

final payment is made. The asset register
constructed should clearly indicate whether the
land is FREEHOLD or LEASEHOLD, the
period of lease be indicated.
2 Building constructed When it is ready for use, even if part of the
building is ready for use a that portion should be
capitalized.
 Purchase If it is direct purchase, it should be capitalized
when the possession is handed over.

Lease Hold If there is any LEASEHOLD building, the

details should be furnished with period of lease
particulars of the person from whom it was
leased.
3 Apparatus & Plants Telephone Exchanges Can be capitalized as and when commissioned.
Transmission Eqpt. Air Condition Eqpt. If partly commissioned, capitalization should be
Subscriber Instrument. done to the parts that are commissioned.
4 Lines & Wires When they are erected or lines laid down and
completion certificate issued to the extent of
completion.
5 Cables Cables are capitalized as and when the cables
are laid and jointed. Even if some portion is
partly commissioned for connecting junction
equipments and when it can be used, that can be
commissioned to the extent put to use.
6 Vehicles On purchase
7 Other Assets On purchase

8 Partition works Charged to Furniture & Fixtures

(a) New Partitions < 2,00,000 P & L Account
(b) Repair/Replacement > = 2,00,000 Capitalized
9 Electrical Wiring & Fittings Part of Asset
a) Original construction P & L Account
b) Additions/Alterations/Repairs
10 Furniture and Fittings P & L Account
a) Up to 5000 on Single Item Capitalized
b) > 5000
11 Office Eqpt. P & L Account
a) Up to 5000 on single Item Capitalized
b) > 5000
12 Additions and Improvements Expenditure enhancing earning capacity-
Capitalized
13 Replacements Expenditure enhancing earning capacity-
capitalized

Replacement of whole asset New Asset Capitalized

Old Asset Capitalized
Value realized on old Asset
 Treated as Loss / Gain

Partial replacement
To keep running the asset Charged to P & L A/C

Increased in revenue earning Capitalized

Capacity Certificate to be issued by
Extraordinary replacement Officer concerned.
14 Temporary sheds Fully depreciated – charged to P&L A/C

Purchase / Inventory

1 Material directly received at site or issue by the store Treated as W-I-P

organization to the installation works
2 Material issued to maintenance works Treated as working expenses
3 Material received by the stores organization and not Treated as inventory
deployed to installation /maintenance /repair

Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on

the transaction date. Year and balances of current assets and liabilities are re-stated at
the closing exchange rate and the difference adjusted to Profit & Loss Account.

Prior Period Items

Andy adjustment an account of settlement of disputes regarding wrong billing

is not treated as prior item. Items of income /expenditure exceeding
Rs. 5,00,000 only are considered for disclosure as prior period items.

Retirements Benefits

Since pension is payable by Government is respect of staff on demand

deputation from DOT and other Government departments 23% of the maximum of the
pay scale will be the basis of education of pension contribution.

The above rate will be followed till actual evaluation is done by Nigam.
 The Nigam will also make provision towards gratuity and leave encashment
on actuarial basis.

Operation & Maintenance Expenditure

Since the nature of business of the company is to provide and efficient

services to the custom, entire expenditure incurred in connection with the provision of
the service, upkeep capital assets in good condition including all type of repairs is to
be treated as revenue expenditure and, therefore, chargeable to P & L Account.

Miscellaneous

Allocation of establishment expenses, including employees remuneration and

benefits, to capital expenditure is based on a percentage of capital expenditure.

The cost of stores and material is charged to project or revenue job at the time
of issue.

In terms of the arrangement between the DOT and the BSNL, reciprocal
services are not accounted for.

The payment of Bonus Act, 1965 is not applicable to the BSNL as per the
directive of the Govt. of India Bonus is, however, paid based on the productivity
linked parameters of the telecommunications network. Adhoc provision on the basis
of the previous year (with a 5% step up), is made in the accounts pending
determination of the final parameters applicable for the year.

Claims of local bodies on account of Civil and Electrical Works are accounted
for in the year of receipt. Provision is made for estimated liability of the jobs
completed but not billed to BSNL.

BASIC ACCOUNTING RECORDS

 Apart from Cash book and Bank Books (both to be separately maintained for
Operational Account and Collection Account), the following are other basic
accounting records.

1. Journal Register of Transfer Journal

2. Purchase Register
3. Salary payable Register
4. Wages payable Register
5. Bills payable Register
6. Imprest / Temporary Advance Register
7. Fixed Assets Register
8. EMD / Security Deposit Register
9. Works-in-progress Register
10. Petty Assets Register
11. Liability Register
12. Un-matched credit Register
13. Contractors / Suppliers Ledger
14. Employees Advances Ledger
15. Other Claims Ledger
16. Prices Store Ledger
17. General Ledger

Reconciliation of the ledgers from serial (2) to (14) is to be done with General
Ledger. The units area required to affect reconciliation of fixed expenditure heads
with subsidiary records. The items are like - rent of building, electricity and water
charges, vehicle hiring charges, police escort charges, property tax, ground rent
leasing charges on assets, expenditure on guest house, etc,.

Details of the above arrangement are listed below. These accounting

instructions are to the followed by all BSNL units with effect from 01-10-2000.

1. Bank Accounts:
 For accounting purpose the main area of accounting unit will be the Circle
office. To enable the proper functioning, each Circle office is further divided into
various sub accounting units (SAU) as per administrative compactness.

1. IN SUB ACCOUNTING UNIT:

To enable the above functioning each SAU (AO Cash) will have two types of
Bank Accounts, one for operational purpose, i.e. to defray the day-to-day on-going
expenses and the other for the collection of the revenue. The operational account will
be operated by the sub accounting unit and the collection account will be operated as
per the instructions of the Corporate Office.

2. IN CIRCLE HEAD QUARTERS:

The Circle Head Quarters, i.e. Circle PGM (F)’s Office will also have two
Bank Accounts. The first account shall be operated by the nominated Finance wing
officers of the circle office for the purpose of payments and also to effecting transfers
to various units for their operational needs. The second account shall be for revenue
wherein all collections of revenue of circle office will be deposited. This account shall
be operated as per the instructions of the Corporate Office of BSNL issued from time
to time.

3. IN BSNL HEAD QUARTERS

As the Headquarters of BSNL is located in New Delhi, there will be one

Corporate Office Bank Account in State Bank of India or any other bank, as fixed by
Director (F), at Delhi and this shall be operated by the Officers of the Corporate
Office nominated by Director (F). All revenue collected through S.A.U. and Circle
Officers will also be credited to this account. All transfers to the Circles will be
channeled through this account.
1.4 Similarly to pool the revenue of the each circle, a separate bank account in the
name of BSNL will be opened in bank in each circle according to the policy
decision and shall be operated by the officers nominated by the Corporate
Office as per decision.

2. RECORDS TO BE MAINTAINED IN RESPECT OF BANKING

OPERATIONS:

Both PGM (f) GMs (F) Officer (Circle Headquarters) and SAUs under them;
wherever Bank Accounts are opened, will maintain the following accounting records.

Operational Bank Account:

All funds received for operational are credited in this account, i.e. from the
Corporate Office to the Circle Headquarters and from the Circle Headquarters to the
SAU. Each Bank account is to be supported by a bank book for the bank receipts and
the withdrawals, where a day-to-day transaction is are to be recorded and balance
struck on day-to-day basis. At the end of the month a bank reconciliation statement is
to be drawn and such statement is to be forwarded to the Circle headquarters for their
scrutiny, financial control and accounting purposes as per details in Para 2.12.

2.2 In addition to the Bank Book, each such unit shall maintain a Cash Book
Wherein all funds drawn from the operational account is t be recorded and all
cash payments affected should also be recorded. The Cash balance at the end
of each day should be tallied and balance. Recorded in the Cashbook. Such
balance is to be certified by the staff under whose control these functions are
assigned.

2.3 REQUISITION AND SUPPLY OF FUNDS:

 Corporate Office will be transferring monthly funds requirements to the %
PGM (F) GMs (F) Accounts and those Office in turn will transfer required funds to
the operational accounts of the subordinate units. To enable Corporate Office to
transfer funds to Circle Officers PGMs (F) / GMs (F) should requisition the funds
from the Corporate Office While requisitioning funds, the revenue and capital items
should be indicated separately, giving broad description of the expenditure involved
and with clear justification. While such requisitions may be based on orthodox
analysis at any time if the funds to be insufficient further requisitions can be made on
the Corporate Office.

2.4 Similar exercise is required to be conducted by the Circle (F) office, while
funds requisitioned from the units are concerned. This exercise is required by
the Corporate Office on monthly basis and the PGMs(F)/GMs(F) Office
should transfer the funds to their operational units on fortnightly basis and the
surplus funds should be deposited on short term basis so that a certain amount
of interest can be earned by prudent allocation of funds.

2.5 ENTRIES IN BANK BOOK AND CASH BOOK:

Corporate office while effecting the transfer to Circle (F)%PGMs(F)GMs(F)

office should make an entry in their Bank book on payment side under the Head
“Inter current account transfer circle office”. The respective PGMs(F) / GMs(F) while
receiving the funds should make an entry on the receipt side of their bank book
denoting “Inter current transfer of funds from Corporate Office”. At the end of the
month the total transfer to the Units and the total receipt in each units of such transfer
should be reconciled.

2.6 While funds are transferred from Circles operation account to the units’
operational account, similar entries are required to be recorded and these
transfers should be reconciled by the respective units with the circle office on
a monthly basis.
2.7 The circle operational accounts are maintained in a bankbook and a cashbook
as stated above. Drawl of Cheques and cash payments to be debited / credited
on day-to-day basis and the balance struck on each day. At the end of the
month, bank reconciliation is to be drawn. When cash is drawn from the
operation bank account, the operational bankbook should indicate an entry
under the head ‘Cash drawn for office use’. Each payment effected by cash
should be recorded as an when it is received, cash balance should be struck
and the cash book balance and the physical balance should tally and a
certificate of the same should be given in the cash book on the same day
indicating the denominations of the currency notes, coins, stamps etc., held.
The total sum of such details should tally with the balance indicated in the
cash book. Similar entries are to be recorded in the SAU bank book and cash
book.

2.8 BANK ACCOUNT OF REVENUE COLLECTION:

Cheque/drafts received should be deposited on day-to-day basis and the

bankbook should be recorded with the necessary information. Cheques returned
should be recorded by recording the cross references. All amounts received should be
indicated under the Head “Sundry Debtors”. The same reference should be indicated
on the payment side if Cheques are returned. While transfers are effected from the
revenue account of the SAU and Circle office to the corporate office bank account an
entry should be recorded on the payment side indicating funds transferred to
Corporate Office under the Head “Inter Current A/C”. Statement of deposits should
be collected on day-to-day basis from the bank and these statements should be tallied
with the collection bank account. On daily basis and bank reconciliation is to be done
on monthly basis as per Para.

2.12 A copy of the same should be forwarded to the Corporate Office for their
scrutiny and record through concerned Circle Office.
 All receipts in respect of telephone bills and demand notes issued by the TRA
or the Commercial Branch have to be credited to “Sundry Debtors”. Further
classification of the amounts in respect of which no debit has previously been given to
the “Sundry Debtors” has to be done by the TR Unit who maintains the income / sales
journal and subsidiary records. Cheques / Demand Drafts have to be entered in the
Bankbook as these are not cash and hence cannot be entered in the cash book.

2.9 Similarly cash received on account of revenue should be deposited with the
bank as far as possible on the same day. The entries required to be made in the
cash book are:-

(a) As and when the cash is received this should be entered in the receipt side of
the cash book under the head “Sundry Debtors”.

(b) As and when it is deposited in the bank collection account, an entry in the cash
book is to be recorded for an equal amount indicating, that cash deposited in
the collection bank account, such entries also should be recorded in the bank
book (Collection). Thus cash book also requires balancing on day-to-day basis
along with certification with denomination of currency / notes coins held. In
case the amount cannot be deposited in the collection bank account, reason for
the delay should be recorded in the Cash Book.

2.10 All entries in the cash and bankbook in the receipt and payment sides are to be
controlled by a Serial No. However, wherever collections are received through
mechanized receipt the present system of numbering should not be changed.
The receipt / voucher No. may be given on monthly basis.

2.11 All the receipt and payment entries in the cash book should be recorded in the
General Ledger either on entry basis or on consolidated basis at the end of the
day by consolidating the respective Heads of Accounts. (The list of Heads of
Accounts to be operated by B.S.N.L. Units has already been circulated).
2.12 BANK RECONCILIATION:

At the end of each month the balances in each book may be reconciled with
the balances in the bank. For this the following procedure may be followed:

(a) All Cheques received by the Collecting Centre may be entered individually
in a register on day-to-day basis showing the Cheque number, date,
amount, name of the bank on which drawn, particulars of the bill against
which payment is received, name of the person from whom received etc.,
as per format enclosed.

(b) On the receipt of the bank statement the date on which the amount of the
cheque has been credited into our bank account should be entered in that
register in the relevant column.

(c) Particulars of the cheques the amount of which has not been credited in
our account till the close of the month may form as cheques deposited but
not credited by the bank in the bank reconciliation statement. Further
clearance of these cheques may be watched through this register.

(d) Similarly the particulars of all cheques issued but not presented for
payment may be drawn up at the end of the month by verifying the bank
statement with bank book and a record may be maintained as per format
enclosed.

(e) Separate registers are to be maintained in respect of each bank book.

(f) At the end of every month a bank reconciliation statement in respect of

each bank account may be prepared in the following proforma:-

I. Balance as per BSNL Bankbook.

II. Add
 (i) Cheques issued but not presented (list enclosed).

(ii) Bank interest not entered in bankbook but credited by the Bank.

(iii) Other credits included in Bank statement but not included in Bank book
(list enclosed).

III. TOTAL
IV. LESS

(i) Cheques deposited in bank but not credited by bank as per register.

(ii) Bank charges not entered in bank book.

(iii) Cheques dishonoured but not yet written back in bank book (list enclosed).

V. NET BALANCE
VI. Balance as per bank statement:
Certified that the above balances agree.

One copy of the bank reconciliation statement may be sent to Circle Office
along with the monthly trail balance. This register is required to be maintained not
only for cheques received on revenue account, but on other accounts also.

3. JOURNAL REGISTER:

The above procedure on bank and cash accounts are not the end of recording
of transactions. In the commercial transactions apart from the cash received / cash
paid / cheques / drafts received, there are certain transactions to be recorded towards
adjustments of entries already effected in the cash and bank book. Similarly journal
entry for bills issued and credit purchases are also recorded from sales / income or
purchase journals. As these transactions cannot be recorded in the cash and bank book
these are recorded through the journal register.
3.1 For each “On-Cash/BANK” transaction a separate journal entry is to be passed
giving a continuous serial number and such numbers will be enclosed only at
the end of the financial year. Each journal voucher is to be posted in the
journal register, the following journals are also to be maintained:

1. Income sales journal (Para 4.1)

2. Purchase Journal (Para 5.7)
3. Salary Payable Journal (Para 8)
4. Wages Payable Journal (Para 8)
5. Bills Payable journal (Para 7)

Most of the transactions will be entered in the above mentioned journals. In

addition there will be certain cases for which journal slips have to be prepared.

These journals will have to be entered in this journal. At the end of the month
the entries in this journal have to be consolidated Head of Account-wise and one
consolidated list prepared for posting in the General Ledger.

3.2 To differentiate the transactions in the cash and bank book and that of the
journal few examples are cited below:

(a) T.A. advance when it is paid in cash it appears in the cash book payment
side TA advance paid to while the journey is completed TA bill is
submitted and the advance is adjusted through the journal and difference
whether positive or negative is transacted through cash book.

(b) At time the Nigam has to pay advances to various parties either for
purchases or for services rendered through cash or bank book. When the
bills are submitted, the advance is adjusted through journal voucher and
the difference either negative or positive is transacted through cash or
bankbook.
4. The following subsidiary ledgers are required to be maintained at the branches
and sub units wherever they are considered to be an accounting unit.

4.1 INCOME / SALES JOURNAL:

In this journal all bills raised towards revenue should be entered on day-to-day
basis and according to the chronological order with which the same have been issued.
The details regarding the bill-classification of income, date of the bill, particulars of
the customers are also to be recorded. If the computer statement is available with the
above details the same may be treated as income / sales journal. At the end of the
month this is to be totaled according to the income head and journal entry is required
to be passed as follows:

‘Debit sundry debtors for the total amount and credit income with all sub-
heads figure displaying separately. This journal entry is required to be posted in the
general ledger’.

4.2 When the payment of the bills are the claims on account of income / revenue
referred to in the above paras, is received it should be credited to “Sundry
Debtors”.

4.3 If the cheques are returned / dishonoured no journal entry is required to be

passed debiting the various income heads and crediting the sundry debtors. A
separate register for the return of cheques is required to be maintained with
bill details, amount ad customer’s name with cheque particulars with cross
reference of the income / sales journal.

4.4 If the returned cheques are required to be represented at that time in the
corresponding bank book (collections) an entry is required to be recorded
before the cheque(s) are represented to the bank for collection.
4.5 SUNDRY DEBTORS LEDGER:

The income/sales journal is to be supported by a Sundry Debtors ledger. This

ledger may be opened as per printed formats of Kalamazoo loose leaf basis. The
telephone number or the name of the customer should be noted in the index for cross
reference and according to the index made. One folio is to be opened for each
customer wherein entries from the income/sales journal are to be recorded. Bill-wise
detail is to be posted in the debit side and all collections from the bank book are to be
posted in the credit side. At the end of the month this should be tallied with the sundry
debtors accounting head in the General ledger. A list should be drawn up for the debit
balance for realization purpose. In normal circumstances credit balances never arise in
this account. If the computer statement is available, the same may be treated as a list
of debit balance.

4.6 If any account of the bill is to be cancelled, a journal entry has to be passed
deleting the concerned revenue head and crediting the sundry debtors.

5. PURCHASE JOURNAL:

5.1 Purchase journal is required to be maintained for all credit purchases made by
the corporation. The columns in this journal should indicate the Sl.No., Bill
and date reference, name of the party with address, purchase order reference,
the gross amount of the bill, Head of Account, advance adjustment, income
tax recovery, security deposit recovered and any other recovery which are
refundable to the party, net amount payable, cheque particulars of payment
and remarks column.

5.2 Bills for purchase are received on daily basis. These are to be entered
according to the date of receipt indicating the details in the above proforma.
5.3 Purchase are of various kinds, it can be purchase or exchange equipment,
instruments, vehicles, cables, jointing materials, various stores, stationery,
furniture, machinery and equipment, etc., and should be classified according to
Accounts Head.

The abovementioned items are not comprehensive; this will be listed out
separately.

If the transaction of the particular item is voluminous a separate purchase

journal may be maintained as per the columns provided in para 5.1.

1.4 At the end of month all the columns in the register can be totaled up and a
journal entry is required to be passed debiting various recoveries. This entry is
required to be posted in the General ledger.

1.5 The purchase journal should be supported by SUNDRY CREDITORS

LEDGER. Form used for debtors can be used for this ledger also. It should be
properly indexed and one folio is to be opened in the name of every supplier.
The entry in this ledger is first to be posted from the purchase journal to the
credit column of the ledger indicating the purpose journal reference along with
bill Number. Debit entry occurs as and when payment is made and is to be
posted from the operational cash book. The ledger generally shows a credit
balance and it should tally with the credit balance of the General Balance and
it should tally with the credit balance of the General Ledger. A schedule is to
be prepared at the end of every month for the credit balance.

1.6 Any cancellation of the order / bill etc., if the same has been entered in the
purchase journal then a journal entry is to be passed reversing the position in
the purchase journal. The entry is also required to be posted in the General
Ledger.
2. BILLS PAYABLE REGISTER:

A bill payable register is to be maintained in respected of all personal claims

(other than that of salary) of the employees of the BSNL e.g. TA, Conveyance charge
reimbursed on account of maintenance of Car/ Scooter for official use, LTC, Tuition
fee, etc. The details of each bill with heads of account under which the gross amounts,
recoveries and net amount payable are to be debited / credited, has to be entered in it
and journalized at the end of the month.

Format for the Bill payable journal is enclosed. As the outstanding allowance
against bills payable have to be reconciled by the concerned pay bill section. The
register should be maintained by the concerned pay bill section. At the end of the each
month, the detail of unpaid vouchers relating to bills payable may be supplied by the
cash branch to the concerned pay bill section for the purpose of reconciliation.

7. LEDGERS FOR ACCOUNT OF ADVANCES:

Advances are received and paid by the corporation. There are various types of
advance payments by the corporation, some of them are listed below:

7.1 ADVANCES PAID TO STAFF:

1. TA Advance
2. Salary Advance
3. Festival Advance
4. House Building Advance
5. Vehicle Advance etc.,

7.2 These advances are paid either in cash or by cheque. Therefore, at the time of
payment these transactions are reflected through the cash or bank book. The
total amount of such advances paid under various heads are directly recorded
in cash and bank and find a place in the general ledger under the above heads.
 However, a subsidiary ledger is required to be maintained in the name of the
staff. In these ledgers debits are made from the cash/bankbook and credits as
and when the amount is recovered or bills are submitted for adjustment
through journal entry.

The existing retrenchment register are continued to be maintained for the time
being and the subsidiary ledgers can be prepared from the retrenchment register.

House building advance and vehicle advance are paid and recovered as per
rules framed for that purpose.

7.3 An index ledger is required to be opened by allotting folios for each person or
the existing R.R. Register can also be used alternatively. Separate ledgers are
required for each type of advances. The balance in the General Ledger and
these advance ledgers should be reconciled on monthly basis.

7.4 PURCHASE ADVANCE LEDGER:

Advances are paid to various vendors/contractors for goods supplied or for

services rendered. When payments are effected it is transacted through either cash or
the bankbook. Cash and bankbook entries are recorded in the General Ledger.
However to control the purchase advance, a ledger is to be indexed and folios are
opened customer-wise and recovery of advances to be watched. As the entries are
made directly from the cash and bankbook to the General Ledger, adjustment of these
advances is to be routed through purchase journals. It may be noted that the erstwhile
DOT system of making payments on behalf of other circles will be no longer
prevalent in BSNL. Therefore, the settlement of transactions between different circles
(remittance different circles) will not be in vogue by book transfer.

7.5 The purchase advances ledger will show entries at the debit side from the cash
and bankbook and credit entries recorded are from purchase journal.
7.6 ADVANCES RECEIVED LEDGER:

In certain cases advances are received by the corporation for the services
rendered or goods sold. This may be a part of the income receivable by the
Corporation. Depending upon the nature of transactions involved a separate ledger is
required to be maintained and advances are to be adjusted according to his
nature/purpose for which the same has been deposited.

Deposits received in respect of contributory works and in respect of providing various

telephone facilities come under this category.

7.7 OTHER ADVANCES LEDGER:

Other advances are paid to the staff for the execution of petty nature of work.
The transactions are routed through cash or bank book and entry is recorded in the
General Ledger. A separate subsidiary ledger in the name of the staff is required to be
opened and as and when the vouchers are submitted against the advance paid after
scrutiny and classification of the expenditure under various heads a journal entry is
required to be passed debiting particular head of expenditure and crediting other
advances. The journal voucher should invariably indicate the name of the official in
whose favour the advance are adjusted. The balance in the sub-ledger should tally
with the General Ledger.

Existing register of temporary advances may be converted into subsidiary

ledger of other advances. It must reflect the amount against each official and the
purposes for which it was sanctioned with the proposed date of expenditure. The
balance in this ledger should agree with the general ledger. The register should be
monthly reviewed by CAO concerned. Under no circumstances, a temporary advance
should be allowed to be used for the purpose for which it was not sanctioned.
7.8 IMPREST PAID TO THE STAFF:

There are certain minor works for which officials are paid advances for a
longer period. These advances are treated as Imprest. The differences between
Imprest advance are as follows:-

Advance in one time “paid” and adjusted and Imprest advances are recouped
to the extent of expenditure statement submitted. Therefore, it is a continuous nature
and the transactions are directly recorded from the Cash and Bank Book and to the
general Ledger. When the final Imprest statement is submitted this is adjusted through
a journal voucher. Hence , a subsidiary ledger is required to be opened in the name of
the officials wherein transactions are recorded from the cash/bank book. In these
ledgers recoupments of expenditure are not posted. The entries occur only when the
advance is paid and the final adjustment is made. All Imprest paid is to be adjusted or
returned at the end of the Financial year.

All advances paid should be adjusted/recovered within a reasonable time and

as quickly as possible. At the end of the financial year it should be minimum possible.
All imprests have to be refunded quarterly and fresh sanction should ne issued at the
beginning of next quarter.

At the end of the Financial year a schedule of all advances outstanding should
be drawn up and reconciled with General ledger balance. These schedules should be
analyses further to indicate how much of such advances are outstanding for more than
six months and for less than six months to meet statutory requirements.

8. PAY ROLL ACCOUNTING:

Once the pay roll is drawn and before payment is effected a journal entry is
required to be passed debiting “Salaries Account” for the gross amount of the roll and
crediting various recoveries effected from the Roll and also crediting the net payable
amount to the staff under the “Salaries/Payable Account.”
8.1 Cheques /cash paid for the salary(net) to the Employees should be entered in
the Cash or Bank Book according to the mode of payment under the head”
Salaries payable”. Salary payable head of Account is only for making
payment. The expenditure under various detailed heads of Accounts will be
available in the General Ledger.

8.2 Wages payable to Daily Wages Workers should be drawn at the end of the
month. A journal entry is required to be made before payment is effected. The
gross amount of the wages should be debited to Wages Account and credit
recoveries such as Provident Fund and any other recovery and the net amount
payable also to be credited under the Head “Wages payable”.

8.3 When payments are made either by Cheque or Cash, an entry will be made in
the Cash/ Bank according to the mode of transaction under the Head “Wages
payable”. Each Mustering officer has to intimate by 2nd of the following month
the amount of wages payable. On the basis of this information; the entries can
be made in the wages payable Journal. The amount of advances to be paid to
Mustering officer must tally with the information given by the officer. If there
is any the actual amount of the Muster Roll, the same may be adjusted through
a Journal Slip. Also the written justification duly countersigned by the
controlling office may be obtained and kept on record.

8.4 In addition to the monthly Pay bills certain supplementary claims towards
salary/wages arise. These are to be drawn in a separate roll for regular and
daily rated employees and paid debiting “Salary Payable / Wages Payable” as
the case may be. At the end of the month such rolls are to be totaled up and a
single journal entry is to be made as per classification.

In case of regular and supplementary pay bills, a “Salary Payable Journal” is

to be maintained for which the format is enclosed. This may be posted from the
abstract of the pay bills. The procedure as applicable to the Bills payable journal will
apply in this case also.
8.5 Over time paid is to be accounted separately. As and when the OTA bills are
drawn it should be debited to salary payable account. At the end of the month
all such payments should be totaled up and the same to be debited to “OTA”
account and credited to salary payable account. A separate OT register should
be maintained.

8.6 It is expected that after making the net payment to the staff at the end of the
salary day some staff will not be present to draw the salary and their salaries
will be outstanding. In these, circumstance the total amount paid should only
be looked under the head “Salary Payable/Wages Payable Account”. The
unpaid portion of the salary should be entered in a separate register and as and
when the payments are made, proper reference of the payment should be made
in the register and the payment voucher classified under the Head “Salary
Payable / Wages Payable”.

8.7 At the end of any period the outstanding amount under the Head “Salary
Payable / Wages Payable” in the General Ledger should tally with the
outstanding accounts in the unpaid register.

8.8 The recoveries made from the rolls should be entered in recovery register. For
each type of recovery proper entry is to be recorded in this register separately
in the follows/pages. As for the due dates recoveries made from the
deputationists should be remitted to their parent units. The delay in remittance
will attract payment of penal interest on this account. Penal interest will be
viewed very seriously by the management. As such all remittances should be
made in time.

Separate recovery retrenchment registers have to be maintained in respect of

loans / advances granted to the staff by the DOT and BSNL respectively. The amount
of recoveries in respect of loans and advances granted by DOT has to be transferred to
DOT through the settlement of claims.
8.9 Income tax deducted at source should be credited by the DDO to the account
of the Government on the due date, failing which penal interest is payable as
per Income Tax Rules. Merely making a Cheque and depositing the same on
the due date to the government Account will not be treated as amount credited
on the due date. In such cases the charges realization date will be treated as
actual date of credit to the Government Account. DDO is responsible for
keeping all records prescribed by IT authority and for issue of all certificates
and returns prescribed by IT authority.

8.10 Similarly provident Fund subscription along with employer’s contribution

should also be deposited with Regional provident Fund Commissioner or the
Account specified by them on a particular due date. This date also should be
observed strictly.

8.11 Employer’s contribution to the Provident Fund is normally equal to the

allowable percentage of deduction made from each employee according to the
Rules in force. In addition to the amount certain amounts such as family
pension, Administrative expenses are also payable. These percentages are to
be verified from the Act in consultation with the Local Provident Fund
Commissioner’s Office at the minimum of the rate prescribed till such time the
Nigam frames its own policies. The amount paid by the Nigam other than the
recovery from the employees should be classified as Employer’s contribution
to the Provident Fund.

8.12 There are certain registers prescribed under the rules of the Provident Fund
Act and the Registers are mandatory and should be kept (undated) by DDO.

Remittance of Income Tax, Provident Fund should be made in the prescribed

forms and returns of monthly remittance are also to be submitted on the prescribed
forms. Due dates of submission of such return are compulsory and as such it should
be submitted in time.
8.13 SALARY REGISTER:

A salary register is to be maintained wherever rolls are prepared. The register

contains the total amount of salary drawn and paid for every employee of the
company including OTA Bills and the supplementary claims paid to the employees.
The register should contain all elements constituting the gross salary and various
recoveries and net paid. This register is to be totaled at regular intervals to enable the
calculations/information of the following.

1. Income tax deductible at source.

2. Bonus payable
3. Income Tax certificate to be issued.
4. For calculation of different elements constituting the salary.

8.14 On certain type of medical claims reimbursements to the employees above a

certain ceiling limit, income tax is recoverable. Such amounts are also
nationally to be included to the gross salary for the purpose of tabulating tax
deductible at source.

8.15 As per section 217(2A) of the companies Act, 1956, certain information’s are
to be added to the Director’s Report forming Annexure to the same. For the
same, total salary paid to the employees to be taken from the total salary
register and certain other perquisite paid to the employees are to be added for
making the above statement.

9. GENERAL LEDGER:

At the end of the month of the Accounting Units should ensure that all the
entries in the cash, bank and journal books have been incorporated in the General
Ledger and the same may be verified from a check list of records from which entries
are posted in the General Ledger. One General Ledger is only to be maintained by
each SAU and Circle Office.
10. TRAIL BALANCE:

Having ensured that all entries have been incorporated in the General Ledger
and also after ascertaining the arithmetical accuracy of the balance in the general
ledger a list of Heads of Accounts either debit or credit should be drawn up. In this list
the cash and bank balance of the unit also should be entered. As trail balance is
prepared at the end of the month, the balance taken from the cash and bank book also
is only the balance at the end of the month.

10.1 Normally the trial balance should tally, i.e. the total of debit and credit side
will be equal. Whenever there is an error towards the arithmetical accuracy or
omission is posting in the general ledger trial balance may not tally. In such
cases checking and totaling should be ensured again and trial balance should
be made to tally.

10.2 After tallying the trial balance the sub-accounting units in their trial balance
either merging the (Circle Office) should incorporate all the figures of sub-
accounting units in their trial balance either merging the figures to Head of
Account in their trial balance or extending further columns in debit and credit
side and displaying the figures in their trial balance amounts separately and
striking the grand total for all the trial balance together.

10.3 The trial balance received from the Sub-accounting units should not be posted
in the General Ledger of the Circle Office on monthly basis. This should be
finally posted by journal entry as the Head of Account in the trial balance and
finally merge figure in respect of Head of account of the Headquarter at the
end of the accounting period. It is to be so because the trial balance received
from the sub-accounting units every month is the progressive total of the
balance maintained in the general ledger of the sub-accounting units.

10.4 Having prepared the trial balance, the circle office should forward a copy of
the same to the Corporate Office in monthly basis.
10.5 As per the instruction of the Corporate Office, the Circle Office should furnish
details of any Head of Account in “Schedules”.

10.6 Circle Office should prepare their own profit and loss account and balance
sheet. As and when fixed by the headquarters, they should forward the same to
the Corporate Office. Preparation of P&L accounts and the balance sheet is a
compulsory work to be done at the circle office.

10.7 All books of accounts are to be kept as prescribed above and elsewhere and
should be promptly produced for verification of the Statutory Auditors,
Government Auditors as and when the audits are conducted. They should also
be produced during periodical inspections/special inspections of Director
(Finance) CFO / PGM(F)/GM(F)/DGM(F) of the unit.

10.8 The above mentioned are the minimum set of books required for the
compilation of accounts. Therefore, deletion of any of the books of account
will not reflect fair and correct view of the transactions of the Nigam.
Supplementary Register, further to the abovementioned, should be kept by the
Sub-Accounting Units or Circle as per their own requirements as fixed by the
head of the finance wing in the unit/circle or by the corporate office of BSNL.

11. CHECK LIST OF TRA ACCOUNTING:

Items of work relating to TRA Accounting which should be completed /

updated every month in order to achieve the target for closing of accounts.

ITEM OF WORK:

i) Preparation of Journal Slips for issue of computerized bill.

ii) Preparation of Journal Slips for adjustment amount in respect of

computerized bills.
iii) Preparation of Journal Slips for issue of computerized bills in respect of
STD/ISD/PCOs.

iv) Preparation of Journal Slips for adjusted amount of STD/ISD PCOs.

v) Preparation of Journal Slips for issue of supplementary bills.

vi) Preparation of Journal Slips for recovery of surcharge on late payment of

telephone bills.

vii) Preparation of Journal Slips for cancellation of amount relating to

telephone bills.

viii) Preparation of Journal Slips for adjustment of telephone bills.

ix) Preparation of Journal Slips for amount written off.

x) Preparation of Journal Slips for unaccounted amount and adjustment

thereof.

xi) Preparation of Applications deposits registers. (Computerized/Manuals) of

UYT/N-OYT/Tatkal Scheme.

xii) Preparation of security depositors registers in respect of dishonour of

bills / difference of Non-OYT deposits charged on account of RNP case
for more than six month cases.

xiii) Preparation of registers in respect of revolving accounts system (Vol

Deposits)

xiv) Preparation of Journal Slips for transfer of application deposits to after

application deposits on opening of telephone in respect of OYT/Non-
OYT/Tatkal Scheme.
 xv) Preparation of journal slips for rent rebate on OYT telephone.

xvi) Preparation of journal slips in respect of interest liability on telephone

deposits i.e. OYT/N-OYT.

xvii) Preparation of broadsheets of application deposits i.e. OYT/N-

OYT/Tatkal. After application, deposits of OYT/N-OYT/Tatkal security
deposits & revolving accounts system.

xviii) Preparation of journal slips for Misc. Income on account of maintenance of

OYT deposits, forfeiture of OYT/Tatkal Deposits.

xix) Preparation of reconciliation sheet in respect of Sundry Debtors

telephones.

12.PURCHASES AND INVENTORY:

12.1 Whenever the material is received at the site or received by the Consignee, it
should invariably be noted down in the prescribed registers. It may be treated as
works-in-progress / Maintenance or repairs expense as the case may be.

12.1.1 Stores received but not issued may be treated as inventory. The inventories
may be valued at cost by using the method of weighted average.

12.1.2 The stores which are directly received and issued by the stores organization of
BSNL may be classified as works-in-progress (Project-wise debit entry passed) with
the project estimate duly approved; Maintenance or repairs expense as the case may
be.

12.1.3 As far as the purchases by BSNL, if the material is not immediately used for
any purpose, i.e., for installation, maintenance or repair, it should be treated as an
inventory. Whenever an item is transferred to installation, the value of such item may
be booked under works-in-progress (with the project estimate duly approved).

12.1.4 Whenever such stores are issued to maintenance or repairs, it may be treated
as maintenance or repair expenditure as the case may be.

12.1.5 The existing system of centralized purchase payment, e.g., through CPAO to
ITI, through AO CTS, Chennai to HTL, and through CGMTS, Calcutta to HCL for
the supplies to be made across the country is not a commercially sound system of
payment. Obviously, it has to be dispensed with sooner than later. BSNL Hqrs. is
seized of the matter and is working out a neater arrangement so that there is no
suspense account and if at all it comes up, it becomes, zero on the close of the year.
Similarly, centralized payments by the Circle Hqrs. for the supplies meant for SSAs
has also to go. CGMs/IFA must therefore, be mentally prepared for the change for
which instructions will be issued separately.

13. Doubtful Debts:

Since BSNL will commence its business from 01-01-2000, the question of providing
doubtful or bad-debts does not arise in the first year. By operation of law a claim
becomes debarred only after 3 years. Therefore, no provision is required to be made
for the year 2000-2001. However, any claim which is forming part of the current
revenue and realization of the same has been suspended due to the proceeding in a
court or the death of a subscriber or to the fact that subscriber has become insolvent or
certain other reasons leading the Nigam to believe that the debt cannot be realized
should be taken care of and necessary provision of doubtful may be made subject to
the fact that such claim is realistically assessed. A certificate from the management to
this effect disclosing the doubtful debts and confirming that there are no other
doubtful debts will have to be submitted.
Budget in BSNL :

BSNL Budget is complied under three categories:

 Revenue Budget
 Capital Budget
 Cash Budget

BUDGET
Revenue (Operating Capital (Capital Cash
Expenditure) Expenditure) Cash Inflow Cash Outflow
* Salary * Land *Revenue from Services *Capital Outlay

* Medical Expenses * Building * Investments *Salary & Wages

* Wages * Apparatus & Plants * Borrowings *Loans & Advances

* Overtime Allowance * Electrical Installations * Operating Expenses

* LTC * Lines & Wires * Corporate Tax

*Pension/Leave * Cables

*Salary Contribution

* Maintenance * Installation Subscriber

Expenditure

*Business Promotion &

Marketing

Budget Head

Capital Heads: Schedule 05 to 07 - Fixed Assets

Schedule 14 to 16 - Works in progress

Operating Expenses: Schedule 71 to 81,86 - Office & Administration

Capital Works Programme

The capital works programme containing proposals for budgeting of the capital works
to be submitted to Corporate Office, during February in the forms ‘A’, ‘B’ and ‘C’.

Capital works Programme (February)

A B C
Proposals of Projects costing New Proposals of Projects Proposals of capital works in
Rs.5 Cr and above but less than costing Rs.5 Cr and above but progress costing more than
Rs.20 Cr less than Rs.20 Cr Rs.20 Cr

The capital works programme should be thoroughly scrutinized before submission to

the corporate office, by the planning branch and the IFA of the Circle Office.

Capital Budget

Capital expenditure in BSNL primarily relates to acquisition of land, constructing

telephone exchanges, procurement of equipments, line and wires, lying of cable etc.
The capital budget is formulated with reference to strategic business plan, which
forecasts new projects to be undertaken in a period of three years and for the
particular financial year as well – and also projection for ongoing works.
Points to be kept in view formulating budget – Estimates are:

 The necessity for individual projects, newly proposed as well as works-in-

progress should be fully examined from the point of view of the relevance of
the project to the expansion or improvement of the network, the essentiality of
the specific project and its profitability.
 The work-in-progress may turn out to be not relevant and therefore not
justifying further expenditure for the following reasons.

o Prolonged gestation of the projects concerned.

o Recent developments, like policy decisions regarding changing

technology, such as digitalization, change in product-mix, from
factories, like phasing out of electro-mechanical systems etc.,

 Decision should be taken in such cases regarding abandoning of the project,

taking care to find ways and means of salvaging the investment already made.

 In case of projects, which have been included in the demand –for-grants after the
above scrutiny, the listing may be done in the basis of priority, so that head
quarters could decide about any possible deletion in the context of inadequacy of
allotment of funds.

 In the case of works costing less than Rs.5Cr each, where a lump sum allotment
is asked for, a similar exercise, as mentioned above should be under taken so that
only essential and remunerative projects are included in the programme.

 Both the planning and budget branches should conduct the above mentioned
exercise jointly.

RE / BE Statements in respect of capital works is to be submitted to CO. BSNL in

forms “A” to “H” during September.
 A) Proposals in respect of ongoing projects
C
A AA) Consolidated component wise demand of ongoing projects
P
I
T
A
B) Component-wise consolidated demand – Major works costing below 5
L Crores

W D) Works costing below Rs.5 Cr. But expenditure exceeded Rs.5 Cr.
O
R
K
S

E) Consolidated proposals of sanctioned works (A to D)

B
U
D
G F) Material input-wise requirement for capital works
E
T

S
G) Profitability of capital works projects to assess expenditure on
T non-remunerative projects for the purpose of “USO” funding.
A
T H) Provision of targeted VPTs – Technology wise break up with.
E
M
E
N
T
S

S
Allotment of funds for works expenditure

 The funds for works expenditure comprise

o Specific provision for each project costing Rs.5Cr and above.

o Lump sum provision for all other works.

 This distinction made in the budget determines the method by

which allotments are placed at the disposal of the various
authorities for execution of works.

 Funds for major works, costing Rs.5 Crores & above are
allotted by the Corporate office to Heads of Circles according
to the components of each project.

 In respect of all other works, allotments are made account

head-wise in lump.

 Allotments of funds are made, subject to the following

conditions:-

 That no appropriation of funds is to be made against any

unsanctioned detailed estimate.

 That no appropriation of funds is made which has the effect of

exceeding the sanctioned cost of the project beyond 10%

Expenditure Control

The Corporate office is ultimately responsible for controlling the whole expenditure
against the sanctioned grant and in turn Heads of Circles are required to cooperate in
the exercise of this control. Control in relation to budget allotments.

Table

(i) Expenditure should not be incurred under any head in excess of the
funds allotted.
(ii) If any time it becomes apparent that there is likely to be a surplus
under any head, then the amount of the probable excess must be
promptly surrendered.

These two objects can be attained only by the adoption of a systematic watch over
expenditure and by a monthly comparison with grants. For the purpose of control
every administrative officer should insist on the submission by each of his subordinate
officers amongst whom he subdivides his allotment of a regular monthly basis . the
same can be watched through the registers and various statements prescribed.
 BILLING (BASIC SERVICE)

Billing Processes

All the BSNL Units are issuing bills to the subscribers for their fixed line service with
the help of the software called Trissur Package or DOT Soft. However, some metro
districts line Chennai and Kolkata are using their own customized software. Even
through different packages are under use, the processes in issue of telephone bills for
the fixed line subscribers are common.

Sources of date for processing of telephone bills.

Whenever a new fixed line is provided, the data relating to subscriber are forwarded
to

 Commercial Section
 FRS (Fault Repair Service)
 Billing Center

The billing center or in In-house computer center maintains the billing master
(Subscriber Record Card) for all the working telephones. In the organization
hierarchy, there is one in-house computer center in each SSA, which caters to all the
billing needs of the entire subscriber base of the SSA. Whenever any new line is
added,

 The information is furnished to the billing centre for updating billing master
through the interconnecting server between the exchanges and billing centre.

 In some places the completed advice note information is still fed manually to
the system wherever automation is not implemented.

All other information like shifting of telephone, any information regarding value
added service, information regarding rental rebate and surrender of telephone are also
forwarded through the interconnecting server or manually fed to the system on the
basis of the advice note issued by the concerned commercial officer / DE in charge of
the exchange.

The meter readings for all telephones are also forwarded to the billing centre through
magnetic tapes, disks, optical disks and digital audiotapes at every fifteen days i.e.,
15th and last day of the month. The details of STD/ISD calls are also forwarded
separately through magnetic tapes, disks and optical disks corresponding to the same
period of which meter readings are forwarded. Meter readings are forwarded to the in
house computer centre in binary or ASCII format readable only through the software
developed for this purpose. Isolated and independent small exchanges may send the
meter readings in hard copies and floppy discs.

The input data for processing telephone bills are received from the following sources:

Input Data Source

 Meter Reading - From the exchanges concerned

 Trunk Call / Phonogram Details - Trunk Exchange / DTO
 OCS Calls - VSNL (Over Seas Service Provider
 Reconnection Charges - From AO (TR)
 Directory Charges, if due - From the directory section
 Accessory Charges, if any - (Annual)
 Shifting Charges - Exchange

Credit adjustments, if any, to be carried on the bill, is also received from the AO (TR)
and wherever online system exists, in some TR billing packages, system itself creates
credit vouchers for any excess payments received. However, in some TR Billing
packages, even though the bills are accepted in excess, the online system accepts the
payments, but AO (TR) only has to create credit vouchers.

The subscriber master data available at the in-house computer center is being updated
in batch mode at least once in 15 days and invariably before the processing of the bill
and with reference to the closing date of meter reading for the bill. Wherever online
system of updation exists, the subscriber master gets updated instantly. All changes
take place, from one billing cycle to next billing cycle are captured by the periodical
updation of the subscriber master data. Once the subscriber master data is ready, the
processing of the bills for every type of telephone service and for each bill date is
processed as per the sequence already explained above. Whatever problem occurs
during the course of processing of the bills, it is taken care of by the in-house
computer center in coordination with the exchange / AO (TR).

AUDIT PROCESS

The different types of Audit in BSNL are:

 Internal Audit
 Statutory Audit
 CAG Audit
 TAX Audit
 Cost Audit
Internal Audit

This is the audit conducted internally by the management by using their own resource
persons or by outsourcing chartered accountants. The area of coverage by the internal
audit is defined by the management.

Statutory Audit

This is the audit conducted by the statutory auditor appointed by the CAG under the
provisions of the section 619 under Company Act.

CAG Audit

CAG also conducts its own commercial audit on the various aspects of the working
of the company through its own audit wing and come up with its observations.

TAX Audit

Section 44 AB makes it obligatory for a company carrying on business whose

turnover or gross receipts in the previous year exceeds Rs. 40 Lakhs to get its
accounts duly verified and signed by the Chartered Accountant in a prescribed for the
tax audit with in a specified date.
Cost Audit

It is the audit conducted under section 233B of the Companies Act with a focus on the
cost accounting records and other related information required to be maintained by the
specific industries. The objective is to have report with independent opinion whether
the cost records prescribed by the law have been maintained or not and the cost
statement gives true and fair view of the cost of production. BSNL will be subject to
cost audit from the current financial year onwards. (Cost audit would any how be
applicable to telecom factories in the BSNL Set up).
 CHAPTER – V
Summary
Change is law of nature. Change may be progressive or regressive or speed or
slow. Telecom places vital role for the progressive and speedy development of any
society for which India is no bar.

After invention of Telephony by Graham Bell the telecom services slowly but
surely made the world much nearer and now with the advent of Value-added services
in Telecom network, the whole world is now termed as Global Village. It is clearly
elucidates the importance and vitality of telecom in the development of society.

The basic telecom services were introduced in India in the year 1856 and its
practicability was emphasised and exposed in the first war of Indian freedom
movement in 1857. The Telecom services were started for public in the year 1881
and it was merged with postal in 1883. After advent of Rajiv Gandhi as the Indian
Prime Minister, the scenario of telecom services were drastically changed and the
department was bifurcated from postal by giving special entity as DoT in December
1985. Later the DoT further divided with sole object of decentralisation of telecom
sercvices, like MTNL, VSNL for quick decision making in the interest of users in
metro cities. The DoT further sub divided later into Department of Telecom
Operations (DTO) and Department of Telecom Services (DTS), to further
decentralisation of services to reach the customers closely and easily. As per the
objectives of New Telecom Policy 1999, the DTS and DTO have been merged and
corporatised as Bharat Sanchar Nigam Limited (BSNL), with effect from 1 st October,
2000.

The Value-added services in the present day scenario play a vital role in this
competitive world to reduce the distances between Countries & people and to
ameliorate science and technology and share knowledge with different countries.

The DoT which traces its birth in the year 1985 in a single, monolithic
organisational not long ago with vast monopolistic lead in the telecom services. But
of late private operators have entered into the arena of competition and DoT also has
been transformed as a Corporation with the name BSNL, in consonance with the NTP
evaluated in the year 1999.

The DoT was under the executive and administrative control of Secretary,
DoT, assisted by different members like Member Services, Member Finance, Member
operational, Member Technical etc. Later after birth of BSNL, the administration is
developed to BSNL board headed by one chairman and four Directors. The BSNL
has 23 Circles, each circle headed by a CGM (Chief General Manager). Under each
CGM one SSA (Secondary switching Areas) are formed corresponding to revenue
Districts, in a particular State and a GM(General Manager) or TDM(Telecom District
Manager) headed them. At present there are 3,60,256 employees in different groups
are working in the total Country. The classification of different groups as follows :
Group “A” : 6,302
Group “B” : 44,536
Group “C” : 78,453
Group “D” : 2,30,965

Apart from the above telecom Circles, there are other Circles like quality &
Development (Q&D) Circle, Projects Circles, Telecom & Development (T&D).

The World is changing rapidly so the technology also. In 1980s the growth of
telephones is Stable. In general any organisation or individual cannot be static and
stable, if development is aspired it must be dynamic. So is the DoT also transformed
from its stable state to Dynamic State in the year 1990, to cater the growing needs of
people in the field of telecom and make the people closer and closer, nearer and
nearer. Later the evolution and revolution in the field of computers made the task of
telecom people more relevant and important in the development of international trade
and communication. So the telecom people swung into action, deregulated by cutting
the shackles of traditional rules and regulations and knocked the doors of customers
and prospective customers to maintain its indispensability and monopoly in the
service of people. So gargantuan targets have been fixed right from 1999 and the
targets have been achieved by giving phones on demand in majority of areas. The
tele-density was rapidly changed from 1% to 3% and a tele-density of 10% is
envisaged by the year 2005 and the staff is in that direction.
 As the new competitor entered in this service, the telecom must rise the
occasion and with stand the challenges posed by them. However BSNL is the sole
provider for rural communication and competitor is not taking up the cause of rural
people for their basic service eventhough he has contractual obligation towards them.
The maintenance of rural service has become a big brunt for telecom services, after its
conversion as cooperation has government is not providing any subside to compensate
the loss aroused out of rural services.

Not withstanding the entry of private operators in this telecom field people
have been reposing their confidence in the BSNL and there is ever growing demand
for new services. In rural area people are invariably depend on BSNL only as the
private operators simply scuttling its own commitment given to DoT for the rural
services.

In the present day scenario where technology and computerisation developed

leaps and bounds, the role of value added services reached to high pinnacles. So the
value-added services like INET, ISDN, INTERNET etc., were introduced in India
with a view to giving good service to needy people. INTERNET is one among them
and its growth is exponential with reference to time.

The Government releasing the importance of the services, has drastically

reduced the tariff and by giving concession to certain categories like low-income
group, high-callers, student, educational institutions to popularize the services and
make the access to service easy.
Limitations :

During my project study I met many subscribers to express their views on our service.
Some of the important expressions/views of subscribers about our services are
furnished hereunder.

1Q. Many subscribers expressed their dissatisfaction about time Mtce. Of our
services. Fault complaints are not being attended immediately. Some times one
week’s time is taking to rectify the fault.

1A. Subscribers have to book their complaints through 198 Fault Repair Service,
the Inter Voice Response System will give the Complaint Booking No, the
Subscribers have to note the complaint number. If the Fault is not rectified within 1 or
2 days, they can give the complaint to higher Officers. The Subscribers are at liberty
to book a compliant through 1094 to higher officers.

2Q. Shifting of telephones works are not being carried out immediately. Some
times more than one week’s time is taking.

2A. Some times shift may be delayed for want of feasibility, the officer concerned
should intimate the Subscriber about in case of non feasibility. In the case of
abnormal delay in shifting of phone where its feasible, the shifting work should be
completed within 1 or 2 days. No charges will be levied for shifting phone from one
location to another.

3Q. Most of the public are not aware of using 198 Fault Repair Service ad
expressed their dissatisfaction about the lengthy procedure of Booking Complaint.
Particularly Rural Subscribers are not aware of using 198.

3A. The Voice Response system is asking the system in two languages in Regional
language of Telugu and in English. However the case will be intimated to the higher
officers for necessary action please.
4Q. Many subscribers expressed their dissatisfaction about the way of approach of
the staff members. Some times if they ask some thing about bill enquiry are for
booking fault etc. the staff members are issuing irresponsible relies.

4A. In cases you please report to the concerned section officer, and section officer
will take suitable action against those officials.

5Q. Some of the Subscribers asked why the BSNL Visakhapatnam not providing
cell towers particularly in rural area as well as urban area.

5A. This is a good question, BSNL has to provide more towers for giving better
services , now it is under process and BSNL Visakhapatnam is planning to erect more
towers, Due to Equipment problem this was delayed

6Q. Many public are interested to purchase the Cell One SIM cards due its wide
range of coverage, many times public got the replies that no SIM cards.

6A. Recently sufficient SIM cards received and supplied.

7Q. Up to the recent fast, BSNL services are available for One Rupees through
Coin Collection Box. People were very happy with a cost of one rupee they are
communicating their messages. For the department also it is earning very good
revenue decision taken by the Dept. it are still charging lower rates than BSNL.
The Public PT attendants also expressed that they are loosing business due to nasty
decisions BSNL.

7A. Yes, it appears that type of decisions are not in the interest of Public. However
this decision is taken by the BSNL Head quarters, the decision of BSNL HQ is
implemented simply.
SUGGESTIONS :

1. To face competition with the private operators, BSNL should first initiate
to use it available resources and infrastructure to provide better services
than existing to get profits and to compensate losses occurred in providing
basic services in village / rural areas.
2. BSNL should offer telephone on demand to ever area, it should start caring
subscriber better. The PSUs fortunes started growing out of the linkages
of the telecom regulatory environment to market conditions of
competition, customer loyalty, increasing other available services etc.
3. BSNL should diversify into other related facilities available in the new
technology switches, like providing free call waiting, calling line
identification etc., to encourage and attract the subscribers to have many
free facilities.
4. The Staff to telephone ration is now satisfactory in the BSNL, but when
compared to other developed countries it is very high. The staff should be
down sized, by taking into consideration of lack of skills, physical fitness
etc.
5. The BSNL should take steps towards market orientation, it still to go a
long way in terms of customer satisfaction. Providing New Telephone
connections and various types of shifts relating to working telephones is
still taking months together, even though the norms are fixed with
minimum time. Things should be set right, so that the re-tapism and other
related delays should be minimised to the utmost satisfaction of the
subscribers.
6. Expansion and diversification are the key words for PSUs in the coming
years. For this infrastructure up-gradation, focus on operational
efficiencies, better customer service will make all the difference.
7. BSNL should revise the age old Indian Telegraph Act 1885 and modify it
to suit the present day conditions.
8. BSNL should try its level best to collect the dues pending with the
defaulter subscribers.
9. BSNL should make its resources with self-sufficiency of its allotted funds
from the Government.
10. The day-to-day expenditure should be minimized, so that the resources
should be utilized for its investment to the new equipment and for future
expansion.
11. A twenty-four hour telecom centers should be opened with all the facilities
like payment of bills, complaint registration, access to internet, FAX,
Telegrams, STD/ISD PCOs etc.
12. Now-a-days corruption has become the part and parcel of the public life.
To eradicate the corruption from the Telecom On-demand provision of
Telephone, facilities should be extended to the users and the users should
also be advised to take the services freely and without offering any bribe to
the employees. Vigilant electronic systems to record meter readings,
collection of telecom revenues should be implemented.
13. Staff should be trained / retrained to suit the needs of the innovative
telecom systems. Employees should be encouraged to acquire academic
 qualifications as managers, cost-accounts to fill in the gap of present
Corporation set up.
14. Transportation, now a day, has become the primary problem of the
emplloyees. So, all the field staff should be provided with suitable two-
wheelers to reach the destination quickly and attend to the fault of the
complaints.

15. Employees should be given need-based minimum salaries for their

physiological needs and to get self-actualisation.
16. There is a comment about BSNL that it concentrates on NPCs a targets but
at the same time neglects the maintenance of existing telephone network
and their fault rectification. This should be avoided and BSNL should
work to the utmost satisfaction of the subscribers both in providing the
NPCs and their maintenance.
17. The services should be decentralised, by geographically and provide all the
services at single window with due courtesy will definitely satisfy the
customers and demand for services will increase.
 FINANCIAL PERFORMANCE OF BSNL
(A CASE STUDY OF VISAKHAPATNAM SSA)
A PROJECT REPORT SUBMITTED
IN PARTIAL FULFILMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE
MASTER DEGREE OF

MANAGEMENT IN BUSINESS ADMINISTRATION

By

k.upendra prasad

Under the Guidance of

J.Nagaraju
 CHAPTERISATION

Chapter 1 : Introduction
National Telecom Policy
Objectives
Methodology
Services of BSNL

Chapter 2 : History
Organization Profile & Profile of BSNL VM SSA
Strengths
Weaknesses

Chapter 3 : Analysis :
Revenue Analysis
Expenditure Analysis
Capital Analysis

Chapter 4 : Accounting Policies of BSNL

Accounting Records
Budgeting in BSNL
Audits.

Chapter 5 : Summary
Suggestions
 CERTIFICATE
This is to certify that the project entitled “FINANCIAL
PERFORMANCE OF BSNL (A CASE STUDY OF VISAKHAPATNAM
SSA)” done by Mr. k.upendra prasad, student of MBA(Regular), JNTU
University, Kakinada is a bonafied work and was completed under my
guidance.

Visakhapatnam,
Date : (J.Nagaraju)
 DECLARATION

I hereby declare that the project work entitled “FINANCIAL

PERFORMANCE OF BSNL (A CASE STUDY OF VISAKHAPATNAM SSA)”
submitted by me to the Jntu, MBA(Regular), Visakhapatnam is of my own and
has not been submitted to any other University.

Visakhapatnam,
Dt. (k.upendra prasad)
09q71e0031
 ACKNOWLEDGEMENT

I am grateful to Bharat Sanchar Nigam Limited, Visakhapatnam for

allowing me to conduct the project work on “FINANCIAL PERFORMANCE
OF BSNL (A CASE STUDY OF VISAKHAPATNAM SSA)”.

I we an irredeemable debt of gratitude to my Project Guide

Mrs. J.Nagaraju, Visakhapatnam for her able guidance, constant
encouragement and wise counsel for the successful completion of this Project
Report .

Visakhapatnam,
Dt. (K.upendra prasad)
09q71e0031
 CHAPTER -I

INTRODUCTION

NATIONAL TELECOM POLICY

OBJECTIVES

METHODOLOGY

SERVICES OF BSNL
 CHAPTER -II

HISTORY

ORGANIZATION PROFILE & PROFILE OF BSNL VM SSA

STRENTHS

LIMITATIONS
 CHAPTER -III

ANALYSIS

REVENUE

EXPENDITURE

CAPITAL
 CHAPTER -IV

ACCOUNTING POLICIES OF BSNL

ACCOUNTING RECORDS

BUDGETTING IN BSNL

AUDITS
 CHAPTER -V

SUMMARY

SUGGESTIONS
 CHAPTERISATION

Page Nos.

Chapter 1 : Introduction 1 To 22

Chapter 2 : Organization Profile 23 To 36

Chapter 3 : Peformance Analysis 37 To 49

Chapter 4 : Accounting Structure 50 To 86

Chapter 5 : Summary & Suggestions 87 To 93

 BIBILOGRAPHY

1. BSNL WEB SITES : a) bsnl.co.in

b) apbsnl.co.in

2. P & T Volumes & Manuals

3. BSNL Journals

4. Material prepared by RTTC, Hyderabad.

5. Records available in various sections (records like

Trial Balance, Sub Ledger, Cash Books, Operating Ratio etc.,)