A

PROJECT REPORT ON FINANCIAL ANALYSIS OF AIRCEL

For Partial Fulfillment of the Diploma in Post Graduate Diploma in Management (S
ession 2011-13)
SUBMITTED TO: MS. PARUL PURI (INTERNAL GUIDE)
SUBMITTED BY: SAPNA KUMARI PGD11091 IV TRIM SEC-B
1

INSTITUTE OF MANAGEMENT STUDIES, NOIDA

A UGC Recognized Institute A-8B, Plot C, Sector-62, Noida
DECLARATION
I SAPNA KUMARI bearing Roll No PGD11091 Class PGDM-IV-TRIMESTER the Institute of
Management Studies, Noida hereby declare that I have completed my Summer traini
ng in Finance on the Project entitled FINANCIAL ANALYSIS OF ARICEL is an original
work and the same has not been submitted to any other Institute for the award of
any other diploma. The suggestions as approved by the faculty were duly incorpo
rated.
SIGNATURE OF FACULTY GUIDE
SIGNATURE OF STUDENT
MS. PARUL
SAPNA KUMARI
2

INSTITUTE OF MANAGEMENT STUDIES, NOIDA

A UGC Recognized Institute A-8B, Plot C, Sector-62, Noida
ACKNOWLEDGEMENT
The success of any project study depends upon a number of factors among which th
e proper guidance from the experts in the industry and a faculty plays an import
ant role. I take this opportunity to convey my sincere thanks and gratitude to a
ll those who have directly or indirectly helped and contributed towards the comp
letion of this project. I take here a great opportunity to express my sincere an
d deep sense of gratitude to Lecturer Ms. PARUL PURI , for giving me an opportun
ity to work on this project. The support & guidance from madam, was of great hel
p & it was extremely valuable. I would like to express my gratitude to madam for
her constant support and encouragement.
I take this platform to convey my gratitude to the officials of AIRCEL for their
prompt response and guidance. I would like to express my gratitude to Mr. SANAT
ANU SEN (Finance Department) for his constant support and encouragement. Without
his outright support and prompt response, it would not be possible to do any ju
stice as well as bring authenticity to the project.
SAPNA KUMARI
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INDEX: SR NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
20. 21. 22. 23 TOPIC EXECUTIVE SUMMSRY OBJECTIVE OF THE STUDY OVERVIEW OF THE I
NDUSTRY ABOUT THE COMPANY HISTORY VISSION AND MISSION CODE OF CONDUCT SBUs CSR K
EY MANAGEMENT PERSONEEL PRODUCT COMPETETIORS RESEARCH METHODOLOGY RESEARCH DESIG
N CONCEPTUAL FRAMEWORK RATIO ANALYSIS CASH FLOW STATEMENT DATA ANALYSIS AND INTE
RPRETAION CONCLUSION SUGGESTIONS LIMITATIONS BIBLIOGRAPHY ANEXURE PAGE NO.
5

1. EXECUTIVE SUMMARY
This is a brief report of eight weeks Summer Internship project titled Financial
Analysis of Aircel conducted in Patna. This report examines the analysis of the s
tatement like Balance sheets and Profit and Loss A/c to know the performance of
the company. Data of Aircel is collected from the companys annual reports and web
sites. Then data of the company are arranged in the uniform manner so that finan
cial factors can be drawn out easily With the help of theoretical knowledge on t
he part of ratios and cash flow, all the Relevant ratios of the company have bee
n founded. After a thorough study and discussion with the companys professional,
comments were taken so that interpretation of these ratios became easy and accur
ate.
The whole summer internship period with Aircel has been full of learning and sen
se of contribution towards the organization. Aircel is a telecom network providi
ng company. The main objective of this company is to provide the best services t
o their customer in low cost as compared to their competitor. They offer more va
lue added service in marginal cost. AIRCEL, Patna will recognize this as well as
take more references from this project report. Finance department has been give
n more emphasis for the study of the project because it is totally analysis of t
he financial position of the company. The main objective of this project is to k
now the analyze the financial position with ratio as tools and give the proper s
uggestions .This project will provide me the better platform to understand the H
istory, Growth and various other aspects of telecom companies.
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2. OBJECTIVE OF THE STUDY:

The basic objective of doing the project is to: 1. Analyze the financial stateme
nts Of Aircel. 2. Know the Financial Position: The basic objective of studying t
he Financial Statements of the company is to know the financial position of the
company. 3. Help in planning: Financial Analysis helps in planning and forecasti
ng. Over a period of time, a firm or industry develops certain norms that indica
te future success & failure.
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3. OVERVIEW OF THE INDUSTRY

India has become one of the fastest-growing mobile markets in the world. The mob
ile services were commercially launched in August 1995 in India. In the initial
5-6 years the average monthly subscribers additions were around 0.05 to 0.1 mill
ion only and the total mobile subscribers base in December 2002 stood at 10.5 mi
llions. However, after the number of proactive initiatives taken by regulator an
d licensor, the monthly mobile subscriber additions increased to around 2 millio
n per month in the year 2003-04 and 2004-05.
Although mobile telephones followed the New Telecom Policy 1994, growth was tard
y in the early years because of the high price of handsets as well as the high t
ariff structure of mobile telephones. The New Telecom Policy in 1999, the indust
ry heralded several pro consumer initiatives. Mobile subscriber additions starte
d picking up. The number of mobile phones added throughout the country in 2003 w
as 16 million, followed by 22 million in 2004, 32 million in 2005 and 65 million
in 2006. The only country with more mobile phones than India with 246 million m
obile phones is China 408 million. India has opted for the use of both the GSM (
global system for mobile communications) and CDMA (code-division multiple access
) technologies in the mobile sector. In addition to landline and mobile phones,
some of the companies also provide the WLL service.
The mobile tariffs in India have also become lowest in the world. A new mobile c
onnection can be activated with a monthly commitment of US$0.15 only. In 2005 al
one 32 million handsets were sold in India. The data reveals the real potential
for growth of the Indian mobile market.
In March 2008 the total GSM and CDMA mobile subscriber base in the country was 3
75 million, which represented a nearly 50% growth when compared with previous ye
ar.
In April 2008 the Indian Department of Telecom (DoT) has directed all mobile pho
ne service users to disconnect the usage of unbranded Chinese mobile phones that
do not have International Mobile Equipment Identity (IMEI) numbers, because the
y pose a serious security risk to the country. Mobile network operators therefor
e planned to suspend the usage
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of around 30 million mobile phones (about 8 % of all mobiles in the country) by

April 30.
9

4.ABOUT THE COMPANY

Type Industry Founded
Joint Venture Telecommunications 1999
Headquarters Chennai, India Sandip Das, CEO Gurdeep Singh, COO Mobile telephony,
Internet services, Maxis Communications (74%)[1] aircel.com aircelbusinesssolut
ions.com
Key people
Products Parent
Website
Aircel group is a mobile phone service provider in India. It offers both prepaid
and postpaid GSM cellular phone coverage throughout India. The Aircel group is
a joint venture between Maxis Communications Berhad of Malaysia and Sindya Secur
ities & Investments Private Limited, whose current shareholders are the Reddy fa
mily of Apollo Hospitals Group of India, with Maxis Communications holding a maj
ority stake of 74% Aircel commenced operations in 1999 and is today the leading
mobile operator in Tamil Nadu, Assam, North- East and Chennai.
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It is Indias fifth largest GSM mobile service provider & seventh largest mobile s
ervice provider (both GSM and CDMA) with a subscriber base of over 51.83 million
, as of January 31, 2011 It has a market share of 6.72% among the GSM operators
in the country. Additionally, Aircel has also obtained permission from Departmen
t of Telecommunications (DoT) to provide International Long Distance (ILD) and N
ational Long Distance (NLD) telephony services. It also has the largest service
in Tamil Nadu. 3G&BWA On 19 May 2010, the 3G spectrum auction in India ended. Ai
rcel paid 6499.46 crores for spectrum in 13 circles - the least cost per circle
compared to other operators. The circles it will provide 3G in are Andhra Prades
h, Assam, Bihar, Jammu & Kashmir, Karnataka, Kerala, Kolkata, Madhya Pradesh & C
hhattisgarh, North East, Orissa Punjab, Tamil Nadu, Uttar Pradesh (East) & Uttar
akhand and West Bengal. On 11 June 2010, the broadband wireless access (BWA) spe
ctrum auction in India ended. Aircel paid 3438.01 crores for spectrum in 8 circl
es, the second highest wins overall - after Reliance Communications. The circles
it has won spectrum are Andhra Pradesh, Assam, Bihar, Jammu & Kashmir, North Ea
st, Orissa, Tamil Nadu and West Bengal. It also has 3G spectrum in all these cir
cles.
11

5. HISTORY
The Aircel group is a joint venture between Maxis Communications Berhad of Malay
sia and Sindya Securities & Investments Private Limited, whose current sharehold
ers are the Reddy family of Apollo Hospitals Group of India, with Maxis Communic
ations holding a majority stake of 74%.
Aircel commenced operations in 1999 and became the leading mobile operator in Ta
mil Nadu within 18 months. In December 2003, it launched commercially in Chennai
and quickly established itself as a market leader a position it has held since.
Aircel began its outward expansion in 2005 and met with unprecedented success i
n the Eastern frontier circles. It emerged a market leader in Assam and in the N
orth Eastern provinces within 18 months of operations. Till today, the company g
ained a foothold in 18 circles including Chennai, Tamil Nadu, Assam, North East,
Orissa, Bihar, Jammu & Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala,
Andhra Pradesh, Karnataka, Delhi, UP(West), UP(East), Maharashtra & Goa and Mum
bai.
The Company has currently gained a momentum in the space of telecom in India pos
t the allocation of additional spectrum by the Department of Telecom, Govt. of I
ndia for 13 new circles across India. These include Delhi (Metro), Mumbai (Metro
), Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharash
tra & Goa, Rajasthan, Punjab, UP (West) and UP (East). Aircel has won many award
s and recognitions. Voice and Data gave Aircel the highest rating for overall cu
stomer satisfaction and network quality in 2006. Aircel emerged as the top mid-s
ize utility company in Businessworlds List of Best Mid-Size Companies in 2007. Addi
tionally, Tele.net recognised Aircel as the best regional operator in 2008. With
over 20 million happy customers in the country, Aircel the fast growing telecom
company in India has revved up plans to become a full-fledged national operator
by end of 2009.
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6. VISION AND MISSION The Aircel Group is a result of alliance between Maxis Com
munications Berhad of Malaysia (74% equity) and Sindya Securities & Investments
Private Limited (26% equity).
The Aircel Group, formed in 1994, offers affordable and outstanding mobile servi
ces to a vast subscriber base in India. Aircel has a vision of delighting its cu
stomers by giving them the respect they deserve. Our goal is to provide our cust
omers with exemplary service and persistently look for new ways to surpass their
expectations.
Aircel commenced operations in 1999. In our first decade of operations, we conce
ntrated on building our foundations in the southern part of the country, and soo
n emerged as the regional market leaders. We worked hard and achieved that succe
ss by remaining focused on growth opportunities. Soon after our company began wi
th its expansion in 2005 and has now set its sight on becoming a pan India opera
tor. Our project pipeline is robust, allowing for sustainable longterm growth.
In addition to our leadership position in Tamil Nadu, Aircel met with extraordin
ary success in the Eastern frontier circles. We pride ourselves on customer sati
sfaction and managed to emerge as the market leaders in Assam and North Eastern
states within 18 months of operations. During this period, our company gained a
strong foothold in 10 circles, to provide better access to our customers. Today,
Aircel operates in 18 telecommunication circles and the company is ready to emb
ark on a dynamic expansion plan, swiftly rolling out in new circles in the near
future.
Aircel recognizes the tremendous growth in its customer base. We have also got a
n authorization from the Department of Telecommunications for ILD and NLD teleph
ony services and are now on track to realize our dream of becoming a nationwide
player by the year 2010.
Aircel offers its customers, services and products that are easy to understand a
nd use. All offerings are stimulating and at the same time extremely unique as A
ircel continues to re-invent itself constantly to deliver the best and most up-t
o-date services. The brand instils a felling of pride, confidence and reliance a
mong all stakeholders by anticipating their desires and fulfilling
13

the same efficiently.

With our foundations deeply set on our brand vales of simplicity, creativity, tr
ust and excitement, we will continue to deliver superior services to our custome
rs and will do our best to live up to their high expectations.
About Maxis Communications Berhad Maxis Communications Berhad is a leading mobil
e communications service provider in Malaysia that started operations in the yea
r 1995. Maxis' vision is to bring superior communication services to enhance its
customers' lives and businesses, in a manner that is simple and personalized, b
y efficiently and creatively harnessing leading edge technology, and delivering
a brand of service experience that is reliable and enchanting.
14

7. CODE OF CONDUCT Simplicity: Simplicity with Aircel signifies freedom from har
dship, effort or confusion. Our products are elegant yet easy to understand and
our services imply purity and clarity for our valued subscribers.
Creativity: Creativity in Aircel refers to the discovery of new ideas or concept
s to find innovative solutions to your problems. Here at Aircel we encourage ori
ginal thoughts, imagination, novelty required to bring fresh ideas to life.
Trustworthiness: Aircel strives to be worthy of your confidence and deserving of
your trust. We endeavour to achieve the same by being dependable, reliable and
by keeping the promises we have made.
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8. SBUS Aircel Business Solutions Internet industry Aircel Business Solutions (A

BS), a part of Aircel, is headquartered in New Delhi. ABS is a Strategic Busines
s Unit (SBU) of Aircel, which addresses the Enterprise segment. Currently, ABS o
ffers ILL, MPLS VPN, NPLC, VoIP and host of services across 36 top business citi
es. It has secured spectrum in 3.3 GHz in 60 cities across country. Operating Na
tional ISP in India 1st ISP to launch WiMAX and deploy it commercially in India
Over 2,500 high Value Enterprise Customers using the last mile on WiMAX & throug
h other BSOs. Licensed to operate National & International Long Distance services
.
ABS Domestic Network
Own fiber in Chennai/ROTN and rolled out Mini and Micro POPs across country MAN
capacity contracted at Mumbai, Delhi, Pune, Bangalore and Hyderabad. NLD PoPs in
36 cities Secured spectrum in 3.3 GHz in 60 cities across country PAN City WiMA
X network in over ten cities with coverage in the commercial areas ABS Value Pro
position
ABS offers a suite of services ranging from the standard to carefully customized
solutions. ABSs service promises you a high degree of reliability, efficiency an
d security in managing your operations supported by 24 x 7 customer care staff o
f highly trained professionals. Premium Internet Leased Line: ABS offers premium
Internet leased Line connectivity to the Enterprise segment customers using the
last mile on WiMAX. ABS has the capacity to provide premium Internet connectivi
ty to the
16

customers in less than 48 hours. The impact of WiMAX in fixed wireless networks
is more immediate, and is already providing Businesses with tangible benefits ov
er other broadband solutions. The benefit of adopting WiMAX as Last mile using A
BS network is because it provides: 1. Quick Deployment 2. Competitive in terms o
f costs. 3. Wider Coverage even in remote locations 4. High Capacity 5. Quality
of service 6. Increased scalability 7. SLA for service uptime of 99%. Technology
related business solutions are an indispensable part of trade and commerce in t
odays marketplace. These business solutions aim at generating value for consumers
by effectively utilizing technology to advance their day to day processes.
Today every company needs unique technology related solutions specific to their
individual environment. Keeping the same in mind, Aircel offers a comprehensive
range of business related applications to empower every aspect of your business.
Our business enhancement solutions are aimed at generating profitable results f
or your enterprise. Our products ranging from premium internet services, E-Confe
rencing, MPLS VPN and Smart Stream provide a gamut of services that will support
your needs.
Let us assist you in implementing innovative business solutions customized to yo
ur needs and make your day to day business processes more efficient by simplifyi
ng your busy world.
17

9. CSR Corporate Responsibility Policy At Aircel, we continually pursue healthy

corporate citizenship. Our aim is not to merely discharge social responsibility,
but conduct business in a manner which reinstates respect for people, communiti
es and the environment.
We emphasize on an inclusive work culture to appreciate differences and believe
engagement with our employees is quintessential for an effective CSR plan. We sh
are adequate information on the organizations vision and CSR initiatives, because
it promises healthy operations and subsequently adds to the overall quality of
life. This motivates the employees and their family members to contribute to soc
iety.
Aircel maintains integrity and respect in its interactions with its stakeholders
, customers, retailers, investors, NGO partners and the government. We are caref
ul in not partnering with any PR / communication that induces distrust in the si
ncerity of our efforts. Our stringent belief in delighting customers with good p
roducts and services helps build a strong relationship.
Aircel is always proactive in supporting NGOs and NPOs. We extend all possible a
ssistance to their projects for a minimum of 3 to 5 years and thereafter support
new projects. Besides, we aim at continual involvement with our business partne
rs and the government for economic and social development of the underprivileged
.
Aircel engages external audit agencies to guarantee authenticity, and maintains
and monitors an external profile of the CSR activities which are shared with the
stakeholders in the annual reports and websites.
We incorporate the CSR policies in our core business to ensure ethical business
practices in all the functions to harness a healthy society.
18

10. KEY MANAGEMENT PERSONNEL

Sandip Das, CEO- Sandip Das (born 11 January 1958) is the Executive Director and
Chief Executive Officer of Maxis Communications Berhad, the largest telecommuni
cations company in Malaysia with overseas operations in India and Indonesia. A w
ell-known figure in the telecoms space Sandip Das joined Maxis in January 2007 a
fter an impressive track record with Hutchison Essar Limited (now known as Vodaf
one Essar Limited), one of Indias largest mobile operators in India, where he sta
rted its operations from scratch in 1994 and left the company as its Deputy Mana
ging Director. Gurdeep Singh, COO- Gurdeep Singh is a Sikh artist and actor from
India who lives in the United States. Sharad Mehrotra: Sharad Mehrotra is the S
r. Vice President, heading the sales, Marketing & Customer Care function for the
Telecom Operations in North and East Circles Vikram Chona: Vikram Chona is the
Associate Vice President, heading the Business development function for the Tele
com Operation in the North East Circles. Ganapathi Srinivasan: Ganapathi Sriniva
san is the Group Commercial Head, heading the Business Strategy & Planning funct
ion for the Telecom Operations in Aircel Komandur P Rangaraj: Komandur P Rangara
j is the Group Financial controller. Mr. Rangaraj was associated with Sundaram &
SrinivasanChartered Accountants and was heading teams conducting statutory and
operational reviews for Public Limited Companies. Sushil Kumar Agarwal: Sushil K
umar Agarwal is the Associate Vice President Projects and Chief Technology Offic
e (North) for the Telecom Operations in the North and EastCircles
Atul Dikshit: Atul Dikshit is the National Head Sales for the Telecom Operations
in the North and East Circles.
19

Nikhil Gupta: Nikhil Gupta is Head People and Culture for the telecom Operations
in the North and East Circles. Pritpal Singh Lakkha: Pritpal Singh Lakkha is th
e National Head Marketing for the Telecom Operations in the North and east Circl
es.
20

11. PRODUCT
AIRCEL SIM Cards
et Internet
AIRCEL SERVICES
SERVICES
PRE-PAID
POST-PAID
21

AIRCEL VOUCHERS

AIRCEL E-Recharge

AIRCEL INQ Mobile

AIRCEL Pock

Any mobile service provider companies provide two types of facility for the usag
es
1. PRE-PAID 2. POST-PAID
PRE-PAID: PRE-PAID Define as a pre paid and then use. In this type customer purc
hases the recharge coupons and other value added services card from retail shops
and then that can use. In the PREPAID if we have no sufficient balance then we
cannot make a call.
POST-PAID: POST-PAID Define as a post means first use and then paid. In this typ
e of facility we can make a call unlimited till the credit limit. There are many
types of facility who divert my opinion to use the Post-paid Facility.
22

12. COMPETITORS
1. Idea 2.Vodafone 3.Reliance 4.Airtel 5.Tata Docomo 6.MTNL 7.BSNL 8.Uninor 9.Ta
ta Indicom 10.Virgin
23

13. RESEARCH METHODOLOGY:

Methodology is the basic framework and the approach that has to be followed to c
arry
out the approach used to collect the data, the sources of primary data, i.e., fr
om where and how it has been collected.

Research is a diligent and systematic inquiry or investigation into a subject in

order to discover or revise facts, theories, applications etc.

Methodology is system of methods followed by particular discipline.

Thus, Research Methodology is the way how we conduct our research.
In the present project report type of research conducted is Quantitative researc
h.
Descriptive research is undertaken which involves extensive scanning of secon
dary data. For my project most of the finance related books have been considered
. The best websites are considered which gives all the efficient and effective
information. References for the project are from the websites and books and the
companys annual reports.
It is assured that the project has been completed with full dedication, sincerit
y and required intensity of hard work.
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14. RESEARCH DESIGN:

It helps to tackle the problem of bringing various phases of research under cont
rol. The research design helps to design the decision with respect to: What type
of data is needed? From where data can be found? What period of time study incl
udes? How much material will be needed? What technique of gathering data will be
adopted? How will data be analyzed? Generally three types of research are inclu
ded in research design. These are as follows: _ Exploratory research _ Descripti
ve and diagnostic research _ Experimental research
In the present project report both primary and secondary data is taken so explor
atory research is done.
This research focuses on discovery of insights and relationships among various f
inancial factors. DATA COLLECTION:
Sources of secondary data are:
reports provided by AIRCEL.
25

Authenticated companys website on Internet.

Annual

15. CONCEPTUAL FRAMEWORK:

Analysis of Financial Statements/Financial Analysis/Financial Statements Analysi
s:
Financial Statements are the summarized statements of accounting data produced a
t the end of the accounting process by an enterprise through which it communicat
es accounting information to the external users. The external users can be inves
tors, lenders, suppliers and trade creditors, customers, government and their ag
encies, public at large and employees. Analysis of Financial Statements is a sys
tematic process of the critical examination of the financial information contain
ed in the financial statements in order to understand and make decisions regardi
ng the operations of the firm.
Customarily, a set of financial statements include: (i) Balance Sheet (ii) Profi
t and Loss Account (iii) Schedules and notes forming part of the Balance Sheet a
nd Profit & Loss Account
Essentials of Financial Statements 1. Accurate information 2. Understandability
3. Comparable 4. Verifiable 5. Relevant 6. Timeliness
Parties interested in Financial Statements or Users of Financial Statements 1. I
nvestors and Potential Investors 2. Creditors 3. Customers
26

4. Employees and Trade Unions 5. Government and its Agencies 6. Stock Exchange
Tools of Analysis of Financial Statements _ Ratio Analysis _ Cash Flow Statement
s
27

16. RATIO ANALYSIS:

A Ratio gives the mathematical relationship between one variable and another. Ra
tio analysis helps in valuing the firm in quantitative terms. Ratios are classif
ied as follows:
1. Liquidity Ratios 2. Turnover Ratios 3. Profitability Ratios 4. Ownership Rati
os
1. Liquidity Ratios Liquidity implies firms ability to pay its debts in short run
. This ability can be measured by Liquidity Ratios. Current Ratio and Quick Rati
o are the two ratios which directly measure Liquidity. Receivables turnover Rati
o and Inventory Turnover Ratio are the two ratios which in directly measure Liqu
idity.
A. Current ratio = Current Assets/Current Liabilities
Current assets which are converted into cash within one year.
Current liabilities are liabilities which are to be repaid within a period of 1
year.
IDEAL RATIO = 2:1
B. Quick ratio or Liquid ratio or Acid Test ratio = Quick Assets/Liquid Assets C
urrent Liabilities Quick Assets = Current Assets Inventories- Prepaid expenses R
atio of quick assets to quick liabilities. Quick assets which can be converted i
nto cash very quickly. Quick liabilities are liabilities which have to be necess
arily paid within 1 year.
28

IDEAL RATIO = 1:1

2. Turnover Ratios (Activity Ratios) A. Accounts Receivable Turnover ratio or De
btors Turnover Ratio = Net Credit Sales Average Accounts Receivables Average Acc
ounts Receivables = Opening receivables + Closing receivables
It shows the Relationship between debtors and sales B. Inventory Turnover Ratio
= Cost of goods Sold Average Inventory
It indicates no. of times stock has been turned into sales in a year
Ideal Ratio = 8 Cost of goods sold = Sales gross profit Average Inventory = Open
ing Stock + Closing Stock
Stock Conversion Period = Cost of goods Sold * No of days in a Year/Average Inve
ntory
C. Creditors Turnover ratio = Net Credit Purchases Average Creditors Average Cre
ditors = Opening Creditors + Closing Creditors
Relationship between Creditors and Purchases
3. Profitability or Efficiency Ratios
These Ratios measure the efficiency of forms activities and its ability to gener
ate profits.
29

(i) Gross Profit Margin Ratio (ii) Net Profit Margin Ratio (iii) Return On Equit
y (i) Gross Profit Margin Ratio = Gross Profit Net Sales Gross Profit = Sales Co
st of goods sold Net Sales = Sales Sales Return - Excise Duty There is no Ideal
Ratio. Higher the ratio better will be the performance of The business. (ii) Net
Profit Margin Ratio = Net Profit Net Sales It measures the overall efficiency o
f production, administration, selling, financing, pricing and tax management. It
shows the result of overall operation of the firm. 4. Ownership Ratios Capital
Structure Ratios a) Debt Equity Ratio = Debt Equity = Long Term Liabilities + Cu
rrent Liabilities Share Holders Funds Ratio 2 or Less Exposes Its Creditors Less
er Risk Ratio >2 Exposes Its Creditors Higher Risk
30

17. CASH FLOW STATEMENT:

Introduction of Cash Cash, the most liquid asset, and also referred to as the li
fe blood of a business enterprise is of vital importance to the daily operation
of business firms. Its efficient management is crucial to the solvency of busine
ss because cash is the focal point of the fund flow in a business. Cash refers to
the cash as well as bank balance of the company to the end of the accounting per
iod, as reflected in the balance sheet of the company. While the profits reflect
s the earning capacity of the company and cash reflects its liquidity position.
Introduction of Cash Flow CASH FLOW is the movement of cash and its equivalents.
It includes the inflow and the outflow of cash during a particular period. All
transactions which lead to increase in cash and cash equivalents are classified
as inflows of cash and all those transactions which lead to decrease in cash and
cash equivalents are classified as outflows of cash. Cash Flow Statement is pre
pared with an objective to highlight the sources and uses of cash and cash equiv
alents for a period. Cash Flow Statement is classified under operating activitie
s, investing activities and financing activities.
31

18. DATA ANALYSIS AND INTERPRETATION:

RATIO ANALYSIS CURRENT RATIO Projected 2007-08 2008-09 2009-10 2010-11 2011-12 1
AIRCEL 1.75 1.98 2.46 2.47 2.25
IDEAL RATIO = 2:1 Figure 1.1
CURRENT RATIO
2.5 2 1.5 CURRENT RATIO 1 0.5 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-201
2
Interpretation of figure 1.1 The two basic components of this ratio are current
assets and current liabilities. Current assets include cash and those assets whi
ch can be easily converted into cash within a short period of time, generally, o
ne year, such as marketable securities or readily realizable investments, bills
receivables, sundry debtors, (excluding bad debts or provisions), inventories, w
ork in progress, etc. Prepaid expenses should also be included in current assets
because they represent payments made in advance which will not have to be paid
in near future.
32

Current liabilities are those obligations which are payable within a short perio
d of tie generally one year and include outstanding expenses, bills payable, sun
dry creditors, bank overdraft, accrued expenses, short term advances, income tax
payable, dividend payable, etc. A relatively high current ratio is an indicatio
n that the firm is liquid and has the ability to pay its current obligations in
time and when they become due. On the other hand, a relatively low current ratio
represents that the liquidity position of the firm is not good and the firm sha
ll not be able to pay its current liabilities in time without facing difficultie
s. An increase in the current ratio represents improvement in the liquidity posi
tion of the firm while a decrease in the current ratio represents that there has
been a deterioration in the liquidity position of the firm. A ratio equal to or
near 2 : 1 is considered as a standard or normal or satisfactory. The idea of h
aving double the current assets as compared to current liabilities is to provide
for the delays and losses in the realization of current assets. However, the ru
le of 2 :1 should not be blindly used while making interpretation of the ratio.
Firms having less than 2 : 1 ratio may be having a better liquidity than even fi
rms having more than 2 : 1 ratio. This is because of the reason that current rat
io measures the quantity of the current assets and not the quality of the curren
t assets. If a firm's current assets include debtors which are not recoverable o
r stocks which are slowmoving or obsolete, the current ratio may be high but it
does not represent a good liquidity position. Current Ratio of AIRCEL is increas
ing for each subsequent year. This indicates that the company can successfully p
ay off its debt while at the same time still have cash left over to continue ope
rating. This is also because of slow nature of Debt collection which makes compa
ny less liquid than what it looks like in the trend.
33

Earnings Per Share 2007-08 2008-09 2009-10 2010-11 2011-12 AIRCEL Figure 1.2 15.
65 15.28 14.03 4.44 1.15
Earning Per Share
16 14 12 10 8 6 4 2 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Earning
Per Share
Interpretation of Figure 1.2 EPS ratio calculated for a number of years indicate
s whether or not the earning power of the company has increased.
Earning Per Share of AIRCEL have been reduced .This may be mainly because of dec
rease in income of services over the period of time. Decrease in income from ser
vices can be attributed to increase in competitive rivalry as various internatio
nal players like Vodafone and Reliance came into the Indian Market with improved
technology and made tariff wars to attract the customers.
34

DEBT TURNOVER RATIO: 2007-08 2008-09 2009-10 2010-11 2011-12 AIRCEL Figure 1.3 5
.03 5.73 6.2 5.92 6.41
DEBT TURNOVER RATIO
7 6 5 4 DEBT TURNOVER RATIO 3 2 1 0 2007-2008 2008-2009 2009-2010 2010-2011 2011
-2012
Interpretation of Figure 1.3 Figure 5.3 represents the Debtor Turnover Ratio Deb
tor Turnover Ratio of AIRCEL is 6.41 for the year 2011-2012. So the debtor veloc
ity is 365/6.41 which comes out as 56.94 days i.e. AIRCEL takes on an average 57
days to collect its money back from the debtors, which is again higher than the
industry standards.
35

Debt Equity Ratio 2007-08 2008-09 2009-10 2010-11 2011-12 AIRCEL Figure 1.4 0.31
0.29 0.26 0.24 0.27
Debt Equity Ratio
0.35 0.3 0.25 0.2 Debt Equity Ratio 0.15 0.1 0.05 0 2007-2008 2008-2009 2009-201
0 2010-2011 2011-2012
Interpretation of Figure 1.4 Debt to equity ratio indicates the proportionate cl
aims of owners and the outsiders against the firms assets. The purpose is to get
an idea of the cushion available to outsiders on the liquidation of the firm. Ho
wever, the interpretation of the ratio depends upon the financial and business p
olicy of the company. Debt-to-Equity Ratio of AIRCEL is 0.27 for the year 2011-1
2 which means that company is using very less debt instruments while it is relyi
ng more on the shareholders capital. This also indicates the companys assets are
primarily supplied with equity.
36

RETURN ON CAPITAL EMPLOYED 2007-08 AIRCEL Figure 1.5 9.94 2008-09 2009-10 2010-1
1 9.05 4.97 1.46 2011-12 0.433
RETURN ON CAPITAL EMPLOYED
10 9 8 7 6 5 4 3 2 1 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 RETURN
ON CAPITAL EMPLOYED
Interpretation of Figure 1.5 Return on capital employed ratio is considered to b
e the best measure of profitability in order to assess the overall performance o
f the business. It indicates how well the management has used the investment mad
e by owners and creditors into the business. It is commonly used as a basis for
various managerial decisions. As the primary objective of business is to earn pr
ofit, higher the return on capital employed, the more efficient the firm is in u
sing its funds. Return on Capital Employed Ratio of AIRCEL is 1.46 for the year
2010-2011, which indicate that the company is earning 1.46 percent return on the
net capital employed by company that consists of fixed assets, investments and
net working capital. ROCE of the company is deteriorating with each succeeding y
ear because increase in number of competitor with each year which lead to decrea
se in market share in due to which income from services have been declining. Fur
ther more investments are required by the co. to acquire new technology like 3g
which will provide return in coming years. As the trend says the Return on capit
al will fall in the coming years and will be around .433 percent.
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Price Earnings Ratio 2007-08 2008-09 2009-10 2010-11 2011-12 AIRCEL --------Figu
re 1.6 59% 34% 8% 2% 1%
Price Earning Ratio
60 50 40 30 20 10 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Price Earn
ing Ratio
Interpretation of Figure 1.6 A valuation ratio of a company's current share pric
e compared to its per-share earnings. Calculated as: In general, a high P/E sugg
ests that investors are expecting higher earnings growth in the future compared
to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole
story by itself. It's usually more useful to compare the P/E ratios of one compa
ny to other companies in the same industry, to the market in general or against
the company's own historical P/E. It would not be useful for investors using the
P/E ratio as a basis for their investment to compare the P/E of a technology co
mpany (high P/E) to a utility company (low P/E) as each industry has much differ
ent growth prospects.
38

NET PROFIT MARGIN RATIO 2007-08 2008-09 2009-10 2010-11 2011-12 AIRCEL Figure 1.
7 30.4 24.7 22.5 9.3 2 -3.88
NET PROFIT MARGIN RATIO
35 30 25 20 15 10 5 0 -5 NET PROFIT MARGIN RATIO
Interpretation of Figure 1.7
This ratio also indicates the firm's capacity to face adverse economic condition
s such as price competition, low demand, etc. Obviously, higher the ratio the be
tter is the profitability. But while interpreting the ratio it should be kept in
minds that the performance of profits also be seen in relation to investments o
r capital of the firm and not only in relation to sales.
Net Profit Ratio of AIRCEL is 2 for the year 2010-2011, which is lower in compar
ison with the industry ratio. This shows that AIRCEL had to pay other indirect e
xpenses which led to fall in the net profit. Through fig 4.8 we can also see tha
t there is continuously negative trend.
39

1.8 ANALYSIS OF CASH FLOWS Interpretation Cash from operations represents the in
flow of cash from primary activities of business. From the above figure it is cl
early stated that Cash from operations is highest of AIRCEL 17496.6 cr in 2007-0
8 but gradually it have been decreased to 6843.81cr which represents the loss of
revenue by the company in its primary activities
So, AIRCEL have to take cost cutting measures as adopted by Bharti and Idea to g
ain the revenues from its business.
1.8.2 Cash Used in Investing Activities 2007-08 AIRCEL 6,478.17 2008-09 6,500.83
2009-10 3,266.88 2010-11 3,724.85 2011-12 7,438.14
Cash Used in Investing Activities
8000 7000 6000 5000 4000 3000 2000 1000 0 Cash Used in Investing Activities
Interpretation
Cash used in financing activities represents the outflow of cash for the purpose
of procurement of funds for business. From the above figure it is clearly state
d that Cash used by the AIRCEL in financing activities is highest in 2007-06 and
it have been increasing in each subsequent years
40

which represent that aAIRCEL is continuously engaged in payment of dividends and

interest for the borrowed funds and they are not raising funds from market. On
the other hand Companies like Bharti and Idea have decreased their cash used in
financing activities in each subsequent year which means that they have raised e
quity and debt in the subsequent years to fund their assets due to which cash fr
om financing activities is increased in each year , which is good indicator for
the company.
Cash Used in Financing Activities
2007-08 AIRCEL 612
2008-09 3,560
2009-10 4,000
2010-11 4,158
2011-12 3736.835(CR)
Cash Used in Financing Activities
4500 4000 3500 3000 2500 2000 1500 1000 500 0 2007-2008 2008-2009 2009-2010 2010
-2011 2011-2012 Cash Used in Financing Activities
41

19. CONCLUSION:
From the above finding and analysis various inferences can be drawn out which ar
e as follows : AIRCEL is having highest current ratio which represents that AIRC
EL is having very good liquidity position and can pay off their short term liabi
lity very easily as they are maintaining huge cash reserves. AIRCEL is having to
ugh time because its market share as well as profit margins has been reduced ove
r the period of time which leads to significant reduction in the earning power o
f the companies. P/E of AIRCEL was the highest in 2008-2009 but as the time pass
es expectation of the investors has been declined and now it is only 2 % In case
of net profit Aircel has to work hard to break the negative trends. Cash from o
perations is decreasing which shows decrease in revenue from primary activities.
Cash used in investing activities is highest of aircel 6478 cr in 2007-08 but G
radually it have been decreased which represents the lack of investments in long
term assets by the company. Cash used in financing activities is highest in 200
7-08 and it have been increasing in each subsequent years which represent that A
IRCEL is continuously engaged in payment of dividends and interest for the borro
wed funds and they are not raising funds from market.
42

20. SUGGESTIONS:
From the personal observations and the above analysis various subjective Recomme
ndations which can be given to the company as follows: Use better & high tech me
thods of advertising, so that more & more subscriber Attract towards AIRCEL. Sho
uld increase the service quality as well as better customer care service. Should
work towards 3 G phones, means high speed streaming video, gaming, Video messag
ing and even mobile TV. There are several global players keen to enter India. Li
ke Telenor, China mobile, Telephonic, SK telecom, NTT Docomo, Orson. Their entry
will make the market even more competitive. So, should be ready for new competi
tion. Provide better customer care service and provide them maximum satisfaction
.
43

21. LIMITATIONS:
Though the project is completed with proper planning and guidance with full dedi
cation but still various limitations that have to be faced in the process of res
earch are as follows:
Limited Time: - Although the staff at AIRCEL was highly co
operative and devoted their valuable time but because of time constraint they we
re not able to devote much time with us. Lack of enthusiasm on the part of offic
ials to provide the required data. Difficult to obtain the data of 2007-08 and 2
008-09 as companies only maintains data of 3 years in their operating systems an
d rest at some other place.
Uniformity of Content and Mode of preparation of financial statements was not th
erein the company. So it became difficult to compare among each other.
44

22 .BIBLIOGRAPHY:
Information has been sourced from namely, books, newspapers, journals, industry
portals, government agencies, industry news and developments and through access
to database.
_ http://www.Google.com _ http://www.capitaline.com/ _ http://www.wikipedia.org/
_ http://www.oecd.org/ _ http://www.legalserviceindia.com/ _ http://www.dot.gov
.in/ _ http://www.economictimes.indiatimes.com/ _ http://www.ibef.org/ _ http://
www.domain-b.com/ _ http://www.trai.gov.in/ _ http://www.perry4law.wordpress.com
/ _ http://www.indianembassy.org/ _ http://www.financialexpress.com _ http://www
.pib.nic.in/
Annual Reports of AIRCEL of the years: 2007-08 2008-09 2009-10 12 S
harma Seema and Lokesh Singla (2009), Telecom equipment Industry: Challenges and
Prospects
2010-11 2011R.P. Rustagi, Financial Management, Edition 2007-08
S.N. Maheshwari, Financial Management, Edition 2006-07

T.S Grewal, Analysis of Financial Statements, Edition 2007-08

45

23. ANEXXURE: P/L ACCOUNAT BALANCESHEET CASH FLOW STATEMENT ALL ABOVE ARE ATTACH
ED IN PDF FORMAT
46