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STRATEGIC MANAGEMENT OF ORGANISATIONS

A CASE STUDY OF BHARAT SANCHAR NIIGAM

LIMITED

SUBMITTED BY

ANINDITA SEN GUPTA

SANJEEV KUMAR SHARMA

P.SUDHAKARA RAO

INTRODUCTION

Bharat Sanchar Nigam Ltd (BSNL), the corporate version of erstwhile DOT,

came to existence on 1st October 2000. Ever since the formation of BSNL, the Indian

telecommunications scenario has been transforming itself into a multi-player, multi-

product market with varied market sizes and segments. Within the basic phone service

the value chain has split into Basic services, long distance players, and international long

distance players.

BSNL’s POSITIONING IN TELECOM INDUSTRY

To understand and suggest – how strategic management can help BSNL – the

first thing is to understand the Telecom industry environment and the stakeholders

involved. Apart from having to cope with the change in structure and culture

(government to corporate), BSNL has had to gear itself to meet competition in various

segments – basic services, long distance (LD), and International Long Distance (ILD),

and Internet Service Provision (ISP), and Mobile services. With the advent of

competition the private operators have been impacting the strategic matrix by

influencing regulatory bodies, adopting intelligent media strategies, and by targeting

the creamy layer of customers. While, political control over the public sector remains a

contentious strategic issue in the country; with the formation of a company, the internal

strategy of the BSNL board will be of gaining considerable autonomy. Labour unions

are powerful internal stakeholders, as are the middle managers/ other staff that have the

primary responsibility for customer care. The following stakeholders diagram gives an

insight about the changing telecom industry environment for BSNL

FIG 1 - STAKEHOLDERS IN BSNL’s STRATEGIC MANAGEMENT

ITU, International telecom industry

Others – media, general public, channel partners, PCOs etc

BSNL Employees & labor unions

Regulators,

TRAI

IT, Insurance, Railways, Banking etc. industry using telecom backbone

Manufacturers of telecom goods

BSNL’s customers & consumer organizations

Other Private operators

Ministry of Communication & IT

BSNL

BSNL’s SWOT ANALYSIS

The changing external environment for BSNL can be well captured by the

Potter’s model diagram which shows that the industry structure has become bit

unfavorable (Pl. refer exhibit- 1)

In such an environment BSNL definitely requires to redefine its strategies. What is

required is to identify the potential opportunities and threats implied by this changing

environment for the BSNL. In changing trends, situations, and events gaining an

accurate understanding of BSNL’s strengths and limitations will help in better strategic

management of organization. The SWOT analysis for BSNL is as follows –

BSNL – SWOT ANALYSIS

STRENTHS WEAKNESSES

• Pan-India reach• Experienced telecom service provider• Total telecom service provider• Huge Resources (financial & technical pool)• Huge customer base• Most trusted telecom brand• Transparency in billing• Easy deployment of new services• Copper in last mile can be used for easy

broadband deployment• Huge Optical Fibre network and associated

bandwidth

• Non-optimization of network capabilities• Poor marketing strategy • Bureaucratic organizational set up• Inflexibility in mindset (DOT period legacies)• Limited number of value added services• Poor franchisee network• Legacy of poor service image• Huge and aged manpower• Procedural delays• Lack of strategic alliances• Problems associated with incumbency like

outdated technologies, unproductive rural assets, social obligations, political interference,

• Poor IT penetration within organization• Poor knowledge Management

OPPORTUNITIES THREATS

• Tremendous market growing at 20 lac customers per month

• Untapped broadband services• Untouched international market• Can capitalize on public sector image to

grab government’s ICT initiatives• ITEB service markets• Diversification of business to turn-key

projects• Leveraging the brand image to source funds• Almost un-invaded VSAT market• Fuller utilization of slack resources• Can make a kill through deep penetration

and low cost advantage• Broaden market expected from convergence

of broadcasting, telecom and entertainment industry

• Competition from private operators• Keeping pace with fast technological changes• Market maturity in basic telephone segment• Manpower churning• Multinational eyeing Indian telecom market• Private operators demand for sharing last mile• Decreasing per line revenues due to

competitive pricing• Private operators demand to do away with

ADC can seriously effect revenues• Populist policies of government like

“OneIndia” rates

Having analysed the external environment and assessed the internal strengths and weaknesses of BSNL, the key issues can be summarized as follows:

BSNL – The key issues

1. The biggest challenge before BSNL is to acquire new subscribers and retain the

existing ones. Price-based selling does not seem to be going very far now, as it has

more or less peaked. Therefore, BSNL will now have to look for newer carrots to

dangle. The reasons for high subscriber churning are not difficult to identify and are

as follows –

- Delayed activation time

- Frequent change in tariff plans

- Information dissipation to subscribers about the new tariff plans and how

they can opt for those

- No customization of services

- Customer support, especially in case of problems, is poor.

- Quality of network, which does not seem to improve despite competition.

2. BSNL has one big drag on its resource generation for future investments, namely,

responsibility of providing telephone services in the rural areas. Though it has now

been compensated for this obligation through USO, still the funds provided are

neither adequate nor received in time.

3. BSNL faces the challenge of shedding away the legacies of monopolistic culture.

The concern is putting a system in place so as to adjust to cut throat competition. To

develop an appropriate organizational structure and bring about a change in work

culture to support the corporate strategy.

4. To react quickly to the technology changes in the communications sector, and

introduce state of art technology for all types of existing as well as up coming

services. This includes –

- Having sizable capacity of outdated switching equipment (E-10B) that is

incapable to extend the value added services to the existing customers.

- Internal lags in procuring the New technology equipment that often results in

obsolescence of technology by that time it is deployed

- Difficulties in integrating new technologies with the existing multiple

technology equipment.

- Deployment of the equipment, that is intended for specific purposes, in

wrong places due to competitive pressure resulting in poor service to

customers.

- Lagging in providing the value added services compared to competitors

- Large unutilized spare capacities in land line segment at certain locations

- Low IT penetration with in the organization

5. To emphasize customer orientation in all the operations to prevent ‘cherry picking’

of high calling customers by rival service providers. The root cause of the

problem is that of customer care and includes –

- Non flexible policies & Procedural delays

- Legacy of poor service image

- Limited number of value added services

- Poor customer education

6. To develop proper marketing strategy to face the competition from other service

providers. The problems related to ill-defined marketing strategy are –

- Poor franchisee network

- Poor marketing strategy

- Absence of segment analysis

- Lack of market research

7. To tackle the problems of declining per DEL revenues, particularly with respect to

the basic services.

8. The challenge of identifying appropriate technological and process innovations, which would help in cost-reduction.

9. The challenges in right sizing of organization coupled with issues related to qualitative development of personnel. Issues involved are –

- Excess aging manpower

- Redeployment of personnel

- Lack of familiarization in new technologies

- Absence of appropriate reward and compensation schemes

RECOMMENDATIONS (ALTERNATIVES AND TRADE OFFS)

Analyzing the correct mix of strategies for a company requires the understanding of key

success factors for that industry. The key Success Factors for the Telecom industry are

–

1. Number of customers

2. Usage intensity (in terms of number of minutes of use per subscriber)

3. Customer retention through a combination of loyalty schemes, better tariff,

service standards (fault free service, reliability, call completion, call holding,

other add on facilities like call waiting, alarm, etc.).

4. Revenue assurance through optimal network utilization.

5. Proportion of revenues attributable to Value Added Services.

Effective growth of a public enterprise depends on appropriate balance between value

and economic aspects of strategy. Value aspects comprise of the socio political

obligations of a public sector entity while economic aspects would be considerations

regarding products, markets, costs, revenues as well as technological and organizational

capabilities. BSNL is still at the formative stage and is attempting to make over to the

next stage i.e. to strike an appropriate balance between value and economic aspects.

Effective growth of a public enterprise depends on appropriate balance between value

and economic aspects of strategy. Value aspects comprise of the socio political

obligations of a public sector entity while economic aspects would be considerations

regarding products, markets, costs, revenues as well as technological and organizational

capabilities. BSNL is at still at the formative stage and is attempting to make over to the

next stage i.e. to strike an appropriate balance between value and economic aspects. For

suggesting the right strategy mix for the company the tangible and intangible resources

and capabilities of the company need to be assessed. (Pl. refer Exhibit-2)

While it is seen that the company is well placed in terms of tangible assets, culture, communication, and motivation are some of the weak areas. The weak areas of concern are mainly in intangible capabilities. The most important of these are –

• Skills & knowledge – Skill sets in traditional fixed line provision, maintenance,

and administration. Professional & new skills lacking

• Communication & Interaction – Is more in the government mode. Marketing &

PR attitudes, skill sets lacking

• Motivation – At present very low.

To understand and make strategic choices for BSNL, a quick analysis of product

portfolio/segment – their growth, market share and focus – has been done using

various models (Pl refer to exhibit -3). The recommendations based on these

strategy frameworks are as follows –

1. BSNL should have clear technology strategy in line with its mission of providing

services with world class State-of-art technology at affordable prices. Since the

Telecom Industry is under going frequent technological revolutions the product

cycles are very short. BSNL should go in for innovative products based on

convergent technology in order to acquire dominant market position. This can

be achieved by –

• Replacement of all the outdated technologies immediately,

• Redeployment of unutilized capacities should be considered first.

• Early deployment of cost effective Wi fi/Wi max Technologies

• Migrating to NGN (Soft Switch) on large scales, which will unable seamless

integration of upcoming technologies.

• Increasing the capital investment in convergent technologies even if it renders

certain in use technologies redundant.

In spite of cost implications the alternatives of scaling/upgrading of existing

technology should not be considered since it will not yield the desired results. Instead

the focus should be on achieving dominant market position through large-scale

deployment of new technology.

2. BSNL should initiate Customer Orientation Strategy to retain existing customers

as well as to attract new customers by –

• Creating a Service-Oriented culture within the organization by linking

incentives to customer satisfaction.

• Introducing flexible Registration Terms so that new customers are

attracted.

• Promoting/Introducing user-friendly service systems such as Electronic

Clearing system, internet or E-seva for bill payment

• Educating the customer about services in detail and respective tariff

structure

• Introducing service at door-step.

3. Extensive use of IT can not only improve operations but can add to greater

customer satisfaction. Despite being a technology intensive organization IT

penetration in BSNL is not commensurate. Presently, the use of IT in BSNL is

restricted to –

• DQ (Directory Enquiry), IVRS (Interactive Voice Response System)

• Accounting and billing systems

• Commercial & Fault Repair System package

• Telephone Directory on CD ROM and on the Internet.

The commercial, fault repair system and billing needs to be integrated by use of a standard CDR based CRM package. BSNL should immediately create intra-BSNL IT network connecting all the SDCAs through MPLS-VPN network for the organization’s own use to improve efficiency and transparency.

Instead of integrating the existing segment specific software, it is recommended

that standard integrated packages should be considered.

4. BSNL should redefine procurement processes to shorten the purchase-decision

cycle, which is critical in project implementation to any telecom service provider.

BSNL should enter in long term supply contract with world-class players to come

out of L-1 mantra of tendering process. This will help BSNL to counter the

strategy of its competitors to stall the very procurements of critical items.

5. Strategic alliance to get pan-India footprints through BSNL-MTNL merger. The

combined operations will also ensure several other sustainable advantages such as

deeper and stronger pockets and greater marketing clout. These synergies would

obviously help BSNL by way of volumes to engage in prolonged tariff wars for a

whole range of value-added services and give private telecom companies a run-

for- their money. The merger of BSNL with MTNL can also give some respite to

BSNL by expanding its resource kitty with which it can fulfill its responsibility of

providing rural connectivity all across the country.

6. BSNL should have strategic alliance with content providers, international long

distance operators and cable operators as a diversification strategy. Turnkey

projects for providing total solutions to corporates /governments should be

undertaken as a business proposition by entering into partnerships.

7. Marketing is going to be the key to success – BSNL should come out with a

plethora of schemes for the end subscriber, both commercial and residential. If

BSNL wants to retain its title as KING BSNL, it has to treat its customers as king.

The marketing strategy of BSNL should identify the fact that their telecom is no

longer a services market but has turned into a commodity market. In fact, it is a

mixture of both as it behaves as a commodity market initially when the

connection is to be sold. BSNL’s marketing strategy needs to be redefined and

should focus around Value Added Services, building strong distribution chain and

differential treatment to premium/corporate customers.

8. Human Resource Management – Human resource is the most prized asset of any

organization and for organization like BSNL who are in service sector this

becomes all the more important. Bharat Sanchar Nigam Limited has a vast

manpower of about 3,50,000. To meet the technological challenges, employees

need to be trained for technology up-gradation, modernization, computerization

etc in a targeted manner. Though different training programs are being run in

various training centers of BSNL to impart technology based training, they seem

to be outdated in the fast changing competitive environment and with formation

of corporate. The dynamics of transition from a lethargic government

organization to a professionally running company requires tremendous up

gradation in Human Resources. There are various aspects of managing an

organization that many employees even at top levels in BSNL are unaware of. At

one hand the competition has brought in the requirement to learn professional

skills in fields like Marketing, HRD, Finance etc. , on the other hand, the

formation of BSNL has made it mandatory for BSNL’s middle and top level

managers to acquire knowledge in company laws, taxation, labor laws etc. BSNL

need to overhaul its Human Resource Management strategy and should focus on

–

• Tie up with top business schools in India for training their managers at

various levels.

• Redeploying its manpower from bigger cities to smaller ones

• Coming out with VRS/CRS for manpower above the age of 50.

• Creating value through employee motivation and should develop reward

and punishment system

• Effective knowledge management within organization

• Preventing manpower churning

The VRS/CRS scheme is likely to be opposed by the unions and the implementation

may be difficult in the politicized environment. However, rightsizing the organization

is of paramount importance for the long run interests.

9. BSNL’s organization structure still remains more or less functional in structure.

The restructuring of organizational on business type model with each

product/segment considered as a separate business will help in

a. Better management

b. Improved segmental efficiencies

c. Improved organizational communication

d. Better performance monitoring

e. Develop focus on revenue

As an alternative, it may be argued that the organization may be vertically split

portfolio wise but this will affect the synergy within the organization. Hence, focus

should be on the restructuring of hierarchy.

10. Revenue Maximization Strategies: The telecom sector is the most

competitive sector post liberalization. This has resulted in a movement from growth

based business model that emphasized growth in numbers or even ARPU to profit-

based model where the success is measured by margins. BSNL as part of the

transition has to adopt both cost reduction and revenue enhancement measures,

which would directly impact profitability.

It is evident (refer exhibit-4) that there is a declining trend in the ARPU for basic

services and there is stagnation in cellular revenues. Revenue maximization

strategies will have two components, one internal to the organization and the other

external. The internal aspect would involve an initiative for change of process,

technology, organizational structure etc. In this context, revenue assurance is the key

to improving the bottom line for BSNL. This is proactive strategy to capture all

revenues due for the services provided. Presently, BSNL generates bills through

different softwares across the zones of operation, which are disintegrated and

provide only basic solutions. The industry standard for revenue leakage is about 3 to

7% percent of revenue, which in money terms translates to about Rs.2100 crores for

BSNL. Therefore plugging revenue leakages is just the first and most obvious part

of a Revenue Assurance initiative. The key concerns for BSNL for effective revenue

realization are –

• The delay in customer billing after activation

• Time lag between calls generated and billed

• Scope of fraud

• Non-availability of uniform database.

Therefore the focus should be on immediate implementation of CDR based billing.

This would require huge investment but the return would more than commensurate.

The software should be scalable and be able to incorporate all the next generation

value added services. The implementation of CDR based system will also generate

the following benefits:

• Plugging of leakage of revenue.

• Formulation of appropriate marketing strategies –The data captured

in the servers and other devices will provide detailed information on

usage patterns, hence, will contribute to formulation of appropriate

marketing strategies. Information and flexibility of the software will

enable BSNL to cater to subscribers segment wise. Specific packages can

be offered by BSNL to the corporate clients tailored to their needs. The

usage and traffic information will also offer a solution to evolve pricing

schemes for services which can then be bundled in a way so as to drive

customer behavior in a desired manner in terms of usage time, distances

etc.

• Help in efficient customer care – The information available will enable

the setting up of “ Call Centres”. A “Call Centre” is prerequisite to

provision of efficient information and promotion of services.

11. Revenue generation through Value Added Services(VAS) – The revenues of

BSNL have been increasing constantly for last 15 years as can be seen from the

following chart –

The major chunk of these revenues have come from basic services and only

recently the revenues from cellular business (to the tune of Rs 3000 cr. per

annum) and from ADC and inter-connect charges etc have grown to significant

level. With continuous decrease in long distance call rates and growth of private

network the revenues from ADC and inter-connect charges will eventually

disappear. BSNL should realize that the basic services market and revenues from

it are also shrinking and it is necessary for a telecom service provider like BSNL

to concentrate on increasing revenues through VAS. While many of the operators

in India and outside are generating more than 25% of their revenues through

VAS, BSNL cannot attribute even 5% of its revenues to VAS. In order to succeed

the strategy of BSNL should be built around strengthening its VAS like SMS,

MMS, broadband content generation etc. and marketing them. BSNL can also go

for large-scale tie-ups with content providers.

12. Pricing strategy – Tariff fixation is crucial in a competitive scenario where it is

required to offer, “value based”, top down convergent services are being

provided by the competitors instead of cost based, bottom up pricing. The focus

has been on acquiring profitable customers, however, for BSNL, it is equally

important to target the old (by number of years of association) customers to

ensure retention. Revenue figures indicate that ARPU is higher for that category

of subscribers. Loyalty programmes serve as an excellent platform for such

strategy. The customers’ feedback should be incorporated to assess the

attractiveness and economic viability of such programmes. A successful loyalty

programme becomes the driving force in customer relationship management

strategy.

13. Cost Management Strategies: As a result of slow growth in revenues and

declining market share, focus is simultaneously required on cost control measures

like –

• Integrated financial software is essential for the management to be able to

monitor costs.

• BSNL’s liability in terms compulsory operational expenses is very

compared to industry standards, primarily due to excess manpower.

Though a high percentage of employees will retire in three years time ,

however in order to expedite the process, voluntary retirement schemes

have to be introduced.

• BSNL is also burdened with legacy technology, which needs to be phased

out, and replaced with cost-effective technology alternatives.

• There is need to assess the core competencies of BSNL and outsource the

non-core activities like bill printing, call enter management etc. by

transformational cost control.

The capital expenditure of BSNL over the period is given below.

14. Effective utilization of surplus (refer to exhibit-5) – It has been observed that BSNL

has cut down on Capital costs quite drastically and at the same time the Balance

Sheet over the years reveal that “reserve and surplus“ is accumulating, Rs.52184 cr

in 2004-05 in comparison to Rs.43421.8 cr in 2003-04. Future of telecom business

in India in the wake of onslaught of technology needs to be assessed accurately.

BSNL is faced with waiting lists, indicative of existing demand. Therefore, the

surplus will have to be invested in technology. Survival of Business is the long-term

objective, and BSNL must learn to use the technology as an effective tool, and

control must always be with business not with technology.

TIMEFRAME FOR IMPLEMENTATION:

The timeframe for implementation will depend on prioritization of the proposed strategies. The strategies dealing with internal reorganization or reorientation can be undertaken and implemented within a relatively short time frame. Simultaneously processes for the induction of the appropriate technology should be initiated and time frame should be worked out by pert analysis.

SUMMARY

BSNL should change its very strategy of acting as follower to that of leader. Instead

of reacting to other operators move it should start acting proactively. BSNL should

adapt greater standardization and flexibility in systems. Only then new service

rollouts will be faster, and ideas will be converted into revenue streams. The overall

strategy of BSNL can be of concentrating on the mobile and broadband business in

near future and to immediately phase out loss making businesses like telegraph,

VSAT communication etc. BSNL can leverage on its pan India reach and economies

of scale to achieve overall cost leadership. At the same time capital investments can

be made in next generation networks where stress should be on Wi-Max, content

based data service and VOIP. Emphasis on organizational restructuring coupled with

customer orientation and operational efficiency can help BSNL find place in Asian

Telecom market.

Exhibit-1

BUYERS

Bargaining powers of

Customers have increased

SUBSTITUTES

Threats have increased

NEW ENTRANTS

Barrier has reduced

SUPPLIERS

Supplier power remains low

INDUSTRY ATTRACTIVENESS

Has reduced due to competition

FIG 2 - TELECOM INDUSTRY POTTER’S MODEL

Exhibit-2

Intangible Resources :

Tangible Resources:

Human

• Experienced trained manpower

• Practices and procedures developed over many decades

• Low churning of manpowerInnovation and creativity

• Technical skills

• Innovation capacities proved during launch of nationwide mobile services

Reputation

• Most trusted telecom brand in India

• Reputation with customers for billing

Exhibit-3

BCG MATRIX

HIGH

QUESTION MARK

- Broadband

- Rural operations

Financial • BSNL’s cash account and assets are enviable

• BSNL’s capacity to raise equity is hitherto untapped

• BSNL’s borrowing capacity from market are also untappedPhysical • Modern network and equipments

• All India reach

• Huge infrastructure can help in fast deployment of new services at marginal costs

Technological • Investments in state-of-the-art network capabilities

• Vast Optical fiber network and associated bandwidth

Organizational • Well-defined processes

Growth %

LOW

HIGH Market Share LOW

STAR

- Cellular service

- Leased circuit

- Intelligent network

CASH COWS

- Landline service

- Internet service

DOGS

- Satellite communications

FIGURE -3

FIGURE 4 - ANSOFF MATRIX

EXISTING

Market

NEW

EXISTING Product NEW

MARKET PENETRATION

- Landline service

- Internet service

- Cater rural demand

PRODUCT DEVELOPMENT

- Broadband based content oriented services

MARKET DEVELOPMENT

- Cellular service

- Leased circuit

- Intelligent network

- Broadband

DIVERSIFICATION

- Turnkey projects for ITES companies

- International market

FIGURE 5 - PORTER’S GENERIC STRATEGY MATRIX

Broad

Market we seek

Narrow

Cost Advantage Differentiation based we seek based

OVERALL COST LEADERSHIP

- Landline service

- Internet service

- Cellular service

OVERALL DIFFERENTIATION

COST FOCUS

- Leased circuit

- Broadband

DIFFERENTIATION FOCUS

- Intelligent network services

Applying strategic framework BSNL indicates that there are various products offered by BSNL and there are various segments of customers for each product and each one would require a different approach. Hence if the company has to service all the segments then it has to have a premium service for the differentiation focus group at a premium rate. The bulk of corporate callers would like the company to strike a right balance between price and differentiation. The low calling group of residential or rural subscribers would like to respond to the cost leadership. The above discussion indicates that the issues faces by the organization during this changing competitive environment and process of restructuring from government department to company are complex and need to be tackled strategically.

Exhibit-4

BSNL Revenue Positions:

FIGURE - 6

FIGURE – 7

Exhibit-5

BSNL- BALANCE SHEET

Year Mar 04 Mar 03 Mar 02 Mar 01

SOURCES OF FUNDS : Share Capital 12,500.00 12,500.00 12,500.00 5,000.00 Reserves Total 51,238.32 44,141.80 43,742.80 33,907.95

Total Shareholders Funds 63,738.32 56,641.80 56,242.80 38,907.95 Secured Loans 0 510 510 510 Unsecured Loans 7,537.68 7,886.44 10,638.51 10,798.33

Total Debt 7,537.68 8,396.44 11,148.51 11,308.33

Total Liabilities 71,276.00 65,038.24 67,391.31 50,216.28

APPLICATION OF FUNDS : Gross Block 101,531.45 85,340.68 71,710.07 65,530.00 Less : Accumulated Depreciation 32,401.23 22,330.59 12,787.86 3,858.08 Net Block 69,130.22 63,010.09 58,922.21 61,671.92 Lease Adjustment 0 0 0 0 Capital Work in Progress 0 9,265.05 10,787.38 0 Investments 200 200 0 0 Current Assets, Loans & Advances Inventories 2,343.76 3,170.32 3,795.11 2,628.35 Sundry Debtors 3,979.45 5,367.08 5,715.87 3,831.06 Cash and Bank 11,557.48 3,439.68 2,360.76 1,777.36 Loans and Advances 9,683.11 5,114.91 5,969.67 6,801.50 Total Current Assets 27,563.80 17,091.99 17,841.41 15,038.27 Less : Current Liabilities and Provisions Current Liabilities 14,928.05 17,310.07 17,852.77 25,245.06 Provisions 5,886.62 3,389.91 2,306.92 1,248.85 Total Current Liabilities 20,814.67 20,699.98 20,159.69 26,493.91 Net Current Assets 6,749.13 -3,607.99 -2,318.28 -11,455.64 Miscellaneous Expenses not written off 0 0 0 0 Deferred Tax Assets 5,239.88 1,758.99 0 0 Deferred Tax Liability 10,043.23 5,587.90 0 0 Net Deferred Tax -4,803.35 -3,828.91 0 0

Total Assets 71,276.00 65,038.24 67,391.31 50,216.28 Contingent Liabilities 864.78 17,648.38 411 0

BSNL-OVERALL PERFORMANCEEquity Paid Up 5000 5000 5000 5000Networth 56238.32 49141.8 48742.8 38907.95Capital Employed 71276 65038.24 67391.31 50216.28Gross Block 101531.5 85340.68 71710.07 65530Net Working Capital ( Incl. Def. Tax) 1945.78 -7436.9 -2318.28 -11455.6Current Assets ( Incl. Def. Tax) 32803.68 18850.98 17841.41 15038.27Current Liabilities and Provisions ( Incl. Def. Tax) 30857.9 26287.88 20159.69 26493.91Total Assets/Liabilities (excl Reval & W.off) 102133.9 91326.12 87551 76710.19Gross Sales 34011.91 25293.15 24297.21 11663.89Net Sales 34011.91 25293.15 24297.21 11663.89Other Income 2580.36 3204.88 3483.5 87.43Value Of Output 34011.91 25293.15 24297.21 11663.89Cost of Production 23707.98 22213.92 19013.02 8891.05Selling Cost 0 221.23 153.05 0PBIDT 18958.14 12619.44 16094.77 4879.41PBDT 18869.9 12209.22 15598.31 4605.13PBIT 9084.4 3068.13 7348.64 1021.33PBT 8996.16 2657.91 6852.18 747.05PAT 5976.52 1444.45 6312.17 747.05CP 15850.26 10995.76 15058.3 4605.13Revenue earnings in forex 0.19 0.09 0.13 0.13Revenue expenses in forex 6.99 1.75 1.59 0.17Capital earnings in forex 0 0 0 0Capital expenses in forex 0 0 0 0Book Value (Unit Curr) 112.48 98.28 97.49 77.82Market Capitalisation 0 0 0 0CEPS (annualised) (Unit Curr) 31.63 21.99 30.12 9.21EPS (annualised) (Unit Curr) 11.88 2.89 12.62 2.56Dividend (annualised%) 7.5 5 0 0Payout (%) 4.74 17.31 0 0Cash Flow From Operating Activities 0 15024.09 15964.21 0Cash Flow From Investing Activities 0 -11302.3 -14531.3 0

Cash Flow From Financing Activities 0 -2642.89 -849.48 0

BSNL - FINANCIAL ANALYSISRate of Growth (%)ROG-Net Worth (%) 14.44 0.82 25.28 0ROG-Capital Employed (%) 9.59 -3.49 34.2 0ROG-Gross Block (%) 18.97 19.01 9.43 0ROG-Gross Sales (%) 34.47 4.1 108.31 0ROG-Net Sales (%) 34.47 4.1 108.31 0ROG-Cost of Production (%) 6.73 16.84 113.84 0ROG-Total Assets (%) 11.83 4.31 14.13 0ROG-PBIDT (%) 50.23 -21.59 229.85 0ROG-PBDT (%) 54.55 -21.73 238.72 0ROG-PBIT (%) 196.09 -58.25 619.52 0ROG-PBT (%) 238.47 -61.21 817.23 0ROG-PAT (%) 313.76 -77.12 744.95 0ROG-CP (%) 44.15 -26.98 226.99 0ROG-Revenue earnings in forex (%) 111.11 -30.77 0 0ROG-Revenue expenses in forex (%) 299.43 10.06 835.29 0ROG-Market Capitalisation (%) 0 0 0 0 Key RatiosDebt-Equity Ratio 0.13 0.17 0.24 0.29Long Term Debt-Equity Ratio 0.13 0.17 0.24 0.29Current Ratio 0.9 0.79 0.7 0.57Turnover RatiosFixed Assets Ratio 0.36 0.32 0.35 0.31Inventory Ratio 12.34 7.26 7.57 7.61Debtors Ratio 7.28 4.56 5.09 5.22Interest Cover Ratio 102.95 1.96 10.18 3.72PBIDTM (%) 55.74 40.93 56.8 41.83PBITM (%) 26.71 3.17 20.81 8.76PBDTM (%) 55.48 39.31 54.76 39.48CPM (%) 46.6 38.61 53.28 39.48APATM (%) 17.57 0.84 17.29 6.4ROCE (%) 13.33 1.21 8.6 3.49RONW (%) 11.34 0.44 9.58 3.29

Debtors Velocity (Days) 72 91 76 0Creditors Velocity (Days) 49 48 43 0Assets Utilisation Ratio (times)Value of Output/Total Assets 0.35 0.28 0.3 0Value of Output/Gross Block 0.36 0.32 0.34 0

Telecommunications Industry - Service Provider Year Latest 2004 2003 2002 2001

SOURCES OF FUNDS : Share Capital 28,439.74 12,827.82 25,278.10 22,704.22 11,673.74Reserves Total 52,774.07 10,906.21 54,166.95 55,092.90 47,627.92Total Shareholders Funds 81,213.81 23,734.03 79,445.05 77,797.12 59,301.66Secured Loans 14,451.92 10,143.80 10,426.83 7,967.86 4,914.03Unsecured Loans 17,678.43 7,744.99 15,082.31 17,931.40 15,814.61Total Debt 32,130.35 17,888.79 25,509.14 25,899.26 20,728.64Total Liabilities 113,344.16 41,622.82 104,954.19 103,696.38 80,030.30APPLICATION OF FUNDS : Gross Block 126,924.93 35,713.57 120,233.14 98,262.45 87,396.07Less : Accumulated Depreciation 34,116.63 10,405.60 33,282.86 21,432.09 11,688.11Net Block 92,808.30 25,307.97 86,950.28 76,830.36 75,707.96Lease Adjustment -6.26 0 -6.26 -21.89 -20.34Capital Work in Progress 10,917.34 1,563.64 11,138.97 13,068.44 1,878.94Investments 7,608.10 6,168.32 5,364.25 3,734.98 2,312.91

Current Assets, Loans & Advances Inventories 3,476.73 151.58 3,523.81 4,512.36 3,636.18Sundry Debtors 9,289.00 3,216.05 8,646.62 8,720.12 7,029.97Cash and Bank 8,473.25 4,331.90 8,427.12 8,015.88 9,747.61Loans and Advances 23,830.81 17,187.46 22,253.10 21,530.38 17,870.28Total Current Assets 45,069.79 24,886.99 42,850.65 42,778.74 38,284.04

Less : Current Liabilities and Provisions Current Liabilities 30,234.56 10,475.96 28,810.57 27,691.88 34,629.79Provisions 10,180.26 5,836.69 9,162.93 6,996.58 5,441.99Total Current Liabilities 40,414.82 16,312.65 37,973.50 34,688.46 40,071.78Net Current Assets 4,654.97 8,574.34 4,877.15 8,090.28 -1,787.74

Miscellaneous Expenses not written off 1,437.77 366.69 1,134.39 2,367.83 1,936.63Deferred Tax Assets 3,228.79 1,315.16 2,542.44 780.56 1.94Deferred Tax Liability 7,304.85 1,673.30 7,047.03 1,154.18 0

Net Deferred Tax -4,076.06 -358.14 -4,504.59 -373.62 1.94Total Assets 113,344.16 41,622.82 104,954.19 103,696.38 80,030.30

REFERENCES AND LINKS:

• The official website of Bharat Sanchar Nigam Limited - http://www.bsnl.co.in

• The website of Departmant of Telecom , Government of India, http://www.dot.gov.in/

• The website of Telecom Regulatory Authority of India Limited - http://www.trai.gov.in/

• Digital Dividend Case Studies - http://www.digitaldividend.org/

• The website of Mahanagar Telephone Nigam Limited - http://www.mtnl.net.in/

• The website of Telecommunication Consultants of India Limited - http://www.tcil-india.com/

• Ken and the art of BSNL maintenance - N. Kalyan Sagar

• The website of Software Technology Parks of India - http://www.stpi.soft.net/

• The website of Cellular Operators Association of India - http://www.coai.com

• National Academy of Telecom Finance and Management NATFM – Journal 2003 and 2004

• The website of Association of Unified Telecom Service Providers of India (AUSPI - http://www.auspi.org

• The website of Ministry of Finance - http://www.finmin.nic.in/

• Beyond Customer Satisfaction by Richard F Gerson.

• The website of Ministry of Industry (SIA) - http://www.nic.in/indmin/

• Competitive Strategy – Michael E Porter

• The website of Ministry Of Information Technology(MIT) - http://www.mit.gov.in

• The website of Reserve Bank of India - http://www.rbi.org.in/

• “What is strategy” – Michael E Porter

• Will Telecoms be a growth sector again? Asia-Pacific's incumbents - battling for growth in maturing markets. By Rosalie Nelson (Study by Ovum)

• The website of International Telecommunication Union (ITU) - http://www.itu.int/

• The website of Asia-Pacific Telecommunity - http://www.aptsec.org

• The website of Communications, IT & Broadcasting NEWS - http://www.telecomlive.com