This document summarizes a study analyzing the financial position of MTNL (Mahanagar Telephone Nigam Limited) over four years from 2003-2007. The objectives are to analyze MTNL's financial condition using ratio analysis, study changes in profits over the years, examine growth trends, and identify strengths, weaknesses, opportunities and threats. Secondary data is collected from annual reports to calculate ratios and conduct comparative and trend analysis. Key findings are that MTNL's profits decreased in three of the four years while expenditures continuously increased, current assets are insufficient to meet short-term needs, and the company needs to utilize capital more effectively to gain maximum long-term profits.

1. welcome Analysis of financial position of MTNL By: PARMINDER NAGAR MBA Roll No. 49 Under guidance of: Ms. Vibha Dua

2. INTRODUCTION FINANCE Finance is the life blood and nerve center of the business . A financial manager is supposed to perform the following function as:- Financial forecasting and planning. Acquisition of funds Investment of funds Helping in valuation decisions Maintaining proper liquidity Financial statement analysis is largely a study of relationship among the financial factors in a business by using single setup statements, and a study of trend of these factors.

3. PURPOSE OF THE STUDY The purpose of the study is ‘To review the financial position of MTNL’.

4. OBJECTIVES OF THE STUDY To study the comparative analysis of financial condition of MTNL on the basis of ratio analysis. To study the changes taking place in the profit condition of MTNL for last four years. To know the growth trend of MTNL, in terms of its operations, its customers & its competitors. To analyze the different strengths, weaknesses, opportunities and threats related to MTNL

5. RESEARCH METHODOLOGY Statement of Problem The first step in the conduct of a research is the careful definition of the problem. The proposed work would be undertaken by keeping in view the following points: To study the existing situations & proceedings of the Financial department of the organization and To suggest measures for improving the management of finances.

6. Research Design Research design is the plan for study that will lead to the most economical method for collection of required data & its analysis. If the proposal is properly designed most of the unnecessary labor & non-essential data will be left out. The research is mainly of three types: Exploratory Research Study Descriptive & Diagnostic Research Study Hypothesis testing Research Study The proposed is exploratory in nature, for it seeks to discover the ideas, insights and to bring out new relationships for more precise investigation of the problem.

7. Data Collection Method Proposed project involves collection of data from secondary sources such as magazines, newspapers, web sites, reports etc. Whereas published secondary sources will used as prime documents for the study. The major among these is the Annual Reports of the company for the financial years – 2003-04, 2004-05, 2005-06 & 2006-07 Analysis & Interpretation of Data Various statistical & financial analysis tools will be used per requirement of the study. The major amongst those will be Ratio Analysis, Comparative statements, diagrams & charts etc.

8. Following Ratios are calculated for carrying out the analysis : Profitability Ratios Operating Ratio Net Profit Ratio ROI (Return on investment) Turnover Ratios Fixed Assets Ratio Current Assets Ratio Working Capital Turnover Ratio Capital Turnover ratio Solvency Ratios Debt-Equity Ratio Proprietory Ratio Current Ratio

9. The following points are to be considered: Out of the past four years, in 3 years MTNL recorded a decrease in the profit and in 2 years, a decrease in the income, but the expenditure has continuously increased. These are the years where telecom sector emerge as a fastest growing sector of economy. And in the same years MTNL fail to gain more income. From 1986 of its establishment to 2006, in these 20 years company has shown many faces, threw out this journey. At one time MTNL had a monopoly in the market. But now this navratna company is facing a very tough competition from the giants like Bharti-Airtel, Reliance, Idea cellular, etc CONCLUSION

10. Although the income figure is continuously falling but there is no impact shown on expenditure side, it is continuously increasing over the years. This is the main cause of reduction in profits. In the year 2002-03, the current assets fell with a huge margin due to this year’s poor performance. After this year company has shown a growth in current assets but not sufficient to fulfill the short-term requirements. In the year 2003-04, Fixed Assets found significant growth with 12.56% which is a good sign for long term prospect. But increase in fixed assets during last two years is not sufficient. Company’s Current Ratio fell very short of the ideal, which shows an inadequate margin of safety to the creditors, company has no sufficient cash to pay its liabilities. Due to the shortage of working capital in the business, company is trading out of its resources. CONCLUSION

11. The Capital Employed ratio is not very high. It shows the ineffective and inefficient utilization of capital. So there is need to use the capital in a better way to gain maximum profit in the long term. After three years in a row, in year 2005-06, there is decrease in dividend because of pressure of previous years’ poor performance. It is not easy to understand that the company is not cutting the expenditure but cutting the dividend. The Net profit ratio is not a handsome ratio. So the low net profit ratio indicates inadequate return. Employee remuneration & benefits area is a area of major concern because there is no impact of profit or loss on this area and expenditure on employees is simultaneously rising. CONCLUSION

12. PROPOSED INDEX Acknowledgement………………………………… Executive Summary………………………………….. List of Charts…………………………………….. Introduction ………………………………………….…. Company Profile ……………………………………….. Trade Profile ……............................................................ Financial Statements – An Overview………………… Meaning of Financial statements.……………….…… Different types of financial statements………….…… Nature of Financial Statements……………………… Limitations of financial statements………………….. Various Techniques of Financial Analysis………….. 5.Ratio Analysis – An overview …………………………. Introduction………………………………………….. Categories of Ratio………………………………….. Advantages of Ratio Analysis………………………. Limitation of Ratio Analysis.……………………….. 6 . Analysis & Interpretation of Ratios …………………. Ratio Analysis of MTNL……………………………………. Comparative Analysis………………………………………. Trend Analysis………………………………………………. 7. Conclusions & Limitations of the Study ...………………… Appendix ‘A’………………………………………………… Appendix ‘B’ ………………………………………………… Appendix ‘C’ ………………………………………………… References...………………………………………………….

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