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Financial magment- Comparative Study of Sourcesof Finance1,063

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Published on Apr 16, 2014

Project Report on Comparative Study of Sources of Finance(MTNL and

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Financial magment- Comparative Study of Sources of Finance

1. ADVANCE FINANCIAL MANAGEMENT 2013-14 A PROJECT ON Project Report onComparative Study of Sources of Finance (MTNL and Reliance Communication) In the subjectADVANCE FINANCIAL MANAGEMENT SUBMITTED TO UNIVERSITY OF MUMBAI FORSEMESTER-IV OF MASTER OF COMMERCE BY SUNITA KUMARI YADAV MCOM PART-IIAND ROLL NO- 3601 UNDER THE GUIDANCE OF MRS. MONALI RAY YEAR- 2013-2014

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2. ADVANCE FINANCIAL MANAGEMENT 2013-14 DECLARATION BY THE STUDENT I,SUNITA KUMARI YADAV student of M COM PART-II Roll Number 3601 hereby declare that theproject for the Paper ADVANCE FINANCIAL MANAGEMENT titled, Project Report onComparative Study of Sources of Finance Submitted by me for semester-III during the academic year2013-2014, is based on actual work carried out by me under the guidance and supervision of MRS.MONALI RAY. I further state that this work is original and not submitted anywhere else for anyexamination. Signature of Student EVALUATION CERTIFICATE This is to certify that the undersignedhave assessed and evaluated the project on Project Report on Comparative Study of Sources ofFinance Submitted by SUNITA KUMARI YADAV Student of M COM Part-II. This project is originalto the best of our knowledge and has been accepted for internal assessment. Internal Examiner ExternalExaminer vice Principle

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3. ADVANCE FINANCIAL MANAGEMENT 2013-14 PILLAIS COLLEGE OF ARTS,COMMERCE & SCIENCE Internal Assessment: Project 40 Marks Name of Student Class Division

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Roll Number. First Name: SUNITA KUMARI M COM Fathers Name: BBS PART II 3601 Surname:YADAV Subject: ADVANCE FINANCIAL MANAGEMENT Topic for the Project: Project Report onComparative Study of Sources of Finance Mark Awarded Signature DOCUMENTATION InternalExaminer (Out of 10 Marks) External Examiner (Out of 10 Marks) Presentation (Out of 10 Marks)Viva and Interaction (Out of 10 Marks) TOTAL MARKS (Out of 40)4. ADVANCE FINANCIAL MANAGEMENT 2013-14 INDEX S. NO. TOPIC PAGE NO. 1.Introduction 1 2. Type of Finance-Definition, Features 1-19 3. Introduction Of MTNL Balance SheetAnd Profit & Loss A/C 2011-12 19 4. Introduction Of Reliance Communication Balance Sheet AndProfit & Loss A/C 2011-12 23 5. Comparative of Source Of finance between MTNL & RelianceComm. 29 6. Conclusion 30 7. Bibliography 31

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5. ADVANCE FINANCIAL MANAGEMENT 2013-14 Introduction Finance is the lifeblood ofbusiness concern, because it is interlinked with all activities performed by the business concern. In ahuman body, if blood circulation is not proper, body function will stop. Similarly, if the finance notbeing properly arranged, the business system will stop. Arrangement of the required finance to eachdepartment of business concern is highly a complex one and it needs careful decision. Quantum offinance may be depending upon the nature and situation of the business Sources of finance mean theways for mobilizing various terms of finance to the industrial concern. Sources of finance state that,how the companies are mobilizing finance for their requirements. The companies belong to the existingor the new which need sum amount of finance to meet the long-term and short-term requirements suchas purchasing of fixed assets, construction of office building, purchase of raw materials and day-to- dayexpenses. SHORT-TERM FINANCE: The finance is generally required for a period of one year or thebusiness cycle which may be slightly greater than period. Apart from the long-term source of finance,firms can generate finance with the help of short-term sources like loans and advances fromcommercial banks, moneylenders, etc. Short-term source of finance needs to meet the operationalexpenditure of the business concern. Types of short-term source

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6. ADVANCE FINANCIAL MANAGEMENT 2013-14 LONG-TERM FINANCE: The long termfinance generally exceeds 5 years period. Finance may be mobilized by long-term or short- term. Whenthe finance mobilized with large amount and the repayable over the period will be more than five years,it may be considered as long-term sources. Share capital, issue of debenture, long-term loans fromfinancial institutions and commercial banks come under this kind of source of finance. Long-termsource of finance needs to meet the capital expenditure of the firms such as purchase of fixed assets,land and buildings, etc. Types of long-term sources MEDIUM-TERM FINANCE: This is also calledintermediate finance. The period of medium term finance may be 3 to 5 year. Based on OwnershipSources of Finance may be classified under various categories based on the period: An ownershipsource of finance include Shares capital, earnings Retained earnings Surplus and ProfitsBorrowed capital include Debenture Bonds Public deposits Loans from Bank and FinancialInstitutions.

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7. ADVANCE FINANCIAL MANAGEMENT 2013-14 Based on Sources of Generation Sources ofFinance may be classified into various categories based on the period. Internal source of financeincludes Retained earnings Depreciation funds Surplus External sources of finance may beinclude Share capital Debenture Public deposits Loans from Banks and Financial institutionsBased in Mode of Finance Security finance may be include Shares capital Debenture Retainedearnings may include Retained earnings Depreciation funds Loan finance may include Long-term loans from Financial Institutions Short-term loans from Commercial banks. The aboveclassifications are based on the nature and how the finance is mobilized from various sources. But theabove sources of finance can be divided into three major classifications: Security Finance InternalFinance Loans Finance SECURITY FINANCE If the finance is mobilized through issue of securitiessuch as shares and debenture, it is called as security finance. It is also called as corporate securities.This type of finance plays a major role in the field of deciding the capital structure of the company.

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8. ADVANCE FINANCIAL MANAGEMENT 2013-14 Characters of Security Finance Securityfinance consists of the following important characters: 1. Long-term sources of finance. 2. It is also

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called as corporate securities. 3. Security finance includes both shares and debentures. 4. It plays amajor role in deciding the capital structure of the company. 5. Repayment of finance is very limited. 6.It is a major part of the companys total capitalization. Types of Security Finance Security finance maybe divided into two major types: 1. Ownership securities or capital stock. 2. Creditorship securities ordebt capital. Ownership Securities The ownership securities also called as capital stock, is commonlycalled as shares. Shares are the most Universal method of raising finance for the business concern.Ownership capital consists of the following types of securities. Equity Shares Preference Shares No par stock Deferred Shares EQUITY SHARES Equity Shares also known as ordinary shares, whichmeans, other than preference shares. Equity shareholders are the real owners of the company. Theyhave a control over the management of the company. Equity shareholders are eligible to get dividend ifthe company earns profit. Equity share capital cannot be redeemed during the lifetime of the company.The liability of the equity shareholders is the value of unpaid value of shares. Equity shareholders areresidual owners who have unrestricted claim on income and assets. They possess all the voting power inthe company. The rate of dividend on these shares is not fixed. The rate of dividend depends on theavailability of divisible profits and the discretion of the directors. Equity shareholders have theopportunity of earning high dividend in times of prosperity. They run the risk of earning nothing inperiods of adversity. They control the company on account of their entitlement to vote at the generalmeeting of the company. These shares are purchased by persons who prefer risk to better return andalso wish to have the voice in the management of the company. The equity share capital is also calledas venture capital as there is a greater risk involved in it.9. ADVANCE FINANCIAL MANAGEMENT 2013-14 TYPES OF EQUITY SHARES: BONUSSHARES: It refers to issue of shares in place dividend. It is just capitalization of reserves or conversionof reserves into equity share capital. A company which has sufficient profits may issue bonus shares.SWEAT EQITY SHARES: These are the shares issued to the employees of an organisation. Theseshares are always issued at a discount. It is a reward to those employees who have done work fororganisation. It helps to motivate the employees. Features of Equity Shares Equity shares consist of thefollowing important features: 1. Maturity: Equity share capital is the permanent capital as a company isnot under contractual obligation to refund the capital during its life time. Equity shareholders candemand there capital only in the event of liquidation and too when funds are left after paying all priorclaims. A company cannot compel the equity shareholders to sell back their shares if they were fullypaid-up and shareholders are engaged in business competitive to the business of the company.However, equity shareholders can be persuaded to sell their shares. 2. Claim on Income: Equityshareholders are residual owners. Their claims on income arise only when the claims of creditors andpreference shareholders have been met. In many cases, residual owners of the creditors. The equityshareholders cannot legally compel the company to pay dividends to them even if the company hassufficient income left after distribute profits. It is internal management which possesses the discretion todistribute profits. It has entire right to utilise business income in whatever manner it likes. The rate ofdividend is not fixed. It depends upon the availability of profits and discretion the management. 3.Claim on Assets: As the equity shareholders are residual owners, they are the last claimants to assets ofthe company. In case the company winds up the business , assets are disposed off to satisfy the claimsof the creditors and also preference shareholders prior to equity shareholders. The equity shareholdersare entitled to receive all the amount left after meeting the business obligations. As the equity sharecapital provides a cushion for creditors of the company.

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10. ADVANCE FINANCIAL MANAGEMENT 2013-14 4. Control: The equity shares run the risk ofloss. However , the risk is compensated to some extend as they have controlling power that rests withresidual owners. In fact they have unchallenged voice in management of the company. The equityshareholders retain control of the company through voting power. Every equity shareholder has theright to vote on every resolution placed before the company. A company is managed by the Board ofDirectors who control and direct the affairs of the company. However , the supreme control is endowedwith the equity shareholders has the right to exercise on vote for each share of the stock he owns. 5.Pre- Emptive Rights: equity shareholders enjoy the power to maintain their proportion interest in the

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assets, earning and control of the company. This power is exercised by the equity shareholders throughtheir to purchase additional issues of equity shareholders through their right to purchase issues of equityshares. PREFERENCE SHARES The parts of corporate securities are called as preference shares. It isthe shares, which have preferential right to get dividend and get back the initial investment at the timeof winding up of the company. Preference shareholders are eligible to get fixed rate of dividend andthey do not have voting rights. Preference shares may be classified into the following major types: 1.Cumulative preference shares: Cumulative preference shares have right to claim dividends for thoseyears which have no profits. If the company is unable to earn profit in any one or more years, C.P.Shares are unable to get any dividend but they have right to get the comparative dividend for theprevious years if the company earned profit. 2. Non-cumulative preference shares: Non-cumulativepreference shares have no right to enjoy the above benefits. They are eligible to get only dividend if thecompany earns profit during the years. Otherwise, they cannot claim any dividend. 3. Redeemablepreference shares: When, the preference shares have a fixed maturity period it becomes redeemablepreference shares. It can be redeemable during the lifetime of the company. The Company Act hasprovided certain restrictions on the return of the redeemable preference shares.11. ADVANCE FINANCIAL MANAGEMENT 2013-14 4. Irredeemable Preference SharesIrredeemable preference shares can be redeemed only when the company goes for liquidator. There isno fixed maturity period for such kind of preference shares. 5. Participating Preference SharesParticipating preference shareholders have right to participate extra profits after distributing the equityshareholders. 6. Non-Participating Preference Shares Non-participating preference shareholders are nothaving any right to participate extra profits after distributing to the equity shareholders. Fixed rate ofdividend is payable to the type of shareholders. 7. Convertible Preference Shares Convertiblepreference shareholders have right to convert their holding into equity shares after a specific period.The articles of association must authorize the right of conversion. 8. Non-convertible Preference SharesThere shares, cannot be converted into equity shares from preference shares. Features of PreferenceShares The following are the important features of the preference shares: a. Maturity: Preference sharescan be redeemable or irredeemable. Irredeemable preference shares capital has to be repaid on windingup of the company. However, the companies (Amendment) Act, 1988 has prohibited the issue ofirredeemable preference share capital or redeemable after the expiry of a period of 10 years from thedate of issue. Thus, companies are prohibited from issuing the redeemable preference shares greaterthan 10 years period. b. Conversion: Preference shares can be convertible or non-convertible.Convertible preference shares are those which are convertible in to equity shares. As against thisnon-convertible shares are those which are not convertible in to equity shares.

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12. ADVANCE FINANCIAL MANAGEMENT 2013-14 c. Participation in Income: Preference sharescan be participating or non-participating. Participating preferences have a right to shares the surplusprofits remaining after paying dividend to equity shareholders at affixed rate as laid down by acompany A/A. however non-participating preference shares do not carry such right. Preferenceshareholders have priority claim to dividend over equity shareholders. These shareholders are paiddividend at a fixed rate which is specified in the agreement. The company can distribute earning amongequity shareholders. The preferences shareholders have no legal recourse against the company for notdistributing dividend even through it has earned large income. d. Claim on Assets: No specific assets arepledged against the preference share capital. However , they have a claim on the general assets of thecompany. The preference shareholders claims on assets are superior to those of equity shareholders. Inthe event of dissolution of the company , the preference shareholders will receive their portion of theproceeds before holders of equity shares. e. Controlling Power: In the ordinary course , the preferenceshareholders do not enjoy direct right to participate in the management through voting for directors andon the other matters. Section 87 of the companies Act 1956 , preference shareholders are given on theright to vote on resolutions which directly affect the rights attached to their preference shares. Inrespect of this , any resolution for winding up the company or the repayment or reduction of its sharecapital is to be regarded as directly affecting the rights attached to the preference shares.DEBENTURES Debenture is a creditor ships security which enables a company to raise finance. A

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debenture is a written instrument signed by the company under its common seal acknowledging thedebt due by it to its holders. Through this document the company promises to pay a specific amount ofmoney as stated their in at affixed date in future together with period payment of interest tocompensate the holders for the use of funds. Debenture loan may be with or without a cargo on theassets of the company. Thus, debenture is a certificate issued by a company under its sealacknowledging a debt due by it to its holders. The company act, 1956 does not define debenture. Itmerely states that denture includes debenture stock , bonds and any other securities of a companywhether constituting a change on the assets of the company or not.13. ADVANCE FINANCIAL MANAGEMENT 2013-14 Types of Debentures Debentures may bedivided into the following major types: 1. Unsecured debentures: Unsecured debentures are not givenany security on assets of the company. It is also called simple or naked debentures. This type ofdebentures are treaded as unsecured creditors at the time of winding up of the company. 2. Secureddebentures: Secured debentures are given security on assets of the company. It is also called asmortgaged debentures because these debentures are given against any mortgage of the assets of thecompany. 3. Redeemable debentures: These debentures are to be redeemed on the expiry of a certainperiod. The interest is paid periodically and the initial investment is returned after the fixed maturityperiod. 4. Irredeemable debentures: These kind of debentures cannot be redeemable during the life timeof the business concern. 5. Convertible debentures: Convertible debentures are the debentures whoseholders have the option to get them converted wholly or partly into shares. These debentures areusually converted into equity shares. Conversion of the debentures may be: Non-convertibledebentures, Fully convertible debentures, Partly convertible debentures 6. Other types: Debentures canalso be classified into the following types. Some of the common types of the debentures are as follows:a. Collateral Debenture b. 2. Guaranteed Debenture c. 3. First Debenture d. 4. Zero Coupon Bond e.Zero Interest Bond/Debenture

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14. ADVANCE FINANCIAL MANAGEMENT 2013-14 Features of Debentures 1. Maturity period:Debentures consist of long-term fixed maturity period. Normally, debentures consist of 1020 yearsmaturity period and are repayable with the principle investment at the end of the maturity period. 2.Residual claims in income: Debenture holders are eligible to get fixed rate of interest at every end ofthe accounting period. Debenture holders have priority of claim in income of the company over equityand preference shareholders. 3. Residual claims on asset: Debenture holders have priority of claims onAssets of the company over equity and preference shareholders. The Debenture holders may haveeither specific change on the Assets or floating change of the assets of the company. Specific change ofDebenture holders are treated as secured creditors and floating change of Debenture holders are treatedas unsecured creditors. 4. No voting rights: Debenture holders are considered as creditors of thecompany. Hence they have no voting rights. Debenture holders cannot have the control over theperformance of the business concern. 5. Fixed rate of interest: Debentures yield fixed rate of interest tillthe maturity period. Hence the business will not affect the yield of the debenture. INTERNALFINANCE A company can mobilize finance through external and internal sources. A new companymay not raise internal sources of finance and they can raise finance only external sources such asshares, debentures and loans but an existing company can raise both internal and external sources offinance for their financial requirements. Internal finance is also one of the important sources of financeand it consists of cost of capital while compared to other sources of finance. Internal source of financemay be broadly classified into two categories: A. Depreciation Funds B. Retained earnings

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15. ADVANCE FINANCIAL MANAGEMENT 2013-14 Depreciation Funds Depreciation funds arethe major part of internal sources of finance, which is used to meet the working capital requirements ofthe business concern. Depreciation means decrease in the value of asset due to wear and tear, lapse oftime, obsolescence, exhaustion and accident. Generally depreciation is changed against fixed assets ofthe company at fixed rate for every year. The purpose of depreciation is replacement of the assets afterthe expired period. It is one kind of provision of fund, which is needed to reduce the tax burden andoverall profitability of the company. There is a controversy among the experts regarding the treatmentof depreciation as a source of funds , argue that funds are raised of finance , a company would have

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improved its financial position by charging periodical depreciation. The experts argue that thedepreciation is a non- cash expenditure and as such , it does not affect the working capital of thecompany and therefore , it is not a source of finance. The above arguments cannot be questioned. Itcannot be derived that depreciation being a non-cash expenditure does not result in to cash outlay. Assuch, part of the profits adjusted for depreciation being a non-cash expenditure does not result in tocash outlay. As such, part of the profits adjusted for depreciation can be used by management toincrease any of the current assets or pay taxes, dividend etc. Hence depreciation can be considered as asource of finance in a limited sense. Depreciation can be regarded as a source of finance because of thefollowing reasons. (i). Depreciation being non-cash expense, finds its way in to current assets throughcharging. (ii). Although depreciation does not raise funds, it certainly saves funds (iii). Depreciationresult in to reduction of taxable income and hence, income tax liability for the period is reduced.Retained Earnings Retained earnings are another method of internal sources of finance. Actually is nota method of raising finance, but it is called as accumulation of profits by a company for its expansionand diversification activities. Retained earnings are called under different names such as; self finance,inter finance, and plugging back of profits. According to the Companies Act 1956 certain percentage,as prescribed by the central government (not exceeding 10%) of the net profits after tax of a financialyear have to be compulsorily transferred to reserve by a company before declaring dividends for theyear. Under the retained earnings sources of finance, a part of the total profits is transferred to variousreserves such as general reserve, replacement fund, reserve for repairs and renewals, reserve funds andsecrete.16. ADVANCE FINANCIAL MANAGEMENT 2013-14 LOAN FINANCING Loan financing is theimportant mode of finance raised by the company. Loan finance may be divided into two types: (a)Long-Term Sources (b) Short-Term Sources reserves, etc. TRADE CREDIT Trade credit is one of themost important sources of short-term finance. Trade credit refers to the sale of merchandise onnon-cash terms by one business organisation to another. There are three categories of trade credit viz.open account is better known as accounts, notes payable and trade acceptances. Open account is betterknown as accounts payable and is the most prevalent form of trade credit. Notes payable is used inthose situations where formal acknowledgment of the debt is called for. These notes are called aspromissory notes. In some business lines, the trade acceptance is employed in place of open account.This kind of credit also involves a formal recognition of debt. Trade credit terms specified period oftime. The credit terms also include the payment period. Availability of trade credit are dependent onseveral factors such nature and extend of competition. COMMERCIAL BANKS The commercialbanks plays play a significant role in providing industrial finance to business enterprise. Traditionally,the commercial banks used to provide short-term loans to the industries. However, the commercialbanks have been providing medium-term and long-term finance to industrial enterprises. The bank loancan take the form of cash credit, overdrafts, loans are granted against the security of current assets likeinventories, shares, receivable etc. LOANS: A loans is an advance to the business enterprise made withor without security. In respect of a loan, the banker makes a lump-sum payment to the borrowed orcredits his deposit account with the money advanced. Loan is advanced for a fixed period at an agreedrate of interest. Repayment of loan may be made either in instalments or at the end of the expiryperiod. The borrower has to pay interest on the total amount of advance. Interest payment has to bemade whether he with draws the money from his account or not.

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17. ADVANCE FINANCIAL MANAGEMENT 2013-14 CASH CREDIT: A cash credit is a financialarrangement through which the commercial banks allow the borrower to borrow money up to certainlimit. Cash credit arrangement is ordinarily made against the security of commodities hypothecated orpledged with the banker. Interest is charged on the amount actually withdrawn for the actual period ofuse. Cost of finance is the interest charged by the bank. The amount can be adjusted as per the need offinance. The security may be pledge of movable property. HYPOTHECATION: Under thisarrangement, the possession of goods is not given to the banker. The commodities remain at thedisposal and in the go down of the borrower. The banker is given access to goods whenever he sodesires. The borrowing unit has to furnish periodical return of the stock to the banker. The banker

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advances the money only to the borrower in whose integrity it has full confidence. PLEDGE: Underthis arrangement, the goods are placed in custody of the banker with its name on the go down wherethey stored. In the case of pledge, the borrower does not enjoy the right to deal with them.OVERDRAFTS: If the borrower requires temporary finance, the banker may allow him to overdraw onhis account with or without security. As compared to cash credit, overdraft is advantageous to theborrower, since the borrower has to pay interest only on the actual amount withdrawn by him. BILLSDISCOUNTED AND PURCHASED: The commercial banks advance to the borrower by discountinghis bill. The account of the customer is credited with the net amount after deducting the amount ofdiscount. The banker may discount the bill with or without security from the debtor. PUBLICDEPOSITS In the recent years, business firms are raising short-term finance from their members,directors and the general public. This is a suitable method of raising short-term finance. It is a cheapersource of short-term finance as compared to bank credit. A company cannot accept deposits for aperiod less than 6 months and more than 36 months. Raising of finance through public deposits does notrequire any security. BUSINESS FINANCE COMPANIES Business finance companies are establishedprimarily for providing short-term and medium-term loans to business firms. As these firms have limitedfinancial resources, they provide only short-term and medium-term finance, such business firms raisethe financial resources mostly from their owners ad their relatives or friends. Lending by these businessfinance companies is generally secured against accounts receivable, stock and other assets. Thesecompanies may specialise their lending for special purpose such as financing of consumer durables,transport finance etc.18. ADVANCE FINANCIAL MANAGEMENT 2013-14 ACCRUAL ACCOUNTS These accounts arespontaneous and self-generating such as wages and taxes. In case of this source, the amounts becomedue but are not paid immediately. There is a time lag between provision of payment of expenses andactual payment which makes the finance available. INDIGENOUS BANKERS These are privateindividuals business is to provide finance to small and local business units. They are engaged inproviding short-term and medium-term finance to business units. These bankers charge very high rateof interest and therefore, they should be approached only as a last resort. COMMERCIAL PAPER It isa short term issue of promissory note issued by a company in a private sector or public sector at a sucha interest on face value as may be decided by the issuing company. It is negotiable by endorsement anddelivery.

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19. ADVANCE FINANCIAL MANAGEMENT 2013-14 Mahanagar Telephone Nigam Limited(MTNL) Mahanagar Telephone Nigam Limited (MTNL) was set up in 1st April of the year 1986 by theGovernment of India to upgrade the quality of telecom services, expand the telecom network, introducenew services and to raise revenue for telecom development needs of India's key metros, Delhi (thepolitical capital) and Mumbai (the business capital of India). The company has also been in theforefront of technology induction by converting 100% of its telephone exchange network into the state-of-the-art digital mode. MTNL as a company, over last nineteen years, grew rapidly by modernizing thenetwork, incorporating the State-of-the-art technologies and a customer friendly approach. TheCompany providing various types of telecommunication services including Telephone, telex, wireless,data communication, telemetric and other like forms of communication (Internet). First digitalexchange world technology brought to India by the company during the year 1986. In the year of 1987,Large Scale came to existence, introduction of push button telephone made dialing easier. Phone plusservices was offered by the company in the year 1988, it gives multiplied benefits to telephone users.During the year 1992, the company introduced Voice Mail Service. MTNL had introduced theIntegrated Services Digital Network (ISDN) services in the period of 1996. In the year 1997, theWireless in Local loop was introduced. In addition to phone plus facilities like dynamic locking, callwaiting/call transfer, hot lines etc were extended to the customers. Apart from this IVRS (InteractiveVoice Response System) like local assistance changed number information, and fault booking systemensuring round the clock service, a CD-ROM version of the telephone directory and an on-linedirectory enquiry through PC was introduced during the year 1997. To facilitate the clientele, MTNLlaunched the country's first toll-free service in Delhi in the period of 1998. The Company made tied

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up with Billjunction.com in the year of 2001 to provide online bill presenting and payment facility to itscustomers. The Company launched pre-paid GSM Mobile services under the brand name Trumpduring the year 2002, and in the same year MTNL's Email on PSTN lines were introduced under thebrand name mtnl mail. MTNL had set up a new software venture called ComSoft for developingcommunications software in the year 2002, as a part of its strategy to offer value-addedcommunications software in e-commerce,20. ADVANCE FINANCIAL MANAGEMENT 2013-14 e-governance and intelligent networking. The Company brought in to market, the CDMA 1x 2000 Technology under the brand name Garuda 1- xin the year of 2003. During the same period MTNL introduced pilot project of ADSL based Broadbandservices and also launched the Virtual Phone services. Mahanagar Telephone Mauritius Ltd. baggedsecond operator license in Mauritius. The company has joined the hands with Nokia, Samsung for WLLhandsets in the year 2003. MTNL has set up its 100% subsidiary as Mahanagar Telephone MauritiusLimited. (MTML) in Mauritius, for providing basic, mobile and international long distance services as2nd operator in Mauritius. Public sector telecom service provider MTNL on June 18th of the year2008 received the much- awaited International Long Distance (ILD) Licence from the Department ofTelecom (DOT), a development that could signal further lowering of ISD rates as the PSU is gearing upto carrying its own traffic in the near future. To remain market leader in providing world class Telecomand IT related services at affordable prices, the company partaking its all efforts in the same businessarea and MTNL wants to become a global player, also find a place in the Fortune 500' companies.

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21. ADVANCE FINANCIAL MANAGEMENT 2013-1421. 22. ADVANCE FINANCIAL MANAGEMENT 2013-1422. 23. ADVANCE FINANCIAL MANAGEMENT 2013-14 RELIANCE COMMUNICATIONS RelianceCommunications Limited is the flagship Company of Reliance Anil Dhirubhai Ambani Group, India'sthird largest business house. The company is India's largest private sector information andcommunications company, with over 100 million subscribers. They have established a pan-India,high-capacity, integrated (wireless and wire line), convergent (voice, data and video) digital network, tooffer services spanning the entire info comm. value chain. The company shares are listed on theBombay Stock Exchange Ltd and the National Stock Exchange Ltd. The company offers the full valuechain of wireless (CDMA and GSM), wire line, national long distance, international, voice, data, video,Direct-To-Home (DTH) and internet based communications services under various business unitsorganized into three strategic customer-facing business segments; Wireless, Global and Broadband.These strategic business units are supported by passive infrastructure connected to nationwidebackbone of Optic Fiber Network fully integrated network operation system and by the largest retaildistribution and customer services facilities. The company also owns through their subsidiaries, a globalsubmarine cable network infrastructure and offers managed services, managed Ethernet and applicationdelivery services. The company is India's first telecom service provider offering nationwide CDMA andGSM mobile services with digital voice clarity. Their mobile portal, R World, offers the widest range ofmobile content spanning e-commerce, m-commerce entertainment, music, news, astrology, cricket,bollywood, maps, search, one-click set-up, access to email and social networking. The companyoffers the most comprehensive portfolio of enterprise voice, data, video, internet and IT infrastructureservices catering to large, medium and small enterprises for their communications, networking and ITinfrastructure needs. Their product portfolio includes national and international private leasedcircuits, broadband internet access, audio solutions including Centrex, toll free services, voice VPN,video conferencing , MPLS-VPN, remote access VPN, Global MPLS VPN managed internet datacentre (IDC) services to name a few. The company operates nationwide Direct-to-Home satellite

23.

24. ADVANCE FINANCIAL MANAGEMENT 2013-14 TV services under its wholly ownedsubsidiary, Reliance Big TV Limited (Big TV). They formed an alliance with Poly com Inc., theglobal leader in tele -presence, video and voice solutions, to introduce world's first wireless,high-resolution video and CD-quality audio, conferencing service along with simple-to-use contentsharing capabilities - at a bandwidth speed of 256 kbps at any place. They own and operate the world'slargest next generation IP enabled connectivity infrastructure, comprising over 2,77,000 kilometers of

24.


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fibre optic cable systems in India, USA, Europe, Middle East and the Asia Pacific region. Companyprofile Reliance Communications Limited is the flagship Company of Reliance Group, one of theleading business houses in India. Reliance Communications is Indias foremost and truly integratedtelecommunications service provider. The Company, with a customer base of 161 million as on March31, 2012 including over 2.5 million individual overseas retail customers, ranks among the Top 4Telecom companies in the world by number of customers in a single country. Reliance Communicationscorporate clientele includes over 35,000 Indian and multinational corporations including small andmedium enterprises and over 800 global, regional and domestic carriers. Reliance Communications hasestablished a pan-India, next generation, integrated (wireless and wire line), convergent (voice, dataand video) digital network that is capable of supporting best-of-class services spanning the entirecommunications value chain, covering over 24,000 towns and 600,000 villages. Mission: Excellence inCommunication Arena To attain global best practices and become a world-class communicationservice provider guided by its purpose to move towards greater degree of sophistication and maturity.

To work with vigor, dedication and innovation to achieve excellence in service, quality, reliability,safety and customer care as the ultimate goal. To earn the trust and confidence of all stakeholders,exceeding their expectations and make the Company a respected household name. To consistentlyachieve high growth with the highest levels of productivity. To be a technology driven, efficient andfinancially sound organization. To contribute towards community development and nation building.

To be a responsible corporate citizen nurturing human values and concern for society, theenvironment and above all, the people.25. ADVANCE FINANCIAL MANAGEMENT 2013-14 To promote a work culture that fostersindividual growth, team spirit and creativity to overcome challenges and attain goals. To encourageideas, talent and value systems. To uphold the guiding principles of trust, integrity and transparencyin all aspects of interactions and dealings. Reliance Global.com retail expansion The global calling cardmarket is experiencing extremely high competition. We have been able to maintain our margins despitethe introduction of aggressive tariffs by other operators both in the US and UK markets. We havefocused on delivering more value to our existing base of over 2.5 million Reliance Global Callcustomers through event-based campaigns and Digital affiliate campaigns. We are operational in USA,UK, Canada, Australia, New Zeland, Singapore, Hong Kong, Spain, Austria, Belgium, France, Ireland,the Netherlands and India taking the total number to 14 countries, where Reliance Global Call is nowpresent. Telecom Infrastructure a. Indian telecom sector has witnessed an exponential growth in the lastfew years. The demand for telecom infrastructure in India is driven by the subscriber growth in themobile Companies and focus on expansion of rural market. b. Indias tower sector is expected tocontinue to grow in terms of both capacity and tenancies in next few years. c. With the completion ofnetwork footprint expansion, the focus will be on ensuring delivery of the best QoS to customers andalso building up network capacity as traffic grows. d. Telecom Industry structure is impacted due tocancellation of 122 licenses by the Honble Supreme Court. Clarity on continuation of the said licenseswill emerge in due course after Government concludes the spectrum auctions and other matters relatedto such licenses. Global Our global business participates in diverse industry segments, viz. (i) Globalsubmarine capacity sales; (ii) Gateways facility for international traffics; (iii) National long distance forvoice and data; (iv) International voice transit; (v) International retail voice; (vi) Enterpriseconnectivity and managed services business.

25.

26. ADVANCE FINANCIAL MANAGEMENT 2013-14 Reliance Communications Ltd wasincorporated on July 15, 2004 as a private limited company with the name of Reliance InfrastructureDevelopers Pvt Ltd. In July 25, 2005, the company was converted into public limited company and thename was changed to Reliance Infrastructure Developers Ltd. In August 3, 2005, they furtherchanged their name to Reliance Communication Ventures Ltd. In August 11, 2005, the equity shares ofthe company were acquired by Reliance Industries Ltd and thus the company became the whollyowned subsidiary of Reliance Industries Ltd . As per the scheme of arrangement, all the properties,investments, assets and liabilities related to Telecommunication Undertaking of Reliance Industries Ltdwas transferred and vested in the company on a going concern basis with effect from December 21,

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2005. Reliance Communications Maharashtra Pvt Ltd became the wholly owned subsidiary of thecompany through Reliance Telecom Ltd (RTL) during the year and merged into RTL, with effect fromMay 25, 2011.27. ADVANCE FINANCIAL MANAGEMENT 2013-1427. 28. ADVANCE FINANCIAL MANAGEMENT 2013-1428. 29. ADVANCE FINANCIAL MANAGEMENT 2013-14 COMPARISION (Amount in Crore)Particular MTNL RELIANCE COMM. Shareholder Fund 26,907.14 86,005.00 Long Term Fund81,139.68 27,873.00 Short Term Fund 6,230.68 12,935.00 Equity and Liabilities 2,536.70 45,197.00 InAbove table it can be clearly seen comparative analysis on Source of Finance of two companies MTNLand Reliance Communication. This shows that In Shareholder Fund Reliance communication havingRs. 86005.00 which is higher as compare to MTNL where shareholder fund is Rs.26907.14. In LongTerm Fund Reliance communication having Rs. 27873.00 which is less as compare to MTNL whereLong Term fund is Rs.81139.68 .Its means long term borrowed fund is more used in MTNL firm. InShort Term Fund Reliance communication having Rs. 12935.00 which is more as compare to MTNLwhere Short Term fund is Rs.6230.68 .Its means Short term borrowed fund is more used in RelianceCommunication firm. In equity and liabilities Reliance communication having Rs. 45197.00 which ishigher as compare to MTNL where shareholder fund is Rs.2536.70

29.

30. ADVANCE FINANCIAL MANAGEMENT 2013-14 CONCLUSION In assessing the significanceof various companies financial data there are Various sources of financing available. Not everybusiness can use all of the available financing choices. Choosing the right financing source is based onthese vital points; business condition and the interest rate or the other cost of the finance. Some sourcesof finance are more flexible than the others, according to the business situation, while refunding risksshould also be considered. There are many difficulties involved in raising funds to finance businessactivities by developing partnerships that lead to a variety of key investment opportunities for itsclients. In a world where the external environment is constantly changing, it help us by providing themwith stability and certainty.

30.

31. ADVANCE FINANCIAL MANAGEMENT 2013-14 BIBLIOGRAPHY Advance financialmanagement book Thanks to MRS. MONALI RAY for help and cooperation for completing thisproject Other site which help us to find matter on related topic are: http://wiki.answers.com/Q/How_do_you_write_conclusion_in_business_project _on_source_of_finance_for_class_11?#slide=1http://www.slideshare.net/pvmoney/sources-offinance

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