FINANCIAL MANAGEMENT

PROJECT ON BHARTI AIRTEL

SUBMITTED BY:-
Ashish Sharma
Roll no. 10
FI-1
 BHARTI AIRTEL
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti
Group, has a diverse business portfolio and has created global brands in the
telecommunication sector. Bharti has recently forayed into retail business as Bharti Retail
Pvt. Ltd. under a MoU with Wal-Mart for the cash & carry business. It has successfully
launched an international venture with EL Rothschild Group to export fresh agri products
exclusively to markets in Europe and USA and has launched Bharti AXA Life Insurance
Company Ltd under a joint venture with AXA, world leader in financial protection and
wealth management. Bharti Airtel is one of India's leading private sector providers of
telecommunications services based on an aggregate of 61,914,666 customers as on
February 29, 2008, consisting of 59,670,174 GSM mobile and 2,244,492 broadband &
telephone customers. The businesses at Bharti Airtel have been structured into three
individual strategic business units (SBU’s) - mobile services, telemedia services (ATS) &
enterprise services. The mobile services group provides GSM mobile services across
India in 23 telecom circles, while the ATS business group provides broadband &
telephone services in 94 cities. The enterprise services group has two sub-units - carriers
(long distance services) and services to corporates. All these services are provided under
the Airtel brand.

Airtel comes to you from Bharti Airtel Limited, India’s largest integrated and the first
private telecom services provider with a footprint in all the 23 telecom circles. Bharti
Airtel since its inception has been at the forefront of technology and has steered the
course of the telecom sector in the country with its world class products and services. The
businesses at Bharti Airtel have been structured into three individual strategic business
units (SBU’s) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The
mobile business provides mobile & fixed wireless services using GSM technology across
23 telecom circles while the Airtel Telemedia Services business offers broadband &
telephone services in 94 cities. The Enterprise services provide end-to-end telecom
solutions to corporate customers and national & international long distance services to
carriers.
All these services are provided under the Airtel brand. Bharti Enterprises is one of India’s
leading business groups with interests in telecom, agri business, insurance and retail.
Bharti Airtel, India’s leading integrated telecom company, has been at the forefront of the
telecom revolution and has transformed the telecom sector with its world-class services
built on leading edge technologies. Bharti has been a pioneering force in the telecom
sector and today enjoys a strong nationwide presence.

Bharti has grown successfully in partnership with various leading companies of the world
- Singapore Telecom, Vodafone, Warburg Pincus, and British Telecom, to name a few.

Bharti has recently forayed into the retail sector with its subsidiary Bharti Retail. It has
also entered into a joint venture with Wal-Mart for setting up the supply chain, logistics
and cash and carry to support the burgeoning retail market in India.

Investor Relations

Creating value for our customers, employees, investors, partners, vendors and the society
at large lies at the root of our fundamental business strategy. Our core principles of trust
and transparency have come a long way in helping us develop and nurture long-term
relationships with our key stakeholders.
Shares

The equity shares of Bharti Airtel are currently listed on National Stock Exchange of
India Limited (NSE) and The Stock Exchange, Mumbai, (BSE). Bharti Airtel offered
185,336,700 equity shares in the initial public offering (IPO) and raised Rs 8,340.15
million through this process. The shares were over subscribed 2.56 times. With this IPO,
Bharti Airtel established certain important landmarks in the history of the Indian capital
market. Together with being the first 100% book building process that this country has
seen, the listing was completed within a record time of ten working days. of the close of
the issue. Moreover the process of allotment and issue of shares was also completed
within one day of the last day of pay-in. The book running lead managers for the IPO
were JM Morgan Stanley and DSP Merrill Lynch and the registrars to the issue was
Karvy Consultants Limited. The equity shares of Bharti Airtel are currently listed
on National Stock Exchange of India Limited (NSE) and the Stock Exchange, Mumbai
(BSE).
Partners

The company has a strategic alliance with SingTel. The investment made by SingTel is
one of the largest investments made in the world outside Singapore, in the company.

The company’s mobile network equipment partners include Ericsson and Nokia. In the
case of the broadband and telephone services and enterprise services (carriers),
equipment suppliers include Siemens, Nortel, Corning, among others. The Company also
has an information technology alliance with IBM for its group-wide information
technology requirements and with Nortel for call center technology requirements. The
call center operations for the mobile services have been outsourced to IBM Daksh,
Hinduja TMT, Teletech & Mphasis.

Operational Network:

Provides GSM mobile services in all the 23 telecom circles in India, and was the first
private operator to have an all India presence.
Provides telemedia services (fixed line) in 94 cities in India.

Vision & promise:

By 2010 Airtel will be the most admired brand in India:

• Loved by more customers
• Targeted by top talent
• Benchmarked by more businesses

“We at Airtel always think in fresh and innovative ways about the needs of our customers
and how we want them to feel. We deliver what we promise and go out of our way to
delight the customer with a little bit more”.

\
Highlights:

• Bharti Airtel to Observe Silent period from March 31, 2008.

• Sunil Bharti Mittal Conferred JRD Tata Corporate Leadership Award .
• Manoj Kohli Inducted Into The GSM Association Board .
• Sunil Bharti Mittal Awarded Global Telecom Sector’s Highest Honour
• Bharti Airtel crosses the 60 million customer mark
• Leading Private Equity firm Kohlberg Kravis Roberts & Co. (KKR) to Invest
USD 250 million in Bharti Infratel

Company’s management and company’s share holding pattern:

Chairman Sunil Bharti Mittal

Managing Director
Company Secretary Vijaya Sampath
Auditor S R Batliboi & Associates
Qutab Ambience,
H-5/12 Mehrauli Road,
Registered Office New Delhi, 110030, New Delhi
Telephone 91-011-41666001-7
Fax 91-011-41666011-12
E-mail ir@bharti.com
Website http://www.airtel.in
Face Value (Rs) 10
BSE Code 532454
BSE Group A
NSE Code BHARTIARTL
Bloomberg BHARTI IN
Reuters BRTI.BO
ISIN Demat INE397D01016
Market Lot 1
Listing Mumbai,NSE
Financial Year End 03
Book Closure Month Jul
AGM Month Jul
Karvy Computershare Pvt Ltd,
Karvy House 46, Road No 4 Street
No1, Banjara Hills, Hyderabad -
500034.
91-40-23312454/23320
Registrar's Name & Address 91-040-23311968
Shareholding Pattern

Shares [%]
Foreign 611,423,266.00 32.25
Institutions 72,504,488.00 3.83
Govt Holding 0 0
Non Promoter Corp.
Hold. 31,600,390.00 1.67
1,155,645,678.0
Promoters 0 60.96
Public & Others 24,569,775.00 1.29
1,895,743,597.0
Totals 0 100
 Ratio analysis:

1 Net profit margin ratio:

=Net profit*100/Net sales

Year 05 06 07
Net profit 1210.67 2012.08 4033.23
Net sales 8142.44 11259.12 17906.54
Net margin 14.86% 17.87% 22.52%

Comment: The Net profit Margin increased significantly. The high net profit margin
implies, higher return to share holders, in the form of dividend and stock price
appreciation.

2 Gross-profit Margin ratio:

=Gross profit*100/Net sales

Year 05 06 07
Gross profit 4080.55 7972.49 12970.02
Net sales 8142.44 11259.12 17906.54
Gross margin 50.11% 70.81% 72.43%

Comment: The Gross profit margin has been increasing steadily, since 2005. The
reason for it can be high sales price but cost of goods sold remaining constant. The high
Gross profit margin shows that the company is doing well.
3 Capital turn-over ratio:

=Net sales/Average capital employed

Capital employed=share holders fund+ long term liability-misc. expenses

Year 05 06 07
Net sales 8142.44 11253.12 173906.54
Average capital 4633.87 6735.77 6943.16
employed
CTR 1.76 1.67 2.58

Comment: The capital turnover ration of Bharti Airtel Ltd. has increased over a period
of three years.

4 Debtor turn-over ratio:

=Net sales/Average debtors

Year 05 06 07
Net sales 8142.44 11253.12 17906.54
Average debtor 715.74 895.96 1247.33
DTR 11.38 12.56 14.35

Comment: The debtor turn-over ratio of Bharti-Airtel an upward trend.

Average collection period=365/DTR.

ACP : 32.07 29.06 25.44

There the average collection period is decreasing. There is a sharp decline in this ratio.
This shows that the firm have shortened the credit-period of debtors. It also shows, that
the collection team is performing well, as a result of which ,the average collection period
has come down.
5 Creditors Turn-over ratio:

=Annual Net credit purchases OR cost of purchases / Average Creditor &Bills payable

Cost of purchases=Total direct expenses+{closing stock-opening stock}

Year 05 06 07
Direct expenses 3728 5241.17 7905.25
+ Stock 11.57 -13.84 30.07
Cost of purchases 3739.59 5227.33 7935.32
Avg. creditors & 4994.29 4796.29 5310.81
Bills payable
CTR 0.75 1.09 1.49

Comment: An increase in the creditors turn-over ratio reveals, that there is decrease in
availing of credit facilities from the creditors.

7 Inventory/Stock Turn-over ratio:

=sales/closing inventory

Year 05 06 07
Sales 8142.44 11259 17905.8
Closing-inventory 31.58 17.74 47.81
STR 254.87 634.67 374.52
DIH 1.43 0.58 0.97

Days of inventory holding= 365 / inventory turn-over

Comment: The Stock Turn-over ratio of Airtel, shows a mixed trend,it has a high stock
Turn-over ratio, which is considered good higher ratio ,may also indicate low investment
in inventories.

8 ROE:

= {PAT-Preference dividend} *100 / share holders equity or net worth

Year 05 06 07
PAT 1210.67 2012.08 4033.23
Preference dividend 0 0 0
Share holder equity 4533.60 7333.43 11413.26
ROE 26.704 27.44 35.34

Comment: It reveals that there is a little improvement in Return on Equity in 06 over

05, but drastic improvement in 07 over 06.
9 ROI:

a. RONW (Return on net worth)

= {PAT-Preference dividend}/{share holders fund+ reserves & surplus- misc. exp. not
Not written off}

Year 05 06 07
Share-holders fund 4533.60 7333.43 11413.26
Preference dividend 0 0 0
Misc. exp. Not 58.34 7.94 7.66
written off
PAT 1210.67 2012.08 4033.23
RONW 27.05 27.47 35.35

EPS
=PAT-Preference dividend/weighted Avg. no of Equity shares outstanding

Year 05 06 07
PAT 1210.67 2012.08 4033.23
Preference dividend 0 0 0
W.A.N.O.E.S.O 185.609 189.388 189.593
EPS 6.52 10.62 21.27

CEPS

= {PAT-Preference dividend+ non cash charges}/ {weighted Avg. no of

Equity shares outstanding}

Year 05 06 07
PAT 1210.67 2012.08 4033.23
Preference dividend 0 0 0
Non-cash charges 1019.36 1547.02 2468.47
W.A.N.O.E.S.O 185.609 189.388 189.593
CEPS 12.01 18.79 34.293

Comment [ROI]: Quite high ROI performance significantly better than 05 & 06 in 07