A PROJECT REPORT ON

ANALYTICAL STUDY OF FINANCIAL STATEMENT OF

RELIANCE JIO & BHARTI AIRTAL (3 YEARS).
A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce

By
Ms. JULI BRAHMDEV TRIPATHI
Under the Guidance of
PROF.APEKSHA PATIL
St.John Collage Humanities & Sciences

VEVOOR MANOR ROAD ,PALGHAR (E)410404, DIST PALGHAR

2020-2021

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 A PROJECT REPORT ON

ANALYTICAL STUDY OF FINANCIAL STATEMENT OF

RELIANCE JIO & BHARTI AIRTAL (3 YEARS).

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce

By
MS.JULI BRAHMDEV TRIPATHI
Under the Guidance of
PROF.APEKSHA PATIL
ST JOHN COLLEGE OF HUMAITIES&SCIENCES

VEVOOR MANOR ROAD ,PALGHAR(E)401404, DIST PALGHAR

2020-2021

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 DECLARATION

I, the undersigned MS.JULI TRIPATHI hereby, declare that the work

embodied in this project work titled “ANALYTICAL STUDY OF
FINANCIAL STATEMENT OF RELIANCE JIO & BHARTI
AIRTAL(3 YEARS)” forms my own contribution to the research
work carried out under the guidance of PROF.APEKSHA PATIL
is a result of my own research work and has not been previously
submitted to any other University for any other Degree/ Diploma to
this or any other University.
Wherever reference has been made to previous works of others, it has
been clearly indicated as such and included in the bibliography.
I, hereby further declare that all information of this document has
been obtained and presented in accordance with academic rules and
ethical conduct.

MS.JULI TRIPATHI

Certified by
PROF. APEKSHA PATIL

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 Certificate
This is to certify that MS.JULI TRIPATHI has worked and duly
completed her Project Work for the Degree of Bachelor in
Commerce(Accounting & Finance) under the Faculty of Commerce in
the subject of Research Methodology and her project is entitled
“ANALYTICAL STUDY OF FINANCIAL STATEMENT OF
RELIANCE JIO & BHARTI AIRTAL(3 YEARS)” under my
supervision.
I further certify that my entire work has been done by the learner
under my guidance and that no part of it has been submitted
previously for any Degree or Diploma of any University.
It is her own work and facts reported by her personal findings and
investigations.

PROF. APEKSHA PATIL

Date of submission:

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 ACKNOWLEDGEMENT
To list who all have helped me is difficult because they are so numerous and
depth is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me
chance to do this project.
I would like to thank my Principal, for providing the necessary
facilities required for completion of this project.
I take this opportunity to thank our Co-ordinator, for his moral support and
guidance.
I would also like to express my sincere gratitude towards my project guide,
Prof.Apeksha patil whose guidance and care made the project successful.
I would like to thank my college Librarian, for having provided reference
books and magazines related to my project.
Lastly, I would like to thank each and every person who directly and indirectly
helped me in the completion of the project especially my parents and peers who
supported me throughout my project.

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 INDEX
CHAPTER PARTICULARS PAGE
NO. NO.
1 INTRODUCTION 8-27
1.1 Analytical study 8
1.2 Financial statement 8-9
1.3 Telecommunication 9-18
1.4 Jio 18-23
1.5 Airtel 23-27
2 REVIEW OF LITERATURE 28-35
3 RESEARCH METHODOLOGY 36-37
3.1 Objective 36
3.2 Data sources and samples 36
3.3 Limitation of the study 36-37
3.4 Scope of the reports 37
4 DATA ANALYSIS 38-70
4.1 Financial statement 38
4.2 Balance sheet/Position statement 38-43
4.2.1 Asset 38-41
4.2.2 Liabilities 41-43
4.3 Income statement/Profit or Loss statement 43-46
4.4 Financial Statement Analysis & Interpretation of Jio 47-59
4.5 Financial Statement Analysis & Interpretation of Airtel 60-67
4.6 Comparison of Ratio 67-70
5 FINDINGS 71
6 SUGGESTIONS 72
7 CONCLUSIONS 73
8 REFERENCE 74-75

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 INDEX
TABLE PARTICULARS PAGE
NO. NO.
4.4.1 Current Ratio 52
4.4.2 Quick Ratio 52-53
4.4.3 Working Capital 53
4.4.4 Debt Ratio 54
4.4.5 Current Worth to Net Worth Ratio 54
4.4.6 Net Profit Margin 56
4.4.7 Operating Profit Margin 56-57
4.4.8 Return on Assets 57
4.4.9 Return on Net Worth 58
4.4.10 Asset Turnover Ratio 59
4.5.1 Current Ratio 63-64
4.5.2 Quick Ratio 64
4.5.3 Working Capital 64
4.5.4 Debt Ratio 65
4.5.5 Current Worth to Net Worth Ratio 65-66
4.5.6 Return on Assets 66
4.5.7 Return on Net Worth 66-67
4.6.1 Current Ratio 67
4.6.2 Quick Ratio 68
4.6.3 Working Capital 68
4.6.4 Debt Ratio 69
4.6.5 Current worth to Net Worth Ratio 69
4.6.6 Return on Assets 70
4.6.7 Return on Net Worth 70

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ANALYTICAL STUDY OF FINANCIAL STATEMENT OF RELIANCE
JIO & BHARTI AIRTAL (3 YEARS)

CHAPTER 1: INTRODUCTION

1.1 Analyticalstudy:

A comparative study designed to reach causal inferences about hypothesised relationships be

tween risk factors and outcome. Analytical studies identify and quantify associations, test hyp
otheses, identify causes and determine whether an association exists between variables, such
as between an exposure and a disease. Statistical procedures are used to determine if a relatio-
nship is likely to have occurred by chance alone. Analytical studies usually compare two or m
ore groups or sets of data.

Examples:
Case-control study, cohort study, randomised-controlled clinical trial, lab study.

1.2 Financialstatement:

Definition:
Financialstatementsarereportspreparedbyacompany’smanagementtopresentthefinancial
performance and position at a point in time. A general-purpose set of financial statements
usuallyincludesabalancesheet,incomestatements,statementofowner’sequity,andstatement of
cash flows. These statements are prepared to give users outside of the company, like investors
and creditors, more information about the company’s financial positions.Publicly

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traded companies are also required to present these statements along with others to regulator
agencies in a timely manner.

What Does Financial Statements Mean?

Financial statements are the main source of financial information for most decision makers.
That is why financial accounting and reporting places such a high emphasis on the accuracy,
reliability, and relevance of the information on these financial statements.
Example:
The balance sheet a summary of the company position on one day at a certain point in time.
Thebalancesheetliststheassets,liabilities,andowners’equityononespecificdate.Inasense, the
balance sheet is a picture of the company on that date. Investors and creditors can use the
balance sheet to analyze how companies are funding capital assets and operations as well as
current investorinformation.
The income statement shows the revenue and expenses of the company over a period of time.
Most companies issue annual income statement, but quarterly and semi-annual income
statements are also common. Users can analyze the income statement to see if companies are
operating efficiently and producing enough profit to fund their current operations and growth.
The statement of owner’s capital summarizes all owner investments and withdrawals fromthe
company during a period. It also reports the current income or loss recorded in retained
earnings.

1.3 Telecommunication:

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The history of telecommunication began with the use of smoke signals and drums in Africa,
the Americas and parts of Asia. In the 1790s, the first fixed semaphore systems emerged in
Europe. However it was not until the 1830s that electrical telecommunication systems started
toappear.Thisarticledetailsthehistoryoftelecommunicationandtheindividualswhohelped
maketelecommunicationsystemswhattheyaretoday.Thehistoryoftelecommunicationisan
important part of the larger history ofcommunication.

Early Era:

Early telecommunications included smoke signals and drums. Talking drums were used by
natives in Africa, New Guinea and South America, and smoke signals in North America and
China.Contrarytowhatonemightthink,thesesystemswereoftenusedtodomorethanmerely
announce the presence of acamp.

In 1792, a French engineer, Claude Chappe built the first visual telegraphy (or semaphore)
systembetweenLilleandParis.ThiswasfollowedbyalinefromStrasbourgtoParis.In1794, a
Swedish engineer, Abraham Edelcrantz built a quite different system from Stockholm to
Drottningholm. As opposed to Chappe's system which involved pulleys rotating beams of
wood, Edelcrantz's system relied only upon shutters and was therefore faster. However
semaphore as a communication system suffered from the need for skilled operators and
expensive towers often at intervals of only ten to thirty kilometers (six to nineteen miles). As
a result, the last commercial line was abandoned in1880.

Telegraph System:

TelecommunicationsbeganwiththesuccessfulinnovationofSamuelMorse'stelegraphsystem
in1844.Forthreeyears,theU.S.PostOfficeranthepioneeringWashingtontoBaltimoreline.

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By that time other private telegraph companies had developed (the first connected New York
and Philadelphia) and were rapidly growing. Telegraph expansion paralleled and aided the
growth of the America’s network of railroads. The latter provided a prepared right of way,
while the former offered vital communication links for the often singletrack networks that
moved people and goods. The first coast-to-coast telegraph line was opened in 1862 (seven
years before rail links extended that far) and immediately made money, demonstrating the
value of telecommunications over great distances.

Early Corporate Alliances:

Western Union, the first telecommunications monopoly, was formed as a regional alliance of
several smaller firms in 1856 and rapidly expanded, often following railway lines. Just a year
later the six largest telegraph companies developed a cartel, dividing up the country and
business among themselves. The Civil War demonstrated the value of telegraph links (the
Union was far better equipped than the Confederacy) and drove up rates and company profits.
Western Union took over some 15,000 miles of government-built lines at the end of the war
and became by far the largest company in the field.

International Telegraph Systems:

Telegraph systems initially served only land routes, as it was presumed impossible to laylines
underwater. After experiments running insulated telegraph lines under lakes and acrossrivers,
in 1858 an American-led consortium laid the first cable connecting Britain and the United
States, which eventually failed in few months. After a failed attempt to lay a cable in 1865,
successcamein1866;soonotherswereadded.ThePacificwasnotcrosseduntil1902because of the
great distances involved. Availability of global telegraphy rapidly changed the face of
business and government affairs. The ability to "instantly" communicate had great positive
impact on business and other human aspects of dailylife.

Birth of Telephone:

Successoftelegraphindustryandrisingelectricalmanufacturingbusinessesformedthecontext
forthetelephone.Theelectrictelephonewasinventedinthe1870s,basedonearlierworkwith
harmonic (multi-signal) telegraphs. The first commercial telephone services were set up in
1878 and 1879 on both sides of the Atlantic in the cities of New Haven and London. Thefirst

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telephone switchboard was placed in service in New Haven, Connecticut, in early 1878, and
demonstrated its greater efficiency over individual lines between each customer.

The first use of telephone numbers and directories of telephone users appeared about thesame
time. Telephone exchanges (using many switchboards) appeared about two decadeslater.

TelephonewaslargelythecreationofAlexanderGrahamBell,whoreceivedhisfirstpatentin March
1876. Early development of the telephone was fraught with technical and financial
problems.AlexanderGrahamBellheldthemasterpatentforthetelephonethatwasneededfor such
services in both countries. The technology grew quickly from this point, with inter-city lines
being built and telephone exchanges in every major city of the United States by the mid-
1880s.

Restricted by crude technology to providing local service (initial iron wires rarely extended
100 miles), telephone service developed slowly before the Bell patents expired in 1893.Initial
Bell business strategy focused on licensing use of its patents and selling equipment to
companies building systems in cities and towns, largely to serve business and thewealthy.

Mechanically Automated Telephone:

A Kansas City undertaker, concerned that telephone operators were sending business to his
competitors, developed the first mechanically automated telephone switch in 1891. The first
automatedswitchesbegantoappeararoundtheturnofthecenturyinmajorcities—andwould
beusedinsmallercommunitiesfordecades.Coppertelephonelineswereplacedinusebetween

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Boston and New York, extending telephone service to 300 miles. Around 1893, the country
leading the world in telephones per 100 persons (teledensity) was Sweden with 0.55 in the
wholecountrybut4inStockholm(10,000outofatotalof27,658subscribers).Thiscompares with 0.4
in USA for that year. Telephone service in Sweden developed through a variety of
institutionalforms:theInternationalBellTelephoneCompany(aU.S.multinational),townand
village co-operatives, the General Telephone Company of Stockholm (a Swedish private
company), and the Swedish Telegraph Department (part of the

Swedishgovernment).SinceStockholmconsistsofislands,telephoneserviceofferedrelatively
large advantages, but had to use submarine cables extensively. Competition between Bell
Telephone and General Telephone, and later between General Telephone and the Swedish
Telegraph Dept., wasintense.

In1893,theU.S.wasconsiderablybehindSweden,NewZealand,Switzerland,andNorwayin
teledensity.TheU.S.rosetoworldleadershipinteledensitywiththeriseofmanyindependent
telephone companies after the Bell patents expired in 1893 and1894.

20th Century Developments:

By1904therewereoverthreemillionphonesintheUS,stillconnectedbymanualswitchboard
exchanges. By 1914, the U.S. was the world leader in teledensity and had more than twicethe

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teledensityofSweden,NewZealand,Switzerland,andNorway.Therelativegoodperformance of
the U.S. occurred despite competing telephone networks notinterconnecting.

Forthenexthalfcentury,thenetworkbehindthetelephonegrewprogressivelylargerandmuch more
efficient, and after the rotary dial was added the instrument itself changed little until touch-
tone signaling started replacing the rotary dial in the1960s.

Transatlantic Voice Communications:

Despite all these developments, transatlantic voice communication remained impossible for
customers until January 7, 1927, when a connection was established using radio. However no
cable connection existed until TAT-1 was inaugurated on September 25, 1956 providing 36
telephone circuits. Transcontinental telephone service became possible only around 1915 by
use of amplifiers based on Lee De Forest's "Audion" vacuum tube.

Coaxial Cable and Microwave Links:

Improvedtechnologywouldbegintochangethefaceoftelecommunicationsafter1945.Paced by
wartime needs and spending, Bell Labs and other researchers produced coaxial cable and
microwave links that were first used commercially in the years after the war. No longer was it
necessary to build an expensive telecommunication network using copper wires. Microwave
links required the use of many antenna towers— and a license to use the high-frequency
spectrum—but this was less expensive than a traditional wired network. Coaxial cableoffered
the broadband capacity needed to transmit thousands of telephone calls or full-motionvideo.

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Satellite Communications:

Development of satellite communication was first hinted at in a 1945 article by Arthur C.

Clarke in which he postulated a geostationary orbit 22,300 miles high that would keep a
satellite above the same part of Earth. Pushed by the cold war missile race, the world's first
artificialsatellitecamejust12yearslaterastheSovietUnionlaunchedSputnikintoalowEarth orbit in
October 1957. Early military satellite communications followed the same low-orbit path until
the first commercial geostationary satellites appeared in the1970s.

Mobile Phones:

The history of mobile phones can be traced back to two-way radios permanently installed in
vehicles such as taxicabs, police cruisers, railroad trains, and the like. Later versions such as
the so-called transportable or "bag phones" were equipped with a cigarette lighter plug so that
theycouldalsobecarried,andthuscouldbeusedaseithermobiletwo-wayradiosorasportable phones
by being patched into the telephonenetwork.

Bell Labs developed the notion of "cellular" systems allowing for frequency reuse (and thus
far greater capacity) and developed it through the 1970s. On April 3, 1973 Motorola manager
Martin Cooper placed a cellular phone call (in front of reporters) to Dr. Joel S. Engel, head of
research at AT&T's Bell Labs. This began the era of the handheld cellular mobile phone.
Meanwhilethe1956inaugurationoftheTAT-1cableandlaterinternationaldirectdialingwere
importantstepsinknittingtogetherthevariouscontinentaltelephonenetworksintoaglobal

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network. The FCC approved operation of an analog cellular mobile telephone system in1982,
sparking a new growthsector.

Cable Television Companies:

Cable television companies began to use their fast-developing cable networks, with ducting
under the streets of the United Kingdom, in the late 1980s, to provide telephony services in
associationwithmajortelephonecompanies.OneoftheearlycableoperatorsintheUK,Cable
London, connected its first cable telephone customer in about1990.

Digital Technology:

Digital technology first appeared in American telecommunications with AT&T's introduction

ofitsT1CarrierSystemin1962.AT1lineofferedfarmorecapacityandacleaner(lessnoisy) signal.
Soon digital telephone switches appeared, allowing for more flexible network design and
operation. But the most sweeping change came with the installation of fiber-optic cables to
carry voice, data, and video signals. The huge carrying capacity of fiber—constantly rose
with further technical improvements— finally placed telecommunication networks wellahead
of projected growth (and planted the seeds for disaster in the early2000s).

The Internet:

On September 11, 1940, George Stibitz was able to transmit problems using teletype to his
ComplexNumberCalculatorinNewYorkandreceivethecomputedresultsbackatDartmouth
CollegeinNewHampshire.Thisconfigurationofacentralizedcomputerormainframewith

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remote dumb terminals remained popular throughout the 1950s. However it was not until the
1960sthatresearchersstartedtoinvestigatepacketswitching—atechnologythatwouldallow
chunks of data to be sent to different computers without first passing through a centralized
mainframe. A four-node network emerged on December 5, 1969 between the University of
California, Los Angeles, the Stanford Research Institute, the University of Utah and the
University of California, Santa Barbara. This network would become ARPANET, which by
1981wouldconsistof213nodes.InJune1973,thefirstnon-USnodewasaddedtothenetwork
belonging to Norway's NORSAR project. This was shortly followed by a node inLondon.

Twopopularlinkprotocolsforlocalareanetworks(LANs)alsoappearedinthe1970s.Internet
accessbecamewidespreadlateinthecentury,usingtheoldtelephoneandtelevisionnetworks.
TheInternet,basedongovernmentnetworksdatingbackto1969,becameawidelyusedpublic
network in 1995. Development of the World Wide Web and the graphic user interfacemaking
it possible opened up a wealth of expanding information resources and growing public
acceptance.Bytheearly 2000s,morethanhalfofAmericanhouseholdswereconnectedtothe
Internet, a slowly growing number of them linked by broadband connections. Projections of
Internet growth sparked bullish plans for the underlying telecommunication services and
manufacturingthatmadetheWebpossible.Manyofthoseprojectionswerewideofthereality.

Internet Protocol (IP) Telephony:

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Internet Protocol (IP) telephony (also known as 'Internet telephony') is a service based on the
Voice over IP communication protocol (VoIP), a disruptive technology that is rapidly gaining
ground against traditional telephone network technologies. In Japan and South Korea up to
10% of subscribers switched to this type of telephone service as of January 2005.

IP telephony uses a broadband Internet connection to transmit conversations as data packets.

InadditiontoreplacingthetraditionalPlainOldTelephoneServicePOTSsystem,IPtelephony is
also competing with mobile phone networks by offering free or lower cost connections via
WiFi hotspots. VoIP is also used on private wireless networks which may or may not have a
connection to the outside telephonenetwork.

1.4 JIO:

Introduction:

RelianceJioInfocommLimited,popularlyknownasJio,isanIndianmobilenetworkoperator.
Owned by Reliance Industries and headquartered in Mumbai, Maharashtra, it operates a
national Long-Term Evolution (LTE) network with coverage across all 22 telecom circles. Jio
does not offer 2G or 3G service, and instead uses Voiceover LTE (VoLTE) to provide voice
service on its network. The launch of Reliance Jio has caused a revolution in the telecom
industry. Now, Jio claims to be the world’s largest data network, based on mobile data
consumption. According to the Telecom Regulatory Authority of India (TRAI), as of
February2019, there are 1.17 billion mobile-phone subscriptions in India, an increase of
roughly 140 million subscriptions since August 2016—the month before Jio launched. The
growth is especially pronounced in rural areas, where there are now over 500million wireless
subscriptions, roughly 80 million more than there were before the company formally beganits
operations. As more Indians gain phone subscriptions, more are coming online. A 2017 report
bytheInternetandMobileAssociationofIndiaestimatedthatnearly50millionIndiansgained
internet access between December 2016 and December 2017, allowing many of them to surf
the web, send WhatsApp messages and stream videos for the firsttime

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Jio logo:

The hidden symbolism in Jio logo

ThelogoofRelianceJio hasahiddensymbolisminit.WhenyoufliptheJiologoaround,itis read ‘oil’.

The Jio Logo seems to represent the past and future of Reliance. Oil is what had propelled
Reliance to become India’s biggest company in the 20th century. When flipped over into the
21st, it’s probably going to beJio.

History:

Jio soft launched on 27 December 2015 (the eve of what would have been the 83rdbirthday of
Reliance Industries founder Dhiru bhai Ambani), with a beta for partners and employees, and
became publicly available on 5 September 2016. As of 31January 2019, it is the third largest
mobile network operator in India and the ninth largest mobile network operator in the world
withover289.44millionsubscribers.ThecompanywasregisteredinAmbawadi,Ahmedabad,
Gujarat on 15 February2007 as Reliance Jio Infocomm Limited. In June 2010, Reliance
Industries (RIL)bought a 95% stake in Infotel Broadband Services Limited (IBSL) for Rs.
4,800crore (US$670 million). Although unlisted, IBSL was the only company that won
broadbandspectruminall22circlesinIndiainthe4Gauctionthattookplaceearlierthatyear. Later
continuing as RIL’s telecom subsidiary, Infotel Broadband Services Limited was renamed as
Reliance Jio Infocomm Limited (RJIL) in January2013.In June 2015, Jio announced that it
would start its operations all over the country by the end of 2015. However,
fourmonthslaterinOctober,thecompany’sspokesmensentoutapressreleasestatingthatthe launch
was postponed to the first quarter of the financial year 2016–2017.Later, in July, a PIL
filedintheSupremeCourtbyanNGOcalledtheCentreforPublicInterestLitigation,through
Prashant Bhushan, challenged the grant of apan-India licence to Jio by the Government of
India. The PIL also alleged that Jio was allowed to provide voice telephony along with its4G

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data service, by paying an additional fee of just Rs 165.8 crore (US $23 million) which was
arbitrary and unreasonable, and contributed to a loss of Rs 2,284.2 crore (US $320 million) to
the exchequer. The Indian Department of Telecommunications (DoT), however, refuted all of
CAG’sclaims.Initsstatement,DoTexplainedthattherulesfor3GandBWAspectrumdidn’t restrict
BWA winners from providing voice telephony. As a result, the PIL was revoked, and the
accusations weredismissed.

Beta launch:

The 4G services were launched internally to Jio’s partners, its staff and their families on 27
December 2015. Bollywood actor Shah Rukh Khan, who is also the brand ambassador of Jio,
kick-started the launch event which took place in Reliance Corporate Park in Navi Mumbai,
alongwithcelebritieslikemusicianARRahman,actorsRanbirKapoorandJavedJaffrey,and
filmmaker Rajkumar Hirani. The closed event was witnessed by more than 35000 RIL
employees some of whom were virtually connected from around 1000 locations including
Dallas in theUS.

Bollywood actor Shah Rukh Khan promoting Jio

Commercial launch:

Thecompanycommerciallylauncheditsserviceson5September2016.Withinthefirstmonth, Jio
announced that it had acquired 16 million subscribers. This is the fastest ramp-up by any
mobile network operator anywhere in the world. Jio crossed50 million subscriber mark in 83
dayssinceitslaunch,subsequentlycrossing100millionsubscriberson22February2017.By

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October 2017 it had about 130 million subscribers. The idea of Jio was first seeded by my
daughter, Isha, in 2011. She was a student at Yale (in the US) and was home for holidays.She
wanted to submit some coursework and she said, ’Dad, the internet in our house sucks’,”
Mukesh Ambani called lately in press. On 5 July 2018, fixed line broadband service named
Gigafiber, was launched by the Reliance Industries Limited’s chairman Mukesh Ambani,
during the company’s Annual GeneralMeeting.

Products and services:

Mobile broadband:

The company launched its 4G broadband services throughout India in September 2016. It was
slated to release in December 2015 after some reports said that the company was waiting to
receive final permits from the government. Jio offers fourth-generation (4G) data and voice
services, along with peripheral services like instant messaging and streaming movies and
music.

JioFiber:

In August 2018, Jio began to test a new triple play fiber to the home service known tenatively
as Jio GigaFiber, including broadband internet with speeds ranging from 100 Mbps to 1Gbps,
as well as television and landline telephoneservices.

InAugust2019,itwasannouncedthattheservicewouldofficiallylaunchon5September2019 as
JioFiber, in honour of the company's third anniversary. Jio also announced plans to offer
streaming of films still in theatres ("First Day First Show") to eligible JioFibersubscribers.

Thecompanyhasanetworkofmorethan250,000kmoffiberopticcablesinthecountry,over which it
will be partnering with local cable operators to get broader connectivity for its
broadbandservices.

Devices:

Jio has also marketed co-branded mobile phones.

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LYF smartphones:

In June 2015, Jio entered into an agreement with domestic handset maker Intex to supply 4G
handsets capable of voice over LTE (VoLTE). However, in October 2015, Jio announced that
it would be launching its own mobile handset brand named LYF.

On 25 January 2016, the company launched its LYF smartphone series starting with Water 1,
through its chain of electronic retail outlets, Reliance Retail. Three more handset models have
been released so far, namely Water 2, Earth 1, and Flame 1.

JioPhone:

JioPhone is a line of feature phones marketed by Jio. The first model, released in August2017
(withpublicpre-ordersbeginning24August2017),waspositionedasan"affordable"LTE-

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compatible feature phone. It runs the Kai OS platform (derived from the defunct Firefox OS),
and includes a 2.4-inch display, a dual-core processor, 4 GB of internal storage, near-field
communication support, a suite of Jio-branded apps (including the voice assistant HelloJio),
and a Jio-branded application store. It also supports a "TV cable" accessory for output to an
external display.

InJuly2018,thecompanyunveiledtheJioPhone2,anupdatedmodelinakeyboardbar form factor

with a QWERTY keyboard and horizontal display. Jio also announced that Facebook,
WhatsApp, and YouTube apps would become available for the twophones.

Jionet WiFi:

Prior to its pan-India launch of 4G data and telephony services, the firm has started providing
free Wi-Fi hotspot services in cities throughout India including Surat, Ahmedabad in Gujarat,
and Visakhapatnam in Andhra Pradesh, Indore, Jabalpur, Dewas and Ujjain in Madhya
Pradesh, select locations of Mumbai in Maharashtra, Kolkata in West Bengal, Lucknow in
Uttar Pradesh, Bhubaneswar in Odisha, Mussoorie in Uttarakhand, Collectorate's Office in
Meerut, and at MG Road in Vijayawada among others.

In March 2016, Jio started providing free Wi-Fi internet to spectators at six cricket stadiums
hosting the 2016 ICC World Twenty20 matches.

1.5 AIRTEL:

Introduction:

BharatiAirtelLimited(commonlyknownasAirtel)roseasasuccessfulprivateIndiantelecom
companyandbecamethefifthlargesttelecomoperatorintheworldwithover243.336million
customers across 23 countries, as of March 2012. Airtel is the largest cellular service provider
inIndia,withover183.3millionsubscribersattheendofMay2012.Airtelisthethirdlargest in-
countrymobileoperatorbysubscriberbase,behindChinaMobileandChinaUnicom.Airtel is also a
provider of broadband and subscription television services. Airtel is the firstIndian

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telecom service provider to achieve Cisco Gold Certification. It also acts as a carrier for
national and international long distance communication services. The company has a
submarine cable landing station at Chennai, which connects the submarine cable connecting
Chennai and Singapore. Some of the other services provided by Airtel are: mobile services
including 3G and 4G, Airtel Money (M-Commerce Platform in collaboration with Infosys,
Telemedia (services in 89 indian cities) both broadband and IPTV services, Digital Television
(DTH Airtel), mobile data services (Blackberry services – push technology, easy mail etc.),
Android Based Tablet.

The telecom industry in India has witnessed unprecedented growth since 1991. After
liberalization and modernization of Indian economy, the telecom sector has witnessed
dramatic changes not only with an ever-increasing subscriber base, but also in its ability to
provide stateof-the-art telecom services to a large section of the population at competitive
rates. It has been one of the drivers in reuniting the rural and the urban population of the
country and the mobile phone has indeed become a common man’s device in India.

The progressive policies in this sector and the basic modernization took place with the
creation of Bharat Sancher Nigam Limited (BSNL) and later, the Mahanagar Telephone
Nigam Limited (MTNL) which provided an impetus to the tremendous growth of telephony
and mobile services in India. Encouraged by the successes of these bodies , the telecom
sector was flooded by a host of private players who wanted to compete and provide the best
of the world class services to the customers in India. It is a huge revenue earner for the
country.

Government Globalization Drivers:

ThegovernmenthastakenmanyproactiveinitiativestofacilitatetherapidgrowthoftheIndian
telecomindustry.

 100% foreign direct investment (FDI) is permitted through the automatic route intelecom
equipment manufacturing. FDI ceiling in telecom services has been raised to 74% from
49%.
 IntroductionofaUASL(‘Unified’AccessServiceLicensing)regimefortelecomservices on a
pan-India basis implying morecompetition.

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 Introduction of Mobile Number Portability (MNP). Implementing MNP has adverse
effects on the operators as it entails huge infrastructural costs, increased competition, and
Cost Recovery and Bill Reconciliationprocess.
 The government is implementing a program of connecting villages under the Bharat
Nirmanprogramme.
 DepartmentofTelecom(DoT)allowedforeigntelecomcompaniestobidfor3Gspectrum
without partnering with Indiancompanies.
 The Ministry of Commerce estimated that off-shoring operations to India can provide a
cost benefit of up to 40-60%, over developed countries. The country has also emerged as
a major R&D hub with more than hundred Fortune 500 companies based inIndia.

Company History of Airtel:

In 1984 Sunil Mittal started assembling push-button phones in India, which he earlier used to
importfromaTaiwancompany,Kingtel,replacingtheoldfashioned,bulkyrotaryphonesthat were
in use in the country then. Bharti Telecom Limited (BTL) was incorporated and entered
intoatechnicaltieupwithSiemensAGofGermanyformanufactureofelectronicpushbutton phones.
By the early 1990s, Bharti was making fax machines, cordless phones and other telecom gear.
He named his first push-button phones as'Mitbrau'.

In 1992, he successfully bid for one of the four mobile phone network licences auctioned in
India. One of the conditions for the Delhi cellular license was that the bidder have some
experience as a telecom operator. So, Mittal clinched a deal with the French telecom group
Vivendi. He was one of the first Indian entrepreneurs to identify the mobile telecom business
as a major growth area. His plans were finally approved by the Government in 1994 and he
launched services in Delhi in 1995, when Bharti Cellular Limited (BCL) was formed to offer
cellular services under the brand name Airtel. Within a few years Bharti became the first
telecom company to cross the 2 million mobile subscriber mark. Bharti also brought down the
STD/ISD cellular rates in India under brand name 'Indiaone'.

In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations
to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell
Communications,inChennai.In2001,thecompanyacquiredcontrolofSpiceCellinCalcutta. Bharti
Enterprises went public in 2002, and the company was listed on Bombay Stock Exchange and
National Stock Exchange of India. In 2003, the cellular phone operations were re-branded
under the single Airtel brand. In 2004, Bharti acquired control of Hexacomand

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entered Rajasthan. In 2005 Bharti extended its network to Andaman and Nicobar. This
expansion allowed it to offer voice services all across India.

Airtellaunched"HelloTunes",acallerringbacktoneservice(CRBT),inJuly2004becoming to the
first operator in India to do so. The Airtel theme song, composed by A.R. Rahman, was the
most popular tune in thatyear.

In May 2008, it emerged that Ai rtel was exploring the possibility of buying the MTN Group,
a South Africa-based telecommunications company with coverage in 21 countries in Africa
andtheMiddleEast.TheFinancialTimesreportedthatBhartiwasconsideringofferingUS$45
billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by an
Indian firm However, both sides emphasise the tentative nature of the talks, while The
Economist magazine noted, "If anything, Bharti would be marrying up," as MTN has more
subscribers, higher revenues and broader geographic coverage. However, the talks fdl apart as
MTN Group tried to reverse the negotiations by making Bharti almost a subsidiary of the new
company. In May 2009, Bharti Airtel again confirmed that it was in talks with MTN and the
companies agreed to discuss the potential transaction exclusively by 31 July 2009. Talks
eventuallyendedwithoutagreement,somesourcesstatingthatthiswasduetooppositionfrom the
South Africangovernment.

In 2009, Bharti negotiated for its strategic partner Alcatel-Lucent to manage the network
infrastructure for the fixed line business. Later, Bharti A irtrl awarded the three-year contract
to Alcatel-Lucent for setting up an Internet Protocol access network across the country. This
would help consumers access internet at faster speed and high quality internet browsing on
mobile handsets.

In2009,AirtellauncheditsfirstinternationalmobilenetworkinSriLank'.InJune2010,Bharti
airtelacquiredtheAfricanbusinessoflainTelecomfor$10.7billionmakingitthelargestever
acquisition by an Indian telecom firm. In 2012, Bharti tied up with Wal-Mart, the US retail
giant, to start a number of retail stores across India. In 2014, Bharti planned to acquire Loop
Mobile for C7 billion (US$110 million), but the deal was called offlater.

BhartiAirtelLimited("Airtel"),theworld'sthirdlargestmobileoperatorwithoperationsin20
countries across Asia and Africa, said that its Treasury division has been adjudged as a highly
commendedwinneroftheTopTreasuryTeam(Asia)AwardsattheAdamSmithAsiaAwards 2015.

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Organization Structure:

Bharti Airtel announced a new organization structure for its operations in India and South
Asia. The new structure has been aimed at driving greater business and functional synergies,
providing a common interface to customers, and creating a de-layered and more agile
organization.Inaddition,thenewstructurewouldprovidemoremeaningful,empoweredroles and
enhance employee engagement. The transformed organisation structure had two distinct
Customer Business Units (CBU) with clear focus on B2C (Business to Customer) and B2B
(Business to Business) segments. Bharti Airtel’s B2C business unit would serve the retail
consumers, homes and small offices, by combining the erstwhile business units - Mobile,
Telemedia, Digital TV, and other emerging businesses (like M-commerce, M-health, M-
advertising etc). The B2C organization consisted of Consumer Business and Market
Operations. Market Operations group would lead the ‘go-to-market’ strategy. This vertical
wouldtakeproductsandservicestocustomersinSouthAsiawithspeedandefficiency.Market
Operations would complement the Consumer Business by building a robust ‘go-tomarket’
ecosystem and leverage Bharti Airtel’s vast distribution reach. Market Operations in India &
South Asia was be divided in three regions (each headed by an Operations Director): North,
East & Bangladesh; South & Sri Lanka; and West. The B2B business unit would continue its
focus on serving large corporate and carriers through Bharti Airtel’s wide portfolio of
telecommunicationsolutions.

JIO VS AIRTEL:

In this project I am going to compare the financial statement of both the companies viz.
ReliancejioandBhartiairtelaftertheintroductionofJio.HowtheintroductionofJioaffected the
business ofAirtel.

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CHAPTER 2: REVIEW OF LITERATURE

1. J.P Singh and S. Panday (2008) in their research concluded that, for the successful
working of any business or an organization, fixed assets and current assets play a vital
role and that the management of Working capital is essential as it has a direct impact
on profitability and liquidity of the organization. They studied the working capital
component and found a significant impact of working capital management on
profitability for Hindalco Industries Limited.

2. B.N. Chakraborty and G. Bandopadhyay (2007) In their research studied strategic

workingcapitalmanagement,anditsroleincorporatestrategydevelopment,ultimately
ensuring the survival of the firm. They also highlight how strategic current asset
decisionsandstrategiccurrentliabilitiesdecisionshadmulti-dimensionalimpactonthe
performance of anorganization.

3. A. Raheman and M. Nasr (2007) In their research study made a shot to point out the
effect of various variables of Wages working capital management including average
collectionperiod,inventoryturnoverindays,averagepaymentperiod,cashconversion
cycle,andcurrentratioontheweboperatingprofitabilityofPakistanifirms.Theychose a
sample of 94 Pakistani firms listed on Karachi securities market for a period of six
yearsfrom1999-2004andlocatedapowerfulnegativerelationshipbetweenvariables of
working capital management and profitability of the organization. They found that
because the cash conversion cycle increases, it results in decreasing profitability of the
organizationandmanagerscancreateapositivevaluefortheshareholdersbyreducing the
cash conversion cycle to a most possible minimumlevel.

4. L. Lazaridis and D. Tryfonidis (2006) They conducted a cross sectional study by

employing a sample of 131 firms listed on the Athens securities market for theamount
period of 2001 - 2004 and located statistically significant relationship between
profitability, measured through gross operating profit, and therefore the cash
conversion cycle and its components (accounts receivables, accounts payables, and
inventory).Supportedbytheresultsanalysisofannualdatabyusingcorrelationand

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 regressiontests,theysuggestthatmanagerscancreateprofitsforhisorherorganization
bycorrectlyhandlingthecashconversioncycleandbykeepingeachcomponentofthe
conversion cycle (accounts receivables, accounts payables, and stocks) at an optimal
level.

5. AbuzarM.A.Eljelly(2004)Inhisresearchstudyempiricallyexaminedthelinkbetween
profitability and liquidity, as measured by current ratio and cash gap (cash conversion
cycle)onasampleof929jointstockcompaniesinSaudiArabia.Usingcorrelationand
multivariate analysis, Eljelly found significant negative relationship between the
organizations profitability and its liquidity level, as measured by current ratio. This
relationship is more pronounced for organizations with high level of current ratios and
longcashconversioncycles.Attheindustrylevel,however,hediscoveredthatthecash
conversion cycle or the cash gap is of more importance as a measure of liquidity than
current ratio that affects profitability. The organization size variable was also found to
have significant effect on profitability at the industrylevel.

6. Rao (1985), in his research study discussed regarding 'impact of debt-equity ratio on
profitability —an exploratory study of banking industry. In his study he observed that
iftheearningabilityi.e.,profitability,hasanyimpactonthedebt-equityratioinbanks. this
study was supported by the impact of profitability on the debt-equity ratio and has
revealed a negative association i.e., high debt equity ratio means low profitability
thanks to large interest payments, whereas low debt equity ratio caused high
profitability due to low interest payments. He concluded that the operating efficiency
of the firm and reasonable rate of return on owner's capital ultimately rely upon the
profits earned by it and thus, profits are necessary to run the firm in an exceedingly
healthy atmosphere of present day cut throat competition and also defend it from
businessrivalry.

7. Yashmin khatun in the year 2018 conducted an exploration study on financial

performance analysis of Bharti airtel limited. In his study he found that analysis and
interpretationoffinancialstatementisaveryimportanttoolinassessingcompany’s

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 performance. It revels the strengths and weakness of an organization. It helps the
investors to determine within which organization the risk is less or within which one
theymustinvestsothatmaximumbenefitcanbeearned.Hisprojectmainlyfocuseson
different kinds of financial statements. Balance sheet and Profit and Loss statement of
airtel have been studied. From ratio analysis (2015-2017) he found that the liquidity
position of the corporate is sweet on the opposite hand current ratio, net profit margin,
operating profit margin, return on assets, return on investment and return on networth,
earning per share, price earning ratio is unacceptable. The ration which were found to
be desirable were leverage ratio like debt equity ratio, total capitalization ratio, time
interestearnedratio,andquickratio.Asfromtheanalysistheycomeupwithfollowing
suggestion that the company should increase its current assets as compared to current
liabilities. It is better for them to increase their liquidity ratio by using long term
financing rather than cash or hand to acquire inventory or selling unnecessary assets.
The firm can improve their profit by improving customers demand and minimizing
costswillhelpinincreasingtheprofitabilityratio.Thecompanyshouldmakesolvency
ratiomoresecureeitherbypayingoffdebtorincreasingtheamountofearningretained in the
business until after balance sheet date. The company should maintain its debt
position.Salesshouldbeincreasedwithouttheadditionsoffixedassets.Inhisstudyhe
concluded that the financial performance of the company is very bad. The company is
not maintaining good financial performance and further it can improve if the company
concentrates on its operating, administrative and selling expenses and by reducing
expenses.

8. Deoskar Aruna (2009), in her study "A study of mobile services from customer's
perspective", shows the spectacular revolution in information technology happened in
India which boosted telecom sector. The main objective of this study is to test the
impact of customer service on customer satisfaction and to associate various factors
like data coverage, billing facilities with it. The findings gathered by testing datausing
SPSS states that all the sub parameters like billing service and data coverage includes
a major impact on the customer satisfaction influencing customer perception. (Aruna,
2009).

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9. D. Chakraborty (2013), in his research investigated the customer satisfaction &
expectation towards a telecommunication company in West Midnapore which is a
district of West Bengal. A descriptive study was conducted to attain the objectives. In
total 250 respondents filled a wellstructured questionnaire having an inventory of
statements regarding products, services & facilities provided by the service provider.
Resultsrevealthatthesizewhichinfluencethesatisfactionlevelofcustomer'sare:Core
services (like good coverage, good connectivity and network quality) and call rate.
Further results show that there’s a major relation between the brands name and the
preference of customers. Hence, it has been recommended that telecom companies
shouldspecialiseinconnectivity,callrate,coverageandnetworkquality.(Chakraborty,
2013).

10. Mr.RajeshKumarandMr.BijendraKumarPushkar(2019)conductedastudyon
“Comparative analysis of Reliance Jio with Airtel, Vodafone telecom service” in the
year 2019. In the study they examined the perception of the subscriber of Gorakhpur
with respect to different service provided by Reliance Jio, Airtel, and Vodafone. They
concluded that Indian mobile industry is one of the fastest growing industries in the
world.AlmosteverypersoninIndiaisusingmobilephones,thisisthemainreasonthat the
Indian market is the second largest market in the field of network providers in the
world. From their analysis they found that mostly the telecom user are youngster
Reliance Jio is most accepted service because of its cheapest tariff that is way better
than other telecom service providers imposed Rs. 35 tariff to get incoming calls bit no
such restriction imposed by Reliance Jio. Most of the user use Reliance Jio because of
their unlimited free voice calling, and internet speed which is better than Airtel,
Vodafone, and other networkproviders.

11. Myilswamy, Ratheesh Kumar (2013) find that the postpaid and prepaid customer
prefertouseAirtelmobileservicebecauseofthefeatures,Rent,Towercoverage,Talk time,
Advertisement and Corporate schemes. Finally the study suggests that by paying
special attention on these factors develop the business by satisfying theconsumers.

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12. Zafar(2013)examinestheimpactofthemobileserviceattributeslikecallrates,service
quality,serviceavailability;promotionandbrandimageofboththegender'spurchasing
decision. The result reveals that the male and female consumers have different
preference in making the purchase decision to the avail mobile service. The study also
discovers that the female consumers are tough to satisfy than the maleconsumers.

13. Chintan Shah (2012) in his study entitled "Consumer Preferences for Mobile Service
Provider" investigates the factor considered by the customers to shape their preference
for the mobile service provider. For the study 150 mobile users of Bardoli city are
surveyed.Theresearcherfindthattheservicequalityandbrandimage,servicecharges and
plan, and network quality plays a very important role in preferring mobile service
provider.

14. Jegan and Sudalaiyandi (2012) in their study on the consumer preference and their
satisfaction towards the mobile phone service providers find that the call tariffs,
network coverage and brand image encourage the consumer's preference and
satisfaction.

15. Raj Kumar Paulrajan and Harish Rajkumar (2011) in their study examine the
perceptionchoiceinselectingthecellularmobiletelecommunicationserviceproviders. The
result of the study indicates that in selecting the telecommunication service provider,
communication and price has a significant impact in choice of the consumer
preference nevertheless the product quality and availability has a significant impact in
selecting the mobile telecommunication service provider. Kim et.al (2004) states that
call quality, value- added services and customer support are the important factor to be
considered by the customers while choosing a serviceoperator.

16. Sethetal(2008)analyzedthatthereisrelativeimportanceofservicequalityattributes
andshowedthatresponsivenessisthemostimportancedimensionfollowedby

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 reliability, customer perceived network quality, assurance, convenience, empathy and
tangibles.

17. Shanthi (2005) throws light on the telecommunications market of India — post
privatization. In the scenario of falling prices, hyper-competition and increasing
attrition rates and the author says that the study aims to bridge the research gaps
identified asabove.

18. A study by Jeanette Carless on and Salvador Arias (2004) wireless substitution is
producing significant traffic migration from wire line to wireless and helping to fuel
fiercepricecompetition,resultinginmarginsqueezesforbothwirelinevoicetariffsin
organization for Economic Cooperation and Development Countries have fallen by an
average of three percent per year between 1999 and2003.

19. Maran et al. (2004) studied the consumer perceptions about fixed telephone lines in
Chennai. The objectives of the study was (1) to find the most influencing factor in
selection of service provider, and (2) to measure customer perception and satisfaction
asregardstheserviceprovided.Thestudyonasampleof550telephoneusersindicated
thatsomeproblemsexistthatdeservetheattentionofthecompany.Thecompanyneeds
tobridgethegapbetweentheservicespromisedandservicesoffered.Andtoconclude,
"Delivering service without measuring the impact on the customer is like driving a car
without awindshield".

20. Liu (2002) found that the choice of a cellular phone is characterized by two attitudes:
attitude towards the mobile phone brand on one hand and attitude towards the network
on theother.

21. Videsh Sanchar Nigam Limited (VSNL) 16th Annual Report (2002) India like
many other countries has adopted a gradual approach to telecom sector reformthrough
selectiveprivatizationandmanagedcompetitionindifferentsegmentsofthetelecom

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 sector. India introduced private competition in value-added services in 1992 followed
by opening up of cellular and basic services for local area to competition. Competition
wasalsointroducedinNationalLongDistance(NLD)andInternationalLongDistance (ILD)
at the start of the current decade.

22. Ruth M. Bolton and James H. Drew (1991), developed a model of how customers
with prior experiences and expectations assess service performance levels, overall
service quality, and service value. The model was applied to residential customers'
assessmentsoflocaltelephoneservice.Themodelwasestimatedwithatwo-stageleast
squares procedure through survey data. Results indicated that residential customers'
assessments of quality and value are primarily a function of disconfirmation arising
from discrepancies between anticipated and perceived performance levels. However,
perceived performance levels also were found to have an important direct effect on
quality and valueassessments.

23. Samuvel (2002) observed that most of the respondents consider size, quality, price,
instrument servicing are an important factors for selecting the handset while majority
of the respondents are satisfied over the payment system, quality of services, coverage
area and the process of attending the complaints regarding their mobile service
provider.

24. Nandhini (2001) examined that attitude of the respondents using cell phones was not
influenced by either education or occupation andincome.

25. Marketing Whitebook (2005) explains with support of detailed data that bigger
players are close to 20% of the market each. In CDMA market, it is Reliance Infocom
and Tata Teleservices are dominating the scene whereas 73 Airtel is lead in GSM
operators. Between 2003 and 2004, the total subscriber base of the private GSM
operatorsdoubled.Itrosefrom12.6millionsubscribersattheendofMarch2003to
26.1 million by the end of March 2004. And yet that 100% growth rate notwithstanding,

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 total industry revenue for 2003-04 was around Rs. 8308 crores. Compared to Rs. 6400
crores that industry grossed in 2002-2003, that is an increase of 30%.

26. According to a paper released by the Associated Chambers of commerce and

IndustryofIndia(2005),itisstatedthat30%ofthenewmobilesubscribersaddedby
theoperatorsworldwidewillcomefromIndiaby2009.10%ofthethirdgeneration(3G)
subscribers will be from India by 2011,Indian handset segment could be between US
$ 13 billion and US $ 15 billion by 2016.It offers a great opportunity for equipment
vendors to make India a manufacturing hub. Indian infrastructure capital expenditure
on cellular equipment will be between 10 to 20% of the investment that will be made
byinternationaloperatorsby2015.Theotherproposalsincludedsettingupofhardware
manufacturing cluster parks, conforming to global standards and fiscal incentives for
telecom manufacturing amongothers.

27. Kalpana and Chinnadurai (2006) found that advertisement play a dominant role in
influencing the customers but most of the customers are of opinion that promotional
strategies of cellular companies are more sale oriented rather than customeroriented.

28. Hagueetal(2007)suggestedthatprice,servicequality,productquality&availability, and

promotional offer play a main role during the time to choose telecommunication
serviceprovider.

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CHAPTER 3: RESEARCH METHDOLOGY

3.1 Objective

 To analyse the telecomsector.

 To analyse the performance of selected companies in telecomsector.
 To compare the performance of selectedcompanies.
 To assist the investors in making investment decision in telecomsector.

3.2 Data sources andsamples

 Type ofstudy:

The project will be exploratory in the initial stage and the knowledge thus gained will be used
for further descriptive research.

 Data:

This project is done using secondary data.

 Samplesize:

For achieving the objective, the study of two telecommunication companies have been taken
i.e. Reliance Jio and Bharti Airtel.

 SampleData:

Thestudyusedanalyticalresearchmethod.Thestudyisbasedonsecondarydataofthreeyears that is
from 2017 to 2019. The secondary data was obtained through websites and magazines. Two
companies are selected for the study, they are Reliance Jio and BhartiAirtel.

3.3 Limitation of thestudy

 Asthedataavailableto mehasbeentakenfromthesecondarysources.So,itisnot sure

that collected data are accurate andcomplete.
 All the comments made, conclusion reached and suggestions for possible
improvement provided are purely based on my level of understanding, knowledge
and my way of interpreting a particularstatement.
 Only two companies are selected for analysis because of timeconstraints.

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  Duetolackofexperienceandknowledgeoftelecommunicationindustryitcan’tbe said
that the projection has been made totally correct andaccurate.

3.4 Scope of thereports:

This report gives a brief idea about fundamental analysis and its process. The information
provided in this report is based on personal observation and own research. This report mainly
focuses on the process of fundamental analysis and analysis is made through reviewing the
financialstatementofthetelecomcompany.Italsogivesanideaoftheperformanceofoverall
telecommunication industry inIndia.

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CHAPTER 4: DATA ANALYSIS

4.1 Financialstatement:

Financial statements are reports prepared by a company’s management to present the

financial performance and position at a point in time. Financial Statements is a collection of
data organized according to logical and consistent accounting procedures. It purposes is to
convey an understanding of some financial aspect of a business firm. It may show position at
amomentintime,asinthecaseofabalancesheet,ormayrevealaseriesofactivitiesovera given
period of time, as in the case of an income statement. Thus, the term 'financial statements'
generally refers to the two statements : I) the position statement or balance
sheet;andii)theincomestatementortheprofitandlossaccount.Thesestatementsareused to
convey to management and other interested outsiders the profitability and financial
position of afirm.

4.2 Balance Sheet or the PositionStatement:

Balance Sheet is the financial statement of a company which includes assets, liabilities,equity
capital, total debt, etc. at a point in time. Balance sheet includes assets on one side, and
liabilities on the other. For the balance sheet ID reflect the true picture, both heads (liabilities
& assets) should tally (Assets = Liabilities + Equity). Balance sheet is more like a snapshot of
thefinancialpositionofacompanyataspecifiedtime,asusuallycalculatedaftereveryquarter, six
months or one year. Balance Sheet has two main heads assets andliabilities.

Let’s understand each one of them.

4.2.1 Asset:

An asset is something that an entity owns or controls in order to derive economic benefitfrom
its use. Assets must be classified in the balance sheet as current or non-current depending on
the duration over which the reporting entity expects to derive economic benefit from its use.
An asset which will deliver economic benefits to the entity over the long term is classified as
non-current whereas those asset that are expected to be realized within one year from the
reporting date are classified as current assets.

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Types of Assets:

There is two major type of assets:

• Tangibleassets

• Intangibleassets

Tangible Assets:

Tangible assets are those have a physical substance, such as equipment and real estate.

Intangible Assets:

Intangible assets lack physical substance and usually are very hard to evaluate. Assets which
do not possess any material value. hey

They include patents, copyright, franchises, goodwill, trademark, trade names, etc.

Types of Tangible Assets:

1. FixedAssets.

2. CurrentAssets.

1. FixedAssets

This group includes land, buildings, machinery, vehicles, furniture, toots, and certain wasting
resources e.g., timberland and minerals. It is also referred to as PPE (property, plant, and
equipment),thesearepurchasedforcontinuedandlong-termuseinearningprofitinabusiness.

2. CurrentAssets

Current assets are cash and other assets expected to be converted to cash, sold, or consumed
eitherinayearorintheoperatingcycle.Theseassetsarecontinuallyturnedoverinthecourse of a
business during normal business activity. There are 5 major items included into current assets:

 Cash and CashEquivalents:

It is the most liquid asset, which includes currency, deposit accounts, and negotiable
instruments (e.g., money orders, cheque, and bank drafts).

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  Short-term Investments:

It includes securities bought and held for sale in the near future to generate income on Short
term price differences (trading securities).

 Inventory:

The raw materials. work- in-process goods and completely finished goods that are considered
to be the portion of a business's assets this ready or will be ready for sale.

 Receivables:

It is usually reported as net of allowance for uncollectable accounts.

 Prepaid Expenses:

These are expenses pail in cash and recorded as assets before they are used or consumed (a
common example is insurance). The phrase net current assets (also called working capital)are
often used and refer to the total of current assets less the total of currentlabilities.

I. Gross Block:

Gross block is the sum total of all assets of the company valued at their cost of acquisition.
This is inclusive of the depreciation that is to be charged on each asset. Net block is the gross
block less accumulated depreciation on assets. Net block is actually what the asset are worth
to the company.

II. Capital Work in Progress:

Work that has not been completed but has already incurred a capital investment from the
company.Thisisusuallyrecordedasanassetonthebalancesheet.Workinprogressindicates any
good that is not considered to be a final product, but must still be accounted for because funds
have been invested toward itsproduction.

III. Investments:

 Shares and Securities, such as bonds, common stock, or long-termnotes

 AssociateCompanies
 Fixed deposits with banks/financecompanies
 Investments in special funds (e.g., sinking funds or pensionfunds).
 Investments in fixed assets not used in operations (e.g., land held forsale).

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  IV. Loans and Advancesinclude:
 House buildingadvance
 Car, scooter, computer etc.advance
 Multipurposeadvance
 Transfer travelling allowance advance
 Tour travelling allowanceadvance
 DRS payment.

V. Reserves:

 Subsidy Received from TheGovt.

 Development Rebate reserve
 Issue of Shares atPremium
 GeneralReserves

4.2.2 Liabilities:

A liability is an obligation that a business owes to someone and its settlement involves the
transfer of cash or other resources. Liabilities must be classified in the statement of financial
position as current or non-current depending on the duration over which the entity intends to
settletheliability.Aliabilitywhichwillbesettledoverthelongtermisclassifiedasnoncurrent
whereas those liabilities that are expected to be settled within one year from the reportingdate
are classified as currentliabilities.

Types ofLiabilities:

CurrentLiabilities:

Orient liabilities are short-term financial obligations that are paid off within one war or on
currentoperatingcycle.Theseliabilitiesarereasonablyexpectedtobeliquidatedwithinayear.
Itincludes:

 Accrued expenses as wages. taxes. and interest payments not setpaid

 Accountspayable
 Short-termnotes
 Cash dividendsand
 Revenues collected n advance of actual delivery of goods orservices.

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Long-Term Liabilities:

Liabilitiesthatarenotpaidoffwithinayear.orwithinabusiness'soperatingcycle.areknown as long-
term or non-current liabilities. Such liabilities often involve large sums of money
necessarytoundertakeopeningofabusiness.majorexpansionofabusiness.replaceassets,or make a
purchase of significant assets. These liabilities are reasonably expected not to be liquidated
within a year. Itincludes:

 Notes payable- debt issued to a singleinvestor

 Bonds payable - debt issued to general pubic or group ofinvestors
 Mortgagespayable
 Capital lease obligations - coarser to pay rent for the use of plant. property or
equipments
 deferred income taxes payableand
 Pensions and other post-retirementbenefits.

Contingent liabilities:

A third kind of liability accrued by companies is known as a contingent liability. The term
refers to instances in which a company reports that there is a possible liability for an event,
transaction,orincidentthathasalreadytakenplace;thecompany,however,doesnotyetknow
whether a financial drain on its resources wil result It also is often uncertain of the size of the
financial obligation or the exact time that the obligation might have to bepaid.

Secured Loans:

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as
collateral for the loan, which then becomes a secured debt owed to the creditor who gives the
loan. Unsecured Loans An unsecured loan is a loan that is not backed by collateral. It is also
known as signature loan and personal loan. Unsecured loans are based solely upon the
borrower'screditrating.Anunsecuredloanisconsideredmuchcheaperandcarrieslessriskto the
borrower. However, when an unsecured loan is granted, it does not necessarily have to be
based on a creditscore.

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Equity:

Equity is what the business owes to its owners. Equity is derived by deducting total liabilities
from the total assets. It therefore represents the residual interest in the business that belongsto
theowners.

Equity is usually presented in the statement of financial position under the following categories:

 Share capital represents the amount invested by the owners in theentity

 Retained Earnings comprises the total net profit or loss retained in the business after
distribution to the owners in the form ofdividends
 Revaluation Reserve contains the net surplus of any upward revaluation of property,
plant and equipment recognized directly inequity.

Purpose and Importance:

Statementoffinancialpositionhelpsusersoffinancialstatementstoassessthefinancialhealth of an
entity. When analyzed over several accounting periods, balance sheets may assist in
identifying underlying trends in the financial position of the entity. It is particularly helpful in
determining the state of the entity's liquidity risk, financial risk, credit risk and business risk.
When used in conjunction with other financial statements of the entity and the financial
statementsofitscompetitors,balancesheetmayhelptoidentifyrelationshipsandtrendswhich
areindicativeofpotentialproblemsorareasforfurtherimprovement.Analysisofthestatement of
financial position could therefore assist the users of financial statements to predict the amount,
timing and volatility of entity's futureearnings.

4.3 Income Statement or Profit or LossStatement:

The income statement is one of the three primary financial statements used to assess a
company's performance and financial position (the two others being the balance sheet and the
cash flow statement). The income statement summarizes the revenues and expenses generated
by the company over the entire reporting period.

The basic equation on which an income statement is based is:

Revenues - Expenses = Net Income

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Allcompaniesneedtogeneraterevenuetostayinbusiness.Revenuesareusedtopayexpenses,
interestpaymentsondebtandtaxesowedtothegovernment.Afterthecostsofdoingbusiness are paid,
the amount left over is called net income. Net income is theoretically available to
shareholders, though instead of paying out dividends, the firm's management often chooses to
retain earnings for future investment in the business.

Basis of Preparation:

Income statement is prepared on the accruals basis of accounting.

This means that income (including revenue) is recognized when it is earned rather than when
receipts are realized (although in many instances income may be earned and received in the
some accounting period).

Conversely, expenses are recognized in the income statement when they are incurred even if
they are paid for in the previous or subsequent accounting periods.

Income statement does not report transactions with the owners of an entity.

Hence, dividends paid to ordinary shareholders are not presented as an expense in the income
statement and proceeds from the issuance of shares is not recognized as an income.
Transactionsbetweentheentityanditsownersareaccountedforseparatelyinthestatementof
changes inequity.

Components:

Income statement comprises of the following main elements:

Revenues:

Revenue includes income earned from the principal activities of an entity. So for example, in
case of a manufacturer of electronic appliances, revenue will comprise of the sales from
electronic appliance business. Conversely, if the same manufacturer earns interest on its bank
account, it shall not be classified as revenue but as other income.

Cost of Sales:

Thecostofsalesrepresentscostofgoodssoldorservicesrenderedduringanaccountingperiod. Hence,
for a retailer, cost of sales will be the sum of inventory at the start of the period and purchases
during the period minus any closing inventory. In case of a manufacturer however,
costofsaleswillalsoincludeproductioncostsincurredinthemanufactureofgoodsduringa

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period such as the cost of direct labour, direct material consumption, depreciation of plantand
machinery and factory overheads,etc.

Other Income:

Other income consists of income earned from activities that are not related to the entity'smain
business. For example, other income of an entity that manufactures electronic appliances may
include:

 Gain on disposal of fixed assets

 Interest income on bankdeposits
 Exchange gain on translation of a foreign currency bankaccount

Distribution Cost:

Distributioncostincludesexpensesincurredindeliveringgoodsfromthebusinesspremisesto
customers.

Administrative Expenses:

Administrative expenses generally comprise of costs relating to the management and support
functions within an organization that are not directly involved in the production and supply of
goods and services offered by the entity.

Examples of administrative expenses include:

 Salary cost of executive management

 Legal and professionalcharges
 Depreciation of head officebuilding
 Rent expense of offices used for administration and managementpurposes
 Cost of functions / departments not directly involved in production such as finance
department, HR department and administrationdepartment

Other Expenses:

This is essentially a residual category in which any expenses that are not suitably classifiable
elsewhere are included.

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Finance charges:

Finance charges usually comprise of interest expense on loans and debentures. The effect of
present value adjustments of discounted provisions are also included in finance charges (e.g.
unwinding of discount on provision for decommissioning cost).

Income Tax:

Income tax expense recognized during a period is generally comprised of the following three
elements:

 Current period's estimated taxcharge

 Prior period taxadjustments
 Deferred tax expense

Purpose and Use:

Income Statement provides the basis for measuring performance of an entity over the course
of an accounting period.

Performance can be assessed from the income statement in terms of the following:

 Change in sales revenue over the period and in comparison to industrygrowth

 Change in gross profit margin, operating profit margin and net profit margin over the
period
 Increase or decrease i n net profit, operating profit and gross profit over theperiod
 Comparison of the entity's profitability with other organizations operating in similar
industries orsectors

Income statement also forms the basis of important financial evaluation of an entity when it is
analyzed in conjunction with information contained in other financial statements such as:

 Change in earnings per share over theperiod

 Analysis of working capital in comparison to similar income statement elements (e.g.
the ratio of receivables reported in the balance sheet to the credit sales reported in the
income statement, i.e. debtor turnoverratio)
 Analysis of interest cover and dividend coverratios.

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4.4 Financial Statement Analysis and Interpretation of Jio:

BalanceSheet:

(₹ in crore)

As at31st As at31st As at31st

Particulars March, 2019 March, 2018 March, 2017
ASSETS
NON-CURRENT ASSETS
Property, Plant and Equipment 191,879 145,486
Capital Work-in-Progress 194,895
92,581 128,283
Intangible Assets 105,155
9,085 9,092
Intangible Assets Under Development 8,293
Financial Assets 6,402 6,902 4,458

Investments 271,980 171,945 140,544

Loans 31,806 17,699 10,418
Other Non-Current Assets 4,287 3,522 2,184
Total Non-Current Assets 622,818 493,613 440,465
CURRENT ASSETS

Inventories
44,144 39,568 34,018

Financial Assets
59,556 53,277 51,906
Investments
12,110 10,460 5,472
Trade Receivables
Cash and Cash Equivalent 3,768 2,731 1,754
Loans 4,876 3,533 4,900
Other Financial Assets 17,274 3,856 3,372
Other Current Asset. 11,199 10,487 4,859
Total Current Assets 152,927 123,912 106,281
Total Assets
775,745 617,525 546,746
EQUITY AND LIABILITIES
EQUITY

Equity Share Capital 6,339 6,335 3,251

Other Equity 398,983 308,312 285,062
Total Equity 405,322 314,647 288,313

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 LIABILITIES
Non-Current Liabilities
Financial Liabilities
118,098 81,596
Borrowings
Provisions 2,483 2,205 78,723
Deferred -Tax Liabilities (Net) 47,317 27,926 2,118
Other Non-Current Liabilities 504 504 24,766
Total Non-Current Liabilities 168,402 112,231 105,607
CURRENT LIABILITIES
Financial Liabilities
39,097 15,239 22,580
Borrowings
Trade Payables Due to:
229 183
Micro and Small Enterprise
88,012 88,492 68,161
Other than Micro and Small Enterprise
Other Financial Liabilities _ 27,675 48,250 43,920
Other Current Liabilities 46,225 37,565 16,897
Provisions 783 918 1,268
Total Current Liabilities 202,021 190,647 152,826
Total Liabilities 370,423 302,878 258,433
Total Equity and Liabilities
775,745 617,525 546,746

This is the balance sheet of the Reliance Jio for the year 2016-2017, 2017-2018, and 2018-
2019.

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STATEMENT OF PROFIT AND LOSS:

The above image is the profit and loss statement of Reliance jio for the year 2017-2018 and
2018-2019.

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 (in crore)

The above image is the profit and loss statement for the year 2016-2017 after one year of
launch of Jio.

Ratio Analysis:

Financial ratios are useful indicators of a firm's performance and financial situation. Financial
ratioscanbeusedtoanalyzetrendsandtocomparethefirm'sfinancialstothoseofotherfirms. Ratio
analysis is the calculation and comparison of ratios which are derived from the information in
a company's financial statements. Financial ratios are usually expressed as a percent or as
times per period. Ratio analysis is a widely used tool of financial analysis. It is defined as the
systematic use of ratio to interpret the financial statements so that the strength and
weaknesses of a firm as well as its historical performance and current financial condition can
be determined. The term ratio refers in the numerical or quantitative relationshipbetween

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twovariables.Withthehelpofratioanalysisconclusioncanbedrawnregardingseveralaspects
suchasfinancialhealth,profitabilityandoperationalefficiencyoftheundertaking.Ratiopoints out
the operating efficiency of the firm i.e. whether the management has utilized the firm's assets
correctly, to increase the investor's wealth. It ensures a fair return to its owners and secures
optimum utilization of fires assets. Ratio analysis helps in inter-firm comparison by providing
necessary data. An inter firm cornparison indicates relative position. It provides the relevant
data for the comparison of the performance of different departments. If comparison shows a
variance, the possible reasons of variations may be identified and if results are
negative,theactionmaybeinitiatedimmediatelytobringtheminline.Yetanotherdimension of
usefulness or ratio analysis, relevant from the View point of management is that it throws
light on the degree efficiency in the various activity ratios measures this kind of operational
efficiency.

 LiquidityRatios
 LeverageRatios
 ProfitabilityRatio
 ActivityRatio
 MarketRatios

Liquidity Ratio:

Liquidity ratios measure a firm’s ability to meet its current obligations. These include:

Current Ratio =Current Assets/ Current Liabilities

This ratio indicates the extent to which current liabilities are covered by those assets expected
to be converted to cash in the near future. Current assets normally include cash, marketable
securities,accountsreceivables,andinventories.Currentliabilitiesconsistofaccountspayable,
short-termnotespayable,currentmaturitiesoflong-termdebt,accruedtaxes,andotheraccrued
expenses. Current assets are important to businesses because they are the assets that are used
to fund day-to-day operations and pay ongoing expenses. A relatively high current ratio is an
indication that firm is liquid and has ability to pay its current obligations in time as and when
they become due. On the other hand, a relatively low current ratio represents that the liquidity
position of the firm is not good and the firm shall not be able to pay its debt without facing
difficulties. As a convention the minimum of two or, one ratio is referred to as a bankers rule
of thumb.

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 Table No. 4.4.1

Current Ratio

Year 2017 2018 2019

Current Assets 1,06,281 1,23,912 1,52,927

Current Liabilities 152,826 190,647 202,021

Current Ratio 0.695 0.650 0.757

Interpretation:

The current ratio of Reliance Jio was 0.695 in 2017 and it decreased to 0.650 in 2018 and in
2019 it shows increase to 0.757. All those three year the current ratio of the company is
satisfactory because it is above the rule of thumb that is 0.73

Quick Ratio:

The quick ratio, also known as the acid-test ratio, is a liquidity ratio that further refines the
current ratio by measuring the level of the most liquid current assets available to covercurrent
liabilities. The quick ratio is more conservative than the current ratio because it excludes
inventoryandothercurrentassets,whichgenerallyaremoredifficulttoturnintocash.Ahigher quick
ratio means a more liquid currentposition.

The formula for calculating a company's quick ratio is:

Quick asset /Current liability

Table No. 4.4.2

Quick Ratio

Year 2017 2018 2019

Quick Assets 97,584 73,857 67,404

Current Liabilities 152,826 190,647 202,021

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 Quick Ratio 0.639 0.387 0.334

Working Capital:

Working Capital = Current Assets - Current Liabilities

AMeasureofbothacompany'sefficiencyanditsshort-termfinancialhealth.Positiveworking
capital means that the company is able to pay off its short-term liabilities. Negative working
capitalmeansthatacompanycurrentlyisunabletonetitsshort-termliabilitieswithitscurrent assets
(cash, accounts receivable and inventory). Also known as "net workingcapital".

Table No. 4.4.3

Working Capital

Year 2017 2018 2019

Current Assets 1,06,281 1,23,912 1,52,927

Current Liabilities 152,826 190,647 202,021

Working Capital -46,546 -66,735 -49,094

Interpretation:

The working capital of Reliance Jio was -46,546 in 2017 and it increased to -66,735 in 2018
andin2019itdecreasedto-49,094.Thecompany’sliquiditypositionisnotgood.RelianceJio current
liability is more than its current asset. This results in negative working capital overthe year.

Debt Ratio:

Debt Ratio =Total Debt / Total Assets

The ratio of total debt to total assets, generally called the debt ratio, measures the percentage
offundsprovidedbythecreditors.Theproportionofafirm'stotalassetsthatarebeingfinanced
withborrowedfunds.Thedebtratioiscalculatedbydividingtotallongtermandshort-term

53| P a g e
liabilities by total assets. The higher the ratio, the more leverage the company is using and the
more risk it is assuming. Assets and liabilities are found on a company's balance sheet.

Table No. 4.4.4

Debt Ratio

Year 2017 2018 2019

Total Debt 22,580 96,835 1,57,195

Total Asset 546,746 617,525 775,745

Debt Ratio 0.041 0.157 0.203

Interpretation:

Calculating the debt ratio, we came to see that this company is highly leveraged one. The debt
ratio of Jio was 0.041 in year 2017 in 2018 it was 0.157 and in 2019 the debt ratio was 0.203.

Current Worth to Net Worth Ratio= Current / Net worth Ratio

We can calculate current worth and net worth by using following formulas:

Current Worth = Total current assts – total current liabilities

Net Worth = Total assets – Total liabilities

Table No. 4.4.5

Current Worth to Net Worth Ratio

Year 2017 2018 2019

Current Worth -46,546 -66,735 -49,094

Net Worth 2,88,313 3,14,647 4,05,322

CW/NW Ratio -0.161 -0.212 -0.121

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Interpretation:

The current worth of the company shows a negative pattern over the years which results in
negative current worth to net worth ratio. In 2017 it was -0.161 and -0.121 in 2019.

Profitability Ratio:

Profitability is the ability to earn profit from all the activities of an enterprise. It indicates how
well management of an enterprise generates earnings by using the resources at its disposal.
Good Profitability is essential element for a healthy enterprise. Profitability is the net result of
a number of policies and decisions. For making policy an policy decision under different
situations, measurement of profitability is essential. According to Murthy V.S. "The most
important measurement of profitability of a company is ratio, e.g. profitability of assets,
variously referred to as earning power of the company, return on total investment or total
resource Committed to operations. These profitability ratios were calculated to measure the
operating efficiency of the firm. Measurement of profitability is as essential as the earning of
itself for the business concern. Some managerial decision like rising of additional finance,
further expansion, problems of bonus and dividend payments rest upon this measurement. It
can be measured for short term as well as long term purpose. The relation to sales is the good
short term indication of successful growth while profitability in relation to investment is the
healthier for long term growth of the business. It provides overall performance of a company
and useful tool for forecast measurement of a company's performance.

This section discusses the different measures of corporate profitability and financial
performance. These ratios, much like the operational performance ratios, give users a good
understanding of how well the company utilized its resources in generating profit and
shareholder value. The long-term profitability of a company is vital for both the survivability
of the company as well as the benefit received by shareholders. It is these ratios that can give
insightintotheallimportant"profit".Profitabilityratiosshowthecombinedeffectsofliquidity, asset
management and debt on operating results. These ratios examine the profit made by the
firmand comparethesefigureswiththesizeofthefirm,theassets employedbythefirmorits level of
sales. There are four important profitability ratios that I am going toanalyze:

Net Profit margin = Net Profit / Sales x 100

Net Profit Margin gives us the net profit that the business is earning per dollar of sales. This
margin indicates the profit after all the costs have been incurred it shows that what % of

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turnover is represented by the net profit. An increase in the ratios indicates that a firm is
producing higher net profit of sales than before.

Table No. 4.4.6

Net Profit Margin

Year 2017 2018 2019

Net Profit 33,617 30,109 94,837

Sales 2,64,909 3,14,917 4,00,139

Net Profit Margin 12.690 9.561 23.701

Interpretation:

Fromtheabovetable,itcanbeseenthatnetprofitratioofalltheyearispositive.Thenetprofit margin of
2016-2017 is 12.690 in 2017-2018 it is 9.561 and it increased to 23.701 in the year 2018-
2019. It clearly shows that Jio is a profit making company.

Operating Profit Margin:

Theoperatingprofitmarginratioindicateshowmuchprofitacompanymakesafterpayingfor
variable costs of production such as wages, raw materials, etc. It is also expressed as a
percentage of sales and then shows the efficiency of a company controlling the costs and
expenses associated with businessoperations.

Operating Profit Margin = Operating Profit x 100 / Net sales.

Table No. 4.4.7

Operating Profit Margin

Year 2017 2018 2019

Operating Profit 40,777 45,725 47,367

Sales 2,64,909 3,14,917 4,00,139

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 Operating Profit 15.393% 14.520% 11.838%
Margin

Interpretation:

Operating profit margin shows actual performance of the company and evaluation of the
businessisdonebyit.ThetableshowstheoperatingprofitratioofJiofromtheperiod2017to 2019.
This table indicates the trend of operating profit ratio decreasing from 15.393% in 2017 to
11.838% in 2019. The reason of decreasing operating profit margin can be increase in
operating expenses of the company.

Return on Assets:

Itmeasuresacompany'sprofitability,equaltoafiscalyear'searningsdividedbyitstotalasset,
expressed as a percentage. This is an important ratio for companies deciding whether or notto
initiateanewproject.Thebasisofthisratioisthatifacompanyisgoingtostartaprojectthey
expecttoearnareturnonit,ROAisthereturntheywouldreceive.Simplyput,ifROAisabove the rate
that the company borrows at then the project should be accepted, if not then it is rejected.

Return on Assets (ROA) = Profit after Taxation /Total assets x 100

Table No. 4.4.8

Return on Assets

Year 2017 2018 2019

Net Profit 33,617 30,109 94,837

Total Asset 546,746 617,525 775,745

Return on Asset 6.149% 4.876% 12.225%

Interpretation:

ThetableabovedepictingthedataregardingnetprofittototalassetofJio,whichwereworking in India
during the period of 2017-2019. In the year 2017, the net profit was the 33,617which

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increased to 94,837 in the year 2019. In 2017 the return on asset was 6.149% which increased
to 12.225% in the year 2019.

Return on Net Worth:

ReturnonNetworthmeasurestheamountofNetIncomeearnedbyShareholders.Itisthemost
important of the "Bottom line" ratio. By this, we can find out how much the shareholders are
goingtogetfortheirshares.Thisratioindicateshowprofitableacompanyisbycomparingits net
income to its average shareholders' equity. It measures how much the shareholders earned for
their investment in the company. The higher the ratio percentage, the more efficient
management is in utilizing its equity base and the better return is toinvestors.

Return on Net Worth= Profit after taxation /Net Worth x 100

Table No. 4.4.9

Return on Net Worth

Year 2017 2018 2019

Net profit 33,617 30,109 94,837

Net worth 2,88,313 3,14,647 4,05,322

Return on Net 11.660% 9.569% 23.398%

Worth

Interpretation:

The table above showing return on net worth of Jio for the last 3 year. It is evident that in the
year 2017 it was 11.660% which means the company earning 11.660% on its shareholders but
it decreases suddenly to 9.569% in 2018. This is because of the increase in shareholders fund
was more than increase in net profit. In 2019 it increased to 23.398% which is positive due to
positive profit of the company.

Asset Turnover:

The amount of sales generated for every dollar's worth of asset. It is calculated by dividing
sales in dollars by assets in dollars. Asset turnover measures a firm's efficiency at using its

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assetsingeneratingsalesorrevenue-thehigherthenumberthebetter.Italsoindicatespricing
strategy:companieswithlowprofitmarginstendtohavehighassetturnover,whilethosewith high
profit margins have low asset turnover.

Total Asset Turnover = Total Sales /Total Assets

Table No. 4.4.10

Asset TurnoverRatio

Year 2017 2018 2019

Sales 2,64,909 3,14,917 4,00,139

Assets 546,746 617,525 775,745

Total Assets 48.452 50.997 51.581

Turnover

Interpretation:

Asset turnover ratio has been increased all the years. It was 48.452% in 2017 and increased to
51.581% in 2019.

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4.5 Financial Statement Analysis and Interpretation of BhartiAirtel:

Balance sheet:

(in crore)

Balance sheet for the year 2017-18 and 2018

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 (in crore)

Balance sheet for the year 2016-17.

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Statement of Profit and Loss:

(in crore)

Statement of profit and loss for the year 2017-18 and 2018-19.

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 (in crore)

Statement of profit and loss for the year 2016-17.

Table No. 4.5.1

CurrentRatio:

Current Ratio =Current Assets/ CurrentLiabilities

Year 2017 2018 2019

Current Assets 176,709 158,302 205,206

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 Current Liabilities 349,204 436,404 604,631

Current ratio 0.506 0.363 0.339

Interpretation:

The current ratio of Bharti Airtel was 0.506 in 2017 and it decreased to 0.363 in 2018 and in
2019 it shows decrease to 0.339. All those three year the current ratio of the company is not
satisfactory because it is below the rule of thumb that is 0.73.

Table No. 4.5.2

Quick Ratio:

Quick asset /Current liability

Year 2017 2018 2019

Quick Asset 143,718 76,518 91,365

Current Liabilities 349,204 436,404 604,631

Quick Ratio 0.412 0.175 0.151

Table No. 4.5.3

Working Capital:

Working Capital = Current Assets - Current Liabilities

Year 2017 2018 2019

Current Assets 176,709 158,302 205,206

Current Liabilities 349,204 436,404 604,631

Working Capital -172,495 -278,102 -399,425

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Interpretation:

TheworkingcapitalofBhartiAirtelwas-172,495in2017anditincreasedto-278,102in2018 and in
2019 it further increased to -399,425. The company’s liquidity position is not good. Bharti
Airtel current liability is more than its current asset. This results in negative working capital
over theyear.

Table No. 4.5.4

Debt Ratio:

Debt Ratio =Total Debt / Total Assets

Year 2017 2018 2019

Total Debt 568,719 625,361 815,677

Total Asset 1,907,416 2,049,373 2,226,855

Debt Ratio 0.298 0.305 0.366

Interpretation:

Calculating the debt ratio, we came to see that this company is highly leveraged one. Thedebt
ratioofAirtelwas0.298inyear2017in2018itwas0.305andin2019thedebtratiowas0.366.

Table No. 4.5.5

Current Worth to Net Worth Ratio:

Current Worth to Net Worth Ratio= Current / Net worth Ratio

Current Worth = Total current assts – total current liabilities

Net Worth = Total assets – Total liabilities

Year 2017 2018 2019

Current Worth -172,495 -278,102 -399,425

Net Worth 1,012,073 1,028,609 983,593

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 CW/NW Ratio -0.126 -0.270 -0.406

Interpretation:

The current worth of the company shows a negative pattern over the years which results in
negative current worth to net worth ratio. In 2017 it was -0.126 and -0.406 in 2019.

Table No. 4.5.6

Return on Assets:

Return on Assets (ROA) = Profit after Taxation /Total assets x 100

Year 2017 2018 2019

Net Profit -25 57 96

Total Asset 1,907,416 2,049,373 2,226,855

Return on Asset -0.001% 0.003% 0.004%

Interpretation:

The table above depicting the data regarding net profit to total asset of Airtel, which were
working in India during the period of 2017-2019. In the year 2017, there was net loss of -25.
In the year 2019, there was net profit of 96. In 2017 the return on asset was -0.001% which
increased to 0.004% in the year 2019.

Table No. 4.5.7

Return on Net Worth:

Return on Net Worth= Profit after taxation /Net Worth x 100

Year 2017 2018 2019

Net profit -25 57 96

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 Net worth 1,012,073 1,028,609 983,593

Return on Net -0.002% 0.006% 0.010%

Worth
Interpretation:

The table above showing return on net worth of Airtel for the last 3 year. It is evident that in
the year 2017 it was -0.002% which means the company earning -0.002% on its shareholders
but it decreases suddenly to 9.569% in 2018. This is because of the increase in shareholders
fund was more than increase in net profit. In 2019 it increased to 23.398% which is positive
due to positive profit of the company.

4.6 Comparison ofRatio:

Table No. 4.6.1

Current Ratio:

Year 2017 2018 2019

Jio 0.695 0.650 0.757

airtel 0.506 0.363 0.339

Interpretation:

The following table shows the current ratio of Reliance Jio and Bharti Airtel. As you can see
in 2017 the current ratio of Jio was 0.695 whereas Airtel’s current ratio was 0.506. In 2019
Jio’s current ratio was increased to 0.757 whereas Airtel’s current ratio decreased to 0.339.
Jio’s liquidity position is very good as compared to Bharti Airtel.

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 Table No. 4.6.2

Quick Ratio

Year 2017 2018 2019

Jio 0.639 0.387 0.334

Airtel 0.412 0.175 0.151

Interpretation:

In 2017 the quick ratio of jio was 0.639 whereas Airtel was having quick ratio of 0.412. Both
companies quick ratio decreased in 2019 to 0.334 and 1.151 respectively. The quick ratio of
Reliance Jio is very good as compared to Bharti Airtel. Reliance Jio has better liquidity and
financial health as compared to Airtel.

Table No. 4.6.3

Working Capital

Year 2017 2018 2019

Jio -46,546 -66,735 -49,094

Airtel -172,495 -278,102 -399,425

Interpretation:

As we can see both the companies have negative working capital. Their short-term debts
outweigh their liquid assets. Jio’s working capital is negative but satisfactory as compared to
Airtel’s working capital.

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 Table No. 4.6.4

Debt Ratio

Year 2017 2018 2019

Jio 0.041 0.157 0.203

Airtel 0.298 0.305 0.366

Interpretation:

Bycalculatingthedebtratiowecanknowweatherthecompanyishighlyleveragedoneornot. The
debt ratio of 0.4 or lower are considered better, while the a debt ratio of 0.6 or higher makes it
more difficult to borrow money. Both Jio and Airtel have a good debt ratio which is below
0.4. But when we compare the Jio with Airtel, Jio has better debt ratio thanAirtel.

Table No. 4.6.5

Current Worth to Net Worth Ratio:

Year 2017 2018 2019

Jio -0.161 -0.212 -0.121

Airtel -0.126 -0.270 -0.406

Interpretation:

If we compare the current worth to net worth ratio of both Reliance Jio and Bharti Airtel,both
companies show negative pattern over the years which results in negative current worth to net
worth ratio. When we compare the current worth to net worth ratio of both companies we can
see jio’s current worth to net worth ratio is better thanAirtel’s.

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 Table No. 4.6.6

Return on Assets

Year 2017 2018 2019

Jio 6.149% 4.876% 12.225%

Airtel -0.001% 0.003% 0.004%

Interpretation:

The table above depicting the data regarding net profit to total asset of Jio and Airtel, which
were working in India during the period of 2017-2019. If we compare the ratio of both the
companieswecanseeJio’sreturnonassetisverygoodascomparedtoAirtel’sreturnonasset in all the
threeyears.

Table No. 4.4.7

Return on Net Worth

Year 2017 2018 2019

Jio 11.660% 9.569% 23.398%

Airtel -0.002% 0.006% 0.010%

Interpretation:

The table above showing return on net worth of Jio and Airtel for the last 3 year. If we see the
ratio of both the companies Jio’s return on net worth is way more than Airtel’s return on net
worth in all the three years.

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CHAPTER 5: FINDINGS

In the company analysis, we can conclude following points based on the ratio analysis:

 Reliance Jio has good current ratio as compared to Bharti Airtel. Jio’s liquidity
position is good as compared toAirtel’s.
 Reliance Jio has good quick ratio as compared to Bharti Airtel. Airtel’s financial
health and liquidity position is bad as compared to Jio.
 Reliance Jio have earned higher profit as compared to BhartiAirtel.
 Reliance Jio has more working capital as compared to BhartiAirtel.
 Reliance Jio debt ratio is good as compared to Bharti Airtel which makes Jio’s
borrowing capacity more thanAirtel.
 Reliance Jio’c current wirth to net worth is good as compared to Bharti Airteleven
if it is negative in all the years for both thecompanies.
 Reliance jio’s return on asset is very good as compared to BhartiAirtel.
 Reliance Jio’s return on net worth is good as compared to BhartiAirtel.

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CHAPTER 6: SUGGESTIONS

As from the analysis we come up with following suggestions:

 Bharti Airtel has very low current ratio. So, it should increase its current asset as
compared to its current liability where it can meet its short-term obligationsmoothly.
 As the low values for the Liquidity Ratios indicates that Bharti Airtel may have
difficulty in meeting current obligations. Thus, it is better for them to increase their
liquidity ratio by using long-term financing rather than cash on hand to acquire
inventory or selling unnecessaryassets.
 A Profitability Ratio is a measure of profitability, which is a way to measure a
company'sperformance.Profitabilityissimplythecapacitytomakeaprofit.Thefirms can
improve their profit by improving customers demand and minimizing costs help
increase in profitabilityratios.
 The companies can make Solvency Ratios more secure either by paying off debt or
increasingtheamountofearningsretainedinthebusinessuntilafterbalancesheetdate.
Asthehigherratioindicatesapossibleoveruseofleverage,anditmayindicatepotential
problems meeting the debtpayments.
 The companies can increase Market Share Ratio through innovation, strengthening
customer relationships, smart hiring practices and acquiringcompetitors.
 The company should maintain its debtposition.
 Sales should be increased without the additions of fixedassets.

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CHAPTER 7: CONCLUSION

This is the final important stage of my project. The main aim of my project was to see which
companyismakinggoodprofitanddemandedbytheconsumersandwhichcompanywillgive higher
return for investment. Reliance Jio is making good profit in all three years and most
demandedbytheconsumersandinvestorscanalsogethigherreturnontheirinvestmentonthe other
hand Bharti Airtel is not making good profit and its customer are shifting to Jio and investors
can not have goodprofit.

According to company analysis, Reliance Jio got biggest favourable ratio and its earning is
very high, sustainable growth rate is also good which shows good earning in future, so it
indicates good sign for the company and investor to invest in Jio but Bharti Airtel’s ratio and
its earning is not good, its growth rate is negative which indicates bad sign for the company
and the investors.

Finally, the result of analytical study clearly indicates that Reliance Jio is analyticallystronger
than Bharti Airtel. Hence it seems to be more profitable for the investors toinvest.

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CHAPTER 8: REFERENCE

 https://medical-dictionary.thefreedictionary.com/analytical+study
 https://www.myaccountingcourse.com/accounting-dictionary/financial-statements
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industry/item/history-of-telecommunications-industry
 https://www.researchgate.net/publication/332529159_A_Study_Report_On_Reliance
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 Expires=3600&X-Amz-SignedHeaders=host&X-Amz-
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