introduction of mtnl ltd mohan
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INTRODUCTION
Mahanagar Telephone Nigam Limited (MTNL) was set up in 1st April of the year 1986 by theGovernment of India to upgrade the quality of telecom services, expand the telecom network,
introduce new services and to raise revenue for telecom development needs of India's keymetros, Delhi (the political capital) and Mumbai (the business capital of India). The companyhas also been in the forefront of technology induction by converting 100% of its telephoneexchange network into the state-of-the-art digital mode. MTNL as a company, over lastnineteen years, grew rapidly by modernising the network, incorporating the State-of-the-arttechnologies and a customer friendly approach. The Company providing various types oftelecommunication services including Telephone, telex, wireless, data communication,telematic and other like forms of communication (Internet). First digital exchange worldtechnology brought to India by the company during the year 1986. In the year of 1987, LargleScale came to existence, introduction of push button telephone made dialling easier. PhonePlus services was offered by the company in the year 1988, it gives multiplied benefits totelephone users. During the year 1992, the company introduced Voice Mail Service. MTNL hadintroduced the Integrated Services Digital Network (ISDN) services in the period of 1996. In the
year 1997, the Wireless in Local loop was introduced. In addition to phone plus facilities likedynamic locking, call waiting/call transfer, hot lines etc were extended to the customers. Apartfrom this IVRS (Interactive Voice Response System) like local assistance changed numberinformation, and fault booking system ensuring round the clock service, a CD-ROM version ofthe telephone directory and an on-line directory enquiry through PC was introduced during theyear 1997. To facilitate the clientele, MTNL launched the country's first toll-free service in Delhiin the period of 1998. During the year 1999, MTNL brought in the most widely using servicecalled Internet (Network of Networks), the extreme level of information exchange. MillenniumTelecom Limited, a wholly owned subsidiary of MTNL was formed in 17th February of the year2000 to do practically any type of Telecom Business with a focus on value added services,which was started its operation in Himachal Pradesh in association with HPSEDC from 25thFeb 2002 itself. During the year 2001, the company launched GSM Cellular Mobile serviceunder the brand name Dolphin and in the same year MTNL also launched Wireless in Local
Loop (WLL) Mobile services under the brand name Garuda. MTNL has formed a Joint Venturecompany in Nepal by the name of United Telecom Ltd. (UTL) in collaboration with TelecomConsultants India Limited (TCIL), Videsh Sanchar Nigam Limited (VSNL) and NVPL (NepalVentures Pvt. Ltd., a Nepalese Company). The Company is operational since 10th October2001 for providing WLL based basic services in Nepal. CLI based Internet express service wasadded with the service line of the company in the period of 2001. The Company made tied upwith Billjunction.com in the year of 2001 to provide online bill presenting and payment facility toits customers. The Company launched pre-paid GSM Mobile services under the brand nameTrump during the year 2002, and in the same year MTNL's Email on PSTN lines wereintroduced under the brand name mtnlmail. MTNL had set up a new software venture calledComSoft for developing communications software in the year 2002, as a part of its strategy tooffer value-added communications software in e-commerce, e-governance and intelligentnetworking. The Company brought in to market, the CDMA 1x 2000 Technology under thebrand name Garuda 1-x in the year of 2003. During the same period MTNL introduced pilotproject of ADSL based Broadband services and also launched the Virtual Phone services.Mahanagar Telephone Mauritius Ltd. bagged second operator license in Mauritius. Thecompany has joined the hands with Nokia, Samsung for WLL handsets in the year 2003. MTNLhas set up its 100% subsidiary as Mahanagar Telephone Mauritius Limited. (MTML) inMauritius, for providing basic, mobile and international long distance services as 2nd operatorin Mauritius. Necessary licenses have been obtained in January 2004. MTML has alreadystarted its ILD & CDMA based basic services in Mauritius. In Mauritius against the switchingcapacity of 50K, 8K telephone connections are working. The Company established Wi-Fi &
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digital certification services in the identical year. MTNL bagged the award for excellence in costreduction in the year 2004. State of the art training centre of the company 'CETTM' wascommissioned in the year of 2004. The Company introduced the broadband services under thebrand name of 'TRI BAND' during the year 2005. The Company made partnership with Red Hatthrough its CETTM centre in the same year of 2005. MTNL-STPI IT Services Ltd is a 50:50Joint Venture between Software Technology Parks of India (STPI) and the company. The JVformed in 2006 combines the STPI's rich experience as an ISP and MTNL's track record ofbeing India's leading telecom operating company to offer niche portal services to the Indiancommunity. The Company has restructured Millennium Telecom Ltd (MTL) as a Joint Venturecompany of MTNL and BSNL with 51% and 49% equity participation respectively. MTNL(Mumbai) has joined hands with Contakt Tech Solutions India in the year 2008 for Expressalert, a new value added service for the subscribers. Public sector telecom service providerMTNL on June 18th of the year 2008 received the much-awaited International Long Distance(ILD) Licence from the Department of Telecom (DOT), a development that could signal furtherlowering of ISD rates as the PSU is gearing up to carrying its own traffic in the near future. Toremain market leader in providing world class Telecom and IT related services at affordableprices, the company partaking its all efforts in the same business area and MTNL wants tobecome a global player, also find a place in the `Fortune 500' companies.
GROWTH AND ACHIVEMENT
MTNL as a company, over the last twenty six years, grew rapidly by modernizing the network
through induction of State-of-the-art technologies and adopting a customer friendly approach.1986 2012
1.No of exchanges 114 5952.Equipped capacity (Millions) 0.88 12.483.Subscriber base (Millions) 0.75 9.29i) Basic Wireline & CDMA Fixed (Millions) 0.75 3.45ii) CDMA-Mobile (Millions) - 0.13iii) GSM Cellular (Millions) - 5.54.Internet Dial-up(Millions) - .895.Broadband (Millions) - 1.046.Public Call Offices (Local and Long Distance) (Millions) .01 0.217.No of stations on Long Distance Network 264 39,3038.No of countries connected overseas on ISD 11 2439.Digitalization of exchange network Nil 100%MTNL is proud to be associated with the Common Wealth Games (CWG)-2010 as its Official
Telecom Partner to set up a world class communication infrastructure to meet out the
broadcast and telecom requirement of the event. Its a matter of great prestige for MTNL to
associate with a global sporting event of this magnitude and significance and to showcase the
world, India s capability to setup best possible all round infrastructure.
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NETWORK OF MTNL
Network Structure
In more than two decades of its operations, MTNL is growing rapidly by modernizing the
network, incorporating the State-of-the-art technologies and a customer friendly
approach. there has been all-round development & growth and improved operational
efficiency. Presently, MTNL is providing a host of telecom services that include fixed telephone
service, GSM (including 3G services) & CDMA based Mobile service, Internet, Broadband, ISDN
and Leased Line services., MTNL has been in the forefront of offering state of the art technology
based telecommunications services to its customers at most affordable prices. MTNL has been
the first to launch some of the latest telecom technologies in the country like ADSL2+ & VDSL2
in broadband, IPTV on MPEG4 technology, VOIP and 3G Mobile service.STATUS OF MTNL NETWORK
(As on 31.03.2012)
NAME OF THE ITEMS DELHI MUMBAI TOTALNumber of ExchangesWireline Exchanges 358 218 576GSM MSCs 6 6 12CDMA MSCs 2 5 7N/w Switching CapacityFixed Line 2771995 2570947 5342942GSM (Trump + Dolphin) 3025000 3025000 6050000CDMA 550000 542230 1092230Total Switching Capacity 6346995 6138177 12485172Subscribes baseLandlines 1563034 1894695 3457729FWT 26833 81334 108167Trump 2457678 2516125 4973803Dolphin 294084 317195 611279GSM (Trump + Dolphin) 2751762 2833320 5585082CDMA (M)
107364
31785
139149
Total DELs 4448993 4841134 9290127Teledensity * 27.71% 26.31%Internet customers (Dial Up) -Pre paid 20249 274 20523Internet customers (Dial Up) -Post paid 172 878770 878942Total Internet customers (Dial Up) 20421 879044 899465Broadband capacity 786192 845908 1632100
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Broadband customers 476127 564064 1040191IPTV customers 13308 4149 17457VOIP customers 2193 1847 4040Pay Phones 60972 97998 158970Sanchar Haats/ CSCs 88 89 1773G Subs All existing GSM subs are 3G
enabled 2751762 2833320 5585082BTS (GSM) as on 04.05.2012 1100
(2G) 762
(3G)
1010
(2G) 724
(3G)2110 (2G)1486(3G)
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AUDITOR REPORT
Mahanagar Telephone Nigam Limited. New Delhi
1. We have audited the attached Balance Sheet of Mahanagar Telephone Nigam Limited as at March 31, 2012, theStatement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, annexed
thereto, in which, the accounts of 3 units namely Delhi unit, Mumbai unit and Mobile Service Unit (Delhi & Mumbai
both) are incorporated, which have been audited by us. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order 2003, as amended by the Companies (Auditor's Report)Order, 2004 (together the 'Order'), issued by the Central Government of India in terms of Section 227 (4A) of the
Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the
information and explanation given to us, we give in the Annexure, a statement on the matters specified in paragraphs
4 and 5 of the said Order, to the extent applicable to the company.
4. Further to our comments in the Annexure referred to in paragraph 3 above and subject to:
a) Point No.6 (a) to Note No. 40 regarding deduction under section 80IA of the Income Tax Act claimed by the
company of which 75% has already been allowed upto Tribunal level and the company has preferred an appeal for
the remaining 25% with the High Court. The company is maintaining a provision for income tax amounting to Rs.
4003.31 millions for the years 1997-98 to 1999-2000 on this account whereas the similar claims for subsequent years
involving a tax liability of Rs. 3948.46 Millions have been shown as Contingent Liability. In view of the pending
disputes with the Income Tax Departments at the High Court level, we are unable to comment on the adequacy or
requirement of the provision or contingency held in this regard.
b) Point No. 6 (b) to Note No. regarding accounting of appeal effect of Rs. 1015.43 millions including accrued Interest
of Rs. 412.04 millions (Rs. 101.86 Millions for the year) as recoverable is subject to adjustment as per the final orders
to be passed by the Income Tax Department. Besides, the balances appearing in Advance Tax, Provisions for
Income Tax and Interest on income Tax Refund are subject to reconciliation with the figures of the Income Tax
Department.
c) Points No.11 & 14 to Note No.40 regarding the amounts recoverable from BSNL/DOT are subject to reconciliation
and confirmation and in view of various pending disputes regarding each other's claims we are unable to comment on
the impact of the same on the profitability of the company.
d) Point No. 1(k) of Note 40 regarding disclosure of contingent liability of Rs. 1403.63 Million instead of actual
provision on account of License Fee to the DOT which is being worked out on accrual basis as against the terms of
License Agreements according to which the expenditures/ deductions from the Gross revenue are allowed on actual
payment basis.
e) The company has allocated the establishment overheads as per Note 25 and Administrative overheads as per
Note 28.The company's policy in this regard needs to be made more scientific and the same should avoid capitalizing
the loss due to idle time of labour and machines.
f) Point No.32 of Note No. 40 regarding no impairment adjustment required to the carrying value of the fixed assets
as at 31 March 2012. In our view, due to recurring losses incurred by the Company and uncertainty in the
achievement of projections made by the Company, we are unable to comment on the provisions, if any, required in
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respect of impairment of carrying value of the fixed assets (including capital work in progress), other than land, and its
consequential impact, if any, on the loss for the year, accumulated balance in the Profit and Loss Account and the
carrying value of the fixed assets as at 31 March 2012.
g) Point No.27 (ii) of Note No.40 regarding the provision for employees benefits which have been made on the basis
of actuarial valuation. The issue being technical, we are unable to comment on the adequacy or otherwise of these
provisions.h) Point No. 28 of Note No. 40 regarding Non provision of actuarial liability on account of medical expenses for retired
employees and continuing employees as the Insurance policy has been taken by the company and yearly premium is
only charged.
i) Insurance claim for the fire loss in Data Center in July, 2009 amounting to Rs. 40 Millions has been considered as
good despite of the same being still pending with the Insurance Company.
j) Accounting Policy No.2 (iv) regarding valuation of scrapped/ decommissioned assets which are not being revalued
every year.
k) Accounting Policy No. 1 (ii)(b) regarding exclusion of dues from operators for making provision for Doubtful debts
and non provision of disputed cases which are outstanding for less than three years in Basic and less than six
months in wireless services.
l) Point No. 22 of Note No. 40 regarding non valuation of vacant land and Guest Houses/ Inspection quarters at fair
market value as at the year end for the purpose of wealth tax provisions.
m) Point No.18 of Note No.40 regarding non confirmation and reconciliation of amounts receivable and payable from
various parties.
n) Point No.14(b) regarding balance in subscriber's deposits account of Rs. 6588.81 Million, unlinked receipts from
subscribers Rs. 412.60 Million are subject to reconciliation. Balance of sundry debtors as per Ageing Summary is
short by Rs. 94.70 Million with comparison to balance is general ledger though the same has been fully provided for
(Refer Note No. 14(c)). The reconciliation of metered and billed calls in various units and leased, operational and
billed circuits is in process. The final impact of above on the accounts is presently not ascertainable and the same
may have an impact on the Profitability of the company.
o) The matching of Billings for roaming receivables/payable with the actual traffic intimated by the MACH is not being
made and the amounts received are allocated on estimated basis. The impact thereof, on profitability, if any, is
unascertainable.p) The system of issuance of completion certificates by engineering department needs to be strengthened. The
impact due to the delay in issuance of completion certificate on Fixed Assets and Depreciation is not ascertainable.
q) Point No.23 of Note No. 40 regarding provision for ADCC recoverable from Project Development Company
amount.
PROFIT AND LOSS
Profit & Loss account of Mahanagar Telephone Nigam ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '0 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover 3,373.25 3,675.51 3,657.75 4,457.024,724.77
Excise Duty 0.00 0.00 0.00 0.00 0.00
Net Sales 3,373.25 3,675.51 3,657.75 4,457.02 4,724.77
Other Income 251.16 232.31 1,234.55 552.71 403.12
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Total Income 3,624.41 3,907.82 4,892.30 5,009.73 5,127.89
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Expenditure
Raw Materials0.00
0.00 0.00 0.00 0.00
Power & Fuel Cost 213.53 205.48 219.44 183.06 188.34
Employee Cost 3,711.56 3,258.55 4,869.48 2,064.89 1,580.95
Other Manufacturing Expenses 124.37 116.87 102.56 100.02 93.62
Selling and Admin Expenses 0.00 678.86 757.89 862.19 951.86
Miscellaneous Expenses 1,174.35 603.71 680.59 906.08 1,005.55
Preoperative Exp Capitalised 0.00 -38.41 -36.61 -30.95 -21.01
Total Expenses 5,223.81 4,825.06 6,593.35 4,085.29 3,799.31
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths 12mths
Operating Profit-
1,850.56-1,149.55 -2,935.60 371.73 925.46
PBDIT-
1,599.40-917.24 -1,701.05 924.44 1,328.58
Interest 949.16 494.56 11.03 10.96 12.09
PBDT-
2,548.56-1,411.80 -1,712.08 913.48 1,316.49
Depreciation 1,496.22 1,410.15 1,759.49 698.85 704.06
Other Written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax -4,044.78 -2,821.95 -3,471.57 214.63 612.43
Extra-ordinary items -65.02 26.58 509.58 94.40 212.12
PBT (Post Extra-ord Items)-
4,109.80-2,795.37 -2,961.99 309.03 824.55
Tax 0.00 0.19 -355.11 95.46 224.83
Reported Net Profit-
4,109.78-2,801.92 -3,063.79 168.33 406.82
Total Value Addition 5,223.81 4,825.06 6,593.35 4,085.27 3,799.31
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 0.00 0.00 0.00 63.00 252.00
Corporate Dividend Tax 0.00 0.00 0.00 10.71 42.83
Per share data (annualised)
Shares in issue (lakhs) 6,300.00 6,300.00 6,300.00 6,300.00 6,300.00
Earning Per Share (Rs) -65.23 -44.47 -48.63 2.67 6.46
Equity Dividend (%) 0.00 0.00 0.00 10.00 40.00
Book Value (Rs) 40.27 105.50 149.97 191.42 189.23
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