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Published on Apr 16, 2014

Project Report on Comparative Study of Sources of Finance


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Financial magment- Comparative Study of Sources of Finance


1. 1. ADVANCE FINANCIAL MANAGEMENT 2013-14 A PROJECT ON Project Report on
Comparative Study of Sources of Finance (MTNL and Reliance Communication) In the subject
ADVANCE FINANCIAL MANAGEMENT SUBMITTED TO UNIVERSITY OF MUMBAI FOR
SEMESTER-IV OF MASTER OF COMMERCE BY SUNITA KUMARI YADAV MCOM PART-II
AND ROLL NO- 3601 UNDER THE GUIDANCE OF MRS. MONALI RAY YEAR- 2013-2014
2. 2. ADVANCE FINANCIAL MANAGEMENT 2013-14 DECLARATION BY THE STUDENT I,
SUNITA KUMARI YADAV student of M COM PART-II Roll Number 3601 hereby declare that the
project for the Paper ADVANCE FINANCIAL MANAGEMENT titled, Project Report on
Comparative Study of Sources of Finance Submitted by me for semester-III during the academic year
2013-2014, is based on actual work carried out by me under the guidance and supervision of MRS.
MONALI RAY. I further state that this work is original and not submitted anywhere else for any
examination. Signature of Student EVALUATION CERTIFICATE This is to certify that the undersigned
have assessed and evaluated the project on Project Report on Comparative Study of Sources of
Finance Submitted by SUNITA KUMARI YADAV Student of M COM Part-II. This project is original
to the best of our knowledge and has been accepted for internal assessment. Internal Examiner External
Examiner vice Principle
3. 3. ADVANCE FINANCIAL MANAGEMENT 2013-14 PILLAIS COLLEGE OF ARTS,
COMMERCE & SCIENCE Internal Assessment: Project 40 Marks Name of Student Class Division

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Roll Number. First Name: SUNITA KUMARI M COM Fathers Name: BBS PART II 3601 Surname:
YADAV Subject: ADVANCE FINANCIAL MANAGEMENT Topic for the Project: Project Report on
Comparative Study of Sources of Finance Mark Awarded Signature DOCUMENTATION Internal
Examiner (Out of 10 Marks) External Examiner (Out of 10 Marks) Presentation (Out of 10 Marks)
Viva and Interaction (Out of 10 Marks) TOTAL MARKS (Out of 40)
4. 4. ADVANCE FINANCIAL MANAGEMENT 2013-14 INDEX S. NO. TOPIC PAGE NO. 1.
Introduction 1 2. Type of Finance-Definition, Features 1-19 3. Introduction Of MTNL Balance Sheet
And Profit & Loss A/C 2011-12 19 4. Introduction Of Reliance Communication Balance Sheet And
Profit & Loss A/C 2011-12 23 5. Comparative of Source Of finance between MTNL & Reliance
Comm. 29 6. Conclusion 30 7. Bibliography 31
5. 5. ADVANCE FINANCIAL MANAGEMENT 2013-14 Introduction Finance is the lifeblood of
business concern, because it is interlinked with all activities performed by the business concern. In a
human body, if blood circulation is not proper, body function will stop. Similarly, if the finance not
being properly arranged, the business system will stop. Arrangement of the required finance to each
department of business concern is highly a complex one and it needs careful decision. Quantum of
finance may be depending upon the nature and situation of the business Sources of finance mean the
ways for mobilizing various terms of finance to the industrial concern. Sources of finance state that,
how the companies are mobilizing finance for their requirements. The companies belong to the existing
or the new which need sum amount of finance to meet the long-term and short-term requirements such
as purchasing of fixed assets, construction of office building, purchase of raw materials and day-to- day
expenses. SHORT-TERM FINANCE: The finance is generally required for a period of one year or the
business cycle which may be slightly greater than period. Apart from the long-term source of finance,
firms can generate finance with the help of short-term sources like loans and advances from
commercial banks, moneylenders, etc. Short-term source of finance needs to meet the operational
expenditure of the business concern. Types of short-term source
6. 6. ADVANCE FINANCIAL MANAGEMENT 2013-14 LONG-TERM FINANCE: The long term
finance generally exceeds 5 years period. Finance may be mobilized by long-term or short- term. When
the finance mobilized with large amount and the repayable over the period will be more than five years,
it may be considered as long-term sources. Share capital, issue of debenture, long-term loans from
financial institutions and commercial banks come under this kind of source of finance. Long-term
source of finance needs to meet the capital expenditure of the firms such as purchase of fixed assets,
land and buildings, etc. Types of long-term sources MEDIUM-TERM FINANCE: This is also called
intermediate finance. The period of medium term finance may be 3 to 5 year. Based on Ownership
Sources of Finance may be classified under various categories based on the period: An ownership
source of finance include Shares capital, earnings Retained earnings Surplus and Profits
Borrowed capital include Debenture Bonds Public deposits Loans from Bank and Financial
Institutions.
7. 7. ADVANCE FINANCIAL MANAGEMENT 2013-14 Based on Sources of Generation Sources of
Finance may be classified into various categories based on the period. Internal source of finance
includes Retained earnings Depreciation funds Surplus External sources of finance may be
include Share capital Debenture Public deposits Loans from Banks and Financial institutions
Based in Mode of Finance Security finance may be include Shares capital Debenture Retained
earnings may include Retained earnings Depreciation funds Loan finance may include
Long-term loans from Financial Institutions Short-term loans from Commercial banks. The above
classifications are based on the nature and how the finance is mobilized from various sources. But the
above sources of finance can be divided into three major classifications: Security Finance Internal
Finance Loans Finance SECURITY FINANCE If the finance is mobilized through issue of securities
such as shares and debenture, it is called as security finance. It is also called as corporate securities.
This type of finance plays a major role in the field of deciding the capital structure of the company.
8. 8. ADVANCE FINANCIAL MANAGEMENT 2013-14 Characters of Security Finance Security
finance consists of the following important characters: 1. Long-term sources of finance. 2. It is also

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called as corporate securities. 3. Security finance includes both shares and debentures. 4. It plays a
major role in deciding the capital structure of the company. 5. Repayment of finance is very limited. 6.
It is a major part of the companys total capitalization. Types of Security Finance Security finance may
be divided into two major types: 1. Ownership securities or capital stock. 2. Creditorship securities or
debt capital. Ownership Securities The ownership securities also called as capital stock, is commonly
called as shares. Shares are the most Universal method of raising finance for the business concern.
Ownership capital consists of the following types of securities. Equity Shares Preference Shares
No par stock Deferred Shares EQUITY SHARES Equity Shares also known as ordinary shares, which
means, other than preference shares. Equity shareholders are the real owners of the company. They
have a control over the management of the company. Equity shareholders are eligible to get dividend if
the company earns profit. Equity share capital cannot be redeemed during the lifetime of the company.
The liability of the equity shareholders is the value of unpaid value of shares. Equity shareholders are
residual owners who have unrestricted claim on income and assets. They possess all the voting power in
the company. The rate of dividend on these shares is not fixed. The rate of dividend depends on the
availability of divisible profits and the discretion of the directors. Equity shareholders have the
opportunity of earning high dividend in times of prosperity. They run the risk of earning nothing in
periods of adversity. They control the company on account of their entitlement to vote at the general
meeting of the company. These shares are purchased by persons who prefer risk to better return and
also wish to have the voice in the management of the company. The equity share capital is also called
as venture capital as there is a greater risk involved in it.
9. 9. ADVANCE FINANCIAL MANAGEMENT 2013-14 TYPES OF EQUITY SHARES: BONUS
SHARES: It refers to issue of shares in place dividend. It is just capitalization of reserves or conversion
of reserves into equity share capital. A company which has sufficient profits may issue bonus shares.
SWEAT EQITY SHARES: These are the shares issued to the employees of an organisation. These
shares are always issued at a discount. It is a reward to those employees who have done work for
organisation. It helps to motivate the employees. Features of Equity Shares Equity shares consist of the
following important features: 1. Maturity: Equity share capital is the permanent capital as a company is
not under contractual obligation to refund the capital during its life time. Equity shareholders can
demand there capital only in the event of liquidation and too when funds are left after paying all prior
claims. A company cannot compel the equity shareholders to sell back their shares if they were fully
paid-up and shareholders are engaged in business competitive to the business of the company.
However, equity shareholders can be persuaded to sell their shares. 2. Claim on Income: Equity
shareholders are residual owners. Their claims on income arise only when the claims of creditors and
preference shareholders have been met. In many cases, residual owners of the creditors. The equity
shareholders cannot legally compel the company to pay dividends to them even if the company has
sufficient income left after distribute profits. It is internal management which possesses the discretion to
distribute profits. It has entire right to utilise business income in whatever manner it likes. The rate of
dividend is not fixed. It depends upon the availability of profits and discretion the management. 3.
Claim on Assets: As the equity shareholders are residual owners, they are the last claimants to assets of
the company. In case the company winds up the business , assets are disposed off to satisfy the claims
of the creditors and also preference shareholders prior to equity shareholders. The equity shareholders
are entitled to receive all the amount left after meeting the business obligations. As the equity share
capital provides a cushion for creditors of the company.
10. 10. ADVANCE FINANCIAL MANAGEMENT 2013-14 4. Control: The equity shares run the risk of
loss. However , the risk is compensated to some extend as they have controlling power that rests with
residual owners. In fact they have unchallenged voice in management of the company. The equity
shareholders retain control of the company through voting power. Every equity shareholder has the
right to vote on every resolution placed before the company. A company is managed by the Board of
Directors who control and direct the affairs of the company. However , the supreme control is endowed
with the equity shareholders has the right to exercise on vote for each share of the stock he owns. 5.
Pre- Emptive Rights: equity shareholders enjoy the power to maintain their proportion interest in the

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assets, earning and control of the company. This power is exercised by the equity shareholders through
their to purchase additional issues of equity shareholders through their right to purchase issues of equity
shares. PREFERENCE SHARES The parts of corporate securities are called as preference shares. It is
the shares, which have preferential right to get dividend and get back the initial investment at the time
of winding up of the company. Preference shareholders are eligible to get fixed rate of dividend and
they do not have voting rights. Preference shares may be classified into the following major types: 1.
Cumulative preference shares: Cumulative preference shares have right to claim dividends for those
years which have no profits. If the company is unable to earn profit in any one or more years, C.P.
Shares are unable to get any dividend but they have right to get the comparative dividend for the
previous years if the company earned profit. 2. Non-cumulative preference shares: Non-cumulative
preference shares have no right to enjoy the above benefits. They are eligible to get only dividend if the
company earns profit during the years. Otherwise, they cannot claim any dividend. 3. Redeemable
preference shares: When, the preference shares have a fixed maturity period it becomes redeemable
preference shares. It can be redeemable during the lifetime of the company. The Company Act has
provided certain restrictions on the return of the redeemable preference shares.
11. 11. ADVANCE FINANCIAL MANAGEMENT 2013-14 4. Irredeemable Preference Shares
Irredeemable preference shares can be redeemed only when the company goes for liquidator. There is
no fixed maturity period for such kind of preference shares. 5. Participating Preference Shares
Participating preference shareholders have right to participate extra profits after distributing the equity
shareholders. 6. Non-Participating Preference Shares Non-participating preference shareholders are not
having any right to participate extra profits after distributing to the equity shareholders. Fixed rate of
dividend is payable to the type of shareholders. 7. Convertible Preference Shares Convertible
preference shareholders have right to convert their holding into equity shares after a specific period.
The articles of association must authorize the right of conversion. 8. Non-convertible Preference Shares
There shares, cannot be converted into equity shares from preference shares. Features of Preference
Shares The following are the important features of the preference shares: a. Maturity: Preference shares
can be redeemable or irredeemable. Irredeemable preference shares capital has to be repaid on winding
up of the company. However, the companies (Amendment) Act, 1988 has prohibited the issue of
irredeemable preference share capital or redeemable after the expiry of a period of 10 years from the
date of issue. Thus, companies are prohibited from issuing the redeemable preference shares greater
than 10 years period. b. Conversion: Preference shares can be convertible or non-convertible.
Convertible preference shares are those which are convertible in to equity shares. As against this
non-convertible shares are those which are not convertible in to equity shares.
12. 12. ADVANCE FINANCIAL MANAGEMENT 2013-14 c. Participation in Income: Preference shares
can be participating or non-participating. Participating preferences have a right to shares the surplus
profits remaining after paying dividend to equity shareholders at affixed rate as laid down by a
company A/A. however non-participating preference shares do not carry such right. Preference
shareholders have priority claim to dividend over equity shareholders. These shareholders are paid
dividend at a fixed rate which is specified in the agreement. The company can distribute earning among
equity shareholders. The preferences shareholders have no legal recourse against the company for not
distributing dividend even through it has earned large income. d. Claim on Assets: No specific assets are
pledged against the preference share capital. However , they have a claim on the general assets of the
company. The preference shareholders claims on assets are superior to those of equity shareholders. In
the event of dissolution of the company , the preference shareholders will receive their portion of the
proceeds before holders of equity shares. e. Controlling Power: In the ordinary course , the preference
shareholders do not enjoy direct right to participate in the management through voting for directors and
on the other matters. Section 87 of the companies Act 1956 , preference shareholders are given on the
right to vote on resolutions which directly affect the rights attached to their preference shares. In
respect of this , any resolution for winding up the company or the repayment or reduction of its share
capital is to be regarded as directly affecting the rights attached to the preference shares.
DEBENTURES Debenture is a creditor ships security which enables a company to raise finance. A

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debenture is a written instrument signed by the company under its common seal acknowledging the
debt due by it to its holders. Through this document the company promises to pay a specific amount of
money as stated their in at affixed date in future together with period payment of interest to
compensate the holders for the use of funds. Debenture loan may be with or without a cargo on the
assets of the company. Thus, debenture is a certificate issued by a company under its seal
acknowledging a debt due by it to its holders. The company act, 1956 does not define debenture. It
merely states that denture includes debenture stock , bonds and any other securities of a company
whether constituting a change on the assets of the company or not.
13. 13. ADVANCE FINANCIAL MANAGEMENT 2013-14 Types of Debentures Debentures may be
divided into the following major types: 1. Unsecured debentures: Unsecured debentures are not given
any security on assets of the company. It is also called simple or naked debentures. This type of
debentures are treaded as unsecured creditors at the time of winding up of the company. 2. Secured
debentures: Secured debentures are given security on assets of the company. It is also called as
mortgaged debentures because these debentures are given against any mortgage of the assets of the
company. 3. Redeemable debentures: These debentures are to be redeemed on the expiry of a certain
period. The interest is paid periodically and the initial investment is returned after the fixed maturity
period. 4. Irredeemable debentures: These kind of debentures cannot be redeemable during the life time
of the business concern. 5. Convertible debentures: Convertible debentures are the debentures whose
holders have the option to get them converted wholly or partly into shares. These debentures are
usually converted into equity shares. Conversion of the debentures may be: Non-convertible
debentures, Fully convertible debentures, Partly convertible debentures 6. Other types: Debentures can
also be classified into the following types. Some of the common types of the debentures are as follows:
a. Collateral Debenture b. 2. Guaranteed Debenture c. 3. First Debenture d. 4. Zero Coupon Bond e.
Zero Interest Bond/Debenture
14. 14. ADVANCE FINANCIAL MANAGEMENT 2013-14 Features of Debentures 1. Maturity period:
Debentures consist of long-term fixed maturity period. Normally, debentures consist of 1020 years
maturity period and are repayable with the principle investment at the end of the maturity period. 2.
Residual claims in income: Debenture holders are eligible to get fixed rate of interest at every end of
the accounting period. Debenture holders have priority of claim in income of the company over equity
and preference shareholders. 3. Residual claims on asset: Debenture holders have priority of claims on
Assets of the company over equity and preference shareholders. The Debenture holders may have
either specific change on the Assets or floating change of the assets of the company. Specific change of
Debenture holders are treated as secured creditors and floating change of Debenture holders are treated
as unsecured creditors. 4. No voting rights: Debenture holders are considered as creditors of the
company. Hence they have no voting rights. Debenture holders cannot have the control over the
performance of the business concern. 5. Fixed rate of interest: Debentures yield fixed rate of interest till
the maturity period. Hence the business will not affect the yield of the debenture. INTERNAL
FINANCE A company can mobilize finance through external and internal sources. A new company
may not raise internal sources of finance and they can raise finance only external sources such as
shares, debentures and loans but an existing company can raise both internal and external sources of
finance for their financial requirements. Internal finance is also one of the important sources of finance
and it consists of cost of capital while compared to other sources of finance. Internal source of finance
may be broadly classified into two categories: A. Depreciation Funds B. Retained earnings
15. 15. ADVANCE FINANCIAL MANAGEMENT 2013-14 Depreciation Funds Depreciation funds are
the major part of internal sources of finance, which is used to meet the working capital requirements of
the business concern. Depreciation means decrease in the value of asset due to wear and tear, lapse of
time, obsolescence, exhaustion and accident. Generally depreciation is changed against fixed assets of
the company at fixed rate for every year. The purpose of depreciation is replacement of the assets after
the expired period. It is one kind of provision of fund, which is needed to reduce the tax burden and
overall profitability of the company. There is a controversy among the experts regarding the treatment
of depreciation as a source of funds , argue that funds are raised of finance , a company would have

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improved its financial position by charging periodical depreciation. The experts argue that the
depreciation is a non- cash expenditure and as such , it does not affect the working capital of the
company and therefore , it is not a source of finance. The above arguments cannot be questioned. It
cannot be derived that depreciation being a non-cash expenditure does not result in to cash outlay. As
such, part of the profits adjusted for depreciation being a non-cash expenditure does not result in to
cash outlay. As such, part of the profits adjusted for depreciation can be used by management to
increase any of the current assets or pay taxes, dividend etc. Hence depreciation can be considered as a
source of finance in a limited sense. Depreciation can be regarded as a source of finance because of the
following reasons. (i). Depreciation being non-cash expense, finds its way in to current assets through
charging. (ii). Although depreciation does not raise funds, it certainly saves funds (iii). Depreciation
result in to reduction of taxable income and hence, income tax liability for the period is reduced.
Retained Earnings Retained earnings are another method of internal sources of finance. Actually is not
a method of raising finance, but it is called as accumulation of profits by a company for its expansion
and diversification activities. Retained earnings are called under different names such as; self finance,
inter finance, and plugging back of profits. According to the Companies Act 1956 certain percentage,
as prescribed by the central government (not exceeding 10%) of the net profits after tax of a financial
year have to be compulsorily transferred to reserve by a company before declaring dividends for the
year. Under the retained earnings sources of finance, a part of the total profits is transferred to various
reserves such as general reserve, replacement fund, reserve for repairs and renewals, reserve funds and
secrete.
16. 16. ADVANCE FINANCIAL MANAGEMENT 2013-14 LOAN FINANCING Loan financing is the
important mode of finance raised by the company. Loan finance may be divided into two types: (a)
Long-Term Sources (b) Short-Term Sources reserves, etc. TRADE CREDIT Trade credit is one of the
most important sources of short-term finance. Trade credit refers to the sale of merchandise on
non-cash terms by one business organisation to another. There are three categories of trade credit viz.
open account is better known as accounts, notes payable and trade acceptances. Open account is better
known as accounts payable and is the most prevalent form of trade credit. Notes payable is used in
those situations where formal acknowledgment of the debt is called for. These notes are called as
promissory notes. In some business lines, the trade acceptance is employed in place of open account.
This kind of credit also involves a formal recognition of debt. Trade credit terms specified period of
time. The credit terms also include the payment period. Availability of trade credit are dependent on
several factors such nature and extend of competition. COMMERCIAL BANKS The commercial
banks plays play a significant role in providing industrial finance to business enterprise. Traditionally,
the commercial banks used to provide short-term loans to the industries. However, the commercial
banks have been providing medium-term and long-term finance to industrial enterprises. The bank loan
can take the form of cash credit, overdrafts, loans are granted against the security of current assets like
inventories, shares, receivable etc. LOANS: A loans is an advance to the business enterprise made with
or without security. In respect of a loan, the banker makes a lump-sum payment to the borrowed or
credits his deposit account with the money advanced. Loan is advanced for a fixed period at an agreed
rate of interest. Repayment of loan may be made either in instalments or at the end of the expiry
period. The borrower has to pay interest on the total amount of advance. Interest payment has to be
made whether he with draws the money from his account or not.
17. 17. ADVANCE FINANCIAL MANAGEMENT 2013-14 CASH CREDIT: A cash credit is a financial
arrangement through which the commercial banks allow the borrower to borrow money up to certain
limit. Cash credit arrangement is ordinarily made against the security of commodities hypothecated or
pledged with the banker. Interest is charged on the amount actually withdrawn for the actual period of
use. Cost of finance is the interest charged by the bank. The amount can be adjusted as per the need of
finance. The security may be pledge of movable property. HYPOTHECATION: Under this
arrangement, the possession of goods is not given to the banker. The commodities remain at the
disposal and in the go down of the borrower. The banker is given access to goods whenever he so
desires. The borrowing unit has to furnish periodical return of the stock to the banker. The banker

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advances the money only to the borrower in whose integrity it has full confidence. PLEDGE: Under
this arrangement, the goods are placed in custody of the banker with its name on the go down where
they stored. In the case of pledge, the borrower does not enjoy the right to deal with them.
OVERDRAFTS: If the borrower requires temporary finance, the banker may allow him to overdraw on
his account with or without security. As compared to cash credit, overdraft is advantageous to the
borrower, since the borrower has to pay interest only on the actual amount withdrawn by him. BILLS
DISCOUNTED AND PURCHASED: The commercial banks advance to the borrower by discounting
his bill. The account of the customer is credited with the net amount after deducting the amount of
discount. The banker may discount the bill with or without security from the debtor. PUBLIC
DEPOSITS In the recent years, business firms are raising short-term finance from their members,
directors and the general public. This is a suitable method of raising short-term finance. It is a cheaper
source of short-term finance as compared to bank credit. A company cannot accept deposits for a
period less than 6 months and more than 36 months. Raising of finance through public deposits does not
require any security. BUSINESS FINANCE COMPANIES Business finance companies are established
primarily for providing short-term and medium-term loans to business firms. As these firms have limited
financial resources, they provide only short-term and medium-term finance, such business firms raise
the financial resources mostly from their owners ad their relatives or friends. Lending by these business
finance companies is generally secured against accounts receivable, stock and other assets. These
companies may specialise their lending for special purpose such as financing of consumer durables,
transport finance etc.
18. 18. ADVANCE FINANCIAL MANAGEMENT 2013-14 ACCRUAL ACCOUNTS These accounts are
spontaneous and self-generating such as wages and taxes. In case of this source, the amounts become
due but are not paid immediately. There is a time lag between provision of payment of expenses and
actual payment which makes the finance available. INDIGENOUS BANKERS These are private
individuals business is to provide finance to small and local business units. They are engaged in
providing short-term and medium-term finance to business units. These bankers charge very high rate
of interest and therefore, they should be approached only as a last resort. COMMERCIAL PAPER It is
a short term issue of promissory note issued by a company in a private sector or public sector at a such
a interest on face value as may be decided by the issuing company. It is negotiable by endorsement and
delivery.
19. 19. ADVANCE FINANCIAL MANAGEMENT 2013-14 Mahanagar Telephone Nigam Limited
(MTNL) Mahanagar Telephone Nigam Limited (MTNL) was set up in 1st April of the year 1986 by the
Government 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 key metros, Delhi (the
political capital) and Mumbai (the business capital of India). The company has also been in the
forefront of technology induction by converting 100% of its telephone exchange network into the stateof-the-art digital mode. MTNL as a company, over last nineteen years, grew rapidly by modernizing the
network, incorporating the State-of-the-art technologies and a customer friendly approach. The
Company providing various types of telecommunication services including Telephone, telex, wireless,
data communication, telemetric and other like forms of communication (Internet). First digital
exchange world technology brought to India by the company during the year 1986. In the year of 1987,
Large Scale came to existence, introduction of push button telephone made dialing easier. Phone plus
services was offered by the company in the year 1988, it gives multiplied benefits to telephone users.
During the year 1992, the company introduced Voice Mail Service. MTNL had introduced 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 like dynamic locking, call
waiting/call transfer, hot lines etc were extended to the customers. Apart from this IVRS (Interactive
Voice Response System) like local assistance changed number information, and fault booking system
ensuring round the clock service, a CD-ROM version of the telephone directory and an on-line
directory enquiry through PC was introduced during the year 1997. To facilitate the clientele, MTNL
launched the country's first toll-free service in Delhi in the period of 1998. The Company made tied

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up with Billjunction.com in the year of 2001 to provide online bill presenting and payment facility to its
customers. The Company launched pre-paid GSM Mobile services under the brand name Trump
during the year 2002, and in the same year MTNL's Email on PSTN lines were introduced under the
brand name mtnl mail. MTNL had set up a new software venture called ComSoft for developing
communications software in the year 2002, as a part of its strategy to offer value-added
communications software in e-commerce,
20. 20. ADVANCE FINANCIAL MANAGEMENT 2013-14 e-governance and intelligent networking.
The Company brought in to market, the CDMA 1x 2000 Technology under the brand name Garuda 1- x
in the year of 2003. During the same period MTNL introduced pilot project of ADSL based Broadband
services and also launched the Virtual Phone services. Mahanagar Telephone Mauritius Ltd. bagged
second operator license in Mauritius. The company has joined the hands with Nokia, Samsung for WLL
handsets in the year 2003. MTNL has set up its 100% subsidiary as Mahanagar Telephone Mauritius
Limited. (MTML) in Mauritius, for providing basic, mobile and international long distance services as
2nd operator in Mauritius. Public sector telecom service provider MTNL 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 further lowering of ISD rates as the PSU is gearing up
to carrying its own traffic in the near future. To remain market leader in providing world class Telecom
and IT related services at affordable prices, the company partaking its all efforts in the same business
area and MTNL wants to become a global player, also find a place in the Fortune 500' companies.
21. 21. ADVANCE FINANCIAL MANAGEMENT 2013-14
22. 22. ADVANCE FINANCIAL MANAGEMENT 2013-14
23. 23. ADVANCE FINANCIAL MANAGEMENT 2013-14 RELIANCE COMMUNICATIONS Reliance
Communications Limited is the flagship Company of Reliance Anil Dhirubhai Ambani Group, India's
third largest business house. The company is India's largest private sector information and
communications company, with over 100 million subscribers. They have established a pan-India,
high-capacity, integrated (wireless and wire line), convergent (voice, data and video) digital network, to
offer services spanning the entire info comm. value chain. The company shares are listed on the
Bombay Stock Exchange Ltd and the National Stock Exchange Ltd. The company offers the full value
chain of wireless (CDMA and GSM), wire line, national long distance, international, voice, data, video,
Direct-To-Home (DTH) and internet based communications services under various business units
organized into three strategic customer-facing business segments; Wireless, Global and Broadband.
These strategic business units are supported by passive infrastructure connected to nationwide
backbone of Optic Fiber Network fully integrated network operation system and by the largest retail
distribution and customer services facilities. The company also owns through their subsidiaries, a global
submarine cable network infrastructure and offers managed services, managed Ethernet and application
delivery services. The company is India's first telecom service provider offering nationwide CDMA and
GSM mobile services with digital voice clarity. Their mobile portal, R World, offers the widest range of
mobile content spanning e-commerce, m-commerce entertainment, music, news, astrology, cricket,
bollywood, maps, search, one-click set-up, access to email and social networking. The company
offers the most comprehensive portfolio of enterprise voice, data, video, internet and IT infrastructure
services catering to large, medium and small enterprises for their communications, networking and IT
infrastructure needs. Their product portfolio includes national and international private leased
circuits, broadband internet access, audio solutions including Centrex, toll free services, voice VPN,
video conferencing , MPLS-VPN, remote access VPN, Global MPLS VPN managed internet data
centre (IDC) services to name a few. The company operates nationwide Direct-to-Home satellite
24. 24. ADVANCE FINANCIAL MANAGEMENT 2013-14 TV services under its wholly owned
subsidiary, Reliance Big TV Limited (Big TV). They formed an alliance with Poly com Inc., the
global leader in tele -presence, video and voice solutions, to introduce world's first wireless,
high-resolution video and CD-quality audio, conferencing service along with simple-to-use content
sharing capabilities - at a bandwidth speed of 256 kbps at any place. They own and operate the world's
largest next generation IP enabled connectivity infrastructure, comprising over 2,77,000 kilometers of

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fibre optic cable systems in India, USA, Europe, Middle East and the Asia Pacific region. Company
profile Reliance Communications Limited is the flagship Company of Reliance Group, one of the
leading business houses in India. Reliance Communications is Indias foremost and truly integrated
telecommunications service provider. The Company, with a customer base of 161 million as on March
31, 2012 including over 2.5 million individual overseas retail customers, ranks among the Top 4
Telecom companies in the world by number of customers in a single country. Reliance Communications
corporate clientele includes over 35,000 Indian and multinational corporations including small and
medium enterprises and over 800 global, regional and domestic carriers. Reliance Communications has
established a pan-India, next generation, integrated (wireless and wire line), convergent (voice, data
and video) digital network that is capable of supporting best-of-class services spanning the entire
communications value chain, covering over 24,000 towns and 600,000 villages. Mission: Excellence in
Communication Arena To attain global best practices and become a world-class communication
service provider guided by its purpose to move towards greater degree of sophistication and maturity.
To work with vigor, dedication and innovation to achieve excellence in service, quality, reliability,
safety and customer care as the ultimate goal. To earn the trust and confidence of all stakeholders,
exceeding their expectations and make the Company a respected household name. To consistently
achieve high growth with the highest levels of productivity. To be a technology driven, efficient and
financially sound organization. To contribute towards community development and nation building.
To be a responsible corporate citizen nurturing human values and concern for society, the
environment and above all, the people.
25. 25. ADVANCE FINANCIAL MANAGEMENT 2013-14 To promote a work culture that fosters
individual growth, team spirit and creativity to overcome challenges and attain goals. To encourage
ideas, talent and value systems. To uphold the guiding principles of trust, integrity and transparency
in all aspects of interactions and dealings. Reliance Global.com retail expansion The global calling card
market is experiencing extremely high competition. We have been able to maintain our margins despite
the introduction of aggressive tariffs by other operators both in the US and UK markets. We have
focused on delivering more value to our existing base of over 2.5 million Reliance Global Call
customers through event-based campaigns and Digital affiliate campaigns. We are operational in USA,
UK, Canada, Australia, New Zeland, Singapore, Hong Kong, Spain, Austria, Belgium, France, Ireland,
the Netherlands and India taking the total number to 14 countries, where Reliance Global Call is now
present. Telecom Infrastructure a. Indian telecom sector has witnessed an exponential growth in the last
few years. The demand for telecom infrastructure in India is driven by the subscriber growth in the
mobile Companies and focus on expansion of rural market. b. Indias tower sector is expected to
continue to grow in terms of both capacity and tenancies in next few years. c. With the completion of
network footprint expansion, the focus will be on ensuring delivery of the best QoS to customers and
also building up network capacity as traffic grows. d. Telecom Industry structure is impacted due to
cancellation of 122 licenses by the Honble Supreme Court. Clarity on continuation of the said licenses
will emerge in due course after Government concludes the spectrum auctions and other matters related
to such licenses. Global Our global business participates in diverse industry segments, viz. (i) Global
submarine capacity sales; (ii) Gateways facility for international traffics; (iii) National long distance for
voice and data; (iv) International voice transit; (v) International retail voice; (vi) Enterprise
connectivity and managed services business.
26. 26. ADVANCE FINANCIAL MANAGEMENT 2013-14 Reliance Communications Ltd was
incorporated on July 15, 2004 as a private limited company with the name of Reliance Infrastructure
Developers Pvt Ltd. In July 25, 2005, the company was converted into public limited company and the
name was changed to Reliance Infrastructure Developers Ltd. In August 3, 2005, they further
changed their name to Reliance Communication Ventures Ltd. In August 11, 2005, the equity shares of
the company were acquired by Reliance Industries Ltd and thus the company became the wholly
owned subsidiary of Reliance Industries Ltd . As per the scheme of arrangement, all the properties,
investments, assets and liabilities related to Telecommunication Undertaking of Reliance Industries Ltd
was transferred and vested in the company on a going concern basis with effect from December 21,

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2005. Reliance Communications Maharashtra Pvt Ltd became the wholly owned subsidiary of the
company through Reliance Telecom Ltd (RTL) during the year and merged into RTL, with effect from
May 25, 2011.
27. 27. ADVANCE FINANCIAL MANAGEMENT 2013-14
28. 28. ADVANCE FINANCIAL MANAGEMENT 2013-14
29. 29. ADVANCE FINANCIAL MANAGEMENT 2013-14 COMPARISION (Amount in Crore)
Particular MTNL RELIANCE COMM. Shareholder Fund 26,907.14 86,005.00 Long Term Fund
81,139.68 27,873.00 Short Term Fund 6,230.68 12,935.00 Equity and Liabilities 2,536.70 45,197.00 In
Above table it can be clearly seen comparative analysis on Source of Finance of two companies MTNL
and Reliance Communication. This shows that In Shareholder Fund Reliance communication having
Rs. 86005.00 which is higher as compare to MTNL where shareholder fund is Rs.26907.14. In Long
Term Fund Reliance communication having Rs. 27873.00 which is less as compare to MTNL where
Long Term fund is Rs.81139.68 .Its means long term borrowed fund is more used in MTNL firm. In
Short Term Fund Reliance communication having Rs. 12935.00 which is more as compare to MTNL
where Short Term fund is Rs.6230.68 .Its means Short term borrowed fund is more used in Reliance
Communication firm. In equity and liabilities Reliance communication having Rs. 45197.00 which is
higher as compare to MTNL where shareholder fund is Rs.2536.70
30. 30. ADVANCE FINANCIAL MANAGEMENT 2013-14 CONCLUSION In assessing the significance
of various companies financial data there are Various sources of financing available. Not every
business can use all of the available financing choices. Choosing the right financing source is based on
these vital points; business condition and the interest rate or the other cost of the finance. Some sources
of finance are more flexible than the others, according to the business situation, while refunding risks
should also be considered. There are many difficulties involved in raising funds to finance business
activities by developing partnerships that lead to a variety of key investment opportunities for its
clients. In a world where the external environment is constantly changing, it help us by providing them
with stability and certainty.
31. 31. ADVANCE FINANCIAL MANAGEMENT 2013-14 BIBLIOGRAPHY Advance financial
management book Thanks to MRS. MONALI RAY for help and cooperation for completing this
project Other site which help us to find matter on related topic are: http://wiki.answers.com
/Q/How_do_you_write_conclusion_in_business_project _on_source_of_finance_for_class_11?#slide=1
http://www.slideshare.net/pvmoney/sources-offinance
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