Accounting

CA-III ASSIGNMENT BBA-LLB 3

“Financial Analysis of Bharti Airtel”

Submitted to -
Dr. Himanshu Mathur

Submitted by -
Kuldeep Singh Rathore
022301000006004006
Bharti Airtel

A. Introduction of industry
Bharti Airtel Limited is a leading telecommunication company. The telecommunication
industries come under the sector of information and communication technology and is
comprised of internet service provider and telecommunication companies which played the
leading role in the evolution of mobile communication. This industry helped in the
modernization of the society by facilitating communication, commerce, and connectivity
across the globe. Moreover, due to the rapid technological advancements, increasing
consumer demands and the shift of the preference of the customers towards online
platforms, this sector has also evolved rapidly. Being started with the traditional telephone
calls, which is the biggest revenue generator of the industry, it now stretches its arms to 3D
video call, live streaming, high-speed internet, images etc. The introduction of 5G internet
is the recent example of such advancement. This sector is the epicentre for growth and
innovation. The continuous use of these services is embedding in the society and this sector
is being the world’s biggest machine.
In today’s modern world each and every segment of the market is in touch with this
industry. From learning in schools to any business transaction, small shopkeeper to big
business houses and government to private sectors etc. this global system touches nearly
all of us. The introduction of OTT services such as WhatsApp, Instagram, Facebook, has
offered effective alternative communication methods other than the traditional telecom
service which also leads to the evolution of this industry. Due to the technological
advancement and the introduction of newer faster internet technology and Artificial
Intelligence, this sector holds the potential connecting vast number of customers more
effectively and solving their problems in one touch. This increasing use of the advanced
technology ultimately leads to the relines on this industry.
Due to the dynamic and extensive reach of this industry there are certain challenges faced
by it which includes infrastructure investment, cybersecurity risk, data privacy, regulatory
compliance etc. The emerging global trends which include digital transformation and focus
on the sustainable approach to achieve the same. The data shared via this medium can also
significantly impact on the public welfare and national security. Additionally, as the
present-day society is getting more use-to to this sector which requires regulation of
pricing, service quality, competition etc. so that it can used for the benefit of the customer
and development of the country.
As the society progress, so as the digital landscape and this industry plays a pivotal role in
shaping the modern world. The introduction of newer advance technology has significantly
changed the functioning of this industry, which started from the traditional landline system
to the present-day video conferencing and other wireless services and now becoming the
basic requirement in the individual’s life. Therefore, as this industry is beneficial for the
growth and development of the society at the same time it is also necessary for some
regulatory framework to avoid the misuse of the requirement of the individual.
 B. Introduction of company
Bharti Airtel Limited is an Indian multinational telecommunication services company
which was founded by Sunil Mittal in 1984. It operates in 18 countries and is headquartered
at New Delhi. It functions in three divisions namely Airtel Asia, Airtel Europe and Airtel
Africa. As of now, the ownership structure of this company is divided as follows- Bharti
Telecom (39.14%), Singtel (9.52%), Indian Continent Investment Limited (4.51%) and
Public Float (46%). Currently, it provides 5G, 4G, and VoLET services throughout the
India. It has also been named as India’s 2nd most valuable brand in the first ever Brandz
ranking by Millward Brown.
Initially, the company started its services from Delhi, becoming the first private telecom
operators in the country. The company focused on providing affordable and reliable mobile
services and it quickly gained a substantial customer base. By 2000, the company launched
its services in various circles and expanded rapidly across the country. In July 2004, the
company launched a ring back tine service named as “Hello Tunes” and the Airtel’s theme
song composed by A R Rahman became the most popular tune of that year. By the end of
the decade, it becomes the leading telecom provider in India with millions of subscribers.
In 2010, airtel acquired Zain’s operations in 15 African countries and this move transformed
the company into a global telecommunication player.
As the digital landscape of the country changed due to the digitalization and the shift
towards the online platforms and cashless transactions, Airtel also began to invest in newer
technology and new business segments. In 2016, the company launched its banking
services i.e., Airtel Payments Bank which aims to provide banking services to its customers.
In 2018, due to the growing OTT market, Airtel also introduced its own digital streaming
platform, Airtel Xstream.
Due to the increase in the demand of the services various other company entered this market
and increases the challenges and competition. Particularly the entry of Reliance Jio in 2016
disturbed the pricing and data services. The lower prices offered by the Jio company
attracted the customers attention and also gained the market share effectively. Airtel
responded this competition with aggressive pricing and enhanced service offerings. As the
time passed Airtel again gained its market share and in 2021, it launched its 5G services in
selective cities in India. The company further focuses on partnership with global tech firms
to enhance its digital ecosystem and to provide better services to its customers. The
company’s focus on innovation, customer service and strategic partnership plays a crucial
role for its survival and growth in this competitive landscape.
 C. Research Methodology

I. Type of Research
This study involves the analysis of the data from the publicly available sources of the
company. The type of research involved is secondary i.e., the data collected by someone
else or made available to the public is analysed to find out the growth of the company. This
type of research is more cost-efficient than primary research as no new data collection is
required and the data already collected can be used for the analysis.

II. Objective of Study

The main objective of this study is-
• To analyze the financial position of the company.
• To make comparative study of financial statements of different years.
• To evaluate key financial ratios and metrics to assess the company's growth and
stability.

III. Hypothesis of Study

The following hypothesis was framed to conduct the analysis-
H1: Bharti Airtel's financial performance has improved over the past two years.

IV. Tool use

The study employs financial statements, industry reports, and statistical tools such as Excel
for data analysis and visualization.

V. Limitation of the study

This study has the following limitations-
• We only analysed last four years’ financial statements which does not represent the
whole profitability of the company.
• The data used in the analysis is based on the company's own published past results.
As a result, ratio analysis metrics are not always indicative of future company
performance.
• Financial statements used for financial analysis are prepared based on a going
concern concept, so they do not always reflect the current situation.
 D. Data Analysis
Source: Dion Global Solutions Limited (moneycontrol.com)
Analysis Based on:

1. Net Sales (in Rs. cr.)

It is the total revenue which is generated from goods or services sold by the company during
a specific year. By analysing the sales per year, a company and effectively evaluate its
financial position and can also compare its performance. The year-on-year increase in the
sales indicates a healthy growth of the company and this can be affected by the market
conditions or competitive challenges. There can be a rapid increase in the demand of the
product and services by the company in a particular year due to some exceptional
circumstances and can result in the overall increase in the net sale. If the net sales decreases,
then the company should change its marketing strategy according to the preference of the
customers so that it can be increased which is important for the survival of the company in
the market. It is an important indicator of the health of the company and a company can
make changes accordingly.

Year Net sales

2024 149,982.40
2023 139,144.80
2022 116,546.90
2021 100,615.80

Net Sale
160000

140000

120000

100000

80000

60000

40000

20000

0
2021 2022 2023 2024

Series 1
INTERPRETATION
This graph shows that the net profit has increased constantly in the past years. This increase
indicates strong business growth, increased market share, or successful product launches.
The company could further figure out in which product the profit is high and can adopt
different strategies to further increase its sales.

2. Operating Profit
It refers to the company’s profit before interest and taxes (EBIT). This figure provides the
managing efficiency of the company of its core business operations. The analysis of the
trend in operating profit margins can indicate that how well a company manages its costs
relative to sales. The increase in the operating profit indicates the effective cost control and
higher pricing power of the company whereas decreases indicate increasing operational
cost, inefficiencies or pricing pressures. It is calculated as follows-
Operating profit= Revenue – Operating Expenses

Year Operating profit

2024 78,291.80
2023 71,273.50
2022 57,533.90
2021 45,371.70
 Operating Profit
90000

80000

70000

60000

50000

40000

30000

20000

10000

0
2021 2022 2023 2024

Series 1

INTERPRETATION
This graph shows the increase in operating profit as compared to the past years. This
increase shows the company’s efficient control on its operations, cost control or pricing
power. It is beneficial for a company in long term and it makes the survival and growth of
the company easier in this competitive market.

3. Reported Net Profit

The net profit is the overall profitability of the company after accounting for all expenses.
This is the actual amount left after deducting the taxes and interest from total revenue. The
analysis of the net profit provides a clear picture of the overall financial health and
profitability of the company. Also, the investors get a clear idea about their investment. The
increase in net profit suggests the company’s efficiency in converting sales into actual profit
whereas its decrease requires immediate attention to identify the issues related to it. It is
calculated as follows-
Net Profit= Operating Profit – Interest Expense – Tax Expense
Year Reported Net Profit
2024 5,848.60
2023 7,593.80
2022 1,831.70
 2021 -14,990.70

Net Profit
10000

5000

0
2021 2022 2023 2024

-5000

-10000

-15000

-20000

Series 1

INTERPRETATION
This graph shows the increase in net profit from the year 2021 to 2022 and further in the
year 2023. This increase shows the company’s ability to generate consistent returns. The
decrease in net profit from the year 2023 to 2024 signals economic challenges, increased
competition, or unexpected costs. The factors which affect the net profit are dividend
payout ratio, return on equity and net profit margin and a company should focus on these
factors on that it can manage its net profit.

4. Current Assets
Current assets include cash, account receivable, and inventory that can be converted to cash
within a year. It represents the company’s short-term financial stability and helps to assess
liquidity. The increase in current assets indicates better liquidity and the ability to meet
short-term obligation whereas a declining current asset shows liquidity issues and the
potential inability to meet short-term liabilities which rises concerns about the financial
stability of the company. It is calculated as-
Current Assets= Cash+ Accounts Receivable+ Inventory+ Other Current Assets
 Year Current Assets
2024 38,034.40
2023 40,577.00
2022 37,817.80
2021 40,071.90

Current Assets
41000
40500
40000
39500
39000
38500
38000
37500
37000
36500
36000
2021 2022 2023 2024

Series 1

INTERPRETATION
As the graph shows that the current assets of the company decrease from 2021 to 2022 and
then increases from 2022 to 2023 and then further decreases in 2024. This rise and fall in
the current assets of the company shows its liquidity and short-term stability which is not
up to the mark. The company have to take certain steps to maintain a stable financial
condition.
 5. Fixed Assets
It refers to the long-term tangible assets of the company such as the machinery, land,
equipment etc. The analysis of fixed assets of the company helps to understand the insights
of the company’s investment in infrastructure and its capacity for growth. Increasing fixed
assets shows expansion of the company by investing in newer technology or facilities and
it aligns positively with the revenue growth of the company. Whereas the decreasing fixed
assets suggest underutilization of resources or decrease in assets disposals which indicates
operational inefficiencies. It is calculated as-
Fixed Assets= Property, Plant and Equipment (PPE) + Intangible Assets
Year Fixed Assets
2024 233,729.10
2023 227,964.80
2022 172,664.20
2021 158,694.70

Fixed Assets
250000

200000

150000

100000

50000

0
2021 2022 2023 2024

Series 1

INTERPRETATION
As the graph shows the constant increase in the fixed assets. It reflects the growth of the
company and its expansion. The factors which are considered are property, plant,
equipment, depreciation expense, and capital expenditure.
 6. Earnings Per Share
It is calculated by dividing the net profit by the number of outstanding shares. It is the key
indicator for the profit available for shareholders. The increasing EPS signal the growth of
the company and investors are tend to invest more in the companies having higher EPS. On
the other hand, the decrease in EPS decreases the investor confidence and affects the
profitability of the company.
Year EPS
2024 8.25
2023 -0.16
2022 -6.16
2021 -45.88

EPS
20

10

0
2021 2022 2023 2024
-10

-20

-30

-40

-50

Series 1

INTERPRETATION
The earning per share increases from -45.88 to 8.25 from the year 2021 to 2024. The
positive increase in the EPS highlights the growing profitability of the company and also
increases the shareholder value.
 7. Debt – Equity Ratio
This ratio indicates the financial leverage used by the company. It compares the total
liabilities to shareholders’ equity. This is also useful in understanding the risk exposure and
capital structure of the company. The higher ratio suggests the greater reliance on debt
financing whereas a lower ratio reflects a conservative approach which reduces the
financial risks but also limits the growth opportunity of the company. It is calculate as-
Debt – Equity Ratio= Total Debt/ Total Equity
Year Ratio
2024 1.85
2023 1.68
2022 2.00
2021 2.20

Debt – Equity Ratio

2.5

1.5

0.5

0
2021 2022 2023 2024

Series 1

INTERPRETATION
As the graph shows, the Debt – Equity Ratio decreases from 2.20 to 1.68 from the year
2021 to 2023 and then further increases from 1.68 to 1.85 in 2024. This shows that the
company has moved to the conservative approach by restricting its growth and in the
present year company started taking opportunity to grow which is reflected in its increase
in the ratio.
 8. Dividend
It is the portion of profit distributed to the shareholders. The analysis of the dividend payout
of the company shows the company’s profitability, cash flow management, and shareholder
value distribution. The higher dividend signals a company’s strong cash flow and
commitment to returning value to shareholders and also reflects its confidence in future
earnings. The reduction in dividend reflects shift in strategy of reinvesting profits for
growth and can also affect the investors negatively.

Year Dividend (%) Dividend (Rs per share)

2024 160 8.00
2023 80 4.00
2022 60 3.00
2020 40 2.00

Dividend (%)
180

160

140

120

100

80

60

40

20

0
2020 2022 2023 2024

Series 1

INTERPRETATION
This graph shows that there is a constant increase in the dividend percentage. This trend
reflects the company’s positive dividend policy and also indicates strong financial health,
strong profits and commitment to shareholder value. The increase dividend percentage also
attract the investors and reflects the company’s confidence in its future earnings potential.
 E. Suggestions

1. Enhance Sales Strategies

• Market Research: Conduct thorough market research to gather insights on
customer preferences, emerging trends, and competitive dynamics. Understanding
the factors driving demand can help the company adapt its offerings and marketing
strategies accordingly. Surveys, focus groups, and analysis of market reports can be
valuable tools in this process.
• Product Diversification: Introduce new products or enhance existing ones based
on market feedback. Diversifying the product range can help capture different
segments of the market and mitigate risks associated with reliance on a limited
number of offerings. This could also involve exploring complementary products that
align with the company’s core offerings.
• Promotional Campaigns: Implement targeted marketing campaigns, especially
during times when sales typically dip. Seasonal promotions, discounts, or loyalty
programs can incentivize customers to purchase more frequently, helping to boost
sales and increase customer retention.
2. Cost Management and Efficiency
• Operational Efficiency: Continuously assess operational processes to identify
inefficiencies. This might involve adopting lean management practices, automating
certain processes, or investing in employee training to enhance productivity.
Regularly reviewing operational performance can uncover opportunities for cost
savings.
• Supplier Negotiations: Build strong relationships with suppliers to negotiate better
terms on raw materials and services. Establishing long-term partnerships can lead
to more favourable pricing and terms, which can help lower operating expenses.
3. Addressing Net Profit Fluctuations
• Expense Management: Implement a strict budgeting process that tracks expenses
meticulously. This can help identify discretionary spending that can be trimmed.
Regular financial reviews will enable the company to respond quickly to any
variances in budget versus actual performance.
• Profitability Analysis: Conduct a detailed profitability analysis of different product
lines and services. This will help identify high-margin products that should be
promoted more aggressively while potentially phasing out less profitable offerings.
4. Improving Liquidity
• Current Asset Management: Focus on managing inventory levels and accounts
receivable effectively. For example, implementing just-in-time inventory systems
can reduce holding costs, while refining credit policies can improve cash flow.
 Shortening credit terms for customers or offering discounts for early payment can
enhance cash collection.
• Cash Reserves: Establish a policy for maintaining healthy cash reserves. This
provides a cushion during economic downturns or unexpected expenses, ensuring
the company can meet its short-term obligations without relying on additional
borrowing.
5. Investment in Fixed Assets
• Strategic Capital Expenditures: Prioritize capital expenditures that support long-
term growth and align with the company’s strategic goals. For instance, investing in
advanced manufacturing technology can enhance efficiency and product quality,
leading to higher sales.
• Asset Utilization: Regularly assess the performance of fixed assets to ensure they
are being used effectively. If certain assets are underperforming, consider divesting
or reallocating resources to more productive uses.
6. Focus on Shareholder Value
• Increase EPS: Strategies to enhance profitability will naturally lead to an increase
in EPS, which is a key metric for investors. Communicate clearly with shareholders
about how management plans to drive growth and profitability, as transparency
builds trust and confidence.
• Balanced Dividend Policy: When the financial situation allows, consider
reinstating or increasing dividends. A consistent and attractive dividend policy can
enhance shareholder loyalty and attract new investors, signalling confidence in the
company’s future prospects.
7. Debt Management
• Leverage Optimization: While a rising debt-equity ratio can indicate growth
opportunities, it's important to maintain a balance that minimizes financial risk.
Consider setting a target ratio that aligns with industry norms while allowing for
strategic investments.
• Interest Rate Management: In a fluctuating interest rate environment, refinancing
existing debt may provide cost savings. Regularly review financing options to
ensure the company is benefiting from competitive rates, which can help lower
overall interest expenses and improve net profit.
 F. Conclusion
The financial analysis presents a mixed yet generally positive picture of the company’s
performance. Key indicators such as net sales and operating profit show an upward trend,
reflecting the company’s ability to grow and manage its core operations effectively.
However, fluctuations in net profit and current asset levels signal areas needing attention.
To navigate these challenges and capitalize on opportunities, the company should adopt a
multi-faceted approach. By enhancing sales strategies, managing costs more efficiently,
and focusing on liquidity, the company can ensure its financial stability and growth
potential.
Moreover, careful investments in fixed assets and a commitment to improving shareholder
value through a balanced dividend policy and EPS growth will strengthen investor
confidence.
In summary, proactive management and strategic planning are essential for sustaining
growth, enhancing profitability, and ensuring the company remains competitive in the
market. With these strategies in place, the company is well-positioned to tackle future
challenges and seize opportunities for continued success.