A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE

OF RELIANCE JIO INFO-COMM LIMITED AND BHARTI

AIRTEL LIMITED BY USING DUPONT APPROACH

SYNOPSIS

FOR PARTIAL FULFILMENT OF

B. COM. (HONOURS)

Under the supervision of - Submitted by-

Dr. Rakesh kumar yadav Soni Mawdi

Assistant Professor B.com 5th semester

1700509

DEPARTMENT OF ACCOUNTANCY AND LAW

FACULTY OF COMMERCE

DAYALBAGH EDUCATIONAL INSTITUTE

AGRA- 282005
 CONTENTS

 Introduction

 Review of literature

o National journals/papers

o International journals/papers

 Research gap

 Need of the study

 Objectives

 Research methodology

 Chapter proposed plan

 References

 Bibliography

2
INTRODUCTION

India is currently the world’s second-largest telecommunications market with a subscriber base

of 1.20 billion and has registered strong growth in the past decade and half. Overall teledensity

has increased from about 1 percent in 1994 to 91.45 percent in December 2018. Cumulative

foreign direct investment (FDI) inflows have increased from a paltry US$ 177.69 million in 2000

to US$ 32.82 billion in March 2019. The rise of mobile phones has contributed greatly to the

Indian economy in terms of consumer benefit, employment, revenue generation and gross

domestic product (GDP). Besides, India has the inherent advantage of being endowed with a

large addressable market. This is especially true since the launch of Reliance Jio in September

2016 that brought down data prices from Rs. 180 per GB in September 2016 to Rs. 10.52 per GB

in December 20184 . During the same period, data consumption exploded from 239 MB to 8.74

GB per subscriber per month.

COMPANY PROFILE

Bharti Airtel Limited

Bharti Airtel Limited is a leading global telecommunications company with operations in 16

countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks

amongst the top three mobile service providers globally in terms of subscribers. In India, the

company's product offerings include 2G, 3G and 4G wireless services, mobile commerce, fixed

line services, high speed home broadband, DTH, enterprise services including national &

international long-distance services to carriers. In the rest of the geographies, it offers 2G, 3G,

4G wireless services and mobile commerce. Bharti Airtel had over 403 million customers across

its operations at the end of March 2019.

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Reliance Jio Info-comm limited

Reliance Jio is an entire ecosystem that allows Indians to live the digital life to the fullest. This

ecosystem consists of powerful broadband networks, useful applications, best-in-class services

and smart devices distributed to every doorstep in India. Jio is about creating connected

intelligence for 6 billion global minds to unleash the power of a young nation. The three-pronged

focus on broadband networks, affordable smartphones and the availability of rich content and

applications has enabled Jio to create an integrated business strategy from the very beginning,

and today, Jio is capable of offering a unique combination of telecom, high speed data, digital

commerce, media and payment services.

DUPONT APPROACH

Measuring the business’s financial performance using well framed ratios has been a conventional

yet important tool for stakeholders including investors, creditors, bankers, analysts and financial

managers for taking their economic decisions. The various ratios will help stakeholders to

analyze the financial performance and soundness of a firm. Accounting and finance domain

experts generally categorize financial ratios into liquidity, profitability, solvency, and turnover

ratios. Liquidity ratios measure the ability of a firm to meet short-term debt, whereas a long term

solvency ratios measure how risky an investment for creditors in the firm. Profitability ratios

evaluate the revenue -generating ability of a firm based on different variables including sales,

equity, and assets. Turnover ratios measure how best the firm uses its scared resources to

generate revenues. Investors use return on equity to measure the ability of the firm to generate

earnings from its assets and economic efficiency of the management in using the resources of the

firm. The three important drivers of return on equity are increase in sales or sales turnover,

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higher profit margins and higher debt proportions as compared to equity (highly levered), each of

them can lead to a higher ROE. The DuPont approach addresses this important issue by breaking

down ROE and allowing rational investors to see what factors are primarily driving ROE. The

systematic analysis of the DuPont approach allows you to determine whether management is

generating value for shareholders and also comparisons can be made across companies within an

industry, between industries, or within a firm itself.

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REVIEW OF LITERATURE

 National journal/paper

 International journal/paper

NATIONAL JOURNALS/PAPERS

S.NO. NAME OF YEAR TOPIC OF OBJECTIVES FINDINGS

AUTHOR JOURNALS/PAPE

RS

1 Khan 2018 Panel data analysis To examine the Lagged profit,

t., shamim m. of profitability determinants of productivity, and

& goyal j. determinants: profitability over size play a major

evidence from the period of 2004- role in explaining

indian telecom 2017 profitability,

companies whereas the effect

of industry

affiliation is trivial

2 Gaste m. & 2017 Financial To comparing the Profit and roce of

hundekar v. performance of telecom companies bsnl company is

telecom companies financial very as compare to

performance. the airtel company.

3 Jan S. Financial Statements To determine The Long Term

2016 Analysis of Idea operational Debt Ratio of Idea

Cellular & Reliance efficiency of both cellular is better

6
 Telecommunications the companies by than Reliance

: A Comparative calculating Communication

Study Operating/Profitab showing that the

ility ratios. Idea cellular with a

high Long Term

Debt to Equity is

considered to be

highly leveraged.

4 Mishra a. , 2015 Comparative study To compare the This analysis

singh m. , mittal of major telecom level of proves that the

a. , soni a. providers in india satisfaction of the factors chosen for

indian determining the

telecommunication level of satisfaction

s’ customers of the customers are

significant except

for customer

services and

schemes.

5 Muthusamy A. 2012 A financial analysis To study the Among the six

of selected liquidity, telecommunication

telecommunication profitability and companies, the

companies in India turnover operating profit of

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 performance of Tata

selected private Communication is

telecommunication more consistent as

companies in the Co-efficient of

India. variance is less.

Bharti Airtel is

having better

operation profit as

the average is

higher.

INTERNATIONAL JOURNALS/PAPERS

S.NO. NAME YEAR TOPIC OBJECTIVES FINDINGS

1 Ramachandran 2019 Financial To study the Omantel and

N. & Performance of financial health by Ooredoo have

Kelkar A. Telecom Industry in calculating various enough short term

Sultanate of Oman ratios and by assets in all the

applying “Z- years of study

Score” model. except year 2016

where Omantel

shows a negative

working capital.

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 The companies

have not invested in

excess assets during

the study period.

2 Muchori S. 2018 Analysis of Return The paper aimed at The findings were

on Equity of Kenyan analysing the that the components

Telecommunication Kenyan of both the three and

Telecommunication five-step dupont

and Technology
and Technology models, and which
Industry Using
Industry’s return on involves financial and
dupont Model
equity using operational strategies

threestep dupont affected the ROE.

Model.

3 Vijayalakshmi 2017 A study on financial To know the short The value of

s. & performance term and long term absolute liquid ratio

sowndharya.k analysis of bharti financial position is fluctuating

airtel limited of the company.  throughout the

to know the profit period due to the

level of the fluctuation of liquid

company. liabilities.  equity

ratio has increased

due to the increase

in the outsider’s

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 fund.

4 Sharma V. 2017 To compare the Bharti Airtel is

Financial Resources financial performing better

Management: A performance than other

Comparative Study through Ratio telecommunication

of Indian analysis. companies in

Telecommunication To analysis the respect of earning

Sector profitability of the capacity, the

selected average of net

companies. profit ratio of

Bharti Airtel

Company.

5 Khan m. & 2016 Liquidity & To study the The performance of

Safiuddin s. profitability liquidity vodafone has

performance performance of improved and it has

analysis of selected selected performed better

telecom companies companies. To than bharti airtel in

study the terms of return on

profitability equity.

performance of

selected

companies.

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6 Bujaki M. 2014 Financial ratios and Calculating and Note that the use of

strategy in the interpreting a leverage is a double-

canadian number of edged sword. When

operating results are
telecommunications financial statement
strong, the multiplier
sector ratios for three
effect of leverage is
firms in the
beneficial. When
Canadian
operating results are
telecommunication
poor, higher levels of
s sector. leverage multiply the

negative effects of

poor performance.

Thus highly

leveraged companies

may have larger

swings in their roes.

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RESEARCH GAP

After reading the various reviews of literature available on this topic, it is evident that there are

many studies that have been conducted which are all focused on the liquidity and profitability of

a telecom company. Whereas, this studies compares the financial performance of the two

companies from the telecom sector by using DuPont approach and the study into the reasons for

the difference in the financial performance of the selected companies.

NEED OF THE STUDY

It is very easy for enterprise to prepare its financial statement, and know the financial position but it is a

challenging task for them to know liquidity, profitability and risk in companies The competitive

environment of the telecom companies is so tense that any telecom company that aims to survive

must be fully aware of the consequences of its liquidity and profitability obligations as both

variables can make or destroy its future.. In order to answer these quires a Du Pont approach is

taken. This study helps to overcome the above challenge and to understand the company’s financial

strength using different ratio. Since the operating efficiency of a firm and its ability to ensure

adequate returns to its shareholders depends ultimately on the profits earned by it and Return on

Investment is the ultimate parameter of the financial performance of a firm, the need is felt to

undertake a study on the selected companies of telecom sector.

OBJECTIVES OF THE STUDY

The objectives behind carrying the study are as follows:-

1. To measure financial performance of Bharti Airtel Limited and Reliance Jio Info-comm

limited in India using Extended DuPont approach.

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2. To compare the financial performance of Bharti Airtel Limited and Reliance Jio Info-comm

limited.

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RESEARCH METHODOLOGY

Sample Size

Two companies have been selected for comparative analysis.

 Bharti Airtel Limited

 Reliance Jio Info-Comm Limited

Criterion for selection of sample

 Two companies have taken into consideration for the study on the basis of top mobile

operators in India in terms of network as on 31st march 2019.

Period of Study

For the purpose of study, 3 years data will be taken into consideration from 2016-17 to 2018-19.

Type of Data

In order to examine, evaluate and analyze the study, secondary data will be taken into

consideration.

Data Collection

The secondary data will be collected from annual reports of the companies from their official

websites. Other data will be collected from the journal, magazine etc.

Tools to be used

Data will be analyzed through the various ratio Analysis, mean, standard deviation etc.

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Presentation Tools:

Data will be presented through tables, graphs etc.

OBJECTIVES WISE RESEARCH METHODOLOGY

OBJECTIVES RESEARCH METHODOLOGY

1. To measure financial performance of Bharti Ratio analysis will be used to measure the

Airtel Limited and Reliance Jio Info-comm financial performance of both companies.

limited

2. To compare the financial performance of DuPont approach will be used to compare the

Bharti Airtel Limited and Reliance Jio Info- financial performance of both companies.

comm limited

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PROPOSED CHAPTER PLAN

Chapters No. Contents

Chapter 1 Introduction

Chapter 2 Review of literature

Chapter 3 An overview of Bharti Airtel Limited and Reliance Jio Info-Comm

Limited

Chapter 4 Data Analysis And Interpretation

Chapter 5 Findings, Suggestion And Conclusion

Annexure 1 References

Annexure 2 Bibliography

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REFERENCES

Journals:

1. Kathuria, R. , Kedia, M. & Sekhani, R. (2019) “A Study of the Financial Health of the

Telecom Sector”.

2. Jan, S. (2016) “Financial Statements Analysis of Idea Cellular & Reliance

Telecommunications: A Comparative Study”. Vol-2, Issue-7, 2016 ISSN: 2454-1362

3. Vijayalakshmi, S. & Sowndharya, K. (2017)” A Study on Financial Performance Analysis of

Bharti Airtel Limited” Volume 2 Issue 3 March 2017, ISSN: 2456-4559

4. Khan, M. and Safiuddin, S. (2016) “Liquidity & Profitability Performance Analysis Of

Selected Telecom Companies” Volume 1, Issue 8 (Issn-2455-6602)

5. Muthusamy, a. (2012) “A Financial Analysis Of Selected Telecommunication Companies In

India” volume 2, issue 8 issn: 2249-1058

6. Gaste, m. And hundekar, v. (2017) “Financial Performance Of Telecom Companies “volume:

04 issue: 11 e-issn: 2395-0056

Web References:
https://main.trai.gov.in/sites/default/files/PIR_04042019_0.pdf

https://www.ibef.org

https://www.ibef.org/industry/telecommunications/showcase/reliance-jio-infocomm

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BIBLIOGRAPHY

https://main.trai.gov.in/sites/default/files/PIR_04042019_0.pdf

https://www.ibef.org

https://www.ibef.org/industry/telecommunications/showcase/reliance-jio-infocomm

18