MIRA INFORM REPORT

Report Date :

06.03.2007

IDENTIFICATION DETAILS

Name :	BHARAT SANCHAR NIGAM LIMITED
Registered Office :	10^th Floor, Statesman House, B-148, Barakhamba Road, New Delhi- 110 001, India
Country :	India
Financials (as on) :	31.03.2005
Date of Incorporation :	15.09.2000
CIN No.:	U74899DL2000G0I107739
Com. Reg. No.:	55-107739
Legal Form :	It is a closely held public limited liability company. Subject is Government of India Undertaking.
Line of Business :	Providing comprehensive range of telegraph and telecom services throughout the country.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 2500000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a largest telecom company in public sector. Available information indicates high financial responsibility of the company. Trade relations are fair. Payments are correct and as per commitments. The company can be considered good for normal business dealings. It can be regarded as a promising business partner in a long run.

LOCATIONS

Registered Office :	10^th Floor, Statesman House, B-148, Barakhamba Road, New Delhi- 110 001, India
Tel. No.:	91-11-23357760
Fax No.:	91-11-23737760
E-Mail :	dirtf@bol.net.in adgtfp@sancharnet.in
Website :	http://www.bsnl.co.in
Location :	Owned
Head Office :	5^th Floor, Sanchar Bhawan, 20, Ashoka Road, New Delhi - 110 001, India.
Tel. No.:	91-11-23718698 / 23032980 / 23711209
Fax No.:	91-11-23730392
E-Mail :	dirtf@bol.net.in adgtfp@sancharnet.in
Website :	http://www.bsnl.co.in
Location :	Owned
Corporate Office :	Statesman House, B – 148, Barakhamba Road, New Delhi – 110 001, India.
Branches :	Located at: > Mumbai, Maharashtra > Kolkata, West Bengal > Jabalpur, Uttar Pradesh > Richhai, > Bhilai > Kharagpur

DIRECTORS

Name :	Mr. V. P. Sinha
Designation :	Chairman and Managing Director (w.e.f. 01.01.2004)
Name :	Mr. Prithipal Singhal
Designation :	Chairman and Managing Director (upto 31.12.2003)
Name :	Mr. A. K. Sinha
Designation :	Chairman and Managing Director
Name :	Mr. S. D. Saxena
Designation :	Director (Finance)
Name :	Mr. N. K. Mangla
Designation :	Director
Name :	Mr. S. K. Jain
Designation :	Director
Name :	Mr. S. C. Choudhary
Designation :	Director
Name :	Mr. R. N. Prabhakar
Designation :	Director (Government Nominee)
Name :	Mr. J. Sreedhara Sharma
Designation :	Director (Government Nominee)
Name :	Mr. Arun Bharat Ram
Designation :	Director
Name :	Mr. Ashok Jhunjhunwala
Designation :	Director
Name :	Mr. Vivek Singhal
Designation :	Director
Name :	Mr. Nirmal Saroop
Designation :	Director (upto 29.10.2003)
Name :	Mr. H. C. Kochar
Designation :	Director (upto 29.10.2003)
Name :	Mr. P. C. Rawal
Designation :	Director (Government Nominee) upto 22.10.2003
Name :	Mr. P. K. Chandra
Designation :	Director (Government Nominee) upto 13.08.2003
Name :	Mr. B. B. Singh
Designation :	Director (Government Nominee) upto 06.02.2004
Name :	Mr. Tarun Das
Designation :	Director (upto 26.12.2003)
Name :	Mr. G. S. Grover
Designation :	Director
Name :	Mr. Niranjan Singh
Designation :	Director
Name :	Mr. R. L. Dube
Designation :	Director
Name :	Mr. Y. S. Bhave
Designation :	Director
Name :	Mr. J R Gupta
Designation :	Director (Operations)
Name :	Mr. N K Mangla
Designation :	Director
Name :	Mr. P.K. Purwar
Designation :	Deputy Director

KEY EXECUTIVES

Name :	Mr. H. C. Pant
Designation :	Company Secretary

BUSINESS DETAILS

Line of Business :	Providing comprehensive range of telegraph and telecom services throughout the country.
Products :	> All type of Telecom Services > Telex, Telegraph, Circuits, Value Added Services > Sale of Directories, Forms, Waste Paper, etc.

GENERAL INFORMATION

No. of Employees :	Around 363000
Bankers :	> State Bank of India > Punjab National Bank > Corporation Bank > ICICI Bank > Indian Bank

Banking Relations :	Good
Auditors :	Thakur Vaidyanath Aiyar and Company Chartered Accountants

Banking Relations :	Good
Auditors :	Thakur Vaidyanath Aiyar and Company Chartered Accountants

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
10,000,000,000	Equity Shares	Rs. 10/-	Rs. 100,000.000 millions
7500,000,000	Preference Shares	Rs. 10/-	Rs. 75,000.000 millions
	Total		Rs. 175,000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
5,000,000,000	Equity Shares	Rs. 10/-	Rs. 50,000.000 millions
7500,000,000	Equity Shares	Rs. 10/-	Rs. 75,000.000 millions
	Total		Rs. 125,000.000 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital	125000.000	125000.000	125000.000
2] Reserves & Surplus	682565.100	602791.100	512383.200
NETWORTH	807565.100	727791.100	637383.200
LOAN FUNDS
1] Secured Loans	0.000	0.000	0.000
2] Unsecured Loans	72839.300	82208.900	75376.800
TOTAL BORROWING	72839.300	82208.900	75376.800
DEFERRED TAX LIABILITIES	17040.000	30440.200	0.000
TOTAL	897444.400	840440.200	712760.000
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	601884.900	617690.700	691302.200
Capital work-in-progress	38204.800	45722.600	0.000
Decommissioned Assets	734.600	804.500	0.000
INVESTMENTS	2000.000	2000.000	2000.000
CURRENT ASSETS, LOANS & ADVANCES
Inventories	27892.200	22453.500	23437.600
Sundry Debtors	63020.500	66370.300	39794.500
Cash & Bank Balances	305794.800	219311.300	115574.800
Other Current Assets	6362.700	1436.800
Loans & Advances	92320.700	75216.000	149229.900
Total Current Assets	495390.900	384787.900	328036.800
Less: CURRENT LIABILITIES & PROVISIONS
Current Liabilities	161232.400	146154.100	249712.800
Provisions	88822.300	73861.600	58866.200
Total Current Liabilities	250054.700	220015.700	308579.000
Net Current Assets	245336.200	164772.200	19457.800
MISCELLANEOUS EXPENSES	9283.900	9450.200	0.000
TOTAL	897444.400	840440.200	712760.000

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		361389.400	334500.400	313993.400
Other Income		40376.400	26400.100	51929.300
Total Income		401765.800	360900.500	365922.700
Profit/(Loss) Before Tax		84469.800	79300.800	89961.600
Provision for Taxation		(4927.100)	(22532.100)	30196.400
Profit/(Loss) After Tax		89396.900	101832.900	59765.200
Total Earnings		NA	20.000	1.906
Total Imports		NA	5712.100	NA
Expenditures :
	Manufacturing Expenses	NA	NA	45620.900
	Administrative Expenses	104968.900	80519.600	27043.700
	Salaries, Wages, Bonus, etc.	74206.300	83930.200	68108.900
	Financial Expenses	10898.000	292.900	882.400
	Power & Fuel	NA	NA	11448.200
	Depreciation & Amortization	93766.900	96248.600	98737.400
	Other Expenditure	35230.500	33023.600	28481.600
Total Expenditure		319070.600	294014.900	280323.1

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.10	0.12	0.13
Long Term Debt-Equity Ratio	0.10	0.12	0.13
Current Ratio	1.57	1.25	0.89
TURNOVER RATIOS
Fixed Assets	0.33	0.34	0.35
Inventory	14.36	14.58	11.64
Debtors	5.59	6.30	9.07
Interest Cover Ratio	8.75	210.77	76.87
Operating Profit Margin(%)	52.32	47.23	53.05
Profit Before Interest And Tax Margin(%)	26.38	18.46	21.60
Cash Profit Margin(%)	50.68	54.46	45.61
Adjusted Net Profit Margin(%)	24.74	25.69	14.16
Return On Capital Employed(%)	11.40	8.17	10.02
Return On Net Worth(%)	11.93	13.03	8.44

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was incorporated on 15^th September 2000 at New Delhi in India having Company Registration Number 107739.

Subject came into being pursuant to an agreement entered into with the Union of India, to acquire or to take over the management, control, operation and maintenance of commercial network, manufacturing, research & development and other telecom services of Department of Telecommunication, Government of India and its entire business operations, with all assets & liabilities including contractual right & obligation on 1^st October, 2000.

The company also took over the entire established officers, staff, employees and industrial workers posted in the field units and part of the Telecom Department.

Subject was incorporated with a paid up capital of Rs. 50000 millions and licenses to operate basic, cellular and net services nation-wide, barring Delhi and Mumbai.

Subject has taken over with effect from 1^st October, 2000 from the Department of Telecom Operations, which was operating countrywide telegraph / telecom services - about 24.000 million telephone connections, over 400 satellite earth stations, over 16000 route kilometres of microwave systems, with an even larger optic fibre cable network, and with coverage extending to every corner of the country, managing and operating this vast network were 20 territorial circles, two metro districts, four project circles, four maintenance regions, with support from specialised telecom units, over forty training institutions and other units such as telecom factories, telecom stores, etc. This includes 24.00 million telephone connections with about 20% of this working in rural and remote areas of the country. To support this network 29.22 million lines switching capacity, 2 million lines of trunk automatic exchange capacity, 185000 routes KM of optical fibre cable system, 160000 routes KM of microwave system and about 416 satellite stations are in operation. In addition about 378000 villages out of a total of 600000 villages are covered with village public telephones.

FINANCIAL HIGHLIGHTS

The financial year 2004-2005 witnessed a strong economic growth. Despite increased competition and considerable tariff reduction, the company’s volume of operations scaled new heights and the company had achieved record growth in turnover and profits.

Other income includes extraordinary income of Rs. 17659.000 millions received as reimbursement of license fee.

Proposed Dividend includes Rs. 2000.000 millions Interim Dividend and Rs. 261.400 millions tax on Interim dividend.

BASIC AND LIMITED MOBILE TELEPHONE SERVICES

The company continues to remain country’s largest basic telephone services provider. Despite the cutthroat competition, the basic services segment showed an unward growth. There was an increase of approximately 423845 lines, in comparison to that of the previous year. Though large number of basic telephone connections have been surrendered by the subscribers, continued efforts made by public machinery, together with the trainings imported to the staff had helped in arresting the surrender rate, thus maintaining a lead in this business segment. The basic telephone services segments of the business is expected to get further fillip in demand by the launch of broadband services of the company.

CELLULAR MOBILE TELEPHONE SERVICES

The company GSM technology based cellular mobile network has reached a long way, covering more than 3772 cities with a subscriber base of over 10.700 millions as on 31^st July 2005.

BROADBAND ACCESS NETWORK

The company has launched its Broadband Services under the brand name ‘Data One ’ on 14/1/2005. this offers services like High Speed Internet Access with speed ranging from 256 kbps to 8 Mbps. Other services like streaming video, video on demand, Bandwidth on damand etc. have also been planning. The company plans to build up capacity to give one million broadband connections by December 2005. then after, there are plans to give 2 millions and 3 millions connection in 2006 and 2007 respectively.

INTERNET SERVICE (SANCHARNET)

The company offers dialup internet services to the customers by post paid services with brand name ‘sancharnet’. The post paid services is a CLI based access services, currently operational in 100 cities. Sancharnet is available on local call basis throughout India to ISDN and PSTN subscribers. The internet dahba scheme of the company aims to further promote internet usage in rural and semi urban areas.

To keep pace with the latest and varied values added services to its customers, BSNL uses uses IP /MPLS based core to offer world calss IP/VPN services. MPLS based VPNs is a very useful service for corporate, as it reduces the cost setting involved as well as the complexity in setting up NPNs for customer networking. As on 31/03/2005 the company total internet customer base was 1798089 and total internet customer base dhaba were 4143 a toal of 708594 dial up internet connections have been given during 2004-2005 against a target of 0.700 millions.

INTERNET TELEPHONY

The Company is providing Internet Telephony Service under the brand name of WebFone. The service was started on 2nd September 2002. Revenue from the sale of Webfone cards is gradually picking up. 

INTELLIGENT NETWORK

Intelligent Network Services is in-services that incorporates several value added facilities, though designed to save time and money and enhance productivity. At present the company offers free phone, premium rate services, India telephone card, account card calling, virtual private network, universal access number and televoting in services. With the commissioning of five numbers of new technology in platforms at Kolkata, Bangalore, Ahmedabad and Hyderabad the India telephone card facility and new value added services and being provided throughout the country. Activation of these new IN platforms had increased the sale of ITC cards taking the figure to Rs. 2650 millions in 2004-205 alone.

NETWORK MANAGEMENT

The company is committed to provide a roust state-of-the –art infa\rastucture that will provide stable and superior services to its customers. Accordingly the MLLN network covering more than 200 cities was made operational in May 2004. since then about 22000 circuital, have been provided on this network. This has provided high level of stability to the leased circuits and capability to offer NX64 kbps circuits. Keeping in view the growing demand of leased circuits the network is being expanding to cover about 50 more locations and additional capacity at many existing locations is also being provided.

COMPUTERISATION

BSNL launched the portal which has the Web Mail Service for BSNL Employees, discussion Board, live news channels, e-payment for limited area etc. In 76 SSAs the integrated billing and customer care packages have been introduced which provide for better customer care by effective computerization of all customers related activities. Call Center facility has been introduced in 38 SSAs, which is a single point approach for addressing all customer needs cum grievances. The Web enabled Directory Enquiry access has been made more attractive and simplified by providing access through the map of India. All the new telephone exchanges with more than 1000 lines are being started with Computerized Fault Repair Service. All the 331 SSAs have computerized telephone billing. 

BSNL is on the look out for CDR based Customer Care and Convergent Billing System, which will meet out future requirements. The project should prepare BSNL to face new challenges due to competition by providing effective and efficient billing & customer care solutions. It envisages building of country wide intranet, reduce the cost of operation, increase revenue realization, stop leakage of revenue and minimize fraud besides providing round-the clock best customer care operations. 

The company’s fixed assets of important value include land, building, apparatus & plant, cable lines and wires, office equipments, electrical fittings, electrical appliances, furniture & fixtures, computers, subscriber installations, motor vehicle & launches, installation test equipments and masts & aerials.

FUTURE OUTLOOK

The company endeavors to remain a leading provider of a range of telecom services. The future outlook for the national economy specially the Indian telecom industry is very bring with positive signs of tremendous growth. Having laid a strong foundation in the growth of telecom sector and nation building the company expected to grow still taller and scale new heights in coming days, with its progressive and creative workforce and the support of the government.

AS PER WEB DETAILS

About Us

On October 1, 2000 the Department of Telecom Operations, Government of India became a corporation and was christened Bharat Sanchar Nigam Limited (BSNL). Today, BSNL is the No. 1 Telecommunications Company and the largest Public Sector Undertaking of India with authorized share capital of $ 3977 million and networth of $ 14.32 billion. It has a network of over 45 million lines covering 5000 towns with over 35 million telephone connections.

With latest digital switching technology like OCB,EWSD,AXE-10,FETEX,NEC etc. and  widespread transmission network including SDH system upto 2.5 gbps, DWDM system upto 80 gbps,Web telephony,DIAS,VPN, Broadband and more than 400,000 data customers , BSNL continues to serve this great nation .

Its responsibilities include improvement of the already impeccable quality of telecom services, expansion of telecom network, introduction of new telecom services in all villages and instilling confidence among its customers.

 BSNL has managed to shoulder these responsibilities remarkably and deftly. Today with over 45 million line capacity, 99.9% of its exchanges digital, nation wide Network management & surveillance system (NMSS) to control telecom traffic and over 4,00,000 route kms of OFC network, Bharat Sanchar Nigam Ltd is a name to reckon with in the world of connectivity. Along with its vast customer base, BSNL's financial and asset bases too are vast and strong. Consider the figures, as they speak volumes on  BSNL's standing:

The telephone infrastructure alone is worth about Rs. 1,00,0000 millions (US $ 22.74 billion)

Turnover of Rs. 314000 millions (US $ 7.14 billion)

 Add to which, BSNL's nationwide coverage and reach, comprehensive range of telecom services and a penchant for excellence; and you have the ingredients for restructuring India for a bright future. Today, BSNL is most trusted Telecom Brand of India.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.44
UK Pound	1	Rs.85.89
Euro	1	Rs.58.54

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	9
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	7
--LEVERAGE	1~10	7
--RESERVES	1~10	9
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	YES
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		66

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions