A PROJECT REPORT ON

COST ANALYSIS AND ACCOUNT RECIEVABLE MANAGEMENT AT IDEA

BY ANKUR JAIN 10BSP0073 IDEA CELLULAR LTD

(An !dea can change your life)

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A PROJECT REPORT ON

COST ANALYSIS AND ACCOUNT RECIEVABLE MANAGEMENT AT IDEA

BY ANKUR JAIN 10BSP0073

IDEA CELLULAR LTD

A Report Submitted in partial fulfillment of the requirements of PGPM Program of the IBS BANGALORE

DISTRIBUTION LIST: Mrs. Mahalaxmi Hariharan GM, Finance IDEA CELLULAR Mr. Pankaj Tayal Assistant manager, Finance IDEA CELLULAR DATE OF SUBMISSION - TH 112 - MAY 2011 Prof. Aparna Hawaldar Faculty Guide IBS BANGALORE

CERTIFICATE

This is to certify that the Project Report entitled COST ANALYSIS AND ACCOUNT RECIEVABLE MANAGEMENT AT IDEA. submitted by Ankur Jain, student of PGPM as partial fulfillment of the requirements of PGPM of IBS, BANGALORE is a bonafide work done by him at IDEA CELLULAR LTD. The Summer Internship Program was scheduled from 15 February, 2010 to 13 May, 2010 and the project was completed under our supervision.

Mr. Pankaj Tayal Assistant Manager, Finance IDEA CELLULAR LTD, Bangalore

Mrs. Mahalakshmi Hariharan General Manager, Finance IDEA CELLULAR LTD, Bangalore

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DECLARATION

I, Ankur jain Enrollment No.10BS0073, hereby declare that the project entitled COST ANALYSIS AND STREAMLINING OF DEBTORS AT IDEA CELLULAR LTD is my original work and does not contain any work which has been submitted for award of any other diploma or degree anywhere. This project has been completed under the supervision of Mr.Pankaj Tayal, AM finance, and the guidance of Mrs.Mahalaksmi Hariharan, GM Finance and Mr.Sachi Panigrahi, Senior Manager Finance for the Summer Internship Program as partial fulfillment of the requirements of PGPM program of IBS Bangalore.

PLACE: DATE:

Bangalore 10.05.2011

Signature of Candidate Ankit Chandak 10BSP0069 Class of 2012

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ACKNOWLEDGEMENTS

I would like to thank Honble Mrs.Mahalaksmi Hariharan (General Manager, Finance, IDEA CELLULAR Ltd.), for providing me this opportunity to complete my project work and gain optimum knowledge & experience by working in IDEA CELLULAR Limited. The project would have concluded no-where if Mrs.Mahalaksmi Hariharan (General Manager, Finance and Company Guide for the project) , Mr. Pankaj Tayal (Assistant Manager, Finance) ,Mr. Sachi Panigrahi (Senior Manager, Finance) were not there to give me the in-depth ideas & knowledge of Finance and Accounting. Behind every success there are many unsung heroes who have a great role in scripting the story of success. I would like to extend my thanks to Mr.Sudarshan Reddy, Mr.Shivraju S.D, and Mr. Som Shekhar who guided me on the financial and technical terminologies.

I am grateful to my faculty guide, Prof. Aparna Hawaldar (Faculty, IBS Bangalore) who guided me and also played a vital role during my project work at IDEA CELLULAR Ltd. Also I would like to thank my friends for their co-operation and suggestions, in completion of this project.

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TABLE OF CONTENT

SR NO I II III 1 2 2.1 2.2 2.3 2.3.1 2.3.2 2.3.3 3 4 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.2 4.2.1 4.2.2 4.2.3 4.2.4 4.3 4.3.1 4.3.2 4.3.3 4.4 4.4.1 4.4.2

TOPIC CERTIFICATION DECLARATION ACKNOWLDGEMENTS COMPANY PROFILE SYNOPSIS PROJECT PROPOSED PURPOSE AND OBJECTIVE OF THE PROJECT PROJECT METHODOLOGY PROCESS FLOW ISSUE POPPED UP DURING THE PROJECT SOLUTION TO THE ISSUE ABSTRACT OF THE PROJECT INTRODUCTION PART 1:- PREPAID BRIEF PROJECT LAYOUT OF MONTHWISE CALCULATION FINAL CALCULATION RESULT /ANALYSIS PART 2:- POSTPAID BRIEF PROJECT CALCULATION RESULT /ANALYSIS AGEING BRIEF PROJECT CALCULATION PART 4:- ROAMING BRIEF PROJECT

PG NO 3 4 5 9 12

15 16

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4.4.3 4.4.4 4.4.5 5 6 7 8 9

CALCULATION OBSERVATION RESULT/ANALYSIS FINDINGS RECOMMENDATIONS CONCLUSION REFERENCES GLOSSARY

47 47 48 49 50

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LIST OF FIGURES &TABLES

FIGURE NO 1-3 4 5 6 7 8 9 10 11-12 13 14 15 16 17 18 19 20 21 22 23 24-31

FIGURE NAME REVENUE AND GROWTH FIGURE OF IDEA PROCESS METHODOLOGY PROCESS FLOW PREPAID TARRIF INCENTIVE FLOW CHART AT IDEA COMMISSION PAYOUT FOR JAN 2010 ZONAL WISE COST PER ACTIVATION COST PER ACTIVATION TABLE COST PER ACTIVATION GRAPH GRAPHICAL REPRESENTATION OF TOP DSTS TOP 10 DSTS -POSTIVE GROWTH TOP 10 DSTS -NEGATIVE GROWTH TOP 10 RDSTS -POSTIVE GROWTH TOP 10 RDSTS -NEGATIVE GROWTH COST PER ACTIVATION GRAPH PIVOTED FORMAT OF AGEING SCHEDULE COMPOSITION CHART FOR MAKING SITE PIVOTED SUMMARY OF INVENTORY MARCH 2011 NATIONAL ROAMING TARRIF INTERNATIONAL ROAMING TARRIF ORACLE SNAPSHOT

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1. COMPANY PROFILE:IDEA Cellular is a publicly listed company, having listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in March 2007. IDEA is the 3rd largest mobile services operator in India, in revenue terms recorded a subscriber base of over 84 million as on end January 2011, which is 10.93 %( approx.)Of the total mobile connection in India. It is a pan India integrated GSM operator covering the entire telephony landscape of the country, and has NLD and ILD operations. In FY 2010 Idea increased its revenue market share by over 1%, despite stiff tariff war in the market.

The company has won license to offer 3G services in 11 service areas. Idea's 3G services are launched in the year 2011.Idea's strong growth in the Indian telephony market comes from its deep penetration in the non-urban and rural markets. Idea has the highest share of rural subscribers as a percentage of total subscribers, amongst other GSM players. In fact, two out of every three new subscribers now come from non-urban market. The company has its retail outlets under the "My Idea" banner. The company has also been the first to offer flexible tariff plans for prepaid customers.

IDEA offers seamless coverage to roaming customers traveling to any part of the country, as well as to international traveling customers across over 200 countries. Idea's partnership with over 400 operators ensures that customers are always connected while on the move, within the country or other parts of the world. IDEA Cellular is an Aditya Birla Group Company, India's first truly multinational corporation. The group operates in 26 countries, and is anchored by over 130,600 employees belonging to 40 nationalities. The Group has been adjudged the '6th Top Company for Leaders in Asia Pacific Region' in 2009, in a survey conducted by Hewitt Associates, in partnership with The RBL Group, and Fortune. The Group has also been rated 'The Best Employer in India and among the Top 20 in Asia' by the Hewitt-Economic Times and Wall Street Journal Study 2007. Idea Cellular won the GSM Association Award for "Best Billing and Customer Care Solution" for 2 consecutive years. IDEA Cellular has been recognized as the 'Most Customer Responsive Company' in the Telecom sector, at the prestigious Avaya Global Connect Customer responsiveness Awards 2010.

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STATISTIC OF IDEA CELLULAR LTD

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FIG 1 & 2 & 3:- REVENUE AND GROWTH FIGURE OF IDEA IN 2010

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2. SYNOPSIS:-

The project has been accomplished in IDEA CELLULAR Ltd. in view of better understanding of working of the Finance & Accounts department of an organization.

2.1 Project Proposed :-

PART 1 :- To calculate commission payout of Idea Cellular Limited to its Distributors and retailers with respect to number of activation done by them in each zone of Karnataka and finally calculate cost of customer acquisition (COCA) which means cost of acquiring each prepaid customer. PART 2 :- To calculate the total payout by Idea Cellular Limited to each DSTS for acquiring each postpaid customers and finally calculating the effectiveness of each DSTS

PART 3 :- To calculate the ageing schedule of (active, passive, core items) used by Idea Cellular Limited and then calculate per unit cost and number of site which can be made from inventory in hand for particular month, match it with the particular month projected figures made by IDEA network department and see how much deviation is there.

PART 4 :- To give on hand on practice of complete accounting module covered in oracle by idea and to rectify the errors in previous closed books and prepare bank reconciliation statement for cash at bank as part of auditing process. Also we have to rectify the errors and calculate the exchange in roaming scheme for selected inter-operators of idea and pass the final entries in oracle. Note: First three part of the project is related to COST ANALYSIS and part 4 is related to STREAMLINING OF DEBTORS.

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2.2 Purpose and Objective of the Project:-

The main aim behind this project to be familiar with the technicality & working environment of financials of corporate. The projects also gives brief insight in telecom world and give deep understanding of financial works in this sector. Each part of the Project has following Objectives:-

PART 1:- To analyze cost of acquiring each prepaid customers of organization across each zone and finally calculating which zone is doing well. In this way we can derive cost effective policy for organization with respect to each zone. Then analyze in which zone company is spending more and where it should cut down its cost.

PART 2:- To analyze cost of acquiring each postpaid customers of IDEA Cellular Limited and finally calculating which DSTS is doing well. In this way we can calculate efficiency of each DSTS and which one is performing better and how long they are beneficial for organization (i.e. to analyze for how many months they are with the organization and how much business they are giving to idea)

PART 3:- To analyze that the inventory which is in companys warehouse and order which are in process (OP) is sufficient according to organizations need for making particular site and number of site which can be made from inventory in hand.

PART 4:- To get aware of hand on process of accounting module of oracle and rectify and clear the accounts of roaming process in Idea Cellular for last 7 yrs. This will finally benefit to clear the accounts receivables/payable and thereby rectify the differences which finally affect the revenue.

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2.3 Project Methodology:-

DATA SOURCES

Primary

RESEARCH TYPE

Qualitative and Quantitative MS Excel and Oracle as Data base

RESEARCH TOOL

FIG 4

2.3.1 Process flow:-

ANALYZING

To create a spread sheet in pivoted summary format from primary data given to us.

To apply functions ,create excel based report And finally analyze it through graphs etc.

To match our reports with company reports,for deviations if any and rectify errors

CREATION

MATCHING

FIG 5
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2.3.2 Issues popped-up during the Project:-

Reconciliation of account statements requires a deep study of accounts of whole assessment year. The project also requires a deep understanding of how telecom process works before starting.

2.3.3 Solution to the Issues: Reconciliation of account statements and clearing of Roaming settlement under the guidance of company guide Mr. Pankaj Tayal. Brief on Technical Description, of Telecom process work by Mr.Sudarshan Reddy, Officer, IDEA cellular

3. ABSTRACT OF THE PROJECT:The project is directed towards the financial area of the organization. The area being covered is the analysis of cost structure, to enhance the revenue as well as streamlining of debtors account. The preliminary parts of project is to calculate commission payout or COCA(cost of customer acquisition) for both pre paid and post connection of Idea cellular across Karnataka zone and thereby calculate the efficiency of both DSTs(distributors) and retailers and also know which zone company is paying more. The other part of the project consist of compilation of 7 yrs of Idea roaming operators account ,to rectify the errors which have been passed ,calculate the exchange loss/gain which occur due to difference of currency and finally closed the books by writing off through entry. This part of
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project also gives us brief how Oracle works which company is using for financial works and know the inside out. The whole project finally deals with financial efficiency, whereby the aim is to increase the efficiency of accounting work in the company by extracting the weak points and removing it off.

4. INTRODUCTION 4.1 PART 1:- PREPAID

4.1.1 BRIEF:-

IDEA had become a pan India operator by 2009.The total subscriber base of idea as on 31st Dec 2009 were 57,611,872. The company is one of the most emerging company and has acquired license for nine states (Punjab, Karnataka, Tamil Nadu & Chennai, West Bengal, Orissa, Kolkata, Assam, North East and Jammu & Kashmir) in 2008 Some of the prepaid tariff plans in idea are:-

Idea Prepaid Offers Per Min. Plan New Customer s First Recharge Talk time Validity Call Rates Idea Idea Idea Other Landline STD Roaming SMS/day (free) Local SMS to 29p to 40p 60p 50p 70p 150 Local 60p 40p 60p 50p 70p 150 Local 60p 1p/sec 1p/sec 1p/sec 1p/sec 200 Local 60p/min 40p 50p 50p 70p 150 Local 50p/min 29p 1p/sec 20p Existing Customer s Rs.48 Rs.40 6 months Per Sec. Plan TBT* plan

Rs.28 Rs.15 6 months

Rs.47 Rs.40 12 months

Rs.46/Rs.26 Rs.40/15 6 months

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National SMS

Condition s

Rs 1.20/min After 6 months Idea to Idea 40p

Rs 1.20/mi n After 6 months Onnet 40p

Rs 1.20/min

50p/min

After 6 months Onnet 40p/min

* TBT = Tower based tariff plans are applicable only @ selected locations

FIG 6

4.1.2 PROJECT:Every year Idea Cellular Limited pays a sum of money to its retailers and distributors as commission of acquiring prepaid customer. There are several incentive involved for each activation done by distributors and retailers. The project proposes to calculate cost of acquiring each prepaid customer by finding the total commission paid to each retailer and distributor and the number of activation done by them with respect to each zone in Karnataka. There are in all 9 zones in Karnataka, so we have to calculate the total commission paid by Idea to its distributors and retailers and number of activation done by them across each zone for three months (Nov 2010-Jan 2011) and finally calculated the cost of acquiring customer across each zone .A month on month Analysis was carried out to find out which zone was performing better.

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Look of Incentive Flowchart in idea:-

FIG 7

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4.1.3 LAYOUT OF MONTHWISE INCENTIVE CALCULATION:-

FIG 8

4.1.4 FINAL CALCULATION DONE ACROSS EACH ZONE:-

ZONE COST PER ACTIVATION JAN-11 COST PER ACTIVATION DEC-10 COST PER ACTIVATION NOV-10

BEL

BLR1

BLR2

CNT

GLB

MLR

MYS

NRT

ROB

AVERAGE

66

55

83

85

65

69

89

68

84

72

91

69

63

74

86

83

84

61

87

65

68

70

91

86

89

72

70

68

68

72

FIG 9

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Results Matching OF Three months with General file (GL) managed at Idea:-

ZONE COST PER ACTIVATION JAN-11 COST PER ACTIVATION DEC-10 COST PER ACTIVATION NOV-10

CALCULATED AVERAGE

ACTUAL AVERAGE FROM GL

72

84

65

75

72

83

4.1.5 RESULT/ANALYSIS:-

Average cost of activation across each zone is INR .69 for three months (Nov 10-Jan 11). Cost per activation is increasing month wise for three months. Average Cost per activation is highest for Mysore region due to large number of ineligible activation done there by retailer and distributors, However for three months company is having large payout for MYS region, in spite of large no of ineligible activation. Cost per activation is least for BLR 2 region due to large number of eligible activation done there by retailers and distributors. However for three months company is having less payout for BLR 2 region, in spite of large number of eligible activation.

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4.2 PART 2:- POSTPAID

4.2.1 BRIEF:IDEA had become a Pan India operator by 2009.The total subscriber base of idea cellular on 31st Dec 2009 were 57,611,872. The company is one of the most emerging company and has acquired license for nine states (Punjab, Karnataka, Tamil Nadu & Chennai, West Bengal, Orissa, Kolkata, Assam, North East and Jammu & Kashmir) in 2008.Some of the postpaid plans are IDEA 99, IDEA 225, and IDEA Economy, IDEA Group etc.

4.2.2 PROJECT:-

Every year Idea Cellular Limited pays commission to DSTS along with fixed salary for acquiring post paid customers. There are several incentives paid to distributors which are divided into various category comprising of EBU (who acquire corporate customers), DSTS & RDSTS (who acquire customers and retailer).Thus part of proposed project is to calculate the total payout to DSTS by organization (i.e. Gross salary + Incentive) in each month for three months (Nov 2010-Jan 2011). We made calculation for the number of activation done by them and then eventually calculated the cost per activation of each DSTS. In this way we arrived at the trend of cost per activation of each DSTS for three months. By doing this analysis we will also come to know about the DSTs performance based on his age in the organization.

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4.2.3 CALCULATION DONE:TYPE TOTAL NOV PAYOUT TOTAL DEC PAYOUT TOTAL JAN PAYOUT TOTAL NOV ACTIV ATION 1208 468 TOTAL TOTAL JAN COST/ELIGIBL DEC ACTIVATION E ACTIVATION ACTIVAT NOV ION 1378 876 1299 1052 607 805 COST/ELIG IBLE ACTIVATI ON DEC 768 468 COST/ELI GIBLE ACTIVATI ON JAN 736 416

DST RDST

1109172 469980

1336712 472560

1233568 566931

FIG 10

1,200 1,000 800 600 400 200 COST/ELIGIBLE COST/ELIGIBLE COST/ELIGIBLE ACTIVATION NOV ACTIVATION DEC ACTIVATION JAN DST RDST

BAR FORMAT

FIG 11
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1,200 1,000 800 600 400 200 COST/ELIGIBLE COST/ELIGIBLE COST/ELIGIBLE ACTIVATION ACTIVATION ACTIVATION JAN NOV DEC 1,003 864 625 525 DST RDST 1,051 944

LINE FORMAT

FIG 12

4.2.4 RESULT /ANALYSIS:-

Cost of eligible activation of DSTs is much more than RDSTs across each months We arrived at an upward trend in DSTs performance each month as compare to RDSTs which is following downward trend. The company is paying more to DSTs as compared to RDSTs in terms of gross salary and incentive so they are the one who are acquiring more activation as compared to RDSTs. From the above data efficiency of top 10 DSTs & RDSTs were also calculated, which is as follows:-

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CODE

CP TYPE

3 MEA 90 100 135 76 122 61 132 112 92 10

3 MTP 51810 47120 38450 36000 34075 33775 32200 31475 31375 39990

EBU10050 DST EBU10008 DST EBU10147 DST DST00013 DST00066 DST00049 RDST RDST RDST

EBU10157 DST EBU10095 DST EBU20365 DST EBU20314 DST

80000 70000 60000 50000 40000 30000 20000 10000 0

DST DST DST RDST RDST RDST DST DST DST DST EBU10050 EBU10008 EBU10147 DST00013 DST00066 DST00049 EBU10157 EBU10095 EBU20365 EBU20314

160 140 120 100 80 60 40 20 0

3 MTP

3 MEA

GRAPHICAL REPRESNTATION OF TOP 10 DSTs & RDSTs PERFORMANCE FIG 13

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RESULT /ANALYSIS: The other finding seen through this graph was that for some DSTs in spite of paying them more for three months they have done very less activation for the same. While for some DSTs in spite of being paid less has acquired sufficient number of Customers. The DSTs are the one who comprise of EBU (deals with corporate customers) are being paid the most by IDEA Cellular and acquires sufficient number of activation for IDEA Cellular.

Top 10 DSTs with Positive Growth

35 30 25

1,300 1,200

1,400 1,200 1,000 800 700 800 600 300 300 280 244 9 31
DST

20 15 10 5 1 14 DST

238 8 27
DST GBL10004

217 6 19
DST EBU20651

400 200

2 26
DST

19
DST

4 32
DST

7 28
DST

4 16
DST

5 19
DST

NOV-10 ELIGIBLE JAN-11 ELIGIBLE GROWTH IN %

EBU60007 EBU20662 EBU20537 EBU10222 EBU20620 EBU20663 EBU20518 EBU10307

FIG 14 RESULT/ ANALYSIS:

Most growing DSTs are in term of activation is EBU20662 & EBU10222, & in term of
% is EBU60007. Company should concentrate more on most growing DSTs in terms of activation which will help the company to grow faster.

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Top 10 DSTs with Negative Growth

50 45 40 35 30 25 20 (71) 15 10 5 DST DST DST DST DST DST DST DST DST DST EBU20579 EBU30079 EBU20611 EBU20521 EBU70002 EBU20601 EBU20587 EBU20278 EBU10050 EBU10312

(10) (20) (30) (40) (50) (71) (69) (67) (60) (70) (80) (90) 17 2 44 8 9 2 22 5 4310 21 6 14 4 3210 3 1 (100) NOV-10 ELIGIBLE JAN-11 ELIGIBLE GROWTH IN % (77) (77)

(82) (88) (93) 15 1

(78)

FIG 15

RESULT /ANALYSIS:-

Company can avoid all these DSTs (OR) Can find the reason of declining by conducting a survey through market research team.

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Top 10 RDSTs with Positive Growth

90 80 70 60 50 40 30 20 10
1 13 2 13 14 78 1 5 22 54 6 14 6 14

1,400 1,200 1,200 1,000 800 550 457 400 400 145 133 133 127
11 25

NOV-10 ELIGIBLE 600 JAN-11 ELIGIBLE GROWTH IN %

114
7 15

91
11 21

200 -

FIG 16

RESULT/ANALYSIS:-

Most growing RDSTs are in term of activation is DST00066 & DST00193 & in term of
% is FBL11141 4429140982 Company should concentrate more on most growing DSTs in terms of activation.

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Top 10 RDSTs with Negative Growth

35 30 (30) 25 20 15 (69) 10 5 RDST RDST RDST RDST RDST RDST RDST RDST RDST RDST DST00116 DST00069 DST00056 DST00141 FBL11132 DST00014 FBL11137 FBL11129 FBL11130 FBL11126

(9) (24) (21) (17)

(10) (20) (30)

(46)

(44)

(40) (50) (60) (70) (80) NOV-10 ELIGIBLE JAN-11 ELIGIBLE GROWTH IN %

(75)

(94) 16 1 8 2 13 4 13 7 9 5 3021 1713 1915 1210 1110

(90) (100)

FIG 17

RESULT /ANALYSIS:

Company can avoid all these RDSTs (OR) Can find the reason of declining by conducting a survey through market research team,
with concern of marketing department.

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GRAPHS OF COST PER ELIGIBLE ACTIVATION OF TOP 13 DSTs & RDSs

16000 14000 12000 10000 8000 6000 4000 2000 0 COST/ELIGIBLE NOV COST/ELIGIBLE DEC COST/ELIGIBLE JAN TOTAL

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

DST00167 DST00215 DST00132 DST00238 DST00239 DST00208 FBL11141 DST00182 DST00116 DST00073 DST00234

FIG 18

RESULT /ANALYSIS: Cost per eligible activation is changing every month. As an average ,Jan month cost per eligible activation is high for each Dsts (Distributors) There are some Dsts (Distributors) cost per eligible activation is high for particular month and then it is decreasing and some cases it is vice versa.

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4.3 PART 3:- AGEING

4.3.1 BRIEF:The CAPEX and OPEX department in Idea Cellular deals with capital and operating expenditure of IDEA cellular. In Capex model there are several direct inventory used for transmission starting from few rupee to lakh. In Opex Model Company deals with working inventory which are indirectly used. This inventory is used for cell site transmission.

4.3.2 PROJECT:The third part of our project is to calculate ageing schedule of (active, passive and core items) used by Idea Cellular Limited and finally deriving the results for effectively managing its inventory with respect to its value. .Every month network department at Idea make some projections of no of sites to be made in particular month and based on this purchase ordered are raised. So this project finally deals with calculating per unit cost of site and no of site we can make for particular period from the current inventory in hand, and finally see whether there is any deviation from projected figures.

As first part of our process we have created pivoted summary of three accounts of IDEA namely Open PO, Open Indent, Open Inventory characterizing the Active, Passive core and Core items on the basis of their value and their ageing schedule.

Active items are those which are directly used for transmission like Antenna, Microwave link etc. Core items are those which are used in very small amount and are of major Application. Passive items are those which are indirectly used in Transmission operation like A.C, Car etc.

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After identifying these items from files given to us we have created pivoted summary of these items along with their shipment cost and the ageing period for which they lie in inventory.

Pivoted Format looks like:-

Capex / Opex CAPEX CAPEX CAPEX CAPEX CAPEX CAPEX CAPEX

TYPE PASSIVE PASSIVE PASSIVE ACTIVE ACTIVE ACTIVE ACTIVE

Total Amount 1400000 200000 80000 1400000 200000 3500000 2500000

Ageing range(in days) 11 to 20 11 to 20 11 to 20 11 to 20 11 to 20 11 to 20 11 to 20

Ageing days) 12 12 12 14 12 12 12

of

Indent(in

FIG 19

Result seen where: The Active items are widely used items and have long ageing days, are regular used in transmission. The Passive items are those which indirectly help in transmission and their cost is also not too high. They are in regular used and are temporary. The Core items are those which are most costly and have less ageing period. They are more of permanent items and are used for long periods.

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The next part of this Project deals with calculation of number of site and per unit cost of those site which can be formed from inventory in hand as on for March 2011.We have already characterize the inventory from Open PO and Open inventory, now the aim is to keep an account of these items and see how many sites can be made from these inventory in hand and from Open PO.

COMPOSITION REQUIRED FOR MAKING A SITE

ITEM DESCRIPTION Hardware for BTS ZXSDR BS8800_S444_900M_RSU60E ZTE BTS Accessory box (wooden) Surge Arrestors Supply 7/16'' Aluminum Feeder Cable(ANDREW FXL-780) Jumper Cable with Male Connectors Din Female Connectors for 7/16'' Aluminum Feeder Cable-Andrew Make GSM ANTENNA 65 DEG Radium Sticker Clamps 6 Way 7/16" (1 Set ) Weather Proofing Kit Outdoor 7/16" Grounding kits NEC 23 GHZ NEO/I E IDU (1+0) 32 E1 WITH CARD NEC 23 GHZ NEO/I E ODU HIGH NEC IF CABLE NEC E1 CABLE RIGHT ANGLE CONNECTOR STIGHT ANGLE CONNECTOR NEC 23 GHZ 0.6ANTENNA NEC MW ACC. KIT NEO/I E SDH 1 + 0 Krone Module 10 Pair Label Holder SUBRACK 19"(3U) FOR BMF 2/10,22,5MM,5W

QTY 1 1 6 84 6 12 3 0 14 6 12 1 1 75 2 1 1 1 1 6 6 1

FIG 20

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4.3.3 CALCULATION DONE:-

Pivoted summary from inventory as on March 2011 look like:-

COMPOSITION

QTY REQUIRE D

TYPE

UNIT COS T 1045 0 1226 5 3575 2 1225 9 1156 6 0.25

QUANTITY LYING IN INVENTOR Y AS ON MARCH 2011 8 12 4 1 2 1

NO OF SITE WHICH CAN BE MADE 3 12 4 1 2 1

GSM Antenna 900 Band, 90 HBW, 7 VBW , 17 Dbi NEC 23 GHz. High Performance Antenna (0.6M) NEC MW Antenna SP 15 GHZ 1.2M NSN 0.6 M PDH Antenna 23 GHz (as per BOQ) NEC 15 GHZ 0.6 HIGH PERFORMANCE ANTENNA ZTE 2/2/2 Accessories for Indoor BTS (ZXG10

3 1 1 1 1 1

GSM ANTENNA MW ANTENNA MW ANTENNA MW ANTENNA MW ANTENNA BTS

FIG 21

RESULTS:-

There are couples of items for particular month which are ordered from Open inventory and some from Open purchases order. For making a site some items are outsourced from the Extra inventory lying in other Zones which are not taken into account in calculation. Total number of site which can be made in March month is around 280 with per unit cost of Rs 0.4 Mn.

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4.4 PART 4:-ROAMING

4.4.1 BRIEF: At IDEA, each one of the customers is special. IDEA makes sure that your communication needs are met even when you are traveling out of your home region for business or pleasure. IDEA National roaming service ensures that even when you are out of your home region, you can make and receive calls, send and receive text messages and also access data services (to remain connected to the online world). So while traveling across India, if it's a matter of calling back home informing about your arrival, sending a text message to your loved ones, emailing that important business document while you attend meetings, uploading pictures on your online album - it's all possible with Roaming Service from Idea.

SERVICES OFFERED:>National Roaming > International Roaming

NATIONAL ROAMING TARIFF:National Roaming Charges while Roaming on Idea Networks

Usage Type

Roaming Charges

Incoming

SMS Call Outgoing SMS - Local and National

Free Re 1/Min

Rs. 1.50/ SMS

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SMS - International*

Rs 5/SMS

Local Call

Re 1/Min

STD Call

Rs 1.50/Min

FIG 22

INTERNATIONAL ROAMING TARIFF

Postpaid International Roaming Tariff Zone 1 2 3 4 5 6 7 8 9 10 11 12 Outgoing call within Outgoing call to Outgoing Call International Incoming Outgoing SMS the Visited Country India (Rs/Min) (except to India) (Rs/Min) Calls (Rs/Min) (Rs/SMS) (Rs/Min) 135 115 65 200 165 240 160 120 290 180 95 185 70 35 20 70 45 110 35 45 75 70 35 50 145 125 65 210 185 240 170 120 290 180 100 185 70 50 50 70 90 110 40 130 75 70 50 120 15 15 15 15 15 15 15 15 15 15 15 25

Postpaid Zone

Countries Afghanistan, Albania, Argentina, Bhutan, Botswana, Cambodia, Chile, Colombia, Congo Democratic Republic, Cote D'Ivoire, Cyprus, Denmark, Dominica, Ecuador, Faroe Islands, Finland, Germany, Haiti, Hungary, Lao, Liechtenstein, Luxembourg, Macedonia, Madagascar, Mauritius, Mexico, Paraguay, Peru, Salvador, Sudan, Suriname, Sweden, USA

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Angola , Anguilla , Armenia , Bangladesh , British Virgin Islands , Brunei Darussalam , Burkina Faso , Cayman Islands , Gambia , Grenada , Guyana , Iceland, Liberia , Macau , Malaysia , Maldives , Martinique , Montserrat , Norway , Seychelles , Sri Lanka , St Kitts and Nevis, St Lucia , St Vincent and Grenadines , Taiwan , Tanzania , Thailand , Turks and Caicos Islands , Uganda , Vietnam Fiji , Ghana , Gibraltar , Iran , Nepal , Sierra Leone , South Africa , Yemen Azerbaijan , Belgium , Estonia , Georgia , Kazakhstan , Kenya , Latvia , Lithuania , Mali , New Zealand , Portugal , Romania , Slovenia , Tunisia , Uruguay, Zimbabwe Bahrain , Bosnia & Herzegovina , Canada, French Polynesia , Greece , Hong Kong , Indonesia, Italy , Japan, Netherlands , Netherlands Antilles , Nicaragua , Niger, Oman , UAE , UK Jordan , Saudi Arabia

3 4 5

FIG 23

ROAMING PROCESS IN IDEA:-

Process Objectives are: To ensure completeness, accurate and timely and recording of roaming revenue and expense To ensure compliance with Accounting standards and other regulatory requirements

Process Owners are : Revenue Accounting team (Circle Accounts) Circle Finance Head

Accounting Policy Used: Roaming revenue is recognized on rendering of services. Roaming Charges are recognized on accrual basis. Provision for doubtful debts on account of roaming is made for dues outstanding for more than 180 days from the date of billing other than cases when an amount is payable to that operator or in specific case when management is of the view that the amount is recoverable.

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Scope of Process Used: Start - Operator wise revenue/Charges is captured in Billing support and Control system(Oracle) End - Settlement with operator

Control points Used: Total of Operator wise balance in account payable module tallies with - Main General Ledger code 10220 (as per Account Payable Trial Balance) and; - Control Sheet Validation of Revenue/Charges by RA (Revenue Accounting)Team Quarterly balance confirmation from each Operator including idea circles. Agreement of operator balance as per clearing house statement with Oracle (as per APTB)

Key points are:-

Roaming Billing System & Clearing House Tap Files to the clearing house; Supporting data for invoices (viz. day-wise Tap Out & SDR summary to be billed/received to/from other operators) (Target date : 8th of every month) Inter Circle revenue & charges details from IT ( Target date 3rd of every month) End of the month exchange rate for period closing

Key definitions are: In Roamer : Subscriber of other operator roaming in home network Out Roamer : Home Subscriber roaming in other operators network. Roaming Expense : Roaming Charges payable towards Out roamers calls, SMS & vas service used in visited Network Roaming Revenue : Roaming revenue receivable towards calls, SMS & vas service used by In roamers in our network. Tap-Out : File contains details of Calls, SMS & VAS etc. for in roamer Tap-In : File contains details of Calls, SMS & VAS etc. for Out roamer AA 12&13 : Agreement with international operators for In & out roaming activity.

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Dual IMSI Arrangement : Wherever a operator do not have roaming agreement with other operators but in order to enable customer to roam in such service areas also, the operators tie up with the other operator who has the roaming agreement With the operator of the required service area, such arrangement is called DUAL IMSI(International mobile subscriber identity) arrangement. Currently Maharashtra & Punjab are two circles working as a SPOC for this activity.

Periodicity: Accounting of Roaming revenue & Charges - monthly ROAMING invoicing and settlement : Idea Circles - Quarterly Other Operators Monthly

Process Guidelines: Settlement with each operator is to be done by netting off receivable & payable on monthly other than idea circle which is on quarterly basis. All invoices are to be recorded in same Roaming site in AP module of OFS (Oracle financial system).

Time Limit: For exchange of Tap Files between operators - 30 Days from called date (submitted to clearing house for onward transmission). Net Settlement with Operators- 45 days

Roaming Process working in Oracle

The basic objective for Roaming accounting in Oracle financial system is to streamline the process of capturing the inputs required for service tax credits

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Roaming invoices:-In roaming invoices are generated by IDEA and send to operators through MACH. Out roamers will do vice versa. This is applicable for both National and International Roaming. Booking of invoices:-All International(in/out) are booked at the SDR rate applicable for that period and national roaming invoices are booked in INR Settlement:-2 banks accounts are being operated by IDEA circle one for receipt and for making payment. The roaming operators sent through MACH, the remittance to receipt bank account. Similarly for the payment of invoices, IDEA will use payment bank account. The Remittance detail will be in respective foreign currency. On confirmation by MACH, the invoices in the roaming operators accounts are knocked off. Similarly for receipt invoices are settled as when we get receipt in bank.Settelment happens in net basis except Russia and Bangladesh. The exchange gain/loss are calculated and maintained separately.

NATURE OF ACTIVITIES DONE IN ROAMING PROCESS IN IDEA

1. Roaming Invoice booking: Roaming Revenue:-Debit Memo to be passed in account payable module for any revenue booking. All international invoices are raised in USD with reference to SDR and all Domestic invoices are raised in INR. Roaming Expenses:-Standard invoices to be passed for expense booking. Whenever there is foreign currency invoices these invoices will be booked in that currency with rate type as SDR and exchange rate as specified by MACH.

2.

Adjusting the current Invoices booked through various Modules:In some Account receivable Module may have debit Module and some may have credit. Similarly in Account payable module some may have credit balance. For the purpose of adjustment, the AR (Account Receivable) balance needs to be closed by sing ARAP bank and provide corresponding effect in account payable module.

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3. Settlement: Roaming Payment:-Payment to be made by selecting all respective payable invoices by the payment bank using payment batch or Manual payment for the Pay group Roaming. The payment will be made by MACH confirms that payment has been executed. The user will run the payment based report and based on that they will instruct MACH. When foreign currency invoices are setteled, difference between payment rate and invoice booking rate will be automatically charged to Exchange Gain/Loss. Roaming Collection-Manual Refund Payment to be passed by selecting Debit memo for Receipt Bank Account. Similarly to payment account Gain/Loss is calculated automatically.

SNAPSHOT OF WORKING IN ORACLE

1. ROAMING REVENUE

A) Creation of batches:-

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FIG 24 & 25 B) Recording of revenue by Debit Memo:-

FIG 26

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C) Distribution of Revenue Invoices:-

FIG 27

2. OUTROAMING CHARGES:A) Creation of batches:-

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FIG 28 & 29

B) Booking of Invoices by Standard Memo:-

FIG 30

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C) Validate and Initiate for Approval

FIG 31

4.4.2 PROJECT:The project consist of compilation of bank reconciliation statement for last 7 years( 2004-11) books of IDEA. The project basically deals with more than inter-operators of idea ,which comes into picture when idea customers goes in roaming, the revenue which it generates from other operators and the cost the company pays to other operators are already compiled in the idea general ledger. Our aim is to rectify the errors (for e.g. cheque deposited but not cleared, cheque issued but not presented etc.) which have been already been passed in books through bank reconciliation statement. We also identify whether there is exchange loss/gain (which occurs due to difference in currency each day) or bank charge; write off the account by passing the entries. Then these entries have to be finally passed in Oracle financial system which handles all billing and control activity as part of final activity.

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4.4.3 CALCULATION DONE:-

International (inter) Operators Covered: - 253 Period Covered: - 2004-11 Entries classified as Exchange (Gain/Loss): - More than 3500 Amount Analyzed as Exchange: - More than 16, 00,000(in INR)

Pivoted summary format looks like:Supplier Name Autpt-Mobilkom Austria Ag Autpt-Mobilkom Austria Ag Autpt-Mobilkom Austria Ag Autpt-Mobilkom Austria Ag Autpt-Mobilkom Austria Ag Supplier Number 190528 190528 190528 190528 190528 Invoice Number REVENUE OCT 04 -56 REVENUE NOV 04 -57 REVENUE DEC 04 -57 REVENUE JAN 05 -56 RECEIPT - JAN 05 -12 Invoice Description I-A00PT - REVENUE OCT 04 -56 I-A00PT - REVENUE NOV 04 -57 I-A00PT - REVENUE DEC 04 -57 I-A00PT - REVENUE JAN 05 -56 I-A00PT - RECEIPT JAN 05 -12 Invoice Date 31-Oct04 30-Nov04 31-Dec04 31-Jan05 31-Jan05 Invoice Amount -1,299.25 40,976.39 16,782.02 -1,747.22 20,229.00 Balance Amount -1,299.25 -40,976.39 -16,782.02 -1,747.22 20,229.00 TO BE ADJUSTED EXCHANGE BANK CHARGES O/S NETOFF NETOFF

FIG 32

4.4.4 OBSERVATION SEEN:-

The major type on entries which came across were: Outstanding: - Still not paid. Exchange Gain/Losses: - Amount gained or loss due to fluctuation of foreign currency. Bank charges:-The amount was not accounted.

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 Exchange Net-off and O/S Net-off:-These involve more than 3 or 4 entries which were of same period or Cost-Revenue Combination which were netted off together and were either realized as Outstanding or Exchange.

Disperancies seen in Accounting Process : Amount not booked in main file as on that date Unidentified entries Payment received but still shown outstanding Cost charged or revenue debited or credited of one operator in other operators account. Transfer Entries

4.4.5 RESULT/ANALYSIS:-

More than 250 operators Account which were lying unidentified will be cleared by passing the entries in Oracle. As major entries were exchange they will be written off by passing the following entries in ORACLE

1. Exchange Gain Gl Code Particulars 10220 Roaming Credits Control Account (Party) Realized Exchange Gain Rate

Dr Dr

Cr

80305

Cr Dr Dr Cr Cr

2. Exchange Loss Gl Code Particulars 80315 10220 Realized Exchange Gain Rate Roaming Credits Control Account (Party)
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In this way Company will be able to clear more than Lakhs of entries which were left unidentified Errors were rectified which were done while Compiling

5. FINDINGS:-

1.

The Company is paying more to number of Retailers and Distributors of Karnataka for

acquiring Prepaid and Postpaid Customers, in spite of less number of activation done by them and vice versa. 2. The Company is paying more in several zones of Karnataka where there is not enough

business i.e. very less customer acquisition , so there is need to concentrate on zones which are consistently doing good business. 3. There are several computing errors and many revenue and cost entries which could be an exchange while closing the Inter-operators Roaming account left unrecorded. 4. The average cost of making site is around Rs .4 lakh, in which couple of items are outsourced. The number of site differs each month depending upon the inventory in hand and purchase orders made. If inventory is high, purchases should be low and vice versa.

6. RECOMMENDATIONS:-

1. To get more precise understanding on how each telecom process work before starting on any telecom project. 2. To gather clear understanding in basic accounting while closing of entries.

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7. CONCLUSION:-

In IDEA CELLULAR they successfully fulfill their mission We delight our customer anytime anywhere. They survive because of their customers. IDEA is been instrumental in providing quality services at affordable cost. This is only possible by efficiently managing its revenue and cutting off the cost.

Through our project we aim to provide better options for idea to help them know, where are they spending well and where not so that they can cut down cost efficiently and remove the drawbacks from the system.

The project finally leads to enhancement of revenue and removing financial irregularities in IDEA CELLULAR.

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8.REFERENCES:-

1. Primary data provide by company

2. www.Ideacellular.com

3. en.wikipedia.org/wiki/Idea Cellular

4. PDF File of TRAI Report 2011

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9. GLOSSARY

ABBREVIATION
COCA DSTS RDSTS DSE

STANDS FOR
COST OF CUSTOMER ACQUISITION DISTRIBUTORS RETAIL DISTRIBUTORS DISTRIBUTORS SALES EXECUTIVE TERRITORY SALES EXECUTIVE FIRST RECHARGE PRIMARY RECHARGE BASE STATION ACCOUNT RECIEVABLE ACCOUNT PAYABLE PURCHASE ORDER SPECIAL DISCOUNT RATE TELECOM REGULATORY AUTHORITY OF INDIA

TSE
FRC PRC BTS AR AP PO SDR TRAI

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