ANKUR SIP

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)

1

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:-

2

Mrs. Mahalaxmi Hariharan

GM, Finance

IDEA CELLULAR

Mr. PankajTayal

Assistant manager, Finance

IDEA CELLULAR

DATE OF SUBMISSION 11TH 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 Mrs. Mahalakshmi Hariharan

Assistant Manager, Finance General Manager, Finance

IDEA CELLULAR LTD, Bangalore IDEA CELLULAR LTD, Bangalore

3

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: Bangalore Signature of Candidate

DATE: 10.05.2011 Ankit Chandak

10BSP0069

Class of 2012

4

ACKNOWLEDGEMENTS

I would like to thank Hon’ble 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.

5

SR NO TOPIC PG NO

I CERTIFICATION 3II DECLARATION 4III ACKNOWLDGEMENTS 51 COMPANY PROFILE 92 SYNOPSIS 12

2.1 PROJECT PROPOSED2.2 PURPOSE AND OBJECTIVE OF THE PROJECT2.3 PROJECT METHODOLOGY

2.3.1 PROCESS FLOW2.3.2 ISSUE POPPED UP DURING THE PROJECT2.3.3 SOLUTION TO THE ISSUE

3 ABSTRACT OF THE PROJECT 154 INTRODUCTION 16

4.1 PART 1:- PREPAID4.1.1 BRIEF4.1.2 PROJECT4.1.3 LAYOUT OF MONTHWISE CALCULATION4.1.4 FINAL CALCULATION4.1.5 RESULT /ANALYSIS4.2 PART 2:- POSTPAID

4.2.1 BRIEF4.2.2 PROJECT4.2.3 CALCULATION4.2.4 RESULT /ANALYSIS4.3 AGEING

4.3.1 BRIEF4.3.2 PROJECT4.3.3 CALCULATION4.4 PART 4:- ROAMING

4.4.1 BRIEF4.4.2 PROJECT

6

TABLE OF CONTENT

4.4.3 CALCULATION4.4.4 OBSERVATION4.4.5 RESULT/ANALYSIS5 FINDINGS 476 RECOMMENDATIONS 477 CONCLUSION 488 REFERENCES 499 GLOSSARY 50

7

FIGURE NO FIGURE NAME1-3 REVENUE AND GROWTH FIGURE OF IDEA4 PROCESS METHODOLOGY5 PROCESS FLOW6 PREPAID TARRIF7 INCENTIVE FLOW CHART AT IDEA8 COMMISSION PAYOUT FOR JAN 20109 ZONAL WISE COST PER ACTIVATION10 COST PER ACTIVATION TABLE

11-12 COST PER ACTIVATION GRAPH13 GRAPHICAL REPRESENTATION OF TOP DSTS14 TOP 10 DSTS -POSTIVE GROWTH15 TOP 10 DSTS -NEGATIVE GROWTH16 TOP 10 RDSTS -POSTIVE GROWTH17 TOP 10 RDSTS -NEGATIVE GROWTH18 COST PER ACTIVATION GRAPH19 PIVOTED FORMAT OF AGEING SCHEDULE20 COMPOSITION CHART FOR MAKING SITE21 PIVOTED SUMMARY OF INVENTORY MARCH 201122 NATIONAL ROAMING TARRIF23 INTERNATIONAL ROAMING TARRIF

24-31 ORACLE SNAPSHOT

8

LIST OF FIGURES &TABLES

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”.

9

STATISTIC OF IDEA CELLULAR LTD

10

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

11

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 DST’S for acquiring each postpaid customers and finally calculating the effectiveness of each DST’S

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”.

12

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 DST’S is doing well. In this way we can calculate efficiency of each DST’S 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 company’s 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.

13

2.3 Project Methodology:-

FIG 4

2.3.1 Process flow:-

FIG 5

14

Primary DATA SOURCES

Qualitative and QuantitativeRESEARCH TYPE

MS Excel and Oracle as Data baseRESEARCH TOOL

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

CREATION

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

ANALYZING

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

MATCHING

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

15

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 2008Some of the prepaid tariff plans in idea are:-

Idea Prepaid Offers

Per Min. Plan Per Sec. Plan

TBT* plan

New Customers

Existing Customers

First Recharge Rs.48 Rs.28 Rs.47 Rs.46/Rs.26

Talk time Rs.40 Rs.15 Rs.40 Rs.40/15

Validity 6 months6 months 12 months 6 months

Call Rates

Idea to Idea 29p 29p 1p/sec 20p

Idea to Other 40p 40p 1p/sec 40p

Landline 60p 60p 1p/sec 50p

STD 50p 50p 1p/sec 50p

Roaming 70p 70p 1p/sec 70p

SMS/day (free) 150 Local

150 Local 200 Local 150 Local

Local SMS 60p 60p 60p/min 50p/min

16

National SMS Rs 1.20/min

Rs 1.20/min Rs 1.20/min 50p/min

Conditions

After 6 months Idea to Idea 40p

After 6 months Onnet 40p   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.

17

Look of Incentive Flowchart in idea:-

FIG 7

18

Retailer Earning Per Activation

` 80

DSE Earns

` 3,000Per Month

Incentive for Distributors Primary Billing PRC Billing BTS Activation Distributor Support

TSE Incentives

FRC Primary

PRC Netsetter – Primary + Activation

Double Dhamaka

4.1.3 LAYOUT OF MONTHWISE INCENTIVE CALCULATION:-

FIG 8

4.1.4 FINAL CALCULATION DONE ACROSS EACH ZONE:-

ZONE BEL BLR1 BLR2 CNT GLB MLR MYS NRT ROBAVERAGE

COST PER ACTIVATION JAN-11 66 55 83 85 65 69 89 68 84 72COST PER ACTIVATION DEC-10 91 69 63 74 86 83 84 61 87 65COST PER ACTIVATION NOV-10 68 70 91 86 89 72 70 68 68 72

FIG 9

19

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

ZONECALCULATED

AVERAGE

ACTUALAVERAGE FROM GL

COST PER ACTIVATION JAN-11 72 84

COST PER ACTIVATION DEC-10 65 75COST PER ACTIVATION NOV-10 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.

20

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 DST’S 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), DST’S & RDST’S (who acquire customers and retailer).Thus part of proposed project is to calculate the total payout to DST’S 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 DST’S. In this way we arrived at the trend of cost per activation of each DST’S for three months. By doing this analysis we will also come to know about the DST’s performance based on his age in the organization.

21

4.2.3 CALCULATION DONE:-

FIG 10

TYPE TOTAL NOV PAYOUT

TOTAL DEC PAYOUT

TOTAL JAN PAYOUT

TOTAL NOV ACTIVATION

TOTAL DEC ACTIVATION

TOTAL JAN ACTIVATION

COST/ELIGIBLE ACTIVATION NOV

COST/ELIGIBLE ACTIVATION DEC

COST/ELIGIBLE ACTIVATION JAN

DST 1109172 1336712 1233568 1208 1378 1299 607 768 736

RDST 469980 472560 566931 468 876 1052 805 468 416

COST/ELIGIBLE

ACTIVATION NOVCOST/ELIGIBLE

ACTIVATION DECCOST/ELIGIBLE

ACTIVATION JAN

-

200

400

600

800

1,000

1,200

DSTRDST

BAR FORMAT

FIG 11

22

COST/ELIGIBLE ACTIVATION

NOV

COST/ELIGIBLE ACTIVATION

DEC

COST/ELIGIBLE ACTIVATION

JAN

-

200

400

600

800

1,000

1,200

864

1,051 944

1,003

625 525

DSTRDST

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:-

23

CODECP TYPE 3 MEA 3 MTP

EBU10050 DST 90 51810

EBU10008 DST 100 47120

EBU10147 DST 135 38450

DST00013 RDST 76 36000

DST00066 RDST 122 34075

DST00049 RDST 61 33775

EBU10157 DST 132 32200

EBU10095 DST 112 31475

EBU20365 DST 92 31375EBU20314 DST 10 39990

DST

DST

DST

RDST

RDST

RDST

DST

DST

DST

DST

EBU10050

EBU10008

EBU10147

DST00013

DST00066

DST00049

EBU10157

EBU10095

EBU20365

EBU20314

01000020000300004000050000600007000080000

020406080100120140160

3 MTP

3 MEA

GRAPHICAL REPRESNTATION OF TOP 10 DSTs & RDSTs PERFORMANCE

FIG 13

24

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 DST’s with Positive Growth

DST DST DST DST DST DST DST DST DST DSTEBU60007 EBU20662 EBU20537 EBU10222 EBU20620 EBU20663 EBU20518 EBU10307 GBL10004 EBU20651

-

5

10

15

20

25

30

35

-

200

400

600

800

1,000

1,200

1,400

1 2 1 4 7 4 5 9 8 6 14 26 9 32 28 16 19 31 27 19

1,300 1,200

800 700

300 300 280 244 238 217

NOV-10 EL-IGIBLEJAN-11 EL-IGIBLEGROWTH IN %

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.

25

Top 10 DST’s with Negative Growth

DST DST DST DST DST DST DST DST DST DSTEBU20579 EBU30079 EBU20611 EBU20521 EBU70002 EBU20601 EBU20587 EBU20278 EBU10050 EBU10312

-

5

10

15

20

25

30

35

40

45

50

(100)

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

-

15 17 44 9 22 43 21 14 32 3 1 2 8 2 5 10 6 4 10 1

(93) (88)

(82) (78) (77) (77)

(71) (71) (69) (67)

NOV-10 ELIGIBLEJAN-11 ELIGIBLEGROWTH IN %

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.

26

Top 10 RDST’s with Positive Growth

FBL1

1141

DST00195

DST00066

DST00167

DST00193

DST00190

FBL1

1121

FBL1

1122

DST00050

FBL1

1127 -

10

20

30

40

50

60

70

80

90

-

200

400

600

800

1,000

1,200

1,400

1 2 14 1 22 6 6 11 7 11 13 13 78 5 54 14 14 25 15 21

1,200

550 457

400

145 133 133 127 114 91

NOV-10 ELIGIBLEJAN-11 ELIGIBLEGROWTH IN %

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.

27

Top 10 RDST’s with Negative Growth

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

RDST

DST00116

DST00069

DST00056

DST00141

FBL11132 DST00014

FBL11137 FBL11129 FBL11130 FBL11126

-

5

10

15

20

25

30

35

(100)

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

-

16 8 13 13 9 30 17 19 12 11 1 2 4 7 5 21 13 15 10 10 (94)

(75) (69)

(46) (44)

(30) (24) (21)

(17) (9)

NOV-10 EL-IGIBLE

JAN-11 EL-IGIBLE

GROWTH IN %

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.

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

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RDST RDST RDST RDST RDST RDST RDST RDST RDST RDST RDSTDST00167 DST00215 DST00132 DST00238 DST00239 DST00208 FBL11141 DST00182 DST00116 DST00073 DST00234

0

2000

4000

6000

8000

10000

12000

14000

16000

COST/ELIGIBLE NOVCOST/ELIGIBLE DECCOST/ELIGIBLE JANTOTAL

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.

4.3 PART 3:- AGEING

29

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.

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.

30

Pivoted Format looks like:-

Capex / Opex TYPE Total Amount Ageing range(in days) Ageing of Indent(in days)

CAPEX PASSIVE 1400000 11 to 20 12

CAPEX PASSIVE 200000 11 to 20 12

CAPEX PASSIVE 80000 11 to 20 12

CAPEX ACTIVE 1400000 11 to 20 14

CAPEX ACTIVE 200000 11 to 20 12

CAPEX ACTIVE 3500000 11 to 20 12

CAPEX ACTIVE 2500000 11 to 20 12

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.

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

31

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 QTYHardware for BTS ZXSDR BS8800_S444_900M_RSU60E 1ZTE BTS Accessory box (wooden) 1Surge Arrestors Supply 6

7/16'' Aluminum Feeder Cable(ANDREW FXL-780) 84Jumper Cable with Male Connectors 6Din Female Connectors for 7/16'' Aluminum Feeder Cable-Andrew Make 12GSM ANTENNA 65 DEG 3Radium Sticker 0Clamps 6 Way 7/16" (1 Set ) 14Weather Proofing Kit Outdoor 67/16" Grounding kits 12NEC 23 GHZ NEO/I E IDU (1+0) 32 E1 WITH CARD 1NEC 23 GHZ NEO/I E ODU HIGH 1NEC IF CABLE 75NEC E1 CABLE 2RIGHT ANGLE CONNECTOR 1STIGHT ANGLE CONNECTOR 1NEC 23 GHZ 0.6ANTENNA 1NEC MW ACC. KIT NEO/I E SDH 1 + 0 1Krone Module 10 Pair 6Label Holder 6SUBRACK 19"(3U) FOR BMF 2/10,22,5MM,5W 1

FIG 20

4.3.3 CALCULATION DONE:-

32

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

COMPOSITIONQTY

REQUIRED

TYPEUNIT COS

T

QUANTITY LYING IN INVENTORY AS ON MARCH 2011

NO OF SITE

WHICH CAN BE MADE

GSM Antenna 900 Band, 90 HBW, 7 VBW , 17 Dbi 3

GSM ANTENNA

10450 8 3

NEC 23 GHz. High Performance Antenna (0.6M) 1

MW ANTENNA

12265 12 12

NEC MW Antenna SP 15 GHZ 1.2M 1MW

ANTENNA3575

2 4 4NSN 0.6 M PDH Antenna 23 GHz (as per

BOQ) 1MW

ANTENNA1225

9 1 1NEC 15 GHZ 0.6 HIGH

PERFORMANCE ANTENNA 1MW

ANTENNA1156

6 2 2ZTE 2/2/2 Accessories for Indoor BTS

(ZXG10 1 BTS 0.25 1 1

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.

4.4 PART 4:-ROAMING

4.4.1 BRIEF: -

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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 Free

Call Re 1/Min

Outgoing

SMS - Local and National Rs. 1.50/ SMS

SMS - International* Rs 5/SMS

Local Call Re 1/Min

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STD Call Rs 1.50/Min

FIG 22

INTERNATIONAL ROAMING TARIFF

Postpaid International Roaming Tariff

Zone

Outgoing call to India (Rs/Min)

Outgoing call within the Visited Country (Rs/Min)

Outgoing Call International (except to India) (Rs/Min)

Incoming Calls (Rs/Min)

Outgoing SMS (Rs/SMS)

1 135 70 145 70 15

2 115 35 125 50 15

3 65 20 65 50 15

4 200 70 210 70 15

5 165 45 185 90 15

6 240 110 240 110 15

7 160 35 170 40 15

8 120 45 120 130 15

9 290 75 290 75 15

10 180 70 180 70 15

11 95 35 100 50 15

12 185 50 185 120 25

Postpaid Zone

Countries

1

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

2

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

3 Fiji , Ghana , Gibraltar , Iran , Nepal , Sierra Leone , South Africa , Yemen

4Azerbaijan , Belgium , Estonia , Georgia , Kazakhstan , Kenya , Latvia , Lithuania , Mali , New Zealand , Portugal , Romania , Slovenia , Tunisia , Uruguay, Zimbabwe

5 Bahrain , Bosnia & Herzegovina , Canada, French Polynesia , Greece , Hong Kong , Indonesia, Italy ,

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Japan, Netherlands , Netherlands Antilles , Nicaragua , Niger, Oman , UAE , UK

8

Jordan , Saudi Arabia

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.

Scope of Process Used:-

Start - Operator wise revenue/Charges is captured in Billing support and Control system(Oracle)

End - Settlement with operator

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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 operator’s 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.

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.

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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

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

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account. The Remittance detail will be in respective foreign currency. On confirmation by MACH, the invoices in the roaming operator’s 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.

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.

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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:-

40

FIG 24 & 25

B) Recording of revenue by Debit Memo:-

FIG 26

C) Distribution of Revenue Invoices:-

41

FIG 27

2. OUTROAMING CHARGES:-

A) Creation of batches:-

42

FIG 28 & 29

B) Booking of Invoices by Standard Memo:-

FIG 30

43

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 Supplier Number

Invoice Number

Invoice Description

Invoice Date

Invoice Amount

Balance Amount

TO BE ADJUSTED

Autpt-Mobilkom Austria Ag

190528 REVENUE OCT 04 -56

I-A00PT - REVENUE OCT 04 -56

31-Oct-04

-1,299.25

-1,299.25 EXCHANGE

Autpt-Mobilkom Austria Ag

190528 REVENUE NOV 04 -57

I-A00PT - REVENUE NOV 04 -57

30-Nov-04

-40,976.3

9

-40,976.3

9

BANK CHARGES

Autpt-Mobilkom Austria Ag

190528 REVENUE DEC 04 -57

I-A00PT - REVENUE DEC 04 -57

31-Dec-04

-16,782.0

2

-16,782.0

2

O/S

Autpt-Mobilkom Austria Ag

190528 REVENUE JAN 05 -56

I-A00PT - REVENUE JAN 05 -56

31-Jan-05

-1,747.22

-1,747.22 NETOFF

Autpt-Mobilkom Austria Ag

190528 RECEIPT - JAN 05 -12

I-A00PT - RECEIPT - JAN 05 -12

31-Jan-05

20,229.00

20,229.00

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 GainGl Code Particulars Dr Cr

10220 Roaming Credits Control Account (Party)

Dr

80305 Realized Exchange Gain Rate Cr

2. Exchange LossGl Code Particulars Dr Cr

80315 Realized Exchange Gain Rate Dr

10220 Roaming Credits Control Account (Party)

Cr

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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 STANDS FOR

COCA COST OF CUSTOMER ACQUISITION

DST’S DISTRIBUTORS

RDST’S RETAIL DISTRIBUTORS

DSE DISTRIBUTORS SALES EXECUTIVE

TSE TERRITORY SALES EXECUTIVE

FRC FIRST RECHARGE

PRC PRIMARY RECHARGE

BTS BASE STATION

AR ACCOUNT RECIEVABLE

AP ACCOUNT PAYABLE

PO PURCHASE ORDER

SDR SPECIAL DISCOUNT RATE

TRAI TELECOM REGULATORY AUTHORITY OF INDIA

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