Project Report

PROJECT REPORT

On

“Study of Reliance PCO market and sales”

For

Reliance Infocomm Limited

Submitted By: Niveditha Ramanand

FP46/116

INDIAN BUSINESS ACADEMY

“Study of Reliance PCO market and sales”

Submitted in Partial Fulfillment of the requirement for the Summer Placement Project during

Post Graduate Diploma in Business Management [PGDBM]

Of the

INDIAN BUSINESS ACADEMY By

Niveditha Ramanand

Regd No: FP46/116

Under the guidance of

Mr. Manish Jain Mr. J K Naidu CEO Zonal Lead, CO Division Indian Business Academy Reliance Infocomm LTD Bangalore Bangalore

INDIAN BUSINESS ACADEMY Thataguni Post, Lakshmipura Kanakpura Main Road, Bangalore - 560062

CERTIFICATE

This is to certify that project entitled “study of Reliance PCO market and

sales” submitted by Ms Niveditha Ramanand (Regd No: FP46/116) student

of Indian Business Academy is a work of dissertation carried out by her

during the period of April 2005 to June 2005 .This project is submitted in

partial fulfillment of the requirements for the summer placement project

during the Post Graduate Diploma in Business Management

Prof Ramesh Thagat

DEAN

Indian Business Academy

Bangalore

Date:

INDIAN BUSINESS ACADEMY Thataguni Post, Lakshmipura Kanakpura Main Road Bangalore - 560062

CERTIFICATE

This is to certify that project entitled “study of Reliance PCO market and

sales” submitted by Ms Niveditha Ramanand (Regd No: FP46/116) student

of Indian Business Academy is a work of dissertation carried out by her

during the period of April 2005 to June 2005 .This project is submitted in

partial fulfillment of the requirements for the summer placement project

during the Post Graduate Diploma in Business Management

Mr. Manish Jain

CEO

Indian Business Academy

Bangalore

INDIAN BUSINESS ACADEMY Thataguni Post, Lakshmipura Kanakpura Main Road Bangalore - 560062

CERTIFICATE OF GUIDANCE

This is to certify that Ms Niveditha Ramanand has conducted the project

titled “study of Reliance PCO market and sales” under my guidance and

supervision. This project report is submitted in partial fulfillment of the

requirement for the summer placement project during the Post Graduate

Diploma in Business Management, a prestigious PG Diploma awarded by

the Indian Business Academy.

Mr. Manish Jain

Internal Project guide/Mentor

Indian Business Academy

Bangalore

INDIAN BUSINESS ACADEMY Thataguni Post, Lakshmipura Kanakpura Main Road Bangalore - 560062

Declaration by the Student

I, Ms Niveditha Ramanand, a student of Indian Business Academy,

Bangalore, declare that this Project Report titled “study of Reliance PCO

market and sales” conducted at Reliance Infocomm, Bangalore is an

original and a bonafide work carried in partial fulfillment of the requirement

for the summer placement project during the Post Graduation Diploma in

Business Managemt, a PG Diploma awarded by Indian Business Academy.

The findings and conclusions in this report are based on the information

gathered through personal interactions with the staff, questionnaire and the

observation during the tenure of summer placement in the company.

Niveditha Ramanand Regd No FP46/116 INDIAN BUSINESS ACADEMY Thataguni Post, Lakshmipura Kanakpura Main Road, Bangalore - 560062

i

Acknowledgment

An undertaking of this type is a result of contribution received from a number of people.

Never can this report be claimed as my individual effort. No amount of words written

will be sufficient and adequate to acknowledge all the people who have provided me with

the inspiration, guidance and help during the preparation of the project. Therefore I

extend my deep sense of gratitude towards them.

I am extremely grateful to Mr.Vinay Singh, PCO head of Karnataka State Reliance

Infocomm for giving me an opportunity to work on the project “study of Reliance

PCO market and sales” I also take the opportunity to thank our external project guides Mrs. Kalpana, Mr. J K

Naidu ( Zonal Lead ), Mr. Perin, Mr. Mohammed Shakeel ( Revenue Head ), Mr. Eshwar

( Local Business Associate Sainath Marketing), Mr. Raju Markandiah ( Customer

Relationship Executive) Ms Maya ( HR Head ) and Mr. Sundershan (Circle Head )for

their constant help and support during the project.

I express my sincere gratitude to Mr. Manish Jain, my mentor / internal guide, Mr

Ramesh Thagat, DEAN, Indian Business Academy, my colleagues and my dear parents

for their valuable inputs and constantly encouraging me in every step towards the

completion of the project successfully. Last but not the least; I would like to thank Indian

Business Academy for giving me the platform to gain practical exposure apart from the

regular curriculum and to experience life from its near distance.

Niveditha Ramanand Regd No FP46/116 INDIAN BUSINESS ACADEMY Thataguni Post, Lakshmipura Kanakpura Main Road Bangalore – 560062

ii

EXECUTIVE SUMMARY

Reliance Infocomm Ltd a Reliance group company is India’s largest mobile service

provider with over 6 million subscribers and a Pan India Network covering over 1100

towns. In 2002, Reliance Infocomm launched Public Calling Offices (PCO) prepaid for

which it is associating with local partners in the form of Local Business Associates

(LBAs) in various cities and towns.

In Bangalore, Reliance Infocomm has 12 LBAs.The whole city is divided among these

12 partners. Within 2 months of its launch RIC was successful to acquire 2500 customers.

The responsibilities of these LBAs include sales, installation of PCO connection,

recharging the cards and service after sales

In spite of successful launch of wireless PCO in the market there has been a negative

attitude among the customers towards the reliance due to lack of service provided by

LBA.The customers are not educated properly with the handling of the FWT and

PPA,availability of the recharge coupons, the benefits of the wireless reliance connection.

No doubt at present BSNL is the market leader in this business but there are some private

players like AIRTEL, TATA, who are also giving competition in some areas. The

negligence of the sales people has also hampered a lot resulting in some cases where the

customers are switching to their competitors. In order to tackle to this problem a project

was undertaken by the name Study of Reliance PCO market in Bangalore and sales of

coin box connection with the sole objective of identifying the process and rectifying

problems and sales.

To conduct this two month project summer trainees were hired and sent to each

area in the Bangalore city to do the survey of the existing as well as churned customers.

Each person was assigned an area handled by a particular LBA.The team was supposed

to understand the problems faced by the existing customers and the problem was to be

immediately brought into the notice of the respective LBA or the zonal head who were to

take the necessary actions to rectify the problem. The team was also supposed to analyze

why the some of the customers churned out of reliance and try to convince them to switch

back to reliance. Other than that the team also participated in the launch of coin box

connection of reliance and dealt with the sales of it too. They were also engaged in

iii

creating awareness among the people about reliance connection make them understand its

benefits and lure them to take the connection. The team was trained to impart necessary

information about the reliance PCO, commission structure and Tariff plan.

The project created a sense of trust among the PCO customers towards reliance. It also

helped to identify lot many problems which even the ZLs (Zonal Lead) where not aware.

The customers were also made aware of the product and its working.

WORD COUNT: 472

1

TABLE OF CONTENTS

TITLE PAGE NOs

ACKNOWLEDGEMENT i

EXECUTIVE SUMMARY ii

INDUSTRY PROFILE – TELECOM SECTOR 3

RELIANCE GROUP 9

RELIANCE INFOCOMM 10

BUSINESS 11

VISION 19

FINANCIAL ANALYSIS 21

PCO MARKET 25

INTRODUCTION RELIANCE PCO 27

ORGANISATIONAL HIERARCHY 29

PRODUCT 30

PREPAID CARD MANAGEMENT 31

STATEMENT OF THE PROJECT 32

OBJECTIVE 33

PROCEEDINGS OF THE PROJECT 34

SWOT ANALYSIS 36

PROBLEMS FACED DURING PROJECT 37

PROBLEMS FACED BY CUSTOMERS 38

SCOPE OF PROJECT 39

STEPS TAKEN BY RELIANCE 40

ANALYSIS ON CHURNED CUSTOMERS 41

ANALYSIS ON EXISTING CUSTOMERS 47

OBSERVATIONS 58

RECOMMENDATIONS 60

2

CONCLUSION 61

EXHIBIT 1 62

EXHIBIT 2 66

EXHIBIT 3 69

EXHIBIT 4 71

BIBLIOGRAPHY 73

3

INDUSTRY PROFILE – TELECOM SECTOR

15th August 1997 marked the 50th anniversary of India's Independence from British hegemony.

Telecommunications have played a critical role in shaping India's march towards progress and the

importance they hold for the future of India cannot be overstated. Telecommunication Services

were introduced in India soon after their invention in late 19th century by the British, not for

meeting any socio-economic objectives but with the purpose of meeting the requirements of the

government in matter of defense, law and order, general administration and revenue collection.

The national investment in telecom in the first six five-year Plans since 1950 hovered between 1.4

and 2.7 percent of the Gross Domestic Product (GDP). Only after 1985 did things start looking up

for telecom, with the investments jumping up to 3.6 percent of GDP in the Seventh Plan (1985-90)

and 11.9 percent in the Eighth Plan (1992-97). The Ninth Five Year Plan has a plan of 13percent

of GDP to be invested on the Telecommunications Infrastructure. In 1989 the Telecom Research

Center (TRC) formulated some guidelines for Rural Telecom Sector with plans to implement a

phone in every village till 1999. With the opening up of the economy in 1991 the sudden

requirements for telecommunications changed and the plans were redrafted in 1994 through the

National Telecom Policy. The new National Telecommunications Policy (NTP) announced in

1994 anticipates an expansion of ten million lines to a total base of almost 16 million within the

eighth five-year plan which ended in March 1997. The plan also called for all 0.6 million Indian

villages to be connected to the telephone network by 1997 - until now, only about one-third have

had a telephone. In addition, the aim was to achieve an average density of at least 2.5 lines per 100

people by the year 2000 for the Rural Sector. The world average is 10 per 100 people. Presently

India has 21,328 Telephone Exchanges with a capacity of 15.1 million lines. The network is

growing at an enormous rate of 21.6%. One-fourth of the total capacity is installed in the four

metropolitan cities of Delhi, Bombay, Calcutta and Madras

The changes in the technology have helped in the advancement of the business in the faster rate.

To keep in track of the competitive global markets the government is always pressurized to revise

the policy, regulation, and structure of the telecom sector. India, have responded by restructuring

the state-controlled telecom service provider, increasing private participation, and deregulating

service provision

4

India’s teledensity is just 1.38 phones per 100 hundred inhabitants (one of the lowest teledensities

in the world);

2.3 million people are on India’s registered waiting list for phones (it takes two or more years to

get a phone in India);

India has between 200,000 and 300,000 middle-class consumers;

97 percent of India's 600,000 villages have no telephone at all;

64 million by 2006, and this will require an investment of at least $60 billion by 2006

The process of telecom reforms in India had started in 1980s. Private manufacturing

of customer premise equipment was allowed in 1984 and proliferation of individual STD/ISD PCO

network undertaken on a large scale across the country through private individual franchisees. The

leaders among these were the Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar

Nigam Limited (BSNL). A high-powered Telecom Commission was set up in 1989 with all the

powers of the Government

New Telecom Policy came into force in 1990s and thereafter the pagers and cell phones came into

use. This policy also paved the way for private sector participation in telecom services. An

independent statutory regulator was established in 1997. Internet services were opened in 1998 and

progressively there was a major involvement of private sector in the growth of telecom services in

the country. The Telecom Regulatory Authority of India (TRAI) was formed in January 1997 with

a view to provide an effective regulatory framework and adequate safeguards to ensure fair

competition and protection of consumer interests.

The Government has already taken substantial steps to deregulate the telecom environment since

1993. Initiatives such as liberalizing the Internet environment through the introduction of the ISP

policy have been moves in this direction. Yet, telecom infrastructure lags behind other Asia Pacific

nations such as China, Singapore, among others that boast higher telephone/PC/Internet

penetration, and world class telecom infrastructure in terms of bandwidth availability, etc. so

important for domestic IT market proliferation and software exports.

During the 2000-01 to 2009-10 period, domestic demand for telephone lines is expected to

increase at a CAGR of 13.8 percent, to 112 million lines by March 2010. With the increasing

penetration of wireless technologies, especially in the rural areas, the supply constraints in

5

providing telephone lines are expected to decline gradually. As a result, the unsatisfied demand is

expected to decline from 8.2 percent in end March 2001 to less than 2 percent by March 2010.

The penetration of cellular mobile services is expected to continue to increase at a significantly

high rate. The substitution of fixed phones by mobile phones is expected to increase, as the price

differential between the subscription prices of the two services continues to decline.

The number of telephone lines per hundred inhabitants (or teledensity) is expected to increase from 3.2

percent in end March 2001 to 5.5 percent by March 2005, and 9.5 percent by March 2010.

The total number of access lines (including mobile) is expected to increase from 35.8 million in end

March 2001 to 170-190 million by March 2010. Hence, teledensity (expressed in terms of the total

fixed and mobile lines) is expected to increase from 3.5 percent in end March 2001 to 7.5 percent by

March 2005, and over 15 percent by March 2010.

Opportunity

In a country like India, a rapid increase in telecom infrastructure has multiple benefits--a US $1

investment in telecom leads to US$ 6 increase in GDP according to a World Bank study. Also, the

growth in penetration leads to a virtuous circle of larger installed base, economies of scale in

negotiating prices of networking equipment which leads to lower service charges.

In India, when mobile population crosses PC population within another 12-18 months, the

opportunities for software are expected to be immense. For one, e-governance can really be given a

boost since more citizens will have access to low cost Internet access devices. Secondly, a large

population boosts development of localized content which further boosts airtime usage and revenues

of mobile phones. This will lead to further price reductions and so on. Thirdly, development of R&D

in areas of embedded software, mobile commerce can take place in the country enabling software

companies to tap these rapidly growing segments in international markets. With the government

abiding by its commitment of allowing Voice over IP (Internet telephony), a significant killer

application has come up which is expected to further spur Internet usage in India

India's above 70 million-line telephone network is among the top 10 networks in the world and the

second largest among the emerging economies, after China. India has one of the fastest growing

telecommunications systems in the world, with system size (total connections) growing at an average

of more than 20 percent per annum over the last 4 years. The industry is considered as having the

highest potential for investment in India. The growth in demand for telecom services in India will be

6

highest in the mobile services, followed by national and international long distance

Unified License: Earlier the Government of India (GoI) had issued separate licenses for Basic and

Cellular services. The Basic Service operators were also allowed to provide limited mobile services in

a specified area. However, in November of 2003, the GoI announced the policy of Unified Access

Service License (USAL). All the access providers whether providing Basic or Cellular were allowed to

migrate to USAL regime after paying the difference between the entry fee paid by the basic operators

and the entry fee paid by the fourth cellular service provider in each service area. All the Basic

Service operators have migrated to Unified Access Service License. All new licenses are being issued

as a Unified Access License. The one time entry fee varies from circle to circle depending upon the

category of circle starting from $220,000 to $ 40 million. The Annual License Fee also varies from

circle to circle starting from 6 % of the annual gross revenue (AGR) to 10% of the AGR.

Domestic long distance (DLD)/International Long Distance (ILD): DLD has been opened up for

private participation and three companies have obtained the licenses. As per the guidelines, announced

on August 15, 2000, the total foreign equity in a DLD company must not exceed 49 per cent.

International long distance has also been opened; industry estimates the market for international long

distance to grow from $3.9 billion in 2004 to $5 billion in 2005. DLD is expected to grow from $ 8

billion in 2004 to $9 billion in 2005.

Cellular: In 1992, the Government decided to open provision of Cellular Mobile Telephone Service

for private participation. India adopted the Global System of Mobile Communication (GSM). Today,

India has 8 private companies providing cellular services in 20 telecom circles and 4 Metro cities. The

subscriber base at present is approximately 25 million and is expected to reach 50 million by 2005.

CMDA Based Mobile Service: The CDMA technology developed by Qualcomm of the U.S. has been

recently introduced in India. Three major players (two private and the incumbent) are using the

technology to provide mobile services. The two private operators, Reliance and Tata, in less then a

year have achieved more than 7 million subscriber base. Reliance, the largest corporate house in

India, is the leading player in this area.

7

Present licensing position: In the current telecom services sector, there is no restriction in the number

of entrants. Any operator meeting the eligibility conditions can apply for a license. The licenses are

issued only for Unified Access licenses and no longer separately for basic and/or cellular. FDI

permitted is 49 percent.

1. Number of fixed-line subscribers: 40 million

2. Fixed-line penetration rate: 4/100

3. Number of cellular phone subscribers (GSM and CDMA): 32 million

4. Cellular penetration rate: 3/100

Three bodies manage India's telecommunications regulatory system:

1. The Telecom Commission (TC)

2. The Department of Telecommunications (DoT);

3. The Telecom Regulatory Authority of India (TRAI)

The three bodies have a framework of nominally independent authorities with checks and balances

designed to separate the formulation of policy from the licensing authority, and the regulation of tariffs

and interconnection.

The TC is responsible in formulating policy of the DoT for approval of the GoI. The TC holds control

over the budgetary allocation and disbursement of the state-owned telecom service and manufacturing

companies, including the service providers (BSNL, MTNL) and equipment providers (Indian

Telephone Industries, Telecommunications Consultants India Limited and Hindustan Teleprinters

Limited). The TC consists of five members: a Chairman and one member of each for Services,

Finance, Technology and Production.

The DoT functions as a policy maker, licensing authority and performs research and development and

training functions.

Telecom Regulatory Authority of India (TRAI) is responsible for facilitating interconnection

and technical interconnectivity between operators, regulating revenue sharing, ensuring

8

compliance with license conditions, fixing telecommunications tariffs, facilitating competition

and settling disputes between service providers.

Telecom Dispute Settlement Appellate Tribunal has been set up to settle disputes between

service providers, between licensor and service providers and also between consumers and

service providers.

Telecommunication best prospects (including upcoming major procurements)

India is growing at a very fast pace. The tele density target laid down in NTP'99- that of reaching 7

per hundred by 2005 has been achieved much ahead of the time i.e. by end of 2003 itself. Still the

tele-density is low as compared to the international standards. Tele-density in India rural areas is 0.5

per 100 people and the government plans to increase this to 4 per 100 by 2010. A total of 547,207 out

of 607,491 villages have been provided with village public telephone (VPT), i.e. one telephone per

village. Average monthly addition of 1.5 million cellular subscribers achieved during 2003 is about 14

times higher compared to the average growth of mobile subscribers in the preceding 8 years (since

1995). From a tele-density of less than 2 per cent in 2000, it is currently at approximately 7 percent

and is expected to increase to 11 by 2007 and 15 (175 million by 2010). This will require an

investment of over $69 billion. This will result in huge demand for switching and transmission

equipment, Base Tran receivers Towers for mobile, handsets, transport equipment, etc.

Rural connectivity continues to be on the government's priority list. The government expects about

10 percent of all connections provided by the private sector to be in the villages. To improve long

distance connectivity, a target of creating additional 1.8 million lines of telephone exchanges is also

proposed. The new policy envisages a crucial role of the private sector in development of the telecom

industry and to meet its targets. The targets are: setting up 0.14mn route kilometers of optical fiber

system, public call offices (PCO), station trunk dialing – domestic long distance (STD) PCO for every

10 km of national highway, broad base STD facilities and digitalization of all exchanges.

Telecommunication barriers to entry; "what are the negatives" (e.g., IPR issues, tariffs, import

restrictions)

India's tariffs are still high by international standards. The peak tariff rate was reduced to a ceiling

(with a few exceptions) of 20 percent in the last fiscal budget. One time entry fee for all telecom

service providers continues to be high along with large amount of performance guarantees and annual

9

recurring license fees in the form of revenue share, which varies from 6 percent to 12 percent. The

GoI permits a maximum of 49 percent for FDI in the telecom sector

RELIANCE GROUP

The Reliance Group founded by late Dhirubhai H Ambani (1932-2002) is India’s largest business

house with total revenues of over Rs 99,000 crore (US$ 22.6 billion), cash profit of Rs 12,500 crore

(US$ 2.8 billion), net profit of Rs 6,200 crore (US$ 1.4 billion) and export of Rs 15,900 crore (US$

3.6 billion).It is now under the hands of his sons Mukesh Ambani and Anil Ambani.

The Group’s activities span Exploration and Production (E&P) of oil and gas, refining and

marketing, petrochemicals (polyester, polymers, and intermediates), textiles, financial services and

insurance, power, telecom and infocomm initiatives. The Group exports its products to more than 100

countries the world over. Reliance emerged as India's Most Admired Business House, for the third

successive year in a TNS Mode survey for 2003.

Reliance Group revenue is equivalent to about 4.3% of India's GDP and it is targeting a GDP of 10%

by 2010.The Group contributes nearly 10% of the country's indirect tax revenues and over 6% of

India's exports. Reliance is trusted by an investor family of over 3.1 million - India's largest.

The Reliance Group Companies include: Reliance Industries Limited, Reliance Capital

Limited, Reliance Industrial Infrastructure Limited, and Reliance Telecom Limited, reliance

Infocomm Limited, Reliance General Insurance Company Limited, Indian Petrochemicals and

Corporation Limited and Reliance Energy Ltd.Their business also include exploration and production,

LPG business, polymers, chemicals, textiles etc.

10

RELIANCE INFOCOMM

Reliance Infocomm is the outcome of the late visionary Dhirubhai Ambani's (1932-2002) dream to

herald a digital revolution in India by bringing affordable means of information and communication to

the doorsteps of India's vast population.

This also marks the beginning of Reliance’s dream of ushering in a digital revolution in India by

becoming a major catalyst in improving quality of life and changing the face of India.

"Make the tools of infocomm available to people at an affordable cost, they will overcome the

handicaps of illiteracy and lack of mobility", Dhirubhai Ambani charted out the mission for Reliance

Infocomm in late 1999. He saw in the potential of information and communication technology a once-

in-a-lifetime opportunity for India to leapfrog over its historical legacy of backwardness and

underdevelopment.

Working at breakneck speed, from late 1999 to 2002 Reliance Infocomm built the backbone for a

digital India - 60,000 kilometers of fiber optic backbone, crisscrossing the entire country. The Reliance

RELIANCE INFOCOMM BUSINESS

Postpaid Prepaid Corporate Wireless

PCO

11

Infocomm pan-India network was commissioned on December 28, 2002, the 70th - birth anniversary

of Dhirubhai. This day also marked his first birth anniversary after his demise July - 6, 2002.

Reliance Infocomm network is a pan India, high capacity, integrated (wireless and wire line) and

convergent (voice, data and video) digital network, designed to offer services that span the entire

Infocomm value chain - infrastructure, services for enterprises and individuals, applications and

consulting. The network is designed to deliver services that will foster a new way of life for a New

India. Reliance infocomm will offer a complete range of telecom services, covering mobile and fixed

line telephony including broadband, national and international long distance services, data services

and a wide range of value added services and applications that will enhance productivity of

enterprises and individuals.

Reliance Infocomm will extend its efforts beyond the traditional value chain to develop and deploy

telecom solutions for India’s farmers, businesses, hospitals, government and public sector

organizations. Right now Reliance Infocomm has a total market share of 26% and it is a 20,000 worth

crore businesses

BUSINESS

Wireless

Reliance India Mobile

Reliance is India's largest mobile service provider with over 8 million subscribers as on June 30,

2004. Reliance India Mobile (RIM), its mobile service was commercially launched on May 1, 2003

and became the largest mobile service in seven months. RIM is now available in over 1100 cities and

towns across India and will increase its coverage to over 5000 cities and towns by the end of financial

year 2005.

Within a short span of one year, RIM has earned many accolades. RIM was voted "India's Most

Trusted Telecom Brand" by AC Nielsen Survey for Brand Equity - The Economic Times, 2003. The

"Monsoon Hungama" of July 2003 set a world record in adding one million mobile subscribers in just

10 days. Nearly 90 per cent of the handsets on RIM network are data enabled with access to R World

12

suite of hundreds of Java applications, which is again very unique in the world. With innovative

pricing and attractive multimedia enabled handsets, RIM was instrumental in making mobile phones

affordable to common people and increasing India's teledensity. Spurred by the innovative offerings

from RIM, the total number of mobile subscribers in India grew from 12 million in January 2003 to 37

million in June 2004, with Reliance garnering market share of 22 per cent.

Reliance Infocomm's pan India wireless network runs on CDMA2000 1x technology, which offers

superior voice and data experience compared to other competing technologies. CDMA 2000 1x

utilizes the scarce radio spectrum more efficiently, resulting affordable mobile services. It also offer

improved voice clarity, higher data speeds of up to 144 Kbps and seamless migration to new

generation mobile technologies.

R World

The Java-based R World suite of Reliance India Mobile (RIM) applications is unique in India and the

world. It enables the introduction of complex Internet applications on mobile phones quickly and

efficiently. R World receives over 1.5 billion hits per month from RIM users.

R World offers a wide range of applications including hour-to-hour news updates, high quality video

streaming, downloadable multilingual Ring Tones, seasonal updates including festival specials, city &

TV guides, exam results, astrology, mobile banking, credit card transaction from mobile phone, bill

payment and stock prices.

With over 100 data applications offering varied services, R World has become a treasure house of

Knowledge, Information, Entertainment and Commerce - unique to any wireless service in India.

Wireless POS for Credit Card transaction processing

Reliance deployed India's first Wireless Point of Sale (POS) Terminal for processing credit card

transactions in July 2003 in association with HDFC Bank - An important milestone in the history of

retail credit in India. Wireless POS will enable banks to expand the number of merchant outlets

accepting credit cards exponentially and speed up penetration of credit card services to smaller towns.

Since then numerous banks have used this unique application to expand their credit card business.

13

A POS terminal, the size of a large soapbox, is the equipment used by merchants to process credit card

payments at their sales outlets. Till now merchant establishments processed credit card payments by

swiping customers' credit card in a slot in the POS terminal, which is traditionally connected to a

bank's Network Access Controller (NAC) through a dedicated PSTN connection. The NAC then

directs the information contained on the credit card to the bank's data center, through its own network.

With the Wireless POS, a transaction will now be directly processed at the bank's data centre, by

skipping the PSTN connection and the NAC infrastructure

Wireless ATMs

The CDMA-based Wireless connectivity solution enables quick deployment of ATMs by banks, apart

from the advantage of rolling out a nationwide network of Wireless ATMs that are secure and cost

efficient. Unlike VSAT-based connectivity, which banks traditionally rely on, the CDMA solution

eliminates the need of rooftop rights and the resultant delays. Reliance Infocomm's CDMA-based

Wireless connectivity scores over other ATM connectivity options on counts like speed of

deployment, mobility and cost. Many banks including SBI, ICICI and HDFC banks are rolling out

hundreds of wireless ATMs using Reliance's wireless network.

Mobile Virtual Private Network (VPN)

Reliance's Wireless Data VPN offering looks at extending the Enterprise Users desktop to him while

he is on the move. Over our CDMA network, he will be able to access all those applications he uses in

office (including corporate E-mail, Intranet Portals, SAP, and other enterprise specific applications

available only within the corporate intranet) at speeds up to 144 Kbps, anywhere, any time. Reliance's

Mobile VPN, also for the first time, will allow enterprises the opportunity of connecting their remote

offices, scattered across the country, and integrating them into their networks, thereby truly ushering

organizations into the realm of being truly always "networked".

Vehicle Tracking System

Reliance has mapped the entire country and built a world class Geographical Information System

around it, enabling remote pin pointing of any location in the country to the accuracy of a few meters.

14

Among the many applications that leverage this state-of-the-art GIS system is Reliance Vehicle

Tracking System.

Reliance Vehicle Tracking System provides real time tracking and monitoring of road consignments

and vehicles across India from anywhere, anytime; consignment location display on GIS map with

assigned route data; routing and location finder capability; real time text messaging to remote vehicle

from application interface; automatic exception alerts via e-mail; SMS in case of geofence violation,

speed, delay etc.

R Connect

Reliance offers India's only nationwide wireless Internet connectivity through R Connect service by

leveraging its pan-India high speed CDMA2000 1x wireless network. R Connect is also India's fastest

growing Internet connectivity service with over 300,000 subscribers in less than seven months.

Subscribers can connect to Internet on the move at data speeds of up to 144 Kbps from their laptops or

other mobile computing devices with an R Connect Cable connected to their RIM phones or by using

an R Connect Card inserted into the PCMIA slot in their laptop. A customer can connect to Internet

using R Connect Cable plugged to Reliance India Phone Fixed Wireless Terminals and Phones.

2. Wire line:

The second phase of the digital revolution envisioned by Reliance begins with the roll

out of real broadband, capable of delivering 100 Mbps to Gigabit bandwidth across the country.

Through innovative use of bleeding-edge technologies in the fields of fiber optics, Ethernet,

Microwave radios, Switching, Routing, Digital Compression and Encoding, Reliance Infocomm is

setting a new benchmark for the world to follow. Mass roll out of Broadband that offers 100 Mbps

speed to millions of people across the vast geography of India is a major technological breakthrough.

What makes Reliance Infocomm's broadband initiative special is that the entire

nationwide network is architected and built up from scratch to bring about a digital revolution in India.

The network is designed to deliver affordable and quality education, governance and healthcare to

millions across India; improve the efficiency of businesses and generate millions of new jobs and put

India at the centre stage of the world. Broadband applications like E-Education have the potential to

15

revolutionaries Indian society. It can help transcend traditional barriers of development like lack of

capital, infrastructure and the challenge of distribution in a vast country like India.

Other business in this sector includes:

E-Education

Digital workplaces

E-Healthcare

Integrated Enterprise Solution

Rural Communication:

In one of the largest and fastest ever network rollout operations in the world, Reliance

Infocomm has embarked on an ambitious expansion plan to reach out to four lakh villages across the

country by end of 2005, thus bringing about a new revolution in rural telephony.

The company's 80,000 km of terabit optic fiber cable network forms the backbone of its

countrywide expansion, which will facilitate unlimited and uninterrupted voice, data and video

applications.

This massive operation, touching 65 crore Indians, will cover nearly two-third of its

villages and over 5,700 cities and towns. This expansion involving 8,500 BTS (Base Transceiver

Station) towers will also cover 91% of the country's national highways and 85% of the rail routes.

Eventually, the company's footprint will cover the entire habitat of the country. This initiative is

expected to increase India's teledensity to 10% by the end of the year, ahead of the national target.

Reliance already enjoys over one billion hits a month on its unique infotainment data

application suite called R World. This rollout will take the benefits of these services to many more

Indians.

With this expansion, rural India will also have greater access to the Internet, thanks to

the increasingly popular R-Connect and is bound to take India on its path towards knowledge-

led leadership. It is also an established fact that increases of each point in teledensity results in

a 3% growth in the country's GDP.

16

Reliance Infocomm has recently become the first Indian telecom service

provider to cross the 10-million subscriber mark. As on December 31, 2004, Reliance

Infocomm's subscriber base across its 20 circles stood at 10,298,208.

This initiative reinforces Reliance Group's commitment to the Founder Chairman's vision:

"Our dreams have to be bigger. Our ambitions higher. Our commitment deeper. And our

efforts greater.” This is my dream for Reliance and for India.

Other business in rural communication includes:

Village public telephone

Rural community phone (RCP)

Rural household DELs

High speed public tele-info center (HPTICs)

4. Netway:

Home Netway is a revolutionary concept hitherto inexperienced anywhere in the world

at the scale in which it is being rolled out in India. It heralds a breakthrough in the worldwide research

and development for providing television on telecommunication infrastructure. Home Netway is

currently under testing at various locations covering thousands of household.

Riding on bandwidth of 100 Mbps, Netway will bring a whole new convergent

experience of television, video, Internet and telephony. It will redefine home entertainment and will

bring distance learning, remote health care, e-governance, smart home controls, video-on-demand and

numerous other digital applications into millions of Indian homes.

Home Netway will deliver hundreds of television channels to millions of homes

through a multifunctional, digital set-top box designed and manufactured by Reliance. The state-of-

the-art set-top box, with 40 GB memory capable of storing nearly 10 hours of programming, will

enable users to experience functions such as "pausing live TV ", live and pre-programmed digital

recording and electronic programme guide. The Reliance patented remote control that comes along

with the set-top box is a design marvel with multiple functions - VoIP telephone handset, Karaoke

microphone and keypad for surfing the net or typing e-mail.

17

Home Netway will also do away with the requirement of VCD/DVD players and the

need to visit lending libraries to borrow discs to watch favorite movies. Users will be able to select and

watch movies online from vast libraries of thousands of digital movies, songs and other contents from

their home. Not only that, Home Netway enables users to get subtitles for movies and transliteration

for songs in ten Indian languages. Other features include category-wise music selection, Karaoke, and

Antakshari.

Netway also ushers in convergence of television and Internet. Users will be able to surf

the web at super speed and compose e-mails on their television. Other features of Netway include

access to a wealth of information - from travel guides, quizzes, info on health and fitness to

documentaries on various topics. In fact Netway is a gateway to a new digital way of life for Indians.

5. Web world:

Reliance Web World is a countrywide network of retail outlets offering a host of state-of-the art

communication and information services along with food and beverages in a modern ambience. It

probably is also the world's largest network of public access broadband centers. A total of 240 Web

Worlds are operational in 111 cities and towns across India. The number of Web Worlds in this

network will further increase to cover nearly 700 towns and cities.

All Web World outlets have three components:

Customer Convenience Centre

Broadband Centre and

Gourmet Café

Customer Convenience Centre is a one-stop sales and customer service point for Reliance Infocomm's

retail products and services

Broadband Centre brings real broadband experience to Indians for the first time through a host of

unique applications and services. This includes Video Chat, Multi-location Video Conference, Multi-

player Online Gaming, High Speed Internet, Virtual Office, Digital Storage, Digital Movie, Digital

Customized Music, Digital Electronic News Gathering Service and E-Learning. Javagreen, a Gourmet

18

Café with exciting range of food and beverage products, is designed to provide you a relaxed and

refreshing atmosphere in Reliance Web Worlds.

6. Internet Data Center:

Reliance is India's largest Internet Data Centre (IDC) service provider, hosting

business critical applications of Indian and foreign blue chip companies, financial institutions and

other important organizations. A total of four world-class IDCs, occupying over 200,000 sq. ft. are

operational - two each in Mumbai and Bangalore - while another four more are slated to become

operational in 2005 in Delhi, Kolkata, Chennai and Hyderabad. The Data Centers are internationally

benchmarked on all parameters - physical and network security, infrastructure, facilities, network

connectivity and operations - and surpassing Level 3 world standards on most counts.

Reliance Internet Data Centers offer a range of standard and advanced managed

hosting services. The services range from offering bulk collocation space to fully managed hosting of

servers on rent/lease model. Further, a whole range of managed value added services are offered like

firewall, Intrusion detection, backup, streaming, mailing, system administration, data base

administration, load balancing, storage services and Disaster recovery/ BCP solutions.

Internet Data Centers are critical components of Reliance Infocomm's vision to

herald a digital revolution in India. The Data Centers are connected to Reliance's pan India, optic

fiber based, and high capacity IP network. The data centre is further connected to 52 countries

including US, UK, Mid-east and Asia-Pac through Flag Telecom (Reliance Infocomm’s group

company) backbone and other undersea cable systems. It also has private peering relationship with

the largest Tier 1 Internet Service Providers (ISPs) and public peering at more than 15 Internet

Exchange points across the globe, apart from peering relationship with domestic ISPs on STM-1

bandwidth

DHIRUBHAI’S DREAM

Late Dhirubhai Ambani built Reliance from scratch to be in the reckoning for a place in the Global

Fortune 500 list. This achievement is even more significant due to the fact, that the entire growth was

achieved in an organic manner and in a span of just 25 years.

19

Dhirubhai was not just firmly rooted in traditional Indian values, but was also a quintessentially

modern man - the man of the new millennium. This was clearly reflected in his passion for mega-sized

projects, the most advanced technology and the highest level of productivity.

The corporate philosophy he followed was short simple and succinct - "Think big. Think differently.

Think fast. Think ahead. Aim for the best". He inspired the Reliance team to do better than the best -

not only in India but also in the world.

Dhirubhai Ambani, Founder Chairman of the Reliance Group, had an acute sense that education alone

empowers people. He was a great communicator. He communicated to inspire, to guide, to educate

and to motivate.

He employed telephone as a powerful tool to achieve these goals. He used telephone to defeat

distance, to compress time and to remain abreast of events. He was acutely aware of the power of

information and communications. He would often say: "make the tools of infocomm available to

people at an affordable cost, they will overcome the handicaps of illiteracy and lack of mobility".

He wanted a telephone call to be cheaper than a post card. This, he believed, would transform every

home, empower every Indian, remove the roadblocks to opportunity and demolish the barriers that

divide our society.

Dhirubhai Ambani was of the conviction that infocomm would energize enterprises, galvanize

governance, make livelihood an enjoyment, learning an experience, and living an excitement.

VISION

Reliance Infocomm is a fascinating outcome of this powerful conviction. It is a major initiative to

translate his inspiring dream into reality. "We will leverage our strengths in executing complex global-

scale projects to make leading edge information and communication services affordable by all

individual consumers and businesses in India. We will offer unparalleled value to create customer

delight and enhance business productivity. We will also generate value for our capabilities beyond

Indian borders while enabling millions of India's knowledge workers to deliver their services

globally".

20

Reliance Infocomm envisions a digital revolution that will sweep the country and bring about a new

way of life,” A Digital Way of Life” for a new India.

With the mobile devices, networks and broadband systems linked to powerful digital networks,

Reliance Infocomm will usher fundamental changes in the social and economic landscape of India.

Reliance Infocomm will help men and women connect and communicate with each other. It will

enable citizens to reach out to their work place, home and interests, while on the move. It will enable

people to work, shop, educate and entertain themselves round the clock, both in the virtual world and

in the physical world. It will make available television programmes, movies, and internet and news

capsules on demand. It will unfurl new simulated virtual words with exhilarating experiences behind

the screens of computers and televisions.

Users of Reliance Infocomm’s full range of services would no longer need audiotapes and CD’s to

listen to music. Videotapes and DVD’s would not be necessary to see movies. Books and CD ROMs

would not be needed to get educated. Newspapers and magazines would not be required to keep

abreast of events. Vehicles and wallets will become unnecessary for shopping.

Reliance Infocomm will disseminate information at a low cost. “Make a telephone call cheaper than a

post card”. These prophetic words of Dhirubhai Ambani will be a metaphor of profound significance

for Reliance Infocomm.

Reliance Infocomm will regularly unfold new applications. Continually adapt new digital

technologies. Create new customer experiences. Constantly strive to be ahead of the world.

Reliance Infocomm will transform thousands of villages and hundreds of towns and cities across the

country. Above all, Reliance Infocomm will pave the way to make India global leader in the

knowledge age.

21

FINANCIAL ANALYSIS

Reliance Industry Ltd (RIL), with gross turnover of Rs744bn (US$17bn) in FY04 is the largest private

sector undertaking in India. The company has presence in diverse businesses namely textiles,

petrochemicals, oil & gas, energy and telecom. It has forayed into oil and gas exploration and

marketing besides huge investments in power generation, transmission & distribution and telecom.

Corporate Structure Reliance Infocomm is owned by diversified conglomerate Reliance Group.

Reliance offers fixed local voice and internet access services, as well as national and international

connectivity services and managed networking services.

Recent Developments June 2004: Reliance announced that it would invest Rs 50bn in expanding its

backbone network in the financial year to March 2005.

RIC commercially launched its services in May 2003 under Reliance India Mobile. It has license to

offer telecom services in 20 circles under the Unified Access license. As of March 31, 2004 it had the

base of around 7 million subscribers. The company has presence in 1100 towns in India and is

expected to roll out its services in another 3800 towns. The company expects to maintain the growth

rate achieved in FY04, considering one of the lowest telecom penetrations at 7% as against world

average of 37%. The company expects mobile market in India to grow to 140 million subscribers by

FY08. The company is making major foray into broadband through which it is expected to provide

value-added services (virtual private network, videophone etc) to its subscribers. In January 2004 the

company acquired the undersea cable company FLAG telecom for US$211mn. This acquisition gave

strategic advantage to the company as FLAG Telecom connects 16 of the world’s top 20 business

centre and 75% of the world population through its 55,000km fiber optic network.

22

Performance highlights of past five years

particulars FY00 FY01 FY02 FY03 FY04 CAGR ( Rs in mn ) Net sales 178499 254,293 42889 458978 518085 30.52 % yoy 42.46 65.51 9.05 12.86 Other income 6282 3830 6590 11775 13987 22.15 Operating profit 38185 46235 79993 81890 97232 26.32 %yoy 21.08 73.01 2.37 18.73 Interest 10458 12473 18.251 15552 14347 PBT 21235 21797 40170 49742 64401 31.97 PAT 24033 26456 32427 41043 51601 21.05 %yoy 10.08 22.57 26.57 25.72 Export 18110 93700 109688 108519 122879 61.39 EPS 22.4 25.1 23.4 29.25 36.8 7.04 DPS 4 4.25 4.75 5 5.25 8.225 Sales Growth Continues… RIL’s net sales grew by 13% to Rs 518 bn during FY04 as Rs 459 bn in the FY03. The increase in top

line reflects the impact of 6% increase in product prices and 8% increase in the product sales volume.

In the last five years net sales grew at a CAGR of 31% from Rs178 bn in FY00 to Rs 518 bn in FY04.

Company’s export grew at a much faster rate than total sale at CAGR of 61% from Rs18 bn in FY00

to Rs123bn in FY04. Export contributed about 20% of the net sales in the FY04.

Segmental Performance: Segment results Net sales growth (%) EBIT growth (%) 2003-04 2002-2003 % 2003-04 2002-2003 % Petrochemicals 283847 273558 3.8 33684 29288 15 Refining 392589 321653 22.1 34997 23400 49.3 Others 25256 13546 88.4 5890 5983 -1.6 Petrochemical: Petrochemical sales increased by 4% to Rs283bn in FY04 as against Rs273bn in

FY03. The segments EBIT improved by 15% to Rs33.7bn in FY04 as compared to Rs29.3bn in FY03.

23

Refining: Refinery sales grew by 22% yoy in FY04, whereas EBIT registered a growth of 49% on the

back of strong operational performance and higher gross refinery margins (GRM). Refinery operated

at 109% of the rated capacity and processed 29.6mmt of oil.

Others: Other segment that includes Oil and Gas, textiles, Communication, and Power recorded a

staggering 88% growth in FY04 to Rs25.5bn. However it’s EBIT decreased marginally by 2% to

Rs5.8bn in FY04 due to losses made in the telecom business.

Improvement in Operating Margins…

OPM increased by 80bps in FY04 to 19% on account of less than proportionate increase in raw

material cost, better control over manufacturing expenses etc. On the other hand company increased its

selling and marketing expenses in an effort to boost sales.

Rising Profits…

RIL became the first private sector company to cross US$1bn mark in net profit. The company

clocked 25% increase in net profit at Rs51.6bn i.e. US$1.18bn in FY04 as against Rs41bn in FY03.

Though CAGR of PAT over the period of five year was marginally lower at 21%. The ROCE

increased from 18.7% in FY03 to 19.8% in FY04.

Better working capital management…

Tight inventory control, improvement in debtor collection period and cost cutting exercise resulted in

better working capital management. While debtor collection period has decreased from 23.8 days in

FY03 to 21.5 days in FY04, creditors payment period increased from 75.5 days in FY03 to 79.7 days

in FY04. In addition company has reduced its inventory holding period from 59.7 days in FY03 to 51

days in FY04.

Heavy Investments in Telecom…

The company invested Rs81bn in Reliance Infocomm Ltd more than the incremental growth of

Rs80.75bn under Investment head in FY04. The company subscribed to 10% Cumulative

Redeemable/Optionally Convertible Preference Share of Reliance Infocomm Ltd. The company also

made an equity investment of Rs22.5bn in Reliance Communication Infrastructure Ltd in FY03. All

24

these investment commensurate with the RILs plan to augment leadership position in telecom

business. RIL has extended negative lien on 16, 06,50,000 share of Reliance Infocomm Ltd to banks

for extending loans to one of its associate where the company has invested Rs315mn. Maturity date of

6% Cumulative Redeemable Preference Shares of Reliance Enterprise Ltd, due for redemption on

October 1, 2003, has been extended by ten years where company had invested Rs860bn. 8%

Cumulative Redeemable Preference Share of Reliance Infocomm Ltd has been allotted pursuant to

the High Court order on demerger of the basic service division of Reliance Telecom Ltd.

Interest on Unsecured Optionally Convertible Debenture of Reliance Industrial Investment and

holdings Ltd, a subsidiary, has been changed from 6.5% to 0% with effect from April 1, 2003 where

RIL had invested Rs4.42bn.

Generating Cash…

The company generated huge operating cash flow of Rs117.77bn in FY04 as against Rs66.42bn of

cash generated in FY03. On top of it company paid just Rs3.05bn as tax and that too MAT u/s 115jb.

This reflects inherent strength of the company’s business model and its ability to internally finance

future growth opportunities.

Outlook

Petrochemical: The petrochemical cycle is on the upward move driven by demand from domestic and

export market viz. China and South East Asian countries. With the massive expansion plan (discussed

under heading, Business) in next 2-3years and economy growing at a brisk rate, the company that

controls over 60-65% of the domestic market is all set to gain from the prevailing environment.

Hardening of crude prices is less likely to affect the company’s bottom-line given its ability to pass on

any increase in input prices to the customers.

Exploration and Development: With two successful gas discoveries within a period of 2 years,

contract for supplying gas to NTPC for next 17 years (after a bidding process) and largest exploration

acreage among private companies, the business has potential for higher contribution to company’s

overall business profile.

Refining and Marketing: The Company has completed its de-bottlenecking process and operated at

109% of the capacity in FY04. With firm plans to open 2000 retail outlets in the current fiscal,

25

company will reduce its dependence on oil PSUs for petroleum product off take and at the same time

will give worthy competition to mighty oil PSUs.

Telecom: The Company has made huge investment in its telecom business through its various

subsidiaries to the tune of RS81bn in the FY04 and will continue to invest heavily in near future. With

teledensity as low as 7% in India as against world average of 37%, company is well poised to augment

its leadership position in telecom business.

Power: The company’s presence in entire value-chain of power business (“from well head to wall

socket”) i.e. right from feedstock for power plant, to transmission & distribution of power directly to

consumer, placed company to take advantage of the opportunities offered by new Electricity Act 2003.

There are apprehensions with regards to continuation of reform process, as the new Government that

took reign at the centre. However, the shortage of power supply and need to power India’s economic

growth will compel the authority to think rationally and draft policies in the best interest of the

economy. Interest on Unsecured Optionally Convertible Debenture of Reliance Industrial Investment

and holdings Ltd, a subsidiary, has been changed from 6.5% to 0% with effect from April 1, 2003

where RIL had invested Rs4.42bn.

PCO market: key characteristics

• STD PCO booths, as a franchisee model, started in 1987.

• The number of PCO booths went up from 18 lakh in December 2003 to 23 lakh at

the end of 2004 with amazing reach of one PCO for every 2 sq.kms.

• BSNL and Mahanagar Telephone Nigam Ltd account for about 20-lakh booths.

• Generates direct employment to 1.3 to 1.5 million people.

• Total PCO revenues at Rs.41,000 crores, contributes to 9% of the total telecom

revenues and 24% of long distance revenues

• The break up of PCOs is:

STD PCOs

60%

Local PCOs39%

Highway PCOs1%

26

• Installed PCO lines are more than 8 lacs and local lines are more than 10 lacs.

• The PCO’s has the national ARPU (Average Revenue Per Unit) of Rs. 4000.

• However, private operators such as Reliance Infocomm have about 1.3-lakh PCO booths and

are spreading its network into the rural segment as well.

Scope for PCO Market:

Tele-density of India is only 9%. Tele density is defined as number of people owning

a telephone or mobile per 100 people. So still 91% of people depend on PCO’s for their

communication needs. The Compound Annual Growth Rate (CAGR) of PCOs is 25%, i.e. if the total

number of PCOs were 100 in say 2004, it will grow to 125 in 2005 and to around 157 in 2006.

It’s true that now the usage of mobile phone has been increased to a large extent in India but according

to the survey there 90% of the people who still use PCOs for making calls. Most of the mobile phone

users have prepaid connection and therefore they use PCOs to make at least a STD/ISD call. In the 90s

BSNL were the market leaders in the market division making a huge profit. But now even the private

sector have entered this field giving more benefits to the customers than BSNL.TATA was introduced

first then followed by Reliance and Airtel.

Indian telecom industry and consumer spending:

According to a recent Gartner study, Indian ARPU may be the lowest in the world, but

Indians spend far more than others in the world on telecommunication services. Considering the

addressable market with income of Rs. 3500/ month spend 19-20% of their disposable income, one of

the highest in the world on telecom. While other countries spend 2-4% of their per capita for 600-700

min/month on their cell phones. The domestic telecom sector has attracted FDI worth Rs. 50.48 billion

in past 2 years.

27

Emerging Scenario

In a 10-year perspective of India’s telecom sector, the tele-density will increase 5 folds

and the traffic volume will increase many times than that. The data services are still in the nascent

stage. The tremendous potential of IT sector in India and aspiration to become a world superpower in

IT will have a direct bearing on the future telecom growth in the country. These two sectors will grow

hand-in-hand in the era of convergence. BSNL, with its dominant market share, will have to compete

with the private players like airtel, tata, reliance etc. The technological developments are likely to

make the telecom services more and more affordable. Therefore, India is likely to emerge as a strong

force in telecom and IT areas.

INTRODUCTION RELIANCE PCO

Keeping this 90% of the people in mind Reliance wanted to tap these customers and hence came up

with Reliance PCO services. It offers a prepaid service unlike BSNL.It was launched successfully

throughout in India on March 17 2004. At present there are 8000 Reliance PCO connections in

Karnataka and by next year they want to be the market leaders. The PCO strategic business units at

Reliance Infocomm is enrolling PCO customers through its existing channel partners who are termed

as LBA’s ( Local Business Associates )in each city to provide complete service to the customers that

are assigned to their defined zone. There are nearly 11 LBAs throughout Bangalore. These LBAs are

assisted by CREs to render services to the customers which include installation, maintenance, and

service etc.In short LBAs is responsible for providing total support to the PCO customers to keep

operational. Since FWTs are on prepaid platform, the money is collected when the prepaid vouchers

are sold to the PCO operators and there is no bill, Instead there is a statement that shoes call details

and applicable charges for the past 15 days.

The functions of LBA are

• Obtaining the required FWT, PPA and other requirements from the Reliance Company.

• Obtaining certificate regarding quality of installation as per RIC guidelines from the respective

installers.

• Installing FWT, PPA at the PCO operator premises as per the installation procedure given by

company.

28

• Receiving any service or billing complaints from the customers

• Call the customer care and log in the query and try to solve it as soon as possible.

• Performing the required repairs and to rectify the fault incidence.

• Escalating the problems to the Zonal lead.

• Maintaining the adequate level of spares inventory

• Getting the defective FWTs repaired through the authorized service centre of LG

• Distributing the prepaid recharge cards to the PCO operators as and when requested.

• Visiting the customers at least thrice in a month to check whether they are happy with the

service and maintain a good relationship with them

• Making customer aware about the working of the FWT,PPA,the battery backup, the

commissions, profit they are earning per call, company charges etc

• Explaining the customers about any new offers provided by the company.

• Trying to get information from the customers about other PCO operators who are not using

Reliance and convince them to take reliance connection.

• Provide the correct contact number and address to the customers of the respective LBA so that

they can inform any queries etc.

• LBAs should educate the customers not to take any sort of assistance like recharge vouchers or

service from anyone other than their respective LBAs.

Reliance Infocomm – PCO support

• Ensuring that correct installation kit and installation list are provided to each LBA

• 24 hrs access to the customer care with local access numbers for LBAs to call in for all queries

and complaints from the PCO customers.

• Fulfillment of customers requests for changes in personal profile such as name, address,

contact information etc

• Timely resolution of escalated repair and maintenance

29

ORGANISATIONAL HIERARCHY

This Organizational structure is for PCO division in Reliance Infocomm where the CREs are headed

by the LBAs who in turn report to the Zonal Head of their particular region. The Zonal Leads come

under the Sales lead of the Marketing Department. This entire network is handled by the Circle head

and in turn who is under the CEO.

SALES HEAD COMMERCIAL HEAD REVENUE HEAD

ZONAL HEAD ZONAL HEAD ZONAL HEAD

LBA LBA LBA

CRE CRE CRE

CEO

CIRCLE HEAD

30

PRODUCT

Reliance PCO basically works on wireless technology which consists of Fixed Wireless Terminal

(FWT) and a Patch Panel Antenna (PPA), which works on the prepaid platform with 8 hours battery

backup facility and initially support reverse polarity (battery reversal) with 16 kHz pulses. Initially

there was no deposit taken but now a deposit of Rs 1000 which is refundable is taken for both PCO

and coin box connection and the service is and connection is absolutely free, the customer have to pay

only for the recharge card.( all the instruments including FWT and PPA cost around RS 10,000)

FIXED WIRELESS TERMINAL

It is a wireless phone connection which has a inbuilt battery with the backup. Once recharged it can be

used up to 8 hrs.It should be mounted on the wall 4 feet from the ground and away from the

switchboard or any other electric wiring.

PATCH PANEL ANTENNA

PPA is an antenna that helps to catch signals enabling long distance calls. It should me mounted at

least two feet away from FWT and 6 feet from the ground.

FEATURES

• 2 RJ-11 ports for parallel connection

• Inbuilt battery backup

• Calling line Identification

31

• Speed Dial – LG LST 250 has 30 memory locations to store frequently used numbers. Once

you store the speed dial numbers, you can make a call by pressing speed dial memory location

number.

• Set your STD/ISD locking code

• Bar STD/ISD.

• Call conference- this feature allows a conference between 3 parties.

• To initiate call conference:

• Call the first person

• Once the call is connected, put the call on hold by pressing hook flash

• Dial the second number. Once connected press 3 and hook-flash to initiate a call conference.

• Call waiting

• Inbuilt modem for high speed Internet access ( PC has to be within 3 meters of FWT)

• Prepaid Connection – the wireless Reliance connection is based on a prepaid platform where

the customer is required to make an initial investment on a recharge coupon of fixed

denomination and therefore get the commission at the time of recharge itself unlike the BSNL

or AIRTEL where the customers get the commission only after the bill is produced.

PREPAID RECHARGE CARD MANAGEMENT

Prepaid recharge card is a recharge coupon of fixed value denominations meant for local and long

distance calling for PCO as well as coin box connection. These recharge coupons are disposed

soon after its activation, but if there is any balance amount after the recharge it shall be credited

during the next recharge. The activation are done by the LBAs.There are two cards for PCO and

coin box connection each. (The amount of the card is got by reduction of the 40% commission and

10.2% sales tax.)

7500 PCO card – Here you get a talk time of Rs 7500 and the card is worth Rs 5850 and therefore

the customer gets a commission of Rs 1650 i.e. after removal of sales tax just while recharging

and need not wait for one month as in BSNL and its validity is for 90 days.

3000 PCO card- Here you get a talk time of Rs 3000 and the card is worth Rs 2340 and the

customer gets a commission of Rs 660.

32

1000 Coin box card- Here the customer gets a talk time of Rs 1050 and the card is worth Rs 600

1500 Coin box card - Here the customer gets a talk time of Rs 1500 and the card is worth Rs 900

and hence the customer makes a profit equals to nearly 40% and the validity for these cards is 45

days.

ADVANTAGES OF WIRELESS RELIANCE PCO

1. Instant connection ready to use

2. No line dead problems, especially in rainy season since it operates on wireless technology.

3. Secure and tap proof that is conversations cannot be tapped, because it is wireless.

4. PCO machine/any normal phone instrument can be attached to the FWT.

5. 2 telephone instruments on the same FWT for use as one line with parallel connection can

be used.

6. It is prepaid connection and the currencies are made available at request without delay

7. 38% on PCO and 40% on coin box connection is given to the customer on investment.

8. Reliance often comes out with different offers every month to benefit its customers like

some extra talk time or surprise gifts etc.

Title of the project

Study of the PCO business and the promotion of coin box connection of Reliance in Bangalore

Statement of the problem

When Reliance introduced its new business of PCO in 2004 there were already companies like BSNL,

TATA, TOUCHTEL in the market with BSNL being the dominant one in the market. After one year

of introduction Reliance has now 27% share of market share after the success in mobile industry .The

number of telephone lines per hundred inhabitants (or teledensity) is expected to increase from 3.2

percent in end March 2001 to 5.5 percent by March 2005, and 9.5 percent by March 2010.

The study primarily concentrated in the area of the problems faced by the present customers and the

customers who have been already churned out of reliance. Reliance, with an objective of becoming the

market leader by 2006-07 in PCO business, this study will come up with few suggestions regarding the

33

problems identified, to achieve its objective and also create an awareness among the people make

people know about the recent technology, advantages, benefits of reliance when compared to the

competitors.

Objective of the Project

In spite of successful launch of Reliance PCO there were some customers who had negative attitude

towards Reliance connection and hence they were churning out and switching over to the competitors.

The main objective of this project was to know the reasons why the customers were unhappy with

Reliance, as a result this project ( market survey on the satisfaction level of Reliance customers ) were

undertaken and 10 summer trainees were hired from various MBA institutes for a period of 45 days.

Initially the project dealt with churned customers as mentioned earlier, trying to analyze the key

reasons for them to churn out and solve their problem and ultimately getting them back to Reliance.

Next we dealt with the existing customers and analyzing their satisfaction level and try to find out if

they are happy with the service and Reliance. The project also included launching of coin box

connection and therefore we also dealt with sales of coin box as well as Reliance PCO connection. The

summer trainees also took part in the promotional campaign of Reliance where we had to go the

customers and make them aware about Reliance connections, how advantageous it is and the profit

they could make out of it .The impact was basically to attract new customers.

PROCEEDINGS OF THE PROJECT

It was basically a Market Research project where survey (personal interview with the customers) was

undertaken and the research instrument used was questionnaire .The Primary data is collected through

the structured questionnaire by sampling the reliance PCO users in Bangalore city as the respondents

while the secondary data is collected from the newspapers, internet and magazines. Sample size was

30 for the churned customers and 120 for the existing customers.

STAGE 1

First two days we were given training regarding the company its diversification, the product (Reliance

PCO connection and coin box connection), its advantages, operations, the services provided by LBAs,

their responsibilities etc.Each one was allotted different areas of in and around Bangalore along with

34

different LBAs (i.e. LBA for that particular area).Each one of us were under different Zonal leads.

Initially we were given the database of churned customers of the particular area allotted to us. I was

allotted the Banashankari and nearby areas like Banshankari 1st,2nd,3rd

stages,Chamrajpet,Basavanagudi,Mysore Road, Gandhi Bazaar,KR Road etc and my LBA was known

as Shree Agency but it had withdrawn its services long back and the areas under it were untapped as a

result I was allotted another LBA called Sainath Marketing who was also very new my areas and

therefore my job was very tough and challenging since the LBA had no idea about the customers as

well as their addresses. Everyday in the morning we were supposed to report to our LBAs, and get to

the field. We were supposed to find the PCO customers addresses ourselves which was a tough job

since most of the addresses were fake. We were given an inspection kit which included a questionnaire

to fill in the feedback from the customers, sticker of the respective LBA, instruction sheet which

consists of customer care numer, LBA executive no. Our responsibilities

• to interact with the customers and take the feedback regarding Reliance line and service

offered to them by the LBA

• try to find out the reason for them to churn out

• to inspect the proper installation of FWT and PPA

• ,to know who was their LBA and the CRE visiting them,

• We were also given the task of persuading them to switch back to Reliance and try to convince

them that their problem will be solved at the earliest.

• We also dealt with making the customer aware of the coin box connection which was recently

launched and persuade them to take the connection, making them understand its advantages,

the better commission it gives than the competitors, tariffs, its operational procedure etc.

• When we found any major problem of the customers regarding service or line or customers

who are willing to come back to reliance and recharge as soon as possible or who are interested

in coin box connection , we were supposed to report to our Zonal Leads or LBAs immediately

so that they could follow up from there.

I was successful in persuading at least 15 of the churned customers to switch over back to Reliance

and give at least a lead of 40 coin box connections. When we found any major problem with the

customers or customers who are willing to come back to reliance and recharge as soon as possible or

35

who are interested in coin box connection , we were supposed to report to our Zonal Leads or LBAs

immediately so that they could follow up from there. This process was carried for 10-12 days.

STAGE 2

After dealing with churned customers we had to conduct a survey on customer satisfaction of the

existing customers of the same area allotted for the next 15-20 days .The procedure was the same as it

was for the churned customers where we were given a new database of the customers and had to go to

them and analyze how satisfied they were with Reliance, were they facing any problems related to

service or reliance etc,whether the LBA or CRE were visiting them regularly, how well they know to

handle the product. If they faced any major issues it was immediately escalated to our ZL.There were

many customers who were not happy with Reliance due to various reason and therefore wanted to

switch over to other connections, it was also our task to avoid this and convince them to stick to

Reliance.

STAGE 3

There was a four day promotional campaign of Reliance PCO where it basically highlighted on the

launch of coin box connection where all the ZLs, CRE, MRE, took part along with all the project

trainees. We all were divided into different area and nearly 15 people went as a team responsible for

one particular area in Bangalore with banners outside our cars and vans and there were three to four

bikes going together, we all wore a same Reliance T-shirt. We were supposed to go to each outlet

irrespective whether they have Reliance connection or not and distribute the pamphlet and explain

them about the scheme the various recharge vouchers, the most important was the coin box

connection, the commissions offered, its operation procedures, advantages over their competitors etc.If

the customer would take both the coin box as well PCO connection he would get a gold coin as a

surprise gift. The addresses of the interested customers were taken so that the company would follow

up as per the convenience of the customers. If the customers wanted immediate connection then we

were supposed to fill the CAF form and collect the DD and call to the customer care to give instant

connection. This road show was basically conducted to create an impact in the market and make

people aware about the Reliance PCO and coin box connection and attract new customers. We were

successful to take at least 25 leads per day individually.

36

STAGE 4

In the last 10 days of our project we dealt with hard core sales i.e. we were engaged in selling the coin

box and if possible PCO connection in the Bangalore outlets. This time we not confined to any area

.The sales procedure adopted was as follows

• Demonstration about the product

• Convince the customer about the product

• Fill in the CAF forms and collect the documents required for registrating the reliance line. The

documents include – the address proof of the PCO booth in the form of electricity or telephone

bill or any legal document; the ID proof of the customer whose name the reliance line is

registered

• Submit the CAF form to the ZL or LBA

• Follow up with the customer until the sale is complete i.e. the installation is done and the line

is activated.

SWOT ANALYSIS OF RELIANCE PCO BUSINESS

Strengths

• Highest commission structure (RIL-30%, MTNL 15-18%) among national long distance

operators.

• State of art fault resistant wireless technology.

• Hassles free installation.

• No security deposit as against

• Brand name of Reliance.

• Sales backed by extensive customer care and after-sales services.

• Prepaid PCO system, therefore, hassle free billing mechanism.

• Can penetrate into rural areas.

Weakness

• Hesitation among PCO owners in adopting relatively new technology in Landline segment.

37

• Resentment among business class due to billing problems with RIM.

• Problem of connectivity to some remote, rural areas of Bihar, Uttar Pradesh.

• Inability to effectively check fraudulent connections. Callousness on the part of LBA will

effect customer satisfaction.

• Ineffective orders follow up mechanism.

• More suitable for existing PCOs wishing to churn their line rather than new PCOs.

Opportunities

• Tele-density of India is only 7%. Still 93% of people depend on PCOs for their communication

needs.

• The compound annual growth rate of PCOs is 25%.

• Currently there are 16.55 lacks PCOs in India, waiting to be churned.

• Customer service standards of its main competitor MTNL / BSNL is not very satisfactory.

• Problems of billing in post-paid systems.

Threats

• Pitted against well-entrenched player like MTNL / BSNL controlling approximately 85% of

PCO market in metros, 90% of PCO market in urban, semi-urban areas and near monopoly in

rural areas.

• Entrance of new players like Bharti, and TATA

• Perceived saturation in PCO market.

• TRAI's impending regulations

PROBLEMS FACED DURING THE PROJECT

I was allotted the Banshankari and nearby areas, the of LBA of these places had withdrawn and the

new temporary LBA had no much idea about these places. Therefore there was lot of obstacles

• Addresses given were incomplete and therefore very difficult to search, could not get the

complete address since the LBA was new.

38

• Most of the shops were closed in spite of going three or four times in a day but later I came to

know from the nearby shops that the shop was closed since many months (the information not

known to us).

• Most of the addresses were fraud like there were many such cases where one person has 30 –

40 connections but when I visited such places the addresses did not exist

• Most of the addresses were like they were right but the name of the person would be wrong.

• Most of the customers were not ready to give any information as they were very furious with

Reliance because of their bad experience.

• Since we were not provided with any pamphlet or any document which stated the new offers

and the coin box connection it was very difficult to convince them.

PROBLEMS FACED BY THE CUSTOMERS

The customers of Banshankari and nearby areas are facing a lot of problems because of no permanent

LBA to solve their queries. Quite a few of them were happy with RIC but very unhappy with service,

some of the customers who had switched over to other connections were also ready to come back to

RIC if all their problems were solved .Some of the major and common problems faced by the

customers are

• Connecting to STD/ISD lines specially to Bihar, UP.

• Network problem specially in the evenings and Sundays (during the peak hours)

• Most of them don’t know who is their LBA and where to complain

• In many cases the Reliance PCO connection were given to coin box ( not by LBA) by some

other external agent which cause a lot of problem.

• External agents charged a heavy amount to for FWT and installations from customers illegally

when the Reliance do not charge anything

• The lines get disconnected automatically

• In spite of complaining to the office, customer care or to the LBA hardly any one of them

respond

• LBAs never visited the customers (only sometimes when called).

• Lack of responsibilities from LBA,Very bad service

39

• Problem with currency, amount sometimes get deducted without making any calls

• Voice problem, lot of disturbance

• Very poor branding, Inspite of customers demanding for Reliance board or lit they have not yet

been provided.

• Double dhamaka offer not yet been credited.

• Calling customer care is charged.

• Not aware of the recent offers from RIC

• Customers are not educated regarding the handling and battery backup of FWT and PPA

• Have no idea about recharging and from where to get recharge vouchers.

• Need fax machine

• Demand for separate booth and telephone set

• Not aware of tariff and commissions offered.

SCOPE OF PROJECT

The project was carried on with the intention of finding the satisfaction level of the existing

customers. Initially most of the customers were not satisfied with Reliance network and service, as

a result switched over to other connection. Our initial focus was to find out the reasons why the

customers churned out from Reliance. This has helped RIC to a large extent, they could find out

their strengths and weakness, where did they go wrong and hence correct themselves and not to

repeat the mistakes again. We could also get some of the churned customers back to Reliance .The

project also concentrated on the satisfaction level of existing customers where RIC can get an idea

about how satisfied the customers are, what are the problems they are still facing, are their

problems being responded, how good are the services provided by LBA, how much they are aware

of the commissions offered to them, the handling and maintainence,since most of the customers

are having other connections than Reliance ,more information was also found about the

competitors like BSNL,AIRTEL ( like in some areas why AIRTEL,BSNL,TATA had an edge over

Reliance).Most of the information collected and an thorough analysis provides better opportunities

to RIC to take corrective steps wherever there are major flaws and in future not to repeat them. The

project also focused on creating awareness and attracting new customers and educating them about

40

the new technology adopted by RIC, the additional profit the customers can make compared to the

competitors etc.

SOME OF STEPS TO BE TAKEN BY RELIANCE PCO TO OVERCOME THE FACING

OBSTACLES

• Initially the RIC would give commission to the LBAs on the basis of the number of installation

done by them as a result the LBAs were interested only in installing but not following up later,

but now RIC will give full commission to the LBAs only after the LBA has recharched a

particular customer at least for 3 months and if the customer is happy with the customer.

• They are also planning for a 24 hrs welcome call where it will be toll free where the customers

can enquire for any of the issues like recharging, network issues etc

• RIC has stopped sending the receipts or bills of calls made or currency charged because most

of the addresses were wrong, or most of them have shifted as a result it used to come back to

the office and in future if anyone were interested in having bills they have to send a written

statement to the office or LBA.

• Initially the customers were not asked any address proof before installing as a result there were

many hindrances but now before installing the customers should provide a address proof

documents and identity proof.

41

ANALYSIS ON CHURNED CUSTOMERS.

SAMPLE SIZE 30

Only PCO business 4

PCO + other business 26

Only PCO business

13%

PCO + other

business87%

Only PCO business

PCO + other business

Out of 30 churned out customers there were 13% of the customers who survive with only PCO

business and rest 87% have other business like condiments, general stores including PCO business

BEHAVIOUR OF THE CHURNED CUSTOMERS

Came back to reliance 6

Switched to other competitor 24

After the survey was conducted i.e. 20% of the churned customers were convinced to come back to

reliance if their problems were solved but the rest 80% were stubborn and furious and have already

switched over to other competitors.

42

switched to other

competitor80%

came back to reliance

20%came back to reliance

sw itched to othercompetitor

COMPETITORS TO WHICH RELIANCE CUSTOMERS SWITCHED OVER

BSNL 10

AIRTEL 7

TATA 9

BSNL38%

AIRTEL27%

TATA35% BSNL

AIRTEL

TATA

The churned customers who switched over to other competitors were 27% of Airtel,35% of

TATA,38% of BSNL,therefore the major competitors for reliance are TATA and BSNL and in some

areas Airtel is also giving more competition.

43

Number of months with Reliance

Less than 3 months 15

3-6 months 5

More than 6 months 6

Less than 3 months

58%3-6 months

19%

More than 6 months

23%

Less than 3 months

3-6 months

More than 6 months

From the churned customers about 58% of the customers were with reliance less than 3 months, 19%

between 3-6 months and 23% more than 6 months. Therefore reliance is not a new line for most of

them.

REASONS FOR CHURNING OUT

Network issues 6

Not happy with service from LBA 10

Don’t where to but RCV 1

Wrong decrement issues 0

Issue in making and receiving calls 2

Customer care issues 3

FWT not working 0

Coin box connection 8

44

20%

33%

3%

0%

7%

10%

0%

27%

Network issues

Not happy withservice from LBADon’t where to butRCVWrong decrementissuesIssue in makingand receiving callsCustomer careissuesFWT not working

Coin boxconnection

20% of the customers churned out because of they had problem with network issues like voice

clearance, most of them i.e. 33% were not happy with the LBA service ,27% suffered because the

PCO connection was given to coin box by some other agents ( not LBAs) and they paid a heavy

amount for it and not making enough profit,1% did not know where to buy the recharge card,10%

were furious because they did not get any response from reliance in spite of complaining regularly to

customer care,7% had problem in making calls to distant places. No one had a problem with FWT and

wrong decrement issues.

REGISTERED COMPLAINTS TO

LBA 5

Customer care & office 15

Don’t know 10

45

LBA17%

Customer care & off ice50%

Don’t know33% LBA

Customer care& officeDon’t know

50% of the customers registered complaints in customer care and office, 17% to the LBA and the rest

did not know where to complain.

AWARENESS OF LBA/CRE

YES 21

NO 9

YES70%

NO30%

YESNO

70% of the customers knew who were their LBA and the rest 30% did not know who their LBA was

nor they had their contact address or number because once the CRE installed the connection never

turned up again, sometimes the customers said that every month some different people visit their outlet

so they exactly have no idea who was their LBA

46

FREQUENCY OF CRE VISITS IN A MONTH

ONCE 10

TWICE 0

NONE 11

ONCE48%

TWICE0%

NONE52% ONCE

TWICENONE

48% of CREs visited the customers once in a month, none of them visited twice in a month, 52% of

the CREs never visited the customers once they installed the connection.

HOW DO YOU RATE SERVICE OF LBA

GOOD 1

AVERAGE 5

POOR 15

poor71%

good5% average

24%

GOODAVERAGEPOOR

47

Since the churned customers were not happy with reliance and service from LBA only 5% rated the

service from LBA as good, 24% as average and 71% poor, they also did not know from where to get

the RCVs whom to contact during problems and when contacted to the office there was no response.

Many people did not have much idea abut commissions and tariff rates and the amount of profit they

can make.

HOW WOULD YOU RATE SERVICE OF RELIANCE

good 2

Average 3

bad 25

good7%

Average10%

bad83%

good

Averagebad

Similarly with rating of the service of reliance 83% rated it bad because of their bad experience like

they had problem with network issues, commission etc, only 7% rated good and the rest as average.

ANALYSIS ON EXISTING CUSTOMERS

SAMPLE SIZE 120

Only PCO business 14

PCO + other business 106

48

Only PCO business

12%

PCO + other

business88%

Only PCObusinessPCO + otherbusiness

Out of the 120 existing customers on whom the survey was done 12% had only PCO business the rest

had other business along with PCO.

NUMBER OF PCO LINES WORKING

reliance 140

TATA 40

BSNL 92

Airtel 25

reliance46%

TATA13%

BSNL33%

Airtel8%

relianceTATABSNLAirtel

Out of the 120 customers some of the customers had more than one reliance connection i.e. 46% had

only reliance, 33% had both reliance as well as BSNL, 13% had reliance and TATA, 8% has reliance

and Airtel.

49

ARPU/RELIANCE CONNCETION

>5000 22

5000-10000 75

10000< 23

>500018%

5000-1000063%

10000<19%

>50005000-1000010000<

ARPU is the Average Revenue earned Per Unit, where 63% of the customers earned between 5000-

10000 per reliance connection in one month, 18% earned more than less than 5000 19% earned more

than 10000.

Number of months with Reliance

Less than 3 months 17

3-6 months 47

More than 6 months 56

50

Less than 3 months

14%

3-6 months

39%

More than 6 months

47%

Less than 3months3-6 months

More than 6months

14% of the existing customers were with reliance from less than 3 months, 39% were from 3-6 months

and 47% are the most satisfied customers who are with reliance more than 6 months, most of them

switched from BSNL, Touchtel or tata and the rest took a new connection for reliance.

How effective was double dhamaka or additional talk time offer

Extremely good 5

good 11

Not effective 3

Don’t know 101

4%9%

3%

84%

Extremely goodgoodNot effectiveDon’t know

Double dhamaka or additional talk time offers are the extra benefits given to the existing customers

where 84% did not know about such offers,3% of the customers found it was not effective,9% found it

good and 4% were extremely happy with it

51

WHERE DO YOU REGISTER COMPLAINTS

LBA 32

Customer care or office 16

No complaints 53

Don’t know 19

LBA27%

Customer care or office13%

No complaints

44%

Don’t know16% LBA

Customer careor officeNo complaints

Don’t know

In case of any problems 13% of the customers complained to the customer care or reliance office, 27%

to LBA, 16% did not know where to complain and the rest had no complaints at all.

TIME TAKEN TO RESOLVE THE PROBLEM

Less than 4 hrs 6

More than 8hrs 24

More than a day 67

Not resolved yet 23

52

Less than 4 hrs5%

More than a day56%

Not resolved

yet19%

More than 8hrs20%

Less than 4 hrs

More than 8hrs

More than a day

Not resolved yet

Only 5% of the customers were happy telling that their complaints were responded within 4hrs the

complaint was given, it took more than 8hrs to solve the problem of 20% of the customers.56% are

quite unhappy because they get response only after 2 or 3 days by which they will get a down in their

business, the rest 19% are very furious since their issues have not yet been resolved.

FREQUENCY OF CRE VISITS IN A MONTH

Once 27

Twice 17

Thrice 8

None 13

Only after making a call 55

23% of the customers tell that the CRE visit their outlet only once in a month,14% tells twice a

month,7% thrice a month ,11% tells no one visits them and the rest 45% of the customers complaint

that only once a call is made then only the CRE come to them.

53

Once23%

Thrice7%

None11%

Only after making a call

45%Tw ice14%

Once

Tw ice

Thrice

None

Only after making a call

ARE YOU AWARE RELIANCE COIN BOX LINE

yes 19

no 101

yes16%

no84%

yes

no

16 of the customers were aware of the reliance coin box line but the majority of 84% of them had no

idea about it.

ARE YOU WILLING TO SUBSCRIBE FOR RELIANCE COIN BOX LINE

yes 62

no 58

54

yes52%

no48% yes

no

52% of the customers were happy with the coin box connection offer and hence subscribed fot it and

asked them to contact within a week ,some of them wanted to switch from BSNL most of them were

ready to take a new line.48% of the customers already had coin box connections and were not

convinced to switch over to reliance.

WHETHER RELIANCE IS PLACED INSIDE THE BOOTH

yes 105

no 15

yes87%

no13%

yes

no

If the customers have more than one STD connections sometimes it so happens that not all the

connections shall be kept inside the booth but 87% of the customers have placed reliance

connection inside the booth, by this we can come to know that most of the customers are giving

reliance more importance because the people who come to make the call would like privacy and

would naturally go to the phone which is placed inside the booth.

55

WHETHER RIL IS PLACED IN PRIORITY POINT (BILLING)

Highest 98

Medium 20

Lowest 2

Highest81%

Medium17%

Lowest2%

Highest

Medium

Lowest

This is regarding the customers having more than one STD booth 81% of the customers have

placed the reliance connection under the vicinity of the customers where they can promptly spot it

and would rather prefer to make a call when compared to other connections.

CURRENTLY PROBLEMS FACING

Network 23

Commissions 11

No issues 15

Branding 32

No response 14

Services 25

56

19%

9%

13%

26%

12%

21%NetworkCommissionsNo issuesBrandingNo responseServices

Existing customers are still facing some problems where 19% are because of network issues like

making STD or ISD calls, no voice clarity, lot of disturbance etc,9% are because they have no idea

about how much commissions they are getting ,how are they getting it,13% are very happy with

reliance they have no problem at all,26% of customers are very furious because they are not provided

with any lit or board indicating it is a PCO from the company there is absolutely poor branding,12%

tell that in spite of complaining to office or LBA there is no action taken.21% are unhappy with

service provided from LBA

HOW DO YOU RATE SERVICE OF LBA

Good 30

Average 40

Poor 50

Good25%

Average33%

Poor42% Good

Average

Poor

57

Only 25% of the customers are happy with LBA 33% have rated average and the rest 42% are

really unhappy with LBA.

HOW DO YOU RATE SERVICE OF RELIANCE

Good 55

Average 40

Poor 25

Good46%

Average33%

Poor21%

Good

AveragePoor

Coming to reliance connection 46% have no problem with reliance and only 21% are furious with

reliance.

BRANDING STATUS

flange 23

Sticker 14

Lit 6

None 77

58

flange19%

Sticker12%

Lit 5%

None64%

flange

Sticker

Lit

None

Branding status is actually very poor when compared to the competitors, only 5% of the customers

are provided with the lit ( only provided to high ARPU customers ),12% are provided with only

stickers which is hardly visible,19% are provided with flanges which is not visible during the night

and the rest 64% are not provided with anything.

OBSERVATIONS

Based on the survey done by the churned and existing customers there were some observations

made

• Reliance PCO business is emerging in the market and growing at a greater pace with almost 2nd

in the market after BSNL in just one year beating the competitors like AIRTEL,TATA etc.

• Since the PCO business was outsourced to LBAs there was a lot of problem with the service

provided by them to the customers, according to the survey made 42% of existing and 71% of

churned customers rated service of LBA as poor.

• There was lack of CREs in most of the LBA point as a result they could not visit the customers

in time and regularly. Most of the outlets were in remote places where the CREs would hardly

visit.

• Most of the customers did not know who their LBA was they did not even know where to

complain in case of some problems or where to buy recharge coupons as a result they used to

face down in their business.

• Some of the customers did not know about the working of the connection, the commissions

they would be getting, the benefits etc since the CREs hardly took any initiatives to inform the

customers regarding this information.

59

• Since the LBA were getting their commissions based on the number of installation they made

the CREs were only interested in installing the connection than the service which has to be

provided to the customers after connection. As a result in some cases the PCO connection was

given to the coin box (to the customers who did not have STD PCO connection) by some

dealers incurring loss to the customers, the customers were also heavily charged by these

dealers when the company is rendering the service for free.

• Most of the problems were not attended in spite if complaining frequently even to the company

or customer care because of lack of manpower and training given to them and also the places

were remote and therefore the CRE has to spend from his pocket for the traveling expenses(

they are given only Rs 50 as their traveling expenses )

• During the promotional campaign we found out that most of the people did not know much

about reliance PCO connection.

• There were some repeated problems faced because of network, voice clarity, issue in making

calls as a result the reliance connection was removed from the booth and replaced by the

competitor or kept in a lower visible point .

• The most important issue was locating the address since initially the connection was given

without taking any address proof so most of the customers gave fraud or incomplete address

which was a problem for us to find as well as for the CREs.

• Most of the customers were very furious because of the poor branding the customers were

hardly given any lit or board so that the people can notice that there is a booth.

• Some of the customers were happy with coin box connection scheme and nearly 52% of the

customers were willing to subscribe it.

• There were some demands from the customers like to provide fax, billing machine, booth or

telephone set along with the connection. They also demanded for a bill or receipt of the

recharge currency being used or the currency remained in that particular card for at least every

fortnight so that they can keep a track.

60

RECOMMENDATIONS

• Since reliance is the wireless technology it can be easily used in the remotest places also where

even BSNL or Airtlel cannot penetrate, there is a very high potential specially in the remote

areas as a result more LBA points to be started in different areas with more manpower ie the

CREs so that they can visit all the places in time and not to give any chance for the customer to

complain.

• Better service has to be provided and better training to the CREs to tackle the problems easily,

the customers should also be made aware of the benefits and working etc.

• The CREs should be provided with a vehicle so that they can meet the targets faster and reach

out to the customers instantly.

• The commission to the LBA should be given only after a proper follow with the customers.

• The installation should be done according to the instructions

• The customer should be provided with a instruction manual regarding the handling of FWT

and the PPA,the customer care numbers ,the contact details of the respective LBAs

• The customer should be made aware of tariff rates and commission structure.

• The CREs should maintain a record of all the databases the installations and the sales done on

regular basis.

• The reliance CREs should be trained about the products they are using so that they can give

good product demonstration for the better usage of the product by the customer. This can also

help the customers for not using the STD lines for the coin box.

• The company should take proper care to take the right address from the customers with address

proof so that CREs won’t take much time locating them and FWTs won’t be lost.

• The company can also provide low denomination currency recharge for the low business area

operators and also benefit more customers by providing some extra talktime,free gifts etc, they

can also come out with payments of recharge cards done through installments for low ARPU

customers.

• The customer care number should be made toll free for the customers.

• The RIL can come up by providing the hand set, fax and billing machine, booth along with the

connection.

61

• The follow up should be made immediately by the LBA so that there wont be down in the

business of the PCO operators.

• There is lot to be done in branding, each customer should be provided with a lit or alteast a

normal board of reliance PCO outside the outlet so that people can locate it.

• The CREs can also do something for creating awareness about the Reliance PCO in the market

by visiting some shops and organizing more of road shows.

• The LBA should keep a track of each CRE responsible for particular connection so that if any

problem exists he can be catch hold of.

• The ZLs or LBAs should visit customers once in a while to maintain a better relationship.

• If any changes to be made the customers should be made aware of immediately.

• RIL should provide a receipt or bill indicating the number of calls made the currency being

used, the remaining balance at least once in a month.

CONCLUSION

Telecom sector is in boom as usual since communication plays an important role in any business. With

rapid advancement and improvisation of the technology telecom services are modernized and made its

best to use. The government owned BSNL and the MTNL initiated the telecom services in India with

only a simple telephone but later pagers, cellphones were introduced and used by people to

communicate. They were private players like Airtel, Hutch, Tata Indicom; Reliance Infocomm who

entered into the telecom sector providing better service than public sectors.PCO business is not yet

saturated at least in a developing country like India where 90% of the people don’t use mobile phones.

BSNL and the MTNL are responsible for starting this PCO business and also at present are the market

leaders but now even the private players like Airtel,Tata,Reliance provide this service with better

commission than BSNL as a result it is losing its market share to its competitors. With just one year of

introduction Reliance is already standing next to BSNL in PCO business.Reliance being the richest

company in the country, with good financial backup can provide all the services at its best for the

customers by overcoming the problems faced by the company presently. The objective of being the

market leader by the year 2006-07 can be achieved by solving the problems mentioned and giving the

best service to the operators.

62

EXHIBIT 1 QUESTIONNAIRE 1

Churned Customers

Name of the PCO operator: MDN No.

Address: Other business:

Alternate contact number: Total No. of RIL

Line:

PPA Installed Yes No

1. Total number of PCO line working STD/ISD CCB

Reliance BSNL Airtel

TATA 2. How many months were you with Reliance?

Less than 3 months 3 – 6 months

More than 6 months

Please specify

3. What was the reason of churning? (discontinued using RIL PCO)

Network issue

Not happy with service from LBA

Don’t know where to buy RCV

Wrong decrement issue

Issue in making and receiving calls

Customer care issue

FWT was not working

63

Other reason

4. Where were you registering your complaints in case of any problem?

LBA

Others

5. Within how many hours of complaining your problem gets resolved?

Less than 4 hours

Less than 8 hours

More than a day

Specify

6. Can you please name your LBA or his person who was visiting you?

LBA………………………………………… Phone number………………..

CRE…………………………………………..Phone number………………..

7. How often did the CRE use to meet you in a month?

Once

Twice

Thrice

None

8. How was the Double Dhamaka Scheme & Additional Talk time offer?

Extremely Good

Good

Not Effective

Don’t know

9. Are you aware of Reliance Coin Box Line?

Yes

No

10. Are you willing to subscribe for Reliance coin box line?

Yes

No

No. of lines required

When to contact

64

11. Total number of billing machines………… & number of booths………. in the outlet.

12. Whether RIL line was placed in priority point ?(Billing & visibility wise)

Highest billing

Medium billing

Lowest billing

13. How do you rate the service of LBA Reliance

Good

Average

Poor

Specify if poor

14. Would you like to come back to Reliance if all issues are sorted out?

Yes

No

15. Are you willing to recharge now?

Less than two days

Less than 5 days

Specific date

16. If not willing to recharge, why?

No proper service from LBA

Low business

Line connected to coin box

Already churned line to competition (BSNL, Airtel, TATA )

Unhappy with Reliance

17. Will you recommend Reliance PCO line to anyone?

Reference Name: ………………………………………………………..

Phone Number: ………………………………………………………...

65

18. Branding Status Reliance Others

Circular Lit

Unit Flange

Normal Flange

Stickers

STD code poster

None

Do you have any suggestion to improve our service much better?

66

EXHIBIT 2

QUESTIONNAIRE 2

EXISTING CUSTOMER – An over view of RIL PCO Customers Name of the PCO operator:

Address:

MDN No.

Alternate contact number:

Other business:

Total No. of RIL

Line:

PPA Installed Yes No

1. Total number of PCO line working STD/ISD CCB

Reliance BSNL Airtel

TATA 2. How many months are you with Reliance?

Less than 3 months 3 – 6 months

More than 6 months

Please specify

3. How effective was the introduction of Reliance by the representative?

Excellent

Very good

Good

Poor

4. How effective was the product presentation and demonstration?

Excellent

Very good

Good

Poor

5. How was the Double Dhamaka & Additional Talk Time promotion offer?

67

Extremely good

Good

Not effective

Don’t know

6. How many days of applying did you get the phone?

Within 2 days

Within 4 days

Within 7 days

More than a day

7. Where do you register your complaints in case of any problem?

LBA

Circle

Others

8. How much time did it take to resolve the problem after registering it?

Less than 4 hours

More than 8 hours

More than a day

9. How often did the CRE meet you in a month?

Once

Twice

Thrice

None

10. Can you name LBA or his person who visits your outlet regularly?

LBA-------------------------------------------- Phone Number ……………………

CRE --------------------------------------------- Phone Number……………………

11. Are you aware that Reliance has launched coin box line?

Yes

No

12. Are you willing to subscribe for RIL coin box line?

Yes

68

No

13. Total number of billing machines………… & number of booths………. in the outlet.

14. Whether RIL line is installed in booth Yes No

15. Placement of RIL line billing & visibility wise -

Highest billing

Medium billing

Lowest billing

16. Is there any issue currently you are facing unresolved for long time?

Network related……………………………………………………………………

Commissions………………………………………………………………………

Tariff related………………………………………………………………………

FWT problem……………………………………………………………………..

Others……………………………………………………………………………...

17. How do you rate the services of - LBA Reliance

Good

Average

Poor

18. Will you recommend RIL PCO to any one?

Reference Name …………………………………………………………………..

Phone number …………………………………………………………………….

19. Branding Status - Reliance Others

Circular Lit

Unit Flange

Normal Flange

Stickers

STD code poster

None

Do you have any suggestion to improve our service much better?

69

EXHIBIT 3

COMPARATIVE ANALYSIS OF THE COMPETITORS

COMP NAME NO OF LINES COMMISSION ( % )

BSNL 19000 25

RELIANCE 8000 40

TATA 2000 30

AIRTEL 4000 25

bsnl58%

reliance24%

tata6%

airtel12%

bsnlreliancetataairtel

From the above figure we can see that 58% of the PCO customers use BSNL the second being

reliance with 24% the rest followed by Airtel with 12% and Tata with 6%.

Since the PCO business was initially started by BSNL at present they are the market leaders with

nearly 19000 lines in Bangalore but slowly they are being swapped by private players like

Reliance topping the list with 8000 lines followed by TATA and AIRTEL. In some places BSNL

has an edge because most of the illiterate customers in remote areas they are not ready to except

the new technology or because of bad experience with reliance with mobile they were not ready to

take chance with PCO connection or sometimes the customers are very brand loyal towards

70

BSNL.Airtel is postpaid connection where the customers gets commission after the bills produced

after 15 days but their plus point is their service where the problems are solved within 4hrs of the

complain, whereas TATA being similar to reliance with prepaid connection they have an edge

since they provide a booth along with telephone handset along with connection, they have a good

branding status also compared to reliance. Reliance do not take deposit or service charges only

charge for the recharge card, the customers get commission instantly before currency gets

exhausted and also since it is wireless there would not be any problem during rain etc

71

EXHIBIT 4 INCOME STATEMENT Period to FY 02 FY 03 FY 04 ( Rs mn) (12) (12) (12) Net Sales 420889 458978 518015 Operating expenses (340897) (377088) (420784) Operating profit 79993 81890 97232 Other income 6590 11755 13987 PBDIT 86582 93665 111219 Interest (18251) (15552) (14347) Depreciation (28161) (28371) (32470) PBT 40170 49742 64401 Tax (11860) (8699) (11410) PAT 28310 41043 52991 Extraordinary/prior period items 4117 0 (1390) Adjusted profit after tax 32427 41043 51601 BALANCE SHEET Rs in mn FY 02 FY 03 FY 04 (12) (12) (12) Sources of funds Share capital 10536 13979 13960 Reserves 268216 289785 330565 Net worth 278753 303744 344525 Loan funds 189295 197583 209477 Def tax ( liability) 20608 26848 34478 Total 488646 528175 588719 Uses of funds Gross block 467273 505530 535029 Accd depreciation (150769) (184612) (217137) Net block 316504 320918 317812 Capital WIP 15333 19944 33562 Total fixed assets 331837 340863 351460 Investments 38502 67277 139714 Total current assets 194507 223571 220401 Total current liabilities (76828) (103957) (122855) Net working capital 117678 119614 97546

72

Miscellaneous exp 629 472 0 Total 488646 528175 588719 KEY RATIOS

FY O2 FY 03 FY O4 (12) (12) (12) Per share ratios (EPS ) Rs 30.8 29.4 37 Div per share 6.3 5 5.3 Book value per share 264.6 217.6 246.8 Profitability ratios OPM (%) 20.6 20.4 21.5 PAT % 7.7 8.9 10 ROCE 18.5 18.7 20.1 Liquidity ratio Current ratio 2.5 2.2 1.8 Debtor days 23.6 23.8 21.5 Inventory days 43.1 59.7 51 Creditor days 52.2 71.6 76.4 Leverage ratios Debt/total equity 0.68 0.65 0.61 Payout ratios Dividend payout ratio 20.5 19.2 16 Dividend ( Rs in mn) 6633 6982 7331 No of equity shares (mn) 1053.6 1395.9 1396 Market capitalization 520564 689724 689739

73

BIBLIOGRAPHY

http://www.indiainfoline.com/nevi/terv.pdf

www.ril.com

www.relianceinfo.com

www.bsnl.com

www.trai.com

The Economics Times

The Times of India

India 2005

Business Line