Mahanagar Telephone Nigam Limited
]NSE Symbol MTNL
MTNL and BSNL are two public sector players in the telecom services industry. While MTNL had started incurring losses from FY 2010, BSNL is understood to have started incurring losses in FY 2011.
MTNL is a publicly listed company – with 43.75% public share holding. It has been sliding downwards continuously in terms of performance – with no visible signs of any big effort on the part of the company – to pull its socks together.
Its results for Q4 FY 11 are analyzed below : Each quarterly result for last 5 quarters are analyzed in comparison to each of its its immediate preceding quarter. FY 2010 results is analyzed with reference to proportionate result of Q4 FY 11 (i.e., Q4 FY 11 x 4). FY 2009 is analyzed with reference to FY 2010.
Net Sales/Income from Operations : for Q4 FY 2011 is Rs.807.76 Cr – down from Q3 FY 11 by 12.44%; which is down from Q2 FY 11 by 12.44%; which is up by 10.56% from Q1 FY 11;which is up from Q4 FY 10 by 12.33%. Thus, from Q1 FY 11, there has been a steady down slide QoQ. The Q4 FY 11 9s proportionately ( Q4 FY 11 x 4) down from FY 2010 by 11.63%; but FY 10 is down from FY 09 by a huge 27.49%.
Employees Cost :for Q4 FY 11 is Rs.929.48 cr – which, as we can see, is higher than the net Sales Income itself. It is higher to Q3 FY 11 by 14.35%; Q3 FY 11 is higher to Q2 FY 11 by 3.77%; Q2 FY 11 is higher to Q1 FY 11 by 9.15%.. For some special reason, Q4 FY 10 had recorded a very high employees cost of Rs.2707.72 cr, which is not comparable with other quarters. Q4 FY 11 employee cost is less than FY 10 Proportionately by 25.14%. But FY 10 cost of Rs.4966.25 cr is significantly higher than FY 2009 cost of Rs.2127.40 cr.
Depreciation booked in the 4 quarters of FY 11 is much less than the depreciation booked in FY 2010. But yet, the depreciation booked in Q4 FY 11 is over 35% of the Net sales income in Q4. FY 2010 depreciation was about 110% more than that of FY 2009 depreciation.
Other expenditure is also comparatively less than FY 10 and FY 09.
Total Expenditure for Q4 FY 11 : is Rs.1708.70 cr – which is more than Q3 FY 11 by 6.32%; Q3 FY 11 is more than Q2 FY 11 by 3.27%; Q2 FY 11 is more than Q1 FY 11 by 6.81%. But, Q4 FY 10 had huge total expenditure. Q4 FY 11 is less than Q4 FY 10 by 60.82%.. Q4 FY 11 is also proportionately less than FY 10 total by 19.36%. But, FY 10 was more than FY 09 by 37.1%.
LOSS from Operations for Q4 FY 11 : is Rs.853.69 cr. Q4 loss is more than Q3 loss by 30.17%; Q3 loss is more than Q2 loss by 33.09% ; and Q2 loss is more than Q1 loss by 1.55%. But Q1 FY 11 loss is less than Q4 FY 10 loss by 82.78%. Q4 FY 11 loss is proportionately less than FY 10 loss by 27.26%. But, FY 10 loss of Rs.4694.47 Cr is much higher than the Rs.409 cr loss incurred in FY 09.
Interest burden on loans has been increasing and it currently stays at Rs.144.23 cr.
Loss before tax for Q4 FY 11 is Rs.1098.87 cr – higher by 62.79% from Q3 FY 11; Q3 loss is higher to Q2 by 11.62%; Q2 loss is higher to Q1 loss by 34.17%; but Q1 FY 11 loss is lower to Q4 FY 10 loss by 78.52%. Q4 FY 11 loss proportionately is higher than total of FY 10 by 28.56%. But FY 09 had resulted in a small profit after tax of Rs. 263.79 cr, because of high other income of Rs. 674.24 cr.
Net Loss for Q4 FY 11 is Rs.1099.58 cr - higher by 63.86% from Q3; & Q3 FY 11 is higher than Q2 by 10.94%; Q2 FY 11 is higher than Q1 FY 11 by 33.99%; Q4 FY 11 net loss is however proportionately less than FY 10 total loss by 71.31%. FY 11 net loss is more than FY 09 net loss by 68.46%.
The whole analysis, especially of Q4 FY 11 results - simply points to a few aspects, which the MTNL needs to immediately address.
The salary Bill by itself exceeds the Net sales income. The need for cutting down on the salary Bill by any standards, by well–known measures- can therefore not be overlooked at all. Of course, the net sales also needs to be increased significantly.
Depreciation also is over 35% of the Net sales Income – which means, the assets are not generating sufficient income. There is need for much better, optimal utilization of the assets - so that assets produce much more income , to service the assets and the employee cost.
Other Expenditure constitutes another over 50% of Net sales income.
Ignoring all other negatives, the net loss itself is a huge Rs.1099 crores – against the Net sales Income of Rs.808 crores.
Since the position is deteriorating quarter after quarter – the company needs to brace itself with all possible measures to significantly improve the revenue and drastically reduce expenditure on all fronts.
The company is introducing new services like 3G, which is good for the company. But, the revenue Potential of 3 G at least in the short run is unknown. Garnering greater numbers and market share in each of its other normal services, including mobile, landline and Broadband, seem to hold the key. But, expenditure under each head seems to need drastic pruning.
The Public shareholding in MTNL is a huge 43.75%.
Reserves at the end of FY 10 was a huge Rs.11171.41 cr. This should yield better sales revenue.
| MTNL | Q4 FY 11 | Q3 FY 11 | Q2 FY11 | Q1 FY 11 | Q4 FY 10 | FY 10 | |
| Net Sales/Income from Operations | 80776.2 | 92252.2 | 105362 | 95295.3 | 84833.1 | 365610 | 445599.9 |
| Other Operating Income | 4725.2 | 2870.6 | 972.5 | 1867.3 | 5189.6 | 12490.3 | 12003.1 |
| Employees Cost | 92947.5 | 81285.1 | 78330.1 | 71766.1 | 270772 | 496625 | 212739.6 |
| Depreciation | 36801.4 | 36063.1 | 34285.4 | 34450.4 | 19377.6 | 175949.4 | 69884.7 |
| Other Expenditure | 41121.3 | 43357.7 | 42996.2 | 39469.4 | 81719.6 | 174972.5 | 215908.6 |
| Total Expenditure | 170870 | 160706 | 155612 | 145686 | 371869 | 847546.9 | 498532.9 |
| LOSS from Operations | 85368.8 | 65583.1 | 49277.2 | 48523.3 | 281846 | 469446.6 | 40929.9 |
| Other Income | -10094.9 | 11679.4 | 3189.1 | 6227 | 72004.4 | 127682 | 67424.4 |
| Interest | 14423.6 | 13598.3 | 14388.5 | 2776.9 | 9.6 | 126.1 | 115.3 |
| Loss before tax (Gain) | 109887 | 67502 | 60476.6 | 45073.2 | 209851 | 341890.7 | 26379.2 |
| Tax expense | 4.5 | 4.6 | 4.5 | 4.6 | -52384.8 | -84308.5 | 9545.9 |
| Extraordinary Items | 66.1 | -402 | 7.9 | 65.7 | -90.6 | 3515 | -4338.4 |
| Net Loss (Gain) | 109958 | 67104.6 | 60489 | 45143.5 | 157376 | 261097.2 | 21171.7 |
| Face Value (In Rs | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
| Paid Up Equity | 63000 | 63000 | 63000 | 63000 | 63000 | 63000 | 63000 |
| Reserves | 1117141 | - | |||||
| Basic EPS | -17.45 | -10.65 | -9.6 | -7.17 | -24.98 | -40.89 | 3.36 |
| Public Shareholding (%) | 43.75 | 43.75 | 43.75 | 43.75 | 43.75 | 43.75 | 43.75 |
ANNOUNCEMENTS TO NSE
12-05-2011 standalone Results for the quarter ended on 31-MAR-2011 as follows: Net Sales of Rs. 80776.2 lacs for quarter ending on 31-MAR-2011 against Rs. 92252.2 lacs for the quarter ending on 31-DEC-2010. Net Profit / (Loss) of Rs. (109957.9) lacs for the quarter ending on 31-MAR-2011 against Rs. (67104.6) lacs for the quarter ending on 31-DEC-2010.
11-02-2011 standalone Results for the quarter ended on 31-DEC-2010 as follows: Net Sales of Rs. 92252.2 lacs for quarter ending on 31-DEC-2010 against Rs. 105362 lacs for the quarter ending on 30-SEP-2010. Net Profit / (Loss) of Rs. (67104.6) lacs for the quarter ending on 31-DEC-2010 against Rs. (60489) lacs for the quarter ending on 30-SEP-2010.
02-12-2010 "Income Tax Department has issued a refund orders to MTNL in the matter of deduction under section 80IA of the Income Tax Act, 1961 for the Assessment Years 2001-02 & 2002-03.The total amount received from Income Tax Department amounts to Rs. 299.89 Crores out of which Rs.92.22 Crores has been refunded towards interest on refunds for the above Assessment Years."
03-11-2010 standalone Results for the quarter ended on 30-SEP-2010 as follows: Net Sales of Rs. 105362 lacs for quarter ending on 30-SEP-2010 against Rs. 95295.3 lacs for the quarter ending on 30-JUN-2010. Net Profit / (Loss) of Rs. (60489) lacs for the quarter ending on 30-SEP-2010 against Rs. (45143.5) lacs for the quarter ending on 30-JUN-2010.
02-11-2010 Income Tax Department has issued a refund orders to MTNL in the matter of deduction under section 80IA of the Income Tax Act, 1961, for the Assessment Years 1999-2000 & 2000-01.The total amount received from Income Tax Department amounts to Rs. 794.86 Crores out of which Rs.484.73 Crores has been refunded towards interest on refunds for the above Assessment Years.
12-08-2010 standalone Results for the quarter ended on 30-JUN-2010 as follows: Net Sales of Rs. 95295.3 lacs for quarter ending on 30-JUN-2010 against Rs. 84833.1 lacs for the quarter ending on 31-MAR-2010. Net Profit / (Loss) of Rs. (45143.5) lacs for the quarter ending on 30-JUN-2010 against Rs. (157375.9) lacs for the quarter ending on 31-MAR-2010.
20-05-2010 in the matter of deduction under section 80IA of the Income Tax Act, 1961, the Commissioner of Income Tax (Appeals) has allowed to MTNL a further proportionate relief for the Assessment year 2001-02. As a result of this order, MTNL would be entitled to an estimated amount of Rs. 385 crores which include an Interest amount of Rs. 145 crores approximately.
13-05-2010 standalone Results for the quarter ended on 31-MAR-2010 as follows: Net Sales of Rs. 84833.1 lacs for quarter ending on 31-MAR-2010 against Rs. 90225.7 lacs for the quarter ending on 31-DEC-2009. Net Profit / (Loss) of Rs. (157375.9) lacs for the quarter ending on 31-MAR-2010 against Rs. (89495.3) lacs for the quarter ending on 31-DEC-2009.
19-03-2010 "In the matter of deduction under section 80IA of the Income Tax Act, 1961, the Income Tax Appellate Tribunal has allowed to MTNL a further proportionate relief for the Assessment Years 1998-99, 1999-2000, 2001-02, 2002-03 and 2005-06. As a result of this order, MTNL would be entitled to an estimated amount of Rs.1380 crores which would include an Interest amount of Rs.624 crore approximately".
29-01-2010 Mahanagar standalone Results for the quarter ended on 31-DEC-2009 as follows: Net Sales of Rs. 90225.7 lacs for quarter ending on 31-DEC-2009 against Rs. 95536.6 lacs for the quarter ending on 30-SEP-2009. Net Profit / (Loss) of Rs. (89495.3) lacs for the quarter ending on 31-DEC-2009 against Rs. 2058.4 lacs for the quarter ending on 30-SEP-2009.
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