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From declining revenues to increasing debt: How BSNL lost its stature as 'Navratna' PSU

The company's financial position has been deteriorating for a long time-it has moved from Navratna status to being declared as an 'Incipient Sick' PSU over the years.

twitter-logo Niti Kiran   New Delhi     Last Updated: March 14, 2019  | 16:56 IST
From declining revenues to increasing debt: How BSNL lost its stature as 'Navratna' PSU

Once-a-Navratna-PSU, BSNL missed paying its employees their February 2019 salaries on time. As on November 30, 2018, the employee strength of the company stood at 1.72 lakhs with an executive staff strength of 28 per cent and non-executive staffs making up the rest, 72 per cent.

The company's financial position has been deteriorating for a long time-it has moved from Navratna status to being declared as an 'Incipient Sick' PSU over the years. Here is a look:

Fiscal 2009 was the last year of positive operating profit (EBIT) for BSNL which stood at Rs 1,721.72 crore. Since then, the company has posted a cumulative, EBIT loss of Rs 57,117 crore over FY2010-18.


Employee expenses, including wages and bonus as a per cent of total income doubled over a decade-it stood around 53 per cent of company's total income in FY2018 compared to 26 per cent FY09 when the company last saw its operating profits.

The industry-wide challenge and the its struggle was well depicted from the company's declining revenues. The total income of the company at Rs 25,070.64 crore in FY18 stood around 38 per cent below the its peak of Rs 40,176.58 crore in FY06. Its revenues fell around 21 per cent in 2018.

On the balance sheet front, BSNL moved from a peak net cash position of Rs 37,163 crore in FY2008 to a net debt position in 2011/12 and continues to remain so. Its net debt stood at Rs 16,093.4 at the end of fiscal 2018.

BSNL leads wireline market with a share of 52.31 per cent. R-Jio's impending fibre to the home (FTTH) foray is expected to impact the company's wireline business. The company has seen a continuous fall in its wire-line subscribers base over the last 59 months.

A note from Kotak Institutional Equities says, "We are not really surprised with the event, to be honest; this was a matter of time. Stress in the sector has only been rising for the past few years and BSNL's ability to withstand it, with its uncompetitive cost structure and inferior network, was always limited. We note that even the larger private players in the industry have been under stress and the sector has seen heighted activity with several exits and M&A events."

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