One of the immediate task before the company, which is formed on October one by corporatising the Department of Telecom Services, is to raise the required funds for gearing up to meet the network expansion and entering into new services such as cellular and Internet.

According to an internal note, BSNL would have to increase its borrowings from earlier proposed levels as it has to execute a plan of Rs 12,300 crore during the second half of the current financial year begining this month, while its resources would be eroded to the extent of Rs 8,235 crore.

The note said management of funds need to be stronger to ensure that the company did not incur undue interest or hold funds idle. "It will be necessary that assessment of fund requirement be made critically and commitments made carefully to ensure this."

S P Purwar Advisor (Finance) in the Department of Telecom told eFE that "we have to go for a borrowing close to Rs 4,000 crore before the close of the fiscal calender in March, 200".

Department of Telecom Services had raised bonds worth Rs 2,569 crore for meeting the plan outlay of Rs 12,643 crore. This was mainly because of a fall in revenue after the implementation of the new tariff and due to redemption of bonds worth Rs 3,344 crore.

As per the financial performance of the erstwhile Department of Telecom Services till July this year, it has met the proposed outlay of Rs 16,500 crore through internal resources worth Rs 12,848 crore and extra budgetary resources for an amount of Rs 2,652 crore. A heavy borrowing programme has been necessitated as the company has to go ahead with its network expansion as well as enter into new services such as cellular phone and Internet. The company has already begun implementing plans to roll out cellular systems in a few months from now and it commands good share in the Internet subscriber base too.

The erstwhile DTS has been doing commercial market borrowings through public sector Mahanagar Telephone Nigam Limited. But now that the DTS has become a company from October 1, it can directly approach the market. "Now that we have option of going directly to the market, we will prefer that option", Mr Purwar said.

As a consequence a number of of investment bankers have approached BSNL to manage the debt considering the size of the borrowings.