Your Directors present 23rd Annual Report on the business and operations ofTata Teleservices (Maharashtra) Limited (TTML/ the Company)together with the audited financial statements for the year ended March 312018 and otheraccompanying reports notes and certificates.
TTML holds two Unified Licences (UL) one for Mumbai Metro service area andthe other for Maharashtra service area i.e. Rest of Maharashtra and Goa. The Company isan integrated player across:
Technologies - Wireline Global System for Mobile (GSM) and 3G; CodeDivision Multiple Access (CDMA) has been discontinued since last quarter ofFY2017-18
Products - Voice Data & Other enterprise services (Connectivity and Managedservices Verticals based mobile applications and Cloud services); and
Customer segments - Retail Large corporate and Small & Medium Enterprises.
The Company provides its range of products and services to about 6.1 Million(wireline + wireless) subscribers under the Tata DOCOMO' brand. Its network as ofMarch 2018 consists of about 4569 Base Transceiver Stations (own) and optical fibretransmission network about 17000 kms. in Mumbai and Maharashtra service areas.
The Company proposes to transfer by way of demerger its consumer mobile business(CMB) to Bharti Airtel Limited by way of a Scheme of Arrangement which was approved byyour Board on December 19 2018 (the Scheme) and is currently awaiting various approvalsincluding approval of National Company Law Tribunal (NCLT) your approval secured andunsecured creditors' approval and approval of Department of Telecommunications (DoT).Further details have been given here-in-below in the Section Scheme of Arrangement'.
The Company is also exploring the possibility of demerging its Enterprise Businessand Retail Wireline and Broad-band business.
The Company adopted Indian Accounting Standards (Ind AS) from April 12016 with transition date from April 1 2015. Accordingly the financial reports forcurrent financial year 2017-18 and previous financial year 2016-17 have been prepared asper Ind AS reporting framework.
The financial highlights of the Company for the year ended March 312018 are asfollows:
|Particulars ||2017-18 ||2016-17 |
|Total Revenue ||1904 ||2689 |
|Expenditure ||1734 ||2049 |
|Earnings before Interest Depreciation Tax and Amortisation (EBITDA) ||170 ||640 |
|Finance & Treasury charges including exchange impaxt (net) ||1538 ||1242 |
|Depreciation / Amortisation ||533 ||796 |
|Profit/(Loss) before exceptional items and Tax ||(1900) ||(1398) |
|Exceptional Items ||7942 ||959 |
|Profit/(Loss) After Tax ||(9842) ||(2356) |
During the year the industry's financial performance was significantly affected bycompetitive low pricing offerings driven by the new entrant.
The Company reported total revenue at Rs. 1904 Crores as compared to Rs. 2689Crores in the previous year decline of about 29.2%.
The Company reported a 73.4% fall in EBITDA at Rs. 170 Crores as against Rs. 640Crores in the previous year. EBITDA margin for the year was 9%.
The Company's loss before exceptional items was Rs. 1900 Crores as compared to lastyear's level of Rs. 1398 Crores primarily because of fall in revenues during the currentfinancial year.
Based on assessment of its recoverable value the Company has recorded an impairmentloss of Rs. 7677 Crores on CMB assets and restructuring costs of Rs. 264 Crores whichhave been recognized as exceptional items during the year. The reported net loss for theCompany was Rs. 9842 Crores.
KEY DEVELOPMENTS DURING 2017-18
The last fiscal had seen several factors in both the environment and strategicdirection of the businesses impact its operations.
The recent consolidation in the industry and the continuing price wars have hada substantial negative impact on the revenues and profitability of the Company.
During the year the Company was focusing on containing losses even at the costof lower revenues and growth in the mobility business. Operations were being scaled downwhere those were not financially viable.
There were employee redundancies several times during the year. Voluntaryseparation schemes were made available to certain employees several times during the year.
The market speculation on the future of the company had negative impact on thesentiments including of employees and customers which negatively impacted the business.
Shut down of operations by other operators impacted some of the wholesalerevenue streams.
The proposed Bharti transaction signed in October 2017 shifted mobility focusback to revenue sustenance and value creation.
The shutdown of network as wireless operations moved on to an ICR arrangementwith Bharti reduced the reach and spread of the network impacting the enterprise businessas well.
Attrition was high at 34% (last year: 27%).
The year saw developments in the telecom sector that significantly
impacted the business of each and every operator including
intense competition in the industry announcement of consolidation
in the industry etc.
a. Data Growth
Pursuant to the launch of 4G services during the previous year the industry witnesseda significant growth in data usage. This surge was driven by the demand for high speedservices by the consumers to which the industry operators responded by aggressivelyrolling out 4G sites. The pricing of the new operator spurted data consumption volumes asthe industry saw shift from data packet pricing to bundled pricing.
b. Intense Competition in the Industry
In September 2016 industry witnessed the entry of a new operator with 4G offering veryaggressive introductory prices for voice and data services. This trend was maintained incurrent year and the industry continued to see aggressive offers from the competition toretain their customers and maintain their market share. Data traffic grew tremendously onthe back of free/ low cost services.
c. Industry revenue declining
Industry saw a decline in revenue in the current financial year due to reasonsexplained above. The industry till FY 2015-16 grew at an average rate of ~12.5% over aperiod of 3 years but has declined by an average rate of 13.4% over last two years onaccount of heavily discounted products offered by all operators.
d. Financial Stress
Financial performance of industry suffered due to continued decline in ARPU (includingeffect from reduction of domestic and international IUC charges) and ever growing demandby users for data and voices resulting in requirement of continuing huge investments innetwork.
This resulted in industry net debt being ~ Rs. 7800 billion at end of the year(including debt from DoT under Deferred Payment Obligation' for Spectrum acquired inAuctions).
The industry registered a marginal increase of ~13 million subscribers (pan India)during the year.
(Source TRAI. The above data pertains to Mumbai and Maharashtra circles only; Q4 FY16revenue figure normalized basis best estimates.)
The industry moved towards consolidation with multiple announcements of Merger &Acquisition as well as spectrum trading deals during the course of the year as at least 5mobile operators chose to exit / consolidate and the mobile services industry is seemingto consolidate among 3 large private operators.
The Company's efforts in mobility business were hampered by non-availability of 4Gservices. In our sustained efforts towards digitization the Company rolled outinitiatives to drive engagement through its online platforms and protect high-valuecustomers by offering an enhanced digital experience. This was accomplished by mobilizingthree levers; a) A revamped My Tata Docomo App Interface b) Providing real-time andhyper-personalized engagement at key moments of truth and c) A differential treatment ononline platforms. The new App platform led to a unified digital interface and the journeyswere made intuitive and relevant based on the insights mined from call center drivers andthrough click stream behavior.
During the year we activated the brand Tata Docomo's equity around honesty andtransparency to drive relevance and differentiation. The brand strategy was rolled outthrough major campaigns like We value you not your handset' and Nothing toHide'. In the latter half of the year the key task was to communicate business continuityand stronger network promise while continuing to highlight superior tariffs in acompetitive landscape. Hence we brought alive the dual promise of network and tariffsthrough key campaigns like the Pan-India 3G Rollout Campaign' across Print Out ofHome Radio and Digital platforms and Adjust No More' across Retail.
Enterprises have always relied on technology to innovate and improve productivity andso on. But over the last few years there has been an explosion of disruptive technologiessuch as mobile apps social media IOT and big data. These in turn have created huge newopportunitiesand threatsfor most enterprises. Not only are Indian consumersmore willing to buy goods and services through digital channels they are also automatingactivities which were previously manual.
All these different trends essentially lead to digital becoming a top agenda item formost Board discussions. Much of the public conversation about digital transformation hasfocused on the innovative ways that large consumer-facing companies have used technologyto go from traditional marketers to cutting edge. However it's not just large enterprisesthat are feeling the pressure to go Digital. Not only are an increased number of smallbusinesses being launched in the technology space but SMEs across Industries are nowincorporating Digital strategies into their otherwise traditional business models. As aresult of this the technology lag that once existed between India and other keytechnology markets is rapidly closing.
Tata Tele Business Services (TTBS) remains at the forefront supportingLarge Small and Medium Enterprises as they go through their Digital transformation.
Over the years the lines have blurred between telecom and IT services. Customers areincreasingly looking for one-stop- shop ICT solutions. In order to meet this expectationTTBS has moved up the customer value chain and offers both traditional Telecom servicesand well as solutions which help enable the Digital transformation customers are seeking.TTBS's portfolio of products and services can be categorized under Enterprise VoiceEnterprise Data and IOT Cloud & SaaS solutions and include services such as PRI ILLSIP MPLS Ultra Lola TFN A2P SMS Hosted Voice Solutions Mobile Device ManagementConferencing IOT services like Fleet Management Asset management and School Bus Trackingamong others.
During FY2018 TTBS launched an innovative solution called SmartOfficewhich is a complete office-in-a-box solution. Businesses which need to set up a new officeor a branch are typically required to procure multiple hardware devices to make theiroffice setup voice and data ready. Once the infrastructure is setup comes the tedious andcomplex task of procuring relevant applications to run the office and the operations. Thefirst version of SmartOffice takes care of the customer's voice data wifi security andstorage needs. Subsequent versions will include applications and SaaS services making it atruly one-stop-shop solution.
TTBS entered into a strategic partnership with TCS iON to take their portfolio of SaaSapplication to the SME market. In the first phase TTBS has launched Document ManagementSystem Live Chat Digital Survey and a Digital Assessment prep test module for HighSchools. In FY2019 TTBS will launch applications such as CRM F&A and other relevantSaaS modules relevant to SMEs.
As more Enterprises move their Applications to the Cloud they need private and securenetwork access to the Cloud Service Provider (CSP) premises. TTBS also launchedSecure Connect' which is a secure low-latency VPN connection between the customer'snetwork and the CSP infrastructure.
As TTBS looks to scale its business process simplification has been a key priority forthe organization. Multiple simplification projects such as Zero Agreement Green Channelfor hassle free pick-up and delivery of customer orders Digital CAF Click2Buy amongothers.
Innovation in customer service has always been a priority focus area for TTBS. As partof this initiative Priority Support Center (PSC) was launched in Hyderabad during April2017. The PSC is a one-stop shop for all our key customers who contribute significantrevenues for Enterprise business. It is managed by an in-house team of experiencedprofessionals who have been specially trained in Wireless & Wireline products as wellas in the service industry best practices. Since the launch of PSC our Net Promoter Scorehas seen a constant increase as customer satisfaction continues to remain our toppriority.
TTBS engages with its existing as well as potential customers through multiplechannels across traditional and new age media. The thought leadership platform remainsunder the Do Big' banner where relevant content in the form of whitepapersarticles case studies testimonials product/ technology information & market trendsare shared & communicated to business customers via website apps webinars socialmedia platforms blogs events and other relevant channels.
This year TTBS received the Marketing Excellence Award for content marketing from WorldMarketing Congress & CMO Asia.
SCHEME OF ARRANGEMENT
The Board of Directors at its meeting held on October 12 2017 had approved thetransfer by way of demerger of the Consumer Mobile Business of the Company to BhartiAirtel Limited (Bharti or BAL) on debt-free cash-free basissubject to requisite regulatory approvals. The Competition Commission of India(CCI) approved the proposal by its order dated November 16 2017. Further theBoard at its meeting held on December 19 2017 had approved the Scheme of Arrangement(Scheme) between the Company BAL and their respective shareholders andcreditors under Sections 230-232 of the Companies Act 2013. Upon the Scheme becomingeffective and in consideration of the demerger BAL shall issue and allot (A) 1 (One) BALEquity Share to TTML Equity Holders on such date as may be mutually agreed by TTML and BAL(Record Date) for every 2014 (Two Thousand Fourteen) TTML EquityShares each held in TTML on the Record Date; and (B) 10 (Ten) BAL Redeemable PreferenceShares (RPS) to all (and not each) TTML RPS Holders in proportion to theirholding of TTML RPS on the Record Date.
Thereafter the Company submitted the application for Scheme of Arrangement with theStock Exchanges i.e. BSE Limited (BSE) and the National Stock Exchange ofIndia Limited (NSE). BSE and NSE vide their respective observation lettersdated March 21 2018 conveyed their no adverse observations/no objection to the Scheme.Subsequently the Company submitted its Company Scheme Application with National CompanyLaw Tribunal Mumbai Bench (NCLT) on April 10 2018 for seeking its directionto convene meetings of equity shareholders Secured Creditors and unsecured creditors ofthe Company to obtain their approval to the Scheme. Meetings have been convened on August30 2018 in terms of the order dated May 11 2018 as modified by order
dated July 13 2018 of NCLT Mumbai. Approval of Department of Telecommunications(DoT) is also required.
During the year clear emphasis was placed on optimum utilization of assets leading torollback of sites in non-profitable areas and in addition TTML has entered into ICRarrangement with Airtel to extend the 2G/3G Coverage throughout Maharashtra & Goa andtraffic is being routed through Airtel progressively from November 2017.
In the last seven years through its Project Optimus' initiative the Company hasconverted around 1641 sites from Indoor to Outdoor that resulted in Annualized Savings of5536 MWh of Grid units 688 KL of diesel 6516 TCO2 carbon foot print and Rs. 8.07 Croresof operating costs. This was achieved through conversion of base stations from Indoor BTSto Outdoor through Outdoor Cabinet Free Cooling units and Natural Cooling Units. Thesolution was implemented across 24 sites during the current year.
Seamless international roaming services are also provided to the customers supported bytie ups with 270 operators for in-roaming and 287 out-roaming operators globally.
The Company has a well defined and practiced Employee Safety and Well-being Policy. TheCompany's Safety Policy comprises guidelines and standardized practices based on robustprocesses. It advocates in proactively improving its management systems to minimizehealth and safety hazards thereby ensuring compliance in all operational activities.
To minimize and mitigate risks related to Fire Safety and Physical Security theCompany has taken up various safety initiatives/ projects including:
First Aid and Fire Safety trainings for all employees;
Emergency Mock fire drills (day/night) every six months;
Dissemination of Safety Guidelines through Safety Awareness mailers andvideos/Safety SMS's (covering Do's & Don'ts during emergency).
The above actions are part of 4 pillars of Safety initiatives comprising:
Safety Awareness and Communication;
4 tier Audit Mechanism;
Corrective and Preventive Actions (CAPA);
Benchmarking and Best Practice sharing within and outside Tata Group companies.
CHANGE IN AUTHORISED SHARE CAPITAL
During the financial year the Company increased its Authorised Share Capital from Rs.55000000000/- (Rupees Five Thousand Five Hundred Crores Only) divided into2500000000 (Two Hundred Fifty Crores) Equity shares of Rs. 10/- (Rupees Ten Only) eachand 300000000 (Thirty Crores) Preference Shares
of Rs. 100/- (Rupees One Hundred Only) each by creation of
30.00. 00.000 (Thirty Crores) Preference Shares of Rs. 100/- (Rupees One Hundred Only)each TO Rs. 310000000000 (Rupees Thirty One Thousand Crores Only) divided into
250.00. 00.000 (Two Hundred Fifty Crores) Equity shares of Rs. 10/- (Rupees Ten Only)each 2350000000 (Two Hundred and Thirty Five Crores) Preference Shares of Rs. 100/-(Rupees One Hundred Only) each and 500000000 (Fifty Crores) Unclassified Shares of Rs.100/- (Rupees One Hundred Only) each by creation of additional 1750000000 (One Hundredand Seventy Five Crores) Preference Shares of Rs. 100/- (Rupees One Hundred Only) each and500000000 (Fifty Crores) Unclassified Shares of Rs. 100/- (Rupees One Hundred Only)each.
Pursuant to the provisions of the Companies Act 2013 (the Act) Tata SonsLimited is the Holding Company of your Company.
SUBSIDIARY AND ASSOCIATE COMPANY
The Company does not have any subsidiary or associate company within the meaning ofrelevant provisions of the Act.
BOARD OF DIRECTORS MEETINGS AND ITS COMMITTEES
As on March 31 2018 the Board of Directors comprised of 4 (Four) Directors. Of the 4(Four) Directors 3 (Three) (i.e. 75%) are Non-Executive Directors and 1 (One) ManagingDirector. The Non-Executive Directors include 2 (Two) Independent Directors (including aWoman Director). The composition of the Board is in conformity with the provisions of theAct and Regulation 17 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 (Listing Regulations).
All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and the Listing Regulations.
RETIREMENT OF DIRECTOR
Mr. Kishor A. Chaukar Chairman and a Non-Executive Director of the Company retiredfrom the Board of the Company with effect from August 12017 on attaining the age of 70years.
The Board placed on record its appreciation for the contributions made by Mr. Chaukarduring his tenure.
DIRECTOR RETIRING BY ROTATION
In accordance with the relevant provisions of the Act and in terms of the Articles ofAssociation of the Company Mr. Srinath Narasimhan retires by rotation at the ensuing 23rdAnnual General Meeting (AGM) of the Company and being eligible offers himselffor re-appointment. The Board recommends his re-appointment. The relevant details of Mr.Srinath Narasimhan form part of the Notice convening 23rd AGM.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of Board and Committee meetings to be held during the financial year wascirculated in advance to the Directors.
During the financial year 7 (Seven) Board meetings were held. Details of compositionof the Board meetings of the Board held and attendance of the Directors at such meetingsare provided in the Corporate Governance Report annexed to the Annual Report. Theintervening gap between the meetings was within the period prescribed under the Act andthe Listing Regulations.
COMMITTEES OF THE BOARD
There are currently 4 (Four) Statutory Committees of the Board as follows:
(i) Audit Committee;
(ii) Corporate Social Responsibility Committee;
(iii) Nomination and Remuneration Committee;
(iv) Stakeholders' Relationship Committee.
During the financial year the Board re-constituted some of the Committees inaccordance with the Act and the Listing Regulations. Details of all the Committees alongwith their terms of reference composition and meetings of each Committee held during thefinancial year are provided in the Corporate Governance Report annexed to the AnnualReport.
KEY MANAGERIAL PERSONNEL
Mr. Kiran Thacker retired from the post of Company Secretary and Compliance Officer ofthe Company with effect from close of business hours on June 30 2018.
Ms. Vrushali Dhamnaskar was appointed as Company Secretary and Key Managerial Personnelof the Company designated as Assistant Company Secretary and Compliance Officer witheffect from July 12018 in place of Mr. Kiran Thacker.
POLICIES AND PROCEDURES
Company's Policies on Appointment and Remuneration of Directors
The Policy of the Company on Directors' appointment including criteria for determiningqualifications positive attributes independence of a Director and the Policy onremuneration of Directors Key Managerial Personnel and other employees are annexed asAnnexure - IA and Annexure - IB to this Report.
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and theListing Regulations.
The performance of the Board the Committees and individual Directors was evaluated bythe Board after seeking inputs from all the Directors through a questionnaire wherein theDirectors were required to evaluate the performance on scale of one to five based on thefollowing criteria:
a) Criteria for Board Performance Evaluation: Degree of fulfillment of keyresponsibilities Board structure and composition Establishment and delineation ofresponsibilities to Committees effectiveness of Board processes information andfunctioning Board Culture and Dynamics Quality of relationship between the Board and theManagement.
b) Criteria for Committee Performance Evaluation: Degree of fulfillment of keyresponsibilities Adequacy of Committee Composition Effectiveness of meetings committeedynamics Quality of Relationship of the Committee with the Board and the management.
c) Criteria for Performance Evaluation of Individual Directors: AttendanceContribution at meetings guidance Support to Management outside Board/Committeemeetings.
Mr. D. T Joseph Chairman of the Nomination and Remuneration Committee(NRC) was nominated for conducting one-on-one discussions with Directors toseek their feedback on the Board and other Directors.
The NRC also reviewed the performance of the individual Directors. In addition Mr.Joseph was evaluated on the key aspects of his role.
In separate meeting of Independent Directors performance of Non-Independent Directorsperformance of the Board as a whole and performance of the Chairman was evaluated takinginto account the views of Executive Director and Non-Executive Directors. Thereafter theBoard also reviewed the performance of the Board as a whole its Committees and individualDirectors.
RISK MANAGEMENT POLICY
The Company has Risk Management Policy and the risk management framework which ensuresthat the Company is able to carry out identification of elements of risk if any which inthe opinion of the Board may threaten the existence of the Company.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company has established and maintained adequate internal financial controls withrespect to financial statements. Such controls have been designed to provide reasonableassurance with regard to providing reliable financial and operational information. Duringthe year such controls were operating effectively and no material weaknesses wereobserved.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has established a vigil mechanism in form of Whistle Blower Policy foremployee Directors and employees to report their genuine concerns about unethicalbehaviour actual or suspected fraud or violation of the Company's Code of Conduct orethics policy details of which are provided in the Corporate Governance Report whichforms part of the Annual Report. As a requirement of Tata Code of Conduct allstake-holders are provided access to Whistle Blower mechanism.
The Policy provides for adequate safeguards against victimization ofDirectors/employees who avail of the mechanism and also provides for direct access to theChairman of the Audit Committee.
The Whistle Blower Policy has been placed on the website of the Company i.e.www.tatateleservices.com.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR)Committee in accordance with Section 135 of the Act. The composition of CSR Committee thedetails of CSR Policy and initiatives taken by the Company on CSR activities during theyear have been provided in the Annexure - II to this Report.
OTHER STATUTORY DISCLOSURES
Contracts or Arrangements with Related Parties
All Related Party Transactions (RPTs) that were entered into during thefinancial year were on an arm's length basis and in the ordinary course of business of theCompany. Pursuant to Regulation 23 of the Listing Regulations and Section 177 of the Actprior approval of the Audit Committee is obtained for all RPTs. A statement of significantRPTs is placed before the Audit Committee for its review on a quarterly basis specifyingthe nature value and terms and conditions of the transactions.
Further your Company has taken a prior approval of the Members for all materialtransactions/proposed transactions entered/ to be entered into between the Company andTTSL a related party relating to rendering or availing of services sharing ofinfrastructure purchase/sale of Assets and Inventory and sharing of costs for anaggregate value of Rs. 620 Crores (Rupees Six Hundred and Twenty Crores Only) per annumfor the financial years 2018-19 2019-20 and 2020-21.
The details of material contracts or arrangement or transactions entered by yourCompany on arm's length basis are provided in Form AOC-2 which is annexed as Annexure- III to this Report.
Particulars of Loans Guarantees or Investments
Your Company being in business of providing infrastructural facilities provisions ofSection 186 of the Act do not apply to the Company in respect of loans made guaranteesgiven or security provided by the Company.
Your Company has not made any investment in securities of other Bodies Corporate duringthe financial year 2017-18.
Dividend and Appropriations
In view of the accumulated losses the Directors regret their inability to recommendany dividend for the year under consideration. No appropriations are proposed to be madefor the year under consideration.
The Company has not accepted any deposits from public during the financial year2017-18 within the meaning of Section 73 of the Act read with the Companies (Acceptanceof Deposit) Rules 2014.
However the Company availed Inter Corporate Deposits (ICD) from TataTeleservices Limited (TTSL) amounting to Rs. 3700 Crores (Rupees ThreeThousand Seven Hundred Crores Only) during the financial year 2017-18.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and redressalof complaints of sexual harassment at workplace. The objective of this policy is to layclear guidelines and provide right direction in case of any reported incidence of sexualharassment across the Company's offices and take appropriate decision in resolving suchissues.
During the financial year 2017-18 the Company has not received any complaint on sexualharassment.
Particulars of Employees
Disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure - IV to this report.
The statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. Pursuant to Section 136(1) ofthe Act this Report is being sent to the Members of the Company excluding the aforesaidinformation. However the same is open for inspection at the registered office of theCompany. Copies of this statement may be obtained by the Members by writing to the CompanySecretary of your Company.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of Companies (Accounts)Rules 2014 the details of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo are as under:
(A) Conservation of Energy:
(i) Steps Taken or Impact on Conservation of Energy:
a. Electricity and Diesel Generators are used for the powering of the Company'stelephone exchanges and other network
infrastructure equipment. The Company regularly reviews power consumption patternsacross its network and has implemented various innovative projects including greeninitiatives in order to optimize power consumption which resulted into substantive costsavings and reduction of carbon foot print. Some of the major projects undertaken duringthe year are:
Indoor BTS with Outdoor cabinet on new project roll out - NIL.
FCU (Free Cooling Units) and NCU (Natural Cooling Unit) deployment and AC (AirConditioner) switch off - 24 nos.
Network consolidation - 2- MSC switched off.
b. The initiative on energy conservation has resulted into reduction of 6913 Millionunits of energy consumption carbon foot print reduction of 6516 TCO2 for the financialyear 201718.
(ii) Steps taken by the Company for utilizing alternate sources of Energy:
The Company has not utilized any alternate sources of energy.
(iii) Capital Investment on Energy Conservation Equipments: Nil.
(B) Technology Absorption: The Company has not imported any new technology.
(C) Foreign Exchange Earnings and Outgo:
(Rs. in Crores)
|Particulars ||2017 - 18 ||2016 - 17 |
|Earnings ||2.95 ||1.45 |
|Outgo ||107.67 ||137.69 |
|Capital Goods ||38.76 ||32.07 |
Significant and Material Orders Passed by the Regulators or Courts or TribunalsImpacting the Going Concern Status and the Company's Operation in Future
While there are certain critical litigations including litigations relating to variousdemands made by DoT there are no significant material orders passed as of date by theRegulators / Courts or the Company has interim protection from courts against enforcementof such demands or notices which would impact the going concern status of the Company andits future operations. However there is always a chance that any order passed in criticallitigations in future may have an impact on the going concern or future operations of theCompany.
Extract of Annual Return
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 the extract of Annual Return in Form MGT-9 is annexed as Annexure- V to this Report.
AUDITORS Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 Price Waterhouse Chartered Accountants LLP having FirmRegistration No. 012754N/N500016 were appointed as Statutory Auditors of the Company for aterm of five years from the conclusion of 22nd AGM of the Company until theconclusion of 27th AGM to be held in the year 2022.
The Board of Directors of your Company has on the recommendation of Audit Committeeapproved the re-appointment and remuneration of M/s. Sanjay Gupta & Associates CostAccountants as Cost Auditors of the Company for the financial year 2018-19. Members arerequested to consider approve and ratify the remuneration payable to M/s. Sanjay Gupta& Associates for the financial year 2018-19.
The Board has appointed Ernst & Young LLP and ANB Solutions Pvt. Ltd. as InternalAuditors of the Company for conducting internal audit of the Company for the first twoquarters of the Financial Year 2018-19. The Company is in the process of appointingInternal Auditors for second half of the Financial Year 2018-19.
Secretarial Auditors and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed M/s. Mehta & Mehta Practicing Company Secretaries to undertake theSecretarial Audit of the Company for the year ending March 31 2018. The Secretarial AuditReport in Form MR-3 is annexed as Annexure - VI to this Report.
The observation made by the Secretarial Auditors in its Report and Directors' commentsare given as under:
As per regulation 33(3)(d) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Company was required tosubmit it's Financial Results within fourty five days from end of the quarter however theCompany submitted Financial Results for the quarter and half year ended September 30 2017to the Stock Exchanges on December 19 2017.
Since the Financial Results for the quarter and half year ended September 30 2017 wereunder the finalization the same could not be submitted within the prescribed time. As perthe SEBI Circular No. CIR/CFD/CMD/12/2015 dated November 30 2015 the Company had paid12006500/- without holding of any tax to
National Stock Exchange of India Limited and BSE Limited each as penalty for delay insubmission of the financial results.
AUDITORS' OBSERVATIONS AND DIRECTORS' COMMENTS
The Auditors' Report for the financial year ended March 312018 does not contain anyqualification reservation adverse remark or disclaimer.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and external consultant(s) including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the financial year 2017-18.
Accordingly pursuant to the provisions of Section 134(5) of the Act your Directorsto the best of their knowledge and belief and according to information and explanationobtained by them confirm that:
1. in the preparation of the annual financial statements for the year ended March 312018 the applicable accounting standards have been followed and there are no materialdepartures;
2. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year ended March 312018 and of the loss of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. they have prepared the annual financial statements on a going concern basis;
5. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
6. they have devised systems to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed report on Management Discussion and Analysis as required under theRegulation 34 of the Listing Regulations for the year under review is presented in aseparate section forming part of the Annual Report.
CORPORATE GOVERNANCE REPORT
A report on Corporate Governance appears after this Report. A certificate from PriceWaterhouse Chartered Accountants LLP with regard to compliance of conditions of corporategovernance as specified in the Listing Regulations by the Company is annexed hereto andforms part of this Report.
The Company has complied with mandatory requirements of Corporate Governance prescribedunder the Listing Regulations. The Company had also implemented some of thenon-discretionary requirements as contained in Part E of Schedule II to the ListingRegulations.
The Company is in compliance with the applicable Secretarial Standards.
Your Directors wish to place on record their sincere appreciation for the assistanceand support extended by the employees shareholders customers financial institutionsbanks vendors dealers Department of Telecommunications the Central and StateGovernments and others associated with the activities of the Company. We look forward totheir continued support in future.
|For and on behalf of the Board of Directors |
| ||D. T. Joseph ||N. Srinath |
| ||Director ||Managing Director |
|Place: Mumbai ||DIN: 01716572 ||DIN: 00058133 |
|Date: August 24 2018 || || |