Bharti Infratel Ltd.
|BSE: 534816||Sector: Infrastructure|
|NSE: INFRATEL||ISIN Code: INE121J01017|
|BSE LIVE 15:59 | 27 Mar||312.55||
|NSE LIVE 15:58 | 27 Mar||312.55||
|Mkt Cap.(Rs cr)||57809.56|
|Mkt Cap.(Rs cr)||57809.56|
Bharti Infratel Ltd. (INFRATEL) - Director Report
Company director report
Your Directors are pleased to present the Tenth Boards Report on the business andoperations of the Company together with the audited financial statements for the financialyear ending March 312016.
Bharti Infratel is a provider of tower and related infrastructure sharing services. Ona consolidated basis we are one of the largest PAN India tower infrastructure providersbased on the number of towers owned and operated by Bharti Infratel and Indus Towerswhich are represented by Bharti Infratels 42% equity interest in Indus Towers. Thebusiness of Bharti Infratel and Indus Towers is to acquire build own and operate towersand related infrastructure. Bharti Infratel and Indus Towers provide access to theirtowers primarily to wireless telecommunication service providers on a shared basis underlong-term contracts. Our three largest customers are Bharti Airtel (together with BhartiHexacom) Vodafone India and Idea Cellular which are the three leading wirelesstelecommunication service providers in India by wireless revenue.
We have a nationwide presence with operations in all 22 telecommunication circles inIndia with Bharti Infratel and Indus Towers having operations in 4 overlapping circles.
As of March 31 2016 Bharti Infratel owned and operated 38458 towers with 81632co-locations in 11 telecommunication circles while Indus Towers operated 119881 towerswith 270006 co-locations in 15 telecommunication circles. With Bharti Infratelstowers and its 42% interest in Indus Towers we have an economic interest in theequivalent of 88808 towers and 195035 co-locations in India as of March 31 2016.
We have entered into Master Service Agreements (MSAs) with our customers. The MSAs arelong-term contracts which set out the terms on which access is provided to BhartiInfratels and Induss Towers with all service providers being offeredsubstantially the same terms and receiving equal treatment at towers where they haveinstalled their active infrastructure. Under the MSAs Bharti Infratel and Indus Towersenter into service contracts in respect of individual towers. The MSAs and servicecontracts govern Bharti Infratels and Induss relationship with theircustomers the services provided the applicable charges and incorporate annual escalationclauses in respect of the applicable charges. This provides stability to our business andprovides visibility with regard to future revenues.
A. Consolidated financial results as per Indian Generally Accepted AccountingPrinciples
1Revenue & EBITDA are excluding other income
B. Standalone financial results as per Indian Generally Accepted Accounting Principles
1Revenue & EBITDA are excluding other income
During the year the Company has allotted 2897776 equity shares under the ESOP Scheme2008. Thus the paid up share capital of the Company has increased from ' 18937692930to ' 18966670690 represented by 1896667069 equity shares of ' 10 each fully paid upas on March 312016.
Transfer to Reserves
The Company has not transferred any amount to the General Reserve for the financialyear ended March 312016.
The Board has recommended a dividend of ' 3 per equity share of ' 10 each fully paid up(30% of face value) for FY 2015-16 amounting to ' 5690 Mn (excluding tax on dividend).
The payment of dividend is subject to the approval of the shareholders at the ensuingannual general meeting of the Company.
Material Changes and Commitment Affecting the Financial Position Between the End of theFinancial Year and Date of Report of the Balance Sheet Buy-Back of Equity Shares
The Board of Directors at its meeting held on April 26 2016 approved the Buy-back offully paid-up equity shares of the Company (Equity Shares) at a price notexceeding ' 450/- per Equity Share payable in cash for a total considerationnot exceeding ' 2000 Crores (Rupees Two Thousand Crores Only) excludingtransaction costs viz. brokerage applicable taxes such as securities transaction taxservice tax stamp duty etc. which is 19.3% of the total paid-up equity capital and freereserves as per the audited financial statement of the Company for the financial yearended March 31 2016 through the Tender Offer route.
The Buy-back is subject to regulatory and other approvals if any including theshareholders approval by way of special resolution through Postal Ballot.
The Board has authorised the Committee of Directors to finalise the terms of Buy-backand administer the Buy-back procedure.
The Company has not accepted any deposit and as such no amount of principal orinterest was outstanding as on the date of balance sheet.
Details of Utilisation of IPO Proceeds
Pursuant to the Initial Public Offer in December 2012 the Company has received '31657 Mn (net of selling shareholders proceeds). The Company had in terms ofProspectus proposed to utilise the IPO Proceeds towards objects of the Issue by March312016. Whilst the Company had made best efforts to utilise the IPO proceeds as per theterms of the Issue ' 9403 Mn was pending utilisation as on December 312015 for which the Company has obtained approval of the shareholders by way ofspecial resolution through Postal Ballot for variation in terms of the Objects of theIssue.
For details of utilisation of IPO proceeds subsequent to approval of theshareholders please refer note no. 39 of the standalone financial statements forthe year ended March 312016 on page 224.
Directors and Key Managerial Personnel Inductions Re-appointments Retirements &Resignations
In line with the Companys policy on Independent Directors Mr. Vinod Dhall hasretired from the Board w.e.f. September 2 2015. Further during the previous financialyear Mr. Rakesh Bharti Mittal Non-Executive Director resigned from the Board w.e.f.January 27 2016. The Board placed on record its sincere appreciation for helpguidance and contribution made by the outgoing Directors during their tenure on the Board.
Mr. Rajan Bharti Mittal was appointed as a Non-Executive Additional Director on theBoard w.e.f. January 27 2016. The Company has received requisite notice from a memberunder Section 160 of the Companies Act 2013 along with deposit of '100000/- proposing the appointment of Mr. Rajan Bharti Mittal as the CompanysNon-Executive Director liable to retire by rotation at the ensuing AGM.
Pursuant to the provisions of the Companies Act 2013 Mr. Mark Chin Kok ChongDirector of the Company is liable to retire by rotation at the forthcoming AGM and beingeligible has offered himself for re-appointment.
A brief resume nature of expertise details of other directorships and otherinformation of the Directors proposed to be appointed/ re-appointed as stipulated inSecretarial Standard 2 and Regulation 36 of the Listing Regulations is appended as anannexure to the notice of ensuing AGM.
During the year Mr. R P Singh was appointed as an Independent Director on the Boardw.e.f. July 15 2015 and his tenure was fixed by the members at the last AGM held onAugust 112015.
Mr. Anupam Garg Company Secretary has resigned w.e.f. July 22 2015. The Directorsplaced on record their appreciation for the contribution made by him during his tenure.The Board in its meeting held on July 22 2015 has appointed Ms. Shweta Girotra as theCompany Secretary and Compliance Officer of the Company w.e.f. July 23 2015.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed under Section149 of the Companies Act 2013 and the Listing Regulations. The Independent Directors havealso confirmed that they have complied with the Companys code of conduct.
Policy on Nomination Remuneration and Board Diversity
The Company believes that building a diverse and inclusive culture is integral to itssuccess. A diverse Board among others will enhance the quality of decisions by utilisingdifferent skills qualifications professional experience and knowledge of the Boardmembers necessary for achieving sustainable and balanced development. Accordingly theBoard has adopted a Policy on Nomination Remuneration and Board Diversity which sets outthe criteria for determining qualifications positive attributes and independence of aDirector. The detailed policy is available on the Companys website at
Annual Board Evaluation and Familiarisation Programme for Board Members
A note on the familiarisation programme adopted by the Company for orientation andtraining of the Directors and the Board evaluation process undertaken in compliance withthe provisions of the Companies Act 2013 and the Listing Regulations is provided in theReport on Corporate Governance which forms part of this Annual Report.
During FY 2015-16 the Board of Directors met 4 (four) times on April 27 2015; July22 2015; October 23 2015 and January 27 2016. The period between any two consecutivemeetings of the Board of Directors of the Company was not more than 120 days.
The details regarding composition number of board meetings held and attendance of theDirectors during FY 2015-16 are set out in the Report on Corporate Governance which formspart of this Annual Report.
The Company has several Committees which have been established as a part of the bestcorporate governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes. As on March 312016 the Board has 5Committees namely Audit and Risk Management Committee; HR Nomination and RemunerationCommittee; Corporate Social Responsibility (CSR) Committee; StakeholdersRelationship Committee and Committee of Directors. The details with respect to thecompositions powers roles terms of reference no. of meetings etc. of the Committeesheld during the FY 2015-16 and attendance of the Directors at each meeting is provided inthe Report on Corporate Governance which forms part of this Annual Report.
Subsidiary / Associate and Joint Venture Company
During the FY 2015-16 Smartx Services Limited was incorporated as a wholly ownedsubsidiary Company. Bharti Infratel Services Limited another wholly owned subsidiaryCompany has applied to the Registrar of Companies for striking-off its name from theregister of Companies.
Company has a joint venture in the name of Indus Towers Limited there was no change inthe joint venture during the financial year under review.
In accordance with Section 1 29(3) of the Companies Act 2013 the Company has preparedconsolidated financial statements of the Company its subsidiaries and joint venturewhich forms part of the Annual Report. A statement in Form AOC - 1 containing the salientfeatures of the financial statements of the subsidiaries and Joint Venture Company isannexed as Annexure B to this report. The statement also provides the details ofperformance and financial position of each of the subsidiary and joint venture.
Audited financial statements of Smartx Services Limited for FY 2015-16 and Statement ofAccounts of Bharti Infratel Services Limited as on March 30 2016 have been placed
on the website of the Company www.bharti-infratel.com.The audited financial statements of the subsidiaries are available for inspection at theCompanys registered office and registered office of respective companies.Shareholders interested in obtaining a copy of the audited financial statements ofsubsidiaries may write to the Company Secretary at the Companys registered office.
At Bharti Infratel our workforce is fundamental to the business strategy and itssuccess. We venture to offer an encouraging empowering and engaging environment whereemployees are ardent towards achieving customer excellence and realising the vision of theCompany.
We commenced FY 2015-16 with an endeavour to fortify our stature as Employer ofChoice. In order to deliver on this agenda we undertook various initiatives.
In order to satisfy our jobs with continuous improvement we launched the concept ofInfratel DNA to provide our leadership a direction towards achieving thecorporate vision. This DNA forms the anchor of our Talent Acquisition PerformanceManagement Leadership Development and our Succession planning processes.
A second initiative was the launch of the Applause Online program whichaims at recognising teams and individuals who deliver superior performance with imbibedInfratel values. This portal provides real time recognition to our human resources.
A major aspect of our success is also from the initiative of iLearn. This is wrappedaround the theme of Own Your Development where employees have a marketplacefor all their learning needs. This builds a culture where the workforce is responsible fortheir career development and a holistic growth.
To ensure relentlessly exceeding business targets we introduced the 3600Feedback to provide a holistic feedback to our middle and senior management. Tofoster the culture of safety and to ensure compliance of safety norms we also launchedthe Consequence Management Guidelines.
Finally to take workforce diversity to a new high we not only organised a Womenin Business Conclave but also
introduced the initiative of Bits n Bytes. This platform provides highwomen connect network in all circles. We also conducted the Gender Sensitisation Workshopfor all our employees to ensure employee integrity at every level.
Employees Stock Option Plan
To retain promote and motivate the best talent in the Company and to develop a senseof ownership among employees the Company has instituted two ESOP schemes
i.e. Employee Stock Option Scheme 2008 (ESOP Scheme 2008) and Employee Stock OptionScheme 2014 (ESOP Scheme 2014) with the approval of shareholders. The said schemes are incompliance with the SEBI (Share based Employee Benefits) Regulation 2014 (ESOPRegulations) The HR Nomination and Remuneration Committee administers and monitors theCompanys ESOP schemes.
During FY 2015-16 the Company has allotted 2897776 equity shares pursuant toexercise of stock options under ESOP Scheme 2008.
In accordance with the ESOP Regulations 2014 the Company had set up Bharti InfratelEmployees Welfare Trust (ESOP Trust) for the purpose of implementation ofemployees stock option schemes. Since October 2015 both the ESOP schemes areadministered through ESOP Trust whereby shares held by the Trust are transferred to theemployee upon exercise of stock options as per the terms of the Scheme. In terms of ESOPRegulations neither the ESOP Trust nor any of its trustees shall exercise voting rightsin respect of the shares of the Company held by the ESOP Trust.
During the year Company has formulated LTI Plan - 2015 under ESOP Scheme 2014 and hasgranted 90261 stock options under the said Plan. A detailed report with respect tooptions exercised vested lapsed exercise price vesting period etc. under ESOP Scheme2008 and ESOP Scheme 2014 is disclosed on the website of the Company at http://
A certificate from M/s S. R. Batliboi & Associates LLP Chartered AccountantsStatutory Auditors with respect to ESOP Scheme 2008 and ESOP Scheme 2014 would beplaced before the shareholders at the ensuing AGM and a copy of the same will also beavailable for inspection at the registered office of the Company.
Auditors and Auditors Report Statutory Auditors
In terms of the provisions of Section 139 of the Companies Act 2013 M/s S. R.Batliboi & Associates LLP were appointed as the Statutory Auditors of the Company bythe shareholders in the 8th AGM held on August 4 2014 for a period of threeyears i.e. up to the conclusion of the 11th AGM of the Company.
The said appointment is subject to ratification by the members at every AGM.Accordingly the Board has recommended ratification of appointment of M/s S. R. Batliboi& Associates LLP Chartered Accountants by the shareholders at the forthcoming AGM.The Company has received a letter from M/s S. R. Batliboi & Associates LLP CharteredAccountants confirming their consent and eligibility under Section 139 and 141 of theCompanies Act 2013.
The Board has duly examined the Statutory Auditors Report to the accounts whichis self-explanatory. The report does not contain any observations disclaimerqualification or adverse remarks.
Secretarial Auditors & Their Report
The Company had appointed M/s. Chandrasekaran Associates Company Secretaries NewDelhi to conduct its Secretarial Audit for the financial year ended March 31 2016. TheSecretarial Auditors have submitted their report confirming compliance by the Company ofall the provisions of applicable corporate laws. The Report does not contain anyqualification observations disclaimer or adverse remark. The Secretarial Audit Report isannexed as Annexure C to this report.
The Board has reappointed M/s. Chandrasekaran Associates Company Secretaries NewDelhi as Secretarial Auditor of the Company for the FY 2016-17.
Corporate Social Responsibility (CSR)
At Bharti Infratel Corporate Social Responsibility (CSR) encompasses much more thansocial outreach programmes. Over the years the Company has aligned its business processesand goals to make a more deep-rooted impact on the societys sustainable development.
In accordance with the requirements of Section 135 of the Companies Act 2013 theCompany has constituted a CSR Committee. The composition and terms of reference of the CSRCommittee is provided in the Report on Corporate Governance which forms part of thisReport.
The Company has also formulated a Corporate Social Responsibility Policy which isavailable on the Companys website at
During FY 2015-16 the Company has spent ' 209.4 Mn. towards the CSRactivities and a balance of ' 45.6 Mn was left unspent. The Company hadincreased/ scaled up the intervention for CSR activities as prescribed in theCompanys CSR policy and there was an increase of approx 22% in the total CSR spendvis-a-vis last year i.e. from ' 173 Mn in financial year 2014-15 to '209.4 Mn this year. As a socially responsible company our Company is committed toincrease its CSR impact and spend over the coming years with its aim of playing a largerrole in Indias sustainable development by embedding wider economic social andenvironmental objectives. As the Company has added new projects and scaled up the existingones there will be increased CSR spend in coming years.
A detailed update on the CSR initiatives of the Company is provided in the CorporateSocial Responsibility section which forms part of the Annual Report.
The Annual Report on Corporate Social Responsibility u/s 135 of the Companies Act 2013is annexed as Annexure D to this Report.
Business Responsibility Report
As stipulated under the Listing Regulations the Business Responsibility Reportdescribing the initiatives taken by the Company from environmental social and governanceperspective forms a part of this Annual Report.
Management Discussion and Analysis
The Management Discussion and Analysis Report for the year under review as stipulatedunder the Listing Regulations is presented in a separate section forming part of thisAnnual Report.
Your Company is committed to benchmarking itself with global standards for providinggood corporate governance. The Board constantly endeavours to take the business forward insuch a way that it maximises long term value for the stakeholders. The Company has put inplace an effective corporate governance system which ensures that the provisions of theListing Regulations are duly complied with.
A detailed report on the corporate governance pursuant to the requirements of theListing Regulations forms part of this Annual Report.
A certificate from the auditors of the Company M/s S. R. Batliboi & AssociatesLLP Chartered Accountants confirming compliance of conditions of corporate governance asstipulated in the Listing Regulations is annexed as Annexure E to this report.
Risk management is embedded in the operating framework of Bharti Infratel. The Companybelieves that managing risks goes hand in hand with maximising returns. To this effectthere is a robust process in place to identify key risks across the Company and prioritiserelevant action plans to mitigate these risks. Risk Management Framework is reviewedperiodically by the Board and the Audit and Risk Management Committee which includesdiscussing the management submissions on risks prioritising key risks and approvingaction plans to mitigate such risks.
The Company has a Risk Management Policy approved by Audit and Risk ManagementCommittee and the Board. The objective of this policy is to have a well-defined approachto risk. The Policy lays broad guidelines for the appropriate authority so as to be ableto do timely identification assessment and prioritisation of risks affecting the Companyin the short and foreseeable future. The Policy suggests framing an appropriate responseaction for the key risks identified so as to make sure that risks are adequatelycompensated or mitigated.
The Internal Audit function is responsible to assist the Audit and Risk ManagementCommittee on an independent basis with a full status of the risk assessment andmanagement. Detailed discussion on Risk Management has been given as a part of ManagementDiscussion & Analysis under the section "Risks and Concerns" which formspart of this Annual Report.
Internal Finance Control
The Company has in place a robust and comprehensive internal financial control systemfor all the major financial transactions to ensure orderly and efficient conduct of itsbusiness including adherence to Companys policies and procedures the safeguardingof its assets the prevention and detection of frauds and errors and reliability offinancial reporting. The Internal financial controls of the Company have been furtherdiscussed in detail in the Management Discussion and Analysis section.
The Code of Conduct and vigil mechanism of the Company is posted on the website of theCompany at www.bharti- infratel.com.
A brief note on the highlights of the Ombudsperson Policy and compliance with Code ofConduct is also provided in the Report on Corporate Governance which forms part of thisAnnual Report.
The Company has established well-structured quality processes and systems at everystage of the Companys work from designs materials and workmanship at siteoperations and maintenance throughout the lifecycle. The Company also undertake validationof passive assets factory testing and regular quality checks. The Company is empoweringquality team with PDA Tablets to ensure real time information and proper documentation foreffective quality control.
The Company has adopted the following quality assurance practices stage-wise:
1. Pre-dispatch inspection of all major material such as tower components DG setsbattery banks power interface equipment;
2. On-site inspection during installation work in progress;
3. Quality audits post completion of work to ensure process completion;
4. Preventive maintenance audits during operation and maintenance of sites to ensuretimely maintenance of equipment and basic site hygiene; and
5. Maintenance of tower and civil structures to ensure optimised utilisation of assetsthroughout their design life.
The Company has a Standard Quality Process and Guidelines for civil tower andelectrical works and a Quality Assurance Plan ("QAP") for pre-dispatchinspection for effective material verification at vendor premises. Regular projectreviews governance meetings and third party audits are conducted on a regular basis inorder to encourage maintenance of quality and ensure that tower assets are strictly inaccordance with Companys approved specifications.
These quality assurance practices enable us to maintain high performance standardsacross the network resulting in key long-term advantages:
a. Good asset life as per specifications and designs;
b. High network uptime for customers with fewer network outages; and
c. High levels of customer satisfaction due to hassle-free active infrastructureinstallation.
Other Statutory Disclosures Related Party Transactions
A detailed note on procedure adopted by the Company in dealing with contracts andarrangements with Related Parties is provided in the Report on Corporate Governance whichforms part of this Annual Report.
All arrangements / transactions entered by the Company with its related parties duringthe year were in ordinary course of business and on an arms length basis.Particulars of material related party transactions are given in form AOC- 2 annexed as AnnexureF to this report.
Names of Related Parties and details of transactions with them have been included inNote no. 35 of the standalone financial statements for the year ended March 31 2016 underAccounting Standard 18 on page 218.
The Policy on the Related Party Transactions is available on the Companys websiteat www.bharti-infratel.com.
Significant and Material Orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Companys operations in future.
Particulars of Loans Guarantees or Investments
The details of loans given investments made or guarantees given are provided in thestandalone financial statement in Note no. 12 13 15 and 18.
Particulars of Employees
Disclosures relating to remuneration of Directors u/s 197(12) of the Companies Act2013 read with Rule 5(1) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexures G to this report.
The information as required to be provided in terms of Section 197(12) of the CompaniesAct 2013 read with Rule 5(2) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexures H to this report.
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo
The details of energy conservation technology absorption and foreign exchange earningsand outgo as required under Section 134(3) of the Companies Act 2013 read with the Rule8 of Companies (Accounts of Companies) Rules 2014 is annexed as Annexure I to thisreport.
Extract of Annual Return
In terms of provisions of Section 92 134(3)(a) of the Companies Act 2013 read withRule 12 of Companies (Management and Administration) Rules 2014 the extracts of AnnualReturn of the Company in form MGT-9 is annexed as Annexure J to this report.
Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Directors to the best oftheir knowledge and belief confirm that:
I. I n the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards had been followed and there is no material departure fromthe same;
II. The Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year endedMarch 312016 and of the profit of the Company for the year ended on that date;
III. The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
IV. The Directors had prepared the annual accounts on a going concernbasis;
V. The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively;
VI. The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and are operating effectively.
The Directors wish to place on record their appreciation for the assistance andco-operation extended by customers strategic investors bankers vendors businesspartners various agencies and departments of Government of India and State Governmentswhere Companys operations are existing supporting the Companys variousprojects.
The Directors would also like to place on record their sincere appreciation for thevaluable contribution unstinted efforts and the spirit of dedication shown by theemployees of the Company at all levels in ensuring an excellent all round operationalperformance.