You are here » Home » Companies » Company Overview » GTL Ltd

GTL Ltd.

BSE: 500160 Sector: Telecom
NSE: GTL ISIN Code: INE043A01012
BSE LIVE 15:52 | 17 Nov 14.80 0.75
(5.34%)
OPEN

15.60

HIGH

15.60

LOW

14.65

NSE 15:56 | 17 Nov 14.75 0.55
(3.87%)
OPEN

15.35

HIGH

15.45

LOW

14.60

OPEN 15.60
PREVIOUS CLOSE 14.05
VOLUME 154072
52-Week high 20.10
52-Week low 12.45
P/E
Mkt Cap.(Rs cr) 233
Buy Price 0.00
Buy Qty 0.00
Sell Price 14.80
Sell Qty 1.00
OPEN 15.60
CLOSE 14.05
VOLUME 154072
52-Week high 20.10
52-Week low 12.45
P/E
Mkt Cap.(Rs cr) 233
Buy Price 0.00
Buy Qty 0.00
Sell Price 14.80
Sell Qty 1.00

GTL Ltd. (GTL) - Chairman Speech

Company chairman speech

GTL LIMITED ANNUAL REPORT 2011-2012 CHAIRMAN'S REPORT TO SHAREHOLDER Dear Shareholders, Last year was probably the toughest year that we have seen since the inception of our business. The telecom sector in India continues to endure a very difficult phase. The inability of the operators in this industry to raise fresh capital in the light of high interest rates and the unwillingness of banks to lend them due to uncertainties in the sector, has deferred their expansion plans. This has put huge pressure on pricing for Network Services players like us. The Supreme Court canceled 122 2G licenses, which has resulted in slowdown in the industry as the operators are not rolling out any new networks. The telecom sector is awaiting clear policy guidelines that shall define a cohesive direction for development and growth of this industry. The increase in interest rate has put a burden on our annual interest outgo and reduced our profit margins. The weakness in global markets and the Indian telecom sector has prevented us from magnetizing our investments in tower sector and use the proceeds from the same to reduce our debt. Even, in the power franchisee business, the input costs of power and operational costs have gone up and these are not being passed on to the end consumer. Recently some of the state governments like Tamil Nadu, Delhi etc. have raised the tariffs. In other major states like Rajasthan, the power distribution companies are restructuring their loans with state governments. The situation may improve with the increase in tariffs and legislation to curb losses. We had informed you about this likely negative scenario last year and as expected it had negative impact, both on our revenue and profitability. Business Overview & Outlook: The Financial Highlights of the year, are as follows: On a consolidated basis, (for the period of 9 months from July 2011 to March 2012) * Revenues of Rs. 1864.69 Crs. (US$ 371.30 Mn.) * PBDIT of Rs. 87.08 Crs. (US$ 17.34 Mn.) * Order visibility as on March 31, 2012 stood at Rs. 2800 Crs. (US$ 557.55 Mn.) * (US$ 1 = Rs. 50.22 as on March 31, 2012) We are providing Energy Management Solutions to telecom operators and telecom tower companies. We have also entered into Power Management business by winning the contract for Power Distribution Franchise in Aurangabad region. Since these businesses are new, they are likely to generate lower margins initially. As a result, we are likely to generate substantially lower margins for near to medium term. Corporate Debt Restructuring (CDR): The Company has completed the process of restructuring debt from domestic lenders and is waiting for certain approvals to restructure debt from ECB and NCD lenders. Expressing confidence in the business the promoters have also contributed Rs. 83.45 Crs. towards the equity of the company. The highlights of the CDR are covered in the director's report on page no. 39. New Growth Opportunities: Even though our industry is going through a very difficult phase, we believe in the potential of the telecom sector, and our capability to address them. We are sure that with the capable management team, the Company will continue to focus on overcoming the challenges and creating new opportunities for growth. Extending Network Deployment Capabilities in Power Sector: Our know how of implementation and maintenance of large telecom networks has been extended to power sector. Power sector represents a huge opportunity in Power Generation, Transmission and Distribution, though it too, has challenges across several areas. Power Management Business: We are distributing power to Aurangabad Urban Circle(I & II)on behalf of the local distribution company. This contract is spread over 15 years and is likely to generate revenue of Rs. 900 Crs. in the first year and Rs.1,000 Crs. from the next year onwards. We will be responsible for distribution of electricity to both industrial and residential units from the grid. We are increasing the efficiency in distribution of electricity by cutting down Aggregate Technical and Commercial(AT&C) losses. We believe we can develop similar businesses in the near future as Government and State Electricity Boards accelerate their efforts to privates Power Distribution. We are taking several initiatives like Automated Meter Reading Infrastructure, Distribution Automation etc. that will further improve the AT&C losses. We are making efforts to minimize the losses incurred on account of leakage and theft of power. We are also in the process of modernizing the distribution infrastructure that should enable us to improve the quality of power. Key Challenges: Increasing Recurring Revenue: Our Power Franchisee business along with Energy Management business for telecom operators has helped us to build a business model that has recurring revenue. We are now focusing on wining similar business that shall add recurring revenues. Phase out the low margin Network Services business in Indian telecom market that requires higher working capital: As Indian telecom sector is going through its toughest phase, the operators have deferred their capital expenditure and expansion plans. In addition to this they have reduced the pricing for Network Services players like us, and are asking for better payment terms impacting our margins and working capital. This has resulted into business becoming enviable. Hence we have decided to discontinue loss making projects and continue only with those which offer higher margins and require lower working capital. This will result into lower revenue but will have positive impact on future working. Introduce new services to the customers in LTE space: Globally the telecom sector is likely to witness growth in data services over the next few years. This growth is likely to ride on implementation of LTE networks. GTL has begun offering new services like Bench marking the networks, Network Design in the LTE space to the operators in USA. As the Network evolves in the other markets similar services can be offered in Europe and Middle east in the next two years and Africa, APAC and SAARC over the period of three to four years. Focus on Cost: As we are entering into new business areas of Power Management and Energy Management, our operating profit margins are likely to go down in the near term. Looking at the external environment and the difficult phase we are going through, the company has already initiated several measures that would bring down the administration and wage costs. Monetizing our Investments: Although currently both the capital markets and telecom sector in India are going through a rough phase, we believe we can monetize our investments in telecom tower sector over a period of 3-5 years and reduce our debt. People: Restructuring of our business in Indian market required churning of skill set of our employees. As a result, our employees and contracted associates reduced from 9,612 to 8,204 as on June 30, 2012. Our employees have also contributed to the cost saving efforts by taking a salary cut ranging from 10-30% and have foregone several other benefits. I for myself have been taking a token salary of Rs. 1. Corporate Social Responsibility: We have focused our attention on areas like imparting education to the underprivileged children and providing employment opportunities to women and physically challenged people. Our employees are helping our progress not only in terms of business but also by its impact on the community by volunteering their free time. Our efforts in Energy Management will also help in reducing the carbon footprint of the telecom industry in the coming years. Conclusion: The cancellation of the 122 licenses and the uncertainty pertaining to the telecom sector has had a substantial impact on our revenue. The impact has not only been on the current order backlog but on the future opportunities as well. With the power distribution companies being in distress, the power sector is expecting reforms like revision in tariffs by state governments. The power sector provides recurring revenue model, but in current situation the margins are under pressure. Given this scenario both telecom and power sector are under pressure. As a result, even though we may have operating profit from the business but are likely to generate net losses post Interest and depreciation. The past year had been a difficult year and our focus is now to stabilize and grow the business. It would be our endeavor to bring in efficiency in telecom networks and power distribution, being environment friendly and creating employment in rural India. For all that our Company has accomplished over the years, we would like to thank all our stockholders, customers, financial institutions, partners and employees for their unwavering interest and support and look forward for the same in future. Place: Mumbai Manoj G. Tirodkar Date : July 3, 2012. Chairman & Managing Director