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GTL Ltd.

BSE: 500160 Sector: Telecom
NSE: GTL ISIN Code: INE043A01012
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OPEN 14.65
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VOLUME 48946
52-Week high 20.10
52-Week low 12.45
P/E
Mkt Cap.(Rs cr) 228
Buy Price 14.50
Buy Qty 401.00
Sell Price 14.65
Sell Qty 200.00
OPEN 14.65
CLOSE 14.80
VOLUME 48946
52-Week high 20.10
52-Week low 12.45
P/E
Mkt Cap.(Rs cr) 228
Buy Price 14.50
Buy Qty 401.00
Sell Price 14.65
Sell Qty 200.00

GTL Ltd. (GTL) - Director Report

Company director report

1. STATE OF THE COMPANY'S AFFAIRS FINANCIAL HIGHLIGHTS

(' in Crore)

Particulars

FY 2016-17

FY 2015-16*

Consolidated Standalone Consolidated Standalone
Total Income 1673.68 1254.62 1722.99 1280.50
Profit / (Loss) before Depreciation Interest and Financial Charges (Net) Exceptional items and Tax (PBDIT) (50.69) (40.65) (352.31) 8.98
Profit / (Loss) before Depreciation Exceptional and Tax (PBDT) (656.38) (588.77) (961.84) (550.82)
Less: Depreciation 50.00 47.42 100.85 98.48
Profit / (Loss) before Tax exceptional item and extraordinary items (706.38) (635.19) (1062.69) (649.30)
Exceptional items Nil Nil (1587.90) (1724.41)
Less : Provision for Taxation (incl. Short Provision for Income Tax and Deferred Tax) (4.46) 5.33 (13.00) Nil
Profit / (Loss) after Tax (PAT) before Extra-ordinary and Prior Period items (711.54) (629.86) (2663.59) (2373.71)
Add / (Less): Extra-ordinary item Nil Nil Nil Nil
Add: Minority Interest (0.91) N.A. 0.06 N.A.
Add: Share of Profits in Associates 281.34 N.A. (146.06) N.A.
Loss For The Year From Continuing Operations (993.79) (629.86) (2809.59) (2373.71)
Loss for the year from discontinued operations Nil Nil (58.02) (39.74)
Other Comprehensive Income for the year (0.59) (0.44) (0.14) (0.05)
Total Comprehensive Income for the period (net of Tax) (994.38) (630.30) (2867.75) (2413.50)
Add: Balance brought forward from the last year (6898.15) (4941.46) (4030.40) (2527.96)
Profit / (Loss) available for Appropriation (7892.53) (5571.76) (6898.15) (4941.46)
Appropriations:
Recommended Equity dividend Nil Nil Nil Nil
Dividend Distribution Tax N.A. N.A. N.A. N.A.
Amount transferred to
- General Reserve Nil Nil Nil Nil
- Debenture Redemption Reserve Nil Nil Nil Nil
Balance Carried Forward (7892.53) (5571.76) (6898.15) (4941.46)

2. RESULTS OF OPERATIONS

The financial highlights of the Company on a standalone basis for the financial yearunder review are as follows:

• Total Income is ' 1254.62 Crore as against ' 1280.50 Crore for the previousfinancial year.

• Profit / (Loss) (before Depreciation Interest and Financial Charges (Net)Exceptional Items and Tax) (PBDIT) is ' (40.65) Crore as against profit of ' 8.98 Crorefor the previous financial year.

• Profit / (Loss) after Tax (PAT) is ' (629.86) Crore as against ' (2373.71) Crorefor previous financial year.

3. CORPORATE DEBT RESTRUCTURING (CDR)

As you are aware the Company was admitted into CDR w.e.f. July 12011 on account ofthe adverse circumstances surrounding the telecom sector. The Company made regularpayments following its admission into CDR and such payments continued till May 2014.

Compliance and Fulfillment of Commitments:

GTL undertook all the actions in compliance with CDR requirements like monthlyconcurrent audits creation of security in favor of CDR Lenders monitoring andadministration of cash flows through Trust and Retention Account (TRA) etc. To support theCompany the promoters brought in their own contribution of ' 83.45 Crore. GTL kept astrong focus on servicing lenders and took following positive steps since sanction of CDRin December 2011:

• From July 2011 to date aggregate of principal / interest and all other paymentsmade to several Lenders were ' 2334.50 Crore;

• Paid ' 566.59 Crore to the Government towards various taxes including VATService Tax etc.;

• Issued equity shares to CDR Lenders for value of ' 189 Crore;

Post CDR Developments

Continued adverse developments in the Telecom and Power sector prevented the Company'srevival as per CDR scheme approved. Some of the key developments that took place in ourindustry and customers include:

Telecom

• Cancellation of 122 Nos. of 2G licenses under Supreme Court of India (SC)judgment in February 2012:

The cancellation impacted operators like Uninor Videocon Etisalat IDEA Tata etc.;

• New Spectrum auction met with a sluggish response:

Operators made an investment of ' 1.2 Lac Crore till 2015-16 however only 3-4% of the3G and BWA subscriber targets were achieved;

Government of India held the 2016 Spectrum Auction in 8001800 and 2300 Mhz. bandswhich concluded with 31 rounds of bidding. Total value of bids at the end were ' 65789Crore instead of the ' 560000 Crore expected by the government based on the reserveprices set by TRAI. Only 965 MHz of the total 2354.55 MHz of spectrum was sold which isaround 40%;

• Freeze on fresh debt and equity in telecom sector:

Combination of financial stress tax claims and investigation of promoters andgovernment bodies related to earlier spectrum allocation resulted in complete freeze offresh capital outlays towards the sector;

• Aircel Group's suspension / cancellation of 20000 tenancy commitments in 2014:

GTL had prepared itself for significant revenue opportunity aggregating ' 17170 Croreover 5 years as turnkey service provider to its associate Tower companies (Tower Co.)which had in turn got commitment to lay out infrastructure for 20000 new tenancies fromAircel Group. The details of the business opportunity for GTL were contained in the Noticeof postal ballot dated January 14 2010 to shareholders as summarized below:

('in Crore

Services Offering 2010-11 2011-12 2012-13 2013-14 2014-15 Total
Network Deployment 1250 1250 1250 1250 1250 6250
Network Maintenance 486 594 702 810 918 3510
Energy Management 540 660 780 900 1020 3900
Active Infrastructure Management 486 594 702 810 918 3510
Total Business Opportunity 2762 3098 3434 3770 4106 17170

However due to certain industry developments the Aircel Group had to curtail itsexpansion plans leading to closing down of operations in non-viable telecom circles. InJuly 2013 Aircel Group terminated major portion of its tenancy commitments to the TowerCo. leading to significant loss to the Company as by then it had already made investmentsand arrangements to service the requirements of Tower Co. / Aircel Group and prematuretermination caused massive losses to GTL group;

• BSNL suspension of fixed line contract:

In 2010 GTL bid for EPC work of PAN India radio sites roll out by Bharat Sanchar NigamLtd. (BSNL). Based on successful bid outcome GTL had estimated contract allocation ofwork totaling ' 5500 Crore. The Company had deployed financial and business resources fortimely delivery.

The entire contract was subsequently litigated by some of failed bidders and based onrecommendation of Central Vigilance Commission BSNL cancelled the contract awarded tovarious parties. The cancellation not only resulted in loss of EBITDA estimated at ' 806Crore but also diminished value of assets and investments made by the Company to getready for the delivery under BSNL Letter of Intent.

Power

GTL was impacted by combination of external factors and poor financial strength of itsclients. DISCOMS are heavily indebted and nearly ' 1.5—1.7 Lakh Crore of their debtwas restructured. Some of the other direct developments that impacted Power business ofGTL include:

• Unilateral cut down in power tariff by 20% in the state of Maharashtra whereGTL had its operations.

• Higher than disclosed level of T&D losses impacting profitability of theCompany's operations.

• Delay in power tariff hikes which was essential for financial sustainability andgrowth of the sector consequently GTL could never recover this business back to itsfinancial strength required to service the debt obligations in full.

• Contractual failures on the part of Maharashtra State Electricity DistributionCompany Limited (MSEDCL) in performing their obligations as discussed below.

Cancellation of MSEDCL Contract

After pursuing for nearly two years the Company successfully won contract from MSEDCLin May 2011. Execution of this contract required Capex of ' 192 Crore and issuance ofStand-by Letter of Credit (SBLC) to MSEDCL for which limits were duly approved in CDR.

Subsequently certain lenders failed in issuing the SBLC which added along withoperational and contractual issues with MSEDCL resulted in termination of contract onNovember 17 2014.

Additionally MSEDCL also failed on several of their contractual obligations causinghuge losses to the Company. The net result was that the Company lost an annual revenue ofapproximately ' 1200 Crore and contracted revenue over remaining 12 years of ' 18000 to' 19000 Crore. Thus it could not achieve projected business targets. Nevertheless theCompany is pursuing various contractual default related claims against MSEDCL includingbut not limited to wheeling charges unauthorized use of feeders by MSEDCL Capex Claimsand false representation.

As it can be summarized from above the issues governing the telecom and power sectorhad a negative impact on the performance of the Company. The Company lost a substantialportion of its revenue and EBITDA on account of circumstances beyond the managementcontrol.

Current Status

When the Company realized the potential difficulties for servicing its debt obligationsany further it presented a corrective action plan by way of a negotiated settlementproposal or a "One Time Settlement" (OTS) for monetization of assets in theJoint Lender Forum ("JLF") meeting held on November 13 2014. This proposal wasa voluntary proposal for monetization of substantially all of businesses assets andinvestments - solely with a view to settle the dues of lenders. The Company had placed twoviable offers for sale of the Operations Maintenance and Energy management("OME") business and its international business. These actions clearlydemonstrate the Company's bona fides and intent.

In a high level JLF meeting held on December 4 2015 where senior officials of thebanks were present the CDR lenders approved in-principle the monetization proposal of theCompany based on the Valuation Report

dated July 17 2015 prepared by one of the well known firms of Chartered Accountantsappointed by the lenders was accepted.

The following is the excerpt of the relevant portion of the minutes of the JLF meetingheld on December 4 2015 - 'Based on the discussions held and views expressed by alllenders during the meeting it was concluded that the lenders were in-principle agreeableto consider the OTS proposal submitted by the company. IDBI Bank informed the JLF that itwould approach CDR-EG with a combined proposal for Exit-cum-OTS of the dues. IDBI Bankrequested all the lenders to obtain necessary approval as early as possible positivelybefore December 312015.'

Though the Company's settlement proposal was approved by the high level JLF way back inDecember 2015 only a few lenders had given their approvals for the same and balanceapprovals have been pending due to inter-creditor issues.

I n the Valuation Report it is specifically mentioned that the delay in implementingthe OTS would diminish the enterprise value of the Company. Despite this specificobservation the approvals from only few lenders were received in March 2017. This hasresulted in the potential buyer for OME business calling off the transaction agreedearlier. In the case of the OME business not only the Company had executed a businesstransfer agreement on September 30 2015 but had also obtained the approval of theCompetition Commission of India. Unfortunately the buyer could not wait longer andaccordingly by a letter dated January 6 2017 the Company had to inform the lenders ofthe potential buyer's inability to go ahead with deal due to inordinate delay from thelenders' end and changed circumstances.

The inter-creditor issues further led to filing of winding up petition by the NCDholder and issue of notices / obtaining of order from a Court by the ECB lenders. Mostissues in the opinion of the management are required to be resolved amongst lendersthemselves. This has impaired the Company's ability to settle lenders in an optimum andtimely manner.

I n the meanwhile post CDR the Company was subjected to multiple external auditsincluding special audit concurrent audits due diligence business valuation exercisestock audit and forensic audit but none of the audits reported any material discrepancy inoperations or working of the Company. Furthermore no adverse findings were 'observed'against the management.

The Company has been making continuous efforts to give effect to the OTS proposal in atime bound manner as the realizations depend upon the market conditions.

I n fact the various recent adverse developments in the telecom sector have seriousrepercussions for the industry and consequently for the Company in making anticipatedpayments to the lenders. Still the Company continued its efforts with a view to settle thedues of the lenders in an amicable way. While doing so it is also taking steps to sortout pending matters directly and indirectly involving the Group to the extent possibleso that all matters of the Group are settled simultaneously in an amicable way. As couldbe seen from the following excerpt of the minutes of the JLF meeting held on March 182017 the relentless efforts of the Company has brought out the required results:

'After further detailed discussion the lenders concluded that:

a. based on the findings of the Forensic Audit Report clarifications received from thecompany and further clarifications given by the auditors there were no conclusiveevidence of diversion of funds and hence the lenders could close the Forensic Audit;

b. All the lenders agreed that IDBI as MI might take further steps;

c. It was also agreed that lenders would expedite the process of approval ofsettlement and strive to complete the same by June 2017.'

On this background based on the settlement proposal agreed by the lenders the Companywould not make provision for interest from FY 2017-18.

Going Concern

The Company has made a proposal for a negotiated settlement of debts which has beenagreed in principle by all the lenders. The management is of the view that uponimplementation of the Company's negotiated settlement proposal the Company would be in aposition to meet its liabilities and continue its operations. In view of the above theCompany continues to prepare financial statements / results on a Going Concern basis.

Investments

The Company has strategic and long term equity investments in Associates GTLInfrastructure Ltd. (GIL) and Chennai Network Infrastructure Ltd. (CNIL) Both companieswere admitted into CDR. However during the year the JLF of these associates at thebehest of these companies unanimously agreed to invoke the Strategic Debt RestructuringScheme ("SDR Scheme") in September 2016. The SDR Scheme envisages a conversionof part of the debts held by the lenders into equity so as to pare down the existing debtto more sustainable levels. The shareholders of GIL and CNIL respectively approved theissuance of shares to its secured lenders pursuant to the SDR scheme in March 2017. Theshare in associates is accounted under Equity method as per (Ind-AS 28) "Accountingfor Investment in Associates and Joint Ventures" in the Consolidated FinancialStatements based on audited / unaudited accounts of associates.

Reduction in Promoter's Shareholding

Pursuant to invocation of pledge of the shares of the Company held by Global HoldingCorporation Private Ltd (GHC) one of the Promoters of the Company the Promoters'shareholding in the Company has come down by 13.99% and necessary disclosures / filingshave been done in compliance of regulatory requirements. GHC has filed appropriate legaldefense and the matter is currently sub-judice as GHC believes that such actions have beenincorrect.

4. RECENT DEVELOPMENTS AT MACRO & MICRO ECONOMIC LEVELS Key Indicators:

• The number of wireless subscribers in India increased from 1033.67 miMion atthe end of Mar-16 to 1170.18 million at the end of Mar-17.

• The urban subscription increased from 588.79 million at the end of Mar-16 to672.42 million at the end of Mar-17.

• The rural subscription increased from 444.84 million at the end of Mar-16 to497.76 million at the end of Mar-17.

• The monthly growth rates of urban and rural subscription were 0.12% and 1.05%respectively during the month of Mar-17.

• The overall Tele-density in India increased from 83.36 at the end of Mar-16 to91.08 at the end of Mar-17.

• The share of urban subscribers and rural subscribers at the end of Mar-17 was57.46% and 42.54% respectively. Telecom Market Highlights:

• Increasing pressure on profitability competition spectrum trading and sharingguidelines and favorable M&A policy has driven the consolidation trend in telecommarket.

• In August 2016 spectrum auction took place with the largest quantum of spectrumbeing made available by the Government of India. However the auctions witnessed mutedresponse primarily on account of high reserve prices.

• For a large part of 2016 mobile tariffs remained steady. However with thedisruptive entry of a new operator the sector witnessed innovative tariff structures.

• The average data consumption per user is increasing with increased adoption ofsmart phones and availability of content. The overall data traffic grew by 76% y-o-y in2016 driven by an 85% surge in 3G data traffic.

• The Department of Telecommunications (DoT) has amended the Unified License fortelecom operations which will allow sharing of active telecom infrastructure like antennafeeder cable and transmission systems between operators thereby lowering the costs ofoperations and leading to faster rollout of networks.

5. DIVIDEND:

Since your Company has posted losses and is currently under Corporate DebtRestructuring Mechanism your Directors express their inability to recommend any dividendon the paid up Equity and Preference Share Capital of the Company for the financial yearended March 312017.

6. SHARE CAPITAL AND NON CONVERTIBLE DEBENTURES (NCDs):

i) Equity:

The movement of Equity Capital due to allotment of shares if any is as under:

Particulars No. of Equity Shares
Equity Capital as on April 12016 157296781
Add: Allotment of equity shares during the year Nil
Equity Capital as on March 312017 157296781

The Company has only one class of equity shares and it has not issued equity shareswith differential rights or sweat equity shares. Also the Company cancelled all itsoutstanding Employee Stock Option Schemes (ESOS) in FY 2012-13. Thus the details requiredto be furnished for equity shares with differential rights and / or sweat equity sharesand / or ESOS under the Companies (Share Capital and Debentures) Rules 2014 are notfurnished.

ii) Preference:

During the FY 2012-13 the Company had issued and allotted 0.01 % - 650000000Non-Participating Optionally Convertible Cumulative Preference Shares (OCPS) of the facevalue of ' 10/- each aggregating ' 650 Crore. The Preference shareholder had option forconversion into equity shares at any time after six months but before eighteen months fromthe date of allotment viz. September 28 2012 on the terms and conditions as detailed inNote No. 20.2. of Notes to Accounts. However the Preference shareholder did not exerciseits right for conversion of these preference shares into equity within the stipulated timeperiod and resultantly there will not be any impact on the Company's equity capital.

iii) NCDs:

During the FY 2009-10 the Company had privately placed 14000 Rated RedeemableUnsecured Rupee NCDs of the face value of ' 10 Lakh each aggregating ' 1400 Crore whichwere listed under debt segment of BSE Limited. In view of pending restructuring of NCDsdue to non-completion of documentation currently the same are suspended for trading.This matter is awaiting inter-creditor dispute resolution. The winding-up petition filedby the NCD holder in the Bombay High Court is sub-judice. At the JLF meeting the NCDholder had informed that it has also approved the negotiated settlement proposal and oncethe approval from other Lenders are received they would file Consent Terms at Bombay HighCourt for withdrawing its winding-up petition.

7. FIXED DEPOSITS:

There are no unclaimed deposits lying with the Company and during the year underreview the Company has not accepted any fresh fixed deposits from Public or from itsShareholders.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. Sunil S. Valavalkar - Whole-time Director retires by rotation and being eligibleoffers himself for reappointment.

The background of the Director proposed for reappointment is given in the CorporateGovernance Report which forms part of this Report.

In terms of the provisions of the CDR documents IDBI Bank Limited nominated Mr. BadriSrinivasa Rao Chief General Manager NPA Management Group w.e.f. November 28 2016 asNominee Director in place of Mr. Dilip Kumar Mandal Chief General Manager who served onthe Board w.e.f. October 12014.

The Board places on record its deep appreciation and respect for the valuable adviceand guidance received from Mr. Dilip Kumar Mandal during his tenure as a Director of theCompany.

Pursuant to the provisions of Section 203 of the Companies Act 2013 (the Act)currently Mr. Manoj G. Tirodkar - Chairman & Managing Director Mr. Sunil S.Valavalkar - Whole-time Director Mr. Vidyadhar A. Apte - Company Secretary and Mr. MilindV. Bapat - Chief Financial Officer are the Key Managerial Personnel of the Company.

9. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The information required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedis given below:

i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Executive Directors Ratio to median remuneration
Mr. Manoj G. Tirodkar 11.46
Mr. Sunil S. Valavalkar 2.75
Non-executive Directors (Sitting Fees only) * Ratio to median remuneration
Mr. Vijay M. Vij N.A.
Mr. D. S. Gunasingh N.A.
Mr. Navin J. Kripalani N.A.
Mr. Dilip Kumar Mandal (up to November 27 2016) N.A.
Mrs. Siddhi M. Thakur N.A.
Mr. Badri Srinivasa Rao (w.e.f. November 28 2016) N.A.

ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:

Directors Chief Executive Officer Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
Mr. Manoj G. Tirodkar - Chairman & Managing Director No change
Mr. Sunil S. Valavalkar - Whole-time Director No change
Mr. Vijay M. Vij N.A.
Mr. D. S. Gunasingh N.A.
Mr. Navin J. Kripalani N.A.
Mr. Dilip Kumar Mandal (up to November 27 2016) N.A.
Mrs. Siddhi M. Thakur N.A.
Mr. Badri Srinivasa Rao (w.e.f. November 28 2016) N.A.
Mr. Milind V. Bapat - Chief Financial Officer No change
Mr. Vidyadhar A. Apte - Company Secretary No change

iii) The percentage increase in the median remuneration of employees in the financialyear: 11%

iv) The number of permanent employees on the rolls of Company: 397

v) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average annual increase in salaries of employees is 8.9% and there is no change inmanagerial remuneration during the year.

vi) Affirmation that the remuneration is as per the remuneration policy of the Company:The Company affirms that the remuneration is as per remuneration policy of the Company.

10. DIRECTORS RESPONSIBILITY STATEMENT:

In terms of the provisions of Section 134(3)(c) of the Act the Board of Directors tothe best of their knowledge and ability in respect of the year ended March 312017confirm that:

i) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures;

ii) they had 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 and of the loss ofthe Company for that period;

iii) they 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) they had prepared the annual accounts on a going concern basis;

v) they had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and

vi) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

11. DECLARATION BY INDEPENDENT DIRECTORS:

All the Independent Directors of the Company have furnished a declaration to the effectthat they meet the criteria of independence as provided in Section 149(6) of the Act.

12. POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION ETC.:

The Company has put in place appropriate policy on Directors' appointment andremuneration and other matters provided in Section 178(3) of the Act which is provided inthe Policy Dossier that has been uploaded on the Company's website www.gtllimited.com . Further salient features of theCompany's Policy on Directors' remuneration have been disclosed in the CorporateGovernance Report which forms part of this Report.

13. PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS:

The Board of Directors has carried out annual evaluation of its own performance BoardCommittees and individual Directors pursuant to the provisions of the Act and corporategovernance requirements as prescribed by the Securities & Exchange Board of India(Listing Obligations & Disclosure Requirements) Regulations 2015 (the ListingRegulations).

The performance of the Board and its Committees was evaluated by the Board afterseeking inputs from the Board / Committee members on the basis of the criteria such ascomposition of the Board / Committees and structure effectiveness of Board / Committeeprocesses providing of information and functioning etc. The Board and Nomination &Remuneration Committee also reviewed the performance of individual Directors on the basisof criteria such as attendance in Board / Committee meetings contribution in the meetingslike preparedness on issues to be discussed etc.

In a separate meeting of Independent Directors performance of non-independentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking in to consideration views of executive and nonexecutive Directors.

14. MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis Report (MD&A Report) for the year under reviewas stipulated under Regulation 34 read with Schedule V to the Listing Regulations ispresented in a separate section forming part of the Annual Report.

15. CORPORATE GOVERNANCE & VIGIL MECHANISM:

A separate Corporate Governance Report on compliance with Corporate Governancerequirements as required under Regulation 34(3) read with Schedule V to the ListingRegulations forms part of this Report. The same has been reviewed and certified by M/s.Godbole Bhave & Co. Chartered Accountants and M/s. Yeolekar & AssociatesChartered Accountants the Joint Auditors of the Company and Compliance Certificate inrespect thereof is given in Annexure A to this Report.

The Company has formulated a Whistle Blower Policy details of which are furnished inthe Corporate Governance Report thereby establishing a vigil mechanism for directors andpermanent employees for reporting genuine concerns if any.

16. RISKS:

A separate section on risks and their management is provided in the MD&A Reportforming part of the Annual Report which covers the development and implementation of riskmanagement framework. The Audit Committee monitors the risk management plan and ensuresits effectiveness. It is important for shareowners and investors to be aware of the risksthat are inherent in the Company's businesses. The major risks faced by your Company havebeen outlined in this section to allow stakeholders and prospective investors to take anindependent view. We strongly urge stakeholders / investors to read and analyze theserisks before investing in the Company.

17. CORPORATE SOCIAL RESPONSIBILITY:

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand other details are furnished in Annexure B of this Report in the format prescribed inthe Companies (Corporate Social Responsibility Policy) Rules 2014. For CSR initiativesundertaken by Global Foundation please refer to MD&A Report under the caption"Corporate Social Responsibility". The CSR Policy is available on the Company'swebsite www.gtllimited.com .

18. AUDIT COMMITTEE:

The details in respect of composition of the Audit Committee are included in theCorporate Governance Report which forms part of this Report.

19. AUDITORS AND AUDITORS' REPORT:

Joint Auditors:

M/s. Godbole Bhave & Co. Chartered Accountants Mumbai and M/s. Yeolekar &Associates Chartered Accountants Mumbai were appointed as Joint Auditors at the TwentySixth (26th) Annual General Meeting to hold office from conclusion of the saidmeeting till the conclusion of the Twenty Ninth (29th) Annual General Meeting(AGM). Pursuant to the provisions of Section 139 of the Act read with Companies (Audit andAuditors) Rules 2014 since the term of appointment of the Joint Auditors is expiring atthe conclusion of the ensuing AGM the Audit Committee and the Board has recommendedappointment of M/s GDA & Associates (FRN: 135780W) Chartered Accountants Pune asthe Auditor of the Company for holding office from conclusion of the Twenty Ninth (29th)AGM till the conclusion of Thirty Fourth (34th) AGM. The Company has receivedthe necessary certificate from the Auditor pursuant to Section 139 of the Act regardingtheir eligibility for appointment. In pursuance of the provisions of Section 139 of theAct an appropriate resolution for the appointment of M/s GDA & Associates (FRN:135780W) Chartered Accountants Pune as an Auditor of the Company is being placed at theensuing Annual General Meeting.

Cost Auditors:

In terms of the Companies (Cost Records and Audit) Rules 2014 as amended since theCompany's business (telecom networking services) is not included in the list of industriesto which these rules are applicable the Company has not considered appointment of CostAuditors from the financial years 2015-16 onwards.

Joint Auditors' Report

As regards the Joint Auditors' comment / observation / emphasis of matters the Boardhas furnished required details / explanations in Note Nos. 6.3 24.4 40.c.2 and 48 ofNotes to Standalone financial statements.

Secretarial Auditors' Report

The Secretarial Auditors' Report does not contain any qualifications reservationsdisclaimers or adverse remarks and the same is given in Annexure C (Form No. MR-3) formingpart of this report.

20. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The particulars of loans guarantees and investments have been disclosed in thefinancial statements as under:

No loans are given by the Company to any person / entity except to its employees as atMarch 312017.

Details of Corporate Guarantees given by the Company as at March 312017 are as under:

(' in Crore)

Sr. Name of the Company As at

March 312017

As at

March 312016

1 Subsidiaries 161.88 165.39
2 Other Body Corporate 425.00 425.00

Refer Note No 8.2 of notes to financial statements

The Company has given above guarantees in its normal course of business in India andabroad.

The guarantees are normally given:

• for performance of their business obligations; and

• to enable them to avail financial assistance.

Details of investments made by the Company are given under the respective heads (referNote 6 of notes to the Standalone financial statements).

21. PARTICULARS OF RELATED PARTY TRANSACTIONS:

All related party transactions entered into during the financial year were on an arm'slength basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large.

The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website www. gtllimited.com. None of the Directors has any pecuniaryrelationships or transactions vis-a-vis the Company. The particulars as required under theCompanies Act 2013 are furnished in Annexure D (Form No. AOC-2) to this report.

22. MATERIAL CHANGES AND COMMITMENTS:

Save and except as discussed in this Annual Report no material changes have occurredand no commitments were given by the Company thereby affecting its financial positionbetween the end of the financial year to which these financial statements relate and thedate of this report.

23. SUBSIDIARIES:

The Company has been carrying on its domestic and international operations through someof its subsidiaries. The operations of most of the subsidiaries are loss making on accountof the general economic slowdown and the factors affecting the Telecom Industry. Onaccount of the admission of the Company into CDR it is unable to extend both operationaland financial support to the subsidiaries. Under these circumstances except some of thesubsidiaries

whose operations are viable the operations of other subsidiaries have been scaled downor closed down. In view of this the Company is continuing operations only in thoseprojects and countries which have potential for growth at low working capital. TheCompany has closed / liquidated operations in subsidiaries in Kenya Bangladesh ChinaMalaysia Indonesia Tanzania Philippines KSA and Nigeria while it is continuing itsoperations in UK Myanmar Nepal Singapore and UAE.

Further as per the negotiated settlement plan submitted for settlement of theoutstanding debt with all of its lenders the Company has to dispose of some of itsinvestments as contemplated under the approved CDR package inter-alia investments in itssubsidiary companies for which appropriate resolution was passed in 28thAnnual General Meeting held on September 212016.

Pursuant to Indian Accounting Standard 110 (Ind-AS 110) on Consolidated FinancialStatements issued by the Institute of Chartered Accountants of India ConsolidatedFinancial Statements presented by the Company include information about its subsidiaries.The Company's revenue from its overseas subsidiaries for the year ended March 312017 ona consolidated basis is ' 415.15 Crore (US$ 62 Mn.)

As required by the Companies (Accounts) Rules 2014 a report on performance andfinancial position of each of the subsidiaries and associate companies included in theConsolidated Financial Statement is presented in Annexure E (Form No. AOC-1).

24. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS ANDOUTGO:

[Steps taken / actions initiated by the Company for and on behalf of its customer'sviz. telecom operators telecom tower companies and Original Equipment Manufacturers(OEMs)]

a) Conservation of Energy:

i. the steps taken or impact on conservation of energy:

• Achieved 'Diesel Free' status as defined by TAIPA on 7875 telecom sites.

This has been achieved through constant new EB connection timely rectification and upkeeping of existing EB infrastructure.

• Set up of Validation Assessment and Dimensioning (VAD) service group as newinitiative. The group carried out the following activities:

o Validation of existing infrastructure;

o Assessment from power dimensioning perspective;

o Recommendation for site specific infrastructure up gradation.

The activity resulted into turnaround of high diesel consumption circles across PANIndia and improvement in the energy efficiency.

• Set up of Central Energy Tracking team for analyzing the effect of the siteinfra up gradation activity and new tenancy increase.

The monitoring through various dashboards led to revision of energy cycle andconsumption pattern in critical circles.

ii. the steps taken by the Company for utilizing alternate sources of energy:

• For Carbon Emission reduction undertook the deployment of Deep Discharge andQuick Recharge Storage (QRS) Batteries in various Circle.

iii. the capital investment on energy conservation equipments:

Not Applicable

b) Technology Absorption:

i. the efforts made towards technology absorption:

• Tower monitoring methodology for operators using Network Management Software andadditional bespoke portals such as for Idea telecom and Service Desk tool like HP servicemanagement such as for Rjio to monitor additional sites across different clusters andcircles on PAN India basis;

• Successful PoC being conducted for Automation of Trouble Tickets (TTs) fromthese operator portals to BMC Remedy TT application and integrating it with SMS alarmalerts by BOTS using Artificial Intelligence;

• Testing and PoC for Internet of Things (loT) solutions such as VideoSurveillance; Workforce Tracking (WFT); Fleet Management on few sites basis;

• Automation & designing of Key Performance Indicators (KPI performance)portal as per focused initiative for a specific circle as required by the customer bycreating a Online portal which will display various key performance Indicators such as geocoordinates mapping of tower sites on the circle map of India trouble tickets with RCAdetails etc. like parameters for the circle using Java++ for application development;

• Integration of various data inputs such as OSS logs from various OEMs like NSNEricsson ZTE Huawei trouble tickets from Remedy tool preventive maintenance data ofsite assets Capex and Opex deployment data; Resource management data to generate focusedcircle specific Business Intelligence using Big Data & Analytics;

• Creating an algorithm logic (software application framework) as per MasterServices Agreement (MSA) by using various data inputs and sources to compute monthly KPIsSLAs;

• Implemented using best in class hardware software and security platforms suchas IBM Cisco Fortinet at state of the art infrastructure of Global Command Centre (GCC)at Hinjewadi Pune having intelligent video walls functional data centre with hosting andcollocation facilities Storage and Virtualisation for High Availability / HighPerformance (HA/HP) architecture etc. to fully support the active and passiveInfrastructure of telcos enterprises in terms of tracking preventive maintenance alarmsverifications vendor management and coordination with testing and absorption facilitieslike IoT Experience Center for new emerging technologies such as internet of Things (IoT).

i i. the benefits derived like product improvement cost reduction product developmentor import substitution:

• Contractual compliance and Service delivery as per MSA to measure Sites Uptimeperformance on daily/monthly basis across various KPIs / SLAs for these telcos andadditional sites and tenancies are now being monitored across 24x7 resulting enhancing theUp-time;

• On Time reporting of these Trouble Tickets for timely action to meet KPIs / SLAswith high level data integrity without manual errors;

• To Enhance visibility efficiency and productivity of sites and resources;

• For better project management of focused initiative with timely decision makingto meet KPIs/SLAs;

• Using various types of data dimensions such as volume variety velocity andveracity of Big Data and Analytics insights one can measure performance enhance andimprove it to make efficient operations;

• On Time reporting of these KPIs / SLAs with high level data integrity;

• Will help in achieving and managing high level of scalability with higher alarmsload reliability with error free operations flexibility in allocating technologicalresources and services and adoptability to new and emerging technologies.

This helps in managing the major operations with enhanced ability with higherefficiency optimizing resources value for money for customers in terms of servicesdelivered.

iii. in case of imported technology (imported during the last three years reckoned fromthe beginning

of the financial year):

a. the details of technology imported:
b. the year of import:
c. whether the technology been fully absorbed: Not Applicable
d. if not fully absorbed areas where absorption has not taken place and the reasons thereof:

 

iv. the expenditure incurred on Research and Development:
a. Capital:

b. Recurring:

' 0.96 Crore

' 3.15 Crore

c) Foreign exchange earnings and Outgo:

During the year under review the Company earned in terms of actual inflows foreignexchange of ' Nil and the foreign exchange outgo in terms of actual outflows / expenditureis ' 39.11 Crore.

25. INTERNAL FINANCIAL CONTROL SYSTEM:

The details in respect of adequacy of internal financial control with reference to thefinancial statements are included in the MD&A Report which forms part of the AnnualReport.

26. HUMAN RESOURCES:

Our associate base stood at 5042 as on March 312017 as against 4898 as on March312016. For full details refer to the Human Resources write up in the MD&A Reportwhich forms part of the Annual Report.

27. EXTRACT OF ANNUAL RETURN AS ON MARCH 312017:

The required details are furnished in Annexure F (Form No. MGT-9) to this report.

28. NUMBER OF BOARD MEETINGS HELD DURING THE FY 2016-17:

5 (Five) meetings of the Board were held during the year details of which arefurnished in the Corporate Governance Report that forms part of this Report.

29. PROMOTER GROUP:

The Company is a part of Global Group of Companies promoted by Mr. Manoj G. Tirodkar.The promoter group holding in the Company currently is 30.25% of the Company's paid-upEquity Capital. The members may note that the Promoter Group inter-aiia comprises of Mr.Manoj. G. Tirodkar and Global Holding Corporation Pvt. Ltd.

30. PARTICULARS OF EMPLOYEES:

In terms of the provisions of Section 197(12) of the Act read with sub-rules 2 & 3of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended names and other particulars of the top ten employees in terms ofremuneration drawn and the name of every employee who is in receipt of such remunerationstipulated in said Rules are required to be set out in a statement to this report.Further the report and the Financial Statement are being sent to the shareholdersexcluding the aforesaid statement. In term of Section 136 of the Act the said statementis open for inspection at the Registered Office of the Company. Any shareholder interestedin obtaining a copy of the same may write to the Company Secretary at the RegisteredOffice. None of the employees listed in the said statement is related to any Director ofthe Company.

31. SPECIAL BUSINESS:

As regards the items of the Notice of the Annual General Meeting relating to SpecialBusiness the Resolution(s) incorporated in the Notice and the Explanatory Statementrelating thereto if any fully indicate the reasons for seeking the approval of membersto those proposals. Members' attention is drawn to these items and Explanatory Statementannexed to the Notice.

32. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation and acknowledge withgratitude the support and cooperation extended by the clients employees vendorsbankers financial institutions investors media and both the Central and StateGovernments and their Agencies and look forward to their continued support.

On behalf of the Board of Directors

Mumbai Manoj G. Tirodkar

August 8 2017 Chairman & Managing Director

ANNEXURE A TO DIRECTORS' REPORT AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

To the Members GTL Limited

INDEPENDENT AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

1. This certificate is issued in accordance with the terms of our engagement with GTLLimited ('the Company').

2. We have examined the compliance of conditions of Corporate Governance by theCompany for the year ended on March 31 2017 as stipulated in regulations 17 to 27 andclauses (b) to (i) of regulation 46(2) and para C and D of Schedule V of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("the SEBI Listing Regulations").

MANAGEMENTS' RESPONSIBILITY

3. The compliance of conditions of Corporate Governance is the responsibility of theManagement. This responsibility includes the design implementation and maintenance ofinternal control and procedures to ensure the compliance with the conditions of theCorporate Governance stipulated in the SEBI Listing Regulations.

AUDITORS' RESPONSIBILITY

4. Our responsibility is limited to examining the procedures and implementationthereof adopted by the Company for ensuring compliance with the conditions of theCorporate Governance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.

5. We have examined the books of account and other relevant records and documentsmaintained by the Company for the purpose of providing reasonable assurance on thecompliance with Corporate Governance requirements by the Company.

6. We have carried out an examination of the relevant records of the Company inaccordance with the Guidance Note on Certification of Corporate Governance issued by theInstitute of the Chartered Accountants of India (the ICAI) the Standards on Auditingspecified under Section 143(10) of the Companies Act 2013 in so far as applicable for thepurpose of this certificate and as per the Guidance Note on Reports or Certificates forSpecial Purposes issued by the ICAI which requires that we comply with the ethicalrequirements of the Code of Ethics issued by the ICAI.

7. We have complied with the relevant applicable requirements of the Standard onQuality Control (SQC) 1 Quality Control for Firms that Perform Audits and Reviews ofHistorical Financial Information and Other Assurance and Related Services Engagements.

OPINION

8. Based on our examination of the relevant records and according to the informationand explanations provided to us and the representations provided by the Management wecertify that the Company has complied with the conditions of Corporate Governance asstipulated in regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para Cand D of Schedule V of the SEBI Listing Regulations during the year ended March 312017.

9. We state that such compliance is neither an assurance as to the future viability ofthe Company nor of the efficiency or effectiveness with which the Management has conductedthe affairs of the Company.

For GODBOLE BHAVE & Co. For YEOLEKAR & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Reg. No. 114445W Firm Reg. No. 102489W

M. V. Bhave S. S. Yeolekar

Partner Partner

Membership No.038812 Membership No. 36398

Mumbai August 8 2017