The Shareholders of Mahanagar Telephone Nigam Limited
Your Directors present the 31st Annual Report of your Company together with theFinancial Statements and the Report of the Auditors as well as comments of Comptroller& Auditor General of India on the Financial Statements for the financial year ended onMarch 31 2017.
PERFORMANCE REVIEW OF MTNL FOR THE FY 2016-17
1. The achievements of MTNL during the year 2016-17 are as follows:
Expansion of 3G RF network in Delhi: MTNL is in the process of expansionof mobile network by adding 1080 nos. of 3G sites for upgrading Data handling capacity to10 Gbps. MTNL placed Purchase Order worth Rs. 319 Cr. for expansion of 3G Networkby adding 1080 Node-Bs and replacement of core network. Installation of core network hasbeen completed and testing is in progress. Cold installation of 400 Node-Bs has been done.
Upgradation/replacement of 3G RF network in Delhi: Purchase Order for Rs.42 Cr has been placed for up gradation of existing 720 nos. of 3G Node-B for HSPA+'capability along with upgradation of Backhaul. (24 Cr for RF Upgradation and 17.7 Cr forBackhaul).
3G Network Up-gradation in Mumbai: To improve network capabilities andprovide better speed MTNL is in process of upgrading existing 3G network (720 Node-Bs).S/W Up-gradation for the existing Node-Bs has been implemented. 161 Node B's have beenintegrated with OFC Media for 21 Mbps speed.
With the ongoing expansion and up gradation enhance Downlink speed will be 21.1 Mbps& Uplink speed of 5.76 Mbps against present 3.6 Mbps downlink & 384 Kbps uplinkper sector speeds.
2 . The initiatives taken by MTNL during the year 2016-17 are as follows:
To provide higher data speeds and better quality of services for broadband servicesMTNL has launched a special program to progressively increase the fibre length byredeploying the broadband nodes (DSLAMs) near to the customer.
173 nos. of Digital Subscriber Line Access Multiplexer (DSLAMs) have been redeployed inDelhi and 152 nos. in Mumbai thereby reducing copper length and enhancing the quality ofbroadband service.
Fiber To The Home (FTTH): Policy to Empanel partners for provisions ofFTTH/VAS services in Delhi & Mumbai on revenue share basis has been made operational.The new policy has been made more flexible to attract more partners and more customers.
High Speed Broadband on FTTH and Wi-Fi services for Hon'ble MPs: MTNL hasprovided high speed
Broadband on FTTH and Wi-Fi services at the residences of 750 Hon'ble MPs in Delhi inyear 2016-17.
Mumbai city surveillance project: Provided connectivity to 4717 camerasinstalled at 1510 locations across the Mumbai city covering almost 80% of the city.Project was dedicated to Nation on 02-Oct 2016 by Chief
Wi-Fi Hot-spot for Mumbai City: Provided connectivity to setup 500 Wi-FiHot spot by Govt. of Maharashtra. Project commissioned on 9th Jan 2017.
ATC Project for Mumbai City: MTNL provided connectivity at 133 locationsfor Area Traffic Control Project of Mumbai Traffic Police for Road Traffic Monitoring.
Wi-Fi hotspot at tourist places in Delhi and Mumbai: MTNL is establishingWi-Fi Hotspots at tourist places and important public areas all over Delhi and Mumbai fordigitally connecting the people of Delhi. The Services has been launched at 14 places inGreen Park market Hauz Khas Village Aurobindo market National Museum India Gate QutabMinar Safdarjung Tomb Humayun's Tomb Red Fort Purana Qila Lodhi Garden Nehru PlaceMarket and Defence Colony market of Delhi city and Elephanta cave in Mumbai City.
FINANCIAL RESULTS FOR THE F.Y. 2016-17
The Financial Statements of the Company have been prepared in accordance with theIndian Accounting Standards (IND-AS) notified under Section 133 of the Companies Act 2013read with Companies (Accounts) Rules 2014. The Financial Statements for the FinancialYear ended March 31st 2017 are the Company's firstIND-AS compliant annual financialstatements with comparative figures for the year ended March 31st 2016 also under IND-AS.The date of transition is April 1st 2015. The disclosure and effect of first timeadoption of IND-AS are detailed in Note 55 of the
Standalone Financial Statements and Note 59 of the Consolidated Financial Statementsfor detailed disclosure and effects on the first time adoption of IND-AS. The Standaloneand Consolidated Financial highlights of your company for the Financial Year ended March31st 2017 are summarized as follows:
Sources and Application of funds for the FY 2016-17 are given below:-
| || ||(IN CRORES `) |
| ||Standalone ||Consolidated |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Income from Operations ||2869.68 ||3123.96 ||2969.37 ||3223.16 |
|Expenditures (Excluding Finance Cost) ||5049.44 ||5097.59 ||5146.47 ||5193.09 |
|Operating Profit/(Loss) ||(2179.76) ||(1973.63) ||(2177.10) ||(1969.93) |
|Other Income ||682.78 ||569.22 ||685.32 ||570.73 |
|Finance Cost ||1448.47 ||1351.34 ||1448.47 ||1351.34 |
|Profit/(Loss) before Tax ||(2945.45) ||(2755.75) ||(2940.25) ||(2750.54) |
|Exceptional Items ||- ||- ||- ||- |
|Share of profit/(loss)in investments accounted for using equity methods ||- ||- ||0.69 ||(2.42) |
|Tax Provision for the Year ||(4.38) ||(492.26) ||(3.51) ||(491.15) |
|Profit/ (Loss) for the Year from Continuing Operations ||(2941.07) ||(2263.49) ||(2936.05) ||(2261.81) |
|Profit/ (Loss) for the Year from Discontinuing Operations ||- ||315.95 ||- ||315.95 |
|Profit/ (Loss) for the Year ||(2941.07) ||(1947.54) ||(2936.05) ||(1945.86) |
|Other Comprehensive Income ||(29.49) ||(5.82) ||(32.83) ||1.79 |
|Total Comprehensive Income for the Year ||(2970.56) ||(1953.36) ||(2968.88) ||(1944.07) |
|Appropriation || || || || |
|Interim/ Proposed Final Dividend ||- ||- ||- ||- |
|Dividend Tax ||- ||- ||- ||- |
|Transfer to/(from): || || || || |
|a) Contingency Reserve ||- ||- ||- ||- |
|b) Debenture Redemption Reserve ||- ||- ||- ||- |
|SOURCES AND USES OF FUNDS || || || || |
|Authorised Capital ||800.00 ||800.00 ||800.00 ||800.00 |
|Issued Subscribed & paid up capital ||630.00 ||630.00 ||630.00 ||630.00 |
|Other Equity ||(3996.70) ||(1026.13) ||(4003.85) ||(1034.97) |
|Non-Current and Current Borrowings ||15196.55 ||13436.78 ||15196.55 ||13436.78 |
|Deferred Tax Liability (Net) ||- ||- ||4.60 ||3.91 |
|REPRESENTED BY || || || || |
|Property Plant and Equipment (Net Block) ||4808.32 ||5321.00 ||4928.12 ||5456.90 |
|Capital Work in progress ||291.34 ||136.87 ||291.34 ||136.87 |
|Investment Property ||46.52 ||39.59 ||53.68 ||39.59 |
|Intangible Asset (Net Block) ||3776.69 ||4117.00 ||3777.69 ||4118.27 |
|Investment ||141.98 ||141.98 ||3.81 ||3.12 |
|Other Assets ||8598.11 ||8887.63 ||8638.63 ||8917.58 |
|Other Liabilities ||5833.11 ||5603.42 ||5865.97 ||5636.61 |
The Company has prepared these consolidated and standalone financial results inaccordance with the Companies (Indian Accountant Standards) Rules 2015 (Ind AS)prescribed under section 133 of the Companies Act 2013. The Company has adopted theIndian Accounting Standards (Ind AS) from 01.04.2016. The comparative financialinformation of the Company for the year ended 31.03.2016 which have earlier been preparedas per IGAAP have also been restated to comply with Ind AS.
INFORMATION REGARDING ISSUE OF BONDS BY MTNL DURING FINANCIAL YEAR 2016-17.
The Company has not issued any debenture/ bonds during Financial Year 2016-17.
Since there has been no operating profit during the FY 2016-17 the Board of Directorsof your company expresses its inability to recommend any dividend for the year underreport.
SUBSIDIARY AND JOINT VENTURE COMPANIES
As on 31st March 2017 your company has two subsidiaries and one Joint Venture and oneAssociate company. There has been no material change in the nature of the business of theSubsidiaries. Pursuant to the provisions of Section 129 (3) of the Act a statementcontaining salient features of the Financial Statements of the Company's Subsidiaries inForm AOC-1 is attached to the Financial Statements of the Company and published in thisreport. Further pursuant to the provisions of Section 136 of the Act the FinancialStatements of the Company Consolidated Financial Statements along with relevant documentsand separate Audited Accounts in respect of Subsidiaries have been published with thisreport and the same are also available on the website of the Company. The other details ofSubsidiaries and Joint Venture Companies are briefly given as under:-
(i) Mahanagar Telephone (Mauritius) Ltd. (MTML)
MTML is a 100% subsidiary of MTNL. The company is having license for mobile servicesinternational long distance services and internet services. The customer base of MTML ason 31st Mar'17 has grown to 289161 resulting in a market share of around 20%. MTML isoffering 2G/3G services in all over the island and 4G services at selected areas. 4Gexpansion is being done by which 80% of the island will be covered over 4G network and itis expected to be completed soon.
Though there is a slight decrease in revenue of the company mainly due to fiercecompetition followed by rate reduction the company could improve its brand image withbest quality of service. Despite reduction in gross revenue the profit after tax of thecompany has increased from 3.83% to 4.03% of gross revenue. The Company has recommendedthe payment of dividend Rs. 1.35 Crore for the financial year 2016-17 out of its netprofit for the year.
MTML has earned a gross revenue of approx INR 971 million during the financial year asagainst INR 1022 Million in the corresponding period of last fiscal year therebyregistering a fall of around 4.99%. The fall in the revenue is attributable to change incustomer usage pattern with majority of customers using data for ILD calls as well aslocal calls and using chat applications instead of SMS etc. intense competition andsaturated market. However the company could increase its net profit with precisemanagement of available resources.
In the year 2015-16 the company had upgraded its entire network for high speed dataservices (HSPA+) and introduced LTE (4G) in some select areas. In 2016-17 MTML not onlymaintained its market share but added to customer base by introducing very attractivevoice and data plans for existing as well as prospective customers. MTML made inroads in
Enterprise Business solutions as well and could get a few dozen Enterprise customers inthe year.
MTML is well established in Mauritius due to its innovative tariff structure and on themerit of its state of art technical offerings. The Company is always exploring newbusiness possibilities and is looking to consolidate its position in the market on thebasis of a strong 4G network.
All the expenses of the company are paid from its own internal resources. The CAPEX forprocurement of equipments is totally met from its own internal resources. MTML isoperating from its own building constructed from internal resources situated at 63Cyber City Ebene Mauritius which is considered to be heart of IT hub in Mauritius. Thereis no debt liability on the company.
The company is managed by CEO CTO CFO and 9 more officers all on deputation fromMTNL. Other operations are managed through outsourcing.
(ii) Millennium Telecom Ltd. (MTL)
Millennium Telecom Ltd (MTL) is a wholly owned subsidiary of MTNL. Services beingoffered by MTL include Telecom consultancy & engineering Project Management Wi-Fisolution project on e-governance Managed services Turnkey ICT solution capacitybuilding and skill development etc.
Millennium Telecom Ltd (MTL) is also moving ahead with a very high growth rate. In2014-15 thecompanyturnedintoprofitby System Integration other ICT related works at PanIndia level. MTL is in the process of winning over more orders in the upcoming years.
A large number of Govt. Institutions have awarded works on nomination basis which havebeen successfully executed by MTL showcasing its understanding and capabilities. Customerlist include National Highway Authority of India (NHAI) Air India J & K GovernmentCentral University-(Mahendragarh) Haryana etc. MTL is also expanding its portfolio ofservice for providing generalized as well customized solutions to suit government and semigovernment institutions. MTL had invited EOI from interested parties for empanelment asBusiness Development Associates to assist MTL for implementation of innovative projects.15 BDAs' have been empanelled till now.
Recently MTL has been awarded the work for GIS survey of Meerut and Ghaziabad worth Rs.18.9 crore. MTL is also pursuing various new projects which are at different stages orconsideration by Government Agencies.
(iii) MTNL STPI IT Services Ltd. (MSITS)
MTNL STPI IT SERVICES LTD (MSITSL) is a 50:50 Joint Venture company of MahanagarTelephone Nigam Limited (MTNL) and Software Technology Parks of India (STPI).
In order to implement one of its objectives MSITSL has established the physicalinfrastructure of Tier III Data Center at Chennai on space taken on lease basis from STPI.The Data Center has server farm area of around 3500 sq. ft. and the total investment madein this regard is of `477 lakhs. This Tier III Data Center is maintaining 99.98% uptime on24X7 basis. The commercial operation of the Data Center commenced in 2009. The Ministry ofExternal Affairs (MEA) has hosted the Passport Seva Project at MSITSL Data Center throughM/s TCS. The Directorate General of Employment & Training (DGE&T) in Ministry ofLabour & Employment has hosted National Career Project through STPI at MSITSL DataCentre. Many IT/TES companies have also co-located servers and networking equipments inthe MSITSL Data Centre. MSITSL has earned the revenue for the period of 2009-10: `196lakhs for the year 2010-11: `296 lakhs for the year 2011-12: `303 lakhs for the year2012-13: `367 lakhs for the year 2013-14: `404 Lakhs and for the year 2014-15: `445Lakhs. For the year 2015-16 : `562 Lakhs. For the year 2016-17: 540 Lakhs.
(iv) United Telecommunications Ltd. (UTL)
UTL is an associate of MTNL which consists of TCL TCIL NVPL (Nepal) & MTNL andwas set up in October 2001.
The company provides Mobile/ILD/data services in Nepal. Company is making losses andhas a total customer base of approx. 596008 as on 31st December 2016.
UTL obtained Unified License from Nepal Telecommunications Authority (NTA) regulatorybody of telecommunication market in Nepal on September 5 2016. This is a pan-Nepallicense to operate any service GSM CDMA ISP NSP inside the territory of Nepal. Underimplementation of the Unified License UTL is planning to roll-out GSM network all overNepal in different phases in addition to its existing network of almost 200 BTSs covering44 out of 75 districts of Nepal. UTL has been negotiating with vendors and shall befinalizing and entering into agreements with respective vendors of supply and service ofGSM systems infrastructures Billing IN/VAS systems. UTL will be planning for effectiveroll-out of services in order to compete in the market at the earliest with an aim topenetrate the market from Day 1.
DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2016-17 (AS ON 31st MARCH 2017)
Your Company has the following equipped and used capacity of Landline GSM Broadbandetc. as on 31st March 2017:-
DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2016-17
|S. No ||Parameters ||Delhi ||Mumbai ||Total |
|1 ||Number of Switches ||342 ||260 ||602 |
|2 ||Details of Capacity ||- ||- ||- |
|2a ||Fixed Phones ||2416505 ||2586392 ||5002897 |
|2b ||GSM ||2800000 ||2800000 ||5600000 |
|2c ||Broadband Capacity (in Ports) ||788736 ||845908 ||1634644 |
|3 ||DELs (including Fixed-Line GSM and Broadband) ||4506496 ||3692690 ||8199186 |
|3a ||Fixed Line ||1601487 ||1860887 ||3462374 |
|3b ||GSM ||2327203 ||1300117 ||3627320 |
|3c ||Broadband Subscribers ||577806 ||531686 ||1109492 |
|4 ||FTTH Subscribers ||4572 ||4677 ||9249 |
|5 ||ISDN ||7870 ||12675 ||20545 |
|6 ||DLC (No.) ||425 ||523 ||948 |
|7 ||Tax Capacity ||150000 ||115200 ||265200 |
|8 ||Tandem Capacity ||402500 ||363240 ||765740 |
|9 ||Optical Fibre Cable ||- ||- ||- |
|9a ||OFC in Route Kms ||9014.903 ||8177.62 ||17192.523 |
|9b ||OFC in Fibre Kms ||282395.344 ||261771.550 ||544166.894 |
|10 ||Leased Circuits ||12598 ||18574 ||31172 |
HUMAN RESOURCE DEVELOPMENT
Your Company attaches the highest priority to the quality of intellectual capital atits disposal and believes that knowledge and skills of its employees are the key toachievements of its corporate mission. It has sound recruitment policy and comprehensivetraining system. During the past one year your company has laid greater emphasis on HumanResources Development. We have been devoting substantial resources on building a skilledworkforce that has a capability to counter threats posed by ever changing customer base.The Company has been conducting various training and development activities which apartfrom reorienting the employees towards the greater organizational purpose are alsofocusing on eliminating any skill gap and technical obsolescence. The management's view ontraining is one of development of employee's overall personality and enabling them inbecoming a vital productive resource
At present MTNL has two of its in house state of the art training centers one locatedin New Delhi and other at Mumbai. The details of the achievement of training centers atDelhi and Mumbai respectively are given below:
(I) THE INSTITUTE OF TELECOM TECHNOLOGY & MANAGEMENT (ITTM) NEW DELHI
The Institute of Telecom Technology & Management ITTM Shadipur New Delhi is astate of the art training centre of MTNL Delhi engaged in imparting induction trainingand short duration training to its officers and employees in the field of Telecom ITComputer system and Management. With impressive growth of Telecom sector in India therequirement of telecom trained personnel is growing day by day. Realizing this evergrowing demand for telecom personnel ITTM started training engineering students also aspart of their summer training. During the year 2016-17 ITTM has successfully trained 968Executives with an achievement of 3889 Man days and 667 Non Executives with an achievementof 10774 Man days.
Industrial Training / Industrial visits for engineering and short term trainings foroutside candidates on skill development were also successfully provided to 772 traineesof various engineering institutions and other students from various Government schoolsunder NSQF (National Skills Qualification Framework) with an achievement of11795
Revenue earned at ITTM for the financial year 2016-17
Industrial Training/ Industrial Visits to Engineering Students = Rs. 4381590/-
Corporate Training to TCIL employees/ Short term courses on skill development = Rs.304953/-Total Revenue Earned by ITTM by training outsiders = Rs. 4686543/-
Special training on "digital mode of payments" to promote the cashlesstransactions was organised at ITTM on 23/12/2016. It was inagurated by Hon'ble CMD Delhiand ED(Delhi) GM(Fin) GM(Trg) & other officers of MTNL were also present.
ITTM has the necessary infrastructure technical and academic competence and excellencefor providing training in specialized courses in the field of GSM Broadband TechnologySwitching Transmission External Plant IT Computer System Management and variouswellness programs.
(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGEMENT (CETTM) MUMBAI
The Centre for Excellence in Telecom Technology & Management (CETTM) is ISO9001-2008 certified Institute. Launched in 2004 this institution is imparting training inTelecom Technology and Management Studies to candidates across the globe. It has ERP basedfully networked training center & Hostel for environmental friendly paperless workingand is strategically located at Hiranandani Gardens Powai Mumbai India. CETTM has beeninstrumental in enhancing the skills & knowledge of MTNL employees which hastranslated into increased productivity and efficiency. During F.Y. 2016-17 4892 personnelwere trained including 1984 in-house personnel and 2908 external personnel and haveregistered an achievement of 25179 Trainee Days. A total of 274 Programs were conductedwhich included training programs on Broadband FTTH Mobile services soft-skilldevelopment and mandatory courses for Financial up-gradation.
Under ITEC-SCAAP program sponsored by MEA Govt. of India CETTM has successfullycompleted 09 courses in Telecom IT & Management streams. A total of 315 foreigndelegates from over 60 countries were trained. As CSR activity 17 vacation courses forengineering college students were conducted during MAY & DEC 2016 in which 234students were trained during summer and winter vacations.
2053 Engineering Students in F.Y.2016-17 were trained in various courses. 23 CabinetSecretariat officers trained in various courses. CETTM has done MOU with Syncroute forproviding Wireless 4G training and trained 41 students.
(III) SKILL DEVELOPMENT
With a vision of a Skilled India Ministry of Skill Development & Entrepreneurship(MSDE) aims to skill India on a large scale with speed and high standards. Pradhan MantriKaushal Vikas Yojana (PMKVY) is the flagshipscheme that is driving towards greaterrealisation of this vision. MTNL have two training centre one at Mumbai (CETTM) andanother at Delhi (ITTM). Both of the training centers are engaged to meet the requirementof skill development and giving summer trainings to students of BE/ B.Tech. Short Term(One Day/ Two days) training programs for outsiders including students housewives &others are also being conducted. To achieve the aim of skill development programme MTNLhas signed MoU with Telecom Sector Skill Council & Global Institute of SkillDevelopment. MTNL has also signed MoU with Gramin Vikas Trust (GVT) to run a training cumskilling center for promotion of entrepreneurship for the period of Five years. Underskill development programme MTNL has trained 3591 trainees in year 2016-17. MTNL is alsoin process of conducting Recognition of Prior Learning certification for all eligible MTNLemployees.
Industrial peace and Industrial harmony is based on healthy Employee Relations and likethe previous year Employees Relations remained Cordial throughout the year. TheGrievances/Issues raised by the employees/Union/Associations were given due attention andregard. The cases/issues brought up by them were settled through regular meetings andinteractions between Management and Unions/Associations and action as mutually agreed wastaken to settle them.
Further MTNL was paying Pension to the absorbed employees for the service rendered inGovt. For the past few years MTNL was pursuing with Govt for settlement of the pensionissue. The Pension issue is considered by the Govt and it has been decided that Payment ofpensionary benefits to all categories of the erstwhile employees of the Govt (Gr ABC& D) absorbed in MTNL who have opted for pension on combined service is being made byGovt in the same manner as in BSNL w.e.f 01/10/2000.
Employees Welfare Schemes like subsidized Canteen Housing Medical facilities GroupInsurance dormitories for females working in night shift etc. continued and maintained bythe Company for its employees. Sports and Cultural activities were also given priorityduring the year.
Changeover of Contributory Group Health Insurance Scheme for retirees to CGHS- Afterpursuance of MTNL with DoT Ministry of Health issued instructions to CGHS for enrolmentof MTNL retirees (drawing Govt. Pension) in the CGHS. To facilitate the same an incentiveis being provided to the retirees concerned. As on date approximately 2500 retirees inMTNL have benefitted from this scheme.
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
The Company continued its efforts to comply with statutory requirements in promotingthe use of Hindi and has been able to achieve most of the annual targets set by theGovernment for implementation and promotion of Hindi as Official Language in the Company.
IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY
Your Company has endeavored to fulfill all the statutory requirements with regard toimplementation of reservation policy for candidates to SC/ ST/ OBC communities as well asPhysically Challenged candidates.
IMPLEMENTATION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITITION& REDRESSAL) ACT 2013
The Company has constituted an internal Complaint Committee on Prevention Prohibition& Redressal of Sexual Harassment of Women at workplace and matters connected therewithor incidental thereto covering all aspects as contained in the Sexual Harassment of Womenat workplace (Prevention Prohibition & Redressal) Act 2013. No complaint has beenreported during the year under report.
WORKING CONDITIONS OF WOMEN EMPLOYEES
We are continuously striving towards gender sensitization amongst our employees.Special care has been taken in case of woman employees in night shifts. Also to redressthe issues of Sexual Harassment at workplace special cells have been constituted.
As on 31st March 2017 your company had a working strength of employees as per detailsgiven below:-
|Group ||Total Working ||SC ||ST |
|A ||899 ||145 ||57 |
|B ||3026 ||434 ||73 |
|C ||16366 ||2636 ||284 |
|D ||7614 ||1915 ||552 |
|Total ||27905 ||5130 ||966 |
|TSM ||14 ||- ||- |
|Grand Total ||27919 ||5130 ||966 |
In order to induct new blood into its working strength the Board of Directors of yourCompany has approved to induct 100 officers at E-2 level in the stream of TelecomElectrical Civil Finance HR Sales & Marketing.
The candidates for the post of JTO (Telecom/ Electrical & Civil) are selected underGATE-2015 score. 57' candidates were issued offer of appointment out of which19' candidates including one PwD candidate joined induction training at CETTMMumbai. They are further posted in field training as per the MTNL rules.
The recruitment of non-technical posts viz. AM (Finance/ Mktg./ Legal/ HR) is underprocess.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has been suffering losses for the last few years and hence no CSR funds hasbeen allocated/spent for CSR activities during the Financial Year. The provision ofSection 135 of the Companies Act 2013 are not applicable. However MTNL is undertaking nonfunding CSR activities like sending SMS to the public for spreading awareness on SwachhBharat Pulse Polio other moves of the Government etc. For other details regarding theCSR Committee please refer to the Corporate Governance Report which forms part of thisReport. The Policy is available on the website of the company www.mtnl.net.in.
The Vigilance department of MTNL is headed by Chief Vigilance Officer. Presently ShriDeepak Kashyap CVO BSNL is looking after the charge of CVO MTNL. The CVO is responsiblefor complete vigilance administration in MTNL. During the year 2016-17 emphasis was laidon preventive vigilance and to enhance the awareness of transparency and accountability inworking by carrying out various field inspections. System improvement advice were issuedby Vigilance Unit for reconciliation of Sanchaar Haats products storeverificationoptimum electrical load in various buildings proper maintenance of broadbandfaults BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.
Further training programmes/seminars on vigilance/complaints handling and disciplinaryproceedings have been conducted during the period for the employees to make theparticipants understand the conduct rules of MTNL procedure for handling departmentalproceedings and improve their working efficiency. As per CVC instructions the VigilanceAwareness Week was observed from 31.10.2016 to 05.11.2016. During this week variousactivities like integrity pledge taking release of two booklets on (i) Publicparticipation in promoting integrity and eradicating corruption" and (ii) book onvigilance and discipline with a focus on the subject Public participation in promotingintegrity & eradicating corruption and containing the chapters on main function ofvigilance MTNL Conduct Disciplinary and Appeal Rules-1998 (Executive) Certified Standingorders for MTNL C & D Employees (Non Executives) Do's and Don'ts were distributed.Also quotations were displayed and lectures seminar and workshop organized. Further MTNLhas started a newsletter titled CHETAN' which was released by CMDMTNL duringvigilance awareness week. This newsletter has detailed information regarding departmentalinquiries and various vigilance activities carried by vigilance unit during year 2015-16.
Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai withconcerned GM (Vigilance) team to review the status of the cases and expedite the same.Meeting with ED & CGM ( Delhi / Mumbai / Wireless Services) were also held to apprisethem of the observations made during field inspections and different types of operationalcomplaints received by Vigilance Unit. During these meetings CVO emphasized for furtherimprovement in customer services offered by MTNL by taking prompt action on customer'scomplaint and having customer-centric approach at all levels to enhance the credibilityand brand image of the company in the minds of the customers.
INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA
MTNL has signed a Memorandum of Understanding (MOU) with Transparency InternationalIndia (TII) for implementing an Integrity Pact Programme (IPP) focused on enhancingtransparency in its business transactions contracts and procurement process. Under thisMOU MTNL is committed to implementing the Integrity Pact in all its major procurement andwork contract activities. Three Independent External Monitors being persons of eminencenominated by MTNL in consultation with Central Vigilance Commission (CVC) monitor theactivities. The Integrity Pact has strengthened the established system and procedures bycreating trust in various Stakeholders.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT
No material changes and commitment affecting the financial position of the companyoccurred between the end of the financial year to which this financial statements relateand the report . dateof the
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS & OUTGO
The provision of Section 134(m) of the Companies Act 2013 do not apply to the Companyas your Company is a service provider. The total foreign inflow was`3.83 Crore and outflowwas` 3.10 Crore.
ENTERPRISE RISK MANAGEMENT
The Board of Directors of the Company has formed a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The Committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. TheAudit Committee also has additional oversight in the area of financial risks and controls.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. The development and implementation ofRisk Management Policy has been covered in the Management Discussion and Analysis whichforms part of this Report.
MEETINGS OF THE BOARD OF DIRECTORS
During the year under report the Board of Directors of your Company met Ten times i.e.during the Financial Year 2016-17 10 (Ten) Board Meetings were held. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013.Details of Board Meetings are given in Corporate Governance Report which forms part ofthis Report. At these meetings the Board held intensive discussions on the budgetimportant financial transactions and various steps to face the impending competition fromprivate operators both in Basic Telephone Service Cellular Mobile Telephony and othervalue added services.
DECLARATION BY INDEPENDENT DIRECTOR
The Company has received necessary declaration from the Independent Directors i.e. fromShri Rakesh Nangia and Shri Ashok Mittal under Section 149(7) of the Companies Act 2013that they meets the criteria of Independence laid down in the Section 149(6) of theCompanies Act 2013 and Regulation 25 of SEBI (LODR) 2015.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the period under review the Company has not entered with any MaterialTransaction with any of its related parties. The Company's major Related PartyTransactions are generally with its subsidiaries and associates. All Related PartiesTransactions were in ordinary course of Business and were negotiated on an Arm's Lengthbasis and they were intended to further the company's interest. Accordingly thedisclosure of Related Party Transactions as required under Section 134(3)(h) of CompaniesAct 2013 in Form AOC-2 is not applicable. Web link for Policy on Materiality of RelatedParty Transactions and also on dealing with Related Party Transactions has been providedin the Report on Corporate Governance which forms part of Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013
During the year your Company has given a Corporate guarantee for `3160000 valid till30th May 2020 in favour of Central University Haryana Mahendragarh on behalf ofMillennium Telecom Ltd (MTL) a wholly owned subsidiary of MTNL for execution of a projectby MTL.
During the Year there was no loan given or investments made by the MTNL under Section186 of the Companies Act 2013.
Your Company follows the principles of effective Corporate Governance Practices. TheCompany has taken steps to comply with the requirements of SEBI (LODR) Regulation 2015which came into effect from 01.12.2015. Your Company has also complied with the CorporateGovernance Guidelines enunciated by Department of Public Enterprises (DPE) Government ofIndia for Central Public Sector Enterprises(CPSEs).MTNLisfilingits reports statementsdocuments in this regard with the NSE BSE & OTCIQ on quarterly basis. A Report onCorporate Governance has been appended under the separate section titled CorporateGovernance Report.
COMPLIANCE OF CORPORATE GOVERNANCE - CERTIFICATE FROM THE PRACTISING COMPANY SECRETARYREGARDING
Acertificate Secretary regarding compliance of conditions of Corporate Governance asstipulated under Schedule V (E) of SEBI (LODR) 2015 and DPE Guidelines is attached as anAnnexure.
COMPLIANCE OF DPE GUIDELINES & POLICIES
The Guidelines & Policies issued by the Department of Public Enterprises (DPE) fromtime to time are being complied with and implemented.
IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREENINITIATIVES IN CORPORATE GOVERNANCE"
The Ministry of Corporate Affairs vide its Circular no. 17/2011 dated 21st April 2011followed by Circular no.18/2011 dated 29th April 2011 has taken "Green Initiative inthe Corporate Governance" by allowing paperless compliances by the Companies throughelectronic mode and introduced e-mail address as one of the modes of sending communicationto the members. Also as per provision of Section 101 of the Companies Act 2013 and rulesmade there under notice of meeting may be sent by electronic mode.
In accordance with the above circulars and to ensure compliance of Green Initiativeyour Company has sent various documents including Notice of the 31st AGM AuditedFinancial Statements Directors' Report Auditors' Report for the F.Y. 2016-17 etc. to itsshareholders in electronic form at the e-mail addresses provided / registered by membersand made available to us by the Depositories (NSDL/CDSL). The members are advised toupdate by registering changes if any in their e-mail address with the concernedDepository Participant.
Your Company shall also display full text of Notice of 31st AGM & Annual Report2016-17 at its website www.mtnl.net. in and physical copies of such documents will be madeavailable at the registered office of the Company for inspection by the members duringoffice hours on all working days.
Your Company looks forward towards active participation of Shareholders in this"Green Initiative".
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Directorsto the best of their knowledge that: andbeliefconfirm
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments 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 and ofthe profit or loss of the company for that period;
(c) 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;
(d) the directors had prepared the annual accounts on a going concern basis and
(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingefficiently.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company had maintained financial controls over financial reporting and such allrespects adequate internal internal effectively during the control over financial year2016-17 based on the internal control over financial reporting criteria established bythe Company considering the essential components on internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India. The Company has appointed M/s HDSG &Associates Internal Financial Control Consultants for reviewing evaluating andidentifying the existing MRCM and suggest establishment of effective Control System inMTNL for the FY 2016-17.
Your Company has not invited/ accepted any fixed deposits and as such no amount ofprincipal or interest was outstanding as on the Balance Sheet date on this account.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
The provisions of Section 197(12) of Companies Act 2013 read with Rule 5 of Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014 are not applicable toyour Company as being a Govt. Company.
SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR 2016-17
M/s Hemant Singh & Associates Company Secretaries have conducted the SecretarialAudit of your company for the Financial Year 2016-17 under Section 204 of the CompaniesAct 2013. The said Secretarial Audit Report and the replies to the observations of theSecretarial Auditors are given in as annexure.
EXTRACT OF ANNUAL RETURN FOR THE YEAR 2016-17 PURSUANT TO SECTION 92(3) OF COMPANIESACT 2013 (MGT-9)
Extract of Annual Return (in Form-MGT-9) of the Company is annexed.
AUDITORS QUALIFICATIONS AND MANAGEMENT REPLY THERETO
The replies to the observation of the Statutory Auditors for the Financial Year 2016-17are given as annexure. The Comments of the Comptroller and Auditor General of India on theFinancial Statements and the replies of the Management thereon are given in the annexureto the Directors' Report.
DIRECTORS & KEY MANAGERIAL PERSONNEL
The Board of Directors of your company has seven (7) members three FunctionalDirectors (including CMD) two Government Nominee Directors and two independent directors.List of present Directors of MTNL as on 10.08.2017 is given in the Corporate GovernanceReport.
During the period under report the following changes took place in theDirectorship/Key Managerial Personnel of Your Company:-
1. Shri N. K. Yadav ceased to be CMD w.e.f. 08.06.2016.
2. Shri P. K. Purwar was given additional charge of CMD w.e.f. 08.06.2016. Appointed asRegular CMD on 03.03.2017 and entrusted with additional charge of Director (Fin) on03.03.2017.
3. Shri Sanjeev Kumar has been appointed as Director (Tech) w.e.f. 02.07.2016.
4. Smt. Simmi R. Nakra ceased to be Director w.e.f. 12.04.2016.
5. Ms. Tiakala Lynda Yaden has been appointed as Government Nominee Director in placeof Smt. Simmi R. Nakra w.e.f 19.05.2016.
Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofyour Company are:-
i) Shri P.K. Purwar CMD & Dir (Fin)
ii) Shri Sunil Kumar Dir (HR&EB)
iii) Shri Sanjeev Kumar Dir (Tech)
iv) Shri S.R. Sayal Company Secretary
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this Report.
(1) M/s. Kumar Vijay Gupta & Co. Chartered Accountants and M/s Mehra Goel &Co Chartered Accountants have been appointed as Joint Statutory Auditors of your Companyby the Comptroller and Auditor General of India for the Financial Year 2016-17 and theBoard has already ratified their appointment.
(2) M/s R. M. Bansal & Co. Cost Accountants have been appointed as Cost Auditorsof your company for carrying out audit under Section 148 of the Companies Act 2013 forthe cost records maintained under Section 209(1) (d) of Companies Act1956 and as notifiedunder: (i) Cost Accounting & (ii) Cost Audit Rules2001. The Cost Audit Reportalongwith the annexures for the Financial Year 2015-16 have been submitted to the CentralGovernment in the Form I-XBRL format on MCA portal on 28/09/2016.
(3) M/s Hemant Singh & Associates Company Secretaries have been appointed asSecretarial Auditors of your company for carrying out Secretarial Audit under Section 204of the Companies Act 2013 for the Financial Year 2016-17.
Your Directors take this opportunity to gratefully acknowledge the help guidance andsupport received from Deptt. of
Telecom (DoT) and various Ministries of the Government of India. Your Directors areespecially grateful to its Bankers all stakeholders and investors including ADR holdersfor their continued patronage and confidence reposed in the company.
The Directors would like to express their thanks for the sincere hard work anddedicated services rendered by every employee of the company. The Board is confident thatwith the employees' continued enthusiasm initiative and dedicated efforts your companycould face the new challenges and opportunities arising out of the resultant competitionfrom private operators in the Cellular Mobile Basic Telephone Internet services andother Value Added services.
For and on behalf of the Board of Directors
(Shri P.K. PURWAR)
CMD & DIRECTOR (FIN)
PLACE: NEW DELHI