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Quadrant Televentures Ltd.

BSE: 511116 Sector: Telecom
NSE: N.A. ISIN Code: INE527B01020
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VOLUME 12975
52-Week high 4.25
52-Week low 2.01
P/E
Mkt Cap.(Rs cr) 149
Buy Price 0.00
Buy Qty 0.00
Sell Price 2.43
Sell Qty 853.00
OPEN 2.30
CLOSE 2.36
VOLUME 12975
52-Week high 4.25
52-Week low 2.01
P/E
Mkt Cap.(Rs cr) 149
Buy Price 0.00
Buy Qty 0.00
Sell Price 2.43
Sell Qty 853.00

Quadrant Televentures Ltd. (QUADRANTTELE) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present the 69th (Sixty Ninth) Annual Report togetherwith the Audited Accounts and Auditors Report for the Financial Year ended on 31st March2016.

SUMMARY OF FINANCIAL RESULTS

The Company's financial results for the year ended 31st March 2016 is summarizedbelow: -

(Rs. In millions)

Particulars For the year ended March 31 2016 For the year ended March 31 2015
I. Revenue from operations 5583.72 5207.94
II. Other Income 44.58 36.24
III. Total Income(I+II) 5628.31 5244.18
IV. Expenses
Networks operation Expenditure 3791.32 4442.02
Employee Benefits Expenses 741.61 803.85
Sales & Marketing Expenditure 283.58 368.44
Finance Cost 272.98 268.40
Depreciation and Amortization Expenses 1334.00 1389.96
Other Expenses 552.91 370.44
Total Expenses 6976.40 7643.12
V. Profit/(Loss) before exceptional and extraordinary items and tax (III-IV) (1348.10) (2398.93)
VI. Exceptional Item - -
VII. Profit /(Loss) before extraordinary items and tax (V-VI) (1348.10) (2398.93)
VIII. Extraordinary items - -
IX. Proffi/(Loss) before tax (VII-VIII) (1348.10) (2398.93)
X. Tax expenses:-
(1) Current Tax - -
(2) Deferred Tax - -
XI. Proffi/(Loss) for the period from continuing operations (IX-X) (1348.10) (2398.93)
XII. Profit/(Loss) from discontinuing operations - -
XIII. Tax expenses of discontinuing operations - -
XIV. Profit/(Loss) from Discontinuing operations (after tax)(XII-XIII) - -
XV. Profit /(Loss) for the period(XI-XIV) (1348.10) (2398.93)

FINANCIAL PERFORMANCE REVIEW

The Company registered a growth in revenue by 7.21% from Rs. Rs.5207.94 million in2014-15 to Rs.5583.72 million in 2015-16. Consequently the operating losses decreasedfrom Rs.2398.93 million during 2014-15 to Rs. 1348.10 million during the year ended31.03.2016.

However the total expenses during 2015-16 decreased to Rs. 6976.41 Million as againstRs. 7643.12 million in the previous year.

In consolidated terms the Company recorded a consolidated revenue of Rs.5623.94Million during 2015-16 against the consolidated revenue of Rs. 5252.94 Million during2014-15.The Company incurred a loss of Rs.1314.93 Million in 2015-16 against loss ofRs.2406.62 Million in 2014-15.

BUSINESS OPERATIONS

Your Company holds Unified Access Services License (UAS License) for providingTelephony Services in the Punjab Telecom Service Area comprising of the State of PunjabUnion Territory of Chandigarh and Panchkula Town of Haryana.

Earlier the Company was holding ISP Licence - Category-B (Punjab Circle) which wasvalid till June 2015 and the Company had applied for its renewal/issuance of new ISPLicence Category-A. Considering the Company's request the DoT has granted ISP LicenceCategory-A (PAN India) to the Company on January 6 2015.

The Portfolio of services provided by the Company includes Data and InternetConnectivity across wireline technology Fixed Line and Mobile voice services ManagedServices.

The Company provides broadband services through its fiber optic cable laid acrossPunjab and the Company has also entered into co-location agreements with other operatorsin order to expand its network.

As at 31.03.2016 the company had a total subscriber base of 3861039 telephonycustomers including 3400961 GSM mobile customers 264963 fixed-line customers 195115Broadband Customers.

During the year under review there is no change in the nature of business of theCompany.

MARKETING INITIATIVES

During the year various marketing initiatives were taken in order to enhance the brandvisibility through various programs such as Young Manch Contest Connect Super JodiContest etc in order to connect to and reach out to a larger segment of the populaceespecially the younger segment of society.

CORPORATE DEBT RESTRUCTURING SCHEME (CDR SCHEME)

The Corporate Debt Restructuring Cell (CDR Cell) had vide its letterno.CDR(JCP)563/2009-10 dated August 13 2009 approved a Corporate Debt RestructuringPackage (CDR Package) for the company in order to write off the losses and also to enablethe company to service its debts. As of March 31 2016 the Company has duly complied withall the terms and conditions as stipulated in the CDR Package.

SHARE CAPITAL AND LISTING OF SHARES

The paid-up Equity share capital of the Company is Rs.612260268/- comprising of612260268 equity shares of Re.1/- each. The Company's shares are listed on BSE Limitedand are actively traded.

MATERIAL CHANGES

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year of the Company i.e. 31 March 2016 and thedate of Directors' Report i.e. 27th May 2016.

Further there were no significant and material orders passed by the regulators orcourts or tribunals impacting the going concern status and company's operations in future.

DIVIDEND

As on 31.03.2016 the Company had accumulated losses. Your Directors therefore havenot recommended any dividend for the financial year 2015-16.

TRANSFER TO RESERVES

During the year under review no amount has been transferred to reserves.

FIXED DEPOSITS

Your Company has not accepted / renewed any deposits within the meaning of Section 73of the Companies Act 2013 and as such no amount of principal or interest was outstandingas on the Balance Sheet date.

HUMAN RESOURCE DEVELOPMENT

Human Resource Development is considered to be vital in any organisation for theeffective implementation of its business plans. Constant endeavors' are being made by theCompany through various HR policies and processes aimed for professional growth andopportunities and recognitions of the employees in order to effectively motivate theemployees at all levels in the drive for growth and expansion of the business. Regularinnovative programs for learning and development are also drawn up constantly in order tocreate an encouraging and conducive work environment for empowering the employees at alllevels and maintaining a well structured reward and recognition mechanism. The Companyencourages its employees to strengthen their entrepreneurial skills in order to enhancethe Organization's productivity and creativity.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company being in the telecommunications sector is not involved in carrying on anymanufacturing activity; accordingly the information required under Section 134(3)(m) ofthe Act read with Rule 8(3) of the Companies (Accounts) Rules 2014 with respect toConservation of Energy Technology Absorption and Foreign Exchange earnings/outgo are notapplicable.

However the following information would give adequate idea of the continuous effortsmade by the Company in this regard:

(i) Energy Conservation:

(a) Electricity is used for the working of the Company's telephone exchanges and othernetwork infrastructure equipment. The Company regularly reviews power consumption patternsacross its network and implements requisite changes in the network or processes in orderto optimize power consumption and thereby achieve cost savings.

(b) Reduction in the running of the Diesel Generator (DG) Sets during power cuts invarious tower sites.

(ii) Technology Absorption: The Company has not imported any technology. The Companyhas not yet established separate Research & Development facilities.

FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the year there were no foreign exchange earnings; the total foreign exchangeoutgo was to the tune of Rs. 373.91 millions which was on account of Import of CapitalEquipment (other than telephone instruments) finance charges and travel expenses.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is appended as Annexure-5 to the Board's Report.

The Company does not have any employee whose particulars are required to be furnishedunder Section 197 of the Companies Act 2013 read with Rule 5(2) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.

The remuneration paid to all Key Managerial Personnel is in accordance withremuneration policy adopted by the company.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included inthe Management Discussion & Analysis which forms part of this report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has formulated and published a Whistle Blower Policy to provide VigilMechanism for employees including Directors of the Company to report genuine concerns. Theprovisions of this policy are in line with the provisions of Section 177(9) of the Act andRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (URL: http://www.connectzone. in/corporate_governance.php)

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 of the Act and Rule 12 of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in Form MGT-9 is provided inAnnexure-1 which forms part of this report.

RELATED PARTY TRANSACTIONS

In line with the requirements of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated a Policy on Related PartyTransactions and the same is posted on the Company's URL: http://www.connectzone.in/corporate_governance.php

Information on transaction with related parties pursuant to Section 134(3)(h) of theAct read with Rule 8(2) of the Companies (Accounts) Rules 2014 are given in Annexure-3 inForm AOC-2 and the same forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY

In terms of the provisions of Section 135 read with Schedule VII and the Rule madethereunder every Company having net-worth of Rs. 500 Crore or Turnover of Rs. 1000 Croreor Net Profit of Rs. 5 Crore is required to constitute Corporate Social ResponsibilityCommittee. The Company does not meet any of the above criteria. As such the Company is notrequired to constitute Corporate Social Responsibility Committee and comply with therequirements of Section 135 read with Schedule VII and the Rules made thereunder.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The particulars of loans guarantees and investments pursuant to Section 186 of theCompanies Act 2013 are provided in Notes no. 3 11 and 25 respectively to the financialstatements.

BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performanceBoard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc. The performance of thecommittees was evaluated by the board after seeking inputs from the committee members onthe basis of the criteria such as the composition of committees effectiveness ofcommittee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc.

In a separate meeting of independent Directors performance of nonindependentdirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent Directors at which the performance of the Board its committees andindividual directors was also discussed.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company proactively keeps its Directors informed of the activities of the Companyits management and operations and provides an overall industry perspective as well asissues being faced by the industry. The familiarization programme adopted by the Companyis posted on the website of the Company's URL:http://www.connectzone.in/corporate_governance.php

REMUNERATION POLICY FOR THE DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and under Regulation 19 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Nomination& Remuneration Committee (NRC) is responsible for formulating the criteria fordetermining qualification positive attributes and independence of a Director. The NRC isalso responsible for recommending to the Board a policy relating to the remuneration ofthe Directors Key Managerial Personnel and other employees.

In line with this requirement the Board has adopted the Policy relating to theremuneration of the Directors Key Managerial Personnel and other employees and the samehas been disclosed in the Corporate Governance Report which forms part of the Directors'Report. The same is also available on the Company's website URL:http://www.connectzone.in/corporate_governance.php

NUMBER OF MEETING OF THE BOARD

Seven Meetings of the Board were held during the year. For details of the meetings ofthe Board please refer to the Corporate Governance Report which forms part of thisreport.

THE DETAILS OF DIRECTORS WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

During the year under review Mr. Vinay Kumar Monga was appointed as IndependentDirectors pursuant to the provisions of Section 149 of the Companies Act 2013 at theprevious Annual General Meeting held on 28th September 2015 to hold office of Directorupto a term of five consecutive years w.e.f. October 17 2014. Further Ms. Mitu MehrotraGoel was appointed as Director liable to retire by rotation at the Annual General Meetingof the Company held on September 28 2015.

In terms of the provisions of Section 152 (6) of the Companies Act 2013 and the Rulesmade there under Ms. Mitu Mehrotra Goel Director retires by rotation and being eligiblehas offered herself for re-appointment. The Board recommends her re-appointment at theensuing Annual General Meeting.

A brief profile of Director seeking reappointment nature of expertise in specificfunctional area name of other companies in which she holds Directorship(s) andMembership(s)/Chairmanship(s) of the Committees of the Board of Directors and theparticulars of the shareholding as stipulated under Regulation 26 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the Notice.

IDBI Bank Limited has with effect from December 28 2015 nominated Ms. Lalita Sharma asits Nominee Director on the Board in place of Mr. Rajeev Kumar. The Board takes thisopportunity and place on record its sincere appreciation for the valuable guidance andsupport of Mr. Rajeev Kumar during his tenure as Director of the Company.

During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company.

THE DETAILS OF KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THEYEAR

a. Changes in Key Managerial Personnel during the period 1st April 2015 to 31st March2016

- Mr. Ashu Ratan Khare Chief Financial Officer of the Company had resigned and ceasedto be Chief Financial Officer of the Company w.e.f. 15th April 2015.

- Mr. Munish Bansal was appointed as Chief Financial Officer of the Company in place ofMr. Ashu Ratan Khare w.e.f. 30th April 2015.

- Mr. Amit Verma was appointed as Company Secretary of the Company in place of Mr.Kapil Bhalla w.e.f. 1st July 2015.

- Pursuant to the provisions of Section 196 197 and 203 read with Schedule V of theCompanies Act 2013 Mr. Amit Verma was also appointed as Manager of the Company in placeof Mr. Kapil Bhalla for a period of three years w.e.f. November 7 2015 to November 62018 on such terms and conditions and subject to the approval of Shareholders of theCompany at the ensuing Annual General Meeting of the Company.

No changes took place in Key Managerial Personnel for the period 1st April 2016 tillthe date of signing of Board Report.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed under section149 of the Companies Act 2013 and Regulation 25 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The Independent Directors have also confirmedthat they have complied with the Company's Code of Conduct.

AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Rulesframed thereunder the Company had on 30th September 2014 appointed M/s Khandelwal Jain& Co. Chartered Accountants (Firm Registration No.105049W) as Statutory Auditors ofthe Company for a period of 5 years from the conclusion of the Sixty Seventh (67th) AnnualGeneral Meeting of the Company upto the conclusion of Seventy Second (72nd) Annual GeneralMeeting of the Company.

As per the provisions of Rule 3(7) of the Companies (Audit and Auditors) Rules 2014such appointment made by the company shall be subject to ratification in every AnnualGeneral Meeting upto the end of the tenure of appointment of the auditors.

M/s. Khandelwal Jain & Co. Chartered Accountants Mumbai have confirmed theireligibility in terms of the provisions of Section 141 of the Companies Act 2013 and Rule4 of Companies (Audit and Auditors) Rules 2014.

The Board recommends the ratification of the appointment of M/s. Khandelwal Jain &Co. Chartered Accountants Mumbai from the conclusion of this meeting i.e. 69th AnnualGeneral Meeting until the conclusion of 72nd Annual General Meeting (subject toratification by the Members at every subsequent meeting) on such remuneration as shall befixed by the Board of Directors of the Company.

COST AUDITOR

The Central Government had directed vide its order no.52/26/CAB- 2010 dated 6thNovember 2012 to conduct a Cost Audit in respect of the specified products viz.Telecommunication Industry.

The Board of Directors of the Company has accorded its approval for the appointment ofM/s Sanjay Gupta & Associates Cost Accountants New Delhi as Cost Auditors for theFinancial Year 2016-17 as the Cost Auditor of the Company to conduct audit of the CostAccounting Records maintained by the Company for the financial year commencing on 1stApril 2016 and ending on 31st March 2017 subject to the approval of the CentralGovernment.

In accordance with the provisions of Section 148 of the Companies Act 2013 read withthe Companies (Audit & Auditors) Rules 2014 the remuneration payable to the CostAuditor has to be ratified by the members of the Company. Accordingly consent of theMembers is sought by way of an Ordinary Resolution for ratification of the remunerationamounting to Rs. 100000/- (Rupees One Lac Only) plus applicable service tax and out ofpocket expenses payable to the Cost Auditors for financial year commencing on 1st April2016.

In compliance with the provisions of the Companies (Cost Audit Report) Rules 2011 andGeneral Circular No. 15/2011 issued by Government of India Ministry of Corporate AffairsCost Audit Branch we hereby submit that the Company has filed the Cost Audit Report forthe financial year ended on 31st March 2015 within the prescribed timeline. As regardsto the financial year ended on 31st March 2016 the due date for filing the Cost AuditReport is 27th September 2016 and the Company shall file the same on or before due date.

In terms of Section 148 of the Companies Act 2013 read with Companies (Cost Recordsand Audit) Rules 2014 the Company has appointed M/s Sanjay Gupta & Associates CostAccountants New Delhi as Cost Auditors for the Financial Year 2016-17.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Dinesh Bhandari (CP No.:10300 FCS: 5887) Practicing Company Secretary toundertake the secretarial audit of the company. The Practicing Company Secretary hassubmitted the Report on the Secretarial Audit conducted by him which is annexed to thisBoard Report as Annexure-4.

The Report does not contain any qualification reservation or adverse remark.

INTERNAL AUDITORS

M/s Ernst and Young performs the duties of internal auditors of the Company and theirreport is reviewed by the Audit Committee from time to time.

CASH FLOW STATEMENT

As per the requirements of the Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Cash Flow Statement as prepared inaccordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by theInstitute of Chartered Accountants of India is given along with the Balance Sheet andStatement of Profit and Loss.

AUDIT COMMITTEE

In compliance with the provisions of Section 177 of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasconstituted an Audit Committee. The composition scope and powers of the Audit Committeetogether with details of meetings held during the year under review forms part of theCorporate Governance Report.

The recommendations of the Audit Committee are accepted by the Board.

RISK MANAGEMENT POLICY

The Company has a robust Risk Management policy to identify evaluate business risksand opportunities. This policy seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage. The policydefines the risk management approach across the organization at various levels includingdocumentation and reporting. The Company has identified various risks and also hasmitigation plans for each risk identified.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

As of March 31 2016 there was no Unclaimed Dividend due for transfer to the InvestorEducation and Protection Fund (IEPF) of the Central Government after the expiry of sevenyears.

HOLDING/SUBSIDIARY COMPANIES

As on 31st March 2016 Quadrant Enterprises Private Limited was holding company of theCompany (holding 53.36%). After Balance Sheet date there is change among the shareholdingof Promoter Group Entities whereby Quadrant Enterprises Private Limited transferred 3.76%of shares to Nippon Investment & Finance Company Private Limited other Promoter GroupEntity. Consequently Quadrant Enterprises Private Limited ceased to be holding company ofthe Company w.e.f. 13th April 2016.

As on March 31 2016 the Company has one wholly owned subsidiary namely QuadrantTelenet Services Private Limited which was incorporated as Subsidiary of the Company onMarch 30 2015 to undertake the business of Telecommunications Internet Services TelecomInfrastructures and other related telecom services.

As on May 30 2015 the Company had disinvested its stake in its wholly ownedsubsidiary namely Videocon Integrated Solutions Private Limited (Formerly Infotel TowerInfrastructure Private Limited). Accordingly M/s Videocon Integrated Solutions PrivateLimited ceased to be a subsidiary company of the Company w.e.f. May 30 2015consequently M/s Videocon Mobile & Infra Private Limited subsidiary of M/s VideoconIntegrated Solutions Private Limited also ceased to be a step down subsidiary company ofthe Company.

As on the date of signing of this Report the Company is having only one subsidiarynamely Quadrant Telenet Services Private Limited.

Pursuant to the provision of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the Company's subsidiary inForm AOC-1 is attached as Annexure-2 to the financial statement of the Company.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company Consolidated financial statements alongwith relevant documentsand separate audited accounts in respect of subsidiaries are available on the website ofthe Company.

Annual accounts of the subsidiary company along with related information are availablefor inspection at the Company's registered office and the registered office of thesubsidiary company. Copies of the annual accounts of the subsidiary company will also bemade available to the shareholders - upon request.

JOINT VENTURES/ASSOCIATE COMPANIES

As of March 31 2016 there are no Joint Ventures / Associate Companies of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the consolidated financial statement prepared inaccordance with the Accounting Standard AS-21 read with Accounting Standard AS-23 onAccounting for Investments in Associates your Directors have pleasure in presenting theConsolidated Financial Statements together with Auditors Report thereon forms part of theAnnual Report.

AUDITORS' REPORT

The Statutory Auditors of the Company M/s Khandelwal Jain & Co. CharteredAccountants have submitted the Auditors' Report which has observation on Standalone andConsolidated Financial Statements for the period ended March 31 2016.

MANAGEMENT'S EXPLANATION TO THE AUDITORS' OBSERVATIONS: -

A) Auditors' Observation in the Standalone Auditor's Report & Annexure to theAuditor's Report

Point No.5 of the Auditor's Report which summarises the basis of Emphasis of Matter"We draw attention to Note No.28

to the Financial Statements the Company has incurred a net loss of Rs.1348104827/-during the year the accumulated losses as at March 31 2016 amounted toRs.17638407752/- resulting in erosion of its net worth and has net current liabilitiesof Rs.12713562129/- as at March 31 2016. These factors raise a doubt that the Companywill not be able to continue as a going concern. The management is confident of generatingcash flows from business operations through increasing subscribers base and with thesupport of significant shareholders to fund its operating and capital fund requirements.Accordingly these statements have been prepared on a going concern basis. Our opinion isnot qualified in respect of this matter "

Management's Explanations to the Auditor's Observations in the Standalone Balance Sheet

The accumulated losses of the Company as at March 31 2016 are more than fifty percentof its net worth as at that date. The losses are due to dedining market of the fixed linebusiness and high operating costs. The management is confident of generating cash flowsfrom business operations through increasing subscribers' base and other value addedservices and reducing losses gradually. Further with the support of significantshareholders to fund its operating and capital expenditure. Management is confident ofmeeting its funds requirement.

B) Auditors' Observation in the Consolidated Auditor's Report & Annexure to theAuditor's Report

Point No.5 of the Auditor's Report which summarises the basis of Emphasis of Matter"In case of Holding Company we draw attention to Note No.29 to the financialstatements the Company has incurred a net loss of Rs. 1348104827/- during the yearthe accumulated losses as at March 31 2016 amounted to Rs.17638407752/- resulting inthe erosion of its net worth and has net current liabilities of Rs.12713562129/- as atMarch 31 2016. These factors raise a doubt that the Company will not be able to continueas a going concern. The management is confident of generating cash flows from businessoperations through increasing subscribers' base and with the support of significantshareholders to fund its operating and capital fund requirements. Accordingly thesestatements have been prepared on a going concern basis. Our opinion is not qualified inrespect of this matter "

Management's Explanations to the Auditor's Observations in the Consolidated BalanceSheet

In consolidated terms the Company has incurred Net loss of Rs.1314928758/- duringthe year and the accumulated losses as at March 31 2016 amounted to Rs.17638463308/-resulting in erosion of its net worth and has net current liabilities of Rs.12713517684/- as at March 31 2016.

The accumulated losses of the company as at March 31 2016 in consolidated terms aremore than its fifty percent of its Net worth as at that date. The losses are due todeclining market of the fixed line business and high operating costs. The management isconfident of generating cash flows from business operations through increasingsubscribers' base and other value added services and reducing losses gradually. Furtherwith the support of significant shareholders to fund its operating and capitalexpenditure management is confident of meeting funds requirement.

PREVENTION OF SEXUAL HARASSMENT POLICY

The Company has in place a Prevention of Sexual Harassment policy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaints Committee has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.

POLICY ON PREVENTION OF INSIDER TRADING

Pursuant to SEBI (Prohibition of Insider Trading) Regulations 2015 the Company hasframed a) Code of Internal Procedures and Conduct for Regulating Monitoring and Reportingof Trading by Insiders and b) Code of Fair Disclosure. The Company's Code inter aliaprohibits purchase and/or sale of shares of the Company by an insider while in possessionof unpublished price sensitive information in relation to the Company and also duringcertain prohibited periods.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance.The detail report on Corporate Governance Management Discussion and Analysis Report aswell as Corporate Governance Compliance Certificate are attached pursuant to therequirements of Regulation 27 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and form part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Act the Directors state that:

(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(b) The Directors has selected such accounting policies and applied consistently andhave made judgments and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the Profit and 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;

(e) The Directors had laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and were operating effectively;

(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.

ACKNOWLEDGEMENTS

Your Directors wish to express their gratitude for the wholehearted support receivedthroughout the year from the Department of Telecommunications Financial InstitutionsBanks Lenders and the various Central and State Government Departments BusinessAssociates Shareholders and Subscribers.

The Directors also extend their appreciation to the employees for their continuingsupport and unstinting efforts in ensuring an excellent all round operational performance.

For and on behalf of the Board of Directors

Mitu Mehrotra Goel Vinay Kumar Monga
Place: Mohali Director Director
Date: May 27 2016 (DIN: 05188846) (DIN: 03029345)