Your Directors present 21 Annual Report on the business and operations of TataTeleservices (Maharashtra) Limited ("TTML"/ the "Company") togetherwith the audited financial statements for the year ended March 31 2016 and otheraccompanying reports notes and certificates.
TTML holds two Unified Access Service Licences ("UASL") one for Mumbai Metroservice area and the other for Maharashtra service area i.e. Rest of Maharashtra and Goa.The Company is an integrated player across:
Technologies - Wireline Code Division Multiple Access ("CDMA")Global System for Mobile ("GSM") & 3G;
Products - Voice Data & Other enterprise services (Connectivity and Managedservices Verticals based mobile applications and Cloud services); and
Customer segments Retail Large corporate and Small & mediumenterprises.
The Company provides its range of products and services to about 10.7 Million (wireline+ wireless) subscribers under the 'Tata DOCOMO' brand. Its network consists of about14000 Base Transceiver Stations and optical fibre transmission network about 15000 kmsin Mumbai and Maharashtra service areas.
The financial highlights of the Company for the year ended March 31 2016 are asfollows:
| || ||(Rs. in Crores) |
|Particulars ||2015-16 ||2014-15 |
|Total Revenue ||3025 ||2939 |
|Expenditure ||2182 ||2293 |
|Earnings before Interest Depreciation ||843 ||646 |
|Tax and Amortization ("EBITDA") || || |
|Finance & Treasury charges including ||755 ||650 |
|foreign exchange impact || || |
|Depreciation / Amortization ||557 ||611 |
|Profit/(Loss) before Exceptional Items and Tax ||(469) ||(615) |
|Exceptional Items ||29 ||- |
|Profit/(Loss) after Tax ||(498) ||(615) |
The Company reported total revenue at Rs. 3025 Crores as compared to Rs. 2939Crores in the previous year representing a growth of about 2.9%.
The Company witnessed a 30.4% growth in EBITDA at Rs. 843 Crores as against Rs.646 Crores in the previous year. There was a significant improvement in the EBITDA marginto 28% from 22% in the previous year.
The revenue and EBITDA are not fully comparable to last year as this year'sfigures have an impact of change in Interconnect Usage Charges ("IUC") onincoming traffic due to change in IUC regulations effective from March 2015.
Net loss before exceptional items during the year was Rs. 469 Crores. Howeverin view of the expiry of telecom licences in September 2017 the Company has recorded aprovision for impairment of CDMA fixed assets of Rs. 29 Crores which is recognized as anexceptional item. The reported net loss for the Company was Rs. 498 Crores. Theaccumulated losses of the Company at the end of the financial year have exceeded itspaid-up equity share capital and reserves.
KEY DEVELOPMENTS DURING 2015-16
The year saw some positive developments in the sector primarily aimed towards moving toa regulatory regime which enables most efficient use of spectrum. For the last couple ofyears the demand for spectrum especially contiguous spectrum has gone up significantly onthe backdrop of growth of data services and lack of enough spectrum available withindividual operators to run optimal networks. Some of the key developments during the yearare:
1. Spectrum sharing: Department of Telecommunication ("DoT") during the yearissued spectrum sharing guidelines wherein two operators can share spectrum in any band aswell as of both types i.e. acquired through auction as well as administratively allottedspectrum (by paying One Time Spectrum Charges).
2. Spectrum trading: DoT during the year issued spectrum trading which permits anoutright sale transfer of spectrum from one operator to another. Spectrum acquiredthrough an auction can be traded only post two years of the auction.
3. Liberalization: As per the DoT guidelines now telecom service providers can gettheir administratively allotted spectrum in 800 MHz and 1800 MHz bands converted toliberalized spectrum for the remaining validity of their licences after payment of auctiondetermined price on a pro-rata basis.
4. Spectrum auction 2016: Telecom Regulatory Authority of India ("TRAI")released its recommendations on reserve prices for spectrum to be auctioned in 2016. Themost encouraging aspect of the upcoming auctions for the telecom service providers is theexpected high quantum of spectrum to be available across all bands namely 700 MHz 800MHz 1800 MHz 2100 MHz 2300 MHz and 2500 MHz. Government has taken initiatives toharmonize spectrum which is likely to result in availability of more spectrum and alsohelping service providers make their existing spectrum contiguous.
The abovementioned developments are very encouraging signs for the sector. There havealso been some early signs of consolidation in the industry. Together this presents aunique opportunity for telecom service providers in India who have been facing hypercompetition and low spectrum availability in the past.
During the year the Company enhanced its segmented customer engagement analytics anddelivery platform that recommends personalized plans to users based on their usage trendsand communication needs. The concept of customized offers and the inherent value in it forconsumers was brought to life through the "Har Baar More" marketing campaign.
Understanding that telecom connectivity is the lifeblood of modern life the Companycreated an innovative product that allows users to take talk time from us on credit andavoid usage interruption in case they run out of prepaid balance. This product innovationdemonstrated the commitment to ensure that the Company's users have a great serviceexperience always.
Another industry first was the launch of an exclusive accidental death insurance coverwith coverage benefits of up to Rs. 3 Lakhs for the prepaid users in Mumbai. The productwas well received and it helped strengthen the emotional connect with consumers in themarket.
Continuing its leadership in customer-centric product innovation the Companyintroduced Photon Wi-Fi Duo a device that pairs Wi-Fi internet access with a power bankfor seamless on-the-go internet usage across multiple devices. The industry-firstproduct led Tata Teleservices to win the Voice & Data Telecom Leadership Award 2016for product innovation.
The Company continued its journey towards building the best-in-class on-boarding andcustomer service experience for the customers. Initiatives such as the two-hour activationfrom the brand stores setting up of a neo-platinum call center and digital self-serveplatforms such as the Tata Docomo mobile app and website have helped us deliver a greatbrand experience to the users.
During the year the Company launched a unique pilot program called 'Swabhiman' aimedat empowering women and strengthening gender diversity in the workforce. This programallowed women to get attached to the channel partners with freedom to work from home toreach out to the prospective customers. Tata Teleservices not only trained the women ontele-calling skills but also set up a technology-led automated business process to helpthese women work in a hassle-free and productive environment.
For enterprise business customers the strategy of the Company revolves around buildingproducts and solutions in the areas of Enterprise mobility Cloud computing Software as aService ("SaaS") Collaboration Machine to Machine communication("M2M") and Managed Services for voice and Data. The Company continues toinnovate and during the course of the year introduced a host of innovative solutions suchas Hosted IVR Call register Services mobile applications for Service Ticketing andInternet of Things ("IOT")/M2M services.
The Company together with Tata Teleservices Limited ("TTSL") conducted about90 events across cities for its enterprise business customers as well as potentialcustomers ranging from webinars product conclaves forums etc. under the 'Do Big' banner.The biggest event 'Do Big Symposium' was conducted across seven cities in the countryincluding Mumbai. With the theme - "Digital Disruption: A CEO's Agenda" thisone of a kind event was aimed at providing a multi city platform to bring togetherdecision makers and influencers to discuss digital opportunities and challenges in theirrespective businesses. The Company engaged senior executives from a diverse set ofindustries including IT eCommerce Media and Entertainment Engineering and constructionamong others.
During the year a rapid network growth was evident on the data segments. In order tomeet the additional data capacity requirement 300 3G sites have been rolled out.
In line with cost and network optimization initiatives the Company has initiated thetransition of wireless network operations to TCTSL (Tata Communications TransformationServices Limited) from in-house operations model. The transition was smoothly executed forRest of Maharashtra circle without impacting network performance or customer experience.
During the year the Company enhanced network quality and coverage in priority areasthrough consolidation. The Company currently provides wireless services in 860 towns forGSM and 718 towns for CDMA. The Company also has High Speed Internet Access("HSIA") services in 32 towns in the states of Maharashtra and Goa. Seamlessinternational roaming services are also provided to the customers supported by tie upswith more than 314 operators globally.
The Company has a well defined and practiced Employee Safety and Well-being Policy. TheCompany's Safety Policy comprises guidelines and standardized practices based on robustprocesses. It advocates in proactively improving its management systems to minimizehealth and safety hazards thereby ensuring compliance in all operational activities.
To minimize and mitigate risks related to Fire Safety and
Physical Security the Company has taken up various safety initiatives / projectsincluding:
First Aid and Fire Safety trainings for all employees;
Emergency Mock fire drills (day/night) every six months;
Dissemination of Safety Guidelines and Knowledge Management on health and safetyissues through Safety Awareness mailers and videos / Safety SMSs (covering Dos& Donts during emergency Road Safety Articles on Safety during Fire Flood andEarthquake etc.).
The above actions are part of the Company's transformation journey based on the 4pillars of Transformation Project on Safety comprising:
Excellence in Awareness and Employee Communication;
Risk Assessment through Audit Mechanism;
Corrective and Preventive Actions ("CAPA");
Benchmarking and Best Practice sharing within and outside the Tata Groupcompanies.
ISSUE OF NON-CONVERTIBLE DEBENTURES
During the financial year the Company issued and allotted 7500 (Seven Thousand FiveHundred) Non-convertible Debentures of Rs. 1000000/- (Rupees Ten Lakhs Only) eachaggregating Rs. 7500000000/- (Rupees Seven Hundred Fifty Crores Only) on privateplacement basis to Yes Bank Limited on May 22 2015.
Pursuant to the provisions of the Companies Act 2013 (the "Act") Tata SonsLimited is the Holding Company of your Company.
Subsidiary and Associate Company
The Company does not have any subsidiary or associate company within the meaning ofrelevant provisions of the Act.
BOARD OF DIRECTORS MEETINGS AND ITS COMMITTEES
As on March 31 2016 the Board of Directors comprised of 6 (Six) Directors. Of the 6(Six) Directors 5 (Five) (i.e. 83%) are Non-Executive Directors and 1 (One) ManagingDirector. The Non-Executive Directors include 1 (One) Chairman and 3 (Three) IndependentDirectors. The composition of the Board is in conformity with the provisions of the Actand Regulation 17 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations").
All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and the Listing Regulations.
Mr. Nadir Godrej Independent Director of the Company resigned from the Board of theCompany with effect from September 23 2015 due to his other professional commitments.
The Board placed on record its appreciation for the contributions made by Mr. Godrejduring his tenure.
Directors retiring by rotation
In accordance with the relevant provisions of the Act and in terms of the Articles ofAssociation of the Company Mr. N. Srinath retires by rotation at the ensuing AnnualGeneral Meeting ("AGM") and being eligible offers himself for reappointment. TheBoard recommends his re-appointment.
Meetings of the Board of Directors
A calendar of Board and Committee meetings to be held during the financial year wascirculated in advance to the Directors.
During the financial year 5 (Five) Board meetings were held. Details of the compositionof the Board meetings of the Board held and attendance of the Directors at such meetingsare provided in the Corporate Governance Report annexed to the Annual Report. Theintervening gap between the meetings was within the period prescribed under the Act andthe Listing Regulations.
Committees of the Board
There are currently 4 (Four) Statutory Committees of the Board as follows:
(i) Audit Committee;
(ii) Corporate Social Responsibility Committee; (iii) Nomination and RemunerationCommittee; (iv) Stakeholders' Relationship Committee.
Details of all the Committees along with their terms of reference composition andmeetings of each Committee held during the financial year are provided in the CorporateGovernance Report annexed to the Annual Report.
KEY MANAGERIAL PERSONNEL
During the financial year Mr. Suresh Mahadevan resigned from the post of ChiefFinancial Officer of the Company with effect from close of business hours on August 312015.
At the meeting of the Board of Directors held on July 30 2015 Mr. Harish Abichandaniwas appointed as Chief Financial Officer of the Company with effect from September 1 2015in place of Mr. Suresh Mahadevan. Mr. Harish Abichandani Chief Financial Officer of theCompany resigned from the Company with effect from close of business hours on February10 2016.
Mr. Kush S. Bhatnagar was appointed as Chief Financial Officer of the Company by theBoard with effect from May 26 2016 in place of Mr. Harish Abichandani.
POLICIES AND PROCEDURES
Company's Policies on Appointment and Remuneration of Directors
The Policy of the Company on Directors' appointment including criteria for determiningqualifications positive attributes independence of a Director and the Policy onremuneration of Directors Key Managerial Personnel and other employees are annexed as Annexure IA and Annexure - IB to this Report.
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 theListing Regulations.
The performance of the Board the Committees and individual Directors was evaluated bythe Board after seeking inputs from all the Directors through a questionnaire wherein theDirectors were required to evaluate the performance on scale of one to five based on thefollowing criteria:
a) Criteria for Board Performance Evaluation: Degree of fulfillment of keyresponsibilities Board structure and composition Establishment and delineation ofresponsibilities to Committees effectiveness of Board processes information andfunctioning Board Culture and Dynamics Quality of relationship between the Board and theManagement.
b) Criteria for Committee Performance Evaluation: Degree of fulfillment of keyresponsibilities Adequacy of Committee Composition Effectiveness of meetings committeedynamics Quality of Relationship of the Committee with the Board and the management.
c) Criteria for Performance Evaluation of Individual Directors: AttendanceContribution at meetings guidance Support to Management outside Board/Committeemeetings.
The Chairman of the Board who is one of the Members of the Nomination and RemunerationCommittee ("NRC") was nominated for conducting one-on-one discussions withDirectors to seek their feedback on the Board and other Directors.
The NRC also reviewed the performance of the individual Directors. In addition theChairman was evaluated on the key aspects of his role.
In separate meeting of Independent Directors performance of Non-Independent Directorsperformance of the Board as a whole and performance of the Chairman was evaluated takinginto account the views of Executive Director and Non-Executive Directors. Thereafter theBoard also reviewed the performance of the Board as a whole its Committees and individualDirectors.
Risk Management Policy
The Company has Risk Management Policy and the risk management framework which ensuresthat the Company is able to carry out identification of elements of risk if any which inthe opinion of the Board may threaten the existence of the Company.
Internal Financial Controls and their Adequacy
The Company has established and maintained adequate internal financial controls withrespect to financial statements. Such controls have been designed to provide reasonableassurance with regard to providing reliable financial and operational information. Duringthe year such controls were operating effectively and no material weaknesses wereobserved.
Vigil Mechanism/Whistle Blower Policy
The Company has established a vigil mechanism in form of Whistle Blower Policy forDirectors and employees to report their genuine concerns about unethical behaviour actualor suspected fraud or violation of the Company's Code of Conduct or ethics policy detailsof which are provided in the Corporate Governance Report which forms a part of the AnnualReport.
The Policy provides for adequate safeguards against victimization ofDirectors/employees who avail of the mechanism and also provides for direct access to theChairman of the Audit Committee.
The Whistle Blower Policy has been placed on the website of the Company i.e.www.tatateleservices.com.
Corporate Social Responsibility
The Company has constituted a Corporate Social Responsibility ("CSR")Committee in accordance with Section 135 of the Act. The composition of CSR Committee thedetails of CSR Policy and initiatives taken by the Company on CSR activities during theyear have been provided in the Annexure II to this Report.
OTHER STATUTORY DISCLOSURES
Contracts or Arrangements with Related Parties
All Related Party Transactions ("RPTs") that were entered into during thefinancial year were on an arm's length basis and in the ordinary course of business of theCompany. Pursuant to Regulation 23 of the Listing Regulations and Section 177 of the Actprior approval of the Audit Committee is obtained for all RPTs. A statement of significantRPTs is placed before the Audit Committee for its review on a quarterly basis specifyingthe nature value and terms and conditions of the transactions.
Further your Company has taken a prior approval of the Members for all materialtransactions/proposed transactions entered/to be entered into between the Company andTTSL a related party relating to rendering or availing of services sharing ofinfrastructure purchase/sale of Assets and Inventory and sharing of costs for anaggregate value of Rs. 470 Crores (Rupees Four Hundred Seventy Crores Only) for thefinancial year 2014-15 and upto maximum aggregate value of Rs. 620 Crores (Rupees SixHundred and Twenty Crores Only) per annum for the financial years 2015-16 2016-17 and2017-18.
The details of material contracts or arrangement or transactions entered by yourCompany on arm's length basis are provided in Form AOC-2 which is annexed as Annexure III to this Report.
Particulars of Loans Guarantees or Investments
Your Company being in business of providing infrastructural facilities provisions ofSection 186 of the Act do not apply to the Company in respect of loans made guaranteesgiven or security provided by the Company.
Your Company has not made any investment in securities of other Bodies Corporate duringthe financial year 2015-16.
Dividend and Appropriations
In view of the accumulated losses the Directors regret their inability to recommendany dividend for the year under consideration. No appropriations are proposed to be madefor the year under consideration.
The Company has not accepted any deposits from public during the financial year2015-16 within the meaning of Section 73 of the Act read with the Companies (Acceptanceof Deposit) Rules 2014.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and Redressalof complaints of sexual harassment at workplace. The objective of this policy is to layclear guidelines and provide right direction in case of any reported incidence of sexualharassment across the Company's offices and take appropriate decision in resolving suchissues.
During the financial year 2015-16 the Company has not received any complaint on sexualharassment.
Particulars of Employees
Disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed as Annexure IV to this report.
The statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. Pursuant to Section 136(1) ofthe Act this Report is being sent to the Members of the Company excluding the aforesaidinformation. However the same is open for inspection at the registered office of theCompany. Copies of this statement may be obtained by the Members by writing to the CompanySecretary of your Company.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of Companies (Accounts)Rules 2014 the details of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo are as under:
(A) Conservation of Energy:
(i) Steps Taken or Impact on Conservation of Energy:
a. Electricity and Diesel Generators are used for the powering of the Company'stelephone exchanges and other network infrastructure equipment. The Company regularlyreviews power consumption patterns across its network and has implemented variousinnovative projects including green initiatives in order to optimize power consumptionwhich resulted into substantive cost savings and reduction of carbon foot print. Some ofthe major projects undertaken during the year are:
Indoor BTS with Outdoor cabinet on new project roll out - 156 nos.
FCU (Free Cooling Units) deployment and AC (Air Conditioner) switch off - 180nos.
AC (Air Conditioner) continued to be switch off mode - 92Nos.
Location surrender 1 no (Technopolis)
Energy day is observed at core locations once a week where energy saving measuresare taken.
b. The initiatives on energy conservation has resulted into reduction of 5220 Millionunits of energy consumption carbon foot print reduction of 6143 TCO2 for the financialyear 2015-16.
c. Periodic energy audit and implementation of audit recommendations.
(ii) Steps taken by the Company for utilizing alternate sources of Energy:
The Company has not utilised any alternate sources of energy. However we are exploringvarious opportunities in this area and suitable solutions will be deployed once finalized.
(iii) Capital Investment on Energy Conservation Equipments:
The Company has made capital investment of Rs. 1.5 Crores on energy conversationequipments.
(B) Technology Absorption: The Company has not imported any new technology.
(C) Foreign Exchange Earnings and Outgo:
| || |
(Rs. in Crores)
|Particulars ||2015 -16 ||2014-15 |
|Earnings ||3.87 ||6.35 |
|Outgo ||128.40 ||143.42 |
|Capital Goods ||117.00 ||141.17 |
Significant and Material Orders Passed by the Regulators or Courts or TribunalsImpacting the Going Concern Status and the Company's Operation in Future
While there are certain critical litigations including litigations relating to variousdemands made by DoT there are no significant material orders passed as of date by theRegulators/Courts or the Company has interim protection from courts against enforcement ofsuch demands or notices which would impact the going concern status of the Company andits future operations. However there is always a chance that any order passed in criticallitigations in future may have an impact on the going concern or future operations of theCompany.
Extract of Annual Return
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 the extract of Annual Return in Form No. MGT-9 is annexed as AnnexureV to this Report.
Deloitte Haskins & Sells LLP ("DHS") Chartered Accountants the presentstatutory auditors retire at the conclusion of the ensuing AGM and have confirmed theirwillingness and eligibility for re-appointment in accordance with Section 139 read withSection 141 of the Act. The Audit Committee and the Board recommend their re-appointmentfrom the conclusion of the ensuing AGM till the conclusion of the next AGM. Members arerequested to consider the reappointment of DHS and authorize the Board of Directors to fixtheir remuneration.
The Board of Directors of your Company had upon recommendation of the Audit Committeeappointed M/s. Sanjay Gupta & Associates Cost Accountants as Cost Auditors of theCompany for the financial year 2015-16.
The Board on the recommendation of Audit Committee approved the re-appointment andremuneration of M/s. Sanjay Gupta & Associates Cost Accountants as Cost Auditors ofthe Company for the financial year 2016-17. Members are requested to consider approve andratify the remuneration payable to M/s. Sanjay Gupta & Associates for the financialyear 2016-17.
The Board has appointed Axis Risk Consulting Services Private Limited ANB SolutionsPrivate Limited and Grant Thornton India LLP as Internal Auditors for handling internalaudit of the Company.
Secretarial Auditors and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed M/s. Mehta & Mehta Practicing Company Secretaries to undertake theSecretarial Audit of the Company for the year ending March 31 2016. The Secretarial AuditReport in Form MR-3 is annexed as Annexure VI to this Report.
The Secretarial Audit Report does not contain any qualifications reservations oradverse remarks.
AUDITORS' OBSERVATIONS AND DIRECTORS' COMMENTS
The Auditors' Report for the financial year ended March 31 2016 does not contain anyqualification reservation adverse remark or disclaimer.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the
Company work performed by the internal statutory cost and secretarial auditors andexternal consultant(s) including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by Management and therelevant Board Committees including the Audit Committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during the financialyear 2015-16.
Accordingly pursuant to the provisions of Section 134(5) of the Act your Directorsto the best of their knowledge and belief and according to information and explanationobtained by them confirm that:
1. in the preparation of the annual financial statements for the year ended March 312016 the applicable accounting standards have been followed and there are no materialdepartures;
2. they have 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 ended March 312016 and of the loss of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. they have prepared the annual financial statements on a going concern basis;
5. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
6. they have devised systems to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed report on Management Discussion and Analysis as required under theRegulation 34 of the Listing Regulations for the year under review is presented in aseparate section forming part of the Annual Report.
CORPORATE GOVERNANCE REPORT
A report on Corporate Governance appears after this Report. A certificate from DeloitteHaskins & Sells LLP Chartered Accountants with regard to compliance of conditions ofcorporate governance as specified in the Listing Regulations by the Company is annexedhereto and forms part of this Report.
The Company has complied with mandatory requirements of Corporate Governance prescribedunder the Listing
Regulations. The Company has also implemented some of the non-discretionaryrequirements as contained Part E of Schedule II to the Listing Regulations.
Your Directors wish to place on record their sincere appreciation for the assistanceand support extended by the employees shareholders customers financial institutionsbanks vendors dealers Department of Telecommunications the Central and StateGovernments and others associated with the activities of the Company. We look forward totheir continued support in future.
For and on behalf of the Board of Directors
| ||Kishor A. Chaukar |
|Place: Mumbai ||Chairman |
|Date: June 25 2016 ||DIN: 00033830 |
Annexure IA to the Directors Report
Company's Policy on Directors Appointment and Remuneration
The Company has formulated the criteria determining qualifications positive attributesand independence of Director. The details of the same are as under:
1. Definition of Independence
A director will be considered as an "independent director" if theperson meets with the criteria for 'independent director' as laid down in the Act andClause 49 (as may be applicable).
The definition of Independence as provided in the Act and Clause 49 is asfollows:
"An independent director in relation to a company means a director other than amanaging director or a whole-time director or a nominee director
(a) who in the opinion of the Board is a person of integrity and possesses relevantexpertise and experience;
(b) (i) who is or was not a promoter of the company or its holding subsidiary orassociate company;
(ii) who is not related to promoters or directors in the company its holdingsubsidiary or associate company;
(c) who has or had no pecuniary relationship with the company its holding subsidiaryor associate company or their promoters or directors during the two immediatelypreceding financial years or during the current financial year;
(d) none of whose relatives has or had pecuniary relationship or transaction with thecompany its holding subsidiary or associate company or their promoters or directorsamounting to two per cent or more of its gross turnover or total income or fifty lakhrupees or such higher amount as may be prescribed whichever is lower during the twoimmediately preceding financial years or during the current financial year;
(e) who neither himself nor any of his relatives
(i) holds or has held the position of a key managerial personnel or is or has beenemployee of the company or its holding subsidiary or associate company in any of thethree financial years immediately preceding the financial year in which he is proposed tobe appointed;
(ii) is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which he is proposed to beappointed of
(A) a firm of auditors or company secretaries in practice or cost auditors of thecompany or its holding subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the companyits holding subsidiary or associate company amounting to ten per cent or more of thegross turnover of such firm;
(iii) holds together with his relatives two per cent or more of the total voting powerof the company; or
(iv) is a Chief Executive or director by whatever name called of any nonprofitrganization that receives twenty-five per cent or more of its receipts from the companyany of its promoters directors or its holding subsidiary or associate company or thatholds two per cent or more of the total voting power of the company;
(v) is a material supplier service provider or customer or a lessor or lessee of thecompany; (additional provision as per Clause 49);
(f) who is not less than 21 years of age (additional provision as per Clause 49)."
Current and ex-employees of a Tata company may be considered as independent onlyif he/she has or had no pecuniary relationship with any Tata company (due toemployment/receipt of monthly pension by way of Special Retirement Benefits/holdingconsultant or advisor positions) during the two immediately preceding financial years orduring the current financial year.
2. Qualifications of Directors
Board will ensure that a transparent board nomination process is in place thatencourages diversity of thought experience knowledge perspective age and gender.
It is expected that board have an appropriate blend of functional and industryexpertise.
While recommending appointment of a director it is expected that the Nominationand Remuneration Committee ("NRC") consider the manner in which the function anddomain expertise of the individual contributes to the overall skill-domain mix of theBoard.
Independent Directors ("ID") ideally should be thought/practiceleaders in their respective functions/domains.
3. Positive Attributes of Directors
Directors are expected to comply with duties as provided in the Act. For reference theduties of the Directors as provided by the Act are as follows:
1) "Act in accordance with the articles of the company.
2) Act in good faith in order to promote the objects of the company for the benefit ofits members as a whole and in the best interests of the company its employees theshareholders the community and for the protection of environment.
3) Exercise duties with due and reasonable care skill and diligence and exerciseindependent judgment.
4) Not be involved in a situation in which he may have a direct or indirect interestthat conflicts or possibly may conflict with the interest of the company.
5) Not achieve or attempt to achieve any undue gain or advantage either to himself orto his relatives partners or associates.
6) Not assign his office."
Additionally the Directors on the Board of a Tata Company are also expected todemonstrate high standards of ethical behavior strong interpersonal and communicationskills and soundness of judgment.
IDs are also expected to abide by the 'Code for Independent Directors' as outlined inSchedule IV to Section 149(8) of the Act. The Code specifies the guidelines ofprofessional conduct role and function and duties of Independent Directors. Theguidelines of professional conduct specified in the Code are as follows:
"An independent director shall:
1) uphold ethical standards of integrity and probity;
2) act objectively and constructively while exercising his duties;
3) exercise his responsibilities in a bona fide manner in the interest of the company;
4) devote sufficient time and attention to his professional obligations for informedand balanced decision making;
5) not allow any extraneous considerations that will vitiate his exercise of objectiveindependent judgment in the paramount interest of the company as a whole while concurringin or dissenting from the collective judgment of the Board in its decision making;
6) not abuse his position to the detriment of the company or its shareholders or forthe purpose of gaining direct or indirect personal advantage or advantage for anyassociated person;
7) refrain from any action that would lead to loss of his independence;
8) where circumstances arise which make an independent director lose his independencethe independent director must immediately inform the Board accordingly;
9) assist the company in implementing the best corporate governance practices."
For and on behalf of the Board of Directors
| ||Kishor A. Chaukar |
|Place: Mumbai ||Chairman |
|Date: June 25 2016 ||DIN: 00033830 |
Annexure IB to the Directors Report Remuneration Policy
Further the Company has also formulated a Remuneration Policy for the Directors KeyManagerial Personnel and other employees and the same is given hereunder:
The philosophy for remuneration of directors Key Managerial Personnel("KMP") and all other employees of Tata Teleservices (Maharashtra) Limited("Company") is based on the commitment of fostering a culture of leadership withtrust. The remuneration policy is aligned to this philosophy.
This remuneration policy has been prepared pursuant to the provisions of Section 178(3)of the Companies Act 2013 ("Act") and Clause 49(IV)(B)(1) of the EquityListing Agreement ("Listing Agreement"). In case of any inconsistencybetween the provisions of law and this remuneration policy the provisions of the lawshall prevail and the company shall abide by the applicable law. While formulating thispolicy the Nomination and Remuneration Committee ("NRC") has consideredthe factors laid down under Section 178(4) of the Act which are as under:
"(a) the level and composition of remuneration is reasonable and sufficient toattract retain and motivate directors of the quality required to run the companysuccessfully;
(b) relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
(c) remuneration to directors key managerial personnel and senior management involvesa balance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the company and its goals"
Key principles governing this remuneration policy are as follows:
Remuneration for independent directors and non-independent non-executivedirectors
Independent directors ("ID") and non-independent non-executivedirectors ("NED") may be paid sitting fees (for attending the meetings of theBoard and of committees of which they may be members) and commission within regulatorylimits.
Within the parameters prescribed by law the payment of sitting fees andcommission will be recommended by the NRC and approved by the Board.
Overall remuneration (sitting fees and commission) should be reasonable andsufcient to attract retain and motivate directors aligned to the requirements ofthe company (taking into consideration the challenges faced by the company and its futuregrowth imperatives).
Overall remuneration should be reflective of size of the company complexity ofthe sector/industry/ company's operations and the company's capacity to pay theremuneration.
Overall remuneration practices should be consistent with recognized bestpractices.
Quantum of sitting fees may be subject to review on a periodic basis asrequired.
The aggregate commission payable to all the NEDs and IDs will be recommended bythe NRC to the Board based on company performance profits return to investorsshareholder value creation and any other significant qualitative parameters as may bedecided by the Board.
The NRC will recommend to the Board the quantum of commission for each directorbased upon the outcome of the evaluation process which is driven by various factorsincluding attendance and time spent in the Board and committee meetings individualcontributions at the meetings and contributions made by directors other than in meetings.
In addition to the sitting fees and commission the company may pay to anydirector such fair and reasonable expenditure as may have been incurred by the directorwhile performing his/her role as a director of the company. This could include reasonableexpenditure incurred by the director for attending Board/Board committee meetings generalmeetings court convened meetings meetings with shareholders / creditors / managementsite visits induction and training (organized by the company for directors) and inobtaining professional advice from independent advisors in the furtherance of his/herduties as a director.
Remuneration for managing director ("MD")/ executive directors("ED")/ KMP/ rest of the employees
The extent of overall remuneration should be sufficient to attract and retaintalented and qualified individuals suitable for every role. Hence remuneration should be
Market competitive (market for every role is defined as companies from which thecompany attracts talent or companies to which the company loses talent)
Driven by the role played by the individual
Reflective of size of the company complexity of the sector/industry/ company'soperations and the company's capacity to pay
Consistent with recognized best practices and
Aligned to any regulatory requirements.
In terms of remuneration mix or composition
The remuneration mix for the MD/ EDs is as per the contract approved by theshareholders. In case of any change the same would require the approval of theshareholders.
Basic/ fixed salary is provided to all employees to ensure that there is asteady income in line with their skills and experience.
In addition to the basic/fixed salary the company provides employees withcertain perquisites allowances and benefits to enable a certain level of lifestyle and tooffer scope for savings and tax optimization where possible. The company also providesall employees with a social security net (subject to limits) by covering medical expensesand hospitalization through re-imbursements or insurance cover and accidental death anddismemberment through personal accident insurance.
The company provides retirement benefits as applicable.
In addition to the basic/fixed salary benefits perquisites and allowances asprovided above the company provides MD/EDs such remuneration by way of commissioncalculated with reference to the net profits of the company in a particular financialyear as may be determined by the Board subject to the overall ceilings stipulated inSection 197 of the Act. The specific amount payable to the MD/EDs would be based onperformance as evaluated by the Board or the NRC and approved by the Board.
In addition to the basic/ fixed salary benefits perquisites and allowances asprovided above the company provides MD/EDs such remuneration by way of an annualincentive remuneration/performance linked bonus subject to the achievement of certainperformance criteria and such other parameters as may be considered appropriate from timeto time by the Board. An indicative list of factors that may be considered fordetermination of the extent of this component are:
Company performance on certain defined qualitative and quantitative parametersas may be decided by the Board from time to time
Industry benchmarks of remuneration
Performance of the individual.
The company provides the rest of the employees a performance linked bonus. Theperformance linked bonus would be driven by the outcome of the performance appraisalprocess and the performance of the company.
Remuneration payable to Director for services rendered in other capacity
The remuneration payable to the Directors shall be inclusive of any remunerationpayable for services rendered by such director in any other capacity unless:
a) The services rendered are of a professional nature; and
b) The NRC is of the opinion that the director possesses requisite qualification forthe practice of the profession.
The NRC is responsible for recommending the remuneration policy to the Board. The Boardis responsible for approving and overseeing implementation of the remuneration policy.
For and on behalf of the Board of Directors
| ||Kishor A. Chaukar |
|Place: Mumbai ||Chairman |
|Date: June 25 2016 ||DIN: 00033830 |