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GTL Ltd.

BSE: 500160 Sector: Telecom
NSE: GTL ISIN Code: INE043A01012
BSE 00:00 | 03 Apr 1.09 -0.04
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1.13

HIGH

1.15

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1.08

NSE 00:00 | 03 Apr 1.10 0
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OPEN

1.10

HIGH

1.15

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OPEN 1.13
PREVIOUS CLOSE 1.13
VOLUME 5296
52-Week high 5.19
52-Week low 0.99
P/E
Mkt Cap.(Rs cr) 17
Buy Price 1.08
Buy Qty 498.00
Sell Price 1.18
Sell Qty 5000.00
OPEN 1.13
CLOSE 1.13
VOLUME 5296
52-Week high 5.19
52-Week low 0.99
P/E
Mkt Cap.(Rs cr) 17
Buy Price 1.08
Buy Qty 498.00
Sell Price 1.18
Sell Qty 5000.00

GTL Ltd. (GTL) - Director Report

Company director report

Your Directors present their Thirty First Annual Report together with the AuditedFinancial Statements for the year ended March 31 2019.

1. STATE OF THE COMPANY'S AFFAIRS

FINANCIAL HIGHLIGHTS

( Rs Crores)

FY 2018-19 FY 2017-18
Particulars Consolidated Standalone Consolidated Standalone
Total Income 238.74 238.74 1005.38 1005.38
Profit / (Loss) before Depreciation Interest and
(223.51) (223.51) (63.97) (79.67)
Financial Charges (Net) Exceptional items and Tax (PBDIT)
Profit / (Loss) before Depreciation Exceptional and Tax (PBDT) (240.18) (240.18) (82.50) (98.20)
Less: Depreciation 4.54 4.54 17.49 17.49
Profit / (Loss) before Tax exceptional item and extra- ordinary items (244.72) (244.72) (99.99) (115.69)
Exceptional items Nil Nil (727.79) (2512.34)
Less: Provision for Taxation (incl. Short Provision for Income Tax and Deferred Tax) (0.05) (0.05) 0.37 0.37
Profit / (Loss) after Tax (PAT) before Extra-ordinary and Prior Period items (244.77) (244.77) (827.41) (2627.66)
Add / (Less): Extra-ordinary item Nil Nil Nil Nil
Add: Minority Interest N.A. N.A. Nil N.A.
Add: Share of Profits in Associates N.A. N.A. 425.77 N.A.
Loss For The Year From Continuing Operations (244.77) (244.77) (401.64) (2627.66)
Loss for the year from discontinued operations (170.37) Nil (52.83) Nil
Other Comprehensive Income for the year 0.10 0.11 0.36 0.37
Total Comprehensive Income for the period (net of Tax) (415.04) (244.66) (454.11) (2627.29)
Add: Balance brought forward from the last year (8346.64) (8199.06) (7892.53) (5571.77)
Profit / (Loss) available for Appropriation (8761.68) (8443.72) (8346.64) (8199.06)
Appropriations:
Recommended Equity dividend Nil Nil Nil Nil
Dividend Distribution Tax N.A. N.A. N.A. N.A.
Amount transferred to
- General Reserve Nil Nil Nil Nil
- Debenture Redemption Reserve Nil Nil Nil Nil
Balance Carried Forward (8761.68) (8443.72) (8346.64) (8199.06)

The difference in brought forward reserve is on account of non-consideration ofaccounts of GTL Infrastructure Limited (GIL) and ADA Cell Works Engineering Pvt. Ltd. inconsolidation since investment in Shares of these companies are invoked by the securedLenders (Refer Note no. 6.2. of Consolidated Financials)

2. RESULTS OF OPERATIONS

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

• Total Income is Rs 238.74 Crores as against Rs 1005.38 Crores for the previousfinancial year.

• Profit / (Loss) (before Depreciation Interest and Financial Charges (Net)Exceptional Items and Tax) (PBDIT) is Rs (223.51) Crores as against Rs (79.67) Crores forthe previous financial year.

• Profit/ (Loss) (before Depreciation Exceptional Items and Tax (PBDT) is Rs(240.18) Crores as against Rs (98.20) Crores for the previous financial year.

• Profit / (Loss) after Tax (PAT) before extra-ordinary and prior period items isRs (244.77) Crores as against Rs (2627.66) Crores for previous financial year.

3. CORPORATE DEBT RESTRUCTURING (CDR)

Post CDR Developments

In the last Annual Report for FY 2017-18 the Directors' Report summarized thedevelopments since the Company's admission into Corporate Debt Restructuring (CDR) w.e.f.July 1 2011 as under:

• Impact of post CDR developments like cancellation of 122 Nos of 2G licenses bythe Supreme Court Cancellation of 20000 tenancies by Aircel Group Suspension of fixedline expansion by BSNL cancellation of MSEDCL Contract in November 2014;

• Regular payments made to lenders till May 2014;

• The proactive efforts of the Company to settle the lenders dues by means of anOTS plan submitted to the lenders in September 2014 by monetization of its assets /business divisions / investments;

• The in principle approval of the lenders given on December 4 2015 to the OTSmonetization proposal based on the valuation report dated July 17 2015;

• The execution of business transfer agreement for its OME business with apotential buyer on September 30 2015 and obtaining of approval of Competition Commissionof India for the same for giving effect to the above monetization proposal;

• The intimation to the lenders on January 6 2017 about the inability of thepotential buyer to go ahead with OME business deal on account of inordinate delay ingiving the requisite approvals by the lenders;

• The various external audits such as special audit concurrent audit duediligence business valuation exercise stock audit forensic audit etc. carried out andthe delay caused by some of them in the settlement process;

• The conclusion arrived at by the lenders on March 18 2017 that there were noevidence of diversion of funds and hence the lenders could close the forensic audit andexpedite the process of approval of settlement (based on the findings of the forensicaudit report clarifications received from the Company and further clarifications given bythe Auditors);

• Non provision of interest from FY 2017-18 based on the settlement proposalagreed as above.

• Issue of Circular dated February 12 2018 by RBI inter alia for

• Withdrawal of the CDR and all other restructuring schemes by RBI

• Referring all accounts in which default exists to the NCLT under the Insolvencyand Bankruptcy Code 2016 in case of failure to arrive at a restructure under the RevisedResolution Framework.

• Valuation of the Company going down on account of intense competitionunsustainable level of debts incurring of loss by almost all operators and consequentmerger / exit of telecom companies like Tata Tele Rcom Telenor Sistema-Shyam etc.; andfiling of voluntary insolvency by Aircel Group;

• Exit of Tata Teleservices Ltd & Aircel Group and the significant scalingdown of operations by GIL would have considerable negative impact on the business of theCompany;

• Submission of revised restructure proposal by the Company in April 2019 inresponse to the RBI Circular based on the valuation report of March 2018.

Current Status

While the Company and its management filed a settlement proposal to the lenders basedon the RBI Circular dated February 12 2018 the lenders issued notices for recall oftheir loans and interest thereon and also for taking possession of secured assets underthe SARFEASI Act. They have also invoked the shares pledged by the Company and thePromoter apart from filing Application before the Debt Recovery Tribunal. One of thelenders also filed an application before National Company Law Tribunal (NCLT) underChapter 7 of the Insolvency and Bankruptcy Code 2016 against which the appropriatejudicial authority granted interim relief by ordering status quo to be maintained by allthe parties. Subsequently the Hon'ble Supreme Court vide its order dated April 2 2019held the said circular ultra vires as a whole and declared to be of no effect in law. TheHon'ble Supreme Court also held and declared that all cases in which debtors have beenproceeded against by Financial Creditors under Section 7 of the Insolvency Code onlybecause of the operation of the said RBI Circular to be non est. Accordingly the processinitiated by one of the Lenders to approach NCLT as mentioned above became non est in theopinion of the Company and the decision in respect of this from NCLT is awaited.

Thereafter based on the developments in the Industry and the Company and the RevisedCircular issued by RBI the Company presented a revised OTS proposal for settlement of thedues of the lenders. The lenders in continuation of the discussion held earlier in thematter discussed the same in their JLF meeting held on July 5 and 6 2019. In the saidmeeting it was agreed by all but one bank to sign the Inter-Creditor Agreement based onwhich almost all specified lenders have executed the Inter -Creditor Agreement as per newcircular of RBI dated June 7 2019.

Impact on the Company

Aircel Group was one of the largest customers of both GTL & GIL. Its filing forbankruptcy has resulted in loss of direct and indirect revenue for the Company. Thiscoupled with loss of MSEDCL contracts due to their financial positions have impactednegatively. Further on account of exit / consolidation the tenancy for GIL has come downdue to the termination of overlapping tenancy by existing operators and tenancy by thosewho exit. Both BSNL and MTNL face huge funds crunch which has resulted in reduction intenancy and liquidity issue. On account of the stiff competition and the reduction in thescale of operation the profit margin keeps going down. All these developments affectingGIL in turn affect the operations of the Company as GIL is the only customer for theCompany. The present revenue streams of the OME business of the Company are OperationMaintenance for Telecom Sites and Management Fees for Energy Management. Thus the revenueand profit of the Company have come down drastically during FY 2018-19. Under thecircumstances the Company is aligning its business plans with that of GIL to sustainbusiness continuity.

At the same time in spite of these difficulties for settling the dues of the lenderswhether through negotiated settlement process or through legal process it is necessaryfor the Company to maintain and create value for its existing business viz networkservices.

Keeping this aspect in mind the Company on a continuous basis implements costoptimization and network optimization measures. While downsizing its manpower for reducingthe cost it takes care to retain its trained manpower and senior management team formeeting the demand of the operators including for their expected addition in dataservices. Similarly while it got its winding up petitions and other litigations disposedof by filing consent terms wherever possible it has also taken legal action to recoverits dues from Aircel MSEDCL and others. It also tries to maintain a flexible and nimbleorganization which can react to any exigency.

4. DEVELOPMENTS

As stated in the previous report since September 2016 when Reliance Jio launchedcommercial services there had been a spate of exit / consolidation in the TelecomIndustry leaving only 3 private operators instead of 18 few years ago viz. BhartiAirtel Vodafone Idea and Reliance Jio in the fray who among them hold close to 90% ofthe market share. The intense competition and the consequent unprecedented exit /consolidation coupled with the debt burden have affected the balance sheets of theoperators it is reported that while Bharti Airtel has posted a loss of Rs 2866 Crores inApril-June 19 quarter its first in 14 years Vodafone Idea has posted a loss of Rs 4908Crores for the same period.

While Countries like US Switzerland South Korea etc have already started commercial5G services India is likely to launch 5G commercial services along with other key telecommarkets globally in the near future. However going by the past the operators have tomake huge investments in procuring the spectrum and developing infrastructure for this tohappen. In this connection it is pertinent to note that two of the operators haveexpressed reservations about their participation in the upcoming 5G license auctions.

Thus while on the one hand the Industry is having difficulty to overcome its debtburden on the other hand it is under pressure for making further investments in spectrumand infrastructure for launching 5G services.

To overcome these difficulties the Operators are now resorting to various forms offinancial engineering to shore up their balance sheets and also to free up capital for newinvestments.

Some industry developments as reported in media are:

• Both Vodafone Idea and Bharti Airtel are raising 250 billion each through rightsissue;

• Bharti Airtel also proposes to raise another Rs 70 billion through foreigncurrency perpetual bonds;

• Both Bharti Infratel and Indus Towers have announced merger. The merged entitywill have over 160000 towers. Both Bharti Airtel and Vodafone Group are consideringstake sales in the merged entity;

• A consortium led by Brookfield Asset Management has agreed to acquire RelianceJio's Tower unit. Once the transactions are closed the Canadian alternative assetsmanager and its partners would own 100% of India's largest telecom tower company with170000 towers;

• Talks are also going on to monetize the group's fibre assets Jio Digital Fibreunder similar deal structure.

While the Telecom Industry is taking all steps to overcome the debt burden and launch5G services the media reports suggest that the Indian economy is slowing down. Theslowdown in the Indian economy is partially attributed to global slowdown retreat ofglobalization sluggish global demand & US-China trade war and also collapse inprivate consumption debt burden of corporates loss of job decline in exports lowerdemand etc. in India.

Challenges of the Telecom Sector

Data consumption by the subscribers has grown manifold in recent years. To provideuninterrupted service the operators have to make investments not only for acquiring newinfrastructure but also modify existing infrastructure. As cloud has emerged as a keysolution for this the operators are exploring to provide cloud services through datacenters. These developments are happening at a time when the financial woes of the telecomindustry continue to trouble the telecom industry. These challenges faced by the Industryand the efforts made by the operators to overcome the same is well summarized by tele.netunder the caption ‘Pluming New Depths Operators look for solutions to cope withdebts' as under (refer page 26 of April Issue):

"By July-September 2018 quarter the industry had aggregated financing costs of Rs82.8 billion and it was generating only about Rs 73 billion in operating profits (EBITDA).Far too much debt on telecom balance sheets for comfort and due to the continuing pricewar revenues are not growing quickly enough to make it possible to service that debt.Moreover capex must continue. New areas such as digital entertainment are opening up ascompanies search for new revenue streams. Further they must strengthen their fibre and 4Gnetworks to exploit these opportunities. Since 5G is already on the horizon even morecapex will be required in future.

In terms of strategy it is clear that the data segment is key to future earnings. TheIndian appetite for entertainment has already pushed data consumption to global highs.Since about half of Indian subscribers are still not on data-enabled devices there isroom for growth. While tariffs remain low operators are also trimming subscriber lists toeliminate low-ARPU "missed call" subscribers. The trio of private operators isalso trying various forms of financial engineering to reduce their respectivedebt-to-equity ratios. They are looking to raise more cash ideally via the equity routeor by monetization of non-core assets.

Airtel and Vodafone Idea have both announced large rights issues which will enablethem to retire some of their debt. They are also looking to hive off assets like towerportfolios and fiber networks in the hope of monetization at the later stage. Jio is alsohiving off its fibre and tower assets and may soon look to monetize them. Airtel isseeking to list its Africa arm via an initial public offering (IPO) and this too wouldcut debt."

Thus while the operators are struggling to service their debts out of their existingprofits there is further need for funds for participating in the spectrum auction andinvestment for acquiring / modifying the infrastructure for providing enhanced services tothe customers. With the economic slowdown knocking at the door of corporates across thesector the Industry is facing one of its challenging times.

5. GOING CONCERN

During the last few years the Company has incurred cash losses resulting in erosionof its entire net worth. The Company's current liabilities are higher than its currentassets. The management is of the view that upon acceptance and implementation of theCompany's revised negotiated settlement proposal to the lenders and/or upon restructurethrough NCLT and/or the revised circular of RBI as the case may be it would be in aposition to settle the matter and continue its operations. The signing of theInter-Creditor Agreement by the Specified Lenders as per RBI Circular dated June 7 2019is a step in the positive direction. In view of this the Company continues to prepare itsfinancial statements on Going Concern basis.

6. INVESTMENTS

The Company had pledged certain shares held in its subsidiary / associate / affiliatecompanies which are held as ‘Long Term Investments' with the lenders as a securitytowards the borrowings from the lenders. During the year the lenders have invoked thepledge and have transferred those shares in the name of its trustees without appropriatingthe same against the borrowings. The Company has made necessary disclosure to the StockExchanges vide its letter dated April 2 2019 in this regard. Further the company shalltake appropriate legal action based on legal advice. Pending appropriation of pledgedshares as mentioned above the said investments are continued to be classified under‘Long Term Investments'.

The Company has carried out fair valuation of its investment in GIL and accordinglyaccounted the ‘Mark to Market' loss amounting to Rs 152.81 Crores during the currentyear. These investments are part of the shares that have been transferred by the lendersin the name of its trustees as mentioned above.

As regards investments in subsidiaries reference may be made to the contents under thehead ‘Subsidiaries'.

7. INVOCATION OF PLEDGED SHARES OF THE PROMOTER

While the Company and the promoter had been engaging with the lenders on the OTSproposal on March 28 2019 the secured lenders had invoked 18599435 equity shares ofthe Company pledged by the Promoter in their favour. Both the promoter and the Companyhave made necessary disclosure in this regard to the Stock Exchanges on April 2 2019.

8. DIVIDEND

Since your Company has posted losses and it is also not allowed to declare dividendwithout fulfillment of certain conditions as per the MRA executed with the lenders onDecember 31 2011 for restructure of its debts your Directors express their inability torecommend any dividend on the paid up Equity and Preference Share Capital of the Companyfor the financial year ended March 31 2019.

9. SHARE CAPITAL AND NON CONVERTIBLE DEBENTURES (NCDs)

i) Equity:

There is no change in Equity Capital due to allotment of shares or otherwise during theyear under review. As such Equity Capital of the Company at the beginning of the year andat the year end stood at 157296781 Equity shares.

The Company has only one class of equity share. Thus the details required to befurnished for equity shares with differential rights and / or sweat equity shares and / orESOS under the Companies (Share Capital and Debentures) Rules 2014 are not furnished.

ii) Preference:

There is no change in status of preference shares as reported in the last year'sDirector's Report.

iii) NCDs:

During the FY 2009-10 the Company had privately placed 14000 Rated RedeemableUnsecured Rupee NCDs of the face value of 10 Lakh each aggregating Rs 1400 Crores whichwere listed under debt segment of BSE Limited. The NCDs got delisted for the reason‘Redemption'.

In the meanwhile based on the consent terms filed by both parties before the Hon'bleBombay High Court on March 19 2018 and the order passed thereon the winding petition gotdisposed of. The NCD holder has also signed the Inter- Creditor Agreement signallingsettlement.

10. FIXED DEPOSITS

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

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Sunil S. Valavalkar (DIN:01799698) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offer himself for re-appointment.

Mr. D.S. Gunasingh and Mr. Navin J. Kripalani were appointed as Independent Directorsof the Company with effect from September 16 2014 to September 15 2019. Pursuant to therecommendation of the Nomination and Remuneration Committee the Board of Directors at itsmeeting held on August 14 2019 has approved the re-appointments of Mr. D.S. Gunasingh andMr. Navin J. Kripalani for a further term of five years from September 16 2019 toSeptember 15 2024 subject to the approval of shareholders through special resolution.

The Company has incorporated appropriate resolutions for re-appointment of Mr. Sunil S.Valavalkar on his retirement by rotation; and for the re-appointments of Mr. D. S.Gunasingh and Mr. Navin Kripalani as Independent Directors from September 16 2019 toSeptember 15 2024 on expiration of their terms as detailed in the Notice conveningensuing Annual General Meeting and Explanatory Statement annexed thereto for considerationof members.

The background of the Directors proposed for re-appointments are given in the CorporateGovernance Report which forms part of this Report.

During the year Mr. Manoj G. Tirodkar and Mr. Vijay M. Vij relinquished theirpositions as Director and Non-Executive Independent Director respectively as intimated tothe Stock Exchanges.

Mr. Vidyadhar A. Apte Company Secretary retired from the employment of the Company andaccordingly relinquished his position as Key Managerial Personnel w.e.f. November 7 2018.In his place Mr. Pratik Toprani was appointed as the Company Secretary and ComplianceOfficer w.e.f. May 1 2019.

12. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

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

i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year and percentage increase in remuneration ofeach Director Chief Executive Officer Company Secretary or Manager if any in thefinancial year:

Name Ratio to median remuneration % increase in remuneration in the financial year
Executive Directors
Mr. Sunil S. Valavalkar 1:2.73 No Change
Mr. Manoj G. Tirodkar* ^ No change
Non-executive Directors (Sitting Fees only) #
Mr. Vijay M. Vij** N.A. N.A.
Mr. D. S. Gunasingh N.A. N.A.
Mr. Navin J. Kripalani N.A. N.A.
Mrs. Siddhi M. Thakur N.A. N.A.
Mr. Badri Srinivasa Rao N.A. N.A.
Chief Financial Officer
Mr. Milind V. Bapat - No change
Company Secretary
Mr. Vidyadhar A. Apte*** ^ No change

* Relinquished the position of Director w.e.f. August 23 2018.

** Relinquished the position of Independent Director w.e.f. May 2 2018.

*** Retired from the employment of the Company w.e.f. November 7 2018.

^ Since remuneration is only for part of the year the ratio of his remuneration tomedian remuneration is not comparable and hence not stated.

# Since Non-executive Directors received no remuneration except sittingfees forattending Board / Committee meetings the required details are not applicable .

ii) The percentage increase in the median remuneration of employees in the financialyear: 14%

iii) Number of employees: The number of employees of the Company and its Associatesare 1732

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

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

v) Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration is as per remuneration policy of the Company.

13. DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 134(3)(c) of the Act the Board of Directors tothe best of their knowledge and ability in respect of the year ended March 31 2019confirm that:

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

ii) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the loss ofthe Company for that period;

iii) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; iv) they had prepared the annual accounts on a going concern basis;

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

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

14. DECLARATION BY INDEPENDENT DIRECTORS

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

15. POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION ETC.

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

16. PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS

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

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

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

17. MANAGEMENT DISCUSSION AND ANALYSIS

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

18. CORPORATE GOVERNANCE & VIGIL MECHANISM

A separate Corporate Governance Report on compliance with Corporate Governancerequirements as required under Regulation 34(3) read with Schedule V to the ListingRegulations forms part of this Report. The same has been reviewed and certified by M/s GDA& Associates Chartered Accountants the Auditors of the Company and ComplianceCertificate in respect thereof is given in Annexure A to this Report.

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

19. RISKS

A separate section on risks and their management is provided in the MD&A Reportforming part of the Annual Report. The Audit Committee monitors the risk management planand ensures its effectiveness. It is important for shareowners and investors to be awareof the risks that are inherent in the Company's businesses. The major risks faced by yourCompany have been outlined in this section to allow stakeholders and prospective investorsto take an independent view. We strongly urge stakeholders / investors to read and analyzethese risks before investing in the Company.

20. CORPORATE SOCIAL RESPONSIBILITY

In view of the negative net worth revenue below the prescribed limit and loss sufferedby the Company it is not attracted by the provisions of Section 135 of the Act. Howeverit is undertaking various projects through ‘Global Foundation' a Public CharitableTrust.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand other details are furnished in Annexure B of this Report in the formatprescribed in the Companies (Corporate Social Responsibility Policy) Rules 2014. For theCSR initiatives undertaken by Global Foundation reference may be made to MD&A Reportunder the caption "Corporate Social Responsibility". The CSR Policy is availableon the Company's website www.gtllimited.com.

21. AUDIT COMMITTEE

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

22. AUDITORS AND AUDITORS' REPORT

Auditors:

M/s GDA & Associates (FRN: 135780W) Chartered Accountants Pune were appointed asAuditors at the Twenty Ninth (29th) Annual General Meeting (AGM) to hold office fromconclusion of the said meeting till the conclusion of the Thirty Fourth (34th) AGM. Inpursuance of the provisions of Section 139 of the Act as amended since the requirementfor ratification of appointment of an Auditor at every annual general meeting has beendispensed with the Company has not incorporated such resolution in the matter.

Cost Auditors:

In terms of the provisions of Section 148(1) of the Act read with the Companies (CostRecords and Audit) Rules 2014 as amended since the Company's business (telecomnetworking services) is not included in the list of industries to which these rules areapplicable the Company is not required to maintain cost records.

Auditors' Report:

As regards the Auditors' qualified opinion and emphasis of matters the Board hasfurnished required details / explanations in Note Nos. 31.1 and 6.2 & 45 of Notes toStandalone financial statements respectively.

Secretarial Auditors' Report:

The Secretarial Audit Report is given in Annexure C (Form No. MR-3) forming partof this report.

As regards the observation on non-filing of Form MGT-14 for filing of Board Resolutionwith Registrar of Companies it is to be noted that it is on account of inadvertentomission. Necessary action is being taken for filing the same. In terms of Regulation 24Aof the Listing Regulations a Secretarial Compliance Report given by the PracticingCompany Secretary is also annexed as Annexure D to this Report.

Compliance with Secretarial Standards:

The Company has complied with applicable Secretarial Standards as prescribed by theInstitute of Company Secretaries of India.

23. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

As regards Guarantees and Investments reference may be made to Note Nos. 38c and 6 ofthe Standalone Financial Statements. No loans are given by the Company to any person /entity except to its employees as at March 31 2019.

24. PARTICULARS OF RELATED PARTY TRANSACTIONS

All related party transactions entered into during the financial year were on an arm'slength basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. The policy on Related Party Transactions as approvedby the Board is uploaded on the Company's website www.gtllimited.com. None of theDirectors has any pecuniary relationships or transactions vis--vis the Company. Theparticulars as required under the Companies Act 2013 are furnished in Annexure E(Form No. AOC-2) to this report.

25. MATERIAL CHANGES AND COMMITMENTS

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

26. SUBSIDIARIES

For the reasons stated in the previous year's Annual Reports except some of thesubsidiaries / step down subsidiaries whose operations are viable the operations ofother subsidiaries / step down subsidiaries have been scaled down or closed down. Thedomestic subsidiary viz. ADA Cellworks Wireless Engineering Pvt. Ltd. is admitted intoNCLT.

In respect of certain disinvestment of its holdings in the subsidiaries the Companyentered into agreements for sale subject to final approval of lenders of the Company andthe investee companies and other necessary regulatory approvals. Pending completion ofthese transactions the said Non-current investments in the investee companies are treatedas ‘Assets Held for Sale' in terms of AS 105. In respect of one of thosesubsidiaries the Court has appointed Joint Provisional Liquidators inter alia forreviewing the financial position of the said company and has also stayed the winding upproceedings in the matter pending final decision.

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

27. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS ANDOUTGO

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

a) Conservation of Energy:

The company has continued its enhanced focus on reduction of energy consumption attelecom tower sites through several initiatives of energy efficiency & fuel savings.

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

• Optimization of Energy cycles across circles through Energy Audits and constantmonitoring facilitated effective energy usage cash flow management and energyconservation.

• With timely rectification of electricity related faults and upkeep of EBinfrastructure organization has maintained the ‘Diesel Free' status (as defined byTAIPA) on 3151 telecom sites.

• Development & Implementation of Energy Management processes for effectivecost controlling and optimization of monthly diesel planning and management approvalprocess.

• Projects under trial / implementation for Electricity & Diesel conservation:The Company continues with the project undertaken in the earlier years

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

Installation of Deep Discharge and Quick Recharge Storage (QRS) batteries on varioustelecom sites for carbon emission reduction

iii. the capital investment on energy conservation equipment:

Due to lack of availability of Capex this investment is not undertaken.

b) Technology Absorption:

i. the efforts made towards technology absorption: Refer a(iii) above.

ii. the benefits derived like product improvement cost reduction productdevelopment or import substitution: Not Applicable.

iii. in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year):

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

iv. the expenditure incurred on Research and Development:

a. Capital: - Nil

b. Recurring: - Nil

c) Foreign exchange earnings and Outgo:

During the year under review the Company earned in terms of actual inflows foreignexchange of Rs Nil and the foreign exchange outgo in terms of actual outflows /expenditure is Rs 43.62 Crores.

28. INTERNAL FINANCIAL CONTROL SYSTEM

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

29. HUMAN RESOURCES

Our employees and associates base stood at 1732 as on March 31 2019 as against 2978as on March 31 2018. For full details refer to the Human Resources write up in theMD&A Report which forms part of the Annual Report.

30. EXTRACT OF ANNUAL RETURN AS ON MARCH 31 2019

As per the requirements of Section 92(3) of the Act and the Rules framed thereunderthe extracts of Annual Return as on March 31 2019 is annexed as Annexure G (FormNo. MGT-9) to this report. The Company has placed a copy of the same on its website atwww.gtllimited.com

31. NUMBER OF BOARD MEETINGS HELD DURING THE FY 2018-19

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

32. PROMOTER GROUP

The Promoter Group comprised of Mr. Manoj G. Tirodkar and Global Holding CorporationPvt. Ltd. Consequent to the invocation of 18599435 pledged equity shares of the Companyheld by the Promoter by the lenders on March 28 2019 the Promoter does not hold anyownership in the Company.

33. PARTICULARS OF EMPLOYEES

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

34. SPECIAL BUSINESS

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

35. ACKNOWLEDGEMENT

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

On behalf of the Board of Directors
Place : Mumbai D. S. Gunasingh
Date : August 14 2019 Chairman