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Mahanagar Telephone Nigam Ltd.

BSE: 500108 Sector: Telecom
NSE: MTNL ISIN Code: INE153A01019
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VOLUME 239692
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OPEN 22.30
CLOSE 21.80
VOLUME 239692
52-Week high 24.40
52-Week low 7.79
P/E
Mkt Cap.(Rs cr) 1,336
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Mahanagar Telephone Nigam Ltd. (MTNL) - Director Report

Company director report

To

The Shareholders

Mahanagar Telephone Nigam Limited

Dear Shareholders

Your Directors present the 34th Annual Report of yourCompany together with the Financial Statements and the Report of the Auditors as well ascomments of Comptroller & Auditor General of India (CAG) on the Financial Statementsfor the Financial Year ended on March 31 2020.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2019-20

1. Mobile Network:

A. DoT vide Office memorandum No.30-40/2019-PSU affairs dated 29thOct 2019 had informed that GoI in its cabinet meeting held on 23-10-2019 has approved theproposal of DoT for Revival of BSNL and MTNL by reducing employee costs through VRSadministrative allotment of spectrum for 4G services debt restructuring by raising ofsovereign guarantee bonds monetisation of assets and in-principle approval of merger ofBSNL and MTNL.

(a) Launching 4G Services in Delhi and Mumbai:

The allotment of spectrum has to be carried by DOT. Regarding launch of4G services in Delhi and Mumbai detailed discussions and deliberation were carried outwith senior management of BSNL to explore the possibility of best possible alternative torollout 4G services at the earliest. It was agreed that MTNL quantities may be added inthe proposed tender of BSNL. Accordingly after several round of discussions MTNL hasshared its Schedule of requirements (SoR) with BSNL for inclusion of items in their phaseIX tender so that competitive rates are received for MTNL also. Due to financialconstraints SoR for only Radio Access Network (RAN) with reduced sites 7000 (Delhi 4000and Mumbai 3000) has been sent to BSNL. The Estimated cost for Radio Access Network (RAN)is Rs. 877 Cr. BSNL has floated tender in this regard on 23rd March 2020.

B. MTNL undertook the task of improving the Wireless Network inDelhi and Mumbai so as to improve the coverage &downlink speed to 21.1 Mbps &uplink speed to 5.76 Mbps which was earlier 3.6 Mbps & 384 Kbps respectively withfollowing major projects:

I. 3G expansion & upgradation in Delhi:

Expansion of GSM / 3G RF network by adding 1080 nos. of 3G sites &800 nos. of hybrid microwave to meet the backhaul capacity and Data handling capacity to10 Gbps. In addition upgradation/replacement of 720 old Node-B and upgradation of 914 old8Mbps-Microwave Hops to hybrid M/W of 400 Mbps capacity.

II. 3G upgradation in Mumbai: Upgradation of 720 old Node-Bs andupgradation/ replacement of 497 old 8Mbps-Microwave Hops to hybrid M/W of 400 Mbpscapacity. 3G upgrade implementation of HSPA+ enhanced data speed from 3.6 Mbps to 21 Mbpsand 384Kbps to 5.76Mbps on downlink and uplink.

III. Convergence of Core Network of Delhi and Mumbai: MTNL tookinitiative to have common core of 3G network for Delhi and Mumbai. Core network of Delhiand Mumbai has been converged by migrating the core elements of Mumbai Network to Delhi.This resulted into saving of opex of Rs. 96 Cr and will help in reducing Opex on annualbasis in terms of AMC cost and staff Cost. The convergence lead to significant improvementin resource utilisation and reliability of network. With this convergence Mumbai networkis also able to utilise the benefits of upgraded core network of Delhi.

2. Wireline Network:

A. Upgradation of the MPLS Network: MTNL is planning to upgrade theentire MPLS network and make it future ready to handle the growing traffic needs of FTTHand 4G network.

B. FTTH Revenue share Policy: MTNL had worked out finalized andmade operational the policy to engage partners on revenue share basis to extend its FTTxservices. Various partners were roped in to offer the high speed broadband services onfiber. In the year 2019-20 more than 80% subscribers were added by these revenue sharepartners.

C. Redeployment of DSLAMs: Redeployment of DSLAMs of existingBroadband Network near to the subscriber premises in Delhi and Mumbai thereby reducingcopper length and enhancing the quality of broadband service. A total of 242 DSLAMs havebeen redeployed in Delhi and 203 in Mumbai till 31st March 2020 therebyreducing copper length and enhancing the quality of Broadband service. This has improvedcustomer experience and reduced the number of complaints.

D. Refurbishing of Pillars and DPs: To improve the QoS parametersrefurbishing of Pillars and DPs has been planned in phased manner. 219 Pillar and 1906 DPin Delhi & 1260 Pillar and 6455 DPs in Mumbai have been refurbished by MTNL in2019-20.

E. Replacement of Drop Wire: To improve copper pair quality1337110 mtr existing Drop wires have been replaced with twisted drop wires or thermosleeves have been put at open joints at DPs by MTNL in 2019-20.

F. Upgradation of Broadband Speed: To give boost to customerexperience Download Speed of Broadband subscribers has been upgraded to 8 Mbps withoutany additional cost depending upon feasibility and line parameters.

3. Integration of Networks between MTNL & BSNL:

Several Synergy/Integration items have also been identified and sharedwith BSNL to bring

out the best possible technical solutions as given below:

A. IT system & Infrastructure - MTNL has legacy IT system forBilling CRM provisioning financial management BSS etc however BSNL has latest ITsystem. Further in BSNL new CDR tender integration of Fixed Line N/w in BSNL platformagreed and it will be done by third party hence no issue. However efforts for ERP MobileBSS User Interface etc will be required and it is suggested that ERP shall be integratedfirst then other IT system shall be integrated.

B. Access Network (OSS & BSS) - In MTNL and BSNL various accessnetwork like PSTN Broad band FTTH Mobile Leased Line etc are working and these networkhave separate OSS and BSS system. Both the organizations have to find the network havingcommon OEM / Specification for smooth integration and for different access networkdevelopment is required.

C. Business Process - MTNL agreed for same business process &services of BSNL including customer's experiences & product / services catalogue.There may not be any requirement of extra customization done for MTNL except MTNL logoaddress as per respective LSA or as needed by regulatory requirements. However necessarytraining with respect of business process and services (including reports) andproduct/service catalogue will be provided to MTNL employee.

D. Business support systems (BSS) integration - MTNL agreed forproviding Fixed Line CDRs either through X.25 or appropriate secure channel for BSSintegration.

FINANCIAL RESULTS OF MTNL FOR THE FY 2019-20

The Standalone Financial Results of your company alongwith ConsolidatedFinancial Results for Financial Year 2019-20 is placed as an annexure to this Report.

The Standalone and Consolidated Financial highlights of your companyfor the Financial Year ended March 31' 2020 are summarized as follows:

(Rs. In Crores)

Standalone Result

Consolidated Result (MTNL its Subsidiaries JV & Associates)

2019-20 2018-19 2019-20 2018-19
Income from Operations 1536.36 1987.80 1623.55 2085.41
Expenditures (Excluding Finance Cost) 3981.16 4293.73 4067.82 4404.87
Operating Profit/(Loss) (2444.80) (2305.93) (2444.27) (2319.46)
Other Income 690.66 618.91 693.04 636.09
Finance Cost 1941.54 1703.18 1941.66 1703.18
Profit/(Loss) before Tax (3695.68) (3390.20) (3692.89) (3386.55)
Exceptional Items - - - -
Share of profit/(loss)in investments accounted for using equity methods - - 0.23 (0.64)

Standalone Result

Consolidated Result (MTNL its Subsidiaries JV & Associates)

2019-20 2018-19 2019-20 2018-19
Tax Provision for the Year - - 1.07 0.88
Profit/ (Loss) for the Year from Continuing Operations (3695.68) (3390.20) (3693.73) {3388.07)-
Profit/ (Loss) for the Year from Discontinuing Operations - -
Profit/ (Loss) for the Year (3695.68) (3390.20) (3693.73) {3388.07)
Other Comprehensive Income (115.32) (7.39) (120.44) (7.75)
Total Comprehensive Income for the Year (3811.00) (3397.58) (3814.17) {3395.82)
Appropriation - -
Interim/ Proposed Final Dividend - - - -
Dividend Tax - - - -
Transfer to/ (from): - -
a) Contingency Reserve - - - -
b) Debenture Redemption Reserve - - - -

Sources and Application of Funds for the FY 2019-20 are given below: -

SOURCES AND USES OF FUNDS 2019-20 2018-19 2019-20 2018-19
Authorised Capital 10000.00 10000.00 10000.00 10000.00
Issued Subscribed & Paid Up Capital 630.00 630.00 630.00 630.00
Other Equity (14215.65) (10364.94) (14212.10) (10357.83)'
Non-Current and Current Borrowings 22965.57 19737.16 22965.57 19737.16
Deferred Tax Liability (Net) - - 6.75 6.34
REPRESENTED BY
Property Plant and Equipment (Net Block) 3486.95 4233.78 3579.11 4329.56
Capital Work in progress 328.08 320.04 328.08 320.04
Investment Property 31.42 25.74 39.80 34.96
Intangible Asset (Net Block) 2766.21 3101.90 2766.21 3101.90
Investment 106.13 106.13 3.51 3.73
Other Assets 9937.28 6890.03 9971.35 6914.33
Other Liabilities 7276.15 6889.86 7297.84 4688.85

The company has prepared these consolidated and standalone financialresults in accordance with the Companies (Indian Accounting Standards) Rules 2015 (Ind AS)prescribed under Section 133 of the Companies Act 2013.

AMOUNT IF ANY WHICH THE BOARD PROPOSE TO CARRY TO ANY RESERVES

The Company has not transferred any amount to the Reserves in theabsence of any profits during the financial year 2019-20.

DIVIDEND

Since there hasbeen no operating profit the Board of Directors of yourcompany expresses its inability to recommend any dividend for the year under report.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITIONOF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT.

No Material changes and commitment affecting the financial position ofthe company occurred between the end of the financial year to which these financialstatements relate and the date of the report. There has been no change in the nature ofBusiness of the Company.

CAPITAL AND DEBT STRUCTURE OF MTNL

During the Financial Year there was no increase in the AuthorizedShare Capital of your Company. The Authorized Share Capital as at March 31 2020 of yourcompany was Rs. 10000 Crores comprising of 65 Crores of Preference Shares of Rs. 100 eachand 350 Crores of Equity Shares of Rs 10 each. The Paid up Equity Share Capital as atMarch 31 2020 of your company was Rs. 630 Crores comprising of 63 Crores Equity Shares ofRs. 10 each.

During the Financial Year 2019-20 your company has neither issued anyshares with differential voting rights nor has granted any stock option or sweat equity orissued any equity shares or preference shares or any securities which carry a right oroption to convert or issue any Share Warrants.

During the Financial Year 2019-20 your company has not issued anyDebentures/Bonds.

DETAILS OF PRIVATELY PLACED DEBT SECURITIES/BONDS OF MTNL AS ON 31stMARCH 2020.

Details of privately placed debt securities as on 31.03.2020

s. No. Name of the issuer ISIN Number Issuance Date Maturity Date Coupon Rate Payment Frequen cy Embedded Option if Any Embedded Option if Any Put option Detail Embedded Option if Any Call option Detail Amount Issued (in Rs) Amount Outstanding (in Rs) Name of the Debenture Truste Company Remarks if any
1

MTNL

INE153A08014 28-Mar-13 28-Mar-23 8.57%

Half Yearly

No 10050000000 10050000000

SBI Cap Trustee Company Ltd

.
2 INE153A08022 5-Dec-13 5-Dec-23 9.38% No 19750000000 19750000000 .
3 INE153A08030 26-Mar-14 26-Mar-24 9.39% No 7650000000 7650000000

Semi annual interest and principal repayment liability rest with DoT (GOI)

4 INE153A08048 19-Nov-14 19-Nov-24 8.24% No 14000000000 14000000000
5 INE153A08055 19-Nov-14 19-Nov-24 8.28% Yes Call option at the end of ninth year 1000000000 1000000000
6 INE153A08063 19-Nov-14 19-Nov-24 8.24% No 700000 700000
7 INE153A08071 28-Nov-14 28-No v-24 8.29% No 22689000000 22689000000
Grand Total 75139700000 75139700000

CREDIT RATING OF DEBT/BOND ISSUED BY MTNL ALONG WITH ANY REVISIONSTHERETO DURING THE FY. 2019-20

CRISIL and CARE have reaffirmed their 'CRISIL AAA(CE)/Stable' and CAREAAA(CE)/stable rating respectively on the Rs 7513.97 crore non-convertible debentures ofMahanagar Telephone Nigam Limited (MTNL). There has been no change in the rating given byCRISIL and CARE in last three years i.e. 2017 2018 and 2019.

REVIEW OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

Pursuant to Section 129(3) of the Companies Act 2013("Act")the consolidated financial statements of the Company and itssubsidiaries associates and joint ventures prepared in accordance with the relevantAccounting Standard specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 form part of this Annual Report. Pursuant to theprovisions of the said section a statement containing the salient features of thefinancial statements of the Company's subsidiaries associates and joint ventures in FormAOC-1 is given in this Annual Report. At present there is no material subsidiary companyof MTNL within the meaning of the Companies Act 2013 / SEBI (LODR) 2015.

The Policy on Material Subsidiary has been approved by the Board andthe same may be accessed

on the Company's Website at the link: http://mtnl.in/policymaterialsubsidy.pdf

Performance highlights of Subsidiaries Associates and Joint VentureCompanies during FY

2019-20 are briefly given as under:-

SUBSIDIARIES

(i) MAHANAGAR TELEPHONE (MAURITIUS) LTD. (MTML) (A WHOLLY OWNEDOVERSEAS SUBSIDIARY)

MTML is a 100% owned subsidiary of MTNL in Mauritius. The company ishaving license for Mobile Services International Long Distance (ILD) Services andInternet Services. In a small Island country having a population of around 13 Lacs onlyand having Mobile Tele-density of more than 150% MTML has been able to successfullyposition itself with Customer Centric Services and with patronage of more than 3 00000customers MTML is able to compete well in a saturated telecom market. The companycontinues to be in profit for 11th Consecutive Year. MTML is offering MobileServices on latest state of the art technology having 2G/3G Network all over the Islandand 4G (LTE) Services covering more than 90% of the total population. With increasedcoverage of highspeed data services on 4G and migrating more and more subscribers to its4G network MTML customers are now generating more than 1000 TB of data every month. Datadownload has multiplied by more than 250% during the financial year 2019-20. MTML hasearned Gross Revenue of approximately MUR 448.33 Million (INR 89.50 Cr) during thisfinancial year as against MUR 468.13 Million (INR 108.43 Cr) during last fiscal year.Slight fall in revenue is mainly due to falling Roaming and ILD revenue due to change incustomer usage pattern as more and more customers are now using OTT Services like whatsappfor making and receiving long distance voice and video calls. The company also faced loweconomic activity and lockdown/ curfew due to COVID19 during March 2020. Still thecompany has managed to earn a Net Profit of MUR 18.12 Million (INR 3.47 Cr) during 2019-20compared to Net Profit of MUR 18.12 Million (INR 3.41 Cr) last year. The company hasstarted focusing more on Enterprise Services and is making inroads in this challengingmarket especially because MTML doesn't have Fixed Line Services and Optical FibreNetwork. To overcome this challenge and to meet the requirements of high data growth MTMLhas been exploring the possibility of having fibre connectivity for its Mobile Towers. Atpresent all mobile sites are connected on Microwave Radio Network which has its ownlimitation in terms of growth of data carrying capacity. MTML has been able tosuccessfully engage Central Electricity Board (CEB) of Mauritius A GovernmentOrganization to provide Optical Fibre to MTML hub sites free of cost in lieu of MTMLMobile Services for its employees initially for 6 months and further extendable to oneyear. Under the proposed arrangement MTML Mobile connections will also be deployed inSmart Meter Network on trial basis which is being developed by CEB. The arrangement willstrengthen MTML's Backhaul Network for its 4G Network and to provide Carrier GradeServices for Enterprise Customers as well as create further business opportunity in SmartMeter Network. Apart from GSM Network MTML is also having CDMA Network license which wastaken in the year 2004 for 15 years. On expiry of HTML License in Jan'19 due to change intechnology the Telecom Regulator decided to vacate the spectrum by closing its CDMANetwork. On MTML's request the license was extended for

one more year and now upto 30th June'20 due to lockdown bywhen the CDMA Network will be switched off. MTML has already started the process ofmigrating willing CDMA customers to its GSM Network through various plans and schemesspecially designed for the purpose. All the expenses of the company are paid from its owninternal resources. The CAPEX for procurement of equipment is totally met from its owninternal resources. MTML is operating from its own building constructed from internalresources situated in Cyber City Mauritius which is considered to be heart of IT hub inMauritius. There is no debt liability on the Company. The company is managed by CEO CTOCFO and 10 more officers all on deputation from the parent company. Other operations aremanaged through local outsourcing

(ii) MILLENNIUM TELECOM LTD. (MTL) (A WHOLLY OWNED INDIAN SUBSIDIARY)

Millennium Telecom Ltd (MTL) is a wholly owned subsidiary of MTNLincorporated in February 2000 under the Companies Act 1956. Services being offered by MTLinclude Telecom consultancy & engineering Project Management Wi-Fi solution projecton e-governance Managed services Turnkey ICT solution GIS based services capacitybuilding and skill development etc. MTL is also moving ahead with a very high growth rate.In 2014-15 the company turned into profit making company by System Integration and otherICT related business at pan India level. During the year under report i.e. 2019-20 thecompany has earned a revenue of Rs. 1.47 crores. MTL earned a net profit of Rs. 25.67lakhs for the period ending 31st March 2020. MTL is in the process of winningover more orders in the upcoming years. A large number of Govt. Institutions have awardedworks on nomination basis which have been successfully executed by MTL. Customer listinclude Air India J & K Government Central University-(Mahendragarh) Haryana UPBuilding and Other Constructions Workers Welfare Board (BOCWWB) Lucknow Thane MunicipalCorporation CIDCO Film Division of India Insurance Institute of India etc. MTL is alsoexpanding its portfolio of services for providing generalized as well customized solutionsto suit government and semi government institutions. MTL has empanelled 26 BusinessDevelopment Associates (BDAs) for 10 years through EOI in the year 2016-17. In the F.Y2019-20 MTL has worked on various projects GIS based Survey of District Meerut andGhaziabad of UP for generating social welfare fund for labor's CESS CIDCO EPABX Server (3years contract) TMC WAN Networking (5 years contract) TMC Managed services (5 yearscontract) etc.

JOINT VENTURE

(I) MTNL STPI IT SERVICES LTD. (MSITS)

MTNL STPI IT Services Ltd. (MSITSL) is a 50:50 Joint Venture company ofMahanagar Telephone Nigam Limited (MTNL) and Software Technology Parks of India (STPI).MSITSL was incorporated on 31/03/2006 under the Companies Act 1956 with authorizedCapital of Rs. 50 Crores. MSITSL has established the physical infrastructure of state ofthe art Tier III Data Center at Chennai on space taken on lease basis from STPI. The DataCenter has server farm area of around 3500 sq. ft. and the total investment made forsetting it up was Rs.477 lakhs. This Tier III Data Center is maintaining 99.98% uptime on24X7. The commercial operation of the Data Center commenced in 2009. At present thefollowing customers have

co-located server racks for their projects and operation in the MSITSLData Centre.

• The Ministry of External Affairs (MEA) has hosted Passport SevaProject at MSITSL Data Center through M/s TCS.

• The Directorate General of Employment & Training (DGE&T)in Ministry of Labour & Employment has hosted National Career Project through STPI atMSITSL Data Centre.

• M/sRepco Bank Ltd has co-located server racks for bankingoperation.

• The Service Agreement between TCS and MSITS for co-locatingPassport Seva Project (PSP) in MSITS data center at Chennai which has expired on 11thJune 2020 has been extended upto 31.12.2020

The revenue of the company has been increasing year from the date ofits commercialization in 2009.During the year under Report MSITSL has registered aturnover of Rs.614.60 lacs as against Rs. 572.54 lacs last year which has registered anincrease of Rs.42.06 lacs over last year. MSITSL has earned a profit before tax amountingto Rs.249.79 lacs after providing for depreciation as compared to the last year's figureof Rs.205.92 lacs. Net Profit of the company after deferred tax is Rs.186.33 lacs whichwas Rs.145.70 lacs in the previous year registered an increase of Rs. 40.63 lacs.

(II) UNITED TELECOMMUNICATIONS LTD. (UTL) NEPAL

UTL is J.V Company of MTNL which consists of TCL TCIL NVPL (Nepal)& MTNL. The company provides Mobile/ILD/data services in Nepal. At present MTNL isholding 26.68% of Equity in UTL. The company has not been performing well for the last fewyears. It has huge losses. The Customer base has also reduced. It is not able to pay thestatutory dues like Royalty Fees BTS site charges and other dues to the Govt. of Nepal.The company does not have resources to clear outstandings. They have sought Equity/ Loanparticipation by its JV partners but MTNL TCIL & TCL all the Indian JV partners havedecided not to contribute any amount towards its Share Capital or Loan. All the Indian JVPartners have decided to exit from the JV and have exercised their Right to exit onJanuary 30 2018. Notice of exit (Sale of our share in JV Company) was given and wasrequired to be accepted within 3 months i.e. on or before 30.04.2018 but so far the samehas not been given effect by the UTL/ NVPL.

Accordingly such investment has been classified as "held forsale" in the financial statement for year ended 31st March 2020. Therepatriation of Indian FDI in Nepal is under the consideration of the Nepal GovernmentDepartment. MTNL and other JV Partner have taken up the matter with Ambassador of India inNepal through the secretary DoT to get the process expedited so that facilitation of theremittance of amount invested in UTL is done.

The Ministry of Foreign Affairs Govt. of Nepal has vide letter dated26.11.2019 has informed to the Embassy of India Kathmandu (Nepal) that the Authoritiesconcerned of the Govt. of Nepal would be able to grant approval for repatriation of thecapital invested by Indian Shareholders of UTL namely MTNL TCIL and TCL once theoutstanding tax amount (tariff royalties fees charges etc.) of NRs 858386044.00 tobe paid by UTL to the authorities concerned of the Govt. of Nepal including NepalTelecommunication Authority is completely settled.

During the FY 2019-20 there has been no change in subsidiariesassociates or joint ventures of the company.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2019-20 (AS ON 31stMARCH 2020)

Your Company has the following equipped and used capacity of LandlineGSM Broadband etc. as on 31st March 2020: -

S. No. Parameters MTNL Delhi MTNL Mumbai MTNL Total
1 Number of Switches 364 285 649
2 Details of Capacity
2a Fixed Phones 2416505 2586392 5002897
2b GSM 2800000 2800000 5600000
2c Broadband Capacity (in Ports) 788736 845908 1634644
3 DELs (including Fixed-Line GSM and Broadband) 4010763 3234783 7245546
3a Fixed Line 1395358 1698442 3093800
3b GSM 2181486 1178701 3360187
3c Broadband Subscribers 433939 357640 791579
4 FTTH Subscribers 20519 13833 34352
5 ISDN 7057 10560 17617
6 DLC (No.) 425 39 464
7 Tax Capacity 150000 115200 265200
8 Tandem Capacity 215500 331240 546740
9 Optical Fibre Cable
9a OFC in Route Kms 9047.845 9216.24 18264.085
9b OFC in Fibre Kms 302312.914 297002.618 599315.532
10 Leased Circuits 9548 16500 26048

HUMAN RESOURCE DEVELOPMENT

The Company attaches the highest priority to the quality ofintellectual capital at its disposal and believes that knowledge and skills of itsemployees are the key to achievements of its corporate mission. It has sound recruitmentpolicy and comprehensive training system. During the past one year your company has laidgreater emphasis on Human Resources Development. We have been devoting substantialresources on building a skilled workforce that has a capability to counter threats posedby ever changing customer base. The Company has been conducting various training anddevelopment activities which apart from reorienting the employees towards the greaterorganizational purpose are also focusing on eliminating any skill gap and technicalobsolescence. The management's view on training is one of development of employee'soverall personality and enabling them in becoming a vital productive resource.

TRAINING ACHIEVEMENTS

At present MTNL has its two in house state of the art trainingcenters one located in New Delhi

and another at Mumbai. The details of the achievement of trainingcenters at Delhi and Mumbai

are given below:

(I) THE INSTITUTE OF TELECOM TECHNOLOGY & MANAGEMENT (ITTM) NEWDELHI

The Institute of Telecom Technology and Management ITTM Shadipur NewDelhi is a state of the art training centre of MTNL Delhi engaged in imparting inductiontraining and short duration training to its officers and employees in the field ofTelecom IT Computer System and Management. ITTM has the necessary infrastructuretechnical and academic competence and excellence for providing training in specializedcourses in the field of GSM Broadband Technology Switching Transmission ExternalPlant IT Computer System Management and various wellness and Life Style Managementsubjects comprising of Motivation Positive Thinking Stress Management and Spiritualityat workplace and other health care programs. In addition to this ITTM also conductsIndustrial Training and Visits for students from Engineering Colleges and Various Schoolsof India. From April'2019 to March'2020 total 1043 MTNL Delhi (Internal Trainees) and 621External Trainees (including Industrial Training and Industrial visits) were trained atITTM. Revenue earned at ITTM for financial year 2019-20 for imparting training toEngineering/diploma students: Rs.1323960/-

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGEMENT(CETTM) MUMBAI

The Centre for Excellence in Telecom Technology & Management(CETTM) an ISO 9001-2015 certified institute is situated at Technology StreetHiranandani Gardens Powai Mumbai. CETTM's achievements during financial year 2019-20 areas follows: (a) CETTM successfully trained 1111 in-house personnel and 1535 externalpersonnel with an achievement of 11828 Trainee days. Total of 158 programs were conducted.(b) CETTM conducted 10 weeks Induction Training Program for newly recruited 03 AM(HR) 07AM (Sales & Mktg) and 07 AM(Finance) candidates in MTNL. (c) CETTM conducted 6 weeksInduction training of 5 candidates for TM promotion. (d) Students were trained throughvarious certificate courses under Corporate Social Responsibility (CSR) while 23 studentstook part in one/two/six months Project Training works. Total 1366 number of engineeringdiploma and degree college Students from 24 different Colleges took part in"Industrial Visit Programme" at CETTM during 2019-20. (e) 28 senior officersfrom Cabinet Secretariat have been trained in VOIP Next Generation Networks &Information System Security. (f) 28 officers from MMRCL have been trained in 3 days IPNetworking training program. (g) Under ITEC programme sponsored by MEA Govt. of IndiaCETTM successfully completed 2 programs giving training to a Total of 54 foreign delegatesfrom various ITEC countries. (h) Polytechnic faculties from Maharashtra State Board ofTechnical Education (MSBTE) were trained for 3 days training Course on InformationSecurity. (I) 17 polytechnic students were imparted In-plant Training (I scheme-MSBT) invarious area GM units for 6 weeks duration. (j) 3 days In-service course on "4G LTEBasics" and various onsite and in-house programs conducted in Landline BroadbandOFC Splicing PON FTTH & their troubleshooting.CETTM has

conducted various short duration Technical as well as Managementrelated courses for MTNL employees on need basis to improve MTNL services.

Workshops & Events organized by CETTM in FY 2019-20:_CETTMcelebrated 'World Telecommunications & Information Society Day' by conducting one dayworkshop on 'Network Softwarization - The New Frontier for SDN Clouds NFV Data-Centersand 5G' by Dr. Ashwin Gumaste Professor in the Dept. of CSE at IIT Bombay on 17th May2019. Yoga sessions & talk by 'Yoga Institute' personnel were conducted for MTNLemployees to celebrate 'International Yoga Day' at CETTM on 21st June 2019.Workshops on OCB and EWSD Maintenance conducted on 19/07/2019 and 22/10/2019. Workshops ofINDAS accounting training conducted in Oct-2019.

(III)SKILL DEVELOPMENT

With a vision of a Skilled India Ministry of Skill Development &Entrepreneurship (MSDE) aims to skill India on a large scale with speed and highstandards. Pradhan Mantri

Vikas Yojana (PMKVY) is the flagship scheme that is driving towardsgreater realisation of this vision. MTNL have two training centre one at Mumbai (CETTM)and another at Delhi (ITTM). Both of the training centers are engaged to meet therequirement of skill development and giving summer trainings to students of BE/ B.Tech.Short Term (One Day/ Two days) training programs for outsiders including studentshousewives & others are also being conducted. To achieve the aim of skill developmentprogramme MTNL has signed MoU with Telecom Sector Skill Council & Global Institute ofSkill Development. MTNL has also signed MoU with Gramm Vikas Trust (GVT) to run a trainingcum skilling center for promotion of entrepreneurship for the period of Five years. Underskill development programme MTNL has trained 2156 trainees in year 2019-20.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy EmployeeRelations and like tire previous year Employees Relations remained Cordial throughout theyear. The Grievances/ Issues raised by the employees/Union/Associations were given dueattention and regard. The cases/ issues brought up by them were settled through regularmeetings and interactions between Management and Unions/Associations and action asmutually agreed was taken to settle them. In pursuance of DoT OM dated 29.10.2019 anddecision of Board of Directors of MTNL the MTNL Voluntary Retirement Scheme-2019 wasintroduced vide Office Order No. MTNL/CO/ GM (HR)/VRS/NE/2016-17/337 dated 04.11.2019.Around 14387 employees took VRS and were relieved on 31.01.2020.

MTNL VOLUNTARY RETIREMENT SCHEME (VRS)- 2019

DOT vide OM. No. 30-04/2019-PSU Affairs dated 29.10.2019 had conveyedthe Cabinet's approval on revival of MTNL. One of the measures of revival was to offerVoluntary Retirement Scheme on the pattern of Gujarat Model to the employees of age 50years and above. Accordingly MTNL Voluntary Retirement Scheme 2019 was launched w.e.f.04.11.2019 to 03.12.2019 with the following salient features:Ex-Gratia equal to 35 dayssalary for each completed year of service plus 25 days salary for every year of serviceleft until superannuation shall be payable. It shall not exceed the sum of salary that theemployee would draw at the existing level.The amount of Ex-

Gratia payable to the employees entitled to combined service pensionunder Rule 37-A of CCS Pension Rules 1972 would be drawing for the balance period lefttill date of superannuation does not exceed 125% of the sum of salary at prevailing levelthat the employee would have drawn till superannuation from the effective date of VRS i.e.31.01.2020.In respect of the employees directly recruited by MTNL on or after 01.04.1986ex-Gratia will be equal to 35 days salary for each completed year of service plus 25 dayssalary for every year of service left until superannuation. VRS optees shall be eligiblefor Ex-gratia and normal retirement benefits i.e. Pension Gratuity commutation ofPension and Leave encashment. They shall be treated at par with normal retirees. Totalemployees eligible for VRS were 16361 out of which total employees opted for VRS were14387. Financial implication of payment of ex-gratia to employees is borne by theGovernment of India. The employees are also entitled to retirement benefits as per MTNLpolicy existing on VRS date.

EMPLOYEES'WELFARE

Employees Welfare Schemes like subsidized Canteen Housing Medicalfacilities Group Insurance dormitories for females working in night shift etc. continuedand maintained by the Company for its employees. Sports and Cultural activities were alsogiven priority during the year. Changeover of Contributory Group Health Insurance Schemefor retirees to CGHS- after pursuance of MTNL with DoT Ministry of Health issuedinstructions to CGHS for enrolment of MTNL retirees (drawing Govt. Pension) in the CGHS.To facilitate the same an incentive is being provided to the concerned retirees. As ondate approximately '10946' retirees in MTNL have benefited from this scheme.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirementsin promoting the use of Hindi and has been able to achieve most of the annual targets setby the Government for implementation and promotion of Hindi as Official Language in theCompany.

IMPLEMENTATION OF RESERVATION POLICY FOR SC / ST / OBC / PHYSICALHANDICAPED AND ECONOMICALLY WEAKER SECTION

The Company has endeavoured to fulfill all the statutory requirementswith regard to implementation of reservation policy for candidates to SC/ ST/ OBCcommunities as well as Physically Challenged and Economically Weaker Section candidates.

IMPLEMENTATION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION & REDRESSAL) ACT 2013

The Company has constituted an internal Committee to look into thecomplaints on Prevention Prohibition & Redressal of Sexual Harassment of Women atworkplace and matters connected therewith or incidental thereto covering all aspects ascontained in the Sexual Harassment of Women at workplace (Prevention Prohibition &Redressal) Act 2013.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst ouremployees. Special care has been taken in case of woman employees in night shifts. Also toredress the issues of Sexual Harassment at workplace special cells have been constituted.

MANPOWER STATUS

As on 31st March 2020 the total strength of employees and SC/STCategory working in the company as per details is given below: -

Group Working SC ST
A 214 55 26
B 1074 201 41
C 1742 334 28
D 1152 352 31
TSM 3 - -
Grand Total 4185 942 126

NEW RECRUITMENT

Total 18 trainee officers in the stream of Assistant Manager(HR/Marketing/Finance) at E-2 level joined MTNL.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has been suffering losses for the last few years and hence.The provisions of Section 135 of the Companies Act 2013 are not applicable. However thecompany has constituted a CSR Committee and also formed a CSR Policy in compliance withthe provisions of The Companies Act 2013 and DPE Guidelines on the subject. MTNL isundertaking non funding CSR activities like sending SMS to the public for spreadingawareness on spread of COVID 19 awareness on Swachh Bharat Pulse Polio other moves ofthe Government etc. For details regarding the CSR Committee please refer to theCorporate Governance Report which forms part of this Report. The CSR Policy is availableon the website of the company http://mtnl.in/csr 2014.pdf.

VIGILANCE

The Vigilance organization of MTNL is headed by Chief VigilanceOfficer. At present Shri H.S.Sohal CVO BSNL is in additional charge of CVO MTNL. TheCVO is responsible for complete vigilance administration in MTNL. During the year 2019-20emphasis was laid on preventive vigilance and to enhance the awareness of transparency andaccountability in working by carrying out various field inspections. Advices for systemimprovement were issued by Vigilance Unit. CTE type inspections were also carried out asper CVC guidelines. Further training programme/ seminars on vigilance/ complaintshandling and disciplinary proceedings have been conducted during the period for theemployees to make the participants understand the conduct rules of MTNL procedure forhandling departmental proceedings and improve their working efficiency. As per CVCinstructions the Vigilance Awareness Week was observed from 28/10/2019 to 02/11/2019.During this week various activities like administering of integrity pledge release ofinformation booklet on the Vigilance & Disciplinary matters with a focus on"Integrity -A way of life (beiunijl-yd tlou "ty)" Preventive Vigilance andother general conduct (Do's & Dont's) among the employees of MTNL was distributed.Also various programmes such as seminars workshops debates as well as Quiz competitionswere also organized during

vigilance awareness week. MTNL Board was regularly apprised of theprogress of disciplinary cases through for review through quarterly reports. Review ofVigilance works/matters by CMD with approval of CVO was also submitted quarterly.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

Your Company has in place a robust vigil Mechanism for reportinggenuine concerns through the company's Whistle Blower Policy. The Policy on Whistle Blowermay be accessed on the Company's Website at the link: http://mtnl.in/whistleBlowerPolicy.pdf . The Company promotes ethical behavior in all its businessactivities and has put in place a mechanism for reporting illegal or unethical behavior asdefined under Regulation 22 of SEBI (LODR) Regulation 2015. Under the Whistle BlowerPolicy the employees are free to report violations of applicable laws and regulations andthe Code of Conduct to the Chairman of the Audit Committee. During the year underreportno employee was denied access to the Audit Committee.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS

There are no significant and material orders passed by theRegulators/Courts/Tribunals that would impact the going concern status of the Company andits future operations.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with TransparencyInternational India (TII) for implementing an Integrity Pact Programme (IPP) focused onenhancing transparency in its business transactions contracts and procurement process.Under this MOU MTNL is committed to implementing the Integrity Pact in all its majorprocurement and work contract activities. The Integrity Pact has strengthened theestablished system and procedures by creating trust in various stakeholders. ThreeIndependent External Monitors (IEMs) being persons of eminence nominated by the CentralVigilance Commission (CVC) to monitor the activities. As on 31-03-2020 Shri Dhruv Kr.Agarwal [Ex-Advisor (T) DOT] Shri V. K. Gupta [Ex-Addl. DG CPWD] and Ms. Alka Sirohi[IAS (Retd)] are acting as IEMs of MTNL. The tenure of all the three IEMs has ended on22.05.2020. There have been regular Vendor and Management Meeting with IEMs during FY2019-20. The CVC has vide letter no 011/VGL/001/455 dtd 17.07.2020 has appointed SmtRashmi Goel IRAS (Retd) and Shri Dhirendra Kumar Tyagi IDSE (Retd) as new IEMs of MTNLfor a period of three years.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS & OUTGO

The provision of Section 134(m) of the Companies Act 2013 do not applyto the Company as your Company is a service provider. The total foreign exchange earningwas Rs. 1.44 Crore and the total foreign exchange expenditure was Rs. 2.08 Crore.

ENTERPRISE RISK MANAGEMENT

The Board of Directors of the Company has formed a Risk ManagementCommittee to frame implement and monitor the risk management plan for the Company. TheCommittee is responsible for reviewing the risk management plan and ensuring itseffectiveness. The Audit

Committee also has additional oversight in the area of financial risksand controls. Major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis. The development andimplementation of Risk Management Policy has been covered in the Management Discussion andAnalysis Report which forms part of this Report.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under report the Board of Directors of your Companymet Four times during the Financial Year 2019-20. The intervening gap between any twomeetings was within the period prescribed by the Companies Act 2013 & the ListingRegulations. Details of Board Meetings are given in Corporate Governance Report whichforms part of this Report. At these meetings the Board held intensive discussions on thebudget important financial transactions and various steps to face the impendingcompetition from private operators both in Basic TelephoneService Cellular MobileTelephone and other value added services.

SELECTION AND PROCEDURE FOR NOMINATION AND APPOINTMENT OF DIRECTORS ANDTHEIR REMUNERATION

MTNL being a Government Company the appointment and the terms andconditions of appointment (including remuneration) of the Whole-Time Directors are decidedby the Government of India. However the Board has constituted a Nomination &Remuneration Committee. The Government Nominee Directors do not get any remuneration fromthe Company. The Independent Directors are being paid sitting fee of Rs. 10000/- forattending each meeting of the Board or Committee thereof. They are reimbursed travelexpenses & hotel expenses on this account if any in addition to the sitting fees.Details of remuneration paid to the Whole time Directors and KMP as well as sitting feespaid to Independent Directors for the year under review are given in the CorporateGovernance Report which is attached as annexure to this report.

PERFORMANCE EVALUATION OF DIRECTORS

Ministry of Corporate Affairs (MCA) through General Circular dated 5thJune 2015 has exempted Government Companies from the provisions of Section 178 (2) ofthe Companies Act 2013 which provides about manner of performance evaluation of Board ofDirectors Committee of Board of Directors and Director by the Nomination and RemunerationCommittee. The aforesaid circular of MCA further exempted listed Govt. Companies fromprovisions of Section 134 (3) (p) of the Companies Act 2013 which requires mentioning themanner of formal evaluation of its own performance by the Board and that of its Committeesand Individual Director in Board's Report if directors are evaluated by the Ministry orDepartment of the Central Government which is administratively in charge of the companyor as the case may be the State Government as per its own evaluation methodology. NowMCA through Notification dated 05.07.2017 has amended Schedule IV of the Companies Act2013 with respect to performance evaluation of directors of the Government Companies thatin case of matters of performance evaluation are specified by the concerned Ministries orDepartments of the Central Government or as the case may be the State Governments andsuch requirements are complied with by the Government companies such provisions ofSchedule IV are exempt for the Government Companies.

Similar exemption has been requested by PSUs wing of CII from SEBIunder the SEBI LODR for all PSUs. In this regard Department of Public Enterprises (DPE)has already laid down a mechanism for performance appraisal of all functional directors.DPE has also initiated evaluation of Independent Directors.

Your Company enters into a Memorandum of Understanding (MOU) withGovernment of India each year demarcating key performance parameters for the Company. Theperformance of the Company and Board of Directors are evaluated by the Department ofPublic Enterprises vis-avis MOU entered into with the Government of India.

TRANSFEROFFUNDS/SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND(IEPF)

Your Company has not declared dividend from FY 2009-10 onwards henceprovision of transfer of unclaimed dividend and shares as per IEPF Rules is not applicableto your Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under report the Company has not entered into anyMaterial Transaction with any of its related parties. The Company's major Related PartyTransactions are generally with its subsidiaries and associates. All Related PartyTransactions if any were in ordinary course of Business and were negotiated at an Arm'sLength basis and they were intended to further the company's interest. Accordingly thedisclosure of Related Party Transactions as required under Section 134(3)(h) of CompaniesAct 2013 in Form AOC-2 is not applicable. Web link for Policy on Materiality of RelatedParty Transactions and also on dealing with Related Party Transactions has been providedin the Report on Corporate Governance which forms part of Annual Report. Details ofRelated Parties and transaction with your Company are given in Notes to the financialstatement which is a part therof.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186OF THE COMPANIES ACT 2013.

During the Year under report there was no loan or Guarantee given orinvestments made by the MTNL under Section 186 of the Companies Act 2013.

CORPORATE GOVERNANCE

Your company has complied with the Corporate Governance requirementunder the Act Listing Regulations and the relevant guidelines issued by Department ofPublic Enterprises (DPE). Your company is also complying with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India (ICSI). A certificatefrom M/s V.K. Sharma & Co. Practising Company Secretaries regarding compliance ofconditions of Corporate Governance as stipulated under Schedule V (E) of SEBI (LODR) 2015for the FY 2019-20 and Annual Secretarial Compliance Report for the FY 2019-20 pursuant toSEBI Circular No. CIR/CFD/CMD1/27/2019 dated 8th February 2019 has been obtained from M/sMritunjay Shekhar & Associates Practising Company Secretaries is also placed atannexure to this report. Further a separate section on Corporate Governance is alsoplaced as annexure to this report.

EXTRACT OF ANNUAL RETURN

As provided under Section 92 of the Act and rules framed thereunder theextract of Annual Return in Form MGT-9 is given as Annexure which forms part of thisreport. In compliance with Section 134 (3) (a) of the Act an extract of Annual Return isalso uploaded on MTNL Website and can be accessed at www.mtnl.net.in.

IMPLEMENTATION OF CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON"GREEN INITIATIVES IN CORPORATE GOVERNANCE"

In accordance with the MCA Circular No 14/2020 dtd 08.04.2020 CircularNo 17/2020 dtd 13.04.2020 and Circular No 20/2020 dtd 05.05.2020 and SEBI vide itsCircular No. SEBI/HO/ CFD/CMD1/CIR/P/2020/79 dtd 12/05/2020 and to ensure compliance ofGreen Initiative your Company has sent various documents including Notice of the 34thAGM Audited Financial Statements Directors' Report Auditors' Report for the F.Y.2019-20 etc. to its shareholders only in electronic form at the e-mail addresses provided/ registered by members and made available to us by the Depositories (NSDL/CDSL). Themembers are advised to update by registering changes if any in their e-mail addresswith the concerned Depository Participant. Your Company shall also display full text ofNotice of 34th AGM & Annual Report 2019-20 at its website www.mtnl.net.in.Your Company looks forward towards active participation of Shareholders in this"Green Initiative" and request all Shareholders who have not so far suppliedtheir e-mail addresses to give the same at the earliest. There will be no dispatch byPost of Notice of 34th AGM and Annual Report 2019-20 to shareholders having noemail ids in compliance with Circulars of MCA.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act2013 the Directors to the best of their knowledge and belief confirm that:

(a) In the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;

(b) the directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit or loss of the company for that period;

(c) the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concernbasis and

(e) the directors had laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating efficiently.

(f) the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company had maintained in all respects adequate internalfinancial controls over financial reporting and such internal control over financialreporting were operating effectively during the Financial Year 2019-20 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components on internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India (ICAI). Report on the Internal Financial Control under Section143(3)(1) of the Companies Act 2013 for the FY 2019-20 is attached as annexure to theIndependent Auditors Report which is part of the report.

FIXED DEPOSITS

Your Company has not invited/ accepted any fixed deposits under Section73 of the Companies Act 2013 read with the Companies (Acceptance of Deposit) Rules 2014during the year and as such no amount of principal or interest was outstanding as on theBalance Sheet date on this account.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

The provisions of Section 197(12) of Companies Act 2013 read with Rule5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 arenot applicable to your Company as being a Govt. Company.

BUSINESS RESPONSIBILITY REPORT (BRR)

The Listing Regulations mandate the inclusion of the BusinessResponsibility Report as part of the Annual Report for top 1000 listed companies based onMarket Capitalization and your company comes under top 1000 list. MTNL is disclosingBusiness Responsibility Report (BRR) as partof Annexure to this report. The BRR maps thesustainability performance of your Company against the reporting framework suggested bySEBI.

STATUTORY AUDITORS

M/s. Kumar Vijay Gupta & Co. Chartered Accountants and M/s VinodKumar & Associates Chartered Accountants have been appointed as Joint StatutoryAuditors of your Company by the Comptroller and Auditor General (CAG) of India for theFinancial Year 2019-20 and the Board has already ratified their appointment on 14.11.2019.

COST AUDITORS

M/s R. M. Bansal & Co. Cost Accountants have been appointed asCost Auditors of your company for carrying out audit under Section 148 of the CompaniesAct 2013 for the cost records as maintained under Section 209(1)(d) of CompaniesAct1956 and as notified under: (i) Cost Accounting Records (Telecommunications)Rules2002 & (ii) Cost Audit Rules2001. The Cost Audit Report alongwith the Annexuresfor the Financial Year 2018-19 have been submitted to the Central Government in the FormI-XBRL format on MCA portal on 19/12/2019.

SECRETARIAL AUDITORS

Your Company has appointed M/s R. P. Sehgal & AssociatesPractising Company Secretaries to conduct the Secretarial Audit of the Company for theFinancial Year 2019-20. The Secretarial Audit Report of M/s R. P. Sehgal & Associatesare given in as annexure to this report.

AUDITORS QUALIFICATIONS AND MANAGEMENT REPLY THERETO

The replies to the observation of the Statutory Auditors for theFinancial Year 2019-20 are given as annexure. The Comments of the Comptroller and AuditorGeneral of India (CAG) on the Financial Statements and the replies of the Managementthereon are also given in the annexure to the Directors' Report.

FRAUD REPORTED BY AUDITORS

The Auditors of the Company have not reported any fraud as specifiedunder second proviso of Section 143(12) of the Companies Act 2013 (including anystatutory modification(s) or re- enactment(s) thereof for the time being enforce).

CRITERIA FOR DETERMINATING QUALIFICATION POSITIVE ATTRIBUTES ANDINDEPENDENCE OF A DIRECTOR

(i) Qualification:- The Board of Directors of your Company hasformulated criteria for appointment of Whole time Directors in your Company. The selectionof Whole time Directors is done by Public Enterprise Selection Board (PESB) on the basisof such criteria.

(ii) Positive Attribute:- Apart from the duties of Directors asprescribed in the Companies Act the Directors are expected to demonstrate high standardsof ethical behavior communication skills and independent judgment. The Directors are alsoexpected to abide by the respective code of conduct as applicable to them

(iii) Independence:- A Director is considered as independent ifhe/she meets the criteria laid down in Section 149(6) of the Act the Rules framed theirunder and Regulations 16(1)(b) of the Listing Regulations.

INDEPENDENT DIRECTOR DECLARATION

The Independent Directors have submitted a declaration/confirmationthat they meet the criteria of independence as lad down in section 149 (6) of CompaniesAct 2013 & Regulation 16 (1) (b) of the Listing Regulation and they are not aware ofany circumstances or situation which exist or may be reasonably anticipated that couldimpair or impact their ability to discharge their duties with an objective independentjudgment and without any external influence pursuant to Regulation 25 of the ListingRegulations.

The following Non-Executive Director are Independent as on March 312020: -

1. Smt. Suneeta Trivedi

2. Shri Chinmay Basu

3. Smt. G. Padmaja Reddy

4. Shri K. B. Gokulchandran

DIRECTORS & KEY MANAGERIAL PERSONNEL

The Company has a very balanced and diversified Board of Directors withan optimum mix of Executive [represented by CMD Director (HR & EB) Director(Finance) and Director (Technical)] Non-Executive [represented by Government Directors]and Independent Directors.

List of Present Directors of MTNL as on 31-07-2020 is given in theCorporate Governance Report. During the period under report the following changes tookplace in the Directorship/ Key Managerial Personnel (KMP) of Your Company: -

1. Shri R. K Khandelwal ceased to be Government Nominee Director on30.05.2019.

2. Shri Navneet Gupta Jt. Secretary (Admin) Government of India wasappointed as Government Nominee Director vide DoT letter no. E-5-4/2019-PSA dtd27.05.2019.

3. Smt Tiakala Lynda Yaden ceased to be Government Nominee Director on24.09.2019.

4. Shri P. K. Purwar ceased to be CMD of MTNL w.e.f 15.07.2019 and wasgiven additional charge of CMD vide DOT letter no. E-2-2/2019-PSA dtd.13.04.2020 w.e.f15.04.2020.

5. Shri Sunil Kumar Director (HR & EB) was entrusted withadditional charge of CMD vide DOT letter no. E-2-2/2019-PSA dtd.24.07.2019 w.e.f24.07.2019 till 15.04.2020.

6. Shri Rakesh Nangia and Shri Ashok Mittal ceased to be Independentdirectors w.e.f. 31.01.2020.

7. Shri Mahmood Ahmed DDG LFA DoT Government of India was appointedas Government Nominee Director vide DoT letter no. E-5-4/2019-PSA dtd 05.02.2020.

Pursuant to the provisions of Section 203 of the Act the KeyManagerial Personnel (KMP) of your Company as on 31.03.2020 are: -

i) Shri Sunil Kumar Director (HR&EB} (Relinquished additionalcharge of CMD on 15.04.2020)

ii) Shri Milind Vijay Joshi Director (Finance)

iii) Shri Sanjeev Kumar Director (Technical)

iv) Shri S.R. Sayal Company Secretary

Apart from the above no other Director (including IndependentDirectors) or KMP were appointed or had retired or resigned during the Financial Year2019-20. Details of Board of Directors are given in the Corporate Governance Report.

RETIREMENT OF DIRECTORS BY ROTATION

In accordance with the provisions of Section 152 of the Companies act2013 read with Article 66 F of the Articles of Association of the Company. Shri SunilKumar Director (HR & EB) and Shri Navneet Gupta Director retire by rotation at theforthcoming Annual General Meeting and being eligible offer themselves for reappointment.Brief particulars of director seeking reappointment together with their directorships inother companies and committee memberships have been given in the annexure to the notice ofAnnual General Meeting in pursuance to Regulation 36(3) of SEBI (LODR) Regulations 2015and Secretarial Standards 2 issued by ICSI.

COMMITTEES OF THE BOARD

The Company has Five Board Level Committees as on 31.03.2020:

1. Audit Committees.

2. Nomination & Remuneration Committees.

3. Stakeholder Relationship Committee.

4. Risk Management Committee

5. Corporate Social Responsibility Committee

Details of all the Committees along with their main terms compositionand meeting held during the year under review are provided in the report on CorporateGovernance a part of this annual report.

ACKNOWLEDGMENT

Your Directors take this opportunity to gratefully acknowledge thehelp guidance and support received from Department of Telecom (DoT) and variousMinistries of the Government of India. Your Directors are especially grateful to itsBankers all stakeholders and investors including ADR holders for their continuedpatronage and confidence reposed in the company. The Directors would like to express theirthanks for the sincere hard work and dedicated services rendered by every employee of thecompany. The Board is confident that with the employees' continued enthusiasm initiativeand dedicated efforts your company could face the new challenges and opportunitiesarising out of the resultant competition from private operators in the Cellular MobileBasic Telephone Internet services and other Value Added services.

For and on behalf of the Board of Directors
Sd/-
(Shri P.K.Purwar)
CM D
PLACE: NEW DELHI
DATE: 15.09.2020

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