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BSE: 504112 Sector: Telecom
NSE: NELCO ISIN Code: INE045B01015
BSE 00:00 | 02 Mar 222.10 2.60






NSE 00:00 | 02 Mar 222.25 2.90






OPEN 220.00
VOLUME 28061
52-Week high 241.95
52-Week low 109.05
P/E 73.30
Mkt Cap.(Rs cr) 507
Buy Price 221.00
Buy Qty 150.00
Sell Price 222.10
Sell Qty 57.00
OPEN 220.00
CLOSE 219.50
VOLUME 28061
52-Week high 241.95
52-Week low 109.05
P/E 73.30
Mkt Cap.(Rs cr) 507
Buy Price 221.00
Buy Qty 150.00
Sell Price 222.10
Sell Qty 57.00

NELCO Ltd. (NELCO) - Director Report

Company director report


The Members

The Directors have pleasure in presenting Seventy Seventh Annual Report of NelcoLimited (Company or Nelco) alongwith the Audited Statement of Accounts for the year ended31st March 2020.

As informed in the previous year's Annual Report the Hon'ble National Company LawTribunal (NCLT) Mumbai Bench approved the Composite Scheme of Arrangement andAmalgamation (Scheme) involving the internal restructuring of the various businesses ofthe Company and its two wholly owned subsidiaries viz. Tatanet Services Limited (TNSL) andNelco Network Products Limited (NNPL). The necessary steps for obtaining approval fromDepartment of Telecommunications (DoT) for transfer of VSAT and ISP licenses from TNSL toNelco have been taken after which the Scheme will become effective. The said approval isawaited.

In the first phase of the Scheme Nelco will transfer its two businesses to NNPL on agoing concern basis by way of slump sale. These businesses are (a) ISSS and (b) sale andmaintenance of VSAT and related equipment. In the second phase TNSL will amalgamate withNelco. Post the said restructuring the VSAT Communication service business will be inNelco which is the listed parent entity and the related equipment business will be inNNPL. The VSAT and ISP licenses will be transferred from TNSL to Nelco.

1. Financial Results

Pending the DoT approval as aforesaid the Scheme has not been given effect to in thefinancial results for the year ended 31st March 2020.

( Rs in lakhs)

. Particulars



FY 2019-20 FY 2018-19 FY 2019-20 FY 2018-19
A Continuing Operations
a Net Sales / Income from Other Operations 3833 3357 21993 19101
b Operating Expenditure 2947 2914 17016 15502
c Operating Profit 886 443 4977 3599
d Add:- Other Income 241 245 259 428
e Less: - Finance Cost 508 439 1323 738
f Profit before depreciation and Tax 619 249 3913 3289
g Less: - Depreciation/Amortization/Impairment 72 93 2002 1296
h Less: - Minority Interest





Add: - Share of Profit of Associates - - - 9
j Net Profit/(Loss) after Minority interest and Share of Profit of Associates 547 156 1911 2002
k Exceptional items 564 - 115 -
l Current/Deferred Tax Expenses 284 (779) 588 (227)
m Net Profit/(Loss) after Tax Minority interest and Share of Profit of Associates from Continuing Operations 828 935 1438 2229
B Discontinuing Operations* (being transferred to Wholly Owned Subsidiary)
n Profit from Discontinuing operations (before exceptional item and tax) 682 1192 - -
o Add: -Exceptional Profit





E_ Tax Expenses 141 355 - -
q Profit after Tax from Discontinuing operations 541 837



C Profit after tax from Total Operations 1368 1772 1438 2229
r Add: Other comprehensive Income/(expenses) (31) (21) (31) (22)
s Total Comprehensive Income 1337 1751 1407 2207

* Operations that are being transferred to Nelco Network Products Ltd. (Wholly OwnedSubsidiary) as a part of internal restructuring.

2. Dividend

For FY 2019-20 the Board of Directors has recommended a dividend of Rs 1.20/- pershare i.e. 12% (previous year Rs 1.50 per share i.e. 15%) on the Equity Shares of theCompany. If declared by the Members at the ensuing Annual General Meeting ('AGM') thetotal dividend outgo during FY 2020-21 would amount to Rs 273 lakhs (previous year Rs 403lakhs including dividend distribution tax).

3. Financial Performance and the state of the Company's affairs

3.1 Standalone

On a Standalone basis your Company achieved revenue of Rs 3833 Lakhs in FY 2019-20from Continuing Operations as against Rs 3357 Lakhs in FY 2018-19. On a total operationbasis your Company achieved revenue of Rs 15073 Lakhs in FY 2019-20 as against Rs 12632Lakhs in FY 2018-19.

In FY 2019-20 the Company earned a net profit after tax of Rs 1368 Lakhs from totaloperations as against profit of Rs 1772 Lakhs in FY 2018-19. Despite of higher operatingprofit in the current year there is lower net profit in comparison to previous year due todeferred tax benefit recognised in the previous year.

Profit from Discontinuing Operations are calculated considering the direct cost ofthose Operations and interest on identifiable loans that are being transferred under theScheme. The entire corporate overheads are considered part of Continuing Operations.

3.2 Consolidated

On a Consolidated basis revenue from Operations was Rs 21993 Lakhs in FY 2019-20 asagainst Rs 19101 Lakhs in FY 2018-19 i.e. increase by 15% over previous year.

Based on evaluation of key financial parameters the Company believes that it operatesin only one reportable segment i.e. Network Systems and accordingly the financial resultsare reported as single reportable segment from the year ended 31st March 2020.Consequently prior period comparatives have been modified to conform to current period'spresentation.

The Company earned a net profit after tax of Rs 1438 Lakhs from total operations asagainst profit of Rs 2229 Lakhs in FY 2018-19. No material changes and commitments haveoccurred after the close of the year under review till the date of this Report whichaffect the financial position of the Company.

3.3 Operations

Information in detail has been given in the Management Discussion & Analysis whichforms a part of this report.

3.4. Exceptional items

During the year ended 31st March 2020 the Company sold its entireinvestment in Nelito Systems Limited (associate company) which was classified as assetsheld for sale in the previous year. The resultant gain on sale of said investment has beendisclosed as an exceptional item in the financial results.

3.5 Covid-19 pandemic

The Covid-19 pandemic is redefining global health crisis of recent times and isspreading rapidly across the globe. The bigger challenge is that it is not a mere healthcrisis and is having an unprecedented impact on Indian and global business environment.The Company has taken all necessary measures in terms of mitigating impact of thechallenges being faced in the business due to the Covid-19 pandemic. Though the long-termdirections of the Company remain firm in light of Covid-19 and its expected impact on theoperating environment the immediate key priorities of the Company would be to closelymonitor customer demand conserve cash and control fixed costs while continuing to investin the important long term growth areas.

The Ministry of Home Affairs Government of India on 24th March 2020notified the first ever nationwide lockdown in India to contain the outbreak of Covid-19.Towards the end of the quarter ended March 2020 the operations were disrupted across thecountry. The Company and its subsidiaries (Group) continued to provide SatelliteCommunication services through VSAT during the lockdown period as these are part of theessential services under "Telecommunication Internet Services Broadcasting andcable services" by obtaining the necessary permissions from the concerned Govtauthorities. The number of new VSATs deployed during this period however was lower becausethe offices of most of the customers were closed. Moreover there were restrictions onmovement in certain areas. The deployment of VSATs will be improved progressively as theGovernment has taken measures leading to relaxation on movement and easing of supply andservice constraints.

The Group has evaluated the impact of Covid-19 on its businesses financial risks(including credit risks and liquidity risks) and will continue to monitor these on futurebusiness environment. In the fight against spread of Covid-19 the Company inter alia has:

• adhered to all the advisories and guidelines issued by the Government from timeto time;

• contributed to the community in various ways - including the voluntary financialcontribution by Company and its employees to the Tata Community Initiatives Trust;

• ensured to provide to all employees a safe working environment with strongprocesses and protocols in place.

4. Reserves

The Board of Directors has decided to retain the entire amount of profit for FinancialYear 2019-20 in the statement of profit and loss.

5. Subsidiary Companies

5.1 The Company has two wholly owned subsidiaries viz. Tatanet Services Ltd. (TNSL)& Nelco Network Products Ltd. (NNPL).

TNSL holds the VSAT License as well as the Inflight & Maritime Communication (IFMC)licence issued by Department of Telecommunication (DoT). Government of India (Departmentof telecommunication 'DOT') vide its notification dated 14th December 2018 hasgiven permission to long awaited IFMC. TNSL has taken lead to provide IFMC servicesimmediately after obtaining license from DOT. During the year Company has already startedproviding maritime and in-flight connectivity services. The Revenue of TNSL for FY 2019-20was Rs 11617 Lakhs against Rs 9827 Lakhs in the previous year. The Profit after tax wasRs 564 Lakhs against Rs 468 Lakhs in the previous year. NNPL has not yet commenced itsbusiness operations. It has incurred a loss of Rs 4 Lakhs for FY 2019-20 and theaccumulated loss since incorporation was Rs 12 Lakhs.

5.2 The organisational and operational structure would be simplified on implementationof the Scheme of Arrangement and Amalgamation with the VSAT communication service businessvesting in the Company the flagship listed parent entity and the related equipmentbusiness vesting in NNPL. This would result in the recurring revenue from VSATcommunication service being in the Company and the revenue from sale of equipmentincluding VSAT systems being in NNPL. The enhanced net worth of the Company after theScheme is effective will improve its ability to bid for larger projects and pursue biggeropportunities. Also there will be increase in overall efficiency in terms of utilizationof assets employees etc.

5.3 Pursuant to NCLT Order the Company intimated the Registrar of CompaniesMaharashtra ("RoC") about the approval of the Scheme by NCLT mentioning interalia that the Scheme would be effective only after the approval of DoT for transfer oflicenses of TNSL to Nelco which is pending. The RoC records however got updated (pendingsuch DoT approval) to reflect the Scheme as effective and accordingly TNSL stands"amalgamated" with the Nelco. Based on legal advice the Company approached NCLTto direct the RoC to amend their records to reinstate TNSL to its earlier status andcancel the effect of the Scheme with immediate effect. This matter is pending for decisionbefore NCLT. The Scheme will be given effect in the financial statements on receipt of allnecessary approvals.

There has been no major change other than those mentioned above in business of theaforesaid wholly owned subsidiary Companies.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 (Act) astatement containing the salient features of financial statements of the Company'ssubsidiaries in Form AOC-1 is attached to the financial statements of the Company.

Further pursuant to the provisions of Section 136 of the Act the financial statementsof the Company consolidated financial statements along with relevant documents andseparate audited financial statements in respect of subsidiaries are available on thewebsite of the Company

The Policy for determining material subsidiaries of the Company has been provided inthe following link:

6. Directors and Key Managerial Personnel Directors Appointment

Pursuant to the recommendation of the Nomination and Remuneration Committee ('NRC')the Board of Directors appointed Mr. Anand Agarwal as Additional Director of the Companywith effect from 24th October 2019. In accordance with Section 161(1) of theAct he holds office upto the date of the ensuing AGM and a Notice under Section 160(1) ofthe Act has been received from a Member signifying the intention to propose hisappointment as Director. Further based on the recommendations of NRC the Board alsoappointed Mr. K.N.Murthy Dr. Lakshmi Nadkarni and Mr. Ajay Kumar Pandey as IndependentDirectors of the Company for a period of five consecutive years w.e.f. 28thJanuary 2020 subject to approval of the Members at the ensuing AGM. The Board recommendstheir appointment as Independent Directors of the Company.


Mr. Rahul Shah the nominee of the Parent Company The Tata Power Company Ltd. (TPC)resigned from the Board of Directors of the Company w.e.f. 24th October 2019 tofacilitate restructuring of the Board of Nelco Ltd. as per the decision of TPC.

During the year under review Mr. K.Raghuraman Mr. K.Ramachandran and Ms. HemaHattangady Independent Directors of the Company who were appointed at the 72ndAnnual General Meeting of the Company held on 28th January 2015 for a period of5 years completed their tenure as Independent Directors of the Company on 27thJanuary 2020 at the close of working hours.

The Board places on record its appreciation for invaluable contribution and guidance ofMr. Rahul Shah Mr. K. Raghuraman Mr. K.Ramachandran and Ms. Hema Hattangady duringtheir tenure as Directors.


In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Mr. R. R. Bhinge retires by rotation at the ensuing AGM andbeing eligible has offered himself for re-appointment.

Independent Directors

On the recommendation of NRC Mr. K.N.Murthy Dr. Lakshmi Nadkarni and Mr. Ajay KumarPandey were appointed as Additional and Independent Directors of the Company for a periodof 5 years from 28th January 2020 to 27th January 2025. Resolutionsseeking approval of Members for their appointment forms a part of the Notice of ensuingAGM. The Board recommends their appointment.

In terms of Section 149 of the Act and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 (Listing Regulations) Mr. K. N.Murthy Dr. LakshmiNadkarni and Mr. Ajay Kumar Pandey are the Independent Directors of the Company as ondate. The Company has received declarations from them confirming that they meet thecriteria of independence as prescribed under Section 149(6) of the Act read with rulesframed thereunder and Regulation 16(1) (b) of the Listing Regulations. In terms ofRegulations 25(8) of the Listing Regulations the Independent Directors have confirmedthat they are not aware of any circumstance or situation which exists or may beanticipated that could impair or impact their ability to discharge their duties.

In the opinion of the Board the Independent Directors fulfil the conditions ofindependence specified in the Act and the Listing Regulations and are independent of themanagement. Further the Board is of the opinion that the Independent Directors of theCompany possess requisite qualifications experience and expertise in their respectivefields and that they hold highest standards of integrity.

Further the Independent Directors of the Company wherever applicable have undertakenrequisite steps towards the inclusion of their names in the data bank of IndependentDirectors maintained with the Indian Institute of Corporate Affairs in terms of Section150 of the Act read with Rule 6 of the Companies (Appointment & Qualification ofDirectors) Rules 2014.

Additional information and brief profile as stipulated under Listing Regulations andSecretarial Standards-2 on General Meetings with respect to Mr. Bhinge being a Directorseeking re-appointment and other Directors seeking appointment is annexed to the Notice ofAGM.

During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting fees andreimbursement of expenses incurred by them for the purpose of attending meetings of theBoard/Committee of the Company.

Pursuant to Section 203 of the Act the Key Managerial Personnel of the Company as on31st March 2020 are:

• Mr. PJ. Nath Managing Director & CEO

• Mr. Uday Banerjee Chief Financial Officer

• Mr. Girish Kirkinde Company Secretary & Head-Legal

Number of Board meetings

During the year under review Seven Board Meetings were held. For further detailsplease refer Report on Corporate Governance.

Governance Guidelines:

The Company has adopted Governance Guidelines on Board Effectiveness. The saidGuidelines covers aspects related to composition and role of the Board Chairman andDirectors Board diversity definition of independence Director's term retirement ageand Committees of the Board. It also includes aspects relating to nomination appointmentinduction and development of Directors Director Remuneration subsidiary oversight Codeof Conduct Board Effectiveness Review and mandates of Board Committees.

7. Annual Evaluation of Board Performance and Performance of its Committees andIndividual Directors

As required under the Act and Listing Regulations the Board has carried out formalannual evaluation of the performance of the Board its Committees and of individualdirectors. The performance of the Board was evaluated by the Board after seeking inputsfrom all the Directors on the basis of criteria such as the Board composition andstructure effectiveness of board processes information and functioning etc.

The performance of the Committees was evaluated by the board after seeking inputs fromthe Committee members on the basis of criteria such as the composition of Committeeseffectiveness of Committee meetings etc.

The above criteria are based on the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India on 5th January 2017.

In a separate meeting of Independent Directors performance of non-IndependentDirectors the Board as a whole and the Chairman of the Company was evaluated consideringthe views of Executive Director and non-Executive Directors.

The Board and the NRC reviewed the performance of individual Directors on the basis ofcriteria such as the contribution of the individual Director to the Board and Committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc.

In the Board meeting that followed the meeting of the Independent Directors and meetingof Nomination and Remuneration Committee the performance of the Board its Committeesand individual Directors was also discussed. Performance evaluation of IndependentDirectors was done by the entire Board excluding the Independent Director beingevaluated.

Based on inputs received from the Board members it emerged that the Board had a goodmix of competency experience qualifications and diversity. Each Board member contributedin his/her own manner to the collective wisdom of the Board keeping in mind his/her ownbackground and experience. There was active participation and adequate time was given fordiscussing strategy. Overall the Board was functioning very well in a cohesive andinteractive manner.

7.1 Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisionsin line with the delegated authority. The following substantive Committees constituted bythe Board function according to their respective roles and defined scope:

• Audit Committee of Directors

• Nominations HR and Remuneration Committee (NRC)

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Executive Committee of the Board

Details of composition terms of reference and number of meetings held for respectiveCommittees are given in the Report on Corporate Governance which forms part of the AnnualReport. Further during the year under review all recommendations made by the AuditCommittee have been accepted by the Board.

The details of the familiarization programs for Independent Directors are disclosed onthe Company's website and the web link for the same is:

The Company has adopted a Code of Conduct for its Non-Executive Directors including acode of conduct for Independent Directors which suitably incorporates the duties ofIndependent Directors as laid down in the Act. The Company has also adopted the Tata Codeof Conduct for its employees including the Managing and Executive Directors. The abovecodes can be accessed on the Company's website at

In terms of the Listing Regulations all Directors and senior management personnel haveaffirmed compliance with their respective codes. The CEO & Managing Director has alsoconfirmed and certified the same which certification is provided at the end of the Reporton Corporate Governance.

7.2 Remuneration Policy for the Directors Key Managerial Personnel and other Employees

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read withPart D of Schedule II to the Listing Regulations the NRC is responsible for formulatingthe criteria for determining qualification positive attributes and independence of aDirector. The NRC is also responsible for recommending to the Board a policy relating tothe remuneration of the Directors Key Managerial Personnel and other employees. In linewith this requirement the Board has adopted the Policy on Board Diversity which isreproduced in Annexure-I forming part of this report and Remuneration Policy forDirectors Key Managerial Personnel and other employees of the Company is available on thewebsites of the Company at

Silent Features of this policy are as under:-

• The philosophy for remuneration of Directors Key Managerial Personnel("KMP") and all other employees of Nelco Ltd. ("company") is based onthe commitment of fostering a culture of leadership with trust. The remuneration policy isaligned to this philosophy.

• Independent Directors ("ID") and non-independent non-executivedirectors ("NED") may be paid sitting fees (for attending the meetings of theBoard and of committees of which they may be members) and commission within regulatorylimits.

• Overall remuneration should be reflective of size of the company complexity ofthe sector/industry/company's operations and the company's capacity to pay theremuneration.

• The NRC will recommend to the Board the quantum of commission for each directorbased upon the outcome of the evaluation process which is driven by various factorsincluding attendance and time spent in the Board and committee meetings individualcontributions at the meetings and contributions made by directors other than in meetings.

• The extent of overall remuneration to Managing Director ("MD")/Executive Directors("ED")/ KMP/ rest of the employees should be sufficient toattract and retain talented and qualified individuals suitable for every role.

• The remuneration mix for the MD/EDs is as per the contract approved by theshareholders.

• In addition to the basic/fixed salary the company provides to other KMPs andemployees with certain perquisites allowances and benefits to enable a certain level oflifestyle and to offer scope for savings and tax optimization where possible and alsoperformance linked bonus.

• Remuneration is payable to Director for services rendered in professionalcapacity and which NRC is of the opinion that the director possesses requisitequalification for the practice of the profession.

• There is no change in the aforesaid policies during the year under review.

• Except the Performance Linked Payment (PLP) which is a part of his Cost to theCompany (CTC) the Managing Director & CEO has neither received any commission fromthe Company nor from its Holding or Subsidiary Company.

7.3 Particulars of Employees and Remuneration

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 ('Rules) is provided in Annexure - II (A) forming partof this Report.

The information required under Section 197(12) of the Act read with Rule 5(2) and (3)of the Rules is provided in the Annexure II (B) forming pat of this Report. In terms offirst proviso to Section 136 of the Act the Report and Accounts are being sent to theMembers excluding the aforesaid Annexure II (B). Any Member interested in obtaining thesame may write to the Company Secretary at the Registered Office of the Company. None ofthe employees listed in the said Annexure II (B) is related to any Director of theCompany.

8. Significant and material Orders passed by the Regulators or Courts or Tribunal

There were no significant and material orders passed by the Regulators / Courts orTribunal which would impact the going concern status of the Company and its futureoperations. Further no penalties have been levied by Regulators during the year underreview.

8.1 Income Tax matters of Nelco Ltd.

Income Tax Department has reduced certain liabilities of Rs 1893 Lakhs while computinglong term Capital Gain on a business sold under slump sale for Assessment Year 2011-12due to which a tax demand of Rs 631 Lakhs has been raised on the Company. The saidliabilities are not directly related to the businesses sold and as such the Company hasgone in appeal against the demand. During the year Company has received order fromCIT(Appeals) rejecting claims of the Company and confirming tax demand. Company has filedappeal in ITAT against order of the CIT(Appeals).

8.2. Goods and Service Tax (GST) transition Input Tax Credit (ITC) of Nelco Ltd.

Upon implementation of GST from July 2017 for carry forward and set off old servicetax input credit the Company was required to file form Trans 1. However due to technicalglitches on the web portal of GST Department the Company could not file form Trans 1. Asresult of this automatic carry forward and set off transition ITC of Rs 31 lakhs was notallowed to Company. To seek remedy Company has filed writ petition before Hon'ble HighCourt of Bombay. Hon'ble High Court of Bombay vide its order dated 20th March2020 dismissed the petition of the Company and disallowed Company's claim. However thereare judgements of various High Courts in India on the matter similar to that of Companywhich supports claim of the Company. Also based on opinion received from independent legalcounsel Company is confident that claim of the Company will be allowed. Company isplanning to file Special Leave Petition before Hon'ble Supreme Court. Considering thisCompany has not made any provision towards disallowance of transition input tax credit.

8.3. Sales Tax matters of Tatanet Services Ltd. (TNSL) Wholly Owned Subsidiary

Maharashtra Sales Tax Department (Dept.) has issued orders against TNSL demandingpayment of MVAT on the entire satellite communication services provided by TNSL claiming"The facility to use the transponders is a property is commercial in nature andgoods and therefore transaction of lease of facility to use the transponders is a deemedsale and accordingly MVAT is applicable." The orders issued are for financial year2006-07 to 2010-11 and aggregate amount under dispute is Rs 38.36 Crores. The Companyfiled writ petition in Bombay High Court for the financial year 2008-09. The said WritPetition was disposed by the Bombay High Court and referred to Maharashtra Sales TaxTribunal (MSTT) to decide the above-mentioned matter.

MSTT in its order dated 29th April 2017 allowed the appeal of TNSL and setaside the demand of the Dept. made for financial year 2008-09. However the Dept. hasfiled appeal in Bombay High Court against the order passed by MSTT for the year 2008-09.

Since the facts of the above matter are similar for other financial years viz. 2006-072007-08 2009-10 and 2010-11 the Joint Commissioner of Sales Tax (JCST) has passed orderagainst the Company demanding payment of MVAT for these financial years also. The Companyhas filed Appeals to MSTT against the said orders of JCST.

8.4. Claim of Rs 528 lakhs made by Antrix Corporation Ltd. from Tatanet ServicesLtd. (TNSL)

For providing satellite communication services under the VSAT ISP and IFMC licensesobtained by the Company from by Department of Telecommunication (DoT) the Company fromtime to time enters into agreements with Antrix Corporation Ltd. an entity under theadministrative control of Department of Space (DOS) Govt. of India. These agreements forprocuring satellite bandwidth capacity inter alia contain charges to be paid for SpaceSegment/ leasing of Satellite Transponder Charges (Transponder Charges) to Antrix. TheseAgreements also contain specific clause allowing price revision and recovery of spacesegment charges with retrospective effect during the term of agreement. The Agreementsexpired on 30th April 2017 and the claim for increased charges withretrospective effect was received by the Company on 31st August 2017 i.e.after the expiry of the Agreements.

Similar petitions have been filed by Antrix against other VSAT & telecom operators.Admittedly the term of all the aforesaid agreements expired on 31.03.2017 i.e. muchbefore the issuance of decision to levy increased/revised Transponder Charges. Thepleadings in Company's matter are complete and now it is pending before Registrar TDSATfor framing of issues. The next date in the matter has not been fixed. Based on the legalopinion received the Company has a strong arguable case on merit. However as an abundantcaution the Company has provided in the books of account an amount of Rs. 278 Lakhstowards the claim during the period from 1st April 2017 to 31stDecember 2018 and out of this Company has already paid Rs 212 lakhs. An amount of Rs 168Lakhs has been shown as contingent liability (refer note 34) in the books of accountstowards the claim for the period from 1st April 2016 to 31st March2017.

8.5. Goods and Service Tax (GST) transition Input Tax Credit (ITC) Tatanet ServicesLtd. (TNSL)

Upon implementation of GST from July 2017 for carry forward and set off old servicetax input credit Company was required to file form Trans 1. However due to technicalglitches on the web portal of GST Department Company could not file form Trans 1. Asresult of this automatic carry forward and set off transition ITC of Rs 89 lakhs was notallowed to Company. To seek remedy Company has filed writ petition before Hon'ble HighCourt of Bombay. Hon'ble High Court of Bombay vide its order dated 20th March2020 dismissed the petition of the Company and disallowed Company's claim. However thereare judgements of various High Courts in India on the matter similar to that of Companywhich supports claim of the Company. Also based on opinion received from independent legalcounsel Company is confident that claim of the Company will be allowed. Company isplanning to file Special Leave Petition before Hon'ble Supreme Court. Considering thisCompany has not made any provision towards disallowance of transition input tax credit.

Corporate Governance Management Discussion & Analysis and Business ResponsibilityReport

As per Listing Regulations the Corporate Governance Report with the Auditors RsCertificate thereon and the Management Discussion and Analysis are attached which formspart of this Annual Report.

Pursuant to Regulation 34(2)(f) of the Listing Regulations the Business ResponsibilityReport initiatives taken from an environmental social and governance perspective in theprescribed format is attached as a separate section of this Annual Report.

Vigil Mechanism

The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour. In line with the Tata Code of Conduct (TCOC) any actual orpotential violation howsoever insignificant or perceived as such would be a matter ofserious concern for the Company. The role of the employees in pointing out such violationsof the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act and Regulation 4(2)(d)(iv) of the ListingRegulations a Whistle-blower Policy and Vigil Mechanism was established for Directorsemployees and stakeholders to report to the Management instances of unethical behaviouractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The Vigil Mechanism provides a mechanism for employees of the Company to approach theChief Ethics Counsellor (CEC)/Chairman of the Audit Committee of the Company forredressal. The Company has revised the Whistle-blower Policy to include "reporting ofincidents of leak or suspected leak of unpublished price sensitive information" interms of SEBI (Prohibition of Insider Trading) Regulations 2015 as amended from time totime. The revised Policy was approved by the Board at its meeting. The updated policy hasbeen posted on the Company's website at The Companyaffirms that no personnel have been denied access to the Audit Committee.

9. Risks and Concerns

The Company is faced with risks of different types all of which need differentapproaches for mitigation. Details of various risks faced by the Company are provided inManagement Discussion & Analysis.

9.1 Risk Management Framework and Internal Financial Controls

Risk Management framework: The Company and its Material Subsidiary have Risk Managementframework to inform the Audit Committee and Board members about risk assessment andminimization procedures and periodical review to ensure that Executive Management controlsrisks by means of properly designed framework.

The Company has also established a risk management policy based on which risks areidentified and assessed across its businesses. The Risk Management Committee whichcomprises of the CEO CFO Senior Lead - Business Analytics and Risk Management and keybusiness and operations heads ensures that existing and future risk exposures of theCompany are identified assessed quantified minimized managed and appropriatelymitigated. The Company's framework of risk management process provides clear basis forinformed decision making at all levels of the organization on an ongoing basis havingduly evaluated likely risks and their mitigation plans being controllable and within riskappetite of the Company. There are no elements of risk which in the opinion of the Boardmay threaten the existence of the Company.

Internal Financial Control and Systems: The Company has an internal control systemcommensurate with its size scale nature and complexity of its operations. The Companyhas appointed independent Chartered Accountant firm as Internal Auditors who auditsgovernance risks management and internal controls and processes. The Internal

Auditors present their findings to the Audit Committee. Testing of Internal FinancialsControls also form a part of internal audit schedule. The scope and authority of internalaudit is defined in Audit Committee Charter adopted by the Company.

As per the Audit Committee Charter adopted by the Board and as per provisions ofSection 177 of the Companies Act 2013 (the Act) one of the responsibilities of the AuditCommittee is to review the effectiveness of the Company's Internal control systemincluding Internal Financial Controls. Internal controls have been discussed in detail inManagement Discussion & Analysis in this report.

Process Robustness: The Company assesses the process maturity and robustness for itskey functions on the following:

• Process documentation and workflow

• Process measures and controls (manual/system driven) including maker-checkermechanisms

• Performance tracking for key measures/metrics

• Initiatives taken for process improvements

The Company also carries out internal audits and process deep dives through externalagencies to establish and improve efficiency and effectiveness of processes in various keyfunctions. On review of the internal audit observations and action taken on auditobservations there are no adverse observations having material impact on financialscommercial implications or material non-compliances which have not been acted upon. Inaddition the statutory auditors carry out an audit at quarterly intervals and thesereports also have not reported any adverse findings.

10. Sustainability

10.1 Corporate Social Responsibility

Your Company has formed a CSR committee comprising of the following Directors:

Mr. R. R. Bhinge Chairman Dr. Lakshmi Nadkarni and Mr. P J. Nath

As the Company has not earned net profits computed as defined in Section 198 of theAct it is not mandatorily required to spend on CSR activities. However as a goodcorporate practice it has taken a project which involves installing 13 VSATs in identifiedschools in remote areas & in 4 Institutes run by Tata Power Skill DevelopmentInstitute. These VSATs are used for downloading educational contents. Also the Companyconducted two batches of training at its Mahape office for the underprivileged studentswho have been trained on VSAT & RF installation and basics of Networking. The Companyhas also made efforts to get these students find employment after completion of thetraining. The Company has formulated the policy on CSR which is available on Company'swebsites:

10.2 Safety Health and Environment

The Company places utmost importance to the Safety agenda. An office Fire EvacuationDrill is regularly conducted covering all staff working at its Mahape office to checkemergency preparedness. Existing safety policy systems roles site safety inspection andaction planning statutory compliances & records counselling to Safety Committee& safety promotional activities were taken up in consultation with OccupationalHealth Safety & Environment (OHSE) Management consultant. Training & awarenesssessions were conducted periodically on Fire Safety and First-aid in emergency situationand on usage of the fire saving equipment. Inspection of Mahape office was conducted byOHSE consultant and initial observations were communicated for discussion with SafetyCommittee and action on gaps are monitored on periodic basis. Safety standards aremaintained across all office locations. During National Safety Week safety trainingawareness sessions and promotion campaigns were conducted for Nelco employees contractstaff suppliers & customers. Free health check-up camp through local hospitalregular health consultation through company doctor and annual health check-up throughmedical service provider were organised for employees.

11. Human Resources

As on 31st March 2020 the Company had employee strength of 175. During theyear under review 31 employees were recruited and 22 employees were separated.

Various people related initiatives were undertaken by the Company during the year toenable organizational growth through people care and development which include:

• Employee Engagement: Nelco is cognisant of the fact that higher employeeengagement leads to greater involvement of employees in achieving company goals which inturn leads to higher business productivity. Continuous communication with employees indifferent forums (Connect meetings Open House etc.) has been

the way of life at the company to ensure transparency and to establish strong affinitybetween people and the management. Every year Employee Engagement Surveys are conductedfor all employees to enable people to voice out their concerns and suggestions for makingthe workplace better for everyone. The company utilises multiple platforms that encourageopen communication amongst all employees and allow them to voice their opinion. Knowledgesessions and employee welfare and sports activities are also conducted from time to timeto ensure continuous learning and good health of the employees.

• Reward & Recognition: In order to make recognitions an integral part ofNelco it has drafted a strong R&R policy. Various Reward & Recognition functionsare organised throughout the year. Programmes like Appreciation Week R&R functions atmonthly department meeting with HR Quarterly Reward & Recognition functions duringOpen house for recognizing exceptional performances (both team and Individual level) andNelco Innovista awards for rewarding creative and innovative minds are significant R&Rplatforms in the company. HoDs Spot awards safety and bravery awards are a few moreR&R activities.

• Engagement activities are planned based on a calendar and implemented on monthlybasis covering all locations. Employee recreation and team-building activities likesports festivals picnics and team outings are also taken up across locations to increaseemployee engagement. As per Maternity Benefit Act 2017 creche facility has been createdat Mahape premises to enable new mothers to manage office work as well as childcare asrequired by them.

• Capability Development: Company focuses on overall capability building offunctional managerial and behavioural skills. Innovation in working is encouraged throughcompetitions like Tata Innovista and Tata Business Leadership Awards where employeesshowcase creative ideas/actions in business process or technology. Training needs areprimarily sourced through performance appraisal discussions with respective managers andconsidering dynamic business requirements. Training programmes are facilitated bye-learning platform as well as internal and external trainers. Effectiveness of trainingprogrammes are monitored to ensure achievement of training objectives. Employees are alsoencouraged to take up relevant educational courses on self-learning basis.

• Performance & Talent Management: Employee performance is monitored andmanaged through rigorous processes of involving people in framing the company's vision andpurpose re-defining Job descriptions goal setting based on the company and departmentlevel Balance Score Card (BSC). To bring emphasise on behavioural aspects and values theTata Leadership Practices (TLPs) have been included in the performance appraisal of thesenior management of the Company. Continuous dialogue is encouraged between managers andtheir teams with focus on guiding and training first time managers through performancecoaching. All the senior managers who joined during the year went through psychometricassessments.

• Succession Planning: Successors have been identified for critical positions (forN & N-1 level) in the Company to ensure business continuity. In specific instanceswhere ready successors were not available interim alternate plans have been crafted toensure continuity in the event of any emergency situation. Based on the outcome of thisprocess decisions to hire capable person for specific positions have also beenrecommended.

• The company has an instituted Policy on Prevention of Sexual Harassment (POSH)which seeks to govern guidelines and grievance redressal procedures as required underSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.As per policy a Complaints Redressal Committee/Internal Complaints Committee has beenformed at Nelco with inclusion of an external lady member. POSH theme training wasconducted for employees and allied resources. No complaints related to POSH have beenreceived during the year.

12. Credit Rating

During the year CARE Ratings has reaffirmed ratings for long term and short-term bankfacilities of the Company to

CARE A/Stable and CARE 1 respectively.

13. Loans Guarantees Securities and Investments (LGSI)

Details of LGSI covered under the provisions of Section 186 of the Act 2013 are givenin Annexure III forming part of

this report.

14. Foreign Exchange - Earnings and Outgo. ( Rs in lakhs)

Particulars - Standalone Year ended 31st March 2020 Year ended 31st March 2019
Foreign Exchange Earnings 33.31 44.31
Foreign Exchange Outflow 3981.10 5367.24

15. Auditors

At the 74th Annual General Meeting (AGM) the Members appointed PriceWaterhouse Chartered Accountants LLP (PWC) Chartered Accountants (ICAI Firm RegistrationNo. 012754N/N500016) as Statutory Auditors to hold the office for the period of five yearsfrom the conclusion of 74th AGM till the conclusion of 79th AGM ofthe Company to be held in the year 2022. PWC has notified their resignation as theStatutory Auditors of the Company effective immediately from the conclusion of the 77thAGM scheduled on 13th August 2020. The reason for resignation has been givenin explanatory statement at item no. 5 to the notice of 77th AGM. The StatutoryAuditors were present at the last AGM.

The Board has recommended appointment of S.R. Batliboi & Associates LLP CharteredAccountants (ICAI Firm Registration No. 103162W/E300004) as statutory auditors of theCompany in place of Price Waterhouse Chartered Accountants LLP for a period of 5 yearsfrom the conclusion of 77th AGM till the conclusion of the 82nd AGMto be held in 2025. In this connection the attention of the Members is invited forapproval of Item No. 5 of the Notice for appointment of Statutory Auditors.

16. Auditors Rs Report

The standalone and the consolidated financial statements of the Company have beenprepared in accordance with applicable Indian Accounting Standards (Ind AS) notified underSection 133 of the Act. The Statutory Auditor's report does not contain anyqualifications reservations adverse remarks or disclaimers. The Notes to the Accountsreferred to in the Auditors Rs report are self-explanatory and therefore do not call forany further clarification under section 134(3)(f) of the Act.

During the year under review neither the statutory auditors nor the secretarialauditors has reported to the Audit committee under Section 143 (12) of the Companies Act2013 any instances of fraud committed against the Company by its officers or employeesthe details of which would need to be mentioned in the Board's report.

17. Maintenance of cost records

As specified by the Central Government under sub-section (1) of section 148 of theCompanies Act 2013 the Company has maintained cost accounts and records.

18. Secretarial Audit Report

In terms of Section 204 of the Act and Rules made thereunder M/s. Bhandari &Associates Practicing Company Secretaries were appointed as Secretarial Auditors of theCompany to carry out the secretarial audit for FY 2019-20. The report of the SecretarialAuditors for FY 2019-20 is enclosed as Annexure- IV forming part of this Report. There hasbeen no qualification reservation adverse remark or disclaimer given by the SecretarialAuditors in their Report.

The Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively.

As per the requirements of the Listing Regulations the secretarial audit for FY20 ofTatanet Services Ltd. material subsidiary of the Company was undertaken by PracticingCompany Secretaries. The Audit Report confirms that the material subsidiary has generallycomplied with the provisions of the Act Rules Regulations and Guidelines etc.

19. Conservation of Energy and Technology Absorption

The information on conservation of energy and technology absorption stipulated underSection 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules 2014is given in Annexure - V forming part of this report.

20. Related Party Transactions

In line with the requirements of the Act and the Listing Regulations the Company hasformulated a Policy on Related Party Transactions and the same is available on theCompany's website:

All related party transactions entered during the year under review were on an arm'slength basis and were in the ordinary course of business. All transactions with relatedparties were reviewed and approved by the Audit Committee. Prior omnibus approval isobtained for related party transactions which are of repetitive nature and entered in theordinary course of business and on an arm's length basis. There were no other materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel and Body Corporate(s) which had a potential conflict with theinterest of the Company at large. Accordingly the disclosure of these Related PartyTransactions as required under Section 134 (3) (h) of the Act in Form AOC 2 is notapplicable for the year under review.

The details of the transactions with related parties are provided in the accompanyingFinancial Statements.

21. Deposits

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of theBalance Sheet.

22. Extract of Annual Return

Pursuant to Section 92 of the Act read with the appliable Rules the extract of AnnualReturn in Form MGT-9 is given in Annexure-VI forming part of this report. Further theAnnual Return for the year ended 31st March 2019 filed with ROC can be accessedon the Company's website: pdf

23. Directors Rs Responsibility Statement

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costauditors secretarial auditors and external consultants including the audit of internalfinancial controls over financial reporting by the statutory auditors and the reviewsperformed by Management and the relevant Board Committees including the Audit Committeethe Board believes the Company's internal financial controls were adequate and effectiveduring the period under review.

Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:

a) in the preparation of the annual accounts for the period ended 31st March2020 the applicable accounting standards had been followed along with proper explanationrelating to material departures.

b) they have in the selection of the accounting policies consulted the StatutoryAuditors and have applied them consistently and made judgments and estimates that arereasonable and prudent to give a true and fair view of the Company for the period ended 31stMarch 2020 and of the profit of the Company for that period.

c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

d) they have prepared the accounts for the period under review on a going concernbasis.

e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively.

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

24. Acknowledgment

The Board of Directors thank the Company's shareholders customers vendors businesspartners bankers and financial institutions for their continuous support.

The Directors also thank the Government of India Dept. of Telecommunications variousMinistries Regulatory Authorities and their departments for the co-operation.

We appreciate and value the contributions made by all our employees.

On behalf of the Board of Directors
R.R. Bhinge
Mumbai 16th July 2020