Your Directors present the 17th Annual Report and the audited financialstatements for the financial year ended March 31 2021.
Pursuant to an application filed by Ericsson India Pvt. Ltd before the Hon'ble NationalCompany Law Tribunal Mumbai Bench ("NCLT") in terms of Section 9 of theInsolvency and Bankruptcy Code 2016 read with the rules and regulations framed thereunder("Code") the NCLT had admitted the application and ordered the commencement ofcorporate insolvency resolution process ("CIR process") of the RelianceCommunication Limited ("Company"/ "RCOM") vide its order dated May 152018 ("Admission Order"). The NCLT had pursuant to the Admission Orderappointed an interim resolution professional (IRP) for the Company vide its order datedMay 18 2018. In terms of the Admission Order inter alia the management of theaffairs of the Company was vested with the IRP.
Subsequently the Hon'ble National Company Law Appellate Tribunal ("NCLAT")while adjudicating upon an appeal preferred against the admission of the insolvencyapplication against the Company vide its order dated May 30 2018 inter alia stayedthe Admission Order and allowed the management of the Company to function ("StayOrder"). On April 30 201 9 the NCLAT upon allowing the director and shareholder ofthe Company to withdraw its aforesaid appeal vacated all interim orders including theStay Order. The NCLT vide order May 7
2019 directed the IRP to proceed in the CIRP of the Company.
Thereafter the Committee of Creditors ("CoC") of the Company resolved withthe requisite voting share to replace the IRP with the undersigned as the resolutionprofessional for the Company ("RP" or "Resolution Professional").Subsequently the Hon'ble NCLT has appointed Mr. Anish Niranjan Nanavaty as the RP for theCompany vide its order dated June 21 2019 which order was published on June 28 201 9.
In accordance with the provisions of the Code various resolution plans in respect ofthe Company were received by the RP. The CoC of the Company in their meeting held on March02 2020 had approved a resolution plan submitted by UV Asset Reconstruction CompanyLimited ("Resolution Plan") which was subsequently submitted to the NCLT onMarch 6 2020 in accordance with Section 30(6) of the Code. The same continues to remainsub-judice with the NCLT.
Financial performance and state of the Company's affairs
The standalone financial performance of the Company for the year ended March 31 2021is summarised below:
|Particulars ||Financial Year ended March 31 2021 ||* Financial Year ended March 31 2020 |
| ||Rs. in crore ||US$ in million ||Rs. in crore ||US$ in million |
|Total income ||483 ||66 ||818 ||109 |
|Gross profit /(Loss) before depreciation Amortisation and exceptional items ||(120) ||(16) ||(1429) ||(190) |
|Less: || || || || |
|Depreciation and amortization ||132 ||18 ||183 ||24 |
|Profit/ (Loss) before Exceptional items and Tax Exceptional items: ||(252) ||(34) ||(1612) ||(214) |
|(Loss) / Profit on Fair Value of Investments ||- ||- ||(15251) ||(2025) |
|Profit/ (Loss) before Tax ||(252) ||(34) ||(16863) ||(2239) |
|Current tax / Excess provision for Tax of earlier years ||- || ||- ||- |
|Deferred Tax charge/ (credit) ||- || ||- || |
|Profit / (Loss) after tax ||(252) ||(34) ||(16863) ||(2239) |
|Profit / (Loss) after tax from Discontinued Operations Other Comprehensive Income ||(4637) ||(635) ||(28475) ||(3780) |
|Re-measurement Gain/ (Loss) of defined benefit plans (Net of tax) ||1 ||0 ||5 ||1 |
|Total Comprehensive Income ||(4888) ||(669) ||(45333) ||(6018) |
|Add : Balance brought forward from previous year Profit available for appropriation ||(59516) ||(8140) ||(14183) ||(1883) |
|Balance carried to Balance Sheet ||(64404) ||(8809) ||(59516) ||(7901) |
Figures of previous year have been regrouped and reclassified wherever required.
** Exchange Rate ' 73.110 = US$ 1 as on March 31 2021 (' 75.665 = US$ 1 as on March31 2020).
During the year under review your Company has earned from Continuing Operations incomeof ' 483 crore against ' 818 crore in the previous year. The Company has incurred anoperational loss of ' 4889 crore (including loss from discontinuation of wirelessbusiness of ' 4637 crore) and there is a Loss of ' 4888 crore for the year as comparedto loss of ' 45333 crore in the previous year which included provision for diminution inthe value of Investment. The performance and financial position of the subsidiarycompanies and associate companies are included in the consolidated financial statements ofthe Company and presented in the Management Discussion and Analysis Report forming part ofthis Annual Report.
Vide notification dated March 24 2020 issued by Ministry of Home Affairs anation-wide lockdown was announced to contain COVID-19 outbreak. Further various stategovernments have issued orders from time to time extending lockdowns and otherrestrictions. COVID-19 has impacted businesses globally and in India. Telecommunicationservices being essential services had been exempted and permitted to continue operationduring the period of lockdown. Your Company has continued to provide services to itsEnterprise customers without any interruptions and honour commitments despite facing allodds during lockdown.
The Company has been monitoring the situation closely and has taken proactive measuresto comply with various directions / regulations / guidelines issued by Government ofIndia various state governments and local bodies to ensure safety of workforce across allits offices.
Further the resurgence had led to imposition of various restrictions and lockdowns invarious states. Accordingly there exists uncertainty over the impact of the pandemic onfuture business performance of the Company and the extent of effect of the pandemic willdepend among other things on any action to contain its spread or mitigate its impactwhether government mandated or elected by the Company. However in view oftelecommunication services being considered as essential activity the Company hascontinued to provide services to its Enterprise customers without any interruptions andhonour commitments despite facing all odds during lockdown and the Company has continuedits assessment of likely adverse impact on economic environment in general and financialrisks on account of COVID19.
As the Company is undergoing CIRP it is relevant to note that the period of lockdownhas been exempted from the calculation of the timeline of CIRP as per the order of theNCLAT in Suo Moto - Company Appeal (AT) (Insolvency) No. 01 of 2020 dated March 30 2020.
During the year under review since the Company is under CIR Process and due to currentyear losses no dividend on the equity shares of the Company has been recommended. Thedividend distribution policy of the Company is uploaded on the Company's website at thelink https://www.rcom.co.in/our- company/investor-relations/corporate-governance/
The Company provides wireless telecom services to the business and government segments.These include a comprehensive portfolio spanning Network Connectivity Cloud NetworkingData Center Services Enterprise Voice Cloud Telephony Access Number ServicesCollaboration Services Wholesale Voice & Value Added Service (VAS). The Companyserves nearly 40000 businesses of all sizes-from multinational conglomerates toSMEs-belonging to almost every vertical: BFSI Manufacturing Logistics Healthcare IT& ITeS OTT and New Media to name just a few With nine world-class data centersspread across key business markets in India (Mumbai Bengaluru Chennai & Hyderabad)we are a leading provider of data center services in the region to hundreds of enterprisecustomers including many of India's marquee brands in the BFSI FMCG new media ande-commerce industry segments. These services cover Colocation Shared IT Infrastructureand IT Managed Services.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulated underRegulation 34(2)(e) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") is presentedin a separate section forming part of this Annual Report.
Issue and Redemption of Non-Convertible Debentures
The Company has not carried out any fresh issue of NonConvertible Debentures (NCDs) inthe current financial year.
NCDs issued during the earlier years matured for final redemption during the financialyear 2018-19 but remains unpaid in view of the ongoing CIR Process.
The Company has never accepted any deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 ("the Act") and the Companies (Acceptanceof Deposits) Rules 2014. There are no unclaimed deposits unclaimed/ unpaid interestrefunds due to the deposit holders or to be deposited with the Investor Education andProtection Fund as on March 31 2021.
Particulars of Loans Guarantees or Investments
The Company has complied with provisions of Section 1 86 of the Act to the extentapplicable with respect to Loans Guarantees or Investments during the year.
Pursuant to the provisions of Section 186 of the Act the details of the Investmentsmade by the Company are provided in the standalone financial statements under Notes No.2.03 and 2.07.
Subsidiary and Associate Companies
During an earlier year GCX Limited a step-down subsidiary of the Company along withits subsidiaries/affiliates (collectively "GCX") had filed for voluntarypre-packaged restructuring under Chapter 11 of the US Bankruptcy Code before Delawarecourt USA. Objections were filed on behalf of your Company which were not accepted by thecourt. The plan filed by GCX had been confirmed by the court on December 4 2019.
The Plan as confirmed provides that the old equity interests in the Debtors would beextinguished and the new ownership would pass to the participating Note holders on the"Effective Date" of the Plan. It provided that certain transactions needed tooccur and various regulatory approvals needed to be obtained before the Debtors would filea Notice of Effective Date (i.e. a notice declaring that as of the stated date the Planhad become effective)
Pursuant to the order dated February 25 2020 the court had granted a motion filed byGCX Limited along with the other debtors aimed at addressing the issues they have beenhaving in completing the steps to make their plan effective inter alia seekingapproval for process whereby a bifurcation had been created wherein debtors not requiringregulatory approvals could complete their processes and arrive at effective date whileothers could wait for occurrence of their effective date upon fulfillment of regulatoryapprovals. Accordingly on April 14 2020 a notice has been issued intimating occurrenceof "Effective Date" of certain "non-regulated debtors" while the"Effective Date of the Plan with respect to Debtors GCX Limited FLAG Telecom NetworkUSA Limited Reliance Globalcom Limited and Vanco US LLC (collectively the"Regulated Debtors") is expected to occur at a later date". The courtconfirmed the aforesaid and entered order on April 21 2020.
A notice of occurrence of Effective Date for the Regulated Debtors dated December 312020 has been issued by counsel to GCX (and served on the Company). The said notice interalia provides that the Effective Date of the Plan for the Regulated Debtors hasoccurred on December 31 2020.
In light of the aforesaid development the Plan having now being effective in respectof the Regulated Debtors and the Non-Regulated Debtors the Company has been divested ofits indirect equity interest in GCX and there is no impact on the financial statements ofyour Company.
Pursuant to an application filed by Ericsson India Pvt. Ltd before the Hon'ble NCLT interms of Section 9 of the Code the NCLT had admitted the application and ordered thecommencement of CIR process of the Reliance Infratel Limited and Reliance Telecom Limitedsubsidiary companies of the Company vide its order dated May 15 2018. Mr. Anish NiranjanNanavaty had been appointed as the resolution professional of Reliance Infratel Limited(RITL) and Reliance Telecom Limited (RTL).
For RTL in accordance with the provisions of the Code various resolution plans werereceived by the RP The Committee of Creditors (CoC) of RTL in their meeting held on March02 2020 had approved a resolution plan submitted by UV Asset Reconstruction CompanyLimited which was subsequently submitted to the NCLT on March 6 2020 in accordance withSection 30(6) of the Code. The same continues to remain sub- judice with the Hon'ble NCLT.
For RITL in accordance with the provisions of the Code various resolution plans werereceived by the RP The CoC of RITL in their meeting held on March 02 2020 had approveda resolution plan submitted by Reliance Projects & Property Management ServicesLimited (earlier known as Reliance Digital Platform & Project Services Limited)through its division Infrastructure Projects in respect of RITL which was subsequentlysubmitted to the Hon'ble NCLT in accordance with Section 30(6) of the Code. On December03 2020 Hon'ble NCLT pronounced its order approving the Resolution Plan of RITL. TheResolution Plan as approved by Hon'ble NCLT shall be binding on RITL its employeesmembers creditors guarantors and other stakeholders involved in the Resolution Plan. Theapproved Resolution Plan is yet to be implemented and once implemented RITL will cease tobe subsidiary of the Company. RITL is currently under the supervision of a monitoringcommittee constituted under the provisions of the resolution plan.
Further pursuant to an application filed by State Bank of India under Section 7 of theCode the Hon'ble NCLT vide order dated September 25 2019 had ordered the commencementof CIR process in terms of the Code in respect of Reliance Communications InfrastructureLimited (RCIL) a wholly owned subsidiary of the Company and had appointed Mr. AnishNiranjan Nanavaty as the resolution professional of Reliance Communications InfrastructureLimited. RCIL continues to be under the CIRP
Reliance Tech Services Limited (RTSL) a wholly owned subsidiary of the Company hasbeen admitted by Hon'ble NCLT on August 04 2020 for corporate insolvency resolutionprocess under the Code and Mr. Anjan Bhattacharya has been appointed as the ResolutionProfessional by the Hon'ble NCLT. The resolution professional of RTSL has filed anapplication with NCLT on May 04 2021 for initiation of liquidation proceedings in respectof RTSL and the matter is currently pending before the Hon'ble NCLT.
The summary of the performance and financial position of the each of the subsidiary andassociate companies are presented in Form AOC - 1 and in Management Discussion andAnalysis Report forming part of the Annual Report. Also a report on the performance andfinancial position of each of the subsidiary companies and associate companies as per theAct is provided in the consolidated financial statements.
The Policy for determining material subsidiary companies can be accessed on theCompany's website at the link http://www.rcom.co.in/Rcom/about-us/investor-relations/corporate- governance.html.
Standalone and Consolidated Financial Statements
The Audited financial statements of the Company are drawn up both on standalone andconsolidated basis for the financial year ended March 31 2021 in accordance with therequirements of the Companies (Indian Accounting Standard) Rules 2015 (Ind AS) notifiedunder Section 133 of the Act read with relevant rules and other accounting principles.The Consolidated Financial Statements has been prepared in accordance with Ind-AS andrelevant provisions of the Act based on the financial statements received fromsubsidiaries associates as approved by their respective Board of Directors.
As Reliance Telecom Limited Reliance Tech Services Limited and Reliance CommunicationsInfrastructure Limited subsidiaries of the Company are under CIR Process financialstatements of these companies are approved and received from these companies andaccordingly the Consolidated Financial Statements are prepared.
In the case of Reliance Infratel Limited the financial statements are approved byMonitoring Committee of the Company on basis of recommendation of the Director and ChiefFinancial Officer of the Company.
During the year under review there was no change in Directors of the Company.
The members are requested to note that in FY 201 9-20 Shri Anil D Ambani Smt. ChhayaVirani and Smt. Manjari Kacker had resigned with effect from 15th November2019; Smt. Ryna Karani has resigned with effect from 14th November 2019 andShri Suresh Rangachar had resigned with effect from 13th November 2019 asDirectors of the Company. Certain directors being Shri Anil D Ambani Shri SureshRangachar and Smt. Manjari Kacker also filed their respective DIR-11 forms with theRegistrar of Companies. The aforementioned resignations were put up to the CoC of theCompany for their consideration in accordance with Section 28(1)(j) of the Code. HoweverCoC of the Company at its meeting held on November 20 2019 considered the resignationstendered by the above directors and expressed a unanimous view that the resignationscannot be accepted and instructed the Resolution Professional to convey to the directorsto continue with their duties and responsibilities as directors and provide allcooperation in the corporate insolvency resolution process at least until the completionof the corporate insolvency resolution process of the Company.
In light of the above it was duly communicated to the aforesaid directors of theCompany that their resignations have not been accepted and they are advised to continue toperform their duties and responsibilities as the directors of the Company and provide allcooperation to Resolution Professional in the CIR process.
Accordingly Shri Anil D Ambani Smt. Chhaya Virani Smt. Manjari Kacker Smt. RynaKarani and Shri Suresh Rangachar continues to be on the composition of the board ofdirectors and the respective committees of the Company.
Due to abovementioned events Company has not received necessary annual disclosures asrequired under section 164(2) and Section 184(1) of the Companies Act 2013 from Shri AnilD Ambani Smt. Chhaya Virani Smt. Ryna Karani Smt. Manjari Kacker and Shri SureshRangachar Directors of the Company.
In terms of the provisions of the Companies Act 2013 Shri Vishwanath Devaraja RaoExecutive Director of the Company retires by rotation and being eligible offers himselffor re-appointment at the ensuing AGM.
A brief profile of Shri Vishwanath Devaraja Rao along with requisite details asstipulated under Regulation 36(3) of the Listing Regulations are provided in this AnnualReport.
The details of programme for familiarization of Independent Directors with the Companynature of the industry in which the Company operates and related matters are placed on thewebsite of the Company at the link http://www.rcom.co.in/Rcom/about-us/investor-relations/corporate-governance.html.
Key Managerial Personnel
During the year under review there was no change in the Key Managerial Personnel ofthe Company.
Policy on appointment and remuneration for Directors Key Managerial Personnel andSenior Management Employees
The Nomination and Remuneration Committee of the Board has devised a policy forselection appointment and remuneration of Directors Key Managerial Personnel and SeniorManagement Employees. The Committee has also formulated the criteria for determiningqualifications positive attributes and independence of a Director which has been put upon the Company's website at http://www.rcom.co.in/investorrelations.
Currently as the Company is under CIR Process the approval of CoC is necessary forthe appointment and remuneration of Directors and Key Managerial personnel of the Company.
Directors' Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Act with respect to Directors'Responsibility Statement it is hereby confirmed that:
i In preparation of the annual accounts for the financial year ended March 31 2021the applicable Accounting Standards had been followed along with proper explanationrelating to material departures if any;
ii The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2021 and of theprofit/loss of the Company for the year ended on that date;
iii The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv The Directors had prepared the annual financial statements for the financial yearended March 31 2021 on a 'going concern' basis;
v The Directors had laid down internal financial controls to be followed by the Companyand such financial controls are adequate and are operating effectively and
vi The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
Note: Since the Company is under CIR Process the management of the affairs of theCompany is vested with Resolution Professional and the Directors of the Company arerequired to continue performing their duties and roles and extend necessary cooperationand support to the RP. Accordingly the above mentioned duties and responsibility ofDirectors have been performed by directors under the overall supervision/direction of RPof the Company.
Contracts and Arrangements with Related Parties
All contracts / arrangements / transactions entered into by the Company during thefinancial year under review with related parties were on an arm's length basis and in theordinary course of business. There were no materially significant related partytransactions made by the Company with its Promoters Directors Key Managerial Personnelor other designated persons which may have a potential conflict with the interest of theCompany at large.
During the year under review the Company has not entered in to any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of Company on materiality of related party transactions.
All Related Party Transactions were placed before the Audit Committee for approval.Omnibus approval of the Audit Committee was obtained for the transactions which were of arepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted were reviewed and statements giving details of all related party transactions wereplaced before the Audit Committee on a quarterly basis.
During the year under review as the Company is under CIR Process in terms of Section28(1)(f) of the Code approval of the CoC was taken for related party transactions in CoCmeeting(s).
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website at the link http://www.rcom.co.in/Rcom/about-us/investor-relations/corporate-governance.html. None of the Directors has any pecuniary relationships ortransactions vis-a-vis the Company.
There are no transactions entered by the Company with persons / entities as mentionedin Regulation 34 (3) and 53 (f) in Schedule V A 2A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
Material Changes and Commitments if any affecting the financial position of theCompany
Except as disclosed in this report there were no material changes and commitmentsaffecting the financial position of the Company which have occurred between the end of thefinancial year and the date of this report.
Meetings of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe financial year ended March 31 2021 the Directors held 4 meetings on July 31 2020October 17 2020 November 28 2020 and February 13 2021. The maximum gap between twomeetings of Directors was 77 days and minimum gap between two meetings of Directors was 41days.
The additional details about aforesaid meetings are given in the Corporate GovernanceReport forming part of this report.
During the year under review there were no changes in the composition of the AuditCommittee of the Company.
The Audit Committee of the Directors consists of Independent Directors namely Smt.Manjari Kacker Chairperson Smt. Ryna Karani Smt. Chhaya Virani and Non IndependentDirectors Shri Punit Garg Shri Vishwanath Devaraja Rao as members.
During the year all the recommendations made by the Audit Committee were accepted bythe Directors and noted and taken on record by the RP of the Company.
Auditors and Auditors' Report
M/s. Pathak H.D. & Associates LLP Chartered Accountants who were appointed asstatutory auditors of the Company to hold office for a term of 5 (five) consecutive yearsat the 12nd Annual General Meeting (AGM) of the Company held on September 272016 would be completing their term of appointment upon conclusion of the ensuing 17thAGM of the Company.
Your directors in their meeting held on June 26 2021 recommended re-appointment ofM/s. Pathak H.D. & Associates LLP Chartered Accountants as the Statutory auditors ofthe Company for another term of 5 (five) years until the conclusion of 22nd AGMof the Company subject to the approval of members at the ensuing AGM.
The Company has received letter from M/s. Pathak H.D. & Associates LLP CharteredAccountants to the effect that their appointment if made would be within the prescribedlimits under Section 141(3) of the Act and that they are not disqualified from beingappointed as Statutory Auditors of the Company.
The Auditors in their report to the members have given a qualified opinion and theresponse of the Company with respect to it is as follows:
Attention is drawn on the standalone financial statements regarding "Assets Heldfor Sale (AHS)" pertaining to Wireless Spectrum Towers Fibre and Media ConvergenceNodes (MCNs) along with liabilities continue to be classified as held for sale at thevalue ascertained at the end of March 31 2018 and impact of the non payment of spectruminstallments due to Department of Telecommunication (DOT). Non determination of fair valueof Assets Held for Sale as on the reporting date is not in compliance with Ind AS 105"Non-Current Assets Held for Sale and Discontinued Operations".
Attention is drawn on the standalone financial statements regarding admission of theCompany and its four subsidiaries into Corporate Insolvency Resolution Process("CIRP") and pending determination of obligations and liabilities with regardto various claims submitted by the Operational/financial/other creditors and employeesincluding interest payable on loans during CIRP. Auditors are unable to comment theaccounting impact there of pending reconciliation and determination of final obligation.The Company accordingly has not provided interest on borrowings amounting to ' 3916 crore(' 4362 crore in case of consolidated) for the year ended March 31 2021 and ' 11174crore (' 1 2746 crore in case of consolidated) up to the previous financial yearcalculated based on basic rate of interest as per terms of loan. The Company further hasnot provided for foreign exchange gain amounting to ' 515 crore (' 630 crore in case ofconsolidated) for year ended March 31 2021 and ' 2116 crore (' 2593 crore in case ofconsolidated) of foreign exchange loss up to the previous financial year. Had suchinterest and foreign exchange variation as mentioned above been provided the reportedloss for the year ended March 31 2021 would have been higher by ' 3401 crore (' 3732crore in case of consolidated) and Net worth of the Company would have been lower by '16691 crore (' 19071 crore in case of consolidated) as at March 31 2021 and '1 3290crore (' 1 5339 crore in case of consolidated) as at March 31 2020. Non provision ofinterest and non recognition of foreign exchange variation is not in compliance with IndAS 23 "Borrowing Costs" and Ind AS 21 "The Effects of Changes in ForeignExchange Rates" respectively.
Attention is drawn on the standalone financial statement regarding pendingcomprehensive review of carrying amount of all assets (including investments receivablesand balances lying under Goods & Service Tax) & liabilities and non provision forimpairment of carrying value of the assets and write back of liabilities if any pendingcompletion of the CIRP. In the absence of comprehensive review as mentioned above for thecarrying value of all the assets and liabilities auditors are unable to comment thatwhether any adjustment is required in the carrying amount of such assets and liabilitiesand consequential impact if any on the reported losses for the year ended March 312021. Non determination of fair value of financial assets & liabilities and impairmentin carrying amount for other assets and liabilities are not in compliance with Ind AS 109"Financial Instruments" Ind AS 36 "Impairment of Assets" and Ind AS37 "Provisions Contingent Liabilities & Contingent Assets".
Attention is drawn on the standalone financial statement regarding non adoption of IndAS 116 "Leases" effective from April 1 2019 and the consequent impact thereof.The aforesaid accounting treatment is not in accordance with the relevant IndianAccounting Standard Ind AS 116.
Attention is drawn on the standalone financial statement regarding continuous lossesincurred by the Company current liabilities exceeding its current assets default inrepayment of borrowings and default in payment of regulatory and statutory dues. Thissituation indicates that a material uncertainty exists that may cast significant doubt onthe company's ability to continue as a going concern. The accounts however have beenprepared by the management on a going concern basis for the reason stated in the aforesaidnote. Auditors are unable to obtain sufficient and appropriate audit evidence regardingmanagement's use of the going concern basis of accounting in the preparation of thestandalone financial statements in view of ongoing CIRP the outcome of which cannot bepresently ascertained.
The observations and comments given by the Auditors in their report read together withnotes on financial statements are self explanatory particularly Note No. 2.14 2.30 2.472.48 and 2.51 (standalone financials) and Note No. 2.1 5 2.35 2.42 2.51 2.54 2.57 and2.58 (consolidated financials) and hence the same to be treated as explanation providedunder Section 134 of the Act.
The audited financial statements are drawn up both on standalone and consolidated basisfor the financial year ended March 31 2021 in accordance with the requirements of theInd-AS Rules.
As per the provisions of Clause (ca) of Sub-section (3) of Section 134 of the Act theauditors of the Company have not reported any fraud under sub-section (12) of Section 143of the Act.
Pursuant to the provisions of the Act and the Companies (Cost Records and Audit) Rules2014 the Resolution Professional. on the recommendation of directors in a meeting datedJune 26 2021 have appointed M/s. V. J. Talati & Co. Cost Accountants as the CostAuditors to conduct cost audit for the telecommunications businesses of the Company forthe financial year ending March 31 2022 and their remuneration is subject to ratificationby the Members at the ensuing Annual General Meeting of the Company.
The Provisions of Section 148(1) of the Act are applicable to the Company andaccordingly the Company has maintained cost accounts and records in respect of theapplicable products for the year ended March 31 2021.
During the year under review the Company has complied with the applicable SecretarialStandards issued by The Institute of Company Secretaries of India.
Secretarial Audit & Secretarial Compliance Report
Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the ResolutionProfessional on the recommendation of Directors in the meeting held on November 28 2020had appointed M/s. Ashita Kaul & Associates Company Secretaries in Practice toundertake the Secretarial Audit of the Company. There is no qualification reservation oradverse remark made in their Secretarial Audit Report submitted to the Company. TheSecretarial Audit Report is attached herewith as Annexure A.
Pursuant to Regulation 24A of the Listing Regulations the Company has obtained AnnualSecretarial Compliance Report from a Practicing Company Secretaries (PCS) on compliance ofall applicable SEBI
Regulations and circulars/ guidelines issued there under and the copy of the same shallbe submitted with the Stock Exchanges within the prescribed due date.
The observations and comments given by the Secretarial Auditor in their Report areself-explanatory and hence do not call for any further comments under Section 134 of theAct.
As required under Section 1 34(3)(a) of the Act the Annual Return for the financialyear 2020-21 is put up on the Company's website and can be accessed at https://www.rcom.co.in/investor-relations-Annual Return.
Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Act read with Rule 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 (theRules) as amended a statement showing the names and other particulars of the employeesdrawing remuneration in excess of the limits set out in the said Rules are provided in theAnnual Report. Disclosures relating to the remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended also forms part of thisAnnual Report.
However having regard to the provisions of second proviso to Section 136(1) of theAct the Annual Report excluding the aforesaid information is being sent to all themembers of the Company and others entitled thereto. Any member interested in obtaining thesame may write to the Company Secretary and the same will be furnished on request.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
As the Company does not carry on any manufacturing activity being a telecommunicationsservice provider most of the information of the Company as required under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 are notapplicable. However the information as applicable has been given in the Annexure B formingpart of this Report.
The Company has adopted the "Reliance Group-Corporate Governance Policies and Codeof Conduct" which sets out the systems process and policies confirming to theinternational standards. The report on Corporate Governance as stipulated under Regulation34(3) read with Para C of Schedule V of the Listing Regulations is presented in separatesection forming part of this Annual Report.
A Certificate from M/s. Ashita Kaul & Associates Practicing Company Secretariesconforming compliance to the conditions of Corporate Governance as stipulated under Para Eof Schedule V of the Listing Regulations is enclosed to this Report.
Ombudspersons & Whistle Blower (Vigil Mechanism)
The Company has formulated an Ombudspersons & Whistle Blower (Vigil Mechanism) toaddress the genuine concern if any of the directors and employees. The details of thesame have been stated in the Report on Corporate Governance and the policy can also beaccessed on the Company's website at www.rcom.co.in.
The Board of the Company had constituted a Risk Management Committee in their meetingheld on 14th November 2014 consisting of majority of directors and seniormanagerial personnel of the Company; however these mandatory provisions of ListingRegulations are not applicable to the Company. The Board of Directors of the Company haspreviously dissolved the Risk Management Committee in its meeting held on 3rdNovember 2018. The Audit Committee of Directors looks after the functions of the RiskManagement Committee.
The Company is currently under corporate insolvency resolution process ("CIRprocess") pursuant to the provisions of the Insolvency and Bankruptcy Code 2016 andconsidering these developments including in particular the respective ResolutionProfessionals having taken over the management and control of the Company and itssubsidiaries (Group) which are under CIR process inter alia with the objective ofrunning them as going concerns. The Company continues to incur loss current liabilitiesexceed current assets and the Group has defaulted in repayment of borrowings payment ofregulatory and statutory dues. The Auditors have drawn qualification in their Audit Reportfor the year ended March 31 2021 that these events indicate material uncertainty on theGroup's ability to continue as a going concern.
Further the Company has a robust Business Risk Management framework to identifyevaluate business risks and opportunities. This framework seeks to create transparencyminimize adverse impact on the business objectives and enhances Company's competitiveadvantage. The business risk framework defines the risk management approach across theenterprise at various levels including documentation and reporting.
The risk framework has different risk models which helps in identifying risks trendexposure and potential impact analysis at a Company level as also separately for businesssegments.
Compliance with provisions of Sexual Harassment of Women at workplace (PreventionProhibition and Redressal) Act 2013
The Company is committed to uphold and maintain the dignity of women employees and ithas in place a policy which provides for protection against sexual harassment of women atwork place and for prevention and redressal of such complaints. During the year no suchcomplaint was received.
The Company has also constituted an Internal Compliance Committee under the SexualHarassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013.
Corporate Social Responsibility
The Company has constituted Corporate Social Responsibility Committee in compliancewith the provisions of Section 135 of the Act read with the Companies (Corporate SocialResponsibility Policy) Rules 2014. The Corporate Social Responsibility Committee hasformulated a Corporate Social Responsibility Policy (CSR policy) indicating the activitiesto be undertaken by the Company. However Section 135 of the Companies Act
2013 and rules made there under are not applicable to the Company for the Financialyear 2020-21.
The CSR policy may be accessed on the Company's website at the link;http://www.rcom.co.in/Rcom/about-us/investor- relations/corporate-governance.html.
The CSR Committee as on March 31 2021 comprised Smt. Manjari Kacker as Chairpersonand Shri Punit Garg Shri Vishwanath Devaraja Rao Smt. Ryna Karani and Smt. Chhaya Viranias members.
Orders if any passed by Regulators or Courts or Tribunals
Except as disclosed in this report no orders have been passed by the Regulators orCourts or Tribunals impacting the going concern status and the Company's operation.
Internal Financial Controls and their adequacy
The Company has in place adequate internal financial controls across the organization.The same is subject to review periodically by the Internal Audit Cell and by the AuditCommittee for its effectiveness.
Except as disclosed in auditors report during the year under review such controlswere tested and no further reportable material weaknesses in the design or operation wereobserved.
Business Responsibility Report
Business Responsibility Report for the year under review as stipulated under theListing Regulations is presented under separate section forming part of this AnnualReport.
Except as disclosed in this report during the year under review there were noreportable event in relation to issue of equity shares with differential right as todividend voting or otherwise issue of sweat equity shares to Director or Employee andone time settlement with any bank or financial institution.
Your Directors express their sincere appreciation for the cooperation and assistancereceived from shareholders debenture holders bankers financial institutions regulatorybodies government Authorities debenture trustee and other business constituents duringthe year under review. The Directors express their sincere thanks to the ResolutionProfessional and Committee of Creditors of the Company for continuous support during theyear. Your Directors also wish to place on record their deep sense of appreciation for thecommitment displayed by all executives officers and staff and look forward to theircontinued support in future.
By the Order of the Resolution Professional
|Punit Garg ||Vishwanath Devaraja Rao |
|Non Executive Director ||Executive Director and |
| ||Chief Financial Officer |
|(DIN: 00004407) ||(DIN: 08607657) |
|Place : Mumbai || |
|Date : June 26 2021 || |