The Board of Directors hereby submits the thirty first Annual
Report of the Company with Audited Financial Statements for the period from 1st April2018 to 31st March 2019 along with the Auditors Report.
The financial performance of your company is as given below:-
| || ||(Rs. in Lakhs) |
| ||2018-19 ||2017-18 |
|Revenue from operations ||- ||160.69 |
|Other Income (Net) ||5.46 ||3.85 |
|Total Revenue ||5.46 ||164.54 |
|Total Expenditure ||649.43 ||728.46 |
|Finance Charges ||896.65 ||844.20 |
|Extraordinary / Exceptional items ||- ||2.15 |
|Gross Profit / (Loss) after interest before De - preciation & Tax ||(1540.62) ||(1410.27) |
|Depreciation and Amortization Expense ||29.93 ||30.26 |
|Provision for Taxation / Deferred Tax ||- ||- |
|Net Profit / (Loss) ||(1570.55) ||(1440.53) |
|Other Comprehensive Income /(Loss):Item that will not be reclassified to Profit and Loss ||(22.91) ||20.55 |
|Total Comprehensive Income/(Loss) for the Period ||(1593.46) ||(1419.98) |
The net loss after Tax is Rs. (1593.46) lakhs against net loss of Rs. (1419.98) lakhsmade during the previous year.
Review of Operations
During the year under review the company's other income wasRs.5.46lakhs.Duetonon-availabilityofrawfiberthere is no operation in the company.
Market Scenario and Outlook
The demand for optical fiber has grown at a rapid scale due to development ofinfrastructure under smart city project and digital India promoted by Govt. of India.
The Smart City Mission (SCM) of the Govt. of India plans to accommodate the massiveurbanization that is expected in the future by modernizing the existing mid-sized cities.
The cabinet approved the new telecom policy now named National Digital CommunicationsPolicy (NDCP) 2018. It aims to provide access of broadband with 50 megabit per second toevery citizen attract USD 100 billion investments in the sector and create 40 lakh jobsby 2022. Government has also outlined the programme of rolling out 5G mobile services fornext-generation networks. This next generation of wireless access technology is expectedto offer higher data capacity and speeds faster than 10 GB per second. Number of towersrequired to cover the areas would go manifold. Towers would have to be connected with OFCfor providing sufficient backhaul capacity. The government also aims to boost WiFiecosystem in the country by deploying 5 million public Wi-Fi hotspots by 2020 and 10million by 2022. The Company is also exploring the possibilities for diversification inthe related areas like manufacturing and supply of Ribbon Fiber Cable and OFC accessories.
The Broadband Policy 2004 was laid down by the Government of India in order to realizethe potential of broadband services. India's BharatNet broadband project which expectedto connect 250000 gram panchayats after completing 100000 GPs in phase-I in December2017. It aimed at enhancing the quality of life by implementation of tele-educationtele-medicine e-governance entertainment and also to generate employment through highspeed access to information and web-based communication.
Currently broadband penetration in India at present is less than 2%. As per World Bankstudy a 10% increase in broadband connectivity leads to 1.38% increase in Gross DomesticProduct (GDP). The optical fiber network that supports high speed broadband connectivityhas predominantly reached state capitals districts and blocks in India.
The Indian economy is continuing its high growth momentum. According to theInternational Monetary Fund India is forecast to grow at 7.4% in 2018 making us thefastest-growing economy in the world. Series of new initiatives initiated by theGovernment have moved India into world's top countries towards ease of doing business. Theglobal economy is also growing at its fastest pace and expected to strengthen further inyears to come.
Statements in the Boards' Report contain forward looking statements. Actual resultsperformances or achievements may vary materially from those expressed or implieddepending upon economic conditions Government policies subsequent developments and otherincidental factors.
Risk & Concern
The industry is facing challenging cost pressures as the cost of major raw materialsare going up due to shortage & increase in oil prices. The variations in exchange ratefluctuation are also a threat towards cost of production. The competition within OFCbusiness is becoming fierce due to emerging new technologies and frequent new productintroductions in Optical fiber products which command competitive prices preference in themarket. The market price of cables is also varying due to competition.
In accordance with Sec.152 (6) and (7) of the Companies Act 2013 read with Articles79 & 80 of the Articles of Association of the company Shri. B.Elangovan (DIN00133452) and Shri. Rajiv Gupta (DIN 06993918) will retire from the directorship of thecompany by rotation and being eligible offers themselves for re-appointment.
Directors' Responsibility Statement
As required under Section 134(5) of the Companies Act 2013 the Directors of theCompany hereby state and confirm that -
a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed.
b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2019 and the loss of the Companyfor the year ended on that date.
c) They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.
d) They have prepared the annual accounts on a going concern basis considering thecomparative growth in OFC market future prospects of the Company with the support ofTCIL.
e) They have laid down internal financial control to be followed by the company andthat such internal financial control is adequate and was operating effectively.
f) They have devised proper system to ensure compliance with all provision of allapplicable laws and that systems were adequate and operating effectively.
Extracts of the Annual Return
Pursuant section 92(3) of the Companies Act2013 and Rule12(1) of the Companies(Management And Administration) Rules2014 the extract of the Annual Return in Form MGT-9has been attached as to form part of the Report.
A report on Corporate Governance with the Practicing Company Secretaries Certificate oncompliance with conditions of the Corporate Governance has been attached as to form partof the Report.
Clarification on Practicing Company Secretaries observations is given below: and
1. Due to non appointment of Independent Directors the Company has not complied withRegulations 17(1) (b) 18 (1) 19(1) and 25 (3) of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 in terms ofminimum number of Independent Directors in the Board Constitution of Audit Committee andconducting a separate meeting of Independent Directors respectively.
2. The Company has not complied with Regulation 17(1) (a) of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 in terms of having woman director in the Board.
3. The Company has not complied with Regulation 6 of the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 in terms ofappointment of Company Secretary as Compliance Officer of the Company till 21.01.2019during the period under review.
4. The Company has not complied with 46 (2) (b) (c) (e) (f) (g) and (i) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 in terms of disclosing information in the website of the Company.
5. The Company has not complied Regulation 9 17(9) 30(4)(iii) & 30(8) ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 in terms of Framing Policy for preservation of documents Riskassessment and minimization procedures Policy for determination of materiality of thedisclosure of events and information and Archival Policy.
Points No (1) and (2) : The Company is Joint sector Govt. Company with 49% of itsshares held by TCIL a Govt. of India Enterprise and 14.63% held by TIDCO a Govt ofTamilnadu Enterprise. Being a Govt. Company action has already been taken for inductionof Independent Directors and Woman Director in the Board of the Company with theDepartment of Telecommunications Ministry of Telecommunications and the same are beingfollowed up for early appointment to comply regulation 17(1)(b). Constitution of AuditCommittee as per 18 (1) and Constitution of Nomination and Remuneration Committeeas per regulation 19(1) of SEBI LODR and separate Independent Directors Meeting asper 25 (3) of SEBI LODR shall be conducted after appointment of required number ofIndependent Directors by the Ministry of Telecommunications. The Company succeeded toinduct a Woman Director on the Board of the Company from the promoter company TCIL fromJune 2019.
Point No (3): The management informed company took all steps for the appointmentof Company Secretary as per regulation 6 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015. However due to sickfinancially status of the Company no response was received against advertisement made bythe Company for the Appointment of Company Secretary during the Financial year 2018-19. ACompany Secretary is now appointed w.e.f 13.02.2019 to look after the secretarial affairsof the company.
Point No (4) and (5) : Company has maintained the bare minimum disclosure on thewebsite of the company and the policies of the company also could not be framed during theyear due to the current financial position and other shortage of resources of the company.
Energy Technology and Foreign Exchange
Particulars relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under Sec.134 (3)(m) of the Companies Act 2013are enclosed as part of the Report.
Details of director or Key Managerial Personnel who were appointed or have resignedduring the year.
(i) Ms. Swapnil Gupta was appointed as Company Secretary on 13.02.2019
(ii) Shri V.Arun Roy IAS was appointed on 19.11.2018 in place of Shri M.S.Shanmugam onhis cessation on 19.11.2018.
The Managing Director the Key Managerial Personnel (CFO) and Company Secretary weredeputed from the Promoter Company TCIL which is a Govt. of India Enterprise holding 49%stake in the Company. Hence their remuneration was as per the scales applicable to theircadre in the promoter company.
The number of permanent employees as on 31.03.2019 was 67 excluding three officials ondeputation from the promoter company.
None of the employees drew remuneration of Rs.6000000/- or more per annum /Rs.500000/- or more per month during the year. This information is furnished as requiredunder Rule 5(2)(i) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules2014.
Your company is glad to announce that the industrial relations continue to be verycordial. During the year employees were given training on laying of Optical Cable OFCsplicing OFC construction work and FTTH etc. TTL has been encouraging its employees tocome out with innovative suggestions which will pave way for significant cost savings aswell as overall development of the company.
During the year 2018-19 M/s.Telecommunications Consultants India Limited decided tohelp TTL employees by taking them on deputation. Out of 67 no. of employees 45 employeeshave either joined TCIL on deputation or in the process of joining. For remaining 22employees TTL has requested to M/s.Tamilnadu Industrial Development CorporationLtd. (TIDCO) another promoter to absorb these employees on deputation.
Quality Management Systems
Your Directors are happy to report that as a commitment in meeting global qualitystandards your company already has IS/ISO 9001:2015 quality management systemscertification from Bureau of Indian Standards. The license is valid up to 22.02.2021.
Internal Control System
TTL has adequate internal control procedures in respect of all its operations. It haslaid down internal control procedures to ensure that all assets are safeguarded andprotected against loss from unauthorized use or disposition and transactions areauthorized recorded and reported correctly. Internal Audit is being carried out byIndependent Audit Firm of Chartered Accountants on an ongoing basis and it recommendsappropriate improvements apart from ensuring adherence in company policies as well asregulatory compliance. The Audit Committee periodically reviews the audit findings.
Transfer to reserves
During the year under review no amount is being transferred to General Reserve Account.
In a view of the losses your Directors have not declared any dividend during the yearunder review.
During the year under section 73 and the rules may be called the Companies (Acceptanceof Deposits) Rules 2014 the Company has neither accepted nor renewed any deposits frompublic during the year under review.
Corporate Social Responsibility
Since the Company is continuously incurring losses no CSR policy has been devised.
Related Party Transactions
There was no contract or arrangements made with related parties as defined undersection 188 (1) of the Companies Act 2013 during the year under review.
Research & Development (R&D)
The information as required under the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules 1988 with respect to R&D are not applicable toyour Company.
Particulars of Loans guarantees or investments made under section 186 of the CompaniesAct 2013
There were no loans guarantees or investments made by the company exceeding the limitsspecified under Section 186 of the Companies Act 2013 during the year under review andhence the said provision is not applicable
The unsecured loan amounting to Rs 110.96 crores as on 30.06.2019 is from related partyi.e. holding company has been taken on long term basis without any stipulation forrepayment and other terms.
Information under section 197 of the Companies Act 2013 read with rule 5(2) of thecompanies (appointment and remuneration of managerial personnel) rules 2014 regardingemployee's remuneration.
Information as per Section 197 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is notapplicable to your company as there is no employee on the rolls of the Company.Accordingly there was no employee of the Company who received remuneration in excess ofthe limits prescribed under the Companies Act.
Statement under section 134(3)(p) of the Companies Act 2013 regarding formal annualevaluation made by board of its performance and that of its committees and individualdirectors.
In terms of the notification dated 05.06.2015 issued by Ministry of Corporate Affairsthe company has been exempted from the above provision and hence the disclosure is nolonger required.
Material changes and commitments if any affecting the financial position of thecompany which have occurred between the end of the financial year to which the financialstatements relates and the date of the report.
Information under section 134(3)(n) of the Companies Act 2013 concerning developmentand implementation of risk management policy.
The company's operations are completely stopped only limited assistance by the holdingcompany which has a well defined risk management policy. Your company has not developedand/or implemented the Risk management policy on its own.
Vigil Mechanism under section 177(9) of the Companies Act 2013
Your Company is in process of making the Whistle Blower Policy/ vigil mechanism fordirectors and employees to report concerns about unethical behavior actual or suspectedfraud or violation of your Company's Code of Conduct. Adequate safeguards are providedagainst victimization to those who avail of the mechanism will be provided soon.
The Company has always aimed at the highest level of transparency accountability andequity in its operations. It is having a well defined corporate structure that establisheschecks and balances and delegate decision making to appropriate levels in theorganization though the board remains in effective control of the affairs of the company.Your Company also confirms the compliance of the Government of India's directives forimplementation of Corporate Governance Norms for the CPSEs.
In terms of Section 139 of the Companies Act 2013 the Comptroller and Auditor Generalof India (CAG) had appointed M/s. R.BUPATHY & CO Chartered Accountants as theAuditors of the company for the year 2018-19 at a remuneration of Rs.100000/- besidesreimbursement of traveling and out-of-pocket expenses at actual subject to the otheritems and conditions as specified by the CAG.
Independent Auditor's Report
Clarification on Auditors observations is given below:
Basis for Qualified Opinion
The Company has not recognized the following financial liability/asset at Fair Value interms of IndAS 109 (including comparative figures as of 31st March 2018):
i) Amounts due to M/s Fujikura Limited amounting to Rs. 19378840/- (PreviousYear Rs. 18965590/-)
ii) Trade Receivables (considered good) amounting to Rs. 71257092/- (PreviousYear Rs. 74353067/-)
iii) Unsecured Trade Payables amounting to Rs. 33107285/- (Previous Year Rs.32846998/-)
We have audited the standalone financial statements of Tamilnadu TelecommunicationsLimited ("the Company") which comprise the Balance sheet as at March 31 2019and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofchanges in equity and the Statement of cash flows for the year then ended and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid financial statements give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31st 2019the loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Emphasis of Matter
We draw attention to:
1) Note No.28 (Sl.No. 22) of the explanatory notes to the financial statements whichstates the reason for non-recognition of amounts due to the holding Company viz.Telecommunications Consultants India Limited amounting to Rs. 1083968014/- (PreviousYear Rs. 971745550/-) at Fair Value in accordance with IndAS 109. Our opinion is notmodified in respect of this matter.
2) Note Nos. 3581415 of the notes to financial statements where the balancescarried in the debtors creditors advances & deposits payable / recoverable aresubject to confirmation from all parties (other than Telecommunications Consultants IndiaLimited) as stated in Note No.28 (Sl. No. 2). The impact if any on financial statementsis not ascertainable and therefore our opinion is not modified in this respect.
3) Note No. 28(Sl. No. 19) of the explanatory notes to the financial statements whichstates that the Company has not received information from vendors regarding their statusunder the Micro Small and Medium Enterprises Development Act 2006. Hence the disclosurerelating to amounts unpaid as at the year- end together with interest paid / payable underthis Act could not be ascertained. Our opinion is not modified in this respect.
Company's Reply to Basis of Qualification and Para 1 of Emphasis of Matter regardingnon-recognition of financial liability/asset at Fair Value in terms of IndAS 109.
As mentioned in our financials TTL is regularly borrowing from our holding companyTCIL for its raw material support and working capital support for running day to dayoperations. The balances of current liabilities and trade payable pertaining to relatedparty / our holding company TCIL as on 31/03/2019 are given below.
|(i) Current liabilities short term borrowing || |
|(a) Bridge Loan ||: Rs. 116573000 |
|(b) Working capital support loan ||: Rs. 151249847 |
|(ii) Trade payable Sundry creditors for raw material support ||: Rs. 761076487 |
|(iii) Other current liabilities - interest accrued ||: Rs. 55068682 |
Amounts due to Fujikura Limited amounting to Rs.19378840; Trade Receivables(considered good) amounting to Rs.71257092.
Unsecured Trade Payables amounting to Rs. 33107285
This is to state that the above items are reviewed and monitored on day to day basis inboth TTL and TCIL. The balances are periodically reconciled with TCIL and also approved byboard of directors of TTL.
It may not be out of place to mention that all the realizations from TTL clients arerouted through Escrow account which is auto credited to TCIL's Account for which standinginstructions have been given to bank. Moreover charge has been created in favour of TCILagainst fixed assets and current assets of TTL for all the TCIL loans advances andliabilities towards raw material supply. The loans are repayable on demand basis.
Ind AS 109 requires all financial assets/liabilities to be recognised initially at fairvalue and subsequently at amortised cost it satisfies the criteria with reference to IndAs 32 Para 11 and para 4.2.1 of Ind As 109. Since these financial assets/ liabilities arecurrent in nature there is immaterial finance cost/ income involved therefore as ageneral practice demand deposits are carried at cost and not at fair value/amortisedcost.
In view of the commitment to pay to TCIL the holding company / related party on demandbasis and the company is taking a conservative approach management assume book value ofcurrent liabilities at a amortized cost i.e instead to book profit by discountingliabilities the company prefers to go and disclose liabilities with full amount under lawof prudence.
Company's Reply to Para 2 of Emphasis of Matter regarding balances carried in thedebtors creditors advances & deposits payable / recoverable are subject toconfirmation from all parties (other than Telecommunications Consultants India Limited)
Wherever possible the Company is getting confirmation.
Since TTL does not have fund to pay to the Creditor including M/s.Fujikura the companydoes not ask for balance confirmation from any Creditors which will trigger to makepayment.
Company's Reply to Para 3 of Emphasis of Matter regarding Company not receivedinformation from vendors regarding their status under the Micro Small and MediumEnterprises Development Act 2006.
As stated in Notes to Accounts No.19 the Company has not received information from thevendors regarding their status under the Micro Small and Medium Enterprises DevelopmentAct 2006.
Material Uncertainty Related to Going Concern
We draw attention to Note No. 28(Sl. No. 4) of the explanatory notes to the financialstatements. As at 31st March 2019 the Company's accumulated losses of 1478986086/-(including a loss of Rs. 159346225/- incurred during the FY 2018-19) has eroded the NetWorth of the Company indicating the existence of material uncertainty that may cast adoubt about the Company's ability to continue as a Going Concern. Based on the factorsdetailed in the said note the Management believes that the Going Concern assumption isappropriate. Our opinion is not modified in respect of this matter.
Company's Reply : The cabinet approved the new telecom policy now named NationalDigital Communications Policy (NDCP) 2018. It aims to provide access of broadband with 50megabit per second to every citizen attract USD 100 billion investments in the sector.Therefore there will be surge in demand of OF cable in future.
The company has the facility of producing loose tube OF cable and does not have thefacility of ribbon type cables. Considering the huge demand of ribbon type OF cable themanagement wanted to go manufacturing of ribbon type OF cables. Considering the hugeinvestment but still the requirement of OFC in the country is huge as company hascapacity of 10000 km per annum only. Therefore the order booking position is expected tobe good in the near future. Considering the likely order in the immediate future and withthe promoter's financial support the accounts have been prepared on Going Concern Basis.
As per the provisions of the Companies (Cost Records and Audit) Rules 2014 theoperation of the company is not falling within the scope of cost audit. Hence cost auditorwas not appointed for the financial year 2018-19.
Secretarial Audit Report
Clarification on Secretarial audit observations is given below:
i. Due to non-appointment of Independent Directors the Company has not complied withSection 149(4) 177(1) 178(1) and Schedule IV of the Companies Act 2013 as well as withRegulations 17(1) (b) 18 (1) 19(1) and 25 (3) of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 in terms ofminimum number of Independent Directors in the Board Constitution of Audit CommitteeNomination and Remuneration Committee and conducting a separate meeting of IndependentDirectors respectively.
ii. The Company has not complied with Section 149(1) of the Companies Act 2013 andRegulation 17(1) (a) of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 in terms of having woman director in theBoard.
iii. The Company has not complied with Section 203(1) of the Companies Act 2013 andRegulation 6 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 in terms of appointment of Company Secretary ofthe Company till 21.01.2019 during the period under review.
iv. The Company has not complied with 46 (2) (b) (c) (e) (f) (g) and (i) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 in terms of disclosing information in the website of the Company.
v. The Company has not complied Regulation 9 17(9) 30(4)(iii) & 30(8) ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 in terms of Framing Policy for preservation of documents Riskassessment and minimization procedures Policy for determination of materiality of thedisclosure of events and information and Archival Policy.
vi. The company has not framed and published in its official website regarding code ofpractices and procedures for fair disclosure of unpublished price sensitive information asrequired Regulation 8 of SEBI (PIT) Regulations 2015.
vii. The company has not framed any such Code of Conduct to Regulate Monitor andReport Trading by Designated Persons for dealing with Company's securities.
Management reply to the observations:
Points No (i) and (ii) The Company is a listed Company with 49% of its shares heldby TCIL a Govt. of India Enterprise and 14.63% held by TIDCO a Govt of TamilnaduEnterprise. Action has already been taken for induction of Independent Directors and WomanDirector in the Board of the Company with the Department of Telecommunications Ministryof Telecommunications and the same are being followed up for early appointment to complyregulation 17(1)(b). Constitution of Audit Committee as per 18 (1) and Constitution of Nominationand Remuneration Committee as per regulation 19(1) of SEBI LODR and separateIndependent Directors Meeting as per 25 (3) of SEBI LODR shall be conducted afterappointment of required number of Independent Directors by the Ministry ofTelecommunications. The Company inducted a Woman Director on the Board of the Company fromthe promoter company TCIL from June 2019.
Point No (iii) The management informed company took all steps for the appointmentof Company Secretary as per regulation 6 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 due to sick financialstatus of the Company no response was received against advertisement made by the Companyfor the Appointment of Company Secretary during the Financial year 2018-19. A CompanySecretary is now appointed w.e.f 13.02.2019 to look after the secretarial affairs of thecompany.
Point No (iv)(v)(vi) and (vii) Company has maintained the bare minimum disclosureon the website of the company and the policies of the company also could not be framedduring the year due to the current position and other shortage of resources of thecompany.
The Directors wish to place on record their sincere appreciation for the encouragementassistance support and co-operation given by Government of India Government of Tamilnaduand the Promoters. The Directors appreciate your whole hearted efforts during the year andsolicit your continued support and co-operation. Your Directors acknowledge the continuedtrust and confidence you have reposed in this company.
| ||For and on behalf of the Board || |
|Place: Chennai ||Sanjeev Kumar Kesari ||B.Elangovan |
|Date: 08.08.2019 ||Managing Director ||Director |
| ||(DIN 08082217) ||(DIN: 00133452) |