Your Directors present 25th Annual Report on the business and operations ofTata Teleservices (Maharashtra) Limited (TTML/ the Company)together with the audited financial statements for the financial year ended March 31 2020and other accompanying reports notes and certificates.
TTML holds a Unified Licence (UL) with Authorization for Access Service inMumbai and Maharashtra License Service Area (LSA) i.e. Maharashtra and Goastates as well as Authorization for Internet Service Provider (ISP) CategoryA - National (Pan India coverage). The Company is one of the country's leadingenablers of connectivity and communication solutions for businesses.
As described in last year's report the transfer by way of demerger of ConsumerMobile Business (CMB) of the Company to Bharti Airtel Limited(Bharti) under a Scheme of Arrangement (the Scheme) becameeffective from July 1 2019 after receiving the requisite approvals as detailed in thesection Scheme of Arrangement. The Scheme was earlier approved by your Boardon December 19 2017 and Equity Shareholders Secured Creditors and Unsecured Creditors ofthe Company on August 30 2018. DoT vide its letter dated February 6 2020 conveyed itsapproval to take on record the transfer / merger as above. Details are provided insubsequent sections.
On completion of the demerger of the CMB as stated above the Company does not havewireless services business since July 1 2019 and has been focusing on providing variouswireline voice data and managed telecom services to Enterprise customers. The Company mayalso explore opportunities to strategically restructure the residual business at anappropriate time.
The Company currently provides its range of products and services to about 0.8 MillionDELs (Direct Exchange Lines) as of December 2019 and having about 17000 kmsof optical fibre transmission network in Mumbai and Maharashtra service areas.
The Company adopted Indian Accounting Standards (Ind AS) from April 12016 with transition date from April 1 2015. Accordingly the financial reports forcurrent financial year 2019-2020 and previous financial year 2018-2019 have been preparedas per Ind AS reporting framework.
The financial highlights of the Company for the year ended March 31 2020 are asfollows:
(Rs. in Crores)
|Particulars ||2019-2020 ||2018-2019 |
|Total Revenue ||1088 ||1322 |
|Expenditure ||656 ||620 |
|Earnings before Interest Depreciation Tax and Amortisation (EBITDA) ||432 ||702 |
|Finance & Treasury charges including exchange impact (net) ||1521 ||1524 |
|Depreciation / Amortisation ||195 ||178 |
|Profit/(Loss) Before Exceptional Items and Tax ||(1284) ||(999) |
|Exceptional Items ||(2430) ||331 |
|Profit/(Loss) After Tax ||(3714) ||(668) |
(Nos are not comparable as CMB business demerged w.e.f. July 1 2019)
The Company reported total revenue at Rs. 1088 Crores as compared to Rs. 1322 Croresin the previous year decline of about 18%.
The Company reported drop in EBITDA at Rs. 432 Crores as against Rs. 702 Crores in theprevious year. EBITDA margin for the year was 40%.
The Company's loss before exceptional items was Rs. 1284 Crores as compared to lastyear's level of Rs. 999 Crores.
The Company has provided for exceptional items of Rs. 2430 Crores primarily towardsadditional provision for License Fee/Spectrum Usage Charges(LF/SUC).
DIVIDEND AND APPROPRIATIONS
In view of the accumulated losses the Directors regret their inability to recommendany dividend for the year under consideration. No appropriations are proposed to be madefor the year under consideration.
Digital disruption and transformation continued to gain momentum in FY 2019-2020 acrossEnterprises. Small Medium and Large Enterprises are going through a phase of digitalevolution. To ride the wave of digital transformation Enterprises continued to invest inrobust telecom infrastructure.
During the year our focus continued to be on:
Developing deeper understanding of the unique needs of our customers
Delivering pioneering products & services
Delighting our customers with great experience across touchpoint During theyear we strengthened our suite of products and services involving ConnectivityCollaboration IoT & Marketing Solutions. Some of the prominent products/ solutions welaunched/strengthened during the year were:
Managed ILL: This product bundles complete bouquet of managed serviceslike proactive monitoring fault management configuration management policy managementand reporting along with standard internet lease line. It takes away the worries ofownership deployment usage and management from customers as it is actively managed byTTBS. It doesn't require capital outlay and has low operational expense.
SIP Channel on Demand: This product gives flexibility to customers toeasily upgrade their channels for running their short duration campaigns/projects.Typically BFSI Media BPO and Voice Aggregators have such requirements and our productallows them to quickly upgrade their channel for a short/ desired time period.
Smart VPN: This is a solution suite that offers private dedicated andsecured connectivity across multiple locations and to the cloud. It empowers enterprisesby integrating diverse operations be it large small permanent or project based.Businesses can get enhanced security through VPN solution with protected internet accessfor sensitive information. The solution ensures real-time performance reporting andproactive monitoring. This solution combines various WAN connectivity solutions (wirelessor wireline) to deliver an all-inclusive network connectivity solution to customers. Thebenefits like QoS (Quality of Service) along with enterprise-level SLAs is what makesSmart VPN more valuable for businesses.
ultra LOLA 2.0: This a technogically superior Point to Point offeringwith latency in microseconds which enables Brokerage/Financial institutions to processmarket data in real time.
Collaboration Solutions: In order to address the continuous shift inmodern workplace where employees expect more openness collaboration and flexibility inhow they stay connected we launched a host of plug and play collaboration solutions whichallows enterprises to improve their productivity and enables them to grow faster:
a. Web Conferencing Solutions: Web Conferencing Solution allows businesses withdistributed workforce to conduct/ participate in reviews collaborate effectively andexchange information in a secure data environment.
b. Hosted Interactive Voice Response ('HIVR'): It is a cloud-based voice applicationthat allows businesses to efficiently connect with its customers. It offers best in classcall connectivity multiple level IVR facility and wide range of numbers to choose from.Enterprises can quickly set up a distributed call center with our HIVR and let agents workfrom remote locations.
c. International Bridging Services ('IBS'): This solution provides bridging facility toorganizations so that they can connect to any international location or conference bridge.Our IBS gives customers the flexibility of getting your employees connected tointernational destinations without having ISD facility on their phones. It provides acentralized bridge facility for all conferencing needs in a cost effective and flexiblemanner.
We continued to increase our Engagement with Customers through our Digital and SocialMedia Platforms. Our onground connect events under the umbrella of Do BigEvents have grown in stature with the introduction of our Thought Leadership seriesof Do Big Conclave. Our Do Big Forum & Do BigConclave formats have received immense appreciation from customers.
Customer-centricity is a way of life at Tata Tele Business Services (TTBS)and 'Customer-First' attitude is embedded across our business operations. To us customercentricity means offering a great experience right from the awareness stage till postpurchase stage. For providing best-in-class customer service we have invested in:
Enhancing and Expanding our Network and Infrastructure
Improvement in Network Resiliency and Uptimes
Tools & Automation to simplify work processes
Self Service Proliferation
Our customers have rewarded our focus on customer centricity by continuing to growbusiness with us and by giving us high customer satisfaction scores.
Awards & Recognition
The Company continued its journey to win Awards & Recognition. During the FY2019-2020 the Company won the Digital Marketing award for Marketing to UniqueAudience in B2B sector at the e4M Indian Marketing Awards 2019. The award ispresented to organizations individuals and teams who have achieved extraordinary successfrom innovative and effective marketing practices having regard to the circumstances ofdifferent industries and diversity of marketing programs.
Some of the other recognitions we have received in the past include:
CII Customer Obsession Award for customer engagement
TelecomLead Innovation Leader Award for SmartOffice
International Echo Awards for Meet4Solutions (Digital Platform) in 2019
Global Marketing Excellence Award for Excellence in Content Marketing.
Pursuant to the provisions of the Companies Act 2013 (the Act) TataTeleservices Limited (TTSL) and Tata Sons Private Limited are the HoldingCompanies of your Company.
Pursuant to Section 47(2) of the Act since October 18 2018 TTSL has become entitledto additional voting rights of 26.26% in respect of the Redeemable Preference Shares (RPS)of Rs. 100/- each held in the Company. Accordingly TTSL has total 74.56% voting rights inthe Company in respect of Equity Shares and RPS of the Company held by it. The RPS areNon-convertible.
subsidiary and associate company
The Company does not have any subsidiary or associate company within the meaning ofrelevant provisions of the Act.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and external consultant(s) including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the financial year 2019-2020.
Accordingly pursuant to the provisions of Section 134(5) of the Act your Directorsto the best of their knowledge and belief and according to information and explanationobtained by them confirm that:
1. in the preparation of the annual financial statements for the year ended March 312020 the applicable accounting standards have been followed and there are no materialdepartures;
2. 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 at the end of the financial year ended March 312020 and of the loss of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. they have prepared the annual financial statements on a going concern basis;
5. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
6. they have devised systems to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
CORPORATE STRUCTURE - DIRECTORS AND KEY MANAGERIAL PERSONNEL
BOARD OF DIRECTORS MEETINGSAND ITS COMMITTEES
As on March 31 2020 the Board of Directors comprised of 6 (Six) Directors. Of the 6(Six) Directors 5 (Five) (i.e. 83%)
are Non-Executive Directors and 1 (One) Managing Director. The term of ManagingDirector ended on March 31 2020 and the incumbent has been appointed as AdditionalDirector effective April 12020. The Non-Executive Directors include 3 (Three) IndependentDirectors (including a Woman Director). The composition of the Board is in conformity withthe provisions of the Act and Regulation 17 of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations).
Further all the Directors and senior management personnel have affirmed compliancewith the Code of Conduct for the Financial Year 2019-2020 (Year) and thedeclaration in this respect appears elsewhere in the Annual Report.
RESIGNATION OF DIRECTOR
Mr. D. T Joseph an Independent Non-Executive Director of the Company due to hishealth and personal reasons resigned as an Independent Non-Executive Director of theCompany with effect from September 21 2019.
The Board placed on record its sincere appreciation for the valuable contributionsupport and guidance provided by Mr. D. T Joseph during his tenure as an IndependentNonExecutive Director of the Company.
RE-APPOINTMENT OF MANAGING DIRECTOR
Mr. Srinath Narasimhan who at the Annual General Meeting (AGM) of theCompany held on July 31 2017 was reappointed as Managing Director of the Company for aperiod of 3 years with effect from February 1 2017 held office till January 31 2020. TheBoard on recommendation of the Nomination and Remuneration Committee re-appointedsubject to the approval of the Members Mr. Srinath Narasimhan as Managing Director for aperiod of two months till March 31 2020. Accordingly a resolution has been proposed inthe Notice convening 25th AGM seeking approval of the Members to thisappointment.
The relevant details of Mr. Srinath Narasimhan forms part of the Notice convening 25thAGM.
DIRECTORS RETIRING BY ROTATION
In accordance with the relevant provisions of the Act and in terms of the Articles ofAssociation of the Company Mr. Ankur Verma retires by rotation at the ensuing AGM andbeing eligible offers himself for re-appointment. The Nomination and RemunerationCommittee and Board recommends his re-appointment. The relevant details of Mr. Ankur Vermaforms part of the Notice convening 25th AGM.
CESSATION OF DIRECTOR
Mr. Srinath Narasimhan Managing Director of the Company on completion of his term asManaging Director and Key Managerial Personnel on March 31 2020 ceased to be ManagingDirector and Director of the Company with effect from close of business hours on March 312020.
The Board placed on record its sincere appreciation for the valuable contributionsupport and guidance provided by Mr. Srinath during his tenure as Managing Director of theCompany.
APPOINTMENT OF DIRECTORS
The Board of Directors on recommendation of Nomination and Remuneration Committeeappointed Mr. Kumar Ramanathan as an Additional Director in the category of IndependentNon-Executive Director with effect from September 24 2019. for the period of 5 (Five)years subject to approval of the Members of the Company at the ensuing AGM. Mr. KumarRamanathan shall not be liable to retire by rotation. The Company has received declarationfrom Mr. Kumar Ramanathan that he fulfills the criteria of Independence as prescribedunder the provisions of the Act read with the Schedules and Rules issued thereunder aswell as Regulation 16 of the Listing Regulations.
Further the Board of Directors on recommendation of Nomination and RemunerationCommittee appointed Mr. Srinath Narasimhan as an Additional Director in the category ofNon-Independent Non-Executive Director with effect from April 1 2020. Mr. Srinath holdsthe office as an Additional Director till the ensuing AGM. The Company has received anotice in writing from a Member under Section 160(1) of the Act proposing candidature ofMr. Kumar Ramanathan and Mr. N. Srinath for the office of Director.
The relevant details of Mr. Kumar Ramanathan and Mr. Srinath Narasimhan forms part ofthe Notice convening 25th AGM.
APPOINTMENT OF MANAGER
The Company appointed Mr. Harjit Singh President Enterprise Business as the Managerand Key Managerial Personnel under Section 203 of the Act with effect from August 122020. He will draw remuneration from Tata Teleservices Limited. He will not draw anyremuneration from the Company.
Accordingly a resolution has been proposed in the Notice convening 25th AGMseeking approval of the Members to this appointment.
The relevant details of Mr. Harjit Singh forms part of the Notice convening 25thAGM.
All the Independent Directors of the Company have given declarations and confirmed thatthey meet the criteria of 'Independence' as stipulated under the Act and the ListingRegulations.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of Board and Committee meetings to be held during the Year is circulated inadvance to the Directors.
During the Year 8 (Eight) meetings of the Board of Directors were held viz. May 292019; June 18 2019; August 7 2019; September 20 2019; November 15 2019; January 172020; January 30 2020 and February 5 2020. Details of composition of the Board meetingsof the Board held and attendance of the Directors at such meetings are provided in theCorporate Governance Report included in the Annual Report. The intervening gap betweenthe meetings was within the period prescribed under the Act and the Listing Regulations.
COMMITTEES OF THE BOARD
(i) Audit Committee:
During the Year the Audit Committee comprised of 4 (Four) Members out of which 3(Three) were Independent Directors and 1 (One) was Non-Executive Non-Independent Director.During the Year 5 (Five) Audit Committee meetings were held. The Board has accepted therecommendations made by the Audit Committee from time to time.
(ii) Corporate Social Responsibility Committee:
During the Year the Corporate Social Responsibility Committee comprised of 3 (Three)Members out of which 1 (One) was Independent Director 1 (One) was NonExecutiveNon-Independent Director and 1 (One) was Executive Director. During the Year 1 (One)Corporate Social Responsibility Committee meeting was held.
(iii) Stakeholders' Relationship Committee:
During the Year the Stakeholders' Relationship Committee comprised of 3 (Three)Members out of which 1 (One) was Independent Director 1 (One) was NonExecutiveNon-Independent Director and 1 (One) was Executive Director. During the Year 1 (One)Stakeholders' Relationship Committee meeting was held.
(iv) Nomination and Remuneration Committee:
During the Year the Nomination and Remuneration
Committee comprised of 3 (Three) Members out of which 2 (Two) were IndependentDirectors and 1 (One) was Non-Executive Non-Independent Director. During the Year 3(Three) Nomination and Remuneration Committee meetings were held.
In addition to above the Company also has the Finance Committee of the Board.
During the Year the Board re-constituted some of the Committees in accordance with theAct and the Listing Regulations. Details of all the Committees along with their terms ofreference composition and meetings of each Committee held during the Year are providedin the Corporate Governance Report annexed to the Annual Report.
The Board of Directors has carried out an annual evaluation of its own performanceperformance of Board Committees and individual Directors pursuant to the provisions of theAct and the Listing Regulations.
The performance of the Board the Committees and individual Directors was evaluated bythe Board after seeking inputs from all the Directors through a questionnaire wherein theDirectors evaluated the performance on scale of one to five based on the followingcriteria:
a) Criteria for Board Performance Evaluation: Degree of fulfillment of keyresponsibilities Board structure and composition Establishment and delineation ofresponsibilities to Committees effectiveness of Board processes information andfunctioning Board Culture and Dynamics Quality of relationship between the Board and theManagement.
b) Criteria for Committee Performance Evaluation: Degree of fulfillment of keyresponsibilities Adequacy of Committee Composition Effectiveness of meetings committeedynamics Quality of Relationship of the Committee with the Board and the management.
c) Criteria for Performance Evaluation of Individual Directors: Fulfilment of theindependence criteria as specified in the Listing Regulations and their independence fromthe Management Attendance Contribution at meetings guidance Support to Managementoutside Board/Committee meetings.
Dr. Narendra Damodar Jadhav Chairman of the Nomination and Remuneration Committee(NRC) was nominated for conducting one-on-one discussions with Directors toseek their feedback on the Board and other Directors.
The NRC also reviewed the performance of the individual Directors.
In separate meeting of Independent Directors performance of Non-Independent Directorsperformance of the Board as a whole and performance of the Managing Director wasevaluated taking into account the views of the then Managing Director and Non-ExecutiveDirectors. Thereafter the Board also reviewed the performance of the Board as a wholeits Committees and individual Directors.
SCHEME OF ARRANGEMENT
The Board of Directors at its meeting held on October 12 2017 had approved thetransfer by way of demerger the Consumer Mobile Business (CMB) of theCompany (TTML) to Bharti Airtel Limited (BAL) subject to requisiteregulatory approvals.
The Scheme of Arrangement amongst TTML and BAL and their respective shareholders andcreditors (Scheme) for transfer of the Consumer Mobile Business(CMB) of TTML to BAL was approved by The Competition Commission of India(CCI) on November 16 2017 by the Board of Directors on December 19 2017 andby shareholders and secured and unsecured creditors on August 30 2018. National CompanyLaw Tribunal (NCLT) Mumbai sanctioned the Scheme by an order dated December4 2018 and NCLT New Delhi by an order dated January 30 2019. The said sanction by NCLTMumbai & Delhi was subject to receipt of Department of Telecommunications(DoT) approval after receipt of which TTML was required to approach NCLT withfixed Appointed Date.
DoT granted approval subject to certain conditions on April 10 2019 to TTML and BALsome of which were subsequently stayed/modified by Telecom Disputes Settlement andAppellate Tribunal (TDSAT) vide its interim orders dated April 22 and May 2and May 6 2019.
TDSAT pending final hearing of the petitions filed by BAL directed DoT to take onrecord the demerger subject to fulfilment of modified conditions and also allowed BAL tooperationalize spectrum and to undertake consequential actions.
TTML and BAL reported compliance with such conditions to DoT vide letter dated May 222019. NCLT Mumbai vide its order dated June 12 2019 approved July 1 2019 as theAppointed Date under the Scheme. On June 24 and 25 2019 BAL and TTML filed NCLT orderswith the Registrar of Companies (RoC) at Delhi and Mumbai respectively withthe Appointed Date of July 1 2019. BAL and TTML informed
DoT vide letter dated June 26 2019 of the NCLT orders and filing of those with RoCDelhi and Mumbai and further informed that the approval process for merger of ConsumerMobile Business of TTML to BAL has been completed with an Appointed and Effective Date ofJuly 12019 and all statutory formalities towards operationalizing the demerger of the CMBof TTML and consequent merger/transfer of the said CMB of TTML into BAL have beencompleted with an Appointed and Effective Date of July 1 2019.
The Scheme became effective on July 1 2019.
DoT appealed against TDSAT interim orders dated May 2 2019 and May 6 2019 in Hon'bleSupreme Court which declined to interfere with the interim orders and requested TDSAT tofinally hear the matter by end of February 2020. Subsequently on February 6 2020 DoTsubject to outcome of the pending BAL petition in TDSAT and any appeal against thejudgement has taken the demerger on record.
DoT on April 28 2020 issued a show cause notice to the Company as to why a penalty ofRs. 50 Crores per circle on its two circles should not be levied for alleged violation ofClause 6.1 of the Unified License (with Access Service Authorisation) Agreement. TheCompany challenged the notice before the TDSAT which directed the Company to file itsresponse with DoT and the decision to be taken by DoT on merit within a reasonable time inaccordance with law without being prejudiced by the tone and tenor of the show causenotice and also without being influenced by the filing of the petition. The matter hasbeen adjourned sine die. The Company filed it's detailed response on June 9 2020 and apersonal hearing was granted by DoT on July 3 2020. DoT's response is awaited.
DoT has also filed a petition before NCLT Delhi in the matter related to merger ofTTML CMB with Bharti Airtel Limited wherein DoT has alleged that both the parties haveviolated the provisions of Scheme as sanctioned by Hon'ble Tribunal and that they shouldbe punished and penalized as per the provisions of the Section 232(8) of the Company Act2013. The petition is yet to be listed.
Upon the Scheme becoming effective and in consideration of transfer of Consumer MobileBusiness of the Company to BAL BAL issued and allotted (A) 1 (One) BAL Equity Share toTTML Equity Holders on Record Date for every 2014 (Two Thousand Fourteen) TTML EquityShares each held in TTML on the Record Date; and (B) 10 (Ten) BAL Redeemable PreferenceShares (RPS) to all (and not each) TTML RPS Holders in proportion to theirholding of TTML RPS on the Record Date. The Record Date was fixed as July 12 2019.
Post transfer of mobile services to BAL the Intra Circle Roaming Arrangement waswithdrawn and network is aligned on serving Enterprise Business Unit. The focus isoptimization/ consolidation of locations as per business requirement.
The Company has a well-defined and practiced Employee Safety and Well-being Policy. TheCompany's Safety Policy comprises guidelines and standardized practices based on robustprocesses. It advocates proactively improving its management systems to minimize healthand safety hazards thereby ensuring compliance in all operational activities.
To minimize and mitigate risks related to Fire Safety and Physical Security theCompany has taken up various safety initiatives that includes:
First Aid and Fire Safety trainings for all employees.
Emergency Mock fire drills (day/night) every six months.
Dissemination of Safety Guidelines through Safety Awareness mailers andvideos/Safety SMS's (covering Do's & Don'ts during emergency).
POLICIES AND PROCEDURES
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Policy of the Company on Directors' appointment including criteria for determiningqualifications positive attributes independence of a Director and the Policy onremuneration of Directors Key Managerial Personnel and other employees are annexed as Annexure- IA and Annexure - IB to this Report.
RISK MANAGEMENT POLICY
The Company has Risk Management Policy and the risk management framework which ensuresthat the Company is able to carry out identification of elements of risk if any which inthe opinion of the Board may threaten the existence of the Company.
INTERNAL FINANCIAL CONTROLS AND THEIR
The Company has established and maintained adequate internal financial controls withrespect to financial statements. Such controls have been designed to provide reasonableassurance with regard to providing reliable financial and operational information. Duringthe Year such controls were operating effectively and no material weaknesses wereobserved.
vigil MECHANISM / WHISTLE BLOWER POLICY
The Company has established a vigil mechanism in the form of Whistle Blower Policy forDirectors employees and other stakeholders of the Company to report their genuineconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's Code of Conduct or ethics policy details of which are provided in the CorporateGovernance Report which forms part of the Annual Report.
The Policy provides for adequate safeguards against victimization ofDirectors/employees who avail of the mechanism and also provides for direct access to theChairman of the Audit Committee.
The Whistle Blower Policy has been placed on the website of the Company at https://corporate.tatateleservices.com/Downloads/ttml/code conduct whistle.pdf
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR)Committee in accordance with Section 135 of the Act. The composition of CSR Committee thedetails of CSR Policy and initiatives taken by the Company on CSR activities during theYear have been provided in the Annexure - II to this Report. For other detailsregarding the CSR Committee please refer to the Corporate Governance Report which is apart of this Report.
RELATED PARTY TRANSACTIONS
All Related Party Transactions (RPTs) that were entered into during thefinancial year were on an arm's length basis and in the ordinary course of business of theCompany. Pursuant to Regulation 23 of the Listing Regulations and Section 177 of the Actprior approval of the Audit Committee is obtained for all RPTs. A statement of significantRPTs is placed before the Audit Committee for its review on a quarterly basis specifyingthe nature value and terms and conditions of the transactions.
Further your Company has taken a prior approval of the Members for all materialtransactions/proposed transactions entered/to be entered into between the Company andTTSL a related party relating to rendering or availing of services sharing ofinfrastructure purchase/sale of Assets and Inventory and sharing of costs for anaggregate value of Rs. 620 Crores (Rupees Six Hundred and Twenty Crores Only) per annumfor the financial years 2018-2019 2019-2020 and 2020-2021. Similar resolution for nextthree financial years requesting prior approval of the Members for aggregate value of Rs.200 Crores (Rupees Two Hundred Crores Only) forms part of the Notice convening 25thAGM.
The details of material contracts or arrangement or transactions entered by yourCompany on arm's length basis are provided in Form AOC-2 which is annexed as Annexure- III to this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Your Company falls within the scope of the definition infrastructurecompany as provided by the Act. Accordingly the Company is exempt from theprovisions of Section 186 of the Act with regards to loans made guarantees given orsecurity provided by the Company.
Your Company has not made any investment in securities of other Bodies Corporate duringthe financial year 2019-2020.
The Company has not accepted any deposits from public during the financial year2019-2020 within the meaning of Section 73 of the Act read with the Companies (Acceptanceof Deposit) Rules 2014. No amount on account of principal or interest on deposits frompublic was outstanding as on the date of the balance sheet.
The Company availed Inter Corporate Deposits (ICD) from TTSL amounting toRs. 2790.15 Crores (Rupees Two Thousand Seven Hundred Ninety Crores and Fifteen LakhsOnly) during the financial year 2019- 2020.
disclosures as per the sexual harassment of
WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention andredressal of complaints of sexual harassment at workplace. The objective of this policy isto lay clear guidelines and provide right direction in case of any reported incidence ofsexual harassment across the Company's offices and take appropriate decision in resolvingsuch issues.
Further the Company has complied with provisions relating to the constitution ofInternal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
During the financial year 2019-2020 the Company has not received any complaints onsexual harassment.
particulars of employees
Disclosure 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 is annexed as Annexure - IV to this report.
The statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. Pursuant to Section 136(1) ofthe Act this Report is being sent to the Members of the Company excluding the aforesaidinformation. However Copy of this statement may be obtained by the Members by writing tothe Assistant Company Secretary at email@example.com.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OuTGO
Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of Companies (Accounts)Rules 2014 the details of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo are as under:
(A) Conservation of Energy:
(i) Steps Taken or Impact on Conservation of Energy:
a. Electricity and Diesel Generators are used for the powering of the Company'stelephone exchanges and other network infrastructure equipment. The Company regularlyreviews power consumption patterns across its network and has implemented variousinnovative projects including green initiatives in order to optimize power consumptionwhich resulted into substantive cost savings and reduction of carbon foot print. Some ofthe major projects undertaken during the Year are:
Network Optimization - 11 Tx locations switched off post Network optimization.
03 Core Switching locations full surrender
Total Surrendered - 0.31 L Sq. ft.
b. The initiative on energy conservation has resulted into reduction of 0.34 Millionunits of energy consumption carbon foot-print reduction of 17381 TCO2 for the financialyear 2019-2020.
(ii) Steps taken by the Company for utilizing alternate sources of Energy:
The Company has not utilized any alternate sources of energy.
(iii) Capital Investment on Energy Conservation Equipments: Nil.
(B) Technology Absorption: The Company has not imported any new technology.
(C) Foreign Exchange Earnings and Outgo:
(Rs. in Crores)
|Particulars ||2019-2020 ||2018-2019 |
|Earnings ||0.12 ||0.31 |
|Outgo ||1.68 ||2.97 |
|Capital Goods ||68.39 ||119.72 |
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE
regulators or courts or tribunals impacting
THE GOING CONCERN STATuS AND THE COMPANY'S OPERATION IN FuTuRE
The Hon'ble Supreme Court (SC) pronounced its Judgment dated October 242019 (Judgement) dismissing the appeals of operators and allowing Departmentof Telecommunication's (DoT) appeal in respect of the definition of GrossRevenue (GR) and Adjusted Gross Revenue (AGR) as defined in theUnified Access Service License Agreement. The SC also directed all telecom licensees topay amounts due within three months of the date of the order.
DoT vide letter dated November 13 2019 directed all the telecom licensees to undertakeself-assessment and make payment of Licence Fee (LF) and other dues withinthree months in accordance with the Judgment.
The Company and other operators filed review petitions in SC challenging inter aliaimposition of penalty and interest thereon. These petitions were dismissed on January 162020.
The Company and other operators filed modification applications in the SC seekingmodification of Supplementary Order dated October 24 2019 to allow the Company and DoT toconduct the exercise for ascertaining and payment of the amounts due under the Judgment.
TTSL and TTML also submitted various representations and submitted documentary evidenceto claim permissible deductions.
On February 14 2020 the SC heard abovementioned modification applications ofoperators and passed an order which noted that despite the dismissal of Review Petitionsthe Companies had not paid any amount. SC directed the MD/Directors of the Companies toshow cause as to why SC should not initiate Contempt Proceedings against them for notcomplying with the orders passed by the court by not depositing the amount.
Mr. N. Srinath then Managing Director filed an affidavit on behalf of himself andother directors as also the Company.
On February 17 2020 TTSL and TTML (jointly TTL) made a payment of Rs.2197 Crores based on self-assessment. TTL in good faith and by way of abundant cautionalso made additional ad-hoc payment of Rs. 2000 Crores on March 2 2020 to coverreconciliation and verification differences with DoT if any.
DoT on March 16 2020 filed an application (Modification Application) for grant of a 20year period for recovery of Rs. 16798 Crores as the demand towards LF Spectrum UsageCharges (SUC) Interest penalty and interest on penalty against Tata Group of companiesand showed an amount of Rs. 12601 Crores as outstanding after deducting an amount of Rs.4197 Crores which was paid subsequent to Supreme Court judgement and to cease theinterest applicable under the relevant licenses after a particular date.
Post March 31 2020 SC has passed three (3) orders as below:
On June 11 2020 SC directed the operators to file joint affidavit with respectto proposal to secure the outstanding LF amount. The aforesaid order was passed on theModification Application filed by DoT in March 2020 seeking to recover the balanceoutstanding over 20 years.
On June 18 2020 SC directed that operators to file audited Balance Sheets forthe last 10 years including for the Calendar year ending March 31 2020 as well as theIncome Tax Returns and the particulars of AGR (LF) deposited during the last 10 Years. SCalso requested telecom operators to make payment of reasonable amount to show theirbonafide before the next date of hearing. TTSL and TTML filed the required documents incompliance with the order.
On July 20 2020 SC passed an order agreeing with the statement relating torecoverable amount filed by DoT as part of Modification Application and further orderedthat there cannot be any re-assessment or recalculation of this amount. The order on timeframe during which the payment is to be made and the how to securitize the outstandingdues is reserved. The Company is awaiting clarity with the Judgement and the orders andwill then decide on the future course.
Further details and details of the provisions made are given in the Notes to accounts.
While there are other critical litigations including litigations relating to variousdemands made by DoT except the AGR issue there are no material orders passed as ofdate by the Regulators / Courts or the Company has interim protection from courts againstenforcement of such demands or notices which would impact the going concern status of theCompany and its future operations. However there is always a chance that any order passedin critical litigations in future may have an impact on the going concern or futureoperations of the Company.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 the extract of Annual Return for FY 2019-2020 in theprescribed Form No. MGT-9 is annexed as Annexure - V to this Report.
The list of all credit ratings obtained by the Company along with any revisions theretoduring the Year for all debt instruments are given hereunder:
|Rating Agency || |
|Long Term Rating ||Short Term Rating |
|CRISIL ||AA- (Stable) ||A1 + ||A1 + |
|CARE ||A+ (Stable) ||A1 + ||A1 + |
There was change in outlook by rating agency CARE as compared to last year from 'Creditwatch with developing implications' to Stable.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
There was no amount to be transferred to the IEPF during the year. However totalunclaimed amount of Rs. 298047.30 is available with the Company towards sale proceeds offractional shares arising out of issuance of bonus shares in 2014.
Pursuant to the provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 Price Waterhouse Chartered Accountants LLP having FirmRegistration No. 012754N/N500016 were appointed as Statutory Auditors of the Company for aterm of five years from the conclusion of 22nd AGM of the Company until theconclusion of 27th AGM to be held in the year 2022.
Section 148 of the Act read with Companies (Cost Record and Audit) Rules 2014 (theRules) requires every Telecommunication company to get its Cost Recordsaudited by the Cost Accountants in practice and file the Cost Audit Report with theCentral Government within 180 days of closure of the financial year. Accordingly theCompany is required to maintain cost records.
The Board of Directors of your Company has on the recommendation of Audit Committeeapproved the reappointment and remuneration of M/s. Sanjay Gupta & Associates CostAccountants as Cost Auditors of the Company for conducting cost audit for the financialyear 2020-2021. A resolution seeking approval of the Members for ratifying theremuneration payable to the Cost Auditors for the financial year 2020-2021 is provided inthe Notice of the ensuing AGM.
The Board has appointed Ernst & Young LLP and ANB Solutions Pvt. Ltd. as InternalAuditors for conducting internal audit of the Company for the financial year 2019-2020.
Secretarial Auditors and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed M/s. Mehta & Mehta Practicing Company Secretaries to undertake theSecretarial Audit of the Company for the year ending March 31 2020. The Secretarial AuditReport in Form MR-3 is annexed as Annexure - VI to this Report.
AUDITORS' OBSERVATIONS AND DIRECTORS' COMMENTS
The Auditors' Report for the financial year ended March 31 2020 does not contain anyqualification reservation adverse remark or disclaimer.
CORPORATE GOVERNANCE REPORT
A report on Corporate Governance appears after this Report. A certificate from PriceWaterhouse Chartered Accountants LLP with regard to compliance of conditions of corporategovernance as specified in the Listing Regulations by the Company is annexed hereto andforms part of this Report.
The Company has complied with mandatory requirements of Corporate Governance prescribedunder the Listing Regulations.
MANAGEMENTS' DISCUSSION AND ANALYSIS REPORT
A detailed report on Managements' Discussion and Analysis as required under theRegulation 34 of the Listing Regulations for the Year under review is presented in aseparate section forming part of this Report.
COMPLIANCE WITH SECRETARIAL STANDRADS
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.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34 of the Listing Regulations a Business Responsibility Reportbecoming applicable to the Company with effect from April 1 2020 is attached and is apart of this Annual Report.
Your Directors wish to place on record their sincere appreciation for the assistanceand support extended by the employees shareholders customers financial institutionsbanks vendors dealers Department of Telecommunications the Central and StateGovernments and others associated with the activities of the Company. We look forward totheir continued support in future.
| || |
For and on behalf of the Board of Directors
| ||Ankur Verma ||N. Srinath |
| ||Director ||Director |
| ||DIN: 07972892 ||DIN: 00058133 |
|Place: Navi Mumbai || || |
|Date: August 12 2020 || || |