Your Directors are delighted to present the 20th Annual Report on the business &operations of the Company together with the Audited Financial Statements & Accountsfor the year (18 months) ended September 30, 2012.
1. Financial Highlights
The Company has extended its financial year 2011- 12 and accordingly the figures forthe period under review is for a period of 18 months ended on September 30, 2012 and hencenot comparable with last years figures.
Your Company has recorded an overall revenue of Rs. 4,062.51 Crores for the year (18months period). Profit after tax is Rs. 433.21 Crores. Brief Financial Highlights withcomparison of previous year are as follows:
|Particulars ||2011-12 ||2010-11 |
|Total Revenue ||4,062.51 ||2,350.76 |
|Total Operating Expenditure ||2,960.07 ||1,685.32 |
|Profit Before Tax ||558.13 ||409.60 |
|Profit/(Loss) after Tax ||433.21 ||309.53 |
|Profit Available for Appropriation ||433.06 ||308.45 |
|Cumulative Retained Profits ||1,082.14 ||941.04 |
Analysis of operating performance is covered under Management Discussion and Analysiswhich forms of this Report. No Dividend has been recommended by the Board of Directors ofthe Company for Extended Financial Year 2011-12. However, the register of members andshare transfer books will remain closed from December 24, 2012 to December 29, 2012 bothdays inclusive.
2. Extension Of Period Of Financial year and annual general meeting
The members are apprised that the financial year of your Company has been extended from12 months to 18 months and therefore, the Financial Year now ends on 30th September, 2012.The same was done in order to align the reporting structure of the Company with theregulatory reporting structure and to make it more transparent and compliant. The saidExtension was approved by Registrar of Companies, NCT of Delhi and Haryana vide its letterdated 23rd May, 2012.
The management of the Company strongly believes that the financials prepared with thereviewed, simplified and strengthened operating and reporting system will not only providethe true and fair picture of the Companys position but also meet the requirement ofthe reporting structure of the regulator. Consequent to the aforesaid extension ofFinancial year, the approval for extension of period of holding the Annual General Meetingfor the FY 2011- 12 was also sought from the Registrar of Companies, NCT of Delhi andHaryana and the same was approved by the Registrar vide its letter dated 20th September,2012. Hence, the period of holding the Annual General Meeting for the FY 2011- 12 wasextended till 31st December, 2012.
3. Dividend & Transfer To Reserves
Your Directors have not declared any dividend for the year 2011-12.
Debenture Redemption Reserve
The Company has created Debenture Redemption Reserve (DRR) of Rs. 42.68 Crores duringthe period for Non Convertible Debentures (NCDs), amounting to Rs. 560 Crores outstandingas on September 30, 2012.
4. Foreign Currency Convertible Bonds (FCCBs)
During the Financial year 2007-08, your Company has raised Zero Coupon Foreign CurrencyConvertible Bonds (FCCBs) aggregating to USD 150 Million with a maturity period of 5years, i.e. 26th August 2012. The company has bought back Zero Coupon Foreign CurrencyConvertible Bonds (FCCBs) aggregating to USD 52.99 Millions during F.Y. 2008-09 &2009-10, resulting in outstanding FCCB liability to USD 97 Million as on 30.09.2012.
The company has defaulted in repayment of aforesaid unsecured Foreign CurrencyConvertible bonds (FCCB) amounting to approx. USD 145 million (Rs. 75853.57 Lacs approx.)(Including Premium approx. Rs. 24928.04 Lacs) in respect of FCCB were due for redemptionin August, 2012. In order to redeem aforesaid FCCB, the management is actively pursuingvarious options which includes raising of additional finance in the form of debt and othervarious options. Discussion on each of these options is in process and the management isconfident that the company will be able to arrange the required funds for its redemptionshortly.
Regarding the recent downgrade of Credit Rating of the Company to D (IND, your Companywould like to clarify that it is not on account of any surveillance of operationperformance of the Company and is primarily do extension to timeline beyond its due dateis to redeem the outstanding FCCB. The core operations of the Company remain robust andProfitable and Tulip continues to provide best in class services to its Clients.
5. Non Convertible Debentures
During the year, your Company has issued Non Convertible Debentures(NCDs) to the tuneof Rs.150 Crores to Tata Capital and Rs.115 Crores to following entities: (i) Bank ofBaroda(ii) Canara Bank(iii) Central Bank of India(iv) Andhra Bank(v) Indian OverseasBank(vi) Bank of India and (vii) Dena Bank.
Further the Company has also redeemed NCDs amounting to Rs. 55 Crores during theFinancial year 2011-12.
EXTERNAL COMMERCIAL BORROWINGS
During the year, your Company has raised an External Commercial Borrowings (ECB) forUSD 35 Million.
Your Company has four, wholly Owned Subsidiary and a Fellow Subsidiary, namely:
1. Tulip IT Services Singapore Pte. Ltd.
2. Tulip Swan IT Services Ltd.
3. Tulip Telecom Inc.
4. Tulip Data Centre Services Pvt. Ltd.
5. Sada IT Parks Pvt. Ltd.
In accordance with the general circular issued by the Ministry of Corporate Affairs,Government of India, the Balance Sheet, Profit and Loss Account and other documents of thesubsidiary companies are not being attached with the Balance Sheet of the Company.However, the financial information of the subsidiary companies is disclosed in the AnnualReport in compliance with the said circular.
The Company will make available the Annual Accounts of the subsidiary companies and therelated detailed information to any member of the Company who may be interested inobtaining the same. The annual accounts of the subsidiary companies will also be kept openfor inspection at the Registered office of the Company and that of the respectivesubsidiary companies. The Consolidated Financial Statements presented by the Companyinclude the financial results of its subsidiary companies.
Mr. Dinesh Kaushal was appointed as the Whole-time Director of the Company for a periodof 5 years on Rotational Basis with effect from August 14, 2012 and was designated as theDirector Finance of the Company.
In compliance of section 302 of the Companies Act, 1956, an abstract of his terms ofappointment and remuneration payable to him has already been sent to the members on 2ndSeptember, 2012 The Appointment of Mr. Dinesh Kaushal as Whole Time Director is subject toyour approval in the ensuing Annual General Meeting and therefore, the same is beingproposed.
In accordance with the provisions of Sec 255 & 256 of the Companies Act, 1956 &Articles of Association of Company, Mr. Vinod Chander Sinha and Lt. Gen (Retd.) Amar NathSinha, PVSM, AVSM, Directors of the Company will retire by rotation at the ensuing AnnualGeneral Meeting. In order to fill the casual vacancy in the Board of the Company causeddue the aforesaid Retirement of Directors, Col. Jasbinder Singh Rai is proposed to beappointed as Non Executive Independent Director of the Company in the ensuing AnnualGeneral Meeting and is liable to retire by rotation. The Company has also received anotice u/s 257 of the Companies Act, 1956, in writing proposing the candidature of Col.Jasbinder Singh Rai for the office of the Director in place of retiring Director.
Your Directors recommend their appointment/ re-appointment at the ensuing AnnualGeneral Meeting.
A brief resume, nature of expertise, details of directorships held in other companiesand shareholding in the Company of Mr. Dinesh Kaushal and Col. Jasbinder Singh Rai asstipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is annexed tothe notice convening the Annual General Meeting.
Hence, the Constitution of Board of Directors remains properly constituted incompliance with clause 49 of the Listing Agreement and as per provisions of the CompaniesAct, 1956.
M/s R. Chadha & Associates, Chartered Accountants, Statutory Auditors of theCompany retire at the conclusion of the ensuing Annual General Meeting and being eligible,offer themselves for the re-appointment. They have furnished a Certificate to the effectthat their re-appointment, if made, will be within the limits specified under section224(1B) of the Companies Act, 1956.
Your Directors recommend their re-appointment.
8. Cost Auditors
Pursuant to the notification issued by the Ministry of Corporate Affairs (MCA) andbased on the recommendation of the Audit Committee, your Board has, subject to theapproval of the Central Government, approved the appointment of M/s H. Tara & Co.,Cost Accountants, as the Cost Auditor of the Company for the financial year 2012-13. YourCompany has filed application with the Central Government for necessary approval in thisconnection.
9. Employee Stock Option Scheme
Out of the total 27,00,000 options granted during the previous year, 76 employees ofthe Company who were granted the options aggregating 17,55,000 have left the services ofthe Company before any options could vest with them. Hence, the total options granted are9,45,000.
Further, during the year under review, the Company had granted 3,87 ,500 stock optionsto its identified Employees for exercising the stock options. Further, the disclosures asrequired under Clause 12 of SEBI (Employee Stock Option Scheme & Employee StockPurchase Scheme) Guidelines, 1999 are furnished as Annexure A, forming part of thisReport.
A Certificate from M/s. R. Chadha & Associates, Chartered Accountants, StatutoryAuditors, with respect to the implementation of the Companys ESOS Scheme, would beplaced before the Shareholders at the ensuing Annual General meeting, and a copy of thesame shall be available for inspection at the registered office of the Company.
10. Human Resources Management
Your Board believes that Employees are vital to the Company. Your Company has created afavourable work environment which encourages innovation and meritocracy. The Company hasalso set up scalable recruitment and human resource management process which would enableus to attract and retain high caliber employees.
11. Directors Responsibility Statement
In terms of and pursuant to section 217 (2AA) of the Companies Act, 1956, yourDirectors, in relation to the Annual Statement of Accounts for the financial year2011-2012, state and confirm that:
(i) the Accounts had been prepared on a going concern basis and in suchpreparation, the applicable accounting standards have been followed along with properexplanation relating to material departures;
(ii) the Accounting Policies have been selected and applied and judgments and estimatesmade are reasonable and prudent so as to give a true and fair view of the state of Affairsof the Company at the end of the financial period and of the Profit of the Company forthat period ;
(iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 asamended, for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities
12. Listing With Stock Exchanges
The Equity Shares of the company are listed with Bombay Stock Exchange Ltd. (BSE) &National Stock Exchange of India Limited (NSE). Zero Coupon Convertible Bonds (FCCBs) werelisted on Singapore Stock Exchange (SGX ST). Secured Redeemable Non ConvertibleDebentures (NCDs) are listed on WDM segment of Bombay Stock Exchange Ltd (BSE).
The annual listing fee for the year 2012-2013 have been paid within the scheduled timeto BSE, NSE & SGX ST respectively.
13. Internal Audit
M/s JRA & Associates, Chartered Accountants have been appointed as the Internal cumManagement Auditors of the Company for the financial year 2012-13
Your Company also has a separate and dedicated Internal Audit Department in order tohedge the exposure towards the fraud, malfunctions and deceptive activities at variouslevels and departments. The Internal Audit Department also facilitates its support andco-operation to the Internal Auditor(s) during the course of the Internal Audit.
14. Corporate Governance Report And Management Discussion And Analysis Statement
As per Clause 49 of the Listing Agreement, report on Corporate Governance together withManagement Discussions and Analysis report and Certificate from Companys StatutoryAuditor are annexed elsewhere in this report.
15. Public Deposits
During the year under review, your Company has not accepted any deposits under theprovisions of Section 58A of the Companies Act, 1956 and Rules made there under.
16. Audit Committee Recommendation
During the year, there was no such recommendation of the Audit Committee which was notaccepted by the Board. Hence there is no need for the disclosure of the same in thisReport.
17. Particulars on Conservation Of Energy and Technology Absorption
Information as required under Section 217(1)(e) of the Companies Act, 1956, read withthe Companies (Disclosure of particulars in the report of the Board of Directors) Rules,1988 as amended from time to time, has been provided in Annexure B to this Report.
18. Quality Initiatives
Reinforcing its commitments to high standards of quality, your Company was successfullyassessed for its ISO certificates Intertek Systems Certification for the following :
QMS (Qaulity Mangament System) as per ISO 9001:2005 for providing systemIntegration , Network Integration, VPN Services and Managed Services.
ISMS (Information Security Management System) as per ISO 27001: 2005 coveringall information assets owned or managed by your Company related to providing Data CentreServices & Network Operation Centre from Delhi & Mumbai premises for delivering ofManaged Services as per SOA version 1.0.
ITSM (Information Technology Service Management System) as per ISO 20000-1: 2005covering the delivery of managed services to its customers for Network Operation Centre atMumbai Premises & Data Centre & Network Operations Centre at New Delhi premiseswithin the technical & organizational boundaries of your Company
The Bangalore Data Centre of your Company was certified for ISO 27001:2005 byBritish Standards Institute for providing Data Centre Services to its clients inBangalore.
Standards Institute for providing Data Centre Services to its clients in Bangalore.
19. Particular Of Employees
A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,1975 is required to be set out in the Annexure to this Report. However, in terms ofsection 219(1)(b)(iv) of the Companies Act, 1956 , the Report and Accounts are being sentto members excluding aforesaid Annexure. Any member interested in obtaining a copy of thesame may write to the Company Secretary at the Registered office of the Company.
Your Directors would like to express their gratitude for the co-operation and supportreceived from Members, Bankers, Department of Telecommunications (DOT), Telecom RegulatoryAuthority of India (TRAI), Wireless Planning Commission (WPC), Government of India, otherRegulatory Bodies, Customers and other business constituents during the period underreview. Your Directors place on record their deep appreciation for exemplary contributionof the Employees at all levels. Their dedicated efforts and enthusiasm has been integralto your Companys impressive growth.
| ||For & on behalf of the Board of Directors |
| ||S/d-New Delhi |
| ||Lt. Col. H.S. Bedi, VSM |
| ||Chairman & Managing Director |
|Place: New Delhi || |
|Date: November 30, 2012 || |
Annexure A to the Directors Report regarding ESOS Scheme Employee StockOption Scheme "TULIP ESOS -2011"
|a. ||Total number of shares covered under the scheme ||50,00,000 |
|b. ||Options Granted ||13,32,500 |
|c. ||Pricing Formula ||Determined by the Board of Director which is generally Current Market Price |
|d. ||Options Vested ||NIL |
|e. ||Options Exercised ||NIL |
|f. ||Total number of shares arising as a result of exercise of option ||NIL |
|g. ||Options Lapsed ||NIL |
|h. ||Variation in terms of options: ||NIL |
|i. ||Money realized by exercise of options ||NIL |
|j. ||Total number of options in force at the end of year ||NIL |
|k. ||Employee wise details of options granted to (during the year) || |
| ||i.) Senior managerial personnel ||10 |
| ||ii.) Any other employee who receives a grant in any one year of options amounting to 5% or more of options granted during the year. ||NIL |
| ||iii.) Identified employees who were granted options, during any one year, equal to or exceeding 1% of the Issued Capital (excluding outstanding warrants and conversions) of the Company at the time of grant. ||NIL |
|l. ||Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options. ||NIL |
|m. ||In case, the employees compensation cost is calculated on the basis of intrinsic value of Stock Option, the difference between the employees compensation of the Stock Option cost based on intrinsic value of the Stock and the employees compensation of the Stock Option cost based fair value for the year ended September 30, 2012 and the impact of this difference on profits and on EPS of the Company. ||NIL |
|n. ||For options whose exercise price either equals or exceeds or is less than the market price of the stock the following are disclosed separately: ||N.A. |
| ||Weighted average exercise price || |
| ||b) Weighted average fair value || |
|o. ||A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information: ||N.A. |
| ||(i) risk free interest rate, || |
| ||(ii) expected life, || |
| ||(iii) expected volatility, || |
| ||(iv) expected dividends, || |
| ||(v) the price of the underlying share in market at the time of option Grant. || |
Annexure B to the Directors Report as per Section 217 (1) (e) of CompaniesAct, 1956
Information relating to conservation of energy, technology absorption, research anddevelopment and foreign exchange earnings and outgo forming part of Directors Reportin terms of section 217(1)(e) of the Companies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 asfollows:-
A. Energy conservation measures, Additional Investment & proposals and Impact ofthe measures taken:
Tulip being a telecommunications service provider requires minimal energy consumptionand every endeavor has been made to avoid its wastage and optimal use and conservation ofenergy as far as possible. Further, details pertaining to total energy consumption andenergy consumption per unit of production are not applicable as your Company is a ServiceProvider not covered under the list of industries mandated under the rule.
B. Technology Absorption
Research and Development (R & D)
i) Specific areas in which R & D is carried out by the Company
Due to the nature of business of the company, your Company is not initiating anyspecific research. However to be acquainted with the latest technology available in themarket or the future technologies , your Company is taking all necessary steps, i.e.Employees trainings, organizing workshops, participating in seminars, conferences andvarious technology forums.
ii) Benefits derived as a result of the above R&D
By virtue of the above initiatives, your Company is able to choose / adopt appropriatetechnology (ies)/ product(s) for rendering better services at competitive prices.
iii) Future plan of action
The Company continues to evaluate and adopt innovative and high quality products andtechnologies to meet the ever changing consumer needs, drive growth, continuous focus onreducing costs to fund the growth and reduce the operating costs.
iv) Expenditure on R & D
|a) Capital || |
|b) Recurring ||N.A. |
|c) Total || |
d) Total R & D expenditure as a percentage of total turnover
Since, your Company is not initiating any specific research due to nature of itsbusiness operations, all the expenditures incurred for the activities mentioned in B(i)above, are charged to the respective expenditures accounts and cannot be separatelyidentified.
Your Company has its own technically qualified staff in the field of computer software,hardware and networking. No imported technology is required by your Company to carry outits business operations.
C. Foreign Exchange Earning and Outgo
a) Activities relating to exports, initiatives taken to increase exports, developmentof new export markets for products and services and export plans
As the Company is in Services Sector there is a limited scope of export promotion.
Total Foreign Exchange Earnings and Outgo during the year :
b) Foreign Exchange earnings and outgo:
|FOB Value of Exports ||NIL || |
|CIF Value of Imports ||Rs. ||10.23 Crores |
|Expenditure in Foreign Currency ||Rs. ||15.73 Crores |
|Foreign Exchange Earnings ||NIL || |
Declaration Regarding Compliance By The Board Members And Senior Management Personnelwith the Companys Code Of Conduct.
This is to confirm that the Company has adopted a Code of Conduct for its Board Membersand the Senior Management and the same is available on the Companys website.
I confirm that the Company has in respect of the financial year ended September 30,2012, received from the Senior Management Team of the Company and the members of theBoard, a declaration of compliance with the Code of Conduct as applicable to them.
|New Delhi || |
|November 30, 2012 || |
| ||Sd/- |
| ||Lt. Col. H.S. Bedi |
| ||Chairman & Managing Director |