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Directors Report of ITI Ltd.

Mar 31, 2015

To The Members of ITI Limited

The Directors have pleasure in presenting the 65th Annual Report of the Company together with Audited Accounts thereon for the year ended 31st March 2015.

PERFORMANCE

The Company has achieved Sales and Production of Rs. 619.81Crore and Rs. 617.81 Crore respectively during the year 2014-15 against Rs.769.90 Crore and 767.91 Crore respectively during the previous year 2013-14. The Company could achieve this turnover in spite of the fact that our major customers BSNL and MTNL have not placed any major orders like earlier years. The net loss of the Company for the year 2014-15 is Rs. 297.12 Crore against the fgure of Rs.344.26 Crore for the year 2013-14.

The net loss for the year 2014-15 is the lowest ever loss in the last 13 financial years (if the financial assistance by way of grant from the Government is not taken into account).

The contribution (net of material cost) for the year is Rs 172.25 crore, which is comparable for that of previous year at Rs. 184.99 crore.

IMPLEMENTATION OF REVIVAL PACKAGE

The CCEA approval with a financial package of Rs. 4156.79 Crores for the revival of ITI was accorded on 12th February 2014. This consists of Rs. 2264 Crores towards capex for implementation of various projects in 18 technology domains in all the plants of ITI and Rs. 1892.79 Crores as grant-in-aid to meet part of ITI's liabilities.

Against the capex grant of Rs. 2264 Crores, Government has released Rs. 192 Crores to ITI in February 2015. Sixteen projects have been identifed for the investment of this amount. Advance action for implementation of these projects has been initiated in the plants as early as mid 2014, after the approval of the projects by ITI Board followed by DoT and the Apex Committee. Immediately on transfer of capex by the Government in February 2015, ITI plants have taken action to place purchase orders for the equipments required as part of infrastructure up- gradation for the implementation of the projects. Multi-pronged approach has been adopted, involving Corporate Management, Unit Management, Trade Unions etc., for successful implementation of the projects. Projects teams have been formed in all the units for project management and also monitoring of implementation of the projects. Regular monitoring of the implementation is also done at ITI Corporate. Periodic review meetings have been held by DoT at the level of Member (Services) and further review meetings by the Apex Committee.

The Government of India Budget BE 2015-16 includes an additional allocation of Rs. 50 Crores for ITI under plan head. Projects for utilization of this amount have been already identified. This money would be required during the third or fourth quarter of 2015-16.

Against the CCEA approval of Rs. 1892.79 Crores to ITI as grant-in-aid under the revival plan, Rs. 165 Crores was released in November 2014 towards payment of 1997 wage arrears. The 39 month wage arrears corresponding to the period from January 1997 to March 2000 have been paid to almost all the employees including retirees and only a few cases having some dispute or unclaimed cases are pending.

HIGHLIGHTS

The turnover for the year 2014-15 is mainly constituted from National Population Register (NPR), NGN, AMC for GSM-SZ, GSM-WZ, OCB, MLLN & ASCON, Defence and IT Solutions.

The company is executing turnkey project of Registrar General of India (RGI) for creation of Multi Purpose National Identification card under National Population Register Project for the country.

The Company has received the Purchase Order for NFS Project from BSNL for Rs.2984 Crore which involves procurement, Supply trenching, laying, Installation, testing and maintenance of Optical Fiber Cable, PLB Duct and accessories for construction of exclusive Optical NLD backbone and Optical access routes on turnkey basis in the Eastern and North- eastern region of the country.

PRODUCTION

(Rs,in Crore)

2014-15 2013-14 (including (including Sl. Product/Project ED & ED & No. Service Service Tax) Tax)

1 C-DOT Products 0.34 0.16

2 Diversifed Products/ 68.40 16.63 Cont.Mfg.

3 Solar Panel 0.15 18.85

4 PCM MUX 1.73 1.33

5 MLLN 38.42 105.45

6 GSM - WZ (Incl. BTS, 19.72 84.04 RTT, Shelter & AMC )

7 GSM - MTNL 5.43 0

8 GSM - SZ 48.30 0.96

9 Misc. Services 29.03 26.12 10 Defence / ASCON 81.72 69.02

11 OCB AMC Business 36.86 37.82

12 SIM / USIM / SMART 0.89 0.35 Cards

13 NPR/SECC Projects 51.10 234.25 (Data)

14 SMPS 5.75 1.27

15 G-PoN 14.83 8.77

16 ROs / CCO / IT 158.09 150.27

17 Data Centre 11.56 14.61

18 NGN 47.49 0.00

TOTAL (Incl. ED & Ser. Tax) 619.81 769.90

Projects executed during the year 2014-15:

- Next Generation Network (NGN)

ITI Bangalore plant successfully executed the purchase order worth Rs.47.20 Cr. for NGN products received from BSNL. Further, Advance Purchase Order (APO) from BSNL to the tune of Rs 120 Cr is available for execution of this project during 2015-16.

- National Population Registration (NPR) and Socio Economic & Caste Census (SECC) projects ITI is one among the consortium of three PSUs (other two PSUs being M/s BEL & M/s ECIL) for the execution of prestigious National Population Register (NPR) Project under Ministry of Home Affairs (MHA). The job involves collection of citizen data including biometrics which is under execution. The above consortium is also executing SECC project for the Ministry of Rural Development (MoRD).

- GSM

ITI has implemented GSM Projects in BSNL West Zone and MTNL-Mumbai in technology alliance with M/s Alcatel-Lucent & in South Zone in technology alliance with M/s Huawei. The Annual Maintenance Contract related works have been carried out in these zones.

- Defense projects

ITI is the leader in supplying encryption equipments for the secured communication in the Defense networks. In the year 2014-15, ITI had executed orders from Defense sector for IP encryptions, NGN (BU), 5C telephone instruments etc.

- Fiber Cable Laying for Network for Spectrum (NFS)

In the tender foated by BSNL for laying optical fiber cables under NFS project, ITI was L1 for 2 zones (out of seven) and has received Purchase Orders from BSNL worth Rs 2111 Crore (excluding AMC) for laying of optical fiber cable in the east and north eastern part of the country. The project is currently under execution with support from technology partners.

- Switch Mode Power Supply (SMPS)

ITI Raebareli plant is manufacturing SMPS systems and executing the orders from BSNL / MTNL.

- Data center & IT Projects

ITI has already established Tier 3 state-of- art Data center at Bangalore on PPP model. Presently this Data Center is fully booked for co- location services. ITI is also playing a major role in implementing IT projects. The Government is pursuing E-Governance projects for taking the benefit of IT to the Village Panchayats and a substantial budget provision has been made by the Government for the same. ITI is aggressively pursuing this market segment. ITI has executed SWAN (State Wide Area Network) projects of Maharashtra, Odisha and Mizoram. ITI is also executing Accelerated Power Development and Reform Programme (APDRP) of Tamil Nadu state.

- Maintenance Contracts

ITI had earlier established the ASCON network for Indian Army. ITI was also the major supplier of fixed line switches to BSNL and MTNL. Currently ITI has been extending maintenance assistance to Indian Army for ASCON and to BSNL and MTNL for OCB exchanges, MLLN and STP Networks under Annual Maintenance Contracts.

FINANCE

The performance of the Company for the year 2014- 2015 as compared to the previous year is as follows:

(Rs,in Crore)

SI. Particulars 2014-2015 2013-2014 No.

i. Sales including 620 770 services

ii. Value of 618 768 Production

iii. Loss before tax 297 344

iv. Loss after tax 297 344

v. Financing 157 122 Expenses

vi. Depreciation 15 17

vii. Capital Employed 1112 952 (Net Fixed Assts Net Current Assets)

viii. R&D Expenditure 13 17



SHARE CAPITAL

The shareholders at the Extra Ordinary General Meeting held on 9th January 2015 has approved the increase in authorized share capital from Rs. 700 crores to Rs. 1200 crores in total. Accordingly, the Equity share capital has been increased from Rs. 300,00,00,000 (Rupees Three Hundred crores) divided into 30,00,00,000 (Thirty Crores) equity shares of Rs. 10 each to Rs.800,00,00,000 (Rupees Eight Hundred crores) divided into 80,00,00,000 (Eighty Crores) equity shares of Rs.10 each. The existing Preference Share Capital of 4,00,00,000 Redeemable Cumulative preference shares of Rs.100/- each remains the same.

The paid up Equity Share Capital as on 31st March 2015 was Rs.288,00,00,000.

During the year under review, the Company has received Rs.192 crores from Ministry of Communications and IT for meeting the expenditure towards CAPEX implementation of various projects in its various plants, during February 2015. The Process of allotment of shares to Government of India and ensuring minimum public shareholding, is being done as per directions of Ministry of Communications and IT.

During the year under review, the Company has not issued shares or granted stock options or sweat equity.

As on 31st March 2015, none of the Directors of the Company hold any shares of the Company.

DIVIDEND

As your Company has incurred a loss, the Directors are not in a position to recommend any dividend for the year 2014-2015.

HIGHLIGHTS OF THE PRODUCTION PLANTS AND SERVICE UNITS

- BANGALORE PLANT

Bangalore plant achieved a turnover of Rs. 157.04 Crores (with ED) & the Net turnover of Rs. 145.02 Crores.

The Supply consisted of Defence equipment worth Rs. 19.32 Crores, Telesets, Magneto & Naval telephone equipment worth of Rs. 1.64 Crores, Primary Mux, Data cards worth Rs. 3.13 Crores, Service & Def. AMC worth Rs. 10.52 Crores, Contract manufacturing worth Rs. 1.04 Crores and Data Centre turnover worth of Rs.13.9 Crores. NGN supplies worth Rs. 47.66 Crores, GSM AMC (South Zone) worth Rs. 42.71 Crores, CDMA WLL AMC worth Rs. 7.2 Crores, IFWT equipments worth Rs. 1.63 Crores, GSM South Zone Projects worth Rs. 5.66 Crores, Tablet PC supplies worth of Rs. 1.06 Crores and ISAT Phone (CRPF) usage charges of Rs. 1.57 Crores.

During the year, the plants also addressed tenders for MIL PCM 1000 nos. AWAN II project E3CR, 5C telephones and other Secrecy equipments like STM1 and 2Mb/s. The total value of the tenders is approximately Rs.350 Crores.

During the year, the plant signed a MoU with M/s HAL "to work together for manufacturing of contract products and services".

Reliability Labs have been opened up for external agencies to utilize the facilities, thus making it an independent revenue generating centre.

Energy Consumption for the year is 21,92,638 Units compared to 25,12,700 Units during the same period last year, a saving of 12.74%.

The turnover of the plant is 3 times more that of last year and the Operating Profit is Rs.3 Crores.

- MANKAPUR PLANT

Prestigious NFS project for package F in six states for construction of exclusive optical NLD backbone and optical access route on turnkey basis for Defense network has been allocated to ITI Mankapur. It is worth approx. Rs. 1150 Crs. including AMC. The project is currently under execution

Mankapur Plant achieved a turnover of Rs. 1.84 Crs. (including ED) during 2014-15. Under NPR- 40 project in Bihar and Chhattisgarh, Biometric Enrolment worth Rs. 0.046 Cr. has been done. The plant supplied C-DOT equipments worth Rs. 0.40 Cr., Bank Mechanization products of approx. Rs. 1.17 Cr, LED based products worth Rs. 0.029 Cr. and BTS worth Rs. 0.19 Cr.

ITI Mankapur undertakes repair of the cards for ongoing AMC work through NSU and GSM project groups. During the year ITI Mankapur generated SSU revenue worth Rs. 6.11 Crs, out of which Rs 2.95 Crs. is from SSU cards repair and Rs. 3.03 Crs. is from BTS card repair.

ITI Mankapur has established "Finishing Schools" for the engineering under graduates pursuing higher studies or skill development. Under Finishing School project towards the knowledge based activities, ITI Mankapur earned revenue of approx. Rs 0.16 Cr. while imparting training on technical innovation and skill up gradation to the engineering students from various reputed Engineering. Colleges of the country, which helps them in getting better career opportunities.

During the Financial year 2014-15, the plant has bagged 2 National Safety Awards for Performance Year 2012 - WINNER for Lowest Average Accident Frequency rate and WINNER for Accident Free year accumulating to 26 such awards in past 14 years.

Austerity measures undertaken at ITI Mankapur have resulted in reduction of expenses on different accounts especially in the area of energy conservation. The major steps undertaken for energy conservation during the year 2014-15 are optimization in usage & running of central air conditioning plant, power factor management to get electricity billing benefits etc. As a result, the physical units consumed in the year 2014-15 in the factory has reduced by about 10 lakh units i.e. more than 25% saving as compared to year 2013-14.

- RAE BARELI PLANT

NFS cable laying project

Rae Bereli plant is Executing purchase order for laying of optical fiber for the G package for the prestigious NFS project. This order is Valued at approximately Rs.1800 Crores (including AMC).

Solar Charge Controller Unit (CCU)

CDAC(T), and ITI Ltd submitted a joint proposal for the "Development of Solar Charge Controller Unit for Telecom Application" as a technology development project under NaMPETPh-II. The National Steering Committee of NaMPETPh-II has approved this proposal for funding, by DeitY. The major objectives of the proposal involve the "design, development, testing, and fabrication of prototypes and for this purpose.

Memorandum of Agreement is entered into with Centre for Development of Advanced Computing, Vellayambalam, Thiruvananthapuram (CDAC-T).

These equipments are required for supplying power to BTS of cellular network. A huge market is expected from BSNL/MTNL and other cellular operators.

SMPS Project

With a CAPEX of Rs 3.4 Crores SMPS Power Plant business has been expanded with high capacity power plant which includes all ranges of power plants required by BSNL/MTNL as given below:

- 25A , Ultimate Capacity 200A Indoor

- 25A , Ultimate Capacity 200A Outdoor

- 50A , Ultimate Capacity 450A Indoor

- 50A , Ultimate Capacity 450A Outdoor

- 100A , Ultimate Capacity 3000A Indoor

Contract Manufacturing

With a CAPEX of Rs. 1.54 Crores following contract manufacturing business has been taken up

- Signed rate contract with BHEL Jagdishpur for repair of tools/ contract manufacturing of items. Already executed small value of order.

- Registered with Rail Coach Factory as approved vendor and tenders are being addressed.

- Discussion with CDAC Noida is in process for Rate contract of PCB assembly.

- Manufactured 500 nos. of VTS card of M/s Sway using SMT line as a job work and based on the performance report rate contract to be signed for future orders.

PLB HDPE PIPE

With a CAPEX of Rs. 3.0 Crores a production line of PLB HDPE (Permanently lubricated High Density Poly Ethylene) Pipe, used for laying of optical fiber cable (OFC) is being set up. Orders for all the machinery have been placed. Installation & commissioning of 350 kg/hr capacity HDPE production line has been completed. The probable customers are BSNL/ MTNL/Defense and other Telecom Service Providers.

3D Printer

RB unit is entering into a new era of manufacturing with 3D Printing Technology. 3D printing is evolving rapidly, for fast prototype development requirements in numerous industries including defense, aerospace, automotive and healthcare. 3D printing products are far superior (lighter, stronger, customized, already assembled) and cheaper than those designed with traditional manufacturing processes. That is because 3D printing can control exactly how material is deposited (built up), making it possible to create structures that cannot be produced using conventional means. The planned CAPEX for this project is Rs. 4.40 Crores.

VTS Project

ITI-RB has signed MoU with M/s Sway Techno Solutions Pvt Ltd, Noida, for Vehicle Tracking System(VTS), Personnel Tracking and Object/ Asset Tracking. ITI RB unit will be manufacturing the hardware and Application software portion will be taken care by MoU partner.

The plant has already addressed a few tenders for these products and following potential customers are being identified.

- Defence & Para-military forces ITBP Delhi

- Coal mines/Oil Marketing Companies

- Banks

Proof of Concept (POC) for the safety of ATM of State Bank of Patiala at Jalandhar and other fve locations have been successfully completed. Estimated CAPEX for this project is Rs. 3.0 Crores.

Skill Development

The plant has initiated many programmes for skill development in partnership with Telecom Sector Skill Council (TSSC).

- ITI RB is the first unit in ITI to conduct Training for trainers programme for BSS support course.

- About 50 Engineering students of 3rd year, E&C branch are expected to register for training on BSS support QP.

- Training is planned during the month of March & May, 2015.

- Such training programme will generate good revenue for ITI.

- NAINI PLANT

ITI Naini is gearing up for addressing Solar Projects- particularly production of SPV modules of both low and high capacity/wattage. For supply of Solar panels, IEC certification is mandatory in most of the cases. In this direction, ITI Naini has already got IEC certification for low wattage (up to 50W) modules.

Highlights for the year 2014-15

Reduction of sundry debtors from Rs. 15.18 Crores to Rs. 8.88 Crores by focusing on realization against opening balance (net of provision) as on 01.04.14.

1. High Wattage production line with manual Tabbing and Stringing has been stabilized.

2. The plant is ready for bulk production of SPV up to modules 300W.

3. The card repair and other service activity performed to the tune of approx. Rs. 14.75 Lakhs.

4. Skill development training program on"Solar module Technician" conducted for ITI students = 02 Programs (for 62 students).

5. In-house fifteen (15 no.) training programs conducted for ITI employees.

6. Surveillance audit of ISO 9001 and ISO 1401 are conducted.

- PALAKKAD PLANT

The Unit has achieved a turnover of Rs. 146 Crs. for the year 2014-15 registering profit. The work of SECC and NPR Project in the allotted States has been completed and additional orders for Data Digitization, Data Merging and Permanent Data Centers worth Rs. 55 Crs under these Projects would be executed by the plant.

As a part of diversification of products, plant has made inroads in the Defense Manufacturing area and Space Electronics by supplying Cables, Bare PCBs and Assembled PCBs to NPOL, HVF Avadi, VSSC etc. Separate manufacturing area for Space Electronics fabrication has been set up to meet the requirements of stringent quality norms of Space Related products.

AMC contract worth Rs 93 Crs has been renewed with BSNL and MTNL for MLLN and SSTP Equipments for further 5 years and 3 years respectively. Orders worth Rs 11.83 Crs for MLLN RNP Cards and Modems, Data Base License for SSTP, NMS Sever up gradation orders from BSNL / MTNL have been received during 2014-15.

Palakkad plant has successfully completed re- certification audit for Quality Management System and surveillance audit for Environment Management System. In the Industrial Safety front, Palakkad has been the winner for the Outstanding Safety performance in the large size Engineering Industries Group from National Safety Council Kerala Chapter.

- SRINAGAR PLANT

The sales performance of Srinagar Unit for FY 2014- 15 is Rs.0.01 Crore against Services. ITI Srinagar Plant has been facing various difficulties for retaining or posting talented manpower in Srinagar. With a view to motivate and develop the skills of the employees posted at Srinagar area, the company has envisaged training plans during November 2014. Priority will be given for training of employees working in J&K region, so that they can be employed on jobs requiring various skill sets by deputing them to other units, wherein training will be imparted in the specific skill set/ project etc. In accordance with the training plan, ten employees of Srinagar Plant initially have been trained in two batches on "Assembly and Testing of SPV Modules" at ITI Naini Plant, UP State.

Srinagar Plant is also exploring the possibilities of initiating skill development training programmes of telecom sector skills for the students of Srinagar State. To begin with the Skill Development training in Base Station Support Engineer (BSS) of TSSC Qualification Pack is contemplated.

- NETWORK SYSTEMS UNIT

Network Systems Unit achieved a performance of Rs 93.58 Crores. The performance mainly comprises of annual maintenance contract for fixed line OCB exchanges worth Rs 36.50Crs. for BSNL& MTNL and AMC for ASCON up to November 14 worth Rs 56.93 Crs.

From Dec-14, the renewal of AMC for ASCON for another five years with average annual value of around Rs. 88 Cr has been finalized with MoD. Also another AMC proposal for 12 1 up gradation project for Indian Army with average annual value of around Rs. 11 Cr/annum has also been finalized.

HIGHLIGHTS OF REGIONAL OFFICES

Performance:

- Performance of ROs for the FY 2014-15 is Rs. 155.67 Crs.

- Sundry Debtor realization during 2014-15 is Rs. 99.18 Crs.

- Order bagged in 2014-15 is Rs. 77.97 Crs.

- Rs. 179.88 Crs orders on hand as on 01.04.2015.

- RO Kolkata completed frst phase of NPR in West Bengal, enabling Palakkad Unit to bill Rs. 17 Crs.

New Projects taken up in 2014-15

- E-Tendering services for DDA, Delhi. Estimated business Rs. 100 Crs. in 5 years - RO Delhi

- Supply, I&C of EPABX Systems of value Rs. 6.18 Crs. for Cabinet Secretariat- RO Lucknow

- Establishment of LAN / WAN for East Delhi Municipal Corp. of value Rs. 3.1 Crs. - RO Delhi

- Implementation of Online Admission & Exam for University, value Rs. 1.8 Crs. - RO Lucknow

Major orders successfully completed in 2014-15

- E-Tendering business of value Rs. 38.24 Crs. - RO Delhi, Bangalore, Kolkata & Lucknow

- Establishment of Police Control Room of value Rs. 6.82 Crs. for UP Police – RO Lucknow

- Supply, I&C of EPABX Systems of value Rs. 6.18 Crs. for Cabinet Secretariat- RO Lucknow

GSM Projects:

The Company carried out AMC services for GSM Network worth Rs.83.43 Crore against BSNL orders in West Zone.

RATING IN MEMORANDUM OF UNDERSTANDING

The company's rating for the year 2013-14 is "GOOD" with a composite score of 2.86. This composite score is BEST during twelve years, i.e. 2002-03 to 2013-14. The company has signed Memorandum of Understanding with the Administrative Ministry for a Sales Turnover of Rs.1800 Crores for the year 2014-15.

FUTURE OUTLOOK

In the Union budget 2014-15, Government had approved Rs 192 Crore as first phase disbursement to the Company towards capital expenditure under revival plan. This amount has already been received by ITI and several projects under Defence business, SCADA, MLLN, Smart cards, HDPE Pipe manufacturing, SMPS, Component screening, Vehicle Tracking System (VTS), 3D printing, Contract manufacturing, Business with PSUs etc., have been identified. The infrastructure up gradation for implementation of these projects is in progress in Bangalore, Rae bareli and Palakkad plants. The Company is looking at the following business opportunities in the future.

- Defence projects

Being one of the leading suppliers of encryption equipments for the secured communication in the Defence networks, ITI is looking at Defence market as a great opportunity for its business. With greater thrust towards domestic manufacturing of Defence equipments, ITI proposes taking up manufacturing of new products for Defence like, Software Defned Radio (SDR), High Frequency Radio Handsets, TR modules for RADAR, equipments for Army Wide Area Network (AWAN Phase II) etc.

The Ministry of Defence had approved in principle for the establishment of Strategic Business Units (SBUs) at ITI at Bangalore and Raebareli plants to take up manufacture of DRDO designed products at ITI. The formation of SBUs is aimed at establishing facilities at ITI for the production of strategically important network and communication components, modules, systems designed and developed by DRDO. Necessary action is under progress to achieve the above objective.

Another major project which has been launched by Indian Army is ASCON Phase IV. Earlier three phases of ASCON project have been executed by ITI successfully. ITI is hopeful of winning the order for ASCON phase IV for which a tender has been released by Indian Army.

- Solar Project:

There has been special emphasis by the Government of India to implement the renewable energy sources including solar to overcome the environmental hazards and meeting the growing energy needs. ITI, having requisite expertise and experience for implementing Solar solutions, is planning to augment the solar panel manufacturing infrastructure in its Naini plant and is also planning to install one more manufacturing facility at its Srinagar plant. Naini plant has earlier executed Solar project for UP Police and BSNL. More orders are expected in this market.

- Core Telecom Products:

ITI is pursuing on addressing the core telecom market like GSM, Next Generation Networks (NGN), Long Term Evolution (LTE), Managed Leased Line Network (MLLN), SSTP etc.

- LED Lighting:

LED lighting is an environmental friendly option due to non-use of mercury. Market potential for this product is very good. ITI is planning to address this market. Potential areas of business opportunities are from National Highway Authority, State Governments and Municipal Corporations, CPWDs/ PWDs, Railways, Hotels and Hospital Industry etc.

- Wi-Fi for NOFN network:

Huge orders are anticipated for Wi-Fi equipments for deployment in NOFN (National Optic Fiber cable Network) project of Government of India. ITI is in the process of empanelling the back end partners for the execution of anticipated orders.

- Manufacture of Citizen ID Cards:

As an extension of NPR project which is under execution by ITI as a consortium partner with BEL and ECIL, ITI is also looking at the huge opportunity of manufacturing SMART card based citizen identity cards for all the citizens in the Country. ITI is already having SMART card manufacturing facility at its Palakkad plant. This will be further augmented to take manufacture of citizen ID cards.

- Manufacturing of Li-Ion Batteries:

High density back up power solutions using Li-Ion technology have been proved in all fields of consumer electronics like PCs, Mobile phones, Tablet PCs etc,. They are also making inroads into other applications like powering GSM towers. ITI is planning to take up manufacturing of Li-Ion batteries in one of its plants.

CONTRIBUTION TO EXCHEQUER

During the year, your company has contributed Rs. 97.37 Crore to the exchequer towards duties and taxes.

PUBLIC DEPOSITS

Value of deposits held by the company was NIL. Deposits aggregating to Rs. 0.24 Crore had matured for payment, but were not claimed on due dates.

REVIEW OF ACCOUNTS BY INDIAN AUDIT AND ACCOUNTS DEPARTMENT

The comments on the accounts for the year 2014- 15 by the Comptroller and Auditor General of India is appended.

JOINT VENTURES

INDIA SATCOM LIMITED

India Satcom Ltd., (ISL) is a Public Limited Company incorporated in the year 1987 by ITI, Unit Trust of India (UTI) and Equatorial Pacifc International Company (EPIC). Both UTI and EPIC sold their respective stakes in ISL to M/s Chris Tech Systems Pvt Ltd (CTSPL) during 2006. ITI also took steps to sell its entire 49% stake but the Government of India, Ministry of Communications & IT did not approve the proposed sale of ITI shares in ISL. Presently the shareholders in the Joint Venture are ITI (49%) and CTSPL (51%). ISL planned to revive the operations of the company through a JV proposal of National Building Construction Corporation Ltd, a Govt. of India Enterprises (NBCC), on a land purchased by ISL from Karnataka Industrial Area Development Board (KIADB). ISL will take steps to obtain the required approvals for ISL-NBCC JV proposal as directed by ITI and BIFR, once the Forest case on this ISL land purchased from KIADB is resolved in the Hon'ble High Court of Karnataka.

QUALITY

Quality policy of ITI is to "deliver high quality, secure and reliable products, services and solutions" by empowering every employee. Quality Assurance wings have been established in all the manufacturing units of ITI Ltd. The QA wings are responsible for Quality of products and services. The Units have been well equipped with necessary test facilities and test systems for carrying out elaborate tests, conducting reliability evaluations on all the products to ensure quality. This is achieved by sound and effective Quality Management System.

The five manufacturing plants at Bangalore, Palakkad, Mankapur, Rae Bareli and Naini have been accredited with ISO 9001:2008.NSU Bangalore is also accredited with ISO 9001-2008. The periodical Surveillance Audit & Recertification Audits have been conducted successfully. Keeping in tune with the Global concern for Environmental Management, all the plants have gone in for ISO 14001:2004 EMS certifications. The guidance and support to all the units for training, implementation surveillance audits & recertification audits of ISO 9001-2008 and EMS 14001: 2014 are provided by Corporate Quality Assurance.

BSNL has granted AIS (Approved Inspection Scheme) status by BSNL QA for SIM Cards. Localization activities continued during the year to procure items such as cables, connectors and PCBs for GSM- BTS Project with Alcatel approval and after approval from VDA, VRC, Standards Components Testing and Reliability Labs provide Qualification Approval Standardizations of electronic components Vendor Development and Vendor Rating after stringent evaluation in Testing in Reliability and Environment al laboratory.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The President of India is empowered to appoint the Directors of the Company from time to time and also to determine the terms of office of such Directors in terms of the Articles of Association of the Company. Accordingly, the following changes on the Board of your Company were effected during the year as per the directives of the President of India.

- Shri P K Gupta appointed as Director Marketing w.e.f 27.03.2014

- Shri S Gopu was appointed as Director-HR w.e.f 16.04.2014

- Shri R K Mishra was appointed as Government Director in the place of Shri N K Joshi, w.e.f 25.07.2014

- Dr Janaki Ananthakrishnan, has been appointed as Government Director in the place of Shri R K Mishra, w.e.f 13.05.2015. Subsequently, Government of India has appointed her as Director Finance w.e.f 10th June 2015.

- Shri K K Gupta, Director Production was granted extension of tenure w.e.f 01.06.2015. Shri K K Gupta, Director Production was also entrusted with additional charge as Chairman and Managing Director in the place of Shri K L Dhingra, who was holding post as Chairman and Managing Director from 07.04.2010 Shri K L Dhingra was relieved from services w.e.f 03.06.2015

- Shri Srikanta Panda, has been appointed as Government Director in the place of Dr Janaki Ananthakrishnan, w.e.f 29.07.2015, since she has been appointed as Director Finance.

The Board placed on record its deep appreciation of the valuable services rendered by the Directors whose term of office ended during the year.

In accordance with the provisions of the Companies Act, 2013, Shri P K Gupta and Shri S Gopu retire by rotation and are eligible for re-appointment.

Independent Directors shall not be liable to retire by rotation. The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Companies Act, 2013

The policy on Director's appointment and remuneration and also remuneration for Key Managerial Personnel forms part of Corporate Governance Report of this Annual Report.

NUMBER OF MEETINGS OF BOARD

During the year, 6 meetings of the Board were held on 07.04.2014, 30.05.2014, 13.08.2014, 13.11.2014, 09.01.2015 and 13.02.2015.

PARTICULARS OF EMPLOYEES

There were no employees of the Company who received remuneration in excess of the limits prescribed under Companies Act, 2013 read with Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.

CORPORATE GOVERNANCE

The new Companies Act, 2013 and amended Listing Agreement have strengthened the governance regime in the country. Accordingly, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report. A Certificate of the CEO and CFO of the Company in terms of Clause 49 of Equity Listing Agreement, inter alia, confirming the correctness of the financial statements and cash fow statements and adequacy of the internal control measures, is also annexed.

During the year, Secretarial Audit was carried out by Shri D Venkateswarlu, Company Secretary in practice, and the Secretarial Auditor of the Company for the financial year 2014-15. There were observations given by Secretarial Auditor of the Company. The detailed report on Secretarial Audit and reply of the Board of Directors to the observation made in the sand report are appended as an Annexure to this Report

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure to this Report.

Related Party Transactions

In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website at www.itiltd-india.com. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. All Related

Party Transactions entered during the year were in Ordinary Course of the Business and on Arm's Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.

AUDITORS

ä STATUTORY AUDITORS

M/s. Sundar Srini & Sridhar, Chartered Accountants, Bangalore, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year 2014-15.

ä BRANCH AUDITORS

The following forms of chartered Accountants were appointed as Branch Auditors for different plants of the Company for the year 2014-15

Unit Name of Auditor

1. Bangalore Sundar Srini & Sridhar, Bangalore

2. Naini Nagendra Gupta & Company,Allahabad

3. Rae Bareli Rajesh Srivastava & Associates,Lucknow

4. Mankapur Sri Prakash & Co. Gorakhpur

5. Palakkad Mahadevan & Sivarajan,Palakkad

6. Srinagar S D M & Co, Srinagar

ä COST AUDITORS

Your Company has appointed M/s GNV Associates, Cost Accountants, Bangalore, as Cost Auditors for the year 2014-15 for the cost audit of south-based units located at Bangalore, Palakkad and also consolidation for the Company and M/s. Aman Malviya & Associates, Lucknow as Branch auditors for the Cost Audit of North based units located at Naini, Rae Bareli, Mankapur and Srinagar with the approval of the Board and Ministry of Corporate affairs.

SECRETARIAL AUDITORS

The Company has appointed Shri D Venkateswarlu, Company Secretary in practice, to undertake the Secretarial Audit of the Company.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has set up Hospitals, Schools and Playgrounds at various Manufacturing Units for the benefit of employees and the local community.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that

(a) In the preparation of the annual financial statements for the year ended 31st March 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) that such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at 31st March 2015 and of the loss of the company at that date;

(c) that proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) that the annual financial statements have been prepared on a going concern basis; and

(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ('Act') and Rules made there under, your Company has constituted Internal Complaints Committees (ICC) to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15

No. of complaints received and disposed off: Nil

MANPOWER

Employee strength at the end of the year 31st March, 2015 was 6177 out which 542 were female employees.

As on 31.03.2015, there were 992 employees belonging to Scheduled Castes and 58 belonging to Scheduled Tribes.

41 Contract Engineers / Contract Technicians and 8 Tenure Officers were recruited during the year 2014- 2015.

Employees belonging to Physically Challenged Persons numbering 88 and Ex-servicemen category numbering 30 were on the rolls of the company as at the end of the financial year.

HUMAN RESOURCE DEVELOPMENT

Keeping in view the Company MoU target on HRM – Training for the FY 2014-15, the HRD initiatives were more oriented towards imparting Training to Executives / Non-Executives for skill / knowledge development in Telecom and IT. Training Programmes and Workshops were organized in Broadband, OFC, Mobile, NGN, Cyber Security and Communication Technologies. Towards improving computer literacy in the company, need based Microsoft Office training programmes were imparted at Plant levels. Executives were nominated to external training programmes in advanced / specialized technologies like Encryption etc.

Training programmes were also organized in-house on Soft Skills, Stress Management, Safety, besides organizing awareness programmes on Health, Environment, Energy Management; Government of India's initiative "Make in India – Zero Defect - Zero Effect" etc., were organized

In a nutshell, as against the MoU target in respect of HRM performance indicators, 56 training programmes have been organized as against the target of 40 training programmes. The company trained 1117 Executives and 438 Non-Executives achieving 1195 and 608 training mandays respectively.

The MoU target on HRM Training has been fully met and achieved 'Excellent' MoU Rating for the year 2014-15.

INDUSTRIAL RELATIONS

The Industrial Relations scenario in the Company was cordial during the year. Employees' Union and Officers' Association extended their co-operation and support in ensuring smooth work fow and helped to meet the Company's objective in revival of the company.

OFFICIAL LANGUAGE

All Units / Offices have established Check-points in their concerned offices to make more efforts for effective Implementation of the Official Language Policy, monitored by the Official Language Implementation Committees constituted in every Unit / Office.

The Progress of Implementation of Official Language in Corporate Office as well as in all subordinate Units / Offices is also being periodically reviewed by the OLIC Committee of Corporate office.

In order to enhance the working knowledge of Official Language amongst our employees, officials have been sent to Training Programme organized by the government for imparting training in Hindi, Hindi typing and Hindi Stenography as per our requirement. The Official Language Cell of the different Units / Offices have also conducted internal training programmes. Besides, employees were encouraged to take part in Hindi Prabodh, Praveen & Pragya examinations and have been sanctioned financial incentives.

Since eighty percent (80%) of the staff working in our Units / Offices like Naini, Rae Bareli, Mankapur, New Delhi, Mumbai, Lucknow & Corporate Office have acquired a working knowledge of Hindi, such Units / Offices have been notified in the Gazette of India as per OL Rules 10 (2) & (4), 1976.

For Bangalore based Units/Offices, a short term workshop for Hindi Unicode training programme was organized in the HRD department of Corporate Office, with the help of Deputy Manager-OL&HR, BHEL, Bangalore. More than 30 officers/non-officers participated and they were trained how to use the Hindi Unicode Fonts in day-to-day typing work.

After reviewing our quarterly report, an appreciation letter was also received from Deputy Director-OL, Official Language Department DoT, New Delhi as well as Deputy Director (Implementation), Regional Implementation Office, Bangalore.

A Joint Hindi Fortnight Programme for Bangalore based PSUs / Organizations between 30.07.2014 & 27.08.2014 was organized by TOLIC (Town Official Language Implementation Committee), Bangalore and various types of competitions were arranged during this occasion. On this occasion many officers/ Non-officers of ITI Limited, Bangalore based Units / Offices participated in these competitions and more than 14 Officers / Non-Officers have got the prizes. Hindi Workshops were organized for encouraging progressive use of Hindi during 2014-15. Company's website has been made bilingual (i.e. English and Hindi).

VIGILANCE

During the year, Vigilance Department functioned effectively. The prime focus of the vigilance activities was on Preventive Vigilance and Reduction in pendency of complaints by expediting Investigations.

Vigilance Department has suggested several System Improvement Measures to various departments to improve the transparency and efficiency of the procedures. Constant and continuous efforts have been made in this direction as a part of Preventive Vigilance. Keeping in view the emphasis laid by Company-Vigilance, Project Management Manual for Telecom Infrastructure Projects has been brought out by the Company.

The Company observed Vigilance awareness week from 27th October 2014 to 1st November 2014 at Manufacturing Units, Business Establishments, as well as Corporate Office.

The Vigilance department is endeavoring to lay far more emphasis on preventive vigilance, scrutinizing the APR documents and conducting periodic / surprise checks in sensitive departments.

RIGHT TO INFORMATION

During the year 2014-15, out of 221 RTI requests, information was provided against 175 requests, 21 requests rejected and 2 requests were transferred to another Public Authority. The RTI returns on quarterly basis is being submitted to the Ministry for forwarding the same to Central information Commission and the same is published on our Company website.

ENTERTAINMENT EXPENDITURE AND FOREIGN TRAVEL

The expenditure on entertainment was NIL. Expenditure on official travel abroad by the officials of the Company amounted to Rs. NIL during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required to be disclosed under the Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are annexed.

ITI signs MoU with Department of Telecommunications

ITI Limited signed the Memorandum of Understanding (MoU) for the year 2015-16 with the Department of Telecommunications, Ministry of Communications & IT, Government of India. Shri Rakesh Garg, Secretary, Department of Telecommunications and Shri K.L. Dhingra, former Chairman and Managing Director, ITI Limited signed the MoU on March 30, 2015.

The MoU focuses on ITI's role in the field of Telecommunications in the current market scenario and pursue opportunities arising out of Government's "Make in India" campaign for indigenous electronic equipment manufacturing for diversified areas like Railways, Defense, etc. in addition to telecommunications also to play a vital role in Government of India funded Projects like Network for Spectrum (NFS).

ITI Limited has been conferred with "Certificate of Excellence" award by the Institute of Economic Studies, Delhi (IES) at the time of the Seminar on "Economic Development" on 13th of August 2014 at hotel Lalit Ashok, Bangalore.

ACKNOWLEDGEMENT

Your Directors place on record their sincere thanks for the assistance and support extended by the Ministry of Communications & IT and various other Ministries of Central and State Governments viz., Karnataka, Uttar Pradesh, Kerala and Jammu & Kashmir and look forward for their continued support and co-operation in future.

Your Directors also wish to express their gratitude for the co-operation and assistance extended by BSNL and MTNL, Banks, Suppliers, Shareholders, Bondholders, Depositors, Agents, Customers and Foreign Collaborators, Committee on Public Undertakings (COPU), Standing Committee on Public Enterprises (SCOPE) and Standing Committee on Information Technology.

Your Board also expresses its sincere thanks to the Comptroller and Auditor General of India, Chairman and Members of the Audit Board and Statutory and Branch Auditors.

Your Directors take this opportunity to place on record their appreciation for the valuable contribution made and excellent co-operation rendered by the employees at all levels for the progress and prosperity of the Company.

For and on behalf of the Board of Directors



(K. K. Gupta)

Director Production

Addl Charge Chairman and Managing Director

Place: Bangalore

Date : 11th August 2015


Mar 31, 2014

The Members

ITI Limited

The Directors have pleasure in presenting the 64th Annual Report of the Company together with Audited Accounts and Auditors'' Report thereon for the year ended 31st March 2014.

1. PERFORMANCE:

The Company has achieved Sales and Production of Rs. 769.90 Crore and Rs. 767.91 Crore respectively during the year 2013-14 against Rs. 921.04 Crore and Rs. 910.16 Crore respectively during the previous year 2012-13. The Company could achieve this turnover in spite of the fact that our major customers BSNL and MTNL have not placed orders like earlier years. The net loss of the Company for the year 2013-14 is Rs. 344. 26 Crore against the figure of Rs. 182.06 Crore for the year 2012-13, which however, was after considering a grant of Rs. 177.23 Crore by the Government.

The net loss for the year 2013-14 is the lowest ever loss in the last twelve financial years (if the financial assistance by way of grant from the government is not taken into account).

The contribution (net of material cost) for the year is Rs. 184.99 Crore, which is comparable for that of previous year at Rs. 187.27 Crore.

2. SANCTION OF REVIVAL PROPOSAL :

The Directors are pleased to inform that ITI''s Revival Plan has been approved by the Cabinet Committee on Economic Affairs (CCEA) on 12th February 2014. The financial package approved by CCEA includes funding support for Rs. 1892.79 Crore as grant-in-aid towards clearing of part of its liabilities and Rs. 2264 Crore as equity for upgradation and implementation of several projects as part of revival plan. The Government has already approved release of Rs. 460 Crore as frst stage disbursement to the Company towards capital expenditure in the recent budget for the year 2014-15.

In the Revival plan, around 18 projects have been identified for implementation. This includes expansion of capacities for manufacturing of existing telecom products like Encryptors for Defence sector, G-PON, DWDM, MLLN, Ethernet, Broadband equipments, SMART cards etc. and also diversified products like Solar, LED lightings, Data center and Defence projects.

These projects are allocated to all the six units of ITI for their revival. The project implementation will be done in three phases. For the implementation of projects in the 1st phase an amount of Rs. 460 crore has already approved by the Government in the recent budget. The amount required for the implementation of projects in 2nd and 3rd phases is expected to be released subsequently. For monitoring of the implementation of the projects, committees have been formed at unit level, corporate level at ITI and at DoT level and also at APEX level.

As part of diversifcation, all the Units have taken various initiatives for enhancement of production and sales.

Mankapur Unit developed and entered into production of various LED based lighting products. ITI Mankapur executed an order from ONGC under their Corporate Social Responsibility (CSR) "Swach Roshni Abhiyan" Project.

Naini Unit established High Wattage Solar Panels manufacturing line of 280 W SPV panel and tested internally. For commercial orders, IEC certification is under process.

Rae Bareli Unit developed ''Total Solution for Lightening & Surge Protection Unit (LSPU) and the frst lot of 39 units were supplied to Ahmedabad BSNL Gujarat Circle.

Palakkad Unit has established inroads in the Defence manufacturing area by supplying to NPOL (National Physical Oceanographic Laboratory), HVF (Heavy Vehicle Factory) Avadi, etc. The Plant has opened a separate manufacturing area for meeting the requirements of production of Space related products and have supplied to VSSC (Vikram Sarabhai Space Centre) both bare and assembled PCBs.

3. HIGHLIGHTS:

- The turnover for the year 2013-14 is mainly constituted from National Population Register (NPR), GSM-WZ, GSM-SZ, G-PoN, AMC for OCB & ASCON, Defence and IT solutions.

- The Company is executing Turnkey Project of Registrar General of India (RGI) for creation of Multi Purpose National Identifcation Card under National Population Register (NPR) project for the country.

- Company is executing Restructured Accelerated Power Development Reforms Program (RAPDRP) of value Rs. 307 Crore from Tamil Nadu Electricity Board (TNEB).

PRODUCTION

(Rs. in Crore) 2013-14 2012-13 (including (including Sl. Product/Project ED & ED & No. Service Service Tax) Tax)

1 C-DOT Products 0.16 1.61

2 Diversifed 16.63 9.37 Products / Cont. Mfg.

3 Solar Panel 18.85 22.76

4 PCM MUX 1.33 0.52

5 MLLN 105.45 11.07

6 GSM – WZ (Incl. BTS, 84.04 61.62 RTT, Shelter & AMC )

7 GSM – MTNL 0 1.15

8 GSM – SZ 0.96 1.75

9 ADSL – CPE 0 2.89

10 Misc. Services 26.12 24.82

11 Defence / ASCON 69.02 60.96

12 OCB AMC Business 37.82 42.05

13 SIM / USIM / SMART 0.35 26.54 Cards

14 NPR/SECC Projects 234.25 410.14 (Data)

15 SMPS 1.27 1.65

16 G-PoN 8.77 16.29

17 ROs / CCO / IT 150.27 207.80

18 Data Centre 14.61 18.05

TOTAL (including ED & 769.90 921.04 Service Tax)

Projects executed during the year 2013-14:

National Population Registration (NPR) and Socio Economic & Caste Census (SECC) projects:

ITI is one among the consortium of three PSUs (other two PSUs being BEL & ECIL) for the execution of prestigious National Population Register (NPR) Project under Ministry of Home Affairs (MHA). The job involves collection of citizen data including biometrics. The above consortium is also executing SECC project for the Ministry of Rural Development.

MLLN (Managed Leased Line Networks):

ITI has successfully rolled out countrywide MLLN network for BSNL in technical collaboration with a technology partner. ITI had received an expansion order from BSNL and the same has been executed during 2013-14.

GSM:

ITI has implemented GSM Projects in BSNL West Zone and in technology alliance with M/s Alcatel- Lucent & in South Zone in technology alliance with Huawei. The Annual Maintenance Contract related works have been carried out for West zone network.

G-PON (Gigabit Passive Optical Network):

ITI has been a major supplier of this product to BSNL and MTNL using the imported technology. Some G-PON equipments against the earlier orders have been supplied during 2013-14. Requirements are anticipated for this product in future also for applications like FTTH.

Defence Projects:

ITI is the leader in supplying encryption equipments for the secured communication in the Defence networks. ITI has supplied telecom equipment like Telephones, Ruggedized Telephone Exchanges, Transmission equipments, VSAT etc. to the Defence sector. ITI has also executed ASCON project (Phase I, II, & III) successfully.

Solar Project:

Naini Plant of ITI is having requisite expertise and experience for implementing Solar solutions. ITI has executed solar projects for BSNL as well as UP police. BSNL and other Service Providers are planning to upgrade their outdoor GSM Telecom BTS sites with Solar Power especially in rural areas where grid power supply position is poor. ITI Naini is planning to augment the solar panel manufacturing infrastructure in its plant.

Data Center & IT Projects:

ITI has already established Tier 3 state-of-art Data center at Bangalore on PPP model. Presently this Data Center is fully booked for co-location services. ITI is also playing a major role in implementing IT projects. The State Governments are pursuing E-Governance projects for taking the benefit of IT to the Village Panchayats and they have made a substantial budget provision for the same. ITI is aggressively pursuing this Market segment. ITI is also executing Accelerated Power Development and Reform Programme (APDRP) of Tamil Nadu state.

Maintenance Contracts:

ITI had earlier established the ASCON network for Indian Army. ITI was also the major supplier of fixed line switches to BSNL and MTNL. Currently ITI has been extending maintenance assistance to Indian Army, BSNL and MTNL under Annual Maintenance Contracts. (AMC)

4. FINANCE:

The performance of the Company for the year 2013- 2014 as compared to the previous year is as follows:

(Rs.. in Crore)

SI. Particulars 2013-2014 2012-2013 No.

i. Sales including 770 921 services

ii. Value of 768 910 Production

iii. Loss before tax 344 182

iv. Loss after tax 344 182

v. Financing 122 85 Expenses

vi. Depreciation 17 18

vii. Capital Employed 952 1226 (Net Fixed Assts Net Current Assets)

viii. R&D Expenditure 17 18

5. DIVIDEND:

As your Company has incurred a loss, the Directors are not in a position to recommend any dividend for the year 2013-2014.

6. HIGHLIGHTS OF THE PRODUCTION PLANTS AND SERVICE UNITS:

BANGALORE PLANT:

Bangalore Plant achieved a performance of Rs. 51.12 Crore. This performance consist of supply of Defence equipment of Rs. 17.11 Crore, Data Centre services worth Rs. 14.61 Crore, AMC, repair and Miscellaneous products worth Rs. 19.40 Crore.

During the year, the Plant has bagged National Safety Award for the Performance Year 2011 – RUNNER for accident free category on September 18, 2013.

MANKAPUR PLANT:

Mankapur Plant achieved a performance of Rs. 11.27 Crore. The Plant has executed 2.157 Million Nos. of Biometric Data entry against NPR-40 Project worth Rs. 8.29 Crore and Banking/Miscellaneous products worth Rs. 2.98 Crore.

During the year, the Plant has bagged 2 National Safety Awards – Performance Year 2011 – WINNER for ''Lowest Average Accident Frequency Rate'' Category and Performance Year 2011 – WINNER for ''Accident Free Year'' Category on September 18, 2013.

RAE BARELI PLANT:

Rae Bareli Plant achieved a performance of Rs. 61.52 Crore; Rs. 8.77 Crore from dispatch of ONT of GPON equipment, Rs. 1.42 Crore from the supply of SMPS & Misc. equipments, Rs. 22.81 Crore worth of GSM Franchisee business and 73.25 lacs nos. of Biometric Entry against NPR-40 project valuing Rs. 28.52 Crore.

NAINI PLANT:

Naini Plant achieved a performance of Rs. 20.60 Crore. The Plant has supplied 131 Nos. of Solar Panel equipment worth Rs.18.86 Crore, Misc./ Contract Manufacturing worth of Rs. 0.06 Crore and 4.37 lacs nos. of Biometric Entry against NPR-40 project valuing Rs. 1.68 Crore.

PALAKKAD PLANT:

Palakkad Plant achieved a performance of Rs. 300.60 Crore. The Plant has captured Bio-metric data collection/data entry against NPR/SECC Projects worth Rs. 193.66 Crore, Supply of MLLN & AMC Project worth Rs. 105.45 Crore and Miscellaneous/ Contract Manufacturing worth Rs. 1.49 Crore.

In the Industrial Safety front, consecutively for the second year, Plant was runner up for the Outstanding Safety performance in the large size Engineering Industries Group from National Safety Council, Kerala Chapter and third prize winner from Directorate of Factories, Kerala Government for large scale industries.

SRINAGAR PLANT:

Srinagar Plant achieved a performance of Rs. 0.04 Crore against services.

A high level committee visited Srinagar Plant from 15th to 16th November 2013 comprising Shri K.L. Dhingra, CMD; Shri N.K. Joshi, DDG (SU) and Shri Shahbaz Ali, DDG (TPF) to review the functioning of Srinagar Plant.

The committee in its report recommended short term, mid term and long term measures for revival of the Unit.

Government allocation of Rs. 460 Crore for ITI Ltd under the budget for year 2014-15 includes a provision for Srinagar Unit. The same will be utilised for implementing the recommendations of the Committee.

NETWORK SYSTEMS UNIT:

Network Systems Unit achieved a performance of Rs. 89.73 Crore. The performance mainly comprises of Annual Maintenance Contract for fixed line OCB exchanges worth Rs. 37.82 Crore for BSNL & MTNL and AMC for ASCON worth Rs. 51.91 Crore.

REGIONAL OFFICES

Regional offices and its Customer Care Organization (CCO) achieved a performance of Rs. 151.59 Crore. This performance consists of Rs. 64.54 Crore supplies of ITI''s manufacturing products and other traded products, Rs. 51.17 Crore of Services, Rs. 3.30 Crore by various CCOs and Rs. 32.58 Crore towards IT Projects.

HIGHLIGHTS OF REGIONAL OFFICES

Performance:

- Performance of ROs for the FY 2013-14 is Rs. 151.59 Crore.

- Order bagged in 2013-14 is Rs. 68.82 Crore.

- Rs. 379.35 Crore orders on hand as on 01.04.2014.

- RO-Mumbai collected C-Form worth Rs. 88.57 Crore for other units.

- RO Mumbai realized payment of Rs. 17.59 Crore for

other units.

New Projects taken up by ROs in 2013-14 :

- Supply and Implementation of College Management Software - RO Delhi

- Establishment of Police Control Room – RO Lucknow

- NPR project taken up for the state of Meghalaya - RO Kolkata

Big orders successfully completed by ROs in 2013-14

- Supply & Installation of Video Conferencing Systems of value Rs. 6.62 Crore-RO Lucknow

- Supply of Anti Riot Equipments of value Rs. 4.62 Crore to UP Police - RO Lucknow

- e Tendering business of value Rs. 35 Crore - RO Delhi

GSM Projects:

The Company carried out AMC services for GSM Network worth Rs. 83.43 Crore against BSNL orders in West Zone.

7. RATING IN MEMORANDUM OF UNDERSTANDING

The Company''s rating for the year 2012-13 is "GOOD" with a Composite Score of 2.94.

This Composite Score is BEST during Eleven years, i.e. 2002-03 to 2012-13.

The Company has signed Memorandum of Understanding with the Administrative Ministry for a Sales Turnover of Rs. 1500 Crore for the Company for the year 2014-15.

8. FUTURE OUTLOOK:

Defence projects

ITI is looking at Defence market as a great opportunity for its business. With greater thrust towards domestic manufacturing of Defence equipments, ITI proposes taking up manufacturing of new products for Defence like, Software Defined Radio (SDR), High Frequency Radio Handsets, TR modules for RADAR, Electronic Fuzes, equipments for Army Wide Area Network (AWAN Phase II) etc.

Other major projects which have been launched by Indian Army are ASCON Phase IV and Battlefeld Management System (BMS). Earlier three phases of ASCON project have been executed by ITI successfully and ITI is hopeful of getting order for ASCON phase IV project also. ITI has also responded to the RFI against the BMS project and has presented details on BMS solution to the Indian Army.

Solar Project

There has been special emphasis by the Government of India to implement the renewable energy sources including solar to overcome the environmental hazards and meeting the growing energy needs. ITI, having requisite expertise and experience for implementing solar solutions, is planning to augment the solar panel manufacturing infrastructure in its Naini plant and is also planning to install one more manufacturing facility at its Srinagar plant.

Tablet PC manufacturing

Ministry of Human Resources Development has an ambitious plan of distributing Tablet PCs to all students at College level for empowering students to access educational data through internet. Similar programmes are being launched by State Governments also. These devices are also being used by common man for e-enabled applications similar to mobile phones. Since the requirements are huge, ITI is planning to take up manufacture of this product at its various units. ITI has already been qualified for the low cost tablet PC supplies announced by the Ministry of HRD and has been listed by DGS&D.

Core Telecom Products

ITI is pursuing on addressing the core telecom market like GSM, Next Generation Networks (NGN), Long Term Evolution (LTE), and Managed Leased Line Network (MLLN) etc. The LTE technology is expected to be the future technology in mobile communications. ITI is planning to take up manufacturing of these products by entering into collaboration agreements with technology providers.

NFS

The Government funded projects like Network for Spectrum (NFS) require many types of telecom equipments like DWDM, Carrier Ethernet, Microwave, IP-MPLS equipments etc. in huge volumes. ITI is planning to take up manufacture of these products with suitable technology collaborations. In the tender foated by BSNL for laying optical cables under

NFS project, ITI was L1 and has recently received Advance Purchase Order (APO) from BSNL worth Rs. 2111 Crore (excluding AMC) for establishment of optical fber network in two (out of seven) zones in the Country.

LED Lighting

LED lighting is an environmental friendly system due to non-use of Mercury. Market potential for this product is very good. ITI is planning to address this market. Potential areas of business opportunities are expected from National Highway Authority, State Governments and Municipal Corporations, CPWDs/ PWDs, Railways, Hotels and Hospital Industry.

Data Center

Considering the huge scope existing in the market of Data Center particularly in the Government sector, for projects of national importance like NPR, UIDAI and other Projects/Schemes envisaged by Government agencies & PSUs, ITI is planning to establish its own Data Center.

Manufacture of Citizen ID Cards

As an extension of NPR project which is under execution by ITI as a consortium partner with BEL and ECIL, ITI is also looking at the huge opportunity of manufacturing SMART card based citizen identity cards for all the citizens in the Country. ITI is already having SMART card manufacturing facility at its Palakkad plant. This will be further augmented to take manufacture of citizen ID cards.

Manufacturing of Li-Ion Batteries

High density back up power solutions using Li-Ion technology have been proved in the felds of consumer electronics like PCs, Mobile phones, Tablet PCs etc. They are also making inroads into other applications like powering GSM towers. ITI is planning to take up manufacturing of Li-Ion batteries in one of its plants.

9. CONTRIBUTION TO EXCHEQUER:

During the year, your Company has contributed Rs. 45.01 Crore to the exchequer towards duties and taxes.

10. PUBLIC DEPOSITS:

Value of deposits held by the Company was NIL. Deposits aggregating to Rs. 0.24 Crore had matured for payment, but were not claimed on due dates.

11. REVIEW OF ACCOUNTS BY INDIAN AUDIT AND ACCOUNTS DEPARTMENT:

The comments on the accounts for the year 2013-14 by the Comptroller and Auditor General of India is appended.

12. JOINT VENTURES :

INDIA SATCOM LIMITED

India Satcom Limited (ISL) is a Joint Venture Company incorporated on 5th October, 1987 by ITI, Unit Trust of India (UTI) and Equatorial Pacifc International Company (EPIC). Both EPIC and UTI sold their respective stakes in ISL to M/s Chris Tech Systems Pvt. Ltd. (CTSPL) and ITI also took steps to sell its entire 49% equity stake in ISL to CTSPL. The Government of India, Ministry of Communications & IT vide its letter dated 28.01.2011 has not approved the above said sale of 49% ITI''s equity stake in ISL to CTSPL, therefore the transfer of ITI shares could not be effected. Now, the shareholders in the Joint Venture are ITI (49%) and CTSPL (51%).

13. QUALITY:

Quality policy of ITI is to "deliver high quality, secure and reliable products, services and solutions". Quality Assurance wings have been established in all the manufacturing units of ITI Ltd. The QA wings are responsible for Quality of products and services. The Units have been well equipped with necessary test facilities and test systems for carrying out elaborate tests, conducting reliability evaluations on all the products to ensure quality. This is achieved by sound and effective Quality Management System.

The five manufacturing plants at Bangalore, Palakkad, Mankapur, Rae Bareli and Naini have been accredited with ISO 9001:2008. NSU Bangalore is also accredited with ISO 9001-2008. The periodical Surveillance Audit & Recertification Audits have been conducted successfully. Keeping in tune with the Global concern for Environmental Management, all the plants have gone in for ISO 14001:2004 EMS certifications. The guidance and support to all the units for training, implementation surveillance audits & recertification audits of ISO 9001-2008 and EMS 14001: 2014 are provided by Corporate Quality Assurance.

BSNL QA has granted AIS (Approved Inspection Scheme) status for SIM Cards. Localization activities continued during the year to procure items such as cables, connectors and PCBs for GSM-BTS Project with Alcatel Lucent approval and after approval from VDA and VRC. VDC, VRC, Components Testing and Reliability Labs provide Qualifcation Approval Standardizations of electronic components Vendor Development and Vendor Rating after stringent evaluation in Testing in Reliability and Environmental laboratory.

14. MAN POWER:

Employee strength at the end of the year 31st March, 2014 was 7311 out of which 623 were female employees.

As on 31st March 2014, there were 1203 employees belonging to Scheduled Castes and 67 belonging to Scheduled Tribes.

1 Chief Manager on permanent basis, 51 Contract Engineers & 34 Contract Technicians were recruited during the year 2013-2014.

Employees belonging to Physically Challenged Persons numbering 102 and Ex-servicemen category numbering 36 were on the rolls of the company as at the end of the financial year.

15. HUMAN RESOURCE DEVELOPMENT:

Human Resource Development (HRD), keeping in view the initiatives taken for organizational turnaround, diversifcation and the Company''s MOU target on HRM – Training for 2013-14, focused on imparting need based training for executives and non-executives in the areas of New Technology, Information Technology and General Management Development.

To keep pace with the advancements in Telecom & Information Technology, training programmes on the topics like GPON, OFC Networks, Mobile Communications, Cloud Computing, MLLN, Networking, Cyber Security, etc., were organized. Management Development programmes focused on Leadership, Finance, Human Resource, Vigilance, Quality, Personality Development, etc., besides organizing a host of awareness programmes.

The MoU HRM Training performance indicators were to train the company executives and non-executives and impart Risk Management training for senior executives. Following the MoU targets, the company, for knowledge / skill up-gradation of it''s manpower working at Corporate office, Corporate marketing – including Regional and sub offices, Manufacturing plants, Network Systems Unit, located across the country, has organized 49 exclusive training programmes covering 1134 executives and 27 training programmes covering 711 non-executives achieving totally 2868 training mandays. Besides, 45 need based awareness training programmes have been organised in the areas of safety, health, energy, environment management etc., by Plant HR (ED) Centres. 1184 personnel have been benefited by these programmes and the company records 1369 training mandays on these awareness programmes. An in-house Training on ''Risk Management'' was conducted for senior executives. A group of 23 executives, consisting of DGMs and above, participated in the training.

During the year, the company has sponsored 11 executives/non-executives for external training through renowned organizations / training institutions.

In a nutshell the Company trained 2040 executives, 989 non-executives achieving 2061 and 1176 training mandays respectively.

16. INDUSTRIAL RELATIONS:

The Industrial Relations scenario in the Company was cordial during the year. Employees'' Union and officers'' Association extended their co-operation and support in ensuring smooth work fow and helped to meet the Company''s objective.

17. OFFICIAL LANGUAGE:

All Units/offices have established Check-points in their concerned offices to make more efforts for effective Implementation of the Offcial Language Policy, monitored by the Offcial Language Implementation Committees constituted in every Unit/ office.

The Progress of Implementation of Offcial Language in Corporate office as well as in all subordinate Units/ offices is also being periodically reviewed by the OLIC Committee of Corporate office.

In order to enhance the working knowledge of Offcial Language amongst our employees, offcials have been sent to Training Programme organized by the government for imparting training in Hindi, Hindi typing and Hindi Stenography as per our requirement. However, the Offcial Language Cell of the different Units/ offices has also conducted internal training programmes. Besides, employees were encouraged to take part in Hindi Prabodh, Praveen & Pragya examinations and have been sanctioned financial incentives.

Since eighty percent (80%) of the staff working in our Units / offices like Naini, Rae Bareli, Mankapur, New Delhi, Mumbai, Lucknow & Corporate office have acquired a working knowledge of Hindi, such Units / offices have been notifed in the Gazette of India as per OL Rules 10 (2) & (4), 1976.

For Bangalore based Units/offices, a short term workshop for Hindi Unicode training programme were organized in the HRD deptt. of Corporate office, with the help of Dy. Manager-OL & HR, BHEL, Bangalore. More than 30 officers/non-officers participated and they were trained how to use the Hindi Unicode Fonts in day-to-day typing work.

After reviewing our quarterly report, an appreciation letter was also received from the Deputy Director-OL, Offcial Language Department DoT, New Delhi as well as Deputy Director (Implementation), Regional Implementation office, Bangalore.

A Joint Hindi Fortnight Programme for Bangalore based PSUs / Organisations between 16th September 2013 and 23rd October 2013 was organized by TOLIC (Town Offcial Language Implementation Committee), Bangalore and various types of competitions were arranged during this occasion.

18. VIGILANCE :

During the year, Vigilance Department functioned effectively and efficiently being a part of Corporate Governance Structure. The prime focus of the vigilance activities was to reduce the pendency of complaints by expediting Investigation. Greater emphasis was laid on preventive vigilance. CVC guidelines and Government policies in this regard have been followed. To achieve the above objectives, periodical inputs were given to the Management regarding review of Administrative expenses, implementation of Rotational Transfers of Executives in sensitive areas in the company.

To improve the transparency and effciency of the procedures, several System Improvement Measures have been suggested to various departments. Constant and continuous efforts have been made in this direction as a part of Preventive Vigilance.

Logical conclusions on Vigilance Cases were arrived at and Special emphasis was taken to reduce the Pendency of Complaints, MIS Reports were sent to Statutory / Government Agencies like DoT-Vigilance and CVC.

The Company observed Vigilance awareness week from 28th October 2013 to 2nd November 2013 to 5th November 2013 at all Manufacturing Units including its administrative offices, as well as Corporate office.

Periodical appraisals were also made to the Board of Directors on Vigilance Matters.

The Vigilance department is endeavoring to lay far more emphasis on preventive vigilance, scrutinizing the documents and conducting surprise checks in sensitive departments. These actions had good impact for creating awareness amongst Company Executives on Vigilance aspects of Company Governance.

19. RIGHT TO INFORMATION:

The RTI requests have been on the increase constantly. During the year 2013-14, out of 254 RTI requests, information was provided against 203 requests, 17 requests were rejected and 1 request was transferred to another Public Authority. The RTI returns on an quarterly basis have been submitted to the Ministry for forwarding the same to Central Information Commission and the same is published on our Company website also.

20. ENTERTAINMENT EXPENDITURE AND FOREIGN TRAVEL:

The expenditure on entertainment was NIL. Expenditure on offcial travel abroad by the offcials of the Company amounted to Rs. 0.86 lakh during the year.

21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required to be disclosed under the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed.

22. PARTICULARS OF EMPLOYEES:

The statement of particulars of employees drawing remuneration of Rs. 60.00 lakhs and above per annum or Rs. 5.00 lakhs and above per month are required to be included in the Directors'' report as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Amendment Rules, 2011, are NIL for 2013-2014.

23. AUDITORS:

Pursuant to Section 619(2) of the Companies Act, 1956, M/s. Sundar Srini & Sridhar, Chartered Accountants, Bangalore were appointed as Statutory Auditors of the Company for the year 2013-2014 by the Comptroller & Auditor General of India.

The following firms of Chartered Accountants were appointed /re-appointed as Branch Auditors for different Plants of the Company for the year 2013- 2014:- M/s. Nagendra Gupta & Co. Naini Plant, Allahabad

M/s Mahadevan & Sivarajan, Palakkad Palakkad Plant

M/s S D M & Co, Srinagar Srinagar Plant

M/s Habibullah & Co., Gorakhpur Mankapur Plant

M/s Rajesh Srivastava & Associates, Lucknow Rae Bareli Plant

24. COST AUDITORS

Your Company has appointed M/s GNV & Associates, Bangalore, as Cost Auditors for the cost audit of south-based units located at Bangalore, Palakkad and also Consolidation for the Company and M/s Aman Malviya & Associates, Lucknow, as branch auditors for the cost audit of North-based units, located at Naini, Rae Bareli, Mankapur and Srinagar for the year 2013-14, with the approval of Board and Ministry of Corporate Affairs.

25. BOARD OF DIRECTORS:

The following changes took place in the Directorate of your Company since the last Report.

Shri R.K. Agarwal ceased to be a Director of the Company on 30th November 2013 on attaining the age of superannuation. In accordance with the requirements of the Companies Act, 1956, Shri P.K. Gupta, Director-Marketing joined on 27th March 2014 and Shri S. Gopu, Director-Human Resources joined on 16th April 2014 will retire by rotation at this Annual General Meeting and eligible, offer themselves for re- appointment.

Lt Gen Nitin Kohli joined the Board on 26th October

2013 will retire at this Annual General Meeting and eligible offer himself for re-appointment as Director not liable to retire by rotation. Shri R.K. Mishra joined as Director not liable to retire by rotation on 25th July 2014 in place of Shri N. K. Joshi.

26. CORPORATE GOVERNANCE:

A report on Corporate Governance along with a Compliance Certifcate from the Auditors as prescribed under the Listing Agreement with the Stock Exchanges on which the Company''s shares are listed, is annexed to this report.

27. MAJOR ORDERS RECEIVED AFTER 31ST MARCH 2014

ITI Ltd bags the Prestigious Orders against NFS Project

ITI Limited has bagged two advance purchase orders from BSNL amounting to Rs. 2984 Crore.

These orders are part of Network For Spectrum (NFS) project for establishment of Optical Fiber Network through out the country.

ITI is the only Central Public Sector Undertaking to bag two packages out of seven packages for NFS tender against stiff competition from multiple players. These are the biggest orders ITI has ever got by competing in an open tender. These are the frst major orders received after the approval of the revival package of ITI, by Cabinet Committee on Economic Affairs (CCEA) and will open the doors for turning around the company.

28. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state that:

(i) in the preparation of annual accounts, the applicable accounting standards have been followed and that there were no material departures.

(ii) the accounting policies adopted by the Company have been applied consistently, judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March 2014 and Loss of the Company for the period ended 31st March 2014.

(iii) they have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

29. AWARDS

ITI Limited Mankapur Unit has bagged the prestigious "National Safety Awards" from the Ministry of Union Labour & Employment for the performance year 2011 and adjudged winner in two categories of ''Accident Free Year'' and ''Lowest Frequency Rate'' for the performance year 2011. ITI Ltd., Bangalore Unit is also adjudged runner up in ''Accident Free Year'' category for the same year. The awards were received on 18th September 2013.

30. SALES PROMOTION

ITI Limited participated in SES 2013 Exhibition

ITI participated in the ''Strategic Electronics Summit: Defence & Aerospace – SES 2013''. Organized by Electronic Industries Association of India (ELCINA) at HAL Convention Center, Bangalore on 2nd August 2013. ITI displayed SDR systems at the exhibition.

Dr. Ajay Kumar Joint Secretary, Department of Electronic & IT, Shri M.N. Vidyashanker, Secretary IT, Govt of Karnataka, Defence Offcials and other PSU Executives visited our stall.

ITI Limited participated in INDIA TELECOM 2013 EXHIBITION at Vigyan Bhavan, New Delhi

ITI participated in India Telecom-2013 Exhibition which was held at Vigyan Bhavan, New Delhi from 5th to 7th December 2013.

Dr. Manmohan Singh, Hon''ble Prime Minister of India, inaugurated the India Telecom 2013 Exhibition. The theme of the event was "Internet of People to Internet of Things: Future of Communication". Inauguration at the Exhibition Venue was done by Shri Kapil Sibal, Hon''ble Minister for Communication and IT & Law and Justice. The other dignitaries present at the ceremony with the Hon''ble Minister were Shri M.F. Farooqui, Secretary, DoT; Smt. Rita Teaotia, Addl. Secretary, DoT; Shri Umashankar, Joint Secretary, DoT.

Products Displayed at ITI Stall:

- Tablet PCs

- Field Telephones

- Decorative LED Lights

- Solar Lantern with Panel

- Biometric Hand Held Terminal (with charger)

- Note Counting Machine

- Fake Note Detector

NSIC Buyer Seller Meet-2013

ITI Mankapur has participated in the vendor development programme and Buyer and Seller Meet- 2013 organized by NSIC, Kanpur at Feroz Gandhi Inter College, Rae Bareli. The meet was held on May 15th & 16th, 2013. ITI Mankapur has exhibited Note Counting Machine (both Desk Top and Floor Model), Fake Note Detector, LED Decorative Lights (seven types), LED Bulb and LED Tube lights. There was a very warm response from the visitors to the stall who showed keen interest in our products.

Shri K.H. Muniyappa, Hon''ble Minister of Micro, Small and Medium Enterprises, Govt. of India also visited our stall.

31. EVENTS

Observance of Vigilance Awareness Week - 2013 Celebration

Theme "Promoting Good Governance – Positive Contribution of Vigilance".

As per the directives of CVC, ITI observed the Vigilance Awareness Week from 28th October 2013 to 2nd November 2013, in all the Production Units as well as the Administrative offices of ITI Limited.

The Vigilance Awareness week started with administration of the pledge on 28th October 2013 in all the Units and Administrative offices. At Corporate office, Shri K. L. Dhingra, CMD, administered the Vigilance pledge both in English and Hindi.

World Telecommunication and Information Society Day - 2013 celebrated at ITI Bangalore Plant

World Telecommunication and Information Society day was celebrated on 17.05.2014 at ITI Bangalore Plant. The Theme for this year''s celebration was "BROAD BAND FOR SUSTAINABLE DEVELOPMENT". Shri S. Gopu, Director (HR) welcomed the gathering.

Shri K. L. Dhingra, CMD, presided over the function and emphasized the need of Broadband for sustainable development in his address.

The Chief Guest of the function, Shri D.M. Ezhil Buddhan, GM-Telecom, Broadband Networks, BSNL delivered the Key note address.

National Productivity Week – 2014

National productivity week was observed from 12th to 18th February 2014 at Bangalore plant. During the week, several Posters and Banners on Productivity Week and related messages were displayed all over the Factory premises. Essay and Slogan competitions were held on theme of the Year : "Lean management to enhance productivity." Valedictory function of the Productivity week 2014 was held on 18th February 2014.

Public Sector Day Celebrations at Corporate office and Bangalore Plant

5th Public Sector Day was celebrated at ITI Corporate office on 16th April 2014. Shri K.L. Dhingra, CMD, and Vice Chairman, SCOPE addressed the gathering of all functional Directors and Senior officers of

Corporate office and explained the importance of the PSU day and the contribution which Public Sector has made in the Economic Development of the Country.

APEX Meeting Deliberates Key Issues

APEX Meeting was held on 27th & 28th May 2013 at Banaglore Plant to deliberate key issues related to Company''s Revival, Orders, Financial status, Production targets and Marketing challenges. Shri K.L. Dhingra, CMD, Chaired the Meeting and called upon all the segments of ITI to redouble their efforts in every feld to turn around the Company. Functional Directors, Unit Heads, other Senior officers and representatives from the Employees'' Union and officers'' Association of all the Units participated in the deliberations.

DoT team visits ITI Ltd Bangalore

Smt. Rita A Teaotia, IAS, Additional Secretary (T), DoT visited ITI Corporate office on 3rd July 2013, along with Shri V. Uma Shankar, IAS, Joint Secretary (T) DoT, Shri N.K. Joshi, DDG (SU) and Shri R.K. Kaushik Director (PSU IV). Smt. Rita A Teaotia, planted a sapling in the garden area of Corporate office in the presence of DoT Team and Shri K.L. Dhingra, CMD ITI Limited.

32. ACKNOWLEDGEMENT:

Your Directors place on record their sincere thanks for the assistance and support extended by the Ministry of Communications & IT and various other Ministries of Central and State Governments viz., Karnataka, Uttar Pradesh, Kerala and Jammu & Kashmir and look forward for their continued support and cooperation in future.

Your Directors also wish to express their gratitude for the cooperation and assistance extended by BSNL MTNL, Banks, Suppliers, Shareholders, Bondholders, Depositors, Agents, Customers and Foreign Collaborators, Committee on Public Undertakings (COPU), Standing Committee on Public Enterprises (SCOPE) and Standing Committee on Information Technology.

Your Board also expresses its sincere thanks to the Comptroller and Auditor General of India, Chairman and Member of the Audit Board and Statutory and Branch Auditors.

Your Directors take this opportunity to place on record their appreciation for the valuable contribution made and excellent cooperation rendered by the employees at all levels for the progress and prosperity of the Company.

For and on behalf of the Board of Directors

(K. L. Dhingra) Chairman and Managing Director

Place: Bangalore Date: 13th August 2014


Mar 31, 2013

To The Members of ITI Limited

The Directors have pleasure in presenting the 63rd Annual Report of the Company together with Audited Accounts and Auditors'' Report thereon for the year ended 31st March 2013.

PERFORMANCE:

ITI Limited has reported a net loss of Rs. 182.06 Cr in the financial year 2012-13 which is the lowest ever loss reported by the Company in the last eleven financial years. The net loss has come down by 50.77% from a net loss of Rs. 369.80 Cr. reported in the financial year 2011-12.

The Company was having Moll target of Rs. 4430 Cr. (sales) for the year 2012-13. Against this Moll target, the Company has achieved Sales (including ED & Service Tax) and Production of Rs. 921.04 Cr. and Rs. 910.16 Cr. during the year 2012-13 as against Rs. 993.12 Cr. and Rs. 995.96 Cr. respectively during the previous year 2011-12. Due to reduced market share of telecom PSUs, major orders could not be finalized and hence resulted in reduced sales.

Despite the reduced Sales turnover, contribution in the year 2012-13 has increased to Rs.187.27 Cr. as compared to Rs. 180.51 Cr. in the year 2011-12.

During the year 2012-13, the Company received approximately fresh orders of Rs. 1104 Cr only.

The Company has signed MoU of Rs. 4500 Cr. (Level-3) for the year 2013-14 with projected gross margin of Rs.130 Cr. and Net Profit of Rs. 1.00 Cr.

As part of diversification, all the Units have taken various initiatives to enhance production.

Bangalore Plant has entered into a TOT for manufacturing and supply of SDR (Software Defined Radio Products) it is expected to be in demand for defence forces in future.

Mankapur Unit has developed LED bulbs of 5W to replace 60W filament bulbs, LED streetlights (40W-excellent replacement of 250W sodium vapor lamp), LED streetlight (75W) and LED based tube lights (18W) for domestic/business/industrial applications. These LED based products will go a long way towards energy saving.

Naini Unit established a new line for manufacturing of High Wattage Solar Panels of capacity 5 MW.

Palakkad Unit has established inroads in the Defence manufacturing area by supplying to NPOL, HVF Avadi, etc. The Plant has opened a separate manufacturing area for meeting the requirements of production of Space research related products and have supplied to VSSC both bare and assembled PCBs.

HIGHLIGHTS:

- The turnover for the year 2012-13 is mainly constituted by GSM, G-PoN, Defence, IT solutions Projects and services sector for NPR and SECC projects.

- The Company is executing Turnkey Project of Registrar General of India (RGI) for creation of Multi Purpose National Identification Card under National Population Register (NPR57) project for the country.

PRODUCTION

The product-wise details of performance achieved by the Company during the year 2012-13 as compared to the previous year is as given below:

(Rs. in Crores)

SI. No. Product/Project 2012-13 2011-12

1 Radio Modem - 17.50

2 SSTP/IPTAX - 12.28

3 C-DOT Products 1.61 4.57

4 Diversified Products / 10.61 4.15 Cont.Mfg.

5 Solar Panel 22.76 6.87

6 PCM MUX 0.52 3.84

7 DWDM - 9.21

8 MLLN 9.77 -

9 GSM - WZ (Incl. BTS, 55.11 32.70 RTT, Shelter & AMC)

10 GSM-MTNL 1.02 18.44

11 GSM - SZ 1.75 13.64

12 WLL-INFRA -14.88

13 ADSL-CPE 2.89 5.13

14 Misc. Products & 24.78 34.37 Services

15 Defence / ASCON 55.35 52.20

16 OCB AMC Business 37.74 47.14

17 SIM / USIM / SMART 20.09 0.28 Cards

18 NPR/SECC Projects 371.37 438.07 (Data)

19 SMPS 1.65 3.76

20 G-PoN 16.29 24.24

21 ROs/CCO/IT 198.23 197.89

22 Data Centre 15.44 10.69

Total Service Tax 74.06 71.03

TOTAL (Incl. ED & Ser. Tax) 921.04 993.12

New Products:

- National ID Card manufacturing :

ITI is already a part of the consortium of PSUs along with BEL and ECIL for executing the National Population Register (NPR) project under the Ministry of Home Affairs. The next phase of the project is to manufacture national identity cards for all citizens in the country (above 18 years age). The project is expected to be awarded to the consortium during this year and is expected to be valued more than Rs. 1200 Crore (for ITI) in a period of three years. Also, there will be continuous requirement of these cards beyond this period even though volume would be lower. The cards are planned to be manufactured at Palakkad plant which is already engaged in manufacturing this type card in its plant.

- Software Defined Radio (SDR):

Software Defined Radio cater to single radio covering HF, VHF and UHF range for voice and low bit-rate voice and data applications. Defence sector plans to replace existing radios namely combat net radios with SDR. These radios have Electronic counter Measures (ECCM) features to avoid jamming. ITI has entered into an Moll with a technology partner and signed Transfer of Technology (TOT) agreement with the party to start component level manufacturing of this product in ITI. Tenders are awaited from Defence sector for this product.

- Next Generation Networks:

Next Generation Network (NGN) is a Soft Switch based Telecommunication network capable of providing services, viz., Voice, Data & Video by encapsulating them into packets. Manufacturing of IP TAX equipment (or, Class IV switches) and local exchanges (or, class V switches), based on Soft Switch architecture is planned. BSNL and MTNL''s plans to migrate their TDM switches to NGN in order to provide new services to customers will boost the NGN market.

- Carrier Ethernet:

Carrier Ethernet is the next generation transport technology for high bandwidth packet access for internet and business communication. The projects like NFS (Network for Spectrum), are expected to have a huge requirement for Carrier Ethernet switches. ITI is in the process of identifying a technology partner for the execution of anticipated orders from the customer.

- G-PON (Gigabit Passive Optical Network):

G-PON is a promising transmission technology in terms of its low operating expenses, low power requirements and ease of network deployment. Huge requirements are anticipated from projects like National Optical Fiber Network (NOFN) and Network for Spectrum (NFS) and others. ITI has already been a major supplier of this product to BSNL and MTNL using the imported technology. ITI has now entered into a ToT agreement with C-DOT and plans are afoot to take up manufacture of G-PON equipments from component level at Raebareli plant. This will boost indigenous manufacturing in India.

- MLLN (Managed Leased Line Networks):

ITI has successfully rolled out countrywide MLLN network for BSNL in technical collaboration with M/s Tellabs. During the year 2012-13, ITI received expansion order for MLLN project to the tune of Rs. 82 crore.

EXPORT:

The exports of the Company for the year 2012-2013 were NIL.

FINANCE:

The performance of the Company for the year 2012- 2013 as compared to the previous year is as follows:

(Rs. in Crs.)

SI Particulars 2012-2013 2011-2012 No.

i. Sales including 921 993 services

ii. Value of 910 996 Production

iii. Loss before tax 182 370

iv. Loss after tax 182 370

v. Financing 89 85 Expenses

vi. Depreciation 18 21

vii. Capital Employed 1778 1895 (Net Fixed Assts Net Current Assets)

viii. R&D Expenditure 18 21

DIVIDEND:

As your Company has incurred a loss, the Directors are not in a position to recommend any dividend for the year 2012-2013.

HIGHLIGHTS:

The performance value for 2012-13 is mainly from National Population Register (NPR), GSM Projects, GPoN, Solar Panel, IT Project and Service Contracts through ROs, Defence and Civil Networks.

The Company is executing Turnkey Project of Registrar General of India (RGI) for creation of Multi Purpose National Identification Card under National Population Register, AMC and Misc. services.

HIGHLIGHTS OF THE PRODUCTION PLANTS AND SERVICE UNITS:

BANGALORE PLANT:

Bangalore Plant achieved a performance of Rs. 30.62 Crores. This performance consist of supply of Defence equipment ofRs. 6.27 Cr, Data Centre services worth Rs. 18.05 Cr., AMC, repair and Miscellaneous products worth Rs. 6.30 Cr,

MANKAPUR PLANT:

Mankapur Plant achieved a performance of Rs. 6.35 Crores. The Plant has dispatched 40K Nos. of ADSL- CPE worth Rs. 2.89 Cr., C-DoT Products worth Rs.1.61 Crs. and Banking/Miscellaneous products worth Rs. 1.81 Crs.

During the year, the Plant has bagged 2 Nos. National Safety Award - Performance Year 2010 - WINNER for lowest average accident frequency rate and Performance Year 2010 - RUNNER for accident free year.

ITI Limited, Mankapur has done a yeoman''s service in maintaining a balanced environment and ecology since its establishment in 1983 in the Gonda District of Uttar Pradesh. Since inception, the Unit is continuously making efforts to upgrade the environment.

RAE BARELI PLANT:

Rae Bareli Plant achieved a performance of Rs. 42.76 Crores. The Plant has dispatched 31,9K Nos. of ONT of GPoN equipment worth Rs. 16.29 Cr., Rs. 1.65 Cr. from the supply of SMPS equipments, Rs. 24.82 Cr worth of GSM Franchise business.

During the year, the Plant has bagged National Safety Award for outstanding performance in Industrial Safety during performance year 2010 for accident free year.

NAINI PLANT:

Naini Plant achieved a performance of Rs. 22.91 Crores. The Plant has dispatched 117 Nos. of Solar Panel equipment worth Rs. 22.76 Cr. and Misc. / Contract Manufacturing worth of Rs. 0.15 Cr.

PALAKKAD PLANT:

Palakkad Plant achieved a performance of Rs. 449.33 Crores. The Plant has captured Bio- metric data collection/data entry against NPR/ SECC Projects worth Rs. 409.98 Cr., supplied 20.14 million Nos. of Smart Cards for NPR Project worth Rs. 26.54 Cr, Supply of MLLN & AMC Project worth Rs.11.07 Cr. and Misc. / Contract Manufacturing worth Rs. 1.74 Cr.

In the Industrial Safety front, Plant was runners up for the Outstanding Safety performance in the large size Engineering Industries Group from National Safety Council, Kerala Chapter and third prize winner from Directorate of Factories, Kerala Government for large scale industries.

SRINAGAR PLANT:

Srinagar Plant achieved a performance of Rs. 0.01 Crores against services.

NETWORK SYSTEMS UNIT:

Network Systems Unit achieved a performance of Rs. 98.01 Crores. The performance mainly comprises of Annual Maintenance Contract for fixed line OCB exchanges worth Rs. 42.05 Cr. for BSNL & MTNL, AMC for ASCON worth Rs. 54.69 Cr. and Misc./ contract jobs worth of Rs. 1.27 Cr.

REGIONAL OFFICES:

Regional Offices and its Customer Care Organization (CCO) achieved a performance of Rs. 206.53 Crores. This performance consists of t 75.89 Crs. supplies of ITI''s Mfg. products and other traded products, Rs. 45.23 Crs. of Services and Rs. 5.77 Crs. by various CCOs and Rs. 79.64 Cr. towards IT Projects.

Highlights of Regional Offices Performance:

a) Performance of ROs for the FY 2012-13 is Rs.206.53 Cr against Rs.206.82 Cr in the FY 2011-12.

b) Sundry Debtor realization for 2012-13 is Rs. 120.63 cr Realisation for FY 2011-12 was 170.49 Cr.

- Total order bagged in 2012-13 is Rs. 209.52 Crs. against the order bagged of Rs. 122.86 Crs. in 2011-12.

Rs. 453.74 Crs. orders on hand as on 01.04.2013. Order value on hand as on 01-04.2012 was Rs. 457.20 Crs.

New Projects taken up in 2012-13:

- CCTNS Bihar - RO Lucknow (Rs. 68 Crs)

- CCTNS Nagaland - RO Kolkata (Rs. 9.6 Crs)

- APDRP Puducherry - RO Chennai (Rs. 12.8 Crs)

- In the State of Assam - NPR (estimated work of Rs. 35 Crs.) being executed by RO (Kolkata)

Austerity Measures:

- Closure of 8 Area Offices in last three years.

- Cost reduction in office rent by shifting office to a smaller area.

- Fixed expenditure reduced by surrendering the rented premises & operating from residence.

GSM Projects:

The Company rolled out GSM Network worth of t 63.38 Cr. (with Service Tax) against BSNL orders in West Zone & South Zone and Rs. 1.15 Cr against Orders of MTNL, Mumbai.

CONSERVATION OF ENERGY:

The Company has undertaken following energy saving measures:

1. Recommendations of Bureau of Energy Efficiency have been implemented from time to time.

2. Optimum usage of Plant & Utilities

3. Monitoring of power factor at regular interval.

4. Replacement of old high capacity equipments with multiple optimum size capacity energy efficient ones.

5. Replaced conventional electro-magnetic ballast fluorescent fitting with electronic ballast fluorescent tri-phosphate lamp fitting.

6. Offloading of Central Air Conditioning plant in winter season.

7. Use of timer control devices in street lighting, etc.

8. Diverting the load on single transformer to reduce no-load losses.

9. Training programmes / competitions among employees to create awareness on energy conservation.

New Product & New Technology Initiatives:

Mankapur Unit has developed LED bulbs of 5W to replace 60W filament bulbs, LED streetlights (40W-excellent replacement of 250W sodium vapor lamp), LED streetlight (75W) and LED based tubelights (18W) for domestic applications. These LED based products will go a long way towards energy savings.

Future Outlook:

- Telecom projects like NOFN and NFS:

The Government funded projects like National Optical Fiber Network (NOFN) and Network for Spectrum (NFS) require many types of telecom equipments like GPON, DWDM, Carrier Ethernet, DSL equipments etc. in huge volumes. Some of equipments required in these projects have been designed by C-DOT, with whom ITI has tie-up for technology transfer. For other products also, ITI has tied up with technology partners for technology transfer to ITI with an intention of taking up manufacturing of these products.

- Core Telecom Products:

ITI is pursuing on addressing the core telecom market like GSM, Long Term Evolution (LTE), and Managed Leased Line Network (MLLN) etc.

The LTE technology is expected to be taking over in the next decade ITI is planning to take up manufacturing of these products.

- Defence projects:

ITI is looking at Defence market as a great opportunity for its business. ITI has already supplied telecom equipment like Telephones, Ruggedized Telephone Exchanges, Transmission equipments, VSAT etc. to the Defence sector. ITI is the leader in supplying encryption equipments for the secured communication in the Defence networks With greater thrust towards domestic manufacturing of Defence equipments, ITI proposes taking up manufacturing of new products for Defence like, Software Defined Radio (SDR), High Frequency Radio Handsets, TR modules for RADAR, Electronic Fuses, equipments for Army Wide Area Network (AWAN Phase II) etc. ITI is discussing with DRDO for setting up of SBIJ in two units of ITI One major project which has been now launched by Indian Army is ASCON Phase IV. Earlier three phases of this project have been executed by ITI successfully and ITI is hopeful of getting order for this project also

- Solar Project:

There has been special emphasis by the Government of I ndia to implement the renewable energy sources including solar to overcome the environmental hazards and meeting the growing energy needs. ITI is having requisite expertise and experience for implementing Solar solutions in its Naini plant. ITI has already executed solar projects for BSNL as well as - UP police. BSNL and other Service Providers are planning to upgrade their outdoor GSM Telecom BTS sites with Solar Power specially in rural areas where power supply position is not good. ITI Naini is planning to augment the solar panel manufacturing infrastructure in its plant

- LED Lighting:

LED lighting is an environmental friendly option due to non-use of Mercury. Market potential for this product is very good. ITI is planning to address this market. Potential areas of business opportunities are expected from National Highway Authority, State Governments and Municipal Corporations, CPWDs/ PWDs, Railways, Hotels and Hospital Industry.

- Data Center:

ITI has already established Tier 3 state-of- art Data center at Bangalore on PPP model. Presently this Data Center is fully booked for co-location services. Big scope exists in the market of Data center considering the immense potential in the Government sector to store data for projects of national importance like NPR, UIDAI and other Projects/Schemes envisaged by Government agencies & PSUs. In line with the business opportunities, ITI is planning to build another Data center as main and disaster recovery sites.

- IT Projects:

All the State Governments are pursuing E-Governance projects for taking the benefit of IT to the Village Panchayats and they have made a substantial budget provision for the same. ITI is aggressively pursuing this Market segment. ITI has already executed SWAN (State Wide Area Network) projects of Maharashtra, Odisha and Mizoram. ITI is also executing Accelerated Power Development and Reform Programme (APDRP) of Tamil Nadu state, Crime & Criminal Tracking Network System (CCTNS) for Bihar and Nagaland. e-Tendering is another project being executed by ITI. ITI plans to pursue more such IT projects in future.

CONTRIBUTION TO EXCHEQUER:

During the year, your Company has contributed Rs. 46.12 Crs to the exchequer towards duties and taxes.

PUBLIC DEPOSITS:

Value of deposits held by the Company was NIL.

Deposits aggregating to Rs. 0.24 Cr. had matured for payment, but were not claimed on due dates.

REVIEW OF ACCOUNTS BY THE COMP- TROLLER AND AUDITOR GENERAL OF INDIA:

The comments on the accounts for the year 2012-13 by the comptroller and Auditor General of India appended.

JOINT VENTURES :

1. INDIA SATCOM LIMITED

India Satcom Limited (ISL) is a Joint Venture Company incorporated on 5th October, 1987 by ITI, Unit Trust of India (UTI) and Equatorial Pacific International Company (EPIC). Both EPIC and UTI had sold their respective stakes in ISL to M/s Chris Tech Systems Pvt. Ltd. (CTSPL) and ITI had also took steps to sell its entire 49% equity stake in ISL to CTSPL. The Government of India, Ministry of Communications & IT vide its letter dated 28.01.2011 has not approved the above said sale of 49% ITI''s equity stake in ISL to CTSPL, therefore the transfer of ITI shares could not be effected. Now, the shareholders in the Joint Venture are ITI (49%) and CTSPL (51%).

In the 408th Board meeting held on 6.08 2013, it has been decided that ISL will sign a MOU with NBCC for joint development of the land of ISL for commercial purpose, after obtaining approval from Govt., and after taking necessary approval from statutory bodies. This will go a long way in the revival of the ISL.

QUALITY:

In all the production units of ITI Ltd., the Quality Assurance (QA) wings have been well established. The QA wings are responsible for Quality of products & services rolling out of units. A variety of Environmental test facilities are in force in all the Units. Test systems and instruments for carrying out elaborate tests for conducting Reliability Evaluation on all products to ensure customer satisfaction. This is achieved by sound and effective Quality Management Systems. The Quality Policy of ITI is to ''provide Competitive and Reliable Products, Solutions and Services".

All the five manufacturing Plants at Bangalore, Palakkad, Mankapur, Rae Bareli & Naini of the Company have been accredited with and periodically upgraded to International ISO 9001:2008 Standards of Quality Management as on date.

Keeping in tune with the Global concern for Environmental Management, all the plants of the Company have gone in for ISO 14001:2004 EMS certification for all of the Plants and are periodically being upgraded.

The guidance and support to all Units for Training, Implementation, Surveillance and Recertification of ISO 9001:2008, Quality Management System (QMS) and ISO 14001:2004 Environmental Management System (EMS) are provided by Corporate Quality Department. Quality related MOU targets and Quality related issues like AIS, SPC, Six Sigma, 5S, TQM Quality Cost etc., have been achieved.

AIS (Approved Inspection Scheme) status has been granted by BSNL QA for SIM Cards. Localisation activities continued during the year to procure items such as cables, connectors and PCBs for GSM-BTS Project with Alcatel approval and after approval from VDC & VRC of R&D, Bangalore. CAG, VDC, VRC, Standards, Component Testing and Reliability Labs provide Qualification Approval, Standardisation of Electronic components, Vendor Development and Vendor Rating after stringent evaluation in Testing in Reliability and Environmental laboratory.

MANPOWER

Employee Strength at the end of the year 31st March 2013 was 8516 compared to previous year''s strength 9512.

As on 31.03.2013, there were 1429 employees belonging to Scheduled Castes and 79 belonging to Scheduled Tribes, thus constituting 16% and 0.92% respectively of the total strength of employees on the rolls of the Company. 10 Contract Engineers belonging to SC category and 3 belonging ST category, 4 Technicians belonging to SC and none belonging to ST were recruited on contract basis during the year 2012-2013.

Employees belonging to Ex-servicemen category numbering 37 and Physically Challenged Persons numbering 108 were on the rolls of the Company as at the end of the financial year.

HUMAN RESOURCES DEVELOPMENT:

During the year 2012-13 the HR (ED) initiated several programmes, keeping in view, the continued organizational turnaround and capacity building efforts and the MoU HRM Training targets, focussed on employee skill development through various need-based in-house training programmes on Management Development, New/Advanced Technology and Multi-skilling. A special emphasis was given to developing leadership skills amongst middle and senior executives. Besides, the company sponsored Senior Executives (GM''s and above) for advanced training programmes that provide platform for exploring the organizational growth opportunities.

As part of Organization Development initiatives, for the first time in the company, ''Mentor-Mentee System'' has been successfully developed and implemented. To begin with around 30 Executives have been trained as mentors and around 50 officials have been selected as Mentees. During the year, the company successfully carried out Employee Engagement Survey. Quality Circles have also been revived in the company.

On HRM Training, in fulfillment of the MoU parameters, in the General Management area 115 in- house training programmes were organized covering 3835 employees which include training programmes on Stress Management, Medicare etc., 8 training programmes were conducted on Leadership covering 246 employees. As an exclusive initiative to develop multi-skills amongst non-executives, 11 programmes were organized covering 182 non-executives as against the target of conducting 10 Multi-skill training programmes. Similarly, on New/Advanced Technology, 11 programmes were conducted covering 263 employees as against the target of five training programmes. In total, the company has organized 161 programmes as against the target of 120 training programmes. Also, the company has sponsored 16 nominations to renowned external training institutions which included nominations of four Senior Executives (GM''s and above).

In total, during the year, 4532 employees have been trained achieving more than 6100 training mandays. In terms of percentage of number of training programmes organized, the company has achieved 120% on New/ Advanced Technology, 160% on Leadership, 115% on MDPs and 110% on Multi-skilling. With respect to the target of 0.4 training mandays per employee per year, the company achieved 0.64 by imparting training to a total of 4532 employees achieving 6100 training mandays. Similarly, against the target training budget of Rs. 3.21 lakhs - 0.008% of the manpower cost - the company has spent Rs. 3.72 lakhs i.e., 0.0092% of the manpower cost.

During the year, against every Moll HRM training performance indicator the company''s achievements surpassed the targets.

INDUSTRIAL RELATIONS

The Industrial Relations scenario in the Company was cordial during the year. Employees'' Union and Officers'' Association extended their co-operation and support in ensuring smooth work flow and helped to meet the Company''s objective.

OFFICIAL LANGUAGE:

All Units / Offices have established Check-points in their concerned offices to make more efforts for effective Implementation of the Official Language Policy, monitored by the Official Language Implementation Committees constituted in every Unit / Office.

The Progress of Implementation of Official Language in our Corporate Office as well as in our all subordinate Units / Offices is also being periodically reviewed by the OLIC Committee of Corporate office.

In order to enhance the working knowledge of Official Language amongst our employees, officials have been sent to Training Programme organized by the government for imparting training in Hindi, Hindi typing and Hindi Stenography as per our requirement. However, the Official Language Cell of the different Units / Offices has also conducted internal training programmes. Besides, employees were encouraged to take part in Hindi Prabodh, Praveen & Pragya examinations and have been sanctioned financial incentives.

Since eighty percent (80%) of the staff working in our Units / Offices like Naini, Rae Bareli, Mankapur, New Delhi, Mumbai, Lucknow & Corporate Office have acquired working knowledge of Hindi, such Units / Offices have been notified in the Gazette of India as per OL Rules 10 (2) & (4), 1976.

For Bangalore-based Units/Offices, a short term Hindi Unicode training programme were organized in the HRD deptt. of Corporate Office, with the help of Senior Hindi Officer, NAL, Bangalore. More than 30 officers/non-officers participated and they were trained how to use the Hindi Unicode Fonts in day- to-day typing work.

After reviewing our quarterly report, an appreciation letter was also received from Dy. Director-OL, Official Language Department DoT, New Delhi as well as Dy. Director (Implementation), Regional Implementation Office, Bangalore.

A Joint Hindi Fortnight Programme for Bangalore based PSUs / Organisations between 03.10.2012 & 31.10.2012 was organized by TOLIC (Town Office Language Implementation Committee), Bangalore and various types of competitions were arranged during this occasion. On this occasion many officers/ Non-officers of ITI Limited, Bangalore based Units / Offices participated in these competitions and more than 14 Officers / Non-Officers have got the prizes. On the TOLIC Meeting & valedictory function held on 22.01.2013, the President, TOLIC gave the cash prizes and certificate to the wining participants.

"Hindi Fortnight" was celebrated and Hindi Workshops were organised for encouraging progressive use of Hindi during 2012-13. Company''s website has been made bilingual (i.e. English and Hindi).

VIGILANCE :

During the year, Vigilance Department functioned effectively and efficiently being a part of Corporate Governance Structure. The prime focus of the vigilance activities was to sensitize the employees towards transparent, ethical and professional approach towards their duties and responsibilities. Greater emphasis was laid on preventive vigilance. CVC guidelines and Government policies in this regard have been strictly followed. To achieve the above objectives, periodical inputs were given to the Management regarding review of Administrative expenses, review of Procedure being followed for selection of technology Partners, implementation of Rotational Transfers of Executives in Sensitive Areas in the Company.

To improve the transparency and efficiency of the procedures, several System Improvement Measures have been suggested to various departments. Constant and continuous efforts have been made in this direction as a part of Preventive Vigilance.

Logical conclusions on Vigilance Cases were arrived at and Special emphasis was taken to reduce the Pendency of Complaints MIS Reports were sent to Statutory / Government Agencies like DOT-Vigilance and CVC.

The Company observed Vigilance awareness week from 31st October 2012 to 5th November 2012 at all Manufacturing Units including its administrative offices, as well as Corporate Office. Open-house discussions were held with Middle Management Executives of the Company, with specific emphasis on streamlining the System and Procedures in Procurement and recording the Reasons for proposing / taking requisite Commercial /Administrative decisions. The main thrust was to enhance the Vigilance Awareness across the Company and to sensitize employees in work areas and their role in preventing corruption. This also provided a platform for the participants to interact, seek more information and clarify doubts on vigilance concepts and functions. Emphasis was also laid on leveraging IT,creating awareness for transparency and accountability.

Management facilitated up-gradation of Computer Infrastructure in Corporate Vigilance Department and suitable deployment of manpower in Vigilance department across ITI offices. Management established another Vigilance wing at RO office at Lucknow, to monitor vigilance functions at Northern ROs and other North-lndia based Commercial wings of the Company. Impetus was given to review the pendency of Cases periodically to expedite logical conclusion of the pending cases. Periodical apprisals were also made to the Board of Directors on Vigilance Matters.

The Vigilance department is endeavoring to lay far more emphasis on preventive vigilance, scrutinizing the documents and conducting surprise checks in sensitive departments. These actions had good impact for creating awareness amongst Company Executives on Vigilance aspects of Company Governance.

RIGHT TO INFORMATION:

As a part of imparting training on RTI Act, an in- house training programme was conducted in two batches. The first phase was held at Mankapur on 25th & 26th February 2013 for Northern Units and a few regional offices which was attended by a good number of participants. The second phase of the programme for Southern Units/Regional office was held on 21st & 22nd March 2013 at Bangalore. Both the programme were conducted using the internal faculty of Corporate office.

The programme was aimed at providing in-depth knowledge of the RTI Act. The training was well received by the participants with interactive sessions and lively discussions on several case studies. The programme was rated "Excellent" by all the participants.

Ever since the introduction of RTI Act, the awareness among citizens has been on the increase and during the year 2012-13 RTI cell received and processed 204 requests.

AWARDS:

ITI Bags National Safety Awards from Ministry of Labour & Employment

ITI Ltd. has bagged the prestigious ''National Safety Awards'' from the Ministry of Labour & Employment for the performance year2010. Shri K. L. Dhingra, CMD, ITI Ltd, received the awards from Shri Mallikarjun Kharge, Horrble Union Minister for Labour & Employment at a function in New Delhi on September 17, 2012.

ITI''s Mankapur Plant, Gonda Dist. Uttar Pradesh, emerged for outstanding performance in Industrial Safety Awards as winner during the Performance Year 2010 based on the Lowest Average Frequency Rate and Runner-Up in Accident Free Year.

SALES PROMOTION:

ITI Limited participated in DEFCOM India 2012 Exhibition 111 Limited participated in DEFCOM India 2012 held during 8th & 9th November, 2012 at Manekshaw Centre, Delhi. The posters depicting latest products of ITI and the products for which ITI has tie-ups with OEMs were displayed.

In line with the theme of the exhibition, "Tactical Communication System", the following products were showcased :

1) NGN BEU (New Generation Bulk Encryption Unit)

2) SDR ( Software Defined Radio)

3) HF Radio Set

On the first day i.e. 8th November 2012, CMD of ITI shared the dais with Shri Vivek Rae, Secretary MSME, Ad. Secretary (A), Lt. Gen. S.P. Kochar, AVSM, S.M., VSM, ADC, SO-in-C, Maj, Gen. Johar, ADG-TAC and other top officials of telecom companies and presented his views on "ICTEC : Challenges and Opportunities".

ITI participated in India Telecom-2012 Exhibition

ITI participated in India Telecom-2012 Exhibition which was held at Pragathi Maidan, New Delhi from 13th to 15th December 2012.

Products Displayed:

1) Hand Held Terminal

2) Charge Control Unit (CCU)

3) Solar Panel

4) Solar Structure

5) Multi Channel NGN BEU

Shri Milind Deora, Hon ble Minister of State for Communications and Information Technology, inaugurated ITI stall in the presence of Shri Kapil Sibal, Hon''ble Union Minister for Communications and Information Technology and Shri R. Chandrasekhar, Secretary, DoT along with Shri K.K. Gupta, Director Production.

EVENTS:

Secretary DPE Visits ITI

Shri O.P. RAWAT, Secretary, Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, Gol, has visited ITI Corporate Office on 07th February 2013 and discussed with Shri K.L. Dhingra, Chairman and Managing Director, Shri R.K. Agarwal, Director Marketing, Shri K.K. Gupta, Director Production, Shri Ravi Khandelwal, Director Finance and other Management Officials regarding revival of ITI Limited.

National Productivity Week-2013

National Productivity week was observed from 12th to 18th February 2013 at Bangalore Plant. The Productivity week 2013 was inaugurated at ITI Bangalore Plant on 12th February 2013 by Lt.Col. (Retd) A.M. Uniyal, General Manager, Bangalore Plant. The Chief Guest at the function Shri C. Narendra, Senior Deputy Director, National Productivity Council, Bangalore, presented his key note address and highlighted the importance of "Productivity and Innovation for Sustainable Development".

Shri K.L. Dhingra, CMD, ITI Ltd. addressed the gathering and shared his views on the subject.

ITI Ltd, has bagged the prestigious ''National Safety Awards'' from the Ministry of Labour & Employment for the performance year2010. Shri K, L. Dhingra, CMD, ITI Ltd, received the awards from Shri Mallikarjun Kharge, Hon ble Union Minister for Labour & Employment at a function in New Delhi on September 17, 2012.

ITI''s Mankapur Plant, Gonda Dist. Uttar Pradesh, emerged for outstanding performance in Industrial Safety Awards as winner during the Performance Year 2010 based on the Lowest Average Frequency Rate and Runner-Up in Accident Free Year.

SALES PROMOTION:

ITI Limited participated in DEFCOM India 2012 Exhibition 111 Limited participated in DEFCOM India 2012 held during 8th & 9th November, 2012 at Manekshaw Centre, Delhi- The posters depicting latest products of ITI and the products for which ITI has tie-ups with OEMs were displayed.

In line with the theme of the exhibition, "Tactical Communication System", the following products were showcased :

1) NGN BEU (New Generation Bulk Encryption Unit)

2) SDR ( Software Defined Radio)

3) HF Radio Set

On the first day i.e. 8th November 2012., CMD of ITI shared the dais with Shri Vivek Rae, Secretary MSME, Ad. Secretary (A), Lt. Gen. S.P. Kochar, AVSM, S.M., VSM, ADC, SO-in-C, Maj. Gen. Johar, ADG-TAC and other top officials of telecom companies and presented his views on "ICTEC : Challenges and Opportunities".

ITI participated in India Telecom-2012 Exhibition

ITI participated in India Telecom-2012 Exhibition which was held at Pragathi Maidan, New Delhi from 13th to 15th December 2012.

Products Displayed:

1) Hand Held Terminal

2) Charge Control Unit (CCU)

3) Solar Panel

4) Solar Structure

5) Multi Channel NGN BEU

Shri Milind Deora, Hon''ble Minister of State for Communications and Information Technology, inaugurated ITI stall in the presence of Shri Kapil Sibal, Hon''ble Union Minister for Communications and Information Technology and Shri R. Chandrasekhar, Secretary, DoT along with Shri K.K. Gupta, Director Production.

EVENTS:

Secretary DPE Visits ITI

Shri O.P. RAWAT, Secretary, Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, Gol, has visited ITI Corporate Office on 07th February 2013 and discussed with Shri K.L. Dhingra, Chairman and Managing Director, Shri R.K. Agarwal, Director Marketing, Shri K.K. Gupta, Director Production, Shri Ravi Khandelwal, Director Finance and other Management Officials regarding revival of ITI Limited.

National Productivity Week-2013

National Productivity week was observed from 12th to 18th February 2013 at Bangalore Plant. The Productivity week 2013 was inaugurated at ITI Bangalore Plant on 12th February 2013 by Lt.Col. (Retd) A.M. Uniyal, General Manager, Bangalore Plant. The Chief Guest at the function Shri C. Narendra, Senior Deputy Director, National Productivity Council, Bangalore, presented his key note address and highlighted the importance of "Productivity and Innovation for Sustainable Development".

Shri K.L. Dhingra, CMD, ITI Ltd. addressed the gathering and shared his views on the subject.

Inauguration of New Solar Module Production Plant at ITI, Naini

Shri K.L. Dhingra, CMD, ITI Ltd. inaugurated High Wattage SPV (Solar Photo Voltaic) Module Manufacturing Production Plant on 9th March, 2013 at ITI Naini. He appreciated the exemplary efforts and initiative taken by Naini Plant. He also congratulated Shri P.K. Gupta, GM, Naini & his team for new leap towards diversification. He expressed that this project will contribute towards National Solar Mission in a big way & bring long term sustainable business to ITI.

On this occasion he also addressed senior officers, the representatives of Workers ''Union & Officers'' Association and stressed upon the need of identification of more such diversified products for turn around of ITI Limited.

ITI MoU Concentrates on Revival Plans

ITI has signed a Memorandum of Understanding (MoU) with the Government for the year 2013-14. Shri R. Chandrasekhar, Secretary, DoT and Chairman, Telecom Commission and Shri K.L. Dhingra, CMD, ITI Ltd. signed the MoU on 22nd March 2013 at New Delhi. The thrust areas of the MoU include pursuing growth opportunities in telecom sector and exploiting diversified business such as renewable energy. The MoU envisages that ITI concentrate on revival plans with due approval of the Government agencies.

World Telecommunication and Information Day Celebrations at Bangalore Plant

World Telecommunication and Information Society Day was celebrated at Bangalore Plant and the theme selected by International Telecom Union (ITU) for the year 2013 is "ICTs and Improving Road Safety".

As part of the programme, a combined valedictory function was held at Old R & D Conference Hall. Shri Sridhar Rao, AGM ( B ) welcomed the gathering. The Chief Guest Shri Bhaskar Rao, IPS, IGP (Anti- Terrorist Cell), delivered the keynote address on the subject and enlightened the employees about the revival of KSRTC when he was the Commissioner of Transport Dept. & Road Safety, Government of Karnataka. Shri K.L.Dhingra, CMD, ITI Ltd., presided over the function and delivered presentations address.

Function was attended by other dignitaries are Shri R.K. Agarwal, Director Marketing, Shri K.K. Gupta, Director Production, Shri R.Venkataraman, CVO and other Senior Officers, Office bearers of OA, Union and all other employees participated in the function.

ENTERTAINMENT EXPENDITURE AND FOREIGN TRAVEL:

The expenditure on entertainment was NIL. Expenditure on official travel abroad by the officials of the Company amounted to Rs. 0.74 lakh during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required to be disclosed under the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed.

PARTICULARS OF EMPLOYEES:

The statement of particulars of employees drawing remuneration ofRs. 60.00 lakhs and above per annum or Rs. 5.00 lakhs and above per month are required to be included in the Directors'' report as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Amendment Rules, 2011, are NIL for 2012-13.

AUDITORS:

Pursuant to Section 619(2) of the Companies Act, 1956, M/s. Badari, Madhusudhan & Srinivasan, Chartered Accountants, Bangalore were appointed as Statutory Auditors of the Company for the year 2012-13 by the Comptroller & Auditor General of India.

The following firms of Chartered Accountants were appointed /re-appointed as Branch Auditors for different Plants of the Company for the year 2012-13:-

M/s Nagendra Gupta S. R. Gupta & Co.,

Naini Plant, Allahabad

M/s Thrivikraman & Co.,

Palakkad, Palakkad Plant

M/s Samriti & Associates,

Jammu, Srinagar Plant

M/s Habibullah & Co.,

Gorakhpur, Mankapur Plant

M/s S.C. Singh & Co.,

Rae Bareli, Rae Bareli Plant

COST AUDITORS

Your Company has appointed M/s.GNV & Associates, Bangalore, as Cost Auditors for the cost audit of south-based units located at Bangalore, Palakkad and also Consolidation for the Company and M/s. Aman Malviya & Associates, Lucknow, as branch auditors for the cost audit of north-based units, located at Naini, Rae Bareli, Mankapur and Srinagar for the year 2012-13, with the approval of Board and Ministry of Corporate Affairs.

BOARD OF DIRECTORS:

The following changes took place in the Directorate of your Company since the last Report.

In accordance with the requirements of the Companies Act, 1956, Shri Dhirendra Singh, Independent Director, Prof. M.J.Zarabi, Independent Director joined on 03.10.2012 and Prof. Ramesh Bhat, Independent Director joined on 03.01.2013 will retire by rotation at this Annual General Meeting and being eligible, offer themselves for re-appointment.

On completion of tenure, Shri T.S. Narayanasami, Prof.M. Balakrishnan and Dr. S.K. Chaudhuri, Independent Directors were relieved from the duties from March, 2013.

CORPORATE GOVERNANCE:

A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreement with the Stock Exchanges on which the Company''s shares are listed, is annexed to this report.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state that

(i) in the preparation of annual accounts, the applicable accounting standards have been followed and that there were no material departures.

(ii) the accounting policies adopted by the Company have been applied consistently, judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March 2013 and Loss of the Company for the period ended 31.3.2013.

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere thanks for the assistance and support extended by the Ministry of Communications & IT and various other Ministries of Central and State Governments viz , Karnataka, Uttar Pradesh, Kerala and Jammu & Kashmir and look forward for their continued support and co-operation in future

Your Directors also wish to express their gratitude for the co-operation and assistance extended by BSNL and MTNL, Banks, Suppliers, Shareholders, Bondholders, Depositors, Agents, Customers and Foreign Collaborators, Committee on Public Undertakings (COPU), Standing Committee on Public Enterprises (SCOPE) and Standing Committee on Information Technology.

Board of Directors also express its sincere thanks to the Comptroller and Auditor General of India, Chairman and Member of the Audit Board and Statutory and Branch Auditors.

Your Directors take this opportunity to place on record their appreciation for the valuable contribution made and excellent co-operation rendered by the employees at all levels for the progress and prosperity of the Company.

For and on behalf of the

Board of Directors

(K. L. Dhingra)

Place: Bangalore Chairman and

Date: 29.05.2013 Managing Director


Mar 31, 2012

To The Members ITI Limited

The Directors have pleasure in presenting the 62nd Annual Report of the Company together with Audited Accounts and Auditors' Report thereon for the year ended 31st March 2012.

PERFORMANCE:

The Company was having MoU target of Rs.5300 Cr. (sales) for the year 2011-12. Against this MoU target, the Company has achieved Sales and Production of Rs. 922.09 Cr. and Rs. 924.94 Cr. during the year

2011-12 as against Rs. 2138.93 Cr. and Rs. 2052.18 Cr. respectively during the previous year 2010-11.

Due to reduced market share of Telecom PSUs, volume of ITI's business with these customers has been severely affected resulting in to reduction in sales.

The Company's loss as worked out is Rs.369.80 Cr. for the year 2011-12. Despite the reduced sales turn- over, contribution in the year 2011-12 has increased to Rs 180.51 Cr. as compared to Rs. 160.10 Cr. in the year2010-11.

During the year 2011-12, the Company received fresh orders of Rs. 1610 Cr. approximately.

The Company has signed MoU of Rs. 4430 Cr. (Level-3) for the year 2012-13 with projected gross margin of Rs. 164 Cr. and Net Profit/loss at par.

HIGHLIGHTS:

The turnover for 2011-12 is mainly from National Population Register (NPR), GSM Projects, GPoN, IT Project and Service Contracts of Defense and Civil networks.

Your Company executed e-Governance Project of Registrar General of India (RGI) on a large scale as part of consortium of BEL & ECIL and registers sales of Rs.438.07 Cr. during the year. Another milestone achieved by the Company in execution of APDRP Project of Tamil Nadu State. The Company did a total business of around Rs.200 Cr. In IT and other turnkey projects mainly through its presence of Regional Offices situated in various parts of Country.

The supplies of Major Products and execution of projects during the year are as follows:

NPR Project of Rs. 438.07 Cr., GSM Rs.59.16 Cr., G-PoN, Rs. 24.24 Cr., Defence Projects and Services Rs.52.20 Cr., ADSL-CPEs Rs. 5.27 Cr., SMPS Rs.3.76 Cr. Radio Modem Rs. 17.50 Cr., AMC of OCB 283 exchanges Rs. 47.14 Cr., IT Project Rs. 90.02 Cr. and business through Regional Offices Rs. 107.87 Cr.

PRODUCTION

The product-wise details of performance achieved by the Company during the year 2011-12 as compared to the previous year is as given below:

f1 in Crores

Sl.No. Product/Project 2011-12 2010-11

1. OCB-283 CORE inc. I/C _ 3.81

2. Radio Modem 17.50 -

3. SSTP/IP TAX 12.28 1.77

4. C-DOT Products 4.57 4.38

5. Diversified 4.15 32.84 Products/Cont.Mfg.

6. Optic Fibre Equipments _ 45.67

7. Solar Panel 6.87 -

8. PCM MUX 3.84 14.34

9. DWDM 9.21 56.96

10. MLLN _ 2.41

11. EPBT/CLIP Phones _ 8.11

12. GSM - WZ (Incl. BTS, 32.70 909.09 RTT, Shelter & AMC )

13. GSM - MTNL 18.44 19.37

14. GSM - SZ 13.64 593.06

15. WLL - INFRA 14.88 14.96

16. ADSL-CPE 5.13 37.47

17. Misc. Products & Services 34.37 16.93

18. Defence / ASCON 52.20 54.77

19. OCB AMC Business 47.14 45.22

20. USIM / SIM Cards 0.28 6.09

21. NPR 438.07 11.46

22. SMPS 3.76 14.94

23. G-PoN 24.24 119.98

24. ROs / CCO / IT 197.89 125.28

25. Data Centre 10.69 -

TOTAL (Incl. ED) 922.09 2138.93

NEW PRODUCTS:

b" Carrier Ethernet: Carrier Ethernet is the next generation transport technology for high bandwidth packet access for internet and business communication. ITI has identified a technology partner to address anticipated tender from BSNL. The NFS (Network for Spectrum) project is expected to have a huge requirement for Carrier Ethernet switches. Tender are expected in

2012-13.

b" G-PON: G-PON is a promising transmission technology in terms of its low operating expenses, low power requirements and ease of network deployment. Huge requirements are anticipated from projects like NOFN, NFS and others. ITI has already been a major supplier of this product to BSNL and MTNL using the technology from M/s Alphion, USA. ITI has now entered into a TOT agreement with M/s C-DOT and manufacturing of G-PON equipments from component level is under process at Raebareli plant using C-DOT technology. This will boost indigenous manufacturing in India.

b" National Population Registration (NPR) and Socio Economic & Caste Census (SECC) projects: ITI is one among the consortium of three PsUs selected for the execution of prestigious NPR project. The job involves collection of citizen data including biometrics followed by issue of ID cards. ITI has already received an order to the tune of Rs 750 crore against this project from RGI for data collection including Biometrics which is under execution. Further orders are also anticipated.

An order to the tune of ? 450 crore has also been received for SECC ( Socio-Economic Caste Census) project from the Ministry of Rural Development which is also under execution by the same consortium. This project involves additional census data of all the citizens in the Country.

b" Migration of C-DoT TDM switches to NGN: ITI has manufactured the control card for migration of existing C-DoT exchanges to NGN. The manufacturing and testing of card has been approved by C-DoT. It is in line to the initiative of Ministry for bringing synergy in various organization under its control.

b" GSM : ITI has been implementing GSM Projects in BSNL West Zone & South Zone and MTNL- Mumbai, in technology alliance with M/s Alcatel- Lucent [BSNL-West Zone & MTNL] and with M/s Huawei [BSNL-South Zone]. Huge demands are anticipated for GSM-3G equipments for expansion of BSNL/MTNL and other private operators networks. ITI is manufacturing BSS network equipments in-house.

Non-Telecom products :

b" Solar Project: There has been special emphasis by the Government of India to implement the renewable energy sources including solar to overcome the environmental hazards. ITI is having requisite expertise and experience for implementing Solar solutions.

BSNL and other Service Providers are planning to upgrade their outdoor GSM Telecom BTS sites with Solar Power specially in rural areas where power supply position is not good. The requirement will be around 4,000 BTS sites/year. ITI Naini has installed equipments required for assembly and testing of solar module for 40 MW capacity. ITI has bagged two orders for supply of Solar Equipment of value Rs.35 Cr.

b" LED Lighting: LED lighting is an environmental friendly option due to non-use of Mercury. Market potential for this product is very good. ITI is planning to address this market. Potential areas of business opportunities are expected from National Highway Authority, State Governments and Municipal Corporations, CPWDs/ PWDs, Railways, Hotels and Hospital Industry.

b" Data Center: ITI established Tier 3 state-of-art Data center at Bangalore on PPP model. Presently this Data Center is fully booked for co- location services.

Big scope exists in the market of Data center considering the immense potential in the Government sector to store data for projects of national importance like NPR, UIDAI and other Projects/Schemes envisaged by Government agencies & PSUs. In line with the business opportunities, ITI is planning to build its own Data centers as main and disaster recovery sites at 2-3 locations.

b" IT Projects: All the State Governments are pursuing E-Governance projects for taking the benefit of IT to the Village Panchayats and they have made a substantial budget provision for the same. ITI is aggressively pursuing this Market segment. ITI has already executed SWAN (State Wide Area Network) projects of Maharashtra, Odisha and Mizoram. ITI is also executing Accelerated Power Development and Reform Programme (APDRP) of Tamil Nadu state. e-Tendering is another major project being

executed by ITI. ITI has also got orders of IT projects from Bihar & Nagaland States and UID projects in various States.

EXPORT:

The exports of the Company for the year 2011-2012 was NIL

FINANCE:

The performance of the Company for the year 2011-2012 as compared to the previous year is as follows:

(Rs.in Crs.)

SI Particulars 2011-2012 2010-2011 NO.

1 Sales including services 922 2139

ii. Value of Production 925 2052

iii. Loss before tax 370 358

iv. Loss after tax 370 358

v . Financing Expenses 85 66

vi. Depreciation 21 22

vii. Capital Employed 1893 2142

viii. R&D Expenditure 21 19

DIVIDEND:

As your Company has incurred a loss, the Directors are not in a position to recommend any dividend for the year 2011-2012.

HIGHLIGHTS OF THE PRODUCTION PLANTS AND SERVICE UNITS: BANGALORE PLANT:

Bangalore Plant achieved a turnover of Rs.45.24 Cr. Supplies consists of, Defense equipment of Rs.10.08 Cr, ADSL-CPEs worth Rs. 0.29 Cr., PCM MUX, etc. worth Rs.3.84 Cr., Switching equipment, OCB-CSN / C-DoT / Microwave items, AmC & repair etc. worth Rs. 4.08 Cr, Data Centre's turnover worth Rs. 10.69 Cr, and Radio Modem worth Rs. 17.50 Cr. and roll back of Rs. 14 88 Cr. against WLL CDMA earlier PO value.

MANKAPUR PLANT:

Mankapur Plant has achieved a turnover of Rs.57.41 Cr ., Out of this C-DoT products worth Rs 4.57 Cr., ADSL-CPE worth Rs.4.98 Cr. Banking product worth Rs.2.04 Cr, and Misc. Products worth Rs.0.30 Cr. were supplied.

The Plant has bagged 2 Nos. National Safety Award - Performance Year 2009 - WINNER for lowest

average accident frequency rate and Performance Year 2009 - WINNER for accident free year.

Smt. Mamta Dubey and Smt. Suman Srivastava of these plant bags Prime Minister's Shram Devi Award for the year 2008 and 2009 respectively.

RAE BARELI PLANT:

Rae Bareli Plant achieved a turnover of Rs.61.73 Cr, SMPS worth Rs. 3.76 Cr., Rs. 24.24 Cr. from the supply of G-PoN equipments, Rs. 28.40 Cr worth of GSM Franchise and GSM (BTS) TRU Expansion worth Rs. 5.33 were supplied.

The Plant has bagged National Safety Award for lower average frequency rate of accident Scheme-1 (Runner) & longest accident free period Scheme-2 (Winner) from Ministry of Labour & Employment for "Performance year 2008" conferred on 27th September 2010.

NAINI PLANT:

Naini Plant achieved a turnover of Rs.16.20 Cr. Supplies consist of DWDM equipment worth Rs. 9.21 Cr., Solar Panel worth Rs. 6.87 Cr. and misc./ contract mfg. worth of Rs. 0.12 Cr. This plant has initiated for upgrading the manufacturing facility of manufacturing of PV Solar Panels during the year.

PALAKKAD PLANT:

Palakkad Plant achieved a turnover of Rs.451.74 Cr. Which is highest ever since its inception. The Plant supplied MLLN equipment worth Rs. 12.28 Cr, NPR Project worth Rs.438.07 Cr. and Misc. / Contract Manufacturing worth Rs. 1.40 Cr.

The Plant has achieved notable performance in NPR 57 Data collection, Bio-metric Enrolment, Data Capture and for SECC Project, NPR Card production.

Palakkad Plant received First Prize in Industrial Safety from National Safety Council, Kerala Chapter for Medium Size Engineering Industries and also from Department of Factories and Boilers, Government of Kerala.

SRINAGAR PLANT:

Srinagar Plant achieved a turnover of Rs.0.02 Cr. against services.

NETWORK SYSTEMS UNIT:

Network Systems Unit achieved a turnover of Rs.91.86 Cr mainly comprising of Annual Maintenance Contract for OCB exchanges worth Rs 47.14 Cr. for BSNL & MTNL, AMC for ASCON Project worth Rs. 42.12 Cr. and Misc./ contract jobs worth of Rs 2.60 Cr.

REGIONAL OFFICES :

Regional Offices and its Customer Care Organization (CCO) achieved a turnover of Rs. 197.89 Crs. Overall growth was 58% higher compared to previous year's performance. This turnover consists of Rs. 69.77 Crs supply of ITI's mfg. products and other traded products, Rs.33.58 Crs. of Services and Rs.5.07 Crs. by various CCOs and Rs 90.02 Cr. towards IT Projects of services of old exchanges. During the year 2011- 12, 6 Regional offices out of 8 have reported gross profit for the first time in last 5 years and 5 have reported net profit.

GSM Projects:

The Company rolled out GSM Network worth of Rs. 40.72 Cr. against BSNL orders in WZ & SZ and Rs 18.44 Cr against Orders in MTNL, Mumbai.

Future Outlook:

b" Software Defined Radio (SDR): Software defined radio cater to single radio covering HF, VHF and UHF range for voice and low bit-rate voice and data applications. Defence sector plans to replace existing radios namely combat net radios with SDR. These radios have Electronic counter Measures (ECCM) features to avoid jamming. ITI is planning ToT with an Original Design agency for manufacturing and supply of SDRs for both Defence and Civilian use.

b" Network for Spectrum (NFS): This project is allocated to BSNl by Ministry of Communications for setting up of a communication backbone network in lieu of release of spectrum by Defence. ITI is anticipating substantial order from BSNL for laying of Optical fiber cables for this project as well as supply and installation of transport equipment.

b" Broadband to rural sector: In line with the Government's mission to provide Broadband

connectivity to the rural masses under "Bharat Nirman", 2,50,000 villages are planned to be connected by optical fiber under National Optical Fiber Network (NOFN) project. ITI is leveraging this opportunity using the G-PON technology of C- DOT.

b" Defence projects: ITI has supplied telecom equipment like Telephones, Ruggedized Telephone Exchanges, Transmission equipments, VSAT etc. to the Defence sector. ITI has successfully implemented communication network to Indian Army viz. ASCON Phase-I, II, III on turnkey basis and also maintaining the project under AMC.

ITI is the major supplier of Encryption equipment to Defence for its communication network.

To enhance product portfolio in Defence segments following technologies are being planned by ITI :

b" Satellite Trans-Receiver and Access equipments.

b" RADARs and Allied Equipments.

b" Weapon Control Systems.

b" Navigation Systems and Equipment.

b" Missile systems and Equipments.

b" Electronic fuzes.

b" ASCON Phase IV for Indian army: ITI has already executed ASCON Phase I, II & III projects. Total maintenance support is also being given for these projects by ITI. The ASCON Phase IV order is also anticipated by ITI.

b" Citizen ID cards: As a part of National Population

Register, ITI, along with its consortium partners, looks at the huge opportunity of manufacturing Smart card based citizen identity cards for all the citizens in the Country.

CONTRIBUTION TO EXCHEQUER:

During the year, your Company has contributed '.

57.64 Crs to the exchequer towards duties and taxes.

PUBLIC DEPOSITS:

Value of deposits held by the Company was NIL.

Deposits aggregating to Rs. 0.24 Crs. had matured for

payment, but were not claimed on due dates.

JOINT VENTURES : 1. INDIA SATCOM LIMITED

India Satcom Limited (ISL) is a Joint Venture Company incorporated on 5th October, 1987 by ITI, Unit Trust of India (UTI) and Equatorial Pacific International Company (EPIC). Both EPIC and UTI had sold their respective stakes in ISL to M/s Chris Tech Systems Pvt. Ltd. (CTSPL) and ITI had also took steps to sell its entire 49% equity stake in ISL to CTSPL. The Government of India, Ministry of Communications & IT vide their letter dated 28.01.2011 has not approved the above said sale of 49% ITI's equity stake in ISL to CTSPL, therefore the transfer of ITI shares can not be effected. Now the shareholder in the Joint Venture are ITI (49%) and CTSPL (51%).

QUALITY:

The Quality Policy of ITI is to [provide Competitive and Reliable Products, Solutions and Servicesb. Quality Assurance (QA) wings have been well established in all the production units of ITI Ltd. The QA wings are responsible for Quality of products & services rolling out of units. The Units are well equipped with a variety of Environmental test facilities. Test systems and instruments for carrying out elaborate tests for conducting Reliability Evaluation on all products to ensure customer satisfaction. This is achieved by sound and effective Quality Management Systems.

The guidance and support to all Units for Training, Implementation, Surveillance and Recertification of ISO 9001:2008, Quality Management System (QMS) and ISO 14001:2004 Environmental Management System (EMS) is provided by Corporate Quality. Quality related MOU targets and Quality related issues like AIS, SPC, Six Sigma, 5S, TQM Quality Cost etc.

The five Plants at Bangalore, Palakkad, Mankapur, Rae Bareli & Naini of the Company have been accredited with and periodically upgraded to International ISO 9001:2008 Standards of Quality Management as on date.

Keeping in tune with the Global concern for Environmental Management, all the plants of the Company have gone in for ISO 14001:2004 EMS certification for all of the Plants.

BSNL has granted AIS (Approved Inspection Scheme) status by BSNL QA for SIM Cards. Localisation activities continued during the year to procure items such as cables, connectors and PCBs for GSM-BTS Project with Alcatel approval and after approval from VDC & VRC of R&D, Bangalore. CAG, VDC, VRC, Standards, Component Testing and Reliability Labs provide Qualification Approval, Standardisation of Electronic components, Vendor Development and Vendor Rating after stringent evaluation in Testing in Reliability and Environmental laboratory.

MANPOWER

Employees Strength at the end of the year 31st March 2012 was 9512 when compared to previous year's strength at 10616.

As on 31.03.2012, there were 1630 employees belonging to Schedule Castes and 79 belonging to Schedule Tribes employees, thus constituting 17.13% and 0.83% respectively of the total strength of employees on the rolls of the Company. 2 Contract Engineers belonging to SC Category & 1 belonging to ST Category, 25 Technicians belonging to SC and 1 belonging to ST were recruited on contract basis during the year 2011-2012.

Employees belonging to Ex-servicemen category numbering 41 and Physically Challenged Persons numbering 120 were on the rolls of the Company as at the end of the financial year.

HUMAN RESOURCE DEVELOPMENT:

Human Resource Development (HRD) initiatives, with organizational turn around and diversification attempts in focus and in tune with the MOU target on HRM - targets for 2011-12 were set to impart training for 8% of executives and 7% of non-executives strength in the areas of New Technology, Information Technology, Employee Development, besides skill development across various functional areas by organizing 50 and 30 number of training programmes for officers and non-officers respectively. ITI achieved 'excellent rating' under the MOU for this.

Another target for the year was, for the first time in the company - as part of the MOU criteria, to conduct the SKILL Gap Analysis, involving all the trainable employees of the company.

These twin objectives were basically intended to meet the immediate training requirements of the company for the year under reference and to gear up the HRD training initiates on the findings of the Skill GAP Analysis, for subsequent years, to supplement the company's turn around the diversification agenda.

The Company has surpassed the MOU targets for 2011-12 on HRM-Training criteria by internally training 2199 i.e., 45.54% of 4819 officers and 915 i.e., 15.8% of 5797 non-officers strength (as of 1-4- 2011) through organizing a total of 97 in-house training programmes. This performance includes the 31 executives trained externally and the 5 executives trained by MOU partners in Project / Product specific training.

To keep pace with the advancements in Telecom training programmes on the topics like GPON, WiMAX, SDH, DWDM, Broad Band, Migration from IPv4 to IPv6, Embedded System were organized. On the IT front, training programmes were conducted on 'e-tendering' as part of development and implementation of the e-tendering system in the company. IT programmes also included awareness programmes on NPR Projects, Biometrics etc., Management Development programmes focused on Personality Development, Preventive Vigilance, Public Procurement, besides host of other areas like Quality, Finance, Reservation Policy for SC/ST. General Awareness programmes, keeping the company's CSR endeavors, focused on topics like, Environment Management System, Energy Conservation, Industrial Health, Safety etc,., In a nutshell, during the year company had trained over 3078 employees and achieved 3733 training mandays.

Corporate HR (ED), in its efforts to minimize the training costs, thrust was given to, develop and engage more and more officers as internal resource persons for conducting the training programmes, and employ video conferencing method for conducting training programmes company-wide, at a stretch covering more than 200 participants.

INDUSTRIAL RELATIONS

The Industrial Relations scenario in the Company was cordial during the year 2011-12. The Unions and Officers' Associations extended their full co- operation and support in ensuring smooth work flow and helped to meet the Company's objective.

OFFICIAL LANGUAGE:

All Units / Offices have established Check-points in their concerned offices to make more efforts for effective Implementation of the Official Language Policy, monitored by the Official Language Implementation Committees constituted in every Unit / Office.

The Progress of Implementation of Official Language in our Corporate Office as well as in our all subordinate Units / Offices is also being periodically reviewed by the OLIC Committee of Corporate office.

In order to enhance the working knowledge of Official Language amongst our employees, officials have been sent to Training Programme organized by the government for imparting training in Hindi, Hindi typing and Hindi Stenography as per our requirement. However, the Official Language Cell of the different Units / Offices has also conducted internal training programmes. Besides, employees were encouraged to take part in Hindi Prabodh, Praveen & Pragya examinations and have been sanctioned financial incentives.

Since eighty percent (80%) of the staff working in our Units / Offices like Naini, Rae Bareli, Mankapur, New Delhi, Mumbai, Lucknow & Corporate Office have acquired a working knowledge of Hindi, such Units / Offices have been notified in the Gazette of India as per OL Rules 10 (2) & (4), 1976.

For Bangalore based Units/Offices, a short term Hindi Unicode training programme were organized in the HRD deptt. of Corporate Office, with the help of Senior Hindi Officer, NAL, Bangalore. More than 30 officers/non-officers participated and they were trained how to use the Hindi Unicode Fonts in day- to-day typing work. Official Language Cell had achieved the "Best Excellence Performance Award" during the year 2010-2011 from the President, "Town Official Language Implementation Committee", Bangalore for remarkable progress and significant achievements for the use of Hindi and implementation of Official Language in the company.

After reviewing our quarterly report, an appreciation letter was also received from Dy.Director-OL, Official Language Department DoT, New Delhi as well as Dy. Director (Implementation), Regional Implementation Office, Bangalore.

A Joint Hindi Fortnight Programme for Bangalore based PSUs / Organisations between 03.10.2011 & 31.10.2011 was organized by TOLIC, Bangalore and various types of competitions were arranged during this occasion. On this occasion many officers/Non-officers of ITI Limited, Bangalore based Units / Offices participated in these competitions and more than 14 Officers / Non-Officers have got the prizes. On the TOLIC Meeting & valedictory function held on 05.12.2011, the President, TOLIC were given the cash prizes and certificate to the wining participants.

[Hindi Fortnight] was celebrated and Hindi Workshops were organised for encouraging progressive use of Hindi during 2011-12. Company's website has been made bilingual (i.e. English and Hindi).

VIGILANCE:

During the year, Vigilance Department functioned as an effective part of Management. The main focus of the vigilance activities was to sensitize the employees towards transparent, ethical and professional approach towards their duties and responsibilities. Greater Emphasis was laid on preventive vigilance. CVC guidelines and Government policies in this regard have been followed.

To achieve the above objectives, periodical inputs were given to the Management regarding review of Administrative Expenses, review of Procedure being followed for selection of Technology Partners, Securitization of ITI assets, Formulating Project- Specific-Accounting Policies in the Company, implementation of Rotational Transfer of Executives in Sensitive Areas, implementation of Whistle Blower Policy in the Company etc.

The Company observed Vigilance awareness week from 31st October 2011 to 5th November 2011 at all Manufacturing Units of ITI Limited including its administrative offices, as well as at Corporate Office. Open-house discussions were held with Middle Management Executives of the Company, with specific emphasis on streamlining the Systems and Procedures in Procurement and recording the Reasons for proposing / taking requisite Commercial /Administrative decisions. The main thrust was also to enhance the Vigilance Awareness across the Company and provide a platform for the participants to interact, seek more information and clarify doubts on vigilance concepts and functions.

Impetus was given to review the pendency of Cases periodically to expedite logical conclusions of the pending cases. Periodical appraisals were also made to the Board of Directors on Vigilance Matters.

The Vigilance department is endeavoring to lay more emphasis to preventive vigilance, scrutinizing the documents and conducting surprise checks in sensitive departments. These actions had good impact for creating awareness amongst Company Executives on Vigilance Facets of Company Governance.

RIGHT TO INFORMATION:

Ever since the introduction of Right to Information Act, 2005, there has been a reasonable increase in the number of information seekers. The number of requests received during 2011-12 was 358 in comparison to the requests of previous year of 321. As a part of mandatory requirement, the returns are now being submitted every quarter to our Ministry for onward submission to Central Information Commission.

At present, we have a designated Public Information Officer for every unit and a CPIO at Corporate Office. The first appeals are being addressed by Appellate Authority at Corporate level. The Transparency Officer has been nominated to ensure the overall compliance of the RTI Act and as a single window interface with the public and the Central Information Commission.

The retention schedule of records has been formulated and being implemented which is one such step of our dedicated and sincere efforts of RTI Cell in complying with relevant provisions under RTI Act for transparency.

AWARDS:

EVENTS & Awards:

Two ITI Women Employees Honoured with PM's Shram Award

Two employees of ITI Ltd Ms. Mamta Dubey and Ms. Suman Srivastava received the Prime Minister's Shram Award from Dr. Manmohan Singh at a function in New Delhi. Mr.K.L.Dhingra, CMD of ITI Ltd was also present on the occasion. Ms. Dubey developed a machine based test and repair set-up for turret board and main display boards of note counting machine, thus making the product more reliable and reducing the testing time, earlier this was a manual process. Ms. Srivastava's contribution in Transreceiver (TRA module) assembly resulted in process simplification and zero rejection by remodelling the Jigs and has resulted in significant improvement in increasing productivity almost to the time of 23%. Both are employees of ITI Mankapur in Gonda District of Uttar Pradesh.

ITI Ltd. has bagged the prestigious 'National Safety Awards' from the Ministry of Labour & Employment for the performance year 2009. Mr. K. L. Dhingra, CMD, ITI Ltd, received these awards from Mr. Mallikarjun Kharge, Minister for Labour & Employment at a function in New Delhi on November 29,2011.

ITI's Mankapur Plant emerged as the winner in the scheme I (based on the lowest average frequency rate) and scheme II (based on accident free year). ITI's Rae Bareli Plant was runner-up in the lowest average frequency rate of accident (scheme I).

ITI participated in the prestigious INDIA TELECOM 2011

ITI participated in the prestigious INDIA TELECOM 2011, 6lh International Exhibition & Conference organized by DoT and FICCI on December 7-9, 2011 at Pragati Maidan, New Delhi. The theme of event was " Total Solutions for Global Communications".

Mr. Milind Deora Focuses on ITI's Revival, Inaugurates Gas Plant

Mr. Milind Deora, the Union Minister of State for Communication and Information Technology, visited ITI on October 29,2011 and discussed issues related to ITI's revival, its financial performance, manpower, Research and Development, its diversification and revival strategies. "We have to revive and we want to revive ITI", he told the senior executives of the Company at a presentation held on the Company's revival strategy at the Corporate Office. Mr. K. L. Dhingra, CMDof ITI Ltd welcomed Mr. Deora and briefed him about the Company activities.

Honorable Union Minister Mr. Kapil Sibal Inaugurates ITI Lab., Assures A Smile Back on ITI

Mr. Kapil Sibal, Union Minister of Communications & IT and HRD, inaugurated "New Products Lab" at ITI on February 6, 2012 and said his Ministry would do everything possible to revive ITI and "bring back smiles" on faces of employees. "Your company has been a backbone of telecom industry and we will not allow it to go down", he told to the packed audience at ITI Plant. Mr. R. Chandrashekhar, Secretary DoT and Mr. K.L. Dhingra, CMD of ITI, employees and top officials from Defence, Banks and other PSUs were present on the occasion.

DoT Secretary Visits Bangalore Plant

Mr. R. Chandrashekhar, Secretary DOT, visited Bangalore plant on February 6 2012. In the SMT Line, ITI Officials brief in about SMD populated cards. They also explain to him the features and capabilities of the line, as well as in-circuit tester being used.

ITI Moll Concentrates on Revival Plans

ITI signed a Memorandum of Understanding (MoU) with the Government for the year 2012-13. Mr.R.Chandrasekhar, Secretary, DoT and Chairman, Telecom Commission and Mr.K.L.Dhingra, CMD, ITI Ltd. signed the MoU in New Delhi on March 12,2012.

The thrust areas of MoU include pursuing growth opportunities in telecom sector and exploiting diversified businesses such as renewable energy. The MoU envisages that ITI concentrate on revival plans with due approval of the Government agencies. The Company has also committed to follow DPE guidelines for the Corporate Governance, Corporate Social Responsibility, Research & Development and Human Resources Management. The Company will also address other critical issues such as up gradation of plant infrastructure and reduction of surplus manpower through VRS.

ITI's Maiden Venture at DEFEXPO 2012

ITI Ltd has participated in DEFEXPO 2012 for the first time. The exhibition is being held in New Delhi from March 29 to April 1, 2012. ITI has showcased its products and services relevant to the defence sector. Mr. A. K. Antony, Union Defense Minister visited the ITI stall where he was received by Mr.K.L.Dhingra, CMD, ITI Ltd. Dr. M. M. Pallam Raju, Minister of State for Defence and Dr. Vijay Kumar Saraswat, Scientific Advisor to the Minister of Defence were present on the occasion. The dignitaries were briefed about ITI activities and its contribution to the defence sector communication activities.

Secretary DPE Visits ITI

Mr. O.P. Rawat (IAS), Secretary, Department of Public Enterprises (DPE), visited ITI's Corporate Office and Bangalore Plant on April 27, 2012 and discussed several issues related to ITI's business with senior executives at the Corporate Office.

Mr. O.P. Rawat (IAS), Secretary, Department of Public Enterprises (DPE), planting a sapling at ITI's Bangalore Plant. Mr. K.L. Dhingra, CMD, Mr. R. K. Agarwal, Director - Marketing, Mr.K.K Gupta, Director- Production, Mr.Ravi Khandelwal, Director-Finance and other Senior Officers of the Company were present on the occasion.

World Telecommunication and Information Society day

World Telecommunication and Information Society day has been celebrated for the year 2012 and the Theme selected by International Telecommunication Union (ITU) was "WOMEN AND GIRLS IN ICT".

As part of the Program a combined valedictory function of World Telecommunication and Information Society day was held on 17.05.2012 at Bangalore Plant. Lt. Col. A M Uniyal (Retd), GM- B welcomed the gathering. Mr.P.Raghavan, Chief General Manager, BSNL Karnataka Telecom Circle was the Chief Guest of the program and delivered the Key note address. Mr. K L Dhingra, CMD ITI Ltd. in his presidential address emphasized the need of Technology towards Women and Girls in ICT He further stated that ITI will put all out efforts to ensure that women and girls are benefited from the technology. Mr. K K Gupta, Director- Production, Mr. Ravi Khandelwal, Director-Finance, Mr.RVenkataraman, Chief Vigilance Officer gracing the function.

ENTERTAINMENT EXPENDITURE AND FOREIGN TRAVEL:

The expenditure on entertainment was NIL. Expenditure on official travel abroad by the officials of the Company amounted to' 0.50 lakhs during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required to be disclosed under the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed.

PARTICULARS OF EMPLOYEES:

The statement of particulars of employees drawing remuneration of 60.00 lakhs and above per annum or 5.00 lakhs and above per month are required to be included in the Directors' report as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Amendment Rules, 2011, as amended, are NIL for 2011-2012.

AUDITORS:

Pursuant to Section 619(2) of the Companies Act, 1956, M/s. Badari, Madhusudan & Srinivasan, Chartered Accountants, Bangalore were appointed as Statutory Auditors of the Company for the year 2011-2012 by the Comptroller & Auditor General of India.

The following firms of Chartered Accountants were appointed /re-appointed as Branch Auditors for different Plants of the Company forthe year 2011-2012:-

M/s. Nagendra Gupta & Co., Naini Plant, Allahabad

M/sThrivikraman &Co., Palakkad, Palakkad Plant

M/s Samriti &Associates, Jammu, Srinagar Plant

M/s Habibullah &Co., Gorakhpur, Mankapur Plant

M/s S. C. Singh & Co., Rae Bareli, Plant

BOARD OF DIRECTORS:

The following changes took place in the Directorate of your Company since the last Report.

In accordance with the requirements of the Companies Act, 1956, Shri M. Balakrishnan, Independent Director, and Dr. S. K. Chaudhuri, Independent Director will retire by rotation at this Annual General Meeting and eligible, offer themselves for re-appointment.

Your Directors wish to place on record their appreciation of the services rendered by Shri A.K.Srivastava, Shri N.K.Srivastava, Lt. Gen. P. Mohapatra during their tenure.

CORPORATE GOVERNANCE:

A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreement with the Stock Exchanges on which the Company's shares are listed, is annexed to this report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state that:

(i) in the preparation of annual accounts, the applicable accounting standards have been followed and that there were no material departures.

(ii) the accounting policies adopted by the Company have been applied consistently, judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March 2012 and Loss of the Company for the period ended 31.3.2012.

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere thanks for the assistance and support extended by the Ministry of Communications & IT and various other Ministries of Central and State Governments viz., Karnataka, Uttar Pradesh, Kerala and Jammu & Kashmir and look forward for their continued support and co-operation in future.

Your Directors also wish to express their gratitude for the co-operation and assistance extended by BSNL and MTNL, Banks, Suppliers, Shareholders, Bondholders, Depositors, Agents, Customers and Foreign Collaborators, Committee on Public Undertakings (COPU), Standing Committee on Public Enterprises (SCOPE) and Standing Committee on Information Technology.

Your Board also expresses its sincere thanks to the Comptroller and Auditor General of India, Chairman and Member of the Audit Board and Statutory and Branch Auditors.

Your Directors take this opportunity to place on record their appreciation for the valuable contribution made and excellent co-operation rendered by the employees at all levels for the progress and prosperity of the Company.

For and on behalf of the BOARD OF DIRECTORS

Place : Bangalore (K. L. DHINGRA) Date:11.08.2012 CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2010

The Directors have pleasure in presenting the 60th Annual Report of the Company together with Audited Accounts and Auditors Report thereon for the year ended 31st March 2010.

The Company has recorded the highest turnover in its history of Rs. 4660 Crs. for the year ended March 31, 2010. The turnover achieved this year is more than double its previous high of Rs. 2317 Crs. recorded in year 2001-2002.

PERFORMANCE:

The Company achieved Sales and Production of Rs. 4660 Crs. and Rs.4630 Crs. during the year 2009- 10 as against Rs. 1741 Crs. and Rs. 1762 Crs. respectively during the previous year 2008-09. This is the highest performance ever achieved by the Company since its inception. The sales and production have gone up by 167.66% and 162.77% respectively compared to previous year.

The Companys loss has come down from Rs. 668 Crs. of the previous year 2008-09 to Rs. 459 Crs. for the year 2009-10. Contribution for the year 2009-10 is Rs 309 Crs. as compared to Rs. 170 Crs. for the year 2008-09.

The Company had entered the year 2009-10 with an order book position of Rs. 5950 Crs. and advance purchase order of Rs. 450 Crs. During the year 2009- 2010 the Company received fresh order of Rs. 889 Crs.

HIGHLIGHTS:

- The major projects and products that constituted the turnover of 2009-10 are: GSM West Zone, GSM South Zone, WLL-CDMA, SSTP equipment, GPON, SDH and Defence Products. Leaseline and Broadband equipment

- For the first time in country the Company in collaboration with M/s Alphion Corporation, USA, deployed the G-PoN Technology in BSNL Network.

- The Company has setup State-of-the-art Tier-3+

Data Centre facility at Bangalore.

- The Company is executing Turnkey Project of Registrar General of India (RGI) for creation of Multi Purpose National Identification Card under National Population Register.

- During the year, ITI received a financial assistance from the Government of Rs. 2820 Crs. which helped the Company in partial cleaning of Companys Balance Sheet, as a result of which the Companys financial cost has come down from Rs. 292 Crs. during 2008-09 to Rs. 119 Crs. for the year 2009-10.

- The Productwise details of performance achieved by the Company during the year 2009-10 as compared to the previous year is as given below:

Rs. Crs.

Sl. Product/Projects 2009-10 2008-09

NO.

1. OCB-283 CORE incll/C 19.86 4.76

2.QCB-283CSN 7.26 8.30

3. OCB -TAX /TANDEM - -

4. SSTP/IPTAX 101.38 57.05

5. C-DOT PRODUCTS 6.02 18.87

6. DIVERSIFIED PRODUCTS 8.45 6.34

7 OPTIC FIBRE EQUIPMENT 191.95 78.70

8. SATCOM 2.22 7.48

9. PCM MuX 9.46 16.11

10. DWDM 8.25 128.87

11. MLLN 27.36 66.50

12. EPBT/CLIP PHONES 1.49 0.06

13. GSM WZ(incl. BTS, RTT & 1139.79 590.33

(Shelter ;

14. GSM MTNL 109.91 11.39

15. GSM SZ 2003.36 342.31

16.IWLL-INFRA 409.46 66.94

17. IFWT - 12.44

18. ADSL CPE 19.78 45.86

19. Misc. Products 17.79 17.87

20. DEFENCE/ASCON 149.72 20.72

21. NSU 66.43 90.36

22. SIM CARDS 5.84 21.25

23.JMNID 9.00 -

24. Is MPS 16.14 25.08

25. G-PoN - 240.14

26. Ros/CCO/IT 89.25 103.73

TOTAL (including ED) 4660.32 1741.32

NEW PRODUCTS:

- National Population Registration (NPR) Project: ITI is one of the three Public Sector Undertakings short listed by RGI (Registrar General of India) for providing Multi Purpose National ID cards. The scope of work involves collection of citizen data including biometrics followed by preparation of ID cards. It is expected that this project will give a substantial turnover in the coming 2 to 3 years with good value addition.

4 G-PON: ITI is currently manufacturing G-PON Equipments at Raebareli Plant in technical collaboration with M/s Alphion Corporation, USA. ITI is the first Indian Company to secure TSEC Certification for this product. Most of the Orders received from BSNL have already been executed and further orders are expected.

- Next Generation Networks : Next Generation Network (NGN) is a Soft Switch based Telecommunication network capable of providing services viz., Voice, Data & Video by encapsulating these into packets. Manufacture of IP TAX equipment, (Class IV) which is trunk automatic exchange and local exchange (Class V) based on Soft Switch architecture are planned.

- Wi-MAX / Wi-M AX CPEs : Wi-MAX stands for World wide Interoperability for Microwave Access. This is a new wireless technology for high speed Broadband access. ITI proposes to induct manufacture of Wi-MAX BTS and Wi-MAX CPEs (Customer Premises Equipment). Concurrently, ITIs R&D has initiated action for the development of

Wi-MAX CPEs.

- 10 Gbps DWDM equipments : ITI has set up facilities for manufacture of 10 Gbps DWDM Equipment at Naini Plant. ITI has also secured TSEC Certification for this product.

4 Non-Telecom products : Solar power equipments for rural BTS sites; ITI has plans to manufacture Solar power equipments for rural BTS sites, which will help for better penetration of mobile communication into rural areas where availability of power is a major constraint.

- Restructured Accelerated Power Development & Reforms Programme (RAPDRP): ITI is persuing to enter into this segment and has bagged big order of Rs. 307 Crs. from Tamilnadu State. R&D is also developing some of the products for this sector.

TECHNOLOGY ALLIANCES:

ITI has technology alliances with the leading Technology providers for the following product range:



Product Technology provider

GSM-BTS Alcatel-Lucent, France

G-PON Alphion, USA

CDMA Infrastructure ZTE, China equipments.

NGN (Class 4) Huawei, China

NGN (Class 5) ZTE, China

STM 1,4,16 Tejas, India

STM64 Xalted, India

DWDM ZTE, China

Microwave equipments SAF Tehnika, Latvia

CLI phones Pramod Telecom, India

ADSL -CPEs SEM India

MLLN Tellabs, Finland

SSTP Tekelec, USA

Radio Modem PointRed, India

SIM cards WatchData, China

USIM Cards Bartronics, India



EXPORT:

The exports of the Company for the year 2009-2010 was NIL.

FINANCE:

The performance of the Company for the year 2009- 2010 as compared to the previous year is as follows:

(Rs. in Crs.)

Sl. Particulars 2009-2010 2008-2009

i. Sales including services 4660 1741

ii. Value of Production 4630 1762

iii. Loss before tax 459 668

iv. Loss after tax 459 668

v. Financing Expenses 119 292

vi. Depreciation 24 27

vii. Capital Employed (Net Fixed 2292* 2138*

Assts + Net Current Assets)

viii.R&D Expenditure 24 28

-Including Revaluation Reserves DIVIDEND:

As your Company has incurred a loss, the Directors are not in a position to recommend any dividend for the year 2009-2010.

HIGHLIGHTS OF THE PRODUCTION PLANTS

BANGALORE PLANT:

Bangalore Plant achieved a turnover of Rs.571.41 Crs. (with ED). Supply Consisting of WLL-CDMA Infra worth Rs. 409.46 Crs., Defence equipment of Rs. 126.01 Cr, ADSL-CPEs worth Rs. 19.78 Crs., PCM MUX etc worth Rs.9.46 Crs., Switching equipment-OCB CSN exchange / C-DoT items etc worth Rs. 7.79 Crs. and SATCOM equipment worth Rs. 2.22 Crs.

State of-the-art Tier-3+ Data Centre facility was set up at Bangalore. The Unit achieved saving of Rs. 1 Crs. by Shifting of Water Meter and Regularization of Power.

MANKAPUR PLANT:

Mankapur Plant achieved a turnover of Rs. 216.29 Crs.(with ED). The Plant supplied 2640 Nos. of GSM (BTS) and 20 Nos. Expansion Kit worth Rs. 206.63 Crs. and C-DoT products worth Rs. 5.49 Crs.

The plant has bagged 16th National Safety Award and 3rd National Energy Conservation Award. It is the First Plant to obtain ISO 9001:2008 Certificate.

RAE BARELI PLANT:

Rae Bareli Plant achieved a turnover of Rs.464.00 Crs. (with ED). The Plant supplied 4252 Nos. of GSM (BTS) and 1100 TRU Expansion worth Rs. 179.19 Crs., and SMPS worth Rs. 27.86 Crs. Further, the Plant achieved Rs. 240.14 Crs. from the supply of G PoN equipments, which were supplied for the First Time in the Country and Rs 16.30 Crs. from the sale of BSNL SIM Cards.

NAINI PLANT:

Naini Plant achieved a turnover of Rs.200.51 Crs. (with ED). Supply consisting of STM-16 worth Rs. 121.76 Crs.STM-1 worth Rs. 67.72 Crs., DWDM equipment worth Rs. 8.25 Crs., DDF worth Rs. 1.58 Crs. and STM 64 worth Rs.0.89 Crs.

This Plant has received ISO 14001: Environmental Management System Certification.

PALAKKAD PLANT:

Palakkad Plant achieved a turnover of Rs. 166.90 Crs. (with ED). The Plant supplied SSTP worth Rs. 101.38 Crs. LLN equipment worth Rs. 27.36 Crs. OCB-283 CORE worth Rs. 19.86 Crs. and SIM/USIM Cards worth Rs.5.84 Crs.

ITI was selected as one of the consortium member along with M/s BEL and M/s ECIL by RGI for the NPR Project. This Plant is executing the Project which includes Data Collection, Biometrics, Manufacturing and Personalization of Smart Cards. Turnover against this project in 2009-10 was Rs. 9.0 Crs.

SRINAGAR PLANT:

Srinagar Plant achieved a turnover of Rs.1.49 Crs.(with ED).

NETWORK SYSTEMS UNIT:

Network systems achieved a turnover of Rs. 90.14 Crs.(with ED) mainly comprising of annual maintenance contract for OCB exchanges worth of Rs. 50.22 Cr for BSNL & MTNL and AMC for ASCON worth RSY18.71

Crs. The Unit has undertaken ASCON Expansion work worth Rs. 5 Crs. and other external plants work of Rs 16.21 Crs.

This Unit has obtained ISO 9001: 2008 Certificate for Supply, Installation, Commissioning and Maintenance of Switching, Transmission, Civil Engineering, Cable Laying and Business Development activities.

REGIONAL OFFICES & CUSTOMER CARE ORGANISATION:

Regional Offices and Customer Care Organization achieved a turnover of Rs. 89.25 Crs. consisting of Rs.2.94 Crs. of ITI products, Rs.44.98 Crs. of other products, Rs.24.72 Crs. for Services and Rs. 4.84 Crs. towards CCO and Rs 11.77 Crs. towards IT Projects.

Regional Office, Bangalore bagged ONCO Net Project of NIC value Rs.6 Crs. It is to set up network for teleconsultation centers with facility for oncology treatment in the Country.

ITI bagged order for Security Survielliance from Defence & Para Military Forces.

GSM Projects:

The Company rolled out GSM Network against 9 ML Order in BSNL WZ worth Rs 741.76 Crs. and Rs 109.91 Crs. against 1 MLOrderfor MTNL, Mumbai.

GSM Network for BSNL, SZ was rolled out for a turn over Rs 2003.36 Crs.

FUTURE OUTLOOK:

1. Formation of Joint Venture Companies (JVCs) :

The Government of India has approved formation of three JVCs for manufacturing the following product- mix with equity participation of 51% to 74% by the Strategic Partners who are Global manufacturers and balance equity by the Government.

(Rs. in Crs.)

Sl. Location of NO. Product JVC

1. WiMAX and Associated Customer Rae Premises Equipment (CPE) Bareli

2. GEPON / GPON and Optical Naini Transmission Equipments

3. IP CORE Systems Bangalore

The product lines are chosen in tune with the requirement of Governments "Mission Broadband to AN" with an ambitious goal of providing 100 million broadband connections in the next 3 to 5 years. The formation of JVCs is under process.

2. Data Center : ITI has already set up Tier 3+ state- of-the-art Data center at Bangalore on Private- Public Partnership model. Company is exploring setting up of Data center in other units of ITI to encash huge market potential in the area of secured data storing.

3. Network for Spectrum (NFS):. This project is allocated to BSNL by Ministry of Communications for release of spectrum by Defence. Estimated value of project is Rs 10000 crore. ITI is also trying to get orders for this project.

4. IT Projects: All the State Governments are aggressively pursuing e-Govemance and taking the benefit of IT to the lowest level upto Village Panchayat and they have made substantial budget provision for the same. ITI is aggressively addressing this Market segment.

5. Non-Renewable Energy Products: ITI has plans to diversify into manufacture of Green energy products like Solar power systems. ITI is contemplating to be a significant contributor to the Governments ambitious Solar Mission (Jawaharlal Nehru National Solar mission) with a objective of making India as global leader in the manufacture of Solar power equipments. ITI also has plans to manufacture Solar power equipments and fuel cell power systems for rural BTS sites, which will help for better penetration of mobile communication into rural areas where availability of power is a major constraint.

CONTRIBUTION TO EXCHEQUER:

During the year, your Company has contributed Rs. 370.81 Crs. to the exchequer towards duties and taxes.

PUBLIC DEPOSITS:

Value of deposits held by the Company was NIL. Deposits aggregating to Rs. 0.24 Crs. had matured for payment, but were not claimed on due dates.

REVIEW OF ACCOUNTS BY INDIAN AUDIT AND ACCOUNTS DEPARTMENT:

The Accounts for the year 2009-10 under review by the Indian Audit and Accounts Department is appended.

JOINT VENTURES:

1. INDIASATCOM LIMITED

ITI Limited had sold its entire (49%) equity stake in India Satcom Limited for a sales consideration of Rs. 3 Crs. in favour of M/s Chris Tech Systems Pvt Ltd. and sale proceeds are kept in Escrow Account awaiting Government Approval.

2. ITI COMMUNICATIONS PTE. LIMITED, SINGAPORE (ITI-C):

In the year December 1992, a Joint Venture was formed by ITI with M/s Valvas and M/s ISL in the name of M/s ITI Communications Pte Ltd. Singapore. As ITI-C was running into losses Board of Directors in its 314th Meeting held during 1999 decided to close this venture through winding up process.

QUALITY:

ITI has a well-established Quality Assurance wing in every Production Unit. Each Unit QA is responsible for Quality of Products and services rolling out of the Unit. The Units are well equipped with a variety of Environmental test facilities, Test systems and Instruments for carrying out elaborate tests for conducting Reliability Evaluation on all products to ensure customer satisfaction. The Quality Policy of ITI is to "provide Competitive and Reliable Products, Solutions and Services." ITI is achieving this through sound Quality Management Systems.

ITI Palakkad is granted AIS (Approved Inspection Scheme) status by BSNL QA for SIM Cards. Localisation activities continued during the year to procure items such as cables, connectors and PCBs for GSM-BTS Project with Alcatel approval and after approval from VDC/VRC of R&D, Bangalore.

All the Six manufacturing Plants of the Company stand accredited and upgraded to International ISO Standards of Quality Management as on date. Rae

Bareli & Mankapur plants were upgraded to ISO 9001:2008 during financial year 2008-2009 and Palakkad & Srinagar plants during year 2009-2010. Naini Unit is in the process of upgradation. Network System Unit was awarded ISO 9001:2008 Certification during 2009-2010.

Keeping in tune with the Global concern for Environmental Management, the Company has gone in for ISO 14001: 2004 EMS Certification for most of the Plants. While Units like Bangalore, Palakkad and Mankapur are maintaining the certification to ISO 14001:2004 EMS Standards, Naini and Rae Bareli Units are in the process of certification.

MANPOWER

Employee Strength at the end of the year 31st March 2010 was 11737 compared to 12556 at the end of the previous year.

As on 31.03.2010, there were 2064 employees belonging to Scheduled Castes and 105 belonging to Scheduled Tribes employees, thus constituting 17.59 % and 0.89 % respectively of the total strength of employees on the rolls of the Company. 14 employees belonging to SC and 01 belonging to ST were recruited during the year 2009-10.

Employees belonging to Ex-servicemen category numbering 62 and Physically Challenged Persons numbering 150 were on the rolls of the Company as at the end of the financial year. One PWD person was recruited during the year 2009-10.

Promotions exercise for officers was held during the year 2009 and the eligible officers were considered for promotion / upgradation to the next higher level.

HUMAN RESOURCE DEVELOPMENT:

The year 2009-10 was all set to build futuristic trends in telecom technology, Information Technology and HRM through appropriate Skill upgradation amongst all sections of employees in the company. HRD initiatives were also oriented towards educating the middle and senior management executives, in particular, on the concepts and process of turnaround strategies to provide a philip to the companys revival process.

On telecom technology, skill up gradation training programmes included on 2G, 3G, GPON, GEPON, WiFi, WiMax, RF Planning, SDH, DWDM and so on. 823 employees have been imparted training.

IT related training programmes focused on developing basic computer skills and creating awareness on information security. The programme on "Computer Hardware and Networking" exclusively designed and organized for Marketing Personnel to educate them on the technical and commercial / tendering aspects was one of the highlights. More than 559 employees have been trained in ITdiscipline.

Number of need-based Executive Development Programmes were organized to refresh and update conceptual knowledge and develop soft skills in areas like HR, Quality, Marketing to name a few. Company wide Business Awareness Workshops conducted for Senior Executives, Refresher course on Right to Information Act, 2005 were the highlights of the year in Executive Development. Nearly 950 employees have been trained through Executive Development Programmes. Similarly, number of need-based awareness programmes on health, safety, community etc., were organized all over the company covering 517 employees.

In a nutshell, during the year, company has trained more than 2900 employees scoring 4128 training man days in over 97 in-house and 12 external training programmes. Management was considerate also to train the employees through external renowned institutions in the areas where conducting in-house training programmes was not feasible. 54 employees were trained externally.

INDUSTRIAL RELATIONS

The Industrial Relations scenario in the Company has been cordial during the year. Employees Union and Officers Association extended their co-operation and support in ensuring smooth work flow and helped to meet the Companys objective.

OFFICIAL LANGUAGE:

All Units / Offices have established Check-points in their concerned offices to make more efforts for effective

Implementation of the Official Language Policy, monitored by the Official Language Implementation Committees constituted in every Unit/Office.

The Progress of Implementation of Official Language in our Corporate Office as well as in our all-subordinate Units / Offices is also being periodically reviewed by the OLIC Committee of Corporate office.

In order to enhance the working knowledge of Official Language amongst our employees, officials have been sent to Training Programme organized by the government for imparting training in Hindi, Hindi typing and Hindi Stenography as per our requirement. However, the Official Language CelJ of the different Units / Offices have also conducted internal training programmes. Besides, employees were encouraged to take part in Hindi Prabodh, Praveen & Pragya examinations and have been sanctioned financial incentives.

Since eighty percent (80%) of the staff working in our Units / Offices like Naini, Rae Bareli, Mankapur, New Delhi, Mumbai, Lucknow & Corporate Office have acquired a working knowledge of Hindi, such Units / Offices have been notified in the Gazette of India as per OL Rules 10 (2) & (4), 1976.

Official Language Cell was given an appreciation letter by the Director-OL, Official Language Department DoT, New Delhi.

For Bangalore based Units / Offices, a short-term 5 days "Hindi Translation Training" Programme was organized in Corporate Office, HR(ED) Conference Hall w.e.f. 01.02.2010 to 06.02.2010 with the help of Home Ministry, Official Deptt., Central Translation Bureau, New Delhi & Bangalore and more than 40 Officers7 Non-Officers participated & they were trained during this training programme.

A Joint Hindi Fortnight Programme for Bangalore based PSUs / Organisations between 23.11.2009 & 15.12.2009 was organized by TOLIC, Bangalore and various types of competitions were arranged during this occasion. On this occasion many officers/Non-officers of ITI Limited, Bangalore based Units / Offices participated in these competitions and more than 15

Officers / Non-Officers have got the prizes. On the TOLIC Meeting & valedictory function held on 07.01.2010, the President, TOLIC gave cash prizes and certificate to the wining participants.

"Hindi Fortnight" was celebrated and Hindi Workshops were organised for encouraging progressive use of Hindi during 2009-10. Companys website has been made bilingual (i.e. English and Hindi).

VIGILANCE:

During the year Vigilance Department functioned as an effective part of Management. The main focus of the vigilance activities was to sensitize the employees towards transparent, ethical and professional approach towards their duties and responsibilities. Greater emphasis was laid on preventive vigilance. CVC guidelines and Government policies in this regard have been followed.

RIGHT TO INFORMATION:

The Right to Information Act, 2005 has enabled all the citizens to seek information. Since introduction of the Act, a mechanism has been drawn to process all requests received by Corporate Office/ Units under the Act. The Units and Regional offices have designated PIOs/APIOs with CPIO & Appellate authority at the Corporate Office.

The main objective has been to ensure total transparency. The requests are processed and information is being provided to the Appellants within the stipulated time frame. The details are also put on the web site www. itiltd-india.com.

During the year 2009-10, 176 requests were received, out of which 151 were accepted and 13 were rejected. The Annual Returns are submitted to the Ministry every year for forwarding to the Central information Commission.

AWARD:

Public Relations Council of India (PRCI) has conferred Special Corporate Collateral Award 2010 to ITI Ltd. for its House Journal "Doorvani" at a function held in New Delhi on April 3,2010.

SALES PROMOTION:

1. ITI participated in the 18th Convergence India 2010 International Exhibition & Conference organized by Exhibitions India Group from March 23-25, 2010 at Pragati Maidan, New Delhi by putting up a display in a fabricated stall no. B132 over an area of 36 sqm.

2. ITI participated in the INDIA TELECOM 2009, 4th International Exhibition & Conference organized by DoT/FICCI from December 3-5, 2009 at Pragati Maidan, New Delhi by putting up a display in a fabricated stall no. 18D3 over an area of 55 sqm.

EVENTS:

1. ITI signed a Memorandum of Understanding (MoU) with the Telecom Commission setting a gross sales target of Rs. 8,000 Crores for the year 2010-11 on March 15,2010.

2. Shri Gurudas Kamat, Union Minister of State for Communications and Information Technology inaugurated the new Integrated R&D laboratory at ITI Plant in Bangalore on March 17,2010.

3. Shri Ajay Makan, Union Minister of State for Home Affairs, reviewed the progress of ongoing National Population Register (NPR) project in Kochi on March 20,2010 along with the state govt, authorities of Kerala and the CPSU consortium BEL, ECIL and ITI.

4. Shri Monsieur Augustin, Minister of Telecommunication and Posts, Madagascar and his three-member team visited ITI Bangalore Plant on August 27,2009.

ENTERTAINMENT EXPENDITURE AND FOREIGN TRAVEL:

The expenditure on entertainment was NIL. Expenditure on official travel abroad by the officials of the Company amounted to Rs. 0.80 lakhs during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO:

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange

Earnings and Outgo, required to be disclosed under the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed.

PARTICULARS OF EMPLOYEES:

The statement of particulars of employees drawing remuneration of Rs.24 lakhs and above per annum or Rs.2 lakhs and above per month are required to be included in the Directors report as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Rules, 1975, as amended, areNILfor2009-2010.

AUDITORS:

Pursuant to Section 619(2) of the Companies Act, 1956, M/s. Karra & Company, Chartered Accountants, Chennai were appointed as Statutory Auditors of the Company for the year 2009-2010 by the Comptroller & Auditor General of India.

The following firms of Chartered Accountants were appointed /re-appointed as Branch Auditors for different Plants of the Company forthe year 2009-2010:-

M/s. S.R. Gupta & Co., Allahabad, Naini Plant

M/s Varier& Associates, Palakkad, Palakkad Plant

M/s Rashid Associates, Srinagar, Srinagar Plant

M/s D S Shukla & Co., Gorakhpur, Mankapur Plant

M/s S. C. Singh & Co., Rae Bareli, Plant

BOARD OF DIRECTORS:

The following changes took place in the Directorate of your Company since the last Report.

On attaining the age of superannuation, Shri Tejbir Singh, Director Marketing was relieved of his duties from the post on 31.01.2010. Shri R.K. Agarwal has assumed the charge of Director- Marketing w.e.f 09.03.2010.

Government of India, Department of Telecommuni- cations, New Delhi vide their letter No. U 38014-2/2003- FAC dated 09.03.2010 has appointed the following three dignitaries as non-official part-time Directors on the Board of ITI Limited Prof. M. Balakrishnan, Shri T.S. Narayanasami, Dr. S.K. Chaudhuri.

Consequent on attaining the age of 65 years, Shri C.K. Koshy, Special Director appointed by BIFR is relieved of his duties from the post on 25.03.2010.

Consequent on attaining age of superannuation, Shri S.K. Chatterjee, Chairman and Managing Director is relieved of his duties from the post on 31.03.2010. Shri K.L. Dhingra has taken over the charge as Chairman and Managing Director of the Company on 7th April, 2010.

Consequent on attaining age of superannuation, Shri Ravi Agarwal, Director Production is relieved of his duties from the post on 30.04.2010. Shri K.K. Gupta has assumed the charge of Director Production w.e.f 01.05.2010.

In accordance with the requirements of the Companies Act, 1956, Shri V. H. Ron, Independent Director, Shri A.K. Srivastava, Govt. Director and Lt. Gen. P. Mohapatra, Govt Director will retire by rotation at this Annual General Meeting and eligible, offer themselves for re-appointment.

Your Directors wish to place on record their appreciation of the services rendered by Shri Tejbir Singh, Shri S.K. Chatterjee, Shri Ravi Agarwal and Shri C.K. Koshy.

CORPORATE GOVERNANCE:

A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreement with the Stock Exchanges on which the Companys shares are listed, is annexed to this report

DIRECTORS" RESPONSIBILITY STATEMENT:

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state that:

(i) in the preparation of annual accounts, the applicable accounting standards have been followed and that there were no material departures.

(ii) the accounting policies adopted by Company have been applied consistently, judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March 2010 and Loss of the Company for the period ended 31.3.2010

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere thanks for the assistance and support extended by the Ministry of Communications & IT and various other Ministries of Central and State Governments viz., Karnataka, Uttar Pradesh, Kerala and Jammu & Kashmir and look

forward for their continued support and co-operation in future.

Your Directors also wish to express their gratitude for the co-operation and assistance extended by BSNL and MTNL, Banks, Suppliers, Shareholders, Bondholders, Depositors, Agents, Customers and Foreign Collaborators, Committee on Public Undertakings (COPU), Standing Committee on Public Enterprises (SCOPE) and Standing Committee on Information Technology.

Your Board also expresses its sincere thanks to the Comptroller and Auditor General of India, Chairman and Member of the Audit Board and Statutory and Branch Auditors.

Your Directors take this opportunity to place on record their appreciation for the valuable contribution made and excellent co-operation rendered by the employees at all levels for the progress and prosperity of the Company.

For and on behalf of the BOARD OF DIRECTORS

(K. L. DHINGRA)

CHAIRMAN AND MANAGING DIRECTOR

Place : Bangalore

Date : 08.09.2010

 
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