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Directors Report of Mahanagar Telephone Nigam Ltd.

Mar 31, 2014

Dear Shareholders,

The Directors present the 28th Annual Report of your Company together with the Statement of Accounts and Auditors'' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2014.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2013-14

MTNL is giving major thrust on the expansion of capacity for GSM and Broadband to cater the further demand. Actions are being taken to generate fresh demands by providing quality services, customer care & satisfaction, introduction of new services / schemes and innovative marketing strategies. Company has initiated the following upgradation / capacity building projects-

GSM / 3G services-

The present HSDPA enabled 3G network supporting download speeds up to 3.6 Mbps and uploads speed upto 384 Kbps is being upgraded to HSPA supporting download speed upto 21.1 Mbps and upload speed upto 5.76 Mbps. For meeting the enhanced Data carrying requirement of 3G network, packet core capacity will be expanded to 10 Gbps and M/W backhaul will be augmented / expanded through deployment of 100 / 200 Mbps (upgradable to 400 Mbps) Hybrid M/W systems.

RF coverage will be improved by deploying additional BTSs / Node-Bs. Initially around 1080 Node-Bs & 800 BTSs in Delhi and 1080 Nods-Bs & 566 BTSs in Mumbai are proposed to be added. Afterwards, the number of BTSs & Node-Bs will added as per requirement in phases. To reduce Capex & Opex, majority of the proposed expansion will be done on shared sites.

Tenders for augmentation / expansion of GSM / 3G & MW backhaul are under various stages of finalization.

Fixed Line -

Replacement of TDM switches with NGN/ IMS platform : MTNL has planned to replace its TDM Fixed line switches which are becoming obsolete as their induction started around 20 years back with NGN / IMS technology in phased manner. Introduction of NGN / IMS based services will not only help MTNL in saving Opex, space but also enable us to offer all data / video centric services which are currently enjoyed by Mobile subscribers to our fixed line subscribers also ultimately leading to convergence of fixed and mobile services.

For this purpose, C-DOT was allowed to conduct a field trial of its IMS Complied NGN platform solution in MTNLs Network. An MOU in this regard was also signed with CDOT. Successful field trial of C-DOT''s IMS complied NGN switches has already been completed and voice to MTNL''s FTTH subscribers, certain FIN and centrex services are being provided through this switch. Further C-DOT has been given go-ahead for trial commercial migration of one existing TDM switch of 10-20K capacity each in Delhi and Mumbai. This initiative with C-DOT will help MTNL in migration of its life expired switches without bearing any significant CAPEX burden.

(i) Deployment of FTTH services

To meet the ever increasing demand for the bandwidth MTNL is aggressively laying and extending the reach of optical fiber in its network and is deploying GPON based FTTH network. It is a centrally managed network designed to provide reliable fiber routes to cover all possible destinations within MTNL. This will help in meeting the increased bandwidth requirement for both data and video applications. The company intends to create POP on fiber within a 1 Km radius of the subscribe.

(ii) Creation of POPs on NGCN Network-

To meet the ever increasing bandwidth demand, higher level of customer satisfaction and providing wide range of services MTNL has planned to take fibre near to the subscriber and reduce the last mile copper loop length to 1-2 Kms during the 12th five year plan period. This will be achieved by creating additional 400-500 PoPs (through which data, voice, enterprise and other services will be provided to the subscribers) on the state of art NGCN (IP/ MPLS) Network which is currently having 45 and 56 POP locations in Delhi and Mumbai respectively.

FINANCIAL RESULTS FOR THE YEAR 2013-14

Sources and Application of funds for the year 2013-14 are given below:-

(In Million RS. ) 2013-14 2012-13

Income from Operations 33917.35 34286.63 Expenditure (excluding Interest & prior period Adjustments) 54802.60 78355.62 Operating Profit /(Loss) (20885.25) (44068.99) Other Income 3956.37 2854.20 Interest 13901.48 11802.60 Profit/(Loss) before Tax (30830.37) (53017.40) Exceptional Items 116209.31 0.00 Tax Provision for the Year 4971.79 0.00 Prior Period Adjustments 2155.84 193.84 Net Profit / (Loss) for the Year 78251.31 (53211.23)

Appropriation

Interim/Proposed Final dividend 0.00 0.00 Dividend Tax 0.00 0.00

Transfer to/(from):

a) Contingency Reserve 0.00 (491.29) b)Debenture Redemption Reserve 452.71 0.00

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00 Issued, Subscribed & paid-up Capital 6300.00 6300.00 Reserves & Surplus 44107.06 (34144.25) Secured and Unsecured Loan 141204.40 115386.87 Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY

Fixed Assets (Net Block) 112209.50 148991.83 Investment (Net) 2019.79 2219.79 Other Assets 156307.88 102953.39 Other liabilities 82751.39 175944.81 Capital Work-in-Progress 3825.69 9322.42

Note: Previous year''s figures have been re-grouped/re-cast wherever considered necessary.

INFORMATION REGARDING ISSUE OF BONDS BY MTNL DURING THE FINANCIAL YEAR 2013-14.

MTNL has recently issued the Third series of Bonds to the tune of RS. 765 crores on 26th March 2014 at the coupon rate of 9.39 % per annum payable semi annually. The first and second series of Bonds were earlier issued to the tune of Rs. 1005 crores on 28th March 2013 at the coupon rate of 8.57% per annum payable semi annually and Rs. 1975 crores on 05th December 2013 at the coupon rate of 9.38% per annum payable semi annually.

DIVIDEND

Since there has been no operating profit during the financial year 2013-14, the Board of Directors of your company expresses its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Ventures companies. The working of the same is as under:-

(i) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for mobile services, international long distance services and internet services. The customer base of MTML has grown to 191,262 from 141,699 of last year. The market share has crossed 15% in voice and more than 30% in ILD Sector. MTML has launched its 3 GSM Services in this fiscal year.

In the year 2013-14, it is planning to add more network elements to ensure good quality service, taking into account the capacity utilization.

MTML has achieved revenue of INR 761 Million during this fiscal year 2013-14 compare to the last fiscal year revenue of INR 522.35 Million. Despite the intense competition and market getting saturated, the company could increase its revenue. However, the net profit (before tax) has increased to INR 37.42 Million from INR 19.19 Million (before tax) in this fiscal year. MTML has completed the construction of its administrative building (Ground 7 Floors) and moved into its building from July-2014 from the rented premises.

All the expenses of the company are paid by its own internal resources and CAPEX for procurement of equipments is also met. There is no debt liability on the company.

The company is managed by CEO, CTO, CFO and 10 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

(ii) Millennium Telecom Ltd. (MTL)

MTL was formed by MTNL as its wholly owned subsidiary company basically for providing internet and other value added services in the year 2000. During the financial year 2013-14 the Board of MTL has proposed to enter into the new lines of business for increasing the revenue and making the Company profitable simultaneously. Some of the new work orders being undertaken by the company are as follows:

1. To start Bundled Services for MTNL products/services in which non-telecom components work will be executed by MTL .

2. To undertake the Data centers Leasing /Hiring of MTNL and other PSU telecos like. M/s BSNL, ITI, MSITS.

3. To undertake remote monitoring of customer network.

4. Association with MTML for various works relating to Disaster Management, Video Surveillance and other Government projects.

MTL also proposes to get ISO 9000 certification, SMSE Registration, Risk Analysis and PMT.

The Board of the company is working on the above line of business alongwith MTML and is hopeful to generate revenue in the years to come.

FINANCIAL PERFORMANCE FOR THE FINANCIAL YEAR 2013-14

MTL has suffered a Net loss of Rs. 16,97,258/- for the financial year ended 31 st March, 2014 as against the Net Loss of Rs. 20,19,378 /- last year (2012-13).The company has earned other Income (Interest from Bank Fixed Deposit) amounting to Rs. 18,39,036/- in the financial year ended 31 st March, 2014 as against Rs. 20,11,398/- last year.

(iii)United Telecommunications Ltd. (UTL)

The Joint Venture is working for providing telecom service in Nepal based on CDMA technology.

UTL has total voice customer base of more than 506,459 (As per NTA MIS report dated 14.03.2013) in number and total data customer base is more than 56,059. UTL has more than 118 personnel consisting of telecom engineers and finance professionals and other support staffs. Apart from this, more than 110 people are working through outsourcing agencies for Fault Repair Services, Customer Care and Marketing of phones, security and campaigns. The Management closely monitors the overall performance of the network, quality of services, subscriber complaints, fault rates, BTS wise traffic and ILD traffic.

The Company is sustaining its operational expenses from internal revenue generation.

During the period ending 31 st March 2014, the company has reported a net loss of INR 267.95 million after Tax.

(iv) MTNL STPI IT SERVICES LTD (MSITS)

MTNL STPI IT SERVICES LTD is a 50:50 Joint Venture company between Mahanagar Telephone Nigam Limited (MTNL) and Software Technology Parks of India(STPI). The main objective of the company is to provide data center services, messaging services, business application services etc. MSITS has established the physical infrastructure of the Data Center at Chennai and space taken on lease basis from STPI Chennai. The Data Center has server farm area of around 3400 sqft and the total investment made in this regard is of Rs. 4.77 crores.

The commercial operation of the Data Center had commenced in 2009, the Ministry of External Affairs (MEA) has hosted its Passport Seva Project at MSITS Data Center through M/s TCS. The Data center is maintaining 99.98% uptime on 24X7. At present CEO and 2 officers on deputation from MTNL are on regular payrolls of the company and other operations are maintained through outsourcing. Total revenue of MSITS for the year 2013-14 is Rs. 3.88 crores while it was Rs. 3.60 crores during the year 2012-13.

In addition, MSITS is in the process of exploring avenues for business expansion with the collaboration of various business partners of the data center industry.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2013-14 (AS ON 31ST MARCH, 2014)

Your Company has the following equipped and used capacity of Landline, GSM, WLL etc. as on 31st March, 2014:-

S. No Parameters Delhi Mumbai Total

1 Number of switches 327 236 563 2 Equipped Capacity* - - -

(a) Fixed Phones including WLL 2,433,959 2,580,392 5,014,351 Fixed Phones (b) WLL 400,000 542,230 942,230 (c) GSM 2,800,000 2,800,000 5,600,000 DLC capacity* 160,152 118,046 278,198 Digitalization % lines 100 100 200

3 DELs* 3,909,470 3,004,941 6,914,411 4 Details of Net DELs

(a) Fixed Line 1,601,739 1,940,336 3,542,075 (b) WLL-Fixed 12,935 65,434 78,369 (c) WLL-Mobile 23,158 25,720 48,878 (d) GSM 2,271,638 973,451 3,245,089

5 Broadband

(a) Subscribers 557,269 614,232 1,171,501 (b) Capacity (in ports) 788,736 845,908 1,634,644

6 Internet connection

(a) Prepaid 412 6 418 (b) Postpaid 0 879,359 879,359

7 Payphones 57,270 86,126 143,396

S. No Parameters Delhi Mumbai Total

8 ISDN 8,505 86,126 143,396

9 DLC (No) 425 523 948

10 Tax Capacity 150,000 115,200 265,200

11 Tandem Capacity 402,500 363,240 765,740

12 Optical fiber cable

(a) In Route KMs 8,563.37 7,944.19 16,507.56 (b) In Fiber KMs 268,324.58 256,030.68 524,355.26

13 Leased Circuits 12,678 35,812 48,490

14 Replacement of 31.059 15.77 46.829 PCUT Cable ( in LKCM)

"including Landline/WLL fixed, WLL Mobile & GSM

HUMAN RESOURCE DEVELOPMENT

Your Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skill of its employees are the key to achievements of its corporate mission. It has sound recruitment policy and comprehensive training system.

During the past one year, your Company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has a capability to counter threats posed by ever changing business environment and to take advantages of opportunities presented to serve ever increasing customer base.

The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose, are also focusing on eliminating any skill gap and technical obsolescence. The managements'' view on training is one of development of employee''s overall personality and enabling them in becoming a vital productive resource.

TRAINING TARGETS AND ACHIEVEMENTS

The training target and achievements for the financial year 2013-14 is given below:-

UNIT Number of Achievement Number of Man Achievement Persons Trained Days Target Target

DELHI 2390 21060 7579 MUMBAI 7020 6050 35977

TOTAL 7020 8440 21060 43556

At present MTNL has its in house two state of the art training centres one located in New Delhi and other at Mumbai.

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM), NEW DELHI

The Institute of Telecom, Technology & Management,ITTM Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction training and short duration training to its officers and employees in the field of Telecom, IT, Computer system and Management. With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started training engineering students also as part of their summer training. During the year 2013-14, ITTM has successfully trained 1266 Executives with an achievement of 5116 Man days and 1124 Non Executives with an achievement of 2463 Man days. Industrial Training were also successfully provided to 1002 Trainees with an achievement of 35877 Man days.

Revenue earned at ITTM by providing industrial training to students for the Financial Year 2013- 14 is Rs. 6737060 and revenue earned at ITTM from AAI Corporate for the Financial Year 2013-14 is Rs. 540000.

ITTM has the necessary infrastructure, technical and academic competence and excellence for providing training in specialized courses in the field of GSM, Broadband Technology, Switching, Transmission, External Plant, IT, Computer System & Management.

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGEMENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM), at Powai, Mumbai is state of art training centre of MTNL imparting technical and management training to both in- service officers & staff and to external candidates. CETTM provides training in field of Telecom, Information & Computer Technology and Management. CETTM also leases training infrastructure to corporate sector for their training requirements. CETTM is empanelled with Ministry of External Affairs and conducts Telecom and management training under ITEC/SCAPP program, sponsored by MEA, Govt. of India. CETTM has successfully completed 16 programs in FY-13-14 and trained 212 participants from different countries. Apart from the above, CETTM has successfully trained 5613 in-service personnel with an achievement of 32894 Trainee days. Moreover, there were a total of 348 Programs conducted altogether.The competition in the field of training is increasing tremendously with each passing day. Despite of the fierce competition, CETTM has earned revenue of Rs. 13.11 Cr during the financial year 2013-14 with clientele from various sectors like Telecom, BPO, Banking, Finance, Oil, Pharma, IT etc. Keeping to its tradition, CETTM has also added more than 38 new clients to its already existing long clientele. CETTM also participates in industry-academic interaction and conducts short term courses for students. 27 batches were conducted to train the students of Engineering Colleges. 402 Students were trained under Corporate Social Responsibility (CSR), while 92 students took part in one/two months Project Training works. 1870 number of Engineering College Students took part in "Industrial Visit Programme" during 2013-14. CETTM also conducted 4 new customized courses for corporate which included 102 participants. 18 senior officers from the Security Wing from Cabinet Secretariat have been trained in various Technologies of Telecommunication. CETTM has tied up with Welingkar Institute of management Development & Research for providing PostGraduate Program on Telecom Management. 29 students passed out in the first batch and the second batch with 17 Students is on and will be completing by June-2014. The efforts and the results, reiterate our commitment to the growth in terms of business, quality and customer satisfaction; and the customers have always rewarded our good work by giving us the repeated business.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the previous year, Employees Relations remained Cordial throughout the year. The Grievances/ Issues raised by the employees/Union/Associations were given due attention and regard. The cases/issues brought up by them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

A further step towards Workers Participation in critical issues concerning business endeavors and employees, a meeting was convened to share the views of recognized Unions on the various aspects of our business endeavors and issues concerning employees including pension issue.

EMPLOYEES'' WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Medical facilities, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Govt for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavoured to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates belonging to SC/ST/OBC communities as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace, special cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committees at Delhi/Mumbai. Child Care leave has also been approved by MTNL Board on 30/05/2014.

IMPLEMENTATION OF CSR AND SUSTAINABILTY ACTIVITIES/ PROJECTS IN MTNL.

A Board level CSR Committee has been constituted on 21.11.2013 as per DPE Guidelines which will oversee and coordinate the implementation of CSR and sustainability activities/ projects in MTNL. Presently, the Committee consists of the following:

1. Shri P.K. Purwar, CMD and Dir (Fin) - Head of the committee

2. Shri Sunil Kumar, Dir(HR), Member

3. Shri Sushil Kumar Shingal, Independent Director, Member

4. Shri S.R.Sayal, Secretary to the committee

CSR Policy has been approved by the Board of Directors of MTNL in its meeting held on 7th July, 2014, and the same has been posted on the website of the company.

No meeting of the Board level CSR Committee was held during Financial Year 2013-14.

MANPOWER STATUS

As on 31st March, 2014 your company had strength of employees as per details given below:-

MTNL Employees Working Strength as on 31.03.2014. Group Total Working SC ST

A 951 137 59 B 4124 520 71 c 21709 2769 391 d 9721 2216 769

Total 36505 5633 1290 TSM 18 - - Grand Total 36523 5633 1290

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. He is an officer of the rank of Joint Secretary, Govt. of India. Presently Shri Khushi Ram, IRSEE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration.

During the year 2013-14, emphasis was laid on preventive vigilance and to enhance the awareness of transparency and accountability in working by carrying out various field inspections. System improvement advice were issued by Vigilance Unit for reconciliation of Sanchaar Haats products, store verification, optimum electrical load in various buildings, proper maintenance of broadband faults, BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.

Further, training programmes/seminars on vigilance/complaints handling and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL, procedure for handling departmental proceedings and improve their working efficiency.

As per CVC instructions, the Vigilance Awareness Week was observed from 28th October to 2nd November 2013. During this week, various activities like pledge taking, release of three booklets on (i) "Promoting Good Governance - Positive contribution of vigilance" containing various circulars and initiative of CVC in promoting good governance (ii) Book containing "DO''s and DON''T and service provided by MTNL, and (iii) book on Vigilance and discipline containing E- tendering and E- procurement etc were distributed. Also quotations on anti-corruption and lectures, seminar and workshop organized. Further an interactive programme was also organized wherein Ex Special Director, CBI addressed senior officers to bring more accountability and transparency in working.

Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai with concerned GM (Vigilance) team to review the status of the cases and expedite the same. Meeting with ED & CGM ( Delhi / Mumbai / Wireless Services) were also held to apprise them of the observations made during field inspections and different types of operational complaints received by Vigilance Unit. During these meetings, CVO emphasized for further improvement in customer services offered by MTNL by taking prompt action on customer''s complaint and having customer-centric approach at all levels to enhance the credibility and brand image of the company in the minds of the customers.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme (IPP) focussed on enhancing transparency in its business transactions, contracts and procurement process. Under this MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent External Monitors being persons of eminence nominated by MTNL in consultation with Central Vigilance Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust in various Stakeholders.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS & EXPENDITURE

Information with regard to foreign exchange earnings and outgo in the Financial Year 2013-14 are as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million)

Foreign Exchange Earned 87.48 Expenditure in Foreign Currency 44.48

RISK MANAGEMENT POLICY

Risk Management Policy for the FY 2014-15 has been approved by your directors in its meeting held on 30.05.2014. Following major risk are faced by MTNL in the current competitive telecom scenario:-Market Risk, Policy and regulatory risk, Technology Risk/ Quality of Service Overstaffing Risk and Staff Costs and Manpower Risk. Details/Explanation of Risk factors are given in Management Discussion & Analysis Report for the FY 2014-15 attached in the Annual Report.

NUMBER OF MEETING OF THE BOARD IN THE FINANCIAL YEAR 2013-14

During the FY 2013-14, Eight meetings of Board of directors of your company were held.Details of Board meetings and attendance of directors in the Board meeting is given in the Corporate Governance Report attached with this Directors Report.

CORPORATE GOVERNANCE

Your Company follows the principles of effective Corporate Governance Practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (CPSEs). Quarterly Compliance Reports are regularly sent to the Stock Exchange and the DPE. A Report on Corporate Governance has been appended under separate section titled ‘Corporate Governance Reports and the same forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report as Annexure.

COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & Policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON 1 GREEN INITIATIVES IN CORPORATE GOVERNANCE

Your company will send Annual Report for the year 2013-14 by email to all the shareholders who are having valid email id account. Further your company request shareholders holding shares in electronic mode to keep their email addresses updated or provide their email addresses if not earlier provided to their DPs. Members holding shares in physical mode are also requested to update their email addresses by writing to the Registrar and Transfer Agent of the Company or directly to the Company by quoting their folio number(s).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act 1956 & Section 134(5) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 & Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis and

(e) the directors, in the case of a listed Company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating efficiently.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

ADDENDUM TO DIRECTORS'' REPORT

The replies to the points raised in the Auditors'' Report and Comments of the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956 & Section 143(5) of the Companies Act, 2013, on the Accounts of your company and the replies thereon of the Management are given in the addendum to the Directors'' Report.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year under report, the Board of Directors of your Company met frequently. In the Financial Year 2013-14, 8 (eight) no. of Board Meetings were held. Details of Board Meetings are given in Corporate Governance Report. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri P.K Purwar continued to be the Director (Fin) of the Company and was given the additional charge of CMD, w.e.f. 24.06.2014, Shri Sunil Kumar continued to be the Director (HR) of the Company, Shri Sushil Kumar Shingal continued to be the Independent Director and and V. Umashankar continued to be the Government Director respectively.

During the period under report, the following changes took place in the Directorship/Key Managerial Personnel of your Company:-

1. Shri A.K.Garg has ceased to be the CMD) w.e.f 31/05/2014.

2. Shri P.K.Purwar, Dir(Fin), was given additional charge of CMD, w.e.f. 24.06.2014.

3. Shri K.S. Bariar, has ceased to be the director of the company w.e.f. 26.08.2014 pursuant to the DoT letter No. F. No. 5-2/2013-PSA dt. 26/08/2014 and Shri Srikant Panda has been nominated as a director in his place.

The Key Managerial Personnel of your Company as on 1 st September, 2014 are:-

i) Shri P.K. Purwar, CMD & Dir(Fin)

ii) Shri Sunil Kumar, Dir(HR)

iii) Shri S.R. Sayal, Company Secretary.

AUDITORS

(1) M/s. V.K. Dhingra & Co., Chartered Accountants and M/s Arun K. Agarwal & Associate, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2013-14 and the Board has already ratified their appointment.

(2) M/s R.M.Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your company for carrying out audit under Section 233B(1) of Companies Act, 1956 and Section 148 of the Companies Act, 2013, for the records maintained under section 209(1 )(d) of Companies Act,1956 and as notified under: (i) Cost Accounting Records (Telecommuncations) Rules,2002 & (ii) Cost Audit Rules,2001. The Cost Audit Report alongwith the annexures for the year 2012-13 have been submitted to the Central Government in the Form I-XBRL format on MCA portal on 27/09/2013.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees'' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services. The Directors are hopeful that the hardwork and sincere efforts and dedicated sevices of the employees at all levels, MTNL shall maintain its position as one of the leading telecom sevice provider.

For and on behalf of the Board of Directors

sd/- (Shri P.K. Purwar) CHAIRMAN AND MANAGING DIRECTOR & DIRECTOR (FINANCE) PLACE : NEW DELHI DATE : 14th August, 2014


Mar 31, 2013

To The Shareholders of Mahanagar Telephone Nigam Limited

Dear Shareholders,

The Directors present the 27th Annual Report of your Company together with the Statement of Accounts and Auditors'' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2013.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2012-13

(i) GSM / 3G Services -

Expansion / upgradation of GSM & 3G Networks:

- The present HSDPA enabled 3G network supporting download speeds up to 3.6 Mbps and uploads speed upto 384 Kbps is being upgraded to HSPA supporting download speed upto 21.1 Mbps and upload speed upto 5.76 Mbps. For meeting the enhanced Data carrying requirement of 3G network, packet core capacity will be expanded to 10 Gbps and M/W backhaul will be augmented / expanded through deployment of 100 / 200 Mbps (upgradable to 400 Mbps) Hybrid M/W systems.

- RF coverage will be improved by adding additional BTSs / Node-Bs. Initially around 580 Node-Bs & 300 BTSs in Delhi and 350 Nods-Bs & 200 BTSs in Mumbai.

Note: Tenders for augmentation / expansion of GSM/ 3G & M/W backhaul are under various stages of finalization.

(ii) Fixed Line -

Replacement of TDM switches with NGN / IMS platform: MTNL has planned to replace its TDM Fixed line switches which are becoming obsolete as their induction started around 20 years back with NGN / IMS switch in phased manner during 12th Five year plan. Introduction of NGN / IMS based services will not only help MTNL in saving space & Opex but also enable it to offer all data / video centric services currently enjoyed by Mobile subscribers, to its fixed line subscribers also. This will also lead to convergence of fixed and mobile services. C-DOT''s NGN / IMS platform has been deployed after being successfully tested. Presently, voice services to FTTH subscribers are being provided from this platform.

(iii) Deployment of FTTH Services (Directly and through franchisee model on revenue share basis) MTNL is adding optical fibre in its access network and is deploying FTTH based on GPON. This will enable MTNL to provide Fiber at the door steps of its esteemed customers & thereby giving access to high bandwidth applications like HDTV, VoD & very high speed data etc.

(iv) Deployment of NGCN (IPMPLS) Network:

After the conclusion of CWG-2010 held in Delhi, the state of art IP/ MPLS equipment has been redeployed at different locations in Delhi & Mumbai for creating high capacity IP Bandwidth. With this redeployment the POP locations on IP/MPLS network has increased to around 45 in Delhi & 56 in Mumbai from existing POP of 11 in Delhi & 12 in Mumbai thus bringing IP closer to the customers and helping reducing the local copper loop length to 1- 2 kms as targeted during 12th five year plan. The services to the customers are expected to improve considerably with the reduction in the copper loop length.

FINANCIAL RESULTS

Sources and application of funds for the year 2012-13 are given below:-

(In Million Rs.)

2012-13 2011-12

Income from Operations 34286.63 33732.53

Expenditure (excluding Interest & prior period Adjustments) 78355.62 67200.21

Operating Profit /(Loss) (44068.99) (33467.68)

Other Income 2854.20 2511.64

Interest 11802.60 9491.62

Profit/(Loss) before Tax (53017.40) (40447.66)

Tax Provision for the Year 0.00 0.00

Prior Period Adjustments 193.84 650.18

Net Profit / (Loss) for the Year (53211.23) (41097.84)

Appropriation

Interim/Proposed Final dividend 0.00 0.00

Dividend Tax 0.00 0.00

Transfer to/(from):

a) Contingency Reserve (491.29) (189.85)

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00

Issued, Subscribed & paid-up Capital 6300.00 6300.00

Reserves & Surplus (34144.25) 19066.97

Secured and Unsecured Loan 115386.87 96474.93

Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY

Fixed Assets (Net Block) 148991.83 157601.75

Investment (Net) 2219.79 4919.79

Other Assets 102971.04 97579.89

Other liabilities 175962.46 147229.47

Capital Work-in-Progress 9322.42 8969.95

Note: Previous year''s figures have been re-grouped/re-cast wherever considered necessary.

ISSUE OF 8.57% REEDEMABLE NON CONVERTIBLE BONDS ON PRIVATE PLACEMENT BASIS.

MTNL has issued 8.57% Semi- Annual , Unsecured, Government Guarantee Redeemable, Non Covertible, Bonds in the nature of debentures on private placement basis on 28-03-2013 amounting to Rs. 1,005 crores. The said bonds are redeemable after 10 years i.e. on 28-03-2023.

DIVIDEND

Since there has been no operating profit during the financial year 2012-13, the Board of Directors of your company expresses its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Ventures companies.The working of the same is as under:-

(i) Millennium Telecom Ltd. (MTL)

MTL was formed by MTNL as its wholly owned subsidiary company basically for providing internet and other value added services. During the financial year 2012-13, MTL has no revenue from operations. The Board of MTL has decided that MTL may bid in consortium/JV with MTNL leveraging on financial and experience strength of MTNL, where MTNL may be the lead partner and MTL be the Technical or support partner or vice-versa as the requirement may be. For this it has been decided that a standard consortium/JV agreement will be signed between the two companies. MTL may be permitted to participate in any tender in consortium/JV with MTNL, where profitability is 5% or more. For projects, having profitability less than 5%, permission of MTNL management shall be sought by MTL on case by case basis. Further the Board of MTL has decided to request MTNL to allow MTL to participate in the various tenders floated by it after giving MTL preferential treatment like exemption from payment of Tender document fee, EMD and Performance Bank Guarantee, exemption/relaxation in eligibility requirement on Financial, Experience or any other eligibility criteria defined in any tender. MTL is also planing to take sales & distribution of MTNL''s Products & Services and enter into FTTH Service, segment of MTNL on revenue share Model.

In addition, MTL will look forward to take any turnkey project for providing telecom solutions to any customer within India & overseas market and offer consultancy Service in Telecom domain.

The Board of MTL is working on the above line of business and is hopeful to generate revenue in the years to come.

(ii) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL and is operational only in Mauritius. The company is having license for providing mobile services, international long distance services and internet services. The company initially started its operations with CDMA technology and in November, 2011 launched its GSM network of 100K lines capacity. During the year 2012-13, MTML successfully marketed the GSM services with attractive offerings and could add more than 70,000 GSM subscribers. With international roaming connectivity with around 200 networks, MTML has been able to make GSM as its main line of business in less than 18 months of its operation. The total subscriber base, including the old CDMA network, ILD and ISP was 141,699 as on 31st March''13. The company is upgrading the GSM network and plans to launch 3G services in the year 2013-14. It is also adding more network elements to ensure good quality service, taking into account the capacity utilization.

MTML has achieved a turn-over of INR 522 Million during the fiscal year 2012-13 compared to the last fiscal year turn-over of INR 475 Million, through these telecom services. Despite the intense competition and market getting saturated, the company could increase its revenue. However, the net profit was decreased to INR 19 Million (before tax) in this fiscal year compared to last fiscal year''s net profit (before tax) of INR 54 Million due to increased depreciation as new GSM network has been added. MTML''s own building (Ground 7 floors) in Cyber City, is almost ready and will be available for use and leasing out by June''13.

All the expenses of the company are paid by its own internal resources and CAPEX for procurement of equipments is also met. There is no debt /liability on the company.

The company is managed by CEO, CTO, CFO and 9 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

(iii) United Telecommunications Ltd. (UTL)

The joint venture is working for providing telecom sevices in Nepal.

UTL has a total customer base of more than 6,98,298 (As per NTA MIS Report dated 13.4.2013) in numbers and the PCOs are 1,005. UTLs engineering team follows the O & M procedures scrupulously thereby ensuring fault free network round the clock. The Management closely monitors the overall performance of the network, quality of services, subscriber complaints, fault rates, BTS wise traffic and ILD traffic.

The company is sustaining its entire operations from internal revenue generation only. Monthly OPEX including the interest payments, IUC charges, etc are fully met from its internal accruals.

During the period ending 31st March 2013 (2012-13), the company has reported a net loss of INR 84.68 million.

(iv) MTNL STPI IT SERVICES LTD (MSITS)

The main objective of the company is to provide data center services, messaging services, business application services etc. In order to implement the objectives, MSITS has established the physical infrastructure of the Data Center at Chennai and space taken on lease basis from Software Technology Prices of India (STPI). The Data Center has server farm area of around 3400 sqft and the total investment made in this regard is of Rs. 477 lakhs. The Data center is maintaining 99.98% uptime on 24 X 7.

The commercial operation of the Data Center had commenced in 2009, the Ministry of External Affairs (MEA) has hosted its Passport Seva Project at MSITS Data Center through M/s TCS.

Total revenue of MSITS for the year 2012-13 is Rs. 3.60 crores while it was Rs. 2.97 crores during the year 2011-12.

In addition to the existing facility at Chennai, MSITS is in the process of setting up the Green Data Centre (GDC) in the area of about 10000 sqft each at Hyderabad and New Delhi on Public-Private Partnership (PPP) model. MSITS has appointed a consultant for assistance and RFP has been floated for selecting Industry Partner (IP).

SYSTEM STATUS AS ON 31ST MARCH, 2013

Your Company has the following equippped and used capacity of Landline, GSM, WLL etc. as on 31st March, 2013:-

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2012-13 (31.03.2013)

S. No Parameters Delhi Mumbai Total

1 Number of switches

2 Equipped Capacity 6,223,831 5,912,854 12,136,685

(a) Fixed Phones including WLL 2,648,831 2,570,624 5,219,455 Fixed Phones

(b) WLL 550,000 542,230 1,092,230

(c) GSM 3,025,000 2,800,000 5,825,000

DLC capacity 160,152 118,046 278,198

Digitalization % lines 100 100 200

3 DELs* 4187447 4,271,953 8,459,400

4 Details of Net DELs

(a) Fixed Line 1,593,551 1,866,498 3,460,049

(b) WLL-Fixed 15,909 68,707 84,616

(c) WLL-Mobile 68,957 25,836 94,793

(d) GSM 2,509,030 2,310,912 4,819,942

5 Broadband

(a) Subscribers 521,278 597,664 1,118,942

(b) Capacity (in ports) 788,448 845,908 1,634,356

6 IPTV 13,348 3,393 16,741

7 Internet connection 416 879,262 879,678

8 (a) Prepaid 416 45 461

(b) Postpaid 0 879,217 879,217

9 Payphones 59,646 90,649 150,295

10 ISDN 8,604 15,437 24,041

11 DLC (No) 425 523 948

12 Tax Capacity 150,000 115,200 265,200

13 Tandem Capacity 402,500 363,240 765,740

14 Optical fiber cable

(a) In Route KMs 8,501.66 7,843.24 16,344.90

(b) In Fiber KMs 266,956.12 252,583.13 519,539.25

15 Leased Circuits 12,766 36,860 49,626

16 Replacement of 31.059 15.711402 46.770402 PCUT Cable ( in LKCM)

*including WLL fixed, WLL mobile & GSM

HUMAN RESOURCE DEVELOPMENT

Your Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skill of its employees are the key to achievements of its corporate mission. It has sound recruitment policy and comprehensive training system.

During the past one year, your Company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has an capability to counter threats posed by ever changing business environment and to take advantages of opportunities presented to serve ever increasing customer base.

The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose, are also focusing on eliminating any skill gap and technical obsolescence. The managements'' view on training is one of development of employee''s overall personality and enabling them in becoming a vital productive resource.

TRAINING TARGETS AND ACHIEVEMENTS

The Training Targets and Achievements for the Financial year 2012-13 is given below:-

UNIT Number of Achievement Number of Man Achievement Persons Trained Days Target Target

DELHI 3137 27349 35004

7500

MUMBAI 4498 15137

TOTAL 7500 7635 27349 50141

At present MTNL has its in house two state of the art training centres one located in New Delhi and other at Mumbai.

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM ) SHADIPUR, NEW DELHI

The Institute of Telecom, Technology & Management,ITTM Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction training and short duration training to its officers and employees in the field of Telecom, IT, Computer system and Management. With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started training engineering students also as part of their summer training.During the year 2012-13, ITTM has successfully trained 2209 in-house personnel with an achievement of 11811 Man days. Industrial Training were also successfully provided to 928 Trainees with an achievement of 23193 Man days.

ITTM has the necessary infrastructure, technical and academic competence and excellence for providing training in specialized courses in the field of GSM, BroadbandTechnology, Switching, Transmission, External Plant, IT, Computer System & Management.

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM) is situated at Technology Street, Hiranandani Garden, Powai,Mumbai. The competition in the field of training is increasing tremendously with each passing day. Despite of the fierce competition, CETTM has successfully shown a net revenue of 12.75 Cr during the financial year 2012-13 with clientele from various sectors like Telecom, BPO, Banking, Finance, Oil, Pharma, IT, etc. Keeping to its tradition, CETTM has also added more than 36 new clients to its already existing long clientele. Two new courses were designed & launched for Engineering College students. 30 batches were conducted to train the students of engineering colleges. 708 students were trained under Corporate Social Responsibility (CSR), while 82 students took part in one/two months Project training works/ Industrial training to students of various Engineering colleges during 2012-13.

Under ITEC -SCAAP program, sponsored by MEA, Govt. Of India, CETTM has successfully completed 18 programs and launched 3 new courses in T elecom, IT & Management streams.

Apart from the above, CETTM has successfully trained 5857 in-house personnel with an achievement of 34840 Trainee Days. Moreover there was a total of 332 Programmes conducted altogether.

CETTM has also introduced 6 new customised courses for corporates which included 89 participants. It also tied up with Welingkar Institute for providing Post Graduate Program on Telecom Management.

CETTM was also engaged in some other business like leasing of 2200 sq ft space on ground floor to Karnataka Bank, opened its Auditorium for commercial use & conducted two Telecom Trainings for the Training Centre faculty staff and officers from IT Ministry Afghanistan.

The efforts and the results, reiterate our commitment to the growth in terms of Business, Quality and Customer Satisfaction; and the Customers have always rewarded our good work by giving us the repeated business.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the previous year, Employees Relations remained Cordial throughout the year. The Grievances/ Issues raised by the employees/Union/Associations were given due attention and regard. The cases/issues brought up by them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

A further step towards Workers Participation in critical issues concerning business endeavors and employees, a JNC meeting was convened to share the views of recognized Unions on the various aspects of our business endeavors and issues concerning employees.

EMPLOYEES'' WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Medical facilities, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Govt for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavoured to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates belonging to SC/ST/OBC communities as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace, special cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committees at Delhi/Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

As per Guidelines issued by Department of Public Enterprises F no. 15(3)/2007-DPE (GM) dt 9th April 2010 loss making Companies are not mandated to earmark specific funding of CSR activities. Hence, no specific allotment is made under CSR head considering the financial results of the Company for the year.

Some of the Activities which have been carried out in MTNL keeping the CSR initiative in mind are:-

- Concession/Rebate to Senior citizens, handicapped persons, freedom fighters, Gallantry Award winners, war widows / disabled persons in Plan 250 of MTNL landline subscribers.

- Concession to Non Residential telephone in Schools / Universities/ Institutions/ Homes for aged/ orphanges recognized by the Government.

- For social cause, SMS blasts on Polio, Income Tax Return, Issues related to Human Rights Commission etc are carried out.

- Advertisement released in the souvenirs of NGO''s, etc working for physically and mentally challenged persons, women empowerment, etc.

- Organizing MTNL Perfect Health Mela & Free Health checkups.

MANPOWER STATUS

As on 31st March, 2013 your company had strength of employees as per details given below:- MTNL Employees working strength as on 31.3.2013.

Group Working SC ST

A 1028 144 55

B 4463 550 83

C 23331 3844 422

D 10423 2445 806

Total 39245 6983 1366

TSM 19 - -

Grand Total 39264 6983 1366

VIGILANCE

The Vigilance Department of MTNL is headed by Chief Vigilance Officer. He is an officer of the rank of Joint Secretary, Govt. of India and is appointed by Deptt of Personnel & Training (DOPT) with the concurrence of CVC for a period of 3 years extendable upto 5years. Presently Shri Khushi Ram, IRSEE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration. During the year 2012-13, emphasis was laid on preventive vigilance for enhancing the awareness of transparency and accountability in working by carrying out various field inspections. System improvement advice were issued by Vigilance Unit for reconciliation of Sanchaar Haats products, store verification, optimum electrical load in various buildings, proper maintenance of broadband faults, BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.

Further, training programmes/seminars on vigilance/complaints handling and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL, procedure for handling departmental proceedings and improve their working efficiency.

As per CVC instructions, the Vigilance Awareness Week was observed from 29-10-12 to 03- 11-12. During this week, various activities like pledge taking, release of booklet on "T ransparency in Public Procurement" containing "DO''s and DON''T, vigilance angle, quotations on anti- corruption" for internal circulation, display of posters related to honesty and integrity were carried out. An interactive programme was organized wherein special Director, CBI addressed senior officers of MTNL with more emphasis on bringing accountability and transparency in file notings/ working.

Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai with concerned GM (Vigilance) team to review the status of the cases and expedite the same and with ED( Delhi / Mumbai / Wireless Services) to apprise them of the observations made during field inspections and different types of operational complaints received by Vigilance Unit. During these meetings, CVO emphasized for further improvement in customer services offered by MTNL by taking prompt action on customer''s complaint and having customer-centric approach at all levels to enhance the credibility and brand image of the company in the minds of the customers.

INTEGRITY PACT PROGRAMME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme (IPP) focussed on enhancing transparency in its business transactions, contracts and procurement process. Under this MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent External Monitors being persons of eminence nominated by TII in consultation with Central Vigilence Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust and has the full support of CVC.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS & EXPENDITURE

Information with regard to foreign exchange earnings and outgo in the Financial Year 2012-13 are as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million) Foreign Exchange Earned 39.50

Expenditure in Foreign Currency 30.79

CORPORATE GOVERNANCE

Your company follows the principles of effective Corporate Governance Practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (PCSEs). Quarterly Compliance Reports are regularly sent to the Stock Exchange and the DPE. A Report on Corporate Governance has been appended under separate section titled ''Corporate Governance Report ''and the same forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and DPE Guidelines is attached to this report as Annexure.

COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE"

Your company will send Annual Report for the year 2012-13 by email to all the shareholders who are having valid email id account. Further your company request shareholders holding shares in electronic mode to keep their email addresses updated or provide their email addresses if not earlier provided to their DPs. Members holding shares in physical mode are also requested to update their email addresses by writing to the Registrar and T ransfer Agent of the Company or directly to the Company by quoting their folio number(s).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

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

(iv) They had prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

ADDENDUM TO DIRECTORS'' REPORT

The replies to the points raised in the Auditors'' Report and Comments of the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956 on the Accounts of your company and the replies thereon of the Management are given in the addendum to the Directors'' Report.

DIRECTORS

During the year under report, the Board of Directors of your Company met frequently. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri A.K.Garg continued to be the CMD of the company. Shri Sushil Kumar Shingal and Shri K.S. Bariar continued to be the Independent Director and the Government Director respectively.

During the period under report, the following changes took place in the Directorship of Your Company:-

1) Shri S.P.Pachauri has ceased to be the Director (HR) w.e.f 31/10/2012.

2) Shri Malay Shrivastava has ceased to be the Govt. Director w.e.f 14/02/2013.

3) Shri V.Umashankar has been appointed as the Govt. Director w.e.f. 15/03/2013.

4) Shri Vijay Aggarwal, Shri T.S.Narayanasami & Shri Rajan Saxena have ceased to be the Directors w.e.f 30/03/2013.

5) Shri Kuldip Singh has ceased to be the Director (Tech) w.e.f 01/04/2013.

6) Smt. Anita Soni has ceased to be the Director (Finance) w.e.f 31/05/2013.

7) Shri P.K.Purwar has been appointed as the Director(Finance) w.e.f. 01/06/2013

8) Shri Sunil Kumar has been appointed as the Director(HR) w.e.f. 21/06/2013

AUDITORS

(1) M/s. V.K.Dhingra & Co., Chartered Accountants and M/s Arun K. Aggarwal & Associate, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2012-13 and the Board has already ratified their appointment.

(2) M/s R.M.Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your company for carrying out audit under section 233B(1) for the records maintained under section 209(1 )(d) of Companies Act, 1956 and as notified under: (i) Cost Accounting Records (Telecommuncations) Rules,2002 & (ii) Cost Audit Rules,2001. The Cost Audit Report alongwith the annexures for the year 2011-12 have been submitted to the Central Government in the XBRL format on MCA portal on 26/03/2013.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees'' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services. The Directors are hopeful that the hardwork and sincere efforts and dedicated sevices of the employees at all levels, MTNL shall be able to return to its original position of a profit making Company.

For and on behalf of the Board of Directors

sd/-

(A.K. Garg)

CHAIRMAN AND MANAGING DIRECTOR

PLACE : NEW DELHI

DATE : 13th August, 2013


Mar 31, 2011

Dear Shareholders,

The Directors present the 25th Annual Report of your Company together with the Statement of Accounts and Auditors' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2011.

While India is widely acknowledged as the world's fastest growing telecom market, it enjoys around 60 per cent teledensity. Thus, there is still good margin for growth as far as Pan India operations are concerned. However, since the operations of your company are limited to Delhi & Mumbai, where teledensity is much higher we also need to find out other means to grow. To ride this enormous boom and retain our strong competitive advantage, we have launched a whole new range of services with aggressive and innovative tariff plans. These pathbreaking initiatives will not only broaden our subscriber base but also offer our millions of customer's real choice in Landline, CDMA and GSM (2G &3G) networks.

The advent of broadband has revolutionized back office functions across the world. As a leader in the converged telecom space, the stage is set for us to drive this process of change, and to capture the market with ogr unique network and IT infrastructure facilities, bundled value added services and strong project management.

We remain committed to build MTNL into a World Class Service Provider, known for its standards of quality, operational performance and efficiency and admired for its record of consistently treating value for all.

FINANCIAL RESULTS

Sources and application of funds for the year 2010-11 are given below.-

(In Million Rs.)

2010-11 2009-10

Income from Services 36739.52 36561.00

Expenditure (excluding 63148.03 84754.69

Interest & prior period Adjustments)

Operating Profit/(Loss) (26408.51) (48193.69)

Other Income 3180.44 14017.23

Interest 4519.46 12.61

Profit/(Loss) before tax (27747.53) (34189.07)

Tax provision for the year 1.91 (3551.14)

Prior Period Adjustments 269.71 (4528.21)

Net Profit / (Loss) for the year (28019.15) (26109.72)

Appropriation

Interim/Proposed final dividend 0.00 0.00

Dividend Tax 0.00 0.00

Transfer to:

a) Contingency Reserve 0.00 0.00

b) Reserve for R&D 0.00 0.00

c) General Reserve (25631.20) 0.00

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00

Issued, Subscribed & paid-up Capital 6300.00 6300.00

Reserves & Surplus 60164.81 111714.10

Secured and unsecured loan 74556.75 0.00

Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY

Fixed Assets (Net Block) 163230.30 165549.76

Investment 4946.58 5095.37

Net Current Assets (38693.47) (87940.76)

Deferred Revenue Expenditure 0.00 0.00

Capital Work-in-Progress 11538.15 11779.60

Note: Previous year's figures have been re-grouped/re-cast wherever considered necessary.

DIVIDEND

Since there has been no operating profit during the financial year 2010-11, the Board of Directors of .your company expressed its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Vjentures companies namely:-

(i) Millennium Telecom Ltd. (MTL):

MTL was originally formed by MTNL as a wholly owned subsidiary company basically for providing internet and other value added services in the year 2000. In the year 2008, MTL had planned to lay sub-marine cable (under sea cable) from Indian Coasts to Middle East and then to Europe. The DOT had directed MTNL to take BSNL as 50% partner in the said project. MTL being 50:50 Joint Venture of MTNL and BSNL had invited Global Tender for laying of Submarine Cable. However, because of decline in bandwidth prices, high cost of laying the cable, various operational and financial reasons, the Board of MTL had cancelled the tender in 2010.

The Board of MTL has decided to enter into new line of business which could be telecom related as well as other areas.

(ii) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for fixed telephone service, mobile service, international long distance services and internet services. During the year 2010-11, MTML's ©customer base has increased from 104,032 (as on 31/3/2010) to its 108,886 (almost full) on 31/03/2011, out of its equipped capacity of 110K. The company is managed by CEO, CTO, CFO and 10 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

MTML continued to provide telecom services viz., Fixed Wrieless Phone, Mobile (Post paid & Prepaid), Internet Services through Fixed Wireless Phones, High Speed Data cards and International Long Distance Call Services through CAC,VCC/ACC cards. MTML has achieved a turn-over of INR 499 Million during this fiscal year 2010-11 compared to the last fiscal year turn-over of INR 389 Million through these telecom services(an increase of 28.2%). MTML has earned a net profit of INR 43 Million (before tax) in this fiscal year compared to last fiscal year's net profit (before tax) of INR 9.6 Million.(increase of 347%)

During this fiscal year, MTML has completed the High-speed Data connectivity through expansion of the EVDO network all over the island by augmenting its resources from 15 BTS to 53 BTS. The Acceptance & Testing is under progress and the services are planed to be launched in the first quarter of the fiscal year 2011-12. As the existing capacity of the CDMA is already fully utilised, the network expansion through new integrated switch for GSM & CDMA was carried out and the installation has commenced in Nov-2010 and the GSM services are planned to be launched in the fiscal year 2011-12.

During this year 2010-11, MTML has constructed its own technical building of two floors to house its technical installations at a cost of INR 20 Million. The paid-up capital of the company is enhanced from INR 854.12 Million to INR 1052 Million.

(iii) United Telecommunications Ltd. (UTL)

The joint venture was incorporated in the year 2001 under the Companies Act of Nepal. UTL has a total customer base of more than 5, 74,339 in numbers and the PCOs are 1223. UTLs engineering team follows the O & M procedures scrupulously thereby ensuring fault free network round the clock. The Management closeJy monitors the overall performance of the network. The quality of services, parameters, subscriber complaints, fault rates, BTS wise traffic and ILD traffic are continuously kept under watch.

The company is sustaining its entire operations from internal revenue generation only. Monthly OPEX including the interest payments, IUC charges, repayment of term loan etc are fully met from its internal accruals.

During the period ending 31st March 2011 (2010-2011), the company has reported a net profit of INR 73,456,410.

(ii) MTNLSTPI IT Services Ltd. (MTNLSTPI)

The Joint Venture was incorporated on 31/03/2006 under the Companies Act, 1956, with authorized Capital of Rs. 50 crores.The main objective of the JV Company is to provide exclusive data center services, messaging services, business application services to the identified sectors of economic activity and thereby also popularizing the "India.in" domain.

In order to implement the above said activities, the JV Company has taken space of around 11000 sq.ft Super Built-up areas from STPI-Chennai and established a physical infrastructure of Tier-Ill Data Centre.

The commercial exploitation of the data centre has already commenced in 2009 and the Ministry of External Affairs (MEA) has hosted its Passport Seva Project through M/s TCS.

Keeping in view of smooth operation and expansion needs of the Data Center, MSITS created suitable infrastructure components like LT extension panel, UPS panel, PAC panel and Server DB which were installed and integrated in the live Data Center. Also MSITS is in the process of doing the caging in the Data center to support other collocation requirements.

In addition the existing facility at Chennai, it has been planned to setup Green Data Centers at Hyderabad and New Delhi. In this regard a space of around "lOOOOsq.ft and8000 sq.ft area have been identified at Narela New Delhi and Solitaire Building, Madhapur, Hyderabad respectively. MSITS has floated RFP and identified consultant for establishing Green Data Center.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2010-11 (31.03.2011)

S. No Parameters Delhi Mumbai Total

1 Number of switches 352 222 574

2 Equipped Capacity 6346995 6544315 12891310

(a) Fixed Phones including WLL

Fixed Phones 2771995 2677085 5449080

(b) WLL 550000 542230 1092230

(C) GSM 3025000 3325000 6350000

DLC capacity 160152 119006 279158

Digitalization % lines 100 100 100

3 DELS* 4189680 4753433 8943113

4 Details of Net DELs

(a) Fixed Line 1546432 1917537 3463969

(b) WLL-Fixed 27671 89508 117179

(o) WLL-Mobile 109598 52892 162490

(d) GSM 2505841 2693496 5199337

5 Broadband

(a) Subscribers 426772 515545 942317

(b) Capacity (in ports) 786192 836980 1623172

6 IPTV 10172 4018 14190

7 VOIP 2466 2661 5127

8 Internet connection 621083 878007 1499090

(a) Prepaid 20184 818 21002

(b) Postpaid 600899 877189 1478088

9 Payphones 65237 110320 175557

10 ISDN 8796 16936 25732

11 DLC (No) 425 523 948

12 Tax Capacity 150,000 155,200 305,200

13 Tandem Capacity 402,500 432,460 834,960

14 Optical fiber cable

(a) In Route KMs 8129.98 7195.25 15325.23

(b) In Fiber KMs 251610.37 215523.76 467134.13

15 Leased Circuits 14897 39775 54672

16 Replacement of PCUT Cable (in LKCM) 30.78 15.711402 46.491402

'including WLL fixed, WLL mobile & GSM

HUMAN RESOURCE DEVELOPMENT

The Telecom industry in India is undergoing through a volatile phase and fate of the organization is being written and re-written everyday. In the recent past, we have identified Human Resources as one of the strategic partners for rapid business strides leading to success in all strata of our operations. During last fiscal also we continued Our endeavors towards world standards HR policies.

We have always considered our Manpower as one of our greatest assets and this is what differentiates MTNL from its competitors. We have a strong manpower base of 43311 with wide array of Technical and Managerial aptitudes and also talented supporting staff having exposure to state of the art technologies prevailing in Telecom Industry in the world. As a step towards restructuring of our manpower we have adopted dual pronged strategy, viz., at one end we have recruited young and talented professionals in areas like Telecom, Finance, HR, Marketing, Law and on the other hand we have taken steps towards rightsizing of the organization by offering VRS. Almost 4000 employees were separated through 03 VRS, During 2003 to 2006

Thus fine-tuning our existing manpower mix in terms of age, qualification, and aptitude to meet the demands posed by the changing Business Environment and to take advantage of the opportunities presented to serve ever-increasing customer base"

TRAINING PROGRAMME

Our company has been conducting training programme for new recruited executives Trainees in the field of Telecom, Finance, Marketing, HR, Legal regularly at CETTM.

CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CEETTM)

Our dream for having a world-class in house Training Centre furthered one step when CETTM (Centre of Excellence in Telecom Training & Management) was awarded ISO 9001:2000 certification. CETTM is slowly taking the lead role and becoming the nodal center for HRD. Induction Training programme for newly recruited executive Trainees in the field of Telecom, Finance, Marketing, HR, Legal have been conducted at CETTM. Inhouse training programmes are also conducted for executives and non executives at ITTM (Institute of Telecom Training and Management) located at Shadipur, New Delhi.

CETTM has started generating revenues by leasing out infrastructure and providing training to other organizations of repute.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony based on healthy Employee Relations, like the previous year prevailed throughout the year. The Grievances/Issues raised by the employees/Union/ Associations was given due attention and regard. The cases/issues brought up by them were settled through regular meetings ad interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them. Recently we have signed wage agreement with recognised unions for a period of 10 years effective from 1/1/2007.

A further step towards Worker's Participation in critical issues concerning business endeavors, a special Joint Negotiation Committee meeting was convened to share the views of recognized Unions on the various aspects of pur business endeavors and to obtain opinion from them in further improving the same.

EMPLOYEES'WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Housing, Medical facilities, Scholarships to wards of employees, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Government for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavored to fulfill all the statutory requirements with regard to , implementation of reservation policy for candidates belonging to SC/ST/OBC communities and as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace Special Cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committee at Delhi/Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

MTNL has made a provision of temporary cct 8 Mbps for a period of 15 days for DCP (Communication) for organising Bhagidari Fair at Pragati Maidan, New Delhi, free of cost in the interst of Public. The actual cost incurred by MTNL was Rs. 501880/-. MTNL has also taken other intiatives like free SMS's regarding pulse polio, other messages of social activities of general awareness of the public, etc.

MANPOWER STATUS

As on 31st March 2011 your Company had a strength of employees as per details given next page:-

MTNL Employees working strength as on 31.3.2011.

Group Working SC ST

A 1183 208 52

B 5110 724 105

C 25536 4432 498

D 11459 2656 863

Total 43288 8020 1518

DRM 23 0 0

Grand Total 43311 8020 1518

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. He is ah officer of the rank of Joint Secretary, Govt, of India. Presently Shri Khushi Ram, IRSSE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration. During the period 2010- 11 emphasis was laid on efficiency and transparency in working and various steps were taken to empower customer oriented services of the organization. Training programmes/seminars and workshops have been conducted during the period to update the knowledge and skills of the officers working in vigilance.

The Vigilance Awareness Week was celebrated from 25.10.10 to 1.11.10. During this week various activities like display of banners, pledge taking, release of booklets on DO'S and DON'T'S for internal circulation in MTNL and display of pamphlets related to anticorruption on notice board were observed.A guest lecture was delivered by Joint Director (Policy) CBI North Block on 28.10.10 during vigilance awareness week. As per directions of Central Vigilance Commission, SMS was sent to mobile users of MTNL for lodging complaint at toll free no 1800-11-0180. Interaction with field staff and customers was undertaken to further improve the customer services.Information booklets indicating various services provided by MTNL were distributed to customers through Sanchar Haats. Monthly vigilance meetings were held regularly at Delhi and Mumbai to monitor the progress of Vigilance/Disciplinary cases and remedial action was taken for timely settlement of the case. Regular inspections were carried out by Vigilance officers and corrective action suggested whenever required. The training on Vigilance and Disciplinary proceedings courses were conducted on 19.7.10 to 23.7.10 and 6.12.10 to 10.12.10. The seminars on different activities were also organized. To maintain the transparency in procurement, the e -tendering system has been introduced.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS

Information with regard to foreign exchange earnings and outgo is as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million)

Earned: 37.30

Expenditure in Foreign Currency 34.52

CORPORATE GOVERNANCE

Your company follows the principles of effective corporate governance practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with; the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises, Government of India for Government Companies. A Report on Corporate Governance has been appended under separate section titled ' Corporate Governance Report' and forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and DPE Guidelines is attached to this report.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE"

The Company is in the process of implementing the "Green Initiative" as per Circular No. 17/ 2011 dated April 21, 2011 and Circular No. 18/2011 dated April 29, 2011 issued by Ministry of Corporate Affairs to enable electronic delivery of notices/documents and annual report to shareholders and as per the said circular. Henceforth all notices etc. shall be issued electronically.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) they have .selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(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 and for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

COMMENTS OF C & AG ON THE ACCOUNTS

Comments of C&AG and management replies thereto are given as an Annexure to the Directors' Report. '

DIRECTORS

During the year under report, the Board of Directors of your Company met frequently. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri Kuldip Singh continued to be Director (Technical) and Chairman and Managing Director of MTNL, Smt. Anita Soni continued to be the Director (Finance) of the Company and Shri S.P.Pachauri continued to be the Director (HR) of the Company respectively. Shri Adit Jain, Shri V.S.Iyer, Shri Rajan Saxena, Shri T.S.Narayanasami and Shri Vijay Aggarwal continued to be the Independent Directors of the Company.

During the period under report, the following changes took place in the Directorship of Your Company:-

1. Smt. Usha Sahajpal ceased to be director of the company w.d.f 30/04/2011.

2. Shri N.K.Joshi, DDG (SU), Department of Telecommunications (DOT) was appointed as a Director w.e.f. 12/08/2010 and ceased to be a Director w.e.f 10/08/2011.

3. Shri Malay Shrivastava, Joint Secretary (Telecom), DOT has been appointed as a Government Director in place of Shri N.K.Joshi ,DDG(SU), DOT w.e.f. 10/08/2011.

4. Smt. Nirmala Pillai, Senior DDG (WPF), DOT has been appointed as a Government Director w.e.f. 10/08/2011.

The Board placed on record its deep appreciation for the valuable services and contribution made by Smt. Usha Sahajpal and Shri N.K.Joshi during their tenure-as Director on the Board of MTNL.

AUDITORS

M/s. Bansal Sinha & Co., Chartered Accountants and M/s.Goel Garg & Co., Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2011-12 and the board has already ratified their appointment. They were our Statutory Auditors for the Financial Year 2009-10 and 2010-11 also.

v ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services.

For and on behalf of the Board of Directors

sd/-

(Kuldip Singh)

CHAIRMAN AND MANAGING DIRECTOR

PLACE : NEW DELHI

DATE: 10th August, 2011



 
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