Home  »  Company  »  T Nadu Telecom L  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Tamil Nadu Telecommunications Ltd.

Mar 31, 2015

1. The Company is having a system of sending letters to the Debtors for confirming the balance as at the year end 31st March. However the balances of debtors, creditors, loans and advances (other than Telecommunications Consultants India Limited (TCIL)) are subject to confirmation.

2 a. No provision is made for one long pending debtor Rs. 33,950,521 (previous year Rs. 33,950,521) in view of the arbitration proceeding completed against the Purchaser for which the Award is received in favour of the Company but has since been challenged by the Purchaser in the court. Further the court remitted back the case to the Arbitrator for speaking orders which also has been awarded in favour of the Company after arguments, cross examinations and written submissions, during the year. The purchaser has again appealed in the Court.

b. No provision is made for Rs. 1,339,656 (previous year Rs. 1,339,656) due from RailTel which was under arbitration. In the Arbitration award, six claims were in favour of the Company and one against the Company. Company has appealed against the award in Delhi High Court and the proceedings are in progress.

3. After restructuring as per the Sanctioned Scheme of BIFR during 2010-11, the net worth of the Company was positive during 2010-11. However during the year 2011-12 the net worth has again eroded. The Company is already under rehabilitation period as per the BIFR Sanctioned Scheme. Lack of executable orders and dull phase of Optical Fiber Cable (OFC) market from the year 2010-11 onwards is the reason for the poor performance. During the year 2012-13 the Company had received order from BSNL for supply of 3206 KMs of OFC valuing Rs.159,701,104 and successfully executed the order in time and got 50% add-on order of 1602 KMs and executed during 2013-14 valuing Rs.79,800,740. These two were the only major orders executed during these two years. Bharat Broadband Network Limited (BBNL), the Special Purpose Vehicle of the Government, had floated the tender towards the National Optic Fiber Network (NOFN) project to connect all the villages by broad band. The date of tender opening was 08.05.2013. Though the initial projection was 600000 KMs, the tender called for is to cover 404995 KMs under six packages based on geographical location. For this huge quantum, BBNL has fixed the delivery time frame of eight months only including initial two months for preliminary arrangements. The Company has participated in one package considering its production capacity to cover the quantum in the given short delivery period. The Company has received APO and given acceptance during February, 2014 for 5800 KMs including accessories. The Value of the APO is Rs. 3,190,44,437. BBNL has proposed to issue PO in two phases of 50% each. During April,2014, BBNL has issued the first 50% PO for 2900 KMs including accessories valuing Rs. 159,527,319. Delivery period was upto October, 2014. BBNL has issued the consignee details in full periodically for four months consignments of 1740 KMs only. For fifth month consignment, consigee details were provided for only 48 KMs out of 580 KMs. Hence consignee details are not provided for balance around 1112 KMs. BBNL has extended the delivery schedule by another six months beyond October,2014. Hence the supply of balance around 1112 KMs and second 50% PO for 2900 KMs may be anticipated during 2015-16 for execution. The Company has participated in the tender floated by BSNL for supply of 24,000 KMs of 24F HDPE DS OFC. The technical bid opened and the company has been technically qualified. Financial bid opened on 21.5.2015 and is under evaluation, which will be followed by e- reverse auction. Company is hopeful of getting orders around 2500 KMs which is projected to be executed during 2015- 16. The requirement of OFC in the country is huge; however the delay in procurement is due to various procedural matters / issues in execution of big projects by the Government Clients. The Company is hoping to get continuous orders from 2015-16 onwards regularly since the OFC market is picking up. The order booking position is expected to be continuously good. Considering the scope during the immediate future and TCIL's continuous financial support, the accounts have been prepared on going concern basis.

4 Land: The Company is in possession of free hold land from Chennai Metropolitan Development Authority (CMDA) and the Tamilnadu State Government measuring around 9.82 acres. In case of sale of CMDA land by the company it has to be first offered to CMDA at the same purchase price. The land can be sold to other third parties only after getting No Objection Certificate (NOC) from CMDA. In the case of Tamilnadu State Government land it is to be utilized for the purpose for which it is allotted and surplus land if any, has to be surrendered.

5 As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below:

A) Defined contribution Plan

Upto the year 2008-09 the Company has set up separate Trust for Provident Fund and has been contributing towards the same. In view of the fact that the Company is industrially sick as declared by BIFR and its net worth has fully eroded, the Provident Fund Commissioner-I has withdrawn with effect from 01.04.2009 the relaxation order issued under Para 79 of the Employees' Provident Fund Scheme 1952, with a direction to remit the whole cash balance to Employees' Provident Fund (EPF) Account No.1 and the balance available in Special Deposit Account to Central Board of Trustees, Employees' Provident Fund. During the year the Company has followed the directions of the Provident Fund Commissioner- I and remitted the monthly contributions to the concerned Regional Provident Fund Commissioner.

B) Defined Benefit Plan

Gratuity (Un Funded) :

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

The following table set out the status of the gratuity plan as required under AS 15

Note: The estimates of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is based on the valuation certified by the actuary.

C) Leave encashmentThe employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 240 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial valuations.

6 a) Current Tax: No provision for income tax is made in view of the current year loss and the accumulated losses of previous years available for set off.

b) Deferred tax: During the year the Company has not accounted/taken the credit/charge for the deferred tax assets/liabilities. The excess of timing difference over the deferred tax liability has been ignored for want of reasonable certainty of the company making taxable income in the near future. Similarly, for the same reason, certain other provisions made in the earlier years have been ignored for creation of deferred tax asset. The accumulated losses and carried forward depreciation under the tax laws have been ignored for creating the deferred tax asset considering that there is no reasonable certainty of the company making taxable income in the future in terms of para 26 of AS-22.

The treatment noted above is in accordance with the Accounting Standard 22 "Taxes on Income" notified under Section 133 of the companies Act, 2013.

7 Work-in-Progress under Inventories as on 31.03.2015 includes realizable scrap comprising short length cables, quality defects cables, excess production cables for operational reasons, type approval cables and disputed returned cables valuing Rs.5,116,178 (previous year Rs. 13,867,175). The above items are saleable with further processing and re- testing to the same or other customers.

8 As stipulated in AS – 28, the company is of the view that assets employed in continuing business are capable of generating adequate returns over their useful life in the usual course of business. There is no indication to the company of impairment of any asset and accordingly the Management is of the view that no impairment provision is called for during the year.

9. The Company had undertaken on test basis during 2012-13, a new venture of assembling and supply of Tablet PCs to one of the promoters, Telecommunications Consultants India Limited (TCIL), towards TCIL's CSR Project of supplying 150 nos. of Tablet PCs to 10 State Government Schools in Vellore district of Tamilnadu. The project was successfully executed during 2012-13. No further business on this front,during the year 2014-15.

10 CONTINGENT LIABILITIES

(a) Claims against the company not acknowledged as debt:

(i) Commercial Ta x Department had demanded a sum of Rs.18,608,794 as Additional Sales Ta x in respect of Financial Year 2000-2001 and 2001-2002 (up to November 2001). The company has obtained a Stay from Madras High Court against the collection of above demand by depositing a sum of Rs.7,500,000 with Commercial Tax Department as directed by the High Court while granting the stay. As the demand is disputed, the same is not provided for in the accounts. The case came up for hearing during November, 2011and directions were issued to post the case along with the writ appeal before the Bench in another similar case where the judgement is in favour of the assessee.

(ii) The Sales Ta x department has demanded a sum of Rs. 2,295,000 during the financial year 2006-07 for non submission of "C" Forms from BSNL / MTNL pertaining to AY 2001-02, 2002-03 and 2003-04. The Government has exempted "C" forms in respect of inter-state sales to BSNL / MTNL. The company has represented to the Department and also referred the matter to BSNL / MTNL.

(iii) The Customs Authority has demanded an amount of Rs. 3,155,226 towards difference in classification of Optical Fibre during the year 2006-07. However the order of the Commissioner of Customs has come in favour of the Company during the year 2009-10 dropping the proceedings. Department has gone for appeal against the order.

(b) Guarantees:Guarantees arranged by TCIL in favour of the Company and issued by Banks outstanding as at March 31, 2015 is Rs.108,494,216 including expired Bank Guarantees to the extent of Rs.11,717,894 (previous year Rs.142,139,028 including expired Bank Guarantees to the extent of Rs. 10,874,154 )

11 Commitments

(a) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for during the year is Rs. 'Nil' (previous year Rs. 'Nil')

(b) Uncalled liability on shares and other investments which are partly paid up during the year is Rs.'Nil' (previous year Rs.'Nil')

12 The Company has no long term operating lease. No financial lease has been availed during the year

13 A demand was raised by Income Tax Department towards tax to be deducted at source on Royalty amounting to Rs.2,542,165 (for the years 2000-01 & 2001-02). The company, has however, paid the entire amount of demand, out of which Rs. 2,193,733 is kept as recoverable. Appeal filed by the company for the above is pending in the Tribunal.

14 A writ petition has been filed by the Company in Madras High Court during the year 2008 against BSNL for reducing the awarded rate during the scheduled delivery period, in one of their orders without giving effect to BSNL's amendment to the 'Fall clause' applicable from 01.08.2005. BSNL has rejected and returned the differential claim invoice of the company for Rs.13,991,251. The case is pending in Madras High Court.

15 Figures of previous year have been regrouped / rearranged, wherever necessary, to conform to the current year's classification.

16. Applicability of Companies Act, 2013:Since it is notified as per General Circular No. 8/2014 dated 04.04.2014 issued by Ministry of Corporate Affairs that the financial statements as per Companies Act, 2013 is applicable with effect from Financial Year commencing from 01.04.2014, the financial statements have been prepared as per the Companies Act, 2013.

17. There was a fire incident in the store yard of the factory on 12.01.2015 and most of the WIP inventories, part of external portion of factory building, minor part of Plant & machinery including electrical installations got damaged. Insurance claims lodged with the Insurer. The total insurance claim lodged for Rs.74,723,904. Out of this, the cost of damaged WIP inventories excluding excise duty and salvage value Rs.62,386,677 and reimbursement of actual expenditures incurred during the fire incident Rs. 83,917 only have been accounted as insurance claims receivable under 'Other Current Assets' with credit to 'Other Income'. The corresponding stock value of the damaged WIP reduced from the WIP inventories. For other claims, the same shall be accounted as per expenditure incurred / insurance claims settled. The claim amount being huge, the insurance claim settlement process takes time. However, based on the surveyor's interim report, the insurer has made provisions towards this claim to the extent of Rs.64,000,000.

18. a) A civil suit has been filed by the company in Delhi High court on 31.03.2011 to stay the Advance Purchase Order issued by BSNL, HQ for supply of 42000 KMs of OFC. This is in addition to the purchase order issued during January, 2011 for supply of 18000 KMs. The order for OFC supply is with Nylon 12 jacketing and subsequently BSNL has changed the specification with HDPE Double sheathing. During the year 2011-12 BSNL has floated tender for 42000 KMs with the new specification. The case in Delhi High Court against the APO is in progress. b) The Company had taken up with BSNL for short closure of the PO for supply of 18000 KMs or to invoke the Arbitration clause. During the year the Arbitration clause has been invoked and arbitration proceedings are in progress.

19. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act could not be ascertained

20. Related Party Disclosures : Disclosures as required by the Accounting Standard 18 "Related Party Disclosures" are as given below:

List of Related Parties:

Associate Companies 1. Fujikura Ltd., Japan, Technical Collaborator & Equity Partner

2. Telecommunications Consultants India Ltd., New Delhi, Equity Partner

Key Managerial Personnel 1. Shri.V.S.Parameswaran, Managing Director

2. Shri.V.Mohan, Group General Manager (Finance)

* Movement in balance includes exchange rate fluctuation ** Includes only Shri.V.S.Parameswaran, Managing Director


Mar 31, 2014

1. The Company is having a system of sending letters to the Debtors for confirming the balance as on the year end 31st March. However the balances of debtors, creditors, loans and advances (other than TCIL) are subject to confirmation.

2. a. No provision is made for certain long pending debtors Rs. 33,950,521 (previous year Rs. 35,283,109) in view of the arbitration proceeding completed against the Purchaser for which the Award is received in favour of the Company but has since been challenged by the Purchaser in the court. Further the court remitted back the case to the Arbitrator in one case for speaking orders. Final arguments completed and speaking order expected. In another case the court has given order in favour of the Company and the Company has realized Rs.1,332,588 along with interest through the Court of District Judge, Thiruvananthapuram, Kerala.

b. No provision is made for Rs. 1,339,656 (previous year Rs. 1,339,656) due from RailTel which was under arbitration. In the Arbitration award, six claims were in favour of the Company and one against the Company. Company has appealed against the award in Delhi High Court and the proceedings in progress.

3. After restructuring as per the Sanctioned Scheme of BIFR during 2010-11, the net worth of the Company was more than the accumulated losses. However during the year 2011-12 the net worth has again eroded. The Company is already under rehabilitation period as per the BIFR Sanctioned Scheme. Lack of executable orders and dull phase of OFC market from the year 2010-11 onwards is the reason for the poor performance. During the year 2012-13 the Company had received order from BSNL for supply of 3206 KMs of OFC valuing Rs.159,701,104 and successfully executed the order in time and got 50% add-on order of 1602 KMs during 2013-14 valuing Rs.79,800,740. During the year this add-on order has been executed. All other orders executed during the said period were only of small quantum. M/s.Bharat Broadband Network Limited (BBNL), the Special Purpose Vehicle of the Government, has floated the tender towards the National Optic Fiber Network (NOFN) project to connect all the villages by broad band. The date of tender opening was 08.05.2013. Though the initial projection was 600000 KMs, the tender called for is to cover 404995 KMs under six packages based on geographical location. For this huge quantum, BBNL has fixed the delivery time frame of eight months only including initial two months for preliminary arrangements. The Company has participated in one package considering its production capacity to cover the quantum in the given short delivery period. The Company has received APO and given acceptance during February, 2014 for 5800 KMs including accessories. The Value of the APO is Rs. 319,044,437. BBNL has proposed to issue PO in two phases of 50% each. This order would be executed during the year 2014-15. The project is going to be funded by USOF. The Company has participated in RailTel tenders and has received initial orders for 517 KMs and subsequently variation order for 155 KMs. Out of this 279.36 KMs valuing Rs. 17,197,717 despatched during 2013-14 and balance 392.64 KMs valuing Rs. 24,192,279 will be supplied during 2014-15. The Company has participated in another tender floated by PGCIL covering 2124 KMs of various designs, and is a single bidder. PGCIL''s Assessment Committee is evaluating the tender for further decisions. The Company is hopeful of getting order from PGCIL. The Company is hoping to get continuous orders from 2014-15 onwards regularly since the OFC market is picking up. The order booking position is expected to be continuously good. Considering the scope during the immediate future and TCIL''s continuous financial support, the accounts have been prepared on going concern basis.

4. Land: The Company is in possession of free hold land from CMDA and the Tamilnadu State Govt. measuring around 9.82 acres. In case of sale of CMDA land by the company it has to be first offered to CMDA at the same purchase price. The land can be sold to other third parties only after getting NOC from CMDA. In the case of Tamilnadu State Govt. land it is to be utilized for the purpose for which it is allotted and surplus land if any, has to be surrendered.

A) Defined Benefit Plan

Gratuity (Un Funded) :

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

Note: The estimates of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is based on the valuation certified by the actuary.

B) Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 240 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial valuations.

6 a) Current Tax: No provision for income tax is made in view of the current year loss and the accumulated losses of previous years available for set off.

b) Deferred tax: During the year the Company has not accounted/taken the credit/charge for the deferred tax assets/ liabilities. The excess of timing difference over the deferred tax liability has been ignored for want of reasonable certainty of the company making taxable income in the near future. Similarly, for the same reason, certain other provisions made in the earlier years have been ignored for creation of deferred tax asset. The accumulated losses and carried forward depreciation under the tax laws have been ignored for creating the deferred tax asset considering that there is no reasonable certainty of the company making taxable income in the future in terms of para 26 of AS-22.

The treatment noted above is in accordance with the Accounting Standard 22 " Taxes on Income" notified under Sub section 3(C) of Section 211 of the Companies Act, 1956.

7 Work-in-Progress under Inventories as on 31.03.2014 includes realizable scrap comprising short length cables, quality defects cables, excess production cables for operational reasons, type approval cables and disputed returned cables valuing Rs.13,867,175 (previous year Rs. 13,503,182). The above items are saleable with further processing and re- testing to the same or other customers.

8 As stipulated in AS - 28, the company is of the view that assets employed in continuing business are capable of generating adequate returns over their useful life in the usual course of business. There is no indication to the company of impairment of any asset and accordingly the Management is of the view that no impairment provision is called for during the year.

9 The Company had undertaken on test basis during 2012-13, a new venture of assembling and supply of Tablet PCs to one of the promoters, M/s. Telecommunications Consultants India Limited (TCIL), towards TCIL''s CSR Project of supplying 150 nos. of Tablet PCs to 10 State Government Schools in Vellore district of Tamilnadu. The project was successfully executed during 2012-13. No further business in this front and during the year small quantum supplied to TCIL.

10 CONTINGENT LIABILITIES

(a) Claims against the company not acknowledged as debt:

(i) Commercial Tax Department had demanded a sum of Rs.18,608,794 as Additional Sales Tax in respect of Financial Year 2000-2001 and 2001-2002 (up to November 2001). The company has obtained a Stay from Madras High Court against the collection of above demand by depositing a sum of Rs.7,500,000 with Commercial Tax Department as directed by the High Court while granting the stay. As the demand is disputed, the same is not provided for in the accounts. The case came up for hearing during Nov, 2011 and directions were issued to post the case along with the writ appeal before the Bench in another similar case where the judgement is in favour of the assessee.

(ii) The Sales Tax department has demanded a sum of Rs. 2,295,000 during the financial year 2006-07 for non submission of "C" Forms from BSNL / MTNL pertaining to AY 2001-02, 2002-03 and 2003-04. The Govt. has exempted "C" forms in respect of inter-state sales to BSNL / MTNL. The company has represented to the Department and also referred the matter to BSNL / MTNL.

(iii) The Customs Authority has demanded an amount of Rs. 3,155,226 towards difference in classification of Optical Fibre during the year 2006-07. However the order of the Commissioner of Customs has come in favour of the Company during the year 2009-10 dropping the proceedings. Department has gone for appeal against the order.

(iv) One of the clients M/s. Team Engineers, Hyderabad demanded for replacement of around 110 kms of cables for quality issues. All the cables are tested at manufacturing stage and at the final stage for manufacturing defects before leaving the factory. The company has noticed some technical defaults in the installation procedures followed by the said client. Hence the claim has not been acknowledged as debt. The equivalent value for 110 kms would be around Rs. 8,000,000.

(b) Guarantees:Guarantees arranged by TCIL in favour of the Company and issued by Banks outstanding as at March 31, 2014 is Rs.142,139,028 including expired Bank Guarantees to the extent of Rs.108,74,154 (previous year Rs.72,847,358 including expired Bank Guarantees to the extent of Rs. 110,03,977)

11. Commitments

(a) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for during the year is Rs. ''Nil'' (previous year Rs. ''Nil'')

(b) Uncalled liability on shares and other investments which are partly paid up during the year is Rs.''Nil'' (previous year Rs.''Nil'')

12. The Company has no long term operating lease. No financial lease has been availed during the year.

13. A demand was raised by Income Tax Department towards tax to be deducted at source on Royalty amounting to Rs.2,542,165 (for the years 2000-01 & 2001-02). The company, has however, paid the entire amount of demand, out of which Rs. 2,193,733 is kept as recoverable. Appeal filed by the company for the above is pending in the Tribunal.

14. A writ petition has been filed by the Company in Madras High Court during the year 2008 against BSNL for reducing the awarded rate during the scheduled delivery period, in one of their orders without giving effect to BSNL''s amendment to the ''Fall clause'' applicable from 01.08.2005. BSNL has rejected and returned the differential claim invoice of the company for Rs.13,991,251. The case is pending in Madras High Court.

15. Figures of previous year have been regrouped / rearranged, wherever necessary, to conform to the current year''s classification.

16. Applicability of Companies Act, 2013:

Since it is notified as per General Circular No. 8/2014 dated 04.04.2014 issued by Ministry of Corporate Affairs that the financial statements as per Companies Act, 2013 is applicable with effect from Financial Year commencing from 01.04.2014, reference is made for Companies Act, 1956 wherever applicable.

III A civil suit has been filed by the company in Delhi High court on 31.03.2011 to stay the Advance Purchase Order issued by BSNL, HQ for supply of 42000 KMs of OFC. This is in addition to the purchase order issued during Jan, 2011 for supply of 18000 KMs. The order for OFC supply is with Nylon 12 jacketing and subsequently BSNL has changed the specification with HDPE Double sheathing. During the year 2011-12 BSNL has floated tender for 42000 KMs with the new specification. The case in Delhi High Court against the APO is in progress. The Company has also taken up with BSNL for short closure of the PO for supply of 18000 KMs or to invoke the Arbitration clause.

IV The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act could not be ascertained


Mar 31, 2013

1 The Company is having a system of sending letters to the Debtors for confirming the balance as on the year end 31st March. However the balances of debtors, creditors, loans and advances (other than TCIL) are subject to confirmation.

2 a. No provision is made for certain long pending debtors Rs. 35,283,109 (previous year Rs. 35,283,109) in view of the arbitration proceeding completed against the Purchaser for which the Award is received in favour of the Company but has since been challenged by the Purchaser in the court. Further the court remitted back the case to the Arbitrator in one case for speaking orders. In another case the court has given the order in favour of the Company,

b. No provision is made for Rs. 1,339,656 (previous year Rs. 1,339,656) due from RailTel which is under arbitration. Arbitration proceedings in progress.

3 After restructuring as per the Sanctioned Scheme of BIFR during 2010-11, the net worth of the Company was more than the accumulated losses. However during the year 2011-12 the net worth has again eroded. The Company is already under rehabilitation period as per the BIFR Sanctioned Scheme. Lack of orders and dull phase of OFC market during the years 2010-11 and 2011-12 were .the reasons for the poor performance. However the Company has received order from BSNL for supply of 3206 KMs of OFC during the year valuing Rs. 159,701,104. The Company has successfully executed the order in time and got add-on order APO during first week of May,2013, for another 1602 KMs valuing Rs.79,800,740. The Company''s earlier expectation of good order from M/s.Reliance Ingoted has riot matured, since Reliance has changed their modus operandi. M/s.Bharat Broadband Network Limited (BBNL), the Special Purpose Vehicle of the Government, has floated the tender towards the National Optic Fiber Network (NOFN) project to connect all the villages by broad band. The date of tender opening was 08.05.2013. Though the initial projection was 600000 KMs, the tender called for is to cover 404995 KMs under six packages based on geographical location. For this huge quantum, ''BBNL has fixed the delivery time frame of eight months only including initial two months for preliminary arrangements. The Company has participated in one package considering its production capacity to cover the quantum in the given short delivery period. The Company is hopeful of getting orders to the extent of around 7000 KMs and the composite value expected is around Rs. 39 crores. The project is going to be funded by USOF. The Company has proposed to participate in another two big tenders of RailTel due for opening in May & June, 2013, covering 7726 KMs and the composite value expected is around Rs. 50 Crores, to be awarded to two parties. Even at 40% the expected value would be Rs. 20 crores. The Company is hoping to get continuous orders from 2013-14 onwards regularly since the OFC market is picking up. The order booking position is expected to be continuously good. Considering the scope during the immediate future and TCIL''s continuous financial support, the accounts have been prepared on going concern basis.

4 Land: The Company is in possession of free hold land from CMDA and the Tamilnadu State Govt, measuring around 9.82 acres. In case of sale of CMDA land by the company it has to be first offered to CMDA at the same purchase price. The land can be sold to other third parties only after getting NOC from CMDA. In the case of Tamilnadu State Govt, land it is to be utilized for the purpose for which it is allotted and surplus land if any, has to be surrendered.

5 As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below:

Upto the year 2008-09 the Company has set up separate Trust for Provident Fund and has been contributing towards the same. In view of the fact that the Company is industrially sick as declared by BIFR and its net worth has fully eroded, the Provident Fund Commissioner-I has withdrawn with effect from 01.04.2009 the relaxation order issued under Para 79 of the Employees'' Provident Fund Scheme 1952, with a direction to remit the whole cash balance to EPF Account No.1 and the balance available in Special Deposit Account to Central Board of Trustees, Employees'' Provident Fund. During the year the Company has followed the directions of the Provident Fund Commissioner-I and remitted the monthly contributions to the concerned Regional Provident Fund Commissioner.

B) Defined Benefit Plan Gratuity (Un Funded) :

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of sen/ice. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

Note: The estimates of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion anc| other relevant factors including supply and demand in the employment market. The above information is based on the valuation certified by the actuary. .

C) Leave encashment .

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 240 days. The Company records an obligation for compensated absences in the period ih which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial valuations.

a) Current Tax: No provision for income tax is made in view of the current year loss and the accumulated losses of previous years available for set off.

b) Deferred tax: During the year the Company has not accounted/taken the credit/charge for the deferred tax assets/ liabilities. The excess of timing difference over the deferred tax liability has been ignored for want of reasonable

b) Change in plan assets - Unfunded

c) Reconciliation of present value of the obligation :

certainty of the company making taxable income in the near future. Similarly, for the same reason, certain other provisions made in the earlier years have been ignored for creation of deferred tax asset. The accumulated losses and carried forward depreciation under the tax laws have been ignored for creating the deferred tax asset considering that there is no reasonable certainty of the company making taxable income in the future in terms of para 26 of AS-22.

The treatment noted above is in accordance within the Accounting Standard 22 " Taxes on Income" notified under Sub section 3 ( C ) of Section 211 of the Companies Act, 1956.

6 Work-in-Progress under Inventories as on 31.03.2013 includes realizable scrap comprising short length cables, quality defects cables, excess production cables for operational reasons, type approval cables and disputed returned cables valuing Rs.13,503,182 (previous year Rs. 13,291,606). The above items are saleable with further processing and retesting to the same or other customers.

7 As stipulated in AS - 28, the company is of the view that assets employed in continuing business are capable of generating adequate returns over their useful life in the usual course of business. There is no indication to the company of impairment of any asset and accordingly the Management is of the view that no impairment provision is called for during the year.

8 The Company has undertaken on test basis, a new venture of assembling and supply of Tablet PCs to one of the promoters, M/s. Telecommunications Consultants India Limited (TCIL), towards TCIL''s CSR Project of supplying 150 nos. of Tablet PCs to 10 State Government Schools in Vellore district of Tamilnadu. During the year the company has assembled and supplied 150 nos. of Tablet PCs and imparted training at schools.

9 CONTINGENT LIABILITIES

(a) Claims against the company not acknowledged as debt:

(i) Commercial Tax Department had demanded a sum of Rs. 18,608,794 as Additional Sales Tax in respect of Financial Year 2000-2001 and 2001-2002 (up to November 2001). The company has obtained a Stay from

Madras High Court against the collection of above demand by depositing a sum of Rs.7,500,000 with Commercial

Tax Department as directed by the High Court while granting the stay. As the demand is disputed, the same is not provided for in the accounts. The case came up for hearing during Nov, 201 land directions were issued to post the case along with the writ appeal before the Bench in another similar case where the judgment is in favour of the assessed.

(ii) The Sales Tax department has demanded a sum of Rs. 2,295,000 during the financial year 2006-07 for non submission of "C" Forms from BSNL / MTNL pertaining to AY 2001-02, 2002-03 and 2003-04. The Govt, has exempted "C" forms in respect of inter-state sales to BSNL / MTNL. The company has represented to the

Department and also referred the matter to BSNL / MTNL.

(iii) The Customs Authority has demanded an amount of Rs. 3,155,226 towards difference in classification of Optical Fabre during the year 2006-07. However the order of the Commissioner of Customs has come in favor of the Company during the year 2009-10 dropping the proceedings. Department has gone for appeal against the order.

(iv) One of the clients M/s. Team Engineers, Hyderabad demanded for replacement of around 110 kms of cables . for quality issues. All the cables are tested at manufacturing stage and at the final stage for manufacturing defects before leaving the factory. The company has noticed some technical defaults in the installation procedures followed by the said client. Hence the claim has not been acknowledged as debt. The equivalent value for 110 kms would be around Rs. 8,000,000.

(b) Guarantees: ,

Guarantees arranged by TCIL in favour of the Company and issued by Banks outstanding as at March 31, "2013 is Rs.72,847,358 (previous year Rs.69,193,957)

10 Commitments

(a) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for during the year is Rs.''Nil" (previous year Rs. ''Nil'')

(b) Uncalled liability on shares and other investments which are partly paid up during the year is Rs.''Nil'' (previous year Rs.''Nil'')

11 The Company has no long term operating lease. No financial lease has been availed during the year.

12 A demand was raised by Income Tax Department towards tax to be deducted at source on Royalty amounting to Rs.2,542,165 (for the years 2000-01 & 2001-02). The company, has however, paid the entire amount of demand, out of which Rs. 2,193,733 is kept as recoverable. Appeal filed by the company for the above is pending in the Tribunal.

13 A writ petition has been filed by the Company in Madras High Court during the year 2008 against BSNL for reducing the awarded rate during the scheduled delivery period, in one of their orders without giving effect to BSNL''s amendment to the ''Fall clause'' applicable from 01.08.2005. BSNL has rejected and returned the differential claim invoice of the company for Rs.13,991,251. This amount has been accounted during the year 2011-12 as prior period income. The case is pending in Madras High Court.

14 Figures of previous year have been regrouped / rearranged, wherever necessary, to conform to the current year''s classification. .

III A civil suit has been filed by the company in Delhi High court on 31.03.2011 to stay the Advance Purchase Order issued by BSNL, HQ for supply of 42000 KMs of OFC. This is in addition to the purchase order issued during Jan, 2011 for supply of 18000 KMs. The order for OFC supply is with Nylon 12 jacketing and subsequently BSNL has changed the specification with HDPE Double sheathing. During the year 2011-12 BSNL has floated tender for 42000 KMs with the new specification. The case in Delhi High Court against the APO is in progress.

IV The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act could not be ascertained

V Related Party Disclosures : Disclosures as required by the Accounting Standard 18 "Related Party Disclosures" are given below: , ''

List of Related Parties:

Associate Companies 1. M/s. Fujikura Ltd., Japan - Technical Collaborator & Equity Partner

2. Telecommunications Consultants India Ltd., New Delhi - Equity Partner .

Key Managerial Personnel Shri.V.S.Parameswaran, Managing Director


Mar 31, 2012

1 The Company is having a system of sending letters to the Debtors for confirming the balance as on the year end 31st March. However the balances of debtors(only two confirmed), creditors, loans and advances (other than TCIL) are subject to confirmation.

2 a. No provision is made for certain long pending debtors Rs. 35,283,109 (previous year Rs. 35,283,109 ) in view of

- the arbitration proceeding completed against the Purchaser for which the Award is received in favour of the

- Company but has since been challenged by the Purchaser in the court. Further the court remitted back the case to ’ the Arbitrator in one case for speaking orders.

b. No provision is made for Rs. 1,339,656 due from IRCQN which is under arbitration. Arbitration proceedings in progress.

3 After restructuring as per the Sanctioned Scheme of BIFR, the net worth of the Company was more than the accumulated losses. However during the year the net worth has again eroded. The Company is already under rehabilitation period as per the BIFR Sanctioned Scheme. Lack of orders and dull phase of OFC market during the years 2010-11 and 2011-12

were the reasons for the poor performance. However the Company has already received order from BSNL for supply of 3206 KMs of OFC valuing Rs. 156,890,836. The Company is confident of getting Reliance InfoTel order for supply of 48F OFC and the volume is expected to be around Rs. 33 crores. The National Optic Fiber Network (NOFN) project of the iGovt.of India to connect all the villages by broad band is likely to take off during 2012-13 wherein the total requirement of OFC is around 600,000 KMs which is to be funded by USOF. The OFC orders are expected by middle of 2012-13. Even at minimum of 5% Company is hopeful of getting 30000 KMs expected to be around Rs. 147 crores, and the design and ' fiber count is likely to be the same of BSNL. The above order in hand / projected orders are expected to yield net revenue of around Rs. 11 crores during 2012-13 and 2013-14. From 2012-13 onwards the OFC market is expected to pick up in a big way. Considering the scope during the immediate future and TCIL’s continuous financial support, the accounts have been prepared on going concern basis.

4 Land: The Company is in possession of free hold land from CMDA and the Tamilnadu State Govt, measuring around 9.82 acres. In case of sale of CMDA land by the company it has to be first offered to CMDA at the same purchase price. The land can be sold to other third parties only after getting NOC from CMDA. In the case of Tamilnadu State Govt.land it is to be utilised for the purpose for which it is allotted and surplus land if any, has to be surrendered.

5 As per Accounting Standard 15 “Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below:

A) Defined contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under:

Upto the year 2008-09 the Company has set up separate Trust for Provident Fund and has been contributing towards the same. In view of the fact that the Company is industrially sick as declared by BIFR and its net worth has fully eroded, the Provident Fund Commissioner-I has withdrawn with effect from 01.04.2009 the relaxation order issued under Para 79 of the Employees’ Provident Fund Scheme 1952, with a direction to remit the whole cash balance to EPF Account No.1 and the balance available in Special Deposit Account to Central Board of Trustees, Employees’ Provident Fund. During the year the Company has followed the directions of the Provident Fund Commissioner-I.

B) Defined Benefit Plan Gratuity (Un Funded):

The Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

C) Leave encashment

The employees of the Company are entitled to Compensated absence^ The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 240 days. The Company records an obligation for compensated absences in the period in which the employee renders the sen/ices that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the-balance sheet date based on actuarial valuations.

6 a) Current Tax: No provision for income tax is made in view of the current year loss and the accumulated losses of previous years available for set off.

b) Deferred tax: During the year the Company has not accounted/taken the credit/charge for the deferred tax assets/ liabilities. The excess of timing difference over the deferred tax liability has been ignored for want of reasonable certainty of the company making taxable income in the near future. Similarly, for the same reason, certain other provisions made in the earlier years have been ignored for creation of deferred tax asset. The accumulated losses and carried forward depreciation under the tax laws have been ignored for creating the deferred tax asset considering that there is no reasonable certainty of the company making taxable income in the future in terms of para 26 of AS-22.

The treatment noted above is in accordance with the Accounting Standard 22 “ Taxes on Income" notified under

Sub section 3( C ) of Section 211 of the Companies Act, 1956. .

7 Work-in-Progress under Inventories as on 31.03.2012 includes realizable scrap comprising short length cables, quality defects cables, excess production cables for operational reasons, type approval cables and disputed returned cables valuing Rs. 13,291,606. The above items are saleable with further processing and re-testing to the same or other customers

8 As stipulated in AS - 28, the company is of the view that assets employed in continuing business are capable of generating adequate returns over their useful life in the usual course of business. There is no indication to the company of impairment of any asset and accordingly the Management is of the view that no impairment provision is called for during the year.

9 CONTINGENT LIABILITIES

(a) Claims against the company not acknowledged as debt:

(i) Commercial Tax Department had demanded a sum of Rs.18,608,794 as Additional Sales Tax in respect of Financial Year 2000-2001 and 2001-2002 (up to November 2001). The company has obtained a Stay from Madras High Court against the collection of above demand by depositing a sum of Rs.7,500,000 with Commercial Tax Department as directed by the High Court while granting the stay. As the demand is disputed, the same is not provided for in the accounts. The case came up for hearing during Nov, 2011 and directions were issued to post the case along with the writ appeal before the Bench in another similar case where the judgement is in favour of the assessee. ......

(ii) The Sales Tax department has demanded a sum of Rs. 2,295,000 during the financial year 2006-07 for non submission of “C" Forms from BSNL / MTNL pertaining to AY 2001-02, 2002-03 and 2003-04. The Govt, has exempted “C" forms in respect of inter-state sales to BSNL / MTNL. The company has represented to the Department and also referred the matter to BSNL / MTNL.

(iii) The Customs Authority has demanded an amount of Rs.3,155,226 towards difference in classification of Optical Fibre during the year 2006-07. However the order of the Commissioner of Customs has come in favour of the Company during the year 2009-10 dropping the proceedings. Department has gone for appeal against the order. :f:

(iv) One of the clients M/s. Team Engineers, Hyderabad demanded for replacement of around 110 kms of cables for quality issues. All the cables are tested at manufacturing stage and at the final stage for manufacturing defects before leaving the factory. The company has noticed some technical defaults in the installation procedures followed by the said client. Hence the claim has not been acknowledged as debt. The equivalent value for 110 kms would be around Rs. 8,000,000.

(b) Guarantees: -

Guarantees arranged by TCIL in favour of the Company and issued by Banks outstanding as at MarjEh 31, 2012 is Rs.69,193,957 (Previous year Rs.66,828,035)

10 Commitments

(a) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for during the year

is Rs. ‘Nil’ (previous year Rs. ‘Nil’)

(b) Uncalled liability on shares and other investments which are partly paid up during the year is Rs.’Nil’ (previous year Rs.’Nil’) -

11 The Company has no long term operating lease. No financial lease has been availed during the year

12 A demand was raised by Income Tax Department towards tax to be deducted at source on Royalty amounting to Rs.2,542,165 (for the years 2000-01 & 2001-02). The company, has however, paid the entire amount of demand, out of which Rs. 2,193,733 is kept as recoverable. Appeal filed by the company for the above is pending in the Tribunal.

13 A writ petition has been filed by the Company in Madras High Court during the year 2008 against BSNL for reducing the awarded rate during the scheduled delivery period, in one of their orders without giving effect to BSNL’s amendment to the ‘Fall clause’ applicable from 01.08.2005. BSNL has rejected and returned the differential claim invoice of the company for Rs. 13,991,251. This amount has been accounted during the year as prior period income. ,

14 Figures of previous year have been regrouped / rearranged to conform to the current year’s classification as per the revised Schedule VI format

III A civil suit has been filed by the company in Delhi High court on 31.03.2011 to stay the Advance Purchase Order issued by BSNL, HQ for supply of 42000 KMs of OFC. This is in addition to the purchase order issued during Jan, 2011 for supply of 18000 KMs. The order for OFC supply is with Nylon 12 jacketing and subsequently BSNL has changed the specification with HDPE Double sheathing. During the year BSNL has floated tender for 42000 KMs with the new specification. The case in Delhi High Court against the APO is in progress.

IV The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act could not be ascertainede


Mar 31, 2011

1 Sanction Scheme issued by BIFR

a. During the year BIFR has issued a Sanctioned Scheme to the Company and accordingly restructuring has been made in the books of accounts. Rs. 1543.27 lakhs loans / credit of M/s. Telecommunications Consultants India Limited (TCIL) have been converted into equity at face value. TCIL has provided Rs. 1165.73 lakhs as bridge loan towards settlement of OTS to consortium bankers and for remittance of compensation to the Govt of Tamil Nadu land.

b. Part of the loans amounting to Rs.758.33 lakhs of the three consortium bankers viz.. State Bank of India, Andhra Bank and Punjab National Bank have been converted into equity at face value. Another part of the loans amounting to Rs. 885.02 Lakhs (Net after adjustment of margin money deposits with interest) settled to the three consortium bankers under OTS and balance loans of Rs. 979.71 Lakhs of the three consortium bankers waived off. The same has been given effect in the books of account. The waived off portion has been treated as "Capital Restructuring Reserve" in the books of account

c. After restructuring as per the Sanctioned Scheme of BIFR, the net worth of the Company is more than the accumulated losses and hence the accounts have been prepared on going concern basis.

2. Secured Loans

Bridge loan from TCIL is secured on all the fixed assets as well as current assets of the Company as at present existing and to be acquired in future. The formalities for creation of charge are being carried out

3. The Company is having a system of sending letters to the Debtors for confirming the balance as on the year end 31st March. However the balances of debtors, creditors, Loans and advances (other than TCIL) are subject to confirmation.

4. a. No provision is made for certain long pending debtors Rs. 3.52 crores (previous year Rs 3 52 crores) in view of the arbitration proceeding completed against the Purchaser for which the Award is received in favour of the Company but has since been challenged by the Purchaser in the court Further the court remitted back the case to the Arbitrator in one case for speaking orders

b. No provision is made for Rs. 13.40 lakhs due from IRCON which-is under arbitration. Arbitration proceedings in progress.

5. a. Special State Capital Subsidy of Rs.20 lakhs received during the year 2001-02 from Government of Tamilnadu towards capital outlay of Optical Fiber Project at' Maraimalai Nagar is treated as Capital Reserve

b. Proportionate depreciation of Rs. 206,800 on the assets acquired thereon was being credited to profit and loss account every year. During the year balance depreciation of Rs. 138.800 has been credited to profit and loss account and fully adjusted.

6. The company, as a measure of cost control, implemented Voluntary Separation Scheme (VSS) for its employees till 2006-07 and the unadjusted balances at the beginning of the year was Rs. 3.40 Lakhs. Entire Rs.3.40 Lakhs has been adjusted during the year.

7. Land: In respect of the OFC project at Maraimalai Nagar, the Land has been capitalized based on the possession certificate and lease cum sale agreement of Govt of Tamil Nadu and CMDA respectively. The sale deed for CMDA land has been executed during 2006-07. During the year, compensation for the Govt.of Tamil Nadu land measuring about 2.98 hectares has been remitted out of the bridge loan received from TCIL, and the Land Delivery Order is awaited from the Govt.of Tamil Nadu.

8. As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below:

A) Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under:

Upto the year 2008-09 the Company has set up separate Trust for Provident Fund and has been contributing towards the same. In view of the fact that the Company is industrially sick as declared by BIFR and its networth has fully eroded, the Provident Fund Commissioner-I has withdrawn with effect from 01.04.2009 the relaxation order issued under Para 79 of the Employees' Provident Fund Scheme 1952, with a direction to remit the whole cash balance to EPF Account No.1 and the balance available in Special Deposit Account to Central Board of Trustees, Employees' Provident Fund. During the year the Company has followed the directions of the Provident Fund Commissioner-I.

B) Defined Benefit Plan

Gratuity (Un Funded):

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

The following table set out the status of the gratuity plan as required under AS 15

b) Change in plan assets - Unfunded

d) Gratuity cost for the year ended March 31 2011

Note: The estimates of rate of escalation in salary considered in actuarial valuation, taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is based on the valuation certified by the actuary.

C) Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 240 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial valuations.

9 Dues against material credit facility provided by TCIL is secured on the raw materials, work-in-progress, finished goods, book debts and all the fixed assets of the Company

10. (1) Estimated value of contracts yet to be executed on account of capital work not provided for is NIL. (Previous year Rs. Nil).

11. Taxation :

a. Current Tax: No provision for income tax is made in view of the current year loss and the accumulated losses of previous years available for set off.

b. Deferred tax: During the year the Company has not accounted/taken the credit/charge for the deferred tax assets/liabilities. The excess of timing difference over the deferred tax liability has been ignored for want of reasonable certainty of the company making profits in the near future. Similarly, for the same reason, certain other provisions made in the earlier years have been ignored for creation of deferred tax asset. The losses and carried forward depreciation under the tax laws have been ignored for creating the deferred tax asset considering that there is no virtual certainty of the company making profits in the future. The treatment noted above is in accordance with the Accounting Standard 22 " Taxes on Income" notified under Sub section 3 (C) of Section 211 of the Companies Act, 1956.

13. Contingent Liability

a. On account of Guarantees issued by Banks outstanding as at March 31, 2011 is Rs. 668.28 lakhs (Previous year Rs. 337.44 lakhs) out of which Rs. 668.28 lakhs (previous year Rs. 320.78 lakhs) pertain to the banks arranged by TCIL.

b. Commercial Tax Department had demanded a sum of Rs. 186.09 lakhs as Additional Sales Tax in respect of Financial Year 2000-2001 and 2001-2002 (up to November 2001). The company has obtained a Stay from Madras High Court against the collection of above demand by depositing a sum of Rs.75 lakhs with Commercial Tax Department as directed by the High Court while granting the stay. As the demand is disputed, the same is not provided for in the accounts. Will be taken up at appropriate time for consideration as directed in the Sanctioned Scheme of BIFR.

c. The Sales Tax department has demanded a sum of Rs. 22.95 lakhs during the financial year 2006-07 for non submission of "C" Forms from BSNL / MTNL pertaining to AY 2001-02, 2002-03 and 2003-04. Govt, has exempted "C" forms in respect of inter-state sales to BSNL / MTNL. The company has represented to the Department. The company has also referred the matter to BSNL / MTNL.

d. The Customs Authority has demanded an amount of Rs. 31.55 lakhs towards difference in classification of Optical Fibre during the year 2006-07. However the order of the Commissioner of Customs has come in favour of the Company during the year 2009-10 dropping the proceedings. Department has gone for appeal against the order.

14. Managerial Remuneration :

Particulars of Managerial Remuneration of Managing Director Shri M. Sengupta

In addition, the Managing Director is allowed the use of car for private purpose to the limits prescribed by the department of Public Enterprises from time to time, on payment of Rs.250/- per month.

15. Dividend paid to Non-resident shareholder(s): Nil (last year Nil )

16. The company has no long term operating lease. No financial lease has been availed during the year.

17 A demand was raised by Income Tax Department towards tax to be deducted at source on Royalty amounting to Rs.25.41 lakhs (for the years 2000-01 & 2001-02). The company, has however, paid the entire amount of demand. Out of which Rs. 21.94 lakhs is kept as recoverable in Loans and Advances. Appeal for the above is pending in the Tribunal.

18. Figures of previous year have been regrouped / rearranged, wherever necessary, to conform to the current year's classification.

IV The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act could not be ascertained.

V Related Party Disclosures : Disclosures as required by the Accounting Standard 18 "Related Party Disclosures" are given below :

List of Related Parties

Associate Companies 1. M/s. Fujikura Ltd., Japan Technical Collaborator & Equity Partner

2. Telecommunications Consultants India Ltd., New Delhi. - Equity Partner

Key Managerial Personnel - Shri. M. Sengupta, Managing Director

VI. Segment Reporting: The company's sole business segment is 'Telephone Cables' and the only geographical segment is India. Consequently the need for separate disclosure as required under Accounting Standard - 17 viz. Segment Reporting is not considered relevant.


Mar 31, 2010

1. During the year the Company has increased its Authorised Share Capital from Rs. 30 crores to Rs. 50 crores consisting 50000000 Equity shares of Rs. 10 each, as approved in the AGM conducted on 30th September 2009.

2. Secured Loans

a. Term Loans from State Bank of India and Punjab National Bank, working capital Term loans and Funded Interest Term Loans from Consortium of Bankers comprising of State Bank of India, Andhra Bank and Punjab National Bank are secured by way of equitable mortgage of land and factory building at Maraimalai Nagar and hypothecation of Fixed Assets at Maraimalai Nagar .

b. Working Capital Loans from banks are in the form of Cash Credit, bills paid by banks under Letters of credit and External Commercial Borrowings. They are secured by way of hypothecation of Raw Materials, Work-in-progress, Finished Goods, Book Debts and Spares and also by way of Second charge on the Fixed Assets of the Company.

c. Term loan from M/s. Telecommunications Consultants of India Limited (TCIL) is secured by way of second charge on Fixed Assets and Current Assets of the Company, on pari-passu basis with Consortium Banks.

d. During the year 2004-05, based on the approval of the CDR cell the lenders had restructured the loans including reduction in the interest rates. But the accounts have become irregular during the year 2007-08 due to industry reasons and company being in the phase of revival.

3. The Accumulated losses of the company had exceeded its net worth. The Board for Industrial and Financial Reconstruction (BIFR), vide its order dated 16.05.2006, formed the view that the company had fully eroded its net worth and accordingly appointed State Bank of India (SBI) as Operating Agency (OA) under Section 17(3) of SICA for formulating Revival Scheme. However, the company is striving hard to improve the operational and economic performance of the unit. The methods include restructuring the operations, cost control, One-time-settlement / corporate debt restructuring through BIFR and other measures. This would result in significant improvement and turnaround in due course. Based on above the OA has submitted the final DRS of the Company to BIFR on 05.02.2010. After evaluation BIFR has published the scheme in newspaper for Suggestions / objections giving a period of 60 days. Approval of the scheme is expected very shortly. In view of the foregoing, the accounts have been prepared on going concern basis.

4. The Company is having a system of sending letters to the Debtors for confirming the balance as on the year end 31st March. However the balances of debtors, creditors, Loans and advances (other than TCIL) are subject to confirmation.

5. No provision is made for certain long pending debtors Rs. 3.52 crores (previous year Rs. 3.52 crores) in view of the arbitration proceeding completed against the Purchaser for which the Award is received in favour of the Company but has since been challenged by the Purchaser in the court. Further the court remitted back the case to the Arbitrator in one case for speaking orders.

6. a. Special State Capital Subsidy of Rs.20 lakhs received during the year 2001-02 from Government of Tamilnadu towards capital outlay of Optical Fiber Project at Maraimalai Nagar is treated as Capital Reserve.

b. Proportionate depreciation of Rs. 206,800 on the assets acquired thereon is being credited to profit and loss account every year.

7. The company, as a measure of cost control, implemented Voluntary Separation Scheme (VSS) for its employees till 2006-07 and the unadjusted balances at the beginning of the year was Rs. 21.29 Lakhs. One-fifth portion of the total VSS amount has been charged as expense of this year (Rs. 17.89 lakhs). Remaining portion of Rs. 3.40 Lakhs is considered under Deferred Revenue Expenditure to be amortized in the succeeding year.

8. Land: In respect of the OFC project at Maraimalai Nagar, the Land has been capitalized based on the possession certificate and lease cum sale agreement of Govt of Tamil Nadu and CMDA respectively. The sale deed for CMDA land has been executed during 2006-07. But the sale deed of the Tamil Nadu Govt land measuring about 2.98 hectares is yet to be finalized. For this land, as per the Government GO dated 23/10/2001, the compensation was fixed at Rs. 6975 per cent in the year 1995. As per the order dated 06.09.2008 with subsequent appreciation of nominal value at 12% p.a. the value has been worked out and accounted during the year in the books of account.

9. (i) Company has pursued the banks for one-time-settlement with the cut-off-date 31.3.2007. Though consortium banks have approved the proposal the final DRS submitted to BIFR is awaiting final approval. In view of this, interest for the year Rs. 297 lakhs on bank loans including cash credit has not been provided ( previous year Rs. 346 lakhs). Cumulative interest as on 31.03.2010 not provided is Rs. 957 Lakhs (previous year Rs. 660 Lakhs)

(ii) The interest amounts set off by the banks out of cash credit or margin amounts during the year and the excess of past years over and above the interest rate approved by CDR Empowerment Committee have been accounted as dues receivable from banks (Rs. 46.72 lakhs) under Loans and Advances which will be adjusted when DRS is finally approved by BIFR.

B. Defined Benefit Plan

Gratuity (Un Funded) :

The Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

C. Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 240 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial valuations.

10. In respect of balances with scheduled Banks in Margin Money Deposit Accounts amounting to Rs. 51.91 lakhs (previous year Rs. 48.87 lakhs), the deposit receipts are under lien against Letter of Credit and Bank Guarantee to Bank.

11. Taxation :

a. Current Tax: No provision for income tax is made in view of the current year loss and the accumulated losses of previous years available for set off.

b. Deferred tax: During the year the Company has not accounted/taken the credit/charge for the deferred tax assets/liabilities. The excess of timing difference over the deferred tax liability has been ignored for want of reasonable certainty of the company making profits in the future as the final DRS submitted to BIFR is awaiting approval. Similarly, for the same reason, certain other provisions made in the earlier years have been ignored for creation of deferred tax asset. The losses and carried forward depreciation under the tax laws have been ignored for creating the deferred tax asset considering that there is no virtual certainty of the company making profits in the future as the final DRS submitted to BIFR is awaiting approval. The treatment noted above is in accordance with the Accounting Standard 22 " Taxes on Income" notified under Sub section 3 ( C ) of Section 211 of the Companies Act, 1956.

12. Contingent Liability

a. On account of Guarantees issued by Banks outstanding as at March 31, 2010 is Rs. 337.44 lakhs (Previous year Rs. 492.99 lakhs) out of which Rs. 320.78 lakhs (previous year Rs. 375.04 lakhs) pertain to the banks other than that of consortium banks.

b. Commercial Tax Department had demanded a sum of Rs.186.09 lakhs as Additional Sales Tax in respect of Financial Year 2000-2001 and 2001-2002 (up to November 2001). The company has obtained a Stay from Madras High Court against the collection of above demand by depositing a sum of Rs.75 lakhs with Commercial Tax Department as directed by the High Court while granting the stay. As the demand is disputed, the same is not provided for in the accounts. Relief / exemption requested in the DRS submitted to BIFR.

c. The Sales Tax department has demanded a sum of Rs. 22.95 lakhs during the financial year 2006-07 for non submission of “C” Forms from BSNL / MTNL pertaining to AY 2001-02, 2002-03 and 2003-04. Govt. has exempted “C” forms in respect of inter-state sales to BSNL / MTNL. The company has represented to the Department. The company has also referred the matter to BSNL / MTNL. Relief / exemption requested in the DRS submitted to BIFR.

d. The Customs Authority has demanded an amount of Rs. 31.55 lakhs towards difference in classification of Optical

Fibre during the year 2006-07. However the order of the Commissioner of Customs has come in favour of the Company during the year dropping the proceedings.

13. Dividend paid to Non-resident shareholder(s) : Nil ( last year Nil)

14. The company has no long term operating lease. No financial lease has been availed during the year.

15. A demand was raised by Income Tax Department towards tax to be deducted at source on Royalty amounting to Rs.25.41 lakhs (for the years 2000-01 & 2001-02). The company, has however, paid the entire amount of demand. Out of which Rs. 21.94 lakhs is kept as recoverable in Loans and Advances. Appeal for the above is pending in the Tribunal. Relief / exemption requested in the DRS submitted to BIFR.

16. Figures of previous year have been regrouped / rearranged, wherever necessary, to conform to the current years classification.

IV The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence the disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act could not be ascertained.

V Related Party Disclosures : Disclosures as required by the Accounting Standard 18 "Related Party Disclosures" are given below :

List of Related Parties

Associate Companies 1. M/s. Fujikura Ltd., Japan Technical

Collaborator & Equity Partner

2. Telecommunications Consultants India

Ltd., New Delhi. - Equity Partner

Key Managerial Personnel - Shri. M. Sengupta, Managing Director

VI. Segment Reporting: The companys sole business segment is Telephone Cables and the only geographical segment is India. Consequently the need for separate disclosure as required under Accounting Standard - 17 viz. Segment Reporting is not considered relevant.

Find IFSC