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Directors Report of Tata Communications Ltd.

Mar 31, 2017

DIRECTORS'' REPORT

Dear Shareholder:,

The directors present the 31st Annual Report and audited financial statements of Tata Communications Limited ("Company") for the financial year ended March 31, 2017. The Company along with its subsidiaries wherever required is referred as "we", "us", "our", "Tata Communications" or ''Tata Communications Group''.

performance

The key financial parameters of the Company''s performance during the year under review are given in the table below:

Rs, in Croce

Standalone

Consolidated

2016-17

2015-16

2016-17

2015-16

Continuing operations

Income from operations

5068.15

4790.32

17619.73

18148.58

Other Income

(16.91)

209.77

360.29

396.64

Total Revenue

5051.24

5000.09

17980.02

18545.22

Total Expenses

4670.22

4372.52

17446.79

17980.21

Profit from ordinary activities before exceptional items, tax and share of profit of associate

381.02

627.57

533.23

565.01

E-creational Items

823.82

(22.63)

(1063.33)

(102.79)

Profit / (Loss) before tax and share of profit of associate

1204.84

604.94

(530.10)

462.22

Tax expense/(benefit)

Current Ov

602.50

150.32

270.30

203.95

Deferred Tv

(87.49)

61.94

(33.92)

28.90

Profit / (Loss) for the period

689.83

392.68

(766.48)

229.37

Share in Profit of Associates

-

-

5.08

-

Profit/ (Loss) for the period from continuing operations

-

-

(761.40)

229.37

Discontinued operations

Profit/(Loss) before tax from discontinued operations

-

-

123.31

(109.66)

Gain on sale of business and subsidiaries (including impairment of goodwill)

-

-

2420.51

(90.00)

Profit /(Loss) from Discontinued operations (before tax)

-

-

2543.82

(199.66)

Tax expense on Discontinued operations

-

-

546.96

19.25

Profit /(Loss) from discontinued operations after tax

-

-

1996.86

(218.91)

Net Profit/ (Loss) from total operations

-

-

1235.46

10.46

Other Comprehensive Income (net of tax)

(188.02)

(334.37)

864.64

(608.82)

Total Comprehensive Income / (Loss)

501.81

58.31

2100.10

(598.36)

Dividend

The directors are pleased to recommend a dividend of Rs,6.00 per share [Normal dividend of Rs,4.50 per share of face value Rs,10/- each plus a one-time special dividend Rs,1.50 per share of face value Rs,10/- each] for the financial year ended March 31, 2017 (Rs,4.30 per share dividend in FY 15-16), subject to the approval of the shareholders at the ensuing annual general meeting.

Transfer to Reserves

On a standalone basis, the Company does not propose to transfer any amount to the general reserve out of the amount available for appropriation and the balance in the surplus in the statement of profit and loss stood at Rs, 3105.08 crores as on March 31, 2017.

OPERATIONS Segment Distribution

We have been successful in our goal of diversifying revenues, to tap new opportunities and reduce any risks of an overtly concentrated portfolio. Our revenues are broadly diversified across our voice and data services businesses. Taking advantage of the growing data services market the Tata Communications Group has been focusing on segments such as mobility, Internet of Things (IoT), media and entertainment, financial services, and health care. During the year under review, consolidated continuing business revenue from our voice services business contributed 38% (45% in FY15-16) of total revenue and our data services business contributed 62% (55% in FY15-16) of total revenue. This is discussed in detail in the Management Discussion & Analysis, which forms a part of this report.

Voice

We continue to be one of the largest players worldwide in wholesale voice business. The volumes in this business continued to decline due to a continued shift in traffic to voice over internet protocol (VoIP) based calling. During the year under review, total voice traffic declined by

0.6% over the previous year, EBITDA margins increased by 0.13% and EBITDA declined by 14.9%. Developing innovative commercial offerings and optimizing costs to maintain free cash flow generation remains the focus for this business.

Data

In the data services business, we are the industry leaders in India and an emerging challenger globally. We have made significant capital expenditure in our data business to create a global infrastructure and a suite of growth products and services. Our ongoing focus and investment in brand, sales and marketing to scale up our global enterprise data business have increased recognition for the Tata Communications Group in the market place.

Over the years, we have moved from being a traditional connectivity services provider, largely in India, to a truly global services provider - offering a broad range of managed communication and collaboration services as well as IT infrastructure services. With our current portfolio of data services, Tata Communications is no longer seen as a mere provider of raw bandwidth. Our customers see us as an essential provider of technologies that help them make the shifts to digital business models, in addition to being a globalization enabler.

Our investments and innovations are enabling us to be viewed more as an Over-The-Top (OTT) player than as a telecom operator. Our data business has continued its robust momentum with revenues growing 6.8% during 2016-17. During the year, Tata Communications Group launched the latest addition to its IZO Cloud Enablement Platform called IZO™ SDWAN, SDWAN standing for Software Defined Wide Area Networking. This will strengthen the Company''s data services offerings with new capabilities that allow enterprises to take advantage of greater service agility and automated provisioning.

The Tata Communications Group has a strong set of offerings across the gamut of unified communications and collaboration (UCC) services, hosting services, security services and continues to see further growth in its data services portfolio. Our strategy of expanding into managed services continues to pay off, as these services now contribute 37% to the data services segment.

HUMAN RESOURCES

Tata Communications Group offers a dynamic work environment where our employees benefit from working with other innovators from around the globe who are driving meaningful change to our customers and the planet. We have a multicultural workforce, with people of more than 36 nationalities on our rolls, out of which women constitute 20% of our employees. Tata Communications Group''s compensation and employee benefit practices are designed to be competitive in the respective geographies where it operates. Employee relations continue to be harmonious at all our locations. The number of training person days provided to employees increased by 17% over the previous year.

The Tata Communications Group has zero tolerance for sexual harassment and the Company has adopted a charter on prevention, prohibition and redressal of sexual harassment in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made there under. During the financial year 2016-17, the Company received five complaints on sexual harassment. As on March 31, 2017, all complaints were disposed off with appropriate action and no complaint remained pending.

BUSINESS EXCELLENCE

The Tata Communications Group has adopted the Tata Business Excellence Model (TBEM), which is formulated on the Baldrige Excellence Framework, to enable the Tata Communications Group to improve performance and attain higher levels of efficiency in its businesses. Tata Communications was classified as an "Emerging Industry Leader" following a rigorous assessment conducted by the Tata Business Excellence Group (a division of Tata Sons) and continues to use this assessment as a framework as part of its business excellence journey. We have taken actions on the findings of the assessment which have considerably improved our processes and TBEM score in the current year.

ENTERPRISE RISK MANAGEMENT

The Company has established an enterprise-wide risk management (ERM) framework to optimize the identification and management of risks globally and to comply with provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In line with the Company''s commitment to delivering sustainable value, this framework aims to provide an integrated and organized approach for evaluating and managing risks.

There are no elements of risk, which in the opinion of the

Board may threaten the existence of the Company. RISK-BASED INTERNAL AUDIT

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers various businesses and functions of the Tata Communications Group. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

CORPORATE MATTERS Subsidiary Companies

a) The Company had 47 subsidiaries as on March 31, 2017 and 5 associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). Except for the transfer of the Singapore data centre business described below, there has been no material change in the nature of business of the subsidiaries and associate companies.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements.

Pursuant to the provisions of section 136 of the Act and General Circular No. 11/ 2015 dated July 21, 2015 issued by Ministry of Corporate Affairs, the financial statements of the Company, consolidated financial statements along with relevant documents and separate accounts in respect of subsidiaries, are available on the website of the Company.

b) On February 10, 2017, the Company and Nexus Connexion successfully completed the sale of its entire shareholding in Neotel Pty. Ltd. ("Neotel") to Liquid Telecom, a privately owned, pan-African telecoms group, majority owned by Econet Wireless Global, who partnered with Royal Bafokeng Holdings (RBH), a South African empowerment investment group, in the transaction. The deal has created the largest pan-African broadband network and B2B telecom provider, enabling African companies to connect with each other and internationally on a single fibre network. Thus, Neotel ceased to be our subsidiary from February 10, 2017.

c) As reported last year in May 2016, Tata Communications and Singapore Technologies Telemedia (ST Telemedia), a strategic global investor focused on the communications, media and technology sectors, had entered into definitive agreements whereby ST Telemedia, through ST Telemedia Global Data Centres (STT GDC), would, upon closing of the transaction acquire a 74% majority stake in Tata Communications'' data centre business in India and Singapore, with Tata Communications holding the remaining stake as a minonty ^hJlehoklel.

The India data centre transaction was successfully completed on October 19, 2016 and Tata Communications Data Centres Private Limited ceased to be our subsidiary from that date, while the Singapore data centre joint venture transaction was successfully completed on February 13, 2017.

The completion of both India and Singapore transactions reinforces the strategic partnership between the two dynamic companies, working closely and drawing on each other''s complementary capabilities and experience to accelerate growth in the vibrant data centre markets in India and Singapore.

d) On January 20, 2017, Tata Communications (Netherlands) B. V., a wholly owned indirect subsidiary of the Company, acquired a 35% stake in Teleena Holding B.V. ("Teleena"), a mobile virtual network enabler headquartered in the Netherlands, thus becoming its single largest shareholder. Thus, Teleena has become an Associate of the Company from January 20, 2017.

Investment in Tata Teleservices Limited

In 2008-09, NTT DoCoMo Inc (Docomo) entered into an agreement with Tata Teleservices Limited (TTSL) and Tata Sons Limited (Tata Sons) to acquire 20% of the equity share capital under the primary issue and 6% under the secondary sale from Tata Sons. In terms of the agreements with Docomo, Tata Sons, inter alia, agreed to provide various indemnities and a Put Option entitling Docomo to sell its entire shareholding at a minimum pre-determined price of Rs, 58.05 per share if certain performance parameters were not met by TTSL. The minimum pre-determined price represented 50% of the acquisition price paid by Docomo in 2008-09.

An Inter-se agreement dated March 25, 2009, was executed by the Company with Tata Sons and other TTSL shareholders to give effect to the Docomo/Tata Sons'' sale and purchase agreement. In accordance with the terms of the Inter-se agreement, the Company sold 36,542,378 equity shares of TTSL to Docomo at Rs, 116.09 per share, resulting in a profit of Rs, 346.65 crores.

In or around July 2014, Docomo exercised its Put Option and called upon Tata Sons to acquire Docomo''s entire shareholding in TTSL at the pre-determined price of Rs, 58.05 per share. The Reserve Bank of India did not permit acquisition of the shares at the pre-determined price and had advised the parties that the acquisition can only be made at Fair Market Value (FMV) prevailing at the time of the proposed acquisition. Tata Sons conveyed to Docomo its willingness to acquire the shares at the FMV, however, Docomo reiterated its position that the shares had to be acquired at Rs, 58.05 per share. Thereafter, Docomo had initiated Arbitration in the matter before the London Court of International Arbitration (LCIA), the evidentiary hearing of which was completed on May 06, 20 16.

The Arbitral Tribunal appointed by the LCIA to arbitrate the dispute between Tata Sons and Docomo, issued a final award (LCIA Award) on June 22, 2016, which required Tata Sons to pay to Docomo, damages of US$1,172 million upon tender of shares held by Docomo in TTSL, together with interest, arbitration costs and legal costs.

Thereafter, Docomo filed a petition with the Delhi High Court for implementation of the LCIA Award. The Delhi High Court directed Tata Sons to deposit the damages including costs and interest in an escrow account. Under the terms of the Inter-Se agreement, and pursuant to the LCIA award, the Company was to acquire 158,350,304 equity shares of TTSL at a value of approximately Rs,1058 crores. On August 2, 2016, the Company paid to Tata Sons approximately Rs,1058 crores as a recoverable advance in anticipation of satisfaction of the LCIA Award and receipt of the TTSL Shares.

On April 28, 2017, the Delhi High Court, approved the consent terms between Tata Sons and Docomo for resolution of the LCIA Award (hereafter, the "Order").

Under the terms of the Order, the monies deposited by Tata Sons in the Court by way of Fixed Deposit Receipts, together with interest accrued thereon, shall be retained by the Registrar of the Delhi High Court until requisite clearance from the Competition Commission of India and the Withholding Tax Certificate as mentioned in the consent terms between the parties have been obtained, at which time the funds shall be returned to Tata Sons for onward payment to Docomo in satisfaction of the

Award.

Based on the Delhi High Court Order dated April 28, 2017, the Company has made a provision of Rs, 872.01 crores towards the contractual obligation under the Inter-se agreement being difference between the fair value of equity shares to be repurchased (based on the valuation undertaken as at November 18, 2016) and the consideration paid for discharge of the Company''s obligation under the Inter-se agreement and Put Option. The provision has been adjusted against the deposit of Rs, 1.058 crores which is included in Non-current - Other financial assets.

The Company''s overall investment in the equity shares of TTSL is recognized at fair value through Other Comprehensive Income. During the current year, the Company reassessed the fair value of TTSL and accordingly recognized a loss of Rs, 166.71 crores (Rs, 344.40 crores in FY15-16) in Other Comprehensive Income. Due to the continued volatility of market conditions, it was not possible to complete an updated valuation report to determine fair value as at March 31, 2017.

Compliance under the Companies Act, 2013 and additional SEBI stipulations

As on the date of this Report, the Board comprised of nine directors out of whom two were independent. As reported to stock exchanges, in February 2002, when the Government of India ("GoI") transferred 25% of its stake in the Company to Panatone Finvest Limited ("Panatone"), a shareholders'' agreement and a share purchase agreement were signed. These agreements, inter alia, set forth the rights and obligations of Panatone and the GoI including appointment of directors on the Board of the Company. The relevant clauses from the agreements were incorporated in the Articles of Association of the Company which in part provide that the Board is to comprise of twelve directors, four of whom must be independent. The GoI and Panatone are entitled to indicate the names of two independent directors each.

The two independent directors indicated by the GoI and appointed to the Board resigned in May 2011. Since the resignation of these two independent directors, the GoI has indicated only one independent director to replace them - Dr. Uday B. Desai, who has been duly appointed. Further, Mr. Subodh Bhargava, an independent director has ceased to be a director with effect from March 30, 2017. Ms. Renuka Ramnath, an independent director, has been elected as the Chairperson of the Board w.e.f. April 14, 2017.

The Company is pursuing with the GoI and Panatone for indication of candidates for appointment as independent directors so as to fill the vacancies on the Board. Until the recommendation is received enabling the Nomination and Remuneration Committee (NRC) and the Board to appoint two more independent directors, the Company will not be able to comply with provisions of Section 149 (4) of Companies Act, 2013 and Regulation 17 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) R^gulationo 2015.

PENDING MATTERS OF SIGNIFICANCE

Inability to Raise Additional Equity Funding

In response to Company''s request for consideration of additional equity funding, the GoI has informed the Company that it is neither willing to invest in any further equity of the Company nor will it accept dilution of its stake in the Company. This has resulted in the Company not being able to avail of any non-debt funding through issue of equity since 1997.

Surplus Land

Out of the total land acquired by the Company (then Videsh Sanchar Nigam Limited) in 1986 from the GoI as the successor to the Overseas Communications Service, 773.13 acres of land at five different locations was identified as ''surplus'' (Surplus Land) for demerger under the terms of the share purchase and shareholders'' agreements (SHA) signed between the GoI and Panatone at the time of disinvestment. Under the terms of the SHA it was agreed that this Surplus Land would be demerged into a separate entity. It was further provided that if, for any reason, the Company could not transfer or demerge the Surplus Land into a separate entity, alternative solutions would be explored.

To accomplish the demerger of the Surplus Land in accordance with the SHA, Panatone incorporated Hemisphere Properties India Limited (HPIL) in 2005-06 to hold the Surplus Land as and when demerged. In March 2014, the GoI acquired ~51.12% of the shares in HPIL making it a Government company.

Additionally, with the objective to give effect to the terms of the SHA and to facilitate the demerger of Surplus Land in a tax neutral manner for the Company, the GoI has inserted an Explanation 5 to clause (19AA) of section 2 of the Income Tax Act, 1961 (Explanation 5) with effect from April 1, 2017 by a recent Taxation Laws (Amendment) Act, 2016. This Explanation 5 provides as follows:

"Explanation 5 - For the purposes of this clause, the reconstruction or splitting up of a company, which ceased to be a public sector company as a result of transfer of its shares by the Central Government, into separate companies, shall be deemed to be a demerger, if such reconstruction or splitting up has been made to give effect to any condition attached to the said transfer of shares and also fulfils such other conditions as may be notified by the Central Government in the Official Gazette"

Further, in exercise of the powers conferred by Explanation 5, the GoI pursuant to Central Board of Direct Taxes Notification 93/2016, No. 149/251/2015-TPL dated October 14, 2016, issued a notification (Notification) which states:

"that the reconstruction or splitting up of a company which ceased to be a public sector company as a result of transfer of its shares by the Central Government, into separate companies, shall be deemed to be a demerger, if the following conditions are fulfilled, namely:—

i. that such reconstruction or splitting up has been made to transfer any assets of the demerged company to the resulting company to give effect to the conditions mentioned in the Share Holders'' Agreement and Share Purchase Agreement; and

ii. that the resulting company is a public sector company."

The Directors place on record their sincere appreciation for the GoI for affecting the above mentioned Explanation 5 and Notification. The Company has sought certain clarifications on the said Explanation 5 and Notification and is pursing the same with the GoI.

The Company is currently actively working with the GoI, Panatone and HPIL to finalize the scheme of demerger and expects that the same shall be finalized sometime in the near future.

Continuous efforts are being made by the GoI, Panatone, HPIL and the Company to measure the land, demarcate it between Surplus Land and non-Surplus Land and to resolve the issues of variance in the physical areas of land vis a vis the areas of land mentioned in the SHA. As reported earlier, 32.5 acres of land situated at Padianallur was transferred in July 2009 to the VSNL Employees Cooperative Housing Society, Chennai (society) as per the order of the Hon''ble Delhi High Court. As this land was part of the Surplus Land, Panatone has written to the GoI to exclude these 32.5 acres of land from the Surplus Land to be demerged.

Additionally, as mentioned below in this Report, Delhi Metro Rail Corporation Limited (DMRC) has acquired approximately 2.6 acres of Company land for the Delhi Metro work, out of which 0.55 acres constitutes Surplus

Land.

Furthermore, as per the terms of the SHA, the Company owns 774 acres of land at Dighi, Kalas and other villages near Pune (Pune Land), of which 524 acres constituted Surplus Land. In 1940, approximately 94.7 acres of the Pune Land was leased to the Ministry of Defense (MoD) for the duration of the war which could form part of Surplus Land. The MoD continued to occupy this land and pay the agreed annual rent until March 31, 2006. Since this time, the Company has been seeking payment from the MoD for all rent due on the land. On July 31, 2010 the MoD informed the Company that the land in their possession had been transferred to the MoD in 2007 by the Collector of Pune and that no rent on this land was owed to the Company. The MoD further claims that the land was transferred to the MoD under a "Pune Package Deal" by the GoI and no compensation is payable by it to the Company for the land. The Company continues to pursue the matter for compensation for the unpaid rent and the value of the land.

In view of the above, the quantum of Surplus Land available for demerger has reduced. Significant progress has been made in reconciliation of the Surplus Land and the Board is hopeful that the outstanding issues on the demarcation of land shall be resolved by the promoters of the Company very soon.

The book value of the Surplus Land is ~Rs,0.16 crores. Delhi Metro Land Acquisition

In September 2013, the Delhi Metro Rail Corporation Limited ("DMRC") informed the Company that as part of its Delhi Metro work, it required a parcel of the Company''s land at Greater Kailash-I, New Delhi. This land parcel measured 1 1622 square meters (2.6 acres). On January 2, 2014, the Company received an acquisition notice for this land pursuant to an award granted by the Land Acquisition Collector (LAC). The Company subsequently received a certified copy of the LAC award on February 6, 2014 stating the total compensation for the land determined by LAC as Rs, 18,880,168/- based on an indicative price fixed by the Government of Delhi for agricultural land. Aggrieved, the Company filed a Reference Petition with LAC for the proper determination of the compensation due on the land based on commercial and not agricultural usage of land. Simultaneously, the Company also filed a writ petition with the Delhi High Court. On April 24, 2014, the Delhi High Court directed DMRC to deposit a sum of Rs, 247 crores with the Court Registrar which has since been deposited by DMRC. This amount is approximately 80% of the estimated compensation valuation for the land based on commercial usage. In the meantime, DMRC has commenced construction for the Delhi Metro work on the land. The writ petition in the Delhi High Court is at the stage of final arguments between the parties.

Premature Termination of Monopoly and Compensation

As reported earlier, the GoI had allowed other players into the International Long Distance (ILD) business from April 1, 2002, terminating the Company''s exclusivity in ILD two years ahead of schedule. The GoI agreed to give the Company a compensation package for this early termination by the terms of its communication to the Company dated September 7, 2000. The GoI also gave the Company an assurance that it would consider additional compensation, if found necessary, following a detailed review.

However, pursuant to its letter dated January 18, 2002, issued just before its disinvestment of the Company, the GoI issued a further dispensation to the Company and unilaterally declared that the conditions stated in its letter were to be treated as full and final settlement of every sort of claim against the early termination of the Company''s rights in the ILD market. The Company filed a suit in the Bombay High Court in 2005. The Bombay High Court, on July 7, 2010, ruled that it did not have the jurisdiction to hear this suit, in view of the provisions of the Telecom Regulatory Authority of India Act, 1997 (TRAI). In response, the Company has instituted an appeal before a division bench of the Bombay High Court on various grounds. This appeal in the Bombay High Court is yet to come up for hearing.

STATUTORY INFORMATION AND DISCLOSURES Material Events After Balance-Sheet Date

During the current year, NTT Docomo Inc. ("Docomo") had filed a petition with the Delhi High Court for implementation of the arbitration award (damages along with costs and interest) made by the London Court of International Arbitration. The Delhi High Court directed Tata Sons to deposit the damages, including costs and interest, in an escrow account. During the quarter ended September 30, 2016, the Company had remitted its share of Rs, 1058.00 crores, to Tata Sons. During the current year, based on the High Court Order dated April 28, 2017, the Company has made a provision of Rs, 872.01 crores towards the contractual obligation under the inter-se agreement being the difference between the fair value of the equity shares to be repurchased, based on the valuation undertaken as at November 18, 2016 and the consideration payable to the buyer for discharge of the Company''s obligations under the Put Option. The provision has been adjusted against the deposit of Rs, 1058 crores which is included in Non-current - Other financial assets. The Company does not believe that there is any obligation of any further payment in this regard.

Deposits from Public

The Company has not accepted nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company had Rs, 155 crores of outstanding NCDs (Secured NCDs - Rs, 5 crores and Unsecured NCDs Rs, 150 crores) as on March 31, 2017. The trust deed for the secured NCDs will be available for inspection by the members at the Company''s registered office during normal working hours, 21 days before the date of the 31st Annual General Meeting i.e. June 27, 2017.

All debentures issued by the Company were rated AA

by CARE.

Particulars of Employees

The provisions of Section 134 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, require the Company to provide certain details about the remuneration of its

employees.

According to the provisions of section 136(1) of the Act, the Directors'' Report being sent to the shareholders need not include this information as annexure. The annexure regarding the Particulars of Employees under section 134 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the AGM.

Conservation of Energy

To achieve optimal energy efficiency, we aim to employ continuous measurement of energy consumption, identify leakages and review our operating procedures. Our facilities / sites are designed to connect utilities such as chillers, Un-interrupted Power Supply (UPS) and Air Handling Units (AHUs) to a customer''s Building Management System (BMS) for maximizing efficiency and sourcing Renewable Energy (RE) from third party sources. We implemented several energy efficiency projects in 2016-17 across our operations, which further reduced our global emissions by 69,000 metric tons.

We consume nearly 2 million gigajoules of energy mainly comprising of indirect power supply (97%) from the national grid whereas rest comes from conventional sources. There is an on-going move to use renewable energy at key locations of Tata Communications. The Company has signed multiple agreements with wind power suppliers in Tamil Nadu, Karnataka and Hyderabad for 69 million kilowatt hours per annum for the facilities at Chennai, Bangalore & Hyderabad.

Technology Absorption

The Company continues to use the latest technologies for improving the productivity and quality of its services and products. The Company''s operations do not require significant import of technology.

Foreign exchange earnings and outgoings

For the purpose of Form ''C'' under the said rules, foreign exchange earnings were equivalent to Rs, 898.45 crores and foreign exchange outgo was equivalent to Rs, 623.1 1 crores.

Statutory Auditor''s Report

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

The standalone and consolidated financial statements of the Company have been prepared in accordance with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued there under (Ind AS) and other accounting principles generally accepted in India.

The Auditors have given a qualified opinion on the standalone and consolidated financial statements of the Company, as described below:

Standalone Financial Statements:

"As described in Note No. 6(VI) to the standalone Ind AS Financial Statements, the fair value of the Company''s investment in the unquoted equity shares of Tata Teleservices Limited (TTSL) has not been determined as at March 31, 2017. Accordingly, we are unable to comment whether the carrying value of the investment in TTSL ofRs, 515.53 crores represents the fair value as at March 31,2017 and whether any consequent adjustment is required to be recognized in other comprehensive income, and whether the expense for provision for contractual obligation, as described in Note No. 29 to the standalone Ind AS Financial Statements, is adequate."

Board''s Comment:

The equity investment in question is in an unlisted company where the Company is a minority shareholder holding less than 10 percent of the shares of the unlisted company. The Company was provided an external valuation report dated November 18, 2016 from the unlisted company.

As of the date of the issue of these financial statements, due to the continued volatility of market conditions, it was not possible to complete an updated valuation report to determine fair value as at March 31, 2017.

Consolidated Financial Statements:

1. "As described in Note No. 8(i) to the Consolidated Ind AS Financial Statements, investment in the unquoted equity shares of Tata Teleservices Limited (TTSL) has not been determined as at March 31,2017. Accordingly, we are unable to comment whether the carrying value of the investment in TTSL ofRs, 515.53 crores represents the fair value as at March 31, 2017 and whether any consequent adjustment is required to be recognized in other comprehensive income, and whether the expense for provision for contractual obligation, as described in Note No. 31 to the Consolidated Ind AS Financial Statements, is adequate."

Board''s Comment:

The equity investment in question is in an unlisted company where the Company is a minority shareholder holding less than 10 percent of the shares of the unlisted company. The Company was provided an external valuation report dated November 18, 2016 from the unlisted company.

As of the date of the issue of these financial statements, due to the continued volatility of market conditions, it was not possible to complete an updated valuation report to determine fair value as at March 31, 2017.

2. "As described in Note No. 34(II)(a), the Consolidated Ind AS Financial Statements includes loss from discontinued operations of '' 69.98 crores for the year ended March 31,2017, in respect of a subsidiary (disposed on February 10, 2017), whose financial statements have not been audited by us. These financial statements are unaudited and have been furnished to us by the Management and our opinion on the Consolidated Ind AS Financial Statements, in so far as it relates to the amounts and disclosures included in respect of this subsidiary is based solely on such unaudited financial statements."

Board''s Comment:

On February 10, 2017 the Company concluded sale of its entire shareholding in Neotel and the Company does not have any control over Neotel. Neotel is in the process of obtaining its audited Financial Statement and hence the Company has considered the management accounts of Neotel to prepare its consolidated financial statements. The Company believes that the numbers provided by the management will not differ significantly from the final audited financials. Further, this will not have any impact on the Consolidated Balance Sheet as on March 31, 2017.

Secretarial Auditors'' Report

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. U. C. Shukla a Practising Company Secretary (FCS No. - 2727/CP No. - 1654) to undertake the Secretarial Audit of the Company. The report of the Secretarial Auditor in Form MR-3 for the Financial Year ended March 31, 2017 is annexed to this Report. The Secretarial Audit Report contains the following observation:

"During the year under review the Company has complied with the provisions of the Act, Rules Regulations, Guidelines, Standards, etc. mentioned above subject to the following

observation

The Company has complied with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 except for appointment of Independent Directors to the extent of 1/3rd of the total strength of the Board."

Board''s Comment:

In February 2002, when the Government of India (GoI) transferred 25% of its stake in the Company to Panatone Finvest Limited (Pantone), a shareholders'' agreement and a share purchase agreement were signed. These agreements, inter alia, set forth the rights and obligations of Panatone and the GoI including appointment of directors on the Board of the Company. The relevant clauses from the agreements were incorporated in the Articles of Association of the Company which in part provide that the Board is to comprise of twelve directors, four of whom must be independent. The GoI and Pantone are entitled to indicate the names of two independent directors each.

The two independent directors indicated by the GoI and appointed to the Board resigned in May 2011. Since the resignation of these two independent directors, the GoI has indicated only one independent director to replace them - Dr. Uday B. Desai, who has been duly appointed. Further, Mr. Subodh Bhargava, an independent director has ceased to be a director with effect from March 30, 2017. Ms. Renuka Ramnath, an independent director, has been elected as the Chairperson of the Board w.e.f. April

14, 2017.

The Company is pursuing with the GoI and Panatone for indication of candidates for appointment as independent directors so as to fill the vacancies on the Board. Until the recommendation is received enabling the Nomination and Remuneration Committee (NRC) and the Board to appoint two more independent directors, the Company will not be able to comply with provisions of Section 149 (4) of Companies Act, 2013 and Regulation 17 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Particulars of loans, guarantees or investments under Section 186

The particulars of loans, guarantees and investments have been disclosed in the Financial Statements which also form part of this report.

Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Financial Controls

The Company has adequate internal financial controls with reference to the preparation and presentation of Financial Statements which are operating effectively.

Subsidiaries

A statement in Form AOC-I pursuant to first proviso to Section 129 of the Act read with rule 5 of Companies (Accounts) Rules, 2014 containing salient features of the financial statement of subsidiaries/ associate companies/ joint ventures forms a part of this report. The Company adopted Ind AS from April 1, 2016 and accordingly, the consolidated financial statements of the Company and its subsidiaries, are prepared in accordance with the recognition and measurement principles stated therein. The account statements of the subsidiaries will be provided on request to any shareholder wishing to have a copy, on receipt of such request addressed to the Company Secretary at the Company''s registered office. These documents will also be available for inspection by any shareholder at the Company''s registered office and will be available on the Company''s website.

Changes in the Board of Directors & Key Managerial

Personnel

Mr. Subodh Bhargava, independent director ceased to be a director on the Board with effect from March 30, 2017, as his term as independent director came to an end. The Board places on record its sincere gratitude for Mr. Bhargava''s counsel and leadership which has been invaluable to the growth and development of the Company. Ms. Renuka Ramnath, independent director, has been elected as the Chairperson of the Board with effect from April 14, 2017.

Dr. Ashok Jhunjhunwala stepped down from the Board with effect from January 27, 2017. The Board places on record its sincere appreciation for his contributions and guidance to the Company.

After obtaining the requisite security clearance under the Company''s TV up linking license from the Ministry of Information and Broadcasting, GoI, the Board, at its meeting held on October 18, 2016, appointed Mr. G. Narendra Nath, Deputy Director General (Security), Department of Telecommunictions, Government of India, as an additional director of the Company, as per the nomination received from the Government of India.

The Board seeks approval of the shareholders at the 31st Annual General Meeting for confirmation of the appointment of Mr. G Narendra Nath.

In accordance with the provisions of the Act and the Company''s Articles of Association, Mr. Bharat Vasani and Mr. N. Srinath retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

None of the Company''s directors are disqualified from being appointed as a director as specified in Section 164 of the Act. For details about the directors, please refer to the report on Corporate Governance.

Declaration of Independent Directors

The independent directors have provided necessary disclosures to the Company that they comply with all the requirements stipulated in Section 149(6) of the Act for being appointed as an independent director which forms part of the Directors'' Report.

Particulars of contracts or arrangements with related parties referred to in Section 188 of the Act

There have been no materially significant related party transactions between the Company and the directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the Directors'' Report.

Number of meetings of the Board

Eleven meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the report on Corporate Governance, which forms part of the Directors'' Report.

Board evaluation

The Board of Directors of the Company carried out annual evaluation of its own performance, of committees of the Board and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015.

Inputs were sought from all the directors on the basis of criteria such as the Board composition and structure, effectiveness of and contribution to Board processes, adequacy, appropriateness and timeliness of information and the Board''s overall functioning, etc. In a meeting of independent directors held on March 1, 2017, the performance of the Board as a whole, its committees and the Chairperson was evaluated. The conclusions were discussed in a meeting of the NRC where the performance of the Board, its committees and individual directors were reviewed. Thereafter, the Board, based on the briefing by the Chairperson and the NRC discussed the assessment of the Board, its committees and the Cl ijnperoM-i.

Policy on directors'' appointment and remuneration and other details

The Company''s policy on directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the report on Corporate Governance, which forms part of the Directors''

Report.

Audit committee

The details pertaining to composition of the Audit Committee are included in the report on Corporate Governance, which forms part of the Directors'' Report.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the Company''s website.

Extract of annual return

As provided under Section 92(3) of the Act, the extract of annual return is given in the prescribed Form MGT-9 which forms part of the Directors'' Report as Annexure II.

Particulars of employees

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given below:

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2016-17:

Non-Executive Directors

Ratio to median remuneration *

Mr. Subodh Bhargava (up to March 30, 2017)

3.06

Mr. N. Srinath

0.68

Mr. Kishor A. Chaukar

1.51

Dr. Ashok Jhunjhunwala (up to January 27, 2017)

1.07

Dr. Uday B. Desai

2.48

Mr. Saurabh Kumar Tiwari #

1.10

Mr. Bharat Vasani

0.76

Ms. Renuka Ramnath

2.08

Dr. Gopichand Katragadda

0.87

Mr. G. Narendra Nath #

0.20

Executive Director

Mr. Vinod Kumar

48.46

* While calculating the ratio for non-executive directors, both commission and sitting fees paid have been taken.

# The Government directors have informed the Company that they shall not accept any sitting fees and commission as their directorships are considered to be part of their official duty.

b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Directors, Chief Executive

% increase in

Officer, Chief Financial Officer

remuneration

and Company Secretary*

in the financial

year *

Mr. Subodh Bhargava @

(up to March 30, 2017)

NA

Mr. N. Srinath

(11.34)

Mr. Kishor A. Chaukar

(3.76)

Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary*

% increase in remuneration in the financial year *

Dr. Ashok Jhunjhunwala @ (up to January 27, 2017)

NA

Dr. Uday B. Desai

12.01

Mr. Saurabh Kumar Tiwari #

NA

Mr. Bharat Vasani

28.34

Ms. Renuka Ramnath

19.85

Dr. Gopichand Katragadda

69.14

Mr. G. Narendra Nath #

NA

Mr. Vinod Kumar, Managing Director & Group CEO

17.60

Ms. Pratibha K Advani, Chief Financial Officer @

NA

Mr. Manish Sansi, Company Secretary @

NA

* While calculating the ratio for non-executive directors, both commission and sitting fees paid have been taken.

@ Directors and KMPs who have not been in the Company for the entire financial years 2015-16 and 2016-17 have not been considered for the calculation::..

# The Government Directors have informed the Company that they shall not accept any sitting fees and commission as their Directorships are considered to be part of their official duty.

c. The percentage increase in the median remuneration of employees in the financial year:

d. The number of permanent employees on the rolls of Company: 4064

e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was around 8.4%. However, during the course of the year, the total increase is approximately 7.9%, after accounting for promotions and other event based compensation revisions. Increase in the managerial remuneration for the year was 14.3''%.

f. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration is as per the remuneration policy of the Company.

g. Particulars of Employees:

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modifications and amendments thereto, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Corporate Governance

Pursuant to Regulation 24 and Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis, Business Responsibility Report, Report on Corporate Governance and Auditors'' Certificate regarding compliance with conditions of corporate governance form part of the Directors'' Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s), as applicable, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant

Board committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2016-1''.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

- In the preparation of the annual accounts, the applicable accounting standards were followed and there were no material departures;

- 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 at the end of the financial year and of the profit and loss of the Company for that period;

- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other iueciulautiec;

- the directors had prepared the annual accounts on a going concern basis.

- the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

- the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

- the directors have reviewed and approved the Annual Operating Plan (including the strategy and resource plan) of the Company.

- the directors have overseen maintenance of high standards of Tata values and ethical conduct of business.

- the directors have reviewed TBEM (Tata Business Excellence Model) findings and monitored the action plan.

- the directors have protected and enhanced the

Company and Tata brand, where companies are using the same.

Awards & Recognitions

Gartner''s Magic Quadrant for Network Services, Global

- Tata Communications has been positioned as a Leader in the Gartner Magic Quadrant for Network Services, Global for the fourth year in a row.

A 2017 Best Employer in India and Hong Kong by Aon

Hewitt

- In 2017, for the second year in a row, Tata Communications has been recognized as one of the Best Employers in India. Only 18 other companies in India have received this recognition and it is a testament of the Company''s commitment to its employees and progressive people practices, specifically in the area of Learning and Development. In addition, earlier this year we were also recognized as one of the Best Employers in Hong Kong.

Ranked 19th in the Top 25 companies in India (2017) -

LinkedIn

- In 2017, Tata Communications was ranked 19th in the Top 25 companies to work for in India by LinkedIn.

Certified as Great Place to Work in India (2017) - Great

Place to Work Institute

- In 2017, Tata Communications was also certified as a Great Place to Work in India by the Great Place to Work Institute, again a testament of the progressive people practices deployed by the Company.

ACKNOWLEDGMENTS

The directors would like to thank each one of our customers, business associates and suppliers located in different parts of the world for their valuable contribution to the Company''s growth and success. The directors recognize and appreciate the passion and commitment of all the employees around the world.

The directors are grateful to the Company''s other stakeholders and partners including its shareholders, promoters, bankers and others for their continued support.

On behalf of the Board of Directors

OiSiilperosn

Dated: May 4, 2017

Registered Office:

VSB, Mg Road, Fort,

Mumbai – 400001


Mar 31, 2015

Dear Shareholders,

The directors present the 29th Annual Report and audited financial statements of Tata Communications Limited (the 'Company') for the financial year ended 31 March 2015. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

PERFORMANCE

The key financial parameters of the Company during the year under review are given in the table below:

2014-15 2013-14 Percentage (Rs.in Crores) (Rs.in Crores) Change

Consolidated continuing total income 18,264.42 17,848.62 2.33%

Consolidated continuing total EBIDTA 2,456.94 2,432.40 1.01%

Profit before taxes from continuing operations 506.29 503.66 0.52%

Net profit from continuing operations before minority interest 135.83 160.38 -15.31%

Loss from discontinuing operations (132.74) (57.56) 130.61%

Consolidated profit after tax 1.29 101.42 -98.73%

Standalone total income 4,989.88 4,840.35 3.09%

Standalone profit before tax 1,003.27 803.48 24.87%

Standalone profit after tax 674.62 542.43 24.37%

On a Standalone basis, profit after tax during the year under review improved to Rs.674.62 crores from Rs. 542.43 crores last year. The consolidated profit after tax was Rs.1.29 crores against Rs.101.42 crores in the previous year. The consolidated profit figures for the year are after taking into consideration the loss of Rs.171.64 crores (Rs.136.06 crores in FY13-14) of Tata Communications Payment Solutions Ltd (TCPSL) a 100 % subsidiary of the Company which is in its gestation period. Of the Company's total consolidated revenues, 27% (25% in FY 13-14) came from India. The rest of the world contributed 73% or Rs.13,140.04 crores of the total continuing operations revenue against 75% or Rs. 13,280.03 in the previous year.

The consolidated accounts for 2014-15 have been drawn up using management accounts (pending completion of audit) of one of the Company's foreign subsidiaries, Neotel Pty. Ltd. Therefore, the Company's statutory auditors have issued a qualified Audit Report for the year.

Dividend

The directors are pleased to recommend a dividend of Rs.5.50 per share (Rs.4.50 per share last year) for the financial year ended 31 March 2015, subject to the approval of the shareholders at the upcoming annual general meeting.

Transfer to Reserves

On a standalone basis, the Company proposes to transfer Rs.407.46 crores to the general reserve out of the amount available for appropriation and an amount of t1,726.94 crores is proposed to be retained in the Company's profit and loss account.

OPERATIONS

Segment Distribution

Over the last few years, Tata Communications has been successful in its goal of diversifying revenues, to tap new opportunities and reduce any risks of an overly concentrated portfolio. Accordingly, the revenues are now broadly diversified across data and voice products and across business segments, especially by taking advantage of greater opportunities in the data market in new segments such as media and entertainment, financial services, health care, etc. During 2014-15, consolidated continuing operations revenue from voice services contributed 49% (53% last year) of total revenue and data services contributed 51% (47% last year). This is discussed in details in the Management Discussions & Analysis which forms a part of this report.

Voice

In the voice business, Tata Communications remains one of the largest players worldwide. The trend of declining margins continues due to traffic shifting to VoIP-based calling. Therefore, Tata Communications is focused on developing innovative commercial offerings and optimizing costs to maintain free cash flow generation from this business. During the year under review total voice traffic fell by 13% over the previous year, while EBITDA margins have declined by 19% and EBITDA declined 23%. Free cash flow or (EBITDA less capex)generated during the year from the voice business was Rs.608 crores (Rs.804 crores in the previous year).

Data

Data continues to present substantial opportunities for Tata Communications to achieve rapid growth and improved profitability. Over the years, Tata Communications has moved from being a traditional connectivity services provider, largely in India, to a truly global services provider - offering a broad range of managed communication and collaboration services as well as IT infrastructure services. The data business has continued its robust momentum, with data revenues growing in double digits during 2014-15. The launch of cloud enablement solutions such as IZOTM services, coupled with network and data center services, helped the Tata Communications to grow its data portfolio and strengthen its presence in this high-growth business. Tata Communications has also been strengthening its unified communications services portfolio encompassing all forms of communications, as well as its industry solutions for the Media & Entertainment sector and the Banking & Financial Services sector. The Company's strategy of expanding into managed services continues to pay off, as managed services now contribute 36% to the data services segment (35% last year).

Neotel (Disclosed as Discontinuing Operations)

Neotel is a subsidiary of the Company in South Africa. In May 2014, the shareholders of Neotel and Vodacom SA concluded an agreement on the commercial structure and terms to proceed for Vodacom to acquire 100% of the shares of Neotel valued at an enterprise value of ZAR 7.0 billion. The structure of the deal and its commercial terms remain subject to necessary approvals of regulatory and competition authorities.

Human Resources

Tata Communications worldwide has a multicultural workforce, with people of more than 40 nationalities on its rolls, while women constitute 18% of the workforce. The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where it operates. Employee relations continued to be harmonious at all our locations, through continuous dialogue and openness. The number of training person days provided to employees increased by 26.72% over the previous year, to a total of 42260 days.

Tata Communications has zero tolerance for sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. As on 31 March 2015, out of the two complaints on sexual harassment received during the year, one complaint has been resolved with appropriate action taken and one complaint remained pending.

Business Excellence

The Company has progressed in its endeavors to transform itself in tandem with market and regulatory changes, using as its framework the Tata Business Excellence Model (TBEM), which has been devised based on the Baldrige Excellence Framework. The Company has been classified as an "Emerging Industry Leader" following a rigorous assessment conducted by Tata Quality Management Services.

In the financial year 2014-15, for the second year in a row, Tata Communications has been positioned as a leader in the Gartner Magic Quadrant for network services -global, a testament to its ongoing commitment to driving its network capabilities forward, while extending coverage in both developed and emerging markets.

Enterprise Risk Management

The Company has established an enterprise-wide risk management (ERM) framework to optimise the identification and management of risks globally and to comply with clause 49 of the listing agreement with Indian stock exchanges. In line with the Company's commitment to delivering sustainable value, this framework aims to provide an integrated and organized approach for evaluating and managing risks.

There are no elements of risk, which in the opinion of the Board may threaten the existence of the Company.

Risk-based Internal Audit

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers Tata Communications' various businesses and functions. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

CORPORATE MATTERS

Subsidiary Companies

The Company had 42 subsidiaries as on 31 March 2015 and two associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries and associate companies.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements.

Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

During the year, the process of closure of the following wholly-owned indirect subsidiaries, which were not in operation, was completed:

a. TCNL 1 B.V. (w.e.f. 26 August 2014)

b. TCNL 2 B.V. (w.e.f. 26 August 2014)

During the year, in order to optimize the subsidiary structure, a wholly-owned indirect subsidiary, BitGravity Inc. was merged with another wholly-owned indirect subsidiary Tata Communications (America) Inc.

During the year, the Company incorporated a wholly- owned indirect subsidiary in China named Tata Communications (Beijing) Technology Limited.

In May 2014, the shareholders of Neotel and Vodacom SA concluded an agreement to acquire 100% of the shares of Neotel. On 17 June 2014, Neotel Pty. Ltd. (together with all its shareholders) and Vodacom Proprietary Limited (Vodacom) submitted an application to the Independent Communications Authority of South Africa (the Authority) for approval in respect of the proposed acquisition by Vodacom of the entire issued share capital of Neotel (the application). The Authority has commenced with the public consultation process alluded to above.

Investment in Tata Teleservices Limited

The Company was informed about the decision taken on 25 April 2014 by the Board of Directors of NTT DoCoMo, Inc. of Japan (NTT) to exercise the sale option in respect of Tata Teleservices Limited (TTSL) shares under the terms of a legal agreement and the option was required to be exercised by 30 June 2014. Prevailing regulations permit a company to acquire shares from a non-resident only at a valuation based on the prescribed method.

In terms of agreements entered into in 2008-09, the Company was entitled to and had sold to NTT part of its stake in TTSL atRs. 116.09 per share resulting in a profit of Rs. 346.65 crores in that year. According to the sale agreement, the Company, along with other selling shareholders of TTSL, may be obligated to indemnify NTT against claims arising from the possible failure of certain representations and from specified contingent liabilities. The amount in the case of failure of certain representations is not determinable, while the Company is liable to pay up to Rs. 39.86 crores towards specified contingent liabilities. With NTT deciding to divest its entire shareholding in TTSL and a buyer not being found for such shares, the Company along with other selling shareholders of TTSL may be obligated to acquire the entire stake from NTT at the higher of the fair value or Rs. 58.05 per share i.e. 50% of the subscription purchase price subject to compliance with applicable laws and regulations. Should NTT decide to divest its entire shareholding in TTSL at a lower price, then, the Company along with other selling shareholders of TTSL may be obligated to indemnify any loss byway of a monetary compensation equal to the difference between such lower sale price and the price referred to above subject to compliance with applicable exchange control regulations. Tata Sons Limited has informed the Company that NTT has filed a request for arbitration with the London Court of International Arbitration alleging breach by Tata Sons Limited of its obligations under the shareholders agreement. Tata Sons Limited has filed its response to the said request for arbitration and has communicated the name of its nominee arbitrator. Please see Note No.36(a)(5) of standalone Notes to Accounts and Note No.40(a)(4) of the consolidated notes to accounts.

Compliance under the Companies Act 2013 ("Act") and additional SEBI stipulations

The Act came into force substantially from 1 April 2014. Also, SEBI in its master circular dated 17 April 2014 notified additional requirements on corporate governance which became effective from 1 October 2014. These requirements substantially increase the compliance requirements for companies.

As on the date of this Report, the Board comprised 11 directors, out of whom three were independent. As reported to the Indian stock exchanges, in February 2002, when the Government of India (GoI) transferred 25% of its stake in the Company to the strategic partner, a shareholders agreement and a share purchase agreement were signed. The said agreements, inter alia, set forth the rights and obligations of the strategic partner and the GoI including appointment of directors on the Board of the Company. The relevant clauses from the agreements were incorporated in the articles of association of the Company. Under the articles of association and in accordance with the agreements referred above, the Board is to comprise of 12 directors, four of whom must be independent. The GoI and the strategic partner are entitled to recommend two independent directors each. The GoI has been in the process of recommending the name of the other independent director. The Company and the Board have been vigorously pursuing with the GoI to recommend the name of one more independent director so as to fill in this vacancy. Until the recommendation is received from the GoI enabling the Board to appoint one more independent director, the Company will not be able to be compliant with Clause 49(IA)(ii) of the listing agreement.

As per the listing agreement, the Company is required to send to the stock exchanges, consolidated annual accounts within 60 days of the end of the financial year. The Company was not able to file its annual accounts with the stock exchanges within the stipulated time as one of the foreign subsidiaries of the Company, Neotel Pty. Ltd. and its associated companies were not able to finalize their audited accounts within that time. Neotel continues to work with its auditors to resolve the outstanding issues and hopes to be in a position to finalize its audited financial statements. In compliance with the SEBI circular dated 30 September 2013, the Company has paid the specified fines imposed by the stock exchanges for the delay in filing of annual accounts with the stock exchanges. On 28 July 2015, rather than further delaying the release of the consolidated financial statements, the Company finalized its annual accounts using the management accounts for Neotel. For this reason, the Company's statutory auditors have issued a qualified audit report on the consolidated financial statements.

PENDING MATTERS OF SIGNIFICANCE

Surplus Land

Under the terms of the share purchase and shareholders' agreements (SHA) signed between the Government of India (GoI) and the strategic partner (SP) at the time of disinvestment, it was agreed that certain identified land in the ownership of the Company would be demerged into a separate company. It was further provided that if, for any reason,the Company cannot hive off or demerge the said surplus land into a separate entity, alternative courses that were also stipulated in the SHA would be explored. A draft scheme of demerger was presented to the Board in April 2005, which was forwarded to the GoI with the Board's observations. The Board/management have been exploring other alternatives also with the GoI and SP. The GoI has informed the Company that it is willing neither to invest in any further equity of the Company nor will it allow dilution of its stake in the Company. This has resulted in the Company not being able to avail of any non-debt funding through issue of equity since 2002. The Company has been regularly following up the matter with the GoI and has addressed several communications and held several meetings with both the GoI and SP highlighting the urgency for resolution and also the need for non-debt funding. To accomplish demerger of the surplus land in accordance with such scheme of demerger, the SP incorporated Hemisphere Properties India Limited (HPIL) sometime in 2005-06 to hold the surplus land as and when demerged. In March 2014, the GoI acquired 51.12%shares in HPIL making it a Government company. It is understood that the GoI will send its modifications to the draft scheme of arrangement of demerger of surplus land, which will be placed before the boards of the Company and HPIL.

Out of the total land purchased by the Company (then Videsh Sanchar Nigam Limited) in 1986 from the Government of India as the successor of Overseas Communications Service, 773.13 acres of land at different locations was initially identified as 'surplus' land for demerger as per the SHA.

As mentioned below in this report, land measuring ~2.6 acres has been acquired in Greater Kailash - I, Delhi for Delhi Metro Rail Corporation Limited (DMRC) for the Delhi Metro work, out of which ~21% (i.e. ~0.54 acres) falls within surplus land.

As reported earlier, 32.5 acres of land situated at Padianallur was transferred in July 2009 to the VSNL Employees Cooperative Housing Society, Chennai(society) as per the order of the Hon'ble Delhi High Court. As this land was part of the identified surplus land, the SP has written to the GoI to exclude the 32.5 acres of land so transferred to the society, from the 773.13 acres mentioned in the SHA as the land identified to be demerged.

The Company owns at Dighi, Kalas and other villages near Pune 774 acre of land. Out of this land (Pune land), 524 acres were identified as surplus as per the SHA. In 1940, approximately 94 acres out of the Pune land were given to the Ministry of Defense on lease for duration of the war, which land falls within the land identified as surplus land. As then agreed, the Ministry of Defense had been paying annual rent for occupying this land till 31 March 2006. The Company has been following up with the Ministry of Defense for release of rent due, since 1 April 2006. On 31 July 2010 the said Ministry of Defense informed that the land in its possession was transferred to it in 2007 by the Collector of Pune and therefore rent cannot be paid. Ministry of Defense claims that the land was transferred under the Pune Package Deal by the Government and no compensation is payable. The Company continues to pursue the matter with the Ministry of Defense for compensation.

In view of the above, the quantum of surplus and available for demerger has reduced. The book value of the surplus land is Rs. 0.16 crores.

Premature Termination of Monopoly and Compensation

As reported earlier, the GoI had allowed other players into the international long distance (ILD) business from 1 April 2002, terminating the Company's exclusivity two years ahead of schedule. The GoI gave the Company a compensation package as per its communication dated 7 September 2000; wherein the GoI also gave an assurance that it would consider additional compensation, if found necessary, on a detailed review when undertaken.

However, vide its letter dated 18 January 2002, issued just

before the disinvestment of the Company, the GoI issued a further dispensation and unilaterally declared that the conditions stated in its said letter of 18 January 2002 were to be treated as full and final settlement of every sort of claim against the premature ILD de-monopolisation. The Company filed a claim in the Bombay High Court in 2005. The Bombay High Court, on 7 July 2010, ruled that it did not have the jurisdiction to entertain this suit, in view . of the provisions of the Telecom Regulatory Authority of India Act, 1997 (TRAI). Since the Company holds a different opinion, it has preferred an appeal before a division bench of the Bombay High Court on various grounds including that the compensation granted was in breach of promise from the GoI, acting as a policy maker and not as a licensor under the Indian Telegraph Act; that the dispute did not relate to the provision of telecommunication services as envisioned under the TRAI Act; and that the suit was not under, pursuant to and consequent upon the license then granted to the Company. The appeal for hearing admitted by the Bombay High Court is yet to come up.

Delhi Metro Rail Corporation Limited (DMRC) Land Acquisition

In September 2013, DMRC conveyed that as part of the Delhi Metro work, DMRC needs a piece of company's land at Greater Kailash-I, New Delhi. This land parcel measuring ~10489.18 sq metres (2.6 acres) also includes approximately 21% (0.54 acres) surplus land. On 3 January 2014, TCL received an acquisition notice stating award announced by the land acquisition collector (LAC) on 30 December 2013, without giving any details of the award. The Company received the certified copy of the award on 7 February 2014 as per which, the total compensation determined by the LAC is Rs. 188,80,168/- based on indicative price fixed by Govt. of Delhi for agricultural land. Aggrieved, the Company filed a reference petition for proper determination of the compensation with the LAC based on commercial usage of land. Simultaneously, the Company also filed a writ petition with the Delhi High Court challenging the acquisition proceedings. On 24 April 2014, the High Court directed DMRC to deposit the sum of Rs. 247 crores with the Court Registrar which has since been deposited by DMRC. This amount is approximately 80% of the estimated compensation valuation for the acquired property. In the meantime DMRC has commenced construction for the Delhi Metro work on the land. The writ petition as well as the reference petition are pending for disposal.

STATUTORY INFORMATION AND DISCLOSURES

Material Events after Balance-Sheet Date

There has been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2014-15 and the date of this report.

Deposits from Public

The Company has not accepted nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company had Rs.210 crores of outstanding NCDs as on 31 March 2015. The trust deeds for the NCDs issued by the Company will be available for inspection by the members at the Company's registered office during normal working hours, 21 days before the date of the 29th annual general meeting.

The Company redeemed Rs.190 crores of long term secured and Rs.150 crores of unsecured debentures during the year 2014-15. All debentures issued by the Company were rated AA by CARE.

Particulars of Employees

The provisions of Section 134 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, require the Company to provide certain details about the remuneration of the employees.

According to the provisions of section 136(1) of the Act, the Directors' Report being sent to the shareholders need not include this information as annexure. The annexure regarding the Particulars of Employees under section 134 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the AGM.

Conservation of Energy

The Company has taken a number of steps in improving energy efficiency. More than 80% of the energy is consumed by the data centres. The energy efficiency in data centers in India is measured by PUE- Power Utilization Effectiveness. Over the last 4 years, the PUE has steadily come down from 2.2 to 1.7. The various steps taken include adaptation and implementation of new and improved technology for improving the air conditioning efficiency and implementing efficient electrical engineering for avoiding UPS energy and power distribution losses.

The Company has also taken steps for utilising alternate sources of energy through on-site solar power plants by installing energy conservation equipment. The Company is also in the process of co-building solar power plants in Tamil Nadu to provide 140 M units of green power by April 2016.

Technology Absorption

The Company continues to use the latest technologies for improving the productivity and quality of its services and products. The Company's operations do not require significant import of technology.

Foreign Exchange Earnings and Outgo

For the purpose of Form 'C under the said rules, foreign exchange earnings were equivalent to t 1,031.43 crores and foreign exchange outgo was equivalent to Rs. 408.85 crores.

Statutory Auditor's Report

The consolidated financial statements of the Company have been prepared in accordance with Accounting Standard 21 on Consolidated Financial Statements, Accounting Standard 23 on Accounting of Investments in Associates and Accounting Standard 27 on Financial Reporting of Interest in Joint Ventures, issued by the Council of The Institute of Chartered Accountants of India.

The auditors have given a qualified opinion on the consolidated financial statements of the Company, as listed below:

As referred to in note 34 to the consolidated financial statements, the consolidated financial statements include the unaudited consolidated financial information of a subsidiary and its Group consisting its subsidiary and an associate, pending resolution of certain matters resulting from an inquiry into certain transactions undertaken by such subsidiary. Accordingly, the unaudited consolidated financial information consisting of such subsidiary and its Group reflect total assets of Rs. 2,738.13 crores as at March 31 2015, total revenues of Rs. 2,140.25 crores and net cash outflows amounting to Rs. 49.04 crores for the year then ended, as considered in the consolidated financial statements, based on their unaudited consolidated financial information. These unaudited consolidated financial information has been furnished by the management and our opinion, in so far as it relates to the amounts included in respect of such subsidiary and its Group, is based solely on such unaudited consolidated financial information and consequently we are unable to determine whether any adjustment might be necessary to the consolidated financial statements.

Board's comment:

One of the Company's foreign subsidiaries, Neotel Pty. Ltd., and its associated companies, has been unable to finalise their audited accounts. The issue at Neotel involves potential reportable irregularities identified by its statutory auditors in respect of a particular third party intermediary engaged by Neotel during the third quarter of FY 2014-15 in connection with a customer contract. Upon learning of the auditor's concern, the Board of Neotel appointed an independent firm to investigate the matter.

The Company has since been advised by the Neotel Board that to the best of their knowledge, based on the investigation, there has been no finding of corruption or illegal activities undertaken by employees of Neotel, with the exception of misconduct by one of its employees, who is no longer with Neotel. Pursuant to its obligations under the laws of South Africa, the matter has been referred to the appropriate authorities in South Africa. Neotel continues to work with its auditors to resolve the outstanding issues, and hopes to be in a position to approve its audited financial statements soon.

Based on the current facts, the Company believes that these matters will not have a material adverse effect on its business, financial condition, results of operations or cash flow of the Company. Therefore, the Company finalised its annual accounts using the management accounts for Neotel.

Consequently, the Company was not able to file its annual accounts with the stock exchanges within the stipulated time. In compliance with the SEBI Circular No.CIR/MRD/DSA/31/2013 dated 30 September 2013, the Company has paid the specified fines imposed by the stock exchanges for the delay in filing of annual accounts with the stock exchanges.

Secretarial Auditor's Report

Due to the above, the Independent Secretarial Auditor has made an observation in the secretarial audit report, the comment on which is the same as the comment above.

Particulars of loans, guarantees or investments under Section 186

The particulars of loans, guarantees and investments have been disclosed in the financial statements which also form part of this report.

Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Financial Controls

The Company has adequate internal financial controls with reference to the preparation and presentation of financial statements which are operating effectively.

Subsidiaries

A statement in Form AOC-I pursuant to first proviso to Section 129 of the Act read with rule 5 of Companies (Accounts) Rules, 2014 containing salient features of the financial statements of subsidiaries/ associate companies/ joint ventures forms a part of this report. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS 21) prescribed by the Institute of Chartered Accountants of India, form part of the Annual Report and accounts. The accounts statements of the subsidiaries will be provided on request to any shareholder wishing to have a copy, on receipt of such request addressed to the company secretary at the Company's registered office. These documents will also be available for inspection by any shareholder at the Company's registered office and will be available on the Tata Communications' website.

Changes in the Board of Directors and Key Managerial Personnel

In accordance with the applicable Tata guidelines regarding age limit prescribed for a director, Mr. S. Ramadorai and Mr. Amal Ganguli stepped down from the Board with effect from 6 October 2014 and 16 October 2014 respectively. The Board places on record its deep appreciation for their contributions and guidance to the Company.

In accordance with the Act and the Rules made thereunder read with Schedule IV to the Act, as amended from time to time, Ms. Renuka Ramnath was appointed by the Board as an additional director - independent, subject to shareholders' approval. The appointment of Ms. Ramnath, who has submitted a declaration that she meets the criteria for independence as provided in Section 149(6) of the Act and who is eligible for appointment as an independent director, not liable to retire by rotation, to hold the office for a period of 5 years from 8 December 2014 till 7 December 2019, is being placed before the shareholders for approval at the ensuing annual general meeting.

In accordance with the provisions of the Act and the Company's Articles of Association, Dr. Ashok Jhunjhunwala and Mr. N. Srinath retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment.

Dr. Gopichand Katragadda who was appointed as an additional director holds office only up to date of the this annual general meeting and in respect of whom a notice under the provisions of Section 160 of the Act has been received by the Company from a member signifying his intention to propose Dr. Gopichand Katragadda as a candidate for the office of director liable to retire by rotation.

Mr. Sanjay Baweja, resigned from the office of the Chief Financial Officer with effect from 2 November 2014 and Ms. Pratibha K Advani joined as the Chief Financial Officer from 8 May 2015.

None of the Company's directors are disqualified from being appointed as a director as specified in Section 164 of the Act. For details about the directors, please refer to point 2 of the Report on Corporate Governance.

Declaration of Independent Directors

The independent directors have provided necessary disclosures to the Company that they comply with all the requirements stipulated in Section 149(6) of the Act for being appointed as an independent director.

Particulars of contracts or arrangements with related parties referred to in Section 188 of Act

There have been no materially significant related party transactions between the Company and the directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report.

Number of Meetings of the Board

Six meetings of the Board were held during the year. For details of the meetings, please refer to the corporate governance report, which forms part of this report.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, of Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the listing agreements ("Clause 49").

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of and contribution to Board processes, adequacy, appropriateness and timeliness of information and the Board's overall functioning, etc.

The performance of the committees was evaluated by the Board after seeking inputs from the members of the respective committees on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent directors, the performance of the non-independent directors, the Board as a whole and of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The consensus on conclusions was discussed in the Board meeting that followed the meeting of the independent directors, at which the performance of the Board, its committees and individual directors was also discussed.

Policy on Directors' Appointment and Remuneration and Other Details

The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance report, which forms part of the Directors' Report.

Audit Committee

The details pertaining to composition of the Audit Committee are included in the Corporate Governance Report, which forms part of this report.

Corporate Social Responsibility

The brief outline of the corporate social responsibility (CSR) policy of the Company and the CSR initiatives undertaken during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company.

Extract of Annual Return

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure II in the prescribed Form MGT-9, which forms part of this report.

Particulars of Employees

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2014-15:

Non-Executive Directors Ratio to median remuneration*

Mr. Subodh Bhargava 1.97

Mr. Srinath Narasimhan 0.58

Mr. Kishor Chaukar 1.18

Dr. Ashok Jhunjhunwala 0.72

Dr. U.B. Desai 1.76

Mr. Ajay Kumar Mittal# 0.78

M r. Saurabh Tiwari# 0.43

Mr. Bharat Vasani 0.63



Non-Executive Directors Ratio to median remuneration*

Ms. Renuka Ramnath (From 8 Dec 0.51 2014)

Dr. Gopichand Katragadda (From NA 26 March 2015)

Mr. S. Ramadorai (Up to 6 October NA 2014) **

Mr. Amal Ganguli (Up to 16 0.64 October 2014)

Executive Director

Mr. Vinod Kumar 35.63

* While calculating the ratio for non-executive directors, both commission and sitting fees paid have been taken.

** Mr. Ramadorai has not received any remuneration from the Company for FY 2014-15.

# The Government directors have informed the Company that they shall not accept any sitting fees and commission as their directorships are considered as part of their official duty.

i. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Directors, Chief Executive % increase in Officer, Chief Financial Officer remuneration and Company Secretary * in the financial year

Mr. Subodh Bhargava 43.32

Mr. Srinath Narasimhan 44.29

Mr. Kishor Chaukar 62.83

Dr. Ashok Jhunjhunwala 28.74

Dr. U.B. Desai 52.57

Mr. Ajay Kumar Mittal# NA

Mr. Saurabh Tiwari# NA

Mr. Bharat Vasani** 485.71

Ms. Renuka Ramnath (From 8 Dec NA 2014)

Dr. Gopichand Katragadda (From NA 26 March 2015)

Mr. S. Ramadorai (Up to 6 NA October 2014)

Mr. Amal Ganguli (Up to 16 NA October 2014)

Mr. Vinod Kumar, Managing 26.89% Director & Group CEO

Mr. Satish Ranade, Company 27.37% Secretary

Ms. Pratibha K Advani, Chief NA Financial Officer (From 8 May 2015)

Mr. Sanjay Baweja, Chief Financial NA Officer (Up to 2 November 2014)

* Directors and KMPs who have not been in the Company for the entire financial year have not been considered for the calculations.

# The Government Directors have informed the Company that they shall not accept any Sitting Fees and commission as their Directorships are considered to be part of their official duty.

** Mr. Bharat Vasani joined the Board w.e.f 16 December 2013. Since he received remuneration only for a part of the financial year 2013-14, the same is not comparable with remuneration that he has received for financial year 2014-15.

c. The percentage increase in the median remuneration of employees in the financial year:

6.96%

d. The number of permanent employees on the rolls of the Company: 3,531

e. The explanation on the relationship between average increase in remuneration and Company performance:

On an average, employees received an annual increase of 11.6%. The individual increments varied from 0% to 20%, based on individual performance. The increase in remuneration is in line with the market trends in the respective countries. In order to ensure that remuneration reflects Company performance; the performance pay is also linked to organization performance, apart from an individual's performance.

f. Comparison of the remuneration of the key managerial personnel against the performance of the Company:

Aggregate remuneration of key 8.84 managerial personnel (KMP) in FY15 (Rs. crores)

Revenue (Rs. crores) 4319.35

Remuneration of KMPs 0.20% (as % of revenue)

Profit before Tax (PBT) (Rs.crores) 1003.27

Remuneration of KMP 0.88% (as % of PBT)

g. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:

Variations in the market capitalization of the company (31 March 2015 vs. 31 March 2014): 37.4% increase in market capitalization.

Variations price earnings ratio (31 March 2015 vs. 31 March 2014): 9,683.9% increase in price earnings ratio.

h. Percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

Particulars March Open % 31,2015 Offer Change price in April 2002

Market Price (BSE) 420.75 202 108.29

Market Price (NSE) 422.00 202 108.91

i. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was around 11.6%. However, during the course of the year, the total increase is approximately 12.3%, after accounting for promotions and other event based compensation revisions. Increase in the managerial remuneration for the year was 16.1%.

j. Comparison of each remuneration of the key managerial personnel against the performance of the Company:

Mr. Vinod Kumar, Mr. Satish Ms. Pratibha Mr. Sanjay Managing Ranade, K Advani, CFO Baweja, CFO (Up Director & Group Company (From 8 May to 2 Novem -ber CEO* Secretary 2015) 2014)

Remuneration in FY15 (Scrores) 3.72 1.45 NA 3.66

*Exclusion of retiral benefits and leave encahhment

Revenue (Rs.crores) 4319.35

Remuneration as % of Revenue 0.09% 0.03% NA 0.08%

Profit before Tax (PBT) (Rs.crores) 1003.27

Remuneration (as % of PBT) 0.37% 0.14% NA 0.36%

* Mr. Vinod Kumar as a Chief Executive Officer of one of the Company's wholly-owned foreign subsidiaries, Tata Communications Services (International) Pte. Ltd., has also received a remuneration of Rs.4.64 crores during the year from that subsidiary

k. The key parameters for any variable component of remuneration availed of by the directors:

The members have, at the AGM of the Company on 11 October 2011 approved payment of commission to the non-executive directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions. The said commission is decided each year by the Board of Directors and distributed amongst the non- executive directors based on the Board evaluation process taking into account their attendance and contribution at the Board and certain committee meetings, as well as the time spent on operational matters other than at meetings.

l. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: 0.97

m. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration is as per the remuneration policy of the Company.

n. Particulars of Employees:

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the company secretary.

Corporate Governance

Pursuant to Clause 49 of the listing agreement with the stock exchanges, the Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance with conditions of corporate governance form part of the Directors' Report. Pursuant to Clause 55 of the listing agreement with the stock exchanges, business responsibility reports have been included elsewhere in this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s) and the reviews performed by management and the relevant Board committees, including the audit committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

- In the preparation of the annual accounts, the applicable accounting standards were followed and there were no material departures;

- 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 at the end of the financial year and of the profit and loss of the Company for that period;

- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the directors had prepared the annual accounts on a going concern basis;

- the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

- The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Awards & Recognitions

Gartner's Magic Quadrant for Network Services, Global

Tata Communications is positioned in the Leaders Quadrant in this Magic Quadrant for the second year in a row

Frost & Sullivan 2015 Best Practices Award - India ICT Awards

Enterprise Ethernet Provider of the Year

Enterprise Data Service Provider of the Year

Enterprise Telecom Service Provider of the Year - Large Enterprise Segment

Hosted Contact Centre Service Provider of the Year Frost & Sullivan 2014 Asia Pacific ICT Award

Data Communications Service Provider of the Year.

2014 Frost & Sullivan Best Practices Awards

Asia Pacific UC as a Service Product Line Strategy Award

Frost & Sullivan 2014 India ICT Awards

Enterprise Data Service Provider of the Year (sixth year in a row)

Audio Conferencing Service Provider of the Year

Third Party Data Center Service Provider of the Year

Enterprise Ethernet Provider of the Year

Current Analysis (US-Based Global Analyst Firm)

Global IP VPN Service, Priority Ethernet, Dedicated Ethernet - rated as 'strong' in the global data WAN segment

Wholesale - rated as 'very strong' in the global wholesale segment

Global Enterprise - rated as 'very strong' in the global enterprise, business network and IT services segment

ACKNOWLEDGMENTS

The directors would like to thank each one of Tata Communications' customers, business associates and other stakeholders globally for their valuable contribution to the Company's growth and success. The directors also recognise and appreciate the passion and commitment of all its employees around the world.

The directors are also grateful to the Company's other stakeholders and partners including its shareholders, promoters (strategic partner and the GoI), bankers and others for their continued support.

On behalf of the Board of Directors

Subodh Bhargava

Chairman

Dated: 28 July 2015

Registered Office:

VSB, MG Road, Fort,

Mumbai - 400001.


Mar 31, 2014

Dear Shareholders,

The directors are pleased to present the 28th annual report and audited accounts of Tata Communications Limited (TCL) for the financial year ended 31 March 2014.

PERFORMANCE

The key financial parameters of the Company during the year under review are given in the table below:

2013-14 2012-13 Percentage (Rs.in Crores) (Rs.in Crores) Change

Consolidated income 19,809.20 17,439.54 13.59%

Consolidated EBIDTA 3,087.96 2059.71 49.92%

Consolidated profit/(loss) after exceptional items 444.41 (430.71) NA and before tax

Consolidated Profit/(loss) after tax 101.42 (623.31) NA

Standalone total income 4,840.35 4,796.34 0.92%

Standalone Profit before tax 803.48 656.69 22.35%

Standalone Profit after tax 542.43 475.24 14.14%

The consolidated profit after tax of Rs.101.42 crores for the year 2013-14 is against a consolidated loss of Rs.623.31 crores in the previous year - a turnaround of Rs.724.73 Crores. The consolidated profit figures are after taking into account the profit/(loss) of Rs.87.54 crores ((Rs.246.90) crores in FY12-13) from the Company''s holding in Neotel Pty Limited (Neotel), South Africa and the loss of Rs.136.06 crores (Rs.141.72 crores last year ) of Tata Communications Payment Solutions Ltd (TCPSL) a 100% subsidiary which is in gestation period.

On a standalone basis, profit after tax improved toRs.542.43 crores from Rs.475.24 crores last year. This excludes the data centre business figures on account of hive off of the Data Centre business segment into 100% subsidiary effective March 1, 2014.

The Company has established a strong presence globally. As a result, while 23% (24% last year) of the Company''s revenues in 2013-14 came from India, the rest of the world contributed 77% (76% last year) of the total revenue. The revenue from other than India for the year 2013-14 was Rs.15226.46 crores (77% of the total revenue) as against Rs.13077.61 (76%) in the previous year. We are pleased that our long-term strategies are yielding value for all stakeholders.

Dividend

The directors are pleased to recommend a dividend of Rs.4.50 per share (Rs.3 per share dividend last year) for the financial year ended 31 March 2014, subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM).

OPERATIONS Segment Distribution

Over the last few years, the Company has been successful in its goal of diversifying revenues, to tap new opportunities and reduce any risks of an overly concentrated portfolio. Accordingly, the Company''s revenues are now broadly diversified across its various products and segments, especially by taking advantage of greater opportunities in the data market in new segments such as media and entertainment, financial services, health care, etc. During 2013-14, consolidated revenue from voice services contributed 49% (50% last year) of total revenue, while data services contributed 40% (39% last year) and 11% from Neotel.

Voice

In the voice business, the Company remains one of the largest players worldwide in terms of market share. The trend of declining margins continues due to traffic shifting to VoIP based calling and therefore, the Company is focused on developing innovative commercial offerings and optimizing costs to maintain free cash fow generation from this business. Year on Year (YOY) ILD voice traffic declined by 2%, however the traffic mix is better. YoY EBITDA margins improved by 1% and YoY EBITDA grew by 24%. Free cash flow generated during the year from the voice business was Rs.804 crores (previous yearRs.669 crores).

Data

Data continues to present substantial opportunities for rapid growth and improved profitability. The launch of cloud enablement solutions, including network and data centre service, helped the Company to grow its data portfolio and strengthen its presence in this high growth business. The Company has also been strengthening its Unified Communications Services portfolio encompassing all forms of communications, as well as its industry solutions for the Media & Entertainment Sector and the Banking & Financial Services Sector. The Company''s strategy of expanding into managed services continues to pay off, as managed services now contribute 5.2% to the data services segment (Previous Year 4.6%).

Neotel

Neotel, a subsidiary of the Company in South Africa, though still in its gestation period, continued to achieve growth. During the year 2013-14, Neotel turned the corner with several major achievements: its revenues grew 23% year-on-year and it remained profitable at the operating (EBIT) level. EBITDA for Neotel for 2013-14 was Rs.618.07 crores as against an EBITDA of Rs.322.23 crores in the previous year, a jump of 92%.

In May 2014, the shareholders of Neotel and Vodacom SA concluded an agreement on the commercial structure and terms to proceed for Vodacom to acquire 100 per cent of the shares of Neotel valued at an enterprise value of ZAR 7.0 billion. This decision is in line with the Company''s financial objectives, while paving the way for Neotel to continuously improve its value proposition in the South African market. The structure of the deal and its commercial terms remain subject to regulatory and competition authority approvals and the parties have commenced the necessary processes in that regard.

Human Resources

The Company worldwide has a multicultural workforce, with people of more than 40 nationalities on its rolls. The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where we operate. Employee relations continued to be harmonious at all our locations, through continuous dialogue and openness. The number of training person days provided to employees increased by 22% over the previous year, to a total of 33347 days.

Customer Satisfaction and Business Excellence

Providing an excellent customer experience remains an important pillar of the Company''s strategy to generate sustainable advantages. In 2013-14, according to an independent survey, the Company''s customer loyalty ratings stood at the 87th percentile of its global peer set, an improvement of 3% over the previous year. The Company continues with several other initiatives such as customer portal that enables real-time customer interaction, obtaining better feedback through the "Customer Voice" initiative etc.

The Company continues to transform itself in tandem with market and regulatory changes, using successfully the framework of the Tata Business Excellence Model (TBEM). The Company has further extended the validity of its TL 9000 certification for Quality Management by three years, commencing 31 March 2013, for the India and Singapore offices. The company also has ISO 14001 Environmental Management certification for the 13 key office premises in India, valid till 10 April 2017.

The Company''s Global Managed Services Operations Centre (MSOC) of the Company at Chennai, all eleven data centres in India and seven data centres at international locations (totalling eighteen) have received ISO 20000 and ISO 27001 certifications through until 14 March 2017.

In addition, during the year, the Company has been certified to ISO 22301 Business Continuity Management (BCM) for some of its critical operations. This provides further confidence to various stakeholders and customers about the organization''s ability to recover from catastrophic events and demonstrate sustainability.

Enterprise Risk Management

The Company has established an enterprise-wide risk management (ERM) framework to optimise the identification and management of risks globally and to comply with clause 49 of the listing agreement with Indian stock exchanges. In line with the Company''s commitment to delivering sustainable value, this framework aims to provide an integrated and organised approach for evaluating and managing risks.

Risk-based Internal Audit

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers the Company''s various businesses and functions. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

CORPORATE MATTERS

Investment in Tata Teleservices Limited

Recently the Company was informed about the decision taken on 25 April 2014 by the board of directors of NTT DoCoMo, Inc. of Japan (NTT) to exercise the Sale Option of Tata Teleservices Limited (TTSL) shares under the terms of a legal agreement and the option is required to be exercised by 30 June 2014. Prevailing regulations permit a company to acquire shares from a non-resident only at a valuation based on the prescribed method.

In terms of agreements entered into in 2008-09, the Company was entitled to and had sold to NTT part of its stake in TTSL at Rs.116.09 per share resulting in a profit of Rs.346.65 crores in that year. According to the sale agreement, the Company, along with other selling shareholders of TTSL, is obliged to indemnify NTT on a proportionate basis against claims arising from the possible failure of certain representations to be true and from specified contingent liabilities. The amount in the case of the former is not determinable while the Company is liable to pay up to Rs.40.60 crores towards specified contingent liabilities. Should NTT decide to divest its entire shareholding in TTSL and a buyer has not been found for such shares, the Company along with other selling shareholders of TTSL is obligated to proportionately acquire stake from NTT at the higher of fair value or 50 percent of the subscription purchase price subject to compliance with applicable exchange control regulations. Should NTT decide to divest its entire shareholding in TTSL at a lower price, then, the Company may be obliged to proportionately indemnify any loss by way of a monetary compensation equal to the difference between such lower sale price and the price referred to above subject to compliance with applicable exchange control regulations

The Agreements are governed by Indian Law.

Indian Data Centre Business

As reported last year, to bring more focus and specialization to the IDC business and to maximize overall shareholder value, the Company was in the process of hiving off this business segment. After obtaining all requisite corporate and regulatory approvals, the Hon''ble Bombay High Court approved the Scheme on 24 January 2014. The Scheme has been made effective on 1 March 2014 and the Data Centers (IDC) business has been transferred in its entirety to the Company''s wholly-owned subsidiary called Tata Communications Data Centers Private Limited. The annual accounts of the Company for financial year 2013-14 have been prepared after taking this in to account.

Delisting from the New York Stock Exchange

As reported last year, the Company''s Board of Directors had approved delisting the Company''s American Depositary Receipts (ADRs), from the New York Stock Exchange (NYSE) and to terminate its ADR programme. During the year, the American Depositary Shares ("ADSs") were delisted from the NYSE and it''s the ADR program was terminated w.e.f 13 August 2013. The termination of the ADR program helped achieve public shareholding of 25% as required by SEBI guidelines. The Company continues to comply with filing and compliance requirement of NYSE till June 2014 as part of delisting process of Security Exchange Commission of the United States.

Despite the delisting of the ADRs, the Company remains committed to the highest standards of corporate governance and internal controls. The Company will continue to be subject to the comprehensive reporting and governance requirements of the Indian Exchanges. The Company''s decision to delist from the NYSE does not call into question the Company''s strategic vision for the US which has been one of its core markets in its overall global strategy and will continue to be so moving forward.

Minimum Public Shareholding

On 4 June 2010, the Central Government amended the Securities Contracts (Regulation) Rules, 1956 and inserted Rule 19A to the Securities Contracts (Regulation) Rules, 1957 ("SCRR"). According to this amendment, all listed companies (except public sector companies) are required to maintain a minimum threshold level of public shareholding (MPS) of 25% within a period of 3 years from the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, i.e. before 3 June 2013. By inserting clause 40A, this provision was also incorporated in the listing agreement with stock exchanges.

The Company became compliant with MPS requirement last year after the delisting of its American Depositary Receipts and the divestment by one of its promoters of a 1.15% stake.

Compliance under the Companies Act 2013 and additional SEBI stipulations

The Companies Act 2013 (Act) came into force substantially from 1 April 2014. Also, SEBI in its master circular dated 17 April 2014 notified additional requirements on corporate governance which will be effective from 1 October 2014. The Act and the SEBI stipulations set the tone for a more modern legislation which enables growth, greater regulation and self-governance of India''s corporate sector. The Act and SEBI''s requirements are expected to improve corporate governance norms, enhance the accountability of companies and their auditors, improve transparency and protect the interests of investors, particularly small ones.

These requirements substantially increase the compliance requirements for companies. The Company is taking all the necessary steps to be compliant with the Act within the time stipulated.

PENDING MATTERS OF SIGNIFICANCE

Surplus Land

Under the terms of the share purchase and shareholders'' agreements (SHA) signed between the Government of India (GoI) and the strategic partner (the parties) at the time of disinvestment, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if, for any reason, the Company cannot hive off or demerge the land into a separate entity, alternative courses that were also stipulated in the SHA would be explored. A draft scheme of demerger was presented to the Board in April 2005, which was forwarded to the GoI with the Board''s observations. The Board/ management have been exploring other alternatives also with the GoI and Panatone. The Company has been regularly following up the matter with the GoI and has addressed several communications to both GoI and Panatone highlighting the urgency for resolution and also the need for non- debt funding.

To accomplish demerger of surplus land in accordance with such scheme of demerger, the strategic partner formed Hemisphere Properties India Limited (HPIL) sometime in 2005-06 to hold the surplus land as and when demerged. In March 2014, the GoI has acquired 51.12% shares in HPIL and HPIL has become a Government Company. It is understood that the GoI will send its modifications to the draft scheme of arrangement of demerger of surplus land which would be placed before the boards of the Company and HPIL.

The land identified for demerger at different locations measured 773.13 acres, and carried a book value of Rs. 0.164 crores. As reported earlier, 32.5 acres of land situated at Padianallur was transferred in July 2009 to the VSNL Employees Cooperative Housing Society, Chennai (society) as per the order of the Hon''ble Delhi High Court. As this land was part of the identified surplus land, the strategic partner has written to the GoI to exclude the 32.5 acres of land so transferred to the society, from the 773.13 acres mentioned in the SHA as the land identified to be demerged. The current balance of surplus land is 740.63 acres having a book value of Rs. 0.163 crores.

Delhi Metro Rail Corporation Limited (DMRC) Land Acquisition

In September 2013, DMRC conveyed that as part of the Delhi Metro work, DMRC needs a piece of company''s land at Greater Kailash-I, New Delhi. This land parcel admeasuring ~11622 sq meters also includes approximately 21% surplus land. On 2 January 2014, TCL received acquisition Notice stating award announced by Land Acquisition Collector (LAC) on 30 December 2013 without giving any details of the Award. The Company received the certified copy of the award on 6 February 2014 as per which, the total compensation determined by LAC is Rs.188,80,168, based on indicative price fixed by Govt. of Delhi for agricultural land. Aggrieved, the Company fled Reference Petition for proper determination of the compensation with LAC based on commercial usage of land. Simultaneously, the Company also filed a writ petition with Hon''ble High Court of Delhi. On 24 April 2014, the High Court directed DMRC to deposit the sum of ~Rs.247 Crores with the Court Registrar which has since been deposited by DMRC. This amount is approximately 80% of the estimated compensation valuation for 11622 Sq. meters. The actual amount of compensation will depend on the land actually acquired by DMRC. In the meantime DMRC has commenced construction for the Delhi Metro work on the land.

Premature Termination of Monopoly and Compensation

As reported earlier, the GoI had allowed other players into the International Long Distance (ILD) business from 1 April 2002, terminating the Company''s exclusivity two years ahead of schedule. The GoI gave the Company a compensation package vide communication dated 7 September 2000; wherein, the GoI also gave an assurance that it would consider additional compensation, if found necessary, on a detailed review when undertaken.

However, vide its letter dated 18 January 2002, issued just before the disinvestment of the Company, the GoI issued a further dispensation and unilaterally declared that the conditions stated in its said letter of 18 January 2002 were to be treated as full and final settlement of every sort of claim against the premature ILD de-monopolisation. The Company filed a claim in the Bombay High Court in 2005. The Bombay High Court, on 7 July 2010, ruled that it did not have the jurisdiction to entertain this suit, in view of the provisions of the Telecom Regulatory Authority of India Act, 1997 (TRAI). Since the Company holds a different opinion, it has preferred an appeal before a division bench of the Bombay High Court on various grounds including that the compensation granted was in breach of promise from the GoI, acting as a policy maker and not as a licensor under the Indian Telegraph Act as also the dispute did not relate to the provision of telecommunication services as envisioned under the TRAI and the suit was not under, pursuant to and consequent upon the license then granted to the Company. The appeal for hearing admitted by the Bombay High Court is yet to come up.

STATUTORY INFORMATION AND DISCLOSURES Fixed Deposits

The Company has not accepted nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company had Rs.550 crores of outstanding NCDs as on 31 March 2014. The trust deeds for the debentures issued by the Company will be available for inspection by the members at the Company''s registered office during normal working hours, 21 days before the date of the 28th Annual General Meeting.

The Company did not redeem any long term secured and unsecured debentures during the year 2013-14. All debentures issued by the Company were rated AA by CARE.

Particulars of Employees

The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, require the Company to provide certain details about the employees who were in receipt of remuneration of not less than Rs. 0.60 crores during the year ended 31 March 2014 or not less than Rs. 0.05 crores per month, during any part of the said year.

The Company had 71 such employees employed during the year ended 31 March 2014. According to the provisions of section 219(1) (b) (iv) of the Companies Act, 1956, the Directors'' Report being sent to the shareholders does not include this annexure. The Annexure regarding the Particulars of Employees under section 217(2A) of the Companies Act, 1956 will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the AGM.

R & D, Technology Absorption and Foreign Exchange Earnings

The Company has invested in developing new products and services adopting latest technologies such as content delivery network (CDN), cloud computing, telepresence and Wimax. There are no particulars to be disclosed pertaining to the year under review, in respect of expenditure on Research & Development (R&D) and technology absorption as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

For the purpose of Form ''C under the said rules, foreign exchange earnings were equivalent to Rs.1288.06 crores and foreign exchange outgo was equivalent to Rs.460.88 crores.

Auditors'' Report

There are no qualifications in the report of the statutory auditors for the year 2013-14.

Subsidiaries

The statement pursuant to section 212 of the Companies Act, 1956 containing details of the Company''s subsidiaries, forms part of the Annual Report. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS

21) prescribed by the Institute of Chartered Accountants of India, form part of the annual report and accounts.

The accounts statements of the subsidiaries will be provided on request to any shareholder wishing to have a copy, on receipt of such request addressed to the company secretary at the Company''s registered office.

These documents will also be available for inspection by any shareholder at the Company''s registered office and will be available on the Company''s website.

The Board of Directors

Mr. Bharat Vasani was appointed on the Board as an additional director with effect from 16 December 2013 vice Mr. Arun Gandhi who resigned wef 15 March 2013. Mr. Vasani holds office till the AGM. The Board places on record its deep appreciation for Mr. Gandhi''s contribution and guidance to the Company.

In accordance with the provisions of the Companies Act, 2013, Mr. Subodh Bhargava, Mr. Amal Ganguli and Dr. Uday B Desai, will cease to be the independent directors on the Board at this Annual General Meeting (AGM). On recommendations of Nomination and Remuneration Committee the Board proposes the fresh appointment of Mr. Subodh Bhargava and Dr. Uday B Desai on the terms and conditions to be included in the Notice convening the AGM. In line with the policy of maximum age to serve as a Director to be 75 years, the Nomination and Remuneration Committee and the Board do not propose the fresh appointment of Mr. Amal Ganguli who will attain the age of 75 years on 16 October 2014.

In accordance with the provisions of the Companies Act, 2013 and the Company''s Articles of Association, Mr. Saurabh Tiwari and Mr. S. Ramadorai retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Mr. Bharat Vasani who holds office only up to date of the this Annual General Meeting and in respect of whom a notice under the provisions of Section 160 of the Companies Act, 2013 has been received by the Company from a member signifying his intention to propose Mr. Bharat Vasani as a candidate for the office of director.

None of the Company''s directors is disqualified from being appointed as a director as specified in Section 164 of the Companies Act, 2013. For details about the directors, please refer to point 2 of the Report on

Corporate Governance.

Corporate Governance

Pursuant to Clause 49 of the listing agreement with the stock exchanges, the Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance with conditions of corporate governance form part of the directors'' report.

Pursuant to Clause 55 of the listing agreement with the stock exchanges, Business Responsibility Reports have been included elsewhere in this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, the directors, based on the representations received from the operating management, confirm that:

In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

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 at the end of the financial year 2013- 14 and of the profit and loss of the company for that period;

They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

They have prepared the annual accounts on a going concern basis;

They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGMENTS

The directors would like to thank every one of the Company''s customers, business associates and other stakeholders globally for their valuable contribution to the Company''s growth and success. The directors also recognise and appreciate the passion and commitment of all the employees of the Company around the world. The directors are also grateful to the Company''s other stakeholders and partners including its shareholders, promoters (strategic partner and GoI), bankers and others for their continued support.

On behalf of the Board of Directors

Subodh Bhargava

Chairman

Dated: 13 May 2014

Registered Office: VSB, MG Road, Fort, Mumbai - 400001.


Mar 31, 2013

Dear Shareholders,

The directors are pleased to present the 27th annual report and audited accounts of Tata Communications Limited (TCL) for the financial year ended 31 Maich 20|3.

PERFORMANCE

The key financial parameters of the Company during the year under review are given in table below:

2012-13 2012-13 2011-12 2011-12 (Rs. in Crores) (USD in (Rs. in Crores) (USD in Million)* Million)*

Consolidated income 17,439.54 3,198.74 14,340.85 2,630.38

Consolidated EBIDTA 2059.72 377.79 1,791.49 328.59

Consolidated profit/ (loss) after exceptional items and before tax (430.71) (79.00) (718.02) (131.70)

Consolidated Profit/ (loss) after tax (623.21) (114.31) (794.65) (145.75)

Standalone total income 4,796.34 879.74 4,270.87 783.36

Standalone Profit before tax 656.69 120.45 265.12 48.63

Standalone Profit after tax 475.24 87.17 171.34 31.43

* All conversions from Indian rupees to US dollars in the above table and elsewhere in this report are based on the noon buying rate in New York City for cable transfers in foreign currencies as certified by the Federal Reserve Bank of New York for custom purposes, which was Rs. 54.52 per USD on 31 March 2013.

The consolidated net loss includes Rs. 246.90 crores (USD 45.29 million) from the Company''s holding in Neotel Pty Ltd (Neotel), South Africa. As a high-potential new business, Neotel needs investments to establish its capabilities. While it has already turned profitable at the operating level, it will require support for a while longer before it becomes fully profitable. The consolidated net loss also includes increase in other non-cash costs, that is, depreciation, because of significant capitalisation done. The Company remains confident that its current strategy and future direction are working to the best advantage of all stakeholders. The Company expects to achieve improved financial performance, based on the strong demand for communication services in a globally connected world and its own ability to leverage the extensive investments it has made over the past several years.

Dividend

The directors are pleased to recommend a dividend of Rs. 3 (USD 0.05) per share (Rs. 2 per share dividend previous year) for the financial year ended 31 March 2013, subject to the approval of the shareholders at the Annual General Meeting.

OPERATIONS

Geographical Presence

In recent years, the Company has established a strong presence not just in India, but globally. As a result, while 24% of the Company''s revenues in 2012-13 came from India, the rest of the world contributed 76%.

Segment and Product Distribution

The Company''s revenues are now broadly diversified across its various products and segments. During 2012-13, voice services contributed 50% to revenues, while 39% came from data services and 11% from Neotel. Within the data services segment, revenues are well distributed between its two segments of service providers and enterprises, which contributed 46% and 54% of the total respectively.

Global Voice

In the voice business, the trend of the past few years continues, as overall volumes continue to grow, although margins are declining. During the year, the Company''s international long distance voice traffic grew 14% from 46.72 billion minutes in 2011-12 to 53.4 billion minutes in 2012-13. National long distance voice traffic in India decreased by 2.5% to 8.35 billion minutes in 2012-13. The gross margins from the voice business fell 11% to US cents 0.003 per minute, from US cents 0.0034 per minute in the previous year.

Global Data

The launch of cloud computing solutions in India and Asia enabled the Company to grow its data portfolio to build the presence in this high growth business. The global data business achieved a healthy revenue mix between India 51% and the rest of the world 49%; and between service providers 51% and enterprises 49%. The Company''s strategy of expanding into managed services continues to pay off, as managed services now contribute 29% to the global data services segment.

Neotel

Neotel, a subsidiary of the Company in South Africa, though still in its gestation period, continues to achieve growth. During the course of 2012-13, Neotel, had several major achievements: its revenues grew 12% year- on-year growth and it turned profitable at the operating (EBIT) level. After achieving an EBITDA profit the year before, Neotel grew that profit 531% during the course of 2012-13. Neotel increased its business customers by 29% to just short of 3,000 and retail customers by 152% to about 152,000. Neotel today employs approximately 1,000 people.

Customer Satisfaction

The Company believes that providing an excellent customer experience generates a crucial sustainable advantage and has made this an important focus area. In 2012-13, the Company''s customer loyalty ratings stood at the 84th percentile of its global peer set. In order to create a customer-centric culture, the Company is improving existing processes for faster service deployment and support to customers, investing in a customer portal that enables customer interaction, initiating programmes around "Customer Voice" and acting on the feedback received, and strengthening its people through multi- skilling and leadership training.

HUMAN RESOURCES

The Company worldwide has a multicultural workforce, with people of about 40 nationalities on the rolls. The Company seeks to hire, train and retain the best talent available globally to enable efficient and effective performance in a competitive marketplace. At Tata Communications, employees are encouraged to live the vision and values adopted by the Company. The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where we operate. Employee relations continued to be harmonious at all our locations, through continuous dialogue and openness.

Business Excellence

The Company continues to transform itself in tandem with market and regulatory changes, using the framework of the Tata Business Excellence Model (TBEM), which covers areas such as leadership, strategy, customer and market focus, knowledge management, human resources, process management, customer service and social responsibility. The Company participated in the TBEM external assessment and crossed the score of 500 and bagged the Tata group award for active promotion of TBEM. The Company has received TL 9000 certification for Quality Management for three years, commencing 31 March 2010, for the India region and from 6 July 2011 for Singapore office. Ten out of thirteen key office premises across India have received ISO 14001 certification for environment management on 1 April 2011 for a period of three Veals.

Our Global Managed Services Operations Centre (MSOC) at Chennai, all ten data centres in India and seven data centres at international locations (totalling seventeen) have received ISO 20000 and ISO 27001 certifications until 26 March 20 14.

Compliance with SOX

Pursuant to its listing on the New York Stock Exchange, Tata Communications has been complying with section 404 of the Sarbanes Oxley Act, 2002 (SOX). SOX sets forth requirements for internal control over financial reporting and its documentation. For the current fiscal year, in addition to the management''s own assessment of the effectiveness of such internal control, the Company''s external auditors are also required to issue an opinion on effectiveness of internal control over financial reporting in respect of all material aspects by the management.

Enterprise Risk Management

The Company has established an enterprise-wide risk management (ERM) framework to optimise the identification and management of risks globally, as well as to comply with clause 49 of the listing agreement with Indian stock exchanges. In line with the Company''s commitment to delivering sustainable value, this framework aims to provide an integrated and organised approach for evaluating and managing risks.

Risk-based Internal Audit

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers the Company''s various businesses and functions. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

Hiving-off of Indian Data Centre Business

The Company''s Board of Directors has, in its meeting held on 1 March 2013, approved a proposal to hive-off the Company''s Indian Data Centre (IDC) business into a wholly-owned subsidiary on a ''going concern'' basis, subject to obtaining approval of the shareholders and creditors of both the companies, and subject to receipt of necessary approval from relevant regulatory authorities and from the Bombay High Court. The intention of this move is to bring more focus and specialization to the IDC business and to maximize overall shareholder value. The proposal is now in the hands of the Bombay High Court for approval.

Delisting from The New York Stock Exchange

The Company''s Board of Directors has approved a proposal to delist its American Depositary Receipts (ADRs), from the New York Stock Exchange (NYSE) and to terminate its ADR programme. The Company has derived a number of important benefits from its NYSE listing since 2000 including the financial reporting discipline which has been implemented to comply with U.S. reporting requirements. The Company is committed to continuing the highest standards of corporate governance and internal controls and will continue to be subject to the comprehensive reporting and governance requirements of the Indian Stock Exchanges. The Company''s decision to delist from the NYSE, deregister with the SEC and terminate its ADR program does not call into question the Company''s strategic vision for the US which has been one of its core markets in its overall global strategy and will continue to be so, moving forward.

The Board reached this decision after considering the recent low trading volume of the Company''s ADRs on the NYSE, compliance with the Securities and Exchange Board of India''s (SEBI) mandate on minimum public shareholding, and the associated costs of maintaining the listing and related obligations. The Company will now concentrate all trading of its ordinary shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India Limited (NSE) in India.

On 28 May 2013, the Company filed Form 25 with the U.S. Securities and Exchange Commission confirming its intent to delist and deregister its ADR Program. Consequent to the filing, the delisting of the ADRs from the New York Stock Exchange has become effective at the close of business of 7 June 2013. As a consequence of the delisting becoming effective, termination of the Deposit Agreement under which the ADRs were issued will become effective on 14 July 2013. Holders of the Company''s ADRs can surrender their ADRs to the Depositary in exchange for the underlying ordinary shares in the Company at any time prior to 13 August 20 13.

PENDING MATTERS OF SIGNIFICANCE

Minimum Public Shareholding

On 4 June 2010, the Central Government amended the Securities Contracts (Regulation) Rules, 1956 and inserted Rule 19A to the Securities Contracts (Regulation) Rules, 1957 ("SCRR"). Pursuant to the said amendment, all listed companies (except public sector companies) are required to maintain a minimum threshold level of public holding (MPS) to the extent of 25% within a period of 3 years from the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, i.e. before 3 June 2013. This provision was incorporated in the Listing Agreement by inserting Clause 40A in the Listing Agreement.

Consequent to completion of ADR delisting process and the promoter''s divestment of 1.15% stake in accordance with the letter dated 29 May 2013 from Securities and Exchange Board of India (SEBI), the Company will be fully compliant of the MPS requirement.

Surplus Land

Under the terms of the share purchase and shareholders'' agreements (SHA) signed between the GoI and the strategic partner (the parties) at the time of disinvestment, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if, for any reason, the Company cannot hive off or demerge the land into a separate entity, alternative courses that were also stipulated in the SHA would be explored. A draft scheme of demerger was presented to the Board in April 2005, which was forwarded to the GoI with the Board''s observations. The Board / management have been exploring other alternatives also with the GoI and Panatone. The Company has been regularly following up the matter with the GoI and has addressed several communications to both GoI and Panatone highlighting the urgency for resolution and also the need for non-debt funding.

To accomplish demerger of surplus land in accordance with such scheme of demerger, the strategic partner formed Hemisphere Properties India Limited (HPIL) sometime in 2005-06. It is understood that the agreement for acquisition of 51.12% shares in HPIL (which will hold the demerged/surplus land) has been finalized and on the date of the report the agreement is awaiting execution. On execution of the agreement, HPIL will become a Government Company. The letter also stated that the scheme of arrangement of demerger of surplus land would be placed shortly before the boards of the Company and HPIL.

The land identified for demerger at different locations measured 773.13 acres, and carried a book value of Rs. 0.164 crores (USD 0.04 million). As reported earlier, the VSNL Employees Cooperative Housing Society, Chennai (Society) had moved the Hon''ble Delhi High Court in respect of their long pending issue of the transfer of 32.5 acres of land situated at Padianallur, Chennai, which was part of the identified surplus land. According to the order of the Hon''ble High Court and as per the advice of the GoI, the process of transferring the said land to the Society was completed in July 2009. The strategic partner has written to the GoI to exclude the 32.5 acres of land so transferred to the society, from the 773.13 acres mentioned in the SHA as the land identified to be demerged. The current balance of surplus land is 740.63 acres having a book value of Rs. 0.163 crores (USD 0.04 million''.

Premature Termination of Monopoly and Compensation

As reported earlier, the Government of India had allowed other players into the International Long Distance (ILD) business from 1 April 2002, terminating the Company''s exclusivity two years ahead of schedule. The GoI gave the Company a compensation package vide communication dated 7 September 2000; wherein, the GoI also gave an assurance that it would consider additional compensation, if found necessary, on a detailed review when undertaken.

However, vide its letter dated 18 January 2002, issued just before the disinvestment of the Company, the GoI issued a further dispensation and unilaterally declared that the conditions stated in its said letter of 18 January 2002 were to be treated as full and final settlement of every sort of claim against the premature ILD de-monopolisation. The Company filed a claim in the Bombay High Court in 2005.

The Bombay High Court, on 7 July 2010, ruled that it did not have the jurisdiction to entertain this suit, in view of the provisions of the Telecom Regulatory Authority of India Act, 1997 (TRAI). Since the Company holds a different opinion, it has preferred an appeal before a division bench of the Bombay High Court on various grounds including that the compensation granted was in breach of promise from the Government, acting as a policy maker and not as a licensor under the Indian Telegraph Act as also the dispute did not relate to the provision of telecommunication services as envisioned under the TRAI and the suit was not under, pursuant to and consequent upon the license then granted to the Company. The appeal for hearing admitted by the Bombay High Court, is yet to come up.

STATUTORY INFORMATION AND DISCLOSURES

Fixed Deposits

The Company has not accepted nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company had Rs. 550 crores (USD 100.88 million) of outstanding NCDs as on 31 March 2013. The trust deeds for the debentures issued by the Company will be available for inspection by the members at the Company''s registered office during normal working hours, 21 days before the date of the 27th Annual General Meeting.

The Company redeemed long term secured and unsecured debentures amounting to Rs. 600 crores (USD 110.05 million) in 2012-13. All debentures issued by the Company were rated AA .

Particulars of Employees

The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, require the Company to provide certain details about the employees who were in receipt of remuneration of not less than Rs. 0.60 crores (USD 0.13 million) during the year ended 31 March 2013 or not less than Rs. 0.05 crores (USD 0.01 million) per month, during any part of the said year.

The Company had 51 such employees employed during the year ended 31 March 2013. According to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report being sent to the shareholders does not include this annexure. The Annexure regarding the Particulars of Employees under section 217(2A) of the Companies Act, 1956 will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the AGM.

R & D, Technology Absorption and Foreign Exchange

Earnings

The Company has invested in developing new products and services adopting latest technologies such as content delivery network (CDN), cloud computing, telepresence and Wimax. There are no particulars to be disclosed pertaining to the year under review, in respect of expenditure on Research & Development (R&D) and technology absorption as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

For the purpose of Form ''C'' under the said rules, foreign exchange earnings were equivalent to Rs. 1,250.52 crores (USD 229.36 million) and foreign exchange outgo was equivalent to Rs. 485.51 crores (USD 89.05 million).

Auditors'' Report

There are no qualifications in the report of the statutory auditors for the year 2012-13.

Subsidiaries

The statement pursuant to section 212 of the Companies Act, 1956 containing details of the Company''s subsidiaries, forms part of the Annual Report. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS 21) prescribed by the Institute of Chartered Accountants of India, form part of the annual report and accounts.

The accounts statements of the subsidiaries will be provided on request to any shareholder wishing to have a copy, on receipt of such request addressed to the deputy company secretary at the Company''s registered office. These documents will also be available for inspection by any shareholder at the Company''s registered office and will be available on the Company''s website.

The Board of Directors

Mr. Arun Gandhi, non-executive director, resigned as Director from the Board of the Company, effective from the end of business hours of 15 March 2013. The Board of Directors of the Company at present consists of10 directors. The Company has received a letter from Panatone Finvest Limited which was placed before the Board of Directors in May 2013. The letter recommended appointment of Mr. Bharat Vasani on the Board of the Company in the stead of Mr Arun Gandhi who earlier resigned from the Board. The Board decided that as per the requirement of the operating licences of the Company, Mr. Vasani would be appointed on the Board as an additional director only after receiving necessary Government clearance.

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Mr. Srinath Narasimhan, Mr. Subodh Bhargava and Mr. Kishor Chaukar retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

None of the Company''s directors is disqualified from being appointed as a director as specified in Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000. For details about the directors, please refer to point 2 of the Report on Corporate Governance.

Corporate Governance

Pursuant to Clause 49 of the listing agreement with the stock exchanges, the Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance with conditions of corporate governance form part of the directors'' report.

Pursuant to Clause 55 of the listing agreement with the stock exchanges, Business Responsibility Reports have been included elsewhere in this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors, based on the representations received from the operating management, confirm that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

- They have consulted the Statutory Auditors in the selection of the accounting policies and have applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

- They have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularites;

- They have prepared the annual accounts on a going concern basis.

- All Board members and senior management personnel have affirmed compliance with the stipulated code of conduct.

ACKNOWLEDGMENTS

The directors would like to thank every one of the Company''s customers, business associates and other stakeholders globally for their valuable contribution to the Company''s growth and success. The directors also recognise and appreciate the passion and commitment of all the employees of the Company around the world. The directors appreciate the support of various ministries and departments of the Government of India, including the Department of Telecommunications and the Information & Broadcasting Ministry, Tata Sons and its group companies; as well as the governments and regulators of the various countries in which Tata Communications operates. The directors are also grateful to the Company''s other stakeholders and partners including its shareholders, promoters (strategic partner and GoI), bankers and solicitors for their continued support.

On behalf of the Board of Directors

Subodh Bhargava

Chairman

Dated: 30 June, 2013

Registered Office:

VSB, MG Road, Fort,

Mumbai - 400 001.


Mar 31, 2012

The directors are pleased to present the 26th annual report and audited accounts of Tata Communications Limited (TCL) for the financial year ended 31 March 2012.

PERFORMANCE

The key financial parameters of your Company during the year under review are given in table below:

2011-12 2011-12 2010-11 2010-11 (Rs.in Crores) (USD in (Rs.in Crores) (USD in Million)* Million)*

Consolidated income 14340.85 2818.01 12185.21 2394.42

Consolidated EBIDTA 1791.49 352.03 1225.27 240.77

Consolidated profit/ (loss) after exceptional items

and before tax (718.02) (141.09) (706.70) (138.87)

Consolidated Profit/ (loss) after tax (794.65) (156.15) (776.90) (152.66)

Standalone total income 4270.87 839.24 3802.48 747.20

Standalone Profit before tax 265.12 52.10 154.04 30.27

Standalone Profit after tax 171.34 33.67 162.56 31.94

* All conversion from Indian rupees to US Dollars in the above table as also elsewhere in this report are based on the noon buying rate in New York City for cable transfers in foreign currencies as certified by the Federal Reserve Bank of New York for custom purposes which was Rs50.89 per USD 1.00 on 31 March 2012.

The consolidated net loss includes Rs 737.47 Crores (USD 144.91 million) from the Company's holding in Neotel, South Africa. Neotel is in its gestation phase, requiring investments to establish the required capabilities. Neotel will continue to need support for some more time before it turns profitable. The consolidated net loss also includes increases in other non-cash costs viz. depreciation on account of significant capitalization done over the past two years. Your Company remains confident that its strategy is sound and that the direction that the Company is taking will be beneficial to the Company and its stakeholders as we move forward.

Dividend

The directors are pleased to recommend a dividend of Rs2 (USD 0.04) per share (Rs2 per share dividend previous year) for the financial year ended 31 March 2012 subject to approval of the Shareholders at the Annual General Meeting.

COMPANY STRATEGY AND DIRECTION Strategy Overview

Your Company continues to develop and execute its strategy to be a global provider of communication solutions, predominantly targeting business customers. Your Company's strategy continues to be focused on creating a portfolio of communication and IT infrastructure services to leverage the trends shaping our chosen business segments. The key trends that we aim to address are:

- The growth of emerging new market economies, with an emphasis on India, Asia, the Middle East and Africa;

- The growth of IP and cloud-based communication and IT solutions; and

- The shift towards managed services, which allows our client businesses to focus on their core competencies.

Your Company has been investing in the underlying infrastructure to support the growing role of the internet in the lives of consumers and businesses, the increased penetration of more powerful end-user devices such as smart-phones, tablets etc., and a more globally connected and collaborative business environment. This infrastructure includes long distance networks, metro networks, international submarine cables, data centres and virtual private network nodes.

REVIEW OF OPERATIONS

Geographical presence

Your Company continues to grow its business in both India and globally. The revenue distribution between India and the rest of the world was 24% and 76% respectively in 2011-2012.

Segment and Product Distribution

Your Company maintains a healthy blend of revenues across its various products and segments. During 2011-12, voice services contributed 48% to revenues, data services contributed 40% and Neotel contribution grew considerably to 12% of the total revenue. Within the data services segment, the contribution to revenue by the two segments i.e. service providers and enterprises were fairly balanced with 49% and 51% of the total respectively.

Highlights of Segment Operations

Global Voice

During the year, Tata Communications' international long distance voice traffic grew 13.40% from 41.19 billion minutes in 2010-11 to 46.72 billion minutes in 2011-12. National long distance voice traffic in India decreased by 18% to 8.55 billion minutes in 2011-12. However, gross margins from voice declined 5% to US Cents 0.45 per minute, from US Cents 0.47 per minute a year earlier.

Global Data

Tata Communications' data portfolio continued to expand during 2011-12, and the launch of cloud computing solutions in India and Asia marked an entry into a fast-growing market segment. Revenues from this business segment were well-balanced between India 50% and the rest of the world 50%; and between service providers 51% and enterprises 49%. The Company's strategy of expanding into managed services is beginning to show results, with managed services contributing 25% to the global data services segment.

Neotel (Proprietary) Ltd.

Neotel was set up as South Africa's (SA) Second National Operator (SNO) in 2005-2006. The Company was selected by the South African Government as a strategic partner to participate with a 26% effective stake and provide best practice, cost effective telecommunication solutions to South African businesses and consumers through the use of innovative technologies. Over the last three years, the Company has increased its effective stake in Neotel to 64.10% by acquiring shares from other partners in the joint venture, thereby assuming a position of a majority shareholder in Neotel.

Neotel today employs almost 1000 people and offers communication services to the wholesale, enterprise and consumer segments in South Africa. Neotel runs South Africa's first next generation network and the country's first CDMA network. During the course of 2011-12, Neotel had several major achievements including a 25% year on year growth in its revenues and turning profitable at the operating (EBITDA) level. Neotel increased its business customers by 92% to 2400 and retail customers by 100% to about 100,000.

Customer Satisfaction

In the highly competitive Indian and global telecom markets, one of the biggest sources of sustainable advantage is superior customer experience. Tata Communications has made steady progress in this area, with the Company's customer satisfaction ratings in 2011-12 standing at the 87th percentile of the global peer set. The Company is making ongoing investments in improving systems and processes as well as in strengthening people training and a customer centric culture.

HUMAN RESOURCES

Tata Communications companies together employed 7954 people as on 31 March 2012 (7667 on 31 March, 2011). Of these, 2276 (2410 in the previous year) were located outside India. With people of about 40 nationalities on the rolls, the workforce profile is diverse and multicultural. The Company seeks to hire, train and retain the best talent available globally to enable efficient and effective performance in a competitive marketplace. At Tata Communications, employees are encouraged to live the vision and values adopted by the Company. The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where we operate. Employee relations continued to be harmonious at all our locations, through continuous dialogue and openness.

AWARDS AND RECOGNITION

The Company's transformational initiatives are being recognized in India and abroad. During the year, the Company earned several prestigious recognitions, including:

Awards from Analysts

- Hosted Contact Center Service Provider of the Year by Frost & Sullivan 2011 India IT & Telecom Excellence Awards

- Enterprise Data Service Provider of the Year by Frost & Sullivan 2011 India IT & Telecom Excellence Awards

- IPX framework is ranked third (tied) in innovation across all aspects of the wholesale telecom business, first in terms of go-to-market strategy in Ovum's Wholesale Innovation Analyzer 2011

Awards from Press and Industry

- Global Wholesale Telecommunications Award - Capacity Awards 2011; Best Global Offering

- Best Long Distance Operator (India) Tele.net Telecom Operator Awards 2011

- Best Wholesale International Telecom Asia Award 2011

- Best APAC Wholesale Ethernet Service, APAC 2011

- MEF Carrier Ethernet Service Provider Awards 2011

- Best Business Service, APAC 2011 - MEF Carrier Ethernet Service Provider Awards 2011

- APAC Service Provider of the Year 2011 (Ethernet and Telepresence) - Cisco Partner Summit 2011

CONTINUOUS IMPROVEMENT

In order to be able to respond quickly to customers, your Company continues with various initiatives to compete effectively, and to improve organizational flexibility and efficiency.

Business Excellence

Your Company has developed and deployed a Continuous Improvement methodology (QUICK), designed in partnership with Tata Quality Management Services, to serve as a model for continuous improvement.

Your Company continues to transform itself in tandem with market and regulatory changes, using the framework of the Tata Business Excellence Model (TBEM), which covers areas such as leadership, strategy, customer and market focus, knowledge management, human resources, process management, customer service and social responsibility. Your Company participated in the TBEM external assessment and crossed the score of 500 and bagged the Tata group award for active promotion of TBEM.

Your Company has received TL 9000 certification for Quality Management for three years, commencing 31 March 2010, for the India region and from 6 July 2011 for its Singapore office. Ten out of thirteen key office premises across India have received ISO 14001 certification for environment management on 1 April 2011 for a period of three years.

Our Global Managed Services Operations Centre (MSOC) at Chennai, all ten data centres in India and seven data centres at international locations (totaling seventeen) have received ISO 20000 and ISO 27001 certifications through until 26 March 2014.

Compliance with SOX

Pursuant to its listing on the New York Stock Exchange, Tata Communications has been complying with section 404 of the Sarbanes Oxley Act, 2002 (SOX). SOX sets forth requirements for internal control over financial reporting and its documentation. For the current fiscal year, in addition to the management's own assessment of the effectiveness of such internal control, the Company's external auditors are also required to issue an opinion on effectiveness of internal control over financial reporting in respect of all material aspects by the management.

Enterprise Risk Management

Your Company has established an enterprise-wide risk management (ERM) framework to optimize the identification and management of risks globally, as well as to comply with clause 49 of the listing agreement with Indian stock exchanges. In line with your Company's commitment to delivering sustainable value, this framework aims to provide an integrated and organized approach for evaluating and managing risks.

Risk-based Internal Audit

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers the Company's various businesses and functions. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

PENDING MATTERS OF SIGNIFICANCE

Premature Termination of Monopoly and Compensation

As reported earlier, the Government of India (GOI) had allowed other players into the International Long Distance (ILD) business from 1 April 2002, terminating the Company's exclusivity two years ahead of schedule. The GOI gave the Company a compensation package vide communication dated 7 September 2000; wherein, the GOI also gave an assurance that it would consider additional compensation, if found necessary, on a detailed review when undertaken. However, vide its letter dated 18 January, 2002, issued just before the disinvestment of the Company, the GOI issued a further dispensation and unilaterally declared that the conditions stated in its said letter of 18 January 2002 were to be treated as full and final settlement of every sort of claim against the premature ILD de-monopolization. The Company filed a claim in the Bombay High Court in 2005. The Bombay High Court, on 7 July, 2010, ruled that it did not have the jurisdiction to entertain this suit, in view of the provisions of the Telecom Regulatory Authority of India Act, 1997 (TRAI). Since the Company holds a different opinion, it has preferred an appeal before a division bench of the Bombay High Court on various grounds including that the compensation granted was in breach of promise from the Government, acting as a policy maker and not as a licensor under the Indian Telegraph Act as also the dispute did not relate to the provision of telecommunication services as envisioned under the TRAI and the suit was not under, pursuant to and consequent upon the license then granted to the Company. The appeal has been admitted by the Bombay High Court.

Surplus Land

Under the terms of the share purchase and shareholders' agreements (SHA) signed between the GOI and the strategic partner (the parties) at the time of disinvestment, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if, for any reason, the Company cannot hive off or demerge the land into a separate entity, alternative courses that were also stipulated in the SHA would be explored. A draft scheme of demerger was presented to the board in April 2005, which was forwarded to the GOI with the Board's observations. The Board / management have been exploring other alternatives also with the GOI and Pan atone. The Company has been regularly following up the matter with the GOI and has addressed several communications to both GOI and Pan atone highlighting the urgency for resolution and also the need for non-debt funding.

The land identified for demerger at different locations measured 773.13 acres, and carried a book value of Rs 0.164 crores (USD 0.04 million). As reported earlier, the VSNL Employees Cooperative Housing Society, Chennai (society) had moved the Hon'ble Delhi High Court in respect of their long pending issue of the transfer of 32.5 acres of land situated at Padianallur, Chennai, which was part of the identified surplus land. According to the order of the Hon'ble High Court and as per the advice of the GOI, the process of transferring the said land to the Society was completed in July 2009. The strategic partner has written to the GOI to exclude the 32.5 acres of land so transferred to the society, from the 773.13 acres mentioned in the SHA as the land identified to be demerged. The current balance of surplus land is 740.63 acres having a book value of Rs 0.163 crores (USD 0.04 million).

Minimum Public Shareholding

On 4 June 2010, the Central Government amended the Securities Contracts (Regulation) Rules, 1956 and inserted Rule 19A to the Securities Contracts (Regulation) Rules, 1957 ("SCRR"). Pursuant to the said amendment all listed companies (except public sector companies) are required to maintain a minimum threshold level of public holding to the extent of 25% within a period of 3 years from the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, i.e. before 3 June 2013. This provision was incorporated in the Listing Agreement by inserting Clause 40A in the Listing Agreement.

Under the present regulations, the 'public shareholding' as referred to under SCRR and Listing Agreement excludes the shares held by the promoters and promoter group as well as the equity shares held by custodian against depositary receipts issued overseas. The public shareholding of the Company for the purpose of SCRR and the Listing Agreement is about 17.69% which is below the required level of 25%. The Company is in discussion with the promoters, the Stock Exchanges and the Securities and Exchange Board of India (SEBI) to decide on the course to become compliant with the minimum public shareholding requirement of SCRR and the Listing Agreement.

STATUTORY INFORMATION AND DISCLOSURES

Fixed Deposits

The Company has not accepted nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company had Rs1150 crores (USD 225.98 million) of outstanding NCDs as on 31 March 2012. The trust deeds for the debentures issued by the Company will be available for the inspection by the members at the Company's registered office during normal working hours, 21 days before the date of the 26th Annual General Meeting.

The Company redeemed long term secured and unsecured debentures amounting to Rs800 crores (USD 157.20 million) in 2011-12. All debentures issued by the Company were rated AA .

Particulars of Employees

The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, require the Company to provide certain details about the employees who were in receipt of remuneration of not less than Rs0.60 crores (USD 0.13 million) during the year ended 31 March 2012 or not less than Rs0.05 crores (USD 0.01 million) per month, during any part of the said year.

The Company had 53 such employees employed during the year ended 31 March 2012. According to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors' Report being sent to the shareholders does not include this annexure. The Annexure regarding the Particulars of Employees under section 217(2A) of the Companies Act, 1956 will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the AGM.

R & D, Technology Absorption and Foreign Exchange Earnings

The Company has invested in developing new products and services adopting latest technologies such as content delivery network (CDN), cloud computing, telepresence and wimax. There are no particulars to be disclosed pertaining to the year under review, in respect of expenditure on Research & Development (R&D) and technology absorption as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988. For the purpose of Form 'C' under the said rules, foreign exchange earnings were equivalent to Rs1036.72crores (USD 203.72 million) and foreign exchange outgo was equivalent to Rs531.96 crores (USD 104.53 million).

Auditors' Report

There are no qualifications in the report of the statutory auditors for the year 2011-12.

Subsidiaries

The statement pursuant to section 212 of the Companies Act, 1956 containing details of the Company's subsidiaries, forms part of the Annual Report. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS 21) prescribed by the Institute of Chartered Accountants of India, form part of the annual report and accounts.

The accounts statements of the subsidiaries will be provided on request to any shareholder wishing to have a copy, on receipt of such request addressed to the deputy company secretary at the Company's registered office.

These documents will also be available for inspection by any shareholder at the Company's registered office and will be available on the Company's website.

The Board of Directors

The board of directors of the Company at present consists of 11 directors.

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Mr. Amal Ganguli, Mr. S Ramadorai and Dr. Ashok Jhunjhunwala retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment.

None of the Company's directors is disqualified from being appointed as a director as specified in Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000. For details about the directors, please refer to point 2 of the Report on Corporate Governance.

Corporate Governance

Pursuant to Clause 49 of the listing agreement with the stock exchanges, the Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance with conditions of corporate governance form part of the directors' report.

Looking Ahead

In the coming years, your Company will continue to focus on its strategy of providing communication solutions and IT infrastructure services to service providers and enterprise customers, in India and globally, with a focus on developing differentiated capabilities in emerging new markets. It is expected that the demand for the Company's services will remain strong, but we will continue to face increased competition and pressure on pricing and margins. Your Company will have to manage a two-pronged strategy of driving revenue growth from new markets and services, while continuing to improve the cost structure of its operations. It is expected that your Company will show improving financial performance, based on the strength of demand for communication services in our globally connected world and based on the ability to leverage the sound investments made over the past several years.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors, based on the representations received from the operating management, confirm that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

- They have consulted the Statutory Auditors in the selection of the accounting policies and have 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 at the end of the financial year and of the profit of the Company for that period;

- They have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- They have prepared the annual accounts on a going concern basis.

- All Board members and senior management personnel have affirmed compliance with the stipulated code of conduct.

ACKNOWLEDGMENTS

The directors would like to express their thanks to all our valued customers, vendors and other business associates around the world for their support and confidence in the Company and its services. The directors also recognise, commend and thank all the employees globally for their dedication and commitment. The directors appreciate the support of various ministries and departments of the Government of India, including the Department of Telecommunications and the Information & Broadcasting Ministry as well as the governments and regulators of the various countries in which Tata Communications operates. The directors are also grateful to the Company's other stakeholders and partners including its shareholders, promoters (strategic partner and GOI), bankers and solicitors for their continued support.

On behalf of the Board of Directors

Subodh Bhargava

Dated: 21 May 2012 Chairman

Registered Office:

VSB, MG Road, Fort,

Mumbai - 400001.


Mar 31, 2011

Dear Shareholders,

The directors are pleased to present the 25th annual report and audited accounts of Tata Communications Limited (TCL) for the financial year ended 31 March 2011.

PERFORMANCE

The key financial parameters of your Company during the year under review are given in table below:

2010-11 2010-11 2009-10 2009-10 (Rs. in Crores) (USD in (Rs. in Crores) (USD in Million)* Million)*

Consolidated income 12185.21 2735.79 11194.22 2513.30

Consolidated EBIDTA 1225.27 275.09 1012.36 227.29

Consolidated profit/(loss) after exceptional items and before tax (706.70) (158.67) (681.19) (152.94)

Consolidated Profit/(loss) after tax (776.90) (174.43) (597.74) (134.20)

Standalone total income 3802.48 853.72 3383.46 759.65

Standalone Profit before tax 154.04 34.58 309.33 69.45

Standalone Profit after tax 162.56 36.50 483.18 108.48

* All conversion from Indian rupees to US Dollars in the above table as also elsewhere in this report are based on the noon buying rate in New York City for cable transfers in foreign currencies as certified by the Federal Reserve Bank of New York for custom purposes which was Rs. 44.54 per USD 1.00 on March 31, 2011.

The consolidated net loss includes Rs. 551.02 Crores (USD 123.71 million) from the Company's holding in Neotel, South Africa, which is still in its gestation phase, requiring investments to establish the required capabilities. Neotel will continue to need support for some more time before it turns profitable. The consolidated net loss also includes increases in other non-cash costs viz. depreciation on account of significant capitalisation done over the past two years. We remain confident that the Company's strategy is sound and that the direction that the Company is taking will be beneficial to the Company and its stakeholders as we move forward.

Dividend

The directors are pleased to recommend a dividend of Rs.2 (USD 0.04) per share (Nil dividend previous year) for the financial year ended 31 March 2011. The amount available for appropriation is Rs.2050.44 crores (USD 460.36 million), out of which the Company has proposed a dividend of Rs.57 crores (USD 12.80 million), (excluding dividend tax of Rs.9.25 crores (USD 2.08 million)), and also proposes to transfer Rs.12.19 crores (USD 2.74 million) to general reserves and further Rs.560.77 crores (USD 125.90 million) to the debenture redemption reserve, leaving Rs.1411.24 crores (USD 316.85 million) to be carried forward.

Macro Economic Situation

During the year under review, the global economy recovered slightly from the crisis of the previous year. However, the weaknesses in developed markets continued to impact business spending and expansion plans. Sectors like banking, financial services and manufacturing have been the hardest hit, and have consequently shown only marginal growth in demand.

Businesses across the world are still battling to reduce costs, while looking to create new markets in the emerging economies / new geographies. The biggest impact of this on your Company's business is in the form of severe price pressures and delayed commencement of new projects from some customers. However, your Company was able to grow its revenues due to its capabilities in India and other emerging markets, as well as a focus on value-added managed services.

Segmentation

Being largely a B2B (business-to-business) player, your Company serves two segments of customers: service providers and enterprise customers.

In the service provider segment, your Company provides an integrated set of services including wholesale voice, domestic and international data connectivity, Internet backbone connectivity (also known as IP transit), value-added roaming services for mobile operators and carrier-specific business process outsourcing services.

In the enterprise segment, your Company principally offers a comprehensive suite of connectivity, IT infrastructure and managed solutions for businesses seeking voice, data and video connectivity between their distributed offices, within India or globally. These services are aimed at improving the operational efficiencies of customers ranging from smaller enterprises to large global multinational corporations. Your Company is also building specialization in some industry verticals by offering customized solutions relevant to that industry. For example, we offer managed ATM solutions for banks and digital workflow management solutions for media companies.

INDUSTRY SITUATION AND DEVELOPMENTS

Global Telecom Market

The landscape of the global telecom industry continues to be shaped by the following major trends:

- Continued growth of mobile penetration, especially in developing countries;

- Surge in mobile data traffic, enabled by adoption of 3G technology and increased penetration of smarter end-user devices like smart phones, tablets etc.;

- Video becoming a growing part of both consumer and business traffic;

- Businesses looking for managed services and turn-key solutions that help improve their operational efficiency; and

- Growth in traffic, within and to emerging markets / new geographies.

The Wholesale Voice market continues to be a business of scale, with constant pressure on prices and margins. The share of mobile communications continues to grow in relation to fixed voice, and there is an increasing use of Voice over Internet Protocol (VoIP). Alternate services such as portal-based offerings on the Web are growing in popularity and usage. The current market dynamics provide both challenges and opportunities for your Company. The shift from traditional to pure VoIP players creates margin pressure. However, this margin pressure is driving operators to look for turn-key and outsourced solutions, where your Company is well positioned due to the scale of its business, advanced operations practices and global market leadership.

The Wholesale Data market is also undergoing rapid changes. The growth of the Internet on the back of growing global broadband usage, increasing demand for multimedia services, the success of new collaboration and communications applications and the continued increase in the use of the web by both individuals and corporations, is driving the demand for IP bandwidth. With the growing need for bandwidth around the world, the demand for submarine cable capacity and IP Transit services continues to grow. New cable projects have been announced, or are being constructed, principally connecting the emerging new markets in Asia, Africa and the Middle East. These cables are largely being constructed to meet traffic growth rates of 30-40% per annum and the need for diversity. The associated challenge with new cable systems being built, is the price pressure it creates on wholesale data services.

The Mobile Value Added Services market has been aided by the resilience that the mobile industry has shown to the economic downturn. There is some concern about revenue growth from mobile voice traffic, especially in the established markets of Europe and North America. However, with the increasing penetration of smart devices and the rolling out of broadband HSPA/3G networks, mobile data is rapidly increasing its share of overall customer usage and revenue. As operators expand their broadband networks and subsequently their requirements for core Internet connectivity, it creates new opportunities for your Company's wholesale IP transit and data services. Simultaneously, as mobile operators focus on cost reduction, there are resulting opportunities for Value Added Services such as 'steering of roaming' and 'roaming hubbing'.

Indian Telecom Market

Over the last decade the Indian telecom industry has changed significantly, with all major segments being opened to competition. There are several new entrants in areas that the Company operates in, resulting in increasing competition from both domestic operators and large international companies with a direct presence in the country. The number of active players in our key service areas is shown below:

ILD (voice) 08

NLD (voice) 16

Domestic Data 12

International Data 13

Data Centre 09

The Indian telecom market grew to Rs.177719 crore (USD 40 billion) in 2011, with the addressable market for Tata Communications being Rs. 52939 crores (USD 11.90 billion). The major factors driving growth in the Indian market are increased penetration of mobile services, growth in consumer broadband services and increased adoption of network services by Indian businesses.

REGULATORY DEVELOPMENTS

The past year witnessed significant regulatory developments in India, such as the introduction of Mobile Number Portability (MNP) and license amendments requiring the government's prior approval for telecom equipment purchases by licensees.

Through a license amendment dated 3 December 2009, the Department of Telecommunications (DoT) had made it mandatory for all telecom service providers to obtain security clearances before placing purchase orders for procuring telecom equipment/ software from manufacturers who are not Indian owned/controlled. The associated time-consuming procedures caused the Company to face significant delays in fulfilling customer orders and in expanding its network infrastructure in India, which adversely impacted the Company's revenues. On 31 May 2011, the DoT issued an amendment to the licensing conditions, doing away with the requirement of obtaining security clearance before placing purchase orders for telecom equipment. Network security has now been made the responsibility of the service providers, for which the DoT has prescribed the requisite measures; the Company is taking all the steps outlined.

The regulatory scenario in other geographies across the world, where your Company operates through its subsidiaries, did not see any major policy changes impacting the Company's business.

COMPANY STRATEGY AND DIRECTION

Strategy Overview

Your Company continues to develop and execute its strategy to be a global provider of communication solutions, predominantly targeting business customers. Your Company's strategy continues to be focused on creating a portfolio of communication and IT infrastructure services to leverage the trends shaping our chosen business segments. The key trends that we aim to address are:

- The growth of emerging new market economies, with an emphasis on India, Asia, the Middle East and Africa;

- The growth of IP and cloud-based communication and IT solutions; and

- The shift towards managed services, which allows our client businesses to focus on their core competencies.

Your Company has been investing in the underlying infrastructure to support the growing role of the Internet in the lives of consumers and businesses, the increased penetration of more powerful end-user devices such as smart-phones, tablets etc., and a more globally connected and collaborative business environment. This infrastructure includes long distance networks, metro networks, international submarine cables, data centres and virtual private network nodes.

REVIEW OF OPERATIONS

Geographical presence

Your Company continues to grow its business in both India and globally. The revenue distribution between India and the rest of the world was 26% and 74% respectively in 2010-2011.

Segment and Product Distribution

Your Company maintains a healthy blend of revenues across its various products and segments. Some of the key facts in 2010-2011, reflecting the resilience in the revenue portfolio are:

- Mix (for data services) - Service Providers 52%, Enterprises 48%

- Overall revenues: Voice 55%, Data 40%, Neotel 5%

Highlights of Segment Operations

Global Voice

- During the year, Tata Communications' international long distance voice traffic grew 25%, from ~3200 crore minutes in 2009-10 to ~4000 crore minutes in 2010-11. National long distance voice traffic in India grew marginally to ~1000 crore minutes in 2010-11. However, gross margins from voice declined 23% to US Cents 0.46 per minute, from US Cents 0.60 per minute a year earlier.

Global Data

- Tata Communications' data portfolio continued to expand during 2010-11, and the launch of cloud computing solutions in India and Asia marked an entry into a fast-growing market segment. Revenues from this business segment were well-balanced between India (43%) and the rest of the world (57%); and between service providers (52%) and enterprises (48%). The Company's strategy of expanding into managed services is beginning to show results, with managed services contributing 21% to the global data services segment.

Customer Satisfaction

- In the highly competitive Indian and global telecom markets, one of the biggest sources of sustainable advantage is superior customer experience. Tata Communications has made steady progress in this area, with the Company's customer satisfaction ratings in 2010-11 standing at the 87th percentile of the global peer set. The Company is making ongoing investments in improving systems and processes as well as in strengthening people training and a customer- centric culture.

HUMAN RESOURCES

The different corporate entities that are part of Tata Communications together employed 7510 people as on 31 March 2011 (6457 on 31 March 2010). Of these, 2260 (1182 in the previous year) were located outside India. With people of about 40 nationalities on the rolls, the workforce profile is diverse and multicultural.

The Company seeks to hire, train and retain the best talent available globally to enable efficient and effective performance in a competitive marketplace. At Tata Communications, employees are encouraged to live the vision and values adopted by the Company.

Your Company has recognised the need to become more flexible in the management of its human capital, so as to be able to draw heavily on the skills of its global workforce. The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where we operate. Employee relations continued to be harmonious at all our locations, through continuous dialogue and openness.

AWARDS AND RECOGNITION

The Company's transformational initiatives are being recognised in India and abroad. During the year, the Company earned several prestigious recognitions, including:

- 'Top international long distance operator' award from Voice & Data magazine in India, consecutively for the 9th successive year since 2001 (India);

- 'Best global wholesale offering' award from Capacity magazine, a global publication for

telecommunications carriers and service providers;

- 'Telepresence managed service provider of the year' at the European CEO 2010 Awards;

- 'Service provider of the year' in enterprise data services and hosted contact centre services at the Frost & Sullivan 2011 India IT & Telecom Excellence Awards;

- 'Best service provider of the year, APAC'; and 'best ethernet wholesale service, APAC' at the 2010 MEF Awards;

- 'APAC service provider of the year 2011 (ethernet and telepresence)' at the Cisco Partner Summit 2011; and

- 'Best long distance operator (India)' at the Tele.net Telecom Operator Awards 2011.

CONTINUOUS IMPROVEMENT

In order to be able to respond quickly to customers, your Company continues with various initiatives to compete effectively, and to improve organisational flexibility and efficiency.

Business Excellence

Your Company has developed and deployed a Continuous Improvement methodology (QUICK), designed in partnership with Tata Quality Management Services, to serve as a model for continuous improvement.

Your Company continues to transform itself in tandem with market and regulatory changes, using the framework of the Tata Business Excellence Model (TBEM), which covers areas like leadership, strategy, customer and market focus, knowledge management, human resources, process management, customer service and social responsibility.

Your Company has received TL 9000 certification for three years, commencing 31 March 2010, for the India region. Nine out of thirteen key office premises across India have received ISO 14001 certification for environment management and we are pursuing certification for the remaining four office premises. Our Global Managed Services Operations Centre (MSOC) at Chennai, all eleven data centres in India and six data centres at international locations have received ISO 20000 and ISO 27001 certifications.

Compliance with SOX

Pursuant to its listing on the New York Stock Exchange, Tata Communications has been complying with section 404 of the Sarbanes Oxley Act, 2002 (SOX). SOX sets forth requirements for internal control over financial reporting and its documentation. For the current fiscal year, in addition to the management's own assessment of the effectiveness of such internal control, the Company's external auditors are also required to issue an opinion on whether effective internal control over financial reporting was maintained in respect of all material aspects by the management.

Enterprise Risk Management

Your Company has established an enterprise-wide risk management (ERM) framework to optimise the identification and management of risks globally, as well as to comply with clause 49 of the listing agreement with Indian stock exchanges. In line with your Company's commitment to delivering sustainable value, this framework aims to provide an integrated and organised approach for evaluating and managing risks.

Risk-based Internal Audit

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers the Company's various businesses and functions. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

PENDING MATTERS OF SIGNIFICANCE

Premature Termination of Monopoly and Compensation

As reported earlier, the Government of India (GoI) had allowed other players into the international long distance (ILD) business from 1 April 2002, terminating the Company's exclusivity two years ahead of schedule. The GoI gave the Company a compensation package vide communication dated 7 September 2000; wherein, the GOI also gave an assurance that it would consider additional compensation, if found necessary, on a detailed review when undertaken. However, vide its letter dated 18 January, 2002, issued just before the disinvestment of the Company, the GoI issued a further dispensation and unilaterally declared that the conditions stated in its said letter of 18 January, 2002 were to be treated as full and final settlement of every sort of claim against the premature ILD de-monopolisation. The Company filed a claim in the Bombay High Court in 2005. The Bombay High Court, on 7 July 2010, ruled that it did not have the jurisdiction to entertain this suit, in view of the provisions of the Telecom Regulatory Authority of India Act, 1997. Since the Company holds a different opinion, it has preferred an appeal before a division bench of the Bombay High Court on various grounds including:

- That the monopoly granted to the plaintiff was distinct from the license, and that the award of compensation was in the nature of a breach of promise from the Government, acting as a policy maker and not as a licensor under the Indian Telegraph Act.

- That the dispute did not relate to the provision of telecommunication services as envisioned under the TRAI Act.

- That the plaintiff's suit was not under, pursuant to and consequent upon the license granted to the plaintiff in 1999.

The appeal has been admitted by the Bombay High Court.

Surplus Land

Under the terms of the share purchase and shareholders' agreements (SHA) signed between the GoI and the strategic partner (the parties) at the time of disinvestment, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if, for any reason, the Company cannot hive off or demerge the land into a separate entity, alternative courses that were also stipulated in the SHA would be explored. A draft scheme of demerger was presented to the board in April 2005, which was forwarded to the GoI with the Board's observations. The parties are examining the legality and feasibility of implementing the scheme. The land identified for demerger at different locations measured 773.13 acres, and carried a book value of Rs.0.164 crores (USD 0.04 million). As reported earlier,

the VSNL Employees Cooperative Housing Society, Chennai (society) had moved the Hon'ble Delhi High Court in respect of their long pending issue of the transfer of 32.5 acres of land situated at Padianallur, Chennai, which was part of the identified surplus land. According to the order of the Hon'ble High Court and as per the advice of the GoI, the process of transferring the said land to the Society was completed in July 2009. The strategic partner has written to the GoI to exclude the 32.5 acres of land so transferred to the society, from the 773.13 acres mentioned in the SHA as the land identified to be demerged. The current balance of surplus land is 740.63 acres having a book value of Rs.0.163 crores (USD 0.04 million).

STATUTORY INFORMATION AND DISCLOSURES

Fixed Deposits

The Company has not accepted nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company has Rs.1950 crores (USD 437.81 million) of outstanding NCDs. The trust deeds for the debentures issued by the Company will be available for the inspection by the members at the Company's registered office during normal working hours, 21 days before the date of the 25THAnnual General Meeting.

During the year, the Company borrowed for its short term requirements. The Company issued short term unsecured debentures amounting to Rs.811 crores (USD 182.08 million) in 2010-11. These unsecured debentures were redeemed during 2010-11. All debentures issued by the Company were rated 'P1 '.

Particulars of Employees

The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, require the Company to provide certain details about the employees who were in receipt of remuneration of not less than Rs.0.60 crores (USD 0.13 million) during the year ended 31 March 2011 or not less than Rs.0.05 crores (USD 0.01 million) per month, during any part of the said year. The Company had 38 such employees employed during the year ended 31 March 2011. According to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors' Report being sent to the shareholders does not include this annexure. The Annexure regarding the Particulars of Employees under section 217(2A) of the Companies Act, 1956 will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the AGM.

R & D, Technology Absorption and Foreign Exchange Earnings

The Company has invested in developing new products and services adopting latest technologies such as content delivery network (CDN), cloud computing, telepresence and Wimax.

There are no particulars to be disclosed pertaining to the year under review, in respect of expenditure on Research & Development (R&D) and technology absorption as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988. For the purpose of Form 'C' under the said rules, foreign exchange earnings were equivalent to Rs.885.26 crores (USD 198.76 million) and foreign exchange outgo was equivalent to Rs.483.38 crores (USD 108.53 million).

Auditors' Report

There are no qualifications in the report of the statutory auditors for the year 2010-11.

Subsidiaries

The statement pursuant to section 212 of the Companies Act, 1956 containing details of the Company's subsidiaries, is attached. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS 21) prescribed by the Institute of Chartered Accountants of India, form part of the annual report and accounts.

The accounts statements of the subsidiaries will be provided on request to any shareholder wishing to have a copy, on receipt of such request by the deputy company secretary at the Company's registered office. These documents will also be available for inspection by any shareholder at the Company's registered office and will be available on the Company's website.

The Board of Directors

The board of directors of the Company at present consists of 11directors. Mr. Vinod Kumar, who was a non-executive director on the Board was appointed as the Managing Director and Group CEO w.e.f. 1 February 2011 subject to approval of shareholders and the Central Government as may be necessary. He replaced Mr. N. Srinath and Mr. Srinath continues to be a Director on the Board of Tata Communications Ltd and some of its subsidiary/associate companies. Mr. H.P. Mishra, who was nominated by the Government of India as a permanent (non-retiring) director, has ceased to be a director on the board of Tata Communications Limited with effect from w.e.f 1 April 2010. Mr. Manish Sinha, Dy. Director General (LF), Department of Telecommunications, was appointed in place of Mr. H.P. Mishra on the board of the Company. Mr. Manish Sinha ceased to be a director on the board of Tata Communications Limited w.e.f from 15 September 2010; effective the same date, Mr.Shabhaz Ali, Dy. Director General (TRF & Accounts), Department of Telecommunications, was appointed as government nominee director on the board of the Company.

Mr. PV Kalyanasundaram and Dr. V.R.S Sampath independent directors ceased to be a director w.e.f 20 May2011 and 2 June 2011 respectively. Mr. AK Srivastava, then Deputy Director General (AS) and Mr.Shahbaz Ali, Deputy Director General (TPF & Accounts) ceased to be directors w.e.f. 9 August 2011. On the recommendation of the government, the board has appointed Mr. Uday B. Desai as an additional director (independent) w.e.f. 6 June 2011. W.e.f 9 August 2011, Mr. AK Mittal, Senior Deputy Director General (AS), DoT and Mr.Saurabh Tiwari, Deputy Director General (LF.II), DoT nominated by the Government of India were appointed as additional directors. Mr. Uday B. Desai, Mr. AK Mittal and Mr. Saurabh Tiwari hold office till the ensuing annual general meeting.

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Mr. Arun Gandhi, Mr.Subodh Bhargava and Mr. Kishor Chaukar retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment.

None of the Company's directors is disqualified from being appointed as a director as specified in Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000. For details about the directors, please refer to point 2 of the Report on Corporate Governance.

Corporate Governance

Pursuant to Clause 49 of the listing agreement with the stock exchanges, the Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance with conditions of corporate governance form part of the directors' report.

Looking Ahead

In the coming years, your Company will continue to focus on its strategy of providing communication solutions and IT infrastructure services to service providers and enterprise customers, in India and globally, with a focus on developing differentiated capabilities in emerging new markets. It is expected that the demand for the Company's services will remain strong, but we will continue to face increased competition and pressure on pricing and margins.

Your Company will have to manage a two-pronged strategy of driving revenue growth from new markets and services, while continuing to improve the cost structure of its operations. It is expected that your Company will show improving financial performance, based on the strength of demand for communication services in our globally connected world and based on the ability to leverage the sound investments made over the past several years.

ACKNOWLEDGMENTS

The directors would like to express their thanks to all our valued customers, vendors and other business associates around the world for their support and confidence in the Company and its services. The directors also recognise, commend and thank all the employees globally for their dedication and commitment. The directors appreciate the support of various ministries and departments of the Government of India, including the Department of Telecommunications and the Information & Broadcasting Ministry as well as the governments and regulators of the various countries in which Tata Communications operates. The directors are also grateful to the Company's other stakeholders and partners including its shareholders, promoters (strategic partner and GoI), bankers and solicitors for their continued support. On behalf of the Board of Directors

Subodh Bhargava

Dated: 30 August, 2011 Chairman

Registered Office:

VSB, MG Road, Fort,

Mumbai – 400001.


Mar 31, 2010

The directors present the 24th annual report and audited accounts of Tata Communications Limited (TCL) for the financial year ended 31 March 2010.

PERFORMANCE

The year under review saw continued sluggishness in markets in which your Company operates. Most corporates, who are the major customers of the company, have remained cautious and focussed on reducing costs and becoming more efficient thereby limiting the growth in our addressable market. Despite this, your Company continued to expand and grow, and has increased its consolidated revenues to Rs.111.94 billion (previous year Rs. 102.07 billion) and EBIDTA was at Rs. 10.12 billion (previous year Rs. 13.66 billion). However, consolidated profit/(loss) after exceptional items and before tax was Rs. (6.81) billion (previous year Rs. (4.23) billion), whereas profit/(loss) after tax was Rs. (5.98) billion (previous year Rs. (3.16) billion).

On standalone basis, during the year under review, your Company earned total revenue of Rs. 33.83 billion (previous year Rs. 39.81 billion). Profit before tax for the year was Rs. 3.09 billion, (previous year Rs.7.13 billion). Profit after tax was Rs. 4.83 billion (previous year Rs. 5.16 billion).

The Company’s profitability has been affected adversely by the global economic conditions, nascent stage of some of its investments and due to increases in some specific items of cost. The consolidated net loss includes Rs. 4.64 billion in respect of the Company’s holding in Neotel, South Africa, which is still in the early growth phase and will continue to need support for some more time before it turns profitable. The net loss also includes increases in other non-cash costs viz. depreciation on account of significant capitalisation done over the past two years, and the changes in retirement provisions in India and overseas subsidiaries. We remain confident that the Company’s strategy is sound and the direction that the Company is taking will prove beneficial to the Company and its stakeholders in the future.

Dividend

The directors have recommended that no dividend be paid for the financial year ended 31 March 2010. This was deemed prudent in the light of several factors impacting your Company. The Company’s revenue has shown growth but profitability has come under pressure over the last couple of years primarily due to sharp drop in tariffs and the high capital expenditure to meet current and future business requirements resulting in significantly higher depreciation and additional interest costs and some large investments being still in their gestation phase and will take a few more years to be profitable.

Your Company has reinvested its cash in the business to expand its capabilities in key markets around the world, including India. However, your Company has also been increasing its debt funding to support growth and expansion. As a result, interest costs have been rising, affecting adversely your Company’s profitability. Therefore, as a part of its attempts to control the debt burden on the Company, the Board has decided to reinvest the amount available into growth investments for the business.

The amount available for appropriation is Rs. 25.83 billion, out of which the Company proposes to transfer Rs. 0.48 billion to general reserves and Rs. 3.55 billion to the debenture redemption reserve, leaving Rs. 21.79 billion to be carried forward.

Funding

During the year, the Company continued to borrow for financing its projects and operations. The Company issued unsecured debentures amounting to Rs. 7.00 billion in 2009-10. All debentures issued by the Company have been rated ‘AAA’. The trust deeds for the debentures issued by the Company will be available for the inspection by the members at the Company’s registered office during normal working hours, 21 days before the date of the 24th Annual General Meeting.

OVERVIEW

Over the last few years, your Company has consistently pursued its strategy of providing a range of communication services to enhance the reach and leadership of its customers in the wholesale, enterprise and retail segments across different geographies. It is leveraging its integrated wholesale capability, strong market position in India, portfolio of managed services and its focus on emerging markets to compete with other global service providers. The Company has judiciously invested in key infrastructure and service delivery capabilities to be able to meet the demands of its customers.

The Company’s focused strategy has enabled it to be one of the leading players worldwide in its major business segments, with operations in more than 50 countries. Tata Communications remains the largest provider of international wholesale voice services globally and one of the largest owners and providers of submarine cable capacity in the world. The Company is a global Tier-1 Internet Services Provider (ISP) and is a major player in the growing global IP Transit market. Your Company also offers telecommunication services through its subsidiary in Sri Lanka and associates/joint ventures in Nepal and South Africa.

In the coming years, your Company will continue to focus on redefining telecom services for “wholesale” commodity and low-value operations to a partnership-driven, value-enhancing business; on expanding networks in India to reach the customers’ premises; on rapidly growing its global enterprise segment with catalyst services including Telepresence, media and entertainment solutions, Ethernet and cloud computing; and on achieving global benchmarks in customer services and operations.

During the year under review, the enterprise customers’ demand for greater global connectivity and services continued to grow, worldwide broadband penetration increased and demand for rich media and interactive digital content continued to increase globally. This gave the Company the opportunity to leverage its Tata Global Network (TGN) of optical fibre undersea cables and Internet Protocol (IP) networks to its advantage.

Over the last four years, Tata Communications invested over US$2 billion in building infrastructure and new service capabilities as well as in entering new markets. In 2009-10, the Company invested nearly US$509 million towards capital expenditure and other investments. The Company has commissioned additional submarine cable systems and is expanding capacity in the current year, connecting emerging markets in Asia, the Middle East and Africa to each other and onwards to Europe and America to meet the increasing bandwidth demand of broadband, enterprise and wholesale customers over the next five to eight years. Investments have also been made in new data centres and in expanding the network and service capability in different markets globally. The Company expects to continue investing in increasing its capabilities and market presence.

Tata Communications has set up extensive operating framework for servicing the specific needs of customers across various market segments and geographies. The Company continues to focus on building long lasting relationships with its customers and business associates and to lead the industry in responsiveness and flexibility. The service fulfilment, service assurance and billing functions are integrated into a single team called Customer Services and Operations. This provides the right focus and synergies across all “customer touch points” in all stages of the service life cycle and has led to significantly enhanced customer satisfaction across our business segments and geographies.

The Department of Telecommunications (DoT), through a license amendment dated 3 December 2009, made it mandatory for all telecom service providers to obtain security clearances before placing purchase orders for procuring telecom equipment from manufacturers who are not Indian owned/ controlled. Further notifications issued by the DoT lay down more conditions relating to the transfer of technology requirements to be imposed on foreign vendors, self certification regarding equipment being free from malware, etc. Service providers and vendors are generally finding it difficult to comply with these conditions. The Company is facing delays in fulfilment of its customer orders and in expanding its network infrastructure in India, which is having an adverse effect on the Company’s revenues.

The Company continues to work with the Government of India to resolve this issue.

Premature Termination of Monopoly and Compensation

As reported earlier, the Government of India (GOI) had allowed other players into the international long distance (ILD) business from 1 April 2002, terminating the Company’s exclusivity two years ahead of schedule. The GoI gave the Company a compensation package and had given an assurance prior to the disinvestment of 2002 that it would consider additional compensation, if found necessary, on a detailed review when undertaken. However, in February 2002, just before the disinvestment of the Company, the GoI unilaterally granted a further dispensation as full and final settlement of every sort of claim against the premature ILD demonopolisation.

The Company filed a claim in the Mumbai High Court in 2005 which is yet to come up for hearing.

Surplus Land

Under the terms of the share purchase and shareholders’ agreements signed between the GoI and the strategic partner (the parties) at the time of disinvestment, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if, for any reason, the Company cannot hive off or demerge the land into a separate entity, alternative courses as stipulated in the share purchase and shareholders’ agreement would be explored. A draft scheme of demerger was presented to the Board in April 2005, and the parties are examining the legality and feasibility of implementing the scheme. The land identified for demerger at different locations measured 773.13 acres, and carried a book value of Rs.1.64 million.

As reported earlier, the VSNL Employees Cooperative Housing Society, Chennai (Society) had moved the Hon’ble Delhi High Court in respect of their long pending issue of transfer of 32.5 acres of land situated at Padianallur, Chennai, which was part of the identified surplus land. According to the order of the Hon’ble High Court, the process of transferring the said land to the Society was completed during the year.

HUMAN RESOURCES

Your Company invests in continuous training to enhance employee skills and capabilities and offers ample avenues to its employees to not only contribute but also learn and grow.

The different corporate entities that are part of Tata Communications together employed 6,457 people as on 31 March 2010 (5,825 on 31 March 2009). Of these, 1,181 (1,050 in the previous year) were located outside India. With people of about 40 nationalities on the rolls, the workforce profile is diverse and multi- cultural. The Company seeks to hire, train and retain the best talent available globally to enable efficient and effective performance in the competitive market.

At Tata Communications, employees are encouraged to live the vision and values adopted by the Company. Integrity is recognized and rewarded. An employee satisfaction survey is carried out annually through an independent global agency across all our different operating locations. This year, more than 94% of the employees participated in this survey and the overall employee satisfaction scores showed a healthy upward trend in respect of all major parameters and across all geographies.

The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where we operate. Employee relations continued to be harmonious at all our locations, through the process of continuous dialogue and openness to find mutually acceptable solutions to issues.

AWARDS AND RECOGNITION

The Company’s transformational initiatives are being recognised in India and abroad. During the year, the Company earned several prestigious recognitions, including:

Best Global Wholesale Offering Award from Capacity magazine, one of the most important publications for telecommunications carriers and service providers.

Global Telecoms Business Innovation Award for International Wholesale Infrastructure Transformation and International Network Infrastructure Transformation.

During the year, your Company’s MD & CEO, Mr. N Srinath, was named as the world’s eighth most influential telecom personality for the second consecutive year by the Global Telecoms Business magazine.

European CEO announced Tata Communications as Telepresence Managed Service Provider of the Year 2009.

Frost & Sullivan named the Company #1 Enterprise Data Services Provider in India 2009.

In March 2010, Tata Communications entered the Gartner’s Magic Quadrant for Global Network Service Providers.

Frost & Sullivan’s 2009 Product Innovation award for Managed Telepresence Service.

“Best service coverage” in the 2009 Optical Transmission Vision (OTV) APAC Network Operator Awards.

CONTINUOUS IMPROVEMENT

In order to be able to respond quickly to the customers, your Company continues with various internal initiatives to compete effectively, improve organisational flexibility and efficiency, streamline internal processes across all its entities globally and institutionalise a culture of continuous improvement. The Company is developing and deploying a Continuous Improvement methodology (QUICK) which is being designed in partnership with Tata Quality Management Services to serve as a model for continuous improvement. Some important initiatives are:

Business Excellence

Your Company continues to transform itself in tandem with market and regulatory changes using the framework of the Tata Business Excellence Model (TBEM) which covers areas like leadership, strategy, customer and market focus, knowledge management, human resources, process management, customer service and social responsibility.

Your Company has received TL 9000 certification for three years commencing 31 March 2010 for the India region. Nine out of thirteen key office premises across India have received ISO 14001 certification for environment management. Our Global Managed

Services Operations Centre (MSOC) at Chennai, all eleven data centres in India and six data centres at international locations have received ISO 20000 and ISO 27001 certifications.

Compliance with SOX

Pursuant to its listing on the New York Stock Exchange, Tata Communications has been complying with section 404 of the Sarbanes Oxley Act, 2002 (SOX). SOX sets forth requirements for internal control over financial reporting and its documentation. For the current fiscal year, in addition to the management’s own assessment of the effectiveness of such internal control, the Company’s external auditors are also required to issue an opinion on whether effective internal control over financial reporting was maintained in respect of all material aspects by the management.

Revenue Assurance

Revenue assurance aims to prevent revenue leakages to ensure robust internal controls and IT processes that keep pace with increasing business complexities, thus moving towards zero tolerance of revenue leakages. Your Company has recently undertaken a ‘benchmark’ study to enhance revenue assurance processes and the findings will be implemented this year.

Enterprise Risk Management

Your Company has established an enterprise-wide risk management (ERM) framework to optimise identification and management of risks globally, as well as to comply with clause 49 of the listing agreement with Indian stock exchanges. In line with your Company’s commitment to deliver sustainable value, this framework aims to provide an integrated and organised approach for evaluating and managing risks.

Risk-based Internal Audit

The risk assessments performed under the ERM exercise are a key input for the annual internal audit programme, which covers the Company’s various businesses and functions. This approach provides adequate assurance to the management that the right areas are covered under the audit plan.

STATUTORY INFORMATION AND DISCLOSURES

Fixed Deposits

The Company has not accepted nor does it hold any public deposits.

Particulars of Employees

The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, require the Company to provide certain details about the employees who were in receipt of remuneration of not less than Rs. 24 lakhs (Rs 2,400,000) during the year ended 31 March 2010 or not less than Rs. 2 lakhs (Rs. 200,000) per month, during any part of the said year. The Company had 313 such employees employed during the year ended 31 March 2010. According to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors’ Report being sent to the shareholders does not include this annexure. The Annexure regarding the Particulars of Employees under section 217(2A) of the Companies Act, 1956 will be available for inspection by any member at the registered office of the Company during working hours, 21 days before the date of the AGM.

R & D, Technology Absorption and Foreign Exchange Earnings

There are no particulars to be disclosed pertaining to the year under review, in respect of Research & Development (R&D) and technology absorption as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988. For the purpose of Form ‘C’ under the said rules, foreign exchange earnings were equivalent to Rs. 8.32 billion and foreign exchange outgo was equivalent to Rs. 5.86 billion.

The Company has invested in developing new products and services adopting latest technologies such as content delivery network (CDN), cloud computing, Telepresence and Wimax.

Auditors’ Report

There are no qualifications in the report of the statutory auditors for the year 2009-10.

Subsidiaries

The statement pursuant to section 212 of the Companies Act, 1956 containing details of the

Company’s subsidiaries, is attached. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS 21) prescribed by the Institute of Chartered Accountants of India, form part of the annual report and accounts.

These documents will be provided on request to any shareholder wishing to have a copy, on receipt of such request by the deputy company secretary at the Company’s registered office. These documents will also be available for inspection by any shareholder at the Company’s registered office.

The Board of Directors

The Board of Directors of the Company consists of twelve directors. Mr. H.P. Mishra, who was nominated by the Government of India as a permanent (non- retiring) director, has ceased to be a director on the Board of Tata Communications Limited with effect from 1 April 2010. Mr. Manish Sinha, Dy. Director General (LF), Department of Telecommunications, has been appointed in his place on the Board as a permanent (non-retiring) director. In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, Mr. P.V. Kalyanasundaram, Dr. V.R.S. Sampath and Mr. Amal Ganguli retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment.

None of the Company’s directors are disqualified from being appointed as a director as specified in Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

For details about the directors, please refer to point 2 of the Report on Corporate Governance.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the stock exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors’ Certificate regarding compliance with conditions of corporate governance form part of the directors’ report.

ACKNOWLEDGMENTS

The directors would like to express their thanks to the various customers and business associates of the Company around the world for their support and confidence in the Company and the services provided by it. The directors also recognise and commend the dedication and commitment of all the employees globally. The directors appreciate the support of various Ministries and departments of the Government of India, including the Department of Telecommunications and the Information & Broadcasting Ministry as well as the Governments and regulators of the various countries in which Tata Communications operates. The directors are also grateful to the Company’s other stakeholders and partners including its shareholders, bankers, solicitors and suppliers, for their support.

On behalf of the Board of Directors

Subodh Bhargava Dated: 5 July 2010 Chairman

Registered Office: VSB, MG Road, Fort, Mumbai - 400001.

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