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Directors Report of Tata Communications Ltd.

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.

 
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