Mar 31, 2023
Your Directors are pleased to present their Twentieth Annual Report together with the Audited Financial Statements for the year ended March 31,2023.
1. STATE OF COMPANYâS AFFAIRS Financial Highlights:
(Rs. in Lakhs) |
||
Particulars |
FY 2022-23 |
FY 2021-22 |
Revenue from Operations |
145,786 |
146,273 |
Other Income |
2,747 |
1,416 |
Total Revenue |
148,533 |
147,689 |
Profit / (Loss) before Depreciation & Amortization Expenses, Finance Costs, Exceptional |
5,513 |
42,586 |
Item & Tax |
||
Less: Depreciation & Amortization Expenses |
50,357 |
50,319 |
Profit / (Loss) before Finance Costs, Exceptional Item & Tax |
(44,844) |
(7,733) |
Less: Finance Costs |
78,193 |
73,388 |
Profit / (Loss) before Exceptional Items & Tax |
(123,037) |
(81,121) |
Less: Exceptional Items [Impairment of Assets] |
58,654 |
66,346 |
Profit / (Loss) before Tax |
(181,691) |
(147,467) |
Less: Tax Expenses |
- |
- |
Profit / (Loss) |
(181,691) |
(147,467) |
Other Comprehensive Income |
9 |
(66) |
Total Comprehensive Income |
(181,682) |
(147,533) |
The Figures for the corresponding previous year have been regrouped / reclassified wherever necessary to make them comparable.
Results of Operations
Key Highlights of the Company for the financial year ended March 31,2023 are as under:
⢠Total Revenue from Operations for current financial year stands at '' 145,786 Lakhs as against '' 146,273 Lakhs for the previous financial year.
⢠Normalized EBITDA for current financial year stands at '' 21,316 Lakhs as against '' 23,349 Lakhs for the previous financial year.
Telecom Sector Developments and its impact
The Company has from time to time informed about various developments in Indian Telecom Sector, which were beyond the control of the Company and the management. The first set of issues included the landmark judgement of the Hon''ble Supreme Court cancelling 122 2G telecom licenses in February 2012 (including licenses of Uninor, Videocon, Etisalat, Idea and Tata), the Vodafone Tax issues, the 3G auctions and the unsustainable debt accumulated by the telecom companies. All these factors led to mass exits of operators and significant scale down by the remaining. As a result, majority of the Company''s telecom sites turned into single tenant sites.
Thereafter, the year 2017-18 has seen unprecedented shutting down of some of the major telecom operators such as Aircel Group (then largest customer of the Company), Tata Teleservices, Reliance Communication, Sistema Shyam (merged with Reliance Communication) and Telenor (merged with Airtel). The table below, clearly highlights the impact of tenancy loss the Company has faced over the last decade, despite having long term binding contracts with telecom operators:
Sr. No. |
Events of Tenancy Loss |
No. of Tenancy |
Period |
Comments |
1. |
Cancellation of 2G licenses |
4,319 |
Upto December 2017 |
Supreme Court Judgement on cancellation of 122 2G telecom licenses |
2. |
Slower 3G/BWA growth |
4,750 |
Since FY 2012-13 |
Industry slowdown following the Supreme Court verdict |
3. |
Operator scale back due to auction |
3,500 |
||
4. |
Aircel default of commitment of additional 20,000 tenancies |
15,200 |
May 2014 |
Legal and financial issues |
5. |
RCom shutdown of wireless business |
1,386 |
August & September 2017 |
Unsustainable business due to competition |
6. |
TATA exit from wireless business |
2,910 |
Since May 2017 |
|
7. |
Merger of Vodafone - Idea (VIL) |
3,227 |
Since April 2018 |
Forced industry consolidation due to competition |
8. |
Consolidation of Telenor with Airtel |
1,395 |
During FY 2018-19 |
|
9. |
Aircel filing of bankruptcy |
23,727 |
January 2018 |
Unsustainable business due to competition |
10. |
BSNL exits due to uncertainty of collection |
1,767 |
Since FY 2018-19 |
Unsustainable business due to competition |
11 |
Exit during business course with various reasons |
4,923 |
Since April 2013 |
|
Aggregate tenancy loss from 2012 to 2023 |
67,104 |
Resultantly, these operators abandoned tower sites of the Company making more than 14,000 towers sites unoccupied, which is more than 50% of the total tower portfolio. These discontinuing operators did not make any payment of their contractual dues to the Company, including rent payable to landlords, statutory dues such as property tax, Na tax, local body tax, employees'' dues and vendors'' claims etc., many of which are pass through payments for the Company. As a result, the Company was saddled with substantial costs and liabilities including rents, vendors'' claims and statutory dues on such unoccupied towers without any revenue. The Company has requested Edelweiss Asset Reconstruction Company Limited (âEARCâ) being Monitoring Institution, on regular basis for making payments due to the landlords of the unoccupied sites, however, the same is yet to be approved.
The Company had also attempted to salvage unoccupied tower sites and accordingly resolution plans submitted by the Company included payment of rent to landowners, settlement to vendors and employees. However, none of the resolution proposals were considered by the lenders. The lenders rather chose to appropriate '' 1,06,600 Lakhs till date without even addressing issues of unpaid liabilities towards unoccupied towers. Additionaly, ITSL (at the behest of lenders) realized '' 3,401 Lakhs by way of sale of pledged equity shares.
Due to non-receipt of the rental amounts from the discontinuing operators as per contractual arrangement, pending approval of payment requests of the Company with the Monitoring Institution and non-resolution of issue of unpaid liabilities towards unoccupied towers, the rentals to landlords for those unoccupied sites remained unpaid. Many of the landowners blocked access to our Company''s employees to the sites and initiated legal actions against the Company and its directors / officials. Such disgruntled landlords / unknown miscreants resorted to unauthorized dismantling of sites.
The Company, on its part, are taking various mitigation measures to protect its assets such as carrying out additional survey of its sites, discussion with landowners for convincing them for not resorting to such actions; negotiating with customers / telecom operators for getting new tenants on such unoccupied towers, deployment of Tower Vigilance Team, submission of proposal to lenders for unfeasible sites etc.
Despite continuous efforts of the Company, its Board of Directors and the management to protect its assets, 2,932 sites got dismantled during the financial year ended March 31,2023 out of unoccupied sites. The Company continues to pursue its insurance claims and appropriate actions against the landlords / unknown miscreants including filing FIR, wherever applicable.
Assignment of Debt to ARC
Post various adverse developments in telecom sector as detailed above, the Company had proactively presented a resolution plan on April 27, 2018 (with an intent to maximize recovery of dues and to protect the equity exposure of the lenders) to the lenders who constituted a significant majority of the outstanding debt of the Company.
However, the lenders on their own discretion elected to pursue sale of their debt to an Asset Reconstruction Company (ARC) and accordingly, in an independently run process by the lenders, 79.34% of the Indian Rupee Lenders assigned their respective rights, title and interest in the financial assistance granted to the Company in favour of EARC.
In the meantime, one of the secured lenders filed petition before the National Company Law Tribunal, Mumbai Bench (âNCLTâ) under Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process (âCIRPâ).
Further, the Central Bureau of Investigation has filed a FIR dated August 16, 2023 against the Company, unknown public servants and unknown persons as stated therein. The Company believes that (i) the decision to assign the lenders'' debt to ARC, was entirely that of the lenders and the Company was no way involved in the decision-making process. This was based on lenders'' own commercial wisdom and on an independent process followed by the lenders; (ii) the Company has complied with all relevant sanctions, approvals and regulations.
The Company continues to operate in normal course of business and does not see any material impact on the operations of the Company.
Dismissal of Petition for initiation of CIRP
The Hon''ble NCLT vide its order dated November 18, 2022 has dismissed petition filed by one of the secured lenders for initiation of CIRP under Section 7 of the Insolvency & Bankruptcy Code, 2016 (âIBCâ). The said lender has filed an appeal against this order before the Hon''ble National Company Law Appellate Tribunal (âNCLATâ). EARC who is the lead lender of the Company has filed its Intervention Application in abovementioned Appeal. The Company has filed its reply to the appeal as well as EARC intervention application and now matter is posted for hearing.
Going Concern
Events, as stated in Financial Statements for the year ended March 31, 2023, cast significant doubt on the Company''s ability to continue as a going concern. However, with the telecom sector moving towards stabilization, management believes that below events in telecom sector are positive developments which will lead to increased demand for its towers and thereby increase in the revenue and EBITDA levels.
1. Revival package approved by the Government of India for telecom sector;
2. Hike in mobile call and data tariffs by telecom operators;
3. Mapping of sites for 5G rollout by the operators.
In addition to the above, various resource optimization initiatives undertaken by the Company, can lead to stabilization and revival. The Company is also regular in payment of statutory dues, taxes, employee dues etc. Further, the Company also continues to pursue contractual claims of approx. '' 15,34,023 Lakhs (as on June 30, 2023) from various operators in respect of premature exits by them in the lock in period. One of such claims of the Company against Tata Teleservices was settled during the year resulting in receipt of arbitration award in favour of the Company and consequent recovery of '' 2,900 Lakhs.
It was also observed in the order dated November 18, 2022 passed by the Hon''ble NCLT that the business of the Company is sustainable, it is a viable going concern under its current management and the overall financial health of the Company is not bad enough to be admitted under CIRP
Considering the above facts, decision of NCLT in favor of the Company and as the Company does not have any intention to stop its operations or liquidate its assets, the Company continues to prepare the books of account on Going Concern basis.
2. RECENT DEVELOPMENTS AT MACRO AND MICRO ECONOMIC LEVEL
The details in respect of recent developments at macro and micro economic level are covered under Management Discussion and Analysis (âMD&Aâ) Report, which forms part of the Annual Report.
3. MANAGEMENT DISCUSSION AND ANALYSIS
The MD&A Report for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the âListing Regulationsâ) is presented in a separate section forming part of the Annual Report.
The details in respect of debt resolution plan are provided in separate section under the heading âDebt Resolution Planâ under MD&A Report, which forms part of the Annual Report.
The Company has not transferred any amount to the General Reserve for the financial year ended March 31,2023.
Since your Company has posted losses for the current financial year, your Directors express their inability to recommend any dividend on the paid up Equity Share Capital of the Company for the financial year ended March 31,2023.
As per Regulation 43A of the Listing Regulations, top 1000 listed companies based on market capitalization shall formulate a dividend distribution policy, which shall be disclosed on the website of the listed entity. Accordingly, the Dividend Distribution Policy is available on the Company''s website www.gtlinfra.com.
a. The movement of Equity shares due to allotment of shares is as under:
Particulars |
No. of Equity Shares |
Equity Shares as on April 1,2022 |
12,62,33,26,856 |
Add: Allotments of Equity Shares to Bond Holders upon conversion of Bonds during the year |
4,77,75,890 |
Equity Shares as on March 31,2023 |
12,67,11,02,746 |
Add: Allotments of Equity Shares to Bond Holders upon conversion of Bonds post March 31,2023 |
13,59,18,201 |
Equity Shares as on September 5, 2023 |
12,80,70,20,947 |
The Company has only one class of equity shares and it has not issued equity shares with differential rights or sweat equity shares.
Further to information furnished in the previous year Directors'' Report 9,45,82,939 equity shares allotted to Trust are yet to be listed due to pending receipt of requisite details from Bondholders.
b. Foreign Currency Convertible Bonds (FCCBs)
The details of outstanding Foreign Currency Convertible Bonds are as follows:
Particulars |
No. of Series B1 Bonds (of US$ 1,000 each) |
No. of Series B2 Bonds (of US$ 1,000 each) |
No. of Series B3 Bonds (of US$ 1,000 each) |
Total No. of Bonds (of US$ 1000 each) |
No. of Equity Shares upon conversion |
FCCBs allotted |
80,745 |
86,417 |
30,078 |
197,240 |
- |
Converted till date |
53,016.5 |
48,805 |
19,748 |
121,523.5 |
79,18,86,672 |
Balance as September 5, 2023 |
27,728.5 |
37,612 |
10,330 |
75,716.5 |
- |
* Series B1 and B3 bonds have become compulsorily convertible upon maturity date i.e. October 27, 2022. The Company has requested bondholders to share their respective details for converting bonds and crediting equity shares to their respective accounts. However, the Company is still awaiting the relevant details of bondholders w.r.t. 27,728.50 Series B1 Bonds and 10,330 Series B3 Bonds.
** Series B2 Bonds are redeemable and have matured on October 27, 2022. The lead lender has informed the Company that till the time the entire outstanding secured debt of the secured lenders is fully paid off, no other creditor including Series B2 bondholders, which rank sub-ordinate to the secured creditors, can be paid in priority. Hence, the Company could not redeem Series B2 Bonds on its maturity. In terms of Terms and Conditions of Series B2 Bonds, bondholders can exercise their right for conversion of bonds into equity shares till the date of receipt of redemption amount by the Principal Agent / Trustee of the Series B2 bonds.
If bonds are converted into equity shares of the Company, the number of equity shares would go up by 49,29,07,042.
During the year under review, the Company has not accepted any public deposits under chapter V of the Companies Act, 2013 (the âActâ) from public or from its members.
9. MATERIAL CHANGES AND COMMITMENTS
Save and except as discussed in this Annual Report, no material changes have occurred and no commitments were given by the Company thereby affecting its financial position between the end of the financial year to which these financial statements relate and the date of this report.
The Company was promoted by GTL Limited (âGTLâ). Subsequent to lenders action to convert debt in to equity and action by lenders of GTL under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, total equity holding of Promoter groups reduced to 3.28%.
11. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, in respect of financial year ended March 31,2023 confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards had been followed and there were no material departures;
ii. they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period;
iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they had prepared the annual accounts on a going concern basis;
v. they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
vi. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
12. DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Charudutta Naik (DIN: 00225472), Director of the Company, retires by rotation at the ensuing Annual General Meeting (âAGMâ) and being eligible, offers himself for re-appointment.
During the year, Mr. Milind Naik (DIN: 00276884), who was associated with the Company as Whole-time Director of the Company, has tendered his resignation with effect from September 22, 2022. The Board places on record its deep appreciation and respect for the valuable advice and guidance received from Mr. Milind Naik during his tenure as a Whole-time Director of the Company.
The Board appointed Mr. Vikas Arora (DIN:09785527) as Whole-time Director of the Company with effect from November 10, 2022, which was approved by the Shareholders of the Company on February 5, 2023.
The Board appointed Mrs. Sunali Chaudhry (DIN: 7139326) as an Additional Director of the Company with effect from September 5, 2023, subject to approval of the Shareholders at the ensuing AGM.
Resolutions seeking Shareholders approval for their appointment/ re-appointment along with other required details forms part of Notice.
Pursuant to the provisions of Section 203 of the Act, currently, Mr. Vikas Arora - Whole-time Director, Mr. Bhupendra J. Kiny - Chief Financial Officer and Mr. Nitesh A. Mhatre - Company Secretary are the Key Managerial Personnel of the Company.
13. DECLARATION BY INDEPENDENT DIRECTORS
All the Independent Directors of the Company have furnished a declaration to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act, along with the Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.
14. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met Eight (8) times during the financial year, the details of which are given in Corporate Governance Report that forms part of this Report.
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the provisions of the Act and Corporate Governance requirements as prescribed by the Listing Regulations.
The performance of the Board and its Committees was evaluated by the Board after seeking inputs from all the Board / Committee members on the basis of the criteria such as composition of the Board / Committee and structure, effectiveness of Board / Committee processes, providing of information and functioning etc. The Board and the Nomination and Remuneration Committee also reviewed the performance of the individual directors on the basis of the criteria such as attendance in Board / Committee meetings, contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed etc.
In a separate meeting of Independent Directors, performance of non-independent directors, performance of Board as a whole and performance of the Chairman were evaluated taking into account the views of executive directors and non-executive directors.
16. POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company has put in place appropriate policy on Directors'' Appointment and remuneration and other matters as required by Section 178(3) of the Act, which is provided in the Policy Dossier that has been uploaded on the Company''s website www.gtlinfra.com. Further, salient features of the Company''s Policy on Directors'' remuneration have been disclosed in the Corporate Governance Report, which forms part of this Report.
17. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is given below:
i. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year and the percentage increase in remuneration of each director, chief financial officer, company secretary or manager, if any, in the financial year:
Executive Director |
Ratio to median remuneration |
% increase in remuneration in the financial year |
Mr. Vikas Arora |
1:11.62 |
$ |
Non-executive Directors** (sitting fees only) |
Ratio to median remuneration |
% increase in remuneration in the financial year |
Mr. Manoj G. Tirodkar |
N.A. |
N.A. |
Mr. N. Balasubramanian |
N.A. |
N.A. |
Dr. Anand P. Patkar |
N.A. |
N.A. |
Mr. Charudatta K. Naik |
N.A. |
N.A. |
Mr. Vinod B. Agarwala |
N.A. |
N.A. |
Ms. Dina S. Hatekar |
N.A. |
N.A. |
Chief Financial Officer |
||
Mr. Bhupendra J. Kiny |
- |
20%# |
Company Secretary |
||
Mr. Nitesh A. Mhatre |
- |
5% # |
$ appointed as Whole-time Director w.e.f. November 10, 2022.
** Since Non-executive Directors received no remuneration, except sitting fee for attending Board / Committee meetings, the required details are not applicable.
# Considered only CTC while calculation.
ii. The percentage increase / (decrease) in the median remuneration of employees in the financial year: 22%
iii. The number of permanent employees on the rolls of the Company: 727
iv. Average percentage increase already made in the salaries of employees other than the managerial personnel in last financial year and its comparison with the percentage 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 in salaries of employees is 7.7.%. Mr. Vikas Arora, Whole-time Director was appointed w.e.f. November 10, 2022, hence comparison cannot be provided.
v. 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.
18. INTERNAL FINANCIAL CONTROL SYSTEMS
The details in respect of adequacy of internal financial controls with reference to the Financial Statements are included in the MD&A Report, which forms part of the Annual Report.
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report.
20. AUDITORS AND AUDITORSâ REPORT
M/s. Pathak H.D. & Associates LLP (FRN: 107783W / W100593), Chartered Accountants, Mumbai hold office till conclusion of twentieth (20th) AGM of the Company. The Board has recommended the appointment of M/s. CVK & Associates (FRN: 101745W), Chartered Accountants as the Statutory Auditor of the Company in their place, for a term of five consecutive years, from the conclusion of twentieth (20th) AGM of the Company scheduled to be held in the year 2023 till the conclusion of twenty fifth (25th) AGM of the Company to be held in the year 2028, for approval of shareholders of the Company, based on the recommendation of the Audit Committee.
For the FY 2022-23, the Statutory Auditors of the Company have issued modified opinion w.r.t. the Company''s inability to quantify the amount of property tax on its telecom towers to be ultimately borne by it due to petition pending before the appropriate Courts, non-receipt of property tax demands in respect of majority of telecom towers and Company''s contractual rights to recover such property tax from its customers. In this regard, the Company has given appropriate explanation in its Note No. 40 of Notes to the Financial Statements. Further, as regards the Auditors opinion regarding material uncertainty related to Going Concern, the Company has furnished required details / explanations in Note nos. 59 Notes to the Financial Statements.
In terms of Section 148 (1) of the Act read with the Companies (Cost Records and Audit) Rules, 2014, as amended, since the Company''s business (Infrastructure Provider Category - I) is not included in the list of industries to which these rules are applicable, the Company is not required to maintain cost records.
22. SECRETARIAL AUDITORSâ REPORT
The Secretarial Auditor Report is given in Annexure A (Form No. MR-3) forming part of this Report.
Further, in terms of Regulation 24A of the Listing Regulations, a Secretarial Compliance Audit Report given by Mr. Chetan A. Joshi, Practicing Company Secretary, is annexed as Annexure B to this Report.
23. COMPLIANCE WITH SECRETARIAL STANDARD
The Company has complied with applicable secretarial standards as prescribed by the Institute of Company Secretary of India.
A separate section on risks and their management is provided in the MD&A Report forming part of this Report. The Risk Management Committee in consultation with the Audit Committee monitor the risk management plan and ensures its effectiveness. It is important for members and investors to be aware of the risks that are inherent in the Company''s businesses. The major risks faced by the Company have been outlined in this section to allow members and prospective investors to take an independent view. The Company strongly urges Shareowners/ Investors to read and analyze these risks before investing in the Company.
25. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During the year under review, the Company has neither provided any loans / corporate guarantees nor made any investment.
26. PARTICULARS OF RELATED PARTY TRANSACTION
All related party transactions entered into during the financial year were on an arms'' length basis and were in ordinary course of business. None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Accordingly, a statement pursuant to provisions of Section 129(3) of the Act in Form No. AOC-2 is not required to be furnished.
The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website www.gtlinfra.com.
27. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have Subsidiary or Joint Venture Company. Accordingly, a statement pursuant to provisions of Section 129(3) of the Act in Form No. AOC-1 is not required to be furnished.
28. CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and other details are furnished in Annexure C of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
For CSR initiatives undertaken by Global Foundation, please refer to MD&A Report under the caption âCorporate Social Responsibilityâ. The CSR Policy is available on the Company''s website www.gtlinfra.com.
29. ANNUAL RETURN AS ON MARCH 31,2023
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the draft Annual Return having all the available information of the Company as on March 31,2023 is available on the Company''s website at https://www.gtlinfra.com/wp-content/uploads/pdf/GTLINFRA MGT7 2023.pdf
30. CORPORATE GOVERNANCE AND VIGIL MECHANISM
The Company has complied with the Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of the Regulation 46 of the Listing Regulations. A separate Report on Corporate Governance along with the Certificate of the Auditor, M/s. Pathak H.D. & Associates LLP, Chartered Accountants, Mumbai confirming compliance of conditions of Corporate Governance as required under Regulation 34(3) of the Listing Regulations forms part of this Report.
The Company has formulated and published a Whistle Blower Policy, details of which are furnished in the Corporate Governance section, thereby establishing a vigil mechanism for directors and permanent employees for reporting genuine concerns, if any. The policy is available on the Company''s website at www.gtlinfra.com.
31. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Regulation 34(2) of the Listing Regulations, as amended, inter-alia, provides that the Annual Report of the top 1000 listed entities based on market capitalization (calculated as on 31st March of every Financial Year), shall include a Business Responsibility and Sustainability Report (BRSR). Accordingly, the Company has presented its BRSR for the Financial Year 2022-23, which is part of this Annual Report as Annexure D.
32. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
a. Conservation of Energy:
During the year, the Company continued its efforts towards conservation of energy by way of reduction of diesel consumption at telecom tower sites through several initiatives of energy efficiency and fuel savings as under:
i) the steps taken or impact on conservation of energy:
a. Regular and timely induction / replacement of Passive Infrastructure related Capex like Battery Banks, Power Systems, Automation systems at tower site for optimal energy consumption leading to reduction in wastage and increasing performance.
b. Periodical Corrective and Prevesentive Maintenance of assets to ensure right levels of load to power ratio, thereby controlling excessive overrun of Energy utilized.
c. Operating high EB availability sites with optimal fuel stock, thus reducing wastage as well as making sites Fuel Free. A total of 2,547 sites are operating as Green sites.
d. Increased drive to get sites connected / reconnected with EB (as applicable), thus reducing diesel consumption for a clean Energy operation
e. Sustained efforts to reduce potential pilferage of fuel and electricity at site through a strong governance mechanism in the field.
f. Constant monitoring of excessive energy use sites to identify root causes and rectify the same, thereby controlling the excess consumption and conserving Energy.
ii) the steps taken by the Company for utilizing alternate source of energy:
Undertaking Proof of Concept trials for introducing new technologies like Li Ion Batteries, as a potential replacement of Lead acid Batteries and Diesel Generators in extremely high dependent tower sites with excessive Energy consumption and such other steps currently under evaluation by the Company.
iii) the capital investment on energy conservation equipment:
Not Applicable
b. Technology Absorption: |
||
1. |
Efforts made towards technology absorption : |
|
2. |
The benefits derived like product improvement, cost reduction, : product development or import substitution |
|
3. |
In case of imported technology (imported during last 3 years reckoned : |
The Company has not absorbed, |
from the beginning of the financial year) following information may |
adopted and innovated any new |
|
be furnished. |
technology. Hence, the details |
|
a. the details of technology imported : b. the year of import : c. whether the technology been fully absorbed? : d. i f not fully absorbed, the areas where absorption has not taken : |
relating to technology absorption are not furnished. |
|
place, reasons thereof |
||
4. |
the expenditure incurred on Research and Development : |
No expenditures |
were incurred during the year. |
c. Foreign Exchange Earnings and Outgo:
During the year under review, the inflow and outgo of foreign exchange in actual terms were '' Nil respectively.
The associate base of the Company as on March 31,2023 stood at 792. For full details / disclosures refer to the Human Resources section in the MD&A Report, which forms part of the Annual Report.
In terms of the provisions of Section 197(12) of the Act read with sub-rules 2 & 3 of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, names and other particulars of the top ten employees in terms of remuneration drawn and the name of every employee who is in receipt of such remuneration as stipulated in said Rules are required to be set out in a statement to this Report. This Report is being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said statement is related to any Director of the Company.
Your Directors wish to place on record their appreciation and acknowledge with gratitude the support and cooperation extended by the customers, employees, vendors, bankers, financial institutions, investors, media and both the Central and State Governments and their Agencies and look forward to their continued support.
On behalf of the Board of Directors,
Mumbai Manoj G. Tirodkar
September 5, 2023 Chairman
Mar 31, 2018
The Directors are pleased to present their Fifteenth Annual Report together with the Audited Financial Statements for the year ended March 31, 2018.
Financial Highlights:
(Rs. in Lakhs)
Particulars |
FY 2017-18 |
FY 2016-17* |
Total Revenue |
251,584 |
230,848 |
Profit / (Loss) before Depreciation & Amortization Expenses, Finance Costs, Exceptional Item & Tax |
89,687 |
101,797 |
Less: Depreciation & Amortization Expenses |
79,992 |
74,266 |
Profit / (Loss) before Finance Costs, Exceptional Item & Tax |
9,695 |
27,531 |
Less: Finance Costs |
56,974 |
102,396 |
Profit / (Loss) before Exceptional Item & Tax |
(47,279) |
(74,865) |
Less: Exceptional Item |
142,016 |
65,000 |
Profit / (Loss) before Tax |
(189,295) |
(139,865) |
Less: Tax Expenses |
- |
- |
Profit / (Loss) |
(189,295) |
(139,865) |
Other Comprehensive Income |
69 |
(44) |
Total Comprehensive Income |
(189,226) |
(139,909) |
- As the Scheme of Arrangement between CNIL and the Company has been accounted under the Pooling of Interest method w.e.f. April 1, 2016 being the Appointed Date, the comparative figures for previous year 2016-17 have been re-stated.
Results of Operations
Key Highlights of the Company for the financial year ended March 31, 2018 are as under:
- Total Revenue from Operations for current financial year stands at Rs. 233,333 Lakhs as against Rs. 228,290 Lakhs for the previous financial year.
- Normalized EBITDA for current financial year stands at Rs. 105,963 Lakhs as against Rs. 112,160 Lakhs for the previous financial year.
The increase in revenue is mainly on account of growth in tenants till period ending December 31, 2017. During the first nine months period ended December 31, 2017, the Company was on course to achieve its projected annual revenue and EBITDA targets, however, the same could not be achieved on account of telecom sector developments as discussed hereinunder.
Telecom Sector Developments
Telecom Sector developments such as (i) aggressive pricing by Telcos; (ii) reduction in interconnect usage charges and (iii) increasing unsustainable levels of debts of existing Telcos, impacted the profitability / cash flow of all participants in the sector making it unsustainable to remain viable and / or continue operations as evidenced through series of transactions / announcements listed below:
(i) Aircel Group''s admission to National Company Law Tribunal (NCLT) under Insolvency & Bankruptcy Code (IBC)
(ii) Reliance Communication Limited''s (RCom) decision to withdraw from the wireless space and consequent acquisition of certain assets by Reliance Jio Infocomm Limited
(iii) Sale of Sistema Shyam Teleservices Limited (SSTL) to RCom and consequent merger of both
(iv) Tata Group''s decision to withdraw from the wireless space and consequent merger of Tata Teleservices Limited (TTSL) with Bharti Airtel Limited (Bharti Airtel)
(v) Vodafone India Limited (Vodafone) and Idea Cellular Limited (Idea) merger
(vi) Bharti Airtel and Telenor (India) Communication Private Limited (Telenor) merger
The extract of the message of Chairman of Cellular Operators Association of India (COAI) published in its Annual Report for FY 2017-18, summarising the uphill challenges faced by the industry is stated in MD&A Report.
Impact of Telecom Sector Developments on the Company
Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited (Collectively called Aircel Group) were the largest customers of the Company, contributing around 43% of its revenue as at March 31, 2017. Despite having lock-in contractual arrangements with the Company, Aircel Group issued Exit Notices for six circles in the month of January, 2018. As a step towards recovery of its dues, the Company filed an application under Section 9 of Arbitration & Conciliation Act, 1996 before the Hon''ble Delhi High Court and the Hon''ble Court by its order dated January 29, 2018 ordered status quo in the matter. Post the said order and during the pendency of Arbitration Petition, Aircel Group voluntarily filed for Insolvency petition before the NCLT on March 1, 2018. The Company also filed an intervention application before the Hon''ble NCLT on March 8, 2018. While admitting the Insolvency Petition of Aircel Group, the Hon''ble NCLT directed the Company to file its claim before an Interim Resolution Professional (IRP). Accordingly the Company has filed its claims before the IRP. This event resulted in a loss of 23,778 tenants of Aircel to the Company.
Further, withdrawal from wireless space by RCom and TTSL and consolidation among telecom operators has also resulted in further loss of tenants for the Company during the financial year under review.
The events enumerated above, which are akin to force majeure events and beyond the control of the management, adversely affected the Company. The Company ended last financial year with 27,626 tenancies despite achieving an all time high of 51,587 against projected tenancies of 56,000. However, the Company continues to believe that post consolidation, the remaining Telcos will need to aggressively expand and upgrade their networks to account for increased subscribers and continued demand for data services. The Company expects to add around 4,200 tenancies from the continuing operators during next financial year and expects this trend to continue. However, this estimate is contingent on no adverse external factors yet impacting the telecom sector.
Going Concern
The Telecom sector developments as enumerated above have had massive negative impact on the Company. Despite these telecom sector challenges, the Company continues to service its Rupee Term Loans in accordance with SDR terms and paid Rs. 303.77 Crore from February 2018 till August 9, 2018. Hence, there was no financial default by the Company as on July 31, 2018. The Reserve Bank of India (RBI) vide circular dated February 12, 2018, withdrew SDR guidelines. During the quarter ended June 30, 2018, one of the term loan lenders has claimed '' 26,446 Lakhs, which as per the Company is not justifiable and is wrong, and hence the Company has disputed the claim. In view of the above developments, options to right size the debt either through an ARC debt sale process initiated by lenders or in accordance with the revised RBI guidelines dated February 12, 2018 are being envisaged. Accordingly, the Company continues to prepare the financial statements on a going concern basis.
2. RECENT DEvELOPMENTS AT MACRO AND MICRO ECONOMIC LEvEL
The details in respect of recent developments at macro and micro economic level are covered under Management Discussion and Analysis (MD&A) Report, which forms part of the Annual Report.
3. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the âListing Regulationsâ) is presented in a separate section forming part of the Annual Report.
4. DEBT RESTRUCTURING
The details in respect of Debt Restructuring are provided in separate section under the heading âDebt Restructuringâ under MD&A Report, which forms part of the Annual Report.
5. SCHEME OF ARRANGEMENT
The Board of Directors approved the Scheme of Arrangement between Chennai Network Infrastructure Limited (CNIL) and the Company and their respective shareholders and creditors (the Scheme) under Sections 230 to 232 of the Companies Act, 2013 on April 22, 2017 based on the valuation report received from M/s Haribhakti & Co. LLP, Chartered Accountants. The Company received all approvals necessary for effecting the Scheme of merger during the year and the merger was made operational from December 22, 2017 with effect from April 1, 2016, being the Appointed Date of the Scheme. The Scheme has been accounted under the pooling of interest method with effect from the Appointed Date and accordingly the comparative figures for the financial year 2016-17 have been re-stated.
Pursuant to the Scheme, shareholders of CNIL received for each equity share held by them with one equity share of face value of Rs. 10 each in the Company. Accordingly, the Company allotted 7,588,819,117 equity shares of Rs.10 each to shareholders of CNIL.
6. exchange of series b bonds with new bonds
During the year under review, the Company, with the approval of the RBI and the holders of existing Interest Bearing Convertible Bonds (âExisting Series B Bondsâ) has successfully completed the exchange of Existing Series B Bonds with the following New Bonds:
a) 80,745 Zero Coupon Compulsorily Convertible Bonds due 2022 (Series B1 Bonds), having face value of US$ 1000 each aggregating to US$ 80.745 Million;
b) 86,417 Interest Bearing Convertible Bonds due 2022 (Series B2 Bonds) having face value of US$ 1000 each aggregating to US$ 86.417 Million; and
c) 30,078 Zero Coupon Compulsorily Convertible Bonds due 2022 (Series B3 Bonds) having face value of US$ 1000 each aggregating to US$ 30.078 Million.
The New Bonds are listed on Singapore Exchange Securities Trading Limited.
7. TRANSFER TO RESERvES
The Company has not transferred any amount to the General Reserve for the financial Year ended March 31, 2018.
8. DIvIDEND
Since your Company has posted losses, your Directors express their inability to recommend any dividend on the paid up Equity Share Capital of the Company for the financial Year ended March 31, 2018.
9. SHARE CAPITAL
a. The movement of Equity shares due to allotment of shares, if any, is as under:
Particulars |
No. of Equity Shares |
Equity Shares as on April 1, 2017 |
2,460,083,350 |
Add: Allotments of Equity Shares to Lenders under Strategic Debt Restructuring Scheme |
1,692,215,807 |
Add: Allotments of Equity Shares to Shareholders of CNIL pursuant to Scheme of Arrangement |
7,588,819,117 |
Add: Allotments of Equity Shares to Bond Holders upon conversion of Bonds |
384,152,342 |
Equity Shares as on March 31, 2018 |
12,125,270,616 |
Add: Allotments of Equity Shares to Bond Holders upon conversion of Bonds |
168,637,320 |
Equity Shares as on August 9, 2018 |
12,293,907,936 |
The Company has only one class of equity shares and it has not issued equity shares with differential rights or sweat equity shares.
During the year under review, the Trustee of Zero Coupon Compulsorily Convertible Bonds (Series A Bonds) on the instruction of one of Series A Bondholders lodged a commercial suit against the Company for alleged event of default under Series B Bonds and sought interim relief restraining the Company from unilaterally converting the Series A Bonds into equity shares on maturity date. However, the Hon''ble High Court did not grant interim relief for restraining the Company from conversion of Series A Bonds into equity shares. Accordingly, on maturity, the Company converted all Series A Bonds outstanding as on the date of maturity into equity shares and allotted 103,198,154 equity shares. However, out of the said equity shares, 95,364,166 equity shares allotted are yet to be listed, since the concerned Series A bondholders did not provide requisite details for crediting the shares to the respective Series A bondholders. In the absence of requisite information, the Company has allotted the said equity shares to a Trust, created for the benefit of Series A Bondholders.
b. Foreign Currency Convertible Bonds (FCCBs)
The details of outstanding Foreign Currency Convertible Bonds are as follows:
Particulars |
No. of Series B1 Bonds (of US$ 1,000 each) |
No. of Series B2 No. of Series B3 Bonds (of US$ Bonds (of US$ 1,000 each) 1,000 each) |
Total No. of Bonds (of US$ 1000 each) |
No. of Equity Shares upon conversion |
|
FCCBs allotted |
80,745 |
86,417 |
30,078 |
197,240 |
|
Converted till date |
25,889 |
- |
16,908 |
42,797 |
278,773,661 |
Balance as on August 9, 2018 |
54,856 |
86,417 |
13,170 |
154,443 |
If compulsorily convertible bonds (i.e. Series B1 Bonds and Series B3 Bonds) are converted into equity shares of the Company, the number of equity shares would go up by 443,111,840. The Company has excluded such number of convertible securities which are likely to be redeemed in terms of Series B2 Bonds.
10. fixed deposits
During the year under review, the Company has not accepted any public deposits under chapter V of the Companies Act, 2013 from Public or from its Members.
11. MATERIAL CHANGES AND COMMITMENTS
Save and except as discussed in this Annual Report, no material changes have occurred and no commitments were given by the Company thereby affecting its financial position between the end of the financial year to which these financial statements relate and the date of this report.
12. PROMOTER GROUP
The Company is promoted by GTL Limited and is a part of Global Group of Companies. The Members may note that the Promoter Group comprises of Global Holding Corporation Private Limited and such other persons as defined under the Listing Regulations. As on August 9, 2018, the Promoter Group shareholding in the Company is 20.06% after all dilution of equity pursuant to allotments under SDR, Merger and FCCB conversions.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, in respect of financial year ended March 31, 2018 confirm that:
i. i n the preparation of the annual accounts, the applicable accounting standards had been followed and there were no material departures;
ii. they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period;
iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they had prepared the annual accounts on a going concern basis;
v. they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
vi. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
14. DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year under review, the Company re-appointed Mr. Milind K. Naik as Whole-time Director and appointed Mr. Bhupendra J. Kiny as Chief Financial Officer w.e.f. January 1, 2018 and designated them as Key Managerial Personnel (âKMPâ) under Section 203 of the Companies Act, 2013 (the âActâ).
Mr. Laxmikant Y. Desai - Chief Financial Officer retired from the employment of the Company and accordingly relinquished his position of KMP w.e.f. December 31, 2017.
Pursuant to the provisions of Section 203 of the Act, currently, Mr. Milind K. Naik - Whole-time Director, Mr. Bhupendra J. Kiny - Chief Financial Officer and Mr. Nitesh A. Mhatre - Company Secretary are the KMPs of the Company.
Mrs. Sonali P. Choudhary (DIN: 07139326), Director of the Company, retires by rotation at the ensuing Annual General Meeting (âAGMâ) and being eligible, offers herself for re-appointment.
The background of the Director proposed for re-appointment is given under the Corporate Governance Report, which forms part of this Report.
15. DECLARATION BY INDEPENDENT DIRECTORS
All the Independent Directors of the Company have furnished a declaration to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act.
16. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met seven (7) times during the financial year, the details of which are given in Corporate Governance Report that forms part of this Report.
17. BOARD EvALUATION
The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and Corporate Governance requirements as prescribed by the Listing Regulations.
The performance of the Board and its Committees was evaluated by the Board after seeking inputs from all the Board / Committee members on the basis of the criteria such as composition of the Board / Committee and structure, effectiveness of Board / Committee processes, providing of information and functioning etc. The Board and the Nomination and Remuneration Committee also reviewed the performance of the individual directors on the basis of the criteria such as attendance in Board / Committee meetings, contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed etc.
In a separate meeting of Independent Directors, performance of non-independent directors, performance of Board as a whole and performance of the Chairman were evaluated taking into account the views of executive directors and non-executive directors.
18. POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company has put in place appropriate policy on Directors'' Appointment and remuneration and other matters as required by Section 178(3) of the Act, which is provided in the Policy Dossier that has been uploaded on the Company''s website www.gtlinfra.com. Further, salient features of the Company''s Policy on Directors'' remuneration have been disclosed in the Corporate Governance Report, which forms part of this Report.
19. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is given below:
i. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Executive Directors |
Ratio to median remuneration |
Mr. Milind K. Naik |
8.25 |
Non-executive Directors* (sitting fees only) |
Ratio to median remuneration |
Mr. Manoj G. Tirodkar |
N.A. |
Mr. N. Balasubramanian |
N.A. |
Dr. Anand P. Patkar |
N.A. |
Mr. Charudatta K. Naik |
N.A. |
Mr. Vinod B. Agarwala |
N.A. |
Mr. Vijay M. Vij |
N.A. |
Mrs. Sonali P. Choudhary |
N.A. |
* Since Non-executive Directors received no remuneration, except sitting fee for attending Board / Committee meetings, the required details are not applicable.
ii. The percentage increase in remuneration of each director, chief financial officer, company secretary or manager, if any, in the financial year:
Directors, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial year |
Mr. Manoj G. Tirodkar |
N.A. |
Mr. N. Balasubramanian |
N.A. |
Dr. Anand P. Patkar |
N.A. |
Mr. Charudatta K. Naik |
N.A. |
Mr. Vinod B. Agarwala |
N.A. |
Mr. Vijay M. Vij |
N.A. |
Mrs. Sonali P. Choudhary |
N.A. |
Mr. Milind K. Naik, Whole-time Director |
Refer Note* |
Mr. Laxmikant Y. Desai, Chief Financial Officer (upto December 31, 2017) |
Nil |
Mr. Bhupendra J. Kiny, Chief Financial Officer (w.e.f. January 1, 2018) |
Nil |
Mr. Nitesh A. Mhatre, Company Secretary |
Nil |
* The Company has made necessary application to the Central Government for payment of remuneration not exceeding '' 1.26 Crore p.a. to Mr. Milind K. Naik. Once the Company receives the approval from the Central Government, the Company shall compensate Mr. Milind K. Naik for his arrears accordingly.
iii. The percentage increase in the median remuneration of employees in the financial year: 0.89%
iv. The number of permanent employees on the rolls of the Company : 432
v. Average percentage increase already made in the salaries of employees other than the managerial personnel in last financial year and its comparison with the percentage 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 in salaries of employees is nil and also there is no change in managerial remuneration during the year.
vi. 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.
20. INTERNAL FINANCIAL CONTROL SYSTEMS
The details in respect of adequacy of internal financial controls with reference to the Financial Statements are included in the MD&A Report, which forms part of the Annual Report.
21. AUDIT COMMITTEE
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report.
22. AUDITORS AND AUDITORSâ REPORT
M/s Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s Yeolekar & Associates, Chartered Accountants, Mumbai, were appointed as Joint Auditors at the Eleventh (11th) AGM of the Company held on September 16, 2014 to hold office from conclusion of the said meeting till the conclusion of the Fifteenth (15th) AGM to be held in calendar year 2018. Pursuant to the provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, since the term of appointment of the Joint Auditors is expiring at the conclusion of the ensuing AGM, the Audit Committee and the Board have recommended appointment of M/s Pathak H.D. & Associates (FRN: 107783W), Chartered Accountants, Mumbai, as the Auditor of the Company for holding office from conclusion of the Fifteenth (15th) AGM till conclusion of Twentieth (20th) AGM to be held in calendar year 2023. The Company has received the necessary certificates from the Auditor pursuant to Sections 139 and 141 of the Act regarding their eligibility for appointment. In pursuance of the provisions of Section 139 of theAct,an appropriate resolution for the appointment of M/s Pathak H.D. & Associates (FRN: 107783W), Chartered Accountants, Mumbai, as an Auditor of the Company is being placed at the ensuing Annual General Meeting.
For the FY 2017-18, the Joint Auditors of the Company have issued modified opinions w.r.t. the Company''s inability to quantify the amount of property tax on its telecom towers to be ultimately borne by it due to petition pending before the Hon''ble Supreme Court and the matter being still sub-judice, non-receipt of property tax demands in respect of majority of telecom towers and Company''s contractual rights to recover such property tax from its customers. In this regard, the Company has given appropriate explanation in its Note No. 42 of Notes to the Financial Statements. Further, as regards the Joint Auditors'' emphasis of matters, the Company has furnished required details / explanations in Note nos. 31.1, 3.8 and 53 of Notes to the Financial Statements.
23. COST AUDIT
In terms of Section 148 (1) of the Act read with the Companies (Cost Records and Audit) Rules, 2014, as amended, since the Company''s business (Infrastructure Provider Category - I) is not included in the list of industries to which these rules are applicable, the Company is not required to maintain cost records.
24. SECRETARIAL AUDITORSâ REPORT
The Secretarial Auditors'' Report does not contain any qualifications, reservations, disclaimers or adverse remarks. The Secretarial Auditors'' Report is given in Annexure A (Form No. MR-3) to this Report.
25. RISKS
A separate section on risks and their management is provided in the MD&A Report forming part of this Report. The Audit Committee monitors the risk management plan and ensures its effectiveness. It is important for members and investors to be aware of the risks that are inherent in the Company''s businesses. The major risks faced by the Company have been outlined in this section to allow members and prospective investors to take an independent view. The Company strongly urges Shareowners/ Investors to read and analyze these risks before investing in the Company.
26. PARTICULARS OF LOANS, GUARANTEES AND INvESTMENTS
During the year under review the Company has not provided any corporate guarantees. The particulars of loans and investments have been disclosed in the Note nos. 6 & 14 and 4 & 10 of Notes to the Financial Statements respectively.
27. PARTICULARS OF RELATED PARTY TRANSACTION
All related party transactions entered into during the financial year were on an arms'' length basis and were in ordinary course of business. None of the transactions with related parties falls under the scope of Section 188(1) of the Companies Act, 2013.
The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website www.gtlinfra.com. The particulars as required under the Companies Act, 2013 are furnished in Annexure B (Form No. AOC - 2) to this Report.
28. SUBSIDIARIES, JOINT vENTURES AND ASSOCIATE COMPANIES
The Company does not have Subsidiary or Joint Venture Company. During the financial year under review, the Company received all approvals necessary for effecting the merger with CNIL, its only associate company, and the merger was made operational from December 22, 2017 with effect from April 1, 2016, being the Appointed Date of the Scheme. Accordingly, a statement pursuant to provisions of Section 129(3) of the Companies Act, 2013 is furnished in Annexure C (Form No. AOC-1) to this Report.
29. CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and other details are furnished in Annexure D of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For CSR initiatives undertaken by Global Foundation, please refer to MD&A Report under the caption âCorporate Social Responsibilityâ. The CSR Policy is available on the Company''s website www.gtlinfra.com. It is clarified that Global Foundation is a Global Group initiative.
30. EXTRACT OF ANNUAL RETURN AS ON MARCH 31, 2018
An extract of Annual Return as on March 31, 2018 is annexed as Annexure E (Form No. MGT - 9) to this Report.
31. CORPORATE GOvERNANCE AND viGIL MECHANISM
The Company has complied with the Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of the Regulation 46 of the Listing Regulations. A separate Report on Corporate Governance along with the Certificate of the Joint Auditors, M/s Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s Yeolekar & Associates, Chartered Accountants, Mumbai confirming compliance of conditions of Corporate Governance as required under Regulation 34(3) of Listing Regulations forms part of this Report.
The Company has formulated and published a Whistle Blower Policy, details of which are furnished in the Corporate Governance section, thereby establishing a vigil mechanism for directors and permanent employees for reporting genuine concerns, if any.
c. Foreign Exchange Earnings and Outgo:
During the year under review, the inflow and outgo of foreign exchange in actual terms were Rs.Nil and Rs.608.26 Lakhs respectively.
33. HUMAN RESOURCE
The associate base of the Company as on March 31, 2018 stood at 982. For full details / disclosures refer to the Human Resources section in the MD&A Report, which forms part of the Annual Report.
32. CONSERvATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
a. Conservation of Energy:
During the year, the Company continued its efforts towards conservation of energy by way of reduction of diesel consumption at telecom tower sites through several initiatives of energy efficiency and fuel savings as under:
i) the steps taken or impact on conservation of energy:
a. Installation of Free Cooling / Emergency Free Cooling systems to utilize cool ambient temperatures for saving electrical energy consumption of air-conditioning systems
b. Installation of High Efficiency Rectifiers with wide input voltage range SMPS with minimum duration at lower input voltages
c. Upgradation of DC power plants with compatible high efficiency rectifiers
d. Deployment of additional battery banks for increasing backup power and thereby minimizing diesel consumption at sites
e. Fuel optimizer feature of DG controller for optimum utilization of battery backup and air-conditioning system
f. Implemented Stage-wise capacity enhancement with upgradeability as and when site load increased
g. Aircon efficiency improvement solutions for better heat transfer of refrigerant
h. Deployment of Integrated Power Management Units for AC power line conditioning and AC to DC conversion
i. Remote monitoring of site health parameters through NOC (Network Operations Centre) j. Facilitating telecom operator tenants to swap their Indoor BTS with Outdoor BTS
ii) the steps taken by the Company for utilizing alternate source of energy:
a. Deployment of Deep discharge and Lithium Ion batteries for faster charging / better utilization of backup power and thereby reducing diesel consumption
b. Deployment of DC type Diesel Generator of smaller capacity at pilot sites
iii) the capital investment on energy conservation equipment:
Not Applicable
34. PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Act read with sub-rules 2 &3 of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, names and other particulars of the top ten employees in terms of remuneration drawn and the name of every employee who is in receipt of such remuneration as stipulated in said Rules are required to be set out in a statement to this Report. This Report is being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said statement is related to any Director of the Company.
35. SPECIAL BUSINESS
As regards the items of the Notice of the Annual General Meeting relating to Special Businesses, the Resolutions incorporated in the Notice and the Explanatory Statement regarding thereto fully indicate the reason for seeking the approval of members to those proposals. Members'' attention is drawn to this items and Explanatory Statement annexed to the Notice.
36. ACKNOwLEDGEMENT
Your Directors wish to place on record their appreciation and acknowledge with gratitude the support and cooperation extended by the customers, employees, vendors, bankers, financial institutions, investors, media and both the Central and State Governments and their Agencies and look forward to their continued support.
On behalf of the Board of Directors,
Mumbai Manoj G. Tirodkar
August 9, 2018 Chairman
Mar 31, 2017
To
The Members,
The Directors are pleased to present their Fourteenth Annual Report together with the Audited Financial Statements for the year ended March 31, 2017.
1. STATE OF COMPANYâS AFFAIRS
Financial Highlights:
(Rs. in Lakhs)
Particulars |
2016-17 |
2015-16 |
||
Standalone |
Consolidated# |
Standalone |
Consolidated# |
|
Total Income |
96,703 |
96,703 |
93,043 |
93,043 |
Profit / (Loss) before Depreciation / Amortization, Finance Costs, Exceptional Item & Tax |
39,571 |
39,567 |
22,176 |
22,175 |
Less: Depreciation / Impairment & Amortization Expenses |
23,913 |
23,913 |
25,165 |
25,165 |
Profit / (Loss) before Finance Costs & Tax |
15,658 |
15,654 |
(2,989) |
(2,990) |
Less: Finance Costs |
45,870 |
45,870 |
46,895 |
46,895 |
Profit / (Loss) before Exceptional Items & Tax |
(30,212) |
(30,216) |
(49,884) |
(49,885) |
Less: Exceptional Items (Net) |
- |
- |
10,655 |
10,655 |
Profit / (Loss) before Tax |
(30,212) |
(30,216) |
(60,539) |
(60,540) |
Less: Tax Expenses |
- |
- |
- |
- |
Add: Share in Loss of Associate |
- |
(30,038) |
- |
(13,716) |
Profit / (Loss) |
(30,212) |
(60,254) |
(60,539) |
(74,256) |
Other Comprehensive Income |
(44) |
(44) |
(40) |
(41) |
Total Comprehensive Income Year |
(30,256) |
(60,298) |
(60,579) |
(74,297) |
*In view of the application of Ind AS, the figures for the previous year 2015-16 are restated.
# In Consolidated Financial Statements, share of loss of Chennai Network Infrastructure Limited, an associate is only consolidate d as per equity method as mandated by Indian Accounting Standard.
Results of Operations
Key Highlights of the Company on Standalone basis for the financial year ended March 31, 2017
- Revenue from Operations - Rs.95,211 Lakhs (up 6% Y-o-Y)
- Normalized EBITDA - Rs.44,544 Lakhs (up 17% Y-o-Y)
Recent Developments at Macro and Micro Economic Level
The details in respect of recent developments at macro and micro economic level are covered under Management and Discussion Analysis Section.
2. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations) is presented in a separate section forming part of the Annual Report.
3. STRATEGIC DEBT RESTRUCTURING
The details in respect of Strategic Debt Restructuring (SDR) are provided in separate section under the heading âStrategic Debt Restructuringâ.
4. SCHEME OF ARRANGEMENT
Based on original sanction terms of lenders and as envisaged under Corporate Debt Restructuring (CDR), the Company always expressed a strong opinion that the merger between the Company and Chennai Network Infrastructure Limited (CNIL) would bring about synergies especially if debt is reduced to sustainable level on a combined basis. Accordingly, the lenders of the Company and CNIL in their JLF meeting held on September 20, 2016 agreed to proceed with the proposed merger of CNIL with GTL Infra and in-principally approved the proposed merger.
The Board of Directors of both the companies approved the Scheme of Arrangement between CNIL and the Company and their respective shareholders and creditors under Section 230 to 232 of the Companies Act, 2013 on April 22, 2017 based on the valuation report received from Haribhakti & Co. LLP. Upon the Scheme becoming effective, the Company will issue and allot of 1 (one) fully paid up equity share of face value of Rs.10/- (Rupees Ten) each of the Company for every 1 (one) fully paid up equity share of face value of Rs.10/- (Rupees Ten) each of CNIL held by shareholders of CNIL.
The implementation of the Scheme is subject to receipt of the requisite statutory and regulatory approvals, including from the applicable National Company Law Tribunals.
The highlights of the proposed merger are as under:
- The merged entity will continue to operate as GTL Infra
- The proposed merger will create a large neutral and independent telecom tower company with pan-India presence across 22 telecom circles having 27,759 towers with 50,845 tenants as on March 31, 2017.
- Financials of the combined entity as on March 31, 2017 were as under :
(Rs. in Lakhs) |
|
Revenue from Operations |
228,605 |
Normalized EBIDTA |
112,159 |
Secured Debt reduced to sustainable level post SDR implementation on April 13, 2017 (Gross)* |
419,291 |
*This excludes unsecured optionally convertible bonds issued by GTL Infra.
- The merger (once completed) will bring several operational and financial synergies that include the Companyâs enhanced abilities to garner incremental tenancies by meeting the network expansion requirements of the Telecom Operators, productivity gains and optimized cost structures through sharing of resources and available assets.
The Company believes that the combined entity will continue to grow and unlock value to (i) benefit all stakeholders including the lenders, the minority shareholders and bondholders; and (ii) provide an attractive value proposition for a potential investor.
5. DIVIDEND
Since your Company has posted losses and is currently under CDR, your Directors express their inability to recommend any dividend on the paid up Equity Share Capital of the Company for the financial Year ended March 31, 2017.
6. SHARE CAPITAL
a. The movement of Equity shares due to allotment of shares, if any, is as under:
Particulars |
No. of Equity Shares |
Equity Shares as on April 1, 2016 |
2,336,388,793 |
Add: Allotments of Equity Shares to FCCB Holders upon conversion of FCCBs |
123,694,557 |
Add: Allotments of Equity Shares to Lenders under Strategic Debt Restructuring Scheme |
1,692,215,807 |
Equity Shares as on April 27, 2017 |
4,152,299,157 |
The Company has only one class of equity shares and it has not issued equity shares with differential rights or sweat equity shares.
b. Foreign Currency Convertible Bonds (FCCBs)
Particulars |
No. of Series A FCCBs (of US$ 1,000 each) |
No. of Series B FCCBs (of US$ 1,000 each) |
Total No. of FCCBs (of US$ 1000 each) |
No. of Equity Shares issued upon conversion |
FCCBs allotted |
111,740 |
207,546 |
319,286 |
- |
Converted / cancelled till date |
87,572 |
14,013 |
101,585 |
550,796,501 |
Balance as on April 27, 2017 |
24,168 |
193,533 |
217,701 |
- |
The Company is in process of restructuring of Series B bonds, which are maturing on November 2017. Post completion of restructuring process, which is expected to be completed before November, 2017, the unsecured debt held through optionally convertible bonds will reduce from current levels of US$ 193.5 Mn as on March 31, 2017 to US$ 100 Mn. The restructuring has received approval from the lenders (JLF) of the Company and is subject to receipt of further statutory approvals and requisite consent from the Series B bondholders. Post proposed restructuring, status of FCCBs would be as follows:
Particulars |
Us $ Mn |
FCCBs alloted in 2012 |
319 |
Converted/cancelled till date |
102 |
Balance as on March 31, 2017 |
218 |
Less: FCCBs compulsorily convertible into equity share on November 8, 2017 |
24 |
Less: FCCBs compulsorily convertible into equity share 5 years from date of proposed Resturcturing* |
94 |
Balance FCCBs post proposed restructuring |
100 |
* This does not include compulsorily convertible FCCBs to be issued against early redemption premium and interest amount due on FCCBs post restructuring.
c. Consideration to CNIL shareholders under Scheme of Arrangement
As discussed in earlier paragraph, in consideration of the merger of CNIL with the Company, in terms of and upon the coming into effect of the merger scheme, the Company shall without any further application, issue and allot equity shares in following manner:
Particulars |
No. of Equity Shares |
Equity Shares of CNIL |
9,404,541,517 |
Less: Equity Shares held by Trust, whose sole beneficiary is GTL Infra (Note) |
1,815,722,400 |
Equity Shares to be allotted pursuant to Scheme |
7,588,819,117 |
Note: Upon coming into effect of the Scheme, 1,815,722,400 equity shares held by GTL Infra in CNIL through Trust shall stand cancelled pursuant to the Scheme and the Companies Act.
7. FIXED DEPOSITS
During the year under review, the Company has not accepted any deposits under chapter V of the Companies Act, 2013 from Public or from its Members.
8. MATERIAL CHANGES AND COMMITMENTS
Save and except as discussed in this Annual Report, no material changes have occurred and no commitments were given by the Company thereby affecting its financial position between the end of the financial year to which these financial statements relate and the date of this report.
9. PROMOTER GROUP
The Company is promoted by GTL Limited and is a part of Global Group of Companies. The Members may note that the Promoter Group comprises of Global Holding Corporation Private Limited and such other persons as defined under the Listing Regulations. As on April 27, 2017, the Promoter Group shareholding in GTL Infra and CNIL is 15.14% and 38.03% respectively.
10. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, in respect of financial year ended March 31, 2017 confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures;
ii. they had selected such accounting policies and 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 loss of the Company for that period;
iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they had prepared the annual accounts on a going concern basis;
v. they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
vi. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
11. DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Charudatta K. Naik, Director of the Company, retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.
Based on the recommendation of the Nomination & Remuneration Committee, the Board of Directors in its meeting held on April 27, 2017 re-appointed Mr. Milind K. Naik as the Whole-time Director of the Company.
The Board has placed an appropriate resolution for re-appointment of Mr. Naik as the Whole-time Director for a period of 3 years effective from July 21, 2017, for consideration of members.
The background of the Directors proposed for reappointment is given under the Corporate Governance Report, which forms part of this Report.
Mr. Milind K. Naik - Whole-time Director, Mr. Laxmikant Y. Desai - Chief Financial Officer and Mr. Nitesh A. Mhatre - Company Secretary are the Key Managerial Personnel of the Company and there is no change in the same during the financial year.
12. DECLARATION BY INDEPENDENT DIRECTORS
The Independent Directors of the Company have furnished a declaration to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.
13. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met Eight (8) times during the financial year, the details of which are given in Corporate Governance Report that forms part of this Report.
14. BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and Corporate Governance requirements as prescribed by the Listing Regulations.
The performance of the Board and its Committees was evaluated by the Board after seeking inputs from all the Board / Committee members on the basis of the criteria such as composition of the Board / Committee and structure, effectiveness of Board / Committee processes, providing of information and functioning etc.
The Board and the Nomination & Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as attendance in Board / Committee meetings, contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed etc.
In a separate meeting of Independent Directors, performance of non-independent directors, performance of Board as a whole and performance of the Chairman was evaluated taking into account the views of executive directors and nonexecutive directors.
15. POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company has put in place appropriate policy on Directorsâ Appointment and remuneration and other matters as provided in Section 178(3) of the Companies Act, 2013, which is provided in the Policy Dossier that has been uploaded on the Companyâs website www.gtlinfra.com. Further, salient features of the Companyâs Policy on Directorsâ remuneration have been disclosed in the Corporate Governance Report, which forms part of this Report.
16. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended is given below:
i. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Executive Directors |
Ratio to median remuneration |
Mr. Milind K. Naik |
8.19 |
Non-executive Directors* |
Ratio to median |
(sitting fees only) |
remuneration |
Mr. Manoj G. Tirodkar |
N.A. |
Mr. N. Balasubramanian |
N.A. |
Dr. Anand P. Patkar |
N.A. |
Mr. Charudatta K. Naik |
N.A. |
Mr. Vinod B. Agarwala |
N.A. |
Mr. Vijay M. Vij |
N.A. |
Mrs. Sonali P. Choudhary |
N.A. |
* Since Non-executive Directors received no remuneration, except sitting fees for attending Board / Committee meetings, the required details are not applicable.
ii. The percentage increase in remuneration of each director, chief financial officer, company secretary or manager, if any, in the financial year:
Directors, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial year |
Mr. Manoj G. Tirodkar |
N.A. |
Mr. N. Balasubramanian |
N.A. |
Dr. Anand P. Patkar |
N.A. |
Mr. Charudatta K. Naik |
N.A. |
Mr. Vinod B. Agarwala |
N.A. |
Mr. Vijay M. Vij |
N.A. |
Mrs. Sonali P. Choudhary |
N.A. |
Mr. Milind K. Naik, Whole-time Director |
Refer Note* |
Mr. Laxmikant Y. Desai, Chief Financial Officer |
Nil |
Mr. Nitesh A. Mhatre, Company Secretary |
10.19% |
*The Company has made necessary application to the Central Government for payment of remuneration not exceeding Rs.1.26 Crore p.a. to Mr. Milind K. Naik during his tenure of 3 years w.e.f. July 21, 2014, as approved by the Members at AGM held on September 16, 2014. Once the Company receives the approval from the Central Government, the Company shall compensate Mr. Milind K. Naik for his arrears accordingly.
iii. The percentage increase in the median remuneration of employees in the financial year: 12.75%
iv. The number of permanent employees on the rolls of the Company : 442
v. Average percentage increase already made in the salaries of employees other than the managerial personnel in last financial year and its comparison with the percentage 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 in salaries of employees is around 11.69%.
As approved by the Members in the AGM held on September 16, 2014, the Company has made necessary application to the Central Government for payment of remuneration not exceeding Rs.1.26 Crore p.a. to its Whole-time Director, Mr. Milind K. Naik during his tenure of 3 years w.e.f. July 21, 2014. The said remuneration is commensurate with the responsibilities shouldered and industry standards as explained in the explanatory statement to Notice of AGM held on September 16, 2014. Hence, comparison can not be provided.
vi. 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.
17. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis Report, which forms part of the Annual Report.
18. AUDIT COMMITTEE
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report.
19. AUDITORS AND AUDITORSâ REPORT
Pursuant to the provisions of Section 139 of the Companies Act, 2013 and rules framed there under, M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Yeolekar & Associates, Chartered Accountants, Mumbai, were appointed as Joint Auditors at the Eleventh (11th) AGM of the Company held on September 16, 2014 to hold office from conclusion of the said meeting till the conclusion of the Fifteenth (15th) AGM to be held in year 2018, subject to ratification of their appointment at every AGM. The Company has received the necessary certificates from the Joint Auditors pursuant to Sections 139 and 141 of the Companies Act, 2013 regarding their eligibility for appointment.
The resolution seeking approval of the Members for ratification of the appointment of M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Yeolekar & Associates, Chartered Accountants, Mumbai, as Joint Auditors of the Company have been incorporated in the Notice of the forthcoming AGM of the Company.
The Joint Auditors have issued modified opinion w.r.t. the Companyâs inability to quantify the amount of property tax on its telecom towers to be ultimately borne by it due to various petitions pending before appropriate authorities, non-receipt of property tax demands, as well as Companyâs contractual rights to recover such property tax from its customers. In this regard, the Company has given proper explanation in its Note No. 40 of Notes to the Standalone Financial Statements. Further, as regards the Joint Auditorsâ emphasis of matters, the Company has furnished required details / explanations in Note nos. 4.1, 29.1, 41 and 44 of Notes to the Standalone Financial Statements.
20. SECRETARIAL AUDITORSâ REPORT
The Secretarial Auditorsâ Report does not contain any qualifications, reservations, disclaimers or adverse remarks and the same is given in Annexure A (Form No. MR-3) to this Report.
21. RISKS
A separate section on risks and their management is provided in the Management Discussion & Analysis Report forming part of this Report, which covers the development and implementation of risk management framework. The Audit Committee monitors the risk management plan and ensures its effectiveness. It is important for members and investors to be aware of the risks that are inherent in the Companyâs businesses. The major risks faced by the Company have been outlined in this section to allow members and prospective investors to take an independent view. We strongly urge Stakeholders / Investors to read and analyze these risks before investing in the Company.
22. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the Note nos. 12, 42, 4 & 8 of Notes to the Standalone Financial Statements.
23. PARTICULARS OF RELATED PARTY TRANSACTIONS
All related party transactions entered into during the financial year were on an armsâ length basis and were in ordinary course of business. None of the transactions with related parties falls under the scope of Section 188(1) of the Companies Act, 2013.
The Policy on Related Party Transactions as approved by the Board is uploaded on the Companyâs website www.gtlinfra.com. The particulars as required under the Companies Act, 2013 are furnished in Annexure B (Form No. AOC - 2) to this Report.
24. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have Subsidiary or Joint Venture Company. The Company has investment in Associate Company, CNIL through Tower Trust, in which the Company has beneficial interest.
Pursuant to Accounting Standard 21 (AS 21) on Consolidated Financial Statements issued by the Institute of Chartered Accountants ofIndia, Consolidated Financial Statements presented by the Company include information about its associate. Pursuant to provisions of Section 129(3) ofthe Companies Act, 2013 a statement containing salient features of the Financial Statements of the Companyâs Associate, CNIL are furnished in Annexure C (Form No. AOC-1) to this Report.
For the sake of clarity, transparency and better comparison of performance in this annual report, standalone basis represents amounts pertaining to GTL Infra and combined entity basis includes that of CNIL, an associate, too.
25. CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and other details are furnished in Annexure D of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For CSR initiatives undertaken by Global Foundation, please refer to Management Discussion & Analysis Report under the caption Corporate Social Responsibility. The CSR Policy is available on the Companyâs website www.gtlinfra.com. It is clarified that Global Foundation is a GTL Group initiatives.
26. EXTRACT OF ANNUAL RETURN AS ON MARCH 31, 2017
An extract of Annual Return as on March 31, 2017 is annexed as Annexure E (Form No. MGT - 9) to this Report.
27. CORPORATE GOVERNANCE AND VIGIL MECHANISM
The Company has complied with the Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of the Regulation 46 of the Listing Regulations. A separate Report on Corporate Governance along with the Certificate of the Joint Auditors, M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Yeolekar & Associates, Chartered Accountants, Mumbai confirming compliance of conditions of Corporate Governance as required under Regulation 34(3) of Listing Regulations forms part of this Report.
The Company has formulated and published a Whistle Blower Policy, details of which are furnished in the Corporate Governance Report, thereby establishing a vigil mechanism for directors and employees for reporting genuine concerns, if any.
28. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
a. Conservation of Energy:
The Company has continued its enhanced focus on reduction of diesel consumption at telecom tower sites through several initiatives of energy efficiency and fuel savings. Further, trials of various green energy solutions are carried out through pilot deployment of Solar Photovoltaic panels, Deep discharge, Quick recharge and Lithium Ion batteries which have technological superiority and/or lesser carbon footprint. Through deployment of additional battery banks at sites and site electrification works for nongrid diesel generator operated sites, the Company has about 1,650 tower sites which are identified as Green Sites (each of which consumes diesel less than 35 litre per month).
The various initiatives for conservation of energy in respect of telecom towers taken by the Company are enumerated below:
i) the steps taken or impact on conservation of energy:
a. Installation of Free Cooling / Emergency Free Cooling systems to utilize cool ambient temperatures for saving electrical energy consumption of air-conditioning systems
b. Installation of High Efficiency Rectifiers with wide input voltage range SMPS with minimum deration at lower input voltages
c. Upgradation of DC power plants with compatible high efficiency rectifiers
d. Deployment of additional battery banks for increasing backup power and thereby minimizing diesel consumption at sites
e. Fuel optimizer feature of DG controller for optimum utilization of battery backup and air-conditioning system
f. Implemented Stage-wise capacity enhancement with upgradeability as and when site load increased
g. Aircon efficiency improvement solutions for better heat transfer of refrigerant
h. Deployment of Integrated Power Management Units for AC power line conditioning and AC to DC conversion
i. Remote monitoring of site health parameters through NOC (Network Operations Centre)
j. Facilitating telecom operator tenants to swap their Indoor BTS with Outdoor BTS
ii) the steps taken by the Company for utilizing alternate source of energy:
Deployment of Deep discharge and Lithium Ion batteries for faster charging / better utilization of backup power and thereby reducing diesel consumption
iii) the capital investment on energy conservation equipment:
Not Applicable
29. PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended is provided in a separate annexure forming part of this Report. Further, the Report and the Financial Statements are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Companies Act, 2013 the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said annexure are related to any Director of the Company.
30. GENERAL
Notes forming parts of the Financial Statements are self -explanatory.
31. SPECIAL BUSINESS
As regards the items of the Notice of the Annual General Meeting relating to Special Business, the Resolution incorporated in the Notice and the Explanatory Statement relating thereto, fully indicate the reasons for seeking the approval of members to those proposals. Membersâ attention is drawn to this item and Explanatory Statement annexed to the Notice.
32. ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation and acknowledge with gratitude the support and cooperation extended by the customers, employees, vendors, bankers, financial institutions, investors, media and both the Central and State Governments and their Agencies and look forward to their continued support.
On behalf of the Board of Directors,
Mumbai Manoj G. Tirodkar
April 27, 2017 Chairman
Mar 31, 2015
Dear Members,
The Directors are pleased to present their Twelfth Annual Report
together with the Audited Financial Statements for the year ended March
31,2015.
1. STATE OF COMPANY'S AFFAIRS
Financial Highlights
(Rs. in Crore)
Particulars 2014-15 2013-14
Total Revenue 623.10 615.44
Profit / (Loss) before Depreciation / 220.46 276.44
Amortization, Finance Costs & Tax
Depreciation / Impairment & 255.99 389.03
Amortization Expenses
Profit / (Loss) before Finance (35.53) (112.59)
Costs & Tax
Finance Costs 392.60 377.76
Profit / (Loss) Before Exceptional (428.13) (490.35)
Items & Tax
Exceptional Items (Net) 86.58 60.00
Profit / (Loss) before Tax (514.71) (550.35)
Tax Expenses - 0.89
Net Profit / (Loss) (514.71) (551.24)
Figures regrouped / reclassified wherever necessary to make them
comparable.
2. RESULTS OF OPERATIONS AND BUSINESS OVERVIEW Results Of Operations
During the year, total revenue of the Company was Rs. 623.10 Cr.
against Rs. 615.44 Cr. for the previous year. Operating Profit (before
Depreciation / Amortization, Finance Costs & Tax) was at Rs. 220.46 Cr.
in comparison to previous year's Operating Profit (before Depreciation
/ Amortization, Finance Costs & Tax) of Rs. 276.44 Cr. Net Loss for the
year was at Rs. 514.71 Cr. against Net Loss of Rs. 551.24 Cr. for the
previous year.
The telecom scenario in the country changed drastically since the
beginning of year 2012 due to cancellation of 122 2G licenses by the
Hon'ble Supreme Court, slower 2G and 3G growth, failure of spectrum
auctions, inflationary costs of power & fuel and general economic
slowdown. Further, during this time, the Company was expected to get
increased / additional business arising out of its acquisition of
telecom tower portfolio from Aircel Limited and its subsidiaries
(Aircel) through Chennai Network Infrastructure Limited (CNIL).
However, owing to several external factors, the Company and CNIL could
not garner the required 20,000 additional new tenancies on Right of
First Refusal basis from Aircel. In the meanwhile, the Company had
already placed orders on various vendors to procure tower assets and
made expenses / advances against those orders. Consequently, the
Company had to short close its commitment to vendors and is currently
pursuing legal action against its vendors for recovery of these
advances. However, as a matter of prudence, a provision for a sum of
Rs. 208.75 Cr. has been made during the year under review. Further,
pursuant to the settlement agreement between the Company, CNIL and
Aircel, Rs. 150 Cr. has been recognized as income towards final
settlement during the year under review. The above amounts have been
shown as exceptional items in the Financial Statements.
Going Concern basis
Owing to factors as referred above, the Company's net worth has been
eroded substantially and the Company has incurred cash losses. The
Company continues to take various measures such as cost optimisation,
improving operating efficiency, renegotiation of contracts with
customers to improve Company's operating results and cash flows. Further
the management believes that new spectrum auction will result in
exponential growth in 3G, 4G & LTE which are expected to generate
incremental cash flows to the Company. Based on the Master Services
Agreement executed for passive infrastructure sharing with new
operators, having BWA spectrum and preparing to launch 4G services Pan
India, the Company has already commenced roll outs for it. In view of
the above mentioned factors, the Company continued to prepare its
Financial Statements on going concern basis.
Recent Developments at Macro And Micro Economic Level
The telecom industry has shown tremendous increase in subscriber base
to 960.58 Mn. at the end of February 2015 against 903.36 Mn. at the end
of February 2014, registering a growth of 6.33%. The share of urban
subscribers declined to 58.01% at the end of February 2015 from 59.16%
in February 2014 vis-a-vis the share of rural subscribers which
increased to 41.99% at the end of February 2015 from 40.84% at the end
of February 2014. With this, the overall tele-density in India has
shown marginal improvement at 76.60 at the end of February 2015
visa-vis the overall tele-density of 72.92 at the end of February 2014.
(Source: Telecom Regulatory Authority of India (TRAI), Press Release
dated April 10, 2015)
India saw fastest growth in subscription base with 65 million new
connections in FY 2014-15. Given this the Indian telecom industry has
been one of the fastest growing and most competitive in the world. The
Indian call tariffs are still among the lowest in the world.
Growth Drivers
It is observed, globally that telecom industry is a vital sector for
the overall development of a nation. It is catalyst to growth and
modernization of a nation. Given the recent developments, we have
identified a few growth drivers for the coming few fiscals.
1) 2015 Spectrum Auction was successful with Rs. 1.10 Lacs Cr.
investment by the industry signaling restored faith in business
prospect
2) Industry Friendly and liberal policies
a. Government plans to allocate the Spectrum auctioned in March 2015
by end of this year
b. Government's ambitious US$ 1.1 Bn. Smart City program to facilitate
telecom growth
3) Attractive FDI market
4) Subscriber base continues to see upward trend
5) 3G and 4G rollouts expected to lead to machine to machine (M2M)
growth in India in F.Y. 2016-17
6) Reliance Jio the only Pan India license 4G provider to roll out 4G
in this fiscal
7) India a Data usage driven economy (Nokia Networks' MBit Index study)
a. Mobile data traffic generated by 2G and 3G services has risen by a
whopping 74 percent at the end of 2014
b. Use of 3G devices capable of supporting a speed of up to 21.1 Mbps
increased from 23% in 2013 to 54% in 2014
c. Average monthly data consumption by a 2G consumer was seen to be
216 MB, an increase of 48% during 2014
d. The average data consumed by a 3G consumer, on the other hand, 688
MB, an increase of 29% during 2014
8) India to be 4th largest Smartphone market in the world
Since Tower Network plays vital role for growth mapping, the Company
will see growth in the near future.
Major Developments in the industry (source: A brief Report on Telecom
Sector in India - January 2015, Corporate Catalyst (India) Pvt. Ltd.)
1) Reliance Jio infocomm has signed an agreement to share telecom
towers of GTL Infrastructure Limited. Seventh Tower sharing agreement
by Reliance Jio;
2) Ericsson has won US$ 9.42 Mn. 3 years operations support system deal
with Reliance Jio;
3) Japanese telecom Company softbank has planned to invest around US$
10 billion in India's IT sector over next few years.
4) Bharti Infratel plans to take over telecom towers of few operators
at a valuation of approx US$ 785.82 Mn.
5) Bharti Infratel plans to explore acquisition opportunities in
neighboring countries
The Company believes that though the current scenario in telecom sector
and in general economy is encouraging, it would take some time in
improving overall economic scenario inter-alia the telecom and telecom
infrastructure sector. Hence, in order to overcome the CDR scenario,
the Company is contemplating bi-lateral / multi-lateral settlements,
either one time, negotiated or otherwise, with the Lenders. The Company
has already obtained requisite approvals from Members of the Company at
the 11th Annual General Meeting (AGM) and through Postal Ballot, result
of which was declared on September 25, 2014.
3. DEBT RESTRUCTURING
Further to information furnished in the Directors' Report for financial
year 2013-14, after successful implementation of Corporate Debt
Restructuring (CDR) mechanism for its Rupee Term Loans, as approved by
CDR EG, the Company has complied and continues to comply with the terms
and conditions of CDR package. The CDR Rupee Debt outstanding as on
March 31,2015 is Rs. 3,417.49 Cr., details of which are as follows:
Principal - Rs. 3,245.09 Cr.
FITL - Rs. 169.22 Cr.
Interest - Rs. 3.18 Cr.
Subject to cash flow permitting, your Company has been continuing to
pay on account of its debt service obligation and is committed to work
towards honouring its debt obligation in future. However, due to the
effect of continuing downturn in the economy in general and telecom
sector in particular, there has been delay at times in debt servicing.
The Company continues to explore opportunities to monetize its
investment (held through Tower Trust) in CNIL, the proceeds of which
will be utilized for meeting debt service obligations of the Company.
4. DIVIDEND
Since your Company has posted losses and is currently under CDR
Mechanism, your Directors express their inability to recommend any
dividend on the paid up Equity Share Capital of the Company for the
financial Year ended March 31,2015.
5. SHARE CAPITAL
a. The movement of Equity Capital due to allotment of shares is as
under:
Particulars No. of Equity Shares
Equity Share Capital as on April 1,2014 2,306,799,754
Add: Allotments of Equity Shares to FCCB 18,348,026
Holders upon conversion of FCCBs
Equity Share Capital as on May 6, 2015 2,325,147,780
The Company has only one class of equity shares and it has not issued
equity shares with differential rights or sweat equity shares. Also, the
Company has cancelled all its outstanding Employee Stock Option Schemes
(ESOS) in FY 2012-13. Thus, the details required to be furnished for
equity shares with differential rights and / or sweat equity shares and
/ or ESOSs as required under the Companies (Share Capital and
Debentures) Rules, 2014 are not furnished.
b. Foreign Currency Convertible Bonds (FCCBs)
Further to information furnished in the Directors' Report for financial
year 2013-14, during the year under review, as per Terms and Conditions
of the Series B Bonds issued in terms of Offering Circular dated
November 8, 2012, the Conversion Price of Series B Bonds i.e. US$
207,546,000 Interest Bearing Convertible Bonds due 2017 convertible into
share, have been reset to Rs. 10 against Rs. 11.38. The Status of FCCBs
allotted is as under:
No. of No. of No. of
Series A Series B Total No. Equity
Particulars FCCBs FCCBs of FCCBs Shares
(of US$ (of US$ (of US$ upon
1,000 1,000 1000 conversion
each) each) each)
FCCBs allotted 111,740 207,546 319,286 -
Converted / 62,700 14,013 76,713 415,860,931
cancelled
till date
Balance as on May 6, 49,040 193,533 242,573 -
2015
If all the balance 242,573 FCCBs are converted into equity shares of
the Company, the total share capital would go up by 1,316,007,039 new
equity shares of the Company.
c. Consideration to CNIL shareholders for merger
Consequent to the approval of CDR proposals of the Company and CNIL and
further to the modifications to be made in the petitions by the Company
and CNIL (subject to approval of CDR Lenders), the Company would be
required to issue its equity shares to the shareholders of CNIL towards
consideration of merger of CNIL with the Company as may be approved by
Hon'ble High Courts of Bombay and Madras.
6. FIXED DEPOSITS
There are no unclaimed deposits lying with the Company and during the
year under review, the Company has not accepted any fresh fixed
deposits from Public or from its Shareholders.
7. SCHEME OF ARRANGEMENT
Further to information furnished in the Directors' Report for financial
year 2013-14, the Company continues to pursue the Scheme of Arrangement
for the merger of CNIL with the Company by way of modification of
Scheme of Arrangement to give effect to financial and capital structure
changes consequent upon restructuring under CDR. Once the modified
Scheme of Arrangement between CNIL and Company is approved by the
Hon'ble Bombay and Madras High Courts, the Company's financial
statements will be re-casted / re-stated with effect from the Appointed
Date as may be approved.
8. MATERIAL CHANGES AND COMMITMENTS
Save and except as discussed in this Annual Report, no material changes
have occurred and no commitments were given by the Company thereby
affecting its financial position between the end of the financial year
to which these financial statements relate and the date of this report.
9. PROMOTER GROUP
The Company is a part of Global Group of Companies which is promoted by
GTL Limited (GTL). The Members may note that the Promoter Group
comprises of Global Holding Corporation Private Limited and such other
persons as defined under SEBI Regulations. As on March 31,2015, the
shareholding of promoters is 27.04%.
10. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act,
2013 (the "Act"), the Board of Directors, to the best of their
knowledge and ability, in respect of financial year ended March 31,2015
confirm that:
a. in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
b. they had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the loss of the
Company for that period;
c. they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d. they had prepared the annual accounts on a going concern basis.
e. they had laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and
were operating effectively; and
f. they had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
11. DIRECTORS & KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 149 of the Act, which came into
effect from April 1,2014, Mr. N. Balasubramanian, Dr. Anand Patkar, Mr.
Vinod Agarwala and Mr. Vijay Vij were appointed as Independent
Directors at the AGM of the Company held on September 16, 2014. The
terms and conditions of appointment of Independent Directors are as per
Schedule IV of the Act. They have submitted a declaration that each of
them meets the criteria of independence as provided in Section 149(6)
of the Act and there have been no change in the circumstances which may
affect their status as Independent Directors during the year under
review.
Mr. Milind Naik retires by rotation and being eligible has offered
himself for re-appointment.
Pursuant to provisions of Section 149 of the Act and Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, Mrs. Sonali P.
Choudhary was appointed as an Additional Director with effect from
March 31,2015 by way of resolution passed by circulation and the same
was taken on record by the Board of Directors in its meeting held on
May 6, 2015. She will hold office up to the date of the ensuing AGM.
The resolutions seeking approval of the Members for the re-appointment
/ appointment of Mr. Milind Naik and Mrs. Sonali P. Choudhary have been
incorporated in the notice of the forthcoming AGM of the Company. The
background of the Directors proposed for re-appointment / appointment
as stipulated under Clause 49 of the Listing Agreement entered into
with Stock Exchanges is given under the Corporate Governance section of
this Report. The Company has received a notice under Section 160 of the
Act along with the requisite deposit proposing the appointment of Mrs.
Sonali P. Choudhary as Director, liable to retire by rotation.
Pursuant to the provisions of Section 203 of the Act, which came into
effect from April 1,2014, the appointments of Mr. Milind Naik,
Whole-time Director, Mr. L. Y. Desai, Chief Financial Officer and Mr.
Nitesh A. Mhatre, Company Secretary as key managerial personnel of the
Company were formalized.
During the year under review, none of the managerial personnel have
relinquished their positions.
12. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met four (4) times during the financial year,
the details of which are given in Corporate Governance Report that
forms part of this Report. The intervening gap between any two meetings
was within the period prescribed under the Act.
13. BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own
performance, Board committees and individual directors pursuant to the
provisions of the Act and Clause 49 of the Listing Agreement entered
into with the Stock Exchanges.
The performance of the Board and its Committees was evaluated by the
Board after seeking inputs from all the directors on the basis of the
criteria such as composition of the Board / Committee and structure,
effectiveness of Board / Committee processes, information and
functioning 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 attendance in Board / Committee meetings,
contribution of the individual director to the Board and committee
meetings like preparedness on the issues to be discussed etc.
In a separate meeting of Independent Directors, performance of
non-independent directors, performance of Board as a whole and
performance of the Chairman was evaluated taking into account the views
of executive directors and non-executive directors.
14. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER
DETAILS
The Company has put in place appropriate policy on Directors
Appointment and remuneration and other matters as provided in Section
178(3) of the Act, which is provided in the Policy Dossier that has
been uploaded on the Company's website www.gtlinfra.com. Further,
salient features of the Company's Policy on Directors' remuneration
have been disclosed in the Corporate Governance Report, which forms
part of this Report.
15. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The information required under Section 197 of the Act read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is given below:
a. The ratio of the remuneration of each director to the median
remuneration of the employees of the Company for the financial year:
Particulars Ratio to median remuneration
Executive Directors
Mr. Milind Naik 10.16
Non-executive Directors*
(sitting fees only)
Mr. Manoj G. Tirodkar N. A.
Mr. N. Balasubramanian N. A.
Dr. Anand Patkar N. A.
Mr. Charudatta Naik N. A.
Mr. Vinod Agarwala N. A.
Mr. Vijay Vij N. A.
Mrs. Sonali P. Choudhary N. A.
* Since Non-executive Directors received no remuneration, except
sitting fee for attending Board / Committee meetings, the required
details are not applicable.
b. The percentage increase in remuneration of each director, chief
financial officer, company secretary in the financial year:
Directors, Chief Financial Officer % increase in remuneration in the
and Company Secretary financial year
Mr. Manoj G. Tirodkar N. A.
Mr. N. Balasubramanian N. A.
Dr. Anand Patkar N. A.
Mr. Charudatta Naik N. A.
Mr. Vinod Agarwala N. A.
Mr. Vijay Vij N.A
Mrs. Sonali Choudhary N. A.
Mr. Milind Naik, Whole-time Director Refer Note*
Mr. L. Y. Desai, Chief Financial Officer 7.5
Mr. Nitesh A. Mhatre, Company Secretary 50.0
* The Company has made necessary application to the Central Government
for payment of remuneration not exceeding Rs. 1.26 Cr. p.a. to Mr.
Milind Naik during his tenure of 3 years w.e.f. July 21,2014, as
approved by the Members at AGM held on September 16, 2014. Once the
Company receives the approval from the Central Government, the Company
shall compensate Mr. Milind Naik for his arrears accordingly.
c. The percentage increase in the median remuneration of employees in
the financial year: 6.10%
d. The number of permanent employees on the rolls of the Company : 398
e. The explanation on the relationship between average increase in
remuneration and the Company's performance:
On an average, employees received an annual increase of 10% in India.
The individual increments varied from 3.5% to 75% based on individual
performance. In order to ensure that remuneration reflects the
Company's performance, the variable performance pay is also linked to
the Company's performance, apart from an individual performance.
f. Comparison of the remuneration of Key Managerial Personnel against
the performance of the Company:
Aggregate remuneration of the key managerial personnel
(KMP) in FY 15 (Rs. in Cr.) 2.13
Revenue from Operations (Rs. Cr.) 599.65
Remuneration of KMPs (as % of revenue) 0.36
Profit / (Loss) before Tax (PBT) (Rs. in Cr.) (514.71)
Remuneration of KMP (as % of PBT) N.A.
g. Variation in the market capitalization of the Company, price
earnings ratio as at March 31, 2015 and March 31,2014:
Particulars March 31,2015 March 31,2014 % change
Market Capitalization 453.40 334.49 35.55
(Rs. in Cr.)*
Price Earnings Ratio (0.87) (0.61) (42.62)
*based on closing market price on NSE on the respective year end dates.
h. Percentage increase over decrease in the market quotations of the
shares of the Company in comparison to the rate at which the Company
came out with last public offer:
Particulars March 31,2015 September 28, % Change
2007 (Right Issue)
Market Price (BSE) Rs. 1.98 Rs. 10.00 (80.20)
Market Price (NSE) Rs. 2.00 Rs. 10.00 (80.00)
i. Average percentage increase already made in the salaries of
employees other than the managerial personnel in last financial year
and its comparison with the percentage 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 10%.
As approved by the Members in the AGM held on September, 16, 2014, the
Company has made necessary application to the Central Government for
payment of remuneration not exceeding Rs. 1.26 Cr. p.a. to its
Whole-time Director, Mr. Milind Naik during his tenure of 3 years
w.e.f. July 21,2014. The said remuneration is commensurate with the
responsibilities shouldered and industry standards as explained in the
explanatory statement to Notice of AGM held on September 16, 2014.
Hence, comparison can not be provided.
j. Comparison of each remuneration of the key managerial personnel
against the performance of the Company:
Mr. Milind Mr. L. Y. Desai, Mr. Nitesh
Naik, Chief Financial A. Mhatre,
Whole-time Officer Company
Director Secretary
Remuneration in FY 15 0.47 1.11 0.55
(Rs. in Cr.)
Revenue from Operations 599.65
(Rs. in Cr.)
Remuneration as % of 0.08 0.19 0.09
revenue
Profit / (Loss) before (514.71)
Tax (PBT) (Rs. in Cr.)
Remuneration (as % of PBT) N.A. N.A. N.A.
k. The key parameters for any variable component of remuneration
availed by the Directors: None
l. The ratio of remuneration of the highest paid Director to that of
the employees who are not Directors but received remuneration in excess
of the highest paid Director during the year: 1 : 1.85
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.
16. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control systems and their
adequacy are included in the Management Discussion & Analysis (MD&A)
Report, which forms part of this Report.
17. AUDIT COMMITTEE
The details pertaining to composition of Audit Committee are included
in the Corporate Governance Report, which forms part of this report.
18. AUDITORS AND AUDITORS' REPORT
Pursuant to the provisions of Section 139 of the Act and rules framed
there under, M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and
M/s. Yeolekar & Associates, Chartered Accountants, Mumbai, were
appointed as Joint Auditors at the Eleventh (11th) AGM of the Company
held on September 16, 2014 to hold office from conclusion of the said
meeting till the conclusion of the Fifteen (15th) AGM to be held in
year 2018, subject to ratification of their appointment at every AGM.
The Company has received the necessary certificates from the Joint
Auditors respectively pursuant to Sections 139 and 141 of the Act
regarding their eligibility for appointment.
The resolution seeking approval of the Members for ratification of the
appointment of M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai
and M/s. Yeolekar & Associates, Chartered Accountants, Mumbai, as Joint
Auditors of the Company have been incorporated in the notice of the
forthcoming AGM of the Company.
As regards the Joint Auditors' comments / observations / emphasis of
matters, the Company has furnished required details / explanations in
Note nos. 22.1,29, 30 and 31 of Notes to the Financial Statements.
19. COST AUDITORS
Pursuant to provisions of Section 148 of the Act, on the recommendation
of Audit Committee, the Board of Directors of the Company had appointed
Mr. Vikas V. Deodhar, Cost Accountants as the Cost Auditor for the
financial year 2014-15. However, the Government of India, Ministry of
Corporate Affairs (MCA), New Delhi vide G.S.R. 425 (E) dated June 30,
2014 introduced the Companies (cost records and audit) Rules, 2014
repealing the then extant rules, regulation and orders, which has
excluded the Company's business activity viz. passive telecom
infrastructure and tower facilities from the list of industries to
which these rules are applicable. Resultantly, the Company was not
required to undertake audit of its cost record during the year under
review.
The Company has duly filed the Cost Audit Report for financial year
2013-14 with Ministry of Corporate Affairs on September 27, 2014.
20. SECRETARIAL AUDITORS' REPORT
The Secretarial Auditors' Report does not contain any qualifications,
reservations, disclaimers or adverse remark and the same is given in
Annexure A (Form No. MR-3) to this Report.
21. RISKS
A separate section on risks and their management is provided in the
MD&A Report forming part of this Report, which covers the development
and implementation of risk management framework. The Audit Committee
monitors the risk management plan and ensures its effectiveness. It is
important for shareholders and investors to be aware of the risks that
are inherent in the Company's businesses. The major risks faced by your
Company have been outlined in this section to allow shareholders and
prospective investors to take an independent view. We strongly urge
Shareowners/ Investors to read and analyze these risks before investing
in the Company.
22. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments have been
disclosed in the Note nos. 11, 13 & 33 of Notes to the Financial
Statements.
23. PARTICULARS OF RELATED PARTY TRANSACTION
All related party transactions that were entered into during the
financial year were on arms' length basis and were in ordinary course
of business. None of the transactions with related parties falls under
the scope of Section 188(1) of the Act.
The Policy on Related Party Transactions as approved by the Board is
uploaded on the Company's website www.gtlinfra.com.
The particulars as required under the Act are furnished in Annexure B
(Form No. AOC - 2) to this Report.
24. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have Subsidiary or Joint Venture Company. The
Company has CNIL as the Associate Company. However, in the light of the
amendment made in Rule 6 of the Companies (Account) Rule, 2014 vide
Circular dated October 14, 2014, the Company does not require to
consolidate the Financial Statements of the Associate Company with
Financial Statements of the Company for the financial year ended March
31,2015.
Pursuant to provisions of Section 129(3) of the Act, a statement
containing salient features of the Financial Statements of the
Company's Associate is furnished in Annexure C (Form No. AOC-1) to this
Report.
25. CORPORATE SOCIAL RESPONSIBILITY
The Company continued, during the period under review, to contribute
through Global Foundation, a Public Charitable Trust, towards social
causes as described in the MD&A Report under the caption 'Corporate
Social Responsibility (CSR)'. The details as prescribed in the
Companies (Corporate Social Responsibility Policy) Rules, 2014 are set
out in Annexure D to this Report.
26. EXTRACT OF ANNUAL RETURN AS ON MARCH 31,2015
In terms of Section 134(3)(a) read with Section 92(3) of the Act and
Rule 12 of the Companies (Management and Administration) Rules, 2014,
an extract of Annual Return as on March 31, 2015 is annexed as Annexure
E (Form No. MGT- 9) to this Report.
27. CORPORATE GOVERNANCE AND VIGIL MECHANISM
The Company continues to comply with Clause 49 of the Listing Agreement
entered into with the Stock Exchanges. A separate Report on Corporate
Governance along with the Certificate of the Joint Auditors, M/s.
Chaturvedi & Shah, Chartered Accountants and M/s. Yeolekar &
Associates, Chartered Accountants confirming compliance of conditions
of Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchanges in India is given elsewhere in this
Report.
The Company has formulated and published a Whistle Blower Policy,
details of which are furnished in the Corporate Governance section,
thereby establishing a vigil mechanism for directors and employees for
reporting genuine concerns, if any.
28. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis (MD&A) for the year under
review, as stipulated under Clause 49 of the Listing Agreement entered
into with the Stock Exchanges, on the Company's performance, industry
trends and other material changes with respect to the Company is
presented in a separate section forming part of this Annual Report.
29. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
a. Conservation of Energy:
The Company has continued its enhanced focus on reduction of diesel
consumption at telecom tower sites through several initiatives of
energy efficiency and fuel savings. Further, trials of various green
energy solutions are carried out through pilot deployment of Solar
Photovoltaic panels, Deep discharge and Lithium Ion batteries which
have technological superiority and/or lesser carbon footprint. Through
deployment of additional battery banks at sites and site
electrification works for non-grid diesel generator operated sites, the
Company has about 1,650 tower sites which are identified as Green Sites
(each of which consumes diesel less than 35 litre per month).
The various initiatives for conservation of energy in respect of
telecom towers taken by the Company are enumerated below:
i) the steps taken or impact on conservation of energy:
a. Installation of Free Cooling / Emergency Free Cooling systems to
utilize cool ambient temperatures for saving electrical energy
consumption of air-conditioning systems
b. Installation of High Efficiency Rectifiers with wide input voltage
range SMPS with minimum derating at lower input voltages
c. Upgradation of DC power plants with compatible high efficiency
rectifiers
d. Deployment of additional battery banks for increasing backup power
and thereby minimizing diesel consumption at sites
e. Fuel optimizer feature of DG controller for optimum utilization of
battery backup and air-conditioning system
f. Implemented Stage-wise capacity enhancement with upgradeability as
and when site load increased
g. Aircon efficiency improvement solutions for better heat transfer of
refrigerant
h. Deployment of Integrated Power Management Units for AC power line
conditioning and AC to DC conversion
i. Remote monitoring of site health parameters through NOC (Network
Operations Centre)
ii) the steps taken by the Company for utilizing alternate source of
energy:
a. Deployment of Deep discharge and Lithium Ion batteries for faster
charging / better utilization of backup power and thereby reducing
diesel consumption
b. Deployment of DC type Diesel Generator of smaller capacity at pilot
sites
iii) the capital investment on energy conservation equipment: Not
Applicable
b. Technology Absorption:
1. Efforts made towards technology
absorption :
2. The benefits derived like product
improvement, cost reduction, :
product development or import
substitution
The Company has not
3. In case of imported technology : absorbed, adopted and
(imported during last three years innovated any new
reckoned from the beginning : technology. Hence, the
of the financial year) details relating to
technology
absorption are not
furnished.
a. the details of technology imported
b. the year of import
c. whether the technology been fully absorbed?
d. if not fully absorbed, the areas where absorption has not
taken place, reasons thereof
4. the expenditure incurred on Research and : No significant
Development expenditures were
incurred during the
year.
c. Foreign Exchange Earnings and Outgo:
There were no actual inflow of Foreign Exchange during the year and the
particulars regarding actual outflow of Foreign Exchange appear in Note
No. 38 of Notes to the Financial Statements.
30. PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under
Section 197(12) of the Act read 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 Financial Statements 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 Member interested in obtaining a copy of the same may
write to the Company Secretary. None of the employees listed in the
said annexure are related to any Director of the Company.
31. SPECIAL BUSINESS
As regards the items of the Notice of the AGM relating to Special
Business, the Resolutions incorporated in the Notice and the
Explanatory Statement relating thereto, fully indicate the reasons for
seeking the approval of members to those proposals. Members' attention
is drawn to these items and Explanatory Statement annexed to the
Notice.
32. GENERAL
Notes forming parts of the Accounts are self - explanatory.
33. ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation and
acknowledge with gratitude the support and cooperation extended by the
clients, employees, vendors, bankers, financial institutions,
investors, media and both the Central and State Governments and their
Agencies and look forward to their continued support.
On behalf of the Board of Directors,
Mumbai Manoj G. Tirodkar
May 6, 2015 Chairman
Mar 31, 2014
The Members,
The Directors are pleased to present their Eleventh Annual Report
together with the Audited Accounts for the year ended March 31, 2014.
1. FINANCIAL RESULTS
(Rs. in Crores)
Particulars 2013-14 2012-13
Total Income 615.44 570.92
PBDIT 276.44 283.53
Depreciation 389.03 486.43
PBIT (112.59) (202.90)
Interest and Finance Charges (Net) 377.76 350.53
Profit / (Loss) Before Exceptional (490.35) (553.43)
Items & Tax
Exceptional Item 60.00 133.21
Profit/(loss) before tax (550.35) (686.64)
Provision for Taxation 0.89 -
Net Profit / (Loss) (551.24) (686.64)
Figures regrouped / reclassified wherever necessary to make
them comparable.
Financial Performance
During the year, revenue of the Company was Rs. 615.44 Cr. against Rs.
570.92 Cr. for the previous year. Operating Profit (before
Depreciation, Interest and Tax) was at Rs. 276.44 Cr. in comparison to
previous year''s Operating Profit (before Depreciation, Interest and
Tax) of Rs. 283.53 Cr. Net Loss for the year was at Rs. 551.24 Cr. against
Net Loss of Rs. 686.64 Cr. for the previous year.
2. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges in India, on the Company''s performance, industry trends and
other material changes with respect to the Company is presented in a
separate section forming part of this Annual Report.
3. DIVIDEND
The Company is in the business of providing telecom towers on a shared
basis to multiple wireless telecom service providers and is a capital
intesive in nature. In view of high depreciation, interest and in
absence of distributable profits, your Directors express their
inability to recommend any dividend on the paid up Equity Share Capital
of the Company for the financial Year ended March 31,2014.
4. BUSINESS OVERVIEW AND RECENT DEVELOPMENTS AT MACRO AND MICRO
ECONOMIC LEVEL
The Indian telecom industry has been one of the fastest growing and
most competitive in the world. The Indian call tariffs are still among
the lowest in the world.
The telecom industry has shown marginal increase in subscriber base to
904.51 Mn. at the end of March 2014 against 861.66 Mn. at the end of
February 2013, registering a growth of 4.97%, however, the growth is
still below the subscriber base registered at 919.70 Mn. at the end of
March 2012. The share of urban subscribers declined to 58.90% at the
end of March 2014 from 60.50% in February 2013 vis-a-vis the share of
rural subscribers which increased to 41.10% at the end of March 2014
from 39.50% in February 2013. With this, the overall tele-density in
India has shown marginal improvement at 72.94 at the end of March 2014
vis-a-vis the overall tele-density of 70.42 in February 2013.
(Source: Telecom Regulatory Authority of India, Press Release dated May
12,2014)
The Telecom industry continues to be under stress and had been dealing
with several challenges on the financial, revenue and profitability
fronts on one hand and Regulatory, Government and Judicial scrutiny on
other hand. The various factors adversely impacting the telecom sector
post CDR of the Company were discussed in detail in earlier reports and
the same are enumerated hereunder:
a. Cancellation of 2G licenses upheld by the Hon''ble Supreme Court;
b. Slower 3G and BWA growth;
c. Failed spectrum auction;
d. Declining performance of Telecom Operators;
e. Freeze on fresh debt and equity;
f. Operators'' defaults and penalties;
Further, the Company was expected to get increased / additional
business arising out of its acquisition of telecom tower portfolio from
Aircel Limited and its subsidiaries through Chennai Network
Infrastructure Limited (CNIL) from FY 2010-11. However, owing to
various factors stated above, the Company and CNIL could not garner the
required 20,000 additional new tenancies on Right of First Refusal
basis from Aircel. Due to this the Company faces several claims from
its suppliers and Network operators.
With the stability in the Government at the Centre, it is expected to
have positive effect on policy and investment climate. The telecom
industry is poised for growth in the coming years.
Major developments in the Industry
The following are some of the major industry developments that are
going to have an impact on the earnings and profitability of the
sector:
1. Clarity in regulatory policy
During the recent period, there have been several policy initiatives by
the Government in the areas of spectrum auction, unified licensing,
liberalization of the M&A norms etc as mentioned below.
2. Spectrum:
- All spectrums required for access services are being allotted
through a transparent auction process. The recently concluded spectrum
auction in February 2014 is testimony to this fact
- Incumbent telecom operators like Vodafone, Bharti Airtel and Idea
Cellular displayed vigorous participation in the auction especially for
Metros and Circle A cities where the Company has presence
- New operators namely Reliance Jio contested for 1800 MHz spectrum
in 14 circles.
- A sum of Rs. 61,162 Cr. has been spent on this auction.
- The Government has taken a decision to allow spectrum sharing.
Detailed guidelines are expected soon
- The government has indicated a roadmap on the spectrum availability
as well
3. FDI Policy:
- Foreign Direct Investment (FDI) is allowed up to 49% under
automatic route and equity infusion beyond 49% up to 100% is with the
approval of Foreign Investment Promotion Board
4. M&A norms
- The new rules require the acquiring telco to pay market rates (to
the Government) for spectrum above 4.4Mhz in the acquired telco,
- The market share of the combined entity not to exceed 50%
5. Unified licensing
- All future telecom licenses will be granted as Unified Licenses,
which will allow the provision of all voice and data services
- All Unified Licenses to have the validity of 20 years
Salient features of spectrum auctions - February 2014
- Reserve Price was lower than the previous Auctions
- Total winning bids amounted to Rs. 61,162 Cr.
- 900 MHz auction saw competitive bidding. Delhi circle received bids
of more than 200% of Reserve Price
- The quantum of spectrum available for 1800MHz band was higher
- Operators hedged against the upcoming 900 MHz Auction in 2015, by
buying spectrum in 1800MHz
- 8 major operators participated in the auction
- Airtel, Vodafone, Idea and Reliance Jio acquired 95% of the
auctioned spectrum
Given the successful auction of 900MHz and 1800 MHz, expected increase
in adoption of 3G and 4G with exponential growth in data usage,
introduction of national telecom policy, M&A policy approval and 100%
foreign equity approval, 2014 onwards we hope to see growth and
consequently stability in the telecom industry.
However, in our opinion, it would take a considerably prolonged time in
improving the economic scenario inter- alia the telecom sector and in
order to overcome the CDR scenario, the Company is contemplating
bi-lateral / multi- lateral settlements, either one time, negotiated or
otherwise, with the Lenders for which the Company may be required to
initiate appropriate actions as elaborated in the proposals put forward
before the shareholders for approval.
5. DEBT RESTRUCTURING
Further to information furnished in the Directors'' Report for financial
year 2012-13, after successful implementation of Corporate Debt
Restructuring (CDR) mechanism for its Rupee Term Loans, as approved by
CDR EG, the Company has complied and continues to comply with the terms
and conditions of CDR package. The CDR Rupee Debt outstanding as on
March 31, 2014 is Rs. 3,529.02 Cr., details of which are as follows:
Principal - Rs. 3,256.57 Cr.
FITL - Rs. 207.09 Cr.
Interest - Rs. 65.36 Cr.
The Company has sizeable amount of overdue receivables from CNIL, an
associate company but the same is yet to be released by CNIL''s lenders.
Your Company has been honouring its debt service obligation in time and
is committed to honour its debt obligation in time but due to
non-release of the funds from CNIL coupled with the effect of downturn
in the economy in general and telecom sector in particular, there has
been delay at times in debt servicing. The Company is also exploring
opportunities to monetize its investment (held through Tower Trust) in
CNIL, the proceeds of which will be utilized for meeting debt service
obligations of the Company.
6. SCHEME OF ARRANGEMENT
Further to information furnished in the Directors'' Report for financial
year 2012-13, the Company continues to pursue the Scheme of Arrangement
for the merger of CNIL with the Company by way of modification of
Scheme of Arrangement to give effect to financial and capital structure
changes consequent upon restructuring under CDR. The Company and CNIL
proposes to seek approvals for modified Scheme of Arrangement from the
Stakeholders, CDR EG, Lenders, the Hon''ble Courts and other regulatory
/ statutory authorities, as may be required. Once the modified Scheme
of Arrangement between the Company and CNIL is approved, the Company''s
financial statements will be re-casted / re-stated with effect from the
Appointed Date as may be approved.
7. SHARE CAPITAL:
a. The movement of Equity Share Capital due to allotment of shares is
as under:
Particulars No. of Equity Shares
Equity Share Capital as on April 1,2013 2,306,799,754
Add: Allotment of Equity Shares to FCCB Holders upon conversion of
FCCBs 1,855,418
Equity Share Capital as on May 21,2014 2,308,655,172
b. Foreign Currency Convertible Bonds (FCCBs)
Further to information furnished in the Directors'' Report for financial
year 2012-13, during the year under review, as per terms and conditions
of the Series B Bonds issued in terms of Offering Circular dated
November 8, 2012, the Conversion Price of Series B Bonds i.e. US$
207,546,000 Interest Bearing Convertible Bonds due 2017 convertible
into share, have been reset to Rs. 11.38 as against Rs. 12.64. The Status
of FCCBs allotted is as under:
If all the balance 245,613 FCCBs are converted into equity shares, the
total share capital would go up by 1,205,176,429 new equity shares.
c. Consideration to CNIL shareholders for merger
Consequent to the approval of CDR proposals of the Company and CNIL and
further to the modifications to be made in the petitions by the Company
and CNIL (subject to approval of CDR Lenders), the Company would be
required to issue its equity shares to the shareholders of CNIL towards
consideration on merger of CNIL with the Company as may be approved by
Hon''ble High Courts of Bombay and Madras.
8. EMPLOYEE STOCK OPTION SCHEME (ESOS)
Further to the information furnished in the Directors'' Report for
financial year 2012-13, the Company has obtained necessary approvals of
the members in their Annual General Meeting held on September 17, 2013
for cancellation of unvested options and options pending for conversion
and also for closure of "GTL Infrastructure Limited - Employees Stock
Option Scheme 2005 (ESOS 2005)". Accordingly, the Company has closed
ESOS 2005 w.e.f. September 17, 2013. Hence the details as required
under Securities Exchange Board of India (Employees Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 are not furnished.
9. FIXED DEPOSITS
There are no unclaimed deposits lying with the Company and during the
year under review, the Company has not accepted any fresh fixed
deposits from Public or from its Shareholders.
10. CORPORATE GOVERNANCE
The Company continues to comply with Clause 49 of the Listing Agreement
with the Stock Exchanges. A separate report on Corporate Governance
along with the Certificate of the Joint Auditors, M/s. Chaturvedi &
Shah, Chartered Accountants and M/s. Yeolekar & Associates, Chartered
Accountants confirming compliance of conditions of Corporate Governance
as stipulated under Clause 49 of the Listing Agreement with the stock
exchanges is given elsewhere in this Report.
11. DIRECTORS
Pursuant to Sections 149, 152 and other applicable provisions, if any,
of the Companies Act, 2013, one-third of such of the Directors as are
liable to retire by rotation, shall retire every year and, if eligible,
offer themselves for re- appointment at every Annual General Meeting.
Consequently, Mr. Manoj Tirodkar and Mr. Charudatta Naik will retire by
rotation at the ensuing Annual General Meeting, and being eligible,
offer themselves for re-appointment in accordance with the provisions
of the Companies Act, 2013.
Further as per Section 149(5) of the Companies Act, 2013, the Company
is required to appoint Independent Directors under Section 149(4)
within a period of one year from April 1, 2014 i.e. the date of
commencement of the said Section and Rules made there under. Since the
Company had already appointed Mr. N. Balasubramanian, Mr. Anand Patkar,
Mr. Vinod Agarwala and Mr. Vijay Vij as Non-Executive Independent
Directors subject to retirement by rotation in the past, in terms of
clause 49 of the Listing Agreement, as per the recommendations of
Nomination and Remuneration Committee the Board of Directors proposes
to re-appoint all the aforesaid Directors as Non-Executive Independent
Directors within the meaning of Section 149 of the Companies Act, 2013
read with Schedule IV attached thereto and Rules made there under, not
subject to retirement by rotation, for a term of 5 (five) consecutive
years from September 16, 2014 to September 15, 2019.
Brief resumes of the Directors being appointed / re- appointed, nature
of their expertise in specific functional areas and names of companies
in which they hold directorships and memberships / chairmanships of
Board Committees, shareholding and relationships between directors
inter-se as stipulated under Clause 49 of the Listing Agreement with
the Stock Exchanges are provided in the Corporate Governance Report
forming part of the Annual Report.
Your Directors recommend their appointment / re- appointment at the
ensuing Annual General Meeting.
12. PROMOTER GROUP
The Company is a part of Global Group of Companies which is promoted by
GTL Limited (GTL). The members may note that the Promoter Group
comprises of Global Holding Corporation Private Limited and such other
persons as defined under SEBI Regulations.
Consequent to the settlement reached between GTL, CNIL and IFCI Limited
(IFCI), IFCI has returned 175,536,793 equity shares of the Company to
GTL, which were earlier appropriated by IFCI in July 2011. Resultantly,
GTL''s shareholding in the Company has been restored to 14.99% of the
total paid-up capital of the Company. Hence Promoter Group''s total
shareholding in the Company stood at 27.26 % of the total paid-up
capital of the Company.
13 DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956 the Directors, to the best of their knowledge and belief,
state, in respect of the year ended March 31,2014, that:
a. in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
b. the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at the end of financial year and of the loss of the
Company for that period;
c. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act,1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities; and
d. the Directors have prepared the annual accounts of the Company on a
''going concern'' basis.
14. AUDITORS & AUDITORS'' REPORT
M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Yeolekar &
Associates, Chartered Accountants, were appointed as Joint Auditors of
the Company at the Tenth Annual General Meeting of the Company to hold
office from the conclusion of the said meeting till the conclusion of
the next Annual General Meeting. The Company has received the necessary
written consents and certificates from the Joint Auditors respectively,
pursuant to Section 139 and 141 the Companies Act, 2013, regarding
their eligibility for re-appointment. Accordingly, in terms of Section
139 of the Companies Act, 2013, approval of the members to the
appointment of M/s. Chaturvedi & Shah, Chartered Accountants and M/s.
Yeolekar & Associates, Chartered Accountants as Joint Auditors of the
Company is being sought at the ensuing Annual General Meeting.
The Auditors'' Report to the shareholders on the Accounts of the Company
for the financial year ended March 31, 2014 does not contain any
qualification or adverse remarks.
15. COST AUDITORS
Pursuant to directions issued by Government of India, Ministry of
Corporate Affairs (MCA) for appointment of Cost Auditors, the Board of
Directors has appointed Mr. Vikas V. Deodhar, a Cost Accountant as a
Cost Auditor of the Company for the financial year ended March 31,2014.
The relevant Cost Audit Report for financial year 2012-13 was duly
filed with Ministry of Corporate Affairs on September 26, 2013.
Pursuant to the provisions of Section 148 of the Companies Act, 2013
and Rules there under as may be prescribed on the recommendations of
Audit Committee, the Board of Directors has appointed Mr. Vikas V.
Deodhar, Cost Accountant as the Cost Auditor for the financial year
2014-15.
16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The Company has continued to focus aggressively on reduction of diesel
consumption at telecom tower sites through various initiatives of
energy efficiency improvement and fuel savings. The Company has carried
out trials and pilot installations of various energy saving and green
energy solutions through deployment of Solar Photovoltaic (SPV),
Lithium Ion batteries and aircon performance improvement solutions.
The details relating to conservation of energy and environmental
improvement are given in the Annexure to this Report.
The Company is engaged in the business of providing Passive
Infrastructure Services and has no manufacturing activities. During
the year under review, the Company has not absorbed, adopted any
technology and innovated any new technology. Hence, the details
relating to Technology Absorption are not furnished.
In line with Department of Telecommunications (DoT) directives of Green
Initiatives to Telecom Service Providers, the Company has worked out
plan to outsource the supply of Renewable Energy through RESCO
(Renewable Energy Service Companies) model in phase-wise manner.
Also, the Company is in advance stage of MoU for a project on energy
management improvement project jointly with New Energy and Industrial
Technology Development Organization of Japan (NEDO), (DoT) and Ministry
of New and Renewable Energy (MNRE). The objectives of the project are
to contribute to the efficient use of energy and the protection of the
environment in India by installing PV Power Generation solution and
advanced energy management system including energy storage solutions at
the telecommunication towers in India and demonstrating the energy
management system using diesel power generators and /or grid power. The
initial surveys and identification of site are completed.
There were no actual inflow of Foreign Exchange during the year and the
particulars regarding actual outflow of Foreign Exchange appear at item
number 28 in Notes on Financial Statements to the Balance Sheet as at
March 31, 2014 forming part of this Annual Report.
17. PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, names and other particulars of the employees are required
to be set out in an annexure to this Report. However, in terms of the
Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and
Accounts are being sent to the shareholders excluding the aforesaid
Annexure. Any shareholder interested in obtaining a copy of the same
may write to the Joint Company Secretary at the Registered Office
address. None of the employees listed in the said annexure are related
to any Director of the Company.
18. SPECIAL BUSINESS
As regards the items of the Notice of the Annual General Meeting
relating to Special Business, the Resolutions incorporated in the
Notice and the Explanatory Statement relating thereto, fully indicate
the reasons for seeking the approval of members to those proposals.
Members'' attention is drawn to these items and Explanatory Statement
annexed to the Notice.
19. GENERAL
Notes forming parts of the Accounts are self - explanatory.
20. ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation and
acknowledge with gratitude, the support and co-operation extended by
the clients, employees, vendors, bankers, financial institutions,
investors, media and both the Central and State Governments and their
Agencies and look forward to their continued support.
On behalf of the Board of Directors,
Mumbai Manoj Tirodkar
May 21,2014 Chairman
Mar 31, 2013
To The Members''
The Directors are pleased to present their Tenth Annual Report
together with the Audited Accounts for the year ended March 31'' 2013.
1. FInAncIAl Results
(Rs.in Cr.)
Particulars 2012-13 2011-12
Total Income 570.92 557.17
PBDIT 283.53 301.10
Depreciation 486.43 243.42
PBIT (202.90) 57.68
Interest and Finance
Charges (Net) 350.53 428.51
Profit / (Loss) Before
Exceptional (553.43) (370.83)
Items & Tax
Exceptional Item 133.21
Profit / (Loss) before tax (686.64) (370.83)
Provision for Taxation
Net Profit / (Loss) (686.64) (370.83)
Figures regrouped / reclassified wherever necessary to make them
comparable.
Financial performance
During the year'' despite the deceleration in growth rate in the Indian
Economy and a challenging macroeconomic environment'' revenue of the
Company grew to R 570.92 Cr. in comparison to previous yearÂs revenue
at R 557.17 Cr. Operating Profit (before Depreciation'' Interest and
Tax) was at R 283.53 Cr. in comparison to previous yearÂs Operating
Profit (before Depreciation'' Interest and Tax) of R 301.10 Cr. Net Loss
for the year was at R (686.64) Cr. in comparison to previous yearÂs
Net Loss of R (370.83) Cr.
The factors contributing to the financial performance are discussed
more elaborately in the Management Discussion and Analysis Report which
forms part of this Annual Report.
2. MAnAGeMent DIscussIon AnD AnAlysIs
The Management Discussion and Analysis for the year under review'' as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges in India'' on the CompanyÂs performance'' industry trends and
other material changes with respect to the Company is presented in a
separate section forming part of this Annual Report.
3. suBsIDIARy coMpAny
Chennai Network Infrastructure Limited (CNIL) ceased to be a subsidiary
of the Company with effect from December 20'' 2012'' consequent upon
allotment of equity shares to CDR Lenders and Promoters in terms of
Corporate Debt Restructuring Scheme.
4. scHeMe oF ARRAnGeMent
In the year 2010-11'' the Company and CNIL filed petitions in the High
Courts of Judicature at Bombay & Madras respectively for approval of
the Scheme of Arrangement between the Company and CNIL. The HonÂble
Bombay High Court has sanctioned the Scheme of Arrangement for the
merger of CNIL with the Company'' however'' approval is awaited from the
HonÂble Madras High Court.
In the meantime the Company and CNIL had approached the Lenders with a
proposal to restructure its debts under the CDR Mechanism which has
been implemented successfully in both the entities. Consequent to
these approvals the financials and capital structure of both the
Companies have undergone substantial changes and therefore the Company
and CNIL have decided to modify the Scheme of Arrangement and shall
seek various approvals inter alia Shareholders'' CDR EG'' Lenders and the
HonÂble Courts. Once the modifed Scheme of Arrangement between CNIL and
Company is approved by the HonÂble Bombay and Madras High Courts'' the
CompanyÂs financial statements will be re-casted / re-stated with
effect from the Appointed Date as may be approved.
5. Recent DevelopMents At MAcRo AnD MIcRo econoMIc level
The Indian telecom industry has shown marginal decrease in subscriber
base in the year under review. The mobile subscriber base in India has
decreased to 861.66 Mn. at end of February 2013 as against 919.17 Mn.
at the end of March 2012'' registering a de-growth of 6.26 %. The share
of Urban subscribers that was giving higher average revenue per user
has declined to 60.50 % in February 2013 from 64.83 % in March'' 2012
whereas share of Rural subscribers has increased to 39.50 % in February
2013 from 35.17 % in the month of March 2012. With this'' the overall
Teledensity in India has fallen to 70.42 at the end of February 2013.
The Telecom Industry today is undergoing stress and has been dealing
with several challenges on the financial'' revenue and profitability
fronts on one hand and Regulatory Policies on the other.
Some of the developments we believe that had negative impact on the
sector are:
a. cancellation of 2G licenses by HonÂble supreme court upheld:
Cancellation of 122 telecom licenses including that of Uninor''
Videocon'' Etisalat by the HonÂble Supreme Court of India in February
2012 and the rejection of their final plea in January 2013 leading to a
grinding halt of all 2G capital expenditure plans of these Operators;
b. slower 3G and BwA growth: While Operators have invested Rs. 1''20''000
Cr. towards 3G and BWA services'' their initial rollouts have been very
selective. Further'' ongoing litigations over 3G roaming agreements has
dented the growth prospects of data service revenues;
c. spectrum auction response: Due to high reserve prices set for the
November 2012 auction'' the response from Operators was mild with no
single operator bidding for a pan India spectrum. Further'' in March
2013 spectrum auction'' GSM operators refrained themselves from
participation;
d. Declining performance of telecom operators: On account of falling
subscribers along with operating losses'' even leading operators like
Bharti reported consolidated losses over 12 consecutive quarters;
e. operators defaults and penalties: Several Operators faced huge
penalties from regulator'' on various counts'' including for spectrum'' 3G
roaming pacts'' under reporting of revenues'' non-compliance of KYC norms
etc.
As the telecom sector is facing difficulty in raising fresh capital
from banks or investors'' this has resulted in their reduced ability to
spend and lower capital expenditure. Nevertheless'' the Operators are in
process for aggressive rollouts for network expansion for financial
year 2013-14. The factors that will drive growth for network services
business in India are as follow:
a. Growth of Data services in Indian telecom Market:
The increasing usage of smart phones'' and the growth of Value Added
Services and the resultant growth in the data usage would require
further investments in augmenting the network;
b. Focus on rural expansion: Though mobile coverage is increasing'' the
rural area still holds large untapped potential. With Rural teledensity
at 40.01 as at February 2013'' there is good opportunity for growth in
rural areas. With a good footprint in rural India'' our Company expects
revenue to grow in the long run as a result of growth in demand from
the Rural areas;
c. Roll out of 3G and BwA services: The expansion of the 3G networks
and rollout of BWA networks will also impact positively'' leading to
growth in network services;
d. Quality of services: As the coverage targets have been achieved by
most of the operators'' the focus has now shifted to the quality of
service and differentiating the customer experience. This is expected
to drive consulting revenue in terms of benchmarking networks and
optimization.
It is general consensus among market participants and policy makers
that given the current state of associated uncertainties in telecom
sector'' it may take 2-3 years for this sector to recover'' stabilize and
get into growth mode.
6. DeBt RestRuctuRInG
Further to information furnished in the Directors Report for financial
year 2011-12'' after successful implementation of Corporate Debt
restructuring (CDR) package for its Rupee Term Loans'' as approved by
CDR EG'' the Company has complied and continues to comply with the terms
and conditions of CDR package. Further'' during the year'' Promoter''
Global Holding Corporation Pvt. Ltd. (GHC)'' have infused Rs. 90.16 Cr.
towards Promoter Contribution into the Company.
7. RestRuctuRInG oF FoReIGn cuRRency conveRtIBle BonDs (FccBs)
During the year under review'' the Company'' with the approval of
shareholders and the Reserve Bank of India has restructured its
outstanding principal amount of FCCBs of US$ 228.30 Mn. (issued in 2007
and due in 2012) aggregating US$ 319.286 Mn. (including redemption
premium) by way of cashless exchange with and for the following:
(i) 111''740 Zero Coupon Convertible Bonds'' having face value of US$
1''000 due 2017 ("Series A BondsÂ)'' aggregating principal amount of US$
111.740 Mn. at a conversion price of R 10 per share; and
(ii) 207''546 Interest Bearing Convertible Bonds'' having face value of
US$ 1''000 due 2017 ("Series B BondsÂ)'' aggregating principal amount of
US$ 207.546 Mn. at conversion price of:
8. sHARe cApItAl
a. The authorized share capital was increased from R 3''500 Cr. to R
5''000 Cr. by creation of 150 Cr. equity shares of R 10 each;
b. The movement of Equity Capital due to allotment of shares is as
under:
No. of
particulars equity shares
Equity Share Capital as on April 1'' 2012 957''348''604
Add: Allotments of Equity Shares
during the year:
a) CDR Lenders (on conversion of
Zero Percent & 880''609''132
One Percent CCDs)
b) Promoters (on conversion of
Zero Percent CCDs) 71''329''113
c) FCCBs Holders (on conversion
of restructured 397''512''905
FCCBs Series A & B)
Equity Share Capital as on May 9'' 2013 2''306''799''754
9. DIvIDenD
The Company is in the business of providing telecom towers on a shared
basis to multiple wireless telecom service providers which is capital
intensive in nature. In view of high depreciation'' interest and in the
absence of distributable profits'' no dividend has been recommended.
10. FIXeD DeposIts
The Company has not invited or accepted any fixed deposits and'' as
such'' no amount of principal or interest was outstanding as of the
Balance Sheet date.
11. coRpoRAte GoveRnAnce
The Company is complying with Clause 49 of the Listing Agreement with
the Stock Exchanges. A separate Report on Corporate Governance along
with the Certificate of the Joint Auditors'' M/s. Chaturvedi & Shah''
Chartered Accountants and M/s. Yeolekar & Associates'' Chartered
Accountants confirming compliance of conditions of Corporate Governance
as stipulated under Clause 49 of the Listing Agreement with the stock
exchanges is given elsewhere in this Annual Report.
12. DIRectoRs
Mr. Vijay Vij'' Mr. Vinod Agarwala and Mr. Satya Pal Talwar'' Directors
retire by rotation at the forthcoming Annual General Meeting. Mr.
Vijay Vij and Mr. Vinod Agarwala being eligible offer themselves for
re-appointment.
Mr. Satya Pal Talwar has conveyed that due to his health problem'' he is
not seeking re-appointment as a Director of the Company at the ensuing
Annual General Meeting.
The background of the Directors proposed for reappointment is given
under the Corporate Governance Section of this Annual Report.
13. pRoMoteR GRoup
The Company is a part of Global Group and is promoted by GTL Limited
(GTL). The members may note that beside GTL'' the Promoter Group
comprises of Global Holding Corporation Private Limited and such other
persons as defined under the SEBI Regulations. The Promoter Group
holding in the Company is currently 19.65% of the CompanyÂs Paid-up
Share Capital.
pledge of promoter shareholding in the company:
Further to the information furnished in the Directors Report for the
financial year 2011-12'' GTL (Promoter) and Chennai Network
Infrastructure Limited (CNIL) have arrived at an agreement to resolve
the dispute with IFCI Limited (IFCI). Successful completion of the same
would result in restoration of promoters shareholding in the Company
to 27.26 %.
14. AuDItoRs & AuDItoRs RepoRt
M/s. Chaturvedi & Shah'' Chartered Accountants and M/s. Yeolekar &
Associates'' Chartered Accountants'' were appointed as Joint Auditors of
the Company at the Ninth Annual General Meeting of the Company to hold
office from the conclusion of the said meeting till the conclusion of
the next Annual General Meeting. The Company has received the necessary
certificates from the Joint Auditors respectively'' pursuant to Section
224(1B) of the Companies Act'' 1956'' regarding their eligibility for
re-appointment. Accordingly'' approval of the members to the
appointment of M/s. Chaturvedi & Shah'' Chartered Accountants and M/s.
Yeolekar & Associates'' Chartered Accountants as Joint Auditors of the
Company is being sought at the ensuing Annual General Meeting.
The Auditors Report to the shareholders on the Accounts of the Company
for the financial year ended March 31'' 2013 does not contain any
qualification or adverse remarks.
15. cost AuDItoRs
The Cost Audit Branch of Government of India'' Ministry of Corporate
Affairs (MCA)'' New Delhi vide Cost Order No. 52/26/CAB-2010 dated
November 6'' 2012 have issued industry wise Orders'' which includes
Infrastructure Providers (IP-1)'' for appointment of
Cost Auditors. Accordingly'' the Board of Directors has appointed Mr.
Vikas V. Deodhar'' a Cost Accountant as a Cost Auditor of the Company
for the financial year 2013-14.
16. DIRectoRs ResponsIBIlIty stAteMent
In accordance with the provisions of Section 217(2AA) of the Companies
Act'' the Directors'' to the best of their knowledge and belief'' state''
in respect of the year ended March 31'' 2013'' that:
a. in the preparation of the annual accounts'' the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
b. the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at the end of financial year and of the loss of the
Company for that period;
c. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act''1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities; and
d. the Directors have prepared the annual accounts of the Company on a
Âgoing concern basis.
17. conseRvAtIon oF eneRGy'' tecHnoloGy ABsoRptIon AnD FoReIGn eXcHAnGe
eARnInGs AnD outGo:
The Company has enhanced its focus on reduction of diesel consumption
at telecom tower sites through several initiatives of energy efficiency
and fuel savings. Further'' trials of various green energy solutions are
carried out through pilot deployment of Solar Photovoltaic panels'' Deep
discharge and Lithium Ion batteries which have technological
superiority.
The details relating to conservation of energy and environmental
improvement are given in the Annexure to this Report.
The Company is engaged in the business of providing Passive
Infrastructure Services and has no manufacturing activities. During the
year under review'' the Company has not absorbed'' adopted any technology
and innovated any new technology. Hence'' the details relating to
Technology Absorption are not furnished. During the year under review''
the Company has carried out R&D activity for reduction of energy
consumption at Telecom Tower Sites. The details relating to R&D are
given in the Annexure to this Report.
In line with DoT directives dated January 23'' 2012 on Green initiatives
to Telecom Service Providers'' the Company as a member of Tower And
Infrastructure Providers Association (TAIPA)'' has been actively in the
tower industryÂs collective efforts for renewable energy solutions on
Opex model'' through RESCO (Renewable Energy Service Companies) concept.
It is planned to engage through this model in phase-wise manner.
There were no Foreign Exchange Earning during the year and the
particulars regarding Foreign Exchange Expenditures appear at item
numbers 37 and 38 in Notes on Financial Statements to the Balance Sheet
as at March 31'' 2013 forming part of this Annual Report.
18. pARtIculARs oF eMployees
In terms of the provisions of Section 217(2A) of the Companies Act''
1956'' read with the Companies (Particulars of Employees) Rules'' 1975''
as amended'' names and other particulars of the employees are required
to be set out in an annexure to this Report. However'' in terms of the
Section 219(1)(b)(iv) of the Companies Act'' 1956'' the Report and
Accounts are being sent to the shareholders excluding the aforesaid
Annexure. Any shareholder interested in obtaining a copy of the same
may write to the Company Secretary at the Registered Office. None of
the employees listed in the said annexure are related to any Director
of the Company.
19. eMployee stocK optIon scHeMe (esos)
ESOS was introduced and implemented in the year 2005 for the benefits
of the employees of the Company. The shareholders have authorized issue
of shares'' not exceeding 5% of issued equity capital of the Company'' to
its employees in the form of stock options. As on March 31'' 2013 a
total 166 employees hold 13''465''454 stock options allotted under
various scheme. As required by Clause 12 of the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines'' 1999'' the
particulars of ESOS are furnished in Annexure to this Report. However''
considering current market conditions'' the stock options granted to
employees became unfavourable for conversions and hence'' the management
has proposed to cancel all pending options in the hands of employees
and also to close the entire ESOS 2005.
20. specIAl BusIness
As regards the items of the Notice of the Annual General Meeting
relating to special business'' the resolutions incorporated in the
Notice and the Explanatory Statement relating thereto'' fully indicate
the reasons for seeking the approval of members to those proposals.
Members attention is drawn to these items and Explanatory Statement
annexed to the Notice.
21. GeneRAl
Notes forming parts of the Accounts are self-explanatory.
22. AcKnowleDGeMents
Your Directors wish to place on record their appreciation and
acknowledge with gratitude the support and co-operation extended by the
clients'' vendors'' bankers'' financial institutions'' investors'' media and
both the Central and State Governments and
their Agencies and look forward to their continued support. Your
Directors also thank the employees at all levels'' who through their
dedication'' co-operation and support'' have enabled the Company to
achieve sustained growth.
For and on behalf of the Board of Directors
Mumbai Manoj G. tirodkar
May 9'' 2013 Chairman
Mar 31, 2012
The Members,
The Directors are pleased to present their Ninth Annual Report
together with the Audited Accounts for the year ended March 31, 2012.
1. FINANCIAL RESULTS
(Rs. in Crore)
Consolidated Standalone
Particulars 2010-11 2011-12 2010-11 2011-12
Total Income 1,082.64 1407.78 534.06 557.16
PBDIT 657.45 770.95 324.64 301.10
Depreciation 574.77 791.36 207.66 243.42
PBIT 82.68 (20.41) 116.98 57.68
Interest and
Finance Charges (Net) 657.03 977.31 256.27 428.51
Profit/(Loss)
Before Tax (574.35) (997.72) (139.29) (370.83)
Provision for Taxation - - - -
Net Profit / (Loss) (574.35) (997.72) (139.29) (370.83)
Figures regrouped / reclassified wherever necessary to make them
comparable.
Financial Performance
Operating Profit / (Loss) was at Rs. 51.07 Cr. in comparison to previous
year's Operating Profit / (Loss) of Rs. 73.34 Cr. Net Profit/(Loss) for
the year was at (Rs. 370.83) Cr. in comparison to previous year's net
profit /(loss) of (Rs. 139.29) Cr.
On a consolidated basis, total income for the year under review was at
Rs. 1407.78 Cr. Operating Profit / (Loss) (profit before taxes excluding
other income and finance costs) was at (Rs. 30.23) Cr. Net Profit /
(Loss) for the year was at (Rs. 997.72) Cr.
The factors contributing to the financial performance are discussed
more elaborately in the Management Discussion and Analysis Report which
forms part of this Annual Report.
2. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis for the year under review, as
stipulated under Clause 49 of the listing agreement with the stock
exchanges in India, on the Company's performance, industry trends and
other material changes with respect to the Company and its subsidiary,
wherever applicable, is presented in a separate section forming part of
this Annual Report.
3. SUBSIDIARY COMPANY
Chennai Network Infrastructure Limited (CNIL), promoted by Global
Group, became subsidiary of the Company during FY 2010-11.
In terms of the general approval granted under Section 212(8) of the
Companies Act, 1956 by the Ministry of Corporate Affairs, Government of
India vide its Circular No. 2/2011 dated February 8, 2011, copies of
Balance Sheet, Profit & Loss Account and other documents of the
subsidiary company have not been attached with the Balance Sheet of the
Company. Financial information of the subsidiary company, as required
by the said general approval has been furnished separately in the
Consolidated Balance Sheet in this Annual Report. The Company will make
available the Annual Accounts of the subsidiary company and related
detailed information to the Company's and the subsidiary company's
shareholders, seeking such information at any point of time. The
Annual Accounts of the subsidiary company will also be kept open for
inspection by any shareholder at the Registered/Head Office of the
Company and that of the subsidiary company.
In the year 2010-11, the Company and its subsidiary, CNIL filed
petitions in the High Courts of Judicature at Bombay & Madras
respectively for approval of the Scheme of Arrangement between the
Company and CNIL. The Hon'ble Bombay High Court had sanctioned Scheme
of Arrangement for the merger of CNIL with the Company, however,
approval is awaited from the Hon'ble Madras High Court.
In the meantime the Company and its subsidiary had approached the
Lenders with a proposal to restructure its debts under the CDR
Mechanism. Both the proposals of the Company and CNIL respectively have
been approved by the CDR Empowered Group. Consequent to these approvals
the financials and capital structure of both the Companies have changed
substantially and therefore the Company has decided to modify the
Scheme of Arrangement and submit it afresh for the approval of the
Hon'ble Courts. Approval of the revised Scheme is not likely to be
received on or before the date of convening of the ensuing Annual
General Meeting, and therefore the financial statements of the Company
for the financial year ended March, 31, 2012 are prepared without
considering the CNIL financial statements and once the modifed merger
scheme between CNIL and Company is approved by the Hon'ble Bombay and
Madras High Courts, the Company's financial statements will be
re-casted with effect from the Appointed Date as approved by the High
Courts.
The consolidated financial statements of the Company prepared in
accordance with applicable accounting standards forms part of this
Annual Report.
4. RECENT DEVELOPMENTS AT MACRO AND MICRO ECONOMIC LEVEL
The Indian telecom industry has shown minimal growth in the last year.
The mobile subscriber base in India has increased to 919.17 Million at
the end of March 2012, registering a growth of 0.88%. The share of
Urban subscribers that was giving higher average revenue per user has
declined to 65.23% from 65.59% whereas share of Rural subscribers has
increased to 34.77% in the month of March 2012. With this, the overall
Teledensity in India has reached 78.66 at the end of March, 2012.
The industry today is undergoing stress and has been dealing with
several challenges on the financial, revenue and profitability fronts
on one hand and Regulator, Government and Judiciary on the other hand.
Some of the developments that had negative impact on the sector are
- Cancellation of 122 2G licenses by Supreme Court
- TRAI recommendations for
Rs. Fixation of higher reserve price for spectrum auction
Rs. Re farming of 900 MHz spectrum leading to higher investment by all
telecom operators
- Shutting down of Indian operations partially or fully by Etisalat DB,
Loop Telecom, S-Tel and cancellation of all 122 2G licences.
- Slower than expected offtake of the 3G roll outs, and the delay in
rolling out the BWA networks even after a year of paying out the
license fees
The above factors have resulted in lack of investor interest in telecom
sector. This had a direct impact on the telecom operator's ability to
spend and has resulted into lower capital expenditure. The 3G rollouts
were limited to the top 40 cities in India and the primary focus has
been on upgrading and utilizing the existing infrastructure. However as
the roll out spreads it will lead to the growth of telecom tower
sector.
Since the operators have reduced their capital expenduture the
expansion is happenning through sharing. The tower industry shifted its
focus from building more towers to increasing tenancies. Single-tenant
towers are not viable and tower sharing is likely to augment industry
profitability.
Moving forward the growth drivers for the tower sector would be as
follows
- Growth of Data Services in Indian Telecom Market: the increasing
usage of smart phones, and the growth of Value added services and the
resultant growth in the data usage would require further investments in
augmenting the network
- Focus on rural expansion: with mobile coverage expected to increase,
especially in rural areas, there will be a steady increase in tenancies
and telecom towers in rural areas
- Rollout of 3G and BWA services: The expansion of the 3G networks and
rollout of BWA networks will also impact positively, leading to growth
in tenancies
- Quality of Service: the recently launched mobile number portability
has encouraged competition amongst operators to lure new customers and
retain the existing user base. This is expected to drive additional
investment into tower infrastructure to support the Quality of Service
(QoS) indicators and differentiation strategies for operators.
Pledge of Promoter shareholding in the Company
Further to the information furnished in the Directors' Report for the
FY 2010-11, GTL Limited (GTL), Chennai Network Infrastructure Limited
(CNIL) and IFCI Limited (IFCI) are at the final stage of settlement of
the dispute, whereupon the shares appropriated by IFCI would be
returned to GTL. Also as part of the settlement, IFCI is likely to
convert its loan in CNIL into equity shares of CNIL, with the consent
from CDR Lenders.
5. CORPORATE DEBT RESTRUCTURING
The Company had filed its proposal for Restructuring its Debts through
CDR process in July 2011, which was admitted by the Corporate Debt
Restructuring Empowered Group (CDR EG) on September 26, 2011. Further
the Company received a Letter of Approval bearing Number
BY.CDR(ATR)No./6117/2011-12 dated December 23, 2011 from the CDR EG
approving the Restructuring Package, the salient features of which are
as under;
1. The debt restructuring of the Company, involves the conversion of
part of the Indian Rupee Debt of Rs. 1,062.29 Cr. from CDR lenders into
Compulsorily Convertible Debentures ("CCDs") to be converted into
equity shares. CCDs will also be issued to CDR lenders against part of
the Funded Interest Term Loan of Rs. 78.78 Cr. and interest on CCDs of Rs.
6.67 Cr.
2. Promoter Contribution of Rs. 90.16 Cr. to be brought into the Company
by Promoter (Global Holding Corporation Private Limited & and /or its
affiliates) as stipulated in the CDR package, in the form of CCDs to be
converted into equity shares.
3. Rescheduling of repayment of the balance rupee debt to CDR lenders
of the Company which are part of the ongoing corporate debt
restructuring process, over the period of 15 years and with a
moratorium of one year and nine months, the repayment of which begins
from quarter ending June 30, 2013.
4. Moratorium in the payment of interest for the period of one year
and six months, requiring the payment of interest to begin from quarter
ending March 31, 2013 and an overall reduction in the interest rate
with an effective yield of 10.75% over the term of the facility.
Also, Promoter Group has contributed in the subsidiary of the Company,
viz. Chennai Network Infrastructure Limited (CNIL) Rs. 82.72 Cr. towards
equity through CCDs and Rs. 758.53 Cr. by way of conversion of unsecured
loans into equity through CCDs. Thus the promoters of the Company have
contributed Rs. 931.41 Cr. in aggregate in the Company and CNIL towards
equity enhancement.
6. SHARE CAPITAL
During the year under review, there was no change in the Equity Share
Capital of the Company. As on March 31, 2012 the Equity Share Capital
of the Company was Rs. 957.35 Cr.
As per the Terms of the Master Restructuring Agreement executed between
the Company and the Lenders a portion of Restructured Loan was to be
converted into Equity, through Compulsorily Convertible Debentures
(CCDs) to be allotted to them in tranches. The Promoters were also
required to contribute additional amount as their contribution into the
Equity Capital also through CCDs. The Company on April 21, 2012 had
allotted 109,947,737 CCDs of face value of Rs. 100/- each to the Lenders
and Promoters. Consequent to the conversion of the CCDs, the Company on
May 5, 2012 allotted 869,839,670 Equity Shares of face value of Rs. 10/-
per share at a Premium of Rs. 2.64 per share to the Lenders and Promoter
thereby increasing the Paid-up Equity Share Capital of the Company to Rs.
18,271,882,740.The Equity Share Capital is subject to dilution on
account of -
a) Foreign Currency Convertible Bonds (FCCBs)
During the FY 2007-08, the Company raised US $ 300 Million through Zero
Coupon FCCBs at a conversion price of Rs. 53.04 per share for meeting the
capital expenditure, acquisition and other expenses permitted by the
regulatory authorities. The status of FCCBs allotted is as under.
No. of FCCBs No. of Equity Shares
Particulars (of US $ 1 Lac each) upon conversion
(In Crore)
FCCBs allotted 3,000 22.23
Conversion till
March 31, 2012 717 5.31
Balance as on
March 31, 2012 /
July 03, 2012 2,283 16.92
If all the balance 2,283 FCCBs are converted into equity shares, the
total share capital would go up by 169,158,948 new equity shares.
b) Employees Stock Option Scheme
The shareholders have authorized issue of shares, not exceeding 5% of
issued equity capital of the Company, to its employees in the form of
stock options. As on March 31, 2012, a total of 166 Employees (Previous
Year 166) hold 13,495,004 Stock Options (Previous Year - 13,651,804) as
under:
Particulars No. of Options
No. of outstanding Options as on April 01, 2011 13,651,804
Add: No. of Options issued during the year Nil
Less: No. of Options converted during the year Nil
Less: No. of Options lapsed during the year 156,800
Outstanding Options as on March 31, 2012 13,495,004
If all the outstanding Options are converted into equity shares, the
total share capital would go up by 13,495,004 new equity shares.
As required by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, the particulars of Employee Stock
Option Scheme 2005 are set out in the Annexure to Directors' Report.
c) Consideration to CNIL Shareholders for merger
Consequent to the approval of the CDR proposals of the Company and its
subsidiary and further to the revision to be made in the petitions by
the Company and CNIL, the Company would be required to issue its equity
shares to the shareholders of CNIL towards consideration on merger of
CNIL with the Company as may be approved by Hon'ble High Courts of
Bombay & Madras respectively.
d) Conversion of CCDs
Consequent to the conversion of CCDs proposed to be alloted to the CDR
Lenders and Promoters in Tranche II and III the equity capital of the
Company would increase.
7. DIVIDEND
The Company is in the business of providing telecom towers on a shared
basis to multiple wireless telecom service providers which is capital
intensive in nature. In view of high depreciation, interest and in
absence of distributable profits, no dividend has been proposed.
8. FIXED DEPOSITS
The Company has not invited or accepted any fixed deposits and, as
such, no amount of principal or interest was outstanding as of the
Balance Sheet date.
9. CORPORATE GOVERNANCE
Report on Corporate Governance along with the Certificate of the Joint
Auditors, M/s. Chaturvedi & Shah, Chartered Accountants and M/s.
Yeolekar & Associates, Chartered Accountants confirming compliance of
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement with the stock exchanges is given elsewhere in this
Annual Report.
10. DIRECTORS
Dr. Anand Patkar, Mr. N. Balasubramanian and Mr. Vivek Kulkarni retire
by rotation at the forthcoming Annual General Meeting and Dr. Anand
Patkar & Mr. N. Balasubramanian being eligible offer themselves for
re-appointment. Mr. Vivek Kulkarni, however, had expressed his desire
to retire and not to seek re-appointment.
The background of the Directors proposed for reappointment /
appointment is given under the Corporate Governance Section of this
Annual Report.
11. PROMOTER GROUP
The Company is a part of Global Group and is promoted by GTL Limited.
The members may note that beside GTL the Promoter Group comprises of
Global Holding Corporation Private Limited and such other persons as
defined under the SEBI Regulations. The Promoter Group holding in the
Company is currently 23.19% of the Company's Paid-up Share Capital.
12. AUDITORS & AUDITORS ' REPORT
M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Yeolekar &
Associates, Chartered Accountants, were appointed as Joint Auditors of
the Company at the Eighth Annual General Meeting of the Company to hold
office from the conclusion of the said meeting till the conclusion of
the next Annual General Meeting.
The Company has received the necessary certificates from the Joint
Auditors respectively, pursuant to Section 224(1B) of the Companies
Act, 1956, regarding their eligibility for re-appointment.
Accordingly, approval of the members to the appointment of M/s.
Chaturvedi & Shah, Chartered Accountants and M/s. Yeolekar &
Associates, Chartered Accountants as Joint Auditors of the Company is
being sought at the ensuing Annual General Meeting.
The Auditors' Report to the shareholders on the Accounts of the Company
for the financial year ended March, 31, 2012 does not contain any
qualification or adverse remarks.
13. COST AUDITORS
The Government of India, Ministry of Corporate Affairs have, vide its
Notification dated 7th December, 2011, made rules namely Cost
Accounting Records (Telecommunication Industry) Rules, 2011, which
would be applicable to Infrastructure Provider (IP-1). Accordingly, the
Board of Directors have appointed Mr. V. V. Deodhar, a Practicing Cost
Auditor as a Cost Auditor of the Company for the financial year
2012-13, subject to approval of Central Government.
14. DIRECTORS ' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956 and based on the information provided by the management, your
Directors state that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
b) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2012 and of the loss of the Company for
the year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act,1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts of the Company on a
'going concern' basis.
15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The Company has enhanced its focus on reduction of diesel consumption
at telecom tower sites through several initiatives of energy efficiency
and fuel savings. Further, trials of various green energy solutions are
carried out through deployment of Solar Photovoltaic, Methanol based
Fuel Cells and Lithium Ion batteries. The details relating to
conservation of energy and environmental improvement are given in the
Annexure to this Report.
The Company is engaged in the business of providing Passive
Infrastructure Services and has no manufacturing activities. During the
year under review, the Company has not absorbed, adopted any technology
and innovated any new technology. Hence, the details relating to
Technology Absorption are not furnished. During the year under review,
the Company has carried out R&D activity for reduction of energy
consumption at Telecom Tower Sites. The details relating to R&D are
given in the Annexure to this Report.
In line with DoT directives dated January 23, 2012 on Green initiatives
to Telecom Service Providers , the Company has worked out plan to
outsource supply of Renewable energy through RESCO (Renewable Energy
Service Providers) model in phase-wise manner, FY2012-13 onwards.
The particulars regarding Foreign Exchange Expenditures and Earnings
appear as item numbers 33 and 34 respectively, in Notes on Financial
Statements to the Balance Sheet as at March 31, 2012 forming part of
this Annual Report.
16. PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, names and other particulars of the employees are required
to be set out in an annexure to this Report. However, in terms of the
Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and
Accounts are being sent to the shareholders excluding the aforesaid
Annexure. Any shareholder interested in obtaining a copy of the same
may write to the Company Secretary at the Registered Office. None of
the employees listed in the said annexure are related to any Director
of the Company.
17. SPECIAL BUSINESS
As regards the items of the Notice of the Annual General Meeting
relating to special business, the resolutions incorporated in the
Notice and the Explanatory Statement relating thereto, fully indicate
the reasons for seeking the approval of members to those proposals.
Members' attention is drawn to these items and Explanatory Statement
annexed to the Notice.
18. GENERAL
Notes forming parts of the Accounts are self-explanatory.
19. ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation and
acknowledge with gratitude the support and co-operation extended by the
clients, vendors, bankers, financial institutions, investors, media and
both the Central and State Governments and their Agencies and look
forward to their continued support. Your Directors also thank the
employees at all levels, who through their dedication, co-operation and
support, have enabled the Company to achieve sustained growth.
For and on behalf of the Board of Directors
Mumbai Manoj G. Tirodkar
July 03, 2012 Chairman
Mar 31, 2010
The Directors are pleased to present their Seventh Annual Report along
with the Audited Accounts for the year ended March 31, 2010.
1. Financial Results
Rupees in Crore
Year Ended Year Ended
March 31,2010 March 31, 2009
Total Income 381.32 274.58
PBDIT 224.17 167.83
Depreciation 198.32 141.15
PBIT 25.85 26.68
Interest and Finance
Charges (Net) 28.43 97.46
Profit / (Loss) Before Tax (2.58) (70.78)
Provision for Taxation - -
- Current - -
-Deferred - (7421)
- Fringe Benefit - 0.59
Net Profit (2.58) 2.84
/(Loss)
Figures regrouped I reclassified wherever necessary to make them
comparable.
2. Dividend
The Company is in the process of rolling out 23,700 towers. It is also
acquiring 17,500 towers from Aircel Limited and its subsidiaries
(Aircel). Thus in view of the ongoing project execution and the
acquisition of Aircel Towers, the capital-intensive nature of the
business and inadequate profit on account of high depreciation and
interest, no dividend has been proposed.
3. Acquisition
The Company has entered into an agreement to purchase the Tower
business of Aircel through Chennai Network Infrastructure Limited, a
Special Purpose Vehilce (SPV) formed for the said purpose. The
highlights of the transaction are as follows;
- Purchase of 17,500 telecom towers;
- 21,000 active tenants on these towers;
- Transaction Value Rs.8,400 Crores;
- Aircel has committed additional 20,000 tenancies over the next 3
years;
The transaction is expected to be consummated by July 2010, subject to
fulfilment of legal formalities.
This transaction is proposed to be funded through a mix of Debt and
Equity as follows:
Equity investment of Rs.3,400 Crores from the Company and its
Promoters. While the Company is subscribing through Trust for 51 % of
the Equity, GTL Limited and Global Holding Corporation Private Limited,
the Promoter Group companies are subscribing for the balance of 49%.
Debt funding of Rs.5,000 Crores has been syndicated and lead managed by
SBI Capital Markets Limited.
The purchase of Aircel tower business will deliver strong revenue
growth for the Company as the deal assures immediate revenue of Rs. 700
crore p.a. for next 15 years. The Company has also received additional
commitment of 20,000 tenancies over a period of next 3 years which will
provide additional revenue of Rs. 700 crore p.a. This will be in
addition to the existing revenue base of the Company.
The Company will continue to be an independent and neutral player with
focus on reducing the capital and operational expenditure of telecom
service providers.
4. Operations
During the year under review, the Company earned total Income of Rs.
381.32 Crore (which includes net income from operations of Rs. 347.95
Crore and other income of Rs. 33.37 Crore). The revenues are in the
form of infrastructure provisioning fees in respect of our passive
infrastructure. The PBDIT has improved from Rs. 167.83 Crore in the
previous year to Rs. 224.17 Crore in the year under review. While the
Company has a depreciation charge of Rs. 198.32 Crore, Interest &
Finance Charges (Net) is Rs. 28.43 Crore. The operations have resulted
in a Profit/(Loss) before tax of Rs. (2.58) Crore. However, the
operations (before depreciation) have resulted in cash profit before
tax of Rs. 195.74 Crore.
Business Strategy
Having achieved considerable size, post the Aircei tower acquisition,
the Company has set a vision to be the most efficient tower Company in
the World. The goal of the Company is to increase per tower revenue and
cashflows. This is being done by increasing the tenancy per tower. The
expansion by existing dual technology operators, rollout by new 2G
operators and impending 3G network rollout present the Company with
opportunity to improve tenancy on towers.
The Company post Aircei should have significant tower presence on
pan-India basis. The Company plans to deploy new towers as well as grow
inorganically to improve its tower penetration in the interiors of the
Country. Existing tower sharing will give operators an opportunity for
speedy 2G & 3G network rollout while enjoying the sharing benefits in
the form of reduced operational and energy cost.
Future Outlook
With a subscriber base of over 621 Mn, India is the 2nd largest
Telecom.market in the World. The introduction of low cost handsets and
impending 3G & WiMAX rollout is expected to be the next growth driver
for the industry. Presence of more than 12 operators in each circle,
increasing subscriber base and spectrum scarcity for incumbent
operators in key markets will augur well for the tower industry.
Post acquisition of Aircei Towers, the Company will be in a better
position to capture the growth opportunity offered by the Network
rollout by new 2G & 3G operators and thereby improve tenancy on its
towers.
5. Awards and Recognitions
During the year the Company won the prestigious "Greentech Environment
Excellence Award 2009". This Award in its 10th year was presented to
companies demonstrating the highest level of commitment to
environmental management, business excellence & sustainability. The
Company had also been voted as the "Best Independent Infrastructure
Provider" in the Telecom Operator Awards 2010 organized by Tele.Net.
6. Share Capital
The Equity Share Capital of the Company has increased from Rs. 816.16
Crore as on March 31, 2009 to Rs. 957.35 Crore as of date as under:
Particulars Share Capital
(Rs,in Crore)
Share Capital as on 31.03.09 816.16
Allotment during the year:
a) Promoter Group / Pre-demerger Shareholders
(On conversion of
Warrants issued on preferential basis) 120.50
b) FCCB Holders (On conversion of 2007 FCCBs) 10.00
c) ESOS Holders (On conversion of 2005 ESOSs) 10.69
Share Capital as on 31.03.10 / 29.04.10 957.35
The details of the above allotments done during the year are as under:
a) Convertible Warrants
The Company allotted 26.36 Crore Convertible Warrants (Warrants) on
November 30, 2007 to the promoter group / predemerger shareholders on
preferential basis at a conversion price of Rs.40 per share,
convertible into one Equity Share for each Warrant within 18 months
aggregating to Rs.1,054.60 Crore, for meeting the capital expenditure,
acquisition and other expenses. The status of Warrants issued is as
under:
Particulars Total
No. of Warrants issued (in Crs.) 26.36
No. of Warrants converted till March 31, 2010 (in Crs.) 21.75
No. of Warrants forfeited (in Crs.) 4.61
No. of Warrants pending conversion (in Crs.) -
Total amount received
against Warrants (Rs.Crs.) 888.46
b) Foreign Currency Convertible Bonds (FCCBs)
During the FY 2007-08, the Company raised US $ 300 Million through Zero
Coupon FCCBs at a conversion price of Rs.53.04 per share for meeting
the capital expenditure, acquisition and other expenses permitted by
the regulatory authorities. The status of FCCBs allotted is as under.
Particulars No. of FCCBs No. of Equity
(of US $ 1 Lac each) Shares upon conversion
(InCrore)
FCCBs allotted 3,000 22.23
Conversion till
March 31,2010 717 5.31
Balance as on
31.03.10/29.04.10 2.283 16.92
c) Employees Stock Option Scheme
The shareholders have authorized issue of shares, not exceeding 5% of
issued equity capital of the Company, to its employees in the form of
stock options. As on March 31, 2010, a total of 173 Employees (Previous
Year 76) hold 11,968.904 Stock Options (Previous Year -16,179,644) as
under:
Particulars No.
of Options
No. of outstanding Options as on
April 01, 2009 16,179,644
Add: No. of
Options issued during the year 6,507,850
Less: No. of Options converted during the year 10,686,690
Less: No. of
Options lapsed during the year 31,900
Outstanding Options as on March 31, 2010
11,968,904
As required by SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, the particulars of Employee Stock
Option Scheme 2005 are set out in the Annexure to Directors Report.
7. Liquidity
The Company has secured financial closure for the total project cost of
Rs. 7,265 Crore.
The paid-up share capital of the Company as at March 31, 2010 was Rs.
957.35 Crore. With a view to strengthen the capital base of the Company
and also to improve on the Debt Equity Ratio, the Company in 2007 has
raised US $ 300 Million through Foreign Currency Convertible Bonds
(FCCB), of which FCCBs aggregating to US $ 71.70 Million have been
converted into Equity Shares of the Company. The Company has also
issued Convertible Warrants worth Rs. 1,054.60 Crore in 2007 on
preferential basis, out of which, on subscription by the
Warrantholders. 21.75 Crore Warrants amounting to Rs. 870 Crore have
been converted into Equity Shares of the Company. Accordingly, the
total Shareholders funds aggregate to Rs. 1,865.37 Crore.
Out of the long term funding commitments received from the domestic and
international lenders aggregating to Rs. 4,999 Crore, the Company has
drawn Rs. 2,826.82 Crore as at March 31, 2010.
The Company has Cash and Bank balance of Rs. 460.25 Crore as at March
31, 2010 after providing a sum of Rs. 1,815.72 Crores towards purchase
of Aircel Tower business.
8. Fixed Deposits
The Company has not invited or accepted any deposits during the year
under review from the public/shareholders.
9. Listing
The Equity Shares of the Company are listed at Bombay Stock Exchange
Limited (BSE) and National Stock Exchange of India Limited (NSE). The
Foreign Currency Convertible Bonds of the Company are listed at
Singapore Exchange Securities Trading Limited. Singapore.
10. Corporate Governance
Report on Corporate Governance along with the Certificate of the
Auditors, M/s. Chaturvedi & Shah. Chartered Accountants and M/s.
Yeolekar & Associates, Chartered Accountants confirming compliance of
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement with the stock exchanges is given elsewhere in this
Annual Report.
11. Management Discussion and Analysis Report
Management Discussion and Analysis on the Companys performance,
industry trends and other material changes with respect to the Company,
as required under the Listing Agreements with the Stock Exchanges is
given else where in this Annual Report.
12. Particulars of Employees
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the names and other particulars of employees are required
to be set out in an Annexure to this Report.
However, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956,
the Report and Accounts are being sent to the shareholders excluding
the aforesaid Annexure. Any Shareholder interested in obtaining a copy
of the same may write to the Company Secretary at the Registered
Office. None of the employees listed in the said Annexure are related
to any Director of the Company.
13. Particulars regarding Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo:
The Company has focused on reduction of energy consumption at telecom
tower sites through several initiatives for deployment of energy
efficient solutions. The details relating to conservation of energy
are given in the Annexure to this Report.
During the year under review, the Company has actively participated in
EOI (Expression of Interest) invited by Universal Service Obligation
Fund (USOF), Department of Telecommunications, Government of India for
Renewable Energy Solutions Pilot Project. The Company has successfully
received confirmation from USOF for deployment of Solar Solution Site
in UP-E Circle and Solar+Wind Hybrid Solution in Andhra Pradesh.
The Company is engaged in the business of providing Passive
Infrastructure Services and has no manufacturing activities. Its
projects are under various stages of implementation. During the year
under review, the Company has not absorbed, adopted any technology and
innovated any new technology. Hence, the details relating to Technology
Absorption are not furnished. During the year under review, the Company
has carried out R&D activity for reduction of energy consumption at
Telecom Tower Sites. The details relating to R&D are given in the
Annexure to this Report.
The particulars regarding Foreign Exchange Expenditures and Earnings
appear as item numbers 27 and 28 respectively, in Schedule, P to the
Balance Sheet as at March 31, 2010 forming part of this Annual Report.
14. Subsidiary
During the year under review, the wholly owned subsidiary of the
Company M/s. Towers Worldwide Limited ceased to be subsidiary.
15. Directors
In accordance with the Companies Act, 1956 and the Articles of
Association of the Company, Mr. Balasubramanian N., Dr. Anand Patkarand
Mr. Vivek Kulkarni retire by rotation at the ensuing Annual General
Meeting. Accordingly, Mr. Balasubramanian N., Dr. Anand Patkar and Mr.
Vivek Kulkarni, based on their consent and eligibility are proposed for
re-appointment. Their re-appointment forms part of the notice of the
ensuing Annual General Meeting.
On reaching the prescribed age for retirement, Mr. Deepak Vaidya ceased
to be a Director with effect from January 14, 2010.
The Board places on record its appreciation of the contribution of Mr.
Deepak Vaidya during his tenure as the Director of the Company.
The Board of Directors regret to inform the sad demise of Mr. Prakash
Samant on 2nd January 2010 and place on record its appreciation and
deep gratitude for his valuable contribution during his tenure as the
Director of the Company.
While Mr. Vinod Agarwala and Mr. Vijay Vij were appointed as Additional
Directors on July 20, 2009, Mr. Satya Pal Talwar was appointed as
Additional Director on August 13, 2009, pursuant to the provisions of
Section 260 of the Companies Act, 1956 and as such they hold office up
to the date of the ensuing Annual General Meeting. In terms of Section
257 of the Companies Act, 1956 they are proposed to be appointed in the
ensuing Annual General Meeting.
The background of the Directors proposed for reappointment is given
under the Corporate Governance Section of this Annual Report.
None of the Directors are disqualified from being appointed as
Directors as specified in terms of Section 274 (1) (g) of the Companies
Act, 1956.
16. Auditors & Auditors Report
M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Yeolekar &
Associates, Chartered Accountants, were appointed as Auditors of the
Company at the 6lh Annual General Meeting of the Company to hold office
from the conclusion of the 6"1 Annual General Meeting until the
conclusion of the 7th Annual General Meeting of the Company.
The Company has received the necessary certificates from the Joint
Auditors respectively, pursuant to Section 224(1 B) of the Companies
Act, 1956 and other applicable regulations regarding their eligibility
for re-appointment.
Accordingly, the approval of the shareholders to the appointment of
M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Yeolekar &
Associates, Chartered Accountants as Joint Auditors of the Company is
being sought at the ensuing Annual General Meeting.
The Board has duly reviewed the Statutory Auditors Report on the
Accounts for the year ended March, 31, 2010, and wish to report that
the same does not have any reservation, qualification or adverse
remarks.
17. Directors Responsibility Statement
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956 and based on the information provided by the management, your
Directors state that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31, 2010 and of the loss of the Company for the
year ended on that date;
c) proper and sufficient care has been taken 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 frauds and other irregularities:
d) the annual accounts of the Company have been prepared on a going
concern basis.
18. Special Business
As regards the items of the Notice of the Annual General Meeting
relating to special business, the resolutions incorporated in the
Notice and the Explanatory Statement relating thereto, fully indicate
the reasons for seeking the approval of members to those proposals.
Your attention is drawn to these items and Explanatory Statement
annexed to the Notice.
19. General
Notes forming part of the Accounts are self-explanatory.
20. Acknowledgements
Your Directors wish to place on record their appreciation and
acknowledge with gratitude the support and co-operation extended by the
clients, vendors, bankers, financial institutions, investors, media and
both the Cemtral and State Governments and their Agencies and look
forward to their continued support. Your Directors also thank the
employees at all levels, who through their dedication, co-operation and
support, have enabled the Company to achieve sustained growth.
For and on behalf of the Board of Directors
Mumbai Manoj G. Tirodkar
April 29, 2010 Chairman
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