Mar 31, 2018
1. CORPORATE INFORMATION
The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act, applicable in India. Its shares are listed on Bombay Stock Exchange and National Stock Exchange of India. The registered office of the Company is located at GTL Limited, Global Vision, Electronic Sadan II, MIDC, TTC Industrial Area, Mahape, Navi Mumbai.
The Company engaged in providing network services to telecom operators, OEMâs and tower companies.
The financial statements were authorised for issue in accordance with a resolution passed in the meeting of the Board of directors held on May 03, 2018.
2.1 Deemed cost of leasehold building includes subscription towards share capital of co-operative societies amounting to Rs.2,750/- (Previous Year Rs.2,750/-)
2.2 For lien and charge on the above assets refer note no 23.2
2.3 In accordance with the Indian Accounting Standard (Ind AS 36) on âImpairment of Assetsâ the Management carried out an exercise of identifying assets that may have been impaired and on the basis of this review carried out by the Management, there was no impairment loss on Property, plant and equipment during the year ended March 31, 2018 and March 31, 2017
2.2 For lien and charge on the above assets refer note no 23.2
Estimation of Fair Value
2.3.1 The companyâs investment properties consist of land parcels in the state of Gujarat and Maharashtra
2.3.2 The company obtains independent valuations for its investment properties at least annually. These valuations are performed by independent valuers who are specialists in valuing these types of investment properties. The valuation methodology is based on the prevailing rate of sale of land in said locality with the same specification and amenities. This valuation methodology is categorised under level 2 of fair value hierarchy.
3.1 The Company has measured all its investments at fair value and tested these investment for expected credit loss and differences have been accounted through Profit and Loss Account.
3.2 The Current financial year saw unprecedented consolidation in telecom industry with five operators ceasing to exist either on account of mergers or outright shut down of operations. One of the groupâs major customerâs Aircel group filed for voluntary liquidation on account of significant headwinds within the telecom sector. This has substantially impacted the projected cash flow of the Companyâs associate GTL Infrastructure Limited (GIL) and accordingly the Company has recognized impairment provision of Rs.1,784.55 Crore in respect of its investment in GIL. Accordingly, these provisions are shown under âExceptional itemsâ
3.3 During the current financial year Chennai Network Infrastructure Limited (CNIL) merged with GTL infrastructure Limited (GIL) accordingly, investment in CNIL is added to the investment in GIL.
4.1 The Current financial year saw unprecedented consolidation in telecom industry with five operators ceasing to exist either on account of mergers or outright shut down of operations. One of the groupâs major customerâs Aircel group filed for voluntary liquidation on account of significant headwinds within the telecom sector. This has impacted realisation of advances since Aircel is not settling vendor dues. The Company performed an Impairment test based on current expectation of the impact of the Bankruptcy on projected cash flows of the Company related to Aircel projects. As a result an impairment of Rs.727.79 Crore has been taken. Accordingly, these provisions are shown under âExceptional itemsâ
5.1 The Company has sought the balance confirmations from the customers and has received such confirmations from some customers. In respect of remaining customers, balances are subject to confirmation and appropriate adjustment, if necessary, will be considered in the year of reconciliation.
5.2 âThe recent headwinds faced by telecom operators and single largest customer of the company has filed for insolvency has material adverse impact on the Company. This has resulted in difficulty in making recovery of trade receivable. Considering this aspect, as prudent practice the Company has impaired receivables of Rs.85.21 Crore based on Expected Credit Loss (ECL).
6.1 I n accordance with the negotiated settlement in-principally approved by the lenders, the Company had obtained necessary consent of the Shareholders for divestment in subsidiaries. During the year the Company has executed Share Purchase agreement for divestment in its subsidiaries. The sale is subject to final approval of lenders of the Company and its subsidiaries and other necessary regulatory approvals. Pending completion of transactions, the said Non Current investment in the subsidiaries is treated as âAssets Held for Sale â in terms of Ind AS 105.
6.2 During the financial year 2014-15 Distribution Franchise (DF) agreement between the Company and MSEDCL got terminated. With regards to Distribution Franchise activity The reconciliation and settlement of several claims of the Company and MSEDCL are under process. The amount payable of Rs.210.76 Crore to MSEDCL is adjustable against receivable of Rs.254.59 Crore from them and accordingly has been presented net. The Company has tested the amount receivable from MSEDCL for expected credit loss and accordingly Rs.43.83 crore is provided for during Previous financial year 2016-17
7.1 Terms/ rights attached to equity shares
The Company has only one class of equity shares having a face value of Rs.10/- per share. Each holder of equity share is entitled to one vote on show of hands and in case of poll, one vote per equity share. A member shall not have any right to vote whilst any call or other sum shall be due and payable to the Company in respect of any of the equity shares of such member. All equity shares of the Company rank pari-passu in all respects including the right to dividend.
In the event of winding-up of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, if any, after distribution of all preferential amounts in proportion to the number of shares held at the time of commencement of winding-up.
The equity shareholders have all other rights as available to equity shareholders as per the provisions of Companies Act, 2013 , read together with Memorandum and Articles of Association of the Company.
7.2 Terms, Rights, Preferences and restrictions attached to 0.01% - Non Participating Optionally Convertible Cumulative Preference Shares (OCPS):
The Company has only one class of preference shares, having face value of Rs.10/- per share allotted to GTL Infrastructure Limited (GIL), a Companyâs associate. In terms of the issue, GIL had right to convert OCPS into equity shares from the expiry of 6 months from the date of allotment till 18 months of the date of allotment. However, GIL has opted for nonconversion of OCPS into equity shares.
The OCPS carry a dividend of 0.01 % per annum, payable on a cumulative basis on the date of conversion / redemption as the case may be. Any declaration and payment of dividend shall at all times be subject to the availability of Profits and the terms of the restructuring of the debts under the Corporate Debt Restructure (CDR) Mechanism, unless otherwise agreed by the CDR Lenders. Further, in the event of inability of the Company to declare / pay dividend due to nonavailability of Profits / pursuant to the terms of restructuring, the dividend may be waived by GIL.
After the expiry of a period of 6 months from the Allotment Date, the OCPS may at the Option of the Company be redeemed at any time prior to the expiry of 20 years from the date of the allotment, in part or in full, after providing a prior written notice of 30 days to GIL. As agreed by the OCPS holder, the original term providing Yield to Maturity of 8% by way of redemption premium has been repealed by the Board.
Other than as permitted under applicable laws, GIL will not have a right to vote at the Companyâs General Meetings. CNIL has also agreed to waive the right to vote in the event it waives the right to receive dividend.
In the event of winding-up of the Company, the OCPS holder/s will be entitled to receive in proportion to the number of shares held at the time of commencement of winding-up, any of the remaining assets of the Company, if any, after distribution to all secured creditors and their right to receive monies out of the remaining assets of the Company shall be reckoned pari-passu with other unsecured creditors, however, in priority to the equity shareholders. The OCPS holder/s shall have such rights as per the provisions of Companies Act, 2013, read together with Memorandum of Association of the Company.
The OCPS holder/s shall have all other rights as avaialble as per the provisions of Companies Act, 2013, read together with Memorandum and Articles of Association of the Company.
8.1 Liability component of compound financial instrument i.e 0.01% Non-Participating Optionally Convertible Cumulative Preference Shares (OCPS) is determined considering effective interest rate.
8.2 Refer note 19.2 for Terms, Rights, Preferences, redemption details and restrictions attached to 0.01% - Non Participating Optionally Convertible Cumulative Preference Shares (OCPS)
9.1 The Company has sought the balance confirmations from the trade payables and has received such confirmations from some purchasers. In respect of remaining purchaser, balances are subject to confirmation and appropriate adjustment, if necessary, will be considered in the year of reconciliation.
9.2 Disclosure in accordance with Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The information required to be disclosed has been furnished to the extent parties have been identified as Micro, Small and Medium Enterprises on the basis of information available in this regard with the Company.
10.1 In view of non-adherance to the agreed CDR terms for repayment of principal loan, interest and other conditions, the entire liability towards Consortium Lenders is presented under current financial liability on implementation of Ind AS. Companyâs proposal for negotiated settlement of debts was agreed in principle by all sets of lenders viz. Consortium Lenders, NCD and ECB Lenders.
10.2 Nature of security
I) Security created in favor of CDR Lenders:
a) A first charge and mortgage on all immovable properties, present and future;
b) A first charge by way of hypothecation over all movable assets, present and future;
c) A first charge on the Trust and Retention Account and other reserves and any other bank accounts wherever maintained, present & future;
d) A first charge, by way of assignment or creation of charge, over:
i. all the right, title, interest, benefits, claims and demands whatsoever in the Project Documents duly acknowledged and consented to by the relevant counter-parties to such Project Documents, all as amended, varied or supplemented from time to time;
ii. all the rights, title, interest, benefits, claims and demands, whatsoever, in the Clearances;
iii. all the right title, interest, benefits, claims and demands, whatsoever, in any letter of credit, guarantee, performance bond provided by any party to the Project Documents;
iv. all the rights, title, interest, benefits, claims and demands, whatsoever, in Insurance Contracts / proceeds under Insurance Contracts;
e) Pledge of all shares held in the Company by one of the Promoters of the Company namely Mr. Manoj G. Tirodkar;
f) Pledge of all investments of the Company, except investment in Global Rural Netco Ltd (GRNL) which will be pledged on fulfillment of financial covenant agreed with the lenders of GRNL;
g) Mr. Manoj G. Tirodkar, one of the promoters of the Company, has extended a personal guarantee. The guarantee is limited to an amount of Rs.394.28 Crore; and
h) Mr. Manoj G. Tirodkar and Global Holding Corporation Private Limited (GHC), promoters of the Company, have executed sponsor support agreement to meet any shortfall or expected shortfall in the cash flows towards the debt servicing obligations of the Company;
II) Security offered to CDR Lenderâs pending creation of charge
a) The Companyâs one of the promoters namely GHC along with its step down subsidiaries has to extend corporate guarantee; and
b) GHC has to pledge its holding in the Company that is currently pledged by GHC in favor of its lenders, as and when released, either in full or part.
III) Prior to the restructuring of the Companyâs debts under CDR Mechanism, the Company created security on certain specified tangible assets of the Company in favour of Andhra Bank, Punjab National Bank, Union Bank of India, Vijaya Bank, IDBI Bank Limited, State Bank of Hyderabad, Bank of Baroda, UCO Bank, Indian Overseas Bank, Indian Bank, Canara Bank and Dena Bank for their respective credit facilities other than term loans, aggregating Rs.1,572 Crore. In terms of CDR Documents inter-alia Master Restructuring Agreement, the earlier charges are not satisfied by the Company after creation of new security as stated in I above.
10.3 As stated in the previous years, the JLF in its meeting held on 4th December 2015 agreed to the One Time Settlement Proposal (OTS) and requested the lenders to give their individual approvals for monetization of the assets, business and investments for settling the dues of the lenders. Subsequently, the unprecedented consolidation in the telecom industry resulted in tenancy surrender by Reliance Infocom (R.Com), Telenor and Tata Teleservices and filing of voluntary insolvency by Aircel Group, all of which led to the business and valuation of the Company going down. RBI vide its letter dated 12th February 2018, also withdrew the CDR, SDR and other Schemes. On this background, the CDR lenders considered the revised proposal of the Company and asked the Company to improve the offer to acceptable level and submit the same for consideration of the consortium, in order to proceed with recovery measures. Accordingly the Company has submitted its further revised proposal to the lenders. In the meanwhile, while in the winding up petition filed by the NCD Holder, parties have resolved the matter to their mutual satisfaction and filed the consent terms before the Bombay High Court on 19th March 2018, based on which the Bombay High Court has disposed of the winding up petition, In the ECB matter some of the ECB lenders have filed recovery suit following the court order got by some other ECB lenders which is subjudice.
10.4 Details of Interest accrued and due on borrowings comprises of:
a) Overdue Interest of Rs.502.79 Crore relating to the period March 14 to March 17 on amounts due to holders of Rated Redeemable Unsecured Rupee Non-convertible Debentures;
b) Overdue Interest of Rs.164.79 Crore relating to the period for December 12,2011 to March 31,2017 on External Commercial Borrowings; the variation in the interest accrued amount as at March 18 is on account of exchange fluctuation
c) Overdue Interest of Rs.727.80 Crore relating to the period June 2014 to March 2017 on Secured Term Loan;
d) Overdue interest of Rs.22.64 Crore relating to the period June 2014 to March 2017on Secured Funded Interest Term Loan;
e) Overdue interest of Rs.23.00 Crore September 2014 to March 2017 on Cash Credit facility;
f) Overdue interest of Rs.20.27 Crore November 2014 to March 2017 on Dues towards BG Invocation.
11.1 The Company has not provided and recognized interest on its borrowing during the financial year based on the in principle approval given by the lenders in respect of negotiated settlement proposal. Had such interest been recognized the Finance Cost for the year ended would have been more by Rs.641.56 Cores.
11.1 Includes Rs. Nil Crore (March 31, 2017 Rs.43.83 Crore) towards receivable of distribution franchisee business.
12.1 The Current financial year saw unprecedented consolidation in telecom industry with five operators ceasing to exist either on account of mergers or outright shut down of operations. One of the groupâs major customerâs Aircel group filed for voluntary liquidation on account of significant headwinds within the telecom sector. This has impacted realisation of advances since Aircel is not settling vendor dues. The Company performed an Impairment test based on current expectation of the impact of the Bankruptcy on projected cash flows of the Company related to Aircel projects. As a result an impairment of Rs.727.79 Crore has been taken.
12.2 The Current financial year saw unprecedented consolidation in telecom industry with five operators ceasing to exist either on account of mergers or outright shut down of operations. One of the groupâs major customerâs Aircel group filed for voluntary liquidation on account of significant headwinds within the telecom sector. This has substantially impacted the projected cash flow of the Companyâs associate GTL Infrastructure Limited (GIL) and accordingly the Company has recognized impairment provision of Rs.1,784.55 Crore in respect of its investment in GIL.
13.1 There have been no other transactions involving Equity shares or potential Equity shares between the reporting date and the date of authorisation of these financial statements.
13.2 There were no potentially dilutive equity shares which would have been outstanding as at the year end
14. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Companyâs Standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Standalone financial statements:
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
The Management believes that the judgments and estimates used in preparation of financial statement are prudent and reasonable.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits.
Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 40 for further disclosures.
Allowances for credit loss on Trade Receivable , Advance to supplier and other receivable
The Provision for allowances for credit loss for Trade Receivable , Advance to supplier and other receivable are based on assumptions about the risk of defaults and expected credit loss. The Company uses judgment in making these assumption and selecting the inputs to the calculation of provision for allowance based on the past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Provisions for impairment loss on Investment
Provisions for impairment loss on Investment is based on evaluation of financial position of investee companies to meet their obligations for honouring their commitments towards the investment held by the Company.
The Company makes contribution towards provided fund and superannuation fund which are in nature of defined contribution post employee benefit plan. Under the plan, the Company is required to contribute a specified percentage of payroll cost to fund the benefits. amount recognised as an expense in the statement of Profit and Loss - included in note 30 - âContribution to provident and other fundsâ Rs.2.21 crore ( previous year Rs.2.04 Crore) is given in table above
b) Defined Benefit Plan
The employeeâs Gratuity Fund Scheme, which is defined benefit plan, is managed by Trust maintained with Life Insurance Corporation of India (LIC). The present value of obligation is determined based on actuarial valuation using Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in same manner as gratuity.
Based on accturial valuation obtained as at the Balance Sheet date the following table sets out the details of Defined Benefit obligation.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the Balance Sheet.
15. COMMITMENTS, CONTINGENCIES AND PROVISIONS
a. Leases
Operating lease commitments â Company as lessee
The Companyâs lease agreements are in respect of operating lease for office premises, guesthouses, warehouses, and vehicles. These lease arrangements are cancellable by either parties there to as per the terms and conditions of the agreements. The lease rental recognised in the Statement of Profit and Loss during the year under the heading âRentâ in âOther Expensesâ is Rs.3.19 Crore (Rs.3.57 Crore.).
The lease obligations due within next five-years are Rs.3.58 Crore. (Rs.4.19 Crore.). Future minimum rentals payable under non-cancellable operating leases as at 31 March are, as follows:
Future cash outflows in respect of v and vi matters are determinable only on receipt of judgments or decisions pending at various forum. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required in respect of above liability.
C.1 Claims against the Company not acknowledged as debts
As on March 31, 2018, there were 48 cases against the Company, pending in various Courts and other Dispute Redressal Forums.
i) In 8 out of 48 cases, the Company has been implicated as proforma defendant i.e. there are no monetary claims against the Company. In most of these cases, dispute concerns matters like loss of share certificate, title claim / ownership / transfer of the shares etc. The Companyâs implication in these matters is with a view to protect the interest of the lawful owners of the shares. Upon the final orders passed by the Court(s), the Company shall have to release the shares, which are presently under âstop transferâ, in this regard to the rightful claimants. There is no direct liability or adverse impact on the business of the Company on account of the said 8 cases.
ii) Out of the balance 40 cases, 21 cases are from its earlier power business, 9 cases are from telecom related businesses and 1 case is in respect of non-allotment / non-refund of money in its IPO, which are handled by the Companyâs advocates, who have the necessary expertise on the subject. It is found that in most of the cases the claims are unsubstantiated and therefore the Company is resisting and defending these claims. (In the aforesaid 21 case, 9 cases pertain to Labour Court matter wherein the employees filed for reinstatement on termination consequent to termination of Aurangabad Distribution Franchisee Agreement of the Company. These are being settled with affected employees). The contingent liability in respect of these 31 cases is Rs.1.34 Crore
There are 5 cases in which the Company has invoked arbitration proceedings against MSEDCL and the contingent liability towards counter claims of MSEDCL is Rs.147.76 Crore In 1 case, a bank has filed commercial suit against the Company in the Honâble Bombay High Court in respect of the Companyâs comfort letter issued in favour of one of its Wholly Owned Subsidiaries (WOS) towards WOSâs credit facilities. The contingent liability in respect of which is Rs.237.28 Crore.
iii) I n 2 cases of winding up filed against the Company, one by the NCD Lender and another by the lender of the Companyâs one of the associate company, both the matters were disposed off based on consent term(s) filed by both the parties. The contingent liability in respect of these 2 cases is Rs.206.60 Crore.
iv) In the balance 1 case, the Department of Telecom (DoT) has raised a frivolous demand of Rs.1,509.50 Crore based on Adjusted Gross Revenue for ISP license fee pertaining to the business carried out by the Company well before the year 2009 and the relevant ISP license was surrendered to DoT in 2009 for which DoT had issued a no-dues certificate in November 2010. The Company is contesting this demand in an appropriate forum.
The contingent liability in respect of 48 cases is Rs.2,102.47 Crore
v) Claim of Rs.179.00 Crore from Global Holding Corporation, an associate of the Company towards loss occurred to the associate on account of invocation by lender of share investment held by the associate in the Company which was offered as pledge for the credit facility availed by the Company.
vi) Apart from the above, in respect of ECB some of the Lenders have filed recovery suit, following the court order got by some other ECB lenders
16. 1. Related Parties
A Subsidiaries
a) International Global Tele Systems Ltd.
b) GTL International Ltd.
c) Ada Cellworks Wireless Engineering Pvt. Ltd.
B Fellow Subsidiaries (Subsidiaries of GTL International Ltd.)
a) GTL (Singapore) Pte Ltd.
b) GTL Overseas Middle East JLT
c) GTL Europe Limited.
d) GTL Nepal Limited.
e) IGTL Myanmar Limited
C Associates
a) GTL Infrastructure Limited
b) Global Rural Netco Pvt. Ltd.
c) Global Holding Corporation Private Limited D Key Managerial Personnel
a) Mr. Manoj Tirodkar, Chairman and Managing Director
b) Mr. Sunil S. Valavalkar - Whole Time Director
c) Mr. Vidyadhar Apte, Company Secretary
d) Mr. Milind Bapat, Chief Financial Officer
16.2.1 The Above amounts with respect to advances & debtors are before making allowances for credit loss.
16.2.2 Claim from Global Holding Corporation Pvt.Ltd. of Rs.179 Crore which is not acknowledged as debt is considered in â Contingent liabilityâ and hence not shown in the above Statement.
16.2.3 During the current financial year Chennai Network Infrastructure Limited (CNIL) merged with GTL infrastructure Limited (GIL) and hence current year figures are shown under GIL
16.2.4 Terms and conditions of transactions with related parties
The credit period towards sale to related parties are in line with other external customers. The outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided to or received from any related party with resepct to receivables or payables. For the year ended 31 March 2017, the Company has provided impairment loss against amount due from related parties and the impairment provision as at March 31, 2017 is Rs.333.90 Crore (31 March 2017: Rs.335.71 Crore). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
16.2.5 In view of being dormant, operations of step down subsidiary in Kenya, Tanzania, Indonesia, Bangladesh, Saudi Arabia and Philippines were discontinued / liquidated / under process of liquidation.
16.3.1 The sales to and purchases from related parties are made on terms equivalent to those that prevail for arm âs length transactions.
16.3.2 The amounts disclosed in the table related to key management personnel are the amounts recognised as an expense during the reporting period .
16.3.3 Provision for contribution to Gratuity fund and Leave encashment on retirement which are made based on actuarial valuation on an overall Company basis are not included in remuneration details of key managerial personnel
17.1 The management assessed that trade receivables cash and bank balances, loans, other financial assets, trade payables and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
17.2 The fair values of the Companyâs fixed interest-bearing borrowings and loans is determined by using DCF method using discount rate that reflects the issuerâs borrowing rate as at the end of the reporting period. The own non- performance risk as at 31 March 2018 was assessed to be insignificant as borrowing are fixed interest bearings
18. FAIR VALUE HIERARCHY
The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities.
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities comprise of loans and borrowings, trade and other payables and financial guarantee contracts. The main purpose of these financial liabilities is to manage finance for the Companyâs operations. The Companyâs principal financial assets includes investments, trade and other receivables, supplier advance and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Companyâs senior management is supported by Risk Management Group (RMG), Investment committee and Resource committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Group, Investment committee and Resource committee provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Audit Committe of the Board and the Board of Directors review and monitor risk management and mitigation plans. The financial risks are summarised below.
19.1 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans, borrowings and deposits. As the revenues from the Companyâs network service business is dependent on the sustainability of telecom sector, Company believes that Macro - economic factor, including the growth of Indian economy as well as political and economic environment, have a significant direct impact on the Companyâs business, results of operations and financial position.
19.2 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flow of financial instrument will fluctuate because of changes in market interest rates. The significant part of financial instrument which can be considered in case of the Company as subject to interest rate risk are borrowings . However the Companyâs borrowings carry fixed interest rate and therefore the Company is not exposed to significant interest rate risk.
19.3 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the External Commercial Borrowings and except for the the same , the Company is not exposed to foreign currency risk as the Companyâs business operations do not involve any significant transactions in foreign currency.
Foreign currency sensitivity
The impact on the Companyâs loss before tax on account of variation in exchange rates can be on account of fluctuation in USD as the Companyâs External Commercial borrowings liability is USD denominated liability .The following table demonstrates the sensitivity to a reasonably possible change in USD exchange rates, with all other variables held constant. 1% increase or decrease in USD rate will have the following impact on loss before tax :
19.4 Equity price risk
The Companyâs equity investment in one of its associates is listed and all other investments are in unlisted entities. All the investments of the Company are trade and strategic investments and therefore are not considered to be exposed or susceptible to market risk.
19.5 Commodity price risk
The Company is engaged in business of providing âNetwork Servicesâ comprising mainly of Operation maintenance and energy management (OME) and other network services. In OME the major component of cost are electricity and Fuel. The variation in the price of electricity and fuel is index based i.e. additionally charged to customer. With regards to other services the contracts are cost plus margin and therefore commodity price risk is mitigated
19.6 Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables), deposits with banks and other financial assets.
Trade receivables
Customer credit risk is managed subject to the Companyâs established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on individual credit limits and defined in accordance with customer assessment. Outstanding customer receivables are regularly monitored.
The Company follows a âsimplified approachâ (i.e. based on lifetime ECL) for recognition of impairment loss allowance on Trade receivables. For the purpose of measuring lifetime ECL allowance for trade receivables, the Company estimates irrecoverable amounts based on the ageing of the receivable balances . Individual trade receivables are written off when management deems them not to be collectible. The Company does not hold any collateral as security against these trade receivables. The contractually agreed terms effectively manage the concentration risk.
Financial Assets and bank deposits
Credit risk from balances with banks is managed by the Companyâs treasury department in accordance with the Companyâs policy. The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which its balances and deposits are maintained. Generally, the balances are maintained with the institutions with which the Company has also availed borrowings. The Company does not maintain significant cash and deposit balances other than those required for its day to day operations.
The Companyâs maximum exposure to credit risk for the components of the balance sheet at 31 March 2018 and 31 March 2017 is the carrying amounts as appearing in Note 8,12,13,14,15,16 and 19.
19.7 Liquidity risk
Liquidity risk is that the Company will not be able to settle or meet its obligation on time or at reasonable price. Companyâs principal sources of liquidity are cash flows generated from its operations.
The Company continues to take various measures such as cost optimisation, improving operating efficiency to increase Companyâs operating results and cash flows. Further the Company has made a proposal for a negotiated settlement of debts which has been agreed in principle by all set of lenders. The management is of the view that upon the implementation of the Companyâs negotiated settlement proposal, the Company would be in a position to meet its liabilities and continue its operations.
The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments.
20. CAPITAL MANAGEMENT
For the purpose of the Companyâs capital management, capital includes issued equity capital, convertible preference shares, Securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to safeguard continuity of the business operations.
In view of slow down in telecom industry in last few years, the Companyâs business received a set back which resulted in incurrence of huge losses and adversely impacting the capital of the Company. The Company therefore for effective capital management has submitted a proposal for negotiated settlement of debts and the same has been agreed in principle by all set lenders. On implementation of Companyâs proposal for negotiated settlement, there will be substantial improvement in capital structure of the Company.
20.1 The Company has a Deferred Tax Asset of Rs.438.97 Crore as on March 31, 2018 (Rs.789.55 Crore as on March 31, 2017). The same has not been recognised in the financial statement in the absence of probable taxable profits against which the same can be utilised.
20.2 Amount and expiry date of unused tax losses which are not considered in deferred tax assets disclosed above
From last few years the Company is incurring losses and doesnât expect sufficient future taxable income in the near future against which the unused business losses can be utilised and therefore the Company has not considered the same for working of unrecognised DTA disclosed above .
21. GOING CONCERN
In last few years, the Company has incurred cash losses, resulting in erosion of its entire net worth. The Companyâs current liabilities are higher than its current assets. While winding up petitions have been disposed of based on consent terms filed.
The management is of a view that upon acceptance and implementation of the Companyâs revised negotiated settlement proposal, it would be in a position to meet its liabilities and continue its operations. In view of the above, the Company continues to prepare above results on Going Concern basis.
22. DISCLOSURE OF INFORMATION AS REQUIRED BY REGULATION 34(3) OF LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS
a) Details of Loans or Advances in the nature of loans given to wholly owned Subsidiaries and step-down Subsidiaries.
Note : 1) Increase in outstanding amount and maximum balance during the respective years is on account of exchange variation
2) The Company has made full provision for impairment against the said advances during the FY 2015-2016.
b) None of the Subsidiaries to whom advances are given per se, have investment in the shares of the Company.
23. DETAILS OF ROUNDED OFF AMOUNTS
The financial statements are presented in Rs. in Crore. Those items which are required to be disclosed and which were not presented in the financial statement due to rounding off to the nearest Rs. in Crore are as follows
24. The previous year figures, wherever necessary, have been regrouped/rearranged/recast to make them comparable with those of the current year.
25. Figures in brackets relate to the previous year unless otherwise stated.
Mar 31, 2015
(i) The above Cash Flow Statement has been prepared under the 'Indirect
Method' as set out in Accounting Standard - 3 'Cash Flow Statement.
(ii) Figures in brackets indicate outflows.
(iii) Cash and cash equivalents at the end of the year include Rs. 0.59
Cr. (Previous Year Rs. 0.70 Cr.) towards amount payable for unclaimed
dividend.
(iv) Following transactions since not involving cash flows are not
considered in preparation of above Statement :
a) Increase in paid up Equity Share capital of Rs. Nil (PY Rs. 0.34 Cr.) &
in Securities Premium Reserve of Rs. Nil (PY Rs. 0.58 Cr.) which is on
account of conversion of Compulsory Convertible Debentures (CCDs)
alloted to the lenders under CDR Package.
b) Return of Inventory of Rs. Nil (PY Rs. 291.76 Cr.) resulting in increase
in advances to suppliers classified under Long Term Loans and Advances.
c) Increase in non current investment on account of:
i) Restoration of Company's investment of Rs. Nil (PY Rs. 300.32 Cr.) in
Equity Shares of GTL Infrastructure Limited which were earlier invoked
by IFCI, a lender of the Company's Associate, Chennai Network
Infrastructure Limited (CNIL).
ii) Investment accepted of Rs. Nil (PY Rs. 200.00 Cr.) in Preference Shares
and of Rs. Nil (PY Rs. 150.00 Cr.) in Fully Convertible Debentures of
Global Rural Netco Limited from parties against receivables for a)
advances paid towards supplies and b) sale of goods.
iii) Acceptance of Investment of Rs. Nil (PY Rs. 241.48 Cr.) in Preference
Shares of European Projects and Aviation Limited from parties against
receivables for a) advances paid towards supplies and b) sale of goods.
d) Increase in borrowing of Rs. 249.16 Cr. (PY Nil) on account of
conversion of part of the accrued interest liability relating to NCD.
(v) Previous year's figures have been regrouped/rearranged/recast
wherever necessary to make them comparable with those of current year.
2.1.3 Terms, Rights, Preferences and restrictions attached to equity
shares:
The Company has only one class of equity shares having a face value of
Rs. 10/- per share. Each holder of equity share is entitled to one vote
on show of hands and in case of poll, one vote per equity share. A
member shall not have any right to vote whilst any call or other sum
shall be due and payable to the Company in respect of any of the equity
shares of such member. All equity shares of the Company rank pari-passu
in all respects including the right to dividend.
In the event of winding-up of the Company, the holders of equity shares
will be entitled to receive any of the remaining assets of the Company,
if any, after distribution of all preferential amounts in proportion to
the number of shares held at the time of commencement of winding-up.
The equity shareholders have all other rights as available to equity
shareholders as per the provisions of Companies Act, 2013, read
together with Memorandum of Association of the Company.
2.1.4 Terms, Rights, Preferences and restrictions attached to 0.01%
Non-Participating Optionally Convertible Cumulative Preference Shares
(OCPS):
The Company has only one class of preference shares, having face value
of Rs. 10/- per share allotted to Chennai Network Infrastructure Limited
(CNIL). In terms of the issue, CNIL had right to convert OCPS into
equity shares from the expiry of 6 months from the date of allotment
till 18 months of the date of allotment. However, CNIL has opted for
non- conversion of OCPS into equity shares.
The OCPS carry a dividend of 0.01 % per annum, payable on a cumulative
basis on the date of conversion / redemption as the case may be. Any
declaration and payment of dividend shall at all times be subject to
the availability of Profits and the terms of the restructuring of the
debts under the Corporate Debt Restructure (CDR) Mechanism, unless
otherwise agreed by the CDR Lenders. Further, in the event of inability
of the Company to declare / pay dividend due to non-availability of
Profits / pursuant to the terms of restructuring, the dividend may be
waived by CNIL.
After the expiry of a period of 6 months from the Allotment Date, the
OCPS may at the Option of the Company be redeemed at any time prior to
the expiry of 20 years from the date of the allotment, in part or in
full, after providing a prior written notice of 30 days to CNIL. As
agreed by the OCPS holder, the original term providing Yield to
Maturity of 8% by way of redemption premium has been repealed by the
Board.
Other than as permitted under applicable laws, CNIL will not have a
right to vote at the Company's General Meetings. CNIL has also agreed
to waive the right to vote in the event it waives the right to receive
dividend.
In the event of winding-up of the Company, the OCPS holder/s will be
entitled to receive in proportion to the number of shares held at the
time of commencement of winding-up, any of the remaining assets of the
Company, if any, after distribution to all secured creditors and their
right to receive monies out of the remaining assets of the Company
shall be reckoned pari-passuwith other unsecured creditors, however, in
priority to the equity shareholders.
The OCPS holder/s shall have such rights as per the provisions of
Companies Act, 2013, read together with Memorandum of Association of
the Company.
2.3.1 Nature of security:
I) Security created in favor of CDR Lenders:
a) A first charge and mortgage on all immovable properties, present and
future;
b) A first charge by way of hypothecation over all movable assets,
present and future;
c) A first charge on the Trust and Retention Account and other reserves
and any other bank accounts wherever maintained, present & future;
d) A first charge, by way of assignment or creation of charge, over:
i. all the right, title, interest, benefits, claims and demands,
whatsoever, in the Project Documents duly acknowledged and consented to
by the relevant counter-parties to such Project Documents, all as
amended, varied or supplemented from time to time;
ii. all the rights, title, interest, benefits, claims and demands,
whatsoever, in the Clearances;
iii. all the right title, interest, benefits, claims and demands,
whatsoever, in any letter of credit, guarantee, performance bond
provided by any party to the Project Documents;
iv. all the rights, title, interest, benefits, claims and demands,
whatsoever, in Insurance Contracts / proceeds under Insurance
Contracts;
e) Pledge of all shares held in the Company by one of the Promoters of
the Company namely Mr. Manoj G. Tirodkar;
f) Pledge of all investments of the Company, except investment in
Global Rural Netco Ltd. (GRNL) which will be pledged on fulfillment of
financial covenant agreed with the lenders of GRNL;
g) Mr. Manoj G. Tirodkar, one of the promoters of the Company, has
extended a personal guarantee. The guarantee is limited to an amount of
Rs. 394.28 Cr.; and
h) Mr. Manoj G. Tirodkar and Global Holding Corporation Private
Limited; promoters of the Company, have executed sponsor support
agreement to meet any shortfall or expected shortfall in the cash flows
towards the debt servicing obligations of the Company.
II) Security offered to CDR Lender's pending creation of charge
a) The Company's one of the promoters namely GHC along with its step
down subsidiaries has to extend corporate guarantee; and
b) GHC has to pledge its holding in the Company that is currently
pledged by GHC in favor of its lenders, as and when released, either in
full or part.
III) Prior to the restructuring of the Company's debts under CDR
Mechanism, the Company created security on certain specified tangible
assets of the Company in favour of Andhra Bank, Punjab National Bank,
Union Bank of India, Vijaya Bank, IDBI Bank Limited, State Bank of
Hyderabad, Bank of Baroda, UCO Bank, Indian Overseas Bank, Indian Bank,
Canara Bank and Dena Bank for their respective credit facilities other
than term loans, aggregating Rs. 1,572 Cr. In terms of CDR Documents
inter- alia Master Restructuring Agreement, the earlier charges are not
satisfied by the Company after creation of new security as stated in I
above.
2.3.2.1 In view of the non-payment of loan installments and interest
accrued thereon, CDR lenders have classified facilities provided to the
Company as Non - Performing Assets (NPA). Considering the continuation
of CDR package, the maturity profile presented above is as per approved
CDR package.
2.7.1 The Balances of Trade Payables are subject to reconciliation and
confirmation. Appropriate adjustment, if necessary, will be considered
in the year of reconciliation.
2.7.2 Disclosure in accordance with Micro, Small and Medium Enterprises
Development (MSmEd) Act, 2006.
The information required to be disclosed has been furnished to the
extent parties have been identified as Micro, Small and Medium
Enterprises on the basis of information available in this regard with
the Company.
* Include Rs. 2.16 Cr. (Rs. Nil) received from related party. ** Includes
due to employees towards insurance claims received Rs. 1.05 Cr. (Rs. 1.90
Cr.).
2.8.1 In the financial statements of the previous financial year, the
following was disclosed in relation to the Rated Redeemable Unsecured
Rupee Non- Convertible Debentures issued by the Company:
"The holder of Rated Redeemable Unsecured Rupee Non-Convertible
Debentures have given their consent to be part of the Corporate Debt
Restructuring Scheme. Accordingly, the Company and the holders of Rated
Redeemable Unsecured Rupee Non-Convertible Debentures have entered into
amendment to the original sanction letter on March 22, 2014 to
restructure NCD debt, pending fulfillment of conditions mentioned
therein, the effect of the same is not given in the books".
The time period for complying with the various conditions was
originally May 31,2014 and the same was subsequently extended to July
31,2014.
While the Company had taken steps towards fulfillment of its
obligations, including payment of a sum of Rs. 123.80 Cr. in respect of
interest, due
to certain inter-creditor issues, and pendency of consent by CDR
Lenders, the restructuring could not be implemented within the time
prescribed under definitive documentation entered into with the NCD
holders.
While the Company was in the process of obtaining consent of the CDR
lenders on bilateral restructuring documents, the Company received a
notice on October 27, 2014 from the NCD holder exercising its rights
for acceleration of the entire outstanding amount and in January 2015
the NCD holders filed winding up petition against the Company before
Hon'ble High Court of Bombay seeking urgent / interim reliefs such as
desisting from making any further payment to CDR lenders till ECB / NCD
interest / principal dues are paid, share the proceeds of TRA account
on pari-passu with CDR lenders and going forward to create security in
favour of NCD holder. The Company has taken appropriate legal steps in
these matters to defend / protect its interest. The CDR and ECB lenders
of the Company have also intervened. The Bombay High Court has asked
CDR lenders position on the NCD holder's treatment on pari-passu basis.
The matter is currently sub-judice.
Since all funds of the Company are subject matter of Trust and
Retention Account (TRA) which is controlled by CDR lenders, the
question of payment to NCD holder does not arise until and unless CDR
lenders decide on the issue as directed by the Hon'ble High Court of
Bombay.
The above circumstances have resulted in non payment of dues to the NCD
holders, which is beyond the control of the management and thus not in
the nature of default.
2.8.2 The Company availed an External Commercial Borrowing ("ECB")
facility of US$ 150 Mn. in September 2006. The facility was due for
repayment in September 2011. An amount of Rs. 694.86 Cr. (US$
111.21 Mn.) is presently owed to the ECB Lenders.
By way of background, it may be noted that on account of the various
factors that adversely affected the Telecom and Power industries (and
in particular, the Company), the Company was constrained to restructure
its debt under the Corporate Debt Restructuring ("CDR") scheme with
effect from July 2011. Pursuant to the terms of the said CDR package,
the Company and the ECB lenders also agreed to an indicative term sheet
for restructuring of ECB facilities. Even though RBI approval for the
restructuring was obtained, due to the contrarian
stands taken by different sets of lenders, the inter- creditor
agreement could not be executed.
Pending execution of the documentation (which was being deliberated
amongst the CDR lenders, the ECB lenders & the NCD holders), some of
the ECB lenders filed an Application for Summary Judgment before the
High Court of Justice, Queen's Bench Division, Commercial Court, London
("London High Court"). The London High Court, after hearing the
parties, by way of its Order dated February 20, 2015 dismissed the ECB
lenders' application for summary judgment on their claim of interest
post September 19, 2011 and directed the Company to pay outstanding
principal amount of US$ 21,666,667, equivalent to Rs. 135.37 Cr., to the
3 ECB lenders who approached the Court. The Court has also directed
payment of GBP 31,500 equivalent to Rs. 0.29 Cr. towards Claimants legal
costs by the Company.
2.8.3 Dues payable to Banks for Secured Long Term Loan of Rs. 419.55 Cr.
represent overdue amount relating to period June 14 to March 15
(Previous year Rs. 67.19 Cr. relating to period January 2014 to March
2014).
2.8.4 Interest accrued and due on borrowings comprises of:
a. Overdue Interest of Rs. 189.28 Cr. relating to the period March 2014
to March 2015 (previous year Rs. 415.50 Cr. relating to the period May
2011 to March 2014) on amounts due to holders of Rated Redeemable
Unsecured Rupee Non-convertible Debentures;
b. Overdue Interest of Rs. 93.75 Cr. relating to the period for December
12, 2011 to March 31, 2015 (previous year Rs. 86.67 Cr. relating to the
period December 12, 2011 to March 31,2014) on External Commercial
Borrowings.
c. Overdue Interest of Rs. 196.54 Cr. relating to the period June 2014 to
March 2015 (previous year Rs. 24.78 Cr. relating to the period February
14 to March 14) on Secured Term Loan
d. Overdue interest of Rs. 5.87 Cr. relating to the period June 2014 to
March 2015 (previous year Rs. 0.81 Cr. relating to the period February 14
to March 14) on Secured Funded Interest Term Loan
e. Overdue interest of Rs. 2.48 Cr. relating to the period September 2014
to March 2015 (previous year Rs. Nil) on Cash Credit facility.
The Company continues to account for the interest obligations on
various credit facilities as per the terms of CDR / the amended terms /
as per the original terms of sanction as applicable.
2.11.1 For basis of Valuation Refer Point No. 7 of Note No. 1
"Significant Accounting Policies"
2.11.2 Details of aggregate amount of quoted investments, market value
thereof, aggregate amount of unquoted investment and provision for
diminution:
(Rs. in Crores)
2.11.3 The Company holds investment in both quoted / unquoted equity
and preference shares. In respect of Company's investment in unquoted
shares, the book value of these investments, are ascertained from the
latest available audited / unaudited financials of the investee
companies and the book values of these investments (other than
subsidiaries ) is much lower than carrying cost of such investments.
Similarly, the market value of Company's quoted investment is much
below the carrying cost of such investment. The Company has made
provision of Rs. 45 Cr. for diminution in value of investment in Equity
Shares Global Rural Netco Ltd. As regards other investments, in the
opinion of the Management, having regard to the long-term nature of
these investments and future business plans of the investee companies
and other vested contractual rights available to the Company in respect
of certain specified investments, the diminution in the value of
investments does not require provision as such diminution is not other
than temporary.
2.12.1 The Company had paid advances for procurement of material to
execute large telecom projects such as BSNL Mega Tender, Aircel,
Expansion 2G Network and other telecom projects. In view of
discontinuation of these projects, the corresponding purchases have not
taken place and hence the advances paid for supplies for these
materials are not issued. The Company is negotiating with suppliers for
recovery of these advances and considering the status of negotiations,
as a prudent accounting practice, has made provision of Rs. 136.00 Cr.
(Previous Year Rs. Nil) towards these advances which is considered
adequate by the Management. The amount provided has been considered as
exceptional items.
2.12.2 DETAILS OF LOANS GIVEN, INVESTMENTS MADE AND GUARANTEE GIVEN
COVERED U/S 186 (4) OF THE COMPANIES ACT, 2013
Investments made are given under the respective heads. No Loans have
been given except loan to employee.
Details of Corporate Guarantees given by the Company in respect of
loans taken by the subsidiaries and Other Body Corporate.
2.13.1 For basis of Valuation Refer Point No. 7 of Note No. 1
"Significant Accounting Policies."
2.13.2 Details of aggregate amount of quoted investment, market value
thereof and aggregate amount of unquoted investment:
2.15.1 The Company has sought the balance confirmations from the
customers and has received such confirmations from some customers. In
respect of remaining customers, balances are subject to confirmation
and appropriate adjustment, if necessary, will be considered in the
year of reconciliation.
2.18.1 During the year the Distribution Franchisee (DF) agreement
between the Company and MSEDCL got terminated. The reconciliation and
settlement of several claims of the Company and MSEDCL are under
process. The assets relating to DF activity comprising of Plant and
Equipments, trade receivables, inventory and unbilled amount to
consumers on the date of termination of Distribution Franchisee
agreement will be adjusted against the amount due to MSEDCL. Pending
reconciliation of the claims and consequent adjustment thereof, these
amounts are considered as "Claim Receivable - DF".
2.23.1 Salaries and allowances include remuneration to whole time
director, appointed during the year, of Rs. 0.04 Cr. which is subject to
the approval of Central Government.
2.23.2 Disclosure of Employee Benefits as defined in Accounting
Standard 15 "Employee Benefit":
b) Defined Benefit Plan
The Employee's Gratuity Fund Scheme, which is defined benefit plan, is
managed by a Trust maintained with Life Insurance Corporation of India
(LIC). The present value of obligations is determined based on
actuarial valuation using Projected Unit Credit Method, which
recognizes each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for compensated absences is
recognised in same manner as gratuity.
a. The Company was in negotiation with its customer, Aircel group of
companies, for settlement of the disputes arising from cancellation /
termination of certain commitments resulting in loss of business
expansion opportunities for the Company and also its vendors. As a part
of the settlement, the Company received an amount of Rs. 345.00 Cr. from
Aircel group of companies which inter-alia includes the payment for
settlement towards the vendors various claims of Rs. 245.72 Cr. The net
amount of Rs. 99.28 Cr. is considered as Exceptional Item.
b. The Company has settled part of its ECB liability during the year.
The remission of liability against the said settlement of Rs. 42.49 Cr.
is considered as Exceptional Item.
c. The Company's associate Chennai Network Infrastructure Limited
acquired tower portfolio of Aircel in the year 2010 with the commitment
from Aircel to rollout 20,000 additional telecom sites. In turn, the
Company was expecting revenue worth Rs. 17,100 Cr. Unfortunately,
subsequently, Aircel cancelled / terminated its plan to expand 20,000
towers in July 2013. Consequently, the Company suffered huge losses
due to loss of business opportunities and which also resulted in
pile-up of inventory and suppliers advances. The Company is negotiating
with suppliers for recovery of advances given and as prudent accounting
practice has provided Rs. 136.00 Cr. doubtful of recovery and the said
provision is included in Exceptional Item.
d. During the year, an assessment of carrying values of long term
investments was carried out and amount of Rs. 45.00 Cr. has been provided
for towards its diminution and the same is considered as an Exceptional
Item.
2.27.1 Provision of Income tax includes tax liability of Rs. Nil (Rs. 25.57
Cr.) towards tax liability determined for Assessment Years 2005-06 to
2012-13 upon conclusion of proceedings before Appropriate Statutory
Authority.
2.28 DISCONTINUED OPERATIONS:
During the year, the DF agreement between the Company and MSEDCL got
terminated. The reconciliation and settlement of several claims of the
Company and MSEDCL are under process and appropriate effect in respect
of the same will be given in financials on conclusion of the said
process.
Pending reconciliation / settlement, as stated above, following are the
disclosures as required by Accounting Standard (AS) 24 - Discontinued
Operations
2.30 CONTINGENT LIABILITIES & COMMITMENTS:
2.30.1 Contingent Liabilities
(Rs in Crores)
Particulars As at As at
March 31st 2015 March 31st 2014
i Claims against the Company
not acknowledged as debts 321.43 231.56
ii Put option by IFCI on optionally
convertible loan of GRNL
(including interest accrued
thereon of Rs. 37.54 ) 137.54 Nil
iii Guarantees given by Banks on
behalf of the Company 64.61 211.86
iv Performance Guarantees issued to
banks on behalf of Subsidiaries /
Associates and Affiliates 5.00 5.00
v Corporate Guarantees given by the
Company for loans taken by subsidiaries
/ others 581.20 594.79
vi Disputed Sales tax liabilities for
which appeals are pending (Amount deposited
Rs. 0.91 Cr. (Rs. 0.57 Cr.) 11.31 10.28
vii Dividend on 0.01% Non- Participative
Optionally Convertible Cumulative
Preference Shares 0.16 0.10
Future cash outflows in respect of the above matters are determinable
only on receipt of judgments or decisions pending at various forum.
*As on March 31,2015, there were 52 cases against the Company, pending
in various Courts and other Dispute Redressal Forums.
In 12 out of 52 cases, the Company has been implicated as proforma
defendant i.e. there is no monetary claim against the Company. In most
of these cases dispute is concerning the matters like loss of share
certificate, title claim/ownership/transfer of the shares etc. The
Company's implication in these matters is with a view to protect the
interest of the lawful owners of the shares. Upon the final orders
passed by the Court(s), the Company shall have to release the shares,
which are presently under 'stop transfer', in this regard to the
rightful claimants. There is no direct liability or adverse impact on
the business of the Company on account of the said 12 cases.
Out of the balance 40 cases, 29 cases are from its earlier power
business and 10 cases are from telecom related businesses which are
handled by the Company's Advocates, who have the necessary expertise on
the subject. It is found that, in most of the cases the claims are
frivolous, highly exaggerated and without any basis and therefore the
Company is resisting and defending these claims. The contingent
liability of these 40 cases is Rs. 2.34 Cr.
NCD holder has filed winding up petition against the Company before
Hon'ble High Court of Bombay on January 22, 2015 inter-alia claiming
recovery of dues of Rs. 1,858.46 Cr. Contingent Liability of Rs. 98.09 Cr.
represents difference between amount claimed by NCD holders and amount
accounted by the Company in the books as on Spetember 30, 2014 of Rs.
1,760.37 Cr. based on the amended terms on March 22, 2014. Presently
the matter is sub-judice.
**Global Rural Netco Limited (GRNL) issued Fully convertible Debentures
of Rs. 250 Cr. to IFCI Limited. Subsequently, in terms of the settlement
between GRNL and IFCI on August 03, 2012, GRNL's loan of Rs. 250.00 Cr.
reduced to Optionally Convertible Loan (OCL) of Rs. 100.00 Cr. In case
the loan is not repaid / prepaid by GRNL or converted into equity
shares of GRNL on or before March 31,2015, IFCI has Put option and the
Company has to purchase the said loan from IFCI so as to provide IFCI a
YTM of 13.50% on loan amount from April 1,2012 to March 31,2015.
In April 2015, IFCI exercised its put option for OCL of Rs. 100 Cr. on
the Company. Since GRNL has requested IFCI to defer the repayment date
by further two years, which is under consideration of IFCI, the
contingent liability shown against Put Option of IFCI comprises of
unpaid principal OCL amount of Rs. 100 Cr. and unpaid interest thereon of
Rs. 37.54 Cr. as at March 31,2015 payable by GRNL.
2.30.2.2 Other Commitments
a) GTL Infrastructure Ltd (GIL) is an associate of the Company. The
Company's equity shareholding in GIL, as at Balance Sheet date is
14.87% (14.99%). As a promoter of GIL, the Company has furnished
following undertakings in respect of credit facilities of Rs. 2,004.45
Cr. (Rs. 2,004.45 Cr.) then sanctioned by various lending institutions
for GIL's second phase project of setting up of telecom sites.
i) The Company along with Global Holding Corporation Private Limited
(GHC), an associate, shall not reduce the shareholding in GIL below
26%. The Company shall retain the management control of GIL.
ii) The Company shall bring or arrange Equity/ Preference Capital as
envisaged by Phase II lenders.
iii) In case of cost overrun or shortfall, the Company shall bring and
/ or arrange additional capital within a period of 90 days from written
demand by Creditor's Agent either in form of equity or preference or
subordinated loans.
iv) The Company shall ensure that GIL will not abandon the Project
during the currency of Phase II loans.
v) The Company shall ensure that GIL is provided with requisite
technical, financial and managerial expertise to perform / discharge
its obligation under the project.
b) The Company's equity shareholding in European Projects and Aviation
Limited (EPAL) [Formerly known as Global Projects and Aviation Private
Limited (GPAL)] as at Balance Sheet date is 19% (19%). EPAL has been
sanctioned working capital line of credit of Rs. 500 Cr. (Rs. 500 Cr.). The
Company has furnished various undertakings for the above referred line
of credit which inter-alia provide as under:
i) The Company, along with its associate Global Holding Corporation
Private Limited (GHC), shall not reduce the shareholding in EPAL below
51%. The Company shall retain the management control of EPAL during the
tenor of credit facilities.
ii) The Company, along with its associate GHC, shall ensure conversion
of Redeemable Preference Shares issued by EPAL into equity shares or
compulsorily convertible instrument or shall ensure that the same shall
be redeemed out of infusion of fresh equity or compulsorily convertible
instrument by the Sponsors.
iii) The Company shall contribute towards the shortfall in the funds
required by EPAL to complete the projects as defined in terms and
conditions of credit facilities.
c) Chennai Network Infrastructure Limited (CNIL) is an associate of the
Company. The Company's equity shareholding as at March 31, 2015 is
25.79% (25.79%). As sponsors to CNIL, the Company along with its
associates Global Holding Corporation Private Limited and GTL
Infrastructure Limited have agreed to hold and maintain at least 26%
and to further contribute in the form of equity in future, if required
to meet needs of CNIL and to replenish Debt Service Account Letter of
Credit (DSRA LC), in the event DSRA LC is invoked by the lenders.
d) The CDR lenders of the Company have right to re-compense in respect
of relief extended and sacrifices made by them of Rs. 555.87 Cr. as per
Master Restructuring Agreement (MRA). Such right is exercisable by CDR
lenders based on criteria's/ conditions as detailed in MRA.
2.31 SEGMENT REPORTING
Reporting as per Accounting Standard 17 based on consolidated Financial
Statements is forming part Consolidated Financial Statement.
2.32 RELATED PARTY DISCLOSURES A Related Parties
I Subsidiaries
a) International Global Tele Systems Ltd.
b) GTL International Ltd.
c) Ada Cellworks Wireless Engineering Pvt. Ltd.
II Fellow Subsidiaries (Subsidiaries of GTL International Ltd.)
a. GTL (Singapore) Pte Ltd.
b. GTL Saudi Arabia Company Limited.
c. GTL Overseas Middle East FZ LLC.
d. GTL Overseas Middle East JLT
e. GTL International Nigeria Limited.
f. Pt. GTL Indonesia Limited.
g. GTL Europe Limited.
h. GTL Network Services Malaysia Sdh Bhd.
i. IGTL Network Services Philippines Inc.
j. GTL China Corporation Ltd.
k. GTL Taiwan Co. Ltd.
l. GTL USA Inc.
m. GTL International Lanka (Private) Limited.
n. GTL International Bangladesh Pvt. Ltd.
o. GTL Kenya Limited.
p. GTL Tanzania Limited.
q. GTL Canada Inc.
r. GTL Nepal Limited.
s. IGTL Myanmar Limited
III Associates
a. GTL Infrastructure Limited
b. Global Rural Netco Pvt. Ltd.
c. Chennai Network Infrastructure Ltd.
d. Global Holding Corporation Private Limited
IV Key Managerial Personnel
a. Mr. Manoj Tirodkar, Chairman and Managing Director
b. Mr. Arun Prabhukhanolkar - WTD (upto December 16, 2014)
c. Mr. Sunil S. Valavalkar - WTD (w.e.f December 16, 2014)
d. Mr. Vidyadhar Apte, Company Secretary
e. Mr. Milind Bapat, Chief Financial Officer
Mar 31, 2014
1.1 CONTINGENT LIABILITIES & COMMITMENTS:
1.1.1 Contingent Liabilities
Rs. in Crores
As at As at
Sr. Particulars March 31, March 31,
No.
2014 2013
i Claims against
the Company not
acknowledged as
debts* 189.56 278.54
ii Guarantees given by
Banks on behalf of the
Company 211.86 169.09
iii Performance
Guarantees issued
to banks on behalf
of Subsidiaries /
Associates and
Affiliates 5.00 5.00
iv Corporate Guarantees
given by the Company
for loans taken by
subsidiaries / others 594.79 580.77
v Disputed Sales tax
liabilities for which
appeals are pending
(Amount deposited
Rs. 0.57 Cr. (Rs. 3.12 Cr.) 10.28 9.08
vi Disputed Income tax
liabilities for which
appeals are pending
(Amount deposited
Rs. Nil (Rs. 0.40 Cr.) Nil 0.76
vii Premium on
Redemption of 0.01%
Non-Participative
Optionally Convertible
Cumulative Preference
Share (Refer Note No.
2.28.2) Nil 25.93
viii Dividend on 0.01%
Non-Participative
Optionally Convertible
Cumulative Preference
Share 0.10 0.03
No cash out flow is expected in near future in respect of above items
*includes claim of Rs. 179.00 Cr. (Rs. 179.00 Cr.) of Global Holding
Corporation Pvt. Ltd. an Associate.
2.1.1 During the year, as agreed by the Non-Participative Optionally
Convertible Cumulative Preference Share (OCPS) holder, the original
term providing Yield To Maturity of 8% by way of redemption premium has
been repealed. In view of this, OCPS holder is now not entitled for
redemption premium retrospectively from date of issue of OCPS.
2.2.2 Commitments
2.2.2.1 Estimated amount of contracts remaining to be executed
2.2.2.2 Other Commitments
a) GTL Infrastructure Ltd (GIL) is an associate of the Company. The
Company''s equity shareholding in GIL, as at Balance Sheet date is
14.99% (7.38%). As a promoter of GIL, the Company has furnished
following undertakings in respect of credit facilities of Rs. 2,829.00
Cr. (Rs. 2,829.00 Cr.) and Foreign Currency loan of US$ 175 Mn. (US$ 175
Mn.) then sanctioned by various lending institutions for GIL''s second
phase project of setting up of telecom sites.
i) The Company along with Global Holding Corporation Private Limited
(GHC) an associate shall not reduce the shareholding in GIL below 26%.
The Company shall retain the management control of GIL.
ii) The Company shall bring or arrange Equity/ Preference Capital as
envisaged by Phase II lenders.
iii) In case of cost overrun or shortfall, the Company shall bring and
/ or arrange additional capital within a period of 90 days from written
demand by Creditor''s Agent either in form of Equity or preference or
subordinated loans.
iv) The Company shall ensure that GIL will not abandon the Project
during the currency of Phase II loans.
v) The Company shall ensure that GIL is provided with requisite
technical, financial and managerial expertise to perform / discharge
its obligation under the project.
b) The Company''s equity shareholding in European Projects and Aviation
Limited (EPAL) (Formerly known as Global Projects and Aviation Private
Limited (GPAL)) as at Balance Sheet date is 19% (19%). EPAL has been
sanctioned Working capital line of credit of Rs. 500.00 Cr. (Rs. 500.00
Cr.). The Company has furnished various undertakings for the above
referred line of credit which inter alia provide as under:
i) The Company along with its associate Global Holding Corporation
Private Limited (GHC) shall not reduce the shareholding in EPAL below
51%. The Company shall retain the management control of EPAL during the
tenor of credit facilities.
ii) The Company along with its associate GHC shall ensure conversion of
Redeemable Preference Shares issued by EPAL in to Equity Shares or
compulsorily convertible instrument or shall ensure that the same shall
be redeemed out of infusion of fresh equity or compulsorily convertible
instrument by the Sponsors.
iii) The Company shall contribute towards the shortfall in the funds
required by EPAL to complete the projects as defined in terms and
conditions of credit facilities.
c) Global Rural Netco Limited (GRNL) is an associate of the Company.
The Company''s equity shareholding in GRNL as at March 31, 2014 is
42.86% (42.86%). GRNL had issued Fully Convertible Debentures of Rs.
250.00 Cr. to IFCI Limited on June 10, 2010. For securing the said
loan, the Company and Global Holding Corporation Private Limited (GHC)
had executed security documents inter-alia Indemnity Undertaking
thereby agreeing to purchase the FCDs from IFCI in terms of the
Subscription Agreement.
Subsequently, in terms of the settlement between GRNL and IFCI on
August 03, 2012, GRNLs loan of Rs. 250.00 Cr. reduced to Optionally
Convertible Loan of Rs. 100.00 Cr. and in case the loan has not been
repaid / prepaid / converted into equity shares of GRNL on or before
March 31, 2015, IFCI has Put option and the Company has to purchase the
said loan from IFCI.
i. Upon failure of GRNL to repay the OCL on or prior to March 31, 2015,
IFCI shall be entitled to, at any time thereafter, exercise the Put
Option by a written notice ("Put Notice") to GTL and require GTL to
purchase the OCL outstanding as of the date of exercise of the Put
Option by IFCI.
ii. GTL shall, within a period of 30 (Thirty) Business days, subject to
all requisite approvals and permissions, as may be required by GTL for
such purchase, from the date of receipt of the Put Notice from IFCI,
purchase Put Option OCL for such sum so as to provide IFCI a YTM of
13.50% on the Put Option OCL, calculated from April 1, 2012 up to the
date of payment by GTL ("Put Option Purchase Price"). However, in case
IFCI does not exercise Put option on or before April 30, 2015, then,
subject to the provisions herein being followed, GTL shall purchase the
Put Option OCL for such sum so as to provide IFCI a YTM of 13.50% on
Put Option OCL from April 1, 2012 to March 31, 2015 only.
d) Chennai Network Infrastructure Limited (CNIL) is an associate of the
Company. The Company''s equity shareholding as at March 31, 2014 is
25.79% (27.02%). As sponsors to CNIL, the Company along with its
associates Global Holding Corporation Private Limited and GTL
Infrastructure Limited have agreed to hold and maintain at least 26%
and to further contribute in the form of equity in future, if required
to meet needs of CNIL and to replenish Debt Service Account Letter of
Credit (DSRA LC), in the event DSRA LC is invoked by the lenders.
e) The CDR lenders of the Company have right to re-compense in respect
of relief extended and sacrifices made by them of Rs. 555.87 Cr. as per
Master Restructuring Agreement (MRA). Such right is exercisable by CDR
lenders based on criteria''s / conditions as details in MRA.
3.1 SEGMENT REPORTING
Reporting as per Accounting Standard 17 based on consolidated Financial
Statements is forming part Consolidated Financial Statement.
4.0 RELATED PARTY DISCLOSURES A Related Parties
I Subsidiaries
a. International Global Tele Systems Ltd.
b. GTL International Ltd.
c. Ada Cellworks Wireless Engineering Pvt. Ltd.
II Fellow Subsidiaries (Subsidiaries of GTL International Ltd.)
a. GTL (Singapore) Pte Ltd.
b. GTL Saudi Arabia Company Limited.
c. GTL Overseas Middle East FZ LLC.
d. GTL International Nigeria Limited.
e. Pt. GTL Indonesia Limited.
f. GTL Europe Limited.
g. GTL Telecommunications Ireland Limited.
h. GTL Network Services Malaysia Sdn Bhd.
i. IGTL Network Services Philippines Inc.
j. GTL China Corporation Ltd.
k. GTL Taiwan Co. Ltd.
l. GTL USA Inc.
m. GTL International Lanka (Private) Limited.
n. GTL International Bangladesh Pvt. Ltd.
o. GTL Kenya Limited.
p. GTL Tanzania Limited.
q. GTL Canada Inc.
r. GTL Nepal Limited.
s. GTL Network Services SA Pty Limited.
III Associates
a. GTL Infrastructure Limited
b. Global Rural Netco Pvt. Ltd.
c. Chennai Network Infrastructure Ltd.
d. Global Holding Corporation Private Limited
IV Key Managerial Personnel
a. Mr. Manoj Tirodkar, Chairman and Managing Director
b. Mr. Sukanta Kumar Roy, Whole- time Director and COO (up to July 26,
2013)
c. Mr. Arun Prabhu Khanolkar, Whole- time Director (effective from
August 1, 2013)
d. Mr. Vidyadhar Apte, Company Secretary
e. Mr. Milind Bapat, Chief Financial Officer
4.1 Operating Leases
The Company''s lease agreements are in respect of operating lease for
office premises, guesthouse, warehouses, and vehicles. These lease
arrangements are cancellable by either parties there to as per the
terms and condition of the agreements. The lease rental recognized in
the Statement of Profit and Loss during the year under the heading
''Rent'' in ''Other Expenses'' is Rs. 4.17 Cr. (Rs. 5.39 Cr.). The lease
obligations due within next five-years are Rs. 14.87 Cr.. (Rs. 12.88 Cr.).
4.2.1 The conversion option available to holders of 0.01%
Non-Participative Optionally Convertible Cumulative Preference Share
(OCPS) has lapsed during the year. For the previous year the effect of
shares arising on account of conversion option available is not
considered in calculation of diluted EPS since the same is
anti-dilutive.
5.1 FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS:
5.1.1 Derivative contracts entered into by the Company during the year
is Nil and outstanding as at year end are Nil.
5.1.2 Foreign Currency exposures that are not hedged by the derivative
instruments and forward contract as at March 31, 2014 for US$ Mn. (US$
305.97 Mn.)
6.1 GOING CONCERN
The Company''s business activities comprises of two segments viz
"Network Services" and "Power Management". During the last few years,
the telecom industry has been adversely affected by the general
economic slowdown, forcing the operators to substantially curtail capex
on rollout of towers. This has an adverse impact on company''s revenue
from Network Deployment, Operation and Energy Management and other
Network services and consequentially operating margins and cash flow
from this segment.
In Power sector, increase in energy cost by Genco''s without
commensurate revision in energy price to consumers has adversely
affected profitability of Power Management. Coupled with this Company''s
inability to incur sufficient capex could not result in achieving
desired efficiency and thereby further affecting operating margins and
cash flow of said segment.
In view of the above, Company has incurred Cash losses which has
resulted in substantial erosion of the Company''s net worth.
The Company is taking various measures such as cost optimisation,
renegotiation of contracts with the customers, improving operating
efficiency, capex to reduce distribution losses in Power distribution
franchises so as to improve Company''s operating margins and cash flows.
The management believes that these measures together with expected
growth in Telecom sector and overall turnaround in economy will have
positive impact on the Company''s business operations and will generate
improved margins and cash flows. In view of above, the Company
continues to prepare its financial statements on going concern basis,
which contemplates realization of assets and settlement of liabilities
in the normal course of business.
7.1 CONSOLIDATED FINANCIAL STATEMENT
Consolidated financial statements forming part of the accounts with the
Auditors report thereon are attached herewith.
7.2 The Previous period figures, wherever necessary, have been
regrouped/rearranged/recast to make them comparable with those of the
current year.
7.3 Figures in brackets relate to the previous period unless otherwise
stated.
Mar 31, 2013
1.1 OPERATING LEASES
The CompanyÂs lease agreements are in respect of operating lease for
office premises, guesthouse, warehouses and vehicles. These lease
arrangements are cancellable by either parties there to as per the
terms and condition of the agreements. The lease rental recognized in
the Statement of Profit and Loss during the year under the heading
''Rent in ''Other Expenses is Rs. 5.39 Cr. (Rs. 3.10 Cr.). The lease
obligations due within next five-years are Rs. 12.88 Cr. (Rs. 19.22 Cr.).
1.2 EMPLOYEE BENEFITS
1.2.1 Employee Stock Options
i) During the year the Company has not granted any stock options to the
employees. Further, during the year the Company has closed all the
Employee Stock Option Schemes consequent to cancellation of all
outstanding options in the hands of the employees. Therefore, for the
year ended, there are no outstanding options in the hands of employees.
1.2.2 Disclosure of Employee Benefits as per Accounting Standard 15
"Employee BenefitÂ:
1.3 CONTINGENT LIABILITIES & COMMITMENTS:
1.3.1 Contingent Liabilities
Rs. in Crores
April 12 - July 11 -
Sr.
No. Particulars March 13 March 12
(12 Months) (9 Months)
i Claims against the Company
not acknowledged as debts* 278.54 199.89
ii Guarantees given by Banks on
behalf of the Company 169.09 128.54
iii Performance Guarantees
issued to banks on behalf of
Subsidiaries/Associates and Affiliates 5.00 145.28
iv Financial Guarantees given by
the Company to Subsidiaries/Associates
and Affiliates NIL 18.39
v Corporate Guarantees given by the
Company for loans taken by
subsidiaries / others 580.77 580.77
vi Bills Discounted (Net of
Insurance cover) NIL NIL
vii Disputed Sales tax liabilities
in respect of pending appeals.
(Amount deposited Rs. 3.12 Cr.
(Rs. 2.71 Cr.) 9.08 109.33
viii Disputed Income tax liabilities
in respect of pending appeals
(Amount deposited Rs. 0.40 Cr.
(Rs. 0.03 Cr.) 0.76 0.03
ix Premium on Redemption of 0.01%
Non-Participative Optionally
Convertible Cumulative Preference
Share (Refer Note No. 2.31.2) 25.93 NIL
x Dividend on 0.01% Non-Participative
Optionally Convertible Cumulative
Preference Share 0.03 NIL
No cash out flow is expected in near future in respect of items stated
in 2.31.1 (i to ix)
*includes claim of Rs. 179 Cr. (Rs. 179 Cr.) of Global Holding Corporation
Pvt. Ltd. an Associate.
1.3.2 The Preference shareholders of 0.01% Non-Participating
Optionally Convertible Cumulative Preference Share have a right of
conversion into Equity shares of the Company. The conversion right
lapses on expiry of period of 18 months from the date of allotment. In
case of redemption, the preference shareholders are entitled to
redemption premium of 8% YTM. The right of conversion of preference
shareholders is subsisting at the Balance sheet date. The contingent
liability of Rs. 25.93 Cr. represents proportionate redemption premium
for the period commencing from the date of allotment i.e. September 28,
2012 till March 31, 2013.
1.3.3 Commitments
i) Estimated amount of contracts remaining to be executed
ii) Other Commitments
a) GTL Infrastructure Ltd. (GIL) is an associate of the Company. The
CompanyÂs holding in GIL, as at Balance Sheet date is 7.38% (17.78%).
As a promoter of GIL, the Company has furnished following undertakings
in respect of credit facilities of Rs. 2,829 Cr. (Rs. 2,829 Cr.) and
Foreign Currency loan of USD 175 million (USD 175 million) then
sanctioned by various lending institutions for GILÂs second phase
project of setting up of telecom sites.
i) The Company along with Global Holding Corporation Pvt. Ltd. (GHC) an
associate shall not reduce the shareholding in GIL below 26%. The
Company shall retain the management control of GIL.
ii) The Company shall bring or arrange Equity/ Preference Capital as
envisaged by Phase II lenders.
iii) In case of cost overrun or shortfall, the Company shall bring
and/or arrange additional capital within a period of 90 days from
written demand by CreditorÂs Agent either in form of Equity or
preference or subordinated loans.
iv) The Company shall ensure that GIL will not abandon the Project
during the currency of Phase II loans.
v) The Company shall ensure that GIL is provided with requisite
technical, financial and managerial expertise to perform/ discharge its
obligation under the project.
b) The CompanyÂs holding in European Projects and Aviation Ltd. (EPAL)
(Formerly known as Global Projects and Aviation Pvt. Ltd. (GPAL)) as at
Balance Sheet date is 19% (19%). EPAL has been sanctioned Working
capital line of credit of Rs. 500 Cr. (Rs. 500 Cr.). The Company has
furnished various undertakings for the above referred line of credit
which inter alia provide as under:
i) The Company along with its associate Global Holding Corporation Pvt.
Ltd. (GHC) shall not reduce the shareholding in EPAL below 51%. The
Company shall retain the management control of EPAL during the tenor of
credit facilities.
ii) The Company along with its associate GHC shall ensure conversion of
Redeemable Preference Shares issued by EPAL in to Equity Shares or
compulsorily convertible instrument or shall ensure that the same shall
be redeemed out of infusion of fresh equity or compulsorily convertible
instrument by the Sponsors.
iii) The Company shall contribute towards the shortfall in the funds
required by EPAL to complete the projects as defined in terms and
conditions of credit facilities.
c) Global Rural Netco Ltd. (GRNL) is an associate of the Company. The
CompanyÂs holding as at March 31, 2013 is 42.86%. GRNL has issued fully
Convertible Debentures (FCDs) of Rs. 250 Cr. (Rs. 250 Cr.). The Company has
furnished following undertaking for the above referred issue of fully
Convertible Debenture.
i) The Company along with its associate Global Holding Corporation Pvt.
Ltd. (GHC) shall not reduce its shareholding in the total paid up
equity capital of GRNL below 26% and retain the management control of
GRNL till the sale of the FCDs and/or the conversion of FCDs by the
Investor, whichever is later.
ii) The Company along with GHC shall purchase FCDs on Put option if
exercised by the Investor as per the terms detailed in the letter of
Intent.
d) Chennai Network Infrastructure Ltd. (CNIL) is an associate of the
Company. The CompanyÂs holding as at March 31, 2013 is 27.02%. As
sponsors to CNIL, the Company along with its associates Global Holding
Corporation Pvt. Ltd. and GTL Infrastructure Ltd. have agreed to hold
and maintain at least 26% and to further contribute in the form of
equity in future, if required to meet needs of CNIL and to replenish
Debt Service Account Letter of Credit (DSRA LC), in the event DSRA LC
is invoked by the lenders.
e) As at March 31, 2013 the Company has investment of US $ 5,000 in
Alpha Impex International Ltd. (AIIL). In respect of the borrowing by
AIIL, the Company has agreed for Put Option of US $ 35 mn equivalent to
Rs. 190.33 Cr. in the event of default by AIIL.
1.4 RELATED PARTY DISCLOSURES A. Related Parties
I. Subsidiaries
a) International Global Tele-Systems Ltd.
b) GTL International Ltd.
c) Ada Cellworks Wireless Engineering Pvt. Ltd.
II. Fellow Subsidiaries (Subsidiaries of GTL International Ltd.)
a) GTL (Singapore) Pte. Ltd.
b) GTL Saudi Arabia Company Ltd.
c) GTL Overseas (Middle East) FZ LLC.
d) GTL International Nigeria Ltd.
e) Pt. GTL Indonesia
f) GTL Europe Ltd.
g) GTL Telecommunications Ireland Ltd.
h) GTL Network Services Malaysia Sdn Bhd. i) IGTL Network Services
Philippines Inc. j) GTL China Corporation Ltd. k) GTL Taiwan Co. Ltd.
l) GTL (USA) Inc.
m) GTL International Lanka (Pvt.) Ltd.
n) GTL International Bangladesh Pvt. Ltd.
o) GTL Kenya Ltd.
p) GTL Tanzania Ltd.
q) GTL (Canada) Inc.
r) GTL Nepal Pvt. Ltd.
s) GTL Network Services SA (Pty) Ltd.
III. Associates
a) GTL Infrastructure Ltd.
b) Global Rural Netco Ltd.
c) Chennai Network Infrastructure Ltd.
d) Global Holding Corporation Pvt. Ltd.
I V. Name of the Key Managerial Personnel
a) Mr. Manoj Tirodkar, Chairman and Managing Director
b) Mr. Charudatta Naik, Whole-time Director (upto September 12, 2012)
c) Mr. Sukanta Kumar Roy, Whole-time Director and COO
d) Mr. Milind Bapat, Sr. Vice President  Finance
1.5 FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS:
1.5.1 Derivative contracts entered into by the Company during the year
is NIL and outstanding as at year end are NIL.
1.5.2 Foreign Currency exposures that are not hedged by the derivative
instruments and forward contract as at March 31, 2013 for USD 305.97 mn
(USD 303.41 mn)
1.6 SEGMENT REPORTING
Reporting as per Accounting Standard 17 based on consolidated Financial
Statements is forming part Consolidated Financial Statement.
1.7 DETAILS OF ROUNDED OFF AMOUNTS
The financial statements are presented in Rs. in Cr.. Those items which
are required to be disclosed and which were not presented in the
financial statement due to rounding off to the nearest Rs. Crore are
given as follows:
1.8 CONSOLIDATED FINANCIAL STATEMENT
Consolidated financial statements with the Auditors report thereon are
attached herewith.
1.9 The Previous period figures, wherever necessary, have been
regrouped/ rearranged/ recast to make them comparable with those of the
current year.
1.10 Figures in brackets relate to the previous period unless otherwise
stated.
1.11 Figures of current year for 12 months and hence are not comparable
to previous period which was of 9 months.
Mar 31, 2012
1.1.1 Terms, Rights, Preferences and restrictions attached to equity
shares:
The Company has only one class of equity shares having a face value of
Rs. 10 per share. Each holder of equity share is entitled to one vote on
show of hands and in case of poll, one vote per equity share. A member
shall not have any right to vote whilst any call or other sum shall be
due and payable to the Company in respect of any of the shares of such
member. All equity shares of the Company rank pari passu in all
respects including the right to dividend.
In the event of winding-up of the Company, the holders of equity shares
will be entitled to receive any of the remaining assets of the Company,
if any, after distribution of all preferential amounts in proportion to
the numbers of shares held at the time of commencement of winding-up.
The shareholders have all other rights as available to Equity
shareholders as per the provision of the Companies Act, 1956, read
together with Memorandum of Association of the Company, as applicable.
1.1.2 Number of Shares reserved for issue and terms thereof:
i) The ESOS holders under the employee stock option schemes have the
option to exercise / convert ESOS into 2,370,903 Equity Shares
(previous period 2,482,362 Equity Shares).
ii) Compulsorily Convertible Debentures (CCDs) to be allotted pursuant
to the Corporate Debt Restructuring package to the Lenders and
Promoters.
On April 28, 2012 the Company allotted 1% coupon 18,784,046
Compulsorily Convertible Debentures (CCDs) of the face value of Rs. 100
each to CDR Lenders and 0% coupon 4,515,000 CCDs of the face value of Rs.
100 each to the Promoter aggregating Rs. 232.99 Crs. These CCDs would be
converted into Equity Shares in terms of Securities and Exchange Board
of India (Issue of Capital and Disclosure Requirements) Regulation,
2009.
*During the period ended shares pledged by Holding company in favour of
ICICI Bank, were invoked, resulting reduction in stake by holding
company to the extent of 29.30%. However, ICICI Bank has reinstated the
revoked shares to the account of the holding company on May 8, 2012.
1.2.1 In view of Loss for the period ended March 31, 2012, Debenture
Redemption Reserve is not created.
1.3.1 The Company's proposal for restructuring of its debts is
sanctioned by the Corporate Debt Restructuring Empowered Group (CDR EG)
vide sanction letter dated December 23, 2011 as per following terms and
conditions:
i) Effective date for restructuring: July 1, 2011
ii) Under the scheme, debts are restructured as:
a) Term Loans which are repayable within ten years (by March 2021) and
having moratorium of 21 months for repayment (till March 31, 2013).
Term loans carry Interest at 11% p.a.
b) Continuing facilities comprising of Cash Credit, Letter of Credits,
Purchase Bill Discounting and Guarantees.
c) Compulsorily Convertible Debentures (CCDs) carrying coupon rate at
1% p.a.
iii) The Company shall create security for securing restructured debt.
iv) Interest on Term Loan for the first 21 months (from July 1, 2011 to
March 31, 2013) shall be converted into Funded Interest Term Loan
(FITL) carrying interest at 2% p.a. Repayment of FITL shall start from
April 1, 2014 in 16 structured quarterly installments.
v) The Company's liability to ICICI Bank of Rs. 650.00 Crs. shall shift
to Chennai Network Infrastructure Limited (CNIL) and the Company's
liability to CNIL shall be repayable from FY 2018 to FY 2024.
vi) Promoters shall bring in Rs. 83.38 Crs. as their contribution towards
0% CCDs. Out of the same Rs. 41.69 Crs. to be brought in by December 31,
2011 and balance by December 31, 2012.
1.3.2 Securities Offered
i) First pari passu charge over free-hold non-agricultural land
admeasuring 296.50 Sq. Mtrs., known as Plot No. 37, part of Survey No.
36A, Mouje Pali, Sudhagad Taluka, Raigad District. First pari passu
charge over the Company's movable assets, both tangible and intangible
and the company's plant and machinery, tools and vehicles.
First pari passu charge over all rights, title, interest, benefit,
claims and demands whatsoever of the Company, in, to, and/ or under the
Project Documents, clearances and insurance contracts.
First pari passu charge over all bank accounts of the Company,
including the Trust and Retention Accounts (and all sub- accounts
thereof), Distribution Franchisee Business Accounts. First pari passu
charge over all monies and amounts owing to or received by or
receivable by the Company, whether now existing, or at any time
existing.
ii) Pledge of all investments of the Company in Equity and Preference
Shares or other securities in other companies.
iii) Mr. Manoj G. Tirodkar one of the promoters of the Company has
extended a personal guarantee not exceeding Rs. 394.28 Crs.
iv) Mr. Manoj G. Tirodkar and Global Holding Corporation Private
Limited promoters of the Company have executed sponsor support
agreement to meet any shortfall or expected shortfall in the cash flows
towards the debt servicing obligations of the Company.
v) Prior to the restructuring of its debts under CDR Mechanism, the
Company created security in favour of Andhra Bank, Punjab National
Bank, Union Bank of India, Vijaya Bank, IDBI Bank Limited, State Bank
of Hyderabad, Bank of Baroda, UCO Bank, Indian Overseas Bank, Indian
Bank, Canara Bank and Dena Bank for their respective credit facilities
other than term loans, aggregating Rs. 1,572 Crs. In terms of CDR
Documents inter-alia Master Restructuring Agreement, the earlier
charges are not satisfied by the Company after creation of new security
as stated in (a) above.
1.3.4 Rated Redeemable Unsecured Non-Convertible Debentures:
i) As at March 31, 2012 Interest of Rs. 105.33 Crs. relating to the
period May 2, 2011 to February 3, 2012 on 'Rated Redeemable Unsecured
Rupee Non-convertible Debentures (NCDs)' is overdue for payment.
The Company has received letter dt. April 4, 2012 from Standard
Chartered Bank (Mauritius) Limited for restructuring of Rated
Redeemable Unsecured Rupee Non-convertible Debentures (NCDs) proposing
commencement of redemption from quarter ended June 30, 2013 and
culminating on the quarter ended March 31, 2021 with moratorium on the
payment of the Debenture Coupon for the period of 21 months from the
cut -off date viz. July 01, 201. These Terms are under negotiation.
The Company has a Deferred Tax Asset of Rs. 9.28 Crs. as on March 31,
2012. In the absence of reasonable certainty of sufficient future
taxable income against which Deferred Tax Asset can be realized, the
same is not considered in accordance with AS 22 on Accounting for Taxes
on Income issued by ICAI.
1.4.1 Disclosure in accordance with Section 22 of Micro, Small and
Medium Enterprises Development (MSMED) Act, 2006.
The information required to be disclosed under the Micro, Small, and
Medium Enterprises Act, 2006, is furnished below. The same has been
determined to the extent such parties have been identified on the basis
of information available with the Company.
1.5.1 Current maturities of Term Loan from Bank - ECB loan
i) In terms of CDR LOA ECB exposure shall be restructured as per CDR
approved terms for ECB Lenders. Accordingly, the Company is in
negotiations with the lenders for restructuring of the said loan.
ii) External Commercial Borrowing (ECB) of USD 150 Mn. availed by the
Company was due for repayment in August 2011. As at March 31, 2012 the
ECB loan of Rs. 763.35 Crs. (USD 150 Mn.) along with interest of Rs. 11.48
Crs. relating to the period for December 12, 2011 to March 19, 2012 is
overdue for payment.
1.5.2 In terms of CDR package and as stated in note no. 2.3.1 (v), the
Company's liability of Rs. 650 Crs. to ICICI Bank has been shifted to
Chennai Network Infrastructure Limited (CNIL). The said liability is
transferred to Preference Share Application Money based on agreement
between the Company and CNIL. The terms and conditions for allotment of
Preference Shares are as under:
a) Optionally convertible Preference Shares
b) Coupon rate 0.01%
c) Number of shares proposed to be issued: 650,000,000 of the face
value of Rs. 10/- each at par.
d) Period before which shares are to be allotted: on or before March
31, 2013 subject to completion of required formalities inter alia
approvals, if any, required in the matter.
e) The Company does not have authorized capital of the class of
Preference Shares to be issued.
1.5.3 As on March 31, 2012, part of the debts outstanding in respect of
CDR lenders and CCD contribution received from promoters aggregating Rs.
271.29 Crs. has been disclosed as CCD application money pending
allotment. Out of the said amount CCDs amounting to Rs. 232.99 Crs. have
been allotted on April 28, 2012 as stated in note no. 2.1.2(ii)
1.5.4 Interest due as at March 31, 2012 on Cash Credit and Funded
Interest Term Loan is Rs. 2.01 Crs. and Rs. 0.23 Crs. respectively.
Interest of Rs. 2.21 Crs. is subsequently paid. Interest of Rs. 0.03 Crs.
provided in the Current Account but not appropriated by certain banks
against interest due.
Notes :
1. Gross block of building includes subscription towards share capital
of co-operative societies amounting to Rs. 0.00 Crs. (Rs. 0.00 Crs.) and
leased buildings amounting to Rs. 19.91 Crs. (Rs.19.91 Crs.).
2. Software included internally generated Assets Rs. 7.27 Crs. (Rs. 7.27
Crs.)
3. Impairment of Fixed Asset, in accordance with the Accounting
Standard (AS 28) on "Impairment of Assets" the Management during
the year carried out an exercise of identifying assets that many have
been impaired in respect of each Cash Generating Unit. On the basis of
this review carried out by the Management, there was no impairment loss
on Fixed Assets during the period ended March 31, 2012.
1.6.1 Receivable on Account of Assignment
The Company has entered into "Agreement for Assignment of
Receivable" with GTL Infrastructure Limited (GIL). In terms of the
said agreement, GIL has assigned receivables from its customer with
regard to Energy Management to the Company. Out of the assigned
Receivable during the period of Rs. NIL (Rs. 200.58 Crs.), outstanding
amount of Rs. NIL (Rs. 4,247.95 Crs.) as at March 31, 2012 is shown under
'Other Current Assets".
1.6.2 In terms of the Non-Disposal Undertaking-cum-Escrow Agreement
with POA, the Company, offered 27.37 Crs. shares of GTL Infrastructure
Limited as security to IFCI Limited (IFCI) for their financial
assistance of Rs. 250 Crs. to CNIL. IFCI had created pledge on these
shares on July 13, 2011 and issued a No Dues Certificate to CNIL on
July 22, 2011.
The Company has contested this appropriation and by an order dated
August 29, 2011 of the Hon'ble Delhi High Court, IFCI was reverted to
the position of a pledgee and continued to be a lender in CNIL. IFCI
has challenged this order and presently the matter is sub-judice.
The Company has written down the value of these investments in its
books and has made a claim on CNIL equal to the book value of its
investments since IFCI has not returned the GIL shares to its pledge
account.
1.7 REMITTANCE OF DIVIDEND IN FOREIGN EXCHANGE - NIL (NIL)
1.8 OPERATING LEASES
The Company's lease agreements are in respect of operating lease for
office premises, guesthouse, warehouses, and vehicles. These lease
arrangements are cancellable by either parties there to as per the
terms and condition of the agreements. The lease rental recognized to
the profit and loss account during the period ended are Rs. 3.10 Crs.(Rs.
15.65 Crs.).The lease obligations due within five-years are Rs. 19.22
Crs. (Rs. 23.27 Crs.).
1.9 EMPLOYEE STOCK OPTIONS
ESOP 2001: The Company has obtained approval of the shareholders at the
13th AGM held on July 30, 2001, for allocation of 1,500,000 warrants
convertible into equal number of equity shares to employees of the
Company and 1,000,000 warrants convertible into equal number of equity
shares to employees of its subsidiaries (in the form of warrants under
ESOP-2001) at an exercise price, at a discount up to 25% of the closing
market price of the Company's shares on the National Stock Exchange of
India Ltd. (NSE) on the previous trading day of the date of allotment
of warrants.
In this Scheme, the Company had granted 2,159,800 warrants to its
Employees and 72,550 warrants to employees of its subsidiaries. This
includes 796,511 and 44,950 warrants respectively lapsed/cancelled till
date due to resignation. The lapsed/cancelled warrants were added back
to the kitty for reissuance to the eligible employees from time to
time.
ESOP 2002:The Company obtained further approval of the shareholders at
the 14th AGM held on July 25, 2002, for allocation of 3,000,000
warrants convertible into equal number of equity shares to employees of
the Company and similarly 1,000,000 equity shares to employees of its
subsidiaries (in the form of warrants under ESOP 2002) at an exercise
price, at a discount up to 25% of the Average Price of the weekly high
and low of the closing prices of the Company's shares on the NSE, for
the preceding six months of the month in which the Warrants are
allotted.
In this Scheme, the Company had granted 4,189,130 warrants to its
Employees and 1,219,850 warrants to employees of its subsidiaries.
This includes 1,229,376 and 345,980 warrants respectively lapsed/
cancelled till date due to resignation. The lapsed/cancelled warrants
were added back to the kitty for reissuance to the eligible employees
from time to time.
ESOP 2004: The Company obtained further approval of the shareholders at
the 16th AGM held on September 16, 2004, for allocation of 3,000,000
warrants convertible into equal number of equity shares to employees of
the Company and similarly 500,000 warrants convertible into equal
number of equity shares to employees of its subsidiaries (in the form
of warrants under ESOP 2004) at an exercise price, at a discount up to
25% of the Average Price of the weekly high and low of the closing
prices of the Company's shares on the NSE, for the preceding six months
of the month in which the Warrants are allotted. In this Scheme, the
Company had granted
3,191,000 warrants to its Employees and 223,900 warrants to employees
of its subsidiaries. This includes 595,879 and 30,750 warrants
respectively lapsed/cancelled till date due to resignation. The
lapsed/cancelled warrants were added back to the kitty for reissuance
to the eligible employees from time to time.
ESOP 2005: The Company obtained further approval of the shareholders at
the 17th AGM held on September 27, 2005, for allocation of 3,500,000
warrants convertible into equal number of equity shares to employees of
the Company and similarly 300,000 warrants convertible into equal
number of equity shares to employees of its subsidiaries (in the form
of warrants under ESOP 2005) at an exercise price, at a discount up to
25% of the Average Price of the weekly high and low of the closing
prices of the Company's shares on the NSE or BSE, as the case may be
where the volume of shares traded is more, in the preceding six months
of the month in which the Warrants are allotted.
In this Scheme, the Company had granted 316,500 warrants to its
Employees. This includes 19,000 warrants lapsed/cancelled till date due
to resignation. The lapsed/cancelled warrants were added back to the
kitty for reissuance to the eligible employees from time to time.
ESOP 2008: The Company obtained further approval of the shareholders at
the 20th AGM held on June 13, 2008, for allocation of 1,500,000
warrants convertible into equal number of equity shares to employees of
the Company under this scheme (in the form of warrants under ESOP 2008)
at an exercise price at a discount up to 25% of the Average Price of
the weekly high and low of the closing prices for the preceding six
months of the month in which the warrants are allotted or the closing
market price on the previous trading day on which the warrants are
allotted, whichever is lower, on the National Stock Exchange of India
Limited or Bombay Stock Exchange Limited as the case may be where the
volume of shares traded is more. In this ESOP 2008 Scheme, No grants
have been issued to the Employees till date.
The vesting schedules for all the grants issued under the above Schemes
were revised on July 22, 2009, whereby all options allotted to
employees are vested after their initial lock-in period of 12 months
from their respective dates of allotment.
1.10.4 Defined Benefit Plan
The employee's Gratuity Fund Scheme, which is defined benefit plan, is
managed by Trust maintained with Life Insurance Corporation of India
[LIC]. The present value of obligation is determined based on actuarial
valuation using Projected Unit Credit Method, which recognizes each
period of service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation for compensated absences is recognized in
same manner as gratuity.
The expected rate of increase in salary for actuarial valuation is
based on consideration of inflation, seniority, promotion, attrition
and other relevant factors including supply and demand in the
employment market. The above information is as per the certificate
obtained from Actuary.
1.11 Contingent Liabilities & Commitments:
1.11.1 Contingent Liabilities
Rs. in Crores
As at As at
Particulars March 31, June 30,
2012 2011
i. Claims against the Company not 199.89 3.07
acknowledged as debts*
ii Guarantees given by Banks on
behalf of 128.54 498.60
the Company
iii Performance Guarantees issued
to banks 0.01 121.04
on behalf of
Subsidiaries / Associates and
Affiliates
iv Financial Guarantees given by
Company 18.39 225.00
to Subsidiaries /
Associates and Affiliates
v Performance Guarantees given
by NIL 5.00
Company to Third Party/ies
vi Disputed Sales tax liabilities
in respect 109.33 115.18
of pending appeals. (Amount
deposited
Rs. 2.71 Crs. (Rs. 1.82 Crs.)
vii Bill Discounted (Net of
Margin and NIL 156.72
Insurance Cover)
viii Disputed Income tax liability
in respect NIL 1.96
of pending case
before the Appellate
Authorities. (Amount deposited Rs. NIL ( NIL)
No cash out flow is expected in near future in respect of items stated
in 2.32
* Includes claim of Rs. 179 crores of Global Holding Corporation Pvt.
Ltd.
ii) Other Commitments
a) GTL Infrastructure Ltd (GIL) is an associate of the Company. The
Company's holding in GIL, as at Balance Sheet date is 17.78% (Previous
period 36.22%). As a promoter of GIL, the Company has furnished
following undertakings in respect of credit facilities of Rs. 2,829 Crs.
and Foreign Currency loan of USD 175 million sanctioned by various
lending institutions for GIL's second phase project of setting up
telecom sites.
The Company along with Global Holding Corporation Private Limited (GHC)
an associate shall not reduce the shareholding in GIL below 26%
(Previous period 26%) The Company shall retain the management control
of GIL.
The Company shall bring or arrange Equity/ Preference Capital as
envisaged by Phase II lenders.
In case of cost overrun or shortfall, the Company shall bring and / or
arrange additional capital within a period of 90 days from written
demand by Creditor's Agent either in form of Equity or preference or
subordinated loans.
The Company shall ensure that GIL will not abandon the Project during
the currency of Phase II loans.
The Company shall ensure that GIL is provided with requisite technical,
financial and managerial expertise to perform / discharge its
obligation under the project.
b) The Company's holding in European Projects and Aviation Limited
(EPAL) (Formerly known as Global Projects and Aviation Private Limited
(GPAL)) as at Balance Sheet date is 19% (Previous period 19%). EPAL has
been sanctioned Working capital line of credit of Rs. 500 Crs. The
Company has furnished various undertakings for the above referred line
of credit which inter alia provide as under:
The Company along with its holding company Global Holding Corporation
Private Limited (GHC) shall not reduce the shareholding in EPAL below
51% (Previous period 51%). The Company shall retain the management
control of EPAL during the tenor of credit facilities.
The Company along with its associate GHC shall ensure conversion of
Redeemable Preference Shares issued by EPAL in to Equity Shares or
compulsorily convertible instrument or shall ensure that the same shall
be redeemed out of infusion of fresh equity or compulsorily convertible
instrument by the Sponsors. (size of redeemable preference shares to be
mentioned.)
The Company shall contribute towards the shortfall in the funds
required by EPAL to complete the projects as defined in terms and
conditions of credit facilities.
c) Global Rural Netco Limited (GRNL) is an associate of the Company and
the company holds 42.86% (Previous period 42.86%) of its issued and
paid up share capital. GRNL has issued fully Convertible Debentures of
Rs. 250 Crs. The Company has furnished following undertaking for the
above referred issue of fully Convertible Debenture.
The Company along with its associate Global Holding Corporation Private
Limited (GHC) shall not reduce its shareholding in the total paid up
equity capital of GRNL below 26% (Previous period 26%) and retain the
management control of GRNL till the sale of the FCDs and / or the
conversion of FCDs by the Investor, whichever is later; and.
The Company along with GHC shall purchase FCDs on Put option if
exercised by the Investor as per the terms detailed in the letter of
Intent.
d) Chennai Network Infrastructure Limited (CNIL) is an associate of the
Company. The Company holds 30% (Previous period 30%) As sponsors to
CNIL, the Company along with its associates Global Holding Corporation
Private Limited and GTL Infrastructure Limited have agreed to hold and
maintain at least 26% (Previous period 26%) of the total paid-up Equity
Share Capital of CNIL and to further contribute in the form of equity
in future, if required to meet needs of CNIL and to replenish Debt
Service Account Letter of Credit (DSRA LC), in the event DSRA LC is
invoked by the lenders.
e) The Company has investment of US$ 5,000 in Alpha Impex International
Limited (AITL). In respect of the borrowing by AITL, the Company has
agreed for Put Option of US$ 35 Mn. (equivalent to Rs. 156.97 Crs.) in
the event of default by AITL.
i) Disclosure of information as required by clause 32 of listing
agreement
a) The Company has not given any Loans or advances in the nature of
Loans to Subsidiaries and Associates. Advance to subsidiaries and
Associates outstanding as at March 31, 2012 are Rs. 211.66 Crs. (Rs. 11.57
Crs.) (Maximum Balance Rs. 211.66 Crs. (Rs. 11.57 Crs.) and Rs. 4.01 Crs.
(Rs. 3.11 Crs.) (Maximum Balance outstanding during the period was
Rs. 124.01 Crs. (Rs. 3.11 Crs.) respectively.
b) None of the Subsidiaries to whom advances are given per se, have
investment in the shares of the company.
ii) Key Managerial Personnel
Particulars of remuneration and other benefits paid to key management
personnel during the period end March 31, 2012 is set out below:
Name of the key managerial personnel
a) Mr. Manoj Tirodkar, Chairman and Managing Director (Mr. Manoj
Tirodkar is re-designated as Chairman and Managing Director with effect
from August 18, 2011)
b) Mr. Charudatta Naik, Whole-time Director
c) Mr. Sukanta Kumar Roy, Whole-time Director and COO
1.12 During the financial year 2010-11, income tax authorities had
conducted proceedings u/s 132 of the Income-tax Act. As management was
of the opinion that there will be no material tax liability on account
of these proceedings, no provision for tax was made in the accounts for
the period ended June 30, 2011.
In the Current Financial year, the authorities have initiated
proceedings u/s 153A of the Income Tax Act, 1961 for the Assessment
years 2005 - 06 to 2010 - 11. Considering the certain interpretational
issues on claims preferred for those years, provision for tax of Rs.
16.59 Crs. has been made for those years.
1.13 The Balances of Sundry Debtors and Sundry Creditors are subject to
reconciliation and confirmation. Appropriate adjustment if necessary
will be considered in the year of reconciliation.
1.14 In respect of Goods purchased and supplied under agency
arrangements commission of Rs. NIL (previous period Rs. 21.35 Crs.) if
recognized as income. During the period, as per the contractual agreed
terms under this arrangement, the company has discharged its liability
of principal for the goods procured through supplier's bill facility.
The receivable from the principal for the same as at the period end are
Rs. NIL (previous period Rs. 447.55 Crs). These receivables and the
liability for acceptances referred above are presented net in the
financial statements.
1.15 SEGMENT REPORTING
Reporting as per Accounting Standard 17 based on consolidated Financial
Statements is forming part Consolidated Financial Statement.
1.16 DETAILS OF ROUNDED OFF AMOUNTS
The financial statements are presented in Rs. in Crores Those items which
are required to be disclosed and which were not presented in the
financial statement due to rounding off to the nearest Rs. Crores are
given as follows:
1.17 CONSOLIDATED FINANCIAL STATEMENT
Consolidated financial statements forming part of the accounts with the
Auditors report thereon are attached herewith.
1.18 The Previous period figures, wherever necessary, have been
regrouped/rearranged/recast to make them comparable with those of the
current period.
1.19 Figures in brackets relate to the previous period unless otherwise
stated.
1.20 Figures of current period are for 9 months and hence are not
comparable to previous period which is of 15 months.
Jun 30, 2011
1. SHARE CAPITAL
Equity Share Capital
The Rated Redeemable Unsecured Rupee Non-Convertible Dentures (NCDs) of
Rs. 140,000 Lacs are redeemable over the period of 3 to 5 years and in
respect of the same, equivalent amount of Debenture Redemption Reserve
is required to be created over the tenor of the Debentures on pro-rata
basis. During the period, Debenture Redemption Reserve of Rs. 140,000
Lacs is created to the extent of available of profit for the period
ended June 30,2011.
2. OTHER SECURITIES CREATED
The Company avails fund-based facilities like sale bill discounting and
non-fund based facilities like Letters of Credit, Bank Guarantees and
Dealer Finance in the course of its operations. The aggregate of such
sanctioned facilities as on June 30, 2011 is Rs. 4, 11,500.00 Lacs (Rs.
225,400.00 Lacs). Out of these facilities, Rs. 2, 45,000.00 Lacs (Rs.
45,500.00 Lacs) are unsecured facilities and Rs. 166,500.00 Lacs (Rs.
179,900.00 Lacs) are secured facilities. The details of secured
facilities are as under:
i) Facilities of Rs. 22,200.00 Lacs (Rs. 22,200.00 Lacs) are secured on a
pari passu basis against the movable and immovable fixed assets &
hypothecation of goods specifically procured.
ii) Facilities ofRs. 122, 500.00 Lacs (Rs. 129,500.00 Lacs) are secured on
hypothecation of goods specifically procured under the non- fund based
facilities
iii) Facilities of Rs. 7500 Lacs (NIL) are secured on hypothecation on
receivables arising out of Distribution ship Franchisee of MSEDCL
iv) Facilities of Rs. 14,300.00 Lacs (Rs. 28,200.00 Lacs) are partly
secured by Cash Margin in the form of pledge of Term deposits.
Bank Deposits are pledged towards margin money for Letter of Credit
Facilities Rs. 7,324.33 lacs (Rs. 7,140 lacs), Bank Guarantees Rs. 2,659.33
lac (Rs. 2,650.84 lac) & Trade Finance of Rs. 41,713.94 lac (Rs. 46,407.40),
aggregating to Rs. 51,697.60 Lacs (Rs. 56,198.57 Lacs). Subsequent to the
balance sheet date the banks have invoked the peldge in respect of
fixed deposits of Rs. 32,419.00 Lacs offered as security for trade
finance facility.
3. a) GTL Infrastructure Ltd (GIL) is an associate of the Company. The
Company's holding in GIL, as at Balance Sheet date is 36.22%.
(Previous year 31.30%) As a promoter of GIL, the Company has furnished
following undertakings in respect of credit facilities of Rs. 352,900
Lacs sanctioned by various lending institutions for GIL's second phase
project of setting up telecom sites.
i. The Company along with Global Holding Corporation Private Limited
(GHC) an associate shall not reduce the shareholding in GIL below 26%
(Previous year 26%). The Company shall retain the management control of
GIL.
ii. The Company shall bring or arrange Equity/ Preference Capital as
envisaged by Phase II lenders.
iii. In case of cost overrun or shortfall, the Company shall bring and/
or arrange additional capital within a period of 90 days from written
demand by Creditor's Agent either in form of Equity or preference or
subordinated loans.
iv. The Company shall ensure that GIL will not abandon the Project
during the currency of Phase-II loans.
v. The Company shall ensure that GIL is provided with requisite
technical, financial and managerial expertise to perform/discharge its
obligation under the project.
b. The Company's holding in European Projects & Aviation Private
Limited (EPAL) (Formerly known as Global Projects & Aviation Private
Limited (GPAL).) as at Balance Sheet date is 19% (Previous year
19%).EPAL has been sanctioned Working capital line of credit of Rs.
50,000 Lacs. . The Company has furnished various undertakings for the
above referred line of credit which interalia provide as under :
i. The Company along with its associate Global Holding Corporation
Private Limited (GHC) shall not reduce the shareholding in EPAL below
51 % (fifty one percent). The Company shall retain the management
control of EPAL during the tenor of credit facilities.
ii. The Company along with its associate GHC shall ensure conversion of
Redeemable Preference Shares issued by EPAL in to Equity Shares or
compulsorily convertible instrument or shall ensure that the same shall
be redeemed out of infusion of fresh equity or compulsorily convertible
instrument by the promoters of EPAL.
iii. The Company shall Contribute towards the shortfall in the funds
required by EPAL to complete the projects as defined in terms and
conditions of credit facilities.
c. Global Rural Netco Limited (GRNL) is an associate of the Company &
holds 42.86% (Previous year 42.86%) Equity Capital of GRNL as at
Balance Sheet date. GRNL has issued fully Convertible Debentures of
Rs. 25, 000 Lacs. The Company has furnished following undertaking for the
above referred issue of fully Convertible Debenture.
i. The Company along with its associate Global Holding Corporation
Private Limited (GHC) shall not reduce its shareholding in the total
paid up equity capital of GRNL below 26% (twenty six percent) and
retain the management control of GRNL till the sale of the FCDs and/or
the conversion of FCDs by the Investor, whichever is later; and
ii. The Company along with GHC shall purchase FCDs on Put option if
exercised by the Investor as per the terms detailed in the letter of
Intent.
d. Chennai Network Infrastructure Limited (CNIL) is an associate of
the Company. The Company holds 30.00% (Previous year 33.60%) Equity
Capital of CNIL as at Balance Sheet date. As sponsors to CNIL, the
Company along with its associates Global Holding Corporation Private
Limited and GTL Infrastructure Limited have agreed to hold and maintain
at least 26% (Twenty Six percent ) of the total paid-up Equity Share
Capital of CNIL and to further contribute in the form of equity in
future, if required to meet needs of CNIL and to replenish Debt Service
Account Letter of Credit ( DSRA LC ), in the event DSRA LC is invoked
by the lenders
e. The Company has investment of US $ 5,000 in Alfa Impex Telecom
Limited (AITL). In respect the borrowing by AITL, The Company has
agreed for Put Option of US $ 35 mn (equivalent to Rs. 15,697.50 lacs) in
the event of default by AITL.
4. As on April 01, 2010 Promoter and Promoter Group were holding
48.02% of the equity share capital of the Company. Between April 2010
and June 2010, by way of creeping acquisitions in the open market,
Promoter and Promoter groups' holding increased to 52.83% of the equity
share capital of the Company. On account of further issue of shares
pursuant to ESOP conversions, the Promoter and Promoter group
shareholding was diluted to 52.72% as on January 14, 2011. On further
acquisitions during June 2011, the promoter and promoter group
shareholding increased to 52.77%.
On January 28, 2011, the Promoter and Promoter group pledged 12.85%
comprising 12,500,000 equity shares of the Company. On June 23, 2011,
the Promoter and Promoter Group pledged additional 9.77% comprising
9,500,000 equity shares, thereby taking the pledged quantity to a total
of 22,000,000 equity shares being 22.62% of the equity share capital of
the Company.
On December 22, 2010, the Company was sanctioned a long term loan of Rs.
500 Crore by ICICI Bank Limited (ICICI). For securing the said loan,
the Promoter and Promoter Group had furnished Non Disposal Undertaking
(with POA) to ICICI on December 24, 2010 for 28,500,000 equity shares
of the Company and on July 4, 2011 ICICI created pledge on the said
shares, thus taking the aggregate of pledged shares to 50,500,000
representing 51.92% of the total outstanding equity capital of the
Company.
On July 26, 2011, ICICI invoked the pledge on 28,500,000 equity shares
by transferring it to their account resulting into a reduction of
Promoter and Promoter Group holdings to 23.47% from 52.77%.
5. The Company's shareholding in GTL Infrastructure Ltd. (GIL), an
associate of the Company as at April 1, 2010, was 31.30% of the Equity
share capital of GIL. Between April 2010 and June 2010, by way of
creeping acquisitions in the open market, the Company's shareholding in
GIL increased to 36.22% of the equity share capital of GIL.
Chennai Network Infrastructure Limited (CNIL), a Special Purpose
Vehicle set-up by GIL for acquiring 17,500 telecom towers of Aircel and
its subsidiaries, availed a Term Loan of Rs. 250 Cr. from IFCI Limited
(IFCI). For securing the said loan, the Company had entered into a Non
Disposal and Escrow Agreement (NDU) on July 9, 2010 with IFCI for
273,729,000 equity shares held by the Company in GIL. On July 13, 2011,
IFCI by invoking security, created a pledge on the shares kept in
escrow account.
On July 18, 2011 and July 19, 2011, IFCI sold 100,000 shares each,
thereby appropriating about Rs. 30 Lac. On July 20, 2011 IFCI advised the
Company about invocation of pledge on 176,368,219 equity shares of GIL
at the closing price of Rs. 14.25 per share on NSE, thereby appropriating
the proceeds amounting to about Rs. 251 Cr and has issued a No Dues
Certificate to CNIL on July 22,2011. As a result of the above
invocation/sale of shares by IFCI, the Company's holding in GIL stands
reduced to 17.78% from 36.22%.
The Company (pledgor) has contested this appropriation and accordingly
beneficial ownership of IFCI is under dispute and in view thereof the
Company continues to account its investment in GIL.
6. EMPLOYEE STOCK OPTIONS
a. ESOP 2001
The Company obtained approval of the shareholders at the 13th AGM held
on July 30, 2001, for allocation of 1,500,000 warrants convertible into
equal number of equity shares to employees of the Company and 1,000,000
warrants convertible into equal number of equity shares to employees of
its subsidiaries (in the form of warrants under ESOP-2001) at an
exercise price, at a discount upto 25% of the closing market price of
the Company's shares on the National Stock Exchange of India Ltd.
(NSE) on the previous trading day of the date of allotment of warrants.
The vesting schedule from the date of allotment under this grant is as
under:
15% after 12 months
15% after 18 months
15% after 24 months
15% after 30 months
15% after 36 months
15% after 42 months
10% after 48 months
In this ESOP 2001 Scheme, the Company had granted 2,159,800 warrants to
its Employees and 72,550 warrants to employees of its subsidiaries.
This includes 793,611 and 44,950 warrants respectively lapsed/cancelled
till date due to resignation. The lapsed/cancelled warrants were added
back to the kitty for reissuance to the eligible employees from time to
time.
b. ESOP 2002
The Company obtained further approval of the shareholders at the 14th
AGM held on July 25, 2002, for allocation of 3,000,000 warrants
convertible into equal number of equity shares to employees of the
Company and similarly 1,000,000 equity shares to employees of its
subsidiaries (in the form of warrants under ESOP 2002) at an exercise
price, at a discount up to 25% of the Average Price of the weekly high
and low of the closing prices of the Company's shares on the NSE, for
the preceding six months of the month in which the Warrants are
allotted.
In this ESOP 2002 Scheme, the Company had granted 4,189,130 warrants to
its Employees and 1,219,850 warrants to employees of its subsidiaries.
This includes 1,222,476 and 344,980 warrants respectively
lapsed/cancelled till date due to resignation. The lapsed/ cancelled
warrants were added back to the kitty for reissuance to the eligible
employees from time to time.
c. ESOP 2004
The Company obtained further approval of the shareholders at the 16th
AGM held on September 16, 2004, for allocation of 3,000,000 warrants
convertible into equal number of equity shares to employees of the
Company and similarly 500,000 warrants convertible into equal number of
equity shares to employees of its subsidiaries (in the form of warrants
under ESOP 2004) at an exercise price, at a discount up to 25% of the
Average Price of the weekly high and low of the closing prices of the
Company's shares on the NSE, for the preceding six months of the month
in which the Warrants are allotted.
In this ESOP 2004 Scheme, the Company had granted 3,191,000 warrants to
its Employees and 223,900 warrants to employees of its subsidiaries.
This includes 508,270 and 30,750 warrants respectively lapsed/cancelled
till date due to resignation. The lapsed/cancelled warrants were added
back to the kitty for reissuance to the eligible employees from time to
time.
d. ESOP 2005
The Company obtained further approval of the shareholders at the 17th
AGM held on September 27, 2005, for allocation of 3,500,000 warrants
convertible into equal number of equity shares to employees of the
Company and similarly 300,000 warrants convertible into equal number of
equity shares to employees of its subsidiaries (in the form of warrants
under ESOP 2005) at an exercise price, at a discount up to 25% of the
Average Price of the weekly high and low of the closing prices of the
Company's shares on the NSE or BSE, as the case may be where the volume
of shares traded is more, in the preceding six months of the month in
which the Warrants are allotted.
In this ESOP 2005 Scheme, the Company had granted 316,500 warrants to
its Employees This includes 5,500 warrants lapsed/ cancelled till date
due to resignation. The lapsed/cancelled warrants were added back to
the kitty for reissuance to the eligible employees from time to time.
e. ESOP 2008
The Company obtained further approval of the shareholders at the 20th
AGM held on June 13, 2008, for allocation of 1,500,000 warrants
convertible into equal number of equity shares to employees of the
Company under this scheme(in the form of warrants under ESOP 2008) at
an exercise price at a discount up to 25% of the Average Price of the
weekly high and low of the closing prices for the preceding six months
of the month in which the warrants are allotted or the closing market
price on the previous trading day on which the warrants are allotted,
whichever is lower, on the National Stock Exchange of India Limited or
Bombay Stock Exchange Limited as the case may be where the volume of
shares traded is more. In this ESOP 2008 Scheme, No grants have been
issued to the Employees till date.
7. Additional information pursuant to the provisions of paragraph 3
(ii) (d) of Part II of the Schedule VI to the Companies Act, 1956: -
The Company is in the business of providing Network Services involving
Network Planning & Designing, Network Deployment, Operation and
Maintenance, Professional Services and Energy Management. In view of
the composite nature of business activities, the company has not
furnished the quantitative information as required under paragraph 3
(ii) (d) of Part II of Schedule VI.
Name of the key managerial personnel
a Mr. Manoj Tirodkar, Chairman (Mr. Manoj Tirodkar is re-designated as
a Non-Executive Chairman with effect from 01st April 2011)
b Mr. Charudatta Naik, Whole-time Director
c Mr. Sukanta Kumar Roy , Whole-time Director and COO with effect from
27th July 2010
8. FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS:
b) All Derivatives and Financial instruments are for hedging purpose
only.
9. OPERATING LEASES
The Company's lease agreements are in respect of operating lease for
office premises, guesthouse, warehouses and vehicles. These lease
arrangements are cancellable by either parties there to as per the
terms and condition of the agreements. The lease rental recognized to
the profit & loss account during the period ended are Rs. 1,565.28 lacs
(Rs. 1,134.98 lacs). The lease obligations due within five-years are
Rs.2,326.69 lacs (Rs.1,814.41 lacs).
10. On 28th September, 2010, the Income Tax authorities carried out
search and seizure operations at the Company premises. The Company has
provided necessary information required by the authorities. The
Company believes that there will be no material tax liability. The
amount of tax liability, if any, shall be determined upon completion of
the proceedings by the Authorities.
11. The Balances of Sundry Debtors and Sundry Creditors are subject to
reconciliation and confirmation. Appropriate adjustment if necessary
will be considered in the year of reconciliation.
12. In respect of Goods procured and supplied under agency
arrangements, commission of Rs. 2,134.62 Lacs (Previous Year Rs. 2,598.38
lacs) is recognized as Income. During the period, as per the
contractually agreed terms under these arrangements, the company has
discharged its liability of principal for the goods procured through
supplier's bill facility. The receivables from the principal for the
same as at the period- end are Rs. 44,754.82 lacs (Rs. 40,149.45 lacs).
These receivables and the liability for acceptances referred above are
presented net in the Financial Statements.
13. The Company has entered into "Agreement for Assignment of
Receivableà with GTL Infrastructure Limited (GIL). In terms of the said
agreement, GIL has assigned receivables from its customer with regards
to Energy Management to the Company. Out of the assigned Receivable
during the period of Rs. 20,057.81 lacs (Rs. 10,579.14), outstanding amount
of Rs. 4,247.95 lacs (Rs. 4,312.01 lacs) as at June 30, 2011 is shown under
ÃOther Current AssetsÃ.
14. SEGMENT REPORTING
Reporting as per Accounting Standard 17 based on consolidated Financial
Statements is forming part Consolidated Financial Statement.
15. IMPAIRMENT OF ASSETS
In Accordance with the Accounting Standard (AS-28) on "Impairment of
Assetsà the management during the year carried out an exercise of
identifying the assets that may have been impaired in respect of each
cash-generating unit. On the basis of this review carried out by the
management, there was no impairment loss on fixed assets during the
period ended June 30, 2011.
16. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated financials statements forming part of the accounts with
the Auditors report thereon are attached herewith.
17. The Previous year's figures, wherever necessary, have been
regrouped/ rearranged/recast to make them comparable with those of the
current period.
18. Figures in brackets relate to the previous year unless otherwise
stated.
19. The figures for the 15 months period are not comparable to
previous year, that being of 12 months.
Mar 31, 2010
1. SECURITIES CREATED
The Company avails fund-based facilities like sale bill discounting and
non-fund based facilities like Letters of Credit, Bank Guarantees and
Dealer Finance in the course of its operations. The aggregate of such
sanctioned facilities as on March 31, 2010 is Rs. 225,400.00 Lacs
(Rs.214,031.00 Lacs).Out of these facilities ,Rs.45,500 lacs (Rs.59,350
lacs) are unsecured facilities and Rs 177,900 lacs ( Rs.154,681 lacs)
are secured facilities. The details of secured facilities are as under:
i) Facilities of Rs. 22,200 Lacs (Rs. 23,950 lacs) are secured on a
pari passu basis against the movable and immovable fixed assets &
hypothecation of goods specifically procured.
ii) Facilities of Rs.129,500.00 Lacs (Rs. 101,371 lacs) are secured on
hypothecation of goods specifically procured under the non- fund based
facilities
iii) Facilities of Rs. 28,200.00 Lacs (Rs. 29,360.00 Lacs) are partly
secured by Cash Margin in the form of pledge of Term deposits.
Bank Deposits of Rs.28,443.76 lacs (Rs. 29,527.51 lacs) are pledged
towards margin money for Letter of Credit Facilities & Bank Guarantees.
2. CAPITAL COMMITMENTS, CONTINGENT LIABILITIES AND PROVISIONS FOR
UNASCERTAINED EXPENSES.
Rs. In Lacs
As at As at
Particulars March 31, March 31,
2010 2009
a. Capital Commitments
Estimated amount of contracts remaining 5,779.63 3,635.93
to be executed on capital account not
provided for (net of advances)
(cash out flow is expected on execution of
such contracts on progressive basis.)
b. Contingent Liabilities Not Provided for
i) Claims against the Company not 167.69 26.20
acknowledge as debts
ii) Guarantees given by Banks on behalf 50,451.74 17,783.79
of the Company
iii) Performance Guarantees issued 37,929.74 38,613.92
to banks on behalf of Subsidiaries/
Associates & Affiliates
iv) Financial Guarantees given by 21,000.00 18,500.00
Company to Subsidiaries/Associates
& Affiliates
v) Performance Guarantees given by 500.00 598.12
Company to Third Party/ies
3. a) GTL Infrastructure Ltd (GIL) is an associate of the Company. The
Companys holding in GIL, as at Balance Sheet date is 31.30%. As a
promoter of GIL, the Company has furnished following undertaking in
respect of credit facilities Rs. 2,82,900 Lacs and Foreign Currency
loan of USD 175 million sacntioned by various lending institutions for
GILs second phase project of setting up telecom sites.
i. The Company along with Global Holding Corporation Private Limited
(GHC) an associate, shall not reduce its shareholding in GIL below 26%
and shall retain the management control of GIL.
ii. The Company shall bring or arrange Equity/ Preference Capital as
envisaged by Phase II lenders.
iii. In case of cost overrun or shortfall, the Company shall bring and/
or arrange additional capital within a period of 90 days from written
demand by Creditors Agent either in form of Equity or preference or
subordinated loans.
iv. The Company shall not abandon the Project during the currency
ofPhase-ll loans.
v. The Company shall ensure that GIL is provided with requisite
technical, financial and managerial expertise to perform/discharge its
obligation under the project.
b) The Company is holding in Global Projects & Aviation Private Limited
(GPAL) as at Balance Sheet date is 19%. GPAL has been sanctioned
Working Capital line of credit of Rs.50,000 Lacs. The Company has
furnished various undertakings for the above referred line of credit
which interalia provide as under:
i. he Company along with its associate Global Holding Corporation
Private Limited (GHC) shall not reduce the shareholding in the GPAL
below 51 % (fifty one percent) The Company shall retain the management
control of GPAL during the tenor of credit facilities.
ii. The Company along with its associate GHC shall ensure conversion of
Redeemable Preference Shares issued by GPAL in to Equity Shares or
compulsorily convertible instrument or shall ensure that the same shall
be redeemed out of infusion of fresh equity or compulsorily convertible
instrument by the promoters of GPAL.
iii. The Company shall Contribute towards the shortfall in the funds
required by GPAL to complete the projects as defined in terms and
conditions of credit facilities.
c) Global Rural Netco Limited (GRNL) is an associate of the Company and
holds 42.86% Equity Capital of GRNL as at Balance Sheet date. GRNL has
issued fully Convertible Debentures of Rs.25,000 Lacs. The Company has
furnished following undertaking for the above referred issue of fully
Convertible Debenture.
i. The Company along with its associate Global Holding Corporation
Private Limited (GHC) shall not reduce the shareholding in the total
paidup equity capital of GRNL below 26% (twenty six percent) and retain
the management control of GRNL till the sale of the FCDs and/or the
conversion of FCDs by the Investor, whichever is later; and
ii. The Company along with GHC shall purchase FCDs on Put option
if exercised by the Investor as per the terms detailed in the letter
sof Intent.
d) Chennai Network Infrastructure Limited (CNIL) is an associate of the
Company. The Company holds 33.60% Equity Capital of CNIL as at
Balance Sheet date. As sponsors to CNIL, the Company along with
its associates Global Holding Corporation Private Limited and GTL
Infrastructure Limited have agreed to hold and maintain at least 26%
(Twenty Six percent) of the total paid-up Equity Share Capital of CNIL
and to further contribute in the form of equity in future, if required
to meet needs of CNIL and to replenish Debt Service Account Letter of
Credit (DSRA LC), in the event DSRA LC is invoked by the lenders.
4. EMPLOYEE STOCK OPTIONS
a. ESOP 2001
The Company obtained approval of the shareholders at the 13th AGM held
on July 30, 2001, for allocation of 1,500,000 warrants convertible into
equal number of equity shares to employees of the Company and 1,000,000
warrants convertible into equal number of equity shares to employees of
its subsidiaries (in the form of warrants under ESOP- 2001) at an
exercise price, at a discount upto 25% of the closing market price of
the Companys shares on the National Stock Exchange of India Ltd. (NSE)
on the previous trading day of the date of allotment of warrants. The
vesting schedule from the date of allotment under this grant is as
under: 15% after 12 months 15% after 18 months 15% after 24 months 15%
after 30 months 15% after 36 months 15% after 42 months 10% after 48
months In this ESOP 2001 Scheme, the Company had granted 2,159,800
warrants to its Employees and 72,550 warrants to employees of its
subsidiaries. This includes 793,611 and 44,950 warrants respectively
lapsed/cancelled till date due to resignation. The lapsed/cancelled
warrants were added back to the kitty for reissuance to the eligible
employees from time to time.
b. ESOP 2002
The Company obtained further approval of the shareholders at the 14th
AGM held on July 25, 2002, for allocation of 3,000,000 warrants
convertible into equal number of equity shares to employees of the
Company and similarly 1,000,000 equity shares to employees of its
subsidiaries (in the form of warrants under ESOP 2002) at an exercise
price, at a discount up to 25% of the Average Price of the weekly high
and low of the closing prices of the Companys shares on the NSE, for
the preceding six months of the month in which the Warrants are
allotted.
In this ESOP 2002 Scheme, the Company had granted 4,189,130 warrants to
its Employees and 1,219,850 warrants to employees of its subsidiaries.
This includes 1,220,939 and 342,130 warrants respectively
lapsed/cancelled till date due to resignation. The lapsed/ cancelled
warrants were added back to the kitty for reissuance to the eligible
employees from time to time.
c. ESOP 2004
The Company obtained further approval of the shareholders at the 16th
AGM held on September 16,2004, for allocation of 3,000,000 warrants
convertible into equal number of equity shares to employees of the
Company and similarly 500,000 warrants convertible into equal number of
equity shares to employees of its subsidiaries (in the form of warrants
under ESOP 2004) at an exercise price, at a discount up to 25% of the
Average Price of the weekly high and low of the closing prices of the
Companys shares on the NSE, for the preceding six months of the month
in which the Warrants are allotted.
In this ESOP 2004 Scheme, the Company had granted 3,191,000 warrants to
its Employees and 223,900 warrants to employees of its subsidiaries.
This includes 500,570 and 29,750 warrants respectively lapsed/cancelled
till date due to resignation. The lapsed/cancelled warrants were added
back to the kitty for reissuance to the eligible employees from time
to time.
d. ESOP 2005
The Company obtained further approval of the shareholders at the 17th
AGM held on September 27,2005, for allocation of 3,500,000 warrants
convertible into equal number of equity shares to employees of the
Company and similarly 300,000 warrants convertible into equal number of
equity shares to employees of its subsidiaries (in the form of warrants
under ESOP 2005) at an exercise price, at a discount up to 25% of the
Average Price of the weekly high and low of the closing prices of the
Companys shares on the NSE or BSE, as the case may be where the volume
of shares traded is more, in the preceding six months of the month in
which the Warrants are allotted.
In this ESOP 2005 Scheme, the Company had granted 316,500 warrants to
its Employees This includes 4,000 warrants lapsed/cancelled till date
due to resignation. The lapsed/cancelled warrants were added back to
the kitty for reissuance to the eligible employees from time to time.
e. ESOP 2008
The Company obtained further approval of the shareholders at the 20th
AGM held on June 13, 2008, for allocation of 1,500,000 warrants
convertible into equal number of equity shares to employees of the
Company under this scheme(in the form of warrants under ESOP 2008) at
an exercise price at a discount up to 25% of the Average Price of the
weekly high and low of the closing prices for the preceding six months
of the month in which the warrants are allotted or the closing market
price on the previous trading day on which the warrants are allotted,
whichever is lower, on the National Stock Exchange of India Limited or
Bombay Stock Exchange Limited as the case may be where the volume of
shares traded is more. In this ESOP 2008 Scheme, No grants have been
issued to the Employees till date.
In order to give impetus of improved Stock market conditions to the
employees and pursuant to the powers vested on the Board of Directors
by the Shareholder, the Board in its meeting held on July 22,2009
decided to permit eligible employees to vest their options after the
initial lock-in-period of 12 months g. The Company applies
intrinsic-value based method of accounting for determining Employee
Compensation Expense for its ESOS. Had the Employee Compensation
Expense been determined using the fair value approach, the Companys
net profit and basic and diluted earnings per share as reported would
have reduced to the proforma amounts as indicated below:-
Defined Benefit Plan
The employees Gratuity Fund Scheme, which is defined benefit plan, is
managed by Trust maintained with Life Insurance Corporation of India
[LIC]. The present value of obligation is determined based on actuarial
valuation using Projected Unit Credit Method, which recognizes each
period of service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation for compensated absences is recognized in
same manner as gratuity.
5. Additional information pursuant to the provisions of paragraph 3
(ii) (d) of Part II of the Schedule VI to the Companies Act, 1956: -
The Company is in the business of providing Network Services involving
Network Planning & Designing, Network Deployment, Operation and
Maintenance, Professional Services and Energy Management. In view of
the composite nature of business activities, the company has not
furnished the quantitative information as required under paragraph 3
(ii) (d) of Part II of Schedule VI.
Name of the key managerial personnel
a Mr. Manoj Tirodkar, Chairman and Managing Director b Mr. Charudatta
Naik, Whole-time Director
6. OPERATING LEASES
The Company lease agreements are in respect of operating lease for
office premises, guesthouse, warehouses and vehicles. These lease
agreements provide for cancellation by either parties there to as per
the terms and condition of the agreements. The lease rental recognized
to the profit & loss account during the year Rs.1,134.98 lacs
(Rs.842.14 lacs). The lease agreements obligations due within
five-years Rs.1,814.41 lacs (Rs.1, 048.38 lacs).
7. In respect of Goods procured and supplied under agency
arrangements, commission of Rs.2,598.38 Lacs (Previous Year Rs.1,927.98
lacs) is recognized as Income. During the year under these arrangements
and as per the contractually agreed terms, the company by issuing
acceptances has utilized its Non-fund based credit facilities of
Rs.62,484.95 lacs (Previous Year Rs.55,130.45 lacs) for discharging the
liability of principal for the goods procured. The receivables from the
principal for the same as at the year-end are Rs.40,149.45 lacs
(Rs.55,130.45 lacs). These receivables and the liability for
acceptances as referred above are presented net in the Financial
Statements.
8. The Companys associate Chennai Network Infrastructure Limited
(CNIL) has agreed to purchase tower business of Aircel Limited and its
subsidiaries (Aircel). In terms of sponsorship agreement in this
regard, during the year the Company has paid Equity Share Application
money Rs.106,778.60 lacs to CNIL and the said amount is shown under
Loan & Advances.
9. The Company has entered into Agreement for Assignment of
Receivable" with GTL Infrastructure Limited (GIL).In terms of the said
agreement, GIL has assigned receivables from its customer with regards
to Energy Management to GTL. Out of the assigned Receivable during the
year of Rs.10,579.14 lacs (Previous Year Rs. NIL), outstanding amount
of Rs.4,312.01 lacs (Previous Year Rs. NIL) as at March 31, 2010 is
shown under Other Current Assets"
10. IMPAIRMENT OF ASSETS
In Accordance with the Accounting Standard (AS-28) on "Impairment of
Assets" the management during the year carried out an exercise of
identifying the assets that may have been impaired in respect of each
cash-generating unit. On the basis of this review carried out by the
management, there was no impairment loss on fixed assets during the
period ended March 31, 2010.
11. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated financials statements forming part of the accounts with
the Auditors report thereon are attached herewith.
12. SEGMENT REPORTING
Segment Reporting as per Accounting Standard 17 based on consoli- dated
Financial Statements is forming part of Consolidated Financial
Statement.
13. The Previous years figures, wherever necessary, have been
regrouped/re- arranged/recast to make them comparable with those of the
current year.
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