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Directors Report of Mahanagar Telephone Nigam Ltd.

Mar 31, 2023

DIRECTOR''S REPORT

To

THE SHAREHOLDERS,

MAHANAGAR TELEPHONE NIGAM LIMITED,

Dear Shareholders,

Your Directors present the 37th Annual Report of your Company together with the Financial

Statements and the Report of the Auditors as well as Comments of Comptroller & Auditor

General of India (CAG) on the Financial Statements for the Financial Year ended on March 31,

2023.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2022-231. Mobile Network:

i) Launching of 4G Services in Delhi and Mumbai: DoT vide Office memorandum No.30-
04/2019-PSU affairs dated 29th Oct 2019 had informed that GoI in its cabinet meeting
held on 23-10-2019 has approved the proposal of administrative allotment of spectrum
for 4G services to BSNL and MTNL among other things so as to enable these PSUs to
provide broadband and other data services. In a modification to this decision, the Group
of Ministers (GoM) constituted on the matter of "Revival of BSNL and MTNL" approved
allocation of 4G spectrum to BSNL in Delhi and Mumbai in place of MTNL in its meeting
held on 21.12.2020. Accordingly, Mobile 4G network is being planned for roll out by
BSNL in Delhi and Mumbai.

ii) Mobile Network elements of BSNL such as OMCR, CNMC, EIR, SSTP, MNP gateway,
SPAM filter have been integrated with MTNL mobile network and are being utilized on
need basis. IOR setup for CIOR implementation is being developed by BSNL for BSNL
and MTNL both. This IOR setup is under testing by BSNL and MTNL team. MTNL DLT
platform is in the process of migration to BSNL.

2. W ireline Network:

i) Up-gradation of MPLS Network: MTNL is planning to upgrade entire MPLS network
along with the security solution to handle growing traffic needs of FTTH and 4G
networks. MPLS expansion plan includes 6 Core routers, 78 Edge routers and 150 L-3
Switches. MPLS equipment for MTNL is under procurement as a part of BSNL''s Tender.
T he Purchase Order for the same has already been placed. The survey of the sites is
underway for installation of the equipment.

ii) Firewalls for Data Centre: The requirement of firewall for CGO Complex Data Centre
in Delhi, IT unit Data Centre at Minto Road Delhi as well as Prabhadevi Data Centre in
Mumbai was shared with BSNL for inclusion in its BSNL''s Tender. Purchase Order for
the same has already been placed by BSNL and the Firewalls are going to be deployed
soon in the network.

iii) Deployment of Border Network Gateway (BNGs) for broadband network: Keeping
in view upgradation of Broadband Network of MTNL, a need is felt to replace old

Broadband Remote Access Servers (BRASs) with new BNGs having better capabilities.
Accordingly, the requirement of 4 BNGs was sent to BSNL for procurement through
their tender. BSNL has placed the Purchase Order for 4 BNGs and the equipment shall
be deployed in near future.

iv) Procurement of OTN: The requirement of backbone network of MTNL''s transmission
system is being catered by legacy DWDM equipment. MTNL plans to augment the
backbone network by installing OTN equipment. The requirement of OTN equipment
of MTNL (5 for Delhi and 19 for Mumbai) has been included in BSNL''s OTN Tender,
which is in process.

v) FTTH Revenue Share Policy: MTNL had worked out, finalized and made operational
the policy to engage partners on revenue share basis to extend its FTTx services. The
Policy has been significantly liberalized so as to attract more revenue share partners.

vi) FTTH Rollout Plan: A tender dated 22.01.2021 was floated for Procurement of GPON
based FTTH equipment in Delhi & Mumbai wherein there was provision for 494 No''s
of GPON OLT & 21746 No''s of GPON ONT. Instruction has been given to both the units
to issue Purchase Order on M/s Tejas Networks as per the authorization, for the most
essential quantity / immediate requirement only as per direction of CMD. Thus, a total
order for the procurement of 64 OLTs and 6000 ONTs in Delhi and Mumbai has been
placed.

vii) Procurement of Batteries and Power plants: The Power plants and batteries are the most
important infrastructural items to run network. There was immediate requirement for
replacement of 14 battery sets in Delhi and 10 sets in Mumbai. The matter was taken
u p with BSNL for procurement of batteries through their tender. Accordingly, BSNL
i s in process of placement of orders for urgent requirement of battery sets MTNL.
Requirement of Battery sets and power plants for complete network of MTNL Delhi and
Mumbai is being assessed.

3. Synergy/Integration of Networks between MTNL & BSNL: In order to reduce the CAPEX

and OPEX, several synergy/Integration items have been identified and shared with BSNL to

bring out the best possible technical solutions as given below--

i) Integration of BSNL Mobile network nodes with MTNL Mobile network: MNP Gateway,
OMC-R, CNMC, EIR, SSTP, SPAM filter of BSNL has been integrated with MTNL mobile
network.

ii) Mobile Service Billing: BSNL has placed a PO for TECH REFRESH of its Wireless billing
application wherein requirement of MTNL Wireless billing would also be catered.
Further, the procurement of servers and other hardware''s for Billing is under process

i ii) Sharing of NMS for MLLN: BSNL uses an upgraded NMS with latest servers and
application version for managing MLLN network. MLLN network in BSNL and MTNL
are of same OEM i.e. M/s Infinera (earlier M/s Tellabs). Sharing of NMS will lead to
substantial saving of up-gradation cost. BSNL has placed a PO on M/s pertsol long
back on 05.08.2021 for restoring their NOC DR site and for migration and integration
of MTNL MLLN network with BSNL. However, the activities for migration of MTNL
MLLN network has not started yet.

iv) Migration of MTNL landline subscribers on BSNL IMS core through diversion of spare
LMGs from BSNL: Since, the NT switch installed in MTNL based on TDM technologies
h ave become outdated and obsolete, it was decided to migrate MTNL landline
subscribers on BSNL IMS core through diversion of spare LMGs from BSNL. MTNL had
already successfully conducted the testing of voice and data with BSNL NGN in Delhi
and Mumbai network. Orders for the diversion of about 6 lakhs LMG equipment has
been issued by BSNL for MTNL Delhi and Mumbai which are in the process of diversion
and installation at various exchange locations of Delhi and Mumbai.

v) Migration of FTTH VoIP subscribers on BSNL network: In view of obsolescence of
C-DOT IMS Core installed in MTNL''s network, it was decided to shift the MTNL FTTH
voice subscribers on BSNL''s Network. The migration has been completed in Delhi and
Mumbai.

vi) CRM & CDR based Billing System: Common CDR based Billing system for all fixed line
services (BB, FTTH, Landline and Leased circuit) for BSNL is under implementation
in BSNL. A decision is already there to migrate the billing for all fixed line services
o f MTNL on BSNL CDR Platform. Further, CB-CRM system presently being used for
wireless billing/IUC and MNP billing in MTNL will also be migrated to BSNL platform.
BSNL has planned the implementation of the same after the launching of 4G services in
Delhi and Mumbai.

vii) ILD for Voice & Data services: Outgoing ILD traffic of MTNL Delhi and MTNL Mumbai
is being routed through BSNL Taxes.

FINANCIAL RESULTS OF MTNL FOR THE FY 2022-23

The Standalone Financial Results of your company along with Consolidated Financial Results
for Financial Year 2022-23 is placed as an annexure to this Report.

The Standalone and Consolidated Financial highlights of your company for the Financial Year
ended March 31st, 2023 are summarized as follows:

Consolidated Result

Standalone Result

(MTNL, its Subsidiaries,

JV & Associates)

2022-23

2021-22

2022-23

2021-22

Income from Operations

861.57

1,069.72

935.23

1,149.04

Expenditures (Excluding Finance
Cost)

2,030.51

2,160.04

2,110.80

2,239.66

Operating Profit/(Loss)

(1,168.93)

(1,090.33)

(1,175.57)

(1,090.62)

Other Income

612.45

627.18

613.09

628.89

Finance Cost

2,354.26

2,139.45

2,354.38

2,139.62

Profit/(Loss) before Tax

(2,910.74)

(2,602.59)

(2,916.85)

(2,601.36)

Exceptional Items

-

-

Share of profit/(loss)in investments
accounted for using equity methods

-

1.24

1.15

Tax Provision for the Year

-

(0.50)

2.91

Standalone Result

Consolidated Result
(MTNL, its Subsidiaries,
JV & Associates)

2022-23

2021-22

2022-23

2021-22

Profit/ (Loss) for the Year from
Continuing Operations

(2,910.74)

(2,602.59)

(2,915.11)

(2,603.12)

Profit/ (Loss) for the Year from
Discontinuing Operations

-

-

Profit/ (Loss) for the Year

(2,910.74)

(2,602.59)

(2,915.11)

(2,603.12)

Other Comprehensive Income

(4.48)

(13.98)

(0.35)

(20.63)

Total Comprehensive Income for
the Year

(2,915.22)

(2,616.57)

(2,915.46)

(2,623.76)

Appropriation

-

-

Interim/ Proposed Final Dividend

-

-

-

-

Dividend Tax

-

-

-

-

Transfer to/ (from):

-

-

a) Contingency Reserve

-

-

-

-

b) Debenture Redemption Reserve

-

-

-

-

SOURCES AND APPLICATION OF FUNDS FOR THE FY 2022-23 ARE GIVEN BELOW: -

SOURCES AND USES OF FUNDS

2022-23

2021-22

2022-23

2021-22

Authorised Capital

10,000.00

10,000.00

10,000.00

10,000.00

Issued, Subscribed & Paid Up
Capital

630.00

630.00

630.00

630.00

Other Equity

(21,472.90)

(19,286.45)

(21,484.94)

(19,298.26)

Non-Current and Current
Borrowings

28,174.01

26,606.48

28,174.01

26,606.48

Deferred Tax Liability (Net)

-

-

6.60

6.99

REPRESENTED BY

Property, Plant and Equipment
(Net Block)

2,697.87

2,982.74

2,761.67

3,045.19

Capital Work in progress

59.49

73.98

59.49

73.98

Investment Property

61.75

62.09

68.03

68.62

Intangible Asset (Net Block)

1,764.31

2,097.96

1,764.31

2,097.96

Investment

106.13

106.13

3.06

3.07

Other Assets

6,945.09

6,980.73

6,987.43

7,027.92

Other Liabilities

4,303.53

4,353.62

4,318.32

4,371.54

The Company has prepared this Consolidated and Standalone Financial Results in accordance
with the Companies (Indian Accounting Standards) Rules 2015 (Ind AS) prescribed under
Section 133 of the Companies Act, 2013.There is no revision of Financial Statements and Boards
Report of the Company during the year under review.

AMOUNT, IF ANY, WHICH THE BOARD PROPOSE TO CARRY TO ANY RESERVES

The Company has not transferred any amount to the Reserves in the absence of any profits
during the Financial Year 2022-23.

DIVIDEND

Since there has been no operating profit, the Board of Directors of your company expresses
it s inability to recommend any dividend during FY 2022-23. However, the Company has
formulated and adopted Dividend Distribution Policy in terms of Regulation 43A of SEBI
(LODR) Regulations, 2015

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL
POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL
YEARTO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE
REPORT.

No Material changes and commitment affecting the financial position of the company occurred
between the end of the financial year to which these financial statements relate and the date of
the report. There has been no change in the nature of Business of the Company as on the date
of the report.

CAPITAL AND DEBT STRUCTURE OF MTNL

During the Financial Year 2022-23, there was no increase in the Authorized Share Capital of your
Company. The Authorized Share Capital as at March 31, 2023 of your company was Rs. 10,000
Crores comprising of 65 Crores of Preference Shares of Rs. 100 each and 350 Crores of Equity
Shares of Rs 10 each. The Paid-up Equity Share Capital as at March 31, 2023 of your company
was Rs. 630 Crores comprising of 63 Crores Equity Shares of Rs. 10 each.

During the Financial Year 2022-23, your company has neither issued any shares with differential
voting rights nor has granted any stock option or sweats equity or issued any equity shares or
preference shares or any securities which carry a right or option to convert or issue any Share
warrants.

During the Financial Year 2022-23 your company has issued following Debentures/Bonds: -

1. MTNL has issued 8.00% 61096 (face value Rs. 1000000/-) Unsecured Rated Listed Government
of India Guaranteed Redeemable Non-Convertible Taxable Bonds in the Nature of Debentures
Series VIIA/2022 (Date of Maturity - 15-11-2032) on 15-11-2022 amounting to Rs 6109.60 Cr.

2. MTNL has issued 7.87% 27579 (face value Rs. 1000000/-) Unsecured Rated Listed Government
of India Guaranteed Redeemable Non-Convertible Taxable Bonds in the Nature of Debentures
Series VIIB/2022 (Date of Maturity - 01-12-2032) on 01-12-2022 amounting to Rs 2757.9 Cr.

3. MTNL has issued 7.78% 16176 (face value Rs. 1000000/-) Unsecured Rated Listed Government
of India Guaranteed Redeemable Non-Convertible Taxable Bonds in the Nature of Debentures
Series VIIC/2023 (Date of Maturity - 10-02-2033) on 10-02-2023 amounting to Rs 1617.6 Cr.

4. MTNL has issued 7.80% 3615 (face value Rs. 1000000/-) Unsecured Rated Listed Government
of India Guaranteed Redeemable Non-Convertible Taxable Bonds in the Nature of Debentures
Series VIID/2023 (Date of Maturity - 24-02-2033) on 24-02-2023 amounting to Rs 361.5 Cr.

5. MTNL has issued 7.75% 634 (face value Rs. 1000000/-) Unsecured Rated Listed Government of
India Guaranteed Redeemable Non-Convertible Taxable Bonds in the Nature of Debentures
Series VII E/2023 (Date of Maturity - 24-03-2033) on 24-03-2023 amounting to Rs 63.4 Cr.

The NCDs are listed on the wholesale debt market segment of BSE Limited

CREDIT RATING

CARE Ratings Limited has reaffirmed its ''CARE AAA (CE); Stable'' rating on the Rs 24923.97
crore Non-Convertible Debentures of Mahanagar Telephone Nigam Limited (MTNL) vide its
letter dtd 03.11.2022. There has been no change in the rating given by CARE in last three years
i.e., 2020, 2021 and 2022. India Ratings & Research Private Limited had assigned INDAAA
(CE)/Stable on the Rs 10910 crore non-convertible debentures of Mahanagar Telephone Nigam
Limited (MTNL) vide its letter dtd 01.02.2022.

ASSET MONETIZATION IN MTNL DURING FY 2022-23

MTNL had taken up its asset monetization programme through Department of Investment
and Public Asset Management (DIPAM) in accordance with the Cabinet decision on revival
of MTNL. DIPAM appointed International Property Consultant (IPC) for 5 land parcels and
398 quarters of MTNL and out of these properties, two properties reached to auction stage.
Meanwhile, work of asset monetization had been transferred from DIPAM to Department of
Public Enterprise (DPE) and the Inter Ministerial Group (IMG) decided to annul the auction
process /bids received. A company National Land Monetization Corporation (NLMC) has
been setup by DPE to undertake monetization of assets of CPSEs. Now, MTNL has submitted
3 assets of value more than Rs 100 Cr to DoT/NLMC for monetization. MTNL has also initiated
monetization process for properties of value less than Rs 100 Cr, which shall be monetized by
MTNL through Board of Directors and/or GoM approval and has identified 6 properties of
value less than Rs 10 Cr and 5 properties of value more than Rs 10 Cr and up to Rs 100 Cr range.
Valuation & legal due diligence have been completed. These proposals are in different stages of
approval. Appointment of Transaction Advisor and auctioning agency are also under process
in parallel. In addition to this, efforts are also being made for renting out spare-able office spaces
to various Government Departments/PSU/Banks and other eligible organizations & MTNL has
generated revenue of Rs 434 crs from renting of properties and Rs 54 crs from renting of towers
in the Financial Year 2022-23.

PROCUREMENT DONE BY MTNL DURING FY 2022-23 (Rs. In Crores))

Sl. No.

PROCUREMENT DURING FY 2022-23

(Rs. in Crores)

1.

Total Procurement during the year

63.6076

2.

Annual Procurement from Micro and Small Enterprises (MSEs)

50.2898

3.

Annual procurement from MSEs owned by SC/ST Entrepreneurs

0.3038

4.

Annual procurement from MSEs owned by Women Entrepreneurs

1.9800

5.

Annual Procurement from GeM

10.18

6.

Annual Procurement from MSEs on GeM

10.12

REVIEW OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

Pursuant to Section 129(3) of the Companies Act, 2013 ("Act"), the consolidated financial
statements of the Company and its subsidiaries, associates and joint ventures, prepared in
accordance with the relevant Accounting Standard specified under Section 133 of the Act, read
with Rule 7 of the Companies (Accounts) Rules, 2014, form part of this Annual Report. Pursuant
to the provisions of the said section, a statement containing the salient features of the financial
statements of the Company''s subsidiaries, associates and joint ventures in Form AOC-1 is given
in this Annual Report. At present there is no material subsidiary company of MTNL, within the
meaning of the Companies Act, 2013 / SEBI (LODR), 2015.

During the year under review, there has been no change in the nature of the business of the
Subsidiaries.

During the period under review, no Company has become or ceased to be Subsidiary, Associates
or Joint Venture of the Company

The Policy on Material Subsidiary has been approved by the Board and the same may be accessed
on the Company''s Website at the link: http://mtnl.in/policy materialsubsidy.pdf

Performance highlights of Subsidiaries, Associates and Joint Venture Companies during FY

2022-23 are briefly given as under: -

SUBSIDIARIES(I) MAHANAGAR TELEPHONE (MAURITIUS) LTD. (MTML) (A WHOLLY OWNED
OVERSEAS SUBSIDIARY

MTML is a 100% owned subsidiary of MTNL in Mauritius. The company is having license
for Mobile Services, International Long Distance (ILD) Services and Internet Services. In
a small Island country having a population of around 12.5 Lacs only and having Mobile
Tele-density of more than 150%, MTML has been able to successfully position itself with
Customer Centric Services. With patronage of more than 4,00,000 customers, MTML is able
to compete well in a saturated telecom market. MTML is offering Mobile Services on latest
state of the art technology having 4G (LTE) Services covering more than 90% of the total
population and 2G/3G Network all over the Island. With increased coverage of high speed
data services on 4G and migrating more and more subscribers to its 4G network, MTML
customers are now generating more than 1700 TB of data every month. Data download
has increased by more than 35% during the financial year 2022-23.MTML became the first
operator in Mauritius to launch e-SIM Service which has helped it in acquiring higher ARPU
customers. MTML has also acquired licence for 5G Services in Mauritius recently. Action
on procurement of equipment has been started and it is expected to launch 5G Services in
commercially important areas in due course. MTML has established its own brand CHILI
in the Republic of Mauritius as trusted total telecom service provider. With more than 265
BTSs operating across the island, the quality of service is to the satisfaction of customers.
Co-location with other telecom providers for mobile network has also started opening a new
source of revenue for the company. MTML has been introducing innovative tariff packages
to match current market dynamics with the state of art technology and is quite popular
especially among youth. MTML has also diversified into retailing of Smartphones and the
business has picked up well during past two years. During 2022-23, total Smartphone Sales
reached nearly MUR 40 Million. All the expenses of the company are paid from its own
internal resources. The CAPEX for procurement of equipment is met from its own internal
resources. MTML is operating from its own building, constructed from internal resources,
situated in Cyber City, Mauritius which is considered to be the heart of IT hub in Mauritius.
There is no debt liability on the Company. The company is managed by CEO/CFO and 10
more officers, all on deputation from the parent company. Other operations are managed
through local outsourcing. During the financial year under report, MTML has incurred a
loss of Rs 3.71 crore as against a profit after tax of Rs 0.26 crore last year.

(II) MILLENNIUM TELECOM LTD. (MTL) (A WHOLLY OWNED INDIAN
SUBSIDIARY)

Millennium Telecom Ltd. (MTL): a wholly owned subsidiary of Mahanagar Telephone
Nigam Limited, a Government of India CPSE, registered office in New Delhi. MTL was
incorporated in February 2000. ICT related Services being offered by MTL include Cloud
services, Wi-Fi solution; project one-governance, Managed services, Turnkey ICT solution,
GIS based services, capacity building and skill development etc. MTL earned a net profit
of Rs. 31.77 lakhs for the period ending 31st March 2023. MTL has also declared a dividend
of Rs 14.38 Lakhs, which amounts to 5% of paid up capital. MTL''s customer list includes
Air India, Uttarkhand Government, J & K Government, Central University-(Mahendragarh)
Haryana, UP Building and Other Constructions Workers Welfare Board (UP BOCWWB),
Lucknow, Thane Municipal Corporation CIDCO, Film Division of India, Insurance Institute
of India etc. MTL is also expanding its portfolio of service for providing generalized as
well customized solutions to suit government and semi government institutions. MTL has
empanelled Business Development Associates (BDAs) for 10 years through EOI. MTL has
around 21 empanelled Business Development Associates (BDAs) for innovative projects in
ICT related fields. During the financial year under report, MTL has registered a profit after
tax of Rs 31,76,964 /- as against a profit after tax of Rs 19,78,963/- last year

JOINT VENTURE(i) MTNL STPI IT SERVICES LTD. (MSITSL)

MTNL STPI IT SERVICES LTD (MSITSL) is a 50:50 Joint Venture company of Mahanagar
Telephone Nigam Limited (MTNL) and Software Technology Parks of India (STPI). MSITSL
was incorporated on 31/03/2006 under the Companies Act, 1956, with authorized Capital of
Rs. 50 Crores. In order to implement one of its core objectives, MSITSL has established the
physical infrastructure of Tier III Data Center at Chennai on space taken on lease basis from
STPI. The Data Center has server farm area of around 3500 sq. ft. and the total investment
made in this regard is of Rs.477 lakhs. This Tier III Data Center is maintaining 99.98% uptime
on 24X7. The commercial operation of the Data Center commenced in 2009. At present, the
following are our prime customers who have co-located server/storage/network racks of
their functions and operations in the MSITSL Data Centre:

• The Ministry of External Affairs (MEA) has hosted Passport Seva Project at MSITSL Data
Center through M/s TCS.

• The Directorate General of Employment & Training (DGE&T) in Ministry of Labour&
Employment has hosted National Career Project through STPI at MSITSL Data Centre.

• M/s Repco Bank Ltd and its associates such as Repco Microfinance Ltd and Repco Home
Finance Ltd have co-located server racks for banking/finance operation.

MEA approached MSITS for hosting PSP 2.0 at MSITS DC Chennai through TCS. In this
regard, MSITS has installed non-computing infrastructure in the vacant area and established
server farm area and handed over to TCS on 31.01.2023 for co-locating PSP 2.0. Thereafter,
TCS has co-located 13 numbers racks and commenced PSP 2.0 in FY 2022-23. The revenue
of the company has been increasing year after year from the date of its commercialization
in 2009. The company has earned Rs. 7,14,49,910/-as revenue from operations for FY 2022¬
23 as against Rs. 6,88,29,548/- for FY 2021-22.

(II) UNITED TELECOMMUNICATIONS LTD. (UTL), NEPAL

UTL is J.V. Company of MTNL which consists of TCL, TCIL, NVPL (Nepal) & MTNL. The
company provides Mobile/ILD/data services in Nepal. At present MTNL is holding 26.68%
of Equity in UTL. The company has not been performing well for the last few years. It has

huge losses. The Customer base has also reduced. It is not able to pay the statutory dues like
Royalty Fees, BTS site charges, and other dues to the Govt. of Nepal. The company does not
have resources to clear outstanding. They have sought Equity/ Loan participation by its JV
partners but MTNL, TCIL & TCL all the Indian JV partners have decided not to contribute
any amount towards its Share Capital or Loan. All the Indian JV Partners have decided to
exit from the JV and have exercised their Right to exit, on January 30, 2018 at par value.
Notice of exit (Sale of our share in JV Company) was given on 30.01.2018 and was required
to be accepted within 3 months i.e., on or before 30.04.2018 but so far, the same has not been
given effect by the UTL/NVPL. Now, MTNL along with other Indian JV Partners are taking
legal opinion on various options available to them for exit from UTL, which are: Reminder
to implement the exit right already exercised and to hold board meeting for consideration
of all such issues including the going concern status of the company, Sale of shares to NVPL
viaexerciseof Exit Right
, Sale of shares to a third-party buyer(s) and Liquidation etc.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2022-23 (AS ON 31st MARCH,
2023)

Your Company has the following equipped and used capacity of Landline, GSM, Broadband
etc. as on 31st March, 2023: -

S. No.

Parameters

MTNL Delhi

MTNL Mumbai

MTNL Total

1

Number of Switches

288

339

627

2

Details of Capacity

2a

Fixed Phones

2013129

2464710

4477839

2b

GSM (Mobile)

1900000

2800000

4700000

2c

Broadband Capacity (in Ports)

788736

845020

1633756

3

DELs (including Fixed-Line,
GSM, Broadband & FTTH)

1887392

2174502

4061894

3a

Land Line

781605

1264742

2046347

3b

GSM (Mobile)

861619

660482

1522101

3c

Broadband Subscribers

215487

227240

442727

3d

FTTH Subscribers

28681

22038

50719

4

ISDN

6629

8,241

14870

5

DLC (No.)

30

32

62

6

Tax Capacity

80000

115200

195200

7

Tandem Capacity

215500

331240

546740

8

Optical Fibre Cable

8a

OFC in Route Kms

9522.778

10193.238

19716.016

8b

OFC in Fibre Kms

312492.210

327717.035

640209.245

9

Leased Circuits

8825

12313

21138

HUMAN RESOURCE DEVELOPMENT

The Company attaches the highest priority to the quality of intellectual capital at its disposal
and believes that knowledge and skills of its employees are the key to achievements of its
corporate mission. It has sound recruitment policy and comprehensive training system. During
the past one year, our company has laid greater emphasis on Human Resources Development.
We have been devoting substantial resources on building a skilled workforce that has capability
to counter threats posed by ever changing customer base. The Company has been conducting
various training and development activities which apart from reorienting the employees towards
the greater organizational purpose are also focusing on eliminating any skill gap and technical
obsolescence. The management''s view on training is one of development of employee''s overall
personality and enabling them in becoming a vital productive resource.

TRAINING ACHIEVEMENTS

At present, MTNL has its two in house state of the art training centers, one located in New Delhi
and another at Mumbai. The details of the achievement of training centers at Delhi and Mumbai
are given below:

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM),
NEW DELHI

The Institute of Telecom Technology and Management, ITTM, Shadipur, New Delhi is a state
of the art training center of MTNL, Delhi engaged in imparting induction training and short
duration training to its officers and employees in the field of Telecom, IT, Computer System
and Management. ITTM has the necessary infrastructure, technical and academic competence
and excellence for providing training in specialized courses in the field of GSM, Broadband
Technology, Switching, Transmission, External Plant, IT, Computer System, Management
and various wellness and Life Style Management subjects comprising of Motivation, Positive
Thinking, Stress Management and cyber security, RTI. In addition to this, ITTM also conducts
Industrial Training and Visits for students from Engineering Colleges and Various Schools of
India. ITTM conducts regular executives upgradation training for financially upgraded executives
from E2 to E7 cadre (E2-E3, E3-E4, E4-E5, E5-E6, E6-E7) in core competency (Telecom, Civil,
Finance, Electrical, HR/Marketing/CS/Legal) and management module of one week duration
each. From April 2022 to March 2023, total 474 executives have undergone up-gradation training
and awareness programs. Total 81 Graduate engineering students have undergone Industrial
Visit during period April 2022 to March 2023.

Details of ITTM''s achievements during financial year 2022-23 are as follows:

S.No.

Mode of training

Name of programs

Number of
training programs

Number of
trainees trained

E-mode

Financial up-gradation

06

35

Off-line

Financial up-gradation

32

321

General awareness programs
like RTI/Cyber Security/Yoga

9

69

Classes on topics like FTTH /
OFC /Excel

6

49

Industrial Visit

2

81

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGE¬
MENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM), an ISO 9001:2015
certified institute, is situated at Technology Street, Hiranandani Gardens, Powai, Mumbai.
CETTM''s achievements during financial year 2022-23 are as follows: CETTM has conducted
various short duration Technical as well as Management related courses for MTNL employees
on need basis to improve MTNL business and services. CETTM successfully conducted in all
21 training programs and trained 181 in-house personnel achieving a figure of 181 Trainee
days. Total 1727 number of students in 79 batches from 32 different Engineering/Polytechnic
Colleges took part in the "Industrial Visit Programme" at CETTM in the year 2022-23.
CETTM is suiting up to conduct classroom mode trainings with foreign ITEC batches from
June-2023 subject to all the Government SOPs and guidelines time to time. CETTM has
generated total revenue of Rs. 24.84 Cr during the F.Y.2022-23 with an increase of 25% as
compared to Rs. 19.82 Cr revenue in F.Y.2021-22. CETTM continues to be the first choice for
conducting training courses, interviews, workshops, seminar etc. by our esteemed clients.
Top clients include LIC, IITM, IITB, Informist, Hare Krishna Movement, etc. CETTM has
leased additional 70 hostel rooms & 3rd floor (6868 Sq.Ft) of academic building to MNLU in
the F.Y.2022-23. Proposals of leasing 50 more hostel rooms to MNLU and leasing of entire 5th
floor (approx 14000 Sq.Ft) to BIS are in pipeline. CETTM started leasing of its infrastructure
on short duration basis for the shooting of web series, films by prominent production houses
and generated substantial business this year. Further avenues of generating revenue through
other production houses are also under process.

(II) IMPLEMENTATION OF MISSION KARMAYOGI IN MTNL

DoT vide letter dated 16.09.2022 had conveyed that in September 2020, Government of
India has launched Mission Karmayogi, a National Programme for Civil Services Capacity
Building (NPCSCB). The programme aims at building a future-ready civil service with the
right attitude, skills and knowledge, aligned to the vision of New India. It also aims to prepare
Civil Servants for the future by making them more creative, constructive, imaginative,
proactive, innovative, progressive, professional, energetic, transparent and technology-
enabled. The Mission envisages a comprehensive reform of the capacity building apparatus
at the individual, institutional and process levels for efficient public service delivery. The
capacity building will be delivered through iGOT Karmayogi Digital Platform. This platform
will act as a launch-pad for the NPCSCB.

Accordingly, the roadmap for implementation of Mission Karmayogi in MTNL was conveyed
to DoT. Under Mission Karmayogi, MTNL Corporate office has issued the FRACing Units
in MTNL. In this regard assistance is being taken from BSNL for completion of FRACing
exercise in MTNL. 10 officers each from MTNL, Delhi/MTNL, Mumbai would be undergoing
training at ALTTC, Ghaziabad under Mission Karmayogi. These 20 nominated officers after
undergoing training under the BSNL Master Trainer will further train the non-executives in
MTNL. A Consultative workshop-iGOT Karmshala organized by Karmayogi Bharat, DoPT
was held on 2nd May, 2023 at Vigyan Bhawan which was attended by officers from MTNL.
All employees of MTNL will undergo training at iGOT platform.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the
previous year, employee relations remained cordial throughout the year. The grievances/ issues
raised by the Employees/ Unions /Associations were given due attention and regard. The cases/
issues brought up by them were settled through regular meetings and interactions between
Management and Unions/Associations and action, as mutually agreed, was taken to settle them.

EMPLOYEES'' WELFARE

1. Employees Welfare Schemes like subsidized Canteen, Housing, Medical facilities, Group
Insurance etc. continued and maintained by the Company for its employees. Sports and
Cultural activities were also given priority during the year.

2. Married/unmarried female employees with less than two surviving children are entitled to
maternity leave for a period of 180 days on the production of medical certificate from an
authorized medical officer. During the period of such leave, the female employees are paid
leave salary equal to the pay drawn immediately before proceeding on leave.

3. OPD reimbursement has been enhanced and working spouse has been included in OPD.

4. In view of ongoing pandemic situation due to COVID-19, and for providing relief to the
employees and their families, the ceiling for outdoor medical claim in a financial year has
been increased to 10 days salary (Basic IDA) as on 01.04.2020.

5. Changeover of Contributory Group Health Insurance Scheme for retirees to CGHS- After
pursuance of MTNL with DoT, Ministry of Health issued instructions to CGHS for enrolment
of MTNL retirees (drawing Govt. Pension) in the CGHS. To facilitate the same an incentive
is being provided to the retirees concerned. As on date, approximately ''18162'' retirees in
MTNL have benefited from this scheme.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

In Mahanagar Telephone Nigam Limited (MTNL), more and more correspondence in Hindi,
office work in files/e-files, computers, compliance of bilingual provisions related to all items
of the official work at Head Office (Corporate Office) as well as Delhi and Mumbai Units and
area GM offices, Telephone Exchanges under those Units was emphasized in compliance with
the Official Language Policy. Thereby, prompt efforts were done towards attaining the national
goal of doing official work in Hindi, the Official Language. Towards this, compliance of the
provisions of Official Language Policy and directions of the Department of Official Language
and Department of Telecommunications, issued from time to time, by holding the quarterly
meetings, inspections, workshops-training, bilingual versions & updation of the main website
as well as websites of the Units etc. more and more use of Official Language by officers and
officials was emphasized.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC/PHYSICAL
CHALLENGED AND ECONOMICALLY WEAKER SECTION

The Company has endeavored to fulfill all the statutory requirements with regard to
implementation of reservation policy for candidates to SC/ ST/ OBC communities as well as
Physically Challenged and Economically Weaker Section candidates.

IMPLEMENTATION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

The Company has constituted an internal Committee to look into the complaints on Prevention,
Prohibition & Redressal of Sexual Harassment of Women at workplace and matters connected
therewith or incidental thereto covering all aspects as contained in the Sexual Harassment of
Women at workplace (Prevention, Prohibition & Redressal) Act, 2013. During FY 2022-23 one
case was received and which was resolved.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care
has been taken in case of woman employees in night shifts. Also to redress the issues of Sexual
Harassment at workplace, special cells have been constituted

MANPOWERSTATUS

As on 31st March, 2023, the total strength of employees including SC/ST & OBC Category
working in the company as per details is given below: -

Group

Working

SC

ST

OBC*

A

211

51

23

22

B

1001

182

43

193

C

1473

329

27

79

D

880

279

19

47

TSM

2

-

-

-

Grand Total

3567

841

112

341

*At the time of formation of MTNL in April 1986, all employees of DoT were transferred to MTNL
on as is where is basis. The Group ''C'' and D'' employees were absorbed in MTNL in the year 1998,
whereas Group ''B'' officers were absorbed in the year 2000. In subsequent years, some of Group ''A'' officers
were absorbed in MTNL. At the time of recruitment by DoT and absorption in MTNL, maintaining of
separate data for OB C category was not mandatory, therefore, the data for OBC officials/officers was not
maintained. It is further submitted that OBC employees were not identified at the time of absorption. They
were absorbed in MTNL on “as is where is" basis.

TOTAL NO. OF EMPLOYEES (MALE & FEMALE) AS ON 31.03.2023

Total (A)

Male

Female

No. (B)

% (B/A)

No. (C)

% (C/A)

3567

2863

80.26

704

19.74

Total (A)

Male

Female

No. (B)

% (B/A)

No. (C)

% (C/A)

3567

21

0.59

3

0.08

Turnover rate in FY 2022-23

Male

Female

Total

Permanent Employees

21

4

25

MECHANISM AVAILABLE TO RECEIVE AND REDRESS GRIEVANCES FOR THE
EMPLOYEES

MTNL has its own Grievance Redressal Procedure for employees. Management of the Company
believes in the philosophy of an Open Door Policy in the matter of redressal of employee
grievances. An aggrieved employee can approach his/her Departmental Head or the concerned
officer of the Personnel Department (including the Head of the Personnel Department) and
discuss his/her grievance. Best efforts are made to enable prompt actions on the issues raised
by the employee. The objective of the Grievance Redressal Procedure is to provide an easily
accessible machinery for settlement of grievances, and to adopt measures as would ensure
expeditious settlement of grievances, leading to increased satisfaction on the job and resulting
in improved productivity and efficiency of the organization.

MECHANISMS TO PREVENT ADVERSE CONSEQUENCES TO THE COMPLAINANT IN
DISCRIMINATION AND HARASSMENT CASES

To prevent adverse consequences to the complainant in discrimination and harassment cases,
MTNL has appointed concerned Liaison Officers and constituted Committees

COMPLIANCE OF MTNL WITH RIGHTS OF PERSONS WITH DISABILITIES ACT, 2016

MTNL complies with provisions of Rights of Persons with Disabilities Act, 2016 to protect
the interests of persons with disabilities. Reservation is provided as per GoI instructions in
direct recruitment for Persons with Benchmark Disabilities. Separate 100 point vacancy based
reservation roster register is maintained for determining/effecting reservation for the Persons
with Benchmark Disabilities. Relaxation in age limit and standards of suitability (as applicable)
is given to persons with disabilities. Liaison Officers for PwD have been appointed to look after
reservation matters and to ensure compliance of instructions of the Act.

MEASURES TAKEN BY MTNL TO ENSURE A SAFE AND HEALTHY WORK PLACE

1. In order to ensure a safe and healthy workplace, requisite security measures, installation and
maintenance of fire extinguishers and housekeeping measures have been taken in MTNL.

2. MTNL being an essential service provider of telecom services, MTNL has been scrupulously
following COVID prevention and management guidelines for all its stakeholders like social
distancing, wearing of masks, and frequent hand sanitization.

3. Proper cleaning and frequent sanitization of workplace particularly of frequent touched
surfaces at regular intervals has been ensured.

4. Downloading and updating of Aarogya Setu app has been made mandatory.

5. Quarantine Leave has been provided for employees whose family members have been
infected with COVID.

6. For employees and their family members requiring hospitalization due to COVID, Group
Health insurance coverage upto Rs.6 Lakhs is being provided under Group Health Insurance
Scheme.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has been suffering losses for the last few years and hence. The provisions of Section
135 of the Companies Act, 2013 are not applicable. However, the company has constituted a CSR
Committee and also formed a CSR Policy in compliance with the provisions of the Companies
Act, 2013 and DPE Guidelines on the subject. MTNL is undertaking non funding CSR activities
like sending SMS to the public for spreading awareness on spread of COVID 19, awareness on
Swachh Bharat, Pulse Polio, other moves of the Government, etc. For details regarding the CSR
Committee, please refer to the Corporate Governance Report, which forms part of this Report.
The CSR Policy is available on the website of the company https://mtnl.in/csr_2014.pdf

VIGILANCE

The vigilance wing of MTNL is headed by Chief Vigilance Officer. At present, Smt Shefali
Swaroop, (IFS) CVO DoT is in additional charge of CVO, MTNL. CVO is responsible for
complete vigilance administration in MTNL. During the year 2022-23, emphasis was laid
on preventive vigilance and to enhance the awareness of transparency and accountability in
working by carrying out various types of field inspections. Further, training program / seminars
on vigilance matters/complaints handling and disciplinary proceedings have been conducted
during the year for the employees to make the participants understand the conduct rules of
MTNL, procedure for handling departmental proceedings and improve their working efficiency.
As per CVC instructions, the Vigilance Awareness Week was observed from October 31st, 2022
to November 6th, 2022 with the theme ” WTffR kd - R^fffd ffkd" '' Corruption free India

for a developed Nation''

As a precursor to Vigilance Awareness Week 2022, Preventive Vigilance cum internal
housekeeping activities was taken up w.r.t Property Management, Management of assets,
Record Management, Technological initiatives, updation of guidelines/circulars and disposal of
complaints. During this week, various activities like administering of integrity pledge, release
of information booklet on the Vigilance & Disciplinary matters, Preventive Vigilance and other
general conduct (Do''s & Dont''s) among the employees of MTNL was distributed. Also various
programmes such as seminars, workshops, essay, poster as well as Quiz competitions were
organized during Vigilance Awareness Week.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

Your Company has in place a robust Vigil Mechanism for reporting genuine concerns through
the company''s Whistle Blower Policy. The Policy on Whistle Blower may be accessed on the
Company''s Website at the link: http://mtnl.in/whistleBlowerPolicy.pdf . The Company promotes
ethical behavior in all its business activities and has put in place a mechanism for reporting
illegal or unethical behavior as defined under Regulation 22 of SEBI (LODR) Regulation, 2015.
Under the Whistle Blower Policy, the employees are free to report violations of applicable laws
and regulations and the Code of Conduct to the Chairman of the Audit Committee. During the
year under report, no employee was denied access to the Audit Committee.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS

There are no significant and material orders passed by the Regulators/Courts/Tribunals that
would impact the going concern status of the Company and its future operations. Kindly refer
Note no 50 of Standalone financial statements pertaining to contingent liabilities, pending
litigations etc.

DETAILS OF APPLICATION / ANY PROCEEDING PENDING UNDER THE INSOLVENCY
AND BANKRUPTCY CODE, 2016

Neither any application was made nor any proceeding pending under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) during the financial year 2022-23.

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE
TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING
LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE
REASONS THEREOF

As company has not done any one time settlement of loans from the banks or financial institutions
during the year under review, hence no disclosure is required.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MoU) with Transparency International
India (TII) for implementing an Integrity Pact Programme (IPP) focused on enhancing
transparency in its business transactions, contracts and procurement process. Under this MoU,
MTNL is committed to implementing the Integrity Pact in all its major procurement and work
contract activities. The Integrity Pact has strengthened the established system and procedures
by creating trust in various stakeholders. Two Independent External Monitors (IEMs) being
persons of eminence nominated by the Central Vigilance Commission (CVC), to monitor the
activities. As on 31.03.2023, Smt. Rashmi Goel, IRAS (Retd) and Shri Bibhuti Bhushana Mishra,
IPS (Retd.) are acting as IEMs of MTNL.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS & OUTGO

The provision of Section 134(m) of the Companies Act, 2013 do not apply to the Company as
your Company is a service provider. The total foreign exchange earning was Rs. 4.45 Crore and
the total foreign exchange expenditure was Rs. 1.39 Crore
.

ENTERPRISE RISK MANAGEMENT

The Board of Directors of the Company has formed a Enterprise Risk Management Committee
to frame, implement and monitor the risk management plan for the Company. The Committee
is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit
Committee also has additional oversight in the area of financial risks and controls. Major risks
identified by the businesses and functions are systematically addressed through mitigating
actions on a continuing basis. The development and implementation of Risk Management Policy
has been covered in the Management Discussion and Analysis Report as required in terms of
SEBI(LODR) Regulations, which forms part of this Report.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under report, the Board of Directors of your Company met Four times during
the Financial Year 2022-23. The intervening gap between any two meetings was within the period
prescribed by the Companies Act, 2013 & the Listing Regulations i.e. the maximum interval
between any two Board Meetings did not exceed 120 (One hundred and twenty) days. Details of
Board Meetings and Directors attending the same are given in the Corporate Governance Report

forming part of this Report. At these meetings, the Board held intensive discussions on the
budget, important financial transactions and various steps to face the impending competition
from private operators both in Basic Telephone Service, Cellular Mobile Telephone and other
value-added services.

SELECTION AND PROCEDURE FOR NOMINATION AND APPOINTMENT OF
DIRECTORS AND THEIR REMUNERATION

MTNL being a Government Company, the appointment and the terms and conditions of
appointment (including remuneration) of the Whole-Time Directors are decided by the
Government of India. However, the Board has constituted a Nomination & Remuneration
Committee. The Government Nominee Directors do not get any remuneration from the
Company. The Independent Directors are being paid sitting fee of Rs. 10,000/- for attending
each meeting of the Board or Committee thereof. They are reimbursed travel expenses & hotel
expenses on this account, if any in addition to the sitting fees. Details of remuneration paid to
the Whole time Directors and KMP as well as sitting fees paid to Independent Directors for the
year under review are given in the Corporate Governance Report which is attached as annexure
to this report.

PERFORMANCE EVALUATION OF DIRECTORS

Ministry of Corporate Affairs (MCA), through General Circular dated 5th June, 2015, has
exempted Government Companies from the provisions of Section 178 (2) of the Companies
Act, 2013 which provides about manner of performance evaluation of Board of Directors,
Committee of Board of Directors and Director by the Nomination and Remuneration Committee.
The aforesaid circular of MCA further exempted listed Govt. Companies from provisions of
Section 134 (3) (p) of the Companies Act, 2013 which requires mentioning the manner of formal
evaluation of its own performance by the Board and that of its Committees and Individual
Director in Board''s Report, if directors are evaluated by the Ministry or Department of the Central
Government which is administratively in charge of the company, or, as the case may be, the State
Government as per its own evaluation methodology. Now, MCA, through Notification dated
05.07.2017, has amended Schedule IV of the Companies Act, 2013 with respect to performance
evaluation of directors of the Government Companies that in case of matters of performance
evaluation are specified by the concerned Ministries or Departments of the Central Government
or as the case may be, the State Governments and such requirements are complied with by
the Government companies, such provisions of Schedule IV are exempt for the Government
Companies. Similar exemption has been requested by PSUs wing of CII from SEBI under the
SEBI LODR for all PSUs. In this regard, Department of Public Enterprises (DPE) has already laid
down a mechanism for performance appraisal of all functional directors. DPE vide its Office
Memorandum No. 9(14)/2009-GM-Part-3-FTs-9036 dtd. 30.05.2022 has intimated MTNL that
assessment of performance of Non-official Directors/Independent directors is to be done on
annual basis from now onwards. Your Company enters into a Memorandum of Understanding
(MOU) with Government of India each year, demarcating key performance parameters for
the Company. The performance of the Company and Board of Directors are evaluated by the
Department of Public Enterprises vis-a-vis MOU entered into with the Government of India.

TRANSFER OF FUNDS/SHARES TO THE INVESTOR EDUCATION AND PROTECTION
FUND (IEPF)

Your Company has not declared dividend from FY 2009-10 onwards, hence provision of transfer
of unclaimed dividend and shares as per IEPF Rules is not applicable to your Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under report, the Company has not entered into any Material Transaction with
any of its related parties. The Company''s major Related Party Transactions are generally with
its subsidiaries and associates. All Related Party Transactions, if any, were in ordinary course
of Business and were negotiated at an Arm''s Length basis and they were intended to further
the company''s interest. Accordingly, the disclosure of Related Party Transactions as required
under Section 134(3)(h) of Companies Act, 2013 in Form AOC-2 is not applicable. Web link
for Policy on Materiality of Related Party Transactions and also on dealing with Related Party
Transactions has been provided in the Report on Corporate Governance which forms part of
Annual Report. Details of Related Parties and transaction with your Company are given in
Notes to the financial statement which is a part thereof. Pursuant to Regulation 23(9) of SEBI
(LODR) Regulations, your company has filed the reports on Related party Transactions with the
Stock exchanges on Half yearly basis.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION
186 OF THE COMPANIES ACT, 2013
.

During the Year under report, there was no loan or Guarantee given or investments made by the
MTNL under Section 186 of the Companies Act, 2013.

DETAILS OF MONEY ACCEPTED FROM DIRECTOR

During the period under review the Company has not accepted money in the form of unsecured
loan from the director or relative of the director of the Company

CORPORATE GOVERNANCE

Your company has complied with the Corporate Governance requirement under the Act, Listing
Regulations and the relevant guidelines issued by Department of Public Enterprises (DPE). Your
company is also complying with the applicable Secretarial Standards issued by the Institute of
Company Secretaries of India (ICSI). A Certificate from M/s Mritunjay Shekhar & Associates,
Practising Company Secretaries, regarding compliance of conditions of Corporate Governance as
stipulated under Schedule V (E) of SEBI (LODR), 2015 for the FY 2022-23 and Annual Secretarial
Compliance Report for the FY 2022-23 pursuant to SEBI Circular No. CIR/CFD/CMD1/27/2019
dated 8th February, 2019 has also been obtained from M/s Mritunjay Shekhar & Associates,
Practising Company Secretaries are also placed at Annexure to this Report. Further, a separate
section on Corporate Governance is also placed as annexure to this report.

SECRETARIAL STANDARDS

The Company has in place proper systems to ensure compliance with the provisions of the
applicable secretarial standards issued by The Institute of the Company Secretaries of India and
such systems are adequate and operating effectively.

EXTRACT OF ANNUAL RETURN

As provided under Section 92 of the Act and rules framed thereunder the extract of Annual
Return in Form MGT-9 is given as Annexure which forms part of this report. In compliance with
Section 134 (3) (a) of the Act, an extract of Annual Return for the FY 2022-23 is also uploaded on
MTNL Website and can be accessed at www.mtnl.net.in.

IMPLEMENTATION OF CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS
ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE"

In accordance with the MCA and SEBI Circulars and to ensure compliance of Green Initiative,
your Company has sent various documents including Notice of the 37th AGM, Audited Financial
Statements, Directors'' Report, Auditors'' Report for the F.Y. 2022-23 etc. to its Shareholders and
Debenture holders only in electronic form, at the e-mail addresses provided / registered by
members and made available to us by the Depositories (NSDL/CDSL). The members are advised
to update by registering changes, if any, in their e-mail address, with the concerned Depository
Participant.

Your Company shall also display full text of Notice of 37th AGM & Annual Report 2022-23 at its
website http://mtnl.in/annual.html. Your Company looks forward towards active participation
of Shareholders in this "Green Initiative" and requests all Shareholders, who have not so far
supplied their e-mail addresses, to give the same at the earliest. There will be no dispatch by
Post of Notice of 37th AGM and Annual Report 2022-23 to Shareholders and Debenture holders
having no email ids in compliance with Circulars of MCA and SEBI.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors to the best
of their knowledge and belief confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view
of the state of affairs of the company at the end of the financial year and of the profit or loss
of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 2013 for safeguarding the
assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis and

(e) the directors had laid down internal financial controls to be followed by the company and
that such internal financial controls are adequate and were operating efficiently.

(f) the directors had devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company had maintained, in all respects, adequate internal financial controls over financial
reporting and such internal control over financial reporting were operating effectively during
the Financial Year 2022-23, based on the internal control over financial reporting criteria
established by the Company considering the essential components on internal control stated in
the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by
the Institute of Chartered Accountants of India (ICAI). Report on the Internal Financial Control
under Section 143(3)(1) of the Companies Act, 2013 for the FY 2022-23 is attached as annexure to
the Independent Auditors Report which is part of the report.

FIXED DEPOSITS

Your Company has not invited/ accepted any fixed deposits under Section 73 of the Companies
Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year and, as
such, no amount of principal or interest was outstanding as on the Balance Sheet date on this
account.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

The provisions of Section 197(12) of Companies Act, 2013 read with Rule 5 of Companies
(Appointment & Remuneration of Managerial Personnel) Rules, 2014 are not applicable to your
Company as being a Govt. Company.

BUSINESS RESPONSIBILITY & SUSTAINABLITY REPORT (BRSR)

In accordance with Regulation 34(2)(f) of the SEBI (LODR) Regulations 2015, the Securities and
Exchange Board of India (''SEBI''), in May 2021, introduced new sustainability related reporting
requirements to be reported in the specific format of Business Responsibility and Sustainability
Report (''BRSR''). BRSR is a notable departure from the existing Business Responsibility Report
and a significant step towards giving platform to the companies to report the initiatives taken
by them in areas of Environment, Social and Governance. Further, SEBI has mandated top 1,000
listed companies, based on market capitalization, to transition to BRSR from FY2022-23 onwards.
Accordingly, we are glad to present our inaugural BRSR for FY2022-23 part of Annexure to this
Report.

STATUTORY AUDITORS

M/s SPMG & Co., Chartered Accountants and M/s SCV & CO., LLP, Chartered Accountants
have been appointed as Joint Statutory Auditors of your Company by the Comptroller and
Auditor General (CAG) of India for the Financial Year 2022-23 and the Board has already ratified
their appointment on 14.11.2022.

COST AUDITORS

M/s R. M. Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your
company for carrying out audit under Section 148 of the Companies Act, 2013, for the cost
records as maintained under Section 209(1)(d) of Companies Act,1956 and as notified under: (i)
Cost Accounting Records (Telecommunications) Rules,2002 & (ii) Cost Audit Rules,2001 for the
FY 2022-23. The Cost Audit Report alongwith the Annexures for the Financial Year 2021-22 have
been submitted to the Central Government in the Form CRA 4 in XBRL format on MCA Portal
on 18.10.2022.

SECRETARIAL AUDITORS

Your Company has appointed M/s R. P. Sehgal & Associates, Practising Company Secretaries,
to conduct the Secretarial Audit of the Company for the Financial Year 2022-23. The Secretarial
Audit Report of M/s R. P. Sehgal & Associates are given in as annexure to this report.

The replies to the observation of the Statutory Auditors for the Financial Year 2022-23 are given
as Annexure to the Directors'' Report. The Comments of the Comptroller and Auditor General
of India (CAG) on the Financial Statements and the replies of the Management thereon are also
given in the Annexure to the Directors'' Report.

FRAUD REPORTED BY AUDITORS

The Statutory Auditors nor the Secretarial Auditors of the Company have not reported any
fraud during FY 2022-23 as specified under second proviso of Section 143(12) of the Companies
Act, 2013 (including any statutory modification(s) or re-enactment(s) thereof for the time being
enforce).

CRITERIA FOR DETERMINATING QUALIFICATION, POSITIVE ATTRIBUTES AND
INDEPENDENCE OF A DIRECTOR

(i) Qualification: - The Board of Directors of MTNL has formulated the job description for the
posts of CMD and other Functional Directors.The selection of Whole time Directors is done
by Public Enterprise Selection Board (PESB) on the basis of such criteria.

(ii) Positive Attribute: - Apart from the duties of Directors as prescribed in the Companies Act
the Directors are expected to demonstrate high standards of ethical behavior, communication
skills and independent judgment. The Directors are also expected to abide by the respective
code of conduct as applicable to them

(iii) Independence: - A Director is considered as independent if he/she meets the criteria laid
down in Section 149(6) of the Act, the Rules framed their under and Regulations 16(1)(b) of
the Listing Regulations.

INDEPENDENT DIRECTOR

MTNL is a Public Sector Undertaking. All appointments including Independent Directors
on the Board are done by the Administrative Ministry, Government of India, Ministry of
Communications, Department of Telecommunications (DoT).

As on 31.03.2023, MTNL has five Independent Directors on the Board of MTNL.

1. Shri Yogesh Kumar Tamrakar

2. Shri Sarv Daman Bharat

3. Shri Vishwas Pathak

4. Ms. Deepika Mahajan

5. Shri Piyush Ranjan Nishad

All the Independent directors have made declaration that criteria of independence as specified
under Section 149(6) of the Companies Act, 2013 & Regulation 16(1)(b) of SEBI (LODR)
Regulations, 2015 has been complied with. Pursuant to Part ©(2)(i) of Schedule V of SEBI(LODR
2015, the Board of directors of your Company also gave its confirmation that the Independent
Director fulfill the conditions specified in SEBI (LODR) Regulations and are independent of the
Management.

Due to non-appointment of one Independent Director till 31.03.2023, MTNL was unable to
comply the provisions relating to Board Composition [Regulation 17].

The matter for appointment of one more Independent Director has already been taken up with
the Government of India.

The Company has a very balanced and diversified Board of Directors with an optimum mix
of Executive [represented by CMD, Director (HR & EB), Director (Finance) and Director
(Technical)], Non-Executive [represented by Government Nominee Directors] and Independent
Directors.

List of Present Directors of MTNL as on 31.03.2023 & 31.07.2023 is given in the Corporate
Governance Report. During the period under report, the following changes took place in the
Directorship/Key Managerial Personnel (KMP) of your Company: -

1. Shri V. Ramesh was appointed as Director (Technical) vide DoT Letter No.E-2-2/2021-PSA
dtd. 22.03.2022 w.e.f. 01.04.2022.

2. Shri Piyush Ranjan Nishad was appointed as Independent Director of the Company vide
DoT Letter No. E-5-3/2018-PSA dtd. 23.03.2022 w.e.f. 21.04.2022.

3. Shri Navneet Gupta, Government Nominee Director has ceased to be Government Nominee
Director w.e.f. 17.05.2022.

4. Shri Premjit Lal was appointed as Government Nominee Director vide DoT letter No. E-5-
3/2021-PSA dtd. 17.05.2022 & 18.05.2022 w.e.f. 17.05.2022 and ceased to be Government
Nominee Director w.e.f. 17.11.2022.

5. Shri Amitabh Ranjan Sinha, Government Nominee Director has ceased to be Government
Nominee Director w.e.f. 30.05.2022.

6. Ms. Yashashri Shukla was appointed as Government Nominee Director vide DoT Letter
No.E-5-3/2021-PSA -Part(1) dtd. 26.05.2022 w.e.f. 30.05.2022 and ceased to be Government
Nominee Director w.e.f. 26.12.2022.

7. Ms. Yojana Das, Director (Finance) ceased to be Director (Finance) w.e.f. 30.11.2022.

8. Shri Sunil Kumar Verma was appointed as Government Nominee Director vide DoT letter
No.E-5-2/2021-PSA dtd. 17.11.2022 w.e.f. 23.11.2022.

9. Shri Rajiv Kumar was appointed as Director (Finance) vide DoT letter No.E-1-5/2022-PSA
dtd. 30.11.2022 w.e.f. 02.12.2022.

10. Shri Shivendu Gupta was appointed as Government Nominee Director vide DoT letter No.
No. E-5-3/2021-PSA dtd. 26.12.2022 w.e.f. 05.01.2023.

11. Shri Sultan Ahmed, GM (Finance) MTNL CO was appointed as Chief Financial Officer
(CFO) of the Company w.e.f. 14.02.2023.

12. Shri S.R.Sayal ceases to be Company Secretary & KMP of the Company w.e.f. 28.02.2023 on
account of superannuation.

13. Shri Ratan Mani Sumit was appointed as a Company Secretary & KMP of the Company
w.e.f. 01.03.2023.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel (KMP) of
your Company as on 31.03.2023 are: -

i) Shri Sultan Ahmed, Chief Financial Officer (CFO)

ii) Shri Ratan Mani Sumit, Company Secretary (CS)

Apart from the above, no other Director (including Independent Directors) or KMP were
appointed or had retired or resigned during the Financial Year 2022-23 and till the date of

approval of Directors Report by the Board of Directors. Details of Board of Directors are given
separately in the Corporate Governance Report.

RETIREMENT OF DIRECTORS BY ROTATION

In accordance with the provisions of Section 152 of the Companies act, 2013 read with Article
66 F of the Articles of Association of the Company Shri P.K.Purwar, CMD and Shri V.Ramesh,
Director (Technical) retire by rotation at the 37th Annual General Meeting to be held on
29.09.2023 and being eligible, offer themselves for reappointment. Brief particulars of director
seeking re-appointment together with their Directorships in other Companies and Committee
Memberships have been given in the Annexure to the Notice of 37th Annual General Meeting
in pursuance to Regulation 36(3) of SEBI (LODR) Regulations, 2015 and Secretarial Standards 2
issued by ICSI.

COMMITTEES OF THE BOARD

The Company has Five Board Level Committees as on 31.03.2023:¬

1. Audit Committees.

2. Nomination & Remuneration Committees.

3. Stakeholders Relationship Committee.

4. Enterprise Risk Management Committee

5. Corporate Social Responsibility Committee

Details of terms and reference of the Committees, Committees membership changes and
attendance of Directors at meeting of the Committees are provided in the Report on Corporate
Governance, a part of this Annual Report.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support
received from Department of Telecom (DoT) and various Ministries of the Government of India.
Your Directors are especially grateful to its Bankers, all stakeholders and investors including
bondholders, for their continued patronage and confidence reposed in the company. The
Directors would like to express their thanks for the sincere hard work and dedicated services
rendered by every employee of the company. The Board is confident that with the employees''
continued enthusiasm, initiatives and dedicated efforts, your company could face the new
challenges and opportunities arising out of the resultant competition from private operators in
the Cellular Mobile, Basic Telephone, Internet services, FTTH and other Value Added services.

For and on behalf of the Board of DirectorsSd/-(P. K. PURWAR)
CHAIRMAN & MANAGING DIRECTOR
PLACE: NEW DELHI
DATE:11-08-2023


Mar 31, 2018

To

The Shareholders,

of Mahanagar Telephone Nigam Limited

Dear Shareholders,

The Directors present the 32nd Annual Report of your Company together with the Financial Statements and the Report of the Auditors as well as comments of Comptroller & Auditor General of India on the Financial Statements for the financial year ended on March 31st, 2018.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2017-18

A. Mobile Network:

MTNL has undertaken the task of improving the Wireless Network in Delhi and Mumbai so as to improve the downlink speed of 21.1 Mbps & uplink speed of 5.76 Mbps which is presently of 3.6 Mbps & 384 Kbps respectively with following major projects:

I. Expansion of GSM / 3G RF network by adding 1080 nos. of 3G sites & 800 nos. of hybrid microwave to meet the backhaul capacity and Data handling capacity to 10 Gbps and Upgradation / replacement of existing 3G network (720 Node-Bs) and 754 nos. of existing 8Mbps Microwave Hops to 400 Mbps capacity in MTNL Delhi:

Project implementation kicked off in 2017 with following current status:

- While 730 new Node-Bs have been put on air, 470 sites have been upgraded in the year 2017-18.

- 451 new microwave hops were commissioned while 518 Hybrd Microwave have been upgraded/ redeployed in Delhi in 2017-18.

- 160 Node-Bs have been shifted to Optical Fiber backhaul.

II. 3G Network Up-gradation of existing 3G network (720 Node-Bs) and 497 nos. of existing 8Mbps Microwave Hops to 400 Mbps in Mumbai:

Project implementation kicked off in 2017 with following current status:

- 695 Node B’s have already been upgraded for 21Mbps speed.

B. Redeployment of DSLAMs of existing Broadband Network near to the subscriber premises in Delhi and Mumbai thereby reducing copper length and enhancing the quality of broadband service. A total of 220 DSLAMs have been redeployed in Delhi and 174 in Mumbai. In the year 2017-18, 47 DSLAMs in Delhi and 23 in Mumbai have been redeployed thereby reducing copper length and enhancing the quality of Broadband service. This has improved customer experience and reduced the number of complaints.

C. This year, MTNL finalized and made operational its new policy to engage partners on revenue share basis to extend its FTTx services. 20 Partners in Mumbai and 14 partners in Delhi have already started to provide BB over FTTH at speeds upto 100 Mbps.

D. Initiatives for Additional revenue:

- Millennium Telecom Limited (MTL) - a subsidiary of MTNL, has signed a joint venture with New Delhi Municipal Council Smart City Limited, a public limited company wholly owned by NDMC

- to develop telecom access networks in NDMC areas to provide FTTH (Fibre to the Home) to the residents.

- MTNL has signed an MoU with NDMCSCL on 18.08.2017, with the objective to provide various services like FTTH, Public Wi-Fi for making NDMC area as a SMART City The project involves around 2000 FTTH connections in CP area and approx.150 public Wi-Fi Network comprising Core Network and Access Points for Wi-Fi enabling of CP The estimated cost of this project is around 8 Crore. All Investments are to be done by NDMCSCL and the assets will belong to NDMCSCL. MTNL will ensure SLA and all licensing and Regulatory requirements for the services

E. Steps taken in Customer centric Strategies, to make MTNL a profitable venture:

- Tariff of Wireless services has been rationalized significantly in view of the cut throat competition. MTNL now offers three times more data in the same price.

- To give boost to customer experience, Download Speed of Broadband subscribers is being upgraded to 8 Mbps progressively without any additional cost depending upon feasibility and line parameters.

- Tariff re-balancing of Broadband service has been done for giving more competitive and attractive tariff package to the customers.

- Training is being given to line staff to improve maintenance and installation practices.

- Refurbishing of 20% Pillars and DPs every year, is planned in phased manner. 1113 Pillar and 4,697 DP in Delhi & 1677 Pillar and 3563 DPs in Mumbai have been refurbished by MTNL this year

- To improve copper pair quality, 81,492 mtr existing Drop wires have been replaced with twisted drop wires or thermo sleeves have been put at open joints at DPs by MTNL this year

- Proactive Monitoring of Broadband Faults through Radius attempt.

MTNL displayed an exemplary spirit of Collective efforts when its staff attended more than 25,000 Broadband subscribers affected by Malware recently and resolved the complaints within Four (4) Days including Saturday and Sunday

FINANCIAL RESULTS FOR THE F.Y. 2017-18

The Standalone and Consolidated Financial highlights of your company for the Financial Year ended March 31st, 2018 are summarized as follows:

Sources and Application of funds for the FY 2017-18 are given below: (IN CRORES Rs.)

Standalone

Consolidated (MTNL, its Subsidiaries, JV & Associates)

2017-18

2016-17

2017-18

2016-17

Income from Operations

2,371.91

2,869.68

2,471.86

2,969.37

Expenditures (Excluding Finance Cost)

4,584.38

5,049.44

4,682.72

5,146.47

Operating Profit/(Loss)

(2,212.47)

(2,179.76)

(2,210.86)

(2177.10)

Other Income

744.51

682.78

745.34

685.32

Finance Cost

1,505.49

1,448.47

1,505.49

1448.47

Profit/(Loss) before Tax

(2,973.45)

(2,945.45)

(2,971.01)

(2940.25)

Exceptional Items

-

-

-

-

Share of profit/(loss)in investments accounted for using equity methods

-

-

0.57

0.69

Tax Provision for the Year

-

(4.38)

0.90

(3.51)

Profit/ (Loss) for the Year from Continuing Operations

(2,973.45)

(2,941.07)

(2,971.33)

(2,936.05)

Profit/ (Loss) for the Year from Discontinuing Operations

0.42

-

0.42

-

Profit/ (Loss) for the Year

(2,973.03)

(2,941.07)

(2,970.91)

(2,936.05)

Other Comprehensive Income

2.38

(29.49)

12.78

(32.83)

Total Comprehensive Income for the Year

(2,970.65)

(2,970.56)

(2,958.14)

(2,968.88)

Appropriation

Interim/ Proposed Final Dividend

-

-

-

-

Dividend Tax

-

-

-

-

Transfer to/ (from):

a) Contingency Reserve

-

-

-

-

b) Debenture Redemption Reserve

-

-

-

-

SOURCES AND USES OF FUNDS

Authorised Capital

800.00

800.00

800.00

800.00

Issued, Subscribed & paid up capital

630.00

630.00

630.00

630.00

Other Equity

(6,967.35)

(3,996.70)

(6,962.01)

(4,003.85)

Non-Current and Current Borrowings

17,014.79

15,196.55

17014.79

15,196.55

Deferred Tax Liability (Net)

-

-

5.71

4.60

REPRESENTED BY

Property, Plant and Equipment (Net Block)

4,575.15

4,808.32

4,687.53

4,928.12

Capital Work in progress

330.98

291.34

330.98

291.34

Investment Property

25.57

46.52

35.36

53.68

Intangible Asset (Net Block)

3,439.27

3,776.69

3,440.71

3,777.69

Investment

106.13

141.98

4.37

3.81

Other Assets

7,772.56

8,598.11

7,792.25

8,638.63

Other Liabilities

5,572.23

5,833.11

5602.70

5,865.97

INFORMATION REGARDING ISSUE OF BONDS BY MTNL DURING FINANCIAL YEAR 2017-18.

The Company has not issued any debenture/ bonds during Financial Year 2017-18.

DIVIDEND

Since there has been no operating profit, the Board of Directors of your company expresses its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

As on 31st March, 2018, your company has two subsidiaries and one Joint Venture and one Associate company. There has been no material change in the nature of the business of the Subsidiaries. Pursuant to the provisions of Section 129 (3) of the Act, a statement containing salient features of the Financial Statements of the Company’s Subsidiaries in Form AOC-1 is attached to the Financial Statements of the Company and published in this report. Further, pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate Audited Accounts in respect of Subsidiaries have been published with this report and the same are also available on the website of the Company.

The other details of Subsidiaries and Joint Venture Companies are briefly given as under:-

(i) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for mobile services, international long distance services and internet services. The customer base of MTML as on 31st Mar.’18 has grown to 307,819 resulting in a market share of around 20%. MTML is offering 2G/3G services in all over island and 4G at selected areas. First phase of 4G expansion has been completed by June’17, as targeted, by which now 80% of the island is covered by our 4G network.

MTML has earned a gross revenue of approx INR 965 Million during the financial year 2017-18 as against INR 971 Million in the corresponding period of last fiscal year. In terms of MUR there is a slight fall in revenue due to change in customer usage pattern with majority of customers using data for ILD calls as well as local calls and using chat applications instead of SMS etc., intense competition and saturated market. However the company could post its net profit to INR 37.32 Million with precise management of available resources.

During the Financial Year 2017-18 MTML had total Turnover amounting to MUR 49,59,51,228/- as against MUR 52,10,54,488/- in FY 2016-17. During the Financial Year 2017-18 MTML has earned Profit amounting to MUR 1,98,60,562/- as against MUR 2,15,35,007/- in FY 2016-17.

During 2017-18 MTML has deployed UMTS-900 and augmented its 4G Network. MTML has built up a network over diversified technology with CDMA and GSM having 2G, 3G (UMTS -900 & 2100) along with 4G on a transmission backbone over Digital Microwave with dual ring topology. MTML made inroads in Enterprise Business solutions as well and could get a few dozen Enterprise customers in the year.

MTML has also started retail marketing of popular Mobile phone brands such as Apple, Samsung, Huawei, Nokia etc. after entering into agreements with main distributers of these brands at Mauritius. In this financial year the Company could generate revenue of approx. INR 10 million from this segment.

MTML is well established in Mauritius due to its innovative tariff structure and on the merit of its state of art technical offerings. The Company is always exploring new business possibilities and is looking to consolidate its position in the market on the basis of a strong 4G network. MTML has been conferred with Mauritius Best Employer Brand Award 2017 in the 12th Employer Branding Awards function of World HRD Congress held in Mauritius on 5th December, 2017.

All the expenses of the company are paid from its own internal resources. The CAPEX for procurement of equipment’s is totally met from its own internal resources. There is no debt liability on the company.

The company is managed by CEO, CTO, CFO and 9 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

(ii) Millennium Telecom Ltd. (MTL)

Millennium Telecom Ltd (MTL) is a wholly owned subsidiary of MTNL, incorporated in February 2000 under the Companies Act 1956.

MTL got “Excellent” MoU rating for the outstanding performance in 2016-17.

Services being offered by MTL include Telecom consultancy & engineering, Project Management, Wi-Fi solution, project on e-governance, Managed services, Turnkey ICT solution, GIS based services, capacity building and skill development etc.

Millennium Telecom Ltd (MTL) is also moving ahead with a very high growth rate. In 2014-15, the company turned into profit making company by System Integration and other ICT related business at pan India level. Since 2014-15 the company has been making profit continuously. During the year under report i.e. 2017-18 the company has earned a revenue of ‘6,75,77,399/- as against Rs. 4,82,13,943/- last year. MTL earned a net profit of Rs. 52.58 lacs for the period ending 31st March 2018. MTL is in the process of winning over more orders in the upcoming years.

A large number of Govt. Institutions have awarded works on nomination basis, which have been successfully executed by MTL. Customer list include Air India, J & K Government, Central University-(Mahendragarh) Haryana, UP Building and Other Constructions Workers Welfare Board (BOCWWB), Lucknow etc. MTL is also expanding its portfolio of services for providing generalized as well customized solutions to suit Government and Semi Government institutions.

MTL has empanelled various Business Development Associates (BDAs) for 10 years through Open Tender These BDAs are very competent and have good experience in various components of Govt of India schemes like Smart City, Digital India and Skill India. MTL has reopened the window for Empanelment of Business Development Associates in MTL through open ended EOI.

Many new projects are in pipeline like GIS survey of Electric poles in Uttarakhand, Digitalization of Birth / Death certificate North Delhi Municipal Corporation, Networking Project in UJVNL, video surveillance of temples in Gujarat.

MTL is also in the process of starting various services for which the card rates are being developed. Such services are smart solutions for smart city implementation, security as a services, video surveillance as a services, etc.

(III) MTNL STPI IT SERVICES LTD. (MSITS)

MTNL STPI IT SERVICES LTD (MSITSL) is a 50:50 Joint Venture company of Mahanagar Telephone Nigam Limited (MTNL) and Software Technology Parks of India (STPI). MSITSL was incorporated on 31/03/2006 under the Companies Act, 1956, with authorized Capital of Rs. 50 Crores.

In order to implement one of its objectives MSITSL has established the physical infrastructure of Tier III Data Center at Chennai on space taken on lease basis from STPI. The Data Center has server farm area of around 3500 sq. ft. and the total investment made in this regard is of ‘477 lakhs. This Tier III Data Center is maintaining 99.98% uptime on 24X7.

The commercial operation of the Data Center commenced in 2009. The Ministry of External Affairs (MEA) has hosted Passport Seva Project at MSITSL Data Center through M/s TCS. The Directorate General of Employment & Training (DGE&T) in Ministry of Labour& Employment has hosted National Career Project through STPI at MSITSL Data Centre. IT/TES companies have also co-located servers and networking equipments.

The revenue of the company has been increasing year after year from the date of its commercialisation in 2009. In the current year, the revenue over the last year has registered an increase of 1.63% from Rs. 4,93,67,592/- to Rs.5,01,74,822/-.

(iv)United Telecommunications Ltd. (UTL)

UTL is an associate of MTNL which consists of TCL, TCIL, NVPL (Nepal) & MTNL and was set up in October, 2001. The company provides Mobile/ILD/data services in Nepal. At present MTNL is holding 26.68% of Equity in UTL. The company has not been performing well for the last few years. It has huge losses. The Customer base has also reduced. It is not paying the statutory dues like Royalty, BTS site charges, and other dues to the Govt. of Nepal. The company does not have resources to clear outstandings. They have sought Equity participation by its JV partners but MTNL, TCIL & TCL all the Indian JV partners have decided not to contribute any amount towards its Share Capital or Loan. All the Indian JV Partners have decided to exit from the JV and have exercised their Right to exit, on January 30, 2018. Notice of exit (Sale of our share in JV company) has been given and it is required to be accepted within 3 months i.e on or before 30.04.2018. The UTL has not made any payment for its value of shares so far. UTL has already applied to the Nepal Govt. the requisite Govt. approvals for accepting the Exit option and remitting the value of shares to Indian JV Partners.

Latest Status on United Telecom Limited.

- UTL has not yet received the requisite Government approvals as per Nepalese Laws. MTNL has not received any payment against the sale of shares so far and MTNL’s holding still continues at the existing shareholding pattern.

- UTL had submitted an application to Department of Industries (DOI), Government of Nepal (GoN) for approval of increase of authorized share capital upto NRs. 600 Crores

- After completion of all due process, DOI recommended case of UTL to Industry and Investment Promotion Board (IIPB), GoN for approval.

- However, approval for increase of share capital of UTL was not granted citing various issues such as pending royalty dues, pending interconnection dues with Nepal Telecom, not allowing UTL to enter into any sale purchase agreement for 3 years, etc.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2017-18 (AS ON 31st MARCH, 2018)

Your Company has the following equipped and used capacity of Landline, GSM, Broadband etc. as on 31st March, 2018:-

S. No

Parameters

MTNL Delhi

MTNL Mumbai

Total

1

Number of Switches

355

264

619

2

Details of Capacity

-

-

-

2a

Fixed Phones

2416505

2586392

5002897

2b

GSM

2800000

2800000

5600000

2c

Broadband Capacity (in Ports)

788736

845908

1634644

3

DELs (including Fixed-Line, GSM and Broadband)

4345019

3541900

7886919

3a

Fixed Line

1538377

1808191

3346568

3b

GSM

2279634

1277426

3557060

3c

Broadband Subscribers

527008

456283

983291

4

FTTH Subscribers

6685

5279

11964

5

ISDN

7608

11731

19339

6

DLC (No.)

425

116

541

7

Tax Capacity

150000

115200

265200

8

Tandem Capacity

402500

331240

733740

9

Optical Fibre Cable

-

-

-

9a

OFC in Route Kms

8655.998

8426.145

17082.143

9b

OFC in Fibre Kms

280585.378

272108.028

552693.406

10

Leased Circuits

12590

19534

32124

HUMAN RESOURCE DEVELOPMENT

Your Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skills of its employees are the key to achievements of its corporate mission. It has sound recruitment policy and comprehensive training system. During the past one year, your company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has a capability to counter threats posed by ever changing customer base. The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose are also focusing on eliminating any skill gap and technical obsolescence. The management’s view on training is one of development of employee’s overall personality and enabling them in becoming a vital productive resource.

TRAINING ACHIEVEMENTS

At present, MTNL has its two in house state of the art training centers, one located in New Delhi and another at Mumbai. The details of the achievement of training centers at Delhi and Mumbai respectively are given below:

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM), NEW DELHI

The Institute of Telecom, Technology & Management, (ITTM) Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction and in service training to the executives and non executives of MTNL Delhi in the field of Telecom, IT, Computer system and Management. With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started industrial training for engineering students during summer and winter sessions since 2011. ITTM also conducts corporate training as per requirement of the organization in the field of telecom and management.

During the year 2017-18, some of the achievements of ITTM in the field of training are as given below.

- ITTM imparted training to 694 executives (2888 Man days) and 1170 non executives (7409 Man days) in different courses.

- ITTM imparted industrial training of various durations for 309 engineering students earned a revenue of Rs. 28,11,806/-

- Industrial visit of 278 students from different engineering colleges was conducted at ITTM.

- ITTM imparted corporate training to TCIL employees and earned a revenue of Rs. 53,475/-

- ITTM imparted pre exam training for 296 candidates for TTA LDCE (Limited Departmental Competitive Exam) and 33 for JAO (screening) LDCE. Also conducted pre exam training for JAO (Mains).

- ITTM conducted LDCE exam for the post of TTAs, JAO Mains and JAO Screening successfully.

- Total 169 trainees (both executives and non executives) were imparted door step training on FTTH in all the seven areas of MTNL Delhi.

- ITTM conducted visit of 670 students from different schools to their nearest MTNL exchanges under NSQF scheme.

- Special batch of industrial training exclusively for Diploma students started at ITTM with reduced charges.

- One day Workshop on GST was conducted at ITTM.

- ITTM has necessary infrastructure, technical and academic competence for providing training in the field of GSM, Broadband Technology, Switching, Transmission, External Plant, IT, Computer System, Management and wellness programs. To upgrade the training infrastructure, one eight port FTTH OLT has been installed in Transmission and FTTH Lab at ITTM.

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGEMENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM) is situated at Technology Street, Hiranandhani Garden, Powai, and Mumbai. The competition in the field of training is increasing tremendously with each passing day. CETTM’s achievements during financial year 2017-18 are as follows.

- CETTM successfully trained 3200 in-house personnel and 2833 external personnel with an achievement of 28085 Trainee days. Total of 245 Programs were conducted.

- 105 Students were trained through various certificate courses under Corporate Social Responsibility (CSR), while 34 students took part in one/two/six months Project Training works. Total 2151 number of Engineering College Students from 27 different Colleges took part in “Industrial Visit Programme” during 2017-18.

- 43 senior officers from the Security Wing from Cabinet Secretariat have been trained in various Technologies of Telecommunications and IT related courses.

- Under ITEC/SCAPP program, sponsored by MEA, Govt. of India, CETTM successfully completed 16 programs. Total 310 delegates from 61 different countries participated this FY

- CETTM conducted 10 weeks Induction Training Programme for 14 newly recruited JTOs in MTNL.

- CETTM conducted Induction training of 148 candidates for TTA promotion of 8 weeks duration as well as Telecom Mechanic Induction Course for 10 candidates of 8 weeks duration.

- CETTM has conducted various short duration Technical as well as Management related courses for MTNL employees on need basis to improve MTNL services

- New short duration courses introduced on FTTH, Broadband, OF Splicing etc.

- 61 Students of Symbiosis Institute of Telecom Management (SITM) were trained under 4 days Industrial Visit Program.

- 44 Polytechnic faculties from Maharashtra State Board of Technical Education (MSBTE) were trained for 3 days training Course on Information Security & Next generation transport Technology.

Workshops & Events organized in FY 2017-18:

- CETTM organized workshop on ‘Energy Conservation and Saving techniques’ by Shri Jitendra Kumar Rathour, expert in Energy Conservation & Mgmt on 29 April 2017.

- CETTM celebrated ‘World Telecommunications & Information Society Day’ by conducting one day workshop on ‘Big Data Technology’ by Dr Vinay Kulkarni from IIT Mumbai on 17th May 2017.

- CETTM organized tree plantation drive to celebrate ‘World Environment Day’ on 5th June 2017.

- Yoga sessions & talk by Yoga Prabha Bharti seva Trust were conducted for MTNL employees to celebrate ‘International Yoga Day’ at CETTM on 21st June 2017.

- MTNL ,in association with Mumbai Police, Nutan Savera and Jalota Welfare, organized ‘Seminar on self defense’ for women employees of on 4th July 2017.

- A special Interactive session was addressed by Shri P K Purwar , CMD MTNL for newly inducted Assistant Managers on 9th August, 2017.

- Hindi Diwas was celebrated at CETTM in association with Business Standard (Hindi) by running quiz contests for CETTM employees.

- One day Seminar of “Latest Trends in Telecom Sector’ was organized on 15th November, 2017. Shri P K Purwar, CMD MTNL, was chief guest at the event which was attended by all the senior officers of MTNL.

- One day workshop on Redesigning Life and Power of Vision , Commitment & Gratitude by Mrs Anjala Verma and Mr Lokesh Nathany on 24th March, 2018.

Business Development at CETTM in FY 2017-18:

- Total revenue achieved for the FY 2017-18 was ‘25.2 cr with an increase of 28.3% compared to ‘19.64 cr revenue in FY 2016-17.

- CETTM continues to be the first choice for conducting training courses, workshops, seminar etc. by our esteemed clients. Top clients include LIC, BPCL, NPCIL, Department of Sales Tax, KEC, IIT Mumbai, Grey Atom, Wipro, National School of Drama etc.

- CETTM has leased 100 hostel rooms to Maharashtra National Law University this financial year

The efforts and the results, reiterate our commitment to the growth in terms of business, quality and customer satisfaction and the customers have always rewarded our good work by giving us the repeated business.

(III) SKILL DEVELOPMENT

With a vision of a Skilled India, Ministry of Skill Development & Entrepreneurship (MSDE) aims to skill India on a large scale with speed and high standards. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme that is driving towards greater realisation of this vision. MTNL have two training centre, one at Mumbai (CETTM) and another at Delhi (ITTM). Both of the training centers are engaged to meet the requirement of skill development and giving summer trainings to students of BE/ B.Tech. Short Term (One Day/ Two days) training programs for outsiders including students, housewives & others are also being conducted. To achieve the aim of skill development programme MTNL has signed MoU with Telecom Sector Skill Council & Global Institute of Skill Development. MTNL has also signed MoU with Gramin Vikas Trust (GVT) to run a training cum skilling center for promotion of entrepreneurship for the period of Five years. Under skill development programme MTNL has trained 3945 trainees in FY 2017-18. MTNL is also in process of conducting Recognition of Prior Learning certification for all eligible MTNL employees.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee-Employer Relations and like the previous years, Employees Relations remained Cordial throughout the year under report. The Grievances/ Issues raised by the employees/Union/Associations were given due attention and regard. The cases/ issues brought up by them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

JNC meeting was held on 28.03.2018 for addressing various demands of MTNL employees and officers, wherein neutralization of IDA and implementation of 3rd PRC with 15% fitment has been decided. The matter was submitted to the DOT after the approval of MTNL Board for consideration. Thereafter, the DOT has vide letter dated 22.06.2018 has accorded its approval for benefit of merger of IDA @73.8% for the purpose of fitment in respect of Board level below Board level Executives, Non- Executives Non- Unionized supervisors (all employees) of MTNL w.e.f. 01.01.2007 on notional basis and actual payment from 01.01.2018.

EMPLOYEES’ WELFARE

Employees Welfare Schemes like subsidized Canteen, Housing, Medical facilities, Group Insurance, dormitories for females working in night shift, etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year Changeover of Contributory Group Health Insurance Scheme for retirees to CGHS- After pursuance of MTNL with DoT, Ministry of Health issued instructions to CGHS for enrolment of MTNL retirees (drawing Govt. Pension) in the CGHS. To facilitate the same an incentive is being provided to the concerned retirees. As on date approximately 6030 retirees in MTNL have benefited from this scheme.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Government for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavoured to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates to SC/ ST/ OBC communities as well as Physically Challenged candidates

IMPLEMENTATION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITITION & REDRESSAL) ACT, 2013

The Company has constituted an internal Committee to look into the complaints on Prevention, Prohibition & Redressal of Sexual Harassment of Women at workplace and matters connected therewith or incidental thereto covering all aspects as contained in the Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees in night shifts. Also to redress the issues of Sexual Harassment at workplace, special cells have been constituted.

MANPOWER STATUS

As on 31st March, 2018 your company had a working strength of employees as per details given below:-

Group

Total Working

SC

ST

A

850

152

53

B

2711

400

71

C

14839

2336

256

D

6783

1676

518

Total

25183

4564

898

TSM

8

-

-

Grand Total

25191

4564

898

New Recruitment

The Board of Directors of MTNL has approved to induct 100 officers at E-2 level in the stream of Telecom, Finance, Electrical, Civil, HR and Sales & Mktg.

39 officers in the stream of JTO (Electrical/Civil/Telecom) at E-2 level have joined MTNL. The recruitment of non-technical posts viz AM (Finance/Mktg/HR) as detailed below is under process.

(i) Finance- 22

(ii) HR- 06

(iii) Sales & Marketing - 15

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has been suffering losses for the last few years and hence no CSR funds has been allocated/ spent for CSR activities during the Financial Year. The provisions of Section 135 of the Companies Act, 2013 are not applicable. However, the company has constituted a CSR Committee and also formed a CSR Policy in compliance with the provisions of The Companies Act, 2013 and DPE Guidelines on the subject. MTNL is undertaking non funding CSR activities like sending SMS to the public for spreading awareness on Swachh Bharat, Pulse Polio, other moves of the Government, etc. For details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of this Report. The CSR Policy is available on the website of the company www.mtnl.net.in .

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. At present, Shri Deepak Kashyap, CVO, BSNL is in additional charge of CVO, MTNL. The CVO is responsible for complete vigilance administration in MTNL.

During the FY 2017-18, emphasis was laid on preventive vigilance and to enhance the awareness of transparency and accountability in working by carrying out various field inspections. Advices for systemic improvement were issued by Vigilance Unit for reconciliation of Sanchaar Haat products, store verification, proper maintenance of broadband faults, BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.

Further, training programme/ seminars on vigilance/ complaints handling and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL, procedure for handling departmental proceedings and improve their working efficiency.

As per CVC instructions, the Vigilance Awareness Week was observed from 30/10/2017 to 04/11/2017. During this week, various activities like integrity pledge taking, release of information booklet on the Vigilance & Disciplinary matters with a focus on “My Vision - Corruption Free India”, Preventive Vigilance and other general conduct (Do’s & Dont’s) among the employees of MTNL was distributed. Also various programmes such as seminars, workshops, debates as well as Quiz competitions were also organized during Vigilance Awareness Week.

MTNL Board was regularly apprised of the progress of Disciplinary cases for review through quarterly reports. Review of vigilance work/matters by CMD with CVO was also submitted quarterly. CVO reviews the status of investigations / Disciplinary cases in meetings held with GM (Vigilance) Mumbai/Delhi.

Central Vigilance Commission (CVC) had decided to create an integrity index ,through IIM Ahmedabad, for public sector organizations which would be based on bench marking of governance processes by internal and external stakeholders . MTNL was one of 25 PSUs chosen to carry out the exercise of computing the Integrity index. Timely inputs to questionnaire for the exercise were furnished to IIM Ahmedabad and CVC in coordination with units concerned in MTNL. The exercise has since been completed by MTNL vigilance deptt.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme (IPP) focused on enhancing transparency in its business transactions, contracts and procurement process. Under this MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent External Monitors being persons of eminence nominated by MTNL in consultation with Central Vigilance Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust in various Stakeholders.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT.

No material changes and commitment affecting the financial position of the company occurred between the end of the financial year to which these financial statements relate and the date of the report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

The provision of Section 134(m) of the Companies Act, 2013 do not apply to the Company as your Company is a service provider. The total foreign inflow was ‘2.80 Crore and outflow was Rs. 3.35 Crore.

ENTERPRISE RISK MANAGEMENT

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee also has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of Risk Management Policy has been covered in the Management Discussion and Analysis, which forms part of this Report.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under report, the Board of Directors of your Company met Six times i.e. during the Financial Year 2017-18, 6 (Six) Board Meetings were held. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. Details of Board Meetings are given in Corporate Governance Report which forms part of this Report. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service, Cellular Mobile Telephony and other value added services.

DECLARATION OF INDEPENDENCE BY INDEPENDENT DIRECTORS FOR THE FINANCIAL YEAR 2017-18

Pursuant to the provisions Section 149(7) of The Companies Act, 2013, the Company has received necessary declaration from all the Independent Directors i.e. Shri Rakesh Nangia, Shri Ashok Mittal, Shri Chinmay Basu, Shri K.B. Gokulchandran, Smt. G. Padmaja Reddy and Smt. Suneeta Trivedi that they meet the criteria of Independence laid down in the Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (LODR), 2015.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the period under review, the Company has not entered with any Material Transaction with any of its related parties. The Company’s major Related Party Transactions are generally with its subsidiaries and associates. All Related Party Transactions were in ordinary course of Business and were negotiated at an Arm’s Length basis and they were intended to further the company’s interest. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of Companies Act, 2013 in Form AOC-2 is not applicable. Web link for Policy on Materiality of Related Party Transactions and also on dealing with Related Party Transactions has been provided in the Report on Corporate Governance which forms part of Annual Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

During the year, there were no loans given, guarantees provided or investments made by the MTNL under Section 186 of the Companies Act, 2013.

CORPORATE GOVERNANCE

Your Company follows the principles of effective Corporate Governance Practices. The Company has taken steps to comply with the requirements of SEBI (LODR) Regulation, 2015 which came into effect from 01.12.2015. Your Company has also complied with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (CPSEs). MTNL is filing its reports, statements, documents in this regard with the NSE, BSE & OTCIQ on quarterly basis. A Report on Corporate Governance has been appended under the separate section titled Corporate Governance Report.

COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE - CERTIFICATE FROM THE PRACTISING COMPANY SECRETARY REGARDING

A certificate from M/s VK. Sharma & Co. Practicing Company Secretary, regarding compliance of conditions of Corporate Governance as stipulated under Schedule V (E) of SEBI (LODR), 2015 and DPE Guidelines is attached as an Annexure.

COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & Policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON “GREEN INITIATIVES IN CORPORATE GOVERNANCE”

The Ministry of Corporate Affairs, vide its Circular no. 17/2011 dated 21st April 2011 followed by Circular no.18/2011 dated 29th April 2011 has taken “Green Initiative in the Corporate Governance” by allowing paperless compliances by the Companies through electronic mode and introduced e-mail address as one of the modes of sending communication to the members. Also as per provision of Section 101 of the Companies Act, 2013, and rules made there under notice of meeting may be sent by electronic mode.

In accordance with the above circulars and to ensure compliance of Green Initiative, your Company has sent various documents including Notice of the 32nd AGM, Audited Financial Statements, Directors’ Report, Auditors’ Report for the FY 2017-18 etc. to its shareholders in electronic form, at the e-mail addresses provided / registered by members and made available to us by the Depositories (NSDL/CDSL). The members are advised to update by registering changes, if any, in their e-mail address, with the concerned Depository Participant.

Your Company shall also display full text of Notice of 32nd AGM & Annual Report 2017-18 at its website www.mtnl.net.in and physical copies of such documents will be made available at the registered office of the Company for inspection by the members during office hours on all working days.

Your Company looks forward towards active participation of Shareholders in this“Green Initiative” and request all Shareholders, who have not so far supplied their e-mail addresses, to give the same at the earliest.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating efficiently.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company had maintained, in all respects, adequate internal financial controls over financial reporting and such internal control over financial reporting were operating effectively during the financial year 201718, based on the internal control over financial reporting criteria established by the Company considering the essential components on internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

FIXED DEPOSITS

Your Company has not invited/ accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as on the Balance Sheet date on this account.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

The provisions of Section 197(12) of Companies Act, 2013 read with Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are not applicable to your Company as being a Govt. Company

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR 2017-18

M/s Hemant Kumar Singh & Associates, Company Secretaries, have conducted the Secretarial Audit of your company for the Financial Year 2017-18 under Section 204 of the Companies Act, 2013. The said Secretarial Audit Report and the replies to the observations of the Secretarial Auditors are given in as annexure.

AUDITORS QUALIFICATIONS AND MANAGEMENT REPLY THERETO

The replies to the observation of the Statutory Auditors for the Financial Year 2017-18 are given as annexure. The Comments of the Comptroller and Auditor General of India (CAG) on the Financial Statements and the replies of the Management thereon are given in the annexure to the Directors’ Report.

DIRECTORS & KEY MANAGERIAL PERSONNEL

The Board of Directors of your company has eleven (11) members, three Functional Directors (including CMD), two Government Nominee Directors and six Independent Directors. List of present Directors of MTNL as on 19.07.2018 is given in the Corporate Governance Report.

During the period under report, the following changes took place in the Directorship/Key Managerial Personnel of Your Company:-

1. Shri Chinmay Basu has been appointed as Independent Director w.e.f. 26.10.2017.

2. Shri K.B. Gokulachandran has been appointed as Independent Director w.e.f. 26.10.2017.

3. Smt. G. Padmaja Reddy has been appointed as Independent Director w.e.f. 26.10.2017.

4. Smt. Suneeta Trivedi has been appointed as Independent Director w.e.f. 26.10.2017.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of your Company are:-

i) Shri PK. Purwar, CMD & Director (Fin)

ii) Shri Sunil Kumar, Director (HR&EB)

iii) Shri Sanjeev Kumar, Director (Tech)

iv) Shri S.R. Sayal, Company Secretary AUDIT COMMITTEE

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

AUDITORS

(1) M/s. Kumar Vijay Gupta & Co., Chartered Accountants and M/s Mehra Goel & Co, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the Financial Year 2017-18 and the Board has already ratified their appointment.

(2) M/s R. M. Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your company for carrying out audit under Section 148 of the Companies Act, 2013, for the cost records maintained under Section 209(1)(d) of Companies Act,1956 and as notified under: (i) Cost Accounting Records (Telecommunications) Rules,2002 & (ii) Cost Audit Rules,2001. The Cost Audit Report alongwith the annexures for the Financial Year 2016-17 have been submitted to the Central Government in the Form I-XBRL format on MCA portal on 24/10/2017.

(3) M/s Hemant Kumar Singh & Associates, Company Secretaries have been appointed as Secretarial Auditors of your company for carrying out Secretarial Audit under Section 204 of the Companies Act, 2013 for the Financial Year 2017-18.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company

The Directors would like to express their thanks for the sincere hard work and dedicated services rendered by every employee of the company. The Board is confident that with the employees’ continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone, Internet services and other Value Added services.

For and on behalf of the Board of Directors

Sd/-

(Shri P.K. PURWAR)

CMD & DIRECTOR (FINANCE)

PLACE: NEW DELHI

DATE: 14th August, 2018


Mar 31, 2017

To

The Shareholders,

of Mahanagar Telephone Nigam Limited

Dear Shareholders,

Your Directors present the 31st Annual Report of your Company together with the Financial Statements and the Report of the Auditors as well as comments of Comptroller & Auditor General of India on the Financial Statements for the financial year ended on March 31, 2017.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2016-17

1. The achievements of MTNL during the year 2016-17 are as follows:

- Expansion of 3G RF network in Delhi: MTNL is in the process of expansion of mobile network by adding 1080 nos. of 3G sites for upgrading Data handling capacity to 10 Gbps. MTNL placed Purchase Order worth Rs, 319 Cr. for expansion of 3G Network by adding 1080 Node-Bs and replacement of core network. Installation of core network has been completed and testing is in progress. Cold installation of 400 Node-Bs has been done.

- Up gradation/replacement of 3G RF network in Delhi: Purchase Order for Rs, 42 Cr has been placed for up gradation of existing 720 nos. of 3G Node-B for ''HSPA '' capability along with up gradation of Backhaul. (24 Cr for RF Up gradation and 17.7 Cr for Backhaul).

- 3G Network Up-gradation in Mumbai: To improve network capabilities and provide better speed, MTNL is in process of upgrading existing 3G network (720 Node-Bs). S/W Up-gradation for the existing Node-Bs has been implemented. 161 Node B''s have been integrated with OFC Media for 21 Mbps speed.

With the ongoing expansion and up gradation, enhance Downlink speed will be 21.1 Mbps & Uplink speed of 5.76 Mbps against present 3.6 Mbps downlink & 384 Kbps uplink per sector speeds.

2. The initiatives taken by MTNL during the year 2016-17 are as follows:

- Broadband Network:

- To provide higher data speeds and better quality of services for broadband services, MTNL has launched a special program to progressively increase the fibre length by redeploying the broadband nodes (DSLAMs) near to the customer.

- 173 nos. of Digital Subscriber Line Access Multiplexer (DSLAMs) have been redeployed in Delhi and 152 nos. in Mumbai thereby reducing copper length and enhancing the quality of broadband service.

- Fiber To The Home (FTTH): Policy to Empanel partners for provisions of FTTH/VAS services in Delhi & Mumbai on revenue share basis has been made operational. The new policy has been made more flexible to attract more partners and more customers.

- High Speed Broadband on FTTH and Wi-Fi services for Hon’ble MPs: MTNL has provided high speed Broadband on FTTH and Wi-Fi services at the residences of 750 Hon''ble MPs in Delhi in year 2016-17.

- Mumbai city surveillance project: Provided connectivity to 4,717 cameras installed at 1,510 locations across the Mumbai city covering almost 80% of the city. Project was dedicated to Nation on 02-Oct 2016 by Chief Minister, Maharashtra.

- Wi-Fi Hot-spot for Mumbai City: Provided connectivity to setup 500 Wi-Fi Hot spot by Govt. of Maharashtra. Project commissioned on 9th Jan 2017.

- ATC Project for Mumbai City: MTNL provided connectivity at 133 locations for Area Traffic Control Project of Mumbai Traffic Police for Road Traffic Monitoring.

- Wi-Fi hotspot at tourist places in Delhi and Mumbai: MTNL is establishing Wi-Fi Hotspots at tourist places and important public areas all over Delhi and Mumbai for digitally connecting the people of Delhi. The Services has been launched at 14 places in Green Park market, Hauz Khas Village, Aurobindo market, National Museum, India Gate, Qutab Minar, Safdarjung Tomb, Humayun''s Tomb, Red Fort, Purana Qila, Lodhi Garden, Nehru Place Market and Defence Colony market of Delhi city and Elephanta cave in Mumbai City.

FINANCIAL RESULTS FOR THE F.Y. 2016-17

The Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (IND-AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The Financial Statements for the Financial Year ended March 31st, 2017 are the Company''s first IND-AS compliant annual financial statements with comparative figures for the year ended March 31st, 2016 also under IND-AS. The date of transition is April 1st, 2015. The disclosure and effect of first time adoption of IND-AS are detailed in Note 55 of the Standalone Financial Statements and Note 59 of the Consolidated Financial Statements for detailed disclosure and effects on the first time adoption of IND-AS. The Standalone and Consolidated Financial highlights of your company for the Financial Year ended March 31st, 2017 are summarized as follows:

Sources and Application of funds for the FY 2016-17 are given below:-

(IN CRORES '')

Standalone

Consolidated

2016-17

2015-16

2016-17

2015-16

Income from Operations

2,869.68

3,123.96

2,969.37

3,223.16

Expenditures (Excluding Finance Cost)

5,049.44

5,097.59

5,146.47

5,193.09

Operating Profit/(Loss)

(2,179.76)

(1,973.63)

(2177.10)

(1,969.93)

Other Income

682.78

569.22

685.32

570.73

Finance Cost

1,448.47

1,351.34

1448.47

1,351.34

Profit/(Loss) before Tax

(2,945.45)

(2,755.75)

(2940.25)

(2,750.54)

Exceptional Items

-

-

-

-

Share of profit/(loss)in investments accounted for using equity methods

-

-

0.69

(2.42)

Tax Provision for the Year

(4.38)

(492.26)

(3.51)

(491.15)

Profit/ (Loss) for the Year from Continuing Operations

(2,941.07)

(2,263.49)

(2,936.05)

(2,261.81)

Profit/ (Loss) for the Year from Discontinuing Operations

-

315.95

-

315.95

Profit/ (Loss) for the Year

(2,941.07)

(1,947.54)

(2,936.05)

(1,945.86)

Other Comprehensive Income

(29.49)

(5.82)

(32.83)

1.79

Total Comprehensive Income for the Year

(2,970.56)

(1,953.36)

(2,968.88)

(1,944.07)

Appropriation

Interim/ Proposed Final Dividend

-

-

-

-

Dividend Tax

-

-

-

-

Transfer to/(from):

a) Contingency Reserve

-

-

-

-

b) Debenture Redemption Reserve

-

-

-

-

SOURCES AND USES OF FUNDS

Authorised Capital

800.00

800.00

800.00

800.00

Issued, Subscribed & paid up capital

630.00

630.00

630.00

630.00

Other Equity

(3,996.70)

(1,026.13)

(4,003.85)

(1,034.97)

Non-Current and Current Borrowings

15,196.55

13,436.78

15,196.55

13,436.78

Deferred Tax Liability (Net)

-

-

4.60

3.91

REPRESENTED BY

Property, Plant and Equipment (Net Block)

4,808.32

5,321.00

4,928.12

5,456.90

Capital Work in progress

291.34

136.87

291.34

136.87

Investment Property

46.52

39.59

53.68

39.59

Intangible Asset (Net Block)

3,776.69

4,117.00

3,777.69

4,118.27

Investment

141.98

141.98

3.81

3.12

Other Assets

8,598.11

8,887.63

8,638.63

8,917.58

Other Liabilities

5,833.11

5,603.42

5,865.97

5,636.61

The Company has prepared these consolidated and standalone financial results in accordance with the Companies (Indian Accountant Standards) Rules, 2015 (Ind AS) prescribed under section 133 of the Companies Act, 2013. The Company has adopted the Indian Accounting Standards (Ind AS) from 01.04.2016. The comparative financial information of the Company for the year ended 31.03.2016, which have earlier been prepared as per IGAAP, have also been restated to comply with Ind AS.

INFORMATION REGARDING ISSUE OF BONDS BY MTNL DURING FINANCIAL YEAR 2016-17.

The Company has not issued any debenture/ bonds during Financial Year 2016-17.

DIVIDEND

Since there has been no operating profit during the FY 2016-17, the Board of Directors of your company expresses its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

As on 31st March, 2017, your company has two subsidiaries and one Joint Venture and one Associate company. There has been no material change in the nature of the business of the Subsidiaries. Pursuant to the provisions of Section 129 (3) of the Act, a statement containing salient features of the Financial Statements of the Company’s Subsidiaries in Form AOC-1 is attached to the Financial Statements of the Company and published in this report. Further, pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate Audited Accounts in respect of Subsidiaries have been published with this report and the same are also available on the website of the Company. The other details of Subsidiaries and Joint Venture Companies are briefly given as under:-

(i) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for mobile services, international long distance services and internet services. The customer base of MTML as on 31st Mar''17 has grown to 289,161 resulting in a market share of around 20%. MTML is offering 2G/3G services in all over the island and 4G services at selected areas. 4G expansion is being done by which 80% of the island will be covered over 4G network and it is expected to be completed soon.

Though there is a slight decrease in revenue of the company mainly due to fierce competition followed by rate reduction, the company could improve its brand image with best quality of service. Despite reduction in gross revenue, the profit after tax of the company has increased from 3.83% to 4.03% of gross revenue. The Company has recommended the payment of dividend '' 1.35 Crore for the financial year 2016-17 out of its net profit for the year.

MTML has earned a gross revenue of approx INR 971 million during the financial year as against INR 1,022 Million in the corresponding period of last fiscal year, thereby registering a fall of around 4.99%. The fall in the revenue is attributable to change in customer usage pattern with majority of customers using data for ILD calls as well as local calls and using chat applications instead of SMS etc., intense competition and saturated market. However the company could increase its net profit with precise management of available resources.

In the year 2015-16, the company had upgraded its entire network for high speed data services (HSPA ) and introduced LTE (4G) in some select areas. In 2016-17, MTML not only maintained its market share but added to customer base by introducing very attractive voice and data plans for existing as well as prospective customers. MTML made inroads in Enterprise Business solutions as well and could get a few dozen Enterprise customers in the year.

MTML is well established in Mauritius due to its innovative tariff structure and on the merit of its state of art technical offerings. The Company is always exploring new business possibilities and is looking to consolidate its position in the market on the basis of a strong 4G network.

All the expenses of the company are paid from its own internal resources. The CAPEX for procurement of equipments is totally met from its own internal resources. MTML is operating from its own building, constructed from internal resources, situated at 63, Cyber City, Ebene, Mauritius which is considered to be heart of IT hub in Mauritius. There is no debt liability on the company.

The company is managed by CEO, CTO, CFO and 9 more officers all on deputation from MTNL. Other operations are managed through outsourcing.

(ii) Millennium Telecom Ltd. (MTL)

Millennium Telecom Ltd (MTL) is a wholly owned subsidiary of MTNL. Services being offered by MTL include Telecom consultancy & engineering, Project Management, Wi-Fi solution, project on e-governance, Managed services, Turnkey ICT solution, capacity building and skill development etc.

Millennium Telecom Ltd (MTL) is also moving ahead with a very high growth rate.

In 2014-15, the company turned into profit by System Integration other ICT related works at Pan India level. MTL is in the process of winning over more orders in the upcoming years.

A large number of Govt. Institutions have awarded works on nomination basis, which have been successfully executed by MTL showcasing its understanding and capabilities. Customer list include National Highway Authority of India (NHAI), Air India, J & K Government, Central University-(Mahendragarh) Haryana etc. MTL is also expanding its portfolio of service for providing generalized as well customized solutions to suit government and semi government institutions.

MTL had invited EOI from interested parties for empanelment as Business Development Associates to assist MTL for implementation of innovative projects. 15 BDAs'' have been empanelled till now.

Recently MTL has been awarded the work for GIS survey of Meerut and Ghaziabad worth Rs, 18.9 crore. MTL is also pursuing various new projects which are at different stages or consideration by Government Agencies.

(iii) MTNL STPI IT Services Ltd. (MSITS)

MTNL STPI IT SERVICES LTD (MSITSL) is a 50:50 Joint Venture company of Mahanagar Telephone Nigam Limited (MTNL) and Software Technology Parks of India (STPI).

In order to implement one of its objectives MSITSL has established the physical infrastructure of Tier III Data Center at Chennai on space taken on lease basis from STPI. The Data Center has server farm area of around 3500 sq. ft. and the total investment made in this regard is of Rs,477 lakhs. This Tier III Data Center is maintaining 99.98% uptime on 24X7 basis.

The commercial operation of the Data Center commenced in 2009. The Ministry of External Affairs (MEA) has hosted the Passport Seva Project at MSITSL Data Center through M/s TCS. The Directorate General of Employment & Training (DGE&T) in Ministry of Labour & Employment has hosted National Career Project through STPI at MSITSL Data Centre. Many IT/TES companies have also co-located servers and networking equipments in the MSITSL Data Centre.

MSITSL has earned the revenue for the period of 2009-10: Rs,196 lakhs, for the year 2010-11: Rs,296 lakhs, for the year 2011-12: Rs,303 lakhs, for the year 2012-13: Rs,367 lakhs, for the year 2013-14: Rs,404 Lakhs and for the year 2014-15: Rs,445 Lakhs. For the year 2015-16 : Rs,562 Lakhs. For the year 2016-17: 540 Lakhs.

(iv) United Telecommunications Ltd. (UTL)

UTL is an associate of MTNL which consists of TCL, TCIL, NVPL (Nepal) & MTNL and was set up in October, 2001. The company provides Mobile/ILD/data services in Nepal. Company is making losses and has a total customer base of approx. 5,96,008 as on 31st December, 2016.

UTL obtained Unified License from Nepal Telecommunications Authority (NTA), regulatory body of telecommunication market in Nepal, on September 5, 2016. This is a pan-Nepal license to operate any service - GSM, CDMA, ISP, NSP inside the territory of Nepal. Under implementation of the Unified License, UTL is planning to roll-out GSM network all over Nepal in different phases in addition to its existing network of almost 200 BTSs covering 44 out of 75 districts of Nepal. UTL has been negotiating with vendors and shall be finalizing and entering into agreements with respective vendors of supply and service of GSM systems, infrastructures, Billing, IN/VAS systems. UTL will be planning for effective roll-out of services in order to compete in the market at the earliest with an aim to penetrate the market from Day 1.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2016-17 (AS ON 31st MARCH, 2017)

Your Company has the following equipped and used capacity of Landline, GSM, Broadband etc. as on 31st March, 2017:-DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2016-17

S. No

Parameters

Delhi

Mumbai

Total

1

Number of Switches

342

260

602

2

Details of Capacity

-

-

-

2a

Fixed Phones

2416505

2586392

5002897

2b

GSM

2800000

2800000

5600000

2c

Broadband Capacity (in Ports)

788736

845908

1634644

3

DELs (including Fixed-Line, GSM and Broadband)

4506496

3692690

8199186

3a

Fixed Line

1601487

1860887

3462374

3b

GSM

2327203

1300117

3627320

3c

Broadband Subscribers

577806

531686

1109492

4

FTTH Subscribers

4572

4677

9249

5

ISDN

7870

12675

20545

S. No

Parameters

Delhi

Mumbai

Total

6

DLC (No.)

425

523

948

7

Tax Capacity

150000

115200

265200

8

Tandem Capacity

402500

363240

765740

9

Optical Fibre Cable

-

-

-

9a

OFC in Route Kms

9014.903

8177.62

17192.523

9b

OFC in Fibre Kms

282395.344

261771.550

544166.894

10

Leased Circuits

12598

18574

31172

HUMAN RESOURCE DEVELOPMENT

Your Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skills of its employees are the key to achievements of its corporate mission. It has sound recruitment policy and comprehensive training system. During the past one year, your company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has a capability to counter threats posed by ever changing customer base. The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose are also focusing on eliminating any skill gap and technical obsolescence. The management''s view on training is one of development of employee''s overall personality and enabling them in becoming a vital productive resource

TRAINING ACHIEVEMENTS

At present MTNL has two of its in house state of the art training centers, one located in New Delhi and other at Mumbai. The details of the achievement of training centers at Delhi and Mumbai respectively are given below:

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM), NEW DELHI

The Institute of Telecom, Technology & Management, ITTM Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction training and short duration training to its officers and employees in the field of Telecom, IT, Computer system and Management. With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started training engineering students also as part of their summer training. During the year 2016-17, ITTM has successfully trained 968 Executives with an achievement of 3889 Man days and 667 Non Executives with an achievement of 10774 Man days.

Industrial Training / Industrial visits for engineering and short term trainings for outside candidates on skill development were also successfully provided to 772 trainees of various engineering institutions and other students from various Government schools under NSQF (National Skills Qualification Framework) with an achievement of 11795 Man days.

Revenue earned at ITTM for the financial year 2016-17

Industrial Training/ Industrial Visits to Engineering Students = Rs, 43,81,590/Corporate Training to TCIL employees/ Short term courses on skill development = Rs, 3,04,953/Total Revenue Earned by ITTM by training outsiders = Rs, 46,86,543/Special training on “digital mode of payments” to promote the cashless transactions was organised at ITTM on 23/12/2016. It was inagurated by Hon’ble CMD Delhi and ED(Delhi) , GM(Fin) , GM(Trg) & other officers of MTNL were also present.

ITTM has the necessary infrastructure, technical and academic competence and excellence for providing training in specialized courses in the field of GSM, Broadband Technology, Switching, Transmission, External Plant, IT, Computer System, Management and various wellness programs.

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGEMENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM) is ISO 9001-2008 certified Institute. Launched in 2004 this institution is imparting training in Telecom Technology and Management Studies to candidates across the globe. It has ERP based fully networked training center & Hostel for environmental friendly paperless working and is strategically located at Hiranandani Gardens, Powai, Mumbai, India.

CETTM has been instrumental in enhancing the skills & knowledge of MTNL employees which has translated into increased productivity and efficiency. During F.Y. 2016-17, 4892 personnel were trained including 1984 in-house personnel and 2908 external personnel and have registered an achievement of 25179 Trainee Days. A total of 274 Programs were conducted which included training programs on Broadband, FTTH, Mobile services, soft-skill development and mandatory courses for Financial up-gradation.

Under ITEC-SCAAP program, sponsored by MEA, Govt. of India, CETTM has successfully completed 09 courses in Telecom, IT & Management streams. A total of 315 foreign delegates from over 60 countries were trained.

As CSR activity 17 vacation courses for engineering college students were conducted during MAY & DEC 2016 in which 234 students were trained during summer and winter vacations. 2053 Engineering Students in F.Y.2016-17 were trained in various courses. 23 Cabinet Secretariat officers trained in various courses. CETTM has done MOU with Syncroute for providing Wireless 4G training and trained 41 students.

(III) SKILL DEVELOPMENT

With a vision of a Skilled India, Ministry of Skill Development & Entrepreneurship (MSDE) aims to skill India on a large scale with speed and high standards. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme that is driving towards greater realisation of this vision. MTNL have two training centre, one at Mumbai (CETTM) and another at Delhi (ITTM). Both of the training centers are engaged to meet the requirement of skill development and giving summer trainings to students of BE/ B.Tech. Short Term (One Day/ Two days) training programs for outsiders including students, housewives & others are also being conducted. To achieve the aim of skill development programme MTNL has signed MoU with Telecom Sector Skill Council & Global Institute of Skill Development. MTNL has also signed MoU with Gramin Vikas Trust (GVT) to run a training cum skilling center for promotion of entrepreneurship for the period of Five years. Under skill development programme MTNL has trained 3591 trainees in year 2016-17. MTNL is also in process of conducting Recognition of Prior Learning certification for all eligible MTNL employees.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the previous year, Employees Relations remained Cordial throughout the year. The Grievances/Issues raised by the employees/Union/Associations were given due attention and regard. The cases/issues brought up by them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

Further, MTNL was paying Pension to the absorbed employees for the service rendered in Govt. For the past few years MTNL was pursuing with Govt for settlement of the pension issue. The Pension issue is considered by the Govt and it has been decided that Payment of pensioner benefits to all categories of the erstwhile employees of the Govt (Gr A,B,C & D) absorbed in MTNL who have opted for pension on combined service is being made by Govt in the same manner as in BSNL w.e.f 01/10/2000.

EMPLOYEES’ WELFARE

Employees Welfare Schemes like subsidized Canteen, Housing, Medical facilities, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

Changeover of Contributory Group Health Insurance Scheme for retirees to CGHS- After pursuance of MTNL with DoT, Ministry of Health issued instructions to CGHS for enrolment of MTNL retirees (drawing Govt. Pension) in the CGHS. To facilitate the same an incentive is being provided to the retirees concerned. As on date approximately 2500 retirees in MTNL have benefitted from this scheme.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Government for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavored to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates to SC/ ST/ OBC communities as well as Physically Challenged candidates.

IMPLEMENTATION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITITION & REDRESSAL) ACT, 2013

The Company has constituted an internal Complaint Committee on Prevention, Prohibition & Redressal of Sexual Harassment of Women at workplace and matters connected therewith or incidental thereto covering all aspects as contained in the Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013. No complaint has been reported during the year under report.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees in night shifts. Also to redress the issues of Sexual Harassment at workplace, special cells have been constituted.

MANPOWER STATUS

As on 31st March, 2017 your company had a working strength of employees as per details given below:-

Group

Total Working

SC

ST

A

899

145

57

B

3026

434

73

C

16366

2636

284

D

7614

1915

552

Total

27905

5130

966

TSM

14

-

-

Grand Total

27919

5130

966

New Recruitment

In order to induct new blood into its working strength, the Board of Directors of your Company has approved to induct 100 officers at E-2 level in the stream of Telecom, Electrical, Civil, Finance, HR , Sales & Marketing.

The candidates for the post of JTO (Telecom/ Electrical & Civil) are selected under GATE-2015 score. ''57'' candidates were issued offer of appointment out of which ''19'' candidates including one PwD candidate joined induction training at CETTM, Mumbai. They are further posted in field training as per the MTNL rules.

The recruitment of non-technical posts viz. AM (Finance/ Mktg./ Legal/ HR) is under process.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has been suffering losses for the last few years and hence no CSR funds has been allocated/spent for CSR activities during the Financial Year. The provision of Section 135 of the Companies Act, 2013 are not applicable. However MTNL is undertaking non funding CSR activities like sending SMS to the public for spreading awareness on Swachh Bharat, Pulse Polio, other moves of the Government etc. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of this Report. The Policy is available on the website of the company www.mtnl.net.in.

VIGILANCE

The Vigilance department of MTNL is headed by Chief Vigilance Officer. Presently Shri Deepak Kashyap, CVO, BSNL is looking after the charge of CVO, MTNL. The CVO is responsible for complete vigilance administration in MTNL.

During the year 2016-17, emphasis was laid on preventive vigilance and to enhance the awareness of transparency and accountability in working by carrying out various field inspections. System improvement advice were issued by Vigilance Unit for reconciliation of Sanchaar Haats products, store verification, optimum electrical load in various buildings, proper maintenance of broadband faults, BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.

Further, training programmes/seminars on vigilance/complaints handling and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL, procedure for handling departmental proceedings and improve their working efficiency.

As per CVC instructions, the Vigilance Awareness Week was observed from 31.10.2016 to 05.11.2016. During this week, various activities like integrity pledge taking, release of two booklets on (i) Public participation in promoting integrity and eradicating corruption” and (ii) book on vigilance and discipline with a focus on the subject Public participation in promoting integrity & eradicating corruption and containing the chapters on main function of vigilance, MTNL Conduct Disciplinary and Appeal Rules-1998 (Executive), Certified Standing orders for MTNL C & D Employees (Non Executives), Do''s and Don''ts were distributed. Also quotations were displayed and lectures, seminar and workshop organized. Further, MTNL has started a newsletter titled ''CHETAN'' which was released by CMD,MTNL during vigilance awareness week. This newsletter has detailed information regarding departmental inquiries and various vigilance activities carried by vigilance unit during year 2015-16.

Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai with concerned GM (Vigilance) team to review the status of the cases and expedite the same. Meeting with ED & CGM ( Delhi / Mumbai / Wireless Services) were also held to apprise them of the observations made during field inspections and different types of operational complaints received by Vigilance Unit. During these meetings, CVO emphasized for further improvement in customer services offered by MTNL by taking prompt action on customer''s complaint and having customer-centric approach at all levels to enhance the credibility and brand image of the company in the minds of the customers.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme (IPP) focused on enhancing transparency in its business transactions, contracts and procurement process. Under this MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent External Monitors being persons of eminence nominated by MTNL in consultation with Central Vigilance Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust in various Stakeholders.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitment affecting the financial position of the company occurred between the end of the financial year to which this financial statements relate and the date of the report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

The provision of Section 134(m) of the Companies Act, 2013 do not apply to the Company as your Company is a service provider. The total foreign inflow was ''3.83 Crore and outflow was '' 3.10 Crore.

ENTERPRISE RISK MANAGEMENT

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee also has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of Risk Management Policy has been covered in the Management Discussion and Analysis, which forms part of this Report.

MEETINGS OF THE BOARD OF DIRECTORS

During the year under report, the Board of Directors of your Company met Ten times i.e. during the Financial Year 2016-17, 10 (Ten) Board Meetings were held. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. Details of Board Meetings are given in Corporate Governance Report which forms part of this Report. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service, Cellular Mobile Telephony and other value added services.

DECLARATION BY INDEPENDENT DIRECTOR

The Company has received necessary declaration from the Independent Directors i.e. from Shri Rakesh Nangia and Shri Ashok Mittal under Section 149(7) of the Companies Act, 2013 that they meets the criteria of Independence laid down in the Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (LODR), 2015.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the period under review, the Company has not entered with any Material Transaction with any of its related parties. The Company''s major Related Party Transactions are generally with its subsidiaries and associates. All Related Parties Transactions were in ordinary course of Business and were negotiated on an Arm''s Length basis and they were intended to further the company''s interest. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of Companies Act, 2013 in Form AOC-2 is not applicable. Web link for Policy on Materiality of Related Party Transactions and also on dealing with Related Party Transactions has been provided in the Report on Corporate Governance which forms part of Annual Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

During the year, your Company has given a Corporate guarantee for ''31,60,000 valid till 30th May, 2020 in favour of Central University Haryana, Mahendragarh on behalf of Millennium Telecom Ltd (MTL), a wholly owned subsidiary of MTNL for execution of a project by MTL.

During the Year there was no loan given or investments made by the MTNL under Section 186 of the Companies Act, 2013.

CORPORATE GOVERNANCE

Your Company follows the principles of effective Corporate Governance Practices. The Company has taken steps to comply with the requirements of SEBI (LODR) Regulation, 2015 which came into effect from 01.12.2015. Your Company has also complied with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (CPSEs). MTNL is filing its reports, statements, documents in this regard with the NSE, BSE & OTCIQ on quarterly basis. A Report on Corporate Governance has been appended under the separate section titled Corporate Governance Report.

COMPLIANCE OF CORPORATE GOVERNANCE - CERTIFICATE FROM THE PRACTISING COMPANY SECRETARY REGARDING

A certificate from M/s V.K. Sharma & Co. Practicing Company Secretary, regarding compliance of conditions of Corporate Governance as stipulated under Schedule V (E) of SEBI (LODR), 2015 and DPE Guidelines is attached as an Annexure. COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & Policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON “GREEN INITIATIVES IN CORPORATE GOVERNANCE”

The Ministry of Corporate Affairs, vide its Circular no. 17/2011 dated 21st April 2011 followed by Circular no.18/2011 dated 29th April 2011 has taken “Green Initiative in the Corporate Governance” by allowing paperless compliances by the Companies through electronic mode and introduced e-mail address as one of the modes of sending communication to the members. Also as per provision of Section 101 of the Companies Act, 2013, and rules made there under notice of meeting may be sent by electronic mode.

In accordance with the above circulars and to ensure compliance of Green Initiative, your Company has sent various documents including Notice of the 31st AGM, Audited Financial Statements, Directors'' Report, Auditors'' Report for the F.Y. 2016-17 etc. to its shareholders in electronic form, at the e-mail addresses provided / registered by members and made available to us by the Depositories (NSDL/CDSL). The members are advised to update by registering changes, if any, in their e-mail address, with the concerned Depository Participant.

Your Company shall also display full text of Notice of 31st AGM & Annual Report 2016-17 at its website www.mtnl.net. in and physical copies of such documents will be made available at the registered office of the Company for inspection by the members during office hours on all working days.

Your Company looks forward towards active participation of Shareholders in this “Green Initiative”.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating efficiently.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company had maintained, in all respects, adequate internal financial controls over financial reporting and such internal control over financial reporting were operating effectively during the financial year 2016-17, based on the internal control over financial reporting criteria established by the Company considering the essential components on internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. The Company has appointed M/s HDSG & Associates Internal Financial Control Consultants for reviewing, evaluating and identifying the existing MRCM and suggest establishment of effective Control System in MTNL for the FY 2016-17.

FIXED DEPOSITS

Your Company has not invited/ accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as on the Balance Sheet date on this account.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

The provisions of Section 197(12) of Companies Act, 2013 read with Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are not applicable to your Company as being a Govt. Company.

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR 2016-17

M/s Hemant Singh & Associates, Company Secretaries, have conducted the Secretarial Audit of your company for the Financial Year 2016-17 under Section 204 of the Companies Act, 2013. The said Secretarial Audit Report and the replies to the observations of the Secretarial Auditors are given in as annexure.

EXTRACT OF ANNUAL RETURN FOR THE YEAR 2016-17 PURSUANT TO SECTION 92(3) OF COMPANIES ACT, 2013 (MGT-9)

Extract of Annual Return (in Form-MGT-9) of the Company is annexed.

AUDITORS QUALIFICATIONS AND MANAGEMENT REPLY THERETO

The replies to the observation of the Statutory Auditors for the Financial Year 2016-17 are given as annexure. The Comments of the Comptroller and Auditor General of India on the Financial Statements and the replies of the Management thereon are given in the annexure to the Directors'' Report.

DIRECTORS & KEY MANAGERIAL PERSONNEL

The Board of Directors of your company has seven (7) members, three Functional Directors (including CMD), two Government Nominee Directors and two independent directors. List of present Directors of MTNL as on 10.08.2017 is given in the Corporate Governance Report.

During the period under report, the following changes took place in the Directorship/Key Managerial Personnel of Your Company:-

1. Shri N. K. Yadav ceased to be CMD w.e.f. 08.06.2016.

2. Shri P. K. Purwar was given additional charge of CMD w.e.f. 08.06.2016. Appointed as Regular CMD on 03.03.2017 and entrusted with additional charge of Director (Fin) on 03.03.2017.

3. Shri Sanjeev Kumar has been appointed as Director (Tech) w.e.f. 02.07.2016.

4. Smt. Simmi R. Nakra ceased to be Director w.e.f. 12.04.2016.

5. Ms. Tiakala Lynda Yaden has been appointed as Government Nominee Director in place of Smt. Simmi R. Nakra w.e.f 19.05.2016.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of your Company are:-

i) Shri P.K. Purwar, CMD & Dir (Fin)

ii) Shri Sunil Kumar, Dir (HR&EB)

iii) Shri Sanjeev Kumar, Dir (Tech)

iv) Shri S.R. Sayal, Company Secretary

AUDIT COMMITTEE

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

AUDITORS

(1) M/s. Kumar Vijay Gupta & Co., Chartered Accountants and M/s Mehra Goel & Co, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the Financial Year 2016-17 and the Board has already ratified their appointment.

(2) M/s R. M. Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your company for carrying out audit under Section 148 of the Companies Act, 2013, for the cost records maintained under Section 209(1)

(d) of Companies Act,1956 and as notified under: (i) Cost Accounting Records (Telecommunications) Rules,2002 & (ii) Cost Audit Rules,2001. The Cost Audit Report alongwith the annexures for the Financial Year 2015-16 have been submitted to the Central Government in the Form I-XBRL format on MCA portal on 28/09/2016.

(3) M/s Hemant Singh & Associates, Company Secretaries have been appointed as Secretarial Auditors of your company for carrying out Secretarial Audit under Section 204 of the Companies Act, 2013 for the Financial Year 2016-17.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedicated services rendered by every employee of the company. The Board is confident that with the employees'' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone, Internet services and other Value Added services.

For and on behalf of the Board of Directors

sd/-

(Shri P.K. PURWAR)

CMD & DIRECTOR (FIN)

PLACE: NEW DELHI

DATE: 03/08/2017


Mar 31, 2014

Dear Shareholders,

The Directors present the 28th Annual Report of your Company together with the Statement of Accounts and Auditors'' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2014.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2013-14

MTNL is giving major thrust on the expansion of capacity for GSM and Broadband to cater the further demand. Actions are being taken to generate fresh demands by providing quality services, customer care & satisfaction, introduction of new services / schemes and innovative marketing strategies. Company has initiated the following upgradation / capacity building projects-

GSM / 3G services-

The present HSDPA enabled 3G network supporting download speeds up to 3.6 Mbps and uploads speed upto 384 Kbps is being upgraded to HSPA supporting download speed upto 21.1 Mbps and upload speed upto 5.76 Mbps. For meeting the enhanced Data carrying requirement of 3G network, packet core capacity will be expanded to 10 Gbps and M/W backhaul will be augmented / expanded through deployment of 100 / 200 Mbps (upgradable to 400 Mbps) Hybrid M/W systems.

RF coverage will be improved by deploying additional BTSs / Node-Bs. Initially around 1080 Node-Bs & 800 BTSs in Delhi and 1080 Nods-Bs & 566 BTSs in Mumbai are proposed to be added. Afterwards, the number of BTSs & Node-Bs will added as per requirement in phases. To reduce Capex & Opex, majority of the proposed expansion will be done on shared sites.

Tenders for augmentation / expansion of GSM / 3G & MW backhaul are under various stages of finalization.

Fixed Line -

Replacement of TDM switches with NGN/ IMS platform : MTNL has planned to replace its TDM Fixed line switches which are becoming obsolete as their induction started around 20 years back with NGN / IMS technology in phased manner. Introduction of NGN / IMS based services will not only help MTNL in saving Opex, space but also enable us to offer all data / video centric services which are currently enjoyed by Mobile subscribers to our fixed line subscribers also ultimately leading to convergence of fixed and mobile services.

For this purpose, C-DOT was allowed to conduct a field trial of its IMS Complied NGN platform solution in MTNLs Network. An MOU in this regard was also signed with CDOT. Successful field trial of C-DOT''s IMS complied NGN switches has already been completed and voice to MTNL''s FTTH subscribers, certain FIN and centrex services are being provided through this switch. Further C-DOT has been given go-ahead for trial commercial migration of one existing TDM switch of 10-20K capacity each in Delhi and Mumbai. This initiative with C-DOT will help MTNL in migration of its life expired switches without bearing any significant CAPEX burden.

(i) Deployment of FTTH services

To meet the ever increasing demand for the bandwidth MTNL is aggressively laying and extending the reach of optical fiber in its network and is deploying GPON based FTTH network. It is a centrally managed network designed to provide reliable fiber routes to cover all possible destinations within MTNL. This will help in meeting the increased bandwidth requirement for both data and video applications. The company intends to create POP on fiber within a 1 Km radius of the subscribe.

(ii) Creation of POPs on NGCN Network-

To meet the ever increasing bandwidth demand, higher level of customer satisfaction and providing wide range of services MTNL has planned to take fibre near to the subscriber and reduce the last mile copper loop length to 1-2 Kms during the 12th five year plan period. This will be achieved by creating additional 400-500 PoPs (through which data, voice, enterprise and other services will be provided to the subscribers) on the state of art NGCN (IP/ MPLS) Network which is currently having 45 and 56 POP locations in Delhi and Mumbai respectively.

FINANCIAL RESULTS FOR THE YEAR 2013-14

Sources and Application of funds for the year 2013-14 are given below:-

(In Million RS. ) 2013-14 2012-13

Income from Operations 33917.35 34286.63 Expenditure (excluding Interest & prior period Adjustments) 54802.60 78355.62 Operating Profit /(Loss) (20885.25) (44068.99) Other Income 3956.37 2854.20 Interest 13901.48 11802.60 Profit/(Loss) before Tax (30830.37) (53017.40) Exceptional Items 116209.31 0.00 Tax Provision for the Year 4971.79 0.00 Prior Period Adjustments 2155.84 193.84 Net Profit / (Loss) for the Year 78251.31 (53211.23)

Appropriation

Interim/Proposed Final dividend 0.00 0.00 Dividend Tax 0.00 0.00

Transfer to/(from):

a) Contingency Reserve 0.00 (491.29) b)Debenture Redemption Reserve 452.71 0.00

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00 Issued, Subscribed & paid-up Capital 6300.00 6300.00 Reserves & Surplus 44107.06 (34144.25) Secured and Unsecured Loan 141204.40 115386.87 Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY

Fixed Assets (Net Block) 112209.50 148991.83 Investment (Net) 2019.79 2219.79 Other Assets 156307.88 102953.39 Other liabilities 82751.39 175944.81 Capital Work-in-Progress 3825.69 9322.42

Note: Previous year''s figures have been re-grouped/re-cast wherever considered necessary.

INFORMATION REGARDING ISSUE OF BONDS BY MTNL DURING THE FINANCIAL YEAR 2013-14.

MTNL has recently issued the Third series of Bonds to the tune of RS. 765 crores on 26th March 2014 at the coupon rate of 9.39 % per annum payable semi annually. The first and second series of Bonds were earlier issued to the tune of Rs. 1005 crores on 28th March 2013 at the coupon rate of 8.57% per annum payable semi annually and Rs. 1975 crores on 05th December 2013 at the coupon rate of 9.38% per annum payable semi annually.

DIVIDEND

Since there has been no operating profit during the financial year 2013-14, the Board of Directors of your company expresses its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Ventures companies. The working of the same is as under:-

(i) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for mobile services, international long distance services and internet services. The customer base of MTML has grown to 191,262 from 141,699 of last year. The market share has crossed 15% in voice and more than 30% in ILD Sector. MTML has launched its 3 GSM Services in this fiscal year.

In the year 2013-14, it is planning to add more network elements to ensure good quality service, taking into account the capacity utilization.

MTML has achieved revenue of INR 761 Million during this fiscal year 2013-14 compare to the last fiscal year revenue of INR 522.35 Million. Despite the intense competition and market getting saturated, the company could increase its revenue. However, the net profit (before tax) has increased to INR 37.42 Million from INR 19.19 Million (before tax) in this fiscal year. MTML has completed the construction of its administrative building (Ground 7 Floors) and moved into its building from July-2014 from the rented premises.

All the expenses of the company are paid by its own internal resources and CAPEX for procurement of equipments is also met. There is no debt liability on the company.

The company is managed by CEO, CTO, CFO and 10 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

(ii) Millennium Telecom Ltd. (MTL)

MTL was formed by MTNL as its wholly owned subsidiary company basically for providing internet and other value added services in the year 2000. During the financial year 2013-14 the Board of MTL has proposed to enter into the new lines of business for increasing the revenue and making the Company profitable simultaneously. Some of the new work orders being undertaken by the company are as follows:

1. To start Bundled Services for MTNL products/services in which non-telecom components work will be executed by MTL .

2. To undertake the Data centers Leasing /Hiring of MTNL and other PSU telecos like. M/s BSNL, ITI, MSITS.

3. To undertake remote monitoring of customer network.

4. Association with MTML for various works relating to Disaster Management, Video Surveillance and other Government projects.

MTL also proposes to get ISO 9000 certification, SMSE Registration, Risk Analysis and PMT.

The Board of the company is working on the above line of business alongwith MTML and is hopeful to generate revenue in the years to come.

FINANCIAL PERFORMANCE FOR THE FINANCIAL YEAR 2013-14

MTL has suffered a Net loss of Rs. 16,97,258/- for the financial year ended 31 st March, 2014 as against the Net Loss of Rs. 20,19,378 /- last year (2012-13).The company has earned other Income (Interest from Bank Fixed Deposit) amounting to Rs. 18,39,036/- in the financial year ended 31 st March, 2014 as against Rs. 20,11,398/- last year.

(iii)United Telecommunications Ltd. (UTL)

The Joint Venture is working for providing telecom service in Nepal based on CDMA technology.

UTL has total voice customer base of more than 506,459 (As per NTA MIS report dated 14.03.2013) in number and total data customer base is more than 56,059. UTL has more than 118 personnel consisting of telecom engineers and finance professionals and other support staffs. Apart from this, more than 110 people are working through outsourcing agencies for Fault Repair Services, Customer Care and Marketing of phones, security and campaigns. The Management closely monitors the overall performance of the network, quality of services, subscriber complaints, fault rates, BTS wise traffic and ILD traffic.

The Company is sustaining its operational expenses from internal revenue generation.

During the period ending 31 st March 2014, the company has reported a net loss of INR 267.95 million after Tax.

(iv) MTNL STPI IT SERVICES LTD (MSITS)

MTNL STPI IT SERVICES LTD is a 50:50 Joint Venture company between Mahanagar Telephone Nigam Limited (MTNL) and Software Technology Parks of India(STPI). The main objective of the company is to provide data center services, messaging services, business application services etc. MSITS has established the physical infrastructure of the Data Center at Chennai and space taken on lease basis from STPI Chennai. The Data Center has server farm area of around 3400 sqft and the total investment made in this regard is of Rs. 4.77 crores.

The commercial operation of the Data Center had commenced in 2009, the Ministry of External Affairs (MEA) has hosted its Passport Seva Project at MSITS Data Center through M/s TCS. The Data center is maintaining 99.98% uptime on 24X7. At present CEO and 2 officers on deputation from MTNL are on regular payrolls of the company and other operations are maintained through outsourcing. Total revenue of MSITS for the year 2013-14 is Rs. 3.88 crores while it was Rs. 3.60 crores during the year 2012-13.

In addition, MSITS is in the process of exploring avenues for business expansion with the collaboration of various business partners of the data center industry.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2013-14 (AS ON 31ST MARCH, 2014)

Your Company has the following equipped and used capacity of Landline, GSM, WLL etc. as on 31st March, 2014:-

S. No Parameters Delhi Mumbai Total

1 Number of switches 327 236 563 2 Equipped Capacity* - - -

(a) Fixed Phones including WLL 2,433,959 2,580,392 5,014,351 Fixed Phones (b) WLL 400,000 542,230 942,230 (c) GSM 2,800,000 2,800,000 5,600,000 DLC capacity* 160,152 118,046 278,198 Digitalization % lines 100 100 200

3 DELs* 3,909,470 3,004,941 6,914,411 4 Details of Net DELs

(a) Fixed Line 1,601,739 1,940,336 3,542,075 (b) WLL-Fixed 12,935 65,434 78,369 (c) WLL-Mobile 23,158 25,720 48,878 (d) GSM 2,271,638 973,451 3,245,089

5 Broadband

(a) Subscribers 557,269 614,232 1,171,501 (b) Capacity (in ports) 788,736 845,908 1,634,644

6 Internet connection

(a) Prepaid 412 6 418 (b) Postpaid 0 879,359 879,359

7 Payphones 57,270 86,126 143,396

S. No Parameters Delhi Mumbai Total

8 ISDN 8,505 86,126 143,396

9 DLC (No) 425 523 948

10 Tax Capacity 150,000 115,200 265,200

11 Tandem Capacity 402,500 363,240 765,740

12 Optical fiber cable

(a) In Route KMs 8,563.37 7,944.19 16,507.56 (b) In Fiber KMs 268,324.58 256,030.68 524,355.26

13 Leased Circuits 12,678 35,812 48,490

14 Replacement of 31.059 15.77 46.829 PCUT Cable ( in LKCM)

"including Landline/WLL fixed, WLL Mobile & GSM

HUMAN RESOURCE DEVELOPMENT

Your Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skill of its employees are the key to achievements of its corporate mission. It has sound recruitment policy and comprehensive training system.

During the past one year, your Company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has a capability to counter threats posed by ever changing business environment and to take advantages of opportunities presented to serve ever increasing customer base.

The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose, are also focusing on eliminating any skill gap and technical obsolescence. The managements'' view on training is one of development of employee''s overall personality and enabling them in becoming a vital productive resource.

TRAINING TARGETS AND ACHIEVEMENTS

The training target and achievements for the financial year 2013-14 is given below:-

UNIT Number of Achievement Number of Man Achievement Persons Trained Days Target Target

DELHI 2390 21060 7579 MUMBAI 7020 6050 35977

TOTAL 7020 8440 21060 43556

At present MTNL has its in house two state of the art training centres one located in New Delhi and other at Mumbai.

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM), NEW DELHI

The Institute of Telecom, Technology & Management,ITTM Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction training and short duration training to its officers and employees in the field of Telecom, IT, Computer system and Management. With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started training engineering students also as part of their summer training. During the year 2013-14, ITTM has successfully trained 1266 Executives with an achievement of 5116 Man days and 1124 Non Executives with an achievement of 2463 Man days. Industrial Training were also successfully provided to 1002 Trainees with an achievement of 35877 Man days.

Revenue earned at ITTM by providing industrial training to students for the Financial Year 2013- 14 is Rs. 6737060 and revenue earned at ITTM from AAI Corporate for the Financial Year 2013-14 is Rs. 540000.

ITTM has the necessary infrastructure, technical and academic competence and excellence for providing training in specialized courses in the field of GSM, Broadband Technology, Switching, Transmission, External Plant, IT, Computer System & Management.

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY & MANAGEMENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM), at Powai, Mumbai is state of art training centre of MTNL imparting technical and management training to both in- service officers & staff and to external candidates. CETTM provides training in field of Telecom, Information & Computer Technology and Management. CETTM also leases training infrastructure to corporate sector for their training requirements. CETTM is empanelled with Ministry of External Affairs and conducts Telecom and management training under ITEC/SCAPP program, sponsored by MEA, Govt. of India. CETTM has successfully completed 16 programs in FY-13-14 and trained 212 participants from different countries. Apart from the above, CETTM has successfully trained 5613 in-service personnel with an achievement of 32894 Trainee days. Moreover, there were a total of 348 Programs conducted altogether.The competition in the field of training is increasing tremendously with each passing day. Despite of the fierce competition, CETTM has earned revenue of Rs. 13.11 Cr during the financial year 2013-14 with clientele from various sectors like Telecom, BPO, Banking, Finance, Oil, Pharma, IT etc. Keeping to its tradition, CETTM has also added more than 38 new clients to its already existing long clientele. CETTM also participates in industry-academic interaction and conducts short term courses for students. 27 batches were conducted to train the students of Engineering Colleges. 402 Students were trained under Corporate Social Responsibility (CSR), while 92 students took part in one/two months Project Training works. 1870 number of Engineering College Students took part in "Industrial Visit Programme" during 2013-14. CETTM also conducted 4 new customized courses for corporate which included 102 participants. 18 senior officers from the Security Wing from Cabinet Secretariat have been trained in various Technologies of Telecommunication. CETTM has tied up with Welingkar Institute of management Development & Research for providing PostGraduate Program on Telecom Management. 29 students passed out in the first batch and the second batch with 17 Students is on and will be completing by June-2014. The efforts and the results, reiterate our commitment to the growth in terms of business, quality and customer satisfaction; and the customers have always rewarded our good work by giving us the repeated business.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the previous year, Employees Relations remained Cordial throughout the year. The Grievances/ Issues raised by the employees/Union/Associations were given due attention and regard. The cases/issues brought up by them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

A further step towards Workers Participation in critical issues concerning business endeavors and employees, a meeting was convened to share the views of recognized Unions on the various aspects of our business endeavors and issues concerning employees including pension issue.

EMPLOYEES'' WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Medical facilities, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Govt for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavoured to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates belonging to SC/ST/OBC communities as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace, special cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committees at Delhi/Mumbai. Child Care leave has also been approved by MTNL Board on 30/05/2014.

IMPLEMENTATION OF CSR AND SUSTAINABILTY ACTIVITIES/ PROJECTS IN MTNL.

A Board level CSR Committee has been constituted on 21.11.2013 as per DPE Guidelines which will oversee and coordinate the implementation of CSR and sustainability activities/ projects in MTNL. Presently, the Committee consists of the following:

1. Shri P.K. Purwar, CMD and Dir (Fin) - Head of the committee

2. Shri Sunil Kumar, Dir(HR), Member

3. Shri Sushil Kumar Shingal, Independent Director, Member

4. Shri S.R.Sayal, Secretary to the committee

CSR Policy has been approved by the Board of Directors of MTNL in its meeting held on 7th July, 2014, and the same has been posted on the website of the company.

No meeting of the Board level CSR Committee was held during Financial Year 2013-14.

MANPOWER STATUS

As on 31st March, 2014 your company had strength of employees as per details given below:-

MTNL Employees Working Strength as on 31.03.2014. Group Total Working SC ST

A 951 137 59 B 4124 520 71 c 21709 2769 391 d 9721 2216 769

Total 36505 5633 1290 TSM 18 - - Grand Total 36523 5633 1290

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. He is an officer of the rank of Joint Secretary, Govt. of India. Presently Shri Khushi Ram, IRSEE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration.

During the year 2013-14, emphasis was laid on preventive vigilance and to enhance the awareness of transparency and accountability in working by carrying out various field inspections. System improvement advice were issued by Vigilance Unit for reconciliation of Sanchaar Haats products, store verification, optimum electrical load in various buildings, proper maintenance of broadband faults, BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.

Further, training programmes/seminars on vigilance/complaints handling and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL, procedure for handling departmental proceedings and improve their working efficiency.

As per CVC instructions, the Vigilance Awareness Week was observed from 28th October to 2nd November 2013. During this week, various activities like pledge taking, release of three booklets on (i) "Promoting Good Governance - Positive contribution of vigilance" containing various circulars and initiative of CVC in promoting good governance (ii) Book containing "DO''s and DON''T and service provided by MTNL, and (iii) book on Vigilance and discipline containing E- tendering and E- procurement etc were distributed. Also quotations on anti-corruption and lectures, seminar and workshop organized. Further an interactive programme was also organized wherein Ex Special Director, CBI addressed senior officers to bring more accountability and transparency in working.

Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai with concerned GM (Vigilance) team to review the status of the cases and expedite the same. Meeting with ED & CGM ( Delhi / Mumbai / Wireless Services) were also held to apprise them of the observations made during field inspections and different types of operational complaints received by Vigilance Unit. During these meetings, CVO emphasized for further improvement in customer services offered by MTNL by taking prompt action on customer''s complaint and having customer-centric approach at all levels to enhance the credibility and brand image of the company in the minds of the customers.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme (IPP) focussed on enhancing transparency in its business transactions, contracts and procurement process. Under this MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent External Monitors being persons of eminence nominated by MTNL in consultation with Central Vigilance Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust in various Stakeholders.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS & EXPENDITURE

Information with regard to foreign exchange earnings and outgo in the Financial Year 2013-14 are as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million)

Foreign Exchange Earned 87.48 Expenditure in Foreign Currency 44.48

RISK MANAGEMENT POLICY

Risk Management Policy for the FY 2014-15 has been approved by your directors in its meeting held on 30.05.2014. Following major risk are faced by MTNL in the current competitive telecom scenario:-Market Risk, Policy and regulatory risk, Technology Risk/ Quality of Service Overstaffing Risk and Staff Costs and Manpower Risk. Details/Explanation of Risk factors are given in Management Discussion & Analysis Report for the FY 2014-15 attached in the Annual Report.

NUMBER OF MEETING OF THE BOARD IN THE FINANCIAL YEAR 2013-14

During the FY 2013-14, Eight meetings of Board of directors of your company were held.Details of Board meetings and attendance of directors in the Board meeting is given in the Corporate Governance Report attached with this Directors Report.

CORPORATE GOVERNANCE

Your Company follows the principles of effective Corporate Governance Practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (CPSEs). Quarterly Compliance Reports are regularly sent to the Stock Exchange and the DPE. A Report on Corporate Governance has been appended under separate section titled ‘Corporate Governance Reports and the same forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report as Annexure.

COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & Policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON 1 GREEN INITIATIVES IN CORPORATE GOVERNANCE

Your company will send Annual Report for the year 2013-14 by email to all the shareholders who are having valid email id account. Further your company request shareholders holding shares in electronic mode to keep their email addresses updated or provide their email addresses if not earlier provided to their DPs. Members holding shares in physical mode are also requested to update their email addresses by writing to the Registrar and Transfer Agent of the Company or directly to the Company by quoting their folio number(s).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act 1956 & Section 134(5) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 & Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis and

(e) the directors, in the case of a listed Company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating efficiently.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

ADDENDUM TO DIRECTORS'' REPORT

The replies to the points raised in the Auditors'' Report and Comments of the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956 & Section 143(5) of the Companies Act, 2013, on the Accounts of your company and the replies thereon of the Management are given in the addendum to the Directors'' Report.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year under report, the Board of Directors of your Company met frequently. In the Financial Year 2013-14, 8 (eight) no. of Board Meetings were held. Details of Board Meetings are given in Corporate Governance Report. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri P.K Purwar continued to be the Director (Fin) of the Company and was given the additional charge of CMD, w.e.f. 24.06.2014, Shri Sunil Kumar continued to be the Director (HR) of the Company, Shri Sushil Kumar Shingal continued to be the Independent Director and and V. Umashankar continued to be the Government Director respectively.

During the period under report, the following changes took place in the Directorship/Key Managerial Personnel of your Company:-

1. Shri A.K.Garg has ceased to be the CMD) w.e.f 31/05/2014.

2. Shri P.K.Purwar, Dir(Fin), was given additional charge of CMD, w.e.f. 24.06.2014.

3. Shri K.S. Bariar, has ceased to be the director of the company w.e.f. 26.08.2014 pursuant to the DoT letter No. F. No. 5-2/2013-PSA dt. 26/08/2014 and Shri Srikant Panda has been nominated as a director in his place.

The Key Managerial Personnel of your Company as on 1 st September, 2014 are:-

i) Shri P.K. Purwar, CMD & Dir(Fin)

ii) Shri Sunil Kumar, Dir(HR)

iii) Shri S.R. Sayal, Company Secretary.

AUDITORS

(1) M/s. V.K. Dhingra & Co., Chartered Accountants and M/s Arun K. Agarwal & Associate, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2013-14 and the Board has already ratified their appointment.

(2) M/s R.M.Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your company for carrying out audit under Section 233B(1) of Companies Act, 1956 and Section 148 of the Companies Act, 2013, for the records maintained under section 209(1 )(d) of Companies Act,1956 and as notified under: (i) Cost Accounting Records (Telecommuncations) Rules,2002 & (ii) Cost Audit Rules,2001. The Cost Audit Report alongwith the annexures for the year 2012-13 have been submitted to the Central Government in the Form I-XBRL format on MCA portal on 27/09/2013.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees'' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services. The Directors are hopeful that the hardwork and sincere efforts and dedicated sevices of the employees at all levels, MTNL shall maintain its position as one of the leading telecom sevice provider.

For and on behalf of the Board of Directors

sd/- (Shri P.K. Purwar) CHAIRMAN AND MANAGING DIRECTOR & DIRECTOR (FINANCE) PLACE : NEW DELHI DATE : 14th August, 2014


Mar 31, 2013

To The Shareholders of Mahanagar Telephone Nigam Limited

Dear Shareholders,

The Directors present the 27th Annual Report of your Company together with the Statement of Accounts and Auditors'' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2013.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2012-13

(i) GSM / 3G Services -

Expansion / upgradation of GSM & 3G Networks:

- The present HSDPA enabled 3G network supporting download speeds up to 3.6 Mbps and uploads speed upto 384 Kbps is being upgraded to HSPA supporting download speed upto 21.1 Mbps and upload speed upto 5.76 Mbps. For meeting the enhanced Data carrying requirement of 3G network, packet core capacity will be expanded to 10 Gbps and M/W backhaul will be augmented / expanded through deployment of 100 / 200 Mbps (upgradable to 400 Mbps) Hybrid M/W systems.

- RF coverage will be improved by adding additional BTSs / Node-Bs. Initially around 580 Node-Bs & 300 BTSs in Delhi and 350 Nods-Bs & 200 BTSs in Mumbai.

Note: Tenders for augmentation / expansion of GSM/ 3G & M/W backhaul are under various stages of finalization.

(ii) Fixed Line -

Replacement of TDM switches with NGN / IMS platform: MTNL has planned to replace its TDM Fixed line switches which are becoming obsolete as their induction started around 20 years back with NGN / IMS switch in phased manner during 12th Five year plan. Introduction of NGN / IMS based services will not only help MTNL in saving space & Opex but also enable it to offer all data / video centric services currently enjoyed by Mobile subscribers, to its fixed line subscribers also. This will also lead to convergence of fixed and mobile services. C-DOT''s NGN / IMS platform has been deployed after being successfully tested. Presently, voice services to FTTH subscribers are being provided from this platform.

(iii) Deployment of FTTH Services (Directly and through franchisee model on revenue share basis) MTNL is adding optical fibre in its access network and is deploying FTTH based on GPON. This will enable MTNL to provide Fiber at the door steps of its esteemed customers & thereby giving access to high bandwidth applications like HDTV, VoD & very high speed data etc.

(iv) Deployment of NGCN (IPMPLS) Network:

After the conclusion of CWG-2010 held in Delhi, the state of art IP/ MPLS equipment has been redeployed at different locations in Delhi & Mumbai for creating high capacity IP Bandwidth. With this redeployment the POP locations on IP/MPLS network has increased to around 45 in Delhi & 56 in Mumbai from existing POP of 11 in Delhi & 12 in Mumbai thus bringing IP closer to the customers and helping reducing the local copper loop length to 1- 2 kms as targeted during 12th five year plan. The services to the customers are expected to improve considerably with the reduction in the copper loop length.

FINANCIAL RESULTS

Sources and application of funds for the year 2012-13 are given below:-

(In Million Rs.)

2012-13 2011-12

Income from Operations 34286.63 33732.53

Expenditure (excluding Interest & prior period Adjustments) 78355.62 67200.21

Operating Profit /(Loss) (44068.99) (33467.68)

Other Income 2854.20 2511.64

Interest 11802.60 9491.62

Profit/(Loss) before Tax (53017.40) (40447.66)

Tax Provision for the Year 0.00 0.00

Prior Period Adjustments 193.84 650.18

Net Profit / (Loss) for the Year (53211.23) (41097.84)

Appropriation

Interim/Proposed Final dividend 0.00 0.00

Dividend Tax 0.00 0.00

Transfer to/(from):

a) Contingency Reserve (491.29) (189.85)

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00

Issued, Subscribed & paid-up Capital 6300.00 6300.00

Reserves & Surplus (34144.25) 19066.97

Secured and Unsecured Loan 115386.87 96474.93

Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY

Fixed Assets (Net Block) 148991.83 157601.75

Investment (Net) 2219.79 4919.79

Other Assets 102971.04 97579.89

Other liabilities 175962.46 147229.47

Capital Work-in-Progress 9322.42 8969.95

Note: Previous year''s figures have been re-grouped/re-cast wherever considered necessary.

ISSUE OF 8.57% REEDEMABLE NON CONVERTIBLE BONDS ON PRIVATE PLACEMENT BASIS.

MTNL has issued 8.57% Semi- Annual , Unsecured, Government Guarantee Redeemable, Non Covertible, Bonds in the nature of debentures on private placement basis on 28-03-2013 amounting to Rs. 1,005 crores. The said bonds are redeemable after 10 years i.e. on 28-03-2023.

DIVIDEND

Since there has been no operating profit during the financial year 2012-13, the Board of Directors of your company expresses its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Ventures companies.The working of the same is as under:-

(i) Millennium Telecom Ltd. (MTL)

MTL was formed by MTNL as its wholly owned subsidiary company basically for providing internet and other value added services. During the financial year 2012-13, MTL has no revenue from operations. The Board of MTL has decided that MTL may bid in consortium/JV with MTNL leveraging on financial and experience strength of MTNL, where MTNL may be the lead partner and MTL be the Technical or support partner or vice-versa as the requirement may be. For this it has been decided that a standard consortium/JV agreement will be signed between the two companies. MTL may be permitted to participate in any tender in consortium/JV with MTNL, where profitability is 5% or more. For projects, having profitability less than 5%, permission of MTNL management shall be sought by MTL on case by case basis. Further the Board of MTL has decided to request MTNL to allow MTL to participate in the various tenders floated by it after giving MTL preferential treatment like exemption from payment of Tender document fee, EMD and Performance Bank Guarantee, exemption/relaxation in eligibility requirement on Financial, Experience or any other eligibility criteria defined in any tender. MTL is also planing to take sales & distribution of MTNL''s Products & Services and enter into FTTH Service, segment of MTNL on revenue share Model.

In addition, MTL will look forward to take any turnkey project for providing telecom solutions to any customer within India & overseas market and offer consultancy Service in Telecom domain.

The Board of MTL is working on the above line of business and is hopeful to generate revenue in the years to come.

(ii) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL and is operational only in Mauritius. The company is having license for providing mobile services, international long distance services and internet services. The company initially started its operations with CDMA technology and in November, 2011 launched its GSM network of 100K lines capacity. During the year 2012-13, MTML successfully marketed the GSM services with attractive offerings and could add more than 70,000 GSM subscribers. With international roaming connectivity with around 200 networks, MTML has been able to make GSM as its main line of business in less than 18 months of its operation. The total subscriber base, including the old CDMA network, ILD and ISP was 141,699 as on 31st March''13. The company is upgrading the GSM network and plans to launch 3G services in the year 2013-14. It is also adding more network elements to ensure good quality service, taking into account the capacity utilization.

MTML has achieved a turn-over of INR 522 Million during the fiscal year 2012-13 compared to the last fiscal year turn-over of INR 475 Million, through these telecom services. Despite the intense competition and market getting saturated, the company could increase its revenue. However, the net profit was decreased to INR 19 Million (before tax) in this fiscal year compared to last fiscal year''s net profit (before tax) of INR 54 Million due to increased depreciation as new GSM network has been added. MTML''s own building (Ground 7 floors) in Cyber City, is almost ready and will be available for use and leasing out by June''13.

All the expenses of the company are paid by its own internal resources and CAPEX for procurement of equipments is also met. There is no debt /liability on the company.

The company is managed by CEO, CTO, CFO and 9 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

(iii) United Telecommunications Ltd. (UTL)

The joint venture is working for providing telecom sevices in Nepal.

UTL has a total customer base of more than 6,98,298 (As per NTA MIS Report dated 13.4.2013) in numbers and the PCOs are 1,005. UTLs engineering team follows the O & M procedures scrupulously thereby ensuring fault free network round the clock. The Management closely monitors the overall performance of the network, quality of services, subscriber complaints, fault rates, BTS wise traffic and ILD traffic.

The company is sustaining its entire operations from internal revenue generation only. Monthly OPEX including the interest payments, IUC charges, etc are fully met from its internal accruals.

During the period ending 31st March 2013 (2012-13), the company has reported a net loss of INR 84.68 million.

(iv) MTNL STPI IT SERVICES LTD (MSITS)

The main objective of the company is to provide data center services, messaging services, business application services etc. In order to implement the objectives, MSITS has established the physical infrastructure of the Data Center at Chennai and space taken on lease basis from Software Technology Prices of India (STPI). The Data Center has server farm area of around 3400 sqft and the total investment made in this regard is of Rs. 477 lakhs. The Data center is maintaining 99.98% uptime on 24 X 7.

The commercial operation of the Data Center had commenced in 2009, the Ministry of External Affairs (MEA) has hosted its Passport Seva Project at MSITS Data Center through M/s TCS.

Total revenue of MSITS for the year 2012-13 is Rs. 3.60 crores while it was Rs. 2.97 crores during the year 2011-12.

In addition to the existing facility at Chennai, MSITS is in the process of setting up the Green Data Centre (GDC) in the area of about 10000 sqft each at Hyderabad and New Delhi on Public-Private Partnership (PPP) model. MSITS has appointed a consultant for assistance and RFP has been floated for selecting Industry Partner (IP).

SYSTEM STATUS AS ON 31ST MARCH, 2013

Your Company has the following equippped and used capacity of Landline, GSM, WLL etc. as on 31st March, 2013:-

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2012-13 (31.03.2013)

S. No Parameters Delhi Mumbai Total

1 Number of switches

2 Equipped Capacity 6,223,831 5,912,854 12,136,685

(a) Fixed Phones including WLL 2,648,831 2,570,624 5,219,455 Fixed Phones

(b) WLL 550,000 542,230 1,092,230

(c) GSM 3,025,000 2,800,000 5,825,000

DLC capacity 160,152 118,046 278,198

Digitalization % lines 100 100 200

3 DELs* 4187447 4,271,953 8,459,400

4 Details of Net DELs

(a) Fixed Line 1,593,551 1,866,498 3,460,049

(b) WLL-Fixed 15,909 68,707 84,616

(c) WLL-Mobile 68,957 25,836 94,793

(d) GSM 2,509,030 2,310,912 4,819,942

5 Broadband

(a) Subscribers 521,278 597,664 1,118,942

(b) Capacity (in ports) 788,448 845,908 1,634,356

6 IPTV 13,348 3,393 16,741

7 Internet connection 416 879,262 879,678

8 (a) Prepaid 416 45 461

(b) Postpaid 0 879,217 879,217

9 Payphones 59,646 90,649 150,295

10 ISDN 8,604 15,437 24,041

11 DLC (No) 425 523 948

12 Tax Capacity 150,000 115,200 265,200

13 Tandem Capacity 402,500 363,240 765,740

14 Optical fiber cable

(a) In Route KMs 8,501.66 7,843.24 16,344.90

(b) In Fiber KMs 266,956.12 252,583.13 519,539.25

15 Leased Circuits 12,766 36,860 49,626

16 Replacement of 31.059 15.711402 46.770402 PCUT Cable ( in LKCM)

*including WLL fixed, WLL mobile & GSM

HUMAN RESOURCE DEVELOPMENT

Your Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skill of its employees are the key to achievements of its corporate mission. It has sound recruitment policy and comprehensive training system.

During the past one year, your Company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has an capability to counter threats posed by ever changing business environment and to take advantages of opportunities presented to serve ever increasing customer base.

The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose, are also focusing on eliminating any skill gap and technical obsolescence. The managements'' view on training is one of development of employee''s overall personality and enabling them in becoming a vital productive resource.

TRAINING TARGETS AND ACHIEVEMENTS

The Training Targets and Achievements for the Financial year 2012-13 is given below:-

UNIT Number of Achievement Number of Man Achievement Persons Trained Days Target Target

DELHI 3137 27349 35004

7500

MUMBAI 4498 15137

TOTAL 7500 7635 27349 50141

At present MTNL has its in house two state of the art training centres one located in New Delhi and other at Mumbai.

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM ) SHADIPUR, NEW DELHI

The Institute of Telecom, Technology & Management,ITTM Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction training and short duration training to its officers and employees in the field of Telecom, IT, Computer system and Management. With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started training engineering students also as part of their summer training.During the year 2012-13, ITTM has successfully trained 2209 in-house personnel with an achievement of 11811 Man days. Industrial Training were also successfully provided to 928 Trainees with an achievement of 23193 Man days.

ITTM has the necessary infrastructure, technical and academic competence and excellence for providing training in specialized courses in the field of GSM, BroadbandTechnology, Switching, Transmission, External Plant, IT, Computer System & Management.

(II) CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CETTM), MUMBAI

The Centre for Excellence in Telecom Technology & Management (CETTM) is situated at Technology Street, Hiranandani Garden, Powai,Mumbai. The competition in the field of training is increasing tremendously with each passing day. Despite of the fierce competition, CETTM has successfully shown a net revenue of 12.75 Cr during the financial year 2012-13 with clientele from various sectors like Telecom, BPO, Banking, Finance, Oil, Pharma, IT, etc. Keeping to its tradition, CETTM has also added more than 36 new clients to its already existing long clientele. Two new courses were designed & launched for Engineering College students. 30 batches were conducted to train the students of engineering colleges. 708 students were trained under Corporate Social Responsibility (CSR), while 82 students took part in one/two months Project training works/ Industrial training to students of various Engineering colleges during 2012-13.

Under ITEC -SCAAP program, sponsored by MEA, Govt. Of India, CETTM has successfully completed 18 programs and launched 3 new courses in T elecom, IT & Management streams.

Apart from the above, CETTM has successfully trained 5857 in-house personnel with an achievement of 34840 Trainee Days. Moreover there was a total of 332 Programmes conducted altogether.

CETTM has also introduced 6 new customised courses for corporates which included 89 participants. It also tied up with Welingkar Institute for providing Post Graduate Program on Telecom Management.

CETTM was also engaged in some other business like leasing of 2200 sq ft space on ground floor to Karnataka Bank, opened its Auditorium for commercial use & conducted two Telecom Trainings for the Training Centre faculty staff and officers from IT Ministry Afghanistan.

The efforts and the results, reiterate our commitment to the growth in terms of Business, Quality and Customer Satisfaction; and the Customers have always rewarded our good work by giving us the repeated business.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the previous year, Employees Relations remained Cordial throughout the year. The Grievances/ Issues raised by the employees/Union/Associations were given due attention and regard. The cases/issues brought up by them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

A further step towards Workers Participation in critical issues concerning business endeavors and employees, a JNC meeting was convened to share the views of recognized Unions on the various aspects of our business endeavors and issues concerning employees.

EMPLOYEES'' WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Medical facilities, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Govt for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavoured to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates belonging to SC/ST/OBC communities as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace, special cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committees at Delhi/Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

As per Guidelines issued by Department of Public Enterprises F no. 15(3)/2007-DPE (GM) dt 9th April 2010 loss making Companies are not mandated to earmark specific funding of CSR activities. Hence, no specific allotment is made under CSR head considering the financial results of the Company for the year.

Some of the Activities which have been carried out in MTNL keeping the CSR initiative in mind are:-

- Concession/Rebate to Senior citizens, handicapped persons, freedom fighters, Gallantry Award winners, war widows / disabled persons in Plan 250 of MTNL landline subscribers.

- Concession to Non Residential telephone in Schools / Universities/ Institutions/ Homes for aged/ orphanges recognized by the Government.

- For social cause, SMS blasts on Polio, Income Tax Return, Issues related to Human Rights Commission etc are carried out.

- Advertisement released in the souvenirs of NGO''s, etc working for physically and mentally challenged persons, women empowerment, etc.

- Organizing MTNL Perfect Health Mela & Free Health checkups.

MANPOWER STATUS

As on 31st March, 2013 your company had strength of employees as per details given below:- MTNL Employees working strength as on 31.3.2013.

Group Working SC ST

A 1028 144 55

B 4463 550 83

C 23331 3844 422

D 10423 2445 806

Total 39245 6983 1366

TSM 19 - -

Grand Total 39264 6983 1366

VIGILANCE

The Vigilance Department of MTNL is headed by Chief Vigilance Officer. He is an officer of the rank of Joint Secretary, Govt. of India and is appointed by Deptt of Personnel & Training (DOPT) with the concurrence of CVC for a period of 3 years extendable upto 5years. Presently Shri Khushi Ram, IRSEE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration. During the year 2012-13, emphasis was laid on preventive vigilance for enhancing the awareness of transparency and accountability in working by carrying out various field inspections. System improvement advice were issued by Vigilance Unit for reconciliation of Sanchaar Haats products, store verification, optimum electrical load in various buildings, proper maintenance of broadband faults, BTS sites etc. CTE type inspections were also carried out as per CVC guidelines.

Further, training programmes/seminars on vigilance/complaints handling and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL, procedure for handling departmental proceedings and improve their working efficiency.

As per CVC instructions, the Vigilance Awareness Week was observed from 29-10-12 to 03- 11-12. During this week, various activities like pledge taking, release of booklet on "T ransparency in Public Procurement" containing "DO''s and DON''T, vigilance angle, quotations on anti- corruption" for internal circulation, display of posters related to honesty and integrity were carried out. An interactive programme was organized wherein special Director, CBI addressed senior officers of MTNL with more emphasis on bringing accountability and transparency in file notings/ working.

Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai with concerned GM (Vigilance) team to review the status of the cases and expedite the same and with ED( Delhi / Mumbai / Wireless Services) to apprise them of the observations made during field inspections and different types of operational complaints received by Vigilance Unit. During these meetings, CVO emphasized for further improvement in customer services offered by MTNL by taking prompt action on customer''s complaint and having customer-centric approach at all levels to enhance the credibility and brand image of the company in the minds of the customers.

INTEGRITY PACT PROGRAMME WITH TRANSPARENCY INTERNATIONAL INDIA

MTNL has signed a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme (IPP) focussed on enhancing transparency in its business transactions, contracts and procurement process. Under this MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent External Monitors being persons of eminence nominated by TII in consultation with Central Vigilence Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust and has the full support of CVC.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS & EXPENDITURE

Information with regard to foreign exchange earnings and outgo in the Financial Year 2012-13 are as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million) Foreign Exchange Earned 39.50

Expenditure in Foreign Currency 30.79

CORPORATE GOVERNANCE

Your company follows the principles of effective Corporate Governance Practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (PCSEs). Quarterly Compliance Reports are regularly sent to the Stock Exchange and the DPE. A Report on Corporate Governance has been appended under separate section titled ''Corporate Governance Report ''and the same forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and DPE Guidelines is attached to this report as Annexure.

COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE"

Your company will send Annual Report for the year 2012-13 by email to all the shareholders who are having valid email id account. Further your company request shareholders holding shares in electronic mode to keep their email addresses updated or provide their email addresses if not earlier provided to their DPs. Members holding shares in physical mode are also requested to update their email addresses by writing to the Registrar and T ransfer Agent of the Company or directly to the Company by quoting their folio number(s).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(iii) They had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 and for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) They had prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

ADDENDUM TO DIRECTORS'' REPORT

The replies to the points raised in the Auditors'' Report and Comments of the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956 on the Accounts of your company and the replies thereon of the Management are given in the addendum to the Directors'' Report.

DIRECTORS

During the year under report, the Board of Directors of your Company met frequently. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri A.K.Garg continued to be the CMD of the company. Shri Sushil Kumar Shingal and Shri K.S. Bariar continued to be the Independent Director and the Government Director respectively.

During the period under report, the following changes took place in the Directorship of Your Company:-

1) Shri S.P.Pachauri has ceased to be the Director (HR) w.e.f 31/10/2012.

2) Shri Malay Shrivastava has ceased to be the Govt. Director w.e.f 14/02/2013.

3) Shri V.Umashankar has been appointed as the Govt. Director w.e.f. 15/03/2013.

4) Shri Vijay Aggarwal, Shri T.S.Narayanasami & Shri Rajan Saxena have ceased to be the Directors w.e.f 30/03/2013.

5) Shri Kuldip Singh has ceased to be the Director (Tech) w.e.f 01/04/2013.

6) Smt. Anita Soni has ceased to be the Director (Finance) w.e.f 31/05/2013.

7) Shri P.K.Purwar has been appointed as the Director(Finance) w.e.f. 01/06/2013

8) Shri Sunil Kumar has been appointed as the Director(HR) w.e.f. 21/06/2013

AUDITORS

(1) M/s. V.K.Dhingra & Co., Chartered Accountants and M/s Arun K. Aggarwal & Associate, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2012-13 and the Board has already ratified their appointment.

(2) M/s R.M.Bansal & Co., Cost Accountants have been appointed as Cost Auditors of your company for carrying out audit under section 233B(1) for the records maintained under section 209(1 )(d) of Companies Act, 1956 and as notified under: (i) Cost Accounting Records (Telecommuncations) Rules,2002 & (ii) Cost Audit Rules,2001. The Cost Audit Report alongwith the annexures for the year 2011-12 have been submitted to the Central Government in the XBRL format on MCA portal on 26/03/2013.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees'' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services. The Directors are hopeful that the hardwork and sincere efforts and dedicated sevices of the employees at all levels, MTNL shall be able to return to its original position of a profit making Company.

For and on behalf of the Board of Directors

sd/-

(A.K. Garg)

CHAIRMAN AND MANAGING DIRECTOR

PLACE : NEW DELHI

DATE : 13th August, 2013


Mar 31, 2012

The Director present the 26th Annual Report of your Company together with the Statement of Accounts and Auditors' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2012.

PERFORMANCE REVIEW OF MTNL FOR THE FY 2011-12

With the liberalization of the telecommunications sector in India the number of operators & availability of deliverable technologies on telecom front are continuously on the rise. Consequently, during the year 2011-12 MTNL faced stiff competition from other operators. Moreover, MTNL is confined only to the cities of Delhi and Mumbai which are having more than 150% tele-density and are among the most competitive markets in India. These factors have contributed in increased pressure on margins (sliding average revenue per user) due to falling tariffs and also on customer retention and acquisition.

Further, the payment of exorbitant spectrum charges in excess of Rs.11,000 Crore for acquiring 3G and BWA spectrum that too only for Delhi & Mumbai has put tremendous strain on the finances of the company. This fund requirement was met through short term loans of about Rs.7,563 Crore & remaining from its own resources.

Having achieved the telephone on demand situation in both the cities, the main thrust in 2011- 12 was on the expansion of existing mobile and broadband services in both Delhi and Mumbai to provide high speed internet, high quality video and new generation wireless services. Plans have been made to expand latest technology like IP-MPLS, FTTH based on G-PON, IN Junction and Access network,etc.

MTNL also made considered efforts to maximize revenue by gainful utilization of its assets by:

I. sharing our passive as well as active infrastructure, such as towers and core capacity; and

II. sharing and developing our real estate.

- MTNL has huge assets in the form of land & building and of late has been making efforts for renting out the spare space and has also been successful to some extent. With the advancement of technology the space occupied by the equipment is shrinking day by day and more and more space is getting available. In its constant effort for generation of additional revenues, MTNL has rented out the spare space available in different offices / exchange buildings across Delhi and Mumbai. In addition, MTNL has considerable assets in the form of spare capacity available in the installed equipment. MTNL intends to rent out this available spare capacity and generate additional revenue .

Action has also been taken to generate fresh demands by providing quality services, better customer care & satisfaction, introduction of new services / schemes and innovative marketing strategies. MTNL is continuously upgrading its exchanges and external plants and during the year 2011-12 this effort has been continued vigorously.

Achievements made during 2011-12 are as under:

- In fiscal year 2008, we commissioned a state of art IP/MPLS core network in Delhi and Mumbai to provide a converged IP network for all services. To take advantage of IP network and to improve the services the company worked on the expansion of this network in 2011-12 and deployed around 10 Core 70 edge & aggregate routers in Delhi and 10 Core 67 edge & aggregate routers in Mumbai leading to creation of around 50 POPs ( Point of presence) each in Delhi and Mumbai.

- To bring optical fiber near / to subscriber's premises in order to meet the ever increasing bandwidth demand of customers, we are adding optical fibre in the access network and are deploying FTTH based on GPON. This will enable MTNL to provide access to this latest technology to its' esteemed customers with very high bandwidth. MTNL has already commercially launched the data services on FTTH. Voice services on FTTH are going to be launched soon.

- DoT has directed all Service Providers to migrate IPv4 to IPv6 enabled network latest by Dec 2011. IPv6 migration was a challenging task as MTNL has many legacy networks and equipments for various Line of Business i.e Broadband, Wireless, Leased Circuit etc. Accepting this challenge MTNL took proactive steps for the successful implementation of the same.

FINANCIAL RESULTS

Sources and application of funds for the year 2011-12 are given below:-

(In Million Rs.)

2011-12 2010-11

Income from Operations 33732.53 36739.52 Expenditure (excluding Interest & prior period Adjustments) 67200.21 63154.64

Operating Profit /(Loss) (33467.68) (26415.12)

Other Income 2511.64 3180.44

Interest 9491.62 4514.76

Profit/(Loss) before Tax (40447.66) (27749.44)

Tax Provision for the Year 0.00 285.38

Prior Period Adjustments 650.18 (15.67)

Net Profit / (Loss) for the Year (41097.84) (28019.16)

Appropriation

Interim/Proposed Final dividend 0.00 0.00

Dividend Tax 0.00 0.00

Transfer to/(from):

a) Contingency Reserve (189.85) (2387.95)

b) Reserve for R&D 0.00 0.00

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00

Issued, Subscribed & paid-up Capital 6300.00 6300.00

Reserves & Surplus 19066.97 60164.81

Secured and Unsecured Loan 96474.93 74556.75

Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY Fixed Assets (Net Block) 157601.75 163230.30

Investment 4919.79 4946.58

Other Assets 97579.89 94728.10

Other liabilities 147229.47 133421.58

Capital Work-in-Progress 8969.95 11538.15

Note: Previous year’s figures have been re-grouped/re-cast wherever considered necessary.

DIVIDEND

Since there has been no operating profit during the financial year 2011-12, the Board of Directors of your company expressed its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Ventures companies namely:-

(i) Millennium Telecom Ltd. (MTL)

MTL was formed by MTNL as its wholly owned subsidiary company basically for providing internet and other value added services in the year 2000. During the year 2007-08 MTL had decided to undertake undersea cable laying project to have own undersea cable from India to Middle East with ultimate aim to extend upto USA. As per the directions of the DOT, BSNL was taken as 50% Joint Venture partner in the said project. However, during 2010-11 the Board had observed that, the cost of laying cable was very high while the bandwidth prices had gone down. Accordingly, the Board decided not to undertake the said project. Later in the year 2011, the Board decided to undertake new activities alongwith BSNL but in 2012, BSNL has withdrawn itself from the Joint Venture stating that since the Sub-marine cable project has been discontinued, there is no need to continue with the Joint Venture. Thus, as of now, MTL is a wholly owned subsidiary of MTNL. The Board of MTL has now decided to enter into new lines of business which could be telecom related as well as other areas. Some of the new lines of business could be Infrastructure sharing, Data Centre Outsourcing application including Web Hosting, Cloude Computing, Providing Turn Key Solution in response to various tenders in Central Government/State Governments/PSUs Banks/Private Corporates, etc. or directly on GFR basis, Marketing and Selling of digital signatures of MTNL, taking franchisee/distributorship of MTNL Mobile Products and SIM Cards of other operators. The Management is working on the above line of business and is hopeful to generate revenue in the years to come.

(ii) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for mobile services, international long distance services and internet services. During the year 2011-12, MTML has installed 100K GSM network with EDGE to meet the increasing demands as the existing CDMA capacity is already fully utilized in Nov - 2011. The current customer base is 106,402 in CDMA and 18,056 customers in GSM. As per the planning, the company has launched High Speed Data services all over the country through EVDO Network.

The company is managed by CEO, CTO, CFO and 10 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

MTML has achieved a turn-over of INR 494 Million during this fiscal year 2011-12 compared to the last fiscal year turn-over of INR 499 Million, through these telecom services due to reduction of tariff due with IUC rate reduction. However, MTML has earned increased net profit of INR 55 Million (before tax) in this fiscal year compared to last fiscal year's net profit (before tax) of INR 43 Million.(increase of 27%) due to strict control over expenditure.

During this year 2011-12, in addition to its own technical building MTML has started the construction of its administrative building with 7 floors at an estimated cost of INR 170M and the same is expected to be completed in this fiscal year.

All the expenses of the company are paid by its own internal resources and also met the CAPEX made for the procurement of the equipments.

(iii) United Telecommunications Ltd. (UTL)

The joint venture was incorporated in the year 2001 under the Companies Act of Nepal.

UTL has a total customer base of more than 7,21, 333 in numbers and the PCOs are 1,005.

UTLs engineering team follows the O & M procedures scrupulously thereby ensuring fault free network round the clock. The Management closely monitors the overall performance of the network. The quality of services, parameters, subscriber complaints, fault rates, BTS wise traffic and ILD traffic are continuously kept under watch.

The company is sustaining its entire operations from internal revenue generation only. Monthly OPEX including the interest payments, IUC charges, repayment of term loan etc are fully met from its internal accruals.

During the period ending 31st March 2012 (2011-2012), the company has reported a net profit of INR 59 million.

(iv) MTNL STPI IT SERVICES LTD (MSITS)

The Joint Venture (JV) MSITS was incorporated on 31/03/2006 under the Companies Act, 1956, with authorized Capital of Rs. 50 crores. The main objective of the JV Company is to provide data center services, messaging services, business application services to the identified sectors of economic activity.

In order to implement the above said activities, the JV Company has taken space of around 11000 sq.ft Super Built-up areas from STPI-Chennai and established the physical infrastructure of Data Centre (Tier III) with a server farm area of around 3400 sqft. The total investment made in this regard is of Rs. 477 lakhs. MSITS is maintaining the Data Center as per Tier III standard with 99.98% uptime on 24 X 7 scale.

The commercial operation of the data centre has already commenced in 2009 and the Ministry of External Affairs (MEA) has hosted its Passport Seva Project through M/s TCS. Keeping in view of physical security and to support other collocation requirements that may arise caging had been done in inside the Data Center.

In addition the existing facility at Chennai, it has been proposed to setup Green Data Centers in the total area of 8000 sqft and 10000 sqft in Hyderabad and New Delhi respectively. Towards this , MSITS has appointed the consultant through proper tender procedure. MSITS has earned the revenue for the period for the year 2010-11: Rs. 29.65 million and for the year 2011-12: Rs. 30.30 million.

MSITS is headed by the CEO and 3 officials have been posted from MTNL and 2 officials from STPI - Chennai are supporting the CEO for MSITS operations in Chennai.

HUMAN RESOURCE DEVELOPMENT

The Company attaches the highest priority to the quality of intellectual capital at its disposal and believes that knowledge and skill of its employees are the key to achievements of its corporate mission. MTNL has sound recruitment policy and comprehensive training system.

During the past one year, your Company has laid greater emphasis on Human Resources Development. We have been devoting substantial resources on building a skilled workforce that has an innate capability to counter threats posed by ever changing business environment and to take advantages of opportunities presented to serve ever increasing customer base.

The Company has been conducting various training and development activities which apart from reorienting the employees towards the greater organizational purpose, are also focusing on eliminating any skill gap and technical obsolescence. The managements' view on training is one of development of employee's overall personality and enabling them in becoming a vital productive resource.

TRAINING TARGETS AND ACHIEVEMENTS

The Training Targets and Achievements for the Financial year 2011-12 is given below:-

UNIT Number of Achievement Number of Man Achievement Persons Trained Days Target Target

DELHI 7000 4337 21000 44156

MUMBAI 6076 38542

TOTAL 7000 10413 21000 82698

At present MTNL has two state of the art training centres located in New Delhi and Mumbai:-

(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM ) SHADIPUR, NEW DELHI

The Institute of Telecom, Technology & Management, ITTM Shadipur, New Delhi is a state of the art training centre of MTNL, Delhi engaged in imparting induction training and short duration training to its officers and employees in the field of Telecom,IT, Computer system and Management.

With impressive growth of Telecom sector in India, the requirement of telecom trained personnel is growing day by day. Realizing this ever growing demand for telecom personnel, ITTM started training engineering students also as part of their summer training.Since 2011,ITTM has trained more than 900 students of various engineering colleges.

ITTM has the necessary infrastructure, technical and academic competence and excellence for providing training in specialized courses in the field of GSM, BroadbandTechnology, Switching, Transmission, ExternalPlant, IT, Computer System & Management.

(II)CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CETTM), MUMBAI

The competition in the field of training is increasing tremendously with each passing day. Despite of the fierce competition, CETTM has successfully shown 65 % increase in revenue during financial year 2011-12 with clientèle from various sectors like BPO, Banking, Fianance, oil, pharma, IT etc. Keeping to its tradition, CETTM has also added more than 50 new clients to its already existing long clientèle.

Nine vacation courses (of six days each) for Engineering Collage students under CSR were launched during 2011-12 and 570 students were trained during Summer and winter vacations.

Under ITEC -SCAAP program, sponsored by MEA, Govt. Of India, CETTM has successfully completed twelve courses in Telecom, IT & Management streams. A total of 207 Foreign participants from over 45 countries were trained.

Apart from the above, CETTM has successfully trained 6076 in-house personnel with an achievement of 38902 Trainee Days.

CETTM has also upgraded ISO certification from 'ISO 9001-2000 'to 'ISO 9001-2008.'

The efforts and the results, reiterate our commitment to the growth in terms of Business, Quality and Customer Satisfaction; and the Customers have always rewarded our good work by giving us the repeated business.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony is based on healthy Employee Relations and like the previous year, Employees Relations remained Cordial throughout the year. The Grievances/ Issues raised by the Employees/Union/Associations were given due attention and regard. The cases/issues brought up them were settled through regular meetings and interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them.

A further step towards Workers Participation in critical issues concerning business endeavors, a meeting was convened to share the views of recognized Unions on the various aspects of our business endeavors to obtain opinion from them in further improving the same.

EMPLOYEES' WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Housing, Medical facilities, Scholarship to wards of employees, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Govt for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavoured to fulfill all the statutory requirements with regard to implementation of reservation policy for candidate belonging to SC/ST/OBC communities and as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace Special Cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committee at Delhi/Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

For MTNL , no specific allotment is made under CSR head considering the financial results of the company for the year as per the Guidelines issued by the Department of Public Enterprises F. No. 15(3)/2007-DPE (GM) dt 9th April, 2010.

Some of the activities which have been carried out in MTNL keeping the CSR initiative in mind are:-

- Concession/Rebate to senior citizens, handicapped persons, freedom fighters, Gallantry Award winners, war widows/disabled persons in Plan 250 of MTNL landline subscribers.

- Concession to non residential telephone in Schools/Universities/Institutions/Homes for aged/orphanages recognized by the government.

- For social cause, around SMS blasts on Polio, Income Tax Returns, issues related to Human Commission Right, etc. are being carried out.

- Supports education of two orphan children from Udyan Care.

- Organising MTNL's Perfect Health Mela to access free health check-ups.

- Advertisement released in the souvenirs of NGO's, etc are working for physically & mentally challanged persons, women empowerment, etc.

- Sponsorship of fund raiser event of People for Animals.

MANPOWER STATUS

As on 31st March 2012 your Company had a strength of employees as per details given below:-

MTNL Employees working strength as on 31.3.2012.

Group Working SC ST

A 1099 147 51

B 4839 589 86

C 24604 3371 463

D 11047 2542 846

Total 41589 6649 1446

DRM 22 - -

Grand Total 41611 6649 1446

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. He is an officer of the rank of Joint Secretary, Govt. of India. Presently Shri Khushi Ram, IRSSE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration.

During the year 2011-12, emphasis was laid on preventive vigilance for enhancing the awareness of transparency and accountability in working by carrying out various field inspections. System improvement advice were issued by Vigilance Unit for reconciliation of Sanchaar Hatts products, store verification, recording of pre-bid conference minutes, optimum electrical load in various buildings, proper maintenance of broadband faults, BTS sites etc.

Further, training programmes/seminars on vigilance and disciplinary proceedings have been conducted during the period for the employees to make the participants understand the conduct rules of MTNL and procedure for handling departmental proceedings.

As per CVC instructions, the Vigilance Awareness Week was observed from 31-10-11 to 05-11-11. During this week, various activities like pledge taking, release of booklet containing "DO's and DON'T, vigilance angle, quotations on anti-corruption" for internal circulation, display of posters related to honesty and integrity were carried out. Further, a conference of senior officers of MTNL on "Vigilance/disciplinary matters and its role in MTNL" was conducted in Delhi which was addressed by Director (HR) and CVO, MTNL.

Monthly vigilance/disciplinary meetings were held regularly at Delhi & Mumbai with concerned GM (Vigilance) team to review the status of the cases and expedite the same. The review meetings were also held by CVO with ED, Delhi on 19.05.11 and 15.12.11, with ED (Mumbai) on 14.07.11 and with ED (Wireless Services) on 10.06.11. During these meetings, CVO emphasized for further improvement in customer services offered by MTNL by taking prompt action on customer's complaint and having customer-centric approach at all levels to enhance the credibility and brand image of the company in the minds of the customers.

INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIAMTNL has a Memorandum of Understanding (MOU) with Transparency International India (TII) for implementing an Integrity Pact Programme focussed on enhancing transparency in its business transactions, contracts and procurement process.Under MOU, MTNL is committed to implementing the Integrity Pact in all its major procurement and work contract activities. Three Independent & External Monitors being persons of eminence nominated by TII in consultation with Central Vigilence Commission (CVC), monitor the activities. The Integrity Pact has strengthened the established system and procedures by creating trust and has the ful support of CVC.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS & EXPENDITURE

Information with regard to foreign exchange earnings and outgo in the Financial Year 2011-12 are as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million) Earned : 57.90

Expenditure in Foreign Currency 36.31

CORPORATE GOVERNANCE

Your company follows the principle of effective corporate governance practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises (DPE), Government of India for Central Public Sector Enterprises (PCSEs). A Report on Corporate Governance has been appended under separate section titled ' Corporate Governance Report ' and the same forms a part of the Annual Report.

COMPLIANCE OF DPE GUIDELINES & POLICIES

The Guidelines & policies issued by the Department of Public Enterprises (DPE) from time to time are being complied with and implemented with the approval of the Board of Directors/ Competent Authority.

COMPLIANCE CERTIFICATE

A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE"

Your company will send Annual Report for the year 2011-12 by email to all the shareholders who are having valid email id account. Further your company request shareholders holding shares in electronic mode to keep their email addresses updated or provide their email addresses if not earlier provided to their DPs. Members holding shares in physical mode are also requested to update their email addresses by writing to the Registrar and Transfer Agent of the Company by quoting their folio number(s).

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 and for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

COMMENTS OF C & AG ON THE ACCOUNTS

Comments of C&AG and Management replies thereto are given as an Annexure to the Directors' Report.

DIRECTORS

During the year under report, the Board of Directors of your Company met frequently. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri A.K. Garg has been appointed as Chairman & Managing Director (CMD) of your company vide DoTs letter dated 05/12/2011 and took over the charges of CMD from Shri Kuldeep Singh, who was additional having charges of CMD w.e.f. 15/01/2010. Smt. Anita Soni and Shri S.P.Pachauri continued to be the Director (Tech), Director (Fin) and Director (HR), respectively. Dr. Rajan Saxena, Shri T.S.Narayanasami and Dr. Vijay Aggarwal continued to be the Independent Directors of the Company. Shri Malay Shrivastava continues to be the Government Director.

During the period under report, the following changes took place in the Directorship of Your Company:- 1) Shri A.K. Garg has been appointed as CMD of the company w.e.f. 05/12/2011

2) Shri K.S.Bariar has been appointed director of the company w.e.f.17/05/2012 in place of Ms. Nirmala Pillai.

3) Shri Sushil Kumar Shingal has been appointed as Independent Director on the Board of the Company w.e.f. 10/05/2012.

4) Shri Adit Jain and Shri V.S.Iyer ceased to be Independent Director on the Board of the Company w.e.f. 30/07/2012.

AUDITORS

(1) M/s. Bansal Sinha & Co., Chartered Accountants and M/s Arun K. Aggarwal & Associate, Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2011-12 and the board has already ratified their appointment.

(2) M/s R.M.Bansal,Cost Accountant has been appointed as Cost Auditor of your company for carrying out audit under section 233B(1) for the records maintained under section 209(1)(d) of Companies Act,1956 and as notified under Coat Accounting Records (Telecommuncations) Rules,2002 and also under Cost Audit Rules,2001.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services.

For and on behalf of the Board of Directors

sd/- (A.K. Garg) CHAIRMAN AND MANAGING DIRECTOR

PLACE : NEW DELHI DATE : 14 AUGUST, 2012


Mar 31, 2011

Dear Shareholders,

The Directors present the 25th Annual Report of your Company together with the Statement of Accounts and Auditors' Report as well as comments of Comptroller & Auditor General of India on the Accounts for the financial year ended on March 31, 2011.

While India is widely acknowledged as the world's fastest growing telecom market, it enjoys around 60 per cent teledensity. Thus, there is still good margin for growth as far as Pan India operations are concerned. However, since the operations of your company are limited to Delhi & Mumbai, where teledensity is much higher we also need to find out other means to grow. To ride this enormous boom and retain our strong competitive advantage, we have launched a whole new range of services with aggressive and innovative tariff plans. These pathbreaking initiatives will not only broaden our subscriber base but also offer our millions of customer's real choice in Landline, CDMA and GSM (2G &3G) networks.

The advent of broadband has revolutionized back office functions across the world. As a leader in the converged telecom space, the stage is set for us to drive this process of change, and to capture the market with ogr unique network and IT infrastructure facilities, bundled value added services and strong project management.

We remain committed to build MTNL into a World Class Service Provider, known for its standards of quality, operational performance and efficiency and admired for its record of consistently treating value for all.

FINANCIAL RESULTS

Sources and application of funds for the year 2010-11 are given below.-

(In Million Rs.)

2010-11 2009-10

Income from Services 36739.52 36561.00

Expenditure (excluding 63148.03 84754.69

Interest & prior period Adjustments)

Operating Profit/(Loss) (26408.51) (48193.69)

Other Income 3180.44 14017.23

Interest 4519.46 12.61

Profit/(Loss) before tax (27747.53) (34189.07)

Tax provision for the year 1.91 (3551.14)

Prior Period Adjustments 269.71 (4528.21)

Net Profit / (Loss) for the year (28019.15) (26109.72)

Appropriation

Interim/Proposed final dividend 0.00 0.00

Dividend Tax 0.00 0.00

Transfer to:

a) Contingency Reserve 0.00 0.00

b) Reserve for R&D 0.00 0.00

c) General Reserve (25631.20) 0.00

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00

Issued, Subscribed & paid-up Capital 6300.00 6300.00

Reserves & Surplus 60164.81 111714.10

Secured and unsecured loan 74556.75 0.00

Deferred Tax Liability (Net) 0.00 0.00

REPRESENTED BY

Fixed Assets (Net Block) 163230.30 165549.76

Investment 4946.58 5095.37

Net Current Assets (38693.47) (87940.76)

Deferred Revenue Expenditure 0.00 0.00

Capital Work-in-Progress 11538.15 11779.60

Note: Previous year's figures have been re-grouped/re-cast wherever considered necessary.

DIVIDEND

Since there has been no operating profit during the financial year 2010-11, the Board of Directors of .your company expressed its inability to recommend any dividend for the year under report.

SUBSIDIARY AND JOINT VENTURE COMPANIES

Your company has two subsidiary and two Joint Vjentures companies namely:-

(i) Millennium Telecom Ltd. (MTL):

MTL was originally formed by MTNL as a wholly owned subsidiary company basically for providing internet and other value added services in the year 2000. In the year 2008, MTL had planned to lay sub-marine cable (under sea cable) from Indian Coasts to Middle East and then to Europe. The DOT had directed MTNL to take BSNL as 50% partner in the said project. MTL being 50:50 Joint Venture of MTNL and BSNL had invited Global Tender for laying of Submarine Cable. However, because of decline in bandwidth prices, high cost of laying the cable, various operational and financial reasons, the Board of MTL had cancelled the tender in 2010.

The Board of MTL has decided to enter into new line of business which could be telecom related as well as other areas.

(ii) Mahanagar Telephone (Mauritius) Ltd. (MTML)

MTML is a 100% subsidiary of MTNL. The company is having license for fixed telephone service, mobile service, international long distance services and internet services. During the year 2010-11, MTML's ©customer base has increased from 104,032 (as on 31/3/2010) to its 108,886 (almost full) on 31/03/2011, out of its equipped capacity of 110K. The company is managed by CEO, CTO, CFO and 10 more officers all on deputation from the parent company. Other operations are managed through outsourcing.

MTML continued to provide telecom services viz., Fixed Wrieless Phone, Mobile (Post paid & Prepaid), Internet Services through Fixed Wireless Phones, High Speed Data cards and International Long Distance Call Services through CAC,VCC/ACC cards. MTML has achieved a turn-over of INR 499 Million during this fiscal year 2010-11 compared to the last fiscal year turn-over of INR 389 Million through these telecom services(an increase of 28.2%). MTML has earned a net profit of INR 43 Million (before tax) in this fiscal year compared to last fiscal year's net profit (before tax) of INR 9.6 Million.(increase of 347%)

During this fiscal year, MTML has completed the High-speed Data connectivity through expansion of the EVDO network all over the island by augmenting its resources from 15 BTS to 53 BTS. The Acceptance & Testing is under progress and the services are planed to be launched in the first quarter of the fiscal year 2011-12. As the existing capacity of the CDMA is already fully utilised, the network expansion through new integrated switch for GSM & CDMA was carried out and the installation has commenced in Nov-2010 and the GSM services are planned to be launched in the fiscal year 2011-12.

During this year 2010-11, MTML has constructed its own technical building of two floors to house its technical installations at a cost of INR 20 Million. The paid-up capital of the company is enhanced from INR 854.12 Million to INR 1052 Million.

(iii) United Telecommunications Ltd. (UTL)

The joint venture was incorporated in the year 2001 under the Companies Act of Nepal. UTL has a total customer base of more than 5, 74,339 in numbers and the PCOs are 1223. UTLs engineering team follows the O & M procedures scrupulously thereby ensuring fault free network round the clock. The Management closeJy monitors the overall performance of the network. The quality of services, parameters, subscriber complaints, fault rates, BTS wise traffic and ILD traffic are continuously kept under watch.

The company is sustaining its entire operations from internal revenue generation only. Monthly OPEX including the interest payments, IUC charges, repayment of term loan etc are fully met from its internal accruals.

During the period ending 31st March 2011 (2010-2011), the company has reported a net profit of INR 73,456,410.

(ii) MTNLSTPI IT Services Ltd. (MTNLSTPI)

The Joint Venture was incorporated on 31/03/2006 under the Companies Act, 1956, with authorized Capital of Rs. 50 crores.The main objective of the JV Company is to provide exclusive data center services, messaging services, business application services to the identified sectors of economic activity and thereby also popularizing the "India.in" domain.

In order to implement the above said activities, the JV Company has taken space of around 11000 sq.ft Super Built-up areas from STPI-Chennai and established a physical infrastructure of Tier-Ill Data Centre.

The commercial exploitation of the data centre has already commenced in 2009 and the Ministry of External Affairs (MEA) has hosted its Passport Seva Project through M/s TCS.

Keeping in view of smooth operation and expansion needs of the Data Center, MSITS created suitable infrastructure components like LT extension panel, UPS panel, PAC panel and Server DB which were installed and integrated in the live Data Center. Also MSITS is in the process of doing the caging in the Data center to support other collocation requirements.

In addition the existing facility at Chennai, it has been planned to setup Green Data Centers at Hyderabad and New Delhi. In this regard a space of around "lOOOOsq.ft and8000 sq.ft area have been identified at Narela New Delhi and Solitaire Building, Madhapur, Hyderabad respectively. MSITS has floated RFP and identified consultant for establishing Green Data Center.

DETAILS OF SYSTEM STATUS FOR THE FINANCIAL YEAR 2010-11 (31.03.2011)

S. No Parameters Delhi Mumbai Total

1 Number of switches 352 222 574

2 Equipped Capacity 6346995 6544315 12891310

(a) Fixed Phones including WLL

Fixed Phones 2771995 2677085 5449080

(b) WLL 550000 542230 1092230

(C) GSM 3025000 3325000 6350000

DLC capacity 160152 119006 279158

Digitalization % lines 100 100 100

3 DELS* 4189680 4753433 8943113

4 Details of Net DELs

(a) Fixed Line 1546432 1917537 3463969

(b) WLL-Fixed 27671 89508 117179

(o) WLL-Mobile 109598 52892 162490

(d) GSM 2505841 2693496 5199337

5 Broadband

(a) Subscribers 426772 515545 942317

(b) Capacity (in ports) 786192 836980 1623172

6 IPTV 10172 4018 14190

7 VOIP 2466 2661 5127

8 Internet connection 621083 878007 1499090

(a) Prepaid 20184 818 21002

(b) Postpaid 600899 877189 1478088

9 Payphones 65237 110320 175557

10 ISDN 8796 16936 25732

11 DLC (No) 425 523 948

12 Tax Capacity 150,000 155,200 305,200

13 Tandem Capacity 402,500 432,460 834,960

14 Optical fiber cable

(a) In Route KMs 8129.98 7195.25 15325.23

(b) In Fiber KMs 251610.37 215523.76 467134.13

15 Leased Circuits 14897 39775 54672

16 Replacement of PCUT Cable (in LKCM) 30.78 15.711402 46.491402

'including WLL fixed, WLL mobile & GSM

HUMAN RESOURCE DEVELOPMENT

The Telecom industry in India is undergoing through a volatile phase and fate of the organization is being written and re-written everyday. In the recent past, we have identified Human Resources as one of the strategic partners for rapid business strides leading to success in all strata of our operations. During last fiscal also we continued Our endeavors towards world standards HR policies.

We have always considered our Manpower as one of our greatest assets and this is what differentiates MTNL from its competitors. We have a strong manpower base of 43311 with wide array of Technical and Managerial aptitudes and also talented supporting staff having exposure to state of the art technologies prevailing in Telecom Industry in the world. As a step towards restructuring of our manpower we have adopted dual pronged strategy, viz., at one end we have recruited young and talented professionals in areas like Telecom, Finance, HR, Marketing, Law and on the other hand we have taken steps towards rightsizing of the organization by offering VRS. Almost 4000 employees were separated through 03 VRS, During 2003 to 2006

Thus fine-tuning our existing manpower mix in terms of age, qualification, and aptitude to meet the demands posed by the changing Business Environment and to take advantage of the opportunities presented to serve ever-increasing customer base"

TRAINING PROGRAMME

Our company has been conducting training programme for new recruited executives Trainees in the field of Telecom, Finance, Marketing, HR, Legal regularly at CETTM.

CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CEETTM)

Our dream for having a world-class in house Training Centre furthered one step when CETTM (Centre of Excellence in Telecom Training & Management) was awarded ISO 9001:2000 certification. CETTM is slowly taking the lead role and becoming the nodal center for HRD. Induction Training programme for newly recruited executive Trainees in the field of Telecom, Finance, Marketing, HR, Legal have been conducted at CETTM. Inhouse training programmes are also conducted for executives and non executives at ITTM (Institute of Telecom Training and Management) located at Shadipur, New Delhi.

CETTM has started generating revenues by leasing out infrastructure and providing training to other organizations of repute.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony based on healthy Employee Relations, like the previous year prevailed throughout the year. The Grievances/Issues raised by the employees/Union/ Associations was given due attention and regard. The cases/issues brought up by them were settled through regular meetings ad interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them. Recently we have signed wage agreement with recognised unions for a period of 10 years effective from 1/1/2007.

A further step towards Worker's Participation in critical issues concerning business endeavors, a special Joint Negotiation Committee meeting was convened to share the views of recognized Unions on the various aspects of pur business endeavors and to obtain opinion from them in further improving the same.

EMPLOYEES'WELFARE

Employees Welfare Schemes like subsidized Canteen, Creches, Housing, Medical facilities, Scholarships to wards of employees, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Government for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavored to fulfill all the statutory requirements with regard to , implementation of reservation policy for candidates belonging to SC/ST/OBC communities and as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace Special Cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committee at Delhi/Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

MTNL has made a provision of temporary cct 8 Mbps for a period of 15 days for DCP (Communication) for organising Bhagidari Fair at Pragati Maidan, New Delhi, free of cost in the interst of Public. The actual cost incurred by MTNL was Rs. 501880/-. MTNL has also taken other intiatives like free SMS's regarding pulse polio, other messages of social activities of general awareness of the public, etc.

MANPOWER STATUS

As on 31st March 2011 your Company had a strength of employees as per details given next page:-

MTNL Employees working strength as on 31.3.2011.

Group Working SC ST

A 1183 208 52

B 5110 724 105

C 25536 4432 498

D 11459 2656 863

Total 43288 8020 1518

DRM 23 0 0

Grand Total 43311 8020 1518

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. He is ah officer of the rank of Joint Secretary, Govt, of India. Presently Shri Khushi Ram, IRSSE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration. During the period 2010- 11 emphasis was laid on efficiency and transparency in working and various steps were taken to empower customer oriented services of the organization. Training programmes/seminars and workshops have been conducted during the period to update the knowledge and skills of the officers working in vigilance.

The Vigilance Awareness Week was celebrated from 25.10.10 to 1.11.10. During this week various activities like display of banners, pledge taking, release of booklets on DO'S and DON'T'S for internal circulation in MTNL and display of pamphlets related to anticorruption on notice board were observed.A guest lecture was delivered by Joint Director (Policy) CBI North Block on 28.10.10 during vigilance awareness week. As per directions of Central Vigilance Commission, SMS was sent to mobile users of MTNL for lodging complaint at toll free no 1800-11-0180. Interaction with field staff and customers was undertaken to further improve the customer services.Information booklets indicating various services provided by MTNL were distributed to customers through Sanchar Haats. Monthly vigilance meetings were held regularly at Delhi and Mumbai to monitor the progress of Vigilance/Disciplinary cases and remedial action was taken for timely settlement of the case. Regular inspections were carried out by Vigilance officers and corrective action suggested whenever required. The training on Vigilance and Disciplinary proceedings courses were conducted on 19.7.10 to 23.7.10 and 6.12.10 to 10.12.10. The seminars on different activities were also organized. To maintain the transparency in procurement, the e -tendering system has been introduced.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS

Information with regard to foreign exchange earnings and outgo is as follows:-

Activities relating to Export and total Foreign Exchange earned and used:-

(Rs. In Million)

Earned: 37.30

Expenditure in Foreign Currency 34.52

CORPORATE GOVERNANCE

Your company follows the principles of effective corporate governance practices. The Company has taken steps to comply with the requirements of Clause 49 of the Listing Agreement with; the Stock Exchanges. MTNL also comply with the Corporate Governance Guidelines enunciated by Department of Public Enterprises, Government of India for Government Companies. A Report on Corporate Governance has been appended under separate section titled ' Corporate Governance Report' and forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and DPE Guidelines is attached to this report.

IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE"

The Company is in the process of implementing the "Green Initiative" as per Circular No. 17/ 2011 dated April 21, 2011 and Circular No. 18/2011 dated April 29, 2011 issued by Ministry of Corporate Affairs to enable electronic delivery of notices/documents and annual report to shareholders and as per the said circular. Henceforth all notices etc. shall be issued electronically.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) they have .selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 and for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the revised provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

COMMENTS OF C & AG ON THE ACCOUNTS

Comments of C&AG and management replies thereto are given as an Annexure to the Directors' Report. '

DIRECTORS

During the year under report, the Board of Directors of your Company met frequently. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Shri Kuldip Singh continued to be Director (Technical) and Chairman and Managing Director of MTNL, Smt. Anita Soni continued to be the Director (Finance) of the Company and Shri S.P.Pachauri continued to be the Director (HR) of the Company respectively. Shri Adit Jain, Shri V.S.Iyer, Shri Rajan Saxena, Shri T.S.Narayanasami and Shri Vijay Aggarwal continued to be the Independent Directors of the Company.

During the period under report, the following changes took place in the Directorship of Your Company:-

1. Smt. Usha Sahajpal ceased to be director of the company w.d.f 30/04/2011.

2. Shri N.K.Joshi, DDG (SU), Department of Telecommunications (DOT) was appointed as a Director w.e.f. 12/08/2010 and ceased to be a Director w.e.f 10/08/2011.

3. Shri Malay Shrivastava, Joint Secretary (Telecom), DOT has been appointed as a Government Director in place of Shri N.K.Joshi ,DDG(SU), DOT w.e.f. 10/08/2011.

4. Smt. Nirmala Pillai, Senior DDG (WPF), DOT has been appointed as a Government Director w.e.f. 10/08/2011.

The Board placed on record its deep appreciation for the valuable services and contribution made by Smt. Usha Sahajpal and Shri N.K.Joshi during their tenure-as Director on the Board of MTNL.

AUDITORS

M/s. Bansal Sinha & Co., Chartered Accountants and M/s.Goel Garg & Co., Chartered Accountants have been appointed as Joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2011-12 and the board has already ratified their appointment. They were our Statutory Auditors for the Financial Year 2009-10 and 2010-11 also.

v ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees' continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services.

For and on behalf of the Board of Directors

sd/-

(Kuldip Singh)

CHAIRMAN AND MANAGING DIRECTOR

PLACE : NEW DELHI

DATE: 10th August, 2011


Mar 31, 2010

The Directors have pleasure in presenting the 24th Annual Report of your Company together with the Statement of Accounts and Auditors Report as well as comments of Comptroller and Auditor General on the Accounts for the financial year ended on March 31, 2010.

While India is widely acknowledged as the worlds fastest growing telecom market, it enjoys around 53 per cent teledensity. To ride this enormous boom and retain our strong competitive advantage, we have launched a whole new range of services with aggressive and innovative tariff plans. These pathbreaking initiatives will not only broaden our subscriber base but also offer our millions of customers real choice in Landline, CDMA and GSM (2G & 3G) networks.

The advent of broadband has revolutionized back office functions across the economy. As a leader in the converged telecom space, the stage is set for us to drive this process of change, and to capture the market with our unique network and IT infrastructure facilities, bundled value added services and strong project management.

We remain committed to build MTNL into a World Class Service Provider, known for its standards of quality, operational performance and efficiency and admired for its record of consistently creating value for all.

FINANCIAL RESULTS

Sources and application of funds for the year 2009-10 are given below:-

(In Million Rs.)

2009-10 2008-09 Income from Services 36561.00 44559.99

Expenditure (excluding 84754.69 49853.29 Interest & prior period Adjustments)

Operating Profit /(Loss) (48193.69) (5293.30) Other Income 14017.23 7942.75

Interest 12.61 11.53

Profit/(Loss) before tax (34189.07) 2637.92

Tax provision for the year (3551.14) 954.59

Prior Period Adjustments (4528.21) (433.84)

Net Profit / (Loss) for the year (26109.72) 2117.17

Appropriation Interim/Proposed final dividend 0.00 630.00

Dividend Tax 0.00 107.07

Transfer to: a)Contingency Reserve 0.00 0.00

b) Reserve for R&D 0.00 0.00

c) General Reserve 0.00 1380.10

SOURCES AND USES OF FUNDS

Authorised Capital 8000.00 8000.00

Issued, Subscribed & paid-up Capital 6300.00 6300.00

Reserves & Surplus 111714.10 114293.68

Secured and unsecured loan 0.00 0.00

Deferred Tax Liability (Net) 0.00 3552.96

REPRESENTED BY

Fixed Assets (Net Block) 165549.76 62838.34

Investment 5095.37 4650.92

Net Current Assets (87940.76) 46185.69

Deferred Revenue Expenditure 0.00 966.90

Capital Work-in-Progress 11779.60 9504.79

Note: Previous years figures have been re-grouped/re-cast wherever considered necessary.

DIVIDEND

Since there has been no operating profit during the financial year 2009-10, Board of Directors of your company expressed their inability to recommend any dividend for the year under report.

SUBSIDIARY COMPANIES

Your company has two subsidiary companies namely:-

(i) MILLENNIUM TELECOM LTD. (MTL): MTNL through MTL, a 50:50 joint venture of MTNL and BSNL had earlier invited global tender for laying of submarine cable, connecting both East & West coast of India to South –East Asia & Middle –East with an ultimate intent to connect to Europe & USA. However, because of decline in bandwidth prices and high cost of laying the cable, many operational and financial reasons, the project has got delayed. Since the cost of the tender was coming very high, it would not be possible for MTNL and BSNL alone to invest such a huge amount, hence, the possibility of forming a consortium with other operators was felt.

(ii) MAHANAGAR TELEPHONE (MAURITIUS) LTD. (MTML) MTML is a 100% subsidiary of MTNL. The company is having license for fixed telephone service, mobile service, international long distance services and internet services.

MTML is providing cost effective services for its customers. It has already rolled out its CDMA based fixed and mobile services as well as internet and ILD services. Presently. MTML has a customer base of appx. 104 K subscribers.

In addition, the company has also got GSM spectrum and have finalized the GSM equipment vendor for deployment of network.

JOINT VENTURES

Your company has two joint ventures viz. UNITED TELECOMMUNICATIONS LTD. (UTL) & MTNLSTPI IT SERVICES Ltd.

(i) UNITED TELECOMMUNICATIONS LTD. (UTL)

The Joint Venture was incorporated in the year 2001 under the Companies Act of Nepal.

UTL has a total customer base of more than 4,16,825 in numbers and the PCOs are 1646.

UTLs engineering team follows the O&M procedures scrupulously thereby ensuring a fault free network round the clock. The management closely monitors the overall performance of the network. The quality of services, parameters, subscriber complaints, fault rates, BTS wise traffic and ILD traffic are continuously kept under watch.

The company is sustaining its entire operations from internal revenue generations only. Monthly OPEX including the interest payment & other IUC charges, repayment of term loans, etc. are fully met within its bill collections.

(ii) MTNLSTPI IT SERVICES Ltd.

It is a 50:50 Joint-venture between Software Technology Parks of India (STPI) and Mahanagar Telephone Nigam Limited (MTNL). The JV is setting up a data centre for Web-farming application at Chennai with the aim to provide exclusive date centre services, messaging services, business application services to the identified sectors of economic activity.

Order for infrastructure creation for data centre has been placed on M/s Wipro and the work has been completed. In the meantime, JV has already started commercially exploiting the created infrastructure by hosting servers of M/s TCS for MEAs Passport Seva Service on commercial terms. Presently, The Company has floated tender for establishment of data centre equipments in Chennai. Further, the JV is also exploring the possibility of establishment of data centre at two more locations i.e. Delhi and Hyderabad in addition to Chennai.

HUMAN RESOURCE DEVELOPMENT

The Telecom industry in India is undergoing through a volatile phase and fate of the organization is being written and re-written everyday. In the recent past, we have identified Human Resources as one of the strategic partners for rapid business strides leading to success in all strata of our operations. During last fiscal also we continued our endeavors towards world standards HR policies.

We have always considered our Manpower as one of our greatest assets and this is what differentiates MTNL from its competitors. We have a strong manpower base of 44910 with wide array of Technical and Managerial aptitudes and also talented supporting staff having exposure to state of the art technologies prevailing in Telecom Industry in the world. As a step towards restructuring of our manpower we have adopted dual pronged strategy, viz., at one end we have recruited young and talented professionals in areas like Telecom, Finance, HR, Marketing, Law and on the other hand we have taken steps towards rightsizing of the organization by offering VRS. Almost 4000 employees were separated through 03 VRS. During 2003 to 2006

Thus fine-tuning our existing manpower mix in terms of age, qualification, and aptitude to meet the demands posed by the changing Business Environment and to take advantage of the opportunities presented to serve ever-increasing customer base.

TRAINING PROGRAMME

Our company has been conducting training programme for new recruited executives Trainees in the field of Telecom, Finance, Marketing, HR, Legal regularly at CETTM.

CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CETTM)

Our dream for having a world-class in house Training Centre furthered one step when CETTM (Centre of Excellence in Telecom Training & Management) was awarded ISO 9001:2000 certification. CETTM is slowly taking the lead role and becoming the nodal center for HRD. Induction Training programme for newly recruited executive Trainees in the field of Telecom, Finance, Marketing, HR, Legal have been conducted at CETTM.

CETTM has started generating revenues by leasing out infrastructure and providing training to other organizations of repute.

INDUSTRIAL RELATIONS

Industrial peace and Industrial harmony based on healthy Employee Relations, like the previous year prevailed throughout the year. The Grievances/Issues raised by the employees/Union/Associations was given due attention and regard. The cases/issues brought up by them were settled through regular meetings ad interactions between Management and Unions/Associations and action as mutually agreed was taken to settle them. Recently we have signed wage agreement with recognised unions for a period of 10 years effective from 1/1/2007.

A further step towards Workers Participation in critical issues concerning business endeavors, a special Joint Negotiation Committee meeting was convened to share the views of recognized Unions on the various aspects of our business endeavors and to obtain opinion from them in further improving the same.

EMPLOYEES WELFARE

Employees Welfare Schemes like subsidized Canteen, Crèches, Housing, Medical facilities, Scholarships to wards of employees, Group Insurance, dormitories for females working in night shift etc. continued and maintained by the Company for its employees. Sports and Cultural activities were also given priority during the year.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The company continued its efforts to comply with statutory requirements in promoting the use of Hindi and has been able to achieve most of the annual targets set by the Government for implementation and promotion of Hindi as Official Language in the Company.

IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY

Your Company has endeavored to fulfill all the statutory requirements with regard to implementation of reservation policy for candidates belonging to SC/ST/OBC communities and as well as Physically Challenged candidates.

WORKING CONDITIONS OF WOMEN EMPLOYEES

We are continuously striving towards gender sensitization amongst our employees. Special care has been taken in case of woman employees working in night shifts. Also to redress the issues of Sexual Harassment at workplace Special Cells have been constituted.

The Report of Parliamentary Committee on empowerment of Women and the working conditions of women in MTNL is received during the year. Special grants have been sanctioned to Women Welfare Committee at Delhi/Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

Fulfilling the Social Responsibility was always high on our agenda and in last fiscal year also your company supported a lot of Organizations fighting for the bigger social cause. In many instances we also took the same responsibility on our shoulders.

MANPOWER STATUS

As on 31st March 2010 your Company had a strength of employees as per details given next page:-

MTNL Employees working strength as on 31.3.2010.

Group Working SC ST

A 1190 215 55

B 5360 756 109

C 26495 4616 511

D 11842 2755 881

Total 46091 8342 1556

DRMs 23 — —

Grand Total 44910 8342 1556

VIGILANCE

The Vigilance organization of MTNL is headed by Chief Vigilance Officer. He is an officer in the rank of Joint Secretary, Govt. Of India. Presently Shri Khushi Ram, IRSSE, is the CVO of MTNL. The CVO is responsible for complete vigilance administration. During the period 2009-10 emphasis was laid on efficiency and transparency in working. During the period various steps were taken to empower customer oriented services of the organization. Training programmes/seminars and workshops have been conducted during the period to update the knowledge and skills of the officer working in vigilance. The Vigilance Awareness Week was celebrated from 03.11.09 to 07.11.09. During the Vigilance Awareness Week various activities including interaction with field staff and customers was undertaken to further improve the customer services based on the feedback/suggestions received from them. During the Vigilance Awareness Week information, booklets indicating various services provided by the MTNL and the complaint handling policy was distributed among the customers through Sanchar Hatts. Monthly Vigilance meetings were held regularly at HQs, Delhi and Mumbai to monitor the progress of Vigilance/Disciplinary cases. Remedial action was also undertaken for timely settlement of these cases. During the period, the vigilance Branch received 228 complaints and 139 Disciplinary cases were finalized. These complaints were expeditiously examined and necessary action taken thereupon. Regular inspections were also carried out by the vigilance officers and corrective action was suggested wherever required.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Being a service providing organization, the relevant rules in this regard are not applicable to your Company.

FOREIGN EXCHANGE EARNINGS

Information with regard to foreign exchange earnings and outgo is as follows:- Activities relating to Export and total Foreign Exchange earned and used:- (Rs. In Million) Earned : 48.30

Expenditure in Foreign Currency 29.31

CORPORATE GOVERNANCE

Your company follows the principles of effective corporate governance practices. The Company has taken steps to comply with the requirements of revised Clause 49 of the Listing Agreement with the Stock Exchanges. A Report on Corporate Governance has been appended under separate section titled Corporate Governance Report and forms a part of the Annual Report.

COMPLIANCE CERTIFICATE

A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under revised Clause 49 of the Listing Agreement is attached to this report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit or loss of the company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 and for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

During the year under report, there was no employee who was in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975.

COMMENTS OF C & AG ON THE ACCOUNTS

Comments of C&AG and management replies thereto are given as an Annexure to the Directors Report.

DIRECTORS

During the year under report, the Board of Directors of your Company met frequently. At these meetings, the Board held intensive discussions on the budget, important financial transactions and various steps to face the impending competition from private operators both in Basic Telephone Service and Cellular Mobile Telephony and other value added services.

Sh. Kuldip Singh Director (Tech.) of MTNL has been entrusted with additional charge of the Chairman and Managing Director of your company w.e.f 15.01.2010 in place of Sh.R.S.P.Sinha whose term of office had expired on 14.01.2010. Shri Kuldip singh continued to be the Director (Technical) and Smt. Anita Soni and Sh. S.P. Pachauri continued to be the Director(Finance) and Director (HR) respectively of your Company.

During the period under report, the following changes took place in the Directorship of Your Company:- 1. Sh. Kuldip Singh Director (Tech.) of MTNL has been entrusted with additional charge of the Chairman and Managing Director of your company w.e.f 15.01.2010 in place of Sh.R.S.P.Sinha whose term of office had expired on 14.01.2010.

2. Sh. Dr. Vijay Aggarwal, Dr. Rajan Saxena and Shri T.S. Narayanasami have been appointed non- official part-time Directors of the company by the Govt. of India, for a period of 3 years. Their appointment was confirmed by the Board in its meeting held on 29.3.2010.

3. Sh. Nirmal Kumar Joshi, DDG (SU), Department of Telecommunications was appointed as Govt. director in place of Shri Manish Sinha, DDG (FEB) w.e.f. 12.8.2010

4. Shri J.S. Deepak ceased to be Govt. Director w.e.f. 29.3.2010.

The Board placed on record its deep appreciation for the excellent guidance given by shri R.S.P. Sinha during his term as CMD. The Board also placed on record its deep appreciation for the valuable services and contribution made by Dr. J.S.Deepak and Shri Manish Sinha during their tenure as Govt. Directors on the Board of MTNL.

AUDITORS

M/s. Bansal Sinha & Co., Chartered Accountants and M/s.Goel Garg & Co., Chartered Accountants have been appointed as joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the year 2010-11 and the board has already ratified their appointment.

ACKNOWLEDGEMENT

Your Directors take this opportunity to gratefully acknowledge the help, guidance and support received from Deptt. of Telecom (DoT) and various Ministries of the Government of India. Your Directors are especially grateful to its Bankers, all stakeholders and investors including, ADR holders, for their continued patronage and confidence reposed in the company.

The Directors would like to express their thanks for the sincere hard work and dedication of every employee leading to impressive results of your company. The Board is confident that with the employees continued enthusiasm, initiative and dedicated efforts, your company could face the new challenges and opportunities arising out of the resultant competition from private operators in the Cellular Mobile, Basic Telephone and Internet services and other Value Added services.

For and on behalf of the Board of Directors

PLACE : New Delhi (Kuldip Singh)

DATE : 03.09.2010 CHAIRMAN AND MANAGING DIRECTOR

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