Directors Report of Quadrant Televentures Ltd.
Mar 31, 2016
Dear Shareholders,
The Directors are pleased to present the 69th (Sixty Ninth) Annual Report together with the Audited Accounts and Auditors Report for the Financial Year ended on 31st March, 2016.
SUMMARY OF FINANCIAL RESULTS
The Company''s financial results for the year ended 31st March, 2016 is summarized below: -
(Rs. In millions)
|
Particulars |
For the year ended March 31, 2016 |
For the year ended March 31, 2015 |
|
I. Revenue from operations |
5583.72 |
5207.94 |
|
II. Other Income |
44.58 |
36.24 |
|
III. Total Income(I II) |
5628.31 |
5244.18 |
|
IV. Expenses |
||
|
Networks operation Expenditure |
3791.32 |
4442.02 |
|
Employee Benefits Expenses |
741.61 |
803.85 |
|
Sales & Marketing Expenditure |
283.58 |
368.44 |
|
Finance Cost |
272.98 |
268.40 |
|
Depreciation and Amortization Expenses |
1334.00 |
1389.96 |
|
Other Expenses |
552.91 |
370.44 |
|
Total Expenses |
6976.40 |
7643.12 |
|
V. Profit/(Loss) before exceptional and |
(1348.10) |
(2398.93) |
|
extraordinary items and tax (III-IV) |
||
|
VI. Exceptional Item |
- |
- |
|
VII. Profit /(Loss) before extraordinary items |
(1348.10) |
(2398.93) |
|
and tax (V-VI) |
||
|
VIII. Extraordinary items |
- |
- |
|
IX. Profit)/(Loss) before tax (VTT-VTTT) |
(1348.10) |
(2398.93) |
|
X. Tax expenses:- |
||
|
(1) Current Tax |
- |
- |
|
(2) Deferred Tax |
- |
- |
|
XI. Profit)/(Loss) for the period from |
(1348.10) |
(2398.93) |
|
continuing operations (IX-X) |
||
|
XII. Profit/(Loss) from discontinuing |
- |
- |
|
operations |
||
|
XIII. Tax expenses of discontinuing |
- |
- |
|
operations |
||
|
XIV. Profit/(Loss) from Discontinuing |
- |
- |
|
operations (after tax)(XII-XIII) |
||
|
XV. Profit /(Loss) for the period(XT-XIV) |
(1348.10) |
(2398.93) |
FINANCIAL PERFORMANCE REVIEW
The Company registered a growth in revenue by 7.21% from Rs. Rs.5,207.94 million in 2014-15 to Rs.5583.72 million in 2015-16. Consequently, the operating losses decreased from Rs.2,398.93 million during 2014-15 to Rs. 1348.10 million during the year ended 31.03.2016.
However, the total expenses during 2015-16 decreased to Rs. 6976.41 Million as against Rs. 7,643.12 million in the previous year.
In consolidated terms, the Company recorded a consolidated revenue of Rs.5623.94 Million during 2015-16 against the consolidated revenue of Rs. 5,252.94 Million during 2014-15.The Company incurred a loss of Rs.1314.93 Million in 2015-16, against loss of Rs.2,406.62 Million in 2014-15.
BUSINESS OPERATIONS
Your Company holds Unified Access Services License (UAS License) for providing Telephony Services in the Punjab Telecom Service Area comprising of the State of Punjab, Union Territory of Chandigarh and Panchkula Town of Haryana.
Earlier the Company was holding ISP License - Category-B (Punjab Circle) which was valid till June, 2015 and the Company had applied for its renewal/issuance of new ISP License Category-A. Considering the Company''s request, the DoT has granted ISP License Category-A (PAN India) to the Company on January 6, 2015.
The Portfolio of services provided by the Company includes Data and Internet Connectivity across wire line technology, Fixed Line and Mobile voice services, Managed Services.
The Company provides broadband services through its fiber optic cable laid across Punjab and the Company has also entered into co-location agreements with other operators in order to expand its network.
As at 31.03.2016, the company had a total subscriber base of 3,861,039 telephony customers, including 3,400,961 GSM mobile customers, 264,963 fixed-line customers, 195,115 Broadband Customers.
During the year under review, there is no change in the nature of business of the Company.
MARKETING INITIATIVES
During the year, various marketing initiatives were taken in order to enhance the brand visibility through various programs such as Young Manch Contest, Connect Super Jodi Contest etc, in order to connect to and reach out to a larger segment of the populace especially the younger segment of society.
CORPORATE DEBT RESTRUCTURING SCHEME (CDR SCHEME)
The Corporate Debt Restructuring Cell (CDR Cell) had vide its letter no.CDR(JCP)563/2009-10 dated August 13, 2009 approved a Corporate Debt Restructuring Package (CDR Package) for the company, in order to write off the losses and also to enable the company to service its debts. As of March 31, 2016, the Company has duly complied with all the terms and conditions as stipulated in the CDR Package.
SHARE CAPITAL AND LISTING OF SHARES
The paid-up Equity share capital of the Company is Rs.61,22,60,268/-comprising of 61,22,60,268 equity shares of Re.1/- each. The Company''s shares are listed on BSE Limited and are actively traded.
MATERIAL CHANGES
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year of the Company i.e. 31 March 2016 and the date of Directors'' Report i.e. 27th May, 2016.
Further, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.
DIVIDEND
As on 31.03.2016, the Company had accumulated losses. Your Directors, therefore, have not recommended any dividend for the financial year 2015-16.
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to reserves.
FIXED DEPOSITS
Your Company has not accepted / renewed any deposits within the meaning of Section 73 of the Companies Act, 2013 and as such, no amount of principal or interest was outstanding as on the Balance Sheet date.
HUMAN RESOURCE DEVELOPMENT
Human Resource Development is considered to be vital in any organization for the effective implementation of its business plans. Constant endeavors'' are being made by the Company through various HR policies and processes aimed for professional growth and opportunities and recognitions of the employees in order to effectively motivate the employees at all levels in the drive for growth and expansion of the business. Regular innovative programs for learning and development are also drawn up constantly in order to create an encouraging and conducive work environment for empowering the employees at all levels and maintaining a well structured reward and recognition mechanism. The Company encourages its employees to strengthen their entrepreneurial skills in order to enhance the Organization''s productivity and creativity.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company, being in the telecommunications sector is not involved in carrying on any manufacturing activity; accordingly, the information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption and Foreign Exchange earnings/outgo are not applicable.
However, the following information would give adequate idea of the continuous efforts made by the Company in this regard:
(i) Energy Conservation:
(a) Electricity is used for the working of the Company''s telephone exchanges and other network infrastructure equipment. The Company regularly reviews power consumption patterns across its network and implements requisite changes in the network or processes in order to optimize power consumption and thereby achieve cost savings.
(b) Reduction in the running of the Diesel Generator (DG) Sets during power cuts in various tower sites.
(ii) Technology Absorption: The Company has not imported any technology. The Company has not yet established separate Research & Development facilities.
FOREIGN EXCHANGE EARNINGS AND OUTGO:
During the year, there were no foreign exchange earnings; the total foreign exchange outgo was to the tune of Rs. 373.91 millions, which was on account of Import of Capital Equipment (other than telephone instruments), finance charges and travel expenses.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure-5 to the Board''s Report.
The Company does not have any employee whose particulars are required to be furnished under Section 197 of the Companies Act, 2013, read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The remuneration paid to all Key Managerial Personnel is in accordance with remuneration policy adopted by the company.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including Directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of Section 177(9) of the Act and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (URL: http://www.connectzone. in/corporate_governance.php)
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92 of the Act and Rule 12 of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9, is provided in Annexure-1 which forms part of this report.
RELATED PARTY TRANSACTIONS
In line with the requirements of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Policy on Related Party Transactions and the same is posted on the Company''s URL: http://www.connectzone.in/ corporate_governance.php
Information on transaction with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure-3 in Form AOC-2 and the same forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions of Section 135 read with Schedule VII and the Rule made there under, every Company having net-worth of Rs. 500 Crore or Turnover of Rs. 1,000 Crore or Net Profit of Rs. 5 Crore is required to constitute Corporate Social Responsibility Committee. The Company does not meet any of the above criteria. As such the Company is not required to constitute Corporate Social Responsibility Committee and comply with the requirements of Section 135 read with Schedule VII and the Rules made there under.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees and investments pursuant to Section 186 of the Companies Act, 2013 are provided in Notes no. 3, 11 and 25 respectively to the financial statements.
BOARD EVALUATION
The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
In a separate meeting of independent Directors, performance of no independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. The familiarization programme adopted by the Company is posted on the website of the Company''s URL: http://www.connectzone.in/corporate_governance.php
REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
In terms of the provisions of Section 178(3) of the Act and under Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Nomination & Remuneration Committee (NRC) is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees.
In line with this requirement, the Board has adopted the Policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees and the same has been disclosed in the Corporate Governance Report, which forms part of the Directors'' Report. The same is also available on the Company''s website URL: http://www.connectzone.in/corporate_governance.php
NUMBER OF MEETING OF THE BOARD
Seven Meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.
THE DETAILS OF DIRECTORS WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR
During the year under review, Mr. Vinay Kumar Monga was appointed as Independent Directors pursuant to the provisions of Section 149 of the Companies Act, 2013, at the previous Annual General Meeting held on 28th September, 2015, to hold office of Director up to a term of five consecutive years w.e.f. October 17, 2014. Further, Ms. Mitu Mehrotra Goel was appointed as Director liable to retire by rotation at the Annual General Meeting of the Company held on September 28, 2015.
In terms of the provisions of Section 152 (6) of the Companies Act, 2013 and the Rules made there under, Ms. Mitu Mehrotra Goel, Director retires by rotation and being eligible, has offered, herself for re-appointment. The Board recommends her re-appointment at the ensuing Annual General Meeting.
A brief profile of Director seeking reappointment, nature of expertise in specific functional area, name of other companies in which she holds Directorship(s) and Membership(s)/Chairmanship(s) of the Committees of the Board of Directors and the particulars of the shareholding as stipulated under Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Notice.
IDBI Bank Limited has with effect from December 28, 2015 nominated Ms. Lalita Sharma as its Nominee Director on the Board in place of Mr. Rajeev Kumar. The Board takes this opportunity and place on record its sincere appreciation for the valuable guidance and support of Mr. Rajeev Kumar during his tenure as Director of the Company.
During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.
THE DETAILS OF KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR a. Changes in Key Managerial Personnel during the period 1st April, 2015 to 31st March, 2016
- Mr. Ashu Ratan Khare, Chief Financial Officer of the Company had resigned and ceased to be Chief Financial Officer of the Company w.e.f. 15th April, 2015.
- Mr. Munish Bansal was appointed as Chief Financial Officer of the Company in place of Mr. Ashu Ratan Khare w.e.f. 30th April, 2015.
- Mr. Amit Verma was appointed as Company Secretary of the Company in place of Mr. Kapil Bhalla w.e.f. 1st July, 2015.
- Pursuant to the provisions of Section 196, 197 and 203 read with Schedule V of the Companies Act, 2013, Mr. Amit Verma was also appointed as Manager of the Company in place of Mr. Kapil Bhalla for a period of three years w.e.f. November 7, 2015 to November 6, 2018 on such terms and conditions and subject to the approval of Shareholders of the Company at the ensuing Annual General Meeting of the Company.
No changes took place in Key Managerial Personnel for the period 1st April, 2016 till the date of signing of Board Report.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all Independent Directors of the Company confirming that they meet with the criteria of independence, as prescribed under section 149 of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Independent Directors have also confirmed that they have complied with the Company''s Code of Conduct.
AUDITORS
Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed there under, the Company had, on 30th September, 2014, appointed M/s Khandelwal Jain & Co., Chartered Accountants (Firm Registration No.105049W), as Statutory Auditors of the Company for a period of 5 years from the conclusion of the Sixty Seventh (67th) Annual General Meeting of the Company up to the conclusion of Seventy Second (72nd) Annual General Meeting of the Company.
As per the provisions of Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014, such appointment made by the company shall be subject to ratification in every Annual General Meeting up to the end of the tenure of appointment of the auditors.
M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai have confirmed their eligibility in terms of the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rules, 2014.
The Board recommends the ratification of the appointment of M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai from the conclusion of this meeting i.e. 69th Annual General Meeting until the conclusion of 72nd Annual General Meeting (subject to ratification by the Members at every subsequent meeting) on such remuneration as shall be fixed by the Board of Directors of the Company.
COST AUDITOR
The Central Government had directed vide its order no.52/26/CAB-2010 dated 6th November, 2012 to conduct a Cost Audit in respect of the specified products viz., Telecommunication Industry.
The Board of Directors of the Company has accorded its approval for the appointment of M/s Sanjay Gupta & Associates, Cost Accountants, New Delhi as Cost Auditors for the Financial Year 2016-17, as the Cost Auditor of the Company, to conduct audit of the Cost Accounting Records maintained by the Company for the financial year commencing on 1st April, 2016 and ending on 31st March, 2017, subject to the approval of the Central Government.
In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, the remuneration payable to the Cost Auditor has to be ratified by the members of the Company. Accordingly, consent of the Members is sought by way of an Ordinary Resolution for ratification of the remuneration amounting to Rs. 1,00,000/- (Rupees One Lac Only) plus applicable service tax and out of pocket expenses payable to the Cost Auditors for financial year commencing on 1st April, 2016.
In compliance with the provisions of the Companies (Cost Audit Report) Rules, 2011 and General Circular No. 15/2011 issued by Government of India, Ministry of Corporate Affairs, Cost Audit Branch, we hereby submit that, the Company has filed the Cost Audit Report for the financial year ended on 31st March, 2015 within the prescribed timeline. As regards, to the financial year ended on 31st March, 2016, the due date for filing the Cost Audit Report is 27th September, 2016 and the Company shall file the same on or before due date.
In terms of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company has appointed M/s Sanjay Gupta & Associates, Cost Accountants, New Delhi as Cost Auditors for the Financial Year 2016-17.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Dinesh Bhandari (CP No.:10300, FCS: 5887), Practicing Company Secretary to undertake the secretarial audit of the company. The Practicing Company Secretary has submitted the Report on the Secretarial Audit conducted by him which is annexed to this Board Report as Annexure-4.
The Report does not contain any qualification, reservation or adverse remark.
INTERNAL AUDITORS
M/s Ernst and Young performs the duties of internal auditors of the Company and their report is reviewed by the Audit Committee from time to time.
CASH FLOW STATEMENT
As per the requirements of the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Cash Flow Statement as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India, is given along with the Balance Sheet and Statement of Profit and Loss.
AUDIT COMMITTEE
In compliance with the provisions of Section 177 of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Company has constituted an Audit Committee. The composition, scope and powers of the Audit Committee together with details of meetings held during the year under review, forms part of the Corporate Governance Report.
The recommendations of the Audit Committee are accepted by the Board.
RISK MANAGEMENT POLICY
The Company has a robust Risk Management policy to identify, evaluate business risks and opportunities. This policy seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The policy defines the risk management approach across the organization at various levels including documentation and reporting. The Company has identified various risks and also has mitigation plans for each risk identified.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As of March 31, 2016, there was no Unclaimed Dividend due for transfer to the Investor Education and Protection Fund (IEPF) of the Central Government, after the expiry of seven years.
HOLDING/SUBSIDIARY COMPANIES
As on 31st March, 2016, Quadrant Enterprises Private Limited was holding company of the Company (holding 53.36%). After Balance Sheet date, there is change among the shareholding of Promoter Group Entities whereby Quadrant Enterprises Private Limited transferred 3.76% of shares to Nippon Investment & Finance Company Private Limited, other Promoter Group Entity. Consequently, Quadrant Enterprises Private Limited ceased to be holding company of the Company w.e.f. 13th April, 2016.
As on March 31, 2016, the Company has one wholly owned subsidiary, namely, Quadrant Telenet Services Private Limited which was incorporated as Subsidiary of the Company on March
30, 2015 to undertake the business of Telecommunications, Internet Services, Telecom Infrastructures and other related telecom services.
As on May 30, 2015, the Company had disinvested its stake in its wholly owned subsidiary, namely, Videocon Integrated Solutions Private Limited (Formerly Infotel Tower Infrastructure Private Limited). Accordingly, M/s Videocon Integrated Solutions Private Limited ceased to be a subsidiary company of the Company w.e.f. May 30, 2015, consequently, M/s Videocon Mobile & Infra Private Limited, subsidiary of M/s Videocon Integrated Solutions Private Limited also ceased to be a step down subsidiary company of the Company.
As on the date of signing of this Report, the Company is having only one subsidiary, namely, Quadrant Telenet Services Private Limited.
Pursuant to the provision of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Company''s subsidiary in Form AOC-1 is attached as Annexure-2 to the financial statement of the Company.
Pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, Consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.
Annual accounts of the subsidiary company, along with related information are available for inspection at the Company''s registered office and the registered office of the subsidiary company. Copies of the annual accounts of the subsidiary company will also be made available to the shareholders - upon request.
JOINT VENTURES/ASSOCIATE COMPANIES
As of March 31, 2016, there are no Joint Ventures / Associate Companies of the Company.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the consolidated financial statement prepared in accordance with the Accounting Standard AS-21 read with Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors have pleasure in presenting the Consolidated Financial Statements together with Auditors Report thereon forms part of the Annual Report.
AUDITORS'' REPORT
The Statutory Auditors of the Company, M/s Khandelwal Jain & Co., Chartered Accountants, have submitted the Auditors'' Report which has observation on Standalone and Consolidated Financial Statements for the period ended March 31, 2016.
MANAGEMENT''S EXPLANATION TO THE AUDITORS'' OBSERVATIONS: -
A) Auditors'' Observation in the Standalone Auditor''s Report & Annexure to the Auditor''s Report
Point No.5 of the Auditor''s Report which summarizes the basis of Emphasis of Matter "We draw attention to Note No.28 to the Financial Statements, the Company has incurred a net loss of Rs.1,348,104,827/- during the year, the accumulated losses as at March
31, 2016 amounted to Rs.17,638,407,752/- resulting in erosion of its net worth and has net current liabilities of Rs.12,713,562,129/- as at March 31, 2016. These factors raise a doubt that the Company will not be able to continue as a going concern. The management is confident of generating cash flows from business operations through increasing subscribers base and with the support of significant shareholders to fund its operating and capital fund requirements. Accordingly, these statements have been prepared on a going concern basis. Our opinion is not qualified in respect of this matter "
Management''s Explanations to the Auditor''s Observations in the Standalone Balance Sheet
The accumulated losses of the Company as at March 31, 2016 are more than fifty percent of its net worth as at that date. The losses are due to declining market of the fixed line business and high operating costs. The management is confident of generating cash flows from business operations through increasing subscribers'' base and other value added services and reducing losses gradually. Further with the support of significant shareholders to fund its operating and capital expenditure. Management is confident of meeting its funds requirement.
B) Auditors'' Observation in the Consolidated Auditor''s Report & Annexure to the Auditor''s Report
Point No.5 of the Auditor''s Report which summarizes the basis of Emphasis of Matter "In case of Holding Company we draw attention to Note No.29 to the financial statements, the Company has incurred a net loss of Rs. 1,348,104,827/- during the year, the accumulated losses as at March 31, 2016 amounted to Rs.17,638,407,752/- resulting in, the erosion of its net worth and has net current liabilities of Rs.12,713,562,129/- as at March 31, 2016. These factors raise a doubt that the Company will not be able to continue as a going concern. The management is confident of generating cash flows from business operations through increasing subscribers'' base and with the support of significant shareholders to fund its operating and capital fund requirements. Accordingly, these statements have been prepared on a going concern basis. Our opinion is not qualified in respect of this matter7''
Management''s Explanations to the Auditor''s Observations in the Consolidated Balance Sheet
In consolidated terms, the Company has incurred Net loss of Rs.1,314,928,758/- during the year and the accumulated losses as at March 31, 2016, amounted to Rs.17,638,463,308/- resulting in, erosion of its net worth and has net current liabilities of Rs. 12,713,517,684/- as at March 31, 2016.
The accumulated losses of the company as at March 31,
2016, in consolidated terms are more than its fifty percent of its Net worth as at that date. The losses are due to declining market of the fixed line business and high operating costs. The management is confident of generating cash flows from business operations through increasing subscribers'' base and other value added services and reducing losses gradually. Further with the support of significant shareholders to fund its operating and capital expenditure, management is confident of meeting funds requirement.
PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
POLICY ON PREVENTION OF INSIDER TRADING
Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has framed a) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders and b) Code of Fair Disclosure. The Company''s Code, inter alia, prohibits purchase and/or sale of shares of the Company by an insider, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.
CORPORATE GOVERNANCE
The Company is committed to maintaining the highest standards of Corporate Governance. The detail report on Corporate Governance, Management Discussion and Analysis Report as well as Corporate Governance Compliance Certificate are attached pursuant to the requirements of Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and form part of this Annual Report.
DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Act, the Directors state that:
(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) The Directors has selected such accounting policies and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit and loss of the Company for that period;
(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;
(e) The Directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively;
(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.
ACKNOWLEDGEMENTS
Your Directors wish to express their gratitude for the wholehearted support received throughout the year from the Department of Telecommunications, Financial Institutions, Banks, Lenders and the various Central and State Government Departments, Business Associates, Shareholders and Subscribers.
The Directors also extend their appreciation to the employees for their continuing support and unstinting efforts in ensuring an excellent all round operational performance.
For and on behalf of the Board of Directors
Mitu Mehrotra Goel Vinay Kumar Monga
Place: Mohali Director Director
Date: May 27, 2016 (DIN: 05188846) (DIN: 03029345
Mar 31, 2015
Dear Shareholders,
The Directors are pleased to present the 68th (Sixty Eighth) Annual
Report together with the Audited Accounts and Auditors Report for the
Financial Year ended on 31st March, 2015.
SUMMARY OF FINANCIAL RESULTS
The Company's financial results for the year ended 31st March, 2015 is
summarized below: -
(Rs. In millions)
Particulars For the year For the year
ended ended
March 31,2015 March 31,2014
I. Revenue from operations 5207.94 4059.95
II. Other Income 36.24 29.44
III. Total Income(I II) 5244.18 4089.39
IV. Expenses
Networks operation Expenditure 4442.02 3784.12
Employee Benefits Expenses 803.85 688.30
Sales & Marketing Expenditure 368.44 281.01
Finance Cost 268.40 273.00
Depreciation and Amortization 1389.96 1267.80
Expenses 370.44 406.76
Other Expenses
Total Expenses 7643.12 6701.00
V. Profit /(Loss) before exceptional and (2398.93) (2611.61)
extraordinary items and tax (III-IV)
VI. Exceptional Item - -
VII. Profit/(Loss) before extraordinary (2398.93) (2611.61)
items and tax (V-VI)
VIII. Extraordinary items - -
IX. Profit before tax (VII-VIII) (2398.93) (2611.61)
X. Tax expenses - -
(1) Current Tax
(2) Deferred Tax
XI. Profit /(Loss) for the period from (2398.93) (2611.61)
continuing operations (IX-X)
XII. Profit/(Loss) from discontinuing - -
operations
XIII. Tax expenses of discontinuing - -
operations
XIV. Profit/(Loss) from Discontinuing - -
operations (after tax)(XII-XIII)
XV. Profit /(Loss) for the period(XI-XIV) (2398.93) (2611.61)
FINANCIAL PERFORMANCE REVIEW
The Company registered a growth in revenue by 28% from Rs.4,059.95
million in 2013-14 to Rs.5,207.94 million in 2014-15. Consequently, the
operating losses decreased from Rs.2,611.61 million during 2013- 14 to
Rs.2,398.93 million during the year ended 31.03.2015.
However, the total expenses during 2014-15 increased to Rs.7,643.12
million as against Rs.6,701.00 million in the previous year due to
operational and other costs.
In consolidated terms, the Company recorded a consolidated revenue of
Rs.5,289.24 Million during 2014-15 against the consolidated revenue of
Rs.4,117.39 Million during 2013-14.The Company incurred a loss of
Rs.2,406.62 Million in 2014-15, against loss of Rs.2,616.93 Million in
2013-14.
BUSINESS OPERATIONS
Your Company holds Unified Access Services License (UAS License) for
providing Telephony Services in the Punjab Telecom Service Area
comprising of the State of Punjab, Union Territory of Chandigarh and
Panchkula Town of Haryana.
Earlier the Company was holding ISP Licence - Category-B (Punjab
Circle) which was valid till June, 2015 and the Company had applied for
its renewal/issuance of new ISP Licence Category-A. Considering the
Company's request, the DoT has granted ISP Licence Category-A (PAN
India) to the Company on January 6, 2015.
The Portfolio of services provided by the Company includes Data and
Internet Connectivity across wireline technology, Fixed Line and Mobile
voice services, Managed Services. The Company has also launched its
post-paid services in the GSM Mobile Segment this year.
The Company provides broadband services through its fibre optic cable
laid across Punjab and the Company has also entered into co-location
agreements with other operators in order to expand its network.
As at 31.03.2015, the company had a total subscriber base of 3,119,797
telephony customers, including 2,711,867 GSM mobile customers, 227,707
fixed-line customers, 167,048 Broadband customers, 12,260 Wireless
broadband customers and 915 FTITH customers.
During the year under review, there is no change in the nature of
business of the Company.
MARKETING INITIATIVES
During the year, various marketing initiatives were taken in order to
enhance the brand visibility through various programs such as Young
Manch Contest, Connect Super Jodi Contest etc, in order to connect to
and reach out to a larger segment of the populace especially the
younger segment of society.
CORPORATE DEBT RESTRUCTURING SCHEME (CDR SCHEME)
The Corporate Debt Restructuring Cell (CDR Cell) had vide its letter
no.CDR(JCP)563/2009-10 dated August 13, 2009 approved a Corporate Debt
Restructuring Package (CDR Package) for the company, in order to write
off the losses and also to enable the company to service its debts. As
of March 31, 2015, the Company has duly complied with all the terms and
conditions as stipulated in the aforesaid CDR Package.
SHARE CAPITAL
In terms of the CDR Package, the issued, subscribed and Paid up equity
share capital of the Company was required to be reduced by 90% i.e.
from Rs. 612.26 Crores to Rs.61.23 Crores by extinguishing/ cancelling
Rs.9/- (Rupee Nine Only) per equity share out of each equity share of
Rs.10/- (Rupees Ten Only) each fully paid up, in order to write-off the
accumulated losses of the Company.
Pursuant to the approval by BSE vide its letter dated October 23, 2013,
the Company had fled the Petition for reduction of Equity Share Capital
with the Hon'ble Bombay High Court. The Hon'ble Bombay High Court had
vide its Order dated July 4, 2014 granted its approval for the
Reduction of Capital. The Certified copy of the Order has already been
filed with the Registrar of Companies, Mumbai, Maharashtra for
registration. The Registrar of Companies, Mumbai vide Order dated
September 3, 2014, registered the said Order. The Reduction of Capital
(in terms of the CDR Package) was effected in the Books of Accounts of
the Company w.e.f. September 3, 2014. Trading in respect of the reduced
equity share capital comprising of 61,22,60,268 equity shares with the
reduced face value and paid up value of Re. 1/- per share, had
commenced on BSE Ltd. w.e.f. December 29, 2014.
MATERIAL CHANGES
No material changes and commitments affecting the financial position of
the Company occurred between the end of the financial year of the
Company i.e. 31 March 2015 and the date of Directors' Report i.e. 13th
August, 2015.
Further, there were no significant and material orders passed by the
regulators or courts or tribunals impacting the going concern status
and company's operations in future.
SHARE CAPITAL AND LISTING OF SHARES
The Company's shares are listed on BSE Limited and are actively traded.
Consequent to the Reduction in Share Capital during the financial year,
the paid-up share capital of the Company is Rs.61,22,60,268/-
comprising of 61,22,60,268 equity shares of Re.1/- each.
DIVIDEND
As on 31.03.2015, the Company had accumulated losses. Your Directors,
therefore, have not recommended any dividend for the financial year
2014-15.
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to
reserves.
FIXED DEPOSITS
Your Company has not accepted / renewed any deposits within the meaning
of Section 73 of the Companies Act, 2013 and as such, no amount of
principal or interest was outstanding as on the Balance Sheet date.
HUMAN RESOURCE (HR) DEVELOPMENT
Human Resource Development is considered to be vital in any
organisation for the effective implementation of its business plans.
Constant endeavors' are being made by the Company through various HR
policies and processes aimed for professional growth and opportunities
and recognitions of the employees in order to effectively motivate the
employees at all levels in the drive for growth and expansion of the
business. Regular innovative programs for learning and development are
also drawn up constantly in order to create an encouraging and
conducive work environment for empowering the employees at all levels
and maintaining a well structured reward and recognition mechanism. The
Company encourages its employees to strengthen their entrepreneurial
skills in order to enhance the Organization's productivity and
creativity.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The Company, being in the telecommunications sector is not involved in
carrying on any manufacturing activity; accordingly, the information
required under Section 134(3)(m) of the Act read with Rule 8(3) of the
Companies (Accounts) Rules, 2014 with respect to Conservation of
Energy, Technology Absorption and Foreign Exchange earnings/outgo are
not applicable.
However, the following information would give adequate idea of the
continuous efforts made by the Company in this regard:
(i) Energy Conservation:
(a) Electricity is used for the working of the Company's telephone
exchanges and other network infrastructure equipment. The Company
regularly reviews power consumption patterns across its network and
implements requisite changes in the network or processes in order to
optimize power consumption and thereby achieve cost savings.
(b) Reduction in the running of the Diesel Generator (DG) Sets during
power cuts in its various tower sites.
(ii) Technology Absorption: The Company has not imported any
technology. The Company has not yet established separate Research &
Development facilities.
FOREIGN EXCHANGE EARNINGS AND OUTGO:
During the year, there were no foreign exchange earnings; the total
foreign exchange outgo was to the tune of Rs. 1.94 millions, which was
on account of finance charges and travel expenses.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5(1) of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company is appended as
Annexure-5 to the Board's Report.
The Company does not have any employee whose particulars are required
to be furnished under Section 197 of the Companies Act, 2013, read with
Rule 5(2) of Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014.
The remuneration paid to all Key Managerial Personnel is in accordance
with remuneration policy adopted by the company.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy
are included in the Management Discussion & Analysis, which forms part
of this report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has formulated and published a Whistle Blower Policy to
provide Vigil Mechanism for employees including Directors of the
Company to report genuine concerns. The provisions of this policy are
in line with the provisions of Section 177(9) of the Act and the
revised Clause 49 of the Listing Agreement with Stock Exchange (URL:
http://www.connectzone.in/corporate_governance.php)
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92 of the Act and Rule 12 of The Companies
(Management and Administration) Rules, 2014, the extract of Annual
Return in Form MGT-9, is provided in Annexure-1 which forms part of
this report.
RELATED PARTY TRANSACTIONS
In line with the requirements of the Act and the Listing Agreement, the
Company has formulated a Policy on Related Party Transactions and the
same is posted on the Company's website (URL: http://
www.connectzone.in/corporate_governance.php).
Information on transaction with related parties pursuant to Section
134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts)
Rules, 2014 are given in Annexure-3 in Form AOC-2 and the same forms
part of this report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees and investments pursuant to
Section 186 of the Companies Act, 2013 are provided in Notes no. 3, 11
and 25 respectively to the the financial statements.
BOARD EVALUATION
The board of directors has carried out an annual evaluation of its own
performance, Board committees and individual directors pursuant to the
provisions of the Act and the corporate governance requirements as
prescribed by Securities and Exchange Board of India ("SEBI") under
Clause 49 of the Listing Agreement.
The performance of the Board was evaluated by the Board after seeking
inputs from all the directors on the basis of the criteria such as the
Board composition and structure, effectiveness of board processes,
information and functioning, etc. The performance of the committees was
evaluated by the board after seeking inputs from the committee members
on the basis of the criteria such as the composition of committees,
effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee ("NRC")
reviewed the performance of the individual directors on the basis of
the criteria such as the contribution of the individual director to the
Board and committee meetings like preparedness on the issues to be
discussed, meaningful and constructive contribution and inputs in
meetings, etc.
In a separate meeting of independent Directors, performance of non-
independent directors, performance of the board as a whole and
performance of the Chairman was evaluated, taking into account the
views of executive directors and non-executive directors. The same was
discussed in the board meeting that followed the meeting of the
independent Directors, at which the performance of the Board, its
committees and individual directors was also discussed.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company proactively keeps its Directors informed of the activities
of the Company, its management and operations and provides an overall
industry perspective as well as issues being faced by the industry. The
familiarization programme adopted by the Company is posted on the
website of the Company. (URL:
http://www.connectzone.in/corporate_governance.php).
REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND
OTHER EMPLOYEES
In terms of the provisions of Section 178(3) of the Act and Clause
49(IV) (B)(1) of the Listing Agreement, the Nomination & Remuneration
Committee (NRC) is responsible for formulating the criteria for
determining qualification, positive attributes and independence of a
Director. The NRC is also responsible for recommending to the Board a
policy relating to the remuneration of the Directors, Key Managerial
Personnel and other employees.
In line with this requirement, the Board has adopted the Policy
relating to the remuneration of the Directors, Key Managerial Personnel
and other employees and the same has been disclosed in the Corporate
Governance Report, which forms part of the Directors' Report. The same
is also available on the Company's website (URL:
http://www.connectzone.in/corporate_governance.php).
NUMBER OF MEETING OF THE BOARD
Six Meetings of the Board were held during the year. For details of the
meetings of the Board, refer to the Corporate Governance Report, which
forms part of this report.
THE DETAILS OF DIRECTORS WHO WERE APPOINTED OR HAVE RESIGNED DURING THE
YEAR
Pursuant to the provisions of Section 149 of the Companies Act, 2013,
Mr. Rahul Amarnath Sethi and Mr. Babu Mohanlal Panchal were appointed
as Independent Directors to hold Office of Director upto a term of five
consecutive years from the date of 67th Annual General meeting held on
September 30, 2014. Further, Ms. Mitu Mehrotra Goel was appointed as
Director liable to retire by rotation at the Annual General Meeting of
the Company held on September 30, 2014.
Subsequently, in order to further comply with the new requirements of
the provisions of Section 149 of the Companies Act, 2013 and the
provisions of Clause 49 of the Listing Agreement and so as to ensure
optimum composition of Independent Directors on various committees, the
Board of Directors thought it fit to appoint Mr. Vinay Kumar Monga as
Independent Director for a period of 5 years. Accordingly, the Board of
Directors of the Company at its meeting held on 17th October, 2014,
have made to continue the appointment of Mr. Vinay Kumar Monga as
Independent Director to hold Office upto a term of 5 consecutive years
from 17th October, 2014, not liable to retire by rotation. The terms
and conditions of appointment of Independent Directors are as per
Schedule IV of the Act. He has submitted a declaration that he meets
the criteria of Independence as provided in Section 149(6) of the Act
and there has been no change in circumstances which may affect his
status as Independent Director during the year.
The Company has also received a notice in writing along with requisite
deposit, from a member under Section 160 of the Companies Act, 2013,
signifying its intention to propose candidature of Mr. Vinay Kumar
Monga for confirmation/appointment to the Office of Director of the
Company as an Independent Director. On the recommendation of the
Nomination & Remuneration Committee, your Directors recommend the
confirmation/appointment of Mr. Vinay Kumar Monga as an Independent
Director at the ensuing Annual General Meeting, on the board upto a
term of five consecutive years w.e.f. October 17, 2014, not liable to
retire by rotation.
In terms of the provisions of Section 152 (6) of the Companies Act,
2013 and the Rules made there under, Ms. Mitu Mehrotra Goel, Director
retires by rotation and being eligible, has offered, herself for
re-appointment. The Board recommends her re-appointment at the ensuing
Annual General Meeting.
A brief profile of Directors seeking confirmation/appointment, nature
of expertise in specific functional area, name of other companies in
which he/she holds Directorship(s) and Membership(s)/ Chairmanship(s)
of the Committees of the Board of Directors and the particulars of the
shareholding as stipulated under Clause 49 of the Listing Agreement
entered with the Stock Exchange forms part of the Notice.
IDBI Bank Limited has with effect from April 21, 2014 nominated Mr.
Rajiv Kumar as its Nominee Director in the Board in place of Mr. Viney
Kumar. Further, Mr. Yatinder Vir Singh retired by rotation at the 67th
Annual General Meeting held on September 30, 2014 since not offered
himself for re-appointment.
During the year, the non-executive directors of the Company had no
pecuniary relationship or transactions with the Company.
THE DETAILS OF KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE
RESIGNED DURING THE YEAR
a. Changes in Key Managerial Personnel during the period 1st April,
2014 to 31st March, 2015
- Pursuant to the provisions of Section 196, 197 and 203 read with
Schedule V of the Companies Act, 2013, Mr. Kapil Bhalla was
re-appointed as Manager of the Company for a further period of three
years w.e.f. January 31, 2015 to January 30, 2018 on such terms and
conditions as approved by the Shareholders of the Company at the Annual
General Meeting of the Company held on September 30, 2014.
- Mr. Suniljit Singh, Chief Financial Officer of the Company had
resigned and ceased to be Chief Financial Officer of the Company w.e.f.
14th November, 2014.
- Mr. Ashu Ratan Khare was appointed as Chief Financial Officer of the
Company in place of Mr. Suniljit Singh w.e.f. 14th November, 2014.
b. Changes in Key Managerial Personnel during the period 1st April,
2015 till the date of signing of Board's Report
- Mr. Ashu Ratan Khare had resigned and ceased to be Chief Financial
Officer of the Company w.e.f. 15th April, 2015.
- Mr. Munish Bansal was appointed as Chief Financial Officer of the
Company in place of Mr. Ashu Ratan Khare w.e.f. 30th April, 2015.
- Mr. Kapil Bhalla, Company Secretary and Manager u/s 2(53) of the
Company had resigned and ceased to be Company Secretary and Manager
w.e.f. 23rd June, 2015.
- Mr. Amit Verma was appointed as Company Secretary of the Company in
place of Mr. Kapil Bhalla w.e.f. 1st July, 2015.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all Independent Directors of
the Company confirming that they meet with the criteria of
independence, as prescribed under section 149 of the Companies Act,
2013 and Clause 49 of the Listing Agreement. The Independent Directors
have also confirmed that they have complied with the company's code of
conduct.
AUDITORS
Pursuant to the provisions of Section 139 of the Companies Act, 2013
and the Rules framed thereunder, the Company had, on 30th September,
2014, appointed M/s Khandelwal Jain & Co., Chartered Accountants (Firm
Registration No.105049W), as Statutory Auditors of the Company for a
period of 5 years from the conclusion of the Sixty Seventh (67th)
Annual General Meeting of the Company upto the conclusion of Seventy
Second (72nd) Annual General Meeting of the Company.
As per the provisions of Rule 3(7) of the Companies (Audit and
Auditors) Rules, 2014, such appointment made by the company shall be
subject to ratification in every Annual General Meeting upto the end of
the tenure of appointment of the auditors.
M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai have
confirmed their eligibility in terms of the provisions of Section 141
of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors)
Rules, 2014.
The Board recommends the ratification of the appointment of M/s.
Khandelwal Jain & Co., Chartered Accountants, Mumbai from the
conclusion of this meeting i.e. 68th Annual General Meeting until the
conclusion of 72nd Annual General Meeting (subject to ratification by
the Members at every subsequent meeting) on such remuneration as shall
be fixed by the Board of Directors of the Company.
COST AUDITOR
The Central Government had directed vide its order no.52/26/CAB- 2010
dated 6th November, 2012 to conduct a Cost Audit in respect of the
specified products viz., Telecommunication Industry.
The Board of Directors of the Company has accorded its approval for the
appointment of M/s Sanjay Gupta & Associates, Cost Accountants, New
Delhi as Cost Auditors for the Financial Year 2015-16, as the Cost
Auditor of the Company, to conduct audit of the Cost Accounting Records
maintained by the Company for the financial year commencing on 1st
April, 2015 and ending on 31st March, 2016, subject to the approval of
the Central Government.
In accordance with the provisions of Section 148 of the Companies Act,
2013 read with the Companies (Audit & Auditors) Rules, 2014, the
remuneration payable to the Cost Auditor has to be ratified by the
members of the Company. Accordingly, consent of the Members is sought
by way of an Ordinary Resolution for ratification of the remuneration
amounting to Rs. 1,00,000/- (Rupees One Lac Only) plus applicable
service tax and out of pocket expenses payable to the Cost Auditors for
financial year commencing on 1st April, 2015.
In compliance with the provisions of the Companies (Cost Audit Report)
Rules, 2011 and General Circular No. 15/2011 issued by Government of
India, Ministry of Corporate Affairs, Cost Audit Branch, we hereby
submit that, the Company has fled the Cost Audit Report for the
financial year ended on 31st March, 2014 on 30th September, 2014. As
regards, to the financial year ended on 31st March, 2015, the due date
for fling the Cost Audit Report is 27th September, 2015 and the Company
shall file the same on or before due date.
In terms of Section 148 of the Companies Act, 2013 read with Companies
(Cost Records and Audit) Rules, 2014, the Company has appointed M/s
Sanjay Gupta & Associates, Cost Accountants, New Delhi as Cost Auditors
for the Financial Year 2015-16.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Mr. Dinesh Bhandhari
(CP No.:10300, FCS: 5887), Practicing Company Secretary to undertake
the secretarial audit of the company. The Practicing Company Secretary
has submitted the report on the Secretarial Audit conducted by him
which is annexed to this Board Report as Annexure-4. In connection with
the auditor's observation in the report, it is clarified that the
non-fling of Form CHG-1 in relation to creation of charge on assets of
the Company is mere accidental omission due to inadvertence. The
Company is in process of fling of Form CHG-1 with ROC.
INTERNAL AUDITORS
M/s Ernst and Young performs the duties of internal auditors of the
Company and their report is reviewed by the Audit Committee from time
to time.
CASH FLOW STATEMENT
As per the requirements of Clause 32 of the Listing Agreement with the
Stock Exchange, the Cash Flow Statement as prepared in accordance with
the Accounting Standard on Cash Flow Statement (AS 3) issued by the
Institute of Chartered Accountants of India, is given along with the
Balance Sheet and Statement of Profit and Loss.
AUDIT COMMITTEE
In compliance with the provisions of Section 177 of the Companies Act
2013 and Clause 49 of the Listing Agreement, the Company has
constituted an Audit Committee. The composition, scope and powers of
the Audit Committee together with details of meetings held during the
year under review, forms part of the Corporate Governance Report.
The recommendations of the Audit Committee are accepted by the Board.
RISK MANAGEMENT POLICY
The Company has a robust Risk Management policy to identify, evaluate
business risks and opportunities. This policy seeks to create
transparency, minimize adverse impact on the business objectives and
enhance the Company's competitive advantage. The policy defines the
risk management approach across the organization at various levels
including documentation and reporting. The Company has identified
various risks and also has mitigation plans for each risk identified.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the provisions of Section 205A and 205C of the Companies
Act, 1956, the Company has transferred an amount of Rs.10,86,059/-
which was credited by the Oriental Bank of Commerce, Mumbai towards
unpaid / unclaimed deposits / interest credited by the Bank on matured
deposits into the Escrow Account to the Investor Education and
Protection Fund ("IEPF") established by the Central Government. Members
are requested to note that upon transfer, no claims shall lie against
the Company or the IEPF in respect of any amounts which remained
unclaimed/unpaid for a period of seven years from the dates they first
became due for payment and no payment shall be made in respect of any
such claims.
As of March 31, 2015, there was no Unclaimed Dividend due for transfer
to the Investor Education and Protection Fund (IEPF) of the Central
Government, after the expiry of seven years.
SUBSIDIARY COMPANIES
As on March 31, 2015, the Company has a wholly owned subsidiary,
namely, Infotel Tower Infrastructure Private Limited, which carries on
the business of manpower outsourcing and trading activities related to
telecommunication operations.
Quadrant Telenet Services Private Limited was incorporated as
Subsidiary of the Company on March 30, 2015 to undertake the business
of Telecommunications, Internet Services, Telecom Infrastructures and
other related telecom services.
Videocon Mobile & Infra Private Limited (formerly Connect Teleinfra
Private Limited) was incorporated as Subsidiary Company of Infotel
Tower Infrastructure Private Limited on March 27, 2015 to undertake the
business of Telecommunications, Internet Services, Telecom
Infrastructures and other related telecom services. Hence, Videocon
Mobile & Infra Private Limited becomes step down subsidiary company of
the Company.
After the Balance Sheet date on May 30, 2015, the Company disinvested
its stake in its wholly owned subsidiary, namely, Infotel Tower
Infrastructure Private Limited. Accordingly, M/s Infotel Tower
Infrastructure Private Limited is ceased to be a subsidiary company of
the Company w.e.f. May 30, 2015, consequently, M/s Videocon Mobile &
Infra Private Limited also ceased to be a step down subsidiary company
of the Company.
As on the date of signing of this Report, the Company is having only
one subsidiary, namely, Quadrant Telenet Services Private Limited.
Pursuant to the provision of Section 129(3) of the Companies Act, 2013,
a statement containing salient features of the financial statements of
the Company's subsidiaries in Form AOC-1 is attached as Annexure-2 to
the financial statement of the Company.
Pursuant to the provisions of Section 136 of the Companies Act, 2013,
the financial statements of the Company, Consolidated financial
statements alongwith relevant documents and separate audited accounts
in respect of subsidiaries, are available on the website of the
Company.
Annual accounts of the subsidiary company, along with related
information are available for inspection at the Company's registered
Office and the registered Office of the respective subsidiary company.
Copies of the annual accounts of the subsidiary company will also be
made available to the shareholders - upon request.
JOINT VENTURES/ASSOCIATE COMPANIES
As of March 31, 2015, there are no Joint Ventures / Associate Companies
of the Company.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with Clause 32 of the Listing Agreement, the consolidated
financial statement prepared in accordance with the Accounting Standard
AS-21 read with Accounting Standard AS- 23 on Accounting for
Investments in Associates, your Directors have pleasure in presenting
the Consolidated Financial Statements together with Auditors Report
thereon forms part of the Annual Report.
AUDITORS' REPORT
The Statutory Auditors of the Company, M/s Khandelwal Jain & Co.,
Chartered Accountants, have submitted the Auditors' Report which has
observation on Standalone and Consolidated Financial Statements for the
period ended March 31, 2015.
MANAGEMENT'S EXPLANATION TO THE AUDITORS' OBSERVATIONS: -
A) Auditors' Observation in the Standalone Auditor's Report & Annexure
to the Auditor's Report
1. Point No.5 of the Auditor's Report which summarises the basis of
Emphasis of Matter "We draw attention to Note No.28 to the Financial
Statements, the Company has incurred a net loss of Rs.2,398,930,498/-
during the year, the accumulated losses as at March 31, 2015 amounted
to Rs.16,290,302,925/- resulting in erosion of its net worth and has
net current liabilities of Rs.11,325,415,028/- as at March 31, 2015.
These factors raise a doubt that the Company will not be able to
continue as a going concern. The management is confident of generating
cash flows from business operations through increasing subscribers base
and with the support of significant shareholders to fund its operating
and capital fund requirements. Accordingly, these statements have been
prepared on a going concern basis. Our opinion is not qualified in
respect of this matter."
2. Point No. VIII of the Annexure to Auditor's Report "The accumulated
losses of the Company are more than fifty percent of its net worth at
the end of the financial year. The Company has incurred cash loss
during the financial year and also in the immediately preceding
financial year.
Management's Explanations to the Auditor's Observations 1 and 2
The accumulated losses of the Company as at March 31, 2015 are more
than fifty percent of its networth as at that date. The losses are due
to declining market of the fixed line business and high operating
costs. The management is confident of generating cash flows from
business operations through increasing subscribers' base and other
value added services and reducing losses gradually. Further with the
support of significant shareholders to fund its operating and capital
expenditure. Management is confident of meeting its funds requirement.
B) Auditors' Observation in the Consolidated Auditor's Report &
Annexure to the Auditor's Report
5(a) In case of Holding Company we draw attention to Note No. 29(a) to
the financial statements, the Company has incurred a net loss of Rs.
2,398,930,498/- during the year, the accumulated losses as at March 31,
2015 amounted to Rs. 16,290,302,925/- resulting in, the erosion of its
net worth and has net current liabilities of Rs. 11,325,415,028/- as at
March 31, 2015. These factors raise a doubt that the Company will not
be able to continue as a going concern. The management is confident of
generating cash flows from business operations through increasing
subscribers' base and with the support of significant shareholders to
fund its operating and capital fund requirements. Accordingly, these
statements have been prepared on a going concern basis. Our opinion is
not qualified in respect of this matter.
5(b) In case of subsidiary Company ITIPL, We draw attention to Note
29(b) to the financial statements. The Company has incurred a loss of
Rs. 7,693,049 during the year (accumulated loss of Rs. 33,132,939)
resulting into erosion of its net worth as at March 31, 2015. These
factors raise a doubt that the Company will not be able to continue as
a going concern. The management is confident of generating cash flows
and meeting its capital fund requirement. Accordingly, these statements
have been prepared on a going concern basis. Our opinion is not
qualified in respect of this matter.
Management's Explanations to the Auditor's Observations 5(a) and 5(b)
In Consolidated terms, the company has incurred net loss of Rs.
2,406,623,553/- during the year and the accumulated losses as at March
31, 2015, amounted to Rs. 16,323,522,120/- resulting in, the erosion of
its netwoth and has net current liabilities of Rs. 11,355,217,330/- as
at March 31,2015.
The accumulated losses of the Company as at March 31, 2015, in
consolidated terms are more than fifty percent of its networth as at
that date. The losses are due to declining market of the fixed line
business and high operating costs. The management is confident of
generating cash flows from business operations through increasing
subscribers' base and other value added services and reducing losses
gradually. Further with the support of significant shareholders to fund
its operating and capital expenditure, Management is confident of
meeting funds requirement.
PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has in place a Prevention of Sexual Harassment policy in
line with the requirements of the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition and Redressal) Act, 2013. An
Internal Complaints Committee has been set up to redress complaints
received regarding sexual harassment. All employees (permanent,
contractual, temporary, trainees) are covered under this policy.
POLICY ON PREVENTION OF INSIDER TRADING
Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015,
the Company has framed a) Code of Internal Procedures and Conduct for
Regulating, Monitoring and Reporting of Trading by Insiders and b) Code
of Fair Disclosure. The Company's Code, inter alia, prohibits purchase
and/or sale of shares of the Company by an insider, while in possession
of unpublished price sensitive information in relation to the Company
and also during certain prohibited periods.
CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate
Governance. The detail report on Corporate Governance, Management
Discussion and Analysis Report as well as Corporate Governance
Compliance Certificate are attached pursuant to the requirements of
clause 49 of the listing agreement and form part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act, the Directors state that:
(a) In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(b) The Directors had selected such accounting policies and applied
consistently and have made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit and
loss of the Company for that period;
(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;
(e) The Directors had laid down internal financial controls to be
followed by the Company and such internal financial controls are
adequate and were operating effectively;
(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.
ACKNOWLEDGEMENTS
Your Directors wish to express their gratitude for the wholehearted
support received throughout the year from the Department of
Telecommunications, Financial Institutions, Banks, Lenders and the
various Central and State Government Departments, Business Associates,
Shareholders and Subscribers.
The Directors also extend their appreciation to the employees for their
continuing support and unstinting efforts in ensuring an excellent
all-round operational performance.
For and on behalf of the Board of Directors
Mitu Mehrotra Goel Vinay Kumar Monga
Director Director
(DIN: 05188846) (DIN: 03029345)
Place: Mohali
Date: August 13, 2015
Mar 31, 2014
Dear Shareholders,
The Directors are pleased to present the 67th (Sixty Seventh) Annual
Report on the business and operations of your Company with the Audited
Financial Statements for the year ended 31st March, 2014.
SUMMARY OF FINANCIAL RESULTS
The Company''s financial results for the year ended 31st March, 2014 is
summarized below:
(Rs. in millions)
Particulars For the year For the year
ended ended
March 31, 2014 March 31, 2013
I. Revenue from operations 4059.95 3295.65
II. Other Income 29.44 27.78
III. Total Income(I II) 4089.39 3323.43
IV. Expenses
Networks operation Expenditure 3784.12 2189.17
Employee Benefits Expenses 688.30 483.32
Sales & Marketing Expenditure 281.01 166.65
Finance Cost 273.00 280.62
Depreciation and Amortization 1267.80 1218.27
Expenses
Other Expenses 406.76 342.22
Total Expenses 6701.00 4680.26
V. Profit before exceptional and (2611.61) (1356.82)
extraordinary items and tax (III-IV)
VI. Exceptional Item - -
VII. Profit before extraordinary
items and (2611.61) (1356.82)
tax (V-VI)
VIII. Extraordinary items - -
IX. Profit before tax (VII-VIII) (2611.61) (1356.82)
X. Tax expenses - -
(1) Current Tax
(2) Deferred Tax
XI. Profit (Loss) for the period from (2611.61) 1356.82)
continuing operations (IX-X)
XII. Profit/(Loss) from discontinuing - -
operations
XIII. Tax expenses of discontinuing - -
operations
XIV. Profit/(Loss) from Discontinuing - -
operations (after tax)(XII-XIII)
XV. Profit /(Loss) for the
period (XI-XIV) (2611.61) (1356.82)
The Company registered revenue increased by 23% from Rs 3295.65 million
in 2012-13 to Rs 4059.95 million in 2013-14. The total expenses during
2013-14 increased to Rs.6701.00 million as against Rs. 4680.26 million
in the previous year due to an increase in the interconnect costs and
network operation costs.
Consequently, operating loss increased from Rs.1,356.82 million during
2012-13 to Rs. 2611.61 million during the year ended 31.03.2014.
BUSINESS OPERATIONS
Your Company holds Unifi ed Access Services License (UAS License) for
providing Telephony Services in the Punjab Telecom Service Area
comprising of the state of Punjab, Union Territory of Chandigarh and
Panchkula Town of Haryana. The Company is a Category -B (Punjab Circle)
ISP
Licensee and offers a broad range of internet related services
including Digital Subscriber Lines ("DSL") leased lines and dial-up
internet access. The ISP Licence is valid till June 2015 and Company
has applied for renewal / issuance of new ISP Licence (Category - A)
for expanding its services.
As of March 31, 2014 i.e. at the end of fourth year of operations of
GSM Mobile Services  the GSM Subscriber base touched 16,33,655
(Previous Year 13,76,202)
The Portfolio of services provided by the Company includes Data and
Internet Connectivity across wireline technology, Fixed Line and Mobile
voice services, Managed Services. The company has also launched its
post-paid services in the GSM Mobile Segment this year.
The Company provides broadband services through its fi ber optic cable
laid across Punjab and the Company has also entered into co-location
agreements with other operators in order to expand its network.
As on March 31, 2014, the Fixed Voice (Landline) Subscriber Base
touched 2,12,798 (previous year 1,87,944), Broadband DSL subscriber
base touched 1,40,600 (previous Year 1,19,879) witnessing a growth of
about 16%;the CDMA Mobile Services Segment subscriber base however
decreased to 3,069 subscribers (previous year 17,456) as the CDMA
Subscribers continued to shift to the GSM Services Segment of the
company by using the Mobile Number Portability (MNP) option.
MARKETING INITIATIVES
During the year, various marketing initiatives were taken in order to
enhance the brand visibility through various programs such as Young
Manch Contest, Connect Super Jodi Contest etc, in order to connect to
and reach out to a larger segment of the populace especially the
younger segment of society.
CORPORATE DEBT RESTRUCTURING SCHEME (CDR SCHEME)
Restructuring of Liabilities:
The Corporate Debt Restructuring Cell (CDR Cell) had vide its letter
no. CDR(JCP) 563/2009-10 dated August 13, 2009 approved a Corporate
Debt Restructuring Package (CDR Package) for the company, in order to
write off the losses and also to enable the company to service its
debts. As of March 31, 2014, the company has duly complied with the
terms and conditions as stipulated in the CDR Package except for the
''Reduction of Capital'', the status of which is as under:
Reduction of Share Capital:
As per the CDR Package the Issued, Subscribed and Paid up Equity Share
Capital of the Company was to be reduced by 90% i.e. from Rs. 612.26
Crores to Rs. 61.23 Crores by extinguishing/ canceling Rs.9/- per
equity share out of each equity share of Rs. 10/- each fully paid up,
in order to write- off the accumulated losses of the company.
Pursuant to the approval by BSE vide its letter dated October 23, 2013,
the company had fi led the Petition for Reduction of Equity Share
Capital with the Hon''ble Bombay High Court. Hon''ble Bombay High Court
has vide its Order dated July 4, 2014 granted its approval for the
proposed Reduction of Capital. Certifi ed copy of the Order has been fi
led with the Registrar of Companies, Mumbai, Maharashtra, for
registration. The reduction of capital would become effective
from the date of registration of the Court Order by the Registrar of
Companies, Mumbai, Maharashtra.
SHARE CAPIAL
During the year ended March 31, 2014, there was no change in issued,
subscribed and paid up equity share capital of the company which stood
at Rs. 6,12,26,02,680/- comprising of 61,22,60,268 equity shares of
Rs.10/- each, fully paid up. However, as detailed above in the
paragraph pertaining to ''Corporate Debt Restructuring Scheme'', the
company had fi led a Petition for Reduction of Capital and the Hon''ble
Bombay High Court has vide its Order dated July 4, 2014 granted its
approval for the Reduction of paid up Equity Share Capital. The
reduction would become effective from the date of registration of the
said Order by the Registrar of Companies, Mumbai, Maharashtra.
LISTING
The equity shares of your Compnay are listed on BSE Limited.
DIVIDEND
As on March, 31, 2014, the Company had accumulated losses. Your
Directors, therefore, have not recommended any dividend for the fi
nancial year 2013-14.
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to
reserves.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The Company,being in the telecommunications sector is not involved in
carrying on any manufacturing activity; accordingly, the information
required under Section 217(1)(e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, as amended,relating to Conservation of Energy
are not applicable.
However, the following information would give adequate idea of the
continuous efforts made by the Company in this regard:
(i) Energy Conservation:
(a) Electricity is used for the working of the Company''s telephone
exchanges and other network infrastructure equipment. The Company
regularly reviews power consumption patterns across its network and
implements requisite changes in the network or processes in order to
optimize power consumption and thereby achieve cost savings.
(b) Reduction in the running of the Diesel Generator (DG) Sets during
power cuts it its various tower sites.
(ii) Technology Absorption: The Company has not imported any
technology. The Company has not yet established separate Research &
Development facilities.
(iii) Foreign Exchange Earnings and Outgo: During the year, there were
no foreign exchange earnings; the total foreign exchange outgo was to
the tune of Rs. 32.70 millions, which was on account of fi nance
charges and travel expenses.
DIRECTORS
As of March 31, 2014, there was no change in the Directors of the
Company. However, IDBI Bank Ltd has w.e.f. April 21, 2014 nominated Mr.
Rajeev Kumar as its Nominee Director on the Board in place of Mr. Viney
Kumar. Your directors welcome Mr. Rajeev Kumar on his appointment and
place on record their sincere appreciation for the contribution made by
Mr. Viney Kumar during his tenure as Director.
Pursuant to the provisions of section 152 of the Companies Act, 2013
and in terms of the Articles of Association of the Company, Mr. Rahul
Amarnath Sethi and Mr. Yatinder Vir Singh, Directors of the Company,
are liable to retire by rotation at the ensuing Annual General Meeting
and being eligible Mr. Rahul Amarnath Sethi has offered himself for
appointment as Director.
The Company has received due notice under Section 160 of the Companies
Act, 2013 proposing the candidature of Ms. Mitu Mehrotra Goel for
appointment as director liable to retire by rotation, in place of Mr.
Yatinder Vir Singh. On the recommendation of the Nomination and
Remuneration Committee, your Directors recommend the appointment of Ms.
Mitu Mehrotra Goel in place of Mr. Yatinder Vir Singh.
In terms of the provisions of Section 160, the Company has received
requisite notice(s) in writing from members proposing the names of Mr.
Rahul Amarnath Sethi and Mr. Babu Mohanlal Panchal, for being
appointed as Independent Directors to hold Office for a term of five
consecutive years from the date of 67th Annual General Meeting, in
terms of the provisions of Section 149 and other applicable provisions
of the Companies Act, 2013.
The Company has received declarations from Mr. Rahul Amarnath Sethi and
Mr. Babu Mohanlal Panchal confi rming that they meet the criteria of
Independence as prescribed under Section 149(6) of the Companies Act,
2013 and Clause 49 of the Listing Agreement.
On the recommendation of the Nomination and Remuneration Committee,
your Directors recommend the appointment of Mr. Rahul Amarnath Sethi
and Mr. Babu Mohanlal Panchal as Independent Directors on the Board for
a term of five consecutive years from the date of the ensuing 67th
Annual General Meeting and they shall not be liable to retire by
rotation.
Annexure giving the brief profi le of each of the directors proposed to
be appointed, giving their details and specifying their expertise in
the specifi c functional areas as well as the public companies in which
they hold Directorship(s) and/ or Committee membership(s), is annexed
to the Notice and forms part thereof.
AUDITORS
M/s. Khandelwal Jain & Co., Chartered Accountants (Firm Registration
No. 105049W) were appointed as the Statutory Auditors of the Company in
the last Annual General Meeting and hold Office upto the conclusion of
the forthcoming Annual General Meeting.
In terms of the provisions of Section 139 of the newly enacted
Companies Act, 2013, a listed company can appoint or re- appoint an
audit fi rm as auditor for a maximum of two terms of five consecutive
years, each. Further, in terms of Rule 6 of Companies (Audit and
Auditors) Rules 2014, the term for which the Auditors have already
acted as Auditors (prior to the commencement of the Companies Act,
2013) shall also be taken into account for calculating the maximum
period of ten consecutive years. Since M/s Khandelwal Jain & Co. have
been the Auditors of the Company for a period of only four years (since
their appointment in 2010) they are eligible to be appointed for a
further 6 years;
M/s Khandelwal Jain & Co., have confi rmed their willingness and
eligibility for re-appointment as statutory auditors under Section 141
of the Companies Act, 2013 (Act). The Audit Committee has recommended
their re-appointment as Auditors for a further term of 5 consecutive
years.
Your directors therefore recommend the re-appointment of M/s Khandelwal
Jain & Co., Chartered Accountants, as the Auditors of the Company for a
further term of 5 consecutive years i.e. from the conclusion of the
67th Annual General Meeting until the conclusion of the 72nd Annual
General Meeting, subject to ratifi cation by the members in every
annual general meeting, as required under section 139 of the Act.
Your directors therefore recommend the approval of the proposed
resolution for appointment of M/s Khandelwal Jain & Co., Chartered
Accountants, as Auditors for a period of five years.
COST AUDITOR
In compliance with the Cost Audit directions issued by the Ministry of
Corporate Affairs (Cost Audit Branch) vide notifi cation no. Cost Audit
No. F.No. 52/26/CAB-2010 dated May 2, 2011 and November 6, 2012; the
Company has appointed M/s Sanjay Gupta & Associates, Cost Accountants
New Delhi, as the Cost Auditor for the financial year 2014- 15; in
accordance with the Companies Act, 2013 the Cost Auditor''s remuneration
is to be ratifi ed in the Annual General Meeting. Your directors
therefore recommend the approval of the Cost Auditor''s remuneration as
proposed in the Notice of the Annual General Meeting. The Cost Audit
report for the Financial Year ended March 31, 2013 was duly fi led on
September 27, 2013. The cost audit report for the financial year ended
March 31, 2014 will be fi led on or before the due date.
PARTICULARS OF EMPLOYEES
During the financial year 2013-14, there was no employee who was
drawing remuneration in excess of the monetary ceiling in accordance
with the revised provisions of Section 217 (2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975.
CASH FLOW STATEMENT
The Cash Flow Statement for the financial year ended March 31, 2014,
in conformity with the provisions of clause 32 of the Listing
Agreement, is annexed hereto.
AUDIT COMMITTEE
In compliance with the provisions of Section 177 of the Companies Act
2013 and Clause 49 of the Listing Agreement, the Company has
constituted an Audit Committee. The composition, scope and powers of
the Audit Committee together with details of meetings held during the
year under review, forms part of the Corporate Governance Report.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As of March 31, 2014, there was no Unclaimed Dividend due for transfer
to the Investor Education and Protection Fund (IEPF) of the Central
Government, after the expiry of seven years.
SUBSIDIARY
As on March 31, 2014, the Company has a wholly owned subsidiary,
namely, Infotel Tower Infrastructure Private Limited, which carries on
the business of manpower outsourcing and trading activities related to
telecommunication operations. Information on the Subsidiary in terms of
the provisions of Section 212 of the Companies Act, 1956 is annexed and
forms part of this Report as Annexure-I.
Pursuant to the General Circular No. 2/2011 dated February 8, 2011
issued by the Ministry of Corporate Affairs, Government of India, the
Board of Directors have consented for not attaching the balance sheet,
statement of profit & loss and other documents as set out in section
212(1) of the Companies Act, 1956 in respect of the subsidiary company
for the year ended March 31, 2014.
Annual accounts of the subsidiary company, along with related
information are available for inspection at the Company''s registered
Office and the registered Office of the subsidiary company. Copies of
the annual accounts of the subsidiary company will also be made
available to the shareholders - upon request.
The statement pursuant to the above referred circular has been annexed
as part of the Notes to Consolidated Accounts of the Company.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with Clause 32 of the Listing Agreement, the consolidated
financial statement prepared in accordance with the Accounting
Standard AS-21 read with Accounting Standard AS-23 on Accounting for
Investments in Associates, your Directors have pleasure in presenting
the Consolidated Financial Statements together with Auditors Report
thereon forms part of the Annual Report.
FIXED DEPOSITS
The Company has not accepted / renewed any deposits from the public
under section 58A of the Companies Act, 1956 during the year.
AUDITORS'' REPORT
The Statutory Auditors of the Company, M/s Khandelwal Jain & Co.,
Chartered Accountants, have submitted the Auditors'' Report which have
certain qualifi cations on Standalone and Consolidated Financial
Statements for the period ended March 31, 2014.
MANAGEMENT''S EXPLANATION TO THE AUDITORS'' OBSERVATIONS:
Auditors'' Observation
1. Point no. 4 of the Auditors Report which summarises the basis of
qualifi ed opinion "As mentioned in Note 27(8)(a) to the Financial
Statements, based on Company`s request, Corporate Debt Restructuring
(CDR) cell vide their letter dated August 13, 2009 (CDR letter) has
revised the terms of CDR scheme with effect from April 1, 2009. The
Company has accounted for the impact of revised CDR scheme as approved
by CDR Cell after complying with most of the terms and conditions
stipulated therein, however compliance of the some of them is still in
process. These financial statements do not include any adjustment
which may arise due to inability of the management to fulfi ll the
remaining conditions precedent."
Management''s Explanation
Except for the Reduction of Capital, the Company had given effect to
all the terms and conditions of the revised Corporate Debt
Restructuring (CDR) Scheme. As of March 31, 2014, Compliance of the
condition with regard to reduction of Issued, Subscribed and Paid-up
Equity Share Capital of the Company was under process. The Company had
fi led the petition for Reduction of Paid up Equity Capital and the
same has been approved by the Hon''ble Bombay High Court vide its Order
dated July 4, 2014. Certifi ed Copy of the Order has been fi led with
the Registrar of Companies, Mumbai, Maharashtra and the reduction would
become effective from the date of registration of the said Order by the
Registrar of Companies. Impact of reduction of capital would be refl
ected in the financials thereafter.
Auditors'' Observation
2. The accumulated loss of the Company as at March 31, 2014, is more
than fi fty percent of its net worth as at that date. The Company has
incurred cash loss during the period. In the immediately preceding fi
nancial year also, the company had incurred cash loss.
Management''s Explanation
The accumulated losses of the Company as at March 31, 2014 are more
than fi fty percent of its net worth as at that date. The management
acknowledges the erosion of net worth as stated by the Auditors. The
cash loss in the current year and cash profit in the previous year are
matters of fact fl owing from the audited financial statements. The
losses are due to declining market of the fi xed line business and high
operating cost. The management is confi dent of generating cash fl ows
from business operations through increasing subscribers base and other
value added services.
CORPORATE GOVERNANCE
The Company is committed to maintaining the highest standards of
Corporate Governance.
The detail report on Corporate Governance, Management Discussion and
Analysis Report as well as Corporate Governance Compliance certificate
are attached pursuant to the requirements of clause 49 of the listing
agreement and form part of this Annual Report.
HUMAN RESOURCE (HR) DEVELOPMENT
Human Resource Development is considered to be vital in any
organisation for the effective implementation of its business plans.
Constant endeavors'' are being made by the Company through various HR
policies and processes aimed for professional growth and opportunities
and recognitions of the employees in order to effectively motivate the
employees at all levels in the drive for growth and expansion of the
business. Regular innovative programs for learning and development are
also drawn up constantly in order to create an encouraging and
conducive work environment for empowering the employees at all levels
and maintaining a well structured reward and recognition mechanism. The
Company encourages its employees to strengthen their entrepreneurial
skills in order to enhance the Organization''s productivity and
creativity.
The Company has constituted a Grievance Redressal Committee (GRC) under
the provisions of Section 4 of Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. The committee meets
regularly to discuss if any complaint of sexual harassment have been
lodged. However no instance of sexual harassment was observed during
the period under review.
DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of provisions of Section 217 (2AA) of the Companies Act, 1956,
your Directors confi rm as under: -
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2014, the applicable accounting standards have
been followed along with proper explanations for any material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently, made changes wherever required,
disclosed the same in the financial statements wherever applicable and
made judgments and estimates that were reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2014 and of the loss incurred by the Company for the said
period;
(iii) that proper and suffi cient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities and
(iv) that the Directors have prepared the accounts for the financial
year ended 31st March, 2014 on a ''going concern'' basis.
ACKNOWLEDGEMENTS
Your Directors wish to express their gratitude for the wholehearted
support received throughout the year from the Department of
Telecommunications, Financial Institutions, Banks, Lenders and the
various Central and State Government Departments, Business Associates,
Shareholders and Subscribers.
Your Directors take this opportunity to put on record their sincere
appreciation for the contribution made by the employees at all levels.
For and on behalf of the Board of Directors
Yatinder Vir Singh Rahul Sethi
Director Director
Place : Mohali
Date : August 9, 2014
Mar 31, 2013
To the Members of QUADRANT TELEVENTURES LIMITED
The Directors have pleasure in presenting the 66th (Sixty Sixth)
Annual Report on the business and operations of the Company together
with the Audited Financial Statements for the year ended 31st March,
2013 .
SUMMARY OF FINANCIAL RESULTS
The summarized Financial Results for the. year ended 31st March, 2013
are as under:
(Rs. in Millions)
Particulars For the year For the year
ended ended
March 31, March 31,
2013 2012
I. Revenue from operations 3358.37 2813.02
II. Other Income 27.78 15.89
III. Total Income(I II) 3386.15 2828.91
IV. Expenses
Network operation Expenditure 2189.17 2164.99
Employee Benefits Expenses 483.32 446.22
Sales & Marketing Expenditure 229.37 203.78
Finance Cost 280.62 281.18
Depreciation and Amortisation 1218.27 1201.71
Expenses
Other Expenses 342.22 322.63
4742.97 4620.51
V. Profit (Loss) before exceptional (1356.82) (1791.60)
and extraordinary items and tax
(III-IV)
VI. Exceptional Item - -
VII. Profit (Loss) before extraordinary (1356.82) (1791.60)
items and tax (V-VT)
VIII. Extraordinary items - -
IX. Profit (Loss) before tax
(VII-VIII) (1356.82) (1791.60)
X. Tax expenses
(1) Current Tax - -
(2) Deferred Tax - -
XI. Profit (Loss) for the period from (1356.82) (1791.60)
continuing operations (IX-X)
XII. Profit/ (Loss) from - -
discontinuing operations
XIII.Tax expenses of discontinuing - -
operations
XIV. Profit/(Loss) from Discontinuing - -
operations (after tax)(XII-XIII)
XV. Profit /(Loss) for the period (1356.82) (1791.60)
(XI XIV)
PERFORMANCE
Your Company holds Unified Access Services License (UAS License) for
providing Telephony Services in the Punjab
Telecom Service Area comprising of state of Punjab, Union Territory of
Chandigarh and Panchkula Town of Haryana. Currently, the Company is
providing GSM Mobile Services, Fixed Voice (Landline) services, DSL
(Internet) services, Leased Line services and CDMA Mobile Services in
the Punjab Telecom Service Area.
As of March 31,2013 i.e. at the end of third year of operations of GSM
Mobile Services - the GSM Subscriber base touched 13,76,202 (Previous
Year 13,21,225).
As on March 31, 2013, the Fixed Voice (Landline) Subscriber Base
1,87,944 (previous year 2,00,044 ), Broadband DSL subscriber base
touched 1,19,879 (previous Year 1,15,538) witnessing a growth of about
4% and the CDMA Mobile Services Segment customer base stood at 17,456
subscribers (previous year 27,768) as CDMA Subscribers have opted to
shift to the GSM Services Segment by using Mobile Number Portability
(MNP) option.
The revenue from joperations increased by 19.38% from Rs.2,813.02
million in 2011-12 to Rs. 3,358.37 million in 2012-13. The total
expenses during 2012-13 increased to Rs. 4,742.97 million as against
Rs. 4,620.51 million in the previous year.
Loss during the year reduced from Rs. 1,791.60 million during 2011-12
to Rs. 1,356.82 million during the year 2012-13.
DIVIDEND
As on 31.03.2013, the Company had accumulated losses. Your Directors,
therefore, have not recommended any dividend for the financial year
2012-13.''
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to
reserves.
CORPORATE DEBT RESTRUCTURING SCHEME (CDR SCHEME)
Restructuring of Liabilities:
(i) Issuance of Non Convertible Debentures
In accordance with the Corporate Debt Restructuring Scheme (CDR Scheme)
approved by the Corporate Debt Restructuring Cell (CDR Cell) vide
letter No. CDR (JCP) 563/2009-10 dated August 13, 2009 and the
consequent approval of the shareholders, the Company has issued
31,969,088 Secured Non Convertible Debentures of Rs.100/- (Rupees One
Hundred only) each, fully paid up, aggregating Rs. 319,69,08,800 to the
Financial Institutions/Bank on January 21, 2013 by way of conversion of
50% of the outstanding debt.
(ii) Reduction of Share Capital:
In accordance With the terms and conditions of the Corporate Debt
Restructuring Package (CDR Package) and consequent to the approval of
the shareholders accorded at an Extra Ordinary General Meeting held on
18th July, 2012, the Company sought the approval from the Bombay Stock
Exchange (BSE) for the proposed reduction of issued, subscribed and
Paid up equity share capital of the Company by 90% i.e. from Rs. 612.26
Crores to Rs. 61.22 Crores by extinguishing/ cancelling Rs.9/- per
equity share out of each equity share of Rs. 10/- each fully paid up
(i.e. each equity share of Rs. 10/- each, fully paid up, would stand
reduced to Rs. 1/- per share, fully paid up) in order to write off the
accumulated losses to that extent as per the CDR Scheme. BSE, vide its
letter dated January 14, 2013 issued its "No objection" under clause
24(f) of Listing Agreement for the proposed Scheme of Reduction
allowing the Company '' to file the Petition with the Hon''ble High Court
at Mumbai; however, before the Petition could be filed, the Securities
& Exchange Board of India (SEBI) came out with a Circular No.
CIR/CFD/DIL/5/2013 dated 4th February, 2013 revising the norms for
restructuring/ reduction of share capital by Listed Companies viz.
requiring the "designated Stock Exchange" to also seek- clearance from
SEBI before giving clearance for any scheme of restructuring/ reduction
and also seeking shareholders approval by way of Postal Ballot;
Accordingly, the Company again approached BSE for seeking clarification
as to whether fresh approval would be required from shareholders for
effecting Reduction of capital; pending clarifications from BSE, SEBI
issued a further clarification vide No. CIR/CFD/DIL/8/2013 dated May
21, 2013 clarifying that shareholders'' approval by way of Postal Ballot
would be required only in those'' cases where fresh equity was proposed
to be allotted to the Promoters resulting in a change in the
shareholding pattern.
Pursuant to the aforesaid clarification, the Company has now submitted
fresh application to BSE (Designated Stock Exchange); the apprdval/
clearance from BSE is awaited where after the Company would be
proceeding to file the" petition with the Hon''ble High Court, Mumbai
.for seeking confirmatory orders for the reduction of
equity share capital.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The Company, being a telecom service provider, does not carry on any
manufacturing activity; accordingly, the information required under
Section 217(l)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, as amended, relating to Conservation of Energy are not
applicable. Nevertheless, the Company regularly take steps to conserve
energy. During the year under review, the Company has not spent any
amount on Research and Development and Technology Absorption.
During the year, there were no foreign exchange earnings; the total
foreign exchange outgo was to the tune of Rs. 60.11 millions, which was
on account of finance charges and travel expenses.
SHARE CAPITAL
During the year, there has been no change in the issued, subscribed and
paid up equity share capital of the company which stood at Rs.
6,122,602,680 consisting of 612,260,268 equity shares of Rs.10/- each,
fully paid up, as at March 31, 2013.
DIRECTORS
The Board of Directors comprises of five independent directors viz. Mr.
Rahul Sethi, Mr. Babu Mohanlal Panchal, Mr. Viney Kumar (Nominee
Director of IDBI Bank), Mr. Yatinder Vir Singh and Mr. Vinay Kumar
Monga.
Further, in accordance with the provisions of Section 255 of the
Companies Act, 1956 read with Article 104 and 105 of the Articles of
Association of the Company, Mr. Vinay Kumar Monga and Mr. Babu Mohanlal
Panchal are liable to retire by rotation at the forthcoming Annual
General Meeting and being eligible, offer themselves for
re-appointment.
Your Directors recommend their reappointment at the forthcoming Annual
General Meeting.
AUDITORS
The Statutory Auditors, M/s Khandelwal Jain & Co., - Chartered
Accountants, New Delhi hold office till the conclusion of the ensuing
Annual General Meeting of the Company and have confirmed their
willingness and eligibility for re-appointment under section 224(1B) of
the Companies Act, 1956. The Board of Directors recommend their
re-appointment as Statutory Auditors for the financial year 2013-14.
PARTICULARS OF EMPLOYEES
During the financial year 2012-13, there was no employee who was
drawing remuneration in excess of the monetary ceiling in accordance
with the revised provisions of Section 217 (2A) of the. Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility is a continuing commitment by business
to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as
well as of the local community and society at large. Your Company is
dedicated to serve the society at large. Commitment towards health,
safety and environment protection are the core values of the Company.
Continuous efforts are made to preserve the environment by undertaking
various measures such as plantation of trees, encouraging paperless
transactions and optimum use of '' natural resources
Your Company shall continue to undertake more activities and
initiatives to improve the quality of life and society at large.
LISTING
The equity shares of your Company are listed on BSE Limited.
CASH FLOW STATEMENT
The Cash Flow Statement for the financial year ended March 31,2013, in
conformity with the provisions of clause 32 of the Listing Agreement,
is annexed hereto.
COST AUDITOR
In compliance with the Cost Audit directions issued by the Ministry of
Corporate Affairs (Cost Audit Branch) vide notification no. Cost Audit
No. R No. 52/26/CAB - 2010 dated May 2,2011 and circular dated November
6,2012, the Company has appointed M/s Sanjay Gupta & Associates, Cost
Accountants New Delhi as the Cost Auditor for the financial year
2013-14. The Cost Audit Report for the Financial year 2012-13 will be
submitted on or before the due date.
AUDIT COMMITTEE
In compfiance with the provisions of Section 292A of the Companies Act,
1956 and provisions of Listing Agreement, the Company has constituted
an Audit Committee. The composition, scope and powers of the Audit
Committee together with details of meetings held during the year under
review, forms part of the Corporate Governance Report.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As of March 31,2013, there was no Unclaimed Dividend due for transfer
to the Investor Education and Protection Fund (IEPF) of the Central
Government after the expiry of seven years. However, unclaimed fixed
deposits have" been duly transferred to IEPf.
SUBSIDIARY
As on March 31, 2013, the Company has one wholly owned subsidiary,
namely, Infotel Tower Infrastructure Private Limited which carries on
the business of manpower outsourcing and trading activities related to
telecommunication operations. Information on the Subsidiary in terms of
the provisions of Section 212 of the Companies Act, 1956 is annexed and
forms part of this Report as Annexure-I.
Pursuant to the General Circular No. 2/2011 dated February 8,2011
issued by the Ministry of Corporate Affairs, Government of India, the
Board of Directors have consented for not attaching the balance sheet,
statement of profit & loss and other documents as set out in section
212(1) of the Companies Act, 1956 in respect of the subsidiary company
for the year ended March 31,2013.
Annual accounts of the subsidiary company, along with related
information are available for inspection at the Company''s registered
office and the registered office of the respective subsidiary company.
Copies of the annual accounts of the subsidiary company will also be
made available to the shareholders upon request.
The statement pursuant to the above referred circular has been annexed
as part of the Notes to Consolidated Accounts of the Company.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 pertaining to
Consolidated Financial Statement read with Accounting Standard AS-23 on
Accounting for Investments in Associates, your Directors have pleasure
in presenting the Consolidated Financial Statements, which form part of
the Annual Report & Accounts.
FIXED DEPOSITS
The Company has not accepted / renewed any deposits from the public
under section 58A of the Companies Act, 1956 during the year. The
Company had discontinued the NBFC business in the year 2004 and had not
accepted / renewed any deposit(s) thereafter; the entire outstanding
amounts of deposits had been transferred to an Escrow Account
maintained with Oriental Bank of Commerce. The Company has been making
the repayment of the amount of deposits out of the said Escrow Account
as per requests received from the depositors from time to time. Certain
amounts of deposits which were unclaimed for a period of seven years
have been duly transferred to the Investor Education and Protection
Fund (IEPF) Account of the Central Government, as and when they became
due for transfer, in terms of the provisions of section 205C of the
Companies Act, 1956.
AUDITORS'' REPORT
The Statutory Auditors of the Company, M/s Khandelwal Jain & Co.,
Chartered Accountants, have submitted the Auditors'' Report on the
accounts of the Company for the accounting period ended 31st March,
2013, which is self explanatory.
MANAGEMENT''S EXPLANATION TO THE AUDITORS'' OBSERVATIONS:
Auditors'' Observation
As mentioned in Note 27(8)(a) to the Financial Statements, based on
Company''s request, Corporate Debt Restructuring (CDR) cell vide their
letter dated August 13,2009 (CDR letter) has revised the terms of CDR
scheme with effect from April 1, 2009. The Company has accounted for
the impact of revised CDR scheme as approved by CDR Cell after
complying with most of the terms and conditions stipulated therein,
however compliance of the some of them is still in process. These
financial statements do not include any adjustment which may arise due
to inability of the management to fulfil the remaining conditions
precedent.
Management''s Explanation
The Company has given effect to most of the terms and conditions of the
revised Corporate Debt Restructuring (CDR) Scheme. Compliance of some
of the terms and conditions are under way. The Company is confident of
fulfilling the remaining conditions precedent for the complete
implementation of the Revised CDR Scheme and would fully implement the
remaining. terms of the Revised CDR Scheme on the completion of such
approvals and conditions precedent. The Management does not foresee any
financial implications on account of the delay in the implementation of
the same.
CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate
Governance.
The detailed Corporate Governance Report, Management Discussion and
Analysis Report as well as Corporate Governance Compliance Certificate
are attached pursuant to the requirements of clause 49 of the listing
agreement and forms part of this Annual Report.
HUMAN RESOURCE (HR) DEVELOPMENT
The Company''s HR policies and processes are continuously aimed at
intellectual growth and orientation in order to effectively motivate
the employees at all levels in the drive for growth and expansion of
the Organization''s business. Regular innovative programs for learning
and development are drawn up in order to create an encouraging work
environment for empowering the employees at all levels and maintaining
well structured reward and recognition mechanism. The Company
encourages its employees to strengthen their entrepreneurial skills in
order to enhance the Organization''s productivity and creativity.
DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of provisions of Section 217 (2AA) of the Companies Act, 1956,
your Directors confirm as under: -
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2013, the applicable accounting standards have
been followed along with proper explanations relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently, made changes wherever required,
disclosed the same in the financial statements wherever applicable and
made judgments and estimates that were reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2013 and of the loss of the Company for the said period;
(iii) that proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities and
(iv) that the Directors have prepared the accounts for the financial
year ended 31st March, 2013 on a ''going concern'' basis.
ACKNOWLEDGEMENT
Your Directors wish to express their gratitude for the wholehearted
support received throughout the year from the Department of
Telecommunications, Financial Institutions, Banks, Lenders and the
various Central and State Government Departments, Business Associates,
Shareholders and Subscribers.
Your Directors take this opportunity to put on record their sincere
appreciation for the contribution made by the employees at all levels.,
For and on behalf of the Board of Directors of
QUADRANT TELEVENTURES LIMITED
Babu Mohanlal Panchal Rahul Sethi
Director Director
Place: Mohali
Date: August 10,2013
Mar 31, 2012
To the Members of QUADRANT TELEVENTURES LIMITED
The Directors take pleasure in presenting the 65th (Sixty Fifth)
Annual Report of your Company together with the Audited Accounts for
financial year ended 31st March, 2012.
SUMMARY OF FINANCIAL RESULTS
The summarized Financial Results for the year ended 31st March, 2012
are as under:
(Rs. in million)
Particulars For the year For the year
ended ended
March 31, March 31,
2012 2011
I. Revenue from operations 2813.02 2360.51
II. Other Income 15.89 22.87
III. Total Income(I II) 2828.91 2383.38
IV. Expenses
Networks Operation Expenditure 2164.99 1978.56
Employee Benefits Expenses 446.22 453.78
Sales & Marketing Expenditure 203.78 402.31
Finance Cost 281.18 278.67
Depreciation and Amortisation 1201.71 1230.24
Expenses
Other Expenses 322.63 276.48
4620.51 4620.04
V. Profit before exceptional and (1791.60) (2236.67)
extraordinary items and tax (III-IV)
VI. Exceptional Item - -
VII. Profit before extraordinary items (1791.60) (2236.67)
and tax (V-VI)
VIII. Extraordinary items - -
IX. Profit before tax (VII-VIII) (1791.60) (2236.67)
X. Tax expenses
(1) Current Tax
(2) Deferred Tax
XI. Profit (Loss) for the period from (1791.60) (2236.67)
continuing operations (IX-X)
XII. Profit/(Loss) from discontinuing - -
operations
XIII.Tax expenses of discontinuing - -
operations
XIV. Profit/(Loss) from Discontinuing - -
operations (after tax)(XII-XIII)
XV. Profit /(Loss) for the period (1791.60) (2236.67)
(XI-XIV)
performance
The Company holds the uASL (unified Access Services License) for
providing Telephony Services in the Punjab Telecom Service Area
comprising of the state of Punjab, the union territory of Chandigarh
and the Panchkula Town of Haryana. Currently, the Company is providing
Fixed Voice (Landline) services, DSL (Internet) services, Leased Line
services, CDMA Mobile Services and GSM Mobile Services in the Punjab
Telecom Circle.
As on March 31, 2012, the Broadband DSL subscriber base touched
1,15,538 (previous Year 1,04,850) witnessing a growth of about 10%, and
the Fixed Voice (Landline) Subscriber Base touched 2,00,044 (previous
year 1,89,988 ); the CDMA Mobile Services Segment customer base at
27,768 subscribers (previous year 2,41,798 ) since many of the
Subscribers have opted to shift to the GSM Services of the Company by
using the Mobile Number Portability (MNP) option.
As of March 31, 2012, the GSM Mobile Services Segment customer base has
touched 13,21,225 (Previous year 12,27,493) at the end of second year
of operations.
The Revenue from operations of the Company increased by 19 % from
Rs.2360.51 million in 2010-11 to Rs.2813.02 million in 2011-12. The
Total Expenses changed marginally from Rs. 4620.04 million in 2010-11
to Rs. 4620.49 million in 2011-12.
Consequently the Loss during the year reduced from Rs. 2236.67 million
in 2010-11 to Rs. 1791.60 million in 2011-12.
DIVIDEND
As on 31.03.2012, the Company had accumulated losses. Your Directors,
therefore, have not recommended any dividend for the financial year
2011-12.
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to
reserves.
MATERIAL CHANGES AND COMMITMENTS OCCURRED BETwEEN THE END OF FINANCIAL
YEAR AND THE DATE OF REPORT
Restructuring of Liabilities:
In accordance with the terms and conditions of the Corporate Debt
Restructuring Package (CDR Package) approved by the Corporate Debt
Restructuring Cell (CDR Cell) vide its letter No. CDR (JCP) 563/2009-10
dated August 13, 2009 and the consequent upon the approval of the
shareholders the company had:
(i) The Company is currently in the process of completing all
documentation with IDBI Bank Ltd. and the Debenture Trustee for the
issuance of Secured Non Convertible Debentures of Rs.100/ - (Rupees One
Hundred only) each, fully paid up - aggregating Rs. 319.69 Crores - to
the Financial Institutions/Banks by way of conversion of 50% of the
Outstanding debt.
(ii) Reduction of Share Capital:
In accordance with the terms and conditions of the Corporate Debt
Restructuring Package (CDR Package) and the consequent approval by the
shareholders accorded in the Extra Ordinary General Meeting held on
18th July, 2012 the Company has already initiated the steps for the
reduction in the issued, subscribed and Paid up equity share capital of
the Company by 90% i.e. by extinguishing/ canceling Rs.9/ - per equity
share out of each equity share of Rs. 10/ - each fully paid up. Also
the face value of each share would stand reduced from Rs. 10/ - per
share to Rs. 1/ - per share, fully paid up. The Company has already
initiated the process for filing the petition with High Court for the
issuance of confirmatory orders for reduction of share capital by the
Hon'ble High Court.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Since the Company does not carry on any manufacturing activity, the
provisions of Section 217(1) (e) of the Companies Act, 1956 relating to
Conservation of Energy are not applicable. However, the Company is
regularly taking steps to conserve energy. During the year under
review, the Company has not spent any amount on Research and
Development and Technology Absorption.
During the year, there was no foreign exchange earnings, the total
foreign exchange outgo was to the tune of Rs. 34.69 million, which was
on account of import of material, finance charges and travel expense.
DIRECTORS
During the year, Mr. Rahul Sethi was appointed as an Additional
Director on the Board w.e.f.17* March, 2012 and holds office till the
date of the ensuing Annual General Meeting of the Company. The Company
has received notice in writing from a member in terms of the provisions
of section 257 of the Companies Act, 1956 signifying his intention to
propose the appointment of Mr. Rahul Sethi as Director of the Company.
Your Directors recommend his appointment as Director at the forthcoming
Annual General Meeting.
The Board of Directors comprises of five independent directors viz. Mr.
Rahul Sethi, Mr. Babu Mohanlal Panchal, Mr. Yatinder Vir Singh, Mr.
Viney Kumar (Nominee Director of IDBI Bank) and Mr. Vinay Kumar Monga.
In accordance with the provisions of Section 260 of the Companies Act,
1956 read with Article 104 of the Articles of Association of the
Company, Mr. Yatinder Vir Singh retires by rotation at the ensuing
Annual General Meeting and, being eligible, offer himself for
re-appointment.
Yours Directors recommend his appointment at the forthcoming Annual
General Meeting.
MANAGER UNDER SECTION 269 OF THE COMPANIES ACT, 1956
During the year under review, the Board of Directors have re-appointed
Mr. Kapil Bhalla as the Manager under section 269 of the Companies
Act,1956, for a further period of three years w.e.f. 31.01.2012 - on
the terms and conditions approved by the Remuneration Committee. Mr.
Kapil Bhalla was earlier appointed as Manager under section 269 of the
Companies Act, 1956 for a period of three years from 31.01.2009 to
30.01.2012. Further, the shareholders of the Company have approved the
reappointment of Mr. Kapil Bhalla as Manager u/s 269 of the Companies
Act, 1956 in the Extra Ordinary General Meeting held on 18th July,
2012. The terms of appointment and remuneration payable to the Manager
are within the limits specified under Schedule XIII of the Companies
Act, 1956.
AUDITORS
M/s Khandelwal Jain & Co., Chartered Accountants, who are appointed as
the Statutory Auditors of the Company in the 64th Annual General
Meeting of the Company, hold office until the conclusion of the
forthcoming Annual General Meeting. The Auditors had expressed their
willingness to act as the Statutory Auditors of the Company; the
Company has received the requisite certificate pursuant to section
224(1B) of the Companies Act, 1956 from M/s Khandelwal Jain & Co.,
regarding their eligibility for re-appointment. Your Directors
therefore recommend the appointment of M/s Khandelwal Jain & Co., as
the Statutory Auditors at the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES
During the financial year 2011-12, no employee was drawing remuneration
in excess of the monetary ceiling in accordance with the revised
provisions of Section 217 (2A) of the Companies Act, 1956, read with
Companies (Particulars of Employees) Rules, 1975, i.e. Rs. 60.00 Lacs
per annum, if employed for full year or Rs.5.00 Lacs per month, if
employed for part of the year.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility is a continuing commitment by business
to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as
well as of the local community and society at large.
Your Company is dedicated to serve the society at large. Commitment
towards health, safety and environment protection are the core values
of the Company. Your Company is continuously making efforts to preserve
the environment by undertaking various measures such as plantation of
trees, encouraging paperless transactions, optimum use of natural
resources etc.
Your Company shall continue to undertake more activities and
initiatives to improve the quality of life and society at large.
LISTING
The equity Shares of your Company are Listed on BSE Limited (Formerly
Bombay Stock Exchange Limited).
CASH FLOw STATEMENT
The Cash Flow Statement for the financial year ended 31st March, 2012,
in conformity with the provisions of clause 32 of the Listing agreement
with the Stock Exchange in India, is annexed hereto.
COST AUDITOR
In compliance with the Cost Audit directions issued by the Ministry of
Corporate Affairs (Cost Audit Branch) vide Notification No. Cost Audit
No. F. No. 52/26/CAB-2010 dated May 2, 2011, the Company has appointed
M/s Sanjay Gupta & Associates, Cost Accountants, New Delhi as the Cost
Auditors of the Company for the Financial year 2012-13.
AUDIT COMMITTEE
Pursuant to the provisions of Section 292A of the Companies Act, 1956
and provisions of the Listing Agreement, the Company has constituted an
Audit Committee. The composition, scope and powers of the Audit
Committee together with details of meetings held during the year under
review, forms part of Corporate Governance Report.
TRANSFER TO IEPF
As of March 31st, 2012, there was no payment of unclaimed dividend due
for transfer to the Investor Education and Protection Fund (IEPF)
account of the Central Government after expiry of seven years.
SUBSIDIARY
As on 31 March 2012 the Company has one Wholly owned Subsidiary namely,
Infotel Tower Infrastructure Private Limited, which carries on the
business of manpower outsourcing and trading activities related to
telecommunication operations. Information on the Subsidiary in terms of
the provisions of Section 212 of the Companies Act, 1956 is annexed and
forms part of this Report as Annexure I.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard 'AS-21' pertaining to
Consolidated Financial Statement read with Accounting Standard AS-23 on
Accounting for Investments in Associates, your Directors have pleasure
in presenting the Consolidated Financial Statements, which form part of
the Annual Report & Accounts.
FIXED DEPOSITS
The Company has not accepted / renewed any deposits from the public
under section 58A of the Companies Act, 1956 during the year. The
Company had discontinued the NBFC business in the year 2004 and
transferred the entire outstanding amounts to an Escrow Account
maintained with Oriental Bank of Commerce. In respect of the request
received from depositors from time to time, the Company has been making
the payment of the amount of deposits out of the said Escrow Account.
Certain amount of deposits which were unclaimed for a period of seven
years have been transferred to the Investor Education and Protection
Fund (IEPF) in terms of the provisions of section 205C of the Companies
Act, 1956 out of said Escrow Account, as and they became due.
AUDITORS' REPORT
The Statutory Auditors of the Company, M/s Khandelwal Jain & Co.,
Chartered Accountants, have submitted Auditors' Report on the accounts
of the Company for the accounting period ended 31st March, 2012 , which
is self explanatory.
MANAGEMENT'S EXPLANATION TO THE AUDITORS' OBSERVATIONS:
Auditors Observation
As mentioned in Note 27(8)(a) to the Financial Statements, based on
Company's request Corporate Debt Restructuring (CDR) cell vide their
letter dated August 13, 2009 (CDR letter) has revised the terms of CDR
scheme with effect from April 1, 2009. The Company has accounted for
the impact of revised CDR scheme as approved by CDR Cell after
complying with the most of the terms and conditions stipulated therein,
however compliance of the some of them is still in process. These
financial statements do not include any adjustment which may arise due
to inability of the management to fulfill the remaining conditions
precedent.
Management's Explanation
The Company has given effect to most of the terms and conditions of the
revised Corporate Debt Restructuring (CDR) Scheme. Compliance of some
of the terms and conditions are under way. The Company is confident of
fulfilling the remaining conditions precedent for the complete
implementation of the Revised CDR Scheme and would fully implement the
remaining terms of the Revised CDR Scheme on the completion of such
approvals and conditions precedent. The Management does not foresee any
financial implications on account of the delay in the implementation of
the same.
CORPORATE GOVERNANCE
Corporate Governance Report, Management Discussion and Analysis Report
as well as Corporate Governance Compliance Certificate are attached and
form part of this report.
HUMAN RESOURCE (HR) DEVELOPMENT
The Company's HR policies and processes are continuously aimed at
intellectual growth and orientation in order to effectively motivate
the employees at all levels in the drive for growth and expansion of
the Organization's business. Regular innovative programs for learning
and development are drawn up in order to create an encouraging work
environment for empowering the employees at all levels and maintaining
well structured reward and recognition mechanism. The Company
encourages its employees to strengthen their innovative skills in order
to enhance the Organization's productivity and creativity.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of provisions of Section 217 (2AA) of the Companies Act, 1956,
your Directors confirm as under: -
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2012 , the applicable accounting standards have
been followed along with proper explanations relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently, made changes wherever required,
disclosed the same in the financial statements wherever applicable and
made judgments and estimates that were reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2012 and of the loss of the Company for the said year;
(iii) that proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities and
(iv) that the Directors have prepared the accounts for the financial
year ended 31st March, 2012 on a going concern basis.
ACKNOWLEDGEMENTS
Your Directors wish to express their gratitude for the wholehearted
support received throughout the year from the Department of
Telecommunications, Financial Institutions, Banks, Lenders, various
Central and State Government Departments, Business Associates,
Shareholders and Subscribers.
Your Directors also take this opportunity to put on record their
sincere appreciation for the contribution made by the employees at all
levels.
For and on behalf of the Board of Directors of
QUADRANT TELEVENTURES LIMITED
Babu Mohanlal Panchal Yatinder Vir Singh
Director Director
Place : Mohali
Date : August 11, 2012
Mar 31, 2011
To the Members of
QUADRANT TELEVENTURES LIMITED
(Formerly HFCL Infotel Ltd.)
The Directors take pleasure in presenting the Sixty Fourth Annual
Report of your Company together with the Audited Accounts for the
financial year ended March 31, 2011.
SUMMARY OF FINANCIAL RESULTS
The summarized Financial Results for the year ended March 31,2011 are
as under:
(Rs. in millions)
Particulars For the For the
year year
ended ended
March 31, March 31,
2011 2010
Gross Income -
- Service Revenue 2360.51 1962.09
- Other Income 22.87 16.07
Total 2383.38 1978.16
Total Expenditure 3130.47 1964.01
Operating Profit before
Finance Charges, Depreciation,
Amortisation and Loss on sold/ (747.09) 14.15
discarded Fixed Assetsæ'
Diminution in Value of Investments - -
(Gain) on sale of Fixed Assets (24.75) (14.30)
Loss on sold/discarded Fixed
Assets and Capital work in progress - 19.00
Finance Cost 278.67 (704.24)
Foreign Exchange (Gain) / Loss (0.46) (34.61)
Depreciation and Amortisation 1230.24 950.17
Loss for the year before prior
period Expenditure and Tax 2230.79 201.87
Prior period Expenditure (net) 5.87 4.58
Loss for the year before Tax 2236.67 206.45
Provision for taxation for earlier
years - -
Loss for the year from ordinary and
extraordinary activities 2236.67 206.45
Loss brought forward from
previous year 11400.33 11193.88
Loss carried to the Balance Sheet 13637.00 11400.33
PERFORMANCE
The Company holds the UASL (Unified Access Services License) for
providing Telephony Services in the Punjab Telecom Service Area
comprising of the state of Punjab, the union territory of Chandigarh
and the Panchkula Town of Haryana. Currently, the Company is providing
Fixed Voice (Landline) services, DSL (Internet) services, Leased Line
services, CDMA Mobile Services and GSM Mobile Services in the Punjab
Telecom Circle.
As on March 31, 2011, the Broadband DSL subscriber base touched
1,04,850 (previous year 87,354) witnessing a growth of about 20%, 'and
the' Fixed Voice (Landline) Subscriber Base touched 1,89,988 (previous
year 154,743); the CDMA Mobile Services Segment customer base declined
by about 7% to 2,41,798 subscribers (previous year 2,59,456).
As of March 31, 2011, the GSM Mobile Services Segment customer base has
touched 12,27,493 (previous year 332), at the end of first year of
operations.
The Service Revenue of the Company increased by 20% from Rs. 1962.09
million in 2009-10 to Rs. 2360.51 million in 2010-11. However, in view
of the extensive GSM Network Rollout for launching its GSM Operations,
the Operating Expenses went up from Rs. 1964.01 million in 2009-10 to
Rs. 3130.47 million in 2010-11.
Consequently, the Operating Profits from Telecom Services (before
finance charges, depreciation and loss on sold/ discarded fixed assets)
reduced from Rs. 14.15 million in the year 2009-10 to Rs. (747.09)
million during the year ended March 31, 2011.
DIVIDEND
As on March 31, 2011, the Company had accumulated losses. Your
Directors, therefore, have not recommended any dividend for the
financial year 2010-11.
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to
reserves.
MATERIAL CHANGES AND COMMITMENTS OCCURRED BETWEEN THE END OF FINANCIAL
YEAR AND THE DATE OF REPORT
Restructuring of Liabilities:
In accordance with the terms and conditions of the Corporate Debt
Restructuring Package (CDR Package) approved by the Corporate Debt
Restructuring Cell (CDR Cell) vide its letter No. CDR (JCP) 563/2009-10
dated August 13, 2009 and the consequent approval of the terms and
conditions of the CDR Package by the shareholders through the process
of Postal Ballot the result of which was declared on September 3, 2010,
the company has:
(i) Repaid 25% of the Term Loan/ Interest outstanding to the Financial
Institutions/Banks à amounting to Rs. 159.84 crores - on July 06,2010
and July 07, 2010.
(ii) Issued 2% (two percent) Cumulative Redeemable Preference Shares of
Rs. 100/- (Rupees One Hundred only) each, fully paid up, aggregating
Rs. 159.84 crore to the Lenders on November 09, 2010, viz. Financial
Institution/Banks à by way of conversion of 25% of the outstanding.
(iii) The Company is presently, taking steps for the issuance of
Secured Non Convertible Debentures of Rs. 100/- (Rupees One Hundred
only) each, fully paid up aggregating Rs. 319.69 ;crores to the
Financial Institutions/Banks by way of conversion of 50% of the
Outstanding debt.
CHANGE OF NAME OF THE COMPANY
Pursuant to the approval of the shareholders accorded by way of Postal
Ballot on September 3, 2010 the name of the company was changed from
HFCL Infotei Limited to Quadrant Televentures Limited. Fresh
Certificate of Incorporation in this regard was issued by the Registrar
of Companies, Mumbai as of September 24,2010.
CHANGE OF REGISTERED OFFICE OF THE COMPANY
Pursuant to the approval of the shareholders accorded by way of Postal
Ballot on September 3, 2010, the Registered Office of the Company was
shifted from Mumbai to Aurangabad within the state ;of Maharashtra.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Since the Company does not carry on any manufacturing activity, the
provisions of Section 217(1) (e) of the Companies Act, 1956 relating to
Conservation of Energy are not applicable. However, the Company is
regularly taking steps to conserve energy. During the year under
review, the Company has not spent any amount on Research and
Development and Technology Absorption.
During the year, there were no foreign exchange earnings; the total
foreign exchange outgo was to the tune of Rs. 136.76 million, which was
on account of import of material, finance charges and travel expenses.
SHARE CAPITAL
The total issued, subscribed and pa|d up equity share capital of the
company comprises of 612,260,268 equity shares of Rs. 10/- each, fully
paid up aggregating Rs. 612,26 crores; the Equity Shares are listed on
the Bombay Stock Exchange.
VOLUNTARY DELISTING OF THE SHARES OF THE COMPANY FROM MADRAS STOCK
EXCHANGE
Pursuant to the application made by the Company for Voluntary Delisting
of its equity share capital from the Madras Stock Exchange (MSE), the
formal approval/ confirmation has been received from MSE on March 15,
20ll. The Equity Shares of the Company are now listed only on the
Bombay Stock Exchange (BSE).
DIRECTORS
The Board of Directors comprises of four independent directors viz. Mr,
Babu Mohanlal Panchal, Mr. Yatinder Vir Singh, Mr."S/ine'y Kumar
(Nominee Director of IDBI Bank) and Mr. Vinay Kumar Monga. Mr. Rajesh
Kandwal (Nominee Director of Life Insurance Corporation of India)
resigned from the Board of Directors with effect from December 22,
2010,
In accordance with Section 260 of the Companies Act, 1956 read with
Clause 104 of the Articles of Association of the Company, Mr. Babu
Mohanlal Panchal retires by rotation at the forthcoming Annual General
Meeting and being eligible offers himself for re-appointment.
Your Directors recommend his appointment at the forthcoming Annual
General Meeting.
AUDITORS
M/s Khandelwal Jain & Co., Chartered Accountants, who were appointed as
the Statutory Auditors of the Company in the 63rd Annual General
Meeting of the company, hold office until the conclusionof the
forthcoming Annual General Meeting. The Auditors have expressed their
willingness to act as the statutory Auditors of the Company; the
Company has received the requisite Certificate pursuant to Section
224(1B) of the Companies Act, 1956 from M/s Khandelwal Jain & Co. ,
regarding their eligibility for re-appointment Your Directors therefore
recommend the appointment of M/s Khandelwal Jain & Co. as the Statutory
Auditors at the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES
The details of employees drawing remuneration in excess of the monetary
ceiling in accordance with the revised provisions of Section 217 (2A)
of the Companies Act, 1956, read with Companies (Particulars of
Employees) Rules, 1975, during the financial year 2010-11, is annexed
as Annexure 'A' forms part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of provisions of Section 217 (2AA) of the Companies Act, 1956,
your Directors confirm as under: -
(i) that in the preparation of the annual accounts for the financial
year ended March 31, 2011, the applicable accounting standards have
been followed along with proper explanations relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently, made changes wherever required,
disclosed the same in the financial statements wherever applicable and
made judgments and estimates that were reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at
March 31, 2011 and of the loss of the Company for the said period;
(iii) that proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities and
(iv) that the Directors have prepared the accounts for the financial
year ended March 31, 2011 on a going concern basis.
SUBSIDIARY
The Company had promoted à Infotel Tower Infrastructure Private Limited
à a Subsidiary Company in 2008, with the object of creating
Infrastructure for telecom operations, manpower outsourcing and trading
activities related to telecommunication operations. During the year,
Infotel Tower Infrastructure Private Limited became a wholly owned
subsidiary of the Company; Information on Infotel Tower Infrastructure
Private Limited as required under Section 212 of the Companies Act,
1956 is provided in Annexure to this Report.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 pertaining to
Consolidated Financial Statement read with Accounting Standard AS-23 on
Accounting for Investments in Associates, your Directors have pleasure
in presenting the Consolidated Financial Statements, which form part of
the Annual Report & Accounts.
FIXED DEPOSITS
The Company has not accepted/renewed any deposits from the public under
section 58A of the Companies Act, 1956 during the year. The Company had
discontinued the NBFC business in the year 2004 and transferred the
entire outstanding amounts to an Escrow Account maintained with
Oriental Bank of Commerce. In respect of the request received from
depositors from time to time, the Company has been making the payment
of the amount of deposits out of the said Escrow Account. Certain
amount of deposits which were unclaimed for a period of seven years
have been transferred to the Investor Education and Protection Fund
(IEPF) in terms of the provisions of section 205C of the Companies Act,
1956 out of said Escrow Account, as and they became due. The unclaimed
amounts as at March 31, 2011 was Rs. 1.18 million.
AUDITORS' REPORT
The Statutory Auditors of the Company, M/ s. Khandelwal Jain & Co.,
Chartered Accountants, have submitted Auditors' Report on the accounts
of the Company for the accounting period ended March 31, 2011, which is
self explanatory.
MANAGEMENT'S EXPLANATION TO THE AUDITORS' OBSERVATIONS:
Auditors Observation
As mentioned in Note 8(a) of schedule 22 to the Financial Statements,
based on Company's request Corporate Debt Restructuring (CDR) cell vide
their letter dated August 13, 2009 (CDR letter) has revised the terms
of CDR scheme with effect from April 1, 2009. The Company has accounted
for the impact of revised CDR scheme as approved by CDR Cell after
complying with the most of the terms and conditions stipulated therein,
however compliance of the some of them is still in process. These
financial statements do not include any adjustment which may arise due
to inability of the management to fulfill the remaining conditions
precedent.
Management's Explanation
The Company has given effect to most of the terms and conditions of the
revised Corporate Debt Restructuring (CDR) Scheme. Compliance of some
of the terms and conditions are under way. The Company is confident of
fulfilling the remaining conditions precedent for the complete
implementation of the Revised CDR Scheme and would fully implement the
remaining terms of the Revised CDR Scheme on the completion of such
approvals and conditions precedent. The Management does not foresee any
financial implications on account of the delay in the implementation of
the same.
CORPORATE GOVERNANCE
Corporate Governance and Management Discussion and Analysis Reports as
well as Corporate Governance Compliance Certificate are being presented
as Annexure to this report.
HUMAN RESOURCE (HR) DEVELOPMENT
The Company's HR policies and processes are continuously aimed at
intellectual growth and orientation in order to effectively motivate
the employees at all levels in the drive for growth and expansion of
the Organization's business. Regular innovative programes for learning
and development are drawn up in order to create an encouraging work
environment for empowering the employees at all levels and maintaining
well structured reward and recognition mechanism. The Company
encourages its employees to strengthen their entrepreneurial skills in
order to enhance the Organization's productivity and creativity.
ACKNOWLEDGEMENTS
Your Directors wish to express their gratitude for the wholehearted
support received throughout the year from the Financial Institutions,
Banks/ Lenders various Central and State Government Departments,
Business Associates, Shareholders and Subscribers.
Your Directors take this opportunity to put on record their sincere
appreciation for the contribution made by the employees at all levels.
For and on behalf of the Board of Directors
(Babu Mohanlal Panchal) (Yatinder Vir Singh)
Director Director
Place: Mohali
Date : August 10, 2011
Mar 31, 2010
The Directors take pleasure in presenting the Sixty Third Annual
Report of your Company together with the Audited Accounts for the year
ended 31st March, 2010.
SUMMARY OF FINANCIAL RESULTS
The summarized Financial Results for the year ended 31st March, 2010
are as under:
(Rs. in millions)
Particulars For year For year
ended ended
March 31, March 31,
2010 2009
Gross Income -
- Service Revenue 1962.09 2235.71
- Other Income 16.07 13.85
Total 1978.16 2249.56
Total Expenditure 1964.01 2058.44
Operating Profit before Finance 14.15 191.12
Charges, Depreciation, Amortisation
and Loss on sold/discarded fixed
Assets
Diminution in Value of Investments - 717.67
(Gain) on sale of Fixed Assets (14.30) (337.23)
Loss on sold/discarded Fixed Assets 19.00 155.30
and Capital work in progress
Finance Cost (704.24) 678.29
Foreign Exchange (Gain) / Loss (34.61) 106.76
Depreciation and Amortisation 950.17 991.74
Loss for the year before prior period 201.87 2121.40
Expenditure and Tax
Prior period Expenditure (net) 4.58 20.66
Loss for the year before Tax 206.45 2142.07
Provision for taxation for earlier years
Fringe Benefits tax - 5.23
Loss for the year from ordinary and 206.45 2147.30
extraordinary activities
Loss brought forward from previous 11193.88 9151.02
year
Loss carried to the Balance Sheet 11400.33 11193.88
PERFORMANCE
Following the trend of past few years, fixed line phones market went
down in terms of number of customers as well as revenue. The downward
trend of falling fixed line revenue has affected your company and
therefore, during the year under review, there is a drop in the telecom
service revenue by 12% from Rs. 2235.71 million to Rs.1962.09 million
primarily because of drop in Fixed Line revenues due
to increased penetration of mobile services. Consequently Operating
Profits from telecom services before finance charges, depreciation, and
loss on sold / discarded fixed assets is reduced to Rs. 14.15 million
compared to the previous years figure of Rs. 191.12 million.
Various expenses optimization initiatives taken by the Company coupled
with reduction in direct variable expenses, has led to a reduction of
operating expenses by Rs. 94.43 million from Rs. 2058.44 million in FY
2009.
The Broadband DSL subscriber base at 87,354 (previous Year 68,902)
witnessed a growth of about 27 %, during the year. In CDMA mobile
customer base, there has been a decline of about 13% and the current
CDMA customer base is 259,456 (previous year 2,98,740).
As of March 2010, the Company has also launched its GSM Services in the
Punjab Service Area.
DIVIDEND
The Company has accumulated losses and your Directors, therefore, are
not in a position to recommend any dividend for the financial year
2009-10.
TRANSFER TO RESERVES
During the year under review, no amount has been transferred to
reserves.
MATERIAL CHANGES AND COMMITMENTS OCCURRED BETWEEN THE END OF FINANCIAL
YEAR AND THE DATE OF REPORT
Restructuring of Liabilities:
The Corporate Debt Restructuring Cell (CDR Cell) vide its letter No.
CDR (JCP) 563/2009-10 dated August 13,2009 has approved a restructuring
package w.e.f. April 1, 2009 which provided for the restructuring of
the term debt and also the induction of a strategic investor / change
of management. The various lenders viz. IDBI Bank Limited, Life
Insurance Corporation of India, Oriental Bank of Commerce, ING Vysya
Bank Limited, State Bank of Patiala, Punjab National Bank and HDFC Bank
Limited (collectively referred to as the "Lenders") have confirmed
their acceptance of the CDR Scheme.
Change of Management:
In terms of the stipulations of the CDR Cell for induction of a
strategic investor / change of management, as sanctioned by the CDR
Cell in terms of the CDR Package approved vide letter No.CDJ (JCP)
No.563/2009-10 dated August 13, 2009, M/s Quadrant Enterprises Private
Limited, has acquired the entire equity stake of Himachal Futuristic
Communications Limited (HFCL) comprising of 32,67,05,000 (Thirty Two
Crores Sixty Seven Lac and Five Thousand only) equity shares of the
Company (Shares) amounting to 53.3605% (approximately fifty three
percent) of the issued, subscribed
and paid up equity share capital of the Company, from the erstwhile
Promoters, Himachal Futuristic Communications Limited (HFCL). The
aforesaid transfer of the said equity shares was effected w.e.f. April
3, 2010.
Further in terms of the stipulations of the CDR Package for a change in
the management of the Company, all the erstwhile Directors (except the
nominees of Financial Institutions) namely Mr. Mahendra Nahata, Mr.
M.P.Shukla, Mr.S.Lakshmanan, Dr. R.M. Kastia and Mr. K.B. Lai have
resigned from the Board of Directors w.e.f. April 9, 2010 and Mr. Babu
Mohanlal Panchal, Mr. Yatinder Vir Singh and Mr. Vinay Kumar Monga
have been appointed as additional Directors on the Board of Directors
of the Company w.e.f. April 9, 2010. Further, in order to complete the
process of change in the management of the Company, as per the
stipulations of the CDR package, the senior management team comprising
of Mr. Surendra Lunia, Chief Executive Officer, Mr. Gurdial Singh,
Chief Operating Officer, and Mr. Vikash Agarwal, Vice President
(Corporate Finance) and Chief Financial Officer of the Company have
also resigned from the Company w.e.f. April 09, 2010.
Further, in accordance with the Corporate Debt Restructuring Scheme
("CDR Scheme") dated August 13, 2009 approved by the Corporate Debt
Restructuring Cell (CDR Cell), the Company is now in the process of
seeking the approval of the shareholders for the issuance of the
following Securities to the Lenders, viz. Financial Institution / Banks
by way of conversion of the amount outstanding and payable to them:
2% (two percent) Cumulative Redeemable Preference Shares of Rs.100/-
(Rupees One Hundred only) each, fully paid up, aggregating Rs.
1,59,84,543 (Rupees One Crore Fifty Nine Lakh Eighty Four Thousand Five
Hundred Forty Three only); and
Secured Non Convertible Debentures of Rs.100/-(Rupees One Hundred only)
each, fully paid up, aggregating Rs. 3,19,69,088 (Rupees Three Crores
Ninteen Lakhs, Sixty Nine Thousand and Eighty Eight only).
During the period under review, the Company has also acquired the
beneficial interest in the 20 equity shares at face value of Rs 10 each
of its Subsidiary Company - Infotel Tower Infrastructure Private
Limited (ITTPL ) w.e.f. April 09, 2010, from the original subscribers
to the Memorandum of Association of LTCPL, where upon Infotel Tower
Infrastructure Private Limited has now become a wholly owned subsidiary
of the Company w.e.f. April 09, 2010.
CHANGE OF REGISTERED OFFICE OF THE COMPANY:
The Company Law Board vide its Order dated August 31, 2009 had accorded
its approval for shifting of Registered Office of the Company from the
state of Punjab to State of Maharashtra. Consequently, the company
filed the requisite documents with the Registrar of Companies, Mumbai.
The Certificate confirming the change of Registered office was issued
by the ROC Mumbai on December 01, 2009.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Since the Company does not carry on any manufacturing activity, the
provisions of Section 217(l)(e) of the Companies Act, 1956 relating to
Conservation of Energy are not applicable. However, the Company is
regularly taking steps to conserve energy. During the year under
review, the Company has not spent any amount on Research and
Development and Technology Absorption.
During the year, there were no foreign exchange earnings; the total
foreign exchange outgo was to the tune of Rs. 262.69 million, which was
on account of import of material, finance charges and travel expenses.
SHARE CAPITAL
The total issued, subscribed and paid up equity share capital of the
company comprises of 612,260,268 equity shares of Rs.10/- each and the
whole of Equity Shares are listed on the Bombay Stock Exchange and
Madras Stock Exchange.
DIRECTORS
IDBI Bank Limited nominated Mr. Viney Kumar, as its Nominee Director on
the Board of the Company w.e.f September 29, 2009 in place of Mr. R.K.
Bansal.
In terms of the stipulations of the Corporate Debt Restructuring Cell
(CDR Cell) for induction of a strategic investor / change of
management, as sanctioned in terms of its CDR Package approved vide
letter No. CDJ (JCP) No. 563/2009-10 dated August 13, 2009, Mr.
Mahendra Nahata, Mr. M.P.Shukla, Mr.S.Lakshmanan, Dr.R.M.Kastia and Mr.
K.B.Lai have resigned as Directors from the Board of Directors of the
Company w.e.f. April 9, 2010 and Mr. Babu Mohanlal Panchal, Mr.
Yatinder Vir Singh and Mr. Vinay Kumar Monga have been appointed as
Additional Directors on the Board w.e.f April 9, 2010 and hold office
till the date of the ensuing Annual General Meeting of the Company. The
Company has received notices in writing from Members in terms of the
provisions of section 257 of the Companies Act, 1956 signifying their
intention to propose the appointment of Mr. Babu Mohanlal Panchal, Mr.
Yatinder Vir Singh and Mr. Vinay Kumar Monga as Directors of the
Company. Your Board of Directors recommend their appointment as
Directors.
In view of the aforesaid change in the Board of Directors, none of the
Directors is liable to retire by rotation in the ensuing Annual General
Meeting, in accordance with the Articles of Association of the Company
and the provisions of the Companies Act, 1956,
AUDITORS
M/s Atul Kulshrestha & Co., Chartered Accountants, had resigned as
Statutory Auditors of the Company w.e.f.
March 15, 2010. M/s S.R. Batliboi & Associates, Chartered Accountants,
hold office till the conclusion of the ensuing Annual General Meeting
and have conveyed their inability to offer themselves for reappointment
at the forthcoming Annual General Meeting of the Company.
M/s Khandelwai Jain & Co., Chartered Accountants, New Delhi, have
offered their appointment as Statutory Auditors. Your Directors
recommend the appointment of M/s Khandelwai Jain & Co. as the Statutory
Auditors for the Financial Year 2010-2011 at the forthcoming Annual
General Meeting to hold office till the conclusion of next Annual
General Meeting.
PARTICULARS OF EMPLOYEES
The details of employees drawing remuneration in excess of the monetary
ceiling in accordance with the provisions of Section 217 (2A) of the
Companies Act, 1956, read with Companies (Particulars of Employees)
Rules, 1975, during the financial year 2009-10, is annexed to this
report as Annexure A.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of provisions of Section 217 (2AA) of the Companies Act, 1956,
your Directors confirm as under: -
(i) that in the preparation of the annual accounts for the financial
year ended 31st Maich, 2010, the applicable accounting standards have
been followed along with proper explanations relating to material
departures;
(ii) that the Directors have selected appropriate accounting policies
and applied them consistently, made changes wherever required,
disclosed the same in the financial statements wherever applicable and
made judgments and estimates that were reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2010 and of the lor,s of the Company for the said period;
(iii) that proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities and
(iv) that the Directors have prepared the accounts for the financial
year ended 31st March, 2010 on a going concern basis.
SUBSIDIARY
Infotel Tower Infrastructure Private Limited is a wholly owned
subsidiary of the Company, dealing with the object of creating
Infrastructure for telecom operations, manpower outsourcing and trading
activities related to telecommunication operations.
Information on subsidiary company required under Section 212 of the
Companies Act, 1956 is provided in Annexure to this report.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 pertaining to
Consolidated Financial Statement read with Accounting Standard AS-23 on
Accounting for Investments in Associates, vour Directors have pleasure
in presenting the Consolidated Financial Statements, which form part of
the Annual Report & Accounts.
FIXED DEPOSITS
The Company has not accepted / renewed any deposits from the public
under section 58A of the Companies Act, 1956 during the year. The
Company had discontinued the NBFC business in the year 2004 and
transferred the outstanding amounts to an Escrow Account maintained
with Oriental Bank of Commerce. In respect of the request received from
depositors from time to time, the Company has been making the payment
of the amount of deposits out of the said Escrow Account. Certain
amount of deposits which were unclaimed for a period of seven years
have been transferred to Investor Education and Protection Fund (IEPF)
under section 205C of the Companies Act, 1956 out of said Escrow
Account. The unclaimed amount as at March 31, 2010 was Ks. 1.31
million.
AUDITORS REPORT
The Statutory Auditors of the Company have submitted Auditors Report
on the accounts of the Company for the accounting period ended 31st
March, 2010, which is self explanatory.
MANAGEMENTS EXPLANATION TO THE AUDITORS OBSERVATIONS:
Auditors Observation
1 Note 9 (a) of Schedule 23 of the financial statements wherein based
on Companys request Corporate Debt Restructuring Cell CCDR) vide
their letter no CDR (JCP) No 563/2009-10 dated August 13, 2009(CDR
letter) has revised the terms of CDR scJieme with effect from April 1,
2009. During the year ended March 31, 2010, based on confirmations from
lenders and the ability of the management to fulfill all conditions in
the precedent to the implementation of the Revised CDR Scheme, the
Company has given effect to the terms of the Revised CDR Scheme
(without considering any interest costs based on yield with respect to
proposed restructuring of 25 percent loan into Cumulative Redeemable
preference Shares) and recognised interest costs for the period from
April 1, 2009 based on such Scheme and, accordingly, reversed the
provision for interest and interest costs of Rs 1,025,846,205. Tlie
Company is confident of fulfilling the remaining conditions precedent
for the implementation of the Revised CDR Scheme and would fidly
implement the terms of the Revised CDR Scheme on the completion of such
approvals and conditions precedent. The
Company has also not made any provision for license fee on such
reversal as based on the judgement of Telecom Disputes Settlement &
Appellate Tribunal (TDSAT) as it believes that no license fee is
leviable. Had the Company followed the old CDR scheme the loss before
taxes would have been higher by Rs 724,507,265 before taxes. These
financial statements do not include any adjustment which may arise due
to inability of the management to complete balance conditions
precedent.
Managements Explanation
Corporate Debt Restructuring Cell (CDR) vide their letter no CDR
(JCP) No 563 / 2009-10 dated August 13, 2009(CDR letter) has revised
the terms of CDR scheme with effect from April 1, 2009. During the year
ended March 31, 2010, based on confirmations from lenders and the
ability of the management to fulfill all conditions in the precedent to
the implementation of the Revised CDR Scheme, the Company has given
effect to the terms of the Revised CDR Scheme and recognised interest
costs for the period from April 1, 2009 based on such Scheme and,
accordingly, reversed the provision for interest and interest costs of
Rs 1,025,846,205. The Company is confident of fulfilling the remaining
conditions precedent for the implementation of the Revised CDR Scheme
and would fully implement the terms of the Revised CDR Scheme on the
completion of such approvals and conditions precedent. The Company has
also not made any provision for license fee on such reversal as based
on the judgment of the Honble Telecom Disputes Settlement & Appellate
Tribunal (TDSAT) as it believes that no license fee is leviable.
Auditors Observation
2. Note 16 (b) of Schedule 23 of the financial statements wherein the
Company has obtained advance ofRs. 1,517,500,000 from a non shareholder
Company/Promoter to fund the entry fee for using alternate technology
under existing Unified Access Service License (UASL) for Punjab Service
Area during March 31, 2008. The terms and conditions with respect to
tenure, interest, rights and obligations etc. are yet to be finalised
hence we are unable to comment on the carrying value and thereby its
impact on the profit and loss for the year. Our audit report on the
financial statements for the year ended March 31, 2009 zvas modified,
accordingly;
Managements Explanation
The Company has obtained an advance of Rs. 1,517.50 million from a
non-shareholder Company to meet the payment of License fee to DOT for
starting GSM services under the Companys Unified Access Service
License for Punjab Service Area. The amount of aforsaid advance is
adjustable or refundable on such terms and conditions as may be mutuary
agreed.
Auditors Observation
3. Undisputed statutory dues including provident fund, investor
education and protection fund, employees state insurance, sales-tax,
wealth tax, customs duty, cess and other material statutory dues
applicable to it have generally been regularly deposited with the
appropriate authorities except there has been delays in many cases in
respect of deposit of service tax and withholding tax. The provisions
relating to excise duty is not applicable to the Company.
Managements Explanation
There have been occasional delays in deposit of service tax and
withholding tax by the Company. The delays were on account of temporary
cash flow mismatch and the dues have been paid subsequently along with
applicable interest.
Auditors Observation
4. Without considering the matters reported in paragraph 5 of our main
audit report, the effects of which are currently not ascertainable the
accumulated losses of the Company as at March 31, 2010, are more than
fifty percent of its net worth as at that date. The Company, has
incurred a cash loss ofRs 74,798,095 and Rs 881,292,798 during the year
and immediately preceding financial year before considering interest
provision on yield basis of Rs 227,329,338 and Rs 66,602,849
respectively.
Managements Explanation
The accumulated losses of the Company as at March 31, 2010, are more
than fifty percent of its net worth as at that date. The management
acknowledges the erosion of net worth as stated by the Auditors. The
cash loss in the current year and cash profit in the previous year are
matters of fact flowing from the audited financial statements. The
losses are due to declining market of the fixed line business and the
CDMA business. The Company has therefore decided to enter the GSM
mobile segment to reverse this trend.
Auditors Observation
5. Based on our audit procedures and as per the information and
explanations given by the management, the Company has defaulted in
payment of interest due to a financial institution and banks as
presented below. Tlte Company has no outstanding dues to debenture
liolders. Due to the delays above, the Company Ims paid Rs 192,252 as
penal interest to financial institution and banks.
Managements Explanation
There have been delays in interest payments payable to financial
institutions and banks due to the tight cash flow situation being faced
by the Company. The due dates and the actual dates of payments are
tabulated in the annexure audit report at para number xi. The Company
is in the process of arranging long term funds to manage this situation
and to enter the GSM mobile segment for improving the cash flow
situation
6. According to the information and explanations given to us and on an
overall examination of the balance sheet and cash flow statement of the
Company, we report that at the year end, the Company has used funds
amounting to Rs 4,724,502,525 raised on short-term basis (primarily
representing loans and Creditors) have been used for long-term
investment (primarily representing accumulated losses).
Managements Explanation
The company has used short term funds of Rs 4,724,502,525 for purchase
of fixed assets pending mobilization of equity capital and long term
debt for funding expansion. Please refer to line item "net cash
generated from operating activities (A) and net cash generated from /
(used in) financing activities (C)" in the Cash Flow Statement)
CORPORATE GOVERNANCE
Corporate Governance and Management Discussion and Analysis Reports as
well as Corporate Governance Compliance Certificate are being presented
as Annexure to this report.
HUMAN RESOURCE (HR) DEVELOPMENT
The Companys HR policies and processes are continuously aimed at
intellectual growth and orientation in order to effectively motivate
the employees at all levels in the drive for growth and expansion of
the Organizations business. Regular innovative programmes for learning
and development are drawn up in order to create an encouraging work
environment for empowering the employees at all levels and maintaining
well structured reward and recognition mechanism. The Company
encourages its employees to strengthen their entrepreneurial skills in
order to enhance the Organizations productivity and creativity.
ACKNOWLEDGEMENTS
Your Directors wish to express their gratitude for the wholehearted
support received throughout the year from the Financial Institutions,
Banks / Lenders various Central and State Government Departments,
Business Associates, Shareholders and Subscribers.
Your Directors take this opportunity to put on record their sincere
appreciation for the contribution made by the employees at all levels.
For and on behalf of the Board of Directors
(Babu Mohanlal Panchal) (Yatinder Vir Singh)
Director Director
Place: Mumbai Date:
July 12, 2010
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