DIRECTORS REPORT Your Directors submit Twenty Seventh Annual Report together with the Audited Accounts for the year ended March 31, 2015 2. RESULTS OF OPERATIONS AND BUSINESS OVERVIEW Results of Operations The financial highlights on standalone basis for the year are as follows: • Revenue for the financial period under review was Rs. 2,069.41 Cr. as against Rs. 2,265.11 Cr. for the previous financial year. GTL, a Global Group Enterprise is a diversified technology and Infrastructure services Company focused on Telecom and Power businesses. Consequent to the enactment of the Companies Act, 2013 (the Act) applicable from April 1, 2014, the Company has reassessed the remaining useful life of fixed assets under Schedule II to the Act. This has resulted in additional charge of depreciation of Rs. 26.54 Cr. for the year ended March 31, 2015. In January 2010, the Company had sought shareholders consent for investment in tower companies, GTL Infrastructure Limited (GIL) and Chennai Network Infrastructure Limited (CNIL), for expansion of telecom network of tower companies by purchase of tower business of Aircel. CNIL acquired tower portfolio of Aircel in the year 2010 with commitment from Aircel for 20,000 additional telecom sites over three years. In turn, the Company was expecting revenue worth Rs. 17,100 Cr. from CNIL / Aircel during the year 2010 to 2015. Unfortunately, Aircel cancelled / terminated its plan to expand 20,000 towers in July 2013. Consequently, the Company suffered huge losses due to loss of business opportunities, which also resulted in pile-up of inventory and suppliers advances. The Company is negotiating with suppliers of advances given and as a prudent accounting practice, has provided an amount of Rs. 10,600 Lac against these advances. As part of settlement, the Company received an amount of Rs. 34,500 Lac from Aircel Group of companies, which inter-alia includes payment for settlement towards the vendors various claims. The Power Management segment has been substantially affected by the losses plagued by Discoms and their restructure and the reduction in tariffs by various Governments and also termination of Distribution Franchisee (DF) agreement during the third quarter of FY 2014-15 by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) on account of certain contractual issues. This business has, as a result, been discontinued by the Company. The Network Services segment continues to be impacted by cancellation of 2G licenses, Aircel group's suspension of ROFR commitments / tenancy commitments, slower 3G & BWA expansion, suspension of BSNL expansion and general economic slowdown. Thus, in view of overall set-back in Company's business operations, cash losses have been incurred which has resulted in substantial erosion of the Company's net worth. Going Concern At the outset, it may be noted that the management neither intends to liquidate the Company nor cease operations entirely. Moreover, the management believes that there are realistic and concrete alternatives which would prevent the occurrence of such eventualities. For reasons beyond the control of the Company's management (including the factors which have adversely impacted the telecommunication and power sectors in India as a whole), the Company was constrained to restructure its debt under the Corporate Debt Restructuring (CDR) mechanism effective July 2011. The CDR proposal also envisaged certain restructuring of the existing External Commercial Borrowings (ECB) and the Non-Convertible Debentures (NCDs) issued by the Company. However, on account of certain inter-creditor issues, these restructuring could not be implemented and are consequently delayed. These issues have resulted in legal proceedings being initiated against the Company in few forums, including a winding up petition filed by the NCD Holder before the High Court of Bombay. In the said proceedings, the CDR and ECB lenders have intervened. In view of the debt burden, the slow revival of the telecommunication sector and the termination of the power business, there may be doubts on the Company's ability to repay its creditors. However, the management is of the view that such events or conditions can be mitigated / counter balanced by the fact that the Company has submitted a negotiated / One-Time Settlement (OTS) plan for settlement of the outstanding debt with all of its lenders (CDR, ECB and NCD). The proceeds as may be realized from sale of certain business divisions and sale of assets and investments, some of which are already contemplated under the approved CDR package will be utilized towards meeting settlement proposal. The OTS proposal and certain other inter-creditor issues (as required by the High Court of Bombay) are currently being considered before the CDR lender forum. The issue is therefore sub-judicebefore the High Court of Bombay. The management is of the reasonable opinion that the OTS proposal will be finally approved by ECB, NCD & CDR lenders of the Company. Post such approval and implementation of such OTS proposal, the above mentioned circumstances and events which could cast an impact on the Company's debt repayment would cease to exist. The Company, which is and always has been inherently a services company, would be in a position to continue with services operations which it currently undertakes as well. The Company currently retains required senior management personnel and proposes to draw on their expertise to pursue such services business going forward. In view of the above, the financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities. Business Overview and Recent Developments at Macro & Micro Economic levels The wireless telecom industry has shown increase in subscriber base to 960.58 Mn. at the end of February 2015 against 903.36 Mn. at the end of February 2014, registering a growth of 6.33% y-o-y for this fiscal compared to approx. 5% growth the year before. The share of urban subscribers declined to 58.01% at the end of February 2015 from 59.16% in February 2014 vis-a-vis the share of rural subscribers which increased to 41.99% at the end of February 2015 from 40.84% at the end of February 2014. With this, the overall tele-density in India has shown marginal improvement at 76.60 at the end of February 2015 vis-a-vis the overall tele-density of 72.92 at the end of February 2014. (Source: Telecom Regulatory Authority of India, Press Release dated April 10, 2015) India saw fastest growth in subscription base with approximately 65 million new connections in FY 2014-15. Growth Drivers It is observed, globally, Telecom industry is a vital sector for the overall development of a nation. It is catalyst to growth and modernization of a nation. Given the recent developments, we have identified a few growth drivers for the coming few fiscals. 1. 2015 Spectrum Auction was successful with Rs. 1.10 Lac Cr. investment by the industry signaling restored faith in business prospect 2. Industry Friendly and liberal policies: a. Government plans to allocate the Spectrum auctioned in March 2015 by end of this year b. Government's ambitious US$ 1.1 bn Smart City program to facilitate telecom growth 3. FDI attractive market 4. Subscriber base continues to see upward trend 5. 3G and 4G rollouts expected to lead to machine to machine (M2M) growth in India in FY 2016-17 6. Reliance Jio the only Pan India license 4G provider to roll out 4G in this fiscal 7. India a Data usage driven economy (Nokia Networks' MBit Index study) a. Mobile data traffic generated by 2G and 3G services has risen by a whopping 74 percent during the course of the last year b. Use of 3G devices capable of supporting a speed of upto 21.1 Mbps increased from 23% in 2013 to 54% in 2014 c. Average monthly data consumption by a 2G consumer was seen to be 216 MB during 2014, an increase of 48% during 2014. d. The average data consumed by a 3G consumer, on the other hand, 688 MB which is an increase of 29% during the year just ended 8. India to be 4th largest Smartphone market in the world 9. Tower Network vital for growth mapping and to see growth in the near future Major Developments in the industry (source: A brief Report on Telecom Sector in India - Jan. 2015, CCI Pvt. Ltd.) 1. Reliance Jio Infocomm has signed an agreement to share telecom towers of GTL Infrastructure Limited. Seventh Tower sharing agreement by Jio 2. Ericsson has won US$ 9.42 Mn., 3 years operations support system deal with Reliance Jio 3. A probable joint venture between Japanese telecom player Softbank and Bharti Group. At beginning of the year SoftBank has announced its willingness to invest US$ 10 Bn. in India 4. Bharti Infratel plans to take over telecom towers of few operators at a valuation of approx US$ 785 Mn. 5. Bharti Infratel plans to explore acquisition opportunities in neighboring countries Salient Features of Spectrum Auctions 2015 (source: <http://telecomtalk.info>) a. Reliance Jio won 800MHz spectrum 10 circles, Reliance Communications in 11 circles and Tata Teleservices in 5 circles b. Bharati Airtel won 2100MHz spectrum in 7 circles, Vodafone in 5 circles and Idea in 1 circle c. Bharati Airtel won 900MHz spectrum in 10 circles, Vodafone in 8 circles, Idea in 9 circles and Reliance Communications in 2 circles d. Bharati Airtel won 1800MHz spectrum in 6 circles, Vodafone in 3 circles, Idea in 6 circles, Reliance Jio in 6 circles, Reliance Communications in 5 circles, Aircel and Tata Teleservices in one circle. e. Reliance Communications lost 900MHz spectrum in 5 out of 7 circles it held. f. Latest auction won spectrum liberalized for use with any technology and valid till 2035. The stability in the Government at Centre is expected to have a positive effect on policy and investment climate, leading to telecom industry growing in the coming years. As the Indian telecom market moves from voice to data, the telcos face new technology and infrastructure related challenges in meeting their expansion and customer experience goals. Termination of Power DF contract by MSEDCL The Company had entered into Power Distribution Franchisee (DF) agreement with Maharashtra State Electricity Distribution Company Limited (MSEDCL) for Aurangabad Urban Circle I & II in February 2011 and commenced the power distribution activity from May 1, 2011. This contract was for period of 15 years, subject to terms and conditions thereof. The Company had incurred losses in its DF business on account of various factors such as, higher Transmission & Distribution (T&D) losses, non-revision of tariff from consumer and other several unresolved operational and contractual factors with MSEDCL. Moreover, Performance Guarantee to the extent required under the contract could not be provided to MSEDCL, as some of the lenders did not provide the same, though approved in CDR package. MSEDCL, vide its notice dated November 10, 2014, terminated DF agreement effective November 17, 2014 and also en-cashed guarantees of about Rs. 15,100 Lacs provided for performance. The reconciliation and settlement of several claims of the Company and MSEDCL are under process and appropriate effect in respect of the same will be given in financials on conclusion of the said process. The Company has valid claims against MSEDCL, which are under discussion. Pending reconciliation / settlement, the Company has made necessary disclosure as required by Accounting Standard (AS) 24 for Discontinued Operations. Investments The Company has investments in Associates, GTL Infrastructure Limited (GIL) and Chennai Network Infrastructure Limited (CNIL). Both, GIL and CNIL have been admitted into CDR. The CDR package provides various financial restraints on these associates for transferring funds to the Company. Based on the legal opinions sought by the Company, such restrains faced by GIL and CNIL constitutes severe long term restrictions, significantly impairs their ability to transfer any funds to the Company as envisaged by AS-23 para 7(b) and therefore, the Company has accounted investment in these associates as per AS-13. The Company's share in Associate, Global Rural Netco Limited is accounted based on un-audited financial statements for the year ended March 31, 2015. Business Update - Pre & Post CDR The Company, in the FY 2009-10, based on the award of a part of BSNL tender contract in its favor, additional business expected by one of the group companies viz. GTL Infrastructure Ltd. (GIL) having cemented business partnership with Aircel with assurance of 20,000 new tenancies on Right of First Refusal (RoFR) basis and other anticipated business avenues based on the 2G spectrum auction, issuing of new licenses and corresponding network expansion plans of the operators, had then projected a robust business plan over next five to six years. network along with supply, installation, testing & commissioning of infrastructure for network of capacity for 93 million lines. This expansion was meant to be rolled out in three phases. The tenders were floated zone-wise with the North, West and South zones having 25 million lines each and the East Zone having 18 million lines. a. In 2010 GTL had bid and won a contract from BSNL, being L2 and L3, out of the contract of 93 million fixed lines. b. In Q4 of FY 2010-11, this business development contract was cancelled and thus leading to an estimated loss of Revenue of Rs. 3,000 Cr. to the Company spreading over the next three financial years. c. Additionally, advances paid to suppliers for execution of BSNL and Aircel contracts led to increase in Current Assets some of which are yet to be realized. • Aircel RoFR towers (20,000 Nos.) for 3 years from FY 2010-11 onwards. The additional business of Aircel ROFR towers to GTL Limited was in relation to the acquisition of 17,500 Aircel towers in July'10. The Company had informed these developments to shareholders vide notice of postal ballot dated January 14, 2010 and sought their approval for making investment in Tower companies. a. GTL had invested over Rs. 2,200 Cr. in GIL and CNIL. b. CNIL acquired 17,500 towers along with 21,000 active tenants and a commitment of 20,000 tenancies upto July 2013 under a RoFR agreement, further on the strength of this commitment, GTL entered into an Energy Management Contract with Aircel and its Affiliates, CNIL and GIL. c. Aircel was unable to provide about 17,500 tenancies under the RoFR resulting into the estimated loss of Revenue of about Rs. 4,218 Cr. as stated below. d. This Investment was expected to give GTL business opportunity of over Rs. 17,000 Cr. over a period of 5 years as detailed below: in Crore) Developments Post CDR The CDR package approved by the lenders in December 2011 envisaged improvement in the telecom and power sectors, additional capex deployment by telecom operators in 3G/4G buoyed by new equity investments into these sectors. However, since CDR implementation, below mentioned developments in the telecom and power sector have impacted the financial performance of GTL. Telecom Sector • Cancellation of 2G licenses upheld by Hon'ble Supreme Court in February 2012; • Aircel Group's suspension of tenancy commitments in July 2013; • Slower 3G & BWA growth since auctions; • Freeze on expansion by Telecom Operators; and • Suspension of BSNL expansion. As commented by Vodafone India CEO in the recent articles in Business Standard dated September 12, 2014 and Times of India dated October 10, 2014, the Indian Telecom industry continues to be in a mess due to lack of clarity on taxation issues, M&A policy, high regulations, spectrum scarcity and preferential treatment / benefits to selective telecom operators with very little action to accept responsibility and bring about change. The impact of this is clearly visible with investments in network in India of only US$ 5 Bn. in the last one year vis-a-vis US$ 50 Bn. in China. Negative impact arising out of downward trend in telecom industry, delay in policy decisions not only affected the business outlook of the Company but the expected valuation of its investments in Tower Companies in the group expected out of acquisition of Aircel Towers based on the future business outlook. Power Sector • No tariff revisions; • Slash in power tariffs by 20% in Maharashtra; and • Refusal of lenders to offer SBLC despite approval in CDR package. To add to the woes, the recent cancellation by the Hon'ble Supreme Court of all but four of the 218 coal block allocations by the government over the past two decades has had major implications for the power and energy sector. Almost 30% of GTL's annual revenue, approx Rs. 1,200 Cr., was from DF business. Already strained revenues and margins and cash flow will be irreparably impacted further due to the termination by MSEDCL of the DF contract. MSEDCL additionally has claimed Rs. 393 Cr. from the Company and invoked SBLC of Rs. 150 Cr. held by it under DF agreement. These factors that are beyond management control, continue to impact GTL's financial performance and are affecting its ability to meet debt service obligations. Inter Creditor Issues: The Company has ever since made all reasonable efforts within its control to implement the restructuring of the ECB and NCD facility. However, restructuring of the ECB Facility could not close on account of certain factors beyond management control such as the financial impact of adverse developments in the telecom and power sectors, inter-creditor issues among various lenders of the Company on matters relating to pari-passu sharing of security, payment of interest to ECB lenders etc. Resignation by the ECB Facility Agent and also the ECB Authorized Dealer has further hampered GTL's efforts to restructure the ECB debt. Similarly, with respect to the restructured NCD facility, while the Company and NCD lender have bilaterally agreed the terms, necessary approval from CDR lenders and consequent execution of the amended agreements and security documents to ensure pari-passu rights to NCD lenders to the Cash Flows and Security package of GTL is still awaiting approval of CDR Lenders. Requests of GTL for release of certain interest / principal dues of ECB and NCD lenders have been denied by CDR lenders and not acted upon as CDR lenders are secured lenders and have no obligation towards NCD and ECB lenders. In light of the inter creditor issues, developments post CDR and alleged non pari-passu treatment to ECB / NCD lenders vis-a-vis CDR lenders, notices have been sent by ECB / NCD lenders to GTL and IDBI Bank Ltd. (as Monitoring Institution to CDR Lenders) advising the Company to desist from: i. Making any further payment to CDR lenders till ECB / NCD interest / principal dues are paid; ii. Sharing the proceeds of Trust and Retention Account (TRA) on pari-passu basis with the CDR lenders going forward; and iii. Creating security in their favor. Actions by ECB Lenders Furthermore, certain ECB lenders have even filed recovery proceedings in the Hon'ble High Court of Justice, Queens Bench Division, Commercial Court, London. The Hon'ble Court vide its Order dated February 20, 2015 directed the Company to make payments in respect of the outstanding principal amount relating to these lenders in terms of the Loan Agreement dated September 8, 2006 executed by participants in ECB. The Hon'ble Court has dismissed the application of the claimants for a summary judgment on their claims for interest. Further, the Court has also ordered payment of GBP 31,500 towards Claimants legal costs by the Company. Actions by NCD Lenders In addition to the aforesaid proceeding, on January 09, 2015 the NCD lender has filed a petition before the High Court of Judicature at Bombay inter alia seeking winding up of the Company and in the interim seeking an injunction against any disposal of assets & against making payments to the secured CDR lenders. Notice of filing was served on the Company on January 16, 2015. The CDR lenders and ECB lenders of the Company intervened. By its order dated January 28, 2015, the High Court asked the CDR lenders' position on the NCD holder's treatment on pari-passu basis. The matter is currently sub-judice. Since all funds of the Company are subject matter of the TRA which is controlled by the CDR lenders, the question of payment to the NCD holder and ECB lenders does not arise, until and unless the CDR lenders decide on the issue directed by the Hon'ble Bombay High Court. In view thereof, as on March 31, 2015, none of the Directors of the Company are disqualified under Section 164(2)(b) of the Act from being appointed as Directors. Initiatives by GTL The Company continues to make efforts to improve cash flow to facilitate an equitable settlement of its debt amongst CDR, ECB and NCD lenders. Reeling under industry happenings, beyond its control, the Company had submitted proposals without altering end date of debt repayment: a. Consolidating GTL Group Level debt at Holding Company (HoldCo) level (April 2013). b. GTL consolidated debt through Debt Realignment Proposal through fresh ECB and SBLC for repayment of rupee debt (September 2013); could not be implemented because of various delays in conclusive decisions till April 2014. RBI issued a circular on April 22, 2014 disallowing ECB and SBLC route for repaying rupee debt. Under current proposal the steps envisaged, subject to necessary approvals, are: • Sale of Operations, Maintenance & Energy business; • Monetization of Investments in Tower Companies; • Realization of Current Assets; • Monetization of non-core assets; • Formation of JV or raising new Capital; and • Such other actions as may be deemed fit in the interest of all stakeholders. For these initiatives, requisite approvals from Shareholders of the Company have been obtained at the 26th Annual General Meeting held on September 16, 2014 and through Postal Ballot for creation of charges / mortgages and for sale / disposal of the whole or substantially the whole of the undertaking(s) of the Company result of which was declared on September 25, 2014. The Company has appraised CDR / NCD lenders of the above initiatives and presented a plan for their consideration at the Joint Lender Forum meetings held on November 13, 2014, September 01, 2014 and June 17, 2014. While the Company continues to engage with all the 3 sets of lenders, viz. ECB Lenders, NCD Lender and CDR Lenders separately to find a resolution to such challenges, which are beyond management control, we believe that given the challenges of telecom and power sector scenario and its resultant impact on the financial performance of GTL, a joint engagement between all the sets of lenders and GTL to draw a long term road map to resolve the issues is essential. The Company believes that in view of the current unsustainable debt levels and the continued bleak outlook in the telecom sector, the most viable option for the Company would be to divest its assets and enter into a negotiated / one-time settlement with its lenders. The Company has submitted this proposal before the forum of lenders in the context of winding-up petition filed by the NCD holder against the Company, where the CDR / ECB Lenders have also intervened. The matter is currently sub-judice and has impacted GTL's ability to meet commitment under MRA. 3. CORPORATE DEBT RESTRUCTURING The Company has implemented Corporate Debt Restructuring CDR) Plan for its Rupee Term Loan. In view of overall set-back in the Company's business operations, cash losses have been incurred which has resulted in substantial erosion of the Company's net worth. In addition to the above, certain disputes among inter-creditor has caused delay in restructuring of ECB facility and execution of amended agreement with NCD lender and has resulted in initiation of legal proceedings against the Company which inter-alia seeks an injunction against disposal of any asset and making payments to secured CDR lenders and liquidation of the Company. The Company has taken appropriate legal steps in these matters to defend / protect its interest. Considering the developments post-CDR, inter-creditor issues (which is beyond management control) and actions initiated by ECB and NCD lenders, the Company has submitted Settlement proposal for which the Company has envisaged / planned steps, such as sale of Operation Maintenance & Energy (OME) business (part of Network Services), monetization of investment including in Tower Companies, monetization of non-core assets. The Company is awaiting lenders approval / consent and resolution to inter-creditor issues. 4. DIVIDEND Since your Company has posted losses and is currently under Corporate Debt Restructuring Mechanism, your Directors express their inability to recommend any dividend on the paid up Equity and Preference Share Capital of the Company for the financial year ended March 31, 2015. b. Preference: During the FY 2012-13, the Company had issued and allotted 650,000,000 Non Participating Optionally Convertible Cumulative Preference Shares of the face value of Rs. 10/- each aggregating Rs. 650 Cr. The Preference shareholder had option for conversion into equity shares at any time after six months but before eighteen months from the date of allotment viz. September 28, 2012, on the terms and conditions as detailed in Note No. 2.1.4. of Notes to Accounts. However, the Preference shareholder did not exercise its right for conversion of these preference shares into equity within the stipulated time period and resultantly, there will not be any impact on the Company's equity capital. 6. FIXED DEPOSITS: There are no unclaimed deposits lying with the Company and during the year under review, the Company has not accepted any fresh fixed deposits from Public or from its Shareholders. 7. DIRECTORS AND KEY MANAGERIAL PERSONNEL: In terms of the provisions of the CDR documents, IDBI Bank Limited nominated Mr. Dilip Kumar Mandal, Chief General Manager, RBG in the month of October 2014 in place of Mr. Ajay Sharma - Chief General Manager who served on the Board as Nominee Director w.e.f. October 8, 2012. The Board of Directors through resolution passed by circulation on December 19, 2014 appointed Mr. Sunil Sadanand Valavalkar as an Additional Director and also a Whole-time Director effective December 16, 2014 and the same was taken on record by the Board of Directors in its meeting held on February 5, 2015. The Board also through resolution passed by circulation on March 30, 2015 appointed Mrs. Siddhi M. Thakur as an Additional Director and also an Independent Director with effect from March 31, 2015 and the same was taken on record by the Board of Directors in its meeting held on May 5, 2015. Both the appointees hold office upto the date of the ensuing Annual General Meeting. The Company having received respective notice under Section 160 of the Companies Act, 2013, proposes appointment of Mr. Sunil S. Valavalkar as a Director, liable to retire by rotation and Mrs. Siddhi M. Thakur as a Director not liable to retire by rotation. Also the Company has incorporated appropriate resolutions for appointing Mr. Sunil S. Valavalkar as the Whole-time Director for a period of three years from December 16, 2014 to December 15, 2018 and Mrs. Siddhi M. Thakur as an Independent Director from March 31, 2015 to March 31, 2018 as detailed in the notice convening ensuing Annual General Meeting and Explanatory Statement annexed thereto for consideration of the members. In light of the provisions of the Companies Act, 2013, out of the current strength of the Board consisting of 7 Directors, 3 Directors are Independent and thus not to be computed for the strength of total directors liable for retirement by rotation. Out of the balance 4 Directors, the Company can have one third as permanent directors, consisting of Mr. Manoj G. Tirodkar - Chairman & Managing Director. Of the balance 3 Directors, one is a Nominee Director, who is not liable for retirement by rotation and rest 2 Directors are Additional Directors whose term is upto the date of the ensuing Annual General Meeting and would be considered for regular appointment. Thus, no director will be retiring by rotation in the ensuing Annual General Meeting. Maharashtra State Electricity Distribution Company Limited terminated the Company's Power Distribution Franchisee (DF) contract for Aurangabad, Maharashtra, Urban Circle I & II, effective November 17, 2014. Since Mr. Arun Prabhukhanolkar - Whole-time Director (who was also appointed as key managerial personnel effective April 1, 2014) was looking after the said Power DF business, has relinquished his position as a Whole-time Director and also as a director w.e.f. December 16, 2014. Prof. Shamkant B. Navathe based in USA and who was associated with the Company as an Independent Director since July 30, 2001, has relinquished his position as a Director w.e.f. January 20, 2015, in view of his busy schedule and difficulty in making frequent trips to India for attending Board Meetings. The Board places on record its deep appreciation and respect for the valuable advice and guidance received from Prof. S. B. Navathe, Mr. Ajay Sharma and Mr. Arun Prabhukhanolkar during their tenure as Directors of the Company. The background of the Directors proposed for appointment / reappointment is given in the Corporate Governance Report, which forms part of the Directors' Report. Pursuant to the provisions of Section 203 of the Companies Act, 2013, which came in to effect from April 1, 2014, the appointment of Mr. Manoj G. Tirodkar - Chairman & Managing Director, Mr. Arun Prabhukhanolkar - Whole-time Director, Mr. Vidyadhar A. Apte - Company Secretary and Mr. Milind V. Bapat - Chief Financial Officer as the key managerial personnel were formalized. Also, the Board appointed Mr. Sunil S. Valavalkar as an Additional & Whole-time Director and also as the key managerial personnel w.e.f. December 16, 2014 in place of Mr. Arun Prabhukhanolkar - Whole-time Director, who has relinquished his position as a Whole-time Director and also as Director effective December 16, 2014. xi) The key parameters for any variable component of remuneration availed by the directors: Key parameter for variable component is the collection target. xii) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: 1:2.02 xiii) Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms that the remuneration is as per remuneration policy of the Company. 9. DIRECTORS RESPONSIBILITY STATEMENT: In terms of the provisions of Section 134(3)(c) of the Companies Act, 2013, we, the Directors of GTL Limited, to the best of their knowledge and ability, in respect of the year ended March 31, 2015, confirm that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period; c. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. they had prepared the annual accounts on a going concern basis; e. they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 10. DECLARATION BY INDEPENDENT DIRECTORS All the Independent Directors of the Company have furnished a declaration to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013. 11. POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION ETC. The Company has put in place appropriate policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013, which is provided in the Policy Dossier that has been uploaded on the Company's website www.gtllimited.com. Further, salient features of the Company's Policy on Directors' remuneration have been disclosed in the Corporate Governance Report, which forms part of the Directors' Report. 12. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS The Board of Directors has carries out annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Act and corporate governance requirements as prescribed under Clause 49 of the Listing Agreement. The performance of the Board and its Committees was evaluated by the Board after seeking inputs from the Board / Committee members on the basis of the criteria such as composition of the Board / Committees and structure, effectiveness of Board / Committee processes, information and functioning etc. The Board also reviewed the performance of individual Directors on the basis of criteria such as attendance in Board / Committee meetings, contribution in the meetings like preparedness on issued to be discussed 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 in to consideration views of executive and non-executive Directors. 13. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis (MD&A) on the Company's performance, industry trends and other material changes with respect to the Company and its subsidiaries, wherever applicable is attached to this Report. 14. CORPORATE GOVERNANCE & VIGIL MECHANISM The Company is complying with Clause 49 of the Listing Agreement with the Stock Exchanges. A separate Corporate Governance Report on compliance on Clause 49 of the Listing Agreement with the Stock Exchanges as reviewed and certified by M/s. Godbole Bhave & Co., Chartered Accountants and M/s. Yeolekar & Associates, Chartered Accountants the Joint Auditors of the Company is given in Annexure A to this Report. The Company has formulated a Whistle Blower Policy details of which are furnished in the Corporate Governance Report thereby establishing a vigil mechanism for directors and employees for reporting genuine concerns, if any. 15. RISKS A separate section on risks and their management is provided in the MD&A Report forming part of this Report, which covers the development and implementation of risk management framework. The Audit Committee monitors the risk management plan and ensure its effectiveness. It is important for shareowners and investors to be aware of the risks that are inherent in the Company's businesses. The major risks faced by your Company have been outlined in this section to allow shareholders and prospective investors to take an independent view. We strongly urge shareowners / investors to read and analyze these risks before investing in the Company. 16. CORPORATE SOCIAL RESPONSIBILITY: The Company continued, during the year under review, to contribute through 'Global Foundation', a Public Charitable Trust towards social causes as described in the MD&A Report under the caption 'Corporate Social Responsibility' (CSR) and implemented CSR Policy. The details as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is furnished in Annexure B to this report. 17. AUDIT COMIITTEE: The details in respect of composition of the Audit Committee are included in the Corporate Governance Report, which forms part of the Directors' Report. 18. AUDITORS AND AUDITORS' REPORT: Joint Auditors: M/s. Godbole Bhave & Co., Chartered Accountants, Mumbai and M/s. Yeolekar & Associates, Chartered Accountants, Mumbai, were appointed as Joint Auditors at the Twenty Sixth (26th) Annual General Meeting to hold office from conclusion of the said meeting till the conclusion of the Twenty Ninth (29th) Annual General Meeting. The Company has received the necessary certificates from the Joint Auditors respectively pursuant to Sections 139 and 141 of the Companies Act, 2013 (the Act) regarding their eligibility for appointment. In pursuance of the provisions of Section 139 of the Act, appropriate resolution for ratification of the appointment of M/s. Godbole Bhave & Co., Chartered Accountants, Mumbai and M/s. Yeolekar & Associates, Chartered Accountants, Mumbai, as Joint Auditors of the Company is being placed at the ensuing Annual General Meeting. Cost Auditors: Pursuant to the provisions of the Section 148 of the Act and Rules made there under as may be prescribed and on the recommendations of the Audit Committee, the Board has appointed M/s V. G. Phadke & Co., Cost Accountants, Mumbai, as the Cost Auditor for the financial year 2014-15. Also, in accordance with the provisions of Section 148 of the Act and the Companies (Audit and Auditors) Rules, 2014, remuneration payable to the Cost Auditor as recommended by the Audit Committee and the Board had been ratified by the members in the 26th Annual General Meeting held on September 16, 2014. The relevant cost audit reports of FY 2013-14 were filed with Ministry of Corporate Affairs on September 23, 2014. In terms of the Companies (Cost Records and Audit) Amendment Rules, 2014, since the Company's business (telecom networking services) is not included in the list of industries to which these rules are applicable, the Company has not considered appointment of Cost Auditor for the financial year 2015-16. Joint Auditors' Report As regards the Joint Auditors' comment / observation / emphasis of matters, the Company has furnished required details / explanations in Note Nos. 2.8.1, 2.39, 2.11.3 and 2.23.1 of Notes to Stand-alone financial statements. Secretarial Auditors' Report The Secretarial Auditors' Report does not contain any qualifications, reservations, disclaimers or adverse remarks and the same is given in Annexure C (Form No. MR-3)forming part of this report. 19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The particulars of loans, guarantees and investments have been disclosed in the financial statements. Details of investments made by the Company are given under the respective heads (refer note 2.11 of notes to the financials). No loans are given by the Company to any person / entity except to its employees as at March 31, 2015. Corporate Guarantees given by the Company as at March 31, 2015: GTL has given above guarantees in its normal course of business in India and abroad. The guarantees are normally given : • for performance of their business obligations; and • to enable them to avail financial assistance. 20. PARTICULARS OF RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website www.gtllimited.com None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. The particulars as required under the Companies Act, 2013 is furnished in Annexure D (Form No. AOC-2) to this report. 21. MATERIAL CHANGES AND COMMITMENTS Save and except as discussed in this Annual Report, no material changes have occurred and no commitments were given by the Company thereby affecting its financial position between the end of the financial year to which these financial statements relate and the date of this report. 22. SUBSIDIARIES Pursuant to Accounting Standard 21 (AS 21) on Consolidated Financial Statements issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include information about its subsidiaries. The Company's revenue from its overseas subsidiaries for the year ended March 31, 2015, on a consolidated basis was X 427.42 Cr. (US$ 69.25 Mn.) As required by the Companies (Accounts) Rules, 2014, a report on performance and financial position of each of the subsidiaries and associate companies included in the Consolidated Financial Statement, is presented in Annexure E (Form No. AOC-1). In response to the evolving industry and technology, the Company is continuing plans and operations in those projects and countries, which have potential for growth at high margin and low working capital. At the same time, the Company having been admitted into CDR is not in a position to extend further financial support to some of the subsidiaries, which are making losses / having financial difficulty. The need is also felt at this juncture to streamline the operations in respect of some of the subsidiaries. Further, as per the negotiated / one-time settlement plan submitted for settlement of the outstanding debt with all of its lenders, the Company has to dispose of some of its investments as contemplated under the approved CDR package. On the above background, the Company has started its operations in Myanmar, where it has a potential for growth. At the same time while it has closed / is in the process of closing its operations in subsidiaries in Sri Lanka, Kenya, Bangladesh, Taiwan, China, Malaysia, Indonesia, Tanzania and Nigeria; it is continuing its operations in UK, Myanmar, Nepal, Philippines, KSA, UAE and Singapore. It is also pertinent to note the legal actions in respect of some of the Subsidiaries. During the course of audit, certain irregularities committed by some of the former employees came to the notice of GTL (USA) Inc. accordingly, based on legal advice, GTL (USA) Inc filed a case against those officials. In the meanwhile, one of the creditors with whom GTL (USA) Inc has dispute, as regards the amount payable, filed a case and GTL (USA) Inc. has filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Court of Eastern District of Texas, USA. That filing, however, affords GTL (USA) Inc the right to reorganise under a plan that will assure the fair treatment of all its creditors, while GTL (USA) Inc continues its business in the ordinary course. A similar legal action initiated by the Bank, which has advanced money for working capital (subsequently withdrawn), has led to the appointment of liquidator in the subsidiary in Malaysia. On account of the delay in payment by the ultimate customer who could not keep up its commitment, leading to the Bank filing recovery proceedings against its subsidiary viz. International Global Tele Systems Ltd. and the Insurance Company in the Court at Mauritius. In the said matter the Bank has impleaded the Company as a party defendant, based on the Letter of Comfort. The matter is pending before the Court. 23. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO a. Conservation of Energy: i. the steps taken or impact on conservation of energy: Opportunity to increase green portfolio complying to Green mandate for Telecom Towers issued by DoT Reduction in Carbon footprints with the help of clean technology Operational efficiency through less power and cost efficiency resulting in high up time ii. the steps taken by the Company for utilizing alternate sources of energy: GTL Limited initiated a pilot project of installation of Fuel Cell System (FCS) instead of Diesel Generators (DG) on 54 Tower sites under OPEX model with a partner Undertaking the pilot project of Bio Mass Installation for ascertaining the implication on alternate energy initiatives and cost reduction Increasing portfolio of solar power site cover for existing sites Tower monitoring methodology for operators using NMS and bespoke portals to monitor additional sites across different operators and circles Automation of Trouble Tickets (TTs) from OSS alarms via BMC Remedy TT application Testing and implementation of solutions such as video surveillance and workforce tracking (WFT) on Pan India basis the benefits derived like product improvement, cost reduction, product development or import substitution: • Enhanced ability with higher efficiency, optimizing technological resources, value for money returns and simplification of management of technical architecture • Additional sites and tenancies being now monitored across 24x7 resulting enhancing the Up-time • This can help in managing the operations error free with no human intervention as well higher alarm load to trouble tickets can be handled more precisely • Real time view of activities from sites and people movement to take corrective actions and business decisions in time which should result in higher Up-time of sites in case of imported technology (imported during the last three years reckoned from the beginning of the financial year): a. the details of technology imported: b. the year of import: c. whether the technology been fully absorbed: d. if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: iv. the expenditure incurred on Research and Development: C. Foreign exchange earnings and Outgo: During the year under review the Company earned in terms of actual inflows foreign exchange of Rs. 0.89 Cr. and the foreign exchange outgo during the year under review in terms of actual outflows was Rs. 28.88 Cr. the particulars of which are appearing in Note No. 2.34 of the Notes to the Accounts. 24. INTERNAL FINANCIAL CONTROL SYSTEM The details in respect of adequacy of internal financial control with reference to the financial statements are included in the MD&A Report, which forms part of this Report. 25. HUMAN RESOURCES Our associate base stood at 5043 as on March 31, 2015 as against 6383 as on March 31, 2014. For full details refer to the Human Resources write up in the MD&A Report. 26. EXTRACT OF ANNUAL RETURN AS ON MARCH 31, 2015 The required details are furnished in Annexure F (Form No. MGT-9) to this report. 27. NUMBER OF BOARD MEETINGS HELD DURING THE FY 2014-15 4 (Four) meetings of the Board were held during the year, details of which are furnished in the Corporate Governance Report that forms part of the Directors' Report. 28. PROMOTER GROUP The Company is a part of Global Group of Companies which is promoted by Mr. Manoj. G. Tirodkar. The promoter group holding in the Company currently is 44.23% of the Company's Paid-up Equity Capital. The members may note that the Promoter Group, inter-alia comprises of Mr. Manoj. G. Tirodkar and Global Holding Corporation Pvt. Ltd. 29. PARTICULARS OF EMPLOYEES In terms of the provisions of sub-rule 2 of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, names and other particulars of the employees are required to be set out in an annexure to this report. Further, the report and the Financial Statement are being sent to the shareholders excluding the aforesaid annexure. In term of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office. None of the employees listed in the said annexure are related to any Director of the Company. 30. SPECIAL BUSINESS As regards the items of the Notice of the Annual General Meeting relating to Special Business, the Resolutions incorporated in the Notice and the Explanatory Statement relating thereto, fully indicate the reasons for seeking the approval of members to those proposals. Members' attention is drawn to these items and Explanatory Statement annexed to the Notice. 31. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation and acknowledge with gratitude the support and cooperation extended by the clients, employees, vendors, bankers, financial institutions, investors, media and both the Central and State Governments and their Agencies and look forward to their continued support. On behalf of the Board of Directors, Manoj G. Tirodkar Chairman & Managing Director Place : Mumbai date : May 5, 2015 |