Directors' Report Dear Shareholders, We have pleasure in presenting the Twentieth Annual Report, together with the audited financial statements of the Company for the Financial Year ended March 31, 2015. Company Overview Your Company is the third largest mobile telecommunications operator in the country, with pan India operations offering voice, data and other value added services (VAS). Your Company provides GSM-based 2G and 3G mobile telecommunications services in all 22 service areas in India and 21 service areas respectively. The Company offers 3G services in 12 service areas pursuant to spectrum allocated to the Company and provides 3G services in remaining service areas through intra-circle roaming (ICR) arrangements with other mobile telecommunication service providers. Your company also provides WiFi services in select locations. Your company also has the capability to launch 4G in earmarked service areas based on the spectrum it acquired in February 2014 and March 2015 auctions. Your company also holds licenses to offer NLD, ILD, ISP and IP-1 services. While the NLD and ISP services mainly cater to the captive needs of the company currently, the ILD and IP-1 services cater to both external and captive needs. Financial Results The financial statements of the Company have been prepared in accordance with the mandated Generally Accepted Accounting Principles (Indian GAAP). The standalone and consolidated financial highlights of your Company for the Financial Year ended March 31, 2015 are summarized below: Operations Review Your Company is pleased to report another year of splendid performance outpacing the sector growth, maintaining its track record of growing faster than the sector. On a standalone basis, your Company clocked total revenues of Rs. 317,318 Mn, a growth of 20.2% over the previous year, primarily driven by solid growth in Voice and data volumes. The EBITDA also increased to Rs. 101,257 Mn, representing a growth of 34.8 % over the previous year. The Profit after Tax stood at Rs. 28,098 Mn, a rise of 66.3% as compared to the previous year. On a consolidated basis, the total revenues were Rs. 320,406 Mn, a growth of 19.8% over the previous year. The EBITDA at Rs. 112,813 Mn, reflects a growth of 32.4% as compared to the previous year. The consolidated Profit after Tax stood at Rs. 31,929 Mn, up by 62.3% compared to the previous year. As on March 31, 2015 the subscriber base of your company was 157.8 Mn, representing a growth of 16.2% over the previous year. Your company continues to improve its market position by gaining higher incremental market share both in terms of revenue as well as in terms of subscribers, and positioned itself as 'One among the Top Three' operators in India. As per TRAI reports, during the Financial Year 2014-15, your Company gained incremental revenue market share (RMS) of 29.7% of the Indian mobile telecommunication service industry, resulting in RMS improvement of 1.3% compared to the previous year, highest among all telecom operators, thus taking up the RMS to 17.5%. In terms of subscriber market share, during the year your company added 22 Mn subscribers, while the industry added 65.4 Mn subscriber, capturing 33.7% incremental subscriber market share. The subscriber market share for your Company stood at 16.3% as of March 31, 2015, compared to 15% as of March 31, 2014, an improvement of 1.3%. Your company also maintains its leadership position in terms of percentage of active subscriber base to total subscriber base. Further, your Company strengthened its leadership position in Mobile Number Portability (MNP), based on the net subscriber additions. The overall demand for both Voice and Data remained strong during the year. Your company has added 95.7 Bn voice minutes on its network, highest incremental voice minutes addition in last 4 years, taking the total minutes of usage on the network for the Financial Year 2014-15 to 683.4 Bn, a growth of 16.3% compared to previous year. The total data usage continue to grow by more than 100% on YoY basis. The total data usage of 172.5 Bn MB registered a growth of 117.3%, compared to previous year. Your Company continues to invest in the long term value creators and remain committed towards increasing its geographical coverage as well as improve the capability of network to address the growing demand of both voice and data. During the year, your Company added 7,589 2G sites,taking the 2G site count to 112,367 as of March 31, 2015. 2G services are now available in more than 360,000 towns and villages. On 3G front, your Company added 8,910 sites increasing its 3G site count to 30,291. Your Company is focused to improve its Optical Fibre Cable (OFC) transmission network, with the growing demand of data. During the year your Company expanded its OFC transmission network approximately to 93,200 km compared to 82,000 km a year ago, an increase of more than 11,000 km In the recent spectrum auction held in March, 2015, your Company was successful in retaining spectrum in the crucial 900 MHz band in nine of its leadership service areas, and won 54 MHz of 900 MHz Spectrum (including additional 5 MHz in Maharashtra for second carrier of 3G service), which account for over 73% of the company's revenues. Your Company also acquired 20.4 MHz additional spectrum in the 1800 MHz band in six of its key service areas and 5 MHz in the 2100 MHz for launching 3G services in the metro market of Kolkata. This will enable company to further expand its 3G Services on own spectrum to 13 service areas covering 80% of its revenue and provide capability to do 4G roll out on 1800 MHz in 10 Service Areas covering 61% of its revenue. Dividend Your Directors are pleased to recommend a dividend of Rs. 0.60 per equity share of Rs. 10/- each (6 % of face value) for the year ended March 31, 2015. Based on the outstanding paid-up share capital as at the year end, the total dividend payout will amount to Rs. 2,598 Mn inclusive of Rs. 439 Mn of dividend distribution tax. This payment is subject to your approval at the ensuing Annual General Meeting of the Company. Transfer to Reserves Your Company has not transferred any amount to the General Reserve for the financial year ended March 31, 2015. However, in line with statutory requirements, your Company has transferred Rs. 103 Mn to Debenture Redemption Reserve. Changes in Share Capital During the year under review, your Company had raised Rs. 30,000 Mn by issuing 223,880,597 Equity Shares of Rs. 10/-each under a Qualified Institutions Placement as per Chapter VIII of SEBI (ICDR) Regulations, 2009, at an issue price of Rs. 134/- per Equity Share. Further, the Company also raised Rs. 7,500 Mn by issuing 51,838,540 Equity Shares of Rs. 10/- each on a preferential basis under Preferential Issue guidelines as per Chapter VII of SEBI (ICDR) Regulations, 2009, to Axiata Investments 2 (India) Limited, (a subsidiary of Axiata Group Berhad, Malaysia), an existing key shareholder of the Company at an issue price of Rs. 144.68 per Equity Share. Additionally, your Company also issued and allotted 2,493,529 Equity Shares of Rs. 10/- each, fully paid-up, to the option grantees pursuant to the exercise of stock options by eligible employees under the Employee Stock Option Scheme, 2006 (ESOS-2006) and Employee Stock Option Scheme, 2013 (ESOS-2013). Consequent to the above, the issued, subscribed and paid-up equity share capital of your Company as on March 31, 2015 stood at Rs. 35,978,444,270 comprising of 3,597,844,427 equity shares of Rs. 10/- each. Capital Raising During the year under review, your Company successfully, managed to raise Rs. 30,000 Mn through a Qualified Institutional Placement (QIP Issue). The issue witnessed strong interest from both foreign and domestic investors and there was a strong participation from long only investors. The issue price of Rs. 134/- per equity share, achieved was strong too, representing a discount of just 2.18% to the floor price. Additionally, your Company also raised Rs. 7,500 Mn by allotting 51,838,540 equity shares of Rs. 10/- each, on a preferential issue basis to Axiata Investments 2 (India) Limited, an existing key shareholder of the Company, at an issue price of Rs. 144.68 per share. The above capital raising has enabled to put in place a strong capital structure to support our strategic business plan. Finance During the year under review, your Company raised long term borrowings of Rs. 80,500 Mn by way of Rupee Term Loans, of which Rs. 76,475 Mn has been prepaid by the Company on May 14, 2015. Further, during the year, Rupee Term Loans aggregating to Rs. 4,055 Mn have been prepaid and Non-Convertible Debentures (NCDs) amounting to Rs. 750 Mn have been repurchased by the Company. In addition to the aforesaid prepayment, Long Term Loans aggregating to Rs. 16,191 Mn (including Rs. 10,051 Mn towards External Commercial Borrowings) have been repaid, pursuant to the instalments that fell due. Capital Expenditure Your Company continues to expand the telecommunication infrastructure of 2G and 3G sites, Optical Fibre Cable (OFC) transmission network (own and through IRU arrangements with other companies) along with the core capacities as required. Your Company also participated in the Government conducted spectrum auction held in March, 2015 and committed Rs. 301,375 Mn, which includes Rs. 276,398 Mn towards 54 MHz spectrum in the 900 MHz band, Rs. 19,198 Mn towards 20.4 MHz spectrum in 1800 MHz band and Rs. 5,780 Mn towards spectrum in 2100 MHz band. Out of the above commitment, Rs. 19,350 Mn has been paid before March 31, 2015 and included in Capital Advances. In addition to the above amount relating to spectrum, the capital expenditure (including capital advances) incurred during the year was Rs. 41,729 Mn and Rs. 45,785 Mn at standalone and consolidated level respectively. Deposits Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding, as on the date of the Balance Sheet. Directors' Report Credit Rating With the certainty of 900 MHz spectrum in the key nine service areas and the consistent healthy operational performance, Credit Analysis & Research Limited (CARE), has revised its rating for Long Term borrowings and Non-Convertible Debentures to 'CARE AA+' from 'CARE AA'. Additionally, your Company continues to enjoy credit rating of CARE A1+ and CRISIL A1+ for its short term debt program. Significant Developments: • Spectrum Auction - March 2015 The Auction for Spectrum in 800 MHz band, 900 MHz band, 1800 MHz band and 2100 MHz band commenced on March 4, 2015. The auction was limited to 20 service areas for 800 MHz band, 17 service areas for 900 MHz band, 15 service areas for 1800 MHz band and 17 service areas for 2100 MHz band. The total spectrum put to auction, in all four bands, was 470.75 MHz i.e. 108.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band, 99.2 MHz in 1800 MHz band and 85 MHz in 2100 MHz band. A large chunk of the spectrum put to auction in 800 MHz band and 1800 MHz band was new spectrum and also the entire spectrum put to auction in 2100 MHz band was new spectrum. However the spectrum put to auction in 900 MHz band was entirely 'in-use' spectrum of existing operators whose licenses were due for extension / renewal in the year 2015/2016. With renewal of licenses across nine key markets where the 20 years of the license period was ending in December 2015/April 2016, auction was critical for your Company as these nine service areas contributes ~73% of its revenues. Your Company remained focused on framing an auction strategy that ensures business continuity in these leadership markets and lay foundation for the digital age going forward. As a result, your Company successfully won 54 MHz of 900 MHz band spectrum in these nine key markets. With data business expected to continue its stupendous growth over the next few years, company has also acquired 5 MHz of 2100 MHz band for 3G services in the strategic metro market of Kolkata and contiguous spectrum in the 1800 MHz band in Tamil Nadu and Odisha service areas, for deployment of 4G services at appropriate juncture in the future. This will further expand 3G coverage to 13 circles covering 80% of company's revenues and enable it to roll out 4G services on 1800 MHz band across 10 service areas covering 61% of its revenues. The 9 MHz spectrum won in Maharashtra & Goa will also enable the company to deploy 3G services on 900 MHz (in addition to the existing 2100 MHz band), at an opportune time. As the Company continues to focus on growing the voice business and enhancing customer experience across all its circles, your Company also acquired additional top up spectrum in 1800 MHz band in UP West - 2.2 MHz, Karnataka - 1 MHz, Himachal Pradesh - 4.8 MHz and North East - 1 MHz. Overall, your Company won 79.4 MHz of spectrum i.e. 54 MHz in 900 band, 20.4 MHz in 1800 band and 5 MHz in 2100 band, across 14 circles for a total bid valued of approximately Rs. 301,375 Mn. Your Company opted for the deferred payment option and has made upfront payments of Rs. 77,342 Mn (including Rs. 19,350 Mn paid before March 31, 2015) The balance amount will be paid in ten equal instalments after two years moratorium including interest @ 10%. • One Time Spectrum Charge The Department of Telecommunications (DoT) had issued demand notices of Rs. 21,135 Mn towards levy of one time spectrum charge. The demand includes a retrospective charge of Rs. 3,691 Mn for holding GSM spectrum beyond 6.2 MHz for the period from July 1, 2008 to December 31, 2012 and also a prospective charge of Rs. 17,444 Mn for GSM spectrum held beyond 4.4 MHz for the period from January 1, 2013 till the expiry of the period of the respective licenses. In the opinion of the Company, the above demands, inter-alia, amount to alteration of financial terms of the licenses issued in the past. Your Company had, therefore, filed a petition before the Hon'ble High Court of Bombay, which directed DoT not to take any coercive action until the next date of hearing. Subsequently, DoT raised the issue of maintainability. The Hon'ble Court passed a detailed order stating that the case is maintainable and that such issue cannot be taken-up by TDSAT. Interim protection continues and the matter is pending for final hearing. • Transfer of licenses for Punjab and Karnataka service areas to the Company In the pending legal matter of transfer of licenses for service areas of Punjab & Karnataka, DoT has transferred these licenses in the name of the Company as directed by Hon'ble Supreme Court pursuant to its order dated January 29, 2014, upon submission of an undertaking. These licences were registered in the name of erstwhile Spice Communications Limited (Spice), which had merged with the Company pursuant to amalgamation order passed by the Hon'ble High Court(s) of Gujarat and Delhi. While the licenses in respect of Punjab and Karnataka service areas have been transferred to the Company pursuant to aforesaid directive given by Hon'ble Supreme Court to DoT upon furnishing of requisite undertaking by the Company to DoT, the matter relating to challenge of aforesaid demand of Rs. 6,000 Mn for alleged violations of license terms & conditions and merger & acquisition guidelines in connection with amalgamation of Spice, remains sub-judice before Hon'ble TDSAT. • 3G Services and Intra-Circle Roaming Arrangements Your Company is presently providing 3G services to its customers in all 11 service areas where it holds spectrum in 2100 MHz band, including Punjab service areas where company received authorization from DoT to launch 3G services in May 2014. Additionally, in March 2015 company has launched 3G services in Delhi service area on 900 MHz band spectrum that it won in February 2014 spectrum auction. Further, the Company provide 3G services in 9 other service areas based on intra-circle roaming arrangements with other leading telecom operators where company does not own 3G spectrum. The DoT had issued notices to your Company and other operators to stop providing 3G services in the service areas where the operator had not won 3G spectrum, besides levying a penalty of Rs. 500 Mn in each service area. Out of such notices issued to operators, your Company received notices for six service areas. Subsequently matters were heard at TDSAT and in its final Judgment dated April 30, 2014, the Hon'ble Tribunal allowed our Petitions and quashed the DoT penalty notices. In this connection, the DoT had also filed contempt of court petition before Hon'ble High Court of Delhi against certain Directors and Officials of the Company for alleged violation of interim order passed by the Hon'ble High Court of Delhi, which too was later dismissed by Hon'ble Court. Awards and Recognitions Some key awards and recognitions received by your Company are: • Your Company has been ranked 3rd in the best managed public companies, 4th in Corporate Governance and Investor Relations amongst Indian Companies across industries by Finance Asia magazine's annual poll of investors and analysts. • At EFFIES 2014, Idea was recognized as 3rd Best Client of the Year with 3 awards as set under: - Gold - Telecom Services category for "No Ullu Banaoing" - Silver- Integrated Advertising Campaign category for "No Ullu Banaoing" - Gold - For Best Ongoing Campaign category for "An Idea can change your life" • Idea was rated 8th among Top 50 Brands across brand, product and service categories in India by BrandZ Awards 2014 basis brand evaluation by WPP Millward Brown. • Your Company bagged "Pitch Top 50" Brands Award for the year 2014. • Your Company won the ET Telecom Award for the Best Marketing Campaign of the year for "No Ullu Banaoing". This award is given for the marketing campaign that is not only unique in creativity but also gets the desired business results. • Your Company yet again won the Economic Times Telecom Awards 2014 for 2 years in succession in the Enterprise category for cab management solution (for implementations for Bookmycab, Fastrack, Mango Cab). • Idea won awards in Annual Telecom Leadership Forum organised by the popular ICT magazine Voice & Data (from the Cyber Media House). • Internet and Broadband Category - for introducing the IN platform for billing postpaid data services. • Marketing Category - for harnessing analytics to gain consumer insights enabling micro marketing. • Marketing Category - for deployment of cloud based services for Idea's enterprise customers. New Initiatives During the year under review, your Company together with its subsidiaries made extensive progress on the marketing and customer care front by entering into various alliances, introducing various innovative products and services. Some of these are:- • Idea continued to capture the consumers' imagination with its innovative advertising during the year. While the theme campaign 'No Ullu Banaoing' highlighted the power of mobile internet on Idea network, the latest campaign - 'Idea Internet Network' (IIN) - shows how education on mobile internet can help overcome the barriers created by traditional systems by delivering the power to learn into the hands of anyone who has the passion to learn and an Idea Internet Network connection. • Idea followed the launch of its online bollywood destination site 'Idea Popcorn Street' (IPCS) (www.ideapopcornstreet.com), by extending the portal to South Indian filmdom - now IPCS has in place the latest on Tamil, Telugu, Malayalam and Kannada movies. • Your Company launched Magic Recharge product as an innovative means of customer engagement where the simple recharge process got converted to one filled with excitement and customer delight. • Idea revamped its much popular 121 and 122 USSD portals in its never ending quest to strengthen relationship with its customers and retailers respectively: - Upfront display of best offers on the 121 USSD portal used by customers for balance enquiry made the customer(s) well aware about the best product deals available for them. - Recharge feature on 122 USSD portal enabled retailers to check customer best offers as well as recharge for the same making the process easier and faster for them. Also Idea launched the online commission payment through 122, which made its relationship with the channel partners much more transparent and trustworthy. • Your Company launched unique web portal www.ismartpacks.com which gives customized data offers to prepaid customers. • Your Company launched easy share plans for prepaid customers which is Industry First and allows the customers to share internet, voice and SMS benefits with friends and family. • For postpaid customers, your Company launched bouquet of customer centric products such as: - "No Bill Shock" plans which ensured that customer doesn't get bill amount more than a pre-defined limit. - Booster packs for customers who run out of data volume or speed in the middle of the bill cycle • Successfully retained IOCL account for Automation of LPG booking for over 80 mn INDANE consumers by winning the national tender for smart gas solution. This has been one of the biggest enterprise business contracts bagged by any mobile operator in India. • Idea strengthened its brand further by sustaining its association with high impact media properties through the year by timing its mass media campaigns well, making its presence felt during some of the most popular properties on TV. The brand extended its association with IPL by signing up with Sunrisers Hyderabad for the 2015 edition. • To increase 3G device penetration amongst Idea customers, Idea (through its subsidiary) further strengthened 'Idea Smartphone' brand by launching five new models in the market in FY 2014-15. Subsidiaries and Joint Venture As on March 31, 2015, your Company has five subsidiary companies and one joint venture, details whereof are as under: Subsidiaries • Aditya Birla Telecom Limited, holds 16% shareholding in Indus Towers Limited and is engaged in the trading of mobility devices. • Idea Cellular Services Limited, provides manpower services to the Company. • Idea Cellular Infrastructure Services Limited, is a tower Company owning towers in Bihar and Odisha service areas and provides passive infrastructure services in these service areas. • Idea Mobile Commerce Services Limited, is engaged in providing mobile banking services and operating Prepaid Payment Instruments in India. • Idea Telesystems Limited, is engaged in the trading of mobility devices. Joint Venture Indus Towers Limited, in which Aditya Birla Telecom Limited (ABTL), a wholly owned subsidiary of the Company holds 16% stake, continues to be a joint venture with the Bharti Group and Vodafone Group and provides passive infrastructure services in 15 service areas. In accordance with the provisions contained in section 136(1) of the Companies Act, 2013 (Act), the Annual Report of the Company, containing therein its standalone and the consolidated financial statements are available on the Company's website www.ideacellular.com. Further, pursuant to the said section, the financial statements of each of the aforesaid subsidiary companies are available on the Company's website www.ideacellular.com and shall be available for inspection during business hours at the Registered Office of the Company. Any member who is interested in obtaining a copy of the financial statements may write to the Company Secretary at the registered office of the Company. In terms of provisions contained in Section 129(3) of the Act, read with Rule 5 of the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries and joint venture is provided as Annexure A to this report. Consolidated Financial Statements In accordance with the provisions of Section 129(3) of the Companies Act, 2013 and Clause 32 of the Listing Agreement, entered into with the Stock Exchanges, the Consolidated Financial Statements forms part of this Annual Report and shall also be laid before the ensuing Annual General Meeting of the Company. The Consolidated Financial Statements have been prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India. Risk Management In compliance with the requirements of Clause 49 of the Listing Agreement and the provisions of the Companies Act, 2013, your Company has constituted a Risk Management Committee, details whereof are set out in the Corporate Governance Report forming part of the Annual Report. Further, your Company has formally adopted a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure. Your Company has a well-established Enterprise-wide Risk Management (ERM) framework in place for identification, evaluating and management of risks, including the risks which may threaten the existence of the Company. In line with your Company's commitment to deliver sustainable value, this framework aims to provide an integrated and organized approach for evaluating and managing risks. A detailed exercise is being carried out to identify, evaluate, manage and monitor the risks. The Committee / Board periodically reviews the risks and suggest steps to be taken to control and mitigate the same through a properly defined framework. Employee Stock Option Scheme Your Company values its employees and is committed to adopt the best HR practices for rewarding them suitably. In this direction your Company had implemented the Employee Stock Option Scheme, 2006 (ESOS-2006) and Employee Stock Option Scheme, 2013 (ESOS-2013) and made grants to eligible employees under ESOS-2006 and ESOS-2013 from time to time. During the year under review, in terms of ESOS-2013, the ESOS Compensation Committee has granted 559,677 Options at an exercise price of Rs. 150.10 per option and 254,499 Restricted Stock Units (RSU) at an exercise price of Rs. 10/- per RSU. Each Option is convertible into one equity share of the Company upon vesting and would vest in 4 equal annual installments after one year of the grant (subject to meeting performance targets) and shall be exercisable within a period of 5 years from the date of vesting. Further each RSU is convertible into one equity share of the Company upon vesting and all RSUs would vest at the end of 3 years from the date of grant and shall be exercisable within a period of 5 years from the date of vesting. In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, the details of the Stock Options and Restricted Stock Units granted under the above mentioned Schemes are available on your Company's website www.ideacellular.com. A certificate from M/s. Deloitte Haskins & Sells LLP, Statutory Auditors, with respect to the implementation of the Company's Employee Stock Option Scheme(s), would be placed at the ensuing Annual General Meeting for inspection by the Members and a copy will also be available for inspection at the Registered Office of the Company. Internal Control Systems Your Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. The internal controls cover operations, financial reporting, compliance with applicable laws and regulations, safeguarding assets from unauthorised use and ensure compliance of corporate policies. Internal controls are reviewed periodically by the internal auditors, and are subject to management reviews with significant audit observations and follow up actions reported to the Audit Committee. The Audit Committee actively reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them in accordance with the changes in the business dynamics, if required. Human Resources The human resource philosophy and strategy of your Company is to attract and retain the best talent, encourage innovation, create an engaging and motivating workplace environment and be an employer of choice. This was reflected by external recognition through the "HR Excellence Award" given for best practices in Talent Acquisition, presented at the Economic Times HR Excellence Summit 2014. In the previous financial year, your company has also shown an improvement in already high employee engagement scores overall, and significant improvement in areas like training and development and onboarding. Keeping in view the long term business goals, your company has ensured that the Human Resources strategy is inline and complementary to the business strategy. Your Company will focus on succession planning, building capability in digital space and analytics, and ensuring continued high employee engagement along with effective and efficient talent development and deployment. This strategy has strong alignment with your Company's vision to successfully build and sustain your Company's standing as one of India's most admired and valuable corporations despite unrelenting competitive pressures. Management Discussion and Analysis The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of the Annual Report. Corporate Governance Your Company is committed to maintain the highest standards of Corporate Governance. Your Company continues to be compliant with the requirements enshrined in Clause 49 of the Listing Agreement which relates to Corporate Governance. A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. A certificate from the Statutory Auditors of the Company, confirming compliance with the conditions of Corporate Governance, as stipulated under Clause 49 forms part of the Annual Report. Business Responsibility Report As stipulated under the Listing Agreement, the Business Responsibility Report, describing the initiatives taken by the Company from environmental, social and governance perspective is presented in a separate section forming part of the Annual Report. Corporate Social Responsibility In terms of the provisions of section 135 of the Companies Act, 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Corporate Governance report, which forms part of this report. Your Company has also in place a CSR Policy and the same is available on your Company's website http:// www.ideacellular.com/investor-relations/corporate-governance. The financial year 2014-15, was a preparatory year for the implementation of CSR policy. Being the initial year, the Company was in the process of evaluating the various focus areas for its CSR activities and conducted number of consultations with organizations working in the area of education, health, sanitation, poverty eradication and livelihood generation. The Company identified some key projects which will be executed during the current financial year 2015-16. A dedicated team is also in place to look after the CSR related activities. The particulars required to be disclosed pursuant to the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure B forming part of this Report. Directors' Responsibility Statement Pursuant to Section 134 of the Companies Act, 2013 ('Act') the Directors, to the best of their knowledge and belief, confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed, along with proper explanation relating to material departures; (b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit 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 this Act 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 that 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. Directors In accordance with the provisions of the Companies Act, 2013, Mrs. Rajashree Birla and Dr. Shridhir Sariputta Hansa Wijayasuriya, retire from office by rotation, and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting of the Company. Further, during the year under review, Mr. Biswajit Subramanian and Dr. Rakesh Jain, Non-Executive Director(s) resigned from the Board of your Company with effect from October 20, 2014 and December 15, 2014 respectively. The Board places on record its sincere appreciation for the valuable guidance and contribution made by Mr. Subramanian and Dr. Jain in the deliberations of the Board during their respective tenures. With coming into the force of the Companies Act, 2013, the Board appointed all the existing Independent Directors viz. Mr. Gian Prakash Gupta, Ms. Tarjani Vakil, Mr. Arun Thiagarajan, Mr. R.C. Bhargava, Mr. P. Murari, Mr. Mohan Gyani and Mrs. Madhabi Puri Buch as Independent Directors under Section 149 of the Companies Act, 2013 for a term of five years upto the conclusion of the Annual General Meeting to be held in calendar year 2019. The Shareholders at their Annual general Meeting held on September 26, 2014 approved their appointment. The Independent Directors have given the declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Mr. Himanshu Kapania was appointed as the Managing Director of the Company for a period of 5 years with effect from April 1, 2011. His current term of office as Managing Director is due to expire on March 31, 2016. The Board of Directors at its meeting held on July 21, 2015, on the recommendation of the Nomination & Remuneration Committee, has re-appointed Mr. Himanshu Kapania as the Managing Director of the Company with effect from April 1, 2016 for a further period of five years, subject to approval of the members. The resolution seeking approval of the members for the appointment of Mr. Kapania together with the terms and conditions of appointment, have been incorporated in the notice of the ensuing Annual General Meeting. Board Evaluation and Familiarization Programme The Board has carried out the annual performance evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Companies Act, 2013 and the Clause 49 of the Listing Agreement. The manner in which the evaluation has been carried out has been provided in the Corporate Governance Report. The details of programme for familiarization of Independent Directors of your Company is available on your Company's website www.ideacellular.com. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy on remuneration of Directors and Senior Management Employees. The remuneration policy is attached as Annexure C to this report. Board Meetings During the year, seven meetings of the Board of Directors were held. The details of the meetings and the attendance of the Directors are provided in the Corporate Governance Report. Board Committees During the year, in accordance with the Companies Act, 2013 and provisions of the Listing Agreement, the Board reconstituted some of its Committees. There are currently six committees of the Board, namely: - Audit Committee - Nomination & Remuneration Committee - Stakeholders' Relationship Committee - Risk Management Committee - Corporate Social Responsibility Committee - Finance Committee - Securities Allotment Committee Details of the Committees along with their charter, composition and meetings held during the year, are provided in the Corporate Governance Report, which forms part of this report. Audit Committee The Audit Committee comprises of Mr. Gian Prakash Gupta, Mr. Arun Thiagarajan, Ms. Tarjani Vakil and Dr. Shridhir Sariputta Hansa Wijayasuriya. Further details relating to the Audit Committee are provided in the Corporate Governance Report, which forms part of this report. Key Managerial Personnel In terms of the provisions of Section 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Himanshu Kapania, Managing Director; Mr. Akshaya Moondra, Chief Financial Officer; and Mr. Pankaj Kapdeo, Company Secretary were designated as Key Managerial Personnel of the Company. Contract and Arrangements with Related Parties All arrangements / transactions entered by the Company during the year with related parties were in the ordinary course of business and on arm's length basis. There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. The related party transactions which can be considered material during the year is the arrangement with Indus Towers Limited (Indus), a joint venture of the wholly-owned subsidiary of your company which provides Passive Infrastructure services and related operations & maintenance services to various telecom operators in India, including your Company. Indus is currently the world's largest passive infrastructure provider. Your Company had entered into a Master Service Agreement (MSA) with Indus in 2008 for availing passive infrastructure services provided by them in certain service areas. The MSA requires individual tenancy service contracts to be executed for each passive infrastructure site, the terms of which vary depending on the location, type of site, number of existing tenants, etc., and contain lock in periods for ensuring continuity. Such terms are similarly applicable to all other telecom providers having arrangements with Indus. The details of the material related party transaction with Indus for the year ended March 31, 2015 is provided in Form AOC-2, which is attached as Annexure D to this report. All Related Party Transactions are placed before the Audit Committee for their approval. Omnibus approvals are taken for the transactions which are repetitive in nature. The Company has implemented a Related Party Transaction manual and Standard Operating Procedures for the purpose of identification and monitoring of such transactions. The details of the transactions with Related Parties are provided in the accompanying financial statements as required under Accounting Standard 18. The policy on Related Party Transactions is uploaded on the Company's website www.ideacellular.com. Particulars of Loans, Guarantees and Investments As your Company is engaged in the business of providing infrastructural facilities, the provisions of Section 186 of the Companies Act, 2013 relating to loans made, guarantees given or securities provided are not applicable to the Company. However, the details of such loans made and guarantees given are provided in the standalone financial statements at Note no. 46. Particulars of investments made by the Company are provided in the standalone financial statements at Note nos. 13 and 15. Vigil Mechanism Your Company has in place a vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of your Company's Code of Conduct. Adequate safeguards are provided against victimization to those who avail of the mechanism and direct access to the Chairman of the Audit Committee in exceptional cases is provided to them. The Vigil Mechanism is available on your Company's website www.ideacellular.com. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The information on conservation of energy, technology absorption and foreign exchange and outgo as required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are given to the extent applicable in Annexure E forming part of this report. Particulars of Employees Disclosures pertaining to remuneration and other details as required under section 197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure F to this report. In accordance with the provisions of Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. However, in line with the provisions of Section 136(1) of the Act, the Report and Accounts as set out therein, are being sent to all Members of your Company excluding the aforesaid information about the employees. Any Member, who is interested in obtaining these particulars about employees, may write to the Company Secretary at the Registered Office of your Company. Statutory Auditors The members of the Company had at its Annual General Meeting (AGM) held on September 26, 2014, appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, (Firm Registration No. 117366W/W-100018), as the Statutory Auditors of the Company for a period of three years, i.e. till the conclusion of 22nd AGM, subject to ratification of their appointment by members at every AGM. The Company has received a certificate from the Statutory Auditors to the effect that ratification of their appointment, if made, shall be in compliance with the provisions Section 139 and 141 of the Companies Act, 2013. Accordingly, the Board proposes ratification of their appointment at the ensuing Annual General Meeting. Auditors' Report and Notes to Financial Statements The Board has duly reviewed the Statutory Auditors' Report on the Financial Statements including the emphasis of matter relating to the one-time spectrum fee demand raised by the Department of Telecommunications in January 2013. As explained in Significant Development section of this report and also in the Notes to the Financial Statements, the matter remains sub-judice and does not call for any further explanation/clarification under Section 134(3)(f) of the Companies Act, 2013. Cost Auditors In conformity with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board on the recommendation of the Audit Committee has appointed M/s. Sanjay Gupta & Associates, Cost Accountants, as the Cost Auditors, to conduct the Cost Audit of your Company for the Financial Year ended March 31, 2016 at a remuneration as specified in the notice convening the Annual General Meeting. The Cost Audit Report for the Financial Year 2014-15 has been placed before the Board at their meeting held on July 21, 2015. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for the approval by the shareholders at the ensuing Annual General Meeting. Secretarial Auditor In terms of the provision of the Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Umesh Ved & Associates, Company Secretaries, Ahmedabad, as the Secretarial Auditor for conducting the Secretarial Audit of your Company for the financial year ended March 31, 2015. The report of the Secretarial Auditor is annexed to this report as Annexure G. The secretarial audit report does not contain any qualification, reservation or adverse remark. Extract of Annual Return In terms of the provisions of Section 92 (3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT 9 for the financial year ended March 31, 2015 is annexed herewith as Annexure H to this report. Other Disclosures - There are no material changes and commitments affecting the financial position of your Company between end of financial year and the date of report. - Your Company has not issued any shares with differential voting. - There was no revision in the financial statements. - Your Company has not issued any sweat equity shares. - There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future - During the year, your Company has not received any complaints under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,2013. Acknowledgement Your Directors place on record their sincere appreciation to the Department of Telecommunications, Telecom Regulatory Authority of India, the Central Government, the State Governments, all its investors & stakeholders, bankers, technology providers, equipment suppliers, value added service partners and all the business associates for the co-operation and support extended to the Company. Your Directors also wish to place on record their deep appreciation to the employees for their hard work, dedication and commitment. The perseverance and unstinting efforts of the employees has enabled the Company to retain the 'Fastest Growing Indian Telecom Brand' within the sector. For and on behalf of the Board Kumar Mangalam Birla Chairman Place: Mumbai Date: July 21, 2015 |