Tata Communications Annual Report 2014
Tata Communications Annual Report 2014
Tata Communications Annual Report 2014
Communications
Annual Report 2013-2014
www.tatacommunications.com |
@tata_comm
http://tatacommunications-newworld.com | www.youtube.com/tatacomms
A global workforce
7,700
30%
40
36
Employees
Outside India
Nationalities
Average age
A global vision
Emerging
markets
INDIA, CHINA,
AFRICA,
MIDDLE EAST
A NEW WORLD OF
COMMUNICATIONS
Converged
IP solutions
Tata Communications
creates A New World of
Communications to drive
our customers leadership,
leveraging IP technology
in future markets
Managed
Services
A global position
#1 Enterprise data in India
#1 International wholesale voice
www.tatacommunications.com |
@tata_comm
http://tatacommunications-newworld.com | www.youtube.com/tatacomms
2014 Tata Communications. All rights reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries.
Notice .........................................................................................................................................................................................................
11
32
44
Declaration by CEO regarding Companys Code of Conduct and CEO/CFO Certificate ...............................................
45
46
47
55
56
58
62
63
64
65
Consolidated Accounts
Auditors Report on Consolidated Financial Statements .........................................................................................................
111
112
113
114
115
Section 212 of the Companies Act, 1956, related to Subsidiary Companies ....................................................................
158
159
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
CORPORATE DETAILS
BOARD OF DIRECTORS
Mr. Subodh Bhargava (Chairman) (Independent)
Mr. Vinod Kumar (Managing Director and Group CEO)
Mr. N. Srinath
Mr. Kishor A. Chaukar
Mr. Amal Ganguli (Independent)
Mr. S. Ramadorai
Dr. Ashok Jhunjhunwala
Dr. Uday B. Desai (Independent)
Mr. Ajay Kumar Mittal
Mr. Saurabh Kumar Tiwari
Mr. Bharat Vasani
Mr. Satish Ranade
Mr. Sanjay Baweja
REGISTERED OFFICE
CORPORATE OFFICE
Plot No. C21& C36, G Block, Bandra Kurla Complex, Mumbai 400 098.
BANKERS
ANZ Bank
Axis Bank
Bank of America
Bank of Baroda
Bank of India
Citibank Inc.
Deustche Bank
Development Bank of Singapore (DBS)
Federal Bank
HDFC Bank Ltd.
LEGAL ADVISORS
STATUTORY AUDITORS
REGISTRARS &
TRANSFER AGENTS
NOTICE
NOTICE is hereby given that the Twenty Eighth Annual General Meeting of Tata Communications Limited will be held at 1100
hours on Monday, 4 August 2014, at NSE Auditorium, Ground Floor, The National Stock Exchange of India Ltd., Exchange
Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051 to transact the following business:
Ordinary Business
1.
To receive, consider and adopt the Balance Sheet of the Company as on 31 March 2014, the audited Profit and Loss
Account for the year ended on that date, the Auditors Report thereon and the Report of the Board of Directors.
2.
3.
To appoint a Director in place of Mr. Saurabh Tiwari who retires by rotation at this Annual General Meeting and being
eligible offers himself for re-appointment.
4.
To appoint a Director in place of Mr. S. Ramadorai who retires by rotation at this Annual General Meeting and being
eligible offers himself for re-appointment.
5.
To consider and, if thought fit, to pass with or without modification the following Resolution as an Ordinary Resolution:
RESOLVED THAT pursuant to the provisions of Sections 139,142 and other applicable provisions, if any, of the Companies
Act, 2013 and the Rules framed thereunder, as amended from time to time, M/s. S.B. Billimoria & Co., Chartered
Accountants be and are hereby appointed Statutory Auditors of the Company to hold office from the conclusion of
this Annual General Meeting (AGM) till the conclusion of the thirty-first AGM of the Company to be held in the year
2017 (subject to ratification of their appointment at every AGM), on such remuneration as may be mutually agreed
upon between the Board of Directors and the Auditors, plus reimbursement of service tax, travelling and out of pocket
expenses.
6.
To appoint a Director liable to retire by rotation in place of Mr. Bharat Vasani (DIN 00040243) who holds office only up to
date of the forthcoming Annual General Meeting and in respect of whom a notice under the provisions of Section 160
of the Companies Act, 2013 has been received by the Company from a member signifying the candidature of Mr. Bharat
Vasani for the office of a director.
7.
To appoint Mr. Subodh Bhargava as an Independent Director and in this regard to consider and if thought fit, to pass,
with or without modification(s), the following resolution as an Ordinary Resolution:
RESOLVED that pursuant to the provisions of sections 149, 152 and other applicable provisions, if any, of the Companies
Act, 2013 (Act) and the Rules framed thereunder, read with Schedule IV to the Act, as amended from time to time,
Mr. Subodh Bhargava (DIN 00035672), a non-executive Director of the Company, who has submitted a declaration that
he meets the criteria for independence as provided in section 149(6) of the Act and who is eligible for appointment, be
and is hereby appointed as an Independent Director of the Company with effect from 4 August, 2014 up to 29 March
2017.
8.
To appoint Dr. Uday B Desai as an Independent Director and in this regard to consider and if thought fit, to pass, with or
without modification(s), the following resolution as an Ordinary Resolution:
RESOLVED that pursuant to the provisions of sections 149, 152 and other applicable provisions, if any, of the Companies
Act, 2013 (Act) and the Rules framed thereunder, read with Schedule IV to the Act, as amended from time to time,
Dr. Uday B Desai (DIN 01735464), a non-executive Director of the Company, who has submitted a declaration that he
meets the criteria for independence as provided in section 149(6) of the Act and who is eligible for appointment, be and
is hereby appointed as an Independent Director of the Company with effect from 4 August, 2014 up to 3 August 2019.
9.
To approve the remuneration of the Cost Auditors for the financial year ending March 31, 2015 and in this regard to
consider and if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution:
RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act,
2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
thereof, for the time being in force), the Cost Auditors appointed by the Board of Directors of the Company Mr. Jugal
Kishor Puri, Cost Accountants, to conduct the audit of the cost records of the Company for the financial year ending
March 31, 2015, be paid the remuneration as set out in the Statement annexed to the Notice convening this Meeting.
RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to do all acts and take all
such steps as may be necessary, proper or expedient to give effect to this resolution.
The Explanatory Statement pursuant to section 102 of the Companies Act, 2013 (Act) in respect of the business
under Item Nos. 5 to 9 of the Notice, is annexed hereto. The relevant details as required under clause 49 of the Listing
Agreements entered into with the Stock Exchanges, of persons seeking appointment/re-appointment as Directors
under Item Nos. 6 to 8 of the Notice, are also annexed.
2.
A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING (THE MEETING) IS ENTITLED TO
APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER
OF THE COMPANY. THE INSTRUMENT APPOINTING THE PROXY SHOULD, HOWEVER, BE DEPOSITED AT THE REGISTERED
OFFICE OF THE COMPANY NOT LESS THAN FORTY-EIGHT HOURS BEFORE THE COMMENCEMENT OF THE MEETING.
A PERSON CAN ACT AS A PROXY ON BEHALF OF MEMBERS NOT EXCEEDING FIFTY AND HOLDING IN THE AGGREGATE
NOT MORE THAN TEN PERCENT OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING VOTING RIGHTS. A MEMBER
HOLDING MORE THAN TEN PERCENT OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING VOTING RIGHTS MAY
APPOINT A SINGLE PERSON AS PROXY AND SUCH PERSON SHALL NOT ACT AS A PROXY FOR ANY OTHER PERSON OR
SHAREHOLDER.
3.
Registers of members and transfer books of the Company shall remain closed from 1 August 2014 till 4 August 2014
(both days inclusive) for the purpose of ascertaining eligibility to dividend.
4.
The dividend as recommended by the Board of Directors, if declared at this Annual General Meeting, shall be paid on or
after Saturday the 9 August 2014:
5.
(i)
to those shareholders whose names appear on the Companys Register of Members after giving effect to all valid
share transfers in physical form lodged with the Registrar & Transfer Agents (R&T Agents) of the Company on or
before Thursday, 31 July 2014.
(ii)
in respect of shares held in electronic form, to those deemed members whose names appear in the statements of
beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services
(India) Limited (CDSL) as at the end of business on Thursday, 31 July 2014. In respect of shares held in demat mode
the dividend will be paid on the basis of beneficial ownership as per details to be furnished by NSDL and CDSL for
this purpose.
Members who hold shares in dematerialized form are requested to bring their DP ID and Client ID numbers for easy
identification of attendance at the meeting.
6.
This may be taken as notice of declaration of dividend for 2013-14 in accordance with Article 93 of Articles of Association
of the Company in respect of dividend for that year when declared.
7.
Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, dividends which remain unclaimed in the
unpaid dividend account for a period of seven years from the date of transfer of the same, will be transferred to the
Investor Education and Protection Fund established by the Central Government. The Members and Shareholders who
have not encashed their dividend warrant(s) so far for the financial year ended 31 March 2007 or any subsequent
financial years are requested to make their claim to the R & T Agents of the Company. According to the provisions of the
Act, no claims shall lie against the said Fund or the Company for the amounts of dividend so transferred nor shall any
payment be made in respect of such claims. The summary of the unpaid dividend for the past years and the date on
which the outstanding amount shall be transferred to Investor Education and Protection Fund on the dates as given in
the table below.
Date of AGM
Balance as on
30 June 2014 (`)
Transfer to Investor
Education & Protection
Fund
2-Aug-07
600,047.50
2006-07
3-Sep-14
2-Aug-08
672,889.50
2007-08
3-Sep-15
7-Aug-09
671,575.50
2008-09
8-Sep-16
6-Aug-10
Nil
2009-10
Not Applicable
11-Oct-11
494,102.00
2010-11
12-Nov-18
27-Jul-12
532,858.00
2011-12
28-Aug-19
26-Jul-13
810,783.00
2012-13
27-Aug-20
Total
3,782,255.50
8.
As per Section 72 of the Companies Act, 2013, shareholders are entitled to make nomination in respect of shares held
by them in physical form. Shareholders desirous of making nominations are requested to send their requests in Form
No. 2B in duplicate (which will be made available on request) to the R & T Agents of the Company.
9.
Members are requested to notify any change in their addresses immediately, in any event not later than Thursday,
31 July 2014, so as to enable us to dispatch the dividend warrants at the correct addresses:
a)
In case of physical shares to the R & T Agents, M/s Sharepro Services (India) Private Limited, 13 AB, Samhita
Warehousing Complex, 2nd Floor, Near Sakinaka Telephone Exchange, Andheri Kurla Road, Andheri East,
Mumbai - 400072.
b)
10. The Notice of the AGM along with the Annual Report 2013-14 is being sent by electronic mode to those Members
whose e-mail addresses are registered with the Company/Depositories, unless any Member has requested for a physical
copy of the same. For Members who have not registered their e-mail addresses, physical copies are being sent by the
permitted mode.
11. To support the Green Initiative, the Members who have not registered their e-mail addresses are requested to register
the same with the R&T Agent/Depositories.
12. VOTING THROUGH ELECTRONIC MEANS
In compliance with the provisions of Section 108 of the Act and the Rules framed thereunder, the Members are provided
with the facility to cast their vote electronically, through the e-voting services provided by NSDL, on all resolutions set
forth in this Notice.
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
In case a Member receives an e-mail from NSDL (for Members whose e-mail addresses are registered with the Company/
Depositories):
i.
Open the e-mail and also open PDF file namely TCL e-voting.pdf with your Client ID or Folio No. as password. The
said PDF file contains your user ID and password for e-voting. Please note that the password is an initial password.
ii.
Open the internet browser and type the following URL: https://www.evoting.nsdl.com.
iii.
iv.
If you are already registered with NSDL for e-voting then you can use your existing user ID and password.
v.
If you are logging in for the first time, please enter the user ID and password provided in the PDF file attached with
the e-mail as initial password.
vi.
The Password Change Menu will appear on your screen. Change to a new password of your choice, making sure
that it contains a minimum of 8 digits or characters or a combination of both. Please take utmost care to keep your
password confidential.
vii.
Once the e-voting home page opens, click on: e-voting> Active Voting Cycles.
viii. Select EVEN (E-Voting Event Number) of Tata Communications Limited which is 100508. Now you are ready for
e-voting as Cast Vote page opens.
ix.
Cast your vote by selecting appropriate option and click on Submit and also Confirm when prompted.
x.
xi.
Once the vote on the resolution is cast, the Member shall not be allowed to change it subsequently.
xii.
Institutional shareholders (i.e. other than individuals, HUF, NRI, etc.) are required to send scanned copy (PDF/
JPG format) of the relevant Board Resolution/Authority letter, etc., together with attested specimen signature of
the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail to mehul.shah@
khaitanco.com, with a copy marked to [email protected].
xiii. In case of any queries, you may refer the Frequently Asked Questions (FAQs) - Shareholders and e-voting user
manual - Shareholders, available at the downloads section of www.evoting.nsdl.com.
B.
C.
In case a Member receives physical copy of the Notice of AGM (for Members whose email addresses are not registered
with the Company/Depositories):
i.
Initial password is provided in the enclosed ballot form: EVEN (E-Voting Event Number), user ID and password.
ii.
Please follow all steps from Sl. No. (ii) to Sl. No. (xiii) above, to cast vote.
Other Instructions:
i.
The e-voting period commences on Tuesday, 29 July 2014 (9.00 a.m. IST) and ends on Thursday, 31 July 2014
(6.00 p.m. IST). During this period, Members of the Company, holding shares either in physical form or in
dematerialized form, may cast their vote electronically. The e-voting module shall be disabled by NSDL for voting
thereafter. Once the vote on a resolution is cast by the Member, he shall not be allowed to change it subsequently.
ii.
The voting rights of Members shall be in proportion to their shares of the paid up equity share capital of the
Company.
iii.
Mr. Mehul Shah, Advocate, Khaitan & Co., has been appointed as the Scrutinizer to scrutinize the e-voting process
(including the Ballot Form received from the Members who do not have access to the e-voting process) in a fair
and transparent manner.
iv.
The Scrutinizer shall, within a period not exceeding three working days from the conclusion of the e-voting period,
unblock the votes in the presence of at least two witnesses not in the employment of the Company and make a
Scrutinizers Report of the votes cast in favour or against, if any, forthwith to the Chairman of the Company.
v.
Members who do not have access to e-voting facility may send duly completed Ballot Form (enclosed with the
Annual Report) so as to reach the Scrutinizer appointed by the Board of Directors of the Company, Mr. Mehul
Shah, Advocate, Khaitan & Co., at Sharepro Services (India) Private Limited, Mr. Mehul Shah (Scrutinizer), (Unit : Tata
Communications Limited) 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021 not later
than Thursday, 31 July 2014 (6.00 p.m. IST). Members have the option to request for physical copy of the Ballot
Form by sending an e-mail to [email protected] by mentioning their Folio / DP ID and Client ID
No. However, the duly completed Ballot Form should reach the Scrutinizer not later than Friday, 1 August 2014
(6.00 p.m. IST). Ballot Form received after this date will be treated as invalid.
A Member can opt for only one mode of voting i.e. either through e-voting or by Ballot. If a Member casts
votes by both modes, then voting done through e-voting shall prevail and Ballot shall be treated as invalid.
vi.
The results declared along with the Scrutinizers Report shall be placed on the Companys website www.
tatacommunications.com and on the website of NSDL www.evoting.nsdl.com within two days of the passing of
the resolutions at the Twenty-eight AGM of the Company on 4 August 2014 and communicated to the BSE Limited
and National Stock Exchange of India Limited, where the shares of the Company are listed.
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
The Nomination and Remuneration Committee has recommended the appointment of Mr. Subodh Bhargava as independent
directors from 4 August, 2014 up to 29 March 2017 and appointment of Dr. Uday B. Desai from 4 August 2014 upto 3 August 2019.
Mr. Bhargava and Dr. Desai, non-executive directors of the Company, have given a declaration to the Board that they meet
the criteria of independence as provided under section 149(6) of the Act. In the opinion of the Board, both directors fulfil
the conditions specified in the Act and the Rules framed thereunder for appointment as independent director and they are
independent of the management.
In compliance with the provisions of section 149 read with Schedule IV of the Act, the appointment of these directors as
independent directors is now being placed before the members for their approval.
The terms and conditions of appointment of the above Directors shall be open for inspection by the members at the
Registered Office of the Company during normal business hours on any working day, excluding Saturday.
None of the Directors or Key Managerial Personnel (KMP) or relatives of directors and KMPs except Mr. Subodh Bhargava and
Dr. Uday B Desai are concerned or interested in the Resolution at Item Nos. 7 & 8 respectively of the accompanying Notice.
Brief profiles of the independent directors to be appointed are given below:
Mr. Subodh Bhargava is a Mechanical Engineer from IIT (Roorkee). He has been the Group Chairman and Chief Executive
Officer of Eicher Group of Companies. He is a Former President of the Confederation of Indian Industries (CII), President of the
Association of Indian Automobile Manufacturers and Vice President of the Tractor Manufacturers Association. He has been
associated with various Central and State Government bodies and committees including as a member of the Technology
Development Board, Insurance Tariff Advisory Committee and the Economic Development Board of the State of Rajasthan,
Himachal Pradesh and Madhya Pradesh. He has been closely associated with various IIMs, IITs and other Management and
Technical Institutions as also with a number of NGOs was Member, Board of Directors of IIT (Roorkee), IIM, Indore, IIM
Lucknow, Entrepreneurship Development Institute, Ahmedabad, Foreign Trade Institute, Delhi, State Bank of India, Power
Finance Corporation etc. Presently, Member of the Board of Governors of IIM, Kashipur, & XLRI Jamshedpur. Detailed bio-data
of Mr. Bhargava is given elsewhere in the Annual Report.
Dr. Uday B. Desai received the B. Tech. degree from Indian Institute of Technology, Kanpur, India, in 1974, the M.S. degree
from the State University of New York, Buffalo, in 1976, and the Ph.D. degree from The Johns Hopkins University, Baltimore,
U.S.A., in 1979, all in Electrical Engineering. Since June 2009, he is the Director of IIT Hyderabad. From 1979 to 1984 he was an
Assistant Professor in the School of Electrical Engineering and Computer Science Department at Washington State University,
Pullman, WA, U.S.A., and an Associate Professor at the same place from 1984 to 1987. From 1987 to May 2009 he was a
Professor in the Electrical Engineering Department at the Indian Institute of Technology - Bombay. He was Dean of Students
at IIT-Bombay from August 2000 to July 2002. He has held Visiting Associate Professors position at Arizona State University,
Purdue University, and Stanford University. He was a visiting Professor at EPFL, Lausanne during the summer of 2002. From
July 2002 to June 2004 he was the Director of HP-IITM R and D Lab. at IIT-Madras. Detailed bio-data of Dr. Desai is given
elsewhere in the Annual Report.
In respect of Item No. 9
The Board, on the recommendation of the Audit Committee, has approved the appointment and remuneration of Mr. Jugal
Kishor Puri, Cost Accountants, as Cost Auditors to conduct the audit of the cost records of the Company for the financial year
ending 31 March 2015. Accordingly, under the authority from the Board of Directors, the remuneration of the Cost Auditors
was fixed at `5,50,000/- plus out of pocket expenses on actual basis subject to a maximum of `55,000/-.
In accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the
remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company. Accordingly, the resolution
at Item No.9 is placed before the shareholders for ratification.
None of the Directors, Key Managerial Personnel or their relatives are, in any way, concerned or interested in the resolution
set out at Item No. 9 of the Notice.
The Board commends the Ordinary Resolution set out at Item No. 9 of the Notice for approval by the members.
By Order of the Board of Directors
Satish Ranade
Company Secretary
Mumbai 4 July 2014
CIN: #L64200MH1986PLC039266
Registered Office :
VSB, Fort,
M.G. Road, Mumbai - 400 001.
10
03606497
NIL
DIN Number
Shareholding In TCL
Financial
& General
Management
NIL
M.A. (Political
Science), from
University of
Allahabad, MBA
(Finance) from
National Institute
of Financial
Management,
Ministry of
Finance,
Government of
India and LLB from
Delhi University.
Qualifications
Memberships/Chairmanships of Committees
in other Public Companies
9 August 2011
Date of Appointment
30 September
1967
Date of Birth
Mr. Saurabh
Tiwari
Particulars
00000002
NIL
13
General
Management
00040243
NIL
NIL
General
Management
00035672
NIL
General
Management
B.Sc., BE in
electronics from
Bangalore, MS in
Computer Science
from University of
California UCLA,
USA.
15 May 2002
30 March 1942
16 December
2013
24 August 1958
28 June 2007
6 October 1944
Mr. S. Ramadorai
01735464
NIL
NIL
NIL
General
Management
B. Tech (Electrical),
IIT, Kanpur, M.S.
(Electrical), State
University of New
York, Ph.D. from
The Johns Hopkins
University,
Baltimore, USA,
Director IIT
Hyderabad.
6 June 2011
14 February 1951
Details of Directors Seeking Appointment / Re-Appointment at the 28th Annual General Meeting
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
DIRECTORS REPORT
Dear Shareholders,
The directors are pleased to present the 28th annual report and audited accounts of Tata Communications Limited
(TCL) for the financial year ended 31 March 2014.
PERFORMANCE
The key financial parameters of the Company during the year under review are given in the table below:
2013-14
(` in Crores)
2012-13
(` in Crores)
Percentage
Change
Consolidated income
19,809.20
17,439.54
13.59%
Consolidated EBIDTA
3,087.96
2059.71
49.92%
444.41
(430.71)
NA
101.42
(623.31)
NA
4,840.35
4,796.34
0.92%
803.48
656.69
22.35%
542.43
475.24
14.14%
Dividend
11
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Data
OVERALL REVENUE MIX
11%
Neotel
40%
Data
49%
Voice
11.4%
17.1%
Revenue
8000
6000
4000
14.7%
2000
0
Voice
Data
2012 - 13 2013 - 14
Neotel
Voice
In the voice business, the Company remains one of the
largest players worldwide in terms of market share.
The trend of declining margins continues due to traffic
shifting to VoIP based calling and therefore, the Company
is focused on developing innovative commercial
offerings and optimizing costs to maintain free cash
flow generation from this business. Year on Year (YOY)
ILD voice traffic declined by 2%, however the traffic mix
is better. YoY EBITDA margins improved by 1% and YoY
EBITDA grew by 24%. Free cash flow generated during the
year from the voice business was `804 crores (previous
year `669 crores).
12
13
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
14
Premature
Termination
Compensation
of
Monopoly
and
15
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Particulars of Employees
16
Corporate Governance.
Corporate Governance
Pursuant to Clause 49 of the listing agreement with
the stock exchanges, the Management Discussion and
Analysis, Corporate Governance Report and Auditors
Certificate regarding compliance with conditions of
corporate governance form part of the directors report.
Pursuant to Clause 55 of the listing agreement with the
stock exchanges, Business Responsibility Reports have
been included elsewhere in this Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act, 2013, the
directors, based on the representations received from the
operating management, confirm that:
t
t
t
irregularities;
t
5IFZIBWFQSFQBSFEUIFBOOVBMBDDPVOUTPOBHPJOH
concern basis;
t
t
ACKNOWLEDGMENTS
The directors would like to thank every one of the
Companys customers, business associates and other
stakeholders globally for their valuable contribution to
the Companys growth and success. The directors also
recognise and appreciate the passion and commitment
of all the employees of the Company around the world.
The directors are also grateful to the Companys other
stakeholders and partners including its shareholders,
promoters (strategic partner and GoI), bankers and
others for their continued support.
On behalf of the Board of Directors
Subodh Bhargava
Chairman
Dated: 13 May 2014
Registered Office:
VSB, MG Road, Fort,
Mumbai 400001.
17
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
18
Business Strategy
Tata Communications is already the worlds largest
carrier of international wholesale voice traffic. It
has over 15 terabits of international bandwidth
lit capacity and owns over 1 million square feet of
data centre and colocation space across 44 global
locations. It is also the worlds largest signaling
provider, the 5th largest and fastest-growing Tier 1
IP backbone, and the largest Ethernet provider. Tata
Communications owns and operates, the worlds
only wholly-owned fibre optic sub-sea network ring
around the globe, the Tata Communications Global
Network (TGN), which consists of 210,000 kilometers
of terrestrial and subsea network fibre. The TGN
reaches countries representing 99.7 % of the worlds
GDP and has significant depth in key emerging
markets.
The Company believes that these capabilities
equip it with unique competitive advantages to
execute its vision, which is to deliver a new world
of communications to advance the reach and
leadership of its customers. The Companys strategy
is to build leading-edge IP-leveraged solutions,
based on its advanced global infrastructure as well
as its leadership in India. Tata Communications is
able to provide differentiated choices of network
and IT Infrastructure services to service providers,
and large enterprise customers, in both established
and emerging markets.
In the coming years, the Company will continue with
its strategy of providing managed services globally
with a business-to-business (B2B) focus. The
Company expects that the demand for its services
will remain strong, but that it will continue to face
increased competition and pressure on pricing and
margins. Therefore, Tata Communications has a
three-pronged strategy of driving revenue growth
from new markets and investing in services and
technology innovation, while continuing to improve
the cost structure of its operations.
To execute this vision, the Company focuses on
several strategic pillars, including the following:
-
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
20
21
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Enterprise Data
22
49%
Enterprise
Global Structure
Tata Communications has structured itself into global
business units and global shared service functions, to
operate optimally in its different customer segments and
markets spread across the world.
Several initiatives are being implemented within this
structure to improve customer experience, define and
create a common company culture, tighten corporate
identity and branding and implement the nextgeneration network architecture for converged services,
and enhance operating efficiency in other respects.
SUSTAINABILITY AND RESPONSIBILITY
Environment Sustainability Initiatives
51%
Service Provider
Tata Communications also offers customised network
solutions and managed services to the media and
entertainment industry. Media companies with global
reach are actively pursuing next generation architectures
that are IP/cloud centric, providing efficient global work
flows, distribution, flexible scaling, and readiness for
alternative OTT services. The Companys strategy to create
the worlds richest, connected, open video ecosystem
includes business-to-business video services, cloudbased services and flexible, modular, managed services.
As the Company continues to leverage its strength in
emerging markets, the Company extended its Video
Connect Network into Nigeria through a partnership with
23
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
24
Key deliverables/Impact
Education
Employability
Thrust Areas
Key deliverables/Impact
Employee
Volunteering
REGULATORY DEVELOPMENTS
The Government of India approved on 31 May 2012, a new
Telecom Policy aiming to boost transparency and revive
growth in the Indian telecom industry. The Company
expects that when implemented, the new telecom policy
will help telecom operators serve their customers better.
The regulatory scenario in other geographies across
the world, where the Company operates through its
subsidiaries, did not see any major policy changes
impacting the Companys business.
RISKS AND CONCERNS
Like all businesses, Tata Communications is exposed to
certain risks and concerns in the course of its business:
Price Reductions
Reductions in prices for communications services, both
voice and data, in India and worldwide, have had and
are expected to continue to have an adverse effect. It is
likely that the prices for communications services will
generally continue to decrease as competition increases,
as capacity is augmented, and as disruptive technologies
are introduced. The recent economic downturn globally
has led to a slowdown in customer uptake and put
increasing downward pressure on prices as customers
seek to reduce costs.
Key Customers Service Providers
Business with other carriers and service providers
represents a large proportion of the Companys total
business. Several carriers that the Company does business
with have in the recent past suffered from reduced
profit margins and other significant financial pressures.
Market restructuring through acquisitions and mergers
25
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
26
27
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
28
Technical Infrastructure
The Companys technical infrastructure is vulnerable to
damage or interruptions caused by earthquakes, floods,
storms, fires, power outages, war, riots, intentional
misdeeds and other similar events. In particular, a major
part of our international traffic is routed through undersea
cable systems as well as through cable systems between
different countries. These cables are prone to damage,
including cable cuts. Any serious damage to major cables
or simultaneous multiple cable failures could seriously
disrupt traffic, which might lead to losses in revenue and
adversely affect the Companys reputation.
In addition, natural information technology system
failures (hardware or software), human error or computer
viruses may affect the quality of services and cause
temporary interruptions. More rarely, software problems
are hidden in vendors equipment, undetectable through
regular commissioning testing, but appear when specific
traffic loading conditions are reached on the network
which can severely impact several pieces of equipment
simultaneously. These types of events could result in
customer dissatisfaction and reduced traffic and revenues.
The infrastructure may also be vulnerable to cyber
security risks, which may result in service interruptions,
gaining of unauthorised access, loss, theft or corruption
of data, and theft of intellectual property or sensitive
information, any of which could disrupt or have a material
adverse effect on the Companys business. Such negative
consequences could include remedial costs, increased
cyber security costs, lost revenues, litigation, reputational
damage and regulatory penalties.
Successful Integration of Acquired Businesses
The Company has made significant acquisitions and
investments in recent years, and will continue to explore
the possibility of future acquisitions and investments
in accordance with business needs. The integration of
acquired businesses involves a number of risks, including:
z
29
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
30
Environmental Legislation
CAUTIONARY STATEMENT
31
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
2.
BOARD OF DIRECTORS
The Company is managed exclusively by and under
the directions of the Board. The composition of
the Board is governed by the applicable laws and
regulations and the Articles of Association of the
Company. The powers delegated by the Board to the
Managing Director and by the Managing Director
to the subordinate officers are documented in the
Delegation of Powers (DoP). The DoP is reviewed
periodically.
Ten out of eleven directors are non-executive
directors, forming more than half of the total number
of directors.
The Company has three independent directors and
one executive director.
As reported to the Indian Stock Exchanges, the
Company has as its Chairman a non-executive
32
The Company had received a letter from Panatone Finvest Limited which was placed before the Board of Directors in
May 2013. The letter recommended appointment of Mr. Bharat Vasani on the Board of the Company in the stead of
Mr. Arun Gandhi. The Board decided that as per the requirement of the operating licences of the Company, Mr. Vasani
would be appointed on the Board as an additional director only after receiving necessary GoI clearance. On receipt of
the necessary GoI clearance, Mr. Bharat Vasani was appointed on the Board as an additional director with effect from
16 December 2013. The Board of Directors of the Company at present consists of 11 directors.
The names and categories of the directors on the board, their attendance at board meetings during the year and at
the last annual general meeting, and the number of directorships and committee memberships held by them in other
companies as of 31 March 2014 (with Directorships updated as of 13 May 2014) are given below:
Name
Mr. Subodh
Bhargava
[Chairman]
DIN # 00035672
Mr. Vinod Kumar
MD & Group CEO
DIN # 01204665
Mr. N. Srinath
DIN # 00058133
Mr. Kishor A.
Chaukar
DIN # 00033830
Mr. Amal Ganguli
DIN # 00013808
Mr. S. Ramadorai
DIN # 00000002
Dr. Ashok
Jhunjhunwala
DIN # 00417944
Dr. Uday B Desai
DIN # 01735464
Mr. AK Mittal 1
DIN # 03606496
Mr. Saurabh
Kumar Tiwari 1
DIN # 03606497
Mr. Bharat Vasani
[w.e.f. 16 Dec 2013)
DIN # 00040243
Category
Board
Meetings
during the
tenure from 1
April 2013 till
31 March 2014
Attendance
at the last
AGM (26
July 2013)
No. of
Directorships
in Indian Public
Companies
including Tata
Communications
Limited
Held Attended
Chairman Member
Directors in Office (as on 13 May 2014)
Independent
9
9
Yes
3
4
Non Executive
Not
Independent
Executive
Not
Independent
Non Executive
Not
Independent
Non Executive
Independent
Non Executive
Not
Independent
Non Executive
Not
Independent
Non Executive
Independent
Non Executive
Not
Independent
Non Executive
Not
Independent
Non Executive
Not
Independent
Non Executive
Yes
NIL
No. of Committee
Positions held in
Public Companies
including Tata
Communications
Ltd
No. of
Shares
held
as on
31
March
2014
Chairman Member
1
NIL
NIL
NIL
NIL
9
Yes
NIL
NIL
NIL
Yes
NIL
Yes
NIL
12
NIL
No
NIL
Yes
NIL
500
Yes
NIL
NIL
Yes
NIL
NIL
NIL
NIL
Yes
NIL
NIL
NIL
NA
NIL
NIL
NIL
NIL
33
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Notes :
(a)
(b) None of the directors has any business relationship with the Company.
(c)
None of the directors received any loans and advances from the Company during the year.
(d) The information as required under Annexure IA to Clause 49 is being made available to the board.
(e)
Apart from Directors Remuneration and sitting fees, the Company did not have any pecuniary relationship
or transactions with non-executive directors during 2013-14.
(f )
The detailed resume of each director and the details of the directors proposed to be appointed / reappointed
at the 28th Annual General Meeting are published elsewhere in the annual report.
(g) The gap between two board meetings did not exceed four months. The dates on which the 9 board meetings
were held are as follows:
18 April 2013
15 May 2013
28 May 2013
26 July 2013
22 August 2013
29 October 2013
23 January 2014
12 February 2014
3.
AUDIT COMMITTEE
The audit committee consists of four members. The
Chairman of the committee is Mr. Amal Ganguli, an
independent director, who is Fellow of the Institute of
Chartered Accountants in England and Wales, Fellow
of Institute of Chartered Accountants of India, Member
of New Delhi Chapter of Institute of Internal Auditors,
Florida, USA. Mr. Amal Ganguli has been the Chairman
of the Audit Committee since 19 October 2006.
The other members of the committee are Mr.
Subodh Bhargava, Independent Director, Dr. Uday B
Desai, Independent Director and Mr. Saurabh Tiwari,
Government Nominee Director. Mr. Satish Ranade,
Company Secretary is the audit committees Secretary.
The audit committee has adequate powers and
detailed terms of reference to play an effective role as
required under the provisions of the Companies Act,
1956 and clause 49 of Companys listing agreement
with the stock exchanges.
Attendance at the Audit Committee Meetings
Name
34
No. of Audit
Committee
Meetings during
2013-14
Held Attended
during
Tenure
7
7
7
7
7
7
7
7
18 Apr 2013
28 May 2013
26 July 2013
24 Sep 2013
29 Oct 2013
11 Feb 2014
4.
REMUNERATION COMMITTEE
a)
c)
(Amount in `000)
Remuneration Policy
The distribution of commission amongst the
non-executive directors (NEDs) is placed before
the Board. The commission to NEDs is proposed
to be distributed broadly on the basis of their
attendance and contribution at the Board
and Committee meetings as well as the time
spent on operational matters other than at the
meetings.
The Company paid sitting fees of `20000/- per
meeting to the non-executive directors for
attending the meetings of the Board and Audit
Committee. The Company paid sitting fees of
`10000/- per meeting to the non-executive
directors for attending the meetings other
than the meetings of the Board and Audit
Committee.
Commission Sitting
Fees
1098
340
Mr. N. Srinath
270
150
486
270
846
330
Mr. S. Ramadorai
108
60
378
210
774
430
Mr. AK Mittal *
198
NIL
720
NIL
72
40
d)
*
5.
35
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
1.
2.
No. of Complaints
Received
Pending
SEBI/Stock Exchange
Complaint
Direct/Miscellaneous/
Other Complaint
NIL
NIL
TOTAL
NIL
7.
36
26 July
2013
27 July
2012
Location, Description
and Type of Resolutions
Voting
All the
resolutions
were put to
vote by show
of hands and
were carried
unanimously.
All the
resolutions
were put to
vote by show
of hands and
were carried
unanimously.
All the
resolutions
were put to
vote by show
of hands and
were carried
unanimously.
DISCLOSURES
i)
ii)
iii)
Secretarial Audit
FINANCIAL CALENDAR
b.
9.
MEANS OF COMMUNICATION
Companys quarterly results are ordinarily published
in the Free Press Journal and Navshakti among
others, and are also hosted on Companys website:
www.tatacommunications.com. The Companys
press releases, details of significant developments
and investor updates are also made available on the
website.
: 31 March 2014
: On or before
14 August 2014
: On or before
14 November 2014
: On or before
14 February 2015
: On or before
29 May 2015.
37
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
t
$BTIPXDPOTUSBJOUT
t
$POUSBDUVBMDPOTUSBJOUT
t
-FHBMDPOTUSBJOUT
t
5BYDPOTJEFSBUJPOT
t
3FUVSODPOTJEFSBUJPOT
STOCK CODE
Bombay Stock Exchange :
500483
TATACOMM
INE151A01013
Month
High
38
Low
Avg Volume
High
Low
Avg Volume
Apr-13
236.25
221.50
14100
237.00
220.60
175500
May-13
243.75
203.40
21100
243.50
203.30
293200
Jun-13
207.00
148.30
77500
207.30
148.00
557800
Jul-13
182.50
142.90
163000
182.45
142.60
573500
Aug-13
174.20
136.90
89300
174.30
137.15
796600
Sep-13
198.40
160.00
66500
198.90
160.10
458400
Oct-13
264.90
195.00
105300
264.90
195.00
903200
Nov-13
293.40
259.00
83800
293.60
256.00
663100
Dec-13
309.65
265.00
109900
309.70
264.35
869300
Jan-14
319.50
268.10
79700
319.00
267.85
867100
Feb-14
305.65
260.10
92600
305.85
258.50
997700
Mar-14
309.20
275.00
122000
309.55
274.50
1026600
100.00
3000.00
350.00
24000
300.00
22000
250.00
18000
200.00
16000
150.00
12000
100.00
10000
250.00
5500.00
5000.00
200.00
4500.00
350.00
7000.00
14000
3-Mar-14
17-Mar-14
3-Feb-14
17-Feb-14
20-Jan-14
6-Jan-14
23-Dec-13
25-Nov-13
9-Dec-13
11-Nov-13
28-Oct-13
30-Sep-13
14-Oct-13
2-Sep-13
31-Mar-14
24-Mar-14
17-Mar-14
10-Mar-14
3-Mar-14
24-Feb-14
17-Feb-14
10-Feb-14
3-Feb-14
27-Jan-14
20-Jan-14
13-Jan-14
6-Jan-14
30-Dec-13
23-Dec-13
16-Dec-13
9-Dec-13
2-Dec-13
25-Nov-13
18-Nov-13
11-Nov-13
4-Nov-13
28-Oct-13
21-Oct-13
14-Oct-13
7-Oct-13
30-Sep-13
23-Sep-13
16-Sep-13
9-Sep-13
2-Sep-13
26-Aug-13
19-Aug-13
12-Aug-13
5-Aug-13
29-Jul-13
22-Jul-13
15-Jul-13
8-Jul-13
1-Jul-13
24-Jun-13
17-Jun-13
10-Jun-13
3-Jun-13
27-May-13
20-May-13
13-May-13
6-May-13
29-Apr-13
22-Apr-13
15-Apr-13
8-Apr-13
1-Apr-13
SENSEX Close
16-Sep-13
5-Aug-13
19-Aug-13
8-Jul-13
22-Jul-13
24-Jun-13
27-May-13
10-Jun-13
13-May-13
29-Apr-13
1-Apr-13
15-Apr-13
20000
SENSEX CLOSE
6500.00
300.00
4000.00
150.00
3500.00
39
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
31.03.2014
31.03.2013
57766
58455
501 to 1000
1376
1292
1001 to 10000
1570
1319
283
143
60995
61209
1 to 500
Over 10000
TOTAL
Number of
Shareholders
Voting Strength
(Percentage)
2014
2013
2014
2013
2014
2013
31.10
31.10
88626654
88626654
13.06
14.22
37237639
40533297
4.71
4.71
13422037
13422037
Central Government
26.12
26.12
74446885
74446885
102
45
12.10
11.76
34440336
33508269
0.03
0.05
83385
144936
92
65
7.02
3.72
20019520
10613516
NIL
NIL
4.97
NIL
14167950
935
945
0.14
0.12
399749
344140
1266
989
1.81
0.48
5146726
1379566
Public
58586
59149
3.92
2.74
11177069
7812750
TOTAL
60995
61209
100
100
285000000
285000000
PROMOTERS
Tata Group
NON-PROMOTERS
Indian Public Financial Institutions
Indian Nationalised Banks
Foreign Financial Institutions
40
Particulars of Issue
Number of
Shares
Total
Nominal
Number of Value of
Shares
Shares (`)
19.03.1986
126
126
126,000
01.04.1986
+599,874
600,000
600,000,000
March 1991
NIL
60,000,000
600,000,000
06.02.1992
+20,000,000
80,000,000
800,000,000
NIL
80,000,000
800,000,000
1994-1995
NIL
80,000,000
800,000,000
27.03.1997
Raised its share capital by way of GDR Issue, and also GOI
Divested 39 lakh shares in GDR markets @ US$13.93 per
GDR equivalent to `1000 per share.
+12,165,000
92,165,000
921,650,000
04.04.1997
+2,835,000
95,000,000
950,000,000
Feb. 1999
NIL
95,000,000
950,000,000
May 1999
NIL
95,000,000
950,000,000
Sept 1999
NIL
95,000,000
950,000,000
15.08.2000
NIL
95,000,000
950,000,000
24.11.2000
27.09.2001
41
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Dates
42
Particulars of Issue
Number of
Shares
Total
Nominal
Number of Value of
Shares
Shares (`)
January 2002 Paid special interim Dividend of 750% i.e. `75/- per share
13.02.2002
21.02.2002
10.04.02
08.06.02
13.08.13
PLANT LOCATIONS
In view of the nature of the Companys business viz. telecommunications services and other value added services,
the Company operates from various offices in India. The Company has no manufacturing facility.
Address for Correspondence
Registered Office
Any shareholder
addressed to:
complaints/queries
may
be
43
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
maintained all the books of account and statutory registers required under the Companies Act,1956 (the Act)
and the rules made thereunder;
(ii)
filed all the forms and returns and furnished all the necessary particulars to the Registrar of Companies and/or
authorities as required by the Act;
(iii) issued all notices required to be given for convening of board meetings and the general meeting, within the time
limit, if any, prescribed by law;
(iv) conducted the board meetings and annual general meeting as per the Act;
(v)
complied with all the requirements relating to the minutes of the proceedings of the meetings of the directors
and the shareholders;
(vi) made due disclosures required under the Act including those required in pursuance of the disclosures made by
the directors;
(vii) obtained all the necessary approvals of directors, shareholders, the central government and other authorities as
per the requirements;
(viii) effected share transfers and dispatched the certificates within the statutory time limit;
(ix) paid dividend amounts to the shareholders and transferred unpaid dividend amounts, if applicable, to the general
revenue account of the central government or the investor education and protection fund within the time limit
prescribed;
(x)
complied with the applicable requirements of the listing agreement entered into with the stock exchanges in India
except for requisite number of independent directors as required under Clause 49(IA)(ii) of Listing Agreement
for the reasons explained in the Report on Corporate Governance for the Year 2013-14 and complied with the
applicable requirements of the New York Stock Exchange till applicable.
The Company has also complied with other statutory requirements under the Companies Act, 1956 and other related
corporate statutes in force.
44
Satish Ranade
Company Secretary
& Legal Advisor
We have reviewed financial statements and the cash flow statement for the year and that to the best of our
knowledge and belief:
i)
these statements do not contain any materially untrue statement or omit any material fact or contain
statements that might be misleading;
ii)
these statements together present a true and fair view of the companys affairs and are in compliance with
existing accounting standards, applicable laws and regulations.
b)
There are, to the best of our knowledge and belief, no transactions entered into by the company during the year
which are fraudulent, illegal or violative of the Companys code of conduct.
c)
We accept responsibility for establishing and maintaining internal controls for financial reporting and that we
have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and
have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal
controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.
d)
We have indicated to the Auditors and the Audit Committee the following:
i)
significant changes in internal control over financial reporting during the year, if any;
ii)
significant changes in accounting policies during the year and that the same have been disclosed in the
notes to the financial statements, if any; and
iii)
Place: Mumbai
Date: 13 May 2014
Sanjay Baweja
Chief Financial Officer
Vinod Kumar
Managing Director
& Group CEO
Satish Ranade
Company Secretary &
Legal Advisor
Vinod Kumar
Managing Director
& Group CEO
45
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
46
2.
3.
4.
Website: www.tatacommunications.com
5.
6.
7.
8.
9.
3.
4.
5.
1.
ii.
Revenue from
telecommunication
services
Other Operating Income
Other Income
Total Turnover
Standalone
` in Crores
Consolidated ` in
Crores
4,330.05
19,619.55
46.35
46.35
463.95
143.30
4,840.35 19,809.20
any
Subsidiary
Yes
2.
Do
the
Subsidiary
Company/Companies
participate in the BR Initiatives of the parent
company? If yes, then indicate the number of
such subsidiary company(s)
The BR initiatives are driven by the parent company
and all the subsidiaries contribute towards such
initiatives as and when required.
3.
101.13
b)
2.
542.43
Consolidated ` in
Crores
a)
1.
Standalone
` in Crores
Section D: BR Information
1.
t /BNFVinod Kumar
47
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
b)
3.
Details
1.
NA
2.
Name
Aadesh Goyal
3.
Designation
4.
Telephone number
+91 22 66505274
5.
e-mail id
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Questions
P1
P2
P3
P4
P5
P6
P7
P8
P9
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
http://www.tatacommunications.com/downloads/
investors/business_responsibility_policies.pdf
P7
P8
P9
2a. If answer to S. No. 1 against any principle, is No, please explain why: (Tick up to 2 options)
S. No.
1.
2.
4.
5.
6.
3.
48
Questions
P1
P2
P3
P4
P5
P6
3.
Governance related to BR
Principle 2
t
1.
Yearly
t
t
3FEVDJOHJUTPXOFOFSHZBOEOBUVSBMSFTPVSDFT
footprint
t
t
No
Section E: Principle-wise performance
Principle 1
1.
No
Does it extend to the Group/Joint entities/
Suppliers/Contractors/NGOs/Others?
All companies in the Tata Communications Group
are covered by the policy.
2.
t
t
Complaints
reported,
investigated
and closed
Complaints
found to be
valid and
actioned
2013-14
7 (includes
1 complaint
which
is under
investigation)
7 (includes
1 complaint
which
is under
investigation)
Total
ii.
49
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
t
*O':_.JMMJPOVOJUTPGXJOEQPXFSBOE
achieved reduction of 12600 MT of carbon.
t
*O':_.JMMJPOVOJUTPGXJOEQPXFSBOE
achieved ~20160 MT of carbon reduction.
t
*O ':
.JMMJPO VOJUT PG XJOE BOE TPMBS
power were used and 38650 MT of carbon
reduction was achieved.
3.
4.
50
1.
2.
5.
Principle 3
3.
4.
5.
6.
7.
Category
1.
Child labour/
forced labour/
involuntary
labour
Sexual
harassment
Discriminatory
employment
2.
3.
8.
No of
complaints
filed during
the financial
year
NIL
No of
complaints
pending
as on end
of the
financial
year
NIL
NIL
NIL
NIL
NIL
t
1FSNBOFOU&NQMPZFFT
t
1FSNBOFOU8PNFO&NQMPZFFT
t
$BTVBM5FNQPSBSZ$POUSBDUVBM&NQMPZFFT
t
&NQMPZFFTXJUI%JTBCJMJUJFT
1.
2.
3.
51
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Principle 5
1.
2.
6.
None
Principle 6
1.
2.
3.
7.
Principle 7
1.
52
2.
Have
you
advocated/lobbied
through
above associations for the advancement or
improvement of public good? Yes/No; if yes
specify the broad areas ( drop box: Governance
and Administration, Economic Reforms, Inclusive
Development Policies, Energy Security, Water,
Food Security, Sustainable Business Principles,
Others)
In order to bring transparency in its decisionmaking process, the Telecom Regulatory Authority
of India has evolved a consultative process wherein
on important issues pertaining to telecom sector,
consultation papers are issued by it, eliciting
response from the stakeholders including Tata
Communications Ltd. After the response from all
stakeholders, the consultation paper is followed
by an open house discussion wherein all the
stakeholders put forward their views on the issues
involved in the consultation. Tata Communications
Ltd. participates in all such consultation processes
which are relevant to its line of business and puts
forth its view in a fair and transparent manner.
t
t
4PNFPGUIFFWFOUTJODMVEF+PZPG(JWJOH
(October), Tata Volunteering Week-Tata
Engage (March), Mumbai Marathon
(January) and regular volunteering per
month
t
7PMVOUFFSJOHBDUJWJUJFTBU*OEJBMPDBUJPOT
4 US & Canada locations
t
2.
Principle 8
1.
t
0OMJOFQPSUBMGPSWPMVOUFFSTUPSFHJTUFSGPS
a dedicated cause enhanced response
through Tata Engage programmes of the
Tata Group
4.
53
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
5.
Thrust Areas
Education
Principle 9
1.
2.
3.
4.
54
196,196
172,130
110,256
119,320
141,961
9.3%
FY10
FY11
FY12
FY13
FY14
14,037
FY10
12.0%
10,254
7,714
FY11
FY12
FY13
17,915
12,253
FY11
EBITDA
FY12
20,597
FY13
FY14
EBITDA %
9,131
10.6%
30,416
10,124
FY10
12.6%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
FY14
45%*
30%
20%
20%
0%
FY 10
FY 11
FY 12
FY 13
FY 14
6.00%
5.17%
4.78%
5.00%
4.61%
3.88%
4.00%
3.00%
2.00%
1.00%
0.00%
FY 10
FY 11
FY 12
FY 13
FY 14
55
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
56
Financial Statements
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
58
(ii)
(b)
(c)
(b)
(c)
(v)
(b)
(c)
(d)
(e)
(b)
59
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
(x)
(a)
(b)
(c)
Nature of Dues
ESI Act
ESI
Sales Tax
Income Tax
Income Tax
Amount
involved
(` in crores)
AY 2007-08, 2008-09
306.78
AY 2010-11
15.41
AY 2007-08 to AY
2012-13
AY 1997-98, 2009-10
AY 2006-07, 2008-09
to 2013-14
February 2008 to
March 2014
FY 2006-07
65.54
200.39
1.13
33.74
0.02
1.08
0.18
Out of the above amounts aggregating ` 624.27 crores, ` 521.84 crores have been stayed for recovery by the relevant
authorities.
60
R. A. BANGA
Partner
(Membership No. 037915)
MUMBAI, 13 May, 2014
61
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
As at
31 March 2013
` in crores
(2)
(3)
Shareholders funds
(a) Share capital
(b) Reserves and surplus
3
4
285.00
7,600.61
7,885.61
285.00
7,231.42
7,516.42
Non-current liabilities
(a) Long-term borrowings
(b) Other long-term liabilities
(c) Long-term provisions
5
6
7
Current liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
210.00
428.69
123.67
762.36
625.00
391.56
122.16
1,138.72
8
9
10
11
316.18
1,144.56
982.48
329.23
2,772.45
149.70
1,082.81
702.66
281.99
2,217.16
11,420.42
10,872.30
12(i)
12(ii)
4,112.62
124.56
310.04
4,547.22
4,694.91
138.54
174.66
5,008.11
13
14
15
16
2,068.66
92.92
2,212.82
8.08
4,382.48
2,030.51
8.71
1,854.49
8.08
3,901.79
17
934.31
4.15
685.44
522.63
334.77
9.42
2,490.72
462.41
4.20
856.49
328.62
290.39
20.29
1,962.40
11,420.42
10,872.30
Total
B
As at
31 March 2014
` in crores
ASSETS
(1)
Non-current assets
(a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(b)
(c)
(d)
(e)
(2)
Non-current investments
Deferred tax assets (net)
Long-term loans and advances
Other non-current assets
Current assets
(a) Current investments
(b) Inventories - stores and spares
(c) Trade receivables
(d) Cash and bank balances
(e) Short-term loans and advances
(f ) Other current assets
Total
See accompanying notes forming part of the financial statements
In terms of our report attached
18
19
20
21
62
SUBODH BHARGAVA
Chairman
VINOD KUMAR
Managing Director & Group CEO
R. A. BANGA
Partner
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
MUMBAI
DATED: 13 May, 2014
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH, 2014
Note No.
Year ended
31 March 2014
` in crores
Year ended
31 March 2013
` in crores
22
4,330.05
46.35
4,416.12
-
II
Other Income
23
463.95
380.22
III
4,840.35
4,796.34
IV
Expenses:
Network and transmission
Employee benefits
Operating and other expenses
Finance cost
Depreciation and amortization
(net of transfer from Capital Reserve)
Total Expenses
1,875.95
640.81
861.70
59.51
1,963.20
639.46
813.25
119.69
680.23
762.40
4,118.20
4,298.00
722.15
498.34
81.33
158.35
803.48
656.69
353.01
(91.96)
206.58
(25.13)
261.05
181.45
542.43
475.24
19.03
16.68
VI
IX
24
25
26
27
12
28
VINOD KUMAR
Managing Director & Group CEO
R. A. BANGA
Partner
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
MUMBAI
DATED: 13 May, 2014
63
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
Year Ended
31 March 2014
` in crores
Year Ended
31 March 2013
` in crores
803.48
656.69
680.23
(8.45)
(22.27)
59.51
(70.66)
(63.71)
3.60
31.43
(216.22)
0.57
134.89
762.40
(193.18)
(39.17)
119.69
(15.73)
(31.16)
98.40
26.16
0.93
-
1,332.40
1,385.03
0.05
84.31
(134.65)
(244.07)
18.49
(3.75)
(41.41)
22.47
113.02
2.52
67.86
136.11
38.34
3.76
2.14
1,304.74
(101.35)
1,203.39
32.89
16.42
7.48
(7.75)
(5.52)
1,521.40
74.05
1,595.45
(633.69)
20.71
(160.15)
(10,179.37)
9,778.13
433.93
(430.94)
81.21
63.71
14.65
(0.91)
(1,012.72)
(722.02)
197.34
(220.24)
(4,829.40)
4,382.72
(519.57)
1,107.90
(60.00)
70.00
31.16
41.00
(0.84)
(521.95)
195.19
(43.56)
(90.23)
(58.97)
489.62
(470.78)
(606.46)
(66.30)
(145.12)
2.43
193.10
317.77
(799.04)
274.46
43.31
510.87
317.77
Notes:
1. Figures in brackets represent outflows.
2. In the previous year, loan to Tata Communications Payment Solutions Limited (TCPSL) amounting to ` 22 crores was converted to equity share capital.
3. In the previous year, profit on sale of fixed assets includes profit on sale of land and building in Chennai which is included as part of exceptional items amounting to ` 189.62 crores.
4. In the current year, input credit against certain statutory obligations amounting to ` 216.22 crores is included as part of exceptional items.
5. In the current year, diminution in value of investments and provision for advances amounting to ` 134.89 crores is included as part of exceptional items.
6. The Company has received ` 433.93 crores from its wholly owned subsidiary under the Scheme of Arrangement for transfer of its IDC division.
64
SUBODH BHARGAVA
Chairman
VINOD KUMAR
Managing Director & Group CEO
R. A. BANGA
Partner
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
MUMBAI
DATED: 13 May, 2014
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014
1.
Corporate information
TATA Communications Limited (the Company) was incorporated on 19 March 1986. The Government of India vide its
letter No. G-25015/6/86OC dated 27 March 1986, transferred all assets and liabilities of the Overseas Communications
Service (OCS) (part of the Department of Telecommunications, Ministry of Communications) as appearing in the
Balance sheet as at 31 March 1986 to the Company with effect from 01 April 1986. During the year 2007-08, the Company
changed its name from Videsh Sanchar Nigam Limited to Tata Communications Limited and the fresh certificate
of incorporation consequent upon the change of name was issued by the Registrar of Companies, Maharashtra on
28 January 2008.
The Company offers international and national voice and data transmission services, selling and leasing of bandwidth
on undersea cable systems, internet dial up and broadband services, and other value-added services comprising
telepresence, managed hosting, mobile global roaming and signaling services, transponder lease, television uplinking
and other services.
2.
b.
Use of estimates
The preparation of the financial statements requires the management of the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures relating to the contingent
liabilities as at the date of financial statements and reported amounts of income and expenses during the period.
Examples of such estimates include provisions for doubtful trade receivables and advances, employee benefits,
provision for income taxes, impairment of assets and useful lives of fixed assets.
The management believes that the estimates used in preparation of the financial statements are prudent and
reasonable. Future results could differ due to these estimates and the differences between the actual results and
the estimates are recognised in the periods in which the results are known / materialise.
c.
d.
e.
Fixed assets
i.
Tangible and intangible assets are stated at cost of acquisition or construction, less accumulated depreciation/
amortisation and impairment loss, if any. Cost includes inward freight, duties, taxes and all incidental expenses
incurred on making the assets ready for its intended use.
ii.
Indefeasible Rights of Use (IRUs) for international and domestic telecommunication circuits are classified
under fixed assets. The IRU agreements transfer substantially all the risks and rewards of ownership.
iii.
Jointly owned assets are capitalised in proportion to the Companys ownership interest in such assets.
65
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
f.
iv.
Costs of borrowing related to the acquisition or construction of fixed assets that are attributable to the
qualifying assets are capitalised as part of the cost of such asset. All other borrowing costs are recognised as
expenses in the periods in which they are incurred.
v.
Capital work-in-progress includes projects under which tangible fixed assets are not yet ready for their
intended use and are carried at cost, comprising direct cost, directly attributable cost and attributable
interest.
vi.
Assets acquired pursuant to an agreement for exchange of similar assets are recorded at the net book value
of the asset given up, with an adjustment for any balancing receipt or payment of cash or any other form of
consideration.
Depreciation / amortisation
Depreciation / Amortisation is provided on the straight line method, at the rates and in the manner prescribed
in Schedule XIV to the Companies Act, 1956 except as follows where the depreciation rate is higher than the
prescribed rate in Schedule IV to the Companies Act, 1956.
Tangible and Intangible assets
i.
Plant and Machinery
Land cables
Sea cables (Refer note 12(i) (f ))
Earth station and switches
Other networking equipments
Customer premises cables and equipments
Batteries (Refer note 12(i) (f ))
ii.
Indefeasible Rights of Use (IRUs)
iii. Leasehold Land
iv. Software
v.
Leasehold Improvements
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each
financial year and the amortisation is revised to reflect the changes in useful life.
g.
Impairment
At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether
there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount
is the higher of an assets net selling price and value in use. In assessing the value in use, the estimated future cash
flows expected from the continuing use of the asset and from its ultimate disposal are discounted to their present
values using a pre-determined discount rate that reflects the current market assessments of the time value of
money and risks specific to the asset. When an impairment loss exists such loss is recognised in the Statement of
Profit and Loss.
h.
Operating leases
Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vest with the
lessor are classified as operating leases.
Rental income and rental expenses on assets given or obtained under operating lease arrangements are recognised
on a straight line basis over the term of the lease in Statement of Profit and Loss.
The initial direct costs relating to operating leases are recorded as expenses as they are incurred.
i.
Investments
Long-term investments are carried individually at cost less provision for diminution, other than temporary in value
of such investments.
66
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Current investments comprising investments in mutual funds are stated at the lower of cost and fair value,
determined on an individual investment basis.
j.
Inventories
Inventories of stores and spares are valued at the lower of cost or net realisable value. Cost includes all expenses
incurred to bring the inventory to its present location and condition. Cost is determined on a weighted average
basis.
k.
Employee benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity fund, compensated
absences and post-employment medical benefits.
i.
ii.
l.
m.
Revenue recognition
i.
Revenues from Global Voice Services (GVS) are recognised at the end of each month based upon minutes of
traffic completed in such month.
ii.
Revenues from Global Data Managed Services (GDMS) are recognised over the period of the respective
arrangements based on contracted fee schedules.
iii.
Revenues from right to use of fibre capacity provided based on IRU are recognised over the period of such
arrangements.
iv.
Certain transactions with providers of telecommunication services such as buying, selling, swapping and/
or exchange of traffic are accounted for as non-monetary transactions depending on the terms of the
agreements entered into with such telecommunication service providers.
Other income
i.
Dividends from investments are recognised when the right to receive payment is established and no
significant uncertainty as to measurability or collectability exists. Interest income is accounted on accrual
basis.
ii.
Guarantee fees are accrued over the period in which the Company has provided the respective guarantees.
67
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
n.
Export incentive
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty
in receiving the same and there is a reasonable assurance that the Company will comply with the conditions
attached to them. Export incentive is included in other operating income.
o.
p.
q.
Taxation
i.
Current tax expense is determined in accordance with the provisions of the Income Tax Act, 1961. Deferred
tax assets and liabilities are measured using the tax rates, which have been enacted or substantively enacted
at the balance sheet date. Deferred tax expense or benefit is recognised on timing differences being the
differences between taxable incomes and accounting incomes that originate in one period and are capable
of reversing in one or more subsequent periods.
ii.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only
to the extent that there is virtual certainty that sufficient taxable income will be available to realise these
assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available to realise these assets. Deferred tax assets are
reviewed at each balance sheet date for their realisability.
iii.
Provision for current income taxes and advance taxes paid in respect of the same jurisdiction are presented
in the balance sheet after offsetting them on an assessment year basis.
Foreign currency transactions are converted into Indian Rupees at rates of exchange approximating those
prevailing at the transaction dates or at the average exchange rate for the month in which the transaction
occurs. Foreign currency monetary assets and liabilities outstanding as at the balance sheet date are
translated to Indian Rupees at the closing rates prevailing on the balance sheet date. Exchange differences
on foreign currency transactions are recognised in the Statement of Profit and Loss. Exchange difference
arising on a monetary item that, in substance, forms part of an enterprises net investments in a non-integral
foreign operation are accumulated in a foreign currency translation reserve.
ii.
Premium or discount on forward contracts are amortised over the life of such contracts and recognised in
the Statement of Profit and Loss. Forward contracts outstanding as at the balance sheet date are stated at
exchange rates prevailing at the reporting date and any gains or losses are recognised in the Statement
of Profit and Loss. Profit or loss arising on cancellation or enforcement/ exercise of forward exchange is
recognised in the Statement of Profit and Loss in the period of such cancellation or enforcement/ exercise.
r.
68
Segment reporting
i.
The Company identifies primary segments based on the dominant source, nature of risks and returns and
the internal organisation and management structure. The operating segments are the segments for which
separate financial information is available and for which operating profit / loss amounts are evaluated
regularly by the executive Management in deciding how to allocate resources and in assessing performance.
ii.
The accounting policies adopted for segment reporting are in line with the accounting policies of the
Company. Segment revenue and segment expenses have been identified to segments on the basis of their
relationship to the operating activities of the segment.
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iii.
s.
Revenue and expenses which relate to the Company as a whole and are not allocable to segments on
reasonable basis have been included under unallocated expenses (net).
t.
3.
Share capital
As at
31 March 2014
a.
Authorized:
400,000,000 (2013: 400,000,000) Equity shares of ` 10 each
b.
400.00
400.00
285.00
285.00
i.
(` in crores)
As at
31 March 2013
ii.
69
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iii.
Number of shares held by each shareholder holding more than 5% of the issued share capital:
As at 31 March 2014
No of shares
As at 31 March 2013
Percentage
No of shares
Percentage
88,626,654
31.10%
88,626,654
31.10%
Government of India
74,446,885
26.12%
74,446,885
26.12%
37,237,639
13.07%
40,533,297
14.22%
14,107,950
4.97%
Note:
During the year, the Company delisted its American Depositary Shares (ADSs), from the New York Stock Exchange
(NYSE) and terminated its ADR program with effect from 13 August 2013. This action enabled the Company to
increase its public shareholding to 25% as required by Securities and Exchange Board of India.
4.
As at
31 March 2014
a.
b.
206.47
(0.41)
206.06
206.92
(0.45)
206.47
350.13
730.74
87.81
219.39
(600.00)
437.94
350.13
Opening balance
725.01
725.01
Closing balance
725.01
725.01
4,821.11
4,173.59
54.24
47.52
600.00
4,875.35
4,821.11
c.
d.
Securities Premium
General Reserve
Opening balance
Add: Transferred from Surplus in Statement of Profit and Loss
Add: Transferred from Debenture Redemption Reserve (Refer note 5i)
Closing balance
70
(` in crores)
As at
31 March 2013
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
As at
31 March 2014
e.
26.47
22.59
1.60
3.88
28.07
26.47
1,102.23
993.12
542.43
475.24
(33.38)
(128.25)
(85.50)
(12.80)
(13.72)
Add: Effect of foreign exchange rate variations during the year (Refer ii)
Closing balance
f.
(` in crores)
As at
31 March 2013
(54.24)
(47.52)
(87.81)
(219.39)
Closing balance
1,328.18
1,102.23
Total
7,600.61
7,231.42
i.
Capital Reserve includes ` 205.22 crores in respect of foreign exchange gains on unutilised proceeds from Global
Depository Receipts in earlier years.
ii.
The Company has accounted for the effects of revaluation of loans given to VSNL SNOSPV Pte. Ltd. which forms part
of net investments in non-integral foreign operations in foreign exchange translation reserve as per Accounting
Standard - 11 on Accounting for effects of changes in Foreign Exchange Rates.
iii.
The Board of Directors of the Company at its meeting held on 1 March 2013 had approved the Scheme of
Arrangement between Tata Communications Limited (TCL) with its wholly owned subsidiary, Tata Communications
Data Centers Private Limited (TCDC) (formerly known as S & A Internet Services Private Limited) pursuant to the
provisions of Section 391 to 394 and other relevant provisions of the Companies Act, 1956 (the Scheme) for
transfer of the Internet Data Center (IDC) division (Colocation service division of TCL) of the Company on a going
concern basis to TCDC from 1 January 2012 being the appointed date.
The Scheme of Arrangement for transfer of the IDC division was sanctioned by the Bombay High Court vide its
Order dated 24 January 2014 and has become effective from 1 March 2014, being the date of filing of the Order
with the Registrar of Companies.
In accordance with the said Scheme:
a.
All the assets, debts, liabilities and obligations of IDC division have been vested in TCDC with effect from 1
January 2012 and have been transferred at their respective book values.
71
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
b.
Accordingly, to give effect to the Scheme, net profits of the IDC division for the period from 1 January 2012
to 31 March 2013 amounting to ` 33.38 crores (net of taxes) has been debited to the Surplus in Statement
of Profit and Loss of the Company as the income and expenditure of the IDC division are treated as income
and expenditure of TCDC in accordance with the terms of Scheme (refer note 4 (e) below) and the items of
income and expenditure relating to the IDC division for the year ended 31 March 2014 have been recorded
in the books of TCDC.
c.
As on 1 January 2012, the net book value of total assets and liabilities were ` 472.38 crores and ` 38.45 crores
respectively. All revenue and expenses pertaining to IDC division for the period 1 January 2012 and 31 March
2013 are transferred to TCDC. Consequently, the previous year amounts are not comparable with the current
year amounts. The Company has received a consideration of ` 433.93 crores for the net assets transferred as
at 1 January 2012, as stated below:
Particulars
Net Fixed Assets
Capital work in progress
Current assets
Current liabilities
Net Asset Value
d.
The impact of the Scheme of Arrangement for the year ended March 2013 and quarter ended March 2012 are
as follows:
Particulars
Revenue from operations
Other Income
Total Income (A)
Operation and other expenses
Employee benefit expenses
Finance costs
Depreciation and amortisation
Total Expenses (B)
Profit before tax (C) = (A-B)
Tax expenses
Current tax
Deferred tax
Profit after tax (E) = (C-D)
72
(` in crores)
As on 1 January 2012
375.25
6.65
90.48
(38.45)
433.93
Year ended
March 2013
345.99
0.02
346.01
223.86
8.12
0.75
76.14
308.87
37.14
18.28
(7.05)
25.91
(` in crores)
Quarter ended
March 2012
82.83
0.40
83.23
53.08
1.94
0.16
17.23
72.41
10.82
4.05
(0.70)
7.47
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
5.
Long-term borrowings
(` in crores)
As at
31 March 2013
As at
31 March 2014
I.
Debentures
a.
Secured
Taxable Rated Secured Non-Convertible Redeemable Debentures
(Refer i)
50, 11.25% Rated Debentures of face value ` 10 lakhs each
5.00
55.00
55.00
190.00
190.00
150.00
150.00
150.00
150.00
75.00
75.00
625.00
625.00
(415.00)
210.00
625.00
II
5.00
Unsecured
Taxable Rated Unsecured Non-Convertible Redeemable
Debentures (Refer ii)
i.
Secured Debentures :
During the year 2008-09, the Company issued Taxable Rated Secured Non-Convertible Redeemable
Debentures in demat form for cash at par on a private placement basis aggregating ` 1,250 crores, IDBI
Trusteeship Services Limited has been appointed as trustee to the debenture issue.
-
Nature of Security
` 250 crores, debentures (interest ranging from 11.00% to 11.25%, face value of ` 1,000,000 each) are
secured by a first legal mortgage and charge on the Companys free hold land at Perambur Barracks,
Chennai and Plant and machinery.
The outstanding debentures are due for redemption as given below:
Date of redemption as per terms of issue
50, 11.25%
Debentures
550, 11.20%
Debentures
1,900, 11.00%
Debentures
` in crores
23 January 2019
23 January 2016
55
23 July 2014
190
Total
55
190
73
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
For facilitating the above redemptions, the Company has created a debenture redemption reserve of
` 222.43 crores (2013: ` 179.60 crores), and an amount of ` 42.83 crores (2013: ` 174.41 crores) has been
appropriated during the current year.
During the previous year, 6,000, 11.70% debentures aggregating ` 600 crores were redeemed and
consequently debenture redemption reserve of ` 600 crores created to facilitate the redemption of
above debentures was transferred to General reserve.
ii.
Unsecured Debentures
During the year 2009-10, the Company issued Taxable Rated Unsecured Non-Convertible Redeemable
Debentures of face value ` 1,000,000 each, in demat form for cash at par on a private placement basis.
The outstanding debentures are due for redemption as given below:
Date of redemption as per terms of issue
02 July 2019
08 June 2014
Total
For facilitating the above redemptions, the Company has created a debenture redemption reserve of
` 215.51 crores (2013: ` 170.53 crores) and an amount of ` 44.98 crores (2013: ` 44.98 crores) has been
appropriated during the current year.
6.
7.
a.
Deferred revenue
b.
Trade payables
As at
31 March 2014
As at
31 March 2013
403.26
376.28
25.43
15.28
428.69
391.56
Long-term provisions
As at
31 March 2014
a.
b.
8.
50.78
61.42
2.40
9.07
123.67
(` in crores)
As at
31 March 2013
57.18
52.85
3.13
9.00
122.16
Short-term borrowings
As at
31 March 2014
(` in crores)
As at
31 March 2013
316.18
149.70
316.18
149.70
74
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
9.
Trade payables
As at
31 March 2014
a.
b.
c.
(` in crores)
As at
31 March 2013
1,018.26
958.34
27.01
32.62
Accrued payroll
99.29
91.85
1,144.56
1,082.81
(` in crores)
As at
31 March 2013
a.
415.00
b.
212.94
145.01
c.
28.55
28.01
d.
67.34
64.25
e.
38.92
39.44
f.
20.57
20.57
g.
0.38
0.39
h.
Statutory liabilities
65.35
205.10
TDS Payable
i.
Capital creditors
j.
k.
Book overdraft
l.
Other liabilities
I.
4.00
13.17
119.69
165.49
4.05
7.48
9.14
5.69
4.61
982.48
702.66
There are no dividends due and outstanding for a period exceeding seven years.
b.
c.
Tax on dividend
Provision for taxes (net of advance tax of ` 832.19 crores
(2013: ` 855.44 crores))
Provision for others
d.
e.
(` in crores)
As at
31 March 2013
7.10
6.76
6.08
3.91
128.25
85.50
21.80
13.72
165.25
171.47
0.75
0.63
329.23
281.99
75
76
i.
2.57
Disposals
Adjustments
At 31 March 2013
Adjustment pursuant to the scheme
of arrangement (Refer note)
Depreciation/ Amortisation
Disposals
Adjustments
At 31 March 2014
e.
f.
d.
c.
178.84
181.41
23.69
0.72
0.72
0.72
0.72
0.72
0.72
454.98
466.40
86.44
(0.02)
(0.87)
8.78
78.55
(2.05)
8.84
71.76
541.42
(0.29)
(3.24)
544.95
0.05
(3.63)
3.56
544.97
Leasehold
Building
Improvements
3,325.80
3,821.98
4,349.00
(3.64)
(15.04)
596.54
(292.64)
4,063.78
(0.16)
(3.21)
668.19
3,398.96
7,674.80
(4.70)
(23.86)
373.36
(555.76)
7,885.76
(1.83)
(13.49)
717.14
7,183.94
53.68
72.24
71.71
0.01
(0.06)
6.20
(9.25)
74.81
0.01
(0.68)
7.74
67.74
125.39
0.13
(0.07)
3.21
(24.93)
147.05
0.12
(0.93)
11.68
136.18
Plant and
Furniture
Machinery and Fixtures
26.30
72.77
17.93
(0.03)
2.17
(12.10)
27.89
0.02
(0.02)
4.54
23.35
44.23
0.02
(0.07)
1.84
(58.22)
100.66
0.52
(0.02)
9.11
91.05
Office
Equipment
57.53
64.96
278.69
0.63
(1.39)
22.21
(3.16)
260.40
(0.07)
(2.43)
27.40
235.50
336.22
0.76
(1.55)
17.68
(6.03)
325.36
0.90
(3.01)
24.35
303.12
Computers
0.50
(0.07)
0.57
0.01
0.56
0.50
(0.07)
0.57
0.57
Motor
Vehicles
4,112.62
4,694.91
4,828.68
(3.02)
(17.46)
638.47
(317.15)
4,527.84
(0.20)
(8.39)
719.29
3,817.14
8,941.30
(3.85)
(28.86)
396.20
(644.94)
9,222.75
(0.24)
(21.09)
765.84
8,478.24
(` in crores)
Total
Freehold land includes ` 0.16 crores (2013: ` 0.16 crores) identified as surplus land.
Gross block of buildings includes:
z
` 32.75 crores (2013: ` 32.75 crores) for flats at Mumbai in respect of which agreements have not been executed.
Gross block and accumulated depreciation of plant and machinery includes Indefeasible Rights of Use (IRUs) for domestic and international telecommunication circuits of ` 405.89
crores (2013: ` 406.91 crores) and ` 234.78 crores (2013: ` 198.37 crores) respectively. The life of IRUs has been estimated at the lower of the life of the cables or the period of the
IRU agreements.
Gross block and accumulated depreciation of plant and machinery include proportionate amounts towards share of assets held jointly with other enterprises of ` 1,013.55 crores
(2013: ` 1,013.98 crores) and ` 452.22 crores (2013: ` 401.73 crores) respectively.
Finance cost capitalised during the year is ` 7.06 crores (2013: ` 7.59 crores) in respect of capital expenditure.
During the previous year, the Company has evaluated the economic useful life of under sea cables and has extended the useful life of under sea cables from 17 years 11 months
to 20 years and batteries from 8 years to 4 years. This has resulted in a lower depreciation charge in previous year by ` 0.36 crores.
At 31 March 2014
a.
b.
15.15
15.49
At 31 March 2013
Net Block
21.12
2.57
18.55
202.53
Depreciation/ Amortisation
15.49
202.53
202.53
Leasehold
Land
At 1 April 2012
Accumulated Depreciation
At 31 March 2014
0.23
Adjustments
0.11
Disposals
15.15
Additions
At 31 March 2013
(0.01)
Disposals
Adjustments
15.16
Freehold
Land
Additions
At 1 April 2012
Gross Block
Tangible assets
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
ii.
Intangible assets
(` in crores)
Gross Block
At 1 April 2012
Additions
Adjustments
At 31 March 2013
Adjustment pursuant to the scheme of arrangement (Refer note)
Additions
Disposals
Adjustments
At 31 March 2014
Accumulated Amortisation
At 1 April 2012
Depreciation/ Amortisation
Adjustments
At 31 March 2013
Adjustment pursuant to the scheme of arrangement (Refer note)
Depreciation/ Amortisation
Disposals
Adjustments
At 31 March 2014
Net Block
At 31 March 2013
At 31 March 2014
Goodwill
Purchased
Software
Total
113.14
113.14
113.14
229.71
90.67
0.55
320.93
(9.86)
33.99
(2.18)
(0.65)
342.23
342.85
90.67
0.55
434.07
(9.86)
33.99
(2.18)
(0.65)
455.37
113.14
113.14
113.14
138.81
43.56
0.02
182.39
(4.92)
42.17
(1.32)
(0.65)
217.67
251.95
43.56
0.02
295.53
(4.92)
42.17
(1.32)
(0.65)
330.81
138.54
124.56
138.54
124.56
As at 31 March 2013
No of shares
` in crores
No of shares
` in crores
13,661,422
7.41
13,661,422
7.41
110,810,000
474.23
110,810,000
474.23
769,333
3.29
769,333
3.29
In subsidiaries
Tata Communications Lanka Limited
(Equity shares of LKR 10 each)
Tata Communications International Pte.
Ltd. *(Equity shares of US$ 1 each) (Refer I)
VSNL SNOSPV Pte. Ltd. * (Equity shares of
US$ 1.00 each) (Refer II)
77
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
As at 31 March 2014
Tata Communications Transformation
Services Limited (Equity shares of ` 10 each)
Tata Communications Payment Solutions
Limited
(Equity shares of ` 10 each)
Tata Communications Data Centers Private
Limited (formerly known as S&A Internet
Services Private Limited) (Equity shares of
` 10 each)
TCNL 1 BV (Equity shares of Euro1 each)
Subtotal
ii.
Subtotal
iii.
78
` in crores
No of shares
` in crores
500,000
0.50
500,000
0.50
362,714,284
477.00
317,000,000
317.00
50,000
0.05
10,000
0.01
5,400
0.04
5,400
0.04
962.52
5,731,900
(ii)
Others
Tata Teleservices Ltd. * (Equity shares of
` 10 each)
New ICO Global Communications
(Holdings) Limited (Class A common stock
of US$ 0.01 each)
Green Infra Wind Farms Limited (Equity
shares of ` 10 each)
Green Infra Wind Generation Limited
(Equity shares of ` 10 each)
ReNew Wind Energy (Karnataka) Pvt Ltd
(Equity shares of ` 10 each)
Radhapura Wintech Private Limited (Equity
shares of ` 10 each)
Smart ICT Services Private Limited (Equity
shares of ` 10 each)
Subtotal
No of shares
(i)
In Joint Venture
United Telecom Limited
(Equity shares of NRS100 each)
(iii)
As at 31 March 2013
35.82
802.48
5,731,900
35.82
35.82
35.82
439,863,622
933.75
439,863,622
933.75
680,373
0.01
680,373
0.01
78,000
0.08
78,000
0.08
108,000
0.10
108,000
0.10
32,000
0.32
24,000
0.24
19,370
0.02
0.01
9,500
934.29
934.18
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
As at 31 March 2014
b.
As at 31 March 2013
No of shares
` in crores
No of shares
` in crores
30,955,250
139.32
30,955,250
139.32
24,680,000
118.71
24,680,000
118.71
In subsidiaries
Tata Communications International Pte.
Ltd * (Cumulative convertible redeemable
Preference Shares of US $ 1 each) (Refer I)
VSNL SNOSPV Pte. Ltd * (Cumulative
convertible redeemable Preference shares
of US $ 1 each) (Refer II)
Subtotal
(iv)
258.03
258.03
2,190.66
2,030.51
(122.00)
2,068.66
2,030.51
2,190.66
2,030.51
Equity investments on these companies are subject to certain restrictions on transfer as per the terms of
individual contractual agreements.
I.
The Company has an investment of ` 474.23 crores (2013: ` 474.23 crores) in equity shares and ` 139.32
crores (2013: ` 139.32 crores) in preference shares of Tata Communications International Pte. Ltd (TCIPL).
In the opinion of the management, having regard to the nature of these subsidiaries businesses and future
business projections, there is no diminution, other than temporary in the value of investment despite
significant accumulated losses.
II.
During the current year, VSNL SNOSPV Pte Ltd (SNOSPV), a wholly owned subsidiary of Tata Communications
Limited, has entered into exclusive discussions with Vodacom Group Limited (Vodacom) to sell all of the
issued share capital of Neotel, held directly or indirectly by SNOSPV. Discussions with Vodacom are still in
progress. The Company has made a provision of ` 134.89 crores (` 122.00 crores being the entire carrying
amounts of investments and of advances ` 12.89 crores to SNOSPV). (Refer note 15 and 20).
79
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
14. Deferred tax assets (net)
(` in crores)
A.
As at
31 March 2014
As at
31 March 2013
72.21
65.42
13.02
22.76
2.28
2.52
12.52
14.31
112.62
88.32
7.48
8.84
27.83
19.64
2.36
13.07
12.38
8.70
8.18
5.54
27.64
298.52
249.12
205.60
240.41
(B)
205.60
240.41
(A - B)
92.92
8.71
(A)
80
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
15. Long-term loans and advances
(` in crores)
As at
31 March 2013
41.23
3.89
531.66
180.85
1,520.11
1,561.75
25.58
25.58
5.79
3.91
0.62
1.22
33.37
26.67
54.46
50.62
Capital advances
b.
c.
d.
e.
Prepaid expenses
f.
Deposits
g.
II
As at
31 March 2014
Others
Unsecured Doubtful
a.
Doubtful advances
b.
9.14
8.57
12.30
(21.44)
(8.57)
2,212.82
1,854.49
As at
31 March 2014
a.
b.
7.44
(` in crores)
As at
31 March 2013
7.44
0.64
0.64
8.08
8.08
As at 31 March 2014 the proportionate share of pension obligations and payments of ` 61.15 crores
(2013: ` 61.15 crores) to the erstwhile Overseas Communications Service (OCS) employees was recoverable
from the Government of India (the Government). Pursuant to discussions with the Government, the
Company had made a provision of ` 53.71 crores (2013: ` 53.71 crores) resulting in a net amount due from
the Government towards its share of pension obligations of ` 7.44 crores (2013: ` 7.44 crores).
81
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
17. Current investments
As at 31 March 2014
No of units
` in crores
Investments in Mutual Funds (Unquoted)
Birla Sunlife Cash Plan - Growth Direct
Baroda Pioneer Liquid Fund - Plan B Growth
JPMorgan India Liquid Fund - Super IP Growth
ICICI Prudential Liquid Fund - Direct Growth
SBI Mangnum Insta Cash Liquid Floater Plan - Direct
Growth
Tata Money Market Fund - Growth Direct
Templeton India TMA - Super IP -Direct - Growth
Axis Bank Debt Fund - Direct Growth
Baroda Pioneer Treasury Advantage Fund - GrowthDirect
Birla Sunlife Floating Rate Long Term Plan - Growth
Direct
HDFC Floating Rate Income Fund - STP Direct
Growth
IDFC Money Manager Fund - Treasury Plan - Direct
Growth
ICICI Prudential Banking and PSU Fund - Direct
Growth
ICICI Prudential Flexible Income Plan - Direct
Growth
Religare Credit Opportunities Fund - Direct Growth
Sundaram Ultra Short Term - Direct Growth
ICICI Prudential Ultra Short Term Plan - Direct
Growth
Kotak Floater - ST - Direct Growth
SBI Magnum Insta Cash - Cash Plan- Direct
Religare Ultra Short Term Fund -Direct Growth
Axis Treasury Advantage Fund - Direct Growth
DSP Blackrock Liquidity Fund - Direct Growth
IDFC Ultra Short Term Fund - Direct Growth
Templeton India Ultra Short Bond Fund - Super IP Direct- Growth
DSP Blackrock Money Manager Fund - Direct- Growth
Templeton India Ultra Short Bond Fund - Super IP Direct- Growth
DWS Ultra Short Term Fund - Institutional Plan Direct Growth
Total
Book value of unquoted investments
82
As at 31 March 2013
No of units
` in crores
6,082,787
263,751
21,082,305
5,272,588
111,780
125.00
38.75
35.00
100.00
24.50
173,348
183,161
172,851
328,948
35.00
35.00
20.25
47.99
4,554,599
69.80
11,507,964
25.18
12,399,000
25.14
36,183,181
50.86
4,797,733
115.32
276,837
20,210,262
58,411,694
40.38
35.57
75.79
63,577,861
75.38
196,087
-
34.78
-
520,774
251,060
310,234
385,531
208,685
15,417,060
186,134
100.00
65.00
50.28
50.19
35.00
25.06
25.00
103,726
6,549,346
16.50
10.00
7,193,831
10.00
934.31
934.31
462.41
462.41
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
18. Trade receivables - Unsecured
(` in crores)
As at
31 March 2014
As at
31 March 2013
44.18
64.08
204.43
179.98
248.61
244.06
(204.43)
(179.98)
44.18
64.08
641.26
792.41
9.53
9.53
650.79
801.94
(9.53)
(9.53)
641.26
792.41
685.44
856.49
Trade receivables outstanding for a period exceeding six months from the
date they were due for payment
Considered good
Doubtful
As at
31 March 2013
Cash on hand
0.05
0.05
b.
Cheques on hand
8.81
7.13
c.
Remittances in transit
7.68
0.87
d.
50.83
73.17
e.
443.50
236.55
510.87
317.77
0.39
0.41
11.37
10.44
522.63
328.62
b.
83
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
20. Short-term loans and advances
(` in crores)
As at
31 March 2014
As at
31 March 2013
72.96
40.88
(0.59)
72.37
40.88
3.02
4.49
56.86
80.01
b.
c.
Prepaid expenses
d.
4.91
7.03
e.
133.23
132.07
f.
5.80
3.44
g.
Other advances
12.23
22.47
h.
46.35
334.77
290.39
a.
b.
c.
Others
i.
As at
31 March 2014
As at
31 March 2013
8.83
1.21
0.46
0.59
18.62
9.42
20.29
Interest receivable includes interest due from subsidiaries of ` 6.95 crores (2013: ` 0.12 crores).
22. During the year, the Company has received duty credit scrips aggregating ` 46.35 crores (2013: Nil) in respect of foreign
exchange earnings to be utilised towards import duty. This is included in Other operating income.
84
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
23. Other income
(` in crores)
a.
Year Ended
31 March 2014
Year Ended
31 March 2013
3.35
1.61
110.51
18.92
37.56
Interest Income
i.
Bank deposits
ii.
iii.
Others (Refer I)
b.
63.71
31.16
c.
70.66
15.73
d.
8.45
3.56
e.
70.22
11.37
f.
(3.55)
15.43
g.
4.70
7.69
h.
5.42
8.65
i.
152.66
117.92
j.
60.38
k.
Others
9.03
19.03
463.95
380.22
I.
Interest on others includes ` 18.90 crores (2013: ` 36.46 crores) from subsidiaries.
II.
b.
c.
(` in crores)
Year Ended
31 March 2013
1,687.71
1,776.16
171.68
166.74
16.56
20.30
1,875.95
1,963.20
b.
c.
(` in crores)
Year Ended
31 March 2013
554.15
556.23
34.00
36.64
52.66
46.59
640.81
639.46
85
COMMUNICATIONS
Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
26. Operating and other expenses
Year Ended
31 March 2014
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
Consumption of stores
Light and power (net of recoveries of ` 100.84 crores (2013: ` Nil))
Repairs and Maintenance:
i.
Buildings
ii.
Plant and machinery
iii. Others
Provision for doubtful trade receivables
Provision for doubtful advances
Rent
Rates and taxes
Travelling
Telephone
Printing, postage and stationery
Legal and professional fees
Advertising and publicity
Commissions
Services rendered by agencies
Insurance
Donations
Other expenses (Refer note 30)
(` in crores)
Year Ended
31 March 2013
17.83
84.51
20.82
167.31
16.70
133.06
0.22
31.43
0.57
36.96
36.03
33.18
20.53
2.97
68.56
20.73
15.59
230.07
7.29
1.23
104.24
18.58
135.85
0.56
22.91
0.94
16.86
18.36
30.25
16.30
3.52
42.38
22.33
18.29
169.23
7.82
0.55
100.39
861.70
813.25
Interest on loans
Interest on debentures
Other interest
Less: Interest capitalized
Year Ended
31 March 2014
8.47
56.65
1.45
(7.06)
59.51
(` in crores)
Year Ended
31 March 2013
9.39
112.63
5.26
(7.59)
119.69
Year Ended
31 March 2014
216.22
(134.89)
81.33
(` in crores)
Year Ended
31 March 2013
(31.27)
189.62
158.35
a.
b.
c.
d.
86
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
i.
During the current year, the Company has recognised ` 216.22 crores towards input credits against certain statutory
obligations relating to earlier periods which have been accounted for on crystallisation of the entitlements to such
credits.
ii.
As part of its initiative to enhance the long-term efficiency of the business, during the previous year the Company
undertook organisational changes to align to the Companys current and prospective business requirements.
These changes involved certain positions in the Company becoming redundant and the Company incurred a one
time charge of ` 18.73 crores and further a one time cost of ` 12.54 crores towards other related initiatives.
iii.
During the previous year, the Company sold part of land and building at Chennai for a consideration of ` 192.30
crores resulting in a gain on sale of fixed assets of ` 189.62 crores.
ii.
87
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Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
The details in respect of the status of funding and the amounts recognised in the Companys financial statements
for the year ended 31 March 2014 for these defined benefit schemes are as under:
(` in crores)
Gratuity (Funded)
As at 31 March
I
2014
2013
2014
2013
57.71
58.35
56.76
52.00
4.60
4.58
0.65
0.63
Interest cost
4.39
4.57
4.26
4.03
(1.52)
(4.62)
(1.54)
4.06
12.90
9.40
Benefits paid
(3.70)
(9.23)
(7.07)
(9.30)
59.94
57.71
67.50
56.76
(` in crores)
As at 31 March
II
As at 31 March
2014
2013
2014
2013
50.23
51.50
4.16
4.03
Employers contribution
7.23
6.92
(2.37)
(4.29)
0.34
1.30
Benefits paid
(3.70)
(9.23)
55.89
50.23
(` in crores)
Gratuity (Funded)
As on 31 March
III
2014
2013
2014
2013
59.94
57.71
67.50
56.76
(55.89)
(50.23)
4.05
7.48
67.50
56.76
4.05
7.48
6.08
3.91
61.42
52.85
88
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Gratuity (Funded)
As on 31 March
IV
2014
2013
2014
2013
4.60
4.58
0.65
0.63
Interest cost
4.39
4.57
4.26
4.03
(4.16)
(4.03)
(1.88)
2.76
12.90
9.40
2.95
7.88
17.81
14.06
(` in crores)
As on 31 March
2014
V
As on 31 March
2013
2014
2013
3.51%
3.51%
Government securities
30.88%
30.88%
Corporate bonds
46.52%
46.52%
Equity
19.09%
19.09%
Total
100%
100%
The Companys policy and objective for plan assets management is to maximise return on plan assets to meet
future benefit payment requirements while at the same time accepting a low level of risk. The asset allocation for
plan assets is determined based on the investment criteria approved under the Income Tax Act, 1961 and is also
subject to other exposure limitations.
(` in crores)
As at 31 March
VI
As at 31 March
2014
2013
2014
2013
Discount rate
9.30%
8.00%
9.30%
8.00%
8.00%
8.00%
6% to 10%
6% to 10%
6% to 10%
6% to 10%
4.00%
2.00%
3% to 15%
3% to 15%
3% to 15%
3% to 15%
The estimates of future compensation cost considered in the actuarial valuation take account of inflation, seniority,
promotion and other relevant factors.
89
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Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Gratuity (Funded) As at 31 March
2014
2013
2012
2011
2010
(59.94)
(57.71)
(58.35)
(52.44)
(45.52)
Plan assets
55.89
50.23
51.50
48.86
33.65
Surplus / (deficit)
(4.05)
(7.48)
(6.85)
(3.58)
(11.87)
(2.10)
(1.87)
6.68
(1.87)
1.20
0.34
1.30
(0.80)
2.32
0.62
3.64
(2.19)
(8.19)
VIII Effect of change in Assumed Health Care Cost Trend Rate. A one percentage point change in assumed
health care cost trend rates would have the following effects
(` in crores)
31 March, 2014
31 March, 2013
Increase
Decrease
Increase
Decrease
0.01
0.01
0.01
0.11
0.09
0.11
0.09
3.86
3.33
1.25
1.09
The Company expects to contribute ` 4.05 crores (2013: ` 7.48 crores) towards employers contribution for funded
defined benefit plans in financial year 2014-15.
IX.
90
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
30. Auditors remuneration:
(Included in other expenses under operating and other expenses Refer note 26)
(` in crores)
Year Ended
31 March 2013
Auditors remuneration and expenses (net of service tax input credit wherever
Year Ended
applicable)
31 March 2014
a. To statutory auditor
i. For Audit fees
1.40
1.40
ii. For taxation matters
0.50
0.30
iii. For other services
1.35
1.37
iv. For reimbursement of expenses
0.20
0.11
The above fees exclude ` Nil (2013: ` 0.65 crores) with respect to audit and related services rendered for financial year
2012-13.
Auditors remuneration excludes fees of ` 3.51 crores (2013: ` 7.77 crores) payable/ paid for professional services to a
firm of chartered accountants in which some partners of the firm of statutory auditors are partners.
b. To cost auditor for cost audit
i. For cost audit services
0.06
0.06
31. In January 2008, an amount of ` 290 crores was paid to the Department of Telecommunications (DoT) under protest,
towards payment of license fees, interest and penalty demanded by DoT before issue of certain licenses to the Company.
Against this, the Company carried a provision of ` 174.15 crores for license fees and interest thereon which has been
set off against the payment of ` 290 crores for the presentation in the financial statements. The Company has filed
a petition in the Supreme Court of India challenging the judgement of The Telecom Disputes Settlement Appellate
Tribunal (TDSAT) relating to the computation of license fee.
Additionally, the Company has also filed a petition with TDSAT challenging the applicability of penal provisions under
International Long Distance (ILD) and National Long Distance (NLD) license agreements, whereby DoT claimed penalty
and interest on penalty amounting to ` 115.73 crores (included in aforesaid ` 290 crores). Consequently, the amount of
` 115.73 crores was reflected as an asset in the books since 31 March 2009.
During the year 2009-10, TDSAT accepted the Companys position and decided in favour of the Company. However,
DoT has filed an appeal in the Supreme Court of India challenging the judgement of TDSAT relating to the waiver of
penalty and interest on penalty. A claim of ` 115.73 crores along with interest was raised upon DoT in financial year
2009-10 based on this TDSAT order, which DoT has refused. The Company filed an appeal in TDSAT in financial year
2010-11 against DoT, which had been allowed in favour of the Company by TDSAT in financial year 2011-12. Pending
implementation of this order by DoT, the Company had further filed execution petition in TDSAT in financial year
2011- 12. TDSAT, on 9 May 2012, decided the execution petition in favour of the Company and directed DoT to refund the
` 115.72 crores being penalty and interest on penalty, along with interest till date of payment. Accordingly DoT, on
7 June 2012 refunded an amount of ` 226.23 crores to the Company, including interest of ` 110.51 crores which was
included in Other Income in financial year 2012-13. The Company based on legal opinion and position in law is confident
that its position will be upheld in the Supreme Court.
32. Earnings per share
(` in crores)
(A)
(B)
As at
31 March 2014
As at
31 March 2013
542.43
475.24
285,000,000
285,000,000
285,000,000
285,000,000
19.03
16.68
91
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
33. Segment Reporting
a.
Business Segments
The Companys reportable business segments are Global Voice Solutions (GVS) and Global Data and Managed
Services (GDMS). The composition of the reportable segments is as follows:
Global Voice Solutions (GVS)
GVS includes international and national long distance voice services.
Global Data and Managed Services (GDMS)
GDMS includes corporate data transmission services, data centers, virtual private network signaling and roaming
services, television and other network and managed services.
(` in crores)
Year ended 31 March 2014
GVS
GDMS
Total
1,119.22
3,257.18
4,376.40
Segment results
(126.79)
2,546.67
2,419.88
1,616.40
803.48
261.05
542.43
(0.10)
31.53
31.43
(` in crores)
GDMS
Total
1,193.11
3,223.01
4,416.12
Segment results
(144.23)
2,512.73
2,368.50
656.69
181.45
475.24
92
1,711.81
25.75
1.34
27.09
i.
Revenues and interconnect charges are directly attributable to the segments. Space segment utilisation
charges, rent of landlines and other network and transmission costs are allocated based on utilisation of
satellite and landlines. License fee for GVS and GDMS have been allocated based on net revenues from these
services. Segment result is segment revenues less segment expenses. Depreciation and certain other costs
cannot be allocated to segments.
ii.
Telecommunication services are provided utilising the Companys assets which do not generally make a
distinction between the types of services. As a result, fixed assets are used interchangeably between segments.
Accordingly assets and liabilities cannot be allocated to segments.
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
b.
Geographical Segments
The secondary reportable segments are Geographical and revenues have been allocated to countries based on
location of the customers as follows:
Segment revenues by Geographical Market
(` in crores)
As at
31 March 2014
As at
31 March 2013
3,366.31
3,429.23
United Kingdom
107.60
95.10
245.98
186.38
Netherlands*
321.73
387.42
Others
334.78
317.99
4,376.40
4,416.12
India
93
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Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
34. Related party transactions
i.
Names
a.
c.
94
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Sr. Category of related parties
No
Names
Tata Communications (Italy) S.r.l
Tata Communications (Japan) KK
ITXC IP Holdings S.a r.l
Tata Communications (Nordic) AS
Tata Communications (Poland) Sp. Zoo
Tata Communications (Portugal) Unipessoal LDA
Tata Communications (Portugal) Instalacao E Manutencao De Redes LDA
Tata Communications (Puerto Rico) Inc (Liquidated on: 23 August 2013)
Tata Communications (Russia) LLC
Tata Communications Services (International) Pte. Ltd.
Tata Communications (Spain) S.L
Tata Communications (Sweden) AB
Tata Communications (Switzerland) GmbH
Tata Communications (Netherlands) B.V.
BitGravity Inc.
Neotel (Pty) Ltd.
SEPCO Communications Pty Ltd.
Neotel Business Support Services (Pty) Ltd.
TCNL1 B.V.
TCNL2 B.V.
d.
Joint Venture
e.
f.
95
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Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
ii.
Key
Investing Subsidiaries
Company
Management
Personnel
Joint
Ventures
Total
37.77
37.77
25.84
25.84
9.79
9.79
9.77
9.77
1.71
439.63
2.80
444.14
2.14
509.51
3.28
514.93
15.45
12.55
28.00
18.78
34.51
53.29
0.38
0.38
2.04
2.04
124.19
124.19
6.38
6.38
0.02
53.20
53.22
0.05
46.08
46.13
160.04
160.04
242.00
242.00
18.90
18.90
36.46
36.46
63.71
63.71
31.16
31.16
Guarantee income
152.66
152.66
117.92
117.92
Loan given
430.94
430.94
519.57
519.57
Services rendered
Services received
Equity capital contribution
Interest income
Dividend income
Loan repaid
Loan taken from subsidiary
Loan repaid to subsidiary
Note: @ represents transaction of amounts less than ` 50,000/-
96
81.21
81.21
1,129.90
1,129.90
127.00
127.00
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Particulars
Investing Subsidiaries
Key
Company
Management
Personnel
Joint
Ventures
127.00
Total
127.00
464.64
292.05
292.05
325.57
325.57
258.04
258.04
464.64
433.93
433.93
Managerial remuneration
Finance costs
12.14
12.14
11.49
11.49
0.25
0.25
0.77
91.93
92.70
0.61
206.66
207.27
9.79
14.19
6.05
1.15
31.18
9.77
17.24
5.78
5.33
38.12
531.66
531.66
180.85
180.85
72.95
0.01
72.96
40.87
0.01
40.88
Advance payable
1.88
0.28
0.28
6.95
6.95
0.12
0.12
12,516.09
12,516.09
11,836.69
11,836.69
4,389.47
4,389.47
3,535.30
3,535.30
1.88
97
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iii.
Dividend paid
Panatone Finvest Limited
Tata Sons Limited
Brand equity expenses
Tata Sons Limited
Investing Subsidiaries
Key
Company
Management
Personnel
Total
26.59
17.73
11.17
8.11
26.59
17.73
11.17
8.11
9.79
9.77
9.79
9.77
318.02
385.94
318.02
385.94
6.76
6.87
8.69
11.91
6.76
6.87
12.55
34.51
8.69
11.91
0.36
0.36
0.35
0.35
1.66
@
-
1.66
@
-
2.47
2.73
2.47
2.73
5.94
3.65
5.94
3.65
115.42
-
115.42
-
98
Joint
Ventures
12.55
34.51
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Particulars
Investing Subsidiaries
Key
Company
Management
Personnel
Guarantee income
Tata Communications (Netherlands) BV
Tata Communications International Pte. Ltd.
Services received
Tata Communications Transformation
Services Limited
Tata Communications Data Centers Private
Limited
Equity capital contribution
Tata Communications Payment Solutions
Limited #
Interest income
Tata Communications International Pte. Ltd.
VSNL SNOSPV Pte. Ltd.
Tata Communications Payment Solutions
Limited
Dividend income
Tata Communications Lanka Limited
Tata Communications Transformation
Services Limited
Loan given
Tata Communications International Pte. Ltd.
Tata Communications Payment Solutions
Limited
VSNL SNOSPV Pte. Ltd.
Joint
Ventures
Total
56.63
26.26
93.13
88.55
56.63
26.26
93.13
88.55
33.18
45.65
33.18
45.65
19.54
-
19.54
-
160.00
242.00
160.00
242.00
11.39
4.05
0.52
30.24
11.39
4.05
0.52
30.24
6.95
2.09
6.95
2.09
27.71
26.16
27.71
26.16
36.00
5.00
36.00
5.00
205.83
167.48
205.83
167.48
225.00
270.20
81.78
225.00
270.20
81.78
99
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Particulars
Investing Subsidiaries
Key
Company
Management
Personnel
Loan repaid
VSNL SNOSPV Pte. Ltd.
Tata Communications Payment Solutions
Limited #
Loan taken from subsidiary
Tata Communications Payment Solutions
Limited
Loan repaid to subsidiary
Tata Communications Payment Solutions
Limited
Advances given by the Company (net)
Tata Communications Data Centers Private
Limited
Tata Communications International Pte Ltd
Tata Communications (Netherlands) BV
Tata Communications Payment Solutions
Limited
Advances taken by the Company (net)
Tata Communications (Netherlands) BV
Tata Communications International Pte Ltd
Tata Communications Payment Solutions
Limited
100
Total
80.44
759.92
80.44
759.92
288.36
288.36
127.00
127.00
127.00
127.00
158.81
134.59
127.02
95.37
39.24
158.81
134.59
127.02
95.37
39.24
12.99
39.09
12.99
39.09
88.76
31.72
136.52
108.86
88.76
31.72
136.52
108.86
13.18
30.81
13.18
30.81
Managerial remuneration
Vinod Kumar $
Finance costs
Tata Communications Payment Solutions
Limited
Joint
Ventures
12.14
11.49
0.25
12.14
11.49
0.25
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iv.
Investing Subsidiaries
Key
Company
Management
Personnel
Joint
Ventures
Total
Receivables
Tata Communications (Netherlands) BV
25.73
25.73
104.95
104.95
19.12
19.12
22.14
22.14
23.10
23.10
27.77
27.77
4.27
4.27
13.62
13.62
Payables
Tata Communications Transformation
Services Limited
United Telecom Limited
Tata Sons Limited
9.79
1.15
1.15
5.33
5.33
9.79
9.77
9.77
Vinod Kumar $
6.05
6.05
5.78
5.78
Loans given
Tata Communications International Pte. Ltd.
Tata Communications Payment Solutions
Limited
306.66
306.66
169.52
169.52
225.00
225.00
24.49
24.49
16.19
16.19
9.58
9.58
20.55
20.55
22.48
22.48
5.43
5.43
5.58
5.58
Advance receivable
Tata Communications Data Centers Private
Limited
Tata Communications (Netherlands) BV
Tata Communications International Pte. Ltd
Tata Communications Payment Solutions
Limited
$ includes remuneration paid by subsidiary
101
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Particulars
Investing Subsidiaries
Key
Company
Management
Personnel
Joint
Ventures
Total
Advance payable
Tata Communications Ireland Ltd
Tata Communications (Canada) Limited
0.90
0.90
0.66
0.66
0.26
0.26
6.95
6.95
0.12
0.12
5,140.91
5,140.91
3,844.80
3,844.80
6,877.96
6,877.96
7,522.32
7,522.32
1,976.54
1,976.54
1,793.06
1,793.06
1,108.06
1,108.06
1,005.20
1,005.20
412.00
412.00
402.00
402.00
433.93
433.93
102
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
35. Operating lease arrangements
Operating lease payments represent rentals payable by the Company for certain buildings and satellite channels.
a.
As lessee:
(` in crores)
As at
31 March 2014
As at
31 March 2013
0.39
0.31
At the balance sheet date, minimum lease payments under non-cancellable operating leases fall due as
follows:
(` in crores)
As at
31 March 2014
As at
31 March 2013
0.52
0.16
Due later than one year but not later than five years
0.19
0.02
0.71
0.18
b.
As lessor:
i.
The Company has leased under operating lease arrangements certain Indefeasible Rights of Use (IRU) with
gross carrying amount and accumulated depreciation of ` 87.02 crores (2013: ` 87.02 crores) and ` 51.25
crores (2013: ` 45.57 crores) respectively as at 31 March 2014. Depreciation expense of ` 5.67 crores (2013:
` 5.67 crores) in respect of these assets has been charged in the Statement of Profit and Loss for the year ended
31 March 2014.
In case of certain lease agreements aggregating ` 530.70 crores (2013: ` 513.79 crores) as at 31 March 2014, the
gross block, accumulated depreciation and depreciation expense of the assets given on IRU basis cannot be
identified as these assets are not exclusively leased. The lease rentals associated with such IRU arrangements
for the year ended 31 March 2014 amount to ` 47.10 crores (2013: ` 37.83 crores).
In respect of IRU arrangements, rental income of ` 54 crores (2013: ` 44.73 crores) has been recognised in the
Statement of Profit and Loss for the year ended 31 March 2014.
Future lease rental receipts will be recognised in the Statement of Profit and Loss of subsequent years as
follows:
As at
31 March 2014
(` in crores)
As at
31 March 2013
53.14
43.87
Due later than one year but not later than five years
182.01
154.80
212.55
206.64
447.70
405.31
103
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
ii. The Company has leased certain premises under operating lease arrangements to its wholly owned subsidiary.
Future lease rental income in respect of these leases will be recognised in the Statement of profit and loss of
subsequent years as follows:
As at
31 March 2014
(` in crores)
As at
31 March 2013
49.62
211.21
42.24
303.07
Lease rental income of ` 55.04 crores (2013: ` Nil) in respect of the above leases has been recognised in the
Statement of Profit and Loss for the current year.
36. Provision for Contingencies:
As at 31 March 2014
Asset
Others
Retirement
Obligation
Opening Balance
Addition
9.00
9.00
0.25
9.00
9.25
0.07
0.07
Utilisation
Closing Balance (Refer note 7)
Total
(` in crores)
As at 31 March 2013
Asset
Others
Total
Retirement
Obligation
0.25
0.25
0.07
9.00
9.07
9.00
9.00
a.
The provision for Asset Retirement Obligation has been recorded in the books of the Company in respect of
undersea cables and switches owned by the Company.
b.
Others include amounts provided towards claims made by a creditor of the Company.
Contingent Liabilities:
i.
ii.
iii.
104
As at
31 March 2014
(` in crores)
As at
31 March 2013
12,516.09
11,836.69
401.63
457.08
1,870.51
2,067.27
1.28
1.28
iv.
827.29
733.53
v.
Also Refer 4
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
1. Claims for taxes on income:
Significant claims by the revenue authorities in respect of income tax matters relate to disallowance of
deductions claimed section 80 IA of the Income Tax Act, 1961 from Assessment years 1996-97 onwards
and transfer pricing adjustments carried out by revenue authorities. The Company has contested the
disallowances/ adjustments and has preferred appeals which are pending.
2. Other claims:
i.
Telecom Regulatory Authority of India (TRAI) reduced the Access Deficit Charge (ADC) rates effective
1 April 2007. All telecom services providers including National Long Distance (NLD) and International
Long Distance (ILD) operators in India are bound by the TRAI regulations; accordingly the Company has
recorded the cost relating to ADC at revised rates as directed by TRAI. However, BSNL continued to bill
at the ADC rate applicable prior to 1 April 2007. BSNL had filed an appeal against the TRAI Interconnect
Usage Charges (IUC) regulation of reduction in ADC and currently this matter is pending with the
Supreme Court. The possible liability on Company is ` 311.84 crores (2013: ` 311.84 crores).
ii.
On 19 February 2013, DoT issued a license fee demand for financial year 2006-07 and 2007-08,
based on special audit reports of auditors appointed by DoT. The total demand is for ` 222.79 crores
(2013: ` 193.05 crores, being ` 92.86 crores for financial year 2006-07 and ` 100.19 crores for financial year
2007-08, including ` 102.06 crores, being interest as on 28 February 2013). The Company has challenged
the said demand notice in the Madras High Court which has vide its orders dated 1 March 2013, granted a
stay-order against the said demand. Further, the Company is also contesting a license fee claim of
` 121.38 crores (2013: ` 101.24 crores) (including interest and penalty) for financial year 2005-06. However,
the said demand notice includes the items which are already the subject-matter of petitions/ appeals,
pending for hearing in the Supreme Court of India, for the previous years.
iii.
Other claims of ` 171.28 crores (2013: ` 127.40 crores) mainly pertain to routine suits for collection,
commercial disputes, claims from customers and/ or suppliers and claims from Employee State Insurance
Corporation (ESIC).
3. The Company has taken appropriate professional advice in respect of the claims/ appeals and has taken all
necessary steps to protect its interest. Based on expert opinion, no provision is required in respect of these
claims/ appeals.
4. In terms of agreements entered into in 2008-09 between the Company and NTT Docomo Inc. the Company
sold to NTT Docomo Inc. of Japan (Strategic Partner SP), 36,542,378 equity shares of Tata Teleservices Ltd
(TTSL) at ` 116.09 per share which resulted in a profit of ` 346.65 crores in the same year.
Tata Sons Limited (TSL) is party to a Shareholders Agreement with NTT Docomo Inc. of Japan (Strategic Partner
SP) dated 25 March 2009 and amended on 21 May 2010.
Under the terms of the Shareholders Agreement if certain performance parameters and other conditions are
not met by TTSL by 31 March 2014 the SP has an option to divest its entire shareholdings in TTSL at a price
being the higher of fair value or ` 58.05 per share (i.e 50 percent of the subscription price) (Sale Price), subject
to compliance with applicable law and regulations (Sale Option).
The Company has an inter se agreement with Tata Sons Limited and other Tata Group companies.
Tata Sons Limited has informed the Company as follows:
i.
In the wake of recent regulatory developments in India, Tata Sons Limited has considered its position
relating to the possible exercise of the Sale Option under the Shareholders Agreement.
ii.
The Shareholders Agreement obliges Tata Sons Limited to find a buyer for the shares at the Sale Price.
iii.
If there is no buyer at the Sale Price, then Tata Sons Limited is obliged to acquire or procure the acquisition
of such shares. These obligations are subject to compliance with applicable law and regulations.
iv.
No notice of exercise of the Sale Option has been received although the SP has communicated its board
105
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Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
decision to exercise the Sale Option.
v.
Under the terms of the inter se agreement, the Company may be obligated to acquire the shareholding
of the SP in proportion of the number of shares sold by the company to the aggregate of the secondary
shares sold to the SP.
vi.
Pending receipt of a notice exercising the Sale Option and in view of applicable law and regulations, the
exposure of the Company (if any) cannot be ascertained.
The aforementioned agreements are governed by Indian Law.
5.
b.
Future cash flows in respect of the above matters are determinable only on receipt of judgements/ decisions
pending at various forums/ authorities.
Commitments:
i.
Capital Commitments:
Estimated amount of contracts remaining to be executed on capital account, not provided for amount to
` 154.75 crores (2013: ` 108.80 crores) (net of capital advances).
As on 31 March 2014, the Company has issued Letters of Comfort for the credit facility agreements in
respect of various subsidiaries:
(` in crores)
Name of the Subsidiary
As at
31 March 2014
As at
31 March 2013
35.94
32.60
434.00
422.93
302.44
1,976.54
1,793.06
1,108.06
1,005.20
412.00
402.00
The Company has undertaken to the lenders of TCPSL that it shall retain full management control so long
as amounts are due to the lenders.
106
2.
The Company has issued a support letter to Tata Communications International Pte. Limited (TCIPL),
aggregating ` 5,446.50 crores (2013: ` 2,547.22 crores) for providing financial support enabling, in turn,
TCIPL to issue such support letters to certain subsidiaries with negative net worth as at 31 March 2014 in
various geographies in order that they may continue as going concerns.
3.
The Company has given loan commitments to other wholly owned subsidiaries aggregating
` 5,673.34 crores (2013: ` 2,784.70 crores) as at 31 March 2014.
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
38. Supplementary statutory information
(` in crores)
a.
b.
c.
As at
31 March 2014
As at
31 March 2013
0.85
1.42
230.81
274.34
1,094.46
1,106.01
ii.
Capital goods
ii.
Interest income
11.87
33.68
iii.
Dividend income
27.71
26.16
iv.
Guarantee fees
152.66
117.92
v.
Other income
1.36
0.49
1,288.06
1,284.26
388.36
366.53
ii.
2.43
iii.
39.92
80.27
iv.
3.78
4.13
v.
Finance costs
1.70
2.53
vi.
Others
27.11
29.62
460.88
485.51
As at 31 March 2013
Value
Percentage
Value
Percentage
1.12
6.28
0.30
1.44
16.71
93.72
20.52
98.56
17.83
100.00
20.82
100.00
107
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Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
40. United Telecom Limited (UTL) is a joint venture between the Company, Mahanagar Telephone Nigam Limited,
Telecommunications Consultant India Limited and Nepal Ventures Private Limited. The Company has 26.66 percent
equity ownership in UTL. UTL operates basic telephony services in Nepal based on wireless-in-local loop technology.
The Companys share in income, expenses, assets and liabilities of UTL based on management accounts for the year
ended 31 March 2014 and year ended 31 March 2013 are as follows:
(` in crores)
Income
As at
31 March 2014
As at
31 March 2013
6.47
14.76
Expenses
15.06
18.48
Assets
27.99
33.92
Liabilities
13.63
12.41
As at
31 March 2013
1,019
1,088
24,038,731
23,499,590
2012-2013
2011-2012
7.21
4.70
Amount remitted
42. Micro and Small Enterprises
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis
of information collected by the Management:
(` in crores)
a.
As at
31 March 2013
0.16
0.06
b.
Interest due thereon remaining unpaid to any supplier as at the end of the
accounting year
c.
The amount of interest paid along with the amounts of the payment made to
the supplier beyond the appointed day
3.07
2.13
d.
0.07
0.04
e.
The amount of interest accrued and remaining unpaid at the end of the
accounting year
0.07
0.04
The amount of further interest due and payable even in the succeeding year,
until such date when the interest dues as above are actually paid
0.23
0.72
f.
g.
108
As at
31 March 2014
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
43. Disclosure as required under clause 32 of Listing Agreement
Amounts of loans and advances in the nature of loans outstanding from subsidiaries during the year ended 31 March
2014
(` in crores)
Name of the Company
Outstanding
as at 31 March
2014
Maximum
amount
outstanding
during the year
327.21
192.00
368.58
220.36
12.89
11.36
12.89
849.73
(Refer ii)
4.42
1.81
13.27
6.17
230.43
5.58
255.16
79.56
24.49
0.72
434.70
1.39
Investment in
Investment
shares of the
in shares of
Company subsidiaries of
No of shares the Company
No of shares
i.
Tata Communications International Pte. Ltd which is a wholly owned subsidiary of the Company has investments in
35 subsidiaries as at 31 March 2014.
ii.
VSNL SNOSPV Pte. Ltd has made the following investments in equity and preference shares of its subsidiaries:
1,017,363,620 in Neotel Pty Ltd. and 1,343,468,261 in SEPCO Communications Pty Ltd.
a.
(Amount in
` crores)
Nil
Nil
6.00
33.80
92.40
553.48
76.21
414.09
87.14
522.02
79.50
431.96
b.
(Amount in
USD millions)
iii.
109
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
45. Previous year figures have been regrouped/ rearranged wherever necessary to conform to the current years classifications.
The results for the current year ended 31 March 2014 includes the effect of scheme of arrangement for transfer of Internet
Data Center (IDC) division (Colocation service division of TCL) to Tata Communication Data Centers Private Limited
(refer note 4(iii)). In view of this, the results for the current year are not comparable with the corresponding previous
financial year.
For and on behalf of the Board
SUBODH BHARGAVA
Chairman
VINOD KUMAR
Managing Director & Group CEO
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
110
(b)
(c)
Other Matters
(a)
Auditors Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We
conducted our audit in accordance with the Standards on
Auditing issued by the Institute of Chartered Accountants of
India. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in
the consolidated financial statements. The procedures
selected depend on the auditors judgement, including
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers
internal control relevant to the Companys preparation and
presentation of the consolidated financial statements that
give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Companys internal control. An audit also includes
evaluating the appropriateness of the accounting policies
used and the reasonableness of the accounting estimates
made by the Management, as well as evaluating the overall
presentation of the consolidated financial statements.
(b)
R. A. BANGA
Partner
(Membership No. 037915)
111
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
As at
31 March 2013
` in crores
285.00
514.52
799.52
6.21
285.00
1,139.87
1,424.87
7.91
6
7 A (i)
8
9
9,750.55
35.73
4,159.11
263.93
14,209.32
9,194.58
28.70
3,932.97
235.49
13,391.74
10
11
12
13
2,225.72
4,040.27
3,191.39
404.50
9,861.88
24,876.93
1,080.40
3,915.64
3,685.22
333.35
9,014.61
23,839.13
14 (i)
14 (ii)
13,854.96
440.74
618.18
34.81
14,948.69
618.46
753.80
108.47
2,282.47
12.32
3,775.52
13,291.51
546.95
763.42
7.24
14,609.12
872.94
753.21
11.09
2,290.76
8.08
3,936.08
1,004.42
50.58
2,733.90
1,669.47
677.68
16.67
6,152.72
24,876.93
568.41
27.20
3,138.70
923.30
608.27
28.05
5,293.93
23,839.13
4
5
(II)
As at
31 March 2014
` in crores
15
7 A (ii)
16
17
18
19
20
21
22
112
SUBODH BHARGAVA
Chairman
VINOD KUMAR
Managing Director & Group CEO
R. A. BANGA
Partner
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
MUMBAI
DATED: 13 May, 2014
CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH, 2014
Note No.
Year ended
31 March 2014
` in crores
Year ended
31 March 2013
` in crores
19,619.55
17,212.95
23
46.35
II
Other Income
24
143.30
226.59
III
19,809.20
17,439.54
IV
Expenses:
Network and transmission
25
10,745.72
9,780.58
Employee benefits
26
2,497.61
2,411.46
27
3,334.61
2,961.20
Finance costs
Depreciation and amortization expense (net of transfer from Capital
Reserve)
28
761.70
794.14
2,091.37
2,027.05
19,431.01
17,974.43
378.19
(534.89)
66.22
104.18
444.41
(430.71)
436.39
(93.11)
343.28
249.98
(29.78)
220.20
IX
101.13
(650.91)
(1.40)
1.69
27.35
0.25
101.42
(623.31)
3.56
(21.87)
Total Expenses
V
VI
29
VINOD KUMAR
Managing Director & Group CEO
R. A. BANGA
Partner
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
MUMBAI
DATED: 13 May, 2014
113
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2014
Year Ended
31 March 2014
` in crores
Year Ended
31 March 2013
` in crores
444.41
(430.71)
2,091.37
(10.38)
(44.42)
761.70
16.84
38.84
13.52
(216.22)
150.00
0.57
(75.32)
3,170.91
(24.03)
501.31
440.80
(374.66)
24.06
(9.95)
(477.17)
28.86
(60.85)
3.12
1.88
19.69
3,243.97
(182.39)
3,061.58
2,027.05
(203.84)
(23.77)
794.14
48.34
46.74
9.58
0.93
(18.01)
2,250.45
(7.13)
(589.85)
(127.06)
211.35
43.13
428.86
(88.37)
370.74
(20.22)
(32.73)
(63.80)
2,375.37
79.33
2,454.70
(1,812.38)
25.18
(0.11)
(11,479.48)
11,118.81
1.35
(0.86)
(142.87)
15.67
(2,274.69)
(1,756.30)
214.74
(92.24)
(0.24)
(5,469.32)
4,918.92
(60.00)
70.00
(27.36)
(296.94)
24.75
(2,473.99)
1,772.23
(603.73)
3,281.87
(3,768.78)
(94.37)
(3.93)
(96.35)
(3.14)
(669.41)
(185.61)
601.28
570.88
(0.51)
1,171.65
1,732.16
(1,982.47)
2,134.78
(873.47)
158.55
(67.06)
(2.94)
(780.04)
319.51
300.22
277.97
(7.31)
570.88
Notes :
i.
Figures in brackets represent outflows
ii.
In the previous year Profit on sale of Fixed Assets includes profit on sale of land and building in Chennai
which is included as part of exceptional items amounting to ` 189.62 crores
See accompanying notes forming part of the financial statements
114
SUBODH BHARGAVA
Chairman
VINOD KUMAR
Managing Director & Group CEO
R. A. BANGA
Partner
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
MUMBAI
DATED: 13 May, 2014
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014
1.
Corporate information
TATA Communications Limited (the Company) was incorporated on 19 March, 1986. The Government of India vide its
letter No.G-25015/6/86OC dated 27 March, 1986, transferred all the assets and liabilities of the Overseas Communications
Service (OCS) (part of the Department of Telecommunications, Ministry of Communications) to the Company with
effect from 01 April, 1986. During the year 2007-08, the Company changed its name from Videsh Sanchar Nigam Limited
to Tata Communications Limited.
Tata Communications Limited, its subsidiaries and jointly controlled entity (collectively the Group) offers international
and national voice and data transmission services, selling and leasing of bandwidth on undersea cable systems,
internet dial up and broadband services, and other value added services comprising telepresence, managed hosting,
infrastructure managed services, mobile global roaming and signaling services, transponder lease, television uplinking
and other services.
2.
b.
Principles of consolidation
The consolidated financial statements relate to the Company, its subsidiary companies, jointly controlled entity
and the Groups share of profit / loss in its associates. The consolidated financial statements have been prepared
on the following basis:
i)
The financial statements of the subsidiary companies, jointly controlled entity and an associate used in the
consolidation are drawn up to the same reporting date as of the Company.
ii)
The financial statements of the Company and its subsidiary companies have been combined on a line-by-line
basis by adding together like items of assets, liabilities, income and expenses. Inter-company balances and
transactions, and unrealised profits or losses have been fully eliminated.
iii)
The results of subsidiaries acquired during the year, if any, are included in the Statement of Consolidated
Profit and Loss from the date of acquisition.
iv)
The consolidated financial statements include the interest in joint ventures which has been consolidated
on a line-by-line basis by adding together the book values of like items of assets, liabilities, incomes and
expenses on a proportionate basis to the extent of the Groups equity interest in each such entity as per
Accounting Standard 27-Financial Reporting of Interests in Joint Ventures. Unrealised profits and losses have
been eliminated to the extent of the Companys share in the joint ventures.
v)
The consolidated financial statements include the interest in associates which has been accounted for as per
Equity Accounting Method as per Accounting Standard 23 Accounting for investments in Associates in
Consolidated Financial Statements.
vi)
The excess of cost to the Company of its investment in a subsidiary company / joint venture over its share of
the equity of the subsidiary company / joint venture at the date on which the investment in the subsidiary
company / joint venture is made is recognised as Goodwill being an asset in the consolidated financial
statements. Goodwill on consolidation is not amortised but tested for the impairment. Where the share of
equity in the subsidiary companies / joint venture as on date of investment, is in excess of cost of investment
of the Company, it is recognised as Capital Reserve and shown under the head Reserves and Surplus, in the
consolidated financial statements.
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NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
vii) Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable
to the minority shareholders at the dates on which investments are made by the Company in the subsidiary
companies and further movements in their share in the equity, subsequent to the dates of investments. Net
profit / loss for the year of the subsidiaries attributable to minority interest is identified and adjusted against
the profit after tax of the Group in order to arrive at the income attributable to shareholders of the Company.
viii) Losses applicable to the minority in excess of the minoritys interest in the subsidiaries equity are allocated
against the majority interest except to the extent that the minority has a binding obligation and is able to
make an additional investment to cover the losses.
c.
Use of estimates
The preparation of financial statements requires the management of the Group to make estimates and assumptions
that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at
the date of the financial statements and reported amounts of income and expenses during the period. Examples
of such estimates include provisions for doubtful trade receivables and advances, employee benefit obligations,
provision for income taxes, provision for cable restoration, impairment of assets, asset retirement obligation and
useful lives of fixed assets.
The management believes that the estimates used in preparation of the financial statements are prudent and
reasonable. Future results could differ due to these estimates and the differences between the actual results and
the estimates are recognised in the periods in which the results are known / materialise.
d.
e.
f.
116
Fixed assets
i.
Tangible and intangible assets are stated at cost of acquisition or construction less accumulated depreciation
and impairment loss, if any. Cost includes freight, duties, taxes, salaries and employee benefits directly related
to the construction or development of the asset and all incidental expenses incurred on making the assets
ready for its intended use.
ii.
Indefeasible Rights of Use (IRUs) for international and domestic telecommunication circuits are classified
under plant and machinery under tangible assets. The IRU agreements substantially all the risks and rewards
of ownership.
iii.
Jointly owned assets are capitalised in proportion to the Companys ownership interest in such assets.
iv.
Costs of borrowing related to the acquisition or construction of fixed assets that are attributable to the
qualifying assets are capitalised as part of the cost of such asset. All other borrowing costs are recognised as
an expense in the periods in which they are incurred.
v.
Capital work-in-progress includes projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, directly attributable cost and attributable interest
vi.
Consideration for purchase of business in excess of the value of net assets acquired is recognised as goodwill.
vii.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
viii. Assets acquired pursuant to an agreement for exchange of similar assets are recorded at the net book value
of the asset given up, with an adjustment for any balancing receipt or payment of cash or any other form of
consideration.
g.
e)
f)
g)
h)
i)
II
a)
b)
Tangible Assets
Leasehold land
Leasehold improvements
Buildings
Plant and Machinery
(i) Indefeasible Rights of Use (IRUs)
(ii) Cables
(iii) Other plant and machinery (Refer Note 14)
Furniture and fixtures
Office equipment
Computers
Motor vehicles
Goodwill on purchase of business
Intangibles assets are amortised over their
estimated useful life as follows
Software (Refer Note 14)
License fees
Lease period
Lease period
1.64% to 6.67%
Life of IRU or period of agreement, whichever is lower
4.75% to 6.33%
4.75% to 33.33%
6.33% to 33.33%
4.75% to 33.33%
10.00% to 33.33%
9.50%
60/120 months
12.5% to 33.33%
4.00%
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each
financial year and the amortisation is revised to reflect the changes in useful life.
h.
Leases
Assets leased by the Group in its capacity as a lessee, where substantially all the risks and rewards of ownership
vest in the Group are classified as finance leases. Such leases are capitalised at the inception of the lease at the
lower of the fair value and the present value of the minimum lease payments and a liability is created for an
equivalent amount.
Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate
of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the
lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Consolidated
Statement of Profit and Loss on a straight-line basis.
Rental income and rental expenses on assets given or obtained under operating lease arrangements are recognised
on a straight - line basis over the term of the relevant lease in the Statement of Profit and Loss.
The initial direct costs relating to operating leases are recorded as expenses as they are incurred.
i.
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its fixed assets and goodwill included in
each cash generating unit to determine whether there is any indication that those assets suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent
117
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NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
of the impairment loss. Recoverable amount is the higher of an assets net selling price and value in use. If the
recoverable amount of the cash generating unit is less than the carrying amount of the unit the impairment loss
is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other asset
of the unit pro-rata on the basis of the carrying value of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in the subsequent period unless there are changes in external events. When an impairment
loss exists such loss is recognised in the Statement of Profit and Loss.
j.
k.
Investments
Long-term investments are carried individually at cost less provision for diminution, other than temporary in value
of such investments. Current investments comprising investments in mutual funds are stated at the lower of cost
or fair value, determined on an individual investment basis.
l.
Inventories
Inventories are valued at the lower of cost or net realisable value. Cost includes all expenses incurred to bring the
inventory to its present location and condition. Cost is determined on a weighted average basis.
m.
Employee Benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity fund, compensated
absences and post-employment medical and other benefits.
i)
ii)
n.
118
Revenue recognition
i)
Revenues from Global Voice Services (GVS) are recognised at the end of each month based upon minutes of
traffic completed in such month.
ii)
Revenues from Global Data Managed Services (GDMS) are recognised over the period of the respective
arrangements based on contracted fee schedules.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iii)
Revenues from right to use of fibre capacity provided based on IRU are recognised over the period of such
arrangements.
iv)
Certain transactions with providers of telecommunication services are accounted for as non-monetary
transactions depending on the terms of the agreements entered into with such telecommunication service
providers.
v)
Revenue from fixed fee based service contracts is recognised on achievement of performance milestones as
specified in Customer Contracts.
vi)
Revenue in respect of annual maintenance service charges is recognised over the period for which services
are provided.
vii) Revenues from providing infrastructure managed and incidental services to banking sector are recognised
on the basis of the contract with the customer at the end of each month based upon the following:
o.
a)
b)
On the basis of fixed service charge for the number of days of usage in such month.
Export incentive
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty
in receiving the same and there is a reasonable assurance that the Company will comply with the conditions
attached to them. Export incentive is included in other operating income.
p.
Other Income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is
established and no significant uncertainty as to measurability or collectability exists.
q.
Taxation
Current income tax expense comprises taxes on income from operations in India and foreign tax jurisdictions.
Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax
expense relating to overseas operations is determined in accordance with tax laws applicable in countries where
such operations are domiciled.
Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income
and accounting income that originate in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax assets in respect of unabsorbed depreciation and carry forward tax losses are recognised only to the
extent that there is virtual certainty that there will be sufficient future taxable income available to realise these
assets. All other deferred tax assets in respect of other timing differences are recognised if there is a reasonable
certainty that sufficient future taxable income will be available to realise such assets. Deferred tax assets are
reviewed at each balance sheet date for their realisability.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting income
tax provision and advance taxes paid in respect of the same tax jurisdiction on an assessment year basis and where
the Group intends to settle the asset and liability on a net basis.
The Group offsets deferred tax assets and deferred tax liabilities relating to taxes on income levied by the same
governing tax authorities.
r.
Transactions in foreign currencies entered into by the Group are accounted at the exchange rates prevailing
on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
119
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Foreign currency monetary items (other than derivative contracts) of the Group, outstanding at the Balance
Sheet date are restated at the year-end rates. Non-monetary items of the Group are carried at historical
cost. Exchange differences, on foreign currency transactions are recognised in the Statement of Profit and
Loss. Exchange difference arising on a monetary item that, in substance, forms part of an enterprises net
investments in a non-integral foreign operation are accumulated in a foreign currency translation reserve.
ii)
For the purpose of consolidation of foreign subsidiaries and joint ventures, income and expenses are
translated at average rates and the assets and liabilities are stated at closing rate. The net impact of such
change is disclosed under foreign exchange translation reserve.
iii)
Forward exchange contracts/Cross Currency Swaps (other than referred in (s)(ii) below):
Premium or discount on forward contracts/cross Currency Swaps is amortised over the life of such contracts
and is recognised in the Statement of Profit and Loss. Forward contracts/cross Currency Swaps outstanding
as at the balance sheet date are stated at the closing rate prevailing on the balance sheet date and any
gains or losses are recognised in the Statement of Profit and Loss. Profit or loss arising on cancellation or
enforcement/exercise of a forward exchange is recognised in the Statement of Profit and Loss in the period
of such cancellation or enforcement/exercise.
s.
The Group enters into forward contracts and interest rate swaps to manage its exposure on foreign exchange
rate risk and interest rate risk globally. Exposures to currency and interest rate risk are monitored on an ongoing basis and the Group endeavours to keep the net exposure at acceptable levels.
In respect of Interest rate swaps that are designated as cash flow hedges, the effective portion of the fair
value of the interest rate swaps are carried to Hedge Fluctuation Reserve which will be recycled to the
Statement of Profit and Loss in the accounting period in which the interest expense is being recognised. The
fair value of interest rate swaps that are not designated under a hedging relationship would be recorded in
the Statement of Profit and Loss.
ii)
t.
Mark-to-market gains and losses on hedging instruments designated as hedges of the net investments in
non-integral foreign operations are recognised in foreign currency translation reserve to the extent that
the hedging relationship is effective. Gains and losses relating to hedge ineffectiveness are recognised
immediately in the Statement of Profit and Loss. Gains and losses accumulated in the foreign currency
translation reserve are included in the income statement when the foreign operation is disposed of.
u.
120
Segment reporting
i)
The Group identifies primary segments based on the dominant source, nature of risks and returns and the
internal organisation and management structure. The operating segments are the segments for which
separate financial information is available and for which operating profit / loss amounts are evaluated
regularly by the executive Management in deciding how to allocate resources and in assessing performance.
ii)
The accounting policies adopted for segment reporting are in line with the accounting policies of the Group.
Segment revenue and segment expenses have been identified to segments on the basis of their relationship
to the operating activities of the segment.
iii)
Revenue and expenses which relate to the Group as a whole and are not allocable to segments on reasonable
basis have been included under unallocated expenses (net).
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
v.
3.
Particulars of subsidiaries, associate and jointly controlled entity considered in the preparation of the
consolidated financial statements:
Country of
Incorporation
As at 31
March 2013
100.00
100.00
90.00
90.00
100.00
100.00
Singapore
100.00
100.00
Singapore
100.00
100.00
India
100.00
100.00
Bermuda
100.00
100.00
Netherlands
100.00
100.00
Hong Kong
100.00
100.00
Luxembourg
100.00
100.00
100.00
100.00
100.00
100.00
Canada
100.00
100.00
Belgium
100.00
100.00
Italy
100.00
100.00
Portugal
100.00
100.00
France
100.00
100.00
Norway
100.00
100.00
Guam
100.00
100.00
100.00
100.00
India
Sri Lanka
121
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Country of
Incorporation
Australia
As at 31
March 2014
100.00
As at 31
March 2013
100.00
Bermuda
100.00
100.00
Puerto Rico
100.00
Poland
100.00
100.00
Japan
100.00
100.00
United Kingdom
100.00
100.00
Germany
100.00
100.00
100.00
100.00
Hungary
100.00
100.00
Ireland
100.00
100.00
Russia
99.90
99.90
Switzerland
100.00
100.00
Sweden
100.00
100.00
Austria
100.00
100.00
Taiwan
100.00
100.00
BitGravity Inc
99.99
99.99
Thailand
100.00
Malaysia
100.00
100.00
New Zealand
100.00
100.00
Spain
100.00
100.00
South Africa
67.32*
67.32*
South Africa
73.17
73.17
South Africa
100.00
100.00
TCNL1 B.V.
Netherlands
100.00
100.00
TCNL 2 B.V.
Netherlands
100.00
100.00
26.66
26.66
20
20
Joint Venture
United Telecom Limited
Nepal
Associate
Number Portability Company (Pty) Ltd.
(Held through Neotel (Pty) Ltd.)
*Direct and indirect interest
122
South Africa
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
4.
Share capital
As at
31 March 2014
a.
Authorized:
400,000,000 (2013:400,000,000) Equity shares of ` 10 each
b.
400.00
400.00
285.00
285.00
i)
(` in crores)
As at
31 March 2013
ii)
iii)
Number of shares held by each shareholder holding more than 5% of the issued share capital:
As at 31 March 2014
As at 31 March 2013
No of shares
Percentage
No of shares
Percentage
88,626,654
31.10%
88,626,654
31.10%
Government of India
74,446,885
26.12%
74,446,885
26.12%
37,237,639
13.07%
40,533,297
14.22%
14,167,950
4.97%
Note:
During the year, the Company delisted its American Depositary Shares (ADSs), from the New York Stock
Exchange (NYSE) and terminated its ADR program with effect from 13 August 2013. This action enabled the
Company to increase its public shareholding to 25% as required by Securities and Exchange Board of India.
123
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
5.
b)
c)
d)
e)
f)
206.47
(0.41)
206.06
206.92
(0.45)
206.47
Securities Premium
Opening balance
Closing balance
725.01
725.01
725.01
725.01
4,827.27
61.89
4,889.16
4,174.59
600.00
52.68
4,827.27
350.13
87.81
437.94
730.74
219.39
(600.00)
350.13
4.79
(10.04)
(5.25)
(0.06)
4.85
4.79
(650.33)
(513.54)
1.06
(563.41)
(1,212.68)
3.88
(140.67)
(650.33)
(4,323.47)
101.42
128.25
(3,326.36)
(623.31)
85.50
25.72
61.89
87.81
(4,525.72)
514.52
16.23
52.68
219.39
(4,323.47)
1,139.87
General Reserve
Opening balance
Add: Transferred from Debenture Redemption Reserve
Add: Transferred from Statement of Profit and Loss
Closing balance
g)
124
(` in crores)
As at
31 March 2013
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
6.
i.
Capital Reserve includes ` 205.22 crores in respect of foreign exchange gains on unutilised proceeds from Global
Depository Receipts credited in earlier years.
ii.
During the year 2011-12, the Company has designated the loans given to VSNL SNOSPV Pte Ltd. and Neotel (Pty)
Ltd. as part of net investment in non-integral foreign operations. In respect of such loans, an amount of ` 1.06
crores (2013: ` 3.88 crores) net foreign exchange gain/(loss) (inclusive of forward cover loss of Nil (2013: ` 135.68
crores)) have been recorded to foreign exchange translation reserve during the year.
DEBENTURES
I)
Taxable Rated Secured Non-Convertible Redeemable Debentures (refer i)
50, 11.25% Rated taxable debentures of face value ` 10 lakhs each
550, 11.20% Rated taxable debentures of face value ` 10 lakhs each
1,900, 11.00% Rated taxable debentures of face value ` 10 lakhs each
II)
b)
c)
UNSECURED NOTES
1,600 (2013: 1,000), 4.25% SGD Notes of face value of SGD 250,000
(refer iii)
TERM LOANS (refer iv)
From Banks
Secured
Unsecured
From Others
Unsecured
TOTAL
Less: Current maturities of long-term borrowings
Long-term Borrowings, net of current portion
i)
(` in crores)
As at
31 March 2013
5.00
55.00
190.00
5.00
55.00
190.00
150.00
150.00
150.00
150.00
1,899.18
1,093.80
2,578.11
6,310.63
2,698.05
6,811.14
130.74
11,468.66
1718.11
9,750.55
129.04
11,282.03
2,087.45
9,194.58
Secured debentures
During the year 2008-09, the Company issued Taxable Rated Secured Non-convertible Redeemable
Debentures in demat form for cash at par on a private placement basis aggregating ` 1,250 crores, IDBI
Trusteeship Services Limited has been appointed as trustee to the debenture issue.
Nature of Security
` 250 crores, debentures (interest ranging from 11.00% to 11.25%, face value of ` 1,000,000 each) are secured
by a first legal mortgage and charge on the Companys free hold land at Perambur Barracks, Chennai and
Plant and machinery.
125
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Redemption Terms
The outstanding debentures are due for redemption as given below:
Date of redemption as per terms of issue
50, 11.25%
Debentures
` in crores
550, 11.20% 1,900, 11.00%
Debentures
Debentures
23 January 2019
23 January 2016
55
23 July 2014
190
Total
55
190
For facilitating the above redemptions, and the Company has created a Debenture Redemption Reserve of
` 222.43 crores (2013: ` 179.60 crores) and an amount of ` 42.83 crores (2013: ` 174.41 crores) has been
appropriated during the current year.
During the previous year, 6,000, 11.70% debentures aggregating ` 600 crores were redeemed and
consequently debenture redemption reserve of ` 600 crores created to facilitate the redemption of above
debentures has been transferred to General reserve.
ii)
Unsecured debentures
During the year 2009-10, the Company has issued, Taxable Rated Unsecured, Non-convertible Redeemable
Debentures of face value ` 1,000,000 each, in demat form for cash at par on a private placement basis.
The outstanding debentures are due for redemption as given below:
Date of redemption as per terms of issue
02 July 2019
08 June 2014
Total
1500, 9.85%
Debentures
` in crores
1500, 9.50%
Debentures
150
150
150
150
For facilitating the above redemptions, the Company has created a Debenture Redemption Reserve of
` 215.51 crores (2013: ` 170.53 crores) and an amount of ` 44.98 (2013: ` 44.98 crores) has been appropriated
during the current year.
iii)
Tata Comunications (Netherlands) B.V (TCN BV), a wholly owned subsidiary of the Company issued Unsecured
Notes on the Singapore Stock Exchange (the Notes) which will mature in February 2016 and carry a fixed
interest of 4.25 per cent per annum. These notes are denominated in Singapore Dollars (SGD), the face value
of each bond is SGD 250,000. The Notes constitute senior unsecured obligations of the TCN BV and will rank at
all times pari passu without any preference among themselves and at least equally with all other present and
future outstanding unsecured and unsubordinated obligations of the TCN BV but, in the event of insolvency,
only to the extent permitted by applicable laws relating to creditors rights. These notes are guaranteed by
the Company. Details are as below:
No. of notes
As on issue
date (` in
crores)
As on 31st
Mar13
(` in crores)
` in crores
As on 31st
Mar14
(` in crores)
Issue 1
1000
1,074.88
1,093.80
1,186.99
Issue 2
600
126
659.36
712.19
1,734.24
1,093.80
1,899.18
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iv)
Currency Amount
Rate of Interest
Maturities
Bank
ZAR
Bank
Bank
ZAR
Bank
ZAR
Bank
ZAR
Bank
ZAR
Bank
ZAR
100.11 3M JIBAR + 5.21%
Total Secured Loan
from Bank
2,578.11
LIBOR plus
Bank
USD
599.00 3.55%*
LIBOR plus 3.04
Bank
USD
599.00 %
LIBOR plus
Bank
USD 2,096.50 2.90%*
(` in crores)
Nature of
Securities
Land and
Building
N.A.
Bank
Bank
USD
N.A.
Bank
USD
N.A.
Bank
INR
June 2014
N.A.
Bank
INR
October 2015
N.A.
October 2015
N.A.
N.A.
Bank
INR
Bank
SGD
Bank
USD
474.79 SIBOR plus 3 %
Total Unsecured Loan
from Bank
6,310.63
December 2016
N.A.
N.A.
Others
USD
130.74 3.95% Fixed
October 2012 - December 2017
N.A.
Total Unsecured Loan
from Others
130.74
LIBOR- London Interbank Offer Rate, JIBAR- Johannesburg Interbank Agreed Rate, SIBOR- Singapore Interbank
Borrowing Offer Rate
*
a.
The spread on above LIBOR is based on net debt of EBIDTA ratio of the Company and certain subsidiaries
of the Company.
The loan of ` 2,504.81 crores facility is from a consortium of banks, namely Nedbank Limited, The Development
Bank of Southern Africa (DBSA) Limited, Investec Bank Limited, Infrastructure Finance Corporation Limited
(INCA), Industrial Development Corporation of South Africa (IDC), State Bank Limited of India and Deutsche
Investitions - und Entwicklungsgesellschaft mbH (DEG). Investec Bank Limited and Nedbank Limited act on
behalf of the consortium of lenders as joint mandated lead arrangers (MLAs). The financing was purely on
a Project recourse basis without any shareholder recourse or guarantees. The facility is made up of senior
debt, subordinated debt and an IDC Mezzanine facility. The details of securities are as follows:
127
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
i.
ii.
7.
Major components of deferred tax asset and liability consist of the following:
As at
31 March 2014
(i)
(ii)
128
(` in crores)
As at
31 March 2013
(A)
368.25
30.14
18.60
416.99
319.13
41.81
9.42
370.36
(B)
237.37
75.55
23.79
36.05
8.50
381.26
228.89
66.29
31.39
9.56
5.53
341.66
(A-B)
35.73
28.70
(A)
300.44
0.17
300.61
296.01
296.01
8.81
39.36
74.41
135.80
27.83
20.49
65.88
131.01
19.64
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(B)
(B-A)
As at
31 March 2014
27.64
19.46
12.52
12.38
38.56
12.31
409.08
108.47
(` in crores)
As at
31 March 2013
27.63
14.31
8.70
19.44
307.10
11.09
The Group has recognised deferred tax asset on unabsorbed depreciation and brought forward business losses to
the extent of the corresponding deferred tax liability.
B.
(` in crores)
As at
31 March 2013
45.26
2.13
(29.78)
17.61
As at
31 March 2014
3,928.75
58.42
171.94
4,159.11
(` in crores)
As at
31 March 2013
3,767.24
36.80
128.93
3,932.97
As at
31 March 2014
(` in crores)
As at
31 March 2013
a.
b.
c.
9.
As at
31 March 2014
17.61
2.76
(93.11)
(72.74)
Unearned Revenues
Trade Payable
Others
Total
a.
b.
c.
60.91
13.42
1.13
61.42
127.05
263.93
62.84
14.60
1.00
52.85
104.18
0.02
235.49
129
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
10. Short term borrowings (unsecured)
As at
31 March 2014
LOANS
From Banks (rate of interest 0.92 % to 11.00% pa)
TOTAL
(` in crores)
As at
31 March 2013
2,225.72
2,225.72
1,080.40
1,080.40
a.
b.
As at
31 March 2014
3,672.54
367.73
4,040.27
(` in crores)
As at
31 March 2013
3,568.20
347.44
3,915.64
Note:
Trade payable includes amounts payable to related parties amounting to ` 21.07 crores (2013: ` 22.03 crores)
12. Other current liabilities
a.
b.
c.
d.
e.
f.
g.
h.
i.
i.
As at
31 March 2014
1,718.11
336.80
67.34
68.96
827.86
20.57
0.38
4.05
147.32
3,191.39
(` in crores)
As at
31 March 2013
2,087.45
380.12
66.55
60.62
755.44
20.57
0.39
7.50
306.58
3,685.22
There are no dividends due and outstanding for a period exceeding seven years.
a.
b.
c.
d.
e.
130
As at
31 March 2014
(` in crores)
As at
31 March 2013
54.89
1.12
6.08
128.25
30.29
182.96
0.91
404.50
53.27
3.92
85.50
15.42
174.56
0.68
333.35
i)
25.64
2.84
0.48
28.96
2.88
0.80
32.64
191.08
189.19
92.75
98.57
103.53
258.46
72.92
14.34
4.20
91.46
26.32
7.81
125.59
140.52
46.46
8.01
194.99
171.85
17.21
384.05
673.31
650.17
155.94
26.74
(2.92)
(3.11)
176.65
26.26
(0.87)
2.44
204.48
866.17
4.82
(6.74)
(14.29)
849.96
2.41
(3.24)
5.52
854.65
Building
11,856.42
12,316.10
6,998.46
1,624.97
(21.01)
96.37
8,698.79
1,668.63
(24.75)
295.52
10,638.19
18,439.07
1,711.42
(102.80)
507.52
20,555.21
1,504.29
(36.25)
931.04
22,954.29
The difference between Depreciation as per schedule of tangible assets and intangible assets of ` 2,089.98 (2013: ` 2,025.70 crores) and net amount
charged to the statement of profit and loss is ` 2,091.37 crores (2013: ` 2,027.05 crores) is on account of goodwill amortisation of ` 1.80 crores (2013:
` 1.80 crores). Decrease on account of depreciation on gifted assets transferred to Capital Reserve of ` 0.41 crores (2013: ` 0.45 crores)
Finance cost capitalised during the year is ` 11.10 crores (2013: ` 14.74 crores) in respect of capital expenditure.
During the previous year, the Group has evaluated the economic useful life of undersea cables and has extended the useful life of undersea cables from
15 /18 years to 20 years and batteries from 8/12 years to 4 years. This has resulted in lower depreciation charge of ` 100.90 crores (net) for the last year.
Neotel (Pty) Limited (a subsidiary of the Company) had changed the useful lives of its network equipments from 12 years to 15 years and computer
software from 3 years to 8 years which has reduced the depreciation charge for the last year by ` 58.10 crores.
4.
5.
6.
13,291.51
13,854.96
7,890.26
1,788.08
(30.84)
100.45
9,747.95
1,833.18
(27.36)
324.90
11,878.67
20,783.41
1,860.99
(119.58)
514.64
23,039.46
1,743.44
(41.54)
992.27
25,733.63
Total
(` in crores)
Gross block of buildings includes ` 32.75 crores (2013: ` 32.75 crores) for flats at Mumbai in respect of which agreements have not been executed.
0.19
0.64
0.98
0.05
(0.01)
1.02
0.03
(0.13)
0.01
0.93
1.22
(0.01)
1.21
0.52
(0.17)
0.01
1.57
Motor
Vehicles
Gross block and accumulated depreciation of plant and machinery includes Indefeasible Rights of Use (IRUs) for domestic and international
telecommunication circuits of ` 2,837.20 crores (2013: ` 2,549.99 crores) and ` 1,264.38 crores (2013: ` 1,019.49 crores) respectively.
191.21
154.31
506.00
97.28
(5.59)
2.90
600.59
87.75
(1.53)
16.61
703.42
717.01
71.74
(6.87)
9.92
791.80
41.20
(1.75)
26.48
857.73
Computers
3.
87.43
90.21
33.84
7.09
(0.07)
0.61
41.47
8.24
(0.03)
1.18
50.86
115.63
12.13
(0.12)
1.26
128.90
9.74
(0.07)
2.50
141.07
Office
Equipment
2.
95.59
97.31
96.48
14.77
(1.25)
(0.99)
109.01
13.07
(0.05)
0.53
122.56
192.64
14.42
(2.01)
(0.45)
204.60
13.32
(0.06)
2.01
219.87
Plant and
Furniture
Machinery and Fixtures
Freehold Land includes ` 0.16 crores (2013: ` 0.16 crores) identified as Surplus land.
218.94
1.10
220.04
1.79
221.83
Leasehold
Leasehold
Land Improvements
92.21
(1.04)
1.58
92.75
0.11
5.71
98.57
Freehold
Land
1.
Notes:
Gross block
At 1 April, 2012
Additions
Disposals
Adjustments
At 31 March, 2013
Additions
Disposals
Adjustments
At 31 March, 2014
Accumulated Depreciation
At 1 April, 2012
Depreciation
Disposals
Adjustments
At 31 March, 2013
Depreciation
Disposals
Adjustments
At 31 March, 2014
Net Block
At 31 March, 2013
At 31 March, 2014
Tangible Assets
Tangible assets
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
131
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
ii)
Intangible assets
(` in crores)
Total
Software
License fees
Goodwill
885.84
227.83
(17.65)
12.00
1,108.02
114.44
(2.86)
52.53
1,272.13
16.90
1.53
0.04
18.47
0.03
(0.57)
17.93
739.46
42.07
781.53
68.39
849.92
1,642.20
229.36
(17.65)
54.11
1,908.02
114.47
(2.86)
120.35
2,139.98
Accumulated Amortisation
At 1 April, 2012
Amortisation Expense
Disposals
Adjustments
At 31 March, 2013
Amortisation Expense
Disposals
Adjustments
At 31 March, 2014
567.84
177.88
(17.65)
4.26
732.33
191.50
(1.79)
32.61
954.65
10.37
0.80
0.41
11.58
0.74
(0.39)
11.93
530.24
58.94
27.98
617.16
64.56
50.94
732.66
1,108.45
237.62
(17.65)
32.65
1,361.07
256.80
(1.79)
83.16
1,699.24
Net Block
At 31 March, 2013
At 31 March, 2014
375.69
317.48
6.89
6.00
164.37
117.26
546.95
440.74
132
748.03
0.01
3.36
0.10
0.08
0.32
0.02
0.01
751.93
(` in crores)
As at
31 March 2013
748.03
0.01
3.05
0.10
0.08
0.24
751.51
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
As at
31 March 2014
Investment in Associates
Investment in Number Portability Company Pty. Ltd.
Opening balance
Translation adjustment
Dividends received
Add: Share in Profit (loss) for the year
Closing balance
TOTAL (A+B)
(` in crores)
As at
31 March 2013
B.
1.70
(0.17)
(1.35)
1.69
1.87
753.80
1.64
(0.19)
0.25
1.70
753.21
As at
31 March 2014
(` in crores)
As at
31 March 2013
A)
B)
0.62
95.94
42.04
112.40
295.65
1.22
82.74
5.01
151.20
249.27
1,546.36
25.58
163.88
1,589.31
25.58
186.43
9.14
(9.14)
8.57
(8.57)
2,282.47
2,290.76
a.
b.
c.
i.
(` in crores)
As at
As at
31 March 2014 31 March 2013
Pension contributions recoverable from Government of India (net) (Refer i)
7.44
7.44
NLD license fees reimbursement recoverable from Government of India
0.64
0.64
Others
4.24
12.32
8.08
TOTAL
As at 31 March, 2013 the proportionate share of pension obligations and payments of ` 61.15 crores (2013:
` 61.15 crores) to the erstwhile Overseas Communications Service (OCS) employees was recoverable from the
Government of India (the Government). Pursuant to discussions with the Government, the Company had made
a provision of ` 53.71 crores (2013: ` 53.71 crores) resulting in a net amount due from the Government towards its
share of pension obligations of ` 7.44 crores (2013: ` 7.44 crores).
133
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
18. Current investments
As at
31 March 2014
1,004.42
1,004.42
(` in crores)
As at
31 March 2013
568.41
568.41
As at
31 March 2014
(` in crores)
As at
31 March 2013
Trade receivables outstanding for a period exceeding six months from the
date they were due for payment
Unsecured, considered good
Doubtful
Less: Provision for Doubtful Debts
Other trade receivables
Considered good
Considered Doubtful
Less: Provision for doubtful trade receivables
TOTAL
111.81
590.02
701.83
(590.02)
111.81
267.80
545.66
813.46
(545.66)
267.80
2,622.09
11.43
2,633.53
(11.43)
2,622.09
2,733.90
2,870.90
11.93
2,882.83
(11.93)
2,870.90
3,138.70
During the year, the Group has entered into a factoring arrangement to sell, without recourse, certain receivables to an
unrelated third party financial institution. The Group has sold receivables amounting to ` 185.16 crores which were due
after March 31, 2014.
20. Cash and bank balances
a.
Cash in Hand
b. Cheques in Hand
c.
Remittances in transit
d. Current accounts with banks
e.
Deposit accounts held with banks
Cash and cash equivalents
f.
Deposits with original maturity over three months
g. Deposit accounts held as margin money (refer note)
h. Earmarked Funds
TOTAL
As at
31 March 2014
0.15
10.13
59.31
626.54
475.52
1,171.65
30.95
449.50
17.37
1,669.47
(` in crores)
As at
31 March 2013
0.11
7.13
0.87
276.63
286.14
570.88
27.37
314.20
10.85
923.30
Note:
Includes ` 439.23 crores (2013 ` 302.48 crores) held in the margin money with bank against short term loan drawn by
Neotel of ` 423.00 crores (2013 ` 296.41 crores).
134
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
21. Short term loans and advances
As at
31 March 2014
(` in crores)
As at
31 March 2013
16.66
12.34
b.
Sundry deposits
12.11
28.63
c.
Prepaid expenses
306.38
310.57
d.
235.96
169.75
e.
46.35
f.
Other advances
60.22
86.98
677.68
608.27
TOTAL
22. Other current assets
As at
31 March 2014
a.
Interest receivable
b.
c.
d.
Others
(` in crores)
As at
31 March 2013
13.88
2.01
1.96
1.13
Gratuity
0.73
TOTAL
0.10
24.91
16.67
28.05
23. During the year, the Company has received duty credit scrips aggregating ` 46.35 crores (2013: Nil) in respect of foreign
exchange earnings to be utilised towards import duty. This is included in Other operating income.
24. Other income
Interest Income:
a) On Bank deposits
b) Refund of license fees (refer note)
c) On Other loans and advances
Profit on sale of current investments
Profit on sale of fixed assets (net)
Rent
Exchange gain/(loss) (net)
Provisions / Liabilities no longer required written back
Other income
TOTAL
Year Ended
31 March 2014
Year Ended
31 March 2013
10.09
34.33
75.32
10.38
7.22
(45.62)
16.08
35.50
143.30
9.53
110.51
14.24
18.01
14.92
5.64
(14.48)
7.69
60.53
226.59
Note:
In January 2008, an amount of ` 290 crores was paid to the Department of Telecommunications, Government of India
(DoT) under protest, towards payment of license fees, interest and penalty demanded by DoT before issue of certain
licenses to the Company. Against this, the Company carried a provision of ` 174.15 crores for license fees and interest
135
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
thereon which has been set off against the payment of ` 290 crores for the presentation in the financial statements.
The Company has filed a petition in the Supreme Court of India challenging the judgement of The Telecom Disputes
Settlement Appellate Tribunal (TDSAT) relating to the computation of license fee.
Additionally, the Company has also filed a petition with TDSAT challenging the applicability of penal provisions under
International Long Distance (ILD) and National Long Distance (NLD) license agreements, whereby DoT claimed penalty
and interest on penalty amounting to ` 115.73 crores (included in aforesaid ` 290 crores). Consequently, the amount of
`115.73 crores was reflected as an asset in the books since 31 March 2009.
During the year 2009-10, TDSAT accepted the Companys position and decided in favour of the Company. However,
DoT has filed an appeal in the Supreme Court of India challenging the judgement of TDSAT relating to the waiver of
penalty and interest on penalty. A claim of ` 115.73 crores along with interest was raised upon DoT in financial year
2009-10 based on this TDSAT order, which DoT has refused. The Company filed an appeal in TDSAT in financial year
2010-11 against DoT, which had been allowed in favour of the Company by TDSAT in financial year 2011-12. Pending
implementation of this order by DoT, the Company had further filed execution petition in TDSAT in financial year 201112. TDSAT, on 9 May 2012, decided the execution petition in favour of the Company and directed DoT to refund the `
115.72 crores being penalty and interest on penalty, along with interest till date of payment. Accordingly DoT, on 7 June
2012 refunded an amount of ` 226.23 crores to the Company, including interest of ` 110.51 crores which was included
in Other Income in financial year 2012-13. The Company based on legal opinion and position in law is confident that its
position will be upheld in the Supreme Court.
25. Network and transmission expenses
Charges for use of transmission facilities (net of expenses written back ` 33.71
crores (2013: Nil)
Royalty and license fees
Rent of satellite channels
Administrative lease charges
TOTAL
Year Ended
31 March 2014
10,364.26
225.67
75.75
80.04
10,745.72
(` in crores)
Year Ended
31 March 2014
9,405.52
257.42
66.78
50.86
9,780.58
Year Ended
31 March 2014
2,218.77
176.99
101.85
2,497.61
(` in crores)
Year Ended
31 March 2013
2,124.52
190.20
96.74
2,411.46
Year Ended
31 March 2014
52.89
389.63
(` in crores)
Year Ended
31 March 2013
58.63
338.54
Consumption of stores
Light and power
Repairs and Maintenance:
- Buildings
- Plant and Machinery
- Others
136
33.24
840.10
27.88
30.92
803.45
21.94
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Year Ended
31 March 2014
38.84
16.84
0.57
184.35
116.44
147.14
56.58
12.68
210.80
195.80
63.01
346.32
24.55
1.68
575.27
3,334.61
(` in crores)
Year Ended
31 March 2013
46.74
48.34
0.93
156.75
81.41
120.56
56.21
20.26
174.65
169.00
48.52
236.16
25.01
0.48
522.70
2,961.20
Year Ended
31 March 2014
(` in crores)
Year Ended
31 March 2013
Interest on:
- Bank loans
623.75
588.27
- Debentures
56.65
112.63
92.40
107.98
- Others
(11.10)
(14.74)
TOTAL
761.70
794.14
b.
c.
d.
i.
216.22
(` in crores)
Year Ended
31 March 2013
-
(150.00)
(85.44)
189.62
66.22
104.18
During the current year, the Company has recognised ` 216.22 crores towards input credits against certain
statutory obligations relating to earlier periods which have been accounted on crystallisation of the entitlements
to such credits.
137
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
ii
During the current year, VSNL SNOSPV Pte Ltd (SNOSPV), a wholly owned subsidiary of Tata Communications
Limited, has entered into exclusive discussions with Vodacom Group Limited (Vodacom) to sell all of the issued
share capital of Neotel, held directly or indirectly by SNOSPV. Discussions with Vodacom are still in progress. The
Group has made a provision of ` 150.00 crores towards impairment of goodwill on consolidation.
iii
As part of its initiative to enhance the long-term efficiency of the business, during the previous year, the Group
undertook organisational changes to align to the Groups current and prospective business requirements. These
changes involved certain positions in the Group becoming redundant and the Group incurred one time charge of
` 72.90 crores which also includes related employment taxes and fringe benefits and further one time cost of
` 12.54 crores towards other related initiatives.
iv.
During the previous year, the Company sold land and building at Chennai for a consideration of ` 192.30 crores
resulting in a profit on sale of fixed assets of ` 189.62 crores.
138
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Communications Service (OCS). The Company purchases life annuity policies from an insurance company to
settle such pension obligation. During the year the Company has incurred a charge of ` 10.53 crores (2013:
` 8.09 crores) to meet the additional pension obligation on account of increase in Dearness Allowance.
The details in respect of status of funding and the amounts recognised in the Companys financial statement
as at 31 March, 2014 and 2013 for these defined benefit schemes are as under:
i)
Particulars
(` in crores)
Gratuity
Gratuity Medical Benefits
(Funded)
(Unfunded)
(Unfunded)
As at 31 March As at 31 March As at 31 March
2014
2014
2014
63.80
1.00
56.77
5.58
0.38
0.65
4.87
0.16
4.26
2.03
1.03
(1.61)
(0.32)
12.90
(4.03)
(7.07)
70.64
2.25
67.51
(` in crores)
Gratuity
Gratuity Medical Benefits
(Funded)
(Unfunded)
(Unfunded)
As at 31 March As at 31 March As at 31 March
2013
2013
2013
61.64
0.37
52.01
5.23
0.15
0.63
4.81
0.03
4.03
(2.63)
0.30
4.81
0.15
9.40
(10.06)
(9.30)
63.80
1.00
56.77
(` in crores)
Gratuity (Funded)
As at
31 March 2014
56.30
4.65
7.68
1.60
1.12
(4.03)
67.32
As at
31 March 2013
54.26
4.28
8.59
(2.31)
1.54
(10.06)
56.30
139
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iii)
(` in crores)
Gratuity
Gratuity Medical Benefits
(Funded)
(Unfunded)
(Unfunded)
As at 31 March As at 31 March As at 31 March
2014
2014
2014
70.64
-
(67.32)
2.25
67.51
3.32
2.25
67.51
4.05
0.73
1.12
6.08
1.13
61.42
(` in crores)
Gratuity
Gratuity Medical Benefits
(Funded)
(Unfunded)
(Unfunded)
As at 31 March As at 31 March As at 31 March
2013
2013
2013
63.80
(56.30)
1.00
56.77
7.50
1.00
56.77
7.50
3.92
1.00
52.85
140
Particulars
iv)
Gratuity
(Funded)
Year Ended
31 March
2014
5.58
4.87
(4.65)
(2.73)
3.07
(` in crores)
Gratuity Medical Benefits
(Unfunded)
(Unfunded)
Year Ended
Year Ended
31 March
31 March
2014
2014
0.38
0.65
0.16
4.26
(0.32)
12.90
0.22
17.81
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Particulars
Gratuity
(Funded)
Year Ended
31 March
2013
5.23
4.81
(4.28)
3.27
(` in crores)
Gratuity Medical Benefits
(Unfunded)
(Unfunded)
Year Ended
Year Ended
31 March
31 March
2013
2013
0.15
0.63
0.03
4.03
0.15
9.40
9.03
0.33
14.06
As at
31 March 2013
3.13%
27.55%
52.29%
17.03%
100.00%
The Companys policy and objective for plan assets management is to maximise return on plan assets
to meet future benefit payment requirements while at the same time accepting a low level of risk. The
asset allocation for plan assets is determined based on the investment criteria approved under the
Income Tax Act, 1961 and is also subject to other exposure limitations.
vi)
Discount rate
Expected return on plan assets
Increase in compensation cost
Attrition Rate
Health care cost increase rate
As at
31 March 2013
8.00%
8.00%
6.00% to 10.00%
3.00% to 15.00%
2.00%
The estimates of future compensation cost considered in the actuarial valuation take account of
inflation, seniority, promotion and other relevant factors.
vii) Experience Adjustment
(` in crores)
Particulars
Defined Benefit Obligation
Plan assets
Surplus / (deficit)
Exp. Adj. on Plan Liabilities (loss)/ gain
Exp. Adj. on Plan Assets gain/ (loss)
Actuarial Gain/(Loss) due to change
on assumptions
2013
2012
2011
2010
70.64
67.32
(3.32)
(2.59)
1.12
63.80
56.30
(7.50)
(2.30)
1.54
61.64
54.26
(7.38)
6.73
(0.73)
52.45
48.86
(3.59)
(1.87)
2.32
45.95
34.09
(11.86)
1.39
0.60
4.20
(2.51)
(8.52)
141
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Particulars
Defined Benefit Obligation
Surplus / (deficit)
Exp. Adj. on Plan Liabilities (loss)/ gain
Actuarial Gain/(Loss) due to change
on assumptions
2014
2.25
(2.25)
0.21
0.12
(0.05)
(0.04)
2010
2.95
(2.95)
(0.27)
-
viii) Effect of change in Assumed Health Care Cost Trend Rate. A one percentage point change in assumed
health care cost trend rates would have the following effects:
Particulars
Effect on service cost
Effect on interest cost
Effect on post-employment benefit
obligation
As at 31 March 2014
Increase
Decrease
0.01
0.11
0.90
3.86
3.33
(` in crores)
As at 31 March 2013
Increase
Decrease
0.01
0.11
0.90
1.25
1.09
The Company and its Indian subsidiaries expects to contribute ` 3.32 crores (2013: ` 7.50 crores) towards
employers contribution for funded defined benefit plans in financial year 2014-15.
ix)
(B) International
(a)
142
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
covering certain senior executives in Canada, closed on 13 February, 2006.The plan provides for defined
benefit based on years of service and final average salary.
Health and Life insurance
The Group also assumed a post-retirement health care and life insurance plan.
The details in respect of status of funding and the amounts recognised in the Groups financial statement as
at 31 March, 2014 and 2013 for these defined benefit schemes are as under:
i)
Pension Plans
NonContributory
contributory
As at 31 March As at 31 March
2014
2014
Projected defined benefit
obligation, beginning of the year
Current Service cost
Interest cost
Benefits paid
Actuarial (gain)/loss
Effect of foreign exchange rate
changes*
Projected benefit obligation at the
end of the year
*
SERP
As at 31 March
2014
As at 31 March
2014
531.63
1.46
22.24
(33.52)
3.22
560.18
9.73
23.85
(30.51)
(6.43)
3.27
0.20
0.15
(0.48)
8.20
0.27
0.35
(0.74)
(0.43)
9.32
9.63
0.05
0.17
534.35
566.45
3.19
7.82
Pension Plans
NonContributory
contributory
As at 31 March As at 31 March
2013
2013
Projected defined benefit
obligation, beginning of the year
Current Service cost
Interest cost
Benefits paid
Actuarial (gain)/loss
Effect of foreign exchange rate
changes
Projected benefit obligation at
the end of the year
SERP
As at 31 March
2013
As at 31 March
2013
490.58
1.79
22.82
(32.57)
26.55
496.95
9.63
23.47
(32.83)
40.56
21.79
0.26
0.76
(25.97)
5.10
9.38
0.30
0.44
(0.56)
(1.82)
22.46
22.40
1.33
0.46
531.63
560.18
3.27
8.20
143
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
ii)
Contributory
As at
31 March
2013
NonContributory
As at
31 March
2013
647.43
26.89
(32.57)
(0.49)
30.12
671.38
530.60
22.43
25.79
(32.83)
1.30
24.34
571.63
Pension Plans
144
Contributory
As at 31 March
2014
Noncontributory
As at 31 March
2014
SERP
As at 31 March
2014
As at 31 March
2014
534.35
(642.58)
566.45
(570.62)
3.19
7.82
(108.23)
(4.17)
3.19
7.82
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(` in crores)
Health care and
Life insurance
Plans
Pension Plans
Contributory
As at 31 March
2013
Noncontributory
As at 31 March
2013
SERP
As at 31 March
2013
As at 31 March
2013
531.63
(671.38)
560.18
(571.63)
3.27
8.20
(139.75)
(11.45)
3.27
8.20
The components of pension expense recognised in the Statements of Profit and Loss for the year ended
31 March, 2014 and 2013:
Particulars
Current service cost
Interest cost
Actual return on plan assets
Net Actuarial loss/(gain) recognised
Effect of foreign exchange rate changes(Net)
Total
v)
(` in crores)
Year Ended
31 March 2013
11.98
47.49
(49.32)
69.58
3.35
83.08
Debt securities
Equity securities
Total
vi)
Year Ended
31 March 2014
11.66
46.59
(52.47)
54.06
10.06
69.90
As at 31 March As at 31 March
2014
2014
Contributory Non-contributory
90.00%
80.00%
10.00%
20.00%
100.00%
100.00%
As at 31 March
As at 31 March
2013
2013
Contributory Non-contributory
90.00%
80.00%
10.00%
20.00%
100.00%
100.00%
The assumptions used for the pension plans and the other benefit plans on a weighted-average basis
are as follows:
Assumptions
As at
31 March 2014
As at
31 March 2013
4.00 %
4.50%
4.35%
4.00%
4.00%
4.00%
Inflation
2.00%
2.00%
3.00%
3.00%
Market Value
Market Value
145
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
vii) The health care cost trend rate has a significant effect on the amounts reported. The assumed health
care trend rate used to determine the accumulated post-retirement benefit obligation calculated as at
31 March, 2014 is 8.38 % (2013: 8.38%). A one-percentage-point change in assumed health care cost
trend rates would have the following effects:
(` in crores)
31 March 2013
31 March 2014
Increase
Decrease
Increase
Decrease
0.04
0.04
0.04
0.04
0.03
0.03
0.03
0.03
0.81
0.71
0.74
0.65
The Group expects to contribute ` 18.62 crores (2013: ` 15.77 crores) to its defined benefit plans in 2014-15.
The estimate salary future increases, considered in actuarial valuation, taken into account inflation,
seniority, promotion and other relevant factors.
viii) Leave Plan and Compensated absences
The liability for leave encashment and compensated absences as at the year end is ` 46.39 crores (2013:
` 45.77 crores)
31. Provision for contingencies:
Asset
Retirement
Obligation
(ARO)
(refer i)
Asset
Retirement
Obligation
(ARO)
(refer i)
(` in crores)
As at 31 March 2013
Others
Total
(refer ii)
95.18
9.00
104.18
80.26
9.00
89.26
13.52
13.52
9.83
9.83
9.35
9.35
5.34
5.34
146
As at 31 March 2014
Others
Total
(refer ii)
(0.25)
(0.25)
118.05
9.00
127.05
95.18
9.00
104.18
i.
The provision for ARO has been recorded in the books of the Group in respect of undersea cables, switches and
leased equipments.
ii.
Others include amounts provided towards claims made by creditors of the Group.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
32. Auditors remuneration (excluding Service Tax)
(Included in other expenses under operating and other expenses refer note 27)
Auditors remuneration and expenses (excluding service tax)
A.
Year Ended
31 March 2014
To statutory auditor
i.
For audit fees
ii.
For taxation matters
iii. For other services
iv. For reimbursement of expenses
1.50
0.51
1.56
0.21
(` in crores)
Year Ended
31 March 2013
1.50
0.32
1.40
0.12
The above fees excludes ` Nil (2013: ` 0.71 crores) with respect of audit and related services rendered for FY 2011-12
of the Group. Auditors remuneration excludes fees of ` 3.90 crores (2013: ` 8.02 crores) payable / paid for professional
services to a firm of chartered accountants in which some partners of the firm of statutory auditors are partners.
Year Ended
31 March 2014
B.
0.06
(` in crores)
Year Ended
31 March 2013
0.06
33. Financial Statements for the following companies considered in the consolidated financial statements are based on
management accounts and are therefore unaudited:
(` in crores)
Cash flows
included in
Consolidation
Total Assets
included in
Consolidation
Total Revenues
included in
Consolidation
0.02
28.54
5.55
Subsidiary:
SEPCO (Pty.) Ltd. (Standalone)
Joint Venture:
United Telecom Ltd.
@ represents transaction of amount less than ` 50,000/34. Earnings per share
Year ended 31
March 2014
Net Profit /(loss) after tax attributable to the equity shareholders
(A)
(B)
Basic and diluted earnings per share (` per equity share of ` 10 each)
(A/B)
(` in crores)
Year ended 31
March 2013
101.42
(623.31)
285,000,000
285,000,000
285,000,000
285,000,000
3.56
(21.87)
147
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
a.
b.
GDMS: includes corporate data transmission services data centers, virtual private network, signaling and roaming
services, television and other network and managed services
c.
SAO: are carried out by Neotel Pty ltd. and offer wholesale international voice and data transit, enterprise business
solution services for the wholesale and corporate market, telephony and data services for retail customers in
South Africa
d.
GVS
GDMS
SAO
Others
Total
9,571.59
1,585.27
7,925.62
4,931.65
2,163.14
435.57
5.55
(9.95)
(1.88)
2.87
2.15
19,665.90
6,942.54
(761.70)
(5,802.65)
378.19
66.22
444.41
(343.28)
101.13
(1.40)
1.69
101.42
3.14
(` in crores)
148
GVS
GDMS
SAO
Others
Total
8,564.69
1,403.59
6,753.43
4,205.81
1,885.48
51.48
9.35
(35.44)
0.02
26.15
0.59
17,212.95
5,625.44
(794.14)
(5,366.19)
(534.89)
104.18
(430.71)
(220.20)
(650.91)
27.35
0.25
(623.31)
26.76
Revenues and interconnect charges are directly attributable to the segments. Space segment utilisation
charges, rent of landlines and other network and transmission costs are allocated based on utilisation of
satellite and landlines. License fee for GVS and GDMS have been allocated based on net adjusted gross
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
revenues from these services. Segment result is segment revenues less segment expenses. Depreciation and
certain other costs that cannot be allocated to GVS, GDMS and others segments, are classified as unallocable
expenses.
ii).
Telecommunication services are provided utilising the Group assets which do not generally make a distinction
between the types of services. As a result, fixed assets are used interchangeably between segments. Fixed
assets and liabilities cannot be allocated to segments.
Geographical Segment:
The secondary reportable segments are Geographical and revenues have been allocated to countries based
on location of the customers as follows:
Year ended 31
March 2014
(` in crores)
Year ended 31
March 2013
India
4,439.44
4,135.34
2,650.87
2,218.49
United Kingdom
2,421.47
1,951.78
South Africa
2,095.18
1,846.49
Canada
740.64
614.33
Singapore
564.63
487.45
France
451.84
396.59
Saudi Arabia
413.13
451.74
Australia
317.21
246.82
Italy
308.63
319.13
Others
5,262.86
4,544.79
19,665.90
17,212.95
Names
Panatone Finvest Limited
Tata Sons Limited
ii)
iii)
Joint Ventures:
iv)
Associates:
149
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(b)
150
26.59
17.73
11.17
8.11
37.76
25.84
(` in crores)
Joint
Total
Ventures /
Associates
26.59
17.73
11.17
8.11
37.76
25.84
14.26
12.51
14.26
12.51
14.26
12.51
14.26
12.51
1.71
2.14
1.71
2.14
2.56
3.08
2.56
3.08
1.71
2.14
2.56
3.08
4.27
5.22
9.20
25.31
9.20
25.31
9.20
25.31
9.20
25.31
0.02
0.05
0.02
0.05
0.02
0.05
0.02
0.05
12.14
11.49
12.14
11.49
12.14
11.49
12.14
11.49
0.77
0.41
0.77
0.41
0.33
0.14
0.33
0.14
0.77
0.41
0.33
0.14
1.10
0.55
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
Investing
Key
Company Management
Personnel
Payables
Managerial Remuneration
Vinod Kumar
United Telecom Limited
Tata Sons Limited
Total
14.24
12.41
14.24
12.41
(` in crores)
Joint
Total
Ventures /
Associates
6.05
5.78
6.05
5.78
0.78
3.84
0.78
3.84
6.05
5.78
0.78
3.84
14.24
12.41
21.07
22.03
i.
ii.
The un-eliminated portion of transactions and balances with joint ventures has been disclosed for
purpose of related party disclosures.
As lessee:
Year Ended
31 March 2014
Minimum lease payments under operating leases recognised as expense in
the year
652.25
(` in crores)
Year Ended
31 March 2013
525.44
At the balance sheet date, minimum lease payments under non- cancellable operating leases fall due as follows:
Year Ended
31 March 2014
595.79
1,473.53
786.53
2,855.85
(` in crores)
Year Ended
31 March 2013
513.53
1,330.52
676.27
2,520.32
Operating lease payments represent rentals payable by the Group for certain buildings, satellite channels, office
equipments, computer equipments, Automatic Teller Machines (ATMs) and ATM related equipments and certain
circuit capacities.
The minimum future lease payments have not been reduced by minimum operating sublease rentals of ` 28.55
crores (2013: ` 33.31 crores) due in the future under non-cancellable subleases for certain buildings, which
primarily commenced in November, 2011 and extend until December, 2020. ` 4.66 crores (2013: ` 3.28 crores) was
recognised in the current year as minimum sublease rental against the same.
(b) As lessor:
The Company has leased under operating lease arrangements certain Indefeasible Right of Use (IRU) with gross
carrying amount and accumulated depreciation of ` 50.45 crores (2013: ` 50.45 crores) and ` 31.71 crores (2013:
` 28.35 crores) respectively as at 31 March, 2014. Depreciation expense of ` 3.36 crores (2013: ` 3.36 crores) in
respect of these assets has been charged to the Statement of Profit and Loss for the year ended 31 March, 2014.
151
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
In case of certain lease arrangements aggregating ` 530.70 crores (2013: ` 513.79 crores) as at 31 March, 2014,
the gross block, accumulated depreciation and depreciation expenses of the assets given on IRU basis cannot be
identified as these assets are not exclusively leased. The lease rentals associated with such IRU arrangements for
the year ended 31 March, 2014 amount to ` 47.10 crores (2013: ` 37.83 crores).
In respect of the above, rental income of ` 51.10 crores (2013: ` 41.83 crores) has been recognised in the Statement
of Profit and Loss for the year ended 31 March, 2014.
Future lease rental receipts will be recognised in the Statement of Profit and Loss of subsequent years as follows:
Year Ended
31 March 2014
Not later than one year
(` in crores)
Year Ended
31 March 2013
50.25
40.97
Later than one year but not later than five years
170.40
143.20
206.64
197.82
427.29
381.99
As at 31 March
2014
2013
Accumulated
Depreciation
As at 31 March
2014
2013
(` in crores)
Net carrying
amount
As at 31 March
2014
2013
Building
54.04
49.19
29.18
24.99
24.86
85.32
77.65
76.84
67.94
8.48
9.71
4.97
4.51
4.03
3.20
0.94
1.31
144.33
131.35
110.05
96.13
34.28
35.22
24.20
Contingent Liabilities:
As at
31 March 2014
1.
2.
3.
4.
152
401.63
1,876.53
12.98
1,050.41
(` in crores)
As at
31 March 2013
457.08
2,073.26
16.95
862.43
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
i)
Significant claims by the revenue authorities in respect of income tax matters relate to:
Significant claims by the revenue authorities in respect of income tax matters relate to disallowance of
deductions claimed section 80 IA of the Income Tax Act, 1961 from Assessment years 1996-97 onwards
and transfer pricing adjustments carried out by revenue authorities. The Company has contested the
disallowances/ adjustments and has preferred appeals which are pending.
ii)
Other Claims
a.
Telecom Regulatory Authority of India (TRAI) reduced the Access Deficit Charge (ADC) rates effective
1 April 2007. All telecom services providers including National Long Distance (NLD) and International
Long Distance (ILD) operators in India are bound by the TRAI regulations; accordingly the Company
has recorded the cost relating to ADC at revised rates as directed by TRAI. However, BSNL continued
to bill at the ADC rate applicable prior to 1 April 2007. BSNL had filed an appeal against the TRAI IUC
regulation of reduction in ADC and currently this matter is pending with the Supreme Court. The
possible liability is ` 311.84 crores (2013: ` 311.84 crores).
b.
On 19 February 2013, DoT issued a license fee demand for financial year 2006-07 and 2007-08, based
on special audit reports of auditors appointed by DoT. The total demand is for ` 222.79 crores (2013: `
193.05 crores, being ` 92.86 crores for financial year 2006-07 and ` 100.19 crores for financial year 200708, including ` 102.06 crores, being interest as on 28 February 2013). The Company has challenged the
said demand notice in the Madras High Court which has vide its orders dated 1 March 2013, granted
a stay-order against the said demand. Further, the Company is also contesting a license fee claim of
` 121.38 crores (2013 : ` 101.24 crores) (including interest and penalty) for financial year 2005-06.
However, the said demand notice includes the items which are already the subject-matter of petitions/
appeals, pending for hearing in the Supreme Court of India, for the previous years.
c.
In April, 2010, the Group voluntarily disclosed to the U.S. Department of Justice and the U.S. Securities
and Exchange Commission the results of an internal investigation conducted by outside counsel for
the Group relating to the activities of a reseller of the Group. The internal investigation found evidence
that the reseller may have offered and made improper payments to officials of a government purchaser
in a Southeast Asian country in connection with the resale of the Groups products. The investigation
also found evidence that the Groups sales consultant in the country was aware of the resellers
potentially improper activities. Such activities may have violated the U.S. Foreign Corrupt Practices Act.
The investigation did not reveal any prior involvement or knowledge regarding these activities by any
officer or director of the Company or its subsidiary. The Group has taken remedial action, including
terminating its relationship with the sales consultant and with the reseller. The Group cannot predict
the ultimate consequences of these matters at this time, nor can we reasonably estimate the potential
liability, if any, related to these matter However, based on the facts currently known, the Group does not
believe that these matters will have a material adverse effect on its business, financial condition, results
of operations or cash flow
d.
Other Claims of ` 394.40 crores (2013: ` 256.30 crores) pertains to the Company and its subsidiaries
in various geographies are routinely party to suits for collection, commercial disputes, claims from
customers and/or suppliers over reconciliation of payments for voice minutes, circuits, Internet
bandwidth and/or access to the public switched telephone network, leased equipment, and claims
from estates of bankrupt companies alleging that the Group received preferential payments from such
companies prior to their bankruptcy filings. While management currently believes that resolving such
suits and claims, individually or in aggregate, will not have a material adverse impact on the Groups
financial position, the FCPA investigations noted above are subject to inherent uncertainties and
managements view of this matter may change in the future. Were an unfavourable final outcome to
occur, such an outcome could have a material adverse impact on the Groups financial position and
results of operations for the period in which the effect becomes reasonably estimable.
153
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
iii)
Cumulative preference dividends amounting to ` 111.81 crores (2013: ` 76.19 crores) will be declared and
paid when Neotel has distributable cash available, in terms of the Shareholders Agreement
iv)
In terms of agreements entered into in 2008-09 between the Company and NTT Docomo Inc. the Company
sold to NTT Docomo Inc. of Japan (Strategic Partner SP), 36,542,378 equity shares of Tata Teleservices Ltd
(TTSL) at ` 116.09 per share which resulted in a profit of ` 362.08 crores in the same year.
Tata Sons Limited (TSL) is party to a Shareholders Agreement with NTT Docomo Inc. of Japan (Strategic
Partner SP) dated 25 March 2009 and amended on 21 May 2010.
Under the terms of the Shareholders Agreement if certain performance parameters and other conditions
are not met by TTSL by 31 March 2014 the SP has an option to divest its entire shareholdings in TTSL at a
price being the higher of fair value or ` 58.05 per share (i.e 50 percent of the subscription price) (Sale Price),
subject to compliance with applicable law and regulations (Sale Option).
The Company has an inter se agreement with Tata Sons Limited and other Tata Group companies.
Tata Sons Limited has informed the Company as follows:
i.
In the wake of recent regulatory developments in India, Tata Sons Limited has considered its position
relating to the possible exercise of the Sale Option under the Shareholders Agreement.
ii.
The Shareholders Agreement obliges Tata Sons Limited to find a buyer for the shares at the Sale Price.
iii.
If there is no buyer at the Sale Price, then Tata Sons Limited is obliged to acquire or procure the acquisition
of such shares. These obligations are subject to compliance with applicable law and regulations.
iv.
No notice of exercise of the Sale Option has been received although the SP has communicated its board
decision to exercise the Sale Option.
v.
Under the terms of the inter se agreement, the Company may be obligated to acquire the shareholding
of the SP in proportion of the number of shares sold by the company to the aggregate of the secondary
shares sold to the SP.
vi.
Pending receipt of a notice exercising the Sale Option and in view of applicable law and regulations, the
exposure of the Company (if any) cannot be ascertained.
B.
v)
The Group has taken appropriate professional advice in respect of the claims / appeals and has taken all
necessary steps to protect its interest. Based on expert opinion, no provision is required in respect of these
claims / appeals.
vi)
Future cash flows in respect of the above matters are determinable only on receipt of judgements/ decisions
pending at various forum/ authorities.
Capital commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for ` 768.99 crores
(2013: ` 593.09 crores) (net of capital advances).
40. United Telecom Limited (UTL) is a joint venture between the Company, Mahanagar Telephone Nigam Limited,
Telecommunications Consultant India Limited and Nepal Ventures Private Limited. The Company has a 26.66 per cent
equity ownership in UTL. UTL operates basic telephony services in Nepal based on wireless-in-local loop technology.
The Groups share in income, expenses, assets and liabilities based on the uniform accounting policy adopted by the
Group and after inter-company eliminations and adjustments based on management accounts for the year ended 31
March, 2014 and 31 March, 2013 is as follows:
154
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
As at
31 March 2014
I
Liabilities
(1)
Non-current liabilities
-
1.12
6.01
3.64
31.70
32.52
0.56
0.58
38.27
36.74
Total
38.27
37.86
17.55
21.95
1.31
1.66
0.48
0.34
(a)
(2)
Current liabilities
(a)
II
Short-term borrowings
(b)
Trade payables
(c)
Assets
(1)
Non-current assets
(a)
Fixed assets
(i) Tangible assets
19.34
23.95
(b)
0.34
(c)
0.04
0.06
19.72
24.01
0.91
1.07
(b)
Trade receivables
1.51
4.33
(c)
(d)
Current assets
(a)
6.40
4.75
8.82
10.15
28.54
34.16
As at
31 March 2014
1
2
3
4
(` in crores)
As at
31 March 2013
INCOME
Traffic Revenue
Other Income
Total Income
EXPENDITURE:
Network Cost
Other expenses
(` in crores)
As at
31 March 2013
5.55
(0.48)
5.07
9.35
0.21
9.56
5.24
4.77
34.46
4.09
155
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Tata Communications Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
5
6
7
As at
31 March 2014
0.02
0.65
5.48
16.16
(` in crores)
As at
31 March 2013
0.03
0.61
6.21
45.40
2.92
2.90
i.
Deal
Currency
Amount (Deal
Currency in
millions)
AUD
EUR
EUR
GBP
GBP
USD
USD
USD
1.00
13.00
0.05
0.72
9.00
0.92
2.50
1.11
5.35
106.61
0.46
7.30
89.09
5.58
11.75
7.05
Deal
Currency
Amount (Deal
Currency in
millions)
USD
CAD
SGD
GBP
EUR
USD
6.00
3.00
2.50
19.00
9.00
1.93
32.60
16.04
10.94
156.49
62.53
10.50
(b) Interest Rate Swaps (IRS) to hedge against fluctuations in interest rate changes as at 31 March, 2014
The Group uses interest rate swaps to manage the market risks associated to interest rate movements relating to
its variable-rate long-term debt. As of 31 March, 2014 the Group had interest rate swaps amounting to ` 1,702.60
crores (USD 284.24 million) (2013: ` 2,579.64 crores (USD 474.72 million)) and Nil (2013: ` 2,797.41 crores (ZAR
4,212.96 million)) to convert the variable interest rate of its long term debt to fixed rate.
IRS of ` 1,702.60 crores (USD 284.24 million) ((2013: ` 2,579.64 crores (USD 474.72 million)) are designated as cash
flow hedges. These hedges are highly effective as on 31 March, 2014 and changes in its fair values are recorded in
the hedge fluctuation reserve.
156
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2014 (Contd.)
(c)
SGD
SGD/USD
SGD
SGD/USD
SGD
Interest
rate in Deal
Currency
Interest rate in
United States
Dollars
4.5210% to 4.5375%
61
Buy
100
Buy
561
2,699.36
42. Previous year figures have been regrouped/ rearranged as necessary to make them comparable with those of the
current year.
VINOD KUMAR
Managing Director & Group CEO
SANJAY BAWEJA
Chief Financial Officer
SATISH RANADE
Company Secretary
MUMBAI
DATED: 13 May, 2014
157
158
Notes forming part of the consolidated financial statements for the year ended 31 March, 2014 (Contd.)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
INR
INR
INR
USD
USD
ZAR
ZAR
ZAR
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
362.71
0.50
0.05
152.44
7.17
0.00
1,112.20
1,767.31
1,077.01
152.45
0.07
63.56
122.14
1,355.34
0.20
0.10
114.63
48.05
2.83
849.17
2.07
0.10
0.09
363.68
8.35
20.94
1.30
398.45
36.04
2.14
0.08
0.00
2.84
0.00
0.27
0.05
21.73
84.01
0.00
0.15
0.15
0.00
0.00
0.57
Reporting Share
currency Capital
(229.63)
67.01
55.70
(2,641.47)
70.61
18.55
(617.17)
(2,548.16)
(539.52)
(627.25)
(1,957.73)
160.41
(87.46)
(786.76)
12.29
0.27
(51.86)
(36.39)
1.41
(1,757.36)
6.60
111.42
(0.14)
(380.92)
(5.21)
(4.04)
57.04
(0.52)
(1,154.05)
(10.54)
9.54
(33.94)
21.17
(0.52)
(0.29)
0.83
(0.53)
6.46
(51.89)
0.00
0.00
0.00
0.04
(0.08)
(0.01)
Reserves
and
surplus
683.68
226.00
463.69
975.62
120.81
52.34
495.16
3,402.69
7,279.49
884.73
4,775.73
232.32
282.21
2,033.59
117.11
2.53
112.68
163.61
9.86
3,213.15
17.92
123.32
3.87
76.18
3.17
25.37
92.37
0.86
1,053.38
111.96
39.56
27.95
25.54
5.37
2.55
2.45
2.95
517.77
40.67
0.15
0.15
1.17
3.30
0.57
Total
Assets
(` in crores)
550.60
158.49
407.94
3,464.65
43.03
33.79
0.13
4,183.54
6,742.00
1,359.53
6,733.39
8.35
247.53
1,465.01
104.62
2.16
49.91
151.95
5.62
4,121.34
9.25
11.80
3.92
93.42
0.03
8.47
35.33
0.08
1,808.98
86.46
27.88
61.81
4.37
3.05
2.84
1.35
3.43
489.58
8.55
1.13
3.38
0.01
15.00
55.11
3.39
-
473.70
401.51
375.64
188.70
91.98
2,214.32
2,340.73
2,900.32
424.19
455.13
344.09
3,596.04
497.32
5.65
191.33
279.35
27.40
761.65
19.34
0.28
3.65
28.17
9.66
32.58
0.62
3,869.05
328.19
120.78
22.78
14.70
2.85
2.84
3.51
3.24
151.43
66.66
1.14
3.85
-
(136.06)
115.80
39.09
(2,360.42)
15.56
12.26
(907.78)
36.92
(26.78)
(23.21)
(389.33)
401.70
(17.87)
(10.82)
2.91
0.13
8.92
(13.11)
(0.07)
(2,169.07)
2.86
7.43
(0.10)
3.37
0.10
(0.34)
10.85
0.02
(135.62)
(0.77)
3.64
1.77
0.57
(0.11)
(0.05)
1.35
(0.10)
16.21
3.96
1.11
0.00
0.00
0.11
0.01
(0.01)
39.36
15.77
1.64
1.85
0.00
5.33
3.53
2.58
0.17
0.00
8.48
0.73
(0.15)
(0.27)
0.87
(1.29)
0.02
(7.75)
2.24
1.00
0.29
(0.09)
0.25
0.01
10.57
0.04
0.08
-
(136.06)
76.44
23.32
(2,360.42)
13.92
10.41
(907.78)
38.51
(26.78)
(23.21)
(389.33)
401.70
(17.87)
(16.15)
(0.62)
0.13
6.34
(13.28)
(0.07)
(2,177.55)
2.13
7.58
0.17
2.50
0.10
(0.34)
12.14
0.00
(135.62)
6.98
1.40
1.77
(0.43)
(0.40)
0.04
1.10
(0.11)
5.64
3.96
1.11
0.07
(0.07)
(0.01)
Total
Profit
Provision Profit
Proposed
Total
Investment
Liabilities Details (except Turnover before
for
after
Dividend
Taxation Taxation Taxation
in case of
investment in
the subsidiaries)
Statement pursuant to Sec.212(8) of the Companies Act, 1956 relating to subsidiary companies
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Mr. Vinod Kumar is Director of the Singapore Economic Development Board (EDB), the lead government agency responsible
for planning and executing strategies to enhance Singapores position as a global business centre and grow the Singapore
economy. He is also the Chairman of its Finance Committee. Mr. Vinod Kumar is a member of the Singapore Ministry of
Communications and Information Steering Committee and Chairman of the Ministry of Communications and Information
Working Committee; Director of Human Capital Leadership Institute (HCLI) in Singapore and the National Arts Council (NAC)
as well as a member of the NAC Human Resource Committee and Strategic Review Committee.
Mr. Vinod Kumar was born in 1965 and graduated with honours in Electrical and Electronic Engineering from the Birla Institute
of Technology and Science in India.
MR. SRINATH NARASIMHAN
DIRECTOR
Mr. N. Srinath, born in 1962, has a degree in Mechanical Engineering from IIT (Chennai) and a Management Degree from IIM
(Kolkata), specialising in Marketing and Systems.
Since joining the Tata Administrative Services in 1986, Mr. Srinath has held positions in Project Management, Sales &
Marketing, and Management in different Tata companies in the ICT sector over the last 28 years.
On completing his probation with the TAS in 1987, Mr. Srinath joined Tata Honeywell, a start-up in the business of process
control systems, as Project Executive working till late 1988 on securing various statutory approvals and funding necessary for
the project. He then moved to Tata Industries as Executive Assistant to the Chairman, an assignment he handled till March
1992. In that period, he was also part of the team that set up Tata Information Systems (later Tata IBM). From June 1992 to
February 1998 he handled a number of assignments in Tata Information Systems Limited in Sales & Marketing to enterprise
customers in the banking, retail, petroleum and process manufacturing sectors.
In March 1998, Mr. Srinath returned to Tata Industries as General Manager (Projects) responsible for overseeing the project
implementation of Tata Teleservices fixed line telecom service in the state of Andhra Pradesh. In April 1999, he took over as the
Chief Operating Officer of Tata Teleservices responsible for Sales, Customer Service, Networks and Information Technology.
From late 2000 till February 2002, he was the Chief Executive Officer of Tata Internet Services, a start-up Internet services
business serving retail and enterprise customers.
Mr. Srinath joined Tata Communications (then known as VSNL) in 2002 as Director (Operations) when the Tata Group was
selected as the strategic partner at the company. He was appointed as the Managing Director of Tata Communications Limited
& CEO of the Tata Communications global group of companies in February 2007. Under his leadership, Tata Communications
has transformed from a monopoly, public sector undertaking into a global communications services provider offering
advanced network, managed and cloud services to customers worldwide.
Mr. Srinath has received several recognitions in the telecom industry. He was named the Telecom CEO of the Year in Asia
by the leading publishing group Telecom Asia in the 2006 edition of their awards. The Institute of Economic Studies (IES),a
research oriented organisation, conferred its Udyog Rattan Award on Mr. Srinath in November 2006. In 2008 and 2009,
Mr. Srinath was named as the worlds eighth most influential telecom personality by the Global Telecoms Business magazine
as well as the Telecom Person of the Year by the India-based Voice and Data magazine in 2008.
Since 1 February 2011 he has been appointed as the Managing Director of Tata Teleservices Limited one of Indias leading
mobile service providers.
160
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Tata Communications Limited
MR. S. RAMADORAI
DIRECTOR
Mr. Ramadorai has been in public service since February 2011. Currently he is Chairman of National Skill Development Agency
(NSDA) in the rank of a Cabinet Minister. The NSDA is a newly formed autonomous body which will coordinate and harmonize
the skill development efforts of the Government and the private sector to achieve the skilling targets of the nation. He is also
Chairman of the National Skill Development Corporation (NSDC), a Public Private Partnership arm of the Government of India
for creating large, for-profit vocational institutions. In February 2011, the Government had appointed him as the Adviser to
the Prime Minister in the National Council on Skill Development, in the rank of a Cabinet Minister, however in June 2013 the
Council was subsumed into the NSDA.
Mr. Ramadorai continues as the Vice - Chairman of Tata Consultancy Services Ltd, a company he has been associated with, for
the past 41 years. He took over as CEO in 1996 when the companys revenues were at $ 155 million and has since then led the
company through some of its most exciting phases, including its going public in 2004. In October 2009, he stepped down as
CEO, leaving a $ 6 billion global IT services company to his successor, while he took over the mantle of Vice Chairmanship of
the company. Today, the companys revenues stand at US $ 13.4 billion for year ended 31 March, 2014, with an employee base
of over 300,000 of the worlds best trained IT consultants in 46 countries.
Mr. Ramadorai is also the Chairman of other Tata companies - Tata Elxsi Ltd, Tata Technologies Ltd and CMC Ltd. He is on the
Boards of a number of non Tata companies and educational institutions - Hindustan Unilever Limited, BSE Limited and the
MIT Sloan School of Management (EMSAB).
In recognition of Mr. Ramadorais commitment and dedication to the IT industry he was awarded the Padma Bhushan (Indias
third highest civilian honour) in January 2006. In April 2009, he was awarded the CBE (Commander of the Order of the British
Empire) by Her Majesty Queen Elizabeth II for his contribution to the Indo-British economic relations.
His academic credentials include a Bachelors degree in Physics from Delhi University (India), a Bachelor of Engineering
degree in Electronics and Telecommunications from the Indian Institute of Science, Bangalore (India) and a Masters degree
in Computer Science from the University of California UCLA (USA). In 1993, Mr. Ramadorai attended the Sloan School of
Managements highly acclaimed Senior Executive Development Program.
Mr. Ramadorai is a well recognized global leader and technocrat who has participated in the Indian IT journey from a mere
idea in 1960s to a mature industry today. Mr. Ramadorai captured this exciting journey in a wonderfully personalized book
titled The TCS Story...and beyond which was published in 2011 and remained on top of the charts for several months.
Among his many interests, Mr. Ramadorai is also passionate about photography and Indian classical music.
DR. ASHOK JHUNJHUNWALA
DIRECTOR
Dr. Ashok Jhunjhunwala, born in 1953, received his B.Tech degree from IIT, Kanpur, and his MS and Ph. D degrees from the
University of Maine. From 1979 to 1981, he was a faculty at Washington State University and since 1981, he has been teaching
at IIT, Madras, where he leads the Telecommunications and Computer Networks group (TeNeT). This group works with
industry in the development of technologies relevant in India. It has incubated several technology companies and helped
them to develop Telecom, Banking and Energy products for Indian Urban and Rural Markets. He is faculty incharge of IITM
Research Park and IITs Incubation Cell.
162
Dr. Jhunjhunwala has been awarded the Padma Shri in the year 2002. He has been awarded Shanti Swarup Bhatnagar
Award in 1998, Dr. Vikram Sarabhai Research Award for the year 1997, Millennium Medal in Indian Science Congress in the
year 2000 and H.K. Firodia for Excellence in Science and Technology for the year 2002, Shri Om Prakash Bhasin Foundation
Award for Science & Technology for the year 2004, Awarded Jawaharlal Nehru Birth Centenary Lecture Award by INSA for the
year 2006, IBM Innovation and Leadership Forum Award by IBM for the year 2006, recently awarded Honorary Doctorate by
the Blekinge Institute of Technology, Sweden and Excellence in Science and Technology Award.
He is a Fellow of World Wireless Research Forum, IEEE and Indian academies including INAE, IAS, INSA and NAS.
Dr. Jhunjhunwala is a Director on the Board of many other companies such as TTML, Polaris, 3i Infotech, Sasken, Tejas, Exicom
and others.
DR. UDAY B. DESAI
DIRECTOR
Dr. Uday B. Desai received the B. Tech. degree from Indian Institute of Technology, Kanpur, India, in 1974, the M.S. degree from
the State University of New York, Buffalo, in 1976, and the Ph.D. degree from The Johns Hopkins University, Baltimore, U.S.A.,
in 1979, all in Electrical Engineering.
Since June 2009 he is the Director of IIT Hyderabad. From 1979 to 1984 he was an Assistant Professor in the School of Electrical
Engineering and Computer Science Department at Washington State University, Pullman, WA, U.S.A., and an Associate
Professor at the same place from 1984 to 1987. From 1987 to May 2009 he was a Professor in the Electrical Engineering
Department at the Indian Institute of Technology - Bombay. He was Dean of Students at IIT-Bombay from August 2000 to
July 2002. He has held Visiting Associate Professors position at Arizona State University, Purdue University, and Stanford
University. He was a visiting Professor at EPFL, Lausanne during the summer of 2002. From July 2002 to June 2004 he was the
Director of HP-IITM R and D Lab. at IIT-Madras.
His research interest is in wireless communication, cyber physical systems, IoT, and statistical signal processing. He is also
interested in multimedia, image and video processing, artificial neural networks, computer vision, and wavelet analysis.
He is the Editor of the book Modeling and Applications of Stochastic Processes (Kluwer Academic Press, Boston, U.S.A. 1986)
and co-editor of Second Asian Applied Computing Conference, Springer Verlag (2004). He is also a co-author of four research
monographs.
Dr. Desai is a senior member of IEEE, a Fellow of INSA (Indian National Science Academy), Fellow of Indian National Academy
of Engineering (INAE), and a Fellow of The Institution of Electronic & Telecommunication Engineers (IETE). He is the recipient
of J C Bose Fellowship. He is also the recipient of the Excellence in Teaching Award from IIT-Bombay for 2007. He is chair
of the working group on Convergence Communication and Broadband Technologies of Department of Electronics and
Information Technology, Ministry of Communication and Information Technology. He is on the governing council and boards
of several academic institutions. . He is one of the founding members of COMSNETS and also Society for Cancer Research and
Communication. He was the Chair for IEEE Bombay Section 2006-2008. He was also on the Visitation Panel for University of
Ghana.
MR. AJAY KUMAR MITTAL
DIRECTOR
Mr. A. K. Mittal did his Graduation in Engineering in Electronics and Communications in 1976 from the University of Roorkee
(now one of the Indian Institutes of Technology). He also holds a Diploma in Management. After working in the R&D wing
163
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Twenty Eighth Annual Report 2013-2014
Tata Communications Limited
of Indian Telephone Industries Ltd. for about two and a half years, he joined Indian Telecom Service in the erstwhile Posts &
Telegraphs Department (now Department of Telecommunications) in February 1979, and was posted as Assistant Divisional
Engineer- Telecom. In 1981, he was given charge of setting up the ground segment of New Delhi Satellite Earth Station
located at Sikandrabad (U.P) for INSAT 1 series of satellites where he commissioned and then operated SCPC, FDM-FDMA
Systems for voice communication as well as TV up linking, Radio up linking, meteorological data up linking and reception
systems etc. He also set up the Network Operations Control Centre (NOCC) for INSAT. Later he was involved in setting up
earth stations in remote and hilly areas of some states. As Assistant Director General(Satellite Planning) in the Department
of Telecommunication Headquarter in 1987, he was involved in planning of satellite communication systems. Thereafter,
as Director Telecommunications, he was responsible for operations and maintenance of a large Optical Fiber, Microwave,
Coaxial and Satellite Communication Network in the State of U.P.
In 1991, as Director in the Headquarter of Department of Telecom, he handled regulation and tariffing of telecommunications
services. He was responsible for activities relating to opening up of telecom sector for competition 1991 onwards. This
included invitation of bids for basic services, mobile services, radio paging services etc. He remained in this position for over
6 years. Subsequently, from 1998 onwards, as General Manager in U.P. (West) Circle of Department of Telecommunications,
he headed the Operations and Maintenance Wing, responsible for making policies in respect of operations of all types of
services and ensuring that services are maintained as per desired Q.o.S.
He was deputed to the Headquarters of BSNL, a public sector unit under Ministry of Communications, as Deputy Director
General (Network Management) in the year 2000 where for a period of about 7 years; he was in-charge of management of
BSNLs international and national long distance switching and transmission network. During this period, he set up Network
Management Systems, overlay managed signaling network, KU Band VSAT Network and country-wide Managed Leased Line
Network. He was also a member of the core team responsible for planning and implementation of Indo-Srilanka Submarine
Cable System. Later, for a period of over two years, while on deputation to BSNL, he worked as General Manager (Mobile
Network Planning and Operations) in J&K State.
He worked as Senior Deputy Director General in DoT headquarters where he looked after policy on licensing of Access
Services and related matters as well as implementation of telecom security related policies.
Currently, he is posted as Senior Deputy Director General and Head of Telecom Engineering Centre New Delhi, which is an
arm of DoT responsible for setting national standards in telecom and certification of telecom equipment. He is also the Head
of National Telecom Institute of Policy Research, Innovation and Training.
MR. SAURABH KUMAR TIWARI
DIRECTOR
Mr. Saurabh K Tiwari, born in 1967, holds a Masters degree in Political Science with a Certificate of Merit from the University
of Allahabad. He completed his MBA with specialisation in Finance from National Institute of Financial Management, an
autonomous body under Ministry of Finance, Govt. of India. He has recently completed LLB from the Delhi University. Besides
being a Fellow of the University Grants Commission, he has taught Political Philosophy in the Post Graduate Classes of the
University of Allahabad for two years.
After clearing the Civil Services Examination in 1993, he joined the Indian P&T Accounts and Finance Service. He has wide
ranging work experience in the Government of India and PSUs. He has handled the Central Area of MTNL, Delhi which
provides service to the elite of India including the President, Prime Minister, Union Council of Ministers, Embassies, High
Commissions and the Central Business District. He has also served as the Financial Advisor to various units of the Indian Air
164
Force including the Central Air Command, Bamrauli. Financial Management, Human Resource Management and General
Management are the areas of his functional expertise.
He was instrumental in designing and implementing the software for the revision of pension of more than two million
Defence Pensioners, spread throughout the country, in accordance with the recommendations of the Sixth Pay Commission.
His three year tenure as Deputy Director General (Licensing Finance), Department of Telecom, Govt. of India involved
assessment of revenue to the tune of Rupees Two Lakh crore annually resulting in collection of Rs. 12,300/- crores (approx.)
in the form of licence fee the single largest contributor to the non-tax revenue of the Union. Mr Tiwaris current assignment
is as Deputy Director General (FEB), Department of Telecom, Govt. of India wherein he is responsible for Human Resource
Management and Financial Management in the Department of Telecom. He is also a Technical Advisor to Government
Accounting Standards Advisory Board. Besides, he is also the Chairman cum Managing Director (CMD) of M/s Hemisphere
Properties India Limited, a PSU of Government of India. He was also selected for various prestigious assignments like Member
(Finance), Land Ports Authority of India and Director, Delhi State Industrial and Infrastructure Development Corporation.
He has attended various trainings and seminars in India and abroad. Besides, he has been a regular faculty in various Training
Institutes. Mr. Tiwari has exemplary leadership qualities. He was the General Secretary of the Indian P&T Accounts and Finance
Service Officers Association for almost a decade. An avid sportsperson, he has won various awards in games like Athletics,
Volleyball, Football, Badminton, Cricket and Tennis.
MR. BHARAT VASANI
DIRECTOR
Mr. Bharat Vasani (55) is a renowned corporate lawyer in India with international reputation. Presently, he is the General
Counsel of the Tata Group, a position he has held since December 2000.
Mr. Vasani has over 3 decades of experience at a senior management level in successfully managing the in house legal
departments of large corporations with international operations. He is reputed for having the most diverse corporate legal
experience, ranging from complex Mergers and Acquisitions to handling high profile litigations, both civil and criminal.
Mr. Vasani has won several national and international awards for his contribution to the legal profession.
165
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Tata Communications Limited
NOTES
166
ATTENDANCE SLIP
(To be presented at the entrance)
28TH ANNUAL GENERAL MEETING ON MONDAY, AUGUST 4, 2014 AT 11.00 A.M.
at NSE Auditorium, Ground Floor, The National Stock Exchange of India Ltd., Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051
DP ID No. ______________________________
Signature __________________________________
Signature___________________________________
PROXY FORM
(Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014)
Name of the Member(s)
Registered address
E-mail ID
Name :
DP ID No.
Shares of Tata Communications Limited, hereby appoint
E-mail ID :
Address :
Signature :
or failing him
2.
Name :
E-mail ID :
Address :
Signature :
or failing him
3.
Name :
E-mail ID :
Address :
Signature :
as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the Twenty Eighth Annual General Meeting of the Company to be
held on Monday, August 4, 2014 at 11.00 a.m. at NSE Auditorium, Ground Floor, The National Stock Exchange of India Ltd., Exchange Plaza, Plot no. C/1,
G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051 and at any adjournment thereof in respect of such resolutions as are indicated below:
1.
Adoption of Audited Statement of Profit and Loss, Balance Sheet, Report of Board of Directors and Auditors for the year ended March 31, 2014.
2.
3.
4.
5.
6.
7.
8.
9.
Affix
Revenue
Stamp
Signature of Proxyholder(s).....................................................
Notes : 1. This Form in order to be effective should be duly completed and deposited at the Registered Office of the Company at VSB, Mahatma Gandhi Road, Fort,
Mumbai 400 001, not less than 48 hours before the commencement of the Meeting
2. Those Members who have multiple folios with different jointholders may use copies of this Attendance slip/Proxy.
India
United Kingdom
France
Tata Communications
(UK) Limited
1st Floor, 20 Old Bailey
London EC4M 7AN
Registered in England and Wales
Registered number: 052 72 339
Tata Communications
(France) SAS
131 Avenue Charles de Gaulle
92200 Neuilly sur Seine
France
Singapore
Tata Communications
International Pte. Ltd.
Tata Communications Exchange
35 Tai Seng Street, #06-01
Singapore 534103
Registration Number: 20040025G
Hong Kong
Tata Communications
(Hong Kong) Limited
2402 Bank of America Tower
12 Harcourt Road
Central Hong Kong
Germany
Tata Communications
Deutschland GmbH
Bettinastrae 30
60325 Frankfurt
Tata Communications
Deutschland GmbH
Domicile: Frankfurt am Main
Registry Court:
AG Frankfurt am Main
Commercial
Register number: HRB 54483
Bettinastr. 30, 60325
Frankfurt am Main
Canada
Tata Communications
(Canada) Limited
1555 Rue Carrie-Derick
Montreal, Quebec H3C 6W2
United States
Tata Communications
(America) Inc.
2355 Dulles Corner Boulevard,
Suite 700
Herndon, VA 20171
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