tata teleservices limited annual report
TRANSCRIPT
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CONTENTS
Board of Directors, Management & Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Director's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Statement of Profit and Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Statement of Profit and Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Standalone Financial Statements
Consolidated Financial Statements
Registered Office : Jeevan Bharati Tower I, 10th Floor, 124, Connaught Circus, New Delhi-110 001.Corporate Office : A & E Blocks, Voltas Premises, T B Kadam Marg, Chinchpokli, Mumbai - 400 033.
CIN : U74899DL 1995PLC066685
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
BOARD OF DIRECTORS
Mr. Cyrus P. Mistry Chairman
Mr. Ishaat Hussain
Mr. Hajime Kii
Dr. Narendra Damodar Jadhav
Ms. Bharati Rao
Ms. Vibha Paul Rishi
Mr. Hidetada Hayashi
Dr. Gopichand Katragadda
Mr. N. Srinath Managing Director
Mr. Bhaskar Chandran,
President - Legal, Regulatory & Company Secretary
Mr. T. Elango President - Consumer Business
Mr. Prateek Pashine President – Enterprise
Mr. Anuraag Srivastava Chief Financial Officer
Mr. Neeraj Dindore Chief Technology Officer
Ms. Richa Tripathi Chief Human Resources Officer
M/s. S. R. Batliboi & Associates LLP
1. ANB Solutions Private Limited
2. Axis Risk Consulting Services Private Limited
3. Grant Thornton India LLP
Jeevan Bharati Tower I
10th Floor, 124 Connaught Circus
New Delhi - 110 001.
A & E Blocks, Voltas Premises
T. B. Kadam Marg, Chinchpokli
Mumbai - 400 033.
U74899DL1995PLC066685
COMPANY SECRETARY
SENIOR MANAGEMENT
STATUTORY AUDITORS
INTERNAL AUDITORS
REGISTERED OFFICE
CORPORATE OFFICE
CORPORATE IDENTITY NUMBER (CIN)
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LIST OF BANKS AND FINANCIALS INSTITUTIONS
BANKS
Allahabad Bank
Axis Bank
Australia and Newzealand Banking Group Limited
Bank of Baroda
Bank of India
Canara bank
Central Bank of India
Citi Bank N.A.
Corporation Bank
DBS Bank Ltd
Dena Bank
Deutsche Bank
HDFC Bank Ltd.
IDBI Bank
IndusInd Bank
Indian Overseas Bank
JP Morgan Bank
RBL Bank Limited (Formerly The Ratnakar Bank Limited)
Oriental Bank of Commerce
Punjab National Bank
Standard Chartered Bank
State Bank of Hyderabad
State Bank of India
State Bank of Mysore
Syndicate Bank
Standard Chartered Bank
Tamilnad Mercantile Bank Ltd
The Jammu & Kashmir Bank
The Royal Bank of Scotland
The South Indian Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank
Yes Bank
Indian Bank
State Bank of Patiala
IDFC Bank
DEBENTURE TRUSTEE
FINANCIAL INSTITUTIONS
Axis Trustee Services Limited
China Development Bank
L& T Infrastructure Finance Company Limited
HDFC Limited
Finnish Export Credit Limited
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
Dear Members,
stYour Directors present the 21 Annual Report on the business and operations of Tata Teleservices Limited (“TTSL” / the “Company”),
together with the audited financial statements for the year ended March 31, 2016 and other accompanying reports, notes and
certificates.
COMPANY OVERVIEW
TTSL continues to be among the leading telecommunications service providers in India. The Company together with Tata
Teleservices (Maharashtra) Limited (“TTML”), an associate company, is licensed to provide basic and cellular telecommunication
services and holds Unified Access (basic + cellular) Service Licences (“UASL”), in nineteen out of twenty-two service areas in the
country, TTML operates in two service areas of Mumbai and Maharashtra i.e., Rest of Maharashtra and Goa (TTSL and TTML
together hereinafter referred to as “TTL”).
The Company is an integrated player across:
• Technologies - Wireline, Code Division Multiple Access (“CDMA”), Global System for Mobile (“GSM”) & 3G (in 8 service areas
and 1 in TTML);
• Products - Voice, Data & other enterprise services (Connectivity and Managed services, Verticals based mobile applications
and Cloud services); and
• Customer segments – Retail, Large Corporate and Small & Medium Enterprises.
The Company provides its range of products and services to about 51 Million wireline and wireless subscribers (TTL - 62 Million
subscribers), under the Tata DOCOMO brand. Its network consists of more than 86,000 (TTL – 100,000) Base Transceiver Stations
(own and intra circle roaming) and optical fibre transmission network in the country of about 111,000 Kms. (TTL – 126,000 Kms.),
through which it provides long-distance connectivity in India.
FINANCIAL RESULTS
The financial highlights of the Company for the year ended March 31, 2016 are as follows:
DIRECTORS' REPORT
(Rs. in Crore)
Consolidated
2014-15 2014-15
Total Revenue 10,966 14,126
Expenditure 9,911 11,327
Earnings before interest, tax, depreciation and amortisation ("EBITDA") 1,055 2,799
Finance & Treasury charges including foreign exchange impact (2,640) ( (3,509)
Depreciation/ Amortization (2,261) (3,141)
Profit / (Loss) for the year before exceptional items and tax (3,846) (3,851)
Exceptional Items - -
Profit / (Loss) before tax (3,846) (3,851)
Taxes - -
Profit / (Loss) after tax (3,846) (3,851)
Minority Interest / Share of loss in associate - 226
Loss for the year (3,846) (4,077)
Standalone
2015-16 2015-16
10,708 14,405
8,976 11,062
1,732 3,343
(2,705) 3,391)
(2,027) (2,858)
(3,000) (2,907)
(386) 91
(3,386) (2,998)
- -
(3,386) (2,998)
- 4
(3,386) (3,002)
Particulars
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•
primarily due to a decline in CDMA revenues, which is a result of a global weak ecosystem around handsets and network.
• The Company witnessed a 64.2% growth in EBITDA at Rs. 1,732 Crore as against Rs. 1,055 Crore in the previous year. There
was a significant improvement in the EBITDA margin to 16% from 10% in the previous year.
• The revenue and EBITDA are not fully comparable to last year as this year's figures have an impact of change in Interconnect
Usage Charges (“IUC”) on incoming traffic from 20 paisa / min to 14 paisa/min due to change in IUC regulations effective from
March 2015.
• The Company's loss before exceptional items was Rs. 3,000 Crore as compared to last year's level of Rs. 3,846 Crore.
However, the Company has recorded a provision for diminution in value of investment in TTML of Rs. 386 Crore which is
recognized as an exceptional item. The reported net loss for the Company was Rs 3,386 Crore.
KEY DEVELOPMENTS DURING 2015-16
Industry developments
The year saw some positive developments in the sector primarily aimed towards moving to a regulatory regime which enables most
efficient use of spectrum. For the last couple of years the demand for spectrum especially contiguous spectrum has gone up
significantly on the backdrop of growth of data services and lack of enough spectrum available with individual operators to run optimal
networks. Some key developments during the year:
1. Spectrum sharing: Department of Telecommunication (“DoT”) during the year issued spectrum sharing guidelines wherein two
operators can share spectrum in any band as well as of both types i.e., acquired through auction as well as administratively
allotted spectrum (by paying One Time Spectrum Charges).
2. Spectrum trading: DoT during the year issued spectrum trading which permits an outright sale, transfer of spectrum from one
operator to another. Spectrum acquired through an auction can be traded only post two years of the auction.
3. Liberalization: As per the DoT guidelines, now telecom service providers can get their administratively allotted spectrum in 800
MHz and 1800 MHz bands converted to liberalized spectrum for the remaining validity of their licences after payment of auction
determined price on a pro-rata basis.
4. Spectrum auction 2016: Telecom Regulatory Authority of India (“TRAI”) released its recommendations on reserve prices for
spectrum to be auctioned in 2016. Spectrum is expected to be auctioned across several bands, namely 700 MHz, 800 MHz,
1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz.
Company’s initiatives
During the year, the Company enhanced its segmented customer engagement analytics and delivery platform that recommends
personalized plans to users based on their usage trends and communication needs. The concept of customized offers and the
inherent value in it for consumers was brought to life through the “Har Baar More” marketing campaign.
Understanding that telecom connectivity is the lifeblood of modern life, the Company created an innovative product that allows users
to take talk time from us on credit and avoid usage interruption in case they run out of prepaid balance. This product innovation
demonstrated the commitment to ensure that the Company’s users have a great service experience, always.
Another industry first was the launch of an exclusive accidental death insurance cover with coverage benefits of up to Rs. 3 Lakh, for
the prepaid users in Mumbai and Uttar Pradesh West circles. The product was well received and it helped strengthen the emotional
connect with consumers in the market.
The Company reported total revenue of Rs. 10,708 Crore during the year, a 2.3% decline over previous year. This decline is
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TATA TELESERVICES LIMITED
21st Annual Report 2015-2016
Continuing its leadership in customer-centric product
innovation, the Company introduced Photon Wi-Fi Duo, a
device that pairs Wi-Fi internet access with a power bank for
seamless, on-the-go internet usage across multiple devices.
The industry-first product, led Tata Teleservices to win the
Voice & Data Telecom Leadership Award 2016 for product
innovation.
The Company continued its journey towards building the
best-in-class on-boarding and customer service experience
for the customers. Initiatives such as the two-hour activation
from the brand stores, setting up of a neo-platinum call center
and digital self-serve platforms such as the Tata Docomo
mobile app and website, have helped us deliver a great brand
experience to the users.
During the year, the Company launched a unique pilot program called ‘Swabhiman’ aimed at
empowering women and strengthening gender diversity in the workforce. This program
allowed women to get attached to the channel partners with freedom to work from home to
reach out to the prospective customers. The Company, not only trained the women on tele-
calling skills but also set up a technology-led, automated business process to help these
women work in a hassle-free and productive environment.
For enterprise business customers, the strategy of the Company revolves around building
products and solutions in the areas of Enterprise mobility, Cloud computing, Software as a
Service (“SaaS”), Collaboration, Machine to Machine communication (“M2M”) and Managed
Services for voice and Data. The Company continues to innovate and during the course of the
year introduced a host of innovative solutions such as Hosted IVR, Call register Services,
mobile applications for Service Ticketing and Internet of Things (“IOT”) / M2M services.
The Company together with its associate (“TTML”) conducted about 90 events across cities for
its enterprise business customers as well as potential customers ranging from webinars,
product conclaves, forums etc. under the ‘Do Big’ banner. The biggest event ‘Do Big
Symposium’ was conducted across seven cities in the country including Mumbai. With the
theme - “Digital Disruption: A CEO’s Agenda”, this one of a kind event was aimed at providing a
multi city platform to bring together decision makers and influencers to discuss digital
opportunities and challenges in their respective businesses. The Company engaged senior
executives from a diverse set of industries including IT, eCommerce, Media and Entertainment,
Engineering and construction among others.
Network
The Company is committed to provide a congestion free network for both Voice and Data customers in accordance to ‘Quality of
Service Performance Indicators’ recommended by TRAI. There has been a constant focus on improving network quality and
coverage through augmentation and innovative network planning techniques for optimal performance of the available spectrum for
both voice and data services.
In the last four years through its ‘Project Optimus’ initiative, the Company has converted around 15,406 sites (Combined TTL – 16,909 sites) from Indoor to Outdoor that resulted in Annualized Savings of 51,143 MWh (Combined TTL – 56,363 MWh) of Grid units, 6,358 KL (Combined TTL – 7,007 KL) of diesel, 60,191 TCO2 (Combined TTL – 66,334 TCO2) carbon foot print and Rs. 75 Crore (Combined TTL – Rs. 82 Crore) of operating costs. This was achieved through conversion of base stations from Indoor BTS to
The industry-first product, Photon Wi-Fi Duo, was awarded the Voice & Data Telecom Leadership Award 2016 for product innovation.
Outdoor conversion through Outdoor Cabinet and Free Cooling units. The solution was implemented across 1,159 sites during the current year.
In line with cost and network optimization initiatives, the Company also initiated the transition of wireless network operations to TCTSL from in-house operations model in planned phases. The transition was smoothly executed for 9 circles, Gujarat, Uttar Pradesh-E, Uttar Pradesh-W, Rajasthan, Madhya Pradesh, Andhra Pradesh, Karnataka, Tamil Nadu, and Kerala, without impacting network performance or customer experience.
nd The Company demonstrated excellent operational efficiency during heavy rainfall and flood in Tamil Nadu Circle on 2 Dec’15 which
impacted 1680 GSM Sites and 279 CDMA Sites in Chennai. Despite severe field challenges and constraints such as power outage, lack of diesel refilling, road blockages, no transportation facilities and lack of spares / resources, the Company was able to restore 50% of the network within 96 hours and upto 94% in 10 days. Rest of the sites took another 10 days to restore as they were completely submerged in the water.
During the year, the Company has enhanced network quality and coverage in priority areas through consolidation. The wireless services are present in 9623 towns for GSM, 1238 towns in 3G and 3320 towns for CDMA. The Company has HSIA services in 287 towns wherein EvDO - RevB Network is available in 29 towns across the country. Seamless international roaming services are also provided to the customers supported by tie ups with more than 314 operators globally.
Safety
The Company has a well defined and practiced Employee Safety and Well-being Policy. The Company’s Safety Policy comprises guidelines and standardized practices, based on robust processes. It advocates in proactively improving its management systems, to minimize health and safety hazards, thereby ensuring compliance in all operational activities.
To minimize and mitigate risks related to Fire Safety and Physical Security, the Company has taken up various safety initiatives / projects including:
• First Aid and Fire Safety trainings for all employees;
• Emergency Mock fire drills (day/night) every six months;
• Dissemination of Safety Guidelines and Knowledge Management on health and safety issues, through Safety Awareness mailers and videos / Safety SMSs (covering Do’s & Dont's during emergency, Road Safety, Articles on Safety during Fire, Flood and Earthquake etc.).
The above actions are part of the Company’s transformation journey based on the 4 pillars of Transformation Project on Safety comprising:
• Excellence in Awareness and Employee Communication;
• Risk Assessment through Audit Mechanism;
• Corrective and Preventive Actions (“CAPA”); and
• Benchmarking and Best Practice sharing, within and outside the Tata Group companies.
Share Capital
During the financial year the Company offered 9,95,43,545 - 0.1% Compulsorily Convertible Non-Cumulative Preference Shares –
Series – II (“CCPS”) of face value of Rs. 100/- each aggregating Rs. 995,43,54,500 under Series – II Tranche 2 to the Equity
Shareholders of the Company whose names appeared in the Register of Members as on May 7, 2015. Tata Sons Limited subscribed
to the entire issue of CCPS (including additional shares) and the same were allotted to Tata Sons Limited on May 28, 2015.
Consequently, the Company’s paid-up capital increased to Rs. 9212,46,57,930 as on March 31, 2016.
CORPORATE STRUCTURE
Holding Company
Pursuant to Section 2(46) read with Section 2(87)(ii) of the Companies Act, 2013 (the “Act”), Tata Sons Limited is the Holding
Company of your Company.
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TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
Subsidiaries, Joint Venture and Associate companies
As on March 31, 2016, the Company has 4 subsidiaries and 2 associate companies.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the Financial Statements of the
Company’s subsidiaries and associate companies in Form AOC-1 is attached to the financial statements of the Company.
The performance and financial position of each of subsidiaries and associate companies are as follows:
Viom Networks Limited (“Viom”) – Subsidiary Company
Viom is one of the largest passive infrastructure providers in India with ~42,000 towers. The Company had hived off its own telecom
towers into a separate entity (formerly known as Wireless-TT Infoservices Limited) and then divested some part of its stake in that
entity (renamed as Viom) to SREI and other investors in 2009. Simultaneously, SREI also merged their tower assets in Quippo
Telecom into Viom. Viom is an independent telecommunications infrastructure company.
In FY’16, Viom reported a net profit for the third consecutive year. The profit for the year stood at Rs. 164 Crore (against Rs. 171 Crore
in previous year).
The Company has sold 12,99,97,920 Equity Shares representing 19.63% of the paid-up Equity Share Capital of Viom Networks
Limited (“Viom”) on April 21, 2016, Viom has become an associate company effective from April 21, 2016. Further the name of Viom
has also changed to ATC Telecom Infrastructure Private Limited.
MMP Mobi Wallet Payment Systems Limited (“MMP”) – Subsidiary Company
MMP is in the business of providing mobile commerce services. The value of transactions done in FY16 is ~Rs. 466 Crore and it has
added over 12,50,000 semi-closed wallets upto March 2016. On the P2M and B2B front, groundwork activities began in FY14 and the
business has started gaining traction in the market place in the current financial year. In FY16 there were many extraneous factors
that affected the business and the notable ones being Payment Bank License from RBI and Bharat Bill Payment Service from NPCI.
Because of Payment Bank License some of the players started an aggressive play on the Money Remittance Business which had a
huge impact on its Turnover and Revenue. The B2B stream that was started in FY16 gained traction and has given MMP a good
platform for FY17.
MMP with its focus on B2B and B2B2C has created some specific products in FY16.
MMP’s net loss for the year ended March 31, 2016 is Rs. 15 Crore as against Rs. 17 Crore in the previous year.
Tata Internet Services Limited (“TISL”) – Subsidiary Company
TISL had entered into an arrangement with Tata Communications Limited (“TCL”) under which TCL had the right to manage
businesses of TISL. TISL earned revenues from TCL as consideration for providing such rights. This agreement expired on
March 31, 2014. TISL is in possession of a property in Mumbai and is expected continue to earn rental income from leasing it out.
During the year, TISL and the Company have made a joint application to the Hon’ble High Court of Delhi ("Delhi HC") for
amalgamation of TISL with and into the Company. As directed by Delhi HC vide its Order dated April 21, 2015, requisite consents from
the Shareholders of Tata Teleservices Limited (“TTSL”) had been filed along with Affidavit with the Delhi HC. On Company’s
application for amalgamation with TTSL, the Delhi HC had sanctioned the First Motion Petition vide its Order dated February 10,
2016. Basis the Order received, the Company and TISL were dispensed with from convening meetings of their respective
Shareholders and Creditors. The Company had filed Second Motion Petition on February 17, 2016, which was heard on February 26,
2016. The matter is listed for hearing on July 22, 2016.
TISL’s net profit for the year ended March 31, 2016 is Rs. 7 Crore as against Rs. 6 Crore in the previous year.
NVS Technologies Limited (“NVS”) – Subsidiary Company
NVS was incorporated as a wholly owned subsidiary of the Company on September 12, 2014 to carry on the Company’s non-voice
services viz. Mobile Advertising (mAdvertising), Mobile Education (mEducation), Mobile Health (mHealth), Mobile Tracking
(mNavigation), Mobile Digital Properties in promising products and services with the developer community. NVS has not yet
commenced any operations during the year.
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Tata Teleservices (Maharashtra) Limited (“TTML”) – Associate Company
TTML has two Unified Access (basic + cellular) Service Licences (“UASL”), one for Mumbai Metro service area and the other for
Maharashtra service area i.e., Rest of Maharashtra and Goa. TTML is an integrated player across:
• Technologies - Wireline, Code Division Multiple Access (CDMA), Global System for Mobile (GSM) & 3G (Maharashtra service
area);
• Products - Voice, Data & Other enterprise services (Connectivity and Managed services, Verticals based mobile applications
and Cloud services) ;
• Customer segments – Retail, Large corporate and Small and medium enterprises.
TTML provides its range of products and services to about 10.7 Million (wireline + wireless) subscribers under the Tata DOCOMO
brand (11.1 Million in the previous year). Its network consists of about 14,000 Base Transceiver Stations and optical fiber
transmission network ~15,000 kms in Mumbai & Maharashtra.
In FY’ 16, TTML reported revenue of Rs. 3025 Crore, EBITDA of Rs. 843 Crore and Net loss of Rs. 498 Crore as against revenue of
Rs. 2,939 Crore, EBITDA of Rs. 646 Crore and Net Loss of Rs. 615 Crore in the previous year.
The licences of TTML and the associated administered spectrum allocated in the past in Mumbai and Maharashtra are coming up for
renewal in September 2017. In order to be able to continue its mobile services in Mumbai & Maharashtra in an effective manner, it is
imperative that TTML wins back enough spectrum in key bands in both circles. There is a possibility that the market auction demand
for spectrum will far exceed what becomes available and is put up for auction. Consequently bidding could be aggressive by other
operators and TTML may not be able to acquire the required spectrum at a cost that is supported by its business cases and its ability
to fund the spectrum. The ability of TTML to continue operations in mobility would be severely compromised in circles where it does
not win back enough spectrum. Winning back enough spectrum at an affordable price is key to continuing mobile operations in any
circle.
Virgin Mobile India Private Limited (“VMI”) – Associate Company (Joint Venture)
VMI was formed as a Joint venture in 2007 between the Company and Virgin Mauritius Investment Ltd. (“VMIL”) to offer Consultancy
Services to facilitate the Company and TTML in offering certain mobile communications products and services to customers under
the Virgin Mobile Brand in India (‘Consultancy Services Agreement’). Further TTL and VMI also entered into a Trademark Licence
Agreement (“TMLA”) with Virgin Group which permitted them to use the “Virgin Mobile” brand in consideration for royalty.
The Company, TTML and VMI mutually agreed to terminate the said Consultancy Services Agreement with effect from the close of
business hours on March 31, 2014. Accordingly, in the previous year, the financial statements of VMI had been prepared on the basis
that it was no longer a going concern and, therefore, assets and liabilities had been stated at their realizable values. Further, on
April 10, 2015, TTL and VMI entered into Deed of Termination of the TMLA with Virgin Group. Virgin has agreed to sell its stake in VMI
to the Company for a nominal consideration of GBP 1 post completion of termination formalities and payouts.
The Company, TTML, VMIL and VMI have also entered into a Deed of Termination for termination of the Shareholders’ Agreement
and the Deed of Guarantee on March 31, 2016. Also the parties entered into Letter of Agreement dated March 31, 2016 for purchase
of Shares. The Deed of Termination shall come into effect on full payment envisaged therein.
During the current year as well, financial statements have been prepared on the basis that VMI is no longer a going concern. VMI’s
net loss for the year ended March 31, 2016 is Rs. 21 Crore as against net loss of Rs. 14 Crore in the previous year.
Consolidated Financial Statement
In accordance with the Act and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on
Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated
financial statement is provided in the Annual Report.
TATA TELESERVICES LIMITED
TELESERVICESTATA
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21st Annual Report 2015-2016
BOARD OF DIRECTORS, MEETINGS AND ITS COMMITTEES
As on March 31, 2016, the Board of Directors comprised of 9 (Nine) Directors. Of the 9 (Nine) Directors, 8 (Eight) (i.e. 88.88%) are
Non-Executive Directors and 1 (One) Managing Director. The Non-Executive Directors include 1 (One) Chairman and 3 (Three)
Independent Directors. The composition of the Board is in conformity with the provisions of the Act and other applicable provisions.
All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.
Appointment(s)
The Board of Directors, on recommendation of the Nomination and Remuneration Committee had approved the appointment of Mr. Hidetada Hayashi and Dr. Gopichand Katragadda as Additional Directors of the Company with effect from August 26, 2015.
thMr. Hidetada Hayashi and Dr. Gopichand Katragadda, being Additional Directors, were appointed as Directors in 20 Annual General Meeting of the Company.
Resignation(s)
Mr. Kazuto Tsubouchi and Mr. Ravi Lambah Non-Executive Directors of the Company, resigned from the Board of the Company with effect from the close of business hours on August 7, 2015.
The Board places on record its appreciation for the contributions made by Mr. Kazuto Tsubouchi and Mr. Ravi Lambah during their respective tenure.
Directors retiring by rotationrdIn accordance with the provisions of Section 152 of the Act and in terms of the Articles of Association of the Company, 1/3 of such
Directors for the time being liable to retire by rotation i.e. 2 (Two) will be retiring by rotation at the ensuing AGM. The relevant details of st the Directors liable to retire by rotation shall form part of the Notice convening 21 AGM.
Meetings of the Board of Directors
A calendar of Board and Committee meetings to be held during the year is prepared and circulated in advance to the Directors.
During the financial year, 5 (Five) Board meetings were convened and held. Details of the composition of the Board and its Committees and of the meetings held and attendance of the Directors at such meetings, are provided in the Corporate Governance Report, annexed to the Annual Report. The intervening gap between the meetings was within the period prescribed under the Act.
Committees of the Board
There are currently 3 (Three) Statutory Committees of the Board, as follows:
(i) Audit Committee;
(ii) Corporate Social Responsibility Committee; and
(iii) Nomination and Remuneration Committee.
During the financial year, the Audit Committee was re-constituted. The composition of the above Committees is in accordance with the relevant provisions of the Act.
Details of all the Committees along with their role, composition and meetings of each Committee held during the financial year, are provided in the Corporate Governance Report, annexed to the Annual Report.
KEY MANAGERIAL PERSONNEL
Mr. Anuraag Srivastava has been appointed as Chief Financial Officer (CFO) of the Company with effect from July 1, 2015.
POLICIES AND PROCEDURES
Company’s Policies on Appointment and Remuneration of Directors
The Policy of the Company on Directors’ appointment including criteria for determining qualifications, positive attributes, independence of a Director and the Policy on remuneration of Directors, Key Managerial Personnel and other employees are annexed as Annexure – IA and Annexure – IB to this Report.
11
Board Evaluation
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Act.
The performance of the Board, the Committees and Individual Directors was evaluated by the Board after seeking inputs from all the Directors through a questionnaire wherein the Directors were required to evaluate the performance on scale of one to five based on the following criteria:
a) Criteria for Board Performance Evaluation: Degree of fulfillment of key responsibilities, Board structure and composition, Establishment and delineation of responsibilities to committees, Effectiveness of Board processes, Information and functioning, Board Culture and Dynamics, Quality of relationship between the Board and the Management.
b) Criteria for Committee Performance Evaluation: Degree of fulfillment of key responsibilities, Adequacy of Committee Composition, Effectiveness of meetings, Committee dynamics, Quality of Relationship of the Committee with the Board and the Management.
c) Criteria for Performance Evaluation of Individual Directors: Attendance, Contribution at meetings, guidance, Support to Management outside Board/Committee meetings.
One of the Members of the Nomination and Remuneration Committee (“NRC”) was nominated for conducting one-on-one discussions with Directors to seek their feedback on the performance of the Board and other Directors.
The NRC also reviewed the performance of the individual Directors. In addition, the Chairman was evaluated on the key aspects of his role and the Managing Director was evaluated on the basis of the goals achieved by him during the financial year.
In separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive Director and Non-Executive Directors. Thereafter, the Board also reviewed the performance of the Board as a whole, its Committees and Individual Directors.
Risk Management Policy
The Company has risk management policy and the risk management framework which ensures that the Company is able to carry out
identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company.
Internal Financial Control and their Adequacy
The Company has established and maintained adequate internal financial controls with respect to financial statements. Such
controls have been designed to provide reasonable assurance with regard to providing reliable financial and operational information.
During the year, such controls were operating effectively and no material weaknesses were observed.
Vigil Mechanism / Whistle Blower Policy
The Company has established the vigil mechanism in the form of Whistle Blower Policy for Directors and employees to report their
genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics
policy, details of which are provided in the Corporate Governance Report annexed to the Annual Report.
The Policy provides for adequate safeguards against victimization of Directors/employees who avail of the mechanism and also
provides for direct access to the Chairman of the Audit Committee.
The Whistle Blower Policy has been placed on the website of the Company i.e., www.tatateleservices.com
Corporate Social Responsibility
The Company has constituted a Corporate Social Responsibility (“CSR”) Committee in accordance with Section 135 of the Act. The
composition of CSR Committee, the details of CSR Policy and initiatives taken by the Company on CSR activities during the year are
annexed as Annexure – II to this Report.
TATA TELESERVICES LIMITED
12
21st Annual Report 2015-2016
OTHER STATUTORY DISCLOSURES
Contracts or arrangements with related parties
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm’s length basis. Your Directors draw attention of the members to Note 41 to the financial statement which sets out related party disclosures.
Particulars of Loans, Guarantees and Investments
Your Company being in business of providing infrastructural facilities, provisions of Section 186 of the Act, do not apply to the Company in respect of loans & investments made, guarantees given or security provided by the Company during the financial year.
Dividend & Appropriations
In view of the accumulated losses, the Directors regret their inability to recommend any dividend for the year under consideration. No appropriations are proposed to be made for the year under consideration.
Deposits
The Company has not accepted any public deposits, during the financial year 2015-16, within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposit) Rules, 2014.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under for prevention and Redressal of complaints of sexual harassment at workplace. The objective of this policy is to lay clear guidelines and provide right direction in case of any reported incidence of sexual harassment across the Company’s offices, and take appropriate decision in resolving such issues.
During the financial year 2015-16, the Company has received 2 (Two) complaints on sexual harassment which have been disposed off and appropriate action has been taken. No complaint is pending as on March 31, 2016.
Particulars of Employees
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure – III to this Report.
The statement containing particulars of employees as required under Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Pursuant to Section 136(1) of the Act, this report is being sent to the Members of the Company excluding the aforesaid information. However, the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary of the Company.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of Companies (Accounts) Rules, 2014, the details of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are as under:
(A) Conservation of Energy
(i) Steps Taken or Impact on Conservation of Energy:
a. Electricity and Diesel Generators are used for the powering of the Company’s telephone exchanges and other network infrastructure equipment. The Company regularly reviews power consumption patterns across its network and has implemented various innovative projects including green initiatives in order to optimize power consumption which resulted into substantive cost savings and reduction of carbon foot print. Some of the major projects undertaken during the year are:
• Indoor BTS with Outdoor cabinet on new project roll out – 353 nos. (Combined TTL – 509).
• FCU (Free Cooling Units) deployment and AC (Air Conditioner) switch off – 470 nos. (Combined TTL – 650).
• Network consolidation – 7 MSCs switched off and 4 Locations surrendered
• Energy day is observed at core locations once a week where energy saving measures are taken.
13
(Rs. In Crore)
Particulars 2014 – 15
Earnings 15.18
Outgo 312.14
Capital Goods 260.99
2015 – 16
10.56
294.12
270.40
Significant and Material Orders Passed by the Regulators or Courts or Tribunals Impacting the Going Concern Status and
Company's Operation's in Future
While there are certain critical litigations including litigations relating to various demands made by DoT, there are no significant
material orders passed, as of date, by the Regulators / Courts or the Company has interim protection from courts against
enforcement of such demands or notices, which would impact the going concern status of the Company and its future operations.
However, there is always a chance that any order passed in critical litigations in future may have an impact on the going concern or
future operations of the Company.
Extract of Annual Return
Pursuant to the provisions of Section 92(3) of the Act and Rule 12 (1) of the Companies (Management and Administration) Rules,
2014, the extract of Annual Return in Form MGT - 9 is annexed as Annexure – IV of this Report.
AUDITORS
Statutory Auditors
M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, the present Statutory Auditors, retire at the conclusion of the ensuing
Annual General Meeting (“AGM”) and have confirmed their willingness and eligibility for re-appointment in accordance with the
provisions of Section 139 read with Section 141 of the Act. The Audit Committee and the Board recommend their re-appointment
from the conclusion of the ensuing AGM till the conclusion of the next AGM. Members are requested to consider the re-appointment
of M/s. S. R. Batliboi & Associates LLP and authorize the Board of Directors to fix their remuneration.
Cost Auditors
The Board of Directors of your Company had upon recommendation of the Audit Committee, appointed M/s. Sanjay Gupta &
Associates, Cost Accountants, as Cost Auditors of the Company for the financial year 2015-16.
The Board, on the recommendation of Audit Committee, approved the re-appointment and remuneration of M/s. Sanjay Gupta &
Associates, Cost Accountants, as Cost Auditors of the Company for the financial year 2016-17. Members are requested to consider,
approve and ratify the remuneration payable to M/s. Sanjay Gupta & Associates for financial year 2016-17.
b. The initiatives on energy conservation has resulted into reduction of 63,859 Mn. units of energy consumption
(Combined TTL – 69,079 Mn. units) and carbon foot print reduction of 60,191 TCO2 (Combined TTL - 66,334
TCO2).
c. Periodic energy audit and implementation of audit recommendations.
(ii) Steps taken by the Company for utilizing alternate sources of Energy:
Six of the core locations are operating on renewable energy sources from wind energy firms. 10,300 Mn. units used from
these sources during the year.
(iii) Capital Investment on Energy Conservation Equipments
Your Company has made capital investment of – Rs. 3.6 Crore (TTL combined – Rs. 5.1 Crore) on energy conservation
equipments.
(B) Technology Absorption: The Company has not imported any new technology.
(C) Foreign Exchange Earnings and Outgo:
TATA TELESERVICES LIMITED
14
21st Annual Report 2015-2016
Internal Auditors
The Board has appointed Axis Risk Consulting Services Private Limited, ANB Solutions Private Limited and Grant Thornton India
LLP as Internal Auditors of the Company for conducting internal audit of the Company.
Secretarial Auditors and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, the Board of Directors of the Company had appointed M/s. Mehta & Mehta, Practicing Company Secretaries, to
undertake the Secretarial Audit of the Company for the year ending March 31, 2016. The Secretarial Audit Report in Form MR-3 is
annexed as Annexure – V to this Report.
AUDITORS' OBSERVATIONS AND DIRECTORS' COMMENTS
Statutory Auditors Report
The Statutory Auditors' Report is self explanatory and does not contain any qualifications, reservations, adverse remarks or
disclaimer.
Secretarial Auditors Report
Observation:
“The Company has not maintained 100% asset cover for the purpose of discharging the principal amount of the securities as required
under Regulation 54 of the Securities and Exchange Board of India (Listing obligations and Disclosure Requirements) Regulations,
2015”.
Directors Comments
The Company has not met the 100% asset cover ratio as required under the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (Listing Regulations) due to various factors including adverse movement in the exchange rates and less capex
incurred as compared to the original plan. However, the Company has disclosed this fact from time to time by way of a note to the half
yearly and annual financial results published by the Company and submitted to the National Stock Exchange of India Limited
(“NSE”). The Company has also disclosed the same in the half yearly communication being submitted to NSE through Debenture
Trustee pursuant to the said Listing Regulations.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work
performed by the internal, statutory, cost and secretarial auditors and external consultant(s) including audit of internal financial
controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board
Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate
and effective during the financial year 2015-16.
Accordingly, pursuant to the provisions of Section 134 of the Companies Act, 2013, your Directors, to the best of their knowledge and
belief and according to information and explanation obtained by them, confirm that:
1. in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards
have been followed and there are no material departures;
2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year
ended March 31, 2016 and of the loss for the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
15
4. they have prepared the annual financial statements on a going concern basis;
5. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are
adequate and are operating effectively;
6. they have devised systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate
and operating effectively.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
A detailed report on Management Discussion & Analysis for the year under review is presented in a separate section, forming part of
the Annual Report.
CORPORATE GOVERNANCE REPORT
Provisions relating to Corporate Governance under the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 do not apply to the Company, since the shares of the Company are not listed on any stock
exchange. However, a report on Corporate Governance initiatives adopted by the Company is annexed to and forms part of the
Annual Report.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their sincere appreciation of the assistance and support extended by the employees,
shareholders, customers, financial institutions, banks, vendors, dealers, Department of Telecommunications, the Central and State
Governments and others associated with the activities of the Company. We look forward to their continued support in future.
For and on behalf of the Board of Directors
Cyrus P. Mistry
Chairman
(DIN 00010178)
Place : Mumbai
Date : June 27, 2016
TATA TELESERVICES LIMITED
16
21st Annual Report 2015-2016
Company’s Policy on Directors Appointment and Remuneration
The Company has formulated the criteria determining qualifications, positive attributes and independence of Director. The details of
the same are as under:
1. Definition of Independence
• A Director will be considered as an "Independent Director” if the person meets with the criteria for 'Independent Director'
as laid down in the Act.
• The definition of Independence as provided in the Act is as follows:
“An Independent Director in relation to a company, means a Director other than a Managing Director or a Whole-Time Director
or a Nominee Director,—
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;
(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company;
(ii) who is not related to promoters or Directors in the company, its holding, subsidiary or associate company;
(c) who has or had no pecuniary relationship with the company, its holding subsidiary or associate company or their
promoters or Directors, during the two immediately preceding financial years or during the current financial year;
(d) none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or
associate company or their promoters or Directors, amounting to two percent or more of its gross turnover or total income
or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately
preceding financial years or during the current financial year;
(e) who, neither himself nor any of his relatives—
(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its
holding, subsidiary or associate company in any of the three financial years immediately preceding the financial
year in which he is proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the
financial year in which he is proposed to be appointed, of—
(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary
or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or
associate company amounting to ten percent or more of the gross turnover of such firm;
(iii) holds together with his relatives two percent or more of the total voting power of the company; or
(iv) is a Chief Executive or Director, by whatever name called, of any nonprofit organisation that receives twenty-five
percent or more of its receipts from the company, any of its promoters, Directors or its holding, subsidiary or
associate company or that holds two percent or more of the total voting power of the company;
ANNEXURE – IA TO THE DIRECTORS’ REPORT
17
(f) who is not less than 21 years of age (additional provision as per Clause 49).”
• Current and ex-employees of a Tata company may be considered as independent only if he / she has or had no pecuniary
relationship with any Tata company (due to employment/ receipt of monthly pension by way of Special Retirement
Benefits / holding consultant or advisor positions) during the two immediately preceding financial years or during the
current financial year.
2. Qualifications of Directors
• Board will ensure that a transparent Board nomination process is in place that encourages diversity of thought,
experience, knowledge, perspective, age and gender.
• It is expected that Board have an appropriate blend of functional and industry expertise.
• While recommending appointment of a Director, it is expected that the Nomination and Remuneration Committee
(“NRC”) consider the manner in which the function and domain expertise of the individual contributes to the overall skill-
domain mix of the Board.
• Independent Directors (“ID”) ideally should be thought / practice leaders in their respective functions / domains.
3. Positive Attributes of Directors
Directors are expected to comply with duties as provided in the Act. For reference, the duties of the Directors as provided by the
Act are as follows:
1) “Act in accordance with the articles of the company.
2) Act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best
interests of the company, its employees, the shareholders, the community and for the protection of environment.
3) Exercise duties with due and reasonable care, skill and diligence and exercise independent judgment.
4) Not be involved in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with
the interest of the company.
5) Not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or
associates.
6) Not assign his office.”
Additionally, the Directors on the Board of a Tata Company are also expected to demonstrate high standards of ethical behavior,
strong interpersonal and communication skills and soundness of judgment.
IDs are also expected to abide by the 'Code for Independent Directors' as outlined in Schedule IV to Section 149(8) of the Act.
The Code specifies the guidelines of professional conduct, role and function and duties of Independent Directors. The
guidelines of professional conduct specified in the Code are as follows:
“An independent director shall:
1) uphold ethical standards of integrity and probity;
2) act objectively and constructively while exercising his duties;
TATA TELESERVICES LIMITED
18
21st Annual Report 2015-2016
3) exercise his responsibilities in a bona fide manner in the interest of the company;
4) devote sufficient time and attention to his professional obligations for informed and balanced decision making;
5) not allow any extraneous considerations that will vitiate his exercise of objective independent judgment in the paramount
interest of the company as a whole, while concurring in or dissenting from the collective judgment of the Board in its
decision making;
6) not abuse his position to the detriment of the company or its shareholders or for the purpose of gaining direct or indirect
personal advantage or advantage for any associated person;
7) refrain from any action that would lead to loss of his independence;
8) where circumstances arise which make an Independent Director lose his independence, the Independent Director must
immediately inform the Board accordingly;
9) assist the company in implementing the best corporate governance practices.”
For and on behalf of the Board of Directors
Cyrus P. Mistry
Chairman
(DIN 00010178)
Place : Mumbai
Date : June 27, 2016
19
Further, the Company has also formulated a Remuneration Policy for the Directors, Key Managerial Personnel (“KMP”) and other
employees and the same is given hereunder:
The philosophy for remuneration of Directors, KMP and all other employees of Tata Teleservices Limited (the “Company”) is based
on the commitment of fostering a culture of leadership with trust. The remuneration policy is aligned to this philosophy.
This remuneration policy has been prepared pursuant to the provisions of Section 178(3) of the Companies Act, 2013 (the “Act”). In
case of any inconsistency between the provisions of law and this remuneration policy, the provisions of the law shall prevail and the
company shall abide by the applicable law. While formulating this policy, the Nomination and Remuneration Committee (“NRC”) has
considered the factors laid down under Section 178(4) of the Act, which are as under:
“(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality
required to run the company successfully;
(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
(c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive
pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals”
Key principles governing this remuneration policy are as follows:
• Remuneration for Independent Directors and Non-Independent Non-Executive Directors
sIndependent Directors (“ID”) and Non-Independent Non-Executive Directors (“NED”) may be paid sitting fees (for
attending the meetings of the Board and Committees of which they may be members) and commission within regulatory
limits.
sWithin the parameters prescribed by law, the payment of sitting fees and commission will be recommended by the NRC
and approved by the Board.
sOverall remuneration (sitting fees and commission) should be reasonable and sufficient to attract, retain and motivate
Directors aligned to the requirements of the Company (taking into consideration the challenges faced by the Company
and its future growth imperatives).
sOverall remuneration should be reflective of size of the Company, complexity of the sector / industry / company's
operations and the Company's capacity to pay the remuneration.
sOverall remuneration practices should be consistent with recognized best practices.
sQuantum of sitting fees may be subject to review on a periodic basis, as required.
sThe aggregate commission payable to all the NEDs and IDs will be recommended by the NRC to the Board based on
Company performance, profits, return to investors, shareholder value creation and any other significant qualitative
parameters as may be decided by the Board.
sThe NRC will recommend to the Board the quantum of commission for each Director based upon the outcome of the
evaluation process which is driven by various factors including attendance and time spent in the Board and Committee
meetings, individual contributions at the meetings and contributions made by Directors other than in meetings.
sIn addition to the sitting fees and commission, the Company may pay to any Director such fair and reasonable
expenditure, as may have been incurred by the Director while performing his/ her role as a Director of the Company. This
ANNEXURE – IB TO THE DIRECTORS’ REPORT
Remuneration Policy
TATA TELESERVICES LIMITED
20
21st Annual Report 2015-2016
could include reasonable expenditure incurred by the Director for attending Board/ Board Committee meetings, general
meetings, court convened meetings, meetings with shareholders/ creditors/ management, site visits, induction and
training (organized by the company for Directors) and in obtaining professional advice from independent advisors in the
furtherance of his/ her duties as a Director.
•
o The extent of overall remuneration should be sufficient to attract and retain talented and qualified individuals suitable for
every role. Hence remuneration should be
sMarket competitive (market for every role is defined as companies from which the company attracts talent or
companies to which the company loses talent)
sDriven by the role played by the individual,
sReflective of size of the company, complexity of the sector/ industry/ company's operations and the company's
capacity to pay,
sConsistent with recognized best practices, and
sAligned to any regulatory requirements.
o In terms of remuneration mix or composition,
sThe remuneration mix for the MD / EDs is as per the contract approved by the shareholders. In case of any change,
the same would require the approval of the shareholders.
sBasic / fixed salary is provided to all employees to ensure that there is a steady income in line with their skills and
experience.
sIn addition to the basic/ fixed salary, the company provides employees with certain perquisites, allowances and
benefits to enable a certain level of lifestyle and to offer scope for savings and tax optimization, where possible. The
company also provides all employees with a social security net (subject to limits) by covering medical expenses and
hospitalization through re-imbursements or insurance cover and accidental death and dismemberment through
personal accident insurance.
sThe company provides retirement benefits as applicable.
sIn addition to the basic/ fixed salary, benefits, perquisites and allowances as provided above, the company provides
MD/ EDs such remuneration by way of commission, calculated with reference to the net profits of the company in a
particular financial year, as may be determined by the Board, subject to the overall ceilings stipulated in Section 197
of the Act. The specific amount payable to the MD / EDs would be based on performance as evaluated by the Board
or the NRC and approved by the Board.
sIn addition to the basic/ fixed salary, benefits, perquisites and allowances as provided above, the company provides
MD / EDs such remuneration by way of an annual incentive remuneration / performance linked bonus subject to the
achievement of certain performance criteria and such other parameters as may be considered appropriate from
time to time by the Board. An indicative list of factors that may be considered for determination of the extent of this
component are:
o Company performance on certain defined qualitative and quantitative parameters as may be decided by the Board from
time to time,
Remuneration for Managing Director (“MD”)/ Executive Directors (“ED”)/ KMP/ rest of the employees
21
o Industry benchmarks of remuneration,
o Performance of the individual.
sThe company provides the rest of the employees a performance linked bonus. The performance linked bonus
would be driven by the outcome of the performance appraisal process and the performance of the company.
•
The remuneration payable to the Directors shall be inclusive of any remuneration payable for services rendered by such
Director in any other capacity unless:
a) The services rendered are of a professional nature; and
b) The NRC is of the opinion that the Director possesses requisite qualification for the practice of the profession.
• Policy implementation
The NRC is responsible for recommending the remuneration policy to the Board. The Board is responsible for approving and
overseeing implementation of the remuneration policy.
For and on behalf of the Board of Directors
Cyrus P. Mistry
Chairman
(DIN 00010178)
Place : Mumbai
Date : June 27, 2016
Remuneration payable to Director for services rendered in other capacity
TATA TELESERVICES LIMITED
22
21st Annual Report 2015-2016
ANNEXURE – II TO THE DIRECTORS’ REPORT
Annual Report on Corporate Social Responsibility (“CSR”) Activities
1. Brief outline of the Company's CSR Policy, including overview of projects or programmes proposed to be undertaken
As a member of the Tata Group, Corporate Social Responsibility is at the core of the Company. The Company's CSR policy
upholds the ethos of the Tata Group's Sustainability (including CSR) Policy. The Company has designed its CSR policy based
on Tata Group's focus areas.
Focus areas and key programs are as under:
Promoting employability through Education, Skill development – The Company has provided skill trainings to partnered
NGOs which were identified through a consultative process, followed by designing and delivering of modules through identified
employees who are subject matter experts. The Company also supports schools in multiple locations for delivering educational
programs on identified subjects. NGOs working in the area of education and soft skill training for women, differently-abled
individuals and underprivileged youth are selected through a rigorous screening process. In total, 1173 lives were touched
through organized sessions on soft skills and child welfare.
Volunteering - The Company participates actively in Group Volunteering Programs – Tata Volunteering Week and Pro-engage
(Short term focused projects with NGO's) through Prakriti club – the volunteering arm of the Company. The key focus areas of
volunteering programs are skill building and education. In total, 399 volunteering hours were spent on various volunteering
initiatives.
Livelihood enhancement - The Company has provided livelihood to 44 people with Orthopedic, Hearing and Visual
disabilities at outbound contact centers & Facility Management process, thus enabling economic independence. It has also
provided livelihood opportunities for 2 economically backward youth at the Retail Stores. The Company encourages women
employment through its 'SIM Kitting Process' at the warehouses, currently employing 89 women (74% of the total workforce).
Promoting women empowerment, health and such social issues –The Tata Group is supporting the historic UN endorsed,
The Global Goals for Sustainable Development. The Company is supporting the cause by reaching out to its customers and
employees to promote the Goals through Twitter, Linked in, Facebook, SMS and Internal newsletters. SMS messages were
sent to ~3.7 Lakh customers to generate awareness on the UN Global Goals Campaign.
The company is also a signatory to United Nation Global Compact (UNGC) & submitted their Communication on Progress
(COP) to UNGC.
Focus on Environment - Given the nature of the telecommunication business, the Company focuses on reducing its carbon
footprint, leveraging green energy, responsible management of waste through various initiatives. Over the last three years, the
Company has achieved a steady decrease in carbon emission (TCO2e) per subscriber – 0.28 in FY'14, 0.021 in FY'15 and
0.0022 in FY'16 (Network emission for H2 awaited). Renewable energy accounts for 9,467 MWh (2.43%) of total electricity
consumption. The Company has continued with various energy saving measures including Save Energy Day initiative &
reduced its electricity & diesel consumption translating into reduction of 2,864 TCO2e. Approximately 5.27K tons of e-waste
has been collected & disposed in environment friendly manner.
Disaster Relief – This is a focus area at the Tata Group level. Employees from the Company volunteered towards relief work
during the Nepal Earthquake and Tamil Nadu Floods. A total of INR 29.9 Lakhs was collected as voluntary contributions from
Company employees and TTL made a contribution of INR 95.2 Lakhs. The contribution was given to Tata Relief Fund to support
relief operations. Additionally the Company also supported volunteers for on ground relief support activities.
23
The weblink to the Company's CSR Policy is –
2. Composition of CSR Committee
The CSR Committee for the Company comprises of the following Members:
http://www.tatateleservices.com/pressroom/pr_docs/policy-on-corporate-social-responsibility.pdf
Sr. No. Name Designation
1 Mr. N. Srinath Executive Director
2 Dr. Narendra Damodar Jadhav Non-Executive Independent Director
3 Ms. Bharati Rao Non-Executive Independent Director
3. Average net profit of the Company for last 3 financial years, prescribed CSR expenditure and details of CSR spent
during the financial year
The Company did not make profits in the past 3 financial years; hence it does not have any budgeted CSR expenditure.
However, in keeping with the Tata Group’s philosophy of giving back to the society, all the above initiatives are managed with
internal resources.
N. Srinath Dr. Narendra Damodar Jadhav
Executive Director & Member of CSR Committee Member of CSR Committee
DIN : 00058133 DIN : 02435444
Place: Mumbai
Date: June 25, 2016
TATA TELESERVICES LIMITED
24
21st Annual Report 2015-2016
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a. The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial
year:
Non-Executive Directors* Ratio to median remuneration
Dr. Narendra Damodar Jadhav 1.278
Ms. Bharati Rao 1.207
Ms. Vibha Paul Rishi 0.710
Mr. Kazuto Tsubouchi 0.142
Mr. Hajime Kii 0.213
Mr. Hidetada Hayashi 0.142
Mr. Seiichi Ikeda 0.071
* Apart from the above named Directors, no other Non-Executive Director is getting any remuneration.
b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company
Secretary in the financial year:
Directors, Chief Executive Officer, Chief Financial % increase in remuneration in the financial year
Officer and Company Secretary
Mr. N. Srinath - Managing Director 18.85%
Mr. Anuraag Srivastava - Chief Financial Officer@ NA
(with effect from July 1, 2015)
Mr. Bhaskar Chandran - Company Secretary 12.66%
@ Appointed with effect from July 1, 2015
c. The percentage increase in the median remuneration of employees in the financial year: 5.09%
d. The number of permanent employees on the rolls of Company as on March 31, 2016 : 5,513.
e. The explanation on the relationship between average increase in remuneration and Company performance:
On an average, employees received an annual increase of 5.4%. Increments given were based on individual performance. The increase in remuneration was in line with the market median trends at various employee levels and roles. However, Performance Pay paid to employees included the factor of the Company performance.
f. Comparison of the remuneration of the key managerial personnel against the performance of the Company:
Aggregate remuneration of Key Managerial Personnel (“KMP”) in FY 2015-16 (Rs. in Crore) 6.839
Revenue (Rs. in Crore) 10,708.43
Remuneration of KMPs (as % of Revenue) 0.064%
Profit before Tax (PBT) (Rs. in Crore) (3,386.02)
Remuneration of KMP (as % of PBT) NA*
* Since PBT is negative for the year
ANNEXURE – III TO THE DIRECTORS’ REPORT
25
g. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year
and previous financial year:
Particulars March 31, 2015 % Change
#Market capitalization (Rs. in Crore) 8,217.03 12.11%
Price Earning Ratio* NA NA
# Paid up share capital (market capitalization is not applicable since the shares of the Company are not listed on any Stock
Exchange).
*Earning Per Share is negative for the current financial year and previous financial year.
h. Percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which
the Company came out with the last public offer:
N.A. (since the shares of the Company are not listed on any Stock Exchange).
i. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if
there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase during the year was [%] in case of employees other than managerial personnel.
j. Comparison of each remuneration of the key managerial personnel against the performance of the Company:
March 31, 2016
9,212.46
NA
# Remuneration for FY 2015-16. Appointed as CFO with effect from July 1, 2015.
* Since PBT is negative for the year.
k. The key parameters for any variable component of remuneration availed by the Directors: None
l. The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive
remuneration in excess of the highest paid Director during the year: None.
m. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration paid is as per the remuneration policy of the Company.
For and on behalf of the Board of Directors
Cyrus P. Mistry
Place : Mumbai Chairman
Date : June 27, 2016 (DIN 00010178)
Mr. N Srinath
- Managing Director
Mr. Anuraag Srivastava
- Chief Financial Officer*
Mr. Bhaskar Chandran
- Company Secretary
Remuneration in FY 2015-16 4.198 1.077 1.564
(Rs. in Crore)
Revenue (Rs. in Crore) 10,708.43
Remuneration as % of revenue 0.039% 0.010% 0.015%
Profit before Tax (PBT) (Rs. in Crore) (3,386.02)
Remuneration (as % of PBT) NA* NA* NA*
TATA TELESERVICES LIMITED
26
21st Annual Report 2015-2016
Form No. MGT-9
EXTRACT OF ANNUAL RETURN
As on the financial year ended on March 31, 2016
[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies
(Management and Administration) Rules, 2014]
ANNEXURE – IV TO THE DIRECTORS’ REPORT
I. REGISTRATION AND OTHER DETAILS:
i) CIN U74899DL1995PLC066685
ii) Registration Date 23/03/1995
iii) Name of the Company TATA TELESERVICES LIMITED
iv) Category / Sub-Category of the Company Company limited by Shares/Indian Non Government Company
th v) Address of the registered office and contact details Jeevan Bharati Tower I, 10 Floor,124, Connaught Circus, New Delhi, 110001, Contact Nos. 011-23327072 / 022-66671414
vi) Whether listed company: Yes / No Yes, debentures of the Company are listed on National Stock Exchange of India Limited
vii) Name, Address and Contact details of Registrar XL Softech Systems Ltd., and Transfer Agent, if any 3, Sagar Society, Road No.2,
Banjara Hills, Hyderabad - 500 034Phone no.: 040-23545913
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-
Sr. No. Name and Description of main NIC Code of the % to total turnover products / services Product/ service of the company
1 Wired telecommunications activities 611 19%
2 Wireless telecommunications activities 612 81%
Sr.No Name and Address of CIN/GLN Holding/ Subsidiary/ % of shares heldthe Company Associate Section
1 Tata Sons LimitedBombay House, read with24 Homi Mody Street, SectionMumbai – 400001 2(87)(ii)
2 Tata Internet Services U72900DL1999PLC100313 Subsidiary Company 100% Section 2(46)Limited read with Jeevan Bharti Tower, Section
th10 floor, 2(87)(ii)124 Connaught Circus, New Delhi - 110001
Applicable
U99999MH1917PLC000478 Holding Company 67.35% Section 2(46)
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
27
Sr.No Name and Address of CIN/GLN Holding/ Subsidiary/ % of shares heldthe Company Associate Section
3 MMP Mobi Wallet Payment Systems read with Limited Section2A, Old Ishwar Nagar, 2(87)(ii)Main Mathura Road, New Delhi - 110065
4 VIOM Networks Limited* U72200DL2004PLC228400 Subsidiary Company 52.86% Section 2(46)D - 2, 5th Floor, read withSouthern Park, SectionSaket Place, Saket, 2(87)(ii)New Delhi - 110017
5 NVS Technologies U74140DL2014PLC271505 Subsidiary Company 100% Section 2(46)Limited read with2A, Old Ishwar Nagar, SectionMain Mathura Road, 2(87)(ii)New Delhi - 110065
6 Tata Teleservices L64200MH1995PLC086354 Associate Company 36.54% Section 2(6)(Maharashtra) LimitedVoltas Premises, T.B. Kadam Marg, Chinchpokli, Mumbai - 400033
7 Virgin Mobile India U64201MH2007PTC169408 Associate Company 50% Section 2(6)Private LimitedA & E Blocks, Voltas Premises, T.B. Kadam Marg, Chinchpokli, Mumbai – 400 033
*w.e.f. April 21, 2016 TTSL holding in Viom Networks Limited is 32.86%
Applicable
U64201DL2010PLC205811 Subsidiary Company 84.13% Section 2(46)
TATA TELESERVICES LIMITED
28
21st Annual Report 2015-2016
(A)
Pro
mo
ters
1)
Ind
ian
a.
Indiv
idual /
HU
F-
--
--
--
--
b.
Cen
tral G
ovt
.-
--
--
--
--
c.S
tate
Govt
.(s)
--
--
--
--
-
d.
Bod
ies
Corp
ora
te1704403691
-1
70
44
03
69
13
6.1
71
70
44
03
69
1-
17
04
40
36
91
36
.17
-
e.
Ban
ks /
FIs
--
--
--
--
-
f.A
ny O
ther
--
--
--
--
-
Su
b -
To
tal
(A)
(1)
1704403691
-1
70
44
03
69
13
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70
44
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69
1-
17
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40
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91
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.17
-
2)
Fo
reig
n
a.
NR
Is /
Indiv
iduals
--
--
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-
b.
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– I
ndiv
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--
--
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c.B
od
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Corp
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te1248974378
-1
24
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Ban
ks /
FIs
--
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e.
Any O
ther
--
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Su
b -
To
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(A)
(2)
1248974378
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24
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12
48
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To
tal S
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Pro
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(A
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-
(B)
Pu
blic S
hare
ho
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g
1)
Insti
tuti
on
s
a.
Mutu
al F
unds
--
--
--
--
-
b.
Ban
ks /
FIs
--
--
--
--
-
c.C
en
tral G
ovt
.-
--
--
--
--
d.
Sta
te G
ovt
.(s)
--
--
--
--
-
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Ven
ture
Capita
l Funds
--
--
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--
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f.In
sura
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Com
panie
s-
--
--
--
--
i) C
ate
go
ry-w
ise S
hare
Ho
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IV. S
HA
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HO
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PA
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Eq
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hare
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tal
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the
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(as
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)N
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the
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29
g.
FIIs
316043561
-3
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Fore
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48000000
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48
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ap
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unds
i.O
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(ple
ase
speci
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--
--
--
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-
Su
b –
to
tal
(B)
(1)
364043561
-3
64
04
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2)
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In
sti
tuti
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s
a.
Bod
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Corp
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i.In
dia
n1293018681
49
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29
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95
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79000000
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b.
Indiv
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--
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i.In
div
idual
--
--
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are
hold
ers
havi
ng
nom
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capita
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Rs.
1 L
akh
ii.In
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1394920207
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(2)
1758963768
49
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75
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13
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43
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(C)
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by
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or
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& A
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4712341837
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64
71
23
91
41
31
00
47
12
34
18
37
49
57
64
71
23
91
41
31
00
-
TATA TELESERVICES LIMITED
30
21st Annual Report 2015-2016
ii) Shareholding of Promoters
Sr. No.
Shareholder’s Name
Shareholding at the beginning of the year(as on April 1, 2015)
Shareholding at the end of the year(as on March 31, 2016) % change
in shareholding during
the yearNo. of Shares
% of total Shares of the
Company
% of Shares Pledged /
encumbered to total shares
No. of Shares
% of total Shares of the
Company
% of Shares Pledged /
encumbered to total shares
1 Tata Sons Limited 1704403691 36.17 - 1704403691 36.17 - NA
2 NTT DOCOMO Inc. 1248974378 26.50 - 1248974378 26.50 - NA
Total 2953378069 62.67 - 2953378069 62.67 - NA
(iii) Change in Promoters’ Shareholding (please specify, if there is no change)
Name of the Promoter
Shareholding at the beginning of the year (as on April 1, 2015)
Cumulative Shareholding during the year
No. of shares % of total shares of the Company
No. of shares
Sr.No.
% of total shares of the Company
1 Tata Sons Limited
At the beginning of the year 1704403691 36.17 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 1704403691 36.17 - -
2 NTT DOCOMO Inc.
At the beginning of the year 1248974378 26.50 -
Increase/decrease in shareholding No changes during the year
At the End of the year 1248974378 26.50 - -
1 Tata Communications Limited
At the beginning of the year 439863622 9.33 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 439863622 9.33 - -
2 The Tata Power Company Limited
At the beginning of the year 328397823 6.97 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 328397823 6.97 - -
3 Aranda Investments (Mauritius) Pte. Ltd.
At the beginning of the year 303888039 6.45 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 303888039 6.45 - -
4 Tata Industries Limited
At the beginning of the year 257186865 5.46 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 257186865 5.46 - -
5 Telecom Investments (Mauritius) Limited
At the beginning of the year 79000000 1.68 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 79000000 1.68 - -
6 IL & FS Trust Company Limited
At the beginning of the year 78500000 1.67 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 78500000 1.67 - -
7 Tata Steel Limited
At the beginning of the year 64692310 1.37 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 64692310 1.37 - -
31
(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
Sr.No. Name of the shareholder
Shareholding at the beginning of the year (as on April 1, 2015)
Cumulative Shareholding during the year
No. of shares % of total shares of the Company
No. of shares % of total shares of the Company
TATA TELESERVICES LIMITED
32
21st Annual Report 2015-2016
8 Tata Capital Financial Services Limited
At the beginning of the year 62250000 1.32 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 62250000 1.32 - -
9 2i Capital PCC
At the beginning of the year 48000000 1.02 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 48000000 1.02 - -
10 Siva Industries and Holdings Limited
At the beginning of the year 29909163 0.63 - -
Sale of shares on June 30, 2015 5 0.00 29909158 0.63
At the End of the year 29909158 0.63 - -
(v) Shareholding of Directors and Key Managerial Personnel:
Sr.No. Name of the Director/KMP
Shareholding at the beginning of the year (as on April 1, 2015)
Cumulative Shareholding during the year
No. of shares % of total shares of the Company
No. of shares % of total shares of the Company
1 Mr. Cyrus Pallonji Mistry
At the beginning of the year 7879063 0.17 - -
Increase/decrease in shareholding No changes during the year
At the End of the year 7879063 0.17 - -
2 Mr. Ishaat Hussain
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
3 Mr. Srinath Narasimhan
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
4 Mr. Kazuto Tsubouchi*
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
33
5 Mr. Hajime Kii
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
6 Mr. Ravi Lambah*
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
7 Dr. Narendra Damodar Jadhav
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
8 Ms. Bharati Rao
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
9 Ms. Vibha Paul Rishi
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
10 Mr. Hidetada Hayashi @
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
11 Dr. Gopichand Katragadda @
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
12 Mr. Bhaskar Chandran, President – Legal, Regulatory & Company Secretary
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
13 Mr. Anuraag Srivastava, Chief Financial Officer #
At the beginning of the year - - - -
Increase/decrease in shareholding No changes during the year
At the End of the year - - - -
* Resigned w.e.f. close of business hours on August 7, 2015@Appointed w.e.f. August 27, 2015# Appointed w.e.f. July 1, 2015
TATA TELESERVICES LIMITED
34
21st Annual Report 2015-2016
Sr. No. Particulars of Remuneration Name of MD/WTD/ TotalManager
Mr. Srinath Narsimhan, Managing Director
1. (a) Salary as per provisions contained in Section 17(1) 3,77,76,528 3,77,76,528of the Income-Tax Act, 1961
(b) Value of perquisites u/s 17(2) Income-Tax Act, 1961 32,39,999 32,39,999
(c) Profits in lieu of salary under Section 17(3) Income-Tax Act, 1961 - -
Gross Salary (a+b+c) 4,10,16,527 4,10,16,527
2. Stock Option Nil Nil
3. Sweat Equity Nil Nil
4. Commission Nil Nil
- as % of profit
- Others, specify…
5. Others, please specify 9,64,800 9,64,800
Total (A) 4,19,81,327 4,19,81,327
Ceiling as per the Act*
*Note: Ceiling limit for the remuneration of Managing Director is not applicable in view of the exemption under Schedule XIII to the Companies Act, 1956.
Indebtedness at the beginning of the financial year
(i) Principal Amount 25,809.57 1,273.00 - 27,082.57
(ii) Interest due but not paid - - - -
(iii) Interest accrued but not due 93.22 78.67 - 171.89
Total (i+ii+iii) 25,902.79 1,351.67 - 27,254.46
Change in Indebtedness during the financial year
Loan Addition 4,523.43 2,394.95 - 6,918.39
Loan Reduction -3,588.15 -273.00 - -3,861.15
Net change 935.29 -2,121.95 - 3,057.24
Indebtedness at the end of the financial year
(i) Principal Amount 26,744.92 3,394.95 - 30,139.87
(ii) Interest due but not paid - - - -
(iii) Interest accrued but not due 82.41 78.56 - 160.97
Total (i+ii+iii) 26,827.33 3,473.52 - 30,300.85
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for payment(Rs. in Crore)
Secured Loans excluding Deposits
Unsecured Loans
Deposits Total Indebtedness
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and / or Manager. (Amount in Rs.)
2. Other Non -
Executive
Directors
a. Fee for attending Rs. Rs. Rs. Rs. Rs.
board / committee - - - - 100,000 150,000 1,00,000 50,000 4,00,000
meetings
b. Commission - - - - - - - - -
c. Others, please
specify - - - - - - - - -
Total (2) - - - - Rs. Rs. Rs. Rs. Rs.
100,000 150,000 1,00,000 50,000 4,00,000
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Total (B) = (1+2) 9,00,000 8,50,000 5,00,000 - 100,000 150,000 1,00,000 50,000 26,50,000
Total Managerial
Remuneration -
Overall Ceiling as Not applicable as only sitting fees paid
per the Act
$ Resigned with effect from close of business hours on August 7, 2015
# Alternate Director to Mr. Hajime Kii
35
1. Independent
Directors
a. Fee for attending
board/committee Rs. Rs. Rs. Rs.
meetings 9,00,000 8,50,000 5,00,000 - - - - - 22,50,000
b. Commission - - - - - - - - -
c. Others, please
specify - - - - - - - - -
Rs. Rs. Rs. Rs.
Total (1) 9,00,000 8,50,000 5,00,000 - - - - - 22,50,000
B. Remuneration to other directors:
Sr. No.
Particulars of Remuneration
Name of the Directors Total
Dr. Narendra Damodar Jadhav
Ms. Bharati Rao
Ms. Vibha Paul Rishi
Sr. No.
Particulars of Remuneration
Name of the Directors
- - - - - -
Mr. Cyrus P.
Mistry
Mr. Ishaat
Hussain
Dr. Gopichand
Katragadda
Mr. Ravi
Lambah
Mr. Kazuto
Tsubouchi $
Mr. Hajime
Kii
Mr. Hidetada
Hayashi
Mr. Seiichi
Ikeda #
Total
Total
TATA TELESERVICES LIMITED
36
21st Annual Report 2015-2016
1 a. Salary as per provisions contained in 1,03,48,301 1,51,77,684 2,55,25,985section 17(1) of the Income-tax Act, 1961
b. Value of perquisites u/s 17(2) Income- Nil Nil Niltax Act, 1961
c. Profits in lieu of salary under section Nil Nil Nil17(3) Income-tax Act, 1961
Gross Salary (a+b+c)
2 Stock Option Nil Nil Nil
3 Sweat Equity Nil Nil Nil
4 Commission Nil Nil Nila. as % of profit Nil Nil Nil
b. Others, specify Nil Nil Nil
5 Others, please specify
a. Company's contribution to PF 3,82,500 4,64,676 8,47,176
b. Flexi Reimbursement 40,950 Nil 40,950
Total 1,07,71,751 1,56,42,360 2,64,14,111
#Remuneration for the period for FY 2015-16. Appointed as CFO with effect from July 1, 2015.
1,03,48,301 1,51,77,684 2,55,25,985
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD – FY 2015-16
(Amount in Rs.)
Sr. No.
Particulars of Remuneration
Key Managerial Personnel
Mr. Anuraag Srivastava #
(Chief Financial Officer) Mr. Bhaskar Chandran(Company Secretary)
Total
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
A. COMPANY
Penalty Nil Nil Nil Nil Nil
Punishment Nil Nil Nil Nil Nil
Compounding Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
B. DIRECTORS
Penalty Nil Nil Nil Nil Nil
Punishment Nil Nil Nil Nil Nil
Compounding Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
C. OTHER OFFICERS IN DEFAULT
Penalty Nil Nil Nil Nil Nil
Punishment Nil Nil Nil Nil Nil
Compounding Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
Type Section of the Companies
Act
Brief Description
Details of Penalty
/Punishment/ Compounding fees imposed
Authority [RD / NCLT/ COURT]
Appeal made, if any (give
Details)
For and on behalf of the Board of Directors
Cyrus P. MistryChairman
(DIN 00010178)
Place : MumbaiDate : June 27, 2016
37
FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016
[Pursuant to section 204(1) of the Companies Act, 2013 and the rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members
Tata Teleservices Limited,
10th Floor, Tower I, Jeevan Bharati,
124, Connaught Circus,
New Delhi 110001.
We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate
practices by Tata Teleservices Limited (hereinafter called “the Company”). Secretarial audit was conducted in a manner that
provided us a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing our opinion thereon.
Based on our verification of the Company's books, papers, minutes books, forms and returns filed and other records maintained by
the Company and also the information provided by the Company, its officer, agents and authorized representatives during the
conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year stended on 31 March, 2016, complied with the statutory provisions listed hereunder and also that the Company has proper Board
processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the company for the stfinancial year ended on 31 March, 2016 according to the provisions of:
(i) The Companies Act, 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder (during the year under review not applicable to the Company);
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'):-
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,2011(during the year under review not applicable to the Company);
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (during the year under review not applicable to the Company);
d. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (during the year under review not applicable to the Company);
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (during the year under review not applicable to the Company);
f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (during the year under review
not applicable to the Company); and
ANNEXURE – V TO THE DIRECTORS’ REPORT
Form No. MR-3
SECRETARIAL AUDIT REPORT
TATA TELESERVICES LIMITED
38
21st Annual Report 2015-2016
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (during the year under review not
applicable to the Company);
(vi) Telecom Regulatory Authority of India Act, 1997;
(vii) The Indian Telegraph Act, 1885;
(viii) The Indian Wireless Telegraphy Act, 1933;
We have examined compliance with the applicable clauses of the following:
a) Secretarial Standards issued by the Institute of Company Secretaries of India;
stb) Debt Listing Agreement entered with National Stock Exchange of India Limited for the period from 1 April 2015 to th30 November 2015 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
st stRegulations, 2015 for the period from 1 December 2015 to 31 March 2016;
During the period under review the Company has complied with the provisions of Act, Rules, Regulations, Guidelines etc.
mentioned above subject to the following observations:
The Company has not maintained 100% asset cover for the purpose of discharging the principal amount of the securities
as required under Regulation 54 of the Securities and Exchange Board of India (Listing obligations and Disclosure
Requirements) Regulations, 2015.
We further report that:
The Board of Directors of the Company is duly constituted with proper balance of the Executive Directors, Non-Executive Directors
and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review
were carried out in compliance with the provisions of the Act.
Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least
seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items
before the meeting and for meaningful participation at the meeting.
All decisions of the Board are carried through unanimously. As per the records provided by the Company, none of the member of the
Board dissented on any resolution passed at the meeting at the Board.
We further report that there are adequate systems and processes in the company commensurate with the size and operations of the
company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
We further report that during the audit period the Company had no specific events / actions having a major bearing on the Company's
affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc.
For Mehta & Mehta,
Company Secretaries(ICSI Unique Code P1996MH007500)
Dipti MehtaPartnerFCS No : 3667CP No. : 3202
Place : MumbaiDate : June 25, 2016
Note: This report is to be read with our letter of even date which is annexed as 'ANNEXURE A' and forms an integral part of this report.
•
39
Annexure A
To,
The Members
Tata Teleservices Limited,
10th Floor, Tower I, Jeevan Bharati,
124 Connaught Circus,
New Delhi 110001.
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an
opinion on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the
correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are
reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our
opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.
4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations
and happening of events etc.
5. The compliance of the provisions of corporate and other applicable laws, rules, regulations, standards is the responsibility of
management. Our examination was limited to the verification of procedures on test basis.
6. The secretarial audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness
with which the management has conducted the affairs of the Company.
For Mehta & Mehta,
Company Secretaries,
(ICSI Unique Code P1996MH007500)
Dipti Mehta
Partner
FCS No : 3667
CP No. : 3202
Place : Mumbai
Date : June 25, 2016
TATA TELESERVICES LIMITED
40
21st Annual Report 2015-2016
Your Directors present the Company's Report on Corporate Governance for the year ended March 31, 2016.
COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
Corporate Governance is set of practices followed to ensure that the affairs of the Company are managed in a way which would
ensure its accountability, transparency and fairness in all its transactions and meet its stakeholders' aspirations and social
expectations.
The Company believes in highest standards of good and ethical Corporate Governance practices. Good Governance practices stem
from the culture and mindset of the organization. It is also believed that Corporate Governance is not only about enacting regulations
and procedures but also maintaining and establishing an environment of trust and confidence among various stakeholders.
Corporate Governance is a journey for constantly improving sustainable value creation and is an upward moving target.
In order to adopt Corporate Governance practice in its true spirit, the Company has put in place “Tata Code of Conduct” for its
employees including Managing Director and senior management, which was revised during the year to align with changing cultural
and regulatory norms. In addition, the Company has also adopted a Code of Conduct for its Non-Executive Directors, which includes
duties of the Independent Directors as laid down in the Companies Act, 2013 (the “Act”). Further, the Company's Corporate
Governance philosophy has strengthened through the “Tata Code of Conduct for Prevention of Insider Trading and Code of
Corporate Disclosure Practices”.
TATA CODE OF CONDUCT
Tata Code of Conduct is a comprehensive document that serves as the ethical road map for the employees and the Company. It also
inter alia governs the conduct of business in consonance with national interest, fair and accurate presentation of financial statements,
being an employer providing equal opportunities to its employees, prohibition on acceptance of gifts and donations that can be
intended or perceived to obtain business or uncompetitive favors, practicing political non-alignment, safe and healthy environment
for its people, maintaining quality of products and services, being a good corporate citizen, ethical conduct and commitment to
enhancement of stakeholders' value.
AFFIRMATION TO CODE OF CONDUCT
All the Directors and senior management personnel have affirmed compliance with the Code of Conduct for the Financial Year ended
March 31, 2016.
TATA CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING AND CODE OF CORPORATE DISCLOSURE
PRACTICES
In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has adopted a code under the
nomenclature of 'Tata Code of Conduct for Prevention of Insider Trading and Code of Corporate Disclosure Practices' for prevention
of insider trading and ensuring timely and adequate disclosures of all Unpublished Price Sensitive Information in a transparent
manner.
BOARD OF DIRECTORS
Composition
As on March 31, 2016, the Board of Directors comprised of 9 (Nine) Directors. Of the 9 (Nine) Directors, 8 (Eight) (i.e. 88.88%) are
Non-Executive Directors and 1 (One) Managing Director. The Non-Executive Directors include 1 (One) Chairman and 3 (Three)
Independent Directors (including 2 (Two) Women Directors).
The Company has adopted the Governance Guidelines on Board Effectiveness (the “Governance Guidelines”) keeping in the view
the provisions of the Act. These Governance Guidelines, among other things, covers aspects related to composition of the Board, its
Committees with adequate numbers of Executive Directors, Non-Executive Directors and Independent Directors, effective discharge
of duties by individual Directors, the Board and its Committees in the best interest of stakeholders, appointment/retirement of
Directors and performance evaluation of the individual Directors, the Board and its Committees.
CORPORATE GOVERNANCE REPORT FOR THE FINANCIAL YEAR 2015-16
The composition of the Board is in conformity with the provisions of the Act. None of the Directors on the Board hold directorships in more than 10 public companies. The Company is managed by the Managing Director under the supervision and control of the Board. The Managing Director is assisted by a team of qualified and experienced professionals.
All the Directors of the Company, except Independent Directors, are liable to retire by rotation. The Company does not have any Nominee Director of Financial Institutions/Banks. The Board has agreed that Non-Executive Directors shall not be responsible for the day-to-day affairs of the Company.
The names and categories of Directors on the Board and the number of Chairmanships / Directorships on the Board held by each Director as on March 31, 2016 is given below. The Chairmanships / Directorships do not include Companies / bodies corporate incorporated outside India, but include Chairmanship/Directorship of the Company:
41
Mr. Cyrus P. Mistry, Chairman 00010178 Non-Executive None 10 3
Mr. Ishaat Hussain 00027891 Non-Executive None 4 6
Mr. Hajime Kii 05307704 Non-Executive None - 1
Dr. Narendra Damodar Jadhav 02435444 Independent, Non-Executive None - 3
Ms. Bharati Rao 01892516 Independent, Non-Executive None - 10
Ms. Vibha Paul Rishi 05180796 Independent, Non-Executive None - 10
Mr. Hidetada Hayashi 07263942 Non-Executive None - 1
Dr. Gopichand Katragadda 02475721 Non-Executive None - 4
Mr. N. Srinath, Managing Director 00058133 Executive None - 6
Name of the DirectorDirector
Identification
Number
CategoryRelationship
with other
Directors
No. of Directorships
Chairman Member
Mr. Kazuto Tsubouchi and Mr. Ravi Lambah ceased to be directors of the Company w.e.f. close of business hours on August 7, 2015.
Board Meetings
The Board met at least once in each quarter and the time gap between two Board Meetings did not exceed the limit prescribed in the Act. 5 (Five) meetings of the Board were held during the Financial Year ended on March 31, 2016 viz. May 15, 2015, May 27, 2015, August 7, 2015, November 2, 2015 and February 9, 2016. The details of participation of the Directors of the Company during the Financial Year ended March 31, 2016 in Board Meetings of the Company are as under:
Mr. Cyrus P. Mistry, Chairman 5 4
Mr. Ishaat Hussain 5 5
Mr. Kazuto Tsubouchi 3 2*
Mr. Hajime Kii 3 3
Mr. Seiichi Ikeda 2 1@
Dr. Narendra Damodar Jadhav 5 5
Ms. Bharati Rao 5 4
Ms. Vibha Paul Rishi 5 4
Mr. Ravi Lambah 3 1*
Mr. Hidetada Hayashi 2 2$
Dr. Gopichand Katragadda 2 2$
Mr. Srinath Narasimhan,Managing Director 5 4
Name of the DirectorNumber of Meetings during FY 2015-16
Held Attended
TATA TELESERVICES LIMITED
42
21st Annual Report 2015-2016
* Ceased to be directors of the Company w.e.f. close of business hours on August 7, 2015.
@ Attended 2 meeting as Alternate Director to Mr. Hajime Kii (one through Audio Conference).
$ Appointed as Directors of the Company with effect from August 26, 2015.
Familiarisation program for Independent Directors
At the time of appointment of an Independent Directors, a formal letter of appointment is given to him/her, which inter alia explains the
role, function, duties and responsibilities expected of him/her as a Director of the Company. The Independent Directors of the
Company were also provided with the necessary documents/brochures, reports and internal policies to familiarize them about the
telecom industry, business operations of the Company and functioning of various divisions / departments of the Company.
COMMITTEES OF THE BOARD
Audit Committee
The Composition of Audit Committee of the Board is in conformity with the provisions of Section 177 of the Act. As on March 31, 2016,
the Audit Committee comprised of 5 (Five) Members, all of them are Non-Executive Directors and 3 (Three) of whom are
Independent Directors. The Committee functions under the Chairmanship of Mr. Ishaat Hussain. The Audit Committee meetings are
also attended by the Managing Director, Chief Financial Officer, Statutory Auditors and Internal Auditors. The functional heads are
also invited as and when required. The Company Secretary acts as the Secretary to the Committee.
The Audit Committee met at least once in each quarter. During the Financial Year 2015-16, 8 (Eight) Audit Committee Meetings were
held on the following dates:
May 15, 2015; May 27, 2015; June 11, 2015; August 7, 2015; October 12, 2015; November 2, 2015; December 3, 2015 and February
9, 2016.
The composition of the Committee and number of meetings attended by the Members of the Committee during the Financial Year
2015-16 is as follows:
Mr. Ishaat Hussain,Chairman Non-Executive 8 8
Mr. Ravi Lambah Non-Executive 4 0*
Dr. Narendra Damodar Jadhav Independent, Non-Executive 8 8
Ms. Bharati Rao Independent, Non-Executive 8 7
Ms. Vibha Paul Rishi Independent, Non-Executive 8 5@
Dr. Gopichand Katragadda Non-Executive 4 3$
Name of the MemberNumber of Meetings during FY 2015-16
Held AttendedCategory
@ Attended 1 meeting through Audio Conference and 1 meeting through skype.
* Ceased to be the Member of the Committee w.e.f. close of business hours on August 7, 2015.
$ Appointed as Member of the Committee w.e.f. August 26, 2015.
The key terms of reference of Audit Committee includes appointment of Statutory and Internal Auditors, review of financial
statements, review of quarterly/half yearly results, review of internal audit plans and reports, review of internal controls, review of
related party transactions, among others.
Financial Results, internal audit reports, fraud-related reports, half yearly results, management letters from Auditors, proposals and
terms of appointment of Internal Auditors have been regularly placed before the Audit Committee for review during the Financial Year
2015-16.
43
Nomination and Remuneration Committee
The Composition of Nomination and Remuneration Committee (“NRC”) of the Board is in conformity with the provisions of Section
178 of the Act. As on March 31, 2016, NRC comprised of 3 (Three) Members, all of them are Non-Executive Directors and 2 (Two) of
them are Independent Directors. During the Financial Year 2015-16, the Committee met on May 15, 2015, May 27, 2015, September
18, 2015 and February 10, 2016.
The composition of the Committee and number of meetings attended by the Members of the Committee during the Financial Year
2015-16 is as follows:
Mr. Ishaat Hussain, Chairman Non-Executive 4 4
Dr. Narendra Damodar Jadhav Independent, Non-Executive 4 4
Ms. Bharati Rao Independent, Non-Executive 4 4
Name of the MemberNumber of Meetings during FY 2015-16
Held AttendedCategory
The key terms of reference of Nomination and Remuneration Committee, inter alia, include identification of persons qualified to be
appointed as Directors, Key Managerial Personnel and who may be appointed in Senior Management, recommending remuneration
policy for them, evaluation of performance of Directors.
Corporate Social Responsibility Committee
The Composition of Corporate Social Responsibility (“CSR”) Committee of the Board is in conformity with the provisions of Section
135 of the Act. As on March 31, 2016, CSR Committee comprised of 3 (Three) Members. During the Financial Year 2015-16, the
Committee met on February 10, 2016.
The composition of the Committee and number of meetings attended by the Members of the Committee during the Financial Year
2015-16 is as follows:
Dr. Narendra Damodar Jadhav Independent, Non-Executive 1 1
Ms. Bharati Rao Independent, Non-Executive 1 1
Mr. N. Srinath Executive 1 1
Name of the MemberNumber of Meetings during FY 2015-16
Held AttendedCategory
The terms of reference of CSR Committee are as follows:
i) To frame the CSR Policy, subject to the approval by the Board.
ii) To make the necessary and required modifications and variations in the CSR Policy, subject to the approval by the Board.
iii) To determine the amount to be expended towards the CSR activities, if any, subject to the minimum limits prescribed by the Act.
iv) To perform such other functions as may be necessary under any statutory or other regulatory requirements to be performed by
the Committee and as delegated by the Board from time to time.
In addition to the above, some other Committees of the Board are as follows:
i) Executive Committee inter alia to review business and strategy related approvals, long-term financial projections and cash
flows, capital and revenue budgets and capital expenditure programmes, acquisitions, divestments and business restructuring
proposals, senior management succession planning;
TATA TELESERVICES LIMITED
44
21st Annual Report 2015-2016
ii) Finance Committee for inter alia considering and approval of the proposal for availing various loan / credit facilities and other
treasury related matters within the powers delegated by the Board; and
iii) Share/Warrant/ Debenture Allotment and Transfer Committee inter alia to issue and allot shares / debentures and transfer of
shares / debentures.
DIRECTORS' REMUNERATION
The Company has adopted the Remuneration Policy for its Directors, Key Managerial Personnel and other employees of the
Company, which has been annexed to the Directors' Report which forms part of this Annual Report.
None of the Non-Executive Directors have any material pecuniary relationship or transaction with the Company.
Sitting fees of Rs. 50,000/- per head per meeting were paid to the Non-Executive Directors for attending meetings of the Board and
Committees thereof. However, some Non-Executive Directors do not accept sitting fees.
The Company also reimburses the out-of-pocket expenses incurred by the Directors for attending Meetings and for the business of
the Company.
The Company pays remuneration by way of salary, allowances, retiral benefits, perquisites, and performance pay to its Managing
Director. Annual Increments and Performance Linked Incentives are decided by the Nomination and Remuneration Committee
within the salary scale approved by the Members of the Company.
None of the Directors have been issued any stock options by the Company during the year or anytime in the past.
The details of remuneration/sitting fees paid by the Company to its Directors during the Financial Year 2015-16 are as follows:
A) Non - Executive Directors
Dr. Narendra Damodar Jadhav 9,50,000
Ms. Bharati Rao 8,50,000
Ms. Vibha Paul Rishi 5,00,000
Mr. Kazuto Tsubouchi 1,00,000
Mr. Hajime Kii 1,50,000
Mr. Seiichi Ikeda 50,000
Mr. Hidetata Hayashi 1,00,000
Name of the Director Sitting Fees (Amount in Rs.)
B) Managing Director
Mr. N. Srinath 80,40,000 72,36,536 45,91,329 2,25,00,000 4,23,67,865
* Incentive remuneration of Mr. N. Srinath for the Financial Year 2015-16 was approved by Nomination and Remuneration
Committee on June 25, 2016.
(Amount in Rs.)
Name of the Director Salary AllowancesRetirals &
Perquisites**
Performance
Pay*Total
45
GENERAL BODY MEETINGS
Till date, the Company has held 20 (Twenty) Annual General Meetings (AGMs). The details of the last 3 (Three) AGMs are as under:
Particulars Date Venue
th18 Annual General Meeting September 27, 2013 New Delhi
th19 Annual General Meeting September 29, 2014 New Delhi
th20 Annual General Meeting September 30, 2015 New Delhi
No Special Resolutions were passed in the above referred AGMs.
DISCLOSURES
Disclosure on Related Party Transactions
All transactions entered into with Related Parties as defined under the Act during the Financial Year were in the ordinary course of
business and on an arm's length pricing basis and do not attract the provisions of Section 188 of the Act. All Related Party
Transactions were approved by the Audit Committee. There were no such related party transactions during the year which in the
opinion of the Board may have potential conflicts with the interests of the Company at large. Apart from paying sitting fees, there was
no pecuniary transaction undertaken by the Company with the Independent/Non-Executive Directors during the Financial Year
ended March 31, 2016. Transactions with related parties are disclosed in the Notes to the Financial Statements in the Annual Report.
Details of compliance with Capital Market Laws
There has neither been any non-compliance on the part of the Company on any matter related to capital markets during the last three
years nor have any penalties or strictures been imposed on the Company in this respect.
As required under the listing agreement for debt securities, for the Financial Year 2015-16, the Company has submitted to the
National Stock Exchange of India Limited, half yearly Financial Results and other information as required under the said Agreement.
Disclosure on Whistle Blower Policy
The Company has adopted a Whistle Blower Policy, which affords protection and confidentiality to whistle blowers. The Audit
Committee Chairman is authorized to receive Protected Disclosures from whistle blowers under this policy. The Audit Committee is
also authorized to supervise the conduct of investigations of any disclosures made by whistle blowers in accordance with policy. No
personnel of the Company has been denied access to the Audit Committee.
MEANS OF COMMUNICATION
The half yearly and annual financial results are published in an English newspaper, “The Statesman”.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on the Management Discussion and Analysis forms part of the Annual Report for Financial Year
2015-16.
GENERAL SHAREHOLDER INFORMATION
Financial Year
The Company follows the April – March, Financial Year. The Financial Results for first half year are generally published in the month of November and Annual audited Financial Results are generally published in the month of May.
TATA TELESERVICES LIMITED
46
21st Annual Report 2015-2016
Listing on Stock Exchange
The Company's non-convertible debentures are listed on the following exchange:
The National Stock Exchange of India Limited (NSE)thExchange Plaza, 5 floor, Plot No. C/1, 'G' Block,
Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.
The Company has paid annual listing fees to the stock exchange within the stipulated time.
Registrar and Share Transfer Agents
The Company has appointed XL Softech Systems Limited as its Registrar & Share Transfer Agents. Shareholders are advised to approach XL Softech Systems Limited on the following address for any shares & demat related queries:
XL Softech Systems Limited
3, Sagar Society, Road No. 2, Banjara Hills,
Hyderabad – 500 034
Tel.: 91 040 23545913, 14, 15
Fax: 91 044 23553214
E-mail: [email protected]
Share Transfer System
All physical share transfers are handled by the Company. The transferee is required to furnish the transfer deed duly completed in all respects together with the share certificates to the Company at the corporate office address in Mumbai in order to enable Company to process the transfer. As regards transfers of dematerialized shares, the same can be effected through the demat accounts of the transferor/s and transferee/s maintained with recognized Depository Participants.
Distribution of Equity Shareholding
The broad Equity shareholding distribution of the Company as on March 31, 2016 with respect to categories of investors was as follows:
Indian 36.17
Foreign 26.50
Foreign Investors (FIIs / FVCI / NRIs / OCBs / Foreign
Banks / Foreign Corporate Bodies) 9.40
Indian Financial Institutions / Banks / Mutual Funds 0.00
Other Bodies Corporate / Companies 27.44
Individuals 0.49
TOTAL 100.00
36.17
26.50
9.40
0.00
27.44
0.49
100.00
Category of InvestorsPercentage of Equity Shareholding
As on March 31, 2016 As on March 31, 2015
Promoters
Dematerialization of Shares
As of March 31, 2016, 99.99 % of the total equity shares issued by the Company have been dematerialized. The equity shares of the
Company are available for dematerialisation with National Securities Depository Limited (NSDL).
Address for correspondence
Shareholders are requested to direct all shares related and non-shares related correspondence/queries to the Company addressed
to the Company Secretary at the Corporate Office of the Company at Mumbai. However, shareholders holding shares in electronic
mode (dematerialized) should address all shares related correspondence to their respective Depository Participants only.
47
TELECOM INDUSTRY DEVELOPMENTS
Global Telecom Industry
The mobile industry continues to scale rapidly, with a total of 7.6 Billion connections at the end of 2015 with unique subscribers at
about 4.6 Billion. Roughly half of the world's population now has a mobile subscription, up from just one in five about 10 years ago. By
2020, this is expected to scale up to three-fifths of the global population, with close to one Billion new subscribers added over the
period. The global mobile connections increased by about 5% in the year 2015.
MANAGEMENT DISCUSSION AND ANALYSIS
Global mobile data traffic grew at an estimated 74% in 2015 with Middle East and Africa having the highest growth rate followed by
Asia Pacific, Latin America and Central and Eastern Europe. North America grew at an estimated 55%, a rebound from an unusually
low growth rate of 26% in 2014. Western Europe trailed North America slightly in 2015. At the country level, Indonesia, China and
India led the global growth. The increasing number of wireless devices that are accessing mobile networks worldwide is one of the
primary contributors to global mobile traffic growth. Each year several new devices with increased capabilities are introduced in the
market. Globally, smart devices represented 36 percent of the total mobile devices and connections in 2015; they accounted for 89
percent of the mobile data traffic. In 2015, on an average, a smart device generated 14 times more traffic than a non-smart device.
Indian Telecom Industry
Globalization has made telecommunications an integral part of the infrastructure of the Indian economy. The mobile industry in India
has scaled dramatically over the years to become one of the country's biggest success stories. With over 1 Billion connections and
925 Million Visitor Location Register (“VLR”) subscribers, India continues to be the world's second largest telecommunications'
market, next only to China. In 2015, VLR subscribers in India grew by about 9% which was above the global growth of connections at
5%. India is also the third-largest smartphone market in the world. There were 185 million smartphone connections as of mid-2015.
With technology migration already under way and accelerating, more than 40% of mobile connections are forecasted to be running
over mobile broadband networks by 2020.
Mobile services and connectivity which two decades ago could have been termed as a luxury, has quickly evolved into a basic need
and is already on a path to becoming more than that. Society today has made itself so used to telecommunications that it affects us in
all aspects of our life – social, work, health, finance, education and the list goes on. Communication is a hugely important aspect not
just for individuals but also small and large scale businesses to the extent that the global economy would probably collapse if it was to
be taken away.
1.4
1.0
1.0
1.1
1.1
1.91.81.71.61.51.3
0.9
1.0
0.5
0.8
0.9
5.4
6.1
1.0
0.9
0.6
1.0
1.0
6.5
1.1
0.9
0.7
1.0
1.1
1.31.4
6.9
0.9
0.8
1.1
1.1
0.9
0.9
1.1
1.1
7.37.6
APAC (Exl. India, China)
Source: GSMA Intelligence
Americas
Europe
Africa
India
2010 2011 2012 2013 2014 2015
Global Connections (Billion)
China
TATA TELESERVICES LIMITED
48
21st Annual Report 2015-2016
The teledensity in India still lags compared to other major economies of the world. As can be seen from the chart, even countries with
similar demographic and economic profiles such as Brazil, China and Russia have achieved much higher penetration of mobile
services.
Wireless Teledensity in Major Countries
Further, it is interesting to note that India's teledensity is characterized by high penetration in some service areas, while others have
still not seen a large scale adoption yet. There exists a stark difference in the rural and urban teledensity in India. As of March 31, 2016
the urban teledensity was 149% while the rural teledensity was still at 51%. A logical inference drawn out of the fact is that a significant
proportion of the population of India, which is approximately half of the entire rural population of India, is still waiting to be connected.
That is a significant group of subscribers which are going to get added to the telecom networks in the coming years. This is
challenging for telecom service providers. On one hand the network coverage needs to be expanded for more inclusion while on the
other hand the urban subscribers demand more and more bandwidth with lesser delays over existing networks.
The road to a comprehensive solution seems even steeper when combined with the fact that the busy-hour traffic as compared to the
average-hour traffic is increasing significantly each year. One of the key factors affecting the busy-hour traffic in relation to average
traffic growth is the higher than ever streaming of video over mobile networks. Video usage tends to occur during evening hours and
has a “prime time”, unlike general web usage that occurs throughout the day. As a result, more video usage means more traffic during
the peak hours of the day. Globally, mobile busy-hour traffic is expected to be 88 percent higher than average-hour traffic by 2020,
compared to 66 percent in 2015.
And things are far from slowing down. In India, the mobile data traffic is expected to increase 12 times between 2015 and 2020 from
148.9 Petabytes per month to 1.7 Exabytes per month. Mobile video traffic on the other hand, which is about 40% of the total data
traffic today, is expected to grow 20 times between 2015 and 2020. This will take mobile data to about 70% of the total data traffic.
This anticipated quantum of traffic means the need to invest intelligently in networks with better and more efficient means to support
the traffic. Telecom service providers have been scaling up their network with increase in capital expenditure in the recent past.
The Company is continuously evaluating and improving its network as well as operational strategy to be able to satisfy the increasing
needs of the evolved new age customers.
KEY REGULATORY DEVELOPMENTS / LITIGATIONS
Spectrum Sharing
Department of Telecommunications (“DoT”) has notified the guidelines for spectrum sharing on September 24, 2015. The salient
features of the guidelines are as follows:
234%
178%
159%
155%
149%
147%
139%
124%
120%
120%
110%
108%
92%
81%
74%
80%
73%
Source - International Telecommunications Union 2014
Hong Kong
U.A.E.
Argentina
Russia
South Africa
Singapore
Brazil
U.K.
Germany
Japan
U.S.A.
Spain
China
Zimbabwe
Bangladesh
India
Pakistan
•
administrative allocation, sharing is allowed only after paying the One Time Spectrum Charges (“OTSC”) or in case the matter
is subjudice, Bank Guarantee equivalent to demand raised by DoT to be submitted.
• All access spectrums including traded spectrum will be sharable provided that both licensees are having spectrum in same
band.
• Spectrum Usage Charges (“SUC”) rate of each of the licensees post sharing shall increase by 0.5% of the Adjusted Gross
Revenue (“AGR”); for the purpose of charging SUC, licensees shall be considered as sharing their entire spectrum holding in
the particular band in the entire Licensing Service Area (“LSA”).
• For Spectrum cap, the prescribed limit shall be applicable for both licensees individually, Spectrum holding of any licensee post
sharing shall be counted after adding 50% of the spectrum held by other licensee in the band.
Spectrum Trading
DoT has issued Spectrum Trading Guidelines on October 12, 2015. The salient features of the guidelines are as follows:
• Permitted between two access providers only on outright transfer basis. Original validity of the spectrum shall remain.
• Spectrum for which latest market determined price has been paid is only allowed to be traded.
• Spectrum acquired through auction can be traded only post 2 years of the acquisition.
• On consideration received from trading licence fee & SUC shall be payable.
• SUC is applicable on the total quantum of spectrum, including spectrum acquired through trading.
Harmonization of Spectrum in 800 & 1800 MHz:
Harmonization in 1800 MHz Band:
• Out of 75 MHz of spectrum in 1800 MHz band, 55 MHz has been earmarked for commercial mobile service and 20 MHz for
Defence band.
• As part of harmonization exercise, operators holding spectrum in Defence band will move from Defence band to commercial
band and vice versa.
• In the run-up to the spectrum auction in 2016, DoT has initiated the harmonization exercise in 1800 MHz band. Implementation
is in progress and likely to be completed before the auction.
Harmonization in 800 MHz Band:
• With a view to increase spectrum efficiency and exploring the possibility to make more spectrums available, harmonization
exercise has started in 800 MHz Band as well.
Policy on Liberalization of Administratively Allocated Spectrum in 800 & 1800 MHz:
DoT has issued guidelines for liberalization of administratively allocated spectrum in 800 & 1800 MHz bands on November 5, 2015.
The salient features of the guidelines are as follows:
• Telecom Service Providers (“TSPs”) can get their administratively allocated spectrum converted into liberalized spectrum for
the remaining validity of their licences after payment of latest auction determined price on pro-rata basis.
• OTSC will be charged up to the date of liberalization.
• Entire holding of administrative spectrum in a circle has to be liberalized.
• TSPs to get refund of entry fee paid on pro-rata basis for the remaining validity of licence.
Spectrum Auction
Telecom Regulatory Authority of India (“TRAI”) recommendation on Valuation and Reserve Price of Spectrum in 700, 800, 900, 1800,
2100, 2300 and 2500 MHz Bands:
Both types of spectrum, acquired through auction and/or administratively allotted spectrum can be shared; in case of
49
TATA TELESERVICES LIMITED
50
21st Annual Report 2015-2016
Spectrum Availability
• 700 MHz: Entire available spectrum (2x35MHz) in the 700 MHz band to be put up in upcoming auction.
• 800 MHz: DoT to carry out carrier re-assignment in 800 MHz band to ensure contiguity and that entire spectrum available for
commercial use is put to auction. On the Company's surrendered spectrum, such spectrum not to be kept idle and DoT will take
appropriate legal remedies to put it in the upcoming auction.
• 1800 MHz: DoT must complete harmonization in 1800 MHz band with Defence and TSPs before upcoming auctions and entire
spectrum so made available should be up for bidding preferably in block of 5 MHz.
• 2100 MHz: Entire available spectrum in 2100 MHz band, including spectrum taken back from STEL, should be put to auction.
Spectrum Cap
• Spectrum cap remains unchanged at 25% of the 'total spectrum assigned' in 700/800/900/1800/ 2100/2300/2500 MHz bands
and 50% within a given band in a LSA.
Regulation on Prohibition of Discriminatory tariffs for Data Services
TRAI, on February 8, 2016, released the Regulation on Prohibition of Discriminatory tariffs for Data Services.
• The key features of the Regulation includes that no service provider shall offer or charge discriminatory tariffs for data services
on the basis of content or enter into any arrangement, agreement or contract, with any person, that has the effect of
discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the
prohibition in this regulation. Service Provider may reduce tariff for accessing or providing emergency services, or at times of
public emergency.
• Consequences of contravention of the regulation – In addition to direction of withdrawal of such tariff, TRAI may also order such
Service Provider to pay, by way of financial disincentive, an amount of Rs. 50,000 to Rs. 50 Lakh for each day of contravention.
Dual Technology
The challenge by Cellular Operators Association of India to the Government of India's Dual Technology Policy is pending before the
Supreme Court (“SC”). The matter is expected to be listed in due course.
3G Rollout Obligation
• The Company has completed the 3G rollout obligations as per the License Amendment dated September 1, 2010 in all eight
circles.
3G Intra Circle Roaming (“ICR”)
• Telecom Disputes Settlement and Appellate Tribunal (“TDSAT”) judgment pronounced on April 29, 2014 held that intra-circle
3G roaming arrangements do not violate any licence provisions.
• DoT has filed an appeal before SC and also an application seeking stay on the judgment passed by TDSAT. DoT's appeal was
admitted, while no interim relief was granted by SC.
Adjusted Gross Revenue (“AGR”) Definition
• TDSAT has pronounced its judgment in April 2015, wherein the impugned demands have been set aside by the Tribunal and it
has directed the DoT to rework the licence fee payable for the duration which was challenged.
• Both, DoT and the Company (as well as other operators), have filed their respective appeals against the aforesaid judgment of
Hon'ble TDSAT. The matter had come up for hearing in Hon'ble SC on February 29, 2016, wherein SC has said that DoT will
continue to raise the demands as per its understanding, however, the same will not be enforced till the final decision in the
matter.
One Time Spectrum Charges (“OTSC”)
•
spectrum). The demand is with effect from January 1, 2013 till expiry of licence.
• The Company filed a Writ Petition before High Court of Kolkata challenging the demand.
• Subsequently, the Company:
o Retained 1.25 MHz (out of excess 2.5 MHz) in Delhi, and surrendered the balance 1.25 MHz and
o Also surrendered excess beyond 2.5 MHz spectrum in other circles.
• The Company agreed to pay OTSC charges for spectrum retained in Delhi under protest without prejudice (in installments) and
completed the surrender of excess spectrum by November 30, 2013.
• Estimated liability on account of retaining excess spectrum in Delhi (from January 1, 2013 till expiry of licence) is Rs. 195 Crore
The Company has paid four installments (out of eight) of OTSC for retaining excess 1.25 MHz spectrum in Delhi amounting to
Rs. 132 Crore.
• The matter is to be listed in due course.
Electromagnetic Frequency (“EMF”) Radiation Penalty
• On November 4, 2008, DoT amended the Licence Agreement mandating licensees to conduct audits and provide self-
certificates (pertaining to radiation levels of cell sites) annually.
• On October 11, 2012, DoT while laying down “Scheme of Penalty in case of violation of terms and conditions of Licence and
Related Instructions on the matter of EMF Radiations” prescribed a uniform penalty of Rs. 5 Lakh for each instance & levied
demand retrospectively from May 2010.
• Operators have filed five Joint Industry petitions before the TDSAT challenging the Circular dated October 11, 2012 as it
empowers DoT to levy penalty on operators for the delayed submission of self-certificates; main ground of challenge being that
the clauses of the Circular are arbitrary and discriminatory in nature as these prescribe totally disproportionate penalty for the
alleged delayed submission of Self Certificates.
• Hon'ble TDSAT has allowed the main Petition No. 271 of 2013 on March 29, 2016 and held that the scheme of penalty under
Circular No. October 11, 2012 is unreasonable, unjust & unfair and that no penalty can be sustained. No BTSes in respect of
which self certificate was submitted by March 31, 2011 can be held liable for penalty for non-submission/delayed submission.
DoT to formulate a fresh scheme in light of the recommendations of the Committee constituted by it on July 26, 2013 and the
observations made in the present judgment. The total demand under this petition was Rs. 360 Crore. Rest of the petitions (total
of 4) on Signage, EMF testing, shared Sites, Rajasthan EMF penalty amounting to approximately Rs. 281 Crore is pending
adjudication. So far, the Company has received 155 Show Cause Notices for Rs. 653 Crore and 116 Demand Notes for
Rs. 584 Crore. The Company has filed its reply to all the SCNs.
RDEL Matters – Bihar and Rajasthan
• The Universal Services Obligation (“USO”) Fund (USOF) authority has sought refund of subsidy in Bihar and Rajasthan
Circles, which was disbursed pursuant to USO undertaken by the Company in terms of the USO Agreement.
• The Company has invoked arbitration in terms of the USO Agreement and the matter is pending before the Ld. Sole Arbitrator.
RISKS AND CONCERNS
This section discusses the various aspects of enterprise- wide risks management. It might be noted that the risk related information
outlined here is not exhaustive and is for information purpose only.
The Company received a demand note towards OTSC of Rs. 863 Crore for CDMA spectrum beyond 2.5 MHz (excess
51
TATA TELESERVICES LIMITED
52
21st Annual Report 2015-2016
The Company has formulated a well defined and dynamic enterprise risk management (“ERM”) program. The program is governed
by a comprehensive risk management policy, which, amongst others, includes the risk management governance structure and the
risk management process.
A Central Risk Office has been established to actively monitor the risk management process. Results of the risk management
activities are periodically presented to the Risk Steering Committee and Audit Committee of the Board of Directors.
The risk management process enables proactive identification, recording, tracking of risks and monitoring of mitigation plans to
respond to changes in business and regulatory environment. The risk management process is embedded in all facets of Company's
work systems, thereby reassuring all stakeholders, customers, investors, employees and partners of the Company's business
sustainability.
The ERM framework aims to realize the following benefits for the organization:
1. Enhance risk management;
2. Facilitate risk based decision making;
3. Improve governance and accountability;
4. Enhance credibility with key stakeholders such as investors, employees, government, regulators, society, etc. ;
5. Protect and enrich stakeholder value.
The Company is exposed to a number of risks such as market risks, spectrum renewal risks, regulatory risks, technology risks,
financing risks and competition risks. An effective and dynamic risk management process enables the Company to manage and
mitigate the impact of these risks. The key risks facing the Company include:
1. Market Risk
In the last 20 years the growth in mobile services has been driven largely by voice. The driver of growth for the future is expected
to be data services. We are already seeing the positive growth opportunities on the back of 3G and now, more recently, 4G
service offerings in the market from other players. The gap to the competition in terms of the spectrum and network
infrastructure investments that would be required for the company to be able to compete on a comparable footing is vast and
growing. The Company would not be able to make those level of investments given its current position and consequently would
be weaker than other players in the market especially as data becomes more and more the engine for growth.
2. Spectrum Renewal Risk
The licence of the Company and the associated administered spectrum allocated in the past in Andhra Pradesh (“AP”) circle is
coming up for renewal in September 2017. In order to be able to continue its mobile services in AP in an effective manner, it is
imperative that the Company wins back enough spectrum in key bands in this circle. There is a possibility that the market
auction demand for spectrum will far exceed what becomes available and is put up for auction. Consequently, bidding could be
aggressive by other operators and the Company may not be able to acquire the required spectrum at a cost that is supported by
its business cases and its ability to fund the spectrum. The ability of the Company to continue operations in mobility would be
severely compromised in this circle, if it dose not win back enough spectrum. Winning back enough spectrum at an affordable
price is key to continuing mobile operations in this circle.
Risk Escalation and Control
Managing Materialized Risks Risk Monitoring and Review
Risk Identification Risk Assessment Risk Prioritization Risk Response
Exte
rnal
En
vir
on
me
nt In
tern
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nviro
nm
en
t
Fra
mew
ork
53
3. Regulatory Risks
Telecom Policies in areas of dual technology licence, allocation of spectrum, EMF radiation, green technology issues, security
guidelines and the decision to charge OTSC within contracted quantum of spectrum etc. have led to litigation and these issues
are now pending before various courts.
The Company's licences and spectrum allocations are for fixed periods and are renewable for additional terms subject to
approvals and successful bidding in future auctions.
4. Technological Risks
The technological landscape within the telecom industry continues to change rapidly. New services offerings such as 4G are
being launched by competition and these products would compete with the existing voice and data offerings of the Company
and could impact its current market share and pricing. CDMA technology has continued to witness a gradual decline globally.
Such changes in technology may require the Company to invest in newer technologies – both spectrum and capex, which
would demand significant capital investments.
5. Financing Risks
The Company may not be able to raise adequate capital to meet its spectrum and capital expenditure requirements or the terms
of raising fresh capital may not be in line with past terms and conditions and / or may be subject to such covenants which may be
challenging for the Company to adhere to thereby impacting the costs of not only incremental capital but also existing debt
adversely.
The Company has experienced difficulties in its borrowing programs in the past when the telecom sector was faced with
uncertainties and continued uncertainty around various business and regulatory parameters may continue to affect the ability
of the Company to raise additional funds from Banks and Financial Institutions.
The Company as on March 31, 2016 was in breach of financial covenants set under various loan agreements. However, the
breach has been cured within the permissible cure period on receipt of divestment proceeds of Viom stake sale on
April 21, 2016.
6. Competition Risks
The Indian telecommunication industry continues to witness intense competition. Over the past year, the focus of the telecom
companies has shifted from voice to the high growth domain of data services. Efforts by operators (existing and new) to
penetrate 3G services further and 4G services offerings could further intensify competition in data services. Competition also
creates need for continued significant expenditure on marketing and advertising to ensure sustainability and growth of the
Company's revenues. The increasing popularity of the same frequencies of 2G for providing 4G services (eg. 1800 MHz) is
further adding to the intensity of demand for that band and at a time when operators like ourselves have to renew that spectrum
to sustain even our 2G customers. While the Company will ensure all efforts to sustain and grow its revenues, due to factors
beyond the control of the Company, the Company may not be successful or fall short of its targets.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
An Audit Committee of the Board of Directors has been constituted as per the provisions of Section 177 of the Companies Act, 2013
(the “Act”).
The internal audit for various functions/aspects is conducted by the independent firms, which conduct reviews and evaluation and
present their reports to the Audit Committee and the management at regular intervals.
The Internal Auditors' Reports dealing with internal control systems are reviewed by the Audit Committee and appropriate actions are
taken, wherever necessary.
OPPORTUNITIES AND THREATS
Opportunities
The evolving Indian telecom market continues to provide operators with new growth opportunities.
• In the spectrum auctions concluded in March 2015, the industry players have committed Rs. 109,875 Crore to acquire
spectrum in the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands. Such large investments made by telecom operators to
acquire spectrum could possibly lead to upward pressures on tariffs during the next year.
• The Indian wireless data market is in its nascent stage. The projected increase in smartphones' penetration levels (4 to 5 times
between 2014 to 2019) will lead to faster growth of the data services in coming years and provide the operators with an
opportunity to focus on servicing data needs of the consumer and acquire a share in this segment.
• New business services such as Wi-Fi etc. provide potential for the operators to expand the breadth of their services and remain
relevant in the market.
• Wireline data services continue to be an attractive opportunity and your Company is benefiting from the optical fibre
infrastructure it has in its key markets.
• Emerging applications and service areas are expected to be another source of market growth in the future eg. mobile
payments.
Thus increase in data volumes and the availability of new applications and services coupled with the increasing penetration of
smartphones, is expected to be the key growth enablers in the near future.
Threats
A stable regulatory and economic environment is critical for realizing the telecom sector's growth potential.
Further the competitive intensity in the telecommunications sector is expected to remain a challenge for all service providers due to
launches by new operators, introduction of new technologies, aggressive pricing and marketing practices and fierce competition in
bidding for spectrum.
HUMAN RESOURCES (“HR”)
With the changing workforce dynamics and business requirements, it is important to streamline the Company's HR practices to cater
to organizational needs more effectively. The Company continued to focus on capability building and talent development during the
year, with the ultimate objective of increased higher productivity of employees.
The Company developed its new learning and development model which emphasizes on functional needs of the employees and is an
evolution over its previous editions. This has been developed in line with the global trends and the need for employees to keep pace
with rapid changes in their respective fields.
The Company also continued the automation and centralization of its processes with the goal of improving efficiency of the
employees and the organization.
The Company had a total of 5,513 employees on its rolls as on March 31, 2016 against 6,247 as on March 31, 2015.
QUALITY AND PROCESSES
The Company was awarded ISO 27001:2013 (Information Security Management System) certification and ISO 22301:2012
(Business Continuity Management System) certification by BSI in May 2015.
The Company adopted Value based audit approach for process audits which focuses on Quality of process design, Quality of
inputs to the process and Quality of conformance to process requirements. In this approach emphasis is on business outcomes, such
as, customer satisfaction & profitability. The business processes were audited on parameters like manpower competency, efficiency
and effectiveness of IT applications and work methods as well as management of key process indicators.
A knowledge repository of business processes (QPR) was created, to enable enhanced customer delivery, at multiple dimensions – Competency building of new process performers, Accelerating re-engineering & process simplification efforts, as a
TATA TELESERVICES LIMITED
54
21st Annual Report 2015-2016
55
reference for compliance audits and Aiding development & enhancement of IT systems. Priority for completion was given to critical business processes.
A periodic review of performance of these processes, anchored by BE function, is done using ''lead KPIs.'' Low performing areas trigger structured root cause analysis and correction and more complex challenges are addressed through cross functional projects. The Company chose over 40 such projects this year and approached them using the FITT (Framework for Improvement in Tata Teleservices), a tool set developed in-house. Benchmarking and adoption of best practices, both within and outside the industry, have been institutionalized as part of FITT framework.
In order to sustain the gains achieved through these projects and also to empower line managers to deliver consistently in their day to day operations, the company undertook Daily Work Management System (DWMS) as a new initiative. The Pilot results have been encouraging.
The Company has introduced Certification based Competency Program on Business Excellence. The objective is to build an empowered workforce, with the right competencies, tools and authority to continuously improve their work and business processes in a structured manner, thus managing and ensuring positive impact on critical KPIs relating to customer, profitability or growth; Make structured improvement and process management a way of working and Build appreciation and an ability to understand, design and manage the interconnected 'systems perspective' in the middle and senior leadership roles. Operational excellence programs for Junior and middle management are 'QUICK' certification and 'QUICK PLUS' certification; Business excellence programs for Senior management relating to TBEM (Tata Business Excellence Model) form a part of the Competency program.
Relevant Business Excellence and Operational Excellence certification is now an additional criterion for employee growth over and above the career movement guidelines.
The Company promotes a culture of innovation and has provided various forums / platforms for employees to post innovative ideas and suggestions against business challenges and to showcase their innovations.
KEY FINANCIAL INFORMATION & OPERATIONAL PERFORMANCE
Revenue from Telecommunications service
As on March 31, 2016 the Company had a total wireless subscriber base of 50 Million as compared to previous year level of 56 Million. There was a reduction in subscriber base of CDMA technology by about 26% while the subscriber base for GSM fell by 7%.
CDMA technology is a part of a globally diminishing ecosystem, and has seen a gradual decline in customer base as well as revenue over the last few years. GSM technology although new for the Company is a part of a growing ecosystem and so far, the growth in GSM has compensated for the decline in CDMA.
The Company's service revenue for the year ended March 31, 2016 reduced slightly to Rs. 10,588 Crore as against Rs. 10,873 Crore in the previous year
Telecommunication Service Revenue (Rs. in Crore)
9,897
2011-12 2012-13 2013-14 2014-15 2015-16
10,708
10,353
10,873
10,588
TATA TELESERVICES LIMITED
56
21st Annual Report 2015-2016
Owing to a reduction in subscribers' base, operating revenue fell by 2.60% during the year. Revenue growth from GSM and wireline
operations were better at about 2% and 10% respectively while the CDMA operations witnessed a decline in revenue by about 24%.
Other Income
Other income during the year stood at Rs. 121 Crore (Previous year Rs. 93 Crore).
Operating expenses
Operating expenses including provision for contingencies for the year were recorded at Rs. 8,976 Crore as against Rs. 9,911 Crore in
the previous year. The major components of the total operating expenses are as follows –
Operating Expense in %
•
Interconnect Usage Charges (“IUC”) on incoming traffic due to change in IUC regulations effective from March 2015.
• Power and fuel expenses remained flat at 11% of the total cost.
• There was also a reduction in total employee costs during the year as compared to the previous year, as a result of Company's
initiatives to keep the operating costs in check.
Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”)
The focus during the last couple of years for the Company has been on optimizing its operations and increasing the asset utilizations.
Due to these efforts, the Company continues to witness an improvement in the EBITDA. EBITDA margin significantly increased to
16% in the current year from 10% in the previous year.
Access costs dropped significantly from 28% in the previous year to 24%. This was primarily on account of change in
27%
19%
11%
8% 1%
24%
11%
Access Charges
License fees and spectrum charges
Cost of goods sold
Employee Benefit Expense
Power & Fuel
Rent
Other Expenses
EBITDA (Rs. in Crore)
1,732
1,055
188
(91)
(487)
2011-12 2012-13 2013-14 2014-15 2015-16
57
Net loss
The Company's loss before exceptional items was Rs. 3,000 Crore as compared to last year's level of Rs. 3,846 Crore. However, the
Company has recorded a provision for diminution in value of investment in TTML of Rs. 386 Crore which is recognized as an
exceptional item. The reported net loss for the Company was Rs 3,386 Crore.
Balance Sheet
The share capital of the Company (including securities premium) stood at Rs. 20,767 Crore which excluded Rs. 5,141 Crore of equity
share capital and reserves & surplus adjusted against the debit balance of profit and loss account in the year ended March 31, 2009
pursuant to the scheme of arrangement and restructuring as approved by Hon'ble High Court.
Shareholders' Funds was Rs. 10,762 Crore (Negative) as at March 31, 2016 against Rs. 8,371 Crore (Negative) as at
March 31, 2015.
Total borrowing for the Company (including long term borrowing, short term borrowing, current maturities of long term borrowing and
deferred spectrum liability) was Rs. 30,140 Crore as compared to Rs. 27,083 Crore in the previous year.
The Net Block (including tangible as well as intangible assets) as at March 31, 2016 increased to Rs. 16,356 Crore as compared to
Rs. 14,548 Crore in the previous year.
OUTLOOK
The outlook for the Company continues to be positive with the telecom sector continuing to offer opportunities, both in voice and data,
to quality operators in the long run.
Albeit a late entrant, the Company's GSM business has witnessed healthy growth driven by a focus on the growing subscriber base,
process improvement across business lines and brand strength. The Company continues to focus on profitable revenue growth, with
specific focus on data, tapping the growing data market.
The broad strategy of the Company would revolve around:
1) Renewing Spectrum and continuing Mobile Operations
The immediate focus of the company is to renew spectrum in its Andhra Pradesh circle that would enable it to carry on
operations in this circle when the licenses and spectrum expire in September 2017. It is imperative that the company gets
adequate spectrum at an affordable price and within its ability to fund in an increasingly competitive environment.
2) Driving profitable growth
The Company has been striving for the last few years to expand its operating profit margins and various initiatives have already
starting bearing fruits of the same. The operating profit has been growing as a result of bold initiatives undertaken by the
Company to keep a check on costs while growing the revenue steadily.
3) Customer centricity and process improvements
The Company is plowing a two pronged approach. On one end it is improving the customer's experience with everyday services
such as billing, collections, call centers as well as improving the overall experience at all critical touch points with the customer.
On the other end, the Company is also concentrating on providing differentiated services to its best customers which include
exclusive retention tools and schemes, special help desks at retail stores and empowered employees for faster resolution of
any concerns.
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
4) Stronger organization
The Company plans to continue investing in its strongest assets which are the employees. There is a framework laid out to
ensure that the Company engages in quality hiring, building its leadership capability and maintaining a strong emotional
connect with its employees.
The aforementioned strategy of the Company is subject to the risks and concerns highlighted above.
Also, to tap the emerging opportunities in new-generation services, the Company has a dedicated team to focus on non-voice
services, which will be the driver of revenues and margins in the future. Several services have been launched already such as home
surveillance, smart tracking solutions, m-commerce and other machine-to-machine solutions. The changing needs of the customers
will necessitate that the Company continue to evolve with the market if they are to truly provide value and remain competitive on a
sustained basis.
The expectations / forecast in the reports are in the opinion of the management and may not necessarily fructify.
To the Members of Tata Teleservices Limited
Report on the Standalone Financial Statements
We have audited the accompanying financial statements of Tata Teleservices Limited (‘the Company’), which comprise the balance
sheet as at March 31, 2016, the statement of profit and loss and cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Standalone Financial Statements
The Company’s Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”)
with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial
performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the
Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This
responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for
safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application
of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design,
implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and
fair view and are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account
the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report
under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on
Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control
relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, its loss and its cash
flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the ‘Annexure 1’ a statement on the matters specified in paragraphs 3 and
4 of the Order.
INDEPENDENT AUDITOR’S REPORT
59
2. As required by section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit;
(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our
examination of those books;
(c) The balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the
books of account;
(d) In our opinion, the aforesaid standalone financial statements comply with the accounting standards specified under
section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the
Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms
of section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating
effectiveness of such controls, refer to our separate Report in ‘Annexure 2’ to this report; and
(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies
(Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given
to us:
i. The Company has disclosed the impact of pending litigations on its financial statements [Refer Note 30(iii), 31 and
33 to the financial statements];
ii. The Company has made provision, as required under the applicable law or accounting standards, for material
foreseeable losses, if any, on long-term contracts [Refer Note 38(b) to the financial statements];
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the
Company.
For S.R. Batliboi & Associates LLPChartered AccountantsICAI Firm Registration Number: 101049W/E300004
per Prashant SinghalPartnerMembership Number: 93283
Place: MumbaiDate: June 24, 2016
TATA TELESERVICES LIMITED
60
21st Annual Report 2015-2016
61
Annexure 1 referred to in paragraph 1 under the heading Report on other legal and regulatory requirements of our Report of
even date
Re: Tata Teleservices Limited (‘the Company’)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets were physically verified by the management in the previous year in accordance with a planned
programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the
Company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties
included in fixed assets are held in the name of the company.
(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material
discrepancies were noticed on such physical verification.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to
companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the
Companies Act, 2013. Accordingly, the provisions of clause 3(iii) of the Order are not applicable to the Company and hence not
commented upon.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and
securities granted in respect of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and hence
not commented upon.
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central
Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the
telecommunication services, and are of the opinion that prima facie, the specified accounts and records have been made and
maintained. We have not, however, made a detailed examination of the same.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund,
income-tax, service tax, employees’ state insurance, value added tax, sales tax, duty of custom, cess and other material
statutory dues. The provisions relating to duty of excise are not applicable to the Company.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund,
income-tax, service tax, employees’ state insurance, value added tax, sales tax, duty of custom, cess and other material
statutory dues were outstanding, at the year end, for a period of more than six months from the date they became
payable.
(c) According to the records of the Company, the dues outstanding of income tax, sales tax, service tax, value added tax and
other statutory dues on account of any dispute, are as follows:
TATA TELESERVICES LIMITED
62
21st Annual Report 2015-2016
Andhra Pradesh Value VAT demand on telephone 0.15 1999-2000 Deputy Commissioner (CT),
Added Tax Act, 2005 instruments Sales Tax Tribunal, Nampally,
Hyderabad
Andhra Pradesh Value Added VAT demand on 0.14 1.6.05 to C T O, Nampally circle,
Tax Act, 2005 telecommunication and 31.5.06 Hyderabad
service revenue.
Andhra Pradesh VAT Demand 0.16 2011-12 to ADCCT, Nampally circle,
Value Added Tax Act, 2005 2013-14 Hyderabad
Bihar Entry of Goods into Entry tax demand 2.08 2004-05 & A.C, Patliputra
Local Areas for Consumption, 2006-07
Use or Sale therein
(Amendment and Validation)
Act, 2008
Bihar Value Added Tax VAT demand - against 0.07 2006-07 ACCT, Patliputra Circle, Patna
Act, 2005 utilization of entry tax credit
Bihar Value Added Tax VAT Demand 0.01 2005-06 AC-Patna
Act, 2005
Bihar Value Added Tax VAT Demand 0.47 2005-06 CCT, Patna
Act, 2005
Bihar Value Added Tax VAT Demand 0.12 2013-14 DC-Patliputra, Patna
Act, 2005
Delhi Value Added Tax VAT demand 0.02 2009-10 JC , Mobile Squard Agra
Act, 2004
Haryana Entry Tax Act Entry tax demand 8.23 2004-05 to The Hon’ble Supreme
2008-09 Court of India
Himachal Pradesh Tax on Entry tax demand 0.41 2010-11 The High Court, Shimla
Entry of Goods into Local
Area Act, 2010
Himachal Pradesh Tax on Entry tax demand 0.11 2013-14 & Addl. Excise & Taxation
Entry of Goods into Local 2014-15 Commissioner, Shimla
Area Act, 2010
Jammu & Kashmir Entry Tax Entry tax demand 3.62 2008-09 The High Court, Srinagar
on Goods Act, 2000
Jammu & Kashmir General General sales tax 16.09 2008-09 The High Court, Srinagar
Sales tax, 1962 demand on services
Kerala Value Added Tax VAT demand 0.20 2004-05 STAT (Addl Bench), Kerala
Act, 2003
Name of the Statute Nature of DuesAmount
(Rs crores)
Period to which amount
relates
Forum where disputes pending
Kerala Value Added Tax VAT demand 0.09 2009-10 Commercial tax inspectorAct, 2003
Kerala Value Added Tax VAT demand 0.01 2011-12 The Intelligence Inspector, Act, 2003 Squad No. III, Malappuram at
Kottakkal, Camp at Walayar
Madhya Pradesh VAS revenue demand 11.70 2011-12 The High Court, JabalpurEntertainments Duty and onwardsAdvertisements Tax Act, 1936
Madhya Pradesh Entry Entry tax demand 3.53 2005-06 to 2007-08 The High Court, JabalpurTax Act, 1976
Madhya Pradesh Entry Entry tax demand 5.99 2006-07, 2008-09 DCCT, BhopalTax Act, 1976 & 2009-10
Madhya Pradesh Entry Entry tax demand 3.06 2010-11 to Commercial Tax Dept, BhopalTax Act, 1976 2013-14
Madhya Pradesh Entry Entry tax demand 0.19 2008-09 Assistant Commissioner of Tax Act, 1976 Commercial Taxes, Raipur
Odisha Sales Tax Act, 1947 Demand for mis match of F 0.03 2005-06 CCT (Appeals), OrissaForms and VAT demand
Orissa Entry Tax Act, 1999 Entry tax demand 11.66 2006-07 to 2010-11 The High Court, Cuttack
Punjab Value Added Tax VAT demand 0.02 2005-06 Deputy Excise and Taxation Act, 2005 Commissioner CUM Joint
Director (ENF) Punjab, Patiala
Punjab Value Added VAT penalty 0.05 2007-08 Deputy Excise and Taxation Tax Act, 2005 Comm. cum Joint Director
(Mobile Wing) Jalandhar, Punjab.
Punjab Value Added Tax VAT and CST demand 0.12 2009-10 Deputy Excise & Taxation Act, 2005 Commissioner (Appeals),
Punjab
Rajasthan Entry Tax - Entry tax demand 0.03 2014-15 The Hon’ble Supreme Goods Act, 2003 Court of India
Rajasthan Value Added VAT demand 0.01 2007-08 AC , Commercial Taxes, JaipurTax Act, 2003
Rajasthan Value Added VAT demand 0.04 2008-09 & 2009-10 CTO, Office of Commercial Tax Act, 2003 Taxes, Jaipur
Tamil Nadu Value added Tax VAT demand 0.21 2013-14 DC Appeals (Commercial Tax), Greams Road, Chennai
The Bombay Provincial NMMC Assessment - 3.20 2009-10 to 2011-12 The Bombay High CourtMunicipal Corporations DemandAct, 1949
The Finance Act, 1994 Service tax on import 2.04 2004-2007 CESTAT, Mumbaiof service
The Finance Act, 1994 CENVAT Denial on Towers, 3.28 2004-2011 The Supreme Court of IndiaShelters
Name of the Statute Nature of DuesAmount
(Rs crores)
Period to which amount
relates
Forum where disputes pending
63
64
Name of the Statute Nature of DuesAmount
(Rs crores)
Period to which amount
relates
Forum where disputes pending
The Finance Act, 1994 Notice rejecting adjustment 0.16 2003-04 Commissioner Appeals,of excess billing Mumbai
The Finance Act, 1994 Service tax on sale of SUK 43.95 October 2006 to CESTAT, New Delhi2013-14
The Income Tax Act, 1961 Appeal against 1.40 2005-06, CIT(A) XIX, Delhire-assessment Order u/s 2006-07 & 2010-11115WE(3) read with sec 115WH
The Income Tax Act, 1961 Tax u/s 201(1) and interest 0.05 2004-05 The High Court, Delhiu/s 201(1A)
The Income Tax Act, 1961 Tax u/s 201(1) and interest 26.35 2006-07 to 2010-11 ITAT, Delhiu/s 201(1A)
The Income Tax Act, 1961 Tax u/s 201(1) and interest 0.47 2004-05 to 2008-09 CIT(A) Chandigarhu/s 201(1A)
The Income Tax Act, 1961 Tax u/s 201(1) and interest 0.03 2005-06 to 2007-08 CIT(A)-II, Hyderabadu/s 201(1A)
The Income Tax Act, 1961 Tax u/s 201(1) and interest 12.83 2009-10 The High Court, Hyderabadu/s 201(1A)
The Income Tax Act, 1961 Tax u/s 201(1) and interest 0.88 2006-07 Commissioner of Income Taxu/s 201(1A) (Appeals), Chennai
The Maharashtra Value Demand against 0.59 2005-06 & 2008-09 Sales Tax officer, MumbaiAdded Tax Act, 2002 disallowance of F-Forms
The Maharashtra Value VAT demand 8.39 2006-07 & 2009-10 Joint Commissioner, MumbaiAdded Tax Act, 2002
Uttar Pradesh Tax on Entry of Entry tax demand 0.30 2006-07 to 2014-15 The High Court, AllahabadGoods into Local Areas Act,2007
Uttar Pradesh Value Added VAT demand on 0.17 2004-05, 2005-06 Commercial Tax Tribunal. Tax Act,2008 telephone rentals & 2007-08 U.P., Lucknow
Uttar Pradesh Value Added VAT demand on 0.56 2006-07 & 2007-08 Jt. Comm.(Appeal), LucknowTax Act,2008 telephone rentals
Uttar Pradesh Value Added VAT demand 0.22 2008-09 Appeal before JC (A) (onTax Act,2008 merit) and Tribunal (for stay)
Uttar Pradesh Value Added VAT demand 0.01 2009-10 Asst. Commissioner ofTax Act,2008 Commercial Tax, Ghaziabad
Uttar Pradesh Value VAT demand 0.04 2007-08 Deputy Commissioner, Added Tax Act,2008 commercial Taxes, Lucknow
Uttar Pradesh Value VAT demand 0.27 2008-09, 2011-12, DC-Circle, Lucknow CTOAdded Tax Act,2008 2012-13
Uttar Pradesh Value VAT demand on 0.54 2009-10 Additional Commissioner Added Tax Act,2008 telephone rentals Appeal- grade-2
Uttar Pradesh Value Added VAT demand on 0.02 2010-11 Department appealTax Act,2008 telephone rentals
TATA TELESERVICES LIMITED
21st Annual Report 2015-2016
65
Name of the Statute Nature of DuesAmount
(Rs crores)
Period to which amount
relates
Forum where disputes pending
West Bengal Entry Tax, 2003 Entry tax demand 1.89 2012-13 to 2015-16 CTO-Park street Charge, Kolkata
West Bengal Sales Tax VAT demand 0.84 2004-05 ACCT (Appeal), South KolkataAct, 1994
(viii) In our opinion, and according to information and explanations given by the management, the Company had not defaulted in repayment of dues to any financial institution, bank or debenture holders.
(ix) In our opinion and according to information and explanations given by the management, monies raised by the company by way of term loans were applied for the purpose for which the loans were obtained, though idle/surplus funds which were not required for immediate utilization have been gainfully invested in liquid investments payable on demand. The maximum amount of idle/surplus funds invested during the year was Rs 300 crs, of which Rs 150 crs was outstanding at the end of the year.
The Company has not raised any money way of initial public offer / further public offer hence, reporting under clause (ix) for initial public offer / further public offer is not applicable to the Company and hence not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud / material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For S.R. Batliboi & Associates LLPChartered AccountantsICAI Firm Registration Number: 101049W/E300004
per Prashant SinghalPartnerMembership Number: 93283
Place: MumbaiDate: June 24, 2016
Annexure 2 to the Independent Auditor’s report of even date on the standalone financial statements of Tata Teleservices
Limited Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the
Act’)
We have audited the internal financial controls over financial reporting of Tata Teleservices Limited (‘the Company’) as of
March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control
over financial reporting criteria established by the Company considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of
India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were
operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting
records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit.
We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the
“Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the
Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over
financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over
financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining
an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected
depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the
internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also,
66
TATA TELESERVICES LIMITED
21st Annual Report 2015-2016
projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the
internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and
such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control
over financial reporting criteria established by the Company considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of
India.
For S.R. Batliboi & Associates LLPChartered AccountantsICAI Firm Registration Number: 101049W/E300004
per Prashant SinghalPartnerMembership Number: 93283
Place: MumbaiDate: June 24, 2016
67
Notes March 31, 2015 EQUITY AND LIABILITIES
Shareholders’ funds
Share capital 3 8,217.03 Reserves and surplus 4 (16,587.97)
(8,370.94)Non-current liabilities
Long-term borrowings 5 24,644.11
Other long term liabilities 6 84.55
Long-term provisions 7 6.87
24,735.53
Current liabilities
Short-term borrowings 8 1,528.40
Trade payables 9 443.22
Other current liabilities 9 3,783.17
Short-term provisions 7 322.60
6,077.39
TOTAL 22,441.98
ASSETS
Non-current assets
Fixed assetsTangible assets 10 8,634.57 Intangible assets 11 5,913.17 Capital work-in-progress 12 155.36
Non-current investments 13 2,017.95 Non-current loans and advances 14 2,153.51 Other non-current assets 19 78.82
18,953.37
Current assetsCurrent investments 15 1,775.00 Inventories 16 25.55 Trade receivables 17 670.61 Cash and bank balances 18 427.19 Current loans and advances 14 451.69 Other assets 19 138.57
3,488.61
TOTAL 22,441.98
Summary of significant accounting policies 2
March 31, 2016
9,212.46
(19,973.99)
(10,761.53)
27,082.56
77.32
-
27,159.88
719.03
477.14
5,045.84
229.48
6,471.49
22,869.84
7,599.318,756.69
119.541,645.221,512.42
50.77
19,683.95
796.23 20.30
523.69 355.82
1,368.51 121.34
3,185.89
22,869.84
BALANCE SHEET AS AT MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The accompanying notes are an integral part of the financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLPICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 24, 2016 Date: June 24, 2016
TATA TELESERVICES LIMITED
68
21st Annual Report 2015-2016
69
Notes March 31, 2015
REVENUE
Revenue from operations 20 10,873.12
Other income 21 92.58
Total revenue 10,965.70
EXPENSES
Access charges 2,759.38
License fees and spectrum charges (revenue share) 904.99
Cost of goods sold 22 109.70
Employee benefit expenses 23 791.15
Power and fuel 24 1,073.01
Rent 25 1,682.36
Other expenses 26 2,590.33
Total expenses 9,910.92
Earnings before interest, tax, depreciation and amortisation (EBITDA) 1,054.78
Depreciation and amortisation expense 27 (2,260.79)
Finance cost 28 (2,757.79)
Finance income 29 96.46
Foreign exchange gain/ (loss), net 21.18
Loss for the year before exceptional items and tax (3,846.16)
Exceptional items 13(f) -
Loss for the year before tax (3,846.16)
Provision for tax - -
Loss for the year (3,846.16)
Earnings per equity share [nominal value of share Rs 10 each]
Basic and diluted (in Rs) 42 (8.16)
Summary of significant accounting policies 2
March 31, 2016
10,587.66
120.77
10,708.43
2,114.44
949.56
68.50
706.33
995.14
1,720.42
2,422.01
8,976.40
1,732.03
(2,026.94)
(2,824.29)
120.14
(1.23)
(3,000.29)
(385.73)
(3,386.02)
(3,386.02)
(7.19)
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The accompanying notes are an integral part of the financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLPICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 24, 2016 Date: June 24, 2016
TATA TELESERVICES LIMITED
TELESERVICESTATA
70
21st Annual Report 2015-2016
Notes March 31, 2015CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year before exceptional items (3,846.16)
Non-cash adjustment to reconcile profit before tax to net cash flows:
Depreciation and amortisation 2,260.79
Foreign exchange, net unrealised loss / (gain) (20.27)
Provision for doubtful debts and advances 40.91
Provision for irrecoverable & damaged assets 5.78
Provision for contingencies and forseeable losses (net of payments) (62.28)
Finance cost 2,757.79
Interest Income (28.74)
Profit on sale of investment (67.72)
Liabilities no longer required written back -
Profit on sale of fixed assets, net (7.13)
Operating Profit before working capital changes 1,032.97
Adjustment for changes in:
(Increase) / Decrease in inventories (12.38)
Decrease in Trade receivables 113.67
Increase in non- current loans and advances, other assets (67.35)
Decrease in current loans and advances, other assets 60.59
Decrease in other long term liabilities & provision (1.45)
Decrease in other current liabilities & provision (136.75)
Cash generated from operations 989.28
Direct taxes (paid), net of refund (193.27)
NET CASH FLOW FROM OPERATING ACTIVITIES (A) 796.01
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of tangible assets (512.57)
Net Movement (Increase) / Decrease to CWIP 55.25
Net movement (Increase) / Decrease to Capital Advances (2.54)
Acquisition of Intangible assets,net (0.94)
Proceeds from sale of tangible assets 28.38
Purchase of investments in mutual funds (17,876.02)
Sale of investments in mutual funds 16,299.24
Investments in subsidiary (13.10)
Investment in bank deposits (having original maturity of more than three months) (1,188.53)
Redemption/maturity of bank deposits (having original maturity of more than three months) 1,647.07
Redemption in bank deposits (having original maturity of more (4.97)than twelve months)
Interest received 33.31
NET CASH FLOW (USED IN) INVESTING ACTIVITIES (B) (1,535.42)
March 31, 2016
(3,000.29)
137.88
(3.95)
(37.99)
2,824.29
(18.49)
(101.65)
(18.79)
(0.01)
1,832.65
5.25
9.04
(11.23)
107.65
(14.10)
(125.29)
1,803.97
(97.40)
1,706.57
(533.91)
35.82
(246.70)
(829.53)
15.07
(17,486.86)
18,567.28
(13.00)
(555.49)
486.97
4.97
17.91
(537.47)
2,026.94
24.72
CASH FLOW STATEMENT AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
71
Notes March 31, 2015
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 1,024.43
Repayment of Debentures - (1,000.00)
Proceeds from Long term borrowings 9,555.50
Repayment of Long term borrowings (3,949.07)
Proceeds from Short term borrowings 3,043.80
Repayment of Short term borrowings (5,346.49)
Finance set up cost (non-current) (11.20)
Finance set up cost (current) (69.37)
Interest paid [Includes premium on redemption of debentures (3,037.99)Rs.NIL crores (March 2015- Rs. 299.94 crores)]
NET CASH FLOW FROM FINANCING ACTIVITIES (C) 209.61
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) (529.80)
OPENING BALANCE OF CASH AND CASH EQUIVALENTS 828.82
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 299.02
NOTES TO CASH FLOW STATEMENT
Cash and cash equivalents include : 18
Cash on hand 3.17
Cheques in hand 43.36
Balances with scheduled banks:
Current accounts 133.85
Deposit Accounts 251.78
Cash & bank balances as per balance sheet 432.16
Less: Fixed deposits not considered as cash equivalents 133.14
CASH AND CASH EQUIVALENTS 299.02
Summary of significant accounting policies 2
March 31, 2016
995.43
2,336.34
(962.50)
1,874.61
(2,676.89)
23.08
(41.27)
(2,857.79)
(1,308.99)
(139.89)
299.02
159.13
2.80
19.59
96.28
237.15
355.82
196.69
159.13
CASH FLOW STATEMENT AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The accompanying notes are an integral part of the financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLPICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 24, 2016 Date: June 24, 2016
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21st Annual Report 2015-2016
1. Background
Nature of business
Tata Teleservices Limited (the 'Company' or 'TTSL'), part of the Tata Group, became a pan-India telecom operator in
January 2005. The Company has Unified Access (Basic and Cellular) Service License ('UASL') to operate in 17 circles and
National Long Distance ('NLD') license to provide the NLD services within India.
The Company has 3G spectrum in 8 Circles namely - Gujarat, Karnataka, Kerala, Punjab, Haryana, Uttar Pradesh (West),
Rajasthan and Madhya Pradesh. The Company has also won certain blocks of spectrum during the auction held in
March, 2015. The Company has opted for the deferred payment scheme and has received Letter of Intent ('LOI') by the
Government of India ('GoI') for most of the spectrum won (Refer note 32).
On November 12, 2008, the Company, Tata Sons Limited ('TSL') and NTT DOCOMO, Inc. ('DOCOMO') entered into definitive
agreements for the acquisition of 26 per cent equity stake (on a fully diluted basis) by DOCOMO in TTSL. As at March 31, 2016,
DOCOMO holds 26.50 per cent (March 31, 2015 – 26.50 percent) stake in TTSL.
Under the Share Subscription Agreement ('SSA') dated November 12, 2008 with DOCOMO, the Company and TSL have jointly
and severally agreed to indemnify DOCOMO within the agreed limits, against (i) claims arising on account of any failure of the
warranties provided by the Company and TSL to be true and correct in all respects, (ii) any material breach by the Company or
TSL of any covenants or other provisions of SSA to the extent such covenants or provisions are not capable of specific
performance; and (iii) in respect of specified contingent liabilities.
On April 25, 2014, the Company and Tata Sons have received intimation from DOCOMO, informing DOCOMO's decision to
exercise the put option as per SSA.
Project Financing / Fund Update
As of March 31, 2016, the Company has incurred a loss of Rs 3,386.02 crores (March 31, 2015- Rs. 3,846.16 crores) and it has
accumulated losses of Rs. 31,528.56 crores (March 31, 2015- Rs. 28,142.54 crores) which has fully eroded its net worth. The
Company also has current liabilities of Rs. 3,414.18 crores (March 31, 2015- Rs 3,638.94 crores) and loans Rs. 3,057.31 crores
(March 31, 2015- Rs. 2,438.45 crores) are due for repayment in the next financial year.
Based on the undrawn loan facilities, approved loan sanction facilities, working capital management and plan for monetizing
investment in subsidiaries, the Company is confident of meeting its repayment obligations, operating and capital expenditure
requirements for the next twelve months.
2 Basis of preparation of financial statements
The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in
India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the
accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies
(Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost
convention, except for derivative financial instruments which have been measured at fair value and revaluation carried out.
The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
Summary of significant accounting policies
2.1 Use of estimates
The preparation of financial statements in conformity with India GAAP requires the management to make judgments, I3
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
73
contingent liabilities, at the end of the reporting period. Although these estimates are based upon management's best
knowledge of current events and actions, uncertainty about this assumptions and estimates could result in the outcome
requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
2.2 Tangible fixed assets
Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. The Company capitalizes direct
costs including taxes, duty (net of CENVAT credit), freight and incidental expenses directly attributable to the acquisition and
installation of fixed assets. Capital work-in-progress is stated at cost. Provision for slow moving assets is made based upon a
periodic technical evaluation and aging of the capital assets.
With respect to capitalization of exchange differences arising on reporting/settlement of the long term foreign currency
monetary items, refer note 2.16.
Subsequent expenditure related to an item of fixed asset is added to its book value only if increases the future benefits from the
existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including
day- to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for
the year during which such expenses are incurred.
2.3 Depreciation on tangible fixed assets
Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated
by the management. The Company has used the following rates to provide depreciation on its fixed assets:
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Assets Useful Life (in Years)
Buildings 60
Leasehold improvements 9 or over the term of the lease, whichever is lower
Plant & Machinery
Network equipment 12
Outside Plant 18
Air-conditioning equipment 6
Generators 6
Electrical equipment 6
Computers & other IT hardware (servers, etc) 3
Office equipment 3-5
Software 3
Furniture & fittings 3-6
Vehicles 5
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21st Annual Report 2015-2016
2.4 Intangible assets
All expenditure on intangible items is expensed as incurred unless it qualifies as an intangible assets as defined in Accounting
Standard 26 – ‘Intangible Assets’. Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less accumulated depreciation and accumulated impairment losses, if
any.
Indefeasible Right to Use (‘IRU’) taken for optical fiber and ducts, by the Company are capitalized as intangible assets at the
amounts paid for acquiring the right and are amortized on straight line basis, over the period of agreement or eighteen years,
whichever is lower.
With respect to capitalization of exchange differences arising on reporting/settlement of the long term foreign currency
monetary items, refer note 2.16.
For accounting policy related to License Entry fees/spectrum fees, refer Note 2.6 (i), below.
The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life
of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been
significant change in the expected pattern of economic benefits from the assets, the amortization method is changed to reflect
the changed pattern. Such changes are accounted for in accordance with AS 5 Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies.
2.5 Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized in the statement of profit and loss wherever the carrying amount of
an asset exceeds its recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s
(CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying
value of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After
impairment, depreciation and amortization is provided on the revised carrying amount of the assets over its remaining useful
life.
2.6 License fees
(i) License Entry fee/Spectrum fees
The License Entry fee/spectrum fees has been recognized as an intangible asset and is amortized on straight line basis
over the remainder of the license period of 20 years from the date of commencement of commercial operations in the
respective circles/spectrum blocks in case of subsequent acquisition. License entry fee/spectrum fees includes interest
on funding of license entry fee/spectrum fees and bank guarantee commission up to the date of commencement of
commercial operations in the respective Circles. Spectrum fees also include exchange differences arising on reporting of
the long term foreign currency monetary items (Refer note 2.16). Fees paid for migration of the original licenses to the
UASL and license fees for NLD services is amortized over the remaining period of the license of 20 years for the
respective circles from the date of migration to UASL / payment of the license fees on straight line basis. Fees paid for
obtaining in-principle approval to use alternate technology under the existing UASL has been recognized as an intangible
asset and is amortized from the date of commercial launch over the balance remaining period of the UASL license on
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
75
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
straight line basis for the respective circles. The fees paid for 3G Spectrum have been recognized as an intangible asset
and is amortized from the date of commercial launch over a remaining period of 20 years on straight line basis for
respective circles.
(ii) Revenue sharing fee
Revenue sharing fee is expensed in the statement of profit and loss in the year in which the related revenue from
providing unified access services and national long distance services are recognized.
An additional revenue share towards spectrum charges is computed at the rate specified by the DoT of the Adjusted
Gross Revenue (‘AGR’), as defined in the License Agreement, earned from the customers. These costs are expensed in
the statement of Profit and Loss in the year in which the related revenues are recognized.
2.7 Investments
Investments that are readily realizable and intended to be held for not more than a year from the date of their acquisition are
classified as current investments; all other investments are classified as long-term investments. Current investments are
carried at lower of cost and fair market value determined on an individual investment basis. Long-term investments are carried
at cost, if an investment is acquired or partly acquired, by the issue of shares or other securities; the acquisition cost is the fair
value of the securities issued. Provision for diminution in value of long-term investments is made to recognize only a decline,
other than temporary, in the value of the investments. However, diminution in value is reversed, when there is rise in the value or
if the reason for the reduction no longer exists.
2.8 Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined on a weighted average basis and
includes all applicable overheads in bringing the inventories to their present location and condition. Customs duty on imported
purchases is treated as part of the cost of inventories.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to make the sale.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, cheques in hand and short term investments with an original
maturity of three months or less.
2.10 Other assets
(i) Finance set up costs
The Company amortizes the cost of arranging long-term loans over the period of the loan or five years, whichever is
lower, commencing from the date of the first draw down of the related loan, on a straight-line basis. The amortization
charge of finance set up costs incurred for the acquisition or construction of a qualifying asset are capitalized as part of
the cost of the underlying class of assets.
(ii) Unbilled revenue - Refer note 2.12 (i)
2.11 Provisions
A provision is recognized for a present obligation as a result of past event; it is probable that an outflow of resources will be
required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
2.12 Revenues
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the revenue can
be reliably measured. The following specific revenue recognition criteria must also be met before revenue is recognized.
(i) Services revenue
Revenues are recognized as services are rendered and are net of trade discounts and service tax. Unbilled revenues
resulting from postpaid unified access services provided from the last billing cycle date to the end of each year are
estimated and recorded. Revenues from unified access services rendered through prepaid cards are recognized based
on usage by the customers during the year and over the validity period in case of upfront collection.
(ii) Sale of equipment
Revenues from sale of equipment primarily consist of sale of handsets and accessories. Revenue from sale of goods
is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer,
usually on the delivery of goods.
(iii) Multiple element arrangements
The Company enters into transactions that include multiple element arrangements, which may include a combination
of services/equipment. When some elements are delivered prior to others in an arrangement, revenue is deferred
until the delivery of the last element unless all of the following conditions are met:
· • The functionality of the delivered elements is not dependent on the undelivered elements; and
• Delivery of the delivered element represents the culmination of the earnings process.
2.13 Interconnect revenues and costs (Access charges)
The TRAI issued Interconnection Usage Charges Regulation 2003 (‘IUC regime’) effective May 1, 2003 and subsequently
amended the same from time to time. Under the IUC regime, with the objective of sharing of call/Short Message Services
(‘SMS’) revenues across different operators involved in origination, transit and termination of every call/SMS, the Company
pays interconnection charges (prescribed as rate per minute of call time) and per SMS for all outgoing calls and SMS
originating in its network to other operators. The Company receives certain interconnection charges from other operators for all
calls and SMS terminating in its network.
Accordingly, interconnect revenues are recognized as those on calls/SMS originating in another telecom operator network and
terminating in the Company’s network. Interconnect cost is recognized as charges incurred on termination of calls/SMS
originating from the Company’s network and terminating on the network of other telecom operators. The interconnect revenue
and costs are recognized in the financial statement on a gross basis and included in service revenue and access charges in the
statement of profit and loss, respectively.
2.14 Retirement benefits
The Company has schemes of retirement benefits for provident fund and gratuity
(i) Provident fund with respect to employees covered with the Government administered fund is a defined contribution
scheme. The contributions to the government administered fund are charged to the statement of profit and loss for the
77
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
year when the contributions are due. Also, the Company makes contributions to the Tata Teleservices Provident Fund
Trust which is treated as defined benefit plan. The Company has an obligation to make good the shortfall, if any, between
the return from the investments of the trust and the notified interest rate. The shortfall / excess between the present value
of fund assets and the present value of the obligation are determined based on actuarial valuation obtained at the end of
each year as per the Projected Unit Credit Method and accounted accordingly.
(ii) Gratuity liability as per the Gratuity Act, 1972 and The Payment of Gratuity (Amendment) Act, 2010, is defined benefit
plan and is provided for on the basis of an actuarial valuation made at the end of each year as per the Projected Unit
Credit Method. The contribution towards gratuity is made to Life Insurance Corporation of India (‘LIC’) and Tata AIA Life
Insurance Company Limited.
All actuarial gains/losses as mentioned in point (i) and (ii) above are immediately taken to the statement of profit and loss and
are not deferred.
2.15 Leave encashment
Liability for leave encashment is in accordance with the rules of the Company. Short term compensated absences are provided
based on estimates. Long term compensated absences are provided based on actuarial valuation obtained at the end of each
year as per the Projected Unit Credit Method.
Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
2.16 Foreign currency translation, accounting for forward contracts and derivatives
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of the transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
(iii) Exchange differences
Exchange differences, in respect of accounting years commencing on or after April 1, 2011 as per the notification issued
by Ministry of Corporate Affairs dated December 29, 2011 the Companies Accounting Standard (Second Amendment)
Rules, 2011, arising on reporting of long-term foreign currency monetary items or exchange differences arising on
settlement of the long term monetary items, at rates different from those at which they were initially recorded during the
year, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset
(including intangible assets), are added to or deducted from the cost of the asset and are depreciated/amortized over the
balance life of the asset. For this purpose, the Company treats a foreign currency monetary items as “long-term foreign
currency monetary item”, if it has a term of twelve months or more at the date of its origination.
Exchange differences arising on the settlement of short-term monetary items or on restatement of the Company’s short-
term monetary items at rates different from those at which they were initially recorded during the year or reported in
previous financial statements, are recognized as income or as expenses in the period in which they arise.
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
(iv) Forward exchange contracts covered under AS 11, ‘The Effects of Changes in Foreign Exchange Rates’
Exchange differences on forward exchange contracts and currency options, not intended for trading and speculation
purposes are recognized in the statement of profit and loss in the year in which the exchange rates changes, except the
contracts which are long-term foreign currency monetary items. The premium or discount arising at the inception of
forward exchange contracts is amortized as expense or income over the term of the contract on a straight line basis. Any
profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as
expense for the year. Any gain/loss arising on forward contracts which are long-term foreign currency monetary items is
recognized in accordance with paragraph (iii) mentioned in the exchange differences.
(v) Other derivative instruments, not in the nature of AS 11, ‘The Effects of Changes in Foreign Exchange Rates’
In accordance with the ICAI announcement, derivative instruments, other than foreign currency forward contracts
covered under AS 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting
effect of gain on the underlying hedged item, is charged to the statement of profit and loss. Net gain, if any, after
considering the offsetting effect of loss on the underlying hedged item, is ignored.
2.17 Borrowing costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset, including interest attributable to the funding
of license fees/spectrum fees up to the date of commencement of commercial operations or commercial use of the spectrum,
are capitalized as a part of the cost of that asset [Refer Note 2.6]. The accounting treatment of loan arrangement fees has been
discussed in Note 2.10(i) to the financial statements. Other borrowing costs are recognized as an expense in the year in which
they are incurred.
2.18 Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to
the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier
year.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty that they can be
realized against future taxable profits. At each Balance Sheet date the Company re-assesses unrecognized deferred tax
assets. It recognizes the unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually
certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be
realized.
In accordance with the Accounting Standard on Accounting for Taxes on Income (‘AS 22’) and the guidance provided by the
ICAI, the Company has not recognized any deferred tax assets resulting from the carry forward tax losses. (Refer note 39).
2.19 Loss per share
Basic loss per share is calculated by dividing the net loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders
79
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential
equity shares.
2.20 Leases
Where the Company is the lessee
Leases of assets under which the lessor effectively retains all the risks and rewards of ownership are classified as operating
leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over
the lease term.
IRU taken for dark fiber, duct and embedded electronics are treated as finance lease (purchase of intangible assets), where the
IRU term substantially covers the estimated economic useful life of the asset and the routes are explicitly identified in the
agreement. The cases where the estimated economic useful life does not significantly represent the life of the asset, the IRU is
treated as operating lease provided the routes are explicitly identified..
Where the Company is the lessor
Assets where the Company effectively retains all the risks and rewards of ownership are recognized as operating leases and
are disclosed under fixed assets. Lease income is recognized in the statement of profit and loss on a straight-line basis over the
lease term. Costs, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs
such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
IRU granted for dark fiber, duct and embedded electronics are treated as finance lease (sale of intangible assets), where the
IRU term substantially covers the estimated economic useful life of the asset and the routes are explicitly identified in the
agreement. The profit on sale of assets is recognized over the term of the contract. The cases where the IRU term does not
significantly represent the estimated useful life of the asset, the IRU is treated as operating lease.
2.21 Segment reporting
The primary reporting of the Company has been performed on the basis of business segments. The Company had only one
business segment, which is providing telecommunication services. Accordingly, the amounts appearing in these financial
statements relate to this primary business segment. Further, the Company provides services only in the domestic markets in
India and, accordingly, no disclosures are required under secondary segment reporting.
2.22 Customer acquisition costs
Customer acquisition costs include cost of startup kits including customer verification cost for acquisition of subscribers.
2.23 Measurement of Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
The Company has elected to present earnings before finance cost, finance income, tax, foreign exchange gain/(loss),
exceptional items and depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and
loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the
Company does not include depreciation and amortization expense, finance cost, finance income, foreign exchange (net),
exceptional item and tax expense.
2.24 Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not
recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability
also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
The Company does not recognize a contingent liability but discloses its existence in the financial statements.
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
3. SHARE CAPITAL March 31, 2015
Authorised Share Capital (Nos in crores)
751.37 (March 31, 2015 - 751.37) Equity Shares of Rs. 10 each 7,513.68
63.00 (March 31, 2015 - 63.00) Unclassified shares of Rs. 10 each 630.00
83.63 (March 31, 2015 - 83.63) Redeemable Non-cumulative Convertible 836.32
Preference Shares of Rs 10 each
150.00 (March 31, 2015 - 150.00) Redeemable Non-cumulative 1,500.00
Non-Convertible Preference Shares of Rs. 10 each
45.20 (March 31, 2015 - 45.20) Compulsory Convertible Non- Cumulative 4,520.00
Preference Shares of Rs. 100 each
Total Authorised Share Capital 15,000.00
Issued, Subscribed and Fully Paid (Nos in crores)
471.23 (March 31, 2015 - 471.23) Equity Shares of Rs. 10 each, fully paid up 4,712.39
[Refer note 3 (b)]
45.00 (March 31, 2015 - 35.05) Cumpulsory Convertible Non Cumulative 3,504.64
Preference Shares of Rs. 100 each, fully paid up [Refer note 3 (c)]
8,217.03
March 31, 2016
7,513.68
630.00
836.32
1,500.00
4,520.00
15,000.00
4,712.39
4,500.07
9,212.46
a. Reconciliation of Shares Outstanding at the beginning and at the end of the reporting period
March 31, 2015
No Crores Rs in Crores
Equity Shares
At the beginning of the year 471.23 4,712.39
Issued during the year - -
Outstanding at the end of the year 471.23 4,712.39
Cumpulsory Convertible Non Cumulative Preference Shares
At the beginning of the year 24.80 2,480.21
Issued during the year 10.25 1,024.43
Outstanding at the end of the year 35.05 3,504.64
March 31, 2016
No Crores Rs in Crores
471.23 4,712.39
- -
471.23 4,712.39
35.05 3,504.64
9.95 995.44
45.00 4,500.07
81
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
c. Terms of conversion/ redemption of Compulsory Convertible Non Cumulative Preference Shares
(i) On January 7, 2014, the Company had issued 24.80 crores Compulsory Convertible Non Cumulative Preference Shares
(CCNCPS) to Tata Sons Limited of Rs 100 each fully paid-up. CCNCPS carry a non cumulative right to receive dividend
@ 0.1% p.a.
Each CCNCPS shall compulsorily be converted into equity share at the end of earlier of the following:
I. 24 months from the date of allotment of CCNCPS, viz., January 6, 2016, or such earlier period as the Board may
decide, provided that if the earlier conversion is to be effected prior to the strategic partner exercising the put option
as per the Shareholders Agreement dated March 25, 2009, specific approval of one of the Strategic Partner’s and
of the Promoter’s Board Member will be required at the Board Meeting approving the earlier conversion
II. Effective date of an event of merger of TTSL with any other entity or restructuring pursuant to a scheme of
arrangement, if any.
Each CCNCPS shall be compulsorily converted into such number of equity shares at the higher of:
I. Fair market value determined as on the date of conversion; or
II. Fair market value prevailing as on the date of issue of CCNCPS; or
III. Rs 10 per equity share (being the face value of shares)
During the year, based on request from holder of CCNCPS, the period of conversion has been extended by one year
(January 6, 2017), with an option to submit the request at any time by giving a notice of 30 days in advance.
(ii) On March 31, 2015, the Company issued 10.25 crores Compulsory Convertible Non Cumulative Preference Shares
(CCNCPS) to Tata Sons Limited of Rs. 100 each. CCNCPS carry a non cumulative right to receive dividend @ 0.1%.
Each CCNCPS shall be converted at the option of the investor at any time after 3 months from the date of allotment of CCPS,
but not later than 36 months from the date of allotment i.e. March 31, 2018
On May 28, 2015, the Company has further issued 9.95 crores CCNCPS of Rs. 100 each fully paid-up, carrying non-cumulative
right to receive dividend @ 0.1% p.a.
Each CCNCPS shall compulsorily be converted into equity share at the option of the investor at any time after 3 months from
the date of allotment of CCNCPS but not later than 36 months from the date of allotment i.e. May 28, 2018.
Each CCNCPS shall be compulsorily converted into such number of equity shares at the higher of:-
I. Fair market value determined as on the date of conversion subject to cap of Rs. 19 per equity shares or
II. Rs 10 per equity share (being the face value of shares)
b. Terms / rights attached to equity shares
The Company has one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to
one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held
by the shareholders.
TATA TELESERVICES LIMITED
82
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
e. Shares held by Tata Sons Limited and/or its subsidiaries/associates
March 31, 2015
a) Equity Shares (All nos in crores)
Tata Sons Limited, the holding company
170.44 (March 31, 2015: 170.44) equity shares of Rs. 10 each fully paid 1,704.40
Tata Communication Limited, Associate of Tata Sons Limited
43.99 (March 31, 2015: 43.99) equity shares of Rs. 10 each fully paid 439.86
Tata Power Company Limited, Associate of Tata Sons Limited
32.84 (March 31, 2015: 32.84) equity shares of Rs. 10 each fully paid 328.40
Tata Industries Limited, Subsidiary of Tata Sons Limited
25.72 (March 31, 2015: 25.72) equity shares of Rs. 10 each fully paid 257.19
Tata Steel Limited, Associate of Tata Sons Limited
6.47 (March 31, 2015: 6.47) equity shares of Rs. 10 each fully paid 64.69
March 31, 2016
1,704.40
439.86
328.40
257.19
64.69
March 31, 2015
% holding in the
No Crores class
Equity shares of Rs. 10 each fully paid
Tata Sons Limited 170.44 36.17%
NTT DoCoMo Inc 124.90 26.50%
Tata Communication Limited 43.99 9.33%
The Tata Power Company Limited 32.84 6.97%
Aranda Investments (Mauritius) Pte. Limited 30.39 6.45%
Tata Industries Limited 25.72 5.46%
Cumpulsory Convertible Non Cumulative Preference
Shares of Rs. 100 each fully paid
Tata Sons Limited 35.05 100.00%
March 31, 2016
% holding in the
No Crores class
170.44 36.17%
124.90 26.50%
43.99 9.33%
32.84 6.97%
30.39 6.45%
25.72 5.46%
45.00 100.00%
As at March 31, 2016 the shareholding of Tata Sons Limited is 36.17 per cent. Pursuant to the issue of Preference shares to
Tata Sons Limited, the Company is considered as a subsidiary of Tata Sons Limited w.e.f. April 01, 2014, in line with the
provisions of the Companies Act, 2013. However, since Tata Sons Limited does not hold, either by itself, or through one/more of
its subsidiaries, more than one half in the nominal value of equity shares of the Company, or controls either directly or indirectly
the composition of the Board of Directors of the Company, TTSL is not considered as subsidiary of Tata Sons Limited pursuant
to provisions of Accounting Standard 18 – Related Party Disclosures.
d. Details of Shareholders holding more than 5% shares in the Company
March 31, 2015
Tata Capital Financial Services Limited, Subsidiary of Tata Sons Limited
6.23 (March 31, 2015: 6.23) equity shares of Rs. 10 each fully paid 62.25
Tata Chemicals Limited, Associate of Tata Sons Limited
0.13 (March 31, 2015: 0.13) equity shares of Rs. 10 each fully paid 1.29
Tata Investment Corporation Limited, Subsidiary of Tata Sons Limited
0.57 (March 31, 2015: 0.57) equity shares of Rs. 10 each fully paid 5.68
2,863.76
b) Compulsory Convertible Non-Cumulative Preference Shares (‘CCNCPS’)
All CCNCPS issued and outstanding as at the year end, are held by Tata Sons Limited (Refer note d, above)
4. Reserves and Surplus [Refer note 3(c) and 43] March 31, 2015
a) Securities Premium account
Balance as per the last financial statements 11,554.57
Closing Balance 11,554.57
b) (Deficit) in the statement of profit and loss
Balance as per last financial Statements (24,296.38)
Loss for the year (3,846.16)
Net loss in the statement of profit and loss (28,142.54)
Total Reserves and Surplus (16,587.97)
March 31, 2016
62.25
1.29
5.68
2,863.76
March 31, 2016
11,554.57
11,554.57
(28,142.54)
(3,386.02)
(31,528.56)
(19,973.99)
5. Long Term Borrowings Non - Current portion Current Portion
March 31, 2015 March 31, 2015
Debentures
5,000 (March 31, 2015: 5,000) 11.69% 500.00 -
Redeemable Non Convertible Debentures –
Series III of Rs. 10 Lakh each (Unsecured)
5,000 (March 31, 2015: 5,000) 11% Redeemable 500.00 -
Non Convertible Debentures – Series IV of
Rs. 10 Lakh each (Unsecured)
March 31, 2016 March 31, 2016
500.00 -
250.00 250.00
83
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
INR <12% <12% 20,481.01 3,394.00 23,875.01 959.56 2,034.80 9,814.00 11,066.65
USD 4%-5% 5%-11.25% 492.60 5,053.23 5,545.83 1,378.72 1,630.27 2,128.84 408.65
Total 11% 8% 20,973.61 8,447.23 29,420.84 2,338.28 3,665.07 11,942.84 11,474.65
Non - Current portion Current Portion
March 31, 2015 March 31, 2015
Term Loan
Financial institutions (Secured) 1,734.00 15.00
Indian rupee loan from banks (Secured) 17,141.00 133.75
Foreign currency loan from banks (Secured) 4,769.11 761.30
Deferred payment liability for spectrum fees - - -
(Unsecured) (Refer note 32)
24,644.11 910.05
The above amount includes
Secured borrowings 23,644.11 910.05
Unsecured borrowings 1,000.00 -
Amount disclosed under the head - - (910.05)
“Other current liabilities” (Note 9)
Net amount 24,644.11 -
March 31, 2016 March 31, 2016
1,714.00 20.00
18,056.50 689.56
4,167.11 1,378.72
2,394.95
2,338.28
23,937.61 2,088.28
3,144.95 250.00
(2,338.28)
27,082.56 -
27,082.56
Rate of Interest Borrowing as on March 31, 2016 Maturity ProfileCurrency of Borrowing Floating
rateFixed rate Total
Within oneyear
between two and
five years
over fiveyears
Floating rate
Fixed ratebetween one and
two years
Rate of Interest Borrowing as on March 31, 2015 Maturity Profile
Currency of Borrowing Floating
rateFixed rate Total
Within oneyear
between two and
five years
over fiveyears
Floating rate
Fixed ratebetween one and
two years
INR <12% <12% 14,653.75 5,370.00 20,023.75 148.67 1,192.00 7,576.79 11,106.29
USD - 4%-11.25% - 5,530.41 5,530.41 761.30 1,296.52 3,322.33 150.26
Total 11% 7% 14,653.75 10,900.41 25,554.16 909.97 2,488.52 10,899.12 11,256.55
*USD fixed rate of interest as disclosed above includes the cost of borrowings and the cost of hedging the loans.
Details of analysis of borrowings i.e. maturity profile, interest rate and currency of borrowings:
TATA TELESERVICES LIMITED
84
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
85
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a. Secured loans
i. Term loans from Financial institutions (‘FI’), Indian rupee loans from banks and Foreign currency loans from banks
Loans of Rs. 26,025.89 crores (March 31, 2015 - Rs. 24,554.16 crores) from Banks, FI’s and foreign currency loans
are fully secured by way of a first charge on all the immovable / moveable project assets and assignment of
licenses, both present and future, of the Company which ranks pari-passu with the charges created / to be created
in favor of the other institutions / banks. Long term rupee loans and foreign currency loans to the extent of
Rs. 26,000 crores are required to be secured by a pledge of shares to the extent of 26 per cent of the voting equity
share capital of the Company by the sponsors. Of this, long term rupee loans and foreign currency loans of Rs
6,893.40 crores (March 31, 2015: Rs. 4,077.40 crores) are already secured by the said share pledge. The
Company is in the process of creating the share pledge in favor of the other lender within the time-frame as required
by the lenders. The amount repayable within one year is Rs. 2,338.28 crores (March 31, 2015 - Rs. 910.05 crores).
The Company has placed fixed deposits of Rs. 215.96 crores (March 31, 2015 – Rs. 232.36 crores) towards the
maintenance of a Debt Service Reserve Account in favor of the foreign currency lenders, as required by the
agreements.
b. Unsecured Loans
i. Long-term non-convertible debentures:
(a) 11.69% Redeemable Non Convertible Debentures – Series III
On August 16, 2010, the Company has issued Unsecured Redeemable Non-convertible Debentures of
Rs. 500 crores to Yes Bank Limited on a private placement basis. The debentures will be redeemed at the end
of the 15th Year.
(b) 11% Redeemable Non Convertible Debentures – Series IV
On June 28, 2013, the Company has issued Unsecured Redeemable Non-Convertible Debentures of
Rs. 500 crores to Yes Bank Limited on a private placement basis. The debentures will be redeemed in the
following manner - at the end of 3 years (Rs. 250 crores), 4 years (Rs. 125 crores) and 5 years (Rs. 125
crores) respectively. During the financial year 2016-17, an amount of Rs. 250 crores is due for redemption.
(Refer note 43).
6. Other Long-term Liabilities
March 31, 2015
Income received in advance 65.48
Unearned income 19.07
84.55
March 31, 2016
58.42
18.90
77.32
TATA TELESERVICES LIMITED
86
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
7. Provision (Note 38) Long Term Short Term
March 31, 2015 March 31, 2015
Provision for employee benefits
Provision for gratuity 6.87 -
Provision for leave encashment - 28.83
Provision for employee benefits - 140.30
6.87 169.13
Other Provisions
Provision for contingencies (net of amount - 50.70
paid under dispute Rs 20.87 crores
[March 31, 2015 - Rs 60.48 crores])
Provision for foreseeble losses on long term - 102.77
contracts (net of amount paid under dispute
Rs Nil [March 31, 2015 - Rs Nil])
- 153.47
6.87 322.60
March 31, 2016 March 31, 2016
- 1.94
- 25.76
- 86.31
- 114.01
- 10.58
- 104.89
- 115.47
- 229.48
8. Short Term Borrowings(Payable within one year)
March 31, 2015Secured
From banks 379.54
Vendor financing 148.90
Bill discounting 726.96
Unsecured
From banks 273.00
1,528.40
Secured loans
a. Vendor financing
The Company has entered into various equipment purchase agreements with vendors for the supply of
telecommunication equipment. The payments are to be made through and covered by an irrevocable letter of credit with
the vendor entitled to draw down based on completion of the agreed payment milestones. Interest ranging between
LIBOR plus 0.50 to 3.50 per cent is payable by the Company over the usance period of one year. The irrevocable letters
of credit have been issued by the Company’s bankers are secured, by way of a first charge on all the immovable /movable
project assets, both present and future, of the Company, which ranks pari-passu with the charges created / to be created
in favor of other institutions / banks and partial promoters support letter.
March 31, 2016
-
115.47
603.56
-
719.03
87
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
9. Other Current Liabilities
March 31, 2015
Trade Payable
Due to micro, small & medium enterprises 5.57
Dues to others 437.65
443.22
Other Liabilities
Current maturities of long-term debt (Note 5) 910.05
Interest accrued but not due on borrowings 171.89
Income received in advance 454.17
Other payables
Dues for capital goods 291.65
Deposit from customers 166.50
Advance from distributors 60.41
Provision for expenses 1,608.27
Taxes payable 14.39
Other liabilities 105.84
3,783.17
March 31, 2016
5.14
472.00
477.14
2,338.28
188.96
480.14
202.06
158.12
19.40
1,554.14
15.52
89.22
5,045.84
b. Bill Discounting
Bills discounting represents facility availed by the Company for the payment of services availed. The payments are
backed through letters of credit, by way of a first charge on all the immovable /movable project assets, both present and
future, of the Company, which ranks pari-passu with the charges created / to be created in favor of other institutions /
banks and partial promoters support letter. The Interest rate is ranging between 8.75% to 9.50% p.a payable by the
Company.
a. Current Liabilities include Rs. 131.88 crores (March 31, 2015- Rs. 166.99 crores) payable to VIOM.
b. Deposit from customers; represents refundable security deposit received from subscribers on activation of connections
granted thereto and are repayable on disconnection, net of outstanding, if any.
c. Amounts due to micro, and small enterprises under Micro, Small and Medium Enterprises Development Act, 2006
aggregate to Rs. 5.14 crores (March 31, 2015– Rs. 5.57 crores), including interest, based on the information available
with the Company and the confirmation received from the creditors till the year end:
TATA TELESERVICES LIMITED
88
21st Annual Report 2015-2016
1 The principal amount and the interest due thereon [Rs. 1.00 crores (March 31,
2015 - Rs. 0.96 crores)] remaining unpaid to any supplier as at the end of each
accounting year
2 The amount of interest paid by the buyer in terms of section 16 of the Micro Small
and Medium Enterprise Development Act, 2006, along with the amounts of the
payment made to the supplier beyond the appointed day during each accounting
year
3 The amount of interest due and payable for the period of delay in making payment
(which have been paid but beyond the appointed day during the year) but without
adding the interest specified under Micro Small and Medium Enterprise
Development Act, 2006.
4 The amount of interest accrued and remaining unpaid at the end of each
accounting year;
5 The amount of further interest remaining due and payable even in the succeeding
years, until such date when the interest dues as above are actually paid to the small
enterprise for the purpose of disallowance as a deductible expenditure under
section 23 of the Micro Small and Medium Enterprise Development Act, 2006.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
SN Particulars March 31, 2016 March 31, 2015
5.14
-
-
1.00
-
5.57
-
-
0.96
-
d. Other liabilities includes employee related payable i.e. provident fund, employee state insurance corporation, employee deposit linked insurance, family provident fund etc.
For the year ended March 31, 2016
Gross BlockAsset Group
As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
10. Tangible fixed assets
Land 24.09 0.20 -
Buildings 85.83 - -
Plant and machinery 22,207.59 445.94 (663.82)
Furnitures and fittings 115.26 0.56 (2.85)
Vehicles 2.88 - (0.32)
Leasehold improvements 377.72 2.69 (5.94)
Total 22,813.37 449.39 (672.91)
24.29
85.83
21,989.71
112.97
2.56
374.47
22,589.83
89
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Asset Group As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
Land - - -
Buildings 8.98 1.43 -
Plant and machinery 13,792.86 1,436.11 (648.41)
Furnitures and fittings 92.90 8.53 (2.74)
Vehicles 2.86 0.01 (0.32)
Leasehold improvements 281.21 23.48 (6.38)
Total 14,178.81 1,469.56 (657.85)
- 24.29
10.41 75.42
14,580.56 7,409.15
98.69 14.28
2.55 0.01
298.31 76.16
14,990.52 7,599.31
Net Block
As at March 31, 2016
Accumulated Depreciation
Gross BlockAsset Group
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Land 23.78 0.31 - 24.09
Buildings 85.83 - - 85.83
Plant and machinery 22,593.86 688.95 (1,075.23) 22,207.59
Furnitures and fittings 115.16 2.10 (2.00) 115.26
Vehicles 3.75 - (0.87) 2.88
Leasehold improvements 375.28 5.16 (2.72) 377.72
Total 23,197.66 696.52 (1,080.82) 22,813.38
For the year ended March 31, 2015
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Land - - - - 24.09
Buildings 7.55 1.43 - 8.98 76.85
Plant and machinery 12,615.13 1,666.08 (488.35) 13,792.86 8,414.73
Furnitures and fittings 84.50 10.36 (1.96) 92.90 22.36
Vehicles 3.68 0.02 (0.84) 2.85 0.02
Leasehold improvements 256.29 26.12 (1.20) 281.22 96.51
Total 12,967.15 1,704.01 (492.35) 14,178.82 8,634.57
Net Block
As at March 31, 2015
Accumulated Depreciation
Asset Group
TATA TELESERVICES LIMITED
90
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a. As at March 31, 2016, plant and machinery includes equipment of gross block of Rs. 11,284.38 crores (March 31, 2015 -
Rs. 11,127.04 crores) and net block Rs. 3,714.77 crores (March 31, 2015- Rs. 4,290.18 crores) located at other passive
infrastructure/operator sites.
b. During the year ended March 31, 2016, the Company has disposed off damaged and obsolete assets as scrap, having
gross block of Rs. 657.97 crores (March 31, 2015 – Rs. 365.67 crores) and having a written-down value of Rs. 8.88 crores
(March 31, 2015 – Rs. 5.90 crores).
c. Addition to tangible fixed assets includes Rs. 42.00 crores (March 31, 2015 - Rs. 121.33 crores) towards exchange
differences as per accounting policy (Refer note 2.16)
d. Leasehold improvements includes those given on lease :
• Gross Block Rs. 2.36 crores (March 31, 2015– Rs. 3.17 crores)
• Depreciation charge for the year Rs. 0.20 crores (March 31, 2015– Rs. 0.31 crores)
• Accumulated Depreciation Rs. 1.68 crores (March 31, 2015– Rs. 1.86 crores)
• Net block Rs. 0.68 crores (March 31, 2015– Rs. 1.31 crores)
For the year ended March 31, 2016
Gross BlockAsset Group
As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
Indefeasible right to use (IRU) 481.66 2.03 (1.51) License Entry fees/spectrum fees 8,419.89 3,400.38 41.25
Total 8,901.55 3,402.41 39.74
482.1811,861.52
12,343.71
11. Intangible Assets [Refer note 31 and 32]
Accumulated Amortisation
As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
Indefeasible right to use (IRU) 240.64 29.07 - 269.71 License Entry fees/spectrum fees 2,747.74 528.31 41.25 3,317.29
Total 2,988.38 557.37 41.25 3,587.01
212.478,544.22
8,756.69
Net Block
As at March 31, 2016
Asset Group
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
For the year ended March 31, 2015
Gross BlockAsset Group
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Indefeasible right to use (IRU) 480.72 0.94 - 481.65 License Entry fees/spectrum fees 7,733.51 686.38 - 8,419.89
Total 8,214.23 687.32 - 8,901.55
Accumulated Amortisation
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Indefeasible right to use (IRU) 210.12 30.52 - 240.64 241.01 License Entry fees/spectrum fees 2,115.43 632.31 - 2,747.74 5,672.15
Total 2,325.56 662.82 - 2,988.38 5,913.17
Net Block
As at March 31, 2015
Assets Group
a) The remaining amortization period of license fees/spectrum fees as at March 31, 2016 ranges between 1 to 20 years.
b) Addition to Intangible assets includes Rs. 106.04 crores (March 31, 2015 - Rs. 686.38 corers) towards exchange differences as per accounting policy (Refer note 2.6)
12. Capital Work in Progress
Asset Group As at
March 31, 2015
Assets under construction 84.44
Other capital inventory 70.92
Total 155.36
Capital work-in-progress include optical fiber, ducts and others of Rs. 5.06 crores (March 31, 2015 – Rs. 7.49 crores) lying with third parties.
Capital work-in-progress is net of provision of Rs. 19.56 crores (March 31, 2015 - Rs. 38.79 crores) for slow moving capital assets, based on the Company policy.
As at
March 31, 2016
34.63
84.91
119.54
91
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
TATA TELESERVICES LIMITED
92
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
13. Non Current Investment
Trade Investments (Valued at Cost unless stated otherwise) March 31, 2015
Investment in Equity Instruments
a) Subsidiaries (unquoted) (Nos in crores)
VIOM Networks Limited (Unquoted)
34.76 (March 31, 2015 — 34.76) Equity Shares of Rs. 10 each fully paid up
Tata Internet Services Limited (TISL) (Unquoted) 150.00
15.00 (March 31, 2015 — 15.00) Equity Shares of Rs. 10 each fully paid up
MMP Mobi Wallet Payment Systems Limited (MMP) (Unquoted) 40.00
5.30 (March 31, 2015 — 4) Equity Shares of Rs. 10 each fully paid up
NVS Technologies Limited ( NVS) (Unquoted) 0.10
0.10 (March 31, 2015 — 0.10) Equity Shares of Rs.10 each fully paid up
942.33
b) Joint Ventures (unquoted) (Nos in crores)
Virgin Mobile India Private Limited (VMI) (Unquoted)
23.01 (March 31, 2015 — 23.01) Equity Shares of Rs. 10 each fully paid 230.06
Less: Provision for diminution (Refer note 13 (e)) (230.06)
-
c) Associates (quoted) (Nos in crores)
Tata Teleservices (Maharashtra) Limited (TTML) (Quoted) 2,035.81
71.43 (March 31, 2015 — 71.43) Equity Shares of Rs. 10 each fully paid up
Less: Provision for diminution (Refer note 13 (f)) (964.33)
1,071.48
d) Others (unquoted)
Andhra Pradesh Gas Power Corporation Limited (Unquoted) 4.06
0.03 (March 31, 2015 — 0.03) Equity Shares of Rs. 10 each fully paid up
Renew Wind Energy (Karnataka) Private Limited (Unquoted) 0.05
0.0005 (March 31, 2015 — 0.0005) Equity Shares of Rs. 100 each fully paid up
Green Infra Limited (Unquoted) 0.03
0.003 (March 31, 2015 — 0.003) Equity Shares of Rs. 10 each fully paid up
4.14
2,017.95
Aggregate value of Quoted Investment - at cost / revalued amount 1,071.48
Aggregate value of Quoted Investment - at market value 560.74
Aggregate value of Unquoted Investment - at cost 1,176.53
Aggregate provision for diminution in value of Investment (1,194.39)
March 31, 2016
752.23
150.00
53.00
0.10
955.33
230.06
(230.06)
-
2,035.81
(1,350.06)
685.75
4.06
0.05
0.03
4.14
1,645.22
685.75
471.45
1,189.53
(1,580.12)
752.23
93
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Subsidiaries
a) VIOM Networks Limited (‘VIOM’) (erstwhile Wireless-TT Info Services Limited)
As at March 31, 2016, the Company shareholding is Rs. 752.23 crores (March 31, 2015– Rs. 752.23 crores) representing 52.86 percent stake (March 31, 2015– 52.86 percent) in equity share capital of VIOM. The Company considers the investment in VIOM as a long term and strategic investment and is confident that there is no diminution other than temporary in the carrying value of the investment.
During the year, the Company has entered into an agreement for sale of certain part of holding in VIOM to ATC Asia Pacific Pte Limited, Singapore. The agreement also provides for put and call options to either party to buy/sell further holding in VIOM held by the Company at a future date as specified in the agreement. The transaction for sale is subject to various precedents including regulatory approvals i.e. Competition Commission of India, Foreign Investment Promotion Board, Lenders consents, approval of the shareholders of the Company pursuant to section 180(1)(a) of the Companies Act, 2013, etc. Subsequent to the year end, the Company has completed the transaction with ATC Asia Pacific Pte Limited, Singapore by obtaining the approvals, transfer of shares and receipt of consideration.
Subsequent to the year end, the name of VIOM Networks Limited has been changed to ATC Telecom Infrastructure Private Limited.
b) Tata Internet Services Limited (’TISL’)
As part of its initiative to optimise synergies between the basic telephony, internet, virtual private network (‘VPN’) and data centre services, the Company had invested Rs 150 crores in TISL to make it a fully owned subsidiary. The carrying value of the investment in TISL, as at March 31, 2016, is Rs 150 crores (March 31, 2015 - Rs 150 crores).
As approved by the Board of Directors of TISL in their meeting held in November 2014, the Company along with TISL has filed the Scheme of Amalgamation before the Hon’ble High Court of Delhi in March 2015 and the matter is listed for hearing in July 2016.
c) MMP Mobi Wallet Payment Systems Limited (‘MMP’)
MMP has been promoted by the Company to provide mobile commerce and related services on pan India basis. MMP was incorporated on July 13, 2010 as a limited company under Companies Act, 1956. MMP received approval from Reserve Bank of India in December 2011 to operate payment system in India and started its operations from June 29, 2012.
During the year, the Company has invested Rs 13 crores as equity share capital (1.3 crores equity shares of Rs. 10 each) of MMP (March 31, 2015– Rs 13 crores). As at March 31, 2016, the Company’s shareholding is Rs. 53 crores (March 31, 2015– Rs. 40 crores) and TTSL holds 84.13 percent stake (March 31, 2015– 80 percent) in equity share capital of MMP. Since the balance shares are held by TISL in MMP, MMP is treated as fully owned subsidiary of the Company.
d) NVS Technologies Limited (NVS)
NVS has been incorporated on September 12, 2014. NVS would primarily focus on the areas of Mobile Advertising (mAdvertising), Mobile Education (mEducation), Mobile Health (mHealth), Mobile tracking (mNavigation), Mobile Digital Properties in promising products and services with the developer community. It has not started operations at the year end.
As at March 31, 2016, the Company has invested Rs 0.10 crores as equity share capital (0.01 crores equity shares of Rs. 10 each) of NVS (March 31, 2015– Rs. 0.10 crores). As at March 31, 2016 TTSL holds 99.99 percent stake (March 31, 2015 – 99.99 percent) in the equity share capital of NVS.
Joint Venture
e) Virgin Mobile India Private Limited (VMI)
The Company has a 50 percent interest in the assets, liabilities, expenses and revenues of VMI. The Company’s share of the assets, liabilities, revenues and expenses of the jointly controlled entity, based on the audited financial statements of VMI as at March 31, 2016, are as follows :-
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
As at March 31, 2016 an amount of Rs. 230.06 crores (March 31, 2015- Rs. 230.06 crores) has been contributed by the Company towards its share capital of the Company and additional has provided inter corporate deposit of Rs. 204.95 crores (March 31, 2015- Rs. 204.95 crores) and has receivable outstanding of Rs. 177.67 crores (net of payables – Rs. 49.59) (March 31, 2015- Rs. 178.06 crores). The net worth of VMI is fully eroded.
Basis the review of VMI's future plans and overall cash flow situation, the Company has provided for diminution of its investment to the extent of Rs. 230.06 crores (March 31, 2015 – Rs. 230.06 crores). It has further recorded a provision in respect of ICD and receivables amounting to Rs. 204.95 crores (March 31, 2015 – 204.95 crores) and Rs. 177.67 crores (March 31, 2015 – Rs. 178.06 crores) respectively.
Associates
f) Tata Teleservices (Maharashtra) Limited ('TTML')
The Company holds Rs. 71.43 crore equity shares (March 31, 2015 –Rs. 71.43 crores) representing 36.54 per cent of the paid-up equity share capital of TTML (March 31, 2015 – Rs. 36.54 percent).
Pursuant to the Scheme of Arrangement and Restructuring during the year ended March 31, 2009 approved by Hon'ble High Court of Delhi, the investments in TTML were revalued at Rs 28.50/- per share.
During the year ended March 31, 2014, the Company has provided for diminution, other than temporary, in the value of investment in TTML of Rs. 964.33 crores [Rs. 13.50/- per share].
The Company has re-assessed the carrying value in its investment in TTML and has provided for diminution, other than temporary, in the value of its investment of Rs. 385.73 crores (March 31, 2015 – Nil) and accordingly the carrying value of the investment as at March 31, 2016 is reduced to Rs. 685.74 crores (March 31, 2015 - Rs. 1,071.48 crores). The Company believes that there is no further diminution, other than temporary, in the carrying value of investment as at the year end.
The Company has pledged 26 per cent (March 31, 2015 – 26 percent) stake of the total outstanding equity share capital of TTML to the lenders of TTML against loans taken by it.
Others
g) The investment in Andhra Pradesh Gas Power Corporation Limited (APGPCL) entitles the Company to tariff benefit on 1 MW of power drawn from APGPCL.
h) The investment in Green Infra Limited (GIL) entitles the Company to tariff benefit on power drawn from GIL.
i) The investment in Renew Wind Energy (Karnataka) Private Limited (RWEPL) entitles the Company to procure 2.4 MW of power for its own use.
Particulars March 31, 2015
(Audited)
Current Liabilities 237.23
Current Assets 6.86
Revenue 6.91
Expense 3.17
Finance Cost 10.75
Profit before tax (7.00)
Contingent Liability 0.81
March 31, 2016
(Audited)
245.98
5.17
0.51
0.37
10.59
(10.44)
0.81
95
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
14. Loans and Advances Non Current Current
March 31, 2015 March 31, 2015
Unsecured, considered goodCapital advances (Refer note 32) 59.70 - Security deposits 272.95 20.74 Others
Prepaid expense 24.08 81.42 Balance with Government authorities
[Refer Note (b) below] 540.22 155.80
Advance income tax 745.31 - Marked-To-Market of derivative contracts 511.25 20.37 Advances to suppliers and others
[Refer Note (a) below] - 173.36
Unsecured considered doubtfulLoans and advances to related party
[Refer Note 13 (e)] - 204.95 Security deposit 25.20 - Others - advances to supplier and others - 35.28 Balance with Government authorities - - Capital advances - - Less: Provisions for doubtful advances (25.20) (240.22)
2,153.51 451.69
a. Advances to suppliers and others includes interest receivable Rs 3.54 crores (March 31, 2015– Rs. 2.96 crores)
b. Balance with Government authorities represent payments made to Government authorities under protest which is net of provision of Rs. 458.06 crores (March 31, 2015 - Rs. 424.96 crores).
March 31, 2016 March 31, 2016
334.96 - 267.67 19.01
44.56 65.12
536.46 115.55
- 842.71 328.77 191.40
- 134.73
- 204.9534.64 -
- 36.20- 15.66
4.84 - (39.48) (256.81)
1,512.42 1,368.51
March 31, 2015
Non TradeCurrent investments (valued at lower of cost and market value)Investment in mutual funds (Quoted) 1,775.00
1,775.00
Aggregate value of quoted investment - at cost 1,775.00
Aggregate value of quoted investment - at market value 1,776.08
March 31, 2016
796.23
796.23
796.23
798.02
15. Current Investments (At lower of cost and market value)
TATA TELESERVICES LIMITED
96
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Axis Liquid Fund - Direct Plan - Growth 0.07 115.00
Birla Sun Life Cash Plus- Growth- Direct plan 0.51 115.00
Bank of Baroda Pioneer Liquid Fund- Growth 0.07 115.00
DSP Black Rock Liquidity Fund - Direct Plan - Growth 0.06 115.00
ICICI Liquid Plan-Direct Plan - Growth 0.56 115.00
IDBI Liquid Fund - Direct Plan - Growth 0.01 15.00
Pramerica Liquid Fund - Direct Plan - Growth 0.08 115.00
Principal cash Management Fund - Direct Plan - Growth 0.08 115.00
Religare Invesco Liquid Fund - Direct Plan - Growth 0.01 10.00
SBI Premier Liquid Fund - Direct Plan - Growth 0.05 115.00
Sundaram Money Fund - Direct Plan - Growth 3.90 115.00
Tata Liquid Fund - Direct Plan - Growth 0.12 300.00
Tata Money Market Fund - Direct Plan - Growth 0.14 300.00
UTI Money Market - Institutional Plan - Growth 0.07 115.00
Kotak Floater short term- Direct Plan - Growth - -
HDFC Cash Management Fund- Savings plan-Direct
Plan-Growth option - -
Total 5.72 1,775.00
0.05 78.85
0.41 99.30
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
0.10 250.11
- -
0.06 142.80
0.07 225.17
0.69 796.23
Mutual Funds
March 31, 2016 March 31, 2015
Unit (in crores) Rs. Crores Unit (in crores) Rs. Crores
16. Inventories (at lower of cost or net realizable value) March 31, 2015
Stock in Trade Mobile handset 22.64 Network cards 2.91 Material in transit -
25.55
17. Trade Receivables March 31, 2015
Receivable outstanding for a period exceeding six months from the date they are due for paymenta) Secured, considered good 0.67 b) Unsecured, considered good 62.86 c) Doubtful 590.24
653.77 Provision for doutful debts 590.24
63.53
Receivable outstanding for a period less than six months from the date theyare due for paymenta) Secured, considered good 14.54b) Unsecured, considered good 592.53c) Doubtful 52.64
659.72 Provision for doutful debts 52.64
607.08 670.61
March 31, 2016
15.763.79 0.75
20.30
March 31, 2016
0.7754.01
684.65739.43684.65
54.78
8.95459.96
65.24534.15
65.24468.91 523.69
97
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Trade receivables include amount to be receivable from associates Rs 85.06 crores (March 31, 2015 - 71.70 crores). Provision for doubtful debts for the period exceeding six months includes provision for receivables from VMI Rs. 177.67 crores (March 31, 2015 - Rs. 178.06 crores) [Refer note 13(e)].
Rs.
18. Cash and Bank Balances Non Current Current
March 31, 2015 March 31, 2015
Cash and Cash equivalents
Cash on hand - 3.17
Cheques / drafts on hand - 43.36
Balance with Banks:
i) in Current Accounts - 133.85
ii) in Fixed Deposit with original maturity less than three months # - 118.64
- 299.02
Other Bank Balances
i) in Fixed Deposit with original maturity more - 128.17
than 3 months but less than 12 months #
ii) in Fixed Deposit with original maturity more 4.97 -
than 12 months #
4.97 128.17
Amount disclosed under non-current assets (4.97) -
(Refer note 19)
- 128.17
- 427.19
# The Company has placed fixed deposits of Rs. 215.96 crores (March 31, 2015 – Rs. 232.36 crores) towards the maintenance of a Debt Service Reserve Account in favor of the foreign currency lenders, as required by the lenders.
19. Other Assets
Non current Current
March 31, 2015 March 31, 2015
Finance setup cost 73.85 44.76Unbilled revenue - 93.81Fixed Deposit with original maturity more than 12 months 4.97 -
78.82 138.57
March 31, 2016 March 31, 2016
- 2.80
- 19.59
- 96.28
- 40.46
- 159.13
- 161.19
- 35.50
- 196.69
- -
- 196.69
- 355.82
March 31, 2016 March 31, 2016
50.77 37.66 - 83.68 - -
50.77 121.34
20. Revenue From Operations
March 31, 2015
Service revenue 10,779.95
Sale of equipment, net 93.17
10,873.12
March 31, 2016
10,535.33
52.33
10,587.66
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
21. Other IncomeMarch 31, 2015
Commission income 69.08
Other non operating income
- Profit on sale of fixed assets 7.13
- Liabilities no longer required written back -
- Interest on income tax refund -
- Miscellaneous Income 16.37
92.58
March 31, 2016
74.91
0.01
18.79
10.61
16.45
120.77
22. Cost Of Goods Sold (Mobile handsets) March 31, 2015
Opening stock 6.82
Add: Purchases 125.52
132.34
Less: Closing stock 22.64
109.70
23. Employee Benefit Expenses [See Note 38 (c)]
March 31, 2015
Salaries, wages and bonus 654.52
Leave encashment & gratuity 14.77
Welfare expenses 79.98
Contribution to provident and other funds 30.22
Recruitment and training expenses 11.66
791.15
24. Power And FuelMarch 31, 2015
Network 1,003.34
Others 69.67
1,073.01
March 31, 2016
22.64
61.62
84.26
15.76
68.50
March 31, 2016
578.43
9.66
68.33
26.55
23.36
706.33
March 31, 2016
937.05
58.09
995.14
Miscellaneous income for the year ended March 31, 2016 includes capital expenditure recovery of the co-location infrastructure sharing of sites aggregating to Rs. 13.66 crores (March 31, 2015- Rs. 10.66 crores) and other income Rs. 2.79 crores (March 31, 2015 – Rs. 5.71 crores).
99
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
25. RentMarch 31, 2015
Network 1,643.85
Others 38.51
1,682.36
26. Other Expenses
March 31, 2015
Commission, incentives and content cost 558.63
Customer acquisition costs 241.13
Advertising and sales promotion 251.65
Information technology solutions 207.67
Bad debt written off 124.63
Provision for doubtful debts and advances 40.92
Network managed service charges 137.68
Annual maintenance charges 160.18
Professional and legal fees (Refer note 36 for payment to Auditors) 127.41
Repairs and maintenance:
- Plant and machinery - network 179.14
- Building 25.05
- Plant and machinery others 37.05
- Others 21.17
Leaseline and bandwidth charges 115.61
Telecalling charges 87.60
Travel and conveyance 76.38
Insurance 12.70
Port charges 28.47
Material consumption (Network cards) 41.44
Rates and taxes 0.33
Provision for contingencies [Refer note 38(a)] 26.55
Provision for foreseeble loss on long term contracts [Refer note 38(b)] (15.23)
Miscellaneous expenses 104.16
2,590.33
March 31, 2016
1,644.53
75.89
1,720.42
March 31, 2016
523.04
230.65
160.04
200.72
-
137.88
75.07
180.66
115.19
204.17
26.52
54.95
23.21
134.39
117.72
67.27
20.24
25.32
40.69
24.97
(19.24)
2.13
76.43
2,422.01
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
27. Depreciation and AmortisationMarch 31, 2015
Depreciation 1,704.01
Amortisation:
- Amortisation of IRU 30.52
- Amortisation of licence fees/spectrum fees 526.26
2,260.79
28. Finance Cost March 31, 2015
Interest:
- On loans from banks / FIs 1,948.99
- On debentures 128.47
- On other loans 365.61
Guarantee commission 12.13
Others finance charges 246.06
Finance set up cost 56.53
2,757.79
29. Finance IncomeMarch 31, 2015
Interest Income
- Bank deposits / mutual funds 28.74
Profit on sale of current investments 67.72
96.46
30. Commitment and contingencies
March 31, 2016
1,469.56
29.07
528.31
2,026.94
March 31, 2016
2,050.06
113.76
366.22
13.27
232.61
48.37
2,824.29
March 31, 2016
18.49
101.65
120.14
S.N. Description March 31,2015
(i) Capital Commitment 4,266.48
Estimated value of contracts remaining to be executed on capitalaccount and not provided for (net of advances) (Includes Rs. 870.77crores (March 31, 2015 - Rs. 4,034.05) towards deferred payout forspectrum won in March 2015 auction)
(ii) Other CommitmentsBank guarantees 692.71Open letters of credit 87.53Indemnity given to others -
(iii) Contingent LiabilitiesClaims against the Company not acknowledged as debts 2,573.67
7,620.39
March 31, 2016
1,003.68
715.1655.87
102.26
2,687.25
4,564.22
101
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Claims against the Company not acknowledged as debts and commitments include the following:
S.N. Description March 31, 2015
1 BSNL Walky ADC [Refer para (a) below] 399.80
2 Income tax demands [Refer para (b) below] 98.74
3 SMS Termination charges payable to other operators [Refer para (c) below] 250.22
4 DOT demands, for license fees and spectrum charges for 2006-07 & 2007-08, based on special audit [Refer para (d) below] 300.06
5 Service Tax [Refer para (e) below] 194.14
6 WPC demand [Refer para (f) below] 106.95
7 DoT demands for EMF [Refer para (g) below] 494.99
8 Revenue share license fee assessment order [Refer para (h) below] 23.65
9 BSNL claims for interconnection [Refer para (i) below] 51.08
10 Port Charges payable to other operators 112.58
11 Sales Tax/VAT demands 48.94
12 Entry Tax 60.58
13 DoT demands on USO fund remittance 195.96
14 Other miscellaneous demands 235.97
2,573.66
March 31, 2016
416.07
91.02
250.22
300.06
119.70
106.95
611.05
23.65
51.08
144.96
48.64
75.44
195.96
252.44
2,687.25
Unless otherwise stated below the management believes that, based on legal advice, the outcome of these contingencies will
be favorable and that a loss is not probable, further outflow of economic resources is not probable in either case:
a. Bharat Sanchar Nigam Limited (‘BSNL’) raised demands on January 15, 2005 with effect from November 14, 2004 stating that
‘fixed wireless’ services provided by the Company under the brand name “WALKY” had mobility features and should be treated
as mobile for the purpose of Interconnect Usage Charges Regulations and Access Deficit Charge (‘ADC’) was payable on such
calls. Hon’ble Telecom Dispute and Settlement Appellate Tribunal (‘TDSAT’) negated the Company’s petition. The Company
filed an appeal before the Hon’ble Supreme Court, which confirmed that ADC was payable on fixed wireless service vide order
dated April 30, 2008. As there were claims and counter-claims between the Company and BSNL, the senior counsel of BSNL
offered and Hon’ble Supreme Court directed that quantification of amounts payable to each other be made by Hon’ble TDSAT.
Hon’ble TDSAT vide its various interim orders had directed that BSNL and the Company to exchange relevant information and
reconcile the differences. On April 15, 2010, Hon’ble TDSAT confirmed BSNL demands for period up to August 25, 2005 and
has given it liberty to lodge its claim for a further period up to February 28, 2006 without quantification. As TDSAT in its aforesaid
judgment has not considered the directions of Hon’ble Supreme Court vide judgment dated April 30, 2008 to reconcile claims/
counter claims and quantify amounts payable by parties to each other, the Company has filed an appeal in Hon’ble Supreme
Court against TDSAT order of April 15, 2010 which has been admitted by the Hon’ble Supreme Court on July 23, 2010. The
Company has also moved an application for interim relief against the Hon’ble TDSAT order, which is pending. During the year,
the Company has filed petition in the Hon’ble Supreme Court with respect to the matter for claiming the refund of excess
payment made to BSNL. The matter will be listed for hearing in due course of time. Based on the legal advice available with the
Company, the penalty clause invoked by BSNL does not apply and the Company is entitled to seek refund of the excess ADC
amount paid to BSNL along with interest and the Company believes that no additional provision is required.
The total demands as at March 31, 2016 are Rs. 651.04 crores (March 31, 2015 - Rs. 651.04 crores) including interest of
Rs. 294.55 crores (March 31, 2015 – Rs. 294.55 crores). Till March 31, 2016, the Company has made on account payment
TATA TELESERVICES LIMITED
102
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
under protest of Rs 570.28 crores (March 31, 2015 – Rs 570.28 crores) against the total demands.
Till March 31, 2016, the Company has provided Rs. 340.50 crores (March 31, 2015– Rs. 340.50 crores). The balance amount
of Rs. 310.54 crores together with accumulated interest on unpaid amount of Rs. 105.53 crores (March 31, 2015 – Rs. 89.25
crores) aggregating Rs. 416.07 crores (March 31, 2015 – Rs. 399.80 crores) has been disclosed as contingent liability.
The Company, based on the data available and legal opinions, believes that the payments in excess of provision would be
refunded and the interest demands will be quashed.
b. Income tax demands under appeal mainly include disputed demands of Rs. 73.26 crores (March 31, 2015– Rs. 80.97crores)
on account of the appeals filed by the Company before various appellate authorities against alleged non deduction of tax at
source with respect to discounts allowed to distributors. In this regards, the management based on legal advice believes that,
its tax position will be sustained.
c. One of the Telecom Operators raised invoices / demands on TTSL for period since June 2009 in respect SMS terminating on
either parties network based on the interconnection agreement between the Company and the operator. The Company
disputed on the ground that the charges are not reasonable and discriminatory. TDSAT vide its order dated August 30, 2012,
for the petition filed by the operator, directed TTSL to pay these charges. On October 17, 2012, TTSL’s appeal against the said
judgment was admitted by the Hon’ble Supreme Court but directed to pay the above amount on a condition that any amounts
paid by TTSL would be refunded back with interest in the event the matter is adjudged in TTSL’s favor. Total demand raised upto
March 31, 2014 by the operator is Rs. 419.12 crores (net of access charges payable of Rs. 570.84 crores, interest payable
Rs 83.54 crores and access charges receivable by TTSL Rs 235.26 crores). Accordingly, TTSL paid the amounts demanded by
the Operator and recorded Rs. 335.58 crores as net access charges and has recorded interest of Rs. 83.54 crores as provision
for contingencies during the year ended March 31, 2014.
Other operators have raised claims for SMS termination amounting to Rs 250.22 crores (March 31, 2015 - Rs. 250.22 crores),
which has been challenged with TDSAT by the Company. During the year, TDSAT has pronounced judgement with respect to
SMS termination charges. The Company believes that the amounts adjudged as payable by TDSAT are not tenable in the
absence of any contractual arrangements with these operators for SMS termination and is in the process of taking the
necessary action for appealing against the judgment. Accordingly, these claims have been disclosed as contingent liability.
d. On November 8, 2012, the Company has received demand from DoT amounting to Rs. 260.56 crores (including interest
Rs. 133.79 crores) for alleged short payment of License Fee for the financial year ended March 31, 2007 and March 31, 2008,
based on special audit. The Company has responded to the DoT contesting the various items included therein viz. commission
paid to dealers, discount/waiver, corporate allocation, etc, and interest charged as the DoT has not factored any on-account
payments for the respective years. These demand notices have been challenged before TDSAT and Hon’ble High Court of
Kerala and vide orders dated November 23, 2012 and December 10, 2012 respectively, Hon’ble High Court of Kerala has
passed an interim direction that no coercive action shall be taken for enforcement of the demands against the Company.
During the earlier year, the Company has also received demand from WPC wing of DoT on the items covered in special audit
demands by DOT, for the years March 31, 2007 and March 31, 2008, amounting to Rs. 145.98 crores (including interest
Rs. 88.69 crores). The Company has also responded to the WPC wing of DOT.
The Company has provision of Rs. 42.81 crores (March 31, 2015 - Rs. 42.81 crores), for the items it considers contentious and
disclosed the balance amount of Rs. 300.06 crores (March 31, 2015 - Rs. 300.06 crores) as contingent liability [excluding
Rs. 62.85 crores interest demanded, since the amounts paid on account have not been considered].
e. The Company availed cenvat credit on procurement of towers and shelters under the category of “Inputs” and service tax credit
on employee mediclaim insurance. The Commissioner of Service Tax passed order in November 2012 demanding Rs. 93.70
crores (March 31, 2015 - Rs. 93.70 crores) including penalty of Rs. 44.30 crores (March 31, 2015 - Rs. 44.30 crores) for the
103
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
April 2004 to March 2009 primarily on account that the Company is not eligible to avail such credit as these are neither
capital goods nor inputs under the Service Tax Law. The Company has filed an appeal before the tribunal.
During the previous year, the Company has received a favorable order from CESTAT disposing the above matters stating
demand on towers and shelter covers under limitation period as per section 73 of the Finance Act. Demand raised under the
extended period is set aside to the extent of Rs. 90.40 crores and CESTAT has asked tribunal for further clarification for balance
Rs. 3.30 crores. Hence, Rs. 3.30 crores has been disclosed as contingent liability.
During the previous year, the Company had received Show Cause Notice (‘SCN’) for the period October 2006 to March 2013
demanding Service Tax of Rs 187.16 crores (March 31, 2015 - Rs. 187.16 crores) on sale value of Starter Kits. During the year,
the Company has received the revised demand of Rs. 70.33 crores against the said Show cause notice. The Company has
duly filed response against the said demand and believes that the sale of starter kits is not liable to service tax.
During the year, the Company has received demand of Rs. 42.14 crores pertaining to service tax on SMS termination charges
receivable from operators, for the period July 2011 to May 2013. The Company is in process of filing response against the said
demand and believes that the Service tax is not liable on SMS termination charges and hence disclosed as Contingent Liability.
f. The Company has received a fresh demand from WPC cell of DoT for the seven assessment years ended March 31, 2006 to
2012 directing TTSL to pay Rs 188.30 crores (March 31, 2015 - Rs. 188.30 crores) for 20 circles, which comprises of principal
WPC demand of Rs. 52.54 crores and interest / penalty of Rs. 135.76 crores upto March 2014.
WPC cell of the DoT had raised number of demands during the prior years, upto 2007-08 and revised it eventually to a refund of
Rs. 31 crores on March 31, 2010 post TDSAT judgment requiring fresh demands based on reconciliation. Subsequently,
TDSAT had also issued an order directing WPC to not levy any penalty and interest on penalty.
The Company had paid Rs. 73.33 crores (March 31, 2015 - Rs. 73.33 crores) under dispute and had continued with a provision
of Rs. 81.35 crores (March 31, 2015 - Rs. 81.35 crores) in the absence of the final assessment orders from WPC. The
Company has filed its reply with DoT highlighting the discrepancies compared to earlier orders; and has requested for the
computation for the difference between the assessed income and AGR filed. The Company is yet to receive a response. As at
March 31, 2016, the Company has disclosed Rs. 106.95 crores (March 31, 2015 - Rs. 106.95 crores) as contingent liability and
believes that the demands will be quashed.
g. The Company has received show cause notice (‘SCN’) and demands from DoT for radiation and certain procedural issues
(non–submission/late submission of Electro Magnetic Field (‘EMF’) radiation self certificate) amounting to Rs. 613.03 crores
(March 31, 2015 - Rs. 496.99 crores). The Company has responded to all SCN and demands stating the facts and made a
provision Rs. 2 crores pertaining to radiation related demands and SCN. A Joint Industry Petition has been filed before TDSAT
challenging levy of penalty due to late submission of self-certificates and TDSAT has granted a stay. During the year, TDSAT
has set aside the EMF penalties pertaining to procedural delay upto March 31, 2011. However, the Company is still in process
of validating the said judgment and accordingly, disclosed Rs. 611.03 crores (March 31, 2015 - Rs. 496.99 crores) as
contingent liability.
h. The DoT made claims of Rs. 25.88 crores (March 31, 2015 - Rs. 25.88 crores) and Rs. 1.97 crores (March 31, 2015 - Rs. 1.97
crores) towards shortfall in license fees, penalty and interest thereon for the year 2003-04 and 2004-05 respectively. The
Company, together with other private Basic Service Providers, filed a petition with TDSAT in May 2003 contesting the basis of
computation of revenue share license fees. TDSAT held that license fee cannot be levied on non-telecom revenues and
decided treatment of various items of revenue and expenditure. DoT had filed an appeal against TDSAT judgment in Hon’ble
Supreme Court of India. The Company had also filed an appeal in Hon’ble Supreme Court. Hon’ble Supreme Court has set
aside the TDSAT judgment. The Company has filed application before TDSAT against these claims in line with Hon’ble
Supreme Court judgment. TDSAT pronounced its judgment in April 2015 and directed DoT to rework license fees payable. DoT
period
TATA TELESERVICES LIMITED
104
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
has filed an appeal against TDSAT judgment in Supreme Court. TTSL has also filed an appeal against TDSAT judgment
wherein certain line items included as part of AGR by TDSAT are being challenged and in the interim, the Company has
disclosed Rs. 23.65 crores (March 31, 2015 - Rs. 23.65 crores) as contingent liability.
i. BSNL in 2001 issued letters to the Company and other operators seeking unilateral increase in interconnection access
charges. The Company along with other operators filed a petition before TDSAT. TDSAT held the matter in favor of the
Company. BSNL filed an appeal in Hon’ble Supreme Court of India. The Supreme Court has stayed the operation of TDSAT
order. Demands raised on TTSL are Rs. 51.08 crores (March 31, 2015- Rs. 51.08 crores). In March 2009, BSNL demanded
payment and issued disconnection notices in case of failure to pay. The Hon’ble Supreme Court has stayed disconnection and
further clarified that the stay regarding TDSAT judgment was only towards refunds to be made by BSNL to TTSL.
31. One Time Spectrum Fees
The Company received demands from DoT for payment of one-time spectrum fees for additional CDMA spectrum held beyond
2.5MHz in all its circles for the period from January 1, 2013 till the expiry of the initial terms of the respective licenses. The
Company responded to DoT, intimating about its decision to retain only one block spectrum in Delhi Circle and surrender the
balance spectrum. The demand with respect to the spectrum retained by the Company is of Rs. 195.09 crores, which is payable
in instalments over the balance term of the license. In the opinion of Company, inter-alia, the above demand amounts to
alteration of financial terms of the licenses issued in the past and therefore, the Company has filed a Writ Petition before Hon’ble
Kolkata High Court challenging the decision to levy one-time spectrum charge and has subsequently, obtained a stay against
the demand. The Company has paid Rs. 132.12 crores (March 31, 2015 – Rs. 99.09 crores) for the period January 1, 2013 to
December 31, 2016 [including interest of Rs. 52.45 crores (March 31, 2015 – Rs. 42.20 crores)], under protest, pending the
judgment with respect to its petition, for the spectrum retained in Delhi. The principal amount paid Rs. 79.62 crores
(March 31, 2015 – Rs. 41.25 crs) has been disclosed under Intangible Assets, amortized as per the accounting policy followed
by the Company and the interest paid has been expensed in the statement of profit and loss under other finance charges for the
period upto March 31, 2016.
On May 24, 2013, DoT has asked the Company to surrender the spectrum unconditionally and pay one-time fee for the
spectrum held for proportionate period (i.e. from January 1, 2013 to the date of surrender). An application is also filed before
Hon’ble Kolkata High Court seeking direction to be issued to DoT for accepting surrender of spectrum as and when surrendered
without imposing any condition and without prejudice to the rights and contentions of TTSL. The same was allowed by Hon’ble
Kolkata High Court vide order dated August 2, 2013 and four months’ time was granted for the same. The Company has
completed surrender of spectrum under protest, as on November 30, 2013.
32. Spectrum acquired during auction process held in March 2015
During the year ended March 31, 2016, the Government of India (‘GoI’) issued Letters of Intent for earmarking the spectrum
won by the Company in 3 circles namely – Andhra Pradesh, Delhi and Haryana in the auctions conducted during March 2015.
The Company is required to pay Rs. 4,034.05 crores for spectrum, subject to outcome of Special Leave Petition filed by
Telecom Operators in Hon’ble Supreme Court. The Company has paid an advance of Rs. 1,059.01 crores on April, 7, 2015 as
upfront payment. The Company has exercised the option to pay the balance amount of Rs. 2,975.04 crores (excluding interest)
under the EMI scheme offered by the DoT. Accordingly, deferred payment liability of Rs. 2,394.95 crores (including interest of
Rs. 213.85 crores) has been recognized. The balance unpaid amount pertaining to the spectrum not yet allotted of Rs. 870.77
crores (including interest of Rs 76.06 crores), has been disclosed under capital commitments and the amount paid in advance
Rs. 294.74 crores (including interest of Rs. 28.84 crores) has been disclosed as capital advance under loans and advances. As
per the terms of the Notice Inviting Application, in the event of default in payment of instalments, DOT may terminate the license
and spectrum allotment/assignment, in which case, the allotted/assigned spectrum will revert back to DOT and the financial
bank guarantees will be encashed by DOT.
33. DOT related demands
a. DOT has issued show-cause notice cum demand for license fees payable by the Company Rs. 846.82 crores
(March 31, 2015 - Rs. 597.92 crores) for the year ended March 31, 2007, 2008, 2009, 2010, 2011 and 2012; wherein DOT
has disallowed the PSTN related call charges, service tax and sales tax, claimed as deduction in the annual license fee
statements filed by the Company for these years. The letters include interest of Rs. 364.43 crores (March 31, 2015 -
Rs. 233.02 crores) and penalty of Rs. 184.71 crores (March 31, 2015 - Rs. 163.96 crores). The Company has submitted
the documents required by DOT and believes that it has the necessary information to substantiate its claims and
therefore is confident that these demands would be corrected. The Company has not got any response from DOT.
b. Subsequent to the judgment of the Hon’ble Supreme Court on October 11, 2011 on components of Adjusted Gross
Revenue for computation of License fee, based on the legal advice, the Company believes that the realised and
unrealized foreign exchange gain should not be included in Adjusted Gross Revenue (AGR) for computation of license
fee thereon. Also, due to ambiguity of interpretation of ‘foreign exchange differences, the license fee impact on such
exchange differences is not quantifiable and has not been included in the table above (contingent liability). Further, as per
the Order dated June 18, 2012 of the Hon’ble Kerala High Court, a stay has been obtained, wherein the licensee can
continue making the payment as was being done throughout the period of license on telecom activities. Further, TRAI in
its recommendation on the AGR dated January 6, 2015 and TDSAT in its order dated April 23, 2015 have excluded the
gains from foreign exchange fluctuations from the computation of AGR. Accordingly, the license fee on such foreign
exchange gain has not been provided in these financial statements.
34. Forward contracts and derivative instruments:
The Company’s activities expose it to different financial risks, including the effects of changes in foreign currency exchange
rates and interest rates. The Company uses derivative financial instruments such as forward contracts, option contracts, cross
currency swaps (‘CCS’) and interest rate swaps (‘IRS’) to manage its exposures to foreign exchange fluctuation and interest
rate fluctuation. There are no contracts entered for speculation purpose.
The following table details the status of the Company’s exposure as on March 31, 2016:
Particulars March 31, 2015
USD INR
a) Foreign currency exposure on related currency loans / liabilities 103.30 6,467.91
(i) Derivative / Hedge contracts entered into by the Company
- Forwards 34.92 2,186.58
- Cross Currency Swaps 25.61 1,603.23
(ii) Unhedged foreign currency exposure
- Foreign currency loan (hedge through IRS below) 41.40 2,592.05
- Dues for capital goods and other trade payables 1.37 86.04
b) Interest Rate exposure on underlying liabilities 81.21 5,084.34
- Hedged through Cross Currency Swap Contracts 25.61 1,603.23
- Hedged through Interest Rate Swaps 55.60 3,481.12
- Unhedged Interest Rate exposure on underlying liabilities - -
March 31, 2016
USD INR
87.53 5,806.83
33.38 2,214.32
20.12 1,334.95
32.88 2,181.45
1.15 76.15
78.06 5,178.19
19.83 1,315.54
53.28 3,534.26
4.95 328.38
105
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
TATA TELESERVICES LIMITED
106
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The Company has taken forward, not included above, on future interest liability exposure amounting to USD 4.73 crores (March 31, 2015 – USD 2.75 crores).
Further, there is interest rate exposure on the Letters of Credit amounting to Rs. 31.80 crores (USD 0.48 crores) as on March 31, 2016 [March 31, 2015– Rs. 32.56 crores (USD 0.52 crores)], not hedged as at the year end.
Pursuant to The Institute of Chartered Accountants of India's (ICAI) Announcement dated March 29, 2008 on 'Accounting for Derivatives', the Company has, based on the principles of prudence enunciated in Accounting Standard-1 on 'Disclosure of Accounting Policies', recognized net MTM gain amounting to Rs. 520.17 crores (Rs. 328.77 crores in non current loans and advances and Rs. 191.40 crores in current loans and advances) during the year to the extent of exchange loss on the underlying liabilities (March 31, 2015– MTM gain Rs. 531.62 crores) (March 31,2015 - Rs. 511.25 crores in non current loans and advances and Rs. 20.37 crores in current loans and advances).
35. A) Expenditure in foreign currency (accrual basis)
Particulars March 31, 2015
Service revenue (roaming revenue from domestic customers) 15.18
15.18
March 31, 2016
10.56
10.56
B) Earnings in Foreign currency
Particulars March 31, 2015
Professional consultancy fees 10.29
Finance charges 269.20
Information technology solutions 4.15
Others 28.50
312.14
March 31, 2016
10.06
259.42
2.79
21.85
294.12
Particulars March 31, 2015
As auditors 1.80
Other services 0.88
Reimbursement of out of pocket expenses 0.20
2.88
March 31, 2016
2.35
0.76
0.34
3.45
36. Payment to Auditors (included in professional and legal fees, excluding service tax):
Particulars March 31 ,2015
Import of capital equipment 259.01
Components and spare part 1.98
260.99
March 31, 2016
266.76
3.64
270.40
37. CIF Value of imports
38. Current Liabilities and provisions
a) Provision for contingencies :
Provision for contingencies is primarily on account of various provisions towards the outstanding claims / litigations
against the Company, which are expected to be utilized on closure of the litigations. The Company has paid certain
amounts under dispute against these claims / litigations.
The following table sets forth the movement in the provision for contingencies:
DescriptionAs at
April 1, 2015Additions
during the yearDeletions
during the yearAmount paidunder dispute
As at March 31,2016
Provision for contingencies 50.70 26.00 (45.24) (20.87) 10.58
DescriptionAs at
April 1, 2014Additions
during the yearDeletions
during the yearAmount paidunder dispute
As at March 31,2015
Provision for contingencies 84.63 26.55 - (60.48) 50.70
b) Provision for foreseeable loss on long term contracts:
Provision for foreseeable loss on long term contracts is on account of outstanding claims / litigations against the Company under these contracts, which are expected to be utilized on closure of the litigations. The Company has paid certain amounts under dispute against these claims / litigations.
The following table sets forth the movement in the provision for foreseeable loss on long term contracts.
DescriptionAs at
April 1, 2015Additions
during the yearDeletions
during the yearAmount paidunder dispute
As at March 31,2016
Provision for foreseeble loss on long term contracts 102.77 38.47 (36.34) (0.00) 104.89
DescriptionAs at
April 1, 2014Additions
during the yearDeletions
during the yearAmount paidunder dispute
As at March 31,2016
Provision for foreseeble loss on long term contracts 118.00 47.00 (62.23) - 102.77
c) Employee Benefit Plans:
The Company has defined benefit gratuity plan. Every employee who has completed five years or more gets the gratuity
on departure at 15 days salary i.e. last drawn salary for each completed year of service. The scheme is funded with an
insurance company in the form of a qualifying insurance policy. Summary of the gratuity plan is as follows :
107
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
TATA TELESERVICES LIMITED
108
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
March 31, 2015
Components of net benefit cost
Service cost 7.36
Interest cost 4.77
Expected return on plan assets (3.49)
Net actuarial (gain) / loss recognised during the year (1.56)
Past Service cost -non-vested benefit -
Past Service cost-vested benefit - -
Net gratuity cost 7.08
March 31, 2016
7.38
3.47
(3.53)
(0.82)
-
6.50
March 31, 2015
Change in benefit obligation
Benefit obligation at the beginning of the period / year 52.00
Service cost 7.36
Interest cost 4.77
Acquisition/Business Combination/Divestiture -
Benefits paid (11.66)
Actuarial (gain) / loss (1.65)
Past Service Cost -
Benefit obligation at the end of the year 50.83
Change in fair value of plan assets
Fair value of plan assets at beginning of year 46.88
Expected return on plan assets 3.49
Actual contribution -
Benefits paid (11.66)
Asset gain / (loss) (0.09)
Fair value of plan assets at end of year 38.62
Actual return on plan assets 3.40
March 31, 2016
50.83
7.38
3.47
(4.64)
(12.81)
(0.57)
-
43.67
38.62
3.53
18.63
(17.44)
0.25
43.59
3.78
The change in benefit obligation and funded status of the gratuity plan for the year ended March 31, 2016 is as follows:
109
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Net gratuity cost for the year ended March 31, 2016 is as follows :
Fund balance March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012
Defined benefit obligation (50.83) (52.00) (54.50) (40.91)
Fair value of plan assets 38.61 46.88 39.61 26.74
Funded status asset / (liability) (12.22) (5.12) (14.89) (14.18)
(Profit) on plan assets not recognised in Profit & Loss Account 5.35 (3.05) (1.95) 0.30
Liability in Balance Sheet (6.87) (8.17) (16.84) (14.48)
Experience adjustment on plan liabilities (assets) (0.09) (0.04) 1.58 (4.86)
March 31, 2016
(43.67)
43.59
(0.08)
(1.85)
(1.94)
0.25
Partuculars March 31, 2015
Discount rate 7.80%
Expected return on plan assets (as declared by LIC) 8.50%
March 31, 2016
7.30%
8.50%
The assumptions used in accounting for the gratuity plan for the year are as below:
Major categories of plan assets as a percentage to total assets: March 31, 2015
Government of India Securities (funded with LIC of India & TATA AIA) 100%
March 31, 2016
100%
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
other relevant factors, such as supply and demand in the employment market. Further, the estimated amount of contributions
expected to be paid to the plan during the year ending March 31, 2017 is Rs. 12.40 crores (March 31, 2016 : Rs. 1.56 crores).
(ii) Provident fund with respect to employees covered with the Government administered fund is a defined contribution
scheme. Also, the Company makes contributions to the Tata Teleservices Provident Fund Trust which is treated as
defined benefit plan.
Summary of the provident fund plan is as follows:
Partuculars March 31 ,2015
Components of net benefit cost
Service cost 19.93
Interest cost 32.81
Expected return on plan assets (34.82)
Net actuarial (gain) / loss recognized during the year (9.55)
Past Service cost -non-vested benefit -
Past Service cost-vested benefit - -
Net cost 8.37
March 31, 2016
15.88
18.07
(19.17)
0.30
-
15.08
TATA TELESERVICES LIMITED
110
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The change in benefit obligation and funded status of the Provident Fund plan for the year ended March 31, 2016 is as follows:
Partuculars March 31, 2015
Change in benefit obligation
Benefit obligation at the beginning of the year . 326.57
Service cost 19.93
Interest cost 32.81
Benefits paid (67.36)
Actuarial (gain) / loss 3.45
Employee contributions 29.69
Settlements 9.01
Changes in the reserves
Benefit obligation at the end of the year 354.11
Change in fair value of plan assets
Fair value of plan assets at beginning of year 327.53
Expected return on plan assets 34.82
Employer contributions 19.93
Transfer In 9.01
Employee Contibution 29.69
Asset gain / (loss) 13.00
Benefit payments (67.36)
Fair value of plan assets at end of year 366.63
March 31, 2016
354.11
15.88
18.07
(74.00)
14.61
27.13
3.28
359.09
366.63
19.17
15.88
3.28
27.13
14.31
(74.00)
372.41
Net provident fund cost for the year ended March 31, 2016 is as follows:
Fund balance March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012
Defined benefit obligation (354.11) (326.57) (281.63) (234.36)
Fair value of plan assets 366.63 327.53 284.86 230.58
Funded status asset / (liability) 12.52 0.96 3.23 (3.78)
(Profit) / Loss on plan assets not recognised in Profit &Loss Account (15.22) (5.39) (7.92) 5.74
(Liability)/ Asset in Balance Sheet (2.70) (4.43) (4.69) 1.96
Experience adjustment on plan liabilities - 2.50 (6.35) 7.37
March 31, 2016
(359.09)
372.41
13.32
(16.70)
(3.38)
-
111
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Particulars March 31, 2015
Interest rate 8.75%
Expected return on Plan Assets (Internal Rate of Return on the portfolio of plan assets, given below) 7.80%
Major categories of plan assets as a percentage to total assets March 31, 2015
Government of India Securities/ Gilt Mutual Funds 25.68%
State Government Securities 20.95%
PSU Bonds 43.60%
Private Sector Bonds/Equity/Mutual Funds 9.77%
March 31, 2016
8.80%
7.40%
March 31, 2016
19.57%
24.32%
55.87%
0.24%
The assumptions used in accounting for the Provident Fund Plan for the year are as below:
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
other relevant factors, such as supply and demand in the employment market. Further, the estimated amount of contributions
expected to be paid to the plan during the year ending March 31, 2017 is Rs. 3.38 crores (March 31, 2016 - Rs. 2.70 crores).
39. Deferred taxes
During the year ended March 31, 2016 the Company has incurred losses of 3,386.02 crores, (accumulated losses of
Rs. 31,528.56 crores) resulting into tax loss carry forward situation. The Company launched its unified access services only
during year ended March 31, 2003. The Company is eligible for a tax holiday under section 80IA of the Indian Income-tax Act,
1961, beginning with the financial year in which the Company started providing telecommunication services prior to
March 31, 2005, for 17 telecom circles. Though the management is confident of generating profits in the future, there is
currently no virtual certainty that the Company would reverse the tax loss carry forwards beyond the tax holiday period.
Accordingly, the Company has restricted recognition of deferred tax assets resulting from the carry forward tax losses and
other timing differences to the extent of deferred tax liability on account of difference in the tax and book depreciation.
40. Operating leases
Where the Company is a lessee
Rent
The Company has entered into lease agreement for leased premises, which expire in the next twenty years from the date of the
agreements. Gross rental expenses for the year ended March 31, 2016 aggregated Rs. 75.89 crores (March 31, 2015--
Rs. 38.51 crores)
Future lease payments under operating leases are as follows:
Rs
Particulars March 31 ,2015
(i) not later than one year 0.44
(ii) later than one year and not later than 5 years 1.78
(iii) Later than 5 years 3.57
5.79
March 31, 2016
0.44
1.78
3.12
5.34
TATA TELESERVICES LIMITED
112
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
41. Related Party Disclosure
a) Enterprises having significant influence
i. Tata Sons Limited. [Refer Note 3]
ii. NTT DOCOMO Inc (Effective March 25, 2009), holding 26.5% in TTSL.
b) Subsidiary companies include Tata Internet Services Limited, VIOM Networks Limited [Refer note 13(a)], NVS Technologies Ltd and MMP Mobi Wallet Payment Systems Limited
c) Associate include Tata Teleservices (Maharashtra) Limited (“TTML”).
d) The Company has entered into Joint Venture, namely Virgin Mobile India Private Limited, with Virgin Mauritius Investment Limited. [Refer Note 13(e)]
e) Key management personnel - Mr. N Srinath (Managing Director)
113
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Transactions during the year
Sale of fixed assets (0.02) (18.47) - - -
Issue of CCNCPS - - - - (1,024.00)
Investments made in equity instruments 13.00 - - - -
Security deposit received - - - -
Security deposit given 2.97 - - - -
Service revenue (3.21) ( (250.83) - (0.09) (1.09)
Other income - (3.36) - - -
Rent- network 981.98 - - - -
Power & fuel -network 660.34 - - - -
Access charges - 50.78 - - 0.02
Employee cost reimbursed 2.50 - - - -
Professional and legal fees - - - - 0.02
Repair and maintenance - 2.77 - - -
Managerial remuneration - - 3.56 - -
Leaseline and bandwidth charges - 14.43 - - -
Communication expenses - 1.09 - - -
Commission, Incentive and content cost 3.57 - - - -
Expenses incurred by us on behalf of related Party (2.40) (71.30) - (0.12) -
Expenses incurred by related party on behalf of us - 15.31 - - -
Miscellaneous expenses (0.07) 2.62 - 0.01 1.04
Outstanding balances as at March 31, 2016
Trade receivables 1.98 71.70 - 226.87 0.70
Other receivables - 32.82 - 0.38 -
Other current liabilities (168.49) (72.82) - (49.09) (0.00)
Inter corporate deposit - - - 204.95 -
Investments in equity instruments 942.33 2,035.81 - 230.06 -
Provision for diminution/doubtful debts & advances - (964.33) - (613.07) -
Security deposit given 138.09 1.73 - - -
Corporate guarantee/ bank guarantee given 1.88 - - - -
(0.01) (10.99) - - -
- - - - (995.43)
13.00 - - - -
(0.05) - - -
- - - - -
(2.76) 204.71) - (0.03) (0.79)
- (1.67) - - -
872.25 - - - -
561.41 - - - -
- 44.60 - - 0.01
1.56 - - - -
- - - - -
- 3.42 - - -
- - 3.83 - -
- 27.43 - - -
- 1.29 - - -
6.80 - - - -
(2.85) (65.43) - (0.01) -
- 22.90 - - -
0.16 1.15 - - 0.87
3.53 85.06 - 227.26 0.23
- 26.33 - - -
(136.03) (131.24) - (49.59) (0.44)
- - - 204.95 -
955.33 2,035.81 - 230.06 -
- (1,350.06) - (613.07) -
138.05 1.73 - - -
1.88 - - - -
-
Relationship Subsidiaries AssociatesKey Managerial
PersonnelJoint Venture
Enterprises having Significant Influence
Mar-16 Mar-15 Mar-16 Mar-15 Mar-16 Mar-15 Mar-16 Mar-15 Mar-16 Mar-15
TATA TELESERVICES LIMITED
114
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a) The Company shares certain infrastructure and operations processes with TTML including common billing platform, domestic
roaming services for the mobile subscribers.
b) Other expenses for the year ended March 31, 2016 are net of Rs. 65.43 crores (March 31, 2015– Rs. 71.30 crores), costs
reimbursed by TTML.
c) Share pledge has been created of 26 per cent (March 31, 2015– 26 percent) between Tata Sons Limited and the Tata Power
Company Limited, in favor of IDBI Trusteeship Services Limited acting as Trustees on behalf of Lenders of the Company. [Refer
Note 5 a (i)]
d) The Company has pledged 26 per cent (March 31, 2015– 26 percent) stake (of the total outstanding equity share capital of
TTML) to the lenders of TTML against loans taken by TTML. [Refer Note 13 (f)].
e) Disclosure in respect of transactions with related parties in accordance with Accounting Standard Interpretation (ASI) 13 –
“Interpretation of paragraph 26 and 27 of AS 18” read together with para 26 and 27 to Accounting Standard (AS) 18, “Related
Party Disclosures”.
115
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Nature of transactions
Sale of fixed assets
MMP Mobi Vallet Payment Systems Limited (0.02) -
Issue of CCNCPS
Tata Sons Limited - (1,024.00)
Investments made in equity instruments
MMP Mobi Vallet Payment Systems Limited 13.00 -
Security deposit given
Viom Networks Limited 2.97 -
Security deposit received
Viom Networks Limited - -
Service revenue
Viom Networks Limited (2.71) -
MMP Mobi Vallet Payment Systems Limited (0.50) -
NTT DoCoMo Inc - (0.93)
Rent - network
Viom Networks Limited 981.98 -
Power & fuel network
Viom Networks Limited 660.34 -
Access charges
NTT DoCoMo Inc - 0.02
Professional and legal fees
Tata Sons Limited - 0.02
Commission, incentive and content cost
MMP Mobi Vallet Payment Systems Limited 3.57 -
Expenses incurred by us on behalf of related Party
Viom Networks Limited (1.28) -
MMP Mobi Vallet Payment Systems Limited (0.75) -
Tata Internet Services Limited (0.26) -
Tata Sons Limited - 0.09
Miscellaneous expenses
MMP Mobi Vallet Payment Systems Limited 0.08 -
NTT DoCoMo Inc - -
Tata Sons Limited - -
(0.01) -
- (995.43)
13.00 -
- -
(0.04) -
(2.42) -
(0.34) -
- (0.78)
872.25 -
561.41 -
- 0.01
- -
6.80 -
(2.03) -
(0.81) -
- -
- -
0.16 -
- 0.60
- 0.27
SubsidiariesEnterprises having Significant
Influence
Mar-16 Mar-15 Mar-16 Mar-15
Particulars
TATA TELESERVICES LIMITED
116
21st Annual Report 2015-2016
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Employee cost reimbursed
MMP Mobi Vallet Payment Systems Limited 2.50 -
Outstanding balances
Trade receivables
Viom Networks Limited 0.69 -
MMP Mobi Vallet Payment Systems Limited 1.39 -
NTT DoCoMo - 0.44
Tata Sons Limited - 0.27
Other current liabilities
Viom Networks Limited (166.99) -
MMP Mobi Vallet Payment Systems Limited - -
Tata Internet Services Limited - -
Tata Sons Limited - -
Investments
Viom Networks Limited 752.23 -
MMP Mobi Vallet Payment Systems Limited 40.00 -
Tata Internet Services Limited 150.00 -
Security deposit
Viom Networks Limited 138.09 -
1.86 -
1.09 -
2.49 -
- 0.05
- 0.18
(131.88) -
(4.32) -
0.17 -
- (0.44)
752.23 -
53.00 -
150.00 -
138.05 -
SubsidiariesEnterprises having Significant
Influence
Mar-16 Mar-15 Mar-16 Mar-15
Particulars
117
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
43. Debenture Redemption Reserve
The Company has issued NCD Series III and NCD Series IV aggregating to Rs. 1,000 crores (March 31, 2015 – Rs. 1,000
crores) repayable over the specified period. As per section 71 (4) of the Companies Act 2013, a debenture redemption reserve
('DRR') is to be created out of the profits of each year until such debentures are redeemed. During the year ended
March 31, 2016, the Company has incurred losses of 3,386.02 crores (March 31, 2015 – Rs. 3,846.16 crores), hence, the
Companyhas not created debenture redemption reserve.
Further, as per Companies (Share Capital and Debentures) Rules 2014 wherein in terms of Clause 18 (7)(c) of the rules, it will thbe necessary for TTSL to create a fund before 30 April of each financial year, which shall not be less than 15% of the
stdebentures maturing during the respective financial year ending on 31 March, by way of one or more methods i.e. through
deposits with scheduled banks /investments in specified securities or bonds as indicated in the Clause 18(7)(c) of the Circular.
The Company has placed Rs. 37.50 crores in scheduled bank as fixed term deposit, on April 28, 2016 for the repayment of
Rs. 250 crores due in the financial year 2016-17.
44. Previous year figures
Previous year figures have been regrouped where necessary to conform to this year's classification.
Rs.
42. Earnings per Share
As per our report of even date
For S.R. Batliboi & Associates LLP For and on Behalf of the Board of Directors ICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 24, 2016 Date: June 24, 2016
Particulars Units March 31 ,2015
Loss for the year Rs. in Crores 3,846.20
Weighted average number of equity shares in calculating basic EPS Nos. in crores 471.23
Loss per Share (equity shares, par value of Rs. 10/- each
- Basic and Diluted In Rs. 8.16
March 31, 2016
3,386.02
471.23
7.19
CONSOLIDATEDFINANCIAL STATEMENTS
To the Members of Tata Teleservices Limited
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Tata Teleservices Limited (hereinafter referred to as the
'Holding Company'), its subsidiaries (the Holding Company and its subsidiaries together referred to as the 'Group') its associate and
jointly controlled entity, comprising of the consolidated balance sheet as at March 31, 2016, the consolidated statement of profit and
loss and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other
explanatory information (hereinafter referred to as 'the consolidated financial statements').
Management's Responsibility for the Consolidated Financial Statements
The Holding Company's Board of Directors is responsible for the preparation of these consolidated financial statements in terms with
the requirement of the Companies Act, 2013 (the 'Act') that give a true and fair view of the consolidated financial position,
consolidated financial performance and consolidated cash flows of the Group in accordance with accounting principles generally
accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group and of its associate and jointly
controlled entity are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for
safeguarding of the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application
of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design,
implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and
fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation
of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit,
we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance
with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the
Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor's judgment, 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 financial control relevant to the Holding Company's preparation of the consolidated financial statements that give a
true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Holding Company's
Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit
evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in paragraph (a) of
the Other Matters below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements
give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India of the consolidated state of affairs of the Group, its associate and jointly controlled entity as at
INDEPENDENT AUDITOR’S REPORT
119
March 31, 2016, their consolidated loss and their consolidated cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
As required by section 143 (3) of the Act, we report, to the extent applicable, that:
(a) We / the other auditors whose reports we have relied upon have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the purpose of our audit of the aforesaid consolidated
financial statements;
(b) In our opinion proper books of account as required by law relating to preparation of the aforesaid consolidation of the financial
statements have been kept so far as it appears from our examination of those books and reports of the other auditors;
(c) The consolidated balance sheet, consolidated statement of profit and loss and consolidated cash flow statement dealt with by
this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial
statements;
(d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under section
133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 ;
(e) On the basis of the written representations received from the directors of the Holding Company as on March 31, 2016 taken on
record by the Board of Directors of the Holding Company and the reports of the auditors who are appointed under Section 139
of the Act, of its subsidiary companies, associate company and jointly controlled company incorporated in India, none of the
directors of the Group's companies, its associate and jointly controlled company incorporated in India are disqualified as on
March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy and the operating effectiveness of the internal financial controls over financial reporting of the
Holding Company and its subsidiary companies, associate company and jointly controlled company incorporated in India, refer
to our separate report in 'Annexure' to this report;
(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The consolidated financial statements disclose the impact of pending litigations on its consolidated financial position of
the Group, its associate and jointly controlled entity – [Refer Note 31 (C), 32 and 34 to the consolidated financial
statements];
ii. Provision has been made in the consolidated financial statements, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts [Refer Note 36 (c)
to the consolidated financial statements];
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the
Holding Company, its subsidiaries, associate and jointly controlled company incorporated in India.
Other Matter
The accompanying consolidated financial statements include total assets of Rs. 47.32 crores as at March 31, 2016, and total
revenues and net cash outflows of Rs. 7.66 crores and Rs 0.32 for the year ended on that date, in respect of two subsidiaries which
have been audited by other auditors, which financial statements, other financial information and auditor's reports have been
furnished to us by the management. The consolidated financial statements also include the Company's share of net loss of Rs. Nil for
the year ended March 31, 2016, as considered in the consolidated financial statements, in respect of its associate, whose financial
TATA TELESERVICES LIMITED
120
21st Annual Report 2015-2016
121
statements, other financial information have been audited by other auditors and whose reports have been furnished to us by the
Management. Our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in
respect of these subsidiaries, jointly controlled entity and associate, and our report in terms of sub-sections (3) and (11) of Section
143 of the Act, in so far as it relates to the aforesaid subsidiaries, jointly controlled entities and associates, is based solely on the
reports of such other auditors.
Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements above, is not
modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the
financial statements and other financial information certified by the Management
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Prashant Singhal
Partner
Membership Number: 93283
Place: Mumbai
Date: June 25, 2016
Annexure to the Independent Auditor's report of even date on the consolidated financial statements of Tata Teleservices
Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the
'Act')
In conjunction with our audit of the consolidated financial statements of Tata Teleservices Limited as of and for the year ended March
31, 2016, we have audited the internal financial controls over financial reporting of Tata Teleservices Limited (hereinafter referred to
as the 'Holding Company') and its subsidiary companies, its associate company and jointly controlled company, which are companies
incorporated in India, as of that date.
Management's Responsibility for Internal Financial Controls
The respective Board of Directors of the of the Holding Company, its subsidiary companies, its associate company and jointly
controlled company, which are companies incorporated in India, are responsible for establishing and maintaining internal financial
controls based on the internal control over financial reporting criteria established by the Holding Company considering the essential
components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of
adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business,
including adherence to the respective company's policies, the safeguarding of its assets, the prevention and detection of frauds and
errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as
required under the Act.
Auditor's Responsibility
Our responsibility is to express an opinion on the company's internal financial controls over financial reporting based on our audit. We
conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the
'Guidance Note') and the Standards on Auditing, both, issued by Institute of Chartered Accountants of India, and deemed to be
prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and
the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether adequate internal financial controls over financial reporting was established and maintained and if such controls
operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over
financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining
an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected
depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports
referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal
financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
TATA TELESERVICES LIMITED
122
21st Annual Report 2015-2016
123
of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company's
assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also,
projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the
internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Holding Company, its subsidiary companies, its associate company and jointly controlled company, which are
companies incorporated in India, have, maintained in all material respects, an adequate internal financial controls system over
financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based
on the internal control over financial reporting criteria established by the Holding Company considering the essential components of
internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of
Chartered Accountants of India.
Other Matters
Our report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over
financial reporting of the Holding Company, insofar as it relates to these two subsidiary companies and one associate company,
which are companies incorporated in India, is based on the corresponding reports of the auditors of such subsidiary and associate.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Prashant Singhal
Partner
Membership Number: 93283
Place: Mumbai
Date: June 25, 2016
TATA TELESERVICES LIMITED
124
21st Annual Report 2015-2016
Notes March 31, 2015 EQUITY AND LIABILITIES
Shareholders’ funds
Share capital 3(A) 8,217.03Reserves and surplus 4 (18,256.48Preference shares issued by subsidiary 3(B) 250.00Minority Interest 122.41
Non-current liabilitiesLong-term borrowings 5 30,325.01Other long term liabilities 6 665.99Long-term provisions 7 210.58
31,201.58Current liabilities
Short-term borrowings 8 1,528.40Trade payables 9 963.18Other current liabilities 9 4.275.76Short-term provisions 7 392.94
7,160.28
TOTAL 28.694.82
ASSETSNon-current assets
Fixed assetsTangible assets 10 14,238.72Intangible assets 11 6,763.67Capital work-in-progress 12 243.99
Trade receivables 17 145.89Non-current investments 13 4.14Non-current loans and advances 14 2,799.24Other non-current assets 19 141.28
24,336.93Current assets
Current investments 15 1,895.20Inventories 16 23.93Trade receivables 17 948.03Cash and bank balances 18 548.40Current loans and advances 14 638.58Other current assets 19 303.75
4,357.89
TOTAL 28,694.82 Summary of significant accounting policies 2
March 31, 2016
9,212.46(21,258.22)
249.85126.22
31,447.61702.33445.35
32,595.29
719.031,005.655,873.03
342.48
7,940.19
28,865.80
12,728.069,511.17
205.01-
4.142,067.28
88.05
24,603.71
1,010.6520.46
673.71545.45
1,708.92302.90
4,262.09
28,865.80
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The accompanying notes are an integral part of the consolidated financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLPICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 25, 2016 Date: June 25, 2016
125
Notes March 31, 2015
REVENUE
Revenue from operations 20 14.008.98
Other income 21 117.26
Total revenue 14.126.24
EXPENSES
Access charges 2,759.38
License fees and spectrum charges (revenue share) 905.34
Cost of goods sold 22 110.96
Employee benefit expenses 23 952.53
Power and fuel 24 2,135 96
Rent 25 1,330.53
Other expenses 26 3,132.60
Total expenses 11,327.30
Earnings before interest, tax, depreciation and amortisation (EBITDA) 2.798.94
Depreciation and amortisation expense 27 (3,141.46)
Finance cost 28 (3,644.05)
Finance income 28 114.11
Foreign exchange gain/(loss), net 21.43
Loss for the year before exceptional items and tax (3,851.03)
Exceptional items 30 -
Loss for the year before tax (3,851.03)
Provision for tax
Current tax expense MAT 26.50
Less: Mat credit entitlement (26.50)
Loss for the year after tax (3,851.03)
Minority interest (3.23)
Share of loss in associate (222.27)
Loss for the year after minority interest (4,076.53)
Earnings per equity share [nominal value Rs 10 each]
Basic and diluted (in Rs) 41 (8.65)
Summary of significant accounting policies 2
March 31, 2016
14,272.90
132.20
14,405.10
2,114.44
949.56
68.50
880.46
2,191.66
1,594.04
3,263.44
11,062.09
3,343.01
(2,858.29)
(3,537.00)
146.85
(1.23)
(2,906.67)
(91.26)
(2,997.93)
95.52
(95.52)
(2,997.93)
(3.81)
-
(3,001.74)
(6.37)
CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The accompanying notes are an integral part of the consolidated financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLPICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 25, 2016 Date: June 25, 2016
TATA TELESERVICES LIMITED
TELESERVICESTATA
126
21st Annual Report 2015-2016
Notes March 31, 2015
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year, before tax, minority interest and share of loss in associates (3,851.03)
Non-cash adjustment:
Depreciation and amortisation (net of amotisation on Goodwill) 3,141.46
Foreign exchange, net unrealised loss / (gain) (20.27)
Provision for lease equalisation reserve (45.79)
Provision for doubtful debts and advances (7.30)
Provision for irrecoverable and damaged assets (36.29)
Provision for contingencies and forseeable losses (net of payments) 41.27
Exceptional items
Finance cost 3,644.05
Interest income (40.55)
Profit on sale of investment (73.56)
Loss on sale of fixed assets, net 51.87
Operating Profit before working capital changes 2.803.86
Adjustment for changes in:
Decrease/(lncrease) in inventories (12.55)
Decrease in trade receivables 10.68
(Increase) in non- current loans and advances, other assets (85.61)
Decrease in current loans and advances, other assets 34.34
Increase in other long term liabilities and provision 72.70
lncrease/(Decrease) in other current liabilities and provision 25.11
Cash generated from operations 2,848.53
Direct taxes (paid) (net of refund) (309.47)
NET CASH FLOW FROM OPERATING ACTIVITIES (A) 2,539.06
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of tangible assets (1,042.13)
Net movement (Increase) / decrease to CWIP 41.52
Net movement (Increase) / decrease to capital advances 3.41
Acquistion of intangibles (net) (0.94)
Proceeds from sale of tangible assets 156.26
Purchase of current investments (17,925.72)
Sale of current investments 16,259.89
Investment in bank deposits (having original maturity of more (1,211.73)
than three months)
Redemption/maturity of bank deposits (having original maturity of 1,662.32
more than three months)
Redemption/maturity of bank deposits (having original maturity of 4.63
more than twelve months)
Interest received 45.20
NET CASH FLOW (USED IN) INVESTING ACTIVITIES (B) (2,007.29)
March 31, 2016
(2,997.93)
2,858.29
24.72
10.69
70.69
236.96
(20.84)
(91.26)
3,537.00
(28.97)
(117.88)
15.46
3,496.92
3.47
309.57
(95.71)
345.89
28.25
(32.62)
4,055.77
(199.33)
3,856.45
(914.49)
38.98
(274.77)
(899.77)
55.95
(17,554.60)
18,557.03
(536.62)
468.19
27.27
28.37
(1,004.46)
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
127
Notes March 31, 2015CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 1,024.42
Proceeds from long term borrowings (net) 4,623.19
(Repayment) of short term borrowings (net) (2,677.40)
Finance set up cost (non-current) (10.28)
Finance set up cost (current) (74.33)
Interest paid (3,916.05)
NET CASH FLOW (USED IN) FINANCING ACTIVITIES (C) (1,030.45)
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) (498.68)
OPENING BALANCE OF CASH AND CASH EQUIVALENTS 915.83
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 417.15
251.98
192.25
Summary of significant accounting policies 2
March 31, 2016
995.28
369.44
(801.99)
25.87
(45.51)
(3,466.46)
(2,923.37)
(71.38)
417.15
345.77
2.80
19.59
282.93
273.87
233.41
345.77
NOTES TO CASH FLOW STATEMENT
Cash and cash equivalents include: 18
Cash on hand 3.17
Cheques in hand 43.36
Balances with scheduled banks:
Current accounts
Deposit Accounts 310.89
Cash and bank balances as per balance sheet 609.40
Less: Fixed deposits not considered as cash equivalents
CASH AND CASH EQUIVALENTS 417.15
579.18
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The accompanying notes are an integral part of the consolidated financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLPICAI Firm Registration No.: 101049W/ E300004Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath Partner Director Managing Director Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai Date: June 25, 2016 Date: June 25, 2016
TATA TELESERVICES LIMITED
128
21st Annual Report 2015-2016
TTSL has Unified Access (Basic and Cellular) Service License (‘UASL’) to operate in seventeen circles and pan India National Long Distance (‘NLD’) license issued by DoT.
TTML has UASL license to operate in two circles issued by DoT.
VIOM is an IP-1 registered Passive Infrastructure provider with DoT, primarily in the business of providing in telecom towers and other related passive infra to the telecom operators in the country. On October 21, 2015, shareholders of VIOM entered into a Share Purchase Agreement (the ‘SPA’) with ATC Asia Pacific Pte Limited and American Tower International Inc. (‘ATC’). In terms of SPA, certain shareholders agreed to transfer their shareholding in VIOM in full or part to ATC, subject to various Condition Precedents, regulatory approvals and compliance of the terms of the SPA. ATC and the Company have received all requisite approvals by April 12, 2016. Subsequent to aforesaid actions, the Board of Directors of VIOM at its meeting held on April 21, 2016 has approved the transfer of Equity Shares of VIOM as agreed under the SPA. Upon completion of the transfer subsequent to the financial year ended on March 31, 2016, ATC Asia Pacific Pte. Ltd. along with its nominee now owns 51% of equity shares and becomes holding company of the Company. Subsequent to the year end, VIOM name has changed to ATC Telecom Infrastructure Limited.
MMP provide Mobile Commerce, its related services on pan India basis and has received approval from Reserve Bank of India in 2011 to operate payment system in India.
TISL has been granted an “A” category license from Department of Telecommunications (DoT) to operate Internet Services on PAN India basis. The license has expired on October 10, 2014 and TISL has not renewed the same. TISL currently does not have any operations. (Refer note 43).
NVS has been incorporated to provide non voice services which does not require license. NVS has not commenced any operations till date.
The Group’s principal shareholders as of March 31, 2016 are Tata Sons Limited and NTT DoCoMo Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Name of the Company Percentage Holding
2015
Subsidiaries
VIOM Networks Limited (‘VIOM’) 52.86%
Tata Internet Services Limited (‘TISL’) 100.00%
MMP Mobi Wallet Payment Systems Limited (‘MMP’) 80.00%
NVS Technologies Limited (‘NVS’) 100.00%
Associate
Tata Teleservices (Maharashtra) Limited (‘TTML’) 36.54%
Joint Venture
Virgin Mobile India Private Limited (‘VMI’) 50.00%
2016
52.86%
100.00%
84.13%
100.00%
36.54%
50.00%
1. Background
Nature of business
Tata Teleservices Limited (the 'Holding Company' or 'TTSL'), part of the Tata Group, became a pan-India telecom operator in
January 2005. TTSL together with its subsidiaries, associate and joint venture (listed below) is hereinafter referred to as 'the
Group'.
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Project Financing / Fund update of TTSL on a standalone basis:
As of March 31, 2016, TTSL has incurred a loss of Rs. 3,386.02 crores (March 31, 2015 - Rs. 3,846.16 crores) and it has
accumulated losses of Rs. 31,528.56 crores (March 31, 2015 - Rs 28,142.54 crores) which has fully eroded the net worth of
TTSL. It has Current liabilities of Rs. 3,414.18 crores (March 31, 2015 - Rs. 3,638.94 crores) and loans Rs. 3,057.31 crores
(March 31, 2015 - Rs. 2,438.45 crores) is due for repayment in the next twelve months.
Based on the undrawn loan facilities, approved loan sanction facilities, working capital management and plan for monetizing
investment in subsidiaries, TTSL is confident of meeting its repayment obligations, operating and capital expenditure
requirements for the next twelve months.
2 Significant Accounting Policies
a. Basis of preparation of financial statements
The consolidated financial statements of the Group have been prepared in accordance with Accounting Standard 21 on
“Consolidated Financial Statement”, Accounting Standard 23 on “Accounting for Investments in Associates in
Consolidated Financial Statements” and Accounting Standard 27 on “Financial Reporting of Interest in Joint Ventures”
issued by Institute of Chartered Accountants of India. The Group has prepared these financial statements to comply in all
material respects with the accounting standards notified under section 133 of the Companies Act, 2013, read together
with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual
basis and under the historical cost convention except in case of assets for which provision for impairment is made,
revaluation carried out,k derivative financial instruments which have been measured at fair value and provision for site
restoration cost obligations.
b. Principles of Consolidation
(i) The financial statements of subsidiaries, associate and joint venture used in consolidation are drawn upto same
reporting date as of TTSL. The financial statements are prepared in accordance with the principles and procedures
required for the preparation and presentation of consolidated financial statements as laid down in Accounting
Standard 21 on “Consolidated Financial Statements”.
(ii) The consolidated financial statements of TTSL and its subsidiaries have been consolidated on a line by line basis
by adding together the book value of like items of assets, liabilities, income and expenses after eliminating intra-
group balances and transactions resulting in unrealised profits/ losses.
(iii) The consolidated financial statements have been prepared using uniform accounting policies for like transactions
and other events in similar circumstances are presented, to the extent possible, in the same manner as the
Companies separate financial statements.
(iv) Minority Interest in the net assets of consolidated subsidiaries is identified and presented in the consolidated
balance sheet separately from liabilities and equity of the Group’s shareholders.
Minority interest in the net assets of consolidated subsidiaries consists of:
• the amount of equity attributable to the minority at the date on which the investment in a subsidiary is made;
and
• the minority share of movements in equity since the date parent-subsidiary relationship came into existence.
(v) Minority interest’s share of net profit / (loss) for the year of consolidated subsidiaries is identified and adjusted
against the loss after tax of the Group.
(vi) Investment in associates where TTSL directly or indirectly through subsidiaries holds more than 20% of equity, are
accounted for using equity method as per Accounting Standard 23 – “Accounting for Investment in Associated in
Consolidated Financial Statements”.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
(vii) Interest in Joint Venture has been accounted by using the proportionate consolidation method as per Accounting
Standard 27 – “Financial Reporting of Interests in Joint Ventures”.
(viii) The accounting policies adopted in the preparation of financial statements are consistent with those of previous
year.
2.1 Use of estimates
The preparation of financial statements in conformity with India GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, uncertainty about this assumptions and estimates could result in the outcome requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
2.2 Tangible fixed assets
Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. The Group capitalizes direct costs including taxes, duty (net of CENVAT credit), freight and incidental expenses directly attributable to the acquisition and installation of fixed assets. Capital work-in-progress is stated at cost. Provision for slow moving assets is made based upon a periodic technical evaluation and aging of the capital assets.
With respect to capitalization of exchange differences arising on reporting/settlement of the long term foreign currency monetary items. (Refer note 2.16)
Subsequent expenditure related to an item of fixed asset is added to its book value only if increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day- to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the year during which such expenses are incurred.
Site restoration cost obligations are capitalized when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.
2.3 Depreciation on tangible fixed assets
Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. TTSL has used the following rates to provide depreciation on its fixed assets:
Assets Useful Life (in Years)
Buildings 60
Leasehold improvements 9 or over the term of the lease, whichever is lower
Plant & Machinery
Towers# 35
Shelter 15
Network equipment 12-13
Outside Plant 18
Air-conditioning equipment 6-15
Generators 6-15
Civil and electrical Lease/license period
Electrical equipment 6-10
Battery bank (included in electrical equipment) 4
Computers & other IT hardware (servers, etc) 3
Office equipment 2-5
Software 3
Furniture & fittings 3-10
Vehicles 5-8
131
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
The reasons for considering different life and realisable value with regard to items under schedule II of Companies Act, 2013 are as below:
# VIOM had obtained technical evaluation from Government approved independent certified engineers estimating useful life of towers between 35 to 50 years. Based on which VIOM had obtained an approval from Ministry of Corporate Affairs, Government of India vide Order no.45/1/2012-CL-III dated May 6, 2013 issued under Section 205(2)(d) of the Companies Act, 1956 effective from April 1, 2011 to depreciate tower on straight line method at the rate of 2.72% per annum (equivalent to 35 years). VIOM continues with the same policy for such assets.
In respect of battery bank and diesel generators VIOM has considered realisable value of 20% and 15% respectively at the end of useful life, based on past trends as well as from the recent sale of such assets. For all other assets it has considered 5% as realisable value.
In respect of all other assets where the useful life of assets is lower than indicative life as per Schedule II of the Companies Act, 2013, VIOM has estimated the same based on past trend of useful life and technical evaluation.
2.4 Intangible assets
All expenditure on intangible items is expensed as incurred unless it qualifies as an intangible assets as defined in Accounting Standard 26 – 'Intangible Assets'. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated depreciation and accumulated impairment losses, if any.
Indefeasible Right to Use ('IRU') taken for optical fiber and ducts, by TTSL are capitalized as intangible assets at the amounts paid for acquiring the right and are amortized on straight line basis, over the period of agreement or eighteen years, whichever is lower.
With respect to capitalization of exchange differences arising on reporting/settlement of the long term foreign currency monetary items, refer note 2.16.
For accounting policy related to License Entry fees/spectrum fees, refer Note 2.6 (i), below.
The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been significant change in the expected pattern of economic benefits from the assets, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.
Goodwill arising on amalgamation of erstwhile Viom Infra Networks (Maharashtra) Limited ('Viom Infra') with VIOM is amortised over a period of 10 years, based on management's estimates of useful life. (Refer note 44).
2.5 Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized in the statement of profit and loss wherever the carrying amount of an asset exceeds its recoverable amount. An asset's recoverable amount is the higher of an asset's or cash generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying value of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After impairment, depreciation and amortization is provided on the revised carrying amount of the assets over its remaining useful life.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
2.6 License Fees
(i) License Entry fee/Spectrum fees
The License Entry fee/spectrum fees has been recognized as an intangible asset and is amortized on straight line basis
over the remainder of the license period of 20 years from the date of commencement of commercial operations in the
respective circles/spectrum blocks in case of subsequent acquisition. License entry fee/spectrum fees includes interest
on funding of license entry fee/spectrum fees and bank guarantee commission up to the date of commencement of
commercial operations in the respective Circles. Spectrum fees also include exchange differences arising on reporting of
the long term foreign currency monetary items (Refer note 2.16). Fees paid for migration of the original licenses to the
UASL and license fees for NLD services is amortized over the remaining period of the license of 20 years for the
respective circles from the date of migration to UASL / payment of the license fees on straight line basis. Fees paid for
obtaining in-principle approval to use alternate technology under the existing UASL has been recognized as an intangible
asset and is amortized from the date of commercial launch over the balance remaining period of the UASL license on
straight line basis for the respective circles. The fees paid for 3G Spectrum have been recognized as an intangible asset
and is amortized from the date of commercial launch over a remaining period of 20 years on straight line basis for
respective circles.
(ii) Revenue sharing fee
Revenue sharing fee is expensed in the statement of profit and loss in the year in which the related revenue from
providing unified access services and national long distance services are recognized.
An additional revenue share towards spectrum charges is computed at the rate specified by the DoT of the Adjusted
Gross Revenue ('AGR'), as defined in the License Agreement, earned from the customers. These costs are expensed in
the statement of Profit and Loss in the year in which the related revenues are recognized.
2.7 Investments
Investments that are readily realizable and intended to be held for not more than a year from the date of their acquisition are
classified as current investments; all other investments are classified as long-term investments. Current investments are
carried at lower of cost and fair market value determined on an individual investment basis. Long-term investments are carried
at cost, if an investment is acquired or partly acquired, by the issue of shares or other securities; the acquisition cost is the fair
value of the securities issued. Provision for diminution in value of long-term investments is made to recognize only a decline,
other than temporary, in the value of the investments. However, diminution in value is reversed, when there is rise in the value or
if the reason for the reduction no longer exists.
2.8 Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined on a weighted average basis and
includes all applicable overheads in bringing the inventories to their present location and condition. Customs duty on imported
purchases is treated as part of the cost of inventories.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to make the sale.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, cheques in hand and short term investments with an original
maturity of three months or less.
133
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
2.10 Other assets
(i) Finance set up costs
The Group amortizes the cost of arranging long-term loans over the period of the loan or five years, whichever is lower,
commencing from the date of the first draw down of the related loan, on a straight-line basis. The amortization charge of
finance set up costs incurred for the acquisition or construction of a qualifying asset are capitalized as part of the cost of
the underlying class of assets.
(ii) Unbilled revenue - Refer note 2.12 (i)
2.11 Provisions
A provision is recognized for a present obligation as a result of past event; it is probable that an outflow of resources will be
required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
2.12 Revenues
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Group and the revenue can be
reliably measured. The following specific revenue recognition criteria must also be met before revenue is recognized.
(i) Services revenue
Service revenue primarily includes revenue from providing telecommunication services and passive infrastructure
services.
(a) Revenue from telecom services:
Telecom service revenues are recognized as services are rendered and are net of trade discounts and service tax.
Unbilled revenues resulting from postpaid unified access services provided from the last billing cycle date to the
end of each year are estimated and recorded. Revenues from unified access services rendered through prepaid
cards are recognized based on usage by the customers during the year and over the validity period in case of
upfront collection.
(b) Revenue from passive infrastructure services:
Revenues from use of sites, energy and other reimbursement charges from operators are net of discounts and
service tax. Income from use of sites is recognized as and when services are rendered. Unbilled revenues at the
end of year represent accrued service income and reimbursements pending to be billed, which are estimated and
recorded.
(c) Revenue from other services:
Service revenue for m-commerce related services are recognized as services are rendered and are net of trade
discounts and service tax
(ii) Sale of equipment
Revenues from sale of equipment primarily consist of sale of customer terminal equipment, NIU's, handsets and network
equipment either by direct sale to distributor / customer or through consignment sale by the consignor (agent) to the
distributor. Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods
have been passed to the buyer, usually on the delivery of goods.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
(iii) Multiple element arrangements
The Group enters into transactions that include multiple element arrangements, which may include a combination of
services/equipment. When some elements are delivered prior to others in an arrangement, revenue is deferred until
the delivery of the last element unless all of the following conditions are met:
• The functionality of the delivered elements is not dependent on the undelivered elements; and
• Delivery of the delivered element represents the culmination of the earnings process.
(iv) Interest income
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate
applicable and on reasonable certainty of realization thereof.
(v) Others
Income by way of compensation on shortfall in commitment and other claims on service level arrangements with
customers is recognized as and when such income is claimable as per agreement and on reasonable certainty of
realization thereof.
2.13 Interconnect revenues and costs (Access charges)
The TRAI issued Interconnection Usage Charges Regulation 2003 ('IUC regime') effective May 1, 2003 and subsequently
amended the same from time to time. Under the IUC regime, with the objective of sharing of call/ Short Message Services
('SMS') revenues across different operators involved in origination, transit and termination of every call/SMS, TTSL pays
interconnection charges (prescribed as rate per minute of call time) and per SMS for all outgoing calls and SMS originating in its
network to other operators. TTSL receives certain interconnection charges from other operators for all calls and SMS
terminating in its network.
Accordingly, interconnect revenues are recognized as those on calls/SMS originating in another telecom operator network and
terminating in the TTSL's network. Interconnect cost is recognized as charges incurred on termination of calls/SMS originating
from TTSL's network and terminating on the network of other telecom operators. The interconnect revenue and costs are
recognized in the financial statement on a gross basis and included in service revenue and access charges in the statement of
profit and loss, respectively.
2.14 Retirement benefits
The Group has schemes of retirement benefits for provident fund and gratuity.
(i) Provident fund with respect to employees covered with the Government administered fund is a defined contribution
scheme. The contributions to the government administered fund are charged to the statement of profit and loss for the
year when the contributions are due. Also, TTSL makes contributions to the Tata Teleservices Provident Fund Trust which
is treated as defined benefit plan. TTSL has an obligation to make good the shortfall, if any, between the return from the
investments of the trust and the notified interest rate. The shortfall / excess between the present value of fund assets and
the present value of the obligation are determined based on actuarial valuation obtained at the end of each year as per
the Projected Unit Credit Method and accounted accordingly.
(ii) Gratuity liability as per the Gratuity Act, 1972 and The Payment of Gratuity (Amendment) Act, 2010, is defined benefit
plan and is provided for on the basis of an actuarial valuation made at the end of each year as per the Projected Unit
Credit Method. The contribution towards gratuity is made to Life Insurance Corporation of India ('LIC') and Tata AIA Life
Insurance Company Limited.
135
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
All actuarial gains/losses as mentioned in point (i) and (ii) above are immediately taken to the statement of profit and loss
and are not deferred.
2.15 Leave encashment
Liability for leave encashment is in accordance with the rules of the TTSL. Short term compensated absences are provided
based on estimates. Long term compensated absences are provided based on actuarial valuation obtained at the end of each
year as per the Projected Unit Credit Method.
Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
2.16 Foreign currency translation, accounting for forward contracts and derivatives
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of the transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
(iii) Exchange differences
Exchange differences, in respect of accounting years commencing on or after April 1, 2011 as per the notification issued
by Ministry of Corporate Affairs dated December 29, 2011 the Companies Accounting Standard (Second Amendment)
Rules, 2011, arising on reporting of long-term foreign currency monetary items or exchange differences arising on
settlement of the long term monetary items, at rates different from those at which they were initially recorded during the
year, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset
(including intangible assets), are added to or deducted from the cost of the asset and are depreciated/amortised over the
balance life of the asset. For this purpose, the Group treats a foreign currency monetary items as “long-term foreign
currency monetary item”, if it has a term of twelve months or more at the date of its origination.
Exchange differences arising on the settlement of short-term monetary items or on restatement of the Group's short-term
monetary items at rates different from those at which they were initially recorded during the year or reported in previous
financial statements, are recognized as income or as expenses in the period in which they arise.
(iv) Forward exchange contracts covered under AS 11, 'The Effects of Changes in Foreign Exchange Rates'
Exchange differences on forward exchange contracts and currency options, not intended for trading and speculation
purposes are recognized in the statement of profit and loss in the year in which the exchange rates changes, except the
contracts which are long-term foreign currency monetary items. The premium or discount arising at the inception of
forward exchange contracts is amortized as expense or income over the term of the contract on a straight line basis. Any
profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as
expense for the year. Any gain/loss arising on forward contracts which are long-term foreign currency monetary items is
recognized in accordance with paragraph (iii) mentioned in the exchange differences.
(v) Other derivative instruments, not in the nature of AS 11, 'The Effects of Changes in Foreign Exchange Rates'
In accordance with the ICAI announcement, derivative instruments, other than foreign currency forward contracts
covered under AS 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting
effect of gain on the underlying hedged item, is charged to the statement of profit and loss. Net gain, if any, after
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considering the offsetting effect of loss on the underlying hedged item, is ignored.
2.17 Borrowing costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset, including interest attributable to the funding
of license fees/spectrum fees up to the date of commencement of commercial operations or commercial use of spectrum, are
capitalized as a part of the cost of that asset [Refer Note 2.6]. The accounting treatment of loan arrangement fees has been
discussed in Note 2.10(i) to the financial statements. Other borrowing costs are recognized as an expense in the year in which
they are incurred.
2.18 Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year and reversal of timing differences of earlier year.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Group will pay normal
income tax during the specified year. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be
recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of
Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as
MAT Credit Entitlement. The Group reviews the same at each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence to the effect that Group will pay normal Income Tax
during the specified year.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realized. In situations where the Group has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty that they can be
realized against future taxable profits. At each Balance Sheet date the Group re-assesses unrecognized deferred tax assets.
It recognizes the unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as
the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.
In accordance with the Accounting Standard on Accounting for Taxes on Income ('AS 22') and the guidance provided by the
ICAI, the Group has not recognized any deferred tax assets resulting from the carry forward tax losses. (Refer note 37).
2.19 Loss per share
Basic loss per share is calculated by dividing the net loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share comprise of the weighted average shares considered for
deriving basic earnings per share including issue of right shares and also the weighted average number of shares, if any, which
would have been issued on the conversion of all dilutive potential equity shares unless the impact is anti-dilutive. For the
purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity
shares.
2.20 Leases
Where the Group is the lessee
Leases of assets under which the lessor effectively retains all the risks and rewards of ownership are classified as operating
137
leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over
the lease term.
IRU taken for dark fiber, duct and embedded electronics are treated as finance lease (purchase of intangible assets), where the
IRU term substantially covers the estimated economic useful life of the asset and the routes are explicitly identified in the
agreement. The cases where the estimated economic useful life does not significantly represent the life of the asset, the IRU is
treated as operating lease provided the routes are explicitly identified.
Where the Group is the lessor
Assets where the Group effectively retains all the risks and rewards of ownership are recognized as operating leases and are
disclosed under fixed assets. Lease income is recognized in the statement of profit and loss on a straight-line basis over the
lease term. Costs, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs
such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
IRU granted for dark fiber, duct and embedded electronics are treated as finance lease (sale of intangible assets), where the
IRU term substantially covers the estimated economic useful life of the asset and the routes are explicitly identified in the
agreement. The profit on sale of assets is recognized over the term of the contract. The cases where the IRU term does not
significantly represent the estimated useful life of the asset, the IRU is treated as operating lease.
2.21 Customer acquisition costs
Customer acquisition costs include cost of startup kits and customer verification cost for acquisition of subscribers.
2.22 Measurement of Earnings / (loss) Before Interest, Tax, Depreciation and Amortization (EBITDA)
As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Group has elected to present
earnings / (loss) before finance cost, finance income, tax, foreign exchange gain/(loss), exceptional item and depreciation and
amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Group measures EBITDA on
the basis of profit/ (loss) from continuing operations. In its measurement, the Group does not include depreciation and
amortization expense, finance cost, finance income, foreign exchange (net), exceptional item and tax expense.
2.23 Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not
recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability
also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
The Group does not recognize a contingent liability but discloses its existence in the financial statements.
2.24 Segment Reporting
Identification of segments:
The Group's operating businesses are organized and managed separately according to the nature of services provided, with
each segment representing a strategic business unit that offers different services that serves different markets. The analysis of
geographical segments is based on the areas in which major operating divisions of the Group operates.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total
common costs.
The Group prepares its segment information in conformity with the accounting policies adopted for preparing and presenting
the financial statements of the Group as a whole.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
3. (A) SHARE CAPITAL March 31, 2015
Rs. in Crores
Authorised Share Capital (Nos in crores)
751.37 (March 31, 2015 - 751.37) Equity Shares of Rs. 10 each 7,513.68
63.00 (March 31, 2015 - 63.00) Unclassified shares of Rs. 10 each 630.00
83.63 (March 31, 2015 - 83.63) Redeemable Non-cumulative Convertible 836.32
Preference Shares of Rs. 10 each
150.00 (March 31, 2015 - 150.00) Redeemable Non-cumulative 1,500.00
Non-Convertible Preference Shares of Rs. 10 each
45.20 (March 31, 2015 - 45.20) Compulsory Convertible Non-Cumulative 4,520.00
Preference Shares of Rs. 100 each
Total Authorised Share Capital 15,000.00
Issued, Subscribed and Fully Paid (Nos in crores)
471.23 (March 31, 2015 - 471.23) Equity Shares of Rs. 10 each, fully paid up 4,712.39
[Refer note 3 (A) (b)]
45.00 (March 31, 2015 - 35.05) Cumpulsory Convertible Non Cumulative 3,504.64
Preference Shares of Rs. 100 each, fully paid up [Refer note 3(A) (c)]
8,217.03
March 31, 2016
Rs. in Crores
7,513.68
630.00
836.32
1,500.00
4,520.00
15,000.00
4,712.39
4,500.07
9,212.46
a. Reconciliation of Shares outstanding at the beginning and at the end of the reporting year
March 31, 2015
No Crores Rs in Crores
Equity Shares
At the beginning of the year 471.23 4,712.39
Issued during the year - -
Outstanding at the end of the year 471.23 4,712.39
Cumpulsory Convertible Non Cumulative Preference Shares
At the beginning of the year 24.80 2,480.21
Issued during the year 10.25 1,024.43
Outstanding at the end of the year 35.05 3,504.64
March 31, 2016
No Crores Rs in Crores
471.23 4,712.39
- -
471.23 4,712.39
35.05 3,504.64
9.95 995.44
45.00 4,500.07
b. Terms / rights attached to equity shares
The Group has one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.
139
c) Terms of conversion/ redemption of Compulsory Convertible Non-Cumulative Preference Shares
i. On January 7, 2014, TTSL had issued 24.80 crores Compulsory Convertible Non-Cumulative Preference Shares
(CCNCPS) to Tata Sons Limited of Rs. 100 each fully paid-up. CCNCPS carry a non-cumulative right to receive
dividend @ 0.1% p.a.
Each CCNCPS shall compulsorily be converted into equity share at the end of earlier of the following:
I. 24 months from the date of allotment of CCNCPS, viz., January 6, 2016, or such earlier period as the Board
may decide, provided that if the earlier conversion is to be effected prior to the strategic partner exercising the
put option as per the Shareholders Agreement dated March 25, 2009, specific approval of one of the
Strategic Partner’s and of the Promoter’s Board Member will be required at the Board Meeting approving the
earlier conversion
II. Effective date of an event of merger of TTSL with any other entity or restructuring pursuant to a scheme of
arrangement, if any.
Each CCNCPS shall be compulsorily converted into such number of equity shares at the higher of:
I. Fair market value determined as on the date of conversion; or
II. Fair market value prevailing as on the date of issue of CCNCPS; or
III. Rs 10 per equity share (being the face value of shares)
During the year, based on request from holder of CCNCPS, the period of conversion has been extended by one
year (January 6, 2017), with an option to submit the request at any time by giving a notice of 30 days in advance.
ii. On March 31, 2015 TTSL issued 10.25 crores CCNCPS to Tata Sons Limited of Rs. 100 each. CCNCPS carry a
non-cumulative right to receive dividend @ 0.1% p.a.Each CCNCPS shall be converted at the option of the investor at any time after 3 months from the date of allotment
of CCPS, viz, June 30, 2015 but not later than 36 months from the date of allotment i.e. March 31, 2018
On May 28, 2015, TTSL has further issued 9.95 crores CCNCPS of Rs. 100 each fully paid-up, carrying non-
cumulative right to receive dividend @ 0.1% p.a.Each CCNCPS shall compulsorily be converted into equity share at the option of the investor at any time after 3
months from the date of allotment of CCNCPS but not later than 36 months from the date of allotment i.e.
May 28, 2018.
Each CCNCPS shall be compulsorily converted into such number of equity shares at the higher of:-
I. Fair market value determined as on the date of conversion subject to cap of Rs 19 per equity shares or
II. Rs 10 per equity share (being the face value of shares)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
In the event of liquidation of the Group, the holders of equity shares will be entitled to receive remaining assets of the Group, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
TATA TELESERVICES LIMITED
140
21st Annual Report 2015-2016
e. Shares held by Tata Sons Limited and/or its subsidiaries/associatesMarch 31, 2015
a) Equity Shares (All nos in crores)
Tata Sons Limited, the holding company
170.44 (March 31, 2015: 170.44) equity shares of Rs. 10 each fully paid 1,704.40
Tata Communication Limited, Associate of Tata Sons Limited
43.99 (March 31, 2015: 43.99) equity shares of Rs. 10 each fully paid 439.86
Tata Power Company Limited, Associate of Tata Sons Limited
32.84 (March 31, 2015: 32.84) equity shares of Rs. 10 each fully paid 328.40
Tata Industries Limited, Subsidiary of Tata Sons Limited
25.72 (March 31, 2015: 25.72) equity shares of Rs. 10 each fully paid 257.19
Tata Steel Limited, Associate of Tata Sons Limited
6.47 (March 31, 2015: 6.47) equity shares of Rs. 10 each fully paid 64.69
Tata Capital Financial Services Limited, Subsidiary of Tata Sons Limited
6.23 (March 31, 2015: 6.23) equity shares of Rs 10 each fully paid 62.25
Tata Chemicals Limited, Associate of Tata Sons Limited
0.13 (March 31, 2015: 0.13) equity shares of Rs. 10 each fully paid 1.29
Tata Investment Corporation Limited, Subsidiary of Tata Sons Limited
0.57 (March 31, 2015: 0.57) equity shares of Rs. 10 each fully paid 5.68
2,863.75
March 31, 2016
1,704.40
439.86
328.40
257.19
64.69
62.25
1.29
5.68
2,863.75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
March 31, 2015
% holding
No Crores in the class
Equity shares of Rs. 10 each fully paid
Tata Sons Limited 170.44 36.17%
NTT DoCoMo Inc 124.90 26.50%
Tata Communication Limited 43.99 9.33%
The Tata Power Company Limited 32.84 6.97%
Aranda Investments (Mauritius) Pte. Limited 30.39 6.45%
Tata Industries Limited 25.72 5.46%
Cumpulsory Convertible Non-Cumulative Preference
Shares of Rs. 100 each fully paid
Tata Sons Limited 35.05 100.00%
March 31, 2016
% holding
No Crores in the class
170.44 36.17%
124.90 26.50%
43.99 9.33%
32.84 6.97%
30.39 6.45%
25.72 5.46%
45.00 100.00%
d. Details of Shareholders holding more than 5% shares in the Group
As at March 31, 2016 the shareholding of Tata Sons Limited is 36.17 per cent. Pursuant to the issue of Preference shares to Tata Sons Limited, TTSL is considered as a subsidiary of Tata Sons Limited w.e.f. April 01, 2014, in line with the provisions of the Companies Act, 2013. However, since Tata Sons Limited does not hold, either by itself, or through one/more of its subsidiaries, more than one half in the nominal value of equity shares of TTSL, or controls either directly or indirectly the composition of the Board of Directors of TTSL, TTSL is not considered as subsidiary of Tata Sons Limited pursuant to provisions of Accounting Standard 18 – Related Party Disclosures.
141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
(ii) Compulsory Convertible Non-Cumulative Preference Shares (‘CCNCPS’)
All CCNCPS issued and outstanding as at the year end, are held by Tata Sons Limited [Refer note (d) above]
3. (B) Preference shares issued by subsidiary
March 31, 2015
Issued, Subscribed and Fully Paid (Nos. in crores)
24.98 (March 31, 2015 - 25.00) 13.5% Cumulative Redeemable Optionally 250.00
Partially Convertible Preference Shares of Rs. 10/- each fully paid up.
[Refer note below)
250.00
March 31, 2016
249.85
249.85
Terms of conversion/ redemption of Cumulative Redeemable Optionally Partially Convertible Preference Shares (CROPCPS)
VIOM had issued 25 crores (March 31, 2015 – 25 crores) 13.5% CROPCPS on March 23, 2010, of which 0.015 crores (March 31, 2015 – Nil) CROPCPS are held by Tata Internet Services Limited, wholly owned subsidiary of TTSL, through secondary sale. CROPCPS carry cumulative dividend @ 13.5% p.a. Each holder of CROPCPS is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to CROPCPS. During the year, VIOM has redeemed 0.005 crores (March 31, 2015 – 0.005 crores) CROPCPS and issued fresh 0.005 crores (March 31, 2015: 0.005 crores) CROPCPS which do not contain conversion option.
Conversion option
(i) One third of 24.97 crores (March 31, 2015 – 24.99 crores) CROPCPS are convertible at an agreed price, any day after March 23, 2013 at the option of the preference shareholder. The preference shareholder has not opted for conversion as on the balance sheet date.
(ii) Shareholders of remaining 0.01 crores (March 31, 2015 – 0.01 crores) CROPCPS does not have the right of conversion.
Redemption option
The earliest date of redemption was March 23, 2015. In accordance with the terms of the agreement, redemption premium is payable by VIOM to the preference shareholders. Since the amount is subject to the outcome of various alternatives available to VIOM/ holders (like conversion, early payment etc.) and is payable only upon redemption, it is included under contingent liabilities (refer note 31(ii) (f)). The preference shareholder has not requested for redemption as on the balance sheet date.
4. Reserves and Surplus [Refer note 3(A) (c) and 42]
March 31, 2015a) Securities Premium account
Balance as per the last financial statements 11,554.57
Closing Balance 11,554.57
b) (Deficit) in the statement of profit and lossBalance as per last financial Statements (26,065.81)Less : Depreciation impact due to life change (Refer note 2.3) (15.34)Add : Adjustment on account of amalgamation [Refer note 44) 60.80Loss for the year (4,076.53)
Net loss in the statement of profit and loss (30,096.88)
c) Capital ReserveBalance as per last financial Statements 285.83
Closing balance 285.83
Total Reserves and Surplus (18,256.48)
March 31, 2016
11,554.57
11,554.57
(30,096.88)--
(3,001.74)
(33,098.62)
285.83
285.83
(21,258.22)
5. Long Term Borrowings Non - Current portion Current Portion
March 31, 2015 March 31, 2015
Debentures
5,000 (March 31, 2015: 5,000) 11.69% 500.00 -
Redeemable Non-Convertible Debentures –
Series III (Unsecured) of Rs. 10 Lakh each
5,000 (March 31, 2015: 5,000) 11% Redeemable 500.00 -
Non Convertible Debentures – Series IV
(Unsecured) of Rs. 10 Lakh each
12,000 (March 31, 2015: Nil) 9.9% Redeemable - -
Non-Convertible Debentures (Secured)
Rs 5 Lakh each
Term Loan
Financial institutions (Secured) 2,326.50 45.00
Indian rupee loan from banks (Secured) 22,229.00 491.84
Foreign currency loan from banks (Secured) 4,769.11 761.30
Deferred payment liability for spectrum fees
(Unsecured) (Refer note 33) - -
30,325.01 1,298.14
The above amount includes
Secured borrowings 29,325.01 1,298.14
Unsecured borrowings 1,000.00 -
Amount disclosed under the head “Other
current liabilities” (Note 9) - (1,298.14)
Net amount 30,325.01 -
March 31, 2016 March 31, 2016
500.00 -
250.00 250.00
600.00 -
1,714.00 20.00
21,821.55 1,389.10
4,167.11 1,378.72
2,394.95 -
31,447.61 3,037.82
28,302.65 2,787.82
3,144.96 250.00
- (3,037.82)
31,447.61 -
TATA TELESERVICES LIMITED
142
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
ROI Borrowing as on March 31, 2016 Maturity Profile
Currency of Borrowing Floating
rate Fixed rate TotalWithin one
year
Between 2 and
5 years
Over 5years
Floating rate
Fixed rate*Between
1 and 2 years
INR <12% <12% 25,545.59 3,394.01 28,939.60 1,659.06 2,778.80 12,563.75 11,937.99
USD 4%-5% 5%-11.25% 492.60 5,053.23 5,545.83 1,378.72 1,630.27 2,128.84 407.97
Total 26,038.19 8447.24 34,485.43 3,037.78 4,409.07 14,692.63 12,345.95
Details of analysis of borrowings i.e. maturity profile, interest rate and currency of borrowings:
a. Secured loans
i Term loans from financial institutions (`FI'), indian rupee loans from banks and foreign currency loans from banks
Loans of Rs. 30,490.48 crores (March 31, 2015 - Rs. 30,623.15 crores) from Banks, FI's and foreign currency loans are
fully secured by way of a first charge on all the immovable / moveable project assets and assignment of licenses, both
present and future, of TTSL and VIOM which ranks pari-passu with the charges created / to be created in favor of the other
institutions / banks. Long term rupee loans and foreign currency loans to the extent of Rs. 26,000 crores are required to be
secured by a pledge of shares to the extent of 26 per cent of the voting equity share capital of TTSL by the sponsors. Of
this, Long Term Rupee Loans and Foreign currency loans of Rs. 6,893.40 crores (March 31, 2015: Rs. 4,077.40 crores)
are already secured by the said share pledge. The Company is in the process of creating the share pledge in favor of the
other lender within the time-frame as required by the lenders. The amount repayable within one year is Rs. 3,037.82
crores (March 31, 2015 - Rs. 1,298.14 crores).
TTSL has placed fixed deposits of Rs. 215.96 crores (March 31, 2015 – Rs. 232.36 crores) towards the maintenance of a
Debt Service Reserve Account in favor of the foreign currency lenders, as required by the agreements.
ii 9.9% Redeemable Non-Convertible Debentures
On April 29, 2015, VIOM has issued secured Redeemable Non-convertible Debentures of Rs. 600 crores. The
debentures are redeemable at par at the end of five years from the date of allotment. VIOM has an option to redeem these
debentures earlier. However no redemption will take place before the end of 3 years from the date of allotment. The
Debentures are secured by way of hypothecation on VIOM fixed assets.
b. Unsecured Loans
Long-term non-convertible debentures:
(a) 11.69% Redeemable Non-Convertible Debentures – Series III
On August 16, 2010, TTSL has issued Unsecured Redeemable Non-convertible Debentures of Rs. 500 crores to
Yes Bank Limited on a private placement basis. The debentures will be redeemed at the end of the 15th Year.
(b) 11% Redeemable Non-Convertible Debentures – Series IV
On June 28, 2013, TTSL has issued Unsecured Redeemable Non-Convertible Debentures of Rs. 500 crores to Yes
Bank Limited on a private placement basis. The debentures will be redeemed in the following manner - at the end of
3 years (Rs. 250 crores), 4 years (Rs. 125 crores) and 5 years (Rs. 125 crores) respectively. During the financial
year 2016-17, an amount of Rs. 250 crores is due for redemption. (Refer note 42)
Rate of Interest Borrowing as on March 31, 2015 Maturity Profile
Currency of Borrowing
Floating rate Fixed rate Total
Within oneyear
Between 2 and
five years
Over fiveyears
Floating rate
Fixed rate*Between
1 and 2 years
INR <12.3% <12% 20,505.74 5,587.00 26,092.74 536.75 2,143.00 10,681.70 12,731.29
USD - 4%-11.25% - 5,530.41 5,530.41 761.39 1,296.52 3,322.42 150.08
Total 20,505.74 11,117.41 31,623.15 1,298.14 3,439.52 14,004.12 12,881.37
*USD fixed rate of interest as disclosed above includes the cost of borrowings and the cost of hedging the loans.
143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
6. Other Long-term LiabilitiesMarch 31, 2015
Income received in advance 65.48
Unearned income 30.64
Lease eqalization reserve 346.71
Deposit from customers/distributors 223.16
665.99
7. Provision Short Term
March 31, 2015 March 31, 2015
Provision for employee benefits[Refer note 36(d)]
Provision for gratuity 13.36 0.76
Provision for leave encashment - 35.36
Provision for employee benefits - 160.08
Provision for current taxes - -
13.36 196.20
Other Provisions [Refer note 10(f) and 36 (a),(b),(c)]
Provision for contingencies (net of amount paid - 93.97
under dispute Rs. 20.84 crores
[March 31, 2015 - Rs. 62.81 crores])
Provision for damaged/other assets 22.98 -
Provision for site resoration costs 174.24
Provision for foreseeble losses on long term - 102.77
contracts (net of amount paid under dispute
Rs. Nil [March 31, 2015 - Rs. Nil])
197.22 196.74
210.58 392.94
8. Short Term Borrowings(Payable within one year) March 31, 2015
Secured
From banks 379.54
Vendor financing 148.90
Bill discounting 726.96
Unsecured
From banks 273.00
1,528.40
March 31, 2016
58.42
34.03
353.99
255.89
702.33
Long Term
March 31, 2016 March 31, 2016
7.76 3.00
4.79 27.01
- 112.84
- 2.42
12.55 145.27
- 92.32
259.94 -
172.86
- 104.89
432.80 197.21
445.35 342.48
March 31, 2016
-
115.47
603.56
-
719.03
TATA TELESERVICES LIMITED
144
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Secured loans
i. Vendor Financing
TTSL has entered into various equipment purchase agreements with vendors for the supply of telecommunication
equipment. The payments are to be made through and covered by an irrevocable letter of credit with the vendor entitled
to draw down based on completion of the agreed payment milestones. Interest ranging between LIBOR plus 0.50 to 3.50
per cent is payable by TTSL over the usance period of one year. The irrevocable letters of credit have been issued by
TTSL's bankers are secured, by way of a first charge on all the immovable /movable project assets, both present and
future, of TTSL, which ranks pari-passu with the charges created / to be created in favor of other institutions / banks and
partial promoters support letter.
ii. Bill Discounting
Bills discounting represents facility availed by TTSL for the payment of services availed. The payments are backed
through letters of credit by way of a first charge on all the immovable /movable project assets, both present and future, of
the Company, which ranks pari-passu with the charges created / to be created in favor of other institutions / banks and
partial promoters support letter. The Interest rate payable is ranging between 8.75% to 9.50% p.a.
9. Other Current LiabilitiesMarch 31, 2015
Trade Payable
Due to micro, small & medium enterprises 30.55
Dues to others 932.63
963.18
Other Liabilities
Current maturities of long-term debt (Note 5) 1,298.14
Interest accrued but not due on borrowings 173.63
Income received in advance 454.17
Other payables
Dues for capital goods 450.70
Deposit from customers 164.35
Advance from distributors 62.71
Provision for expenses 1,516,91
Taxes payable 25.40
Lease equalization reserve 10.70
Other liabilities 119.05
4,275.76
March 31, 2016
24.89
980.76
1,005.65
3,037.82
190.22
480.14
301.98
158.49
35.47
1,528.11
26.95
14.11
99.74
5,873.03
145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a) Deposit from customers; represents refundable security deposit received from subscribers on activation of
connections granted thereto and are repayable on disconnection, net of outstanding, if any.
b) Amounts due to micro, and small enterprises under Micro, Small and Medium Enterprises Development Act, 2006
aggregate to Rs 25.89 crores (March 31, 2015 – Rs. 30.55 crores) based on the information available with the Group and
the confirmation received from the creditors till the year end:
1 The principal amount and the interest due thereon [Rs. 2.12
crores (March 31, 2015 - Rs. 4.28 crores)] remaining unpaid to
any supplier as at the end of each accounting year
2 The amount of interest paid by the buyer in terms of section 16 of
the Micro Small and Medium Enterprise Development Act, 2006,
along with the amounts of the payment made to the supplier
beyond the appointed day during each accounting year
3 The amount of interest due and payable for the period of delay in
making payment (which have been paid but beyond the appointed
day during the year) but without adding the interest specified
under Micro Small and Medium Enterprise Development Act,
2006.
4 The amount of interest accrued and remaining unpaid at the end
of each accounting year;
5 The amount of further interest remaining due and payable even in
the succeeding years, until such date when the interest dues as
above are actually paid to the small enterprise for the purpose of
disallowance as a deductible expenditure under section 23 of the
Micro Small and Medium Enterprise Development Act, 2006.
SN Particulars
March 31, 2016 March 31, 2015
d. Other liabilities includes employee related payable i.e. provident fund, employee state insurance corporation, employee deposit linked insurance, family provident fund etc.
For the year ended March 31, 2016
Gross BlockAsset Group
As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
10. Tangible fixed assets
Land 24.09 0.20 -
Buildings 118.03 - -
Plant and machinery 32,439.49 762.01 (1,224.22)
Furnitures and fittings 121.20 0.59 (2.44)
Vehicles 6.25 - (2.58)
Leasehold improvements 397.82 2.69 (5.82)
Total 33,106.88 765.60 (1,235.06)
24.29
118.03
31,977.28
119.35
3.67
394.69
32,637.31
Total
Principal Amount Due
Interest due thereon
Principal Amount
Adjusted during the year
13.787.90
6.844.70
42.1532.51
4.878.55
4.282.12
10.5219.72
TATA TELESERVICES LIMITED
146
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Gross BlockAsset Group
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Land 23.78 0.31 - 24.09
Buildings 118.03 - - 118.03
Plant and machinery 32,818.77 1,101.24 (1,480.52) 32,439.49
Furnitures and fittings 123.55 2.11 (4.46) 121.20
Vehicles 7.12 - (0.87) 6.25
Leasehold improvements 395.30 5.24 (2.72) 397.82
Total 33,486.55 1,108.90 (1,488.57) 33,106.88
For the year ended March 31, 2015
Asset GroupAs at
March 31, 2015Addition
during the year(Disposal) / Adjustment
As at March 31, 2016
Land - - -
Buildings 17.87 1.93 -
Plant and machinery 18,449.76 2,166.94 (1,152.87)
Furnitures and fittings 96.98 9.33 (2.38)
Vehicles 4.09 0.06 (0.56)
Leasehold improvements 299.45 26.49 (7.85)
Total 18,868.15 2,204.75 (1,163.65)
- 24.29
19.80 98.23
19,463.83 12,513.45
103.94 15.41
3.59 0.08
318.09 76.61
19,909.25 12,728.06
Net Block
As at March 31, 2016
Accumulated Depreciation
Asset Group As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Land - - - - 24.09
Buildings 15.94 1.93 - 17.87 100.16
Plant and machinery 16,832.04 2,437.70 (819.98) 18,449.76 13,989.73
Furnitures and fittings 90.25 11.16 (4.43) 96.98 24.22
Vehicles 4.86 0.07 (0.84) 4.09 2.16
Leasehold improvements 271.47 29.18 (1.20) 299.45 98.37
Total 17,214.56 2,480.04 (826.45) 18,868.15 14,238.72
Net Block
As at March 31, 2015
Accumulated Depreciation
TATA TELESERVICES LIMITED
148
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a. As at March 31, 2016, TTSL plant and machinery includes equipment of gross block of Rs. 4,763.76 crores (March 31,
2015 - Rs. 4,761.93 crores) and net block Rs. 1,943.15 crores (March 31, 2015 - Rs. 2,273.98 crores) located at other
operator sites.
b. Addition to tangible fixed assets includes Rs. 42.00 crores (March 31, 2015 - Rs. 121.33 crs) towards exchange
differences as per accounting policy (Refer note 2.16)
c. During the year ended March 31, 2016, TTSL has disposed off damaged and obsolete assets as scrap, having gross
block of Rs. 657.97 crores (March 31, 2015 – Rs. 365.67 crores) and having a written-down value of Rs. 8.88 crores
(March 31, 2015 – Rs. 5.90 crores).
d. TTSL Leasehold Improvements includes those given on lease :
• Gross Block Rs. 2.36 crores (March 31, 2015 – Rs. 3.17 crores)
• Depreciation charge for the year Rs 0.20 crores (March 31, 2015 – Rs. 0.31 crores)
• Accumulated Depreciation Rs. 1.68 crores (March 31, 2015 – Rs. 1.86 crores)
• Net block Rs. 0.68 crores (March 31, 2015 – Rs. 1.31 crores)
e. VIOM plant and machinery includes site restoration obligation cost: Gross Block of Rs. 163.84 crores (March 31, 2015 -
Rs.164.87 crores) Net Block of Rs. 81.9 crores (March 31, 2015 - Rs. 96.63 crores) (refer Note 2.2).
f. Basis update in the business plan of VIOM and assessment of usability of tangible assets lying on vacant sites, VIOM has
revisited the estimated provision on vacant sites and accordingly provided additional provision of Rs. 179.39 crores to
make the total provision of Rs. 259.94 crores as at March 31, 2016 (March 31, 2015 - Rs. 22.98 crores).
For the year ended March 31, 2016
Gross BlockAsset Group
As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
Goodwill (Refer Note 44) 941.25 - -
Indefeasible right to use (IRU) 481.66 2.03 (1.51)
License Entry fees/spectrum fees 8,419.89 3,400.38 41.25
Additional tenancy rights 38.19 - -
Licensed software (Base platform) 4.10 - -
Total 9,885.09 3,402.41 39.74
941.25
482.18
11,861.52
38.19
4.10
13,327.24
11. Intangible Assets [Refer note 32 and 33]
Accumulated Amortisation
As at March 31, 2015
Addition during the year
(Disposal) / Adjustment
As at March 31, 2016
Goodwill 94.19 94.12 -
Indefeasible right to use (IRU) 241.80 29.07 -
License Entry fees/spectrum fees 2,747.74 528.31 41.25
Additional tenancy rights 34.09 1.54 (0.14)
Licensed software (Base platform) 3.61 0.49 -
Total 3,121.43 653.54 41.11
188.31 752.94
270.88 211.30
3,317.30 8,544.22
35.49 2.70
4.10 0.00
3,816.08 9,511.17
Net Block
As at March 31, 2016
Asset Group
149
Asset Group March 31, 2015
Assets under construction 84.44
Other capital inventory 159.55
Total 243.99
TTSL capital work-in-progress include optical fiber, ducts and others of Rs. 5.06 crores (March 31, 2015 – Rs. 7.49 crores) lying with third parties.
TTSL capital work-in-progress is net of provision of Rs. 19.56 crores (March 31, 2015 - Rs. 38.79 crores) for slow moving capital assets, based on the Group policy.
As atMarch 31, 2016
39.01
165.99
205.01
As at
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Accumulated Amortisation
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Goodwill 0.07 94.12 - 94.19 847.06
Indefeasible right to use (IRU) 211.28 30.52 - 241.80 239.86
License Entry fees/spectrum fees 2,115.43 632.31 - 2,747.74 5,672.16
Additional tenancy rights 32.61 1.48 - 34.09 4.10
Licensed software (Base platform) 2.24 1.37 - 3.61 0.49
Total 2,361.63 759.80 - 3,121.43 6,763.67
Net Block
As at March 31, 2015
Asset Group
For the year ended March 31, 2015
Gross BlockAsset Group
As at March 31, 2014
Addition during the year
(Disposal) / Adjustment
As at March 31, 2015
Goodwill 0.07 - 941.18 941.25
Indefeasible right to use (IRU) 480.72 0.94 - 481.66
License Entry fees/spectrum fees 7,733.51 686.38 - 8,419.89
Additional tenancy rights 38.19 - - 38.19
Licensed software (Base platform) 4.10 - - 4.10
Total 8,256.59 687.32 941.18 9,885.09
a) The remaining amortization period of license fees/spectrum fees as at March 31, 2016 ranges between 1 to 20 years.
b) Addition to Intangible assets includes Rs. 106.04 crores (March 31, 2015 - Rs. 686.38 crores) towards exchange
differences as per accounting policy (Refer note 2.6)
12. Capital Work in Progress
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
13. Non Current Investment
Trade Investments (Valued at Cost unless stated otherwise) March 31, 2015
Investment in Equity Instruments (Nos. in crores)
a) Associates (quoted)
Tata Teleservices (Maharashtra) Limited (TTML) (Quoted) 222.27
71.43 (March 31, 2015-71.43) Equity Shares of Rs. 10 each fully paid up
Less: Share of loss (222.27)
-
b) Others (unquoted) (Nos. in crores)
Andhra Pradesh Gas Power Corporation Limited (Unquoted)
0.03 (March 31, 2015 — 0.03) Equity Shares of Rs. 10 each fully paid up 4.06
Renew Wind Energy (Karnataka) Private Limited (Unquoted) 0.05
0.0005 (March 31, 2015 — 0.0005) Equity Shares of Rs. 100
each fully paid up
Green Infra Limited (Unquoted)
0.003 (March 31, 2015 — 0.003) Equity Shares of Rs. 10 each fully paid up 0.03
4.14
4.14
Aggregate value of Quoted Investment - at market value 564.30
Aggregate value of Unquoted Investment - at cost 4.14
March 31, 2016
-
-
-
4.06
0.05
0.03
4.14
4.14
471.45
4.14
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Associates
Tata Teleservices (Maharashtra) Limited ('TTML')
TTSL holds 71.43 crores equity shares (March 31, 2015 – 71.43 crores) representing 36.54 per cent of the paid-up equity share
capital of TTML (March 31, 2015 – 36.54 percent) at a cost of Rs 387 crores (March 31. 2015 – Rs. 387 crores). TTSL has
accounted for its investment in TTML under equity accounting in line with AS-23 “Accounting for Investments in Associates in
Consolidated Financial Statements”.
Pursuant to the Scheme of Arrangement and Restructuring during the year ended March 31, 2009 approved by Hon'ble High
Court of Delhi, the investments in TTML were revalued at Rs 28.50/- per share resulting into investment value being increased
from Rs. 387 crores to Rs. 2,035.81 crores.
The Company has re-assessed the carrying value in its investment in TTML and has provided for diminution, other than
temporary, in the value of its investment of Rs. 385.73 crores (March 31, 2015 – Nil) and accordingly the carrying value of the
investment as at March 31, 2016 is reduced to Rs 685.74 crores (March 31, 2015 - Rs. 1,071.48 crores) in the stand-alone
financial statements of TTSL. However, since the carrying value of TTML investment in the consolidated financial statement is
Nil as at April 1, 2015, there is no impact of this provision in the consolidated financial statements.
TTML has incurred loss of Rs. 497.96 crores during March 2016 (March 31, 2015 – Rs. 615.25 crores), accumulated losses as at
the year-end being Rs. 5,946.40 crores (March 31, 2015 – Rs. 5,448.44 crores). TTSL has fully adjusted its share of losses to the
extent of the carrying value of the investment of Rs. 2,035 crores.
151
TTSL has pledged 26 per cent (March 31, 2015 – 26 percent) stake of the total outstanding equity share capital of TTML to the
lenders of TTML against loans taken by TTML.
Others
a) The investment in Andhra Pradesh Gas Power Corporation Limited (APGPCL) entitles TTSL to tariff benefit on 1 MW of
power drawn from APGPCL.
b) The investment in Green Infra Limited (GIL) entitles TTSL to tariff benefit on power drawn from GIL.
c) The investment in Renew Wind Energy (Karnataka) Private Limited (RWEPL) entitles TTSL to procure 2.4 MW of power
for its own use
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
14. Loans and Advances Non Current Current
March 31, 2015 March 31, 2015
Unsecured, considered good
Capital advances (Refer note 33) 72.01 -
Security deposits 389.65 20.74
Others
Prepaid expense 24.08 134.87
Balance with Government authorities 655.70 251.22
[Refer Note (a)]
MAT credit entitlement 33.24 -
Advance income tax 1,105.10 -
Marked-To-Market of derivative contracts 511.25 20.37
Advances to suppliers and others 8.21 211.39
[Refer Note (b)]
Considered doubtful
Advances Recoverable in cash or kind or - 0.19
value to be received
Advances to supplier and others 11.80 35.58
Capital advances 2.09 -
Loan and advances to related party - 102.48
Balance with government authorities - 1.65
Security Deposits 3.97 25.43 Less : provisions for doubtful advances (17.86) (165.33)
2,799.24 638.58
a) Balance with Government authorities represent payments made to Government authorities under protest which is net of
provision of Rs. 458.06 crores (March 31, 2015 - Rs. 424.96 crores).
b) Advances to suppliers and others includes interest receivable Rs. 4.08 crores (March 31, 2015-Rs. 3.36 crores)
March 31, 2016 March 31, 2016
340.46 -
364.00 19.02
44.56 126.47
708.76 148.72
128.77 -
151.97 1,058.49
328.77 191.40
- 164.82
0.19 -
25.58 36.23
8.41 -
- 102.48
1.63 15.66
44.50 -(80.31) (154.37)
2,067.28 1,708.92
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15. Current Investments (At lower of cost and market value) Quoted
March 31, 2015
Non Trade
Investment in mutual funds 1,895.20
1,895.20
Aggregate value of quoted investment - at cost 1,895.20
Aggregate value of quoted investment - at market value 1,908.12
March 31, 2016
1,010.65
1,010.65
1,010.65
1,014.92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Axis Liquid Fund - Direct Plan - Growth 0.07 115.00
Birla Sun Life Cash Plus- Growth 0.51 115.00
Bank of Baroda Pioneer Liquid Fund- Growth 0.07 115.00
DSP Black Rock Liquidity Fund - Direct Plan - Growth 0.06 115.00
ICICI Liquid Plan-Direct Plan - Growth 0.56 115.00
IDBI Liquid Fund - Direct Plan - Growth 0.01 15.00
Pramerica Liquid Fund - Direct Plan - Growth 0.08 119.38
Principal cash Management Fund - Direct Plan - Growth 0.08 115.00
Religare Invesco Liquid Fund - Direct Plan - Growth 0.01 10.00
SBI Premier Liquid Fund - Direct Plan - Growth 0.06 135.00
Sundaram Money Fund - Direct Plan - Growth 3.90 115.00
Tata Liquid Fund - Direct Plan - Growth 0.12 302.84
Tata Money Market Fund - Direct Plan - Growth 0.14 300.00
UTI Money Market - Institutional Plan - Growth - 0.07 115.00
Reliance Liquid Fund-TP-Dir-Growth 0.01 20.00
ICICI Prudential Liquid Plan - Growth Option 0.12 25.25
Birla Sunlife - cash Plus Growth Direct 0.09 20.00
HDFC Liquid Fund - Direct Plan - Growth Plan 0.72 20.00
Tata Liquid Fund, direct plan - Growth - -
JP Morgan India - Liquid Fund Direct Plan Growth 0.44 7.74
Kotak Floater short term- Direct Plan - Growth - -
HDFC Cash Management Fund- Savings plan-Direct Plan-Growth option - -
Total 7.12 1,895.21
0.05 78.85
0.41 99.30
- -
- -
- -
- -
- -
- -
- -
0.03 60.22
- -
- 2.34
0.10 250.11
-
0.02 39.73
0.34 33.38
0.30 30.20
0.03 48.55
0.06 142.80
0.07 225.17
1.40 1,010.65
- -
- -
Mutual Funds
March 31, 2016 March 31, 2015
Units (in crores) Amount Units (in crores) Amount
153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
16. Inventories (at lower of cost or net realizable value) March 31, 2015
Stock in Trade
Mobile handset and Network Interface Units 22.84
Network cards 1.09
Material in transit -
23.93
17. Trade Receivables
Non Current Current
March 31, 2015 March 31, 2015
Receivable outstanding for a period exceeding
six months from the date they are due for payment
a) Secured, considered good - 0.67
b) Unsecured, considered good [Refer Note 45] 142.86 149.87
c) Doubtful 30.67 660.69
173.53 811.24
Provision for doutful debts (30.67) (660.69)
142.86 150.54
Receivable outstanding for a period less than six months from the date they are due for payment
a) Secured, considered good - 204.97
b) Unsecured, considered good 3.03 592.53
c) Doubtful - 52.95
3.03 850.46
Provision for doutful debts - (52.96)
3.03 797.50
145.89 948.03
March 31, 2016
March 31, 2016 March 31, 2016
15.92
3.79
0.75
20.46
- 0.77
- 178.19
- 745.62
- 924.58
(745.62)
178.95
- 8.94
- 485.81
- 109.35
- 604.11
- (109.35)
- 494.76
- 673.71
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21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
18. Cash and Bank Balances Non Current Current
March 31, 2015 March 31, 2015
Cash and Cash equivalents
Cash on hand - 3.17
Cheques / drafts on hand - 43.36
Balance with Banks:
i) in Current Accounts - 248.11
ii) in escrow accounts 3.88
ii) in Fixed Deposit with original maturity less than three months# - 118.64
- 417.15
Other Bank Balances
i) in Fixed Deposit with original maturity more
than 3 months but less than 12 months # - 131.25
ii) in Fixed Deposit with original maturity more
than 12 months 61.00 -
61.00 131.25
Amount disclosed under non-current assets (Note 19) (61.00) -
- 131.25
- 548.40
# TTSL has placed fixed deposits of Rs. 215.96 crores (March 31, 2015 – Rs. 232.36 crores) towards the maintenance of a Debt Service Reserve Account in favor of the foreign currency lenders, as required by the lenders.
19. Other Assets
Non current Current
March 31, 2015 March 31, 2015
Finance setup cost 80.19 48.36
Lease rent receivable - 0.58
Unbilled revenue - 254.81
Advance gratuity 0.09 -
Fixed Deposit with original maturity more than 12 months 61.00 -
141.28 303.75
March 31, 2016 March 31, 2016
- 2.80
- 19.59
- 278.99
3.94
- 40.46
- 345.77
- 164.18
33.73 35.50
33.73 199.68
(33.73) -
- 199.68
- 545.45
March 31, 2016 March 31, 2016
54.32 39.93
- 1.76
- 261.21
- -
33.73 -
88.05 302.90
20. Revenue From Operations March 31, 2015
Service revenue 13,915.62
Sale of equipment, net 93.36
14,008.98
March 31, 2016
14,220.57
52.33
14,272.90
155
21. Other IncomeMarch 31, 2015
Commission income 69.08
Other non pperating income
- Profit on sale of fixed assets 7.40
- Liabilities no longer required written back 16.32
- Lease rent 7.61
- Interest on income tax refund -
- Miscellaneous Income 16.85
117.26
March 31, 2016
74.91
0.01
18.79
7.53
10.87
20.09
132.20
Miscellaneous income for the year ended March 31, 2016 includes capital expenditure recovery of the co-location
infrastructure sharing of sites aggregating to Rs. 13.36 crores (March 31, 2015- Rs. 10.66 crores) and other income Rs. 6.73
crores (March 31, 2015 – Rs. 6.19 crores).
24. Cost Of Goods Sold (Mobile handsets) March 31, 2015
Opening stock 11.36
Add: Purchases 123.33
134.69
Less: Closing stock 23.73
110.96
23. Employee Benefit Expenses [Refer Note 36 (d)]
March 31, 2015
Salaries, wages and bonus 804.37
Leave encashment & gratuity 16.19
Welfare expenses 86.64
Contribution to provident and other funds 35.87
Recruitment and training expenses 11.33
Less : Project expenditure capitalised (1.87)
952.53
24. Power And FuelMarch 31, 2015
Network 2,063.02
Others 72.94
2,135.96
March 31, 2016
23.73
60.53
84.26
15.76
68.50
March 31, 2016
735.82
15.05
72.81
32.11
25.93
(1.27)
880.46
March 31, 2016
2,130.48
61.16
2,191.66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
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21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
25. RentMarch 31, 2015
Network 1,279.14
Others 51.40
1,330.53
26. Other Expenses
March 31, 2015
Commission, incentives and content cost 560.88
Customer acquisition costs 229.28
Advertising and sales promotion 252.51
Information technology solutions 223.68
Bad debt written off 221.10
Provision for doubtful debts and advances (7.30)
Network managed service charges 137.68
Annual maintenance charges 194.81
Professional and legal fees 155.19
Repairs and maintenance:
- Plant and machinery - network 358.88
- Building 31.09
- Plant and machinery others 65.13
- Others 84.38
Leaseline and bandwidth charges 106.24
Telecalling charges 87.69
Travel and conveyance 116.51
Insurance 18.65
Port charges 28.47
Material consumption (Network cards) 41.44
Rates and taxes 4.85
Provision for contingencies [Refer note 36(b)] 56.50
Communication expenses 6.08
Printing and stationery 4.83
Provision for slow moving and damaged assets [Refer note 10(f)] (36.29)
Loss on sale/write off of fixed assets 59.27
Provision for foreseeble loss on long term contracts [Refer note 36(c)] (15.23)
Miscellaneous expenses 145.73
CSR expenses 0.56
3,132.60
March 31, 2016
1,503.56
90.49
1,594.04
March 31, 2016
532.12
230.65
166.43
219.51
95.38
70.69
75.07
209.63
181.20
399.08
32.47
121.22
101.07
134.39
117.97
89.15
26.45
25.32
40.69
26.98
19.19
6.71
4.65
236.96
15.47
2.13
82.68
0.19
3,263.44
157
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
27. Depreciation and AmortisationMarch 31, 2015
Depreciation 2,487.72
Amortisation:
- Amortisation of IRU, goodwill, tenancy rights and software 127.49
- Amortisation of licence fees/spectrum fees 526.25
3,141.46
Depreciation includes provision for slow moving assets of Rs. Nil (March 31, 2015 - Rs. 7.68 Crores.)
28. Finance Cost March 31, 2015
Interest:
- On loans from banks / FIs 2,704.36
- On debentures 128.47
- On other loans 484.79
Guarantee commission 12.13
Others finance charges 250.12
Finance set up cost 64.18
3,644.05
29. Finance IncomeMarch 31, 2015
Interest Income
- Bank deposits 40.55
Profit on sale of current investments 73.56
114.11
30. Exceptional Item (Refer note 45) March 31, 2015
Provision for doubtful debts of certain customers -
-
March 31, 2016
2,204.75
125.23
528.31
2,858.29
March 31, 2016
2,629.33
170.88
433.28
13.27
236.31
53.94
3,537.00
March 31, 2016
28.97
117.88
146.85
March 31, 2016
91.26
91.26
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
S.N. Description March 31,2015
(A) Capital Commitment 5,539.23
Estimated value of contracts remaining to be executed on capital
account and not provided for (net of advances) (Includes Rs.870.77
crores (March 31, 2015 - Rs. 5,209) towards deferred payout for
spectrum won in auction)
(B) Other Commitments
Bank guarantees 720.19
Open letters of credit 87.53
Indemnity given to others -
(C) Contingent Liabilities
Claims against the Group not acknowledged as debts -
- TTSL [Refer note (i) below] 2,573.67
- VIOM [Refer note (ii) below] 1,292.65
- TISL [Refer note (iii) below] 8.41
- VMI [Income tax matters] 0.81
- TTML [ Refer note (iv) below] 431.41
10,653.90
March 31, 2016
1,124.76
739.12
55.87
102.26
-
2,687.25
1,340.04
8.41
0.81
468.43
6,526.95
31. Commitment and contingencies
159
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
S.N. Description March 31, 2015
1 BSNL Walky ADC [Refer para (a) below] 399.80
2 Income tax demands [Refer para (b) below] 98.74
3 SMS Termination charges payable to other operators [Refer para (c) below] 250.22
4 DOT demands, for license fees and spectrum charges for 2006-07 & 2007-08,
based on special audit [Refer para (d) below] 300.06
5 Service Tax [Refer para (e) below] 194.14
6 WPC demand [Refer para (f) below] 106.95
7 DoT demands for EMF [Refer para (g) below] 494.99
8 Revenue share license fee assessment order [Refer para (h) below] 23.65
9 BSNL claims for interconnection [Refer para (i) below] 51.08
10 Port Charges payable to other operators 112.58
11 Sales Tax/VAT demands 48.94
12 Entry Tax 60.58
13 DoT demands on USO fund remittance 195.96
14 Other miscellaneous demands 235.97
2,573.66
March 31, 2016
416.07
91.02
250.22
300.06
119.70
106.95
611.05
23.65
51.08
144.96
48.64
75.44
195.96
252.44
2,687.25
Unless otherwise stated below the management believes that, based on legal advice, the outcome of these contingencies will
be favorable and that a loss is not probable, further outflow of economic resources is not probable in either case
a) Bharat Sanchar Nigam Limited ('BSNL') raised demands on January 15, 2005 with effect from November 14, 2004
stating that 'fixed wireless' services provided by TTSL under the brand name “WALKY” had mobility features and
should be treated as mobile for the purpose of Interconnect Usage Charges Regulations and Access Deficit Charge
('ADC') was payable on such calls. Hon'ble Telecom Dispute and Settlement Appellate Tribunal ('TDSAT') negated
the TTSL's petition. TTSL filed an appeal before the Hon'ble Supreme Court, which confirmed that ADC was payable
on fixed wireless service vide order dated April 30, 2008. As there were claims and counter-claims between TTSL
and BSNL, the senior counsel of BSNL offered and Hon'ble Supreme Court directed that quantification of amounts
payable to each other be made by Hon'ble TDSAT.
Hon'ble TDSAT vide its various interim orders had directed that BSNL and TTSL to exchange relevant information
and reconcile the differences. On April 15, 2010, Hon'ble TDSAT confirmed BSNL demands for period up to August
25, 2005 and has given it liberty to lodge its claim for a further period up to February 28, 2006 without quantification.
As TDSAT in its aforesaid judgment has not considered the directions of Hon'ble Supreme Court vide judgment
dated April 30, 2008 to reconcile claims/ counter claims and quantify amounts payable by parties to each other,
TTSL has filed an appeal in Hon'ble Supreme Court against TDSAT order of April 15, 2010 which has been admitted
by the Hon'ble Supreme Court on July 23, 2010. TTSL has also moved an application for interim relief against the
Hon'ble TDSAT order, which is pending. During the year, the Company has filed petition in the Hon'ble Supreme
Claims against the Company not acknowledged as debts and commitments include the following:
(i) Taxes, duties and other demands of TTSL.
160
161
respectively, Hon'ble High Court of Kerala has passed an interim direction that no coercive action shall be taken for
enforcement of the demands against TTSL.
During the earlier year, TTSL has also received demand from WPC wing of DoT on the items covered in special audit
demands by DOT, for the years March 31, 2007 and March 31, 2008, amounting to Rs. 145.98 crores (including interest
Rs. 88.69 crores). TTSL has also responded to the WPC wing of DOT.
TTSL has provision of Rs. 42.81 crores (March 31, 2015 - Rs. 42.81 crores), for the items it considers contentious and
disclosed the balance amount of Rs. 300.06 crores (March 31, 2015 - Rs. 300.06 crores) as contingent liability [excluding
Rs 62.85 crores interest demanded, since the amounts paid on account have not been considered].
e) TTSL availed cenvat credit on procurement of towers and shelters under the category of “Inputs” and service tax credit on
employee mediclaim insurance. The Commissioner of Service Tax passed order in November 2012 demanding
Rs. 93.70 crores (March 31, 2015 - Rs. 93.70 crores) including penalty of Rs. 44.30 crores (March 31, 2015 - Rs. 44.30
crores) for the period April 2004 to March 2009 primarily on account that TTSL is not eligible to avail such credit as these
are neither capital goods nor inputs under the Service Tax Law. TTSL has filed an appeal before the tribunal.
During the previous year, TTSL has received a favorable order from CESTAT disposing the above matters stating
demand on towers and shelter covers under limitation period as per section 73 of the Finance Act. Demand raised under
the extended period is set aside to the extent of Rs. 90.40 crores and CESTAT has asked tribunal for further clarification
for balance Rs. 3.30 crores. Hence, Rs. 3.30 crores has been disclosed as contingent liability.
During the previous year, TTSL had received Show Cause Notice ('SCN') for the period October 2006 to March 2013
demanding Service Tax of Rs. 187.16 crores (March 31, 2015 - Rs. 187.16 crores) on sale value of Starter Kits. During
the year, TTSL has received the revised demand of Rs. 70.33 crores against the said Show cause notice. TTSL has duly
filed response against the said demand and believes that the sale of starter kits is not liable to service tax.
During the year, TTSL has received demand of Rs 42.14 crores pertaining to service tax on SMS termination charges
receivable from operators, for the period July 2011 to May 2013. TTSL is in process of filing response against the said
demand and believes that the Service tax is not liable on SMS termination charges and hence disclosed as Contingent
Liability.
f) TTSL has received a fresh demand from WPC cell of DoT for the seven assessment years ended March 31, 2006 to 2012
directing TTSL to pay Rs. 188.30 crores (March 31, 2015 - Rs. 188.30 crores) for 20 circles, which comprises of principal
WPC demand of Rs. 52.54 crores and interest / penalty of Rs. 135.76 crores upto March 2014.
WPC cell of the DoT had raised number of demands during the prior years, upto 2007-08 and revised it eventually to a
refund of Rs. 31 crores on March 31, 2010 post TDSAT judgment requiring fresh demands based on reconciliation.
Subsequently, TDSAT had also issued an order directing WPC to not levy any penalty and interest on penalty.
TTSL had paid Rs. 73.33 crores (March 31, 2015 - Rs. 73.33 crores) under dispute and had continued with a provision of
Rs. 81.35 crores (March 31, 2015 - Rs. 81.35 crores) in the absence of the final assessment orders from WPC. TTSL has
filed its reply with DoT highlighting the discrepancies compared to earlier orders; and has requested for the computation
for the difference between the assessed income and AGR filed. TTSL is yet to receive a response. As at March 31, 2016,
TTSL has disclosed Rs. 106.95 crores (March 31, 2015 - Rs. 106.95 crores) as contingent liability and believes that the
demands will be quashed.
g) TTSL has received show cause notice ('SCN') and demands from DoT for radiation and certain procedural issues
(non–submission/late submission of Electro Magnetic Field ('EMF') radiation self certificate) amounting to Rs. 613.03
crores (March 31, 2015 - Rs. 496.99 crores). TTSL has responded to all SCN and demands stating the facts and made a
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
provision Rs. 2 crores pertaining to radiation related demands and SCN. A Joint Industry Petition has been filed before
TDSAT challenging levy of penalty due to late submission of self-certificates and TDSAT has granted a stay. During the
year TDSAT has set aside the EMF penalties pertaining to procedural delay upto March 31, 2011. However, TTSL is still
in process of validating the said judgment and accordingly, disclosed Rs 611.03 crores (March 31, 2015 - Rs. 496.99
crores) as contingent liability.
h) The DoT made claims of Rs. 25.88 crores (March 31, 2015 - Rs. 25.88 crores) and Rs. 1.97 crores (March 31, 2015 -
Rs. 1.97 crores) towards shortfall in license fees, penalty and interest thereon for the year 2003-04 and 2004-05
respectively. TTSL, together with other private Basic Service Providers, filed a petition with TDSAT in May 2003
contesting the basis of computation of revenue share license fees. TDSAT held that license fee cannot be levied on non-
telecom revenues and decided treatment of various items of revenue and expenditure. DoT had filed an appeal against
TDSAT judgment in Hon'ble Supreme Court of India. TTSL had also filed an appeal in Hon'ble Supreme Court. Hon'ble
Supreme Court has set aside the TDSAT judgment. TTSL has filed application before TDSAT against these claims in line
with Hon'ble Supreme Court judgment. TDSAT pronounced its judgment in April 2015 and directed DoT to rework license
fees payable. DoT has filed an appeal against TDSAT judgment in Supreme Court. TTSL has also filed an appeal against
TDSAT judgment wherein certain line items included as part of AGR by TDSAT are being challenged and in the interim,
TTSL has disclosed Rs. 23.65 crores (March 31, 2015 - Rs. 23.65 crores) as contingent liability.
i) BSNL in 2001 issued letters to TTSL and other operators seeking unilateral increase in interconnection access charges.
TTSL along with other operators filed a petition before TDSAT. TDSAT held the matter in favor of TTSL. BSNL filed an
appeal in Hon'ble Supreme Court of India. The Supreme Court has stayed the operation of TDSAT order. Demands
raised on TTSL are Rs. 51.08 crores (March 31, 2015 - Rs. 51.08 crores). In March 2009, BSNL demanded payment and
issued disconnection notices in case of failure to pay. The Hon'ble Supreme Court has stayed disconnection and further
clarified that the stay regarding TDSAT judgment was only towards refunds to be made by BSNL to TTSL.
(ii) Taxes, duties and other demands of VIOM (subsidiary)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a) Income tax cases represent amount demanded against the assessment year 2006-07, 2008-09 and 2012-13. The
amount relates to various matters relating to deductions of tax at source, depreciation claim and minimum alternate
tax (MAT).
b) Sales tax/VAT/entry tax demand mainly represents dispute with tax authorities on applicability of sales tax/VAT/
entry tax, where stay orders have been received at various levels in several states.
S.N. Description March 31, 2015
1. Income tax matters [Refer para (a) below] 91.63
2. Indirect tax:
- Sales tax / VAT / entry tax [Refer para (b) below] 312.95
- Service tax [Refer para (c) below] 855.20
3. Other legal matters (civil, criminal and writ petition) 18.27
4. Property taxes and municipal charges [Refer para (d) below]
5. Stamp duty [Refer para (e) below] 14.60
1,292.65
March 31, 2016
96.40
393.42
814.40
19.68
16.14
1,340.04
163
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
c) Service Tax amount represents orders Rs. 533.30 crores for period from April 2008 to September 2013
(March 31, 2015 - Rs. Nil) for which VIOM has preferred an appeal and show cause notice for Rs. 163.34 crores for
period October 2013 to March 2015 (March 31, 2015 - Rs. 855.20 crores for period from April 2008 to September
2013) (both these excluding penalties and interest as may be imposed) in relation to inputs credit taken which have
been appropriately replied to and also includes Rs. 117.75 crores amount relating to period April 2015 to March
2016 for which VIOM has availed the credit.
d) In respect of municipal charges and property taxes which is an industry vide phenomenon, VIOM has been
representing to the authorities wherever required and have been challenging or being challenged in various courts
including Hon'ble Supreme Court. As on balance sheet date, to the best of the knowledge of the management,
VIOM has demands for property taxes outstanding amounting to Rs. 74.50 crores (March 31, 2015 – Rs. 45.46
crores). On the basis of best estimates, VIOM has made a contingency provision of Rs.75.36 crores
(March 31, 2015 – Rs. 38.02 crores) in this regard. In view of the uncertainties about applicability and determination
of amount of overall exposure involved, VIOM considers the exposure of these amounts on the financial statements
not quantifiable.
e) VIOM has preferred an appeal with the Hon'ble Supreme Court and obtained stay order against the order of Hon'ble
High Court of Allahabad in respect of demand from State of U.P. for stamp duty on certain leave and license
agreements.
f) In respect of CROPCPS an estimated amount of dividend/redemption premium, accruing in terms of Investment
Agreement (IA) (which may be paid as dividend or redemption premium in terms of said agreement) is accumulated
as on balance sheet date, on pro-rata basis, aggregates to Rs. 22.50 crores (March 31, 2015 - Rs. 33.75 crores). In
view of this, no adjustments are carried in books and thus the impact of same on net-worth is not disclosed in
financial statement.
(iv) Taxes, duties and other demands of TISL (subsidiary)
S.N. Description March 31, 2015
1. Service tax demand (refer note below) 5.95
2. DOT demands for license fees based on special audit 2.46
March 31, 2016
5.95
2.46
a) On April 9, 2012, Office of the Commissioner of Service Tax had issued a Show cause cum demand notice for
Rs. 5.36 crores (March 31, 2015 - Rs. 5.36 crores) on TISL alleging to invoke service tax on the consideration
received from Tata Communications Limited for facilitating access to render services to customer and intends to
cover the same under Business support services. Subsequently TISL has filed an appeal against the same; the
hearing of the same is awaited.
b) On November 19, 2012, Department of Telecommunications (DoT) had issued a demand notice on TISL for alleged
short payment of License Fee of Rs. 4.84 crores including interest of Rs. 2.48 crores for the financial years 2006-07
and 2007-08. Subsequently TISL has filed an appeal against the same with Telecom Disputes Settlement Appellate
Tribunal (TDSAT). TDSAT has pronounced the judgment on April 23, 2015 where all the impugned demands has
been set aside and DoT has been directed to rework on these demands. DoT and TISL has filed the appeal in
Hon'ble Supreme Court against the TDSAT judgment. Hearing is awaited for the same. TISL is carrying a provision
of Rs. 2.38 crores in the books of account against the said demand notice.
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21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
a) Bharat Sanchar Nigam Limited (BSNL) issued demand notices to pay Access Deficit Charge (ADC) aggregating Rs.166.90 crores, including interest, for the period November 14, 2004 upto February 28, 2006, the date after which ADC is payable on Net Adjusted Gross Revenue Basis. The demands stated that 'Fixed Wireless' services provided by the Company under the brand name 'WALKY' had mobility features and should be treated as mobile services for the purpose of Interconnect Usage Charges Regulations and ADC was payable on such calls. The Company filed a petition before the Hon'ble Telecom Dispute and Settlement Appellate Tribunal (TDSAT) in this regard, wherein the TDSAT disallowed the Company's petition and held that ADC is payable. Thereafter, the Company filed an appeal before the Hon'ble Supreme Court (SC) who vide order dated April 30, 2008 confirmed that ADC was payable and since there were claims and counter-claims between the Company and BSNL, the SC directed that quantification of amounts payable to each other be made by TDSAT. The Company had filed a review petition in SC which was rejected.
The Company filed a petition in TDSAT to determine / reconcile amounts payable to each other and TDSAT vide its order dated August 12, 2008 held that BSNL and the Company should exchange relevant information and reconcile the differences. However, on April 15, 2010, TDSAT confirmed BSNL demands for period up to August 25, 2005 and has given BSNL liberty to lodge its claim for a further period up to February 28, 2006. The Company's appeal before SC against the aforesaid TDSAT order dated April 15, 2010 was admitted by the SC vide its order dated July 23, 2010 but no stay has been granted. The Hon'ble Supreme Court had asked for details / break up of demands which have been filed. The Company has also filed stay application in the Hon'ble Supreme Court. The matter will be listed for hearing in due course of time. Based on the legal advice available with the Company, the penalty clause invoked by BSNL does not apply and the Company is entitled to seek refund of Rs 50.73 crores, the excess ADC amount paid to BSNL along with interest and the Company believes that no additional provision is required.
Out of the aforesaid Rs.166.90 crores, the Company has till date provided for amounts aggregating Rs. 60.88 crores (previous year - Rs 60.88 crores). The balance amounts aggregating Rs.106.02 crores have been disclosed as Contingent Liability under 'Others'.
Payments made under dispute till date aggregates Rs 111.61 crores (previous year - Rs 111.61 crores) in relation to the above.
b) The Company had received a demand letter dated March 17, 2008 from Wireless Planning Commission division (WPC) of Department of Telecommunications (DoT) for Rs.8.38 crores, being a demand for spectrum charges for the period from April 1, 2005 to February 29, 2008. This demand was subsequently revised to Rs.184.69 crores by DoT, vide its demand letters dated July 3, 2008, for the period from October 1, 1998 to June 30, 2008 which was further increased to Rs. 266.00 crores vide letter dated February 28, 2009. The amount was again revised to Rs. 259.70 crores vide letter dated November 25, 2009 for the extended period till November 30, 2009.The
S.N. Description 100% TTSL's share
1. Telecom regulatory matters (refer (a) below] 431.97 157.84
2. Others 292.82 107.00
3. Income Tax demands 101.13 36.95
4. Notice received from Service Tax/Sales tax authorities 354.77 129.63
1,180.69 431.41
March 31, 2016
509.41 186.14
260.68 95.25
110.22 40.27
401.64 146.76
1,281.96 468.43
March 31, 2015 March 31, 2015March 31, 2016
(ii) Taxes, duties and other demands of associate (to the extent holding company's share i.e. 36.54%)
165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
had represented to WPC various items of differences mentioned in the demand orders, vide letter dated September 24, 2008. Though the Company had received a revised demand of Rs. 111.25 crores from DoT on January 3, 2013, Hon'ble TDSAT vide its order dated August 25, 2010 has held that the Company should be given credit for all payments made on producing proof and no penalty should be levied and only simple interest should be charged. The Company has been following up the matter with WPC and had also filed an execution petition before Hon'ble TDSAT on April 27, 2012. TDSAT has asked the Company to file the application as a miscellaneous petition which was filed and has been admitted. The Company has filed its reply to the revised demand note. The demand is not in line with TDSAT order mentioned above. The WPC has additionally raised in March 2013, demands for the financials years 2009-10, 2010-11 and 2011-12 aggregating Rs. 11.26 crores. The Company has sought details from WPC on the aforesaid demands. The matter came up for hearing on January 13, 2016 and the Hon'ble TDSAT deferred the demand until the disposal of Civil Appeal pending before the Hon'ble Supreme Court for a similar case by another operator.
The Company in March 2014 paid Rs. 15.47 crores computing the liability without penalty and simple interest on the principal amount.
c) The definition of Adjusted Gross Revenue (AGR) does not specifically include capital gain from sale of shares/securities and does not specifically allow exemption for bad debts in computation of License Fees (LF) payable to the Government. The TDSAT had vide its Order dated August 30, 2007, held that income from sale of securities is not related to licensed activity and hence should not attract LF and that bad debts written off, waivers and discounts are actual monies lost by service providers and hence should be deducted from AGR. The DoT had filed an appeal in SC against the aforesaid TDSAT Order.
The Company has considered Rs.154.86 crores, being the LF on profit on sale of investment and bad debts written off during an earlier year, as contingent liability and have also made payment of the same to DoT under protest. However, as a matter of abundant caution, the Company allocated Rs. 154.86 crores of provision for contingencies made in an earlier year towards this contingency.
The SC vide its Order dated October 11, 2011 has set aside the Order passed by TDSAT and has given leave to the licensees to approach TDSAT in case if specific demands have been raised by DoT not in accordance with the License Agreement.
Prior to the aforesaid judgment, the Company had received provisional assessment orders from DoT, against which applications have now been filed with the TDSAT in line with the aforesaid judgment and further the replies and rejoinders were also filed by DoT and TTML respectively. TDSAT restrained DoT from taking any coercive steps for enforcement of any impugned demands without its permission.
The Company has not received any further demands on this matter. TDSAT commenced final hearing in the matter in May 2014 and pronounced its judgment in April 2015, wherein the impugned demands have been set aside by the Tribunal and it has directed the DoT to rework the license fee payable for the duration which was challenged. DoT has filed an appeal against the TDSAT judgment dated April 23, 2015 in Supreme Court. TTML has filed an appeal against the TDSAT judgment dated April 23, 2015 before the Supreme Court wherein certain line items which have been included as part of AGR by TDSAT are being challenged. The matter had come up for hearing in Hon'ble Supreme Court on February 29, 2016 wherein the Hon'ble Supreme Court has said that DoT could continue to raise the demands as per its understanding, however, the same will not be enforced till the final decision on the matter.
d) During financial year 2012-13, the Company received a show cause notice (SCN) from DoT based on special audit
conducted for the financial years 2006-07 and 2007-08, towards alleged short payment of license fees and interest
thereon aggregating Rs. 52.11 crores. The Company had replied to DoT against the SCN in the financial year 2013-14.
The Company in November 2012 received a demand from DoT. The Company has filed a petition before TDSAT against
the demand. The matter was heard by TDSAT and TDSAT granted stay and restrained DoT from taking coercive action.
TDSAT commenced final hearing in the matter in May 2014 and pronounced its judgment in April 2015, wherein the
Company
TATA TELESERVICES LIMITED
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21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
impugned demands have been set aside by the Tribunal and it has directed the DoT to rework the license fee payable for
the duration which was challenged. DoT has filed an appeal against the TDSAT judgment dated April 23, 2015 in
Supreme Court. TTML has filed an appeal against the TDSAT judgment dated April 23, 2015 before the Supreme Court
wherein certain line items which have been included as part of AGR by TDSAT are being challenged. The matter had
come up for hearing in Hon'ble Supreme Court on February 29, 2016 wherein the Hon'ble Supreme Court has said that
DoT could continue to raise the demands as per its understanding, however, the same will not be enforced till the final
decision on the matter.
e) A demand for Rs. 290.17 crores for startup spectrum beyond 2.5MHz, being a onetime spectrum charges claimed for the
period from January 1, 2013 till the date of expiry of the license, was received from the DoT. The Company has filed a writ
petition in the Bombay High Court against the demand and obtained a stay order. The Company has undertaken (written
to DoT conveying its intent) to surrender 1.25 MHz of CDMA spectrum after retaining 1.25 MHz of spectrum over and
above start up spectrum of 2.5 MHz in Mumbai and to surrender the spectrum beyond 2.5 MHz in Maharashtra. Pursuant
thereto, the Company has paid under protest all four installments aggregating Rs. 119.58 crores for spectrum retained
and also completed the surrender of spectrum in Mumbai and Maharashtra under protest.
32. One Time Spectrum Fees
The Company received demands from DoT for payment of one-time spectrum fees for additional CDMA spectrum held beyond
2.5MHz in all its circles for the period from January 1, 2013 till the expiry of the initial terms of the respective licenses. The
Company responded to DoT, intimating about its decision to retain only one block spectrum in Delhi Circle and surrender the
balance spectrum. The demand with respect to the spectrum retained by the Company is of Rs. 195.09 crores, which is
payable in installments over the balance term of the license. In the opinion of Company, inter-alia, the above demand amounts
to alteration of financial terms of the licenses issued in the past and therefore, the Company has filed a Writ Petition before
Hon'ble Kolkata High Court challenging the decision to levy one-time spectrum charge and has subsequently, obtained a stay
against the demand. The Company has paid Rs. 132.12 crores (March 31, 2015 – Rs. 99.09 crores) for the period January 1,
2013 to December 31, 2016 [including interest of Rs. 52.45 crores (March 31, 2015 – Rs. 42.20 crores)], under protest, pending
the judgment with respect to its petition, for the spectrum retained in Delhi. The principal amount paid Rs. 79.62 crores (March
31, 2015 – Rs. 41.25 crs) has been disclosed under Intangible Assets, amortized as per the accounting policy followed by the
Company and the interest paid has been expensed in the statement of profit and loss under other finance charges for the
period upto March 31, 2016.
On May 24, 2013, DoT has asked the Company to surrender the spectrum unconditionally and pay one-time fee for the
spectrum held for proportionate period (i.e. from January 1, 2013 to the date of surrender). An application is also filed before
Hon'ble Kolkata High Court seeking direction to be issued to DoT for accepting surrender of spectrum as and when
surrendered without imposing any condition and without prejudice to the rights and contentions of TTSL. The same was
allowed by Hon'ble Kolkata High Court vide order dated August 2, 2013 and four months' time was granted for the same. The
Company has completed surrender of spectrum under protest, as on November 30, 2013.
33. Spectrum acquired during auction process held in March 2015
During the year ended March 31, 2016, the Government of India ('GoI') issued Letters of Intent for earmarking the spectrum won by TTSL in 3 circles namely – Andhra Pradesh, Delhi and Haryana in the auctions conducted during March 2015. TTSL is required to pay Rs. 4,034.05 crores for spectrum, subject to outcome of Special Leave Petition filed by Telecom Operators in Hon'ble Supreme Court. TTSL has paid an advance of Rs. 1,059.01 crores on April, 7, 2015 as upfront payment. TTSL has exercised the option to pay the balance amount of Rs. 2,975.04 crores (excluding interest) under the EMI scheme offered by the DoT. Accordingly, deferred payment liability of Rs. 2,394.95 crores (including interest of Rs. 213.85 crores) has been recognized. The balance unpaid amount pertaining to the spectrum not yet allotted of Rs. 870.77 crores (including interest of Rs. 76.06 crores) has been disclosed under capital commitments and the amount paid in advance Rs. 294.74 crores (including interest of Rs. 28.84 crores) has been disclosed as capital advance under loans and advances. As per the terms of the Notice
167
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Particulars March 31, 2015
USD INR
a) Foreign currency exposure on related currency loans / liabilities 103.30 6,467.91
(i) Derivative / Hedge contracts entered into by the Company
- Forwards 34.92 2,186.58
- Cross Currency Swaps 25.61 1,603.23
(ii) Unhedged foreign currency exposure
- Foreign currency loan (hedge through IRS below) 41.40 2,592.05
- Dues for capital goods and other trade payables 1.37 86.04
b) Interest Rate exposure on underlying liabilities 81.21 5,084.34
- Hedged through Cross Currency Swap Contracts 25.61 1,603.23
- Hedged through Interest Rate Swaps 55.60 3,481.12
- Unhedged Interest Rate exposure on underlying liabilities - -
March 31, 2016
USD INR
87.53 5,806.83
33.38 2,214.32
20.12 1,334.95
32.88 2,181.45
1.15 76.15
78.06 5,178.19
19.83 1,315.54
53.28 3,534.26
4.95 328.38
Inviting Application, in the event of default in payment of instalments, DOT may terminate the license and spectrum allotment/assignment, in which case, the allotted/assigned spectrum will revert back to DOT and the financial bank guarantees will be encashed by DOT.
34. DOT related demands of TTSL
a. DOT has issued show-cause notice demand for license fees payable by TTSL Rs. 846.82 crores (March 31, 2015 – Rs. 597.92 crores) for the year ended March 31, 2007, 2008, 2009, 2010, 2011 and 2012; wherein DOT has disallowed the PSTN related call charges, service tax and sales tax, claimed as deduction in the annual license fee statements filed by TTSL for these years. The letters include interest of Rs. 364.43 crores (March 31, 2015 - Rs. 233.02 crores) and penalty of Rs 184.71 crores (March 31, 2015 - Rs. 163.96 crores). TTSL has submitted the documents required by DOT and believes that it has the necessary information to substantiate its claims and therefore is confident that these demands would be corrected. TTSL has not got any response from DOT.
b. Subsequent to the judgment of the Hon'ble Supreme Court on October 11, 2011 on components of Adjusted Gross Revenue for computation of License fee, based on the legal advice, TTSL believes that the realised and unrealized foreign exchange gain should not be included in Adjusted Gross Revenue (AGR) for computation of license fee thereon. Also, due to ambiguity of interpretation of 'foreign exchange differences, the license fee impact on such exchange differences is not quantifiable and has not been included in the table above (contingent liability). Further, as per the Order dated June 18, 2012 of the Hon'ble Kerala High Court, a stay has been obtained, wherein the licensee can continue making the payment as was being done throughout the period of license on telecom activities. Further, TRAI in its recommendation on the AGR dated January 6, 2015 and TDSAT in its order dated April 23, 2015 have excluded the gains from foreign exchange fluctuations from the computation of AGR. Accordingly, the license fee on such foreign exchange gain has not been provided in these financial statements.
35. Forward contracts and derivative instruments
TTSL's activities expose it to different financial risks, including the effects of changes in foreign currency exchange rates and interest rates. TTSL uses derivative financial instruments such as forward contracts, option contracts, cross currency swaps ('CCS') and interest rate swaps ('IRS') to manage its exposures to foreign exchange fluctuation and interest rate fluctuation. There are no contracts entered for speculation purpose.
The following table details the status of TTSL's exposure as on March 31, 2016:
TATA TELESERVICES LIMITED
168
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
b. Provision for contingencies:
Provision for contingencies represents probable outflow of resources for matters under litigation
Provision for contingencies is primarily on account of various provisions towards the outstanding claims / litigations against the Group, which are expected to be utilized on closure of the litigations. The Group has paid certain amounts under dispute against these claims / litigations. The following table sets forth the movement in provisions:
Particulars March 31 ,2015
Balance at the beginning of the year 95.60
Acquired pursuant to scheme of amalgamation (refer note 44) 4.69
Additions during the year 56.49
Utilised during the year -
Amount paid under dispute (62.81)
Balance at the end of the year 93.97
March 31, 2016
93.97
-
66.02
(46.83)
(20.84)
92.32
Particulars March 31 ,2015
Balance at the beginning of the year 174.33
Additions during the year 0.05
Utilised during the year (0.14)
Balance at the end of the year 174.24
March 31, 2016
174.24
-
(1.38)
172.86
TTSL has taken forward, not included above, on future interest liability exposure amounting to USD 4.73 crores
(March 31, 2015 – USD 2.75 crores)
Further, there is interest rate exposure on the Letters of Credit amounting to Rs. 31.80 crores (USD 0.48 crores) as on
March 31, 2016 [March 31, 2015 – Rs. 32.56 crores (USD 0.52 crores)], not hedged as at the year end.
Pursuant to The Institute of Chartered Accountants of India's (ICAI) Announcement dated March 29, 2008 on 'Accounting for
Derivatives', the Company has, based on the principles of prudence enunciated in Accounting Standard-1 on 'Disclosure of
Accounting Policies', recognized net MTM gain amounting to Rs. 520.17 crores (Rs. 328.77 crores in non-current loans and
advances and Rs 191.40 crores in current loans and advances) during the year to the extent of exchange loss on the underlying
liabilities (March 31, 2015– MTM gain Rs. 531.62 crores) (March 31,2015 - Rs. 511.25 crores in non current loans and
advances and Rs. 20.37 crores in current loans and advances).
36. Current Liabilities and provisions
a. Provision for site restoration:
VIOM uses various premises on lease to install the passive telecom infrastructure facilities. A provision is recognized for
the costs to be incurred for the restoration of these premises at the end of the lease period. It is expected that this
provision will be utilized at the end of the lease period of the respective sites as per the respective lease agreements. The
following table sets forth the movement in provisions:
169
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Particulars March 31 ,2015
Balance at the beginning of the year 118.00
Additions during the year 47.00
Utilised during the year (62.23)
Amount paid under dispute -
Balance at the end of the year 102.77
March 31, 2016
102.77
38.47
(36.34)
(0.00)
104.89
March 31 ,2015
Components of net benefit cost
Service cost 9.61
Interest cost 5.27
Expected return on plan assets (3.50)
Net actuarial (gain) / loss recognised during the year (3.19)
Past Service cost -non-vested benefit -
Past Service cost-vested benefit -
Net gratuity cost 8.19
March 31, 2016
9.15
3.97
(3.54)
(0.25)
-
9.33
d) Employee Benefit Plans:
(i) The Group has defined benefit gratuity plan. Every employee who has completed five years or more gets the gratuity on
departure at 15 days salary i.e. last drawn salary for each completed year of service. The scheme in Parent Company is
funded with an insurance company in the form of a qualifying insurance policy. Summary of the gratuity plan is as follows:
Particulars Total
c. Provision for foreseeable loss on long term contracts:
Provision for foreseeable loss on long term contracts is primarily on account of various provisions towards the
outstanding claims / litigations against TTSL, which are expected to be utilized on closure of the litigations. TTSL has paid
certain amounts under dispute against these claims / litigations. The following table sets forth the movement in
provisions:
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21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Particulars March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012
Defined benefit obligation (58.02) (58.77) (59.52) (45.39)
Fair value of plan assets 38.69 46.96 39.61 26.74
Funded status asset / (liability) (19.33) (11.81) (19.90) (18.65)
Unrecognised past service cost - non vested benefits - - - -
Liability recognised in Balance Sheet (19.33) (11.81) (19.90) (18.65)
(Profit) on plan assets not recognised in 5.20 (3.13) (1.95) 0.30Profit & Loss Account
Assets / (Liability) in Balance Sheet (14.13) (14.94) (21.85) (18.95)
Experience adjustment on plan liabilities (assets) (0.09) (0.04) 1.58 (4.86)
March 31, 2016
(52.49)
43.59
(8.90)
-
(8.90)
(1.85)
(10.76)
0.25
Net gratuity cost for the year ended March 31, 2016 is as follows :
TotalParticulars
March 31, 2015
Change in benefit obligation
Benefit obligation at the beginning of the period / year 58.47
Acquired pursuant to scheme of amalgamation (refer note 35) 0.17
Service cost 9.61
Interest cost 5.27
Acquisition/Business Combination/Divestiture -
Benefits paid (12.41)
Actuarial (gain) / loss (3.09)
Past Service Cost -
Benefit obligation at the end of the year 58.02
Change in fair value of plan assets
Fair value of plan assets at beginning of year 46.95
Expected return on plan assets 3.50
Actual contribution -
Benefits paid (11.66)
Asset gain / (loss) (0.10)
Fair value of plan assets at end of year 38.69
Actual return on plan assets 3.40
March 31, 2016
58.02
-
9.15
3.97
(4.64)
(13.99)
(0.02)
-
52.49
38.69
3.54
18.63
(17.53)
0.27
43.59
3.78
The change in benefit obligation and funded status of the gratuity plan for the year ended March 31, 2016 is as follows:
TotalParticulars
171
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Particulars March 31 ,2015
Discount rate 7.80%
Expected return on plan assets 8.50% - 8.70%
March 31, 2016
7.80%
8.50% - 8.70%
The assumptions used in accounting for the gratuity plan for the year are as below:
Major categories of plan assets as a percentage to total assets: March 31 ,2015
Government of India Securities (funded with LIC of India & TATA AIA) 100%
March 31, 2016
100%
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
other relevant factors, such as supply and demand in the employment market. Further, the estimated amount of contributions
expected to be paid to the plan during the year ending March 31, 2017 is Rs. 12.40 crores (March 31, 2016 - Rs. 1.56 crores).
(ii) Provident fund with respect to employees covered with the Government administered fund is a defined contribution scheme. Also, TTSL makes contributions to the Tata Teleservices Provident Fund Trust which is treated as defined benefit plan.
Summary of the provident fund plan is as follows:
March 31 ,2015
Components of net benefit cost
Service cost 19.93
Interest cost 32.81
Expected return on plan assets (34.82)
Net actuarial (gain) / loss recognized during the year (9.55)
Past Service cost -non-vested benefit
Past Service cost-vested benefit
Net cost 8.37
March 31, 2016
15.88
18.07
(19.17)
0.30
-
15.08
The change in benefit obligation and funded status of the Provident Fund plan for the year ended March 31, 2016 is as follows:
March 31 ,2015
Change in benefit obligation
Benefit obligation at the beginning of the year . 326.57
Service cost 19.93
Interest cost 32.81
Benefits paid (67.36)
Actuarial (gain) / loss 3.45
Employee contributions 29.69
Transfer in -
Settlements 9.01
Changes in the reserves
Benefit obligation at the end of the year 354.10
March 31, 2016
354.11
15.88
18.07
(74.00)
14.61
27.13
-
3.28
359.09
Particulars
Particulars
March 31 ,2015
Change in fair value of plan assets
Fair value of plan assets at beginning of year 327.53
Expected return on plan assets 34.82
Employer contributions 19.93
Transfer In -
Employee Contribution 29.69
Benefits paid (67.35)
Asset gain / (Loss) 13.00
Settlements 9.01
Fair value of plan assets at end of year 366.63
March 31, 2016
366.63
19.17
15.88
-
27.13
(74.00)
14.31
3.28
372.41
Net provident fund cost for the year ended March 31, 2016 is as follows:
Fund balance March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012
Defined benefit obligation (354.11) (326.57) (281.63) (234.36)
Fair value of plan assets 366.63 327.53 284.86 230.58
Funded status asset / (liability) 12.52 0.96 3.23 (3.78)
(Profit) / Loss on plan assets not recognised in (15.22) (5.39) (7.92) 5.74
(Liability)/ Asset in Balance Sheet (2.70) (4.43) (4.69) 1.96
Experience adjustment on plan liabilities - 2.50 (6.35) 7.37
March 31, 2016
(359.09)
372.41
13.32
(16.70)
(3.38)
March 31 ,2015
Interest rate 8.75%
Expected return on Plan Assets (Internal Rate of Return on the portfolio of plan assets, given below) 7.80%
Major categories of plan assets as a percentage to total assets March 31, 2015
Government of India Securities/ Gilt Mutual Funds 25.68%
State Government Securities 20.95%
PSU Bonds 43.60%
Private Sector Bonds/Equity/Mutual Funds 9.77%
March 31, 2016
8.80%
7.40%
March 31, 2016
19.57%
24.32%
55.87%
0.24%
The assumptions used in accounting for the Provident Fund Plan for the year are as below:
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
other relevant factors, such as supply and demand in the employment market. Further, the estimated amount of contributions
expected to be paid to the plan during the year ending March 31, 2017 is Rs. 3.38 crores (March 31, 2016 - Rs. 2.70 crores).
Particulars
TATA TELESERVICES LIMITED
172
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
37. Deferred taxes
During the year ended March 31, 2016 the Group has incurred losses of Rs. 3,001.74 crores (March 31, 2015 – Rs. 4,076.53 crores), (accumulated losses of Rs. 33,098.62 crores (March 31, 2015 – Rs. 30,096.88 crores) resulting into tax loss carry forward situation. TTSL launched its unified access services only during year ended March 31, 2003. TTSL is eligible for a tax holiday under section 80IA of the Indian Income-tax Act, 1961, beginning with the financial year in which TTSL started providing telecommunication services prior to March 31, 2005, for 17 telecom circles. Though the management is confident of generating profits in the future, there is currently no virtual certainty that TTSL would reverse the tax loss carry forwards beyond the tax holiday period. Accordingly, the Group has restricted recognition of deferred tax assets resulting from the carry forward tax losses and other timing differences to the extent of deferred tax liability on account of difference in the tax and book depreciation.
38. Operating leases
Where the Group is a lessee/licensee
Rent
The Group has entered into lease agreement for leased premises, which expire in the next twenty years from the date of the agreements.
There are no contingent lease/license fees payments. Gross lease fee for the ended March 31, 2016 is Rs. 787.47 crores (March 31, 2015 – Rs. 681.77 crores) includes lease equalization of Rs10.68 crores (March 31, 2015 – Rs. 9.28 crores) for considering fixed escalation on a straight line basis over the lease/license term.
Future minimum lease/license commitments under operating leases/licenses are as follows:
March 31, 2015
(i) not later than one year 617.83
(ii) later than one year and not later than 5 years 2,315.32
(iii) Later than 5 years 2,738.40
5,671.55
March 31, 2016
665.50
2,407.06
2,529.86
5,602.42
Particulars Total
39. Related Party Disclosure
a) Enterprise having significant influence
i. Tata Sons Limited [Refer Note 3(f)]
ii. NTT DOCOMO Inc. (Effective March 25, 2009), holding 26.5% in TTSL.
b) Associate include Tata Teleservices (Maharashtra) Limited (“TTML”).
c) Key management personnel - Mr. N Srinath (Managing Director)
173
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Natu
re o
f tr
an
sacti
on
s
Sale
of fix
ed a
ssets
-(1
8.4
7)
-
Issu
e o
f C
CN
CP
S(1
,024.0
0)
--
Serv
ice r
eve
nue
(1.0
9)
(250.8
3)
-
Oth
er
inco
me
-(3
.36
)-
Acc
ess
ch
arg
es
0.0
250.7
8-
Pro
fess
ional a
nd le
gal f
ees
0.0
2-
-
Repair a
nd m
ain
tenance
-2.7
7-
Managerial r
em
unera
tion
--
3.5
6
Lease
line a
nd b
andw
idth
charg
es
-14.4
3-
Com
munic
atio
n e
xpense
s-
1.1
8-
Exp
ense
s in
curr
ed b
y us
on b
ehalf
of re
late
d P
art
y-
(71.3
0)
-
Exp
ense
s in
curr
ed b
y re
late
d p
art
y on b
ehalf
of
us
.-
15.3
1-
Mis
cella
neous
exp
ense
s1.0
42.6
2-
Infr
ast
ruct
ure
pro
visi
onin
g fees
-178.3
9-
Energ
y and o
ther
reim
burs
em
ents
-73.5
8-
Ou
tsta
nd
ing
bala
nces
Tra
de r
ece
ivable
s0.7
071.7
0-
Oth
er
rece
ivable
s-
32.8
2-
Oth
er
curr
ent lia
bili
ties
-(7
2.8
2)
-
Inve
stm
ents
-1,6
48.7
5-
Pro
visi
on for
dim
inutio
n-
(964.3
3)
-
Secu
rity
deposi
ts r
ece
ived
-0.2
6-
Secu
rity
deposi
ts g
iven
-1.7
3-
a.
TT
SL s
hare
s ce
rtain
infr
ast
ruct
ure
and o
pera
tion p
roce
sses
with
TT
ML in
cludin
g c
om
mon b
illin
g p
latf
orm
, d
om
est
ic r
oa
min
g s
erv
ice
fo
r th
e m
ob
ile s
ubsc
ribers
.
b.
Oth
er
exp
ense
s fo
r th
e y
ear
ended M
arc
h 3
1, 2016 a
re n
et of R
s. 6
5.4
3 c
rore
s (M
arc
h 3
1, 2015-R
s. 7
1.3
0cr
ore
s), co
sts
reim
bu
rse
d b
y T
TM
L.
c.S
hare
ple
dge h
as
been c
reate
d o
f 26 p
er
cent
(Marc
h 3
1,
2015-
26 p
erc
ent)
betw
een T
ata
Sons
Lim
ited a
nd
th
e T
ata
Po
we
r C
om
pa
ny
Lim
ited, i
n fa
vor o
f ID
BI T
rust
eesh
ip S
erv
ices
Lim
ited a
ctin
g a
s T
rust
ees
on b
ehalf
of L
enders
of T
TS
L. [
Refe
r No
te 5
a (i
i)]
d.
TT
SL h
as
ple
dged 2
6 p
er ce
nt (
Marc
h 3
1, 2
015- 26 p
erc
ent)
sta
ke (of t
he to
tal o
uts
tandin
g e
quity
share
cap
ital o
f TT
ML
) to
the
len
de
rs o
f T
TM
L a
gain
st lo
ans
take
n b
y T
TM
L. [
Refe
r Note
13].
-(1
0.9
9)
(995.4
3)
--
(0.7
9)
(204.7
1)
-
-(1
.67)
-
0.0
144.6
0-
--
-
-3.4
2-
--
3.8
3
-27.4
3-
-1.2
9-
-(6
5.4
3)
-
22.9
0-
0.8
71.1
5-
--
-
--
-
0.2
385.0
6-
-26.3
3-
(0.4
4)
(131.2
4)
-
-2,0
35.8
1-
-(1
,350.0
6)
--
-
-1.7
3--
Part
icu
lars
En
terp
rises h
avin
g s
ign
ific
an
t in
flu
en
ce
Asso
cia
te
Mar
ch 3
1, 2
016
Mar
ch 3
1, 2
015
Mar
ch 3
1, 2
016
Mar
ch 3
1, 2
015
Mar
ch 3
1, 2
016
Mar
ch 3
1, 2
015
KM
P
TATA TELESERVICES LIMITED
174
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Issue of CCNCPS
Tata Sons Limited (1,024.00)
Service revenue
Tata Sons Limite (0.15)
NTT DoCoMo Inc (0.93)
Rent - network
NTT DoCoMo Inc -
Access charges
NTT DoCoMo Inc 0.02
Professional and legal fees
Tata Sons Limited 0.02
Expenses incurred by us on behalf of related Party
Tata Sons Limited 0.09
Miscellaneous expenses
Tata Sons Limited 0.29
NTT DoCoMo Inc 0.75
Outstanding amounts
Trade receivables
NTT DoCoMo 0.44
Tata Sons Limited 0.26
Other current liabilities
NTT DoCoMo Inc 0.00
Tata Sons Limited -
(995.43)
(0.01)
(0.78)
0.01
-
-
0.27
0.60
0.05
0.18
0.01
(0.44)
Particulars Enterprises having Significant Influence
2015-16 2014-15
40. Segment Reporting
1. Primary Segments:
The Group operates in three business segments:
a) Mobility Services: providing GSM/CDMA/3G based mobile and related telephony services.
b) Passive Infrastructure (PI): providing sites to operators.
c) Others: providing internet access services, m-commerce related and non-voice services
Transactions between segments are accounted on agreed terms on arm's length basis and have been eliminated at the Group level.
2. Secondary Segment:
The Group caters only to the need of Indian market representing a singular economic environment with similar risk and rewards and hence there are no reportable geographical segments.
175
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Rev
enue
from
ext
erna
l cus
tom
ers
10,9
61.9
13,
147.
0917
.24
--
14,1
26.2
4
Inte
r S
egm
ent R
even
ue3.
791,
762.
656.
85(1
,773
.28)
--
Tota
l Rev
enu
es10
,965
.70
4,90
9.74
24.0
9(1
,773
.28)
14,1
26.2
4
Seg
men
t Res
ults
1,05
4.74
1,83
3.73
(6.5
2)(6
0.04
)2,
821.
91
Fin
ance
Inco
me
96.4
615
.73
1.92
-11
4.11
Fin
ance
Cos
t(2
,757
.78)
(777
.29)
(10.
78)
(98.
19)
(3,6
44.0
5)
For
eign
exc
hang
e G
ain/
(Lo
ss)
21.1
80.
25-
-21
.43
Dep
reci
atio
n an
d am
ortis
atio
n(2
,260
.80)
(901
.69)
(1.9
6)-
(3,1
64.4
4)
Pro
fit
/(lo
ss)
bef
ore
tax
(3,8
46.2
0)17
0.73
(17.
34)
(158
.23)
(3,8
51.0
3)
Pro
visi
on fo
r Tax
--
--
-
Ext
ra O
rdin
ary
Item
/ Exc
eptio
nal i
tem
s-
--
--
Pro
fit /
(loss
) af
ter
tax
(3,8
46.2
0)17
0.73
(17.
34)
(158
.23)
(3,8
51.0
3)
Sha
re o
f (Lo
ss)/
Pro
fit in
Ml
--
--
--
(3.8
1)(3
.23)
(3.8
1)(3
.23)
Sha
re o
f (Lo
ss)
in a
ssoc
iate
--
--
--
-(2
22.2
7)-
(222
.27)
Pro
fit
/ (lo
ss)
afte
r ta
x an
d m
ino
rity
inte
rest
(3,8
46.2
0)17
0.73
(17.
34)
(383
.73)
(4,0
76.5
3)
Oth
er S
egm
ent
Item
s
Cap
ital E
xpen
ditu
re69
7.46
1,35
3.44
0.12
-2,
051.
02
Seg
men
t Ass
ets
22,4
64.7
39,
380.
3179
.24
(3,2
51.3
2)28
,673
.01
Seg
men
t Lia
bilit
ies
30,8
35.6
87,
794.
6325
8.33
(548
.61)
38,3
40.0
5
10,7
05.1
13,
686.
6613
.33
14,4
05.1
0
3.33
1,51
5.46
0.39
(1,5
19.1
5)
10,7
08.4
45,
202.
1313
.72
(1,5
19.1
5)14
,405
.12
1,73
4.55
1,72
6.89
(9.0
9)(1
09.2
9)3,
343.
05
120.
1424
.82
1.86
-14
6.82
(2,8
24.3
0)(6
50.5
6)(1
0.79
)(5
1.36
)(3
,537
.01)
(1.2
3)-
--
(1.2
3)
(2,0
29.4
4)(8
27.7
6)(1
.09)
-
(3,0
00.2
8)27
3.38
(19.
13)
(160
.66)
(2,9
06.6
7)
--
--
-
-(9
1.26
)-
(91.
26)
(3,0
00.2
8)18
2.12
(19.
13)
(160
.66)
(2,9
97.9
3)
(3,0
00.2
8)18
2.12
(19.
13)
(164
.47)
(3,0
01.7
4)
3,74
5.77
316.
050.
05-
4,06
1.87
22,8
68.7
28,
793.
8883
.47
(2,9
03.2
2)28
,842
.90
33,6
30.1
97,
109.
2926
8.65
(495
.65)
40,5
12.4
9
(2,8
58.2
9)
-
Des
crip
tio
nM
arch
31,
20
15M
arch
31,
20
16Co
nso
lidat
ed
Mar
ch 3
1,
2015
Mar
ch 3
1,
2016Elim
inat
ion
s
Mar
ch 3
1,
2015
Mar
ch 3
1,
2016
Oth
ers
Mar
ch 3
1,
2015
Mar
ch 3
1,
2016
Pas
sive
Ser
vice
s
Mar
ch 3
1,
2015
Mar
ch 3
1,
2016
Mo
bile
Ser
vice
s
NO
TE
S T
O T
HE
CO
NS
OL
IDA
TE
D F
INA
NC
IAL
STA
TE
ME
NT
S A
S A
T A
ND
FO
R T
HE
Y
EA
R E
ND
ED
MA
RC
H 3
1, 2016
(All
am
ou
nts
in R
up
ee
s C
rore
s u
nle
ss s
tate
d o
the
rwis
e)
TATA TELESERVICES LIMITED
176
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
177
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
40. Interest in a joint ventureTTSL has a 50 per cent interest in the assets, liabilities, expenses and revenues of VMI. TTSL’s share of the assets, liabilities, revenues and expenses of the jointly controlled entity, based on the audited financial statements of VMI as at March 31, 2016, are as follows :-
Particulars March 31, 2015(Audited)
Current Liabilities 237.23
Current Assets 6.86
Revenue 6.91
Expense 3.17
Finance Cost 10.75
Profit before tax -7.00
Contingent Liability 0.81
41. Earnings per Share
Units March 31, 2015
Loss for the year Rs. in Crores (4,076.53)
Weighted average number of equity shares in calculating basic EPS Nos in crores 471.23
Loss per Share (equity shares, par value of Rs. 10/-each)
Basic and Diluted in Rs. (8.65)
42. Debenture Redemption Reserve
Group has issued Redeemable Non-Convertible Debentures aggregating to Rs. 1,600 crores (March 31, 2015-Rs. 1,000 crores) repayable over the specified period. As per section 71 (4) of the Companies Act 2013, a debenture redemption reserve (‘DRR’) is to be created out of the profits of each year until such debentures are redeemed. During the year ended March 31, 2016, Group has incurred losses of Rs. 3,001.74 crores (March 31, 2015-Rs. 4,076.53 crores), hence, the Group has not created debenture redemption reserve.
Further, as per Companies (Share Capitafand Debentures) Rules 2014 wherein in terms of Clause 18 (7)(c) of the rules, it will thbe necessary for TTSL to create a fund before 30 April of each financial year, which shall not be less than 15% of the
stdebentures maturing during the respective financial year ending on 31 March, by way of one or more methods i.e. through deposits with scheduled banks /investments in specified securities or bonds as indicated in the Clause 18(7)(c) of the Circular. The Company has placed Rs. 37.50 crores in scheduled bank as fixed term deposit, on April 28, 2016 for the repayment of Rs. 250 crores due in the financial year 2016-17.
43. Investment in TISL
Tata Internet Services Limited (“TISL”) (100% subsidiary) in its board meeting held on November 14, 2014 approved the amalgamation with TTSL. TTSL along with TISL has filed the Scheme of Amalgamation before the Hon’ble High Court of Delhi in March 2015 and the matter is listed for hearing in July 2016.
44. Investment in VIOM
i. During the previous year pursuant to the scheme of amalgamation (‘the Scheme’) of erstwhile Viom Infra Networks (Maharashtra) Limited (Viom Infra’), wholly owned subsidiary of VIOM, with VIOM under sections 391 to 394 of the Companies Act, 1956, sanctioned by Hon’ble High Court of Delhi on December 04, 2014, entire business and all assets and liabilities of Viom Infra had been transferred and vested in VIOM effective from April 01, 2014 (‘Appointed Date’). Accordingly the Scheme had been given effect to in the financial statements for last quarter of previous financial year as below:
March 31, 2016(Audited)
245.98
5.17
0.51
0.37
10.59
(10.44)
0.81
March 31, 2016
(3,001.74)
471.23
(6.37)
Particulars
a. The amalgamation has been accounted for under the “Purchase Method” as prescribed by the Accounting Standard 14 “Accounting for Amalgamation”.
b. All assets and liabilities of VIOM Infra have been recorded at their respective fair value under respective accounting heads and intercompany balances stand cancelled.
c. Investment amount for shares of VIOM Infra standing in the books of the VIOM has been cancelled. Differential of Rs. 941.18 crores being difference of the investment amount for the shares of VIOM Infra held by VIOM, in the books of VIOM as at the April 1, 2014 less fair value of net assets has been debited to Goodwill account.
d. Goodwill arising on account of amalgamation as referred to in clause (c) above is amortised over a period of ten years, being useful life estimated by the management, effective from April 1, 2014.
ii. Consequent to the merger effective April 1, 2014, the goodwill on consolidation under AS-21 “Consolidation Financial Statements”; amounting to Rs. 878 crores as at March 31, 2014, has been reclassified under intangible assets and amortised as mentioned above. The difference in goodwill is adjusted to reserves and surplus.
45. During the year, one of the customer of VIOM has stopped making payments and has significantly reduced the business with VIOM. VIOM has filed a legal suit with Hon’ble High Court of Delhi. Due to such uncertainty, VIOM has created a provision for bad and doubtful debts of Rs. 91.26 crores as on March 31, 2016. The provision created has been considered appropriate by the management. This has been shown as exceptional item in the statement of profit and loss.
46. Investment in VMI
TTSL has conveyed its intention to purchase the 50% equity stake in VMI held by VMIL. Further, TTSL have not renewed the Consultancy Agreement with VMI beyond March 31, 2014. Pursuant to the proposed actions of TTSL and TTML, the consolidated financial statement have been prepared on the basis that VMI is no longer a going concern, therefore, assets and liabilities have been stated at their realisable values.
Considering above, the future operating committed liabilities including projected losses have been assessed by VMI (based on information available as on date) and recorded the future operating commitments including projected losses in these consolidated financial statements, though, the amount currently estimated may undergo changes based on conditions existing at the time of actualization of these liabilities.
47. Disclosure pursuant to Schedule III to the Companies Act, 2013 for the year ended March 31, 2016:
Name of the entityNet Assets i.e. total assets
minus total liabilitiesShare in profit or (loss)
As % of consolidated
net assetsAmount
As % of consolidated profit or loss
Amount
ParentTata Teleservices Limited 105% (12,435.90) 55% (1,641.04)
SubsidiariesVIOM Networks Limited (6%) 720.04 45% (1,356.96)MMP Mobi Wallet Payment Systems Limited 0% 6.48 0% (13.80)Tata Internet Services Limited 0% 37.79 0% 6.78NVS Technologies Limited 0% 0.09 0% (0.01)
Minority interests in all subsidiariesViom Networks Limited -1% (126.22) 0% 3.81Associates (Investment as per the equity method)Tata Teleservices (Maharashtra) Limited 0% - 0% -
Joint Ventures (as per proportionate consolidation/ investment as per the equity method)Virgin Mobile India Private Limited 0% 1.83 0% (0.53)
Total (11,795.90) (3,001.74)
TATA TELESERVICES LIMITED
178
21st Annual Report 2015-2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
Parent
Tata Teleservices Limited 106% (10,346.75) 59% (2,416.24)
Subsidiaries
VIOM Networks Limited (6%) 634.75 41% (1,651.72)
MMP Mobi Wallet Payment Systems Limited 0% 11.08 0% (15.39)
Tata Internet Services Limited 0% 31.43 0% 6.93
NVS Technologies Limited 0% (0.01) 0% (0.00)
Minority interests in all subsidiaries
Viom Networks Limited 1% (122.41) 0% (3.23)
Associates (Investment as per the equity method)
Tata Teleservices (Maharashtra) Limited 0% - 0% -
Joint Ventures (as per proportionate consolidation/
investment as per the equity method)
Virgin Mobile India Private Limited 0% 2.46 0% 3.12
Total (9,789.45) (4,076.53)
Disclosure pursuant to Schedule III to the Companies Act, 2013 for the year ended March 31, 2015:
Name of the entityNet Assets i.e. total assets
minus total liabilitiesShare in profit or (loss)
As % of consolidated
net assetsAmount
As % of consolidated profit or loss
Amount
48. Previous year figures
Previous year figures have been regrouped where necessary to confirm to this year’s classification.
The accompanying notes are an integral part of the consolidated financial statements.
As per our report of even date For and on Behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm Registration No.: 101049W/ E300004
Chartered Accountants
per Prashant Singhal Ishaat Hussain N Srinath
Partner Director Managing Director
Membership no. 93283 [DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran
Chief Financial Officer Company Secretary
Place: Mumbai Place: Mumbai
Date: June 25, 2016 Date: June 25, 2016
179
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED MARCH 31, 2016(All amounts in Rupees Crores unless stated otherwise)
TATA TELESERVICES LIMITED
180
21st Annual Report 2015-2016
Form AOC-I
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)
Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures
Part “A”: Subsidiaries(Information in respect of each subsidiary to be presented with amounts in Rs. In Crores)
1. Reporting period for the subsidiary N.A N.A N.A N.A concerned, if different from the holding company’s reporting period
2. Reporting currency and Exchange rate N.A N.A N.A N.A as on the last date of the relevant Financial year in the case of foreignsubsidiaries.
3. Share Capital 150.00 63.00 0.10 907.71
4. Reserves & Surplus (102.11) (55.24) (0.12) 776.98
5. Total Assets 57.39 20.81 0.10 8,556.95
6. Total Liabilities 9.50 13.06 0.12 6,872.26
7. Investments 18.67 3.17 - 190.24
8. Turnover 7.57 5.95 - 5,226.98
9. Profit before taxation 6.51 (15.17) (0.01) 163.85
10. Provision for taxation - - - -
11. Profit after taxation 6.51 (15.17) (0.01) 163.85
12. Proposed Dividend - - - -
13. % of shareholding 100% 84% 100% 52.86%
Sl.No.
Name of the subsidiary
(a) (b) (c) (d)
Tata Internet Services Limited
MMP Mobi Wallet Payment
SystemsLimited
NVS Technologies
Limited
ATC Telecom Infrastructure
Private Limited (erstwhile Viom
Networks Limited)
Note:
1. Names of subsidiaries which are yet to commence operations : NVS Technologies Limited
2. Names of subsidiaries which have been liquidated or sold during the year : Not Applicable
For and on Behalf of the Board of Directors
Ishaat Hussain N Srinath
Director Managing Director
[DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran
Chief Financial Officer Company Secretary
Place: Mumbai
Date: June 25, 2016
181
1. Latest audited Balance Sheet Date March 31, 2016 March 31, 2016
2. Shares of Associate/Joint Ventures held by the
company on the year end
Number 71,43,17,891 23,00,55,000
Amount of Investment in Associates/Joint Venture 2,035.81 230.06
Extend of Holding % 36.54% 50.00%
3. Description of how there is significant influence More than 20% More than 20%shareholding shareholding
4. Reason why the associate/joint venture is not Consolidated Consolidated
consolidated
5. Networth attributable to Shareholding as per latest (1,266.47) (240.81)
audited Balance Sheet
6. Profit / Loss for the year
i. Considered in Consolidation - (10.44)
ii. Not Considered in Consolidation (181.95) (10.44)
Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures
(Information in respect of each Associates/Joint Venture to be presented with amounts in Rs. In Crores)
Name of Associates/Joint VenturesTata Teleservices
(Maharashtra) Limited
Virgin Mobile India Private Limited
Note:
1. Names of associates or joint ventures which are yet to commence operations: Not applicable
2. Names of associates or joint ventures which have been liquidated or sold during the year : Not applicable
Part “B”: Associates and Joint Ventures
For and on Behalf of the Board of Directors
Ishaat Hussain N Srinath
Director Managing Director
[DIN No: 00027891] [DIN No: 00058133]
Anuraag Srivastava Bhaskar Chandran
Chief Financial Officer Company Secretary
Place: Mumbai
Date: June 25, 2016