15th Annual Report

15th AnnuAl REpoRtFor the Financial Year ended 31.3.2015

bhARAt sAnchAR nigAm limitEd

Annual Report 2014-15

CONTENTS

DETAILS PAGE NO

CMD and the Board of Directors 04 – 06

Vision and Mission 07 – 08

Chairman and Managing Director’s Message 09 – 12

Board’s Report 13 – 46

Management Discussion and Analysis Report 47 – 48

Report on Corporate Governance 49 – 77

Financial Statements [Balance Sheet, P & L Account, Cash Flow Statement, Notes forming part of the Financial Statements]

78 – 129

Auditor’s Report 130 – 165

Addendum to Directors Report 166 – 176

Comments of the Comptroller and Auditor General of India on the Accounts 177 – 179

Replies of the Management to the Comments of the Comptroller and Auditor General of India on the Accounts

180 – 184

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Smt. Padma Iyer KaulGovernment Director

[W.e.f. 18.9.2015]

Smt. Aruna SundararajanGovernment Director

[Upto 21.10.2015]Chairman, Nom. & Rem.ComChairman, Audit Committee

BOARD OF DIRECTORS

Shri Anupam ShrivastavaChairman and Managing Director

[Wef 15.1.2015]

Shri A.N. RaiDirector(Enterprise) [Upto 31.7.2015]

Shri N.K. GuptaDirector (CFA)

Smt. Sujata RayDirector (HRD)[Wef 8.7.2015]

Shri N.K. MehtaDirector(E)

[Wef 1.8.2015]

Shri R.K. MittalDirector (CM)

[Wef 04.11.2015]

Shri N. SivasailamGovernment Director

[Wef 21.10.2015]

Smt. Rita A. TeaotiaGovernment Director

[Upto 29.7.2015]

Smt. Darshana Momaya DabralGovernment Director

[Upto 18.9.2015]

Shri Ajai Vikram SinghDirector

Chairman, Nom. & Rem.Com [Upto 16.7.2015]

Prof. N. BalakrishnanDirector

Chairman, Audit Committee [Upto 16.7.2015]

Details of additional charges entrusted by the Govt. of India MoC& IT DoT to Whole Time Functional Directors time to time is available in the chapter of Directors at Board Report


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Company Secretary & Sr. GM (Legal)H.C. Pant

Registered and Corporate OfficeBharat Sanchar Bhawan, H.C. Mathur Lane, Janpath, New Delhi–110 001

Website: www.bsnl.co.in

Corporate Identity NumberU74899DL2000GOI107739

Statutory AuditorsWalker Chandiok & Co., L–41 Connaught Circus, New Delhi–110 001.

Cost AuditorsBalwinder & Associates, Cost Accountants, F–125 Phase VIIIB Indl Area Mohali,

Punjab–160071

Secretarial AuditorsM/s VAP & Associates, Company Secretaries, 387, First Floor, Shakti Khand–3, Indirapuram,

Ghaziabad–201010, U.P.

BankersState Bank of India, Punjab National Bank, Corporation Bank, ICICI Bank, Union Bank of India, Canara Bank, INDUSIND Bank, YES Bank, Central Bank of India, Allahabad Bank, United Bank

of India, Indian Bank, Syndicate Bank, Oriental Bank of Commerce, Bank of India

DepositoryNational Securities Depository Limited, 4th Floor A Wing, Trade World, Kamla Mills

Compound, Senapati Bapat Marg, Lower Parel, Mumbai–400013.

Registrar and Transfer AgentIndus Portfolio Private Limited, G–65 Bali Nagar, New Delhi–110015. Phone: 011–47671214/

Fax 011–25449863

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OUR BUSINESS

Mobile Services

GSM :– 2G, GSM 3G

CDMA :– Mobile, CDMA Fixed and CDMA Data Card Services

Broadband Services

Landline Broadband

3G Mobile Broadband

GSM Wi–Fi

WiMAX Broadband

Dial up Internet (DIAS)

Fiber Broadband(FTTH)

CDMA Broadband :– EVDO Prepaid, EVDO Postpaid, EVDO Router.

Enterprise Business

Enterprise Voice and Mobility:– EPABX, Voice VPN, ISDN/PRI/BRI, Centrex, 2G/3G Mobile, Blackberry services

Internet Data Centre Services:– IDC Overview, Managed Colocation services, Managed/Hosting Services, Managed IT Services, Cloud Services(PCaas)

Enterprise Data Services:– Leased Circuit(DLC), MPLS VPN, Internet Leased Line, VSAT, VPN Services (Over BB, CDMA/3G)

Enterprise Broadband:– Wi–Max, Wi–Fi, EVDO, DSL Broadband/FTTH Broadband

Managed Services:– Managed Network Services(MNS), Managed Global Audio Conferencing, Managed SaaS(Mail), Internet Data Centre

Other Enterprise Services:– Web Colocation, Fleet Tracking, Video Conferencing(VC), Video Surveillance, Web Hosting, USOF Project and host of other innovative Enterprise Business Solution Services

Landline Services

Telephone Lines, FLPP B–fone, Phone plus services

Intelligent Network Services:– Universal ITC, UAN service, Toll free numbers/services, VPN service, Televoting services

BSNL PCO:– FLPP–PCO

PRI/BRI/Dial–up Internet:– Dial up internet, ISDN PRI, ISDN BRI


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VISION AND MISSIONVISION Be the leading telecom service provider in India with global presence Create a customer focused organization with excellence in customer care, sales and

marketing Leverage technology to provide affordable and innovative telecom services / products

across customer segments

MISSION

a) Be the leading telecom service provider in India with global presence

Generating value for all stakeholders – employees, shareholders, vendors & business associates

Maximizing return on existing assets with sustained focus on profitability Becoming the most trusted, preferred and admired telecom brand To explore International markets for Global presenceb) Creating a customer focused organization with excellence in sales, marketing and customer

care

Developing a marketing and sales culture that is responsive to customer needs Excellence in customer service–”friendly, reliable, time bound, convenient and

courteous service”c) Leveraging technology to provide affordable and innovative products/services across

customer segments

Offering differentiated products/services tailored to different service segments Providing reliable telecom services that are value for moneyd) Providing a conducive work environment with strong focus on performance

• Attractingtalentandkeepingthemmotivated • Enhancingemployeesskillsandutilizingthemeffectively • Encouragingandrewardingindividualandteam/groupperformancee) Establishing efficient business processes enabled by IT

Changing policies and processes to enable transparent, quick and efficient decision making

Building effective IT systems and tools

OBJECTIVES To be the Leading Telecom Services provider by achieving higher rate of growth so as

to become a profitable enterprise. To provide quality and reliable fixed telecom service to our customer and thereby

increase customers confidence. To provide customer friendly mobile telephone service, with focus on Value added

service and data services, of high quality and play a leading role as GSM operator in its area of operation.

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• Strategyfor

I. Rightsizing the manpower

II. Providing greater customer satisfaction Contribute towards

I. Broadband customers base in India as envisaged in draft National Telecom Policy 2011.

II. Providing broadband connectivity to 2.5 lakhs Village Panchayats as per Government policy

To leverage the existing infrastructure of BSNL for facilitating implementation of other government programmes and initiatives particularly in the rural areas.

To look for the opportunity of possible expansion of BSNL footprint globally by exploring international telecom in developing markets such as Africa.

Shri Ravi Shankar Prasad, Hon’ble Minister for Communication & Information Technology,addressing press meeting on occassion of launch of Wi-Fi facility at two Ghats of Varanasi. Shri Rakesh Garg, Secretary DOT,ShriAnupamShrivastava,

CMD, BSNL were also present in the function on 8.2.2015.


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CHAIRMAN AND MANAGING DIRECTOR’S MESSAGE

Dear Shareholders,

At the outset, I extend you all a hearty and warm welcome on behalf of the Board of Directors of Company in the Company’s 15th Annual General Meeting. The Company’s Annual Financial Statements for the year 2014-15, alongwith the Board’s Report together with Management Discussion and Analysis and Report on Corporate Governance, Auditors Report have been circulated to you.

ECONOMY AND BSNL IN NATION BUILDING

Despite the global imbalances, the Government of India’s initiatives have toned up and kept thegrowth path of the economy in forward graph. The Economic Survey for FY 15 forecast the economy for a 8 per cent growth in the current fiscal.

Telecommunication services is a prime factor in fostering the overall development. BSNL is one of the leading PSU Telecom Service provider engaged in providing affordable telecommunication services across the nook and corner of the country. Your Company, aware of its key responsibility has set forth ambitious network expansion programmes.

The applications based mobile technology is fast emerging as the prime enabler of the economic growth. The advancement of technology and new applications had just taken the mobile – be it 2G, 3G or 4G – to health care, finance, education etc. With the continued focus of the Government for e-delivery, there is a huge potential of growth for the sector.

PERFORMANCE HIGHLIGHTS DURING 2014-15

During the year 2014-15, the company incurred a loss of Rs.8234.09 Crores [Previous year 7,019.76Crore]. While the Income from

services is Rs.27242.23 Crores [Previous year Rs. 26,153.26 Crore], other income was Rs. 1402.97 Crores [Previous year Rs. 1,843.09 Crore].

There was an increase of 4.16% in Income from services in comparison to previous year, the other income decreased by 23.88%. There was an increase of 2.32 % in the total Income in comparison with the previous year.

The Employee benefit expenses and Office & Administration expense has shown a decrease of 3.06% and 1.54% respectively.

The positive revenue growth of 2.10% in the year under review in comparison to previous years is testimony to the turning around of the Company.

The Company has been making losses mainly because of depreciation of assets and administrative costs, which account for 55% of the revenues. However, the operational needs are being through internal cash accruals. With a topline of Rs. 28,000 Crores and a debt of Rs. 4,500 crore, the situation is not that bad.

The first priority is to change the direction of the company in such a way that losses are reduced year after year and there is enough compensation on depreciating assets.

GOVERNMENT OF INDIA’S INITIATIVES AND CONTRIBUTION OF BSNL

To ensure inclusive development of the Country, the Hon’ble Prime Minister of India has unleashed several new initiatives viz. Digital India, Make In India, Skill India and Swachh Bharat Campaign.

Being a leading Pan-India CPSU Telecom Service Provider, ‘nation-building’ is deeply imbedded in its core business activities. Your Company contributed actively in the following

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Government of India’s nation building initiatives:-

DITIGAL INDIA INITIATIVES

Your Company’s plans are completely in sync with the Government of India’s ambitious Digital India Programme, aiming to transform India into a digitally empowered society.

Your Company is always on the forefront to adapt the rapid technological changes and offer new services to its esteemed customers. As part of the Digital India initiatives, following new services were launched during July 2015:-

BSNL BUZZ:-BSNL BUZZ is a mass communication platform that delivers content and services to the mobile home screen of BSNL Mobile customers. The platform provides non stop infotainment as well as public service interactive messaging services. It is an easy to use platform that has the power to promote a variety of content, news, contests, subscription packs, coupons and advertising. It will also help broadcast BSNL service offerings, social awareness messaging and citizen alerts. The service will also deliver location-based information services in 7 languages.

SPEEDPAY:-This is a mobile money solution called SpeedPay, launched in partnership with Andhra Bank and Pyro networks pvt. limited. This model is based on Technology Adaptation for financial inclusion. This is an open prepaid instrument which can be used as a means for purchase of goods and services at any card accepting merchant locations and allows cash withdrawal at ATMs/customer service point. This service will create a self-sustainable eco-system in rural areas and take the banking services to the customer. Launched initially in the States of Andhra Pradesh and Telengana.

MAKE IN INDIA

In line with the Government’s initiatives, Your Company has taken several initiatives such as sourcing of domestically manufactured telecom gears and equipments from the suppliers.

SKILL DEVELOPMENT

State of the Art Telecom Training Centres of Your Company spread across the country are adequately equipped with telecom technology training and teaching. As part of the Skill Development Programme of the Government of India, in addition to already existing programmes, various new programmes and schemes have been launched:-

Training under National Skill Development Training:-7674 students were allotted to BSNL under the scheme. Out of the 7526 students who joined the scheme, MoU Target was 6139 [i.e. 80%]. Whereas, 7214 students, forming 95% of the MoU Target were trained under this scheme. About 14,868 engineering students have undergone EETP certificate courses during the year under review, which is 100% more than the achievement of 2013-14.

Skill Development initiatives under the New Telecom Policy 2012:- Under this scheme, 17 Premier Telecom Training Centres of your Company has been registered under the skill building initiatives spearheaded by NITPRIT, DoT.

In place of National Vocational Educational Qualification Framework (NVEQF), Government has introduced National Skill Qualification Framework (NSQF). Your Company has developed 10 levels for NSQF in Telecom Sector for 7 streams and submitted the same to DoT /NITPRIT.

DISASTER MANAGEMENT

Being a leading pan-India PSU Telecom Service Operator, Your Company connects the remote, hilly and most difficult terrains of the country. As such, Your Company always accords top priority to restoration of communication services on war footing whenever and wherever natural disasters struck. Your Company positioned rapid action teams and restored communication facilities when the devastative floods struck the State of J & K during September 2014 and March 2015.


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SWACHH BHARAT ABHIYAN

Being a pan-India organization and fully aware of the importance of the mission, Your Company carried out a detailed campaign and follow up programmes across the country.

OUR OUTLOOK FOR FUTURE

We are right now in the Phase VII expansion mode for GSM based mobile services. The next growth in communication will be from mobile data. Our huge fibre network could be utilized for data penetration. We are actively pushing for Wi-Fi. We do not have 4G license, but we are integrating Wi-Fi with our 2G and 3G network. We have touched 300 Wi-Fi hotspots and plan to complete 2,500 W-Fi hostspots by the end of this financial year.

One thing is for sure, the tower businesses offers a good opportunity for BSNL to realise critical growth capital. It has 65000 towers, most of them located in the interiors. As metros move towards 100 per cent teledensity, the action is bound to shift to smaller towns and rural areas relatively untapped territory. BSNL’s tower infra is already in place – good way for others to save investments and time. It also owns ample spectrum.

Over and above, the recent policy initiatives of the Government of India are likely to strengthen the business model and growth of the service provisioning sector, especially the Telecom Services.

CORPORATE SOCIAL RESPONSIBILITY

The Company, being wholly owned Government Company has been taking up various CSR initiatives even prior to coming into force of the provisions of the Act of 2013. The Company had its own CSR Policy which is now being aligned with the CSR Policy requirements under the Companies Act 2013. Owing to losses being incurred by the company since the year 2009-10, no specific amount could be earmarked for CSR activities. However, the Company, being a wholly owned Government

Company continued its engagement with social obligations to bridge the digital divide, apart from employee and their family welfare programmes. The Company has constituted the Corporate Social Responsibility Committee of the Board.

CORPORATE GOVERNANCE

The term Corporate Governance connotes putting in a system of best practices in the sphere of governance, which in turn, lead to value maximization for all the stakeholders. Existing governance practices have been strengthened further over the years with sustained focus on excellence in all spheres. The Guidelines on Corporate Governance for the Unlisted CPSEs laid down by the Department of Public Enterprises are being implemented by the Company since Financial year 2008-09.

The Corporate Governance guidelines on Audit Committee, Remuneration Committee, Whistle Blower Policy and other compliances have now been enshrined in the Companies Act 2013 and are applicable to your company.

All the Members of the Board; and the Senior Management Personnel of the Company have affirmed compliance with the Company’s Codes of Conduct for the Members of the Board and the Senior Management Personnel, respectively.

Management Discussion and Analysis Report, Report on Corporate Governance, together with the Secretarial Audit Report in Form MR-3 and Certificate on Compliance of applicable norms of Corporate Governance forms part of the Board Report. Quarterly progress reports on the implementation of CG Norms for the unlisted CPSEs issued by the DPE are being sent regularly to the Administrative Ministry.

AWARDS AND ACCOLADES

For Energy Conservation, the Govt. of Haryana gave 1st Prize of Rs. 2 Lac and 2nd Prize of Rs. 1 Lac to TE Building Ambala City and Hissar, respectively.

The State Energy Conservation Award of

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commendation received by the TE Building Chinnakada, Kerala from the Govt. of Kerala.

‘Certificate of Merit’ by Bureau of Energy Efficiency for Energy Conservation to TE Building Karnal and Hissarin Haryana Telecom Circle.

ALTTC Ghaziabad has been declared as the Centre of Excellence (CoE) for Broadband by International Telecom Union (ITU) for 3 years wef 2015.

OUR BIGGEST ASSET – HUMAN RESOURCE

With greater focus on positive employee employer relationship, apart from a best HR policy, the Company also has an array of employee welfare programmes. The Company’s employee strength as on 31.3.2015 stood at 2,25,512. Highly skilled and motivated, the Employees form the Core asset of the organization.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors I would like to convey my gratitude and deep appreciation to our esteemed Subscribers, Suppliers of various equipments and services, Franchisees, Retailers, Business Associates, and Bankers of the Company who have always been a source of strength.

I sincerely acknowledge the unstinted support, guidance and encouragement Your Company received from various Ministries/Departments, Authorities and Agencies of the Government of India and the State Governments/Union Territory Administrations, particularly, the Department of Telecommunications Ministry of Communications and IT, Govt. of India.

I would like to convey my appreciation and thankfulness to my colleagues on the Board for their invaluable support, guidance and encouragement throughout.

I would like to acknowledge the commitment, drive and expertise of all the Employees of the Company and would like to place on record their unflinching dedication, commitment and contribution to strengthen the Company on all fronts.

I would like to express my sincere gratitude to all our stakeholders for continued faith reposed on BSNL in connecting India.

Thank you,Jai Hind!

Anupam ShrivastavaChairman and Managing Director


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BOARD’S REPORT

Dear Members,

Your Directors have great pleasure in presenting the 15th Annual Report of your company, alongwith the Audited Statement of Accounts, both Statutory and Secretarial Auditors’ Report and Comments and Review of the Comptroller and Auditor General of India, on the Accounts for the financial year ended March 31, 2015.

FINANCIAL PERFORMANCE

The financial performance for fiscal 2014–15 is summarized as below:

S. No Particulars 2014–15 [Rs. in Lacs]

1 Income from services 1 2,724,2232 Other Income 2 140,2973 Expenditure [Excluding Interest and depreciation] 3 2,797,2634 Profit before interest, depreciation and tax [EBIDTA] 4 = 1+2–3 67,2575 Depreciation 5 881,6806 Interest 6 50,1897 Profit/(Loss) before prior period adjustment 7=4–(5+6) (864,612)8 Prior period adjustments 8 19,6529 Profit/loss before tax 9=7+8 (884,264)

10 Provision for deferred tax 10 60,933Tax Provision for the yearTax Provision for the earlier yearsWealth tax (78)

11 Net Profit/Loss for the year 11=9+10 (823,409)

AMOUNTS PROPOSED TO BE CARRIED TO GENERAL RESERVES: NIL

LOAN AND INVESTMENT BY THE COMPANY

Pursuant to the approval and directive of Ministry of Communications and IT, Department of Telecommunications, which is the Administrative Ministry/Department, the Company has made following investments:–

Pursuant to the Government of India, Ministry of Communications and IT, Department of Telecommunications order, Rs. 200 crores [Rupees Two Hundred Crores] in the 7% Redeemable cumulative preference shares each of Rs. 100/– fully paid up, in the financial year 2002–03 in M/s ITI Limited.

Pursuant to the Government of India, Ministry of Communications and IT, Department of Telecommunications’ Presidential directive No. 10–24/2011–SU.1, dated 22.11.2011 directing

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BSNL to become initial subscriber as well as acquire shares in the proposed SPV/ Company being promoted by the Government for creating National Optical Fibre Network, BSNL has become a Member of the Bharat Broadband Networks Limited (BBNL); and, as directed by the Government, invested a sum of Rs.10/– [Rupees Ten only] towards One Equity Share of Rs.10/– [Rupees Ten only] being fully paid up for cash at par.

DIVIDENDS

In view of the losses suffered by the Company, Your Directors do not recommend any dividend for the year.

BORROWINGS

Opening balance of borrowings stood at Rs. 3738.5329 crores as on 1.4.2014. During the year under review, your company borrowed Rs. 8902.33953 crore and repaid an amount of Rs. 6255.9676 crore. The loan balance as on 31.3.2015 stood at Rs. 6384.90513 crore.

CREDIT RATING

Your Company has been assigned the highest Credit Rating AAA(SO) [Triple A Structured Obligation] by M/s CARE Ratings for Company’s Long Term Bank Facility of Rs. 8000 Crores. The rating signifies that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

DEMAT FACILITY TO THE SHAREHOLDERS

Pursuant to the directives of the Government of India, Ministry of Communications and IT, Department of Telecommunications, vide their communication No.10–16/2014–SU.I, dated the 28th November 2014 for dematerializing the shares of BSNL held in paper mode, your Company has obtained International Security Identification Number(ISIN) for both the Equity and Preference Shares of the Company being held by the President of India.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year 2014–15, the company incurred a loss of Rs. 8234.09 Crores [Previous year 7,019.76 Crore]. While the Income from services is Rs. 27242.23 Crores [Previous year Rs. 26,153.26 Crore], other income was Rs. 1402.97 Crores [Previous year Rs. 1,843.09 Crore].

There was an increase of 4.16% in Income from services in comparison to previous year, the other income decreased by 23.88%. There was an increase of 2.32 % in the total Income in comparison with the previous year.



MEMORANDUM OF UNDERSTANDING [MoU] WITH THE DEPARTMENT OF TELECOM

In compliance with the guidelines for “MoU Signing and Monitoring Mechanism” issued by the Department of Public Enterprises, Government of India, Your Company has been signing the


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MoU with the Department of Telecommunications since 2004–05. Your Company obtained FAIR ranking for the MoU 2014–15.

PHYSICAL PERFORMANCE

Your Company, despite operating in a very highly competitive and consumer driven market with pressure on earnings was able to restrain the negative trend to some extent.

The status of MoU Targets and Net Achievements in respect of physical performance during the year 2014-15 is as follows:-

SNo Item Unit MoU Target for

14-15

Status as on

31.3.2014

Status as on

31.3.2015

Net achievement

during 2014-15

%age of achievement

against annual target

1 Total Telephone connection

Lakh Conn

100.00 1,131.37 932.40 –198.98 –198.98

1(a) Wireline “ 0.00 184.88 164.12 –20.76

1(b) WLL “ 0.00 22.49 19.85 –2.64

1(c) Mobile

“ 100.00 924.00 748.42 –175.58 –175.58

1(d) Mobile (VLR)

“ 549.55 597.20 47.64

2 Total switching capacity

Lakh Lines

100 1,275.31 1,320.29 44.99 44.99

2(a) Wireline “ 383.99 376.89 –7.11

2(b) WLL “ 84.54 83.64 –0.90

2(C) Mobile “ 100 806.78 859.78 52.99

3(a) Broadband Wireline

Lakh cons

30 99.65 99.09 –0.56

3(b) FTTH Nos 25,146 41,584 16,438

3(c) EVDO connection

Nos 93,671 86,024 –7,647

3(d) Wimax connection

Nos 124,963 119,134 –5,829

3(e) 3 G Lakh cons

67.68 89.24 21.57

4 OF Cable Route Kms

20,000 734,323 745,345 11,022 55.11

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SERVICES AND PLANS

CONSUMER FIXED ACCESS

BSNL NGN Network

The next generation network (NGN) is a packet-based network to provide telecommunication services to make use of multiple types of traffic, such as voice, data and multimedia. This will provide platform for Fixed Mobile convergence to valued customers. All 8 main core exchanges in entire country got commissioned and 136 such NGN Switches connected to Main Core Exchanges have started working.

Your Company has chalked out a massive plan to migrate existing voice and data customers to NGN platform to provide basic telephone and supplementary services using internet protocol(IP)

Your Company is in the process of migrating C-DOT TDM Technology exchanges covering most of the rural India with NGN solution being developed by C-DOT. Field trials are already over. Your management has accorded administrative approval to the project for migration of C–DOT exchanges to NGN network. MoU has already been signed between BSNL and C DOT and PO has been issued. In the first phase, 100 locations are being covered and balance sites will be covered in Phase–2.

Deployment of modern and state of the art CDR based billing and customer care system and induction of NGN Technology in land line switehces will enable the Company to provide its customers the latest value added services and features both for voice and data services.

This will provide a boost to the growth of this segment. With this, Company will be able to offer new services, VAS to the fixed line customers such as: Wide Area IP Centrix, Multi media video conferencing, prepaid solution with all functionalities, Fixed Mobile convergence, Personalised Ring Back Tone(PRBT) etc.

Wi–fi Hot Spots

Wi-fi, the new broadband technology enables the users to surf high-speed broadband net anywhere, anytime at affordable costs. To enable the visitors to have seamless connectivity at important tourist locations such as Ganga Ghats at Varanasi, Taj Mahal at Agra, Hussain Sagar Lake-Hyderabad, as well as in three cities – Bengaluru, Vijayawada and Bilaspur have already been covered under wi-fi hotspot scheme. 2500 such hotspots are planned during the year 2015-16, by deploying 2G/3G mobile data Wi-Fi off load solution on pan-India basis. This will usher into a much faster and reliable internet through mobile devices to the customers. Your Company is offering free wi-fi surfing for 30 minutes per day per customer.

Unlimited Free Calls Scheme

During May 2015, Your Company launched an innovative scheme for the landline customers which allows unlimited free call to any network from 09 PM to 07 AM on all days without any direct/indirect charges.

Positive response of the customers had resulted in creating demand for the BSNL Landline services.

BROADBAND SERVICES

Your Company has been making continuous efforts for improvement in Operation and Maintenance


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of Broadband services. All the targets set by TRAI regarding QoS have been met by the Company in all the four quarters for the year under review.

To offer Intelligent Network (IN) services, new platforms have been established at two locations namely Chandigarh and Pune. Billing of IN services has been started through state of art CDR project.

Shri Ravi Shankar Prasad, Hon’ble Minister for Communication and IT, at the launch of Wi-Fi facility at Lord Jagannath Temple, Puri on 7.9.2015

PTN tender for expansion of IP aggregation network & NMS tender was finalized and floated. Automatic BB provisioning and Inventory management system Metasolv was successfully implemented in 100 SSAs. Traffic re-engineering at BNG level was successfully undertaken to improve BB services and by way of diversions etc., increased utilization was ensured.

MOBILE SEGMENT

Your Company’s GSM services offered under the brand name of BSNL Mobile Services registered a healthy growth during the year under review. During the period commencing May 2014 to May 2015, active customer base has registered a positive growth of 47 lakh customers.

To strengthen the mobile network, during the year under review, your Company added 3400 Towers. To reduce congestion and arrest the call drops, under Phase VII expansion programme, 15000 new BTSs were got commissioned. These will add to the revenue generation of the company in the coming days.

Efforts are being made to replace the old equipment, to save AMC costs and derive benefits of

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low OPEX and state of art features including high data capabilities. High capacity data node and associated equipments have been inducted in the network resulting in exponential growth in data traffic and commensurate revenue from data.

Future plans include induction of technical innovation in mobile technology like integration of Wi-Fi Hotspot/Femto Cell / LTE/4G with existing GSM/UMTS networks.

All India Free Roaming with effect from 15.6.2015

Your Company has launched free incoming calls to its mobile customer while in roaming all across the country w.e.f. 15.06.2015., on pan-India basis. This scheme will benefit crores of existing as well as new subscribers. Now BSNL mobile customers will not need to carry multiple SIMs and handsets during roaming. This has made the saying One Nation One Number a reality.

DITIGAL INDIA INITIATIVES

Being a leading pan–India public sector telecom service provider, Your Company’s plans are completely in sync with the Government of India’s ambitious Digital India Programme, aiming to transform India into a digitally empowered society.

Your Company is always on the forefront to adapt the rapid technological changes and offer new services to its esteemed customers. As part of the Digital India initiatives, following new services were launched during July 2015.

BSNL BUZZ services

Shri Ravi Shankar Prasad, Hon’ble Minister for Communication & Information Technology launching BSNLBUZZ and Speedpay service of BSNL at Bharat Sanchar Bhawan New Delhi on 3.7.2015.


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BSNL BUZZ is a mass communication platform that delivers content and services to the mobile home screen of BSNL Mobile customers. The platform provides non stop infotainment as well as public service interactive messaging services. It is an easy to use platform that has the power to promote a variety of content, news, contests, subscription packs, coupons and advertising. It will also help broadcast BSNL service offerings, social awareness messaging and citizen alerts. The service will also deliver location–based information services in 7 languages.

BSNL BUZZ has two distinct services enabled by cell broadcast – cell info and an interactive messaging service platform, LiveScreen based easy to use interactive mobile marketing service. The cell info service provides a non–interactive messaging service to millions of BSNL users communicating BSNL services offerings, social awareness messaging and citizen alerts. The CelltickLiveScreen based service branded as BSNL Buzz is an interactive messaging service providing users an easy way to get content and services in local languages and script that is personalized for the users. The service is DND compliant and provides users with simple interactive content discovery.

This broadcast, capable of broadcasting one single message to reach all mobile handsets in an area will be of greater use in Agriculture, Disaster Management and host of other Government initiatives. As this cell broadcast is not affected by traffic load, Disaster Management System of the country will get further strengthened.

Dt.26.06.2015- Shri Anupam Shrivastava,CMD BSNL contributing in SWACHH BHARAT ABHIYAN organized at BSNL Corporate office,Bharat Sanchar Bhawan, Janpath, NEW Delhi.

SPEEDPAY ServicesThis is a mobile money solution called Speed Pay, launched in partnership with Andhra Bank and Pyro networks pvt. limited. This model is based on Technology Adaptation for financial inclusion. This is an open prepaid instrument which can be used as a means for purchase of goods and services at any card accepting merchant locations and allows cash withdrawal at ATMs/customer service point. This service will create a self-sustainable eco-system in rural areas and take the banking

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services to the customer. Launched initially in the States of Andhra Pradesh and Telengana.

Highlights of this service are: Domestic money transfers; Deposit & Withdrawal of cash at BSNL retail outlets; DTH and post paid bill payments; Mobile Airtime & Ticket and host of other services which are in pipeline.

ENTERPRISE BUSINESS

The revenue from Leased Line Circuits segment is growing continuously year on year basis for the last three years. Revenue from this segment during 2014-15 was Rs. 2470.63 crores. There is an increase in revenue despite stiff competition and continuous downward revision in tariff for all type of Enterprise circuits.

The Company has started providing Internet Data Centres (IDCs) services and AUA (Authenticative User Agency) services, which have become a new stream of revenue for the Company.

ILD BUSINESS

Strategic Alliances/Business Development programmes

Your Company is a consortium member of Europe India Gateway cable system (EIG). Company participated in EIG’s first upgrade and obtained 50 G capacity at a cost of Rs. 5.6 crores. Has leased 216 GB International Internet Bandwidth for its broadband operations. An MoU has also been signed between the Company and BSCCL on 12.5.2014 for hiring of International Bandwidth for improving connectivity to North East Region.

Following plans are envisaged for future: (a) To establish interconnect with South Africa Telecom(SAT) and other carriers, to increase connectivity with various regions of the world; (b)Establishing bilateral agreement with foreign carriers, which will help in improving QoS of outgoing calls leading to increase in customer satisfaction and increase incoming traffic so as to increase revenues; (c)Establishing ILD gateway and hiring of 10G International internet Bandwidth at Agartala, which will improve internet connectivity to North East Region of the Country.

CUSTOMER CARE

Being the communication source of common man, your organization attaches significant importance to the customer care segment. Total number of 4250 Customer Service Centres are in operation across the country. These centres work on single window concept; and in general, remain open from 08 AM to 08 PM on working days.

Performance of the Company on QoS against the MoU Target for the year 2014-15 is as follows:-

SNo Name of the Parameter TRAI Benchmark Achievement 1 Fault incidences (No. of faults/100 subscribers/

month)<7 4.2

Fault Clearance2 For urban areas

(i) By next day > 85% 93.7%(ii) Within 5 days 100% 100%

3 For Rural and Hilly Areas


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SNo Name of the Parameter TRAI Benchmark Achievement (i) By next day > 75% 91.45%(ii) Within 7 days 100% 100%

4. Mean time to repair 10 Hrs 5.9 Hrs5. Call completion rate within local network >55% 70.35%6 %age request for Termination/closure of

service complied within 7 days100% 100%

7 Congestion on POI >0.5% >0.5%

Target for restoration of OFC fault was fixed as 8 Hrs. The OFC network reliability fault restoration time is being monitored. The overall achievement of OFC fault restoration time is 8.47 Hrs.

Southern Telecom Region has developed Fault Management System(FMS) software/ Transnet for OFC fault booking and monitoring. The work for implementation of Transnet in the Company’s network is under progress. The Route Kilometers, system and staff data of all the circles and regions has been entered into the system. Target of completion of all the work related to data entry was fixed as 31.5.2015. In FMS system as and when there is break of fibre of a route an SMS is sent by the system to the concerned SDE/DET as per escalation policy. 15 circles and all the 4 regions have started to use FMS for OFC faults booking and monitoring.

Your Company has a Pan India presence with capacity of 37.7 Mn Lines with copper cable network in wide urban and rural areas. At present, only 16.41 Mn connection are working and after migration to NGN there will be opportunity to use the existing cable to provide wireline connections for Voice & Broad Band Services with new features and Value Added Services.

PROVISION AND OPERATION OF SATELLITE BASED SERVICES USING GATEWAY INSTALLED IN INDIA USING INMARSAT TECHNOLOGY

The work on installation of gateway at Sikandarabad (U.P) is underway for the provisioning and operations of the satellite based services using INMARSAT Technology.

ADDITIONAL REVENUE STREAMS

Company owns large land portions across India (15000 parcels; 8000 Acres; 34 Million SQM) which are lying underutilized. Your Company has identified 82 land parcels for this monetizing exercise in Phase-I. A pilot project for 10 locations admeasuring 125 Acres – 0.50 MnSqm has already been taken up by the Company [ 3 Mumbai, 2 Noida, 1 Chennai, 1 Tiruvananthapuram, 2 Kolkatta and 1 Gurgaon]. Monetization of these lands is proposed to be done through PPP Model by engaging a Developer. Case for 7 lands out of these 10 lands has been sent to the Administrative Ministry – D/o Telecommunications for granting approval. Further action shall be taken as per the directions received from them.

In addition, Third Party Quality Audit Agency work costing Rs. 750 crores and Rs. 500 crores for IIT Hyderabad and Panchayati Raj Department of the Govt. of Haryana, Staff Quarter work costing Rs.30 crores for Bank of Baroda, Hostel Work costing Rs. 32.50 crores for National Insurance Authority Pune, etc., are expected in the Financial Year 2015-16.

Company’s Architectural Wing is undertaking consultancy works exclusively for Department of Post, NICF, Department of Telecom etc. In addition, the wing is also carrying out PMC Works for the State Governments of Kerala, HP, Indian Army, Indian Airforce, PNB, UCO Bank, KVS,

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MANUU, CPRI, NPTI etc. Against annual targets of Rs.4.0 crores set for the financial year 2014-15, revenue target of Rs. 4.47 crores was achieved in External Projects (PMC).

Similarly, the Electrical Wing of your Company also undertakes various external works. During the year under review, Rs.56.90 crore revenue was earned from external electrical works.

DEVELOPMENT OF RURAL TELECOM NETWORK

Your Company is committed to provide Village Public Telephones(VPTs) in remote, rural and far flung areas on pan-India basis at the behest of USOF, DoT. The Company has already provided VPTS in 5,78,396 villages out of 5,93,601 villages as per Census 2001.

Roll out period of New VPT Agreement expired on 31.3.2015 and subsidy support under this agreement is upto 26.2.2016. Your Company has taken up the case with the USOF DoT to extend the roll out period upto 31.3.2015 and subsidy support upto 26.2.2021. Approval is awaited. The period of SPV installation on CDMA VPTs expired on 31.3.2015. USOF has already been requested to extend the SPV provisioning date upto 30.6.2015.

COMPUTERISATION AND IT

For implementation of IPV6, action for Design, Development and Deployment work is in progress. FTTH solution deployed in all four CDR Data Centres and migration of FTTH service on CDR system is complete.

ERP

The work on implementation of ERP is in progress. So far, in 30 out of 49 units implementation has been completed successfully. The implementation in remaining units is expected to be completed by November 2015. The main modules being implemented in ERP are: FICO (Finance Control), HCM (Human Capital Management), PS (Project systems), REM (Real Estate Management), PM (Plant and Machinery) and (MM) Materials Management.

CONVERGENT BILLING

Your Company is in the process of establishing a converged IT platform for customer care and billing of all its services including GSM, Landline, Broadband, Enterprise Business, Prepaid and Postpaid, Value Added Services, Franchisee management etc. The process of getting the system in place is in progress.

TELECOM FACTORIES

Telecom Factories of your Company located at Kolkatta, Gopalpur, Kharagpur, Jabalpur, Richhai, Bhilai and Mumbai are in-house manufacturing units engaged in production of various telecom products. These factories with a staff strength of 2004 as on 1st April 2015, clocked the output of Rs. 229.53 crore in the year under review. A target of Rs. 721 crores has been set for the financial year 2015-16. Your Directors have initiated several initiatives For augmenting the revenue

Accordingly, as part of monetization of idle resources of telecom Factory at Kharagpur, APO has been issued to M/s Camel Group Co. Ltd for setting up manufacturing facilities for production of latest technology batteries for telecom and non telecom applications on revenue share basis.

RFP for setting up manufacturing facilities for solar power supply system for telecom and non telecom applications at TF Bhilai has been invited on 28.11.2014.


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To meet the increased demand for NOFN, the production capacity of PLB HDPE Telecom Duct has been augmented in the Telecom Factories. Besides the existing set up, 60,000 Km of Duct has been added to meet the requirement of PLB HDPE Duct, exclusively for NOFN Project by hiring 12 Nos of machinery lines.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Industrial relations

Industrial relations have remained by and large cordial during the year under review.

CORPORATE RESTRUCTURING PLANS

Consolidation of SSAs into Business Areas headed by GMs has been implemented in UP (East), UP(West), Chattisgarh and Madhya Pradesh Circles during the year 2014-15. It will be implemented in phases in other circles with the roll out of ERP project.

Your Directors plan to recruit officers at Management Trainee level to cater to the future need of managerial manpower. Meanwhile, to fill the vacancies at CGM/PGM/GM level, action to recruit Government officers under Rule 37 of CCS Pension Rules is in progress.

TRAINING OF EMPLOYEES

Apart from imparting training to the employees of the organization, state of art telecom training centres of the Company located at various places across the country are also playing an important role in nation building at various levels.

Training to the Employees

MoU Targets and achievements of the segment are as follows:–

Total Number

MoU Target Achievement in Nos.

Percentage of achievement

Training for Fresh Recruits 1191 1191 [100%] 1173 98.50%In house training to employees

236580 41144 [10% of total employees]

41144 17%

Training under National Skill Development Training

7674 students were allotted to BSNL under the scheme. Out of the 7526 students who joined the scheme, MoU Target was 6139 [i.e. 80%]. Whereas, 7214 students, forming 95% of the MoU Target were trained under this scheme. About 14,868 engineering students have undergone EETP certificate courses during the year under review, which is 100% more than the achievement of 2013–14.

Revenue under Training programmes

During the period under review, training centres/field units have reported revenue of about Rs. 22.82 crores by providing vocational training to 1,00,536 students/external trainees.

Skill Development initiatives under the New Telecom Policy 2012

Under this scheme, 17 Premier Telecom Training Centres of your Company has been registered under the skill building initiatives spearheaded by NITPRIT, DoT.

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In place of National Vocational Educational Qualification Framework (NVEQF), Government has introduced National Skill Qualification Framework (NSQF). Your Company has developed 10 levels for NSQF in Telecom Sector for 7 streams and submitted the same to DoT /NITPRIT.

TSDSI Membership and participation in study groups

Your Company is a Member of Telecommunications Standards Development Society, India (TSDSI) under Govt. Category. Officers of the Company were nominated for active participation in the following study groups of the TSDSI:– Machine to Machine (M2M) communication group; Core Networks (CN) study group; and Radio Networks and Spectrum(RNES).

Foreign Deputations

During the period under review, 41 officers of the Company were deputed abroad for courses under CTO PDT Training Programme and for attending exhibitions/meetings/conferences to have first hand information on latest developments taking place in telecommunications.

RESERVATION POLICIES OF THE CENTRAL GOVERNMENT

Government policies with regard to reservations for various categories of employees in the matters of recruitments and promotions are being followed.

A glimpse of representation of Scheduled Caste, Scheduled Tribe, OBC, Ex-Servicemen, Physically Disabled employees and their representation as on 31.3.2015:-

Group Total No. of Employees

Scheduled Caste

Scheduled Tribe

OBC Ex-Servicemen

Executive

46694 7729 2388 5986 138

Non-Executive 178818 32582 9303 14582 404

Total 225512 40311 11691 20568 542

Category Executive Non-Executive Total

Blindness of low vision 0 28 28

Hearing Impairment 9 19 28

Locomotor Disability or Cerebral Palsy 172 325 497

BENEFITS TO FEMALE EMPLOYEES AND PERSONS WITH DISABILITIES

The number of women employees is 7821 No. of Executives and 25998 No. of Non-Executives.

Apart from the maternity leave of 180 days Child Care leave as per the provisions of DoP& T instructions on the subject is available for all the women employees.

Special allowance for child care for women employees with disabilities @ Rs.1000/- per month per child maximum for two children till the child attains two years is being granted.

Double the rates of transport allowance for eligible physically handicapped employees is being granted.


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As far as possible, subject to administrative constraints, persons with disabilities are posted near their native places within the region.

COMPLAINTS COMMITTEE FOR REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACES

Pursuant to the provisions of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act 2013 and in compliance with the guidelines of the Government on the subject, your Company has established an Internal Complaints Committee (ICC) at the Corporate Office and at Circle/SSA level to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed off during the year 2014-15:-

No. of complaints received – 14

No. of complaints disposed of – 09

AWARDS AND ACCOLADES

The Govt. of Haryana gave 1st Prize of Rs. 2 Lac and 2nd Prize of Rs. 1 Lac for Energy Conservation in TE Building Ambala City and Hissar, respectively.

The State Energy Conservation Award of commendation received by the TE Building Chinnakada, Kerala from the Govt. of Kerala.

Certificate of Merit by Bureau of Energy Efficiency for Energy Conservation in TE Building Karnal and Hissar Haryana.

ALTTC Ghaziabad has been declared as the Centre of Excellence (CoE) for Broadband by International Telecom Union (ITU) for 3 years wef 2015.

RIGHT TO INFORMATION

In line with the directions contained in the Right to Information Act 2005, Your Company has nominated CPIOs for respective branch at the Corporate Office as well as the field units of the Company for providing information to citizens. The details of the CPIOs is posted in the website of the company at www.bsnl.co.in

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Government’s guidelines on the implementation of the official language policy is followed scrupulously. Your Company has a full fledged official language Wing.

Unicode software has been installed in all the computers to encourage increased use of Hindi in official work and employees are also trained to use Unicode software. OL Wing carries out inspection of Circles. Skill development workshops are held frequently for sharpening the skills of employees.

COMPLIANCES

All the Senior Management Personnel including key managerial personnel handling different verticals/units have been delegated with administrative and financial powers thereto, are responsible

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to ensure adherence to all the applicable laws, rules, guidelines etc., and ensures implementation of the enterprise risk management policy of the company as a routine, while taking or processing the detail for decision or approval by the competent authority(ies). The Company Secretary ensures the compliance of all the applicable provisions of the Companies Act and other applicable corporate laws.

Being the successor and assigns of the erstwhile Departments of Telecom Services and Telecom Operations with vast geographical spread, the BSNL follows the existing system. Accordingly, all the litigations before the Hon’ble Courts/Tribunals/Arbitrators are handled by the respective verticals and units under their control with the help of Advocates.

No significant and material orders passed by the Hon’ble Courts/Tribunals/Regulators that would impact the going concern status of the Company and its future operations were reported by any of the units.

CORPORATE GOVERNANCE

The term Corporate Governance connotes putting in a system of best practices in the sphere of governance, which in turn, lead to value maximization for all the stakeholders. Existing governance practices have been strengthened further over the years with sustained focus on excellence in all spheres.

The Guidelines on Corporate Governance for the Unlisted CPSEs laid down by the Department of Public Enterprises are being implemented by the Company with effect from the year 2008-09.

The Corporate Governance guidelines on Audit Committee, Remuneration Committee, Whistle Blower Policy and other compliances have now been enshrined in the Companies Act 2013 and are applicable to your company.

All the Members of the Board; and the Senior Management Personnel of the Company have affirmed compliance with the Company’s Codes of Conduct for the Members of the Board and the Senior Management Personnel, respectively.

Management Discussion and Analysis Report, Report on Corporate Governance, together with the Secretarial Audit Report in Form MR–3 forms part of this Report. Quarterly progress reports on the implementation of CG Norms for the unlisted CPSEs issued by the DPE are being sent regularly to the Administrative Ministry.

Your Company has obtained certificate from the Secretarial Auditor M/s VAP & Associates Company Secretaries, regarding compliance of conditions of corporate governance as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises 2007 and revised further vide No. 18(8)/2005–GM, dated 14.5.2010 issued by the Department of Public Enterprises, which forms part of this report.

MEETINGS OF THE BOARD

The Board of Directors of your Company met 7 times during the financial year 2014-15. Details of the attendance of directors etc., form part of the Corporate Governance Report which is a part of this Report. [Refer to the Chapter on Board Meetings held, Attendance of Directors etc.]

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company, being wholly owned Government Company has been taking up various CSR


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initiatives even prior to coming into force of the provisions of the Act of 2013. The Company had its own CSR Policy which is now being aligned with the CSR Policy requirements under the Companies Act 2013. Owing to losses being incurred by the company since the year 2009-10, no specific amount could be earmarked for CSR activities. However, the Company, being a wholly owned Government Company continued its engagement with social obligations to bridge the digital divide, apart from employee and their family welfare programmes.

However, pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder, Your Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee (CSR Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N. Rai Director (Enterprise) and Shri N.K. Gupta Director(CFA) as Members and the Secretary of the Company as the Secretary of the Committee. The Terms of Reference of the CSR Committee are as per the provisions of the Section 135 and other applicable provisions of the Companies Act 2013 and Rules made thereunder.

Consequent upon the retirement of Shri A.N. Rai Director(E) on superannuation wef A/N 31.7.2015 and the completion of the three years tenure of appointment of Shri Ajai Vikram Singh Director on 16.7.2015, to comply with the provisions of the Act, Your Directors, in their 164th meeting held on 28.8.2015, re-constituted the Committee comprising (i) Smt Darshana Momaya Dabral, Govt. Director (ii) Smt. Sujata Ray Director (HRD) and (iii) Shri N.K.Gupta, Director(CFA).

Consequent upon the appointment of Smt. Padma Iyer Kaul DDG [LFA] in DoT as Govt. Director in place of Smt. Darshana Momaya Dabral wef 18.9.2015, the Board of Directors have re-constituted the Committee comprising (i) Smt. Padma Iyer Kaul Govt. Director (ii) Smt. Sujata Ray Director (HRD) and (iii) Shri N.K. Gupta, Director (CFA).Secretary of the Company as the Secretary of the Committee.

Quorum for the meetings and the Terms of Reference of the Committee are as prescribed under Section 178 and other applicable provisions of the Companies Act 2013 & Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

NOMINATION AND REMUNERATION COMMITTEE

To comply with the provisions contained in Section 178 of the Companies Act 2013, the Board of Directors, in their 162nd meeting held on Tuesday, the 7th day of April 2015 constituted the Nomination and Remuneration Committee of the Board by re-constituting the existing Remuneration Committee of the Board. The Committee comprise Shri Ajai Vikram Singh, Non official Part Time (Independent) Director - Chairman, Prof. N. Balakrishnan, Non official Part Time (Independent) Director, Member, Smt. Rita A. Teaotia, Government Nominee Director, Member and Smt. Darshana Momaya Dabral, Government Nominee Director, Member. Secretary of the Company acts as the Secretary of the Committee. Terms of Reference, Roles and Responsibilities of the Committee shall be as per the provisions of Section 178 and other applicable provisions of the Companies Act 2013, Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

Being a wholly owned Government Company, the appointments, terms and conditions and remuneration of the Chairman and Managing Director and Whole Time Functional Directors are governed by the orders of the Govt. of India Department of Public Enterprises. Pursuant to the Govt. of India, Ministry of Corporate Affairs Notification No. 1/2/2014–CL.V, dated 5.6.2015,

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provisions contained sub-sections (2)(3) and (4) of the Section 178 of the Act of 2013 are applicable to the Company with regard to appointment and remuneration of senior management and other employees.

Consequent upon the completion of the three years tenure of appointment of Shri Ajai Vikram Singh and Prof. N. Balakrishnan Directors on 16.7.2015, all the four slots of Non official Part Time (Independent) Directors have fallen vacant and the Committee was left with only one member Ms. Darshana Momaya Dabral. Administrative Ministry, viz., Ministry of Communications and IT, D/o Telecommunication has already been requested to expedite the appointment of Non official Part Time (Independent) Directors. Smt. Aruna Sundararajan has been appointed as Govt. Director in place of Mrs. Rita A. Teaotia wef 29.7.2015.

Pending appointment of Non official Part Time / Independent Directors, to comply with the provisions of the Act, Your Directors, in their 164th meeting held on 28.8.2015 re-constituted the Committee, comprising both the Government Directors and the CMD as Members and the Director (HRD) as Regular Invitee. Secretary of the Company acts as the Secretary of the Committee. Quorum for the meetings and the Terms of Reference of the Committee are as prescribed under Section 178 and other applicable provisions of the Companies Act 2013 & Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

The Committee, in its 6th meeting held on 18.9.2015 elected Smt. Aruna Sundararajan Govt. Director as Chairman of the Committee.

Consequent upon the appointment of Shri N. Sivasailam Additional Secretary(T) in the D/o Telecom as Govt. Director by the GoI, MoC& IT DoT in place of Smt. Aruna Sundararajan with effect from 21.10.2015, Shri N. Sivasailam is a Member of the Committee.

Consequent upon the appointment of Smt. Padma Iyer Kaul DDG (LFA) in the D/o Telecom as Govt. Director by the GoI, MoC& IT DoT in place of Smt. Darshana Momaya Dabral with effect from 18.9.2015, Smt. Padma Iyer Kaul is a Member of the Committee.

AUDIT COMMITTEE OF THE BOARD

Pursuant to the provisions contained in Section 177 of the Companies Act 2013 and Rules thereunder, the Board of Directors of the Company, in their 159th meeting held on 9th December 2014 re-constituted the Audit Committee of the Board, with the following Members – Shri AjaiVikram Singh, Non official Part Time (Independent) Director, Prof. N. Balakrishnan , Non official Part Time (Independent) Director, and Mrs. Darshana Momaya Dabral, Government Nominee Director. While the Director (Finance) shall be the regular invitee, Secretary of the Company acts as the Secretary of the Committee. The Committee, in its 57th meeting elected Prof. N. Balakrishnan as the Chairman of the Committee.

Consequent upon the completion of the three years tenure of appointment of Shri Ajai Vikram Singh and Prof. N. Balakrishnan, Directors on 16.7.2015, the Committee was left with only member Ms. Darshana Momaya Dabral. Smt. Aruna Sundararajan has been appointed as Govt. Director in place of Mrs. Rita A. Teaotia wef 29.7.2015.

Pursuant to the provisions contained in the Section 177 and other applicable provisions if any, of the Companies Act 2013 pending appointment of Non official Part Time (Independent) Directors, Your Directors, in their 164th meeting held on 28.8.2015 re-constituted the Audit Committee of


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the Board comprising comprising both the Government Directors and Director (HRD) as Members.Secretary of the Company acts as the Secretary of the Committee. Director (Finance) is regular invitee. The Committee, in its 59th meeting held on 18.9.2015 elected Smt. Aruna Sundararajan Govt. Director, as Chairman of the Committee.



The Quorum for the meetings and the Terms of Reference of the Committee are as prescribed under Section 177 and other applicable provisions of the Companies Act 2013 & Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

DETAILS OF THE BOARD COMMITTEE MEMBERSHIPS AND CHAIRMANSHIPS OF THE DIRECTORS

The details of Memberships of the Committees and Chairmanship of the Committees held across the companies is available in the Report on Corporate Governance forming part of this Report.

VIGIL MECHANISM

In compliance of CVC / DPE Guidelines, BSNL already has a full fledged Vigilance Mechanism, headed by an independent CVO.

Pursuant to the mandate of the DPE’s MoU Task Force mandating for establishing a Whistle Blower mechanism; and, in compliance with the provisions of the Companies Act 2013, the Company has also put in place in place a Whistle Blower Policy. Same has been circulated widely and posted in the intranet portal of the company and is also being posted in the corporate website of the company. Under this mechanism, protected disclosure can be made by the whistle blower to the Chairman of the Audit Committee.

Particulars of the Vigilance mechanism under CVC compliance are posted in the company’s website at www.bsnl.co.in at ‘contact us’. Further, BSNL has also entered into an agreement with the Transparency International to ensure transparency in tendering process. Further, apart from the Audit by the C&AG of India, Statutory and Branch Audits, Amenability to the Writ Jurisdiction of the Court, GoI’s Rules and Regulations, BSNL has its own Conduct, Disciplinary and Appeal Rules covering all the classes of employees including the Functional Directors. The Members of the Board and Sr. Management Personnel are also governed by the Code of Conduct laid down in accordance with the CG Norms.

RISK MANAGEMENT

BSNL, by virtue of being the successor of erstwhile Central Government Departments of the Telecom Services (DTO) and Telecom Operations (DTO) already had a codified set up with in built mechanism to foresee the potential risks and methods to arrest, control, ignore and/or respond to the risks. However, as mandated by the Department of Public Enterprises through Guidelines on Corporate Governance Norms for the Un–Listed CPSEs – further revised and made mandatory for

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the CPSEs vide No.18(8)/2005–GM, dated the 14th May 2010–Company has laid down a Enterprise Risk Management Policy.

For managing the affairs of the Company, the Board of Directors of the Company has delegated its powers to the Management Committee of the Board (MCB), the CMD and the Functional Directors and Below Board Functionaries, viz., the Executive Directors/CGMs/PGMs/GMs/TDMs/DGMs etc., as the case be. Considering the size and geographical spread of the organization vis–à–vis the delegation of powers made to the business heads and unit heads – who carry out the task of undertaking the risk management as a part of the normal business practice by integrating and aligning the same with corporate and operational objectives –the Business Heads in the Corporate Office; CGMs/PGMs/GMs and Other Unit Heads of the field units were designated as the Risk Management Administrators [RMAs].

With a view to continuously train and develop the employees in the risk management techniques segment, Risk Management Training Courses specially designed for the Senior Management Personnel who function as the Risk Management Administrators are being organized at the Training Centres of the Company.

Establishing Risk Monitoring Centres being one of the Dynamic Parameters, for “Overseeing the mechanism of Enterprise Risk Management Mechanism”, inter–alia, the periodical review of risk assessment and minimization procedures, submission of recommendations / reports to the Executive Management and the Audit Committee of the Board, a ERM Committee comprising of all the Executive Directors has been constituted with Executive Director(Corporate Affairs) as Convenor.

In addition to already existing Risk Management Policy which mandates the Risk Management Administrators for ensuring efficient litigation management and compliance of all applicable provisions of the laws, as directed by the Administrative Ministry, detailed instructions have been issued to all concerned to ensure and comply with the provisions of the NLP-2010. Accordingly, the Unit Heads of the Corporate Office and GM/DGM in–charge of Administration in the field units are the Nodal Officers for respective unit for overall policy implementation, who will be assisted by the “Officer-in-charge of litigation”, who shall be responsible for litigation administration and management of respective unit.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Your Company is engaged in service providing sector. As a responsible corporate citizen, your Company is fully concerned and committed as regards its responsibility for Environmental Protection. Therefore, all required measures for Energy Conservation and Use of Alternate Renewable Energy Resources are being taken at all levels.

As per Company’s Energy Policy 2010, the energy efficient products are being used regularly. The implementation of Energy conservation measures is constantly being monitored. The steps taken have resulted in a saving of Rs. 97.2 crores against a target of Rs. 75 crores.

In future, Your Company plans for provision of Renewable Energy Technologies for sustainable development due to energy saving and thereby reducing the carbon footprints too.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Earned:- 135.53 Crore

Used:- 116.22 Crore


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ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Being the successor of erstwhile Central Government Departments of Telecom Services and Telecom Operations, your company has a well defined and planned internal control systems and procedures commensurate with its size and operations. Internal checks are routinely carried out by the internal audit teams all over the country. Internal audit wing of the Company is headed by a Principal General Manager (PGM) level officer.

Apart from its own Internal Audit machinery, Your Company, being the Central Public Sector Enterprise, is subject to the Resident Audit Office scheme of the Director General of P & T Audit under the aegis of C & AG of India, CVC Mechanism with independent CVO and the Guidelines of the Department of Public Enterprises.

DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF THE ACT

The Company neither invited nor accepted Deposits from the public which are covered under the Chapter V of the Companies Act 2013.

RELATED PARTY DISCLOSURES

The company has not entered into any material financial or commercial transactions with the Key Managerial Personnel, the Directors or the Management or their relatives or the companies and firms etc., in which they are either directly or through their relatives interested as Directors and/or Partners except with the certain PSUs, where the Directors are Directors without the required shareholdings.

The Company has obtained disclosures from all the Directors in this regard, which were noted by the Board.

EXTRACTS OF ANNUAL RETURN

Information required to be disclosed pursuant to Section 134(3)(a) of the Companies Act 2013 with respect to details being part of the extracts of the Annual Return, in Form MGT-9 forms part of the Report (Annexure-1).

DIRECTORS RESPONSIBILITY STATEMENT

To the best of knowledge and belief, and in terms of information and explanation offered and records submitted, the Directors of the Company pursuant to the provisions of Section 134 (3) (c) of the Companies Act, 2013 hereby confirm:

(a) that in the preparation of the annual accounts, the applicable accounting standards had been followed alongwith proper explanation relating to material departures;

(b) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) that the directors had taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of Companies Act 1956 and 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) that the directors had prepared the annual accounts on a going concern basis;

32

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

(f) that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DISCLOSURES AND DECLARATION BY THE DIRECTORS

The Company has complied with the provisions contained in Section 164 of the Companies Act 2013. None of the Directors of your Company is disqualified as per provision of Section 164 of the Companies Act 2013. Pursuant to the Govt. of India, Ministry of Corporate Affairs Notification No.1/2/2014-CL.V, dated 5.6.2015, the provisions contained in sub-section (2) of Section 164 are not applicable to BSNL being a wholly owned Government Company.

STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

Pursuant to the provisions contained sub-section (7) of the Section 149, the Non official Part Time (Independent) Directors of the Company made declaration that they meet the criteria of independence as provided in sub-section (6) of the Companies Act 2013 which was noted by the Board of Directors.

SEPARATE MEETING OF THE INDEPENDENT DIRECTORS

No meeting of the Non-official Part Time (Independent) directors took place during the year under review.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

Your Company being a Government Company, is exempted to furnish information under Section 197 of the Companies Act 2013 vide Notification dated 5.6.2015 issued by the Govt. of India, Ministry of Corporate Affairs. Further, being a wholly owned Government Company, the appointments, terms and conditions and remuneration of the Chairman and Managing Director and Whole Time Functional Directors are governed by the orders of the Govt. of India Department of Public Enterprises.

COMPANY’S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

Size of the Board

Being a Government Company, the power to appoint or remove a Director vest with the President of India. The Article of Association provides that the minimum strength of the Board shall not be less than three (03) and the maximum at fifteen (15).

Composition of the Board

The Board comprise 12 Directors, of which 6 [including the CMD] are whole time Directors; 2 Government Nominee Directors and 4 Non-official Part Time (Independent) Directors. Thus, the Board has the optimum mix of 50% Whole-time and 50% part-time Directors. The composition is as per the Corporate Governance Norms for the unlisted CPSEs, laid down by the Department of Public Enterprises.

The following women Directors were there on the Board, during the year under review:–

(a) Smt Rita Amitabh Teaotia Government Director [Wef 4.9.2012 to 29.7.2015]


33

(b) Smt. Darshana Momaya Dabral, Government Director [Wef 29.9.2014 to 18.9.2015]

Smt. Sujata Ray, who was appointed as Director(HRD) by the Government of India, Ministry of Communications and IT, D/o Telecommunications assumed the charge of duties wef 8.7.2015.

Government of India, Ministry of Communications and IT, D/o Telecommunications appointed Smt. Aruna Sundararajan Additional Secretary & Administrator USOF in D/o Telecom as Govt. Director in place of Smt. Rita A.Teaotia wef 29.7.2015.

Government of India, Ministry of Communications and IT, D/o Telecommunications appointed Smt. Padma Iyer Kaul DDG[LFA] in D/o Telecom as Govt. Director in place of Smt. Darshana Momaya Dabral with effect from 18.9.2015.

Formal Annual Evaluation

Pursuant to Govt. of India, Ministry of Corporate Affairs Notification No. 1/2/2014-CL.V, dated 5.6.2015, following provisions of the Companies Act 2013 relating to Appointment of Directors, their Remuneration and Evaluation etc., are not applicable to BSNL:–

Clause (e) of sub-section (3) of Section 134 relating to directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters prescribed under Section 178 (3); Clause (p) of sub-section (3) of Section 134 regarding formal annual evaluation made by the Board of its own performance and that of its committees and individual directors.

The Govt. of India, through the Administrative Ministry appoints the CMD, the Whole Time Functional Directors, Government Nominee Directors and the Non official Part Time (Independent) Directors on the Board of Directors of the Company.

Terms and conditions of Appointment of CMD and Whole Time Directors and their Remuneration is determined by the Govt. of India; and, their evaluation is being done by the appropriate mechanisms as laid down by the Govt. of India time to time.

Your Company, being a wholly owned Government Company under the aegis of the Govt. of India, Ministry of Communications and IT, D/o Telecommunications, is amenable to and governed by the Orders, Instructions, Guidelines etc., of the Govt. of India’s Nodal Ministry/Department. Accordingly, the Board diversity of the Company is being maintained by the Administrative Ministry in accordance with the Guidelines of the Department of Public Enterprises(DPE).

CHANGES THAT TOOK PLACE IN BOARD OF DIRECTORS AND KMPs

Government of India, Ministry of Communications and IT, Department of Telecommunications vide order No.1-4/2013–PSA(Pt.1), dated 15th January 2015 appointed Shri Anupam Shrivastava Director (Consumer Mobility) as Chairman & Managing Director in scale of pay of Rs. 80,000–1,25,000/– (IDA) for a period of five years from the date of his assumption of the charge of the post, or till the date of his superannuation, or until further orders, whichever is the earliest. Shri Shrivastava assumed the Charge of the office of CMD w.e.f. the A/N of 15th January 2015 and relinquished the charge of the office of Director (CM) from that date.

Prior to this, Additional charge of the post of CMD was held by Shri A.N. Rai Director (Enterprise) w.e.f. 1.7.2014 to 15.1.2015 pursuant to Government of India, Ministry of Communications & IT, D/o Telecommunications, Order No. 1-1/2014-PSA dated 30.6.2014 which was extended from time to time. Shri R.K. Upadhyay was the CMD, till 30.6.2014.

34

Consequent upon the appointment and assumption of the charge of CMD by Shri Anupam Shrivastava on 15.1.2015, Shri A.N. Rai Director(E) relinquished the additional charge of the post of CMD.

Government of India, M/o C & IT, DoT vide No.1-1/2015–PSA, dated 8th July 2015, appointed Smt. Sujata Ray as Director (HRD) in the scale of pay of Rs. 75,000–1,00,000/– on immediate absorption basis for a period of five years from the date of assumption of charge of the post, or till the date of her superannuation, or until further orders, whichever is the earliest. Smt. Sujata Ray assumed the charge of office of Director(HRD) on 8th July 2015.

Prior to this, pursuant to the Government of India, Ministry of Communications & IT, D/o Telecommunications, Order No.1-4/2012–PSA, dated the 19.6.2012 which was extended from time to time Shri A.N. Rai Director(E) was holding the additional charge of the post of Director (HRD).

Consequent upon the appointment and assumption of the charge of Director(HRD) by Smt. Sujata Ray on 8.7.2015, Shri A.N.Rai relinquished the additional charge of Director(HRD).

Pursuant to the Govt. of India, Ministry of Communications and IT D/o Telecommunications Order No.1-7/2010–PSA, dated 17.7.2012, Shri Ajai Vikram Singh and Prof. Balakrishnan were appointed by the President of India under Article 111 of the Articles of Association of the Company as Non official Part Time (Independent) Directors, for a period of three years or until further orders, whichever is earlier. Consequent upon the completion of the three years tenure of appointment on 16.7.2015, Shri Ajai Vikram Singh and Prof. Balakrishnan are ceased to be Directors with effect from 17.7.2015.

On attaining the age of superannuation Shri A.N. Rai Director (Enterprise) retired from service wef A/N of 31.7.2015.

Pursuant to the Government of India, Ministry of Communications and IT, D/o Telecommunications Order No. 5-2/2013–PSA(Pt.1), dated 29.7.2015 read with the provisions of the Section 161 of the Companies Act 2013 and Article 111 of the Articles of Association of the Company Smt. Aruna Sundararajan has been appointed as Government Nominee Director on the Board of Directors of the Company in place of Smt. Rita A. Teaotia, with effect from 29.7.2015.

Government of India, M/o C & IT, DoT vide No.1–5/2014–PSA dated 27th May 2015 appointed Shri N.K. Mehta ED (IT & CA) as Director (Enterprise) on immediate absorption basis, in scale of pay of Rs. 75000-100000/–(IDA) for a period of five years from the date of assumption of charge of the post on or after 1.8.2015 or till the date of his superannuation, or until further orders whichever is the earliest. Shri Mehta assumed the charge of office of Director(Enterprise) on 1st August 2015(F/N).

Government of India, Ministry of Communications & IT, D/o Telecommunications, vide Order No.1-4/2012–PSA dated 5.2.2014 entrusted the additional charge of the post of Director (Finance) to Shri Anupam Shrivastava Director (CM) and, vide further orders, extended the same time to time. Consequent upon his elevation as CMD w.e.f. 15.1.2015, the said additional charge continued with him vide GoI, MoC & IT, DoT order No. 1-2/2015–PSA dated 22.1.2015; and, vide further orders, extended the same time to time.

Thereafter, Government of India, Ministry of Communications & IT, D/o Telecommunications, vide No.1-2/2015–PSA dated 21.10.2015 entrusted the Additional Charge of the post of Director(F) to Ms.S.T.RAY (Smt. Sujata Ray) Director (HRD) with immediate effect, for a period upto 29.2.2016, or till the appointment of a regular incumbent to the post, or until


35

further orders, whichever is the earliest. During the period of holding additional charge as aforesaid, Ms.S.T.Ray will not be entitled to any additional remuneration.

Government of India, Ministry of Communications and IT, Department of Telecommunications vide No.1-2/2015–PSA, dated 22.1.2015 entrusted the additional charge of the post of Director (Consumer Mobility) to Shri N.K. Gupta Director (Consumer Fixed Access) for a period of three months wef 16.1.2015 or until further orders, whichever is the earliest.

Thereafter, GoI, MoC& IT, DoT vide No.1-2/2015–PSA, dated 14.5.2015 entrusted the additional charge of the post of Director(CM) to Shri AN Rai Director(Enterprise) with immediate effect for a period upto 31.7.2015.

Consequent upon the retirement of Shri A.N.Rai on superannuation wef A/N 31.7.2015 and assumption of the charge of office of Director(E) by Shri N.K. Mehta wef 1.8.2015, the Government of India, M/o C & IT, D/o Telecommunications, vide Order No. 1-2/2015(Pt.), dated 3.8.2015 entrusted the additional charge of the post of Director(CM) to Shri N.K.Mehta Director(E) for a period of three months wef 1.8.2015 or till the appointment of regular incumbent or until further orders, whichever is earliest.

Pursuant to the Government of India, Ministry of Communications and IT, D/o Telecommunications Order No. 5-2/2013–PSA(Pt.III), dated 18.9.2015 read with the provisions of the Section 161(3) of the Companies Act 2013 and Article 111 of the Articles of Association of the Company Smt. Padma Iyer Kaul has been appointed as Government Nominee Director on the Board of Directors of the Company in place of Smt. Darshana Momaya Dabral with effect from 18.9.2015.

Pursuant to the Government of India, Ministry of Communications and IT, D/o Telecommunications Order No. 5-2/2013–PSA(Pt.I), dated 21.10.2015 read with the provisions of the Section 161(3) of the Companies Act 2013 and Article 111 of the Articles of Association of the Company Shri N. Sivasailam has been appointed as Government Nominee Director on the Board of Directors of the Company in place of Smt. Aruna Sundararajan with effect from 21.10.2015.

Government of India, Ministry of Communications and IT, D/o Telecommunications vide Order No.1-3/2015-PSA, dated 3.11.2015, have appointed Shri R.K.Mittal Director(CM) on immediate absorption basis in the scale of pay of Rs.75000-100000(IDA) for a period of five years from the date of his assumption of charge of post, or till the date of superannuation, whichever is the earliest. Shri Mittal assumed the charge of office wef 4.11.2015(F/N).

Consequent upon the assumption of the charge of office of Dir(CM) by Shri Mittal, Shri N.K.Mehta relinquished the additional charge of the post of Dir(CM).

Your Directors place on record their deep appreciation for the valued contribution made by Shri A.N. Rai Director (Enterprise), Smt. Rita Amitabh Teaotia, Smt. Darshana Momaya Dabral and Smt.Aruna Sundararajan Government Directors, Shri Ajai Vikram Singh and Prof. N. Balakrishnan Non official Part Time (Independent) Directors, during their association with the company.

STATUTORY AUDITORS

M/s Walker Chandiok & Co., Chartered Accountants, New Delhi were appointed as Statutory Auditors of the Company by the Comptroller & Auditor General of India. In addition to the Statutory Auditors 46 Branch Auditors were also appointed for the year 2014-15. The Report of the Statutory Auditors and the comments of the Comptroller and Auditor General of India, alongwith replies of the Management thereto forms part of this Report.

36

COST AUDITORS

Your Board has appointed M/s Balwinder & Associates, Cost Accountants Firm Registration No. 000201 as Cost Auditor of the Company for conducting the Cost Audit and Accounting Separation Report (ASR) Audit for the financial year 2015-16. Further, pursuant to the provisions of Section 148 of the Companies Act 2013 and Rule 14(a) of the Companies (Audit and Auditors) Rules 2014, as recommended by the Audit Committee, Your Board has approved the remuneration of Rs. 3,99,000/- [Rupees Three Lakh Ninety–Nine Thousand only] plus applicable taxes as Audit Fee to the Cost Auditor, subject to ratification of the same by the Members in the ensuing Annual General Meeting.

The Cost Audit Report for the year 2013-14 was filed with the MCA, Registrar of Companies on 12.1.2015.

SECRETARIAL AUDITORS

Pursuant to the provisions contained in Section 204 of the Companies Act 2013 and Rules thereunder, your Board appointed M/s VAP & Associates, Company Secretaries [ COP No.13901 ] the Secretarial Auditor of the Company for conducting the Secretarial Audit for the year 2014-15. The Secretarial Auditor submitted their Report in Form MR–3, which forms part of this report.

Dt.23.07.2015- Shri Rakesh Garg, Secretary DOT,ShriAnupamShrivastava,CMD,BSNL congratulating through video call from Sanchar Bhawan New Delhi to winners of photo and video competition organized by BSNL at Wi-Fi Hotspots on

04.07.2015 to promote Wi-Fi services among customers.


37

GENERAL

Your Directors state that there is no disclosure or reporting required in respect of following, as no transactions under these provisions were reported / took place during the year under review:-

(i) The Company is neither a subsidiary nor has subsidiaries, joint-ventures or associate companies during the year;

(ii) Details relating to Deposits covered under Chapter V of the Act;

(iii) Section 43 – Relating to Issue of Equity Shares with differential rights;

(iv) Section 54 – Relating to Issue of Sweat Equity shares;

(v) Section 62 – Employees Stock Option Scheme;

(vi) Proviso to Section 67(3) – Details of voting rights not exercised directly by the employees in respect of shares to which the scheme for provision of money for purchase of subscription for shares by employees or by trustees for the benefit of employees, as per the Rule;

(vii) Section 131 – Reasons for revision of financial statement and Board Report

(ix) Section 188 – Contract with the related parties.

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ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere appreciation and gratitude to the Government of India Ministry of Communications and IT, De/o Telecommunications and other Ministries/Departments, subscribers of Company’s telecom services, the stakeholders, and bankers and to all the State Governments and regulatory authoritiesfor their continued cooperation and invaluable support.

Your Directors express their deep appreciation for the hardwork and dedicated efforts put in by the employees at all levels and look forward to their continued contribution in achieving the mission and objective of the Company.

For and on behalf of the Board of Directors,

Sd/– [ANUPAM SHRIVASTAVA]Place: NEW DELHI CHAIRMAN AND MANAGING DIRECTOR

Dated: 17.11.2015

DECLARATION BY THE CHAIRMAN AND MANAGING DIRECTOR REGARDING COMPLIANCE WITH THE CODE OF CONDUCT BY THE BOARD MEMBERS AND THE SENIOR MANAGEMENT PERSONNEL OF THE COMPANY DURING THE FINANCIAL YEAR 2014–15

I, Anupam Shrivastava, Chairman and Managing Director Bharat Sanchar Nigam Limited, do hereby declare that all the Members of the Board and the Senior Management Personnel of the Company have affirmed their compliance to the Code of “Conduct for Board Members and the Senior Management Personnel” during 2014-15

Sd/–[ANUPAM SHRIVASTAVA]

Place: NEW DELHI CHAIRMAN AND MANAGING DIRECTORDated: 25.8.2015


39

ANNEXURE 1

FORM MGT–9EXTRACT OF ANNUAL RETURN

As on the financial year ended on 31.03.2015

[Pursuant to section 92(3)of the Companies Act 2013 and Rule 12(1) of the Companies (Management and Administration) Rules 2015]

I. REGISTRATION AND OTHER DETAILS

(i) CIN U74899DL2000GOI107739(ii) Registration Date 15th September 2000(iii) Name of the Company Bharat Sanchar Nigam Limited(iv) Category/Sub-category of the

CompanyWholly Owned Government Company

(v) Address of the Registered office and contact details

Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi-110001. H.C.Pant, CS & Sr.GM(L) / PH; 23353395 / Fax: 23353389 / Mail: [email protected]

(vi) Whether listed company Un–Listed(VII) Name, Address and Contact details of

Registrar and Transfer Agent, if anyIndus Portfolio Private Limited, Shri Bharat Bhushan Manager–SHR, G-65, Bali Nagar, New Delhi–110015. Phone 011-47671214/47671217 Fax 25449863

II. PRINCIPAL ACTIVITIES OF THE COMPANY

All the business activities contributing 10% of the total turnover of the company shall be stated:

SNo Name and Description of main products/services

NIC code of the Product/Service

% of total turnover of the company

1 Basic services Not available 34.582 Cellular services Not available 47.843 Broadband services Not available 17.58

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

S. No Name and Address of the Company

CIN/GLN Holding/subsidiary/Associate

% of shares held Section

NOT APPLICABLE

40

IV. SHARE HOLDING PATTERN ( Equity Share Capital Breakup as percentage of Total Equity)

(i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year No. of Shares held at the end of the year % change during

the year

Demat Physical Total % of Total shares

Demat Physical Total % of Total

Shares

A. Promoters

(1) Indian

(g) Individual/HUF

– – – – – – – – –

(h) Central Govt. – Equity:500,00,00,000Preference:750,00,00,000

Equity:500,00,00,000Preference:750,00,00,000

100% Equity:500,00,00,000Preference:750,00,00,000


100% –

(i) State Govt(s) – – – – – – – – –

(j) Bodies Corp – – – – – – – – –

(k) Banks/FI – – – – – – – – –

(l) Any other… – – – – – – – – –

Sub–Total (A)(1) – Equity:500,00,00,000Preference:750,00,00,000


100% – Equity:500,00,00,000Preference:750,00,00,000


100% –

(2) Foreign

(a) NRIs –Individuals

– – – – – – – – –

(b) Other– Individuals

– – – – – – – – –

(c) Bodies Corp – – – – – – – – –

(d) Banks/FI – – – – – – – – –

(e) Any other – – – – – – – – –

Sub–Total (A)(2) – – – – – – – – –

Total Shareholding of Promoter (A) = (A)(1) + (A)(2)

Equity:5,00,00,00,000Preference:7,50,00,00,000


100% – Equity:5,00,00,00,000Preference:7,50,00,00,000


100% –

B. Public Shareholding

1,.Institutions

(a) Mutual Funds – – – – – – – – –

(b) Banks/FI – – – – – – – – –

(c) Central Govt. – – – – – – – – –

(d) State Govt(s) – – – – – – – – –

(e) Venture Capital Funds

– – – – – – – – –

(f) Insurance Companies

– – – – – – – – –


41

Category of Shareholders

No. of Shares held at the beginning of the year No. of Shares held at the end of the year % change during

the year

Demat Physical Total % of Total shares

Demat Physical Total % of Total

Shares

(g) FIIs – – – – – – – – –

(h) Foreign Venture Capital Funds

– – – – – – – – –

(i) Others (Specify)

– – – – – – – – –

Sub–Total(B)(1) – – – – – – – – –

2.Non-Institutions

(a) Bodies Corp – – – – – – – – –

(i) Indian – – – – – – – – –

(ii) Overseas – – – – – – – – –

(b) Individuals – – – – – – – – –

(i) Individual shareholders holding nominal share capital upto Rs.1 lakh

– – – – – – – – –

(ii) Individual shareholders holding nominal share capital in excess of Rs.1 lakh

– – – – – – – – –

(c) others (specify)

– – – – – – – – –

Sub–Total (B)(2) – – – – – – – – –

Total Public Shareholding (B) = (B)(1) + B(2)

– – – – – – – – –

C.Shares held by Custodian for GDRs & ADRs

– – – – – – – – –

Grand Total (A + B + C)

– – – – – – – – –

(ii) Shareholding of Promoters

Sl. No

Shareholders Name

Shareholding at the beginning of the year Shareholding at the end of the year % change in share holding during

the year

No. of Shares % of total shares of the Com-

pany

% of Shares Pledged / encum-bered to

total shares

No. of Shares % of total shares of the Com-

pany

% of Shares Pledged / en-cumbered to total shares

1 The President of India and Nominees of President of India


100% NIL Equity:5,00,00,00,000Preference:7,50,00,00,000

100% NIL NIL

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(iii) Change in Promoters’ shareholding (please specify, if there is no change

S. No

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of Shares % of total shares of the

Company

No. of Shares % of total shares of the company

At the beginning of the year Equity:5,00,00,00,000Preference:7,50,00,00,000

100% Equity:5,00,00,00,000Preference:7,50,00,00,000

100%

Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment /transfer /bonus /sweat equity etc.)

There is no change in the promoters holding during the year 2014-15.

At the End of the Year Equity:5,00,00,00,000Preference:7,50,00,00,000

100% Equity:5,00,00,00,000Preference:7,50,00,00,000

100%

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters, and Holders of GDRs and ADRs):

S. No



For each of the Top 10 Shareholders No. of Shares % of total shares of the Company


At the beginning of the year NIL NIL NIL NIL


NIL NIL NIL NIL

At the end of the year (or on the date of separation, if separated during the year)

NIL NIL NIL NIL

(v) Shareholding of Directors and Key Managerial Personnel:

S. No



For each of the Directors and KMP No. of Shares % of total shares of the Company


At the beginning of the year NIL NIL NIL NIL


NIL NIL NIL NIL

At the end of the year NIL NIL NIL NIL


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V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding / accrued but not due for payment

Secured Loans excluding deposits

Unsecured Loans Deposits Total Indebtedness

[Amounts in Crores of Rupees]Indebtedness at the beginning of the financial year(i) Principal Amount 0 3738.5329 0 3738.5329(ii) Interest due but not paid 0 0 0 0(iii) Interest accrued but not due 0 3.5327 0 3.5327Total (i) + (ii) + (iii) 0 3742.0656 0 3742.0656C. Change in Indebtedness during the financial yearAddition 56.1948 8846.1447 0 8902.33953Reduction 0 6255.9673 0 6255.9673Net Change 56.1948 2590.17743 0 2646.37223Indebtenness at the end of the financial year(i) Principal Amount 56.1948 6328.71033 0 6384.90513(ii) Interest due but not paid 0 0 0 0(iii) Interest accrued but not due 0.0162 2.8767 0 2.8929Total (i) +(ii)+(iii) 56.2110 6331.5870 0 6387.7980

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Chairman and Managing Director and Whole Time Directors

S. No

Particulars of Remuneration

Total Amount

Shri R.K. Upadhyay

CMD* [*Upto 30.6.2014]

Shri A.N. Rai

Director(E)

Shri Anupam Shrivastava

CMD

Shri N.K. Gupta

Director(CFA)

[Amounts in Rupees]1 Gross Salary

(a)Salary as per provisions contained in Section 17(1) of the Income Tax Act 1961

687021 2597564 2071380 2441167 7797132

(b)Value of Perquisites u/s 17(2) Income-Tax Act 1961

35751 96519 113150 99984 345404

©Profits in lieu of salary under Section 17(3) of Income Tax Act 1961

– – – – –

2 Stock option – – – – –

44

S. No

Particulars of Remuneration

Total Amount

Shri R.K. Upadhyay

CMD* [*Upto 30.6.2014]

Shri A.N. Rai

Director(E)

Shri Anupam Shrivastava

CMD

Shri N.K. Gupta

Director(CFA)

[Amounts in Rupees]3 Swat Equity – – – – –

4 Commission – – – – –

–as % of profit – – – – –

–others, specify – – – – –

5. Others, please specify – – – – –

Total(A) 722772 2694083 2184530 2541151 8142536

Ceiling as per the Act Being a wholly owned Govt. Company, provisions of Section 197 relating to managerial remuneration are fully exempt to the Company, pursuant to Govt. of India, Ministry of Corporate Affairs Notification GSR 463(E), dated 5.6.2015.

B. Remuneration to other Directors:

SNo Particulars of Remuneration

Total Amount

Shri Ajai Vikram Singh

Director

Prof. N. Balakrishnan

Director

Smt.RitaA.Teaotia Govt.

Director

Smt.Darshana Momaya Dabral Govt. Director

[Wef 29.9.2014]

[Amount in Rupees]

3.Independent Directors – – –

–Fee for attending Board Committee meetings

1,20,000 1,00,000 – – 2,20,000

–Commission – – – – –

–Others, please specify – – – – –

Total(1) 1,20,000 1,00,000 – – 2,20,000

4.Other Non Executive Directors

– – NIL NIL NIL

–Fee for attending Board Committee meetings

– – NIL NIL NIL

–Commission – – NIL NIL NIL

–Others, please specify – – NIL NIL NIL

Total(2) – – NIL NIL NIL

Total(B) = (1 + 2) 1,20,000 1,00,000 NIL NIL 2,20,000

Total Managerial Remuneration

1,20,000 1,00,000 NIL NIL 2,20,000


45

SNo Particulars of Remuneration

Total Amount

Shri Ajai Vikram Singh

Director

Prof. N. Balakrishnan

Director

Smt.RitaA.Teaotia Govt.

Director

Smt.Darshana Momaya Dabral Govt. Director

[Wef 29.9.2014]

[Amount in Rupees]

Overall Ceiling as per the Act

Rule 4 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 provides for maximum of Rs.1,00,000/- per meeting.

The Board of Directors, in their 112th meeting held on 2.7.2008, pursuant to the provisions contained in Article No.115 of the AoA of the Company, fixed the sitting fee as Rs.10,000/– per meeting of the Board or Committees thereof.

Being a wholly owned Govt. Company, provisions of Section 197 relating to managerial remuneration are fully exempt to the Company, pursuant to Govt. of India, Ministry of Corporate Affairs Notification GSR 463(E), dated 5.6.2015.

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD

SNo Particulars of Remuneration Shri H.C.Pant, Company Secretary& Sr.GM(L)

– – – – Total Amount

1 Gross Salary [Amount in Rupees]

(a)Salary as per provisions contained in Section 17(1) of the Income Tax Act 1961

2173479 – – – – 2173479

(b)Value of Perquisites u/s 17(2) Income-Tax Act 1961

280899 – – – – 280899

©Profits in lieu of salary under Section 17(3) of Income Tax Act 1961

– – – – – –

2 Stock option – – – – – –

3 Swat Equity – – – – – –

Commission – – – – – –

–as % of profit – – – – – –

–others, specify – – – – – –

5. Others, please specify – – – – – –

Total 2454378 – – – – 2454378

VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES:

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)

A.COMPANYPenalty NIL NIL NIL NIL NILPunishment NIL NIL NIL NIL NILCompounding NIL NIL NIL NIL NIL

46

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)

B.DIRECTORSPenalty NIL NIL NIL NIL NILPunishment NIL NIL NIL NIL NILCompounding NIL NIL NIL NIL NILC.OTHER OFFICER IN DEFAULTPenalty NIL NIL NIL NIL NILPunishment NIL NIL NIL NIL NILCompounding NIL NIL NIL NIL NIL

22.09.2015-A glimpse of HOCC meeting held at BSNL Corporate office,New Delhi.


47

ANNEXURE 2

MANAGEMENT DISCUSSION AND ANALYSIS REPORTINDUSTRY STRUCTURE AND DEVELOPMENTS

The focus and thrust of the Government of India on Digital India has added philip to the Indian Telecom and IT Sector, which are poised for a major breakthrough in the coming days. The applications based mobile technology is fast emerging as the prime enabler of the economic growth. The advancement of technology and new applications had just taken the mobile – be it 2G, 3G or 4G - to health care, finance, education. With the continued focus of the Government for e-delivery, there is a huge potential of growth for the sector.

With the availability of right environment, it appears, this sector may sustain its forward growth.

MAJOR REGULATORY DEVELOPMENTS/CHALLENGES

STRENGTHS / OPPORTUNITIES/WEAKNESS/THREATS

Spread across the nook and corner of the country - connecting remote and inaccessible areas, BSNL has a bold and strong presence in the country as a leading public sector telecom service provider.

With a huge tower network, large back-haul capacity and state of art last mile connectivity, BSNL has strong potential to emerge as a stable player in the competitive, technology and tariff driven market. Well-trained and technically sound workforce of the Company makes it unique.

The products and services being subject to regulatory framework added with multiple presence of other private operators, churning of customers is a major concern. Complete Mobile Number Portability and host of other regulatory measures tend to have an impact on the operations.

OUTLOOK

The Digital India mission of the Government aiming to transform and prepare the country for a knowledge society future poses a strong business case for the telecom and IT sector. The nine pillars of the Digital India mission viz., Broadband highways, Universal Access to Mobile Connectivity, Public Internet Access Programme, e-Governance - Reforming Government through Technology, e-Kranti - Electronic Delivery of Services, Information for All, Electronics Manufacturing, IT for Jobs and Early Harvest Programmesare, no doubt, will lay a strong foundation for further spread of the operations. Your Company having presence all across the country will play significant role under Digital India Mission.

RISKS AND CONCERNS

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Being the successor of erstwhile Central Government Departments of Telecom Services and Telecom Operations, your company has a well defined and planned internal control systems and procedures commensurate with its size and operations. Internal checks are routinely carried out by the internal audit teams all over the country. Internal audit wing of the Company is headed by a Senior Management level officer.

Apart from its own Internal Audit machinery, Your Companyis subject to the Resident Audit Office scheme of the Director General of P & T Audit under the aegis of C & AG of India, CVC Mechanism

48

with independent CVO and the Guidelines of the Department of Public Enterprises. In addition, for each financial year, the Statutory and Branch Auditors are appointed by the C & AG of India.

In accordance with the Guidelines on Corporate Governance Norms issued by the Department of Public Enterprises, the Audit Committee of the Board had discussions with the Internal Audit Teams and reviewed the Internal Audit Paras.

Further, pursuant to the directions of the Government of India, Ministry of Corporate Affairs for Cost Audit of the Telecommunication Companies by the Cost Accountants, your Company has appointed Cost Auditors.

Pursuant to the mandate of the Companies Act 2013, the appointments of Internal Auditors and the Secretarial Auditor for the year 2014-15 were made by the Board of Directors consequent upon related provisions of the Act coming into force.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year 2014-15, the company incurred a loss of Rs. 8234.09 Crores [Previous year 7,019.76 Crore]. While the Income from services is Rs. 27242.23 Crores [Previous year Rs. 26,153.26 Crore], other income was Rs. 1402.97 Crores [Previous year Rs. 1,843.09 Crore].

There was an increase of 4.16% in Income from services in comparison to previous year, the other income decreased by 23.88%. There was an increase of 2.32% in the total Income in comparison with the previous year.



ENVORONMENTAL PROTECTION AND CONSERVATION, TECHNOLOGICAL CONSERVATION, RENEWABLE ENERGY DEVELOPMENTS, FOREIGN EXCHANGE CONSERVATIONS

BSNL is a telecom service providing Company. As a responsible corporate citizen, the Company is fully concerned and committed as regards its responsibility for Environmental Protection. Therefore, all required measures for Energy Conservation and Use of Alternate Renewable Energy Resources are being taken at all levels.

As per Company’s Energy Policy 2010, the energy efficient product are being used regularly. The implementation of Energy conservation measures is constantly being monitored. The steps taken have resulted in a saving of Rs. 97.2 cr against a target of Rs. 75 crores.

In future, the Company plans for provision of Renewable Energy Technologies for sustainable development due to energy saving and thereby reducing the carbon footprints too.

CAUTIONERY STATEMENT

These discussions are forward looking within the meaning of the applicable laws and regulations. Actual performance may deviate or vary from the explicit or implicit expectations.


49

ANNEXURE 3

REPORT ON CORPORATE GOVERNANCECorporate Governance, in plain terms aims to maximize the value of all the stakeholders through a set of guidelines and principles. Being a leading pan-India telecom service provider to the nation, BSNL is committed to adopting the globally accepted best corporate governance norms practices.

With highly institutionalized system aiming for transparency, disclosures and internal control, BSNL has already been complying with most of the codified norms, viz.–

Composition of the Board;

Complete conformity with Board procedure, specially, the Secretarial Standards laid down by the Institute of Company Secretaries of India;

Constitution of the Audit Committee of the Board headed by Non-official Part-Time (Independent) Director, with 2/3rd of the Members comprising other than Whole-–time Directors;

Constitution of the Nomination and Remuneration Committee of the Board as mandated by the Section 178 of the Companies Act 2013;

Constitution of the Corporate Social Responsibility Committee (CSR Committee) of the Board, as mandated by the provisions of Section 135 of the Companies Act 2013 and Rules thereunder;

Clear cut demarcation of powers with Delegation of Financial and Administrative Powers to the Management Committee of the Board, CMD and the Functional Directors, and below Board–level executives;

Conduct, Discipline and Appeal Rules for all the Employees and reporting systems;

Code of Conduct for the Members of the Board and annual affirmation to the Code by the Members of the Code;

Code of Conduct for the Senior Management Personnel of the Company and annual affirmation to the Code by the Senior Management Personnel;

Disclosures by the Directors to the Board of Directors and filing of requisite forms evidencing the taking note of the disclosures by the Board with the appropriate authorities;

Enterprise Risk Management Policy of the Company;

Appointment of Statutory and Branch Auditors by the C & AG of India;

Appointment of Cost Auditors;

Appointment of Secretarial Auditor;

Certification of compliance of Corporate Governance Norms by an outside practicing professional;

Audit jurisdiction of the DG P & T’s Resident Audit Office scheme,

Dedicated Internal Audit Set up;

Amenability with the Guidelines of Central Vigilance Commission;

Outside independent personnel as CVO;

50

Dedicated and full-fledged Vigilance set up across the units of the country;

Whistle blower policy in vogue;

Compliance of the Orders and Guidelines of the Government of India – Department of Public Enterprises, Administrative Ministry and host of other compliances.

BOARD OF DIRECTORS

Size of the Board

Being a wholly owned Government Company, the provisions of the Companies Act 2013 relating to appointment, remuneration, evaluation etc., of the Directors are not applicable to your Company. The power to appoint or remove a Director vest with the President of India. The Article of Association provides that the minimum strength of the Board shall not be less than three (03) and the maximum at fifteen (15).

Composition of the Board

The Board comprise of 12 Directors, of which 6 [including the CMD] are whole time Directors; 2 Government Nominee Directors and 4 Non-official Part Time Directors. Thus, the Board has the optimum mix of 50% Whole-time and 50% part–time Directors. The composition is as per the Corporate Governance Norms for the unlisted CPSEs, laid down by the Department of Public Enterprises.

The details of the composition of the Board of Directors is as follows:–

Whole-Time Directors [06 including CMD]

Chairman and Managing Director

Shri AnupamShrivastav w.e.f. 15.1.2015.

Prior to this, Additional charge of the post of CMD was held by Shri A.N. Rai Director(Enterprise) w.e.f. 1.7.2014 to 15.1.2015 pursuant to Government of India, Ministry of Communications & IT, D/o Telecommunications, Order No. 1-1/2014-PSA dated 30.6.2014 which was extended from time to time. Shri R.K.Upadhyay was the CMD till 30.6.2014.

Director (Enterprise)Shri A.N. Rai Upto 31.7.2015.Shri N.K. Mehta Wef 1.8.2015

Director(CFA)Shri N.K. Gupta [Wef 1.6.2012]

Director(CM)

Shri R.K.Mittal [Wef 4.11.2015]Shri Anupam Shrivastava Upto 15.1.2015

Consequent upon the elevation of Shri Anupam Shrivastava as CMD, GoI, MoC& IT, DoT vide Order No.1-2/2015-PSA, dated 22.1.2015 entrusted the additional charge of the post to Shri N.K. Gupta Director(Consumer Fixed Access) for a period of three months wef 16.1.2015 or until further orders, whichever is the earliest. Thereafter, vide orders of even number dated 14.5.2015 entrusted


51

the additional charge of the post of Director(CM) to Shri AN Rai Director(Enterprise) with immediate effect for a period upto 31.7.2015. On attaining the age of superannuation, Shri Rai retired from service wef 31.7.2015.

Thereafter, consequent upon the joining of Shri N.K.Mehta as Director(E), GoI, MoC & IT, vide order Order No. 1-2/2015(Pt.), dated 3.8.2015 entrusted the additional charge of the post of Director (CM) to Shri N.K.Mehta Director(E) for a period of three months wef 1.8.2015 or till the appointment of regular incumbent or until further orders, whichever is earliest. Consequent upon the appointment and joining of Shri R.K.Mittal as Dir(CM) wef 4.11.2015, Shri Mehta relinquished the said additional charge of the post of Dir (CM).

Director (Finance)

Government of India, Ministry of Communications & IT, D/o Telecommunications, vide Order No.1-4/2012-PSA dated 5.2.2014 entrusted the additional charge of the post of Director(Finance) to Shri Anupam Shrivastava Director (CM) and, vide further orders, extended the same time to time. Consequent upon his elevation as CMD w.e.f. 15.1.2015, the said additional charge continued with him vide GoI, MoC & IT, DoT order No. 1-2/2015–PSA dated 22.1.2015; and, vide further orders, extended the same time to time.

Thereafter, Government of India, Ministry of Communications & IT, D/o Telecommunications, vide No.1-2/2015-PSA dated 21.10.2015 entrusted the Additional Charge of the post of Director(F) to Ms.S.T. RAY (Smt. Sujata Ray) Director (HRD) with immediate effect, for a period upto 29.2.2016, or till the appointment of a regular incumbent to the post, or until further orders, whichever is the earliest. During the period of holding additional charge as aforesaid, Ms. S.T. Ray will not be entitled to any additional remuneration.

Director (HRD)Smt. Sujata Ray,wef 8.7.2015.

Prior to this, pursuant to the Government of India, Ministry of Communications & IT, D/o Telecommunications, Order No.1-4/2012-PSA, dated the 19.6.2012 which was extended from time to time Shri A.N.Rai Director(E) was holding the additional charge of the post of Director (HRD).

Government Nominee Directors [02 ]

1. Smt. Rita A. Teoatia Additional Secretary(T) in DoT [Upto 29.7.2015]

2. Smt.Aruna Sundararajan, Addl Secretary & Administrator USOF in DoT [Wef 29.7.2015 to 21.10.2015]

3. Smt. Darshana Momaya Dabral, DDG [TPF] in DoT [Wef29.9.2014 to 18.9.2015]

4. Smt. Padma Iyer Kaul DDG [LFA] in DoT [Wef 18.9.2015]

5. Shri N.Sivasailam Additional Secretary(T) in DoT [Wef 21.10.2015]

Non–official Part–Time Directors [04]

1. Shri Ajai Vikram Singh, Director [Upto 16.7.2015]

2. Prof.N. Balakrishnan, Director [Upto 16.7.2015]

Shri Anupam Shrivastava CMD [ Wef 15.1.2015] [DIN: 06590535] :– Shri Anupam Shrivastava is a 1981 batch of Indian Telecom Service (ITS) Officer who has around three decades of experience in

52

the field of telecommunications. He is BE (Electronics &Communications) and is also MBA (Mktg.). He has taken telecommunication trainings in India & Japan. Prior to his present assignment as CMD, Shri Shrivastava joined BSNL Corporate Office as Director (CM) on 1st May, 2013 and is responsible for the growth of mobile business of GSM / CDMA / WIMAX in BSNL, including all activities related to Sales & Marketing, VAS, Tariff finalization & revenue. As Zonal Director for North Zone he is responsible for monitoring growth and maintenance of Telecom Network in 8 Circles. Prior to this assignment, Shri Shrivastava had held the post of Sr. GM, Ajmer TD where he gave special attention to Sales & Marketing of telecom products in the SSA which resulted in physical growth of connections in all segments and increased revenue for the SSA. Ajmer SSA was chosen for the pilot project for NOFN which was successfully completed ahead of target. His contributions in providing quality service to BSNL customers have been widely acknowledged and he strived to achieve benchmarks prescribed by TRAI / BSNL C.O. for various service parameters. Shri Shrivastava also worked as GM Jodhpur SSA and during his stint there he gave record number of mobile and landline connections with special emphasis on data and broadband business. He also has experience of working as GM (BB) in Rajasthan Telecom Circle with additional charge of Marketing and Enterprise Business. Shri Shrivastava also has overseas working experience in Zimbabwe where he was posted in Harare while representing TCIL as Task Force Leader to upgrade their telecom services. Due to his hard work and coordination skills the fault rate was drastically curtailed which was well appreciated by PTC Zimbabwe and TCIL management. He was associated with 6th G-15 Summit in Harare in 1996. Shri Shrivastava has delivered lectures extensively in different institutions both in India and abroad including many universities and management colleges. He also organized many seminars and skill up-gradation courses at many places. A firm believer in team work, Shri Shrivastava always sets examples by himself and uses latest technological applications to promote and inculcate team work amongst his subordinates and maintain synergy with superiors in BSNL management.

Shri A.N. Rai Director (Enterprise) [DIN: 05100500] [Upto 31.7.2015]:- Shri A.N. Rai assumed the charge of office of Director(Enterprise) on 19.9.2011. Shri Rai, officer of Indian Telecommunications Service 1977 batch holds B.Tech Degree in electronics and communications Engineering from BHU Varanasi. Shri Rai, was actively associated with Installation, Commission and Maintenance of Switching equipments at various places in the country. He was also trained in Digital Telephone systems in various countries like UK, Germany and USA. As senior telecom management professional, he was involved with Development, Operation and Maintenance of Telecom Services at various places like Allahabad, Kanpur etc. As Deputy Director General at the Corporate Office, he handled Rural Networking and CMTS areas. Prior to the joining as Director(Enterprise), he was the Chief General Manager of Orissa Circle of the BSNL, which bagged the prestigious “Telecom Circle of the Year 2010-11 Award”.

Shri N.K. Gupta Director (CFA) [DIN: 01140881]:- Shri Naresh Kumar Gupta took over as Director CFA in BSNL on 1st June 2012. Shri Gupta is B.E. from Delhi College of Engineering (DCE), in Electronics and Communications. He joined the Department of Telecommunications, Government of India through Indian Telecommunications Services (ITS) Group A 1978 batch. Since then he has worked in various capacities in different units of DoT/TEC/BSNL/MTNL and has versatile experience covering almost all the fields in telecommunications including installation, operations, development and management of telecom networks, sales and marketing and financial management etc. Before joining as Director (CFA) on the BSNL Board, N K Gupta was working as Chief General Manager Punjab Telecom Circle in BSNL and prior to that he was heading the Information Technology division for CFA business unit of BSNL. He in the capacity of DDG (I) TEC was instrumental in framing specifications and Network architecture against which BSNL and MTNL have implemented


53

their broadband Networks. He has represented DoT in many committees of TRAI, DIT, and also in various Inter–Ministerial Committees like committee on preparing encryption policy, E-Commerce and Information Security working Group. He has widely travelled abroad and represented India in number of UN & ITU meetings including World Summit on Information Society in Geneva andother important assignments. He was an active member of Apex Committee involved in the planning and execution of NIB-II of BSNL and also framing the specification for ERP implementation in BSNL which is currently in progress. He was deeply involved in Pan–India Roll out of zonal OSS and BSS for Wire-line and Broadband segment which helped BSNL to changeover from decentralized 334 SSA level systems to 4 zonal data centres with implementation of world class COTS applications. N K Gupta is also instrumental in conceptualizing BSNL entry in to the Data Center (IDC) Services business for opening up a new revenue stream by leveraging BSNL’s existing infrastructure with an innovative revenue share model. Presently BSNL is in the process of acquiring IDC business. As Director (CFA) BSNL, he is mainly responsible for improving the Systems and Methods to achieve optimal performance and maximum utilization of BSNL’s extensive country-wide Infrastructure and network. He is also responsible for achieving business interests of the Company by way of high customer satisfaction and timely provision of quality services in BSNL CFA segment. He is also responsible for induction & adoption of new technologies and committed to provide state-of-the-art modern and world class telecom services in the highly competitive environment.

Smt. Sujata Ray Director (HRD) [DIN: 07240022] [Wef 8.7.2015]:- Smt. Ray has taken over as Director (HRD) of BSNL on 8.7.2015. A post graduate from Calcutta University, she belongs to the 1982 batch of the Indian P&T Accounts and Finance Service, having over 32 years of experience in the field of telecom finance.

Prior to her present assignment, Smt. Ray was Executive Director (Finance) in the Company since April 2014. She has rich and varied experience encompassing postings in the Department of Telecommunications both in the Ministry as well as in MTNL and BSNL, the two major PSUs. While serving in various capacities as General Manager and Principal General Manager, she has acquired rich experience in Corporate Accounts, Budgeting and Corporate Finance. She is also a strong proponent of the Integrated Finance approach having functioned as IFA for more than a decade in various territorial maintenance and project Circles of the Company. In fact, as Executive Director, Smt. Ray performed the role of rendering financial advice to the Functional Directors inclusive of financial appraisal of various projects and significant procurement issues.

While heading the Finance Wing of the Company, she demonstrated strong leadership qualities in guiding and motivating small and large functional teams to achieve the ascribed business goals. Smt. Ray has also substantial experience in handling HR and personnel issues over the past few years. She has headed or actively participated in key Committees relating to important HR matters of BSNL. Having been a keen member of the Steering Committee for implementing ERP in the Company, she is actively involved in formulation of HR plan of BSNL which is an integral part of its revival plan.

She is a firm believer in the power of positive thinking and the strength of soft skills in her new role of developing the vast human resources of the Company. Smt. Ray is a voracious reader and has received extensive training in India and abroad.

Shri N.K. Mehta Director (Enterprise) [DIN: 07247767 ] [Wef 1.8.2015]:- Shri Mehta, an Indian Telecommunication Service officer of 1981 batch joined as Director (Enterprise) BSNL on 01.08.2015. He is a Bachelor of Engineering with Honours in Electronics & Communication and MBA in HR. He has more than three decades of rich and diversified experience in Telecom

54

Management, Network Operations, Project Management, Business Development, Human Resource Management and Development.

Before joining BSNL as Director(E), he was working as Executive Director(IT) with additional charge of ED (CA) in BSNL. As ED(IT) he successfully rolled out ERP system in BSNL, improved the productivity within organization through BPR. As ED(CA) has handled Regulatory Affairs, Material Management, Corporate Planning, IT Security Policy etc.

While working on an overseas assignment as Area Manager with TCIL in Kingdom of Saudi Arabia, he was responsible for planning and execution and provisioning of Telecom Services in Alhasa & Riyadh city and execution of a Turnkey Telecom Network Project in 17 cities in KSA. As DGM, Area Manager and GM in MTNL, he was responsible for planning, O & M of Telecom Network, Sales and Marketing of Telecom Services, CRM, Human Resource Management and development and Financial Management. As GM(Trg) in MTNL, he successfully transformed an obscure inhouse training centre into a centre of excellence and a profit centre. Served as GM(EB) &later on as CGM (EB) in MTNLfrom November 2010 to April 2014.

As Director(E) BSNL, he is responsible for formulating and implementing policies for sustainable growth of the Enterprise and wholesale Business and Managing core-Network. Enterprise customers include small, medium and large corporate, Central/State Government Departments and Public Sector Undertakings. Whe wholesale business covers India and International Carriers and Internet Service Providers. All deals pertaining to the ILD and NLD network falls within his jurisdiction. His core network responsibilities include procurement, installation, commissioning and O & M of all transmission equipment as well as planning, installation, maintenance and management of all MPLS core network.

As head of these business, he is responsible for the creation of innovative and affordable products, superior sales, marketing and customer service and excellence in network operations.

Shri R.K. Mittal Director(CM) [DIN 07334039] [Wef 4.11.2015]:- Rakesh Kumar Mittal, an officer of Indian Telecommunications Service 1981 batch, is a Graduate in Electrical (Electronics)Engineering from Delhi College of Engineering. He assumed the charge of the Consumer Mobility Vertical on 4.11.2015. Prior to the current assignment, he was General Manager in MTNL Delhi. At MTNL he was in charge of MM, IT & Tech/Plg in Corporate office. He started his career in Department of Telecommunications and held various positions in the field formation. He has been responsible for procurement of ADSL2+ and 3G technologies for the 1st time in India by any of the operator. He attended various training programmes in India and abroad.

Ms. Rita A. Teoatia Government Director [DIN: 02876666] [Upto 29.7.2015]:- Ms. Rita Teaotia joined the Indian Administrative Service in the year 1981 and served in the districts of Panchmahal and Gandhinagar in Gujarat. Subsequently, she worked in the energy sector as MD, Gujarat Industries Power Company Ltd., and Secretary (Energy). She has worked extensively at policy making and strategic levels in the fields of Education, Health, Women’s Development and rural Development. From 2003-2007, she worked in the Government of India as Joint Secretary in the Ministry of Health and Family Welfare. Prior to the present assignment, she also served as Additional Secretary, in the Department of Electronics and Information Technology (DeitY),from 19th March, 2012. In this capacity, she headed the National e-Governance Plan, which entailed working closely with all State Governments and arms of DeitY, including National Informatics Centre(NIC), Standardisation Testing and Quality Certification (STQC) Directorate, Centre for Development of Advance Computing (C-DAC) and National Institute of Smart Governance(NISG).At present, she is


55

serving as Additional Secretary in the Department of Telecommunications and ex officio Secretary of the Telecom Commission. Ms. Rita Teaotia has received four National e-Governance awards for applications developed during her various assignments. She holds a Masters in Medieval and Modern Indian History from the University of Lucknow.

Smt. Aruna Sundararajan, Government Director [DIN: 03523267] [Wef 29.7.2015 to 21.10.2015]: Senior Member of the Indian Administrative Services, India’s premier civil service, with over 32 years of experience in the national and federal governments. Currently, Addl. Secretary, Telecom & Administrator Universal Service Obligation Fund, Govt. of India & CMD BBNL (Bharat Broadband Network Ltd) heading the National Optic Fibre Network Project is NOFN under the ‘Digital India’ Program.

Professional Highlights:– As Administrator USOF, Mrs.Aruna Sundararajan is the custodian of the telecom fund to provide rural telecom access to unserved areas of the sub-continent. The total portfolio of projects under implementation by the Fund in India encompasses the NOFN(National Optic Fibre Network) to provide optic fibere connectivity to India’s 250,000 Gram Panchayats (villages) across India, mobile connectivity to the uncovered village across North East Region of India, Himalayan areas, border states and tribal and hilly pockets.

Mrs. Aruna Sundarajan also heads Bharat Broadband Network Limited (BBNL) (the SPV) established for overseeing India’s rural high-speed broadband project which aims to provide access to 600 million Indians under the “Digital India” Programme.

Achievements:– Established the National Internet Centre Project covering 100,000 villages across the country

under India’s National e-Governance Programme (NeGP). Commissioned India’s first wireless connectivity project at Malappuram district in Kerala. As head of Digital Inclusion under the Central Government’s national e-governance

programme, spearheaded the establishment of state-wise IT infrastructure including Wide Area Networks and Data centres across 28 States in India.

Recognition/Awards:– Honoured as one of the top women achievers by “India Today” magazine in 2009. Also featured by Forbes Magazine in Aug 2012 in the list of eminent Indians who have spearheaded change.

Shri N. Sivasailam [DIN: 00131008] Govt. Director [Wef 21.10.2015]:- Shri N. Sivasailam is an officer of the 1985 batch of the Indian Administrative Service allotted to Karnataka Cadre. He graduated in Mechanical Engineering from University of Delhi. He did his Post Graduate studies at the Faculty Management Studies, University of Delhi and at the London School of Economics in Business Administration and Social Policy & Planning in Business Administration and Social Policy & Planning in Developing Countries respectively. He also has a Post Graduate Diploma in Intellectual Property Rights Law (IPRL) from the National Law School of India University, Bangalore. His last assignment in cadre was at the Department of Public Enterprises, Government of Karnataka where he served in the position of Additional Chief Secretary. He has served in the Departments of Health & Family Welfare and Forest, Ecology & Environment Departments of the Govt. of Karnataka as Principal Secretary.

He has served Bangalore Metro Rail Corporation Ltd, the Karnataka State Beverages Corporation Limited and Rajiv Gandhi Rural Housing Corporation Ltd. as Managing Director, in earlier stints in the Cadre besides serving an assignment as Secretary in the Rural Development & Panchayat Raj

56

Department of the State Government.

In his earlier stint with the Central Government, he served as Deputy Secretary (AIS) in the M/o Personnel, Public Grievances and Pensions. Presently, he is serving as Additional Secretary (Telecom) and is also ex-officio Secretary of the Telecom Commission in the Government of India.

He has been a Member of National Award Winning Teams in Panchayat Raj Administration and E-governance applications.

Smt. Darshana Momaya Dabral, Government Director [DIN: 06975127] [Upto 18.9.2015]:- (I P&T AFS, 1990 Batch):- As an Indian Civil Servant (Batch 1990), have nearly 24 years of senior level experience at Central Government in the Dept. of Telecommunication in the areas of Planning, Budgeting, Accounts, Revenue, Finance, Administration and overall Financial Management. Throughout involved in key positions of critical decision making and tasks of organisational& national transformation through drafting and implementation of legislations for new polices.

Strengths: Leadership, focusing on collaborative team efforts, process orientation and inculcation of transparency & accountability to extract desired levels of work efficiency and performance.

Completed PGDM (FM) (12-14) at National Institute of Finance Management Faridabad, on deputation basis. Presently posted as DDG(TPF) at DoT HQ, responsible for Ministry’s Budget and involved in financial advice to Public Sector Units under DoT.

Smt. Padma Iyer Kaul Government Director [DIN:07303737 ] [Wef 18.9.2015]:- An officer of Indian P & T Accounts and Finance Service, at present, she is Deputy Director General in the D/o Telecommunications, handling the responsibility of Licence Finance Assessments. She is a post graduate of Delhi University.

Shri Ajai Vikram Singh, Director [DIN : 02184840] [ Upto16.7.2015 ]:- Shri Ajai Vikram Singh was born at Ajmer and had his education at Mayo College (Senior Cambridge) and Government College (Graduation), Ajmer. After a short spell in the Private Sector, he joined the Indian Administrative Service(IAS) in 1967 and, after the initial training, was allotted to the Uttar Pradesh Cadre. He has served in various capacities in the State and Central Governments, both, in the field and in the Secretariats. He was District Magistrate in Ghazipur, Sultanpur, Moradabad, and Aligarh districts, as also Commissioner, Lucknow Division. He has served as Managing Director of two State enterprises (Rajasthan State Warehousing Corp-on deputation, & UP Export Corp.) In the Uttar Pradesh Secretariat, he has been Secretary, Small Industries; Secretary, Heavy Industries; Industrial Development Commissioner & Principal Secretary. In the Government of India, the postings have been with the Cabinet Secretariat, Ministry of Defence, Ministry of External Affairs, and the Ministry of Industries. He did the National Defence College (NDC) Course in 1984 during the first of his four tenures with the Ministry of Defence. He was posted as Minister (Supply) in the High Commission of India at London for two years.In November 2000, the State of Uttar Pradesh was bifurcated into Uttar Pradesh and Uttaranchal, and Shri Ajai Vikram Singh was appointed as the first Chief Secretary of the new State of Uttaranchal (Now Uttarakhand).In 2001, consequent to the re-organisation of the Ministry of Defence, he was appointed to the newly created post of Special Secretary (Acquisition). This involved setting up a new organization and evolving procedures for all capital acquisitions for the Armed Forces. Subsequently, he has been Revenue Secretary (Now the Ministry of Finance), Secretary, Ministry of Non-Conventional Energy Sources (now the Ministry of New & Renewable Energy), Secretary, Ministry of Road Transport & Highways, and Defence Secretary. During his various postings in the Central and State Governments, he has been Chairman of the following Companies:- Indo-Gulf Fertilisers Ltd., India Polyfibres Ltd., Pashupati Acrylon Ltd.,


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U.P. Textile Corporation and U.P. Finance Corporation. In addition, he has served as Director on the Boards of, inter-alia, the following Companies:– IFCI Ltd., BHEL Ltd., Maruti Udyog Ltd., HMT Ltd., Heavy Engineering Corp. Ltd., Andrew Yule Ltd., Bharat Bhari Udyog Nigam Ltd., Bharat Yantra Nigam Ltd., Hindustan Aeronautics Ltd., Mazagon Docks Ltd., Goa Shipyard Ltd., and PICUP.Shri Ajai Vikram Singh superannuated from service on 31st July 2005, and is now living in his home-town, Ajmer, with his wife, son, daughter-in-law, and two grand-children. He is involved with issues connected with ecology, the environment, and local development. He is currently Chairman of the Pune based World Institute of Sustainable Energy(WISE), a society devoted to the spread of clean and renewable energy. He is also on the Board of Directors of Pipavav Defence& Offshore Engg. Co. Ltd., and Overseas Infrastructure Alliance Infrastructure Alliance(India) Pvt. Ltd. He has taken up the cultivation of Jojoba ( a non-edible oil bearing plant) and Aloe Vera on a trial basis in his village near Ajmer.

Prof. N. Balakrishnan, Director [DIN: 00181842] [ Upto16.7.2015]:- Prof. N. Balakrishnan received his B.E. (Hons.) in Electronics and Communication from the University of Madras in 1972 and Ph.D. from the Indian Institute of Science in 1979. He then joined the Department of Aerospace Engineering as an Assistant Professor. He is currently the Associate Director of the Indian Institute of Science and a Professor at the Department of Aerospace Engineering and at the Supercomputer Education and Research Centre. His areas of research where he has more than 200 publications in the international journals and international conferences include Numerical Electromagnetics, High Performance Computing and Networks, Polarimetric Radars, Aerospace Electronic Systems, Information Security, Complex Social Networks and Digital Library. He has received many awards including the Padmashree by the President of India, 2002, Homi J. Bhabha Award for Applied Sciences, 2004, J C Bose National Fellowship in 2007, the Alumni Award for Excellence in Research for Science & Engineering by IISc, 2001, Millennium Medal of the Indian National Science Congress in 2000, Ph D (Honoris Causa) from Punjab Technical University in 2003, the CDAC-ACS Foundation Lecture Award in 2008 and the Academy Excellence Award, Defence Research and Development Organization in 2009. He was the NRC Senior Resident Research Associate at the National Severe Storms Laboratory, Norman, Oklahoma, U.S.A. from 1987-1989. He was a visiting research scientist at the University of Oklahoma in 1990, Colorado State University in 1991 and is a Visiting Professor at Carnegie Mellon University from 2000 till 2006. He is an Honorary Professor in Jawaharlal Nehru Centre for Advanced Scientific Research (JNCASR). He is a Fellow of the Academy of Sciences for the Developing World (TWAS), Indian National Science Academy, Indian Academy of Sciences, Indian National Academy of Engineering, National Academy of Sciences and Institution of Electronics & Telecommunication Engineers. He is one of the Directors of Data Security Council of India (Currently its Chairman), Central Bank of India, Bharat Sanchar Nigam Limited (BSNL) and of CDOT-Alcatel Research Centre at Chennai, a member of the Council of CDAC, Member of the Joint Advisory Board of Carnegie Mellon University at Qatar and Member of the Governing Council of IIT Kharagpur, He was one of the editors of the International Journal on Distributed Sensor Networks, and Editor–in–Chief, International Journal of World Digital Libraries. Till recently he was a member of the National Security Advisory Board and the Board of Governors of IIT Delhi and of IIT Madras. He was also one of the Directors of the Bharat Electronics Limited (BEL), a Part–Time Member of the Telecom Regulatory Authority of India. He is the National Coordinator of Indo–US Million Books to the Web Digital Library Projects (www.ulib.org and www.new.dli.ernet.in). He, along with his colleagues from India, China and the US created the world’s largest Digital Library which proudly hosts more than a million books that are freely accessible by any one anywhere and anytime. More details can be found at http://swati.dli.ernet.in/balki

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Appointment and Tenure of the Directors

In terms of Article No. 111 of the Articles of Association, the Directors are appointed by the President of India.

Functional Directors are appointed for a period/tenure of five years from the date of assumption of charge, or till the date of superannuation or until further orders of the President of India, whichever is the earliest. The salary and allowances are determined by the President of India.

The Government Nominee Directors are appointed by the President of India from amongst the officials of the Government of India. Such nominee Director ceases to be a Director on his superannuation from Government Service or transfer from the respective Ministry/Department.

Non–official Part-Time Directors are appointed by the President of India for a period of three years from the date of assumption of charge. The appointment of the Non-official Part-Time Directors shall be at the pleasure of the President of India and other terms and conditions as may be deemed fit by the President of India from time to time in accordance with the Memorandum and Articles of Association of the Company.

BOARD COMMITTEE MEETINGS AND PROCEDURES

Institutionalised Decision Making Process

With the aim of completely institutionalising the process of corporate governance and decision making by the Board of Directors, the Company has, well defined process of placing vital and sufficient information before the Board and/or committee(s) thereof.

The Board of Directors have voluntarily constituted a standing committee for the purposes of general management and administration of business affairs of the Company named as “Management Committee of the Board (MCB), comprising of the CMD and all the Functional Directors as Members and the Company Secretary as the Secretary, and have delegated powers of general management of company’s business affairs to it. The Board of Directors have also delegated some of their powers to the CMD, Functional Directors, EDs and Senior Management Personnel of the Company.

The Statutory standing Committees, viz., (a) the Audit Committee of the Board in accordance with the provisions of Section 177 of the Companies Act 2013; and, (b) the Nomination and Remuneration Committee of the Board in terms of Section 178 of the Companies Act 2013; and (c) the Corporate Social Responsibility (CSR) Committee pursuant to the provisions of the Section 135 of the Companies Act 2013 and Rules thereunder; and (d) Voluntary Standing Committee on Appellate & Review matters under BSNL CDA Rules 2006 have also been constituted by the Company.

In addition, as and when need arises, Board constitutes Committee of Directors.

Role of the Company Secretary in overall Governance Process

The Company Secretary ensures that the Board procedures are followed and regularly reviewed. The Company Secretary endeavors that all the relevant information and documents are made available to the Directors by the different nodal units to facilitate an effective decision making in their meetings. Being the interface between the Board and the Executive Management, all the Senior Management Personnel of the Company take advice and services of the Company Secretary.


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The Company Secretary is also the interface between the management and the regulatory authorities for governance matters.

Guidelines for the Board/Committee Meetings

Details guidelines have been laid down by the Company secretariat especially with reference to preparation and submission of Agenda Notes, Circulation of decisions thereto etc. These are reiterated from time to time.

The Agenda papers are prepared by the respective units under Business verticals headed by PGM/Sr. GM/GM as the case be at corporate office, after considering complete technical, commercial, legal and financial aspects. After getting approval of the concerned ED/Functional Director/CMD/MCB as the case be, in accordance with the delegation of Administrative and Financial Powers, the agenda papers are sent to the Company Secretariat for circulation amongst the Members of the Board / Committee(s) thereof as the case be.

Observance of the Secretarial Standards issued by the Institute of the Company Secretaries of India

The Institute of Company Secretaries of India (ICSI) has, evolved and laid down the best corporate practices in the form of Secretarial Standards. The Company has been adhering to the Standards relating to Board Meetings, General Meetings, Payment of Dividend, Maintenance of Records and Registers, Minutes of the Meetings, Passing of Resolution by Circulation, affixing of Common Seal, Board’s Report etc.

Code of Conduct for the Members of the Board and the Senior Management Personnel

In addition to the Company’s Conduct, Disciplinary and Appeal Rules, in line with the corporate governance norms, the Board of Directors of the Company have laid down a “Code of Conduct for the Members of the Board”. All the Members have affirmed compliance with the said code.

Similarly, In addition to the Company’s Conduct, Disciplinary and Appeal Rules, in line with the corporate governance norms, the Board of Directors of the Company have laid down a “Code of Conduct for the Senior Management Personnel of the Company”. All the Senior Management Personnel have affirmed compliance with the said code.

Scheduling of Board/Committee Meetings and Submission of Agenda Items for the Board/Committee meetings.

The meetings of the Board/Committee thereof are convened, keeping in view the statutory provisions and the convenience of the Members, with sufficient advance planning. The Agenda Notes are, generally sent minimum seven days in advance to facilitate meaningful and informed discussions;

Wherever required, voluminous documents/documents of confidential nature are tabled at the meeting, with the approval of the meeting;

The Board also discusses sensitive and urgent business proposals, without formal agenda note, depending on urgency and case to case basis;

Wherever required, the Senior Management Personnel of the Company are called to make presentations before the Board/Committee on specific agenda notes.

The Meetings of the Board/Committee are generally held at the Registered office of the Company at Delhi. Whenever required, meetings are also held outside the headquarters.

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Recording of Minutes of the Board/Committee meetings

Minutes of the proceedings of the Board of Directors and the Committees of the Board are recorded. The minutes are circulated amongst the Members of the Board/Committee(s) for their comments in a given time frame. The comments if any, received are discussed in the next meeting of the Board/Committee, while confirming the minutes. All the minutes duly signed/initialed by the Chairman are entered into the Minutes Book. The unit heads submit Action Taken Report on the decisions of the previous meetings.

COMPLIANCES

All the Senior Management Personnel including key managerial personnel handling different verticals/units have been delegated with administrative and financial powers thereto, are responsible to ensure adherence to all the applicable laws, rules, guidelines etc., and ensures implementation of the enterprise risk management policy of the company as a routine, while taking or processing the detail for decision or approval by the competent authority(ies). The Company Secretary ensures the compliance of all the applicable provisions of the Companies Act and other applicable corporate laws.

Being the successor and assigns of the erstwhile Departments of Telecom Services and Telecom Operations with vast geographical spread, the BSNL follows the existing system. Accordingly, all the litigations before the hon’ble Courts/Tribunals/Arbitrators are handled by the respective verticals and units under their control with the help of Advocates. Significant litigation if any, are reported by concerned vertical/unit to the management.

INFORMATION PLACED BEFORE THE BOARD OF DIRECTORS

Subject to the provisions of the Companies Act, Memorandum and Articles of Association of the Company, and the directives, guidelines of the Government on the subject, the Board of Directors have delegated all general powers of managing the company’s affairs to the Management Committee of the Board comprising CMD and the Functional Directors; EDs; and, the Senior Management Personnel of the Company. The Minutes of the Meetings of the Management Committee of the Board are placed before the Board in its meetings. In addition, information on following items is invariably placed before the Board of Directors:-

(1) BUDGET (a) Annual Budget Estimates and revised budget estimates for capital expenditure; (b) Annual Budget Estimates and revised budget estimates for revenue account for

operational expenditure; and c) Budget requirements for five year plans.(2) PLANS (a) Annual Plans; (b) Five Year Plans; (c) Manpower Plans; (d) Corporate Plans; and (e) Resource Mobilisation Plans.(3) ACQUISITIONS Acquiring shares, stocks, securities etc., of other Companies or Undertakings

other than in Government guaranteed securities for short term and in duly registered employees consumer co–operative societies.


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(4) STRATEGIC DECISIONS a. Agreement involving foreign collaboration proposed to be entered into by the

Company irrespective of the consideration involved; b Strategic Investments/decision and acquisition of shares/controlling stake/debentures/

bonds of other companies; and Decision with regard to formation of joint ventures, subsidiary companies and restructuring of organization.

(5) PERSONNEL a. Creation of posts of the level of Executive Director; b Formulation of any changes in wage structure and scales of pay of employees of the

company; c. Policy matters relating to allowances of the employees such as HRA, Performance

Related Pay, Bonus etc.(6) ACCOUNTS Acceptance of periodical profit and loss accounts; and Declaration of Dividend.

(7) Investment of the surplus funds of the company in acquisition of controlling stake/shares/debentures/bonds in other companies.

(8). All issues that are reserved for exclusive consideration by the Board of Directors by the Companies Act; and, the Memorandum and Articles of Association of the Company.

(9) COMPLIANCE REPORTINGS UNDER THE CORPORATE GOVERNANCE NORMS

NUMBER OF BOARD MEETINGS HELD DURING 2014-15; ATTENDANCE OF DIRECTORS IN THE BOARD MEETINGS & 14TH ANNUAL GENERAL MEETING HELD ON 29.9.2014

TOTAL BOARD MEETINGS HELDIN 2014-15: 07

Name and Designation No. of Board Meetings

Attended out of 7 Meetings

Attended the last AGM held on

29.9.2014

Directorships in other

Companies

Remarks

Shri Anupam Shrivastava CMD [Wef 15.1.2015] Director (CM) [Wef 1.5.2013 to 15.1.2015]

7 Present NIL Appointed as CMD and joined wef 15.1.15.

Shri R.K. Upadhyay, CMD[Upto 30.6.2014]

1 N.A. – Retired on A/N of 30.6.14

Shri A.N. Rai, CMD / Director (Ent.) & (HR) & (CM) [Upto 31.7.2015]

7 Present – Relinquished the addl charge of CMD wef 15.1.2015. Retired from service on 31.7.2015.

Shri N.K. Gupta Director (CFA) [Wef 1.6.2012]

6 Present NIL Assumed charge on 1.6.2012.

Smt. Sujata Ray, Director (HRD) [Wef 8.7.2015]

NA NA NIL Assumed charge on 8.7.2015

Shri N.K. Mehta Director (Enterprise) [Wef 1.8.2015]


Shri R.K. Mittal Director (CM) [Wef 4.11.2015]


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Name and Designation No. of Board Meetings

Attended out of 7 Meetings

Attended the last AGM held on

29.9.2014

Directorships in other

Companies

Remarks

Shri Shahbaz Ali Govt. Director [Wef 14.2.2012 to 26.8.2014]

– N.A. 1 ) Appointed in place of Shri Tangirala wef 14.2.2012

Ms. Rita A. Teaotia Govt. Director [Wef 4.9.2012 to 29.7.2015]

6 – – Appointed in place of Shri S.R. Rao wef 4.9.2012

Smt. Aruna Sundararajan, Govt. Director [Wef 29.7.2015 to 21.10.2015]

NA NA 1)) Appointed in place of Smt.Rita A Teaotia wef 29.7.2015

Shri N. Sivasailam, Govt. Director [Wef 21.10.2015]

NA NA NIL Appointed in place of Smt. A. Sundararajan wef 21.10.2015.

Smt. Darshana Momaya Dabral [Wef 29.9.2014 to 18.9.2015]

4 Present NIL Appointed wef 29.9.14

Smt. Padma Iyer Kaul [Wef 18.9.2015] NA NA NIL Appointed in place of Smt. D.M. Dabral wef 18.9.2015]

Shri Ajai Vikram Singh Director [Wef 17.7.2012]

7 Present ^^ 2& Appointed wef 17.7.2012

Prof. N. Balakrishnan Director [Wef 17.7.2012]

6 – 3&& Appointed wef 17.7.2012.

Note:- The disclosure of the Directorships are based on the disclosures received from the Directors.

) Government Nominee Director in TCIL, a wholly owned Govt. Company under the aegis of Moc& IT, DoT

)) CMD, Bharat Broadband Networks Limited, a wholly owned Govt. Company under the aegis of Moc& IT, DoT

& Independent Director in Pipavav Defence and Offshore Engineering Company Limited and Overseas Infrastructure Alliance(India) Private Limited.

&& Director in (i) Data Security Council of India (DSCI) – not for profit company registered under Section 8 of Companies Act 2013; (ii) Central Bank of India; and (iii) C–DOT Alcatel-Lucent Research Centre Pvt Ltd., under Chapter 1 Section 2(68) of new Companies Act 2013 as per disclosure for 14-15 and Director in Data Security Council of India(DSCI) and IFCI as per Disclosure for 15-16.

^^ The Audit Committee of the Board, in its 55th meeting held on 29.9.2014 elected Shri Ajai Vikram Singh as Chairman for the meeting. He attended the 14th AGM held 29.9.2014 as Chairman of the Audit Committee of the Board.


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DETAILS OF NUMBER OF COMMITTEE MEMBERSHIPS AND CHAIRMANSHIPS OF DIRECTORS

Name and Designation Details of Memberships of Board Committee Details of Chairmanships of Board Committee

Name of Company

Name of Committee Name of Company Name of Committee

Shri Anupam Shrivastava CMD [Wef 15.1.2015] Director (CM) [Upto15.1.2015] & (Fin) [Wef 1.5.2013]

BSNL Audit Committee of the Board – –

BSNL Nomination and Remuneration Committee of the Board

– –

Shri R.K. Upadhyay, CMD [Upto 30.6.2014]

BSNL Finance Committee of the Board

– –

BSNL Remuneration Committee of the Board

– –

BSNL Committee on Appellate & Review matters under BSNL CDA Rules 2006

– –

Shri A.N. Rai, CMD / Director (Ent.) & (HR)[Upto 31.7.2015]


– –

BSNL Committee on Appellate & Review matters under BSNL CDA Rules 2006

– –

BSNL Corporate Social Responsibility Committee of the Board

– –

Smt. Sujata Ray Director (HRD) [Wef 8.7.2015]


– –

BSNL Audit Committee of the Board

Shri N.K. Gupta Director (CFA) [Wef 1.6.2012]


NIL NIL

Smt. Rita A. Teaotia Govt. Director [Upto29.7.2015]


– –

Smt. Aruna Sundararajan Govt. Director [Wef29.7.2015 to 21.10.2015]

– – BBNL Executive Committee

– – BSNL Audit Committee

– – BSNL Nom. &Rem.Committee of the Board

Shri N. Sivasailam, Govt. Director [Wef 21.10.2015]

BSNL Audit Committee

BSNL Nomination and Remuneration Committee

Shri Shahbaz Ali, Govt. Director [Upto 26.8.14]

TCIL Remuneration Committee – –

TCIL CSR Committee

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Name of Company


BSNL Audit Committee – –

BSNL Committee on Appellate & Review matters under BSNL CDA Rules 2006.

– –


– –

Smt. Darshana Momaya Dabral, Govt. Director [Wef 29.9.2014 to 18.9.2015]


NIL NIL


– –


BSNL CSR Committee of the Board

Smt. Padma Iyer Kaul Govt. Director [Wef 18.9.2015]


BSNL Nom. & Rem. Committee of the Board

– –


– –

BSNL CSR Committee of the Board – –

Shri Ajai Vikram Singh Director [Wef17.7.2012 to 16.7.2015]

Pipavav Defence and

Offshore Engineering

Company Ltd

Audit Committee;CSR Committee;Nomination & Remuneration Committee; andBusiness Development Committee.

BSNL Remuneration Committee

BSNL Audit Committee of the Board BSNL Nomination and Remuneration Committee of the Board


Prof. N. Balakrishnan Director [Wef 17.7.2012 to 16.7.2015]

Central Bank of India

Management Committee BSNL Audit Committee of the Board

upervisory Committee of the Board for monitoring of IT Projects in Banks

Central Bank of India

IT Strategy Committee


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Name of Company


Shareholders/investors Grievances Committee

Data Security Council of India(DSCI) not for profit Company under Sec 8 of the Companies Act 2013

Chairman

Internal Training Policy Advisory Committee

BSNL Remuneration Committee IFCI Executive Committee


IFCI E-Governance Committee

IFCI CSR Committee

Shri N.K.Mehta Dir(E)[Wef 1.8.2015]

– – – –

Shri R.K.Mittal Dir(CM) [Wef 4.11.2015]

– – – –

Note:- The disclosure of the Memberships/Chairmanships are based on the disclosures received from the Directors.

By virtue of holding the Additional Charges as were entrusted by the Govt. of India, M/o C & IT, D/o Telecom and further extended time to time, the Whole Time Directors were members of the Committees during relevant periods.

Pending appointment of Non official Part Time / Independent Directors, to comply with the provisions of the Act, Your Directors, in their 164th meeting held on 28.8.2015 re-constituted the Nomination and Remuneration Committee of the Board, comprising both the Government Directors and the CMD as Members and the Director (HRD) as Regular Invitee. Secretary of the Company acts as the Secretary of the Committee. The Committee, in its 6th meeting held on 18.9.2015 elected Smt. Aruna Sundarajan as Chairman of the Committee. Shri N. Sivasailam AS (T) in DoT who has been appointed as Govt. Director in place of Smt. Aruna Sundararajan wef 21.10.2015; and Smt. Padma Iyer Kaul DDG (LFA) in DoT who has been appointed as Govt. Director wef 18.9.2015 in place of Smt. Darshana Momaya Dabral are Members of the Committee.

Pursuant to the provisions contained in the Section 177 and other applicable provisions if any, of the Companies Act 2013 pending appointment of Non official Part Time (Independent) Directors, Your Directors, in their 164th meeting held on 28.8.2015 re-constituted the Audit Committee of the Board comprising comprising both the Government Directors and Director (HRD) as Members. Secretary of the Company acts as the Secretary of the Committee. Director (Finance) is regular

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invitee. The Committee, in its 59th meeting held on 18.9.2015 elected Smt. Aruna Sundararajan Govt. Director as Chairman of the Committee. Smt. Padma Iyer Kaul, who has been appointed as Govt. Director wef 18.9.2015 in place of Smt. Darshana Momaya Dabral, is Member of the Committee. Shri N. Sivasailam AS (T) in DoT who has been appointed as Govt. Director in place of Smt. Aruna Sundararajan wef 21.10.2015; and Smt. Padma Iyer Kaul DDG (LFA) in DoT who has been appointed as Govt. Director wef 18.9.2015 in place of Smt. Darshana Momaya Dabral are Members of the Committee.

Consequent upon the appointment of Smt. Padma Iyer Kaul DDG [LFA] in DoT as Govt. Director in place of Smt. Darshana Momaya Dabralwef 18.9.2015, the Board of Directors have re-constituted the CSR Committee of the Board comprising (i) Smt. Padma Iyer Kaul Govt. Director (ii) Smt. Sujata Ray Director (HRD) and (iii) Shri N.K. Gupta, Director (CFA). Secretary of the Company as the Secretary of the Committee.

BOARD COMMITTEES

The Company has the following Committees of the Board.

VOLUNTARY COMMITTEES

The Management Committee of the Board (MC of the Board)

The Board of Directors of the Company, in their 118th meeting held on Thursday, the 26th day of February 2009, in super cession of all the extant instructions on the aforesaid subject, have, voluntarily constituted a Standing Committee of the Board, named, “Management Committee of the Board [MC of the Board], comprising the Chairman and Managing Director [CMD] as the Chairman, and the Functional Directors as Members, with the Company Secretary as the Secretary of the Committee.

Further, the Board of Directors of the Company have also delegated to the aforesaid standing committee the powers for the management and administration of the business of the Company. The powers of the Board, in respect of the matters for which approval of the Board of Directors is statutorily required; or , the powers, which cannot be delegated; or, the matters, where, prior approval of the Government is necessary, have not been delegated.

Committee on Appellate & Review matters under BSNL Conduct, Discipline and Appeal Rules 2006

To consider and decide all the appeal / review cases for and on behalf of the Board of Directors, wherever the Board is indicated as Appellate and Reviewing Authority in the CDA Rules 2006 of the Company, the Board of Directors, in their 135th meeting held on 26.8.2011, constituted a Standing Committee of the Board known as Committee on Appellate & Review matters under BSNL Conduct, Discipline and Appeal Rules 2006, comprising of Director (HR) and One Government Director and the Company Secretary as Secretary of the Committee. The minutes of each of the meetings of the Committee shall be submitted to the Board in the immediately following meeting of the Board.

At present, the committee comprise Smt. Padma Iyer Kaul [Wef 18.9.2015] [Smt. Darshana Momaya Dabral Government Director upto 18.9.2015] and Smt. Sujata Ray Director (HRD).


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STATUTORY COMMITTEES

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company, being wholly owned Government Company has been taking up various CSR initiatives even prior to coming into force of the provisions of the Act of 2013. The Company had its own CSR Policy which is now being aligned with the CSR Policy requirements under the Companies Act 2013.Owing to losses being incurred by the company since the year 2009-10, no specific amount could be earmarked for CSR activities. However, the Company, being a wholly owned Government Company continued its engagement with social obligations to bridge the digital divide, apart from employee and their family welfare programmes.

However, pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder, Your Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee (CSR Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N.Rai Director (Enterprise) and Shri N.K. Gupta Director (CFA) as Members and the Secretary of the Company as the Secretary of the Committee. The Terms of Reference of the CSR Committee are as per the provisions of the Section 135 and other applicable provisions of the Companies Act 2013 and Rules made thereunder.

Consequent upon the retirement of Shri A.N. Rai Director(E) on superannuation wef A/N 31.7.2015 and the completion of the three years tenure of appointment of Shri Ajai Vikram Singh Director on 16.7.2015, to comply with the provisions of the Act, Your Directors, in their 164th meeting held on 28.8.2015, re-constituted the Committee comprising (i) Smt Darshana Momaya Dabral, Govt. Director (ii) Smt. Sujata Ray Director (HRD) and (iii) Shri N.K. Gupta, Director (CFA).

Consequent upon the appointment of Smt. Padma Iyer Kaul DDG [LFA] in DoT as Govt. Director in place of Smt. Darshana Momaya Dabral wef 18.9.2015, the Board of Directors have re-constituted the Committee comprising (i) Smt. Padma Iyer Kaul Govt. Director (ii) Smt. Sujata Ray Director (HRD) and (iii) Shri N.K.Gupta, Director (CFA).Secretary of the Company as the Secretary of the Committee.

Quorum for the meetings and the Terms of Reference of the Committee are as prescribed under Section 178 and other applicable provisions of the Companies Act 2013 & Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

NOMINATION AND REMUNERATION COMMITTEE

To comply with the provisions contained Section 178 of the Companies Act 2013, the Board of Directors, in their 162nd meeting held on Tuesday, the 7th day of April 2015 constituted the Nomination and Remuneration Committee of the Board by re-constituting the existing Remuneration Committee of the Board. The Committee comprise Shri Ajai Vikram Singh, Non official Part Time (Independent) Director - Chairman, Prof. N. Balakrishnan, Non official Part Time (Independent) Director, Member, Smt. Rita A. Teaotia, Government Nominee Director, Member and Smt. Darshana Momaya Dabral, Government Nominee Director, Member. Secretary of the Company acts as the Secretary of the Committee. Terms of Reference, Roles and Responsibilities of the Committee shall be as per the provisions of Section 178 and other applicable provisions of the Companies Act 2013, Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

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Being a wholly owned Government Company, the appointments, terms and conditions and remuneration of the Chairman and Managing Director and Whole Time Functional Directors are governed by the orders of the Govt. of India Department of Public Enterprises. Pursuant to the Govt. of India, Ministry of Corporate Affairs Notification No.1/2/2014-CL.V, dated 5.6.2015, provisions contained sub-sections (2)(3) and (4) of the Section 178 of the Act of 2013 are applicable to the Company with regard to appointment and remuneration of senior management and other employees.

Consequent upon the completion of the three years tenure of appointment of Shri Ajai Vikram Singh and Prof. N. Balakrishnan Directors on 16.7.2015, all the four slots of Non official Part Time (Independent) Directors have fallen vacant and the Committee was left with only one member Ms. Darshana Momaya Dabral. Administrative Ministry, viz., Ministry of Communications and IT, D/o Telecommunication has already been requested to expedite the appointment of Non official Part Time (Independent) Directors. Smt. Aruna Sundararajan has been appointed as Govt. Director in place of Mrs. RitaA. Teaotia wef 29.7.2015.

Pending appointment of Non official Part Time / Independent Directors, to comply with the provisions of the Act, Your Directors, in their 164th meeting held on 28.8.2015 re-constituted the Committee, comprising both the Government Directors and the CMD as Members and the Director (HRD) as Regular Invitee. Secretary of the Company acts as the Secretary of the Committee. Quorum for the meetings and the Terms of Reference of the Committee are as prescribed under Section 178 and other applicable provisions of the Companies Act 2013 & Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being. The Committee, in its 6th meeting held on 18.9.2015 elected Smt. Aruna Sundararajan Govt. Director as Chairman of the Committee.



AUDIT COMMITTEE OF THE BOARD

Pursuant to the provisions contained in Section 177 of the Companies Act 2013 and Rules thereunder, the Board of Directors of the Company, in their 159th meeting held on 9th December 2014 re-constituted the Audit Committee of the Board, with the following Members – Shri Ajai Vikram Singh, Non official Part Time (Independent) Director, Prof. N. Balakrishnan , Non official Part Time (Independent) Director, and Mrs. Darshana Momaya Dabral, Government Nominee Director. While the Director (Finance) shall be the regular invitee, Secretary of the Company acts as the Secretary of the Committee. The Committee, in its 57th meeting elected Prof. N. Balakrishnan as the Chairman of the Committee.

Consequent upon the completion of the three years tenure of appointment of Shri Ajai Vikram Singh and Prof. N. Balakrishnan Directors on 16.7.2015, the Committee was left with only member Ms. Darshana Momaya Dabral. Smt.Aruna Sundararajan has been appointed as Govt. Director in place of Mrs. Rita A. Teaotia wef 29.7.2015.

Pursuant to the provisions contained in the Section 177 and other applicable provisions if any, of


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the Companies Act 2013 pending appointment of Non official Part Time (Independent) Directors, Your Directors, in their 164th meeting held on 28.8.2015 re-constituted the Audit Committee of the Board comprising comprising both the Government Directors and Director (HRD) as Members.Secretary of the Company acts as the Secretary of the Committee. Director(Finance) is regular invitee. The Committee, in its 59th meeting held on 18.9.2015 elected Smt.Aruna Sundararajan Govt. Director, as Chairman of the Committee.



The Quorum for the meetings and the Terms of Reference of the Committee are as prescribed under Section 177 and other applicable provisions of the Companies Act 2013 & Rules thereunder and the Guidelines, Instructions, Exemption Notifications, Orders etc. if any, to be/being issued by the Government of India time to time and remain in force for the time being.

The Chairman of the Audit Committee was present in the last Annual General Meeting of the Company.

NUMBER OF MEETINGS HELD DURING 2014-15 AND ATTENDANCE NO. OF MEETINGS HELD: 05

Name and Designation No. of meetings attended

Remarks

Prof. N. Balakrishnan Director Chairman [Upto 16.7.2015]

4 Board, in its 143rd meeting held on 28.8.12 inducted him as Member. The Committee in its 46th meeting held on 7.12.12 elected him as Chairman.

The Committee re-constituted pursuant to Section 177 elected him as Chairman in 57th meeting.

Shri Shahbaz Ali, Govt. Director Member[Upto 26.8.14]

– –

Shri Anupam Shrivastava Director (CM) [Upto 8.12.2014]

4 Consequent upon re–constitution of the Committee on 9.12.2014 by the Board in pursuance of Section 177 of the Act of 2013, he Ceased to be Member of the Committee.

Shri Ajai Vikram Singh Director [Upto 16.7.2015]

5 He was elected as Chairman of the Meeting in the 55th meeting held on 29.9.2014.

Mrs. Darshana Momaya Dabral Govt. Director [Wef 9.12.2014 to 18.9.2015]

1 Inducted as Member by the Board in the Committee re-constituted pursuant to Section 177 on 9.12.2014.

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DISCLOSURES

DIRECTORS REMUNERATION

FUNCTIONAL DIRECTORS

BSNL being a Government Company, and in terms of Article No. 111 of the Articles of Association of the Company, the remuneration payable to the Directors is determined by the President of India.

The salary and other perks paid to the Key Managerial Personnel [a] Whole Time Functional Directors; [b] other than whole time directors during the year under review is as follows:-

Name Desgn. Salary incl. DA

Other Benefits & Perks

Contribution in CPF &

Other Funds

Total

Shri Anupam Shrivastava CMD [Wef 15.1.2015] Director (CM) [Upto 15.1.2015]

CMD 1862080 113150 209300 2184530

Shri R.K. Upadhyay [Upto 30.6.2014]

CMD 620262 35571 66759 722772

Shri A.N.Rai [Upto 31.7.2015] CMD/Dir (Ent.) (HR) (CM)

2343950 96519 253614 2694083

Shri N.K. Gupta [Wef 1.6.2013] Dir(CFA) 2197723 99984 243444 2541151

Shri H.C. Pant Co. Secy & Sr. GM (Legal)

1942662 280899 230817 2454378

TOTAL 8966677 626303 1003934 10596914

GOVERNMENT NOMINEE DIRECTORS

The Government Nominee Directors are not paid any remuneration.

NON–OFFICIAL PART–TIME DIRECTORS

Non-official Part-Time Directors are paid a sitting fee at the rate of Rs.10,000/- [Rupees Ten Thousand only] for attending each meeting of the Board or Committee thereof in addition to TA/DA to outstation Directors.

There were no other pecuniary relationships or transactions of the Non-official Part-Time Directors vis-à-vis the Company.

SHAREHOLDINGS BY THE DIRECTORS AND STOCK OPTIONS

Being a hundred percent Government Owned Company, the shares are held by the President of India through Ministry of Communications and IT, Department of Telecommunications. The Directors are not required to hold any qualification shares.

The company has not issued any stock options to its Directors/Employees.

MATERIAL CONTRACTS/RELATED PARTY TRANSACTIONS

The company has not entered into any material financial or commercial transactions with the Directors or the Management or their relatives or the companies and firms etc., in which they are either directly or through their relatives interested as Directors and/or Partners.


71

LIST OF PRESIDENTIAL DIRECTIVES ISSUED IN THE PAST THREE YEARS

S. No

Year of Issue

Subject Status of Implementation

1 2012-13 – –

2 2013-14 I) No.61-01/2012–SU, dated 10.6.2013. In partial modification of OM No. 61-01/2009 dated 27.2.2009, the benefit of merger of 50% DA effectively amounting to 78.2% as on 1.1.2007 for the purpose of fitment in respect of the Board level and below Board level executives and Non-unionised supervisors and non-executives of BSNL was allowed from the date of issue of the order. No arrears will be paid and the revised fitment on the basis of DPE OM dated 2.4.2009 will be paid with prospective effect only.

Implemented. Vide Order N o . 1 – 1 6 / 2 0 1 0 - P A T (BSNL) dated 10.6.2013, orders issued for allowing benefit of merger of 50% DA effectively amounting to 78.2% as on 1.1.2007, with prospective date i.e. date of issue of Presidential Directive.

3 2014–15 NIL NIL

ANNUAL GENERAL MEETINGS

Venue, Date and Time, where the previous three Annual General Meetings of the Company were held, including the details of the 15th Annual General Meeting are as follows:–

Meeting and Date

Time Venue Details of Special Resolutions

passed in the AGMs

12th AGM, 28.9.2012

12.45 P.M., Regd & Corp. Office, Board Room, 3rd Floor Bharat Sanchar Bhawan, H.C.Mathur Lane, Janpath, New Delhi–110 001.

–

13th AGM, 30.09.2013

05.00 P.M. Regd & Corp. office, Board Room, 3rd floor, Bharat Sanchar Bhawan, H.C.Mathur Lane, Janpath, New Delhi–110 001.

–

14th AGM, 29.09.2014

12.30 P.M., Regd & Corp. office, Board Room, 3rd floor, Bharat Sanchar Bhawan, H.C.Mathur Lane, Janpath, New Delhi–110 001.

–

15th, AGM, 17.11.2015

12.30 P.M. Regd & Corp. office, Board Room, 3rd floor, Bharat Sanchar Bhawan, H.C.Mathur Lane, Janpath, New Delhi–110 001.

–

MEANS OF COMMUNICATIONS

Annual financial statements, New releases, etc., are put in the company’s website as well as in the intranet portal of the company.

Website:– The company’s website www.bsnl.co.in is a user friendly site, containing all the latest developments.

72

Annual Report

Annual Report of the Company containing inter–alia, Audited Accounts, Directors Report, Auditors Report and replies of management thereto, Comments and Review of the C & AG of India are circulated amongst all the Members and others entitled thereto. As enunciated in the Companies Act and also laid before the Houses of the Parliament.

TRAINING OF DIRECTORS

The Company is managed by the Sectoral Experts/Specialists having domain knowledge and expertise of the core sector, which is “Telecom Services Management”. Being a Telecom Service Provider, BSNL is also Member of various National and International level Telecom / Technology related forums.

In order to update the knowledge and skill of BSNL officers and to have first hand information on latest developments taking place in telecommunications, 40 officers including Board level officers were deputed abroad for various events.

Non-official Part-Time Directors, being men of public eminence and proven expertise, bring their own value addition to the management of the company. Still, they are also nominated for various national level seminars, workshops, training programmes as per their convenience.

VIGIL MECHANISM

In compliance of CVC / DPE Guidelines, BSNL already has a full fledged Vigilance Mechanism, headed by an independent CVO.

Pursuant to the mandate of the DPE’s MoU Task Force mandating for establishing a Whistle Blower mechanism; and, in compliance with the provisions of the Companies Act 2013, the Company has also put in place in place a Whistle Blower Policy. Same has been circulated widely and posted in the intranet portal of the Company and is also being posted in the corporate website of the company. Under this mechanism, protected disclosure can be made by the whistle blower to the Chairman of the Audit Committee.

Particulars of the Vigilance mechanism under CVC compliance are posted in the company’s website at www.bsnl.co.in at ‘contact us’. Further, BSNL has also entered into an agreement with the Transparency International to ensure transparency in tendering process. Further, apart from the Audit by the C&AG of India, Statutory and Branch Audits, Amenability to the Writ Jurisdiction of the Court, GoI’s Rules and Regulations, BSNL has its own Conduct, Disciplinary and Appeal Rules covering all the classes of employees including the Functional Directors. The Members of the Board and Sr. Management Personnel are also governed by the Code of Conduct laid down in accordance with the CG Norms.

RISK MANAGEMENT

BSNL, by virtue of being the successor of erstwhile Central Government Departments of the Telecom Services (DTO) and Telecom Operations (DTO) already had a codified set up with inbuilt mechanism to foresee the potential risks and methods to arrest, control, ignore and/or respond to the risks. However, as mandated by the Department of Public Enterprises through Guidelines on Corporate Governance Norms for the Un-Listed CPSEs – further revised and made mandatory for the CPSEs vide No.18(8)/2005-GM, dated the 14th May 2010 –Company has laid down a Enterprise Risk Management Policy.


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For managing the affairs of the Company, the Board of Directors of the Company has delegated its powers to the Management Committee of the Board (MCB), the CMD and the Functional Directors and Below Board Functionaries, viz., the Executive Directors/CGMs/PGMs/GMs/TDMs/DGMs etc., as the case be. Considering the size and geographical spread of the organization vis-à-vis the delegation of powers made to the business heads and unit heads – who carry out the task of undertaking the risk management as a part of the normal business practice by integrating and aligning the same with corporate and operational objectives –the Business Heads in the Corporate Office; CGMs/PGMs/GMs and Other Unit Heads of the field units were designated as the Risk Management Administrators [RMAs].

With a view to continuously train and develop the employees in the risk management techniques segment, Risk Management Training Courses specially designed for the Senior Management Personnel who function as the Risk Management Administrators are being organized at the Training Centres of the Company.

Establishing Risk Monitoring Centresbeing one of the Dynamic Parameters, for “Overseeing the mechanism of Enterprise Risk Management Mechanism”, inter-alia, the periodical review of risk assessment and minimization procedures, submission of recommendations / reports to the Executive Management and the Audit Committee of the Board, a ERM Committee comprising of all the Executive Directors has been constituted with Executive Director(Corporate Affairs) as Convenor.

In addition to already existing Risk Management Policy which mandates the Risk Management Administrators for ensuring efficient litigation management and compliance of all applicable provisions of the laws, as directed by the Administrative Ministry, detailed instructions have been issued to all concerned to ensure and comply with the provisions of the NLP-2010. Accordingly, the Unit Heads of the Corporate Office and GM/DGM in-charge of Administration in the field units are the Nodal Officers for respective unit for overall policy implementation, who will be assisted by the “Officer-in-charge of litigation”, who shall be responsible for litigation administration and management of respective unit.

Pursuant to the provisions contained in Section 204 of the Companies Act 2013 and Rules thereunder, your Board appointed M/s VAP & Associates, Company Secretaries [CoP No.13901] the Secretarial Auditor of the Company for conducting the Secretarial Audit for the year 2014-15.

The Secretarial Audit Report in Form MR-3 forms part of this Report.

CERTIFICATE OF COMPLIANCE OF CORPORATE GOVERNANCE NORMS

Your Company has obtained certificate from the Secretarial Auditor M/s VAP & Associates Company Secretaries, regarding compliance of conditions of corporate governance as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises 2007 and revised further vide No. 18(8)/2005–GM, dated 14.5.2010 issued by the Department of Public Enterprises, which forms part of this Report.

FEE TO STATUTORY AUDITORS

Remuneration paid to the Statutory Auditors during the year 2014-15was Rs. 3.46 crore (exclusive of service tax and cess wherever applicable). It includes Statutory Audit Fee, Certification Charges, Reimbursement of Expenses and Other services.

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THE CERTIFICATE ON COMPLIANCE OF CORPORATE GOVERNANCE NORMS

To

The Members,M/s Bharat Sanchar Nigam Limited,New Delhi

We have examined the relevant books, records and statements in connection with compliance of the conditions of Corporate Governance by M/s Bharat Sanchar Nigam Limited for the financial year ended 31st March, 2015, as stipulated in the Guidelines on Corporate Governance Norms for the Central Public Sector Enterprises 2007, issued by Government of India, Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises(DPE), and revised further vide Office Memorandum No. 18(8)/2005-GM, dated May 14, 2010.

The compliance of the conditions of the Corporate Governance norms is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of corporate governance as laid down in the above said guidelines. Our Certification is neither an audit nor an expression of the opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has substantially complied with the conditions of Corporate Governance Norms as stipulated in the above mentioned DPE Guidelines.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency of the effectiveness with which the management has conducted the affairs of the Company.

For VAP & Associates,Company Secretaries

Sd/-Parul Jain

ProprietorCP No. 13901

M.No.22726Place: Ghaziabad

Date: 26.08.2015

VAP & ASSOCIATESCompany Secretaries

387, First Floor, Shakti Khand-3Indirapuram, Ghaziabad-201010, U.P.

Tel. 91-0120-4272409M:+91-9910091070, 9711670085

E-mail: [email protected]


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SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2015

[Pursuant to Section 204(1) of the Companies Act 2013 and rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 ]

To

The Members,Bharat Sanchar Nigam Limited,Bharat Sanchar Bhawan,Harish Chandra Mathur Lane,Janpath, New Delhi-110001.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adhereance to good corporate practices by Bharat Sanchar Nigam 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.

We report that;

a) Maintenance of Secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these records based on our audit.

b) 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 the correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion. We have not verified the correctness and appropriateness of the financial records and Books of the Company.

c) Where ever required, we have obtained the Management representation about the compliances of laws, rules and regulations and happening of events etc. The compliance of the provisions of the Corporate and other applicable laws, rules, regulations, standards is the responsibility of management.

Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, 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 ended on 31st

March 2015 (‘Audit Period’)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 report made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended 31st March 2015 according to the provisions



Tel. 91-0120-4272409M:+91-9910091070, 9711670085


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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;

(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 thereunder to the extent of Foreign Direct Investment. Overseas Direct Investment and External Commercial Borrowings (Not Applicable to the Company during the Audit Period as there were no Foreign Direct Investments, Overseas Direct Investments in the Company and no External Commercial Borrowings were made by the Company);

(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 (Not applicable to the Company during the Audit Period)

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992(Not applicable to the Company during the Audit Period)

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (Not applicable to the Company during the Audit Period)

(d) The Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 and The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, notified on 28th

October 2014; (Not applicable to the Company during the Audit Period) (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)

Regulations, 2008 (Not applicable to the Company during the Audit Period) (f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer

Agents) Regulations, 1993 regarding the Companies Act dealing with client; (Not applicable to the Company during the Audit Period)

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Not applicable to the Company during the Audit Period)

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998(Not applicable to the Company during the Audit Period)

(vi) The other laws as may be applicable specifically to the Company are:- Having regard to the compliance system prevailing in the Company, on the basis of presentation/certificates made by the heads of Departments, and the compliance certificates made by the heads of the Departments submitted to the Secretariat and Legal Department of the Company, we report that the Company has substantially complied with the provisions of those Acts that are applicable to company including Department of Public Enterprises (DPE) Guidelines on Corporate Governance. The Indian Telegraph Act, 1885, The Indian Wireless Telegraphy Act 1933, The Telecom Regulatory Authority of India Act 1997, The Information Technology Act 2000, other laws related to maintenance of Factories, Laws related to Human resources including Employees Provident Fund Act, Employees State Insurance Act.



Tel. 91-0120-4272409M:+91-9910091070, 9711670085



77

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by the Institute of Company Secretaries of India (not applicable to the Company during the audit period).

(j) (ii) Listing Agreements entered into by the Company with Stock Exchange(s) (not applicable to the Company during the audit period).

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards etc. mentioned above, except the appointment of Chief Financial Officer of the Company, as the Company is having position of Director(Finance), a Whole Time Director on the Board of the Company. The Company, being a Government of India owned enterprise, all the Director level appointments are made by the Government of India. Appointment against position of Director(Finance) and Director(HR) is awaited from Government of India.

We further report that

The Board of Directors of the Company is duly constituted with proper balance of Excutive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the 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 generally 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 decision at Board meetings and Committee Meetings are carried out by majority as reorded in the minutes of the meetings of the Board of Directors or Committee of the Board, as the case may be.

We further report that based on the information received and records maintained 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.

For VAP & Associates,Company Secretaries

Sd/-Parul Jain

ProprietorCP No. 13901

M.No.22726Place: Ghaziabad

Date: 01.07.2015



Tel. 91-0120-4272409M:+91-9910091070, 9711670085


78

Note As at 31st March 2015

As at 31st March 2014

EQUITY AND LIABILITIES Shareholder’s funds Share capital 3 1,250,000 1,250,000 Reserves and surplus 4 3,506,443 4,470,295 Deferred government grant 5 28,497 33,037

4,784,940 5,753,332

Non-current liabilities Long-term borrowings 6 5,619 72,000 Other long-term liabilities 7 344,477 330,074 Long-term provisions 8 28,438 85,532

378,534 487,606 Current liabilities Short-term borrowings 9 632,871 373,853 Trade payables 10 828,914 870,657 Other current liabilities 11 734,591 682,363 Short term provisions 12 63,980 67,459

2,260,356 1,994,332 Total 7,423,830 8,235,270 ASSETSNon-current assets Fixed assets 13 – Tangible assets 3,522,316 4,144,428 – Intangible assets 863,184 917,677 – Capital work-in-progress 327,914 386,917 – Intangible assets under development - 923

4,713,414 5,449,945 Non-current investments 14 20,000 20,000 Deferred tax assets (net) 15 84,706 23,773 Long-term loans and advances 16 843,152 532,684

5,661,272 6,026,402

Current assets Inventories 17 369,688 354,728 Trade receivables 18 232,660 276,258 Cash and bank balances 19 122,477 93,195 Short-term loans and advances 20 69,135 76,344 Other current assets 21 911,286 1,321,806

1,705,246 2,122,331 Intra/inter circle remittances 33 57,312 86,537 Total 7,423,830 8,235,270 Notes 1 to 49 form an integral part of the financial statements.

This is the balance sheet referred to in our report of even date

“for Walker Chandiok & Co LLP For and on behalf of Bharat Sanchar Nigam Limited (formerly Walker, Chandiok & Co)”Chartered Accountants Sd/- Anupam Shrivastava Chairman and Managing Director

Sd/- Sd/-per Anamitra Das Sujata RayPartner Director (HR)

Sd/- M.N.Punde General Manager (Corporate Accounts)

Sd/-Place : New Delhi H.C.Pant Date : 18 September 2015 Company Secretary and Sr. General Manager (Legal)

BHARAT SANCHAR NIGAM LIMITEDBalance sheet(All amounts in ` lacs, unless otherwise stated)


79

Note For the year ended 31st March 2015

For the year ended 31st March 2014

REVENUE

Revenue from operations 22 2,724,223 2,615,326

Other income 23 140,297 184,309

Total revenue 2,864,520 2,799,635

EXPENSES

Employee benefits expense 24 1,496,350 1,543,584

Finance costs 25 50,189 21,799

Depreciation and amortisation expense 13 & 43 881,680 602,317

Other expenses

– Administrative, operating and other expenses 26 1,083,959 1,100,930

– License and spectrum fee 29 217,032 224,330

Total expenses 3,729,210 3,492,960

Loss before prior period items and tax (864,690) (693,325)

Prior period items (net) 27 (19,652) (19,094)

Loss before tax (884,342) (712,419)

Tax benefit :

– Deferred tax benefit 15 60,933 10,443

Loss for the year (823,409) (701,976)

Earnings per equity share

Basic and diluted (nominal value of shares ` 10) 34 (16.47) (14.04)

Notes 1 to 49 form an integral part of the financial statements.

This is the statement of profit and loss referred to in our report of even date.

“for Walker Chandiok & Co LLP For and on behalf of Bharat Sanchar Nigam Limited

(formerly Walker, Chandiok & Co)”Chartered Accountants

Sd/- Anupam Shrivastava Chairman and Managing Director



Sd/- H.C.Pant Company Secretary and Sr. General Manager (Legal) Place : New DelhiDate : 18 September 2015

BHARAT SANCHAR NIGAM LIMITED Statement of profit and loss(All amounts in ` lacs, unless otherwise stated )

80

Particulars For the year ended 31st March 2015


A. Cash flow from operating activities

Loss before tax (884,342) (712,419)

Adjustments for :

Depreciation and amortisation-Current year 881,680 602,317

Depreciation and amortisation-Prior period 6,859 9,063

Finance costs 50,189 21,799

Wealth tax 78 84

Interest income (7,413) (6,888)

Profit on sale of fixed assets (net) (3,234) (3,817)

Capitalisation of overheads (37,020) (43,421)

Write off and losses other than bad debts 30,046 22,534

Bad-debt provision other than services 735 832

Write off of unrecovered service tax 3,774 1,286

Bad-debt written off 22,941 25,684

Provision for doubtful debts and disputed bills 26,966 53,953

Excess provision written back (67,692) (91,985)

Write back of long-term borrowings (72,000) -

Adjustment of grant in aid (4,540) (4,596)

Operating profit/loss before working capital changes (52,973) (125,574)

Adjustment for :

(Increase)/ decrease in inventories (19,735) 18,951

Decrease/(increase) in trade receivables 10,450 (86,517)

Decrease in other receivables (current and non-current) 137,405 127,296

Decrease/(increase) in other payables (current and non-current)

51,508 (45,322)

Decrease/(increase) in provisions (60,573) 50,311

Decrease in remittances 29,225 15,921

Cash generated from operating activities 95,307 (44,934)

Wealth tax paid (82) (85)

Direct tax (paid)/refunded (35,202) 149,601

Net cash generated from operating activities 60,023 104,582

B. Cash flow from investing activities

Purchase of fixed assets (410,660) (479,357)

Proceeds from sale of fixed assets 158,243 248,789

Interest received 7,429 7,058

BHARAT SANCHAR NIGAM LIMITEDCash flow statement for the year ended 31 March 2015(All amounts in ` lacs, unless otherwise stated )


81

Proceeds from/(investment in) earmarked deposits with bank

123 (750)

Net cash used in investing activities (244,865) (224,260)

C. Cash flow from financing activities

Proceeds from term loan 5,619 –

Increase in short term borrowing (net) 259,018 117,739

Interest paid (50,391) (21,741)

Net cash generated from financing activities 214,246 95,998

Net increase/(decrease) in cash and cash equivalents (A+B+C)

29,405 (23,680)

Cash and cash equivalents at the beginning of the year 92,073 115,753

Cash and cash equivalents at the end of the year 121,478 92,073

Components of cash and cash equivalents

Balance with bank 109,514 85,256

Cheques on hand 8,266 4,473

Cash on hand 3,698 2,344

Total cash and cash equivalents (note 19) 121,478 92,073

Notes:

a) In the absence of adequate data regarding assets appearing in the deletions/adjustments column of note no. 13 of fixed assets, all deletions (except amount transferred as decommissioned assets) have been assumed to be cash sales.

b) In the absence of adequate details regarding unreconciled inter circle remittances with the subsidiary records, all the inter circle remittance have been treated as part of working capital changes.

c) The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard -3 on ‘Cash Flow Statement’ specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended).

d) Figures in bracket show outflows.

Notes 1 to 49 form an integral part of the financial statements.

This is the cash flow statement referred to in our report of even date.

“for Walker Chandiok & Co LLP For and on behalf of Bharat Sanchar Nigam Limited (formerly Walker, Chandiok & Co)”Chartered Accountants Sd/- Anupam Shrivastava Chairman and Managing Director



Sd/- H.C.Pant Place : New Delhi Company Secretary and Sr. General Manager (Legal)

Date : 18th September 2015

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1. CORPORATE INFORMATION

Bharat Sanchar Nigam Limited(the “Company” or “BSNL”) is a Public Sector Company fully owned by the Government of India and was formed on 15th September 2000 in pursuance of Telecom Policy 1999, to take over the ongoing business of the Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) from 1st October 2000. The Company has been incorporated under the erstwhile Companies Act, 1956 with its registered corporate office in New Delhi.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION

The financial statements have been prepared to comply with the Accounting Standards specified under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 (as amended). The financial statements have been prepared on a going concern basis under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the Company.

2.2 USE OF ESTIMATES

The preparation of financial statements in conformity with the principles generally accepted in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised in the current and future periods.

2.3 REVENUE RECOGNITION

Income from services is accounted for on accrual basis and in conformity with the notified Accounting Standard- 9 on ‘Revenue recognition’. Accordingly,

a) Revenue for all services is recognised when earned and are realisable at the time of billing. Un-billed revenues from the billing date to the end of the year are recorded as accrued revenue during the period in which the services are provided. Provisions are made for debts outstanding for more than two years and for debts less than two years which are considered doubtful (based on management decision), to the extent considered necessary by the management.

b) Installation charges received from subscribers at the time of new telephone connections are recognised as income in the first year of the billing.

c) In terms of the arrangement between Department of Telecommunications (“DoT”) and the Company, the charges for telecommunication services and other infrastructural services provided by BSNL to DoT are neither billed nor accounted for.

d) Sale proceeds of scrap arising from maintenance and project works are taken into miscellaneous income in the year of sale.

e) Income from Subscriber Identity Modules (SIMs) recharge coupons of mobile, prepaid

Summary of significant accounting policies and other explanatory information for the year ended 31st March 2015(All amounts in ` lacs, unless otherwise stated)


83


calling cards, and prepaid internet connection cards are treated as income of the year in which the payment is received since the extent of use of these cards within the financial year cannot be ascertained.

f) Wherever there is uncertainty in realisation of income, such as liquidated damages, claims on Government departments and local authorities etc., these are recognised on realisation basis.

g) The claims receivable on account of provision of infrastructure, operation and maintenance of Village Public Telephones (VPTs) and Rural Household Connections (RDELs) etc. and operational sustainability of rural wire line network from Universal Service Obligation (USO) fund are accounted for as other operating income.

h) The interest on surplus fund which are placed generally in fixed deposits with banks is recognised on accrual basis.

i) Other income by way of interest on loans to employees, security deposit with Government departments and local authorities, being not material, are accounted for on collection basis.

2.4 FIXED ASSETS

2.4.1 TANGIBLE ASSETS a) Fixed assets are carried at cost less depreciation. Cost includes directly related

establishment and other expenses including employee remuneration and benefits, directly identifiable to the construction or creation of the assets.

b) Expenditure on replacement of assets, equipments, instruments and rehabilitation works is capitalised if, in the opinion of the management, it results in enhancement of revenue generating capacity.

c) Assets are capitalised to the extent completion certificates have been obtained, wherever applicable.

d) The cost of stores and materials at the time of issue to a project is debited to capital work in progress (CWIP).

e) Apparatus and plants principally consisting of telephone exchanges, transmission equipments and air conditioning plants etc. are capitalised as and when an exchange is commissioned and put to use.

f) Cables are capitalised as and when ready for connection to the main system.

2.4.2 INTANGIBLE ASSETS a) Intangible assets are stated at cost of acquiring the same less accumulated amortisation.

Intangible assets are recognised if it is probable that the future economic benefits attributable to the assets will flow to the enterprise and cost of the asset can be measured reliably in accordance with the notified Accounting Standard – 26 on ‘Intangible Assets’.

84

2.5 DEPRECIATION AND AMORTISATION

2.5.1 TANGIBLE ASSETS a) Till the year ended 31st March 2014, depreciation on fixed assets was provided on

written down value method at rates which are either greater than or equal to the corresponding rates in Schedule XIV of the erstwhile Companies Act, 1956, based on management estimate of the useful life of the assets. Pursuant to the notification of Schedule II of the Companies Act, 2013, by the Ministry of Corporate Affairs effective 1st April 2014, the management has reassessed and changed, wherever necessary the useful lives to compute depreciation to conform to the requirements of the Companies Act, 2013 and have been provided on written down value method as per the rates prescribed under Schedule II of the Companies Act, 2013 except in respect of the assets mentioned in b) and c) below.

b) Assets costing up to ` 5,000 are depreciated fully in the year of purchase. Similarly, partition works and paintings costing up to ` 200,000 are depreciated fully in the year of construction/ acquisition.

c) The depreciation on machinery and tools used both for project and maintenance work is charged to statement of profit and loss instead of capitalization.

d) All telephone exchange buildings, administrative offices and captive consumption assembling premises/workshops are considered as building (other than factory building). Accordingly, depreciation is charged uniformly.

2.5.2 INTANGIBLE ASSETS a) Intangible assets such as entry license fee, onetime Spectrum fee for telecom service

operations are amortised over the license period (i.e. 20 years) and standalone computer software applications are amortised over the license period (subject to maximum of 10 years) on straight line method.

2.6 IMPAIRMENT OF ASSETS

Assets, which are impaired by disuse, damage or obsolescence, are segregated from the concerned assets category and shown as ‘Decommissioned Assets’ and provision is made for the loss, if any, due to the difference between their net carrying cost and the net realisable value.

2.7 INVESTMENTS

Long-term investments are carried at cost, after providing for any diminution in value, if such diminution is other than temporary.

2.8 INVENTORIES

Inventories are valued at cost or net realisable value, wherever available, as the case may be: – The cost is ascertained generally on weighted average method, – Obsolete and/ or non-moving inventories are valued at net realisable value.



85

2.9 FOREIGN CURRENCY TRANSACTIONS a) Transactions in foreign currency are recorded in the reporting currency, by applying to

the foreign currency amount the exchange rate prevailing on the date of the transaction i.e. on the date of payment or the billing as the case may be.

b) All monetary items are stated at the exchange rate prevailing as at reporting date and the difference taken to statement of profit and loss as exchange fluctuation loss or gain.

2.10 EMPLOYEES BENEFITS a) SHORT TERM EMPLOYEE BENEFITS: Short term employee benefits are recognized in the statement of profit and loss in the

period during which the services have been rendered. b) LONG TERM EMPLOYEE BENEFITS: DEFINED CONTRIBUTION PLAN:

i) Pension Contribution (including gratuity) The employees of DoT who have opted for absorption / absorbed in the Company

and the employees on deemed deputation from Government are eligible for pension, which is a defined contribution plan. The Company makes monthly contribution (including liability on account of gratuity) at the applicable rates as per Government Pension Rules, 1972 and Fundamental Rules and Supplementary Rules (FR & SR), to the Government who administers the same.

ii) Employees’ Provident Fund All directly recruited employees of the Company are entitled to receive benefits under

the provident fund, a defined contribution plan. Both employee and employer make monthly contribution to the plan at a predetermined rate of employee’s basic salary and dearness allowance. These contributions to provident fund are administered by the provident fund commissioner. Employer’s Contribution to provident fund is expensed in the Statement of Profit and Loss.

iii) Contribution for Leave Salary For employees on deemed deputation from Government, leave salary contribution is

paid by the Company to DoT for the deputation period in accordance with FR 115 (b) of FR&SR Part I. Consequently, the leave salary payable for those on deputation during the period of leave rests with the Government. Further, any leave encashment after quitting service is the responsibility of the Government.

DEFINED BENEFIT PLAN: i) Leave Encashment The liability on account of un-availed leave in respect of absorbed employees and

directly recruited employees at the year-end is provided for based on actuarial valuation.

ii) Gratuity The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering


86

all directly recruited eligible employees. In accordance with the payment of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on Balance Sheet date and are expensed in the Statement of Profit and Loss.

iii) Other benefits including post-employment medical care Medical reimbursements and other personal claim bills of existing / retired employees

are accounted for on actual basis in respect of bills received till the cut off period in the accounts at the concerned primary units as per the prescribed limits.

2.11 MANUFACTURING EXPENSES

Expenses incurred at factory units are allocated to the cost of the manufactured products and manufactured items are transferred to other units on standard rates determined by the Company.

2.12 PRIOR PERIOD ITEMS

Items of income or expenditure, exceeding ` 5 lacs, are considered for being treated as ‘prior period items’.

2.13 TAXES ON INCOME

Taxes on income for the current period are determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

In accordance with the notified Accounting Standard-22, Accounting for taxes on income, Deferred Tax is recognised on the timing differences between accounting income and the taxable income for the period and quantified using the tax rates in force or substantively enacted as on the reporting date.

Deferred Tax Assets are recognised and carried forward to the extent there is a virtual certainty that such deferred tax assets can be realised.

2.14 PROVISIONS

Provisions are recognised when the Company has a present obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.

2.15 CONTINGENT LIABILITIES

Liabilities, though contingent, are provided for if there are reasonable chances of maturing such liabilities as per management. Other contingent liabilities, barring frivolous claims, not acknowledged as debts, are disclosed by way of notes.

2.16 EARNINGS PER SHARE

Earnings Per Share (“EPS”) is calculated by dividing net profit or loss for the year attributable to shareholders by the weighted average of shares outstanding during the year. The number of shares used in computing Basic and Diluted EPS is the weighted average number of shares



87


outstanding during the year.

2.17 SEGMENT REPORTING

The primary segment consists of ‘Basic’, ‘Cellular’ and ‘Broad Band’ services provided. The manufacturing activities have not been treated as a separate segment since such activities are essentially carried on as support service to other segments mainly for captive consumption.

The following specific accounting policies have been followed for segment reporting: a) Segment revenue includes service income and other income directly identifiable with/

allocable to the segment. b) Income/expense, which relates to the Company, as a whole and not allocable

to individual business segment is included in “Un-allocable income/expense respectively”.

c) Expenses that are directly identifiable with/allocable to segments are considered for determining segment results.

d) Segment assets and liabilities include those directly identifiable with the respective segments. Un-allocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

2.18 EXTRAORDINARY ITEMS

Extra-ordinary items of income and expenditure, as covered by Accounting Standard-5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies are disclosed separately.

3. SHARE CAPITAL

As at 31st March 2015 As at 31st March 2014 Authorised10,000,000,000 (previous year: 10,000,000,000) equity shares of ` 10/- each

1,000,000 1,000,000

7,500,000,000 (previous year: 7,500,000,000) 9% non-cumulative preference shares of ` 10/- each

750,000 750,000

1,750,000 1,750,000 Issued, subscribed and fully paid up5,000,000,000 (previous year : 5,000,000,000) equity shares of ` 10/- each

500,000 500,000

7,500,000,000 (previous year: 7,500,000,000) 9% non-cumulative preference shares of ` 10/- each

750,000 750,000

1,250,000 1,250,000

88


a) There is no movement in equity shares and preference shares during the current year and previous year.

b) Details of shares held by shareholders having more than 5% shares in the Company*

As at 31st March 2015 As at 31st March 2014 Equity shares The Central Government of India (number of

shares) 4,999,998,400 4,999,998,400

Holding (%) 99.99 99.99 Preference shares The Central Government of India (number of

shares) 7,500,000,000 7,500,000,000

Holding (%) 100 100

* The above information is furnished as per the shareholder’s register as at the year end

Notes :

a) No shares have been issued for consideration other than cash or as bonus shares in the current reporting year and in the last five years immediately preceeding the current reporting year. Further there are no buy backs of any class of shares during the current reporting year and in the last five years immediately preceeding the current reporting year.

b) “Vote of members : Every member present on person and being a holder of equity share shall have one vote and every person either as a general proxy on behalf of a holder of equity share, shall have one vote or upon a poll, every member shall have one vote for every share held by him. On poll, the voting rights of holder of equity share shall be as specified in Section 47 of the Companies Act, 2013. The holder of preference share have a right to vote on resolution placed before the Company which directly affects the rights attached to their preference shares and subject to aforesaid, the holders of preference shares shall in respect of such capital be entitled to vote on every resolution placed before the Company at a meeting if the dividend due on such capital or any part of such dividend remains unpaid in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting and where the holders of any preference shares have a right to vote as aforesaid on any resolution every such member personally present shall have one vote and on a poll his voting right in respect of such preference share bears to the total paid up equity capital of the Company.”

c) Division of profit : The profit of the Company, subject to any special rights relating thereto created or authorised to be created by the articles subject to the provisions of the articles and also subject to the provisions of section 123 of the Companies Act, 2013 and, regarding transfer of the amount to reserve of the Company, shall be divisible among the members with the approval of the President of India, in the proportion of the amount of capital paid or credited as paid-up on the shares held by them respectively.


89


4. RESERVES AND SURPLUS



Capital reserves [refer note 28] Balance at the beginning of the year 4,119,870 4,023,839 Add: Waiver of loan from the Government of India

[refer note (a) below]– 98,318

Less: Assets identified and accounted for (433) (2,340) Add: Liabilities identified and accounted for (1) 53 Balance at the end of the year 4,119,436 4,119,870 General reserves Balance at the beginning of the year 430,084 430,084 Less: Depreciation charged directly to reserves as per

Companies Act, 2013 [refer note (b) below] (140,009) –

Balance at the end of the year 290,075 430,084 Contingency reserves [refer note (c) below] 200,000 200,000 Deficit in statement of profit and loss Balance at the beginning of the year (279,659) 422,317 Add: Loss for the year (823,409) (701,976) Balance at the end of the year (1,103,068) (279,659)

3,506,443 4,470,295

Notes :

(a) During the previous year, the loan from the Government of India amounting to ` 98,318 lacs was waived off vide letter no.1-43/2008-B, dated 11 April 2014 and the same was taken to the capital reserve created at the time of formation of the Company.

(b) Pursuant to notification of Schedule II of the Companies Act 2013, by the Ministry of Corporate Affairs effective 1st April 2014, the management has reassesed and changed, wherever necessary the useful life of the assets to compute depreciation to conform to the requirements of the Companies Act 2013. The written down value of the assets over residual value (5% of the original cost) where the remaining useful life is nil is adjusted with opening balance of general reserves.

(c) The contingency reserve was created in the financial year 2003-04 by appropriation of profits to meet various contingencies that may arise in future, based on the decision made by the board of directors.

90


5. DEFERRED GOVERNMENT GRANT

As at 31st March 2015 As at 31st March 2014 Grant in aid [refer note (a) below] 28,497 33,037

28,497 33,037

Note :

(a) Since 2005-06, an amount of ` 61,332 lacs (` 17,000 lacs for wireline and ` 44,332 lacs for wireless services) has been received from Department of Information Technology (DIT) for providing wireline and wireless connectivity to 41,500 common service centres. Since this grant cannot be linked to creation of any particular asset; as telecom network is a seamless entity, the same is being disclosed under ‘Grant in aid’ as a Deferred Grant in accordance with the notified Accounting Standard-12 on ‘Accounting for Government Grants’ and is being written back in the statement of profit and loss in a systematic and rational basis.

6. LONG-TERM BORROWINGS

As at 31st March 2015 As at 31s March 2014

Secured loans 5,619

Term loans from banks [refer note (a) below)

–

Unsecured loans

Government of India (non refundable and non interest bearing ) [refer note (b) below]

– 72,000

5,619 72,000

Notes :

(a) Long term loans secured against Pari-Passu charge on the movable fixed assets of Company, both present and future except excluded assets, comprises of the following:

(i) The term loan of ` 2,810 lacs from Union Bank of India carries an interest @ bank base rate (‘BBR’) plus 0.50% per annum with monthly rests, is repayable in quarterly installments which would commence after 2 years from the date of receipt of the first disbursement. The aforementioned term loans is secured by pari-passu charge on all fixed assets of the Company other than land and building (both present and future).

(ii) The term loan of ` 2,809 lacs from Syndicate Bank carries an interest @ BBR plus 0.25% per annum with monthly rests, is repayable in quarterly installments which would commence after 2 years from the date of receipt of the first disbursement. The aforementioned term loans is secured by pari-passu charge on all fixed assets of the Company other than land and building (both present and future).

(b) Non-refundable and non-interest bearing loan from Government of India


91


The Government of India had sanctioned a non-refundable and non-interest bearing advance of ` 72,000 lacs as budgetary support for the ongoing Village Panchayat Telephones (VPT) program of the Company vide letter no. 25-1/2001-SAT/pp(pt) dated 13 January 2003. The amount has already been expensed off in the previous year for the purpose for which it was sanctioned. During the current year, on receipt of the approval from DoT vide letter no. 1-43/ 2001-B (pt.)/569, the same has been transferred to other operating income.

7. OTHER LONG-TERM LIABILITIES

As at 31st March 2015 As at 31st March 2014

Deposits from customers and others

Security deposits 62,272 38,289

After connection deposits 282,205 291,785

344,477 330,074

8. LONG-TERM PROVISIONS


Provision for employee benefits

Post retirement benefit of serving employees [refer note 30.2] (net of planned investments)

28,438 85,532

28,438 85,532

9. SHORT TERM BORROWINGS


Loan repayable on demand

Unsecured loan

Loan from banks [refer note below] 632,871 373,853

632,871 373,853

Note:

Short term borrowings comprise of the following :

(i) ` 155,448 lacs (previous year ` 173,853 lacs) from Union Bank of India carries an interest @ BBR per annum with monthly rests.

(ii) ` 273,594 lacs (previous year nil) from State Bank of India carries an interest @ BBR plus 0.10% per annum with monthly rests

92


(iii) ` 183,829 lacs (previous year nil) from State Bank of India carries an interest @ BBR per annum with monthly rests.

(iv) ` 20,000 lacs (previous year nil) from Union Bank of India carries an interest @ BBR per annum with monthly rests.

(v) Nil (previous year Rs. 50,000 lacs) from Canara Bank carries an interest @ BBR per annum with monthly rests.

(vi) Nil (previous year Rs. 150,000 lacs) from Bank of India carries an interest @ BBR per annum with monthly rests.

10. TRADE PAYABLES



Due to:

Micro small and medium enterprises [refer note (a) below]

41 131

Others 710,758 744,617

Claims payable to Mahanagar Telephone Nigam Limited (MTNL) [refer note (b) below]

101,659 99,602

Claims payable on interconnection usage charges (IUC) 16,064 24,715

Claims payable against Satellite Based Broadband (SBB) and access network services

1 1,115

Claims payable on Universal Service Obligation (USO) towers

365 477

Claims payable against Internet data center (IDC) 26 –

828,914 870,657

Notes :

(a) Thirty two circles (previous year thirty one) of the Company has identified Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The required information in terms of section 22 of MSMED Act to the extent available in respect of thirty two circles (previous year thirty one circles) are given below :

Particulars As at 31st March 2015


The principal amount due to suppliers 41 131

The amount of interest paid by the buyer in terms of section 16 of the MSMED Act, 2006

Nil Nil


93




The amount of interest due and payable for the period of delay in making payment

1 Nil

The amount of interest accrued and remaining unpaid at the end of each accounting year

Nil Nil

The amount of further interest remaining due and payable even in the succeeding years as per Section 23 of MSMED Act, 2006

Nil Nil

(b) The net claim receivable/payable as on 31 March 2015 from MTNL is subject to confirmation and reconciliation.

11. OTHER CURRENT LIABILITIES



Interest accrued but not due on bank loan 299 353

Advances received from

– Customers and others 144,784 32,659

– Defense telecom network project (net) 7,702 12,394

– Bharat Broadband Nigam Limited (net) – 22,568

Deposits from customers and others 99,186 101,395

Income received in advance against service 150,417 204,827

Claims payable to

– DoT [refer note 32] 50,865 39,109

– Other Government departments 9,909 9,553

Statutory dues

– Tax deducted at source 14,833 16,010

– Service tax (net) 40,365 44,044

– Employees’ provident fund 4,355 2,275

License fee, spectrum charges and transponder charges payable

48,390 33,614

Payable for revised wages 9 30

Other payables towards

94




– Employees 13,128 22,642

– Subscribers 24,622 19,222

– Construction account 38,152 34,780

– Services and others 87,575 86,888

734,591 682,363

12. SHORT-TERM PROVISIONS



Provision for employee benefits :

Leave encashment of retired employees 3,495 2,742

Gratuity [refer note 30.2] 1,497 6,435

Post retirement benefit of serving employees [refer note 30.2]

58,603 57,893

Provision for others :

Wealth tax 385 389

63,980 67,459


95

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2,03

1 1

45,9

07

131

,827

6

,661

2

,387

3

,591

1

37,2

84

8,6

23

Com

pute

r–Se

rver

s an

d N

etw

orks

10,

431

32,

881

– 4

3,31

2 3

1,95

4 3

,715

1

54

– 3

5,82

3 7

,489

Dec

omm

issi

oned

ass

ets

90,

460

35,

935

31,

116

95,

279

––

––

– 9

5,27

9 1

5,56

1,40

0 5

34,5

80

338

,184

1

5,75

7,79

6 1

1,34

3,49

8 8

26,2

95

140

,008

1

48,7

94

12,

161,

011

3,5

96,7

85

Less

: D

imin

utio

n in

the

valu

e of

dec

omm

issi

oned

ass

ets

74,

469

Tota

l 3

,522

,316

IN

TAN

GIB

LES

Entry

lice

nse

fees

1

,180

,087

–

– 1

,180

,087

2

74,8

22

59,

004

––

333

,826

8

46,2

61

Com

pute

r sof

twar

es

36,

186

10,

044

871

4

5,35

9 2

3,77

4 3

,979

–

(684

) 2

8,43

7 1

6,92

3 To

tal

1,2

16,2

73

10,

044

871

1

,225

,446

2

98,5

96

62,

983

– (6

84)

362

,263

8

63,1

84

13.

FIXE

D A

SSET

S [a

lso

refe

r no

te 3

1 an

d 43

]A

. Cur

rent

yea

r

96

B. P

revi

ous

Year

Part

icul

ars

Gro

ss B

lock

Dep

reci

atio

n an

d am

ortis

atio

nC

losi

ng

bala

nce

as a

t 31

Mar

ch

2014

Ope

ning

ba

lanc

e as

at

1st A

pril

2013

Add

ition

sD

elet

ions

Clo

sing

ba

lanc

e as

at

31st M

arch

20

14

Ope

ning

ba

lanc

e as

at

1st A

pril

2013

For

the

year

( r

efer

not

e (e

) and

(f )

belo

w)

Ded

uctio

ns /

adju

stm

ents

Clo

sing

ba

lanc

e as

at

31st M

arch

20

14

duri

ng th

e ye

ar

23

45

= (2

+3)

–46

78

9=( 6

+7)

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10=

(5-9

)

TAN

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LES

Free

hol

d la

nd 9

3,67

9 5

73

2,6

02

91,

650

––

––

91,

650

Leas

e ho

ld la

nd 1

7,66

9 2

37

297

1

7,60

9 3

,787

2

63

(4)

4,0

54

13,

555

Build

ings

772

,687

2

7,76

6 1

4,31

0 7

86,1

43

315

,693

2

3,20

2 4

12

338

,483

4

47,6

60

App

arat

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nd p

lant

s 6

,200

,933

3

33,1

89

255

,266

6

,278

,856

4

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,973

3

31,9

22

63,

256

4,4

36,6

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1,8

42,2

17

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or v

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nd la

unch

es 1

3,66

2 7

9 6

67

13,

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12,

098

347

5

65

11,

880

1,1

94

Cab

les

5,9

06,5

05

72,

362

13,

041

5,9

65,8

26

4,6

16,4

98

206

,498

8

,304

4

,814

,692

1

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Line

s an

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ires

519

,289

2

,162

1

1,92

7 5

09,5

24

417

,550

1

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7 9

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4

22,2

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87,

304

Subs

crib

er in

stal

latio

ns 4

58,3

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9,3

93

9,1

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458

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4

19,6

97

13,

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7,2

17

425

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3

2,65

0

Inst

alla

tion

test

equ

ipm

ents

50,

783

2,3

23

691

5

2,41

5 3

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33

34,

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17,

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Mas

ts a

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ls 5

66,7

36

32,

783

21,

172

578

,347

3

02,4

55

38,

320

(420

) 3

41,1

95

237

,152

Offi

ce

mac

hine

ry

and

equi

pmen

ts 1

9,94

2 4

54

690

1

9,70

6 1

4,06

8 8

23

400

1

4,49

1 5

,215

Elec

trica

l fitt

ings

478

,767

3

3,40

7 1

9,14

4 4

93,0

30

290

,375

2

8,76

5 2

,810

3

16,3

30

176

,700

Furn

iture

and

fixt

ures

23,

370

391

4

61

23,

300

18,

257

1,0

22

242

1

9,03

7 4

,263

Part

icul

ars

Gro

ss B

lock

Dep

reci

atio

n an

d am

ortis

atio

nC

losi

ng

bala

nce

as a

t 31

st M

arch

20

15

Ope

ning

ba

lanc

e as

at

1st A

pril

2014

Add

ition

sD

elet

ions

Clo

sing

ba

lanc

e as

at

31st M

arch

20

15

Ope

ning

ba

lanc

e as

at

1st A

pril

2014

For

the

year

(r

efer

not

e (e

) and

(f)

belo

w)

Adj

uste

d w

ith

open

ing

rese

rves

Ded

uctio

ns /

adju

stm

ents

Clo

sing

ba

lanc

e as

at

31st M

arch

20

15

duri

ng th

e ye

ar

23

45

= (2

+3)

–46

78

910

= (6

+7

+ 8

)–9

11 =

(5–1

0)

CA

PITA

L W

ORK

IN P

ROG

RESS

C

apita

l wor

k in

pro

gres

s 3

91,5

04

298

,301

3

58,0

78

331

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–

––

––

331

,727

Le

ss :I

mpa

irmen

t in

pend

ing

proj

ects

etc

. 3

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To

tal

327

,914

IN

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GIB

LE A

SSET

UN

DER

DEV

ELO

PMEN

T In

tang

ible

as

sets

un

der

deve

lopm

ent

923

–

923

–

––

––

––

17,

170,

100

842

,925

6

98,0

56

17,

314,

970

11,

642,

094

889

,278

1

40,0

08

148

,110

1

2,52

3,27

4 4

,713

,414


97

Part

icul

ars

Gro

ss B

lock

Dep

reci

atio

n an

d am

ortis

atio

nC

losi

ng

bala

nce

as a

t 31

Mar

ch

2014

Ope

ning

ba

lanc

e as

at

1st A

pril

2013

Add

ition

sD

elet

ions

Clo

sing

ba

lanc

e as

at

31st M

arch

20

14

Ope

ning

ba

lanc

e as

at

1st A

pril

2013

For

the

year

( r

efer

not

e (e

) and

(f )

belo

w)

Ded

uctio

ns /

adju

stm

ents

Clo

sing

ba

lanc

e as

at

31st M

arch

20

14

duri

ng th

e ye

ar

23

45

= (2

+3)

–46

78

9=( 6

+7)

– 8

10=

(5-9

)

Com

pute

rs 1

83,4

07

4,6

72

5,2

08

182

,871

1

56,2

16

11,

226

3,6

61

163

,781

1

9,09

0

Dec

omm

issi

oned

ass

ets

93,

327

16,

602

19,

469

90,

460

––

––

90,

460

15,

399,

084

536

,393

3

74,0

77

15,

561,

400

10,

766,

919

672

,622

9

6,04

3 1

1,34

3,49

8 4

,217

,902

Less

: D

imin

utio

n in

the

valu

e of

dec

omm

issi

oned

ass

ets

73,

474

Tota

l 4

,144

,428

INTA

NG

IBLE

S

Entry

lice

nse

fees

1,85

2,53

8 –

672,

451

1,18

0,08

7 33

8,33

3 (6

3,51

1)–

274,

822

905

,265

Com

pute

r sof

twar

es35

,259

1,

515

588

36,1

86

20,5

79

3,04

2 (1

53)

23,7

74

12,4

12

Tota

l1,

887,

797

1,51

5 67

3,03

9 1,

216,

273

358,

912

(60,

469)

(153

)29

8,59

6 91

7,67

7

CA

PITA

L W

ORK

IN P

ROG

RESS

Cap

ital w

ork

in p

rogr

ess

373,

857

485,

784

468,

137

391

,504

–

––

–39

1,50

4

Less

:Im

pairm

ent i

n pe

ndin

g pr

ojec

ts e

tc.

4,5

87

Tota

l38

6,91

7

INTA

NG

IBLE

ASS

ET U

ND

ER D

EVEL

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ENT

Inta

ngib

le

asse

ts

unde

r de

velo

pmen

t 1

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5

08

1,0

47

923

–

––

– 9

23

17,6

62,2

00

1,02

4,20

0 1,

516,

300

17,1

70,1

00

11,1

25,8

31

612

,153

95

,890

11

,642

,094

5,

449,

945

Not

es :

a)

In s

ome

case

s, th

e tit

le d

eeds

of l

and

purc

hase

d/ac

quire

d on

leas

ehol

d/fre

ehol

d fro

m v

ario

us a

utho

ritie

s, a

re in

the

proc

ess

of b

eing

exe

cute

d.

b)

Leas

ehol

d la

nd d

iscl

osed

is b

ased

on

the

iden

tific

atio

n by

thirt

y th

ree

circ

les

(pre

viou

s ye

ar th

irty

one

circ

les)

.

c)

Add

ition

to

fixed

ass

ets

incl

ude

asse

ts i

dent

ified

and

tak

en o

ver/(

writ

ten

back

) by

the

Com

pany

in

the

curr

ent

year

, pe

rtain

ing

to t

he a

sset

s be

ing

take

n ov

er f

rom

DoT

as

on 1

O

ctob

er 2

000

` (4

17) l

acs

[pre

viou

s ye

ar `

(2,2

32) l

acs]

d)

Add

ition

s in

gro

ss b

lock

incl

ude

` 37

,020

lacs

(pre

viou

s ye

ar `

43,

421

lacs

) of e

mpl

oyee

rem

uner

atio

n an

d ad

min

istra

tive

expe

nses

cap

italis

ed d

urin

g th

e ye

ar.

e)

The

depr

ecia

tion

and

amor

tisat

ion

for t

he y

ear i

nclu

des

` 6,

859

lacs

(pre

viou

s ye

ar `

9,0

63 la

cs) r

elat

ing

to p

rior p

erio

d.

f) Th

e cu

rren

t ye

ar d

epre

ciat

ion

char

ged

to s

tate

men

t of

pro

fit a

nd l

oss

excl

udes

` 7

39 l

acs

(pre

viou

s ye

ar `

773

lac

s) w

hich

has

bee

n ca

pita

lised

int

o th

e co

st o

f as

sets

und

er

cons

truct

ion.

98


14. NON-CURRENT INVESTMENTS



(At cost, unquoted, non-trade) 20,000,000 (previous year 20,000,000) 7%

redeemable cumulative preference shares of ` 100/- each fully paid in Indian Telephone Industries (ITI) Limited (A Government of India owned Company) [refer note (a) below]

20,000 20,000

20,000 20,000 Aggregated value of unquoted investments 20,000 20,000

Note :

(a) All the five installments of ` 4,000 lacs each are overdue for redemption of 7% redeemable cumulative preference shares in respect of investment in ITI Limited at the end of the year and no dividend has been received till date. ITI Limited will redeem preference shares to the Company immediately on release of financial assistance by the Government of India to ITI Limited as a part of revival package. Hence, no provision for the aforesaid investment is made in the books of accounts of the Company.

15. DEFERRED TAX ASSETS (NET)



Deferred tax assets on – Provision for bad and doubtful debts 109,595 123,698 – Unabsorbed depreciation and amortisation 259,055 259,055 – Provision for leave encashment 79,503 98,412 – Provision for decommissioned assets, wage

revision, etc. 2,580 6,606

– Others 14,951 15,076 A 465,684 502,847

Deferred tax liabilities on – Depreciation and amortisation 363,610 461,706 – Others 17,368 17,368

B 380,978 479,074A-B 84,706 23,773

Notes :

(a) The deferred tax has been dealt with in accordance with the contention of the Company


99


before the tax authorities. The depreciation has been calculated on the book value of assets taken over from DoT, contrary to the Income Tax Department’s contention of treating capital reserve as relief/ grant/ subsidy deductable from book value of assets.The Company contends that the capital reserve arising out of the capital structure at the time of incorporation of the Company is not in the nature of financial relief and hence not to be reduced from the value of fixed assets. According to the Company’s contention, the depreciation provided in the books on the value of assets without deducting the amount involved in capital reserve is admissible in income-tax. The stand of Company was upheld by the Hon’ble High Court of Delhi and the Income Tax Department has not contested against this in the higher court as at the balance sheet date. The Company is recognising deferred tax assets/liabilities accordingly.

(b) The Company, being a Company providing telecommunication services is eligible to claim deduction under Section 80 IA of the Income Tax Act, 1961 with respect to 100 % of the profits and gains derived from this business for the first five years and thereafter at 30% of the profits for the second five years (referred to as the Tax Holiday Period). The Company has opted for tax holiday period from financial year 2003-04 and the period ends in the previous financial year 2012-13

(c) In accordance with Accounting Standard Interpretation (ASI)-3 issued by the Institute of Chartered Accountants of India, the deferred tax provision in respect of timing differences which originates and gets reversed during the tax holiday period have not been recognised. Deferred tax in respect of timing differences which originate during the tax holiday period but gets reversed after the tax holiday period, have been recognized in the year in which the timing differences have originated. For this purpose, as a conservative measure, deferred tax provision has been made in respect of the period when only 30% of the profits would be tax free assuming that only 70% of the timing differences would reverse.

(d) The Company has not recognised any deferred tax asset during the year following the notified Accounting Standard 22 “Accounting for taxes on income’, only reversal relating to deferred tax assets and deferred tax liability created during the earlier years have been made.

16. LONG-TERM LOANS AND ADVANCES



Advances recoverable in cash or in kind or for value to be received

Secured and considered good Security deposits 10,527 10,077 Loans and advances to staff 2,964 4,581 Unsecured but considered good Security deposits 18,880 19,290 Loans and advances to staff 562 1,372 Other loans and advances, unsecured

100




Amount recoverable from DoT for other recoverables [refer note 32]

259,085 -

Capital advance, unsecured but considered good 42,684 24,116 Advance income-tax 502,552 467,350 [Net of provision for tax ̀ 717,196 lacs (previous year

` 717,196 lacs)] Advance fringe benefit tax 5,898 5,898 [Net of provision for tax ` 15,300 lacs (previous year

` 15,300 lacs)] 843,152 532,684

17. INVENTORIES

(Valued at lower of cost or net realisable value)



Building materials 150 183 Lines and wires 9,911 8,332 Cables 85,610 90,889 Apparatus and plants 186,131 200,559 Telephone instruments 19,491 17,801 Telegraph and telex instruments 151 81 Broad band equipments 23,107 27,498 Raw material and scrap (at factory) 17,354 8,376 Finished goods and work in progress (at factory) 1,302 7,536

Finished stock(at various circles) 7,124 3,233 Other stores 16,519 18,275 Shortage in inventory 1,141 493 Inventory for construction works 35,000 –

402,991 383,256 Less: Provision for obsolete inventory/short inventory 33,303 28,528

369,688 354,728

Notes

(a) Physical verification of stock has been conducted by the management [except nine circles


101


(pervious year seven circles)] during the year and is reconciled with the detailed inventory records. Wherever the difference is found the same is provided for. Further, in eleven circles (previous year seven circles) difference between the subsidiary ledger and the general ledger is identified and provided for in the current financial year.

(b) The Company is in the process of identification of non-moving, slow moving and obsolete inventories in twenty circles (previous year eleven circles). Pending finalisation of the process, no provision if any, that may be required, has been made.

(c) The Company is in the process of reconciling the shortage in inventory. Pending finalisation of the process, no provision if any, is made.

18. TRADE RECEIVABLES



Trade receivables (As per General Ledger) 750,618 752,958 Less : Advance income booked but not collected 78,347 20,330

672,271 732,628 Less : Provision for doubtful receivables 439,611 456,370

232,660 276,258

Notes :

a) In twenty two circles (previous year twenty four circles), there is difference in the closing balance of trade receivables between the subsidiary ledger and the general ledger. To the extent identified, the net difference between general ledger and subsidiary ledger balances is ` 22,393 lacs (previous year ` 22,590 lacs). The management is in the process of reconciling these differences. However a further amount of ` 9,678 lacs (previous year ` 23,561 lacs) has been provided during the year in respect of circles where general ledger balances are more than subsidiary ledger balances.

b) The age-wise analysis of the trade receivables as per subsidiary ledger is given below:



Trade receivable exceeding six months from the date they are due for payment

534,545 551,767

Other trade receivables 193,680 178,601 728,225 730,368

c) The classification of the trade receivables as secured (to the extent of the security deposits held by the Company), unsecured/considered good and considered doubtful, to the extent available as per subsidiary ledger is as follows:

102




Secured receivables, considered good 163,640 140,460 Unsecured receivables, considered good 148,061 158,075 Unsecured receivables, considered doubtful 416,524 431,833

728,225 730,368

19. CASH AND BANK BALANCES



Cash and cash equivalents Balances with bank – In current account including sweep-in-deposit 109,514 83,315 – In fixed deposits accounts with original maturity

less than three months– 1,941

Cheques on hand 8,266 4,473 Cash on hand 3,698 2,344

121,478 92,073 Other bank balances “Earmarked deposits with bank [refer note (d) below]

(including bank guarantee, margin money, etc)” 999 1,122

122,477 93,195

Notes :(a) In seven circles (previous year eight circles), it has been noticed that cheques deposited with

the bank and Telegraphic Transfer (TT) sent, have not been credited in the relevant bank accounts of the Company amounting to ` 2,902 lacs (previous year ` 2,704 lacs) as on 31st March 2015. The management has already taken up the case with the concerned banks for timely crediting the amount in the respective account.

(b) In seven circles (previous year nine circles), unlinked credit items amounting to ` 404 lacs (previous year ` 470 lacs) and in six circles (previous year ten circles) unlinked debit items amounting to ` 76 lacs (previous year ` 223 lacs) are appearing in the bank reconciliation statement as at 31st March 2015. The management is in the process of reconciling all such items in due course.

(c) Bank balances in two circles (previous year one circle) includes cheques in hand pending to be deposited in bank as on 31st March 2015.

(d) These earmarked deposits are for the purpose of securing various bank gurantee given by the bank.


103


20. SHORT TERM LOANS AND ADVANCES



Advances recoverable in cash or in kind or for value to be received Secured, considered good Security deposits 2,960 1,224 Unsecured, considered good Advances to contractors 45,524 63,916 Purchase advances 16,726 6,467 Loans and advances to staff 3,775 4,234 Security deposits 54 367 Other advances 96 136

69,135 76,344

Note :

(a) In two circles (previous year one circles), it has been noticed that there are differences in the subsidiary ledger of loans and advances with those appearing in general ledger. The management is in the process of reconciling the differences of current assets.

21. OTHER CURRENT ASSETS



Amount recoverable in cash or in kind or for value to be received

34,988 23,461

Accrued revenue 121,578 130,568 Amount recoverable from DoT – For employees on deputation 2,518 1,745 – For NOFN project 18,699 – – Other recoverables [refer note 32] 409,279 846,120 Amount recoverable from - Government departments 3,705 3,979 - Government companies 363,423 356,466 Claims recoverable from others 20,870 21,576 Operating lease charges recoverable 1,084 1,189 Sales tax recoverable from customers 6 24 Service tax recoverable from customers 82,692 82,294

104




Balances with excise and other tax authorities 62,025 54,257 Interest accrued – on bank deposits 155 158 – on loans and advances 15 27 Call detail record based claims recoverable 7,688 12,337

1,128,725 1,534,201 Less: Provision for doubtful assets 217,439 212,395

911,286 1,321,806

Notes :

(a) Cenvat on account of service tax, excise duty and custom duty on capital goods and inputs is under reconciliation in some circles.

22. REVENUE FROM OPERATIONS



Revenue from sale of services Telephones (other than Wireless in Local Loop

(WLL)) 493,381 501,326

Cellular 1,105,273 1,066,237 WLL 17,021 18,150 Broad band services 499,681 465,969 Leased lines 207,868 208,239 Other services 2,371 2,604 Telegraphs and telex – 399 Income from passive infrastructure 19,106 11,574 Interconnection usage charges (IUC) from

other service providers 273,189 302,809

2,617,890 2,577,307 Other operating revenueOther operating income [refer note (a) below and note 6 (b)]

96,568 20,942

Other 9,765 17,077 106,333 38,019

2,724,223 2,615,326


105


Notes :

(a) (i) Other operating income represents subsidies from Universal Service Obligation Fund and DoT.

(ii) During the year, The Company has booked income of ` 26,442 lacs (previous year nil) on certain projects namely, LWE project, NOFN project and Defence Project.

b) Telephones disconnected due to non-payment are considered to be working for a period of 30 days from the date of disconnection of outgoing facility. During this period, the incoming facility is provided and fixed monthly charges are billed.

c) Indo-Nepal telecom traffic account (i) Revenue receivable amounting to ` 652 lacs (previous year ` 267 lacs) and payable

` 298 lacs (previous year ` 494 lacs) in respect of Indo-Nepal traffic account has been considered on accrual basis.

(ii) Nepal Telecom has disputed outstanding dues of ` 43 lacs pertaining to period from May 2003 to December 2004. A provision of ` 43 lacs which has been made by the corporate office on behalf of the circle in the year 2009-10 in this regard. The disputed amount of dues payable to Nepal telecom from January 2010 to March 2011 is ` 45 lacs.

d) Indo-Bangladesh telecom traffic account Revenue receivable amounting to ` 24 lacs (previous year ` 10 lacs) and payable ` 26 lacs

(previous year ` 7 lacs) in respect of Indo-Bangladesh traffic account has been considered on accrual basis.

e) ` 28 lacs (previous year ` 28) outstanding on account of transit charges as disputed by Tata Teleservices Limited is pending and ` 285 lacs (previous year ` 285) is outstanding against other IUC operator against which necessary provisions has been made upto financial year 2011-12.

23. OTHER INCOME



Interest income on: – Deposits with banks 3,983 3,679 – Loans and advances 3,430 3,209 – Income tax refund 791 17,928

8,204 24,816 Other non-operating income Profit on sale of assets (net) 3,234 3,817 Liquidated damages 23,328 31,965 Excess provision written back 67,692 91,985 Rent of staff quarters 3,106 2,438

106




Sale of scrap 3,636 3,038 Reimbursement from USO Administrator for

USO Towers– 3,988

Income from Network Operating and Control Center (NOCC)

3,070 3,324

Others including sale of publications, forms, waste paper, etc.

28,027 18,938

132,093 159,493 140,297 184,309

24. EMPLOYEE BENEFITS EXPENSE



Salaries, wages, allowance and other benefits 1,359,470 1,321,286 Leave encashment (including provision) [refer

note (a) below] 10,611 110,367

Pension contribution 97,265 88,914 Employer’s contribution towards employees

provident fund 21,316 18,735

Gratuity (including provision) 1,500 6,440 Leave salary contribution 107 818 Medical expenditure 34,819 32,634 Staff welfare expenses [refer note (b) below] 1,922 1,714

1,527,010 1,580,908 Less : Allocated to capital work-in-progress and

others 30,660 37,324

1,496,350 1,543,584

Notes :

a) Leave encashment of ` 66,737 lacs (previous year ` 59,418 lacs) has been paid by the Company considering the unfunded position of the related fund out of which 56,384 lacs has been adjusted in the fund.

b) During the year, the Company has paid ` 750 lacs (previous year ` 400 lacs) to Staff Welfare Board and ` 200 lacs (previous year ` 100 lacs) to Sports and Cultural Board for promoting welfare activities at various circles.


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25. FINANCE COSTS



Interest expense on: – Subscribers’ deposit 8 7 – Bank loan 49,536 21,639 – Others 346 153 Other borrowing costs 299 –

50,189 21,799

26. ADMINISTRATIVE, OPERATING AND OTHER EXPENSES For the year ended

31st March 2015 For the year ended

31st March 2014 Rent 31,397 32,141 Lease charges 366 489 Rates and taxes 5,207 4,962 Power and fuel 263,193 262,451 Insurance 184 281 Bank charges 194 165 Repairs and maintenance on: – Buildings 34,620 31,170 – Plant and machinery 105,352 92,418 – Cables 40,737 42,905 – Others 11,644 10,869 Professional and consultancy charges 2,363 2,412 Payment to auditors [refer note 37] 346 301 Printing and stationery 6,010 6,660 Commission on franchise services 49,992 52,366 Advertisement 1,059 992 Business promotion and marketing expenses 7,612 5,385 Travelling expenses 7,034 7,907 Postage and courier charges 6,284 6,959 Security services 29,737 28,612 Vehicle running expenses (including hired

vehicles) 23,056 21,839

Interconnection usage charges (IUC) to other service providers

229,351 238,835

Expenditure on passive infrastructure hired 75,960 64,719

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Expenditure on services and other expenses [refer note (c)]

72,296 77,906

Penalty for customer application form (CAF) verification

320 1,885

Wealth tax 78 84 Write off and losses (other than bad debts) 30,046 22,534 Bad-debt provision other than services 735 832 Bad-debt written off 22,941 25,684 Provision for doubtful debts and disputed bills 26,966 53,953 Write off of unrecovered service tax 3,774 1,286 Foreign exchange fluctuation loss (net) 461 1,069 Loss from manufacturing activities of factories

[refer note (a) and (b)] 1,222 8,321

Profit from construction/telecom services projects

(479) (1,365)

Hiring charges of machinery lines 257 – Payment of financial disincentive to Telecom

Regulatory Authority of India 4 –

1,090,319 1,107,027 Less: Allocated to capital project works and

others 6,360 6,097

1,083,959 1,100,930

Notes :

a) Telecom factories manufacturing account :



Opening stock - raw material and scraps 8,376 8,379 Purchases 18,878 10,878 Direct expenses 12,384 13,123 Change in inventory (662) 2,079 Closing stock - raw material and scraps (10,836) (8,376)Total (A) 28,140 26,083 Internal transfer (B) 26,918 17,762 Loss from manufacturing activities 1,222 8,321


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b) Production of goods by the Company is for captive consumption. Prices for the transfer of stock from telecom factories to circles for self-consumption are predetermined. The predetermined rates include direct cost including overhead allocation at a fixed rate. This practice has resulted in internal loss of ` 1,223 lacs (previous year ` 8,321 lacs) for the year ended 31st March 2015 arising out of such transfer. The said amount has been netted off against the administrative expenses in the statement of profit and loss for the year since it is not possible to identify the individual items of stores, which have been capitalised or expensed off.

c) Consumption of stores and spare parts for the year ended 31st March 2015 is ` 5,363 lacs (previous year ` 2,367) lacs included in expenditure on services and other expenses.

27. PRIOR PERIOD ITEMS



Prior period income

Income from WIMAX – 3

Value added service 8,992 48

Broadband services 1,056 77

Liquidated damages and other miscellaneous income

(731) 1,212

Telegraphs – 0

Subsidy from DIT for Rural Broad Band (wireline) [refer note 5]

41 90

Interconnection usage charges (IUC) from other service providers

(2,026) 98

Income from real estate – 5

7,332 1,533

Expenditure booked earlier now reversed

Salaries and staff expenses (4,262) 47

License fee – 281

Interest 129 4,132

(4,133) 4,460

Total A 3,199 5,993

Income booked earlier now reversed

Cellular mobile service 535 356

110




Income from

– telephones (other than WLL) 1,657 130

– telephone circuits (2,746) 449

– telegraph circuits 19 149

USO subsidy 3,660 558

Telephones (WLL) 29 22

3,154 1,664

Prior period expenses

Rent, rate and taxes 470 141

Repairs 1,899 864

Depreciation and amortisation [refer note 13] 6,859 9,063

Power and fuel 125 263

Interconnection usage charges (IUC) to other service providers

929 3,954

USO towers maintenance 5,220 46

Other services 4,195 9,092

19,697 23,423

Total B 22,851 25,087

Net amount of prior period items (A-B) (19,652) (19,094)

28. ASSETS AND LIABILITIES TAKEN OVER FROM DoT

28.1 In pursuance of the Memorandum of Understanding (MOU),dated 30 September 2000 executed between Government of India and the Company, all assets and liabilities in respect of business carried on by Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) were transferred to the Company with effect from 1st October 2000 at a provisional value of ` 6,300,000 lacs and up to the current financial year the Company has identified net assets of ` 6,326,718 lacs (previous year ` 6,327,152 lacs) against it.

During the current financial year, based on physical verification of fixed assets and inventory and reconciliation of various heads of assets and liabilities in the subsidiary and general ledgers, the management has found some facts which has resulted in increase/ decrease in the following assets and liabilities taken over as on 1st October 2000 amounting to net reduction in the assets of ` 434 lacs [previous year ` 2,287 lacs]:


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Particulars Up to 31st March 2014

Additions/ (Deletions) during

the year

Up to 31st March 2015

Assets

Fixed assets 5,406,839 (417) 5,406,422

Capital work-in-progress 502,519 (16) 502,503

Inventory 187,850 - 187,850

Trade receivables 683,196 - 683,196

Advance to contractors 39,448 - 39,448

Deposit with electricity boards /others 2,184 – 2,184

Total-A 6,822,036 (433) 6,821,603

Liabilities

Customer deposits 393,704 – 393,704

Earnest money deposits 12,116 – 12,116

Security deposits from contractors /suppliers

28,999 – 28,999

Working expense liability as on 01 October 2000

43,472 1 43,473

Contractors bills payable as on 01 October 2000

16,593 - 16,593

Total-B 494,884 1 494,885

Net assets taken over by the Company (A-B)

6,327,152 (434) 6,326,718

Previous year 6,329,439 (2,287) 6,327,152

Note 1: The net assets and the contingent liabilities transferred to the Company as on 1st October 2000 are subject to confirmation by DoT as regard to their ownership and the value.

Note 2: Trade receivables as on 31st March 2015 includes an amount of ` 21,138 lacs pertaining to period prior to 1st October 2000, which have been fully provided for and included in net current assets referred above.

28.2 The capital structure for the Company concurred by the Ministry of Finance and conveyed by the Department of Telecommunications vide their U.O. No. 1-2/2000-B (Pt.) dated 13th December 2001 has been treated as consideration for transferring the above stated assets and liabilities is as follows:

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Particulars As at 1st October 2000 (as on 31st

March 2014)

Additions/ (Deletions) during

the year ended 31st March 2015

Total structure as at 1st October

2000 (as on 31st March2015)

Equity 500,000 - 500,000

9% Non-cumulative preference shares 750,000 - 750,000

15 year Government loan (Interest at prevalent Government lending rate

750,000 - 750,000

Loan from MTNL [note 1] 305,600 - 305,600

Capital reserves – DoT [note 2] 4,021,552 (434) 4,021,118

Total 6,327,152 (434) 6,326,718

Notes:

1. The entire amount has been repaid in the previous years.

2. Represents the difference between the total value of the assets taken over and the long term identified liabilities and the capital structure, as on 1st October 2000 as communicated by DoT. Further, the additional government loan amounting to ` 98,318 lacs had been written back to capital reserve during previous year which did not form part of capital structure.

28.3 In pursuance of clause 13 of agreement of transfer executed between the Government of India and the Company dated 30th September 2000 all costs, charges and expenses including stamp duties, registration charges, transfer duties, any other taxes, levies, duties or charges relating to or in connection with completion of transfer of assets and liabilities shall be borne by the Government of India.

29. LICENSE FEE AND SPECTRUM CHARGES

29.1 License and spectrum fee for the year ended 31st March 2015 is ̀ 217,032 lacs (previous year ` 224,330 lacs).

29.2 During the current year, the formula for distribution of the revenue between various components for CMTS Services has been changed. The formula adopted during financial year 2014-15 is as per the following percentage:

Service Basic CMTS NLD ILD ISP

Leased circuits 30% - 70% - -

Basic services 70.72% - 17.58% 11.70% -

CMTS services - 69.99% (previous year

75.50%)

23.64% (previous year

21.26%)


3.24%)


nil)

The NLD/ILD portion of Point of Interconnection (POI) revenue has been taken on actual basis.


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30. EMPLOYEE COST

30.1 The Company has made pension contribution as per applicable rates to DoT on the basis of pay scales for absorbed employees and for other employees working on deemed deputation as per the Central Government pay scales in accordance with financial rule 116 of the Government of India. The liability on account of pension payable to all such employees will be that of the Government of India as communicated by the Secretary, DoT vide their DO No. 1-45/2003-B dated 15 March 2005.

However, in the year 2006-07 DoT vide their letter No. 1-45/2003-B dated 15th June 2006 has intimated that annual pension liability of the Government in respect of employees of DoT / DTS / DTO who retired prior to 1st October 2000, those who have worked / are working in the Company on deemed deputation and for those who are absorbed in the Company shall not exceed 60% of the annual receipts to the Government from the item

(a) Dividend income from MTNL/BSNL, (b) License fee from MTNL/BSNL, (c) Corporate Tax/Excise Duty/Service Tax paid by BSNL. Any amount exceeding the receipts on account of 3 items mentioned above shall be

borne by MTNL/BSNL. The Company has taken up the matter with the Government stating that its liability is restricted to pension contribution as per the rates prescribed in financial rules.

30.2 During the year, the Company has recognised following amounts in the statement of profit and loss :

a) Defined contribution plans

Contribution to defined contribution plan i.e. employer’s contribution to provident fund and pension contribution to the Government of India for the year is charged to statement profit and loss. These amounts are shown as under:



Employer’s contribution to provident fund 21,316 18,735

Pension contribution to the Government of India 97,265 88,914

b) Defined Benefit Plans

A. Gratuity The employees’ gratuity fund scheme administered by the Company employees gratuity

fund trust through two fund managers namely Life Insurance Corporation (LIC) of India and SBI Life Insurance Company Limited, is a defined benefit plan. The entire fund has been withdrawn from SBI Life Insurance Company Limited during the current financial year. The amount shown as fund invested with the SBI as on 31st March 2014 is the amount of interest for the financial year 2013-14 till the date of withdrawal. The present value of obligation is determined on actuarial valuation done by LIC using projected unit credit method to arrive the final obligation.

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i) Defined benefits / expenses for gratuity recognised for the year



Current service cost 3,400 3,601

Interest cost 3,516 2,811

Expected return on plan assets ( 3,870) ( 2,890)

Total actuarial (gain)/loss (1,549) 2,913

Net cost 1,497 6,435

ii) The assumptions used to determine the benefit obligations are as follows:



Discount rate 8% 8%

Expected rate of increase in compensation levels 7% 7%

Expected average remaining working lives of employees (years)

23.27 23.17

Mortality table LIC (1994-96) Ultimate

LIC (1994-96) Ultimate

iii) Reconciliation of opening and closing balances of defined benefit obligations for gratuity



Present value of obligations as at beginning of year 43,950 35,128



Benefits paid (385) ( 503)

Actuarial (gain)/loss on obligations (1,549) 2,913

Present value of obligations as at end of year 48,932 43,950

iv) Reconciliation of opening and closing balances of fair value of plan assets for gratuity



Fair value of plan assets at beginning of year 37,515 27,941

Contributions during the year 6,435 7,187

Expected return on plan assets 3,870 2,890

Benefits paid (385) ( 503)


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Fair value of plan assets at the end of year 47,435 37,515

v) Reconciliation of fair value of assets and obligations for gratuity


For the year ended 31st March

2014



Net liability recognised in balance sheet 1,497 6,435

vi) Gratuity fund investment details (Fund manager wise, to the extent funded)



Life Insurance Corporation of India 47,435 37,496

SBI Life Insurance – 19

Total 47,435 37,515

vii) Amounts recognised in current year and previous four years

Particulars For the year ended 31st

March 2015

For the year ended 31st

March 2014


March 2013


March 2012


March 2011

Defined benefit obligation

48,932 43,950 35,128 28,617 24,408

Plan Asset 47,435 37,515 27,941 19,543 18,379

Deficit 1,497 6,435 7,187 9,074 6,029

Net actuarial loss/ (gain) recognized in the year

(1,549) 2,913 908 2,655 2,577

Leave encashment:

Leave encashment is also a defined benefit plan. The liability towards leave encashment has been determined through actuarial valuation as per the notified Accounting Standard 15 (Revised 2005) ‘Employee Benefits’ using projected unit credit method.

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i) Defined benefits / expenses for leave encashment recognised for the year





Expected return on plan assets (66,666) (60,563)

Total actuarial (gain)/loss (65,437) 42,818

Net cost (56,384) 50,846

ii) The assumptions used to determine the benefit obligations are as follows:



Discount rate 8% 8%

Expected rate of increase in compensation levels 7% 7%

Expected average remaining working lives of employees (years)

9 10

Withdrawal rate 1% to 3% depending on age

1% to 3% depending on age

Mortality table LIC (1994-96) Ultimate

LIC (1994-96) Ultimate

iii) Reconciliation of opening and closing balances of defined benefit obligations for leave encashment.



Present value of obligations as at beginning of year 841,499 730,090



Actuarial (gain)/loss on obligations (65,437) 42,818



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iv) Reconciliation of opening and closing balances of fair value of plan assets for leave encashment.



Fair value of plan assets at beginning of year 698,074 637,511

Expected return on plan assets 66,666 60,563


v) Reconciliation of fair value of assets and obligations for leave encashment





Unfunded amount recognised in balance sheet 87,041 143,425

vi) Leave encashment fund investment details (fund manager wise, to the extent funded)



Life Insurance Corporation of India (100%) 764,740 698,074

vii) Amounts recognised in current year and previous four years

Particulars For the year ended 31

March 2015

For the year ended 31

March 2014


March 2013


March 2012


March 2011

Defined benefit obligation

851,781 841,499 730,090 664,741 629,574

Plan Asset 764,740 698,074 637,511 581,352 530,141

Deficit 87,041 143,425 92,579 83,389 99,433

Net actuarial loss/ (gain) recognized in the year

(65,437) 42,818 2,151 14,576 38,250

31. FIXED ASSETS / DEPRECIATION AND AMORTIZATION/ CAPITAL WORK-IN-PROGRESS

31.1 Fixed assets taken over from DoT as on 1st October 2000 are based on physical verification conducted by the management. The value of fixed assets taken over including capital work-in-progress has been determined by the management using the original cost of the asset (wherever available) or alternatively the value arrived at by applying Strategic Business Plan

118


(“SBP”) rates, which is based on technical assessment, as reduced by the depreciation up to 30th September 2000 on straight line basis at the rates prescribed by DoT. Capital assets acquired by the Company after 1st October 2000 are valued at the cost including all direct charges incurred up to the time of installation or put to use.

The transfer values, as indicated above, in respect of assets transferred from DoT on 1st

October 2000 have been treated as its original cost and depreciation has been provided on written down value method at the rates prescribed in Schedule XIV of the Companies Act, 1956 till financial year 2013-14 without reassessing the remaining useful life of such assets as on that date. Depreciation has been provided at the rates as stated above for all the assets acquired after 1st October 2000 except in the case of Subscribers Installations which are depreciated over the useful life of 5 years on written down value method. However, with the enactment of Companies Act, 2013 the depreciation has been provided as per the provisions of schedule II of the Companies Act, 2013 for financial year 2014-15 for all assets including Subscribers Installations. Depreciation has been calculated by the circles, as per the policies of the Company. Further, necessary adjustment has been made to General Reserve to the extent of excess of written down value of assets over residual value (5% of the original cost)for the assets where the remaining useful life is nil as on 31st March 2014 and the assets are not decommissioned.

31.2 Land at several locations has been taken over at a nominal value say ` 1, wherever original cost is not available. As at 31st March 2015, thirty three circles (previous year thirty one circles) have identified the leasehold land. In the absence of the information relating to such acquisition in other cases, no adjustment has been made for amortizing the cost of such unidentified lease hold land over the lease period.

The lease period of a few leasehold lands on which buildings are constructed, have not been renewed / or the renewals are under dispute. Since expected terms, conditions and rentals for renewal/ surrender are not ascertainable, no provision has been made for the ‘surrender value / written down value of the buildings’.

31.3 Pending transfer of the immovable property in the name of the Company, documents in respect of certain land and buildings acquired during the period are under legal process/execution. Further in respect of assets taken over from DoT, formalities for vesting the assets in favour of the Company wherever necessary/applicable are under process.

31.4 The Company, as per instructions issued by the Ministry of Communications and Information Technology through letters having number P-11014/13/2008-PP and number P-11014/13/2008-PP dated 12th June 2010, had provided ` 1,018,658 lacs and ` 831,380 lacs as one time charge for 3G spectrum and BWA spectrum respectively in the financial year 2009-10, which was earmarked for the Company on 8th August 2008. Above-mentioned amount has been paid to the Government of India during the financial year 2010-11. As per terms and conditions of NIA (Notice Inviting Application) the right to use above-mentioned spectrum was for 20 years from the date of awards of right to commercially use the allocated spectrum block. Accordingly, the Company had been amortising the one time spectrum fee over the period of twenty years as per straight-line method.

During the previous year, the Company received approval of the cabinet vide Department of


119


Telecommunication letter no. 10-20/2012-SU.I(vol. II) dated 15th January 2014, for surrender of BWA Spectrum by the Company and refund of upfront charges paid by the Company for six (6) LSAs amounting to ` 672,451 lacs. Accordingly, the intangible assets of BWA spectrum amounting to ` 672,451 lacs has been decapitalised and claims recoverable from DoT for BWA spectrum refund has been raised in the books of accounts by the corresponding amount.

31.5 Certain assets that have been completed and put to use, have not been capitalised in twelve circles (previous year fourteen circles) pursuant to the policy of capitalising only after completion certificates have been obtained and till then these are still shown as capital work-in-progress. The amount ascertained in respect of seven circles (previous year ten circles) is ` 54,234 lacs (previous year ` 45,808 lacs). Consequently, depreciation has also not been charged on the same.

31.6 Establishment and administration expenses incurred in units where project work is also undertaken are allocated to capital and revenue mainly on actual man-month basis and only where such actual allocation is not possible then on proportionate basis.

31.7 In one circle (previous year two circles), there is difference between the CWIP subsidiary ledger and general control ledger.

32. DoT BALANCES

Other recoverable from DoT, after netting off the claim payables to them, ` 617,499 lacs (previous year ̀ 807,011 lacs), included in long-term loans and advances and other current assets, recoverable towards refund of BWA spectrum surrendered by BSNL in the previous year, confirmed by DoT vide letter no. 10-20/2012-SU.I (vol. II) dated 15th January 2014. Further during the year, the Company has set off the payable towards license and spectrum charges payable to DoT with the aforementioned recoverable on account of the BWA spectrum surrender. The management does not believe this set off to have any other significant impact on the financial statement. This balance is subject to confirmation, reconciliation and consequential adjustment. There is no practice of getting confirmation of such balances with Government department due to huge number of transactions.

Further, there is no agreement between the Company and DoT for interest recoverable/payable on outstanding amounts of DoT. Hence, no accrual for interest has been made on the amount payable to/recoverable from DoT.

33. INTER/INTRA CIRCLE REMITTANCE

There are certain expenses (both capital and revenue) which are incurred by one circle on behalf of other. These expenses are parked in Inter/ Intra-Circle Remittances account. As on 31st March 2015, there was a balance of ` 57,312 lacs (previous year ` 86,537 lacs) in Inter/Intra-Circle Remittances account. This amount pertains mainly to assets and liabilities, and marginally to expenditure and revenue. The depreciation is not claimed in case of assets and expenses are not taken to statement of profit and loss pending reconciliation. The reconciliation is done on continuous basis throughout the year and proper effect is taken in the books of accounts for reconciled amounts.

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34. EARNINGS PER SHARE

Description Unit For the year 31st March 2015

For the year 31st March 2014

Loss after tax (` in lacs) (823,409) (701,976)

Number of equity shares outstanding (in number) 5,000,000,000 5,000,000,000

Face value of shares ( ` ) 10 10

Basic and Diluted earnings per share ( ` ) (16.47) (14.04)

35. SEGMENT REPORTING A. Current year


Business Segments Un-allocable

Total

Basic Cellular Broadband

Revenue

Revenue from operations 873,040 1,340,151 502,633 8,399 2,724, 223

Inter segment revenue (eliminated)

96,696 19,438 – – 116,134

Other income 100,499 29,917 934 743 132,093

Net segment revenue 1,070,235 1,389,506 503,567 9,142 2,972,450

Segment results

Operating profit/(loss) before interest, prior period items and taxes

(1,494,546) 241,874 448,545 (18,578) (822,706)

Interest income 6,747 303 – 1,154 8,204

Interest expenses (301) (48) – (49,840) (50,189)

Profit/(Loss) before prior period items and taxes

(1,488,100) 242,129 448,545 (67,264) (864,690)

Prior period items (15,861) (5,997) 1,097 1,109 (19,652)

Profit/(Loss) before tax (1,503,961) 236,132 449,642 (66,155) (884,342)

Deferred tax - – – 60,933 60,933

Profit/(Loss) after tax (1,503,961) 236,132 449,642 (5,222) (823,409)

Other information


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Total


Segment assets 2,814,367 2,864,943 242,415 1,502,105 7,423,830

Segment liabilities 360,559 519,573 41,419 1,717,339 2,638,890

Increase/(decrease) in gross block of fixed assets

(118,215) 276,781 (18,503) (13) 140,050

Depreciation and amortisation

466,821 385,172 29,210 477 881,680

Non cash expense other than depreciation

66,896 17,106 216 244 84,462

B. Previous year

Particulars For the year ended 31 March 2014


Total


Revenue

Revenue from operations 848,713 1,292,179 472,237 2,197 2,615,326

Inter segment revenue (eliminated)

116,492 43,664 – – 160,156

Other income 121,477 33,447 2,375 2,194 159,493

Net segment revenue 1,086,682 1,369,290 474,612 4,391 2,934,975

Segment results

Operating profit/(loss) before interest, prior period items and taxes

(1,509,741) 400,829 429,937 (17,202) (696,177)

Interest income 5,735 243 – 18,838 24,816

Interest expenses (234) (85) – (21,645) (21,964)

Profit/(Loss) before prior period items and taxes

(1,504,240) 400,987 429,937 (20,009) (693,325)

Prior period items (20,825) (2,520) 248 4,003 (19,094)

Profit/(Loss) before tax (1,525,065) 398,467 430,185 (16,006) (712,419)

Deferred tax – – – 10,443 10,443

Profit/(Loss) after tax (1,525,065) 398,467 430,185 (5,563) (701,976)

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Particulars For the year ended 31 March 2014


Total


Other information

Segment assets 3,977,317 3,314,703 274,017 1,367,307 8,933,344

Segment liabilities 1,153,219 530,102 47,025 7,202,998 8,933,344

Increase/(decrease) in gross block of fixed assets

(18,740) (482,200) 12,056 (330) (489,214)

Depreciation and amortisation 418,926 157,684 25,423 284 602,317

Non cash expense other than depreciation

88,586 15,566 129 8 104,289

Note :

1 a) Primary Segment: Basic, Cellular and Broad Band services have been considered as primary business segments for reporting under the notified AS-17 “Segment Reporting” issued by CA Rules 2006.

b) Secondary Segment: The Company caters only to the Indian market representing a singular economic environment with similar risks and returns and further there are no reportable geographical segments.

2 In the current year segment liabilities are shown net of shareholders fund while in the the previous year same were shown including shareholders fund.

36. RELATED PARTY DISCLOSURE a. Key Management Personnel

Designation Name of incumbent Remarks

Chairman and Managing Director

Shri R K Upadhyay Upto 30th June 2014

Shri A.N Rai From 1st July 2014 to 15th January 2015

Shri Anupam Shrivasatava From 16th January 2015 onwards

Director (Finance) Shri Anupam Shrivastava Dir (CM)

Upto 15th January 2015

Director (Enterprise) Shri A.N. Rai –

Director (Consumer Fixed Access)

Shri N.K.Gupta –


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Designation Name of incumbent Remarks

Director (Consumer Mobility) Shri Anupam Shrivastava Upto 15th January 2015

Shri N.K. Gupta From 16th January 2015 onwards

Director (Human Resource) Shri A.N. Rai –

Government Director Shri Shahbaz Ali Upto 26th August 2014

Ms. Rita Amitabh Teaotia –

Smt. Darshana Momaya Dabral

From 19th September 2014 onwards

Non-official part-time Director

Prof. N. Balakrishnan –

Shri Ajai Vikram Singh –

b. Disclosure of transactions between the Company and related parties and the status of outstanding balances.

Name of the Party Description of transactions Year ended 31st March 2015

Year ended 31st March 2014

Key management personnel

Remuneration paid

Payment of salary and allowances 78 120Perquisites 3 4

Sitting fees 2 2Total 83 126Advance given: Opening balance 4 1Extended during the year 12 15Total 16 16Repayment of advance 13 12Outstanding advance 3 4

Note: These advances are in the normal course of business.

c. The Company being a wholly State owned enterprise, disclosure as regards related party relationship with other State controlled enterprises and transactions with such enterprises has not been made in accordance with the notified “Accounting Standard-18 Related party disclosures”.

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37. AUDITOR’S REMUNERATION (STATUTORY/BRANCH AUDITORS)



Statutory auditor Branch auditor Statutory auditor Branch auditor

Statutory audit fee 15 271 13 227

Certification charges

2 26 2 36

Reimbursement of expenses

11 21 2 21

Total 28 318 17 284

Other services – – – –

Tax audit fee – 26 – 24

Note: Fees are exclusive of service tax and cess wherever applicable.

38. ACCOUNTING STANDARD-29, DISCLOSURE REQUIREMENT

The disclosure relating to provisions in terms of AS-29, to the extent available, are as under:

Name of Provisions

Opening balance as at 1st April 2014

Fresh provision

made during the year

Provision utilized

during the year

Provision written back during the

year

Closing balance as at 31st March

2015

Wealth tax 389 78 82 – 385

(390) (84) (85) – (389)

Contingencies 1,544 86 55 3 1,572

(1,256) (435) (1) (146) (1,544)

Total 1,646 519 86 146 1,933

(1,589) (205) (148) – (1,646)

Note: Figures in bracket denotes previous year figures.

39. OTHER SCHEDULE-III REQUIREMENTS

Information required as per Note 5(viii) of General Instructions for preparation of statement of profit and loss, Part II of Schedule III of Companies Act, 2013, to the extent available, is as under:


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a. Value of Imports on CIF Basis:



Components and spares parts 597 957Capital goods 1,101 15,721Total 1,698 16,678

Note: One circle (previous year one circle) has not ascertained the value of import on CIF basis.

b. The expenditure in foreign currency:



Expenditure on services 5881 937Travelling 41 23Others 5,700 8,685Total 11,622 9,645

Note: One circle (previous year one circle) has not ascertained the value of expenditure in foreign currency.

c. Consumption of imported and indigenous stores and spares parts (to the extent identified):



(` in lacs) % (` in lacs) %

Imported 6,480 15 21,908 56

Indigenous 37,542 85 17,325 44

Total 44,022 100 39,233 100

Note: Three circles (previous year one circle) has not ascertained the consumption of imported and indigenous stores and spares parts.

d. Earnings in foreign currency:



Training fee 94 56

Income from services 12,646 2,548

Others 813 685

Total 13,553 3,289

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Note: One circle (previous year one circle) has not ascertained the value of earnings in foreign currency.

40. LEASE

The Company has taken vehicles for senior executives under operating leases, which expire between the period ranging from April 2015 to November 2019 (previous year April 2014 to May 2018). The gross rental expenses, excluding service tax, for such vehicles are ` 83 lacs (previous year ` 92 lacs). The committed lease rentals in the future are:



Not later than one year (excluding service tax) 66 90Later than one year and not later than five years (excluding service tax)

153 110

Total 219 200

41. Vide an Memorandum of Understanding entered between the Company and MTNL, rentals are calculated at mutually agreed rates after review of space occupied by both the aforementioned Public Sector Undertakings (PSUs)in each others’ buildings.

42. CONTINGENT LIABILITIES AND COMMITMENTS: a. Contingent liabilities (i) Claims against the company not acknowledged as debts are as follows:

Particulars As at 31st March 2015 As at 31st March 2014

No. of cases Amount No. of cases Amount

TR Billing 114 56 36 133

Enhanced sales tax in lieu of C/D Forms 21 2,395 11 1,372

On account of service tax disputed 94 33,292 120 22,152

Sales tax disputed 63 12,925 57 14,354

Central excise claims 18 1,820 20 3,536

License fee and spectrum charges [note 1] 2 925,917 2 1,136,678

Foreign exchange fluctuation loss [note 2] 1 2,465 1 2,465

Others [note 3] 392 194,513 43,184 154,565

Total 705 1,173,383 43,431 1,335,255

Note 1: Demand raised by DoT amounting to:

i) ` 691,186 lacs on account of one time spectrum charges for Global System for Mobile (GSM) spectrum held by the Company, the matter is sub-judice by other operators and


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the amount is not finally crystallized. ii) ` 234,731 lacs on account of provisional assessment of license fee for the years 2007-

08 to 2012-13, the matter has been taken up with DoT for revision.

Note 2: The net amount payable to Pakistan Telecom Company Limited for settlement of telecom dues amounting to ` 17,671 lacs payable in Gold Franc currency have been accounted for in the book of Maharashtra Telecom circle in the year 2012-13 pertaining to the period upto June 2003. No claim has been received from Pakistan Telecom Company Limited on account of telecom traffic. In the absence of relevant details of traffic data, no recognition of income and provisioning for expenditure related to it has been accounted for, for the above period. The Management has decided not to recognise the foreign exchange fluctuation for the claims recoverable/payable from/to PTCL in the books of accounts and disclose the same will be shown as contingent liabilities.

Note 3: The contingent liability in connection to nine cases included under the head ‘Others’ in the above table is not ascertainable.

(ii) Claims pending in court related to Land acquisition, TR billing, Service tax, Central Excise andSales tax, Arbitration cases and others.


No. of cases 13,757 14,438

Amount 1,105,158 848,092

(iii) Demands raised by the Income Tax Departments not acknowledged as debt are as follows:

The Income Tax Assessments u/s 143(3) of Income Tax Act 1961 have been completed up to Assessment Year 2012-13 i.e. Financial Year 2011-12 and the disputed demand outstanding up to Assessment Year 2012-13 is of ` 707,995 lacs which has not been acknowledged as confirmed liability as the Company has been legally advised that this demand will either be quashed or substantially reduced.

(iv) Liability on account of bank guarantees given by the Company.


With cash margin

Without cash margin

With cash margin Without cash margin

No. of cases 37 437 33 395

Amount 1,264 8,221 1,169 6,250

(v) As per Office Memorandum (OM) dated 19th November 2009, pension contribution was payable on the actual pay drawn as on 1st January 2007 (being the date of implementation of second pay commission for IDA). Whereas the Company was paying pension contribution on maximum of the scale as advised by DoT, from 1st

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December 2011 the management had decided to change the method of payment of pension contribution from maximum pay scale to actual pay drawn as per the office memorandum dated 19th November 2009. Although the matter is still under pursuance with DoT, meanwhile, the management has once again decided to pay the pension contribution on maximum of the pay scale from 1st October 2014 onwards. The actual difference between these two methods of pension contribution payment upto 31st March 2015 is ` 77,571 lacs (previous year ` 70,703 lacs).

b. Commitments

a) Capital commitments

(i) The estimated amounts of contracts remaining to be executed on capital account and not provided for in relation to execution of works and purchase of equipment are ` 83,403 lacs (previous year ` 121,749 lacs).

(ii) In seven circles (previous year six circles) the estimated amount of contract remaining to be executed on capital account has not been ascertained.

b) Other commitments

(i) The amount of other commitments amounting to ` 5,640 lacs (previous year ` 8,333 lacs) is ascertained in one circle (previous year two circles).

43. CHANGE IN DEPRECIATION

Pursuant to enactment of Schedule II of the Companies Act, 2013, effective 1st April 2014, the management has reassessed and changed, wherever necessary the useful lives to compute depreciation, to conform to the requirements of the Companies Act, 2013. Due to the aforementioned, the depreciation and amortisation charge and loss for the year ended 31st March 2015 is higher by ` 286,423 lacs and fixed assets are lower by a corresponding amount. Further, based on the transitional provisions provided in Schedule II of the Act, an amount of ` 140,009 lacs has been adjusted with the opening reserves as at 1st April 2014.


Loss for the year (823,409)

Add: Depreciation charged as per Companies Act, 2013 881,680

Less: Depreciation as per erstwhile Companies Act, 1956 (595,257)

Adjusted loss for the year (536,986)

44. CURRENT TAX

The provision for income-tax for the current year has not been made since the Company is not having any taxable income either under normal provision of Income-Tax Act, 1961 or special provision under section 115JB (Minimum Alternate Tax) of the Income-Tax Act, 1961.


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45. The Company is executing various projects for various Government departments on reimbursement basis.

46. An agreement dated 30th September 2014 has been entered into between the Company and Government of India through DoT with regard to provide mobile services in areas identified by Ministry of Home Affairs (GOI) in left wing extremists affected areas on agreed terms and conditions.

47. During the current year employees of the Company have contributed an amount of ` 1,284 lacs the Prime Minister National Relief Fund for disaster relief measures and rehabilitation of the victims of flood in Jammu & Kashmir.

48. A climatic catastrophe in the state of Jammu & Kashmir has caused damage to certain assets of the Jammu & Kashmir Telecom Circle of the company. The management is in the process of identifying the damaged assets for ascertaining the loss arising on this account, but does not expect the same to have a significant on the financial statements.

49. Figures of the previous year have been regrouped or reclassified wherever necessary to conform to the current years grouping and classification.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date.

for Walker Chandiok& Co LLP For and on behalf of Bharat Sanchar Nigam Limited

(formerly Walker, Chandiok& Co) Chartered Accountants Sd/- Anupam Shrivastava Chairman and Managing DirectorSd/- per Anamitra Das Partner Sd/- Sujata Ray Director (HR) Sd/- M.N.Punde General Manager (Corporate Accounts) Sd/- H.C. Pant Company Secretary and Sr. General Manager (Legal)

Place : New DelhiDate : 18 September 2015

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Independent Auditor’s ReportTothe Members of Bharat Sanchar Nigam Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of Bharat Sanchar Nigam Limited (the ‘Company’), which comprise the Balance Sheet as at 31st March 2015, the Statement of Profit and Loss,the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information. These financial statements comprise of 47 circles, out of which 1 circle is audited by us and remaining 46 circles are audited by the respective circle auditors appointed under Section 139 of the Companies Act, 2013 (the ‘Act’) by the Comptroller and Auditor General of India.

Management’s Responsibility for the Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements, that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the 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 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, 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

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. 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.

5. We conducted our audit in accordance with the Standards on Auditing 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the 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 controls 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, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the


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accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence obtained by us and the audit evidence obtained by the other circle auditors in terms of their reports referred to in sub-paragraph 38 of the Other Matter paragraph below is sufficient and appropriate to provide a basis for our qualified audit opinion on the financial statements.

Basis for Qualified Opinion

Assets and liabilities taken over from Department of Telecommunication (‘DoT’) and the amounts receivable and payable to DoT

8. As detailed in note 28, 31.1 and 31.3 to the financial statements, assets and liabilities (including contingent liabilities) taken over from DoT have been verified and valued by the management based on internal calculations. Further, subsequent adjustments made on account of identification and recognition of net assets is adjusted to capital reserve. These are subject to reconciliations and confirmation from DoT as regards to ownership, value and classification. The consequential impact on the financial statements, if any, as a result of the same is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

9. As detailed in note 32 to the financial statements, amounts due from and to DoT included in current assets and current liabilities aggregating to Rs. 27,130 lacs (previous year Rs. 173,669 lacs) and Rs. 50,865 lacs (previous year Rs. 39,109 lacs) respectively are subject to confirmations and reconciliation. Consequently, the impact of the adjustments, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Fixed Assets

10. As reported by auditors of 19 circles, Capital work-in-progress, inter alia, includes balances pending capitalisation for long-periods of time owing to pending analysis of status, value and obtaining of commissioning certificates. The consequential impact on the capital work-in-progress, fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

11. As reported by auditors of 8 circles, in the absence of information in respect of certain items of fixed assets capitalised, particularly batteries, it could not be established whether assets capitalised were on account of replacement/extension of an existing asset or additional acquisition of a new asset and hence the consequential impact of the same on the classification/value of the respective asset, depreciation and amortisation, expenses and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

12. As reported by auditors of 12 circles, the leasehold land as identified and valued by the respective circles have been incorporated in the books of accounts and amortised with effect from the date of formation of the Company. Hence, in respect of the lands still not identified and/or duly incorporated in the books of accounts of the respective circles, the consequential impact on value of fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year

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ended 31st March 2014 was also qualified in respect of this matter.

13. As detailed in note 31.2 to the financial statements, auditors of 6 circles have reported on the expired/non-renewal of leases on lands on which the Company had constructed buildings and the fact that management has not made any provision for the surrender value/written down value of the aforementioned buildings in the anticipation of the ultimate renewal of the leases. The consequential impact of adjustment on fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

14. As stated in note 13(a) and 31.3 to the financial statements, fixed assets, inter alia, includes land pertaining to 23 circles, purchased/acquired on leasehold/ freehold basis through various authorities, the title deeds of which are yet to be executed in the name of the Company. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

15. The accounting policy of the Company as stated in note 2.6 to the financial statements with respect to the decommissioned assets has not been uniformly applied across all circles. In 17 circles, the decommissioned assets are not recorded at lower of the cost or net realisable value. While,in 6 circles, the decommissioned assets have not been appropriately adjusted from the block of fixed assets and depreciation and amortisation is still being charged on such decommissioned assets. In the absence of sufficient details, we are unable to comment upon the impact of adjustment on the fixed assets, current assets, depreciation and amortisation and loss for the year, if any, arising out of the same. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

16. The following accounting treatments by the Company in respect of fixed assets and capital works-in-progress are not in accordance with the provisions of the Accounting Standard-6, Depreciation Accounting; Accounting Standard-10, Accounting for fixed assets, and Accounting Standard-26, Intangible Assets notified under section 133 of the Act read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (as amended):

1. As detailed in note 31.6 to the financial statements and as reported by auditors of 23 circles, the Company has not consistently adhered to capitalizing the overheads expenses specifically attributable to the capital work-in-progress but has recorded the same on estimated/fixed percentage/proportionate/payment basis;

2. As reported by auditors of certain circles, the Company capitalises the assetson periodic basis instead of at the ready to use date; and

3. Accounting policies regarding capitalization, disposal, depreciation and amortization of fixed assets are not uniformly applied in case of 24 circles.

The resultant impact of the above non compliances with the standards on the value of fixed assets, capital work-in-progress, depreciation and amortization and loss for the year, if any,are presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Current Assets and Current Liabilities

17. The Company does not follow a system of obtaining confirmation and performing reconciliation of balances in respect of trade receivables, deposits with departments/companies (inter alia, including Mahanagar Telecom Nigam Limited and Bharat Broadband Network Limited),


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claims recoverable from/payable to DoT (including license fees payable as detailed in note 42(a)(i) of the financial statements) or to/from other government departments/authorities, subscriber/customer deposit accounts, trade payable and claims payable. Due to non-availability of confirmations and reconciliations of the aforementioned account balances, we are unable to quantify the impact of the adjustments, if any, arising from reconciliation and settlement of account balances on the financial statements. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

18. As reported by auditors of certain circles, there are unquantifiable differences between the general ledger/trial balance and accounting records pertaining to loans and advances, current assets and current liabilities. The impact on the financial statements, if any, owing to the aforementioned non-reconciliations is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

19. As reported by auditor of 11 circles, there are differences in the inventory records between stores ledger and general ledger/trial balance, the impact of the same is currently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

20. As reported by auditors of 20 circles, in absence of adequate information, details and records of old, non-moving, damaged and unserviceable inventories could not be identified. Further, as reported by auditors of 6 circles, old, non-moving, damaged and unserviceable inventories identified are shown at historical cost. This is not in accordance with the Accounting Standard 2 on Valuation of Inventories and adjustment, if any, amount of lower of net realizable value and the cost is currently not ascertainable. The adjustment, if any, on inventories, consumption and loss for the year is presently not ascertainable. The aforementioned non-identification of old, non-moving, damaged and unserviceable inventories was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31st March 2014.

21. As reported by auditors of 2 circles, certain units have not applied the Company’s policy of valuation of inventory on weighted average method as stated in note 2.8 to the financial statements. The impact of the adjustment, if any, on inventory, consumption and loss for the year is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Inter/ Intra Circle Remittance Account

22. As detailed in note 33 to the financial statements, the Inter-Circle/Unit remittance balances amounting to Rs. 57,312 lacs (previous year Rs. 86,537 lacs) are yet to be reconciled. Pending such reconciliations, the possible cumulative impact of the adjustments, if any, on assets and liabilities and the current and prior year(s) income and expenditure is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

License Fee, Spectrum Charges, Inter Connect Usage Charges

23. As detailed in note 29 to the financial statements, the Company segregates revenue from NLD (National long distance)/ILD (International long distance) on an estimated basis instead of actual usage of pulse which consequently results in recognition of the license fees on an estimated basis. The impact of adjustment, if any, on the license fees expense, recoverable/

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payable from DoT and loss for the year is presently not ascertainable for the year. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Revenue

24. As reported by auditors of 4 circles, the income from recharge coupons, prepaid calling cards, internet connection cards, sanchar net cards and stock of recharge coupons and prepaid calling cards are subject to reconciliations. In the absence of specific details, the impact of adjustment, if any, on financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

25. The revenue and expenditure for the current year, inter alia, includes amounts pertaining to prior period(s) as reported by auditors of 4 circles and 6 circles respectively. This has not been separately disclosed in the financial statements in a manner that their impact on the current year’s loss can be perceived, which is not in accordance with the Accounting Standard-5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. The consequential impact of adjustments, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

26. As stated in note 2.3-(e), (f) and (i) to the significant accounting policies, certain items of revenue are accounted for on cash basis instead of the accrual basis of recognition of revenue which is not in accordance with the generally accepted accounting principles in India. The impact of the adjustment, if any, in respect thereof on revenue, license fee, trade receivables and loss for the year is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Provisions and contingent liabilities

27. The provisions and the disclosures with regard to matters under litigations have been made based upon the management estimates. Based upon the report of auditors of 14 circles, sufficient and appropriate audit evidence for examining and verifying the quantum of contingent liabilities disclosed in note 42(a) to the financial statements has not been obtained. In the absence of the adequate details and documents and pending the responses to our confirmation requests in respect of the litigations at the corporate level, the impact of adjustments/disclosures, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Miscellaneous

28. The Company has not complied in respect of the following Accounting Standards notified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended):

i) As detailed in note 35 to the financial statements, the expenses, incomes, assets and liabilities are not properly disclosed under the reportable segment as per the Accounting Standard 17 on Segment Reporting. In our opinion, the same does not give true and fair disclosure of the segment-wise operations of the Company as required by the aforementioned accounting standard. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.


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ii) As stated in note 15 to the financial statement, the Company as at 31st March 2015 has deferred tax assets (net) amounting to Rs. 84,706 lacs (previous year Rs. 23,773 lacs). Since the Company has a recent history of losses and owing to lack of virtual certainty and convincing evidence that sufficient future taxable income will be available against such deferred tax asset and as stipulated by Accounting Standard-22, Accounting for taxes on income, the amount of such deferred tax asset should be written off. Consequent to the above, loss for the year in the statement of profit and loss is under-stated by Rs. 84,706 lacs and the balance of deferred tax asset included under Non-Current Assets, has been overstated by the corresponding amount. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

iii) The Company has not carried out any Techno-economic assessment during the year ended 31st March 2015 and hence identification of impairment loss and provision thereof, if any, has not been made. The same is not in accordance with the notified Accounting Standard 28 on Impairment of asset. The consequential impact of adjustment, if any, on the financial statements is currently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

iv) The accounting for capital and revenue grant in accordance with the notified Accounting Standard 12 on Accounting for grants is not followed consistently as reported by auditors of 5 circles. In the absence of specific details, the consequential impact of adjustment, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

v) The accounting policy as referred to in note 2.10(b) to the financial statements with respect to the liability on account of post-retirement medical benefits of employees including retired employees, a defined benefit plan, is recognized on actual basis in respect of bills received by the Company instead of recognizing the liability for the same as the present value of the defined benefit obligation at the balance sheet date calculated on the basis of actuarial valuation in accordance with the notified Accounting Standard-5 on Employee Benefits. The consequential impact of adjustment, if any, owing to this non-compliance on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

vi) As reported by 3 circles, the Company has not amounted for the contract revenue and contract costs pertaining to construction contracts in accordance with the notified Accounting Standard 7, Construction Contracts. In the absence of specific details, the consequential impact of adjustment, if any, on the financial statements is presently not ascertainable.

29. As stated in the note 2.12 of the financial statements, only individual transactions of income/expenditure exceeding Rs. 5 lacs, are considered for evaluation as prior-period items. In our opinion, the said accounting policy is not in accordance with the generally accepted accounting principles in India and the same should be evaluated on aggregation of all prior period transactions of similar nature irrespective of individual transaction values, for possible adjustment/disclosure in the financial statements. The consequential impact of the adjustment, if any, on the income, expense and loss for the year is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

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30. As reported by 15 circles and detailed in note 10(a) to the financial statements, these circles have not identified units covered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act, 2006’) and hence disclosures as required under the MSMED Act, 2006 is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

31. The disclosure requirements of the Schedule III of the Acthas not been properly adhered to in the presentation and disclosure of financial statements of the Company in respect of classification of assets/liabilities into current and non-current and secured and unsecured, wherever applicable; categorisation of assets/liabilities into appropriate accounting captions; changes in inventory; non-disclosure of consumption of stores and spares; consumption of imported and indigenous stores and spares parts; capital and other commitments and expenditure and earnings in foreign currency. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

32. As reported by Jammu & Kashmir Telecom circle, all the vouchers, documents and records pertaining to the SSA Srinagar for the period from 1st April 2014 to 7th September 2014, are not available as the same have been lost/destroyed in floods. In the absence of such records, we are unable to comment upon the correctness and completeness of all the transactions for that period.

33. As reported by auditors of 20 circles, compliances with regard to deposition, deduction, reconciliation of service tax, tax deducted at source and value added tax are pending to be made. In the absence of specific details, we are unable to comment on its consequential impact, if any, on the financial statements. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

34. As detailed in notes (a) and (b) of the Cash Flow Statement, certain assumptions have been made for the purpose of preparation of the Cash Flow Statement. In the absence of the appropriate details, we are presently unable to ascertain the impact, if any, on the adjustments/disclosures in the Cash Flow Statement. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

35. Certain subsequent events or circumstances may have occurred between the auditors’ report date of the respective circles of the Company and that of this audit report. Such events or circumstances could significantly affect the accompanying financial statements or the related disclosures forming part of these financial statements of the Company. In the absence of sufficient appropriate audit evidence in respect of the other circles, the impact of adjustments, if any, or disclosures to be included in these financial statements of the Company cannot be ascertained. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Qualified Opinion

36. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other circle auditors on the financial statements of the circles as noted below, except for the effects/ possible effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid 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 31st March 2015, its loss and its cash flows for the year ended on that date.


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Emphasis of Matter

37. We draw attention to note 14 to the financial statements of the Company regarding investments in ITI Limited aggregating to Rs. 20,000 lacs as at 31st March 2015. The management, based on the factors mentioned in the said note, believes that the diminution in the value of investments is temporary in nature and hence no provision in respect of aforementioned amount has been made in the accompanying financial statement. Our opinion is not qualified in respect of this matter.

Other Matter

38. We did not audit the financial statements of 46 circles and balances pertaining to the corporate office, which reflect total assets (including intra/inter circle remittances) of Rs. 6,423,403 lacs as at 31st March 2015; total revenues of Rs. 2,760,607 lacs and net cash inflows aggregating to Rs. 40,758 lacs for the year then ended. The financial statements of the aforementioned 46 circles have been audited by other auditors whose reports have been furnished to us by the management, and our opinion on the financial statements of the Company for the year then ended to the extent they relate to the financial statements not audited by us as stated in this paragraph is based solely on the audit reports of the other auditors.

39. Our opinion on the financial statements and our report on other Legal and Regulatory Requirements below is not modified in respect of the above matters with respect to our reliance on the work done by and reports of the other circle auditors.

Report on Other Legal and Regulatory Requirements

40. As required by the Companies (Auditor’s Report) Order, 2015 (the ‘Order’) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

41. As required by Section 143(3) of the Act and based on the auditor’s report of the circles, we report that:

a. We have sought and except for the possible effects of the matters described in the Basis of Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the effects/ possible effects of the matters described in the Basis of Qualified Opinion paragraph,in our opinion, proper books of account as required by law relating to the preparation of the aforementioned financial statements have been kept by the Company so far as it appears from our examination of those books and the reports of other auditors;

c. The reports on the accounts of the circles of the Company audited under Section 143(8) of the Act by the circle auditors have been sent to us and have been properly dealt with by us in preparing this report;

d. Except for the effects/ possible effects of the matters described in the Basis of Qualified Opinion paragraph, the financial statements dealt with by this report are in agreement with the relevant books of account maintained for the purpose of preparation of these financial statements;

e. Except for the effects/ possible effects of the matters described in the Basis of Qualified Opinion paragraph,in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the

138

Companies (Accounts) Rules, 2014 (as amended); f. Since, the Company is a Government Company, section 164(2) of the Companies Act,

2013 regarding obtaining written representations from the directors of the Company, is not applicable to the Company in terms of notification no. GSR-463(E) issued by Ministry of Corporate Affairs;

g. the qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph; and

h. 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. Except for the possible effects of the matter described in para 27 of the Basis of Qualified Opinion above, as detailed in Note 42(a) to the financial statements, the Company has disclosed the impact of pending litigations on its financial position;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For Walker Chandiok & Co LLP(Formerly Walker, Chandiok & Co)Chartered AccountantsFirm’s Registration No.: 001076N/N500013

Sd/-perAnamitra DasPartner Membership No.:062191

Place: Delhi

Date: 18 September 2015


139

Annexure to the Independent Auditor’s Report of even date to the members of Bharat Sanchar Nigam Limited on the financial statements for the year ended 31st March 2015

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit and based on the comments in the auditors’ reports of the circles, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in case of 23 circles, where such records have not been appropriately maintained

(b) In case of 17 circles, the fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

However, in case of 1 circle, the fixed assets have been physically verified by the management during the year but, in our opinion, the frequency of verification of the fixed assets is not reasonable having regard to the size of the Company and the nature of its assets.

Further, in case of 11 circles, the fixed assets have not been physically verified by the management during the year and in case of 18 circles though the management has conducted physical verification of fixed assets but no documentary evidence was provided. Hence, in respect of the aforementioned 29 circles, we are unable to comment on the discrepancies, if any, which could have arisen on such verification. In our opinion, the frequency of verification of the fixed assets is also not reasonable having regard to the size of the Company and nature of its assets in respect of these circles.

(ii) (a) In case of 6 circles, there is no inventory and accordingly the provisions of clause 3(ii) of the order are not applicable in respect of these circles.

In case of 21 circles, the management has conducted physical verification of inventory at reasonable intervals during the year.

Further,in case of 9 circles, the inventory has not been verified by the management during the year and in case of 11 circles though the management has conducted physical verification of inventory but no documentary evidence was provided, therefore, we are unable to comment on the provisions of clause 3(ii)(a) of the order in respect of these circles.

(b) In case of 15 circles, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

In case of 6 circles, the procedures of physical verification of inventory followed by the management are not reasonable and adequate in relation to the size of the Company and the nature of its business.

Further, the inventory of 9 circles, have not been verified by the management during the year and owing to lack of adequate documentation provided in case of 11 circles, we are, therefore, unable to comment on the procedures of physical verification and reasonableness thereof.

(c) In case of 18 circles, there are proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

140

In case of 3 circles, proper records of inventory are being maintained. However, adequate documentation of physical verification of inventory was not provided.Further, in case of 16 circles, proper records of inventory are not maintained and in case of 4 circles physical verification of inventory was not conducted. We are, therefore, unable to comment on the discrepancies which could have arisen between physical inventory and book records in these 23 circles.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a) and 3(iii)(b) of the Order are not applicable.

iv) In our opinion, in case of 19 circles, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

Further, in our opinion, in case of 28 circles, the internal control system is not commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, in case of 12 circles, we noticed continuing failures to correct major weaknesses in the internal control system.

(v) 42 circles have not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable to the aforementioned circles. Further, in case of 5 circles,in the absence of adequate information, the auditor has not been able to comment upon this clause.

(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 sub-section (1) of Section 148 of the Act in respect of Company’s services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) 29 circles are regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, 18 circles have generally been regular in depositing such dues, though there has been a slight delay in few cases. Except for our comments in para 27 in the basis of qualified opinion paragraph of the audit report,in case of 40 circles, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable. Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable in respect of 4 circles are set out in appendix I to our report and incase of 3 circles, the same are not ascertainable in the absence of adequate information.

(b) Except for the possible effects of the matter described in paragraph 27 under


141

the Basis of Qualified Opinion paragraph, the impact of which is currently not ascertainable, in case of 14 circles, there are no dues in respect of income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess that have not been deposited with the appropriate authorities on account of any dispute. Further, incase of 33 circles, the dues outstanding in respect of income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute, the said information has been detailed in appendix II to our report.

(c) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder. Accordingly, the provisions of clause 3(vii)(c) of the Order are not applicable.

(viii) In our opinion, the Company’s accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current and the immediately preceding financial year.

(ix) In our opinion, the Company has not defaulted in repayment of dues to banks during the year. The Company has no dues payable to a financial institution or debenture-holders during the year.

(x) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 3(x) of the Order are not applicable.

(xi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xii) No fraud on or by the Company has been noticed or reported during the period covered by our audit except in the case of 7 circles. Out of which, 1 circle has reported inventory embezzlements aggregating to Rs. 5.67 lacs, 4 circles have reported on frauds being done by the employees of the Company aggregating to Rs. 94.29 lacs and incase of 2 circles owing to lack of information available, the same cannot be quantified.

For Walker Chandiok & Co LLP(formerly Walker, Chandiok & Co)Chartered AccountantsFirm Registration No.: 001076N/N500013

Sd/-per Anamitra DasPartner Membership No.:062191

Place: New Delhi

Date:18 September 2015

142

S.

No.

Cir

cle

Nam

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of S

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due

s A

mou

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(Rs.

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nera

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les

tax

act,

1962

Sale

s Ta

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.06

2N

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Empl

oyee

Pro

vide

nt F

und

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Empl

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Pro

vide

nt

Fund

due

s 1

67.9

0

3H

imac

hal P

rade

shEm

ploy

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rovi

dent

Fun

d A

ctEm

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rovi

dent

Fu

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ues

25.

55

4U

P W

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Wor

k C

ontra

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ax A

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Con

tract

Tax

188

.05

Not

es :

1)

As

per

the

repo

rt of

the

audi

tor’s

of t

he M

adhy

a Pr

ades

h ci

rcle

, val

ue a

dded

tax

(VA

T) c

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by

som

e un

its o

n sa

le o

f ten

der

form

s ha

s no

t bee

n de

posi

ted

with

the

Gov

ernm

ent a

nd is

pay

able

for m

ore

than

6 m

onth

s fro

m th

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ey b

ecam

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2)

The

stat

utor

y du

es o

utst

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ng fo

r a

perio

d of

mor

e th

an 6

mon

ths

have

not

bee

n as

certa

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, in

the

abse

nce

of d

etai

ls, i

n ca

se o

f M

ahar

asht

ra, W

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3)

The

Har

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circ

le h

as n

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epos

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serv

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tax

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vere

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m v

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me

has

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asce

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y th

e ci

rcle

aud

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.


143

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

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due

sA

mou

nt

(Rs.

in la

cs)

Am

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(Rs.

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acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

1A

ssam

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nce

Act

, 199

4Se

rvic

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x 7

53

–

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

Tota

l 7

53

2C

henn

ai P

hone

sFi

nanc

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ct, 1

994

Serv

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tax

218

–

C

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Inco

me

Tax

Act

, 196

1Ta

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256

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omm

issi

oner

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Prov

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38

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And

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Goo

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Tax

Act

Sale

s ta

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4,2

79

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2002

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3Su

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803

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20

03 to

04

4,2

69

–

2004

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5

15,

144

–

2005

to 0

8

4,2

65

–

2008

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9

4,1

67

–

2009

to 1

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Fina

nce

Act

, 199

4

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76

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8

Com

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20

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8

95

–

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to 1

0

304

–

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10 to

11

283

–

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12

76

–

2012

to 1

3

127

–

20

13 to

14

Exem

pted

ser

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s

303

–

20

05 to

06

531

–

20

01 to

11

270

–

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12

263

–

20

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06

69

–

2004

to 0

9C

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Com

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vat c

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,127

–

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3 –

144

S.

No.

Cir

cle

nam

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of s

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due

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in la

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130

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7

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1 to

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5–06

27

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134

5

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5

0

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57

–

2006

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263

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6

67

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2

2

588

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200

20

03–0

4 to

200

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93

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8 to

200

9–10

391

–

20

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3 to

200

5–06

Com

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97

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2009

14

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2007

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26

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61

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19

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5

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–07

to 2

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171

4

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7 to

201

0–11

27

–

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110

5

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23

–

2002

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47

–

2005

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to 2

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07

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02

–

2002

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to 2

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06

354

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7

15

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112

–

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200

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32

–

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145

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

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due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

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Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

464

2

00

2000

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Hig

h C

ourt

250

–

20

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200

3

1,2

56

300

20

05–0

6 to

200

7–08

Com

mis

sion

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f cen

tral e

xcis

e an

d

serv

ice

tax

243

2

0 20

06 to

200

7

1,2

41

150

20

08

63

15

2006

Com

mis

sion

er 5

96

–

2009

2

2

2010

to 2

011

Com

mis

sion

er A

ppea

l

170

–

O

ctob

er 2

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to

Mar

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mis

sion

er o

f cen

tral e

xcis

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d

serv

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tax

787

1

00

2001

–02

to 2

005–

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Sale

s Ta

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try T

axEn

try ta

x

2

2

2010

to 2

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JCC

T A

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l

4

1

2007

to 2

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DC

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48

33

2008

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60

32

2009

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JCC

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l 2

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20

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9

253

2

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DC

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JCC

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7 2

7 20

08 to

200

9

Sale

s ta

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83

10

2005

to 2

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27

4

2006

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490

3

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2007

to 2

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Hig

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JCC

T A

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Empl

oyee

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05Tr

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al

19

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1996

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200

2 to

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brua

ry 2

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3

5

2002

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013

17

5

1st A

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199

6 to

31

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arch

, 201

0

146

S.

No.

Cir

cle

nam

eN

ame

of s

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199

6 to

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29

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, 196

1Ta

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6J &

K (A

SK)

Jam

mu

and

Kash

mir

Gen

eral

Sal

es T

ax A

ct,1

962

Sale

s ta

x de

man

d

331

–

20

02 to

200

3

Com

mis

sion

er o

f sal

es ta

x, Ja

mm

u

502

–

20

03 to

200

4

900

–

20

04 to

200

5

723

–

20

05 to

200

6

421

–

20

06 to

200

7

Fina

nce

Act

, 199

4Se

rvic

e ta

x du

es 5

40

–

2005

to 2

009

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x , N

ew D

elhi

Tota

l 3

,417

–


147

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

7Ka

rnat

aka

Acl

e C

ases

, Sal

es T

ax

Slp

No.

278

43 –

279

61/

2011

Acl

e Fo

r Lig

ht

Tran

smis

sion

)

659

,600

–

20

11–1

2Su

prem

e C

ourt

Inco

me

Tax

Act

, 196

1

Inco

me

Tax

On

Com

mis

sion

Ofp

co 2

5 –

20

05–0

6

Inco

me

Tax

App

ella

te T

ribun

al

Bang

alor

e Be

nch

Bang

alor

eIn

com

e Ta

x O

n C

omm

issi

on O

fpco

21

–

2006

–07

Inco

me

Tax

On

Com

mis

sion

Ofp

co 3

–

20

07–0

8

Fina

nce

Act

, 199

4

Serv

ice

Tax

On

Pco

Com

mis

sion

16

–

2008

–09

Ces

tat B

anga

lore

Serv

ice

Tax

On

Pco

Com

mis

sion

5

–

2009

–10

Serv

ice

Tax

7

–

2006

–07

Com

mis

sion

er C

entra

l Exc

ise

Serv

ice

Tax

3

–

2008

–09

Sale

s Ta

x an

d in

tere

st 1

32

–

2013

–14

Karn

atak

a A

ppel

late

Trib

unal

Bg

EPF

and

inte

rest

34

–

2013

–14

EPF/

At/N

ew D

elhi

Fina

nce

Act

, 199

4

1. A

djus

tmen

t Of E

xces

s Pa

id S

ervi

ce T

ax In

Su

bseq

uent

Mon

ths.

20

08–0

9

25

–

2008

–09

Com

mis

sion

er O

f Cen

tral E

xcis

e (A

ppea

ls),

Man

galo

re.

Fina

nce

Act

, 199

4

Serv

ice

Tax

1

–

2006

–07

CES

TAT,

Ban

galo

re

EPF

–Int

eres

t 1

2 –

20

14–1

5H

igh

Cou

rt O

f Kar

nata

ka ,

Bang

alor

e

EPF

Dam

age

Cha

rges

15

–

2014

–15

Empl

oyee

s Pr

ovid

ent F

und

Adm

inis

trativ

e Tr

ibun

al

Loca

l pro

perty

tax

act

Prop

erty

Tax

On

Tow

ers

12

–

2009

–10

Karn

atak

a H

igh

Cou

rt

Cen

vat C

redi

t Rul

es, 2

004

Cen

vat C

redi

t On

Exci

se

Dut

y 4

40

–

2008

–09

Cus

tom

s Ex

cise

And

Ser

vice

Tax

A

ppel

late

Trib

unal

, Ban

galo

re

Cen

vat C

redi

t On

Exci

se

Dut

y 2

2 –

20

07–0

9

Cen

vat C

redi

t On

Exci

se

Dut

y 1

06

–

2004

–06

Cen

vat C

redi

t On

Exci

se

Dut

y 1

50

–

2007

–08

Cen

vat C

redi

t On

Exci

se

Dut

y 5

04

–

2009

–10

148

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Cen

vat C

redi

t On

Exci

se

Dut

y 9

4 –

20

10–1

1

Cen

vat C

redi

t On

Exci

se

Dut

y 7

8 –

20

11–1

2

Cen

vat O

n V

ehic

le H

iring

1

–

2010

–12

Com

mis

sion

er O

f Ser

vice

Tax

Fina

nce

Act

, 199

4Ro

undi

ng O

f Off

Serv

ice

Tax

63

–

2008

–10

Cus

tom

s Ex

cise

And

Ser

vice

Tax

A

ppel

late

Trib

unal

, Ban

galo

re

Serv

ice

Tax

On

Book

A

djus

tmen

t (La

ndlin

e A

nd

Mob

ile)

1,1

41

–

2007

–11

Com

mis

sion

er O

f Ser

vice

Tax

, Ba

ngal

ore

Serv

ice

Tax

On

Book

A

djus

tmen

t (La

ndlin

e A

nd

Mob

ile)

93

–

2011

–12

Serv

ice

Tax

On

Book

A

djus

tmen

t (La

ndlin

e A

nd

Mob

ile)

50

–

2012

–13

Serv

ice

Tax

On

Book

A

djus

tmen

t (La

ndlin

e A

nd

Mob

ile)

315

–

20

13–1

4

Tota

l 6

62,9

65

–

8Ke

rala

Serv

ice

Tax

Dis

allo

wan

ce o

f CEN

VA

T cr

edit

538

–

20

00–0

5C

ESTA

T Ba

nglo

re

87

–

2005

–06

Shor

t lev

y 4

9 –

20

10–1

1C

omm

r, A

ppea

ls. C

ochi

n

62

–

2011

–12

CES

TAT,

Ban

glor

e

Inel

igib

le C

ENV

AT

Cre

dit

7

–

2014

–15

Supe

rinte

nden

t, Se

rvic

e Ta

x ‘A

’ Ran

ge,

Koch

i

Non

pay

men

t of a

mou

nt

unde

r Rul

e 6(

3) 3

–

20

14–1

5

Non

pay

men

t of S

T on

Le

gal S

ervi

ce 0

* –

20

14–1

5

ST o

n G

TA 0

* –

20

13–1

4

Non

pay

men

t of S

T on

M

anpo

wer

8

–

2013

–14

Sale

s Ta

xD

ispu

te re

gard

ing

VA

T on

BB

mod

em g

iven

on

rent

al

basi

s.

3

–

2009

–10

Com

mr,

App

eals

. Kol

lam

.

Tota

l 7

56

–


149

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

9M

adhy

a Pr

ades

h Pe

ndin

g co

urt c

ases

on

acco

unt o

f ser

vice

tax,

ce

ntra

l exc

ise,

sal

es ta

x an

d en

try ta

x

4,1

22

1,7

09

2000

– 2

014

Tota

l 4

,122

1

,709

10M

ahar

asht

ra

Fina

nce

Act

, 199

4In

tere

st o

n Sh

ort P

aym

ent

of S

ervi

ce T

ax 2

2 –

20

05–2

006

CES

TAT,

Mum

bai

MV

AT

Act

, 200

5Pu

rcha

se T

ax 4

8 –

20

07–2

008

Sale

s Ta

x A

ppel

late

Trib

unal

Mum

bai

Fina

nce

Act

, 199

4In

tere

st o

n de

lay

in

paym

ent o

f Ser

vice

Tax

2

–

2005

CES

TAT,

Mum

bai

Inco

me

Tax

2009

–10

Act

19

61TD

S on

STD

PT

Com

mis

sion

126

–

20

09–1

0Th

e M

umba

i Hig

h C

ourt

Aur

anga

bad

Benc

h

Fina

nce

Act

, 199

4

Serv

ice

Tax

Cla

im 5

4 –

20

08–2

009

The

Hig

h C

ourt

Mum

bai,

Panj

im B

ench

Shor

t pay

men

t of S

.Tas

Se

c.73

219

–

19

98–9

9 to

200

1

CES

TAT,

Mum

bai

Inte

rest

on

Shor

t Pay

men

t of

Ser

vice

Tax

Sec

.75

1

–

2002

–200

3

8

–

1998

–199

9

Inco

me

Tax

Act

, 196

1Sh

ort D

educ

tion

of T

DS

50

–

2006

–07

to 2

008–

09IT

AT

Mum

bai

Fina

nce

Act

, 199

4Se

rvic

e Ta

x –I

nter

est &

Pe

nalty

25

–

2009

–201

0C

ESTA

T, M

umba

i

Prov

iden

t Fun

d A

ctEP

F D

ues

on C

ontra

ctor

s 1

45

–

2000

–01

to 0

607

The

Hig

h C

ourt,

New

Del

hi

Fina

nce

Act

, 199

4

Serv

ice

Tax

on T

atka

l D

epos

its 2

5 –

20

09–2

010

The

Add

ition

al C

omm

issi

oner

of S

ervi

ce

Tax,

Mum

bai

Wro

ng a

vailm

ent o

f C

ENV

AT

15

–

2009

–201

0

Shor

t pay

men

t of S

ervi

ce

Tax

47

–

2004

–200

5C

ESTA

T, M

umba

i

Inco

me

Tax

Act

, 196

1N

on d

educ

tion

of T

DS

394

–

20

02 –

200

7Th

e C

omm

issi

oner

of I

ncom

e Ta

x (A

ppea

ls)

Fina

nce

Act

, 199

4

Inte

rest

on

dela

y in

pa

ymen

t of S

ervi

ce T

ax

38

–

2002

Com

mis

sion

er o

f Exc

ise

& S

ervi

ce T

ax,

Ratn

agiri

.

9

–

2002

CBE

C, N

ew D

elhi

Non

lavy

of S

ervi

ce T

ax o

n C

CB/

PCO

346

–

19

99–2

006

Wro

ng a

vailm

ent o

f C

ENV

AT

127

–

D

ecem

ber.2

005

to

Mar

ch 2

010

Und

er a

ppea

l with

CES

TAT,

Mum

bai

150

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

47

–

2010

to 2

011

76

–

2011

to 2

012

161

–

20

12 to

201

3

Tota

l 1

,988

–

11N

E–I

Fina

nce

Act

, 199

4

Trip

ura

SSA

Ser

vice

Tax

, D

uty

and

Pena

lty 7

6 –

20

04 to

200

6C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Kol

kata

71

–

2008

TDS

Shor

t Ded

uctio

n &

In

tere

st 1

5 –

20

07 to

201

5TD

S C

PC

Tota

l 1

62

–

12Pu

njab

Empl

oyee

s Pr

ovid

ent F

und

& M

isc.

Pro

visi

ons

Act

, 19

52

Non

–Pay

men

t Of

Con

tribu

tion

In R

espe

ct

Of E

mpl

oyee

s Em

ploy

ed

By O

r Thr

ough

Thr

ee

Con

tract

ors

5

–

June

200

2 to

Fe

brua

ry 2

005

The

Ass

ista

nt C

omm

issi

oner

, EPF

O

rgan

isat

ion,

Sub

Reg

iona

l Offi

ce,

Am

ritsa

r

Del

ayed

Dep

osit

Of E

PF 3

3 –

Fe

brua

ry 2

002

to

June

200

4Pu

njab

& H

arya

na H

igh

Cou

rt

Epf A

sses

sed

On

Con

tract

La

bour

14

–

2011

–201

2EP

FAT

New

Del

hi

7Q, 1

4B O

f EPF

Act

14

–

2002

–200

4Pu

njab

& H

arya

na H

igh

Cou

rt

Indi

an E

lect

ricity

Act

, 191

0

Dem

and

Of A

rrea

rs

Of R

s. 1

4780

56 O

f V

erka

T/E

With

A/C

No.

A

43G

c430

003H

Rai

sed

By

Aee

(Eas

t) V

erka

, Psp

cl, A

sr

15

–

Janu

ary

2012

to

Sept

embe

r 201

3Th

e C

hief

Eng

inee

r, Zo

nal D

ispu

tes

settl

emen

t, PS

PCL,

Am

ritsa

r

Punj

ab M

unic

ipal

Act

, 19

11

Dem

and

Of H

ouse

Tax

Of

Rs. 2

8294

8/–

With

Inte

rest

O

f Rs.

509

40/–

& P

arch

a O

f Rs.

22

Tota

ling

To R

s.

3339

10/–

Of T

arnt

aran

T/

E.

3

–

1998

–99

to 2

003–

04

Punj

ab &

Har

yana

Hig

h C

ourt,

C

hand

igar

h.

Punj

ab G

ener

al S

ales

Tax

A

ct, 1

948

Sale

s Ta

x 4

6 –

19

91 to

199

6

Fina

nce

Act

, 199

4

Inte

rest

On

Reve

rsal

Of

Cen

vat C

redi

t On

Mod

em

Sale

15

–

2004

–05

to 2

008–

09C

omm

issi

oner

(Ser

vice

Tax

)

Serv

ice

Tax

21

–

2007

–08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi


151

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Wro

ng A

vailm

ent O

f C

enva

t Cre

dit O

n To

wer

s 3

2 –

20

04–0

5 &

200

5–06

Shor

t Pay

men

t Due

To

Var

iatio

n In

Rat

e 2

6 –

A

pril

2006

to

Sept

embe

r 200

6Pu

njab

& H

arya

na H

igh

Cou

rtPa

ymen

t Of S

ervi

ce T

ax

To D

ot In

stea

d O

f Tr–

6 C

halla

n

1,1

08

–

Oct

ober

200

2 to

Se

ptem

ber 2

003

Cen

vat D

enia

l On

Tow

er

Mat

eria

l 3

1 –

20

05–0

6, 2

006–

07

and

2007

–08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Reg.

Cen

vat C

r. U

tiliz

atio

n 8

7 –

20

06–0

7 to

200

7–08

Serv

ice

Tax

2

–

01–0

2–08

to

28.0

2.09

Add

ition

al C

omm

. Of S

ervi

ce T

ax

10

–

Oct

ober

200

5 to

Ja

nuar

y 20

08Jo

int C

omm

issi

oner

of C

entra

l Exc

ise,

C

hand

igar

h

15

–

2006

–201

0

Com

mis

sion

er o

f Cen

tral E

xcis

e A

ppea

ls

Cha

ndig

arh

9

–

2006

–200

8

Wro

ng A

vailm

ent O

f C

enva

t Cre

dit O

n In

put

Serv

ices

Use

d Fo

r Pr

ovid

ing

Exem

pted

Se

rvic

es

2

–

Apr

il 20

08 to

Se

ptem

ber 2

010

Punj

ab V

at A

ct, 2

005

Vat

On

Broa

d Ba

nd 1

49

–

2007

–08

Punj

ab &

Har

yana

Hig

h C

ourt

Sale

s Ta

x 5

92

–

2009

–10

Dep

uty

Com

mis

sion

er o

f Cen

tral E

xcis

e,

Cha

ndig

arh

Tota

l 2

,228

–

13O

rissa

Serv

ice

Tax

Sale

s Ta

x 2

0 –

19

93 to

201

5Su

prem

e co

urt

Sale

s Ta

x 2

5 –

19

93 to

201

5Su

prem

e co

urt

Serv

ice

Tax

0*

–

1993

to 2

015

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

OV

AT

VA

T 1

7,10

0 –

O

ctob

er, 2

014

Hig

h C

ourt,

Odi

sha

Tota

l 1

7,14

5 –

14Ra

jast

han

Entry

Tax

Entry

Tax

5,5

32

–

2005

–15

Raja

stha

n H

igh

Cou

rt Ja

ipur

Fina

nce

Act

, 199

4Se

rvic

e Ta

x 2

0 –

20

08–1

3A

DJ–

II ,Ja

ipur

Serv

ice

Tax

30

–

2007

–09

CES

TAT

New

Del

hi.

152

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Shor

t pay

men

t of S

ervi

ce

Tax

durin

g A

pril

2006

to

Mar

ch 2

007.

Am

ount

ad

just

ed in

sam

e fin

anci

al

year

but

not

adm

itted

by

Cen

tral E

xcis

e D

epar

tmen

t

8

–

2010

Raja

stha

n H

IGH

Cou

rt Ja

ipur

Ben

ch,

Jaip

ur

Non

pay

men

t of S

ervi

ce

Tax

on IU

C c

harg

es d

urin

g D

ecem

ber 2

003

to M

arch

20

05.

1

–

2006

Ass

ist.

Regi

stra

r (A

ppea

l Bra

nch)

CES

TAT

New

Del

hi

Shor

t Pay

men

t of S

ervi

ce

Tax

and

inte

rest

and

pe

nalty

ther

eon

5

–

2001

–06

CES

TAT

New

Del

hi

Dem

and

of S

ervi

ce ta

x on

Infra

stru

ctur

e sh

arin

g ch

arge

s fro

m F

eb 2

007

to

May

200

7

22

–

2008

–09

Raja

stha

n H

IGH

Cou

rt Ja

ipur

Ben

ch,

Jaip

ur

Serv

ice

Tax

17

–

2005

to 2

008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Serv

ice

Tax

1

–

2009

–10

Join

t Com

mis

sion

er C

entra

l Exc

ise

Jaip

ur

Serv

ice

tax

6

–

2012

–13

Add

ition

al C

omm

issi

oner

Cen

tral E

xcis

e Ja

ipur

Serv

ice

Tax

14

–

2005

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Serv

ice

Tax

38

–

2012

–13

App

eal f

or re

fund

1

–

2012

–13

Com

mis

sion

er A

ppea

ls –

II Ja

ipur

.

Serv

ice

Tax

36

–

2008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Serv

ice

Tax

87

–

2010

–11

Serv

ice

tax

112

–

20

03–0

4C

omm

issi

oner

, CE,

Jaip

ur

Wro

ng a

vailm

ent E

xces

s ce

nvat

cre

dit

193

–

20

05 –

2008

Com

mis

sion

er (A

ppea

ls)–

l cus

tom

and

ce

ntra

l exc

ise

Jaip

ur

Cen

vat c

redi

t Rul

es, 2

004

CEN

VA

T C

redi

t wro

ngly

av

aile

d on

Inpu

t Ser

vice

0*

–

2011

Dec

isio

n re

ceiv

ed fr

om E

xcis

e D

eptt.

Ja

ipur

aga

inst

Aud

it O

bjec

tion,

Now

A

ppea

l is

to b

e fil

ed.

CEN

VA

T C

redi

t wro

ngly

av

aile

d on

Cap

ital G

oods

23

–

2006

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi


153

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Wro

ng a

vailm

ent o

f C

ENV

AT

cred

it 4

–

20

08–0

9D

y. C

omm

issi

oner

Jaip

ur

CEN

VA

T di

sallo

wan

ce 1

6 –

20

13C

omm

issi

oner

(App

eal–

I) Ja

ipur

CEN

VA

T C

redi

t 4

–

20

09–1

0C

omm

issi

oner

Cen

tral E

xcis

e Ja

ipur

CEN

VA

T av

aile

d w

rong

ly 3

21

–

2008

–12

Cen

tral E

xcis

e C

omm

issi

oner

Jaip

ur

CEN

VA

T cr

edit

disa

llow

ed 1

4 –

20

06–0

7C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

Del

hi

Exci

se D

uty

13

–

2009

–10

Com

mis

sion

er C

entra

l Exc

ise

, Jai

pur

Dis

allo

wan

ce o

f CEN

VA

T cr

edit

take

n on

the

basi

s of

ATs

28

–

2013

–14

CEN

VA

T cr

edit

take

n on

th

e ba

sis

of A

Ts 2

02

–

2002

–11

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Dis

allo

wan

ce o

f cre

dit

13

–

2005

–08

Raja

stha

n H

igh

cour

t Jod

hpur

.

Exci

se D

uty

13

–

2007

–08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Empl

oyee

s Pr

ovid

ent F

und

Act

Reco

very

of e

xces

s in

tere

st

cred

ited

in s

ubsc

riber

ac

coun

t

17

–

2011

–12

EPF

App

ella

te T

ribun

al N

ew D

elhi

.

Sale

s ta

x A

ctSa

le T

ax 2

–

20

04–0

5Ra

j. TA

X Bo

ard

Jaip

ur

Inco

me

Tax

Act

, 196

1

Inte

rest

on

TDS

not

dedu

cted

8

–

2004

–05

Inco

me

tax

App

ella

te tr

ibun

al Ja

ipur

Shor

t Ded

uctio

n of

TD

S 1

–

20

11–1

3C

omm

issi

oner

Inco

me

Tax

App

eals

Ja

ipur

Serv

ice

Tax

Act

Dis

allo

wan

ce o

f Ser

vice

Ta

x 2

–

20

11C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

Del

hi

Serv

ice

Tax

shor

t Pay

men

t 2

,166

–

20

06–1

2C

omm

issi

oner

, CE,

Jaip

ur

Rate

of s

ervi

ce ta

x on

ou

tsta

ndin

g am

ount

re

cove

red

4

–

2009

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew D

elhi

Tota

l 8

,975

–

15Ta

mil

Nad

uFi

nanc

e A

ct, 1

994

Serv

ice

tax

319

–

20

07–1

5C

ESTA

T SE

Z C

HEN

NA

I

7

–

2008

CES

TAT/

CH

ENN

A1

47

–

2011

387

–

20

15

11

–

2014

154

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

1

–

2014

–15

CES

TAT

SEZ

CH

ENN

AI

129

–

20

13C

ESTA

T SE

2 C

henn

ai

134

–

20

12

CES

TAT

SEZ

CH

ENN

AI

265

–

20

11

116

–

20

06

354

–

20

13

415

–

20

13–1

4

33

–

2008

31

–

2014

–15

1,9

41

–

2013

–14

CC

E&ST

Tric

hyO

n ac

coun

t of S

ervi

ce T

ax

Dis

pute

d

23

–

16

–

91

–

89

–

On

acco

unt o

f sal

es ta

x D

ispu

ted

7

–

20

–

Tota

l 4

,436

–

16U

P Ea

st

UP

Trad

e Ta

x 19

48

Entry

Tax

16

–

2004

–05

Supr

eme

Cou

rt of

Indi

a

Entry

of G

oods

into

Loc

al

Are

as A

ct 2

007

359

–

20

06–0

71s

t App

eal P

endi

ng

UP

Trad

e Ta

x 19

48 3

3 –

20

07–0

8H

igh

Cou

rt.A

llaha

bad

Entry

of G

oods

into

Loc

al

Are

as A

ct 2

007

7

–

2000

–01

Supr

eme

Cou

rt of

Indi

a

1

–

1999

–00

Supr

eme

Cou

rt of

Indi

a

6

–

2004

–05

Supr

eme

Cou

rt of

Indi

a

Mun

icip

al T

axH

ouse

tax

7

–

2012

–14

Can

tonm

ent B

oard

Fina

nce

Act

, 199

4Se

rvic

e Ta

x

115

–

20

03–0

6C

ESTA

T, N

ew D

elhi

22

–

2003

–06

Hig

h C

ourt,

Alla

haba

d

200

–

20

06–2

009

CES

TAT,

New

Del

hi

80

–

2005

–09

Ass

tt.C

omm

issi

oner

1

–

2004

–07

Ass

tt C

omm

issi

oner

1

–

June

07–

Sept

embe

r 07

Ass

tt.C

omm

issi

oner


155

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

4

–

2009

Com

mis

sion

er C

entra

l exc

ise

3

–

2009

Com

mis

sion

er C

entra

l exc

ise

662

–

20

05–0

8C

ESTA

T , N

ew D

elhi

11

–

2004

–05

CES

TAT

, New

Del

hi

44

–

2002

–03

CES

TAT

, New

Del

hi

38

–

2002

–06

CES

TAT

, New

Del

hi

8,8

00

–

2008

–201

3C

omm

issi

oner

Cen

tral e

xcis

e , L

uckn

ow

UP

Trad

e Ta

x 19

48

Trad

e Ta

x

731

–

A

pril

08 –

Dec

embe

r 08

Dy

.Com

mis

sion

er ,T

rade

Tax

.Kan

pur

UPV

AT

2008

307

–

20

08–0

91s

t App

eal

UP

Trad

e Ta

x 19

48 1

,380

–

20

05–0

61

st A

ppea

l Pen

ding

1,0

67

–

2006

–07

1st A

ppea

l Pen

ding

UP

VA

T A

CT

2008

231

–

20

07–0

82n

d ap

peal

pen

ding

4

–

2010

–11

1st A

ppea

l Pen

ding

UP

Trad

e Ta

x 19

48

62

–

2004

–05

Dy.

Com

mis

sion

er .A

llaha

bad

27

–

1998

to 2

003

App

eal T

rade

Tax

. Luc

know

53

–

2003

–05

Add

ition

al C

omm

issi

oner

–II J

aunp

ur

6

–

2003

–04

, 04–

05D

y .C

omm

issi

oner

.Tra

de T

ax. J

hans

i

41

–

2002

–05

Trad

e Ta

x Tr

ibun

al

1

–

2000

–04

Hig

h C

ourt

Luck

now

97

–

1995

–96

, 200

2–05

Hig

h C

ourt

Luck

now

1

–

1987

–88

Hig

h C

ourt,

Alla

haba

d

2

–

1988

–89

Hig

h C

ourt,

Alla

haba

d

3

–

1989

–90

Hig

h C

ourt,

Alla

haba

d

5

–

2003

–04

Dy.

Com

mis

ione

r,Tra

de T

ax.K

anpu

r

Tota

l 1

4,42

6 –

17U

P W

est

Inco

me

Tax

Act

, 196

1In

com

e Ta

x A

ct, 1

961

60

42

2002

–03

Com

mis

sion

er O

f Inc

ome

Tax

(App

eal)

Entry

Tax

Act

Entry

Tax

Act

35

–

2000

–200

5H

igh

Cou

rt A

llaha

bad

Empl

oyee

s Pr

ovid

ent F

und

Act

Empl

oyee

s Pr

ovid

ent F

und

Act

14

14

2000

–200

1C

esta

t New

Del

hi

Arb

itrat

ion

Act

Arb

itrat

ion

Act

8

–

2008

–09

to 2

011–

12D

istri

ct Ju

dge

Mee

rut

16

–

2008

–09

to 2

011–

12

8

–

2008

–09

to 2

011–

12

156

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

8

–

2008

–09

to 2

011–

12

–

2004

–05

to 2

011–

12A

llaha

bad

Hig

h C

ourt

Sale

s Ta

x A

ctSa

les

Tax

Act

1

–

2002

–200

3Tr

ade

Tax

Trib

unal

2

–

2002

–200

3Jo

int C

omm

issi

oner

App

eal

Fina

nce

Act

, 199

4Fi

nanc

e A

ct, 1

994

43

–

June

200

3–D

ecem

ber 2

003

Ces

tat

26

–

Oct

ober

200

0 to

Se

ptem

ber 2

001

Arb

itrat

ion

Act

Arb

itrat

ion

Act

23

–

2005

–06

Ce(

C) B

snl N

ew D

elhi

2

–

Dec

embe

r 201

3

2

–

2008

Dis

trict

Judg

e Ru

drap

ur

38

–

2008

Dis

trict

Judg

e M

orad

abad

6

–

2013

Dis

trict

Judg

e N

aini

tal

6

–

2013

3

–

2013

Dis

trict

Judg

e C

ham

paw

at

5

–

2011

Hig

h C

ourt

Alla

haba

d

Entry

Tax

Axt

Entry

Tax

Axt

25

–

2000

to 0

2Tr

ade

Tax

Aut

horit

y Sa

hara

npur

Fina

nce

Act

, 199

4Fi

nanc

e A

ct, 1

994

125

–

A

ugus

t 200

2 to

Ja

nuar

y 20

03C

esta

t

60

–

Janu

ary

2003

to

Nov

embe

r 200

3C

omm

issi

oner

Of E

xcis

e &

Ser

vice

Tax

Sale

s Ta

x A

ctSa

les

Tax

Act

267

–

20

09 to

12

Com

mis

sion

er A

ppea

ls

162

–

20

03–2

005

Alla

haba

d H

igh

Cou

rt 1

08

–

1990

–200

5

Inco

me

Tax

Act

, 196

1In

com

e Ta

x A

ct, 1

961

31

–

2005

–200

6In

com

e Ta

x A

ppel

ate

Trib

unal

16

–

2006

–200

7

Entry

Tax

Axt

Entry

Tax

Axt

13

–

2003

–200

4

Alla

haba

d H

igh

Cou

rt

19

–

2004

–200

5

Sale

s Ta

x A

ctSa

les

Tax

Act

33

–

2003

–200

4

13

–

2004

–200

5

UP

AC

T 20

07U

p A

ct 2

007

5

–

2000

–01/

2001

–02

/200

2–03

5

–

2007

–200

8A

sstt.

Com

mis

sion

er T

rade

Tax

Eta

wah

Inco

me

Tax

Act

, 196

1In

com

e Ta

x A

ct, 1

961

22

–

2008

–200

9C

omm

issi

oner

Of I

ncom

e Ta

x A

gra


157

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

17

–

2008

–200

9

11

–

2009

–201

0In

com

e Ta

x A

ppel

ate

Trib

unal

Sale

s Ta

x A

ctSa

les

Tax

Act

88

6

2009

–10

Alla

haba

d H

igh

Cou

rt

Inco

me

Tax

Act

, 196

1In

com

e Ta

x A

ct, 1

961

21

5

2007

–08

to 2

009–

10Ita

t New

Del

hi

9

–

2008

–200

9Ita

t Agr

a

Sale

s Ta

x A

ctSa

les

Tax

Act

1

–

2004

–05

Mem

ber T

ribun

al T

rade

Tax

Agr

a 0

* –

20

03–0

4

–

1/1/

2008

to

31/0

3/20

08D

y. C

omm

issi

oner

Com

mer

cial

Tax

M

ainp

uri

–

1/04

/200

7 to

31

/12/

2007

Inco

me

Tax

Act

, 196

1In

com

e Ta

x A

ct, 1

961

1

–

2006

–07

Ito (T

ds &

Sur

vey)

Alig

arh

Sale

s Ta

x A

ctSa

les

Tax

Act

124

–

19

77–7

8 to

200

4–05

Trad

e Ta

x Tr

ibun

al B

arei

lly &

Join

t C

omm

issi

oner

Tra

de T

ax B

arei

lly

48

–

2003

–200

4

Trad

e Ta

x Tr

ibun

al A

gra

50

20

2004

–200

5

2

–

2006

–200

7

0*

–

1999

–200

0

Add

ition

al C

omm

issi

oner

(App

eal)

Gra

de 2

0*

–

2000

–200

1

1

–

2003

–200

4

1

–

2004

–200

5

Fina

nce

Act

, 199

4Fi

nanc

e A

ct, 1

994

803

1

10

July

–94

to M

arch

–98

Com

mis

sion

er A

ppea

ls

Inco

me

Tax

Act

, 196

1In

com

e Ta

x A

ct, 1

961

15

15

2009

–201

0C

it(A

ppea

ls)

Entry

Tax

Act

Entry

Tax

Act

55

–

2005

–06

& 2

006–

07H

igh

Cou

rt A

llaha

bad

139

2

8 20

07–0

8Jo

int C

omm

issi

oner

App

eal(T

rade

Tax

)

737

1

40

2005

–06

& 2

006–

07H

igh

Cou

rt A

llaha

bad

276

5

5 20

07–0

8Jo

int C

omm

issi

oner

App

eal(T

rade

Tax

)

1

–

2003

–04

Alla

haba

d H

igh

Cou

rt

17

–

2004

–05

Com

mer

cial

Tax

Trib

unal

Gb

Nag

ar

Sale

s Ta

x A

ctSa

les

Tax

Act

60

–

1998

–99

to 2

003–

04Jo

int C

omm

issi

oner

App

eal

1,5

43

–

2005

.06

to 2

008–

09A

dditi

onal

Com

mis

sion

er A

ppea

l C

omm

erci

al T

ax D

eptt

Mer

rut

158

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Serv

ice

Tax

Dep

artm

ent

Serv

ice

Tax

Dep

artm

ent

153

–

20

06–0

7 &

200

7–08

Ces

tat N

ew D

elhi

Sale

s Ta

x A

ctSa

les

Tax

Act

444

–

19

99–2

003

Alla

haba

d H

igh

Cou

rt

Fina

nce

Act

, 199

4Fi

nanc

e A

ct, 1

994

750

–

20

04–2

005

396

–

O

ct–2

009

to

Mar

–201

1C

esta

t, N

ew D

elhi

Tota

l 6

,971

4

36

18W

est B

enga

l

Loca

l Sal

es ta

x ac

tSa

les

tax

on te

leph

one

serv

ices

867

–

20

03 to

200

4A

ppel

late

Aut

horit

y (C

omm

issi

oner

)

Fina

nce

Act

, 199

4Se

rvic

e ta

x 1

4 –

20

03 to

200

4C

omm

issi

oner

of s

ervi

ce ta

x 2

7 –

20

11 to

201

2

Inco

me

Tax

Act

, 196

1

Inte

rest

31

–

2007

to 2

008

Inco

me

tax

depa

rtmen

t

38

–

2008

to 2

009

49

–

2009

to 2

010

Tax

dedu

cted

at s

ourc

e 1

12

–

2009

to 2

010

2

–

2010

to 2

011

Wes

t Ben

gal e

ntry

tax

Entry

tax

40

–

2014

to 1

5

Com

mis

sion

er o

f sal

es ta

x 1

67

–

2013

to 1

4

Entry

tax

Inte

rest

25

–

2013

to 1

4 &

201

4 to

15

Tota

l 1

,372

–

19H

imac

hal

Prad

esh

Inco

me

Tax

Act

, 196

1TD

S 9

3 –

20

05–0

6 to

200

7–08

Hig

h C

ourt,

Shi

mla

Cen

tral E

xcis

e an

d Se

rvic

e Ta

xSe

rvic

e Ta

x

190

–

20

14–1

5C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

Del

hi

14

–

2006

–07

Com

mis

sion

er o

f Cen

tral E

xcis

e an

d C

usto

m, S

him

la

Empl

oyee

Pro

vide

nt F

und

Act

EPF

4

–

2014

–15

CEG

AT,

New

Del

hi

Tota

l 3

02

–

20TF

Mum

bai

Dep

artm

ent o

f sal

es ta

xTa

x, P

enal

ty &

Inte

rest

16

–

1989

–199

0D

eput

y C

omm

issi

oner

of s

ales

tax

5

–

1990

–199

1

Mah

aras

htra

sal

es tr

ibun

al 2

7 –

19

91–1

992

132

–

19

92–1

993

24

–

1094

–199

5


159

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

174

–

19

95–1

996

5

–

2000

–200

1

2

–

2001

–200

2

82

–

2004

–200

5

13

–

2005

–200

6D

eput

y C

omm

issi

oner

of S

ales

Tax

(A

ppea

l)

306

–

20

05–2

006

29

–

2006

–200

7Jo

int C

omm

issi

oner

App

eal I

I

28

–

2007

–200

8

222

–

20

10–2

011

Dep

uty

Com

mis

sion

er o

f Sal

es T

ax

(App

eal)

Cen

tral s

ales

tax

575

–

20

04–2

005

Dep

uty

Com

mis

sion

er o

f Sal

es T

ax

(App

eal)

883

–

20

06–0

7

1,8

47

–

2007

–200

8

Cen

tral b

oard

of e

xcis

e an

d cu

stom

sTa

x, p

enal

ty a

nd in

tere

st

75

–

Feb.

2008

to Ju

ly

2008

Com

mis

sion

er (C

entra

l Exc

ise,

Mum

bai)

98

–

Aug

ust 2

008

to

Mar

ch 2

009

Com

mis

sion

er (C

entra

l Exc

ise,

Mum

bai)

63

–

Apr

il .2

009

to

Dec

embe

r 200

9C

omm

issi

oner

(Cen

tral E

xcis

e, M

umba

i)

63

–

Janu

ary

2010

to

Sept

embe

r 201

0C

omm

issi

oner

(Cen

tral E

xcis

e, M

umba

i)

50

–

Oct

ober

201

0 to

July

20

11A

ddl.

Com

mis

sion

er (C

entra

l Exc

ise,

M

umba

i)

39

–

Aug

ust 2

011

to

Mar

ch 2

012

Join

t Com

mis

sion

er (C

entra

l Exc

ise,

M

umba

i)

601

–

A

pril

2006

to

Sept

embe

r 201

0C

omm

issi

oner

(Cen

tral E

xcis

e, M

umba

i)

86

–

Oct

ober

201

0 to

A

ugus

t 201

1C

omm

issi

oner

(Cen

tral E

xcis

e, M

umba

i)

43

–

Sep

2011

to M

arch

20

12Jo

int C

omm

issi

oner

(Cen

tral E

xcis

e,

Mum

bai)

47

–

2013

–201

4A

ddl.

Com

mis

sion

er (C

entra

l Exc

ise,

M

umba

i)

133

–

A

pril

2007

to Ja

nuar

y 20

08C

ESTA

T M

UM

BAI

160

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

131

–

20

10–2

011

CES

TAT

MU

MBA

I

150

–

A

pril

2012

to Ja

nuar

y 20

13Jo

int C

omm

issi

oner

(Cen

tral E

xcis

e,

Mum

bai)

135

–

Fe

brua

ry 2

013

to

Dec

embe

r 201

3C

omm

issi

oner

(Cen

tral E

xcis

e, M

umba

i)

0*

–

Oct

ober

201

2 to

Se

ptem

ber 2

013

Add

l. C

omm

issi

oner

(Cen

tral E

xcis

e,

Mum

bai)

106

–

Ja

nuar

y 20

14 to

Se

ptem

ber 2

014

Com

mis

sion

er (C

entra

l Exc

ise.

Mum

bai)

13

–

13th

Apr

il 20

15D

y. C

omm

issi

oner

(Cen

tral E

xcis

e,

Mum

bai)

0*

–

22th

Sep

tem

ber 2

014

Com

mis

sion

er (C

entra

l Exc

ise,

Mum

bai)

0*

–

26th

mar

ch 2

015

Com

mis

sion

er (C

entra

l Exc

ise,

Mum

bai)

Tota

l 6

,202

–

21TF

Kol

kata

Cen

tral e

xcis

e ac

t 194

4Ex

cess

Exc

ise

Dut

y C

laim

ed B

y Th

e A

utho

rity

396

–

20

07–0

8A

ppel

ate

Aut

horit

y

17

–

2008

–09

App

elat

e A

utho

rity

0*

–

2009

–10

App

elat

e A

utho

rity

6

–

2010

–11

App

elat

e A

utho

rity

0*

–

2010

–11

App

elat

e A

utho

rity

181

–

20

12–1

3C

omm

. Cen

tral E

xcis

e

107

–

20

12–1

3C

omm

. Cen

tral E

xcis

e

10

–

2013

–14

Com

m. C

entra

l Exc

ise

0*

–

2013

–14

Com

m. C

entra

l Exc

ise

57

–

2013

–14

Com

m. C

entra

l Exc

ise

11

–

2014

–15

Com

m. C

entra

l Exc

ise

0*

–

2014

–15

Com

m. C

entra

l Exc

ise

142

–

20

08–0

9A

ppel

ate

Aut

horit

y

22

–

2008

–09

App

elat

e A

utho

rity

3

–

2009

–10

App

elat

e A

utho

rity

4

–

2008

–09

App

elat

e A

utho

rity

3

–

2008

–09

App

elat

e A

utho

rity

0*

–

2008

–09

App

elat

e A

utho

rity

17

–

2008

–09

App

elat

e A

utho

rity


161

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

156

–

20

11–1

2A

ppel

ate

Aut

horit

y

178

–

20

12–1

3C

omm

. Cen

tral E

xcis

e

Tota

l 1

,309

–

22TF

– Ja

balp

ur

Cen

tral E

xcis

e A

ct, 1

944

Exci

se

41

–

1996

to 1

997,

1998

to

199

9,19

99 to

20

00 a

nd 2

000

to

2001

(DO

T PE

RIO

D)

Supr

eme

cour

t

88

–

1996

to 1

997,

1998

to

199

9,19

99 to

20

00 a

nd 2

000

to

2001

(DO

T PE

RIO

D)

Supr

eme

cour

t

197

–

20

07–0

8 to

201

0–11

Com

mis

sion

er o

f cen

tral e

xcis

e an

d

serv

ice

tax,

New

Del

hi

1,0

54

–

1996

to 2

000

Supr

eme

cour

t

99

–

2008

–09

to 2

009–

10A

dd. C

om.,

Bhop

al

75

–

2009

–10

to 2

010–

11C

omm

issi

oner

of c

entra

l exc

ise

1

–

2012

to 1

3D

eput

y co

mm

issi

oner

Bho

pal

Mad

hya

Prad

esh

com

mer

cial

tax

act

Entry

tax

29

–

2002

–03

to 2

007–

08A

ppel

late

Boa

rd ,

Bhop

al

2

–

2004

–05

& 2

008–

09D

eput

y co

mm

issi

oner

2

–

2010

–11

& 2

011–

12C

omm

issi

oner

19

–

2009

–10

Ass

t. C

omm

issi

oner

30

–

2007

–08

Trib

unal

, Bh

opal

6

–

2008

–09

Hig

h C

ourt

, Jab

alpu

r

1

–

2011

–12

Dep

uty

App

ella

te C

omm

issi

oner

VA

T

26

–

2005

to 2

006

Add

ition

al c

omm

issi

oner

, Bho

pal

39

–

2006

to 2

007

Trib

unal

, Bh

opal

23

–

2000

–01,

200

1–02

an

d 20

04–0

5 to

20

08–0

9

Trib

unal

, Bh

opal

47

–

2011

–12

Dep

uty

appe

llate

com

mis

sion

er

Cen

tral S

ales

tax

act

Sale

s ta

x

404

–

20

02–0

3 to

200

3–04

, 200

6–07

and

20

11–1

2

Com

mis

sion

er, B

hopa

l

1,4

13

–

2004

–05

and

2009

–10

Trib

unal

, Bh

opal

124

–

20

02–0

3 to

200

8–09

Ass

ista

nt c

omm

issi

oner

,Jab

alpu

r

Tota

l 3

,718

–

162

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

23N

TP

Del

hi s

ales

tax

act

Dem

and

agai

nst t

he

com

pany

1

–

2001

–02

Add

ition

al c

omm

issi

oner

– II

New

Del

hi

Cen

tral s

ales

tax

act

23

–

2001

–02

Add

ition

al c

omm

issi

oner

– II

New

Del

hi

Utta

r Pra

desh

Sal

es ta

x ac

t 2

6 –

20

12–1

3C

omm

issi

oner

(app

eal)–

trad

e ta

x,

Lakh

now

Tota

l 5

0 –

24ST

PPe

nalty

(Cus

tom

s du

ty)

Cus

tom

Dut

y 7

3 –

C

omm

issi

oner

of c

entra

l exc

ise

and

se

rvic

e ta

x

Tota

l 7

3 –

25W

TRFi

nanc

e A

ct, 1

994

Serv

ice

tax

647

–

20

07 to

200

8C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Serv

ice

tax

pena

lty 6

47

–

2007

to 2

008

Tota

l 1

,295

–

26ST

R

Serv

ice

Tax

Act

and

Rul

es

Serv

ice

tax

409

–

Ju

ne 2

007

to

Sept

embe

r 200

9C

usto

ms,

exc

ise

and

serv

ice

tax

appe

llate

trib

unal

, Che

nnai

Serv

ice

Tax

Act

and

Rul

es;

Cen

vat C

redi

t Rul

es, 2

004

3,2

29

–

June

200

7 to

O

ctob

er 2

009

Cus

tom

s, e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al, B

enga

luru

Tota

l 3

,638

–

27ET

RW

.B.V

AT

act,

2003

Val

ue a

dded

tax

31

–

2006

to 0

7

Sale

s ta

x tri

buna

l 1

1 –

20

07 to

08

1

–

2010

to 1

1

Tota

l 4

4 –

28A

LTTC

Fina

nce

Act

, 19

94Se

rvic

e Ta

x 3

7 2

20

08–0

9 an

d 20

09–1

0C

omm

issi

oner

of c

entra

l exc

ise

(App

eals

) u/s

85

A F

inan

ce a

ct 1

994

Tota

l 3

7 2

29A

ndam

an

&

Nic

obar

Cen

tral E

xcis

e A

ct, 1

994

Serv

ice

tax

699

–

20

03 to

200

7C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

138

–

20

07 to

201

1C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Tota

l 8

37

–

30C

hhat

tisga

rhFi

nanc

e A

ct, 1

994

Serv

ice

tax

625

–

19

94–2

000

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, D

elhi

30

–

2000

–04

46

–

2004

–05

16

–

2005

–06


163

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

sA

mou

nt

(Rs.

in la

cs)

Am

ount

pa

id

(Rs.

in L

acs)

Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

14

–

2007

–09

67

–

2009

–10

14

–

2004

–07

Tota

l 8

12

–

31Jh

arkh

and

Fina

nce

act,

1994

Serv

ice

Tax

206

–

A

pril,

200

4 to

Mar

ch,

2006

.C

ESTA

T –K

olka

ta.

Serv

ice

Tax

Pena

lty 2

06

–

Serv

ice

Tax

86

–

Apr

il,20

06 to

M

arch

,201

0Ra

nge

Offi

cer J

amsh

edpu

r.

Serv

ice

Tax

1,4

64

–

Oct

ober

200

3 to

D

ecem

ber 2

003

Com

mis

sion

er (A

ppea

l),Ra

nchi

Serv

ice

Tax

Pena

lty 1

,464

–

Serv

ice

Tax

163

–

20

05–0

6C

ESTA

T Ko

lkat

a.Se

rvic

e Ta

x Pe

nalty

163

–

Serv

ice

Tax

20

–

2006

–07

CES

TAT

Kolk

ata.

Serv

ice

Tax

Pena

lty 2

0 –

Serv

ice

Tax

326

–

A

pril

2005

to

Nov

embe

r 200

6C

ESTA

T Ko

lkat

a.Se

rvic

e Ta

x Pe

nalty

326

–

Serv

ice

Tax

590

–

20

00–2

005

Com

mis

sion

er (A

ppea

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166

Addendum to Director’s Report:The Management replies to Independent Auditor’s Report for the year 2014-15 are given below:

Audit Para Management ReplyAssets and liabilities taken over from Department of Telecommunication (‘DoT’) and the amounts receivable and payable to DoT8. As detailed in note 28, 31.1 and 31.3 to the

financial statements, assets and liabilities (including contingent liabilities) taken over from DoT have been verified and valued by the management based on internal calculations. Further, subsequent adjustments made on account of identification and recognition of net assets is adjusted to capital reserve. These are subject to reconciliations and confirmation from DoT as regards to ownership, value and classification. The consequential impact on the financial statements, if any, as a result of the same is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Noted. The value of net additional assets identified till date of balance sheet is less than 0.50% of the provisional amount on which assets were transferred to the Company as on 01.10.2000.

9. As detailed in note 32 to the financial statements, amounts due from and to DoT included in current assets and current liabilities aggregating to Rs. 27,130 lacs (previous year Rs. 173,669 lacs) and Rs. 50,865 lacs (previous year Rs. 39,109 lacs) respectively are subject to confirmations and reconciliation. Consequently, the impact of the adjustments, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Instructions has been issued to all BSNL Circles to provide the details of balances under account head related to claim recoverable from DOT to the Office of concerned CCAs for confirmation.

Fixed Assets10. As reported by auditors of 19 circles, Capital

work-in-progress, inter alia, includes balances pending capitalisation for long-periods of time owing to pending analysis of status, value and obtaining of commissioning certificates. The consequential impact on the capital work-in-progress, fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year

The Circles are being instructed to capitalize the works as and when completed and put to use and depreciation provided from that date.


167


11. As reported by auditors of 8 circles, in the absence of information in respect of certain items of fixed assets capitalised, particularly batteries, it could not be established whether assets capitalised were on account of replacement/extension of an existing asset or additional acquisition of a new asset and hence the consequential impact of the same on the classification/value of the respective asset, depreciation and amortisation, expenses and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The concerned circles are being instructed to account for such types of transactions strictly as per accounting circulars/ instructions issued in this regard.

12. As reported by auditors of 12 circles, the leasehold land as identified and valued by the respective circles have been incorporated in the books of accounts and amortised with effect from the date of formation of the Company. Hence, in respect of the lands still not identified and/or duly incorporated in the books of accounts of the respective circles, the consequential impact on value of fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

All leasehold/ freehold land which are known/ identified have been accounted for.

13. As detailed in note 31.2 to the financial statements, auditors of 6 circles have reported on the expired/non-renewal of leases on lands on which the Company had constructed buildings and the fact that management has not made any provision for the surrender value/written down value of the aforementioned buildings in the anticipation of the ultimate renewal of the leases. The consequential impact of adjustment on fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The concerned circles are being instructed to expedite the process of getting the lease of lands renewed.

14. As stated in note 13(a) and 31.3 to the financial statements, fixed assets, inter alia, includes land pertaining to 23 circles, purchased/acquired on leasehold/ freehold basis through various

The company is in the process of executing the title deeds of the lands purchased / acquired, wherever required.

168

authorities, the title deeds of which are yet to be executed in the name of the Company. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

15. The accounting policy of the Company as stated in note 2.6 to the financial statements with respect to the decommissioned assets has not been uniformly applied across all circles. In 17 circles, the decommissioned assets are not recorded at lower of the cost or net realisable value. While, in 6 circles, the decommissioned assets have not been appropriately adjusted from the block of fixed assets and depreciation and amortisation is still being charged on such decommissioned assets. In the absence of sufficient details, we are unable to comment upon the impact of adjustment on the fixed assets, current assets, depreciation and amortisation and loss for the year, if any, arising out of the same. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The circles are being instructed to strictly adhere to the accounting instructions issued on the subject matter.

16. The following accounting treatments by the Company in respect of fixed assets and capital works-in-progress are not in accordance with the provisions of the Accounting Standard-6, Depreciation Accounting; Accounting Standard - 10, Accounting for fixed assets, and Accounting Standard – 26, Intangible Assets notified under section 133 of the Act read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (as amended):

1. As detailed in note 31.6 to the financial statements and as reported by auditors of 23 circles, the Company has not consistently adhered to capitalizing the overheads expenses specifically attributable to the capital work-in-progress but has recorded the same on estimated/fixed percentage/ proportionate/ payment basis;

Accounting policy of BSNL in this regard states that the cost includes directly related establishment and other expenses including employee remuneration and benefits, directly identifiable to the construction or creation of assets.

As explained in note no. 31.6, the administrative and establishment expenses incurred in units where project work is also undertaken are allocated to capital and revenue mainly on actual basis and on “actual man-month spent” basis respectively. In case, the costs are not


169

2. As reported by auditors of certain circles, the Company capitalises the assets on periodic basis instead of at the ready to use date; and

3. Accounting policies regarding capitalization, disposal, depreciation and amortization of fixed assets are not uniformly applied in case of 24 circles.

The resultant impact of the above non compliances with the standards on the value of fixed assets, capital work-in-progress, depreciation and amortization and loss for the year, if any, are presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

directly attributable for e.g. administration and other associated costs where an asset is used for different projects or an employee is devoting his time to various jobs simultaneously during the month then such expenditure is divided among the different projects on the basis of ratio of actual use/actual time spent over different projects or if it is not practically possible to find such division then on an appropriate empirical ratio and accordingly decision regarding charging of the same towards CWIP or revenue heads is taken.

The concerned circles are being instructed to capitalize the works as and when completed and put to use as per the instructions already issue d in this regard.

The concerned circles are being instructed to strictly adhere on the accounting policies and instructions issued from time to time.

Current Assets and Current Liabilities17. The Company does not follow a system of obtaining

confirmation and performing reconciliation of balances in respect of trade receivables, deposits with departments/companies (interalia, including Mahanagar Telecom Nigam Limited and Bharat Broadband Network Limited), claims recoverable from/payable to DoT (including license fees payable as detailed in note 42(a)(i) of the financial statements) or to/ from other

As per Industry practice, taking confirmation for trade receivables and subscribers deposits from huge subscribers’ base is neither practical nor possible.

170

government departments/authorities, subscriber/ customer deposit accounts, trade payable and claims payable. Due to non-availability of confirmations and reconciliations of the aforementioned account balances, we are unable to quantify the impact of the adjustments, if any, arising from reconciliation and settlement of account balances on the financial statements. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

For balances due to or due from other parties i.e. DOT, DOP, other Govt. departments/ companies etc., circles are instructed again to carry out reconciliation at regular intervals.

18. As reported by auditors of certain circles, there are unquantifiable differences between the general ledger /trial balance and accounting records pertaining to loans and advances, current assets and current liabilities. The impact on the financial statements, if any, owing to the aforementioned non-reconciliations is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The concerned circles are being instructed to carry out the reconciliation and take necessary action to sort out the difference between the two sets of records.

19. As reported by auditor of 11 circles, there are differences in the inventory records between stores ledger and general ledger/trial balance, the impact of the same is currently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Circles are being instructed to take appropriate action immediately

20. As reported by auditors of 20 circles, in absence of adequate information, details and records of old, non-moving, damaged and unserviceable inventories could not be identified. Further, as reported by auditors of 6 circles, old, non-moving, damaged and unserviceable inventories identified are shown at historical cost. This is not in accordance with the Accounting Standard 2 on Valuation of Inventories and adjustment, if any, amount of lower of net realizable value and the cost is currently not ascertainable. The adjustment, if any, on inventories, consumption and loss for the year is presently not ascertainable. The aforementioned non-identification of old, non-moving, damaged and unserviceable inventories was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31st March 2014.

The Management has initiated detailed programme regarding verification and optimal utilization of inventory under the name “Operation Samudra Manthan’.


171

21. As reported by auditors of 2 circles, certain units have not applied the Company’s policy of valuation of inventory on weighted average method as stated in note 2.8 to the financial statements. The impact of the adjustment, if any, on inventory, consumption and loss for the year is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Circles are being instructed to take appropriate action immediately.

Inter/ Intra Circle Remittance Account22. As detailed in note 33 to the financial statements,

the Inter-Circle/Unit remittance balances amounting to Rs. 57,312 lacs (previous year Rs. 86,537 lacs) are yet to be reconciled. Pending such reconciliations, the possible cumulative impact of the adjustments, if any, on assets and liabilities and the current and prior year(s) income and expenditure is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The reconciliation of remittance items and accounting the same under final head are continuously being done by the circles which resulted in continuous decrease in the pending remittances for last five financial years. It has been further reduced from Rs. 865.37 crores last year to Rs.573.12 crores during current year.

License Fee, Spectrum Charges, Inter Connect Usage Charges23. As detailed in note 29 to the financial statements,

the Company segregates revenue from NLD (National long distance)/ILD (International long distance) on an estimated basis instead of actual usage of pulse which consequently results in recognition of the license fees on an estimated basis. The impact of adjustment, if any, on the license fees expense, recoverable/ payable from DoT and loss for the year is presently not ascertainable for the year. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The license fee is paid on revenue share basis. The value of pulse is not constant and may also be NIL for certain tariff plans. Special tariff/ validity vouchers introduce another variable due to which pulse does not remain right factor for measuring revenue for purpose of calculating license fee. Further, license fee is now uniform across various services; hence the effect is not material. However, the company is improving its technical capabilities to measure as accurately as possible.

Revenue24. As reported by auditors of 4 circles, the income

from recharge coupons, prepaid calling cards, internet connection cards, sancharnet cards and stock of recharge coupons and prepaid calling cards are subject to reconciliations. In the absence of specific details, the impact of adjustment, if any, on financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year

The concerned circles are being instructed to take necessary action in the matter.

172


25. The revenue and expenditure for the current year, inter alia, includes amounts pertaining to prior period(s) as reported by auditors of 4 circles and 6 circles respectively. This has not been separately disclosed in the financial statements in a manner that their impact on the current year’s loss can be perceived, which is not in accordance with the Accounting Standard – 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. The consequential impact of adjustments, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter

Noted. The circles are being instructed to strictly adhere to the accounting instructions issued in this regard.

26. As stated in note 2.3-(e), (f) and (i) to the significant accounting policies, certain items of revenue are accounted for on cash basis instead of the accrual basis of recognition of revenue which is not in accordance with the generally accepted accounting principles in India. The impact of the adjustment, if any, in respect thereof on revenue, license fee, trade receivables and loss for the year is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Noted. Adequate disclosures are already given in the books of accounts of BSNL as required by AS-1 and AS-9 issued by ICAI.

Provisions and Contigent Liabilities27. The provisions and the disclosures with regard to

matters under litigations have been made based upon the management estimates. Based upon the report of auditors of 14 circles, sufficient and appropriate audit evidence for examining and verifying the quantum of contingent liabilities disclosed in note 42(a) to the financial statements has not been obtained. In the absence of the adequate details and documents and pending the responses to our confirmation requests in respect of the litigations at the corporate level, the impact of adjustments/disclosures, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Most of the circles had provided the details of litigation / claims lodged or defended and contacts of the Company’s counsels to the auditors. At Corporate level also, the above mentioned details were given to auditors. The auditors had written letters to the Company’s counsels. It appears that due to professional reasons some counsels did not respond. It may also be noted that many of the legal cases are on either outstanding dues or on service/ personnel matters involving issues of employee’s career progression, inter-se seniority etc. For the cases having major implications known up to finalization of accounts, the details and contingent liabilities have


173

already been shown in note to accounts. Moreover, the concerned circles are further advised to provide the adequate details to auditors.

Miscellaneous28. The Company has not complied in respect of the

following Accounting Standards notified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended):

i) As detailed in note 35 to the financial statements, the expenses, incomes, assets and liabilities are not properly disclosed under the reportable segment as per the Accounting Standard 17 on Segment Reporting. In our opinion, the same does not give true and fair disclosure of the segment-wise operations of the Company as required by the aforementioned accounting standard. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

ii) As stated in note 15 to the financial statement, the Company as at 31st March 2015 has deferred tax assets (net) amounting to Rs. 84,706 lacs (previous year Rs. 23,773 lacs). Since the Company has a recent history of losses and owing to lack of virtual certainty and convincing evidence that sufficient future taxable income will be available against such deferred tax asset and as stipulated by Accounting Standard-22, Accounting for taxes on income, the amount of such deferred tax asset should be written off. Consequent to the above, loss for the year in the statement of profit and loss is under-stated by Rs. 84,706 lacs and the balance of deferred tax asset included under Non-Current Assets, has been overstated by the corresponding amount. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

iii) The Company has not carried out any Techno-economic assessment during the year ended 31st March 2015 and hence identification of impairment loss and

The concerned circles are being instructed to take necessary action in this regard.

As disclosed in the note no. 15(d), the company has not recognized any deferred tax assets following the notified accounting standard ‘accounting for taxes on income’, only reversal relating to deferred tax assets and deferred tax liabilities created during the earlier years have been made. Since the reversal of deferred tax liabilities are more than the newly identified deferred tax liabilities, it has resulted into increase in net deferred tax assets.

The operations of BSNL are of such a nature where assets are in use 24x7. As and when any asset is found non-repairable or non-functional or obsolete,

174

. provision thereof, if any, has not been made. The same is not in accordance with the notified Accounting Standard 28 on Impairment of asset. The consequential impact of adjustment, if any, on the financial statements is currently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

iv) The accounting for capital and revenue grant in accordance with the notified Accounting Standard 12 on Accounting for grants is not followed consistently as reported by auditors of 5 circles. In the absence of specific details, the consequential impact of adjustment, if any, on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

the same is decommissioned and necessary provision is being created in books of accounts. The assets are impaired as and when the necessity arises. This process is continuously followed throughout the year in each circle of BSNL.

The concerned circles are being instructed to strictly adhere to the accounting policies and instructions issued in this regard.

v) The accounting policy as referred to in note 2.10(b) to the financial statements with respect to the liability on account of post-retirement medical benefits of employees including retired employees, a defined benefit plan, is recognized on actual basis in respect of bills received by the Company instead of recognizing the liability for the same as the present value of the defined benefit obligation at the balance sheet date calculated on the basis of actuarial valuation in accordance with the notified Accounting Standard-15 on Employee Benefits. The consequential impact of adjustment, if any, owing to this non-compliance on the financial statements is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

vi) As reported by 3 circles, the Company has not amounted for the contract revenue and contract costs pertaining to construction contracts in accordance with the notified Accounting Standard 7, Construction Contracts. In the absence of specific details,

As per the accounting policy as disclosed, claims for medical facility received from the employees of BSNL(including retirees) up to the cutoff date of finalization of annual accounts, are treated as liability of the Company for the said financial year.

The post employment medical care extended to its retired employees as per the present policy of BSNL is more like facilities ,which may be revised by the Management any time , depending upon the relevant factors prevailing at that time.

Further vide Letter No. BSNL/Admn.I/14-15/09(pt.) dated 02/04/2014 option to choose CGHS facilities has been extended to retired employees of BSNL, who are in receipt of Central Civil Pension .

Noted. The Circles are being instructed to strictly adhere to the accounting instructions issued in this regard.


175

the consequential impact of adjustment, if any, on the financial statements is presently not ascertainable.

29. As stated in the note 2.12 of the financial statements, only individual transactions of income/expenditure exceeding Rs. 5 lacs, are considered for evaluation as prior-period items. In our opinion, the said accounting policy is not in accordance with the generally accepted accounting principles in India and the same should be evaluated on aggregation of all prior period transactions of similar nature irrespective of individual transaction values, for possible adjustment/disclosure in the financial statements. The consequential impact of the adjustment, if any, on the income, expense and loss for the year is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Noted. Adequate disclosures are already given in the books of accounts of BSNL as required by AS-1 and AS-9 issued by ICAI. The accounting policy of the company is made keeping in view the size of organization and volume of high denomination transactions. It may also be noted that many organization of such size in infrastructure industry are following similar policies.

30. As reported by 15 circles and detailed in note 10(a) to the financial statements, these circles have not identified units covered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act, 2006’) and hence disclosures as required under the MSMED Act, 2006 is presently not ascertainable. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Noted. The concerned circles are being instructed to take necessary action.

31. The disclosure requirements of the Schedule III of the Act has not been properly adhered to in the presentation and disclosure of financial statements of the Company in respect of classification of assets/liabilities into current and non-current and secured and unsecured, wherever applicable; categorisation of assets/liabilities into appropriate accounting captions; changes in inventory; non-disclosure of consumption of stores and spares; consumption of imported and indigenous stores and spares parts; capital and other commitments and expenditure and earnings in foreign currency. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The circles are being instructed to strictly adhere to the accounting instructions issued on the subject matter.

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32. As reported by Jammu & Kashmir Telecom circle, all the vouchers, documents and records pertaining to the SSA Srinagar for the period from 1 April 2014 to 7 September 2014, are not available as the same have been lost/destroyed in floods. In the absence of such records, we are unable to comment upon the correctness and completeness of all the transactions for that period.

Noted

33. As reported by auditors of 20 circles, compliances with regard to deposition, deduction, reconciliation of service tax, tax deducted at source and value added tax are pending to be made. In the absence of specific details, we are unable to comment on its consequential impact, if any, on the financial statements. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

The concerned circles are being instructed to make necessary compliances with regard to deposition, deduction, and reconciliation of service tax and other statutory dues.

34. As detailed in notes (a) and (b) of the Cash Flow Statement, certain assumptions have been made for the purpose of preparation of the Cash Flow Statement. In the absence of the appropriate details, we are presently unable to ascertain the impact, if any, on the adjustments/disclosures in the Cash Flow Statement. Our audit report on the financial statements for the previous year ended 31st March 2014 was also qualified in respect of this matter.

Noted.

Emphasis of Matter37. We draw attention to note 14 to the financial

statements of the Company regarding investments in ITI Limited aggregating to Rs. 20,000 lacs as at 31st March 2015. The management, based on the factors mentioned in the said note, believes that the diminution in the value of investments is temporary in nature and hence no provision in respect of aforementioned amount has been made in the accompanying financial statement. Our opinion is not qualified in respect of this matter.

Due to substantive evidence on the soundness of investment and recovery of the amount, the management does not feel there are adequate reasons to decrease the value of investment in preference shares of M/s ITI Ltd.

For and on behalf of the Board of Directors

Sd/-(Anupam Shrivastava)

Chairman & Managing DirectorDate: 13.10.2015 BHARAT SANCHAR NIGAM LIMITED


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Rep-PSU A/cs/F-103/Ann. Acts./BSNL/2014-15/Vol. II/67Date - 06.11.2015

To

The Chairman and Managing Director, Bharat Sanchar Nigam Limited, Delhi.

Subject: Comments of the Comptroller & Auditor General of India under Section 143(6)(b) of the Companies Act 2013 on the accounts of BSNL for the year 31st March 2015

Sir,

I am to forward herewith the comments of Comptroller and Auditor General of India under Section 143(6)(b) of the Companies Act 2013 on the annual accounts of BSNL for the year ended 31st March 2015 for information and further necessary action.

Kindly acknowledge receipt.

Yours faithfully,

Sd/-(MeeraSwarup)

Director General of Audit (P & T)

Encl(s): As above

Telephone: E-mail: Fax:23814747/4623/8625/4533 [email protected] 91-011-23813822

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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6) (b) OF THE

COMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF BHARAT SANCHAR NIGAM LIMITED FOR THE YEAR

ENDED 31st MARCH 2015The preparation of financial statements of Bharat Sanchar Nigam Limited for the year ended 31st

March 2015 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 is the responsibility of the management of the Company. The statutory/Branch auditor/auditors appointed by the Comptroller and Auditor General of India under section 139(5) of the Act is/are responsible for expressing opinion on the financial statements under section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated September 18, 2015.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a) of the Act of the financial statements of Bharat Sanchar Nigam Limited for the year ended 31st March 2015. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records. Based on my supplementary audit, I would like to highlight the following significant matters under section 143(6)(b) of the Act which have come to my attention and which in my view are necessary for enabling a better understanding of the financial statements and the related audit report:

Balance Sheet Equity and LiabilitiesOther Current Liabilities (Note 11) ` 734591 lakh

A. DoT after completing provisional assessment of license fee for the year 2007-08 to 2012-13 raised an additional demand of 234731 lakh. The company did not provide for the same but disclosed it as a contingent liability. As demand was based on assessment, the same should have been provided for. Non provision has resulted in understatement of other current liabilities as well as accumulated losses by ` 234731 lakh.

Current Assets (Note-21)

Other Current Assets- ` 911286 lakh

The above head does not include the amount of ` 1388 lakh recoverable from DoT. Further, an amount of ` 5725.7 lakh for various electrical work carried out under NTR Circle. Non-inclusion of the above amounts has resulted in the understatement of other Current Assets and overstatement of loss by ` 6237 lakh.

STATEMENT OF PROFIT AND LOSSRevenue

Revenue from Operations (Note 22) ` 2724223 lakh

The above head includes an amount of ` 22666 lakh as Income from CMTS towards the income


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received for providing mobile services in areas identified by Ministry of Home Affairs (GOI) in Left Wing Extremists affected areas. However, as per the Fund Utilisation statement furnished to Administrator, USOF, an amount of ` 10407 lakh only was utilized upto 31-08-2015. Thus, accounting of unspent amount as income without showing the same as utilization to Administrator, USOF was not in order and resulted in overstatement of income from CMTS and understatement of loss for the year as well as liabilities by atleast ` 12259 lakh.

Employee Benefit Expenses (Note No. 24) - Pension Contribution - ` 1496350 lakh

The above head is understated by ̀ 77571 lakh due to charging of pension contribution of absorbed employees on the basis of actually drawn pay instead of on maximum pay. This has also resulted in understatement of provision as well as accumulated loss by ` 77571 lakh.

Expenses - Other Expenses License and spectrum fee (Note 29)- ` 217032 lakh

A penalty of ̀ 142862 lakh was imposed by TERM Cell of DoT for non compliance to EMF radiation norms during the year 2013-14 out of which an amount of ` 12.36 lakh has already been paid by the Company leaving a balance of ` 142849 lakh. This has resulted in understatement of above head as well as understatement of Current Liabilities by ` 142849 lakh.

General

A. Persistent Non-Reconciliation of balances with MTNL

As per accounts of BSNL for the year 2014-15, the amount recoverable from and the amount payable to Mahanagar Telephone Nigam Limited (MTNL) on current account have been disclosed as ` 3586.57 crore and ` 1016.59 crore respectively resulting in net recoverable amount of ` 2569.98 crore from MTNL. However, as per approved annual accounts of MTNL for the year 2014-15, the amount recoverable from and the amount payable to the Company was ` 9005.10 crore and ` 4164.07 crore respectively resulting in a net recoverable amount of ` 4841.03 crore from BSNL. Thus, there was net difference of ` 7411.01 crore in the receivable/payable amounts between these two Government Companies under the same Ministry. This comment was raised on accounts of the Company for the year 2013-14 also. However, there is no change in the status of unreconciled balances between the Company and MTNL.

B. BSNL has booked expenditure amounting to ` 9533 lakh on account of post-employment medical care to BSNL retired employees during the FY 2014-15 on actual basis instead of actuarial basis which was not in line with AS-15.

For and on the behalf of the Comptroller & Auditor General of India

Sd/- (Meera Swarup)Place: New Delhi Director General of AuditDate: 6.11.2015 Post and Telecommunication

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Comments of the Comptroller a nd Auditor General of India under section 143(6) (b) of the Companies Act, 2013 on the Financial Statements of Bharat Sanchar Nigam Limited for the Year Ended 31st March 2015 and reply thereon by BSNL ManagementPara No.

Comments by C&AG of India Reply of the Management

BALANCE SHEETA. Equity and Liabilities

Other Current Liabilities (Note 11) ` 734591 lakhDoT after completing provisional assessment of license fee for the year 2007-08 to 2012-13 raised an additional demand of 234731 lakh. The company did not provide for the same but disclosed it as a contingent liability. As demand was based on assessement , the same should have been provided for. Non provision has resulted in understatement of other current liabilities as well as accumulated losses by ` 234731 lakh.

As per disclosure made, such demands are on account of provisional assessment and the matter has been taken up with DOT.A Committee has been formed to look into the issue and there are indications that for 2007-08, some amount will be recoverable from DOTTill final assessment of license fee is done by DOT, it is not a firm liability. Hence, these are disclosed as contingent liability.

B. Current Assets (Note-21)Other Current Assets- Rs. 911286 lakhThe above head does not include the amount of ` 1388 lakh recoverable from DoT and an amount of ` 5725.7 lakh for various electrical work carried out under NTR Circle. Non-inclusion of the above amounts has resulted in the understatement of other Current Assets and overstatement of loss by ` 6237 lakh.

It has been intimated by NTR Circle that the details as given in this Para is under reconciliation and after completion of reconciliation , the necessary entry will be made in the books of account by the NTR Circle.

STATEMENT OF PROFIT AND LOSSA. Revenue

Revenue from Operations (Note 22) Rs. 2724223 lakhThe above head includes an amount of ` 22666 lakh as Income from CMTS towards the income received for providing mobile services in areas identified by Ministry of Home Affairs (GOI) in Left Wing Extremists affected areas. However, as per the Fund Utilisation statement furnished to Administrator, USOF, an amount of ` 10407 lakh only was utilized upto 31-08-2015. Thus, accounting of unspent amount as income without showing the same

The MOU for providing mobile services in areas affected by Left Wing Extremist (LWE) was signed between BSNL and USOF Administrator. Under the agreement total 2199 locations was identified , out of which 363 locations BSNL have already been installed mobile towers.The Income of ` 226.66 crore consists of two separate J.V. One being of ` 194.02 crore pertaining to “Other charges” and Second being ̀ 32.64 crore pertaining to “Centage-LWE Project”.


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as utilization to Administrator, USOF was not in order and resulted in overstatement of income from CMTS and understatement of. loss for the year as well as liabilities by atleast ` 12259 lakh

As per agreement signed with Administrator, USOF dated 30/09/2014 for provisioning of mobile services in the areas affected by Left Wing Extremism (LWE), core and other element of BSNL Network have been made ready to integrate 1836 BTS sites being installed under LWE Project. These equipments were commissioned and accepted tested as per exact provision by BSNL under Phase-V/VII. Survey has already been done by BSNL for 1836 sites and the survey report for 1836 sites has already been submitted to USOF & DOT.

Accordingly, as per para no. 6.11.3(i) of the agreement an amount of ` 171.66 crore is adjusted against advance received for LWE Project as apportioned cost of Core and other network elements for 1836 sites and for survey and documentation cost (NON TENDERED CAPEX). Similarly as per para no. 6.11.3(iii) of the agreement NON TENDERED OPEX for operation and maintenance charges for above said Core network and other elements for two quarters amounting ` 22.36 crore is adjusted. As BSNL core network is seamless and the assets which are being used for LWE Projects cannot be separately identified, above expenses has been accounted as Income.As per para no. 6.11.3(iv) of the agreement OPEX with respect to existing 363 BTS for 6 months amounting ` 32.64 crore has been accounted as “Centage” as the operation and maintenance expenditure has already been incurred for existing 363 BTS.

B. Employee Benefit Expenses(Note No. 24)Pension Contribution ` 1496350 lakhThe above head is understated by ` 77571 lakh due to charging of pension contribution

The absorbed employees of BSNL are paid pension under Rule 37A of CCS

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of absorbed employees on the basis of actually drawn pay instead of on maximum pay. This has also resulted in understatement of provision as well as accumulated loss by ` 77571 lakh

Pension Rules for whom pension contribution is payable as per the rates prescribed in FR. As per FR 116 the rate of pension contribution shall be such as the President may by General Order prescribe. Accordingly vide Office memorandum dated 19/11/2009 issued by DOP&T, pension contribution shall be based on the existing basic pay of the post held by a Govt. Servant (BSNL employee are also Govt. Servant for the purpose of pension under Rule 37A) at the time of proceeding on foreign service or the upgraded pay during financial up-gradation. As the interpretation given by the administrative ministry does not conform to statutory provisions and hence the case was taken up once again with the DOT. The Secretary Telecom vide minutes dated 19/04/2012 permitted the BSNL Management to remit pension contribution on the maximum of the scale only for those employee who are due to retire within six months and for all others on actual basis. In this context, it is also mentioned that the stand of BSNL is confirmed by DOPT in its letter no. 6/1/2014-Estt.(Pay-II) dated 24th April 2014.The matter is under regular pursuance with DOT and management has once again decided to pay the pension contribution on maximum of the pay scale from 01.10.2014 onwards to avoid hardship faced by BSNL retirees on getting pension. The matter has been taken up by CMD, BSNL with DOT vide their Letters dated 23/02/15, 28/05/15 and 24/09/15 .Hence, the difference amount is shown as contingent liability.


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C. ExpensesOther Expenses License and spectrum fee (Note 29) ` 217032 lakh A penalty of ` 142862 lakh was imposed by TERM Cell of DoT for non compliance to EMF radiation norms during the year 2013-14 out of which an amount of ` 12.36 lakh has already been paid by the Company leaving a balance of `142849 lakh. This has resulted in understatement of above head as well as understatement of Current Liabilities by ` 142849 lakh.

These penalties have been imposed for minor procedural discrepancies like delay in submission of self certificate, improper signage/photograph etc. and not because of exceeding the EMF Radiation norms set by DOT.BSNL has taken up the matter with Term Cell, DOT to condone these minor discrepancies. The matter is under regular persuasion with DOT.As assured during last year, these penalties have been shown as contingent liability during current year.

GeneralA. Persistent Non-Reconciliation of balances

with MTNLAs per accounts of BSNL for the year 2014-15, the amount recoverable from and the amount payable to Mahanagar Telephone Nigam Limited (MTNL) on current account have been disclosed as ` 3586.57 crore and ` 1016.59 crore respectively resulting in net recoverable amount of ` 2569.98 crore from MTNL. However, as per approved annual accounts of MTNL for the year 2014-15, the amount recoverable from and the amount payable to the Company was ` 9005.10 crore and ` 4164.07 crore respectively resulting in a net recoverable amount of ` 4841.03 crore from BSNL. Thus, there was net difference of ` 7411.01 crore in the receivable/payable amounts between these two Government Companies under the same Ministry. This comment was raised on accounts of the Company for the year 2013-14 also. However, there is no change in the status of unreconciled balances between the Company and MTNL.

A high Level Committee has been formed by DOT vide Letter No. 10-14/2013-SU-1 dated 25/06/2013 consisting representatives of DOT,MTNL to sort out the issues with MTNL.

Upon recommendation of such High Level Committee, a MOU dated 24/09/2013 has already been signed between BSNL and MTNL to sort out various issues. The pending issues with the MTNL are likely to be settled accordingly.

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B. BSNL has booked expenditure amounting to Rs. 9533 lakh on account of post-employment medical care to BSNL retired employees during the FY 2014-15 on actual basis instead of actuarial basis which was not in line with AS-15.

As per the accounting policy as disclosed, claims for medical facility received from the employees of BSNL(including retirees) up to the cutoff date of finalization of annual accounts, are treated as liability of the Company for the said financial year.The post employment medical care extended to its retired employees as per the present policy of BSNL is more like a facility, which may be reviewed by the Management any time, depending upon the relevant factors prevailing at that time.Further vide Letter No. BSNL/Admn.I/14-15/09(pt.) dated 02/04/2014 option to choose CGHS facilities has been extended to retired employees of BSNL, who are in receipt of Central Civil Pension.

For and on behalf of theComptroller and Auditor General of India

Sd/-(Meera Swarup)

Director General of AuditPost and Telecommunication

For and on behalf of the Board of Directors

Sd/-(Anupam Shrivastava)

CMD,BSNLDate : 17.11.2015

Documents

15th Annual Report