20th Annual Report 2014-15

Transcription

Sistema Shyam TeleServices Limited
Chairman’s Letter
Dear Members,
It gives me great pleasure to address you all and update you about the key developments that have shaped
Sistema Shyam TeleServices Limited (SSTL) in 2014-15.
One of the biggest trends during the year was the rampant growth in the data services market—across the
2G, 3G, fixed broadband and 4G segments. The rise of Social and Mobility greatly accelerated data consumption.
Outside of the US, Indians became the biggest users of Facebook, Twitter and WhatsApp, especially on the
mobile, and provided a great boost to data usage. Data revenues experienced a near 100 percent growth in
2014-15, increasing their contribution to the overall revenues of telecom players.
As a service provider of significance in the data market, SSTL also benefited from these trends. Our focus of
delivering more customer value through new ideas enabled us to beef up our data revenues and enhance our
image within this realm.
We are aware of the existing environment and our compulsions in this scenario. As the market remains very
cut-throat, we will have to focus on offering voice users competitive pricing, affordable smartphones and a
superior and differentiated network experience.
In order to sustain our success and drive momentum within the data domain, we will require unconventional
monetization options that draw and delight our customers.
SSTL decided against participation in the spectrum auctions held in March 2015 and the step was
taken as part of a larger strategic plan after considering a range of variables. There is no point in acquiring
more spectrum if our existing spectrum, won during the last auction, is not made contiguous. This has
to be done without the levy of any additional charge. If such a levy is indeed imposed as is suggested
in the new auction guidelines, then it amounts to changing the rules of the game and violates the principles
of a level playing field.
The underlying objective for any business is to first turn cash positive. This basic fundamental would have got
violated had we bought additional spectrum within the 800 MHz band at Rs. 3646 crore per MHz. Given the
ecosystem realities, there is no way to justify such an investment. We are a responsible enterprise whose
objective is to not only safeguard but enhance shareholder value.
2
While this decision might raise a concern in your mind, I would like to reassure you that the future holds a lot
of positivity for us in form of spectrum sharing, trading, getting into strategic alliances, the list goes on and on.
The telecom market in India is poised for high growth in the years ahead, and SSTL will need to leverage these
trends to achieve its long- and short-term goals.
We have entered 2015 with a greater sense of confidence and sure-footedness and this sense of purpose has
to find reflection in all of our business lines. More imaginative ways will have to be found to excite potential
users, craft a compelling value proposition for them and win their trust and loyalty. After all, only when both
our non-voice and voice revenues record robust growth, can SSTL step up its momentum and make a real
impact in the market.
While we have had success with some of our brand building goals and rank among the more visible players in
the telecom market, more will need to be done to win mind and wallet share.Having forged a strong connect
with young India, we need to fortify this relationship. MTS in India is already perceived as a ‘young’ brand, and
we will need to reiterate this stance and further enhance this image.
2015, therefore, appears to be a positive period for SSTL-a time for restructuring, reinventing and
refurbishing.
I am certain we will be able to achieve our mission and vision with your backing and immense support. On
behalf of the SSTL family, I would like to thank each one of you for standing behind us and providing us your
unstinting and invaluable encouragement.
We are now looking to the future with renewed hope and a sense of expectation. With your backing, we can
achieve the aspirations that we had set for ourselves at the outset. It is only a matter of standing tall, remaining
determined and believing in ourselves.
Warm regards.
Sd/Andrey Dubovskov
CHAIRMAN
June 11, 2015
3
CEO’s Message
Dear Members,
The year 2014-15 was a time of introspection for Sistema Shyam TeleServices Limited (SSTL), with the company
giving serious thought to its future roadmap, while consolidating its position within chosen segments in the
Indian telecom market.
As in the past years, the organization continued to make strides in the data segment by raising the bar on
innovation and building strong marketing and branding momentum.
Our High Speed Data (HSD) services network, the high point of our offerings, further expanded its footprint,
reaching over 800 towns across nine circles. The robustness of our data strategy found reflection in our
scaling non-voice revenue figures and a consistent increase in our data card subscriber base.
Once again, it was high market visibility, imaginative branding and a unique customer experience that won the
day for our data services, which grew during the year.
Out-of-the-box thinking around MBlaze created a surge for us in the data space, enabling SSTL to deliver an
unmatched value proposition to customers. The introduction of MBlaze Power Wi-Fi during 2014-15, proved
to be a good strategy.
It’s USP, of being a ‘first-of-its-kind’ product that allowed users to connect up to six devices on the MTS
3GPlus network, struck a chord with both existing as well as potential users. The fact that they could connect
their smartphones, tablets, laptops, smart TVs and gaming consoles to the high performance network, leveraging
its immense power, created a buy-in.
The MTS Baby, a virtual revolution in the advertising realm and award winning campaign which captured the
imagination of India, made a comeback, sending our data subscriber numbers on the increase. Introduced in a
new avatar with the launch of MTS GB Festival, the MTS Baby made a huge impact, resulting in the highest data
gross additions in a month for the organization.
Our effort to enhance market awareness and in particular deepen our connect with Gen Y, resulted in success.
Initiatives such as the NH7 Weekender festival enabled us to reach out to youth and draw them into our data
fold.
4
Data will continue to be our mainstay in 2015 as well, as we seek to beef up subscriber numbers. We have
begun the year on a strong note with the launch of MTS Homespot WiFi, which is supported by attractive
data plans.
While achieving OIBDA positivity continues to be our most important goal for 2015, we did manage to
reduce OIBDA loss in 2014-15. An increase in revenues, more prudent cost measures, stricter control over
marketing and other expenditures as well as an improvement in our operational efficiencies helped us keep
the OIBDA losses in check. These endeavours will continue through the current year as we make further
investments in our operations and hone the 3GPlus advantage.
As you may be aware, SSTL decided not to participate in the recently concluded spectrum auctions as our
existing spectrum had not been made contiguous. This needed to be done without the levy of any additional
charge. The new auction guidelines, which were suggesting the imposition of such a levy, were changing the
rules of the game and violating the principles of a level playing field. We are contesting this issue legally.
As we look to the future, we remain positive and upbeat. Over the next 12 months we will continue to
consolidate the gains we have made in the data market, while seeking new opportunities through spectrum
sharing, trading and strategic alliances.
There is still significant ground to cover in the voice segment, which presents considerable new potential
for us going forward. Our voice and data business need to work hand-in-hand to create the necessary
traction for brand MTS in the market. Like two engines in an aircraft, they need to perform not only
at peak capacity but also in perfect harmony. This is the only way we can ensure the financial health and
well-being of SSTL in 2015.
Thanking You,
Sd/Dmitry Shukov
Whole Time Director (designated as ‘CEO’)
June 11, 2015
5
DIRECTORS’ PROFILE*
Mr. Andrey Dubovskov graduated in 1993 from
Russian State University of Cinematography named
after S. Gerasimov. From 1993 onwards, he occupied
a number of management positions in companies
such as Millicom International Cellular S.A., Millicom
International Cellular B.V., Regionalnaya Sotovaya Svyaz
LLC and CJSC 800, as well as other companies in
Russia Moscow, Nizhny Novgorod, Ekaterinburg,
Perm), Kazakhstan (Alma-Ata) and Ukraine (Kiev).
From 2002 to 2004, Mr. Dubovskov headed Tele2’s
Andrey Dubovskov operations in Nizhny Novgorod. From 2004 to 2006,
Chairman
he was head of MTS branch in Nizhny Novgorod.
From 2006 to 2007, he was the Head of Macro-region Ural. He joined MTS
Ukraine in November 2007 as First Deputy of General Director and then,
since January 2008 he has been the Head of Business Unit MTS Ukraine. In
March 2011 Andrey Dubovskov was appointed as a President and Chief
Executive Officer (CEO) of MTS Group. Presently, he is also member of the
Board of MTS Group, Deputy Chairman and member of the Supervisory
Board of MTS Ukraine PJSC, Chairman of the Board of Directors of Mobile
TeleSystems JV (MTS-Belarus) and MGTS OJSC (Moscow City Telephone
Network), as well as member of the Board of Directors of International
Cell Holding Ltd. and Russian Telephone Company CJSC.
Mr. Ajay Khanna is a co-promoter of Shyam
Group. He has been instrumental in setting
up all India Distribution Network for Cable TV,
which catapulted Shyam Telecom Limited
to become leading player in the Indian Cable TV
equipment Industr y. Complete commercial
& operational network of SSTL’s Cellular &
Basic Business was set up under his guidance.
He handles the Project implementation,
Ajay Khanna
Commercial operations (Sales, Marketing
Director
& Credit control) and HR activities of
Shyam Group. He also handles Public Relations and liaison with Local
Authorities and Statutory / Regulatory Bodies.
Mr. Alexander Gorbunov graduated in 1992 from
the Moscow Physics and Engineering Institute (MPEI).
In 1999 he received an MBA from Harvard Business
School. From 1994 to 2001 he served as a consultant
in Moscow and Boston offices of Bain & Company.
In 2001 he was appointed Head of Strategic Analysis
and Development Department of Sistema Telecom.
From 2003 to 2006 he served as CSO of MTS OJSC.
In 2006-2007 he has been Head of Corporate
Alexander Gorbunov
Development Department of Sistema JSFC. From
Director
2007 to 2010 he served as Vice President of Strategy
and Development of Comstar - United Telesystems. Presently, Mr. Alexander
Gorbunov is serving as Executive Vice President responsible for Telecom
Assets Development of Sistema JSFC. He is also a member on the Board of
telecom company MTS OJSC and retail company OZON Holdings Limited
Mr. Alok Tandon is a Chartered Accountant by
profession. He looks after all the financial and
commercial activities of the Shyam Group. Mr.Tandon
has experience of more than 22 years in this field.
Under his guidance Shyam Telecom successfully
concluded the IPO in 1994, which was over subscribed
by 25 times. He has been instrumental in efficiently
managing funding and investments for various group
Companies. Mr. Tandon also handles group
Alok Tandon
relationships with all leading Banks, Foreign and Indian
Director
Institutional Investors.With his efforts Shyam Telecom
has been able to smoothly manage its Equity & Debt funding requirements
at the lowest possible cost. He has been instrumental in closing several
important deals of the Shyam Group which gave group the highest ever per
customer valuation of any telecom operation in the country.
6
Mr. V. Rozanov did his graduation from the
Lomonosov Moscow State University with a degree
in Economics. He is having rich corporate experience
of more than 20 years, mainly in the field of
Management, Economics and Finance. He has served
many esteemed Multinational Companies in senior
capacity. Before joining the Company, he was Vice
President and CFO with Mobile TeleSystems (MTS),
V. Rozanov
Moscow, another Subsidiary Company of Sistema
Dy. Chairman
JSFC. He is a successful professional who made a
significant contribution to consolidating MTS’s position in the telecom market.
From August 2008 till May 2013, he held the position of Whole Time
Director designated as President and CEO of SSTL. Presently, he is the
Dy. Chairman of SSTL. He is also the Senior Vice President, Chief
Financial Officer and member on the Management Board of Sistema JSFC.
He is on the Board of telecom company MTS OJSC, Russian bank MTS
Bank JSOC, transport company SG-Trans OJSC and management company
Leader-Invest CJSC.
Mr. Andrey Terebenin graduated in 1985 from
Moscow State University of Foreign Affairs.
Subsequently he held management positions at
Economicheskaya Gazeta (Economics Gazette), Dun
& Bradstreet CIS and AIG Russia. In 2003-2006, he
served as General Director and Managing Partner of
Communication Holding at R.I.M. Porter Novelli. In
2006-2011 he held the position of Vice President of
MTS OJSC (Russia), Corporate Communications. In
2011 he was promoted to the same position in
Andrey Terebenin Sistema, MTS’ mother company. Presently,
Director
Mr. AndreyTerebenin is serving as Senior Vice
President/Head of Investment Portfolio and member of Management Board
of Sistema JSFC. He is also a member on the Board of Binnopharm, a
pharmaceutical company of Sistema, Detsky Mir, a wholly owned subsidiary
of Sistema and the leading player in the sector of childrens’ goods in Russia
and CIS, and Concept Club, a women’s and childrens’ goods Russian company.
Mr. Andrey Smelkov graduated in 1998 from the
Novgorod State University with a degree with honor
in management and economics. In 2000, Mr. Smelkov
graduated from the University College in Telemak
(Norway) with a degree in economics and business
administration. In 2012, he completed executive
development program in business administration and
management at Wharton Business School. In 2002,
he began his career as a marketing and advertising
manager of mobile operator NovgorodskieteleAndrey Smelkov kommunicacii (trademark “Unicell”). From 2004 to
Director
2007, he was head of Vimpelcom (trademark Beeline)
operations in Velikiy Novgorod. From 2006 to 2008, he served as Regional
Development Director and Deputy CEO in Vimpelcom, Uzbekistan. In 20082010, he worked as CEO of Skymobile in Kyrgyzstan. In 2010- 2013, Mr.
Smelkov was CEO, Chairman of the Management Board, of Tele2 in
Kazakhstan. He joined MTS from Tele2 AB, where he served as Senior
Advisor to Executive Vice President, Central Europe and Eurasia. Andrey
Smelkov was appointed in October 2013 as a Vice President for Foreign
Subsidiaries, Member of the Executive Board of MTS Group.
Mr. Bharat V Patel is an Independent Director
of the Company since 13.07.2011. He holds MA
in Economics from the University of Notre Dame,
USA and MBA in Marketing from the University
of Michigan, USA. He is the former Chairman
of Procter & Gamble Hygiene and Health Care Ltd.,
and presently in the Executive Committee or
Boards of Indian Society of Advertisers (ISA),
World Federation of Advertisers (WFA), Advertising
Standards Council of India (ASCI) and Broadcast
Bharat V Patel Audience Research Council (BARC). He has over
Director
40 years of varied experience in the field
of advertising, marketing, sales, exports and operations.
Mr. Dmitry Shukov, aged 46 years, a Russian National,
is a young and dynamic Executive. Mr. Shukov is a
Telecommunication Engineer and has a rich corporate
experience of 21 years, mainly in the field of General
Management, Sales and Customer Service Delivery.
Mr. Shukov has had an outstanding career and is known
for his hands-on business experience, having worked
as head of sales in Tele2, Russia’s leading mobile
operator. Before joining Sistema ShyamTeleServices
Limited (SSTL) he had been rendering his services as
Dmitry Shukov
WTD (CEO)
Managing Director of FE “Uzdunrobita LLC” (MTS
Uzbekistan). He is a successful professional who made a significant contribution
in consolidating MTS’s position in the telecom market. He is a MTS veteran
and was previously the CEO of MTS Turkmenistan as well.
Mr. Igor Kozlov graduated in 1987 from Air Force
Engineering Higher School with an engineer’s degree in
Avionics and in 1999 from Air Force Engineering Academy
with a master’s degree in Military and Administrative
Management. In 2000 he received an MA in International
Economics from UCLA and in 2006 he received an MBA
from Esslingen University Business School. From 1987 he
served as acting officer on different senior positions in
Russian Air Force till his retirement in 2002 in a colonel
Igor Kozlov
rank. From 2002 to 2004 he served as an International
Director
Programs Director of aircraft manufacturing holding
KASKOL Group. During 2004 to 2006 he held a position of Member of the
Management Board and Corporate Management Director in pipe production
holding - ChTPZ Group. From 2006 to 2009 he held a position of Strategy and
Investments Executive Director in URALSIB Financial Corp. In the end of 2009 he
was appointed as Executive Vice President of Sistema JSFC. During 2010 to 2012
he held position of Member of the Board of Directors of various hi-tech companies
e.g. Sitronics OJSC, RTI Systems OJSC, Sitronics- NANO OJSC, Mikron OJSC. Presently,
he is an Adviser of the Russian Minister of Telecom and Mass Media Communications
and Member of the Board of Directors of Russian biggest telecom operator
Rostelecom OJSC and Russian private equity venture fund Rosinfocominvest OJSC.
Mrs. Neera Sharma earned a Bachelor’s degree in
law from the Panjab University in 1997 and also
completed her MBA in Finance From Amity Business
School in 2004. Neera has strong functional expertise
and a well-rounded legal experience base of nearly
two decades having worked with leading companies
like DCM Limited, HCL, Idea Cellular limited, Emaar
MGF Land Private Limited, HFCL Infotel and Dishnet
Neera Sharma
Director
Wireless Limited (Aircel). She has been associated
with the Company since 2008 and as the Head of the Legal Function, counsels
and advises the Company on the entire gamut of Legal and Compliance
matters. She was conferred with the prestigious Young Achiever Award (in
the In House Counsel Category) in 2013 and Outstanding Achievements
award in 2015 by Legal Era. She is also a founder Member of Indian Corporate
Counsel Association..
Mr. Rajiv Mehrotra, a telecom industry veteran
and serial entrepreneur, is the founder and Chairman
of Shyam, India’s leading diversified telecommunications group. In a career spanning over
40 years, he has many firsts to his credit. In 1974, as
a young electronics engineer, he pioneered the
manufacture of satellite TVRO systems that brought
cable TV to millions in India. He then launched Shyam
Telecom-a global name in mobile coverage solutions,
Rajiv Mehrotra
Hexacom (GSM services) and Shyam Telelink (now
Director
Sistema Shyam Teleservices Limited). His efforts
established Essel Shyam as the leading name in VSAT services in India. In 2004
he launched VNL (Vihaan Networks Ltd.) with the dream of connecting the
billions of unconnected across the world using sustainable technology to
deliver affordable mobile and broadband services. Under his guidance VNL
has won extensive international acclaim for innovation and is the only Indian
company today that manufactures and exports its own end-to-end mobile
infrastructure solutions to countries in Asia, Africa and Latin America. An
active industry spokesperson, he is a passionate advocate for India’s indigenous
telecom R&D and manufacturing.
Mr. Ram Krishna Agrawal is a qualified chartered
accountant and was the Managing Partner of
S R Batliboi & Co., at the time of his retirement in
June, 2013. He has got wide exposure of various
industries, including Steel, Paper, Cement, Telecom,
Automobiles, Real Estate, Milk & Dairy Products, etc.
, both in India and abroad. Mr. Agrawal is the past
President of the Institute of Internal Auditors, India
and was a member of the Central Council of the
Institute of Chartered Accountants of India during
Ram K. Agrawal 1991-1997. Mr. Agrawal is connected with various
Director
Chambers of Commerce as the Committee
Chairman/Executive Committee member, permanent invitee etc., and is a
past Chairman of CII (Eastern Region). He was the National Chairman of
Direct Tax Sub-Committee of CII in the year 2013-14.
Mr. Suman Sehgal graduated from the prestigious
St. Stephens College, New Delhi. After graduation,
he completed two years of practical training in West
Germany with Fischer & Krecke following which he
took over his family factory producing paper products
in India as Managing Director. He went to Russia in
1983 and acted as consultant to various Indian
companies- Indian Tobacco Company, Godphrey
Phillips, Tata Tea, Nestle, Mcneil & Magor, Rossell and
Printers House India. Mr. Sehgal was instrumental in
Suman Sehgal establishing brands such as Capstan and Four Square
Director
in the USSR. In Post-Soviet Russia, Mr. Sehgal was
the leading Indian exporter of rice & Tea to Russia. Since 2000, Mr. Sehgal has
consulted various Russian Enterprises including JSFC Sistema, Ural Mining
& Metallurgical Company, Sberbank, Hydroenergostroy, Transmash holding
& Novolipetsk Steel. He is on the Board of SSTL since February 2008.
Mr.Vikram Kaushik brings with him over 30 years
of experience in consumer sales and marketing. He
earned his Master’s degree from St. Stephen’s College
in Delhi and joined Hindustan Unilever as a
Management trainee. He worked for Unilever for
more than 16 years and got wide exposure to
different product categories both in India and in
Asia, Europe and Africa.After a short stint as Managing
Vikram Kaushik Director of a leading advertising agency he returned
Director
to consumer marketing as Vice President Marketing,
Sales and Exports at Britannia, a joint venture with Groupe Danone. He
moved in 2000 as a Director on the Board of Colgate Palmolive and was
responsible for a major turnaround for the brand Colgate in India.Thereafter,
he served as the MD & CEO Tata Sky from 2004 till December 2010 and
played a pioneering role in establishing the DTH industry in India. Presently,
Mr Kaushik is an advisor to Pricewaterhouse Coopers and Voltas, a leading
Tata Group company. He has served on the Board of PrasarBharati, India’s
public service broadcaster. was appointed as member of the Sub Committee
for Innovation in Media under the aegis of the Prime Minister’s Office and
the I&B Ministry. He is currently on the Board of several companies including
Guernsey based India Capital Growth Fund launched by one of the largest
investment trusts in the UK and Vaibhav Global Limited. He also serves as a
Member of the Broadcast Committee of the Confederation of Indian
Industry and as a member of the Convergence Committee of FICCI.
*In alphabatical order except
Chairman’s & Dy. Chairman’s Profile
7
D I R E C TO R S ’ R E P O RT
Dear Members,
Your Directors have pleasure in presenting the Twentieth (20th) Annual Report on the business and operations of the Company
together with Audited Financial Statement for the financial year ended 31st March 2015.
FINANCIAL SUMMARY AND HIGHLIGHTS
(Amount in Rs. Million)
Particulars
Current Year
31st March, 2015
Previous Year
31st March, 2014
13,852
11,876
435
576
14,287
12,452
Cost of Services
8,716
9,022
Others including Revenue Share
1,237
988
Selling, General and Other Operating cost
8.910
10,030
18,863
20,040
Operating Loss
4,576
7,588
Finance Expenses
5,661
6,670
Depreciation and Amortization
6,300
5,402
-
-
17,173
20,728
Income
Revenue (Service and Sale of Goods)
Other Income
Total Income
Expenditure
Total Operating Expenditure
Loss after tax for the year from discontinuing operations
Net Loss
STATE OF COMPANY’S AFFAIRS
During the year ended March 31, 2015, your Company recorded
growth in service revenue i.e. an increase of 17% as compared
to previous year. Total income is increased to Rs 14,287 million
as against Rs 12,452 million in previous fiscal, representing year
on year increase of 15% in total income.
Cost optimization measures taken by the Company have resulted
in decrease in cost of services, sales & marketing expenditure
and personnel cost. Accordingly, total operating expenditure
for the year reduced to Rs 18,863 million as against total
operating expenditure of Rs 20,040 million during the previous
fiscal year.
8
Considering the impact of discontinued operations the financial
performance of the Company is as below:
(Amt. in Rs. Mn.)
Particulars
31 March 2015
Continued
Operation
Discontinued
Operation
31 March 2014
Total
Continued
Operation
Discontinued
Operation
Total
Total Income
14,287
- 14,287
12,452
46
12,498
Total Expenses
30,824
636 31,460
32,112
1,114
33,226
Net Loss
16,537
636 17,173
19,660
1,068
20,728
Company’s operating loss for the year ended 31 March 2015
reduced to Rs 4,576 million as against Rs 7,588 million during
last year and Net Loss for the year reduced to Rs 17,173
million against Net Loss of Rs 20,728 million during
previous fiscal.
DIVIDEND
In view of the losses incurred during the year under
review, your Directors do not recommend any dividend on
equity shares.
The BRAND After scaling new heights in the FY 2013-14 brand MTS has
further strengthened its position in the market in 2014-15. The
brand now stands at No. 2 position on ‘Top of mind awareness’
next only to Airtel in the data card category. The MTS Internet
Baby campaign which put MTS in the consideration set of 3G
users has created history with being the only advertisement in
India with video views in excess of 28 MN on the internet.
Some other key achievements for this campaign include being
seen in 206 countries , 2400+ websites, Blogs in 11 languages,
Covered by 35+ global news portals and >5 million Twitter
timeline deliveries. MTS also enjoys the No. 2 position for
Brand Equity in the category again just behind Airtel.
Today MTS has become a formidable force in the Data category
with its work being recognized by the industry as not just being
famous but also very efficient for the business.We won a battery
of awards that go on to prove why today we are considered
amongst the best in the industry. We got home many laurels in
the year 2014:
❖
Won two Blue Elephants at the Kyoorious Advertising &
Digital Awards for the MTS Canvas Blaze and MTS Internet
Baby campaigns.
❖
MTS Internet Baby Campaign won a Silver Award at the
London International Awards.
❖
Bronze at Goa fest 2014 Creative Abbys for MTS Wi-Fi bin
in the Ambient-Special Build category.
❖
EFFIEs 2014- Most effective advertising in telecom categoryBronze for the MTS Internet Baby.
The year under review started with the launch of 3GPlus
network that was followed by the now famous Internet baby
campaign. Other significant data interventions in the first half of
the year include the launch of Mblaze Power Wi-Fi, 40GB and
Rs 999, co-branded retail initiatives with HP and the launch of
Wi-Fi at Rapid Metro. MTS created disruption in the voice
category with the launch of its ‘Offer ka Sikander’ promo, this
campaign was created with a very granular approach to both
creative development and on ground execution. The campaign
designed for blue collar workers had a push and pull strategy to
create impact.
The highlight in H2 was the much acclaimed ‘MTS GB Festival’.
With this campaign we entered into new segments (Sec B & C)
in Tier 1 & Tier 2 towns. This new animated avatar of the MTS
Internet Baby was designed to appeal to the masses and attract
mid belly users to the network.With this we achieved significant
improvement across all brand KPI’s with high execution cut
through, also
❖
Over 5000 outlets participated in a display contest and
showed almost 48% increase in Data activations.
❖
Campaign and disruptive product pricing led to highest
gross adds ever in a month.
MTS Online Channel emerged as a strategic channel for
acquisitions and registered 300% growth in overall online
channel volume during October to December 2014. Datacards
volume on MTS e-shop jumped 350%. On social media MTS has
seen exponential growth on each platform, even with limited
Ad spend Facebook Fan growth - Crossed the 2 million likes
for MTS India Facebook page and 20,000 Followers on Twitter
with a Klout score of 70, 2nd highest among competitors in the
space.
Brand MTS strengthened the relationship between MTS
& young India with the continuation of its association with
NH7 Weekender. The festivals in 4 cities had approx. 1Lac
people in attendance where the Company was able to
demonstrate its network to this core audience with Festival
Wi-Fi being offered by MTS. On social media this initiative
reached over 2 MN people.
The year 2015 has had a great start with the launch of
MTS Homespot Instant Wi-Fi. This initiative designed to
reposition the data brand to open new customer segments
started with TV presence on the mega event of Cricket
World Cup 2015. The campaign has enjoyed tremendous
success on both brand health and data gross adds parameters.
MTS India March data gross adds touched highest ever i.e. 1.35
Lacs in a month and the UDO’s grew by 20%. MTS India was
recognized for positioning its datacards as convenient,
inexpensive and ubiquitous Wi-Fi solutions for small homes
across metros and Tier1/2 towns. The award also recognized
the creative advertising Homespot campaign that leveraged the
famous MTS Internet Baby and connected with the target
audience across India.
LICENCES & SPECTRUM
SSTL received additional authorization on 3rd September 2014
to provide National Long Distance Service under the existing
Unified License. The company will start carrying inter-circle
traffic on its own NLD network which hitherto was handed
over to other carriers.
9
Further, SSTL also received additional authorization on
29th April 2015 to provide ISP Category A service. The said
authorization will enable the company to provide ISP services
across nation.
The Government conducted spectrum auction in 2100 MHz,
1800 MHz, 900 MHz and 800 MHz bands, which commenced on
4th March 2015 and ended on 25th March 2015 after 115 rounds
over 19 days, has fetched over Rs 109874 Crore.The noteworthy
feature of said auction is that for the first time there is robust
demand for 800 MHz band which in previous auctions had seen
very sluggish response, thereby increasing value of spectrum
holding by SSTL.
Rs.32,037,844,700/-. The breakup of equity share capital along
with Foreign and Indian holding is as under:Shareholders
No. of
Equity Shares % of Holding
Sistema JSFC
1810289400
56.68
547312918
17.14
4222390
0.13
Total (Foreign)
2361824708
73.95
Indian Promoters
723352362
22.65
Others
108742930
3.40
832095292
26.05
3193920000
100
Rosimushchestvo
(Federal Agency for State
Property Management of
Russian Federation)
Others
SSTL did not participate in the auction due to clause 3.10 of
the Notice Inviting Application (NIA) dated 9th January 2015
for Auction of spectrum in 2100 MHz, 1800 MHz, 900 MHz
and 800 MHz bands. The reading of the aforesaid NIA clause
shows that for making spectrum acquired in 800 MHz band in
the 2013 auction contiguous, the licensee has to make the
payment at differential of the latest auction price and the
March 2013 auction price on pro rata basis on the balance period
of right to use spectrum. The company is quite surprised by the
aforesaid prescription of levy of additional charge as SSTL was
the only bidder in 800 MHz in 2013 and as such this clause is
applicable only to SSTL. SSTL has gone to the court against the
said clause of NIA dated 9th January 2015 and expecting a favorable
response.
The present foreign share holding in Company is within the
sectoral equity cap for foreign equity as approved by Foreign
Investment Promotion Board under FDI policy as in force as on
date.
SHARE CAPITAL AND COMPLIANCE OF FDI
SECTORAL POLICY
STATUS OF LISTING OF SHARES AS PER SCHEME
OF ARRANGEMENT
During the year under review, your Company with the approval
of the shareholders,obtained by passing a Special Resolution
through Postal Ballot, results of which were declared on
26.06.2014,increased its Authorised share capital from
Rs. 120,000 million to Rs. 250,000 million by the creation of
13000 million Equity Shares of Rs. 10/- each. Consequently, the
present Authorised Capital of Rs. 25,000 crore is divided as
under:
As informed to the shareholders in the past Directors’ Reports,
the Company has been taking all adequate steps in the matter of
listing in due compliance of the order passed by Hon’ble High
Court to this effect on 07.08.2008. However, post Supreme
Court verdict dated Feb 2, 2012 cancelling the telecom licenses,
the Company was forced to put the IPO plan on hold and it was
decided by the Board of Directors to review the feasibility of
listing through IPO after having complete clarity on the status of
Licenses and other important regulatory issues.
❖
Rs.190,000 million divided into 19000 million equity shares
of Rs. 10/- each.
❖
Rs.60,000 million divided into 6000 million Preference
Shares of Rs. 10/- each.
During the year under review your Company issued and allotted
0.01% 430,970 Redeemable Preference Shares of Rs. 10/- each
on Private Placement basis to Insitel Services Private Limited at
a premium of Rs. 9,990/- per preference share.
There has been no change in the issued, subscribed and paid up
equity share capital of the Company.The total paid up share
capital of the Company at the end of financial year 2014-15 is
10
Total (Indian)
Total Equity
Share Capital
During 2013-14, fresh auction for allotment of spectrum was
conducted by the Department of Telecom, Government of India.
Your company also participated in the said spectrum auction for
800 MHz and won the spectrum for 8 telecom circles- Delhi,
Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, West Bengal
and Uttar Pradesh (West).
During the year under review the Company was engaged in the
process of restructuring its business operations across India
pursuant to the issue of fresh Unified Licenses for the 8 circles
for which it had won the spectrum in the auction held by the
Department of Telecom (DoT). Since 2013, the Company has
been in the process of acquiring fresh Unified Licenses for
Spectrum assignment and redraw it business plan. In view of the
said changes to telecom business scenario the Company has
been forced to rewrite its strategies and the Board will decide
about strategy for listing in the ensuing year(s).
The Company further submits that it is committed to undertake
any action necessary in the best interests of the Company and
its shareholders / investors, however in view of the regulatory,
legal and economic uncertainties in the telecom market, delay
in attaining desired results is unavoidable and beyond control.
The Company will keep the shareholders informed about the
developments in the matter.
AWARDS & RECOGNITION
Brand MTS in 2014, made it to the list of India’s Top 50 most
trusted service brands as per the yearly ‘Most Trusted Brand
Survey’ conducted by The Economic Times in partnership with
AC Nielsen.
Your Company’s Internet Baby campaign made a mark in the
history of Indian Advertising as it became the most viewed Indian
advertisement of all time with over 28 million internet video
views in 206 countries.
Your Company won GOLD for ‘Most Innovative Use of Digital
OOH Media’ & SILVER for ‘Innovative Creation of a New
Medium’ at the 2014 Exchange4media (e4m) Out-of-Home
(OOH) Awards. The Company was awarded for drawing
attention to its Durga Puja campaign that innovatively used
Facebook’s ‘Like’ feature to identify the most popular pandals
across Kolkata. Your company was also recognized for creating
an innovative MTS Wi-Fi Bin at each of the NH7 Weekender
festival venues which encouraged people to keep the premises
clean.
Your Company was awarded for most innovative Mobile VAS
product, i.e. MBuddy, at the Economic Times Telecom Award
2014. MBuddy is an innovative SMS based ‘chat’ application for
feature phones.
Your Company also won National Award for Excellence in Talent
Management-2014 by Delhi Management Association.The Award
recognized the best practices followed by MTS in the field of
talent management.
As part of its CSR initiative, your company was recognized for
its efforts to collect non-perishable food items for the
underprivileged at the Foodathon Awards 2014. For this initiative
your Company was awarded for the Best Communication
campaign by a corporate.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on Management Discussion and Analysis on
Telecom Sector Growth, Indian Telecom Market, Regulatory
Developments, Discussion and Analysis of Company’s Financial
Statements and Operational Performance, Opportunities, Risks
and Threats, etc.,is presented in a separate section and forms
part of this Directors’ Report.
CORPORATE GOVERNANCE
The basic philosophy of Corporate Governance in the Company
is to achieve business excellence and dedicate itself for increasing
long-term shareholders’ value. The Company is committed to
maximum transparency in all its dealings and places prominence
on business ethics.
Being an unlisted entity, the legal provisions of Corporate
Governance such as Clause 49 of Listing Agreement are not
applicable to the Company. However, the Company voluntarily
follows the standards of Corporate Governance which are, to
the extent possible, in line with the internationally accepted
standards of Best Practices.The Company is committed to
establish best practices of Corporate Governance and to this
end the Board has already approved the Company’s Corporate
Governance Strategy and the same is being implemented in a
phased manner.
Your Company realizes the shareholders’ right to information
on the performance of the Company and hence, your Company
has voluntarily posted on the website of the Company-the
Annual Reports, Notices and Minutes of the General Meetings,
Memorandum & Articles of Association, Code of Conduct,
Director’s profile, Charters of different Committees of the
Directors and updated shareholding pattern.The latest
important developments and other information of interest to
the shareholders are also posted in various forms in different
sections of the website of the Company.
In furtherance of its quest for adoption of best corporate
governance practices, your Company has taken initiatives of
voluntarily publishing reports on Corporate Governance and
Management Discussion and Analysis in the Annual Report.These
Reports are annexed and form part of this Director’s Report.
Further, following information as are required to be disclosed
in the Board’s Report have been included in the Corporate
Governance Report which form an integral part of Directors’
report:
❖
Statement indicating the manner in which formal annual
evaluation has been made by the Board of its own
performance and that of its committees and individual
directors.
❖
Number of Board Meetings held during the year.
❖
Statement relating to development and implementation of
Risk Management Policy including identification of key risks.
❖
Details of establishment of Vigil Mechanism.
❖
Details of Remuneration Policy.
11
CORPORATE SOCIAL RESPONSIBILITY
Your Company is at the forefront of Corporate Social
Responsibility and acknowledges its responsibility of playing a
key role in building social equity to safeguard the interest of
society in which it operates.The Company believes that emphasis
should not only be on maximization of revenues but also on
improving the efficiency of business processes to minimize the
environmental and social costs.
During the year under review, CSR policy was developed by
your Company. In terms of section 135 and Schedule VII of the
Companies Act, 2013 read with Companies (Corporate Social
Responsibility Policy) Rules, 2014, the Board of Directors of
your Company have constituted a CSR Committee. The
Committee comprises of Mr. Dmitry Shukov- Whole Time
Director, Mr. Ajay Khanna- Non Executive Director and
Mr. Ram Agrawal- Non Executive Independent Director. CSR
Committee of the Board has developed a CSR Policy in the
fields of Health, Education and eradicating hunger.
The CSR Policy has also been uploaded on the website of the
Company at www.mtsindia.in. The content of the CSR Policy
are described in brief, in the following para.
The vision of CSR policy states that SSTL empowers people to
pursue their purpose in a modern networked world. The policy
is a comprehensive tool-kit for planning and execution of CSR
projects. The policy takes into account the needs of local
communities in India and also draws inspiration from Sistema’s
philosophy of ‘Lift To The Future’.The execution framework of
the CSR Policy has been extended to include philanthropic
activities as well as contribution towards disaster relief.
The Company has also adopted Corporate Social Responsibility
Strategy to address the CSR issue effectively and to ensure that
business is conducted with an innate sense of Social
Responsibility. The objective of this strategy is to leverage the
advancement in Information and Communication Technologies
(ICT) to contribute towards progressive socio-economic change
in the fields of Health and Education.
The provisions of Section 135 of the Companies Act 2013 read
with Companies (Corporate Social Responsibility Policy) Rules,
2014, requiring mandatory spend of 2% of Average Net Profit
on the CSR Activities is not applicable on the Company as the
Company has not earned any profits during immediately
preceding 3 financial years.
However, the absence of profits has not been an impediment in
the CSR activities of the Company. Various steps taken by the
company pursuant to CSR policy are described in detail in
following paras.
In 2014, your Company further strengthened its partnership
with ‘India Unites to End Polio Now’ (IUEPN) campaign that
aims to create awareness for Polio eradication amongst the
masses. The IUEPN campaign is an initiative implemented, in
partnership with the Polio Eradication Program in India, a
12
collaborative effort between the Ministry of Health and Family
Welfare, United Nations Children’s Fund, World Health
Organization, National Polio Surveillance Project, Rotary
International, and the U.S. Centre for Disease Control. As a
part of this initiative, the Company provided support to Polio
awareness campaigns organized in several Indian states including
Delhi NCR, West Bengal, and Uttar Pradesh. The Company sent
millions of SMSs to its customers, notifying them about the
upcoming polio rounds. The joint efforts of all involved in Polio
Eradication have led to India being declared Polio free in April
2014. UNICEF has recognized the effectiveness of MTSResponsenet partnership as a best practice and plans to replicate
the same in Africa. While the Polio menace has been eradicated
from India, the fight against Polio and other vaccine preventable
diseases continues. As a responsible corporate, your Company
continues to support Responsenet to drive awareness on
immunization against Polio, Whooping Cough, Measles,
Diphtheria, Hib Infection, Pertussis, Tuberculosis and Tetanus to
prevent further outbreak of these diseases.
Your Company continued its support to Smile Foundation, a
national level development organization reaching out to more
than 2 Lakh underprivileged children through various education
and health care projects across 22 states of India. Under this
unique initiative, SSTL is providing mobile broadband support
to 23 Mission Education centers across India benefiting over
4200 underprivileged children on an annual basis. Given the
success of the project; the Company renewed its partnership
with Smile Foundation in February 2014 for a period of two
more years.
The Company continued its partnership with India Food
Banking Network (IFBN) to collect non-perishable food
items for underserved sections of the society in 2014. In a
week long drive organized during the Joy of Giving week
at Company’s Corporate Office and Delhi Circle offices,
the Company managed to collect more than 5 tons of food
items. In the process, your Company became of one of the
highest contributors to the food drive for the third year in a
row. The food drive featured more than 20 Indian and
multinational companies.
Your Company partnered with Smile Foundation’s ‘Be an Angel
Campaign’ to raise funds for education and nutrition of
underprivileged children. The Company’s employees collected
more than INR 2,00,000 in a 2 day event at its offices in Delhi
NCR. The proceeds from the fund raising activity were
contributed towards education and nutrition of 400 children
for one year.
In wake of the devastation caused by floods in Jammu & Kashmir
in September 2014, your Company partnered with Corporate
Disaster Resource Network (CDRN), created under the
Corporate Task Force of the National Disaster Management
Authority (NDMA), to dispatch Relief Materials to the flood-hit
areas of Jammu and Kashmir. The Company sponsored relief
kits for more than 100 families in the state. The relief kits sent
to J&K by CDRN contained essentials including Dry Food Items,
Water Purification Tablets, Blankets, and Tarpaulin Sheets
amongst other things.
An annual report on the CSR activities in prescribed format has
also been attached as Annexure- A to this Report.
SUBSIDIARY COMPANY
Shyam Internet Services Limited (SISL), a wholly owned
subsidiary of your Company is having a Category B ISP license
and is providing Internet Service with brand name “Infinity”in
131 cities in the State of Rajasthan.
During the year under review, no other Company became or
ceased to be the subsidiary Company, Joint Venture Company
or Associate of Your Company.
BOARD OF DIRECTORS AND KEY MANAGERIAL
PERSONNEL
Pursuant to Sections 149, 152 and other applicable provisions,
if any, of the Companies Act, 2013, one-third of such of the
Directors as are liable to retire by rotation, shall retire every
year and, if eligible, offer themselves for re-appointment at every
Annual General Meeting. Consequently, Mr. Dmitry Shukov and
Mr. Alok Tandon will retire by rotation at the ensuing Annual
General Meeting, and being eligible, offer themselves for
re-appointment in accordance with the provisions of the
Companies Act, 2013.
During the financial year ended March 31, 2015, Mr. Alexander
Gorbunov and Mr. Andrey Terebenin resigned from
the Directorship of the Company with effect from
September 2, 2014. Consequently, Mr. Andrey Smelkov and
Mr. Vadim Savchenko, Alternate Directors to Mr. Alexander
Gorbunov and Mr. Andrey Terebenin respectively, also vacated
the office of Directors with effect from that date. Further,
Mr. Vasyl Latsanych, also resigned from the position of Alternate
Director of Mr. Anton Abugov with effect from September 2,
2014. Your Directors place on record their sincere and
warm appreciation for their support and guidance during their
association with the Company.
Mr. Igor Kozlov, Mr. Andrey Smelkov, Mr. Andrey Dubovskov and
Mr. Ram Krishna Agrawal were inducted on the Board as
Additional Directors with effect from September 2, 2014.
On the same date Ms. Oxana Tarasenko, Mr. Vadim Savchenko,
Mr. Vasyl Latsanych and Mr. Alexander Gorbunov were
appointed as Alternate Director to Mr. Igor Kozlov, Mr. Andrey
Smelkov, Mr. Andrey Dubovskov and Mr. Anton Abugov
respectively.
Appointment of Mr. Igor Kozlov, Mr. Andrey Smelkov,
Mr. Andrey Dubovskov and Mr. Ram Krishna Agrawal as Director
was also regularized by the shareholders passing requisite
resolutions at the 19 th Annual General Meeting held on
September 28, 2014.
Further after the end of the financial year 2014-15 following
changes took place in the composition of Board of Directors:
Mr. Ron Sommer, Chairman of the Company resigned from the
directorship of the Company with effect from April 28, 2015.Your
Directors place on record their sincere and warm appreciation
for his supportand guidance during his association with the
Company. Consequent upon the resignation of Mr. Ron Sommer,
Board of Directors elected Mr. Andrey Dubovskov as Chairman
of the Company.
Further, to comply with the mandatory requirement to have a
Women Director on the Board in terms of second proviso of
Section 149(1), Mrs. Neera Sharma who is working as Legal
Head in the Company was inducted in the Board as Additional
Director with effect from April 28, 2015 and was also appointed
as Whole Time Director for period of 3 years from that date.
Pursuant to the provisions of Section of Sections 196, 197, 203
read with Schedule V of the Companies Act, 2013, the
appointment and payment of remuneration of Mrs. Sharma as
Whole Time Director is subject to the approval of the
shareholders at the ensuing 20th Annual General Meeting.
Mr. Madhukar and Mr. Anton Abugov resigned from the
Directorship of the Company with effect from April 28, 2015.
Consequently, Mr. Alexander Gorbunov who was alternate
director to Mr. Anton Abugov also vacated the office of Director
with effect from that date. Further, Mr. Vasyl Latsanych and
Mr.Vadim Savchenko also resigned from the position of Alternate
Director to Mr. Andrey Dubovskov and Mr. Andrey Smelkov
with effect from April 28, 2015.Your Directors place on
record their sincere and warm appreciation for the support
and guidance provided by out going directors during their
association with the Company.
Mr. Alexander Gorbunov and Mr. Vasyl Latsanych were
inducted on the Board as Additional Directors with effect
from April 28, 2015. On the same date Mr. Vadim Savchenko
and Mr. Mikhail Arkhipov were appointed as Alternate Director
to Mr. Vasyl Latsanych and Mr. Andrey Smelkov respectively.
Mr. Alexander Gorbunov, Mr. Vasyl Latsanych, Mr. Vadim
Savchenko (Alternate Director) and Mr. Mikhail Arkhipov
(Alternate Director) were appointed as Non-Executive
Directors and were nominated by Sistema JSFC, the Holding
Company.
Except as mentioned above, no other Directors or Key
Managerial Personnel were appointed or resigned during the
year.
Further, all Independent Directors have given declarations
that they meet the criteria of independence as laid down
under Section 149(6) of the Companies Act, 2013.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in prescribed Form MGT-9
is annexed with this report as Annexure-B.
13
DIRECTORS’ RESPONSIBILITY STATEMENT
As required under the provisions of Section 134(5) of the
Companies Act, 2013, the Directors confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper
explanation relating to material departures;
(b) the directors had selected such accounting policies and
applied them consistently and made 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) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance
with the provisions of this Act for safeguarding the assets
of the company and for preventing and detecting fraud and
other irregularities;
(d) the directors had prepared the annual accounts on a going
concern basis; and
(e) 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.
AUDITORS
The term of office of M/s. Deloitte Haskins & Sells,
Chartered Accountants as Statutor y Auditors of the
Company expires at the conclusion of ensuing Annual
General Meeting. The Board recommends re-appointment of
M/s. Deloitte Haskins & Sells, Chartered Accountants as
Statutory Auditor of the Company from the conclusion of ensuing
Annual General Meeting till the conclusion of next Annual
General Meeting.
The Company has received necessary notice from the
Auditors confirming their eligibility and willingness to accept
the office of Statutory Auditors, if re-appointed. The Audit
Committee has also recommended the appointment of
M/s. Deloitte Haskins & Sells, Chartered Accountants as the
Statutory Auditors.
AUDITORS’ REPORT
There are no qualifications/ observations in the Auditor’s Report.
The comments made by Auditors are self-explanatory.
COST AUDITORS
In compliance of the Section 148 of the Companies Act 2013,
the Company has appointed M/s. Sanjay Gupta & Associates
as the Cost Auditors for the Audit of the cost records /
accounts maintained as per the Cost Accounting Records
(Tele-communications) Rules, 2002 for the financial year ending
31 March 2015. The Cost Audit Report for the financial year
2014-15 will be filed on or before the due date.
14
SECRETARIAL AUDITOR AND SECRETARIAL
AUDIT REPORT
In compliance of the Section 204 of the Companies Act 2013,
the Board has appointed M/s. RDA & Associates as the
Secretarial Auditor to conduct the Secretarial Audit of the
Company for the financial year ending 31 March 2015. The
Secretarial Audit Report for the financial year 2014-15 is attached
as Annexure –C.
The para-wise response of the Board to the observation made
in the Secretarial Audit Report is stated as under:
The Company has appointed Woman Director under the provisions of
Section 149 of the Companies Act, 2013 on it’s Board in the meeting of
the Board of Directors held on 28th April, 2015.
Pursuant to the provisions of the Section 149(1) of the
Companies Act 2013 read with Companies (Appointment and
Qualification of Directors) Rules, 2014, the Company was
required to appoint a woman director by March 31, 2015. The
delay in the appointment of Woman Director was mainly
attributed to time consumed in searching for a suitable women
candidate from external resources. In the absence of suitable
external resource, the Board decided to appoint women
director from in-house resources i.e. from among the female
employees of the Company. Mrs. Neera Sharma who is heading
the legal function of the Company and is associated with the
Company since 2008 was considered as suitable for this position
as was inducted in the Board on 28.04.2015.
The Company was required to hold one separate meeting of
Independent Directors of the Company pursuant to the provisions of
Section 149 read with Schedule IV of the Companies Act, 2013 in a
year and the same was held on 10th June, 2015.
The Company is of the view that requirement of holding
Separate meeting of Independent Directors in a year is
applicable from the calendar year 2015 and hence the same
can be held till Dec 31, 2015. Now, the Independent
Directors’ separate meeting is being held on June 10, 2015. In
view of the management of the Company, the word ‘year’ in the
Schedule IV of the Companies Act 2013, means a full calendar
year of 12 months from January to December and not Financial
year from April to March. Since the provisions of Section 149
and Schedule IV of the Act came into force w.e.f. April 1, 2014,
the requirement of holding separate meeting of Independent
Directors was not applicable for the 2014 as full calendar year
of 12 months was not available. This view of the Company is
also appears to be in agreement with Secretarial Standards
SS-1 issued by Institute of Company Secretaries of India which
are applicable from July 1, 2015. According to these standards
also, separate meeting of Independent Directors is to be held
on calendar year basis. However, there is still a lack of clarity on
the said matter and different companies have different views on
the same.
PARTICULARS OF CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS & OUTGO
Particulars with respect to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo, as per
Information required under section 134(3)(m) of the Companies
Act, 2013 read with Rule 8 of the Companies (Accounts) Rules,
2014 are given below :
a)
b)
c)
Conservation of Energy
Your Company being a telecommunication services provider
requires minimal energy consumption and every effort has
been made to ensure the optimal use of energy, avoid waste
and conserve energy as far as possible.
Technology Absorption, Adaptation and Innovation
The Company has not imported technical know-how.
Your Company has not established any separate
R&D facilities.
Foreign Exchange Earnings & Outgo
The details of earning and expenditures incurred in foreign
exchange are as under:
(Rupees in Million)
Earning in Foreign Currency
(on accrual-basis)
March
31, 2015
March
31, 2014
8
14
Data Branding
International in roaming
18
11
TOTAL
26
25
(Rupees in Million)
Expenditure in Foreign
Currency
(on accrual-basis)
Interest
Finance set-up cost
Project Management &
Maintenance Services
Advertisement and marketing
expenses - MTS brand fee
Salaries, wages and bonus
Other Services
TOTAL
March
31, 2015
March
31, 2014
554
88
1007
174
136
217
15
118
11
922
13
384
7
1,802
PARTICULARS OF EMPLOYEES
A statement of particulars of employees as required in
accordance with the provisions of Section 197 (12) of the
Companies Act, 2013 read with Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 as amended
from time to time is annexed as Annexure-D and forms part
of this report.
PARTICULARS OF CONTRACTS AND
ARRANGEMENTS WITH RELATED PARTIES
There were no contracts or arrangements entered into by the
Company which attract the provisions of the Section 188 of the
Companies Act, 2013. However, all the transactions with
related parties were at arm’s length basis and entered in
the ordinary course of business by the Company. All such
transactions were periodically placed before the Audit
Committee for its approval.
Particular of contracts and arrangements with related parties as
required pursuant to Section 134 of the Companies Ac 2013
read with Rule 3 of the Companies (Accounts) Rules 2014 are
given in in prescribed form AOC- 2 and attached to this report
as Annexure-E.
GENERAL DISCLOSURE
❖ Company has not granted any loan, guarantee or made any
investment under Section 186 of the Companies Act, 2013
❖ In view of the losses incurred during the year, Board does
not propose to transfer any amount to any reserves.
❖ No material changes and commitments occurred between
the end of financial year 2014-15 and the date of this report
which may affect the financial position of the Company.
❖ No significant and material order has been passed by the
regulator/court/tribunal which may impact the going concern
and company’s operations in future.
❖ The Company has laid down adequate internal financial
controls over financial reporting to be followed by the
Company and such internal financial controls were operating
effectively.
ACKNOWLEDGEMENT
Your Directors place on record their gratitude to Bankers,
Financial Institutions, Vendors, Dealers and Business Associates
for the assistance, co-operation and encouragement they have
extended to the Company.
Your Directors also wish to place on record their sincere thanks
and appreciation for the continuing support and valuable
assistance received from Sistema JSFC, the Shyam group and
the Russian Federation as major shareholders in ensuring an
excellent all around operational performance.
The Directors wish to convey their appreciation to all of the
Company’s employees for their enormous personal efforts as
well as their collective contribution to the Company’s
performance.The Directors are also thankful to the shareholders
for their continued patronage.
DEPOSITS
The Company has not accepted any deposit covered under
chapter V of the Companies Act 2013.
For and on behalf of the Board
Place : Gurgaon
Date : June 11, 2015
Sd/CHAIRMAN
15
ANNEXURE - A
Annual Report on Corporate Social Responsibility (CSR) Activities
[Pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies
(Corporate Social Responsibility) Rules, 2014]
1
A brief outline of the Company’s CSR policy, including
:
The Focus of the Company, through its CSR initiatives is
overview of projects or programs proposed to be
toward community healthcare, internet enabled learning
undertaken and a reference to the web-link to the CSR
(Mission Education), corporate philanthropy and disaster
policy and projects or programs.
relief. The CSR Policy has also been uploaded on the
website of the Company at www.mtsindia.in
2
The Composition of the CSR Committee.
:
The Committee comprises of 3 Directors - Mr. Dmitry
Shukov- Whole Time Director, Mr. Ajay Khanna- Non
Executive Director and Mr. Ram Krishna Agrawal- Non
Executive Independent Director.
3
Average net profit of the company for last three financial
:
Nil
:
Not Applicable as Company does not have profits during
years
4
Prescribed CSR Expenditure (two per cent of the amount
as in item 3 above)
5
immediately preceding 3 financial years.
a) Details of CSR spent during the financial year.
:
Not Applicable
b) Total amount to be spent for the financial year; Amount
:
Not Applicable
:
Not Applicable
unspent, if any;
c) Manner in which the amount spent during the financial
year
6.
In case the Company has failed to spend the two per cent of the average net profit of the last three financial years or any part
thereof, the company shall provide the reasons for not spending the amount in its Board report.
The provisions requiring mandatory spend of 2% of Average Net Profit on the CSR Activities is not applicable on the Company as the Company
has not earned any profits during immediately preceding 3 financial years.
7.
The responsibility statement of the CSR Committee :
“The implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.”
Sd/Dmitry Shukov
Chief Executive Officer and Chairman of Committee
Place : Gurgaon
16
ANNEXURE - B
EXTRACT OF ANNUAL RETURN
as on the financial year ended on March 31, 2015
[Pursuant to section 92(3)of the Companies Act, 2013 and rule 12(1) of the
Companies (Management and Administration) Rules, 2014]
I.
REGISTRATION AND OTHER DETAILS:
(i)
CIN
U64201RJ1995PLC017779
(ii)
Registration Date
20.04.1995
(iii) Name of the Company
Sistema Shyam TeleServices Ltd.
(iv) Category/Sub-Category of the Company
Company having share capital
(v)
3, MTS Tower, Amrapali Circle, Vaishali Nagar,
Jaipur-302021, Rajasthan, India.
Ph: 0141-5100343, Fax: 0141-5100390
Address of the Registered office and contact details
(vi) Whether listed company
Yes/No
NO
(vii) Name, Address and Contact details of Registrar and Transfer Agent
II.
Karvy Computershare Pvt. Ltd.
Karvy Selenium Tower B, Plot No 31 & 32,
Gachibowli, Financial District,
Nanakramguda, Serilingampally
Hyderabad – 500 008
Tel No.: 040-67161500, Fax No.:040-2331 1968
E-mail ID : [email protected]
PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
All the business activities contributing 10% or more of the total turnover of the company shall be stated:-
III.
Sl.No.
Name and Description of
main products/services
NIC Code of the
Product/ service
% to total
turnover of the company
1
CDMA based telecom service of
voice and data pursuant to Unified
License granted by Department of
Telecom, Ministry of Communication
6120
100%
PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES Name and address of the company Shyam Internet Services Limited
Sistema JSFC
A-60, Naraina Industrial Area,
13, Mokhovaya Street,
Phase-I, New Delhi
Moscow -125009, Russia.
CIN
U74999DL2000PLC10562
Not Applicable (Foreign Company)
Holding/ subsidiary/associate
Subsidiary
Holding
% of shares held
100%
56.68%
Applicable Section
Section 2(87)(ii)
Section 2(46)
17
IV.
SHAREHOLDING 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
[As on 31-March-2014]
No. of Shares held at the end of the year
Demat
Demat
Physical
Total
% of
Total
Shares
Physical
Total
% Change
during the year
% of
Total
Shares
A. Promoters
(1) Indian
a) Individual/ HUF
2859188
1826
2861014
0.09
2859188
1826
2861014
0.09
0.00
b) Central Govt
0
0
0
0.00
0
0
0
0.00
0.00
c) State Govt(s)
0
0
0
0.00
0
0
0
0.00
0.00
d) Bodies Corp.
763714746
0
763714746
23.91
723352362
0
723352362
22.65
-1.26
e) Banks / FI
0
0
0
0.00
0
0
0
0.00
0.00
f) Any other
0
0
0
0.00
0
0
0
0.00
0.00
Total
shareholding of
Promoter (A) (1)
766573934
1826
766575760
24.00
726211550
1826
726213376
22.74
-1.26
0.00
(2) FOREIGN
(a) NRIs-Individuals
0
0
0
0.00
0
0
0
0.00
(b) Other-Individuals
0
0
0
0.00
0
0
0
0.00
0.00
(c) Bodies Corporate
1810289400
0
1810289400
56.68
1810289400
0
1810289400
56.68
0.00
(d) Banks/Di
0
0
0
0.00
0
0
0
0.00
0.00
(e) Any Others
0
0
0
0.00
0
0
0
0.00
0.00
Sub-Total A(2)
1810289400
0
1810289400 56.68
1810289400 0
1810289400 56.68
0.00
Total A=A(1)+A(2)
2576863334
1826
2576865160 80.68
2536500950 1826
2536502776 79.42
-1.26
B. Public Shareholding
1. Institutions
a) Mutual Funds
0
23026
23026
0.00
0
23026
23026
0.00
0.00
b) Banks / FI
27829
0
27829
0.00
27829
0
27829
0.00
0.00
c) Central Govt
0
0
0
0.00
0
0
0
0.00
0.00
d) State Govt(s)
0
0
0
0.00
0
0
0
0.00
0.00
e) Venture Capital Funds
0
0
0
0.00
0
0
0
0.00
0.00
f) Insurance Companies
0
0
0
0.00
0
0
0
0.00
0.00
g) FIIs
3795
7
3802
0.00
3795
7
3802
0.00
0.00
h) Foreign Venture
Capital Funds
0
0
0
0.00
0
0
0
0.00
0.00
i)
0
0
0
0.00
0
0
0
0.00
0.00
31624
23033
54657
0.00
31624
23033
54657
0.00
0.00
10035028
794
10035822
0.31
50185998
794
50186792
1.57
1.26
0
0
0
0.00
0
0
0
0.00
0.00
20916007
1006697
21922704
0.69
20930739
1004425
21935164
0.69
0.00
33325713
170114
33495827
1.05
33526605
170114
33696719
1.05
0.00
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 share
-holders holding
nominal share
capital in excess
of Rs 1 lakh
18
Category of Shareholders
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
% of
Total
Shares
Demat
Physical
Total
% of
Total
Shares
547312918
0
547312918
17.14
547312918
0
547312918
17.14
0.00
Non Resident
Indians
4214968
0
4214968
0.13
4213030
0
4213030
0.13
0.00
Overseas
Corporate
Bodies
4764
0
4764
0.00
4764
0
4764
0.00
0.00
Foreign Banks
794
0
794
0.00
794
0
794
0.00
0.00
Clearing Members
10798
0
10798
0.00
10798
0
10798
0.00
0.00
Trusts
1588
0
1588
0.00
1588
0
1588
0.00
0.00
Foreign Bodies - D R
0
0
0
0.00
0
0
0
0.00
0.00
Sub-total (B)(2):-
615822578
1177605 617000183
19.32
656187234
1175333 657362567
20.58
1.26
Total Public Shareholding 615854202
(B)=(B)(1)+ (B)(2)
1200638 617054840
19.32
656218858
1198366 657417224
20.58
1.26
C. Shares held by
Custodian for
GDRs & ADRs
0
0
0.00
0
0
0.00
0.00
Grand Total (A+B+C)
3192717536
1202464 3193920000 100.00 3192719808 1200192 3193920000 100.00
c) Others Foreign
Government
0
0
% Change
during the year
0.00
(ii) Shareholding of Promoters
SN
Shareholder’s Name
Shareholding at the beginning
of the year 2014 [As on 31-March-2014]
No. of Shares
% of total
Shares of
the company
1810289400
INTEL INVOFIN INDIA
PVT LTD
3
Shareholding at the end of the
year 2015 [As on 31-March-2015]
% change in
shareholding
during the year
%of Shares
Pledged /
encumbered
to total shares
No. of
Shares
% of total
Shares of
the company
to total shares
%of Shares
Pledged /
encumbered
56.68
0.00
1810289400
56.68
0.00
0.00
349859795
10.95
0.00
350727584
10.98
0.00
0.03
A T INVOFIN INDIA
PVT LTD
174929898
5.48
0.00
174929898
5.48
0.00
0.00
4
CELLPHONE CREDIT &
SECURITIES INDIA
PVT LTD
174929898
5.48
0.00
174929898
5.48
0.00
0.00
5
SHYAM BASIC
INFRASTRUCTURE
PROJECTS PRIVATE LTD
63995155
2.01
0.00
22764982
0.71
0.00
-1.30
6
RAJIV MEHROTRA
1551396
0.05
0.00
1551396
0.05
0.00
0.00
7
ALOK TANDON
518164
0.02
0.00
518164
0.02
0.00
0.00
8
S S PURI
399461
0.01
0.00
399461
0.01
0.00
0.00
1
2
JOINT STOCK FINANCIAL
CORPORATION SISTEMA
9
TANU ARORA
225550
0.01
0.00
225550
0.01
0.00
0.00
10
AJAY KHANNA
134288
0.00
0.00
134288
0.00
0.00
0.00
11
K N MEHROTRA
16673
0.00
0.00
16673
0.00
0.00
0.00
12
ARUN KUMAR KHANNA
14450
0.00
0.00
14450
0.00
0.00
0.00
13
RENU MEHROTRA
1032
0.00
0.00
1032
0.00
0.00
0.00
19
(iii) Change in Promoters’ Shareholding (please specify, if there is no change)
S. N. Particulars
1
INTEL INVOFIN INDIA PVT LTD
2
SHYAM BASIC INFRASTRUCTURE
PROJECTS PRIVATE LTD
SL No
Name
Intel Invofin India Pvt Ltd
Cumulative Shareholding during
the year 2015 [As on 31-March-2015]
No. of shares
No. of shares
% of total shares
of the company
349859795
10.95
350727584
10.98
63995155
2.00
22764982
0.71
Date
Increase/
Decrease in
shareholding
Shyam Basic Infrastructure
Reason
% of total
Shares of
the
company
10.95
Cumulative Shareholding
the year (01.04.2014 to
31.03.2015)
No.of shares
% of total
Shares of
the
company
350727584
10.98
350727584
10.98
22764982
0.71
22764982
0.71
01.04.2014
107.11.2014
2
% of total shares
of the company
349859795
Shareholding
No. of Shares at
the beginning
(01.04.2014/ end
of the year
(31.03.2015)
1
Shareholding at the beginning
of the year 2014 [As on 31-March-2014]
350727584
10.98
31.03.2015
63995155
2.00
01.04.2014
22764982
0.71
Projects Pvt. Ltd
07.11.2014
867789
-41230173
Bought
Sold
31.03.2015
(iv) Shareholding Pattern of to ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
SN
1
For Each of the Top 10 Shareholders
Shareholding at the
beginning of the year 2014
FEDERAL AGENCY FOR STATE PROPERTY
MANAGEMENT OF RUSSIAN FEDERATIONROSIMUSCHESTVO
during the Year 2015
No. of shares
% of total shares
of the company
No. of shares
% of total shares
of the company
547312918
17.14
547312918
17.14
2
RENU ASHOK BABLANI
3717353
0.12
3717353
0.12
3
KANTHA RAO UPPALA
1600000
0.05
1600000
0.05
4
ANIL JINDAL
847609
0.03
0
0.00
5
SHRUTI JAIN
794794
0.02
794794
0.02
6
ALOK JAIN
794000
0.02
794000
0.02
7
RICHA AGRAWAL
780000
0.02
780000
0.02
8
ANIL JINDAL HUF
729354
0.02
729354
0.02
9
JAI MAA VINIMAY PVT LTD
718524
0.02
698524
0.02
10
SONA SANGHAVI
662208
0.02
662208
0.02
SL No
Name
Shareholding
No. of Shares at
the beginning
(01.04.2014/ end
of the year
(31.03.2015)
1
2
20
Anil Jindal
Jai Maa Vinimay Pvt Ltd
Date
Increase/
Decrease in
shareholding
Reason
% of total
Shares of
the
company
the year (01.04.2014 to
31.03.2015)
No.of shares
847609
0.03
01.04.2014
0
0
0.00
18.04.2014
-847609
0
0.00
31.03.2015
0
718524
0.02
01.04.2014
0
0
0.00
13.06.2014
-20000
698524
0.02
31.03.2015
0
0
Sold
Sold
% of total
Shares of
the
company
0.00
0
0.00
0
0.00
718524
0.02
698524
0.02
698524
0.02
(v) Shareholding of Directors and Key Managerial Personnel:
SN
Shareholding of each Directors and each
Key Managerial Personnel
Shareholding at the
beginning of the year 2014
during the Year 2015
No. of shares
% of total shares
of the company
No. of shares
% of total shares
of the company
1
RAJIV MEHROTRA
1551396
0.05
1551396
0.05
2
ALOK TANDON
518164
0.02
518164
0.02
3
AJAY KHANNA
134288
0.00
134288
0.00
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding / accrued but not due for payment
Secured Loans
excluding deposits
Unsecured Loans
Deposits
Total
Indebtedness
12,821,389,344
22,504,067,376
-
35,325,456,720
-
-
-
-
5,692,104
173,533,926
-
179,226,030
12,827,081,448
22,677,601,302
-
35,504,682,750
-
7,152,561,393
-
7,152,561,393
Indebtedness at the beginning of the financial year
i)
Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
Change in Indebtedness during the financial year
·
Addition
·
Reduction
20,275,590
1,107,560,240
-
1,127,835,830
Net Change
(20,275,590)
6,045,001,153
-
6,024,725,563
12,801,206,708
28,502,682,441
-
41,303,889,149
-
-
-
-
5,599,150
219,920,014
-
225,519,164
12,806,805,858
28,722,602,455
-
41,529,408,313
Indebtedness at the end of the financial year
i)
Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remunerationto Managing Director, Whole-time Directors and / or Manager:
Sl. No.
Particulars of Remuneration
Name of WTD
Total Amount
Dmitry Shukov
1.
Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act,1961
Rs. 64,636,660
Rs. 64,636,660
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
Rs. 3858500
Rs. 3858500
(c) Profits in lieu of salary under section 17(3) Income- tax Act,1961
2.
Stock Option
-
-
3.
Sweat Equity
-
-
4.
Commission- as % of profit - others, specify.
-
-
5.
Others, please specify
-
-
Total (A)
Rs. 68,495,160
Rs. 68,495,160
Ceiling as per the Act
Not Applicable
Not Applicable
21
B. Remuneration to other directors:
Sl. No.
1.
Independent Directors
- Fee for attending board
committee meetings
- Commission
- Others, please specify
Total (1)
4. Other Non-Executive
Directors
- Fee for attending board
committee meetings
- Commission
- Others, please specify
Total (2)
Total (B)=(1+2)
Total Managerial Remuneration
Overall Ceiling as per the Act
2.
C.
Madhukar
Name of Directors
Vikram Kaushik
Ram Agrawal
Bharat Patel
Total Amount
Rs. 1,280,000
Rs. 1,350,000
Rs. 800,000
Rs. 1,410,000
Rs. 4,840,000
Rs. 1,280,000
-
Rs. 1,350,000
-
Rs. 800,000
-
Rs. 1,410,000
-
Rs. 4,840,000
-
Rs. 1,280,000
Rs. 1,280,000
Not Applicable
Rs. 1,350,000
Rs. 1,350,000
Not Applicable
Rs. 800,000
Rs. 800,000
Not Applicable
Rs. 1,410,000
Rs. 1,410,000
Not Applicable
Rs. 4,840,000
Rs. 4,840,000
Not Applicable
Remuneration to Key Managerial Personnel Other than MD/Manager/WTD
Sl. No.
1.
Gross salary
(a) Salary as per provisions contained in section 17(1) of the
Income-tax Act, 1961
Key Managerial Personnel
Vishal Kohli
Sergey Savchenko
Company Secretary
CFO
Total Amount
Rs. 4,885,603
Rs. 80,467,521
Rs. 85,353,124
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
Rs. 32,400
Rs. 3,363,559
Rs.3,395,959
(c) Profits in lieu of salary under section17(3) Income- tax Act,1961
-
-
-
2.
Stock Option
-
-
-
3.
Sweat Equity
-
-
-
4.
Commission
5.
- as % of profit
-
-
-
- others, specify
-
-
-
Others, please specify
-
-
-
Total (C)
Rs. 4,918,003
Rs. 83,831,080
Rs. 88,749,083
Ceiling as per the Act
Not Applicable
Not Applicable
Not Applicable
VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES: NIL
Type
A. COMPANY
Penalty
Punishment
Compounding
B.DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS
Penalty
Punishment
Compounding
22
Section of
Companies Act
Brief Description
Details of Penalty/
Punishment/
Compounding Fee
Imposed
Authority
(RD/NCLT / Court)
Appral made, if any
-
-
-
-
-
-
-
-
-
-
-
-
-
INDEFAULT
-
ANNEXURE - C
SECRETARIAL AUDIT REPORT (Form No. MR-3)
For the financial year ended on 31st March, 2015
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No. 9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]
To,
The Members,
MTS TOWER, 3,Amrapali Circle,
Vaishali Nagar, Jaipur- 302021, Rajasthan
We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by
Sistema Shyam TeleServices Limited (hereinafter called the “Company”).The Secretarial Audit was conducted in a manner that provided
us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.
Based on our verification of Sistema Shyam TeleServices Limited’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 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance
mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year
ended on 31st March, 2015, according to the provisions of:
i)
ii)
iii)
The Companies Act, 2013 (the Act) and the rules made there under;
The Depositories Act, 1991
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; and
iv) Spectrum and Telecommunications Laws (the law, which is applicable specifically to the Company, being Telecom
Company).
During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above
subject to the following observations under the Companies Act, 2013 (the Act) and the rules made there under:
a.
b.
The Company has appointed Women Director under the provision of Section 149 of the Companies Act, 2013 on its Board in the
meeting of the Board of Directors held on 20th April, 2015.
The Company was required to hold one separate meeting of Independent Directors of the Company pursuant to the
provisions of Section 149 read with Schedule IV of the Companies Act, 2013 in a year and the same was held and conducted on
10th June, 2015.
We further report thatThe Board of Directors of the Company is duly constituted except the appointment of Woman Director. The appointment of Woman Director
was done in the meeting of the Board of Directors on 20th April, 2015.The changes in the composition of the Board of Directors that took place
during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in
advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for
meaningful participation at the meeting
Majority decision is carried through unanimously, and therefore, dissenting members’ views are not required to be captured and recorded as part
of the minutes.
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company
to monitor and ensure compliance with applicable laws, rules, regulations and guidelines mentioned above at para 3 (i) to (iv) and also laws listed
herein below:
1. The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959;
2. The Payment of Bonus Act, 1965;
3. The Employee Provident Fund Act, 1952 and scheme made thereunder;
4. The Employee’s State Insurance Act, 1948;
5. The Minimum Wages Act, 1948;
6. The Contract Labour (Regulation and Abolition) Act, 1970 and the rules;
7. The Sexual Harassment Act, 2013
8. The Indian Stamp Act, 1899
We further report that during the audit period there has not been any such activity having a major bearing on the Company’s affairs in pursuance
of the above referred laws rules, regulations, guidelines etc.
For RDA & ASSOCIATES
COMPANY SECRETARIES
Place: New Delhi
Date: 11/06/2015
Sd/CS AWANISH K. DWIVEDI
PARTNER
FCS- 8055, CP No.- 9080
23
ANNEXURE - D
Information as per Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, as amended and forming part of the Directors Report of Sistema Shyam TeleServices Limited for the Financial Year ended March 31, 2015
S.
No.
Name
Age
(in
years)
Designation
Annual Gross
Earnings (Rs.)
Qualification
Experience
Date of
Commencement
of Employment
Previous
Employment
PART A : Particular of Employeees who are in employment for whole year and in receipt of Annual Remuneration of Rs. 60.00 lacs or more
1
Yudhbir Singh
52
Head, Network Operations &
70,27,336
B.Sc
31
1-Apr-00
Shyam Communication Ltd.
Deployment Department
2
T Narasimhan
61
Deputy CEO, Head Of Regulatory
3,33,11,956
PGDMM
36
1-Jan-08
Vihan Networks Ltd
3
Keshhav Tiwary
49
Chief Operating Officer
1,25,68,811
M.B.A.
23
10-Jul-08
Reliance Communication Ltd
4
Vinay Mittal
43
Head,Accounting Department
58,16,971
C.A.
16
17-Jul-08
Tata Teleservices Limited
5
Neera Sharma
42
Head of Legal
81,29,565
LLB, MBA
18
16-Jul-08
Dishnet Wireless Ltd
6
Nikhil Shrivastava
40
Head, Network Operations &
B.E. ( Elect. & Tel Comm)
20
22-Aug-08
Nokia Siemens Networks
B.COM
26
11-Sep-08
Tata Teleservices Ltd
B.Sc
14
10-Dec-08
Ojsc ‘Mts’ In
32
5-Sep-08
Financial Group Aton
Marketing/BMM
21
12-Jan-09
Rvh. Uk
B.E
30
10-Dec-08
Lukom Agency
PGDBA
32
9-Jan-09
Indo Rama Synthetics Ltt
MBA
23
9-Feb-09
Bharti Airtel Ltd
Post Graduate Diploma in
23
12-May-09
Ericsson India Pvt Ltd
25
19-May-09
Huwaie Techologies
23
1-Jul-09
Rsb Consulting
Diploma in Hotel Management
22
22-Sep-09
Idea Cellular Ltd.
82,48,022
Deployment Department
7
M Srinivas
51
Acting Chief Operating Officer
8
Elena Peretrukhina
39
Head, Business Reporting and MIS Department
9
Sergey Savchenko
57
Deputy CEO, Chief Finance Officer
8,38,31,078
PhD in Economics, MBA
10
Leonid Musatov
43
Chief Marketing & Brand Officer
5,57,15,659
Degree in Ecomonics &
11
Igor Kondaratskov
53
Advisor to CEO
12
S Balagopal
56
Head, Supply Chain Management Department
13
S Suresh Kumar
46
14
Bijender Singh Yadav
44
Acting Chief Technology Officer
58,79,530
1,76,91,032
1,88,97,244
80,45,162
1,14,85,799
80,98,660
Electrical Engineering
15
Ashwani Kumar Khillan
46
Chief Tech. Officer
16
Rajeev Batra
47
Chief Information Technology Officer
17
Sandeep Yadav
44
Head, Data & Voice Business Line
18
Rajiv Gupta
43
58,17,716
BE
19
6-Nov-09
Idea Cellular Ltd.
19
Tarun Katyal
46
Chief Human Resource Officer
78,49,698
MBA
22
2-Feb-10
Aditya Birla Retail Ltd.
20
Viraj Chouhan
41
Head, Corporate Communication
Business Administration
17
22-Sep-10
Coca Cola India
Post Graduate Diploma in
26
30-Sep-10
Reliance Communications
21
Manoj Shrivastava
47
Head,Enterprise Architecture &
1,32,70,666
B.E, MBA
1,77,95,197 BE-Electronics/ B.Sc./ P.G.D.C.A.
1,25,17,873
1,04,57,228
69,33,361
Business Enablement Dept
B.Sc./ P.G.Diploma in
Information Technology
22
Amitesh Krishna Rao
42
Head, Brand & Media Department
61,97,678
MBA
19
17-Jan-11
Rediffusion Y &R
23
Ashish Dindayal Bhatia
44
91,78,794
MBA
22
1-Aug-11
Tata Tele Services Ltd
24
S.
No.
Name
Age
(in
years)
Designation
24
Sai Venkatakrishnan
47
25
Ranjan Banerjee
45
26
Radhakrishnan KV
27
28
Annual Gross
Earnings (Rs.)
Qualification
Experience
Date of
Commencement
of Employment
Previous
Employment
57,41,915
PGDMM
23
30-Sep-11
Reliance Communications
Head, Strategy Function
1,41,16,275
PGDMM
20
21-Dec-11
47
61,19,858
B.Sc
25
26-Mar-12
Sanjeev Bahl
46
Head, Business Planning & MIS Department
52,24,950
C.A.
20
26-Apr-12
Videocon Telecommunication Ltd
Dmitry Shukov
46
CEO, MTS India
A.D.M.
21
22-Apr-13
Ojsc Mts Counselor Department
6,93,22,355
of Foreign Subsidiary
29
Vijayakumar Raju
40
Head,Technology Strategy Department
30
Alexey Velts
45
Head, Real Estate & Administration Department
31
Timur Biktimirov
27
Head, Cyber Division
44,12,461 M.Sc
1,15,36,339
98,38,493
17
10-Jul-13
BE
11
5-Aug-13
Rus Auto Llc Moscow Ru
B.I.T
4
2-Dec-13
Mts Russia
31
6-Mar-09
Subhiksha Trading Services Ltd
PART B : Particular of Employeees who are in employment for part of the year and received monthly Remuneration of Rs. 5.00 lacs or more
1
K V Ramachandra
53
10959087
B.Com, MASTERS OF
MANAGEMENT STUDIES
2
Akshay Lamba
37
Head,Enterprise Architecture &
6366582
PGDBA
16
23-Sep-09
Al-Futtaim Technologies Dubai UAE
Business Enablement Dept
3
NRKS Chakravarthy
41
Head, Business Transformation Department
4307990
MBA
20
12-Nov-10
Uninor
4
Shankar Bali
49
6605966
MBA
25
5-Jan-11
Vodaphone (Srilanka)
5
Rajnish Sharma
41
Head, Product-Data &
5200748
MBA
20
17-Oct-11
Tata Teleservices Ltd Delhi In
Smartphone Department
6
Hitender Kumar
44
2800865
MBA
18
10-Jan-12
Vodaphone Essar Digink Ltd
7
Aasheesh Verma
49
7300385
BE
28
1-Mar-12
8
Ateev Chadda
39
Head, Business Development Department
15087111
MBA
14
1-Aug-12
Renaissance Capital
9
Konstantine D F Hionides
44
Head,Partnership & Innovation Department
25938555
MBA
17
1-Nov-13
Consultant
10
Siraj Ahmad Abbasi
44
Director Operations
3856990
MBA
21
18-Jun-14
Reliance Communications Ltd.
11
Umesh Durve
48
1652808
MBA
23
10-Jul-14
Bharti Airtel Limited. Mumbai In
12
Sergei Zdanovich
32
Chief Sales & CSD Officer
11596067
Diploma
10
23-Jul-14
Mts Russia Frunze Ru
13
Sergey Mironov
51
Deputy CEO, Chief of Operations
14347461
PHD.
23
2-Sep-14
Roduga T V Ru
14
Sandeep Marwaha
47
3498086
MBA
23
18-Jul-11
Vodafone Essar South Ltd.
Note:
1. All appointments are/were contractual in accordance with terms and conditions as per Company rules.
2. None of the above employees is a relative of any Director of the Company.
25
ANNEXURE - E
Form No. AOC - 2
(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)
Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred
to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third
proviso thereto
1.
2.
Details of contracts or arrangements or transactions not at arm’s length basis - NIL
Name(s) of
the related
party and
nature of
relationship
Nature of
contracts/
arrangements/
transactions
Duration of
the contracts
/ arrangements
/transactions
Salient terms
of the contracts
or arrangements
or transactions
including the
value, if any
Justification for date(s) of
Amount
entering into
approval by paid as
such contracts
the Board
advances,
or arrangements
if any:
or transactions
Date on which the special
resolution was passed in
general meeting as
required under first
proviso to section 188
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Details of material contracts or arrangement or transactions at arm’s length basis
Name(s) of the related
party and nature of
relationship
Nature of
contracts/arrangements/
transactions
Duration of
the contracts /
arrangements/
transactions
Salient terms of the
contracts or
arrangements or
transactions including
the value, if any
date(s) of
approval by the
Board/Audit
Committee
Amount
paid as
advances,
if any:
Sitronics Intracom India Pvt. Ltd.
Gurgaon
Microwave AMC due on
the links deployed in
running circles.
Server/Storage AMC
Dec’2013 to
Nov’2014
Quarterly in Advance
AC 02/16.04.14
NIL
April’2014 to
March’2015
100% with in 30 days
after submission of
valid invoice
after submission of
valid invoice
AC 02/16.04.14
NIL
AC 03/25.06.14
NIL
AC 03/25.06.14
NIL
AC 04/01.09.14
NIL
after submission of
valid invoice
after submission of
valid invoice
AC 04/01.09.14
NIL
AC 05/05.11.14
NIL
AC 05/05.11.14
NIL
AC 05/05.11.14
NIL
AC 05/05.11.14
NIL
100% within 30
after submission
valid invoice
100% within 30
after submission
valid invoice
As per agreed
Payment Plan
100% within 30
after submission
valid invoice
days
of
AC 05/05.11.14
NIL
days
of
AC 05/05.11.14
NIL
AC 05/05.11.14
NIL
AC 06/11.12.14
NIL
Sitronics India Pvt. Ltd.
Sitronics Intracom India Pvt. Ltd. MW I&C and Dismantling
Gurgaon
June’2014 to
Aug’2014
Shyam Internet Services Ltd
ILL Bandwidth
ILL Bandwidth
& other services
July’2014 to
Sep’2014
Oct’2014 to
Dec’2014
Sep’2014 to
Dec’2014
& other services
Dec’2014 to
March’2015
Sitronics Intracom India Pvt. Ltd. MW Equipment AMC
Dec’2014 to
Nov’2015
Jan’2015 to
Mar’2015
Jan’2015 to
Dec’2015
April’ 2014 to
March’ 2015
ILL Bandwidth
Sitronics India Private Limited
GIS AMC
O & M Support for GIS
SAP Maintenance
Jan’2015 to
Dec’ 2015
LLC-Nvision Special Projects
Microsoft SW License
Renewal
Web Access Charges
for 16 GPS device installed
in Company Vehicles
Dec’ 2014 to
November 2015
October’2014
to Sep’2015
days
of
For and on behalf of the Board
Place : Gurgaon
26
Sd/CHAIRMAN
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Wireless Market in India
During calendar year 2014 telecom industry witnessed 58 million
increase in subscriber base to 944 million on Home Location
Register (HLR) basis from 886 million at the end of 2013. The
increase in subscriber base was driven by increased focus of
operators towards expansion in rural coverage. Urban subscriber
base grew from 526.6 million at the end of 2013 to 550.6 million
at the end of 2014, at the same time rural subscriber base increased
from 359.7 million to 393.3 million. During the same period,
industry added 71 million active subscribers on Visitor Location
Register (VLR) basis. Overall industry VLR% increased from 87.4%
in March 2014 to 88.9% in March 2015 taking overall VLR
subscriber base to 863 million.
No of Subscribers (MN)
1,000
905
915
930
944
970
Q1’14
Q2’14
Q3’14
Q4’14
Q1’15
833
863
750
500
250
of the entire base tower stations (BTS) installed in India are 3G
enabled.This percentage is expected to go up significantly in near
future.
4G deployments in the sector are still at a nascent stage
with only one large player rolling out its 4G network in few
cities. Management is of the view that another operator will
launch 4G services sometime in 2015 on a large scale. This is
likely to change the competitive landscape of the Industry from
2015 onwards.
On the regulatory front, the government successfully completed
auctions of 800 MHz, 900 MHz, 1800 MHz and 2100 MHz in
March 2015 with total bid from auctions amounting to USD 18.3
billion, the highest in the industry ever. Spectrum allocated
through these auctions is liberalized, which means players are
free to use any technology of their choice. In future, there is
possibility of 4G\LTE rollouts on different bands currently being
used exclusively for voice services. Most of the spectrum in the
current auctions was acquired by incumbents resulting in virtual
consolidation in the sector. In the current year, regulatory clarity
is expected on a number of issues including spectrum trading,
spectrum sharing, and Virtual Network Operators (VNO) which
is expected to be critical towards survival and growth of smaller
players in the industry.
Discussion & Analysis on Financial Statement
0
VLR Subs
791
796
812
Wireless industry gross revenue increased 12% y-o-y to
INR 466 billion between Q4’CY13 to Q4’CY14. During this
period Average Revenue Per User (ARPU) increased by 5% to
INR 166 mainly on account of better traction in data business.
Voice business of most operators continued to grow during the
year driven by increase in minutes while voice realizations were
almost flat for the year. Voice realizations remained flat as there
were no major tariff corrections by industry players during the
year. While further threat of cannibalization of SMS revenues is
expected to be less, there is a higher risk of cannibalization of
voice revenues by OTT platforms with the launch of voice calling
feature on WhatsApp and other OTT players planning to launch
similar services.
Broadband subscription reached 70.4 million at the end of
December 2014. Broadband subscribers now account for
significant proportion of internet subscribers. This segment of
the wireless industry is expected to grow exponentially in the
years to come. Severe under penetration of the market, falling
PC prices, introduction of newer devices and desire to be
connected on the move will be key growth drivers in future. 3G
services in India continued to gain strong traction during the year
driven by increase in device penetration and increased investments
from operators to drive 3G business. The 3G subscriber base
almost doubled in 2014 to 65 million 3G subscriber at the end of
December 2014. 3G business momentum is expected to continue
with more investments from operators and availability of
smartphones at lower price points. Currently, approximately 25%
Overview
As at 31 March 2015, the Company has created significant
infrastructure across in circles, including high speed data (REV-B)
services in major cities.
On 3 October 2013 the DoT has issued Unified License - Access
Services to the Company for eight telecom circles for 20 years.
On 9 October 2013, the DoT has allotted the right to use
spectrum in eight telecom circles for 20 years as per terms of
auction. On 3 September 2014, the Company has received
authorization under the Unified License to provide National Long
Distance (NLD) services. On 29 April 2015, the Company has
received authorization under the Unified License to provide
Internet Service Provider (ISP) category ‘A’ services.
For the year ended 31 March 2015, net loss has been decreased
to Rs 17,173 million from Rs 20,728 million of previous year due
to increase in revenue by 17% and decrease in operating expenses
by 6%.
Key Financial & Operational Highlights for the financial
year 2014-15
●
●
●
Total income up by 15% Y-o-Y to Rs 14,287 million,
service revenue from operations on YoY basis increased by
17%. However, there is a decrease of 6% in operating
expenditure, resulting in improvement of EBITDA margin
by 40%.
Postpaid data revenue is increased by 66% from Rs 3,225
million in 2013 to Rs. 5,361 million in 2014.
ARPU has increased to Rs 121 in 2015 from Rs 96 in 2013.
27
I. Financial Condition
Operating Expenses (Rs in million)
1. Net Worth
As at 31 March 2015, net-worth of the Company is decreased
from Rs 16,253 million to Rs 3,390 million.
2. Share Capital
During the financial year 2014-15, the Company issued 0.4 million
(previous year – 3.4 million) Non Cumulative Non-convertible
Redeemable Preference Shares (“RPS”). Till 31 March 2015, total
issued share capital of RPS including premium is Rs 98,645 million.
There has been no change in the equity share capital and as at
31 March 2015 the Company has paid-up equity share capital of
Rs 31,939 million comprising 3,193,920,000 equity shares of
Rs 10/- each.
3.
Secured and Unsecured Loan
Facility
Non-convertible debentures
Short term unsecured loans
Vendor financing (secured)
(Rupees in Million)
March
March
31, 2015 31, 2014
12,800
12,800
6,183
1
21
Long term funding (unsecured)
22,320
22,504
4. Deferred Payment Liabilities
Deferred Payment Liabilities of Rs 20,132 million represents the
amount payable to DOT towards the acquisition of “Right to use
of Spectrum” in eight Telecom Service Areas in the auction carried
out by DoT and Rs 755 million represents vendor liabilities against
network equipment supply, relating to funding to be arranged by
respective vendors and assets acquired on deferred payment
basis.
5. Tangible and Intangible Assets
Fixed assets is decreased due to charge of depreciation and
amortization for the year Rs 5,773 million (net) and net addition
of Rs1,306 million.
II. Results of Operations
Service revenue from operation for the year has been increased
by 17%, as against decrease of 6% in operating expenditures
resulting in improvement of EBITDA margin by 40%.Total income
of the Company from operating circles has been increased by
Rs 1,835 million, an increase of 15% over previous year and
operating loss has been decreased from Rs 7,588 million to
Rs 4,576 million due to cost optimization measures.The Company
has implemented various programs to benchmark and optimize
its costs in the areas of network maintenance, operations and
customer servicing.
Revenue (Rs in million)
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
13,852
11,876
20,040
18,863
2014
2015
Operating Expenses
1. Revenues from Telecommunication Services
Revenue from operations for operating circles has been
increased by Rs 1,976 million.
2. Other Income
Other income is decreased to Rs 435 million (previous year Rs 574 million) mainly due to reduction in investments in fixed
deposits.
3.
Operating Expenses
The major operating expenses comprise of the following:
i) Network Operation costs
Network operation cost is reduced by 3% from Rs 9,022 million
to Rs 8,716 million on account of decrease in interconnect
charges. Increase in data revenue has led to decrease in
interconnect charges.
ii) Sales and Marketing expenses
S&M expense is reduced by 15% Rs 631 million primarily on
account of reduction in advertisement and marketing expenses
and reduction in average SAC and subsidy.
iii) Employee Related Expenses
Employee cost is reduced by 15% from Rs 3,448 million to
Rs 2,923 million due to reduction of employee count.
4.
Finance and Treasury Charges
Finance cost is reduced by 15% from Rs 6,670 million to
Rs 5,561 million, this reduction is primarily on account of
restructuring/prepayment of loans in previous year.
5. Depreciation and amortization
Total depreciation and amortization charges increased to
Rs 6,300 million (previous year - Rs 5,402 million).
6.
Taxes
No provision for income tax has been made in accounts as
there were no taxable profits for the year.
2014
2015
Revenue
28
21,000
20,000
19,000
18,000
17,000
16,000
15,000
7. Net Loss
The Company’s net loss reduced to Rs 17,173 million for the
year (previous year Rs 20,728 million). There is considerable
improvement in losses due to cost optimization measures
undertaken by the Company.
Discussion on Operational Performance
SSTL has taken various initiatives during the last year to improve
performance of its business. The Company during the year
removed subsidy from the voice business with clear focus on
profitability. After the network upgrade in Oct’13 to REV B
Phase II, the Company has been largely focused on driving better
value from the newly upgraded network. SSTL launched most
competitive data product offerings in the market on the back of
strong data network.
SSTL continues to have a data centric strategy with dongles as
its priority focus areas. In the nine operational circles, Company
continues to expand its HSD footprints, and now provides High
Speed Data (HSD) services in approximately 750 cities and
towns. SSTL’s subscriber base as on Mar’15 stands at 8.9 million
including 1.8 million data subscribers.
No of Subscribers (MN)
10
9.1
9.2
9.2
9.1
9.0
In the financial year 2015-16, the company’s strategic focus will
be to continue to leverage its operations in nine circles. This
will require successfully meeting our strategic imperatives that
includes:●
Strengthen voice business by launching competitive offerings
●
Further strengthen data business through competitive
products, expanding devices portfolio and offering
innovative solution
●
Aggressively focus on cost management and profitability.
Products and Services
Data Business Line
Data business continued to grow and today contributes 50% to
the overall revenue of the Company. The Company enhanced its
data portfolio with a launch of many innovative products and
solutions. Key initiatives in data business include:
8
A. Products
6
●
Launch of prepaid Home Zone for targeting low utilized
towns focused at increasing utilization levels and customer
stickiness
●
Rationalization of unlimited plans by splitting usage between
day & Night to address network abuse
●
Rationalization of prepaid product portfolio
by strengthening mid belly range portfolio (INR 400INR 600)
●
Postpaid Gross Adds contribution increase to 50% level
●
Base Rate and Roaming Rates revision from RS. 1 / MB to
3paisa / 100KB
●
Launched sachet WhatsApp and Viber Pack for customer
convinence.
4
2
0
Q1’14
Q2’14
Q3’14
Q4’14
Q1’15
In the financial year 2015, total revenue of SSTL was INR 13.9
Billion. For this period, contribution of non-voice revenue from
data and mobile VAS was at 45%
Wireless Revenue (INR MN)
3,500
3,000
2,976
3,146
3,237
3,337
3,416
2,500
B. Devices
2,000
●
1,500
1,000
500
0
Q1’14
Q2’14
Q3’14
Q4’14
Q1’15
During last financial year SSTL focused on building strong data
brand. Company’s campaign focused on Internet Baby received
many accolades and went viral on social media. MTS is ranked
among top 50 service brands in India for 2 years in row now.
Apart from that, MTS India received ET Telecom Award 2014,
under the VAS category for the 4th consecutive year.
Last year, SSTL focused on offering Wi-Fi products for consumers
and at public places. SSTL is the first company to provide Wi-Fi
services in Rapid Metro in Gurgaon. SSTL partnered with Indian
Railways to roll-out Wi-Fi hotspots in Six Railway Stations –
Ahmedabad, Agra, Varanasi, Mumbai CST, Howrah and
Secunderabad.
Launch of Wi Fi Power bank device:
■
Device is EVDO REV-B network ready.
■
Customer can connect maximum of 6 devices at any
given point.
■
Device has power bank of 5200 mAH.
C. VAS: The company launched various innovative VAS services
on Data which enabled better user experience and
stickiness, including:
●
MoviePlex: Short Movie Portal for MTS customers
in association with Shotz7, wherein customers are
offered free access for Live streaming of latest short
movies.
●
M-Life : Refreshed landing page for MTS customers
which offers customized content and preferred feed.
Also acts as tool for customer communication and
analytics on data usage preference. M-life gets over
3.5 lac hits a day with average stay time of over
3 minutes
29
effect from July 2014. Saving of INR 150 subsidy per gross
add.
VOICE BUSINESS LINE
Voice business was amply supported by the launch of innovative
products and aggressive market moves.Voice business was amply
supported by the launch of innovative products and aggressive
market moves. Innovations were recognized in various industry
forums:
B. Devices:The device portfolio moved towards non subsidized handsets & 8 new devices launched in various
categories (Music / Music camera & Dual SIM) –
■
Low cost Music device @ INR 999
1 . M-Buddy won most innovative product of year in ET
telecom awards
■
Establishment of direct procurement from Chinese
manufactures to ensure cost optimisation
2.
■
Music camera at INR 1200 for new acquisition and an
upgrade option for existing subscribers
■
DUAL SIM (CDMA + GSM) with zero subsidy at INR
1999 for targeting multiple connection subscribers
and churn GSM subscribers.
Won Dataquest technology award for excellence in
implementation & use of technology for business benefit.
This award was presented for adopting smart marketing
analytics
The highlights for the year included the launch of several new
products and market initiatives:
A.
Products:
●
Launch of Offer Ka Sikander : Most attractive tariff
proposition in the market with circle specific tariff, 1 year
validity, Full talktime on all recharges starting as low as
Rs 10 & extra talktime on Rs 150 & above. Approx. 500k
customers were acquired on the product.
Launch of 1/2p per sec all call :Offer was launched as
most affordable tariff in market with Free on-net on weekly
recharge of Rs 30 & above. It was complemented with 1/2p
sec off-net & NLD tariff. Approx. 1 Million customers were
acquired on the product.
●
C. Roaming & Interconnect
●
Roaming agreement with Reliance which enabled us
extending our footprint.
●
Special rates were negotiated with Bangladesh / Nepal
which helped in improving traffic to these destinations.
●
Voice Roaming Special Tariff Vouchers as well as Data Card
Roaming were launched for the first time, which resulted
into incremental revenues as well as customer delight.
●
Special rate of Rs 2.50 negotiated from Airtel for
International Toll Free Service.
VAS
●
Stringent TRAI (Telecom Regulatory Authority of India)
mandates for VAS services kept the revenues under
pressure.This has led to continued erosion in VAS revenues
across industry.To minimize risk the VAS vertical has shuffled
multiple vendors & services to revamp the offerings.
Innovative award winning service like MBuddy introduced
on BREW platform which contributed Rs.1.5mn every
month. Engaging services like movie magazine on IVR,
Legends for Ever, Mobile Mannat service @ temples,
Fantoosh fun portal & similar interventions helped
sustaining the VAS revenues.
●
2015 has started on a promising note with very fresh
approach to VAS through introduction of Business VAS
initiatives like “Business Messaging” SME solutions through
VAS this has resulted in opening up of strong new revenue
streams. Expected incremental revenues from this service
in April ‘15 to be Rs.14 mn i.e. 10%+ on DRR basis.This has
the potential of further scaling up.
Launch of Utsav pack : Utsav pack was launched during
festive time of Diwali to acquire new customers. Following
are the benefits of Utsav pack:
●
■
Magic Pack (Music Unlimited pack, 100 Local + National
sms, 250 MB HSD Data, 1.5 lac Local MTS-MTS seconds
for 30 days
■
Free mins on minimum monthly recharge basis
category of device.
Launch of
Customer Base Management
(CBM) activities : Numerous CBM initiatives were
implemented:
●
●
●
30
■
Retention campaigns using predicted churn analytics
via SAS Miner
■
Cross sell / Upsell campaigns
■
Member get Member scheme
■
Integration of M-bonus with CRM &self care portal
which helped in offering real time campaigns
■
Best deal IVR integrated with M-Bonus
■
Establishment of Real Time Marketing (RTM) channel
to upsell products & campaigns
Customer Service Operations
The Customer Service Operations Team began the year with a
clearly defined and prioritized strategy to drive “Efficiency and
Compliance”.
Some of the remarkable acheivements in Postpaid business for
FY 2014-15 as compared to FY 2013-14 can be listed as:
Launch of Rev Share for Trade: Revenue share of
10% was launched for retailers basis cumulative recharge
value.
■
Overall collection has improved from 95% to 98%.
■
Provision for Bad Debt has decreased from 5.8%
to 4.8%.
Removal of Subsidy : Removal of device subsidy with
■
Post paid Churn has reduced from 9% to 4%.
Collection Trend
98.72%
97.30%
96.69%
Q4 13-14
97.79%
Q2 14-15
Q3 14-15
Q4 14-15
5.11%
5.38%
3.93%
Daily and monthly CAF reconciliation.
■
Realtime, daily and monthly control mechanism for
bulk.
UCC Complaince : As per TRAI guidelines, UCC
complaints need a rigrous monitoring and with various
technical initiatives our UCC complaints have decreased
to 1203 in Q1’2015 which is a 33% reduction compared to
1800 in Q1’2014.
This has resulted in minimalising the financial disincentives on
UCC complaints.
Bad Debt Trend
5.19%
Quarterly CAF compliance assessment.
■
97.68%
●
Q1 14-15
■
4.88%
UCC complaints trend
Q4 13-14
Q1 14-15
Q2 14-15
Q3 14-15
1800
Q4 14-15
1322
1609
1392
1203
Postpaid Churn Trend
8.8%
Q4 13-14
●
●
●
●
5.2%
5.5%
4.5%
4.2%
Q1 14-15
Q2 14-15
Q3 14-15
Q4 14-15
Q4 13-14
Focus on Ebill penetration - Improvement seen in
number of e-bill subscibers from 35% of base to 79%.
■
PFH (Pay From Home) – Thrust on web payments has
resulted in growth from 37% of web payment base to
51%.
Activation efficiency improvement at ground level has
resulted in increase of activation within 24 hours from
60% to 74%. This was done by:
■
Training & calibration.
■
Spoke optimization.
■
System automation.
In addition to efficiency improvement, substantial measures
have been taken on supporting sales at field through
innovation and empowerment. Few of the initiatives are:
Q2 14-15
Q3 14-15
Q4 14-15
●
Social CRM integration: In a bid towards providing a fast
and amicable solution to customers who posted their
concerns regarding MTS on social media websites, forums
and blogs; we have created a small but strong in-house
Social CRM team who constantly monitor all major social
sites for posts and complaints. The Akosha platform has
been selected as MTS Social CRM tool to monitor and
route all negative posts, tweets and feedback to Social
CRM Team members who act on the same with utmost
priority to ensure a response / resolution time of 6 hours.
●
Revamp of My-Account : Key features which have been
incorporated are Itemized Statement, Data Usage Balance,
Multiple accounts display of Single customer and
Troubleshooting videos.
●
Command Center Reporting Tool : Command Center was
launched giving hourly graphical view of Contact-Centerwise performance.
●
MServe Activation Survey: Survey requests given on
customer email ids encompassing the complete OnBoarding Experience.
●
Various initiatives were taken to reduce service cost from
7.7% to 5.9% by implementing:
■
Q1 14-15
■
Insta number choice at retail point.
■
MNP process re-engineering.
One IVR: Smart IVR has been developed with following key
features:
■
Doorstep fulfillment.
■
Single platform for Data and Voice IVR including
Postpaid.
■
Last 5 transaction details.
■
Nearest branded retail stores location.
■
Complaint status update.
■
Bill details and Offers & Promos.
In the currect scenario where regulatory compliances on
subscriber verification are becoming rigid day by day we
have achieved a consistent industry-topping TERM score of
> 97% and zero penalty related to bulk.This has been done
through various initiatives like:
■
Roll out of 8 new policies related to compliance.
31
Wi-Fi Support: Along with the launch of Wi-Fi services at
five Indian Railway stations, this year SSTL launched Wi-Fi
city Bhadra (Rajasthan) complete with customer service
support.
●
Renewed focus on Call Quality standards have led to
enhanced customer experience. Although Q3 scores were
impacted due to migration, Q4 scores jumped to an all
time high.
●
Quarterly Performance - Cell Quality Scores
100%
80%
60%
Standard Premium Retailer
Q1
Q2
Q3
Data
Q4
Launch of Knowledge Management Portal V2 to ensure
better call center efficiency by:
●
■
100% certification of agents.
■
Monthly knowledge evaluation.
■
Online quality monitoring.
Enrollment of customer care executives with STAR
program as a part of Telecom Sector Skill Council for skill
enhancement.
●
Various measures taken throughout the year to improve
overall call center operational efficiency have resulted in
18% reduction of Calls per customer.
Quarterly Performance - Cells per
Customer
Q1 14-15
0.4
Q2 14-15
0.37
Q3 14-15
0.35
Q4 14-15
●
Successful migration of South Contact Center operations
to new partner in Q3 2014.
●
To improve overall after sales support for handset and
device related issues, the following measures were
initiated:
32
■
Successful rollout of Own Service Model for service
support of directly procured handsets. Overall 96%
SLA achieved.
■
53 field engineers have been fully equipped to resolve
issues at customer sites.
TRAI metering and billing audit
TRAI’s metering and billing audit for 2013-2014 was conducted
in accordance with the schedule of the empanelled Telecom
Regulatory Authority of India (TRAI) audit agency, with the scope
including different processes for Sales, Usage and Retention,
Value Added Services, Subscriber Activation, Customer billing,
etc.
Post the assessment and analysis, TRAI declared SSTL to be 100
% compliant on financial parameters.
TRAI empanelled agency has conducted the audit till Q3’201415 and submitted the reports. Post Quarterly assessment, TRAI
has declared SSTL to be 100% compliant on all financial
parameters.
Regulatory Affairs
LICENCES & SPECTRUM
●
0.43
service stock to address critical escalations.
■
Top 60 high volume authorized service centers were
identified and adequate spares/service stock were
placed for speedy resolution.
■
Empowered MTS circles with Handset and Data card
SSTL received additional authorization on 3rd September 2014
to provide National Long Distance Service under the existing
Unified License. The company will start carrying inter-circle
traffic on its own NLD network which hitherto was handed
over to other carriers.
Further, SSTL also received additional authorization on 29th
April 2015 to provide ISP Category A service. The said
authorization will enable the company to provide ISP services
across nation.
The Government conducted spectrum auction in 2100 MHz,
1800 MHz, 900 MHz and 800 MHz bands, which commenced on
4th March 2015 and ended on 25th March 2015 after 115 rounds
over 19 days, has fetched over Rs 109874 Crore.The noteworthy
feature of said auction is that for the first time there is robust
demand for 800 MHz band which in previous auctions had seen
very sluggish response, thereby increasing value of spectrum
holding of SSTL.
SSTL did not participate in the auction due to clause 3.10 of the
Notice Inviting Application (NIA) dated 9th January 2015 for
Auction of spectrum in 2100 MHz, 1800 MHz, 900 MHz and 800
MHz bands. The reading of the aforesaid NIA clause shows that
for making spectrum acquired in 800 MHz band in the 2013
auction contiguous, the licensee has to make the payment at
differential of the latest auction price and the March 2013 auction
price on pro rata basis on the balance period of right to use
spectrum. Your company is quite surprised by the aforesaid
prescription of levy of additional charge as SSTL was the only
bidder in 800 MHz in 2013 and as such this clause is applicable
only to SSTL. SSTL has gone to the court against the said clause
of NIA dated 9th January 2015 and expecting a favorable
response.
VIRTUAL NETWORK OPERATORS
TRAI on May 1st, 2015 gave recommendations on Guidelines
on Introducing Virtual Network Operators (VNOs) in telecom
sector. As per recommended guidelines VNOs be introduced
through a proper “licensing framework” in the Indian telecom
sector. The company will be able to expand its footprint by
becoming VNO of pan India operator once the policy on VNO is
finalized.
During the period April 1, 2014 and March 31, 2015 around 471
people were added to the company’s pool of human resources.
During the period April 1, 2014 and March 31, 2015, 18 leadership
positions (Department level & above) were filled through
internal job postings which reemphasizes the organization’s
commitment to provide growth to internal talent.
New Hire Split - OU wise
500
400
300
200
100
0
390
As part of our strategy to be “Employer of choice”, we partnered
with ‘Great Place to Work’ Institute and participated in the
prestigious study- ‘India’s Best Companies to Work For’. SSTL
conducted this survey to understand from the employees, the
strengths and areas of improvement pertaining to the Company.
Overall our Trust Index score was 74% which was within the
India’s Best Workplaces Range i.e. 70% to 90%.
n
4
tio
nc
tm
ar
D
ep
Fu
en
t
on
isi
iv
D
ro
G
11
This large talent infusion into the organization was a testimony
to SSTL’s strong employer brand. A look at our demographic
profile indicates that we managed to attract highly qualified talent
from telecom and non-telecom industries, to support our
objective of maintaining a healthy talent diversity.
Engineers, 10%
MBA 27%
Human Resources
At SSTL, our HR strategy in 2014 focused on driving employee
engagement and motivation, enhancing performance driven
organization, attracting and retaining talent along with
organizational re-alignment. People have always been at the
core of our business and as the telecom industry moves into a
phase of growth led by data services we focused on streamlining
our operations through organization structural changes resulting
in enhancement of the organization’s focus on our Products,
Processes, Business Processes and support towards faster
decision making. In short it helped us shift the organization’s
paradigm from a headcount based structure to a productivity
based structure.
23
up
n
43
tio
SSTL will explore all options including spectrum trading and
spectrum sharing to acquire additional / pooling of spectrum
within the 800 MHz spectrum band to meet its short and long
term requirements of spectrum for deployment of next
generation technologies once the policy impediments are
cleared and Spectrum Trading and Sharing policy is finalized by
DoT.
Talent Acquisition:
ra
In addition to the Spectrum trading guidelines,TRAI on 21st July
2014 gave recommendations on Guidelines on Spectrum Sharing
i.e TSPs would be allowed to share spectrum for simultaneous
use using a common Radio Access Network. Spectrum sharing
will provide an opportunity to TSPs to pool their spectrum
holdings and thereby improve spectral efficiency. Further, it can
also provide additional network capacities in places where there
is network congestion due to a spectrum crunch.
Some of the key initiatives undertaken by SSTL during the year
are grouped around the following key themes:
pe
TRAI on January 22nd, 2014 gave recommendations on Guidelines
on Spectrum Trading. As per recommended guidelines outright
transfer of spectrum shall be permitted. The spectrum assigned
through auction in the year 2010 or afterwards or on which TSP
has paid the prescribed market value shall be allowed to be
traded.
At SSTL, the management supports the HR function in attracting,
developing, engaging and retaining expertise within the company.
O
SPECTRUM TRADING AND SHARING
Unlike voice, data operators needs more spectrum to give
customers better experience of watching videos. As the
spectrum has become prohibitively expensive, the other way is
to share and trade spectrum with other similarly placed
operators.
Graduate
& Others 63%
Non-Telecom
35%
Telecom
65%
Off Roll Manpower Management:
During the period April 1, 2014 and March 31, 2015, at SSTL we
realigned two very crucial policies /processes applicable to
Outsourced Manpower along with roll out of strong monitoring
framework on cluster management and increasing efficiency of
Off roll associates. Tool of Psychometric testing was introduced
for Team Leaders and Associates moving from Off Roll to On
33
Roll positions to add scientific approach to access the potential
of identified Associate. Existing DST and MT/IT policy was revised
to drive productivity through attractive incentive payout in line
with SSTL philosophy of “Pay for Performance” resulting in
enhancement of DST productivity from 7 to 15. Automation in
off roll recruitment approval mechanism, data management &
attendance management is being followed in 100% of cases.
There was deliberate focus on retention of top performers by
providing them opportunity for career growth i.e movement to
on roll positions. Total of 29 off roll employees were absorbed
for on roll positions internally during the period.
We at SSTL launched the Sales Incentive plan (SIP) for managing
motivation of sales team.
Talent Development
The focus of Talent development was on increasing the
employee efficiency and helping teams to navigate through
uncertain times, through targeted sessions on Strategy, Data
orientation, Change Management, Business Knowledge and
Leadership. The majority of sessions were developed and
delivered internally to achieve our objective within the
projected budget. Looking at the business dynamics, we
re-aligned our Competency structure with the current business
strategy and covered all employees through ILT sessions. During
the reporting period, the Company conducted no. of training
programs and averaged 2 man-days, against budget of two
man-days. The overall feedback score increased to an all-time
high of 4.5 on a scale of 5.
Along with that MTS has always been proactive about ensuring
a physically and emotionally secure environment for our
colleagues. With this objective in phase 1 drive, we are started
a session on ‘Diversity and Inclusion’ for all employees.
Talent Management (including leadership development)
Our talent management strategy is aligned to the overall HR
strategy which is to be an ‘Employer of Choice’ by 2016. Our
endeavor is to create an engaging and motivating work
environment to be able to attract and retain best talent. In line
with this philosophy, in November 2014, SSTL conducted a Great
Place to Work study which included a survey named Trust Index
survey and also had a audit of our people practices benchmarked
with the best companies in the country.With a pan India coverage,
SSTL achieved a score of 74% in the Trust Index survey which is
above the engagement survey score of 71% conducted in the
previous year by AON Hewitt. We attribute this growth in
employee confidence to a focused approach on employee
engagement and various initiatives under this umbrella.
With a focus on internal talent development and career growth
objective, there were many initiatives that we launched last
year. SSTL has been successful in launching a formal career
management framework which allows employees to share their
career aspirations with their managers. For the development of
leadership pipeline and retention of critical talent, we launched
the exercise of MTS Leaders of Future. Roles critical to business
were identified and a talent pool with different readiness level
were selected who can take on these roles in future. Like
34
previous years, we also continued with the MTS Leaders of
Tomorrow (M-LOT) program where we targeted 5% of the
employee strength as possible HIPOs. A rigorous focus on HIPO
retention and engagement plan helped us to keep the HIPO
attrition within a limit of 14.8%.
For the top most leadership level, we also participated in the
Talent Bank initiative – The Golden Hundred project where top
100 talent across Sistema Group were identified. The goal of
this project is to form a pool of successful and efficient medium
level/top managers of the Corporation that are capable of taking
the key positions at the Corporation. We are proud to have
50% of our top management leaders finally selected as part of
the global talent bank.
SSTL also underwent an Organization design exercise during
the year April 1, 2014 and March 31, 2015 to meet our objective
of achieving operational excellence. The organization design
was conducted to areas of work where more efficiencies can
be derived with same or better outcome. The exercise resulted
in elimination of few positions leading to manpower
Optimization exercise. This exercise resulted in reduction of
10% payroll cost.
In the midst of the Organization Transformation and manpower
optimization exercise SSTL’s major challenge was to retain the
critical talent (HIPOs). The objective was achieved successfully
with the overall attrition rate of HIPOs @ 14.8% against average
overall SSTL attrition of 23.3%. This objective was achieved
through implementation of structured intervention of Critical
Talent Identification and the retention plan.
In this period, the Company has successfully concluded Annual
performance assessment for the year 2013 and bi-Annual
performance assessment cycle for the year 2014. In line with
the Company’s organizational philosophy towards building a
performance driven culture, the focus has been on “Capability
review”.There has been an emphasis on competency assessment
as an integral part of appraisal process due to which the Company
has looked beyond KPI achievement and has focused on
competency demonstrated while performing the job. This year
we have also reframed the behavioral competency framework
with an objective to make it more aligned to our overall business
strategy and also make it more crisper for employees to
understand. The new competency framework has been
acronymed as MLEAD with 5 key competencies detailing the
success behaviors for employees. While the payout of
Performance Linked Incentive is linked to the fulfillment of preapproved KPIs, the decisions on compensation and level
progression (promotions) are closely integrated with the
competencies and capability of the incumbents.
Our Accomplishments
MTS India wins “National Award for Excellence in Talent
Management-2014” from Delhi Management Association.
Conclusion
Our goal for MTS India is to achieve OIBDA breakeven in
2015. To achieve this milestone and in the larger interest
of the organization, the Management Team of MTS Russia
& MTS India have been working continuously and taking
necessary decisions and measures to enhance the business
efficiencies. Creating a Great Place to Work will be joint
responsibility of the Leadership, HR and all employees.
We will collectively work towards creating a strong
employer brand and the greatest place to work in the
year 2015 – 2016.
Internal Control Systems
The Company has in place systems of internal control
designed to provide reasonable assurance with regard to
the effectiveness and efficiency of operations, reliability of
financial reporting and compliance with applicable laws and
regulations.
The in-house Internal Audit department at SSTL is an
independent and objective function performing assurance and
consulting activities designed to add value and improve SSTL
operations. It helps the Company accomplish its objective by
bringing a systematic and disciplined approach to evaluate and
improve the effectiveness of risk management, control and
governance processes.The audit team maintains an independent
status within SSTL at all times.The Head of Internal Audit reports
functionally to the Chairman of the Audit Committee and
administratively to the Chief Executive Officer. The internal
audit function adopts a risk-based audit methodology, which is
aligned with the risk profile of the company to ensure that the
relevant controls addressing those risks are reviewed on a
rotational basis. The scope of audit is extended to all of SSTL’s
operations and third party service providers. In order to
supplement the audit assurance provided by in-house team; the
Company had also outsourced some of the audit work to two
third-party audit firms for the financial year 2014-15. The
deliverables of appointed audit firm are measured and evaluated
against performance KPI’s (Key Performance Indicators)
approved by the Audit Committee to ensure that reasonable
assurance is provided on the end-to-end spectrum of the areas/
processes defined in the agreed scope of work. The internal
audit plan is prepared based on methodology similar to the one
adopted by parent company, Sistema JSFC. The methodology
takes in to account factors like company risk profile, company
strategy, top & middle management turnover, influence of
regulators/legislation, vulnerability to fraud, cost materiality and
results of previous audits to ensure all critical processes gets
covered.The final audit plan is approved by the Audit Committee
and Board of Directors of the Company. The Audit Committee
does a regular review of the Audit Reports and also reviews
update on the status of critical audit issues pending for
resolution, which are submitted by the Internal Auditors. In
addition, the Audit Committee performs a half yearly
performance evaluation of internal audit department. The
Committee also meets the Company’s statutory auditors to
ascertain, inter alia, their views on the adequacy of internal
control systems in the Company and keeps the Board of
Directors informed of major observations, if any.
The Internal Audit function is also involved in streamlining the
audit methodology, starting from inception, through fieldwork
to final reporting, in order to fit in the COSO (Committee of
Sponsoring Organizations of the Treadway Commission)
framework so that it is no longer incidental to the Company’s
processes but provides the foundation for all of the Company’s
audit work. Integrating COSO in this manner will add structure
to the audit process, ensure that appropriate criteria are
considered in key phases of each audit, and provide a trail to
support the conclusions reached. Therefore, an Audit
Management Process (AMP) document has been prepared to
bring clarity in terms of activities to be performed during the
conduct of audit to ensure smooth and efficient management of
all SSTL audits. This will help to identify the interfaces between
Outsourced Audit Partner, In-house audit team and SSTL & its
strategic partners at various stages during the audits. All the
seventeen principles and five essential components of control
environment, risk assessment, control activities, information
communication and monitoring of COSO Internal Control
Integrated framework 2013 is considered while defining the
control objective to be audited.
The Company uses a state-of-the-art ERP system to record
data for accounting and management information purposes and
connects to different locations for efficient exchange of
information. In continuation of the Company’s effort to create
customer-centric and process-based organization the function
of Business Transformation (BT) has been created.The objective
of the function is to align stake holders and operations for
deriving enhanced synergy, facilitate higher internal effectiveness
and collaborate with functional teams to drive Performance
improvement projects to support Organization’s Business
objectives. In order to ensure standardization of processes
across circles and improve their operational effectiveness, an
online activity of best practices across various functions has
been created by BT. A snap shot of process recommendation
implemented and under implementation is published for
monitoring progress.
The Company has also set up a robust enterprise risk
management framework across the organization. This facilitates
identification, assessment, communication and management
of risk(s) in an effective manner. Currently, the enterprise
risk management department is in the process of identification
and quantification of functional risks based on an approved
policy.
Opportunities
In coming years, industry revenue growth is expected to be
robust given strong demand for data and increasing penetration
of smartphones and tablets. The Company is well positioned to
gain ground from data revenue growth given its focus on data
business, existing coverage & deployment of Rev B technology,
reliable service, product offerings and time-to-market advantages.
Also, positioning of company as a Wi-Fi player will further benefit
in strengthening its data brand and better recognition as a focused
data player.
Recently concluded auction generated significant interest for
850 MHz band in India. Post auction, many players are interested
in deploying 4G technology in 850 MHz band which will rapidly
increase ecosystem in this band.The Company is well positioned
to move to next generation technology and is exploring various
35
options to make it happen swiftly with minimum possible
investment requirements. Current focus of the Company
continues to be on building assets that are easily transferable to
next generation technology and stay ahead of the curve.
Risks and Threats
Launch of 4G data services and expansion of 3G services is
expected to further expand the overall data market which inturn will benefit the Company. However, it can also intensify
competition in the data market and may even trigger tariff wars.
Several 3G players have already dropped data prices in order to
push for the adoption of 3G data service in India. CDMA
ecosystem in entry voice is rapidly deteriorating and can
potentially affect Company’s voice business prospects in the
medium to long term.
Launch of 4G services by a large pan-India player is on
the horizon. This will further intensify competition in the
data segment. In recently concluded spectrum auction,
several players acquired spectrum in sub-GHz bands. They
are planning to launch 3G and LTE in these sub-GHz bands
in near future, which will further increase competition in
data business.
On the regulatory front, Company’s ability to do business and
upgrade to future generations of technology depends on the
spectrum and license. There is still lack of clarity about future
roadmap for auction of spectrum in 850 MHz band post Mar
2015 auction.Also, there needs to be clarity on how government
will ensure whether further allocation of spectrum is contiguous
to earlier allocation.
The implementation of Company’s projects would be
materially affected if debt facilities are not raised in a timely
manner and/or interest rates are raised significantly.Additionally,
the Company’s business is dependent on key vendors to
supply critical network equipment and services. Any change
in their ability to provide equipment and/or services also
presents a risk.
Finally, while the Company continues to perform and create
value for its customers, shareholders and employees, there is
execution risk involved if projects are not launched or
completed in time.
36
Future Outlook
Indian wireless market continues to be one of the most attractive
markets in the world with VLR penetration of approximately
67% and 5.9 million active wireless subscriber additions per
month in calendar year 2014. Also, continuous drop in
smartphone and tablet prices is expected to result in higher
penetration of these devices which will increase demand for
data on small screen devices. There is growing interest in Wi-Fi
services at home and at public places.The Company has launched
several home Wi-Fi products and is in the process of partnering
with various government agencies to offer Wi-Fi services at
various public places. In future, demand for mobile data will
grow significantly and The Company is well positioned to get
higher shares of this incremental demand.
Number of players in the industry is likely to go down in medium
term. However, it depends on clarity on final approval to various
policies like spectrum trading, spectrum sharing and M&A. New
opportunities for strengthening the market position can arise
out of such an environment.
New government in India is focusing a lot on ‘Digital India’
vision enabling faster internet services for people and using
internet as driver for the economic growth. It has also launched
smart city project and focusing on ‘making in India’. All these
new initiatives of government provide good opportunity for
the Company to get involved in few projects and increase its
capability and reach in India. As mentioned earlier, the Company
has already partnered with Indian Railways to provide Wi-Fi
services on 6 railway stations in India and it is also providing
Wi-Fi services on Gurgaon Rapid Metro.
Cautionary Statement
Statements in the Management Discussion and Analysis Report
describing the Company’s objectives, projections, estimates, expectations
may constitute a “forward-looking statement” within the meaning of
applicable laws. Actual results could differ materially from those
expressed or implied. Important factors that could make a difference
to the Company’s operations include economic conditions affecting
demand/supply and price conditions in the domestic markets in which
the Company operates, changes in the Government Regulations, tax
laws and other statutes and other related / incidental factors.
REPORT ON CORPORATE GOVERNANCE
GOVERNANCE PHILOSOPHY
Corporate Governance is a tool by which Board of Directors ensures transparency, accountability and fairness towards all
stakeholders of the Company. It inspires and strengthens investors’ confidence by ensuring company’s commitment to higher
growth and profits. Corporate Governance refers to the mechanism and processes which an organization can control and direct
its affairs towards attainment of set objectives maximizing the welfare of its stakeholders.
In pursuit of excellence towards governance, Sistema ShyamTeleServices Limited (“the Company”) is committed to maintain the
highest standards of Corporate Governance and implements several best Corporate Governance practices as prevalent globally,
which are over and above the statutory requirements. Corporate Governance Strategy of the Company is to comply with not
only the statutory requirements, but also voluntarily formulate and adhere to a set of strong Corporate Governance practices.
The Company believes that sound Corporate Governance is critical to enhance and retain investors’ trust.
Your Company always makes efforts to develop and improve the processes and procedures, which are part of Corporate Governance
regime in order to gain the confidence of stakeholders and to promote the principles of transparency, integrity and accountability in the
working and culture of the organization and to keep the level of Corporate Governance matching with Industry Standards.
I. BOARD OF DIRECTORS
The Board of SSTL is broad based and has eminent personalities having experience in distinguished industries. It is managed through
an optimum mix of Executive, Non-Executive and Independent Directors in conformance with the best standards and practices.The
Board of Directors of SSTL comprises of notable professionals possessing unparallel industry experience and knowledge having
diverse backgrounds and expertise in the fields of strategy, technology, finance, economics, entrepreneurship, legal and general
management.
The Board’s composition, nature of directorship & attendance of the Directors at last Annual General Meeting alongwith the details of
their directorships in other companies during the financial year 2014-15 are given as under:
*
**
^
^^
Name of the Director
Nature of
Directorship
Mr. Ron Sommer
Director
Date of
Joining the
Board
Attendance At
the Last AGM
Directorship
In other
Companies
21.05.09
-
3
Mr. Dmitry Shukov
Whole-Time Director
01.06.13
Yes
-
Mr. VsevolodRozanov
Director
01.10.08
-
5
Mr. Rajiv Mehrotra
Director
21.09.96
-
10
Mr. Ajay Khanna
Director
20.04.95
Yes
10
Mr. AlokTandon
Director
20.04.95
Yes
11
Mr. Madhukar
Independent Director
27.03.09
Yes
9
Mr. Suman Sehgal
Director
11.02.08
Yes
-
Mr. Vikram Kaushik
13.07.11
-
2
Mr. Bharat V Patel
13.07.11
-
4
Mr. Alexander Gorbunov*
Director
13.07.12
-
2
Mr. Andrey Terebenin*
Director
13.07.12
-
1
Mr. Anton Abugov
Director
01.06.13
Yes^
3
Igor Kozlov**
Director
02.09.14
-
2
Andrey Smelkov**
Director
02.09.14
-
-
Andrey Dubovskov**
Director
02.09.14
-
6
Ram Krishna Agrawal^^
02.09.14
Yes
6
Resigned w.e.f. September 2, 2014.
Appointed as Additional Director and regularized as Ordinary Director liable to retire by rotation at the 19th Annual General
Meeting held on September 30, 2014.
Attended through Alternate Director.
Appointed as a Director not liable to retire by rotation for a period of 5 years upto September 1, 2019.
37
Post March 31, 2015, following changes have taken place in the composition of Board of Directors of the Company:
●
Mr. Ron Sommer (Chairman), Mr. Anton Abugov & Mr. Madhukar (Independent Director) have resigned from the Directorship of the
Company w.e.f. 28th April 2015.
●
Mr. Andrey Dubovskov has been appointed as Chairman of the Board w.e.f. April 28, 2015.
●
Mrs. Neera Sharma has been appointed as Whole-Time Director of the Company w.e.f. April 28, 2015. She was inducted as an Additional
Director of the Company pursuant to applicable provisions of the Companies Act, 2013.
Currently, the Board of the Company comprises of 15 members. The Board comprises of 8 Indians and 7 Foreign Nationals; the combination is in
conformity with the Security conditions of Unified Licence and Press Note 3 of 2007.
A detailed profile of each Director is available on the website of the Company at www.mtsindia.in and is also published in this Annual Report .
Board Meetings and Attendance
During the financial year ended March 31, 2015, the Board of Directors met 6 times on the following dates and the maximum time gap
between any two meetings has been less than 3 months. Besides the regular Board Meetings, urgent important issues are decided through
circulation resolutions which are confirmed in the next Board Meeting .
Dates on which the Board Meeting(s) were held:
I.
April 17, 2014
IV.
November 6, 2014
II.
June 26, 2014
V.
December 11, 2014
VI.
February 10, 2015
III.
September 2, 2014
The details of attendance of each Director at the Board Meetings held during the financial year 2014-15 are as under:
Name of Directors
Board Meetings Attended
Name of Directors
Name of Directors
Ron Sommer
Vsevolod Rozanov
Ajay Khanna
Alok Tandon
Rajiv Mehrotra
Alexander Gorbunov^
6
6*
6
5
6
2
AndreyTerebenin^
Dmitry Shukov
Madhukar
Suman Sehgal
Vikram Kaushik
Bharat Patel
1
6
5
6
5
5
Anton Abugov
Igor Kozlov
6**
4***
Andrey Smelkov Andrey Dubovskov Ram Krishna Agrawal
4***
4****
4
*Three meetings were attended by Alternate Director
^Resigned w.e.f. September 2, 2014
**Four meetings were attended by Alternate Director
***One meeting was attended by Alternate Director
**** Two Meetings were attended by Alternate Director
Information availability to the Board
The Company provides all the information in advance related to businesses of each meeting to all the members of Board for their
review and for discussions and decisions at the meeting. Such information is submitted as part of the agenda material of the
meetings well in advance and also by way of presentation during the meeting.All major agenda items are backed by comprehensive
background information to enable the Board to take erudite decisions. The information which could not be circulated in advance
is tabled directly at the meeting. The Board has absolute access to all the relevant information and also the managers of the
Company. Apart from the information made available at the time of meetings, the Board also periodically reviews various reports
and information on the progress of the Company. Such information is supplied to the Board at certain intervals and also on
request from time to time.
Advance Planning of the Meetings
Planning of meetings of the Board as well as Board’s Committee is done in advance to adjudge and decide the matters and affairs
which are to be placed and reviewed before the members on the basis of priority and importance. Advance planning also provides
an aid to the Board members to schedule and plan their calendar events accordingly. The schedule of meetings also includes the
primary agenda for each meeting. The Board approves such calendar schedules in the last meeting of every calendar year for the
Board and Committee Meetings of next calendar year. To the extent possible and convenient to Board Members, the Board and
Committees follow the calendar schedules approved for Meetings. In addition to the planned calendar meetings, the Company
also holds special meetings to discuss the urgent business issues and the Board Members have also been very indulgent for such
special meetings as is evident from the attendance of Directors in Board Meetings.The agenda ofthe meeting is pre-circulated
with presentations,detailed notes, supporting documents and executive summary.
Performance Evaluation Process
The Board’s Performance Evaluation process was initiated by distributing a self assessment questionnaire to each Board Member.
Based on the response to questionnaires received from Board Members, a summary report was prepared including the results
of all analyzed criteria, areas of improvement and a certain action plan for the same. The results of the evaluation process were
38
summarized with complete confidentiality and placed before the Board for its review and the suggestions for the improvement
in the working procedures of the Board of Directors.The suggestions advised by the Board members are being implemented, to
the maximum extent possible, with co-ordination of all concerned.
II. DIRECTORS’ COMMITTEES
The Board has constituted / re-constituted Audit Committee, Nomination and Remuneration Committee, Stakeholders’
Relationship and Share Transfer Committee, Business Excellence Committee and Corporate Conduct and Ethics Committee in
compliance with applicable provisions of the Companies Act, 2013.
Committees focus on specific areas and make well-versed decisions within the authority delegated. Each Committee of the
Directors is guided by its well defined Charter, which defines the composition, scope and powers of the Committee. The
charters of the Committees have been aligned in accordance with the scope and functions as prescribed under the applicable
provisions of the Companies Act, 2013. The Chairman of the Committee in consultation with Company Secretary determines
the frequency of the Committee meetings. The Committees also make specific recommendations to the Board on various
matters from time-to time.All observations, recommendations and decisions of the Committees are placed before the Board for
information or for approval.The Board reviews the performance of the Committees exhaustively on annual basis and imparts
necessary directions for improving the performance of the Committees.
Audit Committee
Audit Committee plays an important role in the Company’s financial integrity. The Audit Committee was re-constituted on
2 nd September 2014 in line with Section 177 of the Companies Act, 2013. Presently, it comprises of Board members:
Mr. Vsevolod Rozanov, Mr. Ajay Khanna, Mr. Bharat Patel, Mr. Vikram Kaushik, & Mr. Ram Krishna Agrawal. Mr. Vsevolod Rozanov
is the Chairman of the Committee. He has sound financial knowledge as well as several years of experience in the industry.
Mr. Vishal Kohli is the designated Secretary to the Committee.
In Committee Meetings, detailed discussions are held on various matters e.g. financial results, budgets, related party transactions,
internal audit and internal control, etc.The Head of various functions and other senior management members are invited to
present their reports on the respective issues being discussed in the committee meetings and to have detailed interactions with
the committeemembers on all important issues. The Internal Auditors and Statutory Auditors are also invited to attend the
meeting of the Audit Committee and participate in discussions on their respective issues.
Key responsibilities of the Audit Committee
➢
➢
➢
➢
➢
➢
Financial Reporting and Disclosure process.
Appointment, re-appointment or removal of the Statutory
Auditor, Internal Auditors and Cost Auditor.
Examination of Annual Financial Statements and all aspects
related thereto including qualification in Draft Auditors’
Report.
Quarterly financial statements and Policies.
Review and monitor the auditor’s independence and
performance and effectiveness of audit process.
Budgets and Business Plans of the Company and matters
related thereto.
➢
➢
➢
➢
➢
➢
➢
Overseeing the Vigil Mechanism.
Adequacy of the internal control systems and internal audit
function.
Internal Audit and Cost Audit Reports and follow up action.
Nature and scope of Statutory Audit.
Related Party Transactions.
Legal/ regulatory matters having significant impact on the
Company’s financial statements.
Carrying out any other function as may be related and
important in view of the Audit Committee members.
Audit Committee Meetings and Attendance
During
I.
II.
III.
the financial year 2014-15 the Audit Committee met 6 times i.e. on:
April 16, 2014
IV. November 5, 2014
June 25, 2014
V.
December 11, 2014
September 1, 2014
VI. February 9, 2015
The details of meetings attended by each Committee Member during the financial year 2014-15 are as under:
Members
Vsevolod Rozanov
Ajay Khanna
Alok Tandon*
Suman Sehgal*
Vikram Kaushik**
Chairman
Member
Member
Member
Member
6^
6
3
3
2
Bharat Patel **
Ram Krishna Agarwal**
Member
Member
3
3
Status
No. of Meetings Attended
Members
Status
^Attended by Alternate Director.
*Ceased to be a member w.e.f. September 2, 2014.
**Joined the Committee w.e.f. September 2, 2014.
39
Nomination and Remuneration Committee
The Nomination and Remuneration Committee of Directors was re-constituted on 28 th April 2015 in accordance with the
provisions of the Companies Act 2013 and it presently comprises of Mr. Andrey Smelkov (Chairman), Mr. Alexander Gorbunov,
Mr. AlokTandon, Mr. Ram Krishna Agrawal (Independent Director), Mr. Bharat Patel (Independent Director) and Mr. Vikram
Kaushik (Independent Director). Mr.Vishal Kohli, Company Secretary is the Coordinator of the Committee.
Key Responsibilities of Nomination & Remuneration Committee
➢
To shortlist and select nominees on the Board and to recommend their names to the Board of Directors for appointment,
re-appointment.
➢
To formulate the criteria for determining qualifications, positive attributes and independence of directors.
➢
To recommend to the Board Remuneration Policy relating to remuneration for the directors, key managerial personnel and
other employees and to review the overall Remuneration structure/ Remuneration policy.
➢
To shortlist and select candidates for the position of CEO and to recommend their names to Board of Directors for
appointment as CEO along with proposed remuneration.
➢
To lay down criteria for qualification and to approve the selection/ appointment(s)/ KPIs/ performance/ remuneration/
promotion/resignation(s) and termination(s) of personnel for the position of National Heads/CXOs/Circle
COOs(“Management Personnel”).
Committee Meetings and Attendance
During the financial year 2014-15 the said Committee met 6 times i.e. on:
I.
April 17, 2014
IV.
November 6, 2014
II.
June 26, 2014
V.
December 11, 2014
III.
September 2, 2014
VI.
February 10, 2015
The details of meetings attended by each Committee Member are as under:
Members
Status
Members
Status
Members
Status
Ron Sommer*
Ajay Khanna*
Alexander Gorbunov*
Vsevolod Rozanov*
Chairman
Member
Member
Member
3
3
3
3^
Madhukar**
Vikram Kaushik**
Member
Member
Member
3
3
Andrey Dubovskov** Anton Abugov**
Chairman
2
1^
Alok Tandon**
Bharat Patel**
Member
Member
2
3
*Ceased to be a member w.e.f. September 2, 2014.
**Joined the Committee w.e.f. September 2, 2014
^One meeting attended by Alternate Director
Business Excellence Committee
Business Excellence Committee was initially constituted on July 13, 2011. Presently, the Committee members are Mr. Dmitry Shukov,
Mr.Vikram Kaushik and Mr. Bharat V Patel. Mr.Vikram Kaushik and Mr. Bharat V Patel are Independent Directors and Mr. Dmitry Shukov
is the Chairman of the Committee. Mr. Leonid Musatov, Chief Commerce Officer is the Convener of the Committee and Mr. Vishal
Kohli, Company Secretary is the Co-ordinator of the Committee.
The Committee is responsible for review, formulation and implementation of plans, policies and Strategy for Sales and Marketing, CRM
and Product Innovation, and is also responsible for the review of the performance of the sales and marketing, strategy and business
excellence team.The functions of the Committee also involves providing suggestions, guidance, directions & advices to the management
on various matters related to the Sales, Marketing, Strategy and Business Excellence activities of the Company.
Meeting and Attendance Details
During the financial year 2014-15 the said Committee met 12 times i.e. on:
I.
April 17, 2014
VII.
October 17, 2014
II.
May 19, 2014
VIII.
November 6, 2014
III.
June 26, 2014
IX.
December 12, 2014
IV.
July 7, 2014
X.
January 27, 2015
V.
August 19, 2014
XI.
February 9, 2015
VI.
September 2, 2014
XII.
March 5, 2015
40
The details of meetings attended by each Committee Member during the financial year 2014-15 are as under:
Members
Dmitry Shukov
Vikram Kaushik
Bharat V. Patel
Chairman
Member
Member
12
8
10
Status
Corporate Conduct & Ethics Committee
In order to develop an effective corporate conduct system and ethics standards which correspond with international recognized
standards, the Company had constituted a Corporate Conduct & Ethics Committee on October 18, 2011. The Committee was
recently re-constituted on April 28, 2015 and thereafter, it comprises of Mr. Suman Sehgal, Mr. Dmitry Shukov, Mr. Ajay Khanna &
Mr. Bharat Patel (Independent Director)as its members. Mr. Suman Sehgal is the Chairman of the Committee. Mr. Vishal Kohli,
Company Secretary is the Secretary of the Committee.
The Committee is responsible for formulation of proposal and recommendations to Board of Directors for developing and
implementing effective corporate conduct and ethics, Monitoring and supervising of functioning of executive level Disciplinary
Committees as well as disciplinary proceedings conducted by the said committees, Reviewing Code of Conduct for Board
members and Senior Management Personnel and Code of Conduct for employees and Reviewing policies, documents, processes,
procedures, strategies, guidelines relating to corporate conduct, corporate culture, ethics and disciplines. The main function of
the Committee is to review the periodical reports of the respective Executive Level Disciplinary Committee and to provide
directions and suggestions thereon.
Meeting and Attendance Details
During the financial year 2014-15, the Corporate Conduct & Ethics Committee met four (4) times.The details of meetings attended by
each Committee Member are as under:
Members
Status
Suman Sehgal
Ajay Khanna
Dmitry Shukov
Madhukar*
Chairman
Member
Member
Member
4
4
4
3
*Appointed as a member w.e.f. September 2, 2014
STAKEHOLDERS’ RELATIONSHIP AND SHARE TRANSFER COMMITTEE
The nomenclature of “Share Transfer & Investor Grievance Committee” of the Directors was changed to “Stakeholders’
Relationship and Share Transfer Committee” on 2nd September 2014. On the same date, the charter and constitution was also
aligned in accordance with Section 178 of the Companies Act, 2013. The Committee deals with matters relating to transfer &
transmission of shares, issue of duplicate share certificates, shares dematerialized & rematerialized, redressal of investor’s
grievance and all other matters related to the shares, share capital and investors complaints and correspondence.The Board has
also assigned the committee special task to examine demands of minority shareholders and all other related aspects including
holding of meetings with the minority shareholders’.The Committee meetings are held on regular intervals to consider the
matter pertaining to share transfer and investors grievances.
After the recent reconstitution of the Committee w.e.f. April 28, 2015, Mr. Alok Tandon, Mr. Suman Sehgal, Mr. Bharat Patel,
Mr. Ram Agrawal and Mr.Vikram Kaushik are its members. Mr. Igor Garshin, Head of Chairman’s Office, Sistema JSFC is Ex-Officio
member and Mr. Bharat Patel is the Chairman of the Committee. Mr.Vishal Kohli, Company Secretary is the Secretary of the
Committee.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
In order to comply with the provisions of Section 135 of the Companies Act, 2013 and related Rules, a committee on Corporate
Social Responsibility (CSR) has been reconstituted to recommend and monitor the expenditure on CSR plans, projects and
programs as specified in the CSR Policy. The CSR Committee was constituted on 02.09.2014 with the membership of Mr. Dmitry
Shukov, Mr. Madhukar and Mr. Ajay Khanna.The CSR Committee was re-constituted on 28 th April 2015 and presently comprises
of Mr. Dmitry Shukov, Mr.Ajay Khanna & Mr. Ram Agarwal. Mr. Dmitry Shukov is Chairman of the Committee. During the financial
year 2014-15, only one meeting of the Committee was held on 18th March 2015, in which all Directors were present.
III. REMUNERATION TO DIRECTORS
The Company is not making any payment to the Non Executive Directors as remuneration except sitting fee i.e. Rs.1,00,000/- for
attending each meeting of Board of Directors and Rs.50,000/- for attending each meeting of the Committee of Board. The total
remuneration paid to Mr. Dmitry Shukov, Whole-Time Director designated as CEO for the financial year 2014-15 was Rs.68.49
Million in accordance with the approval of shareholders of the Company tendered at Annual General Meeting of 23.09.2013.
Performance criteria for Executive Directors, entitled for Performance Linked Incentive (PLI), are determined by the Human
41
Resources policy &Nomination and Remuneration Committee. The tenure of office of Mr. Dmitry Shukov is 3 years from the date
of his appointment.In case the services of Mr. Dmitry Shukov are terminated by the Company involuntarily before the term, he
shall be paid one time compensation equal to three months fixed salary and PLI on pro rata basis for the completed period.
IV.
A.
DISCLOSURES
Compliance with Laws
The Company is complying with all applicable laws with due diligence. No penalties or strictures were imposed on the
Company by Ministry of Corporate Affairs or any statutory authority on any matter related to corporate laws.The Audit
Committee periodically reviews compliance reports of applicable laws as prepared by the management as well as steps
taken by the Company to rectify instances of non-compliance, if any.
B.
Related Party Transactions
There were no contracts or arrangements entered into by the Company which attract the provisions of the Section 188 of
the Companies Act, 2013. However, all the transactions with related parties were at arm’s length basis and entered in the
ordinary course of business by the Company. All such transactions were periodically placed before the Audit Committee
for its approval.
Details of each proposed related party transactions are placed before the Audit Committee with detailed justificationfor
its prior approval.Further, it is also ensured that the transaction with related parties are on arms length basis with due
consideration of various business exigencies such as synergy in operation and industry specialization, etc.The established
processes applicable in the Company for all kind of procurements are also equally applied to related party transactions.
C.
Code of Conduct
In compliance with the Code of Conduct for Board Members and Senior Management Personnel adopted by the Company,
all the Board Members and Senior Management Personnel have affirmed the compliance with the ‘Code of Conduct’
for the financial year ended March 31, 2015 by furnishing a certificate to this effect. A declaration to this effect signed by
Mr. Dmitry Shukov, Whole Time Director (designated as Chief Executive Officer of the Company) forms part of this report
as Annexure - I.
D.
Vigil Mechanism / Whistle Blower Policy
The Company has a Vigil Mechanism named as Whistle Blower Policy for Directors and employees to report genuine
concern in accordance with the manner and procedure as prescribed therein and it provides adequate safeguards against
victimization of persons who use such mechanism. The Directors, employees, vendors or any other person covered under
the Whistle Blower Mechanism, have direct access to the Chairman of the Audit Committee in appropriate or exceptional
cases as per provisions of the Whistle Blower Policy and Charter of Audit Committee. The Whistle Blower Policy has been
posted on the website of the Company and can be accessed at https://www.mtsindia.in/corporate/corp-govern.html.
E.
Remuneration Policy
The Company has adopted a Remuneration Policy based on the recommendations of the Nomination & Remuneration
Committee of the Company. The Policy has been framed in accordance with the applicable provisions of the Companies
Act, 2013 and rules framed thereunder and the Articles of Association of the Company. The Policy includes the provisions
relating to remuneration of Board of Directors, Key Managerial Personnel and other employees in general. Remuneration
Policy of the Company is enclosed herewith Annexure -III.
F.
Other Disclosures
■
There is no Inter-se relationship between Directors of the Company.
■
During the year there are no material financial and commercial transactions of senior management, where they may have
had personal interest, and which had potential conflict with the interest of the Company at large.
■
The Independent Directors have submitted a declaration confirming that they meet the criteria of independence and do not
have any material pecuniary relationship or transaction with the Company, its Promoters, Directors, Senior Management,
Holding Company or Subsidiary Company.
V.
ENTERPRISE RISK MANAGEMENT (ERM)
All the clauses of Companies Act, 2013 relating to risk management became effective w.e.f. April 1, 2014. Existing Risk Management
Policy has been amended to ensure compliance with the new Company Law and the policy is also reviewed and approved by the
senior management of the company. In addition, risk management continued taking new initiatives including re-visiting emerging
risks which could have significant impact on the Company and laid down a robust process to monitor key risks and prioritize
relevant action plans to mitigate them.
Key risks as part of the risk portfolio includes the possibility of delay in strategic alliances, uncertain regulatory environment,
technology risk, possibility of non- compliances to regulatory requirement, churn of high ARPU customers, retention of intellectual
capital, etc.
Two meetings of Risk Management Committee was held during the financial year ended March 31, 2015 and risk registers was
re-visited and “value at risk” was assessed, wherever possible and mitigation plans were reviewed as deemed fit.
42
During the year, ERM team continued monitoring of various key parameters including progress, reflecting increase / reduction of
risk impact and also reported the result in Risk management Committee, Management Committee, Audit Committee, BoD and
obtained approval of the key risk’s profile and mitigation plan thereof.
The Company carried out the following risk management activities to identify monitor and mitigate impact of risks:
■
Annual risk survey was conducted across functions to get inputs on key risks impacting achievement of business objectives,
their prioritization and mitigation actions to minimize impact.
■
In addition, periodic assessment of risks, their potential impact and likelihood on key business objectives relating to
growth, profitability, talent engagement, market position and operational excellence were conducted.
■
Further, progress of mitigation actions and their effectiveness were reviewed and discussed with the Risk Management
Committee, duly approved by Audit Committee and Board from time to time.
This resulted in strengthening the risk and control framework and hence reducing the overall risk impact.
In 2015-16, Risk management planned to continue focus on key risks which may threaten the existence of the organization in
addition to coordinating for mitigation of other key risks. It is also working towards improving the accuracy and efficiency of data
analysis and business modeling, in order to identify risks more precisely before its occurrence. ERM team is also consulting
various renowned external consultants to obtain advice on methodology to be adopted for improving Risk management at SSTL
in general and risk assessment in specific, as and when required
VI. TRAINING OF BOARD MEMBERS
The Company believes that the Board must be continuously empowered with the knowledge of the latest developments in
the Company’s business and the external environment affecting the industry as a whole.To this end, the Directors were
given reports/ information/ presentations on the global business environment, as well as all business areas of the
Company including business strategy, risks and opportunities. Directors are also updated on changes / developments in the
domestic / global corporate and industry scenario including those pertaining to statutes / legislation and economic
environment.Additionally, all new directors inducted into the Board from time to time are given an orientation to familiarize
them with the Operations, Financial Performance, Organizational structure, Board Procedures, Code of Conduct and Process
for Board’s Self Appraisal.
VII. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs (MCA) released the Voluntary Guidelines on Corporate Governance in December 2009
and the suggestions recommended in these Guidelines have been drawn from best practices. Your Company is always proactive
in corporate disclosures and statutory compliances; it is already compliant with some of the sections of these Guidelines.
Regular efforts are made by your Company to comply with the suggestions recommended in the guidelines to the extent
possible.
VIII. CEO AND CFO CERTIFICATION
The CEO and CFO Certificate on the Annual Accounts and Internal Controls of the Company for the financial year ended
March 31, 2015 is appended as Annexure - II and forms an integral part of this Report. The requirement of obtaining and
publishing this certificate is applicable only for listed companies, however in its quest for establishing fair and transparent best
practices the Company has voluntarily taken this initiative.
IX. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place “Prevention of Sexual Harassment Policy” in line with the requirements of The Sexual Harassment of Women
at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, which is applicable to all employees of the Company and a committee
named as “Prevention Of Sexual Harassment Committee” has been set up to redress the complaints received regarding sexual harassment.
Summary of sexual harassment complaints received and disposed off during the period starting with April 1 2014 to March 31, 2015:
■
No. of complaints received: 2
■
No. of complaints disposed off: 2
X. SHAREHOLDER AND GENERAL INFORMATION
A. Means of Communication
Good Governance can only be achieved by timely disclosure of consistent, comparable, relevant and reliable information on
corporate financialperformance. The Company has established systems and procedures to disseminate relevant information to
all its stakeholders. The primary source of information regarding the operations of the Company is the corporate website:
www.mtsindia.in. All official press releases are posted on the Company’s website. An analysis of the various means of dissemination
of information in the year under review is produced hereunder:
43
Quarterly Financial Results
Press Releases
Corporate Website
Annual Report
B.
Highlights of its quarterly financial results are published in all major news papers for the knowledge and information of
the shareholders.The press releases are also published on the corporate website: www.mtsindia.in.
All press releases concerning the business operations of the Company and other media news are also displayed on the
corporate website: www.mtsindia.in.
The corporate website www.mtsindia.in provides comprehensive information about the Company. Apart from the press
release, the following information are also uploaded on the website of the Company and updated from time to time:
1.
Details of Shareholders
2.
Shareholding Pattern
3.
Profiles of Directors
4.
Annual Reports
5.
Corporate Governance Report
6.
Code of Conduct for Board and Senior Management Personnel.
7.
Board’s Self Evaluation Process.
8.
Memorandum & Articles of Association
9.
Charter of Audit Committee
10.
Notices of General Meetings
11.
Minutes of General Meetings
12.
All disclosures as prescribed under the Companies Act, 2013
Annual Reports are circulated to all the members and others like Auditors, Debenture Holders, etc.The Annual Report is
also available on the website of the Company.
Details of last 3 General Meetings
(i) Annual General Meetings
Year
Date & Time
Venue
Special Resolution Passed
2011-12
28.09.2012
10:00 A.M.
Hotel Fortune Select Metropolitan
Near Nehru Sahkar Bhawan,
C-Scheme BaisGodam Circle, Jaipur
No Special Resolution was passed.
➢
➢
2012-13
23.09.2013
10:00 A.M.
Hotel Fortune Select Metropolitan
Near Nehru Sahkar Bhawan,
C-Scheme BaisGodam Circle, Jaipur
➢
➢
➢
2013-14
44
30.09.2014
10:00 A.M.
Hotel Hilton, Plot No. 42,
Geejgarh House, Hawa Sadak,
Jaipur- 302006, Rajasthan India
Appointment of Mr. Anton Abugov, as Director liable
to retire by rotation.
Appointment of Mr. Dmitry Shukov, as Director liable
Appointment of Mr. Dmitry Shukov as Whole Time
Director Designated as Chief Executive Officer and
approval of his remuneration.
Approval of payment of Long Term Incentive (LTI) to
Mr. Vsevolod Rozanov for the year 2011 & 2012.
Approval of payment of Performance Linked Incentive
(PLI) to Mr. Vsevolod Rozanov for the year 2012 and
for 5 months of 2013 (from January 2013 to May
2013).
➢
Appointment of Mr. Igor Kozlov, as Director liable to
retire by rotation.
➢
Appointment of Mr. Andrey Smelkov, as Director liable
➢
Appointment of Mr. Andrey Dubovskov, as Director
liable to retire by rotation.
➢
Appointment of Mr. Ram Krishna Agrawal as
Independent Director for 5 years, not liable to retire
by rotation.
➢
Fixing the tenure of Mr. Bharat Patel, Independent
Director for 5 years, not liable to retire by rotation.
➢
Fixing the tenure of Mr. Vikram Kaushik, Independent
Director for 5 years, not liable to retire by rotation.
➢
Fixing the tenure of Mr. Madhukar, Independent Director
for 5 years, not liable to retire by rotation.
➢
Approval for excess payment of PLI to Mr. Dmitry
Shukov, Whole-Time Director of the Company.
➢
Approval of Remuneration of M/s. Sanjay Gupta &
Associates, Cost Auditors for the FY 2014-15.
ii) Extraordinary General Meetings
Year
Date & Time
Venue
Special Resolution Passed
2008-09
22.01.2009
Hotel Pink Pearl 10 Mile, Mahapura,
Ajmer Road, Jaipur
th
10:30 A.M.
➢
➢
2009-10
10.12.2009
11:00 A.M.
Hotel Fortune Select Metropolitan,
Near Nehru Sahkar Bhawan, C-Scheme
Bais Godam Circle, Jaipur.
➢
➢
2011-12
30.03.2012
11:00 A.M.
Hotel Marriott, Ashram Marg,
Near Jawahar Circle, Jaipur.
➢
➢
Change in the name of the Company from Shyam
Telelink Limited to Sistema Shyam TeleServices Limited.
Appointment of Mr. Vsevolod Rozanov as Whole Time
Director of the Company and fixation of his
remuneration.
Offer, issue and allotment on preferential allotment
basis upto 22,85,94,900 equity shares to existing
promoter companies.
Offer, issue and allotment on preferential allotment
basis upto 66,27,45,100 to Federal Agency for State
Property Management (Rosimushchestvo) of Russian
Federation.
Alteration in Articles of Association of the Company to
incorporate the power to issue Preference Shares.
Authorisation to the Board to issue upto
6,000,000,000 preference shares.
C.
Details of ensuing Annual General Meeting
Day: Tuesday Date:September 29, 2015; Time:10:00 AM.
Venue: Venue: Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur – 302006, Rajasthan, India.
D.
Financial Calendar
Accounting Year: April 01, 2014 to March 31, 2015.
E.
Share Capital
During the year ended March 31, 2015, the Board of Directors of your Company has allotted 430,970, 0.01%
Non Convertible Non Cumulative Fully Redeemable Preference Shares to INSITEL Services Private Limited of Rs. 10/each at a price of Rs.10,000/- each (at a premium of Rs.9,990/-). As on March 31, 2015, the total Preference Share Capital
of the Company consists of 9,864,470, 0.01% Non ConvertibleNon Cumulative Fully Redeemable Preference Shares of
Rs.10/-each.The allotment of Preference Shares was done by the Directors at the meetings of Share Allotment Committee
held from time to time, duly authorised in this behalf.
F.
Shareholding Pattern as at March 31, 2015
EQUITY SHARE CAPITAL
Shareholding
Indian vs Foreign Shareholding
Others
(3.44%)
Indian
Holding
(26.05%)
Russian
Federation
(17.14%)
Shyam Group
(22.74%)
Foreign Holding
(73.95%)
Sistema JSFC
(56.68%)
PREFERENCE SHARE CAPITAL
INSITEL Services Pvt. Ltd.
(100%)
45
G.
Distribution of Shareholding as on 31.03.2015
A. Equity Share Capital
Category (Shares)
No. of Shareholders
% of Total Shareholders
No. of Shares
% of Total Shares
1 - 100
1361
7.49
61350
0.00
101 - 500
3857
21.23
1210807
0.04
501 - 1000
6061
33.35
4721976
0.15
1001 - 5000
5228
28.77
11295243
0.35
5001 - 10000
790
4.35
5606878
0.18
10001 - 20000
417
2.29
5656046
0.18
20001 - 30000
155
0.85
3722695
0.12
30001 - 40000
82
0.45
2841554
0.09
40001 - 50000
39
0.21
1741542
0.05
50001 - 100000
89
0.49
6223143
0.19
100001 - 500000
69
0.38
14503549
0.45
500001 and above
26
0.14
3136335217
98.20
18174
100.00
3193920000
100.00
% of Total Shareholders
No. of Shares
% of Total Shares
TOTAL:
B. Preference Share Capital
Category (Shares)
H.
No. of Shareholders
1 - 9864470
1
100
9864470
100
TOTAL
1
100
9864470
100
No. of Shares
%
726213376
1810289400
22.74
56.68
547312918
17.14
4222390
50237647
55644269
3193920000
0.13
1.57
1.74
100.00
Categories of Shareholders as on 31.03.2015
A. Equity Share Capital
Category
(A)
(B)
(C)
PROMOTERS
Indian Promoters
Foreign Promoters
Federal Agency of State Property Management of Russian
Federation (Rosimushchestvo)
NON-PROMOTER
FIIs/NRIs/ Foreign Banks/OCBs
FIs/Mutual Funds/UTI/Banks/Body Corporates
Others
TOTAL
B. Preference Share Capital
Category
(A)
46
No. of Shares
%
Body Corporate (Indian)
INSITEL Services Private Limited
9864470
100.00
TOTAL
9864470
100.00
I.
Physical Holding vs. Holding in Dematerialized Form:
As on 31st March, 2015, 99.96% of Shares are held in dematerialized form and the rest 0.04% in physical form. The Break-up
Physical vs. Demat shares is as listed below:
Category
No. of
Shareholders
PHYSICAL
% of total
Shareholders
No. of
Shares Held
% of
Shareholding
1158
6.37
1200192
0.04
NSDL
12480
68.67
3172909183
99.34
CDSL
4536
24.96
19810625
0.62
Total
18174
100.00
3193920000
100.00
DEMAT:
J.
International Security Identification Number (ISIN)
Security
ISIN
EQUITY SHARES OF RS. 10/- EACH
K.
INE159D01010
Address for Correspondence for Share Related Matters:
Karvy Computershare Private Limited (Registrar & Transfer Agent)
L.
Delhi Office:
Hyderabad Office:
305, New Delhi House,
27 Barakhamba Road,
Connaught Place, New Delhi-110001
Tel No. : 011-43681700
Fax No. : 011-46381710
E-mail ID: [email protected]
Karvy Selenium Tower B, Plot No 31 & 32,
Gachibowli, Financial District,
Nanakramguda, Serilingampally
Hyderabad – 500 008
Tel No.: 040-67161500
Fax No.:040-2331 1968
E-mail ID : [email protected]
Address for Investors Correspondence:
Company Secretary and Compliance Officer
Corporate Office:
Registered Office :
MTS India Towers, 334,
MTS Tower, 3, Amrapali Circle,
Udyog Vihar, Phase –IV,
Vaishali Nagar,
Gurgaon -122001, Haryana
Jaipur-302021, Rajasthan
Email : [email protected]
Email : [email protected]
Ph : 0124-4812500
Ph : 0141-5100343
Fax No. : 0124-4812825
Fax No. : 0141-5100390
Note: The Corporate Governance Report states the facts/figures as of March 31, 2015.
47
ANNEXURE - I
ANNUAL DECLARATION BY CEO ON ADHERENCE TO THE
SSTL’S CODE OF CONDUCT
I, Dmitry Shukov, Chief Executive Officer of Sistema ShyamTeleServices Limited (“the Company”) hereby confirm that the Company
has adopted a comprehensive Code of Conduct (“Code”) for its Board members and Senior Management Personnel and the Code is
available on the Company’s website.
I hereby confirm that all the Board Members and the Senior Management Personnel of the Company have affirmed compliance with the
Code of Conduct of the Company for the financial year ended 31st March, 2015 by submitting Annual Compliance Certificate as
required in terms of the Code of Conduct adopted by the Company.
Sd/Dmitry Shukov
Chief Executive Officer
Place: Gurgaon
Date: June 11, 2015
ANNEXURE - II
CEO & CFO Certification
We, Dmitry Shukov, Chief Executive Officer and Sergey Savchenko, Chief Financial Officer of Sistema ShyamTeleServices Limited
hereby certify that:
1.
We have reviewed the Financial Statements and Cash Flow Statement for the year ended 31st March, 2015 and to the best
of our knowledge and belief :
a)
these statements do not contain any materially untrue statement or omit any material fact or contain statements
that might be misleading;
b)
these statements together present a true and fair view of the Company’s affairs and are in compliance with existing
Accounting Standards, applicable laws and regulations.
2.
To the best of our knowledge and belief, no transactions entered into by the Company during the year ended 31st March,
2015 are fraudulent, illegal or violative of the Company’s code of conduct.
3.
We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated
the effectiveness of internal control systems of the Company pertaining to financial reporting.
4.
There has not been any significant change in internal control over financial reporting during the year under reference;
5.
There has not been any significant change in accounting policies during the year requiring disclosure in the notes to the
financial statements; and
6.
We are not aware of any instance during the year of significant fraud with involvement therein of the management or any
employee having a significant role in the Company’s internal control system over financial reporting.
Sd/Dmitry Shukov
Chief Executive Officer
Place: Gurgaon
Date: June 11, 2015
48
Sd/Sergey Savchenko
Chief Financial Officer
ANNEXURE - III
REMUNERATION POLICY
The Remuneration Policy of Sistema ShyamTeleServices Limited (SSTL) has been framed in accordance with the applicable provisions of the
Companies Act, 2013 and rules framed thereunder and the Articles of Association of the Company. The Policy includes the provisions relating
to remuneration of Board of Directors, Key Managerial Personnel and other employees in general.
The Policy has been formulated by the Nomination & Remuneration Committee of the Company and will be recommended to the Board of
Directors of the Company for its approval for implementation.
REMUNERATION PAYABLE TO BOARD OF DIRECTORS
The Company does not pay any remuneration to the Board of Directors other than Whole Time Director designated as Chief Executive
Officer and Independent Directors of the Company.
REMUNERATION PAYABLE TO INDEPENDENT DIRECTORS
The Independent Directors of the Company are not paid any remuneration other than sitting fee for their services for attending a Board
Meeting or a meeting of the Committee constituted by the Board in accordance with the approval of Nomination & Remuneration
Committee and Board of Directors of the Company and that shall be the sum as may be fixed by the Directors in accordance with the limits
as may be prescribed/approved by the Central Government from time to time under Companies Act, 2013 and the rules framed thereunder
including amendments thereof.
The Board of Directors has fixed an amount of Rs. 1,00,000/- and Rs. 50,000/- as payment of sitting fee to Independent Directors for
attending a Board Meeting or a meeting of the Committee constituted by the Board, respectively.
The Company will make all arrangements for Independent Directors including accommodation arrangements, travel arrangements etc. for
attending the Board, Committee and Shareholders’ meetings of the Company.
The criteria for selection and appointment of Independent Director(s) have been provided in Annexure “A” of this Policy. The criteria of
appointment and selection of Independent Director(s) provides the positive attributes, qualities and qualifications, a potential candidate
must possess to hold the position of Independent Director of SSTL.
REMUNERATION PAYABLE TO WHOLE TIME DIRECTOR DESIGNATED AS CHIEF EXECUTIVE OFFICER
The remuneration package of the Chief Executive Officer is decided by the Nomination and Remuneration Committee subject to approval
of Board of Directors and shareholders of the Company in accordance the requirements and limits as stipulated under the Companies Act,
2013 and / or other applicable laws as in force at the time of his/her appointment. The remuneration paid is determined keeping in view the
industry benchmark, the relative performance of the Company to the industry performance and review of remuneration packages of
managerial personnel of other organizations.
The elements of the remuneration package of the Chief Executive Officer comprises of salary, perquisites & allowances comprising of
Company maintained accommodation or house rent allowance, personnel allowance, leave travel allowance, club membership / facilities, use
of chauffeur driven Company car, telecommunication facilities at residence and other perquisites and allowances including Company’s
contribution to provident fund, gratuity and leave encashment facilities in accordance with rules of the Company.
The annual increments and performance incentive of the Chief Executive Officer are linked to his performance and are considered by the
Nomination & Remuneration Committee and recommended to the Board of Directors for its approval as well as to members, wherever
necessary, for their approval.
REMUNERATION PAYABLE TO KEY MANAGERIAL PERSONNEL (OTHER THAN WHOLE-TIME DIRECTOR) AND
SENIOR MANAGERIAL PERSONNEL
In case of Key Managerial Personnel (other than Whole-Time Director) and Senior Managerial Personnel, the remuneration paid is determined
keeping in view the industry benchmark, the relative performance of the Company to the industry performance and review of remuneration
packages of senior executive of other organizations. Perquisites and retirement benefits are paid according to the Company policy as
applicable to senior executives of the Company, subject to prescribed statutory ceiling.
The appointment and remuneration of Key Managerial Personnel (other than Whole-Time Director) and Senior Managerial Personnel are
decided by the Nomination and Remuneration Committee and recommended to the Board of Directors for its approval.
The annual increments and performance incentive are linked to their performance and are considered by the Nomination & Remuneration
Committee and recommended to the Board of Directors for its approval.
The detailed document regulating the policy of personnel compensation and their revisions (for different staff categories) is already in place.
REMUNERATION PAYABLE TO OTHER EMPLOYEES
The remuneration of employees largely consists of basic salary, perquisites, bonus and performance linked incentives.The components of the
total remuneration vary for different levels and are governed by the industry pattern, qualification & experience / merits, performance of each
employee.
The overall remuneration pattern of the employees is reviewed by the Nomination and Remuneration Committee on periodical basis. The
overall annual increments and performance linked incentive are considered and reviewed by the Nomination & Remuneration Committee
and recommended to the Board of Directors for its approval.
49
Annexure-A of Remuneration Policy
CRITERIA FOR APPOINTMENT AND SELECTION
OF INDEPENDENT DIRECTORS
The Nomination & Remuneration Committee, while evaluating the potential candidate(s) for the position of Independent Director(s),
will consider a variety of personal attributes, including experience, intellect, foresight, judgment and transparency, and will ensure that
these attributes match with the requirements as set out by the Board. Broadly, the attributes and qualities of the Independent Director
(s) consist of the following:
1.
Independent Directors must be capable of taking fair decisions without being influenced.
2.
Independent Directors are expected tobalance the decision-making process of the Board by constructively challenging the
Company’s strategy and exercise due diligence.
3.
Independent Directors should possessthe requisite business and industry expertise in the domain, in which SSTL operates.
4.
Independent Directors should be competent enough to work effectively like a team member as well as leader with the other
directors of the Board and committees.
5.
Independent Directors should contribute constructively in the Board’s deliberations.
Apart from the attributes and qualities as illustrated above, the Independent Director(s) must also comply with the following
criteria / requirements as contemplated under the provisions of the Companies Act, 2013:
1.
An independent director shall possess appropriate skills, experience and knowledge in one or more fields of finance, law,
management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related
to the company’s business.
2.
The Independent Directors must fulfill the requirements as provided in the definition of Independent Director as given below:
Definition of Independent Director (As per Section 149 of the Companies Act, 2013)
“An independent director in relation to a company, means a director other than a managing director or a whole-time director or a nominee
director,—
(a)
who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;
(b)
(i)
who is or was not a promoter of the company or its holding, subsidiary or associate company;
(ii)
who is not related to promoters or directors in the company, its holding, subsidiary or associate company;
(c)
who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors,
during the two immediately preceding financial years or during the current financial year;
(d)
none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or
their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount
as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;
(e)
who, neither himself nor any of his relatives—
(i)
holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or
associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be
appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in
which he is proposed to be appointed, of—
(A)
a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company;
or
(B)
any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company
amounting to ten per cent. or more of the gross turnover of such firm;
(iii)
holds together with his relatives two per cent. or more of the total voting power of the company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-fit organization that receives twenty-five per cent. or more of its
receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. or
more of the total voting power of the company.
50
I N D E P E N D E N T A U D I TO R S ’ R E P O RT
To
The Members of SISTEMA SHYAM TELESERVICES
LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial
statements of SISTEMA SHYAM TELESERVICES
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.
Management’s Responsibility for the Standalone Financial
Statements
The Company’s Board of Directors is responsible for the
matters stated in Section 134(5) of the Companies Act, 2013
(“the Act”) with respect to the preparation of these standalone
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company
in accordance with 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. This responsibility also includes
maintenance of adequate accounting records in accordance with
the provisions of the Act for safeguarding the assets of the
Company and for preventing and detecting 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.
Auditors’ Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required
to be included in the audit report under the provisions of the
Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on
Auditing specified under Section 143(10) of the Act. Those
Standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and 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 control relevant to the Company’s preparation
of the financial statements that give a true and fair view in order
to design audit procedures that are appropriate in the
circumstances, 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 accounting estimates made by
the Company’s Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone financial
statements give the information required by the Act in the
manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India, of the
state of affairs of the Company as at 31st March, 2015, and its
loss and its cash flows for the year ended on that date:
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor’s Report) Order,
2015 (“the Order”) issued by the Central Government in
terms of Section 143(11) of the Companies Act, 1956, we
give in the Annexure a statement on the matters specified
in paragraphs 3 and 4 of the Order.
2 As required by Section143(3) of the Act, we report that:
(a) We have sought and obtained all the information and
explanations which to the best of our knowledge and belief
were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by
law have been kept by the Company so far as it appears
from our examination of those books
(c) The Balance Sheet, the Statement of Profit and Loss, and
the Cash Flow Statement dealt with by this Report are in
agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under
Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014.
(e) On the basis of the written representations received from
the directors as on 31st March, 2015 taken on record by
the Board of Directors, none of the directors is disqualified
as on 31st March, 2015 from being appointed as a director
in terms of Section 164 (2) of the Act.
(f) With respect to the other matters to be included in the
Auditor’s Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the
explanations given to us:
i The Company has disclosed the impact of pending
litigations on its financial position in its financial
statements – Refer Note 26(i) and 34(i) to the financial
statements;
ii The Company did not have any long term contract
including derivative contracts for which there were
any material foreseeable losses - Refer Note 42 to the
financial statements;
iii There were no amounts which were required to be
transferred to the Investor Education and Protection
Fund by the Company. Refer Note 43 to the financial
statements.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm’s Registration No. 015125N)
Place : Gurgaon
Sd/Vijay Agarwal
Partner
Membership No: 094468
51
ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
(i) In respect of its fixed assets:
(a)
(vi)
We have broadly reviewed the cost records
maintained by the Company under sub-section (1) of
section 148 of the Companies Act, 2013 and are of the
opinion that, prima facie, the prescribed cost records
have been made and maintained. We have, however,
not made a detailed examination of the cost records
with a view to determine whether they are accurate
or complete.
(vii)
According to the information and explanations given
to us, in respect of statutory dues:
The Company has maintained proper records showing
full particulars, including quantitative details and
situation offixed assets.
(b) The fixed assets were physically verified during the
year by the Management in accordance with a regular
programme of verification which, in our opinion,
provides for physical verification of all the fixed assets
at reasonable intervals. According to the information
and explanation given to us, no material discrepancies
were noticed on such verification.
(a)
(ii)
The Company is providing telecom services and does
not hold any inventories. Accordingly clause (ii)(a),
(ii)(b) and (ii)(c) of the paragraph 3 of the Order are
not applicable for the Company.
(iii)
The Company has not granted any loans, secured or
unsecured, to companies, firms or other parties covered
in the Register maintained under Section 189 of the
Companies Act, 2013.
The Company has been regular in depositing
undisputed statutory dues, including Provident Fund,
Employees’ State Insurance,Income-tax, Sales Tax,
Wealth tax, Value Added Tax, Customs Duty, Cess and
other material statutory dues applicable to it with the
appropriate authorities.We are informed that Excise
Duty is not applicable to the Company and the
Company’s operations, during the year, did not give
rise to any liability for Investor Education and
Protection Fund.
(iv)
In our opinion and according to the information and
explanations given to us, there is an adequate internal
control system commensurate with the size of the
Company and the nature of its business for the
purchase of fixed assets and the sale of services. During
the course of our audit, there are no purchase of
inventory and sale of goods and we have not observed
any major weakness in such internal control system.
(b) There were no undisputed amounts payable in
respect of Provident Fund, Employees’ State Insurance,
Income-tax, Sales Tax, Wealth tax, Service Tax, Value
Added Tax, Investor Education and Protection Fund,
Customs Duty, Excise Duty, Cess and other material
statutory dues in arrears as at March 31, 2015 for a
period of more than six months from the date they
became payable.
(v)
to us, the Company has not accepted any deposit from
the public during the year, paragraph 3(v) of the Order
is not applicable.
(c)
Details of dues of Income-tax, Value Added Tax , Sales
Tax and Service Tax which have not been deposited as
at March 31, 2015 on account of disputes are given
below:
Name of the Statute
Nature of
Dues
Period to which the
amount pertains
Total disputed
Amount* (Rs in Million)
Amount Deposited
(Rs in Million)
Forum where the dispute
is pending
Income Tax Act, 1961
Income Tax
2006-07, 2008-09, 2010-11,
2011-12, 2012-13
112
51
Commissioner of
Income Tax (Appeals)
Sales Tax/ VAT
VAT
2008-09, 2011-12, 2013-14
3
1
Assessing Officer
Sales Tax/ VAT
VAT
2010-11
6
0
Add Commissioner
(Appeals) and State Tribunal
Sales Tax/ VAT
Finance Act, 1994
(Service tax provisions)
Finance Act, 1994
VAT
2013-14
27
0
High Court, Madras
Service Tax
2008-09, 2009-10
& 2010-11
141
15
Custom, Excise, service
tax Appellate Tribunal
Service Tax
2011-12
8
0
Commissioner, Appeal
*amount as per demand orders including interest and penalty wherever quantified in the order.
52
The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:
Name of the Statute
Nature of
Dues
Period to which the
amount pertains
Total disputed
Amount (Rs in Million)
Amount Deposited
(Rs in Million)
is pending
Income Tax
2008-09 & 2009-10
29
11
Income Tax Appellate Tribunal
VAT
2007-08, 2008-09 & 2009-10
2
1
Sales Tax/ VAT
Tax Board
There are no dues of Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited as on March 31, 2015 on account of
disputes.
(d) There are no amount that are due to be transferred
to the Investor Education and Protection Fund
in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made
thereunder
(viii)
The accumulated losses of the Company at the
end of the financial year are not less than fifty
percent of its net worth and the Company has
incurred cash losses during the financial year covered
by our audit and in the immediately preceding
financial year.
(ix)
In our opinion and according to the information
and explanations given to us, the Company has
not defaulted in repayment of dues to a bank and
debenture holders. There is no loan repayment due
to financial institutions.
(x)
According to the information and explanations
given to us, the Company has not given guarantees
for loans taken by others from banks and financial
institutions.
(xi)
to us, the Company has not taken any term loan during
the year.
(xii)
To the best of our knowledge and according to
the information and explanations given to us,
nofraud by the Company and no material fraud on
the Company has been noticed or reported during
the year.
Place : Gurgaon
Sd/Vijay Agarwal
Partner
53
BALANCE SHEET AS AT MARCH 31, 2015
(All amounts in Rupees million, except per share, debenture amounts unless stated otherwise )
Notes
———————
As at
March 31, 2015
———————
As at
March 31, 2014
———————
Equity and liabilities
Shareholders’ funds
Share capital
Reserves and surplus
3
4
32,038
(28,648)
———————
3,390
32,033
(15,780)
———————
16,253
Non-current liabilities
Long-term borrowings
Deferred payment liabilities
Other long-term liabilities
Long-term provisions
5
6
7
8
31,678
20,810
752
204
———————
53,444
30,974
20,948
2,536
206
———————
54,664
Current liabilities
Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions
9
10
11
12
6,183
4,923
10,114
1,180
———————
22,400
———————
79,234
———————
———————
4,613
7,076
2,012
———————
13,701
———————
84,618
———————
———————
13
13
31,439
33,479
381
8
4,851
209
———————
70,367
34,412
34,973
86
8
4,847
486
———————
74,812
426
5,111
2,601
729
———————
8,867
———————
79,234
———————
———————
399
5,660
3,157
590
———————
9,806
———————
84,618
———————
———————
TOTAL
Assets
Non-current assets
Fixed assets
Tangible assets
Intangible assets
Capital work-in-progress
Non-current investments
Long-term loans and advances
Other non-current assets
14
15
16
Current assets
Trade receivables
Cash and cash equivalents
Short-term loans and advances
Other current assets
17
18
19
20
TOTAL
See accompanying notes forming part of the financial statements
In terms of our report attached
For Deloitte Haskins & Sells
Firm Registration No. 015125N
Sd/Vijay Agarwal
Partner
Place : Gurgaon
54
1 - 44
For and on behalf of the Board of Directors
Sd/Dmitry Shukov
Whole Time Director & CEO
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2015
For the Year
ended
March 31, 2015
———————
For the Year
ended
March 31, 2014
———————
21
22
13,852
435
———————
14,287
———————
———————
11,876
576
———————
12,452
———————
———————
23
2,923
1,237
14,703
———————
18,863
———————
———————
(4,576)
5,661
6,300
———————
(16,537)
———————
———————
3,456
988
15,596
———————
20,040
———————
———————
(7,558)
6,670
5,402
———————
(19,660)
———————
———————
———————
———————
(16,537)
———————
———————
———————
———————
(19,660)
———————
———————
(636)
———————
(636)
———————
(17,173)
———————
———————
(1,068)
———————
(1,068)
———————
(20,728)
———————
———————
(5.18)
(5.38)
(6.16)
(6.49)
(5.18)
(5.38)
(6.16)
(6.49)
Notes
———————
Continuing Operations
Income
Revenue from operations (net)
Other income
Total revenue (I)
Expenses
Employee benefits expense
Revenue share (license fee and spectrum charges)
Other expenses
24
Total expenses (II)
Loss before interest, depreciation, amortisation and tax (I-II)
Finance costs
25
Depreciation and amortisation expenses
Loss before tax
Tax expenses
Current tax
Total tax expense
Loss after tax for the year from continuing operations (A)
Discontinuing operations
Loss before tax from discontinuing operations
Tax expense of discontinuing operations
28
Loss after tax for the year from discontinuing operations (B)
Loss for the year (A+B)
Loss per equity share [of Rs 10 each]
Basic
Computed on the basis of loss from continuing operations
Computed on the basis of total loss for the year
Diluted
31
1 - 44
Sd/Vijay Agarwal
Partner
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
Place : Gurgaon
55
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2015
For the Year ended
March 31, 2015
———————
For the Year ended
March 31, 2014
———————
(16,537)
(19,660)
(636)
———————
(17,173)
(1,068)
———————
(20,728)
6,299
5,402
322
645
Cash flow from operating activities
Net loss before tax from continuing operations
Net loss before tax from discontinuing operations
Net loss before tax
Non-cash adjustment to reconcile loss before tax to net cash flows
Depreciation and amortisation on continuing operation
Depreciation and amortisation on discontinuing operation
Unrealised foreign exchange loss, net
5
16
Amortisation of finance set up charges
424
755
Loss on sale of fixed assets, net
403
140
5,199
5,695
(433)
———————
(4,954)
———————
(574)
———————
(8,649)
———————
256
(867)
Increase/(decrease) in long-term provisions
(2)
28
Increase/(decrease) in short-term provisions
252
420
Interest expense and other finance charges
Interest Income
Operating loss before working capital changes
Movements in working capital
Increase/(decrease) in trade payables
Increase/(decrease) in other current liabilities
(146)
(1,430)
Increase/(decrease) in other long-term liabilities
(38)
(73)
Decrease/(increase) in trade receivables
(29)
(98)
Decrease/(increase) in long-term loans and advances
152
(288)
Decrease/(increase) in short-term loans and advances
Decrease/(increase) in other current assets
Cash used in Operations
Direct tax paid (tax deducted at source)
Net cash flow used in operating activities (A)
(208)
19
(167)
———————
(4,884)
———————
(112)
———————
(4,996)
———————
155
———————
(10,783)
———————
(150)
———————
(10,933)
———————
(2,234)
(2,203)
(202)
(272)
Cash flow from investing activities
Purchase of fixed assets including capital work in progress
Purchase of intangible assets
Proceeds from sale of intangible assets
-
36
Proceeds from sale of fixed assets
5
16
Interest received
Margin money deposit
439
532
-
1,370
(4,241)
(4,261)
4,042
———————
(2,191)
———————
5,872
———————
1,090
———————
Bank balances not considered as cash and cash equivalents
-Placed
-Matured
Net cash flow (used in)/from investing activities (B)
56
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2015
For the Year ended
March 31, 2015
———————
For the Year ended
March 31, 2014
———————
4,310
34,335
-
1,775
(1,128)
(27,794)
6,183
-
(77)
(173)
(2,849)
———————
6,439
———————
(748)
(3,786)
———————
4,357
———————
(5,486)
3,533
———————
2,785
———————
9,019
———————
3,533
———————
Cash on hand (refer note 38)
0
0
Cheques/ drafts on hand
4
2
Balances with banks in current accounts
117
62
Balances with banks in deposit accounts
2,664
———————
2,785
———————
3,469
———————
3,533
———————
Cash flow from financing activities
Proceeds from issuance of preference shares including share premium
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from short-term borrowings
Payment of finance setup cost
Interest paid
Net cash flow from financing activities (C)
Net decrease in cash and cash equivalents (A+B+C)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
Components of cash and cash equivalents
Total cash and cash equivalents (note 18)
1 - 44
Sd/Vijay Agarwal
Partner
Place : Gurgaon
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
57
Notes to financials statements for the year ended 31 March 2015
(All amounts in Rs million, except per share, debenture amounts unless stated otherwise)
1.
Background
(a)
Corporate Information
Sistema Shyam TeleServices Limited (‘the Company’ or ‘SSTL’), was incorporated on 20 April 1995. During financial year 200708, Joint Stock Financial Corporation SISTEMA (‘SISTEMA’) of Russia acquired the controlling stake in the Company and the
Company became subsidiary of SISTEMA. During 2010 - 11, the Company had allotted 547,312,918 equity shares on preferential
basis to The Federal Agency for State Property Management (“Rosimushchestvo”) of Russian Federation. As at 31 March 2015,
SISTEMA’s shareholding is 56.68% and continues to be the holding company of SSTL.
The Company had entered into a license agreement with OJSC Mobile Tele Systems, to use ‘MTS’ brand in India. The Company
commenced commercial operations on 26 March 2009 under the ‘MTS’ brand name.
(b)
Licence and Spectrum
The Company was awarded Basic Telephony Service License by Department of Telecommunications (DoT) on 4 March 1998 for
the Rajasthan service area. In accordance with the DoT guidelines on Unified Access (Basic and Cellular) Services License
(‘UAS’) dated 11 November 2003, the Company migrated to the UAS with effect from 14 November 2003. Further, on 12
December 2007, DoT allotted GSM spectrum in Rajasthan Circle under the original terms of the UAS agreement.
On 25 January 2008, the Company acquired UAS for 21 telecom circles, thus becoming licensee to provide its services across
the country.
The Hon’ble Supreme Court of India vide its judgment dated 2 February 2012 cancelled 21 licenses allotted to the Company in
January 2008. The Company participated in spectrum auction conducted by DoT in March 2013 and won the “ Right to Use of
Spectrum” in eight telecom circles of India namely Delhi, Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, Uttar Pradesh (West)
and West Bengal for a period of 20 years at a bid price of Rs 36,395.
On 3 October 2013 the DoT has issued Unified License - Access Services to the Company for eight telecom circles for 20
years. On 9 October 2013, the DoT has allotted the right to use spectrum in eight telecom circles for 20 years as per terms of
auction.
On 3 September 2014, the Company has received authorization under the Unified License to provide National Long Distance
(NLD) services.
On 29 April 2015, the Company has received authorization under the Unified License to provide Internet Service Provider (ISP)
category ‘A’ services
(c)
Scheme of arrangement
On 18 May 2006, the Hon’ble High Court of Rajasthan had approved the Scheme of Arrangement between Shyam Telecom
Limited (‘STL’), Shyam Telecom Manufacturing Limited (‘STML’), SSTL and Shyam Basic Infrastructure Projects Private Limited
(‘SBIPL’) (‘petitioner Companies’) (hereinafter referred to as ‘the Scheme’).
As per the Scheme, on 26 October 2006, the Company had transferred the equity shares held in the Company by STL.
Further the Scheme envisaged SSTL to be listed in the Bombay Stock Exchange and National Stock Exchange (‘the stock
exchanges’).
The Hon’ble High Court of Rajasthan, vide its order dated 7 August 2008, ordered that the Company shall within a maximum
period of 18 months from the date of the order initiate the process of listing the shares representing the issued capital of the
Company by adopting such route as may be permissible in law and shall carry out such compliance as may be required in law
including that of offering a specified percentage of the shares to the Public, for subscribing thereto, through book building
process, in the manner provided for under SEBI (DIP) Guidelines, 2000 and upon such steps being taken, BSE may issue such
order that may be required in law and as may be necessary for securing the said listing.
In the Board of Directors meeting held in December 2009, the Company has formed an “IPO and Listing Committee” to
review the progress, accord necessary approvals, provide guidance and directions in the matter of the listing of equity
shares of the Company and to initiate such further steps pursuant to directions issued by the Hon’ble High Court of
Rajasthan on 7 August 2008 as may be necessary. Further, the Board of Directors in the meeting held on 11 March 2010,
has approved the appointment of agencies recommended by the management of the Company as first merchant bankers for IPO
purposes.
On 2 February 2012, Honorable Supreme Court had ordered to cancel 21 telecom licenses of the Company acquired in January
2008, and subsequent regulatory and legal developments had led to uncertainty in Indian Telecom Sector. On 5 March 2012, the
Board of Directors of the Company had reviewed the regulatory and legal development and issues and its impact on the IPO and
listing plan of the Company. Based on their review, the Board of Directors decided to put on hold the process of listing and
review the matter as and when the regulatory environment on telecom licenses and spectrum is clear and stabilized. After the
58
fresh spectrum auction held on 11 March 2013, the Company acquired the right to use of spectrum for 8 telecom circles and the
telecom services in other service areas excluding Rajasthan were closed down. In view of the said changes to the telecom
business scenario, the Company has been forced to rework its strategies and the Board will decide about the strategy for listing
of shares.
Certain shareholders of the Company had filed an application before the Hon’ble High Court of Rajasthan, inter alia,
seeking listing of shares of the Company. The Hon’ble High Court vide order dated 9 January 2015 rejected the relief of listing
of shares and dismissed the application completely. The matter is pending before the Division Bench of the Hon’ble High Court
in appeal.
(d)
During the year ended 31 March 2015, the Company has incurred a loss of Rs 17,173 (accumulated loss of Rs 148,709 as on that
date), net current liability of Rs 13,533 and has a net worth of Rs 3,390 after adjusting accumulated losses.The holding Company
has impaired long-lived assets pertaining to SSTL in previous calendar years including year ending 31 December 2014 in its
consolidated financial statements.
However, based on the commitments and funding provided by the shareholders and the lenders so far, the Company is
confident that it would be able to arrange the funds for long term and operations, accordingly, these financial statements are
prepared on a going concern basis.
2.
Basis of preparation
‘The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles
in India (Indian GAAP) 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 and the relevant provisions of the Companies Act, 2013 (“the 2013 Act”)
/ Companies Act, 1956 (“the 1956 Act”), as applicable. The financial statements have been prepared on accrual basis under the
historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with
those followed in the previous year.
Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash
or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets
and liabilities as current and non-current.
Summary of significant accounting policies
(a)
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles in India requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these
estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these
estimates.
(b)
Tangible assets
Tangible assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price
including taxes and duties (net of cenvat credit) and any attributable cost of bringing the asset to its working condition for its
intended use. Capital spares / standby equipment are capitalised as part of the respective main assets, to which they relate to.
Any expenditure on upgradation of existing assets resulting in increase in their capacity and the benefits expected there from
beyond its previously assessed standard of performance is capitalised. All expenditure including capital inventory are shown as
capital work-in-progress until the assets are ready for commercial use. Capital work-in-progress is stated at cost less
provisions for slow moving / obsolete items, if any.
In respect of accounting periods commencing on or after 7 December 2006 exchange differences arising on reporting of the
long term foreign currency monetary items at rates different from those at which they were initially recorded during the
period, or reported in the previous financial statements are added to or deducted from the cost of the asset and are
depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable fixed asset.
Provision for slow moving and obsolescence related to capital work-in-progress is made based upon the ageing of the capital
assets and upon periodic technical evaluation undertaken by the Company.
(c)
Depreciation
(i)
Tangible assets are depreciated pro rata from the date on which the asset is ready for commercial use on a straight line method,
based on the following estimated useful economic lives of assets:
59
Useful Life (in years)
Leasehold land
Over the period of the lease
Leasehold improvements
Over the period of the lease or 10 years, whichever is lower
Building
20
Plant and equipment
3 to 18
Optical fibre and copper cable network
18
Network interface units
1 to 3
Computers
3
Furniture and fixtures
6
Office equipment
5
Vehicles
5
(ii)
Depreciation on tangible fixed assets has been provided as per the useful life prescribed in Schedule II to the 2013 Act other
than in respect of Building, Plant and equipment, Furniture and fixtures and vehicles, in whose case the life of the assets has been
assessed based on technical advice, taking into account the nature, the estimated usage, operating conditions of the asset, past
history of replacement, anticipated technological changes and maintenance practices etc.
(iii)
Depreciation on the amount capitalised on upgradation of existing assets is provided over the remaining useful lives of the
original assets.
(iv)
Fixed assets individually costing less than rupees five thousand are fully depreciated in the year of acquisition.
(v)
The Company, effective 1 April 2014, based on re-evaluation of economic useful lives by the management, as per the Companies
Act 2013, has revised its estimates for useful life of certain fixed assets as mentioned below.
Category of assets
Plant and equipment- towers
Office equipment
(d)
(e)
60
Estimated useful life till
31 March 2014 (In Years)
20
20
6
Revised useful life
w.e.f. 1 April 2014 (In Years)
18
18
5
Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed
assets. The management believes that depreciation rates currently used fairly reflect its estimate of the useful lives and residual
values of fixed assets.
Intangible assets
Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. At initial recognition, the
separately acquired intangible assets are recognised at cost. Following initial recognition, the intangible assets are carried at
cost less any accumulated amortisation and accumulated impairment losses, if any.
Indefeasible right to use (IRU) is amortised on straight line basis over the period of the agreement.
Software, which is not an integral part of hardware, is treated as an intangible asset and is amortized over its useful economic
life of 5 years.
The License entry fee has been recognized as an intangible asset and is amortised over the remainder of the license period of
20 years from the date of commencement of commercial operations. Fees paid for migration of the original licenses to the UAS
is amortised over the remainder of the license period of 20 years from the date of migration to UAS.
Licence fee paid for use of GSM spectrum under the existing UAS licence has been amortized over the remainder of the original
licence on straight line method.
The Right to Use Spectrum has been recognized as an intangible asset and is amortised over the period of 20 years from the
date of allocation of spectrum.
Impairment
The carrying amounts of assets are reviewed for impairment at each balance sheet date if there is any indication of impairment
based on internal and external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value at the pre-tax discount rate. After impairment,
depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the
carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
(f)
(g)
(h)
(i)
(ii)
(iii)
(i)
(j)
(i)
(ii)
(iii)
Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments;
all other investments are classified as long-term investments. Current investments are carried at lower of cost and fair market
value. Long-term investments are carried at cost, except the cost of investments acquired or partly acquired by the issue of
shares or other securities, which is the sum total of the fair value of the securities issued and other acquisition costs. Provision
for diminution in value of long-term investments is made to recognize a decline other than temporary in the value of the
investments.
Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and cash in hand and short term
investments with an original maturity of three months or less.
Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and nonmonetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using
the exchange rates that existed when the values were determined.
Exchange difference
Exchange differences, in respect of accounting periods commencing on or after 7 December 2006, arising on reporting of longterm foreign currency monetary items at rates different from those at which they were initially recorded during the period, or
reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, are added to
or deducted from the cost of the asset and are depreciated over the balance life of the asset.
Exchange differences arising on the settlement of monetary items or on reporting such monetary items of the Company at
rates different from those at which they were initially recorded during the year, or reported in previous financial statements,
are recognized as income or as expenses in the year in which they arise.
Finance set up costs
Finance set-up cost, including financial fees and cost of arranging and restructuring loans, is amortized over the period of the
loan or five years, whichever is lower, commencing from the date of the first draw-down of the related loan, on a straight-line
basis.
Revenue recognition and receivable
Service revenue
Service revenues are recognized as services are rendered and are net of discounts and waivers. Unbilled revenues resulting
from Unified Access Services provided from the billing cycle date to the end of month is recorded based on billing system
reports. Revenue from the sale of prepaid cards is recognised when the customer uses the services or the card expires,
whichever is earlier. Payment received from customers for sale of prepaid cards in excess of revenue recognised is deferred.
Processing fees on recharge coupons on introduction of new prepaid products, is being recognized over the estimated
customer relationship period or coupon validity period, whichever is lower.
Revenue from infrastructure services is recognized as services are rendered, in accordance with the terms of the related
contracts.
Indefeasible right of use contracts are accounted for as operating lease and revenue is recognized over the term of lease.
Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head “other income” in the statement of profit and loss.
Provision for doubtful debts
Receivables are stated net of provision for doubtful debts. The Company provides for entire outstanding net of security deposit
for active subscribers whose outstanding is more than 90 days, deactivated customers or in specific cases, where management
is of the view, that the amount for certain customers are not recoverable.
For receivables due from other operators on account for lease line revenue, infrastructure revenue and interconnection usage
revenue, the Company provides for amount outstanding for more than 180 days from the date of billing net of any amounts,
payable to the operators, or in specific cases, where management is of the view that the amounts for these customers are not
recoverable.
61
(k)
Retirement and other employee benefits
Short-term employee benefits
Short term employee benefits are recognized in the year during which the services have been rendered.
(i)
(ii)
(iii)
(iv)
(l)
(m)
(n)
(o)
(p)
62
Long-term employee benefits
Defined contribution plan
Provident fund and employees’ state insurance schemes
All employees of the Company are entitled to receive benefits under the provident fund, which is a defined contribution plan.
Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employees’ basic
salary. These contributions are made to the fund administered and managed by the Government of India. In addition, some
employees of the Company are covered under the employees’ state insurance schemes, which are also defined contribution
schemes recognized and administered by the Government of India.
The Company’s contributions to both these schemes are expensed in the statement of profit and loss. The Company has no
further obligations under these plans beyond its monthly contributions.
Other long term employee benefit
Compensated absences
The Company has provided for the liability at year end on account of unavailed earned leave as per the actuarial valuation as per
the Projected Unit Credit Method.
Defined benefit plan
Gratuity
The Company provides for gratuity obligations through a defined benefit retirement plan (the ‘Gratuity Plan’) covering all
employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment
based on the respective employee salary and years of employment with the Company. The Company provides for the gratuity
plan based on actuarial valuations in accordance with Accounting Standard 15 (revised), “Employee Benefits”. The Company
makes annual contributions to the Life Insurance Corporation of India (LIC) for the gratuity plan in respect of its employees.
Actuarial gains and losses are recognized in the statement of profit and loss as and when incurred.
Borrowing costs
Borrowing costs attributable to the acquisition or construction of those fixed asset which necessarily take substantial period
to get ready for their intended use, including interest attributable to the funding of license fees with respect to new circles up
to the date of commencement of commercial operations, are capitalized as a part of the cost of that asset. Other borrowing
costs are recognized as an expense in the period in which they are incurred.
Asset Retirement Obligations (ARO)
Asset retirement obligations are provided for when it is probable that an outflow of resources will be required to settle the
obligation and a reliable estimate of the amount can be made.
License Fees – Revenue Share
The Revenue-share fee on license is computed as per the licensing agreement at the prescribed rate and is expensed as
incurred.
Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Income Tax Act 1961. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be realized. If the Company has carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognized only if there is virtual certainty that such deferred tax assets can
be realized against future taxable profits. Unrecognized deferred tax assets of earlier years are re-assessed and recognized to
the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax
assets can be realized.
Earning per share
The earnings considered in ascertaining the Company’s Earnings per Share (‘EPS’) comprise the net profit / (loss) for the year.
The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year. The
weighted average number of equity shares outstanding during the year are adjusted for event of bonus element in a rights issue
to existing shareholders.
The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for
deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the
conversion of all dilutive potential equity shares.
(q)
Leases
(i)
Where the Company is lessee
Leases under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating
leases. Lease payments under operating leases are recognized as an expense in the statement of profit and loss on a straightline basis over the lease term.
(ii)
Where the Company is lessor
Assets subject to operating leases are included in fixed assets. Lease income on operating lease is recognised in the statement
of profit and loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the
statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the
statement of profit and loss.
(r)
Segment reporting
Identification of segment
The Company’s primary operating business is organised and managed according to the nature of services which is telecom
services. The analysis of geographical segment is based on the area in which the Company operates.
(s)
Provisions and Contingencies
A provision is recognised when the company has a present obligation as a result of past event, it is more likely than not that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the
current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present
obligation that is not recognised because it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Information on
contingent liabilities is disclosed in the notes to the financial statements, unless the possibility of an outflow of resources
embodying economic benefits is remote.
3.
Share Capital
Authorised shares
25,000,000,000 [2014 - 6,000,000,000] Equity Shares of Rs. 10/-each
6,000,000,000 [2014- 6,000,000,000] Preference Shares of Rs. 10/-each
Issued, subscribed and fully paid-up shares
3,193,920,000 [2014-3,193,920,000] Equity Shares of Rs. 10/- each
9,864,470 [2014 - 9,433,500] 0.01% Redeemible Non Convertible Non
Cumulative Preference Shares of Rs 10/- each
a)
31 March 2015
————————
31 March 2014
————————
250,000
60,000
————————
————————
60,000
60,000
————————
————————
31,939
31,939
99
————————
32,038
————————
94
————————
32,033
————————
Shares held by holding company and fellow subsidiaries:
Out of equity and preference shares issued by the Company, shares held by its holding company and its subsidiaries
are as below:
SISTEMA JSFC, the holding company
1,810,289,400 [2014- 1,810,289,400] equity sharesof Rs 10 each
INSITEL Services Private Limited, subsidiary of the holding company
9,864,470 [2014-9,433,500] 0.01% Redeemable Non Convertible Non
Cumulative Preference Shares of Rs 10 each
31 March 2015
————————
31 March 2014
————————
18,103
18,103
99
94
63
b)
Details of shareholders holding more than 5% shares in the Company
31 March 2015
No.
% holding
millions
in the class
Name of the Shareholders
Equity shares of Rs. 10/- each fully paid
Sistema JSFC, the holding company
Russian Federation
Intell Invofin India Pvt. Ltd.
A T Invofin India Pvt. Ltd.
Cellphone Credit & Securities India Pvt Ltd.
1,810
547
350
175
175
57
17
11
5
5
1,810
547
350
175
175
31 March 2015
No.
% holding
millions
in the class
0.01% Redeemable Non Convertible Non
Cumulative Preference Shares of Rs 10/- each fully paid
c)
31 March 2014
No.
% holding
millions
in the class
9
57
17
11
5
5
31 March 2014
No.
% holding
millions
in the class
100
9
100
The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled
to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares
held by the shareholders.
d)
Reconciliation of the shares outstanding at the beginning and at the end of the reporting period.
Equity Share
At the beginning of the year
Issued during the year
Outstanding at the end of the year
31 March 2015
No.
Rs.
millions
millions
3,194
31,939
3,194
31,939
Preference Shares
31 March 2015
31 March 2014
No. millions
Rs. millions
No. millions
Rs. millions
9
94
6
60
e)
31 March 2014
No.
Rs.
millions
millions
3,194
31,939
3,194
31,939
Issued during the year (refer note 38)
0
5
3
34
9
99
9
94
Terms of redemption of Non Cumulative Non-convertible Preference Shares
During the year ended 31 March 2015, the Company issued 430,970 (2014 - 3,433,500) Non Cumulative Non-convertible
Redeemable Preference Shares (“RPS”) of Rs 10 each fully paid-up at a premium of Rs 9,990 per share in multiple tranches. Non
Cumulative Non-convertible Preference Shares carry non-cumulative preferential dividend @ 0.01% p.a.
The RPS are redeemable upon the completion of ten years from the respective date of issue at the redemption premium as
mentioned below:Face value of tranches
Preference share capital
44
16
15
4
16
4
64
Preference share premium
43,856
16,084
14,773
4,070
15,457
4,306
Year of receipt
2012-13
2012-13
2013-14
2013-14
2013-14
2014-15
Redemption premium (p.a)
9.77%
9.63%
9.63%
9.80%
9.87%
9.87%
Further, any variation (extension or reduction) in the tenure is subject to the mutual agreement of both parties and extension
shall not exceed twenty years from the respective date of issue.
As per the requirement of the Companies Act, 2013 the premium payable on redemption of redeemable preference shares is
to be provided out of profits of the Company or out of the Company’s security premium account, before the shares are
redeemed. In view of the losses incurred by the Company and based upon an independent opinion obtained, the Company has
not made any provision in respect of premium payable on redemption of preference shares.
On 3 March 2014 the Company has filed an application for increasing the foreign direct investment (“FDI”) in the Company as
revised on 30 July 2014 (collectively “Company’s Application”) was filed for seeking the approval of the Foreign Investment
Promotion Board (“FIPB”) to increase the total FDI, including the direct and indirect FDI (including subsidiary), from 73.95% to
85.13%. FIPB vide its letter dated 28 October 2014 rejected the Company’s application. On 2 March 2015 the Company has filed
representation with the FIPB clarifying the grounds of rejection and is awaiting response from FIPB.
INSITEL Services Private Limited has given consent to convert the above preference shares into equity shares of the Company
at the option of the Company. The terms and conditions shall be agreed subject to seeking necessary approvals and fulfilling
other compliance requirements,
4)
Capital reserve (refer note 38)
Security premium account
Balance as per last financial statements
Additions during the year
Closing Balance
Deficit in the statement of profit and loss
Loss for the year
Net deficit in the statement of profit and loss
Total reserve and surplus
31 March 2015
————————
————————
31 March 2014
————————
————————
115,756
4,305
————————
120,061
————————
81,455
34,301
————————
115,756
————————
(131,536)
(17,173)
————————
(148,709)
————————
(28,648)
————————
————————
(110,808)
(20,728)
————————
(131,536)
————————
(15,780)
————————
————————
Debenture redemption reserve
The Company has not created Debenture Redemption Reserve amounting to Rs 3,200 due to insufficiency of profits.
5.
Particulars
Debentures
15.75% Redeemable, 1,280 Non-Convertible
Debentures of Rs. 10,000,000 each (Secured)
Term Loans
Indian Rupee loans from Others (Secured)
Foreign Currency loans from Banks (Unsecured)
Total
Above amounts include:
Secured Borrowings
Unsecured Borrowings
Amount disclosed under the head “Other Current Liabilities”
(Refer note 11)
Net amount
Non-Current Portion
Current Maturities
31 March 2015
31 March 2014
31 March 2015
31 March 2014
12,800
12,800
-
-
18,878
31,678
1
18,173
30,974
1
3,443
3,444
20
4,332
4,352
12,800
18,878
-
12,801
18,173
-
1
3,443
(3,444)
20
4,332
(4,352)
31,678
30,974
-
65
a)
15.75% Secured, Redeemable, Non-Convertible Debentures are redeemable at par as follows:
Period of Redemption
Amount to be Redemmed
4 equal quarterly installments commencing from 90
day from the 5th anniversary from date of allotment
4 equal quarterly installments commencing from 90th
th
25% of the face value of Debentures
The Company has an option to redeem all of the Debentures earlier than the above stated dates; however no redemption will
take place before the end of fifth year from the date of allotment i.e. 4 January 2012. These Debentures are secured by first
priority pari passu charge and hypothecation over all of the present and future movable assets of the Company and all of the
Company’s estate, rights, title, interest, property, benefit, claim and demand in, to, under and in respect of, such movable assets
other than those covered in (b) below. The Debentures were to be further secured by way of assignment of all the Unified
Access Service Licenses (“UAS Licenses”) issued by the DoT. However, while the said assignment was pending, 21 out of the
22 UAS Licenses of the Company were quashed by the judgment of the Hon’ble Supreme Court of India (refer note 1 (b)
above). Consequently, the Company has requested to the Debenture Trustee to waive the condition. (refer note 4 for
Debenture Redemption Reserve)
b)
Secured Indian rupee loan from others is secured against first and exclusive charge of the assets financed by the lender and is
repayable in five years in equal quarterly installments from their respective disbursement date.
c)
Foreign currency term loans from banks carries interest @ 6 months LIBOR plus mark up from 1.25% p.a. to 3.50% p.a. All the
foreign currency loans are secured by corporate guarantee of Sistema JSFC, the holding Company and are repayable after
moratorium period ranging from thirty to thirty six months from the first utilization date / respective facility agreement date
in ten to twelve half yearly installments.
d)
Summary of repayment terms of non-current portion of borrowings
6.
Particulars
Secured
1 to 2 years
-
Loan repayable in
3 to 5 years
12,800
Unsecured
6,348
11,762
After 5 years
768
Deferred payment liabilities (DPL)
Amount disclosed under ‘Other Current Liabilities’ (Refer Note 11)
31 March 2015
————————
20,887
31 March 2014
————————
20,997
(77)
————————
20,810
————————
(49)
————————
20,948
————————
a)
During March 2013, the Company acquired ‘Right to Use of Spectrum’ in eight Telecom Service Areas in the auction carried out
by DoT. As per the terms of the auction, the Company opted for deferred payment option for payment of the final bid price.
After adjusting upfront payment, the Company has recorded the balance amount payable over the deferred payment period as
DPL. The Company is required to pay interest @ 9.75% p.a. over the balance amount. There is a moratorium of 2 years for
payment of balance amount which shall be payable in 10 equal annual installments commencing from the third anniversary of the
scheduled date of first payment. As per the terms of the deferred payment option, the Company has issued financial bank
guarantee to DoT equal to one annual installment of Rs 3,904 to secure the annual installment. The amount payable to DoT as
at 31 March 2015 is Rs 20,132 (2014 – 20,132).
b)
The Company had entered into contracts with certain vendors for supply of network equipment and rendering of services
on deferred payments terms. On transfer of title and risk of the supplies and rendering of services as per the terms
of the respective vendor contracts, the Company has recorded the liabilities payable over the respective deferred
payment period as DPL. As per the arrangement with the vendors supplying network equipment, DPL to the extent of Rs 708
(2014 – Rs 816) shall be paid through the buyer’s credit facilities arranged by the vendors. DPL in respect of vendor payment do
not carry any interest until converted into buyer’s credit. The amount payable to the vendors as at 31 March 2015 is Rs 755
(2014 – Rs 865).
66
7)
Unaccrued revenue
Interst accrued but not due
Lease equilisation reserve
Other employee long term incentives
Others
7)
31 March 2015
————————
64
245
65
378
————————
752
————————
31 March 2014
————————
78
1,990
86
381
1
————————
2,536
————————
31 March 2015
————————
175
29
————————
204
————————
31 March 2014
————————
177
29
————————
206
————————
Asset retirement obligation
Employee Benefits:
Defined Benefit Plans
The employee’s gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan.The present value
of obligation is determined based on actuarial valuation using Project Unit Credit Method (PUC). The plan liability is the
actuarial present value of the projected accrued benefits as of the beginning and end of the period for active members.
Net gratuity expense recognized for the year ended 31 March 2015 and 31 March 2014 are as follow:
Particulars
31 March 2015
————————
32
11
(6)
(15)
————————
22
8
9%
Current service cost
Interest cost
Expected Return on plan assets
Actuarial (gain) / loss
Net Cost
Actual Return on Plan Assets
Actual Rate of Return on Plan Asset
Long term employee benefits:
31 March 2014
————————
36
9
(8)
(1)
————————
36
7
8.75%
Compensated absences expense recognized in salaries, wages and bonus for the year ended 31 March 2015 and 31 March 2014
are as follow:
Particulars
31 March 2015
31 March 2014
————————
————————
43
52
Interest cost
15
13
Actuarial loss
(10)
28
————————
————————
Net Cost
48
93
i)
The assumptions used to determine the obligations are as follows:
(a) Gratuity
31 March 2015
————————
8.00%
8.40%
8.00%
Discount Rate
Expected Rate of increase in compensation levels
Expected rate of return on assets
Retirement age (Years)
Mortality table
Ages
Up to 30 Years
From 31 to 44 years
Above 44 years
31 March 2014
————————
8.00%
8.40%
9.25%
58
58
IALM (2006 - 08)
Withdrawal Rate (%)
Withdrawal Rate (%)
3.00
3.00
2.00
2.00
1.00
1.00
67
(b) Compensated absences
Particulars
Discount rate
Expected rate of increase in compensation levels
ii)
31 March 2015
8.00%
8.40%
58
58
Mortality table
IALM (2006 - 08)
Ages
Withdrawal Rate (%)
Withdrawal Rate (%)
Up to 30 Years
3.00
3.00
From 31 to 44 years
2.00
2.00
Above 44 years
1.00
1.00
The principal assumptions are discount rate and salary growth rate. The discount rate is generally based upon the market
yields available on Government bonds at the accounting date with a term that matches the liabilities and the salary growth
rate takes account of inflation, seniority, promotion and other relevant factors on long term basis.
The expected rate of return on plan assets was based on the average long-term rate of return expected to prevail over
the next 15 to 20 years on the investments made by the LIC. This was based on the historical returns suitably adjusted for
movements in long-term government bond interest rates. The discount rate is based on the average yield on government
bonds of 20 years.
Reconciliation of opening and closing balances of obligations and plan assets
(a) Gratuity
Particulars
Change in Projected Benefit Obligation (PBO)
PBO at beginning of year
Interest cost
Benefits paid
Actuarial (gain)
Projected benefit obligation at year end
Change in plan assets:
Fair value of plan assets at beginning of year
Expected return on plan assets
Actuarial gain / (loss) (refer note 38)
Employer contribution
Claim paid from Fund
Fair value of plan assets at year end
Net funded Status of the plan
Net amount recognised as liability - current
31 March 2015
————————
31 March 2014
————————
139
33
11
(16)
(15)
152
116
36
9
(13)
(9)
139
79
6
85
67
67
83
8
(8)
9
(13)
79
60
60
Experience history - amount for the current and previous four years are as follows:
Gratuity
31 March
31 March
31 March
2015
2014
2013
Defined benefit obligation
152
139
116
Plan assets
85
79
83
Deficit
(67)
(60)
(33)
Experience adjustments on plan liabilities
15
17
3
Experience adjustments on plan assets (Refer note 38)
(0)
(8)
(2)
Particulars
iii)
68
31 March 2014
8.00%
8.40%
31 March
2012
78
71
(7)
10
(2)
31 March
2011
57
20
(37)
(2)
(1)
31 March 2015
31 March 2014
————————
————————
185
164
43
53
Interest cost
15
13
Benefits paid
(50)
(73)
Actuarial loss
(10)
28
183
185
183
185
Net amount recognized
183
185
The Company made annual contributions to the LIC of an amount advised by the LIC. The Company was not informed by
LIC of the investments made by the LIC or the break-down of plan assets by investment type.
iv)
Estimated contributions to be made in next financial year for gratuity is Rs 49 (2014- Rs 50) and for compensated absences
Rs 46 (2014- Rs 50).
Bifurcation of PBO at the end of year
31 March 2015
31 March 2014
————————
————————
Current liability
8
8
Non-current liability
175
177
Total PBO at the end of year
183
185
Gratuity
The major categories of plan assets as a percentage of the fair value of total plan assets are as follow:
Investment with LIC
9)
Short term borrowings
- Unsecured loans from bank
10)
31 March 2015
————————
100%
31 March 2014
————————
100%
31 March 2015
————————
6,183
6,183
31 March 2014
————————
-
Unsecured loans from a bank carries interest rate @10.8% and secured by unconditional and irrevocable stand by letter of
credit issued by a foreign bank at the request of a fellow subsidiary.
Trade payables
31 March 2015
31 March 2014
————————
————————
Sundry creditors*
- For expenses (other than acceptance)
4,923
4,613
4,923
4,613
*Due to related parties Rs 59 (2014 – Rs 46)
According to the records available with the Company, dues payable to entities that are classified as Micro and Small Enterprises
under the Micro, Small and Medium Enterprises Development Act, 2006 during the year is Rs nil (2014 - Rs nil). Accordingly,
disclosures relating to amounts unpaid as at the year-end together with the interest paid/ payable as required under the said Act
are not applicable. Further no interest has been paid or was payable to such parties under the said Act in the previous year.
Dues to Micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis
of information collected by the management. This has been relied upon by the auditors.
11)
31 March 2015
31 March 2014
————————
————————
3,444
4,352
77
49
771
733
4,131
181
285
460
67
60
708
738
152
151
139
150
36
42
303
159
1
1
————————
————————
10,114
7,076
————————
————————
Rs 40 (2014 - Rs 45) included under deposits from customers, represents refundable security deposits received from subscribers
on activation of services and are repayable on disconnection and security deposits received from channel partners.
Current maturities of long-term borrowings (refer note 5)
Current maturities of deferred payment liabilities (refer note 6)
Unaccrued revenue
Interest accrued but not due
Book overdraft
Gratuity
Sundry creditors for capital goods
Deposits from customers
Statutory dues
Advance from customers
Others - Interest accrued
- Others
a)
b)
Unearned revenue includes advance revenue received for dark fibre given to customers on IRU basis, unearned prepaid and
post-paid revenue for services yet to be availed by the customers.
12)
Provision for contingencies*
Provision for employee benefits - compensated absences (refer note 8)
*Net of Rs 1,202 paid (2014 – Rs 555)
31 March 2015
1,172
8
————————
1,180
————————
————————
31 March 2014
2,004
8
————————
2,012
————————
————————
69
13) (a) Tangible assets
Tangible assets
Freehold Leasehold
Leasehold
Plant and Optical fibre
Network
Furniture
Office
land
land
improvements Building equipment and copper interface units Computers and fixtures equipment Vehicles
Total
Cost or valuation
At 1 April 2013
34
80
648
470
42,288
2,714
443
448
97
265
33
Additions (refer note 38)
-
-
1
0
5,647
8
15
2
0
2
-
Disposals (refer note 38)
-
-
49
0
1,499
-
0
19
9
15
1
1,592
At 31 March 2014
34
80
600
470
46,436
2,722
458
431
88
252
32
51,603
47,520
5,675
-
-
6
0
2,842
5
0
3
3
8
-
2,867
Disposals
32
29
14
110
1,178
247
384
22
1
2
-
2,019
At 31 March 2015
2
51
592
360
48,100
2,480
74
412
90
258
32
52,451
-
Depreciation
At 1 April 2013
-
3
270
57
11,429
1,351
430
357
61
125
25
Charge for the year
-
1
68
24
4,203
137
19
54
11
41
3
14,108
4,561
-
-
27
0
1,420
-
0
16
6
8
1
1,478
At 31 March 2014
-
4
311
81
14,212
1,488
449
395
66
158
27
17,191
Charge for the year
-
1
65
22
4,322
157
8
20
10
58
2
4,665
-
1
8
26
401
0
383
22
1
2
-
At 31 March 2015
-
4
368
77
18,133
1,645
74
393
75
214
29
21,012
At 31 March 2014
34
76
289
389
32,224
1,234
9
36
22
94
5
34,412
At 31 March 2015
2
47
224
283
29,967
835
0
19
15
44
3
31,439
Net Block
844
-
(b) Intangible assets
Intangible assets
Software
License entry fees
Right to use spectrum
Indefeasible right to use
Total
Gross block
At 1 April 2013
496
645
35,163
919
37,223
Purchase
-
81
-
212
293
Disposal of assets
-
-
-
92
92
At 31 March 2014
496
726
35,163
1,039
37,424
Purchase
316
25
-
186
527
-
-
-
69
69
812
751
35,163
1,156
37,882
475
323
-
180
978
6
67
1,355
58
1,486
Disposal of assets
At 31 March 2015
Amortization
At 1 April 2013
Charge for the year-Addition
Charge for the year-Deletion
At 31 March 2014
Charge for the year-Deletion (refer note 38)
At 31 March 2015
-
-
-
13
13
481
390
1,355
225
2,451
41
69
1,771
76
1,957
0
0
-
5
5
522
459
3,126
296
4,403
15
336
33,808
814
34,973
290
292
32,037
860
33,479
Net block
At 31 March 2014
At 31 March 2015
i)
Addition to plant and equipment includes adjustment of Rs 982 (loss) (2014 - Rs 3,909 (loss)) on account of exchange differences
on long term foreign currency monetary items during the year. The total unamortized balance of foreign exchange differences
capitalised as at 31 March 2015 is Rs 6,796 (2014 – Rs 6,800).
ii)
Deletion from plant and equipment includes adjustment of Rs 247 (2014 – Rs nil) on account of settlement of amount payable
to vendor in respect of acquisition of fixed assets.
iii)
License entry fee with the gross carrying amount of Rs 322 (2014- Rs 322) are subject to first charge and assignment to secure
the Company’s debentures (refer note 5(a)).
iv)
The Company has created a first charge on pari passu basis on all of its tangible moveable assets including movable machinery,
70
machinery spares, tools and accessories, furniture, fixtures, vehicles, all other movable assets and current assets, both current
and future, under a non-fund based facility arrangement of Rs 7,670 (2014 – Rs 7,670) with a bank. In addition to this, a second
and subservient charge over all the present tangible movable assets of the Company has been created under a non-fund based
facility arrangement of Rs 1,500 (2014 – Rs 1,500) with another bank.
v)
Due to continuous losses, during the year the Company has conducted an impairment analysis for its tangible and intangible
assets, based on estimated future cash flow projections and estimated recoverable price of assets, management is of the view
that since carrying value of assets is lower than recoverable price/value in use no impairment is required.
vi)
Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has from 1 April 2014
adjusted an amount of Rs 37 in the statement of profit and loss.
The depreciation expense in the statement of profit and loss for the year is higher by Rs 27 consequent to the change in useful
life of certain assets.
14)
Non-current investments
31 March 2015
————————
31 March 2014
————————
8
————————
8
————————
8
————————
8
————————
31 March 2015
————————
31 March 2014
————————
39
438
9
416
3,949
————————
4,851
————————
12
428
8
288
4,111
————————
4,847
————————
Finance set up cost
Non-current bank balances (refer note 18 and note 38)
31 March 2015
————————
209
————————
209
————————
31 March 2014
————————
486
————————
486
————————
Trade receivables
31 March 2015
————————
31 March 2014
————————
16
557
————————
573
(557)
————————
16
17
462
————————
479
(462)
————————
17
18
392
137
————————
547
(137)
————————
410
————————
426
————————
13
369
68
————————
450
(68)
————————
382
————————
399
————————
Trade investments valued at cost
Unquoted in subsidiary company
750,000 [2014 - 750,000] Equity shares of Rs 10 each,
fully paid up in Shyam Internet Services Limited
15)
Long- term loans and advances
Unsecured, considered good
Advance for capital goods
Security deposits
Prepaid expenses
Advance income tax
Balances with customs, excise and other authorities
16)
17)
Debts outstanding for a period exceeding six months
from the date they are due for payment
Secured and considered good
Unsecured and considered good
Unsecured and considered doubtful
Less: Provision for doubtful debts
(A)
Debts outstanding for a period less than six months
(B)
Total (A + B)
71
18)
Particualrs
Non-current
31 March 2015 31 March 2014
Cash & cash equivalents (as per AS-3 cash flow statements)
Balances with banks:
In current accounts
Deposits with original maturity of less than three months
Cheques on hand
Total A
Other bank balances
Deposits with original maturity of more than 12 months
Deposits with original maturity of more than 3 months
but less than 12 months
Margin money deposit (refer note 38)
Total B
Amount disclosed under non current assets
Total A+B
19)
Current
31 March 2015 31 March 2014
117
2,664
4
0
——————
2,785
——————
——————
62
3,469
2
0
——————
3,533
——————
——————
-
-
-
-
0
——————
0
——————
(0)
——————
——————
0
——————
0
——————
(0)
——————
——————
590
1,736
——————
2,326
——————
——————
5,111
——————
367
1,760
——————
2,127
——————
——————
5,660
——————
Margin money deposits:
Margin money deposits of Rs 1,736 (2014 – Rs 1,760) are given as security under the terms of non fund facilities availed by the
Company from banks.
31 March 2015
31 March 2014
————————
————————
Advances recoverable in cash or kind or for value to be received:
131
991
Unsecured, considered doubtful
1,965
1,729
Prepaid expenses
226
196
Assets held for sale
197
143
Advance against equity in Shyam Internet Services Limited
1
Advance income tax
82
97
————————
————————
2,601
3,157
————————
————————
20)
Interest accrued on fixed deposits
Unbilled revenue
Finance set up cost
31 March 2015
————————
108
299
322
————————
729
————————
31 March 2014
————————
114
132
344
————————
590
————————
21)
Service revenue
31 March 2015
————————
13,852
————————
13,852
————————
31 March 2014
————————
11,876
————————
11,876
————————
22)
Other income
Interest
Miscelleneous income
31 March 2015
————————
433
2
————————
435
————————
31 March 2014
————————
574
2
————————
576
————————
23)
Contribution to provident and other funds
Staff welfare expenses
72
31 March 2015
31 March 2014
————————
————————
2,687
3,191
125
130
111
135
————————
————————
2,923
3,456
————————
————————
During the year, the Company has recognized the following amounts in the statement of Profit and Loss
Defined Contribution Plans
Particulars
31 March 2015
31 March 2014
Employer’s Contribution to Provident Fund #
94
97
Employer’s Contribution to ESI # (refer note 38)
# Included in contribution to provident and other funds.
24)
Other expenses
31 March 2015
————————
2,822
29
31 March 2014
————————
3,060
84
225
120
192
130
73
147
62
156
10
0
3,756
998
12
0
3,815
904
803
23
115
735
1,176
267
721
615
134
604
584
179
15
7
165
50
176
154
——————
14,703
——————
893
24
114
1,163
1,138
250
1,000
594
141
659
466
234
85
6
123
70
71
150
——————
15,596
——————
31 March 2015
————————
31 March 2014
————————
2,891
2,244
97
424
5
——————
5,661
——————
Provision for contingencies (net of amount paid under protest) and other provisions :-
3,574
2,063
262
755
16
——————
6,670
——————
Interconnect usage charges
Port charges and other network related costs
Power and fuel
Network
Others
Rent
Network
Others
Insurance
Network
Others (refer note 38)
Infrastructure sharing expenses
Lease line expenses
Repair and maintenance
Network
Building
Others
Advertisement and marketing expenses
Sales commission and incentives
Sales promotion expenses
Device subsidy
Other subscriber acquisition cost
Travelling and conveyance expenses
IT support and services expenses
Customer service and call centre expenses
Legal and professional fees
Rates and taxes
Auditors’ remuneration (refer note 37)
Provision for doubtful debts/ advances
Provision for contingencies
Loss on sale of fixed assets/write off
Miscellaneous expenses
Total
25)
Finance costs
Interest on:
- Term loans
- Others
Bank charges and commission
Amortisation of finance setup costs
Net loss on foreign currency transaction and translation
26)
The following table sets forth the movement in the provisions: The Company makes contingency provision for any sub-judicial
matters that may arise subsequent to the year end.
Description
Provisions for contingencies
Other Provisions
Asset retirement obligation (refer note 38)
FinancialYear
2015
2014
2015
2014
2015
2014
Opening
1,056
1,056
949
489
29
31
Additions
57
70
460
0
-
Adjustment*
(240)
(71)
(650)
(2)
Closing
873
1,056
299
949
29
29
*Adjustment in provision for contingency includes Rs 595 (2014 - Rs nil) adjusted against payment under protest, against which provision
was created in earlier years. Adjustment in other provisions includes Rs 489 (2014 – Rs nil) against disposal of fixed assets
27)
Income taxes
Deferred tax
During the year ended 31 March 2015, the Company has incurred loss as per books of account of Rs 17,173 (2014 - Rs 20,728),
aggregating to accumulated losses of Rs 148,709 (2014 - Rs 131,536), resulting into carry forward of tax losses. Though the
73
management is confident of generating profits in the future, in the absence of convincing evidence of virtual certainty, the
Company has not recognized any deferred tax assets resulting from the carried forward tax losses and unabsorbed depreciation.
Further, no deferred tax liabilities on account of temporary timing differences have been recognized as it would be set off
against these deferred tax assets.
28)
Discontinuing operation
The Company on 21 February 2013 closed telecom services in ten Telecom Circles namely Assam, Andhra Pradesh, Bihar,
Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab and on 11 March 2013 closed
telecom services in three Telecom Circles namely Mumbai, Maharashtra and Uttar Pradesh (East) The closure of telecom
services has been done in consequence of the Order(s)/ judgment of Honorable Supreme Court of India of 2 February 2012
and 11 March 2013.The Company is in the process of redeployment / disposal of assets and settlement of contractual obligation
and liabilities of these thirteen Telecom Circles..
The following statement shows the revenue and expenses of discontinuing operations:
31 March 2015
31 March 2014
————————
————————
Revenue*
46
Expenses
-Others**
21
388
-Loss on sale of fixed assets
227
10
————————
————————
Loss from discontued operations
(248)
(352)
Finance costs
66
71
Depreciation and amortization
322
645
————————
————————
Loss before tax
(636)
(1,068)
Income-tax expense
————————
————————
Loss after tax
(636)
(1,068)
————————
————————
*The Service revenue in discontinued operations is on account of services provided during the period 1 April 2013 till date of
closure i.e. 10 April 2013 in three circles Mumbai, Maharashtra and UP (East).
** For certain parties, the Company has reached settlement or negotiations are at final stage and accordingly, on the best
estimates, amounts have been paid/adjusted/provided for in the financial statements.
Note: The above statement does not include common corporate expenses such as marketing costs, interest on loans that are
not allocated to discontinued circles.
The carrying amounts of total assets and liabilities of discontinuing operations are as follows:
31 March 2015
31 March 2014
————————
————————
Total Assets#
1,340
4,630
Total Liabilities
1,115
1,645
# Include fixed assets of Rs 1,078 (2014 - Rs. 4,038), where the Company is in the process of re-deployment. Fixed assets redeployed during the year in active circles have been re-classified.
The net cash flows attributable to the discontinued operations are stated below:
31 March 2015*
————————
(347)
(2)
29)
(i)
(ii)
74
31 March 2014
————————
Operating activities
330
Investing activities
(331)
Financing activities (refer note 38)
(0)
*The above amounts are funded from bank balances of continuing circles.
Related party disclosures
In accordance with requirement of Accounting Standard 18 – Related Party Disclosures, the names of related parties where
control exists and / or with whom transactions have taken place during the year and description of relationships as identified
and certified by the Management are:
Name of related party where control exists
Relation
Name of the related party
—————————————————————
—————————————————————
Holding company
Sistema JSFC
Subsidiary company
Shyam Internet Services Limited (SISL)
Names of other related parties with whom transactions have taken place during the year
Key management personnel:
Relation
—————————————————————
—————————————————————
Key management personnel
-Vsevolod Rozanov (till 31 May 2013)
- Dmitry Shukov (from 1 June 2013)
(iii)
List of fellow subsidiaries is as below :
- OJSC Intellect Telecom
- Sitronics Telecom Solutions
- OJSC Mobile Telesystems
- Sitronics Intracom India Private Limited
- Sitronics India Private Limited
- Insitel Services Private Ltd
- LLC “NVision Special projects
Transactions with related parties
Particulars
Car hire charges
(recovered)
Interest on Loan
(Grossed Up)
Loan repayment
Internet charges
(service taken)
Leaseline revenue
(received)
Maintenance services
Project Services
Professional Fees
Equipments/software
purchase
IT services taken
Brand fees
Managerial remuneration
Issuance of redeemable
preference shares
Sale of assets (refer note 38)
Refund of Advance Giving for Investment in
Shyam Internet Services Limited (SISL)
Holding Subsidary
Co
Co
Sistema
SISL
OJSC
JSFC
Intellect
Telecom
(2)
(445)
(12,482)
-
5
(5)
40
(23)
1
4
(25)
(3)
-
Nature of relationship
Fellow subsidaries
Sitronics
Telecom
Solutions
(39)
(104)
-
KMP
OJSC
LLC “NVision
Sitronics
Mobile
Special
Intracom
Tele Systems
projects”
India Pvt Ltd
15
(12)
-
42
-
82
(44)
14
(23)
-
Sitronics
India
Pvt. Ltd.
Insitel
Services
Pvt Ltd
Vsevolod
Rozanov
Dmitry
Shukov
(8)
(2)
7
(21)
-
4,310
(34,335)
(0)
-
(127)
-
70
(37)
-
(Figure in bracket are for previous year)
Balance outstanding as on 31 March 2015
Particulars
Investment including
advance against equity
Trade payable
(refer note 38)
Holding Subsidary
Co
Co
Sistema
SISL
OJSC
JSFC
Intellect
Telecom
-
8
(9)
(1)
-
Fellow subsidaries
Sitronics
Telecom
Solutions
-
KMP
OJSC
LLC “NVision
Sitronics
Mobile
Special
Intracom
Tele Systems
projects”
India Pvt Ltd
6
(5)
0
-
36
(29)
Sitronics
India
Pvt. Ltd.
Insitel
Services
Pvt Ltd
Vsevolod
Rozanov
Dmitry
Shukov
1
(1)
-
-
3
-
The remuneration to the key managerial personnel (‘KMP’) does not include the provisions made for gratuity, compensated absences
as they are determined on an actuarial basis for the Company as a whole. Bonus is included in KMP remuneration only when amount
became due for payment on fulfilling certain conditions.
JSFC Sistema, holding company, has given corporate guarantee to certain lenders for various fund and non fund facilities availed by the
Company.
75
30)
Lease commitments
a)
Where the Company is a lessee
The Company has entered into various lease agreements for leased premises, which expire at various dates over the next
fifteen years. Lease rental expense for the year was Rs 241 (2014 - Rs 279).
Future lease payments under operating leases are as follows:
31 March 2015
31 March 2014
————————
————————
Payable not later than one year
199
234
Payable later than one year and not later than five years
485
569
Payable later than five years
222
183
————————
————————
906
986
————————
————————
The escalation clause includes escalation at various periodic levels ranging from 0 to 15 percent includes option of renewal
from 0 to 15 years and there are no restrictions imposed on lease arrangements.
Where the Company is a lessor
Indefeasible Right to Use (IRU)
The Company has entered into Indefeasible Right of Use contract for use of optical fiber with telecom operators for a period
of 15 years. The gross carrying amount and accumulated depreciation of the optical fiber is Rs 244 (2014 - Rs 244) and Rs 142
(2014 - Rs 130). The income and depreciation recognised in the statement of profit and loss for the year is Rs 14 (2014 -Rs 13)
and Rs 12 (2014 – Rs 12) respectively.
Future minimum lease receipts under operating leases are as follows:
b)
(i)
31 March 2015
31 March 2014
————————
————————
14
14
55
55
10
23
————————
————————
79
92
————————
————————
The Company has also entered into an agreement to give optical fiber in exchange on IRU basis for a period of 15 years. Due
to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated
depreciation of the asset given on operating lease as at 31 March 2015 and accordingly, disclosures required by AS 19 is not
given.
Recoverable not later than one year
Recoverable later than one year and not later than five years
Recoverable later than five years
(ii)
31)
32)
Earnings per share (EPS)
Particualrs
Net loss after tax as per statement of profit and loss
Weighted average number of equity shares in calculating basic and diluted EPS
Loss per Share (equity shares, par value of Rs 10 each) Basic and diluted (in Rs)
Net loss after tax as per statement of profit and loss from continuing operations
31 March 2014
(20,728)
3,193,920,000
(6.49)
(19,660)
3,193,920,000
(6.16)
Particulars of unhedged foreign currency exposure as at 31 March 2015
Particulars
Import creditors
Loans
Interest payable
Trade receivables (refer note 38)
33)
31 March 2015
(17,173)
3,193,920,000
(5.38)
(16,537)
3,193,920,000
(5.18)
31 March 2015
Amount in Rs
Amount in USD
681
11
22,320
357
174
3
2
0
Capital commitments
Estimated value of contracts remaining to be executed on capital
account and not provided for (net of advances)
For lease commitments, refer note 30
31 March 2014
Amount in Rs Amount in USD
794
13
22,504
376
175
3
4
0
31 March 2015
————————
31 March 2014
————————
782
————————
553
————————
The Company has other commitments for purchase orders which are issued after considering requirements as per operating
cycle for purchase of services, employee benefits. The Company does not have any long term commitment or material noncancelable contractual commitments/contracts which might have a material impact on the financial statements.
76
34)
Contingent liabilities
(i)
Matter under Litigation
-Income tax
-Entry tax and VAT
-Service tax
-DoT demands (refer note 34 (a) (i) & (ii) below)
-Demand from operators (refer note 34 (b) below)
-Demand for compensation (refer note 34 (c) below)
-Others
(A)
(ii)
Others
-DoT demands (refer note 34 (a) (iii) below)
-Others
(B)
Total (A+B)
31 March 2015
————————
141
23
149
1,340
190
585
114
————————
2,542
————————
31 March 2014
————————
97
43
139
2,271
190
612
160
————————
3,512
————————
6,369
438
————————
6,807
————————
————————
9,349
————————
8
————————
8
————————
————————
3,520
————————
The management believes that the outcome of these contingencies will be favorable and that a loss is not probable.
(a)
DoT demands
i) It also includes disputed demands for penalty in respect of alleged non compliance of electromagnetic field (EMF) procedural
norms by the Company. Petitions are pending before Hon’ble Supreme Court.
ii) The DoT has raised demands for payment of license fees, spectrum usages charges (“SUC”) and interest/penalty thereon for
various financial years on account of difference in interpretation of Adjusted Gross Revenue (AGR) and other assessment
related matters. The Company has contested these demands by filing petition/s with the Hon’ble TDSAT. In its Order dated 23
April 2015 (“the Order”), the Hon’ble TDSAT set aside all the demands under dispute and directed to the DoT to rework
demands for the license fees and SUC payable by the Company in light of the findings, observations and directions made in the
Order. Accordingly, the demands of Rs 1,097 have not been included in above DoT demands.
iii) During the year, the DoT has issued a show cause notice of Rs 6,369 towards One Time Spectrum Charges (“the Charges”) for
continuation of its services, post cancellation of its 21 telecom licenses, from 2 February 2012 till closure of services in 13
service areas and till last valid date of the licenses in 8 service areas where the Company secured spectrum in the auction
conducted by the DoT and new licenses.
The Company has submitted its reply to the DoT on 06 January 2015 and the matter is pending with the DoT. The Company,
based on the independent legal opinion, expects no financial liability in this matter as it continued its services in accordance
with the directions of the Hon’ble Supreme Court of India only which were issued from time to time post cancellation of its
telecom licenses
(b)
Demand from operators
During financial year 2008-09, the Company received demands from telecom operator aggregating to Rs 190 on account of
revision of access charges for the period from June 2001 to May 2003. On 27 April 2005 Hon’ble TDSAT has struck down the
unilateral revision in the rates of access charges by telecom operator. Telecom Operator has preferred an appeal in Hon’ble
Supreme Court against the order of TDSAT. Considering that the final decision is pending with the Hon’ble Supreme Court,
the Company has disclosed the amount under dispute of Rs 190 as contingent liability.
(c)
Demands for compensation
During the year ended 31 March 2013, certain passive infrastructure vendors (‘the Vendors’) has raised demands for compensation
of Rs 585 (2014 – Rs 612) due to premature termination of the respective contracts by the Company as a result of discontinuation
of operations in the thirteen telecom circles in pursuance of the Order issued by the Hon’ble Supreme Court of India related
to cancellation of Company’s Telecom Licenses (Also refer note 1(b)). The Vendors served notice in term of the dispute
resolution mechanism as defined in the contracts during 2014. Out of the Vendors, settlement has been reached with one
vendor.
The Company, based on independent legal opinion, believes the demand by the other Vendor to be not tenable, since the
discontinuance of operations is a ‘Force Majeure Act’ and not the act of the Company
77
35)
Expenditure in foreign currency (on accrual basis)
Interest
Finance setup costs
Project management and maintainance services
Advertisement and marketing expenses - MTS brand fee
Other services
36)
Payment to auditors (excluding service tax)
Statutory audit
Other services
Reimbursement of out of pocket expenses (refer note 38)
38)
31 March 2014
————————
1,007
174
217
13
384
7
————————
1,802
————————
31 March 2015
————————
8
18
————————
26
————————
31 March 2014
————————
14
11
————————
25
————————
31 March 2015
————————
4
3
0
————————
7
————————
31 March 2014
————————
4
2
0
————————
6
————————
Earning in foreign currency (on accrual basis)
Data branding
International inroaming
37)
31 March 2015
————————
554
88
136
15
118
11
————————
922
————————
Details of rounded off amounts
The financial statements are presented in Rs million. Those items which are required to be disclosed and which are not
represented in the financial statements due to rounding off to nearest million are given as follows:
Note
3
4
8
8
13(a)
Description
Perference shares issued during the year
Capital Reserve
Gratuity - Actuarial gain/loss
Gratuity - Experience adjustment of plan assets
Tangible Assets
- Building - Cost or valuation
Additions
Disposal
- Depreciation - disposal
-Network interface units - Cost or valuation
Additions
Disposal
-Furniture and fixtures - Cost or valuation
Additions
-Optical fibre and copper
13 (b) Intangible Assets
-Amortization - Charge for the year-Deletion - software
-Amortization - Charge for the year-Deletion - License
entry fees
18
Cash and cash equivalents - cash on hand
18
Other bank balances - margin money deposit
23
24
Insurance others
26
Provision for contingencies and other provisions
28
Discontinued operations
-Financing activities
29
Related party transactions
LLC “NVision Special projects” (Trade payable)
Insitel Services Private Ltd - Sale of assets
32
Particulars of unhedged foreign currency - Trade receivables
37
Payment to auditors
40
Kerala Commercial Tax Act, 2003
78
31 March 2015
————————
0.431
0.006
0.555
(0.430)
31 March 2014
————————
0.006
-
0.429
-
0.418
0.009
0.001
0.068
-
0.159
0.114
-
0.306
0.020
-
(0.030)
-
0.030
0.159
0.205
0.170
0.181
0.360
0.464
0.196
0.144
0.249
-
-
(0.027)
0.495
0.600
0.115
0.279
0.059
0.250
-
39)
Segmental reporting
The primary segment reporting format is determined on the basis of business segment. The Company has only one business
segment, which is providing unified access services. Accordingly, the amounts appearing in these financial statements relate to
this primary business segment. The secondary segment reporting format is determined on the basis of geographical area in
which the Company provides services. The Company operates only in one geographical segment namely, India.
40)
Details of dues of Income-tax, Sales Tax, Value added tax and Service Tax which have not been deposited as on 31 March 2015
on account of disputes are given below:
Name of the Statute
Nature of
Dues
Income Tax
Period to which the
amount pertains
Total Disputed
Amount*
Amount
Deposited
112
51
60
2006-07 to 2008-09,2010-11,
2011-12 and 2012-13
Amount not
Deposited
Forum where the
dispute is pending
Commissioner of Income
tax (Appeal)
UP VAT Act, 2008
VAT
2011-12 and 2013-14
2
1
1
Assessing Officer
UP VAT Act, 2008
VAT
2010-11
6
-
6
Add Commissioner (Appeals)
and State Tribunal
Kerala Commercial Tax Act,
2003 (refer note 38)
VAT
2008-09 and 2011-12
1
0
1
Assessing Officer
Tamilnadu VAT Act, 2006
VAT
2013-14
Finance Act, 1994
(Service Tax Provisions)
Service
Tax
Finance Act, 1994
Service Tax
2008-09, 2009-10
and 2010-11
2011-12
27
-
27
141
15
126
8
-
8
High Court, Madras
Custom, Excise, Service
Tax Appellate Tribunal
Commissioner,Appeal
*Amount as per demand orders including interest and penalty wherever quantified in the order
Name of the Statute
Nature of
Dues
Income Tax
Rajasthan VAT Act, 2003
VAT
Period to which the
amount pertains
Total Disputed
Amount
2008-09 & 2009-10
2007-08, 2008-09 & 2009-10
Amount
Deposited
Amount
(Rs. in Mn)
29
11
18
2
1
1
Forum where the
dispute is pending
Tax Board
There are no dues of Customs Duty, Excise Duty and Cess which have not been deposited as on 31 March 2015 on account of
disputes
41)
Value of imports calculated on CIF basis
31 March 2015
————————
1,221
Import of capital equipment and spares
31 March 2014
————————
1,173
42)
The Company does not have any long term contracts including derivative contracts for which there are any material foreseeable
losses.
43)
There were no amounts which were required to be transferred to Investor Education and Protection Fund (IEPF).
44)
Previous years comparatives
Previous year’s comparatives have been reclassified/regrouped where necessary to conform with current year’s presentation.
Place : Gurgaon
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
79
I N D E P E N D E N T A U D I TO R S ’ R E P O RT
To
Auditor’s Responsibility
The Members of SISTEMA SHYAM TELESERVICES
LIMITED
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. While
Report on the Consolidated Financial Statements
conducting the audit, we have taken into account the provisions
of the Act, the accounting and auditing standards and matters
We have audited the accompanying consolidated financial
statements of SISTEMA SHYAM TELESERVICES
LIMITED (hereinafter referred to as “the Holding Company”)
and its subsidiary (the Holding Company and its subsidiary
together referred to as “the Group”), comprising of the
Consolidated Balance Sheet as at 31st March, 2015, the
Consolidated Statement of Profit and Loss, the Consolidated
Cash Flow Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory
information (hereinafter referred to as “the consolidated financial
statements”).
Management’s Responsibility for the Consolidated
Financial Statements
The Holding Company’s Board of Directors is responsible for
the preparation of these consolidated financial statements in
terms of the requirements of the Companies Act, 2013
(hereinafter referred to as “the Act”) that give a true and fair
view of the consolidated financial position, consolidated financial
performance and consolidated cash flows of the Group in
accordance with 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.The respective Board of Directors of the companies
included in the Group are responsible for maintenance of
adequate accounting records in accordance with the provisions
of the Act for safeguarding the assets of the Group and for
preventing and detecting frauds and other irregularities; the
selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent;
and the design,implementation and maintenance of adequate
internal financial 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,
which have been used for the purpose of preparation of the
consolidated financial statements by the Directors of the Holding
Company, as aforesaid.
80
which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on
Auditing specified under Section 143(10) of the Act. Those
Standards require that we comply with ethical requirements
and plan and perform theaudit to obtain reasonable assurance
about whether the consolidated financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the
consolidated financial statements. The procedures selected
depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control
relevant to the Holding Company’s preparation of the
consolidated financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the
circumstances but not for the purpose of expressing an opinion
on whether the Holding Company has an adequate internal
financial controls system over financial reporting in place and
the operating effectiveness of such controls. An audit also
includes evaluating the appropriateness of the accounting policies
used and the reasonableness of the accounting estimates made
by the Holding Company’s Board of Directors, as well as
evaluating the overall presentation of the consolidated financial
statements.
We believe that the audit evidence obtained by us and the audit
evidence obtained by the other auditorsin terms of their reports
referred to in Other Matters paragraph below, issufficient and
appropriate to provide a basis for our audit opinion on the
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid consolidated
financial statements give the information required by the Act in
the manner sorequired and give a true and fair view in conformity
with the accounting principles generally accepted in India, of the
consolidated state of affairs of the Group, as at 31st March,
Flow Statement dealt with by this Report are in agreement
2015, and their consolidated loss and their consolidated cash
flows for the year ended on that date.
with the relevant books of account maintained for the
purpose of preparation of the consolidated financial
statements.
Other Matters
We did not audit the financial statements of the subsidiary viz.,
Shyam Internet Services Limited, whose financial statements
d)
reflect total assets of Rs. 17 million as at March 31, 2015, total
revenues of Rs. 55 million and net cash flows amounting to Rs.
0.87 million for the year ended on that date, as considered in
the consolidated financial statements.These financial statements
Companies (Accounts) Rules, 2014.
e)
Holding Company and the reports of the statutory auditor
of its subsidiary company incorporated in India, none of
consolidated financial statements, in so far as it relates to the
amounts and disclosures included in respect of the subsidiary,
the directors of the Group companies is disqualified as on
31st March, 2015 from being appointed as a director in
and our report in terms of sub-section (3) and (11) of Section
143 of the Act, insofar as it relates to the aforesaid subsidiary, is
Our opinion on the consolidated 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 and the reports of the other
auditors and the financial statements certified by the management.
Report on Other Legal and Regulatory Requirements
1.
As required by the Companies (Auditor’s Report) Order,
On the basis of the written representations received from
the directors of the Holding Company as on 31st March,
2015 taken on record by the Board of Directors of the
have been audited by other auditor whose reports have been
furnished to us by the management and our opinion on the
based solely on the reports of other auditor.
In our opinion, the aforesaid consolidated financial
statements comply with the Accounting Standards specified
under Section 133 of the Act, read with Rule 7 of the
terms of Section 164 (2) of the Act.
f)
With respect to the other matters to be included in the
Auditor’s Report in accordance with Rule11 of the
Companies (Audit and Auditor’s) Rules, 2014, in our
opinion and to the best of our information and according
to the explanations given to us:
i. The consolidated financial statements disclose the
impact of pending litigations on the consolidated
financial position of the Group– Refer Note 25(i) and
34(i) to the consolidated financial statements;
2015 (“the Order”), issued by the Central Government of
India in terms of sub-section (11) of Section 143 of the Act,
ii. The Group did not have any long term contract including
based on the comments in the auditors’ reports of the
Holding company and subsidiary company, incorporated in
derivative contracts for which there were any material
foreseeable losses - Refer Note 36 to the consolidated
India, we give in the Annexure a statement on the matters
specified in paragraphs 3 and 4 of the Order.
financial statements;
2.
As required by Section 143(3) of the Act, we report that:
a)
We have sought and obtained all the information and
explanations which to the best of our knowledge and belief
were necessary for the purposes of our audit of the
iii. There were no amounts which were required to be
transferred to the Investor Education and Protection
Fund by the Holding Company and its subsidiary
company. Refer Note 37 to the consolidated financial
statements.
aforesaid consolidated financial statements.
b)
In our opinion, proper books of account as required by law
relating to preparation of the aforesaid consolidated
financial statements have been kept so far as it appears
from our examination of those books and the reports of
the other auditors.
c)
The Consolidated Balance Sheet, the Consolidated
Statement of Profit and Loss, and the Consolidated Cash
Place : Gurgaon
Sd/Vijay Agarwal
Partner
81
ANNEXURE TO THE INDEPENDENT AUDITOR’S REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
“Our reporting on the Order includes subsidiary company
incorporated in India, to which the Order is applicable, which
have been audited by other auditor and our report in respect
the entity is based solely on the report of the other auditor, to
the extent considered applicable for reporting under the Order
in the case of the consolidated financial statements.”
(i)
In respect of the fixed assets of the Holding Company and
subsidiary company, incorporated in India:
(a)
The respective entities have maintained proper
records showing full particulars, including quantitative
details and situation of fixed assets.
(b)
The fixed assets were physically verified during the
year by the Management of the respective entities in
accordance with a regular programme of verification
which, in our opinion and the opinion of the other
auditor, provides for physical verification of all the fixed
assets at reasonable intervals. According to the
information and explanation given to us and the other
auditor, no material discrepancies were noticed on
such verification.
(ii) The Holding Company and subsidiary company
incorporated in India is providing telecom services and
does not hold any inventories. Accordingly clause (ii)(a),
(ii)(b) and (ii)(c) of the paragraph 3 of the Order are not
applicable for the Company.
(v) According to the information and explanations given
to us, the Holding Company and subsidiary company,
incorporated in India have not accepted any deposit
during the year, paragraph 3(v) of the Order is not
applicable.
(vi) According to the information and explanations given to us
we have broadly reviewed the cost records maintained by
the Company under sub-section (1) of section 148 of the
Companies Act, 2013 and are of the opinion that, prima
facie, the prescribed cost records have been made and
maintained. We have, however, not made a detailed
examination of the cost records with a view to determine
whether they are accurate or complete.In the opinion of
the other auditor of the subsidiary company incorporated
in Indiais not required to maintain cost records in pursuant
to the Companies (Cost Records and Audit) Rules, 2014,
as amended prescribed by the Central Government under
subsection (1) of Section 148 of the Companies Act, 2013.
(vii) According to the information and explanations given to us,
in respect of statutory dues of the Holding Company and
subsidiary company incorporated in India.
(a)
(iii) The Holding Company and subsidiary company
incorporated in India have not granted any loans, securedor
unsecured, to companies, firms or other parties covered
in the Register maintained under Section 189 of the
Companies Act, 2013 by the respective entities.
(iv) In our opinion and the opinion of the other auditor and
according to the information and explanations given to us
and the other auditor, there is an adequate internal control
system in the Holding Company, subsidiary company
incorporated in India, commensurate with the size of the
respective entities and the nature of their business for the
purchase of fixed assets and for the sale of services and
There are no purchase of inventory and sale of goods during
the course of our and the other auditor audit and there is
no continuing failure to correct major weaknesses in such
internal control system has been observed.
82
The respective entities have been regular in depositing
undisputed statutory dues, including Provident Fund,
Employees’ State Insurance, Income-tax, Sales Tax,
Wealth Tax, Service Tax, Customs Duty, Excise Duty,
Value Added Tax, Cess and other material statutory
dues applicable to the respective entities with the
appropriate authorities.We are informed that Excise
Duty is not applicable to the Group and the Group’s
operations, during the year, did not give rise to any
liability for Investor Education and Protection Fund.
(b) There were no undisputed amounts payable by the
respective entities in respect of Provident Fund,
Employees’ State Insurance, Income-tax, Sales Tax,
Wealth Tax, Service Tax, Customs Duty, Excise Duty,
Value Added Tax, Cess and other material statutory
dues in arrears as at March 31, 2014 for a period of
morethan six months from the date they became
payable.
(c)
Details of dues of Income-tax, Value Added Tax , Sales
Tax and Service Taxwhich have not been deposited as
at March 31, 2015 on account of disputes by the
aforesaid entities are given below.
Name of the Statute
Nature of
Dues
Period to which the
amount pertains
Total disputed
Amount Deposited
(Rs in Million)
is pending
Income Tax
2006-07, 2008-09, 2010-11,
2011-12, 2012-13
112
51
Commissioner of
Income Tax (Appeals)
Sales Tax/ VAT
VAT
2008-09, 2011-12, 2013-14
3
1
Assessing Officer
Sales Tax/ VAT
VAT
2010-11
6
0
Add Commissioner
(Appeals) and State Tribunal
Sales Tax/ VAT
Finance Act, 1994
Finance Act, 1994
VAT
2013-14
27
0
High Court, Madras
Service Tax
2008-09, 2009-10
& 2010-11
141
15
Custom, Excise, service
tax Appellate Tribunal
Service Tax
2011-12
8
0
Commissioner,Appeal
*amount as per demand orders including interest and penalty wherever quantified in the order.
The following matters have been decided in favour of the Group, although the department has preferred appeals at higher levels:
Name of the Statute
Nature of
Dues
Period to which the
amount pertains
Total disputed
Amount Deposited
(Rs in Million)
is pending
Income Tax
2008-09 & 2009-10
29
11
VAT
2007-08, 2008-09 & 2009-10
2
1
Sales Tax/ VAT
There are no dues of Customs Duty,Wealth Tax, Excise
to us, the Holding Company and subsidiary company
Duty and Cess which have not been deposited as on
incorporated in India have not given guarantees for
March 31, 2015 on account of disputes.
loans taken by others from banks and financial
institutions.
(d) There are no amounts that are due to be transferred
by the aforesaid entities to the Investor Education and
(viii)
(xi)
In our opinion and the opinion of the other auditor
Protection Fund in accordance with the relevant
and according to the information and explanations
provisions of the Companies Act, 1956 (1 of 1956) and
given to us and the other auditor, the term loans have
Rules made thereunder
not been taken by the Holding Company and subsidiary
company.
The consolidated accumulated losses of the Group at
the end of the financial year are not less than fifty
(ix)
(xii)
To the best of our knowledge and according to the
percent of the consolidated net worth and the Group
information and explanations given to us and the other
have incurred cash losses on a consolidated basis during
auditor, no fraud by the Holding Company, its subsidiary
the financial year covered by our audit and in the
company incorporated in India and no material fraud
immediately preceding financial year.
on the Holding Company, its subsidiary company
In our opinion and according to the information and
explanations given to us, the Holding Company have
not defaulted in the repayment of dues to financial
institutions, banks and debenture holders and In the
opinion of the other auditor of the subsidiary company
incorporated in India has been noticed or reported
during the year.
has not taken any loan from banks and financial
institutions or debenture holders.
(x)
Tax Board
Place : Gurgaon
Sd/Vijay Agarwal
Partner
83
Consolidated Balance Sheet as at March 31, 2015
Notes
———————
As at
March 31, 2015
———————
As at
March 31, 2014
———————
Equity and liabilities
Shareholders’ funds
Share capital
3
4
32,038
(28,645)
———————
3,393
32,033
(15,778)
———————
16,255
Non-current liabilities
5
6
7
8
31,678
20,810
752
204
———————
53,444
30,974
20,948
2,536
206
———————
54,664
Current liabilities
Short-term borrowings
Trade payables
9
10
11
12
6,183
4,921
10,118
1,180
———————
22,402
———————
79,239
———————
———————
4,614
7,081
2,012
———————
13,707
———————
84,626
———————
———————
13
13
31,440
33,479
381
4,851
209
———————
70,360
34,413
34,973
86
4,847
486
———————
74,805
427
5,114
2,609
729
———————
8,879
———————
79,239
———————
———————
404
5,663
3,164
590
———————
9,821
———————
84,626
———————
———————
TOTAL
Assets
Non-current assets
Fixed assets
Tangible assets
Intangible assets
Capital work-in-progress
Long-term loans and advances
14
15
Current assets
Trade receivables
16
17
18
19
TOTAL
See accompanying notes forming part of the consolidated
financial statements
Sd/Vijay Agarwal
Partner
Place : Gurgaon
84
‘1 - 41
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
Consolidated Profit and Loss Account for the Year Ended March 31, 2015
For the Year
ended
March 31, 2015
———————
For the Year
ended
March 31, 2014
———————
20
21
13,862
435
———————
14,297
———————
———————
11,889
576
———————
12,465
———————
———————
22
2,923
1,237
14,711
———————
18,871
———————
———————
(4,574)
5,661
6,300
———————
(16,535)
———————
———————
3,456
988
15,584
———————
20,028
———————
———————
(7,563)
6,670
5,402
———————
(19,635)
———————
———————
———————
———————
(16,535)
———————
———————
———————
———————
(19,635)
———————
———————
(636)
———————
(636)
———————
(17,171)
———————
———————
(1,068)
———————
(1,068)
———————
(20,703)
———————
———————
(5.18)
(5.38)
(6.15)
(6.48)
(5.18)
(5.38)
(6.15)
(6.48)
Notes
———————
Continuing operations
Income
Other income
Total revenue (I)
Expenses
Revenue share (license fee and spectrum charges)
Other expenses
23
Total expenses (II)
Loss before interest, depreciation, amortisation and tax (I-II)
Finance costs
24
Depreciation and amortisation expenses
Loss before tax
Tax expenses
Current tax
Total tax expense
Loss after tax for the year from continuing operations (A)
Discontinuing operations
Loss before tax from discontinuing operations
Tax expense of discontinuing operations
27
Loss after tax for the year from discontinuing operations (B)
Loss for the year (A+B)
Loss per equity share [of Rs 10 each]
Basic
Diluted
See accompanying notes forming part of the consolidated
financial statements
30
‘1 - 41
Sd/Vijay Agarwal
Partner
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
Place : Gurgaon
85
Consolidated Cash Flow Statement for the Year Ended March 31, 2015
For the Year ended
March 31, 2015
———————
For the Year ended
March 31, 2014
———————
(16,535)
(19,635)
(636)
———————
(17,171)
(1,068)
———————
(20,703)
6,299
5,402
322
645
Cash flow from operating activities
Net loss before tax from continuing operations
Net loss before tax from discontinuing operations
Net loss before tax
Non-cash adjustment to reconcile loss before tax to net cash flows
Depreciation and amortisation on continuing operation
Depreciation and amortisation on discontinuing operation
Unrealised foreign exchange loss, net
5
16
Amortisation of finance set up charges
424
755
Loss on sale of fixed assets, net
403
140
5,199
5,695
(433)
———————
(4,952)
———————
(574)
———————
(8,624)
———————
253
(867)
(2)
28
Interest expense and other finance charges
Interest Income
Operating loss before working capital changes
Movements in working capital
Increase/(decrease) in trade payables
Increase/(decrease) in long-term provisions
Increase/(decrease) in short-term provisions
252
420
(148)
(1,433)
Increase/(decrease) in other long-term liabilities
(38)
(73)
Decrease/(increase) in trade receivables
(26)
(121)
Increase/(decrease) in other current liabilities
Decrease/(increase) in long-term loans and advances
Decrease/(increase) in short-term loans and advances
Decrease/(increase) in other current assets
Cash used in Operations
Direct tax paid
Net cash flow used in operating activities (A)
152
(288)
(208)
19
(167)
———————
(4,884)
———————
(112)
———————
(4,996)
———————
155
———————
(10,784)
———————
(151)
———————
(10,935)
———————
(2,234)
(2,203)
(202)
(272)
-
36
Cash flow from investing activities
Purchase of fixed assets including capital work in progress
Purchase of intangible assets
Proceeds from sale of intangible assets
Proceeds from sale of fixed assets
Interest received
Margin money deposit
5
16
439
532
-
1,370
(4,241)
(4,261)
4,042
———————
(2,191)
———————
5,872
———————
1,090
———————
Bank balances not considered as cash and cash equivalents
-Placed
-Matured
Net cash flow (used in)/from investing activities (B)
86
Consolidated Cash Flow Statement for the Year Ended March 31, 2015
Cash flow from financing activities
For the Year ended
March 31, 2015
———————
For the Year ended
March 31, 2014
———————
4,310
34,335
-
1,775
(1,128)
(27,794)
6,183
-
Proceeds from issuance of preference shares including share premium
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from short-term borrowings
Payment of finance setup cost
Interest paid
Net cash flow from financing activities (C)
Net decrease in cash and cash equivalents (A+B+C)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
(77)
(173)
(2,849)
(3,786)
———————
———————
6,439
4,357
———————
———————
(748)
(5,488)
3,534
9,022
———————
———————
2,786
3,534
———————
———————
0
0
Components of cash and cash equivalents
Cheques/ drafts on hand
Balances with banks in current accounts
Balances with banks in deposit accounts
Total cash and cash equivalents (note 17)
4
2
118
63
2,664
3,469
———————
———————
2,786
3,534
———————
———————
See accompanying notes forming part of the consolidated financial statements 1 - 41
Sd/Vijay Agarwal
Partner
Place : Gurgaon
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
87
Notes to Consolidated Financials Statements for the Year Ended 31 March 2015
1.
Background
(a)
Corporate Information
Sistema ShyamTeleServices Limited (‘the Company’ or ‘SSTL’), was incorporated on 20 April 1995. During financial year 200708, Joint Stock Financial Corporation SISTEMA (‘SISTEMA’) of Russia acquired the controlling stake in the Company and the
Company became subsidiary of SISTEMA. During 2010 - 11, the Company had allotted 547,312,918 equity shares on preferential
basis to The Federal Agency for State Property Management (“Rosimushchestvo”) of Russian Federation. As at 31 March 2015,
SISTEMA’s shareholding is 56.68% and continues to be the holding company of SSTL.
The Company had entered into a license agreement with OJSC Mobile Tele Systems, to use ‘MTS’ brand in India. The Company
commenced commercial operations on 26 March 2009 under the ‘MTS’ brand name.
The subsidiary Shyam Internet Services Limited (SISL) is in the business of internet services. SISL has been granted category
‘B’ license on 18 December 2003 by Department of Telecommunication for a period of 16 years for providing internet
services in the state of Rajasthan. SISL was granted LOI and has applied for category ‘A’ license for all India operation on
10th December 2008
(b)
During the year ended 31 March 2015, the Company has incurred a loss of Rs 17,171 (accumulated loss of Rs 148,706 as on that
date), net current liability of Rs 13,523 and has a net worth of Rs 3,393 after adjusting accumulated losses.The holding Company
has impaired long-lived assets pertaining to SSTL in previous calendar years including year ending 31 December 2014 in its
However, based on the commitments and funding provided by the shareholders and the lenders so far, the Company is
confident that it would be able to arrange the funds for long term and operations, accordingly, these financial statements are
prepared on a going concern basis.
2.
Basis of preparation of consolidated financial statements
The consolidated financial statements of the Company and its subsidiary have been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP) 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 and the relevant provisions of the
Companies Act, 2013 (“the 2013 Act”) / Companies Act, 1956 (“the 1956 Act”), as applicable. The consolidated financial
statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the
preparation of the consolidated financial statements are consistent with those followed in the previous year except for change
in the accounting policy for depreciation as more fully described in Note 2.1 (d).
Based on the nature of activities of the Company and its subsidiary and the normal time between acquisition of assets and their
realization in cash or cash equivalents, the Company and its subsidiary has determined its operating cycle as 12 months for the
purpose of classification of its assets and liabilities as current and non-current.
2.1)
Summary of significant accounting policies
(a)
Use of estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in India
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the consolidated financial statements and the results of operations during the
reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions,
actual results could differ from these estimates.
(b)
Principles of consolidation
The consolidated financial statements relate to the Company and its subsidiary SISL. The consolidated financial statements have
been prepared on the following basis.
(i)
(ii)
(iii)
88
The financial statements of the subsidiary company used in the consolidation are drawn upto the same reporting period as that
of the Company i.e. 31 March 2015.
The financial statements of the Company and its subsidiary company have been combined on a line-by-line basis by adding
together like items of assets, liabilities, income and expenses, after eliminating intra-group balances, intra-group transactions.
‘The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other
events in similar circumstances.
The consolidated financial statements include the financials of only subsidiary SISL in which the Company has 100% holding.
(c)
Tangible assets
Tangible assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price
including taxes and duties (net of cenvat credit) and any attributable cost of bringing the asset to its working condition for its
intended use. Capital spares / standby equipment are capitalised as part of the respective main assets, to which they relate to.
Any expenditure on upgradation of existing assets resulting in increase in their capacity and the benefits expected there from
beyond its previously assessed standard of performance is capitalised. All expenditure including capital inventory are shown as
capital work-in-progress until the assets are ready for commercial use. Capital work-in-progress is stated at cost less
provisions for slow moving / obsolete items, if any.
In respect of accounting periods commencing on or after 7 December 2006 exchange differences arising on reporting of the
long term foreign currency monetary items at rates different from those at which they were initially recorded during the
period, or reported in the previous financial statements are added to or deducted from the cost of the asset and are
depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable fixed asset.
Provision for slow moving and obsolescence related to capital work-in-progress is made based upon the ageing of the capital
assets and upon periodic technical evaluation undertaken by the Company
(d)
Depreciation
(i)
Tangible assets are depreciated pro rata from the date on which the asset is ready for commercial use on a straight line method,
based on the following estimated useful economic lives of assets:
Useful Life (in years)
Leasehold land
Over the period of the lease
Leasehold improvements
Over the period of the lease or 10 years, whichever is lower
Building
20
Plant and equipment
3 to 18
18
Network interface units
1 to 3
Computers
3
Furniture and fixtures
6
Office equipment
5
Vehicles
5
(ii)
Depreciation on tangible fixed assets has been provided as per the useful life prescribed in Schedule II to the 2013 Act other
than in respect of Building, Plant and equipment, Furniture and fixtures and vehicles, in whose case the life of the assets has been
assessed based on technical advice, taking into account the nature, the estimated usage, operating conditions of the asset, past
history of replacement, anticipated technological changes and maintenance practices etc.
(iii)
Depreciation on the amount capitalised on upgradation of existing assets is provided over the remaining useful lives of the
original assets.
(iv)
Fixed assets individually costing less than rupees five thousand are fully depreciated in the year of acquisition.
(v)
The Company, effective 1 April 2014, based on re-evaluation of economic useful lives by the management, as per the Companies
Act 2013, has revised its estimates for useful life of certain fixed assets as mentioned below.
Category of assets
Plant and equipment- towers
Office equipment
Estimated useful life till
31 March 2014 (In Years)
20
20
6
Revised useful life
w.e.f. 1 April 2014 (In Years)
18
18
5
Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed
assets. The management believes that depreciation rates currently used fairly reflect its estimate of the useful lives and residual
values of fixed assets.
(e)
Intangible assets
Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. At initial recognition, the
separately acquired intangible assets are recognised at cost. Following initial recognition, the intangible assets are carried at
cost less any accumulated amortisation and accumulated impairment losses, if any.
89
Indefeasible right to use (IRU) is amortised on straight line basis over the period of the agreement.
Software, which is not an integral part of hardware, is treated as an intangible asset and is amortized over its useful economic
life of 5 years.
The License entry fee has been recognized as an intangible asset and is amortised over the remainder of the license period of
20 years from the date of commencement of commercial operations. Fees paid for migration of the original licenses to the UAS
is amortised over the remainder of the license period of 20 years from the date of migration to UAS.
Licence fee paid for use of GSM spectrum under the existing UAS licence has been amortized over the remainder of the original
licence on straight line method.
The Right to Use Spectrum has been recognized as an intangible asset and is amortised over the period of 20 years from the
date of allocation of spectrum.
(f)
Impairment
The carrying amounts of assets are reviewed for impairment at each balance sheet date if there is any indication of impairment
based on internal and external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value at the pre-tax discount rate. After impairment,
depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the
carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
(g)
Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments;
all other investments are classified as long-term investments. Current investments are carried at lower of cost and fair market
value. Long-term investments are carried at cost, except the cost of investments acquired or partly acquired by the issue of
shares or other securities, which is the sum total of the fair value of the securities issued and other acquisition costs. Provision
for diminution in value of long-term investments is made to recognize a decline other than temporary in the value of the
investments.
(h)
Cash and cash equivalents for the purpose of consolidated cash flow statement comprise cash at bank and cash in hand and
short term investments with an original maturity of three months or less.
(i)
Foreign currency transactions
(i)
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency at the date of the transaction.
(ii)
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and nonmonetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using
the exchange rates that existed when the values were determined.
(iii)
Exchange difference
Exchange differences, in respect of accounting periods commencing on or after 7 December 2006, arising on reporting of longterm foreign currency monetary items at rates different from those at which they were initially recorded during the period, or
reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, are added to
or deducted from the cost of the asset and are depreciated over the balance life of the asset.
Exchange differences arising on the settlement of monetary items or on reporting such monetary items of the Company at
rates different from those at which they were initially recorded during the year, or reported in previous financial statements,
are recognized as income or as expenses in the year in which they arise.
(j)
Finance set up costs
Finance set-up cost, including financial fees and cost of arranging and restructuring loans, is amortized over the period of the
loan or five years, whichever is lower, commencing from the date of the first draw-down of the related loan, on a straight-line
basis.
90
(k)
(i)
(ii)
(iii)
(l)
Revenue recognition and receivable
Service revenue
Service revenues are recognized as services are rendered and are net of discounts and waivers. Unbilled revenues resulting
from Unified Access Services provided from the billing cycle date to the end of month is recorded based on billing system
reports. Revenue from the sale of prepaid cards is recognised when the customer uses the services or the card expires,
whichever is earlier. Payment received from customers for sale of prepaid cards in excess of revenue recognised is deferred.
Processing fees on recharge coupons on introduction of new prepaid products, is being recognized over the estimated
customer relationship period or coupon validity period, whichever is lower.
Revenue from infrastructure services is recognized as services are rendered, in accordance with the terms of the related
contracts.
Indefeasible right of use contracts are accounted for as operating lease and revenue is recognized over the term of lease.
Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head “other income” in the consolidated statement of profit and loss.
Receivables are stated net of provision for doubtful debts. The Company provides for entire outstanding net of security deposit
for active subscribers whose outstanding is more than 90 days, deactivated customers or in specific cases, where management
is of the view, that the amount for certain customers are not recoverable.
For receivables due from other operators on account for lease line revenue, infrastructure revenue and interconnection usage
revenue, the Company provides for amount outstanding for more than 180 days from the date of billing net of any amounts,
payable to the operators, or in specific cases, where management is of the view that the amounts for these customers are not
recoverable.
Retirement and other employee benefits
Short-term employee benefits
Short term employee benefits are recognized in the year during which the services have been rendered.
(i)
(ii)
(iii)
(iv)
(m)
Long-term employee benefits
Defined contribution plan
Provident fund and employees’ state insurance schemes
All employees of the Company are entitled to receive benefits under the provident fund, which is a defined contribution plan.
Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employees’ basic
salary. These contributions are made to the fund administered and managed by the Government of India. In addition, some
employees of the Company are covered under the employees’ state insurance schemes, which are also defined contribution
schemes recognized and administered by the Government of India.
The Company’s contributions to both these schemes are expensed in the consolidated statement of profit and loss. The
Company has no further obligations under these plans beyond its monthly contributions.
Other long term employee benefit
The Company has provided for the liability at year end on account of unavailed earned leave as per the actuarial valuation as per
the Projected Unit Credit Method.
Defined benefit plan
Gratuity
The Company provides for gratuity obligations through a defined benefit retirement plan (the ‘Gratuity Plan’) covering all
employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment
based on the respective employee salary and years of employment with the Company. The Company provides for the gratuity
plan based on actuarial valuations in accordance with Accounting Standard 15 (revised), “Employee Benefits”. The Company
makes annual contributions to the Life Insurance Corporation of India (LIC) for the gratuity plan in respect of its employees.
Actuarial gains and losses are recognized in the consolidated statement of profit and loss as and when incurred.
Borrowing costs
Borrowing costs attributable to the acquisition or construction of those fixed asset which necessarily take substantial period
to get ready for their intended use, including interest attributable to the funding of license fees with respect to new circles up
to the date of commencement of commercial operations, are capitalized as a part of the cost of that asset. Other borrowing
costs are recognized as an expense in the period in which they are incurred.
91
(n)
(o)
(p)
(q)
Asset Retirement Obligations (ARO)
Asset retirement obligations are provided for when it is probable that an outflow of resources will be required to settle the
obligation and a reliable estimate of the amount can be made.
License Fees – Revenue Share
The Revenue-share fee on license is computed as per the licensing agreement at the prescribed rate and is expensed as
incurred.
Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Income Tax Act 1961. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be realized. If the Company has carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognized only if there is virtual certainty that such deferred tax assets can
be realized against future taxable profits. Unrecognized deferred tax assets of earlier years are re-assessed and recognized to
the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax
assets can be realized.
Earning per share
The earnings considered in ascertaining the Company’s Earnings per Share (‘EPS’) comprise the net profit / (loss) for the year.
The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year. The
weighted average number of equity shares outstanding during the year are adjusted for event of bonus element in a rights issue
to existing shareholders.
The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for
deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the
conversion of all dilutive potential equity shares.
(r)
Leases
(i)
Where the Company is lessee
Leases under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating
leases. Lease payments under operating leases are recognized as an expense in the consolidated statement of profit and loss
on a straight-line basis over the lease term.
(ii)
Where the Company is lessor
Assets subject to operating leases are included in fixed assets. Lease income on operating lease is recognised in the consolidated
statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an
expense in the consolidated statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are
recognised immediately in the consolidated statement of profit and loss.
(s)
Segment reporting
Identification of segment
The Company’s operating business is organised and managed according to the nature of services. The analysis of geographical
segment is based on the area in which the Company operates.
(t)
Provisions and Contingencies
A provision is recognised when the company has a present obligation as a result of past event, it is more likely than not that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the
current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present
obligation that is not recognised because it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Information on
contingent liabilities is disclosed in the notes to the financial statements, unless the possibility of an outflow of resources
embodying economic benefits is remote.
92
3.
Share Capital
Authorised shares
25,000,000,000 [2014 - 6,000,000,000] Equity Shares of Rs. 10/-each
6,000,000,000 [2014- 6,000,000,000] Preference Shares of Rs. 10/-each
Issued, subscribed and fully paid-up shares
3,193,920,000 [2014-3,193,920,000] Equity Shares of Rs. 10/- each
9,864,470 [2014 - 9,433,500] 0.01% Redeemible Non Convertible Non
a)
31 March 2015
————————
31 March 2014
————————
250,000
60,000
————————
————————
60,000
60,000
————————
————————
31,939
31,939
99
————————
32,038
————————
94
————————
32,033
————————
Shares held by holding company and fellow subsidiaries:
Out of equity and preference shares issued by the Company, shares held by its holding company and its subsidiaries
are as below:
SISTEMA JSFC, the holding company
1,810,289,400 [2014- 1,810,289,400] equity sharesof Rs 10 each
31 March 2015
————————
31 March 2014
————————
18,103
18,103
99
94
INSITEL Services Private Limited, subsidiary of the holding company
9,864,470 [2014-9,433,500] 0.01% Redeemable Non Convertible Non
Cumulative Preference Shares of Rs 10 each
b)
Details of shareholders holding more than 5% shares in the Company
Equity shares of Rs. 10/- each fully paid
Sistema JSFC, the holding company
Russian Federation
Intell Invofin India Pvt. Ltd.
A T Invofin India Pvt. Ltd.
Cellphone Credit & Securities India Pvt Ltd.
0.01% Redeemable Non Convertible Non
c)
31 March 2015
No.
% holding
millions
in the class
1,810
547
350
175
175
57
17
11
5
5
31 March 2015
No.
% holding
millions
in the class
9
100
31 March 2014
No.
% holding
millions
in the class
1,810
547
350
175
175
57
17
11
5
5
31 March 2014
No.
% holding
millions
in the class
9
100
The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled
to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares
held by the shareholders.
d)
Reconciliation of the shares outstanding at the beginning and at the end of the reporting period.
Equity Share
Issued during the year
31 March 2015
No.
Rs.
millions
millions
3,194
31,939
3,194
31,939
31 March 2014
No.
Rs.
millions
millions
3,194
31,939
3,194
31,939
93
Preference Shares
e)
31 March 2015
31 March 2014
No. millions
Rs. millions
No. millions
Rs. millions
9
94
6
60
Issued during the year (refer note 38)
0
5
3
34
9
99
9
94
Terms of redemption of Non Cumulative Non-convertible Preference Shares
During the year ended 31 March 2015, the Company issued 430,970 (2014 - 3,433,500) Non Cumulative Non-convertible
Redeemable Preference Shares (“RPS”) of Rs 10 each fully paid-up at a premium of Rs 9,990 per share in multiple tranches. Non
Cumulative Non-convertible Preference Shares carry non-cumulative preferential dividend @ 0.01% p.a.
The RPS are redeemable upon the completion of ten years from the respective date of issue at the redemption premium as
mentioned below:Face value of tranches
Preference share capital
Preference share premium
Year of receipt
Redemption premium (p.a)
44
43,856
2012-13
9.77%
16
16,084
2012-13
9.63%
15
14,773
2013-14
9.63%
4
4,070
2013-14
9.80%
16
15,457
2013-14
9.87%
4
4,306
2014-15
9.87%
Further, any variation (extension or reduction) in the tenure is subject to the mutual agreement of both parties and extension
shall not exceed twenty years from the respective date of issue.
As per the requirement of the Companies Act, 2013 the premium payable on redemption of redeemable preference shares is
to be provided out of profits of the Company or out of the Company’s security premium account, before the shares are
redeemed. In view of the losses incurred by the Company and based upon an independent opinion obtained, the Company has
not made any provision in respect of premium payable on redemption of preference shares.
On 3 March 2014 the Company has filed an application for increasing the foreign direct investment (“FDI”) in the Company as
revised on 30 July 2014 (collectively “Company’s Application”) was filed for seeking the approval of the Foreign Investment
Promotion Board (“FIPB”) to increase the total FDI, including the direct and indirect FDI (including subsidiary), from 73.95% to
85.13%. FIPB vide its letter dated 28 October 2014 rejected the Company’s application. On 2 March 2015 the Company has filed
representation with the FIPB clarifying the grounds of rejection and is awaiting response from FIPB.
INSITEL Services Private Limited has given consent to convert the above preference shares into equity shares of the Company
at the option of the Company. The terms and conditions shall be agreed subject to seeking necessary approvals and fulfilling
other compliance requirements,
4)
Capital reserve (refer note 38)
Security premium account
Additions during the year
Closing Balance
Deficit in the statement of profit and loss
Loss for the year
Net deficit in the statement of profit and loss
Total reserve and surplus
31 March 2015
————————
————————
31 March 2014
————————
————————
115,756
4,305
————————
120,061
————————
81,455
34,301
————————
115,756
————————
(131,535)
(17,171)
————————
(148,706)
————————
(28,645)
————————
————————
(110,831)
(20,703)
————————
(131,534)
————————
(15,778)
————————
————————
Debenture redemption reserve
The Company has not created Debenture Redemption Reserve amounting to Rs 3,200 due to insufficiency of profits.
94
5.
Particulars
Non-Current Portion
Current Maturities
31 March 2015
31 March 2014
31 March 2015
31 March 2014
Debentures
15.75% Redeemable, 1,280 Non-Convertible
Debentures of Rs. 10,000,000 each (Secured)
12,800
12,800
-
-
Term Loans
Indian Rupee loans from Others (Secured)
Foreign Currency loans from Banks (Unsecured)
18,878
1
18,173
1
3,443
20
4,332
31,678
30,974
3,444
4,352
12,800
18,878
-
12,801
18,173
-
1
3,443
(3,444)
20
4,332
(4,352)
31,678
30,974
-
-
Total
Above amounts include:
Secured Borrowings
Unsecured Borrowings
Amount disclosed under the head “Other Current Liabilities”
(Refer note 11)
Net amount
a)
15.75% Secured, Redeemable, Non-Convertible Debentures are redeemable at par as follows:
Period of Redemption
b)
c)
d)
6.
Amount to be Redemmed
The Company has an option to redeem all of the Debentures earlier than the above stated dates; however no redemption will
take place before the end of fifth year from the date of allotment i.e. 4 January 2012. These Debentures are secured by first
priority paripassu charge and hypothecation over all of the present and future movable assets of the Company and all of the
Company’s estate, rights, title, interest, property, benefit, claim and demand in, to, under and in respect of, such movable assets
other than those covered in (b) below. The Debentures were to be further secured by way of assignment of all the Unified
Access Service Licenses (“UAS Licenses”) issued by the Department of Telecommunications (DoT). However, while the said
assignment was pending, 21 out of the 22 UAS Licenses of the Company were quashed by the judgment of the Hon’ble Supreme
Court of India (refer note 1 (b) above). Consequently, the Company has requested to the Debenture Trustee to waive the
condition. (refer note 4 for Debenture Redemption Reserve))
Secured Indian rupee loan from others is secured against first and exclusive charge of the assets financed by the lender and is
repayable in five years in equal quarterly installments from their respective disbursement date.
Foreign currency term loans from banks carries interest @ 6 months LIBOR plus mark up from 1.25% p.a. to 3.50% p.a. All the
foreign currency loans are secured by corporate guarantee of Sistema JSFC, the holding Company and are repayable after
moratorium period ranging from thirty to thirty six months from the first utilization date / respective facility agreement date
in ten to twelve half yearly installments.
Summary of repayment terms of non-current portion of borrowings
Particulars
Secured
1 to 2 years
-
Loan repayable in
3 to 5 years
12,800
Unsecured
6,348
11,762
After 5 years
768
Deferred payment liabilities (DPL)
Amount disclosed under ‘Other Current Liabilities’ (Refer Note 11)
31 March 2015
————————
20,887
31 March 2014
————————
20,997
(77)
————————
20,810
————————
(49)
————————
20,948
————————
95
a)
During March 2013, the Company acquired ‘Right to Use of Spectrum’ in eight Telecom Service Areas in the auction carried out
by DoT. As per the terms of the auction, the Company opted for deferred payment option for payment of the final bid price.
After adjusting upfront payment, the Company has recorded the balance amount payable over the deferred payment period as
DPL. The Company is required to pay interest @ 9.75% p.a. over the balance amount. There is a moratorium of 2 years for
payment of balance amount which shall be payable in 10 equal annual installments commencing from the third anniversary of the
scheduled date of first payment. As per the terms of the deferred payment option, the Company has issued financial bank
guarantee to DoT equal to one annual installment of Rs 3,904 to secure the annual installment. The amount payable to DoT as
at 31 March 2015 is Rs 20,132 (2014 – 20,132).
b)
The Company had entered into contracts with certain vendors for supply of network equipment and rendering of services
on deferred payments terms. On transfer of title and risk of the supplies and rendering of services as per the terms of
the respective vendor contracts, the Company has recorded the liabilities payable over the respective deferred
payment period as DPL. As per the arrangement with the vendors supplying network equipment, DPL to the extent of
Rs708 (2014 – Rs816) shall be paid through the buyer’s credit facilities arranged by the vendors. DPL in respect of vendor
payment do not carry any interest until converted into buyer’s credit. The amount payable to the vendors as at 31 March 2015
is Rs755 (2014 – Rs865).
7)
Unaccrued revenue
Interst accrued but not due
Lease equilisation reserve
Other employee long term incentives
Others
8)
Asset retirement obligation
31 March 2015
————————
64
245
65
378
————————
752
————————
31 March 2014
————————
78
1,990
86
381
1
————————
2,536
————————
31 March 2015
————————
175
29
————————
204
————————
31 March 2014
————————
177
29
————————
206
————————
31 March 2015
————————
32
11
(6)
(15)
————————
22
8
9%
31 March 2014
————————
36
9
(8)
(1)
————————
36
7
8.75%
Employee Benefits:
Defined Benefit Plans
The employee’s gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan.The present value
of obligation is determined based on actuarial valuation using Project Unit Credit Method (PUC). The plan liability is the
actuarial present value of the projected accrued benefits as of the beginning and end of the period for active members.
Net gratuity expense recognized for the year ended 31 March 2015 and 31 March 2014 are as follow:
Particulars
Interest cost
Expected Return on plan assets
Actuarial (gain) / loss
Net Cost
Actual Return on Plan Assets
Actual Rate of Return on Plan Asset
Long term employee benefits:
Compensated absences expense recognized in salaries, wages and bonus for the year ended 31 March 2015 and 31 March 2014
are as follow:
Particulars
31 March 2015
31 March 2014
————————
————————
43
52
Interest cost
15
13
Actuarial loss
(10)
28
————————
————————
Net Cost
48
93
96
i)
The assumptions used to determine the obligations are as follows:
(a) Gratuity
31 March 2015
————————
8.00%
8.40%
8.00%
Discount Rate
Expected Rate of increase in compensation levels
Expected rate of return on assets
Mortality table
Ages
Up to 30 Years
From 31 to 44 years
Above 44 years
Particulars
Discount rate
Expected rate of increase in compensation levels
ii)
31 March 2014
————————
8.00%
8.40%
9.25%
58
58
IALM (2006 - 08)
Withdrawal Rate (%)
Withdrawal Rate (%)
3.00
3.00
2.00
2.00
1.00
1.00
31 March 2015
8.00%
8.40%
31 March 2014
8.00%
8.40%
58
58
Mortality table
IALM (2006 - 08)
Ages
Withdrawal Rate (%)
Withdrawal Rate (%)
Up to 30 Years
3.00
3.00
From 31 to 44 years
2.00
2.00
Above 44 years
1.00
1.00
The principal assumptions are discount rate and salary growth rate. The discount rate is generally based upon the market
yields available on Government bonds at the accounting date with a term that matches the liabilities and the salary growth
rate takes account of inflation, seniority, promotion and other relevant factors on long term basis.
The expected rate of return on plan assets was based on the average long-term rate of return expected to prevail over
the next 15 to 20 years on the investments made by the LIC. This was based on the historical returns suitably adjusted for
movements in long-term government bond interest rates. The discount rate is based on the average yield on government
bonds of 20 years.
Reconciliation of opening and closing balances of obligations and plan assets
(a) Gratuity
Particulars
Interest cost
Benefits paid
Actuarial (gain)
Change in plan assets:
Fair value of plan assets at beginning of year
Expected return on plan assets
Actuarial gain / (loss) (Refer Note-38)
Employer contribution
Claim paid from Fund
Fair value of plan assets at year end
Net amount recognised as liability - current
31 March 2015
————————
31 March 2014
————————
139
33
11
(16)
(15)
152
116
36
9
(13)
(9)
139
79
6
0
85
67
67
83
8
(8)
9
(13)
79
60
60
Experience history - amount for the current and previous four years are as follows:
Gratuity
31 March
31 March
31 March
2015
2014
2013
Defined benefit obligation
152
139
116
Plan assets
85
79
83
Deficit
(67)
(60)
(33)
Experience adjustments on plan liabilities
15
17
3
Experience adjustments on plan assets (Refer Note-38)
(0)
(8)
(2)
31 March
2012
78
71
(7)
10
(2)
31 March
2011
57
20
(37)
(2)
(1)
97
Particulars
iii)
iv)
31 March 2015
————————
31 March 2014
————————
185
164
43
53
Interest cost
15
13
Benefits paid
(50)
(73)
Actuarial loss
(10)
28
183
185
183
185
Net amount recognized
183
185
The Company made annual contributions to the LIC of an amount advised by the LIC. The Company was not informed by
LIC of the investments made by the LIC or the break-down of plan assets by investment type.
Estimated contributions to be made in next financial year for gratuity is Rs 49 (2014- Rs 50) and for compensated absences
Rs 46 (2014- Rs 50).
Bifurcation of PBO at the end of year
31 March 2015
31 March 2014
————————
————————
Current liability
8
8
Non-current liability
175
177
Total PBO at the end of year
183
185
Gratuity
The major categories of plan assets as a percentage of the fair value of total plan assets are as follow:
Investment with LIC
9)
31 March 2015
————————
100%
31 March 2014
————————
100%
Short term borrowings
31 March 2015
31 March 2014
————————
————————
6,183
6,183
Unsecured loans from a bank carries interest rate @10.8% and secured by unconditional and irrevocable stand by letter of
credit issued by a foreign bank at the request of a fellow subsidiary.
Trade payables
31 March 2015
31 March 2014
————————
————————
Sundry creditors*
- For expenses (other than acceptance)
4,921
4,614
4,921
4,614
*Due to related parties Rs 59 (2014 – Rs 45)
According to the records available with the Company, dues payable to entities that are classified as Micro and Small Enterprises
under the Micro, Small and Medium Enterprises Development Act, 2006 during the year is Rs nil (2014 - Rs nil). Accordingly,
disclosures relating to amounts unpaid as at the year-end together with the interest paid/ payable as required under the said Act
are not applicable. Further no interest has been paid or was payable to such parties under the said Act in the previous year.
Dues to Micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis
of information collected by the management. This has been relied upon by the auditors.
- Unsecured loans from bank
10)
11)
Current maturities of long-term borrowings (refer note 5)
Current maturities of deferred payment liabilities (refer note 6)
Unaccrued revenue
Interest accrued but not due
Book overdraft
Gratuity
Sundry creditors for capital goods
Deposits from customers
Statutory dues
Advance from customers
Others - Interest accrued
- Others
98
31 March 2015
————————
3,444
77
774
4,131
285
67
708
152
139
36
303
2
————————
10,118
————————
31 March 2014
————————
4,352
49
736
181
460
60
738
152
150
42
159
2
————————
7,081
————————
a)
b)
12)
Rs 40 (2014 - Rs 45) included under deposits from customers, represents refundable security deposits received from subscribers
on activation of services and are repayable on disconnection and security deposits received from channel partners.
Unearned revenue includes advance revenue received for dark fibre given to customers on IRU basis, unearned prepaid and
post-paid revenue for services yet to be availed by the customers.
31 March 2015
31 March 2014
Provision for contingencies*
1,172
2,004
Provision for employee benefits - compensated absences (refer note 7)
8
8
————————
————————
1,180
2,012
————————
————————
————————
————————
*Net of Rs 1,202 paid (2014 – Rs 555)
13) (a) Tangible assets
Tangible assets
Freehold Leasehold
Leasehold
Plant and Optical fibre
Network
Furniture
Office
land
land
improvements Building equipment and copper interface units Computers and fixtures equipment Vehicles
Total
Cost or valuation
At 1 April 2013
34
80
648
470
42,303
2,714
443
448
97
265
33
-
-
1
0
5,647
8
15
2
0
2
-
-
-
49
0
1,499
-
0
19
9
15
1
1,592
At 31 March 2014
34
80
600
470
46,451
2,722
458
431
88
252
32
51,618
47,535
5,675
-
-
6
0
2,842
5
0
3
3
8
-
2,867
Disposals
32
29
14
110
1,178
247
384
22
1
2
-
2,019
At 31 March 2015
2
51
592
360
48,115
2,480
74
412
90
258
32
52,466
-
Depreciation
At 1 April 2013
-
3
270
57
11,443
1,351
430
357
61
125
25
Charge for the year
-
1
68
24
4,203
137
19
54
11
41
3
14,122
4,561
-
-
27
0
1,420
-
0
16
6
8
1
1,478
At 31 March 2014
-
4
311
81
14,226
1,488
449
395
66
158
27
17,205
Charge for the year
-
1
65
22
4,322
157
8
20
10
58
2
4,665
-
1
8
26
401
0
383
22
1
2
-
At 31 March 2015
-
4
368
77
18,147
1,645
74
393
75
214
29
21,026
At 31 March 2014
34
76
289
389
32,225
1,234
9
36
22
94
5
34,413
At 31 March 2015
2
47
224
283
29,968
835
0
19
15
44
3
31,440
844
Net Block
-
(b) Intangible assets
Intangible assets
Software
License entry fees
Right to use spectrum
Indefeasible right to use
Total
Gross block
At 1 April 2013
496
645
35,163
919
37,223
Purchase
-
81
-
212
293
Disposal of assets
-
-
-
92
92
At 31 March 2014
496
726
35,163
1,039
37,424
Purchase
316
25
-
186
527
-
-
-
69
69
812
751
35,163
1,156
37,882
475
323
-
180
978
6
67
1,355
58
1,486
Disposal of assets
At 31 March 2015
Amortization
At 1 April 2013
Charge for the year-Deletion
-
-
-
13
13
481
390
1,355
225
2,451
41
69
1,771
76
1,957
Charge for the year-Deletion (refer note 38)
(0)
0
-
5
5
At 31 March 2015
522
459
3,126
296
4,403
15
336
33,808
814
34,973
290
292
32,037
860
33,479
At 31 March 2014
Net block
At 31 March 2014
At 31 March 2015
99
i)
Addition to plant and equipment includes adjustment of Rs982 (loss) (2014 - Rs3,909 (loss)) on account of exchange differences
on long term foreign currency monetary items during the year. The total unamortized balance of foreign exchange differences
capitalised as at 31 March 2015 is Rs6,796 (2014 – Rs6,800).
ii)
Deletion from plant and equipment includes adjustment of Rs 247 (2014 – Rs nil) on account of settlement of amount payable
to vendor in respect of acquisition of fixed assets.
iii)
License entry fee with the gross carrying amount of Rs 322 (2014- Rs 322) are subject to first charge and assignment to secure
the Company’s debentures (refer note 5(a)).
iv)
The Company has created a first charge on paripassu basis on all of its tangible moveable assets including movable machinery,
machinery spares, tools and accessories, furniture, fixtures, vehicles, all other movable assets and current assets, both current
and future, under a non-fund based facility arrangement of Rs 7,670 (2014 – Rs 7,670) with a bank. In addition to this, a second
and subservient charge over all the present tangible movable assets of the Company has been created under a non-fund based
facility arrangement of Rs 1,500 (2014 – Rs 1,500) with another bank.
v)
Due to continuous losses, during the year the Company has conducted an impairment analysis for its tangible and intangible
assets, based on estimated future cash flow projections and estimated recoverable price of assets, management is of the view
that since carrying value of assets is lower than recoverable price/value in use no impairment is required.
vi)
Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has from 1 April 2014
adjusted an amount of Rs37 in the consolidated statement of profit and loss.
The depreciation expense in the consolidated statement of profit and loss for the year is higher by Rs27 consequent to the
change in useful life of certain assets.
14)
Long- term loans and advances
31 March 2015
————————
31 March 2014
————————
39
438
9
416
3,949
————————
4,851
————————
12
428
8
288
4,111
————————
4,847
————————
Finance set up cost
Non-current bank balances (refer note 17 and note 38)
31 March 2015
————————
209
————————
209
————————
31 March 2014
————————
486
————————
486
————————
Trade receivables
31 March 2015
————————
31 March 2014
————————
16
537
————————
553
(537)
————————
16
17
436
————————
453
(436)
————————
17
18
393
113
————————
524
(113)
————————
411
————————
427
————————
13
374
54
————————
441
(54)
————————
387
————————
404
————————
Advance for capital goods
Security deposits
Prepaid expenses
Advance income tax
15)
16)
Debts outstanding for a period exceeding six months
(A)
Debts outstanding for a period less than six months
(B)
Total (A + B)
100
17)
Particualrs
Non-current
31 March 2015 31 March 2014
Cash & cash equivalents (as per AS-3 cash flow statements)
Balances with banks:
In current accounts
Deposits with original maturity of less than three months
Cheques on hand
Total A
Other bank balances
Deposits with maturity of more than 3 months
but less than 12 months
Margin money deposit (refer note 38)
Total B
Amount disclosed under non current assets
Total A+B
0
——————
0
——————
(0)
——————
——————
0
——————
0
——————
(0)
——————
——————
Current
31 March 2015 31 March 2014
118
2,664
4
0
——————
2,786
——————
——————
63
3,469
2
0
——————
3,534
——————
——————
592
1,736
——————
2,328
——————
——————
5,114
——————
369
1,760
——————
2,129
——————
——————
5,663
——————
Margin money deposits:
Margin money deposits of Rs 1,736 (2014 – Rs1,760) are given as security under the terms of non fund facilities availed by the
Company from banks.
18)
Advances recoverable in cash or kind or for value to be received:
Prepaid expenses
Assets held for sale
Advance income tax
31 March 2015
————————
31 March 2014
————————
131
1,970
227
197
84
————————
2,609
————————
991
1,733
196
143
101
————————
3,164
————————
19)
Interest accrued on fixed deposits
Unbilled revenue
Finance set up cost
31 March 2015
————————
108
299
322
————————
729
————————
31 March 2014
————————
114
132
344
————————
590
————————
20)
Service revenue
31 March 2015
————————
13,862
————————
13,862
————————
31 March 2014
————————
11,889
————————
11,889
————————
21)
Other income
Interest
Miscelleneous income
31 March 2015
————————
433
2
————————
435
————————
31 March 2014
————————
574
2
————————
576
————————
22)
Contribution to provident and other funds
Staff welfare expenses
31 March 2015
31 March 2014
————————
————————
2,687
3,191
125
130
111
135
————————
————————
2,923
3,456
————————
————————
During the year, the Company has recognized the following amounts in the statement of Profit and Loss
Defined Contribution Plans
Particulars
31 March 2015
31 March 2014
Employer’s Contribution to Provident Fund #
94
97
Employer’s Contribution to ESI # (refer note 38)
# Included in contribution to provident and other funds.
101
23)
Other expenses
Interconnect usage charges
Port charges and other network related costs
Power and fuel
Network
Others
Rent
Network
Others
Insurance
Network
Others (refer note 38)
Infrastructure sharing expenses
Lease line expenses
Repair and maintenance
Network
Building
Others
Advertisement and marketing expenses
Sales commission and incentives
Sales promotion expenses
Device subsidy
Other subscriber acquisition cost
Travelling and conveyance expenses
IT support and services expenses
Customer service and call centre expenses
Legal and professional fees
Rates and taxes
Auditors’ remuneration (refer note 35)
Provision for doubtful debts/ advances
Provision for contingencies
Loss on sale of fixed assets/write off
Miscellaneous expenses
Total
24)
Finance costs
Interest on:
- Term loans
- Others
Bank charges and commission
Amortisation of finance setup costs
Net loss on foreign currency transaction and translation
25)
31 March 2015
————————
2,822
29
31 March 2014
————————
3,060
84
225
120
192
130
73
147
62
156
10
0
3,756
1008
12
0
3,815
913
803
23
115
735
1,177
267
721
615
134
604
584
179
15
7
161
50
176
155
——————
14,711
——————
893
24
114
1,163
1,139
250
1,000
594
141
659
466
234
85
6
100
70
71
151
——————
15,584
——————
31 March 2015
————————
31 March 2014
————————
2,891
3,574
2,244
2,063
97
262
424
755
5
16
——————
——————
5,661
6,670
——————
——————
Provision for contingencies (net of amount paid under protest) and other provisions :The following table sets forth the movement in the provisions: The Company makes contingency provision for any sub-judicial
matters that may arise subsequent to the year end.
Sl. N. Description
(i)
Provisions for contingencies
FinancialYear
Opening
Additions Adjustment Closing
2015
1,056
57
(240)
873
2014
1,056
70
(71)
1,056
(ii)
Other Provisions
2015
949
(650)
299
2014
489
460
949
(iii) Asset retirement obligation (refer note 36)
2015
29
0
29
2014
31
(2)
29
*Adjustment in provision for contingency includes Rs 595 (2014 - Rs nil) adjusted against payment under protest, against which
provision was created in earlier years. Adjustment in other provisions includes Rs 489 (2014 – Rs nil) against disposal of fixed
assets.
26)
102
Income taxes
Deferred tax
During the year ended 31 March 2015, the Company has incurred book loss of Rs17,171 (2014 - Rs20,703), aggregating to
accumulated losses of Rs 148,706 (2014 - Rs131,534), resulting into carry forward of tax losses. Though the management is
confident of generating profits in the future, in the absence of convincing evidence of virtual certainty, the Company has not
recognized any deferred tax assets resulting from the carried forward tax losses and unabsorbed depreciation. Further, no
deferred tax liabilities on account of temporary timing differences have been recognized as it would be set off against these
deferred tax assets.
27)
Discontinuing operation:
The Company on 21 February 2013 closed telecom services in ten Telecom Circles namely Assam, Andhra Pradesh, Bihar,
Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab and on 11 March 2013 closed
telecom services in three telecom Circles namely Mumbai, Maharashtra and Uttar Pradesh (East) The closure of telecom
services has been done in consequence of the Order(s)/ judgment of Honorable Supreme Court of India of 2 February 2012
and 11 March 2013.The Company is in the process of redeployment / disposal of assets and settlement of contractual obligation
and liabilities of these thirteen Telecom Circles.
The following statement shows the revenue and expenses of discontinuing operations:
31 March 2015
31 March 2014
————————
————————
Revenue*
46
Expenses
-Others**
21
388
-Loss on sale of fixed assets
227
10
————————
————————
Loss from discontued operations
(248)
(352)
Finance costs
66
71
Depreciation and amortization
322
645
————————
————————
Loss before tax
(636)
(1,068)
Income-tax expense
————————
————————
Loss after tax
(636)
(1,068)
————————
————————
*The Service revenue in discontinued operations is on account of services provided during the period 1 April 2013 till date of
closure i.e. 10 April 2013 in three circles Mumbai, Maharashtra and UP (East).
**For certain parties, the Company has reached settlement or negotiations are at final stage and accordingly, on the best
estimates, amounts have been paid/adjusted/provided for in the financial statements.
Note: The above statement does not include common corporate expenses such as marketing costs, interest on loans that are
not allocated to discontinued circles.
The carrying amounts of total assets and liabilities of discontinuing operations are as follows:
31 March 2015
31 March 2014
————————
————————
Total Assets#
1,340
4,630
Total Liabilities
1,115
1,645
# Include fixed assets of Rs1,078 (2014 - Rs. 4,038), where the Company is in the process of re-deployment. Fixed assets redeployed during the year in active circles have been re-classified.
The net cash flows attributable to the discontinued operations are stated below:
31 March 2015
————————
(347)
(2)
28)
(i)
(ii)
31 March 2014
————————
330
(331)
(0)
Operating activities
Investing activities
Financing activities (refer note 38)
*The above amounts are funded from bank balances of continuing circles.
Related party disclosures
In accordance with requirement of Accounting Standard 18 – Related Party Disclosures, the names of related parties where
control exists and / or with whom transactions have taken place during the year and description of relationships as identified
and certified by the Management are:
Name of related party where control exists
Relation
—————————————————————
—————————————————————
Holding company
Sistema JSFC
Names of other related parties with whom transactions have taken place during the year
Key management personnel:
Relation
—————————————————————
—————————————————————
Key management personnel
-Vsevolod Rozanov (till 31 May 2013)
- Dmitry Shukov (from 1 June 2013)
103
(iii)
List of fellow subsidiaries is as below :
- OJSC Intellect Telecom
- Sitronics Telecom Solutions
- OJSC Mobile Telesystems
- Sitronics Intracom India Private Limited
- Sitronics India Private Limited
- Insitel Services Private Ltd
- LLC “NVision Special projects
Transactions with related parties
Particulars
Car hire charges
(recovered)
Interest on Loan
(Grossed Up)
Loan repayment
Maintenance services
Project Services
Professional Fees
Equipments/software
purchase
IT services taken
Brand fees
Managerial remuneration
Issuance of redeemable
preference shares
Sale of assets (refer note 38)
Holding
Co
Sistema
JSFC
(2)
(445)
(12,482)
-
Fellow subsidaries
KMP
OJSC
Intellect
Telecom
Sitronics
Telecom
Solutions
OJSC
Mobile
Tele Systems
LLC “NVision
Special
projects”
Sitronics
Intracom
India Pvt Ltd
Sitronics
India
Pvt. Ltd.
Insitel
Services
Pvt Ltd
Vsevolod
Rozanov
Dmitry
Shukov
(3)
-
(39)
(104)
-
15
(12)
-
42
-
82
(44)
14
(23)
-
(8)
(2)
7
(21)
-
4,310
(34,335)
(0)
(127)
-
70
(37)
-
Balance outstanding as on 31 March 2015
Particulars
Trade payable
(refer note 38)
Holding
Co
Sistema
JSFC
-
Fellow subsidaries
KMP
OJSC
Intellect
Telecom
Sitronics
Telecom
Solutions
OJSC
Mobile
Tele Systems
LLC “NVision
Special
projects”
Sitronics
Intracom
India Pvt Ltd
Sitronics
India
Pvt. Ltd.
Insitel
Services
Pvt Ltd
Vsevolod
Rozanov
Dmitry
Shukov
-
-
6
(5)
0
-
36
(29)
1
(1)
-
-
3
-
The remuneration to the key managerial personnel (‘KMP’) does not include the provisions made for gratuity, compensated
absences as they are determined on an actuarial basis for the Company as a whole. Bonus is included in KMP remuneration only
when amount became due for payment on fulfilling certain conditions.
JSFC Sistema, holding company, has given corporate guarantee to certain lenders for various fund and non fund facilities availed
by the Company.
29)
Lease commitments
a)
Where the Company is a lessee
The Company has entered into various lease agreements for leased premises, which expire at various dates over the next
fifteen years. Lease rental expense for the year was Rs 241 (2014 - Rs 279).
104
Future lease payments under operating leases are as follows:
b)
(i)
31 March 2015
31 March 2014
————————
————————
Payable not later than one year
199
234
Payable later than one year and not later than five years
485
569
Payable later than five years
222
183
————————
————————
906
986
————————
————————
The escalation clause includes escalation at various periodic levels ranging from 0 to 15 percent includes option of renewal
from 0 to 15 years and there are no restrictions imposed on lease arrangements.
Where the Company is a lessor
Indefeasible Right to Use (IRU)
The Company has entered into Indefeasible Right of Use contract for use of optical fiber with telecom operators for a period
of 15 years. The gross carrying amount and accumulated depreciation of the optical fiber is Rs 244 (2014 - Rs 244) and Rs 142
(2014 - Rs 130). The income and depreciation recognised in the consolidated statement of profit and loss for the year is Rs 14
(2014 -Rs 13) and Rs 12 (2014 – Rs 12) respectively.
Future minimum lease receipts under operating leases are as follows:
31 March 2015
31 March 2014
————————
————————
14
14
55
55
10
23
————————
————————
79
92
————————
————————
The Company has also entered into an agreement to give optical fiber in exchange on IRU basis for a period of 15 years. Due
to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated
depreciation of the asset given on operating lease as at 31 March 2015 and accordingly, disclosures required by AS 19 is not
given.
Recoverable not later than one year
Recoverable later than one year and not later than five years
Recoverable later than five years
(ii)
30)
31)
32)
Earnings per share (EPS)
Particualrs
Net loss after tax as per statement of profit and loss
Net loss after tax as per statement of profit and loss from continuing operations
Information with respect to 100% subsidiary as at 31 March 2015
Particualrs
Share capital
Total assets
Total liabilities
Turnover (total revenue)
Loss before taxation
Loss after taxation
31 March 2014
(20,703)
3,193,920,000
(6.48)
(19,635)
3,193,920,000
(6.15)
Shyam Internet Services Limited
8
(43)
17
52
55
(2)
(2)
Particulars of unhedged foreign currency exposure as at 31 March 2015
Particulars
Import creditors
Loans
Interest payable
Trade receivables (refer note 38)
33)
31 March 2015
(17,171)
3,193,920,000
(5.38)
(16,535)
3,193,920,000
(5.18)
31 March 2015
Amount in Rs
Amount in USD
681
11
22,320
357
174
3
2
0
Capital commitments
Estimated value of contracts remaining to be executed on capital
account and not provided for (net of advances)
31 March 2014
Amount in Rs Amount in USD
794
13
22,504
376
175
3
4
0
31 March 2015
————————
31 March 2014
————————
782
————————
553
————————
105
The Company has other commitments for purchase orders which are issued after considering requirements as per operating
cycle for purchase of services, employee benefits. The Company does not have any long term commitment or material noncancelable contractual commitments/contracts which might have a material impact on the financial statements.
34)
Contingent liabilities
(i)
Matter under Litigation
-Income tax
-Entry tax and VAT
-Service tax
-DoT demands (refer note 34 (a) (i) & (ii) below)
-Demand from operators (refer note 34 (b) below)
-Demand for compensation (refer note 34 (c) below)
-Others
(A)
(ii)
Others
-DoT demands (refer note 34 (a) (iii) below)
-Others
(B)
Total (A+B)
31 March 2015
————————
141
23
149
31 March 2014
————————
97
43
139
1,340
190
585
114
————————
2,542
————————
2,271
190
612
160
————————
3,512
————————
6,369
438
————————
6,807
————————
————————
9,349
————————
8
————————
8
————————
————————
3,520
————————
The management believes that the outcome of these contingencies will be favorable and that a loss is not probable.
(a)
DoT demands
i) It also includes disputed demands for penalty in respect of alleged non compliance of electromagnetic field (EMF) procedural
norms by the Company. Petitions are pending before Hon’ble Supreme Court.
ii) The DoT has raised demands for payment of license fees, spectrum usages charges (“SUC”) and interest/penalty thereon for
various financial years on account of difference in interpretation of Adjusted Gross Revenue (AGR) and other assessment
related matters. The Company has contested these demands by filing petition/s with the Hon’ble TDSAT. In its Order dated 23
April 2015 (“the Order”), the Hon’ble TDSAT set aside all the demands under dispute and directed to the DoT to rework
demands for the license fees and SUC payable by the Company in light of the findings, observations and directions made in the
Order. Accordingly, the demands of Rs 1,097 have not been included in above DoT demands.
iii) During the year, the DoT has issued a show cause notice of Rs 6,369 towards One Time Spectrum Charges (“the Charges”) for
continuation of its services, post cancellation of its 21 telecom licenses, from 2 February 2012 till closure of services in 13
service areas and till last valid date of the licenses in 8 service areas where the Company secured spectrum in the auction
conducted by the DoT and new licenses.
The Company has submitted its reply to the DoT on 06 January 2015 and the matter is pending with the DoT. The Company,
based on the independent legal opinion, expects no financial liability in this matter as it continued its services in accordance
with the directions of the Hon’ble Supreme Court of India only which were issued from time to time post cancellation of its
telecom licenses.
(b)
Demand from operators
During financial year 2008-09, the Company received demands from telecom operator aggregating to Rs 190 on account of
revision of access charges for the period from June 2001 to May 2003. On 27 April 2005 Hon’ble TDSAT has struck down the
unilateral revision in the rates of access charges by telecom operator. Telecom Operator has preferred an appeal in Hon’ble
Supreme Court against the order of TDSAT. Considering that the final decision is pending with the Hon’ble Supreme Court,
the Company has disclosed the amount under dispute of Rs 190 as contingent liability.
(c)
Demands for compensation
During the year ended 31 March 2013, certain passive infrastructure vendors (‘the Vendors’) has raised demands for compensation
of Rs 585 (2014 – Rs 612) due to premature termination of the respective contracts by the Company as a result of discontinuation
of operations in the thirteen telecom circles in pursuance of the Order issued by the Hon’ble Supreme Court of India related
to cancellation of Company’s Telecom Licenses (Also refer note 1(b)). The Vendors served notice in term of the dispute
106
resolution mechanism as defined in the contracts during 2014. Out of the Vendors, settlement has been reached with one
vendor.
The Company, based on independent legal opinion, believes the demand by the other Vendor to be not tenable, since the
discontinuance of operations is a ‘Force Majeure Act’ and not the act of the Company.
35)
Payment to auditors (excluding service tax)
Statutory audit
Other services
Reimbursement of out of pocket expenses (refer note 38)
31 March 2015
————————
4
3
0
————————
7
————————
31 March 2014
————————
4
2
0
————————
6
————————
36)
The Company does not have any long term contracts including derivative contracts for which there are any material foreseeable
losses.
37)
There were no amounts which were required to be transferred to Investor Education and Protection Fund (IEPF).
38)
Details of rounded off amounts
The financial statements are presented in Rs million. Those items which are required to be disclosed and which are not
represented in the financial statements due to rounding off to nearest million are given as follows:
Note
4
8
8
13(a)
Description
Capital Reserve
Gratuity - Actuarial gain/loss
Gratuity - Experience adjustment of plan assets
Tangible Assets
- Building - Cost or valuation
Additions
Disposal
-Network interface units - Cost or valuation
Additions
Disposal
-Furniture and fixtures - Cost or valuation
Additions
-Optical fibre and copper
13 (b) Intangible Assets
-Amortization - Charge for the year-Deletion - software
-Amortization - Charge for the year-Deletion - License
entry fees
17
Cash and cash equivalents - cash on hand
17
Other bank balances - margin money deposit
22
23
Insurance others
25
Provision for contingencies and other provisions
27
Discontinued operations
-Financing activities
28
Related party transactions
LLC “NVision Special projects” (Trade payable)
Insitel Services Private Ltd - Sale of assets
32
Particulars of unhedged foreign currency - Trade receivables
35
Payment to auditors
40
Kerala Commercial Tax Act, 2003
39)
31 March 2015
————————
0.006
0.555
(0.430)
31 March 2014
————————
0.006
-
0.429
-
0.418
0.009
0.001
0.068
-
0.159
0.114
-
0.306
0.020
-
(0.030)
-
0.030
0.159
0.205
0.170
0.181
0.360
0.464
0.196
0.144
0.249
-
-
(0.027)
0.495
0.600
0.115
0.279
0.059
0.250
-
Segmental reporting
The primary segment reporting format is determined on the basis of business segment. The Company has only one business
segment, which is providing unified access services. Accordingly, the amounts appearing in these financial statements relate to
this primary business segment.The secondary segment reporting format is determined on the basis of geographical area in
which the Company provides services. The Company operates only in one geographical segment namely, India
107
40)
Details of dues of Income-tax, Sales Tax, Value added tax and Service Tax which have not been deposited as on 31 March 2015
on account of disputes are given below:
Name of the Statute
Nature of
Dues
Income Tax
Period to which the
amount pertains
Total Disputed
Amount*
Amount
Deposited
112
51
60
2006-07 to 2008-09,2010-11,
2011-12 and 2012-13
Amount not
Deposited
Forum where the
dispute is pending
Commissioner of Income
tax (Appeal)
UP VAT Act, 2008
VAT
2011-12 and 2013-14
2
1
1
Assessing Officer
UP VAT Act, 2008
VAT
2010-11
6
-
6
Add Commissioner (Appeals)
and State Tribunal
Kerala Commercial Tax Act,
2003 (refer note 38)
VAT
2008-09 and 2011-12
1
0
1
Assessing Officer
Tamilnadu VAT Act, 2006
VAT
2013-14
Finance Act, 1994
Service
Tax
Finance Act, 1994
Service Tax
2008-09, 2009-10
and 2010-11
2011-12
27
-
27
141
15
126
8
-
8
High Court, Madras
Custom, Excise, Service
Tax Appellate Tribunal
Commissioner,Appeal
*Amount as per demand orders including interest and penalty wherever quantified in the order.
Name of the Statute
Nature of
Dues
Income Tax
Rajasthan VAT Act, 2003
VAT
Period to which the
amount pertains
Total Disputed
Amount*
2008-09 & 2009-10
2007-08, 2008-09 & 2009-10
Amount
Deposited
Amount
(Rs. in Mn)
29
11
18
2
1
1
Forum where the
dispute is pending
Tax Board
There are no dues of Customs Duty, Excise Duty and Cess which have not been deposited as on 31 March 2015 on account of
disputes.
41)
Previous years comparatives
Previous year’s comparatives have been reclassified/regrouped where necessary to conform with current year’s presentation.
Place : Gurgaon
108
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
Form AOC - 1
Information with respect to 100% Subsidiary – Shyam Internet Services Limited
(as required under first proviso to sub-section (3) of section 129)
Statement containing salient features of the financial statement of subsidiary
Part “A”
1.
Name of the subsidiary:
Shyam Internet Services Ltd. (SISL)
2.
Reporting period :
3.
Share capital:
4.
Reserves & surplus:
5.
Total assets
17
6.
Total Liabilities
52
7.
Investments:
Nil
8.
Turnover:
55
9.
Profit/(Loss) before taxation
(2)
10.
Provision for taxation
Nil
1 April 14 to 31 March 15
(Amount in Rs. million)
8
(43)
11.
Profit/(Loss) after taxation:
(2)
12.
Proposed Dividend:
Nil
13.
% of shareholding:
100%
Names of subsidiaries which are yet to commence operations:
Nil
Part “B”
As the Company does not have any Associates and Joint Ventures, therefore information required in Part “B” is not applicable
to the Company.
Sd/Dmitry Shukov
Whole Time Director (CEO)
DIN No: 06577078
Sd/Alok Tandon
Director
DIN No: 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
Place : Gurgaon
109
NOTICE OF 20TH ANNUAL GENERAL MEETING
Notice is hereby given that the 20th Annual General Meeting of the members of Sistema Shyam TeleServices Limited
will be held at 10:00 A. M. on Tuesday, the 29th day of September, 2015 at Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak,
Jaipur – 302006, Rajasthan, India, to transact the following businesses:
ORDINARY BUSINESS
1.
a)
To receive, consider and adopt the Standalone Audited Financial Statements of the Company for the financial year ended on
31st March 2015 together with the Directors’ Report and the Auditors’ Report thereon.
b)
To receive, consider and adopt the Consolidated Audited Financial Statements of the Company for the financial year ended
on 31st March 2015 together with the Auditors’ Report thereon.
2.
To appoint a Director in place of Mr. Dmitry Shukov (DIN: 06577078), who retires by rotation and being eligible, offers himself for
re-appointment.
3.
To appoint a Director in place of Mr. Alok Tandon (DIN: 00027563), who retires by rotation and being eligible, offers himself for
re-appointment.
4.
To appoint Statutory Auditors to hold office from the conclusion of this Annual General Meeting till the conclusion of the next
Annual General Meeting and to authorize the Audit Committee / Board of Directors to fix their remuneration. M/s. Deloitte
Haskins & Sells, Chartered Accountants (Registration No. 015125N) the retiring Auditors of the Company, being eligible, offer
themselves for reappointment.
SPECIAL BUSINESS
5.
To consider and, if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED THAT Mr. Alexander Gorbunov (DIN: 03552741) who was appointed as an Additional Director of the Company
by the Board of Directors w.e.f. April 28, 2015 and who holds office until the date of this Annual General Meeting, and in respect
of whom the Company has received from a member a notice in writing under Section 160 of the Companies Act, 2013 proposing
the candidature of Mr. Gorbunov for the office of the Director of the Company, be and is hereby appointed as Director of the
Company whose period of office shall be liable to determination for retirement by rotation.”
6.
“RESOLVED THAT Mr. Andrey Terebenin (DIN: 05323714) who was appointed as an Additional Director of the Company
through Circular Resolution passed by the Board of Directors on August 5, 2015 and who holds office until the date of this Annual
General Meeting, and in respect of whom the Company has received from a member a notice in writing under Section 160 of the
Companies Act, 2013 proposing the candidature of Mr. Terebenin for the office of the Director of the Company, be and is hereby
appointed as Director of the Company whose period of office shall be liable to determination for retirement by rotation.”
7.
“RESOLVED THAT Mrs. Neera Sharma (DIN:975300) who was appointed as an Additional Director of the Company by the
Board of Directors w.e.f. April 28, 2015 and who holds office until the date of this Annual General Meeting, and in respect of whom
the Company has received from a member a notice in writing under Section 160 of the Companies Act, 2013 proposing the
candidature of Mrs. Sharma for the office of the Director of the Company, be and is hereby appointed as Director of the Company
whose period of office shall be liable to determination for retirement by rotation.”
8.
To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 196, 197, 203 and other applicable provisions, if any, of the
Companies Act, 2013 read with Schedule V and the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 (including any statutory modifications or re-enactments thereof, for time being in force) approval be and is hereby accorded
for the appointment of Mrs. Neera Sharma (DIN:975300) as “Whole Time Director” of the Company for a period of three years
with effect from April 28, 2015 to April 27, 2018, on the terms and conditions as set out herein below with liberty to the Board
of Directors to alter, vary and modify the terms and conditions of the said appointment, in such manner as may be agreed to
between the Board of Directors and Mrs. Neera Sharma:
110
DESCRIPTION
AMOUNT IN INR
1.
ANNUAL BASIC SALARY
INR 2,740,000
2.
PERFORMANCE LINKED INCENTIVE
Up to 30% of Annual Fixed Salary, subject to Board of
Directors decision and approval.
3.
LONG TERM INCENTIVE
Subject to Board of Directors approved policy
4.
PERQUISITES AND BENEFITS
a.
LEASED ACCOMODATION/
ALLOWANCE
RENT
She shall be provided with paid leased accommodation with
an annual limit of INR 1,370,000
b.
PERSONAL LIFE / ACCIDENT INSURANCE COVERAGE
For an amount the annual premium of which does not exceed
INR 40,000
c.
MEDICAL INSURANCE COVERAGE
For self and his family for an amount the annual premium of
which does not exceed INR 100,000
d.
COMPANY’S CAR WITH DRIVER
Company will provide AC car with Fuel, Maintenance and
Driver for business need / official duties
e.
OTHER BENEFITS AND ALLOWANCES
She shall be entitled for all other benefits and allowances as
may be available to her as per policy of the Company.
However, the value of such benefits/allowances shall not
exceed INR 3,430,000 per annum.
5.
COMPENSATION
FOR
INVOLUNTARY
TERMINATION OF SERVICES
In case services are terminated by the Company involuntary
before the term, the incumbent shall be paid one time
compensation equal to three months fixed salary and PLI on
pro rate basis for the completed period.
6.
TERMINAL BENEFITS:
A. Company’s contributions towards Provident Fund as per PF Act and the rules of the Company.
B. Gratuity: in accordance with the Scheme as applicable as per the rules of the Company.
HOUSE
‘RESOLVED FURTHER THAT in the event of loss or inadequacy of profits in any financial year during the currency of tenure
of Mrs. Neera Sharma, as Whole Time Director, the remuneration and perquisites as approved by the Board, from time to time,
with in the aforesaid limits be paid to her as minimum remuneration.’
‘RESOLVED FURTHER THAT any Director or Mr. Vishal Kohli, Company Secretary of the Company be and are hereby
authorized individually to file necessary forms, documents, returns etc. with the Registrar of Companies or Govt. Authorities and
to take all such steps as may be necessary, proper or expedient to give effect to the aforesaid resolution.”
9.
“RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013
and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the
time being in force), the Cost Auditors, M/s. Sanjay Gupta & Associates (Registration No. 00212) appointed by the Board of
Directors of the Company to conduct the audit of the cost records of the Company for the financial year ending on 31st March
2016, be paid a remuneration of Rs. 9.00 lakhs (Rupees Nine Lakhs) per annum.’
‘RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorized to do all such acts,
matters, deeds and things as may be necessary to give effect to the above resolution.”
By Order of the Board
For Sistema Shyam TeleServices Limited
Place : Gurgaon, India
Date : August 5, 2015
Sd/Vishal Kohli
Company Secretary
111
NOTES
1.
A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND
TO VOTE ON POLL INSTEAD OF HIMSELF. THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. A BLANK FORM
OF PROXY IS ENCLOSED HEREWITH AND, IF INTENDED TO BE USED, IT SHOULD BE RETURNED DULY COMPLETED
AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN FORTY EIGHT HOURS BEFORE THE SCHEDULED TIME
OF THE COMMENCEMENT OF 20th ANNUAL GENERAL MEETING.
2.
A PERSON CAN ACT AS PROXY ON BEHALF OF MEMBERS NOT EXCEEDING FIFTY IN NUMBER AND HOLDING IN THE
AGGREGATE NOT MORE THAN 10% OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING VOTING RIGHTS.
HOWEVER, A MEMBER HOLDING MORE THAN 10% OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING
VOTING RIGHTS MAY APPOINT A SINGLE PERSON AS PROXY AND SUCH PERSON SHALL NOT ACT AS PROXY FOR
ANY OTHER PERSON OR SHAREHOLDER.
3.
Every member entitled to vote at the meeting, or on any resolution to be moved thereat, shall be entitled during the period
beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting,
to inspect the proxies lodged, at any time during the business hours of the Company, provided not less than three days’ notice in
writing of the intention to inspect is given to the Company.
4.
The relevant explanatory statement pursuant to Section 102 of the Companies Act, 2013 in respect of item no. 5 to 9 of the notice
set out above is annexed herewith.
5.
(A). Members holding shares in physical form are requested to notify/send the following to the Registrar & Transfer Agent (RTA)
of the Company viz. M/s. Karvy Computershare Pvt. Ltd.:
i)
their email id, in case the same have not been sent earlier, for the purpose of receiving the communication electronically,
ii)
any change in their address with PIN Code.
(B). Members holding shares in dematerialized form are requested to notify their Depository Participant:
6.
i)
their email id, in case the same have not been sent earlier, for the purpose of receiving the communication electronically,
ii)
all changes with respect to their address.
Notices/documents including the Annual Report are being sent by electronic mode to the shareholders whose e-mail address has
been registered with the Company. Members who would like to receive such notices/documents in electronic mode in lieu of
physical copy and who have not registered their e-mail addresses so far or who would like to update their e-mail addresses
already registered, are requested to register/update their e-mail addresses by intimating the RTA/ Depository.
7.
Members/Proxies are requested to produce the enclosed attendance slip duly signed as per the specimen signature recorded
with the Company for admission to the meeting hall. Members, who hold shares in Dematerialized Form, are requested to bring
their Client – ID and DP – ID numbers for easier identification of attendance at the meeting.
8.
Corporate Members are requested to send a duly certified copy of the Board Resolution authorizing their representative(s) to
attend and vote at the Annual General Meeting.
112
9.
Members desirous of getting any information from the Company are requested to send their queries addressed to Company
Secretary at Registered Office of the Company well in advance so that the same may reach at least 7 days before the date of the
Meeting to enable the management to keep the required information readily available at the Meeting.
10. As a measure of economy, copies of the Annual Report shall not be distributed at the Meeting. Members are requested to bring
along their own copies to the meeting.
11.
Members are requested to:
i)
note that due to strict security reasons mobile phones, brief cases, eatables and other belongings are not allowed inside the
Auditorium/Hall.
ii)
note that no gifts/coupons will be distributed at the Annual General Meeting.
12. All the documents referred to in the accompanying Notice are open for inspection at the Registered Office of the Company on all
working days between 11.00 am to 1.00 pm up to the date of Annual General Meeting and shall also be available at the venue of the
Meeting.
13. The Register of Directors and Key Managerial Personnel and their shareholding, maintained under Section 170 of the Companies
Act, 2013, will be available for inspection by the members at the AGM.
14. In case of joint holders attending the Meeting, only such joint holder who is higher in order of the names will be entitled to vote.
15. Annual Report is available at the website of the Company at www.mtsindia.in in the Investor relations section.
16.
In compliance with Section 108 of the Companies Act, 2013, Rule 20 of the Companies (Management and Administration) Rules, 2014
substituted by Companies (Management and Administration) amendment Rules 2015, the Company has provided a facility to the
members to exercise their votes electronically through the electronic voting service facility arranged by Karvy Computershare
Private Limited.The facility for voting, through ballot/ polling paper will also be made available at the AGM and the members attending
the AGM who have not already cast their votes by remote voting shall be able to exercise their right at the AGM through ballot/
polling paper. Members who have cast their votes by remote e-voting prior to the AGM may attend the AGM but shall not be able
to cast their votes again. The instructions for e-voting ate annexed to the Annual Report.
17.
The notice of the 20th AGM and instructions for e-voting, alongwith the Attendance Slip and Proxy Form, is being sent by electronic
mode to all members whose e-mail addresses are registered with the Company / Depository Participant(s), unless a member has
requested for a hard copy of the same. For members, who have not registered their email addresses, physical copies of the
documents are being sent by the permitted mode.
Sd/Vishal Kohli
Company Secretary
113
ANNEXURE TO NOTICE
EXPLANATORY STATEMENT UNDER SECTION 102 OF THE COMPANIES ACT, 2013
Item No. 5, 6, and 7
Mr. Alexander Gorbunov and Mrs. Neera Sharma were appointed on the Board as Additional Directors at the meeting of the
Board of Directors of the Company held on April 28, 2015. The Board also appointed Mr. Andrey Terebenin as Additional Director
by passing a resolution through circulation (circulation resolution) on August 5, 2015.
Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 the tenure of Mr. Gorbunov, Mr. Terebenin and Mrs.
Sharma as an Additional Director expires at the date of this Annual General Meeting.
The Company has received a written notice from members under Section 160 of the Companies Act, 2013 along with requisite
deposit proposing the candidature of Mr. Gorbunov, Mr. Terebenin and Mrs. Sharma for the office the directors of the Company.
The Board also considers it desirable that the appointment of Mr. Gorbunov, Mr. Terebenin and Mrs. Sharma as Directors be
regularized by their appointment as Ordinary Directors under Section 152 of the Companies Act, 2013 liable to retire by
rotation.
Mr. Alexander Gorbunov, Mr. Andrey Terebenin and Mrs. Neera Sharma are not disqualified from being appointed as a Director in
terms of Section 164 of the Companies Act, 2013 and has given their consent to act as Director of the Company.
In the opinion of the Board, Mr. Alexander Gorbunov, Mr. Andrey Terebenin and Mrs. Neera Sharma fulfil the criteria and the
conditions as prescribed under the Companies Act, 2013 for appointment as Director and therefore, your Directors recommend
the resolution proposed at Item No. 5, 6 and 7 for the approval of shareholders.
Mr. Alexander Gorbunov, Mr. Andrey Terebenin and Mrs. Neera Sharma are interested in the resolutions set out respectively at
Item Nos. 5, 6 and 7 of the Notice with regard to their respective appointments.
Except as mentioned above, none of the Directors, Key Managerial Personnel or their relatives, is concerned or interested in the
proposed resolutions.
Item No. 8
The Board of Directors of the Company, at its meeting held on 28.04.2015, appointed Mrs. Neera Sharma as an Additional
Director of the Company. Further, at the same meeting, the Board also appointed Mrs. Sharma as Whole Time Director of the
Company for a period of Three years commencing from 28.04.2015 to 27.04.2018 on the terms and conditions as set out in the
resolutions given under item no. 8, subject to the approval of Shareholders in General Meeting.
Information / Profile of Mrs. Neera Sharma, Whole Time Director
Mrs. Neera Sharma, aged 43 years, graduated from Punjab University, India in 1994. She also holds LLB (Professional) from Punjab
University (1997). She has around 18 years’ rich experience in Legal field with different companies encompassing a gamut of
various industries. Before joining the Company in 2008, she had been rendering her services as Assistant General Manager-Legal
with Dishnet Wireless Ltd. She started her career in 1997 as a Senior Executive-Legal with DCM Group and thereafter worked
with HFCL Infotel Ltd., HCL Comnet Ltd., Idea Cellular Ltd. and Emaar MGF Land Pvt. Ltd. before joining Dishnet Wireless Ltd.
in 2007.
The remuneration payable to the appointee by the Company is given in the resolution, which is quite reasonable and also
acceptable to the appointee keeping in view the comparative remuneration profile in similar industry in India. She was drawing a
remuneration of Rs. 93 lakhs (total CTC) approx., which was also due for annual increment.
Mrs. Neera Sharma has no pecuniary relationship with the Company and no relationship with its managerial personnel, either
directly / indirectly. Mrs. Neera Sharma also does not hold any shares in the Company as a shareholder.
114
General and Other Information including Company Business and Growth Plan
The Company is engaged in the business of providing telecommunication services in India. During the year ended March 31, 2015,
the Company recorded growth in service revenue i.e. an increase of 17% as compared to previous year. Total income is increased
to Rs. 14,287 million as against Rs. 12,452 million in previous fiscal, representing year on year increase of 15% in total income.
Cost optimization measures taken by the Company have resulted in decrease in cost of services, sales & marketing expenditure
and personnel cost. Accordingly, total operating expenditure for the year reduced to Rs. 18,863 million as against total operating
expenditure of Rs. 20,040 million during the previous fiscal year.
Company’s operating loss for the year ended 31 March 2015 reduced to Rs. 4,576 million as against Rs. 7,588 million during last
year and Net Loss for the year reduced to Rs. 17,173 million against Net Loss of Rs. 20,728 million during previous fiscal.
The voice business of most operators continued to grow during the year driven by increase in minutes however, the voice
realizations were almost flat for the year. Voice realizations remained flat as there were no major tariff corrections by industry
players during the year. There was cannibalization of voice revenues by OTT platforms with the launch of voice calling feature on
WhatsApp and other OTT players planning to launch similar services. Similarly, the data business also witnessed increase but due
to almost no leverage to pursue tariff corrections due to competition, there was very limited growth in realizations.
The Company is taking various initiatives to improve performance of its business. The Company, during the year, removed subsidy
from the voice business with clear focus on profitability. The Company has been largely focused on driving better value from the
newly upgraded network. SSTL launched most competitive data product offerings in the market on the back of strong data
network. The Company continues to have a data centric strategy with dongles as its priority focus areas. In the nine operational
circles, the Company is striving to expand its HSD footprints.The Company is also focusing on building strong data brand, offering
Wi-Fi products for consumers and at public places, and to continuing to leverage its operations in nine circles. Some of the other
initiatives being planned by the Company for improved performance in the next financial year include strengthening of voice
business by launching competitive offerings, further strengthening data business through competitive products, expanding devices
portfolio and offering innovative solution and to aggressively focus on cost management and profitability.
Indian wireless market continues to be one of the most attractive markets in the world with VLR penetration of approximately
67% and 5.9 million active wireless subscriber additions per month in calendar year 2014. Also, continuous drop in smartphone
and tablet prices is expected to result in higher penetration of these devices which will increase demand for data on small screen
devices. There is growing interest in Wi-Fi services at home and at public places. The Company has launched several home Wi-Fi
products and is in the process of partnering with various government agencies to offer Wi-Fi services at various public places. In
future, demand for mobile data will grow significantly and the Company is well positioned to get higher shares of this incremental
demand. Number of players in the industry is likely to go down in medium term. However, it depends on clarity on final approval
to various policies like spectrum trading, spectrum sharing and M&A. New opportunities for strengthening the market position
can arise out of such an environment. New government in India is focusing a lot on ‘Digital India’ vision enabling faster internet
services for people and using internet as driver for the economic growth. It has also launched smart city project and focusing on
‘making in India’. All these new initiatives of government provide good opportunity for the Company to get involved in few
projects and increase its capability and reach in India. As mentioned earlier, the Company has already partnered with Indian
Railways to provide Wi-Fi services on 6 railway stations in India and it is also providing Wi-Fi services on Gurgaon Rapid Metro.
It is expected that the abovementioned factors will lead to increase in not only productivity but also the profitability of the
Company.
The Supreme Court had, vide its verdict dated 2nd February 2012, cancelled the telecom licences of the Company, due to which
lot of uncertainties were prevailing in the telecom sector as a whole and the operations of the Company in particular. Subsequently,
the Company has participated in the spectrum auctions held by the Department of Telecom in March 2013 and acquired the right
to use spectrum for 8 telecom circles of Delhi, Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, UP (West) and West Bengal for 800
MHz spectrum band. This is in addition to licence held by SSTL for Rajasthan Circle. Pursuant to the acquisition of fresh Unified
115
Licenses for the 8 circles, the Company is in the process of re-structuring, re-organizing and consolidating its business operations
across India. The Company is fully engaged in providing services in the territory of India and is not engaged in export related
activities.
There are still lot of legal and regulatory uncertainties and issues which need to be looked into both strategically and operationally
on a day-to-today basis. This necessitates very close monitoring of the legal and regulatory environment, which are very crucial
and sensitive areas for the future development of the Company. Keeping this in view, it was thought fit to appoint Mrs. Neera
Sharma, who is heading the Legal Function in the Company, as a Whole-Time Director of the Company. This will lead to more
streamlined reporting to the Board as well as expert guidance availability for the Board members for better clarity and for taking
strategic decisions on a timely basis. In view of the above, it became indispensable to appoint one competent professional who
must be a member of the Board as Whole-Time Director of the Company.
As Mrs. Neera Sharma is having enormous experience and expertise in field of Legal function, therefore, it was deemed proper
to appoint her as Whole Time Director of the Company. Mrs. Neera Sharma has a wealth of operational experience, legal acumen
and inspirational leadership needed to provide direction to the Company on legal / regulatory matters. Accordingly, the Board of
Directors, based on the recommendation of the Nomination and Remuneration Committee (meeting dated April 28, 2015), at its
Meeting held on 28.04.2015 appointed Mrs. Neera Sharma as an Additional Director on the Board as well as Whole Time Director
of the Company, subject to the approval of shareholders in General Meeting and Central Govt. of India (if any).
Foreign Investment in Company
As on date, SISTEMA Joint Stock Financial Corporation (SISTEMA JSFC), of Russia, as a strategic investor in the business of the
Company, holds 56.68% of the aggregate paid up equity share capital of the Company.
The Board of Directors believes that the Company shall be certainly benefited by the immense and versatile experience of Mrs.
Sharma in legal field.
Mrs. Neera Sharma does not have any pecuniary relationship directly/ indirectly with the Company. Further, Mrs. Sharma is not
related to any Key Managerial Personnel.
Your Directors recommend passing of the resolution as a special resolution.
None of the Directors, Key Managerial Personnel or their relatives, except Mrs. Sharma to whom the resolution relates, is
concerned or interested in the proposed resolution.
Item No. 9
The Board, on the recommendation of the Audit Committee, has appointed, M/s. Sanjay Gupta & Associates as Cost Auditors of
the Company at a remuneration of Rs. 9.00 lakhs (Rupees Nine Lakhs) per annum all inclusive, to conduct the audit of the cost
records of the Company for the financial year ending 31st March 2016.
In accordance with the provisions of Section 148 of the Companies Act, 2013, read with the Companies (Audit and Auditors)
Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company.
Accordingly, consent of the members is sought for passing an Ordinary Resolution as set out at Item No. 9 of the Notice for
ratification of the remuneration payable to the Cost Auditors for the financial year ending 31st March 2016.
None of the Directors, Key Managerial Personnel or their relatives is concerned or interested in the proposed resolution
116
Sd/Vishal Kohli
Company Secretary
Details of Directors retiring by rotation seeking re-election and appointment as Directors at
this Annual General Meeting:
Name of Directors
Brief Profile
Mr. Dmitry Shukov
Mr. Dmitry Shukov, aged 46 years, a Russian National, is a young and dynamic Executive. Mr. Shukov is
a Telecommunication Engineer and has a rich corporate experience of 21 years, mainly in the field of
General Management, Sales and Customer Service Delivery. Mr. Shukov has had an outstanding career
and is known for his hands-on business experience, having worked as head of sales in Tele2, Russia’s
leading mobile operator. Before joining Sistema Shyam TeleServices Limited (SSTL) he had been
rendering his services as Managing Director of FE “Uzdunrobita LLC” (MTS Uzbekistan). He is a
successful professional who made a significant contribution in consolidating MTS’s position in the
telecom market. He is a MTS veteran and was previously the CEO of MTS Turkmenistan as well.
Mr.Alok Tandon
Mr. Alok Tandon is a Chartered Accountant by profession. He looks after all the financial and commercial
activities of the Shyam Group. Mr. Tandon has experience of more than 22 years in this field. Under his
guidance Shyam Telecom successfully concluded the IPO in 1993, which was oversubscribed by
25 times. He has been instrumental in efficiently managing funding and investments for various group
Companies. Mr. Tandon also handlesgroup relationships with all leading Banks, Foreign and Indian
Institutional Investors. With his efforts Shyam Telecom has been able to smoothly manage its Equity &
Debt funding requirements at the lowest possible cost. He has been instrumental in closing several
important deals of the Shyam Group which gave group the highest ever per customer valuation of any
telecom operation in the country.
Mr. Alexander Gorbunov
Mr. Alexander Gorbunov graduated in 1992 from the Moscow Physics and Engineering Institute
(MPEI). In 1999 he received an MBA from Harvard Business School. From 1994 to 2001 he served as
a consultant in Moscow and Boston offices of Bain & Company. In 2001 he was appointed Head of
Strategic Analysis and Development Department of Sistema Telecom. From 2003 to 2006 he served
as CSO of MTS OJSC. In 2006-2007 he has been Head of Corporate Development Department of
Sistema JSFC. From 2007 to 2010 he served as Vice President of Strategy and Development of
Comstar - United Telesystems. Presently, Mr. Alexander Gorbunov is serving as Executive Vice
President responsible for Telecom Assets Development of Sistema JSFC. He is also a member on the
Board of telecom company MTS OJSC and retail company OZON Holdings Limited.
Mr. Andrey Terebenin
Mr. Andrey Terebenin graduated in 1985 from Moscow State University of Foreign Affairs. Subsequently he held management positions at EconomicheskayaGazeta (Economics Gazette), Dun &
Bradstreet CIS and AIG Russia. In 2003-2006, he served as General Director and Managing Partner of
Communication Holding at R.I.M. Porter Novelli. In 2006-2011 he held the position of Vice President
of MTS OJSC (Russia), Corporate Communications. In 2011 he was promoted to the same position
in Sistema, MTS’ mother company. Presently, Mr. AndreyTerebenin is serving as Senior Vice President/
Head of Investment Portfolio and member of Management Board of Sistema JSFC. He is also a
member on the Board of Binnopharm, a pharmaceutical company of Sistema, Detsky Mir, a wholly
owned subsidiary of Sistema and the leading player in the sector of childrens’ goods in Russia and CIS,
and Concept Club, a women’s and childrens’ goods Russian company.
Mrs. Neera Sharma
Mrs. Neera Sharma earned a Bachelor’s degree in law from the Panjab University in 1997 and also
completed her MBA in Finance From Amity Business School in 2004. Neera has strong functional
expertise and a well-rounded legal experience base of nearly two decades having worked with leading
companies like DCM Limited, HCL, Idea Cellular limited, Emaar MGF Land Private Limited, HFCL
Infotel and Dishnet Wireless Limited (Aircel). She has been associated with the Company since 2008
and as the Head of the Legal Function, counsels and advises the Company on the entire gamut of Legal
and Compliance matters. She was conferred with the prestigious Young Achiever Award (in the In
House Counsel Category) in 2013 and Outstanding Achievements award in 2015 by Legal Era. She is
also a founder Member of Indian Corporate Counsel Association.
117
Route map of the venue of Annual General Meeting
Distance from
Airport - 11 Km
Rly. Stn. - 2.9 Km
Bus Stand - 4 Km
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SISTEMA SHYAM TELESERVICES LIMITED
Regd. Office: MTS Tower, 3 Amrapali Circle,Vaishali Nagar, Jaipur, Rajasthan-302021.Tel: 0141-5100343, Fax: 0141-5100390
CIN: U64201RJ1995PLC017779; Website: www.mtsindia.in; Email: [email protected]
ATTENDANCE SLIP
(Please complete this attendance slip and hand it over at the entrance)
Name of the Member/Proxy
Folio No.
DP ID No.
Client ID
I / We hereby record my / our presence at the 20thANNUAL GENERAL MEETING of SISTEMA SHYAM TELESERVICES LIMITED to be held at 10:00 A.M.
on Tuesday, the 29thSeptember 2015, at Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur-302006, Rajasthan, India.
Note:
1. Only Member / Proxyholder can attend the Meeting.
2. Member / Proxyholder should bring his / her copy of the Annual Report for reference at the Meeting.
If Member sign here
If, Proxy Sign Here
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------SISTEMA SHYAM TELESERVICES LIMITED
Regd. Office: MTS Tower, 3 Amrapali Circle,Vaishali Nagar, Jaipur, Rajasthan-302021.Tel: 0141-5100343, Fax: 0141-5100390
CIN: U64201RJ1995PLC017779; Website: www.mtsindia.in; Email: [email protected]
PROXY FORM (FORM No. MGT-11)
(Pursuant to Section 105(6) of the Companies Act. 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014)
Name of the member(s) :
Folio No. / DP ID-Client ID No. :
Registered address :
E-mail Id :
I/we being the member(s) of _________________________ shares of Sistema Shyam TeleServices Ltd. hereby appoint:
1.
Name: ____________________________________________Address: ________________________________________________
________________________________________________ Email Id: _________________________________________________
Signature: _______________________________________________
2.
or failing him
Name: ____________________________________________Address: ________________________________________________
________________________________________________ Email Id: _________________________________________________
Signature: _______________________________________________
3.
or failing him
Name: ____________________________________________Address: ________________________________________________
________________________________________________ Email Id: _________________________________________________
Signature: _______________________________________________
or failing him
as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 20 Annual General Meeting of the Company to be held at
10:00 A.M. on Tuesday, the 29thSeptember 2015, at Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur-302006, Rajasthan, India and at any
adjournment thereof in respect of such resolutions as are indicated below:
th
Ordinary Business
Special Business:
1.a)
Adoption of Standalone Audited Financial Statements of the
Company for the financial year ended on 31st March 2015
together with the Directors’ Report and the Auditors’ Report
thereon.
5.
Appointment of Mr. Alexander Gorbunov as Ordinary
Director liable to retire by rotation.
1.b) Adoption of Consolidated Audited Financial Statements of
the Company for the financial year ended on 31st March 2015
together with the Directors’ Report and the Auditors’ Report
thereon.
6.
Appointment of Mr. Andrey Terebenin as Ordinary
2.
Re-appointment of Mr. Dmitry Shukov who retires by rotation.
7.
Appointment of Mrs. Neera Sharma as Ordinary
3.
Re-appointment of Mr. Alok Tandon who retires by rotation.
8.
Appointment of Mrs. Neera Sharma as Whole Time
Director and approval of her remuneration.
4.
Appointment of M/s Deloitte Haskins & Sells, Chartered
Accountants as Auditors and to fix their remuneration.
9.
Approval of Remuneration of M/s. Sanjay Gupta &
Associates, Cost Auditors for the FY 2015-16.
Signed on ___________________________________ day of ____________________________________________, 2015
Signature of Shareholder: __________________________________ Signature of Proxy holder: _______________________
Affix
Revenue
Stamp
Notes:
1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company not less than 48
hours before the commencement of the meeting.
2. A Proxy need not be a member of the company.

20th Annual Report 2014-15

Transcription

Similar documents

Brochura Pine Cliffs Terraces

2015 Agriculture Federal Credit Union (AgFed) Board of Directors

18th Annual Report for 2012-13

January 2014 Newsletter - Fresno Police Department Credit Union

sanbonani holiday spa share block limited

Relajacion Guiada

Step by Step Guide: New Company Registration

OCurrance Press Release.pub

PDF - Blandford Ski Area

pine cliffs suites - Pam Golding Properties