14th Annual REport
For the Financial Year ended 31.3.2014
bharat sanchar Nigam limited
Annual Report 2013-14
CONTENTS
DETAILS
PAGE NO
CMD and the Board of Directors
04 – 06
Vision and Mission
07 – 08
Chairman and Managing Director’s Message
09 – 10
Directors Report
11 – 25
Management Discussion and Analysis Report
26 – 27
Report on Corporate Governance
28 – 51
Financial Statements [Balance Sheet, P & L Account, Cash Flow Statement,
Notes forming part of the Financial Statements]
52 – 96
Auditor’s Report
97 – 126
Addendum to Directors Report
127 – 137
Comments of the Comptroller and Auditor General of India on the Accounts
138 – 140
Replies of the Management to the Comments of the Comptroller and Auditor
General of India on the Accounts
141 – 143
BOARD OF DIRECTORS
Shri R.K. Upadhyay
Shri A.N. Rai
Shri N.K. Gupta
Chairman and Managing
Director
[Upto 30.6.2014]
Director (Enterprise) & Director
(HR) Chairman and Managing
Director* [*Wef 01.07.2014]
Director (CFA)
Shri K.C.G.K. Pillai
Shri Anupam Shrivastava
Ms. Rita A. Teaotia
Director [Finance]
[Upto 30.11.2013]
Director (CM) &
Director (Fin)
[Wef 1.5.2013]
Government Director
Shri Shahbaz Ali
Shri Ajai Vikram Singh Prof. N. Balakrishnan
Government Director
[Upto 26.08.2014]
Director
Director
Chairman, Remuneration
Chairman, Audit
Committee of the Board Committee of the Board
Smt. Darshana
Momaya Dabral
4
Government Director
[W.e.f. 29.9.2014]
Annual Report 2013-14
Company Secretary & Sr. GM (Legal)
H.C. Pant
Registered and Corporate Office
Bharat Sanchar Bhawan, H.C.Mathur Lane, Janpath, New Delhi-110 001
Corporate Identity Number (CIN) :
U74899DL2000GOI107739
Statutory Auditors
Walker Chandiok & Co., L-41 Connaught Circus, New Delhi-110 001.
Cost Auditors
M/s Balwinder & Associates, Cost Accountants
Bankers
State Bank of India, Punjab National Bank, ICICI Bank, Indian Bank, HDFC Bank,
Canara Bank, Union Bank of India, Corporation Bank, IDBI Bank, Oriental Bank of Commerce,
Indus Ind Bank, Yes Bank
5
OUR BUSINESS
Mobile Services
Broadband Services
GSM :- 2G, GSM 3G, WiMAX,
Landline Broadband
CDMA :- Mobile, CDMA Fixed and CDMA 3G Mobile Broadband
Data Card Services
GSM Wi-Fi
WiMAX Broadband
Dial up Internet (DIAS)
Fiber Broadband (FTTH)
CDMA Broadband :- EVDO Prepaid, EVDO
Postpaid, EVDO Router.
Enterprise Business
Landline Services
Enterprise Voice and Mobility:- EPABX, Voice Telephone Lines, FLPP B-fone, Phone plus
VPN, ISDN/PRI/BRI, Centrex, 2G/3G Mobile, services
Blackberry services
Intelligent Network Services:- Universal ITC,
Internet Data Centre Services:- IDC Overview, UAN service, Toll free numbers/services, VPN
Managed Colocation services, Managed/ service, Televoting services
Hosting Services, Managed IT Services, Cloud
BSNL PCO:- FLPP-PCO
Services (PCaas)
Enterprise Data Services:- Leased Circuit(DLC), PRI/BRI/Dial-up Internet:- Dial up internet,
MPLS VPN, Internet Leased Line, VSAT, VPN ISDN PRI, ISDN BRI
Services (Over BB, CDMA/3G)
Enterprise Broadband:- Wi-Max, Wi-Fi, EVDO,
DSL Broadband/FTTH Broadband
Managed Services:- Managed Network
Services(MNS), Managed Global Audio
Conferencing, Managed SaaS(Mail), Internet
Data Centre
Other Enterprise Services:- Web Colocation,
Fleet Tracking, Video Conferencing(VC), Video
Surveillance, Web Hosting, USOF Project and
host of other innovative Enterprise Business
Solution Services
6
Annual Report 2013-14
VISION and MISSION
VISION



Be the leading telecom service provider in India with global presence
Create a customer focused organization with excellence in customer care, sales and
marketing
Leverage technology to provide affordable and innovative telecom services / products
across customer segments
MISSION:
a)
b)
c)
d)
e)
Be the leading telecom service provider in India with global presence
•
Generating value for all stakeholders – employees, shareholders, vendors & business
associates
•
Maximizing return on existing assets with sustained focus on profitability
•
Becoming the most trusted, preferred and admired telecom brand
•
To explore International markets for Global presence
Creating a customer focused organization with excellence in sales, marketing and customer
care
•
Developing a marketing and sales culture that is responsive to customer needs
•
Excellence in customer service - ”friendly, reliable, time bound, convenient and
courteous service”
Leveraging technology to provide affordable and innovative products/services across
customer segments
•
Offering differentiated products/services tailored to different service segments
•
Providing reliable telecom services that are value for money
Providing a conducive work environment with strong focus on performance
•
Attracting talent and keeping them motivated
•
Enhancing employees skills and utilizing them effectively
•
Encouraging and rewarding individual and team/group performance
Establishing efficient business processes enabled by IT
•
Changing policies and processes to enable transparent, quick and efficient decision
making
•
Building effective IT systems and tools
OBJECTIVES
•
To be the Leading Telecom Services provider by achieving higher rate of growth so as to
become a profitable enterprise.
•
To provide quality and reliable fixed telecom service to our customer and thereby increase
customers confidence
•
To provide customer friendly mobile telephone service, with focus on Value added service
and data services, of high quality and play a leading role as GSM operator in its area of
operation.
7
•
•
•
•
Strategy for:
I.
Rightsizing the manpower
II. Providing greater customer satisfaction
Contribute towards:
I.
Broadband customers base in India as envisaged in draft National Telecom Policy
2011.
II. Providing broadband connectivity to 2.5 lakhs Village Panchayats as per Government
policy
To leverage the existing infrastructure of BSNL for facilitating implementation of other
government programmes and initiatives particularly in the rural areas.
To look for the opportunity of possible expansion of BSNL footprint globally by exploring
international telecom in developing markets such as Africa.
Shri Ravi Shankar Prasad, Hon’ble Minister for Communications and IT addressing the delegates in the Heads of
Circle Conference 22nd August 2014.
8
Annual Report 2013-14
chairman and managing director’s message
Dear Shareholders,
On behalf of the Board of Directors of your
Company, it is my privilege to extend you all a
very warm welcome at the 14thAnnual General
Meeting of the Company.
Your company, with its robust Pan India network
is well positioned and fully geared to anticipate
the challenges, embrace the technological
changes and tap the ensuing opportunities in
times to come.
Business Outlook
We are hopeful to execute successfully and to the
expectation and satisfaction of the Government,
the projects of national importance viz., LWE,
NFS and NOFN etc., which were entrusted
to your Company on nomination basis by the
Government.
The high inflationary pressures & structural
bottlenecks impacted the growth story as the
economy clocked around 5% GDP Growth in
the last two fiscal years. However, presently,
overall sentiment is that economy is on the
roadmap of smart recovery.
Performance Highlights during Financial
Year 2013-14
In the telecom space, India, the second
largest telecommunication market appears
to be at the crossroads as the telecom sector
is witnessing slow but sure progression from
voice to data usage. Intense competition in
smart-phone suppliers market, generation of
targeted applications & content has resulted
in 3G services gaining traction for a plethora
of services viz. broadband, mobile Internet
access, video calls, voice messaging and
mobile TV etc.
During the year under review, the Company
incurred a loss of Rs. 7,019.76 Crore [Loss in
Previous Year Rs. 7,884.44 Crore]. While the
income from services is Rs. 26,153.26 Crore
[Previous Year Rs. 25,654.81 Crore], other
income was Rs. 1,843.09 Crore [Previous Year
Rs. 1,473.08 Crore]
There was an increase of 1.94% in income
from services in comparison to previous year,
the other income increased by 25.12%. There
was an increase of 3.20% in the total income in
comparison with previous year.
At the industry level, it is evident that for
sustained data-based services driven growth,
transformation of existing business and
operational model has become imperative.
The Employee benefit expenses and Office &
Administration expense has shown an increase
of 12.20 % and 5.82 % respectively.
Going forward, the new telecom policy appears
to have recognized that Telecommunication is a
key driver of economic and social development
in an increasingly knowledge intensive global
scenario. Carrying this ahead, policy initiatives
of new government - ‘Digital India’ and ‘100
Smart Cities’ projects have all the attributes of
telecom & IT and it is apparent that BSNL, with
its footprint all across India, will be central to
the scheme of things in realization of this nation
building activity. This shall entail mobilization
of resources and execution at hitherto
unprecedented level.
Your company in the face of stiff competition
has been able to rein in the downslide to some
extent.
Further, your company kept its sights firmly
on the future and continued to make requisite
investments for technological up gradation and
network expansion. Efforts in these directions
will facilitate improvement in service offerings,
delivery standards and consequently larger
value capture in the years ahead.
9
Corporate Social Responsibility (CSR)
Corporate Governance procedures and Code
of Conduct. Being the successor of erstwhile
central government departments, compliances
of Corporate Governance procedures and
prescribed codes is inbuilt in the systems and
procedures.
Right from its inception, your Company
has been at the forefront of nation building
activities. National telecom policy 2012 has
also recognized that BSNL has played a preeminent role in provision of telecom services
in the country, particularly in rural, remote,
backward and hilly areas. We remain committed
in expanding telecom footprint to every nook
and corner of the country and touch lives of
all citizens and be a key enabler in facilitating
inclusive growth and transforming India.
People our strength
Your Company has always valued its human
resources and their spirit in overcoming
challenges as the most important resource.
Our Focus has been to strengthen up people
practices and processes to attract and retain
talent. Commensurate with its expansion plans,
your Company has prioritized competence
building of its employees through training and
development and induction of new talent.
Towards this end, various management initiative
programmes have been integrated with the
Human Resource Development policies of the
Company.
While delivering value to our subscribers, we are
equally aware of our responsibilities whereby
we have always attempted to adopt a holistic
approach in our endeavours encompassing
economic, social and environmental aspects.
Such efforts of your company have been
recognized and your Company was awarded
1st and 2nd National Level Energy Conservation
award by the Ministry of Power. Certificate of
Merit was also awarded to your Company by
Bureau of Energy Efficiency, Ministry of Power.
Acknowledgements
On behalf of the Board of Directors of your
Company, I wish to convey sincere regards
and deep gratitude to our valued subscribers. I
acknowledge the unstinted support and valuable
guidance from various Ministries, particularly
from the Department of Telecommunications,
other Ministries and Departments, Authorities
and Agencies of the Union Government and the
State Governments.
Importantly, in troubled times, whether it be
Uttarakhand floods, Phailin Cyclone in coastal
Odisha & Andhra Pradesh and more recently,
when rains & floods played havoc in Jammu &
Kashmir, Your Company has always been the
first telecom network to have worked on war
footing for restoration of telecom network and
establishing connectivity.
I also place on record our appreciation to our
vendors and service providers for their their cooperation.
When the natural calamity struck the Uttarakhand,
our employees contributed a day’s salary to the
PM’s National Relief Fund. Again, when Jammu
& Kashmir was hit by unprecedented floods, our
employees rose to the occasion to contribute a
day’s salary to the PM’s National Relief Fund.
I am grateful to the Board of Directors for their
support and guidance. I would like to express
my deep gratitude to all our stakeholders for the
continued faith reposed in BSNL.
CSR Committee of the Board has also been
constituted as mandated by the Companies Act
2013.
Thank you,
Corporate Governance
Your Company believes in conducting
business in a manner that complies with the
A.N. Rai
Chairman and Managing Director
Jai Hind !
10
Annual Report 2013-14
DIRECTOR’S REPORT
Dear Members,
Your Directors have great pleasure in presenting the 14th Annual Report of your company,
alongwith the Audited Statement of Accounts, Auditors’ Report and Comments and Review of the
Comptroller and Auditor General of India, on the Accounts for the financial year ended March 31,
2014.
FINANCIAL PERFORMANCE
The financial performance for fiscal 2013-14 is summarized as below:
S.
No
1
2
3
4
5
6
7
8
9
10
Particulars
Income from services
Other Income
Expenditure [Excluding Interest and depreciation]
Profit before interest, depreciation and tax [EBIDTA]
Depreciation
Interest
Profit/(Loss) before prior period adjustment
Prior period adjustments
Profit/loss before tax
Provision for deferred tax
Tax Provision for the year
Tax Provision for the earlier years
Wealth tax
11 Net Profit/Loss for the year
1
2
3
4 = 1+2-3
5
6
7=4-(5+6)
8
9=7+8
10
11=9+10
2013-14
[Rs. in Lacs]
2,615,326
184,309
2,868,679
(69,044)
602,317
21,964
(693,325)
(19,094)
(712,419)
10,443
Note 1
(701,976)
Note 1: Wealth tax expenditure booked for the current year is Rs. 84 lacs which is included in the expenditure
(excluding interest and depreciation) shown at serial no 3.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
During the year 2013-14, the company incurred a loss of Rs. 7,019.76 Crore [Previous year
Rs. 7,884.44 Crore]. While the Income from services is Rs. 26,153.26 Crore [Previous year
Rs.25,654.81 Crore], other income was Rs. 1,843.09 Crore [Previous year Rs. 1,473.08 Crore].
There was an increase of 1.94 % in Income from services in comparison to previous year, the other
income increased by 25.12 %. There was an increase of 3.20 % in the total Income in comparison
with the previous year.
The Employee benefit expenses and Office & Administration expense has shown an increase of
12.20 % and 5.82 % respectively.
11
OUTLOOK
During the year under review, your Directors continued to work on the vision of creating a customer
focused organization. Your Directors on their part have taken various strategic initiatives to improve
company’s operating efficiency and revenue earning potentials to spear overall growth and
productivity in the organization. Focus is on service, differentiation and operational agility to cater
to subscribers on Pan India basis. Initiatives such as capacity expansion, technology upgradation
coupled with revenue assurance are likely to enhance revenue and restrain the losses.
DIVIDENDS AND BORROWINGS
In view of the losses suffered by the Company, Your Directors do not recommend any dividend
for the year.
Opening balance of borrowings stood at Rs.2,561.1403 Crores as on 1.4.2013. During the year
under review, your company borrowed Rs.5,603.6133 crore and repaid an amount of Rs.4,426.2207
Crore. The loan balance as on 31.3.2014 stood at Rs.3,738.5329 crore.
MEMORANDUM OF UNDERSTANDING [MoU] WITH THE DEPARTMENT OF
TELECOM
In compliance with the guidelines for “MoU Signing and Monitoring Mechanism” issued by the
Department of Public Enterprises, Government of India, Your Company has been signing the MoU
with the Department of Telecommunications since 2004-05.
PHYSICAL PERFORMANCE
Your Company, despite operating in a very highly competitive and consumer driven market with
pressure on earnings was able to restrain the negative trend to some extent.
The status of MoU Targets and Net Achievements in respect of physical performance during the
year 2013-14 is as follows:S.
No
1
1(a)
1(b)
1(c)
2
2(a)
2(b)
2(C)
3
Item
Unit
MoU
Status
Status
Net
%age of
Target for
as on
as on
achievement
achievement
13-14 31.3.2013 31.3.2014 during 2013-14 against annual
target
Lakh
80.00 1,216.53 1,131.38
-85.15
-106.44
Conn
Total
Telephone
connection
Wireline
“
WLL
“
Mobile
“
Total switching Lakh
capacity
Lines
Wireline
“
WLL
“
Mobile
“
VPT
Nos
0.00
0.00
80.00
90
90
-
204.46
27.02
985.05
1,248.97
184.88
22.49
924.00
1,275.31
-19.58
-4.53
-61.05
26.34
398.58
85.19
765.20
577,882
383.99
84.54
806.78
578,267
-14.59
-0.65
41.58
385
12
-76.31
29.26
46.20
Annual Report 2013-14
S.
No
Item
4(a)
Broadband
Wireline
FTTH
EVDO
connection
Wimax
connection
Broadband
capacity
OF Cable
4(b)
4(c)
4(d)
5
6
Unit
MoU
Status
Status
Net
%age of
Target for
as on
as on
achievement
achievement
13-14 31.3.2013 31.3.2014 during 2013-14 against annual
target
Lakh
99.28
99.65
0.37
1.38
cons
Nos
11,445
25,146
13,701
60.42
30
Nos
101,538
93,671
-7,867
-15.73
Nos
Lakh
16.1
Ports
Route 20,000
Kms
85,329
124,963
39,634
17.83
100.18
100.18
0.00
0.00
719,935
734,323
14,388
71.94
SERVICES AND PLANS
MOBILE SEGMENT
With affordable and innovative tariff plans your company offers its Mobile services in almost every
nook and corner of the country.
A glimpse of GSM coverage of your company, as on 31.3.2014 is as follows:S. No Parameter
1
District Headquarters (DHQ)
2
Block Headquarters (BHQ)
3
Villages
4
National Highway (In Kms)
5
Total
Covered
% Coverage
632
632
100.00
6,210
6,110
98.39
5,93,601
3,91,776
66.00
67,493
59,861
88.69
State Highway (In Kms)
1,42,083
98,511
69.33
6
Railway Route (In Kms)
55,414
46,299
83.55
7
Area (Sq.Km)
32,89,212
18,82,837
57.24
8
Population (In lakh)
12,389
7,858
63.43
To augment the capacity, during 2014-15, your company plans to add 10 Million net GSM
connections and 12.5 million GSM capacity.
WIMAX & CDMA SERVICES
CDMA WLL Services
During the year under review 3,41,150 WLL connections and 21,845 EVDO connections were
provided. Your Company is making all round efforts to improve WLL services by providing value
added services like SMS, UMS & high speed packet data, prepaid services. Full mobile service,
CRBT & Voice SMS services have been launched on CDMA. MNP on CDMA is also working. On
the other hand, provisioning of new services at affordable prices, introduction of various attractive
13
tariff plans and improved marketing strategies are being envisaged for improvement in the services.
The CDMA WLL connections are being given on demand in most of the areas in all the circles.
At present, the latest Mobile Switching Centre (MSC) based 2,000 IX/EVDO system is being used
extensively in the company’s network. Your company is optimizing its network continuously for
its performance. In order to reduce the interruptions occurring due to media failure, more Ring
connectivity of Optical Fiber Cable (OFC) media are being provided to WLL BTSs.
However, your company does not have future expansion plan in CDMA WLL.
WiMAX Services
During the year under review, your company provided 39,634 WiMAX connections. Your company
is making all out efforts to popularize WiMAX services by introduction of various attractive tariff
plans and improved marketing strategies. Prepaid services on WiMAX have been tested for launching
of these services. Procurement of CPEs is planned to provide connections and utilize the available
capacity of WiMAX.
However, your company does not have future expansion plan in WiMAX.
FIXED ACCESS SEGMENT
During the year under review, 13,40,281 number of wireline connections were provided, whereas,
the net achievement was 19,57,915 against zero MoU Target for the year 2013-14. Your Company
is in process of migrating C-DOT TDM technology exchanges covering most of the rural India, with
NGN solution being developed by C-DOT. Field trials are already completed. MoU has already
been signed between the Company and C-DOT. In first phase 100 locations are being covered and
balance sites will be covered in Phase-2.
With the migration to NGN network, your company will be able to offer following new services/
value added services to the wire-line customersWide Area IP Centrex - IP Centrex allows small and medium size enterprises to deploy PABX/CUG
service without really installing system physically in their premises
Multimedia Video conferencing service will be available across the country
The prepaid solution will be provided with all functionalities to provide voice, video and data prepaid services including roaming
Fixed Mobile convergence (FMC) by using the NGN-IMS core alongwith the PSTN Access network
and already deployed mobile network.
VALUE ADDED SERVICES
Your Company has been providing various Value Added Services through its Mobile Network as
well as fixed line Broadband network viz. M-Valet, Movies on Demand, on-line education services
etc.
BROADBAND SERVICES
Your Company’s broadband services are one among the best in the country. To accelerate further
growth of business in this segment, your Company constantly monitors the service and offers
innovative tariff plans, new technologies etc.
14
Annual Report 2013-14
Universal Access Number (UAN) with revised tariff positioned for bulk users. New tariff (MoU
based) introduced in Universal ITC (UITC) Cards. ISD Tariff for all countries for UITC, FLPP Gen.
& FLPP PCO was revised with comprehensive list of countries/codes. Work order has been issued
to M/s Alcatel-Lucent for AMC of IN equipments for 5 years w.e.f. 1.4.2014 with special terms and
conditions for operating fixed line IN services which will further reduce operational expenditure.
A glimpse of Broadband coverage of your company, as on 31.3.2014 is as follows:S. No Parameter
1
District Headquarters (DHQ)
2
Total
Covered
% Coverage
632
628
99.37
Block Headquarters (BHQ)
6,210
6,005
96.70
3
Cities
4,645
4,443
95.65
4
Villages
593,601
169,532
28.56
ENTERPRISE BUSINESS
Special focus is being paid to cater to the business needs of the Enterprise customers of your company
segmented in Platinum, Gold and Silver categories. Platinum customers are being served on panIndia basis through single window concept through nine platinum offices located at Ahemedabad,
Bangalore Chennai, Hyderabad, Kolkata, Mumbai, NCR I, NCR II Delhi and Pune, covering around
1,033 Platinum Accounts.
Apart from the ISDN-PRI and Bulk broadband connections, these customers are also offered MPLS
based leased line, MPLS based managed network service, Point to Point leased line, VPNoBB
services, VSAT services and Internet Data Centre Services.
MPLS based Next Generation Transport Project(MNGT)
This has been implemented for expansion of the Core Network alongwith International Gateways
to enhance the capacity of carrying Internet traffic of wire line and wireless network. In this project
42 Core Routers and 30 LAN switches were installed and commissioned alongwith redeployment
of 30 Nos of existing core routers which are now being used as Edge Routers in the field.
Managed Leased Line Network(MLLN)
Equipment was purchased for expansion of existing MLLN network which is meant to provide
Leased Lines of n*64 upto 2 Mbps to the enterprise customers. In this 1,500 V-MUXs and 40 DXC
were installed, enhancing the existing capacity by 21,000 ports/modem.
Leased Circuits
18,996 leased circuits had been commissioned in the year under review.
Procurement of additional cards for upgradation of Edge Routers in the existing MPLS Network
was done to augment the port capacity for the customer connectivity and BSNL services which
provided additional 10,000 number of E1 ports, 600 number of GE ports and 60 number of 10 GE
ports.
Following projects have been planned for the financial year 2014-15 :
 Replacement of life expired MPLS Network Management System
15
 To increase the reach of MPLS network 232 No. of MPLS Edge Routers at 186
locations
 To facilitate IPv4-IPv6 interoperability at International gateways Carrier Grade Network
Address translator is planned to be deployed.
ILD Business Operations and Plans
Your Company is having agreements / ITSAs with AT & T - USA, Jaina - USA, TIS - Italy, Belgacom
- Belgium, Tata Teleglobe Canada, BTCL Bangladesh, MCI USA, C & WW UK, Metrofi USA, dU
- UAE, MPT - Myanmar, Oman Telecom, Etisalat – UAE, Optus – Australia, Q Tel - Quatar, Sprint
- USA , iBasis USA, STC Saudi Arabia, PCCW - HK, IDT – HK, SLT Sri Lanka, TM- Malaysia, FT
France, Nepal Telecom - Nepal, Bhutan Telecom - Bhutan, UTL - Nepal, for exchange of voice
traffic.
Bilateral agreement with Etisalat, DU UAE and Saudi Telecom Corporation (STC) have been signed
for exchange of international voice traffic.
There was saving of around Rs.30 crores in Financial Year 2013-14 in comparison to Financial Year
2012-13, for procuring, commissioning and maintenance of international bandwidth for internet
on one year lease basis.
Joint Ventures/Strategic Alliances/Business Devlopment programmes etc. including Memorandum
of Understanding, Agreements
Your Company has become a consortium member of Europe India Gateway(EIG) Submarine Cable
System as a non-landing party. This cable is from Mumbai to London connecting countries Portugal,
Gibraltar, Monaco, France, Libya, Egypt, Saudi Arab, Djibouti, Oman and UAE. The end to end
connectivity is from Mumbai to London. BSNL has ownership of 7.09% in EIG cable system.
The EIG cable was RFS (Ready for Service) providing EIG end to end connectivity on 4-12-2013.
BSNL has started using the EIG cable which is loaded with international internet bandwidth
activated in Financial Year 2013-14. Further, your company is also participating in 1st upgradation
of existing EIG capacity by 50G at a cost of US $ 1.58 Million.
PROVISION AND OPERATION OF SATELLITE BASED SERVICES USING GATEWAY
INSTALLED IN INDIA USING INMARSAT TECHNOLOGY
On 25th August 2014, Your Company has been granted License for provisioning and operation
of satellite based services using gateway installed in India, with All India Service Area valid for a
period of 20 years, on sui-generis category, using INMARSAT as technology partner.
ADDITIONAL REVENUE STREAMS
Management of your Company has been trying to explore various methods to augment the revenue
stream. Monetization of vacant land parcels through development by engaging a developer under
PPP mode is one such avenue has been identified.
During the period under review, 739 towers were leased out, which resulted in earning revenue
of Rs.98.88 crores.
DEVELOPMENT OF RURAL TELECOM NETWORK
A glimpse of the rural coverage of your company as on 31.3.2014 is as follows :16
Annual Report 2013-14
S. No
1
2
3
4
Parameter
Village Public Telephones
GSM
CDMA
Broadband
Total villages
5,93,601
5,93,601
5,93,601
5,93,601
Covered
5,78,267
3,91,776
4,69,389
1,69,522
% Coverage
97.42
66.00
79.07
28.56
COMPUTERISATION AND IT
Implementation of CDR Project
The CDR project implementation was completed in April, 2012. This takes care of customer care,
billing and post billing operations for landline and broadband customers across the country. This
has resulted in advantages like faster implementation of telecom tariff across the country, corporate
monitoring of billing, revenue and customer care including faults. From the customer’s point of
view, this gives an advantage of uniform customer experience across SSAs, Internet based portal
payments, combined bill of landline and broadband services, uniform standard bill format across
the country, customer friendly tariff packages like fair usage policy etc.
Implementation of ERP
On successful completion of the proof of concept phase of the ERP Project till October 2013
ERP was implemented in the telecom factory (Mumbai), Training Centre (ALTTC, Ghaziabad),
a project circle (Western Telecom Project), a Maintenance Region (Southern Telecom Region),
two Territorial Circles (Karnataka and Maharashtra) and the Corporate Office having resolved the
post implementation issues your Directors have decided to complete the roll out phase in all the
remaining units during this financial year. Implementation of ERP across the Organization will
enable profit centre accounting (lines of business wise), cost control of inventory across units,
efficient asset management, centralized data base of all the employees, centralized (circle wise)
pay roll processing, centralized operations leading to standard optimal procedures and having
centralized IT systems leading to transparency, visibility of information and data accuracy.
TELECOM FACTORIES
Telecom Factories of your Company located at Kolkatta, Gopalpur, Kharagpur, Jabalpur, Richhai,
Bhilai and Mumbai are in-house manufacturing units engaged in production of various telecom
products. These factories with a staff strength of 2,287 as on 1st April 2014 touched the output of
Rs.153.25 crore in the year under review. For 2014-15, a target of Rs.500 crores has been set for
them.
Your Directors have initiated several initiatives for setting up manufacturing facilities for various
telecom/electronic equipments and other related products for revenue generation by gainful
utilization of the huge infrastructure of these telecom factories, by selection of suitable partners.
Advance work order has been issued to M/s Fujikura Ltd., Japan for utilization of spareable
infrastructure of TF Mumbai for setting up manufacturing facilities for OF Cable, Accessories /
Network components and other related products.
Floating / finalization of EoI/RFP is underway for the following:
 Selection of partner for setting up manufacturing facilities for production of latest
technology batteries for telecom / non telecom applications at TF Kharagpur;
17
 Selection of partner for setting up manufacturing facilities for solar power supply system
for telecom and non telecom applications at TF Bhilai;
 Selection of a consultant to advise and assist your Company in selection of suitable
partners for manufacturing various telecom/electronic equipment and other related
products in Telecom Factories.
In addition, the production of PLB HDPE Telecom Duct is being augmented in Telecom Factories
to meet the increased demand for NOFN Project being implemented by your Company. To meet
the internal demand of the Company, 2 Nos. of manufacturing lines have also been purchased.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Industrial Relations
Industrial relations have remained by and large cordial during the year under review.
CORPORATE RESTRUCTURING PLANS
Your Company has engaged M/s Deloittee to undertake comprehensive review and prepare a
financial revival plan. The consultant will also prepare a comprehensive HR plan – Organisation
structure alongwith staffing norms for different roles and cadres, new streams required to facilitate
company’s core business and man power plan for the next 5 years – to bring down the expenditure
on staff and suggest the strategy with specific action plan for sustainable revival of the Company.
TRAINING OF EMPLOYEES
Your Company’s state of the art training centres located at various places design and conduct
number of training programmes, for the skill development and quality training of the employees of
various levels. By opting for the on-line/computer based programmes for completing the mandatory
EPP upgradation trainings, considerable cost saving has been effected by the training centres.
BSNL AICTE Employability Enhancement Training Programme
Pursuant to the MoU entered into with the All India Council for Technical Education(AICTE) for
utilizing the training facilities and faculty of the Company for benefit of students covered under
this programme, a total of 7,555 engineering students got benefitted. The initiative was centrally
implemented and monitored through BRBRAITT, Jabalpur and supported by other Training centres
of the Company. A total of Rs.8.4 Cr was earned by the Company under this segment.
Training Revenues
During the year under review about 1,10,000 students got associated with the Company for
vocational/summer training programmes and a total revenue of of Rs.27 Crores was earned under
this segment.
Foreign Deputations
During the period under review, 40 officers of the Company were deputed abroad for various
training programmes, exhibitions, meetings, conferences and business meetings etc., to have first
hand information on the latest developments taking place in the telecommunication sector and for
upgrading the knowledge and skills
18
Annual Report 2013-14
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
The Government’s guidelines on the implementation of the official language policy is followed
scrupulously. Your Company has a full fledged official language Wing.
RESERVATION POLICIES OF THE CENTRAL GOVERNMENT
Government policies with regard to reservations for various categories of employees in the matters
of recruitments and promotions are being followed.
A glimpse of representation of Scheduled Caste, Scheduled Tribe, OBC, Ex-Servicemen, Physically
Disabled employees and their representation as on 31.3.2014:Group
Executive
Non-Executive
Total
Total No. of
Employees
47,768
1,90,509
2,38,277
Scheduled
Caste
7,668
35,363
43,031
Category
Blindness of low vision
Hearing Impairment
Locomotor Disability or Cerebral Palsy
Scheduled
Tribe
2,341
9,960
12,301
Executive
0
9
166
OBC
5,655
14,933
20,588
Non-Executive
29
22
347
ExServicemen
113
490
603
Total
29
31
513
STAFF GRIEVANCES REDRESSAL MACHINERY
Your Company has established a Staff Grievancs Redressal Cell at the Corporate Office for looking
into the grievances of the staff members. Similar cells have also been established at Circle/SSA
levels.
COMPLAINTS COMMITTEE FOR REDRESSAL OF SEXUAL HARASSMENT AT WORK
PLACES
In compliance with the guidelines of the Government on the subject, your Company has established
a Complaints Committee at the Corporate Office and at Circle/SSA level for looking into the
complaints of employees regarding sexual harassment at work place.
CORPORATE SOCIAL RESPONSIBILITIES
Your Company, being a pan-India service provider of telecom services – very crucial in the nation
building and connectivity, the philosophy of corporate social responsibility was also one of its
pursuits. Apart from the programmes aimed at the welfare of the employees and their family
members, Your company was also pursuing the objectives of CSR in various other spheres viz.,
Contributions to the PM’s National Relief Fund, Assistance during natural calamities etc. To guide
these programmes, Your Board had its Corporate Social Responsibility Policy. Your Company
always remains at the forefront to serve the people when difficult circumstances arise due to natural
calamities.
When the natural calamity struck the state of Jammu and Kashmir, your Company rose to the
occasion and put in its best efforts to restore the communication links of that region by bringing
19
satellite based services (DSPT) etc. A task force team is working in close coordination with the
Army and the local administration to restore the services.
With a view to provide immediate relief to the victims, your Company has allowed free calls
(local as well as STD) and free SMS service to all those BSNL customers who will be using BSNL’s
mobile network in the Srinagar area for ten days starting from 12.9.2014. Further, there shall be no
incoming/outgoing barring for postpaid customers for one month from 12.9.2014.
Constitution of the Corporate Social Responsibility (CSR) Committee of the Board
Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules
thereunder, Your Board, in its 154th meeting held on 7.3.2014 constituted the Corporate
Social Responsibility Committee (CSR Committee) of the Board comprising Shri Ajai Vikram
Singh Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta
Director(CFA) as Members and the Secretary of the Company as the Secretary of the Committee.
The Terms of Reference of the CSR Committee are as per the provisions of the Section 135 of
the Companies Act 2013 and Rules made thereunder. Owing to losses, no specific budget was
earmarked for the CSR activities during the year under review.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION
Being a service providing Company, these rules are not applicable to your Company. However,
as a responsible corporate citizen, your Company is fully concerned and committed as regards
its responsibility for Environmental Protection. Therefore, all required measures for Energy
Conservation and Use of Alternate Renewable Energy Resources are being taken at all levels.
Awards for Energy Conservation
Your Company was awarded 1st and 2nd National Level Energy Conservation award by the Ministry
of Power.
Certificate of Merit was awarded to your Company by Bureau of Energy Efficiency, Ministry of
Power.
FOREIGN EXCHANGE EARNINGS AND OUTGO
Earned:
Used :
-
-
32.89 Crore
96.45 Crore
COMPLIANCES
All the Senior Management Personnel including key managerial personnel handling different
verticals/units have been delegated with administrative and financial powers thereto, are responsible
to ensure adherence to all the applicable laws, rules, guidelines etc., and ensures the compliance
of the enterprise risk management policy of the company as a routine, while taking or processing
the detail for decision or approval by the competent authority(ies). The Company Secretary ensures
the compliance of all the applicable provisions of the Companies Act and other applicable laws.
Being the successor and assigns of the erstwhile Departments of Telecom Services and Telecom
Operations with vast geographical spread, the BSNL follows the existing system. Accordingly, all
the litigations before the hon’ble courts are handled by the respective verticals and units under
their control with the help of Advocates.
20
Annual Report 2013-14
RIGHT TO INFORMATION
In line with the directions contained in the Right to Information Act 2005, Your Company has
nominated CPIOs at the Corporate Office as well as the field units of the Company for providing
information to citizens.
CORPORATE GOVERNANCE
The term Corporate Governance connotes putting in a system of best practices in the sphere of
governance, which in turn, lead to value maximization for all the stakeholders. Existing governance
practices have been strengthened further over the years with sustained focus on excellence in all
spheres.
The Guidelines on Corporate Governance for the Unlisted CPSEs laid down by the Department of
Public Enterprises are being implemented by the Company with effect from the year 2008-09.
All the Members of the Board; and the Senior Management Personnel of the Company have affirmed
compliance with the Company’s Codes of Conduct for the Members of the Board and the Senior
Management Personnel, respectively.
Your Company has obtained certificate from M/s Hemant Singh & Associates, Company Secretaries,
regarding compliance of conditions of corporate governance as stipulated in the Guidelines
on Corporate Governance for Central Public Sector Enterprises 2007, and revised further vide
No.18(8)/2005-GM, dated 14.5.2010, issued by the Department of Public Enterprises.
Management Discussion and Analysis Report, Report on Corporate Governance, together with the
Certificate on compliance of conditions of corporate governance as stipulated in the Guidelines
on Corporate Governance for Central Public Sector Enterprises forms part of this Report. Quarterly
progress reports on the implementation of CG Norms for the unlisted CPSEs issued by the DPE are
being sent regularly to the Administrative Ministry.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors of the
Company hereby confirm:
(i)
that in the preparation of the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
(ii)
that the Directors had selected such accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the financial year and of the profit or
loss of the Company for that period;
(iii) that 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;
(iv) that the Directors had prepared the annual accounts on a going concern basis.
STATUTORY DISCLOSURES
None of the Directors of your Company is disqualified as per provision of Section 274(1)(g) of the
Companies Act, 1956.
21
Further, Your Directors have made necessary disclosures, as required under various provisions of
the Act, which were taken note by the Board of Directors and requisite forms were filed with the
appropriate authorities.
None of the employees of your Company is drawing remuneration exceeding the limits laid down
under provisions of section 217(2A) of the Companies Act 1956 read with Companies (Particulars
of Employees) Rules, 1975.
DIRECTORS
Government of India, Ministry of Communications and IT, Department of Telecommunications
vide their order No. 1-1/2014-PSA dated 6.5.2014 and 11.06.2014 communicated the approval
of the competent authority for extension of the tenure of Shri R.K.Upadhyay CMD upto 30.4.2014
and thereafter upto 30.6.2014 i.e., the date of his superannuation.
Pursuant to Government of India, Ministry of Communications and IT, Department of
Telecommunications order No.1-10/2011-PSA dated 30.6.2014, consequent upon attaining the
age of superannuation Shri Upadhyay retired from service w.e.f., afternoon of 30.6.2014.
Pursuant to GoI, MoC & IT, DoT Order No.1-1/2014-PSA dated 30.6.2014 in terms of the instructions
contained in the DoP & T (Office of Establishment officer) OM No.26(3)EO/2004(ACC) dated
17.8.2005, the competent authority approved the entrustment of the additional charge of the post
of CMD to Shri A.N. Rai Director(E) for a period of three months w.e.f., 1.07.2014 or until further
orders, whichever is the earliest. During the period of holding additional charge as aforesaid, Shri
A.N. Rai will not be entitled to any additional remuneration. Shri Rai assumed the charge of office
of CMD on Forenoon of 1.7.2014.
Government of India, Ministry of Communications and IT, Department of Telecommunications
vide their Notification No.1-4/2012-PSA dated 13.2.2013 conveyed the ex-post-facto approval of
the ACC for entrustment of the Additional charge of Director(HR) to Shri A.N.Rai Director(E) for
a further period of six months beyond 4.12.2012 or till a regular incumbent is appointed or until
further orders, whichever is earliest.
Thereafter, wef 4.6.2013, till the receipt of further orders from Department of Telecom, CMD
was looking after the additional charge of the Director (HR). Government of India, Ministry of
Communications and IT, Department of Telecommunications vide Notification No1-4/2012-PSA
dated 8.8.2013 conveyed the approval of ACC for extension of additional charge of the post of
Director(HR) in favour of Shri A.N.Rai Director(Enterprise) for a period of six months beyond
4.6.2013 or till a regular incumbent is appointed or until further orders, whichever is earliest.
Thereafter, wef 4.12.2013, till the receipt of further orders from Department of Telecom, CMD
was looking after the additional charge of the Director (HR). Government of India, Ministry of
Communications and IT, Department of Telecommunications vide Order No.1-4/2012-PSA, dated
7.2.2014 conveyed the approval of the Appointments Committee of the Cabinet conveyed by the
DoP & T (ACC) vide their communication No.24(6)EO/2012(ACC), dated 30.1.2014, the extension
of entrustment of the additional charge of Director(HRD) in favour of Shri A.N.Rai Director(Enterprise)
for a period of six months wef 4.12.2013 or till a regular incumbent is appointed or until further
orders, whichever is the earliest. Consequent upon the completion of the period on 3.6.2014, since
4.6.2014, additional charge of the office of Director(HR) vest in the CMD.
22
Annual Report 2013-14
Pursuant to Government of India, Ministry of Communications and IT, Department of
Telecommunications Notification No. 1-3/2013-PSA, dated 31.1.2013 appointing Shri Anupam
Shrivastava as Director(CM) in scale of pay of Rs.75,000-1,00,000/-[IDA] scale for a period of
five years from the date of assumption of charge of the post on or after 1.5.2013, Shri Shrivastava
assumed the charge of office of Director(CM) wef 1.5.2013.
Pursuant to Government of India, Ministry of Communications and IT, Department of
Telecommunications Notification No.1-2/2010-PSA(Vol.II), dated 29.1.2013, on attaining the age
of superannuation, Shri K.C.G.K.Pillai Director(Finance) retired from the service wef the Afternoon
of 30.11.2013.
Thereafter, wef 01.12.2013, till the receipt of further orders from Department of Telecom, CMD
was looking after the additional charge of the Director(Fin). Government of India, Ministry of
Communications and IT, Department of Telecommunications, vide Order No.1-4/2012-PSA, dated
the 5th February 2014 communicated that, in terms of DoP & T (Office of Establishment Officer)
OM No.26(3)EO/2004(ACC) dated 17.8.2005, the additional charge of Director(F) shall vest in Shri
Anupam Shrivastava, Director(CM) with immediate effect for a period upto 28.2.2014 until further
orders whichever is the earliest.
Thereafter, wef 01.03.2014, till the receipt of further orders from Department of Telecom, CMD
was looking after the additional charge of the Director (Finance). Government of India Ministry of
Communications and IT, Department of Telecommunications, vide Order No.1-4/2012-PSA, dated
the 9th May 2014 – pursuant to the approval of ACC conveyed by DoP & T vide No.24(5) EO/2014
(ACC) dated 30.4.2014 conveyed the extension of the entrustment of the additional charge of
the post of Director(F) to Shri Anupam Shrivastava Director(CM) for a period of six months wef
1.3.2014 or till the appointment of regular incumbent to the post or until further orders, whichever
is the earliest.
Thereafter, wef 01.09.2014, till the receipt of further orders from Department of Telecommunications,
CMD was looking after the additional charge of Director(Finance).
Pursuant to the provisions contained in Section 152 of the Companies Act 2013, Shri A.N.Rai
Director (Enterprise) [ DIN 05100500 ], who retires by rotation and, being eligible and consented
to, offers himself for re-appointment in the Annual General Meeting of the Company.
Pursuant to the provisions contained in Section 152 of the Companies Act 2013, Shri N.K.Gupta
Director (CFA) [ DIN 01140881 ], who retires by rotation and, being eligible and consented to,
offers himself for re-appointment in the Annual General Meeting of the Company.
Pursuant to the provisions contained in Section 161(3) of the Companies Act 2013 and rules made
thereunder, Article 111 of the Articles of Association of the Company, read with GoI, MoC & IT,
DoT’s Order No.5-2/2013-PSA dated 26.8.2014, the Board of Directors in their 158th meeting
held on 29.9.2014, appointed Smt.Darshana Momaya Dabral [ DIN 06975127 ] DDG(TPF) in DoT
as Government Nominee Director on the Board of Directors of the Company.
Your Directors place on record their deep appreciation for the valuable services rendered by Shri
R.K.Upadhyay CMD, Shri K.C.G.K.Pillai Director(Finance) and Shri Shahbaz Ali Government
Director during their association with the Company.
23
AUDIT COMMITTEE
The Committee has Prof.N.Balakrishnan, Non official Part Time (Independent) Director as Chairman;
and, Shri Ajai Vikram Singh Non official Part Time (Independent) Director, Shri Shahbaz Ali
Government Director [upto 26.8.2014] and Shri Anupam Shrivastava Director(CM) as Members.
Director(Finance) is the Regular Invitee and Shri H.C.Pant, the Company Secretary & Sr.GM(L) is
the Secretary of the Committee.
AUDITORS
M/s Walker Chandiok & Co., Chartered Accountants, New Delhi were appointed as Statutory
Auditors of the Company by the Comptroller & Auditor General of India. In addition to the Statutory
Auditors 47 Branch Auditors were also appointed for the year 2013-14. The Report of the Statutory
Auditors and the comments of the Comptroller and Auditor General of India, alongwith replies of
the Management thereto are attached as Addendum forming part of this Report.
COST AUDITORS
Pursuant to the directions of the Government of India, Ministry of Corporate Affairs, Cost Audit
Branch for Cost Audit of the Telecommunication Companies by the Cost Accountants, Your
Company has appointed M/s Chandra Wadhwa & Co., Cost Accountants as Cost Auditors for
carrying out the Cost Audit of the Company for the year 2013-14. The Cost Audit Report for the
Financial Year 2012-13 was filed with the MCA, Registrar of Companies on 18.01.2014.
Your Board has appointed M/s Balwinder & Associates, Cost Accountants as Cost Auditor of the
Company for conducting the Cost Audit and Accounting Separation Report (ASR) Audit for the
Financial Year 2014-15. Further, pursuant to the provisions of Section 148 of the Companies Act
2013 and Rule 14(a) of the Companies (Audit and Auditors) Rules 2014, Your Board has approved
the remuneration of Rs.3,99,000/-[Rupees Three Lakh Ninety-Nine Thousand only] plus applicable
taxes as Audit Fee to M/s Balwinder & Associates Cost Auditor, subject to ratification of the same
by the Members in the ensuing Annual General Meeting.
Shri A.N. Rai, CMD inaugurating the Swachh Bharat Abhiyaan campaign in BSNL on
2nd October, 2014.
24
Annual Report 2013-14
ACKNOWLEDGEMENTS
Your Directors would like to place on record their sincere appreciation and gratitude to the
subscribers of Company’s telecom services, the stakeholders, and bankers and to all the State
Governments and regulatory authorities for their continued cooperation and invaluable support.
Your Directors express their deep appreciation for the hard work and dedicated efforts put in by the
employees at all levels and look forward to their continued contribution in achieving the mission
and objective of the Company.
For and on behalf of the Board of Directors,
Sd/[A.N.RAI]
CHAIRMAN AND MANAGING DIRECTOR
Place : NEW DELHI
Dated : 29.09.2014
DECLARATION BY THE CHAIRMAN AND MANAGING DIRECTOR REGARDING
COMPLIANCE WITH THE CODE OF CONDUCT BY THE BOARD MEMBERS AND THE
SENIOR MANAGEMENT PERSONNEL OF THE COMPANY DURING THE FINANCIAL
YEAR 2013-14
I, A.N.Rai, Chairman and Managing Director Bharat Sanchar Nigam Limited, do hereby declare
that all the Members of the Board and the Senior Management Personnel of the Company have
affirmed their compliance to the Code of “Conduct for Board Members and the Senior Management
Personnel” during 2013-14
Sd/[A.N.RAI]
CHAIRMAN AND MANAGING DIRECTOR
Place : NEW DELHI
Dated : 18.09.2014
25
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
INDUSTRY STRUCTURE AND DEVELOPMENTS
Indian Telecom sector witnessed a very fast growth in the past decade. Demand for more
specialized services in the sector has fuelled the technological advancements. With a major role in the
country’s socio-economic development, telecom sector plays a pivotal role in the overall growth story.
Liberalisation of the sector and huge investments have accelerated the pace of the growth of the sector.
Telecom services, after hyper competitive and volatile stint, are now slowly gaining stability. This,
together with an increased spurt of passive infra sharing, outsourcing of non-core network functions
etc., is expected to rationalize the capex and opex of the existing large operators, thus, leading to
availability of affordable services to the common man.
MAJOR REGULATORY DEVELOPMENTS/CHALLENGES
STRENGTHS / OPPORTUNITIES/WEAKNESS/THREATS
Century old expertise as telecom operator, huge spareable passive infra, last mile linkage across the
nook and corner of the country and seamless connectivity across the regions make BSNL unique
amongst the incumbent operators.
Government’s plans for smart cities, new industrial corridors and huge infra expansions indicate
a strong business opportunity. These expansions may fuel demand for voice and data services
from both enterprise customers as well as the individual subscriber. Further, growth plans have
increased the demand for more personalized services. BSNL with its strength is likely to position
itself as the leading pan-India service provider.
OUTLOOK
The telecom sector has witnessed considerable technological advancements and huge investments
in the core infra in the past decade. Government’s thrust on e-delivery, ever increasing demand for
non-voice telecom services and the huge untapped rural market for data services present a strong
business case for the sector in the coming days.
RISKS AND CONCERNS
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Being the successor of erstwhile Central Government Departments of Telecom Services and
Telecom Operations, your company has a well defined and planned internal control systems and
procedures commensurate with its size and operations. Internal checks are routinely carried out
by the internal audit teams all over the country. Internal audit wing of the Company is headed by
a Principal General Manager(PGM) level officer.
Apart from its own Internal Audit machinery, Your Company, being the Central Public Sector
Enterprise, is subject to the Resident Audit Office scheme of the Director General of P & T Audit
under the aegis of C & AG of India, CVC Mechanism with independent CVO and the Guidelines
of the Department of Public Enterprises.
In accordance with the Guidelines on Corporate Governance Norms issued by the Department of
Public Enterprises, the Audit Committee of the Board had discussions with the Internal Audit Teams
and reviewed the Internal Audit Paras.
Further, pursuant to the directions of the Government of India, Ministry of Corporate Affairs for
Cost Audit of the Telecommunication Companies by the Cost Accountants, your Company has
appointed Cost Auditors.
26
Annual Report 2013-14
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
During the year 2013-14, the company incurred a loss of Rs. 7,019.76Crore [Previous year
Rs. 7,884.44 Crore]. While the Income from services is Rs. 26,152.26 Crore [Previous year
Rs. 25,654.81 Crore], other income was Rs. 1,843.09 Crore [Previous year Rs. 1,473.08 Crore].
There was an increase of 1.94 % in Income from services in comparison to previous year, the other
income increased by 25.12 %. There was an increase of 3.20 % in the total Income in comparison
with the previous year.
The Employee benefit expenses and Office & Administration expense has shown an increase of
12.20 % and 5.82 % respectively.
Environmental PROTECTION AND CONSERVATION, TECHNOLOGICAL
CONSERVATION, RENEWABLE ENERGY DEVELOPMENTS, FOREIGN EXCHANGE
CONSERVATIONS
As a responsible corporate citizen, Your Company is fully concerned and committed as regards its
responsibility for Environment.
Apart from using energy efficient products, the implementation of energy conservation measures
are being monitored regularly. These steps have resulted in a saving of Rs.84.40 crores.
CORPORATE SOCIAL RESPONSIBILITY
The philosophy of corporate social responsibility - hovering around wide array of spectrum of
activities like nation building, energy conservation, technological empowerment of citizens with
affordable communication means are pursuits of the organization itself. In addition, assistance and
welfare programmes for the staff and their family members are pursued as a routine.
Constitution of the Corporate Social Responsibility (CSR) Committee of the Board
Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules
thereunder, the Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social
Responsibility Committee(CSR Committee) of the Board comprising Shri Ajai Vikram Singh
Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta
Director(CFA) as Members and the Secretary of the Company acts as the Secretary of the Committee.
The Terms of Reference of the CSR Committee are as per the provisions of the Section 135 of the
Companies Act 2013 and Rules made thereunder. Due to losses, there was no separate budgetary
allocation for CSR Programmes in the year 2013-14. The Company continued with its Employee/
Family related welfare schemes throughout the year.
Pursuant to the MoU entered into with the All India Council for Technical Education(AICTE) for
utilizing the training facilities and faculty of the Company for benefit of students covered under
this programme, a total of 7,555 engineering students got benefitted. The initiative was centrally
implemented and monitored through BRBRAITT,Jabalpur and supported by other Training centres
of the Company.
CAUTIONERY STATEMENT
These discussions are forward looking within the meaning of the applicable laws and regulations.
Actual performance may deviate or vary from the explicit or implicit expectations.
27
REPORT ON CORPORATE GOVERNANCE
Corporate Governance, in plain terms aims to maximize the value of all the stakeholders through a
set of guidelines and principles. Being a leading pan-India telecom service provider to the nation,
BSNL is committed to adopting the globally accepted best corporate governance norms practices.
With highly institutionalized system aiming for transparency, disclosures and internal control,
BSNL has already been complying with most of the codified norms, viz.
 Composition of the Board;
 Complete conformity with Board procedure, specially, the Secretarial Standards laid
down by the Institute of Company Secretaries of India;
 Constitution of the Audit Committee of the Board headed by Non-official Part-Time
(Independent) Director, with 2/3rd of the Members comprising of other than Wholetime Directors;
 Constitution of the Remuneration Committee of the Board as mandated by the
Corporate Governance Norms for the unlisted CPSEs issued by the Department of
Public Enterprises;
 Constitution of the Corporate Social Responsibility Committee (CSR Committee) of the
Board, as mandated by the provisions of Section 135 of the Companies Act 2013 and
Rules thereunder;
 Clear cut demarcation of powers with Delegation of Financial and Administrative Powers
to the Management Committee of the Board, CMD and the Functional Directors, and
below Board-level executives;
 Conduct, Discipline and Appeal Rules for all the Employees and reporting systems;
 Code of Conduct for the Members of the Board and annual affirmation to the Code by
the Members;
 Code of Conduct for the Senior Management Personnel of the Company and annual
affirmation to the Code by the Senior Management Personnel;
 Disclosures by the Directors to the Board of Directors and filing of requisite forms
evidencing the taking note of the disclosures by the Board with the appropriate
authorities;
 Enterprise Risk Management Policy of the Company;
 Appointment of Statutory and Branch Auditors by the C & AG of India;
 Appointment of Cost Auditors;
 Audit jurisdiction of the DG P & T’s Resident Audit Office scheme,
 Dedicated Internal Audit Set up;
 Amenability with the Guidelines of Central Vigilance Commission;
 Outside independent personnel as CVO;
 Dedicated and full-fledged Vigilance set up across the units of the country;
 Whistle blower policy in vogue;
 Compliance of the Orders and Guidelines of the Government of India - Department of
Public Enterprises, Administrative Ministry and host of other compliances.
With the introduction of Corporate Governance Norms for the Unlisted CPSEs by the Department
of Public Enterprises, for achieving complete compliance, required changes/modifications have
been put in place.
28
Annual Report 2013-14
BOARD OF DIRECTORS
Size of the Board
Being a Government Company, the power to appoint or remove a Director vest with the President
of India. The Article of Association provides that the minimum strength of the Board shall not be
less than three (03) and the maximum at fifteen (15).
Composition of the Board
The Board comprise of 12 Directors, of which 6 [including the CMD] are whole time Directors;
2 Government Nominee Directors and 4 Non-official Part Time Directors. Thus, the Board has
the optimum mix of 50% Whole-time and 50% part-time Directors. The composition is as per
the Corporate Governance Norms for the unlisted CPSEs, laid down by the Department of Public
Enterprises.
The details of the composition of the Board of Directors is as follows:Whole-Time Directors [ 06 including CMD] [Appointment against positions of CMD, Director(Finance)
and Director(HRD) awaited from the Government of India]
1.
Shri R.K.Upadhyay, CMD [Upto 30.6.2014]
Additional charge of Director(HRD) vested with CMD between 5.3.2012 to 18.6.2012; and, thereafter
charge vested with the Director(E) till 3.6.2013. Thereafter, w.e.f. 4.6.2013 till the receipt of further
orders from the GoI, CMD looked after the charge of Director(HR). GoI DoT vide their letter dated
8.8.2013, conveyed the approval of ACC for extension of additional charge of Dir(HR) to Shri
A.N.Rai Director(E) wef 4.6.2013 for a period of six months or till a regular incumbent is appointed
or until further orders whichever is the earliest. Thereafter, w.e.f. 4.12.2013 till the receipt of further
orders from the GoI, CMD looked after the charge of Director(HR). GoI, MoC & IT, DoT vide order
No.1-4/2012-PSA dated 7.2.14 conveyed the approval of ACC for extension of additional charge of
Director(HR) to Shri A.N.Rai wef 4.12.2013 for a period of six months or till a regular incumbent is
appointed or until further orders, whichever is the earliest. Thereafter, again, wef 4.6.2014, till the
receipt of further orders from GoI, CMD looked after the charge of Director(HR).
Wef 1.12.2013, till the receipt of orders from GoI, CMD was looking after the additional charge of
Director(F). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 5.2.2014 entrusted the additional
charge of the office of Director(F) to Shri Shrivastava with immediate effect for a period upto 28.2.2014
until further orders whichever is the earliest. Thereafter, wef 1.3.2014 till the receipt of further orders
of GoI, CMD was looking after the additional charge of the office of Director(F). GoI, MoC & IT,
DoT vide order No.1-4/2012-PSA dated 9.5.2014 conveyed the extension of the entrustment of the
additional charge of the post of Director(Finance) to Shri Shrivastava for a period of six months wef
1.3.2014 or till the appointment of regular incumbent to the post or until further orders, whichever
is the earliest. On attaining the age of superannuation, pursuant to the GoI, MoC & IT, DoT Order
No.1-10/2011-PSA dated 30.6.2014, Shri Upadhyay retired from service wef A/N 30.6.2014.
2.
Shri A.N.Rai CMD* / Director(Enterprise) & **(HR) & ***(Fin)
*Wef 1.7.2014 – GoI, MoC & IT, DoT vide Order No.1-1/2014-PSA dated 30.6.2014 entrusted
the additional charge of the post of CMD to Shri A.N.Rai Director(Enterprise) for a period of three
months wef 1.07.2014 or until further orders, whichever is the earliest. Shri Rai assumed the
charge of office of CMD wef F/N of 01.07.2014.
29
**Additional charge of Director(HR) vested with Shri Rai wef 5.12.2011 to 4.3.2012. Wef
5.3.2012 to 18.6.2012 additional charge vested with the CMD. Thereafter, Government of India,
M/o Communications and IT vide order dated 19.6.2012 conveyed the approval of the competent
authority for entrustment/extension of the additional charge of Dir(HR) to Shri A.N.Rai for a period
upto 4.9.2012. Thereafter, GoI DoT vide order dated 27.2.2013 conveyed the ex-post-facto approval
of the ACC for extension of the Additional charge of Dir(HR) to Director(E) for a further period of
3 months beyond 4.9.2012; which was followed by another ex-post-facto approval for a further
period of six months beyond 4.12.2012. Thereafter, w.e.f. 4.6.2013, till the receipt of further
orders, from GoI, CMD looked after the additional charge of Dir(HR). GoI, MoC & IT, DoT, vide
their order dated 8.8.2013 conveyed the approval of ACC for extension of the additional charge
of Director(HR) to Shri A.N.Rai Dir(E) wef 4.6.2013 for a period of six months or till a regular
incumbent is appointed or further orders, whichever is the earliest. Thereafter, wef 4.12.2013, till
the receipt of further orders from GoI, CMD looked after the additional charge of Dir(HR). GoI,
MoC & IT, DoT, vide order No.1-4/2012-PSA, dated 7.2.2014 conveyed the approval of the ACC
for extension of entrustment of additional charge of Director(HR) to Shri Rai for a period of six
months wef 4.12.2013 or till a regular incumbent is appointed or until further orders, whichever
is the earliest. Thereafter, till the receipt of further orders from GoI, CMD is looking after the
additional charge of office of Director(HR).
***Consequent upon the conclusion of the period of entrustment of the additional charge of
Director(F) to Shri Anupam Shrivastava Director(CM) on 31.8.2014, thereafter, till the receipt of
orders from the GoI, CMD was looking after the additional charge of Director(F).
3. Shri K.C.G.K.Pillai Director[Finance] [Upto 30.11.2013] [Pursuant to GoI, MoC & IT, DoT
order No.1-2/2010-PSA (Vol.II) dated 29.11.2013, on attaining the age of superannuation Shri
Pillai retired from service wef A/N of 30.11.2013]
4.
Shri N.K.Gupta Director(CFA) [ Wef 1.6.2012]
5.
Shri Anupam Shrivastava Director(CM) * (Fin) [ Wef 1.5.2013]
* Wef 1.12.2013, till the receipt of orders from GoI, CMD was looking after the additional charge
of Director(F). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 5.2.2014 entrusted the
additional charge of the office of Director(F) to Shri Shrivastava with immediate effect for a period
upto 28.2.2014 until further orders whichever is the earliest. Thereafter, wef 1.3.2014 till the receipt
of further orders of GoI, CMD was looking after the additional charge of the office of Director(F).
GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 9.5.2014 conveyed the extension of the
entrustment of the additional charge of the post of Director(Finance) to Shri Shrivastava for a period
of six months wef 1.3.2014 or till the appointment of regular incumbent to the post or until further
orders, whichever is the earliest. Thereafter, wef 1.9.2014, till receipt of orders from GoI, CMD was
looking after the additional charge of Director(F).
Government Nominee Directors [02 ]
1.
2.
3.
Shri Shahbaz Ali, DDG [TPF & A/cs ] in DoT [ Upto 26.8.2014]
Ms.Rita A.Teoatia Additional Secretary(T) in DoT [Wef 04.09.2012]
Smt.Darshana Momaya Dabral, DDG[TPF] in DoT [ Wef 29.9.2014]
Non-official Part-Time Directors [ 04] [ Two Positions are vacant]
1.
2.
Shri Ajai Vikram Singh, Director [ Wef 17.7.2012]
Prof.N.Balakrishnan, Director [ Wef 17.7.2012]
30
Annual Report 2013-14
Shri R.K.Upadhyay CMD [ DIN: 00204311] [Upto 30.6.2014] :- Shri Rakesh Kumar Upadhyay,
joined BSNL as Chairman & Managing Director on 30th April 2011. Shri Upadhyay is a B. Tech in
Electronics Engineering from IT, Banaras Hindu University (BHU). He is also a graduate of Defence
Services Staff College , Wellington and was awarded M.Sc.(DS) degree by Madras University . He
has done MBA in Marketing Management from Indira Gandhi Open University. His career began in
Department of Telecommunications in 1975 after his selection by UPSC for Indian Telecom Service.
In DoT, he gained experience in areas of Planning, Installation and Commissioning, Commercial
Administration and Operations. In October 1996, he proceeded on Deputation to TCIL, where he
remained till August 1999. During his deputation, he successfully worked as Project Director in
the Foreign Projects at Sana and as General Manager in Yemen. On return from TCIL, he worked in
BSNL as General Manager in J&K Circle from January 2000 to June 2003. He was again selected for
Deputation in TCIL in June 2003 where he was entrusted the job of Chief Project Director, Algeria,
Group General Manager (New Technology) and Executive Director (Project Monitoring) and other
important assignments. He took over the charge of Director (Projects), TCIL on 01.11.2005 and
was subsequently selected as Chairman & Managing Director of TCIL.
Prior to assumption of the charge of CMD BSNL, he remained at the helms of TCIL from 1st March
2007 to 29th April 2011. During his tenure in TCIL he gained rich experience in the fields of
Planning, Project Management, Operations and Business Development. In TCIL, he guided the
successful implementation of many complex projects. Some of the notable projects are: Pan African
e-Network Project – Providing Tele-Education and Tele-Medicine Services to 34 African Nations
from seven Universities and 12 Super Specialty Hospitals of India; National Internet Backbone
Project; SAARC e-Network Project; Optical Ground Wire Project over 3,000 Kilometer Electrical
Transmission Lines in live line conditions in Algeria. He has to his credit the turning around of TCIL
as its CMD.
Shri A.N.Rai CMD/Director(Enterprise) & (HR) & (Fin) [DIN: 05100500] :- Shri A.N.Rai assumed the
charge of office of Director(Enterprise) on 19.9.2011. Shri Rai, officer of Indian Telecommunications
Service 1977 batch holds B.Tech Degree in electronics and communications Engineering from
BHU Varanasi. Shri Rai, was actively associated with Installation, Commission and Maintenance of
Switching equipments at various places in the country. He was also trained in Digital Telephone
systems in various countries like UK, Germany and USA. As senior telecom management
professional, he was involved with Development, Operation and Maintenance of Telecom Services
at various places like Allahabad, Kanpur etc. As Deputy Director General at the Corporate Office,
he handled Rural Networking and CMTS areas. Prior to the joining as Director(Enterprise), he was
the Chief General Manager of Orissa Circle of the BSNL, which bagged the prestigious “Telecom
Circle of the Year 2010-11 Award”.
Shri K.C.G.K.Pillai Director[Finance] [DIN – 05283174] [Upto 30.11.2013] :- Shri K.C.G.K.Pillai
took over the charge of Director(Finance) on 25th April 2012. An MBA in Finance and Post
Graduate in Political Science, Shri Pillai, an Officer of the Indian P & T Accounts and Finance
Service-1981 batch, entered Government Service in 1982. Spanning over a career of 30 years in
the P & T Accounts and Finance Service, he served in the Uttar Pradesh, Gujarat and Maharashtra
Telecom Circles of the Department of Telecommunications; apart from a stint of over 7 Years in
the MTNL‘s Finance Wing. Possess vast experience of Budget, Banking, Treasury Management,
Human Resources and Personnel Management and Procurement Finance. Before being appointed
as Director(Finance), he was the Principal General Manager heading the Procurement Finance and
Finance-Personnel units.
31
Shri N.K.Gupta Director(CFA) [DIN: 01140881] [ Wef 1.6.2012] :- Shri Naresh Kumar Gupta took
over as Director CFA in BSNL on 1st June 2012. Shri Gupta is B.E. from Delhi College of Engineering
(DCE), in Electronics and Communications. He joined the Department of Telecommunications,
Government of India through Indian Telecommunications Services (ITS) Group A 1978 batch.
Since then he has worked in various capacities in different units of DoT/TEC/BSNL/MTNL and has
versatile experience covering almost all the fields in telecommunications including installation,
operations, development and management of telecom networks, sales and marketing and financial
management etc. Before joining as Director (CFA) on the BSNL Board, N K Gupta was working
as Chief General Manager Punjab Telecom Circle in BSNL and prior to that he was heading the
Information Technology division for CFA business unit of BSNL. He in the capacity of DDG (I) TEC
was instrumental in framing specifications and Network architecture against which BSNL and MTNL
have implemented their broadband Networks. He has represented DoT in many committees of
TRAI, DIT, and also in various Inter-Ministerial Committees like committee on preparing encryption
policy, E-Commerce and Information Security working Group. He has widely travelled abroad
and represented India in number of UN & ITU meetings including World Summit on Information
Society in Geneva and other important assignments. He was an active member of Apex Committee
involved in the planning and execution of NIB-II of BSNL and also framing the specification for
ERP implementation in BSNL which is currently in progress. He was deeply involved in Pan-India
Roll out of zonal OSS and BSS for Wire-line and Broadband segment which helped BSNL to
changeover from decentralized 334 SSA level systems to 4 zonal data centres with implementation
of world class COTS applications. N K Gupta is also instrumental in conceptualizing BSNL entry
in to the Data Center (IDC) Services business for opening up a new revenue stream by leveraging
BSNL’s existing infrastructure with an innovative revenue share model. Presently BSNL is in the
process of acquiring IDC business. As Director (CFA) BSNL, he is mainly responsible for improving
the Systems and Methods to achieve optimal performance and maximum utilization of BSNL’s
extensive country-wide Infrastructure and network. He is also responsible for achieving business
interests of the Company by way of high customer satisfaction and timely provision of quality
services in BSNL CFA segment. He is also responsible for induction & adoption of new technologies
and committed to provide state-of-the-art modern and world class telecom services in the highly
competitive environment.
Shri Anupam Shrivastava Director(CM) & * (Fin) [DIN: 06590535] [ Wef 1.5.2013] :- Shri Anupam
Shrivastava is a 1981 batch of Indian Telecom Service (ITS) Officer who has around three decades
of experience in the field of telecommunications. He is BE (Electronics & Communications) and
is also MBA (Mktg.). He has taken telecommunication trainings in India & Japan. Shri Shrivastava
joined BSNL Corporate Office as Director (CM) on 1st May, 2013 and is responsible for the growth
of mobile business of GSM / CDMA / WIMAX in BSNL, including all activities related to Sales &
Marketing, VAS, Tariff finalization & revenue. As Zonal Director for North Zone he is responsible
for monitoring growth and maintenance of Telecom Network in 8 Circles. Prior to this assignment,
Shri Shrivastava had held the post of Sr. GM, Ajmer TD where he gave special attention to Sales
& Marketing of telecom products in the SSA which resulted in physical growth of connections in
all segments and increased revenue for the SSA. Ajmer SSA was chosen for the pilot project for
NOFN which was successfully completed ahead of target. His contributions in providing quality
service to BSNL customers have been widely acknowledged and he strived to achieve benchmarks
prescribed by TRAI / BSNL C.O. for various service parameters. Shri Shrivastava also worked as GM
Jodhpur SSA and during his stint there he gave record number of mobile and landline connections
with special emphasis on data and broadband business. He also has experience of working as GM
(BB) in Rajasthan Telecom Circle with additional charge of Marketing and Enterprise Business. Shri
32
Annual Report 2013-14
Shrivastava also has overseas working experience in Zimbabwe where he was posted in Harare
while representing TCIL as Task Force Leader to upgrade their telecom services. Due to his hard
work and coordination skills the fault rate was drastically curtailed which was well appreciated
by PTC Zimbabwe and TCIL management. He was associated with 6th G-15 Summit in Harare in
1996. Shri Shrivastava has delivered lectures extensively in different institutions both in India and
abroad including many universities and management colleges. He also organized many seminars
and skill up-gradation courses at many places. A firm believer in team work, Shri Shrivastava always
sets examples by himself and uses latest technological applications to promote and inculcate team
work amongst his subordinates and maintain synergy with superiors in BSNL management.
Shri Shahbaz Ali, Government Director [DIN: 03282551] [Upto 26.8.2014] :- Shri Shahbaz Ali,
having Master Degree from Patna University, is an officer of Indian P&T Accounts & Finance
Service of 1989 Batch. He is presently working as DDG(TPF & Accounts) in GOI, Ministry of
Communication & IT, Deptt. of Telecom. Shri Ali has wide and varied experience in the field of
Telecom Sector as he has worked in various capacities in Deptt. of Telecom and its Public Sectors,
Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd.
In his present assignment, Shri Shahbaz Ali is responsible for :
●
●
●
●
Formulation of Budget of DoT.
Rendering Finance advice for DoT’s PSEs (including disinvested PSEs).
Nodal Officer for Indian Telegraph Act for billing related disputes.
Overall accounting functions of Department of Telecom.
Shri Ali has also rendered his services as Government Nominee Director on the Board of Directors
of Tata Communications Ltd.
Ms. Rita A. Teoatia Government Director [DIN: 02876666] [Wef 04.09.2012] :- Ms. Rita Teaotia
joined the Indian Administrative Service in the year 1981 and served in the districts of Panchmahal
and Gandhinagar in Gujarat. Subsequently, she worked in the energy sector as MD, Gujarat
Industries Power Company Ltd., and Secretary (Energy). She has worked extensively at policy
making and strategic levels in the fields of Education, Health, Women’s Development and rural
Development. From 2003-2007, she worked in the Government of India as Joint Secretary in the
Ministry of Health and Family Welfare. Prior to the present assignment, she also served as Additional
Secretary, in the Department of Electronics and Information Technology (DeitY),from 19th March,
2012. In this capacity, she headed the National eGovernane Plan, which entailed working closely
with all State Governments and arms of DeitY, including National Informatics Centre(NIC),
Standardisation Testing and Quality Certification (STQC) Directorate, Centre for Development of
Advance Computing (C-DAC) and National Institute of Smart Governance(NISG).At present, she is
serving as Additional Secretary in the Department of Telecommunications and ex officio Secretary
of the Telecom Commission. Ms.Rita Teaotia has received four National eGovernance awards
for applications developed during her various assignments. She holds a Masters in Medieval and
Modern Indian History from the University of Lucknow.
Shri Ajai Vikram Singh, Director [DIN : 02184840] [ Wef 17.7.2012 ] :- Shri Ajai Vikram Singh was
born at Ajmer and had his education at Mayo College (Senior Cambridge) and Government College
(Graduation), Ajmer. After a short spell in the Private Sector, he joined the Indian Administrative
Service(IAS) in 1967 and, after the initial training, was allotted to the Uttar Pradesh Cadre. He
has served in various capacities in the State and Central Governments, both, in the field and
in the Secretariats. He was District Magistrate in Ghazipur, Sultanpur, Moradabad, and Aligarh
33
districts, as also Commissioner, Lucknow Division. He has served as Managing Director of two
State enterprises (Rajasthan State Warehousing Corp-on deputation, & UP Export Corp.) In the Uttar
Pradesh Secretariat, he has been Secretary, Small Industries; Secretary, Heavy Industries; Industrial
Development Commissioner & Principal Secretary.In the Government of India, the postings have
been with the Cabinet Secretariat, Ministry of Defence, Ministry of External Affairs, and the Ministry
of Industries. He did the National Defence College(NDC) Course in 1984 during the first of his four
tenures with the Ministry of Defence. He was posted as Minister (Supply) in the High Commission
of India at London for two years. In November 2000, the State of Uttar Pradesh was bifurcated into
Uttar Pradesh and Uttaranchal, and Shri Ajai Vikram Singh was appointed as the first Chief Secretary
of the new State of Uttaranchal (Now Uttarakhand). In 2001, consequent to the re-organisation of the
Ministry of Defence, he was appointed to the newly created post of Special Secretary (Acquisition).
This involved setting up a new organization and evolving procedures for all capital acquisitions for
the Armed Forces. Subsequently, he has been Revenue Secretary (Now the Ministry of Finance),
Secretary, Ministry of Non-Conventional Energy Sources (now the Ministry of New & Renewable
Energy), Secretary, Ministry of Road Transport & Highways, and Defence Secretary. During his
various postings in the Central and State Governments, he has been Chairman of the following
Companies:- Indo-Gulf Fertilisers Ltd., India Polyfibres Ltd., Pashupati Acrylon Ltd., U.P.Textile
Corporation and U.P.Finance Corporation. In addition, he has served as Director on the Boards of,
inter-alia, the following Companies:- IFCI Ltd., BHEL Ltd., Maruti Udyog Ltd., HMT Ltd., Heavy
Engineering Corp. Ltd., Andrew Yule Ltd., Bharat Bhari Udyog Nigam Ltd., Bharat Yantra Nigam
Ltd., Hindustan Aeronautics Ltd., Mazagon Docks Ltd., Goa Shipyard Ltd., and PICUP. Shri Ajai
Vikram Singh superannuated from service on 31st July 2005, and is now living in his home-town,
Ajmer, with his wife, son, daughter-in-law, and two grand-children. He is involved with issues
connected with ecology, the environment, and local development. He is currently Chairman of the
Pune based World Institute of Sustainable Energy(WISE), a society devoted to the spread of clean
and renewable energy. He is also on the Board of Directors of Pipavav Defence & Offshore Engg.
Co.Ltd., and Overseas Infrastructure Alliance Infrastructure Alliance(India) Pvt. Ltd. He has taken
up the cultivation of Jojoba ( a non-edible oil bearing plant) and Aloe Vera on a trial basis in his
village near Ajmer.
Prof. N. Balakrishnan, Director [DIN: 00181842] [Wef 17.7.2012] :- Prof. N. Balakrishnan
received his B.E. (Hons.) in Electronics and Communication from the University of Madras in
1972 and Ph.D. from the Indian Institute of Science in 1979. He then joined the Department of
Aerospace Engineering as an Assistant Professor. He is currently the Associate Director of the
Indian Institute of Science and a Professor at the Department of Aerospace Engineering and at the
Supercomputer Education and Research Centre. His areas of research where he has more than
200 publications in the international journals and international conferences include Numerical
Electromagnetics, High Performance Computing and Networks, Polarimetric Radars, Aerospace
Electronic Systems, Information Security, Complex Social Networks and Digital Library. He has
received many awards including the Padmashree by the President of India, 2002, Homi J. Bhabha
Award for Applied Sciences, 2004, JC Bose National Fellowship in 2007, the Alumni Award for
Excellence in Research for Science & Engineering by IISc, 2001, Millennium Medal of the Indian
National Science Congress in 2000, Ph D (Honoris Causa) from Punjab Technical University in
2003, the CDAC-ACS Foundation Lecture Award in 2008 and the Academy Excellence Award,
Defence Research and Development Organization in 2009. He was the NRC Senior Resident
Research Associate at the National Severe Storms Laboratory, Norman, Oklahoma, U.S.A. from
1987-1989. He was a visiting research scientist at the University of Oklahoma in 1990, Colorado
State University in 1991 and is a Visiting Professor at Carnegie Mellon University from 2000 till
34
Annual Report 2013-14
2006. He is an Honorary Professor in Jawaharlal Nehru Centre for Advanced Scientific Research
(JNCASR). He is a Fellow of the Academy of Sciences for the Developing World (TWAS), Indian
National Science Academy, Indian Academy of Sciences, Indian National Academy of Engineering,
National Academy of Sciences and Institution of Electronics & Telecommunication Engineers. He
is one of the Directors of Data Security Council of India (Currently its Chairman), Central Bank of
India, Bharat Sanchar Nigam Limited (BSNL) and of CDOT-Alcatel Research Centre at Chennai, a
member of the Council of CDAC, Member of the Joint Advisory Board of Carnegie Mellon University
at Qatar and Member of the Governing Council of IIT Kharagpur, He was one of the editors of the
International Journal on Distributed Sensor Networks, and Editor-in-Chief, International Journal of
World Digital Libraries. Till recently he was a member of the National Security Advisory Board
and the Board of Governors of IIT Delhi and of IIT Madras. He was also one of the Directors of
the Bharat Electronics Limited (BEL), a Part-Time Member of the Telecom Regulatory Authority of
India. He is the National Coordinator of Indo-US Million Books to the Web Digital Library Projects
(www.ulib.org and www.new.dli.ernet.in ). He, along with his colleagues from India, China and
the US created the world’s largest Digital Library which proudly hosts more than a million books
that are freely accessible by any one anywhere and anytime. More details can be found at http://
swati.dli.ernet.in/balki
Smt. Darshana Momaya Dabral, Government Director [DIN: 06975127] [Wef: 29.09.2014] :Darshana Momaya Dabral (I P&T AFS, 1990 Batch): - As an Indian Civil Servant (Batch 1990), have
nearly 24 years of senior level experience at Central Government in the Dept. of Telecommunication
in the areas of Planning, Budgeting, Accounts, Revenue, Finance, Administration and overall
Financial Management. Throughout involved in key positions of critical decision making and tasks
of organisational & national transformation through drafting and implementation of legislations for
new polices.
Strengths: Leadership, focusing on collaborative team efforts, process orientation and inculcation
of transparency & accountability to extract desired levels of work efficiency and performance.
Completed PGDM (FM) (12-14) at National Institute of Finance Management Faridabad, on
deputation basis. Presently posted as DDG(TPF) at DoT HQ, responsible for Ministry’s Budget and
involved in financial advice to Public Sector Units under DoT.
Appointment and Tenure of the Directors
In terms of Article No.111 of the Articles of Association, the Directors are appointed by the President
of India.
Functional Directors are appointed for a period/tenure of five years from the date of assumption of
charge, or till the date of superannuation or until further orders of the President of India, whichever
is the earliest. The salary and allowances are determined by the President of India.
The Government Nominee Directors are appointed by the President of India from amongst the
officials of the Government of India. Such nominee Director ceases to be a Director on his /her
superannuation from Government Service or transfer from the respective Ministry/Department.
Non-official Part-Time Directors are appointed by the President of India for a period of three years
from the date of assumption of charge. The appointment of the Non-official Part-Time Directors
shall be at the pleasure of the President of India and other terms and conditions as may be deemed
fit by the President of India from time to time in accordance with the Memorandum and Articles of
Association of the Company.
35
BOARD COMMITTEE MEETINGS AND PROCEDURES
Institutionalised Decision Making Process
With the aim of completely institutionalising the process of corporate governance and decision
making by the Board of Directors, the Company has, well defined process of placing vital and
sufficient information before the Board and/or committee(s) thereof.
The Board of Directors have constituted a standing committee named as “Management Committee
of the Board(MCB), comprising of the CMD and all the Functional Directors as Members and
the Company Secretary as the Secretary, and have delegated powers of general management of
company’s business affairs to it. The Board of Directors have also delegated some of their powers
to the CMD, Functional Directors, EDs and Senior Management Personnel of the Company.
The other standing Committees, viz., (a) the Audit Committee of the Board in accordance with the
provisions of Section 292A of the Companies Act 1956; and, (b) the Remuneration Committee of
the Board in terms of the Corporate Governance Norms for the CPSEs; and (c) the Corporate Social
Responsibility(CSR) Committee pursuant to the provisions of the Section 135 of the Companies Act
2013 and Rules thereunder; and (d) Committee on Appellate & Review matters under BSNL CDA
Rules 2006 have also been constituted by the Company.
In addition, as and when need arises, Board constitutes Committee of Directors.
Role of the Company Secretary in overall Governance Process
The Company Secretary ensures that the Board procedures are followed and regularly reviewed.
The Company Secretary endeavors that all the relevant information and documents are made
available to the Directors by the different nodal units to facilitate an effective decision making
in their meetings. Being the interface between the Board / Executive Management, all the Senior
Management Personnel of the Company take advice and services of the Company Secretary.
The Company Secretary is also the interface between the management and the regulatory authorities
for governance matters.
Guidelines for the Board/Committee Meetings
Details guidelines have been laid down by the Company secretariat especially with reference to
preparation and submission of Agenda Notes, Circulation of decisions thereto etc.
The Agenda papers are prepared by the respective Business verticals headed by PGM/Sr.GM/GM
as the case be at corporate office, after considering complete technical, commercial, legal and
financial aspects. After getting approval of the concerned ED/Functional Director/CMD/MCB as
the case be, in accordance with the delegation of Administrative and Financial Powers, the agenda
papers are sent to the Company Secretariat for circulation amongst the Members of the Board/
Committee(s) thereof as the case be.
Observance of the Secretarial Standards issued by the Institute of the Company Secretaries
of India
The Institute of Company Secretaries of India(ICSI) has, evolved and laid down the best practices
for corporate practice in the form of Secretarial Standards. The Company has been adhering to the
Standards relating to Board Meetings, General Meetings, Payment of Dividend, Maintenance of
36
Annual Report 2013-14
Records and Registers, Minutes of the Meetings, Passing of Resolution by Circulation, affixing of
Common Seal, Board’s Report etc.
Code of Conduct for the Members of the Board and the Senior Management Personnel
In addition to the Company’s Conduct, Disciplinary and Appeal Rules, in line with the corporate
governance norms, the Board of Directors of the Company have laid down a “Code of Conduct for
the Members of the Board”. All the Members have affirmed compliance with the said code.
Similarly, In addition to the Company’s Conduct, Disciplinary and Appeal Rules, in line with the
corporate governance norms, the Board of Directors of the Company have laid down a “Code
of Conduct for the Senior Management Personnel of the Company”. All the Senior Management
Personnel have affirmed compliance with the said code.
Scheduling of Board/Committee Meetings and Submission of Agenda Items for the Board/
Committee meetings.
The meetings of the Board/Committee thereof are convened, keeping in view the statutory provisions
and the convenience of the Members, with sufficient advance planning. The Agenda Notes are,
generally sent minimum seven days in advance to facilitate meaningful and informed discussions;
Wherever required, voluminous documents/documents of confidential nature are tabled at the
meeting, with the approval of the Chairman;
The Board also discusses sensitive and urgent business proposals, without formal agenda note,
depending on urgency and case to case basis;
Wherever required, the Senior Management Personnel of the Company are called to make
presentations before the Board/Committee on specific agenda notes.
The Meetings of the Board/Committee are generally held at the Registered office of the Company
at Delhi. Whenever required, meetings are also held outside the headquarters.
Recording of Minutes of the Board/Committee meetings
Minutes of the proceedings of the Board of Directors and the Management Committee of the Board
are recorded. The minutes are circulated amongst the Members of the Board/Committee(s) for their
comments in a given time frame. The comments if any, received are discussed in the next meeting
of the Board/Committee, while confirming the minutes. All the minutes duly signed/initialed by the
Chairman are entered into the Minutes Book.
The mechanism of follow up actions
Senior Management Personnel submit Action Taken Report on the decisions of the previous
meetings, after obtaining the approval of the respective Functional Directors. These are circulated
alongwith the Agenda for information and further directives of the Board.
Compliances
While submitting the Agenda Notes, every Senior Management Personnel/Functional Director(s)
concerned, being the head of respective line function/business unit who have been delegated with
administrative and financial powers thereto, ensure adherence to all the applicable laws, rules,
guidelines etc. The Company Secretary ensures the compliance of all the applicable provisions of
the Companies Act and other corporate laws.
37
Accordingly, head of the business unit/line head handling the respective subject also ensures and
undertakes the compliance of the enterprise risk management policy of the company as a routine,
while submitting the Agenda papers. Being the successor and assigns of the erstwhile Departments
of Telecom Services and Telecom Operations, the BSNL has an inbuilt systems, accordingly, all the
court cases and litigation issues are handled by the respective heads of the Circles/Units.
All the returns/reports under Companies Act 1956 were filed in time with the designated
authorities.
INFORMATION PLACED BEFORE THE BOARD OF DIRECTORS
Subject to the provisions of the Companies Act 2013, Memorandum and Articles of Association
of the Company, and the directives, guidelines of the Government on the subject, the Board of
Directors have delegated all general powers of managing the company’s affairs to the Management
Committee of the Board comprising CMD and the Functional Directors; EDs; and, the Senior
Management Personnel of the Company. The Minutes of the Meetings of the Management
Committee of the Board are placed before the Board in its meetings. In addition, information on
following items is invariably placed before the Board of Directors:(1) BUDGET a. Annual Budget Estimates and revised budget estimates for capital expenditure;
b. Annual Budget Estimates and revised budget estimates for revenue account for operational
expenditure; and c. Budget requirements for five year plans.
(2) PLANS a. Annual Plans; b. Five Year Plans; c. Manpower Plans; d. Corporate Plans; and
e. Resource Mobilisation Plans.
(3) ACQUISITIONS Acquiring shares, stocks, securities etc., of other Companies or Undertakings
other than in Government guaranteed securities for short term and in duly registered employees
consumer co-operative societies.
(4) STRATEGIC DECISIONS a. Agreement involving foreign collaboration proposed to be
entered into by the Company irrespective of the consideration involved; b. Strategic Investments/
decision and acquisition of shares/ controlling stake/ debentures/ bonds of other companies; and
Decision with regard to formation of joint ventures, subsidiary companies and restructuring of
organization.
(5) PERSONNEL a. Creation of posts of the level of Executive Director; b. Formulation of any
changes in wage structure and scales of pay of employees of the company; c. Policy matters
relating to allowances of the employees such as HRA, Performance Related Pay, Bonus etc.
(6) ACCOUNTS Acceptance of periodical profit and loss accounts; and Declaration of
Dividend.
(7) Investment of the surplus funds of the company in acquisition of controlling stake/shares/
debentures/bonds in other companies.
(8). All issues that are reserved for exclusive consideration by the Board of Directors by the
Companies Act 2013; and, the Memorandum and Articles of Association of the Company.
(9)
COMPLIANCE REPORTINGS UNDER THE CORPORATE GOVERNANCE NORMS
NUMBER OF BOARD MEETINGS HELD DURING 2013-14; ATTENDANCE OF DIRECTORS IN
THE BOARD MEETINGS & 13TH ANNUAL GENERAL MEETING HELD ON 30.9.2013
38
Annual Report 2013-14
TOTAL BOARD MEETINGS HELD IN 2013-14 : 08
Name and Designation
Shri R.K. Upadhyay, CMD
Shri A.N.Rai, CMD /
Director(Ent.) & (HR)
Shri R.K. Agarwal Director (CM)
[Upto 30.4.2013]
Shri K.C.G.K.Pillai Director (F)
[Wef 25.4.2012]
Shri N.K.Gupta Director (CFA)
[Wef 1.6.2012]
Shri Anupam Shrivastava
Director (CM) [Wef 1.5.2013]
Ms. Rita A.Teaotia Govt.
Director [wef 4.9.2012]
No. of Board Attended the Directorships
Remarks
Meetings
last AGM
in other
Attended out
held on
Companies
of 8 Meetings 30.9.2013
8
Present
Retired on A/N
of 30.6.14
8
Present
1
-
-
4
Present
NIL
8
Present
NIL
7
Present
NIL
7
Present
-
Shri Shahbaz Ali Govt. Director
[Wef 14.2.2012 to 26.8.2014]
7
Present
1 )))
Shri Ashish Guha Director
Chairman, Audit Committee of
the Board. [Upto 20.5.2013]
-
-
3^
Shri Ajai Vikram Singh Director
[Wef 17.7.2012]
Prof. N. Balakrishnan Director
[Wef 17.7.2012]
Smt. Darshana Momaya Dabral
[Wef 29.9.2014]
6
Present ^^
2&
6
-
3&&
NA
NA
NIL
Retired
on
30.4.2013.
Retired on A/N
of 30.11.2013
Assumed charge
on 1.6.2012.
Appointed in
place of Shri
S.R.Rao
wef
4.9.2012
Appointed in
place of Shri
Tangirala wef
14.2.2012
Tenure
of
appointment
ended
on
20.5.2013
Appointed wef
17.7.2012
Appointed wef
17.7.2012.
Appointed wef
29.9.14
Note :- The disclosure of the Directorships are based on the disclosures received from the Directors.
)))
Government Nominee Director in TCIL
^
CEO & MD Heidelberg Cement India Limited, Chairman-Cochin Cements Limited, Director-Ballarpur
Industries Limited.
&
Director in Pipavav Defence and Offshore Engineering Company Limited and Director in Overseas
Infrastructure Alliance(India) Private Limited.
&& Director in (i) Data Security Council of India(DSCI) – not for profit company registered under Section 8 of
Companies Act 2013; (ii) Central Bank of India; and (iii) C-DOT Alcatel-Lucent Research Centre Pvt Ltd., under
Chapter 1 Section 2(68) of new Companies Act 2013.
^^ The Audit Committee of the Board, in its 50th meeting held at 10.30 AM on 30.9.2013 elected Shri Ajai
Vikram Singh as Chairman for the meeting. He attended the 13th AGM held at 5 PM on 30.9.2013 as Chairman
of the Audit Committee of the Board.
39
DETAILS OF NUMBER OF COMMITTEE MEMBERSHIPS AND CHAIRMANSHIPS OF DIRECTORS
Name and
Designation
Details of Memberships of Board
Committee
Name of
Name of Committee
Company
Shri R.K. Upadhyay, BSNL ~
Finance Committee of the
CMD
Board
[Upto 30.6.2014]
BSNL@
Remuneration Committee
of the Board
BSNL
Committee on Appellate
& Review matters under
BSNL CDA Rules 2006
+Shri A.N. Rai, CMD BSNL
Remuneration Committee
/ Director(Ent.) & (HR)
of the Board
BSNL
Committee on Appellate
& Review matters under
BSNL CDA Rules 2006
BSNL
Corporate Social
Responsibility Committee
of the Board \\\\
Shri R.K. Agarwal
BSNL
Audit Committee of the
Director (CM)
Board
[Upto 30.4.2013]
BSNL
Finance Committee of the
Board
++Shri K.C.G.K.
BSNL
Finance Committee
Pillai Director (Finance) \ BSNL
Remuneration Committee
[Upto 30.11.2013]
+++Shri N.K.Gupta BSNL
Corporate Social
Director(CFA)
Responsibility Committee
[Wef 1.6.2012]
of the Board \\\\
++++Shri Anupam BSNL \\\
Audit Committee of the
Shrivastava Director
Board
(CM) & (Fin)
BSNL
Remuneration Committee
[Wef 1.5.2013]
of the Board
Ms.Rita A.Teaotia
Govt. Director
[Wef 4.9.2012]
Shri Shahbaz Ali,
TCIL
Audit Committee
Govt. Director
TCIL
Remuneration Committee
[Upto 26.8.14]
TCIL
CSR Committee
BSNL
Audit Committee
BSNL
Committee on Appellate
& Review matters under
BSNL CDA Rules 2006.
BSNL
Remuneration Committee
of the Board
40
Details of Chairmanships of
Board Committee
Name of
Name of
Company
Committee
-
-
-
-
-
-
-
NIL
-
NIL
-
NIL
NIL
-
-
-
-
-
-
-
-
Annual Report 2013-14
Name and
Designation
Details of Memberships of Board
Details of Chairmanships of
Committee
Board Committee
Name of
Name of Committee
Name of
Name of
Company
Company
Committee
Shri Ashish Guha
Heidelberg
Audit Committee
BSNL
Finance
Director
Cement India
Committee of
[Upto 20.5.2013]
Ltd
the Board
Heidelberg
Shareholders/Investors
BSNL
Audit
Cement India Grievances Committee
Committee
Ltd
Heidelberg
Finance & Risk
Cochin
Chairman
Cement India Management Committee Cements Ltd
Ltd
Cochin
Audit Committee
Cements Ltd
Ballarpur
Risk Management
Industries Ltd Committee
Ballarpur
Remuneration Committee
Industries Ltd
BSNL \
Remuneration Committee
of the Board
Shri Ajai Vikram Singh Pipavav
Audit Committee
BSNL \
Remuneration
Director
Defence and
Committee of
[Wef 17.7.2012]
Offshore
the Board
Engineering
Company Ltd
BSNL \\\
Audit Committee of the
Board
BSNL
Corporate Social
Responsibility Committee
of the Board \\\\
Prof.N.Balakrishnan
Central Bank Management Committee
BSNL\\\
Audit
Director
of India
Committee of
[Wef 17.7.2012]
the Board
Supervisory Committee of Central Bank
IT Strategy
the Board for monitoring
of India
Committee
of IT Projects in Banks
Shareholders/investors
Data Security
Chairman
Grievances Committee
Council of
India(DSCI)
not for profit
Company
under Sec
8 of the
Companies
Act 2013
Internal Training Policy
Advisory Committee
41
Name and
Designation
Smt.Darshana
Momaya Dabral,
Govt. Director
[Wef 29.9.2014] \\\\\
Details of Memberships of Board
Committee
Name of
Name of Committee
Company
NIL
NIL
Details of Chairmanships of
Board Committee
Name of
Name of
Company
Committee
NIL
NIL
Note :The disclosure of the Memberships/Chairmanships are based on the disclosures received from the Directors.
~
Charge of the Director(F) vested with the CMD till joining of Dir(F) on 25.4.2012. Consequent upon the
retirement of Shri KCGK Pillai on A/N of 30.11.2013, till receipt of further orders of GoI, CMD was looking after
the additional charge of Dir(F). GoI, vide order No.1-4/2012-PSA dated 5.2.2014 entrusted the additional charge
with immediate effect upto 28.2.2014 to Shri Anupam Shrivastava Dir(CM). Again, wef 1.3.2014, till receipt of
further orders of GoI, CMD was looking after the additional charge of Dir(F). GoI vide order No.1-4/2012-PSA
dated 9.5.2014 conveyed the extension of additional charge of Director(Finance) to Shri Shrivastava for a period
of six months wef 1.3.2014. By virtue of having the charge of Dir(F) he was Member of the Finance Committee of
the Board during relevant periods.
@
Additional charge of Director(HRD) vested with CMD wef 5.3.2012 to 18.6.2012 and thereafter vested with
Director(E). Thereafter wef 4.6.2013, CMD looked after the charge of Director(HR) till the GoI vide order No.14/2012-PSA dated 8.8.13 conveyed the approval of ACC for extension of the additional charge of Director(HR)
to Shri A.N.Rai Director(E), for a further period of six months wef 4.6.2013. Again, pending receipt of GoI order,
wef 4.12.2013, CMD was looking after the additional charge of Director(HR). GoI vide order No.1-4/2012-PSA
dated 7.2.14 conveyed the ACC approval for extension of additional charge of Dir(HR) to Shri Rai Director(E)
for a period of six months wef 4.12.2013. By virtue of having the charge of Dir(HR), he was Member of the
Remuneration Committee of the Board and Committee on Appellate & Review matters under BSNL CDA Rules
2006 during relevant periods.
+
Shri A.N.Rai assumed the charge of Director(Enterprise) wef 19.9.2011. He is not a Member of any committee.
Additional charge of Director(HRD) vested with Shri Rai wef 5.12.2011 to 4.3.2012. Thereafter, wef 19.6.2012,
additional charge of Director(HRD) entrusted again to Shri A.N.Rai for a period upto 4.9.2012 till appointment of
regular incumbent or further orders, whichever is the earliest, followed by extension upto 3.12.2012. Thereafter,
the arrangement of entrustment of additional charge of Director(HR) to Shri Rai was extended for six months
beyond 4.12.2012 or till a regular incumbent is appointed or until further orders, whichever is earliest. With effect
from 4.6.13, till the receipt of further communication from the GoI, CMD looked after the charge of Director(HR).
Thereafter, GoI, MoC & IT, DoT, vide its order No.1-4/2012-PSA dated 8.8.13 conveyed the approval of the
ACC for extension of additional charge of the post of Director(HR) in favour of Shri Rai Director(E) for a period
of six months or till a regular incumbent is appointed or until further orders, whichever is earliest. Thereafter wef
4.12.2013 till the receipt of further orders of GoI, CMD was looking after the additional charge of Director(HR).
GoI, vide order No.1-4/2012-PSA dated 7.2.2014 conveyed the approval of ACC for extension of additional
charge arrangement of Dir(HR) to Shri Rai for a period of six months wef 4.12.2013. Thereafter, wef 4.6.2013,
pending receipt of further orders of the GoI, additional charge of Dir(HR) was vesting in the CMD. By virtue of
Dir(HR) being Member of the Remuneration Committee of the Board, Committee on Appellate & Review Matters
under BSNL CDA Rules 2006 and the Corporate Social Responsibility Committee, he was Member of these
Committees during the relevant periods. Further, consequent upon the retirement of Shri R.K.Upadhyay CMD on
30.6.2014, GoI vide order No.1-1/2014-PSA dated 30.6.2014 conveyed the approval of the competent authority
for entrusting the additional charge of the CMD to Shri Rai for a period of three months wef 1.7.2014. Shri Rai
assumed the charge of office of CMD wef F/N 1.7.2014.
++ Shri K.C.G.G.K.Pillai assumed the charge of Director(F) wef 25.4.2011. Director(F) is Member of the
Finance Committee and Remuneration Committee. He retired on superannuation from service on 30.11.2013.
+++Shri Gupta assumed the charge of Director(CFA) on 1.6.2012.
++++Consequent upon the retirement of Shri KCGK Pillai on 30.11.2013, wef 1.12.2013 CMD was holding
the additional charge of office of Director(F). GoI vide No.1-4/2012-PSA, dated 5.2.2014 entrusted the additional
42
Annual Report 2013-14
charge of Director(F) to Shri Anupam Shrivastav with immediate effect upto 28.2.2014. Thereafter, till receipt of
further orders, CMD held the additional charge of Director(F). GoI, vide order No.1-4/2012-PSA dated 6.5.2014
conveyed the extension of entrustment of additional charge of Director(F) to Shrivastava wef 1.3.2014 for a period
of six months. By virtue of Director(F) being Member of Finance Committee and Remuneration Committee, he
was Members of these committees during relevant periods.
\
The Board, in its 143rd meeting held on 28.8.2012, re-constituted the Remuneration Committee with the
following composition:- Shri Ajai Vikram Singh Director as Chairman; and, Shri Shahbaz Ali Govt. Director, Shri
Ashish Guha Director, Director(HR), Director(Finance) as Members and the Company Secretary as the Secretary
of the Committee.
\\
The Board, in its 143rd meeting held on 28.8.2012, re-constituted the Audit Committee of the Board by
inducting Prof.N.Balakrishnan Director, also as one of the Members of the Committee. The Committee in its 46th
meeting held on 7.12.2012 elected him as Chairman of the Committee
\\\
Consequent upon the cessation of Directorships of Shri R.K.Agarwal Director(CM) and Shri Ashish Guha
Director, Members of the Audit Committee of the Board, the Board in its 148th meeting held on 14.6.2013 reconstituted the Audit Committee by inducting Shri Ajai Vikram Singh Director and Shri Anupam Shrivastava
Director(CM) as Members of the Committee.
\\\\ Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder
the Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee(CSR
Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N.Rai CMD/
Director(Enterprise) & (HR) and Shri N.K.Gupta Director(CFA) as Members and the Secretary of the Company acts
as the Secretary of the Committee.
\\\\\ Pursuant to the provisions contained in Section 161(3) of the Companies Act 2013 and rules made
thereunder, Article 111 of the Articles of Association of the Company, read with GoI, MoC & IT, DoT’s Order
No.5-2/2013-PSA dated 26.8.2014, the Board of Directors in their 158th meeting held on 29.9.2014, appointed
Smt.Darshana Momaya Dabral [ DIN 06975127 ] DDG(TPF) in DoT as Government Nominee Director on the
Board of Directors of the Company.
BOARD COMMITTEES
The Company has the following Committees of the Board.
The Management Committee of the Board (MC of the Board)
The Board of Directors of the Company, in their 118th meeting held on Thursday, the 26th day
of February 2009, in supercession of all the extant instructions on the aforesaid subject, have
constituted a Standing Committee of the Board, named, “Management Committee of the Board
[MC of the Board], comprising the Chairman and Managing Director [CMD] as the Chairman,
and the Functional Directors as Members, with the Company Secretary as the Secretary of the
Committee.
Further, the Board of Directors of the Company have also delegated to the aforesaid standing
committee the powers for the management and administration of the business of the Company.
The powers of the Board, in respect of the matters for which approval of the Board of Directors
is statutorily required; or , the powers, which cannot be delegated; or, the matters, where, prior
approval of the Government is necessary, have not been delegated.
Remuneration Committee
To ensure complete compliance of the Corporate Governance Norms, the Board of Directors of
the Company has re-constituted the Remuneration Committee. The Committee comprised of Shri
Sanjiv Gupta Non official Part Time [Independent] Director as Chairman, Shri S.R.Rao Government
Director, Shri A.K.Garg Director(HR) and Shri Ashish Guha Non official Part Time [Independent]
Director as Members and the Company Secretary as Secretary.
43
The Board, in its 143rd meeting held on 28.8.2012, re-constituted the Remuneration Committee
with the following composition:- Shri Ajai Vikram Singh Director as Chairman; Shri Shahbaz Ali
Govt. Director, Shri Ashish Guha Director[upto 20.5.2013], Director(HR), and Director(Finance) as
Members and the Company Secretary as the Secretary of the Committee.
Corporate Social Responsibility Committee (CSR Committee)
Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules
thereunder the Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social
Responsibility Committee(CSR Committee) of the Board comprising Shri Ajai Vikram Singh
Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta
Director(CFA) as Members and the Secretary of the Company acts as the Secretary of the
Committee.
Committee on Appellate & Review matters under BSNL CDA Rules 2006
To consider and decide all the appeal / review cases for and on behalf of the Board of Directors,
wherever the Board is indicated as Appellate and Reviewing Authority in the CDA Rules 2006
of the Company, the Board of Directors, in their 135th meeting held on 26.8.2011, constituted a
Standing Committee of the Board known as Committee on Appellate & Review matters under BSNL
CDA Rules 2006, comprising of Director(HR) and One Government Director and the Company
Secretary as Secretary of the Committee. The minutes of each of the meetings of the Committee
shall be submitted to the Board in the immediately following meeting of the Board.
At present, the committee comprise Shri Shahbaz Ali Government Director(Upto 26.8.2014) and
Director(HR) [at present additional charge of Director(HR) vest with CMD / Director(Enterprise)].
Finance Committee of the Board
Board of Directors in their 132nd Meeting held on 6.12.2010, have constituted a ad-hoc Committee
of Directors named as Finance Committee of the Board. The Terms of Reference of the Committee
for the present shall be to consider various ways and means to finance the company’s working
capital and CAPEX requirements. The Committee shall also examine and recommend to the Board
various methodologies to finance all CAPEX requirements of the Company. This being an ad-hoc
committee, had met once under the chairmanship of Shri Ashish Guha.
Audit Committee of the Board
The terms of reference the Audit Committee are in accordance with the provisions of the Section
292A of the Companies Act 1956 and the Corporate Governance norms issued by the Department
of Public Enterprises for the unlisted CPSEs. The Board of Directors have constituted the Audit
Committee of the Board, comprising of 4 Directors, of which Three are Official/Non-official PartTime Directors [other than Functional Directors] and the other Member is a Functional Director:
 Shri R.K.Agarwal Director(CM) Member upto 30.4.2013. – On attaining the age of
superannuation, he retired from service and as such ceased to be Member.
 Shri Ashish Guha Non-Official Part-Time Director, Chairman [Inducted as Member
Wef 6.6.2011] The Audit Committee, in its 40th meeting held on 29.9.2011 elected
Shri Ashish Guha as Chairman of the Committee. Thereafter, the Committee, in its
46th meeting held on 7.12.2012 elected Prof. N.Balakrishnan as Chairman of the
Committee. On completion of the three years tenure of appointment, Shri Guha ceased
to be Director wef 21.5.2013.
44
Annual Report 2013-14
 Shri Shahbaz Ali Government Director Member[ Wef 12.3.12 to 26.8.2014]
 Prof N. Balakrishnan Non-official Part-Time Director, Chairman [Wef 28.8.2012] The
Board of Directors, in their 143rd meeting held on 28.8.2012, reconstituted the Audit
Committee of the Board by inducting Prof.N.Balakrishnan Director also as one of the
Members of the Committee. The Committee, in its 46th meeting held on 7.12.2012
elected Prof. N.Balakrishnan as Chairman of the Committee.
 Shri Anupam Shrivastava Director (CM) Member [ Wef 14.6.2013] The Board of Directors,
in their 148th meeting held on 14.6.2013 inducted Shri Shrivastava Director(CM) as
Member in place of Shri R.K.Agarwal former Director(CM).
 Shri Ajai Vikram Singh Non-official Part-Time Director Member [ Wef 14.6.2013] The
Board of Directors, in their 148th meeting held on 14.6.2013 inducted Shri Ajai Vikram
Singh as Member in place of Shri Ashish Guha former Director.
Director (Finance) is a regular invitee to the Meetings of the Committee. Company Secretary acts
as the Secretary of the Committee.
The Chairman of the Audit Committee was present in the last Annual General Meeting of the
Company.
NUMBER OF MEETINGS HELD DURING 2013-14 AND
ATTENDANCE NO. OF MEETINGS HELD: 06
Name and Designation
No. of meetings
Remarks
attended
Shri Ashish Guha Director,
Elected Chairman in the 40th meeting held
Chairman
on 29.9.2011. Tenure of appointment ended
on 20.5.2013.
Shri Shahbaz Ali, Govt. Director
6
Member [Upto 26.8.14]
Shri R.K. Agarwal Director(CM)
1
On attaining the age of superannuation, Shri
Member.
Agarwal retired from service on 30.4.2013.
Prof. N. Balakrishnan Director
5
Board, in its 143rd meeting held on 28.8.12
Chairman
inducted him as Member. The Committee in
its 46th meeting held on 7.12.12 elected him
as Chairman.
Shri
Ajai
Vikram
Singh
4
Board, in its 148th meeting held on 14.6.2013
Director
inducted him as Member. The Committee,
elected him as Chairman for the 50th meeting
held on 30.9.2013.
Shri
Anupam
Shrivastva
Board, in its 148th meeting held on 14.6.2013
Director (CM)
inducted him as Member.
DISCLOSURES
DIRECTORS REMUNERATION
FUNCTIONAL DIRECTORS
BSNL being a Government Company, and in terms of Article No.111 of the Articles of Association
of the Company, the remuneration payable to the Directors is determined by the President of
India.
45
The salary and other perks paid to the Functional Directors during the year under review is as
follows:Name
Shri R.K. Upadhyay
Shri A.N. Rai
Shri R.K.Agarwal
[Upto 30.4.2013]
Shri Anupam
Shrivastava [wef
1.5.2013]
Shri N.K.Gupta
[Wef 1.6.2013]
Shri K.C.G.K. Pillai
[Upto 30.11.2013]
TOTAL
Desgn.
Salary incl.
DA
CMD
Dir(Ent.)
Dir(CM)
2222648
2047675
341919
Other
Benefits &
Perks
267840
87000
18102
Contribution in
CPF & Other
Funds
251720
230950
18056
Total
2742208
2365625
378077
Dir(CM)
1860753
101000
200989
2162742
Dir(CFA)
1969558
203729
221676
2394963
Dir(Fin.)
2108759
92488
141636
2342883
10551312
770159
1065027
12386498
GOVERNMENT NOMINEE DIRECTORS
The Government Nominee Directors are not paid any remuneration.
NON-OFFICIAL PART-TIME DIRECTORS
Non-official Part-Time Directors are paid a sitting fee at the rate of Rs.10,000/-[Rupees Ten Thousand
only] for attending each meeting of the Board and Committee thereof in addition to TA/DA to
outstation Directors.
There were no other pecuniary relationships or transactions of the Non-official Part-Time Directors
vis-à-vis the Company.
SHAREHOLDINGS BY THE DIRECTORS AND STOCK OPTIONS
Being a hundred percent Government Owned Company, the shares are held by the President
of India through Ministry of Communications and IT, Department of Telecommunications. The
Directors are not required to hold any qualification shares.
The company has not issued any stock options to its Directors/Employees.
MATERIAL CONTRACTS/RELATED PARTY TRANSACTIONS
The company has not entered into any material financial or commercial transactions with the
Directors or the Management or their relatives or the companies and firms etc., in which they are
either directly or through their relatives interested as Directors and/or Partners except with the
certain PSUs, where the Directors are Directors without the required shareholdings. The Company
has obtained disclosures from all the Directors in this regard, which were noted by the Board.
Transactions with related parties are disclosed in Note No.36 to the Accounts in the Annual
Report.
46
Annual Report 2013-14
LIST OF PRESIDENTIAL DIRECTIVES ISSUED IN THE PAST THREE YEARS
S. No
Subject
Status of Implementation
1
Year of
Issue
2011-12
10-24/2011-SU.1, dated the 22nd
December 2011 – Directing BSNL to
become initial subscriber as well as
acquire shares in the proposed SPV/
Company being promoted by the
Government for creating National
Optical Fibre Network.
2
3
2012-13
2013-14
I)No.61-01/2012-SU,dated 10.6.2013.
In partial modification of OM No.6101/2009 dated 27.2.2009, the benefit of
merger of 50% DA effectively amounting
to 78.2% as on 1.1.2007 for the purpose
of fitment in respect of the Board level
and below Board level executives and
Non-unionised supervisors and nonexecutives of BSNL was allowed from
the date of issue of the order. No arrears
will be paid and the revised fitment on
the basis of DPE OM dated 2.4.2009 will
be paid with prospective effect only.
Implemented.
BSNL
has
become a Member of the
Bharat Broadband Networks
Limited; and, as directed by the
Government, invested a sum
of Rs.10/- [Rupees Ten only] in
this financial year [Vide Cheque
No.502828, dated 19.4.2012],
towards One Equity Share of
Rs.10/- [Rupees Ten only] being
fully paid up for cash at par.
Implemented. Vide Order No.116/2010-PAT(BSNL)
dated
10.6.2013, orders issued for
allowing benefit of merger of
50% DA effectively amounting
to 78.2% as on 1.1.2007, with
prospective date i.e. date of issue
of Presidential Directive.
ANNUAL GENERAL MEETINGS
Venue, Date and Time, where the previous three Annual General Meetings of the Company were
held, including the details of the 14th Annual General Meeting are as follows:Meeting and Date
Time
11th AGM, 29.9.2011
12.30 P.M.
12th AGM, 28.9.2012
12.45 P.M.,
13th AGM,
30.09.2013
05.00 P.M.
Venue
Details of Special
Resolutions passed in
the AGMs
Regd & Corp. Office, Board
Room, 3rd Floor Bharat Sanchar
Bhawan, H.C. Mathur Lane,
Janpath, New Delhi-110 001.
Regd & Corp. Office, Board
Room, 3rd Floor Bharat Sanchar
Bhawan, H.C. Mathur Lane,
Janpath, New Delhi-110 001.
Regd & Corp. office, Board
Room, 3rd floor, Bharat Sanchar
Bhawan, H.C. Mathur Lane,
Janpath, New Delhi-110 001.
47
Meeting and Date
14th AGM,
29.09.2014
Time
05.00 P.M.,
Venue
Details of Special
Resolutions passed in
the AGMs
Regd & Corp. office, Board
Room, 3rd floor, Bharat Sanchar
Bhawan, H.C. Mathur Lane,
Janpath, New Delhi-110 001.
MEANS OF COMMUNICATIONS
Annual financial statements, New releases, etc., are put in the company’s website as well as in the
intranet portal of the company.
Website :- The company’s website www.bsnl.co.in is a user friendly site, containing all the latest
developments.
Annual Report
Annual Report of the Company containing inter-alia, Audited Accounts, Directors Report, Auditors
Report and replies of management thereto, Comments and Review of the C & AG of India are
circulated amongst all the Members and other entitled thereto. As enunciated in the Companies
Act and also laid before the Houses of the Parliament.
TRAINING OF DIRECTORS
The Company is managed by the Sectoral Experts/Specialists having domain knowledge and
expertise of the core sector, which is “Telecom Services Management”. Being a Telecom Service
Provider, BSNL is also Member of various National and International level Telecom / Technology
related forums.
In order to update the knowledge and skill of BSNL officers and to have first hand information on
latest developments taking place in telecommunications, 40 officers including Board level officers
were deputed abroad for various events.
Non-official Part-Time Directors, being men of public eminence and proven expertise, bring their
own value addition to the management of the company. Still, they are also nominated for various
national level seminars, workshops, training programmes as per their convenience.
A glimpse of the Targets set forth vis-à-vis the achievements under the Memorandum of
Understanding
Item
Target
Risk Management Training courses for Senior
Management Personnel
Executive Development Training Programme
(10% of Executives)
Skill Development training for non-executives
(10% of non-executives)
Quality training for employees
48
Achievement
% age of
achievement
176
50
88
4993
16069
321
20071
26311
132
250
464
184
Annual Report 2013-14
RISK MANAGEMENT
BSNL, by virtue of being the successor of erstwhile Central Government Departments of the
Telecom Services (DTO) and Telecom Operations (DTO) already had a codified set up with inbuilt
mechanism to foresee the potential risks and methods to arrest, control, ignore and/or respond to
the risks.
Laying down Enterprise Risk Management Policy
However, as mandated by the Department of Public Enterprises through Guidelines on Corporate
Governance Norms for the Un-Listed CPSEs - further revised and made mandatory for the CPSEs
vide No.18(8)/2005-GM, dated the 14th May 2010 – Company has laid down a Enterprise Risk
Management Policy.
For managing the affairs of the Company, the Board of Directors of the Company has delegated its
powers to the Management Committee of the Board (MCB), the CMD and the Functional Directors
and Below Board Functionaries, viz., the Executive Directors/CGMs/PGMs/GMs/TDMs/DGMs
etc., as the case be. Considering the size and geographical spread of the organization vis-à-vis
the delegation of powers made to the business heads and unit heads – who carry out the task
of undertaking the risk management as a part of the normal business practice by integrating and
aligning the same with corporate and operational objectives - the Business Heads in the Corporate
Office; CGMs/PGMs/GMs and Other Unit Heads of the field units were designated as the Risk
Management Administrators [RMAs].
With a view to continuously train and develop the employees in the risk management techniques
segment, Risk Management Training Courses specially designed for the Senior Management
Personnel who function as the Risk Management Administrators are being organized at the Training
Centres of the Company.
During the financial year 2013-14, 80 officers were trained on Risk Management against the target
of 50 which is 176% of the target figures.
Enterprise Risk Management Committee
Consequent upon the mandate of the DPE’s MoU Task Force for inclusion of Compliance of CG
Norms, inter-alia, the “Establishing Risk Monitoring Centres”, as one of the Dynamic Parameters, for
“Overseeing the mechanism of Enterprise Risk Management Mechanism”, inter-alia, the periodical
review of risk assessment and minimization procedures, submission of recommendations / reports
to the Executive Management and the Audit Committee of the Board, a ERM Committee comprising
of all the Executive Directors has been constituted.
WHISTLE BLOWER POLICY
In view of BSNL being a wholly owned Govt. Company already having full fledged Vigilance
Mechanism, headed by an independent CVO in compliance of DPE /CVC Guidelines on the
subject, no separate Whistle Blower Mechanism was in place. Further, BSNL has also entered into
an agreement with the Transparency International to ensure transparency in tendering process.
Further, apart from the Audit by the C&AG of India, Statutory and Branch Audits, Amenability
to the Writ Jurisdiction of the Court, GoI’s Rules and Regulations, BSNL has its own Conduct,
Disciplinary and Appeal Rules covering all the classes of employees including the Functional
Directors. The Members of the Board and Sr.Management Personnel are also governed by the
49
Code of Conduct laid down in accordance with the CG Norms. Accordingly, no separate Whistle
Blower Mechanism was in place.
However, consequent upon the mandate of the DPE’s MoU Task Force for inclusion of Compliance
of CG Norms, inter-alia, the establisihing a whistle blower mechanism also as one of the Dynamic
Parameters, the Company has put in place in place a Board approved Whistle Blower Policy.
Implementation of National Litigation Policy-2010
In addition to already existing Risk Management Policy which mandates the Risk Management
Administrators for ensuring efficient litigation management and compliance of all applicable
provisions of the laws, as directed by the Administrative Ministry, detailed instructions have been
issued to all concerned to ensure and comply with the provisions of the NLP-2010. Accordingly,
the Unit Heads of the Corporate Office and GM/DGM in-charge of Administration in the field units
are the Nodal Officers for respective unit for overall policy implementation, who will be assisted
by the “Officer-in-charge of litigation”, who shall be responsible for litigation administration and
management of respective unit.
COMPLIANCE CERTIFICATE OF THE AUDITORS AND SECRETARIAL COMPLIANCE REPORT
In general, the company has complied with the Corporate Governance Norms as laid down by the
Department of Public Enterprises. A certificate to the effect has been obtained from M/s Hemant
Singh & Associates, Company Secretaries which forms part of the Report.
FEE TO STATUTORY AUDITORS
Remuneration paid to the Statutory Auditors during the year 2013-14 was Rs. 0.17 crore (exclusive
of service tax and cess wherever applicable). It includes Statutory Audit Fee, Certification Charges,
Reimbursement of Expenses and Other services.
Shri A.N. Rai, CMD addressing the delegates in the Heads of Circle conference
22nd August, 2014
50
Annual Report 2013-14
Hemant Singh & Associates
Company Secretaries
306, Surya Complex
21, Veer Savarkar Block, Shakarpur
Delhi-110092
011-43011821
kraghavancs@gmail.com
hemantsinghcs@gmail.com
THE CERTIFICATE ON COMPLIANCE OF CORPORATE GOVERNANCE NORMS
To
The Members,
M/s Bharat Sanchar Nigam Limited,
New Delhi.
We have examined the relevant books, records and statements in connection with compliance of
the conditions of Corporate Governance by M/s Bharat Sanchar Nigam Limited for the financial
year ended 31.3.2014, as enunciated in the “Guidelines on Corporate Governance Norms for the
Central Public Sector Enterprises 2007”, issued by Govt. of India, Ministry of Heavy Industries and
Public Enterprises, Department of Public Enterprises, vide Office Memorandum No. 18(8)/2005GM, dated the 22nd June 2007 and revised further vide No.18(8)/2005-GM, dated 14.5.2010.
The compliance of the conditions of the Corporate Governance norms is the responsibility of the
Management, our examination was limited to procedures and implementation thereof, adopted by
the Company for ensuring the compliance of the conditions of corporate governance as laid down
in the guidelines. Our Report / Certification is neither an audit nor an expression of the opinion on
the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us,
we certify that the Company has complied with the conditions of Corporate Governance Norms
as stipulated in the “Guidelines on Corporate Norms for the CPSEs”, issued by the Department of
Public Enterprises.
We further state that such compliance is neither an assurance as to the future viability of the
Company nor the efficiency of the effectiveness with which the management has conducted the
affairs of the Company.
For Hemant Singh & Associates,
Company Secretaries,
Place : New Delhi
Dated : 19.09.2014
Sd/[K. Raghavan]
Practising Company Secretary
FCP No. 3230
CP No. 13033
51
BHARAT SANCHAR NIGAM LIMITED
Balance Sheet
(All amounts in Rs. lacs, unless otherwise stated)
Notes
As at 31 March 2014
As at 31 March 2013
EQUITY AND LIABILITIES
Shareholder’s funds
Share capital
Reserves and surplus
Deferred government grant
3
4
5
Non-current liabilities
Long term borrowings
Other long term liabilities
Long term provisions
1,250,000
4,470,295
33,037
5,753,332
1,250,000
5,076,240
37,633
6,363,873
6
7
8
Current liabilities
Short term borrowings
Trade payables
Other current liabilities
Short term provisions
72,000
330,074
783,606
1,185,680
170,318
353,884
687,008
1,211,210
9
10
11
12
373,853
870,657
682,363
67,459
1,994,332
8,933,344
256,114
950,092
721,054
53,184
1,980,444
9,555,527
4,144,428
917,677
386,917
923
5,449,945
718,074
23,773
532,684
6,724,476
4,555,753
1,528,885
369,600
1,462
6,455,700
657,511
13,330
683,370
7,809,911
354,728
276,258
93,195
76,344
1,321,806
2,122,331
86,537
8,933,344
377,209
295,339
116,125
93,975
760,510
1,643,158
102,458
9,555,527
TOTAL
ASSETS
Non-current assets
Fixed assets
- Tangible assets
- Intangible assets
- Capital work-in-progress
- Intangible assets under development
13
Non-current investments
Deferred tax assets (net)
Long-term loans and advances
14
15
16
Current assets
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets
17
18
19
20
21
Intra/Inter circle remittances
TOTAL
Notes 1 to 49 form an integral part of the financial statements.
33
This is the Balance Sheet referred to in our report of even date.
for Walker Chandiok & Co LLP
(formerly Walker, Chandiok & Co)
Chartered Accountants
Sd/per Atul Seksaria
Partner
For and on behalf of Bharat Sanchar Nigam Limited
Sd/A. N. Rai
Chairman and Managing Director
Sd/Anupam Shrivastava
Director (Finance)
Sd/Sujata Ray
ED Finance
Sd/Rajeev Singh
General Manager (Corporate Accounts)
Sd/H.C.Pant
Company Secretary and Sr. General Manager (Legal)
Place : New Delhi
Date : 29 August 2014
52
Annual Report 2013-14
BHARAT SANCHAR NIGAM LIMITED
Statement of Profit and Loss
(All amounts in Rs. lacs, unless otherwise stated)
Notes
For the year ended 31
March 2014
For the year ended 31
March 2013
INCOME
Revenue from operations
22
2,615,326
2,565,481
Other income
23
184,309
147,308
2,799,635
2,712,789
Total
EXPENSES
Employee benefit expenses
24
1,543,584
1,375,782
Finance costs
25
21,964
35,147
Depreciation and amortisation expense
13
602,317
833,643
- Administrative, operating and other expenses
26
1,100,765
1,040,235
- License and spectrum fee
29
224,330
205,236
Total
3,492,960
3,490,043
Profit/(Loss) before prior period items and tax
(693,325)
(777,254)
(19,094)
(18,282)
(712,419)
(795,536)
10,443
7,092
(701,976)
(788,444)
(14.04)
(15.77)
Other expenses
Prior-period items (net)
27
Profit/(Loss) before tax
Tax expense :
- Deferred tax
15
Profit/(Loss) for the year
Basic/Diluted earnings per share (in Rs.)
34
Notes 1 to 49 form an integral part of the financial statements.
This is the Statement of Profit and Loss referred to in our report of even date.
for Walker Chandiok & Co LLP
(formerly Walker, Chandiok & Co)
Chartered Accountants
Sd/per Atul Seksaria
Partner
For and on behalf of Bharat Sanchar Nigam Limited
Sd/A. N. Rai
Chairman and Managing Director
Sd/Anupam Shrivastava
Director (Finance)
Sd/Sujata Ray
ED Finance
Sd/Rajeev Singh
General Manager (Corporate Accounts)
Sd/H.C.Pant
Company Secretary and Sr. General Manager (Legal)
Place : New Delhi
Date : 29 August 2014
53
BHARAT SANCHAR NIGAM LIMITED
Cash Flow Statement
(All amounts in Rs. lacs, unless otherwise stated)
Particulars
A.
For the year ended 31 For the year ended 31
March 2014
March 2013
Cash flow from operating activities
Net profit/(loss) before tax
(712,419)
(795,536)
Adjustments for :
Current year depreciation and amortisation
602,317
833,643
Prior period depreciation and amortisation
9,063
14,642
21,799
34,916
84
85
Interest income
(6,888)
(13,824)
Profit on sale of fixed assets (net)
(3,817)
(4,859)
(43,421)
(46,939)
22,534
22,463
2,118
2,266
Bad-debt written off
25,684
24,701
Provision for doubtful debts and disputed bills
53,953
41,534
(91,985)
(66,792)
Finance costs
Wealth tax
Capitalisation of overheads
Write off and losses other than bad debts
Bad-debt provision other than services
Excess provision written back
Adjustment of grant in aid
(4,596)
Operating profit/loss before working capital
changes
586,845
(22,867)
(125,574)
818,969
23,433
Adjustment for :
Decrease/(increase) in inventories
18,951
(18,190)
(Increase)/decrease in trade receivables
(86,517)
19,205
Decrease/(increase) in other receivables (current
and non-current)
127,296
(55,523)
(Decrease)/increase in other payables (current and
non-current)
(45,322)
46,834
Increase in provisions
110,874
65,988
Decrease in remittances
15,921
Cash generated from operating activities
21,157
15,629
Wealth tax paid
(85)
Direct tax refund received (net of tax paid)
149,601
Net cash generated from operating activities
B.
141,203
102,904
(92)
149,516
(39,269)
165,145
Proceeds from sale of fixed assets
54
(39,361)
63,543
Cash flow from investing activities
Purchase of fixed assets
79,471
(479,357)
(269,642)
248,789
67,798
Annual Report 2013-14
Interest received
7,058
13,910
Earmarked deposits with bank
(750)
21
Investments in retirement benefits
C.
(60,563)
(284,823)
(56,159)
(244,072)
Cash flow from financing activities
Increase in short term borrowing (net)
117,739
Interest paid
(21,741)
124,067
95,998
(15,901)
108,166
Net decrease in cash and cash equivalents (A+B+C)
(23,680)
(72,363)
Cash and cash equivalents as at 01 April 2013
115,753
188,116
92,073
115,753
Cash and cash equivalents as at 31 March 2014
Cash and cash equivalents as at 31 March 2014 :
Balance with bank
85,256
110,234
Cheques in hand
4,473
3,962
Cash in hand
2,344
92,073
1,557
115,753
Notes :
a)
In the absence of adequate data regarding assets appearing in the deletions/adjustments column of note no. 13 of fixed
assets, all deletions (except amount transferred as decommissioned assets) have been assumed to be cash sales.
b)
In the absence of adequate details regarding unreconciled inter circle remittances with the subsidiary records, all the
inter circle remittance have been treated as part of working capital changes.
c)
The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard - 3
on ‘Cash Flow Statement’ notified by Companies (Accounting Standard) Rules, 2006.
d)
Figures in bracket show outflows.
This is the Cash Flow Statement referred to in our report of even date.
for Walker Chandiok & Co LLP
(formerly Walker, Chandiok & Co)
Chartered Accountants
Sd/per Atul Seksaria
Partner
For and on behalf of Bharat Sanchar Nigam Limited
Sd/A. N. Rai
Chairman and Managing Director
Sd/Anupam Shrivastava
Director (Finance)
Sd/Sujata Ray
ED Finance
Sd/Rajeev Singh
General Manager (Corporate Accounts)
Sd/H.C.Pant
Company Secretary and Sr. General Manager (Legal)
Place : New Delhi
Date : 29 August 2014
55
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
1.
CORPORATE INFORMATION
Bharat Sanchar Nigam Limited (the “Company” or “BSNL”) is a Public Sector Company fully owned
by the Government of India and was formed on 15 September 2000 in pursuance of Telecom
Policy 1999, to take over the ongoing business of the Department of Telecom Services (DTS)
and Department of Telecom Operations (DTO) from 01 October 2000. The Company has been
incorporated under the Companies Act, 1956 with its registered corporate office in New Delhi.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation
The financial statements have been prepared to comply with the Accounting Standards
referred to in the Companies (Accounting Standards) Rules, 2006 issued by the Central
Government in exercise of the power conferred under sub-section (1)(a) of section 642 and
relevant provisions of the Companies Act, 1956 (the ‘Act’) read with the general circular
15/ 2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section
133 of the Companies Act, 2013. The financial statements have been prepared on a going
concern basis under the historical cost convention on accrual basis. The accounting policies
have been consistently applied by the Company.
2.2 USE OF ESTIMATES
The preparation of financial statements in conformity with the principles generally accepted
in India requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent liabilities on the date of
financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Any revision to accounting estimates
is recognised in the current and future periods.
2.3 REVENUE RECOGNITION
Income from services is accounted for on accrual basis and in conformity with the notified
Accounting Standard (AS) – 9 on ‘Revenue recognition’. Accordingly,
a)
b)
c)
d)
Revenue for all services is recognised when earned and are realisable at the time of
billing. Un-billed revenues from the billing date to the end of the year are recorded
as accrued revenue during the period in which the services are provided. Provisions
are made for debts outstanding for more than two years and for debts less than two
years which are considered disputed (based on management decision), to the extent
considered necessary by the management.
Installation charges recovered from subscribers at the time of new telephone connections
are recognised as income in the first year of the billing.
In terms of the arrangement between Department of Telecommunications (“DoT”) and
the Company, the charges for telecommunication services and other infrastructural
services provided by BSNL to DoT are neither billed nor provided for.
Sale proceeds of scrap arising from maintenance and project works are taken into
miscellaneous income in the year of sale.
56
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
e)
f)
g)
h)
i)
Income from Subscriber Identity Modules (SIMs) recharge coupons of mobile, prepaid
calling cards, and prepaid internet connection cards are treated as income of the year in
which the payment is received since the extent of use of these cards within the financial
year cannot be ascertained.
Wherever there is uncertainty in realisation of income, such as liquidated damages,
claims on Government departments and local authorities etc., these are recognised on
realisation basis.
The claims receivable on account of provision of infrastructure, operation and
maintenance of Village Public Telephones (VPTs) and Rural Household Connections
(RDELs) etc. and operational sustainability of rural wire line network from Universal
Service Obligation (USO) fund are accounted for as other operating income.
The interest on surplus fund which are placed generally in fixed deposits with banks is
recognised on accrual basis.
Other income by way of interest on loans to employees, security deposit with
Government departments and local authorities, being not material, are accounted for
on collection basis.
2.4 FIXED ASSETS
2.4.1TANGIBLE ASSETS
a) Fixed assets are carried at cost less depreciation. Cost includes directly related
establishment and other expenses including employee remuneration and benefits,
directly identifiable to the construction or creation of the assets.
b) Expenditure on replacement of assets, equipments, instruments and rehabilitation works
is capitalised if, in the opinion of the management, it results in enhancement of revenue
generating capacity.
c) Assets are capitalised to the extent completion certificates have been obtained, wherever
applicable.
d) The cost of stores and materials at the time of issue to a project is debited to capital
work in progress (CWIP).
e) Apparatus and plants principally consisting of telephone exchanges, transmission
equipments and air conditioning plants etc. are capitalised as and when an exchange is
commissioned and put to use.
f)
Cables are capitalised as and when ready for connection to the main system.
2.4.2INTANGIBLE ASSETS
a) Intangible assets are stated at cost of acquiring the same less accumulated amortisation.
Intangible assets are recognised if it is probable that the future economic benefits
attributable to the assets will flow to the enterprise and cost of the asset can be measured
reliably in accordance with the notified Accounting Standard–26 on ‘Intangible Assets’.
2.5 DEPRECIATION / AMORTISATION
2.5.1TANGIBLE ASSETS
a) Depreciation is provided based on the written down value method at the rates prescribed
in schedule XIV to the Companies Act, 1956 except for subscriber installation. The
subscriber installation is depreciated over the useful life of 5 years on written down
value method.
57
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
b)
Assets costing up to Rs. 5,000 are depreciated fully in the year of purchase. Similarly,
partition works and paintings costing up to Rs. 2,00,000 are depreciated fully in the
year of construction/ acquisition.
c) The depreciation on machinery and tools used both for project and maintenance work
is charged to Statement of Profit and Loss instead of capitalization.
d) All telephone exchange buildings, administrative offices and captive consumption
assembling premises/workshops are considered as building (other than factory building).
Accordingly depreciation is charged uniformly.
2.5.2INTANGIBLE ASSETS
a) Intangible assets such as entry license fee, one time Spectrum fee for telecom service
operations are amortised over the license period (i.e. 20 years) and standalone computer
software applications are amortised over the license period (subject to maximum of 10
years) on straight line method.
2.6 IMPAIRMENT OF ASSETS
Assets, which are impaired by disuse, damage or obsolescence, are segregated from the
concerned assets category and shown as ‘Decommissioned Assets’ and provision is made for the
loss, if any, due to the difference between their net carrying cost and the net realisable value.
2.7 INVESTMENTS
Long-term investments are carried at cost, after providing for any diminution in value, if such
diminution is other than temporary.
2.8 INVENTORIES
Inventories are valued at cost or net realisable value, where ever available, as the case may
be – the cost is ascertained generally on weighted average method, obsolete/non moving
inventories are valued at net realisable value.
2.9 FOREIGN CURRENCY TRANSACTIONS
a)
b)
Transactions in foreign currency are recorded in the reporting currency, by applying to
the foreign currency amount the exchange rate prevailing on the date of the transaction
i.e. on the date of payment or the billing as the case may be.
All monetary items are stated at the exchange rate prevailing as at reporting date and the
difference taken to Statement of profit and loss as exchange fluctuation loss or gain.
2.10EMPLOYEES BENEFITS
a)
SHORT TERM EMPLOYEE BENEFITS:
Short term employee benefits are recognised in the period during which the services
have been rendered.
b) LONG TERM EMPLOYEE BENEFITS:
c) DEFINED CONTRIBUTION PLAN:
i)
Pension Contribution (including gratuity)
The employees of DoT who have opted for absorption / absorbed in the Company
and the employees on deemed deputation from Government are eligible for
58
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
pension, which is a defined contribution plan. The Company makes monthly
contribution (including liability on account of gratuity) at the applicable rates as
per Government Pension Rules, 1972 and Fundamental Rules and Supplementary
Rules (FR & SR), to the Government who administers the same.
ii) Employees’ Provident Fund
All directly recruited employees of the Company are entitled to receive benefits
under the provident fund, a defined contribution plan. Both employee and employer
make monthly contribution to the plan at a predetermined rate of employee’s
basic salary and dearness allowance. These contributions to provident fund are
administered by the provident fund commissioner. Employer’s Contribution to
provident fund is expensed in the Statement of Profit and Loss.
iii) Contribution for Leave Salary
For employees on deemed deputation from Government, leave salary contribution
is paid by the company to DoT for the deputation period in accordance with
FR115 (b) of FR & SR Part I. Consequently, the leave salary payable for those on
deputation during the period of leave rests with the Government. Further, any
leave encashment after quitting service is the responsibility of the Government.
DEFINED BENEFIT PLAN:
i)
Leave Encashment
The liability on account of un-availed leave in respect of absorbed employees and
directly recruited employees at the year end is provided for based on actuarial
valuation.
ii) Gratuity
The Company provides for gratuity, a defined benefit plan (the Gratuity Plan)
covering all directly recruited eligible employees. In accordance with the payment
of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested
employees on retirement, death, incapacitation or termination of employment.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation
on Balance Sheet date and are expensed in the Statement of Profit and Loss.
iii) Other benefits including post employment medical care
Medical reimbursements and other personal claim bills of existing / retired
employees are accounted for on actual basis in respect of bills received till the
cut off period in the accounts at the concerned primary units as per the prescribed
limits.
2.11MANUFACTURING EXPENSES
Expenses incurred at factory units are allocated to the cost of the manufactured products
and manufactured items are transferred to other units on standard rates determined by the
Company.
2.12PRIOR PERIOD ITEMS
Items of income/expenditure exceeding Rs. 5 lacs are only considered for being treated as
‘prior period items’.
59
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
2.13TAXES ON INCOME
Taxes on income for the current period are determined on the basis of taxable income and
tax credits computed in accordance with the provisions of the Income Tax Act, 1961.
In accordance with the notified AS-22, Deferred Tax Liability is recognised on the timing
differences between accounting income and the taxable income for the period taking into
consideration the contents of Accounting Standard Interpretations (ASI) - 3 and quantified
using the tax rates in force or substantively enacted as on the reporting date.
Deferred Tax Assets are recognised and carried forward to the extent there is a virtual certainty
that such deferred tax assets can be realised.
2.14PROVISIONS
Provisions are recognised when the Company has a present obligation as a result of past
events; it is more likely than not that an outflow of resources will be required to settle the
obligation, and the amount has been reliably estimated.
2.15CONTINGENT LIABILITIES
Liabilities, though contingent, are provided for if there are reasonable chances of maturing
such liabilities as per management. Other contingent liabilities, barring frivolous claims, not
acknowledged as debts, are disclosed by way of notes.
2.16EARNINGS PER SHARE
Earnings Per Share (“EPS”) comprises the net profit after tax (excluding extraordinary income
net of tax). The number of shares used in computing Basic and Diluted EPS is the weighted
average number of shares outstanding during the year.
2.17SEGMENT REPORTING
The primary segment consists of ‘Basic’, ‘Cellular’ and ‘Broad Band’ services provided. The
manufacturing activities have not been treated as a separate segment since such activities are
essentially carried on as support service to other segments mainly for captive consumption.
The following specific accounting policies have been followed for segment reporting:
a) Segment revenue includes service income and other income directly identifiable with/
allocable to the segment.
b) Income/expense, which relates to the Company, as a whole and not allocable to individual
business segment is included in “Un-allocable income/expense respectively”.
c) Expenses that are directly identifiable with/allocable to segments are considered for
determining segment results.
d) Segment assets and liabilities include those directly identifiable with the respective
segments. Un-allocable corporate assets and liabilities represent the assets and liabilities
that relate to the Company as a whole and not allocable to any segment.
2.18EXTRAORDINARY ITEMS
Extra-ordinary items of income and expenditure, as covered by AS - 5, are disclosed
separately.
60
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
3.
SHARE CAPITAL
As at 31 March 2014
As at 31 March 2013
10,00,00,00,000 (previous year: 10,00,00,00,000)
equity shares of Rs. 10/- each
1,000,000
1,000,000
7,50,00,00,000 (previous year: 7,50,00,00,000) 9%
non-cumulative preference shares of Rs.10/- each
750,000
750,000
1,750,000
1,750,000
5,00,00,00,000 (previous year : 5,00,00,00,000) equity
shares of Rs. 10/- each
500,000
500,000
7,50,00,00,000 (previous year: 7,50,00,00,000) 9%
non-cumulative preference shares of Rs.10/- each
750,000
750,000
1,250,000
1,250,000
As at 31 March 2014
As at 31 March 2013
Authorised
Issued, subscribed and fully paid up
a) Reconciliation of number of shares
Number of
shares
Amount
Number of
shares
Amount
5,000,000,000
500,000
5,000,000,000
500,000
7,500,000,000
750,000
7,500,000,000
750,000
Equity shares
Balance at the beginning/end of the year
Preference shares
Balance at the beginning/end of the year
b) Details of shares held by shareholders having more than 5% shares in the Company
As at 31 March 2014
As at 31 March 2013
4,999,998,400
4,999,998,400
99.99
99.99
7,500,000,000
7,500,000,000
100
100
Equity shares
The Central Government of India (No.)
Holding (%)
Preference shares
The Central Government of India (No.)
Holding (%)
Notes :
a)
Out of the shares issued by the Company, 49,99,998,400 (previous year 49,99,998,400) equity shares of Rs. 10/each and 7,500,000,000 (previous year 7,50,00,00,000) preference share of Rs. 10/- each were allotted as fully
paid up for consideration other than cash in the financial year 2000-01 and 2001-02 respectively. The President
of India through its nominees is holding 1,600 shares of Rs. 10/- each as subscribers to the Memorandum and
Articles of association.
b)
The Company for the period of five years immediately preceding the date of Balance Sheet has not :
i)
Allotted fully paid up shares by way of bonus shares.
c)
ii)
Brought back any class of shares.
Vote of members : Every member present on person and being a holder of equity share shall have one vote and
every person either as a general proxy on behalf of a holder of equity share, shall have one vote or upon a poll,
61
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
every member shall have one vote for every share held by him. On poll, the voting rights of holder of equity
share shall be as specified in Section 87 of the Companies Act, 1956. The holder of preference share have a right
to vote on resolution placed before the Company which directly affects the rights attached to their preference
shares and subject to aforesaid, the holders of preference shares shall in respect of such capital be entitled to vote
on every resolution placed before the Company at a meeting if the dividend due on such capital or any part of
such dividend remains unpaid in respect of an aggregate period of not less than two years preceding the date of
commencement of the meeting and where the holders of any preference shares have a right to vote as aforesaid
on any resolution every such member personally present shall have one vote and on a poll his voting right in
respect of such preference share bears to the total paid up equity capital of the Company.
d)
Division of profit : The profit of the Company, subject to any special rights relating thereto created or authorised
to be created by the articles subject to the provisions of the articles and also subject to the provisions of section
205(2A) of the Companies Act, 1956 and, regarding transfer of the amount to reserve of the Company, shall be
divisible among the members with the approval of the President of India, in the proportion of the amount of
capital paid or credited as paid-up on the shares held by them respectively.
4.
RESERVES AND SURPLUS
As at 31 March
2014
As at 31 March
2013
Capital reserves [refer note 28]
Balance at the beginning of the year
4,023,839
4,026,257
Add: Waiver of loan from the Government of India [note a]
98,318
-
Add/(Less): Assets identified and accounted for
(2,340)
(2,388)
53
(30)
Add/(Less): Liabilities identified and accounted for
4,119,870
4,023,839
General reserves
430,084
430,084
Contingency reserves [note b]
200,000
200,000
422,317
1,210,761
Add: Profit/(Loss) for the year
(701,976)
(788,444)
Balance at the end of the year
(279,659)
422,317
4,470,295
5,076,240
Balance at the end of the year
Surplus/ (Deficit) in Statement of Profit and Loss
Balance at the beginning of the year
Notes :
a)
During the current year, the loan from the Government of India amounting to Rs. 98,318 lacs has been waived
vide letter no.1-43/2008-B, dated 11 April 2014 and the same has been taken to the capital reserve created at the
time of formation of the Company.
b)
The contingency reserve was created in the financial year 2003-04 by appropriation of profits to meet various
contingencies that may arise in future, based on the decision made by the board of directors.
5.
DEFERRED GOVERNMENT GRANT
As at 31 March
2014
Grant in aid
62
As at 31 March
2013
33,037
37,633
33,037
37,633
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Note :
a)
Since 2005-06, an amount of Rs. 61,332 lacs (Rs. 17,000 lacs for wireline and Rs 44,332 lacs for wireless
services) has been received from Department of Information Technology (DIT) for providing wireline and wireless
connectivity to 41,500 common service centers. Since this grant cannot be linked to creation of any particular
asset; as telecom network is a seemless entity, the same is being disclosed under ‘Grant in aid’ as a Deferred
Grant in accordance with the notified Accounting Standard-12 on ‘Accounting for Government Grants’ and is
being written back in the Statement of Profit and Loss by applying the depreciation rate on Base Transceiver
Station (i.e. 13.91%).
6.
LONG-TERM BORROWINGS
As at 31 March As at 31 March
2014
2013
Unsecured loans
- Loan from the Government of India [note a]
- Government of India (non refundable and non interest bearing ) [note b]
-
98,318
72,000
72,000
72,000
170,318
Notes :
a)
Loan from the Government of India
The notional loan of Rs. 7,50,000 lacs, which is a part of the capital structure of the Company, had a
moratorium on repayment of the principal and interest thereon up to 31 March 2005. The Company has
been representing since long to the Government of India for reduction in the rate of interest and withdrawal
of terms and conditions towards penal interest and prepayment charges. However, since the Ministry of
Finance, Government of India has not agreed to extend any relief in the form of reduction of interest rate
on the loan, as informed by the DoT through letter No. I-432008-B, dated 21 June 2011, the difference
of Rs. 18,868 lacs between the books of the Company and DoT in respect of outstanding principal
amount of the loan has been accounted in the books of the Company in the financial year 2010-11.
However, during the current year, this outstanding loan from the Government of India and the interest thereon
has been waived-off by the Government (Department of Telecommunication) vide its letter no. 1-43/2008-B,
dated 11 April 2014, consequently the principal amount of loan has been credited to capital reserves and the
outstanding interest provision has been written back.
b)
Non-refundable and non-interest bearing loan from Government of India
The Government of India has sanctioned a non-refundable and non-interest bearing advance of Rs 72,000 lacs
as budgetary support for the ongoing Village Panchayat Telephones (VPT) program of the Company vide letter
no.25-1/2001-SAT/pp(pt), dated 13 January 2003. The amount has already been expensed off for the purpose
for which it was sanctioned. The Company has sought approval from DoT for writing back this loan, being nonrefundable in nature.
7.
OTHER LONG-TERM LIABILITIES
As at 31 March As at 31 March
2014
2013
Deposits from customers and others
Security deposits
After connection deposits
63
38,289
38,430
291,785
315,454
330,074
353,884
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
8.
LONG-TERM PROVISIONS
As at 31 March As at 31 March
2014
2013
Provision for employee benefits
Post retirement benefit of serving employees [refer note 30.2]
9.
783,606
687,008
783,606
687,008
SHORT TERM BORROWINGS
As at 31 March As at 31 March
2014
2013
Loan from banks (unsecured) [note a]
373,853
256,114
373,853
256,114
Note :
a)
Short term unsecured loans, repayable on demand, comprise of the following :
i)
Rs. 50,000 lacs (previous year NIL) from Canara Bank carries an interest rate of 10.20% p.a. (floating) with
monthly rests.
ii)
Rs. 1,50,000 lacs (previous year NIL) from Bank of India carries an interest rate of 10.20% p.a. (floating)
with monthly rests.
iii)
Rs. 1,73,853 lacs (previous year Rs. 1,69,809 lacs) from Union Bank of India carries an interest rate of
10.50% p.a. (floating) with monthly rests.
iv)
Rs.Nil ( Previous year Rs. 86,305 lacs) from Corporation bank which carries an interest rate of 10.50%
p.a. (floating) with monthly rests.
10. TRADE PAYABLES
As at 31 March As at 31 March
2014
2013
Sundry creditors [note a]
744,748
802,057
Claims payable to Mahanagar Telephone Nigam Limited (MTNL) [note b]
99,602
97,747
Claims payable on interconnection usage charges (IUC)
24,715
49,120
1,115
759
477
380
-
29
870,657
950,092
Satellite Based Broadband (SBB) and access network services
Claims payable on Universal Service Obligation (USO) towers
Internet data center (IDC)
Notes :
a)
Thirty one circles (previous year twenty seven) of the Company has identified Micro, Small and Medium
Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The required
information in terms of section 22 of MSMED Act to the extent available in respect of thirty one circles (previous
year twenty seven circles) are given below :
64
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Particulars
As at 31 March As at 31 March
2014
2013
The principal amount due to suppliers
131
NIL
The amount of interest paid by the buyer in terms of section 16 of the
MSMED Act, 2006
NIL
NIL
The amount of interest due and payable for the period of delay in making
payment
NIL
NIL
The amount of interest accrued and remaining unpaid at the end of each
accounting year
NIL
NIL
The amount of further interest remaining due and payable even in the
succeeding years as per Section 23 of MSMED Act, 2006
NIL
NIL
b)
An IUC agreement is being finalised between the Company and MTNL in the current year. Till the finalisation
of the agreement interconnect charges are based on the rates prescribed by Telecom Regulatory Authority of
India (TRAI) in IUC regulation. The net claim receivable/payable as on 31 March 2014 from MTNL is subject to
confirmation and reconciliation.
11. OTHER CURRENT LIABILITIES
As at 31 March As at 31 March
2014
2013
Interest accrued but not due on bank loan
353
204
-
50,570
Advances received from customers and others
32,659
36,730
Advance received from Defense telecom network project (net)
12,394
13,962
Advance received from Bharat Broadband Nigam Limited (net)
22,568
13,146
Deposits from customers and others
101,395
107,159
Income received in advance against service
204,827
214,818
39,109
47,207
9,553
9,286
- Tax deducted at source (TDS)
16,010
13,727
- Service tax (net)
44,044
47,835
2,275
1,757
33,614
24,213
30
246
Liability towards employees
22,642
22,028
Liability towards subscribers
19,222
16,395
Liability towards construction account
34,780
25,164
Liability towards services and others
86,888
76,608
682,363
721,054
Interest accrued and due on the Government loan [refer note 6(a)]
Claims payable to DoT [refer note 32]
Claims payable to other Government departments
Statutory dues
- Employees’ provident fund (EPF)
License fee, spectrum charges and transponder charges payable
Payable for revised wages
65
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
12. SHORT-TERM PROVISIONS
As at 31 March As at 31 March
2014
2013
Provision for :
- Wealth tax
389
390
- Leave encashment of retired employees
2,742
2,525
- Gratuity [refer note 30.2]
6,435
7,187
57,893
43,082
67,459
53,184
- Post retirement benefit of serving employees [refer note 30.2]
66
Particulars
Current year
2
Opening
balance as at
01 April 2013
93,679
17,669
772,687
6,200,933
13,662
5,906,505
519,289
458,328
50,783
566,736
19,942
478,767
23,370
183,407
93,327
15,399,084
Less : Diminution in the value of decommissioned assets
Total
INTANGIBLES
Entry license fees
1,852,538
Computer softwares
35,259
Total
1,887,797
CAPITAL WORK IN PROGRESS
Capital work in progress
373,857
Less :Impairment in pending projects etc.
Total
INTANGIBLE ASSET UNDER DEVELOPMENT
Intangible assets under development
1,462
17,662,200
TANGIBLES
Lands ( Free hold )
Lands ( Lease hold )
Buildings
Apparatus and plants
Motor vehicle and launches
Cables
Lines and wires
Subscriber installations
Installation test equipments
Masts and aerials
Office machinery and equipments
Electrical fittings
Furniture and fixtures
Computers
Decommissioned assets
A.
13. FIXED ASSETS [refer note 31]
2,602
297
14,310
255,266
667
13,041
11,927
9,132
691
21,172
690
19,144
461
5,208
19,469
374,077
672,451
588
673,039
468,137
1,047
1,516,300
1,515
1,515
485,784
508
1,024,200
4
573
237
27,766
333,189
79
72,362
2,162
9,393
2,323
32,783
454
33,407
391
4,672
16,602
536,393
3
Gross Block
Additions
Deletions
During the year
(All amounts in Rs. lacs, unless otherwise stated)
67
923
17,170,100
391,504
1,180,087
36,186
1,216,273
91,650
17,609
786,143
6,278,856
13,074
5,965,826
509,524
458,589
52,415
578,347
19,706
493,030
23,300
182,871
90,460
15,561,400
11,125,831
-
338,333
20,579
358,912
3,787
315,693
4,167,973
12,098
4,616,498
417,550
419,697
32,252
302,455
14,068
290,375
18,257
156,216
10,766,919
612,153
-
(63,511)
3,042
(60,469)
263
23,202
331,922
347
206,498
14,037
13,459
2,738
38,320
823
28,765
1,022
11,226
672,622
95,890
-
(153)
(153)
(4)
412
63,256
565
8,304
9,367
7,217
233
(420)
400
2,810
242
3,661
96,043
11,642,094
-
274,822
23,774
298,596
4,054
338,483
4,436,639
11,880
4,814,692
422,220
425,939
34,757
341,195
14,491
316,330
19,037
163,781
11,343,498
923
5,449,945
391,504
4,587
386,917
905,265
12,412
917,677
91,650
13,555
447,660
1,842,217
1,194
1,151,134
87,304
32,650
17,658
237,152
5,215
176,700
4,263
19,090
90,460
4,217,902
73,474
4,144,428
Depreciation and amortisation
Closing
Closing
Opening
For the year Deductions / Closing balance balance as
balance as
balance as at ( refer note e adjustments as at 31 March at 31 March
2014
at 31 March 01 April 2013
and f )
2014
2014
5=( 2+3 ) - 4
6
7
8
9=( 6+7 ) -8 10 = (5 - 9)
Summary of significant accounting policies and other explanatory information for the year ended 31 March 2014
Annual Report 2013-14
68
2
Opening
balance as at
01 April 2012
2,494
294
7,188
85,496
782
5,685
7,594
4,386
906
17,432
272
12,473
254
2,072
7,590
154,918
146
146
191,094
663
346,821
5,857
5,857
136,903
82
526,185
4
559
496
10,241
185,020
73
94,079
2,487
11,334
3,297
28,023
427
28,498
383
9,167
9,259
383,343
3
Gross Block
Additions
Deletions
During the year
1,462
17,662,200
373,857
1,852,538
35,259
1,887,797
93,679
17,669
772,687
6,200,933
13,662
5,906,505
519,289
458,328
50,783
566,736
19,942
478,767
23,370
183,407
93,327
15,399,084
10,349,571
-
245,706
16,327
262,033
3,527
291,600
3,858,939
12,309
4,383,332
407,549
404,944
29,074
265,281
13,253
258,073
17,132
142,525
10,087,538
849,152
-
92,627
3,738
96,365
261
24,338
366,573
476
235,865
16,119
18,670
3,445
38,526
975
30,987
1,196
15,356
752,787
72,892
-
(514)
(514)
1
245
57,539
687
2,699
6,118
3,917
267
1,352
160
(1,315)
71
1,665
73,406
11,125,831
-
338,333
20,579
358,912
3,787
315,693
4,167,973
12,098
4,616,498
417,550
419,697
32,252
302,455
14,068
290,375
18,257
156,216
10,766,919
1,462
6,455,700
373,857
4,257
369,600
1,514,205
14,680
1,528,885
93,679
13,882
456,994
2,032,960
1,564
1,290,007
101,739
38,631
18,531
264,281
5,874
188,392
5,113
27,191
93,327
4,632,165
76,412
4,555,753
Depreciation and amortisation
Closing
balance
Closing
Opening
For the year Deductions / Closing balance
as at
balance as
balance as at ( refer note e adjustments
as at
at 31 March 01 April 2012
and f )
31 March 2013 31 March
2013
2013
5=( 2+3 ) - 4
6
7
8
9=( 6+7 ) -8 10 = (5 - 9)
Notes :
a)
In some cases, the title deeds of land purchased/acquired on leasehold/freehold from various authorities, are in the process of being executed.
b)
Land includes leasehold land to the extent identified by thirty one circles (previous year thirty two circles).
c)
Addition to fixed assets include assets identified and taken over by the Company in the current year, pertaining to the assets being taken over from DoT as on 01 October 2000
Rs. (2,232) lacs (previous year Rs (2,252) lacs)
d)
Additions in gross block include Rs.43,421 lacs (previous year Rs.46,939 lacs) of Employee remuneration and Administrative expenses capitalised during the year.
e)
The depreciation during the year includes Rs. 9,063 lacs (previous year Rs.14,642 lacs) relating to prior period.
f)
The current year depreciation includes Rs.772 lacs (previous year Rs.867 lacs) which has been capitalised.
95,614
17,467
769,634
6,101,409
14,371
5,818,111
524,396
451,380
48,392
556,145
19,787
462,742
23,241
176,312
91,658
15,170,659
Less : Diminution in the value of decommissioned assets
Total
INTANGIBLES
Entry license fees
1,852,538
Computer softwares
29,548
Total
1,882,086
CAPITAL WORK IN PROGRESS
Capital work in progress
428,048
Less :Impairment in pending projects etc.
Total
INTANGIBLE ASSET UNDER DEVELOPMENT
Intangible assets under development
2,043
17,482,836
TANGIBLES
Lands ( Free hold )
Lands ( Lease hold )
Buildings
Apparatus and plants
Motor vehicle and launches
Cables
Lines and wires
Subscriber installations
Installation test equipments
Masts and aerials
Office machinery and equipments
Electrical fittings
Furniture and fixtures
Computers
Decommissioned assets
B. Previous year
Particulars
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
14. NON-CURRENT INVESTMENTS
As at 31 March As at 31 March
2014
2013
(At cost, unquoted, non-trade)
20,000,000 (previous year 20,000,000) 7% redeemable cumulative
Preference shares of Rs. 100/- each fully paid in Indian Telephone
20,000
20,000
Industries (ITI) Limited (A Government of India owned Company) [note a]
Investments in retirement benefit plan [note 30]
698,074
637,511
718,074
657,511
Note :
a) All the five installments of Rs. 4,000 lacs each are overdue for redemption of 7% redeemable cumulative
preference shares in respect of investment in M/s ITI Limited at the end of the year and no dividend has been
received till date. ITI Limited will redeem preference shares to the Company immediately on release of Financial
Assistance by the Government of India to ITI as a part of revival package. Hence, no provision for the aforesaid
investment is made in the books of accounts of the Company.
15. DEFERRED TAX ASSETS (net)
As at 31 March As at 31 March
2014
2013
Deferred tax assets
Provision for bad and doubtful debts
Unabsorbed depreciation
Provision for leave encashment
Provision for decommissioned assets, wage revision, etc
Others
A
123,698
259,055
98,412
6,606
15,076
502,847
132,336
259,055
99,525
14,485
15,126
520,527
B
A-B
461,706
17,368
479,074
23,773
489,829
17,368
507,197
13,330
Deferred tax liabilities
Depreciation
Others
Notes :
a)
The deferred tax has been dealt with in accordance with the contention of the Company before the tax authorities.
The depreciation has been calculated on the book value of assets taken over from DoT, contrary to the Income Tax
Department’s contention of treating capital reserve as relief/ grant/ subsidy deductable from book value of assets.
The Company contends that the capital reserve arising out of the capital structure at the time of incorporation of
the Company is not in the nature of financial relief and hence not to be reduced from the value of fixed assets.
According to the Company’s contention, the depreciation provided in the books on the value of assets without
deducting the amount involved in capital reserve is admissible in income tax. The stand of Company was upheld
by the Hon’ble High Court of Delhi and the income tax department has not contested against this yet in the
higher court. The Company is recognising deferred tax assets/liabilities accordingly.
69
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
b)
The Company, being a Company providing telecommunication services is eligible to claim deduction under
Section 80 IA of the Income Tax Act, 1961 with respect to 100 % of the profits and gains derived from this
business for the first five years and thereafter at 30% of the profits for the second five years (referred to as the Tax
Holiday Period). The Company has opted for tax holiday period from financial year 2003-04 and the period ends
in the previous financial year 2012-13.
c)
In accordance with Accounting Standard Interpretation (ASI)-3 issued by the Institute of Chartered Accountants
of India, the deferred tax provision in respect of timing differences which originates and gets reversed during the
tax holiday period have not been recognised. Deferred tax in respect of timing differences which originate during
the tax holiday period but gets reversed after the tax holiday period, have been recognized in the year in which
the timing differences have originated. For this purpose, as a conservative measure, deferred tax provision has
been made in respect of the period when only 30% of the profits would be tax free assuming that only 70% of
the timing differences would reverse.
d)
The Company has not recognised any deferred tax asset during the year following the notified Accounting
Standard 22 “Accounting for taxes on income’, only reversal relating to deferred tax assets and deferred tax
liability created during the earlier years have been made
16. LONG-TERM LOANS AND ADVANCES
As at 31 March As at 31 March
2014
2013
Advances recoverable in cash or in kind or for value to be received
- Secured and considered good
Security deposits
Loans and advances to staff
10,077
10,232
4,581
6,612
19,290
16,450
1,372
3,130
24,116
24,097
467,350
616,951
5,898
5,898
532,684
683,370
- Unsecured but considered good
Security deposits
Loans and advances to staff
Other loans and advances
- Capital advance,unsecured but considered good
- Advance income tax
[Net of provision for tax Rs. 7,17,196 lacs (previous year Rs. 7,17,196 lacs)]
- Advance payment of fringe benefit tax
[Net of provision for tax Rs. 15,300 lacs (previous year Rs. 15,300 lacs)]
17. INVENTORIES
As at 31 March As at 31 March
2014
2013
Building materials
Lines and wires
Cables
Apparatus and plants
Telephone instruments
70
183
373
8,332
9,433
90,889
89,422
200,559
209,494
17,801
14,777
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Telegraph and telex instruments
81
88
27,498
26,821
Raw material and scrap (at factory)
8,376
16,928
Finished goods and work in progress (at factory)
7,536
675
Finished stock(at various circles)
3,233
8,427
18,275
25,716
(Excess)/Short in inventory account
493
48
Inventory for construction account
-
5
383,256
402,207
28,528
24,998
354,728
377,209
Broad band equipments
Other stores
Less: Provision for obsolete inventory/short inventory
Notes :
a)
Physical verification of stock has been conducted by the management during the year and is reconciled with the
detailed inventory records. Where ever the difference is found the same is provided for. In seven circles (previous
year six circles) difference between the store ledger and the general ledger is identified and provided for in the
current financial year.
b)
The Company is in the process of identification of non-moving, slow moving and obsolete inventories in eleven
circles (previous year five circles). Pending finalisation of the process, no provision if any, that may be required,
has been made.
c)
In certain cases, the Company has placed orders for procuring inventory at provisional prices around 80-90% of
the previous purchase price. Final purchase price in such cases is determined at a later date. Price difference in
such cases is adjusted on the total material available in stock at the time of finalization of purchase price. The
proportionate price differential on the already consumed material is adjusted on the existing stock. These cases
were arising mainly due to price variation in Copper cable. However, with the introduction of Optical Fiber
Cables (OFC) these cases have reduced to very minuscule level.
18. TRADE RECEIVABLES
As at 31 March As at 31 March
2014
2013
Trade receivables
Less : Advance income booked but not collected
Less : Provision for doubtful receivables
752,958
725,748
20,330
-
732,628
725,748
456,370
430,409
276,258
295,339
Notes :
a)
In twenty four circles (previous year twenty six circles), there is difference in the closing balance of trade
receivables between the subsidiary ledger and the general ledger. To the extent identified, the net difference
between general ledger and subsidiary ledger balances is Rs. 22,590 lacs (previous year Rs. 22,917 lacs). The
management is in the process of reconciling these differences, however an amount of Rs. 23,561 lacs is provided
for the circles where general ledger is more than subsidiary ledger. The provision for doubtful receivables is
made on the basis of information available in the subsidiary ledger.
b)
The age-wise analysis of the trade receivables as per subsidiary ledger is given below:
71
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
As at 31 March As at 31 March
2014
2013
Particulars
Trade receivable exceeding six months
551,767
551,861
Other trade receivables
178,601
150,970
730,368
702,831
c)
The classification of the trade receivables as secured (to the extent of the security deposits held by the Company),
unsecured/considered good and considered doubtful, to the extent available as per sub ledger is as follows:
As at 31 March As at 31 March
2014
2013
Particulars
Considered good secured
140,460
133,244
Considered good unsecured
158,075
149,203
Doubtful receivable
431,833
420,384
730,368
702,831
19. CASH AND BANK BALANCES
As at 31 March As at 31 March
2014
2013
Cash and cash equivalents
- Balances with bank
In current account including sweep-in-deposit
In fixed deposits accounts with original maturity within 3 months
- Cheques in hand
- Cash in hand
83,315
110,234
1,941
-
4,473
3,962
2,344
1,557
92,073
115,753
1,122
372
93,195
116,125
Other bank balances
- Earmarked deposits with bank
(including bank guarantee, margin money, etc)
Notes :
a)
In eight circles (previous year ten circles), it has been noticed that cheques deposited with the bank and telegraphic
transfer (TT) sent, have not been credited in the relevant bank accounts of the Company amounting to Rs. 2,704
lacs (previous year Rs. 3,442 lacs) as on 31 March 2014. The management has already taken up the case with
the concerned banks for timely crediting the amount in the respective account.
b)
In nine circles (previous year ten circles), unlinked credit items amounting to Rs. 470 lacs (previous year Rs. 482
lacs) and in ten circles (previous year eight circles) unlinked debit items amounting to Rs. 223 lacs (previous year
Rs. 428 lacs) are appearing in the bank reconciliation statement as at 31 March 2014. The management is in the
process of reconciling all such items in due course.
c)
Bank balances in one circle (previous year three circles) includes cheques in hand pending to be deposited in
bank on 31 March 2014.
72
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
20. SHORT TERM LOANS AND ADVANCES
As at 31 March As at 31 March
2014
2013
Advances recoverable in cash or in kind or for value to be received
- Secured, considered good
Security deposits
1,224
1,304
63,916
84,948
Purchase advances
6,467
3,164
Loans and advances to staff
4,234
4,450
Security deposits
367
54
Other advances
136
55
76,344
93,975
- Unsecured, considered good
Advances to contractors
Note :
a)
In one circle (previous year fifteen circles), it has been noticed that there are differences in the subsidiary ledger
of loans and advances with those appearing in general ledger. The management is in the process of reconciling
the differences of current assets as well as other current liabilities.
21. OTHER CURRENT ASSETS
As at 31 March As at 31 March
2014
2013
Amount recoverable in cash or in kind or for value to be received
23,461
19,541
130,568
275,704
846,120
170,985
1,745
1,581
3,979
4,895
356,466
338,830
21,576
21,922
Operating lease charges recoverable
1,189
1,298
Sales tax recoverable from customers
24
25
Service tax recoverable from customers
82,294
77,213
Balances with excise and other tax authorities
54,257
54,119
158
149
27
207
12,337
4,033
Accrued revenue
Amount recoverable from DoT
- On current account [refer note 32 and note c below]
- For employees on deputation
Amount recoverable from
- Government departments
- Government companies
Claims recoverable from others
Interest accrued
- on bank deposits
- on loans advances and investments
Call Detail Record based claims recoverable
73
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
As at 31 March As at 31 March
2014
2013
Less: Provision for doubtful items
1,534,201
970,502
212,395
209,992
1,321,806
760,510
Notes :
a)
No circles (previous year four circles) has reported that there is a difference between the subsidiary ledger and
the general ledger, under claims recoverable from MTNL to the extent identified, the general ledger balance
which are considered for preparation of financial statement,was more by Rs. 141 lacs in the previous year than
the subsidiary ledger.
b)
Cenvat on account of service tax, excise duty and custom duty on capital goods and inputs is under reconciliation
in some circles.
c)
Amount recoverable from DOT – on current account includes an amount of Rs. 6,72,451 lacs recoverable on
account of refund of BWA Spectrum confirmed by DOT vide letter no.10-20/2012-SU.I (vol. II) dated 15 January
2014.
22. REVENUE FROM OPERATIONS
For the year
ended 31 March
2014
For the year
ended 31 March
2013
501,326
494,717
1,066,237
1,012,051
18,150
22,105
- Income from broad band services
465,969
397,478
- Leased lines
208,239
179,674
2,604
1,553
399
1,088
11,574
7,512
302,809
318,157
2,577,307
2,434,335
- Other operating income [note a]
20,942
113,907
- Other
17,077
17,239
38,019
131,146
2,615,326
2,565,481
Revenue from sale of services
- Telephones (other than Wireless in Local Loop (WLL))
- Cellular
- Income from WLL
- Other services
- Telegraphs and telex
- Income from passive infrastructure
- Receipts from other operators
Other operating revenue
Notes :
a)
Other operating income represents subsidy from Universal Service Obligation Fund and DoT.
74
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
b)
Telephones disconnected due to non-payment are considered to be working for a period of 30 days from the
date of disconnection of outgoing facility. During this period, the incoming facility is provided and fixed monthly
charges are billed for this period.
c)
Indo-Nepal telecom traffic account
i) Revenue receivable for Rs. 267 lacs (previous year Rs. 289 lacs) and payable Rs. 494 lacs (previous year Rs.
760 lacs) in respect of Indo-Nepal traffic account has been considered on accrual basis in the accounts for the
financial year 2013-14.
ii) Nepal Telecom has disputed outstanding dues of Rs. 43 lacs pertaining to period from May 2003 to December
2004. A provision of Rs. 43 lacs which has been made by the corporate office on behalf of the circle in the year
2009-10 in this regard. The disputed amount of dues payable to Nepal telecom from January 2010 to March
2011 is Rs. 45 lacs.
d)
Indo-Bangladesh telecom traffic account
Revenue receivable for Rs. 10 lacs (previous year Rs. 7 lacs) and payable Rs. 7 lacs (previous year Rs. 8 lacs) in
respect of Indo-Bangladesh traffic account has been considered on accrual basis in the accounts for the financial
year 2013-14.
e)
Indo-Myanmar telecom traffic account
No receivable and payable amount has been booked during the financial year 2013-14 as there is no traffic
between the countries during the current financial year (previous year NIL).
f)
Rs. 28 lacs outstanding on account of transit charges as disputed by M/s Tata Teleservices Limited is pending and
Rs. 285 lacs is outstanding against other IUC operator against which necessary provisions has been made upto
financial year 2011-12.
23. OTHER INCOME
For the year
ended 31
March 2014
For the year
ended 31
March 2013
- On deposits in banks
3,679
6,762
- On advances
3,209
7,062
17,928
-
24,816
13,824
3,817
4,859
31,965
31,178
91,985
66,792
2,438
2,657
- Sale of scrap
3,038
4,204
- Reimbursement from USO Administrator for USO Towers
3,988
5,379
- Income from Network Operating and Control Center (NOCC)
3,324
2,186
- Others including sale of publications, forms, waste paper, etc.
18,938
16,229
159,493
133,484
184,309
147,308
Interest income
- On income tax refund
Other non-operating income
- Profit on sale of assets (net)
- Liquidated damages
- Excess provision written back [refer note 6(a)]
- Rent of staff quarters
75
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
24. EMPLOYEE BENEFIT EXPENSES
For the year ended
31 March 2014
For the year ended
31 March 2013
1,321,286
1,208,068
110,367
64,550
Pension contribution
88,914
91,641
Employer’s contribution towards employees provident fund
18,735
15,933
6,440
4,142
818
808
32,634
30,585
1,714
1,913
1,580,908
1,417,640
37,324
41,858
1,543,584
1,375,782
Salaries, wages, allowance and other benefits
Leave encashment (including provision) [note a]
Gratuity (including provision)
Leave salary contribution
Medical expenditure
Staff welfare expenses [note b]
Less : Allocated to capital work-in-progress and others
Notes :
a)
Leave encashment of Rs. 59,418 lacs (previous year Rs. 55,359 lacs) has been paid by the Company considering
the unfunded position of the related fund.
b)
During the year, the Company has paid Rs. 400 lacs (previous year Rs. 500 lacs) to staff welfare board and Rs.
100 lacs (previous year Rs. 100 lacs) to sports and cultural board for promoting welfare activities at various
circles.
25. FINANCE COSTS
For the year ended
31 March 2014
For the year ended
31 March 2013
- Interest on Government loan [refer note 6(a)]
-
19,599
- Interest on subscribers’ deposit
7
28
21,639
15,099
- Interest on others
153
190
Bank charges
165
231
21,964
35,147
Interest expense
- Interest on bank loan
26. ADMINISTRATIVE, OPERATING AND OTHER EXPENSES
Rent
Lease charges
Rates and taxes
76
For the year ended
31 March 2014
For the year ended
31 March 2013
32,141
32,322
489
456
4,962
6,184
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
For the year ended
31 March 2014
For the year ended
31 March 2013
262,451
253,256
281
195
- Buildings
31,170
27,077
- Plant and machinery
92,418
85,119
- Cables
42,905
42,993
- Others
10,869
7,219
2,412
2,119
301
298
6,660
6,886
52,366
51,201
992
900
Business promotion and marketing expenses
5,385
3,170
Travel expenses
7,907
8,376
Postage and courier charges
6,959
7,115
Security services
28,612
27,805
Vehicle running expenses (including hired vehicles)
21,839
20,691
238,835
225,858
Expenditure on passive infrastructure hired
64,719
55,040
Expenditure on services and other expenses [note c]
77,906
81,409
1,885
1,992
84
85
22,534
22,463
832
2,096
Bad-debt written off
25,684
24,701
Provision for doubtful debts and disputed bills
53,953
41,534
Write off of unrecovered service tax
1,286
170
Foreign exchange fluctuation loss/(gain) (net)
1,069
1,074
Loss/(Profit) from manufacturing activities of factories [note a
& b]
8,321
6,111
(1,365)
(599)
1,106,862
1,045,316
6,097
5,081
1,100,765
1,040,235
Power and fuel
Insurance
Repairs and maintenance
Professional and consultancy charges
Payment to auditors [refer note 37]
Printing and stationery
Commission on franchise services
Advertisement
IUC to other service providers
Penalty for customer application form (CAF) verification
Wealth tax
Write off and losses (other than bad debts)
Bad-debt provision other than services
Loss/(Profit) from construction/telecom services projects
Less: Allocated to capital project works & others
77
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Notes :
a)
Telecom factories manufacturing account :
Particulars
For the year ended
31 March 2014
For the year ended
31 March 2013
8,379
11,833
Purchases
10,878
8,106
Direct expenses
13,123
12,207
2,079
(1,093)
Closing stock - raw material & scraps
(8,376)
(8,379)
Total (A)
26,083
22,674
Internal transfer (B)
17,762
16,563
8,321
6,111
Opening stock - raw material & scraps
Change in inventory
Loss/(Profit) from manufacturing activities
b)
Production of goods by the Company is for captive consumption. Prices for the transfer of stock from Telecom
Factories to circles for self-consumption are predetermined. The predetermined rates include direct cost including
overhead allocation at a fixed rate. This practice has resulted in internal loss of Rs. 8,321 lacs (previous year
Rs. 6,111 lacs) for the year ended 31 March 2014 arising out of such transfer. The said amount has been netted
off against the administrative expenses in the Statement of Profit and Loss for the year since it is not possible to
identify the individual items of stores, which have been capitalised or expensed off.
c)
Consumption of stores and spare parts for the year ended 31 March 2014 is Rs. 2,367 lacs included in expenditure
on services and other expenses.
27. PRIOR PERIOD ITEMS
For the year ended
31 March 2014
For the year ended
31 March 2013
- Telephones (WLL)
-
7
- Income from WIMAX
3
-
- Value added service
48
1,018
- Broadband services
77
775
1,212
300
-
3
- Subsidy from DIT for Rural Broad Band (wireline) [refer note
5]
90
16,786
- Interconnect Usage Charges (IUC)
98
-
5
-
1,533
18,889
47
457
Prior period income
- Liquidated damages and other miscellaneous income
- Telegraphs
- Income from real estate
Expenditure booked earlier now reversed
- Salaries and staff expenses
78
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
For the year ended
31 March 2014
For the year ended
31 March 2013
281
1,003
4,132
-
4,460
1,460
5,993
20,349
356
282
-
2,213
- Income - telephones (other than WLL)
130
908
- Income on telephone circuits
449
8,317
- Income on telegraph circuits
149
303
- USO subsidy
558
1,345
22
-
1,664
13,368
- Rent, rate and taxes
141
18
- Repairs
864
1,138
9,063
14,642
263
545
3,954
1,164
46
-
9,092
7,756
23,423
25,263
25,087
38,631
(19,094)
(18,282)
- License fee
- Interest
Total A
Income booked earlier now reversed
- Cellular mobile service
- IUC
- Telephones (WLL)
Expenditure
- Depreciation [refer note 13]
- Power and fuel
- IUC
- USO towers maintenance
- Other services
Total B
Net amount of prior period items (A-B)
28. ASSETS AND LIABILITIES TAKEN OVER FROM DoT
28.1 In pursuance of the Memorandum of Understanding (MOU), dated 30 September 2000
executed between Government of India and the Company, all assets and liabilities in respect
of business carried on by Department of Telecom Services (DTS) and Department of Telecom
Operations (DTO) were transferred to the Company with effect from 01 October 2000 at a
provisional value of Rs. 63,00,000 lacs and up to the current financial year the Company has
identified net assets of Rs. 63,27,152 lacs (previous year Rs. 63,29,439 lacs) against it.
During the current financial year, based on physical verification of fixed assets and inventory
and reconciliation of various heads of assets and liabilities in the subsidiary and general
ledgers, the management has found some facts which has resulted in increase/ decrease
79
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
in the following assets and liabilities taken over as on 01 October 2000 amounting to net
reduction in the assets of Rs. 2,287 lacs [previous year 2,418 lacs]:
Particulars
Up to
31 March 2013
Assets
Fixed assets
Capital work-in-progress
Inventory
Trade receivables
Advance to contractors
Deposit with electricity boards /others
Total-A
Liabilities
Customer deposits
Earnest money deposits
Security deposits from contractors /suppliers
Working expense liability as on 01 October 2000
Contractors bills payable as on 01 October 2000
Total-B
Net assets taken over by the Company (A-B)
Previous year
Note 1:
Note 2:
5,409,071
502,627
187,850
683,196
39,448
2,184
6,824,376
393,704
12,122
29,005
43,513
16,593
494,937
6,329,439
6,331,857
Additions/
Up to
(Deletions) 31 March 2014
during the year
(2,232)
(108)
(2,340)
(6)
(6)
(41)
(53)
(2,287)
(2,418)
5,406,839
502,519
187,850
683,196
39,448
2,184
6,822,036
393,704
12,116
28,999
43,472
16,593
494,884
6,327,152
6,329,439
The net assets and the contingent liabilities transferred to the Company as on 01 October 2000 are
subject to confirmation by DoT as regard to their ownership and the value.
Trade receivables as on 31 March 2014 includes an amount of Rs. 36,458 lacs pertaining to period
prior to 01 October 2000, which have been fully provided for and included in net current assets
referred above.
28.2 The capital structure for the Company concurred by the Ministry of Finance and conveyed
by the Department of Telecommunications vide their U.O. No. 1-2/2000-B (Pt.) dated 13
December 2001 has been treated as consideration for transferring the above stated assets and
liabilities is as follows:
Particulars
As at 01
October 2000
(as on 31
March, 2013)
Equity
9% Non-cumulative preference shares
15 year Government loan (Interest at prevalent
Government lending rate) [note 1]
Loan from MTNL [note 2]
Capital reserves – DoT [note 3]
Total
80
500,000
750,000
750,000
305,600
4,023,839
6,329,439
Additions/
Total structure
(Deletions) as at 01 October
during the
2000 (as on 31
year ended 31
March, 2014)
March, 2014
500,000
750,000
(2,287)
(2,287)
750,000
305,600
4,021,552
6,327,152
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Notes:
1.
During the current year, the loan from the Government of India amounting to Rs. 98,318 lacs has been
waived vide letter no. 1-43/2008-B dated 11 April 2014 and the same has been taken to the capital
reserve created at the time of formation of the Company.
2.
The entire amount has been repaid in the previous years.
3.
Represents the difference between the total value of the assets taken over and the long term identified
liabilities and the capital structure, as on 01 October 2000 as communicated by DoT.
28.3 In pursuance of clause 13 of agreement of transfer executed between the Government of
India and the Company dated 30 September 2000 all costs, charges and expenses including
stamp duties, registration charges, transfer duties, any other taxes, levies, duties or charges
relating to or in connection with completion of transfer of assets and liabilities shall be borne
by the Government of India.
29. LICENSE FEE AND SPECTRUM CHARGES
29.1 License and spectrum fee for the year ended 31 March 2014 is Rs. 2,24,330 lacs (previous
year Rs. 2,05,236 lacs).
29.2 During the year there was no change of formula in distribution of the revenue between
various components and thus the same formula adopted during 2010-11 is followed this year
also, as per the following percentage:
Service
Basic
CMTS
NLD
ILD
Leased circuits
30%
-
70%
-
Basic services
70.72%
-
17.58%
11.7%
CMTS services
-
75.50%
21.26%
3.24%
The NLD/ILD portion of Point of Interconnection (POI) revenue has been taken on actual
basis.
29.3 With effect from 01 April 2013, uniform rate of 8% is applicable for all the services i.e. Basic,
CMTS, ISP, VSAT, NLD and ILD and for all the circles irrespective of the category, vide DoT
letter no. 20-281/2010-AS-I (Vol. II) (Pt.) dated 25 June 2012.
30. EMPLOYEE COST
30.1 The Company has made pension contribution as per applicable rates to DoT on the basis of
pay scales for absorbed employees and for other employees working on deemed deputation
as per the Central Government pay scales in accordance with financial rule 116 of the
Government of India. The liability on account of pension payable to all such employees will
be that of the Government of India as communicated by the Secretary, DoT vide their DO
No. 1-45/2003-B dated 15 March 2005.
However, in the year 2006-07 DoT vide their letter No. 1-45/2003-B dated 15 June 2006
has intimated that annual pension liability of the Government in respect of employees of
DoT / DTS / DTO who retired prior to 01 October 2000, those who have worked / are
working in the Company on deemed deputation and for those who are absorbed in the
Company shall not exceed 60% of the annual receipts to the Government from the item (a)
Dividend income from MTNL/BSNL, (b) License fee from MTNL/BSNL, (c) Corporate Tax/
81
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Excise Duty/Service Tax paid by BSNL. Any amount exceeding the receipts on account of
3 items mentioned above shall be borne by MTNL/BSNL. The Company has taken up the
matter with the Government stating that its liability is restricted to pension contribution as per
the rates prescribed in financial rules.
30.2 During the year, the Company has recognised following amounts in the Statement of Profit
and Loss :
a) Defined contribution plans
Contribution to defined contribution plan i.e. employer’s contribution to provident
fund and pension contribution to the Government of India for the year is charged to
Statement Profit and Loss. These amounts are shown as under:
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
Employer’s contribution to provident fund
18,735
15,932
Pension contribution to the Government of India
88,914
91,641
b)
Defined Benefit Plans

Gratuity
The employees’ gratuity fund scheme administered by the Company employees gratuity
fund trust through two fund managers namely Life Insurance Corporation (LIC) of India
and SBI Life Insurance Company Limited, is a defined benefit plan. The entire fund has
been withdrawn from SBI Life Insurance Company Limited during the current financial
year. The amount shown as fund invested with the SBI as on 31 March 2014 is the
amount of interest for the year 2013-14 till the date of withdrawal. The present value of
obligation is determined on actuarial valuation done by LIC using projected unit credit
method to arrive the final obligation.
i)
Defined benefits / expenses for gratuity recognised for the year
Particulars
Current service cost
Interest cost
3,601
3,388
2,811
2,289
( 2,443)
2,913
908
Past service cost
-
-
Curtailment and settlement cost/(credit)
-
-
6,435
4,142
Total actuarial (gain)/loss
Net cost
ii)
Year ended 31
March 2013
( 2,890)
Expected return on plan assets
Year ended
31 March 2014
The assumptions used to determine the benefit obligations are as follows:
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
Discount rate
8%
8%
Expected rate of increase in compensation levels
7%
7%
82
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Particulars
Expected average remaining working lives of employees
(years)
Mortality table
iii)
24.94
LIC (1994-96)
Ultimate
LIC (1994-96)
Ultimate
Year ended
31 March 2013
35,128
28,617
Interest cost
2,811
2,289
Current service cost
3,601
3,388
Benefits paid
( 503)
(74)
Actuarial (gain)/loss on obligations
Present value of obligations as at end of year
iv)
2,913
908
43,950
35,128
Reconciliation of opening and closing balances of fair value of plan assets for
gratuity
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
27,941
19,543
Contributions during the year
7,187
6,029
Expected return on plan assets
2,890
2,443
Benefits paid
( 503)
( 74)
-
-
37,515
27,941
Fair value of plan assets at beginning of year
Actuarial gain / (loss) on plan assets
Fair value of plan assets at the end of year
v)
Reconciliation of fair value of assets and obligations for gratuity
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
Fair value of plan assets at the end of year
37,515
27,941
Present value of obligations as at end of year
43,950
35,128
6,435
7,187
Net liability recognised in Balance Sheet
23.17
Year ended
31 March 2014
Present value of obligations as at beginning of year
Year ended
31 March 2013
Reconciliation of opening and closing balances of defined benefit obligations
for gratuity
Particulars
Year ended
31 March 2014
vi)
Gratuity fund investment details (Fund manager wise, to the extent funded)
Particulars
Life Insurance Corporation of India
SBI Life Insurance
Total
83
Year ended
31 March 2014
Year ended
31 March 2013
37,496
24,676
19
3,265
37,515
27,941
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Leave encashment:

Leave encashment is also a defined benefit plan. The liability towards leave encashment
has been determined through actuarial valuation as per the notified Accounting Standard
15 (Revised 2005) ‘Employee Benefits’ using projected unit credit method.
i)
Defined benefits / expenses for leave encashment recognised for the year
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
Current service cost
10,184
10,019
Interest cost
58,407
53,179
(60,563)
(56,159)
42,818
2,151
Past service cost
-
-
Curtailment and settlement cost/(credit)
-
-
50,846
9,190
Expected return on plan assets
Total actuarial (gain)/loss
Net cost
ii)
The assumptions used to determine the benefit obligations are as follows:
Particulars
Year ended 31
March 2014
Year ended 31
March 2013
Discount rate
8%
8%
Expected rate of increase in compensation levels
7%
7%
10
11
1% to 3%
depending on age
1% to 3%
depending on age
LIC (1994-96)
Ultimate
LIC (1994-96)
Ultimate
Expected average remaining working lives of employees
(years)
Withdrawal rate
Mortality table
iii)
Reconciliation of opening and closing balances of defined benefit obligations
for leave encashment.
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
730,090
664,741
Interest cost
58,407
53,179
Current service cost
10,184
10,019
-
-
42,818
2,151
841,499
730,090
Present value of obligations as at beginning of year
Benefits paid
Actuarial (gain)/loss on obligations (balancing figure)
Present value of obligations as at end of year
84
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
iv)
Reconciliation of opening and closing balances of fair value of plan assets for
leave encashment.
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
637,511
581,352
-
-
60,563
56,159
Benefits paid
-
-
Actuarial gain / (loss) on plan assets
-
-
698,074
637,511
Fair value of plan assets at beginning of year
Contributions during the year
Expected return on plan assets
Fair value of plan assets at the end of year
v)
Reconciliation of fair value of assets and obligations for leave encashment
Particulars
Year ended
31 March 2014
Year ended
31 March 2013
Fair value of plan assets at the end of year
698,074
637,511
Present value of obligations as at end of year
841,499
730,090
Unfunded amount recognised in Balance Sheet
143,425
92,579
vi)
Leave encashment fund investment details (fund manager wise, to the extent
funded)
Particulars
Life Insurance Corporation of India (100%)
Year ended
31 March 2014
Year ended
31 March 2013
698,074
637,511
31.FIXED ASSETS / DEPRECIATION AND AMORTIZATION/ CAPITAL WORK-INPROGRESS
31.1 Fixed assets taken over from DoT as on 01 October 2000 are based on physical verification
conducted by the management. The value of fixed assets taken over including capital workin-progress has been determined by the management using the original cost of the asset
(wherever available) or alternatively the value arrived at by applying Strategic Business Plan
(“SBP”) rates, which is based on technical assessment, as reduced by the depreciation up
to 30 September 2000 on straight line basis at the rates prescribed by DoT. Capital assets
acquired by the Company after 01 October 2000 are valued at the cost including all direct
charges incurred up to the time of installation or put to use.
The transfer values, as indicated above, in respect of assets transferred from DoT on 01
October 2000 have been treated as its original cost and depreciation has been provided on
written down value method at the rates prescribed in Schedule XIV of the Companies Act,
1956 without reassessing the remaining useful life of such assets as on that date. Depreciation
has been provided at the rates as stated above for all the assets acquired after 01 October
2000 except in the case of Subscribers Installations which are depreciated over the useful life
of 5 years on written down value method. Depreciation has been calculated by the circles,
as per the policies of the Company.
85
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
31.2 Land at several locations has been taken over at a nominal value say Re. 1, wherever
original cost is not available. As at 31 March 2014, thirty one circles (previous year thirty
two circles) have identified the leasehold land. In the absence of the information relating to
such acquisition in other cases, no adjustment has been made for amortising the cost of such
unidentified lease hold land over the lease period.
The lease period of a few leasehold lands on which buildings are constructed, have not been
renewed / or the renewals are under dispute. Since expected terms, conditions and rentals
for renewal/ surrender are not ascertainable, no provision has been made for the ‘surrender
value / written down value of the buildings’.
31.3 Pending transfer of the immovable property in the name of the Company, documents in
respect of some land and buildings acquired during the period are under legal process/
execution. Further in respect of assets taken over from DoT, formalities for vesting the assets
in favour of the Company wherever necessary/applicable are under process.
31.4 The Company, as per instructions issued by the Ministry of Communications and Information
Technology through letters having number P-11014/13/2008-PP dated nil and number
P-11014/13/2008-PP dated 12 June 2010, has provided Rs. 10,18,658 lacs and Rs. 8,31,380
lacs as one time charge for 3G spectrum and BWA spectrum respectively in the financial
year 2009-10, which was earmarked for the Company on 08 August 2008. Above-mentioned
amount has been paid to the Government of India during the financial year 2010-11. As per
terms and conditions of NIA the right to use above-mentioned spectrum is for 20 years from
the date of awards of right to commercially use the allocated spectrum block. Accordingly,
the Company is amortising the one time spectrum fee over the period of twenty years as per
straight-line method.
During the current year, the Company received approval of the cabinet vide Department of
Telecommunication letter no. 10-20/2012-SU.I(vol. II) dated 15 January 2014, for surrender
of BWA Spectrum by the Company and refund of upfront charges paid by the Company
for six (6) LSAs amounting to Rs. 6,72,451 lacs. Accordingly, the Intangible assets of BWA
spectrum amounting to Rs. 6,72,451 lacs has been decapitalised and claims recoverable from
DoT for BWA spectrum refund has been debited by the corresponding amount. Further, the
to-date accumulated amortisation amounting to Rs. 1,49,228 lacs has been netted off with
the current year amortisation charge of the gross block.
31.5 Certain assets that have been completed and put to use, have not been capitalised in
fourteen circles (previous year thirteen circles) pursuant to the policy of capitalising only after
completion certificates have been obtained and till then these are still shown as capital workin-progress. The amount ascertained in respect of ten circles (previous year nine circles) is Rs.
45,808 lacs (previous year Rs 33,292 lacs). Consequently depreciation is also not charged on
the same.
31.6 Establishment and administration expenses incurred in units where project work is also
undertaken are allocated to capital and revenue mainly on actual man-month basis and only
where such actual allocation is not possible then on proportionate basis.
31.7 In two circles (previous year one circle), there is difference between the CWIP subsidiary
ledger and general control ledger.
86
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
32. DoT BALANCES
Net amount of Rs. 8,07,011 lacs (Previous year Rs. 1,23,778 lacs) recoverable on current
account from DoT, out of which an amount of Rs. 6,72,451 lacs has been confirmed to
be refunded by DoT vide letter no. 10-20/2012-SU.I (vol. II) dated 15 January 2014, is
subject to confirmation, reconciliation and consequential adjustment. There is no practice of
getting confirmation of such balances with Government department due to huge number of
transactions.
There is no agreement between the Company and DoT for interest recoverable/payable on
outstanding amounts of DoT on current account. Hence, no accrual for interest has been
made on the amount payable to/recoverable from DoT.
33. INTER/INTRA CIRCLE REMITTANCE
The management is in the process of reconciling the various differences between the subsidiary
records and the corresponding control accounts and balance of Rs. 86,537 lacs (previous
year Rs. 1,02,458 lacs) in Inter/Intra-Circle Remittances account. This amount pertains mainly
to reconciliation of assets and liabilities, and marginally to expenditure and revenue amongst
various circles of the Company. The reconciliation of the remittances is done on continuous
basis throughout the year and proper effect is taken in the books of accounts for reconciled
amount.
34. EARNINGS PER SHARE
Description
Unit
F.Y. 2013-14
F.Y. 2012-13
Profit/(Loss) after tax
(Rs. in lacs)
(701,976)
(788,444)
Number of equity shares outstanding
(in number)
5,000,000,000
5,000,000,000
Face value of shares
(in Rs.)
10
10
Basic/Diluted earnings per share
(in Rs.)
(14.04)
(15.77)
35. SEGMENT REPORTING
A. Current year
Particulars
For the year ended 31 March 2014
Business Segments
Revenue
Total
Basic
Cellular
Revenue from operations
848,713
1,292,179
472,237
2,197
2,615,326
Inter segment revenue (eliminated)
116,492
43,664
-
-
160,156
Other income
121,477
33,447
2,375
2,194
159,493
1,086,682
1,369,290
474,612
4,391
2,934,975
Operating profit/(loss) before interest, prior (1,509,741)
period items and taxes
400,829
429,937
(17,202)
(696,177)
Net segment revenue
Broadband
Unallocable
Segment results
87
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Particulars
For the year ended 31 March 2014
Business Segments
Revenue
Basic
Cellular
Broadband
Unallocable
Total
Interest income
5,735
243
-
18,838
24,816
Interest expenses
(234)
(85)
-
(21,645)
(21,964)
Profit/(Loss) before prior period items and (1,477,063)
taxes
400,987
429,937
(20,011)
(693,325)
(20,825)
(2,520)
248
4,003
(19,094)
(1,497,888)
398,467
430,185
(16,008)
(712,419)
-
-
-
10,443
10,443
(1,497,888)
398,467
430,185
(9,952)
(701,976)
Segment assets
3,977,317
3,314,703
274,017
1,367,307
8,933,344
Segment liabilities
1,153,219
530,102
47,025
7,202,998
8,933,344
Increase/(decrease) in gross block of fixed
assets
(18,740)
(482,200)
12,056
(330)
(489,214)
Depreciation and amortisation
418,926
157,684
25,423
284
602,317
88,586
15,566
129
8
104,289
Prior period items
Profit/(Loss) before tax
Deferred tax
Profit/(Loss) after tax
Other information
Non cash expense other than depreciation
B. Previous year
Particulars
For the year ended 31 March 2013
Business Segments
Revenue
Total
Basic
Cellular
Revenue from operations
921,442
1,234,184
408,100
1,755
2,565,481
Inter segment revenue (eliminated)
134,480
45,804
-
-
180,284
90,133
38,612
1,162
3,577
133,484
1,146,055
1,318,600
409,262
5,332
2,879,249
Operating profit/(loss) before interest, prior (1,318,973)
period items and taxes
213,137
367,932
(18,027)
(755,931)
8,545
433
-
4,846
13,824
-
(46)
-
(35,101)
(35,147)
Profit/(Loss) before prior period items and (1,310,428)
taxes
213,524
367,932
(48,282)
(777,254)
(34,123)
(1,855)
17,588
108
(18,282)
(1,344,551)
211,669
385,520
(48,174)
(795,536)
Other income
Net segment revenue
Broadband
Unallocable
Segment results
Interest income
Interest expenses
Prior period items
Profit/(Loss) before tax
88
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Particulars
For the year ended 31 March 2013
Business Segments
Revenue
Basic
Deferred tax
Profit/(Loss) after tax
Cellular
Broadband
Unallocable
Total
-
-
-
7,092
7,092
(1,344,551)
211,669
385,520
(41,082)
(788,444)
4,476,926
3,352,443
251,586
1,385,518
9,466,473
548,949
593,089
35,504
2,027,515
3,205,058
39,618
112,301
24,844
13
176,776
476,767
330,944
25,626
306
833,643
66,830
24,868
254
3
91,955
Other information
Segment assets
Segment liabilities
Increase/(decrease) in gross block of fixed
assets
Depreciation and amortisation
Non cash expense other than depreciation
Note :
a)
Primary Segment: Basic, Cellular and Broad Band services have been considered as primary business
segments for reporting under the notified AS-17 “Segment Reporting” issued by CA Rules 2006.
b)
Secondary Segment: The Company caters only to the Indian market representing a singular economic
environment with similar risks and returns and further there are no reportable geographical segments.
36. RELATED PARTY DISCLOSURE
36.1 Key Management Personnel
Designation
Name of Incumbent
Remarks
CMD
Shri. R K Upadhyay
From 30 April 2011 (A/N)
Director (Finance)
Shri. K.C.G.K. Pillai
From 25 April 2013 (A/N) to 30 November 2013
Shri. R K Upadhyay
From 01 December 2013 (F/N) to 04 February 2014
Shri. Anupam Shrivastava
From 05 February 2014
Director (Consumer
Mobility)
Shri. R. K. Agarwal
From 11 April 2008 to 30 April 2013 (F/N)
Shri. Anupam Shrivastava
From 01 May 2013 (F/N)
Director (HRD)
Shri. A.N. Rai
From 19 June 2012
Director (Consumer
Fixed Access)
Shri. N. K Gupta
From 01 June 2012 (F/N)
Director (Enterprise)
Shri. A.N.Rai
From 19 September 2011
Government director
Shri. Shahbaz Ali
From 14 February 2012
Ms. Rita Amitabh Teaotia
From 04 September 2012
Non-official part-time
Shri. Ashish Guha
From 21 May 2010 to 20 May 2013
director
Prof. N. Balakrishnan
From 17 July 2012
Shri. Ajai Vikram Singh
From 17 July 2012
89
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
36.2 Disclosure of transactions between the Company and related parties and the status of
outstanding balances.
Name of the
party
Description of transactions
Year ended
31 March 2014
Year ended
31 March 2013
120
101
4
5
2
2
126
108
1
-
Extended during the year
15
13
Total
16
13
Repayment of advance
12
12
Outstanding advance
4
1
Remuneration paid :
Payment of salary and allowances
Key Management
Perquisites
Personnel
Sitting fees
Total
Advance given [note below] :
Opening balance
Note: These advances are in the normal course of business.
36.3 The Company being a wholly State owned enterprise, disclosure as regards related party
relationship with other State controlled enterprises and transactions with such enterprises
has not been made in accordance with the notified “Accounting Standard-18 Related party
disclosures”.
37. AUDITOR’S REMUNERATION (STATUTORY/BRANCH AUDITORS)
Particulars
Year ended
31 March 2014
Statutory
auditor
Branch
auditor
Statutory
auditor
Branch
auditor
13
227
13
227
Certification charges
2
36
1
36
Reimbursement of expenses
2
21
2
19
17
284
16
282
Other services
-
-
4
-
Tax audit fee
-
24
-
22
Statutory audit fee
Total
Year ended
31 March 2013
Note: Fees exclusive of service tax and cess wherever applicable.
38 AS 29 DISCLOSURE REQUIREMENT
The disclosure relating to provisions in terms of AS 29, to the extent available, are as under:
90
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
Name of
Provisions
Opening
balance as at
01 April 2013
Wealth tax
Contingencies
Total
390
(397)
1,256
(1,192)
1,646
(1,589)
Fresh
provision
made during
the year
84
(85)
435
(120)
519
(205)
Provision
utilized during
the year
85
(92)
1
(56)
86
(148)
Provision
written back
during the
year
146
146
-
Closing
balance as
at 31 March
2014
389
(390)
1,544
(1,256)
1,933
(1,646)
Note: Figures in bracket denotes previous year figures.
39. OTHER SCHEDULE-VI REQUIREMENTS
Information required as per Note 5(viii) of General Instructions for preparation of Statement
of Profit and Loss, Part II of Revised Schedule VI of Companies Act, 1956, to the extent
available, is as under:
39.1 Value of Imports on CIF Basis :
Particulars
Year ended
31 March 2014
957
15,721
16,678
Raw material
Components and spares parts
Capital goods
Total
Year ended
31 March 2013
2,401
57,861
60,262
Note: One circle (previous year one circle) has not ascertained the value of import on CIF basis.
39.2 The expenditure in foreign currency:
Particulars
Year ended
31 March 2014
937
23
8,685
9,645
Expenses on services
Travelling
Others
Total
Year ended
31 March 2013
7,307
19
9,086
16,412
Note: One circle (previous year one circle) has not ascertained the value of expenditure in foreign currency.
39.3Consumption of imported and indigenous stores and spares parts (to the extent identified) :
Particulars
Imported
Indigenous
Total
Year ended
31 March 2014
(Rs. in lacs)
%
21,908
56
17,325
44
39,233
100
(Rs. in lacs)
12,176
22,894
35,070
Year ended
31 March 2013
%
29
71
100
Note: One circle (previous year one circle) has not ascertained the consumption of imported and indigenous
stores and spares parts.
91
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
39.4 Earnings in foreign currency :
Particulars
Year ended
31 March 2014
56
2,548
685
3,289
Training fee
Income from services
Others
Total
Year ended
31 March 2013
51
8,423
569
9,043
Note: One circle (previous year one circle) has not ascertained the value of earnings in foreign currency.
40. LEASE
The Company has taken vehicles for senior executives under operating leases, which expire
between May 2013 to May 2018 (previous year April 2014 to July 2017). The gross rental
expenses, excluding service tax, for such vehicles are Rs. 92 lacs (previous year Rs. 92 lacs).
The committed lease rentals in the future are:
Particulars
Not later than one year (excluding service tax)
Later than one year and not later than five years (excluding service
tax)
Total
Year ended
Year ended
31 March, 2014 31 March, 2013
90
88
110
121
200
209
41. Vide a MoU entered during the year between the Company and MTNL, rentals will be
calculated at mutually agreed rates after review of space occupied by both the aforementioned
Public Sector Undertakings (PSUs) in each others buildings.
42. CONTINGENT LIABILITIES AND COMMITMENTS:
42.1 Contingent liabilities
(i) Claims not acknowledged as debts are as follows:
Particulars
As at 31 March 2014
As at 31 March 2013
No. of
Amount
No. of
Amount
cases
cases
36
133
55
143
11
1,372
39
2,495
120
22,152
94
17,127
57
14,354
59
16,747
20
3,536
17
3,216
2
1,136,678
1
691,186
1
2,465
43,184
154,565
633
25,012
43,431
1,335,255
898
755,926
TR Billing
Enhanced sales tax in lieu of C/D Forms
On account of service tax disputed
Sales tax disputed
Central excise claims
License fee and spectrum charges [note 1]
Foreign exchange fluctuation loss [note 2]
Others [note 3]
Total
Note 1:
Demand raised by DoT amounting to:
(i)
Rs. 6,91,186 lacs on account of one time spectrum charges for Global System for Mobile
(GSM) spectrum held by the Company, the matter is subjudice by other operators and the
amount is not finally crystallized.
92
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
(ii)
Note 2:
Note 3:
Rs. 4,45,492 lacs on account of provisional assessment of license fee for the years 2006-07 to
2008-09, the matter has been taken up with DoT for revision.
The net amount payable to Pakistan Telecom Company Limited for settlement of telecom dues
amounting to Rs.17,671 lacs payable in Gold Franc currency have been accounted for in the book
of Maharashtra telecom circle in the year 2012-13 pertaining to the period upto June 2003. No claim
has been received from Pakistan Telecom Company Limited on account of telecom traffic. In the
absence of relevant details of traffic data, no recognition of income and provisioning for expenditure
related to it has been accounted for, for the above period. The Management has decided not to
recognise the foreign exchange fluctuation for the claims recoverable/payable from/to PTCL in the
books of accounts. Henceforth, the same will be shown as contingent liabilities.
The contingent liability in connection to 23 cases included under the head ‘Others’ in the above
table is not ascertainable.
ii)
Claims pending in court related to Land acquisition, TR billing, Service tax, Central Excise and
Sales tax, Arbitration cases and others.
Particulars
As at 31 March 2014
As at 31 March 2013
14,438
16,520
848,092
273,354
No. of cases
Amount
iii)
Demands raised by the Income Tax Departments not acknowledged as debt are
as follows:
Assessment
year
Particulars
As at 31
March
2014
Particulars
As at 31
March
2013
Forum where pending
Amount
Forum where pending
Amount
2001-02
(refer note 1)
Writ at Hon’ble Delhi High
- Court against re-assessment
u/s 147
81,899
2002-03
(refer note 1)
Appeal pending at
ITAT
- against
penalty order u/s
271(1)(c)
27,307
2003-04
Appeal pending at ITAT against
assessment u/s 143(3)
197,943
Appeal pending at
ITAT
against assessment u/s 143(3)
197,943
2004-05
Appeal pending at ITAT against
assessment u/s 143(3)
36,110
Appeal pending at
ITAT
against assessment u/s 143(3)
36,110
Appeal pending
at ITAT
9,684 against assessment u/s 263 /
143(3)
9,684
2004-05
Appeal pending at ITAT against
(refer note 2) assessment u/s 263 / 143(3)
Appeal pending at ITAT against
assessment u/s 143(3)
31,667
Appeal pending at
ITAT
against assessment u/s 143(3)
31,667
2005-06
Appeal pending at ITAT against
(refer note 3) penalty order u/s 271(1)(c)
115,316
Appeal pending at ITAT against
penalty order u/s 271(1)(c)
115,316
2006-07
Appeal pending at ITAT against
(refer note 4) assessment u/s 143(3)
92,606
Appeal pending at ITAT against
assessment u/s 143(3)
92,606
2007-08
Appeal pending at ITAT against
(refer note 5) assessment u/s 143(3)
97,095
Appeal pending at ITAT against
assessment u/s 143(3)
97,095
2005-06
93
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
2008-09
Appeal pending at ITAT against
(refer note 6) assessment u/s 143(3)
70,891
Appeal filed at ITAT against
assessment u/s 143(3)
70,891
2009-10
Appeal pending at ITAT against
(refer note 7) assessment u/s 143(3)
29,749
Appeal filed at ITAT against
assessment u/s 143(3)
59,429
Appeal pending at CIT (A)
against assessment u/s 143(3)
3,071
Appeal filed at CIT (A) against
assessment u/s 143(3)
3,071
2011-12
Appeal pending at CIT (A)
(refer note 8) against assessment u/s 143(3)
623,422
2010-11
Total
Notes :
1.
2.
3.
4.
5.
1,307,554
823,018
The cases have been decided in the favour of the Company hence not acknowledged as
contingent liability.
Assessment order under section(u/s) 263/143(3), dated 25 September, 2009 has been passed
for assessment year 2004-05, whereby deduction u/s 80-IA amounting to Rs. 4,52,830 lacs was
disallowed. An additional demand of Rs. 1,00,856 lacs has been raised against the Company.
The appeal filed against this assessment has been decided partly by CIT (A) in favour of the
Company vide their order dated 30 April 2010.As per appeal effect u/s 250/263/143(3) dated
30 June 2010 for effecting order of CIT (A) dated 30 April 2010, the additional demand of
Rs. 1,00,856 lacs has been reduced to Rs. 9,684 lacs. Further appeal has been filed with
Hon’ble ITAT against the order of CIT (A).
The appeal filed against the penalty for A.Y. 2005-06 under section 271(1)(c) imposed to the
extent of Rs. 1,15,316 lacs has been disposed of by CIT(A) vide their order dated 14 March
2012. Substantial relief has been allowed to the Company as mentioned below.
S.
No.
Particulars
Additions under normal
provisions/section 115JB
Penalty
(100%)
1
2
Depreciation
Normal
82,994
Write off – other than bad debts
Normal
-
3
Disallowance of claims of deductions u/s
80-IA
Normal
25,838
4
Provision of bad and doubtful debts
Section 115JB
5,630
Total
114,462
Further, second Appeal has been filed by both the Company and Income Tax Department
with Hon’ble ITAT against order of CIT(A) vide Appeal No 2196/DEL-2012 and 2799/DEL2012 respectively.
For assessment year 2006-07, an additional demand of Rs. 51,890 lacs was raised against the
Company vide assessment order u/s 143(3) dated 27 December 2007. The additional demand
for assessment year 2005-06 has further been increased from Rs. 51,890 lacs to Rs. 92,606
lacs vide assessment order u/s 154/143(3) dated 24 September 2010. The appeal filed against
this assessment has been decided partly in favour of the Company by CIT (A) vide their order
dated 28 March 2008. The Company has filed appeal before ITAT against the order of CIT (A).
For assessment year 2007-08, an additional demand of Rs. 35,218 lacs was raised against
the Company vide assessment order u/s 143(3) dated 14 December 2009. The additional
demand for A.Y. 2007-08 has further been increased from Rs. 35,218 lacs to Rs. 97,095 lacs
vide assessment order u/s 154/143(3) dated 10 August 2010. The appeal filed against this
assessment has been decided partly in favour of the Company by CIT (A) vide their Order
dated 29 March 2011. The Company has filed appeal before ITAT against the order of CIT (A).
94
Annual Report 2013-14
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
6.
7.
8.
9.
10.
11.
iv)
Liability on account of bank guarantees given by the Company.
Item
No. of cases
Amount
v)
For assessment year 2008-09, an additional demand of Rs. 1,00,202 lacs was raised vide
assessment order dated 23 December 2010. Vide rectification order u/s 154/143(3) dated
30 January 2012, the additional demand raised vide assessment order u/s 143(3) dated 23
December 2010 has been reduced from Rs. 1,00,202 lacs to Rs. 70,891 lacs. First appeal filed
before CIT (A) against Assessment u/s 143 has been disposed off by CIT (A) vide their order
dated 16 February 2012 and order u/s 154 dated 12 March 2012. Second appeal has been
filed with ITAT against above mentioned orders of CIT (A).
For assessment year 2009-10 an additional demand of Rs. 59,429 lacs had been raised vide
assessment order dated 02 November 2011. This amount has already been paid by the
Company/adjusted by way of refund of other assessment years. The Company filed appeal
before CIT(A) against the assessment order which was decided vide appellate order dated 24
September 2012.The additional demand was reduced from Rs. 59,429 lacs to Rs. 29,749 lacs.
Hence a relief of Rs. 29,679 lacs has been obtained by the Company by appeal effect of order
dated 24 September 2012 passed by CIT(A)-V, New Delhi.
A refund of Rs. 31,163 lacs has been granted to the Company (including interest u/s 244A
amounting to Rs. 1,484 lacs) which has been adjusted against the outstanding demand
of assessment year 2001-02. Income Tax Department has filed an appeal in ITAT against
appellate order. The Company also filed the appeal.
For assessment year 2011-12, an additional demand of Rs.6,23,422 lacs was raised against
the Company vide assessment order u/s 143(3) dated 31 March 2014. The Company has filed
appeal before CIT (A) against the assessment order u/s 143(3) on 29 April 2014.
Penalty proceedings u/s 271(1)(c) of the Income Tax Act 1961 which was initiated against
the Company for A.Y. 2001-02, A.Y. 2003-04, A.Y.2004-05, A.Y.2006-07, A.Y.2007-08,
A.Y.2008-2009 has been kept in abeyance. The additional demand, if any, has not been
quantified.
Additional interest u/s 234B and 220, if any, arising out of above-mentioned income tax
proceedings has not been quantified since demand has not been finally crystallised against
the Company.
As per records, an amount of Rs. 5,21,930 lacs (previous year Rs. 5,96,535 lacs) has been
adjusted by Income Tax Department against the additional demand of Rs. 13,07,554 lacs
(previous year Rs. 8,23,018 lacs) mentioned above which is contested by the Company at
appropriate forums.
As at 31 March 2014
As at 31 March 2013
With cash
margin
Without cash
margin
With cash
margin
Without cash
margin
33
395
38
366
1,169
6,250
427
5,331
As per Office Memorandum (OM) dated 19 November 2009, pension contribution was payable on the
actual pay drawn as on 01 January 2007 (being the date of implementation of second pay commission for
IDA). Whereas the Company was paying pension contribution on maximum of the scale as advised by
DoT. However, from 01 December 2011 the management has decided to pay the pension contribution as
per office memorandum dated 19 November 2009. For those who are retiring within six months, pension
contribution is paid on maximum of the pay scale as per letter no 7-45/2008-TA-I Dated 19 April 2013 of
Director(A/cs-I)IA, DoT. The actual difference between these two methods of pension contribution payment
upto 31 March 2014 is Rs. 70,703 lacs (previous year Rs. 30,844 lacs).
95
Summary of significant accounting policies and other explanatory information for the
year ended 31 March 2014
(All amounts in Rs. lacs, unless otherwise stated)
42.2 Commitments
a) Capital commitments
(i) The estimated amounts of contracts remaining to be executed on capital account
and not provided for in relation to execution of works and purchase of equipments
are Rs. 1,21,749 lacs (previous year 2,31,039 lacs).
(ii) In six circles (previous year thirteen circles) the estimated amount of contract
remaining to be executed on capital account has not been ascertained.
b) Other commitments
(i) The amount of other commitments amounting to Rs. 8,333 lacs is ascertained in
two circles (previous year NIL circle).
43. CURRENT TAX
44.
45.
46.
47.
48.
49.
The provision for income tax for the current year has not been made since the Company is
not having any taxable income either under normal provision of Income Tax Act, 1961 or
special provision u/s 115JB (Minimum alternate tax) of the Income Tax Act, 1961.
The Company is executing various projects for various Government departments on
reimbursement basis.
An agreement dated 16 May 2013 has been entered into between the Company and Bharat
Broad band Nigam Limited (BBNL) with regard to contracting of laying OFC, installation of
equipment, operation and maintenance on agreed terms and conditions of the network so
built in pursuance of MOU dated 04 December 2012. The said agreement has come into
effect from 17 May 2013.
During the current year employees of the Company have contributed an amount of Rs. 1,488
lacs in the Prime Minister National Relief Fund for disaster relief measures and rehabilitation
of the victims of flood in Uttarakhand.
The Company has discontinued its Telegram business (including Telex and Long Distance
Telegraph and Telex system) with effect from 15 July 2013 and decommissioning of assets
(other than land, building, furniture & fixture and computers) is under process in the circles
having Telegram service assets. The net depreciated value of such assets is Rs. 1,044 lacs as
on 31 March 2014.
In Uttarakhand circle of the Company natural calamity due to cloud burst and heavy flood
occurred in the month of June 2013 and assets worth Rs. 91 lacs having net depreciated value
of Rs. 16 lacs were destroyed. The same have been written off in the books of accounts.
Figures of the previous year have been regrouped or reclassified wherever necessary to
conform to the current years grouping and classification.
for Walker Chandiok & Co LLP
(formerly Walker, Chandiok & Co)
Chartered Accountants
Sd/per Atul Seksaria
Partner
For and on behalf of Bharat Sanchar Nigam Limited
Sd/A. N. Rai
Chairman and Managing Director
Sd/Anupam Shrivastava
Director (Finance)
Sd/Sujata Ray
ED Finance
Sd/Rajeev Singh
General Manager (Corporate Accounts)
Sd/H.C.Pant
Company Secretary and Sr. General Manager (Legal)
Place : New Delhi
Date : 29 August 2014
96
Annual Report 2013-14
Independent Auditors’ Report
To the Members of Bharat Sanchar Nigam Limited
Report on the Financial Statements
1.
We have audited the accompanying financial statements of Bharat Sanchar Nigam Limited,
(the ‘Company’), which comprise the Balance Sheet as at 31 March 2014 the Statement of
Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant
accounting policies and other explanatory information. These financial statements comprise
of 48 circles, out of which 1 circle is audited by us and remaining 47 circles are audited by
branch auditors appointed under Section 228 of the Companies Act, 1956 by the Comptroller
and Auditor General of India.
Management’s Responsibility for the Financial Statements
2.
Management is responsible for the preparation of these financial statements, that give a
true and fair view of the financial position, financial performance and cash flows of the
Company in accordance with the accounting principles generally accepted in India,
including the Accounting Standards notified under the Companies Act, 1956 (the ‘Act’) read
with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate
Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes
the design, implementation and maintenance of internal control 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
3.
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the Standards on Auditing issued by the Institute
of Chartered Accountants of India. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
4.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors’
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 control relevant to the Company’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of Company’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
5.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our qualified audit opinion.
Basis for Qualified Opinion
Assets and liabilities taken over from Department of Telecommunication (‘DoT’) and the
amounts receivable and payable to DoT
6.
As detailed in note 28, 31.1 and 31.3 to the financial statements, assets and liabilities (including
contingent liabilities) taken over from DoT have been verified and valued by the management
97
based on internal calculations and are subject to reconciliations and confirmation from DoT
as regards to ownership, value and classification. The consequential impact on the financial
statements, if any, as a result of the same is presently not ascertainable. Further, subsequent
adjustments made on account of identification and recognition of net assets is adjusted to
capital reserve. This was also a subject matter of qualification in our previous year’s audit
report on the audited financial statements for the year ended 31 March 2013.
7.
As detailed in note 32 to the financial statements, amounts due from and to DoT included
in current assets and current liabilities aggregating to Rs. 173,669 lacs (previous year Rs.
170,985 lacs) and Rs. 39,109 lacs (previous year Rs. 47,207 lacs) respectively are subject
to confirmations and reconciliation. Consequently, the impact of the adjustments, if any,
on the financial statements is presently not ascertainable. This was also a subject matter of
qualification in our previous year’s audit report on the audited financial statements for the
year ended 31 March 2013.
Fixed Assets
8.
As reported by auditors of 25 circles, Capital work-in-progress, inter alia, includes balances
pending capitalisation for long-periods of time owing to pending analysis of status, value and
obtaining of commissioning certificates. The consequential impact on the capital work-inprogress, fixed assets, depreciation and loss for the year, if any, is presently not ascertainable.
This was also a subject matter of qualification in our previous year’s audit report on the
audited financial statements for the year ended 31 March 2013.
9.
As reported by auditors of 6 circles, in the absence of information in respect of certain items
of fixed assets capitalised, particularly batteries, it could not be established whether assets
capitalised were on account of replacement/extension of an existing asset or additional
acquisition of a new asset and hence the consequential impact of the same on the classification/
value of the respective asset, depreciation and amortisation, expenses and loss for the year
is presently not ascertainable. This was also a subject matter of qualification in our previous
year’s audit report on the audited financial statements for the year ended 31 March 2013.
10. As reported by auditors of 6 circles, the leasehold land as identified and valued by the
respective circles have been incorporated in the books of accounts and amortised with
effect from the date of formation of the Company. Hence, in respect of the lands still not
identified and/or duly incorporated in the books of accounts of the respective circles, the
consequential impact on value of fixed assets, amortisation and loss for the year is presently
not ascertainable. This was also a subject matter of qualification in our previous year’s audit
report on the audited financial statements for the year ended 31 March 2013.
11. As detailed in note 31.2 to the financial statements, auditors of 4 circles have reported on the
expired/non renewal of leases on lands on which the Company had constructed buildings.
The management has not made any provision for the surrender value/written down value
of the aforementioned buildings. The consequential impact of adjustment on fixed assets,
depreciation and amortisation and loss for the year, if any, is presently not ascertainable.
This was also a subject matter of qualification in our previous year’s audit report on the
audited financial statements for the year ended 31 March 2013.
12. As stated in note 13(a) and 31.3 to the financial statements, fixed assets, inter alia, includes
land pertaining to 25 circles, purchased/acquired on leasehold/ freehold basis through various
authorities, the title deeds of which are yet to be executed in the name of the Company. This
was also a subject matter of qualification in our previous year’s audit report on the audited
financial statements for the year ended 31 March 2013.
98
Annual Report 2013-14
13. As stated in note 47 to the financial statements, Telegraph and Telex services was discontinued
by the Company with effect from 15 July 2013. However, assets (other than land, building,
furnitures and computers) relating to the aforementioned service have not been identified,
classified and valued as decommissioned asset. In the absence of specific details, the
consequential impact of adjustments, if any, on the financial statements is presently not
ascertainable.
14. The accounting policy of the Company as stated in note 2.6 to the financial statements with
respect to the decommissioned assets has not been uniformly applied across all circles. In
15 circles, these are not recorded at lower of the cost or net realisable value while in certain
circles, the decommissioned assets have not been appropriately adjusted from the block of
fixed assets and depreciation is still being charged on such decommissioned assets. In the
absence of sufficient details, we are unable to comment upon the impact of adjustment on
the fixed assets, current assets, depreciation and amortisation and loss for the year, if any,
arising out of the same. This was also a subject matter of qualification in our previous year’s
audit report on the audited financial statements for the year ended 31 March 2013.
15. The following accounting treatments by the Company in respect of fixed assets and capital
works-in-progress are not in accordance with the provisions of Accounting Standard –
6, Depreciation Accounting; Accounting Standard - 10, Accounting for fixed assets, and
Accounting Standard – 26, Intangible Assets notified vide Companies (Accounting Standards)
Rules, 2006:
a) As detailed in note 31.6 to the financial statements and as reported by auditors of
21 circles, the Company has not consistently adhered to capitalizing the overheads
expenses specifically attributable to the capital work – in – progress but has recorded
the same on estimated/fixed percentage/proportionate/payment basis.
b) The Company capitalises the assets, as reported by auditors of certain circles, on
periodic basis instead of at the ready to use date.
c) Accounting policies regarding capitalization, disposal, depreciation and amortization
of fixed assets are not uniformly applied in case of 21 circles.
The resultant impact of the above non compliance with the standards on the value of fixed
assets, capital work-in-progress, depreciation and amortization and loss for the year is
presently not ascertainable. This was also a subject matter of qualification in our previous
year’s audit report on the audited financial statements for the year ended 31 March 2013.
Current Assets and Current Liabilities
16. The Company does not follow a system of obtaining confirmation and performing reconciliation
of balances in respect of trade receivables, deposits with departments/companies (including
Mahanagar Telecom Nigam Limited), claims recoverable from/payable to DoT (including
license fees payable as detailed in note 42.1 of the financial statements) or to/ from other
government departments/authorities, subscriber/customer deposit accounts, trade payable
and claims payable. Due to non-availability of confirmations and reconciliations of the
aforementioned account balances, we are unable to quantify the impact of the adjustments,
if any, arising from reconciliation and settlement of account balances on the financial
statements. This was also a subject matter of qualification in our previous year’s audit report
on the audited financial statements for the year ended 31 March 2013.
17. As detailed in note 18(a) to the financial statements, no adjustment has been recorded
for the differences of Rs. 971 lacs (previous year Rs. 22,917 lacs) in General ledger
and Subsidiary ledger in respect of trade receivables for 7 circles. Further, as reported
99
by auditors of certain circles, there are unquantifiable differences between the general
ledger / trial balance and accounting records pertaining to loans and advances, current
assets and current liabilities. The impact on the financial statements, if any, owing to
the aforementioned non-reconciliations is presently not ascertainable. This was also a
subject matter of qualification in our previous year’s audit report on the audited financial
statements for the year ended 31 March 2013.
18. As reported by auditor of 4 circles, there are differences in the inventory records between
stores ledger and General ledger/Trial balance, the impact of the same is currently not
ascertainable. This was also a subject matter of qualification in our previous year’s audit
report on the audited financial statements for the year ended 31 March 2013.
19. As reported by auditors of 2 circles, certain units have not applied the Company's policy
of valuation of inventory on weighted average method as stated in note 2.8 to the financial
statements. The impact of the adjustment, if any, on inventory, consumption and loss for
the year is presently not ascertainable. This was also a subject matter of qualification in our
previous year’s audit report on the audited financial statements for the year ended 31 March
2013.
Inter/ Intra Circle Remittance Account
20. As detailed in note 33 to the financial statements, the Inter-Circle/Unit remittance balances
amounting to Rs. 86,537 lacs (previous year Rs. 102,458 lacs) are yet to be reconciled.
Pending such reconciliations, the possible cumulative impact of the adjustments, if any, on
assets and liabilities and the current and prior year(s) income and expenditure is presently
not ascertainable. This was also a subject matter of qualification in our previous year’s audit
report on the audited financial statements for the year ended 31 March 2013.
License Fee, Spectrum Charges, Inter Connect Usage Charges
21. As detailed in note 29 to the financial statements, the Company segregates revenue from
NLD (National long distance)/ILD (International long distance) on an estimated basis instead
of actual usage of pulse which consequently results in recognition of the license fees on an
estimated basis. The impact of adjustment, if any, on the license fees expense, recoverable/
payable from DoT and loss for the year is presently not ascertainable for the year. This was
also a subject matter of qualification in our previous year’s audit report on the audited
financial statements for the year ended 31 March 2013.
Revenue
22. As reported by auditors of 6 circles, the income from recharge coupons, prepaid calling cards,
internet connection cards, sancharnet cards and stock of recharge coupons and prepaid
calling cards are subject to reconciliations. In the absence of specific details, the impact of
adjustment, if any, on financial statements is presently not ascertainable. This was also a
subject matter of qualification in our previous year’s audit report on the audited financial
statements for the year ended 31 March 2013.
23. As reported by auditors of 3 circles, the revenue for the current year, inter alia, includes
amounts pertaining to prior period(s). This has not been separately disclosed in the financial
statements in a manner that their impact on the current year’s loss can be perceived, which
is not in accordance with the notified Accounting Standard – 5, Net Profit or Loss for the
Period, Prior Period Items and Changes in Accounting Policies. The consequential impact of
adjustments, if any, on the financial statements is presently not ascertainable.
100
Annual Report 2013-14
24. As stated in note 2.3-(e), (f) and (i) to the significant accounting policies, certain items of
revenue are accounted for on cash basis instead of the accrual basis of recognition of revenue
which is not in accordance with the generally accepted accounting principles in India. The
impact of the adjustment, if any, in respect thereof on revenue, trade receivables and loss for
the year is presently not ascertainable. This was also a subject matter of qualification in our
previous year’s audit report on the audited financial statements for the year ended 31 March
2013.
Provisions and contingent liabilities
25. The provisions and the disclosures with regard to matters under litigations have been
made based upon the management estimates. Based upon the report of auditors of 8
circles, sufficient and appropriate audit evidence for examining and verifying the quantum
of contingent liabilities disclosed in note 42.1 to the financial statements has not been
obtained. In the absence of the adequate details and documents and pending the responses
to our confirmation requests in respect of the litigations at the corporate level, the impact
of adjustments/disclosures, if any, on the financial statements is presently not ascertainable.
This was also a subject matter of qualification in our previous year’s audit report on the
audited financial statements for the year ended 31 March 2013.
Miscellaneous
26. The Company has not complied in respect of the following Accounting Standards notified
vide Companies (Accounting Standards) Rules, 2006:
i)
As reported by auditors of 11 circles, in absence of adequate information, details and
records of old, non-moving, damaged and unserviceable inventories could not be
identified The adjustment, if any, on inventories, consumption and loss for the year
is presently not ascertainable. This was also a subject matter of qualification in our
previous year’s audit report on the audited financial statements for the year ended 31
March 2013.
ii) As detailed in note 35 to the financial statements and as reported by auditors of 13
circles, the expenses, incomes, assets and liabilities are not properly disclosed under the
reportable segment as per the notified Accounting Standard 17 on Segment Reporting.
In our opinion, the same does not give true and fair disclosure of the segment-wise
operations of the Company as required by the aforementioned accounting standard.
This was also a subject matter of qualification in our previous year’s audit report on the
audited financial statements for the year ended 31 March 2013.
iii) As stated in note 15 to the financial statement, the Company as at 31 March 2014 has
deferred tax assets (net) amounting to Rs. 23,773 lacs. Since the Company has a recent
history of losses and owing to lack of virtual certainty and convincing evidence that
sufficient future taxable income will be available against such deferred tax asset and as
stipulated by the notified Accounting Standard-22, Accounting for taxes on income,
the amount of such deferred tax asset should be written off. Consequent to the above,
loss for the year in the statement of profit and loss is under-stated by
Rs. 23,773
lacs and the balance of deferred tax asset included under Non-Current Assets, has been
overstated by the corresponding amount.
iv) The Company has not carried out any Techno-economic assessment during the year
ended 31 March 2014 and hence identification of impairment loss and provision thereof,
if any, has not been made. The same is not in accordance with the notified Accounting
Standard 28 on Impairment of asset. The consequential impact of adjustment, if any,
101
on the financial statements is currently not ascertainable. This was also a subject matter
of qualification in our previous year’s audit report on the audited financial statements
for the year ended 31 March 2013.
v) The accounting for capital and revenue grant in accordance with the notified Accounting
Standard 12 on Accounting for grants is not followed consistently as reported by
auditors of 16 circles. In the absence of specific details, the consequential impact of
adjustment, if any, on the financial statements is presently not ascertainable.
vi) The accounting policy as referred to in note 2.10(b) to the financial statements with
respect to the liability on account of post-retirement medical benefits of employees
including retired employees, a defined benefit plan, is recognized on actual basis in
respect of bills received by the Company instead of recognizing the liability for the same
as the present value of the defined benefit obligation at the balance sheet date calculated
on the basis of actuarial valuation in accordance with the notified Accounting Standard
– 15 on Employee Benefits. The consequential impact of adjustment, if any, owing to
this non –compliance on the financial statements is presently not ascertainable.
27. As stated in the note 2.12 of the financial statements, only individual transactions of income/
expenditure exceeding Rs. 5 lacs, are considered for evaluation as prior-period items. In
our opinion, the said accounting policy is not in accordance with the generally accepted
accounting principles in India and the same should be evaluated on aggregation of all prior
period transactions of similar nature irrespective of individual transaction values, for possible
adjustment/disclosure in the financial statements. The consequential impact of the adjustment,
if any, on the income, expense and loss for the year is presently not ascertainable. This was
also a subject matter of qualification in our previous year’s audit report on the audited
financial statements for the year ended 31 March 2013.
28. As reported by 14 circles and detailed in note 10(a) to the financial statements, these circles
have not identified units covered under Micro, Small and Medium Enterprises Development
Act, 2006 (‘MSMED Act, 2006’) and hence disclosures as required under the MSMED Act,
2006 is presently not ascertainable. This was also a subject matter of qualification in our
previous year’s audit report on the audited financial statements for the year ended 31 March
2013.
29. The disclosure requirements of the Revised Schedule VI of the Companies Act, 1956 has
not been properly adhered to in the presentation and disclosure of financial statements of
the Company in respect of classification of assets/liabilities into current and non-current
and secured and unsecured, wherever applicable; categorisation of assets/liabilities into
appropriate accounting captions; changes in inventory; non-disclosure of consumption of
stores and spares; consumption of imported and indigenous stores and spares parts; capital
and other commitments and expenditure and earnings in foreign currency. This was also a
subject matter of qualification in our previous year’s audit report on the audited financial
statements for the year ended 31 March 2013.
30. As reported by auditors of 10 circles, compliances with regard to deposition, deduction,
reconciliation of service tax and tax deducted at source are pending to be made. In the
absence of specific details, we are unable to comment on its consequential impact, if any,
on the financial statements. This was also a subject matter of qualification in our previous
year’s audit report on the audited financial statements for the year ended 31 March 2013.
31. As detailed in notes (1) and (2) of the Cash Flow Statement, certain assumptions have been
made for the purpose of preparation of the Cash Flow Statement. In the absence of the
appropriate details, we are presently unable to ascertain the impact, if any, on the adjustments/
102
Annual Report 2013-14
disclosures in the Cash Flow Statement. This was also a subject matter of qualification in our
previous year’s audit report on the audited financial statements for the year ended 31 March
2013.
Qualified Opinion
32. In our opinion and to the best of our information and according to the explanations given to
us and based on the consideration of the reports of the other auditors, except for the effects/
possible effects of the matters described in the Basis for Qualified Opinion paragraph the
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:
i)
in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March
2014;
ii) in the case of Statement of Profit and Loss, of loss for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.
Emphasis of Matter
33. We draw attention to note 14 to the financial statements of the Company regarding investments
in ITI Limited aggregating to Rs. 20,000 lacs as at 31 March 2014. The management, based on
the factors mentioned in the said note, believes that the diminution in the value of investments
is temporary in nature and hence no provision in respect of aforementioned amount has been
made in the accompanying financial statement. Our opinion is not qualified in respect of this
matter.
Report on Other Legal and Regulatory Requirements
34. As required by the Companies (Auditor’s Report) Order, 2003 (the ‘Order’) issued by the
Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give
in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.
35. As required by Section 227(3) of the Act, we report that:
a. Except for the effects/ possible effects of the matters described in the para 6, 7, 8, 9, 10,
11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26(i), 26(v) and 30 of Basis of
Qualified Opinion paragraph, we have obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the purpose of our
audit;
b. Except for the effects/ possible effects of the matters described in the para 6, 8, 9, 11,
12, 13, 14, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26(i), 26(iii), 26(iv), 26(v), 26(vi),
27 and 29 of Basis of Qualified Opinion paragraph, in our opinion, proper books of
account as required by law have been kept by the Company so far as appears from our
examination of those books and proper returns adequate for the purposes of our audit
have been received from branches not visited by us. The circle Auditor’s Reports have
been forwarded to us and have been appropriately dealt with;
c. We have received the reports on the accounts of the circle offices audited under section
228 by other auditors and have appropriately dealt with these while forming our audit
opinion.
d. Except for the effects/ possible effects of the matters described in the Basis of Qualified
Opinion paragraph, the financial statements dealt with by this report are in agreement
103
e.
f.
with the books of account and with the audited returns received from the Circles;
Except for the effects/ possible effects of the matters described in the Basis of Qualified
Opinion paragraph, in our opinion, the financial statements comply with the Accounting
Standards notified under the Companies Act, 1956 read with the General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013; and
Since, the Company is a Government Company, clause (g) of sub-section (1) of section
274 of the Companies Act, 1956 regarding obtaining written representations from the
directors of the Company, is not applicable to the Company in terms of notification no.
GSR-829(E), issued by Ministry of Corporate Affairs, dated 21 October 2003.
Other Matter
36. We did not audit the financial statements of 47 circles and balances pertaining to the corporate
office, which reflect total assets (including intra/inter circle remittances) of Rs. 4,999,244 lacs
as at 31 March 2014; total revenues of Rs. 2,722,823 lacs and net cash inflows aggregating
to Rs. 5,173 lacs for the year then ended. The financial statements of the aforementioned
47 circles have been audited by other auditors whose reports have been furnished to us by
the management, and our opinion on the financial statements of the Company for the year
then ended to the extent they relate to the financial statements not audited by us as stated in
this paragraph is based solely on the audit reports of the other auditors. Our opinion is not
qualified in respect of this matter.
37. This report is effective as of 29 August 2014. Certain subsequent events or circumstances may
have occurred between the auditors' report date of the respective circles of the Company
and that of this audit report. Such events or circumstances could significantly affect the
accompanying financial statements or the related disclosures forming part of these financial
statements of the Company. In the absence of sufficient appropriate audit evidence in respect
of the other circles, the impact of adjustments, if any, or disclosures to be included in these
financial statements of the Company cannot be ascertained.
For Walker Chandiok & Co LLP
(formerly Walker, Chandiok & Co)
Chartered Accountants
Firm Registration No.: 001076N/N500013
Sd/per Atul Seksaria
Partner
Membership No. 86370
Place: New Delhi
Date: 29 August 2014
104
Annual Report 2013-14
Annexure to the Independent Auditors’ Report of even date to the members of Bharat
Sanchar Nigam Limited on the financial statements for the year ended 31 March 2014
Based on the audit procedures performed for the purpose of reporting a true and fair view on the
financial statements of the Company and taking into consideration the information and explanations
given to us, the books of account and other records examined by us in the normal course of audit and
based on the audit reports of auditors of all the circles, we report that:
(i)
(a)
The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets except in case of 27 circles, where such records have
not been appropriately maintained.
Further, one of the circles of the Company does not have any fixed assets. Accordingly, the
provisions of clause 4(i) of the order, in respect of this circle, are not applicable.
In case of 12 circles, the fixed assets have been physically verified by the management
during the year and no material discrepancies were noticed on such verification. In our
opinion, the frequency of verification of the fixed assets is reasonable having regard to the
size of the Company and the nature of its assets in respect of these circles.
(b)
However in case of 2 circles, the physical verification has not been completed and in case
of 14 circles, the fixed assets have not been physically verified by the management during
the year. Further, in the case of 18 circles, the management has furnished the certificate of
physical verification of fixed assets but no documentary evidence was provided. Hence in
respect of all these circles, we are unable to comment on the discrepancies, if any, which
could have arisen on such verification. In our opinion, the frequency of verification of the
fixed assets is also not reasonable having regard to the size of the Company and nature of
its assets in respect of these circles.
(c)
In our opinion, a substantial part of fixed assets has not been disposed off during the year.
(ii)
(a)
In case of 22 circles, the management has conducted physical verification of inventory at
reasonable intervals during the year. Further, 7 circles do not carry any inventory and accordingly
the provisions of clause 4 (ii) of the order are not applicable in respect of these circles.
In case of 7 circles, the inventory has not been verified by the management during the year
and owing to lack of adequate information at 12 circles, we are unable to comment on the
provisions of clause 4 (ii) of the order in respect of these circles.
In case of 8 circles, the procedures of physical verification of inventory followed by the
management are reasonable and adequate in relation to the size of the Company and the
nature of its business.
(b)
However, the inventory of 7 circles, have not been verified by the management during
the year and owing to no documentation/inadequate documentation provided in case
of 26 circles, we are unable to comment on the procedures of physical verification and
reasonableness thereof.
In case of 13 circles, proper records of inventory are being maintained and no material
discrepancy between physical inventory and book records were noticed on physical
verification.
(c)
Further, 28 circles are not maintaining proper records of inventory. We are, therefore,
unable to comment on the discrepancies which could have arisen between physical
inventory and book records.
(iii) (a)
The Company has not granted any loan, secured or unsecured to companies, firms or other
parties covered in the register maintained under Section 301 of the Act. Accordingly, the
provisions of clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable.
105
(e)
The Company has not taken any loans, secured or unsecured from companies, firms or
other parties covered in the register maintained under Section 301 of the Act. Accordingly,
the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.
(iv) In our opinion, in case of 15 circles, there is an adequate internal control system
commensurate with the size of the Company and the nature of its business for the purchase
of inventory and fixed assets and for the sale of goods and services. During the course of
our audit, no major weakness has been noticed in the internal control system in respect of
these activities.
However, in case of 33 circles, the internal control system is not commensurate with the
size of the Company and the nature of its business for the purchase of inventory and fixed
assets and for the sale of goods and services. Out of these circles, 7 noticed continuing
failures to correct major weaknesses in the internal control system.
(v)
The Company has not entered into any contracts or arrangements referred to in Section
301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.
(vi)
The Company has not accepted any deposits from the public within the meaning of
Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules,
1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.
(vii)
The Company has an internal audit system, the scope and coverage of which, in our
opinion, requires to be further enhanced to be commensurate with its size and the nature
of its business.
(viii)
The auditors of the 3 manufacturing circles have broadly reviewed the books of account
maintained by the Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act
in respect of Company’s products and are of the opinion that, prima facie, the prescribed
accounts and records have been made and maintained. However, no detailed examination
of the cost records with a view to determine whether they are accurate or complete has
been done for the Company as a whole.
Further, in case of the remaining circles, the cost records are in the process of being
prepared at the corporate level and hence, we are unable to comment on the completeness
and accuracy of the same.
(ix) (a)
Subject to our comments in para 30 in the basis of qualified opinion paragraph of the audit
report, 40 circles are regular in depositing the undisputed statutory dues including provident
fund, investor education and protection fund, employees’ state insurance, income-tax, sales
tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory
dues, as applicable, with the appropriate authorities. Further 7 circles have generally been
regular in depositing such dues, though there has been a slight delay in few cases. One
circle has not been regular in depositing such dues and there have been significant delays
in a large number of cases.
Further, in case of 41 circles, no undisputed amounts payable in respect thereof were
outstanding at the year-end for a period of more than six months from the date they became
payable. Undisputed amounts payable in respect of 2 circles, which were outstanding at
the year-end for a period of more than six months from the date they became payable are
set out in appendix I to our report and in respect of 5 circles, such undisputed amounts
payable has not been ascertained.
Subject to our comments in para 30 in the Basis of Qualified Opinion paragraph of the
audit report, in respect of 12 circles, there are no dues in respect of income-tax, sales tax,
wealth tax, service tax, customs duty, excise duty and cess that have not been deposited
with the appropriate authorities on account of any dispute and incase of 36 circles, there
(b)
106
Annual Report 2013-14
are dues outstanding in respect of income-tax, sales tax, wealth tax, service tax, custom
duty, excise duty, cess on account of any dispute, the said information has been detailed in
appendix II to our report.
(x)
In our opinion, the company has no accumulated losses at the end of the financial year and
it has not incurred cash losses in the immediately preceding financial year; however, in the
current financial year, the Company has incurred cash losses.
(xi)
The Company has no dues payable to a financial institution or debenture-holders during
the year. Accordingly, the provisions of clause 4(xi) of the Order are not applicable in
respect of financial institution and debenture holders. In our opinion, the Company has not
defaulted in repayment of dues to banks during the year.
(xii)
The Company has not granted any loans and advances on the basis of security by way of
pledge of shares, debentures and other securities. Accordingly, the provisions of clause
4(xii) of the Order are not applicable.
(xiii)
In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.
Accordingly, provisions of clause 4(xiii) of the Order are not applicable.
(xiv)
In our opinion, the Company is not dealing or trading in shares, securities, debentures
and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not
applicable.
(xv)
The Company has not given any guarantees for loans taken by others from banks or financial
institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.
(xvi)
The Company did not have any term loans outstanding during the year. Accordingly, the
provisions of clause 4(xvi) of the Order are not applicable.
(xvii)
In our opinion and based upon examination of the books of account and utilization of
funds of the Company on an overall basis, funds raised on short-term basis, prima facie,
have been used for long-term purposes.
(xviii)
During the year, the Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under Section 301 of the Act. Accordingly,
the provisions of clause 4(xviii) of the Order are not applicable.
(xix)
The Company has neither issued nor had any outstanding debentures during the year.
Accordingly, the provisions of clause 4(xix) of the Order are not applicable.
(xx)
The Company has not raised any money by public issues during the year. Accordingly, the
provisions of clause 4(xx) of the Order are not applicable.
(xxi)
No fraud on or by the Company has been noticed or reported during the period covered by
our audit except in the case of 8 circles. Out of which 4 circle auditors have reported inventory
and cash embezzlements aggregating to Rs. 242.05 lacs, further 4 circles have reported
on frauds being done by the employees of the company aggregating to Rs. 314.83 lacs.
For Walker Chandiok & Co LLP
(formerly Walker, Chandiok & Co)
Chartered Accountants
Firm Registration No.: 001076N/N500013
Sd/-
per Atul Seksaria
Partner
Membership No.: 86370
Place: New Delhi
Date: 29 August 2014
107
108
Circle name
BRBAITT
UP West
TTC Jabalpur
Total
Name of statute
Service Tax Act
Work Contract Tax Act
Service Tax Act
Nature of dues
Service Tax
Work Contract Tax
Service Tax
Amount(Rs. in lacs)
686
188
8
882
The Haryana circle has not deposited service tax recovered from vendors and contractors on liquidated damages and the same has not been ascertained
by the circle auditors.
4)As per the report of the circle auditors of Task Force Guwahati, Uttaranchal, Telecom Stores Calcutta and West Bengal service tax payable by the Company
as service recipient under reverse charge mechanism has not been paid by the Company till the date of audit.
3)
2)The statutory dues outstanding for a period of more than 6 months have not been ascertained, in the absence of details, in case of NE-II, Himachal
Pradesh, Andaman & Nicobar and Chattisgarh circles as reported by the respective circle auditors.
1)As per the report of the auditors’ of the Madhya Pradesh circle, value added tax (‘VAT) collected by some units on sale of tender forms has not been
deposited with the Government and is payable for more than 6 months from the date they became payable.
Notes: S. No
1
2
3
Bharat Sanchar Nigam Limited
Appendix I referred under CARO[Clause- 4(ix)(a)] for the year ended 31 March 2014
Outstanding statutory dues as on 31 March 2014 for the period of more than 6 months from the date they become
payable
109
2
1
Total
CHENNAI
TELEPHONES
Total
BIHAR
TELEPHONES
S.
Circle name
No.
Provident fund
Finance Act, 1994
Service tax
Income tax Act, 1961 Tax deducted at source
Provident fund Act
Employee provident fund dues
Employee provident
fund Act
Sales tax
Entry tax
Service tax
Finance Act, 1994
Sales tax/Entry tax
Nature of dues
Name of statute
164
263
126
43
257
1,010
1,286
504
67
378
122
733
237
464
1,241
245
244
830
788
698
2,348
103
148
1,883
212
139
253
28
490
27
8
77
3
15,418
218
38
438
694
Amount
(Rs. in
lacs)
Sep-10
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2001 - 02 to 2005
2002 - 03 to 2005
2005 - 06 to 2006
2004 - 05 to 2005
2003 - 04 to 2006
2003 - 04 to 2006 - 07
2001 - 02 to 2006 - 07
2001 - 02 to 2005 - 06
2006 - 07 to 2007 - 08
2002 - 03 to 2006 - 07
2007 - 2008
2002 - 03 to 2005 - 06
2001 - 02 to 2005 - 06
2000 - 01 to 2004 - 05
2005 - 2006
2003 - 04 to 2005 - 06
2003 - 04 to 2006 - 07
2001 - 02 to 2006 - 07
2002 - 03 to 2005 - 06
2006 - 07 to 2007 - 08
2001 - 02 to 2005 - 06
2006 - 07
2007 - 08 to 2008 - 09
2005 - 06 to 2007 - 08
2005 - 06 to 2007 - 08
2004 - 2005
2008 - 2009
2009 - 10 to 2010 - 11
2005 - 2006
2008 - 09
July 2002 to February 2004
2005 - 2006
March 02 to January 05
Appendix II referred under CARO [Clause - 4 (ix) (b)] for the year ended 31 March 2014
Statutory dues not deposited on account of disputes as on 31 March 2014
Bharat Sanchar Nigam Limited
Commissioner of service tax
Commissioner of income tax appeal
High court of Chennai
Joint commissioner appeal
Employee provident fund commissioner Bhagalpur
High court, Patna
Employee provident fund appellate tribunal
High court
High court
Commissioner of central excise and service tax
Forum where disputes are pending
Annual Report 2013-14
110
4
3
UP-WEST
TELECOMS
Total
UTTARANCHAL
TELECOMS
S.
Circle name
No.
Nature of dues
Service tax
Entry tax
Finance act, 1994
Sales tax Act
Service tax
Service tax
Sales tax
Income tax Act,1961 Penaltytax deducted at source
Entry tax Act
Employee provident fund
against contract works
Civil Works
Civil Works
Entry tax
Tax deducted at source
Income tax Act, 1961 Penaltytax deducted at source
Tax deducted at source
Entry tax
Entry tax
Entry tax act
Sales tax
Sales tax
Employee provident
fund department
Arbitration act
Arbitration act
Sales tax Act
Finance Act, 1994
Uttrakhand Trade tax
Trade tax
Act, 1948
Name of statute
26
14
5
108
22
17
15
55
139
737
276
1
28
13
19
31
16
40
13
1
287
2
217
14
80
1,613
67
5
14
28
5
1,270
12
5
38
25
25
25
14
Amount
(Rs. in
lacs)
227
7
11
15
28
140
55
Assistant commissioner, commercial tax, Haridwar
Assistant commissioner, commercial tax, Haridwar
Assistant commissioner, commercial tax, Haridwar
Assistant commissioner, commercial tax, Haridwar
Commissioner of central excise and service tax, New
Delhi
Assistant commissioner, service tax, Meerut
Assistant Commissioner, tax Haridwar
Assistant Commissioner, tax Rishikesh
Joint Commissioner (appeal) tax
Forum where disputes are pending
Commissioner of central excise and service tax, New
Delhi
2013
Disctrict jugde Nainital
2011
High court Allahabad
1990 - 2005
Allahbad , High court
2008 - 09
Commissioner of Income tax Agra
2008 - 09
Ccommissioner of Income tax Agra
2009 - 10
Commissioner of income tax (appeal)
2005 - 06 & 06 - 07
High court Allahabad
2007 - 08
Joint Commissioner (appeal) tax
2005 - 06 & 2006 - 07
High court Allahabad
2007 - 08
Joint Commissioner (appeal) tax
2003 - 04
Allahbad , High court
2004 - 2005
Commercial tax tribunal, G.B. Nagar
2003 - 2004
Allahbad , High court
2004 - 2005
Allahbad , High court
2005 - 2006
Income tax appellate tribunal
2006 - 2007
Income tax appellate tribunal
2003 - 2004
Allahbad , High court
2004 - 2005
Allahbad , High court
2002 - 2003
trade tax tribunal
1998 - 1999 to 2003 - 2004 Joint Commissioner (appeal)
2003 - 2004
Joint Commissioner appeal
June 03 to December 03
Central excise and service tax appellate tribunal
October 00 to September
Central excise and service tax appellate tribunal
01
14 2000 - 2001
2004 - 05 to 2006 - 07
2007 - 2008
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2004 - 2005
2006 - 07
2007 - 08
2004 - 05
2008 - 09
2000 - 01
2005 - 06
2006 - 07
2007 - 08
2008 - 09
2009 - 10
2010 - 11
Total
S.
Circle name
No.
111
Cenvat CreditTower Material
Finance act,1994
Sales tax
Trade tax
tax deducted at source
Civil Work
Sales tax
Sales tax act
Sales tax act
Income tax act
Arbitration act
Sales tax act
Income tax Act, 1961 Tax deducted at source
Sales tax act
Sales taxrentals
Tax deducted at source Sales
Income tax act, 1961
of Recharge Coupon
Arbitration act
Civil Work
Civil Work
Arbitration act
Income tax act, 1961 Tax deducted at source
Entry tax
Trade tax
UPTT
Tax deducted at sourceSales of
Recharge
UP act,2007
Trade tax act
Income tax act,1961
UPTT
Sales tax
Penalty
Work Contract tax Penalty
Sales tax Act
Sales tax act
Service tax
Finance act, 1994
Finance act, 1994
Entry tax Act
Entry tax Act
Entry tax
Service tax
Tax deducted at sourcePublic
call office Commision
Finance act, 1994
Income tax act,1961
Nature of dues
Name of statute
- 2008 to 09 to 2011 to 12
1,353
15 2009 to 10
15
8
6,022
16 2004 to 05
132 1989 to 2005
16
132
124 1977 to 78 to 2004 to 05
2006 to 07
2008 to 2009
2005 to 06
2012 to 13
2008
2008
1999 to 2000
2000 to 01
2003 to 04
2004 to 05
6 2009 to 10
5 2007 to 08 to 2009 to 10
2008 to 09 to 2011 to 12
1
9
23
2
2
38
0*
0*
1
1
88
21
16
124
2006 to 07,2007 to 08
2003 to 04
20 2004 to 05
2006 to 07
2000 to 01,2001 to
02,2002 to 03
2007 to 08
2009 to 10
2000 to 2005
2000 to 2001, 2001 to
2002
August 02 to January 03
110 July 94 to March 98
2005 to 2006 to 2008 to
386
2009
2009 to 10,2011 to 12
1987 to 2003
2004 to 05
2003 to 2005
42 2002 to 2003
Disctrict jugde, Meerut
Commissioner of income tax( appeal)
Allahabad , High court
Income tax appellate tribunal New Delhi
Disctrict jugde, Meerut
trade tax tribunal (Bareilly and Joint Commissioner
trade tax (Bareilly)
Income tax appellate tribunal
High court, Allahbad
Additional Commissioner (appeal) grade-2
Commissioner of central excise and service tax, New
Delhi
ITO (Tax deducted at source and Survey ALIGARH)
Income tax appeal tribunal, Agra
SRI D.S. Deshwal CE(C) BSNL, New Delhi
SRI D.S. Deshwal CE(C) BSNL, New Delhi
Disctrict jugde, Moradabad
Disctrict jugde, Moradabad
Assistant commissioner trade tax, ETAWAH
Trade tax tribunal, Agra
Income tax appellate tribunal
Commissioner (appeal)
Commissioner (appeal)
Member tribunal trade tax, Agra
Allahabad , High court
Additional Commissioner (appeal) grade 2
Commissioner of central excise and service tax
Commissioner (appeal)
Trade tax authority Saharanpur
High court, Allahbad
Commissioner of Income tax (appeal)
Amount
paid Period to which the
Forum where disputes are pending
(Rs. in amount relates
Lacs)
January 03 to November 03 Commissioner excise and service tax
153
5
5
48
50
2
11
267
76
1
162
1,543
125
803
25
35
60
60
Amount
(Rs. in
lacs)
Annual Report 2013-14
112
5
Karnataka
Total
JHARKHAND
S.
Circle name
No.
Finance act, 1994
Finance act, 1994
Name of statute
Service tax on Public call
office
Service tax Penalty and
Interest
Service tax on Public call
office
Service tax on Public call
office
Service tax on Public call
office
Service tax Penalty and
Interest
Service tax on Public call
office
Service tax
Nature of dues
57
58
58
143
10
22
22
12,277
259
6
7
238
1,180
263
86
412
403
263
913
13
64
1,674
2,552
653
39
326
2,928
Amount
(Rs. in
lacs)
Additional commissioner Central excise, Mysore
Joint commissioner Central excise, Mangalore
Joint commissioner Central excise, Mangalore
January 2008 to June 2010
Custom excise and service tax Appellate tribunal,
Bangalore
January 2008 to December Commissioner of central excise and service tax,
2008
Bangalore
January 2008 to December Commissioner of central excise and service tax,
2008
Bangalore
Custom excise and service tax Appellate tribunal,
March 2008 to March 2009
Bangalore
April 2009 to May 2009
January 2008 to March
2009
January 2008 to March
2009
Amount
paid Period to which the
Forum where disputes are pending
(Rs. in amount relates
Lacs)
October 2003 to December
Commissioner (appeal)
2003
Commissioner of central excise and service tax,
2005 to 06
Kolkata
2006 to 2007
April 2005 to November
Commissioner of central excise and service tax
2006
April 03 to September 03 Commissioner (appeal)
October 2003 to
Commissioner of central excise and service tax,
September 2008
Kolkata
October 2008 to March
Commissioner of Central excise and service tax
2010
1999 to 2000
Commissioner (appeal)
2007 to 08
Assistant Commissioner, Dhanbad
Commissioner of central excise and service tax
2005 to 06
Commissioner
2001 to 2006
Supreme court
Commissioner of central excise and service tax,
April 2004 to March 2006
Kolkata
April 2006 to March 2010 Range office, Jamshedpur
October 2008 to March
Commissioner of central excise and service tax,
2010
Kolkata
2000 to 2005
Commissioner (appeal)
December 2005 to
Commissioner of central excise and service tax
August2009
Commissioner
2004 to 05
Commissioner (appeal)
April 2002 to October
Commissioner (appeal)
2003
October 2003 to March
Commissioner of central excise and service tax
2008
Commissioner
S.
Circle name
No.
Name of statute
113
Service tax on Public call
office
Service tax Penalty and
Interest
Service tax on Public call
office
InterestEXCESS refund
Service tax on Public call
office
Service tax on Public call
office
Service tax on Public call
office
127
Service tax on Public call
office
February 08 to March 10
50
April 10 to July 10
January 08 to June 09
February 09 to December
09
33
26
January 08 to June 09
26
April 01 to March 04
December 2008 to
September
2009
December 2007 to August
2010
February 08 to November
08
December 08 to March 09
April 09 to September
09
October 09 to March 10
April 09 to March 10
April 08 to March 11
January 2008 to June 2009
January 08 to March 10
3
Dharward, High court
Forum where disputes are pending
Chief commissioner of excise and customs, Mysore
Additional commissioner of excise and customs,
Mysore
Commissioner of Central excise (appeal), Mangalore
Commissioner of Central excise (appeal)
Commissioner of central excise and service tax,
Bangalore
Commissioner (appeal) of Central excise, Custom and
service tax, Mangalore
Commissioner of central excise and service tax,
Bangalore
Commissioner (appeal) of Central excise, Custom and
service tax, Mangalore
Commissioner of central excise and service tax,
Bangalore
Commissioner (appeal) of Central excise Custom and
service tax, Mangalore
Deputy Commissioner of Central excise Custom and
service tax, Gulbarga
Commissioner of Central excise (appeal), Mangalore
Commissioner (appeal) of Central excise, Custom and
service tax, Mangalore
Commissioner of Central excise, Mysore
Karnataka , High court
Custom excise and service tax Appellate tribunal,
Bangalore
Custom excise and service tax Appellate tribunal,
Bangalore
Assistant commissioner of commercial taxes,
Mangalore
April 2003 to March 2009
Filed appeal with KAT, Bangalore to get back the
amount paid.
Custom excise and service tax appellate tribunal,
April 2004 to March 2005
Bangalore
Commissioner (appeal) of Central excise,Custom and
January 2008 to June 2009
service tax, Mangalore.
January 2008 to March
2009
November 2005 to June
2006
April 2005 to March 2011
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
29
2
5
7
6
6
9
7
39
9
9
34
Service tax on Public call
office
Service tax on Public call
office
Service tax Penalty and
Interest
Payment Of Service Charges
On Property
Service taxIUC
61
Professional tax on Telephones
exchange and Customer
Service Centre
132
25
203
39
Service tax
Professional tax on Telephones
exchange and Customer
Service Centre
Service tax on Public call
office
Nature of dues
Amount
(Rs. in
lacs)
Annual Report 2013-14
114
Total
S.
Circle name
No.
119
150
Cenvat creditexcise duty
Cenvat creditexcise duty
April 03 to March 07
173
Assistant commissioner of commercial taxes, Hubli
Commissioner (appeal) of Income tax, Hubli
Commissioner of Income tax, Hubli
Commissioner (appeal) of Income tax, Hubli
Additional Commissioner of Central excise, Mysore
Commissioner of central excise and service tax,
Bangalore
Tax deducted at source
April 04 to March 05
April 06 to March 11
April 01 to March 04
35
42
2,616
ASSITTANT Commissioner of commercial taxes,
BELGAUM
Dharward , High court
Assistant Commissioner of commissionerERCAIL taxes,
Davangeree
January 09 to December 09 Karnataka , High court
January 09 to December 09 Karnataka , High court
8
12
100
April 2005 to March 2010
April 05 to March 08
101
33
April 03 to March 07
April 2004 to March 2005
August 09 to August 10
2013 to 14
Amount
paid Period to which the
Forum where disputes are pending
(Rs. in amount relates
Lacs)
March 96 to December 97 Karnataka , High court
Commissioner of central excise and service tax,
December 94 to March 02
Chennai
May 05 to May 06
Commissioner of Central excise (appeal), Mangalore
April 09 to September
Additional commissioner of excise and customs,
09
Mysore
Custom excise and service tax appellate tribunal,
July 08 to March 09
Bangalore
Custom excise and service tax appellate tribunal,
November 07 to June 08
Bangalore
September
Custom excise and service tax appellate tribunal,
04 to September
Bangalore
06
Custom excise and service tax appellate tribunal,
August 07 to October 07
Bangalore
69
3
22
Cenvat creditexcise duty
Cenvat Credit
440
Cenvat creditexcise duty
6
1
Cenvat creditexcise duty
0*
9
Penalty for Non-submission of
EMF Radiation Norms
Cenvat Credit
1
Cenvat credit
35
Interest on Serivce Tax
Serivce Tax
Nature of dues
Tax deducted at sourcePublic
call office
Non Deduction Of Tax
deducted at sourceOn
Comission
Income tax act, 1961
Tax deducted at source Public
call office
Professional tax on Telephones
exchange and Customer
Service Centre
Property taxtowers
Local property tax act
Property taxtower
Professional taxtelephone
exchange and customer
service centres
Karnataka
commercial tax
Professional tax on Telephones
exchange and Customer
Service Centre
Cenvat credit
rules,2004
Name of statute
Amount
(Rs. in
lacs)
7
RAJASTHAN
S.
Circle name
No.
115
17
Cenvat Disallowance
RECOVERY EXCESS Interest
creditED IN SUBSCRIBER
ACCOUNT
Cenvat credit rules
2004
Sales tax act
Finance act 1994
Cenvat credit rules
2004
Entry tax act
14
21
Entry tax
2
6
321
30
Cenvat credit disallowed
SALE tax
Service tax
Cenvat AVAILED LY
16
refund Entry tax
Entry tax act
Cenvat credit rules
2004
Employee provident
fund act
21
Service tax
Finance act 1994
17
20
2004 to 05
2012 to 13
2008 to 12
2011 to 12
2013
April 05 to March 09
2007 to 09
2008 to 13
2008 to 13
2009 to 2010
2009 to 2010
1
4
2005 to 2008
2005
2008
2008 to 2009
2005 to 2006
2009
2009 to 2010
2005 to 2006
2003 to 2004
17
14
36
Entry tax
Service tax
Cenvat credit
Service tax
Service tax
Service tax
71
4
Entry tax
Entry tax
DemandSerivce
TaxINFRASTRUCTURE
22
13
1
112
2006
2006
1
23
2011
2010
2001 to 2006
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2008 to 2009
38,883
8
5
4
Excise duty
Cenvat credit
Serivce Tax and Interest and
penalty thereupon
Cenvat credit
Serivce Tax
Non-PAYMENT of Serivce Tax
on IUC
Cenvat credit TAKENATD
RAISED
Entry tax
Service tax
Nature of dues
Cenvat credit rules,
2004
Entry tax act
Finance act 1994
Finance act,1994
Finance act, 1994
Finance act, 1994
Finance act,1994
Cenvat credit rules,
2004
Entry tax act
Finance act, 1994
Cenvat credit rules,
2004
Entry tax act
Entry tax act
Finance act,1994
Cenvat credit rules,
2004
Name of statute
Amount
(Rs. in
lacs)
Central excise commissioner Jaipur
RAJ. tax board Jaipur
Commissioner of central excise and service tax New
Delhi
Rajasthan , High court
Rajasthan , High court Jaipur
Employee provident fund Appellate tribunal New
Delhi
commissioner (appeal-I) Jaipur
Rajasthan , High court
ADJ-II Jaipur
Commissioner of central excise and service tax New
Delhi
, High court Jaipur
Commissioner of central excise and service tax, New
Delhi
Commissioner of central excise and service tax, New
Delhi
Commissioner of central excise and service tax, New
Delhi
Joint Commissioner Central excise Jaipur
Rajasthan , High court, Jaipur bench, Jaipur
Rajasthan , High court, Jaipur
Rajasthan , High court
Additional commissioner of Central excise, Jaipur
Tax board, Jaipur
Commissioner of Central excise, Jaipur
Commissioner of central excise and service tax
Dy. Commissioner Jaipur
Commissioner of central excise and service tax, New
Delhi
Commissioner appeal-I, Central excise, Jaipur
Rajasthan , High court, Jaipur bench, Jaipur
Forum where disputes are pending
Annual Report 2013-14
116
8
PUNJAB
Total
S.
Circle name
No.
Service tax
Finance act 1994
Service tax
Service tax
Employee provident
fund act
Service tax
Employee provident fund
assessed contract labour
Service tax
Service tax
Employee provident fund
592
10
14
33
1,108
7
26
Cenvat credit
Rate Difference
Serivce Tax
31
149
Cenvat credittowers
VATboard band
14
42,460
4
Employee provident fund act
Serivce Tax
Service tax act
193
46
Cenvat credit
Finance act 1994
13
32
Excise duty
Cenvat credit rules
2,166
State Punjab V/s UBI
Service tax
Service tax act
2
87
Cenvat credit
DisallowanceSerivce Tax
Service tax act
Cenvat credit
rules,2004
Sales tax act
Employee provident
fund act
Sales tax act
Service tax
1
8
1
Appeal for refund
InterestTax deducted at
sourcerefund
Short deduction tax deducted
at source
Finance act 1994
Income tax act 1961
Income tax act 1961
13
202
38
28
Disallowance of Cenvat credit
Cenvat credit
Disallowance credit
Cenvat credit rules
2004
Cenvat credit rules
2004
Cenvat credit rules
2004
Finance act 1994
Nature of dues
Name of statute
Amount
(Rs. in
lacs)
10-Sep-14
October 05 to January 08
April 06 to September 06
April 06 to September 06
October 02 to September
03
February 2002 to June
2004
2005 to 06 to 2007 to 08
2007 to 08
2002 to 2004
1991 to 96
2004 to 05 & 2005 to 06
2009
2005 to 2008
2006 to 12
2011
2010 to 11
2011 to 13
2004 to 05
2012 to 13
2005 to 08
2002 to 11
2012 to 13
2013 to 14
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
Employees’ provident fund appellate tribunal New
Delhi
Deputy commissioner
Joint commissioner (P and V)
Commissioner of central excise and service tax New
Delhi
Punjab and Haryana , High court
Punjab and Haryana , High court
Punjab and Haryana , High court
Tribunal
Commissioner of central excise and service tax New
Delhi
Commissioner of central excise and service tax New
Delhi
Commissioner CE Jaipur
Commissioner of central excise and service tax New
Delhi
Commissioner appeal-I Custom and Central excise
Jaipur
Commissioner of central excise and service tax New
Delhi
Commissioner Income tax appeal Jaipur
Income tax appeal tribunal Jaipur
Commissioner appeal-II Jaipur
Rajasthan , High court
Commissioner of central excise and service tax New
Delhi
Commissioner of central excise and service tax New
Delhi
commissioner Central excise jaipur
Forum where disputes are pending
117
10
9
Tax deducted at source
Income tax act,1961
Total
Service tax Central Excise
Service tax
Service tax
Finance act, 1994
Availment Cenvat credit
Service tax
1,919
3,835
17
68
16
1
14
67
625
30
46
65
14
962
129
7
265
387
2006 to 2007
2006 to 2007
2005 to 2006
2007 to 2009
2007 to 2009
2009 to 2010
1994 to 2000
2000 to 2004
2004 to 2005
2004 to 2008
2004 to 2007
2011 to 12
2011
September
04 to March 08
2002 to 2005
2010 to 2011
2008 to 2009
116
934
2009 to 2010
2007 to 08 & 08 to 09
2007 to 08
Commissioner of central excise and service tax, Delhi
Commissioner of central excise and service tax, SEZ,
Chennai
Commissioner of central excise and service tax, SEZ,
Chennai
Commissioner of central excise and service tax, SEZ,
Chennai
Commissioner of central excise and service tax, SEZ,
Chennai
Commissioner of central excise and service tax, SEZ,
Chennai
EP NO 18/2011=HC
Commissioner of central excise and service tax, SEZ,
Chennai
Commissioner of central excise and service tax Trichy
commissioner (service tax)
Commissioner of central excise and service tax
Punjab and Haryana , High court
Chief Engineer (Amritsar)
January 12 to September
13
1998 to 99 & 2003 to 04
The Assistant commissioner , Employee provident
fund(Amritsar)
tribunal
Central excise and service tax N .Delhi
Central excise and service tax N .Delhi
Forum where disputes are pending
June2002 to February2005
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
October 06 to March07
2006 to 07 & 07 to 08
October08 to March09
79
1
21
2,236
3
15
Demand arrears
House tax
5
14
87
29
Amount
(Rs. in
lacs)
Non-PAYMENT
Adjustment EXCESS PAID
Cenvat CR. utilisation
Cenvat CR. utilisation
Service tax
Employee provident
fund and Misc
Provisions act
Indian electricity act
1910
Punjab minicipal act
1911
Service tax
Service tax
Nature of dues
Name of statute
CHATTISGARH Finance act, 1994
Total
TAMIL NADU
Total
S.
Circle name
No.
Annual Report 2013-14
118
13
12
11
TF MUMBAI
Total
TF KOLKATA
Total
WEST BENGAL
S.
Circle name
No.
Service tax
General provident fund and
others
Service tax act
General provident
fund and others
Tax deducted at source
Department of sales
tax
Central excise act
1944
Central sales tax
Tax, Penalty & Interest
Excise duty
West Bengal entry tax Entry tax
Income tax act, 1961
Sales tax on telephone services
Sales tax act
Interest
Nature of dues
Name of statute
2007 to 2008
2008 to 2009
2009 to 2010
2009 to 2010
2010 to 2011
2013 to 14
31
38
49
112
2
167
1,334
188
3
156
178
412
6
0*
288
67
1,299
16
4
26
128
22
173
4
2
14
17
82
29
28
45
264
574
983
2,047
2007 to 08
1989 to 1990
1990 to 1991
1991 to 1992
1992 to 1993
1994 to 1995
1995 to 96
2000 to 01
2001 to 02
2002 to 2003
2003 to 04
2004 to 05
2006 to 07
2007 to 08
2002 to 03
2003 to 04
2004 to 05
2008 to 09
2009 to 10
2011 to 12
2012 to 13
2007 to 08
2009 to 10
2010 to 11
2012 to 13
2013 to 2014
2007 to 2008
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2003 to 2004
2003 to 2004
2011 to 2012
26
867
14
27
Amount
(Rs. in
lacs)
Maharashtra tribunal
Deputy Commissioner of sales tax
Commissioner central excise
Appellate authority
Commissioner of Central excise, Kolkata-V
Commissioner of central excise and service tax
Commissioner (appeal-1) Kolkata
Commissioner of sales tax
Income tax department
Income tax department
DOT-CELL/CBI
appellate authority (Commissioner)
Commissioner of service tax
Commissioner of service tax
Forum where disputes are pending
119
16
15
GUJARAT
Total
J & K (ASK)
Total
S.
Circle name
No.
Finance act,1994
Stamp duty and penalty
Cenvat disallowed & Interest
& penalty
Service tax dues
Finance Act
Bombay stamp act
Sales tax Demand
Tax, penalty and interest
Central board of
excise and customs
Jammu and Kashmir
general sales tax
act,1962
Nature of dues
Name of statute
594
21
1,478
3,417
472
540
6,172
331
502
900
723
421
0*
135
131
150
133
47
43
86
601
39
50
63
63
98
75
Amount
(Rs. in
lacs)
Joint Commissioner (Central excise, Mumbai)
Commissioner (Central excise, Mumbai)
Commissioner (Central excise, Mumbai)
Joint Commissioner (Central excise, Mumbai)
Additional Commissioner (Central excise, Mumbai)
Commissioner (Central excise, Mumbai)
Forum where disputes are pending
October 2007 to
Novemberember 2011
August 2009 to March
2010
April 2004 to July 2009
118 2007
2005 to 2009
2002 to 2003
2003 to 2004
2004 to 2005
2005 to 2006
2006 to 2007
Commissioner of central excise and service tax
Ahmedabad
Commissioner of service tax
Gujarat , High court
Commissioner of central excise and service tax
Ahmedabad
Commissioner of central excise and service tax , New
Delhi
Commissioner of sales tax, Jammu
Additional Commissioner (Central excise, Mumbai)
Commissioner of central excise and service tax
Apr 2007 to January 2008
Mumbai
2010 to 2011
Apr 2012 to January 2013 Joint Commissioner (Central excise, Mumbai)
February 2013 to
Commissioner (Central excise, Mumbai)
December 2013
October 2012 to
September
Additional Commissioner (Central excise, Mumbai)
2013
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
February 2008 to July
2008
August 2008 to March
2009
Apr 2009 to December
2009
January 2010 to September
2010
October 2010 to July 2011
August 2011 to March
2012
Apr 2006 to September
2010
October 2010 to August
2011
September
2011 to March 2012
2010 to 2011
Annual Report 2013-14
120
19
18
17
Total
NTP
Total
N.E.-I
Total
ANDHRA
PRADESH
Total
S.
Circle name
No.
Service tax Interest & penalty
Nature of dues
Demand against the company
Employee provident fund dues
Employee provident
fund act
Delhi sales tax act
Uttar Pradesh Sales
tax act
Service tax
Adjustment ST-NLR
Cenvat credit
Exempted services
Cenvat credit, CMTS
Sales tax
Service tax from DOTST
system disallowed
Cenvat disallowed & Interest
and penalty
Finance act, 1994
Finance act,1994
Andhra Pradesh
Goods and services
tax act
Finance act,1994
Finance act,1994
Income tax act, 1961 Tax deducted at source
Name of statute
50
26
232
23
93
123
16
4,959
4,279
803
4,269
15,144
4,265
4,167
1,076
20
95
304
283
566
531
270
69
1
1,127
37,270
40
1,814
129
24
15
372
Amount
(Rs. in
lacs)
118
2012 to 13
2001 to 2002
2012 to 13
February 2004 to
November 2006
April 2008 to October
2008
2002 to 2003
2003 to 04
2004 to 05
2005 to 08
2008 to 09
2009 to 10
2003 to 08
2006 to 08
2008 to 10
2010 to 11
2011 to 12
2005 to 06
2001 to 11
2005 to 12
2004 to 09
2006 to 07
2005 to 10
October 2005 to March
2007
2006 to 07 to 2010 to 11
2008 to 09
2009 to 10
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
April 2010 to December
2010
Commissioner (appeal)- trade tax
Additional commissioner- II New Delhi
Guwahati , High court
Commissioner of central excise and service tax,
Kolkata
Commissioner appeal
Commissioner of central excise and service tax,
Bangalore
Commissioner of central excise and service tax,
Bangalore
Supreme court of India
Commissioner of central excise and service tax
Ahmedabad
Commissioner of central excise and service tax
Ahmedabad
Commissioner of central excise and service tax
Ahmedabad
Gujarat , High court
Income tax appellate tribunal Rajkot
Forum where disputes are pending
21
20
121
Maharashtra
Total
UP-EAST
S.
Circle name
No.
Entry tax
House Tax
Trade Tax
Bank Guarantee
Purchase tax
Interest on Serivce tax
Service tax on public call
office
Interest on Serivce tax
Entry of goods into
local areas
Municipal taxes
UP VAT act 2008
Octroi tax
MVAT act,2005
Interest on Serivce tax
Service tax
Trade tax
UP Trade tax act,
1948
Finance act, 1994
Nature of dues
Name of statute
2
38
269
359
7
1
6
7
231
6,591
290
49
9
44
662
11
200
115
22
7
1
2,447
1,067
80
1
97
1
6
1
2
3
5
731
307
16
41
62
53
Amount
(Rs. in
lacs)
2005
2002
1999 to 2006
2006 to 2008
2007 to 2008
2002
2006 to 07
2000 to 2001
1999 to 00
2004 to 05
2012 to 13,13 to 14
2002 to 03
2005 to 2009
2004 to 2007
June 07 to September
07
2005 to 2008
2004 to 2005
2006 to 2009
2003 to 06
2003 to 06
2009
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
1987 to 1988
1988 to 1989
1989 to 1990
2003 to 2004
April 08 to December 08
2008 to 09
2004 to 2005
2002 to 2005
2004 to 2005
2003 to 2005
2003 to 2004, 2004 to
2005
2000 to 2004
1995 to 1996, 2002 to
2005
Commissioner of excise and service tax, Ratanagiri
Commissioner of central excise and service tax,
Mumbai
CBEC, New Delhi
The High court, Mumbai, Aurangabad bench
Sales tax appellate tribunal, Mumbai
CBEC, New Delhi
High court, Allahabad
Commissioner Central excise
Commissioner of central excise and service tax, New
Delhi
Supreme court of India
Supreme court of India
Supreme court of India
Supreme court of India
Cantonement Board
Commissioner of central excise and service tax, New
Delhi
AssistantT. Commissioner
High court, Lucknow
Deputy Commissioner, trade tax, Jhansi
1st appeal
Supreme court of India
trade tax tribunal
Deputy commissioner, Allahabad
Additional commissioner II, Jaunpur
Deputy Commissioner, trade tax, Kanpur
High court, Allahabad
Forum where disputes are pending
Annual Report 2013-14
122
22
Total
S.
Circle name
No.
Madhya Pradesh
commercial tax act
Madhya Pradesh
commercial tax act
Entry tax act
Entry tax
Madhya Pradesh commercial
tax act
Madhya Pradesh commercial
tax act
Entry tax IUC
Entry tax
142
109
48
93
480
5
1
0*
42
52
22
1,043
29
36
757
57
45
162
41
2,720
145
106
October 00 to June 02
2004 to 2005
2006 to 2007
2005 to 2006
2001 to 2002
2008 to 09
2007 to 08
2003 to 2004
October 2000 to June 2002
June 2002 to March 2003
2004 to 2005
2006 to 2007
2005 to 2006
2003 to 2004
2007 to 2008
2008 to 2009
2007 to 2008
2008 to 2009
June2002 to March2003
2000 to 2001 to 2006 to
2007
2009 to 2010
Deputycommissioner of commercial tax (appeal),DIVI,Bhopal
MPCT appellate board
Deputy Commissioner of Commerical tax(appeal),
DIV-I, Bhopal
MPCT appellate board
Deputycommissioner of commercial tax (appeal),DIVI,Bhopal
MPCT appellate board, Bhopal
Deputy Commissioner of Commerical tax(appeal),
DIV-I, Bhopal
Supreme court
The , High court, New Delhi
Employee provident fund tribunal, New Delhi
Income tax appellate tribunal, Mumbai
50
2006 to 2007 to 2008 to
2009
The commissioner of Income tax (appeal)
The Mumbai , High court, AURANGABAD bench
2005 to 2006
2009 to 2010
22
Interest
2009 to 2010
2009 to 2010
2008 to 2009
Commissioner of central excise and service tax,
Mumbai
The Additional Commissioner of service tax, Mumbai
The Additional Commissioner of service tax, Mumbai
The Mumbai , High court, Panjim bench
Commissioner of central excise and service tax,
Mumbai
126
15
50
54
Cenvat
Service tax
Service tax claim
2004 to 2005
Commissioner of central excise and service tax,
Mumbai
Forum where disputes are pending
2002 to 2007
47
Short PAID Service tax
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
1998 to 1999 to 2001
2002 to 2003
1998 to 1999
2001 to 2002
394
219
1
8
824
Short paid Service tax
Short paid Service tax
Short paid Service tax
Serivce Tax & Interest
Nature of dues
Non-deduction tax deducted
at source
Non-deduction tax deducted
Income tax act, 1961
at source
Short deduction tax deducted
at source
Provident fund contribution
and penatly
Provident fund act
Employee provident fund dues
contractors
Finance act, 1994
Name of statute
Amount
(Rs. in
lacs)
24
23
TF- JABALPUR
Total
CALCUTTA
Total
S.
Circle name
No.
Service tax
123
MADHYA PRADESH
commercial tax act
VAT
Entry tax
CENTRAL EXCISE act,
Excise
1944
Finance act, 1994
31
33
2
26
39
31
1
361
197
88
41
3,252
149
3,103
8,940
4,282
219
VAT
Misc Tax
VAT
Misc Tax
Employee provident
fund
Service tax
Madhya Pradesh
commercial tax act
120
83
257
75
0*
Service tax
Madhya Pradesh commercial
tax act
Entry tax
Entry tax act
83
657
Madhya Pradesh commercial
tax act
Madhya Pradesh
commercial tax act
Employee provident fund
Nature of dues
Name of statute
Amount
(Rs. in
lacs)
MPCT appellate board
Forum where disputes are pending
Supreme court
1996 to 1997,1998 to
1999,1999 to 2000 and
2000 to 2001 (DOT
PERIOD)
1996 to 1997,1998 to
1999,1999 to 2000 and
2000 to 2001 (DOT
PERIOD)
2007 to 2008 to 2010 to
2011
2006 to 2007, 2007 to
2008, 2008 to 2009 &2009
to 2010
2012 to 13
2002 to 2003,2003 to
2004,2005 to 2006, 2006
to 2007 & 2008 to 2009
2007 to 2008
2008 to 2009
2005 to 2006
2006 to 2007
2000 to 01,2001 to 02,
2004 to 05 to 2008 to 09
Tribunal Bhopal
Tribunal, Bhopal
Assistant commissioner ,Jabalpur
Additional commissioner, Bhopal
Tribunal, Bhopal
Tribunal, Bhopal
Deputy commissioner Bhopal
Additional commissioner Central excise, Bhopal
Commissioner of central excise and service tax,New
Delhi
Supreme court
Supreme court
July 1994 to September
Custome excise and service tax appellate tribunal/
1998
Commissioner of Central excise-I
October 2000 to September
Commissioner of central excise and service tax
2003
2001 to 02
October 00 to June 02
January01 to March 02
Deputy Commissioner of Commerical tax(appeal)
April 2009 to March 2010
April 2009 to March 2010 Deputy Commissioner of Commerical tax(appeal)
2001 to 02 & 2011 to 12
Different courts in MP
Court attachment Employee provident fund authority
2005 to 12
in various units
2013 to 14
commissioner customs and excise , Bhopal
April03 to March04
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
Annual Report 2013-14
124
27
26
25
KERALA
Total
CORPORATE
Total
ORISSA
Total
S.
Circle name
No.
Service tax
Sales tax
Income tax act,1961
Sales tax act
Central Excise act,
1944
2
0*
April 2010 to March 2012
01/10/2009 to 31/3/2010
April 2009 to October
2009
April 2010 to March 2012
2
0*
Book keeping chargesOYT
deposit
2002 to 03
70
Service tax and penalty for
Public call office Commission
2004 to 2005
Commissioner of Central excise (appeal) Ernakulam
Commissioner of Central excise (appeal)
Commissioner of central excise and service tax,
Bangalore
Commercial taxes Department
Commissioner of income tax(A)
2011-12
2009 to 10
Commissioner of income tax(A)
Income tax appellate tribunal
High court
Commissioner ATE
Supreme court
Commissioner of central excise and service tax,
Kolkata
Assistant commissioner ,Jabalpur
Tribunal, Bhopal
Commissioner, Bhopal
Forum where disputes are pending
2006 to 2007
2007 to 2008
2008 to 2009
2010 to 2011
2009 to 10
2005 to 2006
2004 to 2005
2004 to 2005
2005 to 2006
2003 to 2004
2008 to 09
2000 to 2004
2000 to 2004
1996 to 2003
2002 to 2004
1,472
4
684,132
115,316
92,606
97,095
70,891
3,071
29,749
623,422
197,943
36,110
9,684
31,667
1,227
33
105
85
227
777
2,177
310
767
252
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2002 to 2003,2003 to 2004
& 2006 to 2007
2004 to 2005,2005 to
2006, 2009 to 10
2002 to 2003 to 2008 to
2009
Disallowance of Cenvat Credit
Dispute regarding VATissue
of BB modemrental basis
(Amount including interest
upto 31.3.2014)
Income Tax
Service tax
Sales tax
Service tax
Sales tax
Central Sales tax act
Central Excise act,
1944
Nature of dues
Name of statute
Amount
(Rs. in
lacs)
125
33
32
31
30
28
Total
Andaman &
Nicobar
Total
TS CALCUTTA
Total
STR
Total
ETR
Total
Central Excise Act,
1994
Pending Court Cases
Others
Arbitration Cases
Central Sales tax
Finance act,1994
W.B.VAT act,2003
Service tax
Sales tax
Service tax
Value added tax
699
138
837
285
1,533
1,225
22
3,638
3,229
409
27
31
11
1
44
27
72
122
9
82
87
27
1
2
1
1
1,954
Service tax
Dispute of short payment
by availing ineligible cenvat
credit
Dispute on Short payment
Dispute on OYT rebate
Nature of dues
NTR
Finance act,1994
Name of statute
Amount
(Rs. in
lacs)
Total
S.
Circle name
No.
Commissioner of central excise and service taxE
Commissioner of Central excise, Customs and service
tax (appeal) CR Building IS Press Road Cochin
Forum where disputes are pending
2003 to 2007
2007 to 2011
1989 to 90 to 1993 to 94
June 2007 to September
2009
June 2007 to October
2009
2006 to 2007
2007 to 08
2010 to 11
2004 to 2005
October 2002 to March
2005
Commissioner of central excise and service tax
Commissioner of central excise and service tax
High court, Kolkata, No. of cases #ST-01 (Note 2) and
ED-02 respectively
Customs, excise and service tax appellate tribunal,
Chennai
Customs, excise and service tax appellate tribunal,
Bangaluru
Sales tax tribunal
Commissioner of central excise and service tax,New
Delhi
Commissioner of central excise and service tax
Bangalore Rs. 5005478 paid on 13.4.2007 (No:
04/2007)
Commissioner of central excise and service tax
1/10/2005
Bangalore (No: 04/2008)
Commissioner of central excise and service tax
Apr 2005 to March 2006
Bangalore (No: 09/2008)
case pending in Hight Court Ernakulam against
April 2008 to August 2008 Commissioner of central excise and service tax order
dated 18.1.2013 ( No: 47/2010)
Rs. 10 lakhs paid to Central excise Trivandrum on
October 2008 to March
23.1.2014 as per the direction of Commissioner of
2009
central excise and service tax Bangalore (Amount paid
together for case for 19/2011 and 4/2012
April 2009 to September
2009
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2006 to 07
2008 to 09
2009 to 10
2010 to 11
Annual Report 2013-14
126
STP
35
Commissioner of central
excise & service tax
Penalty (Customs
duty)
Service tax
Assam
38
* Amounts have been rounded off to zero.
Grand Total
Total
Service tax
Total
WTR
Total
37
Central excise and
service tax
Himachal
Pradesh
Sevice tax
Service tax Bhopal Unit
Service tax
Income tax Act, 1961 Tax deducted at source
Sevice tax
Nature of dues
Finance Act, 1994
Name of statute
36
Total
NE II
Total
34
S.
Circle name
No.
862,525
1,687
1,687
73
56
2
98
2
21
179
1,295
1,295
73
190
190
Amount
(Rs. in
lacs)
Commissioner of central excise and service tax
Commissioner of central excise and service tax
Service Tax 5 disputed
cases
, High court Shimla
Commissioner of Central excise (appeal) Chandigarh
Commissioner of central excise and service tax
Commissioner of Central excise
Commissioner of central excise and service tax
Custom Duty
Commissioner of central excise and service tax
Forum where disputes are pending
2007 to 2008
2005 to 06 to 2007 to 08
2013 to 14
2005 to 06 & 2007 to 08
2013 to 14
2005 to 06 & 2007 to 08
Amount
paid Period to which the
(Rs. in amount relates
Lacs)
2005 to 2006
Annual Report 2013-14
Addendum to Director's Report:
The Management replies to Independent Auditor's Report for the year 2013-14 are given
below:
Audit Para
Management Reply
Assets and liabilities taken over from Department of Telecommunication (‘DoT’) and the
amounts receivable and payable to DoT
6. As detailed in note 28, 31.1 and 31.3 Noted. The value of net additional assets
to the financial statements, assets and identified till date of balance sheet is less than
liabilities (including contingent liabilities) 0.50% of the provisional amount on which
taken over from DoT have been verified assets were transferred to the Company as on
and valued by the management based 01.10.2000.
on internal calculations and are subject
to reconciliations and confirmation from
DoT as regards to ownership, value and
classification. The consequential impact on
the financial statements, if any, as a result
of the same is presently not ascertainable.
Further, subsequent adjustments made on
account of identification and recognition of
net assets is adjusted to capital reserve. This
was also a subject matter of qualification
in our previous year’s audit report on the
audited financial statements for the year
ended 31 March 2013.
7. As detailed in note 32 to the financial Due to huge number of transactions especially
statements, amounts due from and to DoT in telecom and such other government
included in current assets and current department/ companies, it is not practically
liabilities aggregating to Rs. 173,669 lacs possible to confirm all of such balances.
(previous year Rs. 170,985 lacs) and
Rs. Further, this amount also includes rolling
39,109 lacs (previous year Rs. 47,207 lacs) balances like GPF and employees loans and
respectively are subject to confirmations and advances which get confirmed on issue of
reconciliation. Consequently, the impact annual statement of balance to the concerned
of the adjustments, if any, on the financial employees. The circle authorities are being
statements is presently not ascertainable. instructed again to carry out reconciliation
This was also a subject matter of qualification of the balance due to and due from DOT at
in our previous year’s audit report on the regular intervals.
audited financial statements for the year
ended 31 March 2013.
Fixed Assets
8. As reported by auditors of 25 circles, Capital The Circles are being instructed to capitalize
work-in-progress, inter alia, includes balances the works as and when completed and put
pending capitalisation for long-periods of time to use and depreciation provided from that
owing to pending analysis of status, value date.
and obtaining of commissioning certificates.
The consequential impact on the capital
work-in-progress, fixed assets, depreciation
127
and loss for the year, if any, is presently not
ascertainable. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
9. As reported by auditors of 6 circles, in the
absence of information in respect of certain
items of fixed assets capitalised, particularly
batteries, it could not be established whether
assets capitalised were on account of
replacement/extension of an existing asset
or additional acquisition of a new asset and
hence the consequential impact of the same
on the classification/value of the respective
asset, depreciation and amortisation,
expenses and loss for the year is presently not
ascertainable. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
10. As reported by auditors of 6 circles, the
leasehold land as identified and valued by
the respective circles have been incorporated
in the books of accounts and amortised
with effect from the date of formation of the
Company. Hence, in respect of the lands
still not identified and/or duly incorporated
in the books of accounts of the respective
circles, the consequential impact on value
of fixed assets, amortisation and loss for the
year is presently not ascertainable. This was
also a subject matter of qualification in our
previous year’s audit report on the audited
financial statements for the year ended 31
March 2013.
11. As detailed in note 31.2 to the financial
statements, auditors of 4 circles have reported
on the expired/non renewal of leases on lands
on which the Company had constructed
buildings. The management has not made
any provision for the surrender value/written
down value of the aforementioned buildings.
The consequential impact of adjustment on
fixed assets, depreciation and amortisation
and loss for the year, if any, is presently not
ascertainable. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
128
The concerned circles are being instructed to
account for such types of transactions strictly
as per accounting circulars/ instructions
issued in this regard.
All leasehold/ freehold land which are
known/ identified have been accounted for.
The concerned circles are being instructed
to expedite the process of getting the lease of
lands renewed.
Annual Report 2013-14
12. As stated in note 13(a) and 31.3 to the financial
statements, fixed assets, inter alia, includes
land pertaining to 25 circles, purchased/
acquired on leasehold/ freehold basis
through various authorities, the title deeds of
which are yet to be executed in the name of
the Company. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
13. As stated in note 47 to the financial
statements, Telegraph and Telex services
was discontinued by the Company with
effect from 15 July 2013. However, assets
(other than land, building, furnitures and
computers) relating to the aforementioned
service have not been identified, classified
and valued as decommissioned asset. In the
absence of specific details, the consequential
impact of adjustments, if any, on the financial
statements is presently not ascertainable.
The company is in the process of executing
the title deeds of the lands purchased /
acquired, wherever required.
The services have been withdrawn from
July 2013 only. Most of the circles have
already decommissioned the assets used for
Telegram Business. Only few circles are left
where decommissioning of these assets is
under process. The assets can be declared
decommissioned only after following certain
stipulated procedures in this regard. These
assets may be useful for other services also;
hence provision can be created only after
completion of decommissioning process.
Keeping in view the size of asset base
of the company, the amount involved is
meager. The appropriate action will be taken
in the year 2014-15 after completion of
decommissioning process.
14. The accounting policy of the Company as The circles are being instructed to strictly
stated in note 2.6 to the financial statements adhere to the accounting instructions issued
with respect to the decommissioned assets on the subject matter.
has not been uniformly applied across all
circles. In 15 circles, these are not recorded at
lower of the cost or net realisable value while
in certain circles, the decommissioned assets
have not been appropriately adjusted from
the block of fixed assets and depreciation is
still being charged on such decommissioned
assets. In the absence of sufficient details, we
are unable to comment upon the impact of
adjustment on the fixed assets, current assets,
depreciation and amortisation and loss for the
year, if any, arising out of the same. This was
also a subject matter of qualification in our
previous year’s audit report on the audited
financial statements for the year ended 31
March 2013.
15. The following accounting treatments by the
Company in respect of fixed assets and capital
works-in-progress are not in accordance
129
with the provisions of Accounting Standard
– 6, Depreciation Accounting; Accounting
Standard - 10, Accounting for fixed assets,
and Accounting Standard – 26, Intangible
Assets notified vide Companies (Accounting
Standards) Rules, 2006:
a) As detailed in note 31.6 to the financial
statements and as reported by auditors
of 21 circles, the Company has not
consistently adhered to capitalizing
the overheads expenses specifically
attributable to the capital work –
in – progress but has recorded the
same on estimated/fixed percentage/
proportionate/ payment basis.
b)
The Company capitalises the assets, as
reported by auditors of certain circles,
on periodic basis instead of at the ready
to use date.
c) Accounting
policies
regarding
capitalization, disposal, depreciation
and amortization of fixed assets are not
uniformly applied in case of 21 circles.
The resultant impact of the above non
compliance with the standards on the value
of fixed assets, capital work-in-progress,
depreciation and amortization and loss for
the year is presently not ascertainable. This
was also a subject matter of qualification
in our previous year’s audit report on the
audited financial statements for the year
ended 31 March 2013.
130
Accounting policy of BSNL in this regard
states that the cost includes directly related
establishment and other expenses including
employee remuneration and benefits, directly
identifiable to the construction or creation of
assets.
As explained in note no. 31.6, the
administrative and establishment expenses
incurred in units where project work is
also undertaken are allocated to capital
and revenue mainly on actual basis and on
“actual man-month spent” basis respectively.
In case, the costs are not directly attributable
for e.g. administration and other associated
costs where an asset is used for different
projects or an employee is devoting his
time to various jobs simultaneously during
the month then such expenditure is divided
among the different projects on the basis
of ratio of actual use/actual time spent over
different projects or if it is not practically
possible to find such division then on an
appropriate empirical ratio and accordingly
decision regarding charging of the same
towards CWIP or revenue heads is taken.
The concerned circles are being instructed to
capitalize the works as and when completed
and put to use as per the instructions already
issued in this regard.
The concerned circles are being instructed
to strictly adhere on the accounting policies
and instructions issued from time to time.
Annual Report 2013-14
Current Assets and Current Liabilities
16. The Company does not follow a system
of obtaining confirmation and performing
reconciliation of balances in respect of trade
receivables, deposits with departments/
companies (including Mahanagar Telecom
Nigam Limited), claims recoverable from/
payable to DoT (including license fees payable
as detailed in note 42.1 of the financial
statements) or to/ from other government
departments/authorities,
subscriber/
customer deposit accounts, trade payable
and claims payable. Due to non-availability
of confirmations and reconciliations of
the aforementioned account balances, we
are unable to quantify the impact of the
adjustments, if any, arising from reconciliation
and settlement of account balances on the
financial statements. This was also a subject
matter of qualification in our previous
year’s audit report on the audited financial
statements for the year ended 31 March 2013.
17. As detailed in note 18(a) to the financial
statements, no adjustment has been recorded
for the differences of Rs. 971 lacs (previous
year Rs. 22,917 lacs) in General ledger and
Subsidiary ledger in respect of trade receivables
for 7 circles. Further, as reported by auditors
of certain circles, there are unquantifiable
differences between the general ledger
and trial balance and accounting records
pertaining to loans and advances, current
assets and current liabilities. The impact
on the financial statements, if any, owing
to the aforementioned non-reconciliations
is presently not ascertainable. This was
also a subject matter of qualification in our
previous year’s audit report on the audited
financial statements for the year ended 31
March 2013.
18. As reported by auditor of 4 circles, there are
differences in the inventory records between
stores ledger and General ledger/Trial
balance, the impact of the same is currently
not ascertainable. This was also a subject
matter of qualification in our previous
year’s audit report on the audited financial
statements for the year ended 31 March 2013.
131
As per Industry practice, taking confirmation
for trade receivables and subscribers deposits
from huge subscribers’ base is neither
practical nor possible.
For balances due to or due from other parties
i.e. DOT, DOP, other Govt. departments/
companies etc., circles are instructed again to
carry out reconciliation at regular intervals.
The concerned circles are being instructed
to carry out the reconciliation and take
necessary action to sort out the difference
between the two sets of records.
Circles are being instructed to take appropriate
action immediately.
19. As reported by auditors of 2 circles, certain Circles are being instructed to take appropriate
units have not applied the Company’s policy action immediately.
of valuation of inventory on weighted average
method as stated in note 2.8 to the financial
statements. The impact of the adjustment, if
any, on inventory, consumption and loss for
the year is presently not ascertainable. This
was also a subject matter of qualification
in our previous year’s audit report on the
audited financial statements for the year
ended 31 March 2013.
Inter/ Intra Circle Remittance Account
20. As detailed in note 33 to the financial The circles are being instructed again for
statements, the Inter-Circle/Unit remittance prompt acceptance of remittance transfer
balances amounting to Rs. 86,537 lacs advices so that the outstanding is kept to the
(previous year Rs. 102,458 lacs) are yet to barest minimum possible. The reconciliation
be reconciled. Pending such reconciliations, of remittance items and accounting the same
the possible cumulative impact of the under final head are continuously being done
adjustments, if any, on assets and liabilities by the circles which resulted in continuous
and the current and prior year(s) income and decrease in the pending remittances for last
expenditure is presently not ascertainable. four financial years.
This was also a subject matter of qualification
in our previous year’s audit report on the
audited financial statements for the year
ended 31 March 2013.
License Fee, Spectrum Charges, Inter Connect Usage Charges
21. As detailed in note 29 to the financial The license fee is paid on revenue share basis.
statements, the Company segregates revenue The value of pulse is not constant and may
from NLD (National long distance)/ILD also be NIL for certain tariff plans. Special
(International long distance) on an estimated tariff/ validity vouchers introduce another
basis instead of actual usage of pulse which variable due to which pulse does not remain
consequently results in recognition of the right factor for measuring revenue for purpose
license fees on an estimated basis. The impact of calculating license fee. Further, license
of adjustment, if any, on the license fees fee is now uniform across various services;
expense, recoverable/ payable from DoT and hence the effect is not material. However,
loss for the year is presently not ascertainable the company is improving its technical
for the year. This was also a subject matter capabilities to measure as accurately as
of qualification in our previous year’s audit possible.
report on the audited financial statements for
the year ended 31 March 2013.
Revenue
22. As reported by auditors of 6 circles, the The concerned circles are being instructed to
income from recharge coupons, prepaid take necessary action in the matter.
calling cards, internet connection cards,
sanchar net cards and stock of recharge
coupons and prepaid calling cards are
subject to reconciliations. In the absence of
132
Annual Report 2013-14
specific details, the impact of adjustment, if
any, on financial statements is presently not
ascertainable. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
23. As reported by auditors of 3 circles, the
revenue for the current year, inter alia,
includes amounts pertaining to prior period(s).
This has not been separately disclosed in
the financial statements in a manner that
their impact on the current year’s loss can
be perceived, which is not in accordance
with the notified Accounting Standard – 5,
Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies.
The consequential impact of adjustments, if
any, on the financial statements is presently
not ascertainable.
24. As stated in note 2.3-(e), (f) and (i) to the
significant accounting policies, certain items
of revenue are accounted for on cash basis
instead of the accrual basis of recognition of
revenue which is not in accordance with the
generally accepted accounting principles in
India. The impact of the adjustment, if any, in
respect thereof on revenue, trade receivables
and loss for the year is presently not
ascertainable. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
Provisions and contingent liabilities
25. The provisions and the disclosures with
regard to matters under litigations have
been made based upon the management
estimates. Based upon the report of auditors
of 8 circles, sufficient and appropriate audit
evidence for examining and verifying the
quantum of contingent liabilities disclosed
in note 42.1 to the financial statements has
not been obtained. In the absence of the
adequate details and documents and pending
the responses to our confirmation requests in
respect of the litigations at the corporate level,
the impact of adjustments/disclosures, if any,
on the financial statements is presently not
ascertainable. This was also a subject matter
133
Noted. The circles are being instructed to
strictly adhere to the accounting instructions
issued in this regard.
Noted. Adequate disclosures are already
given in the books of accounts of BSNL as
required by AS-1 and AS-9 issued by ICAI.
Most of the circles had provided the details
of litigation / claims lodged or defended
and contacts of the Company’s counsels
to the auditors. At Corporate level also,
the abovementioned details were given to
auditors. The auditors had written letters to
the Company’s counsels. It appears that due
to professional reasons some counsels did not
respond. It may also be noted that many of
the legal cases are on either outstanding dues
or on service/ personnel matters involving
issues of employee’s career progression,
inter-se seniority etc. For the cases having
major implications known up to finalization
of accounts, the details and contingent
of qualification in our previous year’s audit liabilities have already been shown in note
report on the audited financial statements for to accounts. Moreover, the concerned circles
the year ended 31 March 2013.
are further advised to provide the adequate
details to auditors.
Miscellaneous
26. The Company has not complied in respect of
the following Accounting Standards notified
vide Companies (Accounting Standards)
Rules, 2006:
i.
As reported by auditors of 11 circles, The concerned circles are being instructed to
in absence of adequate information, take necessary action in this regard.
details and records of old, nonmoving, damaged and unserviceable
inventories could not be identified
The adjustment, if any, on inventories,
consumption and loss for the year is
presently not ascertainable. This was
also a subject matter of qualification
in our previous year’s audit report on
the audited financial statements for the
year ended 31 March 2013.
ii. As detailed in note 35 to the financial The disclosure of Segmental Reporting as
statements and as reported by auditors per AS-17 on Segment Reporting is required
of 13 circles, the expenses, incomes, at Company level only. The Segmental
assets and liabilities are not properly Reporting at Company level is disclosed on
disclosed under the reportable segment the basis of booking in respective account
as per the notified Accounting Standard heads under various segments which is not
17 on Segment Reporting. In our affected by the figures given by circles in
opinion, the same does not give true relevant annexure meant only for additional
and fair disclosure of the segment-wise confirmation in segment reporting of the
operations of the Company as required company.
by the aforementioned accounting
standard. This was also a subject matter of However, the concerned circles are being
qualification in our previous year’s audit instructed to give proper segregated details
report on the audited financial statements in the relevant annexure.
for the year ended 31 March 2013.
iii. As stated in note 15 to the financial As disclosed in the note no. 15(d), the
statement, the Company as at 31 company has not recognized any deferred
March 2014 has deferred tax assets tax assets following the notified accounting
(net) amounting to Rs. 23,773 lacs. standard ‘accounting for taxes on income’,
Since the Company has a recent history only reversal relating to deferred tax assets
of losses and owing to lack of virtual and deferred tax liabilities created during
certainty and convincing evidence that the earlier years have been made. Since
sufficient future taxable income will the reversal of deferred tax liabilities are
be available against such deferred tax more than the newly identified deferred tax
asset and as stipulated by the notified liabilities, it has resulted into increase in net
Accounting Standard-22, Accounting deferred tax assets.
134
Annual Report 2013-14
iv.
v.
vi.
for taxes on income, the amount of such
deferred tax asset should be written
off. Consequent to the above, loss for
the year in the statement of profit and
loss is under-stated by Rs. 23,773 lacs
and the balance of deferred tax asset
included under Non-Current Assets, has
been overstated by the corresponding
amount.
The Company has not carried out any
Techno-economic assessment during
the year ended 31 March 2014 and
hence identification of impairment
loss and provision thereof, if any, has
not been made. The same is not in
accordance with the notified Accounting
Standard 28 on Impairment of asset. The
consequential impact of adjustment,
if any, on the financial statements is
currently not ascertainable. This was
also a subject matter of qualification
in our previous year’s audit report on
the audited financial statements for the
year ended 31 March 2013.
The accounting for capital and revenue
grant in accordance with the notified
Accounting Standard 12 on Accounting
for grants is not followed consistently
as reported by auditors of 16 circles.
In the absence of specific details, the
consequential impact of adjustment,
if any, on the financial statements is
presently not ascertainable.
The accounting policy as referred
to in note 2.10(b) to the financial
statements with respect to the liability
on account of post-retirement medical
benefits of employees including retired
employees, a defined benefit plan, is
recognized on actual basis in respect of
bills received by the Company instead
of recognizing the liability for the same
as the present value of the defined
benefit obligation at the balance
sheet date calculated on the basis
of actuarial valuation in accordance
with the notified Accounting Standard
– 15 on Employee Benefits. The
135
The operations of BSNL are of such a
nature where assets are in use 24x7. As
and when any asset is found non-repairable
or non-functional or obsolete, the same is
decommissioned and necessary provision
is being created in books of accounts. The
assets are impaired as and when the necessity
arises. This process is continuously followed
throughout the year in each circle of BSNL
The concerned circles are being instructed to
strictly adhere to the accounting policies and
instructions issued in this regard.
As per the accounting policy as disclosed,
claims for medical facility received from the
employees of BSNL (including retirees) up
to the cutoff date of finalisation of annual
accounts, are treated as liability of the
company for the said financial year.
The post employment medical care
extended to its retired employees as
per the present policy of BSNL is more
like facilities, which may be revised by
the Management any time, depending
upon the relevant factors prevailing at that
time.
consequential impact of adjustment, However, policy of medical facilities to BSNL
if any, owing to this non–compliance employees (including retired employees) is
on the financial statements is presently under review.
not ascertainable.
Based on such review, appropriate action for
provision will be taken in the forthcoming
year.
27. As stated in the note 2.12 of the financial Noted. Adequate disclosures are already
statements, only individual transactions of given in the books of accounts of BSNL as
income/expenditure exceeding Rs. 5 lacs, required by AS-1 and AS-9 issued by ICAI. The
are considered for evaluation as prior-period accounting policy of the company is made
items. In our opinion, the said accounting keeping in view the size of organization and
policy is not in accordance with the volume of high denomination transactions.
generally accepted accounting principles in It may also be noted that many organization
India and the same should be evaluated on of such size in infrastructure industry are
aggregation of all prior period transactions following similar policies.
of similar nature irrespective of individual
transaction values, for possible adjustment/
disclosure in the financial statements. The
consequential impact of the adjustment, if
any, on the income, expense and loss for the
year is presently not ascertainable. This was
also a subject matter of qualification in our
previous year’s audit report on the audited
financial statements for the year ended 31
March 2013.
28. As reported by 14 circles and detailed in Noted. The concerned circles are being
note 10(a) to the financial statements, these instructed to take necessary action.
circles have not identified units covered
under Micro, Small and Medium Enterprises
Development Act, 2006 (‘MSMED Act,
2006’) and hence disclosures as required
under the MSMED Act, 2006 is presently not
ascertainable. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013.
29. The disclosure requirements of the Revised The circles are being instructed to strictly
Schedule VI of the Companies Act, 1956 adhere to the accounting instructions issued
has not been properly adhered to in the on the subject matter.
presentation and disclosure of financial
statements of the Company in respect of
classification of assets/liabilities into current
and non-current and secured and unsecured,
wherever applicable; categorisation of
assets/liabilities into appropriate accounting
captions; changes in inventory; nondisclosure of consumption of stores and
spares; consumption of imported and
136
Annual Report 2013-14
indigenous stores and spares parts; capital
and other commitments and expenditure
and earnings in foreign currency. This was
also a subject matter of qualification in our
previous year’s audit report on the audited
financial statements for the year ended 31
March 2013.
30. As reported by auditors of 10 circles,
compliances with regard to deposition,
deduction, reconciliation of service tax and
tax deducted at source are pending to be
made. In the absence of specific details, we
are unable to comment on its consequential
impact, if any, on the financial statements.
This was also a subject matter of qualification
in our previous year’s audit report on the
audited financial statements for the year
ended 31 March 2013.
31. As detailed in notes (1) and (2) of the Cash
Flow Statement, certain assumptions have
been made for the purpose of preparation
of the Cash Flow Statement. In the absence
of the appropriate details, we are presently
unable to ascertain the impact, if any, on the
adjustments/disclosures in the Cash Flow
Statement. This was also a subject matter
of qualification in our previous year’s audit
report on the audited financial statements for
the year ended 31 March 2013
Emphasis of Matter
33. We draw attention to note 14 to the financial
statements of the Company regarding
investments in ITI Limited aggregating to
Rs. 20,000 lacs as at 31 March 2014. The
management, based on the factors mentioned
in the said note, believes that the diminution
in the value of investments is temporary in
nature and hence no provision in respect of
aforementioned amount has been made in
the accompanying financial statement. Our
opinion is not qualified in respect of this matter.
The concerned circles are being instructed to
make necessary compliances with regard to
deposition, deduction, and reconciliation of
service tax and other statutory dues.
Noted.
Due to substantive evidence on the
soundness of investment and recovery of the
amount, the management does not feel there
are adequate reasons to decrease the value
of investment in preference shares of M/s ITI
Ltd.
For and on behalf of the Board of Directors
Sd/(A.N.Rai)
Chairman & Managing Director
Date: 11-09-2014
BHARAT SANCHAR NIGAM LIMITED
137
Rep-PSU A/cs/F-86/Ann. Acctt./BSNL/2013-14/602
Date - 29/09/2014
Sd/-
138
Annual Report 2013-14
Comments of the Comptoller & Auditor Gerneral of India
under section 619(4) of the Companies Act, 1956 on the
annual accounts of Bharat Sanchar Nigam Limited for the
year ended 31 March 2014.
The preparation of financial statements of Bharat Sanchar Nigam Limited, New Delhi (BSNL), for
the year ended 31st March 2014 in accordance with the financial reporting frame work prescribed
under the Companies Act, 1956 is the responsibility of the Management of BSNL. The Statutory
Auditors appointed by the Comptroller and Auditor General of India under Section 619(2) of the
Companies Act, 1956 are responsible for expressing opinion on these financial statements under
Section 227 of the Companies Act, 1956 based on independent audit in accordance with the
Standards on auditing prescribed by their professional body, the Institute of Chartered Accountants
of India. This is stated to have been done by them vide their Audit Report dated 29th August
2014.
I, on behalf of the Comptroller & Auditor General of India, have conducted a supplementary
audit under Section 619(3) (b) of the Companies Act, 1956 of the financial statements of Bharat
Sanchar Nigam Limited, New Delhi for the year ended 31st March 2014. This supplementary audit
has been carried out independently without access to the working papers of the statutory auditor
and is limited primarily to enquiries of the statutory auditor and BSNL personnel and a selective
examination of some of the accounting records. Based on my supplementary audit, I would like to
highlight the following significant matters under Section 619(4) of the Companies Act, 1956 which
have come to my attention and which in my view are necessary for enabling a better understanding
of the financial statements and the related Audit Report.
A.
Balance Sheet
a)
Equity & Liabilities
1.
Current Liabilities (Note No. 11) - Other Current Liabilities - ` 6823.63 crore
Dot, after completing provisional assessment of License fee for the years from 2006-07 to
2008-09, raised an additional demand of ` 4076.62 crore apart from ` 378.30 crore towards
demand for short payment of license fee of for the year 2012-13. The Company did not
provide for the same but disclosed it is a contingent liability. As the demand was based
on assessment, the same should have been provided for. Non-provision has resulted in
understatement of other current liabilities as well as accumulated loss by ` 4454.92 crore.
B.
Statement of profit and Loss
1.
Expenses - Other Expenses -License and spectrum fee - ` 2243.30 crore
The does not include ` 1428.62 crore being the penalties imposed by the TERM Cell of
DoT during the year 2013-14. Non-accounting of the above as expenditure for the year
has resulted in understatement of expenses, Loss for the year and also Current Liabilities by
` 1428.62 crore.
2.
Employee Benefit Expenses (Note No. 24) - Pension Contribution - ` 889.14 crore
The above head is understated by ` 707.03 crore due to charging of pension contribution of
absorbed employees on the bases of actually drawn pay instead of on maximum pay during
2011-12, 2012-13 and 2013-14. This has also resulted in understatement of provison as well
as accumulated loss by ` 707.03 crore.
139
C.
General Comments
1.
Persistent Non-Reconciliation of balances with MTNL
As per accounts of BSNL for the year 2013-14, the amount recoverable from and the amount
payable to Mahanagar Telephone Nigam Limited (MTNL) on current account have been
disclosed as ` 3517.95 crore and `996.02 crore respectively resulting in net recoverable
amount of `2521.93 crore from MTNL. However, as per approved annual accounts of MTNL for
the year 2013-14, the amount recoverable from and the amount payable to the Company was
` 4186.04 crore and ` 1828.25 crore respectively resulting in a net recoverable amount of
` 2357.79 crore from BSNL. Thus, there was net difference of `4879.72 crore in the receivable/
payable amounts between these two Government Companies under the same Ministry. This
comment was raised on accounts of the Company for the year 2012-13 also. However, there
is no change in the status of unreconciled balances between the Company and MTNL.
For and on the behalf of the
Comptroller and Auditor General of India
Place : Delhi
Date : September 2014
Sd/(R.B. Sinha)
Director General of Audit (P&T)
140
Annual Report 2013-14
Reply to Comments of the C&AG issued under section 619 (4) of the Companies Act,
1956 on the accounts of the Company for the year ended 31 March 2014.
Para
C&AG Comment
Reply of the Management
No.
A
BALANCE SHEET
(a) Equity & Liabilities
1. Current Liabilities (Note No. 11)
The provisional assessment done by DOT
Other Current Liabilities – ` 6823.63 contains various discrepancies such as nonconsideration of adjustment of Rs.72.35 crores
crore
allowed by DOT vide letter no.17-20/2005-LF
DoT, after completing provisional dated 20.03.2007 in the year 2006-07, nonassessment of License fee for the years allowance of inter-segment expenditure as pass
from 2006-07 to 2008-09, raised an through expenditure, wrong calculation of GR
additional demand of ` 4076.62 crore and AGR by accounting some revenue twice,
apart from ` 378.30 crore towards non-allowance of deduction of excess provision
demand for short payment of license fee written back etc. The matter has been taken up
of for the year 2012-13. The Company did with DOT. Regarding shortfall in payment of
not provide for the same but disclosed it license fee for the year 2012-13, the Company
as a contingent liability. As the demand has adjusted a portion of huge amount lying
was based on assessment, the same under ‘Claims Recoverable from DOT’ on
should have been provided for. Non- account of excess payment of license fee. Since
provision has resulted in understatement the assessment has not yet been finalised, the
of other current liabilities as well as Company has shown this demand raised by
accumulated loss by `4454.92 crore.
DOT as contingent liability.
B
STATEMENT OF PROFIT AND LOSS
1
Expenses – Other Expenses – License These penalties have been imposed for
and spectrum fee - ` 2243.30 crore
minor procedural discrepancies like delay in
submission of self certificate, improper signage
The does not include ` 1428.62 crore / photograph etc. and not because of exceeding
being the penalties imposed by the the EMF Radiation norms set by DOT. BSNL
TERM Cell of DoT during the year has taken up the matter with TERM Cell, DOT
2013-14. Non-accounting of the above to condone these minor discrepancies. On the
as expenditure for the year has resulted basis of the reply from DOT, the necessary
in understatement of expenses, Loss for disclosure will be made in books of account in
the year and also Current Liabilities by ` next year.
1428.62 crore.
2
Employee Benefit Expenses (Note No. The absorbed employees of BSNL are paid
24) - Pension Contribution - ` 889.14 pension under Rule 37A of CCS Pension Rules
crore
for which pension contribution is payable as per
the rates prescribed in Fundamental Rules (FR) of
The above head is understated by ` Govt. of India. As per FR 116, the rate of pension
707.03 crore due to charging of pension contribution shall be such as the President may
contribution of absorbed employees on by General Order prescribe. Accordingly vide
the basis of actually drawn pay instead Office memorandum dated 19/11/2009 issued
of on maximum pay during 2011-12, by DOP&T, pension contribution shall be
2012-13 and 2013-14. This has also
141
resulted in understatement of provision based on the existing basic pay of the post held
as well as accumulated loss by `707.03 by a Govt. Servant (BSNL employee are also
crore.
Govt. Servant for the purpose of pension under
Rule 37A) at the time of proceeding on foreign
service or the upgraded pay during financial
up-gradation.
As such the interpretation given by the
administrative ministry does not conform to
the statutory provisions and hence the case was
taken up once again with DOT. The Secretary
Telecom vide minutes dated 19/04/2012
permitted the BSNL Management to remit
pension contribution on the maximum of the
scale only for those employee who are due to
retire within six months and for all others on
actual basis. The Company has again taken up
the matter with DoT. In this context, it is also
mentioned that the stand of BSNL is conformed
by DOPT also in its letter no. 6/1/2014-Estt.
(Pay-II) dated 24th April 2014.
Hence, the difference amount is shown as
contingent liability.
C
1
GENERAL COMMENTS
Persistent
Non-Reconciliation
balances with MTNL
of A High Level Committee has been formed by
DOT vide Letter No. 10-14/2013-SU-I dated
25.06.2013 consisting representatives of DOT,
As per accounts of BSNL for the year MTNL and BSNL to sort out the issues with
2013-14, the amount recoverable from MTNL.
and the amount payable to Mahanagar
Telephone Nigam Limited (MTNL) on Upon recommendation of such High Level
current account have been disclosed Committee, a MOU dated 24.09.2013 has
as ` 3517.95 crore and ` 996.02 crore already been signed between BSNL and MTNL
respectively resulting in net recoverable to sort out the issues relating to carriage charges,
amount of ` 2521.93 crore from MTNL. IUC, infrastructure charges, roaming charges
However, as per approved annual and enterprise business etc. The reconciliation
accounts of MTNL for the year 2013-14, is in progress. Various pending issues with
the amount recoverable from and the MTNL are likely to be settled.
amount payable to the Company was
` 4186.04 crore and ` 1828.25 crore
respectively resulting in a net recoverable
amount of `2357.79 crore from BSNL.
Thus, there was net difference of `
4879.72 crore in the receivable/payable
amounts between these two Government
Companies under the same Ministry.
This comment was raised on accounts
142
Annual Report 2013-14
of the Company for the year 2012-13
also. However, there is no change in
the status of un-reconciled balances
between the Company and MTNL.
For and on behalf of the
For and on behalf of the Board of Directors
Comptroller and Auditor General of
India
Sd/(R.B. Sinha)
Director General of Audit (P&T)
143
Sd/(A. N. Rai)
Chairman & Managing Director
Bharat Sanchar Nigam Limited
Date : 29-09-2014