Dear Shareholders,
The Directors are pleased to present the sixteenth Annual Report,
together with the audited financial statements of the Company for the
financial year ended March 31, 2011.
Financial Results
The standalone and consolidated financial results of your Company for
the financial year ended March 31, 2011 are summarised below:
Rs. Mn
Particulars Standalone Consolidated
2010-11 2009-10 2010-11 2009-10
Income from Services 153,328 118,502 154,384 123,979
Other Income 562 801 648 1,011
Total Revenue 153,890 119,303 155,032 124,990
Operating Expenses 122,609 90,358 117,126 90,399
EBITDA 31,281 28,945 37,906 34,591
Depreciation and
Amortisation 19,730 15,512 23,973 20,149
EBIT 11,551 13,433 13,933 14,442
Interest and
Financing charges 2,487 2,063 3,964 4,005
Surplus from prepayment
of loan - 317 - 317
EBT 9,063 11,687 9,969 10,754
Taxes 617 1150 982 1,215
Net Profit after Tax 8,446 10,537 8,987 9,539
Balance brought forward
from previous year (3,964) (4,053) (5,038) (5,263)
Accumulated Losses
acquired on
Amalgamation of Spice
Communications Limited
(net of withdrawals
from General Reserve &
Deferred Tax effects) - (10,448) - (9,314)
Cumulative Profit
/ (Losses) 4,482 (3,964) 3,949 (5,038)
Operations Review
Your Company''s total subscriber base as on March 31, 2011 stood at 89.5
million, an increase of 40.2% over the previous year. On a national
basis, your Company''s subscriber market share stood at 11.0% as of end
March, 2011. Further, the Company''s revenue market share increased to
13.2% for the year ended March, 2011 from 12.4% in the previous year.
During the financial year, your Company''s total minutes of usage on the
network crossed the daily one billion minutes mark in terms of daily
voice traffic, placing the Company amongst the largest 10 telecom
operators in the world. The Company grew its Optic Fibre network by ~
7,000 route kilometers during the financial year to cater to almost all
of its captive National Long Distance traffic.
As a result of the above, on a standalone basis, the total revenues for
the financial year were Rs. 153,890 Mn representing a growth of 29.0%
over the previous year.
During the last financial year (FY 10), your Company had launched 7 new
service areas, which, in FY 11 operated for the first full financial
year and are yet to generate cash from operations. The Profit after tax
was lower at Rs. 8,446 Mn, a decrease of 19.8% as compared to the
previous year. However, the brought forward losses from the previous
years (including those acquired on amalgamation of Spice Communications
Limited in March 2010) have been completely wiped off during this
financial year. As of March 31, 2011, your company has carried the
accumulated Profit and Loss balance of Rs. 4,482 Mn to Reserves and
Surplus.
On a consolidated basis, the total revenues were higher by 24.0% at Rs.
155,032 Mn over the previous year. The consolidated Net Profit after
tax stood at Rs. 8,987 Mn, a decrease of 5.8% compared to the previous
year.
Dividend
The Company is in the telecommunication sector which continues to see
tremendous growth and significant new investments. The Company''s capex
requirements are presently higher than the cash profits and hence the
company currently does not have free cash flows. Hence, your Directors
do not recommend any dividend for the year ended March 31, 2011.
Share Capital
During the year under review, your Company issued and allotted
3,433,713 Equity Shares of Rs. 10/- each, fully paid-up, to the option
grantees pursuant to the exercise of stock options under Employee Stock
Option Scheme, 2006 (ESOS-2006).
Consequently, the issued, subscribed and paid-up equity share capital
of your Company as on March 31, 2011 stood at 3,303,271,505 equity
shares of Rs. 10/- each.
Credit Rating
Your Company continues to have credit rating of CARE A1 and CRISIL A1
for its short term debt program and CARE AA credit rating for its long
term debt program.
Capital Expenditure
Your Company continues to expand network for enhanced coverage and
quality. Your Company incurred a capex of Rs. 99,107 Mn (including Rs.
57,686 Mn and Rs. 4,097 Mn, being payout for 3G spectrum fee and interest
capilatised thereon) during the financial year 2010-11.
The Company also made significant progress in rolling out its National
Long Distance (NLD) network, and augmenting the International Long
Distance (ILD) network. As at end March, 2011, it carried about 90% of
its captive NLD and ILD outgoing traffic.
Employee Stock Option Scheme
During the year, the ESOS Compensation Committee granted 2,524,500
options as fourth tranche under the Employee Stock Option Scheme, 2006
(ESOS - 2006) to the eligible employees of the Company. Each option is
convertible into one Equity
Share of the Company upon vesting. These options will vest in 4 equal
annual installments after one year of the grant and shall be
exercisable within a period of 5 years from the date of the vesting.
The disclosures in compliance with clause 12 of Securities and Exchange
Board of India (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999, as amended, are set out in Annexure
''A'' to this Report.
Human Resources
Your company continues to invest in building a strong performance
culture through alignment, shared agreement, robust measurement and
constructive performance conversations. Implementation of sophisticated
management processes and continued investment in people have helped the
Company set high standards of performance.
Significant Developments:
- Launch of 3G Services
The Company was winner of 3G spectrum in 11 services areas. During the
period March''11 to July''11, the Company has launched 3G services in 9
out of these 11 service areas. The Company is in the process of
launching 3G services in Jammu and Kashmir service area. The 3G
spectrum for Punjab service area has not been earmarked by DoT to the
Company for commercial usage as yet, and hence Company has not been
able to launch 3G service there until now.
Besides providing 3G services in the service areas where the Company
has won spectrum, the Company has also entered into bilateral roaming
arrangements with other leading operators. Consequent to these
arrangements, the Company is providing 3G services in 6 service areas
through roaming arrangements, and is in talks to launch its 3G services
in the remaining service areas.
- ISO 9001:2008 Certification
The Service Delivery function of the Company is ISO 9001:2008
certified. The ISO 9001:2008 certification (by TUV-Nord) ensures a
unified platform for providing consistent services to all the customers
the Company serves across the markets and hence the processes that are
implemented are customer centric, best in class and in line with the
international quality management systems.
- Change in Leadership
Mr. Sanjeev Aga relinquished the office of the Managing Director of the
Company from the close of business hours on March 31, 2011. Mr. Aga
continues to be on the Board as a Non-Executive Director of the
Company. Mr. Himanshu Kapania assumed the role of the Managing Director
with effect from April 1, 2011. Mr. Kapania has over 26 years of
experience and has indepth knowledge of the Telecom Industry including
the current competitive landscape in India. Before taking over this
current role, in the position as Director Operations, he has
successfully led the numerous new service area roll outs in the last
four years and also has led several Company-wide strategic initiatives
contributing to the growth of the Company.
- Merger of Spice Communications Limited
The Department of Telecommunications (DoT) had obtained an
ex-parte stay on March 30, 2011 from the Hon''ble High Court of Delhi
against its order dated February 5, 2010 sanctioning the Scheme of
Amalgamation of Spice Communications Limited (Spice) with the Company.
The Hon''ble High Court of Delhi while pronouncing its judgment on July
4, 2011, reaffirmed the amalgamation of Spice with the Company.
However, the said judgment transferred and vested unto the DoT, the six
licenses granted to erstwhile Spice along with the spectrum (including
the two operational licenses for Punjab & Karnataka service areas),
till the time permission of DoT is obtained. Upon an appeal filed by
the Company before the Appellate Bench, challenging the above judgment
of July 4, 2011, the Appellate Bench through interim orders, has
directed DoT to:- (i) Accept the License Fee from the Company without
prejudice, as the Company is continuing to operate the licenses for
Punjab & Karnataka service areas granted to erstwhile Spice;
(ii) Maintain status quo in relation to the aforesaid two operating
licenses and not to take any coercive steps in relation to any demand
pertaining to the four non operating licenses till the next date of
hearing.
The matter remains sub-judice.
- 3G Spectrum for Punjab Service Area
The Company had participated in the 3G auction conducted by the
Department of Telecommunications (DoT), basis the 2G licenses held by
it for various service areas and was declared winner for the allotment
of 3G spectrum in 11 service areas on May 21, 2010, including Punjab
service area. The DoT accordingly issued Letters of Intent for
earmarking of 3G spectrum, inter-alia, for Punjab service area.
Thereafter the Company approached DoT for carrying out license
amendment, enabling the Company for commercial usage of 3G spectrum.
Though DoT carried the requisite amendments to 2G licenses for 10
service areas, it, however, is yet to carry license amendment and allow
commercial usage of earmarked 3G spectrum in respect of Punjab service
area.
As the Company did not receive any response to repeated requests made
to DoT, it approached Telecom Disputes Settlement and Appellate
Tribunal (TDSAT) and filed Petition for necessary direction to the DoT
to allow the commercial usage of allocated 3G Spectrum for Punjab
service area. The TDSAT has dismissed the said petition in view of
order passed by Delhi High Court in July, 2011 concerning amalgamation
of erstwhile Spice Communications Limited with the Company, which was
holding the operative 2G license in respect of Punjab service area. The
Company has filed necessary appeal before the Appellate Bench of Delhi
High Court against the July, 2011 order passed by the single judge and
would decide the next course of action at an appropriate time, basis
the outcome of appeal.
- Notices from DoT for alleged violation of terms and conditions of
License Agreement
Due to the DoTs alleged contention that the acquisition of erstwhile
Spice Communications Limited and its subsequent amalgamation violates
certain license conditions / guidelines, the Company had received
various Show Cause / Demand Notices from the DoT in respect of the
operational and non- operational licenses including for alleged failure
to meet roll- out obligations. Your Company is contesting the same
before the appropriate forums. More details are provided in Note B4 of
Schedule 22 – Notes to Accounts.
Corporate Sustainability
Your Company, part of the Aditya Birla Group which is India''s first
truly global conglomerate, is one of the oldest players in the Indian
telecom industry and has played a key role in the development of mobile
telephony, particularly in rural India. As part of a socially
responsible corporate group, your Company has and continues to adopt
policies, and business strategies to effectively integrate emerging
environmental, social and economic considerations.
Whether it''s through conserving energy, recycling, or finding
innovative solutions to environmental and social challenges, your
Company is committed to being a respectful, responsible and positive
influence on the environment and the society in which it operates.
Efficient power management, infrastructure sharing, use of eco-friendly
renewable energy sources, leveraging the latest in technology to reach
out to a large audience in most energy efficient manner such as video
and teleconferencing, smart logistics, etc. are some of the best
practices in our network infrastructure and day-to-day business
operations, to ensure a clean and green environment.
Network Infrastructure Initiatives
In our effort to give back to the environment and reduce the collective
carbon foot print of the telecom sector in India, your Company
pioneered the concept of ''Shared Telecom Infrastructure'' services,
along with a few other industry leaders in the wireless space. This
initiative is committed towards continuous innovation endeavors;
optimization of future tower rollouts; and enhanced operational
efficiencies leading to a substantial reduction of carbon foot print.
The Indian telecom industry''s first collaborative, cross-industry
consortium to encourage the development of environmentally sustainable
mobile networks was also led by your Company, which was supported by
the GSMA. The pilot, aimed at developing biofuels as a source of power
for wireless networks in rural India which are located beyond the reach
of the national electricity grid, was conducted in parts of Andhra
Pradesh and Maharashtra. The learnings of the research were later
handed to the infrastructure company which owns the towers, to explore
broad basing of the program.
In a bid to reduce energy consumption by our BTS, your Company chose OD
BTS (outdoor BTS) as our preferred BTS type in 2007. Currently, over
40% of our total BTS portfolio comprises of OD BTS, which has resulted
in reducing our conventional energy consumption by about 25% as
compared to the ID BTS (indoor BTS). Efforts are also on to re-deploy
ID BTS to OD BTS sites, in some locations, which will further reduce
energy consumption at these sites by 25%.
Your Company has explored a Solar Hybrid Solution for running our BTS
in parts of rural Bihar. This will reduce the fuel consumption of power
generator from running for 15-16 hours to less than 5 hours a day in
these locations.
Your Company is also part of the Fuel Cell project, initiated by
our Group. The project aims at exploring the usage of hydrogen as an
alternate energy source to power mobile base stations. Currently, at
trial stage, if successful, this program has the potential of reducing
the usage of a regular power generator to Zero.
Communication Initiatives
With a current subscriber base of nearly 10 crore, there is an
opportunity to influence a large mass of people by promoting green
initiatives through our various communication programs and customer
service initiatives.
Your Company germinated the thought of ''Use Mobile, Save Paper'' in the
minds of millions of mobile users in India, with its aggressive yet
thought provoking campaign. The campaign was designed to highlight
numerous ways of saving paper, and thereby saving the green cover
necessary for the health of the planet, by using a range of mobile
based value added services in day-to-day activities to replace paper.
Your Company was amongst the first mobile operators in India to promote
V-Top up recharges for prepaid users, in a major way, which led to
virtual phasing out of paper-based recharge vouchers, ultimately
resulting in saving tonnes of paper.
Another recent and ongoing initiative is e-Bill, which is being
consistently promoted to ensure that more and more users opt for this
service, and contribute towards saving paper.
Breaking all conventions, your Company has conceived another innovative
program which is aimed at reducing plastic consumption on a large
scale. In a major overhaul of its logistics management, it introduced
the ''PICO'' card, which is a half- size plastic card that bears the SIM
card. Your Company is one of the first operators, globally, to
introduce the new PICO card which is expected to save over 90% of
plastic used in manufacturing regular cards.
Employee Based Initiatives
Your Company''s HR operations have all been enabled online for its over
7,000 employees, to ensure that there is minimal paper documentation.
This will save tonnes of paper and help maintain otherwise fragile
eco-balance.
The Company uses smart ICT solutions such as teleconferencing,
videoconferencing, web chats etc. for internal communication amongst
employees to minimize travel.
Driven by its socially conscious parent Group, your Company stays
committed to the cause of giving back to the environment and will
continue to drive the efforts towards environment sustainability by
reducing carbon foot print and energy consumption.
Awards and Recognitions
Your Company''s contribution and efforts is being recognised through
prestigious awards and recognitions in various fora. Some of them are
listed below:
- Your company has been ranked 1st in the Telecommunications sector and
ranked 12th in the country under India''s Best Companies to Work for –
2011 Study conducted by Great Place to Work® Institute, India, in
partnership with The Economic Times.
- Your Company has also been adjudged amongst the Top 3 companies in
Telecommunications sector in the Best Companies to Work For Study
conducted by Business Today.
- Your Company has been ranked 3rd in Best Investor Relations category
for Telecommunications sector (Nominated by Sell Side) in 2011 All-Asia
Executive Team rankings by Institutional Investor magazine in a sector
based survey, which had a participation of 522 portfolio managers and
investors, as well as 348 sell-side analysts.
- Brand Idea has been ranked the 4th Buzziest Brand by Agencyfaqs for
second consecutive year.
- Outdoor Innovation for Break the Language Barrier campaign won two
Silver Awards at the OAC (Outdoor Advertising Convention) Awards 2011
for Telecom Category for Multiple Executions and Best New Media Format
Innovation.
- The ''Use Mobile Save Paper'' campaign was one of the most awarded
campaigns with over 7 awards in various media awards like the EMVIES
2010, EFFIES 2010, Digital Media Awards 10-11 and Yahoo big Chair
Awards 10-11. The campaign was also creditably nominated at the Asian
Marketing Effectiveness Awards and it also won us the Olive Crown Gold
Award for the Green Brand of the Year at Goafest 2011.
- The Company also received the award for ''Most outstanding use of
Radio in an Ad campaign'' at the India Radio Forum 2011, Best Televised
Event - EEMAX Awards 2010 for ''Idea Rocks India'' and an award for Rural
Marketing Programme at the WOW Awards.
New Initiatives and Alliances
During the year under review, your Company made extensive progress on
the marketing and customer care front by introducing various innovative
products and services and also entered into various alliances. Some of
these are:
- IMAGINE promotions management system won the Prepaid Excellence
Awards 2011 for Best Product Innovation category. This system enables
the Company to launch targeted promotions for the prepaid subscribers
and ensures enhancement in take rate of the promotions.
- Matrix, the number and SIM management system is being rolled out to
enable seamless provisioning of numbers and starter packs in the
various network elements.
- Siebel CRM (Christened as Crystal) was successfully rolled out in the
Company. This is the largest Implementation of Siebel in a single
instance in the world. Crystal implementation has ensured, reduced
cost, increased customer satisfaction through better customer service.
- To facilitate higher adoption of 3G services by customers and to
provide better face-to-face service, 3G Experience Zones have been
established at the Service Centers across various cities. The 3G
Experience Zones are managed by trained Data Specialist equipped with
TV, Netbook, 3G compatible handset, NetSetter and device simulators for
demonstration and query handling.
- The Company launched a unique Interactive Voice Response rural
service called ''Behtar Zindagi'' in 16 regional languages, which
provides information on key requirements of the rural segment like
mandi rates, livestock, weather information, agriculture etc.
- Classified Services have been launched as a new VAS service, offering
access to Jobs, Real Estate, Matrimony, Best Deals etc.
- Idea continued on its ''What an Idea Sirji'' campaign and launched the
much appreciated ''Break the Language Barrier'' campaign. It was
supported with a unique service of ''Idea Language Helpline'' offering
instant translations in 15 Indian languages.
- The Idea 3G media campaign was launched to support Idea''s 3G rollout.
- Idea strengthened its brand through a series of media properties with
associations with Kaun Banega Crorepati, Koffee With Karan, Mission
Army and Grammy Awards on VH1, in addition to existing marquee
properties like Idea Filmfare Awards, Idea Present Citizens Journalist
and other regional media properties. The brand continued its
association with the Delhi Daredevils team in IPL4.
- Idea launched a unique National Inter School Skill fest called Kaho
Whats Your Idea in association with renowned Quizmaster Derek O Brien.
The program was very well received as it became one of the largest
National School Connect Programs in the country touching 2.5 Lakh
students across 3000 schools in 100 cities.
Subsidiaries and Joint Ventures
Your Company has the following subsidiaries and joint ventures:
Subsidiaries
- Aditya Birla Telecom Limited, holds 16% shareholding in Indus Towers
Limited and 100% shareholding in Idea Cellular Towers Infrastructure
Limited.
- Idea Cellular Services Limited, provides manpower services to the
Company.
- Idea Cellular Infrastructure Services Limited, is a tower company
owning towers in Bihar and Orissa service areas and provides passive
infrastructure services in these service areas.
- Idea Cellular Towers Infrastructure Limited (ICTIL), holds towers
de-merged from the Company. ICTIL has filed a scheme of arrangement in
the Hon''ble High Court of Delhi which provides for its merger into
Indus Towers Limited.
- Idea Mobile Commerce Services Limited (Formerly Carlos Towers
Limited), is engaged in the business of Mobile Banking, though it is
yet to commence commercial operations.
- Swinder Singh Satara and Company Limited, is engaged in the trading
of Data Cards, mobile handsets and Fixed Wireless Phones.
In terms of general exemption granted by the Ministry of Corporate
Affairs, Government of India, vide its circular
no. 2/2011 dated February 8, 2011, and in compliance with the
conditions enlisted therein, the reports and annual accounts of the
subsidiary companies for the financial year ended March 31, 2011 have
not been attached to the Company''s accounts.
The annual accounts and other related information of the Subsidiary
Companies shall be available for inspection during business hours by
the members at the Registered Office of the Company. The copies of
these documents will also be made available to the members upon
request.
Joint Ventures
Indus Towers Limited, in which Aditya Birla Telecom Limited (ABTL)
holds a 16% stake, is a joint venture between the Bharti group,
Vodafone Essar group and the Company (through ABTL), and provides
passive infrastructure services in 16 service areas.
Fixed Deposits
Your Company does not accept or hold any deposits and as such, no
amount of principal or interest on fixed deposits was outstanding on
the date of the Balance Sheet.
Corporate Governance
The Company is committed to maintain the highest standards of Corporate
Governance. Your Directors adhere to all the requirements as provided
in clause 49 of the Listing Agreement which relates to Corporate
Governance.
A Report on Corporate Governance as stipulated under clause 49 of the
Listing Agreement forms part of the Annual Report. A certificate from
the statutory auditors of the Company, confirming compliance with the
conditions of Corporate Governance, as stipulated under clause 49 forms
part of this report.
Management Discussion and Analysis
The Management Discussion and Analysis Report for the year under
review, as stipulated under clause 49 of the Listing Agreement is
presented in a separate section forming part of the Annual Report.
Board of Directors
Mr. Sanjeev Aga relinquished the office of the Managing Director of the
Company from the close of business hours on March 31, 2011. Taking into
account the significant contribution made by Mr. Aga during his tenure
as the Managing Director, in the growth of the Company, the Board
decided to avail his services as a Non-Executive Director on the Board
of the Company with effect from April 1, 2011.
Mr. Himanshu Kapania has been appointed as the Managing Director of the
Company for a period of 5 years with effect from April 1, 2011. An
abstract of the terms and conditions of his appointment and memorandum
of interest under Section 302 of the Act have been sent to the Members
of the Company in February, 2011.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. Kumar Mangalam Birla, Mr.
Gian Prakash Gupta, Mr. Sanjeev Aga, and Dr. Rakesh Jain retire from
office by rotation, and being eligible, offer themselves for
re-appointment at the ensuing Annual General Meeting of the Company.
Brief profile of the Directors proposed to be appointed / re- appointed
as required under Clause 49 of the Listing Agreement are annexed to the
Notice convening the 16th Annual General Meeting forming part of this
Annual Report.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo
The particulars as required to be disclosed pursuant to Section
217(1)(e) of the Companies Act, 1956, read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988, are given to the extent applicable in the Annexure ''B'' forming
part of this Report.
Particulars of Employees
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules,
1975, the names and other particulars of employees have been set out in
the annexure to this report. However, in terms of the provisions of
Section 219(1)(b)(iv) of the Act, the report and accounts, as therein
set out, are being sent to all the members of the Company excluding the
aforesaid information about employees. Any member, who is interested in
obtaining such particulars about employees, may write to the Company
Secretary at the Registered Office of the Company.
Directors'' Responsibility Statement
Your Directors affirm that the audited accounts containing the
financial statements for the Financial Year 2010-11 are in conformity
with the requirements of the Companies Act, 1956. They believe that
the financial statements reflect fairly the form and substance of
transactions carried out during the year and reasonably present the
Company''s financial condition and results of operations.
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
b) the accounting policies have been applied consistently and judgments
and estimates made are reasonable and prudent, so as to give a true and
fair view of the state of affairs of the Company as at the end of the
financial year and of the profit of the Company for that period;
c) proper and sufficient care has been taken to the best of their
knowledge and belief for the maintenance of adequate accounting records
in accordance with the provisions of the Companies Act, 1956, for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis.
Auditors
The Statutory Auditors of the Company, M/s. Deloitte Haskins & Sells,
Chartered Accountants, Mumbai, retire at the conclusion of the ensuing
Annual General Meeting. The Statutory Auditors have confirmed their
eligibility and willingness to accept the office on re-appointment. The
Board recommends their re-appointment for the next term.
Auditors'' Report and Notes to Accounts
The Board has duly reviewed the Statutory Auditors'' Report on the
Accounts. The observations appearing in the Auditors'' Report, including
on the sub-judice matter, does not call for any further
explanation/clarification by the Board of Directors under Section
217(3) of the Companies Act, 1956.
Acknowledgements
Your Directors wish to express their sincere appreciation to the
Department of Telecommunications, the Central Government, the State
Governments, bankers and all the business associates for their support
and look forward to continued support in future. Your Directors also
wish to place on record their appreciation to the employees for their
commitment in the progress of the Company.
For and on behalf of the Board
Place: Mumbai Kumar Mangalam Birla
Date: July 29, 2011 Chairman
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