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ITI

BSE: 523610|NSE: ITI|ISIN: INE248A01017|SECTOR: Telecommunications - Equipment
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Directors Report Year End : Mar '17    Mar 16

Dear Shareholders,

I am delighted to present, on behalf of the Board of Directors, the 67th Annual Report of your Company along with its Audited Statements of Accounts for the year ended March 31, 2017, together with the Auditors’ Report and Comments on the Accounts by the Comptroller and Auditor General (CAG) of India.

PERFORMANCE

The Company has achieved Sales of Rs.1611 Crores during the year 2016-17 against Rs.1253 Crores during the previous year 2015-16. This is remarkably the highest turnover in the past six years. The Company could achieve this turnover in spite of the fact that our major customers BSNL and MTNL have not placed orders like earlier years. With the grants from the Government of India, net profit for the period has increased by 21% to mark Rs.305 Crores for the year 2016-17 as against Rs. 251 Crores for the previous year, which is after considering a grant of Rs.360.71 Crores by the Government during 2016-17 and Rs.494.02 Crores during 2015-16.

After continuous loss for the last 13 years till 2014-15, our Company has achieved its turn around with this profit of Rs. 305 Crores for the second consecutive year taking into account the grant in aid received from the Government of India for revival. While considering profit/loss of the Company without any Government grants, ITI’s losses have drastically come down to Rs.56 Crores in 2016-17 from Rs.243 Crores in 2015-16 which is an incomparable organizational achievement.

The contribution (net of material cost) for the year 2016-17 is Rs.298 Crores, which is comparable for that of previous year at Rs.201 Crores. The company is making efforts to regain its strong leadership position in the telecommunications domain in the country. The company has plans to keep this sustainability going on and achieve the complete turnaround with the support of Government of India.

IMPLEMENTATION OF REVIVAL PACKAGE OF ITI LIMITED

The Cabinet Committee on Economic Affairs (CCEA), during February 2014, has approved the Revival plan of ITI by fund infusion of Rs.4156.79 Crores. This package consists of Rs.2264 Crores in the form of equity for financial assistance in all the plants of ITI for implementation of new projects and Rs.1892.79 Crores to be financial assistance as grant-in-aid. Out of Rs.2264 Crores, Government has released Rs. 192 Crores as first phase disbursement to the Company towards capital expenditure during 2014-15 and Rs.80 Crores has been released during 2016-17. Company has already submitted proposals for new projects worth Rs.500 Crores and has been allocated Rs. 200 Crores Capex in Budget estimation of 2017-18. Funds against this allocation are expected to be released shortly from the Government. Beyond this we have put up proposals for implementation of new projects for about Rs. 600 Crores.

For the projects planned under Rs.192 Crores plan the infrastructure up-gradation has been completed in all plants of ITI . Further the projects planned under Rs.80 Crores are in final stages of implementation. This support from the Government has helped ITI to enter into manufacturing of products in different market domains in a big way. We are manufacturing and supplying GPON equipments for providing 2 Mbps high speed Broad band connectivity to Gram panchayats across India under BharatNet project to BBNL & BSNL.

Under Revival plan, several projects have been already implemented at various manufacturing plants of ITI and some projects are under implementation. In addition to telecom products like G-PON (ITI has got orders from BBNL and BSNL for the supply of GPON equipments with C-DoT technology and is expecting orders from Railtel.), MLLN, Broadband equipments etc., Major impetus has been given for the manufacture of encrypted telecommunication equipments required for Defence sector. We have submitted tenders for Encryption equipments for Defence and we are confident of getting orders in the coming months. ITI has also ventured in to diversified products like OFC manufacturing, Smart card manufacturing, Data Centre, Products / solutions under IOT verticals etc. Solar panel manufacturing line for 18MW capacity is being installed at ITI Naini. Our existing Data Center is being expanded further to augment 1200 racks. ITI has already established 3 lines of HDPE manufacturing at Rae Bareli plant. In view of huge requirement, to enhance the capacity, one more line of HDPE pipe manufacturing has been commissioned at Palakkad unit.

ITI is in the process of installing one manufacturing line for Optical Fibre Cable (OFC) at Rae Bareli unit. Further optical fibre drawing and optical fibre cable manufacturing infrastructure is also being planned at Bangalore unit. ITI has taken TOT for manufacture and supply of Li-Ion batteries focussing for Telecom applications, Wi-fi solutions, Low power BTS with C DOT technology, Contract manufacturing activities for VSSC and other PSUs.. A 3-D printing facility has been commissioned at Bangalore unit. Other products identified for manufacture are Antenna, Radio modems, CLIP Phones, Smart Jammers, Anti intrusion systems, Set top box, Hand Held Terminals/devices, Smart energy meters, component screening facility, Mini PC etc.

The revival package provided to ITI has boosted our manufacturing strengths to a new height and we are confident of manufacturing various telecom and allied products to cater for domestic market demands under make in India vision of Government of India.

HIGHLIGHTS

The turnover for the year 2016-17 is mainly constituted from Network For Spectrum (NFS) project, ROs and CCOs Services, AMC for ASCON, Defense Business and it’s AMC, MLLN and SSTP Projects and it’s AMC, National Population Register (NPR), NGN, AMC for GSM-SZ, GSM-WZ, AMC for OCB, GPON, Data Centre and IT and IOT Solutions.

The Company has been working on very important projects National Importance. ITI has bagged turnkey orders for Supply, Installation, Commissioning and Maintenance of GPON Equipments covering about 38000 villages from BBNL & BSNL. This project will extend the High Speed broad band services on GPON platform to rural masses. Company has bagged purchase orders from BBNL for Rs. 205 Crores and from BSNL for Rs 130 Crores during the year 2016-17.

GPON is a prestigious project of national importance which is being executed by ITI against the “BharatNet Project” under the scheme of “Digital India”. ITI is presently executing G-PON order of BBNL with C-DOT technology. The ONT, OLT, Splitters, Accessories and IT equipments are being supplied by ITI Raebareli Plant, ONT being supplied by Mankapur Plant also and Solar Power Equipements are being supplied by ITI Naini Plant. ITI Bangalore plant is also ready to supply GPON equipments and a full-fledged repair centre is being setup at ITI Bangalore for catering the repair services.

ITI has deployed 400 teams for Installation and Commissioning of this nationwide network penetrating to the uncovered Gram Panchayats in the hinterland of remote Rural India. ITI is also discussing on the phase II of “BharatNet Project” and expect more orders from this mega project. This project provides Broadband connectivity to 2.5 Lakhs Grama Panchayats in India.

The other important project being executed is the NFS (Network For Spectrum) project worth Rs. 2985 Crores for the defense forces of India which involves Procurement, Supply, Trenching, Laying, Installation, Testing and Maintenance of Optical Fiber Cable, PLB Duct and accessories for construction of exclusive Optical NLD backbone and Optical access routes on turnkey basis with AMC in the Eastern and North- Eastern region of the country. ITI has won the order for these 2 zones, for deployment of optical fibre for around 13,500 Kms of length. Out of the total of 13500 kms cable laying, nearly 9000 kms have been laid in both F and G Packages. So, ITI has already completed 70% of the work and will be completing the entire project by this year end.

This year ITI have achieved another height as ITI Palakkad plant was part of the recent rocket launch of the ISRO. Palakkad plant has contributed to the manufacturing of electronic assembly for ISRO’s Geosynchronous Satellite Launch Vehicle (GSLV) Mark III, one of the prestigious missions of ISRO. The electronic packages fabricated at ITI Palakkad plant were part of the successful launch on June 5, 2017.

On the defense front, the Company has participated in the mega tender of ASCON Phase IV project and awaiting opening of the commercial bid. ITI has recently won a contract from BSNL for encryption products of the NFS project. We are expecting an order for Rs. 90 Crores from the defense for the supply of encryption products. We have also bid for the ASCON encryption tender and hoping to get good orders. In addition, ITI has orders for MIL PCM and other projects for defense.

The overall performance of the Company is as follows:

(Rs. in Crore)

Sl. No.

Products/Projects

2016-17 (Including ED & ST)

2015-16 (Including ED & ST)

1

NFS Project

700.16

535.28

2

ROs/ CCOs/ IT/ IOT

190.00

145.03

3

Defence / ASCON

181.35

117.93

4

MLLN / MLLN AMC/SSTP

154.85

42.64

5

GSM WZ Projects / AMC

81.11

88.43

6

GSM - SZ AMC

76.25

65.11

7

NPR / SECC Projects (Data Collection)

70.59

104.63

8

NGN / C5 / Ph2

35.86

63.22

9

OCB AMC Business

32.86

31.46

10

GPON

22.51

6.66

11

Misc. Services

19.77

29.50

12

Data Centre

19.13

13.96

13

Banking / Div. Prod./Cont.Mfg

11.23

0.00

14

SMPS & Repairs

5.73

6.77

15

SATCOM & PCM MUX & TELESET

5.24

0.48

16

GSM - MTNL

2.44

2.16

17

NPR - Smart Card

1.61

0.00

18

WLL- CDMA Infra

0.00

0.08

Total

1610.69

1253.34

PROJECTS EXECUTED DURING THE YEAR 2016-17

- Next Generation Network (NGN)

ITI Bangalore plant successfully executed the purchase order worth Rs.35.86 Crores for NGN products received from BSNL.

- National Population Registration (NPR) / Aadhaar Seeding and Socio Economic & Caste Census (SECC) projects

ITI is one among the consortium of three PSUs (other two PSUs being M/s BEL and M/s ECIL) for the execution of prestigious National Population Register (NPR) Project under Ministry of Home Affairs (MHA). The job involves collection of citizen data including biometrics.

The Aadhaar seeding work of Kerala has also been awarded to ITI and the work started in July 2016 ITI has seeded nearly 330 Lakhs Aadhaar Numbers to the NPR data base at 75 Centers in 14 districtof Kerala. The Projects was completed in all centers during December 2016. The above consortium is also executing SECC Projects for the Ministry of Rurual Development (MORD). ITI Palakkad has executed total purchase orders worth Rs.70.59 Crores during the year.

- GSM

ITI has implemented GSM Projects in BSNL West Zone and MTNL-Mumbai in technology alliance with M/s Alcatel-Lucent and in South Zone in technology alliance with M/s Huawei. The Annual Maintenance Contract related works have been carried out in these zones for total value of Rs.159.80 Crores.

- Defence projects

ITI is the leader in supplying encryption equipments for the secured communication in the Defence networks. In the year 2016-17, ITI had executed orders worth Rs.76.20 Crores from Defence sector for IP encryptors, NGN (BU), 5C telephone instruments etc.

- Fiber Cable Laying for Network for Spectrum (NFS)

ITI Limited is executing the NFS Cable laying Project in Eastern and North Eastern states of the Country. Cable Laying and services worth Rs.395.91 Crores by Raebareli Unit and Rs.304.25 Crores by Mankapur unit have been completed during the year 2016-17.

- MLLN and SSTP Projects & AMC

MLLN equipment provides dedicated path between two points which carry voice, data and video and BSNL is providing leased circuits to banks and other organizations using MLLN. Palakkad Plant has received order for Rs.134 Crores during 2016-17. Palakkad has also implemented Hardware upgrade of SSTP equipment to overcome the obsolescence of some cards used in the equipment, Capacity upgrade of Mobile Number Portability functions and Software upgrade to match the global levels for future addition of features. Palakkad Plant has executed the orders received from BSNL for MLLN and SSTP Projects and its AMC for total value of Rs.154.85 Crores during the year.

- Giga-bit Passive Optical Network (GPON)

ITI Rae Bareli Plant has executed order worth Rs. 14.26 Crores and NainiPlant has executed order for Rs.8.25 Crores during the year.

- Switch Mode Power Supply (SMPS)

ITI Rae Bareli Plant is manufacturing SMPS systems and executing the orders from BSNL / MTNL. Order value worth Rs.5.73 Crores has been executed by Raebareli Unit.

- Data Center & IT Projects

ITI has already established Tier 3 state-of- art Datacenter at Bangalore on PPP model. Presentlythis Data Center is fully booked for co-location services. ITI is also playing a major role in implementing IT projects.

The Government is pursuing E-Governance projects for taking the benefit of IT to the Village Panchayats and a substantial budget provision has been made by the Government for the same. ITI is aggressively pursuing this market segment. ITI has executed SWAN (State Wide Area Network) projects of Mizoram. ITI is also executing Accelerated Power Development and Reform Programme (APDRP) of Tamil Nadu state.

- Maintenance Contracts for ASCON and OCB Projects

ITI had earlier established the ASCON network for Indian Army. ASCON AMC order worth Rs 105.15 Crores has been executed by NSU. ITI was also the major supplier of fixed line switches to BSNL and MTNL. Currently, ITI has been extending maintenance assistance to to BSNL and MTNL for OCB exchanges, OCB order worth Rs.32.86 Crores has been executed during the year.

- E-Tendering Business, Network Management, CCTV Surveillance Orders

Regional Offices of ITI have executed various orders viz. E-Tendering Business, Network Management, CCTV Surveillance Orders, Video Audio Infra, WiFi establishment and othr miscellaneous orders for total value of Rs.190 Crores during the year.

FINANCE

The performance of the Company for the year 2016-17 as compare to the previous year is as follows

(Rs. in Crs)

Sl. No.

Particulars

2016-17

2015-16

i

Sales including services

1611

1253

ii

Value of Production

1629

1253

iii

Loss/Profit before tax

305

251

iv

Loss/Profit after tax

305

251

v

Financing Expenses

153

157

vi

Depreciation

17

13

vii

Capital Employed (Net Fixed Assets working capital)

1812

460

viii

R&D Expenditure

16

16

SHARE CAPITAL

The Cabinet Committee on Economic Affairs (CCEA), on 24th February 2014 has approved financial assistance, based on the recommendations of Board for Reconstruction of Public Sector Enterprises (BRPSE) to an extent of Rs. 4156.79 Crores for the revival of the Company. The fund infusion will be capital grant of Rs.2264 Crores in the form of equity and the balance amount of Rs.1892.79 Crores in the form of grant-in-aid.

The Company has received Rs.192 Crores during February 2015 and Rs.80 Crores during November 2016 and Rs. 100 Crores during July 2017 from Ministry of Communications and IT for meeting the expenditure towards CAPEX implementation of various projects in its various plants. The Company has allotted 27,20,00,000 equity shares of Rs. 10 each at par to President of India.

Accordingly, the paid up Equity Share Capital as on 31st March 2017 was Rs. 560,00,00,000. Government of India vide letter no. 20-36/2012- FAC-II dated 20-07-2016 has communicated the approval of Cabinet Committee on Economic Affairs to transfer requisite number of shares of President of India to Special National Investment Fund to meet SEBI’s 10% Minimum Public Shareholding requirement. Accordingly, 2,72,00,000 equity shares of Rs 10 each are to be transferred from President of India to Special National Investment Fund (SNIF) for maintenance of SEBI’s 10% minimum Public shareholding

During the year under review, the Company has not granted stock options or sweat equity. As on 31st March 2017, none of the Directors of the Company hold any shares of the Company.

DIVIDEND

As your Company still have accumulated losses the Directors are not in a position to recommend any dividend for the year 2016-2017.

HIGHLIGHTS OF THE PRODUCTION PLANTS AND SERVICE UNITS BANGALORE PLANT

Bangalore plant achieved a turnover of Rs.217.60 Crores (with ED & service tax) during the year 2016-17 registering a profit of Rs.6.22 Crores.

Major Projects / Orders completed in FY 2016-17

The supply consisted of NGN supplies worth Rs.35.86 Crores under the Government’s prestigious Digital India Initiative. Under services, the unit executed GSM-SZ AMC of Rs.76.25 Crores, Defence AMC of Rs.13.65 Crores and generated revenue of Rs.19.13 Crores from Data Centre Business.

The Unit also supplied Defence Equipments worth Rs.62.55 Crores, ISAT for CRPF - Rs.1.57 Crores, Telephones for Defence and BSNl worth Rs.0.79 Crores; Primary MUX for BSNL for Rs.2.58 Crores, Contract Manufacturing and Reliability Lab services Rs. 0.78 Crores, and Spares Rs.0.01 Crores. Revenue of Rs.10.38 Lakhs earned by way of in-plant Training during the Financial Year.

Under the revival plan Phase I, 6 projects viz Legacy secrecy projects, 1 Gigabit encryptor, Multichannel Encryption Unit, PSU Business, SCADA, MUX, Telephone, Data Centre and IT Projects are implmented. All the manufacturing areas viz. IGI, Component Test Labs, PCB Plant, SMT Line, Central Machine Shop, Coil Winding, Injection Moulding, Inspection and Testing, Material Handling, Reliability Chambers, Air conditioning Plants, Power backups like UPS, DG sets, Safety Equipments, Servers, Desktops, Laptops etc. were upgraded with modern equipments to take care of latest technology in Electronics Manufacturing. Similarly, R&D upgraded the research facilities by inductin latest development tools for future requirements. R&D took on development of Multi channel Encryption Units (MCEU), Gigabit Encryptor, Optical transport Unit (OTU1 & OTU2), 1G & 10 G Interface for NFS secrecy, etc.

Future Outlook

Under new revival projects, establishment of Data Centres at Bangalore & Naini, Development of Radio Modem, CLIP phones, Antenna Manufacturing, Creation of EMI/EMC Chamber, Poly jet 3D Printer, etc. are under implementation. Demo samples are being validated for offering to TSEC certification to BSNL. ITI is also venturing into new smart city / IOT project.

PMKVY

Bangalore plant has set up a state of art skill development scheme called the Pradhan Mantri Kausal Vikas Yojna (PMKVY) to cater to the skill development for the needy to impart Hands on Training, GE certified course at the Centre of Excellence CoE. 70 students have been trained so far on the OFC splicing technique and it is matter of pride that all the students who attended the online test have cleared the exam.

IoT

Under Centre of Excellence (CoE), Bangalore plant has set up a centre where ITI will develop solutions and showcase of Internet of Things (IoT)namely Smart Environment, Smart Lighting, Smart Home/Office, Smart Health, Intelligent Transport System, SCADA Solutions in Water, Gas & Electricity, RFID Based solutions, Content Filtering Solutions for ISP, Education Sector etc. ITI has entered into teaming agreement with number of IoT companies including some start-ups firms and plan to showcase the smart solutions from these companies in this facility. ITI has tied up with many technology providers for offering various solutions based on IoT, which go into building smart infrastructure for smart cities and also for augmenting the Digital India initiative of Government of India. Exploring business from various Government bodies like MoUD & State Government, Agricultural Board, Pollution Control Board, Water Supply Board, Municipal Authorities etc.

3D printing

3D printing is a revolutionary manufacturing method by which we can create various types of Three Dimensional (Solid) parts using a CAD file with a single machine Bangalore Plant has procured Fortis 450 3D printer and installed.

Data Centre

ITI is setting up a Data Centre with a rack space of 24,000 Sq ft at Bangalore Plant. There are lot of scopes to get good orders from Government agencies. The plan is to set up the Tier III Data Centre (Uptime 99.982%), at Bangalore with a DR site at Naini and vice versa. ITI Data Center is an endeavor to provide customer-centric services to Government Organizations and Corporate entities. The expected potential customers are Banks, Financial services and Insurance (BFSI) sector, Government organizations / PSUs, Defense Ministry and Defense Organizations, Medium, Small and Micro Scale Enterprises (MSME), Educational Institutions. 1000 racks Data Center at Bangalore and 200 racks Data Center at Naini has been planned. Data Center with First 300 Racks is planned to be put live by October-2017.

TAG - ITI Wallet

This is a cashless secure payment service under Digital India initiative of Government of India “Mera Mobile - Mera Bank”. This is called TAG-ITI MOBILE WALLET which has a huge popularity especially after the Demonetization move. All the transactions are executed and monitored by our Data Centre in Bangalore plant. ITI is the first manufacturing PSU to have entered into cashless transaction with this “TAG-ITI”.

Aadhaar Based Authentication Services on SaaS Model

With the ‘Digital India’ initiative gaining ground and the increase in demand for Aadhaar based authentication services, ITI has ventured into the business of providing Aadhaar based authentication services based on Software as a Service (SaaS) model to address various segments. Till date, over 98 Crores Aadhaar numbers have been generated by UIDAI and 97% of Adult population has Aadhaar Number.

ITI shall be playing the role of providing ASA (Authentication Service Agency) & KSA (KYC Service Agency) services to the concerned departments of Government. of Gujarat who sign up with UIDAI as AUAs (Authentication User Agency) and KUAs (KYC User Agency). Similarly ITI will provide support for the AUA/KUA entities to integrate Aadhaar services in their core plaform based on the business requirements. The ITI ASA / KSA solution / platform will be hosted in ITI Data Center in Bangalore.

ITI is also focusing on ICT projects under Digital India. We have bagged many orders for various services like AADHAAR authentication, e-signature, e-KYC under different projects like e-mitra, e-gram from various State Governments and nationalized banks.

PCB Plant

A state of art PCB manufacturing plant has been set up in Bangalore plant and inaugurated by DDG-SU on the 18th January, 2017.

MoUs signed during the year

Bangalore Plant has signed about 4 MoUs for development manufature and supply of Radio Modem, CLIP phones, Antenna and Ruggedised MUX equipment.

Tender Addressed

GSM 2G, IP Encryptors, BEU, PCM MUX, ETS04, Contract manufacturing for BHEL, CDAC, CDoT, LRDE,BEL, ISRO etc.

Measures taken for energy conservation

Energy Consumption for the year is 2,276,456 units, which is only 10% higher than previous year consumption inspite of the fact that upgradation of infrastructure and installation of various equipments under revival plan are carried out during the year 2016-17.

With the upgraded infrastructure for Electronic Manufacturing in place and Rs.3000 Crores worth of tenders on the anvil, the plant is all set for a historic turn around.

MANKAPUR PLANT

Mankapur Plant including GSM WZ & MTNL has achieved a turnover of Rs.389.45 Crores (including ED & Service Tax) which is highest in the last eleven years.

Projects / Major orders completed during 2016-17

Prestigious NFS project for package F for construction of exclusive optical NLD backbone and optical access route on turnkey basis for Defense network is being executed by ITI Mankapur. Additional cable colaying work is also started.

Revival Projects

The Plant has upgraded its infrastructure under revival plan during the financial year. The manufacturing for ONT 11 (GPON equipment) has commenced in February 2017 and 4104 nos. of ONT 11 have been produced and delivered to Raebareli unit against BBNL order During the year, the unit obtained for the first time, orders worth Rs.33.50 Lakhs for contract manufacturing from C-DoT Bangalore.

BBWT (Wi-Fi) PRODUCT

Wi-Fi products are emerging as a good business opportunityin the Indian communication market. Broadband Wireless Terminal (BBWT) of C-DOT is an effective solution to provide broadband services using Wi-Fi technology to rural, urban and semi urban areas. It is an ideal solution for railway stations, schools, warehouses, hotels and other enterprises needing to extend managed wireless LANs outdoors where Ethernet cabling is not possible. It operaters in 2.4 Ghz and 5.8 Ghz license free band and supports optical and electrical Ethernet 10/100/1000 Mbps interface for backhaul connectivity. The Plant has installed the equipments for manufacturing of BBWTWiFi systems.

Low Power BTS

Under USO Fund Low Power BTS of 2W and 5W capacity are to be installed in uncovered rural/ remote areas/ villages across the country, especially in North Eastern part of India. The compact BTS of C-DOT is a potential solution for providing GSM Network in these areas. The equipment for manufacturing of Low Power BTS is planned to be installed in Mankapur by September 2017.

Skill Development Programme

Under the Skill Development Programme, Mankapur Plant has adopted “Government. Industrial Training Institute, Mankapur” in September 2016. and have imparted training to 371 stdents. Besides this, training for skill up-gradation of Lecturers of Government. Polytechnics and seminar on Management of Waste Electrical, Electronics Equipment (WEEE) was also conducted by unit HREDC during the year.

Hospital Information System (HIS), an application to handle the services of ITI hospital has been developed in house and successfully deployed by ITI Computer Division. HIS includes service modules like OPD, Referrals, Emergency, Common Services and Rostering besides Store management, Indoor management, User management and Master data setup.

Measures taken for energy conservation

a. Installation of LED street lighting in factory and colony area. - 300 Nos.

b. Retrofit replacement of LED tube lights in place of conventional FTIis in factory area 300 Nos.

c. Surrendering contract demand of factory connection by 1300 KVA in August 2015 & another by 1200 KVA in May 2016 and the present contract demand of factory is 2000 KVA.

d. Close monitoring of daily power consumption of factory and colony.

e. The energy conservation efforts has resulted in a saving of approx. Rs. 105 lakhs in 2016-17 in comparison with 2015-16.

RAE BARELI PLANT

Rae Bareli Plant achieved a performance of Rs. 435.67 Crores, during the year 2016-17 by execution of NFS Project, GPON equipment supplies, supply of SMPS equipments and GSM Franchise business.

Major Orders received up to 31st March 2017

Out of the purchase orders received from BBNL towards GPON Project for Rs. 205 Crores and from BSNL for Rs 130 Crores during the year 2016-17, Purchase order value of Rs.114 Crores and Rs 47 Crores respectively are allocated to ITI Raebareli for supply of ONT,OLT, Splitters , accessories and IT equipments.

GPON Project

Giga-bit Passive Optical Network (GPON) is a family of products for high speed broadband communication through fibre backbone. It caters to variety of services, like voice, video, data, internet etc. Active transmission equipment in GPON network consists mainly of Optical Line Termination (OLT) and Optical Network Unit (OnT). ITI Raebareli plant has supplied 7635 OnT and 03 OLT up to 31st March 2017.

PLB HDPE PIPE Project

PLB HDPE (Permanently Lubricated High Density Poly-ethylene) Pipe is used for laying of optical fiber cable (OFC) underground. ITI Raebareli had already set up one line of PLB HDPE Pipe manufacturing and obtained TSEC. Further, two additional lines of PLB HDPE Pipe manufacturing have been installed. The plant has received an educational order of Rs. 48 Lacs from BSNL and obtained BPC.

FUTURE OUTLOOK Li-Ion Battery Project

Lithium is a good conductor of electricity and can combine with many other metals to form alloys. Lithium ion batteries provide more and more energy in a smaller container Lithium-ion batteries have many applications like cell phones, FTTX installations, remoteterminals (such as in FTTX installations), access networks, BTS (Base Transceiver Stations for wireless networks, cable networks, central offices, fuel cell powered system cars, artificial pacemakers, PCs, laptops, audio players, clocks, toys, cameras, automobiles etc.

ITI has entered into agreement with M/s EXICOM for implementation of this project for Telecom application. ITI will be fully responsible for marketing, manufacturing, installation and maintenance support.

Optical Fiber Cable(OFC) Project

An optical fiber cable is a cable containing one or more optical fibers that are used to carry light. The optical fiber elements are typically individually coated with plastic layers and contained in a protective tube suitable for the environment where the cable will be deployed. Different types of cable are used for different applications.

Fiber optic cables find many uses in a wide variety of industries and applications. Some uses of fiber optic cables include Medical, Defense/Government, Data Storage, Telecommunications, Networking, Industrial/ Commercial, FTT-X technology.

ITI Raebareli has ordered Machines and equipment worth Rs. 40 Crores for implementation of this project. Optical Fiber Cable (OFC) manufacturing plant is under installation and commissioning.

PALAKKAD PLANT Performance

The Palakkad Unit has achieved a turnover of Rs.231.71 Crores. during the year 2016-17 registering a profit of Rs.131.29 Crores. The Palakkad unit has set an ambitious production target of Rs.307 Crores for the year 2017-18 for which the entire Palakkad team is making all out efforts.

Major Projects / orders completed in Financial Year 2016-17

The unit has completed the prestigious identity projects such as National Population Register (NPR) awarded by Office of RGI and Marine Fishers Identity Project (MFID) from Department of Fisheries. The Unit has also successfully completed the work of Socio Economic Caste Census (SECC) for the Ministry of Rural Department, which helped them to have a unified database which can be used for availing the various benefit schemes. ITI has completed the supplies of Biometric Handheld Terminals to Office of RGI and Fisheries departments for the reading and authentication of Smart Cards supplies against NPR and MFID projects. The unit has also completed the order of NPR Aadhaar seeding project in Kerala for the order value of Rs.11.00 Crores.

ITI Palakkad also executed SSTP Upgrade Project worth Rs.37 Crores for BSNL and received Purchase Order of Rs.134 Crores from BSNL for MLLN Project out of which order worth Rs.75 Crores is executed during 2016-17. AMC orders worth Rs.40 Crores of MLLN and SSTP projects were successfully executed. Excellent technical support had been provided to BSNL and MTNL for MLLN, SSTP and OCB projects.

Defence / Contract Manufacturing

The focused and result oriented efforts in the Defence and Contract manufacturing area had been made during the year 2016-17. A leap in the business activities with VSSC has been made with the facility accreditation of SMT assembly line, Conformal Coating, Testing of some avionics packages and Component Screening. Subsequently accreditation for manufacturing and testing of 21 avionics packages and screening of 2 types of components received from VSSC. Purchase Order are continuously being received and executed within the stipulated delivery schedules.

VSSC, due to their increased launch vehicle requirements, are planning to outsource various activities as an end to end production mode to approved work centres and ITI Palakkad is qualified as one among them. The manpower for space quality work are trained from VSSC to meet the stringent quality standards for space applications. Packages manufactured and tested at ITI Palakkad are successfully flown to space in various launch vehicles (PSLV & GSLV) of ISRO including the recent GSLV Mark III mission which was a major milestone of ISRO. ITI Palakkad is the only approved work centre by VSSC for manufacturing of RMSA (Remote Mount Safe Arm), which is a package used to trigger the launch vehicles in to space. To meet the requirements of Mil and flight grade bare PCBs, the PCB plant is being upgraded with the state of the art machineries and the accreditation process is in progress. Manufacturing orders also increased with the enhancement of customer base with M/s BHEL, M/s CDOT, M/s CDAC and M/s BEL for contact manufacturing and M/s BEML for cable harnessing. Orders received against Defence and Contract manufacturing are worth Rs.2.5 Crores , which is much higher than previous years.

Future Outlook

As part of the revival project, ITI Palakkad is in the process of getting VISA/Master Certification against which the necessary infrastructure setting for Smart card personalization, surveillance requirements as per the VISA/Master specifications etc. is in progress. Once certified, ITI will be the first PSU to venture in the EMV card personalization domain for supplying EMV chip cards for the banking requirements.

The unit has implemented in Phase I, new projects such as Component screening, Smart cards and MLLN. Against the second phase, the projects such as Smart Cards, Component screening, PCB plant upgradation, HDPE pipe, Smart Energy meter, Set top box, setting up of Repair centre, Handheld terminals, Mini PC etc are progressing to address the market requirement.

The installation & commissioning of machines for HDPE pipe is in the final stage of completion and commercial production is scheduled by November 2017.

ITI has entered into an MoU with M/s CDAC, Thiruvanathapuram for the Transfer of Technology (ToT) and manufacturing of Smart Energy Meter. ITI has signed an MoU for the ToT and manufacturing of Aadhaar Authentication Terminals. ITI has also developed Mini PC under the brand name “ITI Smaash” for which the marketing efforts are in progress.

E-governance Project Initiatives

Against e-governance projects, ITI has submitted the proposal to Kerala State Government against the RFP for Fair Price Shop (ARD) automation under end-to-end computerization of Public Distribution System (PDS) and deployment of e-POS devices in Kerala. ITI has also submitted the techno-commercial proposal to Kerala State Road Transport Corporation (KSRTC) for Intelligent Transport Systems alongwith M/s CDIT, Thiruvanathapuram as the partner.

Additional Skill Acquisition Programme

Kerala Government has selected Palakkad Unit as one of their Training Service Provider of ASAP Scheme (Additional Skill Acquisition Programme) and the Unit has conducted training for one Batch of 29 students for Pick and Place and two batches of around 30 students each for PCB Course. The Unit could generate a revenue of approximately Rs 9 lakhs against this.

QMS/ EMS

The Palakkad Unit is certified with ISO 14001: 2015 for Environment Management System. The certification audit for Quality Management System and Environment Management System with ISO 9001: 2015 standard is completed.

NAINI PLANT

The Plant has achieved a turnover of Rs. 8.25 Crores including ED & ST for the year 2016-17 against supply of Solar equipments for GPON order received from BBNL.

During 2016-17, ITI Naini, being the designated unit for Solar Panel and Transmission equipment, has geared up for addressing Solar Segment and implementation of Revival Plan Project.

Major Orders and Projects Solar Project

Against the purchase orders received from BBNL and BSNL for GPON Projects, ITI Naini Plant is supplying Solar Power equipment. ONT (Broadband Access equipment), which is part of the GPON equipment will be installed in Gram Panchayats. The Solar Power equipment, which is being produced by ITI Naini will provide seamless power to the ONT.

ITI Naini has successfully received Type Approval Certification (TAC) for Solar Power Equipment from BSNL-QA, Bangalore. The Solar modules (60Wp) offered with the product has been successfully tested by National Institute of Solar Energy (NISE), Gurugram and Conformity Test Lab, New Delhi as per BSNL QA test Plan.

Out of present BBNL order quantity of 20000 numbers. ITI Naini has dispatched 5012 numbers of Solar Power Equipment till March 2017.

ITI also Participated in Railtel tender for supply, services and AMC for SPV based solar systems required for GPON. ITI Naini expected to get order for SPV system for GPON.

ITI received order of Rs. 65 Lakhs from M/s L&T construction for Supply of System for project & Work order is awaited which will lead to total Purchase Order value of Rs 75 Lakhs for the project. This will open a new window for Grid Connected SPV System for high KW/MW capacity. Efforts are being made to get similar order from other PSUs for Grid connected Rooftop Solar Power plant.

Future Outlook

ITI Naini has initiated various activities of development of solar application based products like Charge Controller, LED Street Lights and other LED based lighting products.

The Plant has geared up for addressing the opportunity in renewable energy sector and will supply Crystalline Solar Modules to various schemes of Ministry of New and Renewable Energy (MNRE). ITI Naini already has 5 MWp installed capacity of Solar Panel Manufacturing ITI make modules (from 30 Wp to 300 Wp) have been qualified in stringent Test of IEC and has been certified for IEC 61215, 61730, 61701) by M/s UL India, Bangalore.

To meet future requirement, Naini has planned under Revival Plan Phase-II, to augment manufacturing capacity by adding 18 MWp Automatic Solar Panel Manufacturing Line. Procurement & installation of equipment for 18 MWp Manufacturing Line, is in progress. Civil, Plant & other related activities are in advance stage of completion. Moreover, Tabber- Stringer machine has been incorporated in the existing 5 MWp line to enhance automation under Revival Plan Phase-I.

ITI is planning to participate in 1000 MWp tender for Grid connected Roof top Solar Power plant on Government buildings floated by Solar Energy Corporation of India (SECI), a PSU under Ministry of New and Renewable Energy (MNRE). ITI is expecting for 50 MWp capacity in the tender. A consortium agreement has been signed with M/s Cambridge Energy Resources, Gurugram, Haryana, for this project.

Gyansetu project

ITI Naini has signed an agreement with Center for Development of Telematics (CDoT) & Center for DevelopmentofAdvanceComputing(CDAC)BangaloreforTransferofTechnologyofGyanSetuProject,Hybrid Solar Charge Controller suitable for Telecom application and On grid Solar Power Conditioning Unit (PCU) of various rating for Solar Rooftop application. The Gyansetu project will extend the services of Digital India PrograminruralareasthroughCommonServiceCenters(CSC).Thisprojectwillproviderealtimeinformation about the Government services to citizen, (PAN Card, AADHAR, Election Card, Passport) Education, Health, Mandi rates, weather forecast, Agriculture information, Land records (Khasra/Khatauni) etc.

Carrier Ethernet

Naini unit is also exploring to address Carrier Ethernet Segment which is used for Metro/Aggregation Network, as a Revival Plan Project.

Data Center

Purchase order has been placed for design and implementation of Data Center. Building has also been identified for Data Center (Disaster Recovery Site)

Quality

For Solar Manufacturing, 18001 certification for Occupational Health and Safety Services (OHSAS) and 50001 certification for energy systems are mandatory. ITI Naini has acquired 18001 certification from SOCOTEC in March 2017 and is valid up to March 2020.

Skill Development Training

15 days Skill Development Training Program of Solar Module Assembly Technician conducted for 4 batches and 90 trainees were trained & revenue of approximately Rs. 2.06 Lakhs generated and an amount of Rs.1.0 Lakh spent for conducting on-line exam for trainees through TSSC. Six months specialized industrial training conducted for 80 trainees.

4 to 6 weeks Vocational/summer training was conducted for 340 Degree/Diploma/MBA students and revenue of Rs.6.64 Lakhs generated. Five In-house training programs and 2 External training program organized for total 52 training man-days with in the training budget of Rs.0.35 Lakh (For In-House and External)

Energy Conservation

During the year 2016-17, 12031 KVAH saving in consumption was achieved as an Energy Conservation Measure.

SRINAGAR PLANT

The Plant is gearing up for Skill Development activitites for the benefit of local youth, State Government employees and other sections of the Society. Some areas of the Plant is renovated to set up Skill Development Centre.

NETWORK SYSTEMS UNIT (NSU)

This non-production Unit with core strength in Turnkey Projects execution and Annual Maintenance works has a track record of steady growth and continuous profitability.

In the Financial year 2016-17, NSU has given better performance by achieving a turnover of Rs.138.01 Crores and registering a profit of Rs.28.50 Crores Revenue from AMC for ASCON continues to be the major contributor while OCB 283 AMC for BSNL and MTNL contributed Rs. 31.37 Crores For the current fiscal, OCB 283 AMC for BSNL and MTNL have been renewed and are together valued at Rs.26.74 Crores Hence focus is now on generating maximum turnover under AMC for ASCON which is valid till the end of 2019. NSU is also geared up to involve itself in a big way for Installation and Commissioning of GPON equipments. The Unit has initiated steps to migrate from ISO 9001-2008 to ISO 9001-2015 Certification Standards.

HIGHLIGHTS OF REGIONAL OFFICES (ROs)

Performance of Reginal Offices for the Financial Year 2016-17 is Rs.190 Crores (with Service Tax) which is about 31% higher than the last fiscal with a profit of Rs.2.77 Crores Sundry Debtor realization during 2016-17 is Rs.120.56 Crores which is 34% higher than the last fiscal. Orders bagged in 2016-17 amounts to approximately Rs.216.13 Crores. As on 01.04.2017, Orders worth Rs.76.31 Crores are one hand.

New Projects taken up in 2016-17

The following Projects were taken up by Regional offices during the year 2016-17.

1. Integrated University Management System (IUMS) for Universities of total approximately value Rs.18.29 Crores - RO Delhi.

2. CCTV Surveillance Systems for Ministry of Finance (North Block), Ministry of Agriculture (Krishi Bhawan) and HP Cooperative Bank of approximately total value Rs.17 Crores. - RO Delhi.

3. Wi Fi Zones establishment for Government Colleges in Punjab & Haryana Mandi Board of approximately value Rs.3.62 Crores.

4. Wi Fi Zones establishment at important tourist spots in the state of Uttarakhand for the Government of Uttarakhand of approximately value Rs.19 Crores. - RO Lucknow.

5. ICT Infrastructure creation and Implementation of Hospital Management Systems for AYUSH / AIIA of approximately total value of Rs.9 Crores. - RO Lucknow.

6. Audio Video Infra for Lucknow Development Authority (LDA) of approximately total value Rs.29.50 Crores - RO Lucknow.

7. CCTV Surveillance systems for Allahabad University campus & 49 Warehouses of CWC of approximately total value Rs.4.50 Crores - RO Lucknow.

8. Integrated University Management System (IUMS) for HNBG Central University of approximately value Rs.2 Crores - RO Lucknow.

9. Digital Emergency Announcement & Audio Video System for UP Special Task Force of approximately value Rs.2 Crores - RO Lucknow

Major orders successfully completed in 2016-17

1. e Tendering business of value Rs.43 Crores - RO Delhi, Bangalore, Kolkata & Lucknow.

2. RO Hyderabad has successfully implemented the Network Management System (NMS) project for BSNL.

3. RO Lucknow has successfully established the Audio Video Infra for Lucknow Development Authority (LDA).

4. RO Delhi has completed Integrated University Management Systems (IUMS) orders of value Rs.12.0 Crores

5. RO Delhi has completed CCTV Surveillance orders of value Rs.16.0 Crores

6. RO Delhi has completed Wi Fi Zones establishment orders of value Rs.3.62 Crores

Future Prospects

1. Ministry of Urban Development has assigned the task of implementation of an ICT based solution to capture real time feedback from community & public toilets in 12 States / Union Territories - IoT business.

2. ERP / Integrated University Management Systems for universities in Bihar.

3. GIS activities for UP Buildings & Other Construction Workers Welfare Board.

4. e Classrooms for Medical Colleges under Ministry of Health.

5. CCTV Surveillance system for District Courts in Bihar.

Putting all out efforts to address & grab the business from segments like Smart City,IoT& e Market Place etc.

RATING IN MEMORANDUM OF UNDERSTANDING

The Company’s rating for the year 2015-16 is “Good” with a positive score of 60.72. The company has signed Memorandum of Understanding with the Administrative Ministry for sales turnover of Rs.2000 Crores (at Good level) for the year 2017-18.

FUTURE OUTLOOK

The following projects are planned for implementation under revival plan.

HDPE Pipe and Optical Fiber Cable Manufacturing

Laying of Optical Fiber Cable (OFC) underground is to be carried out through PLB HDPE (Permanently Lubricated High Density Poly Ethylene) Pipe only. The demand for HDPE Pipes has quickly risen due to several Government projects like, NFS, ASCON, BharatNet etc. As per Government of India initiative for “DIGITAL INDIA” programme, optical fibre network is to be established for high speed internet access across the country Therefore, there is huge demand of PLB HDPE pipes. Apart from BSNL and BBNL, other service providers are also requiring such type of PLB HDPE pipes for their teleco service. In addition to the existing one manufacturing line for HDPE, two more lines have been commissioned at ITI Raebareliplant An educational order for 100 KMs HDPE pipe to BSNL has successfully completed by RaeBarei unit. The plant is now ready for bulk production. Considering the very huge market available for this product, ITI is in the process of establishing one more line at ITI’s southern unit at Palakkad and will be commissioned shortly. Similar to HDPE pipes, as indicated above there is huge demand for optical fiber cables also. It is expected that the existing old copper cables used for India’s Telecommunication network will be replaced with OFC in future. And also therewill be huge demand of OFC for BhartNet phase III. Looking in to OFC demand expected in the country, Company is in the final stages of commissioning one line OFC manufacturing at Raebareli unit. Further optical fibre drawing and optical fibre cable manufacturing infrastructure is also being planned at Bangalore unit.

- Encryption Products for Defence

The encryption products for Defence communication networks are being designed by our R&D and manufactured and supplied by ITI for long time. ITI has been the pioneer in this field. The products are evolved in tune with the evolution in the digital communication technology. There are major requirements of encryption products for Defence for their NFS network, ASCON network etc. ITI is expecting good business in this year in encryption portfolio.

- G-PON Manufacturing

ITI had participated in GPON turnkey project tenders for BharatNet project and successful in getting orders from the BBNL and BSNL. Company got orders for about Rs.425 Crores for manufacturing and supply of 1500 OLT and 37300 ONTs. Further company is expecting one more GPON order from Railtel shortly. ITI is manufacturing these products at Raebareli and Mankapur plant from component level with C-DOT as the technology provider. The supply, installation and commissioning are in progress across India. In view of huge requirement of OFC deployment for Government of India BharatNet project phase II and III, there would be corresponding requirements of GPON solution also. The Company is geared up for manufacturing using our latest established infrastructure facilities..

- Manufacture of Smart Cards

As an extension of National Population Register project, which is under execution by ITI as a consortium partner with BEL and ECIL, ITI is looking at the huge opportunity of manufacturing Smart card based identity cards for the citizens in the Country. In addition, there are opportunities regarding supply of smart cards for unorganized workers, driving licenses, motor vehicle registration etc. ITI is already having smart card manufacturing facility at its Palakkad plant. This is being further augmented to take manufacture of various types of identity cards.

- Manufacturing of Li-Ion Batteries

Long life, low maintenance and high energy density back up power solutions using Li-Ion technology have been proved in all fields of consumer electronics like PCs, Mobile phones, Tablet PCs etc. They also make inroads into other applications of Telecom industry like powering GSM towers. ITI has taken TOT for manufacture and supply of Li-Ion batteries with focus on meeting needs of Telecom applictions like GSM BTS sites. ITI is planning to take up assembling of Li-Ion batteries in one of its plants, specifically for supplying to the BTS sites.

- Component Screening Project

Component Screening is a Project suggested by VSSC (ISRO) for ITI Palakkad to take up for meeting their requirement of approximately 5 Lakh screened components per year. Screened Components are required regularly for VSSC for their space missions. Basic component screening facility has already been established in the plant. Further the infrastructure upgradation is in final stages to cater for new components and also for meeting needs for component screening for defence.

- Data Center and IT Business

The Company has planned investment to address the huge growth in the service sector related to Information Technology. Currently ITI has been operating one Data Center in its Bangalore plant in partnership with a private company. Looking into high demand for data Centre business and the expected growth in India, the Company is already in the process of building our own Data Centre under the revival plan. The Company is already providing IT solutions, like E-Banking, Aadhaar based authentication etc. on SaaS basis from the Data Center.

- Wi-Fi products

Wi-Fi products have revolutionized the way we communicate. In addition to low power Wi-Fi products in residences, Wi-Fi hot spots are coming up all around the country. Further, Wi-Fi products are also expected to be part of the Digital India programme to connect every citizen to Broadband network and also in setting up of Smart Cities. ITI is planning to address this business opportunity in association with the technology partner.

- Managed Leased Line Network (MLLN) Equipments

ITI has been the leader in supplying MLLN equipment for BSNL and MTNL since 2002-03. The existing MLLN networks of these Telecom Service Providers have been set up and maintained by ITI till date. ITI is also getting good revenue for giving maintenance support to the existing networks. Company has bagged one more big order for MLLN turnkey project recently from BSNL. ITI hopes and gearing up to address the future MLLN requirements on IP based technology.

- Low Power BTS systems for remote villages

Low power BTS systems have been planned as a means to extend mobile connectivity to cover all the unconnected villages in the country. USOF has planned to fund such programmes so that every village in the country is connected through mobile communication networks. ITI is hoping to get orders for supply of equipments required for such networks.

- Business with other PSUs/Contract Manufacturing

Contract manufacturing for PSUs is an existing activity in ITI. ITI is ready executing job works for PSUs like, BHEL, BEL, VSSC, NPOL etc. With upgradation of infrastructure in ITI, there is more scope for getting new business in the area of contract manufacturing.

- IOT and Smart City

ITI has made foray in to Internet Of Things commonly called as “IOT” which is making big head way in common man’s day to day life across the world. The purpose of the Smart Cities Mission is to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to Smart outcomes. Application of smart solutions will enable cities to use technology, information and data to improve infrastructure and services. ITI has entered in to teaming agreements with many start-ups who have developed “smart” solutions which are integral part of IOT sector. ITI is planning to offer solutions for smart education, smart health, smart environment, smart transport etc. As of now, 90 cities find a place in the Centre’s programme. ITI is planning to actively participate in smart city tenders to secure business in the days to come.

CONTRIBUTION TO EXCHEQUER

During the year, your company has contributed Rs. 10497.99 Lakhs to the exchequer towards duties and taxes.

PUBLIC DEPOSITS

Value of deposits held by the company is NIL. Deposits aggregating to Rs. 0.24 Crores had matured for payment, but were not claimed on due dates.

REVIEW OF ACCOUNTS BY INDIAN AUDIT AND ACCOUNTS DEPARTMENT

The comments on the accounts for the year 2016-17 by the Comptroller and Auditor General of India is appended.

JOINT VENTURES INDIA SATCOM LIMITED (ISL)

ISL was incorporated in the year 1987 and the present shareholding of ITI in ISL is 49% of its share capital with M/s. Chris Tech Systems Pvt Limited holding 51% of its share capital. Consequent to the delay in final disposal of the case initiated by Karnataka Industrial Area Development Board (KIADB) which is pending before Hon’ble High Court of Karnataka, ISL could not proceed with its revival operations through land development.

There was no company which became or ceased to be a subsidiary, joint venture or associate of the Company during the year under review.

The salient features of the Joint Venture Company are furnished in form AOC -1 which is appended to this report.

QUALITY

Quality policy of ITI is to “deliver high quality, secure and reliable products, services and solutions” by empowering every employee. Quality Assurance wings are functioning in all the manufacturing units of ITI. The QA wings are responsible for delivery of Quality products and services. The Units have been well equipped with necessary test facilities and test systems for carrying out elaborate tests, conducting reliability evaluations on all the products to ensure quality. This is achieved by sound and effective Quality Management System.

The five manufacturing plants at Bengaluru, Palakkad, Mankapur, Rae-Bareli and Naini have been accredited with ISO 9001-2008, NSU Bangalore is also accredited With ISO 9001-2008. The periodical Surveillance Audit & Recertification Audits have been conducted successfully, Keeping in tune with the Global concern for Environmental Management all the plants have also gone in forISO14001-2004 EMS certifications. The guidance and support to all the units for training implementation surveillance audits & recertification audits of ISO 9001-2008 and EMS 14001-2004 are provided by Corporate Quality Assurance .

Corporate Management has given approval to the units for upgradation to the new ISO Standards - QMS ISO 9001:2015 & EMS 14001:2015 as per the requirements.

There is a three-year transition period (Sept 2015 to Sept 2018) to upgrade to the new Standards. Suitable internal auditors training are being conducted by individual Units by utilising their Annual Training Budget allocated for 2016-17.

MANPOWER

Employee strength at the end of the year 31st March, 2017 was 4052 out which 431 were female employees. As on 31.03.2017, there were 670 employees belonging to Scheduled Castes and 47 belonging to Scheduled Tribes.

56 Officers on Tenure basis 20 Contract Engineers, 13 Contract Technicians and 10 Contract Operators were recruited during the year 2016-2017.

Employees belonging to Physically Challenged Persons numbering 55 and Ex-servicemen category numbering 12 were on the rolls of the company as at the end of the financial year.

INDUSTRIAL RELATIONS

The Industrial Relations scenario in the Company was cordial during the year. Employees’ Union and Officers’ Association extended their co-operation and support in ensuring smooth work flow and helped to meet the Company’s objective.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made there under, the Company has constituted Internal Complaints Committees (ICC) to redress complaints received regarding Sexual Harassment at our all Units. All employees (permanent, Contractual, Temporary, trainees) are covered under this policy.

No. of complaints are received during the year 2016-2017 is NIL.

HUMAN RESOURCE DEVELOPMENT

The world of today, as we know has gone through many revolutionary changes that brought people even more closer than they were in the past. The world that we live and breathe in today, while benefiting ourselves with the endless possibilities that technology has introduced to us, it brought forth a gift unparallel to any other luxury. This rapidly growing telecom market brings on more challenges. The lack of qualified human resource in both technical and managerial competencies in telecommunication sector make the Government confront with immense constraints in its development project expansion. The Government of India hence attempts to improve the skill sets in the telecommunication industry. The training and development are the key instruments to build the HR skills and capacity of ITI Limited. The sufficient investment on human capital Training & development will produce moderate and positive impacts on employee productivity improvement and also organizational performance as a whole. The Learning and Development had strong relationship to the company’s performance and improvement. The correlation of the training capacity and imparting telecom skills development training is immense. The training activity in the company is a planned process, oriented towards employee productivity development and to enable its employees to remain updated of knowledge and skills surmounting the technological obsolescence and competitive edge in our services. The training is allied with the financial condition of the Company.

Bearing in mind the Company MoU target on HRM-Training for the financial year 2016-17, the HRD initiatives were more oriented towards imparting training to Executives/Non-Executives for knowledge/ skill development in Telecom & IT. Training programmes and workshops were organized in IoT, Broadband, OFC, Mobile, NGN, Cyber Security, Communication Technologies, ERP Cashless transactions, GST, MDP etc., towards digitalization and to improve computer literacy in the company, both basic and advance course in computer skills. Training programmes in Microsoft Office were imparted throughout the company. Training programmes were also organized in-house on Soft Skills, Stress Management, Safety, besides organizing awareness programmes in Health, Environment, Energy Management and Official Language.

ITI Limited takes up Government of India initiatives like ‘Skill India’, ‘Digital India’ etc., to fully comply with the directives of the Government of India and in HRD sphere to accelerate skill development training and its implementation. The company has entered into MoUs with NSDC-Telecom Sector Skill Council (TSSC) and Electronics Sector Skill Council of India (ESSCI) for implementation of skill development activities and has taken initiatives. The Company is a NSDC affiliated training provider, to ensure delivery of NOS aligned curriculum. TSSC/ESSCI has accredited for imparting skill development in their QPS/ Job Rolls for the students across India, utilizing the infrastructure facilities in the HRD/SD centres of ITI Units. These short-courses are devised to enable students trainees to take up employment immediately enhance the employability, in association with Government authorities and Skill Sector Councils and other Training Partners in all ITI Units. Training of Trainers (ToT) programmes in Optical Fiber Splicer and Optical Fiber Technician have been organized at Bangalore for trainers of Bangalore Plant and Srinagar Plant separately. Trainers have been prepared to start the skill delopement trained/being trained in various job rolls like Base Station Service Engineer (BSS Engineer), OFS, PCB Fabricator, Circuit Image Operator (PCB), Pick & Place Operator, Solar Module Assembly Technician, Field Trial Computer Peripheral (FTCP) etc.

During the financial year, ITI imparted skill development training to 2480 trainees, out of which 173 in TSSC/ESSCI qualifications packs/job role and 2307 have been trained in ITI modules.

In respect of HRM performance indicators, 59 training programmes have been organized in house/ sponsored outside. The company totally trained 1644 Executives / Non-Executives achieving total 2068 mandays. ITI always achieves its targets and in fact overwhelmingly surpasses given targets of MoU with DoT. Additionally, the skill gaps arising out of newer technologies and changed product portfolio among the employees are also continuously monitored and effectively plugged in periodically.

Training, becoming a vital part to help groom the telecom sector of today, ITI Limited has started to take up the stance in emphasizing the need for telecom training and executive coaching to help their employees train better for the present as well as future challenges. Existing in today’s ever growing market, the company has to come up with many different things to stay in the competition. Now this involved the managerial level serving their companies to get a better understanding at what they are about the uprising challenges in the telecom industry by imparting telecom training coupled with executive or managerial development in collaboration with Premiere Institutes like IITs, IIMs etc. Training has its importance for the managerial staff as well since they are the ones that are responsible for getting the work done through their team. Executives / Managerial training brings a better understanding to them about what they need to prepare themselves with while performing better at their job. Leadership development is also taught to people under the training programme so that those with the spark to become a better leader of tomorrow can get a good insight at what they need to gear themselves up with.

OFFICIAL LANGUAGE

All Units / Offices have established “Check-points” in their departments to make effective implementation of the Official Language Policy. Monitoring is being done by the respective Official Language Implementation Committee(OLIC) constituted in every Unit / Office.

The Progress of Implementation of Official Language in our Corporate Office as well as in Units / Offices is also being periodically reviewed by the OLIC of Corporate office.

In order to enhance the working knowledge of Official Language of our employees, they have been sent to various Training Programs organized by the Government for imparting training in Hindi awareness, Hindi typing and Hindi Stenography as per, the Company’s requirement. However, the Official Language Cells of the different Units / Offices have also conducted internal training programs. Besides, employees were encouraged to take part in Hindi Prabodh, Praveen & Pragya examinations for which financial incentives have also been sanctioned.

Our Units / Offices at Naini, Rae Bareli, Mankapur, New Delhi, Mumbai, Lucknow & Corporate Office have been notified in the Gazette of India as per OL Rules 10 (2) & (4), 1976 after more than eighty percent (80%) of the staff working have acquired a working knowledge of Hindi in these Units/ Offices.

After reviewing our quarterly reports, regular appreciation letters have been received from Dy. Director-OL, Official Language Department DoT, New Delhi as well as Dy. Director (Implementation), Regional Implementation Office, Bangalore.

A Joint Hindi Fortnight Program for Bangalore based PSUs / Organisations was organized by TOLIC (Town Official Language Implementation Committee) Bangalore between 11.07.2016 and 10.08.2016. Various types of competitions were arranged during this period. On this occasion many officers/Non-officers of ITI Limited, Bangalore based Units / Offices also participated in these competitions and more than 03 Officers / Non Officers have got the prizes. Valedictory function was held on 28.12.2016 and cash prizes and certificates to the wining participants were given by President, TOLIC. “Hindi Fortnight” was celebrated and various Hindi Workshops were organised for encouraging progressive use of Hindi during 2016-17. Bilingual (i.e. English and Hindi) website of company is being regularly updated.

VIGILANCE

During the year 2016-17, Vigilance Department focused on the preventive vigilance activities in order to bring more transparency and efficiency in the organization. CVC guidelines and Government policies in this regard have been strictly followed.

To achieve the above objectives, Corporate vigilance advised periodically to the Management for improvement regarding publishing of NITs and ‘Contracts concluded’ in the company website, implementation of Rotational Transfers of Executives in Sensitive Areas, implementation of Integrity Pact, periodical review for ensuring probity and efficacy among employees. Several System Improvement Measures have also been suggested to various departments as a part of preventive vigilance.

The Company celebrated Vigilance Awareness Week from 31st October, 2016 to 5th November, 2016 in all manufacturing units, business establishments and corporate office. Seminars were organized at Kendriya Vidyalaya, Rae Bareli and at St. Peter School, Rae Bareli to create awareness on corruption and on the role of preventive vigilance to combat corruption. In this occasion, a booklet was released by CVO-ITI on Awareness on Works, Goods and Services. This booklet elaborately covers necessary guidelines to be considered for procurement and different check points to be considered during the different phases of purchase procedures, tender process, award of contracts, payment of contractors, back to back procedure etc. It also refers to the list of relevant circulars/orders issued by CVC/DoPT/Ministry.

The Vigilance department is putting emphasis on preventive vigilance like implementation of Integrity Pact, E-procurement, conducting CTE type examination, publishing of tenders and POs in website, surprise checks in sensitive departments and checking of Annual Property Return etc.

RIGHT TO INFORMATION

During the year 2016-17, out of 393 RTI requests, information was provided against 376, 1 request rejected and 5 requests were transferred to another Public Authority. The RTI returns on quarterly basis is being submitted to the Ministry for forwarding the same to Central Information Commission and the same is published on our Company website. With a view to achieve total transparency, the requests and responses are being uploaded on our website by FAA/CPIO/Public Information Officers of Units under specific link given to each Unit. All cases referred to CIC as second appeal have been successfully addressed.

AUDITORS - STATUTORY AUDITORS

M/s. Sundar Srini & Sridhar, Chartered Accountants, Chennai, were appointed by Comptroller and Auditor General of India as Statutory Auditors for the year 2016-17.

- BRANCH AUDITORS

The following firms of chartered Accountants were appointed as Branch Auditors for different plants of the Company for the year 2016-17

S.No.

Unit

Name of Auditor

1

Bangalore

Sundar Srini & Sridhar, Bangalore

2

Naini

Neeraj Prakash & Associates, Allahabad

3

Rae Bareli

Rajesh Srivastava & Associates, Lucknow

4

Mankapur

Sri Ram Bhuvanesh & Co, Faizabad,

5

Palakkad

Mahadevan & Sivarajan, Palakkad

6

Srinagar

S D M & Co, Srinagar

- COST AUDITORS

M/s GNV Associates, Cost Accountants, Bengaluru was appointed as Cost Auditors for the year 2016-17- for the cost audit of south-based units located at Bangalore, Palakkad and also consolidation for the Company and M/s. Aman Malviya & Associates, Lucknow as Branch auditors for the Cost Audit of North based units located at Naini, Rae Bareli, Mankapur and Srinagar.

- SECRETARIAL AUDITOR

The Company has appointed Shri D Venkateswarlu, Company Secretary in practice, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the year 2016-17 and reply to the observations of the Secretarial Auditor are appended as an Annexure to this Report.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has constituted Corporate Social Responsibility Committee and the details of same are furnished in Corporate Governance report. For the year under review, the Company was not required to spend on CSR activities. However, the Company has set up Hospitals, Schools and Playgrounds at Townships of Manufacturing Units for the benefit of employees and the local community.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on 22nd August 2017, the Board of ITI, comprises of Seven Directors of whom three are Whole Time Directors, two Non Official Part Time Directors (Independent Directors) and two Official Part Time Directors (Nominees of Government of India).

Ministry of Communications & IT has been requested to appoint requisite number of independent Directors to comply with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations,

Appointment of Independent Directors

During the year, the Government of India, vide letter No. ENo.5-3/2016-PSA dated 30.01.2017, appointed Smt Asha Kumari Jaswal as Independent Director on the Board of the Company. Her appointment has taken effect from 06.04.2017.

The terms and conditions of the Independent Directors are posted on the web-site of the Company. Independent Directors shall not be liable to retire by rotation. The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Companies Act, 2013.

Government Nominee Directors

Shri R M Agarwal, DDG(SU), Department of Telecommunications, Ministry of Communications & IT was appointed as Government Nominee Director vide MoC & IT letter No. ENo.5-1/2016-PSA dated 08.06.2016 in the place of Shri Srikanta Panda.

Lt General A R Prasad, VSM, ADC, Signal Officer in Chief and Senior Colonel Commandant, Ministry of Defence was appointed as Government Nominee Director vide MoC & IT letter no. ENo.5-1/2016-PSA dated 07.11.2016 in the place of Lt General Nitin Kohli.

Changes in Functional Directors

Shri P K Gupta, then Director Marketing was granted additional charge as Chairman and Managing Director in the place of Shri K K Gupta w.e.f 01.11.2015. Shri P K Gupta relinquished the position as a Director on 31.12.2016 on attaining the age of superannuation.

Shri S.Gopu, Director-HR was granted additional charge of Chairman and Managing Director w.e.f. 01.01.2017.

Shri K Alagesan, Director- Production was granted additional charge of Director Marketing w.e.f. 01.01.2017. Dr Janaki Anathakrishnan, Director Finance continues as Chief Financial Officer. Mrs S Shanmuga Priya continues as Company Secretary of the Company. Chief Financial Officer and Company Secretary continues to be Key Managerial Personnel along with the Functional Directors of the Company.

The Board placed on record its deep appreciation of the valuable services rendered by the Directors whose term of office ended during the year.

Shri K Alagesan and Dr Janaki Ananthakrishnan, Directors retires by rotation at the forthcoming Annual General Meeting and being eligible offers themselves for re-appointment.

The policy on Director’s appointment and remuneration and also remuneration for Key Managerial Personnel forms part of Corporate Governance Report of this Annual Report.

NUMBER OF MEETINGS OF BOARD

During the year, 5 meetings of the Board were held on 26.05.2016, 30.05.2016*, 27.06.2016, 11.08.2016, 10.11.2016, 09.02.2017. * The meeting held on 26.05.2016 was adjourned to 30.05.2016

PARTICULARS OF EMPLOYEES

There were no employees of the Company who received remuneration in excess of the limits prescribed under Companies Act, 2013 read with Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2015.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT AND CORPORATE GOVERNANCE REPORT

A report on Corporate Governance and Management Discussion and Analysis Report alongwith a Compliance Certificate from Statutory Auditors as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended to this report.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure to this Report.

RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company’s website at http://www.itiltd-india.com/investor_information. The Policy intends to ensure that proper reporting; approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm’s Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors confirm that

(a) in the preparation of the annual accounts for the year ended 31st March 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at 31st March 2017 and of the profit of the company at that date;

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

(d) the annual financial statements have been prepared on a going concern basis; and

(e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

ENTERTAINMENT EXPENDITURE AND FOREIGN TRAVEL

The expenditure on entertainment was Rs. -6.43 Lakhs. Expenditure on official travel abroad by the officials of the Company amounted to Rs. NIL during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required to be disclosed under the Section 134 of the Companies Act 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 are annexed.

ACKNOWLEDGEMENT

“Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers and look forward to their continued support and co-operation in future. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Board of Directors are highly grateful for the assistance and continued support extended by the Ministry of Communications & IT and various other agencies in Central and State Governments.

The Board of Directors acknowledge the constructive suggestions received from the Comptroller and Auditor General of India, the Statutory Auditors, Branch Auditors, Cost Auditors and Secretarial Auditor and are highly grateful for their continued support and cooperation.

Your Directors also take this opportunity to place on record their appreciation for the dedicated work put forth by the employees at all levels”

For and on behalf of the

Board of Directors

(S. Gopu)

Place: Bangalore Director HR /

Date: 22.08.2017 Addl Charge Chairman and Managing Director

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