The Director present the 26th Annual Report of your Company together
with the Statement of Accounts and Auditors'' Report as well as comments
of Comptroller & Auditor General of India on the Accounts for the
financial year ended on March 31, 2012.
PERFORMANCE REVIEW OF MTNL FOR THE FY 2011-12
With the liberalization of the telecommunications sector in India the
number of operators & availability of deliverable technologies on
telecom front are continuously on the rise. Consequently, during the
year 2011-12 MTNL faced stiff competition from other operators.
Moreover, MTNL is confined only to the cities of Delhi and Mumbai which
are having more than 150% tele-density and are among the most
competitive markets in India. These factors have contributed in
increased pressure on margins (sliding average revenue per user) due to
falling tariffs and also on customer retention and acquisition.
Further, the payment of exorbitant spectrum charges in excess of
Rs.11,000 Crore for acquiring 3G and BWA spectrum that too only for Delhi
& Mumbai has put tremendous strain on the finances of the company. This
fund requirement was met through short term loans of about Rs.7,563 Crore
& remaining from its own resources.
Having achieved the telephone on demand situation in both the cities,
the main thrust in 2011- 12 was on the expansion of existing mobile and
broadband services in both Delhi and Mumbai to provide high speed
internet, high quality video and new generation wireless services.
Plans have been made to expand latest technology like IP-MPLS, FTTH
based on G-PON, IN Junction and Access network,etc.
MTNL also made considered efforts to maximize revenue by gainful
utilization of its assets by:
I. sharing our passive as well as active infrastructure, such as
towers and core capacity; and
II. sharing and developing our real estate.
- MTNL has huge assets in the form of land & building and of late has
been making efforts for renting out the spare space and has also been
successful to some extent. With the advancement of technology the
space occupied by the equipment is shrinking day by day and more and
more space is getting available. In its constant effort for generation
of additional revenues, MTNL has rented out the spare space available
in different offices / exchange buildings across Delhi and Mumbai. In
addition, MTNL has considerable assets in the form of spare capacity
available in the installed equipment. MTNL intends to rent out this
available spare capacity and generate additional revenue
Action has also been taken to generate fresh demands by providing
quality services, better customer care & satisfaction, introduction of
new services / schemes and innovative marketing strategies. MTNL is
continuously upgrading its exchanges and external plants and during the
year 2011-12 this effort has been continued vigorously.
Achievements made during 2011-12 are as under:
- In fiscal year 2008, we commissioned a state of art IP/MPLS core
network in Delhi and Mumbai to provide a converged IP network for all
services. To take advantage of IP network and to improve the services
the company worked on the expansion of this network in 2011-12 and
deployed around 10 Core 70 edge & aggregate routers in Delhi and 10
Core 67 edge & aggregate routers in Mumbai leading to creation of
around 50 POPs ( Point of presence) each in Delhi and Mumbai.
- To bring optical fiber near / to subscriber''s premises in order to
meet the ever increasing bandwidth demand of customers, we are adding
optical fibre in the access network and are deploying FTTH based on
GPON. This will enable MTNL to provide access to this latest technology
to its'' esteemed customers with very high bandwidth. MTNL has already
commercially launched the data services on FTTH. Voice services on FTTH
are going to be launched soon.
- DoT has directed all Service Providers to migrate IPv4 to IPv6
enabled network latest by Dec 2011. IPv6 migration was a challenging
task as MTNL has many legacy networks and equipments for various Line
of Business i.e Broadband, Wireless, Leased Circuit etc. Accepting this
challenge MTNL took proactive steps for the successful implementation
of the same.
Sources and application of funds for the year 2011-12 are given below:-
(In Million Rs.)
Income from Operations 33732.53 36739.52
Expenditure (excluding Interest &
prior period Adjustments) 67200.21 63154.64
Operating Profit /(Loss) (33467.68) (26415.12)
Other Income 2511.64 3180.44
Interest 9491.62 4514.76
Profit/(Loss) before Tax (40447.66) (27749.44)
Tax Provision for the Year 0.00 285.38
Prior Period Adjustments 650.18 (15.67)
Net Profit / (Loss) for the Year (41097.84) (28019.16)
Interim/Proposed Final dividend 0.00 0.00
Dividend Tax 0.00 0.00
a) Contingency Reserve (189.85) (2387.95)
b) Reserve for R&D 0.00 0.00
SOURCES AND USES OF FUNDS
Authorised Capital 8000.00 8000.00
Issued, Subscribed & paid-up Capital 6300.00 6300.00
Reserves & Surplus 19066.97 60164.81
Secured and Unsecured Loan 96474.93 74556.75
Deferred Tax Liability (Net) 0.00 0.00
Fixed Assets (Net Block) 157601.75 163230.30
Investment 4919.79 4946.58
Other Assets 97579.89 94728.10
Other liabilities 147229.47 133421.58
Capital Work-in-Progress 8969.95 11538.15
Note: Previous year’s figures have been re-grouped/re-cast wherever
Since there has been no operating profit during the financial year
2011-12, the Board of Directors of your company expressed its inability
to recommend any dividend for the year under report.
SUBSIDIARY AND JOINT VENTURE COMPANIES
Your company has two subsidiary and two Joint Ventures companies
(i) Millennium Telecom Ltd. (MTL)
MTL was formed by MTNL as its wholly owned subsidiary company basically
for providing internet and other value added services in the year 2000.
During the year 2007-08 MTL had decided to undertake undersea cable
laying project to have own undersea cable from India to Middle East
with ultimate aim to extend upto USA. As per the directions of the DOT,
BSNL was taken as 50% Joint Venture partner in the said project.
However, during 2010-11 the Board had observed that, the cost of laying
cable was very high while the bandwidth prices had gone down.
Accordingly, the Board decided not to undertake the said project. Later
in the year 2011, the Board decided to undertake new activities
alongwith BSNL but in 2012, BSNL has withdrawn itself from the Joint
Venture stating that since the Sub-marine cable project has been
discontinued, there is no need to continue with the Joint Venture.
Thus, as of now, MTL is a wholly owned subsidiary of MTNL. The Board of
MTL has now decided to enter into new lines of business which could be
telecom related as well as other areas. Some of the new lines of
business could be Infrastructure sharing, Data Centre Outsourcing
application including Web Hosting, Cloude Computing, Providing Turn Key
Solution in response to various tenders in Central Government/State
Governments/PSUs Banks/Private Corporates, etc. or directly on GFR
basis, Marketing and Selling of digital signatures of MTNL, taking
franchisee/distributorship of MTNL Mobile Products and SIM Cards of
other operators. The Management is working on the above line of
business and is hopeful to generate revenue in the years to come.
(ii) Mahanagar Telephone (Mauritius) Ltd. (MTML)
MTML is a 100% subsidiary of MTNL. The company is having license for
mobile services, international long distance services and internet
services. During the year 2011-12, MTML has installed 100K GSM network
with EDGE to meet the increasing demands as the existing CDMA capacity
is already fully utilized in Nov - 2011. The current customer base is
106,402 in CDMA and 18,056 customers in GSM. As per the planning, the
company has launched High Speed Data services all over the country
through EVDO Network.
The company is managed by CEO, CTO, CFO and 10 more officers all on
deputation from the parent company. Other operations are managed
MTML has achieved a turn-over of INR 494 Million during this fiscal
year 2011-12 compared to the last fiscal year turn-over of INR 499
Million, through these telecom services due to reduction of tariff due
with IUC rate reduction. However, MTML has earned increased net profit
of INR 55 Million (before tax) in this fiscal year compared to last
fiscal year''s net profit (before tax) of INR 43 Million.(increase of
27%) due to strict control over expenditure.
During this year 2011-12, in addition to its own technical building
MTML has started the construction of its administrative building with 7
floors at an estimated cost of INR 170M and the same is expected to be
completed in this fiscal year.
All the expenses of the company are paid by its own internal resources
and also met the CAPEX made for the procurement of the equipments.
(iii) United Telecommunications Ltd. (UTL)
The joint venture was incorporated in the year 2001 under the Companies
Act of Nepal.
UTL has a total customer base of more than 7,21, 333 in numbers and the
PCOs are 1,005.
UTLs engineering team follows the O & M procedures scrupulously thereby
ensuring fault free network round the clock. The Management closely
monitors the overall performance of the network. The quality of
services, parameters, subscriber complaints, fault rates, BTS wise
traffic and ILD traffic are continuously kept under watch.
The company is sustaining its entire operations from internal revenue
generation only. Monthly OPEX including the interest payments, IUC
charges, repayment of term loan etc are fully met from its internal
During the period ending 31st March 2012 (2011-2012), the company has
reported a net profit of INR 59 million.
(iv) MTNL STPI IT SERVICES LTD (MSITS)
The Joint Venture (JV) MSITS was incorporated on 31/03/2006 under the
Companies Act, 1956, with authorized Capital of Rs. 50 crores. The main
objective of the JV Company is to provide data center services,
messaging services, business application services to the identified
sectors of economic activity.
In order to implement the above said activities, the JV Company has
taken space of around 11000 sq.ft Super Built-up areas from
STPI-Chennai and established the physical infrastructure of Data Centre
(Tier III) with a server farm area of around 3400 sqft. The total
investment made in this regard is of Rs. 477 lakhs. MSITS is maintaining
the Data Center as per Tier III standard with 99.98% uptime on 24 X 7
The commercial operation of the data centre has already commenced in
2009 and the Ministry of External Affairs (MEA) has hosted its Passport
Seva Project through M/s TCS. Keeping in view of physical security and
to support other collocation requirements that may arise caging had
been done in inside the Data Center.
In addition the existing facility at Chennai, it has been proposed to
setup Green Data Centers in the total area of 8000 sqft and 10000 sqft
in Hyderabad and New Delhi respectively. Towards this , MSITS has
appointed the consultant through proper tender procedure. MSITS has
earned the revenue for the period for the year 2010-11: Rs. 29.65 million
and for the year 2011-12: Rs. 30.30 million.
MSITS is headed by the CEO and 3 officials have been posted from MTNL
and 2 officials from STPI - Chennai are supporting the CEO for MSITS
operations in Chennai.
HUMAN RESOURCE DEVELOPMENT
The Company attaches the highest priority to the quality of
intellectual capital at its disposal and believes that knowledge and
skill of its employees are the key to achievements of its corporate
mission. MTNL has sound recruitment policy and comprehensive training
During the past one year, your Company has laid greater emphasis on
Human Resources Development. We have been devoting substantial
resources on building a skilled workforce that has an innate capability
to counter threats posed by ever changing business environment and to
take advantages of opportunities presented to serve ever increasing
The Company has been conducting various training and development
activities which apart from reorienting the employees towards the
greater organizational purpose, are also focusing on eliminating any
skill gap and technical obsolescence. The managements'' view on training
is one of development of employee''s overall personality and enabling
them in becoming a vital productive resource.
TRAINING TARGETS AND ACHIEVEMENTS
The Training Targets and Achievements for the Financial year 2011-12 is
UNIT Number of Achievement Number of Man Achievement
Trained Days Target
DELHI 7000 4337 21000 44156
MUMBAI 6076 38542
TOTAL 7000 10413 21000 82698
At present MTNL has two state of the art training centres located in
New Delhi and Mumbai:-
(I) THE INSTITUTE OF TELECOM, TECHNOLOGY & MANAGEMENT (ITTM ) SHADIPUR,
The Institute of Telecom, Technology & Management, ITTM Shadipur, New
Delhi is a state of the art training centre of MTNL, Delhi engaged in
imparting induction training and short duration training to its
officers and employees in the field of Telecom,IT, Computer system and
With impressive growth of Telecom sector in India, the requirement of
telecom trained personnel is growing day by day. Realizing this ever
growing demand for telecom personnel, ITTM started training engineering
students also as part of their summer training.Since 2011,ITTM has
trained more than 900 students of various engineering colleges.
ITTM has the necessary infrastructure, technical and academic
competence and excellence for providing training in specialized courses
in the field of GSM, BroadbandTechnology, Switching, Transmission,
ExternalPlant, IT, Computer System & Management.
(II)CENTRE FOR EXCELLENCE IN TELECOM TECHNOLOGY AND MANAGEMENT (CETTM),
The competition in the field of training is increasing tremendously
with each passing day. Despite of the fierce competition, CETTM has
successfully shown 65 % increase in revenue during financial year
2011-12 with clientèle from various sectors like BPO, Banking,
Fianance, oil, pharma, IT etc. Keeping to its tradition, CETTM has also
added more than 50 new clients to its already existing long clientèle.
Nine vacation courses (of six days each) for Engineering Collage
students under CSR were launched during 2011-12 and 570 students were
trained during Summer and winter vacations.
Under ITEC -SCAAP program, sponsored by MEA, Govt. Of India, CETTM has
successfully completed twelve courses in Telecom, IT & Management
streams. A total of 207 Foreign participants from over 45 countries
Apart from the above, CETTM has successfully trained 6076 in-house
personnel with an achievement of 38902 Trainee Days.
CETTM has also upgraded ISO certification from ''ISO 9001-2000 ''to ''ISO
The efforts and the results, reiterate our commitment to the growth in
terms of Business, Quality and Customer Satisfaction; and the Customers
have always rewarded our good work by giving us the repeated business.
Industrial peace and Industrial harmony is based on healthy Employee
Relations and like the previous year, Employees Relations remained
Cordial throughout the year. The Grievances/ Issues raised by the
Employees/Union/Associations were given due attention and regard. The
cases/issues brought up them were settled through regular meetings and
interactions between Management and Unions/Associations and action as
mutually agreed was taken to settle them.
A further step towards Workers Participation in critical issues
concerning business endeavors, a meeting was convened to share the
views of recognized Unions on the various aspects of our business
endeavors to obtain opinion from them in further improving the same.
Employees Welfare Schemes like subsidized Canteen, Creches, Housing,
Medical facilities, Scholarship to wards of employees, Group Insurance,
dormitories for females working in night shift etc. continued and
maintained by the Company for its employees. Sports and Cultural
activities were also given priority during the year.
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
The Company continued its efforts to comply with statutory requirements
in promoting the use of Hindi and has been able to achieve most of the
annual targets set by the Govt for implementation and promotion of
Hindi as Official Language in the Company.
IMPLEMENTATION OF RESERVATION POLICY FOR SC/ST/OBC & PH COMMUNITY
Your Company has endeavoured to fulfill all the statutory requirements
with regard to implementation of reservation policy for candidate
belonging to SC/ST/OBC communities and as well as Physically Challenged
WORKING CONDITIONS OF WOMEN EMPLOYEES
We are continuously striving towards gender sensitization amongst our
employees. Special care has been taken in case of woman employees
working in night shifts. Also to redress the issues of Sexual
Harassment at workplace Special Cells have been constituted.
The Report of Parliamentary Committee on empowerment of Women and the
working conditions of women in MTNL is received during the year.
Special grants have been sanctioned to Women Welfare Committee at
CORPORATE SOCIAL RESPONSIBILITY
For MTNL , no specific allotment is made under CSR head considering the
financial results of the company for the year as per the Guidelines
issued by the Department of Public Enterprises F. No. 15(3)/2007-DPE
(GM) dt 9th April, 2010.
Some of the activities which have been carried out in MTNL keeping the
CSR initiative in mind are:-
- Concession/Rebate to senior citizens, handicapped persons, freedom
fighters, Gallantry Award winners, war widows/disabled persons in Plan
250 of MTNL landline subscribers.
- Concession to non residential telephone in
Schools/Universities/Institutions/Homes for aged/orphanages recognized
by the government.
- For social cause, around SMS blasts on Polio, Income Tax Returns,
issues related to Human Commission Right, etc. are being carried out.
- Supports education of two orphan children from Udyan Care.
- Organising MTNL''s Perfect Health Mela to access free health
- Advertisement released in the souvenirs of NGO''s, etc are working for
physically & mentally challanged persons, women empowerment, etc.
- Sponsorship of fund raiser event of People for Animals.
As on 31st March 2012 your Company had a strength of employees as per
details given below:-
MTNL Employees working strength as on 31.3.2012.
Group Working SC ST
A 1099 147 51
B 4839 589 86
C 24604 3371 463
D 11047 2542 846
Total 41589 6649 1446
DRM 22 - -
Grand Total 41611 6649 1446
The Vigilance organization of MTNL is headed by Chief Vigilance
Officer. He is an officer of the rank of Joint Secretary, Govt. of
India. Presently Shri Khushi Ram, IRSSE, is the CVO of MTNL. The CVO is
responsible for complete vigilance administration.
During the year 2011-12, emphasis was laid on preventive vigilance for
enhancing the awareness of transparency and accountability in working
by carrying out various field inspections. System improvement advice
were issued by Vigilance Unit for reconciliation of Sanchaar Hatts
products, store verification, recording of pre-bid conference minutes,
optimum electrical load in various buildings, proper maintenance of
broadband faults, BTS sites etc.
Further, training programmes/seminars on vigilance and disciplinary
proceedings have been conducted during the period for the employees to
make the participants understand the conduct rules of MTNL and
procedure for handling departmental proceedings.
As per CVC instructions, the Vigilance Awareness Week was observed from
31-10-11 to 05-11-11. During this week, various activities like pledge
taking, release of booklet containing DO''s and DON''T, vigilance angle,
quotations on anti-corruption for internal circulation, display of
posters related to honesty and integrity were carried out. Further, a
conference of senior officers of MTNL on Vigilance/disciplinary
matters and its role in MTNL was conducted in Delhi which was
addressed by Director (HR) and CVO, MTNL.
Monthly vigilance/disciplinary meetings were held regularly at Delhi &
Mumbai with concerned GM (Vigilance) team to review the status of the
cases and expedite the same. The review meetings were also held by CVO
with ED, Delhi on 19.05.11 and 15.12.11, with ED (Mumbai) on 14.07.11
and with ED (Wireless Services) on 10.06.11. During these meetings, CVO
emphasized for further improvement in customer services offered by MTNL
by taking prompt action on customer''s complaint and having
customer-centric approach at all levels to enhance the credibility and
brand image of the company in the minds of the customers.
INTEGRITY PACT PROGRAME WITH TRANSPARENCY INTERNATIONAL INDIAMTNL has a
Memorandum of Understanding (MOU) with Transparency International India
(TII) for implementing an Integrity Pact Programme focussed on
enhancing transparency in its business transactions, contracts and
procurement process.Under MOU, MTNL is committed to implementing the
Integrity Pact in all its major procurement and work contract
activities. Three Independent & External Monitors being persons of
eminence nominated by TII in consultation with Central Vigilence
Commission (CVC), monitor the activities. The Integrity Pact has
strengthened the established system and procedures by creating trust
and has the ful support of CVC.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Being a service providing organization, the relevant rules in this
regard are not applicable to your Company.
FOREIGN EXCHANGE EARNINGS & EXPENDITURE
Information with regard to foreign exchange earnings and outgo in the
Financial Year 2011-12 are as follows:-
Activities relating to Export and total Foreign Exchange earned and
(Rs. In Million)
Earned : 57.90
Expenditure in Foreign Currency 36.31
Your company follows the principle of effective corporate governance
practices. The Company has taken steps to comply with the requirements
of Clause 49 of the Listing Agreement with the Stock Exchanges. MTNL
also comply with the Corporate Governance Guidelines enunciated by
Department of Public Enterprises (DPE), Government of India for Central
Public Sector Enterprises (PCSEs). A Report on Corporate Governance has
been appended under separate section titled '' Corporate Governance
Report '' and the same forms a part of the Annual Report.
COMPLIANCE OF DPE GUIDELINES & POLICIES
The Guidelines & policies issued by the Department of Public
Enterprises (DPE) from time to time are being complied with and
implemented with the approval of the Board of Directors/ Competent
A certificate from the Practicing Company Secretary regarding
compliance of conditions of Corporate Governance as stipulated under
Clause 49 of the Listing Agreement is attached to this report.
IMPLEMENTATION ON CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Your company will send Annual Report for the year 2011-12 by email to
all the shareholders who are having valid email id account. Further
your company request shareholders holding shares in electronic mode to
keep their email addresses updated or provide their email addresses if
not earlier provided to their DPs. Members holding shares in physical
mode are also requested to update their email addresses by writing to
the Registrar and Transfer Agent of the Company by quoting their folio
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Sec 217(2AA) of the Companies Act, 1956,
the Directors to the best of their knowledge and belief confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company as at the end of the financial year and of the profit or
loss of the company for that period;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act 1956 and for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis.
PARTICULARS OF EMPLOYEES
During the year under report, there was no employee who was in receipt
of remuneration in excess of limits prescribed under the revised
provisions of Section 217(2A) of the Companies Act, 1956 read with the
Companies (Particulars of Employees), Rules, 1975.
COMMENTS OF C & AG ON THE ACCOUNTS
Comments of C&AG and Management replies thereto are given as an
Annexure to the Directors'' Report.
During the year under report, the Board of Directors of your Company
met frequently. At these meetings, the Board held intensive discussions
on the budget, important financial transactions and various steps to
face the impending competition from private operators both in Basic
Telephone Service and Cellular Mobile Telephony and other value added
Shri A.K. Garg has been appointed as Chairman & Managing Director (CMD)
of your company vide DoTs letter dated 05/12/2011 and took over the
charges of CMD from Shri Kuldeep Singh, who was additional having
charges of CMD w.e.f. 15/01/2010. Smt. Anita Soni and Shri S.P.Pachauri
continued to be the Director (Tech), Director (Fin) and Director (HR),
respectively. Dr. Rajan Saxena, Shri T.S.Narayanasami and Dr. Vijay
Aggarwal continued to be the Independent Directors of the Company. Shri
Malay Shrivastava continues to be the Government Director.
During the period under report, the following changes took place in the
Directorship of Your Company:- 1) Shri A.K. Garg has been appointed as
CMD of the company w.e.f. 05/12/2011
2) Shri K.S.Bariar has been appointed director of the company
w.e.f.17/05/2012 in place of Ms. Nirmala Pillai.
3) Shri Sushil Kumar Shingal has been appointed as Independent Director
on the Board of the Company w.e.f. 10/05/2012.
4) Shri Adit Jain and Shri V.S.Iyer ceased to be Independent Director
on the Board of the Company w.e.f. 30/07/2012.
(1) M/s. Bansal Sinha & Co., Chartered Accountants and M/s Arun K.
Aggarwal & Associate, Chartered Accountants have been appointed as
Joint Statutory Auditors of your Company by the Comptroller and Auditor
General of India for the year 2011-12 and the board has already
ratified their appointment.
(2) M/s R.M.Bansal,Cost Accountant has been appointed as Cost Auditor
of your company for carrying out audit under section 233B(1) for the
records maintained under section 209(1)(d) of Companies Act,1956 and as
notified under Coat Accounting Records (Telecommuncations) Rules,2002
and also under Cost Audit Rules,2001.
Your Directors take this opportunity to gratefully acknowledge the
help, guidance and support received from Deptt. of Telecom (DoT) and
various Ministries of the Government of India. Your Directors are
especially grateful to its Bankers, all stakeholders and investors
including, ADR holders, for their continued patronage and confidence
reposed in the company.
The Directors would like to express their thanks for the sincere hard
work and dedication of every employee leading to impressive results of
your company. The Board is confident that with the employees'' continued
enthusiasm, initiative and dedicated efforts, your company could face
the new challenges and opportunities arising out of the resultant
competition from private operators in the Cellular Mobile, Basic
Telephone and Internet services and other Value Added services.
For and on behalf of the Board of Directors
CHAIRMAN AND MANAGING DIRECTOR
PLACE : NEW DELHI
DATE : 14 AUGUST, 2012