The Directors have pleasure in presenting the 17th Annual Report
together with the audited financial statements of the Company for the
year ended March 31, 2012 and other accompanying reports, notes and
The financial results of the Company''s operations during the year are
(Rs. in Crores)
Particulars 2011-12 2010-11
Telecom Revenue 2,470.25 2,248.74
Other Income 35.44 67.20
Profit on Sale of Long Term Investment NIL 834.93
Total Income 2,505.69 3,150.87
Operation and Other Expenses 1,945.36 1,818.52
Provision for Contingencies 13.28 185.60
Earnings Before Interest, Depreciation, 547.05 1,146.77
Tax and Amortisation (EBIDTA)
Finance & Treasury Charges(Net) 521.20 346.15
Depreciation/ Amortisation 543.40 750.70
Profit / (Loss) for the year (517.55) 49.90
The total income for the year was Rs.2,505.69 Crores, an increase of 8%
over previous year (excluding the impact of profit on sale of long term
investments). Other income for the year was at Rs.35.44 Crores.
India has the second largest telecom network in the world after China.
As on April 30, 2012, as per Telecom Regulatory Authority of India
(TRAI), there were more than 952 million telephone connections in
the country of which 921 million were wireless connections and 31
million were Wireline connections. Approximately 8-10 million mobile
connections (SIMs) are being added every month. The national
tele-density is 78 per hundred.
The Company has launched several services over the years involving
significant investments. The Company is relatively a new entrant in GSM
and 3G services are still in a gestation phase in the country. It is
not uncommon for telecommunication companies, by virtue of the high
operational costs and the capital intensive nature of the industry, to
have longer gestation periods as compared to some other sectors. The
accumulated losses of the Company at the close of the year have
exceeded its paid up capital and reserves. However, the Company has
been consistently making operating cash profits over the past few
The Company had availed of shortterm loans for the payment of 3G
licence fees and the roll out of the 3G network. The Company got its
Business Plan appraised by IDBI Bank Limited for the availment of long
term External Commercial Borrowings (ECB) of USD 350 million for
replacing the short term loans with new long term loans. In May''
2011, the Company tied up for long term ECB of USD 350 Million for
refinancing of short term loans availed for 3G spectrum fees and for
capex. The Company has so far availed ECB of USD 342.03 Million with an
average maturity period of 10 years.
Products and Services
The Company holds two Unified Access (basic cellular) Service
Licences (UASL), one for Mumbai Metro and the other for
Maharashtra circle i.e. Rest of Maharashtra and Goa. The subscriber
base of 14.13 million as on April''2012 consists of CDMA wireless, GSM
wireless and wireline subscribers.
The successful launch of GSM services under the Tata DOCOMO brand in
2009 and the integration of CDMA services under the same brand in the
latter part of the last fiscal have helped to boost the quality of
subscriber additions. The Company has the 3rt largest wireless
subscriber base in Mumbai and Maharashtra circles.
Tata DOCOMO introduced Family Plans on CDMA and Walky. These plans
authorize subscribers, multiple connections at one rental with free CUG
calling within the family members. Tata DOCOMO pioneered the launch of
Roam Free Plans in GSM wherein subscribers can enjoy free incoming
roaming benefit without extra charges.
The Company continues to be successful in its High Speed Internet
Access (HSIA) services under the Photon brand. Photon services
have continued to gather both industry and consumer endorsements. Frost
and Sullivan chose Photon as the best wireless broadband service
provider of the year for both 3G as well as HSIA services. During the
year, the Company added 19 additional towns in Maharashtra circle to
offer Photon Plus wireless broadband services. The Company launched the
Photon Max service, which effectively doubles the speed of the earlier
Photon Plus services, in Mumbai & Pune. The Photon Max won ''Product
of the Year'' in the wireless broadband category (best innovation).
Available on the CDMA technology platform, the Photon Max provides
users with a never-before browsing experience and seamless in-building
The Company has continued to focus on Value Added Service (VAS)
offerings. Data and VAS revenues have now grown to account for 32% of
the wireless revenues. The Company introduced several attractive
product and service propositions such as Mobile TV, Music downloads and
Personalized Caller tunes. The Company was the first to launch a Wi-Fi
Router Hub on Photon Plus and also on a dual hub supporting Photon Plus
and 3G. The Company implemented innovative ways like leveraging
syndicated ad-networks to drive visibility and ease of discovery of VAS
services via the Internet.
Tata DOCOMO introduced many innovative VAS to its GSM customers across
Voice, Text & Data. A rich media service called Gametanium, which is an
exclusive Android gaming platform, was launched which allows
subscribers to experience a superior gaming experience with 30
exclusive games. A social initiative titled Saral Rozgaar was also
launched which empowers subscribers to search for blue-collar job
opportunities at very conducive costs. Tata DOCOMO launched Tutor on
Mobile to drive education on mobile via offerings of conferencing &
podcasting with domain experts at a very pocket-friendly cost, Go
Bubble for Mumbai customers which is a mobile-coupon based service
offering deals and discounts at popular chains and restaurants, Jobs &
Matrimony search on mobile which allows users to search for the perfect
Job and the right match for themselves among others.
Recent trends in the business and consumer environment are portending a
growth story around data. Mobile internet is registering phenomenal
growth year after year in India. In order to leverage this trend, the
Company has introduced a new business unit which will focus on
life-enhancing services like Home Surveillance, m-Commerce, Location
Based services (eg. School bus tracking) etc.
As you know, the Company obtained 3G spectrum in Maharashtra circle
where it was the first private operator to launch 3G with a range of
new services like Mobile TV and App Stores. The Company was not
successful in its bid for 3G spectrum in Mumbai. The Company would
however continue to address the market requirements through the Photon
Plus which is being made available on a growing range of handsets. The
Company is also exploring the options for 3G roaming with other
operators subject to Regulatory clearances.
The Company has laid over 2,224 km of fiber optic cable across Mumbai
and already connects over 20,000 buildings with broadband services. To
expand the network further at optimal cost, the Company has entered
into co-build agreement with other operators. The Company would
continue to make investments to strengthen its wireline offerings and
would work to increase voice and data penetration in already wired
The Company is a Category A (National) ISP Licensee and offers a broad
range of internet-related services including Digital Subscriber Lines
(DSL), leased lines and dial-up internet access.
The Company has also made significant investments in products and
services specifically forthe Enterprise and Small and Medium Enterprise
business segments. The Company along with Tata Teleservices Limited
(TTSL) has a national footprint for its Conference Call service
with 15 Points of Presence across the country for providing local
access to conference bridges.
Tata DOCOMO mounted the ''Keep it Simple'' campaign which highlighted
service delivery differentiators and gave proof points of its promise
Maharashtra circle got a splendid response for its national level SMS
based engagement program called Jeet Ki Ghanti, the
first-of-its-kind in this category. This program was designed to reward
existing Tata DOCOMO customers (CDMA or GSM) for reposing their faith
in our network. In Maharashtra circle, 2 customers won Chevrolet Beat
Cars and approximately one dozen customers won motorbikes.
Another national level campaign which saw tremendous response in the
Maharashtra circle was the ''Network Campaign'' which established the
promise of ubiquity on Tata DOCOMO''s network.
Various marketing innovations were implemented during the year and the
Company bagged the prestigious ''Exchange 4 Media'' award for using non
conventional media (Ganpati boat branding) under silver category.
Network quality and Customer service
As per the Indian Telecom Services Performance Indicators Reports by
TRAI, the Company''s network is congestion free for the last eleven
The Company continues to improve the quality of its customer services.
Brand Tata DOCOMO offers easy and simple tariff plans and easy to
navigate customer care IVR and direct access to the customer care
executives. As a retention measure, the Company has launched a tool
which models usage patterns, flags customers with high propensity to
churn for subsequent health check call and issue resolution, if any.
On Photon, a Data Traffic Management Module was implemented to enhance
customer experience. Multiple initiatives were successfully implemented
on the network and information technology which are the backbone of the
During the year, the Company successfully expanded GSM wireless
services to reach 898 towns in the states of Maharashtra and Goa. The
Company has also entered into international bi-lateral agreements with
more than 140 operators globally to offer seamless International
roaming facility. The Company has also now spread CDMA voice and Photon
Whiz services in 1,191 towns and provides HSIA service in the states of
Maharashtra and Goa.
During the year, the Company focused on operational efficiency and
quality control measures with a constant endeavor to further improve
its network quality. The Company also successfully unlocked the
bandwidth potential in its existing transmission network and offered
transmission bandwidth to new operators.
Quality and Processes
The Company has undertaken ISO 9001:2008 certification to demonstrate
its capability to consistently provide services that enhance customer
satisfaction through effective deployment of a quality management
system. The Company was the first basic telecommunication provider to
get the coveted ISO 9001:2000 certification in August 2002. In the
surveillance audit for ISO 9001:2008 Certification conducted by TUV
India in October 2010, the Company was awarded a Certificate of
Continuation for ISO 9001:2008 with ''Nil'' Non-Conformance.
The Company along with TTSL has also recently been awarded the ISO
27001:2005 Certification for Information Security Management System.
The Company is also taking active part in the Tata Business Excellence
Model (TBEM) process with knowledge sharing and appropriate
support being extended by Tata Quality Management Services
(TQMS), a division of Tata Sons Limited.
The model enables the leadership to set direction of the organization
based on its Vision, Mission and Values and to strategize its business
priorities based on a variety of environmental factors like
competition, industry, technology and regulatory changes as well as
internal capabilities. The Company attempts to achieve business
excellence through various quality (six sigma/Kaizen) projects and
drive service excellence and cost optimization throughout the
The Company promotes a culture of innovation and has provided various
forums (portals) for employees to post innovative ideas and
suggestions. Many employees have posted their ideas on Tata Innoverse
and were considered for implementation within the Company as well as
other Tata Companies.
The Company assigns very high importance to its human resources and
constantly strives to achieve the mission and objectives of the Company
by creating a favorable work environment and by institutionalizing a
performance oriented work culture. The Financial Year 2011-12 was a
significant year for the Company marked by a number of change
initiatives in the area of organization restructuring, change
management and process improvements to enhance Employee Productivity
and Capability Development in line with the Business Plans.
The integration of the CDMA and GSM Business lines was done to enable
effective go to market strategy with an enhanced operational synergy.
The process was driven with adequate focus and sensitivity to ensure a
smooth transition to the new integrated Mobility Organisation. Besides
this, the Company has reviewed the Organisation Structures for various
other Verticals/Functions to bring about greater synergy.
The Company has continued to invest in its people and held multiple
capability development interventions across the functions and levels to
sharpen the people''s skills to cater to the dynamic nature of the
Industry. The Company strongly believes that coaching employees removes
barriers and boundaries and this culture emphasizes individual and team
achievement towards the common organizational goal.
The Company has a robust Reward, Recognition and Incentive Programs to
enable and encourage employees to perform better. The Performance
management system has been reviewed and improved. The Company has laid
out strong processes and systems to ensure leveraging of its people''s
potential besides attraction and retention of the right talent.
Regulatory Developments and Important Litigation
There have been many regulatory changes during the year, prominent
amongst which is the announcement of the National Telecom Policy (NTP)
2012. Availability of affordable and effective communications for the
citizens is at the core of the vision and goal of NTP''12. It proposes
to delink spectrum from licences, announces plans to introduce free
national roaming and introduction of national level mobile number
portability, lays emphasis on increasing rural teledensity from 39 to
70 by the year 2017 and 100 by the year 2020 and making available
broadband on demand.
Other important developments have been the TRAI recommendation on
guidelines for Unified Licence/Class Licence and migration of Existing
Licences to Unified Licence, TRAI recommendations on Allocation of
Spectrum in 2G band, View of DoT field officers that dual technology
operators should meet additional rollout obligation in respect of GSM
spectrum, DoT''s view that intra-circle roaming (ICR) is permitted
for 2G but not for 3G in non spectrum circles, Enhanced EMF radiation
norms to be implemented by September 1, 2012, Supreme Court (SC)
judgment in 2G case, its impact on future allocation of Spectrum and
cancellation of 122 licences of 2008, National Frequency Allocation
Plan 2011, Telecom Consumer Compliant Redressal Regulations, 2012 &
Telecom Consumers Protection Regulations, 2012 and SC judgment that
definition of Adjusted Gross Revenue as given in the License needs to be
followed to levy revenue share based licence fee.
Detailed information on the regulatory developments and important
litigations has been provided in the report on Management Discussion &
Analysis of Financial Condition and Results of Operations which forms
part of this Annual Report.
Effective July 21, 2011, Mr. Koichi Takahara resigned from the position
of Director of the Company on his relocation to Japan. The Board and
the Company record their sincere appreciation of the valuable services
rendered and contribution made by Mr. Koichi Takahara. The Board
appointed Mr. Katsuhiko Yamagata as Director of the Company w.e.f. July
26, 2011 to fill the casual vacancy caused by resignation of Mr. Koichi
Effective May 30, 2012, Mr. Katsuhiko Yamagata resigned from the
position of Director of the Company on his relocation to Japan. The
Board and the Company record its sincere appreciation of the valuable
services rendered and contribution made by Mr. Katsuhiko Yamagata. The
Board appointed Mr. Koji Ono as Additional Director of the Company
w.e.f. June 1, 2012.
In accordance with the provisions of Article 71 and 72 of the Articles
of Association of the Company, Mr. S. Ramadorai, Mr. N. S.
Ramachandran and Mr. Nadir Godrej retire by rotation at the ensuing
Annual General Meeting of the Company and being eligible, offer
themselves for re-election. The Board of Directors recommends their
re-election. Mr. Kishor A. Chaukar retires by rotation on the date of
the Annual General Meeting of the Company and does not seek
Dividend & Appropriations
In view of the accumulated losses, the Directors regret their inability
to recommend any dividend for the year under consideration. No
appropriations are proposed to be made for the year under
Pursuant to the Order No.F. NO. 52/26/CAB-2010 dated May 2, 2011 by
Cost Audit Branch of Ministry of Corporate Affairs read with Section
233B of the Companies Act, 1956 (Act) and subject to the approval
of the Central Government, the Board of Directors of your Company has
re-appointed M/s. Sanjay Gupta & Associates, Cost Accountants, as Cost
Auditor of the Company for the accounting year 2012-13. The Cost Audit
Report for the financial year 2011-12 is yet to be placed before the
Board. The Cost Audit Report is required to be filed within 180 days
from the close of the financial year to which the report relates.
The Board has empanelled select firms for handling various internal
audits based on their capabilities and experience.
M/s. Deloitte Haskins & Sells (DHS), Chartered Accountants, the
present statutory auditors retire at this meeting and are eligible for
re-appointment. The Audit Committee and the Board recommend their
Directors'' Responsibility Statement
Pursuant to the provisions of Section 217(2AA) of the Act, the
Directors, based on the representations received from the operating
management, confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed and there are no material
2. They have, in the selection of the accounting policies, consulted
the Statutory Auditors, and have applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the financial year and of the loss of the Company for the period;
3. They have taken proper and sufficient care, to the best of their
knowledge and ability, for the maintenance of adequate accounting
records in accordance with the provisions of the Act, for safeguarding
the assets of the Company and for preventing and detecting fraud and
4. They have prepared the annual accounts on a going concern basis.
The Company has not accepted any deposits within the meaning of Section
58A of the Act and the rules made there under.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The disclosures as required under the Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 are
(i) Energy Conservation:
a. Electricity is used for the working of the Company''s telephone
exchanges and other network infrastructure equipments. The Company
regularly reviews power consumption patterns across its network and
implements requisite improvements/ changes in the network or processes
in order to optimize power consumption and thereby achieve cost
b. Reduction of Diesel Generator (DG) running during power cuts
through DG on delay Management system.
c. Periodic energy audit and implementation of audit recommendations.
d. Also see section ''Corporate Sustainability'' for further details on
(ii) Technology Absorption: The Company has not imported any
technology. The Company has not yet established separate Research &
(iii) Foreign Exchange Earnings and Outgo:
(Rs. in Crores)
Particulars 2011-12 2010-11
Earnings NIL NIL
Outgo 100.29 11.27
Capital Goods 112.98 193.42
Particulars of Employees
The particulars of employees as required under Section 217(2A) of the
Act, read with the Companies (Particulars of Employees) Rules, 1975
forms part of this report. However, in pursuance of Section
219(1)(b)(iv) of the Act, this report is being sent to the shareholders
of the Company excluding the aforesaid information. Any Member
interested in obtaining a copy of such information may write to the
Company Secretary at the registered office of the Company.
A report on Corporate Governance appears after this report. A
certificate from M/s. Deloitte Haskins & Sells, Chartered Accountants
with regard to compliance with the corporate governance code by the
Company is annexed hereto as Annexure I and forms part of this report.
The Company has fully complied with all mandatory requirements
prescribed under Clause 49 of the listing agreements with the BSE
Limited (BSE) and the National Stock Exchange of India Limited
(NSE). The Company has also implemented some of the non-mandatory
The contribution of the Tata group towards nation building has been
far-reaching. In keeping with the Tata ethos, the Company too has made
small but significant contributions to corporate sustainability.
The Company has always promoted the highest standards of corporate
ethics and compliance in all its dealings and in the conduct of its
operations. The Company is committed to pursuing initiatives relating
to environment preservation, management of natural resources, community
health, education and empowerment of children.
In keeping with the Tata Climate Change policy, the Company seeks to
continuously find ways to reduce carbon footprint and leverage
telecommunications reach for initiatives aimed at the benefit of
society and the environment including sharing of tower infrastructure
resulting in substantial reductions in energy consumption, encouraging
use of audio and video conference instead of travel for reduction of
carbon dioxide emissions, introduction of highly efficient power
sources and air- conditioning equipment at its network centers,
encouraging customers to switch to an e-bill instead of receiving
printed bills, statements and receipts, encouraging employees to re-use
stationery and introduction of print manager to discourage wasteful
The Company generates awareness about various NGOs and their area of
work by inserting advertising campaigns of the NGO in the monthly bills
sent out to customers. The initiative was launched to encourage people
from different walks of life to engage in acts of giving; be it in
cash, time, skills or simple acts of kindness. The Company uses its
wide subscriber network to create awareness through SMS alerts on say
hightide timings during the monsoon and public service issues like
Swine Flu prevention.
Unemployed youth from under-privileged families in rural areas across
various districts of Maharashtra are chosen to undergo training to
become electrical and telecom wiremen in a training program designed
and supported by the Company. The telecom wiremen''s training was
conducted by the Company''s engineers and managers. All the trainees
were thereafter referred to franchisees/contractors in Company''s areas
of operations, and the Company also helped them get suitable jobs in
their respective taluk as.
The Company has in place a Safety Policy. The Safety Policy aims at
ensuring zero harm to employees and material within and outside the
office premises. The initiatives taken by the Company include Safety
sessions for all employees; Fire Mock drill once every 6 months and
Percolation of Safety Guidelines and Knowledge Management on health and
safety through mailers (Do''s & Don''ts during emergency, Road Safety,
articles related to Health, Safety during Fire, Flood and Earthquake
The Company, demonstrating its commitment towards overall sustainable
and environment friendly operations has been issued carbon credits,
based upon successful registration of its energy efficiency project
under the Voluntary Carbon Standard (VCS 2000.7). The commitment has
been enhanced with the similar exercise being carried out for the
operations across Maharashtra circle under the Clean Development
Mechanism (CDM). The initiatives pertaining to swapping of base station
electronics not only result in a significant reduction of overall
energy consumption but also contribute positively towards the
environment by reducing the demand from fossil fuel based energy
generation and thereby contribute in reduced emission of Greenhouse
The Directors wish to place on record their sincere appreciation of the
assistance and support extended by the employees, shareholders,
customers, financial institutions, banks, vendors, Government and
others associated with the activities of the Company.
For and on behalf of the Board of Directors
Mumbai, Kishor A. Chaukar
July 17,2012 Chairman