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Tamilnadu Telecommunications Directors Report, Tamil Telecom Reports by Directors

Tamilnadu Telecommunications

BSE: 523419|NSE: TNTELE|ISIN: INE141D01018|SECTOR: Cables - Telephone
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Directors Report Year End : Mar '15    Mar 14
The Directors present the Twenty Seventh Annual Report, together with
 the Audited Accounts of the Company for the year ended 31st March 2015.
 Financial Results
                                                (Rs. in Lakhs)
                                            2014-15    2013-14
 Revenue from operations                    1414.79    1365.37
 Other Income (Net)                          632.88      11.84
 Total Revenue                              2047.67    1377.21
 Total Expenditure                          2095.88    1677.94
 Finance Charges                             778.54     663.91
 Extraordinary /
 Exceptional items                            (0.16)      5.64
 Gross Profit / (Loss)
 after                                      (826.59)   (970.28)
 interest before 
 Depreciation & Ta x
 Depreciation and
 Amortization Expense                         30.90      52.95
 Provision for Taxation / 
 Deferred Tax                                    -          -
 Net Profit / (Loss)                        (857.49)  (1023.23)
 The net loss after Ta x is Rs.857.49 lakhs against net loss of
 Rs.1023.23 lakhs incurred during the previous year. Other income
 includes insurance claim of Rs.624.71 lakhs towards the fire incidence
 in factory store yard on 12.01.2015.
 Risk & Concern
 The industry is facing challenging cost pressures as the cost of major
 raw materials are varying because the market is volatile. The
 variations in exchange rate fluctuation are also a threat towards cost
 of production. The competition within OFC business is becoming fierce
 due to emerging new technologies and frequent new product introductions
 in Optical fibre products which command competitive prices and
 preference in the market. The market price of cables is also varying
 due to competition
 In accordance with Sec.152 (6) and (7) of the Companies Act, 2013, read
 with Articles 79 & 80 of the Articles of Association of the company,
 Shri. Vimal Wakhlu and Shri B.Elangovan, will retire from the
 Directorship of the company by rotation and being eligible, offers
 themselves for re- appointment.
 Directors'' Responsibility Statement
 As required under Section 134(5) of the Companies Act, 2013, the
 Directors of the Company hereby state and confirm that 
 a) In the preparation of the annual accounts the applicable accounting
 standards had been followed.
 b) 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 31st March 2015, and the loss of the Company for the
 year ended on that date.
 c) They have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of this
 Act for safeguarding the assets of the company and for preventing and
 detecting fraud and other irregularities.
 d) They have prepared the annual accounts on a going concern basis
 considering the comparative growth in OFC market, future prospects of
 the Company with the support of TCIL & TIDCO.
 e) They have laid down internal financial control to be followed by the
 company and that such internal financial control are adequate and were
 operating effectively.
 f) They have devised proper system to ensure compliance with all
 provision of all applicable laws and that systems were adequate and
 operating effectively.
 Extracts of The Annual Return
 Pursuant section 92(3) of the Companies Act,2013 and Rule 12(1)of the
 Companies (Management And Administration) Rules,2014, the extract of
 the Annual Return in Form MGT-9 has been attached to form part of the
 Board''s Report.
 Corporate Governance
 A report on Corporate Governance with the Practicing Company
 Secretaries Certificate on compliance with conditions of the Corporate
 Governance has been attached to form part of the Annual Report.
 Clarification on Practicing Company Secretaries observations is given
 The Company has not complied with Clause 49 (I) (A) (ii) in terms of
 minimum number of Independent Directors in the Board
 The Company is Joint sector Govt. Company with 49% of its shares held
 by TCIL, a Govt. of India Enterprise and 14.63% held by TIDCO, a Govt
 of Tamilnadu Enterprise. The Board as well as management control of the
 Company lies with TCIL.  Being a Govt. Company, action already taken
 for induction of Independent Directors in the Board of the Company
 through TCIL with the Dept. of Telecommunications, Ministry of
 Telecommunications & IT. The same is being followed up through TCIL for
 early appointment..
 Energy, Technology and Foreign Exchange
 Particulars relating to conservation of energy, technology absorption
 and foreign exchange earnings and outgo as required under Sec.134(3)(m)
 of the Companies Act, 2013 are enclosed as part of the Report.
 Details of Director or Key Managerial Personnel who were appointed or
 have resigned during the year
 (i) Smt. G.Latha IAS, Deputy Secretary to Govt. of Tamilnadu,
 Industries Department has been appointed as Director with effect from
 22.12.2014, as nominated by TIDCO.
 (ii) Shri M. K Jain, Director, Nominee of Dept. of Telecommunications
 (DOT) vacated office of the Director from the Board of Tamilnadu
 Telecommunications Limited pursuant to Section 167(1)(b) of the
 Companies Act,2013, with effect from 26.03.2015. Intimated DOT for
 filling the vacancy.
 (iii) Shri V. Mohan, GGM (Finance) cum Co. Secretary, holding dual role
 of CFO and Secretary has been relived from the position of Secretary
 with effect from 26.03.2015.
 The Managing Director and the Key Managerial Personnel (CFO &
 Secretary) were on deputation from the Promoter Company TCIL which is a
 Govt. of India Enterprise, holding 49% stake in the Company and
 controlling the composition of the Board of Directors. Hence their
 remuneration were as per the scales applicable to their cadre in the
 promoter company. The existing Managing Director''s salary applicable as
 above has been approved by the members in the 23rd AGM. Hence, being on
 deputation from a Govt. of India Enterprise, the ratio as well as
 percentage increase not determined. Under KMP, the CFO was holding the
 position of Secretary also.
 The number of permanent employees as on 31.03.2015 was 69 excluding
 three officials on deputation from the promoter company.
 None of the employees drew remuneration of Rs.60, 00,000/ - or more per
 annum / Rs.5,00,000/- or more per month during the year. This
 information is furnished as required under Rule 5(2)(i) of the
 Companies (Appointment and Remuneration of Managerial Personnel)
 Human Resources
 Your company is glad to announce that the industrial relations continue
 to be very cordial. TTL has designated and implemented a large number
 of initiatives to build and improve knowledge base and competencies of
 employees at all levels.  TTL has been encouraging its employees to
 come out with innovative suggestions, which will pave way for
 significant cost savings as well as overall development of the company.
 Quality Management Systems
 Your Directors are happy to report that as a commitment in meeting
 global quality standards, your company already has IS/ISO 9001:2008
 quality management systems certification from Bureau of Indian
 Standards. During the year licence renewal has been obtained and is
 valid from 23.02.2015 to 22.02.2018. The Company is also having ISO
 14001:2004 Certificate from Guardian Independent Certification Ltd
 (Registered in England and accredited by Member of the IAF MLA) valid
 up to 28.05.2016.
 Internal Control System
 TTL has adequate internal control procedures in respect of all its
 operations. It has laid down internal control procedures to ensure that
 all assets are safeguarded and protected against loss from unauthorized
 use or disposition and transactions are authorized, recorded and
 reported correctly.  Internal Audit is being carried out by Independent
 Audit Firm of Chartered Accountants on an ongoing basis and it
 recommends appropriate improvements apart from ensuring adherence in
 company policies as well as regulatory compliance. The Audit Committee
 periodically reviews the audit findings.
 Corporate Social Responsibility
 Since the Company is continuously incurring losses, no CSR policy has
 been devised.
 In terms of Section 139 of the Companies Act, 2013, the Comptroller and
 Auditor General of India (CAG) had appointed M/s. S.VENKATRAM & CO,
 Chartered Accountants as the Auditors of the company for the year
 2014-15 at a remuneration of Rs. 1,00,000/- besides reimbursement of
 traveling and out-of-pocket expenses at actuals, subject to the other
 items and conditions as specified by the CAG.
 Independent Auditor''s Report
 Clarification on Auditors observations is given below:
 ''Emphasis of Matter'' of the Independent Auditor''s Report: Without
 qualifying our conclusion, we draw, attention to S.N-3-Note -25- Notes
 to Accounts. As at 31st March 2015, the Company''s accumulated losses of
 Rs.9400.69 Lakhs has eroded the Net Worth of the Company, indicating
 the existence of material uncertainty that may cast a doubt about the
 Company''s ability to continue as a going concern.  The Company has
 incurred a loss of Rs.857.49 Lakhs for the year under audit. Based on
 the mitigating factors discussed in the said note, the Management
 believes that the Going Concern assumption is appropriate.
 As mentioned in Note no. 3, the company has already executed the entire
 quantity for which BBNL has provided the consignee details against
 their PO for 2900 KMs.Consinee details for balance 1112 KMs as well as
 PO for balance 2900 KMs (50%) are expected during 2015-16. The
 requirement of OFC in the country is huge, however the delay in
 procurement is due to various procedural matters/issues in execution of
 big projects by the Government Clients. The Company is hoping to get
 continuous orders from 2015-16 onwards regularly since the OFC market
 is picking up. The order booking position is expected to be
 continuously good. Considering the scope during the immediate future
 and TCIL''s continuous financial support, the accounts have been
 prepared on going concern basis.
 ''Other Matter'' of the Independent Auditor''s Report: The Deferred Tax
 Asset amounts to Rs.1465.16 Lakhs, as on 31st March 2015, considering
 all eligible carried forward losses, as per AS 22 - Accounting for
 Taxes on Income. The same has not been provided for, in the books of
 account, considering the absence of virtual certainty of earning
 profits and prudence concept.
 The Company has disclosed the facts of non-provisioning for deferred
 tax assets / liabilities vide Note no. 6(b) under - 25
 .Notes to Accounts.
 Item No. (vii)(a) of the Annexure to the Independent Auditor''s Report
 The Company has been generally regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund, Income
 Tax, Sales tax, Wealth Tax Service tax, Excise Duty, Customs Duty,
 Value added Tax, Cess and other material statutory dues with the
 appropriate authorities during the year as applicable to it except the
 Property tax amounting to Rs.32,27,400/-.We are informed by the Company
 that efforts are made to get exemption being a sick Company. We are
 also informed that there are no employees who are eligible to be
 covered under Employees State Insurance scheme.
 With reference to clause 11.5.3 of the Sanctioned Scheme issued to the
 company by BIFR, the company had requested and continuously insisting
 the concerned authority for waiver of the Property Ta x of the past and
 during the rehabilitation period. No positive reply from the authority
 is received. However provision has been made in the books of accounts
 every year and part amount remitted during the year under review.
 Continuously pursuing for waiver of the balance dues. On waiver, the
 liability will be reversed accordingly.
 Item No.
 (viii) of the Annexure to the Independent Auditor''s Report
 The accumulated losses of the company as at 31st March 2015 is more
 than 50% of its Net Worth. The Company has incurred Cash loss of Rs
 826.59 lakhs during the financial year covered by our audit. The
 Company has incurred cash loss in the immediately preceding financial
 The OFC market condition from the year 2010-11 onwards was not as
 projected due to various reasons beyond the control of the OFC
 manufacturers. Lack of executable orders is the major reason for such
 performance, which was experienced by all the OFC manufacturers.
 However, the OFC market is improving and is expected to grow from the
 year 2015-16 onwards and the Company is confident of avoiding cash
 loss. On identification of successful diversification project and based
 on the expected OFC orders, a modified DRS shall be prepared and
 submitted at appropriate time to BIFR through the Monitoring Agency.
 Cost Auditors:
 During the previous year 2013-14, M/s. SBK Associates, Cost Accountants
 of Chennai were appointed as Cost Auditors and they had conducted the
 Cost Audit and the relevant reports have been filed with MCA on
 25.09.2014, within the due date. As per the provisions of the Companies
 (Cost Records and Audit) Rules, 2014, the operation of the company is
 not falling within the scope of cost audit. Hence cost auditor was not
 appointed for the financial year 2014-15.
 Secretarial Audit Report
 Clarification on Secretarial audit observations is given below:
 (i) Number of Independent Directors in the Company is below the minimum
 numbers prescribed under section 149(4) of the Companies Act, 2013.
 The Company is Joint sector Govt. Company with 49% of its shares held
 by TCIL, a Govt. of India Enterprise and 14.63% held by TIDCO, a Govt
 of Tamilnadu Enterprise. The Board as well as management control of the
 Company lies with TCIL.  Being a Govt. Company, action already taken
 for induction of Independent Directors in the Board of the Company
 through TCIL with the Dept. of Telecommunications, Ministry of
 Telecommunications & IT. The same is being followed up through TCIL for
 early appointment.
 (ii) The Company has not constituted The Nomination and Remuneration
 Committee as per section 178(1) of the Companies Act, 2013.
 Due to Company''s sickness, only the BIFR Nominee Director is being paid
 sitting fees for attending the meetings. Managing Director, being on
 deputation from TCIL, A Govt. of India Enterprise, his salary is fixed
 as per TCIL''s norms applicable to his cadre. The Directors of TCIL and
 TIDCO, A Govt. of Tamilnadu Enterprise are also paid salary by their
 own Organization, applicable as per their cadre in their Organization.
 Only the travelling expenses and local conveyance for attending the
 meetings are incurred by the Company. In view of above, no separate
 Committee was constituted. After appointment of Independent Directors
 by the Govt., necessary action will be taken for constituting the
 (iii) The Company has appointed Company Secretary as per section 203
 (1) of the Companies act, 2013 read with Rule 8 of Companies
 (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and
 is also handling the additional role of CFO.
 As reported, the officer in charge was heading both Finance and
 Secretarial Divisions during the year up to 26.03.2015.  With reference
 to section 203(11) of the Companies Act, 2013 read with Rule 8 of
 Companies (Appointment and Remuneration of Managerial Personnel) Rules,
 2014,actions were taken to have separate CFO and Company Secretary.
 For engaging Company Secretary, advertisements were placed in Company''s
 website and in the notice board of SIRC of the Institute of Company
 Secretaries of India.  But there were no proper response due to the
 Company''s status.  However, the Company has engaged an exclusive
 Company Secretary during June''15. Presently the Company has complied
 with the provisions of the Companies Act,2013
 (iv) The Company has not conducted a separate meeting of Independent
 Directors as per Schedule IV (CODE FOR INDEPENDENT DIRECTORS) of the
 Companies act, 2013.
 As replied in observation (i) above, since sufficient number of
 independent Directors were not available, separate meeting could not be
 held. Case being followed up with the Ministry through TCIL for early
 appointment of independent Directors in the Board. Meetings shall be
 conducted after induction of required number of Independent Directors.
 Comments of the Comptroller and Auditor General
 The Comments of the Comptroller and Auditor General of India under
 Section 143(6)(b) of the Companies Act, 2013 for the year ended 31st
 March 2015 are enclosed as part of the Report.
 The Directors wish to place on record their sincere appreciation for
 the encouragement, assistance, support and co-operation given by
 Government of India, Government of Tamilnadu and the Promoters. The
 Directors appreciate your whole hearted efforts during the year and
 solicit your continued support and co-operation. Your Directors
 acknowledge the continued trust and confidence you have reposed in this
 company. They also wish to place on record their appreciation for the
 hard work put in by the employees at all levels.
                                     For and on behalf of the Board
                                       V.S.Parameswaran B.Elangovan
 Place : Chennai                         Managing Director Director
 Date : 26-08-2015                                   (DIN: 03559930) 
                                                     (DIN: 00133452)
Source : Dion Global Solutions Limited
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