you are here:

Tata Communications Ltd.

BSE: 500483 | NSE: TATACOMM |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE151A01013 | SECTOR: Telecommunications - Service

BSE Live

Jun 22, 16:00
1268.20 0.80 (0.06%)
Volume
AVERAGE VOLUME
5-Day
53,057
10-Day
57,959
30-Day
35,949
27,524
  • Prev. Close

    1267.40

  • Open Price

    1286.40

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    0.00 (0)

NSE Live

Jun 22, 15:57
1269.10 -1.15 (-0.09%)
Volume
AVERAGE VOLUME
5-Day
500,171
10-Day
708,557
30-Day
542,458
520,762
  • Prev. Close

    1270.25

  • Open Price

    1272.00

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    1269.10 (755)

Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Dear Shareholders,

The Directors present the 33rd Annual Report and audited financial statements of Tata Communications Limited (the ‘Company’) for the financial year ended March 31, 2019. The Company along with its subsidiaries wherever required is referred as ‘we’, ‘us’, ‘our’, or ‘Tata Communications’.

PERFORMANCE

The table below sets forth the key financial parameters of the Company’s performance during the year under review:

(Rs. in crores)

Standalone

Consolidated

Particulars

2018-19

2017-18

2018-19

2017-18

Continuing operations

Income from operations

5389.13

5252.03

16524.95

16671.69

Other income

92.23

323.53

60.26

259.66

Total revenue

5481.36

5575.56

16585.21

17031.35

Total expenses

5090.16

4852.26

16244.25

16610.22

Profit from ordinary activities before exceptional items, tax and share of profit of associate

391.20

723.30

340.96

421.13

Exceptional items

(666.97)

(234.23)

2.24

(375.52)

Profit / (Loss) before tax and share of profit of associate

(275.77)

489.07

343.20

45.61

Tax expense/(benefit)

Current tax

223.83

304.85

332.67

409.16

Deferred tax

(57.28)

(82.41)

(59.35)

(54.24)

Profit / (Loss) for the period

(442.32)

266.63

69.88

(309.31)

Share in profit of associates

-

-

(150.31)

(16.30)

Profit/ (Loss) for the period from continuing operations

(442.32)

266.63

(80.43)

(325.61)

Other Comprehensive Income (net of tax)

(8.86)

(517.26)

(445.36)

(562.86)

Total Comprehensive Income / (Loss)

(451.18)

(250.63)

(525.79)

(888.47)

During the year under review, consolidated revenue of Tata Communications’ voice services business revenue contributed 32% of the total revenue, while data services business contributed 68% of the total revenue. You can read more about Tata Communications’ performance in the Management Discussion and Analysis (MDA), which forms part of this Report.

Dividend

The Directors are pleased to recommend a dividend of RS.4.50 per share, from the balance available in the reserves and surplus, for the financial year ended March 31, 2019, subject to the approval of the shareholders at the ensuing Annual General Meeting. For comparison, in FY17-18, the Company paid a dividend of RS.4.50 per share.

Transfer to reserves

On a standalone basis, the Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriation. The surplus balance in the statement of profit and loss stood at RS.2576.62 crores as at March 31, 2019.

Human resources

Tata Communications offers a dynamic work environment where its employees benefit from working with other innovators from around the globe - driving meaningful change together, both for its customers and Tata Communications. We have a multicultural workforce representing more than 47 nationalities, of which women constitute 22.5%. An ongoing gender diversity and inclusion initiative to raise this figure to at least 30% across the business - ‘Winning Mix’ - shows an upward curve since its inception in 2014.

Tata Communications’ compensation and employee benefit practices are designed to be competitive in the respective geographies where we operate. Employee relations continue to be harmonious at all our locations. FY18-19 ended with impressive learning statistics; 83,560 person-days of learning, a 21% increase on total person-days recorded in FY17-18. Through these trainings, over 4,000 employees completed certifications in various skills.

Disclosures pertaining to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Tata Communications has zero tolerance for sexual harassment and has adopted a charter on prevention, prohibition and redressal of sexual harassment in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and complied with all provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 including constitution of Internal Complaints Committee.

During the financial year 2018-19, the Company received seven sexual harassment complaints. As at March 31, 2019, six complaints were disposed off with appropriate action. One complaint which was received towards the end of March 2019 remained pending as at March 31, 2019.

You can read more about our employee engagement and development programmes in the ‘Human Capital’ section of the MDA.

Risk management

The Company’s Board of Directors (‘Board’) has formed a Risk Management Committee to frame, implement, review and monitor the Company’s risk management plan and to ensure its effectiveness. The major risks identified across the business are systematically addressed and mitigated against on a continual basis.

The details of the development and implementation of the enterprise-wide risk management (‘ERM’) framework are covered in the MDA.

CORPORATE MATTERS

Subsidiary companies

As on March 31, 2019, the Company had fifty four (54) subsidiaries and four (4) associate companies. There has been no material change in the nature of business of the subsidiaries and associate companies.

In January 2017, Tata Communications (Netherlands) B. V., a wholly owned indirect subsidiary of the Company, had acquired a 35% stake in Teleena Holding B.V. (‘Teleena’), a mobile virtual network enabler headquartered in the Netherlands, becoming its single largest shareholder, and thus, Teleena had become an associate of the Company. On October 2, 2018, Tata Communications (Netherlands) B. V. made a further investment of 65% in Teleena, consequent to which Teleena along with its four subsidiaries became indirect wholly-owned subsidiaries of the Company.

On February 21, 2019, NetFoundry Inc. was established as an indirect wholly-owned subsidiary of the Company under Tata Communications (Netherlands) B. V. to house and drive growth in the NetFoundryTM business which utilises software-based principles to enable applications to make networks, empowering developers and businesses to embed network-independent, programmable networking inside of their services using owned, leased or internet connectivity.

A statement in Form AOC-1 pursuant to the first proviso to Section 129 of the Act read with rule 5 of the Companies (Accounts) Rules, 2014 containing salient features of the financial statement of subsidiaries/associate companies/ joint ventures forms part of this Report. The Company adopted Ind AS from April 1, 2016 and the consolidated financial statements of the Company and its subsidiaries are prepared in accordance with the recognition and measurement principles stated therein.

The financial statements of the Company, both standalone and consolidated, along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the Company’s website pursuant to the provisions of section 136 of the Companies Act, 2013, General Circular No. 11/ 2015 dated July 21, 2015 issued by Ministry of Corporate Affairs and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The financial statements of the subsidiaries will be provided to any shareholder on written requests addressed to the Company Secretary at the Company’s registered office. These documents will also be available for inspection by any shareholder at the Company’s registered office during normal business hours and also at the venue of the Annual General Meeting on the day of the Meeting till the conclusion of the Meeting.

Changes to the Board of Directors and key managerial personnel

As of the date of this Report, the Board comprised of six Directors, of whom two were independent.

Ms. Renuka Ramnath, Independent Director, continues to act as the Chairperson of the Board.

Dr. Gopichand Katragadda stepped down from the Board with effect from September 11, 2018. Mr. Saurabh Kumar Tiwari tendered his resignation from the Board of the Company with effect from the close of business hours on January 30, 2019 and Mr. G. Narendra Nath resigned from directorship of the Company with effect from March 4, 2019. The Board places on record its sincere appreciation for their immense contributions and guidance to the Company during their tenure on the Board.

After obtaining necessary security clearance under the Company’s TV uplinking license from the Ministry of Information and Broadcasting, Dr. Maruthi Prasad Tangirala and Dr. Rajesh Sharma , were appointed as Additional Directors on the Board with effect from March 5, 2019 as per the nominations received from the Government of India.

The Board seeks approval of the shareholders at the 33rd Annual General Meeting for confirmation of the appointment of Dr. Maruthi Prasad Tangirala and Dr. Rajesh Sharma.

Based on the recommendation of the Nomination and Remuneration Committee, the Board approved the reappointment of Dr. Uday B. Desai, as an Independent Director for a second term commencing from August 4, 2019 to June 5, 2021, subject to approval of the shareholders.

The Board seeks approval of the shareholders via a special resolution at the 33rd Annual General Meeting for re-appointment of Dr. Uday B. Desai as an Independent Director.

In accordance with the provisions of the Act and the Company’s Articles of Association, Mr. Srinath Narasimhan retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for reappointment.

None of the Company’s Directors are disqualified from being appointed as a Director as specified in Section 164 of the Act. For details about the Directors, please refer to the Report on Corporate Governance.

As previously reported to the Stock Exchanges, when the Government of India (GoI) transferred 25% of its stake in the Company to Panatone Finvest Limited (Pantone) in 2002, a shareholders’ agreement (hereafter ‘SHA’) was entered into between the parties. This agreement, inter alia, sets forth the rights and obligations of the parties in appointing Directors on the Board of the Company. The relevant clauses from the SHA were incorporated in the Company’s Articles of Association, which provide that the Board shall comprise of four Independent Directors.

Till September 10, 2018, the Board comprised of seven Directors of whom two were independent. The Company continues to seek both the GoI’s and Panatone’s recommendation for the other two remaining vacancies for Independent Directors.

Subsequent to the resignation of Dr. Gopichand Katragadda with effect from September 11, 2018, the Board comprises of six Directors including two Independent Directors, and is compliant with the provisions of Section 149 (4) of the Companies Act, 2013 and Regulation 17 (1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 of having one-third of the Board as Independent Directors.

Declaration of Independent Directors

The Independent Directors have provided necessary disclosures to the Company that they comply with all the requirements stipulated in Section 149(6) of the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for being appointed as an Independent Director which form part of the Board’s Report.

Number of Board meetings

Eight Board meetings were held during the FY18-19. For further details, please see the Report on Corporate Governance, which forms part of the Board’s Report.

Board evaluation

The Board carried out an annual evaluation of its own performance, including that of its committees, Independent Directors and other Directors, pursuant to the provisions of the Act and the corporate governance requirements as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Input was sought from all Directors relating to criteria such as composition and structure, effectiveness of and contribution to processes, the adequacy, appropriateness and timeliness of information provided, as well as the Board’s overall performance. At a meeting of Independent Directors held on March 29, 2019, the results of the evaluation were reviewed and then also discussed at a meeting of the Nomination and Remuneration Committee (‘NRC’). Thereafter, the Board, based on a briefing by the Chairperson and the NRC, discussed, as a whole, the output of the evaluation.

Policy on Directors’ appointment and remuneration and other details

The Company’s policy on Directors’ appointment and remuneration, and other matters provided in Section 178(3) of the Act, is detailed in the Report on Corporate Governance, which forms part of the Board’s Report.

Surplus land

As previously reported, the Company acquired its assets, including numerous parcels of land, in 1986 from the Government of India (‘GoI’) as the successor to the Overseas Communications Service. At the time of disinvestment to Panatone Finvest Limited (‘Panatone’) in 2002, a total of 773.13 acres of land was identified as surplus under the terms of the Shareholders Agreement and it was agreed that this surplus land would be demerged into a separate entity.

To accomplish the surplus land’s demerger, Panatone incorporated Hemisphere Properties India Limited (‘HPIL’) in 2005-06 to hold the surplus land as and when it was demerged. In March 2014, the GoI acquired -51.12% of the shares in HPIL making it a Government owned company.

On March 5, 2018, the Company filed the scheme of arrangement and reconstruction for demerger of surplus land with the National Company Law Tribunal, Mumbai Bench (‘NCLT’). By order of the NCLT, a shareholders’ meeting was held on May 10, 2018, at which the shareholders approved the scheme of arrangement and reconstruction for demerger of surplus land. The NCLT, vide its order dated July 12, 2018 has approved the Scheme.

As on date, the Company, GoI and Panatone continue to work toward implementation of the scheme.

STATUTORY INFORMATION AND DISCLOSURES

Material Events After Balance Sheet Date

There are no subsequent events between the end of the financial year and the date of this Report which have a material impact on the financials of the Company.

Public deposits

The Company has not accepted, nor does it hold any public deposits.

Non-convertible Debentures (NCDs)

The Company had RS.150 crores of outstanding Unsecured NCDs as at March 31, 2019. RS.5 crores of Secured NCDs were redeemed by the Company during FY18-19.

All debentures issued by the Company were rated AA by CARE Ratings Limited and AAA by Brickworks Ratings India Pvt. Ltd.

Particulars of loans, guarantees or investments under Section 186

The particulars of loans, guarantees and investments are disclosed in the financial statements which also form part of this.

Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

Internal financial controls

The Company has adequate internal financial controls covering the preparation and presentation of financial statements which are operating effectively.

Particulars of contracts or arrangements with related parties referred to in Section 188 of the Act

There have been no materially significant related party transactions between the Company and the Directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act, along with the justification for entering into such a contract or arrangement in Form AOC-2, does not form part of the Board’s Report.

Audit Committee

Details pertaining to composition of the Audit Committee are included in the Report on Corporate Governance, which forms part of the Board’s Report.

Corporate social responsibility

A brief outline of the Company’s corporate social responsibility (CSR) policy and related initiatives undertaken during the year is set out in Annexure I of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR Policy is also available on the Company’s website at www.tatacommunications.com.

Corporate governance

Pursuant to Regulation 24 and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis, Business Responsibility Report, Report on Corporate Governance and Auditors’ Certificate regarding compliance with conditions of corporate governance form part of the Board’s Report and is also available on the Company’s website at www. tatacommunications.com.

Extract of annual return

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure II in the prescribed Form MGT-9, which forms part of the Board’s Report.

Particulars of employees

The provisions of Section 134 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, require the Company to provide certain details about the remuneration of its employees.

According to the provisions of section 136(1) of the Act, the Board’s Report being sent to the shareholders need not include this information as an annexure. The annexure regarding the particulars of employees will be available for inspection by any member at the registered office of the Company during working hours, for 21 days before the date of the Annual General Meeting. Any Member interested in obtaining a copy of the same may write to the Company Secretary.

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given below:

a. The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2018-19:

(Rs. in crores)

Non-Executive Directors

Ratio to median remuneration *

Ms. Renuka Ramnath

4.82

Mr. Srinath Narasimhan1

1.93

Dr. Uday B. Desai

3.20

Mr. Saurabh Kumar Tiwari2 (up to January 30, 2019)

-

Dr. Gopichand Katragadda1 (up to September 11, 2018)

-

Mr. G. Narendra NatRs.2 (up to March 4, 2019)

-

Dr. Rajesh Sharma2 (w.e.f. March 5, 2019)

NA

Dr. Maruthi Prasad Tangirala2 (w.e.f. March 5, 2019)

NA

Executive Director

Mr. Vinod Kumar

76.06

* While calculating the ratio for non-executive Directors, both commission and sitting fees paid have been taken and Directors who have not been in the Company for the entire financial year 2018-19 have not been considered for the calculations.

1. In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full-time employment of any Tata Company.

2 The Government Directors have informed the Company that they shall not accept any sitting fees and commission as their directorships are considered to be part of their official duty.

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:

Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary

% increase in remuneration in the financial year*

Ms. Renuka Ramnath

12.55

Mr. Srinath Narasimhan1

75.40

Dr. Uday B. Desai

11.36

Mr. Saurabh Kumar Tiwari2&3 (up to January 30, 2019)

-

Dr. Gopichand Katragadda1®2 (up to September 11, 2018)

-

Mr. G. Narendra NatRs.2&3 (up to March 4, 2019)

-

Dr. Rajesh Sharma2®3

-

Dr. Maruthi Prasad Tangirala2®3

-

Mr. Vinod Kumar, Managing Director & Group CEO

37.30

Ms. Pratibha K. Advani, Chief Financial Officer

(5.12)

Mr. Manish Sansi, Company Secretary

25.16

*While calculating the ratio for non-executive Directors, both commission and sitting fees paid have been taken.

1. In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full-time employment of any Tata Company

2. Directors and KMPs who have not been in the Company for the entire financial years 2017-18 and 2018-19 have not been considered for the calculations.

3. The Government Directors have informed the Company that they shall not accept any Sitting Fees and commission as their Directorships are considered to be part of their official duty.

c. The percentage increase in the median remuneration of employees in the financial year: (12.91%)

d. The number of permanent employees on the rolls of Company: 5,238 employees as on March 31, 2019

e. Average percentile increase already made in the salaries of employees, other than the managerial personnel in the last financial year, and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

During the course of the year, the total average increase was approximately 7.5% for employees based in India, after accounting for promotions and other event-based compensation revisions. The increase in the managerial remuneration for the year was 21.2%.

f. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration is as per the remuneration policy of the Company.

Conservation of energy

The ‘Natural Capital’ section of the Management Discussion and Analysis describes our consistent efforts towards conservation of energy and creating a better tomorrow.

Technology absorption

The Company continues to use the latest technologies for improving its productivity and the quality of its services and products. Its operations do not require the significant importation of technology.

Foreign exchange earnings and outgoings

For the purpose of Form ‘C’ under the Companies (Accounts) Rules 2014, foreign exchange earnings were equivalent to RS.546.55 crores and foreign exchange outgo was equivalent to RS.991.27 crores.

Statutory Auditors and their report

The Company’s Statutory Auditors, M/s. S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W/E300004), hold office until the conclusion of the 36th Annual General Meeting, subject to ratification of their appointment by shareholders at every Annual General Meeting.

The Statutory Auditors have not reported any incident of fraud to the Company’s Audit Committee in the year under review.

The Company’s standalone and consolidated financial statements have been prepared in accordance with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder (Ind AS) and other accounting principles generally accepted in India.

Secretarial Auditors and their report

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed a practising company secretary, Mr. U. C. Shukla, (FCS No. - 2727/CP No. - 1654), to undertake the Company’s secretarial audit. The report of the Secretarial Auditor in Form MR-3 for the Financial Year ended March 31, 2019 is annexed to this Report. . The Secretarial Audit Report contains the following observation:

‘During the year under review, the Company has complied with the provisions of the Act, Rules Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations:

The Company has complied with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 except with regard to appointment of Independent Directors to the extent of 1/3rd of the total strength of the Board till 10th September, 2018.’

Board’s Comment:

As previously reported to the stock exchanges, when the Government of India (GoI) transferred 25% of its stake in the Company to Panatone Finvest Limited (Pantone) in 2002, a shareholders’ agreement (hereafter ‘SHA’) was entered into between the parties. This agreement, inter alia, sets forth the rights and obligations of the parties in appointing Directors on the Board of the Company. The relevant clauses from the SHA were incorporated in the Company’s Articles of Association, which provide that the Board shall comprise of four Independent Directors.

Till September 10, 2018, the Board comprised of seven Directors of whom two were independent. The Company continues to seek both the GoI’s and Panatone’s recommendation for the other two remaining vacancies for Independent Directors.

Subsequent to the resignation of Dr. Gopichand Katragadda with effect from September 11, 2018, the Board comprises of six Directors including two Independent Directors, and is compliant with the provisions of Section 149 (4) of the Companies Act, 2013 and Regulation 17 (1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 of having one-third of the Board as Independent Directors.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2018-19, based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s), as applicable, including an audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board committees, including the Audit Committee.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirms that:

in the preparation of the annual accounts, the applicable accounting standards were followed and there were no material departures.

the Directors had 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 at the end of the financial year and of the profit and loss of the Company for that period.

the Directors had taken proper and sufficient care 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 other irregularities.

the Directors had prepared the annual accounts on a going concern basis.

the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGMENTS

The Directors would like to thank each one of our customers, business associates and suppliers around the world for their valuable contribution to Tata Communications’ continued growth and success. The Directors recognise and appreciate the passion and commitment of Tata Communications’ employees and workforce globally.

The Directors are also grateful to Tata Communications’ other stakeholders and partners including our shareholders, promoters, bankers and others for their continued support.

Thank you,

On behalf of the Board of Directors

Renuka Ramnath

DIN: 00147182

Chairperson

Dated: May 8, 2019

Director’s Report