The Directors'' are delighted to present the 21st Annual Report on the
business & operations of the Company together with the Audited
Financial Statements & Accounts for the year ended 31st March, 2013.
1. FINANCIAL HIGHLIGHTS
The previous financial year of the Company was of 18 months ending
September 30, 2012. Consequently the current financial year of your
Company was of 6 Months from October 1st, 2012 to March 31st, 2013 and
accordingly the figures for the period under review is for a period of
6 months ended on March 31st , 2013; hence not comparable with the last
Your Company has recorded overall revenue of Rs. 935.54 Crores for the
year (6 months period). Your Company has been facing tough times due to
the current economic slowdown & unfavourable market conditions which
has globally affected industries especially in the Telecom Industry.
Increased competition & rising interest costs have further added to the
profitability. Your Company recorded a net loss of Rs. 742 Crores
during the six months ended March 31, 2013. However the cumulative
retained profits still remains out to Rs. 340.13 Crores & the Company
hopes to do well & recover from the hurdles faced in past. A brief of
the financial highlights with comparison of previous year are as
(Rs. In Crs)
Particulars 2012-13 2011-12
Total Revenue 938.54 4,062.51
Total Operating Expenditure 961.59 2,960.07
Profit Before Tax (777.86) 489.67
Profit/(Loss) after Tax (742.00) 433.21
Cumulative Retained Profits 340.13 1,082.14
Analysis of operating performance is covered under Management
Discussion and Analysis Report (MDAR).
The MDAR for the year under review, as stipulated under Clause 49 of
the listing agreement with the stock exchanges in India, on the
Company''s performance, industry trends and other material changes with
respect to the Company and its subsidiary, wherever applicable, is
presented in a separate section forming part of this Annual Report.
The register of members and share transfer books shall remain closed
from Wednesday, September 25, 2013 to Monday, September 30, 2013 both
2. CORPORATE DEBT RESTRUCTURING
Tulip Telecom Limited established in 1992, has emerged as a leading
enterprise service provider catering to the Information Technology and
data connectivity requirements in recent years. The business portfolio
of Tulip includes three segments: Enterprise Data Connectivity (EDC),
Managed Services and Network Integration. The Company has established
itself as a major EDC player with significant asset base in the form of
fibre optic and wireless network. However, the Company was facing
liquidity problems which ultimately resulted in a stress in its ability
to service its debt obligations. A brief portrayal of reasons for the
stressful phase is as under:
1. Due to the current economic slowdown, many enterprises have started
cutting down their IT and telecom spending, impacting the revenue
growth of your Company. In order to retain customers, Tulip had to
resort to pricing discounts that had impacted the profitability,
particularly in the past quarters.
2. Your Company has undertaken a number of Government projects
involving high capex/upfront investment while the revenue is realized
over a longer period. The aforesaid model of upfront investments and
staggered revenue has resulted in blockage of current assets and
3. Rising interest cost has impacted the operating cash flows
4. On account of insufficient internal accruals and due to unfavorable
capital market conditions your Company was not able to tie up external
funds. While your Company expected conversion of FCCB into equity,
which would have substantially improved the gearing, however, a steep
decline in share price has led to a situation where the same remains as
unpaid debt in Company''s books.
5. Targeting high value added revenue segments and the revenue
potential with respect to the fibre optic cable network, your Company
has made investments in setting up the required infrastructure.
However, the payback period of these investments is significantly
longer than the average tenure of the loans raised to fund these
investments (~5years). Most of the repayments were bunched up in next 2
years resulting in severe liquidity crunch.
Cash flows were not sufficient to meet debt obligation as high capex,
increasing receivables, worsening revenue and profitability and high
interest expenses have resulted in decline in the cash generation which
is insufficient to meet the existing debt liabilities and payment
obligations to the lenders.
In view of the problems faced, your Company has made reference to the
Corporate Debt Restructuring (CDR) Cell of RBI on December 31, 2012
which was supported by ICICI Bank as the Monitoring Institution. The
Flash Report was discussed in CDR meetings dated January 21, 2013,
February 15, 2013 and March 7, 2013. Relying on the strong belief on
the revival of the Company the lenders have acceded their approval to
the CDR proposal.
Your Director''s are pleased to inform that the Company has received a
formal Letter of Acceptance for its proposal for the restructuring of
its debt by the Empowered Group of the CDR Cell dated May 8, 2013 &
subsequently signed the Master Restructuring Agreement (MRA), the
salient features of which are as under:
a) A12 year door-to-door repayment plan;
b) Reduction in Interest Rates;
c) 1.5 year moratorium on Interest and 2.5 year moratorium on Principal
d) Infusion of approximately Rs. 60 Crores by the Promoter under CDR
As mandated by the CDR package terms, the Promoters have infused the
necessary contribution by way of unsecured loans.
3. DIVIDEND & TRANSFER TO RESERVES
In the event of loss your Directors express their inability to declare
any Dividend for the Six months financial year ended March 31, 2013.
Debenture Redemption Reserve
The Company has maintained Debenture Redemption Reserve (DRR) of Rs.
93.72 Crores during the period for Non Convertible Debentures (NCDs),
amounting to Rs. 560 Crores outstanding as on March 31st, 2013.
4. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)
During the Financial year 2007-08, your Company has raised Zero Coupon
Foreign Currency Convertible Bonds (FCCBs) aggregating to USD 150
Million with a maturity period of 5 years, i.e. 26th August 2012. The
company has bought back Zero Coupon Foreign Currency Convertible Bonds
(FCCBs) aggregating to USD 52.99 Millions during F.Y. 2008-09 &
2009-10, resulting in outstanding FCCB liability to USD 97 Million as
on the March 31, 2013
The company has defaulted in repayment of aforesaid unsecured Foreign
Currency Convertible bonds (FCCB) amounting to approx. USD 145 million
(Rs. 785 Crores approx.). The FCCB were due for redemption in August,
Pursuant to the Master Restructuring Agreement approval of CDR lenders
has been accorded to the restructuring of the FCCB''s. In order to
redeem aforesaid FCCB, the management is actively pursuing various
options which includes raising of additional finance in the form of
debt and other various options.
Discussion on each of these options is in process and the management is
confident that the company will be able to arrange the required funds
for its redemption shortly.
5. DEBENTURES & EXTERNAL COMMERCIAL BORROWINGS NON CONVERTIBLE
During the period under review there has been no issue of the NCD''s and
there amount remains constant to previous financial year, to the tune
of Rs. 560 Crores.
EXTERNAL COMMERCIAL BORROWINGS
During the year, the External Commercial Borrowings (ECB) stands
unvarying for USD 42.5 Million (approx. Rs 331.09 Crores) similar to
the previous year.
6. SUBSIDIARY COMPANIES
Your Company has four, wholly Owned Subsidiary and a Fellow Subsidiary,
1. Tulip IT Services Singapore Pte. Ltd.
3. Tulip Swan IT Services Ltd.
4. Tulip Data Centre Services Pvt. Ltd.
5. Sada IT Parks Pvt. Ltd.
In accordance with the General Circular No: 2/2011 dated 8th February
2011, issued by the Ministry of Corporate Affairs, Government of India,
the Balance Sheet, Statement of Profit and Loss and other documents of
the subsidiary companies are not being attached with the Balance Sheet
of the Company. However, the financial information of the subsidiary
companies is disclosed in the Annual Report in compliance with the said
The Company will make available the Annual Accounts of the subsidiary
companies and the related detailed information to any member of the
Company who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection at the Registered Office of the Company and that of the
respective subsidiary companies. The Consolidated Financial Statements
presented by the Company include the financial results of its
7. BOARDOF DIRECTORS
In terms of the provisions of the Companies Act, 1956 & the Articles of
Association of the Company, Mr. Chandrahas Kutty & Mr. Rajesh Gulshan
will retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment. Your Directors recommend
their appointment/ re-appointment at the ensuing Annual General
The present term of appointment of Mr. Deepinder Singh Bedi, Whole-Time
Director of the Company had expired on March 31, 2013. The Board on the
recommendation of the Remuneration committee had recommended his
re-appointment for a further term of 3 (three) years to the members,
who accorded their approval on June 14, 2013 vide Postal Ballot.
Further in the event of losses faced during the period under review,
the remuneration of whole-time directors, as recommended by members
earlier had exceeded the limits prescribed under Schedule XIII, consent
is sought from the members for waiver of excess remuneration & payment
of existing remuneration to the whole-time directors for the remaining
term of their appointment. Details of aforesaid directors are more
particularly mentioned in the notice of the meeting & explanatory
statement annexed thereto.
Brief resume/details of the Directors, who are to be appointed
/re-appointed as mentioned herein-above have been furnished along with
the Explanatory Statement to the Notice of the ensuing Annual General
Meeting. The Board recommends their re-appointment/appointment at the
ensuing Annual General Meeting.
The Constitution of Board of Directors remains properly constituted in
compliance with clause 49 of the Listing Agreement and as per
provisions of the Companies Act, 1956.
Pursuant to the covenants of the Master Restructuring Agreement the
Company was suggested by the CDR Monitoring Committee to appoint
Statutory Auditors as recommended by the CDR lenders. The Board of
Directors in their meeting held on August 12, 2013 had considered and
recommended for the appointment of M/s. T.R.Chadha & Co., Chartered
Accountants, as Statutory Auditors, and considered M/s. R.Chadha &
Associates, Chartered Accountants, the retiring auditor of the Company,
to act as joint auditor of the company, after considering the
recommendation of Audit Committee. Further the Company has received a
certificate from M/s. T.R.Chadha & Co., Chartered Accountants and from
M/s. R. Chadha & Associates, Charterd Accounts, to the effect that
their appointments, if made, would be in accordance with Section 224(1
B) of the Companies Act, 1956 and they are not disqualified in terms of
Section 226 of the Companies Act, 1956 from being appointed as
Statutory Auditors of the Company.
Your Directors recommend their appointment.
9. COST AUDITORS
Pursuant to the notification issued by the Ministry of Corporate
Affairs (MCA) and based on the recommendation of the Audit Committee,
your Board has, subject to the approval of the Central Government,
approved the appointment of M/s H. Tara & Co., Cost Accountants, as the
Cost Auditor of the Company for the financial year 2013-14. Your
Company has filed application with the Central Government for necessary
approval in this connection. Further as per the Cost Audit Rules your
Company has submitted the Cost Audit Report for the Financial Year
10. EMPLOYEE STOCK OPTION SCHEME
During the year under review your Company has not issued & allotted any
Stock Options under the ESOS Scheme. Total no of shares covered under
the Scheme pursuant to stock split remains constant as 50,00,000
Shares. Out of the 13,32,500 Options outstanding as on previous
financial year ended on September 30, 2012; Employees of the Company
who were granted options aggregating 3,50,000 have left the services of
the Company before any options could vest with them. Hence the total
options granted as on March 31, 2013 are 9,82,500.
Further, the disclosures as required under Clause 12 of SEBI (Employee
Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999
are furnished as Annexure A, forming part of this Report.
A Certificate from M/s. R. Chadha & Associates, Chartered Accountants,
Statutory Auditors, with respect to the implementation of the Company''s
ESOS Scheme, would be placed before the Shareholders at the ensuing
Annual General meeting, and a copy of the same shall be available for
inspection at the registered office of the Company.
11. HUMAN RESOURCES MANAGEMENT
Your Board believes that Employees are vital to the Company. Your
Company has created a favorable work environment which encourages
innovation and meritocracy. The Company has also set up scalable
recruitment and human resource management process which would enable us
to attract and retain high caliber employees. The employee strength of
the Company as on March 31, 2013 is 2647.
12. DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of and pursuant to section 217 (2AA) of the Companies Act,
1956, your Directors, in relation to the Annual Statement of Accounts
for the Six months financial year ended March 31, 2013, state and
(i) the Accounts had been prepared on a '' going concern'' basis and in
such prepara- tion, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) the Accounting Policies have been selected and applied and
judgments and estimates made 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 period and of the Profit of the Company for that period ;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 as amended, for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities
13. LISTING WITH STOCK EXCHANGES
The Equity Shares of the company are listed with The BSE Ltd. (BSE) &
National Stock Exchange of India Limited (NSE).
Zero Coupon Convertible Bonds (FCCBs) which were listed on Singapore
Stock Exchange (SGX - ST) have been due for redemption during the
previous financial year. Company is evaluating all possible ventures
for the restructuring of its FCCB''s.
The Secured Redeemable Non Convertible Debentures (NCDs) are listed on
WDM segment of The BSE Ltd (BSE).
The annual listing fee for the year 2012-2013 have been paid within the
scheduled time to BSE, NSE, NSDL & CDSL (the Custodian''s) respectively.
14. CONCURRENT AUDIT
The CDR lenders have recommended the appointment of a Concurrent
Auditor for the effective implementation of the restructured loans and
other indebtedness of the Company.
Pursuant to their recommendations M/s S.S.Kothari Mehta & Co.,
Chartered Accountants have been appointed as the Concurrent Auditors of
the Company for the financial year 2013-14 which was duly approved by
the Audit Committee of the Company. The scope of work of concurrent
auditors includes inter-alia:
- the review of inventories;
- the review of fixed assets;
- the review on financing, legal & regulatory risk management;
- the review of existing management information and reporting system
including accounting procedures fol lowed by the Company & suggest
changes, if any to improve the effectiveness.
16. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS
As per Clause 49 of the Listing Agreement, report on Corporate
Governance together with Management Discussions and Analysis report and
Certificate from Company''s Statutory Auditor are annexed elsewhere in
17. PUBLIC DEPOSITS
During the year under review, your Company has not accepted any
deposits under the provisions of Section 58A of the Companies Act, 1
956 and Rules made there under.
18. AUDIT COMMITTEE RECOMMENDATION
During the year, there was no such recommendation of the Audit
Committee which was not accepted by the Board. Hence there is no need
for the disclosure of the same in this Report.
19. PARTICULARS ON CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Your Company, being a service provider organization, most of the
information as required under Section 217(1)(e) of the Companies Act,
1956, read with the Companies (Disclosure of particulars in the report
of the Board of Directors) Rules, 1988 as amended from time to time,
are not applicable. However, the information as required has been
provided in Annexure B to this Report.
20. QUALITY INITIATIVES
Reinforcing its commitments to high standards of quality, your Company
was successfully assessed for its ISO certifications by BSI Global for
- QMS (Quality Management System) as per ISO 9001: 2005 for providing
system Integration , Network Integration, VPN Services and Managed
- ITSM ( Information Technology Service Management System) as per ISO
20000-1: 2005 covering the delivery of managed services to its
customers for Network Operation Centre at Mumbai Premises & Data Centre
& Network Operations Centre at New Delhi premises within the technical
& organizational boundaries of your Company.
- Company was recertified for TL 9000 within the scope of
provisioning and providing customer service by TUV-SUD
21. PARTICULAR OF EMPLOYEES
Information required to be furnished in terms of section 217 (2A) of
the Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 is required to be set out in the Annexure to this Report.
However, in terms of section 219(1 )(b)(iv) of the Companies Act, 1956
, the Report and Accounts are being sent to members excluding aforesaid
Annexure. Any member interested in obtaining a copy of the same may
write to the Company Secretary at the Registered Office of the Company.
None of the employees except Lt. Col. H.S. Bedi, VSM, Chairman &
Managing Director and Mr. Deepinder Singh Bedi, Executive Director,
listed in the said Annexure are related to any Director of your
Your Directors would like to express their gratitude for the
co-operation and support received from Members, Bankers, Department of
Telecommunications (DOT), Telecom Regulatory Authority of India (TRAI),
Wireless Planning Commission (WPC), Government of India, other
Regulatory Bodies, Customers and other business constituents during the
period under review.
Your Directors place on record their deep appreciation for exemplary
contribution of the Employ- ees at all levels. Their dedicated efforts
and enthusiasm has been integral to your Company''s impressive growth.
For & on behalf of the Board of Directors
New Delhi Lt.Col.H.S.Bedi, VSM
August 30,2013 Chairman & Managing Director