14th Annual Report

14th AnnuAl REpoRtFor the Financial Year ended 31.3.2014

bhARAt sAnchAR nigAm limitEd

Annual Report 2013-14

CONTENTS

DETAILS PAGE NO

CMD and the Board of Directors 04 – 06

Vision and Mission 07 – 08

Chairman and Managing Director’s Message 09 – 10

Directors Report 11 – 25

Management Discussion and Analysis Report 26 – 27

Report on Corporate Governance 28 – 51

Financial Statements [Balance Sheet, P & L Account, Cash Flow Statement, Notes forming part of the Financial Statements]

52 – 96

Auditor’s Report 97 – 126

Addendum to Directors Report 127 – 137

Comments of the Comptroller and Auditor General of India on the Accounts 138 – 140

Replies of the Management to the Comments of the Comptroller and Auditor General of India on the Accounts

141 – 143

4

BOARD OF DIRECTORS

Shri R.K. UpadhyayChairman and Managing

Director[Upto 30.6.2014]

Shri A.N. RaiDirector (Enterprise) & Director (HR) Chairman and Managing Director* [*Wef 01.07.2014]

Shri N.K. GuptaDirector (CFA)

Shri K.C.G.K. PillaiDirector [Finance][Upto 30.11.2013]

Shri Anupam ShrivastavaDirector (CM) &

Director (Fin) [Wef 1.5.2013]

Ms. Rita A. TeaotiaGovernment Director

Shri Shahbaz AliGovernment Director

[Upto 26.08.2014]

Shri Ajai Vikram SinghDirector

Chairman, Remuneration Committee of the Board

Smt. Darshana Momaya Dabral

Government Director[W.e.f. 29.9.2014]

Prof. N. BalakrishnanDirector

Chairman, Audit Committee of the Board


5

Company Secretary & Sr. GM (Legal)H.C. Pant

Registered and Corporate Office

Bharat Sanchar Bhawan, H.C.Mathur Lane, Janpath, New Delhi-110 001

Corporate Identity Number (CIN) :

U74899DL2000GOI107739

Statutory Auditors

Walker Chandiok & Co., L-41 Connaught Circus, New Delhi-110 001.

Cost Auditors

M/s Balwinder & Associates, Cost Accountants

Bankers

State Bank of India, Punjab National Bank, ICICI Bank, Indian Bank, HDFC Bank, Canara Bank, Union Bank of India, Corporation Bank, IDBI Bank, Oriental Bank of Commerce,

Indus Ind Bank, Yes Bank

6

OUR BUSINESS

Mobile Services

GSM :- 2G, GSM 3G, WiMAX,

CDMA :- Mobile, CDMA Fixed and CDMA Data Card Services

Broadband Services

Landline Broadband

3G Mobile Broadband

GSM Wi-Fi

WiMAX Broadband

Dial up Internet (DIAS)

Fiber Broadband (FTTH)

CDMA Broadband :- EVDO Prepaid, EVDO Postpaid, EVDO Router.

Enterprise Business

Enterprise Voice and Mobility:- EPABX, Voice VPN, ISDN/PRI/BRI, Centrex, 2G/3G Mobile, Blackberry services

Internet Data Centre Services:- IDC Overview, Managed Colocation services, Managed/Hosting Services, Managed IT Services, Cloud Services (PCaas)

Enterprise Data Services:- Leased Circuit(DLC), MPLS VPN, Internet Leased Line, VSAT, VPN Services (Over BB, CDMA/3G)

Enterprise Broadband:- Wi-Max, Wi-Fi, EVDO, DSL Broadband/FTTH Broadband

Managed Services:- Managed Network Services(MNS), Managed Global Audio Conferencing, Managed SaaS(Mail), Internet Data Centre

Other Enterprise Services:- Web Colocation, Fleet Tracking, Video Conferencing(VC), Video Surveillance, Web Hosting, USOF Project and host of other innovative Enterprise Business Solution Services

Landline Services

Telephone Lines, FLPP B-fone, Phone plus services

Intelligent Network Services:- Universal ITC, UAN service, Toll free numbers/services, VPN service, Televoting services

BSNL PCO:- FLPP-PCO

PRI/BRI/Dial-up Internet:- Dial up internet, ISDN PRI, ISDN BRI


7

VISION AND MISSIONVISION

Be the leading telecom service provider in India with global presence Create a customer focused organization with excellence in customer care, sales and

marketing Leverage technology to provide affordable and innovative telecom services / products

across customer segments

MISSION:

a) Be the leading telecom service provider in India with global presence • Generatingvalueforallstakeholders–employees,shareholders,vendors&business

associates • Maximizingreturnonexistingassetswithsustainedfocusonprofitability • Becomingthemosttrusted,preferredandadmiredtelecombrand • ToexploreInternationalmarketsforGlobalpresenceb) Creating a customer focused organization with excellence in sales, marketing and customer

care • Developingamarketingandsalesculturethatisresponsivetocustomerneeds • Excellence in customer service - ”friendly, reliable, time bound, convenient and

courteousservice”c) Leveraging technology to provide affordable and innovative products/services across

customer segments • Offeringdifferentiatedproducts/servicestailoredtodifferentservicesegments • Providingreliabletelecomservicesthatarevalueformoneyd) Providing a conducive work environment with strong focus on performance • Attractingtalentandkeepingthemmotivated • Enhancingemployeesskillsandutilizingthemeffectively • Encouragingandrewardingindividualandteam/groupperformancee) Establishing efficient business processes enabled by IT • Changingpolicies andprocesses to enable transparent, quick andefficientdecision

making • BuildingeffectiveITsystemsandtools

OBJECTIVES

• Tobe theLeadingTelecomServicesproviderbyachievinghigher rateofgrowthsoas tobecome a profitable enterprise.

• Toprovidequalityandreliablefixedtelecomservicetoourcustomerandtherebyincreasecustomers confidence

• Toprovidecustomerfriendlymobiletelephoneservice,withfocusonValueaddedserviceanddata services, ofhighquality andplay a leading role asGSMoperator in its areaofoperation.

8

• Strategyfor: I. Rightsizing the manpower II. Providing greater customer satisfaction• Contributetowards: I. Broadband customers base in India as envisaged in draft National Telecom Policy

2011. II. Providing broadband connectivity to 2.5 lakhs Village Panchayats as per Government

policy• To leverage the existing infrastructure of BSNL for facilitating implementation of other

government programmes and initiatives particularly in the rural areas.

• TolookfortheopportunityofpossibleexpansionofBSNLfootprintgloballybyexploringinternational telecom in developing markets such as Africa.

Shri Ravi Shankar Prasad, Hon’ble Minister for Communications and IT addressing the delegates in the Heads of Circle Conference 22nd August 2014.


9

Dear Shareholders,

On behalf of the Board of Directors of your Company, it is my privilege to extend you all a very warm welcome at the 14thAnnual General Meeting of the Company.

Business Outlook

The high inflationary pressures & structural bottlenecks impacted the growth story as the economy clocked around 5% GDP Growth in the last two fiscal years. However, presently, overall sentiment is that economy is on the roadmap of smart recovery.

In the telecom space, India, the second largest telecommunication market appears to be at the crossroads as the telecom sector is witnessing slow but sure progression from voice to data usage. Intense competition in smart-phone suppliers market, generation of targeted applications & content has resulted in 3G services gaining traction for a plethora of services viz. broadband, mobile Internet access, video calls, voice messaging and mobile TV etc.

At the industry level, it is evident that for sustained data-based services driven growth, transformation of existing business and operational model has become imperative.

Going forward, the new telecom policy appears to have recognized that Telecommunication is a key driver of economic and social development in an increasingly knowledge intensive global scenario. Carrying this ahead, policy initiatives of new government - ‘Digital India’ and ‘100 Smart Cities’ projects have all the attributes of telecom & IT and it is apparent that BSNL, with its footprint all across India, will be central to the scheme of things in realization of this nation building activity. This shall entail mobilization of resources and execution at hitherto unprecedented level.

Your company, with its robust Pan India network is well positioned and fully geared to anticipate the challenges, embrace the technological changes and tap the ensuing opportunities in times to come.

We are hopeful to execute successfully and to the expectation and satisfaction of the Government, the projects of national importance viz., LWE, NFS and NOFN etc., which were entrusted to your Company on nomination basis by the Government.

Performance Highlights during Financial Year 2013-14

During the year under review, the Company incurred a loss of Rs. 7,019.76 Crore [Loss in Previous Year Rs. 7,884.44 Crore]. While the income from services is Rs. 26,153.26 Crore [Previous Year Rs. 25,654.81 Crore], other income was Rs. 1,843.09 Crore [Previous Year Rs. 1,473.08 Crore]

There was an increase of 1.94% in income from services in comparison to previous year, the other income increased by 25.12%. There was an increase of 3.20% in the total income in comparison with previous year.

The Employee benefit expenses and Office & Administration expense has shown an increase of 12.20 % and 5.82 % respectively.

Your company in the face of stiff competition has been able to rein in the downslide to some extent.

Further, your company kept its sights firmly on the futureandcontinued tomake requisiteinvestments for technological up gradation and network expansion. Efforts in these directions will facilitate improvement in service offerings, delivery standards and consequently largervalue capture in the years ahead.

CHAIRMAN AND MANAGING DIRECTOR’S MESSAGE

10

Corporate Social Responsibility (CSR)

Right from its inception, your Company has been at the forefront of nation building activities. National telecom policy 2012 has also recognized that BSNL has played a pre-eminent role in provision of telecom services in the country, particularly in rural, remote, backward and hilly areas. We remain committed in expanding telecom footprint to every nook and corner of the country and touch lives of all citizens and be a key enabler in facilitating inclusive growth and transforming India.

While delivering value to our subscribers, we are equally aware of our responsibilities wherebywe have always attempted to adopt a holistic approach in our endeavours encompassing economic, social and environmental aspects. Such efforts of your company have been recognized and your Company was awarded 1st and 2nd National Level Energy Conservation award by the Ministry of Power. Certificate of Merit was also awarded to your Company by Bureau of Energy Efficiency, Ministry of Power.

Importantly, in troubled times, whether it be Uttarakhand floods, Phailin Cyclone in coastal Odisha & Andhra Pradesh and more recently, when rains & floods played havoc in Jammu & Kashmir, Your Company has always been the first telecom network to have worked on war footing for restoration of telecom network and establishing connectivity.

When the natural calamity struck the Uttarakhand, our employees contributed a day’s salary to the PM’s National Relief Fund. Again, when Jammu & Kashmir was hit by unprecedented floods, our employees rose to the occasion to contribute a day’s salary to the PM’s National Relief Fund.

CSR Committee of the Board has also been constituted as mandated by the Companies Act 2013.

Corporate Governance

Your Company believes in conducting business in a manner that complies with the

Corporate Governance procedures and Code of Conduct. Being the successor of erstwhile central government departments, compliances of Corporate Governance procedures and prescribed codes is inbuilt in the systems and procedures.

People our strength

Your Company has always valued its human resources and their spirit in overcoming challenges as the most important resource. Our Focus has been to strengthen up people practices and processes to attract and retain talent. Commensurate with its expansion plans, your Company has prioritized competence building of its employees through training and development and induction of new talent. Towards this end, various management initiative programmes have been integrated with the Human Resource Development policies of the Company.

Acknowledgements

On behalf of the Board of Directors of your Company, I wish to convey sincere regards and deep gratitude to our valued subscribers. I acknowledge the unstinted support and valuable guidance from various Ministries, particularly from the Department of Telecommunications, other Ministries and Departments, Authorities and Agencies of the Union Government and the State Governments.

I also place on record our appreciation to our vendors and service providers for their their co-operation.

I am grateful to the Board of Directors for their support and guidance. I would like to express my deep gratitude to all our stakeholders for the continued faith reposed in BSNL.

Thank you,

A.N. Rai Chairman and Managing Director

Jai Hind !


11

DIRECTOR’S REPORT

Dear Members,

Your Directors have great pleasure in presenting the 14th Annual Report of your company, alongwith the Audited Statement of Accounts, Auditors’ Report and Comments and Review of the Comptroller and Auditor General of India, on the Accounts for the financial year ended March 31, 2014.

FINANCIAL PERFORMANCE

Thefinancialperformanceforfiscal2013-14issummarizedasbelow:

S. No

Particulars 2013-14 [Rs. in Lacs]

1 Income from services 1 2,615,3262 Other Income 2 184,3093 Expenditure [Excluding Interest and depreciation] 3 2,868,6794 Profit before interest, depreciation and tax [EBIDTA] 4 = 1+2-3 (69,044)5 Depreciation 5 602,3176 Interest 6 21,9647 Profit/(Loss) before prior period adjustment 7=4-(5+6) (693,325)8 Prior period adjustments 8 (19,094)9 Profit/loss before tax 9=7+8 (712,419)

10 Provision for deferred tax 10 10,443Tax Provision for the year -Tax Provision for the earlier years -Wealth tax Note 1

11 Net Profit/Loss for the year 11=9+10 (701,976)

Note1:WealthtaxexpenditurebookedforthecurrentyearisRs.84lacswhichisincludedintheexpenditure(excluding interest and depreciation) shown at serial no 3.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year 2013-14, the company incurred a loss of Rs. 7,019.76 Crore [Previous year Rs. 7,884.44 Crore]. While the Income from services is Rs. 26,153.26 Crore [Previous year Rs.25,654.81 Crore], other income was Rs. 1,843.09 Crore [Previous year Rs. 1,473.08 Crore].

There was an increase of 1.94 % in Income from services in comparison to previous year, the other income increased by 25.12 %. There was an increase of 3.20 % in the total Income in comparison with the previous year.


12

OUTLOOK

During the year under review, your Directors continued to work on the vision of creating a customer focused organization. Your Directors on their part have taken various strategic initiatives to improve company’s operating efficiency and revenue earning potentials to spear overall growth and productivity in the organization. Focus is on service, differentiation and operational agility to cater to subscribers on Pan India basis. Initiatives such as capacity expansion, technology upgradation coupled with revenue assurance are likely to enhance revenue and restrain the losses.

DIVIDENDS AND BORROWINGS

In view of the losses suffered by the Company, Your Directors do not recommend any dividend for the year.

Opening balance of borrowings stood at Rs.2,561.1403 Crores as on 1.4.2013. During the year under review, your company borrowed Rs.5,603.6133 crore and repaid an amount of Rs.4,426.2207 Crore. The loan balance as on 31.3.2014 stood at Rs.3,738.5329 crore.

MEMORANDUM OF UNDERSTANDING [MoU] WITH THE DEPARTMENT OF TELECOM

Incompliancewiththeguidelinesfor“MoUSigningandMonitoringMechanism”issuedbytheDepartment of Public Enterprises, Government of India, Your Company has been signing the MoU with the Department of Telecommunications since 2004-05.

PHYSICAL PERFORMANCE

Your Company, despite operating in a very highly competitive and consumer driven market with pressure on earnings was able to restrain the negative trend to some extent.

The status of MoU Targets and Net Achievements in respect of physical performance during the year2013-14isasfollows:-

S. No

Item Unit MoU Target for

13-14

Status as on

31.3.2013

Status as on

31.3.2014

Net achievement

during 2013-14

%age of achievement

against annual target

1 Total Telephone connection

Lakh Conn

80.00 1,216.53 1,131.38 -85.15 -106.44

1(a) Wireline “ 0.00 204.46 184.88 -19.581(b) WLL “ 0.00 27.02 22.49 -4.531(c) Mobile “ 80.00 985.05 924.00 -61.05 -76.31

2 Total switching capacity

Lakh Lines 90 1,248.97 1,275.31 26.34 29.26

2(a) Wireline “ - 398.58 383.99 -14.592(b) WLL “ - 85.19 84.54 -0.652(C) Mobile “ 90 765.20 806.78 41.58 46.20

3 VPT Nos - 577,882 578,267 385


13

S. No

Item Unit MoU Target for

13-14

Status as on

31.3.2013

Status as on

31.3.2014

Net achievement

during 2013-14

%age of achievement

against annual target

4(a) Broadband Wireline

Lakh cons

30

99.28 99.65 0.37 1.38

4(b) FTTH Nos 11,445 25,146 13,701 60.424(c) EVDO

connectionNos 101,538 93,671 -7,867 -15.73

4(d) Wimax connection

Nos 85,329 124,963 39,634 17.83

5 Broadband capacity

Lakh Ports

16.1 100.18 100.18 0.00 0.00

6 OF Cable Route Kms

20,000 719,935 734,323 14,388 71.94

SERVICES AND PLANS

MOBILE SEGMENT

With affordable and innovative tariff plans your company offers its Mobile services in almost every nook and corner of the country.

AglimpseofGSMcoverageofyourcompany,ason31.3.2014isasfollows:-

S. No Parameter Total Covered % Coverage1 DistrictHeadquarters(DHQ) 632 632 100.00

2 BlockHeadquarters(BHQ) 6,210 6,110 98.39

3 Villages 5,93,601 3,91,776 66.00

4 National Highway (In Kms) 67,493 59,861 88.69

5 State Highway (In Kms) 1,42,083 98,511 69.33

6 Railway Route (In Kms) 55,414 46,299 83.55

7 Area(Sq.Km) 32,89,212 18,82,837 57.24

8 Population (In lakh) 12,389 7,858 63.43

To augment the capacity, during 2014-15, your company plans to add 10 Million net GSM connections and 12.5 million GSM capacity.

WIMAX & CDMA SERVICES

CDMA WLL Services

During the year under review 3,41,150 WLL connections and 21,845 EVDO connections were provided. Your Company is making all round efforts to improve WLL services by providing value added services like SMS, UMS & high speed packet data, prepaid services. Full mobile service, CRBT & Voice SMS services have been launched on CDMA. MNP on CDMA is also working. On the other hand, provisioning of new services at affordable prices, introduction of various attractive

14

tariff plans and improved marketing strategies are being envisaged for improvement in the services. The CDMA WLL connections are being given on demand in most of the areas in all the circles.

At present, the latest Mobile Switching Centre (MSC) based 2,000 IX/EVDO system is being used extensively in the company’s network. Your company is optimizing its network continuously for its performance. In order to reduce the interruptions occurring due to media failure, more Ring connectivity of Optical Fiber Cable (OFC) media are being provided to WLL BTSs.

However, your company does not have future expansion plan in CDMA WLL.

WiMAX Services

During the year under review, your company provided 39,634 WiMAX connections. Your company is making all out efforts to popularize WiMAX services by introduction of various attractive tariff plans and improved marketing strategies. Prepaid services on WiMAX have been tested for launching of these services. Procurement of CPEs is planned to provide connections and utilize the available capacity of WiMAX.

However, your company does not have future expansion plan in WiMAX.

FIXED ACCESS SEGMENT

During the year under review, 13,40,281 number of wireline connections were provided, whereas, the net achievement was 19,57,915 against zero MoU Target for the year 2013-14. Your Company is in process of migrating C-DOT TDM technology exchanges covering most of the rural India, with NGN solution being developed by C-DOT. Field trials are already completed. MoU has already been signed between the Company and C-DOT. In first phase 100 locations are being covered and balance sites will be covered in Phase-2.

With the migration to NGN network, your company will be able to offer following new services/value added services to the wire-line customers-

Wide Area IP Centrex - IP Centrex allows small and medium size enterprises to deploy PABX/CUG service without really installing system physically in their premises

Multimedia Video conferencing service will be available across the country

The prepaid solution will be provided with all functionalities to provide voice, video and data pre-paid services including roaming

Fixed Mobile convergence (FMC) by using the NGN-IMS core alongwith the PSTN Access network and already deployed mobile network.

VALUE ADDED SERVICES

Your Company has been providing various Value Added Services through its Mobile Network as well as fixed line Broadband network viz. M-Valet, Movies on Demand, on-line education services etc.

BROADBAND SERVICES

Your Company’s broadband services are one among the best in the country. To accelerate further growth of business in this segment, your Company constantly monitors the service and offers innovative tariff plans, new technologies etc.


15

Universal Access Number (UAN) with revised tariff positioned for bulk users. New tariff (MoU based) introduced in Universal ITC (UITC) Cards. ISD Tariff for all countries for UITC, FLPP Gen. & FLPP PCO was revised with comprehensive list of countries/codes. Work order has been issued toM/sAlcatel-LucentforAMCofINequipmentsfor5yearsw.e.f.1.4.2014withspecialtermsandconditions for operating fixed line IN services which will further reduce operational expenditure.

AglimpseofBroadbandcoverageofyourcompany,ason31.3.2014isasfollows:-

S. No Parameter Total Covered % Coverage

1 DistrictHeadquarters(DHQ) 632 628 99.37

2 BlockHeadquarters(BHQ) 6,210 6,005 96.70

3 Cities 4,645 4,443 95.65

4 Villages 593,601 169,532 28.56

ENTERPRISE BUSINESS

Special focus is being paid to cater to the business needs of the Enterprise customers of your company segmented in Platinum, Gold and Silver categories. Platinum customers are being served on pan-India basis through single window concept through nine platinum offices located at Ahemedabad, Bangalore Chennai, Hyderabad, Kolkata, Mumbai, NCR I, NCR II Delhi and Pune, covering around 1,033 Platinum Accounts.

Apart from the ISDN-PRI and Bulk broadband connections, these customers are also offered MPLS based leased line, MPLS based managed network service, Point to Point leased line, VPNoBB services, VSAT services and Internet Data Centre Services.

MPLS based Next Generation Transport Project(MNGT)

This has been implemented for expansion of the Core Network alongwith International Gateways to enhance the capacity of carrying Internet traffic of wire line and wireless network. In this project 42 Core Routers and 30 LAN switches were installed and commissioned alongwith redeployment of 30 Nos of existing core routers which are now being used as Edge Routers in the field.

Managed Leased Line Network(MLLN)

Equipmentwaspurchased for expansionof existingMLLNnetworkwhich ismeant toprovideLeased Lines of n*64 upto 2 Mbps to the enterprise customers. In this 1,500 V-MUXs and 40 DXC were installed, enhancing the existing capacity by 21,000 ports/modem.

Leased Circuits

18,996 leased circuits had been commissioned in the year under review.

Procurement of additional cards for upgradation of Edge Routers in the existing MPLS Network was done to augment the port capacity for the customer connectivity and BSNL services which provided additional 10,000 number of E1 ports, 600 number of GE ports and 60 number of 10 GE ports.

Followingprojectshavebeenplannedforthefinancialyear2014-15:-

Replacement of life expired MPLS Network Management System

16

To increase the reach of MPLS network 232 No. of MPLS Edge Routers at 186 locations

To facilitate IPv4-IPv6 interoperability at International gateways Carrier Grade Network Address translator is planned to be deployed.

ILD Business Operations and Plans

Your Company is having agreements / ITSAs with AT & T - USA, Jaina - USA, TIS - Italy, Belgacom - Belgium, Tata Teleglobe Canada, BTCL Bangladesh, MCI USA, C & WW UK, Metrofi USA, dU -UAE,MPT-Myanmar,OmanTelecom,Etisalat–UAE,Optus–Australia,QTel-Quatar,Sprint- USA , iBasis USA, STC Saudi Arabia, PCCW - HK, IDT – HK, SLT Sri Lanka, TM- Malaysia, FT France, Nepal Telecom - Nepal, Bhutan Telecom - Bhutan, UTL - Nepal, for exchange of voice traffic.

Bilateral agreement with Etisalat, DU UAE and Saudi Telecom Corporation (STC) have been signed for exchange of international voice traffic.

There was saving of around Rs.30 crores in Financial Year 2013-14 in comparison to Financial Year 2012-13, for procuring, commissioning and maintenance of international bandwidth for internet on one year lease basis.

Joint Ventures/Strategic Alliances/Business Devlopment programmes etc. including Memorandum of Understanding, Agreements

Your Company has become a consortium member of Europe India Gateway(EIG) Submarine Cable System as a non-landing party. This cable is from Mumbai to London connecting countries Portugal, Gibraltar, Monaco, France, Libya, Egypt, Saudi Arab, Djibouti, Oman and UAE. The end to end connectivity is from Mumbai to London. BSNL has ownership of 7.09% in EIG cable system.

The EIG cable was RFS (Ready for Service) providing EIG end to end connectivity on 4-12-2013. BSNL has started using the EIG cable which is loaded with international internet bandwidth activated in Financial Year 2013-14. Further, your company is also participating in 1st upgradation of existing EIG capacity by 50G at a cost of US $ 1.58 Million.

PROVISION AND OPERATION OF SATELLITE BASED SERVICES USING GATEWAY INSTALLED IN INDIA USING INMARSAT TECHNOLOGY

On 25th August 2014, Your Company has been granted License for provisioning and operation of satellite based services using gateway installed in India, with All India Service Area valid for a period of 20 years, on sui-generis category, using INMARSAT as technology partner.

ADDITIONAL REVENUE STREAMS

Management of your Company has been trying to explore various methods to augment the revenue stream. Monetization of vacant land parcels through development by engaging a developer under PPP mode is one such avenue has been identified.

During the period under review, 739 towers were leased out, which resulted in earning revenue of Rs.98.88 crores.

DEVELOPMENT OF RURAL TELECOM NETWORK

Aglimpseoftheruralcoverageofyourcompanyason31.3.2014isasfollows:-


17

S. No Parameter Total villages Covered % Coverage1 Village Public Telephones 5,93,601 5,78,267 97.422 GSM 5,93,601 3,91,776 66.003 CDMA 5,93,601 4,69,389 79.074 Broadband 5,93,601 1,69,522 28.56

COMPUTERISATION AND IT

Implementation of CDR Project

The CDR project implementation was completed in April, 2012. This takes care of customer care, billing and post billing operations for landline and broadband customers across the country. This has resulted in advantages like faster implementation of telecom tariff across the country, corporate monitoring of billing, revenue and customer care including faults. From the customer’s point of view, this gives an advantage of uniform customer experience across SSAs, Internet based portal payments, combined bill of landline and broadband services, uniform standard bill format across the country, customer friendly tariff packages like fair usage policy etc.

Implementation of ERP

On successful completion of the proof of concept phase of the ERP Project till October 2013 ERP was implemented in the telecom factory (Mumbai), Training Centre (ALTTC, Ghaziabad), a project circle (Western Telecom Project), a Maintenance Region (Southern Telecom Region), two Territorial Circles (Karnataka and Maharashtra) and the Corporate Office having resolved the post implementation issues your Directors have decided to complete the roll out phase in all the remaining units during this financial year. Implementation of ERP across the Organization will enable profit centre accounting (lines of business wise), cost control of inventory across units, efficient asset management, centralized data base of all the employees, centralized (circle wise) pay roll processing, centralized operations leading to standard optimal procedures and having centralized IT systems leading to transparency, visibility of information and data accuracy.

TELECOM FACTORIES

Telecom Factories of your Company located at Kolkatta, Gopalpur, Kharagpur, Jabalpur, Richhai, Bhilai and Mumbai are in-house manufacturing units engaged in production of various telecom products. These factories with a staff strength of 2,287 as on 1st April 2014 touched the output of Rs.153.25 crore in the year under review. For 2014-15, a target of Rs.500 crores has been set for them.

Your Directors have initiated several initiatives for setting up manufacturing facilities for various telecom/electronic equipments and other related products for revenue generation by gainfulutilization of the huge infrastructure of these telecom factories, by selection of suitable partners.

Advance work order has been issued to M/s Fujikura Ltd., Japan for utilization of spareable infrastructure of TF Mumbai for setting up manufacturing facilities for OF Cable, Accessories / Network components and other related products.

Floating/finalizationofEoI/RFPisunderwayforthefollowing:-

Selection of partner for setting up manufacturing facilities for production of latest technology batteries for telecom / non telecom applications at TF Kharagpur;

18

Selection of partner for setting up manufacturing facilities for solar power supply system for telecom and non telecom applications at TF Bhilai;

Selection of a consultant to advise and assist your Company in selection of suitable partners for manufacturing various telecom/electronic equipment and other relatedproducts in Telecom Factories.

In addition, the production of PLB HDPE Telecom Duct is being augmented in Telecom Factories to meet the increased demand for NOFN Project being implemented by your Company. To meet the internal demand of the Company, 2 Nos. of manufacturing lines have also been purchased.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Industrial Relations

Industrial relations have remained by and large cordial during the year under review.

CORPORATE RESTRUCTURING PLANS

Your Company has engaged M/s Deloittee to undertake comprehensive review and prepare a financial revival plan. The consultant will also prepare a comprehensive HR plan – Organisation structurealongwithstaffingnormsfordifferentrolesandcadres,newstreamsrequiredtofacilitatecompany’s core business and man power plan for the next 5 years – to bring down the expenditure on staff and suggest the strategy with specific action plan for sustainable revival of the Company.

TRAINING OF EMPLOYEES

Your Company’s state of the art training centres located at various places design and conduct numberoftrainingprogrammes,fortheskilldevelopmentandqualitytrainingoftheemployeesofvarious levels. By opting for the on-line/computer based programmes for completing the mandatory EPP upgradation trainings, considerable cost saving has been effected by the training centres.

BSNL AICTE Employability Enhancement Training Programme

Pursuant to the MoU entered into with the All India Council for Technical Education(AICTE) for utilizing the training facilities and faculty of the Company for benefit of students covered under this programme, a total of 7,555 engineering students got benefitted. The initiative was centrally implemented and monitored through BRBRAITT, Jabalpur and supported by other Training centres of the Company. A total of Rs.8.4 Cr was earned by the Company under this segment.

Training Revenues

During the year under review about 1,10,000 students got associated with the Company for vocational/summer training programmes and a total revenue of of Rs.27 Crores was earned under this segment.

Foreign Deputations

During the period under review, 40 officers of the Company were deputed abroad for various training programmes, exhibitions, meetings, conferences and business meetings etc., to have first hand information on the latest developments taking place in the telecommunication sector and for upgrading the knowledge and skills


19

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

The Government’s guidelines on the implementation of the official language policy is followed scrupulously. Your Company has a full fledged official language Wing.

RESERVATION POLICIES OF THE CENTRAL GOVERNMENT

Government policies with regard to reservations for various categories of employees in the matters of recruitments and promotions are being followed.

A glimpse of representation of Scheduled Caste, Scheduled Tribe, OBC, Ex-Servicemen, Physically Disabledemployeesandtheirrepresentationason31.3.2014:-

Group Total No. of Employees

Scheduled Caste

Scheduled Tribe

OBC Ex-Servicemen

Executive 47,768 7,668 2,341 5,655 113Non-Executive 1,90,509 35,363 9,960 14,933 490Total 2,38,277 43,031 12,301 20,588 603

Category Executive Non-Executive TotalBlindness of low vision 0 29 29Hearing Impairment 9 22 31Locomotor Disability or Cerebral Palsy 166 347 513

STAFF GRIEVANCES REDRESSAL MACHINERY

Your Company has established a Staff Grievancs Redressal Cell at the Corporate Office for looking into the grievances of the staff members. Similar cells have also been established at Circle/SSA levels.

COMPLAINTS COMMITTEE FOR REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACES

In compliance with the guidelines of the Government on the subject, your Company has established a Complaints Committee at the Corporate Office and at Circle/SSA level for looking into the complaints of employees regarding sexual harassment at work place.

CORPORATE SOCIAL RESPONSIBILITIES

Your Company, being a pan-India service provider of telecom services – very crucial in the nation building and connectivity, the philosophy of corporate social responsibility was also one of its pursuits. Apart from the programmes aimed at the welfare of the employees and their family members, Your company was also pursuing the objectives of CSR in various other spheres viz., Contributions to the PM’s National Relief Fund, Assistance during natural calamities etc. To guide these programmes, Your Board had its Corporate Social Responsibility Policy. Your Company always remains at the forefront to serve the people when difficult circumstances arise due to natural calamities.

When the natural calamity struck the state of Jammu and Kashmir, your Company rose to the occasion and put in its best efforts to restore the communication links of that region by bringing

20

satellite based services (DSPT) etc. A task force team is working in close coordination with the Army and the local administration to restore the services.

With a view to provide immediate relief to the victims, your Company has allowed free calls (local as well as STD) and free SMS service to all those BSNL customers who will be using BSNL’s mobile network in the Srinagar area for ten days starting from 12.9.2014. Further, there shall be no incoming/outgoing barring for postpaid customers for one month from 12.9.2014.

Constitution of the Corporate Social Responsibility (CSR) Committee of the Board

Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder, Your Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee (CSR Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta Director(CFA) as Members and the Secretary of the Company as the Secretary of the Committee. The Terms of Reference of the CSR Committee are as per the provisions of the Section 135 of the Companies Act 2013 and Rules made thereunder. Owing to losses, no specific budget was earmarked for the CSR activities during the year under review.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Being a service providing Company, these rules are not applicable to your Company. However, as a responsible corporate citizen, your Company is fully concerned and committed as regards its responsibility for Environmental Protection. Therefore, all required measures for EnergyConservation and Use of Alternate Renewable Energy Resources are being taken at all levels.

Awards for Energy Conservation

Your Company was awarded 1st and 2nd National Level Energy Conservation award by the Ministry of Power.

Certificate of Merit was awarded to your Company by Bureau of Energy Efficiency, Ministry of Power.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Earned: - 32.89CroreUsed : - 96.45Crore

COMPLIANCES

All the Senior Management Personnel including key managerial personnel handling different verticals/units have been delegated with administrative and financial powers thereto, are responsible to ensure adherence to all the applicable laws, rules, guidelines etc., and ensures the compliance of the enterprise risk management policy of the company as a routine, while taking or processing the detail for decision or approval by the competent authority(ies). The Company Secretary ensures the compliance of all the applicable provisions of the Companies Act and other applicable laws.

Being the successor and assigns of the erstwhile Departments of Telecom Services and Telecom Operations with vast geographical spread, the BSNL follows the existing system. Accordingly, all the litigations before the hon’ble courts are handled by the respective verticals and units under their control with the help of Advocates.


21

RIGHT TO INFORMATION

In line with the directions contained in the Right to Information Act 2005, Your Company has nominated CPIOs at the Corporate Office as well as the field units of the Company for providing information to citizens.

CORPORATE GOVERNANCE

The term Corporate Governance connotes putting in a system of best practices in the sphere of governance, which in turn, lead to value maximization for all the stakeholders. Existing governance practices have been strengthened further over the years with sustained focus on excellence in all spheres.

The Guidelines on Corporate Governance for the Unlisted CPSEs laid down by the Department of Public Enterprises are being implemented by the Company with effect from the year 2008-09.

All the Members of the Board; and the Senior Management Personnel of the Company have affirmed compliance with the Company’s Codes of Conduct for the Members of the Board and the Senior Management Personnel, respectively.

Your Company has obtained certificate from M/s Hemant Singh & Associates, Company Secretaries, regarding compliance of conditions of corporate governance as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises 2007, and revised further vide No.18(8)/2005-GM, dated 14.5.2010, issued by the Department of Public Enterprises.

Management Discussion and Analysis Report, Report on Corporate Governance, together with the Certificate on compliance of conditions of corporate governance as stipulated in the Guidelines onCorporateGovernanceforCentralPublicSectorEnterprisesformspartofthisReport.Quarterlyprogress reports on the implementation of CG Norms for the unlisted CPSEs issued by the DPE are being sent regularly to the Administrative Ministry.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors of the Companyherebyconfirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) that 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 or loss of the Company for that period;

(iii) that theDirectors had taken proper and sufficient care for themaintenance of adequateaccounting 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;

(iv) that the Directors had prepared the annual accounts on a going concern basis.

STATUTORY DISCLOSURES

NoneoftheDirectorsofyourCompanyisdisqualifiedasperprovisionofSection274(1)(g)oftheCompanies Act, 1956.

22

Further,YourDirectorshavemadenecessarydisclosures,asrequiredundervariousprovisionsoftheAct,whichweretakennotebytheBoardofDirectorsandrequisiteformswerefiledwiththeappropriate authorities.

None of the employees of your Company is drawing remuneration exceeding the limits laid down under provisions of section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975.

DIRECTORS

Government of India, Ministry of Communications and IT, Department of Telecommunications vide their order No. 1-1/2014-PSA dated 6.5.2014 and 11.06.2014 communicated the approval of the competent authority for extension of the tenure of Shri R.K.Upadhyay CMD upto 30.4.2014 and thereafter upto 30.6.2014 i.e., the date of his superannuation.

Pursuant to Government of India, Ministry of Communications and IT, Department of TelecommunicationsorderNo.1-10/2011-PSAdated30.6.2014, consequentuponattaining theage of superannuation Shri Upadhyay retired from service w.e.f., afternoon of 30.6.2014.

Pursuant to GoI, MoC & IT, DoT Order No.1-1/2014-PSA dated 30.6.2014 in terms of the instructions contained in the DoP & T (Office of Establishment officer) OM No.26(3)EO/2004(ACC) dated 17.8.2005, the competent authority approved the entrustment of the additional charge of the post of CMD to Shri A.N. Rai Director(E) for a period of three months w.e.f., 1.07.2014 or until further orders, whichever is the earliest. During the period of holding additional charge as aforesaid, Shri A.N. Rai will not be entitled to any additional remuneration. Shri Rai assumed the charge of office of CMD on Forenoon of 1.7.2014.

Government of India, Ministry of Communications and IT, Department of Telecommunications vide their Notification No.1-4/2012-PSA dated 13.2.2013 conveyed the ex-post-facto approval of the ACC for entrustment of the Additional charge of Director(HR) to Shri A.N.Rai Director(E) for a further period of six months beyond 4.12.2012 or till a regular incumbent is appointed or until further orders, whichever is earliest.

Thereafter, wef 4.6.2013, till the receipt of further orders from Department of Telecom, CMD was looking after the additional charge of the Director (HR). Government of India, Ministry of Communications and IT, Department of Telecommunications vide Notification No1-4/2012-PSA dated 8.8.2013 conveyed the approval of ACC for extension of additional charge of the post of Director(HR) in favour of Shri A.N.Rai Director(Enterprise) for a period of six months beyond 4.6.2013 or till a regular incumbent is appointed or until further orders, whichever is earliest.

Thereafter, wef 4.12.2013, till the receipt of further orders from Department of Telecom, CMD was looking after the additional charge of the Director (HR). Government of India, Ministry of Communications and IT, Department of Telecommunications vide Order No.1-4/2012-PSA, dated 7.2.2014 conveyed the approval of the Appointments Committee of the Cabinet conveyed by the DoP & T (ACC) vide their communication No.24(6)EO/2012(ACC), dated 30.1.2014, the extension of entrustment of the additional charge of Director(HRD) in favour of Shri A.N.Rai Director(Enterprise) for a period of six months wef 4.12.2013 or till a regular incumbent is appointed or until further orders,whicheveristheearliest.Consequentuponthecompletionoftheperiodon3.6.2014,since4.6.2014, additional charge of the office of Director(HR) vest in the CMD.


23

Pursuant to Government of India, Ministry of Communications and IT, Department of Telecommunications Notification No. 1-3/2013-PSA, dated 31.1.2013 appointing Shri Anupam Shrivastava as Director(CM) in scale of pay of Rs.75,000-1,00,000/-[IDA] scale for a period of five years from the date of assumption of charge of the post on or after 1.5.2013, Shri Shrivastava assumed the charge of office of Director(CM) wef 1.5.2013.

Pursuant to Government of India, Ministry of Communications and IT, Department of Telecommunications Notification No.1-2/2010-PSA(Vol.II), dated 29.1.2013, on attaining the age of superannuation, Shri K.C.G.K.Pillai Director(Finance) retired from the service wef the Afternoon of 30.11.2013.

Thereafter, wef 01.12.2013, till the receipt of further orders from Department of Telecom, CMD was looking after the additional charge of the Director(Fin). Government of India, Ministry of Communications and IT, Department of Telecommunications, vide Order No.1-4/2012-PSA, dated the 5th February 2014 communicated that, in terms of DoP & T (Office of Establishment Officer) OM No.26(3)EO/2004(ACC) dated 17.8.2005, the additional charge of Director(F) shall vest in Shri Anupam Shrivastava, Director(CM) with immediate effect for a period upto 28.2.2014 until further orders whichever is the earliest.

Thereafter, wef 01.03.2014, till the receipt of further orders from Department of Telecom, CMD was looking after the additional charge of the Director (Finance). Government of India Ministry of Communications and IT, Department of Telecommunications, vide Order No.1-4/2012-PSA, dated the 9th May 2014 – pursuant to the approval of ACC conveyed by DoP & T vide No.24(5) EO/2014 (ACC) dated 30.4.2014 conveyed the extension of the entrustment of the additional charge of the post of Director(F) to Shri Anupam Shrivastava Director(CM) for a period of six months wef 1.3.2014 or till the appointment of regular incumbent to the post or until further orders, whichever is the earliest.

Thereafter, wef 01.09.2014, till the receipt of further orders from Department of Telecommunications, CMD was looking after the additional charge of Director(Finance).

Pursuant to the provisions contained in Section 152 of the Companies Act 2013, Shri A.N.Rai Director (Enterprise) [ DIN 05100500 ], who retires by rotation and, being eligible and consented to, offers himself for re-appointment in the Annual General Meeting of the Company.

Pursuant to the provisions contained in Section 152 of the Companies Act 2013, Shri N.K.Gupta Director (CFA) [ DIN 01140881 ], who retires by rotation and, being eligible and consented to, offers himself for re-appointment in the Annual General Meeting of the Company.

Pursuant to the provisions contained in Section 161(3) of the Companies Act 2013 and rules made thereunder, Article 111 of the Articles of Association of the Company, read with GoI, MoC & IT, DoT’s Order No.5-2/2013-PSA dated 26.8.2014, the Board of Directors in their 158th meeting held on 29.9.2014, appointed Smt.Darshana Momaya Dabral [ DIN 06975127 ] DDG(TPF) in DoT as Government Nominee Director on the Board of Directors of the Company.

Your Directors place on record their deep appreciation for the valuable services rendered by Shri R.K.Upadhyay CMD, Shri K.C.G.K.Pillai Director(Finance) and Shri Shahbaz Ali Government Director during their association with the Company.

24

AUDIT COMMITTEE

The Committee has Prof.N.Balakrishnan, Non official Part Time (Independent) Director as Chairman; and, Shri Ajai Vikram Singh Non official Part Time (Independent) Director, Shri Shahbaz Ali Government Director [upto 26.8.2014] and Shri Anupam Shrivastava Director(CM) as Members. Director(Finance) is the Regular Invitee and Shri H.C.Pant, the Company Secretary & Sr.GM(L) is the Secretary of the Committee.

AUDITORS

M/s Walker Chandiok & Co., Chartered Accountants, New Delhi were appointed as Statutory Auditors of the Company by the Comptroller & Auditor General of India. In addition to the Statutory Auditors 47 Branch Auditors were also appointed for the year 2013-14. The Report of the Statutory Auditors and the comments of the Comptroller and Auditor General of India, alongwith replies of the Management thereto are attached as Addendum forming part of this Report.

COST AUDITORS

Pursuant to the directions of the Government of India, Ministry of Corporate Affairs, Cost Audit Branch for Cost Audit of the Telecommunication Companies by the Cost Accountants, Your Company has appointed M/s Chandra Wadhwa & Co., Cost Accountants as Cost Auditors for carrying out the Cost Audit of the Company for the year 2013-14. The Cost Audit Report for the Financial Year 2012-13 was filed with the MCA, Registrar of Companies on 18.01.2014.

Your Board has appointed M/s Balwinder & Associates, Cost Accountants as Cost Auditor of the Company for conducting the Cost Audit and Accounting Separation Report (ASR) Audit for the Financial Year 2014-15. Further, pursuant to the provisions of Section 148 of the Companies Act 2013 and Rule 14(a) of the Companies (Audit and Auditors) Rules 2014, Your Board has approved the remuneration of Rs.3,99,000/-[Rupees Three Lakh Ninety-Nine Thousand only] plus applicable taxes as Audit Fee to M/s Balwinder & Associates Cost Auditor, subject to ratification of the same by the Members in the ensuing Annual General Meeting.

Shri A.N. Rai, CMD inaugurating the Swachh Bharat Abhiyaan campaign in BSNL on 2nd October, 2014.


25

ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere appreciation and gratitude to the subscribers of Company’s telecom services, the stakeholders, and bankers and to all the State Governments and regulatory authorities for their continued cooperation and invaluable support.

Your Directors express their deep appreciation for the hard work and dedicated efforts put in by the employees at all levels and look forward to their continued contribution in achieving the mission and objective of the Company.

For and on behalf of the Board of Directors,

Sd/- [A.N.RAI]

Place : NEW DELHI CHAIRMAN AND MANAGING DIRECTOR

Dated : 29.09.2014

DECLARATION BY THE CHAIRMAN AND MANAGING DIRECTOR REGARDING COMPLIANCE WITH THE CODE OF CONDUCT BY THE BOARD MEMBERS AND THE SENIOR MANAGEMENT PERSONNEL OF THE COMPANY DURING THE FINANCIAL YEAR 2013-14

I, A.N.Rai, Chairman and Managing Director Bharat Sanchar Nigam Limited, do hereby declare that all the Members of the Board and the Senior Management Personnel of the Company have affirmed their compliance to the Code of “Conduct for Board Members and the Senior Management Personnel”during2013-14

Sd/- [A.N.RAI]

Place : NEW DELHI CHAIRMAN AND MANAGING DIRECTOR

Dated : 18.09.2014

26

MANAGEMENT DISCUSSION AND ANALYSIS REPORTINDUSTRY STRUCTURE AND DEVELOPMENTSIndian Telecom sector witnessed a very fast growth in the past decade. Demand for more specialized services in the sector has fuelled the technological advancements. With a major role in the country’s socio-economic development, telecom sector plays a pivotal role in the overall growth story. Liberalisation of the sector and huge investments have accelerated the pace of the growth of the sector.

Telecom services, after hyper competitive and volatile stint, are now slowly gaining stability. This, together with an increased spurt of passive infra sharing, outsourcing of non-core network functions etc., is expected to rationalize the capex and opex of the existing large operators, thus, leading to availability of affordable services to the common man.

MAJOR REGULATORY DEVELOPMENTS/CHALLENGESSTRENGTHS / OPPORTUNITIES/WEAKNESS/THREATSCentury old expertise as telecom operator, huge spareable passive infra, last mile linkage across the nookandcornerofthecountryandseamlessconnectivityacrosstheregionsmakeBSNLuniqueamongst the incumbent operators.

Government’s plans for smart cities, new industrial corridors and huge infra expansions indicate a strong business opportunity. These expansions may fuel demand for voice and data services from both enterprise customers as well as the individual subscriber. Further, growth plans have increased the demand for more personalized services. BSNL with its strength is likely to position itself as the leading pan-India service provider.

OUTLOOKThe telecom sector has witnessed considerable technological advancements and huge investments in the core infra in the past decade. Government’s thrust on e-delivery, ever increasing demand for non-voice telecom services and the huge untapped rural market for data services present a strong business case for the sector in the coming days.

RISKS AND CONCERNSINTERNAL CONTROL SYSTEMS AND THEIR ADEQUACYBeing the successor of erstwhile Central Government Departments of Telecom Services and Telecom Operations, your company has a well defined and planned internal control systems and procedures commensurate with its size and operations. Internal checks are routinely carried out by the internal audit teams all over the country. Internal audit wing of the Company is headed by a Principal General Manager(PGM) level officer.

Apart from its own Internal Audit machinery, Your Company, being the Central Public Sector Enterprise, is subject to the Resident Audit Office scheme of the Director General of P & T Audit under the aegis of C & AG of India, CVC Mechanism with independent CVO and the Guidelines of the Department of Public Enterprises.

In accordance with the Guidelines on Corporate Governance Norms issued by the Department of Public Enterprises, the Audit Committee of the Board had discussions with the Internal Audit Teams and reviewed the Internal Audit Paras.

Further, pursuant to the directions of the Government of India, Ministry of Corporate Affairs for Cost Audit of the Telecommunication Companies by the Cost Accountants, your Company has appointed Cost Auditors.


27

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year 2013-14, the company incurred a loss of Rs. 7,019.76Crore [Previous year Rs. 7,884.44 Crore]. While the Income from services is Rs. 26,152.26 Crore [Previous year Rs. 25,654.81 Crore], other income was Rs. 1,843.09 Crore [Previous year Rs. 1,473.08 Crore].

There was an increase of 1.94 % in Income from services in comparison to previous year, the other income increased by 25.12 %. There was an increase of 3.20 % in the total Income in comparison with the previous year.


ENVIRONMENTAL PROTECTION AND CONSERVATION, TECHNOLOGICAL CONSERVATION, RENEWABLE ENERGY DEVELOPMENTS, FOREIGN EXCHANGE CONSERVATIONS

As a responsible corporate citizen, Your Company is fully concerned and committed as regards its responsibility for Environment.

Apart from using energy efficient products, the implementation of energy conservation measures are being monitored regularly. These steps have resulted in a saving of Rs.84.40 crores.

CORPORATE SOCIAL RESPONSIBILITY

The philosophy of corporate social responsibility - hovering around wide array of spectrum of activities like nation building, energy conservation, technological empowerment of citizens with affordable communication means are pursuits of the organization itself. In addition, assistance and welfare programmes for the staff and their family members are pursued as a routine.

Constitution of the Corporate Social Responsibility (CSR) Committee of the Board

Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder, the Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee(CSR Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta Director(CFA) as Members and the Secretary of the Company acts as the Secretary of the Committee. The Terms of Reference of the CSR Committee are as per the provisions of the Section 135 of the Companies Act 2013 and Rules made thereunder. Due to losses, there was no separate budgetary allocation for CSR Programmes in the year 2013-14. The Company continued with its Employee/Family related welfare schemes throughout the year.

Pursuant to the MoU entered into with the All India Council for Technical Education(AICTE) for utilizing the training facilities and faculty of the Company for benefit of students covered under this programme, a total of 7,555 engineering students got benefitted. The initiative was centrally implemented and monitored through BRBRAITT,Jabalpur and supported by other Training centres of the Company.

CAUTIONERY STATEMENT

These discussions are forward looking within the meaning of the applicable laws and regulations. Actual performance may deviate or vary from the explicit or implicit expectations.

28

REPORT ON CORPORATE GOVERNANCECorporate Governance, in plain terms aims to maximize the value of all the stakeholders through a set of guidelines and principles. Being a leading pan-India telecom service provider to the nation, BSNL is committed to adopting the globally accepted best corporate governance norms practices.

With highly institutionalized system aiming for transparency, disclosures and internal control, BSNL has already been complying with most of the codified norms, viz.-

Composition of the Board; Complete conformity with Board procedure, specially, the Secretarial Standards laid

down by the Institute of Company Secretaries of India; Constitution of the Audit Committee of the Board headed by Non-official Part-Time

(Independent) Director, with 2/3rd of the Members comprising of other than Whole-time Directors;

Constitution of the Remuneration Committee of the Board as mandated by the Corporate Governance Norms for the unlisted CPSEs issued by the Department of Public Enterprises;

Constitution of the Corporate Social Responsibility Committee (CSR Committee) of the Board, as mandated by the provisions of Section 135 of the Companies Act 2013 and Rules thereunder;

Clear cut demarcation of powers with Delegation of Financial and Administrative Powers to the Management Committee of the Board, CMD and the Functional Directors, and below Board-level executives;

Conduct, Discipline and Appeal Rules for all the Employees and reporting systems; Code of Conduct for the Members of the Board and annual affirmation to the Code by

the Members; Code of Conduct for the Senior Management Personnel of the Company and annual

affirmation to the Code by the Senior Management Personnel; Disclosures by theDirectors to the Board ofDirectors and filing of requisite forms

evidencing the taking note of the disclosures by the Board with the appropriate authorities;

Enterprise Risk Management Policy of the Company; Appointment of Statutory and Branch Auditors by the C & AG of India; Appointment of Cost Auditors; Audit jurisdiction of the DG P & T’s Resident Audit Office scheme, Dedicated Internal Audit Set up; Amenability with the Guidelines of Central Vigilance Commission; Outside independent personnel as CVO; Dedicated and full-fledged Vigilance set up across the units of the country; Whistle blower policy in vogue; Compliance of the Orders and Guidelines of the Government of India - Department of

Public Enterprises, Administrative Ministry and host of other compliances.

With the introduction of Corporate Governance Norms for the Unlisted CPSEs by the Department ofPublic Enterprises, for achieving complete compliance, requiredchanges/modificationshavebeen put in place.


29

BOARD OF DIRECTORS

Size of the Board

Being a Government Company, the power to appoint or remove a Director vest with the President of India. The Article of Association provides that the minimum strength of the Board shall not be less than three (03) and the maximum at fifteen (15).

Composition of the Board

The Board comprise of 12 Directors, of which 6 [including the CMD] are whole time Directors; 2 Government Nominee Directors and 4 Non-official Part Time Directors. Thus, the Board has the optimum mix of 50% Whole-time and 50% part-time Directors. The composition is as per the Corporate Governance Norms for the unlisted CPSEs, laid down by the Department of Public Enterprises.

ThedetailsofthecompositionoftheBoardofDirectorsisasfollows:-

Whole-Time Directors [ 06 including CMD] [Appointment against positions of CMD, Director(Finance) and Director(HRD) awaited from the Government of India]

1. Shri R.K.Upadhyay, CMD [Upto 30.6.2014]

Additional charge of Director(HRD) vested with CMD between 5.3.2012 to 18.6.2012; and, thereafter charge vested with the Director(E) till 3.6.2013. Thereafter, w.e.f. 4.6.2013 till the receipt of further orders from the GoI, CMD looked after the charge of Director(HR). GoI DoT vide their letter dated 8.8.2013, conveyed the approval of ACC for extension of additional charge of Dir(HR) to Shri A.N.Rai Director(E) wef 4.6.2013 for a period of six months or till a regular incumbent is appointed or until further orders whichever is the earliest. Thereafter, w.e.f. 4.12.2013 till the receipt of further orders from the GoI, CMD looked after the charge of Director(HR). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 7.2.14 conveyed the approval of ACC for extension of additional charge of Director(HR) to Shri A.N.Rai wef 4.12.2013 for a period of six months or till a regular incumbent is appointed or until further orders, whichever is the earliest. Thereafter, again, wef 4.6.2014, till the receipt of further orders from GoI, CMD looked after the charge of Director(HR).

Wef 1.12.2013, till the receipt of orders from GoI, CMD was looking after the additional charge of Director(F). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 5.2.2014 entrusted the additional charge of the office of Director(F) to Shri Shrivastava with immediate effect for a period upto 28.2.2014 until further orders whichever is the earliest. Thereafter, wef 1.3.2014 till the receipt of further orders of GoI, CMD was looking after the additional charge of the office of Director(F). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 9.5.2014 conveyed the extension of the entrustment of the additional charge of the post of Director(Finance) to Shri Shrivastava for a period of six months wef 1.3.2014 or till the appointment of regular incumbent to the post or until further orders, whichever is the earliest. On attaining the age of superannuation, pursuant to the GoI, MoC & IT, DoT Order No.1-10/2011-PSA dated 30.6.2014, Shri Upadhyay retired from service wef A/N 30.6.2014.

2. Shri A.N.Rai CMD* / Director(Enterprise) & **(HR) & ***(Fin)

*Wef 1.7.2014 – GoI, MoC & IT, DoT vide Order No.1-1/2014-PSA dated 30.6.2014 entrusted the additional charge of the post of CMD to Shri A.N.Rai Director(Enterprise) for a period of three months wef 1.07.2014 or until further orders, whichever is the earliest. Shri Rai assumed the charge of office of CMD wef F/N of 01.07.2014.

30

**Additional charge of Director(HR) vested with Shri Rai wef 5.12.2011 to 4.3.2012. Wef 5.3.2012 to 18.6.2012 additional charge vested with the CMD. Thereafter, Government of India, M/o Communications and IT vide order dated 19.6.2012 conveyed the approval of the competent authority for entrustment/extension of the additional charge of Dir(HR) to Shri A.N.Rai for a period upto 4.9.2012. Thereafter, GoI DoT vide order dated 27.2.2013 conveyed the ex-post-facto approval of the ACC for extension of the Additional charge of Dir(HR) to Director(E) for a further period of 3 months beyond 4.9.2012; which was followed by another ex-post-facto approval for a further period of six months beyond 4.12.2012. Thereafter, w.e.f. 4.6.2013, till the receipt of further orders, from GoI, CMD looked after the additional charge of Dir(HR). GoI, MoC & IT, DoT, vide their order dated 8.8.2013 conveyed the approval of ACC for extension of the additional charge of Director(HR) to Shri A.N.Rai Dir(E) wef 4.6.2013 for a period of six months or till a regular incumbent is appointed or further orders, whichever is the earliest. Thereafter, wef 4.12.2013, till the receipt of further orders from GoI, CMD looked after the additional charge of Dir(HR). GoI, MoC & IT, DoT, vide order No.1-4/2012-PSA, dated 7.2.2014 conveyed the approval of the ACC for extension of entrustment of additional charge of Director(HR) to Shri Rai for a period of six months wef 4.12.2013 or till a regular incumbent is appointed or until further orders, whichever is the earliest. Thereafter, till the receipt of further orders from GoI, CMD is looking after the additional charge of office of Director(HR).

***Consequent upon the conclusion of the period of entrustment of the additional charge ofDirector(F) to Shri Anupam Shrivastava Director(CM) on 31.8.2014, thereafter, till the receipt of orders from the GoI, CMD was looking after the additional charge of Director(F).

3. Shri K.C.G.K.Pillai Director[Finance] [Upto 30.11.2013] [Pursuant to GoI, MoC & IT, DoT order No.1-2/2010-PSA (Vol.II) dated 29.11.2013, on attaining the age of superannuation Shri Pillai retired from service wef A/N of 30.11.2013]

4. Shri N.K.Gupta Director(CFA) [ Wef 1.6.2012]

5. Shri Anupam Shrivastava Director(CM) * (Fin) [ Wef 1.5.2013]

* Wef 1.12.2013, till the receipt of orders from GoI, CMD was looking after the additional charge of Director(F). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 5.2.2014 entrusted the additional charge of the office of Director(F) to Shri Shrivastava with immediate effect for a period upto 28.2.2014 until further orders whichever is the earliest. Thereafter, wef 1.3.2014 till the receipt of further orders of GoI, CMD was looking after the additional charge of the office of Director(F). GoI, MoC & IT, DoT vide order No.1-4/2012-PSA dated 9.5.2014 conveyed the extension of the entrustment of the additional charge of the post of Director(Finance) to Shri Shrivastava for a period of six months wef 1.3.2014 or till the appointment of regular incumbent to the post or until further orders, whichever is the earliest. Thereafter, wef 1.9.2014, till receipt of orders from GoI, CMD was looking after the additional charge of Director(F).

Government Nominee Directors [02 ]

1. Shri Shahbaz Ali, DDG [TPF & A/cs ] in DoT [ Upto 26.8.2014]2. Ms.Rita A.Teoatia Additional Secretary(T) in DoT [Wef 04.09.2012]3. Smt.Darshana Momaya Dabral, DDG[TPF] in DoT [ Wef 29.9.2014]

Non-official Part-Time Directors [ 04] [ Two Positions are vacant]

1. Shri Ajai Vikram Singh, Director [ Wef 17.7.2012]2. Prof.N.Balakrishnan, Director [ Wef 17.7.2012]


31

Shri R.K.Upadhyay CMD [ DIN: 00204311] [Upto 30.6.2014] :- Shri Rakesh Kumar Upadhyay, joined BSNL as Chairman & Managing Director on 30th April 2011. Shri Upadhyay is a B. Tech in Electronics Engineering from IT, Banaras Hindu University (BHU). He is also a graduate of Defence Services Staff College , Wellington and was awarded M.Sc.(DS) degree by Madras University . He has done MBA in Marketing Management from Indira Gandhi Open University. His career began in Department of Telecommunications in 1975 after his selection by UPSC for Indian Telecom Service. In DoT, he gained experience in areas of Planning, Installation and Commissioning, Commercial Administration and Operations. In October 1996, he proceeded on Deputation to TCIL, where he remained till August 1999. During his deputation, he successfully worked as Project Director in the Foreign Projects at Sana and as General Manager in Yemen. On return from TCIL, he worked in BSNL as General Manager in J&K Circle from January 2000 to June 2003. He was again selected for Deputation in TCIL in June 2003 where he was entrusted the job of Chief Project Director, Algeria, Group General Manager (New Technology) and Executive Director (Project Monitoring) and other important assignments. He took over the charge of Director (Projects), TCIL on 01.11.2005 and wassubsequentlyselectedasChairman&ManagingDirectorofTCIL.

Prior to assumption of the charge of CMD BSNL, he remained at the helms of TCIL from 1st March 2007 to 29th April 2011. During his tenure in TCIL he gained rich experience in the fields of Planning, Project Management, Operations and Business Development. In TCIL, he guided the successfulimplementationofmanycomplexprojects.Someofthenotableprojectsare:PanAfricane-Network Project – Providing Tele-Education and Tele-Medicine Services to 34 African Nations from seven Universities and 12 Super Specialty Hospitals of India; National Internet Backbone Project; SAARC e-Network Project; Optical Ground Wire Project over 3,000 Kilometer Electrical Transmission Lines in live line conditions in Algeria. He has to his credit the turning around of TCIL as its CMD.

Shri A.N.Rai CMD/Director(Enterprise) & (HR) & (Fin) [DIN: 05100500] :- Shri A.N.Rai assumed the charge of office of Director(Enterprise) on 19.9.2011. Shri Rai, officer of Indian Telecommunications Service 1977 batch holds B.Tech Degree in electronics and communications Engineering from BHU Varanasi. Shri Rai, was actively associated with Installation, Commission and Maintenance of Switchingequipmentsatvariousplacesinthecountry.HewasalsotrainedinDigitalTelephonesystems in various countries like UK, Germany and USA. As senior telecom management professional, he was involved with Development, Operation and Maintenance of Telecom Services at various places like Allahabad, Kanpur etc. As Deputy Director General at the Corporate Office, he handled Rural Networking and CMTS areas. Prior to the joining as Director(Enterprise), he was the Chief General Manager of Orissa Circle of the BSNL, which bagged the prestigious “Telecom CircleoftheYear2010-11Award”.

Shri K.C.G.K.Pillai Director[Finance] [DIN – 05283174] [Upto 30.11.2013] :- Shri K.C.G.K.Pillai took over the charge of Director(Finance) on 25th April 2012. An MBA in Finance and Post Graduate in Political Science, Shri Pillai, an Officer of the Indian P & T Accounts and Finance Service-1981 batch, entered Government Service in 1982. Spanning over a career of 30 years in the P & T Accounts and Finance Service, he served in the Uttar Pradesh, Gujarat and Maharashtra Telecom Circles of the Department of Telecommunications; apart from a stint of over 7 Years in the MTNL‘s Finance Wing. Possess vast experience of Budget, Banking, Treasury Management, Human Resources and Personnel Management and Procurement Finance. Before being appointed as Director(Finance), he was the Principal General Manager heading the Procurement Finance and Finance-Personnel units.

32

Shri N.K.Gupta Director(CFA) [DIN: 01140881] [ Wef 1.6.2012] :- Shri Naresh Kumar Gupta took over as Director CFA in BSNL on 1st June 2012. Shri Gupta is B.E. from Delhi College of Engineering (DCE), in Electronics and Communications. He joined the Department of Telecommunications, Government of India through Indian Telecommunications Services (ITS) Group A 1978 batch. Since then he has worked in various capacities in different units of DoT/TEC/BSNL/MTNL and has versatile experience covering almost all the fields in telecommunications including installation, operations, development and management of telecom networks, sales and marketing and financial management etc. Before joining as Director (CFA) on the BSNL Board, N K Gupta was working as Chief General Manager Punjab Telecom Circle in BSNL and prior to that he was heading the Information Technology division for CFA business unit of BSNL. He in the capacity of DDG (I) TEC was instrumental in framing specifications and Network architecture against which BSNL and MTNL have implemented their broadband Networks. He has represented DoT in many committees of TRAI, DIT, and also in various Inter-Ministerial Committees like committee on preparing encryption policy, E-Commerce and Information Security working Group. He has widely travelled abroad and represented India in number of UN & ITU meetings including World Summit on Information Society in Geneva and other important assignments. He was an active member of Apex Committee involved in the planning and execution of NIB-II of BSNL and also framing the specification for ERP implementation in BSNL which is currently in progress. He was deeply involved in Pan-India Roll out of zonal OSS and BSS for Wire-line and Broadband segment which helped BSNL to changeover from decentralized 334 SSA level systems to 4 zonal data centres with implementation of world class COTS applications. N K Gupta is also instrumental in conceptualizing BSNL entry in to the Data Center (IDC) Services business for opening up a new revenue stream by leveraging BSNL’s existing infrastructure with an innovative revenue share model. Presently BSNL is in the processofacquiringIDCbusiness.AsDirector(CFA)BSNL,heismainlyresponsibleforimprovingthe Systems and Methods to achieve optimal performance and maximum utilization of BSNL’s extensive country-wide Infrastructure and network. He is also responsible for achieving business interests of theCompanybywayof high customer satisfaction and timelyprovisionof qualityservices in BSNL CFA segment. He is also responsible for induction & adoption of new technologies and committed to provide state-of-the-art modern and world class telecom services in the highly competitive environment.

Shri Anupam Shrivastava Director(CM) & * (Fin) [DIN: 06590535] [ Wef 1.5.2013] :- Shri Anupam Shrivastava is a 1981 batch of Indian Telecom Service (ITS) Officer who has around three decades of experience in the field of telecommunications. He is BE (Electronics & Communications) and is also MBA (Mktg.). He has taken telecommunication trainings in India & Japan. Shri Shrivastava joined BSNL Corporate Office as Director (CM) on 1st May, 2013 and is responsible for the growth of mobile business of GSM / CDMA / WIMAX in BSNL, including all activities related to Sales & Marketing, VAS, Tariff finalization & revenue. As Zonal Director for North Zone he is responsible for monitoring growth and maintenance of Telecom Network in 8 Circles. Prior to this assignment, Shri Shrivastava had held the post of Sr. GM, Ajmer TD where he gave special attention to Sales & Marketing of telecom products in the SSA which resulted in physical growth of connections in all segments and increased revenue for the SSA. Ajmer SSA was chosen for the pilot project for NOFNwhichwassuccessfullycompletedaheadoftarget.Hiscontributionsinprovidingqualityservice to BSNL customers have been widely acknowledged and he strived to achieve benchmarks prescribed by TRAI / BSNL C.O. for various service parameters. Shri Shrivastava also worked as GM Jodhpur SSA and during his stint there he gave record number of mobile and landline connections with special emphasis on data and broadband business. He also has experience of working as GM (BB) in Rajasthan Telecom Circle with additional charge of Marketing and Enterprise Business. Shri


33

Shrivastava also has overseas working experience in Zimbabwe where he was posted in Harare while representing TCIL as Task Force Leader to upgrade their telecom services. Due to his hard work and coordination skills the fault rate was drastically curtailed which was well appreciated by PTC Zimbabwe and TCIL management. He was associated with 6th G-15 Summit in Harare in 1996. Shri Shrivastava has delivered lectures extensively in different institutions both in India and abroad including many universities and management colleges. He also organized many seminars and skill up-gradation courses at many places. A firm believer in team work, Shri Shrivastava always sets examples by himself and uses latest technological applications to promote and inculcate team work amongst his subordinates and maintain synergy with superiors in BSNL management.

Shri Shahbaz Ali, Government Director [DIN: 03282551] [Upto 26.8.2014] :- Shri Shahbaz Ali, having Master Degree from Patna University, is an officer of Indian P&T Accounts & Finance Service of 1989 Batch. He is presently working as DDG(TPF & Accounts) in GOI, Ministry of Communication & IT, Deptt. of Telecom. Shri Ali has wide and varied experience in the field of Telecom Sector as he has worked in various capacities in Deptt. of Telecom and its Public Sectors, Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd.

Inhispresentassignment,ShriShahbazAliisresponsiblefor:-

● Formulation of Budget of DoT. ● Rendering Finance advice for DoT’s PSEs (including disinvested PSEs). ● Nodal Officer for Indian Telegraph Act for billing related disputes. ● Overall accounting functions of Department of Telecom.

Shri Ali has also rendered his services as Government Nominee Director on the Board of Directors of Tata Communications Ltd.

Ms. Rita A. Teoatia Government Director [DIN: 02876666] [Wef 04.09.2012] :- Ms. Rita Teaotia joined the Indian Administrative Service in the year 1981 and served in the districts of Panchmahal and Gandhinagar in Gujarat. Subsequently, she worked in the energy sector as MD, GujaratIndustries Power Company Ltd., and Secretary (Energy). She has worked extensively at policy making and strategic levels in the fields of Education, Health, Women’s Development and rural Development. From 2003-2007, she worked in the Government of India as Joint Secretary in the Ministry of Health and Family Welfare. Prior to the present assignment, she also served as Additional Secretary, in the Department of Electronics and Information Technology (DeitY),from 19th March, 2012. In this capacity, she headed the National eGovernane Plan, which entailed working closely with all State Governments and arms of DeitY, including National Informatics Centre(NIC), StandardisationTestingandQualityCertification(STQC)Directorate,CentreforDevelopmentofAdvance Computing (C-DAC) and National Institute of Smart Governance(NISG).At present, she is serving as Additional Secretary in the Department of Telecommunications and ex officio Secretary of the Telecom Commission. Ms.Rita Teaotia has received four National eGovernance awards for applications developed during her various assignments. She holds a Masters in Medieval and Modern Indian History from the University of Lucknow.

Shri Ajai Vikram Singh, Director [DIN : 02184840] [ Wef 17.7.2012 ] :- Shri Ajai Vikram Singh was born at Ajmer and had his education at Mayo College (Senior Cambridge) and Government College (Graduation), Ajmer. After a short spell in the Private Sector, he joined the Indian Administrative Service(IAS) in 1967 and, after the initial training, was allotted to the Uttar Pradesh Cadre. He has served in various capacities in the State and Central Governments, both, in the field and in the Secretariats. He was District Magistrate in Ghazipur, Sultanpur, Moradabad, and Aligarh

34

districts, as also Commissioner, Lucknow Division. He has served as Managing Director of two State enterprises (Rajasthan State Warehousing Corp-on deputation, & UP Export Corp.) In the Uttar Pradesh Secretariat, he has been Secretary, Small Industries; Secretary, Heavy Industries; Industrial Development Commissioner & Principal Secretary.In the Government of India, the postings have been with the Cabinet Secretariat, Ministry of Defence, Ministry of External Affairs, and the Ministry of Industries. He did the National Defence College(NDC) Course in 1984 during the first of his four tenures with the Ministry of Defence. He was posted as Minister (Supply) in the High Commission of India at London for two years. In November 2000, the State of Uttar Pradesh was bifurcated into Uttar Pradesh and Uttaranchal, and Shri Ajai Vikram Singh was appointed as the first Chief Secretary ofthenewStateofUttaranchal(NowUttarakhand).In2001,consequenttothere-organisationoftheMinistryofDefence,hewasappointedtothenewlycreatedpostofSpecialSecretary(Acquisition).ThisinvolvedsettingupaneworganizationandevolvingproceduresforallcapitalacquisitionsfortheArmedForces.Subsequently,hehasbeenRevenueSecretary(NowtheMinistryofFinance),Secretary, Ministry of Non-Conventional Energy Sources (now the Ministry of New & Renewable Energy), Secretary, Ministry of Road Transport & Highways, and Defence Secretary. During his various postings in the Central and State Governments, he has been Chairman of the following Companies:- Indo-Gulf FertilisersLtd., IndiaPolyfibresLtd.,PashupatiAcrylonLtd.,U.P.TextileCorporation and U.P.Finance Corporation. In addition, he has served as Director on the Boards of, inter-alia,thefollowingCompanies:-IFCILtd.,BHELLtd.,MarutiUdyogLtd.,HMTLtd.,HeavyEngineering Corp. Ltd., Andrew Yule Ltd., Bharat Bhari Udyog Nigam Ltd., Bharat Yantra Nigam Ltd., Hindustan Aeronautics Ltd., Mazagon Docks Ltd., Goa Shipyard Ltd., and PICUP. Shri Ajai Vikram Singh superannuated from service on 31st July 2005, and is now living in his home-town, Ajmer, with his wife, son, daughter-in-law, and two grand-children. He is involved with issues connected with ecology, the environment, and local development. He is currently Chairman of the Pune based World Institute of Sustainable Energy(WISE), a society devoted to the spread of clean and renewable energy. He is also on the Board of Directors of Pipavav Defence & Offshore Engg.Co.Ltd., and Overseas Infrastructure Alliance Infrastructure Alliance(India) Pvt. Ltd. He has taken up the cultivation of Jojoba ( a non-edible oil bearing plant) and Aloe Vera on a trial basis in his village near Ajmer.

Prof. N. Balakrishnan, Director [DIN: 00181842] [Wef 17.7.2012] :- Prof. N. Balakrishnan received his B.E. (Hons.) in Electronics and Communication from the University of Madras in 1972 and Ph.D. from the Indian Institute of Science in 1979. He then joined the Department of Aerospace Engineering as an Assistant Professor. He is currently the Associate Director of the Indian Institute of Science and a Professor at the Department of Aerospace Engineering and at the Supercomputer Education and Research Centre. His areas of research where he has more than 200 publications in the international journals and international conferences include Numerical Electromagnetics, High Performance Computing and Networks, Polarimetric Radars, Aerospace Electronic Systems, Information Security, Complex Social Networks and Digital Library. He has received many awards including the Padmashree by the President of India, 2002, Homi J. Bhabha Award for Applied Sciences, 2004, JC Bose National Fellowship in 2007, the Alumni Award for Excellence in Research for Science & Engineering by IISc, 2001, Millennium Medal of the Indian National Science Congress in 2000, Ph D (Honoris Causa) from Punjab Technical University in 2003, the CDAC-ACS Foundation Lecture Award in 2008 and the Academy Excellence Award, Defence Research and Development Organization in 2009. He was the NRC Senior Resident Research Associate at the National Severe Storms Laboratory, Norman, Oklahoma, U.S.A. from 1987-1989. He was a visiting research scientist at the University of Oklahoma in 1990, Colorado State University in 1991 and is a Visiting Professor at Carnegie Mellon University from 2000 till


35

2006. He is an Honorary Professor in Jawaharlal Nehru Centre for Advanced Scientific Research (JNCASR). He is a Fellow of the Academy of Sciences for the Developing World (TWAS), Indian National Science Academy, Indian Academy of Sciences, Indian National Academy of Engineering, National Academy of Sciences and Institution of Electronics & Telecommunication Engineers. He is one of the Directors of Data Security Council of India (Currently its Chairman), Central Bank of India, Bharat Sanchar Nigam Limited (BSNL) and of CDOT-Alcatel Research Centre at Chennai, a member of the Council of CDAC, Member of the Joint Advisory Board of Carnegie Mellon University atQatarandMemberoftheGoverningCouncilofIITKharagpur,HewasoneoftheeditorsoftheInternational Journal on Distributed Sensor Networks, and Editor-in-Chief, International Journal of World Digital Libraries. Till recently he was a member of the National Security Advisory Board and the Board of Governors of IIT Delhi and of IIT Madras. He was also one of the Directors of the Bharat Electronics Limited (BEL), a Part-Time Member of the Telecom Regulatory Authority of India. He is the National Coordinator of Indo-US Million Books to the Web Digital Library Projects (www.ulib.org and www.new.dli.ernet.in ). He, along with his colleagues from India, China and the US created the world’s largest Digital Library which proudly hosts more than a million books thatarefreelyaccessiblebyanyoneanywhereandanytime.Moredetailscanbefoundathttp://swati.dli.ernet.in/balki

Smt. Darshana Momaya Dabral, Government Director [DIN: 06975127] [Wef: 29.09.2014] :- DarshanaMomayaDabral(IP&TAFS,1990Batch):-AsanIndianCivilServant(Batch1990),havenearly 24 years of senior level experience at Central Government in the Dept. of Telecommunication in the areas of Planning, Budgeting, Accounts, Revenue, Finance, Administration and overall Financial Management. Throughout involved in key positions of critical decision making and tasks of organisational & national transformation through drafting and implementation of legislations for new polices.

Strengths:Leadership,focusingoncollaborativeteamefforts,processorientationandinculcationof transparency & accountability to extract desired levels of work efficiency and performance.

Completed PGDM (FM) (12-14) at National Institute of Finance Management Faridabad, on deputationbasis.PresentlypostedasDDG(TPF)atDoTHQ,responsibleforMinistry’sBudgetandinvolved in financial advice to Public Sector Units under DoT.

Appointment and Tenure of the Directors

In terms of Article No.111 of the Articles of Association, the Directors are appointed by the President of India.

Functional Directors are appointed for a period/tenure of five years from the date of assumption of charge, or till the date of superannuation or until further orders of the President of India, whichever is the earliest. The salary and allowances are determined by the President of India.

The Government Nominee Directors are appointed by the President of India from amongst the officials of the Government of India. Such nominee Director ceases to be a Director on his /her superannuation from Government Service or transfer from the respective Ministry/Department.

Non-official Part-Time Directors are appointed by the President of India for a period of three years from the date of assumption of charge. The appointment of the Non-official Part-Time Directors shall be at the pleasure of the President of India and other terms and conditions as may be deemed fit by the President of India from time to time in accordance with the Memorandum and Articles of Association of the Company.

36

BOARD COMMITTEE MEETINGS AND PROCEDURES

Institutionalised Decision Making Process

With the aim of completely institutionalising the process of corporate governance and decision making by the Board of Directors, the Company has, well defined process of placing vital and sufficient information before the Board and/or committee(s) thereof.

The Board of Directors have constituted a standing committee named as “Management Committee of the Board(MCB), comprising of the CMD and all the Functional Directors as Members and the Company Secretary as the Secretary, and have delegated powers of general management of company’s business affairs to it. The Board of Directors have also delegated some of their powers to the CMD, Functional Directors, EDs and Senior Management Personnel of the Company.

The other standing Committees, viz., (a) the Audit Committee of the Board in accordance with the provisions of Section 292A of the Companies Act 1956; and, (b) the Remuneration Committee of the Board in terms of the Corporate Governance Norms for the CPSEs; and (c) the Corporate Social Responsibility(CSR) Committee pursuant to the provisions of the Section 135 of the Companies Act 2013 and Rules thereunder; and (d) Committee on Appellate & Review matters under BSNL CDA Rules 2006 have also been constituted by the Company.

In addition, as and when need arises, Board constitutes Committee of Directors.

Role of the Company Secretary in overall Governance Process

The Company Secretary ensures that the Board procedures are followed and regularly reviewed. The Company Secretary endeavors that all the relevant information and documents are made available to the Directors by the different nodal units to facilitate an effective decision making in their meetings. Being the interface between the Board / Executive Management, all the Senior Management Personnel of the Company take advice and services of the Company Secretary.

The Company Secretary is also the interface between the management and the regulatory authorities for governance matters.

Guidelines for the Board/Committee Meetings

Details guidelines have been laid down by the Company secretariat especially with reference to preparation and submission of Agenda Notes, Circulation of decisions thereto etc.

The Agenda papers are prepared by the respective Business verticals headed by PGM/Sr.GM/GM as the case be at corporate office, after considering complete technical, commercial, legal and financial aspects. After getting approval of the concerned ED/Functional Director/CMD/MCB as the case be, in accordance with the delegation of Administrative and Financial Powers, the agenda papers are sent to the Company Secretariat for circulation amongst the Members of the Board/ Committee(s) thereof as the case be.

Observance of the Secretarial Standards issued by the Institute of the Company Secretaries of India

The Institute of Company Secretaries of India(ICSI) has, evolved and laid down the best practices for corporate practice in the form of Secretarial Standards. The Company has been adhering to the Standards relating to Board Meetings, General Meetings, Payment of Dividend, Maintenance of


37

Records and Registers, Minutes of the Meetings, Passing of Resolution by Circulation, affixing of Common Seal, Board’s Report etc.

Code of Conduct for the Members of the Board and the Senior Management Personnel

In addition to the Company’s Conduct, Disciplinary and Appeal Rules, in line with the corporate governance norms, the Board of Directors of the Company have laid down a “Code of Conduct for theMembersoftheBoard”.AlltheMembershaveaffirmedcompliancewiththesaidcode.

Similarly, In addition to the Company’s Conduct, Disciplinary and Appeal Rules, in line with the corporate governance norms, the Board of Directors of the Company have laid down a “Code ofConductfortheSeniorManagementPersonneloftheCompany”.AlltheSeniorManagementPersonnel have affirmed compliance with the said code.

Scheduling of Board/Committee Meetings and Submission of Agenda Items for the Board/Committee meetings.

The meetings of the Board/Committee thereof are convened, keeping in view the statutory provisions and the convenience of the Members, with sufficient advance planning. The Agenda Notes are, generally sent minimum seven days in advance to facilitate meaningful and informed discussions;

Wherever required, voluminous documents/documents of confidential nature are tabled at themeeting, with the approval of the Chairman;

The Board also discusses sensitive and urgent business proposals, without formal agenda note, depending on urgency and case to case basis;

Wherever required, the Senior Management Personnel of the Company are called to makepresentations before the Board/Committee on specific agenda notes.

The Meetings of the Board/Committee are generally held at the Registered office of the Company atDelhi.Wheneverrequired,meetingsarealsoheldoutsidetheheadquarters.

Recording of Minutes of the Board/Committee meetings

Minutes of the proceedings of the Board of Directors and the Management Committee of the Board are recorded. The minutes are circulated amongst the Members of the Board/Committee(s) for their comments in a given time frame. The comments if any, received are discussed in the next meeting of the Board/Committee, while confirming the minutes. All the minutes duly signed/initialed by the Chairman are entered into the Minutes Book.

The mechanism of follow up actions

Senior Management Personnel submit Action Taken Report on the decisions of the previous meetings, after obtaining the approval of the respective Functional Directors. These are circulated alongwith the Agenda for information and further directives of the Board.

Compliances

While submitting the Agenda Notes, every Senior Management Personnel/Functional Director(s) concerned, being the head of respective line function/business unit who have been delegated with administrative and financial powers thereto, ensure adherence to all the applicable laws, rules, guidelines etc. The Company Secretary ensures the compliance of all the applicable provisions of the Companies Act and other corporate laws.

38

Accordingly, head of the business unit/line head handling the respective subject also ensures and undertakes the compliance of the enterprise risk management policy of the company as a routine, while submitting the Agenda papers. Being the successor and assigns of the erstwhile Departments of Telecom Services and Telecom Operations, the BSNL has an inbuilt systems, accordingly, all the court cases and litigation issues are handled by the respective heads of the Circles/Units.

All the returns/reports under Companies Act 1956 were filed in time with the designated authorities.

INFORMATION PLACED BEFORE THE BOARD OF DIRECTORS

Subject to the provisions of the Companies Act 2013, Memorandum and Articles of Association of the Company, and the directives, guidelines of the Government on the subject, the Board of Directors have delegated all general powers of managing the company’s affairs to the Management Committee of the Board comprising CMD and the Functional Directors; EDs; and, the Senior Management Personnel of the Company. The Minutes of the Meetings of the Management Committee of the Board are placed before the Board in its meetings. In addition, information on followingitemsisinvariablyplacedbeforetheBoardofDirectors:-

(1) BUDGET a. Annual Budget Estimates and revised budget estimates for capital expenditure; b. Annual Budget Estimates and revised budget estimates for revenue account for operational expenditure;andc.Budgetrequirementsforfiveyearplans.

(2) PLANS a. Annual Plans; b. Five Year Plans; c. Manpower Plans; d. Corporate Plans; and e. Resource Mobilisation Plans.

(3) ACQUISITIONSAcquiringshares,stocks,securitiesetc.,ofotherCompaniesorUndertakingsother than in Government guaranteed securities for short term and in duly registered employees consumer co-operative societies.

(4) STRATEGIC DECISIONS a. Agreement involving foreign collaboration proposed to be entered into by the Company irrespective of the consideration involved; b. Strategic Investments/ decisionandacquisitionofshares/controllingstake/debentures/bondsofothercompanies;andDecision with regard to formation of joint ventures, subsidiary companies and restructuring of organization.

(5) PERSONNEL a. Creation of posts of the level of Executive Director; b. Formulation of any changes in wage structure and scales of pay of employees of the company; c. Policy matters relating to allowances of the employees such as HRA, Performance Related Pay, Bonus etc.

(6) ACCOUNTS Acceptance of periodical profit and loss accounts; and Declaration of Dividend.

(7) Investmentof thesurplus fundsof thecompany inacquisitionofcontrollingstake/shares/debentures/bonds in other companies.

(8). All issues that are reserved for exclusive consideration by the Board of Directors by the Companies Act 2013; and, the Memorandum and Articles of Association of the Company.

(9) COMPLIANCE REPORTINGS UNDER THE CORPORATE GOVERNANCE NORMS

NUMBER OF BOARD MEETINGS HELD DURING 2013-14; ATTENDANCE OF DIRECTORS IN THE BOARD MEETINGS & 13TH ANNUAL GENERAL MEETING HELD ON 30.9.2013


39

TOTAL BOARD MEETINGS HELD IN 2013-14 : 08

Name and Designation No. of Board Meetings

Attended out of 8 Meetings

Attended the last AGM held on

30.9.2013

Directorships in other

Companies

Remarks

Shri R.K. Upadhyay, CMD 8 Present - Retired on A/N of 30.6.14

Shri A.N.Rai, CMD / Director(Ent.) & (HR)

8 Present - -

Shri R.K. Agarwal Director (CM) [Upto 30.4.2013]

1 - - Retired on 30.4.2013.

Shri K.C.G.K.Pillai Director (F)[Wef 25.4.2012]

4 Present NIL Retired on A/N of 30.11.2013

Shri N.K.Gupta Director (CFA) [Wef 1.6.2012]

8 Present NIL Assumed charge on 1.6.2012.

Shri Anupam Shrivastava Director (CM) [Wef 1.5.2013]

7 Present NIL

Ms. Rita A.Teaotia Govt. Director [wef 4.9.2012]

7 Present - Appointed in place of Shri S.R.Rao wef 4.9.2012

Shri Shahbaz Ali Govt. Director [Wef 14.2.2012 to 26.8.2014]

7 Present 1 ))) Appointed in place of Shri Tangirala wef 14.2.2012

Shri Ashish Guha Director Chairman, Audit Committee of the Board. [Upto 20.5.2013]

- - 3^ Tenure of appo in tmen t ended on 20.5.2013

Shri Ajai Vikram Singh Director [Wef 17.7.2012]

6 Present ^^ 2& Appointed wef 17.7.2012

Prof. N. Balakrishnan Director [Wef 17.7.2012]

6 - 3&& Appointed wef 17.7.2012.

Smt. Darshana Momaya Dabral [Wef 29.9.2014]

NA NA NIL Appointed wef 29.9.14

Note:-ThedisclosureoftheDirectorshipsarebasedonthedisclosuresreceivedfromtheDirectors.))) Government Nominee Director in TCIL^ CEO & MD Heidelberg Cement India Limited, Chairman-Cochin Cements Limited, Director-Ballarpur Industries Limited. & Director in Pipavav Defence and Offshore Engineering Company Limited and Director in Overseas Infrastructure Alliance(India) Private Limited.&& Director in (i) Data Security Council of India(DSCI) – not for profit company registered under Section 8 of Companies Act 2013; (ii) Central Bank of India; and (iii) C-DOT Alcatel-Lucent Research Centre Pvt Ltd., under Chapter 1 Section 2(68) of new Companies Act 2013.^^ The Audit Committee of the Board, in its 50th meeting held at 10.30 AM on 30.9.2013 elected Shri Ajai Vikram Singh as Chairman for the meeting. He attended the 13th AGM held at 5 PM on 30.9.2013 as Chairman of the Audit Committee of the Board.

40

DETAILS OF NUMBER OF COMMITTEE MEMBERSHIPS AND CHAIRMANSHIPS OF DIRECTORS

Name and Designation

Details of Memberships of Board Committee

Details of Chairmanships of Board Committee

Name of Company

Name of Committee Name of Company

Name of Committee

Shri R.K. Upadhyay, CMD [Upto 30.6.2014]

BSNL ~ Finance Committee of the Board

- -

BSNL@ Remuneration Committee of the Board

BSNL Committee on Appellate & Review matters under BSNL CDA Rules 2006

+Shri A.N. Rai, CMD / Director(Ent.) & (HR)

BSNL Remuneration Committee of the Board

- -

BSNL Committee on Appellate & Review matters under BSNL CDA Rules 2006

BSNL Corporate Social Responsibility Committee of the Board \\\\

Shri R.K. Agarwal Director (CM) [Upto 30.4.2013]

BSNL Audit Committee of the Board

- -

BSNL Finance Committee of the Board

- -

++Shri K.C.G.K. Pillai Director (Finance) [Upto 30.11.2013]

BSNL Finance Committee NIL NIL\ BSNL Remuneration Committee - -

+++Shri N.K.Gupta Director(CFA) [Wef 1.6.2012]


NIL NIL

++++Shri Anupam Shrivastava Director (CM) & (Fin) [Wef 1.5.2013]

BSNL \\\ Audit Committee of the Board


Ms.Rita A.Teaotia Govt. Director [Wef 4.9.2012]

- - - -

Shri Shahbaz Ali, Govt. Director [Upto 26.8.14]

TCIL Audit Committee - -TCIL Remuneration Committee - -TCIL CSR CommitteeBSNL Audit Committee - -BSNL Committee on Appellate

& Review matters under BSNL CDA Rules 2006.

- -


- -


41




Name of Company


Name of Committee

Shri Ashish Guha Director [Upto 20.5.2013]

Heidelberg Cement India Ltd

Audit Committee BSNL Finance Committee of

the BoardHeidelberg Cement India Ltd

Shareholders/Investors Grievances Committee

BSNL Audit Committee

Heidelberg Cement India Ltd

Finance & Risk Management Committee

Cochin Cements Ltd

Chairman

Cochin Cements Ltd

Audit Committee - -

Ballarpur Industries Ltd

Risk Management Committee

- -

Ballarpur Industries Ltd

Remuneration Committee - -

BSNL \ Remuneration Committee of the Board

- -

Shri Ajai Vikram Singh Director [Wef 17.7.2012]

Pipavav Defence and Offshore Engineering Company Ltd

Audit Committee BSNL \ Remuneration Committee of

the Board

BSNL \\\ Audit Committee of the Board


Prof.N.Balakrishnan Director [Wef 17.7.2012]

Central Bank of India

Management Committee BSNL\\\ Audit Committee of

the BoardSupervisory Committee of the Board for monitoring of IT Projects in Banks

Central Bank of India

IT Strategy Committee

Shareholders/investors Grievances Committee

Data Security Council of India(DSCI) not for profit

Company under Sec 8 of the

Companies Act 2013

Chairman

Internal Training Policy Advisory Committee

42




Name of Company


Name of Committee

Smt.Darshana Momaya Dabral, Govt. Director [Wef 29.9.2014] \\\\\

NIL NIL NIL NIL

Note:-The disclosure of the Memberships/Chairmanships are based on the disclosures received from the Directors.~ ChargeoftheDirector(F)vestedwiththeCMDtilljoiningofDir(F)on25.4.2012.Consequentupontheretirement of Shri KCGK Pillai on A/N of 30.11.2013, till receipt of further orders of GoI, CMD was looking after the additional charge of Dir(F). GoI, vide order No.1-4/2012-PSA dated 5.2.2014 entrusted the additional charge with immediate effect upto 28.2.2014 to Shri Anupam Shrivastava Dir(CM). Again, wef 1.3.2014, till receipt of further orders of GoI, CMD was looking after the additional charge of Dir(F). GoI vide order No.1-4/2012-PSA dated 9.5.2014 conveyed the extension of additional charge of Director(Finance) to Shri Shrivastava for a period of six months wef 1.3.2014. By virtue of having the charge of Dir(F) he was Member of the Finance Committee of the Board during relevant periods.@ Additional charge of Director(HRD) vested with CMD wef 5.3.2012 to 18.6.2012 and thereafter vested with Director(E). Thereafter wef 4.6.2013, CMD looked after the charge of Director(HR) till the GoI vide order No.1-4/2012-PSA dated 8.8.13 conveyed the approval of ACC for extension of the additional charge of Director(HR) to Shri A.N.Rai Director(E), for a further period of six months wef 4.6.2013. Again, pending receipt of GoI order, wef 4.12.2013, CMD was looking after the additional charge of Director(HR). GoI vide order No.1-4/2012-PSA dated 7.2.14 conveyed the ACC approval for extension of additional charge of Dir(HR) to Shri Rai Director(E) for a period of six months wef 4.12.2013. By virtue of having the charge of Dir(HR), he was Member of the Remuneration Committee of the Board and Committee on Appellate & Review matters under BSNL CDA Rules 2006 during relevant periods.+ Shri A.N.Rai assumed the charge of Director(Enterprise) wef 19.9.2011. He is not a Member of any committee. Additional charge of Director(HRD) vested with Shri Rai wef 5.12.2011 to 4.3.2012. Thereafter, wef 19.6.2012, additional charge of Director(HRD) entrusted again to Shri A.N.Rai for a period upto 4.9.2012 till appointment of regular incumbent or further orders, whichever is the earliest, followed by extension upto 3.12.2012. Thereafter, the arrangement of entrustment of additional charge of Director(HR) to Shri Rai was extended for six months beyond 4.12.2012 or till a regular incumbent is appointed or until further orders, whichever is earliest. With effect from 4.6.13, till the receipt of further communication from the GoI, CMD looked after the charge of Director(HR). Thereafter, GoI, MoC & IT, DoT, vide its order No.1-4/2012-PSA dated 8.8.13 conveyed the approval of the ACC for extension of additional charge of the post of Director(HR) in favour of Shri Rai Director(E) for a period of six months or till a regular incumbent is appointed or until further orders, whichever is earliest. Thereafter wef 4.12.2013 till the receipt of further orders of GoI, CMD was looking after the additional charge of Director(HR). GoI, vide order No.1-4/2012-PSA dated 7.2.2014 conveyed the approval of ACC for extension of additional charge arrangement of Dir(HR) to Shri Rai for a period of six months wef 4.12.2013. Thereafter, wef 4.6.2013, pending receipt of further orders of the GoI, additional charge of Dir(HR) was vesting in the CMD. By virtue of Dir(HR) being Member of the Remuneration Committee of the Board, Committee on Appellate & Review Matters under BSNL CDA Rules 2006 and the Corporate Social Responsibility Committee, he was Member of these Committeesduringtherelevantperiods.Further,consequentupontheretirementofShriR.K.UpadhyayCMDon30.6.2014, GoI vide order No.1-1/2014-PSA dated 30.6.2014 conveyed the approval of the competent authority for entrusting the additional charge of the CMD to Shri Rai for a period of three months wef 1.7.2014. Shri Rai assumed the charge of office of CMD wef F/N 1.7.2014.++ Shri K.C.G.G.K.Pillai assumed the charge of Director(F) wef 25.4.2011. Director(F) is Member of the Finance Committee and Remuneration Committee. He retired on superannuation from service on 30.11.2013.+++ Shri Gupta assumed the charge of Director(CFA) on 1.6.2012. ++++ConsequentupontheretirementofShriKCGKPillaion30.11.2013,wef1.12.2013CMDwasholdingthe additional charge of office of Director(F). GoI vide No.1-4/2012-PSA, dated 5.2.2014 entrusted the additional


43

charge of Director(F) to Shri Anupam Shrivastav with immediate effect upto 28.2.2014. Thereafter, till receipt of further orders, CMD held the additional charge of Director(F). GoI, vide order No.1-4/2012-PSA dated 6.5.2014 conveyed the extension of entrustment of additional charge of Director(F) to Shrivastava wef 1.3.2014 for a period of six months. By virtue of Director(F) being Member of Finance Committee and Remuneration Committee, he was Members of these committees during relevant periods.\ The Board, in its 143rd meeting held on 28.8.2012, re-constituted the Remuneration Committee with the followingcomposition:-ShriAjaiVikramSinghDirectorasChairman;and,ShriShahbazAliGovt.Director,ShriAshish Guha Director, Director(HR), Director(Finance) as Members and the Company Secretary as the Secretary of the Committee.\\ The Board, in its 143rd meeting held on 28.8.2012, re-constituted the Audit Committee of the Board by inducting Prof.N.Balakrishnan Director, also as one of the Members of the Committee. The Committee in its 46th meeting held on 7.12.2012 elected him as Chairman of the Committee\\\ ConsequentuponthecessationofDirectorshipsofShriR.K.AgarwalDirector(CM)andShriAshishGuhaDirector, Members of the Audit Committee of the Board, the Board in its 148th meeting held on 14.6.2013 re-constituted the Audit Committee by inducting Shri Ajai Vikram Singh Director and Shri Anupam Shrivastava Director(CM) as Members of the Committee. \\\\ Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder the Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee(CSR Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta Director(CFA) as Members and the Secretary of the Company acts as the Secretary of the Committee.\\\\\ Pursuant to the provisions contained in Section 161(3) of the Companies Act 2013 and rules made thereunder, Article 111 of the Articles of Association of the Company, read with GoI, MoC & IT, DoT’s Order No.5-2/2013-PSA dated 26.8.2014, the Board of Directors in their 158th meeting held on 29.9.2014, appointed Smt.Darshana Momaya Dabral [ DIN 06975127 ] DDG(TPF) in DoT as Government Nominee Director on the Board of Directors of the Company.

BOARD COMMITTEES

The Company has the following Committees of the Board.

The Management Committee of the Board (MC of the Board)

The Board of Directors of the Company, in their 118th meeting held on Thursday, the 26th day of February 2009, in supercession of all the extant instructions on the aforesaid subject, have constituted a Standing Committee of the Board, named, “Management Committee of the Board [MC of the Board], comprising the Chairman and Managing Director [CMD] as the Chairman, and the Functional Directors as Members, with the Company Secretary as the Secretary of the Committee.

Further, the Board of Directors of the Company have also delegated to the aforesaid standing committee the powers for the management and administration of the business of the Company. The powers of the Board, in respect of the matters for which approval of the Board of Directors isstatutorilyrequired;or,thepowers,whichcannotbedelegated;or,thematters,where,priorapproval of the Government is necessary, have not been delegated.

Remuneration Committee

To ensure complete compliance of the Corporate Governance Norms, the Board of Directors of the Company has re-constituted the Remuneration Committee. The Committee comprised of Shri Sanjiv Gupta Non official Part Time [Independent] Director as Chairman, Shri S.R.Rao Government Director, Shri A.K.Garg Director(HR) and Shri Ashish Guha Non official Part Time [Independent] Director as Members and the Company Secretary as Secretary.

44

The Board, in its 143rd meeting held on 28.8.2012, re-constituted the Remuneration Committee withthefollowingcomposition:-ShriAjaiVikramSinghDirectorasChairman;ShriShahbazAliGovt. Director, Shri Ashish Guha Director[upto 20.5.2013], Director(HR), and Director(Finance) as Members and the Company Secretary as the Secretary of the Committee.

Corporate Social Responsibility Committee (CSR Committee)

Pursuant to the provisions contained in the Section 135 of the Companies Act 2013 and Rules thereunder the Board, in its 154th meeting held on 7.3.2014 constituted the Corporate Social Responsibility Committee(CSR Committee) of the Board comprising Shri Ajai Vikram Singh Independent Director, Shri A.N.Rai CMD/Director(Enterprise) & (HR) and Shri N.K.Gupta Director(CFA) as Members and the Secretary of the Company acts as the Secretary of the Committee.

Committee on Appellate & Review matters under BSNL CDA Rules 2006

To consider and decide all the appeal / review cases for and on behalf of the Board of Directors, wherever the Board is indicated as Appellate and Reviewing Authority in the CDA Rules 2006 of the Company, the Board of Directors, in their 135th meeting held on 26.8.2011, constituted a Standing Committee of the Board known as Committee on Appellate & Review matters under BSNL CDA Rules 2006, comprising of Director(HR) and One Government Director and the Company Secretary as Secretary of the Committee. The minutes of each of the meetings of the Committee shall be submitted to the Board in the immediately following meeting of the Board.

At present, the committee comprise Shri Shahbaz Ali Government Director(Upto 26.8.2014) and Director(HR) [at present additional charge of Director(HR) vest with CMD / Director(Enterprise)].

Finance Committee of the Board

Board of Directors in their 132nd Meeting held on 6.12.2010, have constituted a ad-hoc Committee of Directors named as Finance Committee of the Board. The Terms of Reference of the Committee for the present shall be to consider various ways and means to finance the company’s working capitalandCAPEXrequirements.TheCommitteeshallalsoexamineandrecommendtotheBoardvariousmethodologiestofinanceallCAPEXrequirementsoftheCompany.Thisbeinganad-hoccommittee, had met once under the chairmanship of Shri Ashish Guha.

Audit Committee of the Board

The terms of reference the Audit Committee are in accordance with the provisions of the Section 292A of the Companies Act 1956 and the Corporate Governance norms issued by the Department of Public Enterprises for the unlisted CPSEs. The Board of Directors have constituted the Audit Committee of the Board, comprising of 4 Directors, of which Three are Official/Non-official Part-TimeDirectors[otherthanFunctionalDirectors]andtheotherMemberisaFunctionalDirector:-

Shri R.K.Agarwal Director(CM) Member upto 30.4.2013. – On attaining the age of superannuation, he retired from service and as such ceased to be Member.

Shri Ashish Guha Non-Official Part-Time Director, Chairman [Inducted as Member Wef 6.6.2011] The Audit Committee, in its 40th meeting held on 29.9.2011 elected Shri Ashish Guha as Chairman of the Committee. Thereafter, the Committee, in its 46th meeting held on 7.12.2012 elected Prof. N.Balakrishnan as Chairman of the Committee. On completion of the three years tenure of appointment, Shri Guha ceased to be Director wef 21.5.2013.


45

Shri Shahbaz Ali Government Director Member[ Wef 12.3.12 to 26.8.2014] Prof N. Balakrishnan Non-official Part-Time Director, Chairman [Wef 28.8.2012] The

Board of Directors, in their 143rd meeting held on 28.8.2012, reconstituted the Audit Committee of the Board by inducting Prof.N.Balakrishnan Director also as one of the Members of the Committee. The Committee, in its 46th meeting held on 7.12.2012 elected Prof. N.Balakrishnan as Chairman of the Committee.

Shri Anupam Shrivastava Director (CM) Member [ Wef 14.6.2013] The Board of Directors, in their 148th meeting held on 14.6.2013 inducted Shri Shrivastava Director(CM) as Member in place of Shri R.K.Agarwal former Director(CM).

Shri Ajai Vikram Singh Non-official Part-Time Director Member [ Wef 14.6.2013] The Board of Directors, in their 148th meeting held on 14.6.2013 inducted Shri Ajai Vikram Singh as Member in place of Shri Ashish Guha former Director.

Director (Finance) is a regular invitee to the Meetings of the Committee. Company Secretary acts as the Secretary of the Committee.

The Chairman of the Audit Committee was present in the last Annual General Meeting of the Company.

NUMBER OF MEETINGS HELD DURING 2013-14 AND ATTENDANCE NO. OF MEETINGS HELD: 06

Name and Designation No. of meetings attended

Remarks

Shri Ashish Guha Director, Chairman

- Elected Chairman in the 40th meeting held on 29.9.2011. Tenure of appointment ended on 20.5.2013.

Shri Shahbaz Ali, Govt. Director Member [Upto 26.8.14]

6 -

Shri R.K. Agarwal Director(CM) Member.

1 On attaining the age of superannuation, Shri Agarwal retired from service on 30.4.2013.

Prof. N. Balakrishnan Director Chairman

5 Board, in its 143rd meeting held on 28.8.12 inducted him as Member. The Committee in its 46th meeting held on 7.12.12 elected him as Chairman.

Shri Ajai Vikram Singh Director

4 Board, in its 148th meeting held on 14.6.2013 inducted him as Member. The Committee, elected him as Chairman for the 50th meeting held on 30.9.2013.

Shri Anupam Shrivastva Director (CM)

Board, in its 148th meeting held on 14.6.2013 inducted him as Member.

DISCLOSURES

DIRECTORS REMUNERATION

FUNCTIONAL DIRECTORS

BSNL being a Government Company, and in terms of Article No.111 of the Articles of Association of the Company, the remuneration payable to the Directors is determined by the President of India.

46

The salary and other perks paid to the Functional Directors during the year under review is as follows:-

Name Desgn. Salary incl. DA

Other Benefits &

Perks

Contribution in CPF & Other

Funds

Total

Shri R.K. Upadhyay CMD 2222648 267840 251720 2742208Shri A.N. Rai Dir(Ent.) 2047675 87000 230950 2365625Shri R.K.Agarwal [Upto 30.4.2013]

Dir(CM) 341919 18102 18056 378077

Shri Anupam Shrivastava [wef 1.5.2013]

Dir(CM) 1860753 101000 200989 2162742

Shri N.K.Gupta [Wef 1.6.2013]

Dir(CFA) 1969558 203729 221676 2394963

Shri K.C.G.K. Pillai [Upto 30.11.2013]

Dir(Fin.) 2108759 92488 141636 2342883

TOTAL 10551312 770159 1065027 12386498

GOVERNMENT NOMINEE DIRECTORS

The Government Nominee Directors are not paid any remuneration.

NON-OFFICIAL PART-TIME DIRECTORS

Non-official Part-Time Directors are paid a sitting fee at the rate of Rs.10,000/-[Rupees Ten Thousand only] for attending each meeting of the Board and Committee thereof in addition to TA/DA to outstation Directors.

There were no other pecuniary relationships or transactions of the Non-official Part-Time Directors vis-à-vis the Company.

SHAREHOLDINGS BY THE DIRECTORS AND STOCK OPTIONS

Being a hundred percent Government Owned Company, the shares are held by the President of India through Ministry of Communications and IT, Department of Telecommunications. The Directorsarenotrequiredtoholdanyqualificationshares.

The company has not issued any stock options to its Directors/Employees.

MATERIAL CONTRACTS/RELATED PARTY TRANSACTIONS

The company has not entered into any material financial or commercial transactions with the Directors or the Management or their relatives or the companies and firms etc., in which they are either directly or through their relatives interested as Directors and/or Partners except with the certainPSUs,wheretheDirectorsareDirectorswithouttherequiredshareholdings.TheCompanyhas obtained disclosures from all the Directors in this regard, which were noted by the Board.

Transactions with related parties are disclosed in Note No.36 to the Accounts in the Annual Report.


47

LIST OF PRESIDENTIAL DIRECTIVES ISSUED IN THE PAST THREE YEARS

S. No Year of Issue

Subject Status of Implementation

1 2011-12 10-24/2011-SU.1, dated the 22nd December 2011 – Directing BSNL to become initial subscriber as well as acquire shares in the proposed SPV/Company being promoted by the Government for creating National Optical Fibre Network.

Implemented. BSNL has become a Member of the Bharat Broadband Networks Limited; and, as directed by the Government, invested a sum of Rs.10/- [Rupees Ten only] in thisfinancialyear[VideChequeNo.502828, dated 19.4.2012], towards One Equity Share ofRs.10/- [Rupees Ten only] being fully paid up for cash at par.

2 2012-13 - -3 2013-14 I)No.61-01/2012-SU,dated 10.6.2013.

In partial modification of OM No.61-01/2009 dated 27.2.2009, the benefit of merger of 50% DA effectively amounting to 78.2% as on 1.1.2007 for the purpose of fitment in respect of the Board level and below Board level executives and Non-unionised supervisors and non-executives of BSNL was allowed from the date of issue of the order. No arrears will be paid and the revised fitment on the basis of DPE OM dated 2.4.2009 will be paid with prospective effect only.

Implemented. Vide Order No.1-16/2010-PAT(BSNL) dated 10.6.2013, orders issued for allowing benefit of merger of 50% DA effectively amounting to 78.2% as on 1.1.2007, with prospective date i.e. date of issue of Presidential Directive.

ANNUAL GENERAL MEETINGS

Venue, Date and Time, where the previous three Annual General Meetings of the Company were held,includingthedetailsofthe14thAnnualGeneralMeetingareasfollows:-

Meeting and Date Time Venue Details of Special Resolutions passed in

the AGMs11th AGM, 29.9.2011 12.30 P.M. Regd & Corp. Office, Board

Room, 3rd Floor Bharat Sanchar Bhawan, H.C. Mathur Lane, Janpath, New Delhi-110 001.

-

12th AGM, 28.9.2012 12.45 P.M., Regd & Corp. Office, Board Room, 3rd Floor Bharat Sanchar Bhawan, H.C. Mathur Lane, Janpath, New Delhi-110 001.

-

13th AGM, 30.09.2013

05.00 P.M. Regd & Corp. office, Board Room, 3rd floor, Bharat Sanchar Bhawan, H.C. Mathur Lane, Janpath, New Delhi-110 001.

-

48

Meeting and Date Time Venue Details of Special Resolutions passed in

the AGMs14th AGM, 29.09.2014

05.00 P.M., Regd & Corp. office, Board Room, 3rd floor, Bharat Sanchar Bhawan, H.C. Mathur Lane, Janpath, New Delhi-110 001.

-

MEANS OF COMMUNICATIONS

Annual financial statements, New releases, etc., are put in the company’s website as well as in the intranet portal of the company.

Website :- The company’s website www.bsnl.co.in is a user friendly site, containing all the latest developments.

Annual Report

Annual Report of the Company containing inter-alia, Audited Accounts, Directors Report, Auditors Report and replies of management thereto, Comments and Review of the C & AG of India are circulated amongst all the Members and other entitled thereto. As enunciated in the Companies Act and also laid before the Houses of the Parliament.

TRAINING OF DIRECTORS

The Company is managed by the Sectoral Experts/Specialists having domain knowledge and expertiseofthecoresector,whichis“TelecomServicesManagement”.BeingaTelecomServiceProvider, BSNL is also Member of various National and International level Telecom / Technology related forums.

In order to update the knowledge and skill of BSNL officers and to have first hand information on latest developments taking place in telecommunications, 40 officers including Board level officers were deputed abroad for various events.

Non-official Part-Time Directors, being men of public eminence and proven expertise, bring their own value addition to the management of the company. Still, they are also nominated for various national level seminars, workshops, training programmes as per their convenience.

A glimpse of the Targets set forth vis-à-vis the achievements under the Memorandum of Understanding

Item Target Achievement % age of achievement

Risk Management Training courses for Senior Management Personnel

50 88 176

Executive Development Training Programme (10% of Executives)

4993 16069 321

Skill Development training for non-executives (10% of non-executives)

20071 26311 132

Qualitytrainingforemployees 250 464 184


49

RISK MANAGEMENT

BSNL, by virtue of being the successor of erstwhile Central Government Departments of the Telecom Services (DTO) and Telecom Operations (DTO) already had a codified set up with inbuilt mechanism to foresee the potential risks and methods to arrest, control, ignore and/or respond to the risks.

Laying down Enterprise Risk Management Policy

However, as mandated by the Department of Public Enterprises through Guidelines on Corporate Governance Norms for the Un-Listed CPSEs - further revised and made mandatory for the CPSEs vide No.18(8)/2005-GM, dated the 14th May 2010 – Company has laid down a Enterprise Risk Management Policy.

For managing the affairs of the Company, the Board of Directors of the Company has delegated its powers to the Management Committee of the Board (MCB), the CMD and the Functional Directors and Below Board Functionaries, viz., the Executive Directors/CGMs/PGMs/GMs/TDMs/DGMs etc., as the case be. Considering the size and geographical spread of the organization vis-à-vis the delegation of powers made to the business heads and unit heads – who carry out the task of undertaking the risk management as a part of the normal business practice by integrating and aligning the same with corporate and operational objectives - the Business Heads in the Corporate Office; CGMs/PGMs/GMs and Other Unit Heads of the field units were designated as the Risk Management Administrators [RMAs].

Withaviewtocontinuouslytrainanddeveloptheemployeesintheriskmanagementtechniquessegment, Risk Management Training Courses specially designed for the Senior Management Personnel who function as the Risk Management Administrators are being organized at the Training Centres of the Company.

During the financial year 2013-14, 80 officers were trained on Risk Management against the target of 50 which is 176% of the target figures.

Enterprise Risk Management Committee

ConsequentuponthemandateoftheDPE’sMoUTaskForceforinclusionofComplianceofCGNorms,inter-alia,the“EstablishingRiskMonitoringCentres”,asoneoftheDynamicParameters,for“OverseeingthemechanismofEnterpriseRiskManagementMechanism”,inter-alia,theperiodicalreview of risk assessment and minimization procedures, submission of recommendations / reports to the Executive Management and the Audit Committee of the Board, a ERM Committee comprising of all the Executive Directors has been constituted.

WHISTLE BLOWER POLICY

In view of BSNL being a wholly owned Govt. Company already having full fledged Vigilance Mechanism, headed by an independent CVO in compliance of DPE /CVC Guidelines on the subject, no separate Whistle Blower Mechanism was in place. Further, BSNL has also entered into an agreement with the Transparency International to ensure transparency in tendering process. Further, apart from the Audit by the C&AG of India, Statutory and Branch Audits, Amenability to the Writ Jurisdiction of the Court, GoI’s Rules and Regulations, BSNL has its own Conduct, Disciplinary and Appeal Rules covering all the classes of employees including the Functional Directors. The Members of the Board and Sr.Management Personnel are also governed by the

50

Code of Conduct laid down in accordance with the CG Norms. Accordingly, no separate Whistle Blower Mechanism was in place.

However,consequentuponthemandateoftheDPE’sMoUTaskForceforinclusionofComplianceof CG Norms, inter-alia, the establisihing a whistle blower mechanism also as one of the Dynamic Parameters, the Company has put in place in place a Board approved Whistle Blower Policy.

Implementation of National Litigation Policy-2010

In addition to already existing Risk Management Policy which mandates the Risk Management Administrators for ensuring efficient litigation management and compliance of all applicable provisions of the laws, as directed by the Administrative Ministry, detailed instructions have been issued to all concerned to ensure and comply with the provisions of the NLP-2010. Accordingly, the Unit Heads of the Corporate Office and GM/DGM in-charge of Administration in the field units are the Nodal Officers for respective unit for overall policy implementation, who will be assisted bythe“Officer-in-chargeoflitigation”,whoshallberesponsibleforlitigationadministrationandmanagement of respective unit.

COMPLIANCE CERTIFICATE OF THE AUDITORS AND SECRETARIAL COMPLIANCE REPORT

In general, the company has complied with the Corporate Governance Norms as laid down by the Department of Public Enterprises. A certificate to the effect has been obtained from M/s Hemant Singh & Associates, Company Secretaries which forms part of the Report.

FEE TO STATUTORY AUDITORS

Remuneration paid to the Statutory Auditors during the year 2013-14 was Rs. 0.17 crore (exclusive of service tax and cess wherever applicable). It includes Statutory Audit Fee, Certification Charges, Reimbursement of Expenses and Other services.

Shri A.N. Rai, CMD addressing the delegates in the Heads of Circle conference 22nd August, 2014


51

Hemant Singh & Associates 306, Surya ComplexCompany Secretaries 21, Veer Savarkar Block, Shakarpur Delhi-110092 011-43011821 [email protected] [email protected]

THE CERTIFICATE ON COMPLIANCE OF CORPORATE GOVERNANCE NORMS

To

The Members, M/s Bharat Sanchar Nigam Limited, New Delhi.

We have examined the relevant books, records and statements in connection with compliance of the conditions of Corporate Governance by M/s Bharat Sanchar Nigam Limited for the financial year ended 31.3.2014, as enunciated in the “Guidelines on Corporate Governance Norms for the CentralPublicSectorEnterprises2007”,issuedbyGovt.ofIndia,MinistryofHeavyIndustriesandPublic Enterprises, Department of Public Enterprises, vide Office Memorandum No. 18(8)/2005-GM, dated the 22nd June 2007 and revised further vide No.18(8)/2005-GM, dated 14.5.2010.

The compliance of the conditions of the Corporate Governance norms is the responsibility of the Management, our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of corporate governance as laid down in the guidelines. Our Report / Certification is neither an audit nor an expression of the opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance Norms asstipulatedinthe“GuidelinesonCorporateNormsfortheCPSEs”,issuedbytheDepartmentofPublic Enterprises.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency of the effectiveness with which the management has conducted the affairs of the Company.

For Hemant Singh & Associates, Company Secretaries,

Sd/- [K. Raghavan]Place:NewDelhi PractisingCompanySecretary FCP No. 3230Dated:19.09.2014 CPNo.13033

52

BHARAT SANCHAR NIGAM LIMITEDBalance Sheet(All amounts in Rs. lacs, unless otherwise stated)

Notes As at 31 March 2014 As at 31 March 2013 EQUITY AND LIABILITIESShareholder’s funds

Share capital 3 1,250,000 1,250,000 Reserves and surplus 4 4,470,295 5,076,240 Deferred government grant 5 33,037 37,633

5,753,332 6,363,873 Non-current liabilities

Long term borrowings 6 72,000 170,318 Other long term liabilities 7 330,074 353,884 Long term provisions 8 783,606 687,008

1,185,680 1,211,210 Current liabilities

Short term borrowings 9 373,853 256,114 Trade payables 10 870,657 950,092 Other current liabilities 11 682,363 721,054 Short term provisions 12 67,459 53,184

1,994,332 1,980,444 TOTAL 8,933,344 9,555,527 ASSETSNon-current assets

Fixed assets 13- Tangible assets 4,144,428 4,555,753 - Intangible assets 917,677 1,528,885 - Capital work-in-progress 386,917 369,600 - Intangible assets under development 923 1,462

5,449,945 6,455,700 Non-current investments 14 718,074 657,511 Deferred tax assets (net) 15 23,773 13,330 Long-term loans and advances 16 532,684 683,370

6,724,476 7,809,911 Current assets

Inventories 17 354,728 377,209 Trade receivables 18 276,258 295,339 Cash and bank balances 19 93,195 116,125 Short-term loans and advances 20 76,344 93,975 Other current assets 21 1,321,806 760,510

2,122,331 1,643,158 Intra/Inter circle remittances 33 86,537 102,458 TOTAL 8,933,344 9,555,527 Notes 1 to 49 form an integral part of the financial statements.

This is the Balance Sheet referred to in our report of even date.

for Walker Chandiok & Co LLP (formerly Walker, Chandiok & Co)

For and on behalf of Bharat Sanchar Nigam Limited

Chartered Accountants Sd/-A. N. RaiChairman and Managing Director

Sd/-Anupam ShrivastavaDirector (Finance)

Sd/-per Atul SeksariaPartner Sd/-

Sujata RayED Finance

Sd/-Rajeev SinghGeneral Manager (Corporate Accounts)

Place:NewDelhi Sd/-H.C.Pant

Date:29August2014 Company Secretary and Sr. General Manager (Legal)


53

BHARAT SANCHAR NIGAM LIMITEDStatement of Profit and Loss (All amounts in Rs. lacs, unless otherwise stated)

Notes For the year ended 31 March 2014

For the year ended 31 March 2013

INCOME

Revenue from operations 22 2,615,326 2,565,481

Other income 23 184,309 147,308

Total 2,799,635 2,712,789

EXPENSES

Employee benefit expenses 24 1,543,584 1,375,782

Finance costs 25 21,964 35,147

Depreciation and amortisation expense 13 602,317 833,643

Other expenses

- Administrative, operating and other expenses 26 1,100,765 1,040,235

- License and spectrum fee 29 224,330 205,236

Total 3,492,960 3,490,043

Profit/(Loss) before prior period items and tax (693,325) (777,254)

Prior-period items (net) 27 (19,094) (18,282)

Profit/(Loss) before tax (712,419) (795,536)

Taxexpense:

- Deferred tax 15 10,443 7,092

Profit/(Loss) for the year (701,976) (788,444)

Basic/Diluted earnings per share (in Rs.) 34 (14.04) (15.77)

Notes 1 to 49 form an integral part of the financial statements.

This is the Statement of Profit and Loss referred to in our report of even date.










54

BHARAT SANCHAR NIGAM LIMITEDCash Flow Statement(All amounts in Rs. lacs, unless otherwise stated)

Particulars For the year ended 31 March 2014


A. Cash flow from operating activities

Net profit/(loss) before tax (712,419) (795,536)

Adjustments for :

Current year depreciation and amortisation 602,317 833,643

Prior period depreciation and amortisation 9,063 14,642

Finance costs 21,799 34,916

Wealth tax 84 85

Interest income (6,888) (13,824)

Profit on sale of fixed assets (net) (3,817) (4,859)

Capitalisation of overheads (43,421) (46,939)

Write off and losses other than bad debts 22,534 22,463

Bad-debt provision other than services 2,118 2,266

Bad-debt written off 25,684 24,701

Provision for doubtful debts and disputed bills 53,953 41,534

Excess provision written back (91,985) (66,792)

Adjustment of grant in aid (4,596) 586,845 (22,867) 818,969

Operating profit/loss before working capital changes

(125,574) 23,433

Adjustment for :

Decrease/(increase) in inventories 18,951 (18,190)

(Increase)/decrease in trade receivables (86,517) 19,205

Decrease/(increase) in other receivables (current and non-current)

127,296 (55,523)

(Decrease)/increase in other payables (current and non-current)

(45,322) 46,834

Increase in provisions 110,874 65,988

Decrease in remittances 15,921 141,203 21,157 79,471

Cash generated from operating activities 15,629 102,904

Wealth tax paid (85) (92)

Direct tax refund received (net of tax paid) 149,601 149,516 (39,269) (39,361)

Net cash generated from operating activities 165,145 63,543

B. Cash flow from investing activities

Purchase of fixed assets (479,357) (269,642)

Proceeds from sale of fixed assets 248,789 67,798


55

Interest received 7,058 13,910

Earmarked deposits with bank (750) 21

Investments in retirement benefits (60,563) (284,823) (56,159) (244,072)

C. Cash flow from financing activities

Increase in short term borrowing (net) 117,739 124,067

Interest paid (21,741) 95,998 (15,901) 108,166

Net decrease in cash and cash equivalents (A+B+C) (23,680) (72,363)

Cash and cash equivalents as at 01 April 2013 115,753 188,116

Cash and cash equivalents as at 31 March 2014 92,073 115,753

Cash and cash equivalents as at 31 March 2014 :

Balance with bank 85,256 110,234

Chequesinhand 4,473 3,962

Cash in hand 2,344 92,073 1,557 115,753

Notes :

a) Intheabsenceofadequatedataregardingassetsappearinginthedeletions/adjustmentscolumnofnoteno.13offixedassets, all deletions (except amount transferred as decommissioned assets) have been assumed to be cash sales.

b) Intheabsenceofadequatedetailsregardingunreconciledintercircleremittanceswiththesubsidiaryrecords,alltheinter circle remittance have been treated as part of working capital changes.

c) The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard - 3 on ‘Cash Flow Statement’ notified by Companies (Accounting Standard) Rules, 2006.

d) Figures in bracket show outflows.

This is the Cash Flow Statement referred to in our report of even date.










56

1. CORPORATE INFORMATION

BharatSancharNigamLimited(the“Company”or“BSNL”)isaPublicSectorCompanyfullyownedby the Government of India and was formed on 15 September 2000 in pursuance of Telecom Policy 1999, to take over the ongoing business of the Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) from 01 October 2000. The Company has been incorporated under the Companies Act, 1956 with its registered corporate office in New Delhi.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government in exercise of the power conferred under sub-section (1)(a) of section 642 and relevant provisions of the Companies Act, 1956 (the ‘Act’) read with the general circular 15/ 2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. The financial statements have been prepared on a going concern basis under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the Company.

2.2 USE OF ESTIMATES

The preparation of financial statements in conformity with the principles generally accepted in India requiresmanagement tomakeestimatesandassumptions thataffect the reportedamounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised in the current and future periods.

2.3 REVENUE RECOGNITION

Income from services is accounted for on accrual basis and in conformity with the notified Accounting Standard (AS) – 9 on ‘Revenue recognition’. Accordingly,

a) Revenue for all services is recognised when earned and are realisable at the time of billing. Un-billed revenues from the billing date to the end of the year are recorded as accrued revenue during the period in which the services are provided. Provisions are made for debts outstanding for more than two years and for debts less than two years which are considered disputed (based on management decision), to the extent considered necessary by the management.

b) Installation charges recovered from subscribers at the time of new telephone connections are recognised as income in the first year of the billing.

c) IntermsofthearrangementbetweenDepartmentofTelecommunications(“DoT”)andthe Company, the charges for telecommunication services and other infrastructural services provided by BSNL to DoT are neither billed nor provided for.

d) Sale proceeds of scrap arising from maintenance and project works are taken into miscellaneous income in the year of sale.

Summary of significant accounting policies and other explanatory information for the year ended 31 March 2014(All amounts in Rs. lacs, unless otherwise stated)


57


e) Income from Subscriber Identity Modules (SIMs) recharge coupons of mobile, prepaid calling cards, and prepaid internet connection cards are treated as income of the year in which the payment is received since the extent of use of these cards within the financial year cannot be ascertained.

f) Wherever there isuncertainty in realisationof income, suchas liquidateddamages,claims on Government departments and local authorities etc., these are recognised on realisation basis.

g) The claims receivable on account of provision of infrastructure, operation and maintenance of Village Public Telephones (VPTs) and Rural Household Connections (RDELs) etc. and operational sustainability of rural wire line network from Universal Service Obligation (USO) fund are accounted for as other operating income.

h) The interest on surplus fund which are placed generally in fixed deposits with banks is recognised on accrual basis.

i) Other income by way of interest on loans to employees, security deposit with Government departments and local authorities, being not material, are accounted for on collection basis.

2.4 FIXED ASSETS 2.4.1 TANGIBLE ASSETS a) Fixed assets are carried at cost less depreciation. Cost includes directly related

establishment and other expenses including employee remuneration and benefits, directly identifiable to the construction or creation of the assets.

b) Expenditureonreplacementofassets,equipments,instrumentsandrehabilitationworksis capitalised if, in the opinion of the management, it results in enhancement of revenue generating capacity.

c) Assets are capitalised to the extent completion certificates have been obtained, wherever applicable.

d) The cost of stores and materials at the time of issue to a project is debited to capital work in progress (CWIP).

e) Apparatus and plants principally consisting of telephone exchanges, transmission equipmentsandairconditioningplantsetc.arecapitalisedasandwhenanexchangeiscommissioned and put to use.

f) Cables are capitalised as and when ready for connection to the main system. 2.4.2 INTANGIBLE ASSETS a) Intangibleassetsarestatedatcostofacquiringthesamelessaccumulatedamortisation.

Intangible assets are recognised if it is probable that the future economic benefits attributable to the assets will flow to the enterprise and cost of the asset can be measured reliably in accordance with the notified Accounting Standard–26 on ‘Intangible Assets’.

2.5 DEPRECIATION / AMORTISATION 2.5.1 TANGIBLE ASSETS a) Depreciation is provided based on the written down value method at the rates prescribed

in schedule XIV to the Companies Act, 1956 except for subscriber installation. The subscriber installation is depreciated over the useful life of 5 years on written down value method.

58

b) Assets costing up to Rs. 5,000 are depreciated fully in the year of purchase. Similarly, partition works and paintings costing up to Rs. 2,00,000 are depreciated fully in the yearofconstruction/acquisition.

c) The depreciation on machinery and tools used both for project and maintenance work is charged to Statement of Profit and Loss instead of capitalization.

d) All telephone exchange buildings, administrative offices and captive consumption assembling premises/workshops are considered as building (other than factory building). Accordingly depreciation is charged uniformly.

2.5.2 INTANGIBLE ASSETS a) Intangible assets such as entry license fee, one time Spectrum fee for telecom service

operations are amortised over the license period (i.e. 20 years) and standalone computer software applications are amortised over the license period (subject to maximum of 10 years) on straight line method.

2.6 IMPAIRMENT OF ASSETS

Assets, which are impaired by disuse, damage or obsolescence, are segregated from the concerned assets category and shown as ‘Decommissioned Assets’ and provision is made for the loss, if any, due to the difference between their net carrying cost and the net realisable value.

2.7 INVESTMENTS

Long-term investments are carried at cost, after providing for any diminution in value, if such diminution is other than temporary.

2.8 INVENTORIES

Inventories are valued at cost or net realisable value, where ever available, as the case may be – the cost is ascertained generally on weighted average method, obsolete/non moving inventories are valued at net realisable value.

2.9 FOREIGN CURRENCY TRANSACTIONS a) Transactions in foreign currency are recorded in the reporting currency, by applying to

the foreign currency amount the exchange rate prevailing on the date of the transaction i.e. on the date of payment or the billing as the case may be.

b) All monetary items are stated at the exchange rate prevailing as at reporting date and the difference taken to Statement of profit and loss as exchange fluctuation loss or gain.

2.10 EMPLOYEES BENEFITS a) SHORT TERM EMPLOYEE BENEFITS: Short term employee benefits are recognised in the period during which the services

have been rendered. b) LONG TERM EMPLOYEE BENEFITS: c) DEFINED CONTRIBUTION PLAN: i) Pension Contribution (including gratuity) The employees of DoT who have opted for absorption / absorbed in the Company

and the employees on deemed deputation from Government are eligible for



59

pension, which is a defined contribution plan. The Company makes monthly contribution (including liability on account of gratuity) at the applicable rates as per Government Pension Rules, 1972 and Fundamental Rules and Supplementary Rules (FR & SR), to the Government who administers the same.

ii) Employees’ Provident Fund All directly recruited employees of the Company are entitled to receive benefits

under the provident fund, a defined contribution plan. Both employee and employer make monthly contribution to the plan at a predetermined rate of employee’s basic salary and dearness allowance. These contributions to provident fund are administered by the provident fund commissioner. Employer’s Contribution to provident fund is expensed in the Statement of Profit and Loss.

iii) Contribution for Leave Salary For employees on deemed deputation from Government, leave salary contribution

is paid by the company to DoT for the deputation period in accordance with FR115(b)ofFR&SRPartI.Consequently,theleavesalarypayableforthoseondeputation during the period of leave rests with the Government. Further, any leaveencashmentafterquittingserviceistheresponsibilityoftheGovernment.

DEFINED BENEFIT PLAN: i) Leave Encashment The liability on account of un-availed leave in respect of absorbed employees and

directly recruited employees at the year end is provided for based on actuarial valuation.

ii) Gratuity The Company provides for gratuity, a defined benefit plan (the Gratuity Plan)

covering all directly recruited eligible employees. In accordance with the payment of Gratuity Act, 1972, the Gratuity plan provides a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on Balance Sheet date and are expensed in the Statement of Profit and Loss.

iii) Other benefits including post employment medical care Medical reimbursements and other personal claim bills of existing / retired

employees are accounted for on actual basis in respect of bills received till the cut off period in the accounts at the concerned primary units as per the prescribed limits.

2.11 MANUFACTURING EXPENSES

Expenses incurred at factory units are allocated to the cost of the manufactured products and manufactured items are transferred to other units on standard rates determined by the Company.

2.12 PRIOR PERIOD ITEMS

Items of income/expenditure exceeding Rs. 5 lacs are only considered for being treated as ‘prior period items’.


60

2.13 TAXES ON INCOME

Taxes on income for the current period are determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

In accordance with the notified AS-22, Deferred Tax Liability is recognised on the timing differences between accounting income and the taxable income for the period taking into consideration thecontentsofAccountingStandard Interpretations (ASI) -3andquantifiedusing the tax rates in force or substantively enacted as on the reporting date.

Deferred Tax Assets are recognised and carried forward to the extent there is a virtual certainty that such deferred tax assets can be realised.

2.14 PROVISIONS

Provisions are recognised when the Company has a present obligation as a result of past events;itismorelikelythannotthatanoutflowofresourceswillberequiredtosettletheobligation, and the amount has been reliably estimated.

2.15 CONTINGENT LIABILITIES

Liabilities, though contingent, are provided for if there are reasonable chances of maturing such liabilities as per management. Other contingent liabilities, barring frivolous claims, not acknowledged as debts, are disclosed by way of notes.

2.16 EARNINGS PER SHARE

EarningsPerShare(“EPS”)comprisesthenetprofitaftertax(excludingextraordinaryincomenet of tax). The number of shares used in computing Basic and Diluted EPS is the weighted average number of shares outstanding during the year.

2.17 SEGMENT REPORTING

The primary segment consists of ‘Basic’, ‘Cellular’ and ‘Broad Band’ services provided. The manufacturing activities have not been treated as a separate segment since such activities are essentially carried on as support service to other segments mainly for captive consumption.

Thefollowingspecificaccountingpolicieshavebeenfollowedforsegmentreporting: a) Segment revenue includes service income and other income directly identifiable with/

allocable to the segment. b) Income/expense, which relates to the Company, as a whole and not allocable to individual

businesssegmentisincludedin“Un-allocableincome/expenserespectively”. c) Expenses that are directly identifiable with/allocable to segments are considered for

determining segment results. d) Segment assets and liabilities include those directly identifiable with the respective

segments. Un-allocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

2.18 EXTRAORDINARY ITEMS

Extra-ordinary items of income and expenditure, as covered by AS - 5, are disclosed separately.



61


3. SHARE CAPITAL

As at 31 March 2014 As at 31 March 2013

Authorised

10,00,00,00,000 (previous year: 10,00,00,00,000)equitysharesofRs.10/-each

1,000,000 1,000,000

7,50,00,00,000 (previous year: 7,50,00,00,000) 9%non-cumulative preference shares of Rs.10/- each

750,000 750,000

1,750,000 1,750,000

Issued, subscribed and fully paid up

5,00,00,00,000(previousyear:5,00,00,00,000)equityshares of Rs. 10/- each

500,000 500,000

7,50,00,00,000 (previous year: 7,50,00,00,000) 9%non-cumulative preference shares of Rs.10/- each

750,000 750,000

1,250,000 1,250,000

a) Reconciliation of number of shares


Number of shares

Amount Number of shares

Amount

Equity shares

Balance at the beginning/end of the year 5,000,000,000 500,000 5,000,000,000 500,000

Preference shares

Balance at the beginning/end of the year 7,500,000,000 750,000 7,500,000,000 750,000

b) Details of shares held by shareholders having more than 5% shares in the Company


Equity shares

The Central Government of India (No.) 4,999,998,400 4,999,998,400

Holding (%) 99.99 99.99

Preference shares

The Central Government of India (No.) 7,500,000,000 7,500,000,000

Holding (%) 100 100

Notes :a) OutofthesharesissuedbytheCompany,49,99,998,400(previousyear49,99,998,400)equitysharesofRs.10/-

each and 7,500,000,000 (previous year 7,50,00,00,000) preference share of Rs. 10/- each were allotted as fully paid up for consideration other than cash in the financial year 2000-01 and 2001-02 respectively. The President of India through its nominees is holding 1,600 shares of Rs. 10/- each as subscribers to the Memorandum and Articles of association.

b) TheCompanyfortheperiodoffiveyearsimmediatelyprecedingthedateofBalanceSheethasnot: i) Allotted fully paid up shares by way of bonus shares.

ii) Brought back any class of shares.c) Voteofmembers:Everymemberpresentonpersonandbeingaholderofequityshareshallhaveonevoteand

everypersoneitherasageneralproxyonbehalfofaholderofequityshare,shallhaveonevoteoruponapoll,

62

everymembershallhaveonevoteforeveryshareheldbyhim.Onpoll,thevotingrightsofholderofequityshare shall be as specified in Section 87 of the Companies Act, 1956. The holder of preference share have a right to vote on resolution placed before the Company which directly affects the rights attached to their preference shares and subject to aforesaid, the holders of preference shares shall in respect of such capital be entitled to vote on every resolution placed before the Company at a meeting if the dividend due on such capital or any part of such dividend remains unpaid in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting and where the holders of any preference shares have a right to vote as aforesaid on any resolution every such member personally present shall have one vote and on a poll his voting right in respectofsuchpreferencesharebearstothetotalpaidupequitycapitaloftheCompany.

d) Divisionofprofit:TheprofitoftheCompany,subjecttoanyspecialrightsrelatingtheretocreatedorauthorisedto be created by the articles subject to the provisions of the articles and also subject to the provisions of section 205(2A) of the Companies Act, 1956 and, regarding transfer of the amount to reserve of the Company, shall be divisible among the members with the approval of the President of India, in the proportion of the amount of capital paid or credited as paid-up on the shares held by them respectively.

4. RESERVES AND SURPLUS

As at 31 March 2014

As at 31 March 2013

Capital reserves [refer note 28]Balance at the beginning of the year 4,023,839 4,026,257

Add: Waiver of loan from the Government of India [note a] 98,318 - Add/(Less): Assets identified and accounted for (2,340) (2,388)Add/(Less): Liabilities identified and accounted for 53 (30)Balance at the end of the year 4,119,870 4,023,839 General reserves 430,084 430,084 Contingency reserves [note b] 200,000 200,000 Surplus/ (Deficit) in Statement of Profit and LossBalance at the beginning of the year 422,317 1,210,761 Add: Profit/(Loss) for the year (701,976) (788,444)Balance at the end of the year (279,659) 422,317

4,470,295 5,076,240

Notes :

a) During the current year, the loan from the Government of India amounting to Rs. 98,318 lacs has been waived vide letter no.1-43/2008-B, dated 11 April 2014 and the same has been taken to the capital reserve created at the time of formation of the Company.

b) The contingency reserve was created in the financial year 2003-04 by appropriation of profits to meet various contingencies that may arise in future, based on the decision made by the board of directors.

5. DEFERRED GOVERNMENT GRANT

As at 31 March 2014

As at 31 March 2013

Grant in aid 33,037 37,633

33,037 37,633



63


Note :

a) Since 2005-06, an amount of Rs. 61,332 lacs (Rs. 17,000 lacs for wireline and Rs 44,332 lacs for wireless services) has been received from Department of Information Technology (DIT) for providing wireline and wireless connectivity to 41,500 common service centers. Since this grant cannot be linked to creation of any particular asset; as telecom network is a seemless entity, the same is being disclosed under ‘Grant in aid’ as a Deferred Grant in accordance with the notified Accounting Standard-12 on ‘Accounting for Government Grants’ and is being written back in the Statement of Profit and Loss by applying the depreciation rate on Base Transceiver Station (i.e. 13.91%).

6. LONG-TERM BORROWINGS

As at 31 March 2014

As at 31 March 2013

Unsecured loans

- Loan from the Government of India [note a] - 98,318

- Government of India (non refundable and non interest bearing ) [note b] 72,000 72,000

72,000 170,318

Notes :

a) Loan from the Government of India

The notional loan of Rs. 7,50,000 lacs, which is a part of the capital structure of the Company, had a moratorium on repayment of the principal and interest thereon up to 31 March 2005. The Company has been representing since long to the Government of India for reduction in the rate of interest and withdrawal of terms and conditions towards penal interest and prepayment charges. However, since the Ministry of Finance, Government of India has not agreed to extend any relief in the form of reduction of interest rate on the loan, as informed by the DoT through letter No. I-432008-B, dated 21 June 2011, the difference of Rs. 18,868 lacs between the books of the Company and DoT in respect of outstanding principal amount of the loan has been accounted in the books of the Company in the financial year 2010-11. However, during the current year, this outstanding loan from the Government of India and the interest thereon has been waived-off by the Government (Department of Telecommunication) vide its letter no. 1-43/2008-B, dated11April2014,consequentlytheprincipalamountofloanhasbeencreditedtocapitalreservesandtheoutstanding interest provision has been written back.

b) Non-refundable and non-interest bearing loan from Government of India

The Government of India has sanctioned a non-refundable and non-interest bearing advance of Rs 72,000 lacs as budgetary support for the ongoing Village Panchayat Telephones (VPT) program of the Company vide letter no.25-1/2001-SAT/pp(pt), dated 13 January 2003. The amount has already been expensed off for the purpose for which it was sanctioned. The Company has sought approval from DoT for writing back this loan, being non-refundable in nature.

7. OTHER LONG-TERM LIABILITIES

As at 31 March 2014

As at 31 March 2013

Deposits from customers and others

Security deposits 38,289 38,430

After connection deposits 291,785 315,454

330,074 353,884

64

8. LONG-TERM PROVISIONS

As at 31 March 2014

As at 31 March 2013

Provision for employee benefits

Post retirement benefit of serving employees [refer note 30.2] 783,606 687,008

783,606 687,008

9. SHORT TERM BORROWINGS

As at 31 March 2014

As at 31 March 2013

Loan from banks (unsecured) [note a] 373,853 256,114

373,853 256,114

Note :

a) Shorttermunsecuredloans,repayableondemand,compriseofthefollowing: i) Rs. 50,000 lacs (previous year NIL) from Canara Bank carries an interest rate of 10.20% p.a. (floating) with

monthly rests. ii) Rs. 1,50,000 lacs (previous year NIL) from Bank of India carries an interest rate of 10.20% p.a. (floating)

with monthly rests. iii) Rs. 1,73,853 lacs (previous year Rs. 1,69,809 lacs) from Union Bank of India carries an interest rate of

10.50% p.a. (floating) with monthly rests. iv) Rs.Nil ( Previous year Rs. 86,305 lacs) from Corporation bank which carries an interest rate of 10.50%

p.a. (floating) with monthly rests.

10. TRADE PAYABLES

As at 31 March 2014

As at 31 March 2013

Sundry creditors [note a] 744,748 802,057

Claims payable to Mahanagar Telephone Nigam Limited (MTNL) [note b] 99,602 97,747

Claims payable on interconnection usage charges (IUC) 24,715 49,120

Satellite Based Broadband (SBB) and access network services 1,115 759

Claims payable on Universal Service Obligation (USO) towers 477 380

Internet data center (IDC) - 29

870,657 950,092

Notes :

a) Thirty one circles (previous year twenty seven) of the Company has identified Micro, Small and Medium EnterprisesundertheMicro,SmallandMediumEnterprisesDevelopmentAct,2006(MSMEDAct).Therequiredinformation in terms of section 22 of MSMED Act to the extent available in respect of thirty one circles (previous yeartwentysevencircles)aregivenbelow:



65

Particulars As at 31 March 2014

As at 31 March 2013

The principal amount due to suppliers 131 NIL

The amount of interest paid by the buyer in terms of section 16 of the MSMED Act, 2006

NIL NIL

The amount of interest due and payable for the period of delay in making payment

NIL NIL

The amount of interest accrued and remaining unpaid at the end of each accounting year

NIL NIL

The amount of further interest remaining due and payable even in the succeeding years as per Section 23 of MSMED Act, 2006

NIL NIL

b) An IUC agreement is being finalised between the Company and MTNL in the current year. Till the finalisation of the agreement interconnect charges are based on the rates prescribed by Telecom Regulatory Authority of India (TRAI) in IUC regulation. The net claim receivable/payable as on 31 March 2014 from MTNL is subject to confirmation and reconciliation.

11. OTHER CURRENT LIABILITIES

As at 31 March 2014

As at 31 March 2013

Interest accrued but not due on bank loan 353 204

Interest accrued and due on the Government loan [refer note 6(a)] - 50,570

Advances received from customers and others 32,659 36,730

Advance received from Defense telecom network project (net) 12,394 13,962

Advance received from Bharat Broadband Nigam Limited (net) 22,568 13,146

Deposits from customers and others 101,395 107,159

Income received in advance against service 204,827 214,818

Claims payable to DoT [refer note 32] 39,109 47,207

Claims payable to other Government departments 9,553 9,286

Statutory dues

- Tax deducted at source (TDS) 16,010 13,727

- Service tax (net) 44,044 47,835

- Employees’ provident fund (EPF) 2,275 1,757

License fee, spectrum charges and transponder charges payable 33,614 24,213

Payable for revised wages 30 246

Liability towards employees 22,642 22,028

Liability towards subscribers 19,222 16,395

Liability towards construction account 34,780 25,164

Liability towards services and others 86,888 76,608

682,363 721,054


66

12. SHORT-TERM PROVISIONS

As at 31 March 2014

As at 31 March 2013

Provision for :

- Wealth tax 389 390

- Leave encashment of retired employees 2,742 2,525

- Gratuity [refer note 30.2] 6,435 7,187

- Post retirement benefit of serving employees [refer note 30.2] 57,893 43,082

67,459 53,184



67

Sum

mar

y of

sig

nific

ant a

ccou

ntin

g po

licie

s an

d ot

her

expl

anat

ory

info

rmat

ion

for

the

year

end

ed 3

1 M

arch

201

4(A

ll am

ount

s in

Rs.

lacs

, unl

ess

othe

rwis

e st

ated

)

13.

FIXE

D A

SSET

S [re

fer n

ote

31]

A.

Cur

rent

yea

r

Part

icul

ars

Gro

ss B

lock

Dep

reci

atio

n an

d am

ortis

atio

nC

losi

ng

bala

nce

as

at 3

1 M

arch

20

14

Ope

ning

ba

lanc

e as

at

01 A

pril

2013

Add

ition

sD

elet

ions

Clo

sing

ba

lanc

e as

at

31

Mar

ch

2014

Ope

ning

ba

lanc

e as

at

01 A

pril

2013

For

the

year

( r

efer

not

e e

and

f )

Ded

uctio

ns /

adju

stm

ents

Clo

sing

bal

ance

as

at 3

1 M

arch

20

14D

urin

g th

e ye

ar

23

45=

( 2+

3 ) -

46

78

9=( 6

+7

) -8

10 =

(5 -

9)TA

NG

IBLE

SLa

nds

( Fre

e ho

ld )

93,

679

573

2

,602

9

1,65

0 -

- -

- 9

1,65

0 La

nds

( Lea

se h

old

) 1

7,66

9 2

37

297

1

7,60

9 3

,787

2

63

(4)

4,0

54

13,

555

Build

ings

772

,687

2

7,76

6 1

4,31

0 7

86,1

43

315

,693

2

3,20

2 4

12

338

,483

4

47,6

60

App

arat

us a

nd p

lant

s 6

,200

,933

3

33,1

89

255

,266

6

,278

,856

4

,167

,973

3

31,9

22

63,

256

4,4

36,6

39

1,8

42,2

17

Mot

or v

ehic

le a

nd la

unch

es 1

3,66

2 7

9 6

67

13,

074

12,

098

347

5

65

11,

880

1,1

94

Cab

les

5,9

06,5

05

72,

362

13,

041

5,9

65,8

26

4,6

16,4

98

206

,498

8

,304

4

,814

,692

1

,151

,134

Li

nes

and

wire

s 5

19,2

89

2,1

62

11,

927

509

,524

4

17,5

50

14,

037

9,3

67

422

,220

8

7,30

4 Su

bscr

iber

inst

alla

tions

458

,328

9

,393

9

,132

4

58,5

89

419

,697

1

3,45

9 7

,217

4

25,9

39

32,

650

Installationtestequipments

50,

783

2,3

23

691

5

2,41

5 3

2,25

2 2

,738

2

33

34,

757

17,

658

Mas

ts a

nd a

eria

ls 5

66,7

36

32,

783

21,

172

578

,347

3

02,4

55

38,

320

(420

) 3

41,1

95

237

,152

Officemachineryandequipments

19,

942

454

6

90

19,

706

14,

068

823

4

00

14,

491

5,2

15

Elec

trica

l fitt

ings

478

,767

3

3,40

7 1

9,14

4 4

93,0

30

290

,375

2

8,76

5 2

,810

3

16,3

30

176

,700

Fu

rnitu

re a

nd fi

xtur

es 2

3,37

0 3

91

461

2

3,30

0 1

8,25

7 1

,022

2

42

19,

037

4,2

63

Com

pute

rs 1

83,4

07

4,6

72

5,2

08

182

,871

1

56,2

16

11,

226

3,6

61

163

,781

1

9,09

0 D

ecom

mis

sion

ed a

sset

s 9

3,32

7 1

6,60

2 1

9,46

9 9

0,46

0 -

- -

- 9

0,46

0 1

5,39

9,08

4 5

36,3

93

374

,077

1

5,56

1,40

0 1

0,76

6,91

9 6

72,6

22

96,

043

11,

343,

498

4,2

17,9

02

Less:Diminutioninthevalueofdecommissionedassets

73,

474

Tot

al

4,1

44,4

28

INTA

NG

IBLE

S E

ntry

lice

nse

fees

1

,852

,538

-

672

,451

1

,180

,087

3

38,3

33

(63,

511)

- 2

74,8

22

905

,265

C

ompu

ter s

oftw

ares

3

5,25

9 1

,515

5

88

36,

186

20,

579

3,0

42

(153

) 2

3,77

4 1

2,41

2 T

otal

1

,887

,797

1

,515

6

73,0

39

1,2

16,2

73

358

,912

(6

0,46

9) (1

53)

298

,596

9

17,6

77

CA

PITA

L W

ORK

IN P

ROG

RESS

C

apita

l wor

k in

pro

gres

s 3

73,8

57

485

,784

4

68,1

37

391

,504

-

- -

- 3

91,5

04

Less:Impairmentinpendingprojectsetc.

4,5

87

Tot

al

386

,917

IN

TAN

GIB

LE A

SSET

UN

DER

DEV

ELO

PMEN

T In

tang

ible

ass

ets

unde

r dev

elop

men

t 1

,462

5

08

1,0

47

923

-

- -

- 9

23

17,

662,

200

1,0

24,2

00

1,5

16,3

00

17,

170,

100

11,

125,

831

612

,153

9

5,89

0 1

1,64

2,09

4 5

,449

,945

68

B. P

revi

ous

year

Part

icul

ars

Gro

ss B

lock

Dep

reci

atio

n an

d am

ortis

atio

nC

losi

ng

bala

nce

as a

t 31

Mar

ch

2013

Ope

ning

ba

lanc

e as

at

01 A

pril

2012

Add

ition

sD

elet

ions

Clo

sing

ba

lanc

e as

at

31

Mar

ch

2013

Ope

ning

ba

lanc

e as

at

01 A

pril

2012

For

the

year

( r

efer

not

e e

and

f )

Ded

uctio

ns /

adju

stm

ents

Clo

sing

bal

ance

as

at

31 M

arch

201

3D

urin

g th

e ye

ar

23

45=

( 2+

3 ) -

46

78

9=( 6

+7

) -8

10 =

(5 -

9)TA

NG

IBLE

SLa

nds

( Fre

e ho

ld )

95,

614

559

2

,494

9

3,67

9 -

- -

- 9

3,67

9 La

nds

( Lea

se h

old

) 1

7,46

7 4

96

294

1

7,66

9 3

,527

2

61

1

3,7

87

13,

882

Build

ings

769

,634

1

0,24

1 7

,188

7

72,6

87

291

,600

2

4,33

8 2

45

315

,693

4

56,9

94

App

arat

us a

nd p

lant

s 6

,101

,409

1

85,0

20

85,

496

6,2

00,9

33

3,8

58,9

39

366

,573

5

7,53

9 4

,167

,973

2

,032

,960

M

otor

veh

icle

and

laun

ches

14,

371

73

782

1

3,66

2 1

2,30

9 4

76

687

1

2,09

8 1

,564

C

able

s 5

,818

,111

9

4,07

9 5

,685

5

,906

,505

4

,383

,332

2

35,8

65

2,6

99

4,6

16,4

98

1,2

90,0

07

Line

s an

d w

ires

524

,396

2

,487

7

,594

5

19,2

89

407

,549

1

6,11

9 6

,118

4

17,5

50

101

,739

Su

bscr

iber

inst

alla

tions

451

,380

1

1,33

4 4

,386

4

58,3

28

404

,944

1

8,67

0 3

,917

4

19,6

97

38,

631

Installationtestequipments

48,

392

3,2

97

906

5

0,78

3 2

9,07

4 3

,445

2

67

32,

252

18,

531

Mas

ts a

nd a

eria

ls 5

56,1

45

28,

023

17,

432

566

,736

2

65,2

81

38,

526

1,3

52

302

,455

2

64,2

81

Officemachineryandequipments

19,

787

427

2

72

19,

942

13,

253

975

1

60

14,

068

5,8

74

Elec

trica

l fitt

ings

462

,742

2

8,49

8 1

2,47

3 4

78,7

67

258

,073

3

0,98

7 (1

,315

) 2

90,3

75

188

,392

Fu

rnitu

re a

nd fi

xtur

es 2

3,24

1 3

83

254

2

3,37

0 1

7,13

2 1

,196

7

1 1

8,25

7 5

,113

C

ompu

ters

176

,312

9

,167

2

,072

1

83,4

07

142

,525

1

5,35

6 1

,665

1

56,2

16

27,

191

Dec

omm

issi

oned

ass

ets

91,

658

9,2

59

7,5

90

93,

327

- -

- -

93,

327

15,

170,

659

383

,343

1

54,9

18

15,

399,

084

10,

087,

538

752

,787

7

3,40

6 1

0,76

6,91

9 4

,632

,165

Less:Diminutioninthevalueofdecommissionedassets

76,

412

Tot

al

4,5

55,7

53

INTA

NG

IBLE

SEn

try li

cens

e fe

es 1

,852

,538

-

- 1

,852

,538

2

45,7

06

92,

627

- 3

38,3

33

1,5

14,2

05

Com

pute

r sof

twar

es 2

9,54

8 5

,857

1

46

35,

259

16,

327

3,7

38

(514

) 2

0,57

9 1

4,68

0 To

tal

1,8

82,0

86

5,8

57

146

1

,887

,797

2

62,0

33

96,

365

(514

) 3

58,9

12

1,5

28,8

85

CA

PITA

L W

ORK

IN P

ROG

RESS

Cap

ital w

ork

in p

rogr

ess

428

,048

1

36,9

03

191

,094

3

73,8

57

- -

- -

373

,857

Less:Impairmentinpendingprojectsetc.

4,2

57

Tota

l 3

69,6

00

INTA

NG

IBLE

ASS

ET U

ND

ER D

EVEL

OPM

ENT

Inta

ngib

le a

sset

s un

der d

evel

opm

ent

2,0

43

82

663

1

,462

-

- -

- 1

,462

1

7,48

2,83

6 5

26,1

85

346

,821

1

7,66

2,20

0 1

0,34

9,57

1 8

49,1

52

72,

892

11,

125,

831

6,4

55,7

00

Not

es :

a)

Insomecases,thetitledeedsoflandpurchased/acquiredonleasehold/freeholdfromvariousauthorities,areintheprocessofbeingexecuted.

b)

Land

incl

udes

leas

ehol

d la

nd to

the

exte

nt id

entif

ied

by th

irty

one

circ

les

(pre

viou

s ye

ar th

irty

two

circ

les)

.c)

A

dditi

on to

fixe

d as

sets

incl

ude

asse

ts id

entif

ied

and

take

n ov

er b

y th

e C

ompa

ny in

the

curr

ent y

ear,

perta

inin

g to

the

asse

ts b

eing

take

n ov

er fr

om D

oT a

s on

01

Oct

ober

200

0 Rs

. (2,

232)

lacs

(pre

viou

s ye

ar R

s (2

,252

) lac

s)d)

A

dditi

ons

in g

ross

blo

ck in

clud

e Rs

.43,

421

lacs

(pre

viou

s ye

ar R

s.46

,939

lacs

) of E

mpl

oyee

rem

uner

atio

n an

d A

dmin

istra

tive

expe

nses

cap

italis

ed d

urin

g th

e ye

ar.

e)

The

depr

ecia

tion

durin

g th

e ye

ar in

clud

es R

s. 9

,063

lacs

(pre

viou

s ye

ar R

s.14

,642

lacs

) rel

atin

g to

prio

r per

iod.

f) Th

e cu

rren

t yea

r dep

reci

atio

n in

clud

es R

s.77

2 la

cs (p

revi

ous

year

Rs.

867

lacs

) whi

ch h

as b

een

capi

talis

ed.


69

14. NON-CURRENT INVESTMENTS

As at 31 March 2014

As at 31 March 2013

(Atcost,unquoted,non-trade)20,000,000 (previous year 20,000,000) 7% redeemable cumulative Preference shares of Rs. 100/- each fully paid in Indian Telephone 20,000 20,000

Industries (ITI) Limited (A Government of India owned Company) [note a] Investments in retirement benefit plan [note 30] 698,074 637,511

718,074 657,511

Note :

a) All the five installments of Rs. 4,000 lacs each are overdue for redemption of 7% redeemable cumulative preference shares in respect of investment in M/s ITI Limited at the end of the year and no dividend has been received till date. ITI Limited will redeem preference shares to the Company immediately on release of Financial Assistance by the Government of India to ITI as a part of revival package. Hence, no provision for the aforesaid investment is made in the books of accounts of the Company.

15. DEFERRED TAX ASSETS (net)

As at 31 March 2014

As at 31 March 2013

Deferred tax assets Provision for bad and doubtful debts 123,698 132,336 Unabsorbed depreciation 259,055 259,055 Provision for leave encashment 98,412 99,525 Provision for decommissioned assets, wage revision, etc 6,606 14,485 Others 15,076 15,126

A 502,847 520,527Deferred tax liabilities Depreciation 461,706 489,829 Others 17,368 17,368

B 479,074 507,197A-B 23,773 13,330

Notes:

a) The deferred tax has been dealt with in accordance with the contention of the Company before the tax authorities. The depreciation has been calculated on the book value of assets taken over from DoT, contrary to the Income Tax Department’s contention of treating capital reserve as relief/ grant/ subsidy deductable from book value of assets.The Company contends that the capital reserve arising out of the capital structure at the time of incorporation of the Company is not in the nature of financial relief and hence not to be reduced from the value of fixed assets. According to the Company’s contention, the depreciation provided in the books on the value of assets without deducting the amount involved in capital reserve is admissible in income tax. The stand of Company was upheld by the Hon’ble High Court of Delhi and the income tax department has not contested against this yet in the higher court. The Company is recognising deferred tax assets/liabilities accordingly.


70

b) The Company, being a Company providing telecommunication services is eligible to claim deduction under Section 80 IA of the Income Tax Act, 1961 with respect to 100 % of the profits and gains derived from this business for the first five years and thereafter at 30% of the profits for the second five years (referred to as the Tax Holiday Period). The Company has opted for tax holiday period from financial year 2003-04 and the period ends in the previous financial year 2012-13.

c) In accordance with Accounting Standard Interpretation (ASI)-3 issued by the Institute of Chartered Accountants of India, the deferred tax provision in respect of timing differences which originates and gets reversed during the tax holiday period have not been recognised. Deferred tax in respect of timing differences which originate during the tax holiday period but gets reversed after the tax holiday period, have been recognized in the year in which the timing differences have originated. For this purpose, as a conservative measure, deferred tax provision has been made in respect of the period when only 30% of the profits would be tax free assuming that only 70% of the timing differences would reverse.

d) The Company has not recognised any deferred tax asset during the year following the notified Accounting Standard 22 “Accounting for taxes on income’, only reversal relating to deferred tax assets and deferred tax liability created during the earlier years have been made

16. LONG-TERM LOANS AND ADVANCES

As at 31 March 2014

As at 31 March 2013

Advances recoverable in cash or in kind or for value to be received

- Secured and considered good


Loans and advances to staff 4,581 6,612

- Unsecured but considered good



Other loans and advances

- Capital advance,unsecured but considered good 24,116 24,097

- Advance income tax 467,350 616,951

[Net of provision for tax Rs. 7,17,196 lacs (previous year Rs. 7,17,196 lacs)]

- Advance payment of fringe benefit tax 5,898 5,898

[Net of provision for tax Rs. 15,300 lacs (previous year Rs. 15,300 lacs)]

532,684 683,370

17. INVENTORIES

As at 31 March 2014

As at 31 March 2013

Building materials 183 373

Lines and wires 8,332 9,433

Cables 90,889 89,422

Apparatus and plants 200,559 209,494

Telephone instruments 17,801 14,777



71

Telegraph and telex instruments 81 88

Broadbandequipments 27,498 26,821

Raw material and scrap (at factory) 8,376 16,928

Finished goods and work in progress (at factory) 7,536 675

Finished stock(at various circles) 3,233 8,427

Other stores 18,275 25,716

(Excess)/Short in inventory account 493 48

Inventory for construction account - 5

383,256 402,207

Less:Provisionforobsoleteinventory/shortinventory 28,528 24,998

354,728 377,209

Notes:

a) Physical verification of stock has been conducted by the management during the year and is reconciled with the detailed inventory records. Where ever the difference is found the same is provided for. In seven circles (previous year six circles) difference between the store ledger and the general ledger is identified and provided for in the current financial year.

b) The Company is in the process of identification of non-moving, slow moving and obsolete inventories in eleven circles(previousyearfivecircles).Pendingfinalisationoftheprocess,noprovisionifany,thatmayberequired,has been made.

c) In certain cases, the Company has placed orders for procuring inventory at provisional prices around 80-90% of the previous purchase price. Final purchase price in such cases is determined at a later date. Price difference in such cases is adjusted on the total material available in stock at the time of finalization of purchase price. The proportionate price differential on the already consumed material is adjusted on the existing stock. These cases were arising mainly due to price variation in Copper cable. However, with the introduction of Optical Fiber Cables (OFC) these cases have reduced to very minuscule level.

18. TRADE RECEIVABLES

As at 31 March 2014

As at 31 March 2013

Trade receivables 752,958 725,748

Less:Advanceincomebookedbutnotcollected 20,330 -

732,628 725,748

Less:Provisionfordoubtfulreceivables 456,370 430,409

276,258 295,339

Notes:

a) In twenty four circles (previous year twenty six circles), there is difference in the closing balance of trade receivables between the subsidiary ledger and the general ledger. To the extent identified, the net difference between general ledger and subsidiary ledger balances is Rs. 22,590 lacs (previous year Rs. 22,917 lacs). The management is in the process of reconciling these differences, however an amount of Rs. 23,561 lacs is provided for the circles where general ledger is more than subsidiary ledger. The provision for doubtful receivables is made on the basis of information available in the subsidiary ledger.

b) Theage-wiseanalysisofthetradereceivablesaspersubsidiaryledgerisgivenbelow:


72


As at 31 March 2013

Trade receivable exceeding six months 551,767 551,861

Other trade receivables 178,601 150,970

730,368 702,831

c) The classification of the trade receivables as secured (to the extent of the security deposits held by the Company), unsecured/consideredgoodandconsidereddoubtful,totheextentavailableaspersubledgerisasfollows:


As at 31 March 2013

Considered good secured 140,460 133,244

Considered good unsecured 158,075 149,203

Doubtful receivable 431,833 420,384

730,368 702,831

19. CASH AND BANK BALANCES

As at 31 March 2014

As at 31 March 2013

Cash and cash equivalents

- Balances with bank

In current account including sweep-in-deposit 83,315 110,234

In fixed deposits accounts with original maturity within 3 months 1,941 -

-Chequesinhand 4,473 3,962

- Cash in hand 2,344 1,557

92,073 115,753

Other bank balances

- Earmarked deposits with bank

(including bank guarantee, margin money, etc) 1,122 372

93,195 116,125

Notes:

a) Ineightcircles(previousyeartencircles),ithasbeennoticedthatchequesdepositedwiththebankandtelegraphictransfer (TT) sent, have not been credited in the relevant bank accounts of the Company amounting to Rs. 2,704 lacs (previous year Rs. 3,442 lacs) as on 31 March 2014. The management has already taken up the case with the concerned banks for timely crediting the amount in the respective account.

b) In nine circles (previous year ten circles), unlinked credit items amounting to Rs. 470 lacs (previous year Rs. 482 lacs) and in ten circles (previous year eight circles) unlinked debit items amounting to Rs. 223 lacs (previous year Rs. 428 lacs) are appearing in the bank reconciliation statement as at 31 March 2014. The management is in the process of reconciling all such items in due course.

c) Bankbalancesinonecircle(previousyearthreecircles)includeschequesinhandpendingtobedepositedinbank on 31 March 2014.



73

20. SHORT TERM LOANS AND ADVANCES

As at 31 March 2014

As at 31 March 2013

Advances recoverable in cash or in kind or for value to be received

- Secured, considered good


- Unsecured, considered good

Advances to contractors 63,916 84,948

Purchase advances 6,467 3,164


Security deposits 367 54

Other advances 136 55

76,344 93,975

Note:

a) In one circle (previous year fifteen circles), it has been noticed that there are differences in the subsidiary ledger of loans and advances with those appearing in general ledger. The management is in the process of reconciling the differences of current assets as well as other current liabilities.

21. OTHER CURRENT ASSETS

As at 31 March 2014

As at 31 March 2013

Amount recoverable in cash or in kind or for value to be received 23,461 19,541

Accrued revenue 130,568 275,704

Amount recoverable from DoT

- On current account [refer note 32 and note c below] 846,120 170,985

- For employees on deputation 1,745 1,581

Amount recoverable from

- Government departments 3,979 4,895

- Government companies 356,466 338,830

Claims recoverable from others 21,576 21,922

Operating lease charges recoverable 1,189 1,298

Sales tax recoverable from customers 24 25

Service tax recoverable from customers 82,294 77,213

Balances with excise and other tax authorities 54,257 54,119

Interest accrued

- on bank deposits 158 149

- on loans advances and investments 27 207

Call Detail Record based claims recoverable 12,337 4,033


74

As at 31 March 2014

As at 31 March 2013

1,534,201 970,502

Less:Provisionfordoubtfulitems 212,395 209,992

1,321,806 760,510

Notes:

a) No circles (previous year four circles) has reported that there is a difference between the subsidiary ledger and the general ledger, under claims recoverable from MTNL to the extent identified, the general ledger balance which are considered for preparation of financial statement,was more by Rs. 141 lacs in the previous year than the subsidiary ledger.

b) Cenvat on account of service tax, excise duty and custom duty on capital goods and inputs is under reconciliation in some circles.

c) Amount recoverable from DOT – on current account includes an amount of Rs. 6,72,451 lacs recoverable on account of refund of BWA Spectrum confirmed by DOT vide letter no.10-20/2012-SU.I (vol. II) dated 15 January 2014.

22. REVENUE FROM OPERATIONS

For the year ended 31 March

2014

For the year ended 31 March

2013

Revenue from sale of services

- Telephones (other than Wireless in Local Loop (WLL)) 501,326 494,717

- Cellular 1,066,237 1,012,051

- Income from WLL 18,150 22,105

- Income from broad band services 465,969 397,478

- Leased lines 208,239 179,674

- Other services 2,604 1,553

- Telegraphs and telex 399 1,088

- Income from passive infrastructure 11,574 7,512

- Receipts from other operators 302,809 318,157

2,577,307 2,434,335

Other operating revenue

- Other operating income [note a] 20,942 113,907

- Other 17,077 17,239

38,019 131,146

2,615,326 2,565,481

Notes:a) Other operating income represents subsidy from Universal Service Obligation Fund and DoT.



75

b) Telephones disconnected due to non-payment are considered to be working for a period of 30 days from the date of disconnection of outgoing facility. During this period, the incoming facility is provided and fixed monthly charges are billed for this period.

c) Indo-Nepal telecom traffic account

i) Revenue receivable for Rs. 267 lacs (previous year Rs. 289 lacs) and payable Rs. 494 lacs (previous year Rs. 760 lacs) in respect of Indo-Nepal traffic account has been considered on accrual basis in the accounts for the financial year 2013-14.

ii) Nepal Telecom has disputed outstanding dues of Rs. 43 lacs pertaining to period from May 2003 to December 2004. A provision of Rs. 43 lacs which has been made by the corporate office on behalf of the circle in the year 2009-10 in this regard. The disputed amount of dues payable to Nepal telecom from January 2010 to March 2011 is Rs. 45 lacs.

d) Indo-Bangladesh telecom traffic account

Revenue receivable for Rs. 10 lacs (previous year Rs. 7 lacs) and payable Rs. 7 lacs (previous year Rs. 8 lacs) in respect of Indo-Bangladesh traffic account has been considered on accrual basis in the accounts for the financial year 2013-14.

e) Indo-Myanmar telecom traffic account

No receivable and payable amount has been booked during the financial year 2013-14 as there is no traffic between the countries during the current financial year (previous year NIL).

f) Rs. 28 lacs outstanding on account of transit charges as disputed by M/s Tata Teleservices Limited is pending and Rs. 285 lacs is outstanding against other IUC operator against which necessary provisions has been made upto financial year 2011-12.

23. OTHER INCOME

For the year ended 31

March 2014

For the year ended 31

March 2013

Interest income

- On deposits in banks 3,679 6,762

- On advances 3,209 7,062

- On income tax refund 17,928 -

24,816 13,824

Other non-operating income

- Profit on sale of assets (net) 3,817 4,859

-Liquidateddamages 31,965 31,178

- Excess provision written back [refer note 6(a)] 91,985 66,792

-Rentofstaffquarters 2,438 2,657

- Sale of scrap 3,038 4,204

- Reimbursement from USO Administrator for USO Towers 3,988 5,379

- Income from Network Operating and Control Center (NOCC) 3,324 2,186

- Others including sale of publications, forms, waste paper, etc. 18,938 16,229

159,493 133,484

184,309 147,308


76

24. EMPLOYEE BENEFIT EXPENSES



Salaries, wages, allowance and other benefits 1,321,286 1,208,068

Leave encashment (including provision) [note a] 110,367 64,550

Pension contribution 88,914 91,641

Employer’s contribution towards employees provident fund 18,735 15,933

Gratuity (including provision) 6,440 4,142

Leave salary contribution 818 808

Medical expenditure 32,634 30,585

Staff welfare expenses [note b] 1,714 1,913

1,580,908 1,417,640

Less:Allocatedtocapitalwork-in-progressandothers 37,324 41,858

1,543,584 1,375,782

Notes:

a) Leave encashment of Rs. 59,418 lacs (previous year Rs. 55,359 lacs) has been paid by the Company considering the unfunded position of the related fund.

b) During the year, the Company has paid Rs. 400 lacs (previous year Rs. 500 lacs) to staff welfare board and Rs. 100 lacs (previous year Rs. 100 lacs) to sports and cultural board for promoting welfare activities at various circles.

25. FINANCE COSTS



Interest expense

- Interest on Government loan [refer note 6(a)] - 19,599

- Interest on subscribers’ deposit 7 28

- Interest on bank loan 21,639 15,099

- Interest on others 153 190

Bank charges 165 231

21,964 35,147

26. ADMINISTRATIVE, OPERATING AND OTHER EXPENSES



Rent 32,141 32,322

Lease charges 489 456

Rates and taxes 4,962 6,184



77



Power and fuel 262,451 253,256

Insurance 281 195

Repairs and maintenance

- Buildings 31,170 27,077

- Plant and machinery 92,418 85,119

- Cables 42,905 42,993

- Others 10,869 7,219

Professional and consultancy charges 2,412 2,119

Payment to auditors [refer note 37] 301 298

Printing and stationery 6,660 6,886

Commission on franchise services 52,366 51,201

Advertisement 992 900

Business promotion and marketing expenses 5,385 3,170

Travel expenses 7,907 8,376

Postage and courier charges 6,959 7,115

Security services 28,612 27,805

Vehicle running expenses (including hired vehicles) 21,839 20,691

IUC to other service providers 238,835 225,858

Expenditure on passive infrastructure hired 64,719 55,040

Expenditure on services and other expenses [note c] 77,906 81,409

Penalty for customer application form (CAF) verification 1,885 1,992

Wealth tax 84 85

Write off and losses (other than bad debts) 22,534 22,463

Bad-debt provision other than services 832 2,096

Bad-debt written off 25,684 24,701

Provision for doubtful debts and disputed bills 53,953 41,534

Write off of unrecovered service tax 1,286 170

Foreign exchange fluctuation loss/(gain) (net) 1,069 1,074

Loss/(Profit) from manufacturing activities of factories [note a & b]

8,321 6,111

Loss/(Profit) from construction/telecom services projects (1,365) (599)

1,106,862 1,045,316

Less:Allocatedtocapitalprojectworks&others 6,097 5,081

1,100,765 1,040,235


78

Notes :

a) Telecomfactoriesmanufacturingaccount:



Opening stock - raw material & scraps 8,379 11,833

Purchases 10,878 8,106

Direct expenses 13,123 12,207

Change in inventory 2,079 (1,093)

Closing stock - raw material & scraps (8,376) (8,379)

Total (A) 26,083 22,674

Internal transfer (B) 17,762 16,563

Loss/(Profit) from manufacturing activities 8,321 6,111

b) Production of goods by the Company is for captive consumption. Prices for the transfer of stock from Telecom Factories to circles for self-consumption are predetermined. The predetermined rates include direct cost including overhead allocation at a fixed rate. This practice has resulted in internal loss of Rs. 8,321 lacs (previous year Rs. 6,111 lacs) for the year ended 31 March 2014 arising out of such transfer. The said amount has been netted off against the administrative expenses in the Statement of Profit and Loss for the year since it is not possible to identify the individual items of stores, which have been capitalised or expensed off.

c) Consumption of stores and spare parts for the year ended 31 March 2014 is Rs. 2,367 lacs included in expenditure on services and other expenses.

27. PRIOR PERIOD ITEMS



Prior period income

- Telephones (WLL) - 7

- Income from WIMAX 3 -

- Value added service 48 1,018

- Broadband services 77 775

-Liquidateddamagesandothermiscellaneousincome 1,212 300

- Telegraphs - 3

- Subsidy from DIT for Rural Broad Band (wireline) [refer note 5]

90 16,786

- Interconnect Usage Charges (IUC) 98 -

- Income from real estate 5 -

1,533 18,889

Expenditure booked earlier now reversed

- Salaries and staff expenses 47 457



79



- License fee 281 1,003

- Interest 4,132 -

4,460 1,460

Total A 5,993 20,349

Income booked earlier now reversed

- Cellular mobile service 356 282

- IUC - 2,213

- Income - telephones (other than WLL) 130 908

- Income on telephone circuits 449 8,317

- Income on telegraph circuits 149 303

- USO subsidy 558 1,345

- Telephones (WLL) 22 -

1,664 13,368

Expenditure

- Rent, rate and taxes 141 18

- Repairs 864 1,138

- Depreciation [refer note 13] 9,063 14,642

- Power and fuel 263 545

- IUC 3,954 1,164

- USO towers maintenance 46 -

- Other services 9,092 7,756

23,423 25,263

Total B 25,087 38,631

Net amount of prior period items (A-B) (19,094) (18,282)


28. ASSETS AND LIABILITIES TAKEN OVER FROM DoT

28.1 In pursuance of the Memorandum of Understanding (MOU), dated 30 September 2000 executed between Government of India and the Company, all assets and liabilities in respect of business carried on by Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) were transferred to the Company with effect from 01 October 2000 at a provisional value of Rs. 63,00,000 lacs and up to the current financial year the Company has identified net assets of Rs. 63,27,152 lacs (previous year Rs. 63,29,439 lacs) against it.

During the current financial year, based on physical verification of fixed assets and inventory and reconciliation of various heads of assets and liabilities in the subsidiary and general ledgers, the management has found some facts which has resulted in increase/ decrease

80

in the following assets and liabilities taken over as on 01 October 2000 amounting to net reductionintheassetsofRs.2,287lacs[previousyear2,418lacs]:

Particulars Up to 31 March 2013

Additions/ (Deletions)

during the year

Up to 31 March 2014

AssetsFixed assets 5,409,071 (2,232) 5,406,839 Capital work-in-progress 502,627 (108) 502,519 Inventory 187,850 - 187,850 Trade receivables 683,196 - 683,196 Advance to contractors 39,448 - 39,448 Deposit with electricity boards /others 2,184 - 2,184 Total-A 6,824,376 (2,340) 6,822,036 Liabilities Customer deposits 393,704 - 393,704 Earnest money deposits 12,122 (6) 12,116 Security deposits from contractors /suppliers 29,005 (6) 28,999 Working expense liability as on 01 October 2000 43,513 (41) 43,472 Contractors bills payable as on 01 October 2000 16,593 - 16,593 Total-B 494,937 (53) 494,884 Net assets taken over by the Company (A-B) 6,329,439 (2,287) 6,327,152 Previous year 6,331,857 (2,418) 6,329,439

Note1: ThenetassetsandthecontingentliabilitiestransferredtotheCompanyason01October2000aresubject to confirmation by DoT as regard to their ownership and the value.

Note2: Tradereceivablesason31March2014includesanamountofRs.36,458lacspertainingtoperiodprior to 01 October 2000, which have been fully provided for and included in net current assets referred above.

28.2 The capital structure for the Company concurred by the Ministry of Finance and conveyed by the Department of Telecommunications vide their U.O. No. 1-2/2000-B (Pt.) dated 13 December 2001 has been treated as consideration for transferring the above stated assets and liabilitiesisasfollows:

Particulars As at 01 October 2000

(as on 31 March, 2013)

Additions/ (Deletions) during the

year ended 31 March, 2014

Total structure as at 01 October

2000 (as on 31 March, 2014)

Equity 500,000 - 500,0009% Non-cumulative preference shares 750,000 - 750,00015 year Government loan (Interest at prevalent Government lending rate) [note 1] 750,000 - 750,000Loan from MTNL [note 2] 305,600 - 305,600Capital reserves – DoT [note 3] 4,023,839 (2,287) 4,021,552Total 6,329,439 (2,287) 6,327,152



81

Notes: 1. During the current year, the loan from the Government of India amounting to Rs. 98,318 lacs has been

waived vide letter no. 1-43/2008-B dated 11 April 2014 and the same has been taken to the capital reserve created at the time of formation of the Company.

2. The entire amount has been repaid in the previous years. 3. Represents the difference between the total value of the assets taken over and the long term identified

liabilities and the capital structure, as on 01 October 2000 as communicated by DoT.

28.3 In pursuance of clause 13 of agreement of transfer executed between the Government of India and the Company dated 30 September 2000 all costs, charges and expenses including stamp duties, registration charges, transfer duties, any other taxes, levies, duties or charges relating to or in connection with completion of transfer of assets and liabilities shall be borne by the Government of India.

29. LICENSE FEE AND SPECTRUM CHARGES

29.1 License and spectrum fee for the year ended 31 March 2014 is Rs. 2,24,330 lacs (previous year Rs. 2,05,236 lacs).

29.2 During the year there was no change of formula in distribution of the revenue between various components and thus the same formula adopted during 2010-11 is followed this year also,asperthefollowingpercentage:

Service Basic CMTS NLD ILDLeased circuits 30% - 70% -

Basic services 70.72% - 17.58% 11.7%

CMTS services - 75.50% 21.26% 3.24%

The NLD/ILD portion of Point of Interconnection (POI) revenue has been taken on actual basis.

29.3 With effect from 01 April 2013, uniform rate of 8% is applicable for all the services i.e. Basic, CMTS, ISP, VSAT, NLD and ILD and for all the circles irrespective of the category, vide DoT letter no. 20-281/2010-AS-I (Vol. II) (Pt.) dated 25 June 2012.

30. EMPLOYEE COST

30.1 The Company has made pension contribution as per applicable rates to DoT on the basis of pay scales for absorbed employees and for other employees working on deemed deputation as per the Central Government pay scales in accordance with financial rule 116 of the Government of India. The liability on account of pension payable to all such employees will be that of the Government of India as communicated by the Secretary, DoT vide their DO No. 1-45/2003-B dated 15 March 2005.

However, in the year 2006-07 DoT vide their letter No. 1-45/2003-B dated 15 June 2006 has intimated that annual pension liability of the Government in respect of employees of DoT / DTS / DTO who retired prior to 01 October 2000, those who have worked / are working in the Company on deemed deputation and for those who are absorbed in the Company shall not exceed 60% of the annual receipts to the Government from the item (a) Dividend income from MTNL/BSNL, (b) License fee from MTNL/BSNL, (c) Corporate Tax/


82

Excise Duty/Service Tax paid by BSNL. Any amount exceeding the receipts on account of 3 items mentioned above shall be borne by MTNL/BSNL. The Company has taken up the matter with the Government stating that its liability is restricted to pension contribution as per the rates prescribed in financial rules.

30.2 During the year, the Company has recognised following amounts in the Statement of Profit andLoss:

a) Defined contribution plans Contribution to defined contribution plan i.e. employer’s contribution to provident

fund and pension contribution to the Government of India for the year is charged to StatementProfitandLoss.Theseamountsareshownasunder:

Particulars Year ended 31 March 2014

Year ended 31 March 2013

Employer’s contribution to provident fund 18,735 15,932

Pension contribution to the Government of India 88,914 91,641

b) Defined Benefit Plans Gratuity The employees’ gratuity fund scheme administered by the Company employees gratuity

fund trust through two fund managers namely Life Insurance Corporation (LIC) of India and SBI Life Insurance Company Limited, is a defined benefit plan. The entire fund has been withdrawn from SBI Life Insurance Company Limited during the current financial year. The amount shown as fund invested with the SBI as on 31 March 2014 is the amount of interest for the year 2013-14 till the date of withdrawal. The present value of obligation is determined on actuarial valuation done by LIC using projected unit credit method to arrive the final obligation.

i) Defined benefits / expenses for gratuity recognised for the year



Current service cost 3,601 3,388

Interest cost 2,811 2,289

Expected return on plan assets ( 2,890) ( 2,443)

Total actuarial (gain)/loss 2,913 908

Past service cost - -

Curtailment and settlement cost/(credit) - -

Net cost 6,435 4,142

ii) The assumptions used to determine the benefit obligations are as follows:



Discount rate 8% 8%

Expected rate of increase in compensation levels 7% 7%



83



Expected average remaining working lives of employees (years)

23.17 24.94

Mortality table LIC (1994-96) Ultimate

LIC (1994-96) Ultimate

iii) Reconciliation of opening and closing balances of defined benefit obligations for gratuity



Present value of obligations as at beginning of year 35,128 28,617



Benefits paid ( 503) (74)

Actuarial (gain)/loss on obligations 2,913 908

Present value of obligations as at end of year 43,950 35,128

iv) Reconciliation of opening and closing balances of fair value of plan assets for gratuity



Fair value of plan assets at beginning of year 27,941 19,543

Contributions during the year 7,187 6,029

Expected return on plan assets 2,890 2,443

Benefits paid ( 503) ( 74)

Actuarial gain / (loss) on plan assets - -

Fair value of plan assets at the end of year 37,515 27,941

v) Reconciliation of fair value of assets and obligations for gratuity





Net liability recognised in Balance Sheet 6,435 7,187

vi) Gratuity fund investment details (Fund manager wise, to the extent funded)



Life Insurance Corporation of India 37,496 24,676

SBI Life Insurance 19 3,265

Total 37,515 27,941


84

Leave encashment:

Leave encashment is also a defined benefit plan. The liability towards leave encashment has been determined through actuarial valuation as per the notified Accounting Standard 15 (Revised 2005) ‘Employee Benefits’ using projected unit credit method.

i) Defined benefits / expenses for leave encashment recognised for the year





Expected return on plan assets (60,563) (56,159)

Total actuarial (gain)/loss 42,818 2,151

Past service cost - -

Curtailment and settlement cost/(credit) - -

Net cost 50,846 9,190

ii) The assumptions used to determine the benefit obligations are as follows:



Discount rate 8% 8%

Expected rate of increase in compensation levels 7% 7%

Expected average remaining working lives of employees (years)

10 11

Withdrawal rate 1% to 3% depending on age

1% to 3% depending on age

Mortality table LIC (1994-96) Ultimate

LIC (1994-96) Ultimate

iii) Reconciliation of opening and closing balances of defined benefit obligations for leave encashment.



Present value of obligations as at beginning of year 730,090 664,741



Benefits paid - -

Actuarial (gain)/loss on obligations (balancing figure) 42,818 2,151




85

iv) Reconciliation of opening and closing balances of fair value of plan assets for leave encashment.



Fair value of plan assets at beginning of year 637,511 581,352

Contributions during the year - -

Expected return on plan assets 60,563 56,159

Benefits paid - -

Actuarial gain / (loss) on plan assets - -


v) Reconciliation of fair value of assets and obligations for leave encashment





Unfunded amount recognised in Balance Sheet 143,425 92,579

vi) Leave encashment fund investment details (fund manager wise, to the extent funded)



Life Insurance Corporation of India (100%) 698,074 637,511

31. FIXED ASSETS / DEPRECIATION AND AMORTIZATION/ CAPITAL WORK-IN-PROGRESS

31.1 Fixed assets taken over from DoT as on 01 October 2000 are based on physical verification conducted by the management. The value of fixed assets taken over including capital work-in-progress has been determined by the management using the original cost of the asset (wherever available) or alternatively the value arrived at by applying Strategic Business Plan (“SBP”) rates,which isbasedon technicalassessment,as reducedby thedepreciationupto 30 September 2000 on straight line basis at the rates prescribed by DoT. Capital assets acquiredbytheCompanyafter01October2000arevaluedatthecostincludingalldirectcharges incurred up to the time of installation or put to use.

The transfer values, as indicated above, in respect of assets transferred from DoT on 01 October 2000 have been treated as its original cost and depreciation has been provided on written down value method at the rates prescribed in Schedule XIV of the Companies Act, 1956 without reassessing the remaining useful life of such assets as on that date. Depreciation hasbeenprovidedattheratesasstatedaboveforalltheassetsacquiredafter01October2000 except in the case of Subscribers Installations which are depreciated over the useful life of 5 years on written down value method. Depreciation has been calculated by the circles, as per the policies of the Company.


86

31.2 Land at several locations has been taken over at a nominal value say Re. 1, wherever original cost is not available. As at 31 March 2014, thirty one circles (previous year thirty two circles) have identified the leasehold land. In the absence of the information relating to suchacquisitioninothercases,noadjustmenthasbeenmadeforamortisingthecostofsuchunidentified lease hold land over the lease period.

The lease period of a few leasehold lands on which buildings are constructed, have not been renewed / or the renewals are under dispute. Since expected terms, conditions and rentals for renewal/ surrender are not ascertainable, no provision has been made for the ‘surrender value / written down value of the buildings’.

31.3 Pending transfer of the immovable property in the name of the Company, documents in respect of some land and buildings acquired during the period are under legal process/execution. Further in respect of assets taken over from DoT, formalities for vesting the assets in favour of the Company wherever necessary/applicable are under process.

31.4 The Company, as per instructions issued by the Ministry of Communications and Information Technology through letters having number P-11014/13/2008-PP dated nil and number P-11014/13/2008-PP dated 12 June 2010, has provided Rs. 10,18,658 lacs and Rs. 8,31,380 lacs as one time charge for 3G spectrum and BWA spectrum respectively in the financial year 2009-10, which was earmarked for the Company on 08 August 2008. Above-mentioned amount has been paid to the Government of India during the financial year 2010-11. As per terms and conditions of NIA the right to use above-mentioned spectrum is for 20 years from the date of awards of right to commercially use the allocated spectrum block. Accordingly, the Company is amortising the one time spectrum fee over the period of twenty years as per straight-line method.

During the current year, the Company received approval of the cabinet vide Department of Telecommunication letter no. 10-20/2012-SU.I(vol. II) dated 15 January 2014, for surrender of BWA Spectrum by the Company and refund of upfront charges paid by the Company for six (6) LSAs amounting to Rs. 6,72,451 lacs. Accordingly, the Intangible assets of BWA spectrum amounting to Rs. 6,72,451 lacs has been decapitalised and claims recoverable from DoT for BWA spectrum refund has been debited by the corresponding amount. Further, the to-date accumulated amortisation amounting to Rs. 1,49,228 lacs has been netted off with the current year amortisation charge of the gross block.

31.5 Certain assets that have been completed and put to use, have not been capitalised in fourteen circles (previous year thirteen circles) pursuant to the policy of capitalising only after completion certificates have been obtained and till then these are still shown as capital work-in-progress. The amount ascertained in respect of ten circles (previous year nine circles) is Rs. 45,808lacs(previousyearRs33,292lacs).Consequentlydepreciationisalsonotchargedonthe same.

31.6 Establishment and administration expenses incurred in units where project work is also undertaken are allocated to capital and revenue mainly on actual man-month basis and only where such actual allocation is not possible then on proportionate basis.

31.7 In two circles (previous year one circle), there is difference between the CWIP subsidiary ledger and general control ledger.



87

32. DoT BALANCES

Net amount of Rs. 8,07,011 lacs (Previous year Rs. 1,23,778 lacs) recoverable on current account from DoT, out of which an amount of Rs. 6,72,451 lacs has been confirmed to be refunded by DoT vide letter no. 10-20/2012-SU.I (vol. II) dated 15 January 2014, is subjecttoconfirmation,reconciliationandconsequentialadjustment.Thereisnopracticeofgetting confirmation of such balances with Government department due to huge number of transactions.

There is no agreement between the Company and DoT for interest recoverable/payable on outstanding amounts of DoT on current account. Hence, no accrual for interest has been made on the amount payable to/recoverable from DoT.

33. INTER/INTRA CIRCLE REMITTANCE

The management is in the process of reconciling the various differences between the subsidiary records and the corresponding control accounts and balance of Rs. 86,537 lacs (previous year Rs. 1,02,458 lacs) in Inter/Intra-Circle Remittances account. This amount pertains mainly to reconciliation of assets and liabilities, and marginally to expenditure and revenue amongst various circles of the Company. The reconciliation of the remittances is done on continuous basis throughout the year and proper effect is taken in the books of accounts for reconciled amount.

34. EARNINGS PER SHARE

Description Unit F.Y. 2013-14 F.Y. 2012-13Profit/(Loss) after tax (Rs. in lacs) (701,976) (788,444)

Numberofequitysharesoutstanding (in number) 5,000,000,000 5,000,000,000

Face value of shares (in Rs.) 10 10

Basic/Diluted earnings per share (in Rs.) (14.04) (15.77)

35. SEGMENT REPORTING

A. Current year


Business Segments Un-allocable

Total

Revenue Basic Cellular Broadband

Revenue from operations 848,713 1,292,179 472,237 2,197 2,615,326

Inter segment revenue (eliminated) 116,492 43,664 - - 160,156

Other income 121,477 33,447 2,375 2,194 159,493

Net segment revenue 1,086,682 1,369,290 474,612 4,391 2,934,975

Segment results

Operating profit/(loss) before interest, prior period items and taxes

(1,509,741) 400,829 429,937 (17,202) (696,177)


88



Total


Interest income 5,735 243 - 18,838 24,816

Interest expenses (234) (85) - (21,645) (21,964)

Profit/(Loss) before prior period items and taxes

(1,477,063) 400,987 429,937 (20,011) (693,325)

Prior period items (20,825) (2,520) 248 4,003 (19,094)

Profit/(Loss) before tax (1,497,888) 398,467 430,185 (16,008) (712,419)

Deferred tax - - - 10,443 10,443

Profit/(Loss) after tax (1,497,888) 398,467 430,185 (9,952) (701,976)

Other information

Segment assets 3,977,317 3,314,703 274,017 1,367,307 8,933,344

Segment liabilities 1,153,219 530,102 47,025 7,202,998 8,933,344

Increase/(decrease) in gross block of fixed assets

(18,740) (482,200) 12,056 (330) (489,214)

Depreciation and amortisation 418,926 157,684 25,423 284 602,317

Non cash expense other than depreciation 88,586 15,566 129 8 104,289

B. Previous year



Total


Revenue from operations 921,442 1,234,184 408,100 1,755 2,565,481

Inter segment revenue (eliminated) 134,480 45,804 - - 180,284

Other income 90,133 38,612 1,162 3,577 133,484

Net segment revenue 1,146,055 1,318,600 409,262 5,332 2,879,249

Segment results

Operating profit/(loss) before interest, prior period items and taxes

(1,318,973) 213,137 367,932 (18,027) (755,931)

Interest income 8,545 433 - 4,846 13,824

Interest expenses - (46) - (35,101) (35,147)

Profit/(Loss) before prior period items and taxes

(1,310,428) 213,524 367,932 (48,282) (777,254)

Prior period items (34,123) (1,855) 17,588 108 (18,282)

Profit/(Loss) before tax (1,344,551) 211,669 385,520 (48,174) (795,536)



89



Total


Deferred tax - - - 7,092 7,092

Profit/(Loss) after tax (1,344,551) 211,669 385,520 (41,082) (788,444)

Other information

Segment assets 4,476,926 3,352,443 251,586 1,385,518 9,466,473

Segment liabilities 548,949 593,089 35,504 2,027,515 3,205,058

Increase/(decrease) in gross block of fixed assets

39,618 112,301 24,844 13 176,776

Depreciation and amortisation 476,767 330,944 25,626 306 833,643

Non cash expense other than depreciation 66,830 24,868 254 3 91,955

Note:

a) Primary Segment: Basic, Cellular and Broad Band services have been considered as primary businesssegmentsforreportingunderthenotifiedAS-17“SegmentReporting”issuedbyCARules2006.

b) Secondary Segment: TheCompany caters only to the Indianmarket representing a singular economicenvironment with similar risks and returns and further there are no reportable geographical segments.

36. RELATED PARTY DISCLOSURE

36.1 Key Management Personnel

Designation Name of Incumbent RemarksCMD Shri. R K Upadhyay From 30 April 2011 (A/N)

Director (Finance)

Shri. K.C.G.K. Pillai

Shri. R K Upadhyay

Shri. Anupam Shrivastava

From 25 April 2013 (A/N) to 30 November 2013

From 01 December 2013 (F/N) to 04 February 2014

From 05 February 2014

Director (Consumer Mobility)

Shri. R. K. Agarwal

Shri. Anupam Shrivastava

From 11 April 2008 to 30 April 2013 (F/N)

From 01 May 2013 (F/N)

Director (HRD) Shri. A.N. Rai From 19 June 2012

Director (Consumer Fixed Access)

Shri. N. K Gupta From 01 June 2012 (F/N)

Director (Enterprise) Shri. A.N.Rai From 19 September 2011

Government director Shri. Shahbaz Ali

Ms. Rita Amitabh Teaotia

From 14 February 2012

From 04 September 2012

Non-official part-time

director

Shri. Ashish Guha

Prof. N. Balakrishnan

Shri. Ajai Vikram Singh

From 21 May 2010 to 20 May 2013

From 17 July 2012

From 17 July 2012


90

36.2 Disclosure of transactions between the Company and related parties and the status of outstanding balances.

Name of the party

Description of transactions Year ended 31 March 2014


Key Management Personnel

Remuneration paid :

Payment of salary and allowances 120 101

Perquisites 4 5

Sitting fees 2 2

Total 126 108

Advance given[notebelow]:

Opening balance

Extended during the year

Total

1

15

16

-

13

13

Repayment of advance 12 12

Outstanding advance 4 1

Note:Theseadvancesareinthenormalcourseofbusiness.

36.3 The Company being a wholly State owned enterprise, disclosure as regards related party relationship with other State controlled enterprises and transactions with such enterprises has not been made in accordance with the notified “Accounting Standard-18 Related party disclosures”.

37. AUDITOR’S REMUNERATION (STATUTORY/BRANCH AUDITORS)



Statutory auditor

Branch auditor

Statutory auditor

Branch auditor

Statutory audit fee 13 227 13 227

Certification charges 2 36 1 36

Reimbursement of expenses 2 21 2 19

Total 17 284 16 282

Other services - - 4 -

Tax audit fee - 24 - 22

Note:Feesexclusiveofservicetaxandcesswhereverapplicable.

38 AS 29 DISCLOSURE REQUIREMENT ThedisclosurerelatingtoprovisionsintermsofAS29,totheextentavailable,areasunder:



91

Name of Provisions

Opening balance as at 01 April 2013

Fresh provision

made during the year

Provision utilized during

the year

Provision written back during the

year

Closing balance as

at 31 March 2014

Wealth tax390 84 85 - 389

(397) (85) (92) - (390)

Contingencies1,256 435 1 146 1,544

(1,192) (120) (56) - (1,256)Total 1,646 519 86 146 1,933

(1,589) (205) (148) - (1,646)

Note:Figuresinbracketdenotespreviousyearfigures.

39. OTHER SCHEDULE-VI REQUIREMENTS

InformationrequiredasperNote5(viii)ofGeneralInstructionsforpreparationofStatementof Profit and Loss, Part II of Revised Schedule VI of Companies Act, 1956, to the extent available,isasunder:

39.1 Value of Imports on CIF Basis :



Raw material - 2,401Components and spares parts 957 -Capital goods 15,721 57,861Total 16,678 60,262

Note:Onecircle(previousyearonecircle)hasnotascertainedthevalueofimportonCIFbasis.

39.2 The expenditure in foreign currency:



Expenses on services 937 7,307Travelling 23 19Others 8,685 9,086Total 9,645 16,412

Note:Onecircle(previousyearonecircle)hasnotascertainedthevalueofexpenditureinforeigncurrency.

39.3 Consumption of imported and indigenous stores and spares parts (to the extent identified) :



(Rs. in lacs) % (Rs. in lacs) %Imported 21,908 56 12,176 29Indigenous 17,325 44 22,894 71Total 39,233 100 35,070 100

Note:Onecircle(previousyearonecircle)hasnotascertainedtheconsumptionofimportedandindigenousstores and spares parts.


92

39.4 Earnings in foreign currency :



Training fee 56 51Income from services 2,548 8,423Others 685 569Total 3,289 9,043

Note:Onecircle(previousyearonecircle)hasnotascertainedthevalueofearningsinforeigncurrency.

40. LEASE

The Company has taken vehicles for senior executives under operating leases, which expire between May 2013 to May 2018 (previous year April 2014 to July 2017). The gross rental expenses, excluding service tax, for such vehicles are Rs. 92 lacs (previous year Rs. 92 lacs). Thecommittedleaserentalsinthefutureare:Particulars Year ended

31 March, 2014Year ended

31 March, 2013Not later than one year (excluding service tax) 90 88Later than one year and not later than five years (excluding service tax) 110 121

Total 200 209

41. Vide a MoU entered during the year between the Company and MTNL, rentals will be calculated at mutually agreed rates after review of space occupied by both the aforementioned Public Sector Undertakings (PSUs) in each others buildings.

42. CONTINGENT LIABILITIES AND COMMITMENTS:42.1 Contingent liabilities (i) Claimsnotacknowledgedasdebtsareasfollows:

Particulars As at 31 March 2014 As at 31 March 2013No. of cases

Amount No. of cases

Amount

TR Billing 36 133 55 143Enhanced sales tax in lieu of C/D Forms 11 1,372 39 2,495On account of service tax disputed 120 22,152 94 17,127Sales tax disputed 57 14,354 59 16,747Central excise claims 20 3,536 17 3,216License fee and spectrum charges [note 1] 2 1,136,678 1 691,186Foreign exchange fluctuation loss [note 2] 1 2,465 - -Others [note 3] 43,184 154,565 633 25,012Total 43,431 1,335,255 898 755,926

Note1: DemandraisedbyDoTamountingto: (i) Rs. 6,91,186 lacs on account of one time spectrum charges for Global System for Mobile

(GSM) spectrum held by the Company, the matter is subjudice by other operators and the amount is not finally crystallized.



93

(ii) Rs. 4,45,492 lacs on account of provisional assessment of license fee for the years 2006-07 to 2008-09, the matter has been taken up with DoT for revision.

Note2: The net amount payable to Pakistan TelecomCompany Limited for settlement of telecom duesamounting to Rs.17,671 lacs payable in Gold Franc currency have been accounted for in the book of Maharashtra telecom circle in the year 2012-13 pertaining to the period upto June 2003. No claim has been received from Pakistan Telecom Company Limited on account of telecom traffic. In the absence of relevant details of traffic data, no recognition of income and provisioning for expenditure related to it has been accounted for, for the above period. The Management has decided not to recognise the foreign exchange fluctuation for the claims recoverable/payable from/to PTCL in the books of accounts. Henceforth, the same will be shown as contingent liabilities.

Note3: Thecontingentliabilityinconnectionto23casesincludedunderthehead‘Others’intheabovetable is not ascertainable.

ii) ClaimspendingincourtrelatedtoLandacquisition,TRbilling,Servicetax,CentralExciseandSales tax, Arbitration cases and others.

Particulars As at 31 March 2014 As at 31 March 2013No. of cases 14,438 16,520

Amount 848,092 273,354

iii) Demands raised by the Income Tax Departments not acknowledged as debt are asfollows:

Assessment year Particulars

As at 31 March

2014Particulars

As at 31 March

2013

Forum where pending Amount Forum where pending Amount

2001-02(refer note 1) - -

Writ at Hon’ble Delhi High Court against re-assessment u/s 147

81,899

2002-03(refer note 1) - -

Appeal pending at ITAT against penalty order u/s 271(1)(c)

27,307

2003-04 Appeal pending at ITAT against assessment u/s 143(3) 197,943 Appeal pending at ITAT

against assessment u/s 143(3) 197,943



2004-05(refer note 2)

Appeal pending at ITAT against assessment u/s 263 / 143(3) 9,684

Appeal pending at ITAT against assessment u/s 263 / 143(3)

9,684




Appeal pending at ITAT against penalty order u/s 271(1)(c) 115,316 Appeal pending at ITAT against

penalty order u/s 271(1)(c) 115,316


Appeal pending at ITAT against assessment u/s 143(3) 92,606 Appeal pending at ITAT against

assessment u/s 143(3) 92,606


Appeal pending at ITAT against assessment u/s 143(3) 97,095 Appeal pending at ITAT against



94


Appeal pending at ITAT against assessment u/s 143(3) 70,891 Appeal filed at ITAT against



Appeal pending at ITAT against assessment u/s 143(3) 29,749 Appeal filed at ITAT against


2010-11 Appeal pending at CIT (A) against assessment u/s 143(3) 3,071 Appeal filed at CIT (A) against



Appeal pending at CIT (A) against assessment u/s 143(3) 623,422

Total 1,307,554 823,018 Notes : 1. The cases have been decided in the favour of the Company hence not acknowledged as

contingent liability. 2. Assessment order under section(u/s) 263/143(3), dated 25 September, 2009 has been passed

for assessment year 2004-05, whereby deduction u/s 80-IA amounting to Rs. 4,52,830 lacs was disallowed. An additional demand of Rs. 1,00,856 lacs has been raised against the Company. The appeal filed against this assessment has been decided partly by CIT (A) in favour of the Company vide their order dated 30 April 2010.As per appeal effect u/s 250/263/143(3) dated 30 June 2010 for effecting order of CIT (A) dated 30 April 2010, the additional demand of Rs. 1,00,856 lacs has been reduced to Rs. 9,684 lacs. Further appeal has been filed with Hon’ble ITAT against the order of CIT (A).

3. The appeal filed against the penalty for A.Y. 2005-06 under section 271(1)(c) imposed to the extent of Rs. 1,15,316 lacs has been disposed of by CIT(A) vide their order dated 14 March 2012. Substantial relief has been allowed to the Company as mentioned below.

S. No.

Particulars Additions under normal provisions/section 115JB

Penalty (100%)

1 Depreciation Normal 82,994

2 Write off – other than bad debts Normal -

3 Disallowance of claims of deductions u/s 80-IA

Normal 25,838

4 Provision of bad and doubtful debts Section 115JB 5,630

Total 114,462 Further, second Appeal has been filed by both the Company and Income Tax Department

with Hon’ble ITAT against order of CIT(A) vide Appeal No 2196/DEL-2012 and 2799/DEL-2012 respectively.

4. For assessment year 2006-07, an additional demand of Rs. 51,890 lacs was raised against the Company vide assessment order u/s 143(3) dated 27 December 2007. The additional demand for assessment year 2005-06 has further been increased from Rs. 51,890 lacs to Rs. 92,606 lacs vide assessment order u/s 154/143(3) dated 24 September 2010. The appeal filed against this assessment has been decided partly in favour of the Company by CIT (A) vide their order dated 28 March 2008. The Company has filed appeal before ITAT against the order of CIT (A).

5. For assessment year 2007-08, an additional demand of Rs. 35,218 lacs was raised against the Company vide assessment order u/s 143(3) dated 14 December 2009. The additional demand for A.Y. 2007-08 has further been increased from Rs. 35,218 lacs to Rs. 97,095 lacs vide assessment order u/s 154/143(3) dated 10 August 2010. The appeal filed against this assessment has been decided partly in favour of the Company by CIT (A) vide their Order dated 29 March 2011. The Company has filed appeal before ITAT against the order of CIT (A).



95

6. For assessment year 2008-09, an additional demand of Rs. 1,00,202 lacs was raised vide assessment order dated 23 December 2010. Vide rectification order u/s 154/143(3) dated 30 January 2012, the additional demand raised vide assessment order u/s 143(3) dated 23 December 2010 has been reduced from Rs. 1,00,202 lacs to Rs. 70,891 lacs. First appeal filed before CIT (A) against Assessment u/s 143 has been disposed off by CIT (A) vide their order dated 16 February 2012 and order u/s 154 dated 12 March 2012. Second appeal has been filed with ITAT against above mentioned orders of CIT (A).

7. For assessment year 2009-10 an additional demand of Rs. 59,429 lacs had been raised vide assessment order dated 02 November 2011. This amount has already been paid by the Company/adjusted by way of refund of other assessment years. The Company filed appeal before CIT(A) against the assessment order which was decided vide appellate order dated 24 September 2012.The additional demand was reduced from Rs. 59,429 lacs to Rs. 29,749 lacs. Hence a relief of Rs. 29,679 lacs has been obtained by the Company by appeal effect of order dated 24 September 2012 passed by CIT(A)-V, New Delhi.

A refund of Rs. 31,163 lacs has been granted to the Company (including interest u/s 244A amounting to Rs. 1,484 lacs) which has been adjusted against the outstanding demand of assessment year 2001-02. Income Tax Department has filed an appeal in ITAT against appellate order. The Company also filed the appeal.

8. For assessment year 2011-12, an additional demand of Rs.6,23,422 lacs was raised against the Company vide assessment order u/s 143(3) dated 31 March 2014. The Company has filed appeal before CIT (A) against the assessment order u/s 143(3) on 29 April 2014.

9. Penalty proceedings u/s 271(1)(c) of the Income Tax Act 1961 which was initiated against the Company for A.Y. 2001-02, A.Y. 2003-04, A.Y.2004-05, A.Y.2006-07, A.Y.2007-08, A.Y.2008-2009 has been kept in abeyance. The additional demand, if any, has not been quantified.

10. Additional interest u/s 234B and 220, if any, arising out of above-mentioned income tax proceedingshasnotbeenquantifiedsincedemandhasnotbeenfinallycrystallisedagainstthe Company.

11. As per records, an amount of Rs. 5,21,930 lacs (previous year Rs. 5,96,535 lacs) has been adjusted by Income Tax Department against the additional demand of Rs. 13,07,554 lacs (previous year Rs. 8,23,018 lacs) mentioned above which is contested by the Company at appropriate forums.

iv) Liability on account of bank guarantees given by the Company.

Item As at 31 March 2014 As at 31 March 2013With cash

marginWithout cash

marginWith cash

marginWithout cash

marginNo. of cases 33 395 38 366

Amount 1,169 6,250 427 5,331

v) As per Office Memorandum (OM) dated 19 November 2009, pension contribution was payable on the actual pay drawn as on 01 January 2007 (being the date of implementation of second pay commission for IDA). Whereas the Company was paying pension contribution on maximum of the scale as advised by DoT. However, from 01 December 2011 the management has decided to pay the pension contribution as per office memorandum dated 19 November 2009. For those who are retiring within six months, pension contribution is paid on maximum of the pay scale as per letter no 7-45/2008-TA-I Dated 19 April 2013 of Director(A/cs-I)IA, DoT. The actual difference between these two methods of pension contribution payment upto 31 March 2014 is Rs. 70,703 lacs (previous year Rs. 30,844 lacs).


96

42.2 Commitments a) Capital commitments (i) The estimated amounts of contracts remaining to be executed on capital account

andnotprovidedforinrelationtoexecutionofworksandpurchaseofequipmentsare Rs. 1,21,749 lacs (previous year 2,31,039 lacs).

(ii) In six circles (previous year thirteen circles) the estimated amount of contract remaining to be executed on capital account has not been ascertained.

b) Other commitments (i) The amount of other commitments amounting to Rs. 8,333 lacs is ascertained in

two circles (previous year NIL circle).

43. CURRENT TAX

The provision for income tax for the current year has not been made since the Company is not having any taxable income either under normal provision of Income Tax Act, 1961 or special provision u/s 115JB (Minimum alternate tax) of the Income Tax Act, 1961.

44. The Company is executing various projects for various Government departments on reimbursement basis.

45. An agreement dated 16 May 2013 has been entered into between the Company and Bharat Broad band Nigam Limited (BBNL) with regard to contracting of laying OFC, installation of equipment,operationandmaintenanceonagreedtermsandconditionsofthenetworksobuilt in pursuance of MOU dated 04 December 2012. The said agreement has come into effect from 17 May 2013.

46. During the current year employees of the Company have contributed an amount of Rs. 1,488 lacs in the Prime Minister National Relief Fund for disaster relief measures and rehabilitation of the victims of flood in Uttarakhand.

47. The Company has discontinued its Telegram business (including Telex and Long Distance Telegraph and Telex system) with effect from 15 July 2013 and decommissioning of assets (other than land, building, furniture & fixture and computers) is under process in the circles having Telegram service assets. The net depreciated value of such assets is Rs. 1,044 lacs as on 31 March 2014.

48. In Uttarakhand circle of the Company natural calamity due to cloud burst and heavy flood occurred in the month of June 2013 and assets worth Rs. 91 lacs having net depreciated value of Rs. 16 lacs were destroyed. The same have been written off in the books of accounts.

49. Figures of the previous year have been regrouped or reclassified wherever necessary to conform to the current years grouping and classification.





Sd/-per Atul SeksariaPartner

Sd/-Sujata RayED Finance






97

Independent Auditors’ ReportTo the Members of Bharat Sanchar Nigam Limited Report on the Financial Statements

1. We have audited the accompanying financial statements of Bharat Sanchar Nigam Limited, (the ‘Company’), which comprise the Balance Sheet as at 31 March 2014 the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. These financial statements comprise of 48 circles, out of which 1 circle is audited by us and remaining 47 circles are audited by branch auditors appointed under Section 228 of the Companies Act, 1956 by the Comptroller and Auditor General of India.

Management’s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements, that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 (the ‘Act’) read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require thatwe complywith ethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthe financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasisforourqualifiedauditopinion.

Basis for Qualified OpinionAssets and liabilities taken over from Department of Telecommunication (‘DoT’) and the amounts receivable and payable to DoT

6. As detailed in note 28, 31.1 and 31.3 to the financial statements, assets and liabilities (including contingent liabilities) taken over from DoT have been verified and valued by the management

98

based on internal calculations and are subject to reconciliations and confirmation from DoT as regards to ownership, value and classification. The consequential impact on the financial statements, if any, as a result of the same is presently not ascertainable. Further, subsequent adjustments made on account of identification and recognition of net assets is adjusted to capital reserve. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

7. As detailed in note 32 to the financial statements, amounts due from and to DoT included in current assets and current liabilities aggregating to Rs. 173,669 lacs (previous year Rs. 170,985 lacs) and Rs. 39,109 lacs (previous year Rs. 47,207 lacs) respectively are subject to confirmations and reconciliation. Consequently, the impact of the adjustments, if any, on the financial statements is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Fixed Assets

8. As reported by auditors of 25 circles, Capital work-in-progress, inter alia, includes balances pending capitalisation for long-periods of time owing to pending analysis of status, value and obtaining of commissioning certificates. The consequential impact on the capital work-in-progress, fixed assets, depreciation and loss for the year, if any, is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

9. As reported by auditors of 6 circles, in the absence of information in respect of certain items of fixed assets capitalised, particularly batteries, it could not be established whether assets capitalised were on account of replacement/extension of an existing asset or additional acquisition of a new asset and hence the consequential impact of the same on the classification/value of the respective asset, depreciation and amortisation, expenses and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

10. As reported by auditors of 6 circles, the leasehold land as identified and valued by the respective circles have been incorporated in the books of accounts and amortised with effect from the date of formation of the Company. Hence, in respect of the lands still not identified and/or duly incorporated in the books of accounts of the respective circles, the consequential impact on value of fixed assets, amortisation and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

11. As detailed in note 31.2 to the financial statements, auditors of 4 circles have reported on the expired/non renewal of leases on lands on which the Company had constructed buildings. The management has not made any provision for the surrender value/written down value of the aforementioned buildings. The consequential impact of adjustment on fixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

12. As stated in note 13(a) and 31.3 to the financial statements, fixed assets, inter alia, includes land pertaining to 25 circles, purchased/acquired on leasehold/ freehold basis through various authorities, the title deeds of which are yet to be executed in the name of the Company. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.


99

13. As stated in note 47 to the financial statements, Telegraph and Telex services was discontinued by the Company with effect from 15 July 2013. However, assets (other than land, building, furnitures and computers) relating to the aforementioned service have not been identified, classified and valued as decommissioned asset. In the absence of specific details, the consequential impact of adjustments, if any, on the financial statements is presently not ascertainable.

14. The accounting policy of the Company as stated in note 2.6 to the financial statements with respect to the decommissioned assets has not been uniformly applied across all circles. In 15 circles, these are not recorded at lower of the cost or net realisable value while in certain circles, the decommissioned assets have not been appropriately adjusted from the block of fixed assets and depreciation is still being charged on such decommissioned assets. In the absence of sufficient details, we are unable to comment upon the impact of adjustment on the fixed assets, current assets, depreciation and amortisation and loss for the year, if any, arising out of the same. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

15. The following accounting treatments by the Company in respect of fixed assets and capital works-in-progress are not in accordance with the provisions of Accounting Standard – 6, Depreciation Accounting; Accounting Standard - 10, Accounting for fixed assets, and Accounting Standard – 26, Intangible Assets notified vide Companies (Accounting Standards) Rules, 2006:

a) As detailed in note 31.6 to the financial statements and as reported by auditors of 21 circles, the Company has not consistently adhered to capitalizing the overheads expenses specifically attributable to the capital work – in – progress but has recorded the same on estimated/fixed percentage/proportionate/payment basis.

b) The Company capitalises the assets, as reported by auditors of certain circles, on periodic basis instead of at the ready to use date.

c) Accounting policies regarding capitalization, disposal, depreciation and amortization of fixed assets are not uniformly applied in case of 21 circles.

The resultant impact of the above non compliance with the standards on the value of fixed assets, capital work-in-progress, depreciation and amortization and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Current Assets and Current Liabilities

16. The Company does not follow a system of obtaining confirmation and performing reconciliation of balances in respect of trade receivables, deposits with departments/companies (including Mahanagar Telecom Nigam Limited), claims recoverable from/payable to DoT (including license fees payable as detailed in note 42.1 of the financial statements) or to/ from other government departments/authorities, subscriber/customer deposit accounts, trade payable and claims payable. Due to non-availability of confirmations and reconciliations of the aforementioned account balances, we are unable to quantify the impact of the adjustments, if any, arising from reconciliation and settlement of account balances on the financial statements. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

17. As detailed in note 18(a) to the financial statements, no adjustment has been recorded for the differences of Rs. 971 lacs (previous year Rs. 22,917 lacs) in General ledger and Subsidiary ledger in respect of trade receivables for 7 circles. Further, as reported

100

by auditors of certain circles, there are unquantifiable differences between the general ledger / trial balance and accounting records pertaining to loans and advances, current assets and current liabilities. The impact on the financial statements, if any, owing to the aforementioned non-reconciliations is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

18. As reported by auditor of 4 circles, there are differences in the inventory records between stores ledger and General ledger/Trial balance, the impact of the same is currently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

19. As reported by auditors of 2 circles, certain units have not applied the Company's policy of valuation of inventory on weighted average method as stated in note 2.8 to the financial statements. The impact of the adjustment, if any, on inventory, consumption and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Inter/ Intra Circle Remittance Account

20. As detailed in note 33 to the financial statements, the Inter-Circle/Unit remittance balances amounting to Rs. 86,537 lacs (previous year Rs. 102,458 lacs) are yet to be reconciled. Pending such reconciliations, the possible cumulative impact of the adjustments, if any, on assets and liabilities and the current and prior year(s) income and expenditure is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

License Fee, Spectrum Charges, Inter Connect Usage Charges

21. As detailed in note 29 to the financial statements, the Company segregates revenue from NLD (National long distance)/ILD (International long distance) on an estimated basis instead of actual usage of pulse which consequently results in recognition of the license fees on an estimated basis. The impact of adjustment, if any, on the license fees expense, recoverable/ payable from DoT and loss for the year is presently not ascertainable for the year. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Revenue

22. As reported by auditors of 6 circles, the income from recharge coupons, prepaid calling cards, internet connection cards, sancharnet cards and stock of recharge coupons and prepaid calling cards are subject to reconciliations. In the absence of specific details, the impact of adjustment, if any, on financial statements is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

23. As reported by auditors of 3 circles, the revenue for the current year, inter alia, includes amounts pertaining to prior period(s). This has not been separately disclosed in the financial statements in a manner that their impact on the current year’s loss can be perceived, which is not in accordance with the notified Accounting Standard – 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. The consequential impact of adjustments, if any, on the financial statements is presently not ascertainable.


101

24. As stated in note 2.3-(e), (f) and (i) to the significant accounting policies, certain items of revenue are accounted for on cash basis instead of the accrual basis of recognition of revenue which is not in accordance with the generally accepted accounting principles in India. The impact of the adjustment, if any, in respect thereof on revenue, trade receivables and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Provisions and contingent liabilities

25. The provisions and the disclosures with regard to matters under litigations have been made based upon the management estimates. Based upon the report of auditors of 8 circles, sufficient and appropriate audit evidence for examining and verifying the quantum of contingent liabilities disclosed in note 42.1 to the financial statements has not been obtained. In the absence of the adequate details and documents and pending the responses to our confirmation requests in respect of the litigations at the corporate level, the impact of adjustments/disclosures, if any, on the financial statements is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Miscellaneous

26. The Company has not complied in respect of the following Accounting Standards notified vide Companies (Accounting Standards) Rules, 2006:

i) As reported by auditors of 11 circles, in absence of adequate information, details and records of old, non-moving, damaged and unserviceable inventories could not be identified The adjustment, if any, on inventories, consumption and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

ii) As detailed in note 35 to the financial statements and as reported by auditors of 13 circles, the expenses, incomes, assets and liabilities are not properly disclosed under the reportable segment as per the notified Accounting Standard 17 on Segment Reporting. In our opinion, the same does not give true and fair disclosure of the segment-wise operations of the Company as required by the aforementioned accounting standard. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

iii) As stated in note 15 to the financial statement, the Company as at 31 March 2014 has deferred tax assets (net) amounting to Rs. 23,773 lacs. Since the Company has a recent history of losses and owing to lack of virtual certainty and convincing evidence that sufficient future taxable income will be available against such deferred tax asset and as stipulated by the notified Accounting Standard-22, Accounting for taxes on income, the amount of such deferred tax asset should be written off. Consequent to the above, loss for the year in the statement of profit and loss is under-stated by Rs. 23,773 lacs and the balance of deferred tax asset included under Non-Current Assets, has been overstated by the corresponding amount.

iv) The Company has not carried out any Techno-economic assessment during the year ended 31 March 2014 and hence identification of impairment loss and provision thereof, if any, has not been made. The same is not in accordance with the notified Accounting Standard 28 on Impairment of asset. The consequential impact of adjustment, if any,

102

on the financial statements is currently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

v) The accounting for capital and revenue grant in accordance with the notified Accounting Standard 12 on Accounting for grants is not followed consistently as reported by auditors of 16 circles. In the absence of specific details, the consequential impact of adjustment, if any, on the financial statements is presently not ascertainable.

vi) The accounting policy as referred to in note 2.10(b) to the financial statements with respect to the liability on account of post-retirement medical benefits of employees including retired employees, a defined benefit plan, is recognized on actual basis in respect of bills received by the Company instead of recognizing the liability for the same as the present value of the defined benefit obligation at the balance sheet date calculated on the basis of actuarial valuation in accordance with the notified Accounting Standard – 15 on Employee Benefits. The consequential impact of adjustment, if any, owing to this non –compliance on the financial statements is presently not ascertainable.

27. As stated in the note 2.12 of the financial statements, only individual transactions of income/expenditure exceeding Rs. 5 lacs, are considered for evaluation as prior-period items. In our opinion, the said accounting policy is not in accordance with the generally accepted accounting principles in India and the same should be evaluated on aggregation of all prior period transactions of similar nature irrespective of individual transaction values, for possible adjustment/disclosure in the financial statements. The consequential impact of the adjustment, if any, on the income, expense and loss for the year is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

28. As reported by 14 circles and detailed in note 10(a) to the financial statements, these circles have not identified units covered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act, 2006’) and hence disclosures as required under the MSMED Act, 2006 is presently not ascertainable. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

29. The disclosure requirements of the Revised Schedule VI of the Companies Act, 1956 has not been properly adhered to in the presentation and disclosure of financial statements of the Company in respect of classification of assets/liabilities into current and non-current and secured and unsecured, wherever applicable; categorisation of assets/liabilities into appropriate accounting captions; changes in inventory; non-disclosure of consumption of stores and spares; consumption of imported and indigenous stores and spares parts; capital and other commitments and expenditure and earnings in foreign currency. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

30. As reported by auditors of 10 circles, compliances with regard to deposition, deduction, reconciliation of service tax and tax deducted at source are pending to be made. In the absence of specific details, we are unable to comment on its consequential impact, if any, on the financial statements. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

31. As detailed in notes (1) and (2) of the Cash Flow Statement, certain assumptions have been made for the purpose of preparation of the Cash Flow Statement. In the absence of the appropriate details, we are presently unable to ascertain the impact, if any, on the adjustments/


103

disclosures in the Cash Flow Statement. This was also a subject matter of qualification in our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Qualified Opinion

32. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors, except for the effects/possible effects of the matters described in the Basis for Qualified Opinion paragraph the financialstatementsgivetheinformationrequiredbytheActinthemannersorequiredandgive a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2014;

ii) in the case of Statement of Profit and Loss, of loss for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that

date.

Emphasis of Matter

33. We draw attention to note 14 to the financial statements of the Company regarding investments in ITI Limited aggregating to Rs. 20,000 lacs as at 31 March 2014. The management, based on the factors mentioned in the said note, believes that the diminution in the value of investments is temporary in nature and hence no provision in respect of aforementioned amount has been madeintheaccompanyingfinancialstatement.Ouropinionisnotqualifiedinrespectofthismatter.

Report on Other Legal and Regulatory Requirements

34. As requiredby theCompanies (Auditor’sReport)Order,2003 (the ‘Order’) issuedby theCentral Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

35. AsrequiredbySection227(3)oftheAct,wereportthat: a. Except for the effects/ possible effects of the matters described in the para 6, 7, 8, 9, 10,

11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26(i), 26(v) and 30 of Basis of Qualified Opinion paragraph, we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the effects/ possible effects of the matters described in the para 6, 8, 9, 11, 12, 13, 14, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26(i), 26(iii), 26(iv), 26(v), 26(vi), 27 and 29 of Basis of Qualified Opinion paragraph, in our opinion, proper books of accountasrequiredbylawhavebeenkeptbytheCompanysofarasappearsfromourexaminationofthosebooksandproperreturnsadequateforthepurposesofouraudithave been received from branches not visited by us. The circle Auditor’s Reports have been forwarded to us and have been appropriately dealt with;

c. We have received the reports on the accounts of the circle offices audited under section 228 by other auditors and have appropriately dealt with these while forming our audit opinion.

d. Except for the effects/ possible effects of the matters described in the Basis of Qualified Opinion paragraph, the financial statements dealt with by this report are in agreement

104

with the books of account and with the audited returns received from the Circles; e. Except for the effects/ possible effects of the matters described in the Basis of Qualified

Opinion paragraph, in our opinion, the financial statements comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013; and

f. Since, the Company is a Government Company, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 regarding obtaining written representations from the directors of the Company, is not applicable to the Company in terms of notification no. GSR-829(E), issued by Ministry of Corporate Affairs, dated 21 October 2003.

Other Matter

36. We did not audit the financial statements of 47 circles and balances pertaining to the corporate office, which reflect total assets (including intra/inter circle remittances) of Rs. 4,999,244 lacs as at 31 March 2014; total revenues of Rs. 2,722,823 lacs and net cash inflows aggregating to Rs. 5,173 lacs for the year then ended. The financial statements of the aforementioned 47 circles have been audited by other auditors whose reports have been furnished to us by the management, and our opinion on the financial statements of the Company for the year then ended to the extent they relate to the financial statements not audited by us as stated in this paragraph is based solely on the audit reports of the other auditors. Our opinion is not qualifiedinrespectofthismatter.

37. Thisreportiseffectiveasof29August2014.Certainsubsequenteventsorcircumstancesmayhave occurred between the auditors' report date of the respective circles of the Company and that of this audit report. Such events or circumstances could significantly affect the accompanying financial statements or the related disclosures forming part of these financial statements of the Company. In the absence of sufficient appropriate audit evidence in respect of the other circles, the impact of adjustments, if any, or disclosures to be included in these financial statements of the Company cannot be ascertained.

For Walker Chandiok & Co LLP(formerly Walker, Chandiok & Co)Chartered AccountantsFirmRegistrationNo.:001076N/N500013

Sd/-per Atul SeksariaPartnerMembership No. 86370

Place: New DelhiDate: 29 August 2014


105

Annexure to the Independent Auditors’ Report of even date to the members of Bharat Sanchar Nigam Limited on the financial statements for the year ended 31 March 2014

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us, the books of account and other records examined by us in the normal course of audit and basedontheauditreportsofauditorsofallthecircles,wereportthat:

(i) (a) TheCompanyhasmaintainedproperrecordsshowingfullparticulars,includingquantitativedetails and situation of fixed assets except in case of 27 circles, where such records have not been appropriately maintained.

Further, one of the circles of the Company does not have any fixed assets. Accordingly, the provisions of clause 4(i) of the order, in respect of this circle, are not applicable.

(b) In case of 12 circles, the fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion,thefrequencyofverificationofthefixedassetsisreasonablehavingregardtothesize of the Company and the nature of its assets in respect of these circles.

However in case of 2 circles, the physical verification has not been completed and in case of 14 circles, the fixed assets have not been physically verified by the management during the year. Further, in the case of 18 circles, the management has furnished the certificate of physical verification of fixed assets but no documentary evidence was provided. Hence in respect of all these circles, we are unable to comment on the discrepancies, if any, which could have arisen on such verification. In our opinion, the frequency of verification of the fixed assets is also not reasonable having regard to the size of the Company and nature of its assets in respect of these circles.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) In case of 22 circles, the management has conducted physical verification of inventory at reasonable intervals during the year. Further, 7 circles do not carry any inventory and accordingly the provisions of clause 4 (ii) of the order are not applicable in respect of these circles.

In case of 7 circles, the inventory has not been verified by the management during the year and owing to lack of adequate information at 12 circles, we are unable to comment on the provisions of clause 4 (ii) of the order in respect of these circles.

(b) In case of 8 circles, the procedures of physical verification of inventory followed by the managementarereasonableandadequateinrelationtothesizeoftheCompanyandthenature of its business.

However, the inventory of 7 circles, have not been verified by the management during the year and owing to no documentation/inadequate documentation provided in case of 26 circles, we are unable to comment on the procedures of physical verification and reasonableness thereof.

(c) In case of 13 circles, proper records of inventory are being maintained and no material discrepancy between physical inventory and book records were noticed on physical verification.

Further, 28 circles are not maintaining proper records of inventory. We are, therefore, unable to comment on the discrepancies which could have arisen between physical inventory and book records.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable.

106

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, in case of 15 circles, there is an adequate internal control systemcommensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these activities.

However, in case of 33 circles, the internal control system is not commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Out of these circles, 7 noticed continuing failures to correct major weaknesses in the internal control system.

(v) The Company has not entered into any contracts or arrangements referred to in Section 301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

(vii) The Company has an internal audit system, the scope and coverage of which, in our opinion, requires to be further enhanced to be commensurate with its size and the nature of its business.

(viii) The auditors of the 3 manufacturing circles have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act in respect of Company’s products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, no detailed examination of the cost records with a view to determine whether they are accurate or complete has been done for the Company as a whole.

Further, in case of the remaining circles, the cost records are in the process of being prepared at the corporate level and hence, we are unable to comment on the completeness and accuracy of the same.

(ix) (a) Subject to our comments in para 30 in the basis of qualified opinion paragraph of the audit report, 40 circles are regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further 7 circles have generally been regular in depositing such dues, though there has been a slight delay in few cases. One circle has not been regular in depositing such dues and there have been significant delays in a large number of cases.

Further, in case of 41 circles, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable. Undisputed amounts payable in respect of 2 circles, which were outstanding at the year-end for a period of more than six months from the date they became payable are set out in appendix I to our report and in respect of 5 circles, such undisputed amounts payable has not been ascertained.

(b) Subject to our comments in para 30 in the Basis of Qualified Opinion paragraph of the audit report, in respect of 12 circles, there are no dues in respect of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute and incase of 36 circles, there


107

are dues outstanding in respect of income-tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess on account of any dispute, the said information has been detailed in appendix II to our report.

(x) In our opinion, the company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the immediately preceding financial year; however, in the current financial year, the Company has incurred cash losses.

(xi) The Company has no dues payable to a financial institution or debenture-holders during the year. Accordingly, the provisions of clause 4(xi) of the Order are not applicable in respect of financial institution and debenture holders. In our opinion, the Company has not defaulted in repayment of dues to banks during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

(xvi) The Company did not have any term loans outstanding during the year. Accordingly, the provisions of clause 4(xvi) of the Order are not applicable.

(xvii) In our opinion and based upon examination of the books of account and utilization of funds of the Company on an overall basis, funds raised on short-term basis, prima facie, have been used for long-term purposes.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit except in the case of 8 circles. Out of which 4 circle auditors have reported inventory and cash embezzlements aggregating to Rs. 242.05 lacs, further 4 circles have reported on frauds being done by the employees of the company aggregating to Rs. 314.83 lacs.

For Walker Chandiok & Co LLP(formerly Walker, Chandiok & Co)

Sd/- Chartered Accountantsper Atul Seksaria FirmRegistrationNo.:001076N/N500013Partner MembershipNo.:86370

Place: New DelhiDate: 29 August 2014

108

Bhar

at S

anch

ar N

igam

Lim

ited

App

endi

x I r

efer

red

unde

r C

ARO

[Cla

use-

4(ix

)(a)]

for

the

year

end

ed 3

1 M

arch

201

4O

utst

andi

ng s

tatu

tory

due

s as

on

31 M

arch

201

4 fo

r th

e pe

riod

of m

ore

than

6 m

onth

s fr

om th

e da

te th

ey b

ecom

e pa

yabl

e

S. N

oC

ircl

e na

me

Nam

e of

sta

tute

Nat

ure

of d

ues

Am

ount

(Rs.

in la

cs)

1BR

BAIT

TSe

rvic

e Ta

x A

ctSe

rvic

e Ta

x 6

86

2U

P W

est

Wor

k C

ontra

ct T

ax A

ctW

ork

Con

tract

Tax

188

3

TTC

Jaba

lpur

Serv

ice

Tax

Act

Serv

ice

Tax

8

Tota

l88

2

Notes:

1)

As

per

the

repo

rt of

the

audi

tors

’ of t

he M

adhy

a Pr

ades

h ci

rcle

, val

ue a

dded

tax

(‘VA

T) c

olle

cted

by

som

e un

its o

n sa

le o

f ten

der

form

s ha

s no

t bee

n de

posi

ted

with

the

Gov

ernm

ent a

nd is

pay

able

for m

ore

than

6 m

onth

s fro

m th

e da

te th

ey b

ecam

e pa

yabl

e.

2)

The

stat

utor

y du

es o

utst

andi

ng fo

r a

perio

d of

mor

e th

an 6

mon

ths

have

not

bee

n as

certa

ined

, in

the

abse

nce

of d

etai

ls, i

n ca

se o

f NE-

II, H

imac

hal

Prad

esh,

And

aman

& N

icob

ar a

nd C

hatti

sgar

h ci

rcle

s as

repo

rted

by th

e re

spec

tive

circ

le a

udito

rs.

3)

TheHaryanacirclehasnotdepositedservicetaxrecoveredfromvendorsandcontractorsonliquidateddamagesandthesamehasnotbeenascertained

by th

e ci

rcle

aud

itors

.

4)A

s pe

r the

repo

rt of

the

circ

le a

udito

rs o

f Tas

k Fo

rce

Guw

ahat

i, U

ttara

ncha

l, Te

leco

m S

tore

s C

alcu

tta a

nd W

est B

enga

l ser

vice

tax

paya

ble

by th

e C

ompa

ny

as s

ervi

ce re

cipi

ent u

nder

reve

rse

char

ge m

echa

nism

has

not

bee

n pa

id b

y th

e C

ompa

ny ti

ll th

e da

te o

f aud

it.


109

Bhar

at S

anch

ar N

igam

Lim

ited

App

endi

x II

ref

erre

d un

der

CA

RO [C

laus

e - 4

(ix)

(b)]

for

the

year

end

ed 3

1 M

arch

201

4St

atut

ory

dues

not

dep

osite

d on

acc

ount

of d

ispu

tes

as o

n 31

Mar

ch 2

014

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

1BI

HA

R TE

LEPH

ON

ES

Fina

nce

Act

, 199

4Se

rvic

e ta

x

164

20

01 -

02 to

200

5

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

263

2002

- 03

to 2

005

126

2005

- 06

to 2

006

43

2004

- 05

to 2

005

257

2003

- 04

to 2

006

1,01

0 20

03 -

04 to

200

6 - 0

71,

286

2001

- 02

to 2

006

- 07

504

2001

- 02

to 2

005

- 06

67

2006

- 07

to 2

007

- 08

378

2002

- 03

to 2

006

- 07

122

20

07 -

2008

733

20

02 -

03 to

200

5 - 0

6 2

37

2001

- 02

to 2

005

- 06

464

20

00 -

01 to

200

4 - 0

5 1

,241

20

05 -

2006

245

20

03 -

04 to

200

5 - 0

6 2

44

2003

- 04

to 2

006

- 07

830

20

01 -

02 to

200

6 - 0

7 7

88

2002

- 03

to 2

005

- 06

698

20

06 -

07 to

200

7 - 0

8 2

,348

20

01 -

02 to

200

5 - 0

6 1

03

2006

- 07

148

20

07 -

08 to

200

8 - 0

9 1

,883

20

05 -

06 to

200

7 - 0

8 2

12

2005

- 06

to 2

007

- 08

Hig

h co

urt

Sale

s ta

x/En

try ta

xEn

try ta

x 1

39

2004

- 20

05H

igh

cour

t 2

53

2008

- 20

09 2

8 20

09 -

10 to

201

0 - 1

1

Sale

s ta

x 4

90

2005

- 20

06 2

7 20

08 -

09Jo

int c

omm

issi

oner

app

eal

Empl

oyee

pro

vide

nt

fund

Act

Prov

iden

t fun

d 8

Ju

ly 2

002

to F

ebru

ary

2004

Empl

oyee

pro

vide

nt fu

nd c

omm

issi

oner

Bha

galp

ur 7

7 20

05 -

2006

Hig

h co

urt,

Patn

a 3

M

arch

02

to Ja

nuar

y 05

Empl

oyee

pro

vide

nt fu

nd a

ppel

late

trib

unal

Tota

l15

,418

2C

HEN

NA

I TE

LEPH

ON

ES

Fina

nce

Act

, 199

4Se

rvic

e ta

x 2

18

Com

mis

sion

er o

f ser

vice

tax

Inco

me

tax

Act

, 196

1Ta

x de

duct

ed a

t sou

rce

38

Com

mis

sion

er o

f inc

ome

tax

appe

alPr

ovid

ent f

und

Act

Empl

oyee

pro

vide

nt fu

nd d

ues

438

Se

p-10

Hig

h co

urt o

f Che

nnai

Tota

l 6

94

110

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

3U

TTA

RAN

CH

AL

TELE

CO

MS

Uttr

akha

nd T

rade

tax

Act

, 194

8Tr

ade

tax

5

2004

- 20

05

Join

t Com

mis

sion

er (a

ppea

l) ta

x 1

4 20

06 -

07 2

8 20

07 -

08 5

20

04 -

05 1

,270

20

08 -

09A

ssis

tant

Com

mis

sion

er, t

ax R

ishi

kesh

12

2000

- 01

Ass

ista

nt C

omm

issi

oner

, tax

Har

idw

ar 5

20

05 -

06 3

8 20

06 -

07 2

5 20

07 -

08A

ssis

tant

com

mis

sion

er, c

omm

erci

al ta

x, H

arid

war

25

2008

- 09

Ass

ista

nt c

omm

issi

oner

, com

mer

cial

tax,

Har

idw

ar 2

5 20

09 -

10A

ssis

tant

com

mis

sion

er, c

omm

erci

al ta

x, H

arid

war

14

2010

- 11

Ass

ista

nt c

omm

issi

oner

, com

mer

cial

tax,

Har

idw

ar

Fina

nce

Act

, 199

4Se

rvic

e ta

x 6

7 20

07 -

2008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew

Del

hi 8

0 20

04 -

05 to

200

6 - 0

7A

ssis

tant

com

mis

sion

er, s

ervi

ce ta

x, M

eeru

tTo

tal

1,6

13

4U

P-W

EST

TELE

CO

MS

Empl

oyee

pro

vide

nt

fund

dep

artm

ent

Empl

oyee

pro

vide

nt fu

nd

agai

nst c

ontra

ct w

orks

14

14

2000

- 20

01C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

D

elhi

Arb

itrat

ion

act

Civ

il W

orks

14

2013

Dis

ctric

t jug

de N

aini

tal

Arb

itrat

ion

act

Civ

il W

orks

5

2011

Hig

h co

urt A

llaha

bad

Sale

s ta

x A

ctEn

try ta

x 1

08

1990

- 20

05A

llahb

ad ,

Hig

h co

urt

Inco

me

tax

Act

, 196

1Ta

x de

duct

ed a

t sou

rce

22

2008

- 09

Com

mis

sion

er o

f Inc

ome

tax

Agr

aPe

nalty

tax

dedu

cted

at s

ourc

e 1

7 20

08 -

09C

com

mis

sion

er o

f Inc

ome

tax

Agr

aTa

x de

duct

ed a

t sou

rce

15

15

2009

- 10

Com

mis

sion

er o

f inc

ome

tax

(app

eal)

Entry

tax

act

Entry

tax

55

- 20

05 -

06 &

06

- 07

Hig

h co

urt A

llaha

bad

Entry

tax

139

2

8 20

07 -

08Jo

int C

omm

issi

oner

(app

eal)

tax

Sale

s ta

x 7

37

140

20

05 -

06 &

200

6 - 0

7H

igh

cour

t Alla

haba

dSa

les

tax

276

5

5 20

07 -

08Jo

int C

omm

issi

oner

(app

eal)

tax

Entry

tax

Act

Entry

tax

1

2003

- 04

Alla

hbad

, H

igh

cour

t 2

8 1

1 20

04 -

2005

Com

mer

cial

tax

tribu

nal,

G.B

. Nag

ar 1

3 20

03 -

2004

Alla

hbad

, H

igh

cour

t 1

9 20

04 -

2005

Alla

hbad

, H

igh

cour

t

Inco

me

tax

Act

,196

1Pe

nalty

tax

dedu

cted

at s

ourc

e 3

1 20

05 -

2006

Inco

me

tax

appe

llate

trib

unal

16

2006

- 20

07In

com

e ta

x ap

pella

te tr

ibun

al

Sale

s ta

x A

ctSa

les

tax

40

7

2003

- 20

04A

llahb

ad ,

Hig

h co

urt

13

2004

- 20

05A

llahb

ad ,

Hig

h co

urt

1

2002

- 20

03tra

de ta

x tri

buna

l 2

87

227

19

98 -

1999

to 2

003

- 200

4Jo

int C

omm

issi

oner

(app

eal)

2

2003

- 20

04Jo

int C

omm

issi

oner

app

eal

Fina

nce

act,

1994

Serv

ice

tax

217

Ju

ne 0

3 to

Dec

embe

r 03

Cen

tral e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al

Serv

ice

tax

26

Oct

ober

00

to S

epte

mbe

r 01

Cen

tral e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al


111

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Fina

nce

act,

1994

Serv

ice

tax

60

Janu

ary

03 to

Nov

embe

r 03

Com

mis

sion

er e

xcis

e an

d se

rvic

e ta

x

Inco

me

tax

act,1

961

Tax

dedu

cted

at s

ourc

ePub

lic

call

offic

e C

omm

isio

n 6

0 4

2 20

02 to

200

3C

omm

issi

oner

of I

ncom

e ta

x (a

ppea

l)

Entry

tax

Act

Entry

tax

35

2000

to 2

005

Hig

h co

urt,

Alla

hbad

Entry

tax

Act

25

2000

to 2

001,

200

1 to

20

02Tr

ade

tax

auth

ority

Sah

aran

pur

Fina

nce

act,

1994

Serv

ice

tax

125

A

ugus

t 02

to Ja

nuar

y 03

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

xFi

nanc

e ac

t, 19

94 8

03

110

Ju

ly 9

4 to

Mar

ch 9

8C

omm

issi

oner

(app

eal)

Sale

s ta

x A

ctW

ork

Con

tract

tax

Pena

lty 1

,543

3

86

2005

to 2

006

to 2

008

to

2009

Add

ition

al C

omm

issi

oner

(app

eal)

grad

e 2

Sale

s ta

x ac

tPe

nalty

267

20

09 to

10,

2011

to 1

2C

omm

issi

oner

(app

eal)

Sale

s ta

x 7

6 19

87 to

200

3C

omm

issi

oner

(app

eal)

1

2004

to 0

5M

embe

r trib

unal

trad

e ta

x, A

gra

UPT

TU

PTT

162

20

03 to

200

5A

llaha

bad

, Hig

h co

urt

Inco

me

tax

act,1

961

Tax

dedu

cted

at s

ourc

eSal

es o

f Re

char

ge

11

2009

to 1

0In

com

e ta

x ap

pella

te tr

ibun

al

Trad

e ta

x ac

tTr

ade

tax

48

2003

to 0

4Tr

ade

tax

tribu

nal,

Agr

a 5

0 2

0 20

04 to

05

2

2006

to 0

7

UP

act,2

007

Entry

tax

5

2000

to 0

1,20

01 to

02

,200

2 to

03

Ass

ista

nt c

omm

issi

oner

trad

e ta

x, E

TAW

AH

5

2007

to 0

8

Fina

nce

act,1

994

Cen

vat C

redi

tTow

er M

ater

ial

153

20

06 to

07,

2007

to 0

8C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

D

elhi

Inco

me

tax

act,

1961

Tax

dedu

cted

at s

ourc

e 1

20

06 to

07

ITO

(Tax

ded

ucte

d at

sou

rce

and

Surv

ey A

LIG

ARH

) 9

20

08 to

200

9In

com

e ta

x ap

peal

trib

unal

, Agr

a

Arb

itrat

ion

act

Civ

il W

ork

23

2005

to 0

6SR

I D.S

. Des

hwal

CE(

C) B

SNL,

New

Del

hi 2

20

12 to

13

SRI D

.S. D

eshw

al C

E(C

) BSN

L, N

ew D

elhi

2

2008

Dis

ctric

t jug

de, M

orad

abad

38

2008

Dis

ctric

t jug

de, M

orad

abad

Sale

s ta

x ac

tSa

les

tax

0*

1999

to 2

000

Add

ition

al C

omm

issi

oner

(app

eal)

grad

e-2

0*

2000

to 0

1 1

20

03 to

04

1

2004

to 0

5Sa

les

tax

act

Trad

e ta

x 8

8 6

20

09 to

10

Alla

haba

d , H

igh

cour

tIn

com

e ta

x ac

tta

x de

duct

ed a

t sou

rce

21

5

2007

to 0

8 to

200

9 to

10

Inco

me

tax

appe

llate

trib

unal

New

Del

hiA

rbitr

atio

n ac

tC

ivil

Wor

k 1

6 20

08 to

09

to 2

011

to 1

2D

isct

rict j

ugde

, Mee

rut

Sale

s ta

x ac

tSa

les

tax

124

1

24

1977

to 7

8 to

200

4 to

05

trade

tax

tribu

nal (

Bare

illy

and

Join

t Com

mis

sion

er

trade

tax

(Bar

eilly

)In

com

e ta

x A

ct, 1

961

Tax

dedu

cted

at s

ourc

e 1

6 1

6 20

04 to

05

Inco

me

tax

appe

llate

trib

unal

Sale

s ta

x ac

tSa

les

taxr

enta

ls 1

32

132

19

89 to

200

5H

igh

cour

t, A

llahb

ad

Inco

me

tax

act,

1961

Tax

dedu

cted

at s

ourc

e Sa

les

of R

echa

rge

Cou

pon

15

15

2009

to 1

0C

omm

issi

oner

of i

ncom

e ta

x( a

ppea

l)

Arb

itrat

ion

act

Civ

il W

ork

8

- 20

08 to

09

to 2

011

to 1

2D

isct

rict j

ugde

, Mee

rut

Tota

l 6

,022

1

,353

112

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

5

JHA

RKH

AN

DFi

nanc

e ac

t, 19

94Se

rvic

e ta

x

2,9

28

Oct

ober

200

3 to

Dec

embe

r 20

03C

omm

issi

oner

(app

eal)

326

20

05 to

06

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Kolk

ata

39

2006

to 2

007

653

A

pril

2005

to N

ovem

ber

2006

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

2,5

52

Apr

il 03

to S

epte

mbe

r 03

Com

mis

sion

er (a

ppea

l)

1,6

74

Oct

ober

200

3 to

Se

ptem

ber 2

008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Kolk

ata

64

Oct

ober

200

8 to

Mar

ch

2010

Com

mis

sion

er o

f Cen

tral e

xcis

e an

d se

rvic

e ta

x

913

19

99 to

200

0C

omm

issi

oner

(app

eal)

13

2007

to 0

8A

ssis

tant

Com

mis

sion

er, D

hanb

ad

263

20

05 to

06

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x C

omm

issi

oner

403

20

01 to

200

6Su

prem

e co

urt

412

A

pril

2004

to M

arch

200

6C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ko

lkat

a 8

6 A

pril

2006

to M

arch

201

0Ra

nge

offic

e, Ja

msh

edpu

r

263

O

ctob

er 2

008

to M

arch

20

10C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ko

lkat

a 1

,180

20

00 to

200

5C

omm

issi

oner

(app

eal)

238

D

ecem

ber 2

005

to

Aug

ust2

009

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x C

omm

issi

oner

7

2004

to 0

5C

omm

issi

oner

(app

eal)

6

Apr

il 20

02 to

Oct

ober

20

03C

omm

issi

oner

(app

eal)

259

O

ctob

er 2

003

to M

arch

20

08C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Com

mis

sion

erTo

tal

12,

277

Karn

atak

aFi

nanc

e ac

t, 19

94

Serv

ice

tax

on P

ublic

cal

l of

fice

22

Janu

ary

2008

to M

arch

20

09Jo

int c

omm

issi

oner

Cen

tral e

xcis

e, M

anga

lore

Serv

ice

tax

Pena

lty a

nd

Inte

rest

22

Janu

ary

2008

to M

arch

20

09Jo

int c

omm

issi

oner

Cen

tral e

xcis

e, M

anga

lore

Serv

ice

tax

on P

ublic

cal

l of

fice

10

Apr

il 20

09 to

May

200

9A

dditi

onal

com

mis

sion

er C

entra

l exc

ise,

Mys

ore

Serv

ice

tax

on P

ublic

cal

l of

fice

143

Ja

nuar

y 20

08 to

June

201

0C

usto

m e

xcis

e an

d se

rvic

e ta

x A

ppel

late

trib

unal

, Ba

ngal

ore

Serv

ice

tax

on P

ublic

cal

l of

fice

58

Janu

ary

2008

to D

ecem

ber

2008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Bang

alor

eSe

rvic

e ta

x Pe

nalty

and

In

tere

st 5

8 Ja

nuar

y 20

08 to

Dec

embe

r 20

08C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ba

ngal

ore

Serv

ice

tax

on P

ublic

cal

l of

fice

57

Mar

ch 2

008

to M

arch

200

9C

usto

m e

xcis

e an

d se

rvic

e ta

x A

ppel

late

trib

unal

, Ba

ngal

ore


113

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Prof

essi

onal

tax

on T

elep

hone

s ex

chan

ge a

nd C

usto

mer

Se

rvic

e C

entre

39

Apr

il 20

05 to

Mar

ch 2

011

Dha

rwar

d, H

igh

cour

t

Serv

ice

tax

on P

ublic

cal

l of

fice

203

Ja

nuar

y 20

08 to

Mar

ch

2009

Cus

tom

exc

ise

and

serv

ice

tax

App

ella

te tr

ibun

al,

Bang

alor

e

Serv

ice

tax

25

Nov

embe

r 200

5 to

June

20

06C

usto

m e

xcis

e an

d se

rvic

e ta

x A

ppel

late

trib

unal

, Ba

ngal

ore

Prof

essi

onal

tax

on T

elep

hone

s ex

chan

ge a

nd C

usto

mer

Se

rvic

e C

entre

61

Apr

il 20

03 to

Mar

ch 2

009

Ass

ista

nt c

omm

issi

oner

of c

omm

erci

al ta

xes,

M

anga

lore

132

Fi

led

appe

al w

ith K

AT,

Ban

galo

re to

get

bac

k th

e am

ount

pai

d.

Serv

ice

taxI

UC

34

Apr

il 20

04 to

Mar

ch 2

005

Cus

tom

exc

ise

and

serv

ice

tax

appe

llate

trib

unal

, Ba

ngal

ore

Serv

ice

tax

on P

ublic

cal

l of

fice

9

Janu

ary

2008

to Ju

ne 2

009

Com

mis

sion

er (a

ppea

l) of

Cen

tral e

xcis

e,C

usto

m a

nd

serv

ice

tax,

Man

galo

re.

Serv

ice

tax

Pena

lty a

nd

Inte

rest

9

Janu

ary

2008

to Ju

ne 2

009

Paym

ent O

f Ser

vice

Cha

rges

O

n Pr

oper

ty 3

9 A

pril

08 to

Mar

ch 1

1Ka

rnat

aka

, Hig

h co

urt

Serv

ice

tax

on P

ublic

cal

l of

fice

7

Dec

embe

r 200

8 to

Se

ptem

ber

200

9C

omm

issi

oner

of C

entra

l exc

ise,

Mys

ore

Serv

ice

tax

on P

ublic

cal

l of

fice

127

D

ecem

ber 2

007

to A

ugus

t 20

10C

omm

issi

oner

(app

eal)

of C

entra

l exc

ise,

Cus

tom

and

se

rvic

e ta

x, M

anga

lore

Serv

ice

tax

on P

ublic

cal

l of

fice

9

Febr

uary

08

to N

ovem

ber

08C

omm

issi

oner

of C

entra

l exc

ise

(app

eal),

Man

galo

re

6

Dec

embe

r 08

to M

arch

09

Chi

ef c

omm

issi

oner

of e

xcis

e an

d cu

stom

s, M

ysor

e

6

Apr

il 09

to S

epte

mbe

r 0

9A

dditi

onal

com

mis

sion

er o

f exc

ise

and

cust

oms,

M

ysor

e 5

O

ctob

er 0

9 to

Mar

ch 1

0C

omm

issi

oner

of C

entra

l exc

ise

(app

eal),

Man

galo

reIn

tere

stEX

CES

S re

fund

7

Apr

il 09

to M

arch

10

Com

mis

sion

er o

f Cen

tral e

xcis

e (a

ppea

l)Se

rvic

e ta

x on

Pub

lic c

all

offic

e 2

A

pril

01 to

Mar

ch 0

4C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ba

ngal

ore

Serv

ice

tax

on P

ublic

cal

l of

fice

29

Janu

ary

08 to

Mar

ch 1

0C

omm

issi

oner

(app

eal)

of C

entra

l exc

ise,

Cus

tom

and

se

rvic

e ta

x, M

anga

lore

Serv

ice

tax

on P

ublic

cal

l of

fice

26

Janu

ary

08 to

June

09

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Bang

alor

e

33

Febr

uary

09

to D

ecem

ber

09C

omm

issi

oner

(app

eal)

of C

entra

l exc

ise,

Cus

tom

and

se

rvic

e ta

x, M

anga

lore

Serv

ice

tax

Pena

lty a

nd

Inte

rest

26

Janu

ary

08 to

June

09

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Bang

alor

e

Serv

ice

tax

on P

ublic

cal

l of

fice

50

Febr

uary

08

to M

arch

10

Com

mis

sion

er (a

ppea

l) of

Cen

tral e

xcis

e C

usto

m a

nd

serv

ice

tax,

Man

galo

re

3

Apr

il 10

to Ju

ly 1

0D

eput

y C

omm

issi

oner

of C

entra

l exc

ise

Cus

tom

and

se

rvic

e ta

x, G

ulba

rga

114

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Cen

vat c

redi

t ru

les,

2004

Seriv

ce T

ax 3

5 M

arch

96

to D

ecem

ber 9

7Ka

rnat

aka

, Hig

h co

urt

Inte

rest

on

Seriv

ce T

ax 1

D

ecem

ber 9

4 to

Mar

ch 0

2C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

C

henn

ai C

enva

t cre

dit

9

May

05

to M

ay 0

6C

omm

issi

oner

of C

entra

l exc

ise

(app

eal),

Man

galo

re

Cen

vat c

redi

texc

ise

duty

1

Apr

il 09

to S

epte

mbe

r 0

9A

dditi

onal

com

mis

sion

er o

f exc

ise

and

cust

oms,

M

ysor

e

Cen

vat c

redi

texc

ise

duty

440

Ju

ly 0

8 to

Mar

ch 0

9C

usto

m e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al,

Bang

alor

e

Cen

vat c

redi

texc

ise

duty

22

Nov

embe

r 07

to Ju

ne 0

8C

usto

m e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al,

Bang

alor

e

Cen

vat c

redi

texc

ise

duty

119

S

epte

mbe

r 0

4 to

Sep

tem

ber

06

Cus

tom

exc

ise

and

serv

ice

tax

appe

llate

trib

unal

, Ba

ngal

ore

Cen

vat c

redi

texc

ise

duty

150

A

ugus

t 07

to O

ctob

er 0

7C

usto

m e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al,

Bang

alor

ePe

nalty

for N

on-s

ubm

issi

on o

f EM

F Ra

diat

ion

Nor

ms

0*

2013

to 1

4Ta

x de

duct

ed a

t sou

rce

Cen

vat C

redi

t 6

A

ugus

t 09

to A

ugus

t 10

Add

ition

al C

omm

issi

oner

of C

entra

l exc

ise,

Mys

ore

Cen

vat C

redi

t 3

A

pril

2004

to M

arch

200

5C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ba

ngal

ore

Inco

me

tax

act,

1961

Tax

dedu

cted

at s

ourc

ePub

lic

call

offic

e 6

9 A

pril

03 to

Mar

ch 0

7C

omm

issi

oner

(app

eal)

of In

com

e ta

x, H

ubli

Non

Ded

uctio

n O

f Tax

de

duct

ed a

t sou

rceO

n C

omis

sion

101

A

pril

05 to

Mar

ch 0

8C

omm

issi

oner

of I

ncom

e ta

x, H

ubli

Tax

dedu

cted

at s

ourc

e Pu

blic

ca

ll of

fice

173

A

pril

03 to

Mar

ch 0

7C

omm

issi

oner

(app

eal)

of In

com

e ta

x, H

ubli

Prof

essi

onal

tax

on T

elep

hone

s ex

chan

ge a

nd C

usto

mer

Se

rvic

e C

entre

33

Apr

il 20

05 to

Mar

ch 2

010

Ass

ista

nt c

omm

issi

oner

of c

omm

erci

al ta

xes,

Hub

li

Loca

l pro

perty

tax

act

Prop

erty

taxt

ower

s 1

2 Ja

nuar

y 09

to D

ecem

ber 0

9Ka

rnat

aka

, Hig

h co

urt

Prop

erty

taxt

ower

100

Ja

nuar

y 09

to D

ecem

ber 0

9Ka

rnat

aka

, Hig

h co

urt

Karn

atak

a co

mm

erci

al ta

x

Prof

essi

onal

taxt

elep

hone

ex

chan

ge a

nd c

usto

mer

se

rvic

e ce

ntre

s 8

A

pril

04 to

Mar

ch 0

5A

ssis

tant

Com

mis

sion

er o

f com

mis

sion

erER

CA

IL ta

xes,

D

avan

gere

e

Prof

essi

onal

tax

on T

elep

hone

s ex

chan

ge a

nd C

usto

mer

Se

rvic

e C

entre

35

Apr

il 06

to M

arch

11

ASS

ITTA

NT

Com

mis

sion

er o

f com

mer

cial

taxe

s,

BELG

AU

M 4

2 A

pril

01 to

Mar

ch 0

4D

harw

ard

, Hig

h co

urt

Tota

l 2

,616


115

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

7RA

JAST

HA

N

Cen

vat c

redi

t rul

es,

2004

Cen

vat c

redi

t 4

20

08 to

200

9D

y. C

omm

issi

oner

Jaip

urSe

rivce

Tax

and

Inte

rest

and

pe

nalty

ther

eupo

n 5

20

01 to

200

6C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

D

elhi

Cen

vat c

redi

t 3

8,88

3 20

11C

omm

issi

oner

app

eal-I

, Cen

tral e

xcis

e, Ja

ipur

Fina

nce

act,1

994

Seriv

ce T

ax 8

20

10Ra

jast

han

, Hig

h co

urt,

Jaip

ur b

ench

, Jai

pur

Non

-PA

YMEN

T of

Ser

ivce

Tax

on

IUC

1

2006

Cen

vat c

redi

t rul

es,

2004

Cen

vat c

redi

t TA

KEN

ATD

RA

ISED

23

2006

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

Entry

tax

act

Entry

tax

1

2005

to 2

006

Tax

boar

d, Ja

ipur

Fina

nce

act,

1994

Serv

ice

tax

112

20

03 to

200

4C

omm

issi

oner

of C

entra

l exc

ise,

Jaip

urC

enva

t cre

dit r

ules

, 20

04Ex

cise

dut

y 1

3 20

09 to

201

0A

dditi

onal

com

mis

sion

er o

f Cen

tral e

xcis

e, Ja

ipur

Entry

tax

act

Entry

tax

71

2005

to 2

006

Raja

stha

n , H

igh

cour

t, Ja

ipur

Entry

tax

act

Entry

tax

4

2009

Raja

stha

n , H

igh

cour

t

Fina

nce

act,1

994

Dem

andS

eriv

ce

TaxI

NFR

AST

RUC

TURE

22

2008

to 2

009

Raja

stha

n , H

igh

cour

t, Ja

ipur

ben

ch, J

aipu

r

Fina

nce

act,

1994

Serv

ice

tax

36

2008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew

Del

hi

Fina

nce

act,

1994

Serv

ice

tax

14

2005

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew

Del

hi

Fina

nce

act,1

994

Serv

ice

tax

17

2005

to 2

008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew

Del

hi 1

20

09 to

201

0Jo

int C

omm

issi

oner

Cen

tral e

xcis

e Ja

ipur

Cen

vat c

redi

t rul

es,

2004

Cen

vat c

redi

t 4

20

09 to

201

0

Entry

tax

act

Entry

tax

17

2008

to 1

3Ra

jast

han

, Hig

h co

urt

Fina

nce

act 1

994

Serv

ice

tax

20

2008

to 1

3A

DJ-I

I Jai

pur

Fina

nce

act 1

994

Serv

ice

tax

30

2007

to 0

9C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

New

D

elhi

Entry

tax

act

refu

nd E

ntry

tax

21

Apr

il 05

to M

arch

09

, Hig

h co

urt J

aipu

rC

enva

t cre

dit r

ules

20

04C

enva

t Dis

allo

wan

ce 1

6 20

13co

mm

issi

oner

(app

eal-I

) Jai

pur

Empl

oyee

pro

vide

nt

fund

act

REC

OV

ERY

EXC

ESS

Inte

rest

cr

editE

D IN

SU

BSC

RIBE

R A

CC

OU

NT

17

2011

to 1

2Em

ploy

ee p

rovi

dent

fund

App

ella

te tr

ibun

al N

ew

Del

hi

Cen

vat c

redi

t rul

es

2004

Cen

vat A

VA

ILED

LY

321

20

08 to

12

Raja

stha

n , H

igh

cour

t Jai

pur

Sale

s ta

x ac

tSA

LE ta

x 2

20

04 to

05

Cen

tral e

xcis

e co

mm

issi

oner

Jaip

urFi

nanc

e ac

t 199

4Se

rvic

e ta

x 6

20

12 to

13

RAJ.

tax

boar

d Ja

ipur

Cen

vat c

redi

t rul

es

2004

Cen

vat c

redi

t dis

allo

wed

14

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x N

ew

Del

hiEn

try ta

x ac

tEn

try ta

x 2

1 Ra

jast

han

, Hig

h co

urt

116

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Cen

vat c

redi

t rul

es

2004

Dis

allo

wan

ce c

redi

t 2

8 20

13 to

14

com

mis

sion

er C

entra

l exc

ise

jaip

ur

Fina

nce

act 1

994

Serv

ice

tax

38

2012

to 1

3C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

New

D

elhi

Cen

vat c

redi

t rul

es

2004

Cen

vat c

redi

t 2

02

2002

to 1

1C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

New

D

elhi

Cen

vat c

redi

t rul

es

2004

Dis

allo

wan

ce o

f Cen

vat c

redi

t 1

3 20

05 to

08

Raja

stha

n , H

igh

cour

t

Fina

nce

act 1

994

App

eal f

or re

fund

1

2012

to 1

3C

omm

issi

oner

app

eal-I

I Jai

pur

Inco

me

tax

act 1

961

Inte

rest

Tax

dedu

cted

at

sour

cere

fund

8

2004

to 0

5In

com

e ta

x ap

peal

trib

unal

Jaip

ur

Inco

me

tax

act 1

961

Shor

t ded

uctio

n ta

x de

duct

ed

at s

ourc

e 1

20

11 to

13

Com

mis

sion

er In

com

e ta

x ap

peal

Jaip

ur

Fina

nce

act 1

994

Serv

ice

tax

87

2010

to 1

1C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

New

D

elhi

Serv

ice

tax

act

Dis

allo

wan

ceSe

rivce

Tax

2

2011

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x N

ew

Del

hiSe

rvic

e ta

x ac

tSe

rvic

e ta

x 2

,166

20

06 to

12

Com

mis

sion

er C

E Ja

ipur

Cen

vat c

redi

t rul

esEx

cise

dut

y 1

3 C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

New

D

elhi

Fina

nce

act 1

994

Cen

vat c

redi

t 1

93

2005

to 2

008

Com

mis

sion

er a

ppea

l-I C

usto

m a

nd C

entra

l exc

ise

Jaip

ur

Serv

ice

tax

act

Seriv

ce T

ax 4

20

09C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

New

D

elhi

Tota

l 4

2,46

0

8PU

NJA

B

Cen

vat c

redi

t ru

les,

2004

Cen

vat c

redi

t 3

2 20

04 to

05

& 2

005

to 0

6Tr

ibun

al

Sale

s ta

x ac

tSt

ate

Punj

ab V

/s U

BI 4

6 19

91 to

96

Punj

ab a

nd H

arya

na ,

Hig

h co

urt

Empl

oyee

pro

vide

nt

fund

act

Empl

oyee

pro

vide

nt fu

nd a

ct 1

4 20

02 to

200

4Pu

njab

and

Har

yana

, H

igh

cour

t

Sale

s ta

x ac

tV

ATb

oard

ban

d 1

49

2007

to 0

8

Serv

ice

tax

Cen

vat c

redi

ttow

ers

31

2005

to 0

6 to

200

7 to

08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x N

ew

Del

hi C

enva

t cre

dit

7

Apr

il 06

to S

epte

mbe

r 06

Punj

ab a

nd H

arya

na ,

Hig

h co

urt

Rate

Diff

eren

ce 2

6 A

pril

06 to

Sep

tem

ber 0

6

Seriv

ce T

ax 1

,108

O

ctob

er 0

2 to

Sep

tem

ber

03

Empl

oyee

pro

vide

nt

fund

act

Empl

oyee

pro

vide

nt fu

nd 3

3 Fe

brua

ry 2

002

to Ju

ne

2004

Empl

oyee

pro

vide

nt fu

nd

asse

ssed

con

tract

labo

ur 1

4 Em

ploy

ees’

pro

vide

nt fu

nd a

ppel

late

trib

unal

New

D

elhi

Serv

ice

tax

Serv

ice

tax

592

10

-Sep

-14

Dep

uty

com

mis

sion

erSe

rvic

e ta

xSe

rvic

e ta

x 1

0 O

ctob

er 0

5 to

Janu

ary

08Jo

int c

omm

issi

oner

(P a

nd V

)


117

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Serv

ice

tax

Adj

ustm

ent E

XCES

S PA

ID 1

4 O

ctob

er 0

6 to

Mar

ch07

tribu

nal

Cen

vat C

R. u

tilis

atio

n 8

7 20

06 to

07

& 0

7 to

08

Cen

tral e

xcis

e an

d se

rvic

e ta

x N

.Del

hi C

enva

t CR.

util

isat

ion

29

Oct

ober

08 to

Mar

ch09

Cen

tral e

xcis

e an

d se

rvic

e ta

x N

.Del

hiEm

ploy

ee p

rovi

dent

fu

nd a

nd M

isc

Prov

isio

ns a

ctN

on-P

AYM

ENT

5

June

2002

to F

ebru

ary2

005

The

Ass

ista

nt c

omm

issi

oner

, Em

ploy

ee p

rovi

dent

fu

nd(A

mrit

sar)

Indi

an e

lect

ricity

act

19

10D

eman

d ar

rear

s 1

5 Ja

nuar

y 12

to S

epte

mbe

r 1

3C

hief

Eng

inee

r (A

mrit

sar)

Punj

ab m

inic

ipal

act

19

11H

ouse

tax

3

1998

to 9

9 &

200

3 to

04

Punj

ab a

nd H

arya

na ,

Hig

h co

urt

Serv

ice

tax

Ava

ilmen

t Cen

vat c

redi

t 1

20

07 to

08

& 0

8 to

09

com

mis

sion

er (s

ervi

ce ta

x)Se

rvic

e ta

xSe

rvic

e ta

x 2

1 20

07 to

08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

xTo

tal

2,2

36

9TA

MIL

NA

DU

Fina

nce

act,

1994

Serv

ice

tax

79

2009

to 2

010

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, S

EZ,

Che

nnai

116

20

08 to

200

9C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

SEZ

, C

henn

ai

934

C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

SEZ

, C

henn

ai

387

20

10 to

201

1C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

SEZ

, C

henn

ai

265

Se

ptem

ber

04

to M

arch

08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, S

EZ,

Che

nnai

7

2002

to 2

005

EP N

O 1

8/20

11=

HC

129

20

11C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

SEZ

, C

henn

aiIn

com

e ta

x ac

t,196

1Ta

x de

duct

ed a

t sou

rce

1,9

19

2011

to 1

2C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Tric

hyTo

tal

3,8

35

10C

HA

TTIS

GA

RHFi

nanc

e ac

t, 19

94Se

rvic

e ta

x

17

2006

to 2

007

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, D

elhi

68

2006

to 2

007

16

2005

to 2

006

1

2007

to 2

009

14

2007

to 2

009

67

2009

to 2

010

625

19

94 to

200

0 3

0 20

00 to

200

4 4

6 20

04 to

200

5

Serv

ice

tax

Cen

tral E

xcis

e 6

5 20

04 to

200

8 1

4 20

04 to

200

7To

tal

962

118

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

11W

EST

BEN

GA

L

Sale

s ta

x ac

tSa

les

tax

on te

leph

one

serv

ices

867

20

03 to

200

4ap

pella

te a

utho

rity

(Com

mis

sion

er)

Serv

ice

tax

act

Serv

ice

tax

14

2003

to 2

004

Com

mis

sion

er o

f ser

vice

tax

27

2011

to 2

012

Com

mis

sion

er o

f ser

vice

tax

Gen

eral

pro

vide

nt

fund

and

oth

ers

Gen

eral

pro

vide

nt fu

nd a

nd

othe

rs 2

6 20

07 to

200

8D

OT-

CEL

L/C

BI

Inco

me

tax

act,

1961

Inte

rest

31

2007

to 2

008

Inco

me

tax

depa

rtmen

t 3

8 20

08 to

200

9 4

9 20

09 to

201

0

Tax

dedu

cted

at s

ourc

e 1

12

2009

to 2

010

Inco

me

tax

depa

rtmen

t 2

20

10 to

201

1W

est B

enga

l ent

ry ta

xEn

try ta

x 1

67

2013

to 1

4C

omm

issi

oner

of s

ales

tax

Tota

l 1

,334

12TF

KO

LKA

TAC

entra

l exc

ise

act

1944

Exci

se d

uty

188

20

08 to

09

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x 3

2

009

to 1

0 C

omm

issi

oner

(app

eal-1

) Kol

kata

156

20

11 to

12

178

20

12 to

13

Com

mis

sion

er o

f Cen

tral e

xcis

e, K

olka

ta-V

412

20

07 to

08

App

ella

te a

utho

rity

6

2009

to 1

0 0

* 20

10 to

11

288

20

12 to

13

Com

mis

sion

er c

entra

l exc

ise

67

2013

to 2

014

Tota

l 1

,299

13TF

MU

MBA

ID

epar

tmen

t of s

ales

ta

x

Tax,

Pen

alty

& In

tere

st

16

1989

to 1

990

Dep

uty

Com

mis

sion

er o

f sal

es ta

x 4

19

90 to

199

1

Mah

aras

htra

trib

unal

26

1991

to 1

992

128

19

92 to

199

3 2

2 19

94 to

199

5 1

73

1995

to 9

6 4

20

00 to

01

2

2001

to 0

2 1

4 20

02 to

200

3 1

7 20

03 to

04

82

2004

to 0

5 2

9 20

06 to

07

28

2007

to 0

8

Cen

tral s

ales

tax

45

2002

to 0

3 2

64

2003

to 0

4 5

74

2004

to 0

5 9

83

2,0

47

2007

to 0

8


119

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Cen

tral b

oard

of

exci

se a

nd c

usto

ms

Tax,

pen

alty

and

inte

rest

75

Feb

ruar

y 20

08 to

July

20

08

Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

98

Aug

ust 2

008

to M

arch

20

09

63

Apr

200

9 to

Dec

embe

r 20

09

63

Janu

ary

2010

to S

epte

mbe

r 20

10

50

Oct

ober

201

0 to

July

201

1 A

dditi

onal

Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

39

Aug

ust 2

011

to M

arch

20

12

Join

t Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

601

A

pr 2

006

to S

epte

mbe

r 2

010

Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

86

Oct

ober

201

0 to

Aug

ust

2011

C

omm

issi

oner

(Cen

tral e

xcis

e, M

umba

i)

43

Sep

tem

ber

201

1 to

Mar

ch 2

012

Join

t Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

47

201

0 to

201

1 A

dditi

onal

Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

133

A

pr 2

007

to Ja

nuar

y 20

08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x M

umba

i 1

31

201

0 to

201

1 1

50

Apr

201

2 to

Janu

ary

2013

Jo

int C

omm

issi

oner

(Cen

tral e

xcis

e, M

umba

i)

135

F

ebru

ary

2013

to

Dec

embe

r 201

3 C

omm

issi

oner

(Cen

tral e

xcis

e, M

umba

i)

0*

Oct

ober

201

2 to

Se

ptem

ber

201

3 A

dditi

onal

Com

mis

sion

er (C

entra

l exc

ise,

Mum

bai)

Tota

l 6

,172

15J &

K (A

SK)

Jam

mu

and

Kash

mir

gene

ral s

ales

tax

act,1

962

Sale

s ta

x D

eman

d

331

20

02 to

200

3

Com

mis

sion

er o

f sal

es ta

x, Ja

mm

u 5

02

2003

to 2

004

900

20

04 to

200

5 7

23

2005

to 2

006

421

20

06 to

200

7

Fina

nce

Act

Serv

ice

tax

dues

540

20

05 to

200

9C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

, New

D

elhi

Tota

l 3

,417

16G

UJA

RAT

Bom

bay

stam

p ac

tSt

amp

duty

and

pen

alty

472

1

18

2007

Guj

arat

, H

igh

cour

t

Fina

nce

act,1

994

Cen

vat d

isal

low

ed &

Inte

rest

&

pen

alty

1,4

78

Apr

il 20

04 to

July

200

9C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Ahm

edab

ad

21

Oct

ober

200

7 to

N

ovem

bere

mbe

r 201

1C

omm

issi

oner

of s

ervi

ce ta

x

594

A

ugus

t 200

9 to

Mar

ch

2010

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x A

hmed

abad

120

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

372

A

pril

2010

to D

ecem

ber

2010

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x A

hmed

abad

Serv

ice

tax

Inte

rest

& p

enal

ty 1

29

Guj

arat

, H

igh

cour

t

Inco

me

tax

act,

1961

Tax

dedu

cted

at s

ourc

e 2

4 20

08 to

09

Inco

me

tax

appe

llate

trib

unal

Raj

kot

15

2009

to 1

0

Fina

nce

act,1

994

Ser

vice

tax

from

DO

TST

syst

em d

isal

low

ed 1

,814

20

06 to

07

to 2

010

to 1

1C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Ahm

edab

ad

Fina

nce

act,1

994

Cen

vat d

isal

low

ed &

Inte

rest

an

d pe

nalty

40

Oct

ober

200

5 to

Mar

ch

2007

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x A

hmed

abad

Tota

l 4

,959

1

18

17A

ND

HRA

PR

AD

ESH

And

hra

Prad

esh

Goo

ds a

nd s

ervi

ces

tax

act

Sale

s ta

x

4,2

79

2002

to 2

003

Supr

eme

cour

t of I

ndia

803

20

03 to

04

4,2

69

2004

to 0

5 1

5,14

4 20

05 to

08

4,2

65

2008

to 0

9 4

,167

20

09 to

10

Fina

nce

act,1

994

Cen

vat c

redi

t, C

MTS

1,0

76

2003

to 0

8

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Bang

alor

e

20

2006

to 0

8 9

5 20

08 to

10

304

20

10 to

11

283

20

11 to

12

Exem

pted

ser

vice

s

566

20

05 to

06

531

20

01 to

11

270

20

05 to

12

69

2004

to 0

9C

omm

issi

oner

app

eal

Adj

ustm

ent S

T-N

LR 1

20

06 to

07

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Bang

alor

eC

enva

t cre

dit

1,1

27

2005

to 1

0To

tal

37,

270

18N

.E.-I

Fina

nce

act,

1994

Serv

ice

tax

16

Febr

uary

200

4 to

N

ovem

ber 2

006

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Kolk

ata

123

A

pril

2008

to O

ctob

er

2008

Empl

oyee

pro

vide

nt

fund

act

Empl

oyee

pro

vide

nt fu

nd d

ues

93

2012

to 1

3G

uwah

ati ,

Hig

h co

urt

Tota

l 2

32

19N

TPD

elhi

sal

es ta

x ac

tD

eman

d ag

ains

t the

com

pany

23

2001

to 2

002

Add

ition

al c

omm

issi

oner

- II N

ew D

elhi

Utta

r Pra

desh

Sal

es

tax

act

26

2012

to 1

3C

omm

issi

oner

(app

eal)-

trad

e ta

x

Tota

l 5

0


121

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

20U

P-EA

ST

UP

Trad

e ta

x ac

t, 19

48Tr

ade

tax

1

1987

to 1

988

Hig

h co

urt,

Alla

haba

d 2

19

88 to

198

9 3

19

89 to

199

0 5

20

03 to

200

4D

eput

y C

omm

issi

oner

, tra

de ta

x, K

anpu

r 7

31

Apr

il 08

to D

ecem

ber 0

8 3

07

2008

to 0

91s

t app

eal

16

2004

to 2

005

Supr

eme

cour

t of I

ndia

41

2002

to 2

005

trade

tax

tribu

nal

62

2004

to 2

005

Dep

uty

com

mis

sion

er, A

llaha

bad

53

2003

to 2

005

Add

ition

al c

omm

issi

oner

II, J

aunp

ur

6

2003

to 2

004,

200

4 to

20

05D

eput

y C

omm

issi

oner

, tra

de ta

x, Jh

ansi

1

2000

to 2

004

Hig

h co

urt,

Luck

now

97

1995

to 1

996,

200

2 to

20

05 2

,447

1

,067

Fina

nce

act,

1994

Serv

ice

tax

80

2005

to 2

009

Ass

ista

ntT.

Com

mis

sion

er 1

20

04 to

200

7

1

June

07

to S

epte

mbe

r 0

7 6

62

2005

to 2

008

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x, N

ew

Del

hi 1

1 20

04 to

200

5 2

00

2006

to 2

009

115

20

03 to

06

22

2003

to 0

6H

igh

cour

t, A

llaha

bad

7

2009

Com

mis

sion

er C

entra

l exc

ise

44

2002

to 0

3C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

D

elhi

Entry

of g

oods

into

lo

cal a

reas

Entry

tax

359

20

06 to

07

Supr

eme

cour

t of I

ndia

7

2000

to 2

001

Supr

eme

cour

t of I

ndia

1

1999

to 0

0Su

prem

e co

urt o

f Ind

ia 6

20

04 to

05

Supr

eme

cour

t of I

ndia

Mun

icip

al ta

xes

Hou

se T

ax 7

20

12 to

13,

13 to

14

Can

tone

men

t Boa

rdU

P V

AT

act 2

008

Trad

e Ta

x 2

31

Tota

l 6

,591

21M

ahar

asht

ra

Oct

roi t

axBa

nk G

uara

ntee

290

20

06 to

200

8Th

e H

igh

cour

t, M

umba

i, A

uran

gaba

d be

nch

MV

AT

act,2

005

Purc

hase

tax

49

2007

to 2

008

Sale

s ta

x ap

pella

te tr

ibun

al, M

umba

iIn

tere

st o

n Se

rivce

tax

9

2002

CBE

C, N

ew D

elhi

Serv

ice

tax

on p

ublic

cal

l of

fice

269

19

99 to

200

6C

BEC

, New

Del

hi

Inte

rest

on

Seriv

ce ta

x 3

8 20

02C

omm

issi

oner

of e

xcis

e an

d se

rvic

e ta

x, R

atan

agiri

Inte

rest

on

Seriv

ce ta

x 2

20

05C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

M

umba

i

122

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Fina

nce

act,

1994

Sho

rt pa

id S

ervi

ce ta

x 2

19

1998

to 1

999

to 2

001

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Mum

bai

Sho

rt pa

id S

ervi

ce ta

x 1

20

02 to

200

3 S

hort

paid

Ser

vice

tax

8

1998

to 1

999

Seriv

ce T

ax &

Inte

rest

824

20

01 to

200

2

Shor

t PA

ID S

ervi

ce ta

x 4

7 20

04 to

200

5C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

M

umba

i C

enva

t 1

5 20

09 to

201

0 T

he A

dditi

onal

Com

mis

sion

er o

f ser

vice

tax,

Mum

bai

Serv

ice

tax

50

2009

to 2

010

The

Add

ition

al C

omm

issi

oner

of s

ervi

ce ta

x, M

umba

iSe

rvic

e ta

x cl

aim

54

2008

to 2

009

The

Mum

bai ,

Hig

h co

urt,

Panj

im b

ench

Inte

rest

22

2005

to 2

006

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x,

Mum

bai

Inco

me

tax

act,

1961

Non

-ded

uctio

n ta

x de

duct

ed

at s

ourc

e 3

94

2002

to 2

007

The

com

mis

sion

er o

f Inc

ome

tax

(app

eal)

Non

-ded

uctio

n ta

x de

duct

ed

at s

ourc

e 1

26

2009

to 2

010

The

Mum

bai ,

Hig

h co

urt,

AU

RAN

GA

BAD

ben

ch

Shor

t ded

uctio

n ta

x de

duct

ed

at s

ourc

e 5

0 20

06 to

200

7 to

200

8 to

20

09In

com

e ta

x ap

pella

te tr

ibun

al, M

umba

i

Prov

iden

t fun

d ac

t

Prov

iden

t fun

d co

ntrib

utio

n an

d pe

natly

106

20

09 to

201

0Em

ploy

ee p

rovi

dent

fund

trib

unal

, New

Del

hi

Empl

oyee

pro

vide

nt fu

nd d

ues

cont

ract

ors

145

20

00 to

200

1 to

200

6 to

20

07Th

e , H

igh

cour

t, N

ew D

elhi

Tota

l 2

,720

22

Entry

tax

act

Entry

tax

41

June

2002

to M

arch

2003

Dep

utyc

omm

issi

oner

of c

omm

erci

al ta

x (a

ppea

l),D

IV-

I,Bho

pal

109

20

04 to

200

5M

PCT

appe

llate

boa

rd, B

hopa

l 4

8 20

06 to

200

7D

eput

y C

omm

issi

oner

of C

omm

eric

al ta

x(ap

peal

), D

IV-I,

Bho

pal

93

2005

to 2

006

480

20

01 to

200

2Su

prem

e co

urt

5

2008

to 0

9M

PCT

appe

llate

boa

rd 1

20

07 to

08

Entry

tax

IUC

0*

2003

to 2

004

Mad

hya

Prad

esh

com

mer

cial

tax

act

Mad

hya

Prad

esh

com

mer

cial

ta

x ac

t

42

Oct

ober

200

0 to

June

200

2

Dep

uty

Com

mis

sion

er o

f Com

mer

ical

tax(

appe

al),

DIV

-I, B

hopa

l

52

June

200

2 to

Mar

ch 2

003

22

2004

to 2

005

1,0

43

2006

to 2

007

29

2005

to 2

006

36

2003

to 2

004

Mad

hya

Prad

esh

com

mer

cial

tax

act

Mad

hya

Prad

esh

com

mer

cial

ta

x ac

t 7

57

2007

to 2

008

MPC

T ap

pella

te b

oard

57

2008

to 2

009

Entry

tax

45

2007

to 2

008

162

20

08 to

200

9

142

O

ctob

er 0

0 to

June

02

Dep

utyc

omm

issi

oner

of c

omm

erci

al ta

x (a

ppea

l),D

IV-

I,Bho

pal


123

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Mad

hya

Prad

esh

com

mer

cial

tax

act

Mad

hya

Prad

esh

com

mer

cial

ta

x ac

t 8

3 A

pril0

3 to

Mar

ch04

MPC

T ap

pella

te b

oard

Entry

tax

act

Ent

ry ta

x 1

20

Oct

ober

00

to Ju

ne 0

2D

eput

y C

omm

issi

oner

of C

omm

eric

al ta

x(ap

peal

) 8

3 Ja

nuar

y01

to M

arch

02

257

A

pril

2009

to M

arch

201

0V

AT

VA

T 7

5 A

pril

2009

to M

arch

201

0D

eput

y C

omm

issi

oner

of C

omm

eric

al ta

x(ap

peal

)M

isc

Tax

Mis

c Ta

x 0

* 20

01 to

02

& 2

011

to 1

2D

iffer

ent c

ourts

in M

PEm

ploy

ee p

rovi

dent

fu

ndEm

ploy

ee p

rovi

dent

fund

657

20

05 to

12

Cou

rt at

tach

men

t Em

ploy

ee p

rovi

dent

fund

aut

horit

y in

var

ious

uni

tsSe

rvic

e ta

xSe

rvic

e ta

x 2

19

2013

to 1

4co

mm

issi

oner

cus

tom

s an

d ex

cise

, Bh

opal

Mad

hya

Prad

esh

com

mer

cial

tax

act

Mad

hya

Prad

esh

com

mer

cial

ta

x ac

t 4

,282

20

01 to

02

Supr

eme

cour

t

Tota

l 8

,940

23C

ALC

UTT

AFi

nanc

e ac

t, 19

94 S

ervi

ce ta

x 3

,103

Ju

ly 1

994

to S

epte

mbe

r 1

998

Cus

tom

e ex

cise

and

ser

vice

tax

appe

llate

trib

unal

/C

omm

issi

oner

of C

entra

l exc

ise-

I

149

O

ctob

er 2

000

to S

epte

mbe

r 2

003

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

Tota

l 3

,252

24TF

- JA

BALP

UR

CEN

TRA

L EX

CIS

E ac

t, 19

44Ex

cise

41

1996

to 1

997,

1998

to

1999

,199

9 to

200

0 an

d 20

00 to

200

1 (D

OT

PERI

OD

)

Supr

eme

cour

t

88

1996

to 1

997,

1998

to

1999

,199

9 to

200

0 an

d 20

00 to

200

1 (D

OT

PERI

OD

)

Supr

eme

cour

t

197

20

07 to

200

8 to

201

0 to

20

11C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

D

elhi

361

20

06 to

200

7, 2

007

to

2008

, 200

8 to

200

9 &

2009

to

201

0A

dditi

onal

com

mis

sion

er C

entra

l exc

ise,

Bho

pal

1

2012

to 1

3D

eput

y co

mm

issi

oner

Bho

pal

MA

DH

YA P

RAD

ESH

co

mm

erci

al ta

x ac

t

Entry

tax

31

2002

to 2

003,

2003

to

2004

,200

5 to

200

6, 2

006

to 2

007

& 2

008

to 2

009

Trib

unal

, Bho

pal

33

2007

to 2

008

Trib

unal

, Bho

pal

2

2008

to 2

009

Ass

ista

nt c

omm

issi

oner

,Jab

alpu

r

VA

T

26

2005

to 2

006

Add

ition

al c

omm

issi

oner

, Bho

pal

39

2006

to 2

007

Trib

unal

, Bho

pal

31

2000

to 0

1,20

01 to

02,

20

04 to

05

to 2

008

to 0

9Tr

ibun

al B

hopa

l

124

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Cen

tral S

ales

tax

act

Sale

s ta

x

252

20

02 to

200

3,20

03 to

200

4 &

200

6 to

200

7C

omm

issi

oner

, Bho

pal

767

20

04 to

200

5,20

05 to

20

06, 2

009

to 1

0Tr

ibun

al, B

hopa

l

310

20

02 to

200

3 to

200

8 to

20

09A

ssis

tant

com

mis

sion

er ,J

abal

pur

Tota

l 2

,177

25O

RISS

AC

entra

l Exc

ise

act,

1944

Serv

ice

tax

777

20

02 to

200

4C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ko

lkat

a 1

05

2000

to 2

004

85

2000

to 2

004

Sale

s ta

x ac

tSa

les

tax

227

19

96 to

200

3Su

prem

e co

urt

Cen

tral E

xcis

e ac

t, 19

44Se

rvic

e ta

x 3

3 20

08 to

09

Com

mis

sion

er A

TE

Tota

l 1

,227

26C

ORP

ORA

TEIn

com

e ta

x ac

t,196

1In

com

e Ta

x

19

7,94

3 20

03 to

200

4H

igh

cour

t

36,

110

2004

to 2

005

9,6

84

2004

to 2

005

31,

667

2005

to 2

006

11

5,31

6 20

05 to

200

6

92,

606

2006

to 2

007

97,

095

2007

to 2

008

70,

891

2008

to 2

009

3,0

71

2010

to 2

011

Com

mis

sion

er o

f inc

ome

tax(

A)

29,7

4920

09 to

10

Inco

me

tax

appe

llate

trib

unal

62

3,42

220

11-1

2C

omm

issi

oner

of i

ncom

e ta

x(A

)

Tota

l

684,

132

27KE

RALA

Sale

s ta

x

Dis

pute

rega

rdin

g V

ATi

ssue

of

BB

mod

emre

ntal

bas

is

(Am

ount

incl

udin

g in

tere

st

upto

31.

3.20

14)

4

2009

to 1

0C

omm

erci

al ta

xes

Dep

artm

ent

Serv

ice

tax

Dis

allo

wan

ce o

f Cen

vat C

redi

t 1

,472

20

04 to

200

5C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

Ba

ngal

ore

Serv

ice

tax

and

pena

lty fo

r Pu

blic

cal

l offi

ce C

omm

issi

on 7

0 20

02 to

03

Com

mis

sion

er o

f Cen

tral e

xcis

e (a

ppea

l)

Book

kee

ping

cha

rges

OYT

de

posi

t

2

Apr

il 20

10 to

Mar

ch 2

012

Com

mis

sion

er o

f Cen

tral e

xcis

e (a

ppea

l) Er

naku

lam

0*

01/1

0/20

09 to

31/

3/20

10

0*

Apr

il 20

09 to

Oct

ober

20

09 2

A

pril

2010

to M

arch

201

2


125

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

Dis

pute

on

OYT

reba

te

1

2006

to 0

7C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

taxE

C

omm

issi

oner

of C

entra

l exc

ise,

Cus

tom

s an

d se

rvic

e ta

x (a

ppea

l) C

R Bu

ildin

g IS

Pre

ss R

oad

Coc

hin

2

2008

to 0

9 1

20

09 to

10

1

2010

to 1

1

Dis

pute

on

Shor

t pay

men

t

27

Oct

ober

200

2 to

Mar

ch

2005

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x BangaloreRs.5005478paidon13.4.2007(No:

04/2

007)

87

1/10

/200

5C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Bangalore(No:04/2008)

82

Apr

200

5 to

Mar

ch 2

006

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x Bangalore(No:09/2008)

Dis

pute

of s

hort

paym

ent

by a

vaili

ng in

elig

ible

cen

vat

cred

it

9

Apr

il 20

08 to

Aug

ust 2

008

case

pen

ding

in H

ight

Cou

rt Er

naku

lam

aga

inst

C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

orde

r dated18.1.2013(No:47/2010)

122

O

ctob

er 2

008

to M

arch

20

09

Rs. 1

0 la

khs

paid

to C

entra

l exc

ise

Triv

andr

um o

n 23

.1.2

014

as p

er th

e di

rect

ion

of C

omm

issi

oner

of

cent

ral e

xcis

e an

d se

rvic

e ta

x Ba

ngal

ore

(Am

ount

pai

d to

geth

er fo

r cas

e fo

r 19/

2011

and

4/2

012

72

Apr

il 20

09 to

Sep

tem

ber

2009

Tota

l 1

,954

28N

TRFi

nanc

e ac

t,199

4Se

rvic

e ta

x 2

7 20

04 to

200

5C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax,

New

D

elhi

Tota

l 2

7

30ET

RW

.B.V

AT

act,2

003

Val

ue a

dded

tax

31

200

6 to

200

7 Sa

les

tax

tribu

nal

11

200

7 to

08

1

201

0 to

11

Tota

l 4

4

31ST

RFi

nanc

e ac

t,199

4Se

rvic

e ta

x 4

09

June

200

7 to

Sep

tem

ber

2009

C

usto

ms,

exc

ise

and

serv

ice

tax

appe

llate

trib

unal

, C

henn

ai

3,2

29

June

200

7 to

Oct

ober

20

09

Cus

tom

s, e

xcis

e an

d se

rvic

e ta

x ap

pella

te tr

ibun

al,

Bang

alur

uTo

tal

3,6

38

32TS

CA

LCU

TTA

Cen

tral S

ales

tax

Sale

s ta

x 2

2 1

989

to 9

0 to

199

3 to

94

Hig

h co

urt,

Kolk

ata,

No.

of c

ases

#ST

-01

(Not

e 2)

and

ED

-02

resp

ectiv

ely

Pend

ing

Cou

rt C

ases

O

ther

s 1

,225

Arb

itrat

ion

Cas

es 2

85

Tota

l 1

,533

33A

ndam

an &

N

icob

arC

entra

l Exc

ise

Act

, 19

94Se

rvic

e ta

x 6

99

2003

to 2

007

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x 1

38

2007

to 2

011

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

xTo

tal

837

126

S.

No.

Cir

cle

nam

eN

ame

of s

tatu

teN

atur

e of

due

s A

mou

nt

(Rs.

in

lacs

)

Am

ount

pa

id

(Rs.

in

Lacs

)Peri

od to

whi

ch th

e am

ount

rel

ates

Foru

m w

here

dis

pute

s ar

e pe

ndin

g

34N

E II

Fina

nce

Act

, 199

4Se

vice

tax

190

20

05 to

200

6C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Tota

l 1

90

35ST

PPe

nalty

(Cus

tom

s du

ty)

Com

mis

sion

er o

f cen

tral

exci

se &

ser

vice

tax

73

Cus

tom

Dut

y

Tota

l 7

3

36H

imac

hal

Prad

esh

Inco

me

tax

Act

, 196

1Ta

x de

duct

ed a

t sou

rce

56

2005

to 0

6 to

200

7 to

08

, Hig

h co

urt S

him

la

Cen

tral e

xcis

e an

d se

rvic

e ta

xSe

rvic

e ta

x

2

2013

to 1

4C

omm

issi

oner

of C

entra

l exc

ise

(app

eal)

Cha

ndig

arh

98

2005

to 0

6 &

200

7 to

08

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x 2

20

13 to

14

Com

mis

sion

er o

f Cen

tral e

xcis

e 2

1 20

05 to

06

& 2

007

to 0

8C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Tota

l 1

79

37W

TRSe

rvic

e ta

xSe

rvic

e ta

x Bh

opal

Uni

t 1

,295

20

07 to

200

8C

omm

issi

oner

of c

entra

l exc

ise

and

serv

ice

tax

Tota

l 1

,295

38A

ssam

Serv

ice

tax

Sevi

ce ta

x 1

,687

Se

rvic

e Ta

x 5

disp

uted

ca

ses

Com

mis

sion

er o

f cen

tral e

xcis

e an

d se

rvic

e ta

x

Tota

l 1

,687

Gra

nd T

otal

86

2,52

5

* A

mou

nts

have

bee

n ro

unde

d of

f to

zero

.


127

Addendum to Director's Report:The Management replies to Independent Auditor's Report for the year 2013-14 are given below:

Audit Para Management ReplyAssets and liabilities taken over from Department of Telecommunication (‘DoT’) and the amounts receivable and payable to DoT6. As detailed in note 28, 31.1 and 31.3

to the financial statements, assets and liabilities (including contingent liabilities) taken over from DoT have been verified and valued by the management based on internal calculations and are subject to reconciliations and confirmation from DoT as regards to ownership, value and classification. The consequential impact onthe financial statements, if any, as a result of the same is presently not ascertainable. Further, subsequent adjustments made onaccount of identification and recognition of net assets is adjusted to capital reserve. This was also a subject matter of qualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Noted. The value of net additional assets identified till date of balance sheet is less than 0.50% of the provisional amount on which assets were transferred to the Company as on 01.10.2000.

7. As detailed in note 32 to the financial statements, amounts due from and to DoT included in current assets and current liabilities aggregating to Rs. 173,669 lacs (previous year Rs. 170,985 lacs) and Rs. 39,109 lacs (previous year Rs. 47,207 lacs) respectively are subject to confirmations and reconciliation. Consequently, the impactof the adjustments, if any, on the financial statements is presently not ascertainable. Thiswasalsoasubjectmatterofqualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Due to huge number of transactions especially in telecom and such other government department/ companies, it is not practically possible to confirm all of such balances. Further, this amount also includes rolling balances like GPF and employees loans and advances which get confirmed on issue of annual statement of balance to the concerned employees. The circle authorities are being instructed again to carry out reconciliation of the balance due to and due from DOT at regular intervals.

Fixed Assets8. As reported by auditors of 25 circles, Capital

work-in-progress, inter alia, includes balances pending capitalisation for long-periods of time owing to pending analysis of status, value and obtaining of commissioning certificates. The consequential impact on the capitalwork-in-progress, fixed assets, depreciation

The Circles are being instructed to capitalize the works as and when completed and put to use and depreciation provided from that date.

128

and loss for the year, if any, is presently not ascertainable. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

9. As reported by auditors of 6 circles, in the absence of information in respect of certain items of fixed assets capitalised, particularly batteries, it could not be established whether assets capitalised were on account of replacement/extension of an existing asset oradditionalacquisitionofanewassetandhencetheconsequentialimpactofthesameon the classification/value of the respective asset, depreciation and amortisation, expenses and loss for the year is presently not ascertainable. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

The concerned circles are being instructed to account for such types of transactions strictly as per accounting circulars/ instructions issued in this regard.

10. As reported by auditors of 6 circles, the leasehold land as identified and valued by the respective circles have been incorporated in the books of accounts and amortised with effect from the date of formation of the Company. Hence, in respect of the lands still not identified and/or duly incorporated in the books of accounts of the respective circles, the consequential impact on valueof fixed assets, amortisation and loss for the year is presently not ascertainable. This was alsoasubjectmatterofqualification inourprevious year’s audit report on the audited financial statements for the year ended 31 March 2013.

All leasehold/ freehold land which are known/ identified have been accounted for.

11. As detailed in note 31.2 to the financial statements, auditors of 4 circles have reported on the expired/non renewal of leases on lands on which the Company had constructed buildings. The management has not made any provision for the surrender value/written down value of the aforementioned buildings. Theconsequential impactofadjustmentonfixed assets, depreciation and amortisation and loss for the year, if any, is presently not ascertainable. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

The concerned circles are being instructed to expedite the process of getting the lease of lands renewed.


129

12. As stated in note 13(a) and 31.3 to the financial statements, fixed assets, inter alia, includes land pertaining to 25 circles, purchased/acquired on leasehold/ freehold basisthrough various authorities, the title deeds of which are yet to be executed in the name of the Company. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

The company is in the process of executing the title deeds of the lands purchased / acquired,whereverrequired.

13. As stated in note 47 to the financial statements, Telegraph and Telex services was discontinued by the Company with effect from 15 July 2013. However, assets (other than land, building, furnitures and computers) relating to the aforementioned service have not been identified, classified and valued as decommissioned asset. In the absenceofspecificdetails,theconsequentialimpact of adjustments, if any, on the financial statements is presently not ascertainable.

The services have been withdrawn from July 2013 only. Most of the circles have already decommissioned the assets used for Telegram Business. Only few circles are left where decommissioning of these assets is under process. The assets can be declared decommissioned only after following certain stipulated procedures in this regard. These assets may be useful for other services also; hence provision can be created only after completion of decommissioning process. Keeping in view the size of asset base of the company, the amount involved is meager. The appropriate action will be taken in the year 2014-15 after completion of decommissioning process.

14. The accounting policy of the Company as stated in note 2.6 to the financial statements with respect to the decommissioned assets has not been uniformly applied across all circles. In 15 circles, these are not recorded at lower of the cost or net realisable value while in certain circles, the decommissioned assets have not been appropriately adjusted from the block of fixed assets and depreciation is still being charged on such decommissioned assets. In the absence of sufficient details, we are unable to comment upon the impact of adjustment on the fixed assets, current assets, depreciation and amortisation and loss for the year, if any, arising out of the same. This was alsoasubjectmatterofqualification inourprevious year’s audit report on the audited financial statements for the year ended 31 March 2013.

The circles are being instructed to strictly adhere to the accounting instructions issued on the subject matter.

15. The following accounting treatments by the Company in respect of fixed assets and capital works-in-progress are not in accordance

130

with the provisions of Accounting Standard – 6, Depreciation Accounting; Accounting Standard - 10, Accounting for fixed assets, and Accounting Standard – 26, Intangible Assets notified vide Companies (Accounting Standards)Rules,2006:a) As detailed in note 31.6 to the financial

statements and as reported by auditors of 21 circles, the Company has not consistently adhered to capitalizing the overheads expenses specifically attributable to the capital work – in – progress but has recorded the same on estimated/fixed percentage/ proportionate/ payment basis.

Accounting policy of BSNL in this regard states that the cost includes directly related establishment and other expenses including employee remuneration and benefits, directly identifiable to the construction or creation of assets.

As explained in note no. 31.6, the administrative and establishment expenses incurred in units where project work is also undertaken are allocated to capital and revenue mainly on actual basis and on “actualman-monthspent”basisrespectively.In case, the costs are not directly attributable for e.g. administration and other associated costs where an asset is used for different projects or an employee is devoting his time to various jobs simultaneously during the month then such expenditure is divided among the different projects on the basis of ratio of actual use/actual time spent over different projects or if it is not practically possible to find such division then on an appropriate empirical ratio and accordingly decision regarding charging of the same towards CWIP or revenue heads is taken.

b) The Company capitalises the assets, as reported by auditors of certain circles, on periodic basis instead of at the ready to use date.

The concerned circles are being instructed to capitalize the works as and when completed and put to use as per the instructions already issued in this regard.

c) Accounting policies regarding capitalization, disposal, depreciation and amortization of fixed assets are not uniformly applied in case of 21 circles.

The concerned circles are being instructed to strictly adhere on the accounting policies and instructions issued from time to time.

The resultant impact of the above non compliance with the standards on the value of fixed assets, capital work-in-progress, depreciation and amortization and loss for the year is presently not ascertainable. This was also a subject matter of qualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.


131

Current Assets and Current Liabilities16. The Company does not follow a system

of obtaining confirmation and performing reconciliation of balances in respect of trade receivables, deposits with departments/companies (including Mahanagar Telecom Nigam Limited), claims recoverable from/payable to DoT (including license fees payable as detailed in note 42.1 of the financial statements) or to/ from other government departments/authorities, subscriber/customer deposit accounts, trade payable and claims payable. Due to non-availability of confirmations and reconciliations of the aforementioned account balances, we are unable to quantify the impact of theadjustments, if any, arising from reconciliation and settlement of account balances on the financial statements. This was also a subject matter of qualification in our previousyear’s audit report on the audited financial statements for the year ended 31 March 2013.

As per Industry practice, taking confirmation for trade receivables and subscribers deposits from huge subscribers’ base is neither practical nor possible.

For balances due to or due from other parties i.e. DOT, DOP, other Govt. departments/ companies etc., circles are instructed again to carry out reconciliation at regular intervals.

17. As detailed in note 18(a) to the financial statements, no adjustment has been recorded for the differences of Rs. 971 lacs (previous year Rs. 22,917 lacs) in General ledger and Subsidiary ledger in respect of trade receivables for 7 circles. Further, as reported by auditors of certain circles, there are unquantifiabledifferences between the general ledger and trial balance and accounting records pertaining to loans and advances, current assets and current liabilities. The impact on the financial statements, if any, owing to the aforementioned non-reconciliations is presently not ascertainable. This was alsoasubjectmatterofqualification inourprevious year’s audit report on the audited financial statements for the year ended 31 March 2013.

The concerned circles are being instructed to carry out the reconciliation and take necessary action to sort out the difference between the two sets of records.

18. As reported by auditor of 4 circles, there are differences in the inventory records between stores ledger and General ledger/Trial balance, the impact of the same is currently not ascertainable. This was also a subject matter of qualification in our previousyear’s audit report on the audited financial statements for the year ended 31 March 2013.

Circles are being instructed to take appropriate action immediately.

132

19. As reported by auditors of 2 circles, certain units have not applied the Company’s policy of valuation of inventory on weighted average method as stated in note 2.8 to the financial statements. The impact of the adjustment, if any, on inventory, consumption and loss for the year is presently not ascertainable. This was also a subject matter of qualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

Circles are being instructed to take appropriate action immediately.

Inter/ Intra Circle Remittance Account20. As detailed in note 33 to the financial

statements, the Inter-Circle/Unit remittance balances amounting to Rs. 86,537 lacs (previous year Rs. 102,458 lacs) are yet to be reconciled. Pending such reconciliations, the possible cumulative impact of the adjustments, if any, on assets and liabilities and the current and prior year(s) income and expenditure is presently not ascertainable. Thiswasalsoasubjectmatterofqualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

The circles are being instructed again for prompt acceptance of remittance transfer advices so that the outstanding is kept to the barest minimum possible. The reconciliation of remittance items and accounting the same under final head are continuously being done by the circles which resulted in continuous decrease in the pending remittances for last four financial years.

License Fee, Spectrum Charges, Inter Connect Usage Charges21. As detailed in note 29 to the financial

statements, the Company segregates revenue from NLD (National long distance)/ILD (International long distance) on an estimated basis instead of actual usage of pulse which consequently results in recognition of thelicense fees on an estimated basis. The impact of adjustment, if any, on the license fees

The license fee is paid on revenue share basis. The value of pulse is not constant and may also be NIL for certain tariff plans. Special tariff/ validity vouchers introduce another variable due to which pulse does not remain right factor for measuring revenue for purpose of calculating license fee. Further, license fee is now uniform across various services;

expense, recoverable/ payable from DoT and loss for the year is presently not ascertainable for the year. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

hence the effect is not material. However, the company is improving its technical capabilities to measure as accurately as possible.

Revenue22. As reported by auditors of 6 circles, the

income from recharge coupons, prepaid calling cards, internet connection cards, sanchar net cards and stock of recharge coupons and prepaid calling cards are subject to reconciliations. In the absence of

The concerned circles are being instructed to take necessary action in the matter.


133

specific details, the impact of adjustment, if any, on financial statements is presently not ascertainable. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

23. As reported by auditors of 3 circles, the revenue for the current year, inter alia, includes amounts pertaining to prior period(s). This has not been separately disclosed in the financial statements in a manner that their impact on the current year’s loss can be perceived, which is not in accordance with the notified Accounting Standard – 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. Theconsequentialimpactofadjustments,ifany, on the financial statements is presently not ascertainable.

Noted. The circles are being instructed to strictly adhere to the accounting instructions issued in this regard.

24. As stated in note 2.3-(e), (f) and (i) to the significant accounting policies, certain items of revenue are accounted for on cash basis instead of the accrual basis of recognition of revenue which is not in accordance with the generally accepted accounting principles in India. The impact of the adjustment, if any, in respect thereof on revenue, trade receivables and loss for the year is presently not ascertainable. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

Noted. Adequate disclosures are alreadygiven in the books of accounts of BSNL as requiredbyAS-1andAS-9issuedbyICAI.

Provisions and contingent liabilities25. The provisions and the disclosures with

regard to matters under litigations have been made based upon the management estimates. Based upon the report of auditors of 8 circles, sufficient and appropriate audit evidence for examining and verifying the quantum of contingent liabilities disclosedin note 42.1 to the financial statements has not been obtained. In the absence of the adequatedetailsanddocumentsandpendingtheresponsestoourconfirmationrequestsinrespect of the litigations at the corporate level, the impact of adjustments/disclosures, if any, on the financial statements is presently not ascertainable. This was also a subject matter

Most of the circles had provided the details of litigation / claims lodged or defended and contacts of the Company’s counsels to the auditors. At Corporate level also, the abovementioned details were given to auditors. The auditors had written letters to the Company’s counsels. It appears that due to professional reasons some counsels did not respond. It may also be noted that many of the legal cases are on either outstanding dues or on service/ personnel matters involving issues of employee’s career progression, inter-se seniority etc. For the cases having major implications known up to finalization of accounts, the details and contingent

134

ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

liabilities have already been shown in note to accounts. Moreover, the concerned circles arefurtheradvisedtoprovidetheadequatedetails to auditors.

Miscellaneous26. The Company has not complied in respect of

the following Accounting Standards notified vide Companies (Accounting Standards) Rules,2006:i. As reported by auditors of 11 circles,

in absence of adequate information,details and records of old, non-moving, damaged and unserviceable inventories could not be identified The adjustment, if any, on inventories, consumption and loss for the year is presently not ascertainable. This was also a subject matter of qualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

The concerned circles are being instructed to take necessary action in this regard.

ii. As detailed in note 35 to the financial statements and as reported by auditors of 13 circles, the expenses, incomes, assets and liabilities are not properly disclosed under the reportable segment as per the notified Accounting Standard 17 on Segment Reporting. In our opinion, the same does not give true and fair disclosure of the segment-wise operationsoftheCompanyasrequiredby the aforementioned accounting standard. This was also a subject matter of qualificationinourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

The disclosure of Segmental Reporting as perAS-17onSegmentReportingisrequiredat Company level only. The Segmental Reporting at Company level is disclosed on the basis of booking in respective account heads under various segments which is not affected by the figures given by circles in relevant annexure meant only for additional confirmation in segment reporting of the company.

However, the concerned circles are being instructed to give proper segregated details in the relevant annexure.

iii. As stated in note 15 to the financial statement, the Company as at 31 March 2014 has deferred tax assets (net) amounting to Rs. 23,773 lacs. Since the Company has a recent history of losses and owing to lack of virtual certainty and convincing evidence that sufficient future taxable income will be available against such deferred tax asset and as stipulated by the notified Accounting Standard-22, Accounting

As disclosed in the note no. 15(d), the company has not recognized any deferred tax assets following the notified accounting standard ‘accounting for taxes on income’, only reversal relating to deferred tax assets and deferred tax liabilities created during the earlier years have been made. Since the reversal of deferred tax liabilities are more than the newly identified deferred tax liabilities, it has resulted into increase in net deferred tax assets.


135

for taxes on income, the amount of such deferred tax asset should be written off.Consequenttotheabove,lossforthe year in the statement of profit and loss is under-stated by Rs. 23,773 lacs and the balance of deferred tax asset included under Non-Current Assets, has been overstated by the corresponding amount.

iv. The Company has not carried out any Techno-economic assessment during the year ended 31 March 2014 and hence identification of impairment loss and provision thereof, if any, has not been made. The same is not in accordance with the notified Accounting Standard 28 on Impairment of asset. The consequential impact of adjustment,if any, on the financial statements is currently not ascertainable. This was also a subject matter of qualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

The operations of BSNL are of such a nature where assets are in use 24x7. As and when any asset is found non-repairable or non-functional or obsolete, the same is decommissioned and necessary provision is being created in books of accounts. The assets are impaired as and when the necessity arises. This process is continuously followed throughout the year in each circle of BSNL

v. The accounting for capital and revenue grant in accordance with the notified Accounting Standard 12 on Accounting for grants is not followed consistently as reported by auditors of 16 circles. In the absence of specific details, the consequential impact of adjustment,if any, on the financial statements is presently not ascertainable.

The concerned circles are being instructed to strictly adhere to the accounting policies and instructions issued in this regard.

vi. The accounting policy as referred to in note 2.10(b) to the financial statements with respect to the liability on account of post-retirement medical benefits of employees including retired employees, a defined benefit plan, is recognized on actual basis in respect of bills received by the Company instead of recognizing the liability for the same as the present value of the defined benefit obligation at the balance sheet date calculated on the basis of actuarial valuation in accordance with the notified Accounting Standard – 15 on Employee Benefits. The

As per the accounting policy as disclosed, claims for medical facility received from the employees of BSNL (including retirees) up to the cutoff date of finalisation of annual accounts, are treated as liability of the company for the said financial year.

The post employment medical care extended to its retired employees as per the present policy of BSNL is more like facilities, which may be revised by the Management any time, depending upon the relevant factors prevailing at that time.

136

consequential impact of adjustment,if any, owing to this non–compliance on the financial statements is presently not ascertainable.

However, policy of medical facilities to BSNL employees (including retired employees) is under review.

Based on such review, appropriate action for provision will be taken in the forthcoming year.

27. As stated in the note 2.12 of the financial statements, only individual transactions of income/expenditure exceeding Rs. 5 lacs, are considered for evaluation as prior-period items. In our opinion, the said accounting policy is not in accordance with the generally accepted accounting principles in India and the same should be evaluated on aggregation of all prior period transactions of similar nature irrespective of individual transaction values, for possible adjustment/disclosure in the financial statements. The consequential impact of the adjustment, ifany, on the income, expense and loss for the year is presently not ascertainable. This was alsoasubjectmatterofqualification inourprevious year’s audit report on the audited financial statements for the year ended 31 March 2013.

Noted. Adequate disclosures are alreadygiven in the books of accounts of BSNL as requiredbyAS-1andAS-9issuedbyICAI.Theaccounting policy of the company is made keeping in view the size of organization and volume of high denomination transactions. It may also be noted that many organization of such size in infrastructure industry are following similar policies.

28. As reported by 14 circles and detailed in note 10(a) to the financial statements, these circles have not identified units covered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act, 2006’) and hence disclosures as requiredunder the MSMED Act, 2006 is presently not ascertainable. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013.

Noted. The concerned circles are being instructed to take necessary action.

29. Thedisclosure requirementsof theRevisedSchedule VI of the Companies Act, 1956 has not been properly adhered to in the presentation and disclosure of financial statements of the Company in respect of classification of assets/liabilities into current and non-current and secured and unsecured, wherever applicable; categorisation of assets/liabilities into appropriate accounting captions; changes in inventory; non-disclosure of consumption of stores and spares; consumption of imported and

The circles are being instructed to strictly adhere to the accounting instructions issued on the subject matter.


137

indigenous stores and spares parts; capital and other commitments and expenditure and earnings in foreign currency. This was alsoasubjectmatterofqualification inourprevious year’s audit report on the audited financial statements for the year ended 31 March 2013.

30. As reported by auditors of 10 circles, compliances with regard to deposition, deduction, reconciliation of service tax and tax deducted at source are pending to be made. In the absence of specific details, we areunabletocommentonitsconsequentialimpact, if any, on the financial statements. Thiswasalsoasubjectmatterofqualificationin our previous year’s audit report on the audited financial statements for the year ended 31 March 2013.

The concerned circles are being instructed to make necessary compliances with regard to deposition, deduction, and reconciliation of service tax and other statutory dues.

31. As detailed in notes (1) and (2) of the Cash Flow Statement, certain assumptions have been made for the purpose of preparation of the Cash Flow Statement. In the absence of the appropriate details, we are presently unable to ascertain the impact, if any, on the adjustments/disclosures in the Cash Flow Statement. This was also a subject matter ofqualification inourpreviousyear’sauditreport on the audited financial statements for the year ended 31 March 2013

Noted.

Emphasis of Matter33. We draw attention to note 14 to the financial

statements of the Company regarding investments in ITI Limited aggregating to Rs. 20,000 lacs as at 31 March 2014. The management, based on the factors mentioned in the said note, believes that the diminution in the value of investments is temporary in nature and hence no provision in respect of aforementioned amount has been made in the accompanying financial statement. Our opinionisnotqualifiedinrespectofthismatter.

Due to substantive evidence on the soundness of investment and recovery of the amount, the management does not feel there areadequate reasons todecrease thevalueof investment in preference shares of M/s ITI Ltd.

For and on behalf of the Board of Directors

Sd/-(A.N.Rai)

Chairman & Managing Director

Date:11-09-2014 BHARATSANCHARNIGAMLIMITED

138

Rep-PSU A/cs/F-86/Ann. Acctt./BSNL/2013-14/602

Date - 29/09/2014

Sd/-


139

Comments of the Comptoller & Auditor Gerneral of India under section 619(4) of the Companies Act, 1956 on the

annual accounts of Bharat Sanchar Nigam Limited for the year ended 31 March 2014.

The preparation of financial statements of Bharat Sanchar Nigam Limited, New Delhi (BSNL), for the year ended 31st March 2014 in accordance with the financial reporting frame work prescribed under the Companies Act, 1956 is the responsibility of the Management of BSNL. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 619(2) of the Companies Act, 1956 are responsible for expressing opinion on these financial statements under Section 227 of the Companies Act, 1956 based on independent audit in accordance with the Standards on auditing prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 29th August 2014.

I, on behalf of the Comptroller & Auditor General of India, have conducted a supplementary audit under Section 619(3) (b) of the Companies Act, 1956 of the financial statements of Bharat Sanchar Nigam Limited, New Delhi for the year ended 31st March 2014. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor andislimitedprimarilytoenquiriesofthestatutoryauditorandBSNLpersonnelandaselectiveexamination of some of the accounting records. Based on my supplementary audit, I would like to highlight the following significant matters under Section 619(4) of the Companies Act, 1956 which have come to my attention and which in my view are necessary for enabling a better understanding of the financial statements and the related Audit Report.

A. Balance Sheeta) Equity & Liabilities

1. Current Liabilities (Note No. 11) - Other Current Liabilities - ` 6823.63 crore

Dot, after completing provisional assessment of License fee for the years from 2006-07 to 2008-09, raised an additional demand of ` 4076.62 crore apart from ` 378.30 crore towards demand for short payment of license fee of for the year 2012-13. The Company did not provide for the same but disclosed it is a contingent liability. As the demand was based on assessment, the same should have been provided for. Non-provision has resulted in understatement of other current liabilities as well as accumulated loss by ` 4454.92 crore.

B. Statement of profit and Loss1. Expenses - Other Expenses -License and spectrum fee - ` 2243.30 crore

The does not include ` 1428.62 crore being the penalties imposed by the TERM Cell of DoT during the year 2013-14. Non-accounting of the above as expenditure for the year has resulted in understatement of expenses, Loss for the year and also Current Liabilities by ` 1428.62 crore.

2. Employee Benefit Expenses (Note No. 24) - Pension Contribution - ` 889.14 crore

The above head is understated by ` 707.03 crore due to charging of pension contribution of absorbed employees on the bases of actually drawn pay instead of on maximum pay during 2011-12, 2012-13 and 2013-14. This has also resulted in understatement of provison as well as accumulated loss by ` 707.03 crore.

140

C. General Comments1. Persistent Non-Reconciliation of balances with MTNL

As per accounts of BSNL for the year 2013-14, the amount recoverable from and the amount payable to Mahanagar Telephone Nigam Limited (MTNL) on current account have been disclosed as ` 3517.95 crore and `996.02 crore respectively resulting in net recoverable amount of ̀ 2521.93 crore from MTNL. However, as per approved annual accounts of MTNL for the year 2013-14, the amount recoverable from and the amount payable to the Company was ` 4186.04 crore and ` 1828.25 crore respectively resulting in a net recoverable amount of ` 2357.79 crore from BSNL. Thus, there was net difference of ̀ 4879.72 crore in the receivable/payable amounts between these two Government Companies under the same Ministry. This comment was raised on accounts of the Company for the year 2012-13 also. However, there is no change in the status of unreconciled balances between the Company and MTNL.

For and on the behalf of the Comptroller and Auditor General of India

Sd/- Place:Delhi (R.B. Sinha) Date:September2014 DirectorGeneralofAudit(P&T)


141

Reply to Comments of the C&AG issued under section 619 (4) of the Companies Act, 1956 on the accounts of the Company for the year ended 31 March 2014.

Para No.

C&AG Comment Reply of the Management

A BALANCE SHEET(a) Equity & Liabilities1. Current Liabilities (Note No. 11)

Other Current Liabilities – ` 6823.63 crore

DoT, after completing provisional assessment of License fee for the years from 2006-07 to 2008-09, raised an additional demand of ` 4076.62 crore apart from ` 378.30 crore towards demand for short payment of license fee of for the year 2012-13. The Company did not provide for the same but disclosed it as a contingent liability. As the demand was based on assessment, the same should have been provided for. Non-provision has resulted in understatement of other current liabilities as well as accumulated loss by `4454.92 crore.

The provisional assessment done by DOT contains various discrepancies such as non-consideration of adjustment of Rs.72.35 crores allowed by DOT vide letter no.17-20/2005-LF dated 20.03.2007 in the year 2006-07, non-allowance of inter-segment expenditure as pass through expenditure, wrong calculation of GR and AGR by accounting some revenue twice, non-allowance of deduction of excess provision written back etc. The matter has been taken up with DOT. Regarding shortfall in payment of license fee for the year 2012-13, the Company has adjusted a portion of huge amount lying under ‘Claims Recoverable from DOT’ on account of excess payment of license fee. Since the assessment has not yet been finalised, the Company has shown this demand raised by DOT as contingent liability.

B STATEMENT OF PROFIT AND LOSS1 Expenses – Other Expenses – License

and spectrum fee - ` 2243.30 crore

The does not include ` 1428.62 crore being the penalties imposed by the TERM Cell of DoT during the year 2013-14. Non-accounting of the above as expenditure for the year has resulted in understatement of expenses, Loss for the year and also Current Liabilities by ` 1428.62 crore.

These penalties have been imposed for minor procedural discrepancies like delay in submission of self certificate, improper signage / photograph etc. and not because of exceeding the EMF Radiation norms set by DOT. BSNL has taken up the matter with TERM Cell, DOT to condone these minor discrepancies. On the basis of the reply from DOT, the necessary disclosure will be made in books of account in next year.

2 Employee Benefit Expenses (Note No. 24) - Pension Contribution - ` 889.14 crore

The above head is understated by ` 707.03 crore due to charging of pension contribution of absorbed employees on the basis of actually drawn pay instead of on maximum pay during 2011-12, 2012-13 and 2013-14. This has also

The absorbed employees of BSNL are paid pension under Rule 37A of CCS Pension Rules for which pension contribution is payable as per the rates prescribed in Fundamental Rules (FR) of Govt. of India. As per FR 116, the rate of pension contribution shall be such as the President may by General Order prescribe. Accordingly vide Office memorandum dated 19/11/2009 issued by DOP&T, pension contribution shall be

142

resulted in understatement of provision as well as accumulated loss by `707.03 crore.

based on the existing basic pay of the post held by a Govt. Servant (BSNL employee are also Govt. Servant for the purpose of pension under Rule 37A) at the time of proceeding on foreign service or the upgraded pay during financial up-gradation.

As such the interpretation given by the administrative ministry does not conform to the statutory provisions and hence the case was taken up once again with DOT. The Secretary Telecom vide minutes dated 19/04/2012 permitted the BSNL Management to remit pension contribution on the maximum of the scale only for those employee who are due to retire within six months and for all others on actual basis. The Company has again taken up the matter with DoT. In this context, it is also mentioned that the stand of BSNL is conformed by DOPT also in its letter no. 6/1/2014-Estt.(Pay-II) dated 24th April 2014.

Hence, the difference amount is shown as contingent liability.

C GENERAL COMMENTS1 Persistent Non-Reconciliation of

balances with MTNL

As per accounts of BSNL for the year 2013-14, the amount recoverable from and the amount payable to Mahanagar Telephone Nigam Limited (MTNL) on current account have been disclosed as ` 3517.95 crore and ` 996.02 crore respectively resulting in net recoverable amount of ` 2521.93 crore from MTNL. However, as per approved annual accounts of MTNL for the year 2013-14, the amount recoverable from and the amount payable to the Company was ` 4186.04 crore and ` 1828.25 crore respectively resulting in a net recoverable amount of `2357.79 crore from BSNL. Thus, there was net difference of ` 4879.72 crore in the receivable/payable amounts between these two Government Companies under the same Ministry. This comment was raised on accounts

A High Level Committee has been formed by DOT vide Letter No. 10-14/2013-SU-I dated 25.06.2013 consisting representatives of DOT, MTNL and BSNL to sort out the issues with MTNL.

Upon recommendation of such High Level Committee, a MOU dated 24.09.2013 has already been signed between BSNL and MTNL to sort out the issues relating to carriage charges, IUC, infrastructure charges, roaming charges and enterprise business etc. The reconciliation is in progress. Various pending issues with MTNL are likely to be settled.


143

of the Company for the year 2012-13 also. However, there is no change in the status of un-reconciled balances between the Company and MTNL.

For and on behalf of the

Comptroller and Auditor General of India

Sd/- (R.B. Sinha)

Director General of Audit (P&T)

For and on behalf of the Board of Directors

Sd/-(A. N. Rai)

Chairman & Managing DirectorBharat Sanchar Nigam Limited

Date:29-09-2014

14th Annual Report

Documents

Transcript of 14th Annual Report