Tata Anual Report

23rd
Communicate behind a single purpose.

Taking our company, shareholders, partners and employees farther together
CMYK
Tata Communications Limited
TWENTY THIRD ANNUAL REPORT 2008-09

CONTENTS
Corporate Details .............................................................................................................. Notice .................................................................................................................................... Directors Report ................................................................................................................ Report on Corporate Governance .............................................................................. Declaration by CEO regarding Companys Code of Conduct and CEO/CFO Certification ..................................................................................................... Secretarial Responsibility Statement ......................................................................... Auditors Certificate on Corporate Governance ..................................................... Auditors Report ................................................................................................................. Balance Sheet ..................................................................................................................... Profit & Loss Account ....................................................................................................... Cash Flow Statement ....................................................................................................... Schedules ............................................................................................................................. Notes to the Accounts ..................................................................................................... Section 212 of the Companies Act, 1956, related to Subsidiary Companies Consolidated Accounts Auditors Report on Consolidated Financial Statements .................................... Consolidated Balance Sheet .......................................................................................... Consolidated Profit & Loss Account ........................................................................... Consolidated Cash Flow Statement ........................................................................... Consolidated Schedules ................................................................................................. Consolidated Notes to the Accounts ......................................................................... Board of Directors ............................................................................................................. 2 3 8 20 34 35 36 37 40 41 42 43 53 85 87 88 89 90 91 97 129
Annual General Meeting on Friday, 7 August 2009, at MC Ghia Hall, Kalaghoda Mumbai at 11.00 a.m. As a measure of economy, copies of the Annual Report will not be distributed at the Annual General Meeting. Shareholders are requested to kindly bring their copies to the meeting.
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Twenty Third Annual Report 2008-2009
CORPORATE DETAILS BOARD OF DIRECTORS (As on 30 June 2009) Mr. Subodh Bhargava (Chairman) (Independent) Mr. N. Srinath (Managing Director and Chief Executive Officer) Mr. Kishor A. Chaukar (Panatone Nominee) Mr. P. V. Kalyanasundaram (Independent) Dr. V.R.S. Sampath (Independent) Mr. Amal Ganguli (Independent) Mr. Vinod Kumar (Panatone Nominee) Mr. S. Ramadorai (Panatone Nominee) Mr. A. K. Srivastava (Government Nominee) Mr. Arun Gandhi (Panatone Nominee) Mr. H. P. Mishra (Government Nominee) Dr. Ashok Jhunjhunwala (Panatone Nominee) Mr. Satish Ranade Mr. Sanjay Baweja REGISTERED OFFICE CORPORATE OFFICE BANKERS Company Secretary & Chief Legal Officer Chief Financial Officer VSB, Mahatma Gandhi Road, Fort, Mumbai 400 001. C21& C36, G Block, Bandra Kurla Complex, Mumbai 400 098. Bank of America Citibank Inc. Deustche Bank HDFC Bank Ltd. Hongkong & Shanghai Banking Corporation Indian Overseas Bank State Bank of India Axis Bank Ltd. Vijaya Bank Messrs ANS Law Associates Messrs Mulla & Mulla and Craigie Blunt & Caroe Messrs S.B. Billimoria & Co., Chartered Accountants Messrs Sharepro Services (India) Pvt. Ltd. 13 AB, Samhita Warehousing Complex, 2nd Floor, Near Sakinaka Telephone Exchange, Andheri Kurla Road Andheri (East), Mumbai - 400 072.
LEGAL ADVISORS STATUTORY AUDITORS REGISTRARS & TRANSFER AGENTS
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NOTICE
NOTICE is hereby given that the Twenty Third Annual General Meeting of Tata Communications Limited will be held at 1100 hours on Friday, 7 August 2009, at MC Ghia Hall, Bhogilal Hargovindas Building, Second Floor, 18/20 Kaikhushru Dubash Road, Kalaghoda, Mumbai400001 to transact the following business: Ordinary Business 1. 2. 3. 4. 5. To receive, consider and adopt the Balance Sheet of the Company as on 31 March 2009, the audited Profit and Loss Account for the year ended on that date, the Auditors Report thereon and the Report of the Board of Directors. To declare dividend for the financial year 2008-2009. To appoint a Director in place of Mr. Subodh Bhargava who retires by rotation at this Annual General Meeting and being eligible offers himself for reappointment. To appoint a Director in place of Mr. Kishor Chaukar who retires by rotation at this Annual General Meeting and being eligible offers himself for reappointment. To appoint a Director in place of Mr. S. Ramadorai who retires by rotation at this Annual General Meeting and being eligible offers himself for reappointment. To appoint Dr. Ashok Jhunjhunwala as a Director liable to retire by rotation in respect of whom a notice under the provisions of section 257 of the Companies Act, 1956 has been received by the Company from a member signifying his intention to propose Dr. Ashok Jhunjhunwala as a candidate for the office of director. To consider and, if thought fit, to pass with or without modification the following as Special Resolution: RESOLVED THAT pursuant to Section 224 A and other applicable provisions, if any, of the Companies Act, 1956, M/s. S.B. Billimoria & Co., Chartered Accountants be and are hereby appointed Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to examine and audit the accounts of the Company for the financial year 2009-2010 on such remuneration as may be mutually agreed upon between the Board of Directors and the Auditors, plus reimbursement of service tax, travelling and out of pocket expenses. RESOLVED FURTHER THAT the Auditors of the Company be and are hereby authorized to carry out (either themselves or through qualified associates) the audit of the Companys accounts maintained at all its branches and establishments (whether now existing or acquired during the financial year ending 31 March 2010) wherever in India or abroad. 8. To consider and if thought fit, to pass, with or without modifications, the following as Special Resolution: RESOLVED THAT pursuant to Sections 94, 81(1A) and 16 and other applicable provisions, if any, of the Companies Act of 1956, and the Memorandum and Articles of Association of the Company, the Authorised Share Capital of the Company be increased and re-classified from Rs. 300,00,00,000 (Rupees Three Hundred Crore) divided in to 30,00,00,000 (Thirty Crore) equity shares of Rs. 10 each to Rs.2000,00,00,000 (Rupees Two Thousand Crore) divided into 100,00,00,000 (One Hundred Crores) equity shares of Rs.10 each and 100,00,00,000 (One Hundred Crores) Preference Shares of Rs.10 each with the power to the Board to decide on the extent of variation in such rights and to classify from time to time such shares into any class of shares. RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board of Directors of the Company be and is hereby authorised to take all such steps and actions and give such directions as may be in its absolute discretion deemed necessary and expedient and to settle any question that may arise in this regard. RESOLVED FURTHER THAT Clause V of the Memorandum of Association of the Company be and is hereby altered to read as follows: V. The authorised Share Capital of the Company is Rs. 2000,00,00,000/- (Rupees Two Thousand Crore) divided into 100,00,00,000 (One Hundred Crore) equity shares of Rs 10 each and 100,00,00,000 (One Hundred Crore) Preference Shares of Rs. 10 each with the power to the Board to decide on the extent of variation in such rights and to classify from time to time such shares into any class of shares, with the rights, privileges and conditions attached thereto as are provided by the Articles of Association of the Company for the time being with power to increase and reduce the
Special Business 6.
7.
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capital of the Company and to divide the shares in the capital for the time being into several classes and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for the time being be provided by the Articles of Association of the Company. 9. To consider and if thought fit, to pass, with or without modifications, the following as Special Resolution: RESOLVED THAT Article 5 of the Articles of Association of the Company be and is hereby altered to read as follows: Article 5:The authorised Share Capital of the Company is Rs. 2000,00,00,000/- (Rupees Two Thousand Crore) divided into 100,00,00,000 (One Hundred Crore) equity shares of Rs 10 each and 100,00,00,000 (One Hundred Crore) Preference Shares of Rs. 10 each with the power to the Board to decide on the extent of variation in such rights and to classify from time to time such shares into any class of shares, with the rights, privileges and conditions attached thereto as are provided by the Articles of Association of the Company for the time being with power to increase and reduce the capital of the Company and to divide the shares in the capital for the time being into several classes and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for the time being be provided by the Articles of Association of the Company. By Order of the Board of Directors Satish Ranade Company Secretary Dated : 10 July 2009 Registered Office : VSB, Fort, M.G. Road, Mumbai - 400 001. NOTES : 1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER. THE INSTRUMENT APPOINTING A PROXY SHOULD, HOWEVER, BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING. Members who hold shares in dematerialized form are requested to bring their DP ID and Client ID numbers for easy identification of attendance at the meeting. The statement of material facts pursuant to Section 173 (2) of the Companies Act, 1956, setting out the material facts in respect of the business under all items except item Nos.1 to 5 is annexed hereto. Details regarding the persons proposed to be appointed as Directors and their brief resume have been given in the annexure attached to the Notice. This may be taken as notice of declaration of dividend for 2008-2009 in accordance with Article 93 of Articles of Association of the Company in respect of dividend for that year when declared. Registers of members and transfer books of the Company shall remain closed from 24 July 2009 to 7 August 2009 (both days inclusive) for the purpose of ascertaining eligibility to dividend. The dividend as recommended by the Board of Directors, if declared at this Annual General Meeting, shall be paid on or after Wednesday, 12 August 2009. (i) to those shareholders whose names appear on the Companys Register of Members after giving effect to all valid share transfers in physical form lodged with the Registrar & Transfer Agents (R&T Agents) of the Company on or before Thursday, 23 July 2009.
2. 3. 4. 5. 6. 7.
(ii) in respect of shares held in electronic form, to those deemed members whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository
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Services (India) Limited (CDSL) as at the end of business on Thursday, 23 July 2009. In respect of shares held in demat mode, the dividend will be paid on the basis of beneficial ownership as per details to be furnished by NSDL and CDSL for this purpose. 8. Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, dividends which remain unclaimed in the unpaid dividend account for a period of seven years from the date of transfer of the same, will be transferred to the Investor Education and Protection Fund established by the Central Government. The Members and Shareholders who have not encashed their dividend warrant(s) so far for the financial year ended 31 March 2002 or any subsequent financial years are requested to make their claim to the R & T Agents of the Company. According to the provisions of the Act, no claims shall lie against the said Fund or the Company for the amounts of dividend so transferred nor shall any payment be made in respect of such claims. The summary of the unpaid dividend for the past years and the date on which the outstanding amount shall be transferred to Investor Education and Protection Fund on the dates as given in the table below. Date of AGM Balance as on 30 June 2009 (Rs.) Dividend for the year Remarks Transfer to Investor Education & Protection Fund 19 Sept 2009 2 Oct 2010 2 Oct 2011 14 Oct 2012 13 Oct 2013 2 Sept 2014 2 Sept 2015
20 August 2002 2 September 2003 2 September 2004 14 September 2005 13 September 2006 2 August 2007 2 August 2008 Total 9.
2041234.00 1404799.50 801477.00 1051229.00 885244.50 744533.50 889767.00 7818284.50
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Final Dividend Final Dividend Final Dividend Final Dividend Final Dividend Final Dividend Final Dividend
Consequent upon the introduction of Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of shares held by them in physical form. Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in duplicate (which will be made available on request) to the R & T Agents of the Company.
10. Members are requested to notify any change in their addresses immediately, in any event not later than Thursday, 23 July 2009, so as to enable us to dispatch the dividend warrants at the correct addresses: a) In case of physical shares to the R & T Agents, M/s Sharepro Services (India) Private Limited, 13 AB, Samhita Warehousing Complex, 2nd Floor, Near Sakinaka Telephone Exchange, Andheri Kurla Road, Andheri East, Mumbai-400 072. In case of shares held in demat form to their depositary participants (DPs).
b)
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Annexure to the Notice dated 10 July 2009

The Statement of Material Facts pursuant to Section 173 (2) of the Companies Act, 1956. In respect of Item No. 6 Dr. Ashok Jhunjhunwala was appointed as an additional Director on the Board with effect from 25 October 2008 under Article 66B of the Articles of Association of the Company. Pursuant to the provisions of Section 260 of the Companies Act of 1956 and under the said Article, Dr. Ashok Jhunjhunwala holds office up to the date of the forthcoming Annual General Meeting. Dr. Ashok Jhunjhunwala is eligible for appointment as a Director of the Company and the Company has, pursuant to section 257 of the Companies Act of 1956, received a notice in writing proposing his candidature for appointment. If appointed, Dr. Ashok Jhunjhunwala will act as a non-executive Director liable to retire by rotation. Necessary details regarding Dr. Jhunjhunwala and his brief resume has been given in the Annexure attached to the Notice. Keeping in view the experience and expertise, his appointment as Director of the Company is recommended. None of the directors other than Dr. Ashok Jhunjhunwala are concerned or interested in the above Resolution. In respect of Item No.7 M/s. S B Billimoria & Co., Chartered Accountants were appointed as the statutory auditors of the Company at the Twenty Second Annual General Meeting of the Company held on 2 August 2008 and hold office till the conclusion of the Twenty Third Annual General Meeting. Since the Government of India continues to hold not less than 25% of the subscribed share capital of the Company, the appointment of the statutory auditors of the Company is required to be approved by a Special Resolution pursuant to Section 224A of the Companies Act, 1956. None of the directors are interested in the Resolution. In respect of Item No.8 & 9 Presently the Authorised Capital of the Company is Rs. 300 crore while the Issued and paid-up capital is Rs. 285 crore. In view of this, it is proposed that the authorised capital be increased to Rs.2000 crore and reclassified into 100,00,00,000 (One Hundred Crore) equity shares of Rs 10 each and 100,00,00,000 (One Hundred Crore) Preference Shares of Rs. 10 each with the power to the Board to decide on the extent of variation in such rights and to classify from time to time such shares into any class of shares. Increase in authorised capital and reclassification of authorised capital require changes in the Memorandum and Articles of Association of the Company and require approval of the shareholders. According necessary resolutions have been proposed for the consideration of the shareholders. The directors recommend the Resolutions. None of the directors are interested in the Resolutions. By Order of the Board of Directors
Satish Ranade Company Secretary Dated : 10 July 2009 Registered Office: VSB, Fort M.G. Road, Mumbai - 400 001.
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Details of Directors Seeking Appointment/Re-Appointment at the 23rd Annual General Meeting

Particulars Date of Birth Date of Appointment Qualifications Mr. Subodh Bhargava 30 March 1942 15 May 2002 B.E. (Mech) Mr. Kishor Chaukar 1 August 1947 1 July 2002 BA (Eco) Karnataka University, PGDBA (Indian Institute of Management, Ahmedabad), DEA Rural Economics University of Dijon, France. Mr. S. Ramadorai 6 October 1944 28 June 2007 B.Sc.,BS in electronics from Bangalore,MS in Computer Science from University of California UCLA, USA. Dr. Ashok Jhunjhunwala 22 June 1953 25 October 2008 B.Tech degree from IIT, Kanpur, MS and Ph.D degrees from the University of Maine
Expertise in Specific Functional Area Directorships held in other Public Companies (excluding foreign and private companies)
General Management Wartsila India Limited (Chairman) Tata Steel Limited Samtel Colour Limited TRF Limited Carborundum Universal Limited GlaxoSmithKline Consumer Healthcare Limited Batliboi Limited SRF Limited Power Finance Corporation Limited Larsen & Toubro Limited Tata Motors Limited
General Management Tata Industries Limited (Managing Director) Tata Advanced Materials Limited Tata Teleservices Limited Tata Autocomp Systems Limited IDFC Private Equity Company Limited Tata Investment Corporation Limited Tata Business Support Services Limited (Chairman) Tata Petrodyne Limited TSR Darashaw Limited (Charman) Praj Industries Limited Tata Industrial Services Limited Tata Yazaki Autocomp Limited Tata Teleservices (Maharashtra) Limited(Director & Chairman) Audit Committee Tata Business Support Services Ltd - (Chairman) Tata Autocomp Systems Ltd. Tata Teleservices Ltd. Shareholders / Investor Grievance Committee Nil
General Management Tata Industries Limited Tata Consultancy Services Limited (Manaaging Director) Tata Elxsi Limited (Vice Chariman) Tata Technologies Limited (Chairman) CMC Limited (Chairman) WTI Advanced Technology Limited Hindustan Unilever Limited Piramal Healthcare Limited (Formerly known as Nicholas Piramal India Limited) C-Edge Technologies Limited Tata Teleservices (Maharashtra) Limited Computational Research Laboratories Limited
General Management Polaris Software Lab Limited Sasken Communications Technologies Limited State Bank of India 3i Infotech Limited Tata Teleservices (Maharashtra) Limited Bharat Electronics Limited Exicom Tele-Systems Ltd. Tejas Networks Limited
Memberships/Chairmanships of Committees in other Public Companies
Audit Committee Samtel Colour Limited (Chairman) Carborundum Universal Limited - (Chairman) GlaxoSmithKline Consumer Healthcare Limited (Chairman) Tata Steel Limited (Chariman) Wartsila India Limited TRF Limited SRF Limited Batliboi Limited Shareholders / Investor Grievance Committee Nil
Audit Committee Tata Technologies Limited (Chairman) Tata Elxsi Limited Hindustan Unilever Limited Shareholders / Investor Grievance Committee Tata Consultancy Services Limited
Audit Committee Sasken Communications Technologies Limited Polaris Software Lab Limited Tata Teleservices (Maharashtra) Limited (Chairman) State Bank of India Shareholders / Investor Grievance Committee Polaris Software Lab Limited
Shareholding in TCL
Nil
NIL
NIL
NIL
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DIRECTORS REPORT
Dear Shareholders, The directors are pleased to present the 23rd annual report and audited accounts of Tata Communications Limited (TCL) for the financial year ended 31 March 2009. PERFORMANCE During the year under review, your Company earned a total revenue of Rs. 39.84 billion (previous year Rs. 34.65 billion) an increase of 14.97 percent. Profit before tax for the year was Rs. 7.13 billion, (previous year Rs.4.50 billion) an increase of 58.56 percent. Profit after tax was Rs. 5.16 billion (previous year Rs. 3.04 billion) an increase of 69.46 percent. On a consolidated basis, for 2008-09, the Companys total income was Rs. 102.23 billion (previous year 85.38 billion), an increase of 19.74 percent EBIDTA was Rs. 13.50 billion (previous year 8.80 billion), an increase of 53.43 percent. Consolidated profit before tax after exceptional items was Rs. 4.23 billion (previous year 1.49 billion), an increase of 183.88 percent whereas profit before tax before exceptional items was Rs. 1.56 billion (previous year 1.60 billion), a decrease of 2.40 percent. The audited annual accounts for the year 2008-09 have been drawn up taking into account the court order approving the amalgamation of VSNL Broadband Limited, a 100% subsidiary in the nature of merger into the Company with effect from 1 March 2007. Funding During the year, your Company issued secured redeemable non-convertible debentures aggregating to Rs. 12.50 billion on a private placement basis. Out of this amount, debentures worth Rs.10.00 billion were subscribed to by one investor on a five year term. The balance debentures worth Rs. 2.5 billion were subscribed to by 16 investors comprising of different insurance companies and banks with terms ranging from five and half years to ten years. All these debentures have been rated AAA by CARE, a renowned rating agency. IDBI Trusteeship Services Limited has been appointed as the trustees for these debentures. The Trust Deeds for the above debenture issues will be available for inspection by any member, at the registered office of the Company during normal working hours 21 days before the date of the 23rd Annual General Meeting (AGM). The Company will continue to raise additional funds from banks, bond markets etc. in line with the need for maintaining sustained growth of business. Dividend The directors are pleased to recommend a dividend of Rs.4.50 per share (Rs.4.50 per share for the previous year) for the financial year ended 31 March 2009. The amount available for appropriation is Rs. 24.03 billion, out of which the Company proposes to transfer Rs. 0.5 billion to general reserves, leaving Rs. 20.99 billion to the balance sheet. OVERVIEW Over the last few years, your Company has built on its strategy to provide a range of communications services to customers in the wholesale, enterprise and retail segments. It has invested considerably in network infrastructure and service delivery capability in and out of India. Last year, the Company launched its new brand identity Tata Communications integrating the various other brands under which it had been going to market previously and this has been very well received. The Companys focussed strategy has enabled it to be one of the leading players worldwide in its major business segments, with operations in more than 50 countries. Tata Communications remains one of the top three providers of international wholesale voice services and wholesale Voice over Internet Protocol (VoIP) services and one of the largest owners and providers of submarine cable capacity in the world. The Company is a global Tier-1 Internet Services Provider (ISP) and is a major player in the growing global IP Transit market. Your Company also offers telecommunication services through its subsidiary in Sri Lanka and joint ventures/associates in Nepal and South Africa. During the year under review, the business of the Company grew with enterprises demanding more global connectivity and services, increasing broadband penetration worldwide and rich media, interactive digital content becoming more and more popular globally. The global demand for bandwidth and Internet connectivity continues to surge, giving Tata Communications the opportunity to leverage its Tata Global Network (TGN) of optical fiber undersea cables and Internet Protocol (IP) network. Your Company expects to commission additional submarine cable systems in the year 2009-10 connecting emerging markets in Asia, the Middle East and Africa to each other and onwards to Europe to meet the demands of consumer broadband, enterprise and wholesale customers over the next five to eight years. Customer Service and Operations Tata Communications has set up an extensive framework for servicing the specific needs of our customers across various market segments and geographies. We continue to focus on building long lasting relationships with our customers and business associates and to seek to lead the industry in responsiveness and flexibility. The service fulfilment, service assurance and billing functions are integrated into a single team called Customer Services and Operations. This provides the right focus and
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synergies across all customer touch points in all stages of the service life cycle and has led to significantly enhanced Customer Satisfaction across our business segments and geographies. Premature Termination Compensation of Monopoly and
The Company continues to pursue its claim for compensation consequent to the premature termination of its International Long Distance (ILD) monopoly in India. The Government of India (GOI) had allowed other players into the ILD business from 1 April 2002, terminating Tata Communications exclusivity two years ahead of schedule. It gave Tata Communications a compensation package and had given an assurance prior to disinvestment that it would consider additional compensation if found necessary on a detailed review, when undertaken. However, in February 2002, just before the disinvestment of the Company, the GoI unilaterally granted a further dispensation as full and final settlement of every sort of claim against the premature ILD demonopolisation. Tata Communications feels that the compensation is inadequate as the losses, as estimated by independent agencies at that time, were quantified at a much higher value. The Company had been pursuing the GoI to consider additional compensation and to ensure that the claim was not barred by time under The Limitation Act, 1963 , filed a claim in the Mumbai High Court in 2005 which is still to come up for arguments. Flag Arbitration Matter The damages claim filed by Reliance Globalcom Limited (earlier known as FLAG Telecom) in February 2007 in the International Chamber of Commerce (ICC) Arbitration Tribunal is now closed. On 27 August 2008, the Tribunal delivered a final award dealing with the issue of damages. According to the award, a sum of approximately US$ 19 million plus interest from May 2006 was paid against the sum of US$385 million claimed. Surplus Land Under the terms of the share purchase and shareholders agreements signed between the Government of India (GoI) and the strategic partner (parties) at the time of disinvestment by the Government in 2002, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if for any reason the Company cannot hive off or demerge the land into a separate entity, alternative courses as stipulated in the share purchase and shareholders agreement would be explored. A draft scheme of demerger was presented to the Board in April 2005, and the parties are examining the legality and feasibility of implementing the scheme. The land identified for demerger at different locations measures 773.13 acres, and carries a book value of Rs.1.64 million. It was reported last year that the VSNL Employees Co-
operative Housing Society, Chennai (Society) had moved the Honble Delhi High Court in respect of their long pending issue of transfer of 32.5 acres of land situated at Padianallur, Chennai to the Society. The division bench of the Honble High Court finally ruled in favour of the Society and the Company initiated the process of transferring the said land to the Society. The Company has received the consideration amount as determined by the court in full. The transfer process is pending and is likely to be completed shortly. In the meanwhile, the contempt petition filed by the Society against the Company is pending in the Honble Delhi High Court. The area of the land identified for demerger excluding the above 32.5 acres now measures 740.63 acres with a book value of approx. Rs. 1.63 million. HUMAN RESOURCES Tata Communications continues to focus on building the skills and capabilities of its human resources to enable them to perform effectively in a competitive market. Your Company invests in continuous training to enhance employee skills and capabilities. Tata Communications offers ample avenues to its employees to not only contribute but also learn and grow. The different corporate entities that are part of Tata Communications together employed 5,825 people as on 31 March 2009, (5,147 on 31st March 2008). Of these, 1050 (1,008 previous year) were located outside India. The workforce profile is diverse and multi-cultural with people of about 40 nations on rolls. The Company seeks to hire and retain the best talent available globally to support its business. Many work teams are geographically dispersed and employ seamless work practices in a way similar to what is prevalent in other companies with comparable global operations. At Tata Communications employees are encouraged to live the vision and values adopted by the Company. Integrity is recognized and rewarded. An employee satisfaction survey is carried out annually through an independent global agency across all our different operating locations. This year, more than 95% of the employees participated in this survey and the overall employee satisfaction score showed a healthy upward trend across all major parameters and across all geographies. The compensation and employee benefit practices of Tata Communications are designed to be competitive in the respective geographies where we operate. Employee relations continued to be harmonious across all our locations through a process of continuous dialogue and openness to find mutually acceptable solutions to issues. AWARDS AND RECOGNITION The Companys transformational initiatives are being
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recognised in India and various international markets. During the year, the Company earned several prestigious recognitions, including: o Global Telecoms Business Innovation Award for International Wholesale Infrastructure Transformation and International Network Infrastructure Transformation 2008 Telephony Award for Most Innovative Managed Service Best Market Strategy at 2008 Global Wholesale Telecommunications Awards Frost & Sullivan #1 Enterprise Data Services Provider in India 2008.
o o o
During the year, your Companys MD & CEO, Mr. N Srinath, was named as the worlds eighth most influential telecom personality by the Global Telecoms Business magazine as well as the Telecom Person of the Year by the India-based Voice and Data magazine. CONTINUOUS IMPROVEMENT Your Company continues with various internal initiatives to compete effectively, improve organisational flexibility and respond quickly to customers. Some important initiatives are: Business Excellence Your Company has been constantly transforming itself in tandem with market and regulatory changes using the framework of the Tata Business Excellence Model (TBEM) which covers areas like leadership, strategy, customer and market focus, knowledge management, human resources, process management planning, customer service and social responsibility. The Company was the first telecom service provider in the world to obtain the TL 9000 certification; the first telecom company in India to obtain the ISO 14001 certification for environment management; and the first telecom service provider in India and the world to obtain the BS 7799 and the ISO 27001 certifications respectively for information security. During the year, the Company received the ISO 27001 certification for its Managed Security Services, and the ISO 20000 and 27001 certifications for its Managed Services and Data Centres. Your Company continuously works to streamline internal processes across all its entities globally and institutionalise a culture of continuous improvement. The internal audit and revenue assurance teams actively contribute to sustaining process improvement efforts. Senior management regularly tracks implementation of ideas for improvement. Compliance with SOX Pursuant to its listing on the New York Stock Exchange, Tata Communications has been complying with section 404 of the Sarbanes Oxley Act, 2002 (SOX). SOX lays down
requirements for internal control over financial reporting and its documentation. For the current fiscal year, in addition to managements own assessment of the effectiveness of such internal control, the Companys external auditors are also required to issue an opinion on whether effective internal control over financial reporting was maintained in all material respects by the management. Revenue Assurance Revenue Assurance aims to prevent revenue leakages and ensure robust internal controls and IT processes that keep pace with increasing business complexities, thus moving towards zero tolerance of revenue leakages. Your company has recently undertaken a benchmark study to enhance revenue assurance processes and the findings will be implemented this year Enterprise Risk Management Tata Communications has established an enterprise-wide risk management (ERM) framework to optimise identification and management of risks, as well as to comply with clause 49 of the Listing Agreement. In line with your Companys commitment to deliver sustainable value, this framework aims to provide an integrated and organised approach for evaluating and managing risks. The output of this ERM exercise also forms the basis of the Companys annual internal audit programme. Risk-based Internal Audit The risk assessments performed under the ERM exercise is a key input for the annual audit plan, which covers the Companys various business and functional units. This approach provides adequate assurance to the Management by covering the appropriate areas under the audit plan. STATUTORY INFORMATION AND DISCLOSURES Fixed Deposits Tata Communications has not accepted nor does it hold any public deposits. Particulars of Employees The provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, require the Company to provide certain details about the employees who were in receipt of remuneration of not less than Rs. 24 lakhs during the year ended 31 March 2009 or not less than Rs. Two lakhs per month, during any part of the said year. The Company had 194 such employees employed during the year ended 31 March 2009. As per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report being sent to the shareholders does not include this annexure. The Annexure regarding the Particulars of Employees under section 217(2A) of the Companies Act, 1956 will be available for inspection by any members at the registered office of the Company during working hours, 21 days before the date of the AGM.
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R & D, Technology Absorption and Foreign Exchange Earnings There are no particulars to be disclosed pertaining to the year under review, in respect of Research & Development (R&D) and technology absorption as required under Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988. For the purpose of Form C under the said rules, foreign exchange earnings were equivalent to Rs.9.33 billion and foreign exchange outgo was equivalent to Rs. 10.37 billion. Auditors Report There are no qualifications in the report of the statutory auditors for the year 2008-09. Subsidiaries The statement pursuant to section 212 of the Companies Act, 1956 containing details of the Companys subsidiaries, is attached. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with accounting standard 21 (AS 21) prescribed by the Institute of Chartered Accountants of India, form part of the annual report and accounts. These documents will be provided on request to any shareholder wishing to have a copy, on receipt of such request by the deputy company secretary at the Companys registered office. These documents will also be available for inspection by any shareholder at the Companys registered office. The Board of Directors The Board of Directors of the Company consists of twelve Directors. Dr. Mukund Rajan, Director, resigned from the Board with effect from 24 June 2008. Dr. Ashok Jhunjhunwala joined the Board on 25 October 2008. In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Mr. Subodh Bhargava, Mr. Kishor Chaukar and Mr. S. Ramadorai retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment. In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Dr. Ashok Jhunjhunwala holds office only up to this Annual General Meeting; notices under the provisions of section 257 of the Companies Act, 1956 have been received by the Company from a member signifying his intention to propose Dr. Ashok Jhunjhunwala as a candidate for the office of Director. For details about the directors, please refer to Point 2 of the Report on Corporate Governance. None of the Companys directors is disqualified from being appointed as a Director as specified in Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.
Corporate Governance Pursuant to Clause 49 of the Listing Agreement with the stock exchanges, a Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance with conditions of corporate governance form a part of the directors report. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors, based on the representations received from the operating management, confirm that: In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; They have consulted the Statutory Auditors in the selection of the accounting policies and have applied them consistently and made judgements 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 of the Company for that period; They have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; They have prepared the annual accounts on a going concern basis. All Board members and senior management personnel have affirmed compliance with the stipulated code of conduct. ACKNOWLEDGMENTS The directors would like to express their thanks to the various customers and business associates of the Company around the world for their support and confidence in the Company and the services provided by it. They wish to also recognise and commend the dedication and commitment of all the employees globally. The directors appreciate the support of various Ministries and departments of the Government of India, including the Department of Telecommunications and the Information & Broadcasting Ministry as well as the Governments and regulators of the various countries in which Tata Communications operates. The directors are also grateful to the Companys other stakeholders and partners including its shareholders, bankers, solicitors and suppliers for their support. On behalf of the Board of Directors Dated: 24 June 2009 Registered Office VSB, M. G. Road, Fort, Mumbai - 400001. Subodh Bhargava Chairman
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ANNEXURE 1: MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY ANALYSIS Indian Telecom Market Over the last decade the Indian telecom industry has changed significantly, with all major segments being opened up to competition. There are several new entrants in areas the Company operates in reducing its addressable market and increasing competition. There are now more than 250 circles-based access licenses, 23 licensed NLD operators and 18 licensed ILD operators several of whom are large international companies who now have a direct presence in the country. Indias telecom market is growing rapidly and is expected to be a Rs.1,380 billion sector by 2010, contributing 5.4% to Indias gross domestic product (GDP). According to the latest figures from the Telecom Regulatory Authority of India (TRAI), during 2008-09, Indias mobile subscriber base increased approximately 58%, from 165.11 million to 261.09 million, while the fixed subscriber base declined approximately 3.26% from 40.75 million to 39.42 million. During the year, the broadband subscriber base grew by approximately 67%, from 2.34 million to 3.90 million The past year has also witnessed significant regulatory developments including changes in the access deficit charge (ADC) regime, a review of the Interconnect regime, announcements on the auction of spectrum for 3G and Broadband Wireless Access (BWA) services and recommendations by the TRAI on issues like Mobile Virtual Network Operators, Internet Telephony and Carrier Access Code (CAC)/calling cards. The past year also witnessed the announcement of Mobile Number Portability (MNP) with implementation expected to take place in the third quarter of fiscal year 2010. In summary, the telecom landscape continues to evolve and operators such as your Company will have to constantly transform themselves to remain competitive. Global Telecom Market The global telecom industry has also seen changes in the segments your Company participates in. The international wholesale voice market continues to be a business of scale, with constant pressures on prices and margins. The recent global economic downturn has further increased the pressure on prices for international voice calls. Alternate services such as portal based offerings on the Web are growing in popularity and usage. The share of mobile communications continues to grow in relation to fixed voice and there is an increasing use of Voice over Internet Protocol (VoIP) in providing services. The need for profitability in a largely commoditized market is making operators seek both scale and efficiency in their operations. Apart from driving consolidation, this could also create new business models based on greater collaboration between operators which we believe, your Company is well positioned to benefit from. The data market is also undergoing rapid changes. With the growing need for bandwidth around the world, there continues to be growth in the demand for submarine cable capacity. Several new cable systems have been announced or are being constructed in different markets such as across the Pacific, within Asia, connecting Europe and Asia and on both the east and west coasts of Africa. Availability of large capacity in line with market growth and diversity to provide continuity of services in the event of cable cuts due to acts of man or nature continue to be important drivers of this growth. The addition of these new cables present both investment opportunities as well as downward price challenges. The growth of the internet on the back of growing global broadband usage, increasing demand for multimedia services, the success of new collaboration and communications applications and the continued increase in the use of the web by both individuals and corporations is driving the demand for IP bandwidth. Growth is seen in the demand for IP Transit services in all the major geographies but prices continue to fall, thereby increasing pressures on margins. New services such as Content Distribution Networks are fast emerging as growth opportunities leveraging the increasing demand for video traffic on the web. Your company is actively rolling out these services to maintain margins and maintain volume growth. The global enterprise market has seen growing demand for network services, data center services, and value added services. While the global recession has caused delays in decision-making and deferred procurement by some customer segments, Information and Communications Technology investments by enterprises broadly continues to grow. This is motivated by the need for better engagement and service levels with their own customers, the need for higher velocity and flexibility in business, and the growth of global supply chains and markets. Industry leaders are more sharply focused on increasing the ratio of IT budgets that are applied towards competitive advantage and innovation versus basic services and compliance. Mobile VAS Whilst the Mobile industry has shown some resilience to the economical downturn, there is some concern is on revenue growth as they face the prospect of fewer new subscribers and a flat to declining ARPU. This effect is most pronounced in the established markets of Europe and North America while developing markets such as the
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Middle East, Asia and Africa have managed to maintain relatively consistent growth to date. The economic downturn has had a negative effect on business and leisure travel and a significant impact on Mobile Network Operators (MNO) roaming revenues. In many large roaming markets this has been compounded by legislated reductions in roaming rates. With MNOs increasingly focused on cost-cutting measures, it presents an opportunity for providers of cost-saving Value Added Services such as Steering of Roaming and Roaming Hubbing/Brokerage and associated services. MNOs are also rolling-out broadband HSPA/3G+ networks and Mobile Broadband is rapidly increasing its share of overall customer usage and revenue. As MNOs expand their broadband networks and subsequently their requirements for core internet connectivity, it creates new opportunities for providers of wholesale IP transit and data services. Your company is leveraging its strength in the Data Services by extending this offering to Mobile Operators. Carrier Outsourcing The new challenges in the global economy are compelling carriers to find quicker and more cost-effective ways to service their customers. While carriers in developed markets are seeking to reduce costs, carriers in emerging markets are attempting to overcome skills shortages and expedite time to market for new services or geographies. This is generating significant demand for various types of network skills as well as for process improvement and deployment capability. By leveraging its global technical expertise and the availability of highly skilled resources in India, your Company is uniquely positioned to take advantage of this emerging Transformation Services opportunity with international Carriers. Tata Communications Transformation Services, our 100% owned subsidiary has world-class Delivery Centers in Pune and Chennai. We have highly skilled telecom professionals who have wide experience across the full range of telecom services in both developed and emerging markets. With an end to end process capability coupled with domain expertise, they are working on several opportunities in Europe, N America, Middle-East and Africa. Impact of Global Economic Scenario The economic slowdown triggered by events in the USA continues to impact most markets worldwide. Most of the developed markets are in the midst of a recession and even the high-growth emerging markets like India and China are seeing a slowdown in growth rates. Sectors like banking and financial services and manufacturing have been hit most due to the financial crisis and the consequent slowdown in demand. Businesses across the world are battling to reduce costs and conserve cash; at
the same time, they are also seeking to access the growth opportunities that are still available in emerging markets in Asia, Middle East and Africa. The biggest impact this is having on your Companys business is in terms of severe price pressures from existing customers, delays in orders from some customers and more intense price based competition for new customer acquisitions. REGULATORY DEVELOPMENTS Phasing Out of Access Deficit Charge (ADC) The ADC charge applicable to long distance calls in India has been phased out during the year. This has led to a decline in the cost of terminating voice calls and in reducing the arbitrage opportunity for international incoming calls to India. AGR in TDSAT As reported earlier, in the year 2005, the Company along with several others had challenged before the Honble Telecom Disputes Settlement And Appellate Tribunal (TDSAT), the definition of gross revenue and adjusted gross revenue (AGR) as applied by the DoT for levying licence fees as being unfair and beyond the scope and powers of the DoT. It was represented that the present definition of adjusted gross revenue has a number of anomalies, such as that it encompassed several additional revenue streams that were unrelated to the activities under the licence. It had been reported last year that the Company was not satisfied with the final verdict rendered by TDSAT on 30 August 2007. The Company was not satisfied on two issues, viz. (i) date of applicability of the TDSAT verdict, which according to the Company should be the date from which the license fee based on revenue sharing regime came into effect and (ii) deductibility of charges passed on to other service providers for leasing bandwidth, port charges, etc, which was disallowed by TDSAT. The Company has challenged TDSATs order of 30 August 2007 on the above two issues in the Honble Supreme Court of India. As reported, the DoT also has filed an appeal in the Apex Court. Both the appeals are pending and this matter is subjudice. The Company has also separately filed a petition in TDSAT on the matter of applicability of penal provisions under ILD and NLD license agreements towards charging of penal interest. This matter is currently under hearing. The regulatory scenario in the other geographies across the world where your Company operates through its subsidiaries did not see any major policy changes impacting the Companys business. The Company continues to implement and comply with its obligations under the agreement between the Company (and several of its subsidiaries) and the various U.S.
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Government Departments (Department of Justice, U.S. Federal Bureau of Investigation, the U.S. Department of Homeland Security, and the U.S. Department of Defense). As a part of this requirement, the Company and its subsidiaries have, over the last year, invested in enhancing the security for its North American networks, appointed a Chief Security Officer; hired a Chief Information Security Officer for North America and Europe; rolled out security training for North American and European employees; and established formal mechanisms to identify and address network security issues by creating committees of senior engineers and managers to address findings and plans for mitigation. OPERATIONAL REVIEW Your Company operates under three main business segments globally Wholesale Voice, Enterprise and Carrier Data and Other Services. Global Voice Services International Long Distance (ILD) Tata Communications remains one of the leading providers of international voice communication services both in India and globally. Your Company has several hundred direct and bilateral relationships with leading international voice telecommunication providers. In India as per current regulations, your company does not have direct access to the end customer and is dependent on traffic from other access operators for its long distance services. Several of the operators who were giving us their long distance traffic have themselves taken licenses thereby reducing the Companys addressable market. Your company continues to compete leveraging its scale of operations and operational expertise. It continues to lobby the regulator and the licensor to introduce direct customer access mechanisms such as calling cards Globally, during the year under review, there were further reductions in tariff and interconnect rates, increasing the downward pressure on revenues. However, to an extent, this downward pressure was compensated by traffic volumes continuing to increase. Globally, your Company continues to focus on increasing volumes and thus revenues, while cutting costs to improve margins. During 2008-09, globally, Tata Communications handled 24.61 billion minutes of international voice traffic, a growth of 13% over the previous year. Traffic to and from India has grown from about 6.86 billion minutes in 2007-08 to about 8.49 billion in the year under review. Increasing competition is expected to shrink the Companys addressable market and hence affect this business adversely. Your Company believes that its scale, reach, innovative solutions, expertise and strong business relationships give it the capability to compete in this space.
The Company has also moved to capture the emerging market for outsourcing services in the international voice business and is expecting to grow in this space in the future. National Long Distance (NLD) Increased mobile penetration has resulted in significant growth in the NLD traffic within India. The Companys NLD traffic has grown by over 43% from 7.01 billion minutes in 2007-08 to 10.04 billion minutes in 2008-09. The increased competition through the issue of new NLD licences, along with other regulatory initiatives, has reduced the gap between NLD and local tariffs. Continued shrinkage in the Companys addressable market and falling tariffs is expected to affect this business. Your Company has a strong network infrastructure and interconnect agreements with all basic and cellular mobile service operators in India to carry NLD traffic to and from their networks. However, Tata Communications is dependent on getting traffic from these access providers, many of whom have acquired their own NLD licences. Meanwhile, direct customer access mechanisms such as the Carrier Access Code (CAC) have not yet been implemented. During the year, the telecom regulator reviewed the long pending consultation process for the implementation of CAC and eventually recalled the CAC directive and recommended calling cards operated by NLD/ILD operators as an alternative to the CAC. These recommendations have been submitted to the Department of Telecommunications (DoT), Government of India and are awaiting acceptance and further directions from the DoT. Any such implementation will enable Tata Communications to enter the retail long distance market. While increased competition in the long distance space affects your Companys business, it also opens up opportunities to share the Companys network infrastructure with new licensees. The regulator has recently permitted sharing of active infrastructure and this opens up new avenues for your Company. The regulator has initiated a consultation process for the introduction of Internet Telephony in the NLD sector. Depending upon the manner and timing of the implementation of such regulatory changes, this may provide new avenues for the Company in the NLD business area, although at lower margins. Carrier and Enterprise Data Services Carrier Data Tata Communications is one of the worlds leading wholesale providers of data, IP and mobile signalling services. Your Company leverages its Global submarine cable network to provide high-speed bandwidth connectivity to other telecom carriers and Internet Service Providers (ISPs) worldwide. The TGN network which extends across the Atlantic and Pacific Oceans, across select
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locations in Europe and from India to Singapore continues to expand its coverage of new geographies and routes. The latest addition to the TGN system is TGN-Intra Asia, which was recently commissioned and will provide connectivity from Singapore to Hong Kong and Japan, with branching to the Philippines and Vietnam. TGN-Eurasia will connect Mumbai to Western Europe via Egypt and is expected to be launched during this fiscal. In addition, your Company is playing a significant role in the creation of other cable systems that connect India to the Middle East and Africa. These are expected to be operational in the second half of the coming year. Tata Communications also operates one of the worlds leading IP networks and provides wholesale IP transit services to tier-2 ISPs and regional carriers. Your Company is one of the few ISPs that have a strong position in all the major regions worldwide, including North America, Europe, Asia and Africa. The Company is also introducing other value-added services like Content Delivery Networks (CDN) to leverage its existing position within the ISP market segment. Tata Communications is a leading provider of mobile signalling services to mobile operators worldwide. Its offerings include signalling conversion and managed roaming services. In addition, the Company is introducing new, innovative services such as hubbing for prepaid services and is working with partners to develop offerings in the emerging mobile-commerce market. Enterprise Data The Indian enterprise segment has been growing at a very healthy rate. In the past financial year, even after adjusting for the market driven price drops, the Indian industry grew noticeably in terms of revenue. This growth is driven by two factors. Firstly, Indian business have recognized the need and imperative to use IT and Networking technology to improve productivity and create competitive advantage. Secondly, as Indian business grows globally and international companies are increasing their Indian presence, there is an associated need for greater connectivity to and within the country. . Banking and financial services, information technology and business process outsourcing/call centres are some examples of high growth sectors in the country. In addition to being a leading player in the Indian data market, your Company also serves enterprises globally, providing worldwide connectivity through its own network, or assisted by partners in different geographies. As voice, data and video communications converge, the demand for IP based data services is growing worldwide. By developing differentiated services and offering competitive pricing, your Company is tapping these large and lucrative global markets. Tata Communications offers a wide range of customised telecommunication solutions. In addition to international
and national private leased circuits (IPLCs and NPLCs), your Company offers a wide range of Virtual Private Networks and associated Managed Services (Multi Protocol Label Switching), Ethernet Services, Internet Access, Managed Hosting, Messaging, Internet Telephony, etc. The Company also provides other value added offerings such as Collaboration and Conferencing services, Managed Security services, and other Professional services. The Company continues to expand its coverage of Managed Global Virtual Private Network (MPLS-VPN) and Ethernet services throughout the globe by directly entering selective new markets as well as through partnerships with regional / local operators. To further strengthen its customer value proposition, Tata Communications partners with Tata Consultancy Services and other Software and Systems integration companies, for integrated joint product and service offerings. Your Company also markets its services through indirect channels catering to the small and medium enterprise market in India and some international markets. Increasing costs of capital have resulted in the delay and cancellation of private data center facilities, driving more purchases of data center collocation and hosted computing services from external service providers. Virtualization technology is changing the economics of data center computing, with utility computing and cloud computing on the cusp of moving into the mainstream. Your Companys global and India managed hosting services are aggressively supporting this direction. Adoption of new services and service delivery models that enhance competitiveness is accelerating eg. the global adoption of Ethernet for wide area networks in which your Company is a major player both globally and in India. Managed security services from specialist providers enable compliance and business protection with lowest costs of ownership, often in the network cloud. Your Companys global Managed Security Service suite is young, but wellranked by analysts such as Gartner. Virtual meetings using simple and life-like Telepresence endpoints provide enhanced collaboration across global companies and markets, reducing travel and raising productivity. Your Company is a global leader in Managed Telepresence services for companies and between companies. The Company is actively expanding its fibre and wireless access network based on the new Wi-Max technology, to provide its own last mile connectivity to its enterprise customers. Other Services In the retail space, Tata Communications remains a premier Internet Service Provider (ISP), offering connectivity, messaging, Internet telephony and a wide variety of
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content services. Tata Communications is also emerging as a key player in Indias broadband sector. Internet and Broadband Services The growth in broadband subscribers has been slower than anticipated, the primary issue being the limited availability of quality last mile networks capable of delivering the bandwidth that broadband needs. To overcome the last mile connectivity problem, your Company has rolled out its own wireless networks based on Wi-Max technologies in Bangalore, Delhi, NCR, Chandigarh and Hyderabad, with encouraging customer feedback. However, this is based on limited spectrum available with the company. The recent announcements of auction of spectrum for BWA by the DoT when completed should provide an impetus to the spread of quality last mile networks for broadband. As reported earlier, your Companys retail business unit, providing Internet broadband services, was hived off to a wholly owned subsidiary, TCISL. Tata Communications Internet Services Ltd (TCISL), offers internet access and a host of other value-added services in the retail segment. The product portfolio includes wireline, wireless and dial up broadband / internet access service, WiFi internet offering and content and value added services like movies, music, gaming, online back up, PC security, web hosting, domain name registering, etc. TCISL remains a premium ISP and continues to have one of the highest ARPUs (Average Revenue Per User per month) among broadband service providers. TCISL is actively engaged in WiMax industry initiatives and is a member of the Board of the global WiMax Forum. Wi-Fi Wi-fi services are an important supplement to the Companys internet access services. Wi-Fi enables computers, PDAs and other computing devices to use highspeed Internet without any wires or cables, at places that are Wi-Fi enabled, called hotspots. With over 500 hotspots, TCISL is Indias leading Wi-Fi hotspot provider spread across segments such as airports, hotels, coffee shops, restaurant chains, hospitals, educational institutes, railway stations, shopping malls and even stores. Through its partnership with global internet service providers and aggregators, TCISL now offers its customers a Global Internet Roaming service in over 160 countries. TCISL is the only Indian ISP to be a member of this Wireless Broadband Alliance (WBA). For the optimum growth and development of the respective businesses of VSNL Broadband Limited (a 100% subsidiary of your Company providing last mile infrastructure) and Tata Communications, your Board considered it desirable to restructure the business by merging VSNL Broadband Limited with Tata Communications. A comprehensive scheme of arrangement was filed last year for this purpose. With the approval of the Honble High Court at Mumbai, VSNL
Broadband Limited merged with Tata Communications Limited with effect from 1 March 2007. New Growth Opportunities TCTSL With the increasing need for reducing costs several carriers around the world are looking to low cost economies in which to relocate some of their business processes. Leveraging its operating expertise in different global developed and emerging markets and its relationships with these carriers, your Company is seeking to cater to this need. This initiative is implemented through Tata Communications Transformation Services Limited, a wholly owned subsidiary (TCTSL) in India. Through its world class delivery centres in Pune and Chennai, TCTSL provides Business Transformation, Telecom BPO and Consultancy Services to telecommunications carriers around the world. TCTSL delivers solutions for all stages of the carrier processes and operations, such as network engineering, design, implementation and operations. TCTSL operations are totally independent ensuring full confidentiality in managing business processes of its customers. TCTSL employs about 770 people and has customer interfaces in Europe and North America. TCBIL In order to capture emerging opportunities in banking and financial services, your Company has formed Tata Communications Banking InfraSolutions Ltd. (earlier known as BAIL) in February, 2008, as its 100% owned subsidiary. TCBIL aims at providing infrastructure solutions to the banking industry including services relating to establishing and operating Automated Teller Machines (ATMs), Electronic Transaction Processing solutions (ETPS), Cheque Truncation Services (CTS), Core Banking Solutions (CBS), etc. With a highly experienced team of professionals from the Banking and Financial Services industry, TCBIL commenced its commercial operations in April 2009. The company has already received orders for its services from some of the leading banks in the country. Joint Ventures & Associates Neotel (Proprietary) Ltd. Neotel (earlier SNO) was set up as South Africas Second National Operator in 2005. During the year, two of the shareholders in the company, Eskom and Transnet, sold their entire 30% stake in Neotel to the Company and Tata Africa thereby increasing our combined stake to an effective 56% (earlier 26%). Neotel today employs around 1,100 people, and offers telecommunication services to the Wholesale, Enterprises and Consumer segments. Neotel runs the first Next Generation Network and the first CDMA network of South
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Africa (SA). It has also been awarded the Level 3 certification (highest amongst telecom service providers in SA), with regard to Broad Based Black Empowerment initiative of the SA government. As a part of Neotels growth story, it had acquired Transtel, a division of the state owned transport company Transnet. This acquisition was completed and the organization has been fully integrated with Neotel. This integration has resulted in the creation of Neotel Business Support System (NBSS), a unit that now also supports other telecom companies for project services. JV with CEC It was reported last year that your Company had entered into a joint venture agreement with the shareholders of China Enterprise Communications Limited (CEC) under which the Company would acquire 50% equity interest in CEC, subject to the approvals of the requisite governmental and regulatory bodies in China. The process of obtaining regulatory clearances in China in respect of this transaction is still ongoing. Cable Depot JV at Cochin The South East Asia and Indian Ocean Cable Maintenance Authority (SEAIOCMA) consortium, which is entrusted with the maintenance of undersea cables in the Asia-pacific region, has located a repair ship owned by Indian Ocean Cableship Pte Ltd. Singapore (IOCPL) at Cochin port, in order to reduce the time gap for repair of any cables in the Indian Ocean region. So as to ensure efficient and timely repairs, spares such as cable and other material are needed to be stored at the same location. For this purpose, a cable depot is being established at Cochin as a joint venture called Cochin Submarine Cable Depot (India) Pvt Ltd. with IOCPL investing 60% in this joint venture (JV) and your Company the balance 40%. This JV has secured a piece of land on lease from the Cochin Port Trust for establishing a custom bonded depot. The construction of the depot is expected to be completed in the current fiscal year. ORGANISATIONAL RESTRUCTURING Consolidating Subsidiaries Your Company had 8 direct and 40 indirect subsidiaries as on 31 March 2009. As reported earlier, a process had been initiated to reduce this number to a total of about 30 through appropriate restructuring. The aim is to have no more than one entity in each country to the extent possible. With the launch of the new brand Tata Communications, the name of the parent and the names of the first level of subsidiaries have been changed to reflect this new global brand. Appropriate Brand Equity and Brand Promotion Agreements will be signed with Tata Sons Ltd. by those subsidiaries whose names have been changed.
Global Structure Tata Communications has structured itself into global business units and global shared service functions, to best enable it to operate in its different customer segments and markets. Several initiatives are being implemented within the framework of this structure to improve customer experience, define and create a common company culture, tighten corporate identity and branding and implement the next generation network architecture for converged services, among others. Corporate Sustainability Initiatives Tata Communications believes in the need to improve the quality of life of people and to serve the society that provides its customers and other stakeholders. This approach to business has been enunciated in the Companys Corporate Sustainability Policy. As a member of Tata Council for Community Initiatives, the Company has been constantly learning from group initiatives and improving its processes and policies to serve society better. The Company fosters an internal culture of volunteerism and contributes to the socio-economic development of the communities it operates in globally, through financial and other assistance to various causes and organizations. The Corporate Sustainability activities have been aligned with Employee Volunteering Programmes (EVP). During the year, nearly 600 volunteers devoted substantial personal time to improving the conditions of the communities in which we operate. During the under review, the Company and its employees also contributed in a major way to support the relief measures for the flood victims of Bihar state. The Company continued to partner with Dr Reddys Foundation (DRF) in the activities of the Telecom Training Academy that has been set up to provide internship opportunities in different vocational skills required for the telecom industry. The Academy focuses on developing students from economically weaker sections of society, especially candidates completing their Diploma/ITI courses from rural and smaller towns. The Academy has about 200 interns at various stages of the internship programme. Three batches of interns have already successfully completed their internship and have been absorbed in the industry. As part of the Affirmative Action initiatives aimed at providing support to the marginalized sections of the community Tata Communications implemented several programmes addressing three major drivers of social equilibrium: Education, Employability and Entrepreneurship development. The Entrepreneurship Development Programme (EDP) which runs in partnership with the Entrepreneurship Development Institute (EDI), Ahmedabad, has received a good response. The Company is sensitive towards environmental and ecological concerns arising out of its operations. Towards
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that end, the Company has an Environmental Management System and a well enunciated Environment Policy in place to guide its activities. In 2005 it became the first telecom service provider in India to become ISO 14001 certified. Management of Business Ethics (MBE) The Company values, promotes and ensures ethical behaviour by employees and other stakeholders through a series of activities and processes. Tata Communications has been systematically implementing the Tata Code of Conduct. The Company has put in place the necessary structures and processes, to implement and improve ethical standards and practices in the organization. During the induction process, new entrants are informed and educated about the Tata Code of Conduct and the Companys Whistleblower Policy. To internalize the code of conduct and sustain the momentum, the Company conducts employee seminars and ethics awareness workshops at frequent intervals. RISKS AND CONCERNS Like all businesses, Tata Communications is exposed to certain risks and concerns in the course of its business: End Customer Ownership for Long Distance voice services in India An important concern for the Company in its voice business continues to be the lack of direct access to end customers. Tata Communications is dependent on access providers to route the national long distance and international calls of their customers through its networks. Some of these operators are also competitors of Tata Communications in the long distance and other markets. This risk is further increased by the new licenses issued for NLD and ILD services, further shrinking the Companys addressable market. It would be a serious disadvantage not to have access to a large enough market to compete for business. Tata Communications has been pursuing implementation of Direct Customer Access either through the CAC regime or through services like calling cards which has not happened so far. Delay in Implementation of Customer Choice Regime A customer choice regime for long distance calling was to have been implemented in accordance with the TRAI Directive in phases for different segments of the long distance sector, with the final implementation of carrier access code (CAC) and carrier pre selection (CPS) to be completed by December 2003. Carrier selection gives subscribers the option to either pre-select a long distance carrier for all ILD calls, or choose a provider for each call by dialing a carrier access code before making a call. Customers can then freely choose their long distance carrier based on competitiveness and quality, rather than the choice being made for them by access operators, as is the case at present.
However, the customer choice regime has not been implemented due to technical and other reasons. This delay is a cause for concern for Tata Communications because it restricts the market that the Company can directly address. In a recent order, the TRAI recalled the Directive requiring all service providers to implement CAC/CPS; instead the TRAI recommended the use of calling cards as the customer choice mechanism. TRAI recommended that long distance operators be permitted to offer calling cards (using an Intelligent Network platform) that could be sold directly to end-customers for domestic and international long distance services. The DoT is yet to accept and implement this recommendation. Regulatory Environment and Tariffs The tariffs charged by telecommunication service providers in India, including Tata Communications, are subject to TRAI regulations. Tata Communications periodically renegotiates interconnect agreements with various domestic mobile service operators and basic telecom service providers and settlement rates with international carriers, resulting in the revision of rates from time to time depending on market conditions. Such revisions could be adverse and could have a material effect on Tata Communications operations and financial condition. The TRAI has initiated consultations to Internet telephony. The use of Internet telephony may lead to a steep fall in NLD rates and margins. The manner and timing of implementation of the new Internet telephony framework could impact the Companys NLD business significantly. The Grey Market and the IUC Regime Effective 1 October 2008 the TRAI discontinued the access deficit charge (ADC) built into the interconnection usage charge (IUC) regime governing inter-operator settlements for voice calls passing through different networks. There is no assurance that abolishing this ADC will completely eliminate the grey market, or that volumes of legitimate carriers like Tata Communications would be favourably impacted. Besides, effective 1st April, 2009, the IUC regulations provide for a higher termination charge of Rs.0.40 per minutes for incoming international long distance calls as against Rs.0.20 per minute for terminating domestic long distance calls. This difference creates an arbitrage opportunity which may make total elimination of Grey Market difficult. Increasing Competition The de-regulation of the Indian telecom market exposes the Company to increased competition: The Internet Service Provider (ISP) business is intensely competitive and has a large number of players. ISPs are allowed to provide Internet telephony calls overseas. Though the quality of such service may not be comparable to traditional ILD calls, it may impact Tata
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Communicationss ILD business, as also the Companys own Internet telephony services. Tata Communications operates in the markets for international long distance, national long distance and broadband services, where there are several potential and existing competitors. Relaxation of licensing conditions and granting of the new licences for NLD and ILD services, including to several international operators, by the DOT has intensified competition in these sectors. New ILD licensees, like BSNL, Vodafone etc, have established direct connectivity with foreign carriers, and increased competition is likely to impact the Companys business adversely, particularly in the Gulf region. The DoT has permitted resale of international private leased circuit services, which will further intensify the competition.
could have a material adverse effect on the Companys business prospects. Tata Communications operations and investments as well as rights to undersea cable capacity extending to other countries, exposes the Company to risks inherent in international operations. These include: General economic, social and political conditions; The difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; Foreign currency exchange rates fluctuations, which could adversely affect our results of operations and the value of our international assets and investments although the Company partially hedges its foreign exchange risk; Foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions; Difficulties in obtaining licenses or interconnection arrangements on acceptable terms
International Operations A large part of the Companys consolidated revenues are generated through its operations in international markets. Integrating acquisitions and managing operations in diverse international locations is very critical to the success of Tata Communications business plans. Changes in local regulations in any of these countries may adversely affect the operations of the overall group of Tata Communications companies. A list of additional risk factors which could impact the business of the Companys international subsidiaries are more fully set forth in the Companys Form 20-F, which is filed annually with the U.S. Securities and Exchange Commission and can be found at the following weblink: <http://secfilings.nyse.com/ files.php?symbol= TCL>. Debts The Company incurred substantial debt in the fiscal year 2009 primarily to finance its various projects as well as fund the capital requirements of its subsidiaries. As of 31 March 2009, the outstanding principal amount of our debt was approximately Rs.23.28 billion for the Company on a standalone basis and Rs.66.65 billion on a consolidated basis. The Company may also need to resort to additional long-term debt and working capital lines of credit to meet future financing needs, with the possibility of raising nondebt funding being limited at this juncture. This would increase the debt servicing obligations. Unless the Company is able to explore non-debt funding avenues in the near future, its ability to raise debt funding may remain subject to certain restrictions, in turn adversely affecting its debt servicing ability and capital expenditure programme. Changing Economic Conditions Downturns in the Indian, regional and global economies
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Tata Communications has a well-developed internal control system and has also implemented the SAP system for Enterprise Resource Planning. Internal control systems including those for the newly-acquired businesses are continuously reviewed and improved. The financial authority at various management levels are clearly defined in the delegation of powers. Technical and financial operations are controlled by state-of-the-art technology and systems. The accounts of the Company are subjected to internal and statutory audit. CAUTIONARY STATEMENT Statements in the directors report and management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ substantially or materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, policies, tax laws and other incidental factors. Further, the Company retains the flexibility to respond to fast-changing market conditions and business imperatives. Therefore, the Company may need to change any of the plans and projections that may have been outlined in this report, depending on market conditions.
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REPORT ON CORPORATE GOVERNANCE FOR THE YEAR 2008-09

(In accordance with clause 49 of the listing agreement with Indian stock exchanges) Corporate governance is about promoting corporate fairness, transparency and accountability. The corporate governance structure specifies the distribution of rights and responsibilities of the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. 1. CORPORATE GOVERNANCE PHILOSOPHY AND PRACTICE it has to comply with the stringent rules and regulations of the Sarbanes-Oxley Act, 2002 (SOX). The Company believes that achieving SOX compliance will inter-alia enhance its financial reporting structure. The Company communicates regularly with its shareholders through bulletins, presentations and meetings with analysts and investors. 2. As a part of the Tata Group, the Company has a fair, transparent and ethical governance practices. The Company has adopted a Code of Conduct for its employees including the Managing Director. In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors. Both these Codes are available on the Companys website. The Company believes that total business risk elimination is never possible but can be minimized by consistently developing and following the best practices of Corporate Governance. To this end, the Company focuses on developing and implementing higher standards of accountability to enable optimum returns to all stakeholders. The Company is installing new state-of-the art systems including integrated financial accounting and budgeting systems and through a systematic process of training and development has increased the quality of its personnel. The Companys operations and accounts are audited at three levels: an internal audit; a statutory audit by an Indian accounting firm under Indian accounting requirements and their restatement by an internationally recognized accounting firm according to US GAAP. The Company is in compliance with the requirements of the revised guidelines on corporate governance stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges. Besides, the Company being listed on the New York Stock Exchange,
Board Meetings during the tenure Held Attended Directors in Office Mr. Subodh Bhargava [Chairman] Mr. N. Srinath Mr. Kishor A. Chaukar Independent Non Executive Not Independent Executive Not Independent Non Executive 9 9 9 9 9 9 Yes Yes Yes 2 2 3 10 4 11 4 1 6 2 2 NIL NIL NIL
BOARD OF DIRECTORS
The Company is managed exclusively by and under the directions of the Board. The composition of the Board is governed by the applicable laws and regulations and the Articles of Association of the Company. The powers delegated by the Board to the Managing Director and by the Managing Director to the subordinate officers are documented in the Delegation of Powers (DoP). The DoP is reviewed periodically. Eleven out of twelve directors are non-executive directors, forming more than half of the total number of directors. The Company has four independent directors and one executive director. None of the directors hold directorships in more than the permissible number of companies under the applicable provisions. Similarly, none of the directors on the boards sub-committees hold membership of more than ten committees of boards, nor is any director a chairman of more than five committees of boards. The names and categories of the directors on the board, their attendance at board meetings during the year and at the last annual general meeting, and the number of directorships and committee memberships held by them in other companies as of 31 March 2009 (with Directorships updated as of 22 June 2009) are given below:
No. of Directorships in Public Companies Including Tata Comm Chairman Member No. of Committee Positions No. of Shares held in Public Companies held as on including Tata Comm 31 March 2009 Chairman Member
Name
Category
Attendance at the last AGM (02.08.2008)
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Name
Category
Board Meetings during the tenure Held Attended
Attendance at the last AGM (02.08.2008)
No. of Directorships in Public Companies Including Tata Comm Chairman Member
No. of Committee Positions No. of Shares held in Public Companies held as on including Tata Comm 31 March 2009 Chairman Member
Directors in Office Mr. P.V. Kalyanasundaram Independent Non Executive Dr. V.R.S. Sampath Independent Non Executive Mr. Amal Ganguli Mr. Vinod Kumar Mr. S. Ramadorai Mr. A.K. Srivastava1 Mr. Arun Gandhi Mr. H.P. Mishra1 Dr. AshokJhunjhunwala [Director: w.e.f. 25 October 2008] Independent Non Executive Not Independent Non Executive Not Independent Non Executive Not Independent Non Executive Not Independent Non Executive Not Independent Non Executive Not Independent Non Executive 9 9 9 9 9 9 9 9 7 6 6 7 5 7 4 8 Yes Yes Yes Yes Yes Yes Yes Yes 2 1 2 12 3 10 3 7 1 5 1 1 1 2 9 3 1 2 1 NIL NIL NIL NIL NIL NIL NIL NIL
NA
NIL
Directors served during the year Dr. Mukund Rajan [Until 24 June 2008]
1
Not Independent Non Executive
NA
NA
NA
NA
NA
NA
Nominee director of the Government of India.
Notes : (a) None of the directors is related to any other director. (b) None of the directors has any business relationship with the Company. (c) None of the directors received any loans and advances from the Company during the year. (d) The information as required under Annexure IA to Clause 49 is being made available to the board. (e) Apart from Directors Remuneration, the Company did not have any pecuniary relationship or transactions with nonexecutive directors during 2008-09. (f ) The detailed resume of each director and the details of the directors proposed to be appointed / reappointed at the 23rd Annual General Meeting are published elsewhere in the annual report.
(g) The gap between two board meetings did not exceed four months. The dates on which the nine board meetings were held are as follows: 2&3 April 2008 6 September 2008 28 January 2009 17 June 2008 25 October 2008 28&30 July 2008 2 December 2008 2 August 2008 7 January 2009
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3. AUDIT COMMITTEE The audit committee consists of four members. The Chairman of the committee is Mr. Amal Ganguli, an independent director, who is Fellow of the Institute of Chartered Accountants in England and Wales, Fellow of Institute of Chartered Accountants of India, Fellow of British Institute of Management, Member of New Delhi Chapter of Institute of Internal Auditors, Florida, USA. Mr. Amal Ganguli became the Chairman of the Audit Committee w.e.f. 19 October 2006. The other members of the committee are Mr. Subodh Bhargava, Independent Director, Mr. P.V. Kalyanasundaram, Independent Director and Mr. H.P. Mishra, Government Nominee Director. Mr. Satish Ranade, Company Secretary and Chief Legal Officer is the audit committees Secretary. The audit committee has adequate powers and detailed terms of reference to play an effective role as required under the provisions of the Companies Act, 1956 and clause 49 of Companys listing agreement with the stock exchanges. Attendance at the Audit Committee Meetings Name No. of Audit Committee Meetings during 2007-08 Held during Tenure Mr. Amal Ganguli [Chairman] Mr. Subodh Bhargava Mr. P.V. Kalyanasundaram Mr. H.P. Mishra 7 7 7 7 Attended
4. REMUNERATION COMMITTEE a) Constitution and Terms of Reference The Remuneration Committee consists of three members. The Chairman of the Committee is Mr. Kishor Chaukar. Mr. Subodh Bhargava and Mr. A.K. Srivastava are the other members on the Committee. Mr. Satish Ranade, Company Secretary and Chief Legal Officer is the Remuneration Committees Convener. Two meetings of the Remuneration Committee were held on 19 May 2008 and 17 June 2008. All the members of the Remuneration Committee were present in both the meetings. The broad terms of reference of the Remuneration Committee are to review the performance of the Whole-time Directors, after considering the Companys performance and recommend to the Board remuneration including salary, perquisites and commission to be paid to the Companys Whole-time Directors within the overall ceilings approved by the shareholders. b) Remuneration Policy For the financial year 2008-09, the Company proposes to pay remuneration to the nonexecutive directors (NEDs) by way of commission at a rate not exceeding 1% per annum of the profits of the Company (computed in accordance with Section 309(5) of the Companies Act, 1956). The distribution of commission amongst the NEDs is placed before the Board. The commission to NEDs is proposed to be distributed broadly on the basis of their attendance and contribution at the Board and Committee meetings as well as the time spent on operational matters other than at the meetings. Mr. Vinod Kumar, Director who is in employment of a subsidiary of the Company is not paid sitting fees or commission. The Company paid sitting fees of Rs.20,000/- per meeting to the non-executive directors for attending the meetings of the Board and Audit Committee. The Company paid sitting fees of Rs.10,000/- per meeting to the non-executive directors for attending the meetings of the Committees of the Board other than the Audit Committee. The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to the whole time director. Salary is paid within the range approved by
4 7 6 5
At the Annual General Meeting held on 2 August 2008, the Chairman of the Audit Committee, Mr. Amal Ganguli was present. During the last financial year, the Audit Committee held seven meetings and not more than four months had elapsed between any two meetings. The dates of meetings of the Audit Committee are as follows: 8 May 2008 20 August 2008 27 January 2009 17 June 2008 25 October 2008 28 July 2008 3 December 2008
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the shareholders. Annual increments, recommended by the Remuneration Committee are approved by the Board. Within the prescribed ceiling, the perquisites package is approved by the remuneration committee. Commission is calculated with reference to net profits of the Company in a particular financial year and is determined by the Board of Directors at the end of the financial year based on the recommendations of the remuneration committee, subject to overall ceilings stipulated in Sections 198 and 309 of the Companies Act, 1956. Specific amount payable to the whole-time director is based on the performance criteria laid down by the Board which broadly takes in to account the profits earned by the Company for that year. c) The details of commission to be paid to the nonexecutive directors for the year 2008-09 are as follows: (Amount in Rs.000) Name of the Director Mr. Subodh Bhargava [Chairman] Mr. Kishor A. Chaukar Mr. P.V. Kalyanasundaram Dr. V.R.S. Sampath Mr. Amal Ganguli Mr. Vinod Kumar* Mr. S. Ramadorai Mr. A.K. Sivastava Mr. Arun Gandhi Mr. H.P. Mishra Dr. Ashok Jhunjhunwala [Director: w.e.f. 25 October 2008] Dr. Mukund Rajan [Until 24 July 2008] Commission Sitting Fees 676.6 327.4 283.7 218.3 360.1 NIL 109.1 207.3 87.3 327.4 350 300 260 200 210 NIL 100 190 80 300
d) The details of remuneration to the whole-time director during the year 2008-09 are as follows: (Amount in Rs.000) Name Mr. N. Srinath Total Salary Perquisites & Commission* Allowances 7,188 7,188 1,393 1,393 4500.00 4500.00
* Commission payable will be paid only after the date of the Annual General Meeting. 5. INVESTOR GRIEVANCE COMMITTEE
The committee consists of three members. The Chairman of the Committee is Mr. Kishor A. Chaukar who is the Managing Director of Tata Industries Limited. The other members are Dr. V.R.S. Sampath, Independent Director and Mr. A.K. Srivastava, nominee Director of the Government. During the last financial year, the Committee held four meetings on 17 June 2008, 28 July 2008, 25 October 2008 and 28 January 2009. The details of grievances received from the shareholders during the year and their status on 31 March 2009 is given below: Sr. Nature of Complaints No. 1. 2. SEBI/Stock Exchange Complaint Direct/Miscellaneous/ Other Complaint TOTAL No. of Complaints Received Pending NIL 2 2 NIL NIL NIL
This committee has been delegated the powers to approve the issue of Duplicate Share Certificates and approve transfer/transmission of shares not exceeding 500 shares per folio. The Registrar and Transfer Agents have been authorised to issue Duplicate Share Certificates and approve transfer/transmission up to a maximum of 500 shares per folio, limited only to routine day-to-day work. As the shares of the Company are under compulsory dematerialized trading for all investors, this delegation is considered adequate. All the shares received for transfer till 31 March 2009 has been duly processed. 6. ETHICS AND COMPLIANCE COMMITTEE In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended, the Board of Directors of the Company
65.5 43.7 2706.4
60 40 2090
Mr. Vinod Kumar being the managing director and employee of an International subsidiary of the Company, no sitting fees/commission is deemed payable to him.
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adoptedthe Tata Communications Code Of Conduct For Prevention of Insider Trading and Code of Corporate Disclosure Practices to be followed by Directors, Designated EmployeesDesignated Persons and Insiders , . The code is based on the principle that Directors, Designated Employees, Designated Persons and Insiders should not have undue advantage over other shareholders, in their personal security transactions, due to their possible advance knowledge of Price Sensitive Information. The code, therefore, seeks to ensure timely and adequate disclosure of Price Sensitive Information to the investor community by the Company to enable them to take informed investment decisions with regard to the
Companys securities. In terms of the said code, an Ethics and Compliance Committee was constituted in 2003. The present committee consists of three members. The Chairman of the committee is Mr. Kishor A. Chaukar, who is the Managing Director of Tata Industries Limited, Dr. V.R.S. Sampath, Independent Director and Mr. H.P. Mishra, Government Nominee Director are the members. Mr. Satish Ranade, Company Secretary and Chief Legal Officer is the convener of the Committee. Four meetings of the committee were held during the year 2008-09 on 17 June 2008, 28 July 2008, 25 October 2008 and 28 January 2009.
7. GENERAL BODY MEETINGS The location and time of the last four general body meetings are as follows: Meeting Date 2 August 2008 Location, Description and Type of Resolutions The 22nd Annual General Meeting was held at 1100 hours at MC Ghia Hall, Bhogilal Hargovindas Building, Second Floor, 18/20 Kaikhushru Dubash Marg, Kalaghoda, Mumbai 400001. There were Seven resolutions (2 special and 5 ordinary). Court Convened Extraordinary General Meeting was held at 1100 hours on Friday, at MC Ghia Hall, Bhogilal Hargovindas Building, Second Floor, 18/20 Kaikhushru Dubash Road Marg, Kalghoda, Mumbai - 400 001. (3 special resolutions). The 21st Annual General Meeting was held at 1100 hours at MC Ghia Hall, Bhogilal Hargovindas Building, Second Floor, 18/20 Kaikhushru Dubash Marg, Kalaghoda, Mumbai 400001. There were Ten resolutions (2 special and 8 ordinary). The 20th Annual General Meeting was held at 1100 hours at MC Ghia Hall, Bhogilal Hargovindas Building, Second Floor, 18/20 Kaikhushru Dubash Marg, Kalaghoda, Mumbai 400001. There were Ten resolutions (2 special and 8 ordinary). Voting All the resolutions were put to vote by show of hands and were carried unanimously.
14 December 2007
All three resolutions were put to vote by show of hands and were carried unanimously.
2 August 2007
All the resolutions were put to vote by show of hands and were carried unanimously.
13 September 2006
All the resolutions were put to vote by show of hands and were carried unanimously.
8. i)
DISCLOSURES There were no significant related-party transactions of the Company with its promoters, directors or management, their subsidiaries or relatives that may have potential conflict with the interest of the Company at large. Note number B.21 of the Notes on Accounts may also be referred to in this respect. No non-compliance notice has been issued and no penalties or strictures have been imposed on the Company by SEBI, any stock exchange or any statutory authority on any matter related to capital markets during the last three years. ii) The Company has adopted a Whistle Blower Policy and has established necessary mechanisms for employees to report concerns about unethical behaviour. No person has been denied access to the Audit Committee.
iii) SECRETARIAL AUDIT A qualified practicing Company Secretary carried out quarterly secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India)
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Limited (CDSL) and the total issued and listed capital. The audits confirm that the total issued/paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. iv) The Company fulfilled the following non-mandatory 9.
requirements: a. The Company has setup a Remuneration Committee. Please see the paragraph on Remuneration Committee. The Auditors Report on the financial statements of the Company is unqualified.
b.
DISCLOSURE REQUIRED BY CLAUSE 32 OF THE LISTING AGREEMENT
Amount of loans and advances in the nature of loans outstanding from subsidiaries during the year ended 31 March 2009 Name of the Company Outstanding as at 31 March, 2009 Rs. in crores Subsidiaries (i) Tata Communications International Pte Ltd (Formerly known as VSNL International Pte. Ltd.) Maximum amount outstanding during the year Rs. in crores Investment in shares of the Company No. of shares Investment in shares of subsidiaries of the Company No. of Shares
834.17 151.59 0.03
847.32 231.25 0.03
110,810,000 769,333 13,661,422
(ii) VSNL SNOSPV Pte.Ltd (iii) Tata Communications Lanka Ltd (Formerly known as VSNL Lanka Ltd.) (iv) Tata Communications Internet Services Limited (Formerly known as VSNL Internet Services Limited) (v) Tata Communications Transformation Services Limited (formerly known as VSNL Global Services Limited) (vi) Banking ATM InfraSolutions Limited
138.70
403.41
195,004,050
0.06 0.35
0.06 0.35
500,000 50,000 No. of Shares 555,001 1,200,000 1,200,000 50 2 300 500 500 1,000 534,075 16,718,000 186 402
Subsidiaries of Tata Communications International Pte Ltd. Tata Communications (Australia) Pty Limited VSNL Telecommunications (Bermuda) Ltd (In Members Voluntary Liquidation) Tata Communications (Bermuda) Limited Tata Communications (Middle East) FZ-LLC Tata Communications (Hong Kong) Limited Tata Communications (Japan) KK Teleglobe International Luxembourg S.a r.l (In Liquidation) TLGB Luxembourg Holdings S.a r.l (In Liquidation) Tata Communications (Puerto Rico) Inc. Teleglobe Asia Pte Ltd Tata Communications (Netherlands) BV Subsidiaries of Tata Communications (Netherlands) B. V. Tata Communications (Belgium) SPRL Tata Communications (Canada) ULC
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Tata Communications (US) Inc. VSNL International (ITXC) Corp. Tata Communications (UK) Limited Tata Communications (France) SAS Tata Communications Deutschland GmbH Tata Communications (Hungary) LLC Tata Communications (Ireland) Limited Tata Communications (Italy) S.r.l Tata Communications (Nordic) AS VSNL International (Poland) Sp. z o.o. VSNL (Portugal) Unipessoal Limitada VSNL International (Portugal) Instalacao e Manutencao de Redes LDA Tata Communications (Russia) LLC Videsh Sanchar Nigam Spain Srl Tata Communications (Sweden) AB Tata Communications (Switzerland) GmbH Subsidiaries of Tata Communications (UK) Limited VSNL UK Limited (In Liquidation) 1 Teleglobe International Limited (In Liquidation) 8,416,801 Subsidiaries of Tata Communications (US) Inc. (Formerly known as VSNL International (US) Inc.) Tata Communications (Guam) L.L.C. NA Subsidiaries of Tata Communications (America) Inc. VSNL International (IPCO) LLC NA Subsidiaries of VSNL Telecommunications (Bermuda) Ltd. Teleglobe Bermuda Ltd (In Members Voluntary Liquidation) 1,200,000 Subsidiaries of Tata Communications (Bermuda) Ltd. ITXC IP Holding SARL 500 Tata Communications Services (Bermuda) Limited 12,000 ITXC Global Hongkong Limited (In Liquidation) 1,180,000 Subsidiaries of Tata Communications (Hong Kong) Limited VSNL International (Hong Kong) Limited (In liquidation) 10 Subsidiaries of VSNL International (ITXC) Corp. Tata Communications (America) Inc. (Formerly known as Teleglobe America Inc.) 100 VSNL International (Global) Corp. 100 Note 1. The Honble High Court at Mumbai, approved the merger of a wholly owned subsidiary of the Company, VSNL Broadband Limited, with the Company effective from 1 March, 2007. Note 2. The Company has subscribed to the Capital clause of Memorandum of Association of a new company Cochin Submarine Cable Depot (India) Private Limited which is intended to be 40% Joint venture of the Company. 10. MEANS OF COMMUNICATION Companys quarterly results are ordinarily published in the Financial Express and Loksatta among others, and are also hosted on Companys website: www.tatacommunications.com. The Companys press releases, details of significant developments and investor updates are also made available on the website. The Company generally holds a press conference/investors meet after the half-yearly results are taken on record by the board relating to the period ending 30 September and 31 March every year. The management discussion and analysis forms part of the directors report and is included in the annual report for the year 2008-09. Segmental information may be referred to in Note number B.20 of the Notes on Accounts.
No. of Shares 3,000 1,000 6,500,003 1,847,000 1 NA 1 10,000 1,000 1,000 1,055,000 24,894,000 NA 413,006 1,000 5,000
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11. SHAREHOLDER INFORMATION DATE AND VENUE OF THE AGM The twenty third annual general meeting of the Company will be held at 1100 hours on Friday, 7 August 2009, at MC Ghia Hall, Bhogilal Hargovindas Building, Second Floor, 18/ 20 Kaikhushru Dubash Road Marg, Kalaghoda, Mumbai 400023. FINANCIAL CALENDAR Fiscal year ending Annual General Meeting : : 31 March 2009 7 August 2009
of investors from time to time, and money market conditions. DIVIDEND PAYMENT The dividend as recommended by the Board of Directors, if declared at this Annual General Meeting, shall be paid on or after Wednesday the 12 August 2009. (i) to those shareholders whose names appear on the Companys Register of Members after giving effect to all valid share transfers in physical form lodged with the Registrar & Transfer Agents (R&T Agents) of the Company on or before Thursday, 23 July 2009.
KEY FINANCIAL REPORTING DATES FOR THE FINANCIAL YEAR 2009-10 First quarter ending 30 June 2009 Second quarter ending 30 September 2009 Third quarter ending 31 December 2009 Fourth quarter ending 31 March 2010 : : : On or before 31 July 2009 On or before 31 October 2009 On or before 31 January 2010 On or before 30 April, 2010 or if audited, on or before 30 June 2010.
(ii) in respect of shares held in electronic form, to those deemed members whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at the end of business on Thursday, 23 July 2009. In respect of shares held in demat mode, the dividend will be paid on the basis of beneficial ownership as per details to be furnished by NSDL and CDSL for this purpose. BANK DETAILS In order to provide protection against fraudulent encashment of dividend warrants, members are requested to provide, if they have not already provided, their bank account numbers, bank account type and names and addresses of bank branches, quoting folio numbers, to the R&T agents (in case of physical shareholding) to enable them to incorporate the same on the dividend warrants. In case of dematerialised holding the bank account details should be intimated and updated with the shareholders Depository Participant. LISTING ON STOCK EXCHANGES IN INDIA AND LISTING FEES The Companys shares are listed on the stock exchanges at Mumbai (BSE) and National Stock Exchange (NSE) in India. Annual listing fees as due to each of the above stock exchanges for 2008-2009 have been paid. LISTING ON STOCK EXCHANGE OUTSIDE INDIA The Companys ADRs are listed on the New York Stock Exchange (NYSE) and have been traded on the NYSE since 15 August 2000. The annual listing fee payable to the NYSE is being paid regularly. DEPOSITORY BANK FOR ADR HOLDERS The Bank of New York, 101, Barclays Street, 22nd Floor West, New York, NY 10286, Telephone: +1 (212) 815 8365, Facsimile: +1 (212) 571 3050. Local Address : The Bank of New York, Express Towers, 12th Floor, Nariman Point, Mumbai 400 021, Telephone: (022) 2204 4941/43, Facsimile: (022) 2204 4942.
BOOK CLOSURE DATES FOR THE PURPOSE OF DIVIDEND The Companys register of members and share transfer books will remain closed from 24 July 2009 to 7 August 2009 (both days inclusive) for the purpose of ascertaining eligibility to shareholders to receive the final dividend as may be declared for the year ended March 31, 2009. DIVIDEND POLICY Company believes in enhancing shareholders returns every year and in line with this company has constantly endeavored to maintain the Dividend Payout Ratio at broadly same levels every year. However, there are various constraints that may impact on a firms decision to pay out earnings in the form of dividends. Cash flow constraints Contractual constraints Legal constraints Tax considerations Return considerations
The board recommends dividends at its discretion. The factors that may be considered by the Board before making any recommendations for the dividend include, but are not limited to, future expansion plans and capital requirements, profits earned during the financial year, overall financial conditions, cost of raising funds from alternate sources, liquidity and cash flow position and applicable taxes including tax on dividend as well as exemptions under tax laws available to various categories
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CUSTODIAN FOR THE DEPOSITORY IN INDIA ICICI Bank Limited, Securities Markets Services, 1st Floor, Empire Complex, 414 Senapati Bapat Marg, Lower Parel, Mumbai 400013. Telephone: 91-22-6667 2026, 6667 2030. Facsimile: 91-22-6667 2779/2740.
STOCK CODE Bombay Stock Exchange National Stock Exchange New York Stock Exchange ISIN No. for equity shares ISIN No. for ADRs CUSIP No. for ADRs : : : : : : 500483 TATACOMM TCL INE151A01013 US8765641050 876564105
STOCK MARKET DATA RELATING TO SHARES LISTED IN INDIA Monthly high and low quotations and volume of shares traded at BSE & NSE for 2008-09 are: BSE Share Price (In Rs.) Month High Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 585.00 520.90 514.45 479.70 473.60 484.00 522.00 550.00 521.10 549.95 460.00 542.00 Low 461.20 476.00 338.00 332.00 391.00 377.10 320.00 380.50 368.90 412.05 382.00 387.00 Average Volume 121100 69500 57500 70500 49200 94300 103900 114900 61400 39600 30700 56000 High 556.00 525.00 516.95 479.90 473.10 483.90 523.90 560.00 522.00 540.00 489.55 545.00 Low 442.25 478.00 339.90 340.10 390.35 380.00 323.05 380.65 329.85 410.85 380.15 390.15 Average Volume 431200 261100 239800 346000 269700 340000 428000 524300 330200 195700 129600 260300 High 28.69 25.50 24.80 23.11 22.27 24.60 24.00 23.55 23.34 22.50 18.66 22.00 Low 22.00 22.77 16.47 15.86 17.96 17.26 13.79 13.51 14.47 16.00 14.82 14.34 Average Volume 118700 58400 186700 134300 144400 192800 349200 321000 238700 217100 127200 157600 NSE Share Price (In Rs.) NYSE ADR Price (in USD)
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Closing Share Price at BSE V/S Sensex Close

600 500
Closing Share Price at BSE
20000 18000 16000 14000 12000

Sensex Nifty
400 300 200 100 0
10000 8000 6000 4000 2000

2-May-08 1-Aug-08 3-Nov-08 1-Dec-08
1-Apr-08
BSE Closing Share Price
1-Oct-08
Sensex Close
Closing Share Price at NSE V/S Nifty Close

600 500
Closing Share Price at NSE
2-Feb-09
2-Mar-09
2-Jun-08
1-Sep-08
1-Jul-08
2-Jan-09
6000 5000 4000 3000 2000 1000 0
400 300 200 100 0
2-May-08
1-Dec-08
2-Jan-09
1-Aug-08
3-Nov-08
NSE Closing Share Price
Nifty Close
2-Feb-09
1-Oct-08
2-Mar-09
1-Apr-08
1-Sep-08
2-Jun-08
1-Jul-08
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ADR Closing Price at NYSE V/S NYSE Composite Index

30 25 20 15 10 5 0 12000 10000 8000 6000 4000 2000 0
NYSE Composite Index
ADR Closing Price at NYSE (USD)
2-Jun-08
1-Dec-08
1-Apr-08
3-Nov-08
1-May-08
ADR Closing Price Close
1-Aug-08
2-Sep-08
NYSE Composite Index
SHARE TRANSFER SYSTEM Share transfers in physical form can be lodged with the R&T agents of the Company. The transfers are normally processed within 15 days from the date of receipt if the documents are complete in all respects. The Investor Grievances Committee is empowered to approve the share transfers. However, in the interests of shareholder friendliness, the R&T Agents have been empowered to approve the share transfers up to 500 shares per folio per transfer. DISTRIBUTION OF SHAREHOLDING Number of ordinary shares held 1 to 500 501 to 1000 1001 to 10000 Over 10000 Total Number of Shareholders 31.03.2009 46851 816 965 108 48740 31.03.2008 50882 1335 1310 153 53680
30
2-Feb-09
2-Mar-09
1-Oct-08
1-Jul-08
2-Jan-09
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CATEGORIES OF SHAREHOLDERS AS OF 31 MARCH Category Number of Shareholders 2009 PROMOTERS Tata Group Panatone Finvest Limited Tata Sons Limited The Tata Power Company Limited Tata Iron & Steel Company Limited Tata Industries Limited Central Government NON-PROMOTERS Indian Public Financial Institutions Indian Nationalised Banks Foreign Financial Institutions Foreign companies (shares held by The Bank of New York as depository for ADRs) Non-resident individuals / Overseas Corporate Bodies Other Indian Bodies Corporate Others Total 56 13 88 61 15 72 11.15 0.04 1.50 12.74 0.12 1.77 31779685 103522 4287323 36457943 364678 5056092 2 3 1 0 0 1 2 2 1 0 0 1 36.73 10.88 2.48 0.00 0.00 26.12 40.70 8.51 0.90 0.00 0.00 26.12 104671123 31013497 7075837 0 0 74446885 115988857 24260497 2575837 0 0 74446885 2008 Voting Strength (Percentage) 2009 2008 Number of Shares Held
2009
2008
8.70
5.67
24788680
16152446
563 875 47136 48740
194 1315 52015 53680
0.03 0.68 1.69 100
0.02 0.91 2.42 100
94455 1925404 4813589 285000000
66677 2617031 7013057 285000000
Dematerialisation of Shares and Liquidity Approx 99.93% of the Companys share capital available in the market is dematerialised as on 31 March 2009. The Companys shares are regularly traded on the Stock Exchange Mumbai and the National Stock Exchange, as is evident from the table containing stock market data. Outstanding ADRs 12394340 ADRs (each representing two ordinary share of the Company) are outstanding as of 31 March 2009. In respect of these ADRs, the option to convert into shares is alive.
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COMMUNICATIONS
SHARE CAPITAL HISTORY Details of share capital history since incorporation is as follows: Dates 19.03.1986 01.04.1986 March 1991 06.02.1992 Jan-Feb 1992 Particulars of Issue Allotted as Purchase consideration for assets & liabilities of OCS Allotted as Purchase consideration for assets & liabilities of OCS Shares of Rs.1000/- each subdivided into shares of Rs.10/- each 12 million shares disinvested in favour of Indian Financial Institutions by GOI @ Rs.123/- per share 2,382,529 Shares transferred to disinvested parties as bonus shares Number of Shares 126 +599,874 NIL Total Number of Shares 126 600,000 60,000,000 80,000,000 Nominal Value of Shares (Rs.) 126,000 600,000,000 600,000,000 800,000,000
Bonus of 1:3 issued to Government of India. +20,000,000
NIL NIL
80,000,000 80,000,000
800,000,000 800,000,000
1994-1995 27.03.1997
Raised its share capital by way of GDR Issue, and also GOI Divested 39 lakh shares in GDR markets @ US$13.93 per GDR equivalent to Rs.1000 per share. +12,165,000 Raised its capital by way of GDR Issue Green Shoe option @ US$13.93 per GDR equivalent Rs.1000 per share. 10million shares divested by GOI in GDR markets @ US$9.25 per GDR equivalent to Rs.786.25 per share. 396,991 shares Divested by GOI by way of offer of shares to employees @ Rs.294 per share locked in for a period of 3 years. 10,lakh shares Divested by GOI in domestic markets @ Rs.750 per share. Listing of ADRs on New York Stock Exchange Bonus shares in the ratio of 2:1. Declared dividend @ 500% i.e. Rs.50/per share at 15 AGM. Paid special interim Dividend of 750% i.e. Rs.75/- per share 25% Stake transferred to Tata Groups investment vehicle Panatone Finvest Ltd. Govt holdings reduced to 27.97% from 52.97%. Ceases to be a Government of India Enterprise 5264555 shares Divested by GOI by way of offer of shares to employees @ Rs.47.85 per share locked in for a period of 1 year.
92,165,000
921,650,000
04.04.1997
+2,835,000
95,000,000
950,000,000
Feb. 1999
NIL
95,000,000
950,000,000
May 1999
NIL NIL NIL +190,000,000 NIL NIL
95,000,000 95,000,000 95,000,000 285,000,000 285,000,000 285,000,000
950,000,000 950,000,000 950,000,000 2,850,000,000 2,850,000,000 2,850,000,000
Sept 1999 15.08.2000 24.11.2000 27.09.2001 January 2002 13.02.2002
NIL
285,000,000
2,850,000,000
21.02.2002
NIL
285,000,000
2,850,000,000
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Dates 10.04.02
Particulars of Issue Open Offer by Panatone Finvest Limited in accordance with SEBI guidelines to acquire upto 57 million shares @ Rs.202/- per share Open offer complete with Panatone holding total of 128249910 shares including 57 million shares as above.
Number of Shares
Total Number of Shares
Nominal Value of Shares (Rs.)
NIL
285,000,000
2,850,000,000
08.06.02
NIL
285,000,000
2,850,000,000
Locations of Other Offices in India Ambattur, Arvi, Bangalore, Bhubaneswar, Chandigarh, Chennai, Coimbatore, Dehradun, Ernakulam, Gandhinagar, Goa, Guwahati, Hyderabad, Indore, Jaipur, Jalandhar, Kanpur, Kolkata, Mumbai, New Delhi, Patna, Pondicherry, Pune, Thiruvananthapuram. Address for Correspondence
Registered Office VSB, Mahatma Gandhi Road, Fort, Mumbai - 400 001. Tel : +91 22 6657 8765 Fax : +9122 6639 5162 Email : help@vsnl.com Website : www.tatacommunications.com Corporate Office C21 & C36, G Block, Bandra Kurla Complex, Mumbai 400 098. Tel : +91 22 6657 8765 Fax : +9122 6639 5162 Email : help@vsnl.com Website : www.tatacommunications.com Compliance Officer Mr. Satish Ranade Company Secretary & Chief Legal Officer C21 & C36, G Block, Bandra Kurla Complex, Mumbai - 400 098. Tel : +91 22 6657 8765 Fax : +91 22 6725 1962 Email : satish.ranade@tatacommunications.com
Any shareholder complaints/queries may be addressed to: Registrar and Transfer Agents M/s. Sharepro Services (India) Pvt. Ltd. Unit : Tata Communications Limited 13 AB, Samhita Warehousing Complex, 2nd Floor, Near Sakinaka Telephone Exchange, Andheri Kurla Road, Andheri (East), Mumbai - 400 072. Tel : (022) 2851 1872/6772 0300/400 Fax : (022) 2659 1586/2850 8927 E-mail : sharepro@shareproservices.com Any queries relating to financial statements of the Company may be addressed to: Investor Relations Cell Tata Communications Limited VSB, MG Road, Fort, Mumbai - 400 001. Tel : +91 (22) 66578765 Fax: +91 (22) 66395162 Email: investor.relations@tatacommunications.com
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DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE COMPANYS CODE OF CONDUCT
This is to confirm that the Company has adopted a Code of Conduct for its Board Members and senior management of the Company. I confirm that the Company has in respect of the financial year ended March 31, 2009, received from the senior management team of the Company and the Members of the Board a declaration of compliance with the Code of Conduct as applicable to them.
Place: Mumbai Date: 25 May 2009
Satish Ranade Company Secretary & Chief Legal Officer
N. Srinath Managing Director & CEO
CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION FOR THE YEAR 2008-09
As required under Clause 49(V) of the Listing Agreement with Indian Stock Exchanges, the undersigned hereby confirm the following: a) We have reviewed financial statements and the cash flow statement for the year and that to the best of our knowledge and belief: i) ii) b) c) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; these statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations.
There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Companys code of conduct. We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. We have indicated to the Auditors and the Audit Committee the following: i) ii) significant changes in internal control over financial reporting during the year, if any; significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements, if any; and
d)
iii) There have been no instances of fraud of which we have become aware.
Place: Mumbai Date: 25 May 2009
Sanjay Baweja Chief Financial Officer
N. Srinath Managing Director & CEO
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Secretary Responsibility Statement

The Company Secretary & Chief Legal Officer confirms that the company has: (i) maintained all the books of account and statutory registers required under the Companies Act,1956 (the Act) and the rules made thereunder; filed all the forms and returns and furnished all the necessary particulars to the Registrar of Companies and/or authorities as required by the Act; issued all notices required to be given for convening of board meetings and the general meeting, within the time limit, if any, prescribed by law; conducted the board meetings and annual general meeting as per the Act; complied with all the requirements relating to the minutes of the proceedings of the meetings of the directors and the shareholders; made due disclosures required under the Act including those required in pursuance of the disclosures made by the directors; obtained all the necessary approvals of directors, shareholders, the central government and other authorities as per the requirements;
(ii)
(iii)
(iv) (v)
(vi)
(vii)
(viii) effected share transfers and dispatched the certificates within the statutory time limit; (ix) paid dividend amounts to the shareholders and transferred unpaid dividend amounts, if applicable, to the general revenue account of the central government or the investor education and protection fund within the time limit prescribed; complied with the applicable requirements of the listing agreement entered into with the stock exchanges in India and the applicable requirements of the New York Stock Exchange.
(x)
The Company has also complied with other statutory requirements under the Companies Act, 1956 and other related statutes in force.
Dated : 25 May 2009
Satish Ranade Company Secretary & Chief Legal Officer
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AUDITORS CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENTS
To the Members of TATA COMMUNICATIONS LIMITED We have examined the compliance with the conditions of corporate governance by TATA COMMUNICATIONS LIMITED (the Company) (formerly Videsh Sanchar Nigam Limited), for the year ended on 31 March, 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the Companys Management. Our examination has been limited to a review of the procedures and the implementation thereof, adopted by the Company for ensuring compliance with the conditions of corporate governance. It is neither an audit nor an expression of 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 and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of corporate governance as stipulated in the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.
For S. B. BILLIMORIA & CO. Chartered Accountants
P. R. RAMESH Partner Membership No: 70928 Mumbai, 24 June, 2009
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AUDITORS REPORT
TO THE MEMBERS OF TATA COMMUNICATIONS LIMITED
1. We have audited the attached Balance Sheet of TATA COMMUNICATIONS LIMITED (the Company) as at 31 March, 2009, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable. Attention is invited to note B10 of Schedule 20 relating to the amalgamation of the Companys wholly owned subsidiary, VSNL Broadband Limited, with the Company. The excess of the carrying value of the investment over the net assets has been adjusted against Securities Premium account in terms of the Court Scheme instead of to goodwill as required by Accounting Standard 14 Accounting for Amalgamations, as notified under the Companies (Accounting Standard) Rules, 2006. Consequently balance in the Securities Premium account is lower by Rs.109.87 crores. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; required by law have been kept by the Company so far as it appears from our examination of those books; (iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report, read with our comment in paragraph 4 above, comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; (v) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2009; (b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. (vi) on the basis of written representations received from the directors, as on 31 March, 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. For S. B. BILLIMORIA & CO. Chartered Accountants
2.
3.
4.
5.
P.R.RAMESH Partner Membership No: 70928 Mumbai, 26 May, 2009
(ii) in our opinion, proper books of account as
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COMMUNICATIONS
ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date) (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) According to the information and explanations given to us, the fixed assets were physically verified by the Management in accordance with the programme of verification, which in our opinion, provides for physical verification of all fixed assets at reasonable intervals having regard to the size of the Company and nature of its assets. The differences identified pursuant to the physical verification have been duly adjusted in the books of account. Having regard to the size of the operations of the Company and on the basis of explanations received, in our opinion, the net unadjusted differences were not significant. (c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (ii) (a) As explained to us, the stocks of stores and spares have been verified during the year by the Management in accordance with the programme of verification. In our opinion, the frequency of verification is reasonable. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company. (iii) According to the information and explanations given to us, the Company has not taken or granted any loans secured or unsecured from or to companies, firms or other parties covered by the register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets. The internal control systems for rendering of certain enterprise data services need to be suitably strengthened. Except for the foregoing, we have not observed any continuing major weakness in the internal control systems. (v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion and having regard to our comments in paragraph (v) (a) above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time, where such market prices are available. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public to which the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 are applicable during the period covered by our audit report. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) We have broadly reviewed the books of account and records maintained by the Company relating to telecommunication activities pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and, are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.
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(ix) (a) According to the information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess were in arrears, as at 31 March, 2009 for a period of more than six months from the date they became payable. (c) According to the information and explanations given to us, details of dues of sales tax which have not been deposited on account of any dispute are given below:
Particulars Period to Forum where which the the dispute amount is pending relates 2005-06 2005-06 Jt. Commissioner Jt. Commissioner Amount (Rs. in crores)
(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. (xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company. (xvi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were prima facie applied by the Company during the year for the purpose for which the loans were obtained. (xvii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short-term basis have prima facie not been used during the year for long-term investment. (xviii)According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. (xix) In our opinion and according to the information and explanations given to us, the Company has issued secured debentures during the period covered by our report and securities/ charges have been created in respect of debentures issued. (xx) During the period covered by our audit report, the Company has not raised any money by way of public issue. (xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material instances of fraud on or by the Company has been noticed or reported during the course of our audit. For S. B. BILLIMORIA & CO. Chartered Accountants P.R.RAMESH Partner Membership No: 70928 Mumbai, 26 May, 2009
WBST CST
48.86 0.78
(x) The Company does not have accumulated losses. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holder. (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 during the year. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.
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COMMUNICATIONS
BALANCE SHEET AS AT 31 MARCH, 2009

As at Schedule 31 March, 2009 Rs in crores FUNDS EMPLOYED: 1 SHARE CAPITAL 2 RESERVES AND SURPLUS 3 4 5 6 7 TOTAL SHAREHOLDERS FUNDS SECURED LOANS UNSECURED LOANS DEFERRED TAX LIABILITY (NET) (Refer note B16, Schedule 20) TOTAL FUNDS EMPLOYED 5 5,890.00 1,792.06 4,097.94 536.38 4,634.32 9 INVESTMENTS 10 CURRENT ASSETS, LOANS AND ADVANCES A. CURRENT ASSETS (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Other Current Assets B. LOANS AND ADVANCES 6 7 8 9 10 11 2,723.67 1.56 1,343.22 372.37 252.71 1,969.86 2,827.42 4,797.28 11 Less: CURRENT LIABILITIES AND PROVISIONS (A) CURRENT LIABILITIES (B) PROVISIONS 12 NET CURRENT ASSETS [(10) less (11)] 13 TOTAL APPLICATION OF FUNDS SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS As per our report attached For S.B.BILLIMORIA & CO. Chartered Accountants P.R. RAMESH Partner For and on behalf of the Board 20 4,352.65 1,363.75 2,988.90 543.77 3,532.67 2,103.77 5.45 1,063.13 79.63 451.28 1,599.49 2,428.23 4,027.72 1 2 3 4 285.00 6,513.05 6,798.05 1,288.82 1,039.05 133.25 9,259.17 As at 31 March, 2008 Rs in crores 285.00 6,262.34 6,547.34 777.80 84.13 7,409.27
APPLICATION OF FUNDS: 8 FIXED ASSETS: (a) Gross Block (b) Less: Accumulated Depreciation/Amortisation (c) Net Block (d) Capital work-in-progress
12 13
2,607.49 288.61 2,896.10 1,901.18 9,259.17
1,994.91 259.98 2,254.89 1,772.83 7,409.27
SUBODH BHARGAVA Chairman SANJAY BAWEJA Chief Financial Officer MUMBAI DATED: 26 May, 2009
N SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer
MUMBAI DATED: 26 May, 2009
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CMYK
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2009
Schedule INCOME: 1 REVENUES FROM TELECOMMUNICATION SERVICES 2 OTHER INCOME 3 INTEREST INCOME 4 TOTAL INCOME EXPENDITURE: 5 SALARIES AND RELATED COSTS 6 NETWORK COSTS 7 OPERATING AND OTHER EXPENSES 8 DEPRECIATION AND AMORTISATION (Net of transfer from Capital Reserve) 9 INTEREST EXPENSE 10 TOTAL EXPENDITURE PROFIT BEFORE TAXES AND EXCEPTIONAL ITEMS 11 EXCEPTIONAL ITEMS: (a) Claim Settlement (Refer note B11, Schedule 20) (b) Profit on sale of long term investment (Refer note B4, Schedule 20) (c) Fixed Assets written-off PROFIT BEFORE TAXES 12 TAXES (a) CURRENT TAX (b) DEFERRED TAX EXPENSE (c) FRINGE BENEFIT TAX PROFIT AFTER TAXES 13 BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR ADD: ADJUSTMENT FOR LOSSES FOR RETAIL BUSINESS HIVE OFF (Refer note B9, Schedule 20) LESS: TAX ADJUSTMENT ON RETAIL BUSINESS HIVE OFF (Refer note B9, Schedule 20) ADD: ADJUSTMENT FOR PROFIT FOR MERGER OF VSNL BROADBAND LIMITED (Refer note B10, Schedule 20) LESS: DEFERRED TAX ADJUSTMENT ON MERGER OF VBL (Refer note B16, Schedule 20) AMOUNT AVAILABLE FOR APPROPRIATIONS 14 APPROPRIATIONS : (a) PROPOSED DIVIDEND (Refer note B3, Schedule 20) (b) TAX ON DIVIDEND (c) GENERAL RESERVE (d) DEBENTURE REDEMPTION RESERVE BALANCE CARRIED TO BALANCE SHEET 15 EARNINGS PER SHARE (a) Basic/Diluted earnings per share, before exceptional items (Rs.) (Refer note B19, Schedule 20) (b) Basic/Diluted earnings per share, including exceptional items (Rs.) (Refer note B19, Schedule 20) As per our report attached For S.B.BILLIMORIA & CO. Chartered Accountants P.R. RAMESH Partner For and on behalf of the Board Year ended 31 March, 2009 Rs in crores 3,749.43 172.85 61.98 3,984.26 340.07 1,761.37 804.51 425.27 190.60 3,521.82 462.44 95.60 (346.65) 713.49 150.36 41.68 5.50 515.95 1,892.30 2.72 7.44 2,403.53 128.25 21.80 51.60 102.50 2,099.38 10.77 18.10 Year ended 31 March ,2008 Rs in crores 3,283.30 166.04 15.99 3,465.33 242.43 1,852.67 568.14 301.31 39.60 3,004.15 461.18 11.20 449.98 114.15 26.65 4.72 304.46 1,742.91 37.50 9.25 2,075.62 128.25 21.80 33.27 1,892.30 10.94 10.68
14 15
16 17 18 19
N SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer
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COMMUNICATIONS
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2009

CASH FLOWS FROM OPERATING ACTIVITIES 1 PROFIT BEFORE TAXES AND EXCEPTIONAL ITEMS Adjustments for: Depreciation and amortisation Prior year depreciation and excess depreciation written back (Profit)/loss on sale of fixed assets Interest income Interest expense Fixed assets written down Interest on Income Tax Refund Dividend income on current investments Profit on sale and revaluation gain on current investments Profit on sale of long term investment Provision for Contingencies Bad Debts written off Provisions for Doubtful Debts (net) Exchange difference on cash and cash equivalents Dividend income from long-term investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Inventories Sundry debtors Other current assets Loans and advances Restricted cash Current liabilities and provisions Cash generated from operations before tax and exceptional items Income tax (paid)/refunds Interest on income tax refunds Cash generated from operations before exceptional items Claim settlement NET CASH FROM OPERATING ACTIVITIES 2 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets Advance paid against equity share capital Sale of current investments (net of mutual funds dividend re-invested) (net) Proceeds from sale of fixed assets Proceeds from sale of long-term investment Sale of investments in subsidiaries Loans to subsidiaries(net) Dividend income from long-term investments Dividend income from current investments Fixed deposits (net) Interest received NET CASH USED IN INVESTING ACTIVITIES 3 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short term loans Repayment of short term loans Proceeds from long term loans Repayment of long term loans Dividends paid including dividend tax Interest paid NET CASH FLOW FROM / (USED IN) FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AS AT THE BEGINNING OF THE YEAR (Refer note B15, Schedule 20) Effect of exchange on cash and cash equivalents Year ended 31 March 2009 Rs in crores 462.44 425.27 (0.07) 1.52 (61.98) 190.60 3.37 (21.56) (34.15) 1.39 151.35 2.41 (3.96) 1,116.63 3.98 (408.88) 210.92 141.70 (0.04) 484.70 1,549.01 (366.74) 1,182.27 (95.60) 1,086.67 (1,315.11) (395.71) (226.63) 3.85 424.22 (543.03) 3.96 (7.22) 49.96 (2,005.71) 1,387.13 (1,232.42) 1,700.00 (357.06) (150.39) (142.88) 1,204.38 285.34 78.53 Year ended 31 March 2008 Rs in crores 461.18 301.31 (1.58) (15.99) 39.60 1.20 (16.66) (29.98) (14.09) (1.89) 11.87 29.04 0.04 764.05 (0.73) (148.85) (320.63) (25.55) 414.49 682.78 (396.36) 16.66 303.08 303.08 (728.16) (221.51) 617.05 5.14 2.72 (399.17) 3.27 3.97 (716.69) 1,678.02 (1,447.83) 350.00 (150.21) (40.84) 389.14 (24.47) 103.04 (0.04)
CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR 363.87 78.53 (Refer note B15, Schedule 20) Notes : 1. Figures in brackets represent outflows. 2. Advance paid to Tata Communications Internet Services Ltd. of Rs. 290 crores is converted into cumulative convertible preference shares of Rs. 190 crores and equity shares of Rs. 100 crores respectively and to Banking ATM InfraSolutions Ltd. of Rs. 0.05 crores and VSNL SNOSPV Pte. Ltd. of Rs. 24.30 crores have been converted into equity shares. 3. Loans to Tata Communications International Pte. Ltd. of Rs. 208.46 crores have been converted into equity shares and to VSNL SNOSPV Pte. Ltd. of Rs. 94.41 crores is converted into cumulative convertible redeemable preference shares during the year ended 31 March, 2009. As per our report attached For and on behalf of the Board For S.B.BILLIMORIA & CO. Chartered Accountants P.R. RAMESH Partner SUBODH BHARGAVA Chairman SANJAY BAWEJA Chief Financial Officer MUMBAI DATED: 26 May, 2009 MUMBAI DATED: 26 May, 2009 N SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer
42
CMYK
SCHEDULES FORMING PART OF THE BALANCE SHEET

As at As at SCHEDULE - 1 31 March, 2009 31 March, 2008 SHARE CAPITAL Rs in crores Rs in crores AUTHORISED : 300,000,000 (2008:300,000,000) Equity Shares of Rs.10 each 300.00 300.00 ISSUED, SUBSCRIBED AND PAID UP 285,000,000 (2008: 285,000,000) Equity Shares of Rs.10 each, fully paid up 285.00 285.00 Of the above: 1) 60,000,000 (2008: 60,000,000) shares have been fully paid up, pursuant to a contract without payment being received in cash 2) 210,000,000 (2008: 210,000,000) shares have been allotted as fully paid bonus shares by capitalisation of General Reserve 3) 15,000,000 (2008:15,000,000) shares are allotted as fully paid up by way of Euro issue, represented by 7,500,000 American Depository Receipts (ADRs) SCHEDULE - 2 RESERVES AND SURPLUS (a) CAPITAL RESERVE (Refer note B2, Schedule 20) Balance at the beginning of the year Less : Depreciation on assets gifted transferred to Profit and Loss account (b) SECURITIES PREMIUM ACCOUNT Balance at the beginning of the year Less: Adjustment pursuant to merger with VSNL Broadband limited as approved by Honorable High Court (Refer note B10, Schedule 20) Balance at the end of the year (c) GENERAL RESERVE Balance at the beginning of the year Add: Transferred from Profit and Loss account Add: Adjustments pursuant to transitional provision of Accounting Standard - 15 (d) DEBENTURE REDEMPTION RESERVE Balance at the beginning of the year Add: Transferred from profit and loss account (Refer note B13, Schedule 20) (e) PROFIT AND LOSS ACCOUNT Balance carried forward SCHEDULE - 3 SECURED LOANS DEBENTURE (Refer note B13, Schedule 20) (a) 10000, 11.70% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10 lakhs each (b) 1900, 11.00% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10 lakhs each (c) 550, 11.20% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10 lakhs each (d) 50, 11.25% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10 lakhs each TERM LOAN Term - Loan Hongkong and Shanghai Banking Corporation Ltd (note 1)
208.29 0.60 207.69 834.88 109.87 725.01 3,326.87 51.60 3,378.47 102.50 102.50 2,099.38 6,513.05
208.91 0.62 208.29 834.88 834.88 3,287.80 33.27 5.80 3,326.87 1,892.30 6,262.34
1,000.00 190.00 55.00 5.00 38.82 1,288.82
Note 1: Secured by plant and machinery of Rs. 127 crores and office equipments of Rs. 0.50 crores and Furniture and fixtures of Rs.0.50 crores SCHEDULE - 4 UNSECURED LOANS Short - Term Loans from Banks (Repayable within one year) 589.05 427.80 Other Loans from Banks 450.00 350.00 1,039.05 777.80
43
CMYK

(Rs. in crores)
GROSS BLOCK 1 April, 2008 213.39 213.39 259.44 259.44 3,530.83 3,685.94 49.56 52.18 48.27 43.28 250.01 214.01 1.15 1.60 113.14 4,352.65 4,582.98 167.91 1,431.73 530.96 (62.29) (761.29) 5,890.00 4,352.65 1,363.75 1,428.81 38.00 (113.14) 63.68 443.65 301.93 0.03 (0.45) 1.18 1.15 0.94 1.19 0.01 0.05 0.07 2.11 91.98 83.06 (2.39) (47.06) 341.71 250.01 124.03 114.24 0.82 45.49 29.15 (2.22) (19.36) (0.32) (63.68) (53.34) (366.99) 0.12 24.86 7.68 (1.63) (2.69) 71.62 48.27 14.33 13.41 0.02 3.04 2.20 (0.99) (1.28) 16.40 14.33 168.12 124.03 1.00 0.94 1,792.06 1,363.75 0.93 29.02 6.44 (0.07) (9.06) 79.44 49.56 26.94 23.21 0.21 11.10 6.03 (0.04) (2.30) 38.21 26.94 164.72 1,203.96 433.78 (58.20) (588.89) 4,841.31 3,530.83 1,142.38 1,164.71 36.94 378.51 257.72 (50.09) (280.05) 1,507.74 1,142.38 3,333.57 2,388.45 41.23 22.62 55.22 33.94 173.59 125.98 0.18 0.21 4,097.94 2,988.90 536.38 543.77 77.86 337.30 259.44 45.41 41.28 4.36 4.13 49.77 45.41 287.53 214.03 4.05 217.44 213.39 9.72 7.09 1.10 2.63 10.82 9.72 206.62 203.67 Additions on Amalgamation Additions Deductions/ Adjustments 31 March, 2009 1 April, 2008 Additions Depreciation Deductions/ on Amalga- Amortisation Adjustments mation Expense 31 March, 2009 31 March, 2009 ACCUMULATED DEPRECIATION / AMORTISATION NET BLOCK
44
SCHEDULE - 5 FIXED ASSETS
SL.
FIXED ASSETS
NO.
(a)
LAND
COMMUNICATIONS
(b)
BUILDING
(c)
PLANT AND MACHINERY
(d)
FURNITURE AND FIXTURES
(e)
OFFICE EQUIPMENT
(f)
COMPUTERS
(g)
MOTOR VEHICLES
(h)
GOODWILL
Total
(i)
CAPITAL WORK-IN-PROGRESS [including advances for capital expenditure Rs. 8.22 crores (2008 :Rs. 15.22 crores)]
GRAND TOTAL
4,634.32 3,532.67
NOTES: 4
Land includes Rs.203.04 crores (2008: Rs.198.99 crores) under lease. This includes:
(i)
Leasehold Land in Srinagar of Rs.0.03 crores (2008: Rs. 0.03 crores) in respect of which conveyance is not done and lease deed is not available. 5
Deduction/adjustments under gross block and accumulated depreciation and amortisation for previous year include Rs. 675.50 crores and Rs. 308.82 crores respectively representing the value of assets as on 1 April, 2007 transferred pursuant to Scheme of Arrangement to hive-off the Retail Business Undertaking of the Company. (Refer note B9, Schedule 20). Pursuant to the merger of VSNL Broadband Limited with the Company on the effective date of 1 March, 2007 as stated in note B10, Schedule 20: (i) (ii) (iii) Respective book values as on the effective date have been stated under additions on amalgamation in gross block and accumulated depreciation/amortisation. Additions and deductions/adjustments to gross block include Rs. 24.91 crores and Rs. 0.26 crores respectively from the effective date to 31 March, 2008. Depreciation/amortisation expense and deductions/adjustments under accumulated depreciation/amortisation includes Rs. 17.85 crores and Rs. 0.05 crores respectively from effective date to 31 March, 2008. 6 7 Depreciation/amortisation expense includes prior year depreciation and depreciation written back of Rs. (0.07) crores (Net). Figures in italics are for the previous year.
(ii)
Rs. 1.21 crores (2008: Rs. 1.21 crores) in respect of which lease agreement has not been executed/ registered.
(iii)
Rs. 0.16 crores identified as surplus land.
Gross block of buildings include:
(i)
Rs. 7.79 crores (2008: 7.79 crores) for leasehold office space, of which Rs. 1.84 crores (2008: Rs. 1.84 crores) pertains to assets acquired on or after 31 March 2001.
(ii)
Rs. 0.44 crores (2008: Rs. 0.44 crores) being cost of flats in Co-operative Societies under formation.
(iii)
Rs. 32.75 crores (2008: Rs.32.75 crores) for flats at Mumbai and Rs. 1.03 crores (2008: Rs. 1.03 crores) for office space at New Delhi in respect of which agreements have not been executed.
Gross block and accumulated depreciation of plant and machinery includes Indefeasible Rights of Use (IRUs) for domestic and international telecommunication circuits of Rs 307.43 crores (2008: Rs. 252.26 crores) and Rs. 94.20 crores (2008: Rs. 76.66 crores) respectively.
CMYK

SCHEDULE - 6 INVESTMENTS I. A. TRADE INVESTMENTS (At Cost) Fully Paid Equity Shares (Unquoted) (a) Tata Teleservices Ltd. (Equity shares of Rs 10 each) (36,542,378 Equity shares of Rs. 10 each sold during the year) (Refer note B4, Schdule 20) (b) New ICO Global Communications (Holdings) Limited (Class A common stock of US$ 0.01 each) (c) United Telecom Limited - Joint Venture (Equity shares of NRS 100 each) (Refer note B5, Schdule 20) B. (i) Investment in Subsidiary Companies Fully Paid Equity Shares (Unquoted) (a) Tata Communications Lanka Limited (Equity shares of LKR 10 each) (b) Tata Communications International Pte. Ltd. (Equity shares of US$ 1 each) (50,810,000 Equity shares of US $ 1 each subscribed during the year) (Refer note B6, Schedule 20) (c) Tata Communications Services (America) Inc. (Equity shares of US$ 0.01 each) (d) VSNL SNOSPV Pte. Ltd. (Equity shares of US$ 1.00 each) (e) VSNL Broadband Ltd. (Refer note B10, Schedule 20) (Equity shares of Rs. 10 each) (f ) Tata Communications Internet Services Ltd. (Formerly known as VSNL Internet Serivces Ltd.) (Equity shares of Rs. 10 each) (100,000,000 Equity shares of Rs. 10 each subscribed during the year) 13,661,422 110,810,000 7.41 474.23 7.41 265.77 439,863,622 933.75 1,011.32 Number of shares As at 31 March, 2009 Rs in crores As at 31 March, 2008 Rs in crores
180,373 4,638,840
0.01 28.99
0.01 28.99
3,000 769,333 195,004,050
1.31 3.29 194.47
1.31 3.29 202.09 94.47
(g) Tata Communications Transformation Services Limited (Equity shares of Rs. 10 each) (h) Banking ATM InfraSolutions Limited (Equity shares of Rs. 10 each) (50,000 Equity shares of Rs. 10 each subscribed during the year) (ii) Fully Paid Preference Shares (Unquoted) (a) Tata Communications International Pte. Ltd. (Cumulative convertible redeemable Preference Shares of US$1 each) (Refer note B6, Schedule 20)
500,000 50,000
0.50 0.05
0.50
30,955,250
139.32
139.32
45
CMYK
COMMUNICATIONS

SCHEDULE - 6 INVESTMENTS (Contd.) (b) Tata Communications Internet Services Limited (Formerly known as VSNL Internet Services Ltd.) (Cumulative convertible Preference Shares of US$1 each) (19,000,000 preference shares of Rs. 100 each subscribed during the year) (c) VSNL SNOSPV Pte. Ltd. (Cumulative convertible redeemable Preference Shares of US$1 each) (24,680,000 preference shares of US $ 1 each subscribed during the year) II. OTHERS INVESTMENTS IN MUTUAL FUNDS (Unquoted) (a) Liquid Dividend Plan (including dividend reinvestment) Deutsche Credit Opportunity Fund - Weekly Dividend Reinvestment Liquid Plus LIC MF Liquid Fund - Dividend Plan Principal Liquid Institutional Premium Plan Daily Dividend Reinvestment Principal Liquid Plus Regular Plan Daily Dividend Reinvestment Prudential Flexible Income Plan - Daily Dividend Reinvestment (b) Fixed Maturity Plan ABN AMRO Fixed Maturity Plan -17 Months Growth Birla Fixed Term Plan 16 Months HDFC Fixed Maturity Plan 16 Months-December 06 HSBC Fixed Term Plan - Series 21-15 Months HSBC Fixed Term Series -22 - Institutional Growth ING Fixed Maturity Fund - 28 - Growth Kotak 16 Months Fixed Maturity Plan Series 1 Principal 540 Days Fixed Maturity Plan Prudential Fixed Maturity Plan 15 Months Growth 0207 Prudential Fixed Maturity Plan 18 Months - Series 34 Prudential ICICI Fixed Maturity Plan-Series 34 -17 Months Plan Reliance Fixed Horizon Fund II -16 Months Fixed Maturity Plan 10.00 20.00 24.99 15.00 10.00 15.00 10.00 14.98 10.00 19.99 15.00 19.97 4.14 25.00 10.00 20.08 35.14 19,000,000 Number of shares As at 31 March, 2009 Rs in crores 190.00 As at 31 March, 2008 Rs in crores -
24,680,000
118.71
2,092.04
1,754.48
46
CMYK

SCHEDULE - 6 INVESTMENTS (Contd.) Sundaram 16 Months Fixed Maturity Plan Series - 21 Tata 16 Months Fixed Maturity Plan Series 7 Scheme D - IP Tata Fixed Horizon Fund (Fixed Maturity Plan) Series 6 Scheme C -13 Months Growth Tata Fixed Horizon Fund - Series 7 Scheme B Growth -13 Months UTI 16 Months Fixed Maturity Plan Series II - Plan 16 - Growth UTI Fixed Income Interval Fund - Monthly Interval Plan I Institutional Plan - Growth ICICI Prudential Interval Fund IV - Quarterly Interval Plan B Institutional Plan - Growth (c) Liquid Growth Plan JM Money Manager Fund - Super Plus Plan - Growth Kotak Long Term Floater Growth ICICI Prudential Flexible Income Plan - Growth TATA Floater Fund - Growth Birla Sunlife Savings Fund - Institutional Plan - Growth Fortis Money Plus - Institutional Plan - Growth HDFC Floating Rate Income Fund -Short Term Fund Wholesale Plan - Growth IDFC Money Manager Treasury Plan B - Growth LIC MF Liquid Fund - Growth LIC Income Plus Fund - Growth (d) Short Term Growth Plan Canara Robeco Short Term Fund -Institutional Plan - Growth 10,000,000 10.00 631.63 2,723.67 (1) Book Value of unquoted investments (2) All investments other than investments in Mutual Funds are long - term investments 2,723.67 349.29 2,103.77 2,103.77 48,823,923 43,483,791 37,538,139 19,150,479 6,099,790 60,829,263 40,306,223 17,862,600 62,229,296 85,156,390 60.17 60.28 60.88 25.00 10.14 80.04 60.06 25.04 100.02 100.00 13,208,527 24,397,147 Number of units As at 31 March, 2009 Rs in crores 15.00 25.00 As at 31 March, 2008 Rs in crores 15.00 10.00 10.00 25.00 10.00 -
47
CMYK
COMMUNICATIONS

SCHEDULE - 7 INVENTORIES Equipment for resale Less: Provision for obsolescence Consumable stores and spares As at 31 March, 2009 Rs in crores 0.08 (0.08) 1.56 1.56 SCHEDULE - 8 SUNDRY DEBTORS (UNSECURED) (a) Over six months Considered good Considered doubtful Less: Provision for doubtful debts (b) Other debts Considered good As at 31 March, 2008 Rs in crores 0.08 (0.01) 0.07 5.38 5.45
549.67 193.12 742.79 (193.12) 549.67 793.55 1,343.22
290.76 187.81 478.57 (187.81) 290.76 772.37 1,063.13
SCHEDULE - 9 CASH AND BANK BALANCES (a) Cash in hand (b) Cheques in hand (c) Remittances in transit (d) Current accounts with Scheduled Banks (e) Deposit accounts with Scheduled Banks (Refer note B15, Schedule 20) 0.06 54.77 0.28 54.10 263.16 372.37 SCHEDULE - 10 OTHER CURRENT ASSETS (a) Interest receivable (note 1) (b) Service tax recoverable (c) Pension contributions recoverable from Government of India (net of provision of Rs. 53.71 crores; 2008: Rs. 53.71 crores) (Refer note B7, Schdule 20) (d) NLD licence fees reimbursement recoverable from Government of India (e) Licence fees paid under protest (Refer note B12, Schdule 20) (f ) Others 26.50 95.82 14.48 53.08 0.07 17.63 17.26 44.67 79.63
7.44 0.64 120.85 1.46 252.71
7.44 79.96 295.00 1.32 451.28
Note 1: Interest receivable includes interest due from subsidiaries of Rs. 23.54 crores (2008: Rs. 11.49 crores)
48
CMYK

SCHEDULE - 11 LOANS AND ADVANCES (UNSECURED) (a) Considered good (i) Prepaid expenditure 97.81 2.59 11.63 34.41 83.94 1,417.70 1,132.37 46.97 2,827.42 (b) Considered doubtful Other loans and advances Less: Provision for doubtful advances 7.61 (7.61) 2,827.42 Notes: 7.61 (7.61) 2,428.23 42.86 7.25 6.73 34.50 72.44 1,205.16 221.51 836.95 0.83 2,428.23 (ii) Staff advances (note 1) (iii) Deposits a) b) Public bodies Others As at 31 March, 2009 Rs in crores As at 31 March, 2008 Rs in crores
(iv) Advance recoverable in cash or kind for value to be received (v) Advance payment of tax (net of provision for tax) (vi) Advance towards equity investments in subsidiaries and joint ventures (vii) Loans and advances to subsidiaries and joint ventures (note 2) (viii) Others
(1) Staff Advances includes loans due by an officer of the Company Rs. 0.01 crores (2008:Rs. 0.01 crores) (Maximum amount due at any time during the year is Rs. 0.01 crores (2008: Rs. 0.01 crores) (2) Loans and advances to subsidiary companies and joint ventures a) b) c) d) e) f) g) h) i) j) k) l) n) o) Tata Communications International Pte. Ltd. VSNL Telecommunications(Bermuda) Limited VSNL SNOSPV Pte.Ltd. Neotel (Pty.) Ltd. Tata Communications (Netherlands) BV VSNL Broadband Limited Tata Communications Lanka Ltd. Tata Communications (UK) Limited Tata Communications (US) Inc. Tata Communications Internet Services Limted Tata Communications Transformation Services Limited Banking ATM InfraSolutions Limited Videsh Sanchar Nigam Spain Srl. Tata Communications (America) Inc. 834.17 0.01 151.59 2.29 2.98 0.03 0.29 0.30 138.70 0.06 0.35 0.01 1.59 429.00 0.15 3.19 2.75 3.62 3.16 0.01 0.44 0.95 393.07 0.61 -
m) United Telecom Limited
49
CMYK
COMMUNICATIONS

SCHEDULE - 12 CURRENT LIABILITIES (a) Sundry Creditors: (i) Creditors for interconnect charges 1,015.84 0.64 794.88 498.36 704.12 0.19 500.07 380.28 (ii) Dues of micro, small and medium enterprise (Refer note B31, Schdule 20) (iii) Others (note 3) (b) Deferred revenues and advance received from customers (c) Liability towards Investors Education and Protection Fund under Section 205C of the Companies Act 1956 (not due): Unpaid dividend (note 1) (d) Government of India Current Account (e) Other liabilities (note 2) (f ) Interest accrued but not due on loans As at 31 March, 2009 Rs in crores As at 31 March, 2008 Rs in crores
0.78 20.57 227.74 48.68 2,607.49
1.12 20.57 387.60 0.96 1,994.91
Notes: (1) There are no dividends due and outstanding for a period exceeding seven years. (2) Includes Rs.86.04 crores overdrawn book bank balance (2008: Rs. 58.60 crores) (3) Sundry creditors - others includes due to subsidiary companies and joint ventures a) b) c) d) e) f) g) h) i) j) k) l) VSNL Broadband Limited Tata Communications (Canada) ULC. Tata Communications Lanka Ltd. Tata Communications Services (America) Inc. Tata Communications (US) Inc. Videsh Sanchar Nigam Spain Srl. Tata Communications (Hongkong) Limited Tata Communications International Pte. Ltd. Tata Communications Internet Services Limted United Telecom Limited Tata Communications Transformation Services Ltd. Tata Communications UK Limited 12.92 0.18 0.06 5.02 9.32 1.51 1.36 5.25 1.42 0.02 2.19 1.60 0.18 3.59 1.97 0.51 7.16 -
SCHEDULE - 13 PROVISIONS (a) Provisions for employee benefits (b) Provision for proposed dividend (c) Tax on dividend (d) Provision for contingencies (Refer note B23, Scehdule 20) (e) Provision for taxes (net of advance taxes) 120.46 128.25 21.80 9.40 8.70 288.61 86.07 128.25 21.80 15.16 8.70 259.98
50
CMYK
SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

SCHEDULE-14 OTHER INCOME (a) Dividend Income from current Investments (b) Dividend Income from investment in a subsidiary (c) Profit on sale of current investments (net) (d) Profit on sale of fixed assets (net) (e) Profit from sale of long term investment (f ) Rent (g) Exchange gain (net) (h) Provisions no longer required - written back (i) (j) Interest on Income Tax Refund Other Year ended 31 March, 2009 Rs in crores 21.56 3.96 34.07 21.98 46.56 10.78 33.94 172.85 SCHEDULE-15 INTEREST INCOME (a) Bank Deposits [Tax deducted at source Rs. 1.67 crores (2008:Rs. 0.03 crores)] (b) Other Loans and Advances (note 1) [Tax deducted at source Rs. 6.45 Crores (2008: Rs. 2.22 crores)] 20.21 41.77 61.98 Note: (1) Interest on Loans and Advances includes Rs. 41.58 crores (2008: Rs. 14.36 crores) from subsidiaries. Tax Deducted at source on such income is Rs. 6.45 crores (2008: Rs. 2.18 crores) SCHEDULE - 16 SALARIES AND RELATED COSTS (a) Salaries and related costs (b) Contributions to provident, gratuity and other funds (c) Staff welfare expenses 262.84 31.69 45.54 340.07 SCHEDULE-17 NETWORK COSTS (a) Charges for use of transmission facilities (b) Royalty and licence fee to Department of Telecommunications (c) Rent of satellite channels (d) Rent of landlines [net of excess provision written back Rs. 10.02 crores (2008: Nil)] (e) Administrative lease charges 1,569.50 125.76 31.35 28.66 6.10 1,761.37 1,659.43 101.80 29.18 57.04 5.22 1,852.67 195.94 10.07 36.42 242.43 0.12 15.87 15.99 Year ended 31 March, 2008 Rs in crores 29.98 14.02 1.58 1.89 18.43 18.76 16.66 64.72 166.04
51
CMYK
COMMUNICATIONS
SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

SCHEDULE - 18 OPERATING AND OTHER EXPENSES (a) Consumption of stores (b) Light and power (c) Repairs and Maintenance: (i) Buildings 10.97 157.11 14.48 151.35 2.41 40.61 10.35 22.17 13.27 2.69 67.08 8.13 22.51 80.30 7.82 0.40 1.52 0.18 89.30 804.51 SCHEDULE-19 INTEREST EXPENSE (a) Interest paid on loans (note 1) (b) Interest on Debentures (c) Other Interest 143.19 46.06 1.35 190.60 Note: (1) Interest expense includes interest on fixed loans of Rs. 118.37 crores (2008: Rs. 35.44 crores) (2) Interest expense is net of interest captialised during the year of Rs. 0.01 crores (2008: Rs. 0.07 crores) 36.97 2.63 39.60 7.28 111.90 8.12 11.87 29.04 42.19 7.10 23.42 9.93 2.79 90.53 4.45 9.47 53.96 9.82 0.08 7.07 2.00 63.37 568.14 (ii) Plant and Machinery (iii) Others (d) Bad Debts written off (e) Provision for doubtful debts (f ) Rent (g) Rates and taxes (h) Travelling expenses (i) (j) (l) Telephone expenses Printing, postage and stationery Advertising and publicity Year ended 31 March, 2009 Rs in crores 11.20 90.66 Year ended 31 March, 2008 Rs in crores 10.63 63.12
(k) Legal and professional fees (m) Commissions (n) Services rendered by agencies (o) Insurance (p) Donations (q) Loss on sale of fixed assets (net) (r) (s) (t) Exchange loss (net) Prior period adjustments (net) Other expenses
52
CMYK
SCHEDULE 20
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial statements are prepared under the historical cost convention and the requirements of the Companies Act, 1956. 2. Use of estimates The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts and advances, employee benefits, provision for income taxes, impairment of assets and useful lives of fixed assets. 3. Fixed Assets i). ii). Fixed assets are stated at cost less accumulated depreciation. Cost includes freight, duties, taxes and all incidental expenses incurred to bring the assets to their present location and condition. Fixed assets received as gifts from other Foreign Telecom Carriers / vendors are capitalised and credited to capital reserve on the basis of notional cost (cost assessed by customs authorities). Cost includes freight, insurance and customs duty.
iii). Intangible assets in the nature of Indefeasible Rights of Use (IRUs) for international and domestic telecommunication circuits are classified under fixed assets. IRU agreements in respect of these intangibles transfer substantially all the risks and rewards of ownership. iv). Jointly owned assets are capitalised in proportion to the Companys ownership interest in such assets. v). Costs of borrowing related to the acquisition or construction of fixed assets that are attributable to the qualifying assets are capitalised as part of the cost of such asset. A qualifying asset is one which necessarily takes a substantial period to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred in accordance with the Accounting Standard on Borrowing Costs (AS-16) notified by the Companies (Accounting Standards) Rules, 2006.
4.
Depreciation Depreciation is provided on the straight line method (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except as follows: Assets i). Plant and Machinery a. b. c. d. Land cables Earth station and switches Other Networking equipments Customer premises cables & equipments 6.33% 7.92% 11.88% 19.00% Life of IRU or period of agreement,whichever is lower Over the lease period Rates of Depreciation /Period of amortisation
ii). Indefeasible Rights of Use (IRUs) iii). Leasehold Land 5. Operating Leases
These rates are not less than those prescribed under Schedule XIV. Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vest with the lessor are classified as operating leases. Rental income and rental expenses on assets given or obtained under operating lease arrangements are recognised on a straight line basis over the term of the lease. The initial direct costs relating to operating leases are recorded as expenses as they are incurred.
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd.)

6. Impairment At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of an assets net selling price and value in use. In assessing the value in use, the estimated future cash flows expected from the continuing use of the asset and from its ultimate disposal are discounted to their present values using a pre-determined discount rate that reflects the current market assessments of the time value of money and risks specific to the asset. 7. Investments Long-term investments are valued at cost less provision for other than temporary diminution in value. Current investments comprising investments in mutual funds are stated at the lower of cost or market value, determined on an individual investment basis. 8. 9. Inventories Inventories are valued at the lower of cost or net realisable value. Cost is determined on a weighted average basis. Employee Benefits i). Short Term Employee benefits The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave and performance incentives payable within twelve months. ii). Post employment benefits Contributions to defined contribution retirement benefit schemes are recognised as expenses when employees have rendered services entitling them to the contributions. For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. 10. Revenue Recognition i). Revenues from Telephony services are recognised at the end of each month based upon minutes of traffic completed in such month. A substantial portion of revenues are on account of recoveries from Foreign Telecommunication Carriers for incoming traffic and recovery from domestic carriers for delivery of calls on foreign and domestic networks. Revenues from Data services are recognised over the period of the respective arrangements based on contracted fee schedules.
ii).
iii). Revenues from right to use of fibre capacity provided based on IRU are recognised over the period of such arrangements. iv). Revenues from Internet Telephony services are recognised based on usage. v). Dividends from investments are recognised when the right to receive payment is established and no significant uncertainty as to measurability or collectibility exists.
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vi). Transactions with providers of telecommunication services such as buying, selling, swapping and/or exchange of traffic are accounted for as non-monetary transactions depending on the terms of the agreements entered into with such telecommunication service providers. 11. Taxation i). Current tax expense is determined in accordance with the provisions of the Income Tax Act, 1961. Deferred tax assets and liabilities are measured using the tax rates, which have been enacted or substantively enacted at the balance sheet date. Deferred tax expense or benefit is recognised on timing differences being the differences between taxable incomes and accounting incomes that originate in one period and are capable of reversing in one or more subsequent periods. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient taxable income will be available to realise these assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.
ii).
iii). Provision for current income taxes and advance taxes arising in the same jurisdiction are presented in the balance sheet after offsetting on an assessment year basis. 12. Foreign Currency Transactions i). Foreign currency transactions are converted into Indian Rupees at rates of exchange approximating those prevailing at the transaction date. Foreign currency monetary assets and liabilities are translated to Indian Rupees at the closing rate prevailing on the balance sheet date. Exchange differences on foreign currency transactions are recognised in the profit and loss account. Premium or discount on forward contracts and upfront premium payable on option contracts are amortised over the life of such contracts and recognised in the profit and loss account. Forward contracts outstanding as at the balance sheet date are stated at exchange rates prevailing at the reporting date and any gains or losses are recognised in the profit and loss account. Profit or loss arising on cancellation or enforcement/exercise of forward exchange and option contracts is recognised in the profit and loss account in the period of such cancellation or enforcement/exercise. Option contracts outstanding as at the balance sheet date are marked-tomarket with the values as reported by banks and any gains or losses are recognised in the profit and loss account.
ii).
13. Earning Per Share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events if any of bonus issue to existing shareholders and share split. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares from the exercise of options on unissued share capital. The number of equity shares is the aggregate of the weighted average number of equity shares and the weighted average number of equity shares, which would be issued on the conversion of all the dilutive potential equity shares into equity shares. Options on unissued equity share capital are deemed to have been converted into equity shares. 14. Contingent Liabilities and Provision Provisions are recognised in respect of present probable obligations, the amount of which can be reliably estimated. Contingent Liabilities are disclosed in respect of possible obligations that may arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. B. 1. NOTES TO ACCOUNTS The Company was incorporated on 19 March, 1986. The Government of India vide its letter No. G-25015/6/86-OC dated 27 March, 1986, transferred all the assets and liabilities of the Overseas Communications Service (OCS) (part of the
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Department of Telecommunications, Ministry of Communications) as appearing in the Balance Sheet as at 31 March, 1986 to the Company with effect from 1 April, 1986. As per the letter no. G-25015/6/86-OC dated 23 October, 2001 of Government of India, Department of Telecommunications, there was no requirement to register a formal transfer deed or deed of sale in the matter of such transfer of assets. During the year 2007-08, the Company changed its name to Tata Communications Limited and the fresh certificate of incorporation consequent upon the change of name was issued by the Registrar of Companies, Maharashtra on 28 January, 2008. 2. Capital reserve includes Rs. 205.22 crores in respect of foreign exchange gains on unutilised proceeds from Global Depository Receipts credited to Capital Reserve in 2000-01 Rs. 203.70 crores and Rs. 1.52 crores in 2001-02. The Board of Directors have recommended a dividend of Rs. 4.50 (2008: Rs. 4.50) per share for the year ended 31 March, 2009. In terms of the agreements entered into between Tata Teleservices Ltd. (TTSL), Tata Sons Ltd. (TSL) and NTT DoCoMo, Inc. of Japan (Strategic Partner-SP), TSL gave an option to the Company to sell 36,542,378 equity shares in TTSL to the SP, as part of a secondary sale of 253,163,941 equity shares effected along with a primary issue of 843,879,801 shares by TTSL to the SP. Accordingly, the Company realised Rs 424.22 crores on sale of these shares resulting in a profit of Rs 346.65 crores which has been reflected as an exceptional item in the profit and loss account for the current year. If certain performance parameters and other conditions are not met, should the SP decide to divest its entire shareholding in TTSL, acquired under the primary issue and the secondary sale, and should TSL be unable to find a buyer for such shares, the Company is obligated to acquire the shareholding of the SP, at the higher of fair value or 50 percent of the subscription purchase price, in proportion of the number of shares sold by the company to the aggregate of the secondary shares sold to the SP, or if the SP divests the shares at a lower price pay a compensation representing the difference between such lower sale price and the price referred to above. Further, in the event of breach of the representations and warranties (other than title and tax) and covenants not capable of specific performance, the Company is liable to reimburse TSL, on a pro rata basis, up to a maximum sum of Rs 548.50 crores. The exercise of the option by SP being dependent on several variables, the liability, if any, in this respect is remote and indeterminable. 5. The Company has an investment of Rs. 28.99 crores (2008: Rs. 28.99 crores) in United Telecom Ltd. Nepal (UTL) representing an equity interest of 26.66 percent (2008: 26.66 percent) in the issued and paid-up capital of UTL. UTL has accumulated losses, which have significantly eroded its net worth. In the opinion of the management, having regard to the long gestation period inevitable to the nature of its business and future business projections, there is no permanent diminution in value of the investment. The Company has an investment of Rs. 474.23 crores (2008: Rs. 265.77 crores) in Equity Shares and Rs.139.32 crores (2008: Rs. 139.32 crores) in preference shares of Tata Communications International Pte. Ltd (TCIPL), a wholly owned subsidiary. In the opinion of the management, having regard to the nature of its business and future business projections, there is no diminution in value of the investment. As at 31 March, 2009 the proportionate share of pension obligations and payments of Rs. 61.15 crores (2008 : Rs 61.15 crores) to the erstwhile Overseas Communications Service (OCS) employees were recoverable from the Government of India (the Government). Pursuant to discussions with the Government, the Company had made a provision of Rs. 53.71 crores (2008 : Rs 53.71 crores) thereby having a net amount due from the Government towards its share of pension obligations of Rs. 7.44 crores (2008 : Rs 7.44 crores). Pursuant to acquisitions of Tyco Global Network (TGN) and Teleglobe (TLGB), the Company from 1 April, 2006 adopted the Residual Profits Split Method (RPSM) for recording transactions pertaining to International Telecommunications Services under its Transfer Pricing Policy. This policy governs the majority of the transactions between the Company and its international subsidiaries. The Companys subsidiary in the Netherlands is designated as the Central Contracting Party (CCP) and Transfer Pricing Administrator (TPA).
3. 4.
6.
7.
8.
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9. The Board of Directors of the Company in their meeting held on 14 March, 2007 had approved a Scheme of Arrangement (Scheme) to hive-off its Retail Business Undertaking (RBU) to its wholly owned subsidiary, Tata Communications Internet Services Ltd (TCISL) (formerly known as VSNL Internet Services Limited). The High Court of Judicature at Bombay and Delhi approved the Consolidated Scheme vide their orders dated 25 April, 2008 and 27 May, 2008 respectively. In this respect the loss of RBU for financial year 2006-07 transferred to subsidiary as aforesaid amounting to Rs 28.25 crores (net of tax) was adjusted in the opening balance of profit and loss account of the previous year. 10. The Board of Directors of the company at its meeting held on 4 December, 2007 had approved the merger of the Companys wholly owned subsidiary, VSNL Broadband Limited with effect from 1 March, 2007. Consequent to the filing of the final certified order dated 3 April, 2009 of the Honble High Court of juridicature at Bombay with the Registrar of the Companies, Maharashtra the Scheme of Amalgamation between VSNL Broadband Limited with the Company has become effective from the appointed date of 1 March, 2007. The amalgamation has been accounted for based on the Scheme of Amalgamation approved by Honble High Court of juridicature at Bombay. In accordance with the said Scheme: i). All the assets, debts, liabilities and obligations of VSNL Broadband Limited have been vested in the Company with effect from 1 March, 2007 and have been recorded at their respective book values. Accordingly, to give effect to the scheme, VSNL Broadbands net profit for the period 1 March, 2007 to 31 March 2008 amounting to Rs. 2.72 crores (net of tax) (the item-wise break-up is given in (iv) below) has been included in the Companys opening balance of Profit and Loss account. There were no material difference in the accounting policies of VSNL Broadband Limited and the Company. ii). VSNL Broadband Limited being a wholly owned subsidiary of the Company, no securities have been issued and allotted as a part of purchase consideration.
iii). As on 1 March, 2007 Net Book value of total assets and Liabilities was Rs. 150.22 crores and Rs. 58.00 crores respectively. The excess of the cost of investment held by the Company in VSNL Broadband Limited over the net book value of assets taken over by the Company amounting to Rs. 109.87 crores has been transferred to the Securities Premium Account. iv). The item-wise break-up of VSNL Broadbands income and expenditure for the period 1 March, 2007 to 31 March, 2008 is: Revenues Other income Total income Payment to and provision for employees Operation & Administration Expenses Interest & Finance Charges Depreciation Total expenditure Profit before tax Tax expense Profit after tax Rs. in crores 43.87 0.75 44.62 0.02 17.59 5.92 17.85 41.38 3.24 0.52 2.72
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11. On 27 August, 2008, the Arbitration Tribunal (the Tribunal) of the International Chamber of Commerce, Hague handed down a final award in the arbitration proceedings brought by Reliance Globalcom Limited (Reliance), formerly known as FLAG Telecom, against the Company relating to the Flag Europe Asia Cable System. The Tribunal directed the Company to pay Rs. 95.60 crores (US$ 21.45 million) (2008: Rs. NIL) as final settlement against US$ 385 million claimed by Reliance. The amount of Rs. 95.60 crores has been charged to profit and loss account and has been disclosed as an exceptional item. 12. In January 2008, an amount of Rs. 295 crores (2008: Rs. 295 crores) was paid to the Department of Telecommunications (DoT) under protest, towards payment of licence fees, interest and penalty demanded by DoT before issue of certain licences to the Company. Against this, the Company carried a provision of Rs. 174. 15 crores for license fees and interest thereon which has been set off against the payment of Rs. 295 crores for the presentation in the financials. The Company has filed a petition in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) challenging applicability of penal provisions under ILD and NLD licence agreements. The Company believes that the DoTs claim for penalty and interest on penalty, aggregating Rs. 115.73 crores (included in the aforesaid Rs. 295 crores) will not be sustained based on the terms of the license agreement. Consequently this amount of Rs.115.73 crores together with the excess license fee paid of Rs. 5.12 crores (Payment of Rs. 295 crores minus license fees, interest thereon and penalty all aggregating to Rs. 289.88 crores computed by the Company) totalling to Rs. 120.85 crores is retained as an asset in books. 13. Secured Debentures During the year the Company has issued Rated taxable Secured Redeemable Non-convertible Debentures in demat form for cash at par on private placement basis aggregating to Rs.1,250 Crores (2008: Rs NIL). IDBI Trusteeship Services Limited has been appointed as trustee to the debenture issue. i). Nature of Security Rs. 1,000 crores, 11.70% debentures (face value of Rs. 1,000,000 each) are secured by a first legal mortgage and charge on the Companys immovable property being the free hold land at Mouje Maharajpura, Gujarat and Plant and machinery represented by earth stations, network equipments, Land and sea cables, transmission equipments and other telecom equipments. Rs. 250 crores, debentures (interest ranging from 11.00% to 11.25%, face value of Rs. 1,000,000 each) are secured by a first legal mortgage and charge on the Companys immovable property being the free hold land at Parambur Barracks, Chennai and Plant and machinery represented by land cable network and equipments. ii). Redemption Terms These debentures are due for redemption as given belowDate of redemption as per terms of issue 25-11-2011 25-11-2012 25-11-2013 23-07-2014 23-01-2016 23-01-2019 Total 1,000 190 55 11.70% Debentures 400 400 200 190 55 5 5 11.00% Debentures 11.20% Debentures 11.25% Debentures
Rs. in Crores
For facilitating the above redemptions, the Company has created Debenture redemption reserve and Rs.102.50 crores has been appropriated during the current year.
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14. Employee Benefits: Effective from 1 April, 2006 the Company adopted the revised Accounting Standard 15 Employee Benefits (AS15). Retirement Benefits a) Defined Contribution plan Provident Fund The Company makes contribution towards provident fund under a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trustees of the Tata Communications Employees Provident Fund Trust. Under this scheme, the Company is required to contribute a specified percentage of payroll cost to fund the benefits. The Rules of the Companys Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared for Employees Provident Fund by the Government under para 60 of the Employees Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future. There has also been no such deficiency since the inception of the Fund. Provident fund contributions amounting to Rs.11.36 crores (2008: Rs.8.88 crores) have been charged to the profit and loss account. b) Defined Benefit Plans Gratuity The Company makes annual contributions under the Employees Gratuity scheme to a fund administered by Trustees covering all eligible employees. The plan provides for lump sum payments to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. Medical Benefit The Company reimburses domiciliary and hospitalization expenses not exceeding specified limits incurred by eligible and qualifying employees and their dependent family members under the Tata Communications Employees Medical Reimbursement Scheme. The scheme provides for cashless hospitalization where the claims are directly settled by the Company. Pension Plan The Companys pension obligations relate to certain employees transferred to the Company from the Overseas Communications Service (OCS). The Company purchases life annuity policies from an insurance company to settle such pension obligations. During the year the Company has incurred a charge of Rs 10.51 crores (2008 : Rs. 3.49 crores) to meet the additional pension obligation on account of increase in Dearness Allowances. The details in respect of the status of funding and the amounts recognized in the Companys financial statements for the year ended 31 March, 2009 for these defined benefit schemes are as under:
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(i) Changes in the defined benefit obligation: (Rs. in crores) Defined Benefit Plans Gratuity (Funded) As at Medical Benefit (Unfunded) As at 31 March, 2008 28.48 4.23 2.28 0.67 (4.12) 31.54 (Rs. in crores) As at 31 March, 2008 (Funded) 30.03 2.33 (1.36) 1.02 (1.29) 30.73
31 March, 2009 31 March, 2008 31 March, 2009 Projected defined benefit obligation, beginning of the year 27.41 29.42 31.54 Current Service Cost 2.33 2.45 4.03 Interest Cost 2.00 2.00 2.52 Liability transferred from / (to) other Company 0.46 (1.36) Actuarial (gain) / loss 2.00 (3.81) 6.69 Benefits paid (1.49) (1.29) (9.10) Projected benefit obligation at the end of the year 32.71 27.41 35.68
(ii) Changes in the fair value of plan assets for gratuity: As at 31 March, 2009 (Funded) 30.73 2.40 0.46 (2.00) (1.49) 30.10
Particulars Fair value of plan assets, beginning of the year Expected return on plan assets Employers contribution Transfer (to)/from other Company Actuarial (loss)/ gain Benefits paid Fair value of plan assets at the end of the year
(iii) The amounts recognised in the Profit and Loss Account for the year ended 31 March, 2009: (Rs. in crores) Defined Benefit Plans Gratuity Medical Benefits (Funded) (Unfunded) Year ended Year ended Current service cost Interest cost Expected return on plan assets Net actuarial loss/(gain) recognised in the year Net Gratuity and Medical Benefits Cost 31 March, 2009 2.33 2.00 (2.40) 4.00 5.93 31 March, 2008 2.45 2.00 (2.33) (4.83) (2.71) 31 March, 2009 4.03 2.52 6.69 13.24 31 March, 2008 4.23 2.28 0.67 7.18
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iv) The amounts recognized in the Balance sheet is as follows (Rs. in crores) Defined Benefit Plans Medical Benefits (Unfunded) As at 31 March, 2009 35.68 35.68 31 March, 2008 31.54 31.54
Gratuity (Funded) As at 31 March, 2009 Liability at the end of the year Fair value of plan assets at the end of the year Net (asset)/liability in balance sheet 32.71 (30.10) 2.61
31 March, 2008 27.41 (30.73) (3.32)
(v) Categories of plan assets as a percentage of total plan assets: Category of assets Government of India Bonds Corporate Bonds Special Deposits Scheme State Government Bonds Insurer Managed Funds Others Total As at 31 March, 2009 Percentage 1.97 8.33 89.70 100.00 As at 31 March, 2008 Percentage 8.33 6.57 5.37 8.27 65.11 6.35 100.00
The Companys policy and objective for plan assets management is to maximize return on plan assets to meet future benefit payment requirements while at the same time accepting a low level of risk. The asset allocation for plan assets is determined based on the investment criteria approved under the Income Tax Act, 1961 and is also subject to other exposure limitations. vi). Principal actuarial assumptions used in accounting for gratuity and medical benefit obligations: (Percentage) Defined Benefit Plans Gratuity Medical Benefits (Funded) (Unfunded) Assumptions As at As at 31 March, 2009 31 March, 2008 Discount rate Expected return on plan assets Increase in compensation cost Health care cost increase rate 7.50 8.00 6.00 8.00 8.00 6.00 31 March, 2009 7.50 6.00 2.00 31 March, 2008 8.00 6.00 2.00
The estimates of future compensation cost considered in the actuarial valuation take account of inflation, seniority, promotion and other relevant factors.
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vii). Effect of change in Assumed Health Care Cost Trend Rate. A one-percentage-point change in assumed health care cost trend rates would have the following effects: (Rs. in crores) Defined Benefit Plans As at As at 31 March, 2009 31 March, 2008 1 Percentage point 1 Percentage point Effect on service cost Effect on interest cost Effect on post-employment benefit obligation Increase 4.47 3.17 39.57 Decrease 3.60 2.55 31.86 Increase 4.69 2.56 34.98 Decrease 3.78 1.99 28.16
The Company expects to contribute Rs. 2.08 crores (2008: Nil) towards employers contribution for funded defined benefit plans in 2009-10. 15. Cash and cash equivalents represent:As at 31 March, 2009 Rs. in crores Cash and Cheques on hand and balances held with scheduled banks Remittances in transit Deposit accounts held with scheduled banks Deposits with original maturity over three months Restricted Cash Balance Current Account / Deposits held for unpaid dividends Cash and cash equivalents 16. Deferred tax liability: As at 31 March, 2009 Rs. in crores Deferred tax liability Difference between accounting and tax depreciation Deferred tax assets Provision for doubtful debts Provision for post-employment medical benefits and leave encashment pursuant to transitional provision of AS-15 Provision for leave encashment Expenditure on Voluntary retirement schemes Expenditure incurred on NLD license fees Unearned income and deferred revenues Others 261.63 67.02 8.83 9.39 3.25 21.47 14.28 4.14 128.38 Net deferred tax liability 133.25 As at 31 March, 2008 Rs. in crores 210.27 65.22 8.83 5.12 4.87 23.26 15.64 3.20 126.14 84.13 108.93 0.28 263.16 372.37 (7.68) (0.04) (0.78) 363.87 As at 31 March, 2008 Rs. in crores 62.37 17.26 79.63 (1.10) 78.53
Note: Amalgamation of VSNL Broadband Limited with the Company has resulted in recognition of net deferred tax liability of Rs. 7.44 crores as on 31 March, 2008 which has been adjusted against opening balance of the profit and loss account.
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17. Auditors Remuneration Included in operating and other expenses: Year ended 31 March, 2009 Rs. in crores Auditors remuneration and expenses @ (i) Audit fees (ii) Tax audit fees (iii) Other professional services (iv) Service tax *
* Service tax credit has been availed.
Year ended 31 March, 2008 Rs. in crores 1.10 0.20 0.39 0.21
1.15 0.22 0.52 0.23
@ Audit fee for current year includes fee for VSNL Broadband Ltd. which was amalgamated with the Company.
Auditors remuneration excludes fees of Rs. 14.16 crores (2008: Rs. 6.00 crores) payable/paid for professional services to a firm of chartered accountants in which some partners of the firm of statutory auditors are partners. This includes Rs. 4.89 crores in respect of services rendered for FY 2007-08 including for carrying out the audit of the subsidiaries for inclusion in the consolidated financial statements of the company in compliance of the Accounting Standard 21. 18. Managerial Remuneration a) Managerial Remuneration for managing director and non-executive directors. The above is inclusive of : Year ended 31 March, 2009 Rs. in crores 0.68 0.04 0.14 0.45 0.27 0.21 1.79 b) Computation of Net Profit in accordance with Section 309(5) of the Companies Act,1956 Year ended 31 March, 2009 Rs. in crores Profit before taxes as per Profit and Loss Account Add: Managerial Remuneration Provision for doubtful debts (net) Total (A) Less: Profit on Sale of fixed Assets Profit on Sale of Long term Investments Total (B) Net profit as per Section 309(5) of the Companies Act, 1956 713.49 1.79 2.41 4.20 2.06 346.65 348.71 368.98 Year ended 31 March, 2008 Rs. in crores 449.98 1.53 29.04 30.57 1.58 1.89 3.47 477.08 Year ended 31 March, 2008 Rs. in crores 0.53 0.03 0.13 0.45 0.25 0.14 1.53
Salaries Contribution to provident and other funds Estimated monetary value of perquisites Commission Non-executive directors Commission Non-executive directors sitting fees
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Maximum amount permissible for the Managing Director under section 309 of the Companies Act, 1956 Remuneration to Managing Director including commission Maximum Commission permissible to Non-executive Directors under section 309 of the Companies Act, 1956 Commission to Non-executive Directors 19. Earnings Per Share Year ended 31 March, 2009 Rs. in crores, Profit before taxes and exceptional items Income tax expense on profit excluding exceptional items Profit after tax excluding exceptional items Exceptional (expense)/ income (net) Income tax benefit/(expense) on exceptional items Net Profit after tax and exceptional items Number of Shares Before exceptional items Basic EPS Diluted EPS After exceptional items Basic EPS Diluted EPS 462.44 155.46 306.98 251.05 (42.08) 515.95 285,000,000 10.77 10.77 18.10 18.10 Year ended 31 March, 2008 Rs. in crores, 461.18 149.32 311.86 (11.20) 3.80 304.46 285,000,000 10.94 10.94 10.68 10.68 18.45 1.31 3.69 0.27 23.85 1.14 4.77 0.25
20. Segment Reporting a) Business Segments The reportable segments for the year ended 31 March, 2009 and 31 March, 2008 are Wholesale Voice Enterprise , and Carrier Data and Others The composition of the reportable segments is as follows: . Wholesale Voice: includes International and National Voice services. Enterprise and Carrier Data: includes corporate data transmission services like International Private Leased Circuits (IPLC), Frame Relay (FR), Internet Leased Line Circuits (ILL) and National Private Leased Circuits (NPLC). Others: includes Virtual Private Network, Data Centre, TV up-linking, Transponder lease, Corporate Internet Telephony (CIT) and other services. Rs. in crores Year ended 31 March, 2009 Wholesale Voice Revenue from Telecommunication Services Segment Profits Unallocable expenses (net) Profit before taxes and exceptional items Exceptional Expenses/(Income) (net) Profit before taxes Tax expense (net) Profit after taxes 1,740.59 330.52 Enterprise and Carrier Data 1,450.46 1,131.29 Others 558.38 341.84 Total 3,749.43 1,803.65 1,341.21 462.44 (251.05) 713.49 197.54 515.95
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Rs. in crores Wholesale Voice Revenue from Telecommunication Services Segment Profits Unallocable expenses (net) Profit before taxes and exceptional items Exceptional Expenses/(Income) (net) Profit before taxes Tax expense (net) Profit after taxes i) 1,695.25 198.75 Year ended 31 March, 2008 Enterprise and Others Carrier Data 1,226.19 998.39 361.86 189.13 Total 3,283.30 1,386.27 925.09 461.18 11.20 449.98 145.52 304.46
Revenues and expenses, which are directly identifiable to segments, are attributed to the relevant segment. Expenses on rent of satellite channels and landlines, royalty and license fees are allocated on the basis of usage. The segment result is the segment revenues less the segment expenses. Certain costs, including depreciation which are not allocable to segments have been classified as Unallocable expense . Telecommunication services are provided utilising the Companys assets which do not generally make a distinction between the types of services. As a result, fixed assets are used interchangeably between segments. In the absence of a meaningful basis to allocate assets and liabilities between segments, no allocation has been made. Geographical Segments:
ii)
b)
The secondary reportable segments are Geographical. Revenues have been allocated to countries based on location of the customers and are as follows: Segment revenues by Geographical Market Year ended Year ended 31 March, 2009 31 March, 2008 Rs. in crores Rs. in crores India 2,905.84 2,493.48 United Kingdom 183.41 181.54 Saudi Arabia 136.03 159.24 United States of America 97.37 148.48 Singapore 103.83 120.12 United Arab Emirates 48.97 97.66 Others* 273.98 82.78 3,749.43 3,283.30
*Others include amounts recorded as revenues from Tata Communication (Netherlands) BV of Rs 62.95 crores (2008 : Rs.58.16 crores). Tata Communications (Netherlands) BV is a Central contracting party and a transfer pricing administrator for inter-company transactions between Tata Communications Limited and its international subsidiaries (Refer note B8, Schedule 20) 21. Related Party Disclosures: A. List of related parties and relationship: I. Investing parties (Promoters) 1 2 Panatone Finvest Limited Tata Sons Limited
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II. Subsidiaries (Held directly) 1 2 3 4 5 6 7 Tata Communications Internet Services Limited Banking ATM InfraSolutions Limited Tata Communications Transformation Services Limited Tata Communications Lanka Limited Tata Communications Services (America) Inc. Tata Communications International Pte. Ltd. VSNL SNOSPV Pte. Ltd.
III. Other Subsidiaries (Held indirectly) 1 2 3 4 5 6 7 8 9 Tata Communications (Australia) Pty Limited Tata Communications (Belgium) SPRL Tata Communications Services (Bermuda) Limited VSNL Telecommunications (Bermuda) Ltd (In Members Voluntary Liquidation) Tata Communications (Bermuda) Limited Teleglobe Bermuda Ltd (In Members Voluntary Liquidation) Tata Communications (Canada) ULC VSNL International (IPCO) LLC Tata Communications (US) Inc.
10 VSNL International (ITXC) Corp. 11 Tata Communications (America) Inc. 12 VSNL International (Global) Corp. 13 Tata Communications (Middle East) FZ-LLC 14 Tata Communications (UK) Limited 15 Tata Communications (France) SAS 16 Tata Communications Deutschland GmbH 17 Tata Communications (Guam) L.L.C. 18 ITXC Global Hong Kong Limited (In Liquidation) 19 VSNL International (Hong Kong) Limited (In Liquidation) 20 Tata Communications (Hong Kong) Limited
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21 Tata Communications (Hungary) LLC 22 Tata Communications (Ireland) Limited 23 VSNL UK Limited (In Liquidation) 24 Teleglobe International Limited (In Liquidation) 25 Tata Communications (Italy) S.r.l 26 Tata Communications (Japan) KK 27 ITXC IP Holdings S.a r.l 28 Teleglobe International Luxembourg S.a r.l (In Liquidation) 29 TLGB Luxembourg Holdings S.a r.l (In Liquidation) 30 Tata Communications (Nordic) AS 31 VSNL International (Poland) Sp. z o.o. 32 VSNL (Portugal) Unipessoal Limitada 33 VSNL International (Portugal) Instalacao e Manutencao de Redes LDA 34 Tata Communications (Puerto Rico) Inc. 35 Tata Communications (Russia) LLC 36 Teleglobe Asia Pte Ltd 37 Videsh Sanchar Nigam Spain Srl 38 Tata Communications (Sweden) AB 39 Tata Communications (Switzerland) GmbH 40 Tata Communications (Netherlands) BV IV. Joint Venture United Telecom Limited Cochin Submarine Cable Depot (INDIA) Private Limited V. Joint Venture of wholly owned subsidiary SEPCO Communications (Pty) Ltd. (Held through VSNL SNOSPV Pte. Ltd.) Neotel Pty Ltd. (Subsidiary of SEPCO Communications (Pty) Ltd.) VI. Key Managerial Personnel Mr. N.Srinath Mr. Vinod Kumar - Managing Director and Chief Executive Officer TCL Group - Director of Tata Communications Ltd. and Managing Director of Tata Communications International Pte Ltd.
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B. Related party transaction Transactions Investing Company Subsidiaries Key Managerial Personnel Joint Venture (Rs. in crores) Joint Total Venture of wholly owned subsidiary 52.19 52.19 10.92 10.92 63.11 63.11 5.66 5.48 5.66 5.48
Dividend Paid Panatone Finvest Limited Tata Sons Limited Total BEBP Expenses Tata Sons Limited Total
52.19 52.19 10.92 10.92 63.11 63.11 5.66 5.48 5.66 5.48
Revenue from Telecommunication services Tata Communications (Netherlands) BV Tata Communications International Pte. Ltd. Tata Communications (America) Inc. Tata Communications Deutschland GmbH Tata Communications (Hongkong) Limited Tata Communications UK Limited Tata Communications (US) Inc. United Telecom Limited Tata Communications Lanka Limited Tata Communications Transformation Services Limited Neotel Pty Ltd. 62.95 58.16 7.60 9.59 5.60 0.48 2.88 1.11 2.22 6.33 0.55 0.20 2.19 6.38 49.95 27.02 62.95 58.16 7.60 9.59 5.60 0.48 2.88 1.11 2.22 6.33 2.19 6.38 0.55 0.20 49.95 27.02
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B. Related party transaction (Contd.) Transactions Investing Company Subsidiaries Key Managerial Personnel Joint Venture Joint Venture of wholly owned subsidiary 49.95 27.02 (Rs. in crores) Total
Tata Communications Internet Services Limited Tata Communications Services (America) Inc. Tata Sons Limited Others Total Network Cost Tata Communications (Netherlands) BV United Telecom Limited Tata Communications Internet Services Limited Others Total Purchase of Fixed Assets Videsh Sanchar Nigam Spain Srl Total Sale of Fixed Assets Tata Communications (US) Inc. Tata Communications International Pte. Ltd. Total Services rendered Tata Communications Netherlands BV Tata Communications International Pte. Ltd.
2.53 0.49
37.63 7.36 1.39 3.42 23.50 126.72 104.25 68.90 77.97 0.20 6.20 69.10 84.17
2.19 6.38 36.99 28.57 36.99 28.57
37.63 7.36 1.39 3.42 2.53 0.49 23.50 181.39 138.14 68.90 77.97 36.99 28.57 0.20 6.20 106.09 112.74
2.53 0.49 -
0.18 0.18 0.20 0.13 0.33 5.64 4.84 2.21 0.34
0.18 0.18 0.20 0.13 0.33 5.64 4.84 2.21 0.34
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B. Related party transaction (Contd.) Transactions Investing Company Subsidiaries Key Managerial Personnel Joint Venture Joint Venture of wholly owned subsidiary (Rs. in crores) Total
Tata Communications Transformation Services Limited Tata Communications (America) Inc. Tata Communications (Canada) ULC Tata Communications (Hongkong) Limited Tata Communications UK Limited Tata Communications (US) Inc. Tata Communications Internet Services Limited VSNL SNOSPV Pte Ltd. Tata Communications Lanka Limited VSNL Broadband Limited * Others Total Services received Tata Communications Transformation Services Limited VSNL Broadband Limited * Tata Sons Limited Total Equity capital contribution (Refer Cash Flow Statement) Tata Communications International Pte. Ltd.
1.16 3.69 @ @ @ 0.05 0.03 6.48 4.20 0.34 @ 1.95 5.51 15.91 20.53
1.16 3.69 0.05 0.03 6.48 4.20 0.34 1.95 5.51 15.91 20.53
0.09 0.09 -
12.30 2.61
12.30 2.61 0.09 12.39 2.61
12.30 2.61
208.46 -
208.46 -
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VSNL SNOSPV Pte Ltd. United Telecom Limited Tata Communications Internet Services Limited Banking ATM Infra Solutions Limited Total Preference capital contribution Tata Communications Internet Services Limited VSNL SNOSPV Pte. Ltd Total Interest Income Tata Communications International Pte. Ltd. Tata Communications (Netherlands) BV Tata Communications (Guam) L.L.C Tata Communications Services (Bermuda) Limited Tata Communications (America) Inc. Tata Communications (Canada) ULC Tata Communications UK Limited Tata Communications (US) Inc. VSNL SNOSPV Pte. Ltd.
1.60 100.00 0.05 308.51 1.60
5.67 5.67
1.60 5.67 100.00 0.05 308.51 7.27
190.00 118.71 308.71 -
190.00 118.71 308.71 -
36.55 14.36 0.12 0.17 0.31 @ @ 0.20 0.21 4.01 -
36.55 14.36 0.12 0.17 0.31 0.20 0.21 4.01 -
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Tata Communications Lanka Limited Videsh Sanchar Nigam Spain Srl Banking ATM Infra Solutions Limited Others Total Dividend Income Tata Communications Lanka Limited Total Loan given Tata Communications International Pte. Ltd. Banking ATM Infra Solutions Limited VSNL SNOSPV Pte. Ltd. Tata Communications Internet Services Limited Total Loan repaid Tata Communications International Pte. Ltd. Tata Communications Internet Services Limited Others
@ 0.06 0.01 0.21 41.64 14.57 3.96 3.96 -
0.06 0.01 0.21 41.64 14.57 3.96 3.96 -
346.01 500.21 0.35 218.37 6.22 570.95 500.21 98.16 99.69 4.00 1.29 102.16 100.98
346.01 500.21 0.35 218.37 6.22 570.95 500.21 98.16 99.69 4.00 1.29 102.16 100.98
Total Advances given by the Company VSNL SNOSPV Pte. Ltd.
10.67 0.47
10.67 0.47
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B. Related party transaction (Contd.) Transactions Investing Company Subsidiaries Key Managerial Personnel Joint Venture Joint Venture of wholly owned subsidiary 0.01 0.12 0.01 0.12 (Rs. in crores) Total
Tata Communications International Pte. Ltd. Tata Communications Services (Bermuda) Limited Tata Communications (Netherlands) BV Neotel Pty Ltd. Tata Communications (Guam) L.L.C Tata Communications (America) Inc. Tata Communications Internet Services Limited Videsh Sanchar Nigam Spain Srl Tata Communications UK Limited Tata Communications (US) Inc Tata Communications (Japan) KK Tata Communications (Hong Kong) Limited Tata Communications Lanka Limited VSNL Broadband Limited * Others Total Advances repaid to the Company/Adjustments Tata Communications International Pte. Ltd.
1.90 0.35 21.42 0.31 6.71 3.62 8.65 1.61 510.72 5.18 13.16 13.11 8.48 @ 0.02 2.22 1.47 601.63 8.44
1.90 0.35 21.42 0.31 6.71 3.62 0.01 0.12 8.65 1.61 510.72 5.18 13.16 13.11 8.48 0.02 2.22 1.47 601.64 8.56
2.74 0.27
2.74 0.27
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Tata Communications Services (Bermuda) Limited VSNL SNOSPV Pte. Ltd Neotel Pty Ltd. Tata Communications (Canada) ULC Tata Communications (Guam) L.L.C Tata Communications Internet Services Limited Tata Communications (Netherlands) BV Tata Communications (America) Inc. Videsh Sanchar Nigam Spain Srl Tata Communications UK Limited Tata Communications Services (America) Inc Tata Communications (US) Inc. Tata Communications (Japan) KK Others Total Managerial Remuneration N. Srinath Total Balances Receivables Tata Communications (Netherlands) BV
21.56 1.73 0.05 11.30 8.65 765.31 7.35 0.03 5.17 13.30 @ 13.76 8.48 1.44 857.65 3.49
21.56 1.73 0.05 0.02 4.21 11.30 8.65 765.31 7.35 0.03 5.17 13.30 13.76 8.48 1.44 857.67 7.70
1.31 1.14 1.31 1.14 -
1.31 1.14 1.31 1.14
39.79 72.46
39.79 72.46
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United Telecom Limited Tata Communications International Pte. Ltd. Tata Communications (America) Inc. Tata Communications Deutschland GmbH Tata Communications (US) Inc. Tata Communications Services (America) Inc Tata Communications Internet Services Limited Tata Communications Lanka Limited Neotel Pty Ltd. Tata Communications Transformation Services Limited Tata Sons Limited Tata Communications UK Limited Others Total Payables Tata Communications International Pte. Ltd. Tata Communications Transformation Services Limited. Videsh Sanchar Nigam Spain Srl Teleglobe Canada ULC
0.34 0.19 0.34 0.19
7.17 4.67 0.12 3.34 1.14 52.25 @ 0.04 3.66 3.96 19.96 112.18 96.38
0.04 0.43 0.04 0.43
0.04 0.43 7.17 4.67 0.12 3.34 1.14 52.25 0.04 24.10 23.23 3.66 0.34 0.19 3.96 19.96 136.66 120.23
4.41 1.51 0.18 1.42
4.41 1.51 0.18 1.42
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Tata Communications (Hong Kong) Limited. Tata Communications Services America Inc Tata Communications (Canada) ULC Tata Communications (Hongkong) Limited Tata Communications UK Limited N. Srinath United Telecom Limited Tata Sons Limited VSNL Broadband Limited * Others Total Loans Given Tata Communications International Pte. Ltd. VSNL SNOSPV Pte Ltd. Banking ATM Infra Solutions Limited Total Advance Receivable Tata Communications Transformation Services Limited VSNL SNOSPV Pte.Ltd. VSNL Telecommunications (Bermuda) Limited Neotel(Pty)Ltd Tata Communications Internet Services Limited
6.88 5.57 6.88 5.57 -
3.59 2.19 1.62 0.06 1.36 5.06 4.28 9.14 16.54 834.17 440.25 137.28 0.35 971.80 440.25
0.45 0.45 0.45 0.45 -
9.32 7.16 9.32 7.16 -
3.59 2.19 1.62 0.06 1.36 0.45 0.45 9.32 7.16 6.88 5.57 5.06 4.28 25.79 29.72 834.17 440.25 137.28 0.35 971.80 440.25
0.06 0.61 14.31 3.28 0.01 0.14 138.70 393.07
2.29 2.29 -
0.06 0.61 14.31 3.28 0.01 0.14 2.29 2.29 138.70 393.07
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B. Related party transaction (Contd.) Transactions Investing Company Subsidiaries Key Managerial Personnel Joint Venture Joint Venture of wholly owned subsidiary 2.29 2.29 (Rs. in crores) Total
Tata Communications (America) Inc. Tata Communications (Netherlands) BV Tata Comminications (Hong Kong) Limited Tata Communications UK Limited Tata Communications (US) Inc. Tata Communications Lanka Limited Tata Communications Services America Inc Videsh Sanchar Nigam Spain Srl Tata Communications International Pte. Ltd. Others Total Advance Payable Tata Communications International Pte. Ltd. Tata Communications (Canada) ULC Total Advance against equity VSNL SNOSPV Pte. Ltd Tata Communications International Pte. Ltd. Total Interest Accrued-other deposits VSNL SNOSPV Pte. Ltd Tata Communications International Pte. Ltd.
1.59 2.98 @ 0.29 0.30 0.03 @ 0.01 0.15 8.16 158.28 405.41 0.62 11.30 11.92 13.04 208.47 221.51
1.59 2.98 0.29 0.30 0.03 0.01 0.15 8.16 160.57 407.70 0.62 11.30 11.92 13.04 208.47 221.51
3.10 20.43 -
3.10 20.43 -
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Banking ATM Infra Solutions Limited Total Guarantees on behalf of subsidiaries Tata Communications (Netherlands) BV Tata Communications International Pte. Ltd. VSNL SNOSPV Pte. Ltd Tata Communications Transformation Services Limited Tata Communications (US) Inc. Tata Communications UK Limited Tata Communications Internet Services Limited Others Total Letter of Comfort on behalf of subsidiaries Tata Communications (US) Inc Tata Communications Transformation Services Limited VSNL Broadband Limited * Tata Communications International Pte. Ltd. Total
0.01 23.54 -
0.01 23.54 -
2,389.48 1,880.94 1,786.82 360.90 588.88 52.02 22.00 22.00 15.76 18.17 35.00 25.35 4,856.11 2,341.21
2,389.48 1,880.94 1,786.82 360.90 588.88 52.02 22.00 22.00 15.76 18.17 35.00 25.35 4,856.11 2,341.21
89.48 200.10 30.50 24.01 60.00 50.84 170.82 284.11
89.48 200.10 30.50 24.01 60.00 50.84 170.82 284.11
Note: Figures in italics are in respect of the previous year * Refer note B 10, Schedule 20 @ Represents transaction of Less than Rs. 50,000.
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22. Operating lease arrangements: (a) As lessee: Year ended 31 March, 2009 Rs. in crores Year ended 31 March, 2008 Rs. in crores
Minimum lease payments under operating leases recognised as expense in the year 24.06 49.12 At the balance sheet date, minimum lease payments under non-cancellable operating leases fall due as follows: Year ended 31 March, 2009 Rs. in crores 17.28 18.90 2.25 38.43 Year ended 31 March, 2008 Rs. in crores 40.78 42.13 82.91
Due not later than one year Due later than one year but not later than five years Later than five years
Operating lease payments represent rentals payable by the Company for certain buildings and satellite channels. (b) As lessor: i). The Company has leased under operating lease arrangements certain Indefeasible Rights of Use (IRU) with gross carrying amount and accumulated depreciation of Rs. 84.33 crores (2008: Rs.84.33 crores) and Rs. 22.30 crores (2008: Rs.16.79 crores ) respectively as at 31 March, 2009. Depreciation expense of Rs. 5.51 crores (2008: Rs. 5.50 crores) in respect of these assets has been charged in the profit and loss account for the year ended 31 March, 2009. In case of certain lease agreements aggregating to Rs. 278.33 crores (2008: Rs. 198.97 crores) for the year ended 31 March 2009, the gross block, accumulated depreciation and depreciation expense of the assets given on IRU basis is not readily determinable and hence not disclosed. The lease rentals associated with such IRU arrangements for the year ended 31 March, 2009 amounts to Rs. 23.39 crores (2008: Rs.15.33 crores). In respect of such leases, rental income of Rs. 30.24 crores (2008: Rs. 22.13 crores) has been recognised in the profit and loss account for the year ended 31 March, 2009. Future lease rental receipts will be recognised in the profit and loss account of subsequent years as follows: Year ended Year ended 31 March, 2009 31 March, 2008 Rs. in crores Rs. in crores Not later than one year 29.09 24.81 Later than one year but not later than five years 116.38 99.43 Later than five years 145.43 137.03 290.90 ii). 261.27
The Company has leased certain premises under operating lease arrangements. Future lease rental income in respect of these leases will be recognised in the profit and loss account of subsequent years as follows: Year ended Year ended 31 March, 2009 31 March, 2008 Rs. in crores Rs. in crores Not later than one year 0.01 0.71 Later than one year but not later than five years 0.01 0.49 Later than five years 0.39 0.02 1.59
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Lease rental income of Rs. 0.01 crores (2008: Rs. 1.80 crores) in respect of the above leases has been recognised in the profit and loss account for the current year. 23. Provision for Contingencies: 31 March, 2009 Asset Retirement Obligation Others Opening Balance Addition Utilisation Provision written back Closing Balance 1. 2. A. 6.16 (4.23) (1.53) 0.40 9.00 9.00 Rs. in crores 31 March, 2008 Total 15.16 (4.23) (1.53) 9.40 Asset Retirement Obligation 6.16 6.16 Others 12.58 (3.58) 9.00 Total 18.74 (3.58) 15.16
The provision for Asset Retirement Obligation has been recorded in the books of the Company in respect of undersea cables and switches owned by the Company. Others include amounts provided towards claims made by a creditor of the Company. Contingent Liabilities: As at 31 March, 2009 Rs. in crores 4,941.03 As at 31 March, 2008 Rs. in crores 2,341.21
24. Contingent Liabilities and Capital Commitments
i. ii.
iii. iv.
Guarantees given on behalf of subsidiaries (Refer note 1) Claims for taxes on income (Refer note 2 ) (a) Income tax disputes where the department is in appeal against the Company (b) Income tax disputes where the Company has a favorable decision in other assessment year for the same issue (c ) Income tax disputes other than the above Claims for other taxes Other claims
310.61 22.39 1,544.18 49.80 788.71
94.15 2.43 1,405.85 0.53 727.45
Notes: (1) Guarantees given on behalf of subsidiaries: The guarantees have been provided in the ordinary course of business and no liability on the Company is expected to materialise in this respect. (2) Significant claims by the revenue authorities in respect of income tax matters are in respect of: (a) Deductions claimed under Section 80 IA of the Income Tax Act, 1961 from Assessment years 1996-97 onwards have been disallowed by the revenue authorities. The Company has contested the disallowance and has preferred appeals which are pending. (b) Reimbursement by the Department of Telecommunications (DoT) of income tax paid by the Company on the DoT levy during Assessment year 1994-95, that was taxed by the revenue authorities. The Commissioner of Income Tax (Appeals) has upheld the disallowance. The Company is in appeal before the Income Tax Appellate Tribunal. (c) The Company has taken appropriate professional advice in respect of the claims / appeals and has taken all necessary steps to protect its interest. Based on expert opinion, no provision is required in respect of these claims / appeals.
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(3) As on 31 March, 2009, the Company has issued Letters of Comfort for the credit facility agreement, aggregating Rs. 89.48 crores (US $ 17.60 million) (2008 : Rs 200.10 crores ( US $ 50 million)), Rs. 30.50 crores (US $ 6 million) (2008 : Rs 24.01 crores (US $ 6 million)), Rs. Nil (2008 : Rs 60 crores) and Rs. 50.84 crores (US $ 10 million) availed of by Tata Communications (US) Inc. (TCU), a wholly owned subsidiary of TCIPL, Tata Communications Transformation Services Limited, (TCTSL), VSNL Broadband Limited * (VBL) and Tata Communication International Pte Limited (TCIPL) respectively. The Company has undertaken to the lenders of TCU, TCTSL and TCIPL that it shall retain full management control so long as amounts are due to the lenders. (* Refer note B10, Schedule 20 ) (4) The Company has issued a support letter to Tata Communications International Pte Limited (TCIPL), regarding providing financial support enabling, in turn, TCIPL to issue such support letters to certain subsidiaries having negative net worth as at 31 March, 2009 aggregating Rs. 1,417.55 crores (2008 : Rs 1,594.71 crores) in various geographies in order that they remain going concern with reference to the provisions of applicable insolvency laws in their country of incorporation. The letters of comfort / support mentioned in (3) and (4) above have been provided in the ordinary course of business and no liability on the company is expected to materialise in these respects. (5) Contingent liabilities, if any, in respect of sale of shares of Tata Teleservices Limited has beeen stated in note B4, Schedule 20. B. Capital commitments: Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 792.37 crores (2008: Rs. 568.40 crores). The Company has subscribed the capital clause of Memorandum of Association of a new company Cochin Submarine Cable Depot (INDIA) Private Limited which is intended to be 40% Joint venture of the Company. 25. Value of Imports on C.I.F. basis Year Ended Year ended 31 March, 2009 31 March, 2008 Rs. in crores Rs. in crores Stores and Spares 11.42 1.14 Capital Goods 458.39 312.77 26. Earnings in foreign currencies Year Ended 31 March, 2009 Rs. in crores 865.32 41.58 3.96 22.34 933.20 27. Expenditure in foreign currencies Year Ended 31 March, 2009 Rs. in crores 790.76 24.16 6.10 81.01 28.21 95.60 5.12 6.36 1,037.32 Year ended 31 March, 2008 Rs. in crores 652.76 25.33 5.22 60.90 32.97 6.24 783.42 Year ended 31 March, 2008 Rs. in crores 1,001.71 14.58 18.98 1,035.27
Revenue from telecommunication services Interest income Dividend Income Other income
Charges for use of transmission facilities Rent of satellite channels Administrative lease charges Repairs and maintenance Legal and professional fees Settlement of claims Interest Others
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28. Value of imported and indigenous stores/spares consumed Year Ended 31st March, 2009 Rs. in crores Value Percentage Imported Indigenous 1.45 9.75 11.20 12.95 87.05 100.00 Year ended 31st March, 2008 Rs. in crores Value Percentage 1.14 9.49 10.63 10.72 89.28 100.00
29. United Telecom Limited (UTL) is a Joint Venture between the Company, Mahanagar Telephone Nigam Limited, Telecommunications Consultant India Limited and Nepal Ventures Private Limited. The Company has 26.66 percent equity ownership in UTL. UTL operates basic telephony services in Nepal based on Wireless-in-local loop technology. The Companys share in income, expenses, assets and liabilities of UTL for the Year Ended 31 March, 2009 and year ended 31 March, 2008 are as follows: Year Ended 31 March, 2009 Rs. in crores 30.86 32.15 Year Ended 31 March, 2009 Rs. in crores 69.93 34.56 Year ended 31 March, 2008 Rs. in crores 13.75 13.65 Year ended 31 March, 2008 Rs. in crores 41.15 26.82
Income Expenses
Assets Liabilities Contingent liability in respect of claims of taxes and duties Rs. Nil (2008: Nil). 30. Net Dividend remitted to non-resident shareholders in foreign currency
The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non resident shareholders. The particulars of final dividends for the year ended 31 March, 2008 paid to non-resident shareholders are as under: Year Ended Year ended 31 March, 2009 31 March, 2008 Number of non-resident shareholders Number of shares held by them Year to which dividend relates Amount remitted net of tax (Rs. in crores) 31. Micro, Small and Medium Enterprises Particulars Amount due to Vendor Interest due thereon Principal amount paid (includes unpaid beyond the appointed date) Interest accrued and remaining unpaid ( including interest disallowable) As at 31 March, 2009 Rs. in crores 0.64 0.05 12.02 0.05 As at 31 March, 2008 Rs. in crores 0.19 0.05 6.63 0.05 794 23,089,178 2007-08 10.39 512 23,521,800 2006-07 10.58
32. Previous years figures have been regrouped and reclassified wherever necessary. The results for the current year ended 31 March, 2009 include the operations of VSNL Broadband Limited. In view of this, the results for the current year are not comparable with the corresponding period of the previous financial year.
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21. Balance Sheet Abstract and Companys General Business Profile in terms of Part IV of Schedule VI to the Companies Act, 1956. I. Registration Details Registration No. Balance Sheet Date II. 3 9 2 6 6 3 1 Date 0 3 Month 2 0 0 9 Year Right Issue N I L Private Placement N I L State Code 1 1
(REFER CODE LIST)
Capital Raised during the year (Amount in Rs. Crores) Public Issue N I L Bonus Shares N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Crores) Total Liabilities Total Assets 9 2 5 9 . 1 7 Source of Funds Paid-up Capital 2 8 5 . 0 0 Secured Loans 1 2 8 8 . 8 2 Deferred Tax Liabilities 1 3 3 . 2 5 Application of Funds Net Fixed Assets 4 6 3 4 . 3 2 Net Current Assets 1 9 0 1 . 1 8 Accumulated Losses N I L IV. Performance of Company (Amount in Rs. Crores) Turnover 3 7 4 9 . 4 3 P + Profit/Loss Before Tax 7 1 3 . 4 9 P + Total Expenditure 3 5 2 1 . 8 2 Profit/Loss After Tax 5 1 5 Dividend% 4 5 . 9 5 Investments 2 7 2 3 . 6 7 Reserves & Surplus 6 5 1 3 1 0 3 9 . 0 5 . 0 5 Unsecured Loans 9 2 5 9 . 1 7
Misc. Expenditure N I L
(Please tick appropriate box + for Profit, - for Loss) Earning per Share in Rs. 1 8 . 1 0
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V.
Generic Names of Three Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC Code)* Product Description Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description I N T E R N A T I O N A L M U N I C A T I O N S T E L E C O M S E R V I C E S
* Note : For ITC code of products please refer to the publication Indian Trade Classification based on harmonized commodity description and coding system by Ministry of Commerce, Directorate General of Commercial Intelligence & Statistics, Calcutta - 700 001 ANNEXURE I Code List 1 : State Codes State Code 01 03 05 07 09 11 13 15 17 20 22 24 53 55 57 59 State Name Andhra Pradesh Bihar Haryana Jammu & Kashmir Kerala Maharashtra Meghalaya Orissa Rajasthan Uttar Pradesh Sikkim Goa Chandigarh Delhi Lakshwadeep Pondicherry State Code 02 04 06 08 10 12 14 16 18 21 23 52 54 56 58 State Name Assam Gujarat Himachal Pradesh Karnataka Madhya Pradesh Manipur Nagaland Punjab Tamil Nadu West Bengal Arunachal Pradesh Andaman Islands Dadra Islands Daman & Diu Mizoram
For and on behalf of the Board
N. SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer
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CMYK
Statement Pursuant to Sec 212(8) of the Companies Act, 1956, relating to subsidiary companies
Reporting Currency Share Capital Reserves Total Assets Total Liabilities Investment Details (except in case of investment in the subsidiaries) 113.51 67.52 3.44 2,681.42 1,203.41 24.32 75.92 3,352.13 (1.04) (2.07) 0.06 2.79 USD USD 12.49 0.07 35.58 105.04 19.77 (26.41) (18.12) 1.94 2.49 160.73 108.06 258.89 150.01 126.66 98.89 92.40 3,700.77 2.99 2.74 125.15 2.96 236.33 163.93 144.71 0.00 35.59 2.88 4.23 14.26 57.36 869.64 0.00 2.21 380.42 216.88 75.73 12.33 85.26 3.00 8.42 89.85 267.47 99.01 84.54 36.62 1.43 (1.31) 0.36 0.00 (0.27) 0.21 (9.40) (5.43) (0.05) 0.06 49.27 (7.87) (1.78) (1.26) (237.59) 0.15 0.27 3.05 177.72 (6.56) (1.46) (5.21) 1.59 0.44 0.04 0.00 0.10 0.16 10.08 10.96 (3.08) (5.86) 0.03 0.04 0.18 0.26 0.04 (0.00) 254.07 39.78 (0.11) (0.00) 39.78 (0.00) 0.04 0.33 (1.31) 0.36 0.00 (0.27) 0.05 (19.49) (16.38) (0.05) 3.14 55.14 (7.87) (1.81) (1.31) (237.59) 0.15 0.09 2.79 177.72 (6.56) (1.46) (5.21) 294.71 (108.96) 0.90 (109.86) 95.53 14.33 1.76 0.00 97.19 19.73 0.00 4.46 (12.82) (12.82) Total Turnover Profit before Taxation Provision for Taxation Profit after Taxation Propsed Dividend
Sr. New Name of Subsidiary Company No.
1 LKR INR INR INR USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD 1.81 0.00 0.06 0.06 168.38 (184.86) (0.06) (348.70) 0.00 (74.57) 0.17 0.43 1,204.01 0.00 (94.76) 2,586.66 0.06 3.41 6.91 0.00 (0.06) 0.09 0.14 113.08 1,185.23 12,758.96 11,460.65 0.10 176.79 411.24 234.35 14.83 46.97 32.15 12.98 (13.34) 8.53 8.89 0.08 1,025.85 1,051.57 25.63 0.08 48.85 49.34 0.41 0.08 81.40 123.14 41.66 0.77 (0.77) 0.06 (1,067.68) 1,067.62 0.02 2.76 4.33 1.55 0.07 (0.07) 0.69 0.69 7.14 (4.85) 2.44 0.15 0.00 (0.00) 0.04 0.05 720.73 577.83 2,808.74 1,510.17 0.05 (0.11) 0.29 0.36 385.00 (326.36) 58.65 0.50 15.64 25.56 9.42 6.68 51.05 72.41 14.68
VSNL SNO SPV Pte Ltd.
USD
129.38
(21.61)
524.77
417.00
Tata Communications Lanka Limited
Tata Communications Transformation Services Limited
Tata Communications Internet Services Limited
Banking ATM InfraSolutions Limited
Tata Communications International Pte Ltd
Tata Communications (Ireland) Limited
VSNL Portugal Unipessoal Limiteda
Tata Communications (Middle East) FZ - LLC
10 Tata Communications (Switzerland) GMBH
11 VSNL Telecommunications (Bermuda Ltd) (In Liquidation)
12 ITXC Global Hong Kong Ltd (In Liquidation)
13 ITXC IP Holdings Sarl
14 Teleglobe International Luxembourg Sarl. (In Liquidation)
15 TGLB Luxembourg Holdings Sarl (In Liquidation)
16 Tata Communications (Belgium) Sprl
17 Tata Communications (Guam) LLC
18 Tata Communications (Japan) KK
19 Tata Communications (Netherlands) BV
20 Tata Communications (Russia) LLC
21 Tata Communications (Sweden) AB
22 Tata Communications (US) Inc.
23 Tata Communications (Deutschland) GMBH
24 Tata Communications Services (America) Inc
25 VSNL International (Portugal) Instalacao E Manutencao De Redes Lda
26 Teleglobe (Bermuda) Ltd (In Liquidation)
27 Tata Communications (Bermuda) Ltd.
28 Tata Communications (Puerto Rico) Inc.
29 Tata Communications (Australia) Pty Ltd.
30 Tata Communications (Hongkong) Limited
31 Tata Communications Services (Bermuda) Ltd.
32 Videsh Sanchar Nigam Spain srl
33 Tata Communications (France) SAS
85
34 Tata Communications (Italy) srl
CMYK
Statement Pursuant to Sec 212(8) of the Companies Act, 1956, relating to subsidiary companies (Contd.)
Reporting Currency Share Capital Reserves Total Assets Total Liabilities Investment Details (except in case of investment in the subsidiaries) 1.89 10.22 7.03 1.33 2,076.72 41.67 20.93 4.90 (0.55) 0.02 (0.57) 20.73 1.33 10.22 1.89 667.18 (13.25) (13.25) 0.00 (0.02) (0.02) (6.19) (6.19) 2,222.39 30.88 4.80 26.08 3.01 0.04 0.04 Total Turnover Profit before Taxation Provision for Taxation Profit after Taxation Propsed Dividend
86
USD USD USD USD USD USD USD USD USD USD USD USD USD 42.79 (43.86) 0.00 1.07 0.00 5.23 5.23 1.79 (1.17) 0.72 0.11 127.10 27.69 154.79 0.00 19.30 21.04 1.74 0.00 986.96 2,757.59 1,770.63 0.07 (0.53) 7.79 8.25 43.96 26.18 1,795.56 1,725.41 0.32 (0.02) 0.36 0.06 0.01 129.89 136.56 6.67 43.32 (271.13) 3,136.63 3,364.45 0.01 (3.21) 8.87 12.08
Sr. New Name of Subsidiary Company No.
35 Tata Communications (Nordic) AS
36 Tata Communications (Canada) ULC
37 VSNL Intl (ITXC) Corporation
38 Tata Communications (Hungary) LLC
39 Tata Communications (UK) Limited
COMMUNICATIONS
40 VSNL International (Poland) Sp.z.o.o.
41 Tata Communications (America) Inc
42 VSNL International (Global) Corp.
43 VSNL Intl (IPCO) LLC
44 Teleglobe Asia Pte Ltd
45 VSNL International (Hongkong) Limited (In Liquidation)
46 Teleglobe International Limited (In Liquidation)
47 VSNL UK Limited (In Liquidation)
a)
Converted at the rate of exchange of US$=Rs.50.84 and LKR=Rs.0.44 for Balancesheet and US$=Rs.46 and LKR=Rs.0.42 for Profit & Loss A/c
b)
The Board of Directors of the company at its meeting held on 4 December, 2007 had approved the merger of the Companys wholly owned subsidiary, VSNL Broadband Limited with effect from March 1, 2007. Consequent to the filing of the final certified order dated 3 April, 2009 of the Honble High Court of jurisdiction at Bombay with the Registrar of the Companies, Maharashtra the Scheme of Amalgamation between VSNL Broadband Limited with the Company has become effective from the appointed date of 1 March, 2007.(For details Refer note B10, Schedule 20)
For and on behalf of the Board
N. SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer
CMYK
AUDITORS REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF TATA COMMUNICATIONS LIMITED 1. We have audited the attached Consolidated Balance Sheet of TATA COMMUNICATIONS LIMITED (the Company), and its subsidiaries (the Company and its subsidiaries constitute the Group) as at 31 March, 2009, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management and have been prepared by the Management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. (a) We did not audit the financial statements of a subsidiary, whose financial statements reflect total assets of Rs. 58.86 crores as at 31 March, 2009, total revenues of Rs. 67.17 crores and net cash inflows amounting to Rs. 44 crores for the year ended on that date as considered in the Consolidated Accounts. This financial statement and other financial information have been audited by other auditor whose report has been furnished to us, and our opinion is based solely on the report of other auditor. (b) As stated in Note B11, Schedule 20, the financial statements of a subsidiary which represents total assets of Rs. 389.72 crores as at 31 March, 2009, total revenues of Rs. Nil and net cash inflows amounting to Rs. 3.3 crores for the year then ended and joint ventures whose financial statements represents Companys share of total assets of Rs. 607.15 crores as at 31 March, 2009, total revenues of Rs. 247.96 crores and net cash inflows amounting to Rs. 102.91 crores for the year then ended and the share in loss of associate of Rs. 8.01 crores for the year then ended have been incorporated in the consolidated financial statements on the basis of unaudited financial statements as provided by the management of that subsidiary, joint ventures and associate. 4. Subject to our remark in paragraph 3 (b) above: (a) We report that the consolidated financial statements have been prepared by the Companys management in accordance with the requirements of the Accounting Standard (AS) 21, Consolidated Financial Statements, Accounting Standard (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27, Financial Reporting of Interests in Joint Ventures as notified under the Companies (Accounting Standard) Rules 2006. (b) Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31 March, 2009;
2.
3.
(ii) in the case of Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and (iii) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For S. B. BILLIMORIA & CO. Chartered Accountants P.R.RAMESH Partner Membership No. 70928 Mumbai, 26 May, 2009
87
CMYK
COMMUNICATIONS
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2009

Schedule FUNDS EMPLOYED: 1 SHARE CAPITAL 2 RESERVES AND SURPLUS 3 4 5 6 7 8 9 TOTAL SHAREHOLDERS FUNDS MINORITY INTEREST LIABILITY SECURED LOANS UNSECURED LOANS OBLIGATIONS UNDER FINANCE LEASE DEFERRED TAX LIABILITY (NET) (Refer Note B15, Schedule 20) TOTAL FUNDS EMPLOYED 5 12,878.48 3,940.18 8,938.30 2,667.57 11,605.87 11 GOODWILL (ON CONSOLIDATION) (Refer Note B10, Schedule 20) 12 INVESTMENTS 13 CURRENT ASSETS, LOANS AND ADVANCES A. CURRENT ASSETS (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Other Current Assets B. LOANS AND ADVANCES 57.54 6 7 8 9 10 11 1,676.04 17.83 2,862.97 875.93 391.68 4,148.41 2,407.71 6,556.12 14 Less: CURRENT LIABILITIES AND PROVISIONS A. Current Liabilities B. Provisions 15 NET CURRENT LIABILITIES [(13) less (14)] 16 TOTAL ASSETS (NET) SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS As per our report attached For S.B.BILLIMORIA & CO. Chartered Accountants P.R. RAMESH Partner For and on behalf of the Board SUBODH BHARGAVA Chairman SANJAY BAWEJA Chief Financial Officer MUMBAI DATED: 26 May, 2009 N. SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer 20 12 13 7,430.74 488.50 7,919.24 (1,363.12) 11,976.33 8,900.08 2,644.38 6,255.70 2,040.63 8,296.33 167.41 1,204.38 9.29 2,074.56 294.07 611.45 2,989.37 1,673.44 4,662.81 5,297.03 390.01 5,687.04 (1,024.23) 8,643.89 As at 31st March 09 Rs. In crores 285.00 4,821.44 5,106.44 4.97 1,781.76 4,883.62 43.64 155.90 11,976.33 As at 31st March 08 Rs. In crores 285.00 4,866.98 5,151.98 3.21 105.24 3,241.38 42.26 99.82 8,643.89
1 2
3 4
APPLICATION OF FUNDS: 10 FIXED ASSETS: (a) Gross Block (b) Less: Accumulated Depreciation/ Amortisation (c) Net Block (d) Capital work-in-progress
88
CMYK
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2009
Schedule INCOME: 1 REVENUES FROM TELECOMMUNICATION AND OTHER SERVICES 2 OTHER INCOME 14 3 INTEREST INCOME 15 4 TOTAL INCOME EXPENDITURE: 5 SALARIES AND RELATED COSTS 16 6 NETWORK COSTS 17 7 OPERATING AND OTHER EXPENSES 18 8 INTEREST EXPENSE 19 9 DEPRECIATION, AMORTISATION AND IMPAIRMENT (Net of transfer from Capital Reserve) 10 TOTAL EXPENDITURE PROFIT/ (LOSS) BEFORE TAXES AND EXCEPTIONAL ITEMS 11 EXCEPTIONAL ITEMS: (a) Profit on sale of long tem Investments (Refer Note B4, Schedule 20) (b) Claim Settlement (Refer Note B6, Schedule 20) (c) Fixed Assets written-off PROFIT/ (LOSS) BEFORE TAXES 12 TAXES (a) CURRENT TAX (b) DEFERRED TAX EXPENSE (c) FRINGE BENEFIT TAX NET PROFIT/ (LOSS) BEFORE MINORITY INTEREST 13 MINORITY INTEREST (Share of Loss) (net) 14 SHARE IN LOSS OF ASSOCIATE NET PROFIT 15 BALANCE BROUGHT FORWARD FROM PREVIOUS PERIOD LESS: TAX ADJUSTMENT ON RETAIL BUSINESS HIVE OFF. LESS: TAX ADJUSTMENT ON MERGER OF VSNL BROADBAND LTD. LESS: DEFERRED TAX ADJUSTMENT ON MERGER OF VSNL BROADBAND LTD. 16 AMOUNT AVAILABLE FOR APPROPRIATIONS 17 APPROPRIATIONS : (a) PROPOSED DIVIDEND / DIVIDEND PAID (Refer Note B3, Schedule 20) (b) TAX ON DIVIDEND (c) GENERAL RESERVE (d) TRANSFER TO DEBENTURE REDEMPTION RESERVE BALANCE CARRIED TO BALANCE SHEET Year ended 31st March 09 Rs. In crores 9,963.17 210.28 49.39 10,222.84 1,227.30 5,300.22 2,086.08 350.69 1,102.27 10,066.56 156.28 (362.08) 95.60 422.76 179.36 44.25 7.12 192.03 131.78 (8.01) 315.80 444.81 (0.10) (7.44) 753.07 128.25 21.80 51.60 102.50 448.92 Year ended 31st March 08 Rs. In crores 8,297.41 229.12 11.23 8,537.76 895.00 4,763.47 1,759.35 175.41 784.41 8,377.64 160.12 11.20 148.92 133.72 37.78 5.39 (27.97) 38.27 10.30 627.08 (9.25) 628.13 128.25 21.80 33.27 444.81
EARNINGS PER SHARE (EPS) 18 Basic/Diluted earnings per share, excluding exceptional items (Rs.) (Refer Note B16, Schedule 20) 3.21 0.62 19 Basic/Diluted earnings per share, including exceptional items (Rs.) (Refer Note B16, Schedule 20) 11.08 0.36 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 20 As per our report attached For and on behalf of the Board For S.B.BILLIMORIA & CO. Chartered Accountants P.R. RAMESH SUBODH BHARGAVA N. SRINATH Partner Chairman Managing Director & Chief Executive Officer SANJAY BAWEJA SATISH RANADE Chief Financial Officer Company Secretary & Chief Legal Officer MUMBAI MUMBAI DATED: 26 May, 2009 DATED: 26 May, 2009
89
CMYK
COMMUNICATIONS
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009
Year ended 31st March, 2009 Rs. In crores 1 CASH FLOWS FROM OPERATING ACTIVITIES PROFIT BEFORE TAXES AND EXCEPTIONAL ITEMS Adjustments for: Depreciation, amortisation and impairment Loss /(Profit) on sale of fixed assets Interest income Interest expense Fixed assets written down Interest on income tax refunds Provision for Doubtful debts Bad Debts written off Provision for contingency Dividend income / profit on sale of current investments Valuation loss on current investments Loss on sale of long-term investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Inventories Sundry debtors Other current assets, loans and advances Restricted cash Current liabilities and provisions Cash generated from operations before tax and exceptional items Claim Settlement (Refer Note B6, Schedule 20) Cash generated from operations before taxes Income tax (paid)/refunds Interest on income tax refunds NET CASH FROM OPERATING ACTIVITIES 2 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets Stake purchase in Neotel Pty. Ltd. (Refer Note B7, Schedule 20) Business Acquisition (Refer Note B24(ii), Schedule 20) Amount paid towards Joint Venture with China Enterprise Communications (Refer Note B8, Schedule 20) Amount paid towards Investments in Bit Gravity (Refer Note B9, Schedule 20) Sale/ (Purchase) of current investments (net of mutual funds dividend reinvested) (net) Proceeds from sale of fixed assets Proceeds from sale of long-term investment Dividend income from current investments Fixed deposits (net) Interest received NET CASH USED IN INVESTING ACTIVITIES 3 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from unsecured loans Repayment of unsecured loans Proceeds from secured loans Repayment of secured loans Payment for finance lease Dividends paid including dividend tax Dividends paid to Minority Interest paid CASH FLOW FROM FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AS AT THE BEGINNING OF THE YEAR (Refer Note B14, Schedule 20) Effect of exchange on cash and cash equivalents CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR 156.28 1,102.27 1.55 (49.39) 350.69 3.37 12.13 208.88 (0.41) (59.92) (0.08) (2.88) 1,722.49 (5.73) (667.86) (69.34) (0.04) 1,174.55 2,154.07 (95.60) 2,058.47 (377.41) 1,681.06 (3,222.31) (61.61) (58.02) (59.77) (48.56) (247.36) 4.43 427.10 0.14 (10.70) 25.18 (3,251.48) 2,849.94 (1,891.78) 1,692.50 (16.26) (10.05) (150.38) (0.45) (313.56) 2,159.96 589.54 288.40 (14.52) 863.42 Year ended 31st March, 2008 Rs. In crores 160.12 784.41 (0.39) (11.23) 175.41 1.21 (16.66) 32.25 27.78 (4.08) (46.58) (0.07) 0.36 1,102.53 (1.13) (543.57) (554.41) 1,687.01 1,690.43 1,690.43 (421.94) 16.66 1,285.15 (2,543.86) 601.92 10.67 2.71 3.75 2.82 8.42 (1,913.57) 2,499.13 (1,457.11) 13.73 (27.12) (9.77) (150.21) (174.65) 694.00 65.58 220.56 2.26 288.40
(Refer Note B14, Schedule 20) Notes: 1. Figures in brackets represent outflows. 2. Pursuant to the acquisition of 27% stake in Neotel (Pty.) Ltd. from Eskom and Transnet, an amount of Rs. 73.52 crores receivable from these shareholders against a binding agreement has been adjusted against the carrying value of Investment in Associate (Refer Note B7, Schedule 20).
As per our report attached For S.B.BILLIMORIA & CO. Chartered Accountants P.R. RAMESH Partner
For and on behalf of the Board SUBODH BHARGAVA Chairman SANJAY BAWEJA Chief Financial Officer MUMBAI DATED: 26 May, 2009 N. SRINATH Managing Director & Chief Executive Officer SATISH RANADE Company Secretary & Chief Legal Officer
90
CMYK
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET

SCHEDULE - 1 SHARE CAPITAL AUTHORISED : 300,000,000 (2008: 300,000,000) Equity Shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID UP 285,000,000 (2008: 285,000,000) Equity Shares of Rs.10 each, fully paid up SCHEDULE - 2 RESERVES AND SURPLUS (a) Capital Reserve (b) Securities Premium (Refer Note B10, Schedule 20) (c) General Reserve (d) Debenture Redemption Reserve (e) Profit and Loss Account (f ) Exchange Translation Reserve (net) TOTAL As at 31st March, 2009 Rs. In crores 300.00 285.00 As at 31st March, 2008 Rs. In crores 300.00 285.00
217.84 725.01 3,378.46 102.50 448.92 4,872.73 (51.29) 4,821.44
208.15 834.88 3,326.90 444.81 4,814.74 52.24 4,866.98
Note: 1. Depreciation on gifted assets of Rs. 0.60 crores (2008: Rs. 0.62 crores) has been transferred from Capital Reserve to the Profit and Loss Account for the year ended 31 March, 2009. 2. Capital reserve includes Rs. 205.22 crores in respect of foreign exchange gains on unutilised proceeds from Global Depository Receipts credited to Capital Reserve in 2000-01 Rs. 203.70 crores and Rs. 1.52 crores in 2001-02 3. Capital reserve includes Rs. 10.15 crores which represents Groups share in capital reserve of Joint Venture SEPCO Communications (Pty) Ltd arising on acquisition made during the year (Refer Note B24(ii), Schedule 20) 4. As at 31 March, 2009 Rs. 51.60 crores (2008: Rs. 33.27 crores) has been transferred from Profit & Loss Account to General Reserve SCHEDULE - 3 SECURED LOANS (a) From Banks (i) Term-Loan from Hongkong and Shanghai Banking Corporation Limited (Secured by hypothecation of movable properties of Rs. 128.00 crores) 38.83 (ii) Term-Loan from Punjab National Bank (Refer Note1) 9.04 (iii) Term-Loan from Everest Bank Limited (Refer Note 1) 0.47 (iv) Term Loan from Everest Bank Limited and Nepal SBI Bank Limited (Refer Note 1) 4.20 (v) Term Loan from Consortium led by Nedbank Ltd. (Refer Note 1) 475.01 (vi) 11.00% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10.00 lakhs each (Refer Note B12, Schedule 20) 135.00 (vii) 11.20% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10.00 lakhs each (Refer Note B12, Schedule 20) 5.00 (b) From Others (i) 11.00% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10.00 lakhs each (Refer Note B12, Schedule 20) 60.00 (ii) 11.20% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10.00 lakhs each (Refer Note B12, Schedule 20) 50.00 (iii) 11.70% Rated taxable Secured Redeemable Non-convertible Debentures of face value Rs. 10.00 lakhs each (Refer Note B12, Schedule 20) 1,000.00 (iv) Others 4.21 TOTAL 1,781.76 Note: 1. Secured against fixed assets of Joint Ventures SCHEDULE - 4 UNSECURED LOANS (a) From Banks (b) From Others TOTAL Note: 1. Loans repayable within one year Rs. 654.08 Crores (2008: Rs. 438.35 crores)
45.88 9.99 0.51 48.86 105.24
4,742.89 140.73 4,883.62
3,171.23 70.15 3,241.38
91
CMYK
92

Rs. In Crores
GROSS BLOCK 1 April, 2008 Additions Deductions/ Adjustments 31 March, 2009 1 April, 2008 Depreciation/ Amortisation Expense Deductions/ Adjustments 31 March, 2009 31 March, 2009 ACCUMULATED DEPRECIATION / AMORTISATION NET BLOCK
SCHEDULE - 5
SL.
FIXED ASSETS
NO.
TANGIBLE FIXED ASSETS (a) LAND LEASEHOLD IMPROVEMENTS BUILDING PLANT AND MACHINERY FURNITURE AND FIXTURES OFFICE EQUIPMENT COMPUTERS MOTOR VEHICLES
COMMUNICATIONS
(b)
(c)
(d)
(e)
(f)
(g)
(h)
267.52 272.30 79.41 75.62 377.07 375.06 6,874.67 6,188.68 80.28 67.34 62.17 55.59 397.35 263.80 1.82 2.04
4.07 0.49 17.04 83.30 10.54 2,626.45 1,111.69 33.48 13.87 24.54 9.59 252.37 177.04 0.12 0.07
14.66 (4.77) 20.19 (7.77) 32.29 (14.02) 712.69 (425.70) (1.55) (0.93) 4.38 (3.01) (67.02) (43.49) 0.03 (0.29)
286.25 267.53 100.09 84.89 492.66 371.58 10,213.81 6,874.67 112.21 80.28 91.09 62.17 582.70 397.35 1.97 1.82
9.88 7.09 22.28 14.45 57.11 48.62 2,025.55 1,515.65 35.18 25.74 16.22 15.07 175.89 127.63 1.22 1.36
1.09 2.63 10.35 11.26 13.61 12.26 867.71 583.03 2.99 10.01 8.00 2.48 83.69 64.83 0.15 0.16
(0.16) 0.16 6.97 (1.60) 10.46 (5.60) 110.15 (73.13) (1.95) (0.57) 2.70 (1.33) (1.05) (16.57) 0.06 (0.30)
10.81 9.88 39.60 24.11 81.18 55.28 3,003.41 2,025.55 36.22 35.18 26.92 16.22 258.53 175.89 1.43 1.22
275.44 257.65 60.49 60.78 411.48 316.30 7,210.40 4,849.12 75.99 45.10 64.17 45.95 324.17 221.46 0.54 0.60
INTANGIBLE ASSETS (a) SOFTWARE LICENCE FEES GOODWILL
(b)
(c)
131.79 106.51 21.37 25.86 606.63 648.79 8,900.08 8,081.59 3,100.11 1,375.01 878.29 (556.52) 12,878.48 8,900.08 2,644.37 1,971.49 1,102.27 784.41
49.19 33.91 26.10 1.26
55.25 (8.63) 1.64 (4.49) 105.73 (43.42)
236.23 131.79 23.01 21.37 738.46 606.63
56.50 23.27 1.34 0.60 243.20 192.01
43.04 31.96 0.90 0.85 70.74 64.94
20.63 1.27 0.12 (0.11) 45.61 (13.74) 193.54 (111.52)
120.17 56.50 2.36 1.34 359.55 243.21 3,940.18 2,644.38
116.06 75.29 20.65 20.03 378.91 363.42 8,938.30 6,255.70 2,667.57 2040.63
TOTAL
CAPITAL WORK-INPROGRESS [including advances for capital expenditure Rs. 8.22 crores (2008 :Rs. 15.22 crores)]
GRAND TOTAL
11,605.87 8,296.33
NOTES: 3 Gross Block and Accumulated Depreciation of Plant and Machinery includes Indefeasible Rights of Use (IRUs) for domestic and international telecommunication circuits of Rs. 1,524.66 crores (2008: Rs. 1,349.79 crores) and Rs. 309.26 crores (2008: Rs. 268.05 crores) respectively. 4 Figures in italics are for the previous year.
Land includes Rs. 203.04 crores (2008: Rs. 198.99 crores) under lease. This includes:
(i)
Leasehold Land in Srinagar of Rs. 0.03 crores (2008: Rs. 0.03 crores) in respect of which conveyance is not done and lease deed is not available.
(ii)
Rs. 1.21 crores (2008: Rs. 1.21 crores) in respect of which lease agreement has not been executed/registered
(iii)
Rs. 0.16 crores (2008: Rs. 0.16 crores) identified as Surplus land.
Gross block of buildings include:
(i)
Rs. 7.79 crores (2008: Rs. 7.79 crores) for leasehold office space, of which Rs. 1.84 crores (2008: Rs. 1.84 crores) pertains to assets acquired on or after 31 March 2001.
(ii)
Rs. 0.44 crores (2008 : Rs. 0.44 crores) being cost of flats in Co-operative Societies under formation.
(iii)
Rs. 32.75 crores (2008: Rs. 32.75 crores) for flats at Mumbai and Rs. 1.03 crores (2008: Rs. 1.03 crores) for office space at New Delhi in respect of which agreements have not been executed.
CMYK

SCHEDULE - 6 INVESTMENTS I. Trade Investments - Long Term (At Cost) (Unquoted) A. Fully Paid Equity Shares (a) Tata Teleservices Ltd. (Refer Note B4, Schedule 20) (b) New ICO Global Communications (Holdings) Limited (c) Wmode Inc. B. Convertible Bonds of China Enterprise Netcom Corporation Ltd. (Refer Note B8, Schedule 20) C. Convertible Promissory Note and warrants of Bit Gravity (Refer Note B9, Schedule 20) D. Investment in Associate (Refer Note B7, Schedule 20) Equity Shares (at cost) Less: Share in Loss during the year Preference Shares TOTAL TOTAL (A+B+C+D) II. Current Investments (Unquoted) Investments In Mutual Funds As at 31st March, 2009 Rs. In crores As at 31st March, 2008 Rs. In crores
748.03 0.01 2.88 35.59 58.47
810.17 0.01 2.27
90.16 (8.01) 82.15 49.77 131.92 976.90 699.14 1,676.04
812.45 391.93 1,204.38
TOTAL SCHEDULE - 7 INVENTORIES Equipments for resale Less: Provision for obsolescence Consumable stores and spares (at cost) Less: Provision for obsolescence TOTAL SCHEDULE - 8 SUNDRY DEBTORS (a) Over six months (unsecured) Considered good Considered doubtful (b) Other debts (unsecured) Considered good Considered doubtful Less: Provision for doubtful debts TOTAL SCHEDULE - 9 CASH AND BANK BALANCES (Refer Note B14, Schedule 20) (a) Cash in hand (b) Cheques in Hand (c) Remittances in transit (d) Current accounts with banks (e) Deposit accounts with banks TOTAL
0.08 (0.08) 18.29 (0.46) 17.83
0.70 (0.01) 0.69 8.60 9.29
388.22 360.55 2,474.75 36.02 3,259.54 (396.57) 2,862.97
326.39 285.87 1,748.17 2,360.43 (285.87) 2,074.56
0.94 55.17 0.28 487.04 332.50 875.93
0.17 17.91 17.26 192.33 66.40 294.07
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SCHEDULE - 10 OTHER CURRENT ASSETS (a) Interest receivable (b) Service tax / VAT recoverable (c) Pension contributions recoverable from Government of India (net of provision of Rs. 53.71 crores; 2008: Rs. 53.71 crores) (Refer Note B5, Schedule 20) (d) Licence fees paid recoverable from Government of India (e) Licence fees paid under protest (f ) Others TOTAL SCHEDULE - 11 LOANS AND ADVANCES (a) Unsecured - Considered good (i) Staff Advances (ii) Deposits with public bodies and others (iii) Prepaid expenditure (iv) Advance payment of tax (net of provision for tax) (v) Other loans and advances As at 31st March, 2009 Rs. In crores 29.46 107.24 As at 31st March, 2008 Rs. In crores 5.24 176.54
7.44 0.64 120.85 126.05 391.68
7.44 81.96 295.00 45.27 611.45
5.63 84.63 524.38 1,422.08 370.99 2,407.71
10.37 67.71 285.16 1,207.92 102.28 1,673.44 7.61 (7.61) 1,673.44
(b) Unsecured - Considered doubtful Other loans and advances Less: Provision for doubtful advances TOTAL SCHEDULE - 12 CURRENT LIABILITIES (a) Sundry Creditors: (i) Creditors for interconnect charges (ii) Others (b) Unearned income and deferred revenues (c) Investor Education and Protection Fund - unpaid dividend (d) Government of India current account (e) Interest accrued but not due on loans taken from banks (f ) Deposits / Advances from customers (g) Other liabilities (Note 1) TOTAL Note: 1. Includes Rs. 105.35 crores overdrawn book balance (2008: Rs. 27.61 crores) SCHEDULE - 13 PROVISIONS (a) Provisions for employee benefits (b) Provision for proposed dividend (c) Tax on dividend (d) Provision for contingencies (Refer Note B21, Scehdule 20) (e) Provision for tax (net of advance taxes) TOTAL
8.51 (8.51) 2,407.71
1,926.19 2,089.76 2,378.94 0.78 20.57 48.68 662.06 303.76 7,430.74
1,876.73 1,056.17 1,395.90 1.12 20.57 11.55 379.60 555.39 5,297.03
246.38 128.25 21.80 42.86 49.21 488.50
184.67 128.25 21.80 29.41 25.88 390.01
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SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT

SCHEDULE-14 OTHER INCOME (a) Dividend income from current investments (b) Profit on sale of current investments (net) (c) Profit on sale of fixed assets (net) (d) Profit from sale of long term investment (e) Rent (f ) Exchange gain (net) (g) Provisions no longer required written back (h) Interest on income tax refund (i) Other TOTAL Year ended 31st March 2009 Rs. In crores 22.52 37.40 2.88 14.84 23.92 108.72 210.28 Year ended 31st March 2008 Rs. In crores 31.68 14.91 1.68 14.93 8.72 22.95 16.66 117.59 229.12
SCHEDULE-15 INTEREST INCOME (a) On Bank deposits (Tax deducted at source Rs. 1.80 crores; 2008: Rs. 1.40 crores) (b) On Other loans and advances (Tax deducted at source Rs. NIL; 2008: Rs. 0.04 crores) TOTAL
30.94 18.45 49.39
4.56 6.67 11.23
SCHEDULE - 16 SALARIES AND RELATED COSTS (a) Salaries and bonus (b) Contribution to provident, gratuity and other funds (c) Staff welfare expenses TOTAL
1,102.54 56.34 68.42 1,227.30
808.01 23.18 63.81 895.00
SCHEDULE-17 NETWORK COSTS (a) Charges for use of transmission facilities (b) Royalty and licence fee to Department of Telecommunications (c) Rent of satellite channels (d) Rent of landlines (e) Administrative lease charges TOTAL
5,090.87 131.89 31.47 39.89 6.10 5,300.22
4,506.03 110.28 29.84 112.10 5.22 4,763.47
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SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT

SCHEDULE-18 OPERATING AND OTHER EXPENSES (a) Consumption of stores (b) Light and power (c) Repairs and Maintenance: (i) Buildings (ii) Plant and Machinery (iii) Others (d) Bad Debts written off (e) Provision for doubtful debts (f ) Rent (g) Rates and taxes (h) Travelling expenses (i) Telephone and telex (j) Printing, postage and stationery (k) Legal and professional fees (l) Advertising and publicity (m) Commissions (n) Insurance (o) Donations (p) Loss on sale of fixed assets (net) (q) Exchange loss (net) (r) Services rendered by third parties (s) Other expenses TOTAL Year ended 31st March 2009 Rs. In crores 14.70 173.99 32.76 480.05 25.88 208.88 12.13 218.17 60.78 77.95 41.27 15.06 135.85 67.62 51.64 15.36 0.62 1.55 16.30 239.61 195.91 2,086.08 Year ended 31st March 2008 Rs. In crores 10.63 120.95 29.20 394.28 22.84 27.78 32.25 191.08 32.12 87.54 36.93 14.90 420.82 41.52 35.03 16.30 0.27 101.51 143.40 1,759.35
SCHEDULE - 19 INTEREST EXPENSE Interest on: (a) Bank Loans (b) Debentures (c) Others TOTAL
202.31 46.06 102.32 350.69
133.85 41.56 175.41
Note: 1) The above interest expense is net of interest capitalized during the year of Rs. 57.83 crores (2008: Rs. 40.95 crores)
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SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

SCHEDULE 20 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS A. 1. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The consolidated financial statements of Tata Communications Limited (the Company), and its subsidiaries (the Group) are prepared under the historical cost convention and the requirements of the Companies Act, 1956. The financial statements of certain subsidiaries having a negative net worth have been prepared on a going concern assumption and included in these consolidated financial statement on that basis as the Company has provided a support letter regarding providing financial support to enable those entities continuing as a going concern with reference to the provisions of applicable insolvency laws in their country of residence. 2. Principles of consolidation The financial statements of the subsidiary companies used in the consolidation are drawn up to the same reporting date as of the Company. The consolidated financial statements have been prepared on the following basis: i) The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. Inter-company balances and transactions, and unrealised profits or losses have been fully eliminated. The results of subsidiaries acquired during the year are included in the consolidated profit and loss account from the date of acquisition.
ii)
iii) The consolidated financial statements include the interest in joint ventures which has been accounted as per the proportionate consolidation method as per Accounting Standard 27-Financial Reporting of Interests in Joint Ventures. Unrealised profits and losses have been eliminated to the extent of the Companys share in the joint ventures. iv) The consolidated financial statements include the interest in associate which has been accounted as per Equity Accounting Method as per Accounting Standard 23 Accounting for investments in Associate in Consolidated Financial Statements . v) The excess of cost to the Company of its investment in a subsidiary company over its share of the equity of the subsidiary company at the date on which the investment in the subsidiary company is made is recognized as Goodwill being an asset in the consolidated financial statements. Alternatively, where the share of equity in the subsidiary companies as on date of investment, is in excess of cost of investment of the Company, it is recognised as `Capital Reserve and shown under the head `Reserves and Surplus, in the consolidated financial statements.
vi) Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity subsequent to the dates of investments. vii) Losses applicable to the minority in excess of the minoritys interest in the subsidiaries equity are allocated against the majority interest except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. 3. Use of estimates The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include allocation of purchase price on acquisition, provisions for doubtful debts and advances, employee benefit obligations, provision for income taxes, provision for cable restoration, impairment of assets, asset retirement obligation and useful lives of fixed assets.
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4. Fixed assets a) Fixed assets are stated at cost less accumulated depreciation. Cost includes freight, duties, taxes, salaries and employee benefits directly related to the construction or development of the asset, interest costs incurred to finance construction and all incidental expenses incurred to bring the assets to their present location and condition. Fixed assets received as gifts from other Foreign Telecom Carriers / vendors are capitalised and credited to Capital Reserve on the basis of notional cost (cost assessed by customs authorities). Cost includes freight, insurance and customs duty. Intangible assets in the nature of Indefeasible Rights of Use (IRUs) for international and domestic telecommunication circuits are recorded as fixed assets. IRU agreements transfer substantially all the risks and rewards of ownership. Jointly owned assets are capitalised in proportion to the Companys ownership interest in such assets. Costs of borrowing related to the acquisition or construction of fixed assets that are attributable to the qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one which necessarily takes a substantial period to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred in accordance with the Accounting Standard on Borrowing Costs (AS-16) notified by the Companies (Accounting Standards) Rules, 2006. Consideration for purchase of business in excess of the value of net assets acquired is recognised as goodwill. Internally developed computer software and licence fees have been classified as intangible assets. Assets acquired pursuant to an agreement for exchange of similar assets are recorded at the net book value of the asset given up, with an adjustment for any balancing receipt or payment of cash or any other form of consideration.
b)
c)
d) e)
f) g) h)
5.
Depreciation Depreciation other than on freehold land and capital work-in progress is charged over the periods set out below so as to write-off the cost of the asset on a straight line basis over the estimate useful lives, at the following rates: a) c) Leasehold land Buildings (i) e) f) Indefeasible Rights of Use (IRUs) Lease period Lease period 1.64% to 6.67% Life of IRU or period of agreement, whichever is lower 4.75% to 33.33% 6.33% to 33.33% 4.75% to 33.33% 10.00% to 33.33% 9.50% 60/120 months 20.00% to 33.33% 4.00%
b) Leasehold improvements d) Plant and Machinery (ii) Other plant and machinery Furniture and fixtures Office equipment
g) Computers h) Motor vehicles i) j) Goodwill on purchase of business Intangibles (i) Internally developed computer software
(ii) License fees
98
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6. Leases Lease arrangements where the risk and rewards incidental to ownership of an asset substantially vests with the lessor are classified as operating lease. Rental income and rental expenses on assets given or obtained under operating lease arrangements are recognised on a straight - line basis over the term of the relevant lease period. The initial direct costs relating to operating leases are recorded as expenses as they are incurred. Assets given under finance lease are recognised at an amount equal to the net investment in the lease and the finance income is based on a constant rate of return on the outstanding net investment. Assets acquired under lease where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. 7. Impairment At each balance sheet date, the Company reviews the carrying amounts of its fixed assets and goodwill included in each cash generating unit to determine whether there is any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Recoverable amount is the higher of an assets net selling price and value in use. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other asset of the unit pro-rata on the basis of the carrying value of each asset in the unit. An impairment loss recognised for goodwill is not reversed in the subsequent period unless there are changes in external events. 8. Asset Retirement Obligation (ARO) The Companys ARO relate to the removal of cable systems and switches when they will be retired. Provision is recognised based on managements best estimate of the eventual costs that relate to such obligation and is adjusted to the cost of such assets. The estimated costs are based on historical cost information, industry factors and technical estimates received from consortium members of the cable systems. 9. Investments Long-term investments are valued at cost less provision other than temporary diminution in value. Current investments comprising investments in mutual funds are stated at the lower of cost or fair value, determined on an individual investment basis. The acquisition cost of an investment acquired in exchange, or part exchange, for another asset is determined based on the fair value of the asset given up. 10. Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis. 11. Employee Benefits (i) Short-term employee benefits The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave and performance incentives payable within twelve months. (ii) Post-employment benefits Contributions to defined contribution retirement benefit schemes are recognized as an expense when employees have rendered services entitling them to the contributions.
99
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For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the profit and loss account for the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. 12. Revenue recognition a) b) c) d) e) f) Revenues from Telephony services are recognised at the end of each month based upon minutes of traffic completed in such month. Revenues from Data services are recognised over the period of the respective arrangements based on contracted fee schedules. Revenues from right to use of fibre capacity provided based on IRU are recognised over the period of such arrangements. Revenues from Internet services are recognised based on usage. Dividend from investments is recognized when the right to receive payment is established and no significant uncertainty as to measurability or collectibility exists. Transactions with providers of telecommunication services such as buying, selling, swapping and/or exchange of traffic are accounted for as non-monetary transactions depending on the terms of the agreements entered into with such telecommunication service providers.
13. Taxation Current income tax expense comprises taxes on income from operations in India and foreign tax jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961.Tax expense relating to overseas operations is determined in accordance with tax laws applicable in countries where such operations are domiciled. Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward tax losses are recognised only to the extent that there is virtual certainty that there will be sufficient future taxable income available to realise these assets. All other deferred tax assets in respect of other timing differences are recognised if there is a reasonable certainty that sufficient future taxable income will be available to realise such assets. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax and income tax provision arising in the same tax jurisdiction and where the Group intends to settle the asset and liability on a net basis. The Group offsets deferred tax assets and deferred tax liabilities relating to taxes on income levied by the same governing tax authorities. 14. Foreign currency transactions a) Foreign currency transactions are converted into Indian Rupees at rates of exchange approximating those prevailing at the transaction date. Foreign currency monetary assets and liabilities are translated to Indian Rupees at the closing rate prevailing on the balance sheet date. Exchange differences, on foreign currency transactions are recognised in the profit and loss account.
100
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b) Premium or discount on forward contracts and upfront premium payable on option contracts is amortised over the life of such contracts and is recognised in the Profit and Loss Account. Forward contracts outstanding as at the balance sheet date are stated at exchange rate prevailing at the reporting date and any gains or losses are recognised in the profit and loss account. Profit or loss arising on cancellation or enforcement/exercise of a forward exchange and option contracts is recognised in the profit and loss account in the period of such cancellation or enforcement/exercise. Option contracts outstanding as at the balance sheet date are marked-tomarket with the values as reported by banks and any gains or losses are recognised in the profit and loss account. For the purpose of consolidation of foreign subsidiaries and joint ventures, income and expenses are translated at average rates and the assets and liabilities are stated at closing rate. The net impact of such change is disclosed under exchange translation reserve.
c)
15. Derivative financial instruments The Group enters into foreign exchange forward and option contracts and interest rate swaps to manage its exposure on foreign exchange rate risk and interest rate risk globally. Exposures to currency and interest rate risk are monitored on an ongoing basis and the Group endeavours to keep the net exposure at acceptable levels. These derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is recognised in profit and loss account immediately. 16. Earning Per Share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue if any, to existing shareholders and share split. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares from the exercise of options on unissued share capital. The number of equity shares is the aggregate of the weighted average number of equity shares and the weighted average number of equity shares, which would be issued on the conversion of all the dilutive potential equity shares into equity shares. Options on unissued equity share capital are deemed to have been converted into equity shares. 17. Contingent Liabilities and Provision Provisions are recognised in respect of present probable obligations, the amount of which can be reliably estimated. Contingent Liabilities are disclosed in respect of possible obligations that may arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. B. 1. NOTES TO ACCOUNTS Particulars of subsidiaries, associate and joint ventures are as follows: Country of Incorporation Percentage of voting power As at 31 March, 2009 Subsidiaries (held directly) Tata Communications Internet Services Limited Tata Communications Transformation Services Limited India India 100.00 100.00 100.00 100.00 As at 31 March, 2008
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COMMUNICATIONS

Country of Incorporation Percentage of voting power As at 31 As at 31 March, 2009 March, 2008 90.00 100.00 100.00 100.00 100.00 90.00 100.00 100.00 100.00 -
Tata Communications Lanka Limited Tata Communications Services (America) Inc. Tata Communications International Pte. Ltd VSNL SNOSPV Pte. Ltd. Banking ATM InfraSolutions Limited Subsidiaries (held indirectly) VSNL Telecommunications (Bermuda) Limited (in liquidation) VSNL UK Limited (in liquidation) Tata Communications (Bermuda) Limited Tata Communications (Netherlands) BV Tata Communications (Hong Kong) Limited ITXC Global Hong Kong Limited (in liquidation) Teleglobe Global Japan YK ITXC IP Holdings S.A.R.L. Tata Communications (America) Inc. Teleglobe Asia Data Transport Pte. Ltd. Teleglobe Asia Pte. Ltd. Teleglobe Bermuda Limited (in liquidation) Tata Communications (Canada) ULC Tata Communications (Belgium) S.P.R.L. (formerly known as Teleglobe International Belgium S.P.R.L) VSNL International (Hong Kong) Limited (in liquidation) Teleglobe International Limited (in liquidation) Teleglobe International Luxembourg S.A.R.L (in liquidation) Tata Communications (Italy) SRL Teleglobe Netherlands B.V TLGB International Germany GMBH. TLGB Luxembourg Holdings S.A.R.L. (in liquidation) TLGB Netherlands Holdings B.V VSNL (Portugal) Unipessoal Lda VSNL Belgium BVBA
Sri Lanka United States of America Singapore Singapore India
Bermuda United Kingdom Bermuda Netherlands Hong Kong Hong Kong Japan Luxembourg United States of America Singapore Singapore Bermuda Canada
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Belgium Hong Kong United Kingdom Luxembourg Italy Netherlands Germany Luxembourg Netherlands Portugal Belgium
100.00 100.00 100.00 100.00 100.00 100.00 100.00 -
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
102
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Country of Incorporation Percentage of voting power As at 31 As at 31 March, 2009 March, 2008 100.00 100.00 100.00 100.00 100.00 100.00
Tata Communications (France) SAS (formerly known as VSNL France SAS) Tata Communications (Nordic) AS VSNL International (Global) Corp. Tata Communications (Guam) L.L.C. (formally known as VSNL International (Guam) LLC) VSNL International (Portugal) Instalacao E Manutencao de Redes LDA Tata Communications (US) Inc Tata Communications (Australia) Pty Ltd. VSNL International (IPCO) LLC Tata Communications (Puerto Rico) Inc. (formerly known as VSNL International Puerto Rico Inc.) VSNL International (ITXC) Corp. VSNL International(Poland) Sp.z.o.o Tata Communications (Japan) KK. Videsh Sanchar Nigam Spain Srl Tata Communications (UK) Limited Tata Communications Deutschland GMBH Tata Communications (Middle East) FZ-LLC Tata Communications (Hungary) LLC Tata Communications (Ireland) Limited Tata Communications (Russia) LLC Tata Communications (Switzerland) GmbH Tata Communications (Sweden) AB (formerly known as VSNL International (Sweden) AB) Joint Ventures United Telecom Ltd. SEPCO Communications (PTY) LTD (Held through VSNL SNOSPV PTE LTD) Associate NEOTEL PTY LTD (Held through VSNL SNOSPV PTE LTD)
France Norway United States of America
Guam Portugal United States of America Australia United States of America
100.00 100.00 100.00 100.00 100.00 100.00
100.00 100.00 100.00 100.00 100.00 100.00
Tata Communications Services (Bermuda) Limited Bermuda
Puerto Rico United States of America Poland Japan Spain United Kingdom Germany United Arab Emirates Hungary Ireland Russia Switzerland
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
100.00 100.00 100.00 100.00 100.00 100.00 100.00 -
Sweden Nepal South Africa
100.00 26.66 43.16
100.00 26.66 43.16
South Africa
27.00
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2. The Company was incorporated on 19 March, 1986. The Government of India vide its letter No. G 25015/6/86OC dated 27 March, 1986, transferred all the assets and liabilities of the Overseas Communications Service (OCS) (part of the Department of Telecommunications, Ministry of Communications) as appearing in the Balance Sheet as at 31 March, 1986 to the Company with effect from 1 April,1986. As per the letter no. G-25015/6/86-OC dated 23 October, 2001 of Government of India, Department of Telecommunications, there was no requirement to register a formal transfer deed or deed of sale in the matter of such transfer of assets. During the year 2007-08, the Company changed its name to Tata Communications Limited and the fresh certificate of incorporation consequent upon the change of name was issued by the Registrar of Companies, Maharashtra on 28 January, 2008. The Management has changed names of certain subsidiaries and is in the process of changing the names of the other subsidiaries to reflect the name Tata Communications in names The Board of Directors of the Company recommended a dividend of Rs. 4.50 (2008: Rs. 4.50) per share to its shareholders for the year ended 31 March, 2009 based on the financial results of the Company. In terms of the agreements entered into between Tata Teleservices Ltd. (TTSL), Tata Sons Ltd. (TSL) and NTT DoCoMo, Inc. of Japan (Strategic Partner-SP), TSL gave an option to the Company to sell 36,542,378 equity shares in TTSL to the SP, as part of a secondary sale of 253,163,941 equity shares effected along with a primary issue of 843,879,801 shares by TTSL to the SP. Accordingly, the Company realized Rs. 424.22 crores on sale of these shares resulting in a profit of Rs. 362.08 crores which has been reflected as an exceptional item in the profit and loss account for the current year. If certain performance parameters and other conditions are not met, should the SP decide to divest its entire shareholding in TTSL, acquired under the primary issue and the secondary sale, and should TSL be unable to find a buyer for such shares, the Company is obligated to acquire the shareholding of the SP, at the higher of fair value or 50 percent of the subscription purchase price, in proportion of the number of shares sold by the company to the aggregate of the secondary shares sold to the SP, or if the SP divests the shares at a lower price pay a compensation representing the difference between such lower sale price and the price referred to above. Further, in the event of breach of the representations and warranties (other than title and tax) and covenants not capable of specific performance, the Company is liable to reimburse TSL, on a pro rata basis, up to a maximum sum of Rs. 548.50 crores. The exercise of the option by SP being dependent on several variables, the liability, if any, in this respect is remote and indeterminable. 5. As at 31st March, 2007 proportionate share of pension obligation and payments to erstwhile OCS employees of Rs. 61.15 crores (2008 : Rs. 61.15 crores) were recoverable from the Government of India (the Government). Pursuant to discussions with the Government, the Company had made a provision of Rs. 53.71 crores (2008 : Rs. 53.71 crores) thereby having a net amount due from the Government towards its share of pension obligation of Rs. 7.44 crores (2008 : Rs. 7.44 crores). On 27 August, 2008, the arbitration tribunal (the Tribunal) of the International Chamber of Commerce, Hague handed down a final award in the arbitration proceedings brought by Reliance Globalcom Limited (Reliance), formerly known as FLAG Telecom, against the Company relating to the Flag Europe Asia Cable System. The Tribunal has directed the Company to pay Rs. 95.60 crores (US$ 21.45 million) (2008: Rs. Nil) as final settlement against the claim amount of US$ 385 million claimed by Reliance. The amount of Rs. 95.60 crores has been charged in the Profit and Loss Account and has been disclosed as exceptional item. During the year, TATA Communications entered into an agreement with Eskom and Transnet (two South African state owned enterprises) to acquire their 27% interest in Neotel, the second telecommunications operator in South Africa for a consideration of Rs. 135.13 crores which is valued at Rs. 139.93 crores as at balance sheet date in the form of Rs. 90.16 crores in equity shares and Rs. 49.77 crores in preference shares. The consideration comprises of a payment
3.
4.
6.
7.
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of Rs. 61.61 crores and adjustment of receivable of Rs. 73.52 crores from these shareholders under a binding agreement. The effective date of the transaction is 19 January 09. The Goodwill, being the difference between cost of acquisition and the Companys share of the negative networth in Neotel is Rs. 264.30 crores. 8. The Group through its Hong Kong subsidiary entered into an Equity Joint Venture (EJV) Agreement with the shareholders of China Enterprise Communications Limited (CEC). The Group will be acquiring a 50% equity interest in CEC subject to the approvals of the requisite governmental and regulatory bodies in China. The Group has advanced an amount of Rs. 59.77 crores (US$ 14 Million) towards the investment in the joint-venture which represents: two bonds of Rs. 15.04 crores (US$3.5 million) each, subscribed on 16 June, 2008 by the Groups Hong Kong subsidiary in CECs Hong Kong subsidiary viz. China Enterprise Netcom Corporation Ltd., (Valued at Rs.35.59 crores at balance sheet date) and Rs. 29.69 crores (US$ 7 million) paid into an escrow account on 13 August, 2008. The bonds will be redeemed and paid to the Groups Hong Kong subsidiary by CECs Hong Kong subsidiary upon approval of the Joint Venture and closure of the transaction, while the amount in escrow will be released to CEC in partial satisfaction of the purchase price of the shares in CEC. The bonds are classified under Investments and the amount paid into escrow is classified under Loans and Advances in the financials. Capital commitment, if any, arising from agreement with CEC is stated in Note B22, Schedule 20. 9. On 6 August, 2008, the Group, through its Dutch subsidiary entered into a series of agreements, including a Convertible Note and Warrant Purchase Agreement and Investors Right Agreement with BitGravity Inc. a Delaware corporation. In connection therewith, an amount of Rs. 48.56 crores (US$11.5 million ) was paid to BitGravity in exchange for a convertible note and warrants which is disclosed under Investments (Valued at Rs.58.47 crores at balance sheet date). The convertible note and warrants are exercisable in exchange for shares in BitGravity at the discretion of the Group based on certain performance factors after an initial maturity of nineteen months (extendable upto six months). The quantum of shares will be determined in accordance with Warrant Purchase Agreement. Capital commitment, if any, arising from agreement with BitGravity Inc. is stated in Note B22, Schedule 20. 10. The Board of Directors of the company at its meeting held on 4 December, 2007 had approved the merger of the Companys wholly owned subsidiary, VSNL Broadband Limited (VBL) with effect from 1 March, 2007. Consequent to the filing of the final certified order dated 3 April, 2009 of the Honble High Court of juridicature at Bombay with the Registrar of the Companies, Maharashtra the Scheme of Amalgamation of VBL with the Company has become effective from the appointed date of 1 March, 2007. Under the scheme, the shortfall in net book value of assets as compared to investment value is to be debited to Securities Premium Account. To give effect to this, Rs. 109.87 crores has been debited to the Securities Premium Account by crediting the balance in Goodwill on Consolidation which was accounted in the consolidated financial statements on 31 October, 2005 the date when VBL became a subsidiary of the Company.
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11. Financial Statements for the following companies considered in the consolidated financial statements are based on management accounts and are therefore unaudited: (Rs. in Crores) Subsidiary Total Assets Total Revenues Cash flows included in included in included in Consolidation Consolidation Consolidation VSNL SNOSPV Pte. Ltd Joint Ventures 389.72 Share in Total Assets included in Consolidation 32.51 574.64 607.15 Share in Total Revenues included in Consolidation 2.90 245.06 247.96 3.30 Share in Cash Flows included in Consolidation 3.11 99.80 102.91 Share in lossincluded in Consolidation 8.01
United Telecom Ltd SEPCO (Pty.) Ltd Total Associate Neotel (Pty.) Ltd 12. Secured Debentures:
During the year the Company has issued Rated taxable Secured Redeemable Non-convertible Debentures in demat form for cash at par on private placement basis aggregating to Rs. 1,250 Crores (2008 : Rs. NIL). IDBI Trusteeship Services Limited has been appointed as trustee to the debenture issue. i) Nature of Security Rs. 1,000 crores, 11.70% debentures (face value of Rs. 1,000,000 each) are secured by a first legal mortgage and charge on the Companys immovable property being the free hold land at Mouje Maharajpura, Gujarat and Plant and machinery represented by earth stations, network equipments, Land and sea cables, transmission equipments and other telecom equipments. Rs. 250 crores, debentures (interest ranging from 11.00% to 11.25%, face value of Rs. 1,000,000 each) are secured by a first legal mortgage and charge on the Companys immovable property being the free hold land at Parambur Barracks, Chennai and Plant and machinery represented by land cable network and equipments. ii) Redemption Terms These debentures are due for redemption as given belowDate of redemption 11.70% 11.00% 11.20% as per terms Debentures Debentures Debentures of issue Rs. in Crores
11.25% Debentures
25-11-2011 400 25-11-2012 400 25-11-2013 200 23-07-2014 190 23-01-2016 55 23-01-2019 5 Total 1,000 190 55 5 For facilitating the above redemptions, the Company has created Debenture redemption reserve and Rs 102.50 crores has been appropriated during the current year. 13. Employee Benefits: (A) Domestic Effective from 1 April, 2006 the Company adopted the revised Accounting Standard 15 Employee Benefits (AS 15).
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Retirement Benefits (a) Defined Contribution plan Provident Fund The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trustees of the Tata Communications Employees Provident Fund Trust. Under this scheme, the Company is required to contribute a specified percentage of payroll cost to fund the benefits. The Rules of the Companys Provident Fund administered by a trust require that if the Board of Trustees are unable to pay interest at the rate declared for Employees provident Fund by the Government under para 60 of the Employees Provident Fund scheme, 1952 for the reason that the return on Investment is less or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future. There has also been no such deficiency since the inception of the Fund. On account of provident fund a sum of Rs. 14.46 crores (2008: Rs. 11.47 crores) has been charged to the profit and loss account. (b) Defined Benefit Plans Gratuity The Company makes annual contributions for Employees Gratuity scheme to a fund administered by trustees covering all eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment in an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. Medical Benefit The Company reimburses domiciliary and hospitalisation expenses incurred by eligible and qualifying employees and their dependent family members not exceeding certain specified limits under the Tata Communication employees medical reimbursement scheme. The scheme provides for cashless hospitalisation where the claims are directly reimbursed by the company. Pension Plan The Companys pension obligation is in respect of certain employees transferred to the Company from the Overseas Communications Service (OCS). The Company purchases life annuity policies from an insurance company to settle such pension obligation. During the year the Company purchased additional annuity of Rs. 10.51 crores (2008: Rs. 3.49 crores) to meet the additional pension obligation on account of increase in Dearness Allowance. The details in respect of funded status and the amounts recognised in the Companys financial statement as at 31 March, 2009 and 2008 for these defined benefit schemes are as under: (i) Changes in the defined benefit obligation: Defined Benefit Plans Gratuity Gratuity Medical Benefit (Funded) (Unfunded) (Unfunded) As at 31 As at 31 As at 31 March, 2009 March, 2009 March, 2009 Rs. in crores Rs. in crores Rs. in crores Projected defined benefit obligation, beginning of the year (1 April, 2008) 28.54 0.19 31.54 Current Service Cost 2.65 0.25 4.03 Interest Cost 2.05 0.03 2.52 Liability transferred from other companies 0.46 Actuarial (gain) / loss 1.94 0.27 6.69 Benefits paid (1.59) (0.08) (9.10) Projected benefit obligation at the end of the year 34.05 0.66 35.68
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Defined Benefit Plans Gratuity Gratuity (Funded) As at 31 March, 2008 Rs. in crores Projected defined benefit obligation, beginning of the year (1 April, 2007) Current Service Cost Interest Cost Liability transferred to other companies Others Actuarial (gain) / loss Benefits paid Projected benefit obligation at the end of the year (ii) Changes in the fair value of plan assets for gratuity: Particulars As at 31 March, 2009 (Funded) Rs. in crores 30.82 2.41 0.15 0.46 (1.99) (1.56) 30.29 As at 31 March, 2008 (Funded) Rs. in crores 30.17 2.34 (1.36) 1.02 (1.35) 30.82 29.76 2.63 2.03 (1.36) 0.33 (3.30) (1.35) 28.74 (Unfunded) As at 31 March, 2008 Rs. in crores Medical Benefit (Unfunded) As at 31 March, 2008 Rs. in crores 28.48 4.23 2.28 0.67 (4.12) 31.54
Fair value of plan assets, beginning of the year Expected return on plan assets Employers contribution Transfer from other company Actuarial (loss)/ gain Benefits paid Fair value of plan assets at the end of the year
(iii) The amounts recognised in the profit and loss account for the year ended 31 March, 2009 and 2008: Defined Benefit Plans Gratuity Gratuity (Funded) (Unfunded) Year ended 31 Year ended 31 March, 2009 March, 2009 Rs. in crores Rs. in crores Current service cost Interest cost Expected return on plan assets Net actuarial loss/(gain) recognised in the year 2.65 2.05 (2.41) 3.94 6.23 0.25 0.03 0.27 0.55 Medical Benefit (Unfunded) Year ended 31 March, 2009 Rs. in crores 4.03 2.52 6.69 13.24
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Defined Benefit Plans Gratuity Gratuity (Funded) Year ended 31 March, 2008 Rs. in crores Current service cost Interest cost Expected return on plan assets Net actuarial loss/(gain) recognised in the year 2.63 2.03 (2.34) (4.32) (2.00) (iv) The amounts recognized in the Balance sheet is as follows Defined Benefit Plans Gratuity Gratuity (Funded) (Unfunded) Year ended 31 Year ended 31 March, 2009 March, 2009 Rs. in crores Rs. in crores Present value of funded obligations Fair value of plan assets Present value of unfunded obligations Net (asset)/liability in balance sheet 34.05 (30.29) 3.76 0.65 0.65 Medical Benefits (Unfunded) Year ended 31 March, 2009 Rs. in crores 35.68 35.68 (Unfunded) Year ended 31 March, 2008 Rs. in crores Medical Benefit (Unfunded) Year ended 31 March, 2008 Rs. in crores 4.23 2.28 0.67 7.18
Defined Benefit Plans Gratuity Medical Benefits (Funded) (Unfunded) Year ended 31 Year ended 31 March, 2008 March, 2008 Rs. in crores Rs. in crores Present value of funded obligations Fair value of plan assets Present value of unfunded Obligations Net (asset)/liability in balance sheet 28.74 (30.82) (2.08) 31.54 31.54
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(v) Categories of plan assets as a percentage of total plan assets: Category of assets Government of India Bonds Corporate Bonds Special Deposit Scheme State Government Bonds Insurer Managed Fund Others Total As at 31 March, 2009 1.96% 8.28% 89.76% 100.00% As at 31 March, 2008 8.33% 6.57% 5.37% 8.27% 65.11% 6.35% 100.00%
The Companys policy and objective for plan assets management is to maximize return on plan assets to meet future benefit payment requirements while at the same time accepting a low level of risk. The asset allocation for plan assets is determined based on investment criterion approved under the Income Tax Act, 1961 and is also subject to other exposure limitations. (vi) Principal actuarial assumptions used in accounting for gratuity and medical benefit obligations: Gratuity (Funded) Assumptions Discount rate Expected return on plan assets Increase in compensation cost Health care cost increase rate As at 31 March, 2009 7.50% - 8.00% 8.00% 6.00% - 7.00% Gratuity (Unfunded) As at 31 March, 2009 7.75% 5.00% Gratuity (Funded) As at 31 March, 2008 8.00% 8.00% 5.00 % 7.00% Medical Benefits (Unfunded) As at 31 March, 2009 7.50% 6.00% 2.00% Medical Benefits (Unfunded) As at 31 March, 2008 8.00% 6.00% 2.00%
Assumptions Discount rate Expected return on plan assets Increase in compensation cost Health care cost increase rate
The estimates of future compensation cost considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.
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(vii) Effect of change in Assumed Health Care Cost Trend Rate. A one-percentage-point change in assumed health care cost trend rates would have the following effects: 31 March, 2009 1 Percentage point Increase Decrease Rs. in crores Rs. in crores Effect on service cost Effect on interest cost Effect on post-employment benefit obligation 4.47 3.17 39.57 3.60 2.55 31.86
31 March, 2008 1 Percentage point Increase Decrease Rs. in crores Rs. in crores Effect on service cost Effect on Interest cost Effect on post-employment benefit obligation 3.88 2.38 28.78 4.28 1.96 31.93
As the present value of the plan assets is less than the present value of funded obligations, the Company expects to contribute Rs. 3.77 crores to its funded defined benefit plans in 2009-10. (B) International (a) Defined Contribution plans The Group makes contribution to defined contribution retirement benefit plans under the provisions of section 401(k) of the Internal Revenue Code for U.K and USA employees, a Registered Retirement Savings Plan (RRSP) for Canadian employees and a Group Stakeholder Pension plan (GSPP) for UK employees. An amount of Rs. 11.50 crores (2008: Rs. 8.06 crores) is charged to Profit and loss account for the year ended 31 March, 2009. In addition to above the Group has made a contribution of Rs. 8.14 crores in respect of Sepco, a joint venture with the Group. (b) Defined Benefit Pension Plans Pension On 13 February, 2006 the Group assumed Teleglobes contributory and non-contributory defined benefit pension plans covering certain of its Canadian employees, designed in accordance with conditions and practices in Canada. In addition, the Group assumed Teleglobes unfunded Supplemental Employee Retirement Plan (SERP) maintained for certain senior Canadian executives as part of the acquisition closed on 13 February, 2006. Health and Life insurance The Group also assumed a post-retirement health care and life insurance plan for its current retirees and future retirees in the purchase of Teleglobe.
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The details in respect of funded status and the amounts recognised in the Companys financial statement as at 31 March, 2009 for these defined benefit schemes are as under: (i) Changes in the defined benefit obligation: Pension Plans Health care and Life insurance Plans SERP As at 31 March, 2009 Rs. in crores 11.17 0.45 0.69 (0.21) (4.68) 0.42 7.84
Contributory As at 31 March, 2009 Rs. in crores Projected defined benefit obligation, beginning of the year (1 April, 2008) Current Service cost Interest cost Benefits paid Actuarial (gain)/loss Effect of foreign exchange rate changes Projected benefit obligation at the end of the year 351.30 2.03 20.54 (21.89) (81.39) 13.11 283.70
Noncontributory As at 31 March, 2009 Rs. in crores 297.46 8.08 17.68 (21.18) (75.14) 11.12 238.02
As at 31 March, 2009 Rs. in crores 8.41 0.13 0.49 (0.96) (1.05) 0.31 7.33
Pension Plans
Health care and Life insurance Plans SERP As at 31 March, 2008 Rs. in crores 8.67 0.35 0.49 1.32 0.34
Contributory As at 31 March, 2008 Rs. in crores Projected defined benefit obligation, beginning of the year (1 April, 2007) Current Service cost Interest cost Benefits paid Actuarial (gain) / loss Effect of foreign exchange rate changes Projected benefit obligation at the end of the year 355.76 2.91 18.98 (17.49) (22.29) 13.43
Noncontributory As at 31 March, 2008 Rs. in crores 327.56 10.02 17.20 (41.32) (28.23) 12.23
As at 31 March, 2008 Rs. in crores 8.98 0.14 0.48 (0.73) (0.79) 0.33
351.30
297.46
11.17
8.41
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(ii) Changes in the fair value of plan assets for pension plans Pension Plans Contributory As at 31 March, 2009 Rs. in crores Fair value of plan assets, beginning of the year Actual return on plan assets Contributions Benefits paid Actuarial gain / (loss) Effect of foreign exchange rate changes Fair value of plan assets, end of the year 460.90 25.82 (21.89) (40.66) 16.78 NonContributory As at 31 March, 2009 Rs. in crores 321.79 18.29 15.42 (21.18) (28.92) 11.66 Contributory As at 31 March, 2008 Rs. in crores 446.84 26.03 (17.49) (11.45) 16.97 Noncontributory As at 31 March, 2008 Rs. in crores 321.64 18.46 (41.32) (8.28) 31.27
440.95
317.06
460.90
321.77
(iii) The components of pension expense recognised in the Profit and Loss account for the year ended 31 March, 2009 and 2008: Year ended 31 Year ended 31 March, 2009 March, 2008 Rs. in crores Rs. In crores Current service cost Interest cost Actual return on plan assets Net Actuarial loss/(gain) recognized Effect of foreign exchange rate changes (Net) 10.69 39.40 (44.11) (92.68) 34.65 (52.05) 13.42 37.15 (44.49) (30.26) (8.61) (32.79)
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(iv) The amounts recognized in the Balance sheet is as follows: Pension Plans Health care and Life insurance Plans SERP Year ended 31 March, 2009 Rs. in crores 7.84 7.84
Contributory Year ended 31 March, 2009 Rs. in crores Present value of funded obligations Fair value of plan assets Present value of unfunded obligations Net (asset)/liability in balance sheet 283.70 (440.95) (157.25)
Noncontributory Year ended 31 March, 2009 Rs. in crores 238.03 (317.06) (79.03) Pension Plans
Year ended 31 March, 2009 Rs. in crores 7.33 7.33 Health care and Life insurance Plans
Contributory Year ended 31 March, 2008 Rs. in crores Present value of funded obligations Fair value of plan assets Present value of unfunded obligations Net (asset)/liability in balance sheet 351.30 (460.90) (109.60)
Noncontributory Year ended 31 March, 2008 Rs. in crores 297.46 (321.77) (24.31)
SERP Year ended 31 March, 2008 Rs. in crores 11.17 11.17
Year ended 31 March, 2008 Rs. in crores 8.41 8.41
(v) Categories of plan assets as a percentage of total plan assets: Category of assets Government Bonds Equity securities Short term investments Total As at 31 March, 2009 76.00% 19.00% 5.00% 100.00% As at 31 March, 2008 76.00% 19.00% 5.00% 100.00%
The Company uses an active management style to manage short-term securities, Canadian equities and international equities. Canadian bonds, US equities and the asset mix are managed passively. To accomplish this, the Company has entrusted this task to a professional investment manager. The management mandate defines the targeted asset allocation and the parameters for evaluating the manager performance.
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(vi) The assumptions used for the pension plans and the other benefit plans on a weighted-average basis are as follows: Assumptions Discount rate used for benefit costs Discount rate used for benefit obligations Expected long-term return on plan assets Inflation Rate of compensation increase As at 31 March, 2009 5.75% 8.00% 5.50% 2.50% 3.50% As at 31 March, 2008 5.25% 5.75% 5.75% 2.50% 3.50%
(vii) The health care cost trend rate has a significant effect on the amounts reported. The assumed health care trend rate used to determine the accumulated post-retirement benefit obligation calculated as at 31 March, 2009 is 9.32% (2008: 9.38%). A one-percentage-point change in assumed health care cost trend rates would have the following effects: 31 March, 2009 1 Percentage point Increase Decrease Rs. in crores Rs. in crores Effect on service cost Effect on interest cost Effect on post-employment benefit obligation 0.03 0.04 0.47 0.02 0.04 0.42 31 March, 2008 1 Percentage point Increase Decrease Rs. in crores Rs. in crores 0.03 0.04 0.65 0.02 0.04 0.58
The Group expects to contribute Rs. 18.94 crores (2008: Rs. 15.16 crores) to its defined benefit plans in 2009-10 14. Cash and cash equivalents represent:As at 31 March, 2009 Rs. In crores Cash and Cheques on hand and balances held with banks Remittances in transit Deposit accounts held with banks 543.15 0.28 332.50 875.93 Deposits with original maturity over three months Current Account / Deposits held for unpaid dividends Deposit accounts held as margin money Other restricted cash Cash and cash equivalents (11.65) (0.78) (0.04) (0.04) 863.42 As at 31 March, 2008 Rs. In crores 210.41 17.26 66.40 294.07 (0.95) (1.10) (3.62) 288.40
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15. Deferred tax: As at 31 March, 2009 Rs. In crores Deferred tax liability/(assets) (Net) Difference between accounting and tax depreciation Provision for Leave Encashment Provision for doubtful debts Expenditure on VRS and VSS Expenditure incurred on NLD license fees Unearned income / deferred revenues Provisions for post employment benefit and Leave encashment pursuant to the transitional provisions of AS-15 Others Net Deferred Tax Liability 16. Earnings per Share Rs. in crores except Number of Shares and Earnings per share data Year ended Year ended 31 March, 2009 31 March, 2008 Profit before taxes and exceptional items Income tax expense on profit excluding exceptional items Profit after tax excluding exceptional items Exceptional (expense)/ income (net) Income tax benefit/(expense) on exceptional items Minority Interest - share of loss (net) Share in loss of Associate Net Profit after tax and exceptional items Number of Shares Earnings per share excluding exceptional items Earnings per share including exceptional items 156.28 (188.65) (32.37) 266.48 (42.08) 131.78 (8.01) 315.80 285,000,000 Rs. 3.21 Rs. 11.08 160.12 (180.70) (20.58) (11.20) 3.81 38.27 10.30 285,000,000 Rs. 0.62 Rs. 0.36 363.25 (9.39) (67.02) (3.25) (21.46) (83.86) (8.84) (13.53) 155.90 282.86 (5.12) (65.22) (4.87) (23.26) (75.93) (9.07) 0.43 99.82 As at 31 March, 2008 Rs. In crores
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17. Segment Reporting Business Segments The reportable segments for the year ended 31 March, 2009 and 31 March, 2008 are Wholesale Voice Enterprise , and Carrier Data and Others The composition of the reportable segments is as follows: . Wholesale Voice: includes International and National Voice services. Enterprise and Carrier Data: includes corporate data transmission services like International Private Leased Circuits (IPLC), Frame Relay (FR), Internet Leased Line Circuits (ILL) and National Private Leased Circuits (NPLC). Others: includes Global Roaming, Internet, Virtual Private Network, Data Center, TV up-linking and other services. Year ended 31 March, 2009 Rs. in crores Wholesale Enterprise and Others Voice Carrier Data Revenues from Telecommunications and Other Services Segment Results Unallocable expenses (net) Profit before taxes and exceptional items Exceptional Items Profit before taxes Tax expense Profit/(Loss) after taxes Minority interest share of loss (net) Share in loss of Associate Net Profit Year ended 31 March, 2008 Rs. in crores Enterprise and Others Carrier Data 2,294.91 1,688.79 926.80 712.25 5,696.38 1,494.92 2,982.65 2,171.13 1,284.14 996.89
Total 9,963.17 4,662.94 (4,506.66) 156.28 266.48 422.76 (230.73) 192.03 131.78 (8.01) 315.80
Wholesale Voice Revenues from Telecommunications and Other Services Segment Results Unallocable expenses (net) Profit before taxes and exceptional items Exceptional Items Profit before taxes Tax expense Profit/(Loss) after taxes Minority interest share of loss (net) Net Profit i). 5,075.70 1,143.75
Total 8,297.41 3,544.79 (3,384.67) 160.12 (11.20) 148.92 (176.89) (27.97) 38.27 10.30
Revenues and expenses, which are directly identifiable to segments, are attributed to the relevant segment. Expenses on rent of satellite channels and landlines, and royalty and license fees are allocated on the basis of usage. Expenses on Leased Circuits acquired for Backbone and Access is allocated on the basis of revenue. Segment result is segment revenues less segment expenses. Certain costs, including depreciation which are not allocable to segments have been classified as unallocable expense .
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ii). Telecommunication services are provided utilizing the Companys assets which do not generally make a distinction between the types of services. As a result, fixed assets are used interchangeably between segments. In the absence of a meaningful basis to allocate assets and liabilities between segments, no allocation has been made. Geographical Segment: Segment revenues by Geographical Market Year ended 31 March, 2009 Rs. In crores India United States of America United Kingdom Canada Germany South Africa Saudi Arabia Singapore Bermuda Hong Kong Vietnam Spain United Arab Emirates Netherlands Others 3,242.30 1,657.13 676.11 397.17 314.10 293.09 211.02 191.11 135.29 115.90 151.33 124.21 109.93 82.86 2,261.62 9,963.17 18. Related Party Disclosures (a) List of related parties and relationship: I. Investing party II. III. Panatone Finvest Limited Tata Sons Limited N.Srinath Vinod Kumar Managing Director and Chief Executive Officer Managing Director (Tata Communications International Pte. Ltd.) and Director of Tata Communications Limited. Year ended 31 March, 2008 Rs. In crores 3,530.45 1,781.72 560.02 434.89 98.33 69.74 268.30 305.32 26.02 100.20 0.52 16.79 168.97 97.14 839.00 8,297.41
Key Managerial Personnel
Joint Ventures United Telecom Ltd. SEPCO Communications (Pty.) Ltd. (including its direct and indirect subsidiaries - Neotel (Pty.) Ltd. and Neotel Business Support Services (Pty.) Ltd.
IV.
Associate Neotel (Pty.) Ltd.
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(b) Related party transactions Investing Company Transactions Dividend Paid Panatone Finvest Limited Tata Sons Limited Total BEBP Expenses Tata Sons Limited Total Revenues from Telecommunication services Tata Sons Limited United Telecom Limited Neotel(Pty.) Ltd Total Network Cost United Telecom Limited Neotel(Pty.) Ltd Total Services received Tata Sons Limited Total Interest Income SEPCO Communications (Pty.) Ltd. Neotel (Pty.) Ltd. Total 52.19 52.19 10.92 10.92 63.11 63.11 15.47 5.48 15.47 5.48 52.19 52.19 10.92 10.92 63.11 63.11 15.47 5.48 15.47 5.48 Key Managerial Personnel Joint Venture (Rs. in crores) Total
2.53 0.49 2.53 0.49 0.09 0.09 -
1.60 4.68 41.69 28.15 43.29 32.83 27.13 20.96 11.12 3.15 38.25 24.11
2.53 0.49 1.60 4.68 41.69 28.15 45.82 33.32 27.13 20.96 11.12 3.15 38.25 24.11 0.09 -
7.63 2.26 3.06 10.69 2.26
0.09 7.63 2.26 3.06 10.69 2.26
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Investing Company Loan given SEPCO Communications (Pty.) Ltd. Neotel (Pty.) Ltd. Total Advances given by the Company Neotel (Pty.) Ltd Total Advances repaid to the Company Neotel (Pty.) Ltd Total Managerial Remuneration Total Balances Receivables Tata Sons Limited United Telecom Limited Neotel (Pty.) Ltd. SEPCO Communications (Pty.) Ltd Total Payables Neotel(Pty.)Ltd Managerial Remuneration United Telecom Limited Tata Sons Limited Total 0.34 0.19 0.34 0.19 16.68 5.48 16.68 5.48 0.45 4.23 0.45 4.23 0.03 0.31 27.17 19.16 10.04 2.09 37.24 21.56 2.77 3.02 6.84 5.25 9.61 8.27 0.34 0.19 0.03 0.31 27.17 19.16 10.04 2.09 37.58 21.75 2.77 3.02 0.45 4.23 6.84 5.25 16.68 5.48 26.74 17.98 Key Managerial Personnel 8.90 7.73 8.90 7.73 Joint Venture 49.09 12.47 131.58 180.67 12.47 0.01 0.07 0.01 0.07 0.01 2.39 0.01 2.39 (Rs. in crores) Total
49.09 12.47 131.58 180.67 12.47 0.01 0.07 0.01 0.07 0.01 2.39 0.01 2.39 8.90 7.73 8.90 7.73
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Investing Company Loans Given SEPCO Communications (Pty.) Ltd. Neotel (Pty.) Ltd. Total Advance receivables Neotel (Pty.) Ltd. Total Note: 1) 2) Figures in italic are in respect of the previous year. The un-eliminated portion of transactions and balances with joint ventures has been disclosed for purpose of related party disclosures. 69.99 20.90 131.58 201.57 20.90 1.30 1.30 1.30 1.30 69.99 20.90 131.58 201.57 20.90 1.30 1.30 1.30 1.30 Key Managerial Personnel Joint Venture (Rs. In crores) Total
19. Operating lease arrangements: (a) As lessee: Year ended 31 March, 2009 Rs. In crores Minimum lease payments under operating leases recognized as expense in the year 355.38 Year ended 31 March, 2008 Rs. In crores 252.19
At the balance sheet date, minimum lease payments under non- cancellable operating leases fall due as follows: Year ended 31 March, 2009 Rs. In crores Due not later than one year Due later than one year but not later than five years Later than five years 295.17 731.04 447.25 1,473.46 Year ended 31 March, 2008 Rs. In crores 210.20 539.23 461.99 1,211.42
Operating lease payments represent rentals payable by the Company for certain buildings, satellite channels, office equipments, computer equipments and certain circuit capacities. The minimum future lease payments have not been reduced by minimum operating sublease rentals of Rs. 22.17 crores (2008: Rs 25.35 crores) due in the future under non-cancellable subleases for certain buildings, which primarily commenced in January 2002 and extend until 31 July, 2011. Rs. 8.60 crores (2008: Rs. 7.65 crores) was recognised in the current year as minimum sublease rental against the same.
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(b) As lessor: (i) The Company has leased under operating lease arrangements certain Indefeasible Right of Use (IRU) with gross carrying amount and accumulated depreciation of Rs. 50.45 crores (2008: Rs. 50.45 crores) and Rs. 14.89 crores (2008: Rs. 11.53 crores) respectively as at 31 March, 2009. Depreciation expense of Rs. 3.36 crores (2008: Rs. 3.36 crores) in respect of these assets has been charged in the profit and loss account for the year ended 31 March, 2009. In case of certain lease arrangements aggregating to Rs. 278.33 crores (2008: Rs. 198.97 crores) for the year ended 31 March, 2009, the gross block, accumulated depreciation and depreciation expenses of the assets given on IRU basis is not readily determinable and hence not disclosed. The lease rentals associated with such IRU arrangements for the year ended 31 March, 2009 amounts Rs. 23.39 crores (2008: Rs. 15.33 crores). In respect of the above, rental income of Rs. 27.39 crores (2008: Rs. 19.64 crores) has been recognised in the profit and loss account for the year ended 31 March, 2009. Future lease rental receipts will be recognised in the profit and loss account of subsequent years as follows: Year ended 31 March, 2009 Rs. In crores Not later than one year Later than one year but not later than five years Later than five years 26.24 104.98 124.65 255.87 Year ended 31 March, 2008 Rs. In crores 21.95 88.02 114.26 224.23
(ii) The Company has leased certain premises under operating lease arrangements. Future lease rental income in respect of these leases will be recognised in the profit and loss account of subsequent years as follows: Year ended 31 March, 2009 Rs. In crores Not later than one year Later than one year but not later than five years Later than five years 0.01 0.01 0.02 Year ended 31 March, 2008 Rs. In crores 0.71 0.49 0.39 1.59
Lease rental income of Rs. 0.01 crores (2008: Rs. 1.80 crores) in respect of the above leases has been recognised in the profit and loss account for the current year. 20. Finance Lease arrangements: (a) As Lessee As on 31 March, 2009, assets under finance leases with gross carrying amount and accumulated depreciation of Rs. 85.66 crores (2008: Rs. 33.35 crores) and Rs. 46.48 crores (2008: Rs. 15.61 crores) respectively, are included in the total fixed assets. The net carrying amount of each class of asset under finance leases is as follows:
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Gross carrying amount As at 31 March, 2009 Rs. In crores 7.79 57.67 4.81 15.39 85.66 2008 1.84 22.93 3.78 4.80 33.35 Accumulated Depreciation As at 31 March, 2009 Rs. In crores 0.99 32.14 1.51 11.84 46.48 2008 0.13 11.31 0.81 3.36 15.61 Net carrying amount As at 31 March, 2009 Rs. In crores 6.80 25.53 3.30 3.55 39.18 2008 1.71 11.62 2.97 1.44 17.74
Building Plant and Machinery Furniture and Fixtures Computers
Minimum lease payments and the corresponding present value are as follows: Minimum lease Present Value of payments (MLP) MLP Year ended 31 March, Year ended 31 March, 2009 2008 Rs. In crores Not later than one year Later than one year but not later than five years Later than five years 0.30 0.30 21. Provision for Contingencies: 31 March, 2009 Asset Retirement Obligation Others Rs. In crores Balance as at beginning of the year Provision made during the year Payment made during the year Liabilities related to acquired businesses Effect of change in foreign exchange rate Provisions no longer required written back Balance as at end of the year 20.41 1.12 (4.23) 14.11 3.98 (1.53) 33.86 9.00 9.00 29.41 1.12 (4.23) 14.11 3.98 (1.53) 42.86 20.91 (0.50) 20.41 5.48 0.23 5.71 2009 2008 Rs. In crores 0.30 0.30 5.25 0.23 5.48
Difference representing Interest Year ended 31 March, 2009 2008 Rs. In crores 31 March, 2008 0.23 0.23
Total
Asset Retirement Obligation
Others Rs. In crores 12.58 (3.58) 9.00
Total
33.49 (4.08) 29.41
Notes: 1) The provision for ARO has been recorded in the books of the Group in respect of undersea cables and switches owned by the Group. 2) Others include amounts provided towards claims made by creditors of the Group.
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22. Contingent Liabilities and Capital Commitments Contingent Liabilities: As at 31 March, 2009 Rs. In crores i. Claims for taxes on income (Refer Note 1) (a) Income tax disputes where the department is in appeal against the Company (b) Income tax disputes where the Company has a favourable decision in other assessment year for the same issue (c) Income tax disputes other than the above ii. iii. Claims for other taxes Other claims 314.70 22.39 1,544.18 51.46 847.64 94.15 2.43 1,405.85 2.20 778.27 As at 31 March, 2008 Rs. In crores
Notes: (1) Significant claims by the revenue authorities in respect of income tax matters are in respect of: (a) Deductions claimed under Section 80 IA of the Income Tax Act, 1961 from Assessment years 1996-97 onwards have been disallowed by the revenue authorities. The Company has contested the disallowance and has preferred appeals and which are pending. (b) Reimbursement by the Department of Telecommunications (DoT) of income tax paid by the Company on the DoT levy during 1994-95, that was taxed by the revenue authorities. The Commissioner of Income Tax (Appeals) has upheld the disallowance. The Company is in appeal with the Income Tax Appellate Tribunal. (c) The Company has taken appropriate professional advice in respect of the claims / appeals and has taken all necessary steps to protect its interest. Based on expert opinion, no provision is required in respect of these claims / appeals. (2) Contingent liabilities, if any, in respect of sale of shares of Tata Teleservices Limited has been stated in Note B4, Schedule 20. (3) As part of its normal ongoing review of ITXC Corp.s (ITXC) operations in connection with the post-merger integration of Teleglobe, a predecessor in interest to VSNL Telecommunications (Bermuda) Ltd, and ITXC, Teleglobe had identified potential instances of non-compliance with the United States Foreign Corrupt Practices Act (FCPA) relating to ITXCs operations in certain African countries prior to its merger with Teleglobe, consummated on 31 May, 2004. Teleglobe voluntarily notified the Securities Exchange Commission (SEC) and the U.S. Department of Justice (the DOJ) of the matter, and the Company has been cooperating fully with the SEC and the DOJ. The SEC had previously advised Teleglobe that it was conducting an informal inquiry into the matter. Teleglobe has been informed that the SEC issued a formal order of investigation on 15 February, 2005 concerning ITXCs possible violations of the FCPA and possible related violations of the securities laws. On 27 July, 2005, the SEC issued a subpoena to Teleglobe for documents relating to its investigation. The Company cannot predict the extent to which the SEC, the DOJ or any other governmental authorities will pursue administrative, civil or criminal proceedings, the imposition of fines or penalties or other remedies or sanctions. The Company has not identified, and does not believe it is likely that, any material adjustment to its financial statements is or will be required in connection with the results of this investigation, although it is possible that a monetary penalty, if any, may be material to its results of operations in the period in which it is imposed.
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(4) The subsidiaries of the Company in various geographies are routinely party to suits for collection, commercial disputes, claims from customers and/or suppliers over reconciliation of payments for voice minutes, circuits, internet bandwidth and/or access to the public switched telephone network, leased equipment, and claims from estates of bankrupt companies alleging that the Company and / or its subsidiaries received preferential payments from such companies prior to their bankruptcy filings. While management currently believes that resolving such suits and claims, individually or in aggregate, will not have a material adverse impact on the Companys consolidated financial position, the FCPA investigation noted above is subject to inherent uncertainties and managements view of this matter may change in the future. Were an unfavorable final outcome to occur, such an outcome could have a material adverse impact on the Companys consolidated financial position and results of operations for the period in which the effect becomes reasonably estimable. Capital commitments Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3,508.54 crores (2008: Rs. 3,023.95 crores). The Company has entered into Joint Venture (40:60) with IOCPL Singapore for investment in M/s Cochin Submarine Cable Depot (India) Private Limited. However no amount has been invested as of balance sheet date for the said joint venture. As per the Equity Joint Venture (EJV) Agreement entered between the Group through its Hong Kong subsidiary and the shareholders of China Enterprise Communications Limited (CEC) (as stated in Note B8, Schedule 20) additional amount of Rs. 33.05 crores (US$ 6.5 million) will be payable to CEC subject to audit and regulatory approvals. As per the Convertible Note and Warrant Purchase Agreement and Investors Right Agreement entered by the Group with BitGravity Inc. (as stated in Note B9, Schedule 20) BitGravity may issue further convertible promissory notes and warrants up to Rs. 17.79 crores (US$ 3.5 million) and the group may invest based on mutual agreement between the parties. 23. United Telecom Limited (UTL) is a Joint Venture between the Company, Mahanagar Telephone Nigam Limited, Telecommunications Consultant India Limited and Nepal Ventures Private Limited. The Company has 26.66 percent equity ownership in UTL. UTL operates basic telephony services in Nepal based on Wireless-in-local loop technology. The Companys share in income, expenses, assets and liabilities based on the uniform accounting policy adopted by the Company and after inter-company eliminations for the year ended 31 March, 2009 and 31 March, 2008 are as follows: As at 31 March, 2009 Rs. In crores (25.77) 13.72 8.76 As at 31 March, 2008 Rs. In crores (23.54) 10.50 8.81
LIABILITIES: 1 2 3 Reserves and Surplus Secured Loan Unsecured Loan
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As at 31 March, 2009 Rs. In crores As at 31 March, 2008 Rs. In crores
ASSETS: 4 Fixed Assets (a) Gross Block (b) Less: Accumulated Depreciation (c) Net Block (d) Capital work-in-progress 5 A. Current Assets (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Other Current Assets B. Loans And Advances
41.77 15.80 25.97 25.97 0.78 5.84 3.11 1.96 11.69 12.42 24.11
29.14 12.24 16.90 4.39 21.29 2.20 4.94 3.32 0.18 10.64 4.46 15.10 7.50 7.60 Year ended 31 March, 2008 Rs. In crores 5.89 0.09 0.15 6.13 0.51 1.42 5.48 1.62 2.92 11.95 Rs. In crores -
6 7
Less: Current Liabilities Net Current assets
17.57 6.54 Year ended 31 March, 2009 Rs. In crores 2.90 0.06 0.22 3.18 0.73 1.46 3.85 2.13 3.40 11.57 Rs. In crores -
INCOME 1 2 3 Traffic Revenue Other Income Interest Income Total Income EXPENDITURE 4 5 6 7 8 Salaries and Related Costs Network Costs Operating and Other Expenses Interest Expense Depreciation Total Expenditure CONTINGENT LIABILITIES (i) Claims for other Taxes
(ii) Other Claims
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24. As at 31 March, 2009, the Company through its wholly owned subsidiary, VSNL SNOSPV Pte. Ltd., has 43.16 percent (2008: 43.16 percent) ownership in the issued and paid-up share capital of the Joint Venture SEPCO Communications (Pty.) Ltd. (SEPCO) i) SEPCO is an investment company which has acquired 51 percent controlling stake in the issued and paid-up share capital of Neotel, the licensed second network operator in South Africa. The Groups share in income, expenses, assets and liabilities of SEPCO based on the uniform accounting policy adopted by the Company and after intercompany eliminations for the year ended 31 March, 2009 and 31 March, 2008 are as follows: As at 31 March, 2009 Rs. In crores (145.23) 479.22 140.74 As at 31 March, 2008 Rs. In crores (57.93) 48.86 283.03
LIABILITIES 1 2 3 Reserves and Surplus Secured Loan Unsecured Loan ASSETS 4 Fixed Assets (a) Gross Block (b) Less: Accumulated Depreciation (c) Net Block (d) Capital work-in-progress
401.84 83.90 317.94 159.85 477.79
177.01 19.07 157.94 74.13 232.07
A.
Current Assets (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Other Current Assets 15.41 64.26 99.80 65.22 244.69 0.93 24.36 39.72 36.05 101.06 0.89 101.95
B.
Loans And Advances
25.97 270.66
Less: Current Liabilities and provisions (a) Current Liabilities (b) Provisions 159.62 14.19 173.81 77.84 5.38 83.22 18.73
Net (Current Liabilities)/Assets
96.85
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Year ended 31 March, 2009 Rs. in crores 245.06 1.82 8.15 255.03 84.87 124.36 136.28 73.08 61.70 480.29 Rs. in crores ii) Year ended 31 March, 2008 Rs. in crores 43.82 8.01 2.71 54.54 30.25 38.37 52.06 9.13 20.55 150.36 Rs. in crores -
INCOME 1 2 3 Traffic Revenue Other Income Interest Income Total Income EXPENDITURE 4 5 6 7 8 Salaries and Related Costs Network Cost Operating and Other Expenses Interest Expenses Depreciation Total Expenditure CONTINGENT LIABILITIES (i) Claims for other Taxes (ii) Other Claims
On 1st April 2008, Neotel Business Support Systems Pty. Ltd. (a wholly owned subsidiary of Neotel) purchased Transtel the telecommunications arm of Transnet Pty Ltd for a consideration of Rs. 134.43 crores. The Capital Reserve arising on this transaction was Rs. 46.08 crores. Groups share in the consideration and capital reserve is Rs. 58.02 crores and Rs. 10.15 crores respectively.
25. Previous years figures have been regrouped and reclassified wherever necessary.
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BOARD OF DIRECTORS
Mr. Subodh Bhargava Mr. Subodh Bhargava, born in 1942, holds a Degree in Mechanical Engineering from the University of Roorkee. He started his career with Balmer Lawrie & Co., Kolkata before joining the Eicher group of companies in Delhi in 1975. On March 31, 2000, he retired as the Group Chairman and Chief Executive and is now the Chairman Emeritus, Eicher group. He is the past President of CII and the Association of Indian Automobile Manufacturers; and the Vice President of the Tractor Manufacturers Association. Over several years, he has been a key spokesperson for Indian industry, contributing to and influencing government policy while simultaneously working with industry to evolve new responses to the changing environment. He was a member of the Insurance Tariff Advisory Committee, the Economic Development Board of the government of Rajasthan. He was also the chairman of the National Accreditation Board for Certifying Bodies (NABCB) under the aegis of the Quality Council of India (QCI). Mr. Bhargava has been closely associated with technical and management education in India. He was the Chairman of the Board of Apprenticeship Training and Member of the Board of Governors of the University of Roorkee; The Indian Institute of Foreign Trade, New Delhi; Indian Institute of Management, Indore; the Entrepreneurship Development Institute of India, Ahmedabad. He is currently on the Board of Governors of IIM (Lucknow) and other Institutions for Engineering and Business Management Education; the Centre for Policy Research; Member, Technology Development Board, Ministry of Science & Technology, Govt. of India. He has been conferred with the first IIT Roorkee Distinguished Alumnus Award in 2005 by Indian Institute of Technology, Roorkee. Mr Bhargava is the Chairman of Tata Communications Limited and also Wartsila India Limited and Director on the boards of several Indian Corporates such as Tata Steel Limited; Tata Motors Limited; Power Finance Corporation Ltd.; Larsen & Toubro Ltd. etc.
Mr. N. Srinath Mr. N. Srinath, born in 1962, has a degree in Mechanical Engineering from IIT (Chennai) and a Management Degree from IIM (Kolkata), specialising in Marketing and Systems. Since joining the Tata Administrative Services in 1986, Mr. Srinath has held positions in Project Management, Sales & Marketing, and Management in different Tata companies in the ICT sector over the last 23 years. On completing his probation with the TAS in 1987, Mr. Srinath joined Tata Honeywell, a start-up in the business of process control systems, as Project Executive working till late 1988 on securing various statutory approvals and funding necessary for the project. He then moved to Tata Industries as Executive Assistant to the Chairman, an assignment he handled till mid 1992. In that period, he was also part of the team that set up Tata Information Systems (later Tata IBM). From June 1992 to February 1998 he handled a number of assignments in Tata Information Systems Limited in Sales & Marketing to enterprise customers in the banking, retail, petroleum and process manufacturing sectors. In March 1998, Mr. Srinath returned to Tata Industries as General Manager (Projects) responsible for overseeing the project implementation of Tata Teleservices fixed line telecom service in the state of Andhra Pradesh. In April 1999, he took over as the Chief Operating Officer of Tata Teleservices responsible for Sales, Networks and Information Technology. From late 2000 till February 2002, he was the Chief Executive Officer of Tata Internet Services, a start-up Internet services business serving retail and enterprise customers. Thereafter, he moved to Tata Communications Limited (then VSNL) as a whole-time director in charge of operations. Mr. Srinath has received several recognitions in the telecom industry. He was named the Telecom CEO of the Year in Asia by the leading publishing group Telecom Asia in the 2006 edition of their awards. The Institute of Economic Studies (IES), a research oriented organisation, conferred its Udyog Rattan Award on Mr. Srinath in November 2006. In 2008, Mr. Srinath was named as the worlds eighth most influential telecom personality by the Global Telecoms Business magazine as well as the Telecom Person of the Year by the India-based Voice and Data magazine. Since February 2007 Mr. Srinath has been the Managing Director of Tata Communications Limited & CEO of the Tata Communications global group of companies.
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Mr. Kishor A. Chaukar Mr. Kishor A. Chaukar, born in 1947, currently the Managing Director of Tata Industries Limited (TIL), is a post-graduate in management from the Indian Institute of Management at Ahmedabad. TIL is one of the two principal holding companies of the Tata Group, Indias largest and best-known conglomerate. TIL acts as the new projects promotion arm of the Group, and spearheads the entry of the Group in the emerging high-tech and sunrise sectors of the economy. In his capacity as Managing Director of TIL, Mr. Chaukar is responsible for enhancing the value and interest of TIL in TIL divisions and in companies where TIL has made investments and/or has sponsored. One of the tasks performed in the quest for this value enhancement is to provide strategic direction to these companies. Mr. Chaukar is a member of the group Corporate Centre, which is engaged in strategy formulation at the House of Tata. He is on the Board of various companies like Tata Teleservices Limited, Tata Autocomp Systems Limited, Tata Investment Corporation Limited, among others. He also oversees the functions of the Department of Economics and Statistics (DES). Mr. Chaukar is the chairman of Tata Council for Community Initiatives (TCCI) the nodal forum of the Group on matters related to social development, environmental management, bio-diversity restoration and conservation of wild life. Mr. P.V. Kalyanasundaram Mr. P.V. Kalyanasundaram was born in 1958. He received a Bachelor of Arts degree in history, from the New College, Chennai in 1977, followed by a Bachelor of Law degree from Madras Law College in 1983. An advocate by profession, Mr. Kalyanasundaram was a legal advisor for Pallavan Transport Corporation, Chennai, a government of Tamil Nadu undertaking, and legal advisor to the Chennai Metropolitan Water Supply and Sewerage Board. He was trustee of the Jawaharlal Nehru Port Trust, Mumbai, and a member of the Censor Board, Chennai. Dr. V.R.S Sampath Dr. V.R.S Sampath, born in 1956, is an advocate and editor of Sattakadir, a law journal published in Chennai. He is an arbitrator and mediator specially trained from Canada and Austria. He is currently an empanelled advocate to both Canara Bank and Indian Overseas Bank. He is an Independent Director of Arani Agro Oil Industries Ltd., Hyderabad, a joint venture project of India and Malaysia. He studied Master of Arts in History, Master of Law in International Law and Comparative Constititional Law. After that, he was engaged in research programme on Judicial History and awarded Doctor of Philosophy (Ph.D) by the University of Madras. He holds a Post Graduate Diploma in Tourism. Mr. Kalyanasundaram has played a leading role in various public activities. As the managing trustee of the Green Peace World Charitable Trust, Chennai, he took an active part in the various welfare measures organized by the trust. These include organizing free eye camps to treat poor people. Between 2000 and 2004, Mr. Kalyanasundaram was the chairman and trustee, Pachayappas Trust, Chennai. In that position, he managed several educational institutions, including seven colleges and six schools, and looked after immovable properties. Mr. Chaukar is also a Board member of Global Reporting Initiative (GRI), which has spearheaded the concept of triple bottom line reporting (financial, environmental and societal), and is engaged in evolving formats for corporates to follow. GRI is an international organization founded by the United Nations and funded by international foundations such as the Ford Foundation, Mott Foundation and others, and is headquartered in Amsterdam. He is also a member of Social Accountability International (SAI) Advisory Board, based in New York. SAI is a nongovernmental, international, multi-stakeholder organization dedicated to promote human rights and improving workplaces and communities by developing and implementing socially responsible standards. Mr. Chaukar is also a member of the Shell Foundation Breathing Space India Advisory Board. The Breathing Space programme aims at achieving a significant long-term reduction in Indoor Air Pollution by designing more emission and fuel efficient stoves by developing a sustainable way to get them into peoples homes. Mr. Chaukar was previously the Managing Director of ICICI Securities & Finance Company Ltd. (July 1993 to October 1998), and a member of the Board of Directors of ICICI Limited from February 9, 1995 to October 15, 1998. His other experiences include stints in Bhartiya Agro Industries Foundation, a public trust engaged in rural development on a no-profit no-loss basis and Godrej Soaps Limited.
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Dr. V.R.S. Sampath has participated in the following International Certificate programmes Conflict Transformation of the International Civilian Peace Keeping and Peace Building Program, Information Dissemination Program, in Austria. Peace Building and Conflict Resolution Program, The Canadian International Institute of Applied Negotiations, Ottawa, Canada. Human Rights and Development Law Program, Institute of Social Studies, The Hague, The Netherlands. Social Work and Mental Health Program, Social Work and Youth Leadership Program in California State University, Long Beach, U.S.A.
Corporate Affairs, Government of India. Member of the Tamil Nadu State Library book selection committee of Govt. of Tamil Nadu. (A grade Committee) Member of the best Tamil book selection committee Govt. of Tamilnadu.
Dr. Sampath has served on various government committees and, is chairman of various non-governmental organizations. He is a member of the Indian Council of Arbitration and other professional associations. Dr. Sampath is an Advisor for many educational institutions in India and abroad. He regularly organizes seminars and workshops on various professional programmes and development issues. He is an author of many books of law, history, public affairs and tourism. Dr. V.R.S. Sampath has travelled to many countries to participate in seminars, workshops and conferences on law, human rights, social work, corporate governance, etc.
Dr. V.R.S. Sampath has been nominated for the following Government Committees Member of the Board of Governors of Indian Council of Forestry Research and Education, Ministry of Environment and Forests, Govt. of India. Member of Disciplinary Committee of the Institute of Cost and Work Accountants of India, Ministry of
Mr. Amal Ganguli Mr. Amal Ganguli, born in 1939, is a fellow member of the Institute of Chartered Accountants of India and the Institute of Chartered Accountants of England and Wales and a member of the New Delhi chapter of the Institute of Internal Auditors, Florida, U.S.A. He was the Chairman and Senior Partner of PricewaterhouseCoopers (PWC), India till his retirement on 31st March, 2003. Besides his qualifications in the area of accounting and auditing, Mr. Ganguli is an alumnus of IMI, Geneva. Mr. Ganguli, trained in the UK to become a Chartered Accountant. He was seconded as a Partner to PWC, UK/ USA for a year in 1972-73. During his career spanning over 40 years, Mr. Gangulis range of work included International Tax advice and planing, cross border investments, Corporate mergers and re-organisation, financial evaluation of projects, management, operational and statutory audit and consulting projects funded by International funding agencies. In the course of his professional career, he has dealt with a variety of clients including US AID, World Bank, Mr. Vinod Kumar As president and managing director of Tata Communications International Pte. Ltd., a subsidiary of Tata Communications Limited, and Chief Operating Officer, Mr. Kumar is responsible for expanding Tata Communications Internationals roadmap and charter into the global communications market. Enhancing the service capabilities and customer facing activities in strategic markets beyond the shores of India in a nut shell sums his mandate. Besides heading these strategic initiatives, Mr. Kumar is also responsible for the Wholesale Data, Global Mobile and International Enterprise lines of business and meeting the companys ambitious targets. ADB, NTPC, Alcatel, GE, Hindustan Lever, STC, Hewlett Packard and IBM. Mr. Ganguli is a member of the Board of Directors of several Companies such as Hughes Communications India Limited, Tube Investments of India Limited, HCL Technologies Limited, New Delhi Television Limited, Century Textiles and Industries Ltd., Aricent Technologies (Holdings) Ltd., AVTEC Ltd., ICRA Ltd., Maruti Suzuki India Ltd. and Triveni Engineering and Industries Ltd. Mr. Ganguli is a member of the Audit Committees of HCL Technologies Ltd., Century Textiles and Industries Ltd., Tube Investments of India Limited and ICRA Ltd. He is the chairman of the Audit Committees of Hughes Communications India Limited, New Delhi Television Limited, Aricent Technologies (Holdings) Ltd. and Maruti Suzuki India Ltd. and a member of Remuneration Committees of Tube Investments of India Limited and New Delhi Television Limited.
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Mr. Kumar has a wide range of cross-functional experience in the telecommunications industry. He also has an impressive track record in developing business strategies and creating fast growth organizations. He was previously Senior Vice-President of Asia Netcom and responsible for all aspects of generating top-line growth, including strategy formulation, product marketing and sales. He was actively involved in all aspects of the financial restructuring, and eventual asset sale of Asia Global Crossing to China Netcom, resulting in the formation of Asia Netcom. In 1999, Mr. Kumar joined WorldCom Japan as Chief
Executive Officer and prior to that, he held various senior positions in Global One in the United States and Asia where he has had major responsibilities in market management, sales, marketing, product management, multinational account management and operations. Mr. Kumar born in 1965, completed his coursework for a Masters in Business Administration from The American University. He also graduated with honors in Electrical and Electronic Engineering at the Birla Institute of Technology and Science in India.
Mr. S. Ramadorai Mr. S. Ramadorai, born in 1944, Chief Executive Officer and Managing Director of Tata Consultancy Services Limited, has been associated with the Company for the past 37 years. Joining as a trainee engineer, Ramadorai took over as CEO in 1996 and has been instrumental in building TCS to a $6 Billion global software and services company. With a talent base of over 140,000 associates, a geographical reach of 42 countries and an enviable client list which includes six of the Top Ten Fortune companies. Ramadorai has now set his sights on ensuring that TCS is among the global Top Ten software companies. In October 2006, TCS was recognized by Economic Times as the Company of the year, a fitting tribute to its increasing global presence. Recently Ramadorai was awarded CBE (Commander of the Order of the British Empire) by Her Majesty Queen Elizabeth II for his contribution to Indo-British economic relations. Ramadorais vision is evident through the active role he played in establishing Offshore Development Centers (ODCs) in India to provide high-end quality solutions to major corporations. With a view to remain abreast with changing technologies at all times, Ramadorai set up Technology Excellence Centers in India that have acquired knowledge, expertise and equipment in specialized technology areas. His key initiatives include his relentless pursuit of excellence in quality. Under his leadership TCS was awarded the CII-Exim Bank Quality Award for 2006. In August 2004, TCS became the worlds first organization to achieve an integrated Enterprise wide Maturity Level 5 on both Capability Maturity model and People Capability Maturity model, these are frameworks conceptualized by the Software Engineering Institute at Carnegie Mellon University, to benchmark and appraise the software process and people management process of an organization. Ramadorai firmly believes that learning is a continual process, which does not end with formal education. Ramadorai continues to maintain strong links with the world of academia. He is a member of the Corporate Advisory Board, Marshall School of Business (USC) as well as other Boards of reputed Indian academic institutions. Among his other distinctions, Ramadorai is a Fellow of the Institute of Electrical and Electronics Engineers (IEEE) and of the Indian National Academy of Engineering. Ramadorai was recently conferred the Nayudamma Award for 2008 for his outstanding contribution to information technology. He was also International CEO of the Year (2008) at the 14th Annual LT Bravo Business Awards, which are widely acknowledged as the Oscars of Latin American business, organised by Latin Trade Magazine. At the 7th CNBC Asia Business Leaders Awards (ABLA)-2008 Ramadorai was awarded the Asia Talent Management of the Year for his personal involvement in supporting and nurturing leadership within TCS. Ramadorai was recently honoured by the Institution of Engineers, India (IEI), for his outstanding contribution to Engineering in India. In November 2006 Ernst & Young awarded Ramadorai the Entrepreneur Manager of the Year award. In recognition of Ramadorais commitment and dedication to the IT industry he was awarded the Padma Bhushan in January 06. He is also increasingly being recognized as a leader of global standing. Mr Ramadorai was presented by Prime Minister Blair, the UK Trade and Investment Special Recognition Award in September 2005 for TCS exemplary contribution to India UK economic ties. Dataquest has recognized him as the IT Man of the year for 2004. Business India recognized him as the Businessman of the Year (2004). Computer Business Review has named him among the top 10 most influential movers and shakers in the IT sector for 2005 and 2006. The Indo American Chamber of Commerce recognized him with an award for promoting Indo-US Business Excellence in 2004. He was conferred Honorary Doctorate (Honoris Causa) by Anna
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University and the Sastra University of Tamil Nadu. During 2003, Ramadorai was honoured with the Distinguished Achievement Award from the Indian Institute of Science, Bangalore. In 2002, he was awarded with CNBC Asia Pacifics prestigious Asia Business Leader of the Year Award. He has been honoured with the position of IT Advisor to Qingdao City, Peoples Republic of China. As a former Chairman of the National Association of Software Companies (NASSCOM), Ramadorai continues to extend his support to the Indian IT Industry. As an individual deeply committed to the House of Tatas, Mr. A.K. Srivastava Mr. A.K. Srivastava was born in 1951. Mr. Srivastava is a Bachelor of Science and has a Masters Degree in Science besides being a Graduate from the Institution of Electronics and Telecommunication Engineers (IETE). Mr. Srivastava joined the Government of India service in 1973. Thereafter, Mr. Srivastava has worked in Department Mr. Arun Gandhi Mr. Arunkumar Ramanlal Gandhi born in 1943 is a director on the Board of Directors of Tata Sons Limited and is a member of the Group Corporate Centre of Tata Companies. He is a fellow member of the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of India. He is an associate member of the Chartered Institute of Taxation, London. Prior to joining Tata Sons, he was with M/s N. M. Raiji & Co., Chartered Accountants. He joined the firm as a partner in July 1969 and in 1993 became a senior partner. The firm has more than 60 years of professional standing. He joined Tata Sons Limited as an Executive Director on 18th August 2003 and continued in that position till 17th August 2008. Mr. H.P. MISHRA Mr. H.P. Mishra, born in 1950, currently senior deputy director general in the department of telecommunications, Government of India, is an alumnus of the Indian Institute of Technology, Delhi with a degree in Mechanical Engineering. He also holds degrees of Master of Business Administration specializing in finance (1983) and Bachelor of Law (2008) from the University of Delhi. He began his career as an engineer with a machine tools manufacturer on the outskirts of Delhi before moving to the Rourkela Steel Plant of Hindustan Steel Limited (now SAIL). In 1975 he changed path and joined the State Bank of India, before settling for the Indian P&T Accounts and
Ramadorai holds Chairmanships and Directorships of other Group companies. He is also on the Board of Directors of premier companies such as Hindustan Lever Ltd and Nicholas Piramal India Ltd. His academic credentials include a Bachelors degree in Physics from Delhi University, India, a Bachelor of Engineering degree in Electronics and Telecommunications from the Indian Institute of Science, Bangalore, India, and a Masters degree in Computer Science from the University of California - UCLA, USA. In 1993, Ramadorai attended the Sloan School of Managements highly rated Senior Executive Development Program.
of Telecom, ONGC, TCIL and has a wide experience in the telecommunications industry in Operations/Projects Management/Licensing and Regulations. Mr. Srivastava is currently the Deputy Director General (Access Service), Department of Telecommunications, Government of India.
Mr. Gandhi has been assisting the Tata companies in acquiring diverse assets and companies across the globe. This has enabled the Tata companies to acquire critical assets, resources and access to world class R&D facilities. In the course of his professional career, Mr. Gandhi has worked on numerous mergers and acquisitions, both crossborder and domestic. Mr. Gandhi has been a member of various committees constituted by industry forums and regulatory bodies such as SEBIs Takeover Panel Exemption Committee and the Institute of Chartered Accountants of Indias Accounting Standards Board among various others.
Finance Service of the Government of India in July 1976. He has since held several positions, including as finance director in Delhi Telephones and financial advisor in telecom circles of the department of telecommunications. He has managed the departments accounts, introduced computerized accounting in over 670 units all over India in less than 2 years, been instrumental in finalizing the reporting structure for telecom service providers, and formulated the Governments defense in several high-value court cases involving telecom licensees. He has been on deputation to the Ministry of Environment & Forests as finance director, where he established a
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comprehensive system to formulate and evaluate feasibility reports etc., and effected huge savings of time and cost in various schemes under the prestigious Ganga Action Plan. As a professor at the National Institute of Financial Management (NIFM), Faridabad, Haryana, he designed and taught general and financial management courses to senior government officers and organized the Institutes First International Course on Financial Management. He has also contributed to the course material of IGNOU on Project Management. As deputy director general, revenues, in Bharat Sanchar Nigam Ltd. (BSNL), he oversaw its nation-wide billing and collections, helped develop the operating billing manual for cellular services and was involved in finalizing the specifications for its CDR-based billing system. Mr. Mishra has been responsible for bringing out the first post-BSNL Telecom Accounts Manual (electronic format) for the department of telecommunications in October 2007. He has participated in or headed several committees
including those on reorganization of finance functions, spectrum valuation & pricing, introduction of calling cards (for long distance services), internet telephony, MVNO, etc. He has also served as a Government nominee director on the board of HTL Ltd. Mr. Mishra has been the recipient of fellowships awarded by the BADC and the USAID for international telecommunication programs in Belgium and USA, and has participated in workshops of the International Telecommunications Union (ITU) at Geneva and Australia, and in study groups of the Asia Pacific Telecommunity (APT). He is a member of All India Management Association, Indian Institute of Public Administration and Indian Council of Arbitration and is particularly interested in management control systems and ethics in management. He is strongly motivated by a desire to improve existing systems and procedures with a view to prevent problems and thus help all stakeholders achieve their goals more easily and efficiently.
Dr. Ashok Jhunjhunwala Dr. Ashok Jhunjhunwala, born in 1953, received his B.Tech degree from IIT, Kanpur, and his MS and Ph.D degrees from the University of Maine. From 1978 to 1981, he was with Washington State University as Assistant Professor. Since 1981, he has been teaching at IIT, Madras, where he leads the Telecommunications and Computer Networks group ( TeNeT ). This group works with industry in the development of technologies relevant in India. It has incubated several technology companies which work in partnership with TeNeT group to develop Telecom and Banking products for Indian Urban and Rural Markets. He chairs Rural Technology Business Incubator (RTBI) at IIT Madras and Mobile Payment Forum of India (MPFI). Dr. Ashok Jhunjhunwala has been awarded the Padma Shri in the year 2002. He has been awarded Shanti Swarup Bhatnagar Award in 1998, Dr, Vikram Sarabhai Research Award for the year 1997, Millennium Medal in Indian Science Congress in the year 2000 and H.K. Firodia for Excellence in Science and Technology for the year 2002, Shri Om Prakash Bhasin Foundation Award for Science & Technology for the year 2004, Awarded Jawaharlal Neheru Birth Centenary Lecture Award by INSA for the year 2006, IBM Innovation and Leadership Forum Award by IBM for the year 2006, recently warded Honorary Doctorate by the institute of Blekinge Institute of Technology Sweden and Excellence in Science and Technology Award. He is a Fellow of World Wireless Research Forum, IEEE and Indian academies including INAE, IAS, INSA and NAS. Dr. Jhunjhunwala is a Director in the Board of State Bank of India, TTML, BEL, Polaris, 3i Infotech, Sasken, Tejas, IDRBT and Exicom. He is a member of Prime Ministers Scientific Advisory Committee.
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Registered office : VSB, M.G. Road, Fort, Mumbai - 400 001. TWENTY THIRD ANNUAL GENERAL MEETING - 7 AUGUST, 2009 AT 1100 HRS.
ATTENDANCE SLIP
I, Mr/Mrs./Miss................................................................................................. LF/Client ID. No ........................................................... hereby record my presence at the 23rd Annual General Meeting of Tata Communications Limited at the M. C. Ghia Hall, Kalaghoda, Mumbai - 400 001. ............................... Signature of the Shareholder or Proxy Notes: 1. Please fill this Attendance Slip and hand it over at the entrance of the hall. 2. SHAREHOLDERS ARE REQUESTED TO BRING THEIR COPIES OF THE NOTICE DOCUMENT WITH THEM.

Registered office : VSB, M.G. Road, Fort, Mumbai - 400 001.
PROXY
I/We ...........................................................................................................................(LF/Client ID. No...................................) (Address).............................................................................................................being a Member/Members of Tata Communications Limited, do hereby appoint ........................................................................................ of ......................................or/failing him ...................................................................................................................of ........................................as my/our proxy in my/our absence to attend and vote for me/us on my/our behalf at the 23rd Annual General Meeting of the Company to be held at 1100 Hrs on Friday, the 7 August, 2009, and at any adjournment thereof. IN WITNESS whereof I/We have set my/our hand/hands this...................day of..........................2009. Please affix 1.00 Re. Revenue Stamp (Signature of the Shareholder across the stamp) Note : 1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself, and a proxy need not be a Member. 2. A One Rupee Revenue Stamp should be fixed to this and it should then be signed by the Member. 3. The instrument appointing the proxy and the power of attorney or other authority, if any, under which it is signed, or a copy of that power of authority duly certified by a notary or other proper authority, shall be deposited at the Registered Office of the Company not later than forty-eight hours before the time for the holding of the Meeting, in default, the instrument of proxy shall not be treated as valid.
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Corporate Ofce
Tata Communications Limited C-21 and C-36, Bandra Kurla Complex, Mumbai 400 098, Tel +91 22 66578765
Registered Ofce
Tata Communications Limited, VSB, Mahatma Gandhi Road, Fort Mumbai 400 001, Tel +91 22 66578765
Regional Ofce Locations

India
TATA Communications subsidiaries
OFFICE LOCATIONS
Tata Communications, LVSB, Kashinath Dhuru Marg Prabhadevi, Mumbai 400 028, Tel +91 22 6657 8765 Tata Communications, Global Customer Service Centre, Alandi Road, Dighi, Pune 411 015, Tel +91 20 66357001 Tata Communications, VSB, Bangla Sahib Road, New Delhi 110001, Tel +91 11 66501111 / 66501234 Tata Communications, VSB 1/18, C.I.T. Scheme VII-M, Ultadanga, Kolkata 700054, Tel +91 33 66116660 Tata Communications, VSB, No 4, Swami Sivananda Salai, Chennai 600 002, Tel +91 44 66774103
Australia Corporate 503, Tata Communications, King Street Wharf, SuiteOffice Registered Office 35 Lime Street, Sydney NSW 2000 Australia, Tel +61 2 9299 2014
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North America Tata Communications, 2355 Dulles Corner Blvd, 7th Floor, Herndon, VA 20171, USA, Tel +1 703 547 5900
Tata Communications, 90 Matawan Rd 3rd Floor, Matawan, NJ 07747, USA, Tel +1 732 888 6700 Tata Communications, 1555 Rue Carrie-Derick, Montreal, Qubec H3C 6W2, Canada, Tel +1 514 868 7272
Europe
Tata Communications, Exchange Tower, Suite 7.03, 2 Harbour Exchange Square, London E14 9GE, England, Tel +44 20 7519 4610 Tata Communications, 131 Avenue Charles de Gaulle, 92200 Neuilly-sur-Seine, France, Tel +33 1 41 43 4200 Tata Communications, Avenida de Europa 4, Bajo A, Parque Empresarial La Moraleja 28108 Alcobendas, Madrid, Spain, Tel +34 916 57 48 90 Tata Communications, Bettinastrasse 30, D-60325 Frankfurt am Main, Germany, Tel +49 69 97461 123
Asia Tata Communications, 5 Shenton Way #34-10 UIC Building Singapore 068808, Tel +65 6551 3600
Tata Communications, 2402 Bank of America Tower, 12 Harcourt Road, Central, Hong Kong, Tel +852 3693 8888
Middle East & North Africa Tata Communications, Hamdan Street, City Center Building Block A, 2nd Floor, Ofce #204, P.O. Box 41660, Abu Dhabi, United Arab Emirates, Tel +971 2 626 6223
www.tatacommunications.com
2009 Tata Communications Ltd. All Rights Reserved.

VSB, Mahatma Gandhi Road, Fort Mumbai, 400 001 India
www.tatacommunications.com

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23rd

Communicate behind a single purpose.

Tata Communications Limited

TWENTY THIRD ANNUAL REPORT 2008-09

LEGAL ADVISORS STATUTORY AUDITORS REGISTRARS & TRANSFER AGENTS

2041234.00 1404799.50 801477.00 1051229.00 885244.50 744533.50 889767.00 7818284.50

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Annexure to the Notice dated 10 July 2009

Details of Directors Seeking Appointment/Re-Appointment at the 23rd Annual General Meeting

Memberships/Chairmanships of Committees in other Public Companies

ANNEXURE 1: MANAGEMENT DISCUSSION AND ANALYSIS

REPORT ON CORPORATE GOVERNANCE FOR THE YEAR 2008-09

Attendance at the last AGM (02.08.2008)

Board Meetings during the tenure Held Attended

Attendance at the last AGM (02.08.2008)

No. of Directorships in Public Companies Including Tata Comm Chairman Member

Not Independent Non Executive

Nominee director of the Government of India.

65.5 43.7 2706.4

DISCLOSURE REQUIRED BY CLAUSE 32 OF THE LISTING AGREEMENT

834.17 151.59 0.03

847.32 231.25 0.03

110,810,000 769,333 13,661,422

Closing Share Price at BSE V/S Sensex Close

20000 18000 16000 14000 12000

400 300 200 100 0

10000 8000 6000 4000 2000

BSE Closing Share Price

Closing Share Price at NSE V/S Nifty Close

6000 5000 4000 3000 2000 1000 0

400 300 200 100 0

NSE Closing Share Price

ADR Closing Price at NYSE V/S NYSE Composite Index

ADR Closing Price at NYSE (USD)

ADR Closing Price Close

NYSE Composite Index

563 875 47136 48740

194 1315 52015 53680

0.03 0.68 1.69 100

0.02 0.91 2.42 100

94455 1925404 4813589 285000000

66677 2617031 7013057 285000000

Bonus of 1:3 issued to Government of India. +20,000,000

NIL NIL NIL +190,000,000 NIL NIL

95,000,000 95,000,000 95,000,000 285,000,000 285,000,000 285,000,000

950,000,000 950,000,000 950,000,000 2,850,000,000 2,850,000,000 2,850,000,000

Sept 1999 15.08.2000 24.11.2000 27.09.2001 January 2002 13.02.2002

Total Number of Shares

Nominal Value of Shares (Rs.)

Place: Mumbai Date: 25 May 2009

Satish Ranade Company Secretary & Chief Legal Officer

N. Srinath Managing Director & CEO

Place: Mumbai Date: 25 May 2009

Sanjay Baweja Chief Financial Officer

N. Srinath Managing Director & CEO

Secretary Responsibility Statement

Dated : 25 May 2009

Satish Ranade Company Secretary & Chief Legal Officer

For S. B. BILLIMORIA & CO. Chartered Accountants

P. R. RAMESH Partner Membership No: 70928 Mumbai, 24 June, 2009

P.R.RAMESH Partner Membership No: 70928 Mumbai, 26 May, 2009

(ii) in our opinion, proper books of account as

ANNEXURE TO THE AUDITORS REPORT