MIRA INFORM REPORT
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Report Date : |
10.09.2007 |
IDENTIFICATION DETAILS
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Name : |
VIDESH SANCHAR NIGAM LIMITED |
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Registered Office : |
Videsh Sanchar Bhavan, |
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Country : |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
19.03.1986 |
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Com. Reg. No.: |
039266 |
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CIN No.: [Company
Identification No.] |
L64200MH1986PLC039266 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMV03188D |
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Legal Form : |
Public limited liability company The shares of the company are listed on the Stock Exchanges. |
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Line of Business : |
Providing Telecommunication and Internet Services. |
RATING & COMMENTS
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MIRA’s Rating : |
A |
RATING
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STATUS |
PROPOSED
CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 200000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Recently, Government of India has divested 25% stake in favour of Tata, who won against Reliance Group. Tata is country’s premier industrial house having fine track records of performance. Group chairman is Mr. Ratan Tata. Industry circle of the company has welcomed the new management. Subject is now under the control and management of Tata, highly respectable industrial house of the country. Available information indicates high financial responsibility of the company. Financial position is good. Payments are always correct and as per commitments The company can be considered for normal business dealing at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
Videsh Sanchar Bhavan, |
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E-Mail : |
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Regional Office
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Corporate Office : |
Lokmanya Videsh Sanchar Bhawan Kashinath Dhuru Marg, Prabhadevi, Mumbai - 400 028, |
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Tel. No.: |
91-22-24312700 / 56578765 |
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DID No. : |
91-22-24310510 |
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Fax No.: |
91-22-24322678 / 56395162 |
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Info Fax : |
91-22-24320220 |
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Tele Gram : |
VIDESHSANCHAR |
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E-Mail : |
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Website : |
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Branches : |
Located at :- v Ambattur, v Arvi, v
v Bhubaneshwar, v
v
v Dehradun, v Ernakulam, v Gandhinagar, v
v Guwahati, v
v
v Jaipur, v Jalandhar, v
v
v
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DIRECTORS
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Name : |
Mr. Subodh Bhargava |
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Designation : |
Chairman |
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Name : |
Mr. Ishaat Hussain |
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Designation : |
Director |
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Date of Birth/Age : |
02.09.1947 |
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Qualification : |
Graduated in Economics from Management Program at |
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Date of Appointment : |
01.07.2002 |
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Name : |
Mr. N. Srinath |
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Designation : |
Executive Director |
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Date of Birth/Age : |
08.07.1962 |
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Qualification : |
Graduated as a Mechanical Engineer from III ( |
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Date of Appointment : |
13.02.2002 |
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Name : |
Mr. Kishor Chaukar |
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Designation : |
Panatone Nominee |
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Name : |
Mr. Pankaj Agrawala |
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Designation : |
Government Nominee |
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Name : |
Dr. Mukund Rajan |
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Designation : |
Panatone Nominee |
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Date of Birth/Age : |
05.04.1968 |
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Qualification : |
Bachelor of Technology from IIT Relations from |
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Date of Appointment : |
06.05.2005 |
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Name : |
Mr. N. Parmeshwaran |
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Designation : |
Government Nominee |
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Name : |
Mr. P. V. Kalyanasundaram |
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Designation : |
Independent |
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Date of Birth/Age : |
25.02.1958 |
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Qualification : |
Bachelor of Arts degree in history, from the |
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Date of Appointment : |
09.09.2005 |
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Name : |
Dr. V.R.S. Sampath |
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Designation : |
Independent |
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Date of Birth/Age : |
12.08.1956 |
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Qualification : |
Bachelor of Arts degree in History from the Degree from University |
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Date of Appointment : |
09.09.2005 |
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Name : |
Mr. Amal Ganguli |
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Designation : |
Independent |
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Date of Birth/Age : |
17.10.1939 |
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Qualification : |
Fellow of the 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, Alumnus of IMI, Geneva |
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Date of Appointment : |
17.07.2006 |
KEY EXECUTIVES
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Name : |
Mr. Satish Ranade |
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Designation : |
Company Secretary and Chief Legal Officer |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
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Sr. No. |
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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(A) |
Shareholding of
Promoter and Promoter Group |
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(1) |
Indian |
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(a) |
Central Government / State
government(s) |
74446885 |
26.12 |
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(b) |
Bodies Corporate |
142825191 |
50.11 |
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Sub-Total (A)
(1) |
217272076 |
76.24 |
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Total
Shareholding of Promoter and Promoter Group (A) = (A) (1) +
(A) (2) |
217272076 |
76.24 |
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(B) |
Public
Shareholding |
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(I) |
Institutions |
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(a) |
Mutual funds / UTI |
4791645 |
1.68 |
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(b) |
Financial Institutions / Banks |
152716 |
0.05 |
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(c) |
Insurance Companies |
31694225 |
11.12 |
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(d) |
Foreign Institutional Investors |
5707396 |
2.00 |
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Sub-Total (B)
(1) |
42345982 |
14.86 |
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(2) |
Non-Institutions
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(a) |
Bodies Corporate |
1538852 |
0.54 |
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(b) |
Individuals |
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i. Individual shareholders holding nominal
share capital up to Rs. 1 Lakh |
6242349 |
2.19 |
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ii. Individual shareholders holding
nominal share capital in excess of Rs. 1 Lakh |
219783 |
0.08 |
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(c) |
Any Other |
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Trusts |
14150 |
0.00 |
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NRIs |
115496 |
0.04 |
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OCBs |
7250 |
0.00 |
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Sub-Total
(B) (2) |
8137882 |
2.86 |
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(C) |
Shares held by Custodians and against
which Depository Receipts have been issued |
17244060 |
6.05 |
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GRAND
TOTAL (A) + (B) + (C) |
285000000 |
100.00 |
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BUSINESS DETAILS
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Line of Business : |
Providing Telecommunication and Internet Services. |
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Products : |
Product Description: International Telecommunications Services |
GENERAL INFORMATION
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No. of Employees : |
Total:2926 |
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Bankers : |
v
Citibank Inc. v
Indian Overseas Bank v
Standard Chartered Bank v
HDFC Bank v
Hongkong & Shanghai Banking Corporation v
State Bank of v
ICICI Bank Limited. |
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Facilities : |
Unsecured Loan –
As on 31.03.2007 Short Term Loans From Banks
- Rs.1976.100 Millions |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Messrs S.B. Billimoria & Co., Chartered Accountants |
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Other Subsidiary
(held indirectly ) |
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Associates/Subsidiaries : |
Associates: v Tata Managerial Personnel Subsidiaries: v VSNL Telecomnication (US) Inc. v VSNL Netherland B. V. v VSNL UK Limited |
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Joint Venture : |
United Telecom Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
|
300000000 |
Equity Shares |
Rs.10.00 each |
Rs.3000.000 Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
285000000 |
Equity shares |
Rs.10.00
each |
Rs.2850.000
Million |
FINANCIAL DATA
[All figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
2850.000 |
2850.000 |
2850.000 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
60745.000 |
57761.671 |
54430.468 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
63595.000 |
60611.671 |
57280.468 |
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LOAN FUNDS |
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1] Secured Loans |
0.000 |
0.000 |
0.000 |
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2] Unsecured Loans |
1976.100 |
982.501 |
0.000 |
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TOTAL BORROWING |
1976.100 |
982.501 |
0.000 |
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DEFERRED TAX LIABILITIES |
716.800 |
750.926 |
996.796 |
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TOTAL |
66287.900 |
62345.098 |
58277.264 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
31541.700 |
30085.546 |
23470.282 |
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Capital work-in-progress |
3404.400 |
1478.094 |
5131.681 |
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INVESTMENT |
26735.800 |
24993.393 |
12005.839 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
47.200
|
38.019
|
19.651
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Sundry Debtors |
9551.900
|
7375.710
|
6089.452
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Cash & Bank Balances |
1043.100
|
2568.815
|
14091.243
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Other Current Assets |
1047.500
|
983.025
|
507.201
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Loans & Advances |
11477.500
|
13063.532
|
14892.865
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Total
Current Assets |
23167.200
|
24029.101
|
35600.412
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
15856.900
|
15674.824
|
15279.229
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Provisions |
2704.300
|
2566.212
|
2651.721
|
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Total
Current Liabilities |
18561.200
|
18241.036
|
17930.950
|
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Net Current Assets |
4606.000
|
5788.065
|
17669.462
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
66287.900 |
62345.098 |
58277.264 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
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Sales Turnover |
0.000 |
0.000 |
0.000 |
|
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Other Income |
42540.100 |
40097.273 |
34104.423 |
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Total Income |
42540.100 |
40097.273 |
34104.423 |
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Profit/(Loss) Before Tax |
7126.300 |
6867.173 |
10539.823 |
|
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Provision for Taxation |
2440.700 |
(2071.753) |
2976.149 |
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Profit/(Loss) After Tax |
4685.600 |
4795.420 |
7563.674 |
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Earnings in Foreign Currency : |
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Revenues from telecommunication services |
|
16938.734 |
0.000 |
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Profit on sale of long-term investments |
|
0.000 |
0.000 |
|
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Interest Income |
|
106.157 |
0.000 |
|
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Other |
|
75.175 |
0.000 |
|
Total Earnings |
|
17120.066 |
0.000 |
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Imports : |
|
|
|
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|
|
Stores & Spares |
|
11.490 |
0.000 |
|
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Capital Goods |
|
1639.867 |
0.000 |
|
Total Imports |
|
1651.357 |
0.000 |
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Expenditures : |
|
|
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|
Salaries, Wages, Bonus, etc. |
2436.900 |
2090.591 |
1412.808 |
|
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Network Costs |
22044.700 |
20958.674 |
20030.893 |
|
|
Operating and other Expenses |
6630.700 |
6001.739 |
3895.660 |
|
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Interest |
69.100 |
18.027 |
0.779 |
|
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Depreciation & Amortization |
3913.300 |
3595.572 |
2441.535 |
|
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Other Expenditure |
0.000 |
(110.850) |
(1.859) |
|
Total Expenditure |
35094.700 |
32553.753 |
27779.037 |
|
QUARTERLY /
SUMMARISED RESULTS
|
PARTICULARS |
|
|
30.06.2007 (1st
Quarter) |
|
Sales Turnover |
|
|
10081.300 |
|
Other Income |
|
|
273.200 |
|
Total Income |
|
|
10354.500 |
|
Total Expenditure |
|
|
7754.300 |
|
Operating Profit |
|
|
2600.200 |
|
Interest |
|
|
19.400 |
|
Gross Profit |
|
|
2580.800 |
|
Depreciation |
|
|
928.900 |
|
Tax |
|
|
556.600 |
|
Reported PAT |
|
|
1041.600 |
200706
Quarter 1
Notes Other Income includes Other Income Rs 6.90 million
Interest Income Rs 266.30 million Expenditure Includes Network Cost Rs 5648.70
million Operating & Other expenses Rs 1439.40 million Salaries &
Related Costs Rs 666.20 million Tax Includes Provision for Current Tax Rs
547.50 million Deferred Tax Expenses / (benefit) Rs 53.70 million Fringe
Benefit Tax Rs 9.10 million EPS is Basic & Diluted Status of Investor
Complaints for the quarter ended June 30, 2007 Complaints Pending at the
beginning of the quarter Nil Complaints Received during the quarter 01
Complaints disposed off during the quarter 01 Complaints unresolved at the end
of the quarter Nil 1. The above results for the quarter ended June 30, 2007
have been subjected to a limited review by the statutory auditors recommended
by the audit committee and were taken on record and approved by the Board of
Directors of the Company at their meeting held on July 31, 2007. 2. In view of
the Guidance on implementing Accounting Standard - 15 'Employee Benefits (AS
15), the Company has considered certain entitlements to earned leave as a
long-term employee benefit. This has resulted in a reduction in the net
liability in respect of employee benefits as at April 01, 2006, of Rs 58.00
million; (net of deferred tax). This amount has been adjusted to the opening
balance of General Reserve. 3. The Board of Directors of the Company in their
meeting held on March 14, 2007 had approved a Scheme of Arrangement (Scheme) to
hive-off its Retail Business Undertaking to its wholly owned subsidiary, VSNL
Internet Services Ltd. (formerly DIL Internet Ltd). The Scheme is subject to
obtaining necessary approvals, permissions and sanctions including approval of
the shareholders of the Company in accordance with the requirements of the
Companies Act 1956. In continuation of this process, The Honourable High Court
of Judicature at
KEY RATIOS
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity
Ratio |
|
0.02 |
0.01 |
0.01 |
|
Long
Term Debt-Equity Ratio |
|
0.00 |
0.00 |
0.00 |
|
Current
Ratio |
|
1.14 |
1.52 |
1.77 |
|
TURNOVER
RATIOS |
|
|
|
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|
Fixed
Assets |
|
0.93 |
1.04 |
1.19 |
|
Inventory |
|
946.56 |
1118.62 |
1232.48 |
|
Debtors |
|
4.78 |
6.04 |
6.88 |
|
Interest
Cover Ratio |
|
104.13 |
382.51 |
7882.63 |
|
Operating
Profit Margin |
(%) |
27.48 |
27.72 |
26.48 |
|
Profit
Before Interest And Tax Margin |
(%) |
17.80 |
18.21 |
19.09 |
|
Cash
Profit Margin |
(%) |
21.27 |
22.19 |
21.09 |
|
Adjusted
Net Profit Margin |
(%) |
11.59 |
12.68 |
13.70 |
|
Return
On Capital Employed |
(%) |
11.32 |
11.58 |
11.51 |
|
Return
On Net Worth |
(%) |
7.54 |
8.14 |
8.31 |
STOCK PRICES
|
Face Value |
Rs.10.00 |
|
High |
Rs.422.50 |
|
Low |
Rs.415.50 |
LOCAL AGENCY FURTHER INFORMATION
History
Subject was incorporated on
Subject was incorporated to provide international telecommunications
services to and from
In
The company was incorporated in 1986 as a Government of
Government of
In May 2002, the company signed a memorandum of understanding (MoU) with
Antrix, the commercial arm of the Indian Space Research Organization (ISRO) for
acquisition of satellite capacity in the
Since the company has no direct access to provide voice services to its
end customers it has decided to invest in Tata Teleservices Limited, a company already
holds basic licenses for Andhra Pradesh, Tamilnadu, Karnataka, etc. This
strategic decision has been taken by the company’s board and has decided to
invest up to Rs. 8.5 billion in TTSL’s equity over a seven year period.
Subsequently, for the year 2002-2003 the company has invested over Rs. 2.800
billion and picked up 19.9% of TTSL’s equity.
United Telecom Limited, a company promoted by VSNL, MTNL and TCIL along
with Nepal Ventures Private Limited is providing CDMA based basic service in
Has External Gateway Operator Licence.
1986
Company was incorporated on 19th March with the object of assuming responsibilities for providing international telecommunication services, which were being provided by the erstwhile OCS, Department of Telecommunications, and Ministry of Communications.
The
main business of the Company is to provide basic international switched
telecommunication services - comprising telephone, telex and telegraph
services.
Company
is now concentrating on two telecom - related services. One is a vital service
for aeronautical, maritime, and onshore and offshore mobile communications in
the
The
Company provides telex services to 237 territories worldwide and handles on an
average more than 15,000 international telex calls each day. The Company
handles on an average approximately 600 telegrams daily.
1992
The
Company offers Intelsat Business Service - a dedicated satellite-based service
that provides high speed, high quality data circuits on a point-to-point basis
through earth stations strategically located near the customer's premises.
The
Company has entered the era of mobile communications by commissioning its own
Land Earth Station (LES) at Arvi near Pune.
The
Company won the prestigious IMM Award (
1993
The
Company introduced Inmarsat-C service, which permits transmission of messages
via small portable terminals.
The
Company introduced a video conferencing service (both domestic and
international) through studios located at the Company's international gateways
at Mumbai,
The
company has been recognized as one of the best run companies in the country,
rated `EXCELLENT' for the sixth successive year 1998-99, among Memorandum of
understanding [MoU] signing PSEs.
1994
The
Company launched the Concert Packet Service (CPS) for Indian customers on 7
June, in co-operation with British Telecom,
1995
In
November, the Company introduced Inmarsat-B services for voice and data
transmissions and Inmarsat-M services for voice transmissions, both in digital
format.
The
Company commenced providing Internet access services in August, and is the
largest commercial provider of access to the Internet in Mumbai, Chennai,
The
Company is one of the founding investors in ICO Global Communications
(Holdings) Limited which was formed by a consortium of international
telecommunications companies, governments and satellite and telephone equipment
manufacturers to establish and operate a satellite-based mobile
telecommunication system.
Internet
Access Services were introduced by the Company in
The
Company is setting up two Standards `A' Intelsat earth stations, one at
Halisahar (
The
Company has introduced two innovative Incentive Schemes for increased usage of
Hindi with cash incentives to staff at all levels viz. incentive scheme for
passing different Hind examinations and incentive scheme for doing original
work in Hindi.
1996
The
company has accorded approval to set up a subsidiary company to provide value
added services in India, with a share capital of upto Rs 800.000 millions.
The
Company is the exclusive provider of public international telecommunication
services in
The
Company has entered into a Construction and Maintenance Agreement with other
international telecommunication carriers for the construction of SEA-ME-WE-3, a
high capacity undersea optical fibre cable extending from
The Company has recently announced the introduction
of `Universal Connect' services jointly with TMI (Tele Media International) a
wholly-owned subsidiary of Telecommunications Italia.
The
Company has signed a Construction and Maintenance Agreement for the Fibre Optic
Link Around the Globe (FLAG).
1997
The
Company introduced managed data network services in January and now offers such
services through the global alliance networks of six global partners-BT, Cable
& Wireless, EQUANT, Global One, IBM Global Services and Tele Media
International.
In
February, the Company and DoT agreed to the current revenue sharing
arrangement, which took effect on 1st April, and will remain effective until
The
Company has made an offering of 30000000 Global Depository Receipts (GDRs)
representing 15000000 No. of Equity Shares at an offer price of US $13.93 per
GDR in March/April.
Company,
the country's only Internet service provider, has suspended new dial-up
connections.
Subhash
Chandra promoted Afro-Asian Satellite Communications (ASC) and Videsh Sanchar
Nigam Limited (VSNL) will be jointly setting up a dedicated primary gateway in
Mumbai following the implementation of the former's $900 million Agrani
project.
Company
will also set up its own facilities for a Direct-to-Home (DTH) television
service platform for Indian satellite television channels.
The
company has also entered into a construction and maintenance agreement with
other international telecom carriers for the construction of SEA-ME-WE-3, a
high capacity undersea optical fibre cable extending from
Company
also gearing up to introduce Globally Managed Data Services in technical
cooperation with telecom major Cable & Wireless of the
Company
(VSNL) launched the Inmarsat-Phone services, also called the Mini-M service, in
Chennai.
Company
will be setting up international gateways in Ernakulam, Jalandhar and Ahmedabad
by the year-end, and two more next year, in
Company
is inviting fresh proposals from AT&T Unisource, BT-MCI and Sprint
International for its proposed joint venture for setting up a regional hub in
the country.
A
memorandum of understanding was signed here recently between Electronic
Corporation of Goa (ECG) and Videsh Sanchar Nigam Limited (VSNL) for setting up
an earth station at the Verna software
Company
has emerged as the second largest investor in ICO Global Communications (ICOGC).
Company
has joined several other Asian telecom companies in legally challenging the
right of
Globalstar
The
company and ICO Global Communications signed a final agreement for establishing
an ICO Satellite Access Node (SAN) at Chattarpur,
The
company,
1998
The
company is set to join World source Services, which provides latest
telecommunication facilities and get membership of World Partners Association.
Company,
the country's international telecom monopoly, has decided to amend its
memorandum of association to include domestic long distance telephony as part
of its service offerings.
Company
has qualified for being rated "Excellent" amongst MOU-signing Public
Sector Undertakings with GoI for the year based on achievements against targets
set out in the MoU for that year.
In
September, the Company signed an MOU for participation in the
Company
has signed a Memorandum of Understanding (MOU) with Madhya Pradesh State
Electronics Development Corporation Limited (Optel) on 24th April, at
The
company and Microsoft have together set up a Microsoft download server in
http://www.vsnl.net.in/msdownload).
The server, the first of such mirror sites in
The
telecom major Videsh Sanchar Nigam Limited (VSNL) and IBM Global Services India
have expanded the network services portfolio in
Company,
the country's international telecom carrier, is set to sign a memorandum of
understanding (MoU) for a $15 billion (Rs.630, 000.000 millions) submarine
optical fibre telecom cable project.
Company
on 16.07.98 launched sim cards for Inmarsat mini-M global mobile phone users.
Company
is set to tie up with home grown television channels like Sun TV, Enadu TV,
Asianet, New Delhi Television TVI and Udaya for providing satellite uplinking.
The
telecom commission is considering a plan to merge Videsh Sanchar Nigam Limited
(VSNL India International telecom carrier) into India Telecom, the proposed
corporatised version of the department of telecom (DoT).
Public
sector Videsh Sanchar Nigam Limited (VSNL) has launched
Company
has awarded a contract to Siemens Public Communication Networks Limited for
setting up a nationwide state-of-the-art data network, using digital
cross-connect.
Company
introduced a new Internet dial-up service through high speed ISDN (integrated
services digital network) lines in
Company
has introduced a flexihour accounts scheme for Internet users, allowing its
customers to upgrade form one slab to another.
1999
The
Videsh Sanchar Nigam (VSNL) has conducted a "Vision 2004" study.
The
Company provides Home Country Direct services, which permit a caller to speak
to an operator in his home country directly and place a collect or charge call.
The
Company provides an international E-mail service - GEMS 400, which permits
subscribers to send E-mail both to other subscribers within
As
on 31st March, the Company had switching capacity of 34200 international
telephone, 2386 telex and 128 telegraph terminations.
The
capacity of International Voice Circuits has increased from 966 to 17922 as on
31st March.
The
Company has introduced several international specialized and value added
services in recent years and seeks to increase the portion of its revenues
derived from such value-added services.
The
Company seeks to enter into joint ventures with foreign companies to develop
telecommunication projects to permit the Company to utilize its existing
expertise and gain additional experience with potential strategic partners.
The
Company and DoT entered into a licence agreement on 25th January, under which
the Company was granted a licence to provide Internet access service in six
cities on a non-exclusive basis.
International
telecommunications provider Videsh Sanchar Nigam Limited (VSNL) will enter the
national long distance telephony segment when it is opened up for competition
in 2000.
The
company, which is the second largest shareholder in ICO Global, a consortium of
telecom operators, entered into a pre-launch agreement with ICO Global on
Monday to pave the way for the setting up of a joint venture company.
The
company and ICO Global Communications, the global mobile satellite
communications company, signed the pre-launch agreement.
The
company has launched an Internet Central Control Facility (ICCF) and a new Web
Site.
Company
has emerged as the top exporter for the year 1997-98, while Indian Oil
Corporation, and occupies the second spot, according to the annual Global
magazine's survey of top exporters.
Company,
Power
Grid Corporation of India Limited (PGCIL) and Videsh Sanchar Nigam Limited
(VSNL) signed a memorandum of understanding on future cooperation in the area
of telecommunications.
Company
has tied up with Indian Overseas Bank (IOB) to extend Internet connections to
subscribers over the counters of IOB in Mumbai.
Company
has set up an internal committee to look into its proposed entry into domestic
long-distance telephony (DLT).
The
company has tied up with ICICI Bank to provide the latter's Net-banking
clients’ on-line registration and payment facility for taking Net connections.
Company
and Hughes Escorts Communication Limited signed an agreement that would enable
Hughes Escorts Communications to use the VSNL's Internet infrastructure.
2000
The
company has also launched an e-mail service exclusively for the media called
mediapoint.enmail.com. This is to bring media professionals on one virtual
platform, to hear their views and help the common man to give single point
access to the media.
The
Company is planning to set up an Internet consultancy division, which will
offer technical consultancy to start-up Internet Service Providers (ISPs).
The
company (VSNL) and Haryana Electronics Development Corporation Limited
(HARTRON) signed a memorandum of understanding (MoU) to set up a high speed
data communication facility with associated marketing services for data links,
internet access and other value added services of VSNL.
The
proposed VSNL-HARTRON project is setting up a high speed data communications
facility to provide optical fibre and micro-wave connectivity between the
electronics city and VSNL's international gateway based in
The
company has tied up with a Silicon Valley-based software company for the
technology to manufacture Internet appliances including colour televisions
(CTVs).
In
March, the Company plans to install electronic data interchange facilities at
Chennai,
The
Company, State-owned international telecom carrier, is planning to use foreign
satellites to provide band-width to private internet service providers. It has
doubled its bandwidth capacity to 300 Mbps.
A
MoU for the year 2000-20001 has been signed between the Department of Telecom
Services and the Videsh Sanchar Nigam Limited.
The
Company is setting up a Standard-B earth station facility at
The
Company has signed an MoU with ISRO's commercial arm, Antrix Corporation, for
acquisition of satellite capacity in the region.
The
Company will convert its global depositary receipts into American Depositary
Receipts in a one-for-one ratio.
The
Company commissioned its roof-top Earth Station at P S G College of Technology
in
The
Company will acquire an additional internet bandwidth in the current fiscal,
bringing its total to 750 megabites from the present 315 megabites.
The
Department of Telecommunications has asked Videsh Sanchar Nigam Limited to set
up an exclusive website showing requirement and status of applications from
private players for bandwidth.
The
company’s `monsoon package' introduced from June, for a period of two months
has resulted in a spurt in internet connections in Kolkata.
The
Company has signed a memorandum of understanding with Yahoo!
The
Company has recommended a 1:1 bonus to its shareholders and proposed increasing
the authorised share capital to Rs 2500 millions from the existing Rs 1000.000
millions.
The
Company has become the first Indian Public Sector undertaking to list on the
New York Stock Exchange as it began trading its American depository receipts
under the ticker symbol VSL.
The
Company revised the ratio of bonus shares to 2:1 -- two new shares for each
existing share from the earlier recommended ratio of 1:1.
The
company and HDFC have jointly launched online renewal facility for Internet
subscription in Mumbai,
The
company has launched a 65-day Festive Fiesta for its Internet customers in the
six cities of
The
company is set to enter the cellular service sector.
The
Company will raise its bandwidth capacity to nearly one giga byte, to improve
Internet infrastructure in the country.
Crisil
has removed from rating watch, the FA rating assigned to the fixed deposit
programme of SREI International Finance.
The
Company has commissioned a new and improved stream of 155 mb international
Internet bandwidth at its
The
company has launched high speed Internet access through Integrated Services
Digital Network at its customer awareness centre in Videsh Sanchar Bhawan,
Jalandhar.
The
Company launched its first IT-node in
The
company offers both basic and specialized value-added telecommunication
services such as maritime mobile communications, e-mail, electronic data
exchanges, leased lines, bureau fax tele-conferencing, radio photos, etc. It is
an international company both in terms of the services it provides and its
ownership. It has been constantly upgrading its infrastructure investing in
switching and transmission facilities, new earth stations and gateways and
mobile satellite communication networks. The company is also participating in
ventures that provide quality services for multimedia applications to customers
with the help of emerging Global Multimedia Satellite Systems.
2001
The
Company has commissioned Cisco's high-end gigabit switch routers to serve as
important internet exchange points in the country.
The
Company has issued Bonus Shares at the rate of 2:1.
The
race for the 25 per cent stake in company is hotting up with telecom majors
France Telecom, Essar and Singapore Telecom joining the likely-bidders list
along with Reliance and Concert - joint venture between AT&T and British
Telecom.
The
Company is all set to launch direct to home service throughout the country by
the end of this year.
The
Company has marked out a capital expenditure of Rs. 20,000 millions for 2001-02
which will be broadly allocated among its direct-to-home and domestic long
distance projects as well as acquisition of extra bandwidth among other areas.
The
Company has entered into an agreement with Teleglobe, a subsidiary of the
Canadian Telecom major BCE, for assured revenues in a bid to corner some of the
global traffic between Teleglobe and other carriers in the Asia-Pacific region.
Mr.
S. K. Gupta, chairman and managing director of Videsh Sanchar Nigam Limited
(VSNL), has been elected as one of the directors on the board of Intelsat.
The
company wants to reward its existing shareholders by declaring a 1,000 per cent
dividend.
2002
The
company has informed that Shri Subodh Bhargava an independent
part-time-non-official Director has resigned from the post of Directorship from
the Board of VSNL and ceases to be Director with effect from January 17, 2002.
Company
has informed BSE that Shri Ashok Wadhwa an independent (part-time non-official)
Director has resigned from the post of directorship from the Board of VSNL and
ceases to be Director with effect from
Company
has informed that Shri Rakesh Kumar, Sr. Dy Director General (ML), DoT has been
appointed as Government Director on the Board of VSNL.
GOI
signs share purchase agreement for divestment of stake in VSNL with Panatone
Finvest Limited.
The
Board of Directors of company was reconstituted as below:
Shri
Ratan Tata Chairman Shri S K Gupta Managing Director Shri N Srinath Director
(Operations) Smt Sadhana Dikshit Director Shri Rakesh Kumar Director Padmashri
N R Narayana Murthy Director.
The company has informed
that Smt Sadhana Dikshit has resigned from the post of Director of the Company
and ceases to be Director.
In
Feb. 2002 the company has informed that, the Tata Group has been declared the
successful bidder in the disinvestment process initiated by the Government of
India (GOI). Accordingly GOI has entered into share purchase agreement with
Panatone Finvest, as investing vehicle for the four Tata Group Companies as its
principal’s viz. Tata Sons, Tata Power, Tata Iron & Steel Company and Tata
Industries for transfer of 25% stake in VSNL at Rs. 202 per share.
Mr.
Y. Ss Bhave & Mr. Subodh Bhargava appointed on the Board of the company.
Company
has appointed Mr. Suresh Krishna on the Board with effect from
The
Tata group has appointed two of its group executives -- Ishaat Hussain,
director (finance), Tata Sons, and Kishore A Chaukar, managing director, Tata
Industries -- as additional directors on the board of company.
At
the Board Meeting the Board also appointed Mr. Vivek Singhal and Professor
Ashok Jhunjhunwala as Additional Directors (Independent Directors) on the Board
of VSNL w e f from the conclusion of 16th AGM held on
Company
has informed BSE that the Chairman Mr. R N Tata informed that Mr. S K Gupta the
present Managing Director of the Company on his superannuation on September 30,
2002 from VSNL will be appointed by Tatas as their senior executive for a
period of five years and will be deputed to VSNL for a period of upto two years
as its Managing Director.
2003
Mumbai:
Company (VSNL), signed an interconnect agreement with Bharat Sanchar Nigam
(BSNL) and Mahanagar Telephone Nigam (MTNL) on May 28. When contacted, BSNL
chairman Prithipal Singh confirmed that the agreement had been signed, but said
he did not have any details. With the telecom regulator, TRAI, deciding on the
quantum of the interconnect charges; the discussions were more or less limited
to the amount of discounts that could be offered.
Facilities
The company has nine gateways at Kolkata, Chennai,
The company is the exclusive provider of international telecommunication
services to and from
In September, 2000 the Government of India announced its intention to
allow private players to provide international telephone services from April
2002, thus terminating company’s monopoly two years ahead of schedule. However
government plans to compensate company for this termination and the same has
been approved by the company.
The company has the largest dedicated Internet Network in
In May 2000, the company signed a memorandum of understanding with
Abtrix, the commercial arm of the Indian Space Research Organization for
acquisition of satellite capacity in the Indian Ocean Region.
In August 2000, the company made a history by becoming the first Indian
Public Sector Unit to list on any stock exchange in the
Moreover the Government of India in crucial development had decided to
disinvest 25 % stake from its present 52.97 % stake in company’s equity to a
strategic partner along with right to management. Also as a part of continuing
liberalization and deregulation of the telecommunication market, the Indian
government recently announced guidelines and eligibility criteria for entry
into Domestic Long Distance and Direct-to-Home business. The same is being
considered by the company.
The company is also examining opportunities in basic and cellular
telephony abroad. To this end the company Mahanagar Telephone Nigam (MTNL) and
Telecommunication Consultants India (TCIL) had signed a joint venture agreement
with Nepal Ventures Private Limited. (NVPL) and formed new company named United
Telecom to offer wireless-in-local-loop (WLL) based basic services in
In February, 2002 the company informed that, the Tata Group has been
declared the successful bidder in the disinvestment process initiated by the
Government of India (GOI). Accordingly Government of India has entered into
share purchase agreement with Panatone Finvest, as investing vehicle for the
four Tata Group Companies as its principals viz. Tata Sons, Tata Power, Tata
Iron & Steel Company and Tata Industries for transfer of 25 % stake in
company at Rs. 202/- per share
FINANCIAL
PERFORMANCE:
During the year under review, 2006-07, your Company earned a
total revenue of Rs.42.54 billion compared to Rs.40.10 billion during the
previous year. Profit before tax for the year was Rs.7.13 billion, against
Rs.6.87 billion in the previous year. Profit after tax was Rs.4.69 billion
compared to Rs.4.80 billion in the previous year.
On a consolidated basis, for 2006-07, the Company's total income was
Rs.88.57 billion, with an EBIDTA of Rs.12.99 billion and profit before tax and
exceptional items of Rs.3.72 billion.
STRATEGIC
OVERVIEW
The past year has been a landmark one in your Company's
history. It was the first full year of global operations after the integration
of VSNL's major international acquisitions, Tyco Global Network and Teleglobe.
The Company strengthened its position in international wholesale voice
services, grew its carrier and enterprise data business, launched services
through its joint venture in
Your Company has transformed itself into
Meanwhile, in
VSNL has transformed itself over the last few years byreworking its strategies
and repositioning itself. Your Company's overall strategy remains to:
* Maintain its leadership in wholesale services with a global footprint,
new products and enhanced service levels.
* Diversify and de-risk its business model and ensure rapid growth, by
expanding into new high-potential areas like enterprise and carrier value added
data and broadband services.
* Extend and strengthen its global presence by delivering network and
communication solutions globally and by expanding into overseas telecom markets
through
* Support all its businesses by selective and strategic expansions and
modernizations of its state-of-the-art infrastructure network.
* Fully leverage synergies with other Tata Group companies in the telecom
and software sectors, to give customers a range of end-to-end solutions.
* Continuously improve efficiency and competitiveness through initiatives
such as quality, cost rationalisation and profit enhancement; and enhance
customer focus and orientation to deliver a customer experience that matches
the best in the world.
OPERATIONAL REVIEW:
Your Company operates under three main business segments globally - Wholesale
Voice,
Wholesale Voice: * International Long
Distance (ILD):
ILD voice services were traditionally VSNL's core business. Over the last five
years, the international telephony market in
While VSNL retains its position as
Therefore, globally your Company's focus continues to remain on increasing
volumes and thus revenues, while improving margins by cutting costs. Your
Company believes that its strategic advantage in this business comes from its
volumes, reach, and robust state-of-the-art technology and networks, which are
all difficult to replicate.
* National Long Distance (NLD):
Your Company has a strong national network infrastructure and interconnects
agreements with all basic and cellular mobile service operators in
VSNL's reach now extends beyond
As voice, data and video communications converge; the demand for enterprise
data services is growing worldwide. In addition to international and national
private leased circuits (IPLCs and NPLCs), your Company offers a wide range of
Internet Protocol (IP) services encompassing Internet telephony, MPLS VPNs
(virtual private networks), Internet access, managed hosting and other data
centre services, Internet leased lines, mail and messaging services, video
conferencing, website hosting services with security back-up and database
management services and network management.
VSNL's telecom service offerings can be seamlessly integrated across products
and geographies, and customised to meet the varied requirements of the enterprise
sector. The Company continues to expand its IP VPN services throughout the main
global markets. VSNL has progressed up the value chain to deliver managed
solutions to customers. During 2006-07, the Company significantly expanded its
VPN and data centre offerings, establishing state-of-the-art Asynchronous
Transfer Mode (ATM) and Multi Protocol Label Switching (MPLS) networks.
To further strengthen its customer value proposition, VSNL partners with Tata
Group company TCS 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
After recent amendments to telecom licences, IP VPN services are to be
provided under the ILD and NLD licences. The wireless as well as fibre
last-mile network can now be used to provide services under the NLD licence.
NLD service providers are also now allowed to make their own arrangements for laying
the last mile for providing leased circuits and for connecting Closed User
Groups. This amendment removes a major hurdle to VSNL's leased services and 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:
Broadband Business: Keeping with the pace of growth of 2005-06, the broadband
business grew by close to 100% in the year 2006-07. VSNL which was the first broadband
service provider in India to offer an integrated voice, video and data service
to its customers, has made much more progress in terms of providing Integrated
Internet Services to its customers. Customers can now use their high speed
internet connection to view movies, buy music, do live Darshan, and buy
anti-virus and other software applications, call using net telephony and much
more with the state of the art broadband service offered by your company.
VSNL continues to evaluate and test out newer access and application
technologies. As part of that VSNL is evaluating and testing WIMAX. Various
partnerships with leading industry players in both the software and hardware
segments have been announced and VSNL continues to provide thought leadership
for various broadband initiatives in
Public Access Business - Wi-Fi and Cybercafes VSNL is now the largest
public broadband access provider across the country. Public access is being
provided through Wi-Fi hotspots and a chain of cybercafes. The Wi-Fi hotspots
are spread across airports, five star hotels, coffee shops, restaurant chains,
hospitals, educational institutes, railway stations, etc across the country
with VSNL enjoying good success in terms of major new site acquisitions through
the year. Today VSNL provides public internet access at more than 300 hotspot
locations, across the country. VSNL was recently invited onto the Board of the
Wireless Broadband Alliance (WBA). WBA is the leading global organization
representing the largest Wireless Broadband operators like British Telecom,
France Telecom, Korea Telecom, StarHub, Swisscom Mobile and T Mobile. VSNL
joined WBA in 2006, and is the only representative from
To consolidate its position in the Internet space in
- Direct Internet Limited and Primus
New Stream Of Business - Outsourcing
Services:
To help reduce the total cost of its operations and to take advantage of
opportunities in the outsourcing business, VSNL has incorporated a 100%
subsidiary VSNL Global Services Limited (VGSL). VGSL will provide outsourcing
services, namely, client relationship management services, technical and other
support services, transaction processing services, sales administration
services, marketing, promotion, maintaining and updating accounting, costing,
management records, accounts receivable management, accounts payable management
etc. During the year, VGSL has already set up one special economic zone (SEZ)
unit and another software technology park (STPI) unit.
Technical Services Agreement with
Neotel:
As we have previously reported, the Government of South Africa has selected
VSNL as the strategic partner to participate in the second network operator
(SNO) process in that country, to provide telecom services in competition with
the incumbent carrier.
Customer Service:
VSNL has made significant progress towards transforming itself into a
customer-focused organization. The customer service team's mission is to
support the entire customer life cycle from service delivery to service
assurance, including retention and growth.
To support its global operations, the Company is defining and implementing
stringent service delivery standards that adhere to global best practices. In
addition, VSNL has created a dedicated team to support its carrier partners.
Centralized 24 x 7 call centres in
Premature Termination of Monopoly and Compensation: The Company continues to
pursue its claim against the Government of India for inadequate compensation
given against the premature termination of its ILD monopoly. The Government of
India (GoI) had allowed other players into the ILD business from 1 April 2002,
terminating VSNL's exclusivity two years ahead of schedule. It gave VSNL 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 proponing of the ILD
demonopolisation. VSNL 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 limitation, filed a
claim in the Mumbai High Court in 2005.
Demerger of
AWARDS
AND RECOGNITION:
The Company's transformational initiatives are being recognized in
international markets. During the year, the Company earned several prestigious
international recognitions for the first time, including:
* Best Pan-Asian Wholesale Provider Award at the Capacity Global Awards
2006.
* Best Wholesale Carrier at the World Communications Awards 2006.
* Voice & Data Top International Long Distance Operator Award for
2001-2006.
* PC Quest Users' Choice for Internet Award for 2002-2005.
VSNL is also the only Indian Telecom company identified by the Boston
Consultancy Group as one of the New Global Challengers.
VSNL's CEO Mr. N. Srinath was named the 'Telecom CEO of the Year' by the
leading publishing group Telecom Asia in the 2006 edition of their awards. The
Institute of Economic Studies (IES), a research oriented organization, also
conferred its Excellence Award on VSNL and its Udyog Rattan Award on Mr. N.
Srinath in November 2006.
Business
Excellence:
Your Company has been re-inventing its business model and transforming itself
in tandem with market and regulatory changes. To help drive the transformation,
VSNL is implementing the Tata Business Excellence Model (TBEM), a framework
that lays down best practices in areas like leadership, strategy, customer and
market focus, knowledge management, human resources, process management
planning, customer service and social responsibility. During the past year,
VSNL has made further progress in implementing TBEM, with many continuous
improvement projects underway and extensive employee participation.
Your Company has initiated an exercise to streamline internal processes across
all its entities globally and institutionalize 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.
Your Company is the world's first telecom service provider to obtain the TL
9000 certification (a set of quality system metrics designed for the telecom
industry, encompassing ISO 9001 and other best practices); as well as India's
first telecom service provider to obtain the BS7799 certification.
Compliance with section 404 of Sarbanes
Oxley Act, 2002:
Pursuant to its listing on the New York Stock Exchange, VSNL must comply with
section 404 of the Sarbanes Oxley Act by March 2008. This Act lays down
requirements for internal control over financial reporting in the
Company.
VSNL is confident of being able to comply with these stringent
requirements in time.
Revenue Assurance and Cost
Reduction:
VSNL's Revenue Assurance function 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.
A Revenue Assurance charter and manual have been formulated to further
structure these activities.
VSNL continues with its ongoing cost reduction exercise and has
successfully completed several cost reduction projects as a part of its
continuous improvement activities.
VSNL has established an enterprise-wide risk management (ERM) framework
to optimally manage risks, as well as to comply with clause 49 of the SEBI
Listing Agreement. In line with VSNL's commitment to deliver sustainable value,
this framework aims to provide an integrated and organised approach for
evaluating and managing risks.
Subsidiaries:
The Statement pursuant to section 212 of the Companies Act, 1956 containing
details of the Company's 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. The Company
has been granted exemption from attaching the accounts of its subsidiary
companies with the balance sheet of the parent company. 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 registered office of the
Company. These documents will also be available for inspection by any
shareholder at the registered office of the Company.
MANAGEMENT
DISCUSSION AND ANALYSIS:
INDUSTRY ANALYSIS:
The Indian telecom industry has changed significantly over the last
decade with all its segments opening to competition. This market is now highly
competitive, complex and evolving rapidly, with numerous service offerings of
different kinds, including fixed-line, mobile, Internet, long distance and
various data services.
According to the latest figures from the Telecom Regulatory Authority of India
(TRAI), during 2006-07
Effective 1 April 2007, the TRAI revised the access deficit charge (ADC - a
component of the IUC that makes up for below-cost monthly rentals and local
call charges for fixed telephones). The ADC was reduced on incoming
International Long Distance (ILD) calls from Rs.1.60 per minute to Rs.1.00 per
minute and on outgoing ILD calls from Rs.0.80 per minute to nil. The additional
revenue share of 1.5% of the adjusted gross revenue (AGR) towards ADC was also
reduced to 0.75% for all operators including international long distance
operators. Recently, the Department of Telecom (DoT) further relaxed the
licence conditions in respect of security related obligations for provision of
VPN services for international and national long distance services, and more
new entities have been licensed to provide NLD/ILD services.
Regulatory
Developments:
Cable Landing Facilities:
Further to the approval of the recommendations made by the
TRAI in December 2005, the TRAI after due consultations issued the
International Telecommunication Access to Essential Facilities at Cable Landing
Stations Regulations, 2007 (5 of 2007) in June 2007.
Even before the recommendations were accepted, VSNL had established uniform
practices and procedures for access facilitation to International
Telecommunication Entities from
Introduction of Resellers:
Further to the approval of the recommendations made by
the TRAI in December 2005, the TRAI submitted its recommendations to the DoT in
March 2007 regarding terms and conditions to licence resellers in the IPLC
segment. To effectively implement these recommendations, the TRAI has also
suggested amendments to the ILDO licence to permit the sale of international
bandwidth by resellers. The DoT has not yet accepted these
recommendations.
AGR in TDSAT:
The Association of Unified Telecom Service Providers of India, Cellular
Operators Association of India and some Individual telecom service providers
have challenged, before the Hon'ble 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.
The TDSAT in its order dated 7 July 2006 remitted the matter to the TRAI to
make comprehensive recommendations on the individual components of revenue that
can be considered part of AGR. The TRAI in September 2006 recommended that
certain income should not be included in the AGR viz. (i) income from dividend,
(ii) capital gains on account of profit on sale of assets and securities; (iii)
gains from foreign exchange fluctuations, (iv) reversal of provisions; (v)
income from property rent if not connected to establishing, maintaining and
working of telecommunication and (vi) receipts from USO. This matter is being
further heard by the TDSAT.
New FDI Guidelines:
The Government of India vide Press Note 3 (2007 Series) dated 19 April
2007 notified the Foreign Direct Investment (FDI) policy, enhancing the FDI
limit from 49% to 74% in certain telecom services subject to specified
conditions, in super session of its earlier Press Note 5 of 2005. Under the new
policy, both direct and indirect foreign investment in the telecom licensee
will be counted towards the FDI ceiling. The minimum Indian shareholding
prescribed is 26%. FDI up to 49% continues to be permissible on the automatic
route and FDI in the Licensee Company / Indian promoters / investment companies
including their holding companies requires prior approval from the Foreign
Investment Promotion Board if it has a bearing on the overall ceiling of 74%.
Certain security conditions have been imposed on the licensee companies
operating telecom services and these shall be applicable to all licensee
companies irrespective of their level of FDI. All telecom licensees are
required to comply with these terms and conditions within three months and
thereafter to file half yearly compliance reports. The DoT is expected to
notify the amendments to the licence conditions soon.
Transfer Pricing Mechanism:
Transfer pricing becomes relevant when a business operates in multiple
countries. Transactions between associated enterprises located in different
jurisdictions are subject to transfer pricing regulations.
Transfer pricing regulations in different countries adopt methodologies that
are broadly based on the Organization for Economic Cooperation and
Development's (OECD) Transfer Pricing Guidelines for Multinational Enterprises
and Tax Administrations (the 'OECD Guidelines'). An enterprise is expected to
choose and adopt the most appropriate among the approved methods that suits its
business and economic realities by way of a demonstrated elimination of other
approved methods, to determine what independent entities, operating on an arm's
length basis, would reasonably expect to earn operating a comparable business
as the enterprise. In many countries, these subsidiaries are required to
demonstrate to their revenue authorities that the terms of the transfer prices
for inter company transactions adhere to the arms length principle.
Your Company has expanded its global footprint by acquiring the Tyco Global
Network (TGN) in June 2005 and Teleglobe International Holdings Ltd in February
2006. These acquisitions provided VSNL the ability to reach out to a large
global customer base and expand and diversify its services. VSNL’s current
business model envisages frequent cross usage of networks and other assets
apart from cross rendition of various services viz., product development,
network management, selling & marketing, billing, service provisioning,
customer support, information technology support etc., among the group
entities, to render a complete end-to-end service to its customers. Your
Company has 51 subsidiaries in 24 countries. Each subsidiary discharges its
functions, owns its assets, bears its risk and reaps its rewards. Similarly
each subsidiary is expected to discharge its statutory obligation including
paying taxes on its income. For the VSNL group of Companies, considering the
vast network that is owned by the entities, the global reach of the services,
the operational interdependence between the group entities, cross continental
location of customers, and other value drivers in the business, the Residual
Profit Split Method (RPSM) has been chosen and implemented as the global
transfer pricing methodology for determining inter company prices for
international telecommunication related services. RPSM is one of the acceptable
methods prescribed under the Indian tax regulations as well as in many of the
other jurisdictions where formal transfer pricing regulations currently
exist.
SERVICES:
International Long Distance (ILD):
Globally, VSNL handled 19.7 billion minutes of voice traffic out of which
traffic to and from
National Long Distance (NLD):
The increased mobile penetration has resulted in significant growth in the NLD
traffic within
Internet and Broadband Services:
Broadband in
ORGANISATIONAL RESTRUCTURING:
Consolidating Subsidiaries Your Company, which currently has over 50
international direct and indirect subsidiaries, has initiated a process to
reduce this number to about 30 through appropriate restructuring. The majority
of these subsidiaries came into the VSNL fold through the acquisitions of TGN
and Teleglobe and was formed to comply with local laws stipulating the creation
of country specific subsidiaries to hold the required licenses and assets, and
to carry out operations. VSNL aims to have one entity in each country to the
extent possible.
Retail Business Hive Off:
During the year under review, VSNL acquired two entities in India, Direct
Internet Limited (DIL) and VSNL Internet Services Limited (VISL).
Direct Internet Limited (DIL) provides broadband services, mainly to small and
medium enterprises (SMEs). VSNL has acquired the entire shareholding in DIL
from Primus Group,
DIL Internet Limited (DILI), formerly known as Primus Telecommunications India
Limited and now as VSNL Internet Services Limited (VISL), is presently a
subsidiary of DIL and an indirect subsidiary of VSNL. VISL renders broadband
services to the Small and Medium Enterprises (SME) as well as retail
customers.
In order to simplify this structure and to enable possible unlocking of
value in the retail business in the future, your Board decided to hive off
VSNL's retail business unit into VISL. A comprehensive scheme of arrangement
for transfer of the retail business undertakings of VSNL to VISL and the
amalgamation of Direct Internet Limited with VISL has been filed with the
competent High Courts.
Global Structure:
After its acquisitions, VSNL's stated direction is to be structured into
global business units and global support functions. Various initiatives are
underway to implement this structure, which will best enable VSNL to be a
global integrated multi-business telecom player. These initiatives are far
reaching in their scope and the impact they will have on the Company's
business. They cover projects to improve customer experience, define and create
a common company culture, tighten corporate identity and branding, and
implement the next generation network (NGN) architecture for converged services
among others.
Management of Business Ethics
(MBE):
Consistent with the Group's policy, VSNL is systematically
implementing the Tata Code of Conduct. VSNL has put in place an organizational
structure and a process to implement and improve ethical standards and
practices, and began implementing the Tata Code of Conduct in 2003-04. VSNL
conducts regular seminars, ethics awareness campaigns and workshops to sustain
the momentum and to strengthen ethical values and practices among various
stakeholders.
International Long
Distance (ILD) Voice
ILD voice services
have been traditionally the core business of the Company. Over the last four
years, the international telephony market in
VSNL retains its
position as
During 2005-06,
the Telecom Regulatory Authority of India (TRAI) reduced the Access Deficit
Charge (ADC) on incoming ILD calls from Rs.3.25 per minute to Rs.1.60 per
minute and on outgoing ILD calls from Rs.2.50 per minute to Rs.0.80 per minute.
However, from
From
This business is
now characterized by increased competition and falling rates and margins, both
in
The Company believes
that its strategic advantage in this business comes from its volumes, reach,
and robust networks, which are all difficult to replicate. A key concern in the
ILD voice business is the illegal market (please see Management Discussion and
Analysis for a discussion of regulatory issues). In the past, VSNL had
undertaken major initiatives to combat grey traffic, supporting the enforcement
authorities who have been tracking and shutting down illegal operators. These
efforts, if consistently enforced, will help to curb the grey market.
National Long Distance (NLD) Voice
In September 2002,
the Company entered the NLD services market to offer national long distance
services to its customers, as a logical extension of its international
telephony expertise. NLD services now account for a significant component of
VSNL's voice services, and volumes in this segment increased from 1.4 billion
minutes in 2004-05 to 2.9 billion minutes in 2005-06. From
The Company has a
robust national network infrastructure and interconnects agreements with all
basic and cellular mobile service operators in the country to carry NLD traffic
to their networks. The delay in implementing Direct Customer Access mechanisms such
as Carrier Access Code (CAC) or Carrier Pre-Selection (CPS) have resulted in
VSNL continuing to be absent from the retail voice market. The Company is
dependent on its relationships with access providers (fixed line and cellular)
for wholesale long distance traffic. In this regard, the Company's equity
investment in Tata Teleservices Limited. (TTSL) has enabled VSNL to offer ILD
and NLD services to all subscribers of TTSL. This attempts to fill an important
gap in VSNL's access to end customers.(Please see Management Discussion and
Analysis for details.)
Calling Cards
The Company
launched Tata Indicom calling cards in 2004. While the 'Global' calling card
was targeted at Indian
Outbound travelers
and overseas residents, 'Hello Duniya' was aimed at Indian customers for
cheaper and convenient NLD/ILD calling. VSNL stopped the 'Hello Duniya'outbound
calling service in March 2005, as directed by TRAI on the grounds that only
access providers (basic service license or unified access service license
holders) can provide such services. In May 2006, the Telecom Dispute Settlement
and Appellate Tribunal (TDSAT) rejected the Company's petition maintaining that
VSNL cannot access subscribers directly and provide outbound calling cards
under its NLD/ ILD license. The Company believes that calling cards are a
globally recognized mechanism for operators to offer retail long distance
services, and in the absence of CAC / CPS, the only mechanism available to
provide customers with choice in
The Indian
enterprise data market continues to grow at an annualized rate of 60-70% each
year. VSNL's Enterprise Business Unit serves large, mid-sized and small
businesses, and its industry-specific solutions encompass banking and financial
services, information technology/IT enabled services, industrial and
distribution, pharma, petroleum, media and entertainment, travel, and
Government verticals. With voice, data and video communications converging, the
demand for enterprise data services is growing. In addition to international
and national private leased circuits (IPLCs and NPLCs), the Company offers a
wide range of Internet Protocol (IP) services encompassing internet telephony,
MPLS VPNs (Virtual Private Networks), internet access, managed hosting and
other data centre services, internet leased lines, mail and messaging services,
video conferencing, website hosting services with security back-up and database
management services and network management.
VSNL's telecom
service offerings can be seamlessly integrated across products and geographies,
and customized to meet the varied requirements of the enterprise sector. The
Company continues to extend its reach in the main global markets to provide
IP-VPN services. VSNL has progressed up the value chain to deliver consulting
and managed solutions to customers. During 2005-06, the Company significantly
expanded its VPN and data centre offerings, establishing state-of-the-art
Asynchronous Transfer Mode (ATM) and Multi Protocol Label Switching (MPLS)
networks.
VSNL also launched
several new offerings. In November 2005, it introduced the Tata Indicom Web
Conferencing Service powered by the Microsoft Office Live Meeting Platform.
Microsoft and VSNL also announced an alliance to create rich solutions and
services targeted at the enterprise, small and medium business and consumer
segments.
In July 2005, VSNL
announced its intention to partner with Thomson, the leading technology and
service provider in the media and entertainment space. The two companies will
offer high quality services and new technologies to the Indian media and
entertainment market and also explore opportunities in managing and delivering
content for third parties, and developing end-to-end solutions for network
operators as well as content management and distribution solutions.
To further
strengthen its customer value proposition, VSNL partners with TCS and CMC, the
software companies of the Tata Group, for integrated joint product and service
offerings. VSNL also partners with TCS in the international market to leverage
TCS's existing relationships with numerous Fortune 500 companies globally. The
Company also markets its services through indirect channels catering to the
small and medium enterprise market.
VSNL is extending
its services beyond
OTHER SERVICES
VSNL was the first
company to introduce retail internet services in
Dial Up Internet Service
VSNL continues to
lead the dial up market in
Broadband Business
VSNL began
offering broadband services in April 2004 soon after it acquired the narrowband
and broadband business of Dishnet, and now serves 125,000 broadband and
high-speed Internet customers in 43 cities. The Government's 2004 broadband
policy estimates that
VSNL has licensed
content and services from some of the best content owners in
Last-mile access
to the customer is a crucial factor in the success of a broadband business.
Therefore, VSNL is building a Metropolitan Area Network (MAN) in key cities and
continues to evaluate and test newer access and application technologies.
Wi-Fi and
Cybercafes
VSNL is now one-of
Internet Telephony
Effective April
2002, the Government of India permitted Internet Service Providers to offer
voice telephony over the Internet using the Voice over Internet Protocol
(VoIP). VSNL has deployed its unique, fully owned internet telephony
infrastructure.This self-managed network allows VSNL to offer enhanced
features, flexibility in billing and plans and superior voice quality. VSNL
offers both corporate and retail net telephony services, complementing its
voice business. Low tariffs in Internet telephony could encourage usage and
increase international call volumes.
INTERNATIONAL INITIATIVES
VSNL's
international operations (VSNL International) are headquartered out of
Europe and Asia,
offering services to both wholesale and enterprise customers. VSNL
International is rapidly growing its global footprint, with offices currently
in
VSNL Singapore Private Limited (VSPL)
The Company set up
VSPL in January 2004 as a wholly owned subsidiary. VSPL manages and maintains
the
Acquisition of Tyco Global Network
In July 2005, the
Company completed the acquisition of TGN, a state-of-the-art undersea cable
network that spans 60,000 kilometers (37,280 miles) and the continents of North
America, Europe and Asia. With the acquisition of TGN for US$130 million, VSNL
is now one of the world's largest submarine cable system owners, providing
submarine cable bandwidth to its customers in multiple continents.
Acquisition of Teleglobe International Holdings Limited
In February 2006,
the Company completed its acquisition of Bermuda-based Teleglobe International
Holdings Limited. VSNL will leverage Teleglobe's network and capabilities as
part of its strategy to deliver key mobile, data and voice offerings to global
enterprise customers. Teleglobe serves as the product brand for the voice,
mobile and IP transit wholesale services. VSNL International is the product
brand for the Company's wholesale IPL and Ethernet offerings, as well as the
full enterprise portfolio.
In February 2005,
the South African government selected a consortium of VSNL and Tata Africa
Holdings Limited., the investment arm of the Tata Group in
VSNL Lanka Limited (VLL)
In June 2003, VSNL
Lanka Limited., a wholly owned subsidiary set up by VSNL in
CUSTOMER SERVICE
VSNL has
transformed itself into a customer-focused organization. The charter of the
Customer Service Organization is to support the entire customer life cycle from
service delivery to service assurance, including retention and growth. To
support VSNL's international presence, the Company is defining and implementing
stringent service delivery standards that adhere to global best practices. In
addition, VSNL has created a dedicated team to bring focus to its relationship
with other carrier partners. In order to support the enterprise and
international business functions, VSNL has established a centralized 24x7 call
centre. Retail and broadband customers are supported by two other outsourced
call centres. The organization is also providing its expertise in setting up
the entire customer service function including customer impacting processes and
systems, to support the SNO initiative in
INFRASTRUCTURE
One of the biggest
strengths of the Company is its global, robust, scalable network, with the
unique advantage of diversity and multiple connectivity options
internationally. The Company operates a total of 26 switches: 5 international
gateway switches and 21 NLD switches. VSNL has over 50 earth stations,
ownership in over 100 sub-sea and terrestrial cable systems with 200,000
kilometers of fibre and cable, 275 points of presence in 25 countries and
access to five geo-stationary satellites. The Company also has seven data
centres globally.
Tata Indicom Cable (TIC)
In March 2005,
VSNL operationalised its own Tata Indicom Cable (TIC). The state-of-the-art
3,100 km submarine cable system between Chennai and
SEA-ME-WE4
VSNL is one of the
founding members of SEA-ME-WE4, a consortium of 16 parties that has set up a
cable system between
VSNL is already
utilizing SEA-ME-WE2, SEA-ME-WE3, SAFE, FLAG and TIC submarine cable systems as
part of its international network out of
VSNL's submarine
cable landing stations in
NLD Backbone
VSNL's domestic long distance network infrastructure includes a 37,000
kilometer fibre optic network and a new
MPLS based IP VPN backbone linking over 120 points of presence, which is
integrated with the Company's international MPLS network thereby enabling
multinational companies to seamlessly connect deep into
Last Mile
In view of the
fact that the last mile was not readily available, in order to be able to
provide IP VPN services to corporate clients as a part of its ISP offering the
Company has invested substantially in Wireless last mile on Multipoint
Microwave Distribution System (MMDS) technology and fiber as well as through
arrangements with cable operators to provide broadband services. In view of the
recent amendments in the telecom licenses, the IP VPN services have now become
a part of the NLD license and the MMDS as well as the other last mile network
can now be utilized for providing services under the NLD license.
Another
significant change brought about by the amendment is that the NLD service
provider is permitted to make its own arrangements for laying the last mile to
serve its customers directly for provision of leased circuits and CUG's, which
was hitherto not permitted. This amendment removes a major hurdle in terms of
availability of the last mile to VSNL
INDUSTRY ANALYSIS
The Indian telecom
industry has changed significantly over the last decade with all its segments
opening to competition. This market is now highly competitive, complex and evolving
rapidly, with numerous service offerings of different kinds, including
fixed-line, mobile, internet, long distance and various data services.
According to the
latest figures from TRAI, during 2005-06, the mobile subscriber base increased
approximately 73%, from 52 million to over 90 million, while the fixed
subscriber base increased approximately 8% from 46 million to 50 million.
During the year, the subscriber base for internet services grew 25%, from 5.5
million to 6.94 million. Broadband subscribers exceeded 1.3 million as on
DEMERGER OF
Under the terms of
the share purchase and shareholders' agreements signed between the parties at
the time of privatization, it was agreed that certain identified lands would be
demerged into a separate company. It was further agreed that if for any reason
the Company cannot hive off or demerged 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 has been presented to
the VSNL Board, and the parties to the shareholders' agreement are currently
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 (as indicated in the accounts) of Rs.1.64 million.
IMPORTANT HISTORICAL EVENTS AT VSNL
Disinvestment
VSNL ceased to be
a Public Sector Undertaking (PSU) on
Investment in TTSL
In 2002, VSNL was
entirely dependent on the public sector incumbent access providers and other
cellular and basic service providers to route their traffic through VSNL. It
became imperative for VSNL to acquire an end-customer base of its own. The VSNL
Board had accordingly decided to invest in Tata Teleservices Limited. (TTSL).
At the time the investment was approved, TTSL was present in crucial telecom
circles across
Fixed Assets:
v
Land
v
Buildings
v
Plant and Machinery
v
Furniture and Fixture
v
Office Equipments
v
Motor Vehicles
v
Good will
Related Party Disclosures
(a) List of related parties and relationship:
I. Investing party
Panatone Finvest Limited
II. Subsidiaries (Held directly)
VSNL Broadband Limited
VSNL America Inc.
VSNL Lanka Limited
VSNL
VSNL SNOSPV Private Limited
III. Other Subsidiaries (Held indirectly)
VSNL UK Limited
VSNL Bermuda Limited
VSNL
VSNL Telecommunications (
VSNL Hong Kong Limited
ITXC Global
ITXC IP Holdings S.a.r.l
Teleglobe America Inc
Teleglobe Asia Data Transport Private. Limited
Teleglobe Asia Private Limited
Teleglobe Bermuda Limited.
Teleglobe
Teleglobe
Teleglobe International
Teleglobe International Hong Kong Limited
Teleglobe International Limited
Teleglobe International
Teleglobe
Teleglobe
Teleglob
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd.)
TLGB International
TLGB
TLGB
VSNL (
VSNL
VSNL
VSNL International (Nordics) AS
VSNL International (Global) Corp.
VSNL International (
VSNL International (
VSNL International (US) Inc
VSNL International Australia Pty. Limited
VSNL International GBRM Limited
VSNL International IPCO LLC
VSNL International Puerto Rico Inc
VSNL International (ITXC) Corp.
VSNL International (
VSNL
VSNL Telecommunications (
VSNL (
ITXC Global UK Limited.
ITXC Global Zagreb d.o.o
Enhanc d
Services Inc
ITXC (U) Limited.
ITXC Global Hongkong Limited.
IV. Joint Venture
United Telecom Limited
V. Joint Venture of wholly owned subsidiary
SEPCO Communications Pty. Limited.
SNO Telecommunications (Pty) Limited. (Subsidiary of
SEPCO)
VI. Key Managerial Personnel
N.Srinath - Executive Director
The company is in collaboration with:-
Cable and Wireless
IBM Global Services
Tele Media International Limited
Global One
British Telecom
AS PER WEBSITE
Press Releases
VSNL and Ascade Partner
to Deliver Quality
CLI Verification Services to
VSNL's VTS Prime and Mobile Direct Customers Benefit
from Tier 1 Quality & CLI Delivery
to Major Countries Singapore and Stockholm, Sweden--(BUSINESS WIRE)—June
11, 2007—VSNL, a leading
communications solutions provider, and Ascade, the global market-leader of
Interconnect Solutions, announced today a partnership to provide Calling Line
Identification (CLI) delivery assurances to Mobile Network Operators (MNOs)
worldwide. By utilizing Ascade’s CLI Verification
service, VSNL’s offering branded as Teleglobe VTS Prime
Service presently assures Tier 1 quality and CLI delivery to over 135 networks reaching 44
countries around the world. The coverage is persistently growing as Ascade is
continuously expanding the span of the service.
Ascade’s CLI Verification
service rigorously tests, monitors and gathers reports on the CLI delivery
effectiveness of VSNL’s voice traffic and network. VSNL, in turn, uses
this information to make real-time changes to correct any degraded CLI delivery
performance, providing MNOs with high quality termination with highly effective CLI
delivery. VSNL’s CLI assurances help MNOs boost revenues
and reduce customer turnover. “CLI delivery assurances are increasingly in
demand by MNOs around the world to boost not only their own international call
revenues but also the level of customer satisfaction of their international
roamers,” said Michel Guyot President, Global Voice Solutions, and VSNL.
“Customers utilizing Teleglobe VTS Prime and Mobile Direct services
will benefit from this partnership because our enhanced products address the
specialized needs of MNOs. Ascade’s CLI verification
capabilities complement VSNL’s sophisticated voice
network architecture, enabling us to offer our valued customers the best quality service and
products in the growing mobile marketplace.”
VSNL holds a market
leading position in the voice arena, allowing mobile customers to leverage the
scale and breadth of the Company’s global network and extensive relationships
to support traffic exchange through multiple protocol networks. As one of the
world's largest international wholesale carriers, VSNL has more than 415 combined direct and
bilateral relationships with leading international voice telecommunications
providers and commercial relationships with over 450 mobile operators
worldwide. "Guaranteed quality assurance and reliability are crucial elements in how
customers perceive the overall quality of their carrier’s service,” commented Henrik Anderberg,
CEO of Ascade.
“Ascade is
pleased to provide VSNL
with this innovative service that will help them assure CLI delivery to mobile
networks around the world, leading to increased global mobile call completion.”
Corporate
Teleglobe VTS Prime service ensures
reliable, cost effective Tier 1 quality call completion to one of the world’s largest
international networks, enabling mobile operators and retail service providers
to enhance call quality
performance and customer satisfaction. Mobile Direct, VSNL's
mobile-to-mobile solution, allows mobile operators to exchange traffic directly
on a global basis. It guarantees delivery of key signaling information required
for seamless international calling – especially important for roaming traffic.
It offers a “one-stop shop” solution for direct transit to any MNO in the
world. Further information regarding VSNL’s
suite of voice and mobile services can be found at www.vsnlinternational.com.
ABOUT ASCADE AB
Ascade is the global market-leader of Interconnect
Solutions for carriers and telecom operators. Our software, Carrier Cockpit™
Suite, enables carriers worldwide to increase profitability and revenue growth.
It optimizes and automates all aspects of a carrier’s wholesale and bilateral
business including integrated interconnect billing, while providing management
with real-time business planning and steering capabilities. Carrier Cockpit™
Suite, developed together with leading international wholesale carriers and incumbents,
is the most advanced, mature and widely used Interconnect Solution for managing
the wholesale carrier business worldwide. Customers include Reach, Telenor
Global Services, SingTel, Telekom
About VSNL
Videsh Sanchar Nigam Limited (VSNL), a member of the US$ 27 billion Tata
Group, is a leading global communications solutions company offering
next-generation voice, data and value-added services to enterprises, carriers
and retail consumers. Voted the Best Wholesale Service Provider at the World
Communications Awards, 2006, VSNL is one of the world’s largest providers of wholesale international
voice services and operates one of the largest global submarine cable networks.
VSNL’s customer base includes 1500 Global
Carriers, 450 Mobile Operators, 10,000 Enterprises, 500,000 Broadband and
Internet subscribers and 300 Wi-Fi public hotspots. Rated amongst the Top 100
Emerging Global Challengers by the Boston Consulting Group, VSNL has offices in
over 35 countries including the
Corporate
Forward-looking and cautionary statements
Certain words and statements in this release
concerning VSNL
and its prospects, and other statements relating to VSNL’s
expected financial position, business strategy, the future development of VSNL’s operations and the general economy in
VSNL’s Executive Director N Srinath named
Telecom Asia’s CEO of the Year
Mumbai,
Mr. Srinath received the special trophy at a glittering
ceremony in
The 2006 Telecom Asia award has been given in recognition of Mr. Srinath’s role in transforming VSNL from a domestic monopoly to a major global telco in just four years. This makeover was achieved at a time when the Indian telecommunications market was becoming de-regulated and fiercely competitive.
In February 2002 when the Tata Group became the Strategic
Partner in VSNL through the Indian Government’s disinvestment programme, the
company had a monopoly in the International Long Distance (ILD) market. This
monopoly was terminated two years ahead of schedule in
“It is an honor to receive this award which is recognition of the great strides that VSNL has made in the last few years in re-inventing itself to compete in a global marketplace. I am pleased to accept this on behalf of all the people who have helped make this happen,” Mr. N Srinath said while accepting the award.
Robert Clark, chairman of the judging panel and Telecom Asia
Editor-at-Large, said: "In the
last four years, VSNL has made the transition from monopoly carrier in a
developing market into one of the world’s foremost global bandwidth providers
and wholesale carriers. This award recognizes Mr. Srinath's leading role in
driving that change."
The Telecom Asia Awards across various categories for both individuals and companies are the most prestigious honors program in Asian telecommunications and have been presented annually since 1998. The award winners were chosen on their combined financial, market and technology strengths based on the financial analysis and assessments of a 19-member judging panel.
The financial analysis of the carriers was conducted by a research team at IDC, a leading provider of global ICT research and advice, drawing on its extensive communications research expertise across Asia-Pacific.
Mr. Srinath, 43, is a mechanical engineer from the Indian Institute of Technology (IIT), Chennai and an MBA from the Indian Institute of Management, Kolkata. Mr. Srinath joined the Tata Administrative Services in 1986 and has held positions in the project management, sales and marketing, and corporate functions in different Tata companies over the last 20 years. He has been responsible for setting up new projects in high technology areas like process automation and control, computers and telecommunications.
After his probation, he was a project executive in Tata
Honeywell from 1987 to 1988, working on getting various approvals and the
necessary project funding. He then moved to Tata Industries as Executive
Assistant to the Chairman, an assignment he handled till mid-1992. He was part
of the team that set up Tata Information Systems (later Tata IBM). In June 1992
he moved into that company full-time for the next six years, during which
period he handled a number of assignments in sales and marketing. In March
1998, he returned to Tata Industries as General Manager (Projects) and worked
with Tata Teleservices in this capacity for a year. In April 1999, he moved to
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals have
been formally charged or convicted by a competent governmental authority for
any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.40.71 |
|
|
1 |
Rs.82.26 |
|
Euro |
1 |
Rs.55.66 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
66 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|