MIRA
INFORM REPORT
|
Report Date : |
07.01.2008 |
IDENTIFICATION
DETAILS
|
Name : |
IDEA CELLULAR
LIMITED |
|
|
|
|
Registered
Office : |
Suman Tower, Plot
No. 18, Sector – 11, Gandhinagar – 382 011, Gujarat |
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Country : |
India |
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Financials (as
on) : |
31.03.2007 |
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Date of
Incorporation : |
14.03.1995 |
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|
|
|
Com. Reg. No.: |
04-30976 |
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CIN No.: [Company Identification No.] |
U32100GJ1996PLC030976 |
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|
TAN No.: (Tax Deduction & Collection Account No.) |
AHMI00670F |
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|
|
|
PAN No.: (Permanent Account No.) |
AAACB2100P |
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|
|
Legal Form : |
A closely held
public limited liability company |
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|
|
|
Line of
Business : |
Telecommunication
and Cellular System Services. |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Maximum Credit Limit : |
USD 87000000 |
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|
|
|
Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and reputed company in telecom industry.
It is a part of Aditya Birla Group. Company’s profitability is improving. Trade
relations are fair. Payments are reported as usually correct and as per
commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
LOCATIONS
|
Registered
Office : |
Suman Tower, Plot
No. 18, Sector – 11, Gandhinagar – 382 011, Gujarat, India |
|
Tel. No.: |
91-79-23232250 |
|
Mobile No.: |
91-9824012345 |
|
Fax No.: |
91-79-23232251 /
3232383 / 232240 |
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E-Mail : |
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Website : |
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Area : |
Owned - 2000 sq. fts |
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|
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Administrative
Office : |
3rd
Floor, Century Bhavan, Dr. A. B. Road, Worli, Mumbai - 400 025, Maharashtra |
|
Tel. No.: |
91-22-24314987 |
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Fax No.: |
91-22-25467174 |
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|
|
|
Corporate
Office : |
Sharda Centre,
11/1, Erandwane, Off. Karve Road, Pune, Maharashtra |
|
Tel. No.: |
91-20-24123123/25432001/56412222 |
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Fax No.: |
91-20-24123099/25467174 |
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Mobile No.: |
91-9850003798 |
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|
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|
Branches : |
Ø 3rd Floor, KLK Estate, Fateh
Maidan Road, Basheer Bagh, Hyderabad – 500 001, Andhra Pradesh Tel. 91-40-26562000 Cell. 91-9848012345 Fax. 91-40-26562001 E-mail. ccare.ap@ideacellular.com Ø Surya Krishna Towers, 39-7-1 & 39-7-1A,
Labbipet, Vijaywada – 520 010, Andhra Pradesh Tel. 91-866-2663344 Fax. 91-866-2663333 Ø 47-11-3, Eswar Homes, 1st Lane,
Dwaraka Nagar, Visakhapatnam – 530 016, Andhra Pradesh Tel. 91-891-2662000 / 2668080 / 2668081 Fax. 91-891-2663000 Ø Shop No. 5, Ground Floor, L S Tower,
Subhash Road, Anantapur – 515 001, Andhra Pradesh Tel. 91-8554-228822 / 228833 Ø Suman Tower, Plot No. 18, Sector 11,
Gandhinagar, Gujarat Cell. 91-9824012345 Fax. 91-79-28514000 E-mail. info@ideacellular.com Ø A-30, Mohan Co-operative Industrial
Estate, New Delhi Cell. 91-9891012345 Fax. 91-11-251678138 E-mail. ccare.dl@ideacellular.com Ø 139, 140, Electronic Complex, Pardesipura,
Indore, Madhya Pradesh Cell. 91-9826012345 Fax. 91-731-2551304 E-mail. ccare.mp@ideacellular.com |
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|
|
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Customer
Care Addresses : |
3rd Floor, K.L.K.
Estate, Fateh Maidan Road, Basheer Bagh, Hyderabad A-30, Mohan Co-operative
Industrial Estate, New Delhi Anand
Banquet Hall, Delhi Road, Sonepat – 131001, Haryana 139, 140 Electronic Complex, Pardesipura, Indore Sharda Centre, 11/1 Erandawane, Off. Karve Road, Pune 411004 |
DIRECTORS
|
Name : |
Mr. Kumar Mangalam Birla |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Mr. Sanjeev Aga |
|
Designation : |
Managing Director |
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|
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|
Name : |
Ms. Rajashree Birla |
|
Designation : |
Director |
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|
|
|
Name : |
Mr. Debu Bhattacharya |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Arun Thiagarajan |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Tarjani Vakil |
|
Designation : |
Independent Director |
|
|
|
|
Name : |
Mr. Biswajit Anna Subramanian |
|
Designation : |
Additional Director |
|
|
|
|
Name : |
Mr. D D Rathi |
|
Designation : |
Director |
|
Address : |
63, Sunflower,
Cuffe Parade, Mumbai - 400 005, Maharashtra |
|
Date of Birth
: |
11/01/1947 |
|
Date of
Appointment : |
07/11/2001 |
|
|
|
|
Name : |
Mr. Ishaat Hussain |
|
Designation : |
Director |
|
Address : |
Flat No. 222, 22nd
Floor, NCPA Residential Apartments, Dorabjee Trade Road, Nariman Point,
Ahmedabad - 400 021, Gujarat |
|
Date of Birth
: |
02/09/1947 |
|
Date of
Appointment : |
07/11/2001 |
|
|
|
|
Name : |
Mr. K A Chaukar |
|
Designation : |
Director |
|
Address : |
Flat 113, NEPA
Apartments, 11th Floor, Dorabjee Trade Road, Nariman Point,
Ahmedabad - 400 021, Gujarat |
|
Date of Birth
: |
01/08/1947 |
|
Date of
Appointment : |
24/10/2001 |
|
|
|
|
Name : |
Mr. M R Prasanna |
|
Designation : |
Additional Director |
|
|
|
|
Name : |
Mr. Mohan Gyani |
|
Designation : |
Independent Director |
|
|
|
|
Name : |
Mr. R Gopalkrishnan |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. R Lewis |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Saurabh Mishra |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. T Graham |
|
Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. A. J. S. Jhala |
|
Designation : |
Chief Financial Officer and Company Secretary |
|
|
|
|
Name : |
Mr. Satish Rajgarhia |
|
Designation : |
Company Secretary |
|
|
|
|
Name : |
Mr. Graham Burke |
|
Designation : |
Chief Executive Officer |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As On 30.09.2007
|
Category
of Shareholder |
No. of Shares |
Percentage of
Holding |
|
|
|
|
|
Shareholding of Promoter and Promoter Group2 |
|
|
|
Indian |
|
|
|
Bodies Corporate |
1520445714 |
57.69 |
|
Public shareholding |
|
|
|
Institutions |
|
|
|
Mutual Funds/ UTI |
19653632 |
0.75 |
|
Financial Institutions / Banks |
16168540 |
0.61 |
|
Insurance Companies |
11651219 |
0.44 |
|
Foreign Institutional Investors |
175731817 |
6.67 |
|
Foreign Venture Capital Investors |
3266 |
0.00 |
|
Non-institutions |
|
|
|
Bodies Corporate |
19008335 |
0.72 |
|
Individuals |
|
|
|
Individuals -i. Individual shareholders holding nominal
share capital up to Rs 0.100 Million |
71596422 |
2.72 |
|
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100
Million |
12970576 |
0.49 |
|
Any Other (specify) |
|
|
|
Individual Director |
362266 |
0.01 |
|
NRI |
1992398 |
0.08 |
|
Trusts |
66296 |
0.00 |
|
Overseas Corporate Bodies |
779371891 |
29.57 |
|
Clearing member |
6338167 |
0.24 |
|
|
|
|
|
Total |
2635360539 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Telecommunication
and Cellular System Services. |
|
|
|
|
Products : |
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|
|
|
|
Imports : |
|
|
Countries : |
U.S.A and Japan |
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|
|
|
Terms : |
|
|
Purchasing : |
L/C terms |
GENERAL
INFORMATION
|
No. of Employees : |
4662 |
|
|
|
|
Bankers : |
v Dena Bank Dccan Gymkhana Branch, Pune (The company is reported to enjoy hypothecation facility of Rs. 99.000
millions dt. 22nd June 1998) v Deutsche Bank, Mumbai - 400001,
Maharashtra v Standard Chartered Bank v Standard Chartered Grindlyas Bank |
|
|
|
|
Banking
Relations : |
Satisfactory |
|
|
|
|
Auditors : |
|
|
Name : |
v Lodha & Company Chartered Accountants 14, Government Place East, Kolkata - 700 069, West Bengal Tel. No. 91-33-22481111 Telefax No. 91-33-22486960 E-mail cal@bdolodha.com v RSM & Company Chartered Accountants G-2, Phoneix Building, Ground Floor, Bund Garden Road, Pune- 411 001,
Maharashtra Tel. No. 91-20-24002999 Telefax. No. 91-20-24002998 |
|
|
|
|
Associates |
Ø Birla Group Ø Tata Group Ø Indo Gulf Corporation Limited Ø Indian Rayon & Industries Limited Ø Hindalco Limited Ø
Indian
Aluminium Company Limited |
|
|
|
|
Subsidiaries : |
Ø BTA
Cellcom Limited Ø Asian
Telephone Services Limited Ø Asian Telephone Services Limited Ø Bhagalaxmi Investments Private Limited Ø BTA Cellular Limited (Formerly Known As
RPG Cellular Limited) Ø Sapte Investments Limited Ø Vsapte Investments Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
2000000000 |
Equity Shares |
Rs. 10/- each |
Rs. 20000.000 millions |
|
425000000 |
Cumulative
Preference Shares |
Rs. 2/- each |
Rs. 8500.000 millions |
|
425000000 |
Cumulative Preference
Shares |
Rs. 10/- each |
Rs. 4250.000 millions |
|
|
Total |
|
Rs. 32750.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
2592860000 |
Equity Shares |
Rs. 10/- each |
Rs. 25928.600 Millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share Capital |
25928.600 |
27425.300 |
27425.270 |
|
|
2] Share Application
Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves &
Surplus |
[4137.100] |
[15740.000] |
998.410 |
|
|
4] (Accumulated
Losses) |
0.000 |
0.000 |
(17994.420) |
|
NETWORTH
|
21791.500 |
11685.300 |
10429.260 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
35397.700 |
14707.500 |
16927.500 |
|
|
2] Unsecured
Loans |
7107.400 |
14448.500 |
10052.840 |
|
TOTAL BORROWING
|
42505.100 |
29156.000 |
26980.340 |
|
|
DEFERRED TAX
LIABILITIES |
0.000 |
0.000 |
328.990 |
|
|
|
|
|
|
|
TOTAL
|
64296.600 |
40841.300 |
37738.590 |
|
|
|
|
|
|
|
APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block]
|
55924.400 |
28175.000 |
17975.330 |
|
Intangible Assets -
Licence Fees
|
0.000 |
0.000 |
8799.620 |
|
Capital work-in-progress
|
5065.100 |
956.700 |
646.170 |
|
|
|
|
|
|
|
INVESTMENT
|
138.300 |
3070.300 |
3070.310 |
|
DEFERREX TAX ASSETS
|
0.000 |
0.000 |
328.990 |
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS &
ADVANCES
|
|
|
|
|
|
|
Inventories
|
179.100
|
88.100
|
134.490
|
|
|
Sundry Debtors
|
1524.800
|
908.100
|
1424.440
|
|
|
Cash & Bank Balances
|
18197.300
|
1290.900
|
1518.880
|
|
|
Other Current Assets
|
0.000
|
0.000
|
0.000
|
|
|
Loans & Advances
|
5695.600
|
14086.400
|
8337.490
|
Total Current Assets
|
25596.800
|
16373.500
|
11415.300
|
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
21802.100
|
7734.200
|
4497.130
|
|
|
Provisions
|
625.900
|
0.000
|
0.000
|
Total Current Liabilities
|
22428.000
|
7734.200
|
4497.130
|
|
Net Current Assets
|
3168.800
|
8639.300
|
6918.170
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES
|
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
TOTAL
|
64296.600 |
40841.300 |
37738.590 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
43664.000
|
20070.700
|
16320.400
|
|
|
Other Income |
461.300
|
138.400
|
96.700
|
|
|
Total Income |
44125.300 |
20209.100 |
16417.100 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
5090.600
|
1285.000
|
260.500
|
|
|
Provision for Taxation |
70.000
|
29.000
|
00.000
|
|
|
Profit/(Loss) After Tax |
5020.600
|
1256.000
|
260.500
|
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Raw Materials |
40.600
|
00.300
|
01.100
|
|
|
Excise Duty |
00.000
|
00.000
|
00.000
|
|
|
Power & Fuel Cost |
1177.100
|
426.200
|
353.800
|
|
|
Stock Adjustments |
11.900
|
00.100
|
00.000
|
|
|
Other Manufacturing Expenses |
15317.700
|
7243.700
|
5682.300
|
|
|
Employee Cost |
2593.000
|
1179.800
|
990.500
|
|
|
Selling and Administration Expenses |
9274.300
|
3752.000
|
2692.300
|
|
|
Miscellaneous Expenses |
493.000
|
255.800
|
1459.600
|
|
|
Interest & Financial Charges |
3409.800
|
2591.200
|
2600.000
|
|
|
Depreciation |
6718.100
|
3475.400
|
2377.800
|
|
|
Preoperative Expenditure Capitalised |
[0.800] |
[0.400] |
[0.800] |
|
Total Expenditure |
39034.700 |
18924.100 |
16156.600 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
30.06.2007 |
30.09.2007 |
|
Type |
|
1st
Quarter |
2nd
Quarter |
|
Sales Turnover |
|
9086.400
|
15622.100
|
|
Other Income |
|
1.900
|
21.400
|
|
Total Income |
|
9088.300
|
15643.500
|
|
Total Expediture |
|
5852.600
|
10515.200
|
|
Operating Profit |
|
3235.700
|
5128.300
|
|
Interest |
|
151.400
|
640.500
|
|
Gross Profit |
|
3084.300
|
4487.800
|
|
Depreciation |
|
11423.700
|
2007.000
|
|
Tax |
|
08.500
|
16.400
|
|
Reported PAT |
|
1933.100
|
2203.800
|
|
PARTICULARS |
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
PAT / Total Income |
(%) |
11.38
|
6.22 |
1.59 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
11.66
|
6.40 |
1.60 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
6.24
|
2.88 |
0.89 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.23
|
0.11 |
0.03 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
2.98
|
3.16 |
3.02 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.14
|
2.12 |
2.54 |
LOCAL AGENCY
FURTHER INFORMATION
History
Subject was
originally incorporated on 14th March, 1995 at Mumbai in Maharashtra
under the name and style of Birla Communication Limited Subsequently the
registered office changed from Mumbai to Gujarat w. e. f. 22nd
October, 1996 having Company Registration Number 30976. The name of the company
changed to "Birla AT & T Communications Limited" w. e. f. 13th
May, 1996 and again the name of the company changed to "Birla Tata AT
& T Limited" w. e. f. 6th November, 2001 and later again the
name of the company changed to the present w. e. f. 1st May, 2002.
The company was
promoted by Aditya Birla Group and AT & T Wireless - U.S.A
Value-added
services: The extension to speech-enabled access of value-added service
products, mobile top up, music messaging, Group and Global SMS
facilities.
Review
of Consolidated Operations
The Company recorded an increase of 90% in its subscriber base from 7.37
Millions as of March 31, 2006 to 14.01 Millions as of March 31, 2007. The
Company has increased its market share from 7.7% in 2005-06 to 8.6% in 2006-07
on a national basis. The total Minutes of Usage increased from 21 billion
minutes in 2005-06 to 46 billion minutes in 2006-07, showing an increase of
119%. The Company has expanded its network from 1944 cities and towns at end of
FY 2005-06 to 4432 cities and towns at end of FY 2006-07. The Company has
commenced National Long Distance service to carry part of the Company's own
traffic.
Shareholders
approval has been requested by way of Postal Ballot dated September 10,
2007.
Awards and Recognitions
* The Company is the only Indian GSM operator to win the award in 12th Annual
`GSM Association Global Mobile Awards', at 3GSM World Congress held in
Barcelona, Spain, in February 2007. This award, received for two successive
years in the same category despite stiff competition with top-notch global GSM
nominees, is for the Company's unique, "CARE" service in the
"Best Billing or Customer Care Solution".
* To
create year round visibility and ensure brand salience, the Company keeps
coming up with media innovations through tie-ups with media partners.
One
such innovation - The Idea sponsored News Headlines, has won the Gold in the
Business Excellence Awards 2006 ceremony, in the "Best Use of Sponsorship
- Non Sports" category, a first of its kind innovation across
industries.
* The
Company has been awarded the "Indian Operator of the Year" Award at a
function held on the sidelines of CommunicAsia, Singapore. This award was
received at the 4th Annual Asian Mobile News Awards Nite on June 20,
2007.
Significant corporate
developments
* In
August 2006, the Company entered into a Long Term Financing Arrangement for an
amount of Rs. 42,240 Millions with the IDBI led consortium.
The
facility envisaged the refinancing of all existing debt and part financing
capital expenditure requirement.
* The Company has launched commercial mobile services in the service areas of
Rajasthan, Uttar Pradesh (East) and Himachal Pradesh during the period of
September - November 2006. In these markets, the Company has captured 3.4%
market share by end of March 2007.
* The
Company made Initial Public Offering and raised Rs. 25,000 Millions including
Pre IPO placements. The Issue was oversubscribed more than 50 times and attracted
the then highest ever over-subscription by the Qualified Institutional Buyers
category in the history of Indian capital markets. Further, by exercising the
Green Shoe Option, Rs. 3,187.50 Millions were additionally received in April
2007. The Equity Shares of the Company were listed on the Bombay Stock Exchange
and the National Stock Exchange on March 9, 2007.
* In
March 2007, outstanding Preference Shares of Rs. 4,830 Millions were redeemed
along with a redemption premium of Rs. 2,733 Millions.
* The Company
has entered into a ten years business transformation pact to integrate,
innovate, and transform its business processes and IT infrastructure with
International Business Machines (IBM). The pact, sizing upto US$ 600 - 800
Millions, depending upon business revenues and service area expansions, is
designed on an innovative risk - reward revenue sharing model.
* The
Company has signed a US$ 500 Millions contract with Nokia Siemens Networks to
expand and strengthen the Company's network. Under this contract, Nokia Siemens
Network will expand the network in Delhi, Haryana, Uttar Pradesh (both East and
West), Andhra Pradesh and Kerala service areas. The two-years contract includes
supply and services of GSM equipment, "Intelligent Network", value-added
services, circuit and packet core equipment.
* The Company has signed a US$ 343 Millions contract for GSM expansion with
Ericsson in the Maharashtra, Gujarat, Rajasthan, Madhya Pradesh and Himachal
Pradesh service areas. Under this contract, Ericsson will provide radio access,
microwave transmission and next-generation, mobile softswitch network
architecture, between February 2007 to November 2009. Ericsson will help in
building a state-of-the-art cellular network across the five service areas that
will enable a smooth transition to a 3G-ready network.
New products and initiatives
The
Company has made extensive progress on the marketing front by introducing
various unique and innovative products and services across all service areas of
operation. Some of the major initiatives are:
* Roam Like Home
The
Company is the first operator to commercially launch Roam Like Home service for
its International Inroaming customers. This service enables international
inroamers to seamlessly access Voice Mails through home short codes, log on to
the home network's VAS Voice codes, including helpline and emergency numbers.
Inroamers can also dial from the phone book without having to add any country
code prefixes.
* Free Life Insurance cover
The
Company has entered into a brand alliance with Birla Sun Life Insurance Company
Limited to leverage the intrinsic strengths of the Group companies. This
enabled Idea subscribers opting for this scheme to get free life insurance for
a period of one year and an add-on connection with free airtime for a specified
period.
* Idea Rocks India
Idea
Rocks India tour concerts were staged in 25 cities and the televised show of
one of the concerts was telecasted on Zee TV. The tour was supported by a 3600
media campaign.
* VAS Initiative : Star to Copy
The Company launched a unique, first of its kind product, which allows an Idea
Subscriber to easily copy the Dialer Tone of another Idea Subscriber, whom he /
she has called. The subscriber only needs to dial "*" while listening
to the Dialer Tone. This simple product helps the customer to bypass the
lengthy process of selecting a Dialer Tone, providing instant gratification.
The product aims to generate sizeable revenue, in view of the popularity of
Dialer Tones and the simplicity of application.
* Idea IIFA Awards Yorkshire 2007
In a
first of its kind brand association in the mobile entertainment space, the
Company sponsored the IIFA Awards 2007, the most coveted and prestigious Indian
Film Awards held at Yorkshire. IDEA IIFA offered the best platform to
demonstrate the true essence of mobile and entertainment convergence. With IDEA
IIFA, privileged customers of IDEA had access to specially created merchandise,
contests, video and MMS downloads and several other value added services.
Mergers and Acquisitions
* In
June 2006, Escorts Telecommunications Limited became the subsidiary of the
Company and subsequently was renamed as Idea Telecommunications Limited.
* In
February 2007, the Company acquired 10,000,000 Equity Shares of Rs.10 each of
Aditya Birla Telecom Limited, a Company holding License to operate in the
telecom service area of Bihar, for a purchase consideration of Rs. 100
Millions. With this acquisition, Aditya Birla Telecom Limited has become a
wholly owned subsidiary of the Company.
* The corporate structure was rationalised by merging seven subsidiaries, viz.,
Idea Mobile Communications Limited, Idea Telecommunications Limited, BTA
Cellcom Limited, Sapte Investments Private Limited, Vsapte Investments Private
Limited, Bhagalaxmi Investments Private Limited and Asian Telephone Services
Limited.
The statement of the Company's interest in the subsidiaries namely, Aditya
Birla Telecom Limited and Swinder Singh Satara & Co. Limited as at March
31, 2007, prepared in accordance with the provisions of Section 212 (3) of the
said Act, is attached to the Balance Sheet.
Transfer of Telecom Licences
Following
the amalgamation of the erstwhile subsidiaries into the Company, application
for transfer of telecom licences held by the erstwhile subsidiaries were made
to DoT. The transfer of licences in the name of the Company is expected
shortly.
MANAGEMENT DISCUSSION AND
ANALYSIS
INDUSTRY GROWTH
The
Indian mobility industry has set a fast pace during the FY 2007, growing at
around 69% with total mobility subscribers touching 162 Millions by March 2007.
The three key drivers of the fast growth remain the reduced cost of entry into
the sector, reduced cost of ownership, and expanding coverage. With wireless
penetration level still at around 18%, the Indian market offers an attractive
opportunity. The Company has done extremely well in the FY 2007, increasing its
subscriber base from 7.37 Millions as of end March 2006 to 14.01 Millions as of
end March 2007, witnessing a growth of almost 90%. The Company became listed in
March 2007, and is among the top fifty companies in India with a market cap of
over Rs. 330 bn. Idea Cellular Limited is now a part of the Aditya Birla
Group.
MAJOR REGULATORY DEVELOPMENTS
Review of Access Deficit Charges
(ADC)
The ADC regime initially introduced by the Telecom Regulatory Authority of
India (TRAI) with effect from May 2003, has evolved from a fixed charge per
call regime to a mix of revenue share on national calls and fixed charges on
international calls over the period. With effect from April 1, 2007, the
percentage of ADC revenue share has been reduced from 1.5% to 0.75%.
Reduction in roaming tariffs
The
TRAI, in January 2007, issued the 44th amendment to its Telecommunication Tariff
Order (TTO), primarily focused on Roaming Tariffs.
The
Order has reduced the ceiling rates on all domestic roaming calls and abolished
the rental / surcharge for national roaming.
Enhancement
of Foreign Direct Investment (FDI) ceiling from 49% to 74% in the Telecom
Sector
The Department of Industrial Policy & Promotion (DIPP) had announced on
November 3, 2005 (vide Press Note 5 of 2005 SERIES), the enhancement in FDI
ceiling from 49% to 74%, subject to certain conditions. Owing to complexities
involved in implementation of the conditions, the Department of
Telecommunications (DoT) had granted several extensions to the telecom
licensees to ensure compliance. Now, vide Press Note 3 (2007 SERIES), the DIPP
has superseded the earlier Press Note 5 and increased the FDI limit to 74%
including both direct & indirect foreign investments in the licensee
company. Under the new Press Note, FDI upto 49% will be governed by the
automatic route, and anything beyond 49% through the FIPB, subject to
compliance of certain terms and conditions.
Universal Service Obligation (USO)
Subsidy
The
Universal Service Obligation Fund came into force from April 1, 2002, with the
objective of providing access to telecommunication services to population in
the rural and remote areas at affordable prices. In January 2007, the Universal
Service Obligation Fund (USOF) Administration floated tenders to extend
financial assistance for setting up infrastructure (passive and active) for the
provision of mobile services in the rural areas on a cluster (group of
districts) basis.
Idea
has been declared a successful bidder in a total of 27 clusters comprising 2731
sites. This provides them the opportunity to enter into rural markets with
reduced capex costs, as only the opex charges are required to be paid to the
Infrastructure Provider who sets up the tower under the scheme.
Subscriber Verification
The
DoT, vide its letter dated November 22, 2006, directed all service providers to
complete the re-verification of their pre-paid subscriber base by March 31,
2007, post which no subscriber without due verification would be allowed on the
system. The re-verification was also to be re-confirmed by calling up the
subscribers. Post March 31, 2007, if any subscriber was found without due
verification, the operator was liable to a penalty of Rs. 1000 per violation,
besides immediate disconnection of the subscriber.
The
Company has made best efforts to comply with DoT orders on this issue.
GSM Spectrum Allocation
The
GSM spectrum allocation is governed by the new Spectrum Allotment Criteria
declared on March 29, 2006. The Wireless Planning & Coordination (WPC)
Order also clarifies that spectrum allotment is subject to availability. For
the purpose of spectrum allotment, the active subscribers and peak traffic
averaged over a month (for a minimum of 40 mErlangs per subscriber) in the
Visitor Locator Register (VLR) would be taken into account.
Regulation on Port Charges
The TRAI amended the Regulation on Port charges. The amended regulation effective
from April 1, 2007 envisages reduction in the Port charges by approximately 23%
- 29% on various slabs. Interconnection seekers are required to place demand
for the required number of Ports, on every Point of Interconnection (POI) on
the basis of traffic projection over six months.
Roaming Revenue Sharing
The
TRAI published its decision disallowing any revenue sharing on roaming calls
and reiterated that the termination charges prescribed by them are cost based, and
since no additional cost is incurred in terminating roaming traffic, there is
no justification for higher payout to the terminating network.
Interconnection of Intelligent Network
(IN) of all Service Providers
The
TRAI issued a regulation mandating all service providers to provide
interconnection to all eligible service providers so that subscribers of all
access providers can access the IN services offered by other service providers.
Service providers are required to enter into reciprocal and non-discriminatory
agreements for technical and commercial aspects of such connectivity within
three months.
Establishment of the Telecommunication
Consumers Education and Protection Fund (TCEPF)
In
June 2007, the TRAI issued a regulation for the establishment of the TCEPF, for
the purpose of consumers' awareness, education, and the protection of their
interests. Under the said regulation, the telecom service provider has to
transfer to the credit of the fund the excess amount collected and lying
unclaimed by the subscriber, under any regulation or order or direction.
Curb Unsolicited Commercial Calls
In
June 2007, the TRAI issued a regulation for establishing a mechanism for
curbing unwanted telemarketing calls, wherein a National Do Not Call (NDNC)
registry will be maintained containing a list of telephone numbers of
subscribers who do not want to receive unsolicited commercial communication.
The telemarketer will have to verify their calling telephone numbers list with
the NDNC registry before making a call.
TDSAT Judgement on AGR
During
August 2007, TDSAT has pronounced its judgement on the long pending AGR
dispute. TDSAT in its judgement has maintained that only those items which lead
to revenues from telecom activity should be part of AGR. Based on the same,
revenue streams like income from dividend, interest income on savings, capital
gains, foreign exchange fluctuation gains etc. have been excluded from the
definition of AGR. The revenues from activities like income on subscriber
deposits which are linked to telecom activity would be included in the
definition of AGR.
TRAI recommendations on review of
license terms & conditions
TRAI
has released its recommendation on review of license terms & conditions on
August 29, 2007. The key highlights of the recommendations are: No cap on
number of access service providers in any service area; Significantly tighter
subscriber linked criteria for spectrum allocation (as an interim measure) for
both GSM & CDMA; A committee to be formed to frame new spectrum allocation
criteria; Additional spectrum beyond initial allotment only upon compliance
with roll-out obligation; For spectrum beyond 10 MHz (and upto 15 MHz),
licensees to pay one time spectrum charges on a per MHz basis and a higher
spectrum usage charge; All spectrum (excluding 800, 900 and 1800 bands) to be
auctioned in future; Access Service using Combination of Technologies to be
permitted; Market share of merged operator not to exceed 40% in terms of
subscriber and revenue market share; M & A activity will not be allowed if
it reduces the number of operators in a circle to below four; Cross holding
ceiling increased to 20%, up to 10% under the automatic route, and between
10-20% to be approved on a case by case basis; Licensee who covers 75% of
development blocks in service area (excluding Metro areas) to be eligible to
pay USO levy at 3% instead of 5% of AGR.
DISCUSSION ON FINANCIAL AND OPERATIONAL
PERFORMANCE
With
an appointed date of April 1, 2006, seven subsidiaries of Idea Cellular
Limited, viz., Idea Mobile Communications Limited, Idea Telecommunications
Limited, BTA Cellcom Limited, Sapte Investments Private Limited, Vsapte
Investments Private Limited, Bhagalaxmi Investments Private Limited and Asian
Telephone Services Limited have been merged with Idea Cellular Limited. Of the
above subsidiaries, Idea Mobile Communications Limited had operations in the
three telecom service areas of Uttar Pradesh (West) & Uttaranchal, Haryana,
Kerala and BTA Cellcom Limited had operations in the telecom service area of Madhya
Pradesh & Chattisgarh as on March 31, 2006. Thus, figures and amounts for
FY 200607 and FY 2005-06 have been considered as per Consolidated Financial
Statements to have a meaningful discussion and analysis.
Revenues
During the year ended March 31, 2007, revenues grew by 47% to Rs. 43,873
Millions from Rs. 29,869 Millions for the year ended March 31, 2006. Revenues
from SMS and related application services accounted for about 9% of the
revenues for the year. Revenues from National Long Distance Services accounted
for approx Rs. 779 Millions, which stood eliminated during the course of inter
segment consolidation.
Operating Expenses
During
the year ended March 31, 2007, the Company incurred operating expenses of Rs.
29,011 Millions representing 66.1% of the revenue. The main contributors to the
total operating expenses were; Roaming and Access charges at 16.7%, Subscriber
Acquisition & Servicing Expenditure at 12.9%, Network Operating Expenditure
at 12.2%, Licence and WPC charges at 10.2% and Personnel Expenditure at
5.9%.
Profit before Interest, Depreciation
and Amortisation
For
the year ended March 31, 2007, the Company had a Profit before Interest,
Depreciation and Amortisation of Rs. 14,862 Millions, representing an increase
of 36.8% compared to the year ended March 31, 2006. The operating profit margin
for 2006-07 and 2005-06 stood at 34% & 36% respectively. The decrease in
margin was mainly attributable to the commencement of operations in the new
service areas of Himachal Pradesh, Uttar Pradesh (East) and Rajasthan.
Interest, Depreciation and
Amortisation
During
the year ended March 31, 2007, the Company had a depreciation and amortisation
charges of Rs. 6,718 Millions. Interest cost and financing charges net of
treasury income and foreign exchange gain / (loss), stood at Rs. 3,051 Millions
for the year against Rs. 3,171 Millions for previous year. Though there has
been an increase in the overall borrowings level, the Company has managed to
reduce the interest rate to contain the overall interest cost.
Profits and Taxes
The
Profit Before Tax for the year stood at Rs. 5,093 Millions, an increase of
132%, as compared to the last year ended March 31, 2007. The tax charge for the
current year is at Rs. 70 Millions mainly attributable to the Fringe Benefit
Tax. The profit after tax for year ended March 31, 2007 was Rs. 5,022 Millions
resulting in a net profit margin of 11.4%.
Balance Sheet
During
the year under review, Preference Shares amounting to Rs. 4,830 Millions were
redeemed along with the redemption premium of Rs. 2,733 Millions, aggregating
to Rs. 7,563 Millions. Further, the Equity Share Capital of the Company grew by
Rs. 3,333.33 Millions representing issuance of 333.33 Millions Equity Shares of
Rs. 10 each, consequent to the Pre-IPO Placements and the Initial Public Offer.
The Share Premium Account of the Company stood at Rs. 18,313 Millions after
including the premium of Rs. 65 per Equity Share collected on issuance of
shares and reduced by issue expenses and redemption premium on Preference
Shares amounting to Rs. 620 Millions and Rs. 2,733 Millions respectively.
With
the merger of their subsidiaries, majority of the amount resting as goodwill in
the consolidated financials prepared under AS 21 stood eliminated.
Due to
the acquisition being accounted under pooling of interest method as per AS 14,
Rs. 12,314 Millions has been added to the negative balance of profit and loss,
while increase in reserves were Rs. 1,060 Millions resulting in a reduction of
networth by Rs. 11,254 Millions. After taking in to account the net profits
earned by the Company during FY 2006-07, the Profit and Loss debit balance as
at March 31, 2007 is Rs. 24,502 Millions.
The Gross Tangible Block stood at Rs. 70,627 Millions and Net Tangible Block
including Capital Work In Progress (CWIP) stood at Rs. 44,254 Millions as at
March 31, 2007. Net Intangible block was at Rs. 11,776 Millions at the end of
FY 2006-07. The increase in net current assets amounting to Rs. 9,516 Millions
mainly represented the increase in deposits due to IPO proceeds, offset by
increased creditors for Capital Expenditure.
OPPORTUNITIES, RISKS, CONCERNS AND
THREATS
The
Indian telecommunication industry has emerged as the fastest growing telecom
markets in the world and is poised to deliver solid growth as a result of
several economic reforms that have lead to strong GDP growth.
Higher
per capita income is also giving impetus for telecom growth. As India still
remains a largely under-penetrated market, it is one of the most attractive
telecom markets in the world today. The Company is well poised to exploit this
opportunity.
The
churn in this industry is high and thus, the same acts as a threat as well as
provides an opportunity with respect to market share of the Company.
The Company
operates in an Industry which is highly competitive and faces intense
competition from other operators including some of the state-owned enterprises
which are controlled by the Government and thus enjoy certain advantages.
Further, the Company may face additional competition from alternative or new
mobile technologies. The Company, however, being an incumbent player in most of
the service areas, it operates in, is strong enough to withstand the additional
competition, if any.
The
Company requires certain approvals, licenses, registrations and permissions for
operating its business. In addition, regulators may impose conditions in
relation to the grant of licenses and approvals and any such requirements could
have a material adverse effect on Company's business.
The
Company, however, does not perceive adverse changes in the regulatory
environment and is confident that the government will continue to ensure a
level playing field for all operators keeping the customers' best interest in
mind.
The Company's business is dependent on a limited number of vendors to
supply critical network and other equipment and services. Besides this, its
ability to provide a quality mobile network and expanding the area of
operations is also dependent on the Spectrum allocation. The Company has
entered into 2-3 years' contracts with equipment providers to ensure smooth
supply of network equipments.
The
telecommunications industry requires personnel with diverse skills and the
growth of the Indian economy has led to a scarcity for talented managerial
personnel. The Company believes that its success in the future is substantially
dependent on the expertise of their management team and as a retention
strategy; it is in process of implementation of Employees' Stock Option Scheme.
The Company places considerable emphasis on development of leadership skills
and building employee motivation.
OUTLOOK
They believe the mobile telecom sector is poised for continued high
growth, and the Company is attractively placed to benefit from this. They aim
to strengthen their operations in existing service areas, and expand to new
service areas. The Company aims to maintain and build upon the quality services
it provides to its subscribers, underpinned by a strong brand identity.
It is in trade
terms with :-
v Nokia of Japan
v Ericsson
v Schlumberger Sema
v NDTV
v Indiatimes
v Rediff
v C2W
v AT & T - U.S.A.
Fixed
Assets :
Ø
Building
Ø
Network
Equipment
Ø
Plant
& Machineries
Ø
Office
Equipment
Ø
Computer
Ø
Furniture
& Fixtures
Ø
Motor
Vehicles
CMT REPORT (Corruption,
Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No 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.39.32 |
|
UK Pound |
1 |
Rs.77.53 |
|
Euro |
1 |
Rs.57.91 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
5 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
5 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
4 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
6 |
|
--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 |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
53 |
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. |
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 |
|