BHARTI INFOTEL LIMITED - Airtel

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BHARTI INFOTEL LIMITED (Formerly BHARTI TELENET LIMITED) DIRECTORS’ REPORT The Directors have pleasure in presenting the Ninth Annual Report and Audited Statement of Accounts for the financial year ending March 31, 2003. BUSINESS REVIEW Your directors are pleased to inform that the company’s performance has shown considerable improvement during the year. This is largely attributed to the proactive measures taken by the Management. During the year a new strategic vision and framework to create a single entity has paved the way for the merger of Bharti’s fixed line, Long Distance and Broadband businesses into a single company- Bharti Infotel Limited and the demerger of the Cellular Service Project in Himachal Pradesh and the merger of the same into Bharti Cellular Limited to consolidate the mobile business. This reflects the management’s pro-active steps to align the business activities to the dynamic market conditions and provide the highest quality of services to its esteemed customers. The Company has drawn a blue print of continuing to service the consumer market in the fixed line business through its ‘Touchtel’ brand and the long distance business through its ‘India One’ brand. FIXED LINE ACCESS During the year under review, the Company’s fixed line access business had a lot of positive movement. The subscriber base as at March 31, 2003 has more than doubled to 371,973 over subscriber base as at March 31, 2002.This business continues to be a leader in the private wire line industry of India in terms of number of subscribers. In addition the Madhya Pradesh Circle, now Haryana Circle is also EBIDTA positive and the other circles have turned EBIDTA positive by the end of the first quarter of the ensuing financial year. This has been achieved in just over one year of launching services in all new circles and despite tremendous pressures on tariffs. LONG DISTANCE The year under review, being the first full year of operations of the long distance business of the Company was filled with flurry of activities, when alongwith full fledged operations we continued to spread our reach and strengthened our network by closure of backbone rings. The Industry saw the entry of new players in the telecom business and the competition further got heated up with the new initiatives taken by the incumbent operator. This led to further reduction of prices and consequent higher usage per subscriber. TRAI came out with its Interconnection Usage Charges (IUC) regulations in January 2003 and the same have been made applicable with effect from 1st May, 2003. The company started its International Long Distance voice services w.e.f 19th July; 2002.The Company also expanded its revenue base by starting its Data business during the year GROUP DATA & BROADBAND During the year under review, the group data and broadband business also witnessed large order inflow for National leased circuits; International Private leased circuits and Internet Bandwidth from existing and new clients. Today we have large number of prestigious 190 ANNUAL REPORT 2002-2003 names on the customer list including Foreign Financial intermediaries, Technology firms and ISPs. FINANCIAL PERFORMANCE On a consolidated basis, the Key financial indicators for the year ending March 31, 2003 are as under: As on As on March 31, March 31, Particulars 2003 2002 (Rs. in Thousand) (Rs. in Thousand) Sales and other income 11,066,615 1,787,838 Expenditure 8,091,532 1,263,042 Operating Profit 2,975,083 524,796 Finance Expenses 641,428 399,474 License Fees Revenue share and Spectrum Charges 796,149 144,118 Profit/(Loss) before Depreciation, Amortisation and Pre-operative expenses 1,537,506 (18,796) Depreciation, Amortization and Pre-operative expenses (1,852,208) (1,263,385) Profit/(Loss) before tax (134,883) (1,282,181) Net Profit/(Loss) after tax (134,883) (1,081,181) MERGER The Hon’ble High Court of Delhi has on August 29, 2003 approved the amalgamation of Bharti Telesonic Limited and Bharti Broadband Networks Limited with Bharti Telenet Limited. Consequent upon this the NLD /ILD business of Bharti Telesonic Limited and the Internet business carried on by Bharti Broadband Networks Limited stands merged into Bharti Telenet Limited. As part of the scheme of amalgamation, the name of the company has been changed to Bharti Infotel Limited vide fresh Certificate of Incorporation dated September 15, 2003 to reflect the post merger broader businesses of the company. The main object clause of the company has been amended as part of the scheme of amalgamation. As part of the scheme of amalgamation, the paid up share capital of the company has been re-aligned and stands reduced to Rs.2,772,000,000/divided into 277,200,000 equity shares of Rs.10/- each from Rs.3,000,000,000/-. The Cellular division of the Company in the telecom circle of Himachal Pradesh (‘HP cellular division’) has been demerged from the Company under a scheme of arrangement with Bharti Cellular Limited. Consequent upon the scheme coming into effect the HP cellular division stands merged with Bharti Cellular Limited. Thus all cellular operations of the subsidiaries of Bharti Tele-Ventures Limited are being consolidated under Bharti Cellular Limited barring Bharti Mobile Limited. FIXED DEPOSITS The Company has not sought or accepted any deposits from the public and is therefore not required to furnish information in respect of outstanding deposits under Non Banking Non Financial Companies (Reserve Bank) Directions, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.
AUDITORS’ REPORT The Auditors’ Report to Accounts has been duly considered by the Board and clarification, wherever necessary is contained in the Notes to Accounts. AUDITORS M/s. Price Waterhouse Chartered Accountants shall retire at the ensuing Annual General Meeting and being eligible have offered themselves for appointment. A Certificate has been received from them confirming therein that their appointment, if made, will be within the limits prescribed u/s 224(1B) of the Companies Act, 1956. The Directors’ recommend their appointment as the Statutory Auditors for the financial year 2003-04. AUDIT COMMITTEE The company has a duly constituted audit committee in existence since October 2001. The present constitution of the Committee is as under: - 1. Mr. Sunil Bharti Mittal 2. Mr. Rakesh Bharti Mittal 3. Mr. Badri Agarwal 4. Mr. V.N. Koura DIRECTORS During the year under review, Mr. Jagdish Kapur ceased to be the Director of the Company due to his sad demise in January 2003. The Board places on record the condolences and appreciation for the services rendered by him during his tenure as Director of the Company. Mr. K.L. Jain was appointed as an Additional Director on the Board of the company. Pursuant to the provisions of Section 260 of the Companies Act, 1956, Mr. K.L. Jain holds office upto the date of Annual General Meeting. The company has received a notice from a shareholder in terms of section 257 of the Companies Act, 1956 signifying his intention proposing the candidature of Mr. K.L. Jain for the office of Directorship of the company. Mr. K.L. Jain has also given a confirmation to the company that she is, otherwise, not disqualified, in terms of section 274 of the Companies Act, 1956. In view of rich and vast experience of Mr. K.L. Jain, it is felt that his presence on the Board would be an asset for the Company’s future Growth, hence it is recommended that he may be appointed as Director of the Company. Mr. Rajan Bharti Mittal has been re-appointed as Managing Director of the Company w.e.f. June 1, 2003. His appointment was confirmed at the Extra-ordinary General meeting of the Company held on July 29, 2003. Mr. Rakesh Bharti Mittal and Mr. V.N. Koura are due to retire by rotation and being eligible, have offered themselves for re-appointment. The Board recommends their appointment as Directors of the Company. STATUTORY STATEMENTS The Statement pursuant to the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particular of Employees) Rules, 1975 is annexed hereto and forms part of the Report. The other disclosures required to be made in terms of section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of Energy, Research and Development and Technology Absorption are not applicable. Foreign Exchange Earnings and Outflow: Year ended Year ended March 31, March 31, Particulars 2003 2002 (Rs. in Thousand) (Rs. in Thousand) Foreign Exchange Earnings 2,136,659 – Foreign Exchange Outflow SUBSIDIARY COMPANY 501,303 955 The information required under section 212 of the Companies Act, 1956, in respect of subsidiary company, is attached to the Report. DIRECTORS’ RESPONSIBILITY STATEMENT- SECTION 217(2AA) The Directors’ Confirm: i. that in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures; ii. they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year ended 31st March, 2003 and of the profit and loss account of the company for the period; iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. they had prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENT The Directors express their gratitude for assistance, co-operation and support received from the Department of Telecommunications, Government of Madhya Pradesh, Himachal Pradesh, Tamil Nadu, Karnataka, Delhi and Haryana, Company’s Bankers and Financial Institutions. The Directors wish to place on record their sincere appreciation of the valuable contribution and dedication shown by the employees at all levels of the Company. On behalf of the Board RAJAN BHARTI MITTAL BADRI AGARWAL Managing Director Director Place: New Delhi Date: September 16, 2003 ANNUAL REPORT 2002-2003 191
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