AFFLUENCE

BHARTI HEXACOM LIMITED

Regd. Office: Bharti Crescent, 1 Nelson Mandela Road, Vasant Kunj, Phase – II, New Delhi -110070

DIRECTORS’ REPORT

The Directors have pleasure in presenting the Eighteenth Annual Report together with the Audited Accounts for the financial year ending March 31, 2013.

Financial Results and Results of Operation

    (In Rupees Million)

During the year, the Company achieved a growth of 9.58 % in gross revenue over the previous year. The revenue and EBITDA for the year ended March 31, 2013 was Rs. 37589 mn and Rs. 12,302 mn respectively as compared to revenue and EBITDA of Rs. 34,304 mn and Rs. 11,728 mn respectively of last year.

Net profit after tax of the Company has decreased from Rs. 6,018 mn to Rs. 5,821 mn during the year.

As on March 31 2013, the Company had 17,508,526 customers consisting of 17,469,114 in mobile service and 39,412 in broadband & telephone services.

DIVIDEND

The Board recommends a final dividend of Rs 0.5 per equity share of Rs. 10/- each (5% of face value) for the financial year ended on March 31, 2013.

During the year the Company also declared interim dividend of Rs. 1.5 per equity share of Rs. 10/- each (15% of face value). 

 Business Review 

MOBILE SERVICES

During the financial year 2012-13, the wireless market in Rajasthan and North East continued to see turbulence in tariffs. The wireless subscriber market has decreased by 0.2% . The subscriber base of the Company has increased by 4.8% from 16,666,505 in March 2012 to 17,469,114 in March 2013. During the year, the customer market share of the Company has moved from 28.9% to 30.3%.

The Company has done network rollout with the total number of sites increasing by 10.6% from 8,614 in March 2012 to 9,531 in March 2013. The equipped erlangs has also increased by 5.1% from 540,638 to 568,046 during the same period.

TELEMEDIA SERVICES (FIXED LINE)

The subscriber base for voice services has increased by 0.4 % from 39,257 in March 2012 to 39,412 in March 2013.

Fixed Deposits

We have not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the balance sheet date.

 Directors

During the year, Mr. Ajai Puri and Mr. Nilanjan Roy were appointed as additional directors and Mr. Raghunath Mandava resigned from the Board of Directors of the Company.

 The Board placed its sincere appreciation for the valuable guidance and support provided by Mr. Raghunath Mandava during his tenure as Director of the Company. Mr. Ajai Puri and Mr. Nilanjan Roy hold office up to the date of forthcoming Annual General Meeting and being eligible are recommended by the Board for re-appointment subject to approval of shareholders. Further, pursuant to the provisions of the Companies Act, 1956, Mr. Narender Gupta and Mr. Ajai Kumar Gupta, Directors of the Company, are liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. Also, Mr. Ravi Kumar Kaushal was appointed as Alternate Director to Mr. Narender Gupta for the Board Meeting held on April 26, 2013.

Manager

Mr. Sudipto Chowdhary continues to be the Manager of the Company.

Auditors

During the year, consequent upon the conversion of S.R. Batliboi & Associates into a limited Liability partnership statutory auditor of the Company, has been recognised as S.R. Batliboi & Associates LLP.

The statutory auditors of the Company, S. R. Batliboi & Associates LLP, Chartered Accountants, Gurgaon, retire at the conclusion of the ensuing annual general meeting of the Company and have confirmed their willingness and eligibility for re-appointment and have also confirmed that their re-appointment, if made, will be within the limits under Section 224(1B) of the Companies Act, 1956.

The Company in line with the rotational policy on auditors replaced its audit partner of S.R. Batliboi & Associates LLP (erstwhile known as S.R. Batliboi & Associates) with Mr. Nilangshu Katriar.

The Board placed its sincere appreciation for the valuable contributions to the Company by Mr. Prashant Singhal, during his tenure as Audit partner of S.R. Batliboi & Associates LLP.

Cost Auditor

 In conformity with the directives of the Central Government, the Company has appointed M/s. R.J. Goel & Co, Cost Accountants, New Delhi as the Cost Auditors of the Company for financial year 2013-14.

 Pursuant to the General Circular No. 43/2012 dated December 26, 2012 read with General Circular Nos.18/2012 dated July 26, 2012 and 8/2012 dated May 10, 2012 (as amended on June 29, 2012), the Ministry of Corporate Affairs has allowed the companies concerned to file their Cost Audit Reports for the year 2011-12 [including the reports relating to any previous year(s)] with the Central Government in the XBRL mode, within 180 days from the close of the Company’s financial year to which the report relates or by January 31, 2013, whichever is later. Accordingly, the Cost Audit Report for the year ended March 31, 2012 was filed on December 31, 2012.

 Auditor’s Report

 The Board has duly examined the Statutory Auditor’s Report to accounts and clarifications, wherever necessary, have been included in the Notes to Accounts. Audit Committee

 As on 31st March 2013, Audit Committee consists of the following non executive directors of the Company:

 1.                  Mr. Narender Gupta                                       -           Chairman

2.                  Mr. Mukesh Bhavnani                                     -           Member

3.                  Mr. A.K. Gupta                                                -           Member

 Mr. Nilanjan Roy was appointed as member of the Audit Committee on April 25, 2013.                                       

Statutory statements

 The Statement pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and pursuant to 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.

 Industrial Relation

 The Company continues to give utmost attention to safety, health and environment. Relations with employees continued to remain cordial throughout the year.

 The Directors wish to place on record their appreciation for the efforts put in by the Company’s employees at all levels.

 Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

 Since the Company is a provider of telecommunication services, most of the information as required under section 217(1)(e) of the companies act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, as amended is not applicable. However, the information as applicable has been given in Annexure A to this report.  Employees

 The employees of the Company have contributed most significantly to the growth and development and have been the cornerstone of its success. Equally the Company has endeavored to remain an employer of choice, characterized by a progressive management style with fully empowered teams across the Company.

 The Company’s HR department constantly works on launching various initiatives on an on going basis to attract and retain qualified, talented and competent personnel and ensures that the employees are motivated.

 Statement of Particulars under section 217(2A) of the Companies Act, 1956 read with Companies (Particular of Employees) Rules, 1975 is annexed hereto. Director’s Responsibility Statement

 Pursuant to Section 217(2AA) of the Companies Act, 1956, we the Directors to the best of our knowledge and belief confirm that:

 (i)           in the preparation of the annual accounts for the year ended 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

 (ii)         they have selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

 (iii)       they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

 (iv)        they have prepared the annual accounts on a going concern basis.

 Acknowledgement

 Your Directors take this opportunity to place on record their appreciation of the wholehearted support received from Central Government, State Government, Department of Telecommunication, Wireless Planning and Coordination, Telecom Regulatory Authority of India, Cellular Operators Association of India, various banks and statutory and internal auditors, the subscribers, dealers, suppliers and all other business associates.

For and on behalf of the Board

 Mukesh Bhavnani

Chairman Place : New Delhi

Date : April 26, 2013

Annexure A

INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE EARNING AND OUTGO FORMING PART OF DIRECTORS’ REPORT IN TERMS OF SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988.

 Conversation of energy & Technology absorption

 Bharti Hexacom Limited, being a telecommunications service provider, the information in Part A & B pertaining to conversation of energy and technology absorption are not applicable to the Company.

 However, the Company requires energy for its operations and every endeavour has been made to ensure the optimal use of energy, avoid wastage and conserve energy as far as possible.

 For time to time, the Company evaluates global innovation and technology as a benchmark and wherever required enter into arrangements to avail of the latest technology trends and practices.

 Foreign Exchange Earning and Outgo

 Activities relating to exports initiatives taken to increase exports; development of new export markets for products and services; and export plans;

 We have seen significant growth in our long distance business. With India’s increasing integration into the global macro economy, we anticipate continued growth in the domain.

(ii) Total foreign exchange used and earned

(i)         Total Foreign Exchange Earning:                    Rs. 157 mn     

(ii)        Total Foreign Exchange Outgo:                      Rs. 601  mn

Statement of particulars under section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of employees) Rules,1975 for the year ended March 31,2013 and forming part of the Directors' Report.

Notes: 1. Gross Remuneration comprises of Salary, Taxable Allowances & Perquisites and Company’s contribution to Provident Fund.

2.  The employee would qualify for being included in Category (A) or (B) on the following basis:

  For (A) if the aggregate remuneration drawn by him during the year was not less than Rs. 60,00,000 p.a.

 For (B) if the aggregate remuneration drawn by him during the part of year was not less than Rs. 5,00,000 p.m.

  3.   None of the employees mentioned above is a relative of any Director of the Company

  4.  None of the employees mentioned above holds 2% or more share capital of the Company

 5. The employees are governed by the general terms and conditions of employment and the policies of the Company.

Financial Results and Results of Operation (In Rupees Million) ParticularsYear ended March 31, 2013Year ended March 31, 2012 Income including Other Income 37,589; 34,304 Profit/(Loss) before Finance Expenses, Depreciation & Amortisation and Taxation 12,302; 11,728 Finance Expenses (Net) 69; 404 Depreciation & Amortisation 4,151; 3,667 Profit/(Loss) before Tax8,082;7,657 MAT Credit69;(69) Tax Expenses (current tax & deferred tax)2,192;1,708 Net Profit/(Loss) after Tax5,821;6,018 Profit/(Loss) brought forward from earlier years27,891;22,914 Profit/(Loss) carried to Balance Sheet33,712;28,932 During the year, the Company achieved a growth of 9.58 % in gross revenue over the previous year. The revenue and EBITDA for the year ended March 31, 2013 was Rs. 37,589 mn and Rs. 12,302 mn respectively as compared to revenue and EBITDA of Rs. 34,304 mn and Rs. 11,728 mn respectively of last year. Net profit after tax of the Company has decreased from Rs. 6,018 mn to Rs. 5,821 mn during the year. As on March 31 2013, the Company had 17,508,526 customers consisting of 17,469,114 in mobile service and 39,412 in broadband & telephone services.

DIVIDEND The Board recommends a final dividend of Rs 0.5 per equity share of Rs. 10/- each (5% of face value) for the financial year ended on March 31, 2013. During the year the Company also declared interim dividend of Rs. 1.5 per equity share of Rs. 10/- each (15% of face value).

Energy Conservation Since the Company is a provider of telecommunication services, most of the information as required under section 217(1)(e) of the companies act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, as amended is not applicable. However, the information as applicable has been given in Annexure A to this report. Bharti Hexacom Limited, being a telecommunications service provider, the information in Part A & B pertaining to conservation of energy and technology absorption are not applicable to the Company. However, the Company requires energy for its operations and every endeavour has been made to ensure the optimal use of energy, avoid wastage and conserve energy as far as possible. For time to time, the Company evaluates global innovation and technology as a benchmark and wherever required enter into arrangements to avail of the latest technology trends and practices.

Technology absorption Bharti Hexacom Limited, being a telecommunications service provider, the information in Part A & B pertaining to conversation of energy and technology absorption are not applicable to the Company. However, the Company requires energy for its operations and every endeavour has been made to ensure the optimal use of energy, avoid wastage and conserve energy as far as possible. For time to time, the Company evaluates global innovation and technology as a benchmark and wherever required enter into arrangements to avail of the latest technology trends and practices.

Foreign Exchange Earning and Outgo Activities relating to exports initiatives taken to increase exports; development of new export markets for products and services; and export plans; We have seen significant growth in our long distance business. With India’s increasing integration into the global macro economy, we anticipate continued growth in the domain. (ii) Total foreign exchange used and earned (i) Total Foreign Exchange Earning: Rs. 157 mn (ii) Total Foreign Exchange Outgo: Rs. 601 mn

Employees The employees of the Company have contributed most significantly to the growth and development and have been the cornerstone of its success. Equally the Company has endeavored to remain an employer of choice, characterized by a progressive management style with fully empowered teams across the Company. The Company’s HR department constantly works on launching various initiatives on an on going basis to attract and retain qualified, talented and competent personnel and ensures that the employees are motivated. Statement of Particulars under section 217(2A) of the Companies Act, 1956 read with Companies (Particular of Employees) Rules, 1975 is annexed hereto. Sl. No.NameDesignationNature of Employment, whether contractual or otherwiseNature of duties of the employeeQualification(s)Age (In years)Date of Commencement of EmploymentTotal Experience(In years)Gross Remuneration (In Rs.)Previous Employment/ Designation (A)EMPLOYED THROUGHOUT THE FINANCIAL YEAR 1.Rajesh SahanaSales & Marketing HeadPermanentSalesGraduation41;6-Jul-06;19;6039217;ABN AMRO BANK/VICE PRESIDENT (B)EMPLOYED DURING PART OF THE FINANCIAL YEAR Notes: 1. Gross Remuneration comprises of Salary, Taxable Allowances & Perquisites and Company’s contribution to Provident Fund 2. The employee would qualify for being included in Category (A) or (B) on the following basis: For (A) if the aggregate remuneration drawn by him during the year was not less than Rs. 60,00,000 p.a. For (B) if the aggregate remuneration drawn by him during the part of year was not less than Rs. 5,00,000 p.m. 3. None of the employees mentioned above is a relative of any Director of the Company 4. None of the employees mentioned above holds 2% or more share capital of the Company. 5. The employees are governed by the general terms and conditions of employment and the policies of the Company.

Director’s Responsibility Statement Pursuant to Section 217(2AA) of the Companies Act, 1956, we the Directors to the best of our knowledge and belief confirm that: (i) in the preparation of the annual accounts for the year ended 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) they have selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period; (iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) they have prepared the annual accounts on a going concern basis.

Auditors During the year, consequent upon the conversion of S.R. Batliboi & Associates into a limited Liability partnership statutory auditor of the Company, has been recognised as S.R. Batliboi & Associates LLP. The statutory auditors of the Company, S. R. Batliboi & Associates LLP, Chartered Accountants, Gurgaon, retire at the conclusion of the ensuing annual general meeting of the Company and have confirmed their willingness and eligibility for re-appointment and have also confirmed that their re-appointment, if made, will be within the limits under Section 224(1B) of the Companies Act, 1956. The Company in line with the rotational policy on auditors replaced its audit partner of S.R. Batliboi & Associates LLP (erstwhile known as S.R. Batliboi & Associates) with Mr. Nilangshu Katriar. The Board placed its sincere appreciation for the valuable contributions to the Company by Mr. Prashant Singhal, during his tenure as Audit partner of S.R. Batliboi & Associates LLP. Auditor’s Report The Board has duly examined the Statutory Auditor’s Report to accounts and clarifications, wherever necessary, have been included in the Notes to Accounts.

Fixed Deposits We have not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the balance sheet date. Directors During the year, Mr. Ajai Puri and Mr. Nilanjan Roy were appointed as additional directors and Mr. Raghunath Mandava resigned from the Board of Directors of the Company. The Board placed its sincere appreciation for the valuable guidance and support provided by Mr. Raghunath Mandava during his tenure as Director of the Company. Mr. Ajai Puri and Mr. Nilanjan Roy hold office up to the date of forthcoming Annual General Meeting and being eligible are recommended by the Board for re-appointment subject to approval of shareholders. Further, pursuant to the provisions of the Companies Act, 1956, Mr. Narender Gupta and Mr. Ajai Kumar Gupta, Directors of the Company, are liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. Also, Mr. Ravi Kumar Kaushal was appointed as Alternate Director to Mr. Narender Gupta for the Board Meeting held on April 26, 2013. Manager Mr. Sudipto Chowdhary continues to be the Manager of the Company. Cost Auditor In conformity with the directives of the Central Government, the Company has appointed M/s. R.J. Goel & Co, Cost Accountants, New Delhi as the Cost Auditors of the Company for financial year 2013-14. Pursuant to the General Circular No. 43/2012 dated December 26, 2012 read with General Circular Nos.18/2012 dated July 26, 2012 and 8/2012 dated May 10, 2012 (as amended on June 29, 2012), the Ministry of Corporate Affairs has allowed the companies concerned to file their Cost Audit Reports for the year 2011-12 [including the reports relating to any previous year(s)] with the Central Government in the XBRL mode, within 180 days from the close of the Company’s financial year to which the report relates or by January 31, 2013, whichever is later. Accordingly, the Cost Audit Report for the year ended March 31, 2012 was filed on December 31, 2012. Audit Committee As on 31st March 2013, Audit Committee consists of the following non executive directors of the Company: 1. Mr. Narender Gupta - Chairman 2. Mr. Mukesh Bhavnani - Member 3. Mr. A.K. Gupta - Member Mr. Nilanjan Roy was appointed as member of the Audit Committee on April 25, 2013. Statutory statements The Statement pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and pursuant to 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. Industrial Relation The Company continues to give utmost attention to safety, health and environment. Relations with employees continued to remain cordial throughout the year. The Directors wish to place on record their appreciation for the efforts put in by the Company’s employees at all levels. Acknowledgement Your Directors take this opportunity to place on record their appreciation of the wholehearted support received from Central Government, State Government, Department of Telecommunication, Wireless Planning and Coordination, Telecom Regulatory Authority of India, Cellular Operators Association of India, various banks and statutory and internal auditors, the subscribers, dealers, suppliers and all other business associates. For and on behalf of the Board Mukesh Bhavnani Chairman Place : New Delhi Date : April 26, 2013 Annexure A INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE EARNING AND OUTGO FORMING PART OF DIRECTORS’ REPORT IN TERMS OF SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988.