AFFLUENCE

RAILTEL CORPORATION OF INDIA LTD

(A Govt. of India Undertaking)

CIN: U64202DL2000GOI107905

Regd. Off.: 6th Floor, IIIrd Block, Delhi Technology Park, Shastri Park, Delhi -110053

Website: www.railtelindia.com E-mail: jsmarwh@railtelindia.com

N O T I C E

NOTICE is hereby given that the 16th Annual General Meeting of the Members of RailTel Corporation of India Limited will be held onMonday,12thSeptember, 2016 at 4.00 p.m. at the Committee Room, 2nd Floor, Rail Bhawan, New Delhi110001 to transact the following business:

ORDINARY BUSINESS:

1.    To receive, consider and adopt the Audited Financial Statements (including audited consolidated financial statements) for the Financial Year ended 31st March, 2016together with the Boards Report and Auditors Report thereon and comments of the CAG, in terms of section 143(6) of the Companies Act, 2013.

2.    To confirm payment of interim dividend and to consider declaration of final dividend on equity shares for the financial year ended 31st March, 2016.

3.    To take note of the appointment of M/s GSA & Associate, Chartered Accountant as Statutory Auditors of the Company for the financial year 2016-17made by CAG and to fix the remuneration of such Auditors and to pass the following resolution as an Ordinary Resolution:

RESOLVED THAT appointment of Statutory Auditors as well as Branch Auditors made by CAG vide order No./CA. V/ COY/CENTRAL GOVERNMENT,RAILTL(4)//513, dated 22/07/2016be and is hereby noted and the Board of Directors of the Company are hereby authorised to fix the remuneration of such auditors for the Financial Year 2016-17 in pursuance to the provision of section 139(5) read with Section 142 of the Companies Act, 2013.

SPECIAL BUSINESS:

4.  To consider, and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 149, 152 and other applicable provisions, if any, of the Companies Act, 2013, Rules made thereunder, Dr.Anupam Alok, (DIN: 07486492), who was appointed as part time non-official Director (Independent Director), by the President of India through Ministry of Railways vide letter no. 2008/PL/1/pt.3 dated 01/04/2016 with effect from April01, 2016 and such appointment subsequently noted by the Board of Directors in its meeting held on 30/06/2016, be and is hereby notedas Independent Director of the Company, on such terms & conditions as may be determined by the Govt. of India.

5.  To consider, and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 149, 152 and other applicable provisions, if any, of the Companies Act, 2013, Rules made thereunder, Shri. Ashok Goel, (DIN: 01247398), who was appointed as part time non-official Director (Independent Director), by the President of India through Ministry of Railways vide letter no. 2008/PL/1/pt.3 dated 01/04/2016 with effect from April 01, 2016 and such appointment subsequently noted by the Board of Directors in its meeting held on 30/06/2016, be and is hereby noted as Independent Director of the Company, on such terms & conditions as may be determined by the Govt. of India.

6.  To ratifythe remuneration of Cost Auditor for the Financial year 2015-16 by passing following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 148 and other applicable provisions of the Companies Act, 2013 read with rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014 including any statutory modification(s) or re-enactment thereof, for the time being in force, M/s KL Jaisingh& Co, Cost Accountants appointed as Cost Auditors by the Board of Directors of the Company, to conduct the audit of the cost records of the Company for the financial year ending March 31, 2016 with a remuneration of Rs. 44,960/- plus applicable taxes & re-imbursement of outofpocket expenses be and is hereby ratified.

By order of the Board

For RailTel Corporation of India Limited

(J S Marwah)

 Company Secretary

Place: New Delhi

Date: 22/08/2016

NOTES: A member entitled to attend and vote at the meeting is entitled to appoint a Proxy to attend and on poll to vote instead of himself/herself.  A Proxy need not be a member of the Company. Proxy form is available in the Annual Report. An Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013, in respect of Special Business to be transacted, as set out in the notice, is annexed hereto.

3.    Members having any questions on accounts or any other item set out in the Agenda are requested to send their queries at least 10 days in advance to the Company at its CorporateOffice address to enable the Company to collect the relevant information and to keep the information ready at the meeting.

To

1      All the shareholders of the Company as per list attached.

2      All the Directors of the Company.

3      Statutory Auditors of the Company.

ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 102(1) OF THE COMPANIES ACT, 2013

The following Explanatory Statement sets out all material facts relating to the Special Business mentioned in the accompanying Notice:

Item No 4 :

Section 152(2) of the Companies Act ,2013, provides that save as otherwise expressly provided in the Act, all the directors will be appointed in general meeting.

2. Since all the directors in RailTel [whole time, part time(official/non official)] are appointed by the President of India through administrative ministry i.e. Ministry of Railways, in terms article 66 of the Articles of Association of the Company for a fixed tenure, it is not possible to appoint directors at General meeting. Therefore, the appointments made by the Ministry are being put up for noting by the shareholders.

3. Dr. Anupam Alok, (DIN: 07486492) was appointed as part time non-official Director (Independent Director) by the Ministry of Railways vide its letter no. 2008/PL/1/pt.3 dated 01/04/2016 w.e.f. 01/04/2016 and such appointment subsequently noted by the Board of Directors in its meeting held on 30/06/2016.  The terms and conditions regulating the appointment of Dr. Anupam Alok is to be determine by the President of India as contained in article 66(2) of the Articles of Association of the Company.  His brief resume, inter-alia, giving nature of expertise are provided in this Annual Report. 

4. None of the Directors or Key Managerial Personnel of the Company or their relatives except Dr. Anupam Alok, being the appointee himself, is in any way, concerned or interested, financially or otherwise, in the resolution.

Item No 5 :

Section 152(2) of the Companies Act ,2013, provides that save as otherwise expressly provided in the Act, all the directors will be appointed in general meeting.

2. Since all the directors in RailTel [whole time, part time (official/non official)] are appointed by the President of India through administrative ministry i.e. Ministry of Railways, in terms article 66 of the Articles of Association of the Company for a fixed tenure, it is not possible to appoint directors at General meeting.  Therefore, the appointments made by the Ministry are being put up for noting by the shareholders.

3. Shri. Ashok Goel, (DIN: 01247398) was appointed as part time non-official Director (Independent Director) by the Ministry of Railways vide its letter no. 2008/PL/1/pt.3 dated 01/04/2016 w.e.f. 01/04/2016 and such appointment subsequently noted by the Board of Directors in its meeting held on 30/06/2016.  The terms and conditions regulating the appointment of Shri. Ashok Goel is to be determine by the President of India as contained in article 66(2) of the Articles of Association of the Company.  His brief resume, inter-alia, giving nature of expertise are provided in this Annual Report. 

4. None of the Directors or Key Managerial Personnel of the Company or their relatives except Shri. Ashok Goel, being the appointee himself, is in any way, concerned or interested, financially or otherwise, in the resolution.

Item No 6 :

In accordance with the provisions of Section 148 of the Companies Act, 2013 (the Act) and the Companies (Audit and Auditors) Rules, 2014 (the Rules), the Company is required to appoint a Cost Auditor to audit the cost records of the Company for the Financial Year 2015-16.  The Board has approved the appointment of M/s. M/s KL Jaisingh& Co, Cost Accountant as the Cost Auditor of the Company for the financial year 2015-16in their meeting held on 21/09/2015 at an aggregate remuneration of Rs.44,960/- plus applicable taxes & re-imbursement of outofpocket expenses.

2. The remuneration of the cost auditor is required to be ratified subsequently by members in accordance to Section 148 (3) of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014. Accordingly, it is proposed to pass the Ordinary Resolution by the Members for their ratification.

3. None of the Directors, Key Managerial Personnel and their relatives are concerned or interested, financially or otherwise, in the resolution.

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RAILTEL CORPORATION OF INDIA LTD

PROXY FORM

[Pursuant to section 105(6) of the Companies Act, 2013 and Rule 19 (3) of the

Companies (Management and Administration) Rules, 2014]

Name of the Member(s):            ................................

Registered Address:                   ................................

E-mail ID:                                 ................................

Folio No./* DP & Client Id:          ................................

I/We, being the member(s) of . shares of the above named Company, hereby appoint:

(1)     Name:...................

Address: ................................................................... E-mail Id:

Signature: ..................., or failing him/her;

(2)     Name:...................

(3)     Address: ................................................................... E-mail Id:

Signature: ..................., or failing him/her;

(4)     Name:...................

(5)     Address: ................................................................... E-mail Id:

Signature: ........................

as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 16th Annual General Meeting of the Company, to be held on Monday, 12thSeptember, 2016 at 4:00 p.m. at the Committee Room, 2nd Floor, Rail Bhawan, New Delhi110001 and at any adjournment thereof in respect of such resolutions as are indicated below:

Signed this day of 2016.Signature of the Shareholder __________________

 ----------------------------                                    -------------------------------                         -----------------------------

Signature of first proxy holder            Signature of second proxy holder               Signature of third proxy holder

Notes: This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company not less than 48 hours before the commencement of the Meeting.

Boards Report

Dear Shareholders,

Your Companys Directors are pleased to present 16th Annual Report of the Company, along with Audited Accounts, for the financial year ended 31st March, 2016, prepared in accordance with the provisions of Companies Act, 2013.

1.     Company Overview

RailTel Corporation is one of the largest neutral telecom infrastructure providers in the country owning a Pan-India optic fiber network on exclusive Right of Way (ROW) along Railway track. The OFC network presently reaches to over 4500 towns and cities of the country including several rural areas.  RailTel  with  strong nationwide  presence  is committed  to  bring  cutting  edge  technology and offer innovative services to the Indian Telecom market. With its Pan India high capacity network, RailTel is working towards creating a knowledge society at various fronts.

Equipped with ISO-9001-2008, ISO-27001:2005 and ISO 20000-1:2011 certification, RailTel offers a wide gamut of managed telecom services to Indian Telecom market. The service includes Managed lease lines, Tower colocation, MPLS based IP-VPN, Internet, Data Center services, NGN based voice carriage services to Telecom Operators, Services to Internet Service Providers, MSOs, Enterprises, Banks, Government Institution/departments, Educational Institutions/Universities, etc.

RailTel being a Mini Ratna (Category-I)PSU is steaming ahead in the enterprise segment with the launch of various services coupled with capacity augmentation in its Core network. Your company stands as the only telecom PSU, which is a 100% debt free company and consistently profit making PSU in telecom sector.

2.     Financial Performance

During the year, your Company has observed an increase of 19% in its revenue from operations which comes out to be Rs.572 Crore. The total turnover of the Company during the year is Rs.641 Crorecomprising of other income of Rs.69 Crore. The summarized financial results of your Company are shown in Table1.

3.     Share Capital

There is no change in the  capital structure of the Company during the period under review and from the end of the year till the date of this report.

Accordingly, Issued, Subscribed and Paid-up Share Capital is Rs.320.94 crore divided into 32.09 crore Equity Shares of Rs.10 each as on 31st March, 2016 including Rs.305.94 crore issued for consideration other than cash.

Few sections of Indian Railways wherein OFC has already been laid are being taken over from Ministry of Railways against which equity shares for consideration other than cash would be allotted.

4.     Dividend

The Company has declared and paid an interim dividend of Rs.15 crore in the year 2015-16. Finaldividend of additional Rs.26.53 crore has now been proposed to be paid. It had also paid dividend distribution tax to the exchequer.

The total Dividend pay-out will amount to Rs. 41.53 Crore excluding tax on dividend which is in compliance with the instructions issued by Ministry of Finance asking payment of minimum 30% dividend on profit after tax(PAT) and also in pursuance to presidential directives conveyed by Ministry of Railways vide letter no. 2011/PL/64/Pt.I dated 29/04/2016 thereby directing to pay 40% dividend on PAT for the FY 2015-16.

5.     Railways Revenue Share

The Company is also contributing by way of revenue share @7% on services to Indian Railways and the total share of such contribution comes to Rs.22 crore as against such share of Rs.19 crore in the preceding year.  The cumulative revenue share to Railways amounts to Rs. 162 crore till this year.

Besides, the Company has also paid license fee @

 8% (at present) to DoT, Govt. of India on its income from telecom business carried by it under licenses granted to it.

The company has also paid a spectrum charge of

Rs. 78 lakh for the FY 2015-16.

6.     Fixed Deposits

The Company has not accepted or invited any deposits under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposit) Rules, 2014 from public during the year.

7.     Reserves

The Company appropriated its profit earned during the year under report.  It has transferred Rs.40 crore to the General Reserves during the year. The total reserves & surplus at the end of the financial year 2015-16 is Rs. 737crore.

8.     Capital Expenditure

During the year, Capital expenditure of Rs. 315 crore approx. was incurred mainly on OFC related assets, Telecom & Radio equipments, Network Expansion of NE-1/NE-2 Projects etc. The Company made commitments to the tune of Rs. 174 crore on capital account and accordingly, expenditure would be booked during the current financial year, in addition to the capital expenditure allocated for the year 2016-17.

9.     Directors

During the year under report, the Board of RailTel consisted of Chairman & Managing Director, two functional Directors and two Govt. Nominees.

The President of India has appointed two part time non-official Directors (Independent Directors) namely Sh. Ashok Goel (DIN: 01247398) & Dr. Anupam Alok (DIN: 07486492) for a period of three years with effect from 01.04.2016.

As on date of the Boards Report, the Board of RailTel consists of a Chairman & Managing Director, two functional Directors, two Govt. Nominees and two part time non-official Directors (Independent Directors).

RailTel has received a declaration from its Independent Directors stating that they have met the criteria of independence under Section 149(6) of the Companies Act, 2013.During the year, there has been no appointment or extension of an Independent Director for a term exceeding 5 (Five) years as per Section 149(10) of the Companies Act, 2013.

10.            Number of Meetings of Board

The Board met six times for transacting the business of the company during the year 2015-16 on 24.06.2015, 28.07.2015, 21.09.2015 and 04.12.2015, 14.01.2016 and 29.03.2016.

11.            Remuneration to Directors

RailTel, being a Government Company under the Companies Act, 2013, the whole time Directors of the Company are appointed by President of India through Ministry of Railways. The functional Directors are appointed by the Government of India who draw remunerations under IDA pattern of pay scale pre-determined by the Government and as per the terms and conditions issued by the Government of India from time to time.

The part time official Directors (Government Nominee) on the Board of the Company do not draw any remuneration from the Company.  The part time non official Directors / Independent Directors are paid a sitting fee of Rs. 20,000/- per meeting attended, besides cost of travel and lodging in case of outstation Directors.

The Company already has a remuneration committee which is responsible for determination and recommending inter alia of performance related pay (PRP), ex-gratia or distribution of bonus etc.

12.            Committees of the Board:

12.1 Audit Committee

Pursuant to the provisions of Section 177 of Companies Act, 2013, RailTel has an Audit Committee in place comprising of the following Directors:

  Dr. Anupam Alok, Independent Director;

  Sh. Ashok Goel, Independent Director; &

  Sh. Sanjay Upreti, Nominee Director

12.2 Nomination &Remuneration Committee

Pursuant to Section 178 of the Companies Act, 2013, the Company has a Nomination & Remuneration committeecomprising of following Directors:

  Dr. Anupam Alok, Independent Director;

  Sh. Ashok Goel, Independent Director; &

  Sh. Sanjay Upreti, Nominee Director

12.3 Corporate Social Responsibility Committee

Pursuant to Section 135 of the Companies Act, 2013, the Company has a Corporate Social Responsibility committee comprising of following Directors:

  Dr. Anupam Alok, Independent Director;

  Sh. N. K. Gupta, Director (Finance); &

  Sh. A. Seshagiri Rao, Director (NPM)

13.            Subsidiary

Your Company has a wholly owned subsidiary by the name of RailTel Enterprises Limited (REL) incorporated on 12th August, 2014 with following broad objectives :

        To undertake Information and Communication Technologies (ICT) infrastructure projects covering hardware and software applications and other associated sub-systems.

        To carry on any ICT infrastructure construction work on Build-Operate-Transfer, Build-Own operate-Transfer, Build-Lease Transfer etc. or otherwise or any other scheme or project found suitable in and related to the field of infrastructure projects etc.

        To carry out consultation services for various customers in the field of IT, Telecom, signaling, critical infrastructure in India and abroad.

        To undertake Data Center, Network/Security Operation center related infrastructure projects.

The intent behind formation of REL was to make a clear distinction of RailTels existing core activities vis-a-vis project execution works.

The Authorised Share Capital of REL is Rs.50 Crore and paid up share capital is Rs. 10 Crore. The total equity share capital of REL is held by RailTel itself through its nominees. The affairs of the Company are managed, controlled and supervised by three Directors nominated by RailTel.

During the year, REL has received major order from Govt. of Rajasthan for building wireless connectivity for 1500 schools in the State of Rajasthan. Other projects related to network/IT infrastructure creation are also under process.

The REL is in profit since 1styear of its inception.  Income from operation of REL has been increasedto Rs..6.66 crore against the previous year figures of Rs.. 1.33 crore. Net profit for the year has been increased from Rs.. 0.13 crore to Rs.. 0.76 crore.

The consolidated financial statements of the Company duly audited by the Statutory Auditors are presented in the Annual Report. The consolidated financial statements have been prepared in strict compliance with applicable Accounting Standards.

A report on performance and financial position of the subsidiary is presented in a separate section in this Annual Report. Please refer Form AOC-1 annexed to the consolidated financial statements in the Annual Report.

14.            Projects Undertaken

The details of the projects undertaken during the year is included in Management Discussion & Analysis Report forming part of this report.

15.            Procurement from Micro and Small Enterprises

RailTel had set up goals for resorting to procurement from Micro and Small Enterprises and has made a total procurement of Rs.72.34 crore from MSEs during the year 2015-16.

16.            Right to Information Act, 2005

The Right to Information Act, 2005 seeks to provide for setting out the practical regime of Right to Information for citizens to secure access to information under the control of public authorities in order to promote transparency and accountability in the working of every public authority.  The Company in the capacity as Government Company and deference to the spirit behind the law appointed Public Information Officers to take care of the compliance of Right to Information Act, 2005.

17.             Particulars of Loans, Guarantees or Investments

During the year, RailTel has not given any loan or guarantees covered under the provisions of Section 186 of the Companies Act, 2013.

The detail of investments made by the Company is given in the notes to the Financial Statements.

18.            Internal Controls, Systems and their adequacy

The Company has an internal control system in commensuration with size, scale and complexity of its operations.

During the year, the Company has engaged Internal Auditors to carry out Internal Audit of the Company. The highlights of internal audit report and their synopsis were placed before the Audit Committee for its review.

Further, RailTel has implemented ORACLE ERP solution with name ProjectParivartan and all modules like Projects, Procurement, Operations, Maintenance, Finance, HR, Sales and Marketing are live from December 2013.  Implementation of Project Parivartan has empowered all employees to focus on their core competencies, making work environment stress free, at the same time ensuring transparency and decision making in the system.  During year 2015-16, RailTels IT team had been continuously working towards strengthen of core processes of theseimplemented modules so that users should effectively and efficiently use ERP for day to day work like Sales Order Tracking , NOC E ticketing , Failure tracking system, management dashboard , investment module, tax reforms and reports etc.   In next financial year also RailTels IT team is working towards strengthening of existing and development of additional modules like I-recruitment, online payment & Collection, automatic bank reconciliation, performance management system , E tendering.

19.            Annual Return

The extract of Annual Return pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12 of Companies (Management & Administration) Rules, 2014 is enclosed with this report as Annexure-I.

20.            Managements Discussion and Analysis Report

Managements Discussion and Analysis Report for the year under review is presented in separate section forming part of this Annual Report.

21.            Industrial relations and HR Matters

The manpower strength as on 31st March, 2016 was 537regular employees on roll of the employees including 65officers and staff on deputation from the Ministry of Railways &other Govt. Departments/ PSUs. In addition, the Company had outsourced the services of personnel in different capacities to facilitate the execution of work.

During the year, the company recruited 46executives in keeping with the functional requirements and future business expansion plans.

A comprehensive training policy with underlying theme of transforming RailTel into a vibrant learning organization has been evolved.  The policy lays high emphasis on facilitating and incentivizing focused learning and competency building where by employees will have opportunity of taking up trainings and industry recognized professional accreditations courses in their areas of interest.  The employees will also earn credit in the process which will benefit them in their career advancement.

22.            Employment of Women, Use of Official language

During the year 6female employees joined, raising the total number of female employees to 50, which is 9% of the regular strength of 537.

Company has followed all the guidelines of the Govt. of India under Official Language Act. The annual report is published bi-lingual in English and Hindi.  The Company is progressively increasing the use in Hindi in keeping the spirit of the official language policy of the Government. The officers and staff are encouraged to use Hindi in doing their day to day work. The officers and staff possessing working knowledge of Hindi carry out their work in Hindi.

There has been good progress in the use of Official Language Hindi in official work of RailTel.  The provisions of Section 3(3) of the Official Language Act have been complied with and letters received in Hindi were also replied to in Hindi. Most of the Office Orders/tour programmes etc. were processed in Hindi.

Quarterly meetings of Official Language Implementation Committee were held regularly under the Chairmanship of the CMD to review the progress made in promoting the use of Hindi in the Company and the decisions taken therein have been implemented.

Hindi Week was organized from14.09.2015 to 20.09.2015 during which in-house general Hindi knowledge, Essay and Kavita Path competitions were organized to popularize Hindi. A good number of employees took part in these competitions. Few employees were also given away cash awards.

RailTels website is in bilingual and computers have Unicode facility to work in Hindi.

23.            Schedule Caste, Schedule Tribes and Other Backward Classes

The Company has been following the Govt. Guidelines regarding reservation for STs, SCs, OBCs, persons with disabilities (PwDs) and ex-servicemen. The representation as on 31.03.2016 is as under:

24.            Prevention, Prohibition and Redressal of Sexual Harassment

In order to provide protection against sexual harassment of women at workplace and for prevention and redressal of complaints of sexual harassment, the Company has in place a policy to prohibit & prevent the social evil of Sexual Harassment at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013.

The objective of the policy is to provide women, a workplace, free from harassment, to ensure that every woman is treated with dignity and respect and to provide a speedy redressal mechanism to women who have been subjected to sexual harassment.

For the said purposes RailTel has an Internal Complaints Committee (ICC) in place at its corporate office and all four regional offices which is responsible to:

         Investigate every formal written complaint of sexual harassment

         Meet at regular intervals

         Prepare an Annual Report containing the details of complaints of sexual harassment pursuant to the provisions of Act and provide the same to employer

         Take appropriate remedial measures to respond to any substantial allegations of sexual harassment

During the year, ICC of RailTel has not received any complaint under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

25.            Risk Management Policy

The Board of Directors of your Company at their 78th meeting has adopted a risk management policy prepared by M/s Price Waterhouse Coopers (PwC). The following potential risks have been identified in RailTel:

                     Project Risk

                     Strategy Risk

                     Market Risk

                     People Risk

                     Technology Risk

                     Reputation Risk

                     Insurable Risk

                     Contractor/Vendor Risk

                     Financial Risk

                     Operational & Compliance Risk

It has been advised to form a Risk Management Committee at Apex level.

It has also been advised to form a Functional Risk Committee comprising of a Chief Risk Officer and the Core risk team which shall consist of functional heads from key functions/departments.

The implementation of Risk Management policy in RailTel is under process.

26.            Related Party Transactions

The related party transactions entered during the year had been in the ordinary course of business and on arms length basis.  Form no. AOC-2 in terms of section 134(3) (h) of the Companies Act, 2013, read with rule 8 (2) of the Companies (Accounts) Rules, 2014, is placed as Annexure-II.

27.            Corporate Governance

The Company has always worked towards enhancing the corporate governance and the principles underlying the same within the organisation. Your Company is in full compliance with DPE Guidelines on Corporate Governance. A report on the corporate governance is made part of this Annual Report. Pursuant to the requirements of DPE guidelines, 2010 a certificate obtained from practising Company Secretary has been obtained & annexed as Annexure-III.

In compliance with the directive of DPE, the Company is also regularly sending its quarterly and consolidated annual report in the prescribed manner to DPE. For each quarter, CPSEs are graded under various heads viz; Composition of Board, Non-Official Directors, Board Meetings, Code of Conduct, Audit Committee, Remuneration Committee, Board Disclosures., Directors Remuneration etc. on the basis of scores prescribed for each head. For the year under review, RailTel has scored an average score of 89 marks out of 100 marks and on the basis of prescribed grading structure RailTel has been awarded with Excellent grade for ensuring Corporate Governance practices in the organization.

28.            Corporate Social Responsibility

As per the provisions of Companies Act, 2013, your Company has formulated a CSR & sustainability policy which provides a broad framework within which the Company will carry out the CSR activities. The policy aims for social and economic development of community in the areas of rural development, education, skill development, health and other areas and adhere to sustainable and transparent business practices. The activities to be undertaken under the policy will be in accordance with Schedule VII of the Act.

During the FY 2015-16, RailTel has spent Rs.3.21 crore on CSR activities which is more than 2% of average net profit before tax (PBT) of the company earned during the three immediately preceding Financial Years.

During the year, RailTel has carried out various CSR activities with the aim to create IT infrastructure at rural institutions situated in villages/panchayats across various States/UT to provide broadband enabled IT centers enabling e-health, e-education for rural population through local institutions like Primary schools & Primary health center. During the year, to benefit the students of rural areas, RailTel has made available 44 new schools of these areas with IT infrastructure and broadband connectivity. In addition to these 5 villages in Rohtak district of Haryana are also provided with IT infrastructure and broadband connectivity in an attempt to make rural population take up Digital Literacy program.  NGO has also been engaged by RailTel to ensure continuous engagement with the rural population and success of national Digital

Literacy program.

RailTel has also provided free Wi-Fi facility at two rural railway stations namely Bolpur (Eastern Railways) and Basar (South Central Railways) for passengers and people residing in the vicinity of the stations.

At Adra Division of Indian Railways, RailTel has made provisions for skill development and Digital Literacy programme aimed at benefiting the wards and children of Railway personnel along with local population of the region.  

To make health facilities accessible to all, RailTel has also initiated a project on providing telemedicine infrastructure at two rural health units of Indian Railways situated at Bano (Ranchi Division SER) and Samdari (Jodhpur Division NWR) connecting them with their respective Divisional Hospitals. Both these health units do not have any doctors available and the provisioning of telemedicine would prove a great step in ensuring basic healthcare facilities for the local people of these two locations. Installed IT equipment will enable the doctors present at Divisional Hospitals to carry out remote diagnostics on patients. The system is likely to get operational in first quarter of FY 16-17.

Further, during the year, RailTel has started the Akansha Super 30 program at Dehradun, under which 30 talented but underprivileged students from the state of Uttarakhand would be provided with free of cost lodging, boarding and classroom trainings at center. This center would equip the students with the skills and knowledge required for the IIT-JEE, the entrance examination of IIT. In its first year of operation of itself, the center has produced 7 students who have qualified for IITs clearing IIT-JEE advanced examination and other 21 students have succeeded in securing the seats in NITs. Considering the first attempt, the center is happy with the encouraging results and aims at achieving more selections in coming years.

The Annual Report on CSR as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this report as Annexure-IV.

29.            Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), through its notification in the official gazette dated February 16,2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies.    Ind AS would replace the existing AS prescribed under section 133 of the Companies Act,2013 read with Rule 7 of the companies (Accounts) Rules,2014.  For RailTel and its subsidiary Ind AS would be applicable for the financial year 2016-17.

The company has engaged a consultant for identifying impact of transition from existing AS to Ind AS on its financials. Broadly, major impact would be on the dividends, financial assets & liabilities, inventory valuation, useful life of assets, component accounting and Government Grant.

30.            Impact of GST

GST constitutional Amendment Bill has been passed by Rajya Sabha &Lok Sabha and now GST would become a reality. The Goods and Services tax unifies the Indian market for goods and services into a single market with a common tax code and uniform tax rates on a pan India basis.

The impact of GST on RailTel has been broadly ascertained.  The cost of RailTel procurements will come down.  It will also reduce indirect cost of RailTel because availed credit will be utilized immediately instead of spreading the same in two years.   Cost of Deposit works will also come down.  However, cost of services may go up.

31.            Vigil Mechanism

The Company has a Whistle-Blower policy with an objective to provide employees of RailTel an avenue to raise complaints, in line with commitment of RailTel to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication. To provide necessary safeguards for protection of employees from reprisals or victimization, for whistle blowing in good faith.

The policy prescribes for reporting process and manner in which investigation must be must be conducted.

This year has been an eventful year for Vigilance administration in the Company. During the year 2015-16, inspections were carried out in different spheres of the working of the Company. Based on the inspection, system improvements were effected in the leveraging of technology, monitoring and review of advances received from customs, inspection of projects and their implementation, timely payment of various types of bills,  e -procurement, annual property returns etc.

RailTel also renewed ISO 27001 and ISO 20000 in the organization for ensuring information security management which will help in better transparency and data safety implicating risk of financial fraud on account of information /data break with various stakeholders.

A web based Project Monitoring System has been implemented for monitoring the progress of National Optical Fiber Network Project. Supervisors in the field can update the information along with photograph through mobile base app.

32.            Vigilance awareness week

Vigilance Awareness week was celebrated in the Corporate Office as well as in 4 Regional Offices of RailTel during the period 26.10.2015 to 31.10.2015. Fresh bilingual educational / inspirational posters and banners on vigilance issues were displayed at prominent locations. Chairman and Managing Director/RailTel administered the pledge to all the RailTel officials in the Corporate Office as well as in all Regional Offices through video conference. CMD/RailTel delivered a special talk on Preventive Vigilance positive contribution of Vigilance on the occasion of vigilance awareness week.

A special talk on Preventive Vigilance was delivered by Sh. Nitish Kumar, Director CVC on 30th Oct. 2015 in Corporate Office of RailTel which was also joined RailTel Region officials through RailTel in-house telepresence service.

As per the directives of CVC, debate/elocution were to be organized in 10 colleges/schools of Delhi and Gurgaon. Surpassing the target, debate /elocution were organized in 11 colleges/schools of Delhi/Gurgaon & 7 of Eastern part of India.

Various vigilance workshops were held to raise vigilance awareness about raising Preventive Vigilance and reducing discretion in the organization to educate executives of working on large projects, about various methodologies to be adopted, CVC guidelines and Company Policy pertaining to contracts and tenders, role of Vigilance, canon of financial proprietary, conduct rules etc. Pending items pertaining to vigilance administration were discussed in the meetings held with Executive Board of RailTel.

33.            Significant and material orders of regulators etc.

During the year, there has been no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

34.            Statutory Auditors

The Comptroller and Auditor General of India (CAG) hasappointed M/s GSA &Associatesof New Delhi as Statutory Auditors of the Company to audit the annual accounts for the year ended 31st March, 2016. 

Besides, the CAG has also appointed the following named firms of Chartered Accountants as Branch Auditors for auditing of four regional offices of the Company:

In terms of the authorization given by the members in their last annual general meeting, the Board on the recommendations of Audit Committee has already considered and approved payment of fee for all the above Auditors to the aggregate extent of Rs.14.20lakh excluding service tax.

Similarly, the approval of the shareholders is solicited for authorizing the Board for fixation of remuneration payable to the statutory auditors for the year 2016-17 as and when appointed.

35.            Cost Auditors

The Company has appointed M/s KL Jaisingh& Co., Cost Accountants as Cost Auditors to audit the cost record maintained by the Company for the financial year 2015-16.

The Company has filed Form CRA-2 with the Ministry of Corporate Affairs in this regard.

36.            Secretarial Audit

During the year, pursuant to Section 204 of the Companies Act, 2013 read with rules made thereunder, RailTel has appointed M/s Balika Sharma & Associates, Company Secretaries, New Delhi as Secretarial Auditors of the Company for the financial year 2015-16. The Secretarial Auditor has conducted the audit and issued a Secretarial Audit Report in the format prescribed under Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit report of the Company for the year ended 31st March, 2016is annexed as Annexure-V. The managements reply on the observation/comments of Secretarial auditors is given in Annexure-VI.

37.            Comments of CAG

The Comptroller and Auditors General of India (C&AG) have decided not to conduct the supplementary audit of the standalone as well as consolidated financial statement of the Company for the year ended 31st March 2016 and as such no comments to make under Section 143(6)(b) of the Companies Act 2013 as communicated by them vide their letter no PDA/RC/RPSU/32-43/RailTel/2016-17/939 dated 27/07/2016.

38.            Auditors Report

The AuditorsReport of the Company for the year ended 31st March, 2016, is attached with the financial statement of the Company. There has been no qualification/adverse remarks made by the Auditors on the financial statement for the year ended 31st March, 2016.

39.            Energy Conservation, Technology Adoption, Foreign Exchange Earnings and Outgo

The Company is presently engaged in providing telecom services.  The disclosure on Conservation of Energy and Technology Absorption as required under the provisions of Section 134(3)(m) of the Companies Act, 2013 and as prescribed under Rule 8 of Companies Accounts Rules, 2014 is annexed to this report as Annexure-VII.

40.            Presidential Directives

No Presidential Directives were received from the Government during the financial year 2015-16. However, Railway Board vide their letter no. 2011/PL/64/3/Pt.1 dated 29.04.2016 has conveyed the direction of President of India in relation to payment of dividend by the CPSE at the rate of 40% of Profit after tax for the year 2015-16 and 2016-17.  The said directive have been complied with.

41.            MOU with Administrative Ministry

RailTel is signing a MoU with the Government of India, Ministry of Railways thereby laying inter alia the physical and financial targets.  During the year 2014-15 RailTel has got Excellent rating from DPE.

42.            Directors Responsibility Statement

In terms of the provisions of section 134(3)(c) of the Companies Act, 2013, as amended, your Directors confirm that:

a)      in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b)      the directors had selected such accounting policies and applied them 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 at the end of the financial year and of the profit and loss of the company for that period;

c)      the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d)     the directors had prepared the annual accounts on a going concern basis; and

e)      thedirectors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f)       thedirectors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

43.         Acknowledgements

The Board expresses its gratitude towards Indian Railways and other Departments for their cooperation and continued assistance.

The Board expresses its gratitude to Department of Telecommunication, for keeping faith in RailTel for providing services under Universal Service Obligation fund (USOF) in North East region. In addition, the Board also expresses its thanks to the Govt. of India, & Department of Telecommunication, for choosing RailTel as one of the stake holder in the setting up of National Optical Fibre Network ( NOFN) to provide connectivity to 2,50,000 Gram Panchayats of the country for universal services to rural population. The Board is also thankful to National Informatics Center (NIC) for considering RailTel as the lead creator of NKN.

The Board also expresses its sincere thanks to CAG, statutory auditors, branch auditors, secretarial auditorsand also the internal auditors for their valued contribution.

The Board also places on record its appreciation of the services rendered by all categories of employees and others, which have enabled RailTel to achieve its objectives.  The Board also expresses its gratitude to the valued customers and vendors of the Company for their kind and continued patronage.

For and on behalf of the Board

Sd/-

R.K. Bahuguna

Chairman and Managing Director

DIN: 01748132

Date:17/08/2016

Place: Gurgaon

Annexure -I

Annual Return Extracts in MGT 9

Form No. MGT-9

EXTRACT OF ANNUAL RETURN OF RAILTEL CORPORATION OF INDIA LTD

as on the financial year ended on 31st March, 2016

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the
Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise Shareholding

(ii)Shareholding of Promoters

(iii) Change in Promoters' Shareholding (please specify, if there is no change)

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

(v) Shareholding of Directors and Key Managerial Personnel:

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

*RailTel being a Government Company, the appointment of CMD & Directors and fixation of their remuneration are decided by President of India in terms of the Articles of Association of the Company

.

B. Remuneration to other directors:

#.  During the financial year 2015-16, there was no independent Director on the Board of the Company.

##  Government nominees are not entitled to any remuneration or sitting fee from the Company.

### The Independent  Directors were paid the sitting fees at a rate fixed by the Board, i.e. Rs. 20,000 within the limits as prescribed under  the Companies Act, 2013 i.e. Rs.1,00,000 for attending each meeting of the Board and Committees of Directors.

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

----

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies(Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 includingcertain arms length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arms length basis  : NIL

2. Details of material contracts or arrangement or transactions at arms length basis are given below:

For RailTel Corporation of India Ltd.

R. K. Bahuguna

(Chaiman& Managing Director)

DIN: 01748132

COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE

To,

The Members of,

RailTel Corporation of India Limited

Reg. Off: 6th Floor, IIIrdBlock, Delhi Technology Park,

Shastri Park, Delhi-110053

CIN: U64202DL2000GOI107905

We have examined the compliance of conditions of Corporate Governance by RAILTEL CORPORATION OF INDIA LIMITED, for the Financial Year ended on 31stMarch, 2016 as stipulated in Guidelines on CorporateGovernance for Central Public Sector Enterprises issued by Department of Public Enterprise (DPE),Government of India.

The Compliance of conditions of Corporate Governance is the responsibility of management. Our examination was limited to procedures and implementation thereof, adopted by the Company to ensure the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Guidelines. However, two Independent Directors have been appointed by the Administrative Ministry on the Board of the Company with effect from 01.04.2016.

The position of Independent Directors was vacant in the Company since August, 2014. During the year, Company has requested the Administrative Ministry to appoint requisite number of Independent Directors and Woman Director on the Board of Company. After several requests to the Administrative Ministry, two Independent Directors have been appointed but position of Woman Director is still vacant.

During non-availability of Independent Directors on the Board of the Company, as aforesaid, the composition of all applicable Statutory Board level committees is also affected

We further state that such compliance is neither an assurance as to the viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Place: New Delhi                                                                  Signature:

Date: 30.06.2016                    Balika Sharma & Associates

                                                                                                Company Secretaries

FCS No: 4816

C P No : 3222

                                                                                    Annexure IV

RAILTEL CORPORATION OF INDIA LIMITED

ANNUAL REPORT ON CSR ACTIVITIES FOR THE YEAR 2015-16 TO BE INCLUDED IN THE BOARDS REPORT

[Pursuant to Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014]

          Sd/-                                                                                                                       sd/-

R. K. Bahuguna  (DIN 01748132)                                                                 Dr. Anupam Alok (DIN 07486492)

CMD                                                                                                                      Chairman CSR Committee

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 2015-16

[Pursuant to section 204(1) of the Companies Act, 2013 and ruleNo.9

of the Companies (Appointment and Remuneration Personnel)Rules, 2014]

To,

The Members of,

RailTel Corporation of India Limited

Reg. Off: 6th Floor, IIIrdBlock, Delhi Technology Park,

Shastri Park, Delhi-110053

CIN: U64202DL2000GOI107905

We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by RailTel Corporation of India Limited, (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Companys books, papers, minute books, e-Forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit. We hereby report that in our opinion, the company has, during the audit period covering the financial yearcommencing from 1st April, 2015 and ended on 31st March, 2016 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, e-forms and returns filed and other records maintained by RailTel Corporation of India Limited (the Company) for the financial year ended on 31st March, 2016 according to the provisions of:

1)      The Companies Act, 2013 (the Act) and the rules made there under;

2)      The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made there under;

3)      The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;

4)      Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

5)      The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act):-

a)      The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

b)      The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;

c)      The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

d)      The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;

e)      The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

f)       The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

g)      The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

h)      The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

6)      Being an Unlisted Public Company, the above mentioned acts given in para 2, 3,4 and 5 are not applicable to the Company.

7)      We have relied on the representation made by the Company and its Officers for systems and mechanism formed by the Company for compliances under other applicable Acts, Laws and Regulations to the Company. The list of major head/groups of Acts, Laws and Regulations as applicable to the Company is given in Annexure I.

We have examined compliances of the provisions of para (i) as they had been notified by Central Government with effect from 01st July, 2015 but we have not examined compliances of the provisions of para (ii) as these are not applicable to the Company (being Unlisted Public Company).

i)        Secretarial Standards issued by The Institute of Company Secretaries of India.

ii)      The Listing Agreements entered into by the Company with N.A. Stock Exchange(s), if applicable;

We further report that

During the year under review, the Board of Directors of the Company isduly constituted with proper balance of Executive Directors and Non-Executive Directors; except Independent Directors and Woman Director.

However, two Independent Directors have been appointed by the Administrative Ministry on the Board of the Company with effect from 01.04.2016.

The position of Independent Directors was vacant in the Company since August, 2014. During the year, Company has requested the Administrative Ministry to appoint requisite number of Independent Directors and Woman Director on the Board of Company.After several requests to the Administrative Ministry, two Independent Directors have been appointed but position of Woman Director is still vacant.

Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

We further report that there are adequate systems and processes in the company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines as stated above.

Acts, rules and regulations stated above at para no. 5 are not applicable to the Company; however we have been informed that there was no transaction reported under the provisions of FEMA, during the year under report.

We further report that during the audit period the company has:

1.         Changed the Registered office of the Company:

Pursuant to the provisions of Section 12 of the Companies Act, 2013 and other provisions applicable, if any, the Registered Office of the Company shifted from 10thFloor, Bank of Baroda Building, 16, SansadMarg, New Delhi-110001 to 6thFloor, IIIrdBlock, Delhi Technology Park, Shastri Park, Delhi-110053 with effect from 1st July, 2015.

2.      During non-availability of Independent Directors on the Board of the Company, as aforesaid, the composition of all applicable Statutory Board level committees is also affected.

Place: New Delhi                                                                  Signature:

Date:   30.06.2016                   Balika Sharma & Associates

                                                                                                Company Secretaries

FCS No: 4816

C.P.No : 3222

This report is to be read with our letter of even date which is annexed as Annexure I and forms an integral part of this report.

Annexure I-   other laws applicable to the company

1.      Employees Provident Fund and Miscellaneous Provisions Act, 1952

2.      Employees State Insurance Act, 1948

3.      Employers Liability Act, 1938

4.      Environment Protection Act, 1986 and other environmental laws

5.      Equal Remuneration Act, 1976

6.      Factories Act, 1948

7.      Indian Contract Act, 1872

8.      Income Tax Act, 1961 and Indirect Tax Laws

9.      Indian Stamp Act, 1899

10.  Industrial Dispute Act, 1947

11.  Maternity Benefits Act, 1961

12.  Minimum Wages Act, 1948

13.  Negotiable Instruments Act, 1881

14.  Payment of Bonus Act, 1965

15.  Payment of Gratuity Act, 1972

16.  Payment of Wages Act, 1936 and other applicable labour lawsThe Indian Telegraph Act, 1885 (Relevant Provisions) The Telecom Regulatory Authority of India Act, 1997 The TRAI (Levy of Fees and Other Charges for Tariff Plans) Regulations, 2002 The Telecommunication Interconnection (Charges and Revenue Sharing) Regulation, 2001 The Telecommunication Interconnection Usage Charges Regulation, 2003 The Telecom Regulatory Authority of India (Annual Report and Returns) Rules, 1999 The Telecom Regulatory Authority of India (Form of Annual Statement of Accounts and Records) Rules, 1999 The Telecommunication Consumers Education and Protection Fund Regulations, 2007 The Information Technology (Certifying Authorities) Rules, 2000 Right to Information Act, 2005 Service Tax Rules, 1994 The Indian Wireless Telegraphy Act, 1933

Annexure -VI

RAILTEL CORPORATION OF INDIA LTD

Replies to the observations / comments made by Secretarial Auditors in their report

-------

Annexure-VII

RAILTEL CORPORATION OF INDIA LIMITED

Disclosure under Section 134(3)(m) of the Companies Act, 2013 as prescribed under Rule 8 of Companies Accounts Rules, 2013

(A)         Conservation of Energy

(B)         Technology Absorption

(C) Foreign Exchange Earnings& Outgo

-----

Report on Corporate Governance

The Board of Directors at RailTel is committed to following the principles of good corporate governance which is supplemented by the leadership as well as the deep rooted values that the company firmly stands by thereby promoting best practices, transparency and integrity throughout.
In accordance with DPE guidelines on Corporate Governance, this report on governance lays down the governance practices followed at the company.

1.      Corporate Governance Philosophy and Key Values

Highest levels of corporate governance can be observed across the practices and the day to day operations of RailTel.

RailTel believes that corporate governance is an evolutionary process that encourages the Company as a whole to constantly develop and enhance transparency and good governance so as to emerge as a role model for other companies.

RailTels code of Corporate Governance is to enhance ethical and transparent process in managing the affairs of the Company.

The Key Values of The Company formally adopted by the Board of Directors are:

         Zeal to excel and zest for change

         Integrity and fairness in all matters

         Respect for dignity and potential of individuals

         Strict adherence to commitments

         Ensure speed of response

         Foster learning, creativity and team work

         Loyalty and pride in the Company

Corporate Governance is strengthened by the fact that RailTel has a code of conduct (which is described in detail elsewhere in this section ) and the operations and accounts are audited at multiple levels-There is a process of Internal Audit, Statutory Audit, Cost audit and SecretarialAudit.Furthermore, the company is committed to maintain a transparent flow of information.

2.      Board of Directors

2.1 Composition of Board of Directors

Railtel is a Government Company within the meaning of Section 2 (45) of the Companies Act, 2013 as the President of India presently holds the entire equity share capital of the Company and as per Articles of Association of the Company, the power to appoint Directors vests in the President of India.

Presently, the Board of Directors of your Company is having optimum combination of Executive and Non-Executive Directors. Present strength of the Board of Directors is seven, comprising of three whole-time directors (i.e. Chairman& Managing Director, Director/NPM and Director/Finance), two Independent Directors and two Government nominated part-time official directors.

During the year under review, the Board of the Company was in want of requisite number of Independent Directors due to expiry of tenure of erstwhile Independent Directors since August, 2014. During the year, RailTel had requested Ministry of Railways to fill up the position of Independent Directors and followed up deliberately on the matter. Consequently, two Independent Directors namely Sh. AnupamAlok (DIN: 07486492) & Sh. Ashok Goel (DIN: 01247398) have been appointed on the Board of RailTel w.e.f. 01.04.2016.

However, the position of Woman Director on the Board is yet to be filled by Administrative Ministry for which several representations have been made to the Ministry.

2.2 Composition and Directorship(s) as the date of this report:

Board of Directors and their memberships of BoD/Committees as on date of this report is stated as below:

Note:The term whole-time director used in this report refers to functional/ executive directors. The term official indicates part-time Government nominated directors who hold office in the Government. The term non-official/ independent indicates part-time Directors who hold no office in the Government and are independent. Apart from the remuneration to directors as per the terms and conditions of their appointment and entitled sitting fee to part-time (non-official) directors, as detailed in this report. None of the directors has any material or pecuniary relationship with the Company which can affect their independence of judgment. The number of Directorships is within the maximum limit of 20 Companies (out of which maximum 10 Public Companies) as mentioned in Section165 of the Companies Act, 2013. Committees here denote Audit Committee, Nomination and Remuneration Committee and CSR Committee. The number of committee memberships/chairmanships of directors is within the maximum limit of 10 (ten) memberships and 5 (Five) chairmanships in accordance with the DPE Corporate Governance Guidelines, 2010.

2.3 Change in Directorships

During the period under review, there has been no change in the composition of Whole-Time Director, Part-time (Official) Directors and Independent Directors. However, two part-time non official Directors/Independent Directors namely Sh. AnupamAlok (DIN: 07486492) & Sh. Ashok Goel (DIN: 01247398) have been appointed w.e.f. 01.04.2016.

3.      Disclosure about Directors

As per the disclosures made by the Directors in terms of Section 184 of the Companies Act, 2013, no relationship exists between Directors inter-se.

Two part-time officials are from the administrative Ministry i.e. Ministry of Railways and thus related to the promoters being the Govt. of India, Ministry of Railways.

The appointment of Whole-Time Directors of the Company is done by the Government of India in the name of the President of India and not by the Company. Further, Government of India appoints Part-Time (Official & Non-Official) Directors with a fixed tenure. Further, sub section (6) & (7) of Section 152 of the Companies Act, 2013 dealing with retirement of Directors by rotation has been exempted in case of Government Companies where entire paid up capital is held by Govt. of India. Hence, it is not required to have an item in the notice of AGM for appointment of Directors as per Section 152 of the Companies Act, 2013 and determine not less than 2/3rd of the Directors of the Company whose period of office is liable to retire by rotation.

3.1 Profile of Directors

         Shri R.K. Bahuguna, Chairman and Managing Director

He is a qualified Electronics and Communication Engineer from I.I.T. Roorkee.  He started his career in Railways as IRSSE and had long association with Railways working in all fields mainly in Signalling and Telecom. He underwent training programmes abroad on several occasions.  He has to his credit more than 30 years of experience in the field of electronics and communications. 

He is associated with RailTel since October, 2001 and started RailTels operations for Western Region in Mumbai.  He was Director /NPM since July, 2007 and was responsible for all marketing of RailTel services and network planning of RailTel network. Thereafter, he was appointed as Managing Director with effect from October, 2011 for a period of 5 years and re-designated as Chairman & Managing Director with effect from 07.03.2013.

He is member of IRSE (London), Fellow of IETE and Fellow of IRSTE.  He has presented number of papers in Seminars and Conferences in India and abroad.   He has been elevated to the post of Managing Director of the Company in October, 2011.  At present, he has been re-designated as Chairman & Managing Director of the Company from March, 2013.

         Shri A. Seshagiri Rao, Director (NPM)

An Engineering graduate and a University topper in Electronics and communication Engineering from JNTU, Kakinda in 1981.  He is state ranker in SSC, Intermediate and a special merit scholarship holder of Govt. from SSC till the end of his education. He started his career in Indian railways as a Signal and Telecom engineer (IRSSE service of 1982 exam) in 1984 and worked in various capacities of Signaling and Telecom in Indian Railways.  He is a recipient of GMs and Railway Boards awards.

He joined RailTel in December 2001 and opened S. Region. The Region scaled new heights under his tenure and became the top performing region. He joined corporate office as ED/NPM in 2011 and became Director (NPM) in May 2012. He travelled extensively in India and abroad visiting counties like Singapore, Malaysia, China, Italy, Germany and USA. He attended a number of conferences and presented papers in various events.

        Shri N.K. Gupta, Director (Finance)

Shri N K Gupta is a member of Indian Railway Accounts Service 1982 branch.  He is a fellow member of Institute of Cost & Works Accountants of India and also a distinguished member of All India Management Association.  He also participated in 2nd National Management Programme being conducted by Management Development Institute and won ITC Gold Medal in Marketing and Business Planning and secured 2nd rank in National Management Programme.  He is also holding qualification of being an M.B.A. and MA (Economics).  He has to his credit more than 30 years of experience mainly in Indian Railways. 

Besides having held the post of FA&CAO at West Central Railway, Northern Railway, CLW etc., he also went on deputation to IRCON as GM (Finance). 

Mr. Gupta was awarded MRs Group award in implementing Long Range Decision Support System in Indian Railway.  He was also instrumental in implementing ERP system in IRCON.  He had travelled extensively in India and abroad including USA, UK, France and Germany.

        Shri Shobhan Chaudhuri, Part-time official Director/Nominee Director

Shri Shobhan Chaudhuri is IRSSE Officer of 1986 Exam batch having more than 25 years of varied working experience in the Signalling and Telecommunication field of Indian Railways and is currently working as Executive Director / Telecom Development, Railway Board. He has completed his B.E (Electronics & Telecommunication) from Government Engineering College, Jabalpur and was awarded gold medal for topping the University. He has also done his Masters in Business Administration. He has been deputed to attend Advance Management Programme conducted by EMLYON Business School, France and trained in Modern Railway Signalling and Telecommunications from JR East, Japan. He is a Fellow of Institution of Engineers (India) and a member of senate of IIIT/ Jabalpur.

        Shri Sanjay Upreti, Part-time official Director/Nominee Director

Shri Sanjay Upreti is an IRAS officer with more than 20 years experience and is currently working with Ministry of Railways (Railway Board), Government of India as Executive Director Finance (Commercial). He deals with a gamut of policy issues related to passenger and freight business and other areas of revenue generation for Indian Railways.

Prior to his current posting, he has worked in Railway Board as Director Finance (Commercial) and has served in Northern Railway as FA&CAO in various capacities. He has done M.Sc. from Lucknow University and holds a Diploma and M.Phil. in Public Policy from Punjab University.

        Dr.AnupamAlok, Part-time non official Director/Independent Director

Dr. AnupamAlok is freelance journalist, columnist and social activist. He has done Ph. D (Journalism) (1991), Master in Journalism (1987) and M. Sc (Physics) (1979) from Banaras Hindu University. He had held the position of the Chairman (State Minister Status) of Uttar Pradesh forest Corporation (including present Uttrakhand). He was also a founder Director of VishwaSamvad Kendra (Media organisation), Lucknow (UP). Besides this he had also worked as Lecturer and taught journalism in the Department of Journalism, Lucknow University, UP.

Presently he is working as media advisor and consultant to various media organisation and also hold the position as Trustee in Ramesh Chandra Vatra Charitable Memorial Trust, New Delhi.

He took charge as part-time non-official (Independent Director) in RailTel Corporation of India limited w.e.f. 01.04.2016.

        Sh. Ashok Goel, Part-time non official Director/Independent Director

Shri Ashok Goel, a qualified practicing Chartered Accountant by profession with rich experience in the field of Audit, Finance Management and Corporate Governance. He has worked in various reputed organizations, and he previously also held the position of OSD to MoS Chemical and Fertilizer (C & F) in the Ministry of Chemicals and Fertilizer.

He took charge as part-time non-official (Independent Director) in RailTel Corporation of India limited w.e.f. 01.04.2016.

4.      Board Procedure

The Board of Directors met 6 (Six) times during the financial year 2015-16.

Leave of absence was granted in terms of Section 167(1) (b) of the Companies Act, 2013 and granted in all cases of absence of Directors.

Your Company has implemented Secretarial Standard-1 on Meetings of the Board of Directors as issued by the Institute of Company Secretaries of India w.e.f. 1st July, 2015.

Detail of attendance of the Directors during 2015-16 is given below:

Sh. J.S. Marwah, Company Secretary, attended 6 (Six) Board Meetings of the Company held during the year 2015-16.

5.      Code of Conduct for Board members and senior management of theCompany and Key values for entire organization

The Company has in place a Code of Conduct for Board members and for Senior Management (including whole-time directors, Executive Directors and General Managers and above). These Codes came into effect from 30th November, 2007 and have been posted on the website of the Company www.railtelindia.com.

Furthermore, it is mandatory to affirm compliance to the code on an annual basis.
The declaration signed by MD affirming receipt of compliance with the Code of Conduct and Key Values from Board of Directors and members of Senior Management team during 2015-16 is placed given below:

All the members of the Board and Senior Management Personnel have affirmed compliance of the Code of Business Conduct & Ethics for Board Members and Senior Management for the financial year ended on March 31, 2016. 

Sd/-

                                    R.K. Bahuguna

    Chairman and Managing Director                  (DIN: 01748132)

6.      Remuneration of Directors

Being a Government Company, the whole-time directors are appointed by the President of India through the Ministry of Railways and draw remuneration as per Industrial Dearness Allowance (IDA) pay scales pre-determined by the Government and as per the terms and conditions of their appointment issued by the Government.

With the approval of the administrative Ministry i.e. Ministry of Railways, part-time non-official/ Independent Directors are entitled for sitting fee within the ceiling prescribed by Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 per meeting of Board or Committee thereof.  Besides, they are also reimbursed travelling, boarding and lodging expenses etc. in case any of them is stationed outside Delhi. During the year the sitting fees payable to the Independent Directors has been raised from Rs. 8,000/- to Rs. 20,000/- per meeting of the Board or committee thereof with the approval of Administrative Ministry.

The remuneration paid to Directors during the year was of Rs. 1.51 crores in the current year as against that of Rs. 1.54 crores in the previous year.

No stock option has been made available or offered by the Company during the year 2015-16 as the equity shares of the company are held only by the Govt. of India.

During the year under review, there were no Independent Directors on the Board of the Company. Hence, no payment has been made to the Independent Directors during the year 2015-16.

7.      Committees of BoD

7.1 Audit Committee

The Audit Committee of the Board, consisting of two part-time non-official (independent) Directors of the Company, was originally set up with the approval of Board of Directors as per the requirement under Section 292A of the Companies Act, 1956. This has been reconstituted as and when there has been a change in independent directors.

Due to completion of tenure of the Independent Directors since August, 2014, Audit Committee was in want of requisite number of Independent Directors during the year 2015-16. However, two Independent Directors were appointed on the Board of the Company w.e.f. 01.04.2016. Hence, as on date, the Audit committee comprises of two Independent Directors and one Part-Time official Director as under:

(a) Dr. AnupamAlok - Independent Director

(b) Sh. Ashok Goel - Independent Director

(c) Sh. Sanjay Upreti Part-Time official Director

Dr. AnupamAlok is the Chairman of Audit Committee.

7.1.1 Key Responsibilities of Audit Committee

Terms of reference for the Audit Committee as decided by the BoD is as under:

(a)    the recommendation for appointment, remuneration and terms of appointment of auditors of the company;

(b)   review and monitor the auditors independence and performance, and effectiveness of audit process;

(c)    examination of the financial statement and the auditors report thereon;

(d)   approval or any subsequent modification of transactions of the company with related parties;

(e)    scrutiny of inter-corporate loans and investments;

(f)    valuation of undertakings or assets of the company, wherever it is necessary;

(g)   monitoring the end use of funds raised through public offers and related matters.

(h)   evaluation of internal financial controls and risk management systems;

(i)     Any other matter as the Audit Committee may deem appropriate after approval of the Board of Directors or as may be directed by the Board of Directors from time to time.

7.1.2 Review:

The Audit Committee reviewed the financial reporting process during the year, and the Annual Financial Statements for the year 2015-16 were approved by the Board of Directors in its 89th meeting held on 30th June, 2016.

7.1.3 Meetings, Attendance and Composition of Audit Committee

During the Financial year 2015-16, the Audit Committee met four times i.e. on 24.06.2015, 18.09.2015, 04.12.2015 & 29.03.2016.

The composition and the attendance of the members at the meetings held during FY 2015-16, are given below:

*Sh. A. Seshagiri Rao was appointed as member of the Committee on 29.03.2016. No meeting was held during his tenure of appointment.

Note:

(a) The Director/Finance had attended all the meetings of Audit Committee as a Special Invitee.

(b) Sh. J.S. Marwah, Secretary to the Committee has attended 4 (Four) meetings held during the year 2015-16.

8.      Nomination & Remuneration Committee

A remuneration committee was constituted on 30th March, 2009, in terms of the requirements of Department of Public Enterprises- Office Memorandum dated 26th November 2008 for deciding the annual bonus / variable pay pool and policy for its distribution across executive and non-unionized supervisors, within the prescribed limits.  The Chairman of the committee was an Independent Director. 

During the year under review there were no Independent Directors on the Board of the Company. Hence, no committee meetings were held during the year.

Ministry of Railways has appointed two Independent Directors on the Board of the Company w.e.f. 01.04.2016. Accordingly, the Committee has been reconstituted and currently comprises of two Independent Directors and one Part Time official Director.

Also, pursuant to Section 178 of the Companies Act, 2013, the committee has been renamed as Nomination & Remuneration Committee with following term of references mandated by the Board:

(a) To decide the annual bonus/variable pay pool and policy for its distribution across the executives and non-unionized supervisors, within the prescribed limits.

(b) To identify persons who may be appointed in senior management in accordance with the certain criteria laid down and recommend to the Board their appointment and removal.

(c) To recommend to the Board a policy relating to the remuneration of other employees.

The Committee presently consists of:

(a) Dr. AnupamAlok, Independent Director

(b) Sh. Ashok Goel, Independent Director

(c) Sh. Sanjay Upreti, Part-Time official Director

Dr. AnupamAlok is the Chairman of Nomination & Remuneration Committee.

9.      CSR Committee

In terms of the provisions of Section 135 of the Companies Act, 2013, a CSR Committee was constituted on 19.03.2014 consisting of two Executive Directors and one Independent Director.

In terms of the provisions of the Companies Act, 2013 read with rules made thereunder, the CSR committee plays vital role such as:

         To formulate & recommend to the Board, a CSR policy indicating the activities to be undertaken as per schedule VII of Companies Act, 2013;

         To recommend to the Board CSR activity to be undertaken by the Company;

         To recommend to the Board, the amount of expenditure to be incurred to be incurred  on the CSR activity;

         To monitor CSR policy from time to time;

         To institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.

The CSR committee has been reconstituted from time to time to meet the requisite composition criteria. As on date of the report,

the Committee presently consists of:

(a) Dr. AnupamAlok, Independent Director

(b) Sh. N.K. Gupta, Independent Director

(c) Sh. A. Seshagiri Rao, Director/N PM

Dr. AnupamAlok is the Chairman of CSR Committee.

10.  Stakeholders Relationship Committee

The entire equity share capital of the Company is held by the Government of India and as such, the Company did not constitute any Stakeholder Relationship Committee.

11.  Whistle-Blower Policy

In compliance with laid down norms and to provide employees of RailTel an avenue to raise complaints, in line with commitment of RailTel to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication and to provide necessary safeguards for protection of employees from reprisals or victimization, RailTel has a Whistle-blower policy the details of which are available on the companys website.

12.  General Body Meetings

The Last 3 (three) Annual General Meetings were held as under:

13. Disclosures:

(a) During the year, there was no transaction of material nature with the Directors or their relatives that had potential conflict with the interest of the Company.

(b) The Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India in the preparation of Financial Statement.

(c) The Company has not made any public issue of shares or made any offer of shares in any manner to public. There has been no instance of non-compliance on any matter related to the capital market.

(d) The Company has a wholly-owned subsidiary by the name of RailTel Enterprises Limited. The turnover/net worth of REL did not exceed 20% of the turnover of net wealth of RailTel (Holding Company) during the year 2015-16. Therefore, it is not considered as a material subsidiary as per DPE guidelines.

14. Non Mandatory Requirements:

(a) Information to Shareholders: Apart from the annual report etc. sent to the shareholders before the Annual General Meeting, periodical reports on the progress of the Company both in physical and financial are submitted in the form of PCDO and other correspondence to the Govt. of India, Ministry of Railways  (100% holder of the equity share capital of the Company).

(b) Training of Board Members:The normal practice is to furnish a set of documents / booklet to a director on his / her joining the Board.  This includes data about the Company including its Boucher, Annual Report, Latest Unaudited financial results and MoU targets & achievement, Memorandum and Articles of Association.

(c) Evaluation of Board Members: Mechanism for evaluating the performance of part-time non official directors is in abeyance till all independent directors join the Board

RailTel being a Govt. company under the Ministry of Railways is covered under Railways is covered under Chief Vigilance Commission (CVC).  Therefore, as per CVC guidelines, a mechanism has been established in the Company for all its employees to report about any unethical behaviour, actual or suspected fraud to the CVO or the Managing Director directly.  No Employee has been denied access to the Audit Committee of the Board of Directors.

(d) Compliance Certificate:This report duly complies with the legal requirements in respect of data that should be disclosed in a corporate governance report.  The non-mandatory requirements have also been highlighted in the report to the extent they have been adopted by the Company. Information on various matters is being placed every quarter before the Board of Directors. The Quarterly Report about compliance with the corporate governance requirements as prescribed is also being sent to the DPE/Ministry within specified period after the end of each quarter.

15. General Shareholders Information

16th Annual General Meeting

16. Factual Calendar for Approving Matters pertaining to FY 2015-16

Approval of Annual Accounts by BoD:30th June, 2016

Adoption of Audited Annual Accounts by Shareholders:As per Date of AGM

17. Book Closure

In view of the fact that the shares of the Company are not listed on Stock Exchange(s), it did not resort to closure of the Register of Members and Transfer Books.

18. Dividend and Pay-Out Date

Dividend when declared is normally paid within 5 days.  During the financial year 2015-16 the Company had paid on 30.03.2016, an interim dividend to its shareholders of Rs. 15 crores on the paid-up share capital of Rs. 320.94 crores. The final dividend of Rs. 26.53 Crores has been recommended for payment to the shareholders.

19. Distribution of Shareholding

As on the date of this report the distribution of shareholding is as under:

* 9 shares are in the names of different nominees of Govt. of India

Transfer of shares is normally technical in nature, from one Government nominee shareholder to another consequent upon change of official, as the Government holds 100% of the shares. To affect this transfer, Company Secretary is the authorized officer, and no transfer is pending

20. Communication Address:

Management Discussion and Analysis Report

1.     Economy Overview

1.1 Macroeconomic Overview

The global economy has been facing significant challenges in terms of falling commodity prices, subdued growth, fluctuating financial markets and various geo-political issues. The IMF estimated global economic growth at 3.1% in 2015, a decline when compared to growth rate of 3.4% in 2014.Amidst the global slowdown, India has achieved an economic expansion of over 7% to become the fastest growing major economy in the world, surpassing China.

Indian economy grew at 7.6% (as per advanced estimates) in 2015-16 against 7.2% in 2014-15.The Industrial sector, particularly manufacturing, has grown due to a significant fall in inputs costs following the global decline of commodity prices. India is moving towards a stable economic environment due to moderation in inflation and a strict fiscal monitoring.Inflation has reached a comfortable range of 4-5%, after being around 8-10% for several years. The government has achieved fiscal control with the deficit being 4.1% of GDP in 2014-15.Campaigns like Make in India, Start Up India etc. have resulted in an increase in Foreign direct investment (FDI) by 29% during October 2014-December 2015 period when compared to the 15-month period before the launch.

Future events such as favorable monsoons, implementation of GST and improvement in corporate results will further support the expansion of our economy.

1.2 GDP

The GDP at constant prices has grown from Rs. 1,05,52,151 Crores in 2014-15 to Rs. 1,13,50,962 Crores in 2015-16 (as per Advanced Estimates). The Gross Value Add (GVA) at constant prices has increased from Rs.97,27,490 Crores in 2014-15 to Rs.1,04,37,579Crores in 2015-16 with 2011-12 prices as the base. GDP performance from the demand side consisting of consumption, investment and net exports has increased in 2015-16.

It is expected that the economy will grow at a rate between 7-7.5% in 2016-17 due to an improving macroeconomic environment and focus on government reforms.

1.3 Inflation, Monetary Policy and Interest Rate

The average Wholesale Price Index (WPI) inflation has remained negative since 2014. The WPI contracted by 3% (April-December 2015) vis-?is 2% growth per cent in 2014-15. The primary reason for this decline is a 12.6% de-growth in the power and fuel components of the index. Consumer Price Index (CPI) based inflation also reduced to 4.8% during April-December 2015 against 5.9% in 2014-15. This moderation in inflation was due to a drop in inflation of food articles as well as items in the non-fuel and non-food category.

The RBI continued to maintain an accommodative stance in reducing key rates based on easing inflation. It reduced the repo rate cumulatively by 100 basis points between June 2015 and April 2016.The repo rate currently stands at 6.5% , which is the lowest since March 2011. It has been able to achieve and maintain the intended inflation target through the monetary policy. In addition to several reforms in the banking sector, an agreement was also signed between the Government and RBI on monetary policy framework with an objective to maintain price stability.

1.4 Telecom Infrastructure Growth

The flagship initiatives like Make in India, Ease of doing Business, Start-Up India, Digital India, and Smart Cities, etc. will continue to provide necessary impetus to already growing  industrial and infrastructure sector. The telecommunications sector is an important drivers of socio-economic development. As per the Economic Survey approximately 33.4 million new telephone connection were added during April October 2015. Overall Tele density in the country increased from 79.4% in March 2015 to 81.5 %by October 2015. As part of the Bharat Net Project 79,994 km of optical fibre cables (OFC) and 1,03,643 Km of pipeswere laid up to 30th November, 2015. 

2.     Telecom Industry

2.1 Telecom Industry Characteristics

On the basis of the TRAI performance indicator reports, the Gross Revenue of Telecommunication industry during the December-March quarter of 2015 was reported at Rs. 65227 Crores and this has increased to Rs. 68335 Crores for the same period in 2016. At the service level, NLD Gross Revenues for the same period have reduced up to Rs. 8070 Crores in 2016 from Rs. 8923 in 2013.  

The total telecom subscribers (wireline + wireless) stood at 1058.86 million subscribers in the quarter ending March 2016 vs. 996.49 million subscribers in the same period in 2015. The mix for the quarter ending March 2016 stood at approximately 1033.63 million wireless subscribers (a 7 per cent increase) and 25.22 million wireline subscribers (a 4 per cent decrease) from the same period in 2015. The overall tele-density went up from 79.38 in March 2015 to 83.36 in March 2016.

The total internet subscribers in March 2016 was estimated at 342.65 million, up from 302.35 million in March 2015,          comprising 322.21 million wireless internet subscribers and 20.44 million wired internet subscribers showing a ~14 per cent increase and ~7 per cent increase from the same period in 2015, respectively. Indias total Internet subscribers per 100 population is 26.98. There is still a significant divide between urban and rural internet subscribers per 100 population figures that are currently 58.28 and 12.80 respectively.The significant growth in the revenues from the data in Indian Telecom sector is driven primarily by growth in data volumes (major operators have witnessed a CAGR of ~ 19-21 per cent between 2013 and 2016) and marginally by pricing correction (on account of removing discount offers and free usage). Severalfactors like falling handset prices, increasing rural penetration, rising demand for OTT applications, increasing demand for e-commerce, launch of 4G services, Launch of Government initiatives like Digital India, National e-governance plan have fuelled the growth in the data adoption rate in India. Moving forward, telecom operators would increasingly diversify their bouquet of services and offer Enterprise IT Services that maybe broadly defined to include cloud computing services, enterprise mobility, analytics and security services. Enterprise IT Services are going to be the main arena of play for RailTel in the coming future as it looks to offer the same by leveraging its Data Centers. As per Gartner estimates, for the year 2015 the Indian Data Center (DC) Market is estimatedat around Rs.14,000 Crores, with 47% contribution by Enterprise Networking and 33% by servers. This market is expected to grow at 20% YoY for the period 2013-18 basis where 30-40% of the market share amounting to nearly Rs. 3800 Croresexpected to be captured by 3rd party DCs. The 3rd party DC market is witnessing growth rates of 12 per cent.

2.2 Government Initiatives

Government thrust on initiatives such as the National e Governance Plan and Digital India are set to completely change the Indian Telecom landscape. The vision of Digital India is to make India a digitally empowered society and a knowledge economy. This is in line with the National Telecom Policy- 2012

(NTP-2012) announced with the primary objective of maximizing public good by making available affordable, reliable and secure telecommunication and broadband services across the entire country. NTP-2012 has called for unified licensing, full MNP and free roaming services.

Under its Make in India program, government has succeeded in providing much needed boost to manufacturing in Telecom sector by correcting inverted duty structure, providing levelled playing field to local manufacturers by imposing basic custom duty of 10% and also announcing many duty reductions on raw materials used in telecom equipment manufacturing. Other programs launched by Ministry of Telecom include Gyansetu, Public Internet Access Program and National Telecom M2M Roadmap and are aimed at empowering the end consumers by providing access to internet. Further government has eased the way for infusing foreign investments in Indian Telecom sector by increasing the FDI cap in telecom to 100% from 74%.  

2.3 TRAI Regulations

During the year, TRAI initiated various consultations on Differential Pricing for Data Services, Internet Telephony, Broadband through Public Wi-Fi Networks, Cloud Computing, Net Neutrality, Free Data, IP based Interconnection, Implementation model for BharatNet, Compensation to Consumers in event of Dropped Calls, valuation and reserve price of spectrum in 700, 800, 900, 1800, 2100, 2300 and 2500 MHz Band, many of which were followed by recommendations. A major directions from TRAI were the prohibition of discriminatory tariffs for data services and recommendation for crediting Rs.1 for each call drop in consumers account. However, Supreme Court has passed judgment on appeals filed by telecom operators, not to levy any penalty on operators for call drops, rather asked TRAI to tackle its root causes by improving infrastructure and technology.

3.     RailTel An Overview

RailTel Corporation is one of the largest neutral telecom infrastructure providers in the country owning a Pan-India optic fiber network on exclusive Right of Way (ROW) along Railway track. The OFC network presently reaches to over 4500 towns & cities of the country including several rural areas.  With its Pan India high capacity network, RailTel is working towards creating a knowledge society at various fronts. During the year, RailTel has launched a project to provide Wi-Fi service at 400 stations in country by 2019 and has planned to provide an integrated railway display network at 2000 stations providing necessary passenger information at stations. The portfolio of services provided by RailTel includes Data center& DR services, Tele-presence as a service, NLD services, IP-1 services, Internet and Broadband services on a pan-India basis.

Equipped with an ISO 9001, 20000-1:2011 & 27000 certification, RailTel offers a wide gamut of managed telecom services to Indian Telecom marketincluding Managed lease lines, Tower colocation, MPLS based IP-VPN, Internet, Data Center services, NGN based voice carriage services to Telecom Operators, Dark fiber leasing to MSOs/LCOs. The major customer segment for RailTel comprises of Enterprises, Banks, Government Institutions/department, Educational Institutions/Universities, Telecom Service Providers, Internet Service Providers, MSOs, etc.RailTel being aMini Ratna (Category-I)PSU is steaming ahead in the enterprise segment with the launch of various services coupled with capacity augmentation in its Core network.

A look at the past 5 years performance reveals RailTels healthy growth, standing at ~12 per cent, as it realizes returns from its existing services and marks its foray into the Enterprise IT space. RailTels growth rate is expected to accelerate further as it ventures into providing more value added Enterprise IT services. This bodes well for RailTel as the growth of RailTel is comparable to the average growth rate of the top three domestic neutral telecom players in India which is ~12 per cent.

RailTel now stands as the only telecom PSU, which is a 100 per cent debt free company and has a unique position in todays telecom sector. 

4.     Network Strength

RailTel has exclusive seamless Right of Way (ROW) along 63,000 KM of Railway Track passing through 7000 stations across the country. Using this ROW, RailTel has so far laid 47270 RKMs of OFC and OFC lit is 44318 RKMs till March 31, 2016. Works on another 6700 KMs are in various stage of execution. RailTels high speed OFC Backbone Network shall ultimately cover the entire railway route across the country.In high bandwidth backbone segment, RailTel ocupies a proud place with its unparalled network. The network has the ability to provide the mission critical customized connectivity platform for enhanced corporate efficiency and growth.

RailTel is creating PoPs at every Railway station enroute which are spaced at 8-10 Kms.  At all the stations enroute is deployedSTM-1/4 (155/625 Mbps) primarily to meet Railways requirement. The distribution layer network of STM-64/16 (10G/2.5G) spaced at 40-60 KMs is deployed to connect important towns/cities of the country. Presently this network is available at over 600 cities in multiple rings of STM-64/16.Further, RailTel has also provided n x 10G capacities on its Core network using DWDM at over 24000 RKM across 85 cities to provide Giga capacities capable to provide up to 400/800G.

During this year RailTel has upgraded the Mumbai-Chennai DWDM path on 100G capacity on single channel making it one of the few operators in the country to have such network. On same line other important metro routes are also under the process of bandwidth up gradation. On top of this network, RailTel has upgraded its MPLS network to provide n x 10G capacities on backbone with access routers having multiple of 2.5G/1G capacity. Access network with C/DWDM,STM-64/PTN is being provided in important cities to meet the connectivity requirements of serving Enterprise customers upto the premises.

5.     New Initiatives during the year:

RailTel since its formation has kept pace with the introduction of new services and technology to keep its relevance in the market. The new service portfolios shall in long run help in increasing revenues as well as fully supplementing the existing services to its customers. During the year also RailTel initiated some new services as detailed below:

5.1  Railway Station Wi-Fi Services

During the year, RailTel has been mandated by Railways to provide Wi-Fi facilities at A1, A & B category stations comprising around700 stations in the country. As reported in last years report, RailTel commissioned Wi-Fi facility at a few stations during the previous year on pilot basis, using one of the Telecom operators services as a limited period model. RailWire - the retail broadband distribution model of RailTel is the platform for distributing internet bandwidth through Wi-Fi.

During this year, RailTel has engaged Google as its technology partner for setting up high speed Wi-Fi network initially in approx. 400 stations in the country of A1 and A category. Under this partnership RailTel would be upgrading its backbone infrastructure to backhaul high speed connectivity of approx. 1 Gbps per station. Google would be providing the radio access network and RailTel shall be providing power and infrastructure. End consumers would be provided with the Wi-Fi services under Railwire the retail broadband model of RailTel. In the month of March, Mumbai Central Station became the first station of the country to provide Wi-Fi services to its commuters under this scheme.

The project aims at covering 100 major stations of the Country by the end of 2016 and remaining 300 stations are expected to be completed by next year. Once completed this project would be one of the largest public Wi-Fi Service provided in the world catering to over 10 million Indians daily.

5.2 Railway Display Network

During the year, RailTelwas also mandated to provide integrated Railway Display Network across 2000 railway stations of country, as mentioned by Honble Minister of Railways, in his budget speech. This project includes provision and integration of 100,000 screens across the stations which shall provide the passenger information through the centrally controlled system at RailTels data center. It would also create an opportunity to have an alternative revenue stream from the advertisements displayed on these screens installed. The system would also be very useful during disaster management and eventualities.

During the year, RailTel has started a pilot of this project with two firms across five stations each on Mumbai Ahmedabad and Allahabad Manikpur sections. Depending on the success of these pilot runs, RailTel aims to release an RFP for all India project by the end of next year, pilot is expected to get completed by December 2016.

6.     Existing Services

While the new areas of business open additional avenues for RailTel, RailTel continues its focus on the present services being offered.

6.1 NLD Services

RailTels focused efforts in bandwidth leasing segment has ensured continuing growth especially with Government departments, Enterprises, Banks, etc. and last year also saw positive traction in leasing of circuits by Telecom operators and MSOs. Selection of RailTel as one of the major partners in National Knowledge Network (NKN) has contributed significantly in revenues from NLD services as demand for higher capacities is expected in this network. The aggregated network capacity leased to various telecom & enterprise customers has grown by approx. 20% as compared to last year.

During the year, RailTel has been able to get many high volume orders for MPLS, VPN services especially from many prestigious PSUs, MNCs and Banks. Total revenue from the NLD segment (bandwidth leasing &VPN) reached at around Rs. 315.62 Cr. ending Mar16.

6.2 IP-1 Services

In Indian economythe growth shown by tower colocation business, translates to a good alternative for RailTel to monetize its towers infrastructure. Demand for the dark fiber has remained sluggish during the year, as the business of LCOs/MSOs has been impacted by the onslaught of the satellite services. Since LCOs/MSOs are the major customers of dark fiber for their digitalization needs, hence overall revenue and margin of this segment has taken a beating during this year.

Considering the lukewarm response from the market and availability of other better revenue generating options, RailTel has decided to have very limited focus on this business segment andis in the process of re-orienting its business giving due importance to managed services in partnership with a leading infrastructure provider who shall be responsible for management and marketing of RailTel towers to various customers. This shall help in further consolidating its market with existing customer arrangements with all mobile operators across India to lease these sites for collocation purposes. Till Mar16, RailTel has managed to generate Rs. 121.16 Cr. revenue from this segment.

6.3 ISP Services

RailTel is also providing Nationwide Internet services to all major customer segments like ISPs, Educational Institutions and various Government departments. During the year RailTel has bagged several high capacity orders from various Government departments, PSUs and educational institutes. Railwire broadband services has gained high growth momentum during the year, registering 3000 new subscribers each month, crossing 70,000 active subscriber base by Mar 16. Around 1850 Local Cable Operators has partnered to provide last mile connectivity to end consumers. Total revenues of Rs.78.82 crores (including RailWire accruals) during the year, showing a remarkable growth of around 97% over last year, with the major share of revenues coming from newly introduced Railwire business.

6.4 Service to Railways

RailTel was established with the vision to modernize Railways train control, operations and safety system networks. Over the years, RailTel has implemented various telecom & IT infrastructure projects as well as various Value Added Services for Indian Railways. This facilitated in spreading various Railways applications to remote and rural stations thus increasing customer satisfaction.

         Short haul connectivity (station to station): RailTel has created STM-4/STM-1 based network at every station to support data connectivity requirements fromIndian Railways such as supporting the transfer of PRS/UTS/FOIS/mission critical information along with carriage of voice traffic such as emergency communication during disaster management.

         Long haul connectivity: RailTel provides MPLS based Wide Area Network (Railnet) to support administrative data communication needs of various field organizations of Indian Railways. The network interconnects Ministry of Railways with 16 Zonal HQs, 66 Divisions offices, Production units, for sharing of information from all depts. RailTel is now in the process to connect all Tier-1 PRS center on MPLS VPN connectivity with the disaster recovery site of CRIS which shall increase the reliability of these links.

         NGN for voice traffic: All major telephone exchanges of Indian Railways are connected with future proof NGN technology. This infrastructure is very critical for day to day administrative functioning of Railways.

         Broadband: In addition, RailTel has commissioned DSLAMS on existing Railway exchanges to provide Broadband services to more than a lakh of homes and offices of Indian Railways in both urban and rural areas using the existing Copper wire last mile of Railways. This shall not only help Railway employees but shall also help in increasing Broadband penetration in the country in line with the National Telecom Policy.

         Facilitating CUG services: Further, RailTel has also facilitated by choosing an operator on an open process for Mobile CUG connections for 175,000 officers of Indian Railways which is arguably the largest CUG plan within India. It has greatly facilitated in seamless communication among the officials for improved train operations. In addition, RailTel has been carrying out OFC works for various Railways, the work which is entrusted by Railway Board.

Total revenue generation capacity of the services provided to Indian Railways has reached to the levels of Rs. 23 crores by the end of Mar16.

6.5 Data Center

With two Tier-III Data Centers in place at Secunderabad and Gurgaon, RailTel has received several orders from Central Government Ministries, State Government departments and PSUs for Data Center related services during the year. The provisioned space at Secundrabad is already working at the optimum levels and the expansion plans for the same are in process. The income from the Data Center services is expected to grow exponentially in near future.

6.6 Telepresence as a Service (TPaaS)

RailTels Telepresence service was launched in early 2015 and since then it has invoked tremendous interest amongst various customers. The customers are getting end to end support on infra, video hardware, network and unmatched 24x7 service from a single operator, i.e. RailTel hosting its services in DC with DR at its own Data Centers. It is being used extensively by Indian Railways for in house purposes; recently various inauguration events by Honble Minister of Railways and   MoSRwere conducted by using the services of Telepresence solution provided by RailTel. Tele-presence enables the rich experience of audio-visual communication and is seen as a future of collaborative platforms. Railtel is expecting some major orders coming its way in near future from its key customer for the Telepresence Services.

During the year, RailTel has leased out more than 80 units of TPaaS platform to various customers.

7.     Facilitating Government of India Initiatives

7.1 National Optical Fiber Network

The Government of India has approved the project for the creation of a National Optical Fiber Network (NOFN) for providing Broadband connectivity to all 2.5 Lac Gram Panchayats((GPs) which has now been rechristened as BharatNet.

RailTel has been allocated work consisting of 36000 GPs in 11 States comprising of Northern Eastern region states (Tripura, Meghalaya, Manipur, Mizoram, Nagaland& Arunachal Pradesh), Tamil Nadu (incl. Pondicherry)& Gujarat (incl. Daman & Diu and Dadra & Nagar Haveli).

Under the Phase-I of this project, RailTel is mandated to cover 8678 GPs covering 44 Districts, 225 Blocks across these states (excluding Tamil Nadu). As of Mar16, 90% of the work has already been awarded to RailTel and remaining is under process of award to RailTel. As of Mar16, 10949 KM of duct has been laid covering nearly 53% of GPs and 6747 KM of laid optic fiber is expected to cover nearly 35% of the GPs.  The state-wise detail of work completed under this project is as given in the Table-I.

7.2 USOF Project in North-East

RailTel has been awarded the work of creating fiber network in the six states of North East (Mizoram, Tripura, Meghalaya under NE-I & Arunachal Pradesh, Manipur & Nagaland under NE-II) connecting each of the District HQ to their respective SDHQs (Block/Tehsil). By the end of March 2016 work in NE-I has been awarded and 71.5% nodes were connected to the optic fiber while 59% of the nodes were commissioned under the phase-I. Under NE-II region 31% nodes got connected to the optic fiber and 26% nodes got commissioned. The State-wise details of work execution is provided in Table-II.

8.    

Blueprint for the Future

During the year, RailTel took up the task of creating a revised Business plan for next five years considering the changing dynamics of the industry. It is pertinent to have more services under RailTels portfolio to cover entire gamut of Enterprise services which shall provide further growth trajectory for RailTel. One of the consultants of RailTel, M/S KPMG worked on the revised business plan bringing out various areas of focus for RailTel between FY15 and FY19. As per the business plan, RailTel is targeting to double its revenue over next five year period. As per the projected income, RailTel shall grow to Rs. 1000 Cr. by FY 18-19.

RailTel now needs to focus in developing extended capabilities in the area of Data Center centric services such as managed services & cloud, CDN, project execution, etc. In some areas these can be developed effectively using partnership models ensuring risk mitigation while delivering such services. In order to realize the vision of being the preferred telecom solutions and services provider for knowledge economy, RailTel would be following athree pronged strategy of concentrating on optimizing the products & services bouquet, expanding the network and upgrading to a high capacity network, and modifying the
organization design. Execution of the strategy would be supported by state of the art improvements in internal business processes such as service assurance and new product development.

Products & Services: RailTel plans to enhance its focus on provision of services such as MPLS VPN, Internet Bandwidth, Telepresence, retail broadband (RailWire) that have high market attractiveness. At the same time, RailTel also plans to invest resources into building capability for higher margin services such as Data Center services like cloud & managed services and ICT projects.

Network enhancement: RailTel believes that its extensive network is its key differentiator in the market and hence a key value proposition in delivering services to its customers. RailTel thus plans to continue to invest in expanding its backbone network and deploying latest technologies to enable a high capacity next generation network in order to

deliver sustainedvalue to its customers and improve their experience with RailTels services.

Organization Design: RailTel plans to modify its organization design to suit changing business needs such as the Companys entry into enterprise IT services and execution of ICT projects & initiatives launched by the Central Government and various State Governments.

Internal Processes: RailTel believes that strengthening of internal business processes is essential for efficient customer service delivery & cost efficiency that in turn would enable savings for higher investments in the future. RailTel plans to improve key business processes such as service assurance, key account management, management information systems (MIS) to improve competitiveness. RailTel also wishes to institute a dedicated new product development process that would enable RailTel to roll out quality products and services in the fast paced technology industry.

9.    

Financial Performance

During the financial year 2015-16, total revenue earned by RailTel is Rs. 641 Crores. The operating profit earned during 2015-16 has been Rs. 194 crores while net profit earned has been Rs. 104 crores. RailTel has also paid an interim dividend of Rs. 15 Crores to the Ministry of Railways during the year under report.

From NLD (Bandwidth) services, RailTel earned Rs. 315.62 Crores during the year. While earning from IP-1 services has been Rs. 121.64 Crores which includes revenues from tower & rack colocation and Dark fiber leasing. Total earning from IP-VPN and IBW services has been Rs. 78.82 Crores. Under the new revised business plan, the target for the year 2015-16 was to achieve completion of total OFC network of 46000 RKM and increasing PoPs to 4600 and RailTel has successfully achieved this target so far it has laid 47270 RKM of optic network.

10.            Awards

During the year, RailTel bagged highest number of awards in its history of 16 years, it has received 8 awards for its excellent performance from various organizations.Some of the prestigious awards awarded to RailTel for various categories are as mentioned below:Most Innovative strategy for Broadband to Masses for its Railwire broadband business model  

11.            R&D Efforts

RailTel took the initiative to give the country its 8th Telecom Centre of Excellence. Accordingly, Dept. of Telecommunication, RailTel Corporation & IIT Roorkee signed a tripartite MoU for establishing RailTel IIT Roorkee Center of Excellence in Telecom (RICET). RailTel shall sponsor the TCOE for doing research & development in the field of ICT & Broadband Applications.

RICET will work on R&D in the field of development of infrastructure, applications, services & technology in the domain of broadband & ICT for providing affordable services to the citizens with high network availability. To start with RICET has taken up three projects in the areas of various utility applications/services being developed for the Indian market. Presently, following three projects have been taken up:

1.    Delivering Secured and Energy Efficient Multimedia streaming services anywhere and anytime for Mobile Broadband Users

2.    Agricultural Information System using Satellite image

3.      Tirthyatrisahayaka: Developing Sensor-Mobile-Cloud based e-application to Safeguard Pilgrims

Project on Agriculture Information System using Satellite Image has already undergone field trails and is ready for its commercialization. In addition to this, five more projects have been proposed by the faculties of IITR and are currently under consideration for sponsorship through the center.

12.            SWOT Analysis

13.  Human Resources

RailTel has made a conscious effort to keep evolving its practices in Human Resources and providing best experience and convenience to its employees. To improve on its convenience to employee score RailTel has implemented an online ERP solution, which enables employee to perform various work related activities online, facilitating them to avail in-house services within a stipulated timeframe. This initiative has benefitted most to the employees deputed in fields who can now avail various reimbursements online without a visit to territorial/regional offices.

Keeping pace with the requirements of future requirements and new service diversifications, RailTel is continuously recruiting experienced and qualified manpower from different fields. During the year, total 27 executives at various levels have been recruited in departments like Finance, IT, telecom, project management, marketing, security and secretariat services. To have cost effectiveness, 33 resources for project specific requirement have also been acquired on contractual basis during the year for short term. At the end of Mar16 total headcount of organization was 537 including 65 officers on deputation from Ministry of Railways.

RailTel Corporation is one of the largest neutral telecom infrastructure providers in the country owning a Pan-India optic fiber network on exclusive Right of Way (ROW) along Railway track. The OFC network presently reaches to over 4500 towns and cities of the country including several rural areas.  RailTel  with  strong nationwide  presence  is committed  to  bring  cutting  edge  technology and offer innovative services to the Indian Telecom market. With its Pan India high capacity network, RailTel is working towards creating a knowledge society at various fronts. Equipped with ISO-9001-2008, ISO-27001:2005 and ISO 20000-1:2011 certification, RailTel offers a wide gamut of managed telecom services to Indian Telecom market. The service includes Managed lease lines, Tower colocation, MPLS based IP-VPN, Internet, Data Center services, NGN based voice carriage services to Telecom Operators, Services to Internet Service Providers, MSOs, Enterprises, Banks, Government Institution/departments, Educational Institutions/Universities, etc. RailTel being a “Mini Ratna (Category-I)”PSU is steaming ahead in the enterprise segment with the launch of various services coupled with capacity augmentation in its Core network. Your company stands as the only telecom PSU, which is a 100% debt free company and consistently profit making PSU in telecom sector.

(A)                                                       (i) Steps taken or impact on conservation of energy   (a)         Use of efficient controlled lighting system using LEDs at Data Center in Gurgaon. (b)         Replacement of old batteries & chargers with new tubular gel batteries for better energy back up & energy conservation (c)         Company is in process of conducting Energy Audit from an independent outside agency for targeting 40% energy saving. (ii) Steps taken by the company for utilising alternate sources of energy NIL (iii) Capital investment on energy conservation equipments NIL      

(A)         Technology Absorption   (i) Efforts made towards technology absorption   ·           Use of Telepresence solution for effective working across all geographical locations ·           Use of high capacity equipments like DWDM, PTN, MPLS for reducing cost of bandwidth creation (ii) Benefits derived like product improvement, cost reduction, product development or import substitution Product improvement & cost reduction (iiii) In case of imported technology (imported during the last three years reckoned from the beginning of thefinancial year)- NA (a) Details of technology imported NA (b) Year of import NA (c) Whether the technology been fully absorbed NA (d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof NA (iv) Expenditure incurred on Research and Development   Nil    

(A) Foreign Exchange Earnings& Outgo   Sl No. Particulars FY 2015-16 FY 2014-15 i. Foreign Exchange Earnings   NIL NIL ii. Foreign Exchange Outgo   Rs.56.11 Crore Rs.28.42 Crore    

In terms of the provisions of section 134(3)(c) of the Companies Act, 2013, as amended, your Directors confirm that: a)      in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b)      the directors had selected such accounting policies and applied them 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 at the end of the financial year and of the profit and loss of the company for that period; c)      the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d)     the directors had prepared the annual accounts on a going concern basis; and e)      thedirectors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.thedirectors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.