Tata Teleservices (Maharashtra) Ltd

Dear Members,

The Directors have pleasure in presenting the 16^th Annual Report togetherwith the audited financial statements of the Company for the year ended March 31, 2011 andother accompanying reports, notes and certificates.

Financial Results

The financial results of the Company's operations during the year are given below:

The total income for the year was Rs.3,150.87 Crores which included the profit on saleof the wholly owned subsidiary of Rs.834.93 Crores and telecom revenue of Rs.2,248.74Crores, which was higher by 8%. Other income for the year was lower at Rs. 67.20 Crores asthe scheme of subsidy from Department of Telecommunications ("DoT") under theUniversal Service Obligations scheme ended on March 31, 2010. Operating expenses increasedby 5%, mainly due to costs associated with the expanded rollout of GSM service besidesoperations of 3G services.

The increase in expenses would have been higher but for the reduced handset subsidy andtighter control on expenses. The Company made a provision for Contingencies of Rs.185.60Crores towards the outstanding claims/litigation. The Company reported EBIDTA ofRs.1,146.77 Crores (including profit on sale of subsidiary Rs.834.93 Crores), as comparedto the previous year's EBIDTA of Rs.540.51 Crores. The depreciation was higher as itincluded an amount of Rs.184.81 Crores towards additional depreciation after re-estimationof the balance useful lives of certain items of plant and machinery. After taking intoeffect of the above, the Company made a profit after tax for the year of Rs.49.90 Crores.

India has the second largest telecom network in the world after China. As of April'2011, there were 861 million telephone connections in the country of which 827 millionwere wireless connections. Approximately 15-20 million mobile connections are being addedevery month. The national mobile tele-density is around 72 per hundred. The revenue growthhowever, is not in proportion to the subscriber growth, as many subscribers are havingmultiple SIMs from different operators which is facilitated by easy availability of thehandsets supporting multiple SIMs.

The Company launched many services over the years involving significant investments andthe new services like GSM and 3G are in the initial phase of gestation period. It is notuncommon for telecommunication service providers, due to high operation costs andinherently capital intensive industry, to have longer gestation period. The accumulatedlosses of the Company at the close of the year have exceeded its paid up capital andreserves, however, the Company is consistently making operating cash profits over the pastfew years.

The Company had availed of short term loans for payment of 3G licence fee and roll outof 3G network. The Company has got its Business Plan appraised by IDBI Bank Limited and isin the process of replacing the short term loans with the new long term loans. InMay'2011, the Company has tied up for long term External Commercial Borrowings of USD 350Million for refinancing of short term loans availed for 3G spectrum fees and for capex.

Products and Services

The Company holds two Unified Access (basic + cellular) Service Licences("UASL"), one for Mumbai Metro and the other for Maharashtra circle i.e. Rest ofMaharashtra and Goa. The current subscriber base of 16.85 million consists of CDMAwireless subscribers, GSM wireless subscribers and wireline subscribers.

During the year, the Company focused on increasing its retail presence to achieve abetter market penetration for its various products and services. The highly successfullaunch of GSM services under Tata DOCOMO brand has given a significant boost to subscriberadditions. The Company's total subscriber base as on March 31,2011 stood at 16.85 million,an increase of 30% over the previous year. The Company's wireless subscriber base in Restof Maharashtra circle crossed 10 million, and the Company now has the 3^rdlargest subscriber base in this geography. The Company's wireless subscriber base inMumbai circle crossed 5.9 million subscribers and the Company now has the 2^ndlargest subscriber base in this geography. During the year, the Company registered highestincremental wireless subscriber additions of 14.3% and end of period market share of16.7%.

CDMA & Wireline Services

The Company offers High Speed Internet Access ("HSIA") service under the TataPhoton Plus brand across Mumbai and major towns in Maharashtra and Goa. During the year,the Company increased its focus on CDMA's inherent data capabilities. Five additionalTowns in Rest of Maharashtra circle, now have Photon plus wireless broadband services,offering speeds upto 3.1 Mbps. Value Added Services ("VAS") of Photon TV and thenew Photon Music that ride on photon access, are innovative services for customers.

The Company continued to focus on value added service offerings. Data and VAS revenueshave now grown to account for 27% of the wireless revenues. The Company introduced severalattractive product and service propositions such as Mobile TV, Music downloads andPersonalised Caller tunes. The Company was the first to launch a Wi-fi Router Hub onPhoton plus and also on a dual hub supporting Photon plus and 3G.

Tata Photon plus, HSIA has been awarded the coveted "Product of the year2011" for best innovation under the category Wireless Mobile Broadband Category.Earlier NDTV had rated

Tata Photon as the Gadget of the year 2010. It also received in June '2011, six outdooradvertising awards.

As you know, the Company obtained 3G spectrum in Rest of Maharashtra circle, where itwas the first and fastest operator to launch 3G services in record time with a range ofnew services like Video Calling, Mobile TV and App Stores. The Company did not pursue itsbid for 3G spectrum in Mumbai due to what it considers to be unreasonably high bids. TheCompany would however continue to address the market requirements through Tata Photon pluswhich is strongly established as a leader in high speed data access. HSIA has also beenmade available on a growing range of mobile handsets. The Company is also exploring theoptions for 3G roaming with other operators.

The Company has laid over 2,175 kms. of buried fibre across Mumbai and already connectsover 20,000 buildings with broadband services. To expand the network further at optimalcost, the Company has entered into co-build agreement with other operators. The Companywould continue to make investments to strengthen its Digital Mumbai offerings and wouldincrease voice and data penetration in already wired buildings.

The Company is a Category A (National) ISP Licensee and offers a broad range ofInternet-related services including Digital Subscriber Lines ("DSL"), leasedlines and dial-up internet access. The Company, along with Tata Teleservices Limited("TTSL"), has a national footprint for its Tata Indicom conference call service,with 15 Points of Presence across the country for providing local access to conferencebridges.

The Company has also made significant investments in the Enterprise and Small andMedium Enterprise ("SME") business segment. It has further expanded its wirelinepresence in Mumbai, Maharashtra & Goa and added a range of Enterprise products andservices to become a complete provider of all enterprise needs. The Company continues tohave significant presence in the wireline segment.

Network quality and Customer service

As per the Indian Telecom Services Performance Indicators reports by TRAI, theCompany's network is congestion free for last nine consecutive quarters.

The Company continues to improve on the quality of its customer services. Brand TataDOCOMO offers easy and simple tariff plans, and easy to navigate customer care IVR anddirect access to the customer care executives. The Company also scored a unique first,with the introduction of a Performance Guarantee for CDMA, for high concern areas of calldrops, bill complaint resolution and waittime at the call center.

GSM Services

Tata DOCOMO introduced many innovative Value Added Services to customers, across Voice,Text & Data verticals. "My song" (Reverse Caller tune) was a first and aunique proposition in telecom space from Tata DOCOMO, which allows users to listen totheir favourite songs when they call others. Keeping the consumers in mind Tata DOCOMOalso introduced Jobs & Matrimony search on mobile which allows users to search theperfect Job and the right match for themselves. The Pay for what you use concept wasextended to GPRS services i.e. pay per site plans. Innovative packaging of Talktime andData was also done.

During the year, Tata DOCOMO was the first to launch 3G services. We now offer 3Gservices in 19 towns in Rest of Maharashtra circle. In 3G Services, Tata DOCOMO offershigh speed mobile broadband, Multimedia & Video calling facility and other video basedservices like mobile TV, video on demand etc.

Network Rollout

During the year, the Company successfully expanded GSM wireless services under 'TataDOCOMO' brand to reach 898 towns in Maharashtra and Goa. The Company has also entered intointernational bi-lateral agreement with more than 140 operators across different countriesto offer seamless International roaming facility to Tata DOCOMO subscribers.

The 3G rollout by the Company is one of the fastest by any standards with integrationof complex network elements.

The Company has also now spread CDMA voice and Photon Whiz services in 1,184 towns andprovides HSIA service in Maharashtra and Goa.

During the year, the Company has focused on operational efficiency and quality controlmeasures with a constant endeavor to further improve its network quality. The Company hasalso successfully unlocked the bandwidth potential in its existing transmission networkand offered transmission bandwidth to the new operators.

Quality and Processes

The Company has undertaken ISO 9001:2008 certification to demonstrate its capability toconsistently provide services that enhance customer satisfaction through effectivedeployment of a quality management system. The Company was the first basictelecommunication provider to get the coveted ISO 9001:2000 certification in August 2002.In the recent Surveillance audit for ISO 9001:2008 Certification conducted by TUV India inOctober 2010, the Company was awarded a Certificate of Continuation for ISO 9001:2008with'Nil' Non-Conformance.

The Company along with Tata Teleservices Limited has also recently been awarded the ISO27001:2005 Certification, for Information Security Management System.

The Company is also taking active part in the Tata Business Excellence Model("TBEM") process, with knowledge sharing and appropriate support being extendedby Tata Quality Management Services ("TOMS"), a division of Tata Sons Limited.

The model enables the leadership to set direction of the organization based on itsVision, Mission and Values and to strategize its business priorities based on a variety ofenvironmental factors like competition, industry, technology and regulatory changes aswell as internal capabilities.

Human Resources

The Company assigns the highest degree of importance to its human resources which arevery critical for a service organization like ours. The Human Resources ("HR")function of the Company constantly strives to achieve the mission of the Company bycreating a favorable work environment and by institutionalizing a performance orientedwork culture.

The Company has laid out strong processes to ensure it attracts and retains the righttalent.

A rewards & recognition scheme for various awards is in place to encourageemployees perform better.

The Company promotes a culture of innovation and has provided various forums (portals)for employees to post innovative ideas and suggestions. The Company recently won the bestinnovative idea award under the Tata Innovista program.

The Company strongly believes that coaching employees removes barriers and boundariesand this culture emphasizes individual and team achievement towards the commonorganizational goal.

Regulatory Developments and Important Litigation

There have been many regulatory changes, prominent amongst which are implementation ofMobile Number Portability across India on January 20, 2011, auction of 3G spectrum,initiation of process to formulate a comprehensive National Telecom Policy("NTP") 2011 and National Frequency Allocation Plan 2011.

Detailed information on the regulatory developments and important litigation has beenprovided in the report on Management Discussion & Analysis of Financial Condition andResults of Operations which forms part of this Annual Report.

Directors

Effective May 20, 2010, Dr. Mukund Rajan resigned from the position of Director andManaging Director of the Company to take up responsibility in another Tata company. Mr.Anil Kumar Sardana was appointed as Managing Director of the Company with effect from May20, 2010. Mr. Anil Kumar Sardana resigned from the position of Managing Director of theCompany to take up responsibility in another Tata company with effect from close ofbusiness hours of January 31, 2011. Mr. Anil Kumar Sardana continued as a Non-Executivedirector of the Company till May 19, 2011.

The Board and the Company record its sincere appreciation of the valuable servicesrendered and contribution by Dr. Mukund Rajan and Mr. Anil Kumar Sardana especially forbringing in considerable operational efficiency and advantages arising out of associationwith and working in tandem with TTSL, this has resulted in improving cost effectiveness byway of combined purchase negotiations, marketing campaigns and brand building, regulatoryaffairs. The Board appointed Mr. N. Srinath as the Additional Director and ManagingDirector of the Company w.e.f. February 1, 2011. The resolutions for appointment of Mr. N.Srinath as Director and Managing Director of the Company are included in the Noticeconvening Annual General Meeting of the Company. The Board recommends these resolutionsfor your approval.

In accordance with the provisions of Article 71 and 72 of the Articles of Associationof the Company, Mr. Amal Ganguli, Mr. D. T. Joseph and Prof. Ashok Jhunjhunwala retire byrotation at the ensuing Annual General Meeting of the Company and, being eligible, offerthemselves for re-election. The Board of Directors recommends their re-election.

Subsidiary

The Company had a Wholly Owned Subsidiary i.e. 21st Century Infra Tele Limited("CITL") which was sold to Wireless - TT Info Services Limited (now ViomNetworks Limited), the passive infrastructure subsidiary of TTSL, for net consideration ofapproximately Rs.956 Crores in May '2010.

Dividend & Appropriations

In view of the accumulated losses, the Directors regret their inability to recommendany dividend for the year under consideration. No appropriations are proposed to be madefor the year under consideration.

Cost Audit

Pursuant to the Order No. F. NO.52/26/CAB-2010 dated May2, 2011 by Cost Audit Branch ofMinistry of Corporate Affairs read with Section 233B of the Companies Act, 1956('Act") and subject to the approval of the Central Government, the Board of Directorsof your Company has appointed M/s. Sanjay Gupta & Associates, Cost Accountants, asCost Auditor of the Company fortheaccountingyear2011-12.

Internal Auditors

The Board has empanelled select firms for handling various internal audits based ontheir experience effective April 1,2011.

Statutory Auditors

M/s. Deloitte Haskins & Sells ("DHS"), Chartered Accountants, the presentstatutory auditors retire at this meeting and are eligible for re-appointment. The AuditCommittee and the Board recommend their re-appointment.

Directors' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Act, the Directors, based on therepresentations received from the operating management, confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards havebeen followed and there are no material departures;

2. They have, in the selection of the accounting policies, consulted the StatutoryAuditors, and have applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the loss of the Company for the period;

3. They have taken proper and sufficient care, to the best of their knowledge andability, for the maintenance of adequate accounting records in accordance with theprovisions of the Act, for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

They have prepared the annual accounts on a going concern basis.

Fixed Deposits

The Company has not accepted any deposits within the meaning of Section 58A of the Act,and the rules made thereunder.

Balance Sheet Abstract and General Business Profile

Information pursuant to Department of Company Affairs' notification dated May 15, 1995,relating to the Balance Sheet Abstract and General Business Profile of the Company isgiven in the Annual Report for information of the shareholders.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The disclosures as required underthe Companies (Disclosure of Particulars in the Reportof the Board of Directors) Rules, 1988 are given below:

(i) Energy Conservation:

a. Electricity is used for the working of the Company's telephone exchanges and othernetwork infrastructure equipment. The Company regularly reviews power consumption patternsacross its network and implements requisite improvements/ changes in the network orprocesses in order to optimize power consumption and thereby achieve cost savings.

b. Reduction of Diesel Generator ("DG") running during power cuts through DGon delay Management system.

c. Periodic energy audit and implementation of audit recommendations.

(ii) Technology Absorption: The Company has not imported any technology. The Companyhas not yet established separate Research & Development facilities.

(iii) Foreign Exchange Earnings and Outgo:

Particulars of Employees

The particulars of employees as required under Section 217(2A) of the Act, read withthe Companies (Particulars of Employees) Rules, 1975 forms part of this report. However,in pursuance of Section 219(1)(b)(iv) of the Act, this report is being sent to theshareholders of the Company excluding the aforesaid information. Any Member interested inobtaining a copy of such information may write to the Company Secretary at the registeredoffice of the Company.

Corporate Governance

A report on Corporate Governance appears after this report. A certificate from M/s.Deloitte Haskins & Sells, Chartered Accountants with regard to compliance with thecorporate governance code by the Company is annexed hereto as Annexure I and forms part ofthis report.

The Company has fully complied with all mandatory requirements prescribed under Clause49 of the listing agreements with the Bombay Stock Exchange Limited ("BSE") andthe National Stock Exchange of India Limited ("NSE"). The Company has alsoimplemented some of the non-mandatory provisions.

Corporate Sustainability

The contribution of the Tata group towards nation building has been far-reaching. As isthe ethos of large Tata conglomerate, the Company too, has made small but significantcontributions to this holistic canopy of corporate sustainability.

The Company has always promoted the highest standards of corporate ethics andcompliance in dealing and conduct of its operations. The Company is committed to pursuinginitiatives relating to environmental preservation, management of natural resources,community health, education and empowerment of children.

In keeping with the Tata Climate Change policy, the Company seeks to continuously findways to reduce carbon footprint and leverage telecommunications reach for initiativesaimed at the benefit of society and the environment including sharing of towerinfrastructure resulting in substantial reductions in energy consumption, encouraging useof audio and video conference instead of travel for reduction of carbon dioxide emissions,mountain greening, introduction of highly efficient power sources and air-conditioningequipment at its network centers, encouraging customers to switch to an e-bill instead ofreceiving printed bills, statements and receipts, encouraging employees to re-usestationery, introduction of print manager to discourage wasteful paper usage.

The Company generates awareness about various NGOs and their area of work. The Companyinserts ad campaigns of the NGO in the monthly bills sent out to its customers. Theinitiative was launched to encourage people from different walks of life to engage in actsof giving be it in cash, time, skills or simple acts of kindness. Prior to the generalelections, the Company launched a campaign urging voters to cast their votes after makingan informed choice. The Company uses its wide subscriber network to create awarenessthrough alerts say hightide timings during the monsoon via SMS alerts, and public servicesissues like Swine Flu prevention.

Unemployed youth from under-privileged families in rural areas, across variousdistricts of Maharashtra, are chosen to undergo training to become electrical and telecomwiremen in a training program designed and supported by the Company. The telecom wiremen'straining was conducted by the Company's engineers and managers. All the trainees werethereafter referred to franchisees/contractors in Company's areas of operations, and theCompany also helped them get suitable jobs in their respective talukas.

The Company has in place a Safety Policy. The Safety Policy aims at ensuring zero harmto employees and material within and outside the office premises. The initiatives taken bythe Company included:

• Safety sessions for all employees;

• Fire Mockdrill once in every 6 month;

• Percolation of Safety Guidelines and Knowledge Management on health and safetythrough mailers (Do's& Don'ts during emergency, Ergonomic, Road Safety, articlesrelated to Health, Safety during Fire, Flood and Earthquake etc.).

Acknowledgements

The Directors wish to place on record their sincere appreciation of the assistance andsupport extended by the employees, customers, financial institutions, banks, vendors,Government and others associated with the activities of the Company.

To the members of Tata Teleservices (Maharashtra) Limited

We have examined the compliance of conditions of Corporate Governance by TataTeleservices (Maharashtra) Limited for the year ended on March 31,2011, as stipulated inClause 49 of the Listing Agreement of the said Company with the stock exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of theManagement. Our examination was limited to procedures and implementation thereof, adoptedby the Company for ensuring compliance of the conditions of Corporate Governance. It isneither 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 explanationsgiven to us, we certify that the Company has complied in all material aspects with theconditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

We state that no investor grievance is pending for a period exceeding one month againstthe Company, based on the records maintained by the Investors Services Department and ascertified by the Compliance Officer of the Company.

We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with which the Management hasconducted the affairs of the Company.

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITHTHE COMPANY'S CODE OF CONDUCT

This is to confirm that the Company has adopted a Code of Conduct for its employeesincluding the Managing Director. In addition, the Company has adopted a Code of Conductfor its Non-Executive Directors. Both these codes are available on the Company's website.

I confirm that the Company has in respect of the financial year ended March 31,2011,received from the Senior management Team of the Company and the Members of the Board adeclaration of compliance with the Code of Conduct as applicable to them.

For the purpose of this declaration, Senior Management Team means the Chief FinancialOfficer, employees in the General Manager cadre and above and the Company Secretary as onMarch 31,2011.