ortel communications ltd Management discussions

Global Economy Overview

Its becoming increasingly clear that COVID-19 has permanently changed many of the media and entertainment habits and preferences of consumers, while increasing the velocity of the forces buffeting industry participants. The organizations that will thrive in the new world will do so by moving assertively with purpose and strategic intent. Here are five trends to watch in 2021 as we are grappling with the second wave of the pandemic, which seems significantly more intense in terms of its impact.

The industry is under renovation

EY research released at the beginning of 2020 - before the global pandemic hit in full force - found that 50% of media and entertainment executives believe they can no longer rely on traditional business models to drive future growth, highlighting the imperative for strategic and operational reinvention.

The impacts of COVID-19 on the economy and consumer behaviour accelerated and amplified long - running changes, including streaming growth, cord cutting, fading movie attendance and an increased focus on the price-value relationship embedded.

In consumer decision-making on media spending. COVID-19 also resulted in shorter-term cyclical shock. Lockdowns and travel restrictions walloped businesses that rely on the physical aggregation of people - most notably sports, concerts, conferences, and content production. Industry leaders are responding by taking bold steps to reposition their companies to align with new market realities.

As we move into 2021, the sweeping operational restructuring actions already announced by several media majors will take hold throughout the industry. A primary motive is cost reduction, of course. Releasing cash for redeployment into growth investment is essential. However, the changing dynamics in the industry is forcing companies to rethink their fundamental structure and go to market strategy with their products and services.

The steps taken by media and entertainment companies to streamline the cost base and optimize the operating model for efficiency and effectiveness will remain on center stage as the entire industry plots a course through disruption.

2020 presented us with monumental challenges - as individuals, as businesses, as society. However, there were some silver linings as well. Several digital trends accelerated their trajectory, fed by growth in broadband, personal devices and smart televisions, and the time and inclination to try online services.

Consequently, M&E businesses had to accelerate some of the changes that they had started and to relook at their customer engagement models as new demand-side patterns emerged.

This new reality also placed increased importance on understanding consumer behaviour to better engage with them Indias diversity and scale will continue to fuel the growth of traditional media, but equally exciting is the fact that there are a number of new and big opportunities for M&E businesses.

And were already seeing the Industry embrace these changes and chart a new growth path.

Being Home Bound is leading to increase in TV Engagement across Countries Globally

Younger Audiences watch online while gen x and Boomers watch TV: US & UK

% who say theyve started consuming or are consuming more of the following since the outbreak	All %	U.S. %	UK %	Gen Z %	Millennials %	GenX %	Boomers %
Broadcast TV	38	39	34	24	35	45	42
Online Videos (e.g. YouTube / TikTok)	38	39	30	51	44	35	11
Online TV / streaming films	37	38	30	38	41	38	21
Online press	29	30	23	21	36	31	15
Music-streaming	28	30	18	28	35	27	12
Video games	24	25	21	31	31	19	10
Radio	22	23	18	17	26	23	15
Livestreams	22	24	12	17	30	21	9
Books / literature	19	20	17	18	20	21	13
Podcasts	13	13	8	11	20	10	4
Physical press	11	12	7	9	19	7	7
None of these	15	13	20	10	10	17	24

Source: Global Web Index surveyed 4,000 Internet users between the ages of 16-64 across the U.S & UK to find out how the COVID-19 outbreak has changed their media consumption

Audience Definitions

Gen Z -16-23 years	Gen X - 38-56 years
Gen Y - 24-37 years	Babv Boomers - 57-64 vears

Global economy

Global economy is emerging from the collapse triggered by the pandemic; the recovery is projected to be subdued. Limiting the spread of the virus, providing relief for vulnerable populations, and overcoming vaccine-related challenges are key immediate priorities. Global economic output is expected to expand 4 percent in 2021 but still remain more than 5 percent below its pre-pandemic trend. Global growth is projected to moderate to 3.8 percent in 2022, weighed down by the pandemics lasting damage to potential growth.

Aggressive policy actions by central banks kept the global financial system from falling into crisis last year. Abundant credit issuance, and a recovery in equity market valuations amid positive news about vaccine developments. Government support packages have encouraged continued credit extension to corporates. The rebound in industrial production across commodity exporters has been tepid, with production remaining below pre-pandemic levels.

INDIAN ECONOMY OVERVIEW

The Indian M&E sector fell by 24% to I NR 1.38 trillion (US$ 18.9 billion), in effect taking revenues back to 2017 levels.

	2019	2020	2021E	2023E	CAGR 2020-23
Television	787	685	760	847	7%
Digital media	221	235	291	425	22%
Print	296	190	237	258	11%
Online gaming	65	76	99	155	27%
Filmed entertainment	191	72	153	244	50%
Animation and VFX	95	53	74	129	35%
Live events	83	27	53	95	52%
Out of Home media	39	16	22	32	27%
Radio	31	14	23	27	24%
Music	15	15	18	23	15%
Total	1,822	1,383	1,72 9	2,23 4	17%

All figures are gross of taxes (INR in billion) for calendar years : EY estimates

The last quarter of 2020 showed some improvement in revenues for most segments and we expect the M&E sector to recover 25% in 2021 to reach INR1.73 trillion (US$ 23.7 billion) and then to grow at a CAGR of 13.7% to reach INR 2.23 trillion (US$ 30.6 billion) by 2023.

While television remained the largest segment, digital media overtook print, and online gaming overtook a disrupted filmed entertainment segment in 2020.

Digital and online gamings were the only segments which grew in 2020 adding an aggregate of INR 26 billion and consequently, their contribution to the M&E sector increased from 16% in 2019 to 23% in 2020. Other segments fell by an aggregate of INR 465 billion. Largest absolute contributors to the fall were the filmed entertainment segment (INR 119 billion), print (INR 106 billion) and television (INR 102 billion). The share of traditional media (television, print, filmed entertainment, OOH, radio, music) stood at 72% of M&E sector revenues in 2020.

Television - The largest segment saw a 22% fall in advertising revenues on account of highly discounted ad rates during the lockdown months - though ad volumes reduced only 3%. In addition, it also witnessed a 7% fall in subscription income, led by the continued growth of free television, reverse migration and a reduction in ARPUs.

Digital subscription - 28 million Indians (up from 10.5 million in 2019) paid for 53 million OTT subscriptions in 2020 leading to a 49% growth in digital subscription revenues. Growth was led largely by Disney+ Hotstar which put the IPL behind a paywall during the year, increased content investments by Netflix and Amazon Prime Video and launch of several regional language products. In addition, 284 million Indians consumed content which came bundled with their data plans.

Future outlook

2020 has propelled these changes and promises to propel the Indian creative economy to double in size by 2025 and drive a much larger contribution to Indias GDP goals.

This is the time for the sector to forego holding on to old ways of thinking and working, and its sense of complacency about whats possible in the future. The opportunity is discontinuous. The answer to what we can do is nonlinear - we need to disrupt our old business models, our approach, our solutions, our marketing, and our distribution.

While we expect the M&E sector to rebound in 2021 and double to around INR 2.68 trillion by 2025, the recovery of various segments will vary. We expect that different segments will take different periods of time to regain their 2019 (prepandemic) revenue numbers. We estimate the following periods for recovery, assuming no further setbacks: One to two years: TV, film, music.

The share of regional content will increase to 60% of television consumption in 2025 from around 55% in 2020 and will increase to around 50% of OTT consumption from 30% in 2019.

The need for interactivity and loyalty will multiply and become a way of life for reality and fiction content as television enters an era of connected interactive consumption. Loyalty programs and bundling of linear + digital content / channels will enable higher time spent within a network.

Television

Television advertising declined by 21.5% in 2020, though ad volumes fell just 3%. Subscription de-growth of 7% was mainly due to reduction in ARPU and a reduction of two million pay TV homes.

	2019	2020	2021E	2023E
Advertising	320	251	304	345
Distribution	468	434	456	502
Total	787	685	760	847

INR billion (gross of taxes) / EY analysis

We expect television segment revenues to exceed 2019 levels by 2022. While television households will continue to grow at over 5% till 2025, we expect growth to be driven by connected TVs which could cross 40 million by 2025 and free television which could cross 50 million, thereby making core television a more massified product.

MSO registrations increased only by 4% to 1702 during 2020 as compared to 11% in 2019 and ongoing impact of COVID-19 other service like DTH and HITS are remain at the 5 and 1 Respectively.

The Indian market is serviced by four paid DTH providers and one free DTH provider as of 2020. Operating platforms include VideoconD2H+,TataSky, Airtel, Sun Direct and Free Dish. InCable continues to operate the lone HITS service.

Television subscription revenues in India decreased 7% in 2020, mainly due to a fall in ARPUs and reduction in the paid subscriber base by around two million television homes. While 2020 was impacted by COVID-19, we expect the subscription base for traditional unidirectional television services (cable, DTH, HITS) to keep growing as penetration levels increase over the next few years.

Active paid subscriptions reduced by 2 million in 2020 COVID-19 led to a decline in the pay TV Universe

While DTH and HITS were relatively stable in 2020, cable saw a decline of 3% compared to 2019 numbers. The fall in paid subscriptions is attributed to metro subscribers who went back to their hometowns and subscribers who did not renew their subscriptions specifically due to lack of fresh content on major GECs and live sports. We observed 131 million paid subscriptions for which broadcasters earned revenues in 2020, as compared to 133 million we had reported in 2019.

End-customer prices (ARPU) decreased

End-customer prices declined 5% on average to reach INR 226 net of taxes as compared to INR 239 in 2019. Industry discussions indicate that over 70% subscribers had opted for DPO designed packages in the beginning of 2020 before the lockdown, but that number reduced as subscribers started to let go of channels they did not wish to watch which caused a fall in ARPU.

DPOs implemented different strategies for customer retention - including suggesting lower cost DPO packages cheaper than the ones originally subscribed to by users.

However, Overall time spent on TV increased 7% over 2019. Overall impressions increased significantly over 2019 levels with people spending more time Indoors. While HSM saw impressions grow by 80 billion, south markets grew 35 billion. But increase in viewership did not translate into additional ad volumes.

Television viewership increased during lockdown and was at an all-time high during March 2020 on account of the lockdown, but stabilized by December 2020 to normal levels.

COVID-19 led to a decline in the pay TV universe

	2019	2020
Cable	75	73
DTH*	56	56
HITS	02	02
Free TV	38	40
Total	171	171

Television subscriptions (in million) : Industry discussions, billing reports, TRAI data, EY analysis.

*Net of temporarily suspended subscribers

Majority of regional languages saw a rise in minutes of viewing (Language growth)

TV Viewership increase 10% across all age group Hindi and Tamil, the two largest languages by viewership, saw a rise in their total minutes of viewing by over 10%. Gujarati, Punjabi and Bangla were the top gainers in viewership share during 2020. English was the most impacted with a fall of 28% followed by Assamese and Bhojpuri. In the sports genre, an absence of live sports for over three months and deferment of the IPL resulted in a drop of 67% viewership during the first half of 2020 with the decline continuing on account of cancellation/postponement of live sports events in primetime alone, the drop for the sports genre was much higher at 79%. However, IPL Season 13 provided a much-needed revival push. IPL Season 13 in 2020 surpassed the viewership of IPL Season 12 by 23% with a total of 400 billion viewing minutes as compared to 326 billion viewing minutes for the 2019 edition.

Future outlook

We expect television to grow to INR 847 billion by 2023. We expect television advertising in 2021 to be close to 2019 levels, growing over 20% to reach INR 304 billion on the back of a line up of fresh sports content, regional channel rate increases and continued growth of free television. Subscription income would grow 5% to reach INR 456 billion on the back of fresh content, several marquee sports events and pending movie releases, though ARPUs may face regulatory hurdles.

Television segment revenues are expected to grow at a CAGR of 7% to reach INR 847 billion by 2023 driven by increased base of subscribers as households continue to get televised and TVs price competitiveness as against [OTT + data] alternatives.

Television will go mass

	2020	2025
Pay TV (Cable + DTH + HITS)	131	141-145
Free TV	40	50+
Unidirectional TV	171	191 +
Connected TV (bi-directional)	5+	40+
Total TV subscriptions	176	231 +

EY Estimates : Millions of Subscriptions

Pay TV will continue to grow marginally as states like UP, Bihar, Rajasthan and West Bengal get Electrified. However, more new users will enter the Free TV market as Free Dish channel count increases to around 200 by 2022 (from 120 in 2019), providing a low-cost advertising opportunity to Marketers.

Growth of unidirectional TV will be far outstripped by the growth of connected TVs, which could reach 40 to 50 million connected sets by 2025, on the back of 46 Indian cities which have a population of over a million each and a total population of 122 million which can be wired-up more easily for broadband as well as telcos partnering with LCOs to drive broadband services. This means that overall TV connections will keep growing at a healthy pace of over 5% per year to cross 71% of Indian households by 2025.

Regional television will drive ad rate growth

Companies like Zee have already started to segment the HSM market with defined offerings for Punjabi audiences. Regional ad rates have been rising over the last two years faster than HSM and we expect the same to continue. This will be driven by increase in regional content consumption on TV to 60% of total TV consumption, improved quality and higher quantity of content on regional channels.

End-consumer pricing will be benchmarked to OTT

For television subscription to grow, it would need to remain cost efficient as compared to the price of [OTT + data] packages. Consequently, the impact of data prices and bundling of popular OTT packages will be the benchmark against which television subscription will need to be maintained.

Sports will become table stakes for broadcasters

The move of sports programming to prime-time (through day- night matches, evening scheduling, etc.) can have an impact on GEC viewership. Having a sports product in the bouquet will become increasingly important for broadcasters.

Indian Broadband Industry

Internet penetration increased 11% to reach 795 million, of which 747 million had broadband access. This lead to second in terms of number of telecommunication subscriptions. Also, India is one of the biggest consumers of data worldwide. As per TRAI, average wireless data usage per wireless data subscriber was 11GB per month in FY20. 45% of Indias population over 15 years of age had access to a smartphone by December 2020.

Indians spent 4.6 hours a day on their phones, increased data consumption by 15% over 2019 and aggregated 450 million online entertainment consumers in 2020.

Subscriptions Revenue were 1,174 million in December 2020 as compared to 1,172 million in December 2019. Urban subscriptions dipped marginally while rural subscriptions grew to 45% of total subscriptions in 2020. The tele-density number in India is now 86%, but is heavily skewed to 138% in urban areas and just 59% in rural areas of India. However, Internet subscriptions grew 11% between December 2019 and December 2020. Yet, just 68% of telecom subscriptions accessed the internet. 94% of those accessing the internet used broadband.

	Dec 2019	Dec 2020
Total internet subscribers (a = b + c )	719	795
Narrow band subscribe rs (b)	57	48
Broadband subscribers (c)	662	747
Urban internet subscribers (b)	450	482
Rural internet subscribers (c)	269	313

Number of internet subscribers increasing at a fast pace in

Broadband subscribers grew ~13% during 2020, Wired broadband stand at is 22 Mn (3%) of total base, However rapid an increase of 16% compare to Dec 2019 (19 Mn), Subsequently decline in narrow band subscriptions fell 16%. Urban internet subscriptions grew 7% while rural internet subscriptions grew significantly faster at 17%.

Broadband subscribers reached 747 million

Subscribers	Dec 2018	Dec 20196	Dec 20207
Wired broadband	18	19	22
Wireless broadband	507	643	725
Total broadband	525	662	747

Smart device growth continued unabated:- Industry estimates indicate that there were over 20 million smart TVs in use in 2020, and this is expected to increase to over 25 million TVs by 2021. However, they also indicate that just 5 to 7 million of these were connected to the internet. Desktop, laptop and PC users increased from 94 million in 2019 to 101 million in 2020 as laptop and PC shipments to India fell barely by 1% in 2020 to approximately 18 million units.

Content consumption

Overall consumption trends Indians spent 4.6 hours a day on their phones. At 4.6 hours per day, Indians came third in the world, for the most amount of time spent on phones in 2020. Indians downloaded 24 billion apps in 2020. India remained the second largest market by app downloads in 2020, Indians downloaded almost 24.3 billion apps in 2020, a growth of over 20% over 2019. In terms of revenue, India lagged many smaller markets.

The Indian audience grew 15% in 2020 to reach 450 million & watch the most online video each week at an average of 10 hours 54 minutes, an increase of 30% from 2019. Indians spent more than 25 hours on average per month on YouTube and Around 448 million Indians were active on social media in 2020, a growth of 21% over 2019. Social media is now used by 32% of Indians aged 16 years and above, up from 29% in 2019. Most social media users subscribed to multiple platforms but did not use each platform daily.

Satellite-based Narrowband-IoT Network

In December 2020, BSNL, in partnership with Skylotech India, announced a breakthrough in satellite-based NB-IoT (Narrow band-Internet of Things) for fishermen, farmers, construction, mining and logistics enterprises.

Investment in National Infrastructure Pipeline (NIP)

The government has targeted an investment of close to I NR 3.2 trillion in digital infrastructure over the next six years from FY20 to FY25 as part of the recently proposed NIP, of which the private sector is expected to contribute 71%. The NIP has set a goal of digital services access for all along with a two-fold strategy to achieve this goal, namely: a) 100% population coverage for telecom and high-quality broadband services for socio-economic empowerment of every citizen; b) digital payments and e-governance infrastructure for delivery of banking and public services.

On September 21,2020, Prime Minister, launched a project to connect all 45,945 villages in Bihar with optical fibre internet service. This project will be completed by March 31,2021 at a cost of Rs. ~1,000 crore (US$ 135.97 million); Rs.640 crore (US$87.01 million) of capital expenditure will be funded by the Department of Telecommunications. In December 2020, the Union Cabinet, chaired by the Prime Minister, approved the provision of submarine optical fibre cable connectivity between Mainland (Kochi) and Lakshadweep Islands (KLI Project).

Relaxed FDI norms

The government has focused on liberalizing the FDI regime for both telecom and media and entertainment sectors, to attract investment for adequate infrastructure development. FDI limits for the telecom sector were eased in 2013 while those for the media and entertainment sector were eased in 2015 and 2016. In June 2016, FDI limits in teleports, DTH, cable networks, mobile TV, Head End in the Sky broadcasting service dark fibre, electronic mail and voice mail and cable networks were completely lifted, allowing 100% FDI through the automatic route. Further, there were no express provisions in relation to digital media in the FDI policy until 2019. However, in December 2019, FDI up to 26% has been permitted under the government approval route for uploading/streaming of news and current affairs, through digital media.

Opportunities across segments in the industry

1. Untapped rural markets: - By October 2020, rural tele density reached 58.94%, up from 43.05%, in March 2016.

2. Rising internet penetration: - Internet penetration is expected to grow steadily and is likely to be bolstered by Government policy. Number of broad band subscribers reached 687.44 million in FY20. To encourage cash economy, Indian Government announced to provide free Wi-Fi to more than 1,000 gram panchayats.

3. Growing Cashless Transactions:- In order to overcome the cash related problems being faced by people, due to demonetisation, Paytm launched a service through which consumers and merchants can pay and receive money instantly, without an internet connection. Payments on unified payments interface (UPI) hit an all-time high of 2.23 billion (by volume), with transactions worth ~Rs.4.16 lakh crore (US$ 56.95 billion) in December 2020.

Company Overview

Ortel Communications Limited ("the Company") is a regional renowned & fastest growing Multiple System Operator (MSO) providing digital Cable television (CATV) and high speed Broadband services provider presently focused in the Indian states of Odisha and Andhra Pradesh/Telangana. It has always been the Companys vision to provide Cable TV, Data Service and Internet Telephony on a single cable platform to households. Company has built a State-of-Art two-way communication network for Triple Play services (Video, Data and Voice Capabilities) having HFC network (combination of Optic Fibre in the backbone and coaxial cable in the distribution network) with control over the "Last Mile". It pioneered the primary point cable business model in India by offering Digital Cable Television, Broadband and VAS services. It currently providing Cable TV and Broadband business in Odisha, with a presence in two other markets with direct to consumer business model, popularly known as "Last Mile" business model in the Cable TV universe having 90% of the subscriber base under own network. Currently, business of the Company is broadly divided into (i) Cable Television Services comprising of Digital cable television services including other value added services such as HD services, NVoD, Gaming and Local Content; (ii) Broadband services; (iii) FTTH internet services (iv) Leasing of fibre infrastructure; and (v) signal up linking services. It has legal "Rights of Way" for laying network cable and capable of providing broadband at speed of up to 100 mbps through use of cable modem with DOCSIS 3.0 technology. It has grown both organically and inorganically through buyout of network equipment, infrastructure and subscribers of other MSOs and LCOs. Ortel is a pioneer in providing Convergence Communication Services in the Country. It has revolutionized the Entertainment and Broadband Technology in the Eastern India.

Ortel is the first MSO to offer upto 100 Mbps Broadband in the state of Odisha using the DOCSIS 3.0 technology. DOCSIS 3.0 allows for a much higher throughput compared to the earlier versions by using multi-channel bonding simultaneously for download/upload. Ortel has withdrawn all schemes of Broadband services where the speed is less than 1Mbps. It offers uninterrupted high speed & truly unlimited data experience to its customers across Odisha. The broadband business had been growing over the years with having more than 1000 subscribers as of March-21.

Financials Review

Standalone revenue decreased to Rs.70.70 Crore against Rs.89.32 Crore of FY 2020, Profit Before Tax (PBT) is Rs.(21.96) Crore as against Rs.(34.85) Crore in the FY 2020 and Profit After Tax came in at Rs.(21.96) Crore against Rs.(34.85) Crore in the FY 2020.

With the implementation of the New Tariff Order in the year, 2019, the Company has been successful to convert its some of LCO base into Prepaid Business Model, which is aimed to enable the Company to reap future benefits in terms of increased collection efficiency and debt control. The Company has launched online collection system and also launched language-wise regional packs to enhance customers experience and choose the required channels according to their needs.

Operational Review

The Financial Year 2021 was a challenging year for your Company. The operational performance has been affected due to both external and internal factors like an extremely severe cyclonic storm Amphan hit the Odisha coast on 16th May, 2020. This cyclone has damaged our network, equipments etc. and also caused severe damages to all our facilities in the coastal region and partial damages in peripheral areas. It took 2 to 3 months to restored our network, as a result of which all customers in Odisha (irrespective of whether the local area was affected by Cyclone or not) were without signal. Also the global pandemic of the novel coronavirus disease (COVID-19) resulting in slower growth both in terms of revenue and profitability. On external side, lower Average Revenue per User ("ARPU") realizations from the addressable C&S base has impacted the performance. Increased competition has impacted industry in general affecting badly broadband performance of the company.

The companys performance has also been affected due to delay in collections, higher competitive intensity in the market place as well as restriction in movement due to COVID- 19 pandemic.

In view of the above, your company has achieved a de growth in revenue both for cable TV and broadband business year on year basis. Full digitization of subscribers will also help improving the collection controlling the debtors days. Members may also note that, the Company has demonstrated a strong B2C last mile business model in its core market which is profitable and expects to replicate the same in the new markets also. Having the unique Last Mile model and with adequate steps being taken for aggressive digitization and various other business plan, the Company is very hopeful of improved performance in the coming Financial Year.

Current Business Trends and Future Outlook

Cable Television Business

Company provides Cable television service in the state of Odisha and AP/TS. The cable TV business strategy for FY21 focused around taking forward transformation brought by the implementation of the New Tariff Order (NTO) in March 2019. Transparency to end customers and providing them with the freedom to watch television of their choice and enabling LCOs has been the driving force behind all our industry-first initiatives in FY21.

Since Ortel is still under NCLT and no investment plan was under place in enhancing our systems but only on the basis of technical capabilities to ensure uninterrupted service to esteemed consumers, the new initiatives like automated reminders and online payment systems were taken this year. After consolidating its business at various locations in Odisha, your Company has taken further steps to consolidate its market base in AP/TS.

After mandatory digitization under phase III and Phase-IV, the Company has made a growth in its digital subscriber base. Further, in addition to SD (Standard Definition) series, your Company is also providing high quality HD (High Definition) and has also plan to take care to provide high quality HD services to its customers. The Company also holds registration certificate as prescribed in the amended Act to operate as MSO in DAS areas from Ministry of Information & Broadcasting.

Broadband Business

Ortel continues to be one of the players in the Data Services market in Odisha by providing high speed services at competitive prices. The Company presently provides both retail and corporate broadband services in major towns in the state of Odisha. While the competition for data services has intensified especially from wireless operators who offer the advantage of mobility, high speed service still remains the unique selling proposition for Ortel Broadband. Your Company has successfully implemented DOCSIS 3.0 high speed broadband service and during the year under review we had significant growth in FTTH Business. We have substantially increased the download limit from 250GB to 500GB under 25Mbps Plan; 500GB to 1250GB under 50Mbps Plan, looking at the market scenario & to compete with the Major Telecom Players. We have an aggressive ATL and BTL Marketing Plan in place & expect to grow the Broadband/FTTH figures in the coming financial year. Also new competitive plans, higher data speed and better technology are in pipeline for the coming financial year.

Your company is also using HFC architecture, which can easily be converted or upgraded to provide FTTH service at very nominal incremental capital expenditure. With the implementation of new technology and high speed data service, the Company will manage to sustain its existing subscriber base.

Your company is well equipped with its upgraded Network Operating Center (NOC) with inbuilt redundancy of key elements in the system to support and sustain the higher level of customer base and service.

Your company has set up a state of the art integrated Call Center to address customer queries and complaints with 24X7 help line. Company has also a network monitoring system through which major network failures are monitored and steps taken to restore the services early. Your company also has a grievance redressal system in place to resolve the complaints.

Other Value Added Service

The Company also provides choice of other value added services over the same cable leading to customer convenience and satisfaction with a range of services HD services, NVoD and other interactive video content. Currently Company provides some HD channels on its network. The Company also offers bundled services such as Cable TV + Broadband + HD to its customers. All these services are expected to drive business in future.

Internal Control Systems and their Adequacy

Ortel continues to maintain an effective system of internal control for facilitating accurate, reliable and speedy compilation of financial information, safeguarding the assets and interests of the company and ensuring compliance with all laws and regulations. The companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations, which provide, among other things, reasonable assurance of authorization, recording and reporting of the transactions of its operations in all material respects and of providing protection against significant misuse or loss of the assets of the company. The company has appointed M/s SBN & Associates a firm of Chartered Accountants, as its Internal Auditors, who conduct internal audit for various activities. The reports of Internal Auditors are submitted to the Board/Resolution Professional, which further reviews the adequacy of internal Control system.

Human Resources

Human Resources are of paramount importance for the sustenance and growth of any organization and it is specifically true for the technically sensitive broadband sector. Your company continues to give maximum thrust to its Human Resources Development. Employee relations remained cordial at all your companys locations. Your Directors/Resolution Professional takes this opportunity to record their appreciation for the outstanding contribution of all employees of your company.

During the year, the Company maintained harmonious and cordial industrial relations. No man-days were lost due to shut down and lockdown due to COVID-19 pandemic, strike, lock out etc. As on 31st March 2021 there were 520 permanent employees on the rolls of the company.

Disclosure by Senior Management Personnel

None of the Senior Management personnel/Resolution Professional has Financial and Commercial transactions with the Company, where they have personal interest that would have a potential conflict with the interest of the Company at large.

Risk Management

The Company takes proactive risk management initiatives to identify and mitigate the relative risk associated by various risk measures. The company has taken comprehensive and adequate insurance policies for its electronic equipment, vehicles, network assets and buildings etc to cover different types of potential risk that may affect the operational performance of the Company.

Preference Risk-Implementation of the New Tariff has increased customer focus in the M&E sector. Ortel is offering and upgrading its offering in line with its customers preferences. With more focus on HD content, it enables Ortel to provide customers with better experience.

Migration Risk-Difficulty in attracting new customers impact the business growth and sustainability. Ortel initiated providing online payment facility to the customers.

Content Risk-The Company depends on the third-party i.e., the Broadcasters for content. If it fails to provide content from popular Broadcaster to its customers, its credibility may be significantly impacted. The Company having a better negotiating power with the Broadcaster, Ortel still holds this risk as under the New Tariff Regime, increase in content cost may affect the Company.

Potential Risk

Nature of Risk	Definition and Impact
Regulatory Risk	Increased regulations or change in existing regulations could potentially impact the operation of the company
Industry Risk	Competition from competitors may adversely affect the operating performance of the company.

Health, Safety and Environment

The company has taken adequate measures for health and safety of its employees through Group Insurance covering life, accident and disablement, Employee Deposit Link Insurance and ESI. Your Company also gives utmost priority on health and safety of its employees and is committed to ensure high standard work practice in compliance with applicable laws and regulations.

Your Company also conducts training programmes for its staff and employees, and carries out regular safety audits in relation to the operations. All field employees are provided with safety equipment. Regular safety audits are conducted at each location to monitor the implementation of the safety guidelines issued by the Company and a compliance report is also prepared every month. The company also believes in environmental safety and zero hazards.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectation may be "forward-looking" within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.