gtl ltd share price Management discussions

At the outset Shareholders are requested to read the Management Discussion and Analysis along with other sections of the Annual Report for having a full understanding.

BUSINESS SNAPSHOT

GTL Limited ("GTL" / "the Company"), is a Network Services Company, offering services and solutions to address the Network Life Cycle requirements of Telecom Operators and Tower Companies. Currently it has GTL Infrastructure Limited ("GIL"), an IP 1 License Category Tower Company as its Customer. Its network services portfolio includes Network Operations and Maintenance and Energy Management as under:

Network Operations and Maintenance

GTL provides Network Operations and Maintenance services that deliver assured Network uptime and availability to its customer. These services include:

• Corrective and preventive maintenance of the network

• Capex sizing and planning services

• Remote monitoring and trouble ticketing

• Technical support and process management

Energy Management

Telecom Networks require uninterrupted access to power for seamless operation. Management of Energy (Power and Fuel) plays an important role to ensure reliable network operations at optimum costs.

GTLs Energy Management Solutions provide high availability of power to telecom sites efficiently. They are delivered through –

• Technical audit for optimum power consumption

• Monitoring utilization of sources of energy and plugging leakage thereof

• Driving modernization with energy efficient equipment

• Integrating non-traditional or alternate sources of energy with reduced CO2 footprint For further details on the various steps taken by the Company in implementing and operating various energy conservation measures, members are advised to refer the write up under the head ‘Conservation of Energy in the Directors Report.

INDUSTRY STRUCTURE AND DEVELOPMENTS i) Telecom Industry comprise of :

• Telecom Equipment Suppliers.

• Telecom Service Providers.

• Telecom Infrastructure Providers. ii) Telecom Service Providers comprise of :

• Telecom Operators / Mobile Service providers.

• Broadband Service providers.

• Internet Service Providers.

• Mobile Virtual Network Operators.

Business Model of Telecom Service Providers

Telecom companies generate revenue via. subscription mobile services, fixed landline and wireless broadband services. These companies offer a high-speed broadband facility, wireless network and mobile security-related services to businesses.

Mobile telecom services revenue includes income earned via. mobile data usages such as SMS, mobile data access, and mobile phone calls. Mobility segment i.e., wireless and mobile subscription services also contribute to the revenue of telecom companies. These companies charge from big multinationals for premium services such as video-conferencing and high-security private networks. Telecom companies also source revenue from other telecom companies by providing them with network connectivity.

Note:

Recently, a new sector in telecom services has emerged, that of Satellite Communication based Service Providers. There is a great interest generated in this space with Bharti backed One Web and Reliance Jio along with Luxembourgs SES having obtained a Global Mobile Personal Communication by Satellite ("GMPCS") License for LEO, MEO and GEO satellite services, respectively, for services in India. Inmarsat and BSNL have Inflight and Maritime Communications ("IFMC") License (Source: ET Telecom February 27, 2023). iii) Telecom Infrastructure Providers

The Telecom Infrastructure providers can be classified as under:

• Operator owned tower companies.

• Towers owned by Government operators.

• Independent tower companies.

Telecom towers form the backbone of wireless networks and provide last mile connectivity to subscribers. Tower requirements usually depend on Network Coverage (which, in turn, depends upon geographical area, population density and spectrum bands) and Network Capacity i.e. maturity of wireless industry, cellular and data penetration and data usage per subscriber, quantum of spectrum and wireless data technology (whether it is 2G/3G/4G/5G).

Business Model of Telecom Infrastructure Providers

As the number of tenants on a tower increase, tower companies ("TowerCos") are able to generate incremental revenue and EBITDA. The key driver of tower revenue growth is tenancy. Apart from tenancies, TowerCos revenues are also influenced by the pricing charged per tenant.

Operating cost components for the tower business are site rentals, repairs and maintenance, security charges, insurance and cost of outsourced resources. As major expense items are fixed in nature, cost for additional tenant is minimal. Hence, the tenancy ramp-up results in a significant percentage of incremental revenues, ROI and cash flow. To gain market penetration and 4G + 5G network expansion at optimal cost, Telcos continued to rent towers from TowerCos, thereby considerably reducing costs while allowing them to focus on their core. Renting towers from TowerCos enabled these Telcos to go to market within a short time.

Note:

GTL Limited currently provides Network Services mainly to telecom infrastructure providers i.e. Telecom Tower companies. Presently GTL Limited has only one customer i.e. GTL Infrastructure Limited.

iv) Telecom Industry Scenario & Key Development Telecom Industry Scenario

• Telecom Revenues

Indias telecom industry revenue inched up 1.3 per cent quarter-on-quarter (QoQ) to 569 billion in Q4FY23 but slowed to 9 per cent year-on-year (YoY) from 15 per cent YoY in December 2022, driven mainly by a modest uptick in average revenue per unit (ARPU), amid muted industry net adds. Overall, implied ARPU, at 166 (10 per cent YoY), finally inched up above the pre-RJio launch (June 2016) levels. However, telcos spending at 0.8 per cent of nominal GDP, remains significantly below pre-RJio launch levels (1.4 per cent) and provides a large runway for growth.Industry revenue inched up 14 per cent YoY to 2.2 trillion in FY 2023, driven primarily by 16 per cent YoY growth in implied ARPU on the benefits of the December 2021 tariff hikes and subscriber mix improvements. (Source: BW Online Bureau – June 14, 2023)

• Telecom Reforms

- Indian Telegraph Right of Way (Amendment) Rules,

2022 will facilitate faster and easier deployment of telecom infrastructure for enabling speedy 5G roll-out. These amended rules, inter-alia, incorporate provisions for usage of street furniture for installation of small cells and telegraph line. Fees and charges for seeking RoW permissions by the Telecom Service Providers ("TSPs") and Infrastructure Providers ("IP") have also been rationalized to bring uniformity across the country. The Government has also released National Frequency Allocation Plan 2022 which will give guidance to the users of the spectrum to plan their networks in accordance with relevant frequency and parameters provided therein. Self-certification has been introduced in order to save time in operationalizing the networks.

- Launch of "Gati Shakti Sanchar" Portal to Streamline the process of Right of Way ("ROW") Applications and permissions Across the Country Universal and equitable access to Broadband Services across the country, especially in the rural area is one of the most important visions of Honble Prime Minister of India. To fulfil this vision, it is imperative that backbone of infrastructure is created by facilitating smooth and efficient deployment of Digital Communications Infrastructure across the country. The timely disposal of RoW applications of various services and Infrastructure providers shall enable speedy infrastructure creation especially for timely rollout of 5G Network.

- About 20 lakh Telecom Towers of all Telecom Service Providers ("TSPs") have been mapped with details such as ‘fiberized and ‘non fiberized. The tool developed by Bhaskaracharya National Institute for Space Applications and Geo-Informatics ("BISAG-N") on PM GatiShakti National Master Plan ("NMP") calculates the required length and route of the nearest OFC to a particular unfiberized tower. This helps in: a) Fiberization of unfiberized towers b) PSUs having saleable OFC can easily showcase and sell their

OFC. c) Companies can buy available OFC to connect their unfiberized towers without much effort.

(Source: Telecom at a Glance as on January 18, 2023 – dot.gov.in)

• Budget 2023 Allocation for Telecom Sector by Government

Total allocation includes 97,579.05 Crores for the Department of Telecom and 25,814 Crores for Postal projects, as per the Budget document presented by Finance Minister Nirmala Sitharaman. State-run BSNL, which is expected to roll out 4G and 5G services this year, will get 52,937 Crores capital infusion from the government in 2023-24. The government has allocated 2,158 Crores for Optical Fibre Cable based network for Defence Services and 715.8 Crores for telecom projects in the North Eastern states. (Source: NDTV - February 1, 2023)

Key Developments in the Indian telecom sector

• Satellite Communication

Satellite internet or satellite broadband, is a wireless internet connection provided through communication satellites orbiting the Earth. It, being independent of location, can be accessed from anywhere within the range of satellites providing global coverage to its users. Satellite internet is gradually gaining popularity in the world and big internet companies are entering this space to offer faster internet network.

- Starlink services in India

One of the primary advantages of Starlink is its ability to provide high-speed internet access with low latency. Starlinks LEO satellites orbits are much closer to earth, resulting in significantly reduced signal travel time. This low latency makes Starlink suitable for applications requiring real-time interactions, such as online gaming, video conferencing and remote work.

Moreover, Starlink is particularly beneficial in areas with limited or no access to traditional internet infrastructure. Remote regions, rural communities, and developing countries often face challenges in establishing reliable internet connections. It is certainly an area where Starlink could be beneficial as it could take internet to villages and other remote areas in India.

Starlink aims to bridge this digital divide by providing global coverage, reaching areas where laying fibre optic cables or building traditional infrastructure is cost- prohibitive or impractical. Another advantage of Starlink is its potential to enhance resilience and redundancy in internet connectivity., Starlink can serve as an alternative or backup option, ensuring connectivity remains available even during disruptions to traditional systems. ( Source: Times of India June 21, 2023)

- One Web

Backed by the Bharti Airtel Group, One Web is the second largest player after Starlink, in the satellite internet space. Unlike Starlink, it does not offer broadband connections to individual users, but primarily caters to telecom firms that offer internet service. The company has signed a six-year contract with Hughes Network Systems. One Web anticipates having all necessary regulatory permits, including the essential landing rights and market access clearances, by July 2023, to launch its high-speed satellite internet services in India. It has received a letter of intent for offering NLD services and a license for GMPCS services from Indias DoT. In March this year, it completed its 18th launch, bringing the total satellite launches to 620 (618 in orbit, after 2 satellites failed or were retired). One Web has now launched ~95% of its planned 648 LEO satellites, enough for providing global coverage. However, it plans to launch additional satellites for resiliency and redundancy. (Source: EY Analysis June-23)

- Reliance Jios partnership with SES

In February 2022, Jio Platforms Ltd. and SES, a Luxembourg-based satellite solutions provider, announced a joint venture with a 51% and 49% stake respectively, under the name of Jio Space Technology Limited. It has received DoT approvals for a 20-year license to set up a mobile satellite network for voice and internet services, becoming the second company in India to receive the DoT nod after One Web.

Using SESs satellite capacity and Jios market coverage in India, this partnership aims to tap a potentially large opportunity. Along with rural areas, it would have the capacity to power retail customers and enterprises across India.

(Source: EY Analysis June-23)

• New advances in Energy Management

- Indias telecom industry has started tapping into green energy sources such as solar power, and in the coming decade, the solarization of tower sites is expected to increase, which will reduce the carbon footprint of the industry.

- Renewable energy offers a solution to the pressing issue of greenhouse gas emissions, which contribute significantly to global warming. Telcos & Tower companies are realising the importance of reducing their carbon footprint and are turning to renewable energy sources such as solar, wind, and hydropower to power their operations. By embracing these clean energy alternatives, mobile companies can significantly decrease their environmental impact and contribute to the fight against climate change. (Source: The Economic Times - July 25, 2023)

- Solar Rollout -As of now, approx. 20% of sites have been solarized in the country. Operators like Jio and Airtel are focusing more on site solarization either directly or through tower companies. BSNL has not installed solar in a big way as yet but has big plans for solarization in the coming years. (Source: PV-magzine-india.com - May 23, 2023.)

- Lead Acid Battery-Batteries that are designed for reliable performance, high energy density and long life. They are robust suiting Outdoor /

rural /off - grid / Critical Installations. They have highest cyclic life, for most competitive Total cost of ownership ("TCO"). Substantially higher OPEX savings and towers carbon footprint. Reliable for maintenance free operation. Deep Discharge Quick Recharge Characteristics. Time tested & High end VRLA Technology for Telecom Networks. (Source: www.amararajabatteries.com)

- Lithium-ion batteries weigh less, charge faster and last longer than valve regulated lead acid ("VRLA") batteries - all without outgassing. While these advantages come with a higher initial acquisition cost, total cost of ownership savings are quickly seen with elimination of maintenance costs and longer cyclic battery life. In general, payback is realized after the first comparable VRLA replacement cycle. (Source: www.vertiv.com)

OPPORTUNITIES AND THREATS

As GTL is a Network Services Company, the following opportunities and threats of the telecom sector may have consequential positive and negative impact as the case may be on the Company:

OPPORTUNITIES:

• 5G smartphones Market in India

- The number of 5G smartphone shipments in India surpassed 100 million (10 crore) in May-2023, setting a new record, as the rapid deployment of 5G technology continues across the country.

– As 5G technology becomes available in more regions of India.

- The 5G smartphone market is expected to grow by over 70 percent compared to the previous year.

- Reliance Jio and Bharti Airtel have already started rolling out their 5G networks across the country since October 2022.

(Source: CNBCTV18.com - July 7, 2023)

• Monthly data traffic per smartphones

- The number of smartphone subscriptions is projected to grow at a CAGR of 5 percent, reaching over 1.14 billion by 2028 in India from 840 million at the end of 2022. Smartphone subscriptions in India as a percentage of total mobile subscriptions are expected to grow from 76 percent in 2022 to 93 percent in 2028.

Globally,5G subscriptions are rising and forecasted to reach 1.5 billion by the end of 2023.

- Global mobile network data traffic continues to grow with the monthly global average usage per smartphone expected to exceed 20 GB by the end of 2023.

- The report also reveals that 5G continues to drive innovation in mobile service packaging to offer bundles such as television, music streaming or cloud gaming platforms. About 58 percent of 5G service providers currently do this in various forms.

(Source: Tech Hindu- June 22, 2023)

• Rural Mobile Penetration

- India had over 700 million active internet users aged 2 years and above as of December 2022, according to Nielsens India Internet Report 2023. Of these, rural India accounted for 425 million users, which was almost 44% higher than the number of active internet users in urban areas, with 295 million users.

- The report showed that rural areas outperformed urban areas in terms of growth, with a 30% increase in the number of active internet users compared to urban areas 10% growth. Female active internet users grew by 27%, whereas male users increased by around 18%. Additionally, the report found that the lowest population strata of below 100,000 towns and rural areas were the highest growth drivers.

(Source: Indiabiz.gov.in - March 16, 2023)

• Adani Group to launch 5G network services in 2023

- Adani Group, the newest entrant in the telecom space, is looking to launch 5G services for enterprises in 2023. The Indian conglomerate also announced that it would be launching consumer apps this year as part of its digital strategy.

- The Company will invest in expanding the network of data centres, building AI-ML and industrial cloud capabilities, along with rolling out 5G services and launching B2C apps. The company paid 212 crore to buy 400MHz spectrum in the mm-wave band. Adani is planning to provide private network services to enterprises, including its own.

- Other entities, such as IT major TCS, could also participate in the private network market. They are awaiting spectrum assignment rules from the DoT and TRAI, who are still deliberating the spectrum bands, which will be given to enterprises for private network use through administrative allocation.

(Source: The Hindu Business line - January 4, 2023.) The above opportunities / developments will spur growth in the Sector with increase in demand for more tower sites / additional loading on existing sites, thus benefiting Tower Infrastructure Providers & Telecom Network Services Companies.

THREATS:

Following challenges may be faced by telecom operators in future.

Presently, the Company has GIL ("Tower company") as its main customer which in turn is a vendor to Telecom Service Provider ("TSP"). Therefore, challenges faced by TSPs will percolate to Tower Companies and in turn to the Company.

TSPs today have huge exposure to debt burden on account of successive licence fee obligations for 4G & 5G licences. Debt servicing in the face of restrained tariffs / ARPUs does not provide much flexibility to telcos on their cashflow management. Further burden is increasing by way of commitments to continuous capex infusion for 4G upgradation and 5G pan India new rollout. This will stretch cash flow and ability for large scale and quick network roll out thus result in deferred ROI.

• Tenancy consolidation by large telcos within there own chosen few tower companies will entail early exit threats for independent tower companies like GIL and this will impact Companys future outlook.

• Long term site agreement of tower companies with landlord coming up for renewals with demands for increase in rent coupled with the telcos looking to optimise cost, will present threat to tower companies which may impact Company performance.

• Tower companies like ATC are looking to exit/ dilute their holding in ATC India which demonstrates the challenging business environment faced by tower companies on account of VI stability concerns and potential threat of duopoly market creation. GIL as in independent tower company may face threats to its future business growth on this account and so would the Company These above challenges faced by the Telecom Operators / Tower Companies will affect the growth opportunities for the Tower Companies which will in turn adversely affect companies rendering services to them.

FUTURE OUTLOOK

The Companys main business is from a single Tower Company, namely GTL Infrastructure Limited. Any adverse impact on the business operations of that tower company will impact the Companys financials. The Company will continue to track industry developments closely to align with market and customer developments and will continue to explore new opportunities in the telecom sector. However, on account of the delay in settling the dues of the lenders, recovery action being taken by them, proceedings before NCLT, litigations and other reasons discussed elsewhere; and the consequent loss of revenue / customers, inability to incur capital expenditure and erosion of net worth / valuation of the Company, the ability of the Company to make use of the opportunities is limited.

SEGMENT WISE PERFORMANCE

The Company is engaged in the business of providing "Network Services" only. Accordingly, the performance of the Company from Network Services business is presented below.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Financial Analysis of the FY 2022-23 is as under:

Profit & Loss Account Items Revenue

Revenue in FY 2022-23, stood at 186.41 Crores as compared to 193.51 Crores in FY 2021-22.

As GIL is the only customer for the Company and the Company has aligned its business plans with that of GIL to sustain business continuity, the Companys revenue goes along with that of GIL.

Cost of Purchases and Services Rendered

In the FY 2022-23, cost of purchases and services rendered stood at 25.06 Crores as against 47.69 Crores in FY 2021-

22. The said reduction is on account of reduction in revenue and also optimisation of energy cost.

Employee Benefits Expenses

In the FY 2022-23, employee benefit expenses stood at 65.15

Crores as against 66.02 Crores in FY 2021-22. This includes employee expenses relating to operations and management.

Other Expenses

In the FY 2022-23, other expenses including administrative expenses, travelling, conveyance, rent, consultancy, foreign exchange variation and others stood at 115.06 Crores as against 75.15 Crores in FY 2021-22. The increase in expenses is on account of increase in Exchange Loss due to change in USD/ INR rate. The same were non cash expenses.

Finance Cost

In the FY 2022-23 Finance Cost stood at 25.66 Crores as against 22.84 Crores in FY 2021-22.

The Company has neither paid nor provided interest on its borrowings during the FY 2022-23 for the reasons stated in Note 22.3 of the Financial Statements. Had such interest been recognized, the Finance Cost for the year ended March 31,

2023 would have been more by 417.69 Crores.

Balance Sheet Items Equity Share capital

As on March 31, 2022, the equity share capital was 157.30 Crores. There is no change in share capital and as such as at March 31, 2023 the share capital remains at 157.30 Crores as under:

Particulars	No. of Equity Shares	in Crores
Equity Share Capital as at	157,296,781	157.30
March 31, 2022
Equity Share Capital as at	157,296,781	157.30
March 31, 2023

Other Equity

Particulars	in Crores
As at March 31, 2022	(6,446.37)
Movement in Other Equity	57.09
As at March 31, 2023	(6,389.28)

Net Worth

Particulars	in Crores
Equity Share Capital as at March 31, 2023	157.30
Other Equity as at March 31, 2023	(6,389.28)
Total Net Worth	(6,231.98)

Borrowings

Borrowings as on March 31, 2023 were 4,317.13 Crores as against 4,383.14 Crores as on March 31, 2022. Reduction in Borrowings is mainly on account of appropriation of amount realised towards sale of immovable assets of the Company by lenders against the Rupee Loan.

Net Fixed Assets

As on March 31, 2023, the net fixed assets were 51.01 Crores as against 74.21 Crores as on March 31, 2022. The reduction in net fixed assets was mainly on account of sale of immovable assets of the Company by lenders.

Receivable & Inventory

The receivables as on March 31, 2023 were 33.16 Crores as against 19.58 Crores as on March 31, 2022. The increase in

Receivables is on account of delay in realisation from customer on account of cascading effect of delay in payment by GILs customer.

The Inventory as on March 31, 2023 was Nil as against

Nil as on March 31, 2022.

Contingent Liabilities and Related Party Transactions

For details please refer to Note Nos. 39.C & 40.2 in the Financial Statements.

Significant changes in key financial ratios

Particulars	UoM	FY 2022-23	FY 2021-22
Debtors Turnover	No. of Days	52	19
Inventory Turnover (Refer Note 1)	No. of Times	N.A.	N.A.
Interest Coverage Ratio (Refer Note 2)	No. of Times	N.A.	N.A.
Debt Equity Ratio (Refer Note 3)	No. of Times	N.A.	N.A.
Return on Net Worth (Refer Note 3) Net Profit Margin (%)	%	N.A.	N.A.
- Net profit / (Loss) (before Exceptional items)	%	(22.51)	(8.96)
- Net Profit / (Loss) (After Exceptional items and OCI)	%	29.73	217.53
Current Ratio	No. of Times	0.03	0.02

Notes : (1) At the Financial year ended March 31, 2023 and March 31, 2022, inventory was NIL hence stated as N.A. (2) The Company has neither paid nor provided interest on its borrowings during the FY 2022-23 & 2021-22, hence stated as N.A. (3) In view of Negative Net worth, Debt / Equity Ratio and Return on Net Worth are not furnished above

Explanation for significant changes in ratios:

The debtors increased from 19.58 Crores to 33.16 Crores, thus in absolute terms by 13.58 Crores. These were realised subsequently. The increase in Receivables is on account of delay in realisation from customer on account of cascading effect of delay in payment by GILs customer.

The Net Profit/(Loss) (before Exceptional items) in % terms has increased mainly on account of foreign exchange loss totally amounting to 85.88 Crores as against exchange loss of

32.63 Crores in the previous year.

The Net Profit/(Loss) (after Exceptional items & OCI) in % terms has decreased on account of exceptional items of

100.43 Crores (previous year: 449.65 Crores). The detailsof exceptional items are given in Note No. 35 of the Financial Statements. The current ratio has increased from 0.02 to 0.03 mainly on account of increase in Current Assets and decrease in the Current Liabilities as explained elsewhere in this report.

RISKS AND CONCERNS

The key risks and concerns are as under:

Strategic Risk

• Telcos have embarked on a consolidation of their tenancies to few large captive TowerCos in which they have ownership in some form or other. Commercial discussion on price renewal and out-of-lock in sites renewal are underway between GIL and Telcos. As a result, GIL may face exit threat form telcos for out of lock in sites and thus will impact GTL services portfolio.

• New and unique models being explored and implemented by tower companies. Our customer is also looking to implement a model where it will retain the site ownership and land owner relationship and will partner with telcos for opex/capex.

• Vi continues to be a risk as its funding requirements for expansion of 4G as well as introduction of new 5G roll out have not got materialised. Its customer base is also dwindling on account of competition. The developments on those accounts will have cascading effect on GTL.

Operational Risk

• Landlord site rentals are a subject of increased attrition between Tower Companies and Landlords, on account of renewals & new technology. Enhancement or increase in renewals rent on account of 5G roll out is a matter of concern. In the event of any delay in closure, there could be likely disruptions in site operations.

• SEB in various state are exercising their powers to disconnect EB supply on Tower sites due to various reasons. This also impacts and disturbs the services and operations and performance of GTL services.

• The network disruption happened due to Telcos delayed payment and non-payment of certain dues of the Tower company by the Telco also result in disruption of network on account of back-to-back commitment with vendors. GTL is required to manage their disruptions.

• In India inclement weather prevails across all states all around the year, as is evidence from Cyclone, Flooding etc. As a result, operations and maintenance services are always under disruption at sites on account of EB disconnection, access issue etc. Monsoons progressed in various parts of India and in fact have extended beyond normal timelines. As a result, EB availability is volatile and thus impacts site operations.

Legal & Compliance Risk

As reported earlier, while the Company continued its efforts to arrive at a settlement with its lenders, based on the Circulars dated February 2018 / June 2019 of RBI, the lenders issued notices for recall of their loans, taking possession of the secured assets, invoked / sold the shares pledged by the Company and Promoter and filed application before Debt Recovery Tribunal ("DRT") / National Company Law Tribunal ("NCLT"). In view of the above developments, litigation and the rigid stand of some lenders, the settlement of the dues of the lenders through negotiated settlement got affected. While the Application filed by one of the lenders before NCLT got dismissed vide its order dated November 18, 2022, the said matter is now pending before the National Company Law

Appellate Tribunal ("NCLAT"), on appeal by the said lender.

Accordingly, the Management is of the view that subsequent upon final directions of the lenders / NCLAT, it would be in a position to revive the Company and continue its operations. In the meanwhile, the lenders have sold / in the process of selling the immovable properties of the Company. The Central Bureau of Investigation has filed FIR towards certain charges against the Company. In this connection the Directorate of Enforcement, Mumbai has conducted searches at the offices of the Company. The Company has co-operated and will continue to co-operate and provide appropriate documentation to defend and exonerate itself on merits. The Company continues to operate in normal course as this does not have any impact on its operations.

As regards major claims of the Company against MSEDCL and GIL and other litigations, shareholders are requested to refer to the ‘status of legal cases given below.

As regards compliance of various other regulatory requirements shareholders are requested to refer to Secretarial Audit and Compliance Report forming part of the Directors Report.

Foreign Exchange and Commodity Price Risk

Members are requested to refer note no. 43 of the Financial Statements under the head Financial Risk Management Objectives and Policies, for risk arising in respect of the above.

Mitigation measures taken

As regards the Strategic and Operational Risk, GILs Customer Vi has announced that they are actively pursuing possible closure of funding. Hence, this will provide an opportunity to GIL for new tenancies which ultimately would provide certain relief to GIL to mitigate tenancy losses upon future actions, if any by other Telcos and would also be in a position to carry on business with Vi and recover its dues. As regards the unique model being explored, wherein the capex & opex are likely to be partnered with Telcos, GTL is presently in wait and watch mode. GTL will take necessary corrective actions on its OnM costs to mitigate any revenue erosion once it receives the updates in the said matter from its customer. As regards the risk arising from inclement weather and consequent disruption to the network, the Company is taking care by providing additional Diesel in Tank at the sites to mitigate the site disruption on account of EB outage and access restrictions on sites. Further regarding the issues faced at certain radiating sites due to switching off of EB supply by SEB, the Company is co-ordinating with GlL and taking up site rectification works and reorganize field teams to direct them for mitigating the site impact by extending the necessary support for sorting out the matter.

As regards the legal and compliance risk as stated above, the appeal filed by the lender before NCLAT is pending for disposal. The Company is engaging the services of senior counsels and consultants for defending its position. In the matter of FIR / Search by the authorities, the Company has provided / is providing appropriate legal documentation to defend and exonerate on its merits. In the matter of its major claim, the Company has taken legal action including through arbitration to recover its dues from Aircel Group, MSEDCL, GIL and others. In respect of matters where the lenders have filed recovery suits in the Court, the Company wherever possible has filed consent terms and got the suits disposed of. As regards mitigation measures in respect of Foreign Exchange, Commodity and Other Risks, Members are requested to refer to note no. 43 of Standalone Financial Statement under the head Financial Risk Management Objectives and Policies.

Status of legal cases

As on March 31, 2023, there were 48 cases against the Company, pending in various Courts and other Dispute Redressal Forums. i. In 8 out of 48 cases, the Company has been implicated as proforma defendant i.e. there are no monetary claims against the Company. In most of these cases, dispute concerns matter like loss of share certificate, title claim / ownership / transfer of the shares etc. The Companys implication in these matters is with a view to protect the interest of the lawful owners of the shares. Upon the final orders passed by the Court(s), the Company shall have to release the shares, which are presently under ‘stop transfer, in this regard to the rightful claimants. There is no direct liability or adverse impact on the business of the Company on account of the said 8 cases. ii. Out of the balance 40 cases, 16 cases are from its earlier power business, 5 cases are from telecom related businesses and 1 case is in respect of non-allotment / non-refund of money in its IPO, which are handled by the Companys advocates, who have the necessary expertise on the subject. It is found that in most of the cases the claims are unsubstantiated and therefore the Company is resisting and defending these claims. Out of the aforesaid 16 cases of power business, 9 cases pertain to Labour Court matter wherein the employees filed for reinstatement on termination consequent to termination of Aurangabad Distribution Franchisee Agreement of the Company. These are being settled with affected employees. The contingent liability in respect of these 9 cases is 1.34 Crores and in respect of balance 7 cases is 0.37 Crores. Further the contingent liability w.r.t. 5 cases related to telecom business and 1 case in respect of non-allotment / non-refund of money in its IPO is 0.85 Crores. iii. There are 9 cases pertaining to arbitration matters, out of which in 5 cases, the Company has invoked arbitration proceedings against MSEDCL in respect of the DF Contract & EPC Contract as explained in the earlier Annual Report and the contingent liability towards counter claims as claimed by MSEDCL is 462.90 crores. The other four matters, are arising out of challenge on the procedural orders by the Arbitrator and are being contested in the courts by the companys advocates who have the necessary expertise on the subject. There is no contingent liability arising out of the four matters. iv. In 1 case, a bank has filed commercial suit against the Company in the Honble Bombay High Court in respect of the Companys comfort letter issued in favour of one of its Wholly Owned Subsidiaries (WOS) towards WOSs credit facilities. The contingent liability in respect of which is

237.28 crores. v. In 1 case a Lender Bank has filed insolvency petition before the National Company Law Tribunal, Bombay Bench (Honble Tribunal) under section 7 of the IBC Code. The Honble Tribunal vide its order dated November 18, 2022 dismissed the said petition. The said matter is now pending before the National Company Law Appellate Tribunal (NCLAT), on appeal by the said lender. The contingent liability in respect of which is 204.78 crores (Net of liability in the books as at March 31, 2023 of 329.98 crores, against the total claim of 534.76 crores) vi. In 1 case, the Department of Telecom (DoT) has raised a frivolous demand of 1,509.50 crores based on Adjusted

Gross Revenue for ISP license fee pertaining to the business carried out by the Company well before the year 2009 and the relevant ISP license was surrendered to DoT in 2009 for which DoT had issued a no-dues certificate in November 2010. The Company is contesting this demand in an appropriate forum. vii. In 1 case Canara Bank has filed a suit against the company in Debt Recovery Tribunal, Chennai, claiming 551.91 Crores. The company is contesting the claim in the DRT, Chennai. viii. In 1 case, IDBI Bank and other CDR lenders have filed a suit against the company in Debt Recovery Tribunal, Mumbai, claiming 4,853.55 Crores. The company is contesting the claim in the DRT, Mumbai. ix. In 1 case, Employees of the staffing company have initiated legal proceedings in labour/other courts against the company. These are being contested by the company. The contingent liability of these case is 0.12 crores. x. In the balance 3 cases, the company has been impleaded for various procedural reliefs in the courts and these matters relate and arise out of the Interim Award passed by the Arbitral Tribunal in an Arbitration matter between the

Company and GTL Infrastructure Limited ("GIL") and are being contested in the courts by the companys advocates who have the necessary expertise on the subject. There is no liability to the company at this stage of litigation. The Company has a claim against GIL in respect of operational services rendered by it. As reported in MDAR of Annual Report of FY 2019-20, on account of non-resolution of Companys claim by GIL, parties invoked arbitration. The Tribunal ordered GIL to pay 440 Crores vide its Interim Award dated December 17, 2019. In the matter of Appeal filed by ARC against the order of the Tribunal, the Honble Delhi High Court vide its Order dated November 18, 2020 modified the Interim Award thereby directing the amounts as directed by the Tribunal to be deposited and retained in the Trust and Retention Account (TRA) maintained by GIL. The application for clarification filed by ARC against the said Order got dismissed vide Order dated February 3, 2021 of the Honble Delhi High Court. The ARC also filed Review Petition against the Honble Delhi High Courts Judgment dated November 18, 2020 and the same was rejected by the Delhi High Court vide its Judgment dated February 4, 2022. The ARC has also filed a suit before the Honble Bombay High Court praying for permanently restraining GIL from making any payment to the Company under the Interim Award. ARC has further challenged the Review dismissal order along with the earlier Judgment dated November 18, 2020 before the Honble Supreme Court by way of Special Leave Petition.

In view of the above developments, the Company has withdrawn the earlier Execution Petition and has filed a fresh Execution Petition for enforcement of the Interim Award as modified by the Judgment of Honble Delhi High Court dated November 18, 2020. In the matter of Arbitration, final hearing in the proceedings got over and the matter was closed for Final Award. However, on account of the various legal developments the Tribunal has adjourned the case, awaiting the outcome of proceedings before Honble Supreme Court.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has put in place various Internal Controls for different activities so as to minimize the impact of various risks. Also, as mandated by the Companies Act, 2013, the Company has implemented the Internal Financial Control (IFC) framework to ensure proper Internal Controls over financial reporting. Apart from this, a well-defined system of Internal Audit is in place so as to independently review and strengthen these internal controls. The Audit Committee of the Company regularly reviews the reports of the internal auditors and recommends actions for further improvement of the internal controls.

QUALITY

Process & Operational Excellence

GTL Network services are designed to provides operation excellence to its customers with an acute focus on delivering consistent SLAs & generating efficient outcome to meet customer This is made possible by right sizing of the delivery organisation near shoring of technical resource to customers sites & a collaborative efforts with shareholder to meet stated goals.

While there has been improvement in industry infrastructure namely in Ebisation of states & road conditions, however environmental exigencies like inclement weather, cyclones, storms etc. have been impacting site operations and GTL continuous to innovate on its operations and maintenance and energy management process in order to provide consistent performance and good quality of services to its customers.

HUMAN RESOURCES

At GTL, the Human Resources function has made a paradigm shift from being a support function to a core and strategic business partner. HR works with executives to clarify the business direction and performance expectations, and actively contributes to deciding what strategies are required for managing talent to achieve business goals.

Culture is the blueprint that drives the organization initiatives. The GTL leadership has been spending immense time in terms of building a healthy, participative, and competitive culture that provides opportunities to its young work force purely based on merit and driven by performance. At GTL, employees are not confined to their desks. The Company organized a Box Cricket Match for its employees and Women Throwball Match where it saw huge participation across all functions. Further the Company also celebrated Womens Day at Pan India Level.

The Company provided Health and Term Life Insurance to all its employees. Health insurance is covered for employees and their families who have completed 2 years of service in the organization. This scheme covered the employee, his immediate family i.e spouse and dependent children and parents. Excellence in GTL is recognized through a Rewards and Recognition Processes. During the Year 2022-23, 80 number of employees have been recognized for their efforts through Spot Awards.

People Strength

In line with the developments in the India Telecom industry and its own business requirements, its human resources strength is 1,612 associates (directly or indirectly) as on March 31, 2023 as against 1,593 associates in March 31, 2022.

CORPORATE SOCIAL RESPONSIBILITY

The Company discharges its social responsibilities through employee volunteerism, payroll giving and other non-financial means by supporting the causes adopted by Global Foundation. Beneficiaries are supported from all the telecom circles in India where the Company offers its services. For the FY 2022-23, emphasis was placed in the areas of Education, Health & Hygiene, Sanitation, Disability and Community Development. We are happy to share that Global Foundation served around 7,600 beneficiaries in FY 2022-23 against around 7,000 in FY 2021-22 as under:

Education:

• Education of 1,450 students was supported by awarding need cum merit-based Scholarships / Financial Aid.

• To bridge the digital divide and contribute to our countrys vision of "Digital India", Computer Literacy & Skills trainings were imparted to 346 rural children.

Health, Hygiene and Sanitation:

• Medical aid was provided to 70 patients to ease out their financial burden.

• Medical/health camps were organised in rural areas for preventive health check-up. These camps were attended by 6,140 people benefitting from diagnosis of illness/ ailment and referral for treatment at hospitals.

Disability:

• For over two decades, Global Foundation has devotedly worked towards the advancement of the Visually impaired. As a step towards their self-sustenance, computer courses and workshops on android were conducted during the year. Yoga sessions complimented for their mental well-being and personality enrichment.

Community Development:

• Support was extended to NGOs working for the development of mentally challenged children and female children.

Happy faces of beneficiaries from rural Maharashtra