Your Directors present the 18th Annual Report and the audited financial statements for the financial year ended March 31, 2022.
Pursuant to an application filed by Ericsson India Pvt. Ltd before the Honble National Company Law Tribunal, Mumbai Bench ("NCLT" ) in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder ("Code"), the NCLT had admitted the application and ordered the commencement of Corporate Insolvency Resolution Process ("CIR process or CIRP") of the Reliance Communication Limited ("Company"/ "RCOM") vide its order dated May 15, 2018 ("Admission Order"). The NCLT had, pursuant to the Admission Order, appointed an Interim Resolution Professional ("IRP") for the Company vide its order dated May 18, 2018. In terms of the Admission Order, inter alia, the management of the affairs of the Company was vested with the IRP.
Subsequently, the Honble National Company Law Appellate Tribunal ("NCLAT"), while adjudicating upon an appeal preferred against the admission of the insolvency application against the Company, vide its order dated May 30, 2018, inter alia, stayed the Admission Order and allowed the management of
Financial performance and state of the Companys affairs
the Company to function ("Stay Order"). On April 30, 2019, the NCLAT, upon allowing the director and shareholder of the Company to withdraw its aforesaid appeal, vacated all interim orders including the Stay Order. The NCLT, vide order May 7,
2019, directed the IRP to proceed in the CIRP of the Company.
Thereafter, the Committee of Creditors ("CoC") of the Company resolved with the requisite voting share, to replace the IRP with Mr. Anish Niranjan Nanavaty, as the resolution professional for the Company ("RP" or "Resolution Professional"). Subsequently, the Honble NCLT has appointed Mr. Anish Niranjan Nanavaty as the RP for the Company vide its order dated June 21, 2019, which order was published on June 28, 2019. Accordingly, the management of the Company vests in the RP during the continuance of the CIR process period of the Company.
In accordance with the provisions of the Code, various resolution plans in respect of the Company were received by the RP. The CoC of the Company in their meeting held on March 02,
2020, had approved a resolution plan submitted by UV Asset Reconstruction Company Limited ("Resolution Plan") which was subsequently submitted to the NCLT on March 6, 2020 in accordance with Section 30(6) of the Code. The same continues to remain sub-judice with the NCLT.
The standalone financial performance of the Company for the year ended March 31, 2022 is summarised below:
Financial Year ended March 31, 2022
* Financial Year ended March31, 2021
|Rs in crore||US$ in million**||Rs in crore||US$ in million**|
|Gross profit /(Loss) before depreciation, Amortisation and exceptional items||(132)||(18)||(120)||(16)|
|Depreciation and amortization||130||17||132||18|
|Profit/ (Loss) before Exceptional items and Tax||(262)||(35)||(252)||(34)|
|(Loss) / Profit on Fair Value of Investments Profit/ (Loss) before Tax||(262)||(35)||(252)||(34)|
|Current tax / Excess provision for Tax of earlier years||-||-||-||-|
|Deferred Tax charge/ (credit)||-||-||-||-|
|Profit / (Loss) after tax||(262)||(35)||(252)||(34)|
|Profit / (Loss) after tax from Discontinued Operations||(5,355)||(706)||(4,637)||(635)|
|Other Comprehensive Income|
|Re-measurement Gain/ (Loss) of defined benefit plans (Net of tax)||-||-||1||0|
|Total Comprehensive Income||(5,617)||(741)||(4,888)||(669)|
|Add : Balance brought forward from previous year||(64,404)||(8,497)||(59,516)||(8,140)|
|Profit available for appropriation|
|Balance carried to Balance Sheet||(70,021)||(9,238)||(64,404)||(8,809)|
‘Figures of previous year have been regrouped and reclassified, wherever required.
** Exchange Rate Rs 75.793 = US$ 1 as on March 31, 2022 (73.110 = US$ 1 as on March 31, 2021).
During the year under review, your Company has earned from Continuing Operations income of Rs 349 crore against Rs 483 crore in the previous year. The Company has incurred an operational loss of Rs 5,617 crore (including loss from discontinuation of wireless business of Rs 5,355 crore) and there is a Loss of Rs 5,617 crore for the year as compared to loss of Rs 4888 crore in the previous year.
COVID-19 pandemic had impacted businesses across the globe causing significant disturbance and slowdown of economic activities. Further, various state governments have issued orders from time to time extending lockdowns and other restrictions. Telecommunication services, being essential services, had been exempted and permitted to continue operation during the period of lockdown. Your Company has continued to provide services to its Enterprise customers without any interruptions and honour its commitments, despite facing all odds during lockdown.
The Company has been monitoring the situation closely and has taken proactive measures to comply with various directions / regulations / guidelines issued by Government of India, various state governments and local bodies to ensure safety of workforce across all its offices.
As the Company is undergoing CIRP, it is relevant to note that the period of lockdown has been exempted from the calculation of the timeline of CIRP as per the order of the NCLAT in Suo Moto - Company Appeal (AT) (Insolvency) No. 01 of 2020 dated March 30, 2020.
The performance and financial position of the subsidiary companies and associate companies are included in the consolidated financial statements of the Company and presented in the Management Discussion and Analysis Report forming part of this Annual Report.
During the year under review, no dividend on the equity shares of the Company has been recommended. The dividend distribution policy of the Company is uploaded on the Companys website at the link https://www.rcom.co.in/our-company/investor- relations/corporate-governance/
Due to losses and ongoing CIR process, the company has not proposed to carry any amount in reserve.
The Company provides wireline & wireless telecom services to the business and government segments. These include a comprehensive portfolio spanning Network Connectivity, Cloud Networking, Data Center Services, Enterprise Voice, Cloud Telephony, Access Number Services, Collaboration Services, Wholesale Voice & Value Added Service (VAS). The Company serves nearly 10,000 businesses of all sizes-from multinational conglomerates to SMEs-belonging to almost every vertical: BFSI, Manufacturing, Logistics, Healthcare, IT & ITeS, OTT and New Media, to name just a few.
With nine world-class data centers spread across key business markets in India (Mumbai, Bengaluru, Chennai & Hyderabad), we are a leading provider of data center services in the region to hundreds of enterprise customers, including many of Indias marquee brands in the BFSI, FMCG, new media and e-commerce industry segments. These services cover Colocation, Shared IT Infrastructure and IT Managed Services."
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), is presented in a separate section forming part of this Annual Report.
Issue and Redemption of Non-Convertible Debentures
The Company has not carried out any fresh issue of NonConvertible Debentures ("NCDs") in the current financial year.
NCDs issued during the earlier years matured for final redemption during the financial year 2018-19, but remains unpaid in view of the ongoing CIR Process.
The Company has not accepted any deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 ("the Act") and the Companies (Acceptance of Deposits) Rules, 2014. There are no unclaimed deposits, unclaimed/ unpaid interest, refunds due to the deposit holders or to be deposited with the Investor Education and Protection Fund as on March 31, 2022.
Particulars of Loans, Guarantees or Investments
The Company has complied with provisions of Section 186 of the Act, to the extent applicable with respect to Loans, Guarantees or Investments during the year.
Pursuant to the provisions of Section 186 of the Act, the details of the Investments made by the Company are provided in the standalone financial statements under Notes No. 2.03 and 2.07.
Subsidiary and Associate Companies
During an earlier year, GCX Limited, a step down subsidiary of the Corporate Debtor, along with its subsidiaries/affiliates (collectively, "GCX") had filed for voluntary pre-packaged restructuring under Chapter 11 of the US Bankruptcy Code before Delaware court, USA. Objections were filed on behalf of the Corporate Debtor which were not accepted by the court. The plan filed by GCX had been confirmed by the court on December 4, 2019.
The Plan, as confirmed, provides that the old equity interests in the Debtors would be extinguished and the new ownership would pass to the participating Note holders on the "Effective Date" of the Plan. It provided that certain transactions needed to occur and various regulatory approvals needed to be obtained before the Debtors would file a Notice of Effective Date (i.e., a notice declaring that, as of the stated date, the Plan had become effective).
Pursuant to the order dated February 25, 2020, the court had granted a motion filed by GCX Limited along with the other debtors aimed at addressing the issues they have been having in completing the steps to make their plan effective inter alia seeking approval for process whereby a bifurcation had been created wherein debtors not requiring regulatory approvals could complete their processes and arrive at effective date, while others could wait for occurrence of their effective date upon fulfillment of regulatory approvals. Accordingly, on April 14, 2020, a notice has been issued intimating occurrence of "Effective Date" of certain "non regulated debtors" while the "Effective Date of the Plan with respect to debtors GCX Limited, FLAG Telecom Network USA Limited, Reliance Globalcom Limited, and Vanco
US, LLC (collectively, the "Regulated Debtors") is expected to occur at a later date". The court confirmed the aforesaid and entered order on April 21, 2020.
A notice of occurrence of Effective Date for the Regulated Debtors dated December 31, 2020 has been issued by counsel to GCX (and served on Corporate Debtor). The said notice inter alia provides that the Effective Date of the Plan for the Regulated Debtors has occurred on December 31, 2020.
In light of the aforesaid development, the Plan having now being effective in respect of the Regulated Debtors and the NonRegulated Debtors, the Corporate Debtor has been divested of its indirect equity interest in GCX and there is no impact on the consolidated financial statements of the Corporate Debtor.
During the year, disclosure as required under Regulation 30 of the SEBI Listing Regulations read with SEBI Circular No. CIR/CFD/ CMD/4/2015 dated 9th September 2015 regarding disposal of indirect equity interest in GCX Companies was intimated to the Stock Exchange.
Pursuant to an application filed by Ericsson India Pvt. Ltd before the Honble NCLT in terms of Section 9 of the Code, the NCLT had admitted the application and ordered the commencement of CIR process of the Reliance Infratel Limited and Reliance Telecom Limited, subsidiary companies of the Company, vide its order dated May 15, 2018. Mr. Anish Niranjan Nanavaty had been appointed as the resolution professional of Reliance Infratel Limited (RITL) and Reliance Telecom Limited (RTL).
For RTL, in accordance with the provisions of the Code, various resolution plans were received by the RP The Committee of Creditors (CoC) of RTL, in their meeting held on March 02, 2020, had approved a resolution plan submitted by UV Asset Reconstruction Company Limited, which was subsequently submitted to the NCLT on March 6, 2020 in accordance with Section 30(6) of the Code. The same continues to remain sub- judice with the Honble NCLT.
For RITL, in accordance with the provisions of the Code, various resolution plans were received by the RP The CoC of RITL, in their meeting held on March 02, 2020, had approved a resolution plan submitted by Reliance Projects & Property Management Services Limited (earlier known as Reliance Digital Platform & Project Services Limited) through its division Infrastructure Projects in respect of RITL which was subsequently submitted to the Honble NCLT in accordance with Section 30(6) of the Code. On December 03, 2020 Honble NCLT pronounced its order approving the Resolution Plan of RITL. The Resolution Plan as approved by Honble NCLT shall be binding on RITL, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. The approved Resolution Plan is yet to be implemented and once implemented RITL will cease to be subsidiary of the Company. RITL is currently under the supervision of a Monitoring Committee ("MC") constituted under the provisions of the resolution plan.
Further, pursuant to an application filed by State Bank of India under Section 7 of the Code, the Honble NCLT vide order dated September 25, 201 9, had ordered the commencement of CIR process in terms of the Code in respect of Reliance Communications Infrastructure Limited (RCIL), a wholly owned subsidiary of the Company and had appointed Mr. Anish Niranjan Nanavaty as the resolution professional of Reliance Communications Infrastructure Limited. RCIL continues to be under the CIRP
A resolution plan submitted for the RCIL by a resolution applicant, Reliance Projects and Property Management Services Limited, had been approved by the COC pursuant to the meeting dated August 5, 2021 and in this regard, an application had been filed by the RP under Section 30(6) of the Code on August 31, 2021, which is pending adjudication before NCLT.
Reliance Tech Services Limited (RTSL), a wholly owned subsidiary of the Company, has been admitted by Honble NCLT on August 04, 2020 for corporate insolvency resolution process under the Code and Mr. Anjan Bhattacharya has been appointed as the Resolution Professional by the Honble NCLT. The resolution professional of RTSL has filed an application with NCLT on May 04, 2021 for initiation of liquidation proceedings in respect of RTSL and the matter is currently pending before the Honble NCLT.
The summary of the performance and financial position of the each of the subsidiary and associate companies are presented in Form AOC - 1 and in Management Discussion and Analysis Report forming part of the Annual Report. Also, a report on the performance and financial position of each of the subsidiary companies and associate companies as per the Act is provided in the consolidated financial statements.
The Policy for determining material subsidiary companies can be accessed on the Companys website at the link https:// www.rcom.co.in/our-company/investor-relations/corporate- governance/
Standalone and Consolidated Financial Statements
The audited financial statements of the Company are drawn up, both on standalone and consolidated basis, for the financial year ended March 31, 2022, in accordance with the requirements of the Companies (Indian Accounting Standard) Rules, 2015 (Ind AS) notified under Section 133 of the Act, read with relevant rules and other accounting principles. The Consolidated Financial Statements has been prepared in accordance with Ind-AS and relevant provisions of the Act based on the financial statements received from subsidiaries, associates as approved by their respective Board of Directors.
As Reliance Telecom Limited, Reliance Tech Services Limited and Reliance Communications Infrastructure Limited, subsidiaries of the Company are under CIR Process, financial statements of these companies are approved and received from these companies and accordingly the Consolidated Financial Statements are prepared.
In the case of Reliance Infratel Limited, the financial statements are approved by Monitoring Committee of the Company on basis of recommendation of the Director and Chief Financial Officer of the Company.
During the year under review, there was no change in Directors of the Company.
The members are requested to note that in FY 201 9-20, Shri Anil D Ambani, Smt. Chhaya Virani and Smt. Manjari Kacker had resigned with effect from 15th November, 2019; Smt. Ryna Karani has resigned with effect from 14th November, 2019 and Shri Suresh Rangachar had resigned with effect from 13th November, 2019 as Directors of the Company. Certain directors being Shri Anil D Ambani, Shri Suresh Rangachar and Smt. Manjari Kacker also filed their respective DIR-11 forms with the Registrar of Companies. The aforementioned resignations were put up to the CoC of the Company for their consideration in accordance with Section 28(1 )(j) of the Code. However, CoC of the Company at its meeting held on November 20, 201 9 considered the resignations tendered by the above directors and expressed a unanimous view that the resignations cannot be accepted and instructed the Resolution Professional to convey to the directors to continue with their duties and responsibilities as directors and provide all cooperation in the Corporate Insolvency Resolution Process, at least until the completion of the Corporate Insolvency Resolution Process of the Company.
In light of the above, it was duly communicated to the aforesaid directors of the Company that their resignations have not been accepted and they are advised to continue to perform their duties and responsibilities as the directors of the Company and provide all cooperation to Resolution Professional in the CIR process.
Accordingly, Shri Anil D Ambani, Smt. Chhaya Virani, Smt. Manjari Kacker, Smt. Ryna Karani and Shri Suresh Rangachar continue to be on the composition of the Board of Directors and the respective committees of the Company.
Due to abovementioned events, Company has not received necessary annual disclosures as required under section 164(2) and Section 184(1) of the Companies Act, 2013 from Shri Anil D Ambani, Smt. Chhaya Virani, Smt. Ryna Karani, Smt. Manjari Kacker and Shri Suresh Rangachar, Directors of the Company.
In terms of the provisions of the Companies Act, 2013, Shri Punit Narendra Garg, Non-Executive - Non Independent Director of the Company retires by rotation and being eligible, offers himself for re-appointment at the ensuing AGM.
A brief profile of Shri Punit Narendra Garg along with requisite details as stipulated under Regulation 36(3) of the Listing Regulations are provided in this Annual Report.
The details of programme for familiarization of Independent Directors with the Company, nature of the industry in which the Company operates and related matters are placed on the website of the Company at the link https://www.rcom.co.in/our- company/investor-relations/corporate-governance/
Key Managerial Personnel
During the year under review, there was no change in the Key Managerial Personnel of the Company.
Evaluation of Directors, Board and Committee:
The Company is under corporate insolvency resolution process pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016. With effect from June 28, 201 9, its affairs, business and assets are being managed by, and the powers of the board of directors are vested in, the Resolution Professional, Mr. Anish Niranjan Nanavaty, appointed by Honble National Company Law Tribunal, Mumbai Bench.
Hence no formal annual evaluation has been done for the directors performance and that of the committees and individual directors as required under the provisions of Section 134 read with Rule 8(4) of the Companies (Accounts) Rules, 2014.
Policy on appointment and remuneration for Directors, Key Managerial Personnel and Senior Management Employees
The Nomination and Remuneration Committee of the Board has devised a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Employees. The Committee has also formulated the criteria for determining qualifications, positive attributes and independence of a Director, which has been put up on the Companys website at https://www.rcom.co.in/our-company/investor-relations/ corporate-governance/
Currently, as the Company is under CIR Process, the approval of CoC is necessary for the appointment and remuneration of Directors and Key Managerial personnel of the Company. Directors Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Act with respect to Directors Responsibility Statement, it is hereby confirmed that:
i In preparation of the annual accounts for the financial year ended March 31, 2022, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;
ii The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit/loss of the Company for the year ended on that date;
iii The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv The Directors had prepared the annual financial statements for the financial year ended March 31, 2022 on a going concern basis;
v The Directors had laid down internal financial controls to be followed by the Company and such financial controls are adequate and are operating effectively, and
vi The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Note: Since the Company is under CIR Process, the management of the affairs of the Company is vested with Resolution Professional and the Directors of the Company are required to continue performing their duties and roles and extend necessary cooperation and support to the RP. Accordingly, the above mentioned duties and responsibility of Directors have been performed by directors under the overall supervision/direction of RP of the Company.
Contracts and Arrangements with Related Parties
All contracts / arrangements / transactions entered into by the Company during the financial year under review with related parties were on an arms length basis and in the ordinary course of business. There were no materially significant related party transactions made by the Company with its Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large.
During the year under review, the Company has not entered in to any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of Company on materiality of related party transactions.
During the year under review, as the Company is under CIR Process, in terms of Section 28(1)(f) of the Code, approval of the CoC was taken for all new related party transactions in CoC meeting(s).
The new transactions entered into were reviewed and statements giving details of all new related party transactions were placed
before the Audit Committee on a quarterly basis.
The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website at the link https:// www.rcom.co.in/our-company/investor-relations/corporate- governance/. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.
During the year under review, there are no transactions entered by the Company with persons / entities as mentioned in Regulation 34 (3), 53 (f) and in Part A, Part 2A of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Material Changes and Commitments, if any, affecting the financial position of the Company
Except as disclosed in this report, there were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this report.
Meetings of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors. During the financial year ended March 31, 2022, the Directors held 5 meetings on June 26, 2021, August 14, 2021, November 27, 2021, December 28, 2021 and February 12, 2022. The maximum gap between two meetings of Directors was 1 04 days and minimum gap between two meetings of Directors was 30 days.
The additional details about aforesaid meetings are given in the Corporate Governance Report forming part of this report.
During the year under review, there was no change in the composition of the Audit Committee of the Company.
The Audit Committee of the Directors consists of Independent Directors namely Smt. Manjari Kacker, Chairperson, Smt. Ryna Karani, Smt. Chhaya Virani and Non Independent Directors, Shri Punit Garg, Shri Vishwanath Devaraja Rao, as members.
During the year, all the recommendations made by the Audit Committee were accepted by the Directors and noted and taken on record by the RP of the Company.
Auditors and Auditors Report
At the 17th Annual General Meeting (AGM) of the Company held on September 25, 2021, M/s. Pathak H.D. & Associates LLP, Chartered Accountants were appointed as the statutory auditors of the Company to hold office for a term of 5 consecutive years until the conclusion of the 22nd AGM of the Company. Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, M/s. Pathak H.D. & Associates LLP, Chartered Accountants, the Statutory Auditors of the Company have been appointed as Auditors for a term of 5 consecutive years.
The Auditors in their report to the members have given a qualified opinion and the response of the Company with respect to it is as follows:
Attention is drawn on the standalone financial statement, regarding "Assets Held for Sale (AHS)" pertaining to Wireless Spectrum, Towers, Fibre and Media Convergence Nodes (MCNs) along with liabilities continues to be classified as held for sale at the value ascertained at the end of March 31, 2018 and impact of the non payment of spectrum instalments due to Department of Telecommunication (DOT). Non determination of fair value of Assets Held for Sale as on the reporting date is not in compliance with Ind AS 105 "Non-Current Assets Held for Sale and Discontinued Operations".
Attention is drawn on the standalone financial statement regarding admission of the Company and its four subsidiaries into Corporate Insolvency Resolution Process ("CIRP"), and pending determination of obligations and liabilities with regard to various claims submitted by the Operational/financial/other creditors and employees including interest payable on loans during CIRP. Auditors are unable to comment the accounting impact there of pending reconciliation and determination of final obligation. The Company accordingly has not provided interest on borrowings amounting to Rs 4,491 crore (Rs 4,995 crore in case of consolidated) for the year ended March 31, 2022 and Rs 1 5,090 crore (Rs 17,108 crore in case of consolidated) up to the previous financial year calculated based on basic rate of interest as per terms of loan. The Company further has not provided for foreign exchange loss amounting to Rs 541 crore (Rs 663 crore in case of consolidated) for the year ended March 31, 2022 and Rs 1,601 crore (Rs 1,963 crore in case of consolidated) of foreign exchange loss up to the previous financial year. Had such interest and foreign exchange variation as mentioned above been provided, the reported loss for the year ended March 31, 2022 would have been higher by Rs 5,032 crore (Rs 5,658 crore in case of consolidated) and Net worth of the Company would have been lower by Rs 21,723 crore (Rs 24,729 crore in case of consolidated) as at March 31, 2022 and Rs 16,691 crore (Rs 19,071 crore in case of consolidated) as at March 31, 2021. Non provision of interest and non recognition of foreign exchange variation is not in compliance with Ind AS 23 "Borrowing Costs" and Ind AS 21 "The Effects of Changes in Foreign Exchange Rates" respectively.
Attention is drawn on the standalone financial statement, regarding pending comprehensive review of carrying amount of all assets (including investments, receivables and balances lying under Goods & Service Tax) & liabilities and non provision for impairment of carrying value of the assets and write back of liabilities if any, pending completion of the CIRP In the absence of comprehensive review as mentioned above for the carrying value of all the assets and liabilities, auditors are unable to comment that whether any adjustment is required in the carrying amount of such assets and liabilities and consequential impact, if any, on the reported losses for the year ended March 31, 2022. Non determination of fair value of financial assets & liabilities and impairment in carrying amount for other assets and liabilities are not in compliance with Ind AS 109 "Financial Instruments", Ind AS 36 "Impairment of Assets" and Ind AS 37 "Provisions, Contingent Liabilities & Contingent Assets".
Attention is drawn on the standalone financial statement, regarding non adoption of Ind AS 116 "Leases" effective from April 1, 2019 and the consequent impact thereof. The aforesaid accounting treatment is not in accordance with the relevant Indian Accounting Standard Ind AS 116.
Attention is drawn on the standalone financial statement, regarding continuous losses incurred by the Company, current liabilities exceeding its current assets, default in repayment of borrowings and default in payment of regulatory and statutory dues and pending application of renewal of Telecom License. These situation indicates that a material uncertainty exists that may cast significant doubt on the companys ability to continue as a going concern. The accounts however have been prepared by the management on a going concern basis for the reason stated in the aforesaid note. Auditors are unable to obtain sufficient and appropriate audit evidence regarding managements use of the going concern basis of accounting in the preparation of the standalone financial statement, in view of ongoing CIRP and matters pending before regulatory authorities, the outcome of which cannot be presently ascertained.
Attention is drawn on the consolidated financial statement regarding unbilled revenue recognized by one of the Holding Companys subsidiary amounting to Rs 1,021 Crore with respect to services provided during the period and earlier years, which has not yet billed by the subsidiary for the reasons mentioned in the aforesaid note. Auditors are unable to comment on the ultimate outcome of reconciliation and its realizability and its impact on the revenue recognized during the year and in earlier years.
Attention is drawn on the consolidated financial statement regarding non receipt of balance confirmation from balance with Industrial and Commercial bank of China in Fixed Deposit account amounting to Rs 31.62 crore as at March 31, 2022 in respect of one of the subsidiary. Pending receipt of balance confirmation as on reporting date, auditors are unable to comment on the consequential impact if any, on the consolidated financial statement.
The observations and comments given by the Auditors in their report read together with notes on financial statements are self explanatory particularly Note No. 2.14, 2.31, 2.47, 2.48 and 2.53 (standalone financials) and Note No. 2.15, 2.35, 2.40, 2.51, 2.52, 2.59 and 2.60 (consolidated financials) and hence the same to be treated as explanation provided under Section 134 of the Act.
The audited financial statements are drawn up both on standalone and consolidated basis for the financial year ended March 31, 2022, in accordance with the requirements of the Ind-AS Rules.
As per the provisions of Clause (ca) of Sub-section (3) of Section 134 of the Act, the auditors of the Company have not reported any fraud under sub-section (12) of Section 143 of the Act.
Pursuant to the provisions of the Act and the Companies (Cost Records and Audit) Rules, 2014, the Resolution Professional on the recommendation of directors, have appointed M/s N. Ritesh and Associates, Cost Accountants, as the Cost Auditors to conduct cost audit for the telecommunications businesses of the Company for the financial year ending March 31, 2023 and their remuneration is subject to ratification by the Members at the ensuing Annual General Meeting of the Company.
The Provisions of Section 148(1) of the Act are applicable to the Company and accordingly the Company has maintained cost accounts and records in respect of the applicable products for the year ended March 31, 2022.
During the year under review, the Company has complied with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India.
Secretarial Audit & Secretarial Compliance Report
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Resolution Professional on the recommendation of Directors in the meeting held on June 26, 2021 had appointed M/s. Ashita Kaul & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the
Company. The Secretarial Audit Report is attached herewith as Annexure A.
Pursuant to Regulation 24A of the Listing Regulations, the Company has obtained Annual Secretarial Compliance Report from a M/s. Ashita Kaul & Associates, Company Secretaries in Practice (PCS) on compliance of all applicable SEBI Regulations and circulars/ guidelines issued there under and the copy of the same shall be submitted with the Stock Exchanges within the prescribed due date.
The observations and comments given by the Secretarial Auditor in their Report are self-explanatory and hence do not call for any further comments under Section 134 of the Act.
As required under Section 1 34(3)(a) of the Act, the Annual Return for the financial year 2021-22 is put up on the Companys website and can be accessed at https://www.rcom.co.in/our- company/investor-relations/annual-return/
Particulars of Employees and related disclosures
Pursuant to the provisions of second proviso to Section 136(1) of the Act, the Annual Report, excluding the information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the Rules), as amended, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining the same may write to the Company Secretary and the same will be furnished on request.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
As the Company does not carry on any manufacturing activity, being a telecommunications service provider, most of the information of the Company as required under Section 134(3) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 are not applicable. However, the information as applicable has been given in the Annexure B forming part of this Report. Corporate Governance
The Company has adopted the "Reliance Group-Corporate Governance Policies and Code of Conduct" which sets out the systems, process and policies confirming to the international standards. The report on Corporate Governance as stipulated under Regulation 34(3) read with Para C of Schedule V of the Listing Regulations is presented in separate section forming part of this Annual Report.
A Certificate from, M/s. Ashita Kaul & Associates, Practicing Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under Para E of Schedule V of the Listing Regulations, is enclosed to this Report.
Whistle Blower Policy (Vigil Mechanism)
In accordance with Section 1 77 of the Act and the Listing Regulations, The Company has formulated an Vigil Mechanism to address the genuine concern, if any of the directors and employees. The details of the same have been stated in the Report on Corporate Governance and the policy can also be accessed on the Companys website at https://www.rcom.co.in/ our-company/investor-relations/corporate-governance/
The Board of the Company had constituted a Risk Management Committee in their meeting held on 14th November, 2014 consisting of majority of directors and senior managerial personnel of the Company; however, due to ongoing corporate insolvency resolution process ("CIR process"), provisions of Regulation 21 of Listing Regulations are not applicable to the Company. The Board of Directors of the Company has previously dissolved the Risk Management Committee in its meeting held on 3rd November, 2018. The Audit Committee of Directors looks after the functions of the Risk Management Committee.
The Company is currently under CIR process pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016 and considering these developments including, in particular, the respective Resolution Professionals having taken over the management and control of the Company and its subsidiaries (Group) which are under CIR process inter alia with the objective of running them as going concerns. The Company continues to incur loss, current liabilities exceed current assets and the Group has defaulted in repayment of borrowings, payment of regulatory and statutory dues. The Auditors have drawn qualification in their Audit Report for the year ended March 31, 2022 that these events indicate material uncertainty on the Groups ability to continue as a going concern.
Further, the Company has a robust Business Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhances Companys competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.
The risk framework has different risk models which helps in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments. Compliance with provisions of Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company is committed to uphold and maintain the dignity of women employees and it has in place a policy which provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. During the year no such complaint was received. The Company has also constituted an Internal Compliance Committee under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013.
Corporate Social Responsibility
The Company has constituted Corporate Social Responsibility Committee in compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014. The Corporate Social Responsibility Committee has formulated a Corporate Social Responsibility Policy (CSR policy) indicating the activities to be undertaken by the Company. However, Section 135 of the Companies Act, 201 3 and rules made there under are not applicable to the Company for the financial year 2022.
The CSR policy may be accessed on the Companys website at the link; https://www.rcom.co.in/our-company/investor- relations/corporate-governance/
The CSR Committee as on March 31, 2022, comprised Smt. Manjari Kacker as Chairperson and Shri Punit Garg, Shri Vishwanath Devaraja Rao, Smt. Ryna Karani and Smt. Chhaya Virani as members.
Orders, if any, passed by Regulators or Courts or Tribunals
Except as disclosed in this report, no orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status and the Companys operation.
Internal Financial Controls and their adequacy
The Company has in place adequate internal financial controls across the organization. The same is subject to review periodically by the Internal Audit Cell and by the Audit Committee for its effectiveness. Except as disclosed in auditors report, during the year under review, such controls were tested and no further reportable material weaknesses in the design or operation were observed.
Business Responsibility Report
Business Responsibility Report for the year under review as stipulated under the Listing Regulations is presented under separate section forming part of this Annual Report.
Proceedings under the Insolvency and Bankruptcy Code, 2016
The Company is under Corporate Insolvency Resolution Process pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016. Various resolution plans in respect of the Company were received by the Resolution Professional of the Company. The Committee of Creditors ("COC") of the Company in their meeting held on March 02, 2020, had approved a resolution plan submitted by UV Asset Reconstruction Company Limited which was subsequently submitted to the NCLT on March 6, 2020 in accordance with Section 30(6) of the Code. The same continues to remain sub-judice with the NCLT. The detailed background of the proceeding is provided at the beginning of this report.
Except as disclosed in this report, during the year under review, there were no reportable event in relation to issue of equity shares with differential right as to dividend, voting or otherwise, issue of sweat equity shares to Director or Employee and one time settlement with any bank or financial institution.
Your Directors express their sincere appreciation for the cooperation and assistance received from Shareholders, Debenture Holders, Bankers, Financial Institutions, Regulatory Bodies, government Authorities, debenture trustee, customers and other business constituents during the year under review. The Directors express their sincere thanks to the Resolution Professional and Committee of Creditors of the Company for continuous support during the year. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff and look forward to their continued support in future.
|By the Order of the Resolution Professional|
|Punit Garg||Vishwanath Devaraja Rao|
|Non Executive Director||Executive Director and|
|(DIN: 00004407)||Chief Financial Officer|
|Place : Mumbai||(DIN: 08607657)|
|Date : May 28, 2022|