Statements in this Management Discussion and Analysis of Financial Conditions and
Results of Operations of the Company describing the Companys objectives, expectations or
predictions may be forward looking within the meaning of applicable securities laws and
regulations. Forward looking statements are based on certain assumptions and expectations
of the future events.
The Company cannot guarantee that these assumptions and expectations are accurate or
will be realized. The Company assumes no responsibility to publicly amend, modify or
revise forward-looking statements, on the basis of any subsequent developments,
information or events. Actual results may differ materially from those expressed in the
statements. Important factors that could influence the Companys operations include
interconnect usage charges, determination of tariff and such other charges and levies by
the regulatory authority, changes in government regulations, tax laws, economic
developments within the country and such other factors globally.
The financial statements are prepared under historical cost convention, on accrual
basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the
Act) and comply with the Accounting Standards notified under Section 133 of the Act. The
management of Reliance Communications Limited has used estimates and judgments relating to
the financial statements on a prudent and reasonable basis, in order that the financial
statements reflect, in a true and fair manner, the state of affairs for the year.
The following discussions on our financial conditions and results of operations should
be read together with our audited consolidated financial statements and the notes to these
statements included in the Annual Report.
Unless otherwise specified or the context otherwise requires, all references herein to
"we", "us", "our", "the Company",
"Reliance", "RCOM", "RCOM Group" or "Reliance
Communications" are to Reliance Communications Limited and its subsidiary companies,
joint ventures and associate companies.
The Company is in Corporate Insolvency Resolution Process ("CIR Process" or
"CIRP") under the provisions of the Insolvency and Bankruptcy Code, 2016 hence
outlook, opportunity and threats, developments, risk and concerns and ratios has not been
provided separately as required under Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 ("Listing
Regulations").
Indian Telecom Industry
India continues to be the one of the largest telecommunications market in the world
with 1170.73 Million subscribers. During FY 2022-23 we saw the continuation of the
consolidation of the Indian mobile telecommunications market into three private players,
besides the two PSUs. India has transformed from multi-player hyper competitive market to
an Oligopoly and possibly moving towards a duopoly. Given the legal and financial
complications around selling of spectrum, pending AGR dues, and the ongoing tax disputes
with the government authorities, the industry players balance sheet is stretched with
unsustainable debt, continued hyper price competition and upcoming demands for high capex
on account of 5G and fibre expansion.
The consolidation has also led to the coming of specialist B2B strengths into sharp
focus. Now that Reliance Communications is a pure play B2B operator, the Company is able
to better utilize its resources towards focused delivery of its services to the enterprise
segment.
Industry statistics
Total number of telephone subscribers (Wireless and Wireline) in India is 1170.73
million at the end of March 2023, against 1201.20 million at the end of March 2022.
Wireless subscribers accounted for 97.86% of the overall telecom subscriber base.
Wireless tele-density slightly decreased to 85.03% in March 2023, compared to 86.68% at
the end of March 2022.
The Internet subscriber base showed growth and at the end of March 2023 the total was
at 794.68 million against 778.09 million in March 2022. Wireless internet continued to
remain the preferred medium of access and accounted for nearly 97% of the subscriber base.
Company Overview Business Areas
Reliance Communications Limited (RCOM) is a telecommunication service provider with
businesses in India National / International Long Distance (NLD) business.
RCOM currently serve nearly 1960 Indian corporations, including, regional and domestic
carriers.
India Operations India Enterprise services
In India, RCOM provides wireline telecom services to the business and government
segments. These include a comprehensive portfolio spanning Network Connectivity, Cloud
Networking, Enterprise Voice, Cloud Telephony, Access Number Services, Collaboration
Services, Wholesale Voice & Value Added Service (VAS). The Company currently serves
nearly 1,960 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.
Global Operations Overview
RCOM provide Wholesale Voice services to Mobile Network Operators (MNOs), Fixed Network
Operators (FNOs), Tier 1 Carriers, Calling Card Companies and Over-the-Top (OTT) players
across the world. Using our global Next-Generation Network (NGN), multiple international
Voice PoPs, and established relationships with Carriers across the globe, we help carry
Voice to almost every possible destination on the planet.
Analysis Business Strategy a. Network Infrastructure Enhancement
We will continue to enhance our network infrastructure footprint across India in order
to master the combination of Cloud Orchestration, Network Ubiquity Doing so will establish
our strategic building blocks as we continue to move towards becoming the technology
infrastructure company of the next decade. Our infrastructure plan will focus on three key
areas: High-Speed Trunking between Data Centers - We have built high speed data links
between data centers based on the Forward Operating Center concept. Commoditized Low-Cost
Last Mile Access-We will further Branch Connect and low-cost UBRs and open FOCs to allow
access to multiple last-mile providers. We will access carrier interconnect centers in
every major market seamlessly.
b. Continue to Focus on Enhancing Products and Services Portfolio
We aim to continue to grow our revenue streams through the expansion of our portfolio
of service offerings and specific sales and marketing initiatives aimed at increasing our
Enterprise customer base across India and globally. Such efforts include focus on new
products and enhancements of our solutions portfolio, including VPN, Next-Generation
Enterprise Networking, Branch Connect, IP Centrex, SIP Trunk, and SIP Toll-Free Service.
c. Focus on Reduction of Operating Costs
In line with our growth, we also focus on cost management and margin expansion through
various measures to reduce our operating costs and achieve cost optimization. We have
entered into sharing agreements also to lower our regulatory cash outflows as well as
future capex expansion needs.
Financial Performance - Overview
The Companys standalone financial performance is disclosed under the head
‘Financial Performance in the Directors Report. The consolidated performance of the
Company is given below:
Revenues and operating expenses
On a consolidated basis, in the continuing operations, the Company earned total
revenues of 505 crore (US $61 million). The net loss after tax recorded by the Company
was 277crore (US $ 34 million). Total operating expenditure stood at 498 crore (US $
61 million).
Operating profit of the continuing operations before finance charges, depreciation and
amortisation, exceptional items and provision against fixed assets (EBITDA)
EBITDA was of 7 crore (US $ 1 million). The EBITDA margin for the year was 1.39 per
cent.
Depreciation and amortization
The Depreciation and Amortization charges were 136 crore (US $ 17 million).
Loss before / after tax
The Loss before exceptional item was 174 crore (US $ 21 million). Tax credit was to
the tune of (-) 3 crore (US $ 0.37 million). The Loss after tax was 277 crore (US $ 34
million).
Balance Sheet
As on March 31, 2023, the Company had total assets of 36,768 crore (US $ 4,475
million). Stakeholders equity was negative (-) 74,891 crore (US $ 9,114 million), while
net debt (i.e. net of excluding cash and cash equivalents) was 46,873 crore (US $
5,704 million), giving a net debt to equity ratio of (0.63) times.
Segment-wise Review
1. India Operations Overview
RCOMs ‘India Operations segment comprises the following businesses-voice,
long-distance services and broadband access to enterprise customers; and managed Internet
data centre services.
Revenues and Profit
The revenues for the financial year ended March 31, 2023 were 488 crore (US $ 59
million). The EBITDA during the same period was 6 crore (US $ 1 million), while the EBIT
(Earnings before Interest and Tax) (loss) (-) 124 crore (US $ 15 million).
2. Global Operations Overview
The Global Business Unit offers the International long-distance voice, our business
segments Carrier Business units. We provide carrier voice Services.
Revenues and Profit
The Revenues for the financial year ended March 31, 2023 in this segment were 34
crore (US $ 4 million). While the EBITDA was 1 crore (US$ 0.12 million), the EBIT (-)
5 crore (US $ (1 million).
Strategic Business Units
1. Reliance Communications Infrastructure Limited (RCIL)
RCIL, a wholly-owned subsidiary of the Company, offers other marketing services.
Revenues and Operating Expenses
RCIL earned total revenues of 10 crore (US $ 1 million) during the year, compared to
6 crore (US $ 1 million) for the previous year. RCIL incurred total operating
expenses of 5 crore (US $ 1 million), compared to 4 crore (US $ 1 million) in the
previous year.
Net Profit / (Loss)
The net loss after tax recorded by RCIL was 346 crore (US $ 42 million), compared to
loss of 1 crore (US $ 0.13 million) in the previous year.
Balance Sheet
As on March 31, 2023, RCIL had total assets (net) of 3,602 crore (US $438 million)
and shareholders fund negative amounting to 2, 636 crore (US $321 million).
2. Reliance Telecom Limited (RTL)
RTL, a wholly-owned subsidiary of the Company, holding telecom license in Madhya
Pradesh, West Bengal, Himachal Pradesh, Odisha, Bihar, Assam, Kolkata and North East
service areas.
Revenues and Operating Expenses
RTL earned total revenues of 0.19 crore (US $ 0.02 million) during the year, compared
to 0.1 crore (US $ 0.01 million) in the previous year. RTL incurred total operating
expenses of 25 crore (US $3 million), compared to 16 crore (US $2 million) in the
previous year.
Net Profit / (Loss)
The net loss after tax recorded by RTL was 1,001 crore (US $122 million), compared to
net loss of 873 crore (US $115 million) in the previous year.
Balance Sheet
As on March 31, 2023, RTL had total assets of 3,813 crore (US $464 million)
and shareholders fund negative amounting to 12,718 crore (US $1,548 million).
3. Reliance Infratel Limited (RITL)
RITL, subsidiary of the Company, is in the business of telecom Infrastructure. [ceased
to be a subsidiary w.e.f December 22, 2022 upon implementation of the approved resolution
plan] Hence, figures of current year are not comparable with previous year.
Revenues and Operating Expenses [up to December 21, 2022]
RITL earned total revenues of 925 crore (US $112 million) during the year, compared
to 1,190 crore (US $157 million) in the previous year. The Company incurred total
operating expenses of 882 crore (US $107 million), compared to 1,500 crore (US
$198 million) in the previous year.
Net Profit / (Loss) [up to December 21, 2022]
The net profit after tax recorded by RITL was 31 crore (US $4 million), compared to
loss of 177 crore (US $23 million) in the previous year.
Adequacy of Internal Control and Systems
The Company has internal controls aimed at achieving efficiency in operations, optimum
utilization of resources, effective monitoring and compliance with all applicable laws.
The Management Audit Team undertakes extensive checks, process reviews and also conducts
internal audits. The Audit Committee of the Board reviews major findings in the internal
audit reports as well as the adequacy of internal controls.
Risk Management Framework The Company has instituted a Risk Management framework
based on identification of potential risk areas, evaluation of risk intensity, and
clear-cut risk mitigation policies, plans and procedures both at the enterprise and
operating levels. The framework seeks to facilitate a common organizational understanding
of the exposure to various risks and uncertainties at an early stage, followed by timely
and effective mitigation. The Audit Committee of the Board reviews the risk management
framework at periodic intervals.
Corporate Governance
The Companys ‘Code of Conduct policy which has set out the systems, process and
policies conforming to international standards are reviewed periodically to ensure their
continuing relevance, effectiveness and responsiveness to the needs of investors both
local and global and all other stakeholders. We maintained the highest standards of
corporate governance principles and best practices.
Human Resource and Employees Relations
In the area of HR and Talent Management, the prime focus for the company has been on
development of people and process efficiencies.
Under people efficiency improvements, teams across various functions underwent in-house
tailor-made trainings anchored by functional SPOCs, and team managers underwent trainings
on managing performance through effective feedback process. As part of creating process
efficiencies in this field, several process (both online and offline) were analyzed and
revamped to make these more effective and impactful. Team structures and roles were
closely analyzed and aligned in order to create efficiencies within teams. In addition,
changes were made in some key policies to make these more effective and efficient.
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, 2013 and rules
made there under are not applicable to the Company for the Financial year 2022-23.
The CSR policy may be accessed on the Companys website at the link;
http://www.rcom.co.in/Rcom/about-us/ investor-relations/corporate-governance.html.
The CSR Committee as on March 31, 2023, comprised Smt. Manjari Kacker as Chairperson
and Shri Punit Garg, Shri Vishwanath Devaraja Rao, Smt. Ryna Karani and Smt. Chhaya Virani
as members.
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