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Bharti Infratel Ltd.

BSE:534816  |  NSE:INFRATELEQ  |  58888:  |  IND:Telecommunications - Allied Services  |  ISIN code:INE121J01017  |  SECT:Telecommunications

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You can view full text of the Director's Report for Bharti Infratel Ltd.
Director Report
Mar2018   Mar 2019

Dear Members,

Your Directors are pleased to present the Thirteenth Board’s Report on the business and operations of the Company together with the audited financial statements for the financial year ended March. 31, 2019.

Business Overview

Bharti Infratel is a provider of tower and related infrastructure sharing services. On a consolidated basis, we are one of the largest pan-India tower infrastructure providers, based on the number of towers owned and operated by Bharti Infratel and Indus Towers, which are represented by Bharti Infratel’s 42% equity interest in Indus Towers. The business of Bharti Infratel and Indus Towers is to acquire, build, own and operate towers and related infrastructure. Bharti Infratel and Indus Towers provide access to their towers primarily to wireless telecommunication service providers on a shared basis under long-term contracts. We cater to all wireless telecommunication service providers in India.

We have a nationwide presence with operations in all 22 telecommunication circles in India, with Bharti Infratel and Indus Towers having operations in 4 overlapping circles.

As of March. 31, 2019, Bharti Infratel owned and operated 40,388 towers witRs. 76,341 co-locations in 11 telecommunication circles while Indus Towers operated 1,23,546 towers witRs. 229,483 colocations in 15 telecommunication circles. With Bharti Infratel’s towers and its 42% interest in Indus Towers, we have an economic interest in the equivalent of 92,277 towers and 172,724 colocations in India as of March. 31, 2019.

We have entered into Master Service Agreements (MSAs) with our customers. The MSAs are long-term contracts which set out the terms on which access is provided to Bharti Infratel’s and Indus’ towers, with all service providers being offered substantially the same terms and receiving equal treatment at towers where they have installed their active infrastructure. Under the MSAs, Bharti Infratel and Indus Towers enter into service contracts in respect of individual towers. The MSAs and service contracts govern Bharti Infratel’s and Indus’ relationship with their customers, the services provided, the applicable charges and incorporate annual escalation clauses in respect of the applicable charges. This provides stability to our business and provides visibility with regard to future revenues.

Financial Highlights

A. Consolidated financial results as per Ind AS

(Rs. Mn)

Particulars

Year ended March. 31, 2019

Year ended March. 31, 2018

Revenue1

68,262

66,212

EBITDA1

31,666

31,865

Profit before Tax

35,527

35,292

Profit after Tax

24,938

24,937

1 Revenue & EBITDA are excluding other income

B. Standalone financial results as per Ind AS

(Rs. Mn)

Particulars

Year ended March. 31, 2019

Year ended March. 31, 2018

Revenue1

68,217

66,180

EBITDA1

31,680

31,854

Profit before Tax

36,651

32,270

Profit after Tax

27,790

24,139

1 Revenue & EBITDA are excluding other income

Share Capital

During the year, there was no change in the Company’s issued, subscribed and paid-up equity share capital. On March. 31, 2019, it stood at RS.18,496,082,460 represented by 1,849,608,246 equity shares of RS.10 each.

Transfer to Reserves

The Company has not transferred any amount to the General Reserve for the financial year ended March. 31, 2019.

Dividend

During the year, the Board, on October 24, 2018, had declared an interim dividend of RS.7.5 per equity share of RS.10 each fully paid up (75% of face value) for FY 2018-19 amounting to RS.13,872 Mn (excluding tax on dividend). The Board has also declared a 2nd interim dividend of RS.7.5 per equity share of RS.10 each fully paid up (75% of face value) for FY 2018-19 amounting to RS.13,872 Mn (excluding tax on dividend) on April 24, 2019.

Dividend Distribution Policy

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations’), top 500 listed companies based on the market capitalization shall formulate a dividend distribution policy. Accordingly, the policy was adopted by the Board of Directors of the Company to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and / or retaining profits earned by the Company. The Dividend Distribution Policy is available on the Company’s website at www.bharti-infratel.com and is annexed as Annexure A to this report.

Fixed Deposits

The Company has not accepted any fixed deposit and as such no amount of principal or interest was outstanding as on the date of balance sheet.

Significant Developments

Amalgamation of Indus Towers Limited with and into Bharti Infratel Limited

The Board of Directors of the Company had at its meeting held on April 24, 2018, approved amalgamation of Indus Towers Limited into and with the Company (Infratel) subject to necessary statutory and other approvals as maybe required to create a pan-India listed tower Company, with over 163,000 towers operating across all 22 telecom service areas in India.

Key Highlights of the merger are:

- The merged Company will fully own the business of Bharti Infratel and Indus Towers. Its name will be changed to Indus Towers Limited and it will continue to be listed on the BSE Limited and National Stock Exchange of India Limited.

- The merged Company will be governed by a shareholders’ agreement. Bharti Airtel (existing promoter) and Vodafone Group will jointly control the merged Company.

- Share exchange ratio considered for the purpose of merger scheme is consistent with recommendations of independent valuer which has been opined to be fair by merchant bankers.

- The Board of the merged Company will be re-constituted in accordance with the shareholders’ agreement and the Chairman of the Board will be an independent director.

- The combination of the two companies’ highly complementary footprints will create a tower operator with the ability to offer the high quality shared passive infrastructure services needed to support the pan-India expansion of wireless broadband services using 4G /5G technologies for the benefit of Indian consumers and businesses.

The Company has received approval from the Competition Commission of India (CCI) on June 29, 2018 and has also received no-objection from BSE Limited and National Stock Exchange of India Limited on July 24, 2018. The Equity Shareholders and Unsecured Creditors of the Company have approved the amalgamation in their respective meetings held on February 2, 2019. Subsequently, an application for sanction of the scheme has been filed with National Company Law Tribunal, Chandigarh Bench (“NCLT”) and has been admitted. The Scheme shall become effective upon receipt of necessary approvals and other condition precedents.

Directors and Key Managerial Personnel

Induction, Re-appointment and Resignation

Anita Kapur (DIN: 07902012) was appointed as an Independent Director of the Company by the shareholders at the last Annual General Meeting (AGM) of the Company held on July 24, 2018. She will hold the office for a term of five years i.e. up till January 16, 2023.

Pursuant to the provisions of the Companies Act, 2013, D S Rawat (DIN: 06798626), Director of the Company will retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment as Director at the ensuing AGM.

Sanjay Nayar (DIN: 00002615), Non-Executive Director of the Company has resigned from the Board w.e.f. conclusion of Board meeting dated January 23, 2019. The Board placed on record its sincere appreciation for the guidance and contribution made by him during his tenure on the Board.

Pursuant to the provisions of Section 161 and other applicable provisions of the Companies Act, 2013 and applicable provisions of the Listing Regulations and as recommended by HR, Nomination and Remuneration Committee, Prakul Kaushiva (DIN: 08285582), was appointed as an Additional Director in the capacity of a Non-Executive Director w.e.f January 24, 2019. He will hold office upto the date of ensuing AGM. The Company has received requisite notice from a member under Section 160 of the Companies Act, 2013 proposing the appointment of Prakul Kaushiva as Director, liable to retire by rotation. The Board recommends his appointment as a Director liable to retire by rotation at the ensuing AGM.

Bharat Sumant Raut (DIN: 00066080), Jitender Balakrshnan (DIN: 00028320), Leena Srivastava (DIN: 00005737) and Narayanan Kumar (DIN: 00007848) have completed their present terms as Independent Directors of the Company on March. 31, 2019. On the recommendation of the HR, Nomination and Remuneration Committee, the Board in its meeting held on January 23, 2019 subject to the approval of shareholders, has re-appointed them as Independent Directors for a further term of five years w.e.f. April 01, 2019. The Board recommends their re-appointment at the ensuing AGM.

Brief resumes, nature of expertise, disclosure of relationships between directors inter-se, details of directorships and Committee membership held in other companies of the Directors proposed to be appointed/ re-appointed, along with their shareholding in the Company, as stipulated under Secretarial Standard- 2 and Regulation 36 of the Listing Regulations, is appended as an Annexure to the Notice of the ensuing AGM.

Pankaj Miglani, Chief Financial Officer has resigned w.e.f. August 9, 2018. The Directors placed on record their appreciation for the contribution made by him during his tenure. The Board in its meeting held on June 22, 2018 has appointed Subramanian Balasubramanian as the Chief Financial Officer of the Company w.e.f. August 10, 2018.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149 of the Companies Act, 2013 and Regulation 16 & 25 of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Company’s code of conduct.

Policy on Nomination, Remuneration and Board Diversity

The Company believes that building a diverse and inclusive culture is integral to its success. A diverse Board will be able to leverage different skills, qualifications, professional experiences, perspectives and backgrounds, which is necessary for achieving sustainable and balanced development. The Board has adopted a Policy on Nomination, Remuneration and Board Diversity, which sets out the criteria for determining qualifications, positive attributes and independence of a Director. The detailed policy is available on the Company’s website at http://www.bharti-infratel. com/cps-portal/web/pdf/Policy%20on%20Nomination,%20 Remuneration%20and%20Board%20Diversity%20update.pdf and is annexed as Annexure B to this report.

Annual Board Evaluation and Familiarisation Programme for Board Members

A note on the familiarisation programme adopted by the Company for orientation and training of the Directors, and the Board Evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and Listing Regulations is provided in the Report on Corporate Governance, which forms part of this Integrated Report.

The HR, Nomination and Remuneration Committee, in consultation with external agency hired for the purpose of Board Evaluation, has put in place a robust framework for evaluation of the Board, Board Committees and Individual Directors. Customized questionnaires were circulated, responses were analyzed and the results were subsequently discussed by the Board. Recommendations arising from the Evaluation process were duly considered by the Board to further augment its effectiveness. A detailed update on the Board Evaluation is provided in the report on Corporate Governance which forms part of this Integrated Report..

Board Meetings

During FY 2018-19, the Board of Directors met 6 times i.e. on April 23, 2018; April 24, 2018; June 22, 2018; July 25, 2018; October 24, 2018 and January 23, 2019. The period between any two consecutive meetings of the Board of Directors of the Company was not more than 120 days.

The details regarding composition, number of Board meetings held and attendance of the Directors during FY 2018-19 are set out in the Report on Corporate Governance which forms part of this Integrated Report.

Board Committees

The Company has several Board Committees which have been established as part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. As on March. 31, 2019, the Board has 5 Committees, namely, Audit & Risk Management Committee; HR, Nomination and Remuneration Committee; Corporate Social Responsibility (CSR) Committee; Stakeholders’ Relationship Committee and Committee of Directors. The details with respect to the composition, powers, roles, terms of reference, number of meetings etc. of the Committees held during the FY 2018-19 and attendance of the members at each Committee meeting is provided in the Report on Corporate Governance which forms part of this Integrated Report.

All the recommendations made by the Committees of the Board including the Audit & Risk Management Committee were accepted by the Board.

Subsidiary/ Joint Venture/ Associate Company

As on March. 31, 2019, the Company has a wholly owned subsidiary named Smartx Services Limited. The Company has a joint venture named Indus Towers Limited which is in the process of amalgamating with the Company.

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements of the Company, its subsidiary and joint venture, which forms part of the Integrated Report. A statement in Form AOC- 1, containing the salient features of the financial statements of the subsidiary and Joint Venture Company is annexed as Annexure C to this report. The statement also provides the details of performance and financial position of the subsidiary and joint venture.

Audited financial statements of Smartx Services Limited for FY 2018-19 have been placed on the website of the Company, www.bharti-infratel.com. The audited financial statements of the subsidiary company is available for inspection at the Company’s registered office and registered office of the subsidiary company. Shareholders interested in obtaining a copy of the audited financial statements of subsidiary company may write to the Company Secretary at the Company’s registered office.

Human Resources

At Bharti Infratel, we believe people excellence is the foundation for building a culture of service excellence. Our aim is to sustain our fervor as an employer of choice and we have outlined our key focus areas during the year to achieve that goal.

We completed 11 glorious years of our establishment last year. For an eleven year old organization growing at a steady pace, it is important that the organization culture is well defined and articulated amongst all employees. Infratel is a B2B company with little or no brand presence for the end customer. It is therefore imperative for us to make our presence felt as a preferred employer to potential employee segments enabling us to attract and retain the ‘right’ fits from across industries. We realized that the first step to creating an employer brand was to define and articulate the culture for Bharti Infratel which will be our USP and differentiating factor as a brand for external and internal employees. We therefore conducted a study not only to define and articulate the culture at Bharti Infratel but also create a transformation roadmap for enabling change and aligning our systems and processes to the organization and leadership expectation. The clear themes emerging out of the study were around Collaboration, People Orientation and Innovation.

Safety is viewed as a key parameter to demonstrate commitment to our people and the community at large. It is an integral part of our decision-making and is the prime consideration in all spheres of our activities. We have an effective Safety Policy in place that strives for zero fatality and prevents all workplace injuries. In order to ensure safe work practices, Cardinal Safety Rules and Consequence Management Matrix have been framed and implemented. This year to drive better awareness and consciousness on Safety we observed National Safety Week from March. 4th-11th, through Slogan contest, poster making, Safety quiz, My Safety Story, etc. Safety Training continues to be an area of focus where we ensure all new joiners complete mandatory safety training and existing employees go through refresher training.

With employee strength of nearly 1235 (on Standalone basis) spread across our 11 circles and 74 zones, Last Mile Connect continues to be critical to drive and uphold employee motivation, engagement and loyalty. Connect forums & open house sessions were held across locations. The teams were recognized for their efforts and they were made aware of the processes and policies. Special emphasis was placed towards induction and orientation of new employees.

In our continued endeavor to increase the Gender Diversity within the organization, we took an atypical route to attract women talent both at the field and non-field roles. We were successful in creating an audio visual depicting the opportunities, challenges and the work environment that we provide to our employees. We have seen positive traction with the overall Diversity Numbers move from 9.4% to 10.4% and with field roles Diversity number improving from 11% to 16%. In order to retain our women talent, there in on-going effort to conduct Gender Sensitization workshops across geographies to increase awareness about the individual differences that both sexes bring to work. The two pronged approach of attraction and retention has shown sustainable results.

To enable employees to take onus of their development, Infratel has partnered with Lynda - LinkedIn Learning for accessing world class content on the go! This was a revolutionary step as with digitalization, employees can fulfil multi-level skill development by advancing from basic to expert level for any particular skill at his/her own pace. WitRs. 98% activation rate of Linkedin Learning, employees have been accessing customized learning paths to fulfil individual capability gaps. While new employees receive training to familiarize them with our operations and processes, the existing employees were trained to enhance their efficiency levels by classroom interventions, e-learning programs, coaching, external certifications, Management Development Programs from elite institutes like ISB, IIMs. With our continuous commitment towards holistic development of our employees, we recognise that there are other sources of professional development in addition to internal trainings by way of sponsored diploma/ degree qualification upskilling. At Infratel, we strongly believe in empowering our employees through taking charge of their career and development, thereby co- creating their own individual trajectories. 100% of the employees who had selfnominated for developmental interventions were trained in FY 201819. 100% mandatory e-learning compliance has been ensured for FY 2018-19.

Employees Stock Option Plan

To retain, promote and motivate the best talent in the Company and to develop a sense of ownership among employees, the Company has instituted two ESOP schemes i.e. Employee Stock Option Scheme 2008 (ESOP Scheme 2008) and Employee Stock Option Scheme 2014 (ESOP Scheme 2014) with the approval of shareholders. The said schemes are in compliance with the SEBI (Share based Employee Benefits) Regulation, 2014, (ESOP Regulations). The HR, Nomination and Remuneration Committee monitors the Company’s ESOP schemes.

In accordance with the ESOP Regulations, the Company had set up Bharti Infratel Employees’ Welfare Trust (ESOP Trust) for the purpose of implementation of ESOP Schemes. Both the ESOP schemes are administered through ESOP Trust, whereby shares held by the ESOP Trust are transferred to the employees, upon exercise of stock options as per the terms of the Scheme. In terms of ESOP Regulations, neither the ESOP Trust nor any of its trustees shall exercise voting rights in respect of the shares of the Company held by the ESOP Trust.

During FY 2018-19, Company has granted 157,708 stock options under the ESOP Scheme 2014. A detailed report with respect to options exercised, vested, lapsed, exercise price, vesting period etc. under ESOP Scheme 2008 and ESOP Scheme 2014 is disclosed on the website of the Company at http://www.bharti-infratel.com/ cps-portal/web/shares.html.

A certificate from M/s Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors, with respect to ESOP Scheme 2008 and ESOP Scheme 2014 would be placed before the shareholders at the ensuing AGM and a copy of the same will also be available for inspection at the registered office of the Company.

Auditors and Auditors’ Report

Statutory Auditors & their Report

In terms of the provisions of Section 139 of the Companies Act, 2013, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, (firm registration number 117366W-W100018) (‘Deloitte’) were appointed as the Statutory Auditors of the Company by the shareholders in the 11th AGM of the Company for a period of five years i.e. up to 16th AGM, subject to the ratification of appointment by members at every AGM. The requirement to place the matter relating to ratification of appointment by members at every AGM has been done away by the Companies (Amendment) Act, 2017 w.e.f. May 7, 2018. The Board has duly examined the Statutory Auditor’s Report on the Standalone and Consolidated Financial Statements of the Company for the financial year ended March. 31, 2019 by M/s Deloitte Haskins & Sells LLP, Chartered Accountants, which is self-explanatory. The report does not contain any observations, disclaimer, qualification or adverse remarks.

Further, no fraud has been reported by the Statutory Auditors in terms of Section 143(12) of the Companies Act, 2013 during the year.

Secretarial Auditor & their Report

The Company had appointed M/s. Chandrasekaran Associates, Company Secretaries, New Delhi, to conduct its Secretarial Audit for the financial year ended March. 31, 2019. The Secretarial Auditor has submitted its Report, confirming compliance by the Company of all the provisions of applicable corporate laws. The Report does not contain any qualification, observation, disclaimer or adverse remark. The Secretarial Audit Report for the FY 201819 is annexed as Annexure D to this report.

The Board has re-appointed M/s. Chandrasekaran Associates, Company Secretaries, New Delhi, as Secretarial Auditor of the Company for the FY 2019-20.

At Bharti Infratel, CSR has become embedded with its business operation and our employees also participate with great enthusiasm in creating a positive social change and supporting our ground level interventions through volunteering. The objective of Company’s CSR initiatives is to improve the quality of life of communities through long term value creation for all stakeholders. Our social initiatives include providing education to underprivileged children in rural areas across several geographies, scholarship support to students with disabilities to pursue or continue higher education of their choice, providing safe water and sanitation facilities in rural and urban areas and schools, creating awareness on water, sanitation and hygiene, skilling unemployed youth belonging to marginalized communities and supporting research on education & environment sustainability challenges to suggesting policy mechanisms for improving the education scenario and sustainability of renewable energy.

Our CSR project beneficiaries have become a part of our larger family of stakeholders and the change these interventions have brought to their lives has been very encouraging - a skilled youth can now be more hopeful of getting a job and becoming economically independent, a girl child in a rural area can dream of pursuing education of her choice, a student with disability can break barriers of inaccessibility to scale new heights in education, explore new professions and no longer remain an invisible minority. Our work towards social development through CSR encompasses much more than just social outreach programs. We also maintain and align our business processes and goals to make a more deep-rooted impact on the society’s sustainable development.

In accordance with the requirements of Section 135 of the Companies Act, 2013, the Company has constituted a CSR Committee. The composition and terms of reference of the CSR Committee is provided in the Report on Corporate Governance, which forms part of this Integrated Report. The Company has also formulated a Corporate Social Responsibility Policy, which is available on the Company’s website at https://www.bharti-infratel.com/cps-portal/web/pdf/Corporate%20Social%20 Responsibility%20Policy 07062018.pdf.

During the year, the Company has spent approximately RS.414 Mn (1.88% of the net profit of last three years) on the CSR activities. As a socially responsible Company, the Company is persistently exploring new opportunities to increase its CSR expenditure to the prescribed level to create larger social impact. With this view, the Company has identified and implemented a new project during the year under review. The Board, on the recommendation of the CSR Committee, has allocated ~ RS.440 Mn (2% of the net profits) towards various CSR projects for FY 2018-19. Since, the new project was identified for implementation during the later part of the year, the entire allocated amount was not disbursed pending the stage of implementation of the new project. The Company is fully committed to the government’s vision of corporate’s social responsibility towards the society and is taking all the efforts for India’s sustainable development by embedding wider economic, social and environment objectives.

A detailed update on the CSR initiatives of the Company is provided in the Corporate Social Responsibility section, which forms part of this Integrated Report. The Annual Report on Corporate Social Responsibility u/s 135 of the Companies Act, 2013 is annexed as Annexure E to this Report.

Integrated Reporting

SEBI vide circular dated February 6, 2017 has recommended voluntary adoption of Integrated Reporting (IR) from 2017-18 by the top 500 listed companies in India. In line with its philosophy of being a highly transparent and responsible company and considering IR as a journey, the Company adopts ‘Integrated Report’ in accordance with the International Integrated Reporting Council (IIRC) framework. The Integrated Report covers capital approach of IIRC Framework as well as the value that your Company creates for its stakeholders.

Business Responsibility Report

As stipulated under the Listing Regulations, the Business Responsibility Report, describing the initiatives taken by the Company from environmental, social and governance perspective forms a part of this Integrated Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the Listing Regulations, is presented in a separate section, forming part of this Integrated Report.

Corporate Governance

The Company is committed to benchmark itself with global standards for providing good corporate governance. The Board constantly endeavors to take the business forward in such a way that it maximizes long term value for the stakeholders. The Company has put in place an effective corporate governance system which ensures that the provisions of Listing Regulations are duly complied with.

A detailed report on the corporate governance pursuant to the requirements of the Listing Regulations forms part of this Integrated Report.

A certificate from the auditors of the Company, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, confirming compliance of conditions of corporate governance as stipulated in Listing Regulations is annexed as Annexure F to this report.

Risk Management

Risk management is embedded in Bharti Infratel’s operating framework. The Company believes that risk resilience is key to achieving higher growth. To this effect, there is a robust process in place to identify key risks across the Company and prioritize relevant action plans to mitigate these risks. Risk Management framework is reviewed periodically by the Board and the Audit & Risk Management Committee, which includes discussing the management submissions on risks, prioritizing key risks and approving action plans to mitigate such risks.

The Company has duly approved a Risk Management Policy. The objective of this Policy is to have a well-defined approach to risk. The policy lays down broad guidelines for timely identification, assessment and prioritization of risks affecting the Company in the short and foreseeable future. The Policy suggests framing an appropriate response action for the key risks identified, so as to make sure that risks are adequately addressed or mitigated.

The Internal Audit function is responsible to assist the Audit & Risk Management Committee on an independent basis with a complete review of the risk assessment and associated management action plans.

Operationally, risk is being managed at the top level by Executive Committee, chaired by the Managing Director & Chief Executive Officer and at operating level by Executive Committees of Circles headed by Circles Business Head.

Detailed discussion on Risk Management forms part of Management Discussion & Analysis under the section ‘Risks and Concerns’, which forms part of this Integrated Report. At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company.

Internal Financial Control and their adequacy

The Company has established a robust framework for internal financial controls. The Company has in place adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. During the year, such controls were assessed and no reportable material weaknesses in the design or operation were observed. Accordingly, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during FY 2018- 19. The Internal financial controls of the Company have been further discussed in detail in the Management Discussion & Analysis section.

Vigil Mechanism

The Code of Conduct and vigil mechanism of the Company is available on the Company’s website at www.bharti-infratel.com.

A brief note on the highlights of the Whistleblower Policy and compliance with Code of Conduct is also provided in the Report on Corporate Governance which forms part of this Integrated Report.

Quality Control

Quality Control continues to be an important driving force behind customer delight through achievement of high uptime and decreasing energy cost across our footprint.

We continue to fine tune our quality strategies in line with our aim of ensuring First Time Right. The multi-pronged strategies have been refined in line with changing field scenarios. We continue to undertake pre-dispatch inspection of all major and minor material. Stage inspection of on-site work is being undertaken by on-roll quality engineers for 100% of all new build sites and upgrades. Quality audits by independent agencies on a regular basis ensures additional controls. Preventive maintenance audits, process and design improvement and control ensures standardization and quality of workmanship. This has augmented operations and maintenance efforts throughout the lifecycle.

We have continued major projects such as tower maintenance, foundation strengthening and creation of as-built site drawings and have integrated the site data on a central platform “One View”. Last year we ensured automated quality submissions, ensembling as built drawing details into One View and initiated thermographic camera trial to improve site safety and equipment life. The referred activities have transformed the output and resulted in one of the highest quality KPI achievement during past years.

A major exercise was instituted this year for asset re-use post refurbishment and inspection towards improving asset utilization, conversion of in-door sites to outdoor for energy costs reduction and electrification of un-electrified sites. This has helped us in our continuous strive towards higher utilization and lower costs, lower energy consumption, lower network outages and improved P&L’s for both operator and us.

Other Statutory Disclosures

Related Party Transactions

A detailed note on procedure adopted by the Company in dealing with contracts and arrangements with Related Parties is provided in the Report on Corporate Governance, which forms part of this Integrated Report.

All arrangements / transactions entered by the Company with its Related Parties during the year were in ordinary course of business and on an arm’s length basis. Particulars of material related party transactions are given in form AOC- 2 as Annexure G to this report.

Names of Related Parties and details of transactions with them under Ind AS - 24 have been included in Note no. 42 of the standalone financial statements for the year ended March. 31, 2019 on page 302.

The Policy on the Related Party Transactions is available on the Company’s website.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations in future.

Material changes and commitments affecting financial position between the end of financial year and date of the report

There are no material changes and commitments affecting the financial position of the Company between the end of financial year and date of the report.

Particulars of loans, guarantees or investments

The details of loans given, investments made or guarantees given are provided in Note no. 7, 8 and 15 of the Standalone financial statements for the year ended March. 31, 2019.

Particulars of Employees

Disclosures relating to remuneration of Directors u/s 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure H to this report.

The information as required to be provided in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure I to this report.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The details of energy conservation, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts) Rules, 2014 is annexed herewith as Annexure J to this report.

Disclosure under Section 197(14) of Companies Act, 2013

Neither the Managing Director & CEO nor the Chairman & Whole-time Director of the Company receive any remuneration or commission from its holding or subsidiary company.

Extract of Annual Return

In terms of provisions of Section 92, 134(3)(a) of the Companies Act, 2013 read with Rule 12 of Companies (Management And Administration) Rules, 2014, the extract of Annual Return of the Company in form MGT-9 is annexed as Annexure K to this report.

Sexual Harassment of Women at Workplace

The Company has an Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of women employees at work place. Details of the same including the details of the complaints received is provided in the Report on Corporate Governance, which forms part of this Integrated Report.

Secretarial Standards

Pursuant to the provisions of Section 118 of the Companies Act, 2013, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Companies Secretaries of India.

Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

I. In the preparation of the annual accounts for the year ended March. 31, 2019, the applicable accounting standards had been followed and there is no material departure from the same;

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 at the end of the financial year ended March. 31, 2019 and of the profit 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 accounts on a ‘going concern basis’;

V. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

VI. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

Acknowledgements

The Directors wish to place on record their appreciation for the assistance and co-operation extended by customers, strategic investors, shareholders, bankers, vendors, business partners, various agencies and departments of Government of India and State governments where Company’s operations are existing, supporting the Company’s various projects.

The Directors would also like to place on record their sincere appreciation for the valuable contribution, unstinted efforts and the spirit of dedication shown by the employees of the Company at all levels in ensuring an excellent all round operational performance.

For and on behalf of the Board

Akhil Gupta

Date: April 24, 2019 Chairman

Place: New Delhi DIN: 00028728

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