Tamil Nadu Telecommunications Ltd

To The Members

The Board of Directors hereby submits the Thirty Sixth Annual Report of the Company with Audited Financial Statements for the period from 1st April 2023 to 31st March 2024 along with the Auditors Report.

FINANCIAL HIGHLIGHTS

The financial performance of your company is as given below:

-(Rs. in Lakhs)

The net loss after Tax is Rs.(1459.91) lakhs against net loss of Rs.(1182.90) lakhs made during the previous year.

Review of Operations

During the year under review, the company's other income was Rs.2.5 Lakhs and the sale was still nil.

You are aware that the Company is passing through a tough period for past several years. The plant is still non-operational due to the requirement of huge fund for major repairing of very old machineries. But your management is trying hard to revive the company.

During the year, management has explored the possibility of various ways to monetize the company based on the Detailed Project Report (DPR) submitted by the renowned Consultant. With your support the company is expected to start earning revenue from the next year.

Market Scenario and Outlook

The global fiber optics market size was valued at USD 7.56 billion in 2023 and is projected to grow from USD 8.22 billion in 2024 to USD 17.84 billion by 2032, exhibiting a CAGR of 10.2% during the forecast period of 2024-2032.

The telecom segment dominated the market in 2023, owing to the surge in data traffic from various sources, including e-commerce, internet, multimedia, and computer networks that requires a transmission medium, which is capable of handling higher bandwidth used to manage the huge amount of data, and this is propelling the demand for fiber optic cables in the telecom infrastructure.

i. BharatNet Phase III Project: BSNL, the state-owned telecommunications company, has floated a tender process amounting to approximately Rs 65,000 crore for the implementation of the phase-III BharatNet project. The tender is part of the 1.39 lakh crore. This initiative seeks to upgrade existing 164,000 gram panchayats and connect approximately 47,000 new gram panchayats under a new model. The scope of the tender includes designing, supplying, constructing, and installing optical fibre cables, switches, routers, and other essential telecom equipment. There is a huge requirement of optical fiber cable more than 5,00,000 kms.

ii. Implementation of 5G: The growth of 5G is anticipated to be fuelled by the hike in consumer data and proliferation of internet of things (IoT) devices. Further more, to meet the set standards, operators from India, have been increasingly investing in optical fiber and related technologies.

Fiber optic networks play a crucial role in 5G networks by providing high-capacity backhaul connections. They ensure fast and reliable data transmission between cell towers and core network infrastructure, thus supporting the high-speed wireless connectivity promised by 5G technology. Telecom leaders are relying on fiber optic cable to fulfill the extensive demand for 5G connectivity.

iii. Increase in adoption of Fiber to the Home (FTTH) connectivity: FTTH is a popular integrated communication technology that uses fiber technology to enable faster and more effective communication. The technology connects homes to the operator through optic fiber wires. It is the most advanced technology for building the next generation of communication networks. For instance, fiber connections are used by more than 130 million homes. iv. Technological advancements in the fiber cable technology: Advances in technology to improve bandwidth and reduction in attenuation rate have created numerous opportunities for the fiber optics market. The optical fibers are getting smaller and smaller to the deployment challenges being raised by end-use applications. As telecom operators started looking for high fiber count cables in reduced diameters, optical fiber, and cable manufacturers are investing in research and development to realize smaller fibers and cables. These cables will be deployed for FTTx and 5G networks.

Cautionary Statement

Statements in the Boards' Report contain forward looking statements. Actual results, performances or achievements may vary materially from those expressed or implied, depending upon economic conditions, Government policies, subsequent developments and other incidental factors.

Risk & Concern

The industry is facing challenging cost pressures as the cost of major raw materials are going up due to shortage & increase in oil prices. The variations in exchange rate fluctuation are also a threat towards cost of production. The competition within OFC business is becoming fierce due to emerging new technologies and frequent new product introductions in Optical fiber products which command competitive prices and preference in the market. The market price of cables is also varying due to competition.

Directors

In accordance with Sec.152 (6) and (7) of the Companies Act, 2013, read with Articles 79 & 80 of the Articles of Association of the company, Shri. J. Ramesh Kannan (DIN 09292181) and Shri. R. Karthikeyan, (DIN 00824621), will retire from the directorship of the company by rotation and being eligible, offer themselves for re-appointment.

Directors' Responsibility Statement

As required under Section 134(5) of the Companies Act, 2013, the Directors of the Company hereby state and confirm that

a) In the preparation of the annual accounts the applicable accounting standards had been followed.

b) They have 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 optic Company as at 31st March 2024, and the loss of the Company for the year ended on that date.

c) They have taken proper and the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) They have prepared the annual accounts on a going concern basis considering the comparative growth in OFC market, future prospects of the Company with the support of TCIL.

e) They have laid down internal financial control to be followed by the company and that such internal financial control is adequate and was operating

f) They have devised proper system to ensure compliance with all provision of all applicable laws and that systems were adequate and operating effectively.

Extracts of the Annual Return

Pursuant to the amendments to Section 134(3)(a) and Section 92(3) of the Act, 2013 and read with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the Annual Return (Form MGT-7) for the financial year ended March 31, 2024, is available on the Company's website and can be accessed at https://ttlofc.in/AnnualReturn.html. The extract of the Annual Return in Form MGT-9 has been attached.

Corporate Governance

A report on Corporate Governance with the Practicing

Company Secretaries Certificate on compliance conditions of the Corporate Governance has been attached as to form part of the Report.

Clarification is given below:

1. Due to the non-appointment of Independent Directors, the Company has not complied with Section 149(4), 177(1), 178(1), and Schedule IV of the Companies Act, 2013 as well as with Regulations 17(1) (b), 18 (1), 19(1) and 25 (3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in terms of minimum number of Independent Directors in the Board, Constitution of Audit Committee, and conducting a separate meeting of Independent Directors respectively.

Points No (1): The Company is Joint sector Govt. Company with 49% of its shares held by TCIL, a Govt. of India Enterprise and 14.63% held by TIDCO, a Govt of Tamilnadu Enterprise. Being a Govt. Company, action has already been taken for induction of Independent Directors Constitution of Audit

Committee as per 18 (1) and Constitution of Nomination and Remuneration Committee as per regulation 19(1) of SEBI LODR and separate Independent Directors Meeting as per 25 (3) of SEBI LODR shall be conducted after appointment of required number of Independent Directors by the Ministry of

Telecommunications.

2. Non-Compliance of Regulation 46 (2) (b), (c), (e) (f) (g) and (i) of the Securities and Exchange

Points No (2): All compliances were done at the exchanges. in time but the updation responsibility was outsourced with previous PCS firm due to change in peer review firm during the year, the same was not reflecting on website, the gap was observed and reported. The company later complied with the above observation.

Energy, Technology and Foreign Exchange

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Sec.134 (3)(m) of the Companies Act, 2013 are enclosed as part of the Report.

Details of director or Key Managerial Personnel who were appointed or have resigned during the year.

(i) Shri.P. Akash, I.A.S. (DIN 10272137) was appointed as an additional Director on 09.11.2023 on the Board of

Company. He will be regularized at the ensuing Annual General Meeting during the year.

(ii) Shri. S. K. Tata (DIN 10388959) was appointed as an additional PracticingCompanySecretariesobservations Director on 09.11.2023 on the Board of

Company. He will be regularized at the ensuing Annual General Meeting during the year.

(iii) Mrs. Leena Rajput (DIN 10388957) was appointed as an additional Director on 09.11.2023 on the Board of Company. He will be regularized at the ensuing Annual General Meeting during the year.

(iv) Mrs. Alka Selot Asthana (DIN 10064149) was appointed as nominee Director on 05.04.2023 and remains as

Director till 11.08.2023 thereafter she resigned from the company during the year.

(v) Shri. J. Ramesh Kannan remains as Managing Director (DIN 09292181) and Chief Financial Officer (CFO) of the company throughout the year under review.

(vi) Shri D. Porpathasekaran, (DIN 09612667) remains as Director and Chairman of the company during the year.

(vii) Ms. Swapnil Gupta, Company Secretary and Compliance Officer of the Company, continued to hold her posts throughout the year under review. Her position remains same during the year.

Personnel

The Managing Director/CFO and Company Secretary were on deputation from the Promoter Company TCIL which is a Govt. of India Enterprise, holding 49% stake in the Company. Hence their remuneration was as per the scales applicable to their cadre in the promoter company.

The number of permanent employees as on 31.03.2024 was 63 excluding two officials on deputation from the promoter company.

None of the employees drew remuneration of Rs.60,00,000/- or more per annum Rs.5,00,000/- or more per month during the year. This information is furnished as required under Rule 5(2)(i) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Human Resources

Your company is glad to announce that the industrial relations continue to be very cordial. During the year, employees were given training on lying of Optical cable, OFC splicing, OFC construction work etc. TTL has been encouraging its employees to come out with innovative suggestions, which will pave way for significant cost savings as well as overall development of the company.

During the year 2018-19, M/s. Telecommunications Consultants India Limited decided to help TTL employees by taking them on deputation to work in their various projects in India which helps the employees to acquire new skill and experience in services of communication industry. All employees joined in TCIL on deputation except 8 employees.

Quality Management Systems

It is reported that as a commitment in meeting global quality standards, your company already has IS/ISO 9001:2015 quality management systems certification from Bureau of Indian Standards should continue. The license will be renewed after commencement of production.

Internal Control System

TTL has adequate internal control procedures in respect of all its operations. It has laid down internal control procedures to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and transactions are authorized, recorded and reported correctly. Internal Audit is being carried out by Independent Audit Firm of Chartered Accountants on an ongoing basis and it recommends appropriate improvements apart from ensuring adherence in company policies as well as regulatory compliance. The Audit

Committee periodically reviews the audit findings.

Transfer to reserves

During the year under review no amount is being transferred to General Reserve Account.

Dividend

In a view of the losses your directors have not declared any dividend during the year under review.

Deposits

During the year under section 73 and the rules may be called the Companies (Acceptance of Deposits) Rules, 2014, the

Company has neither accepted nor renewed any deposits from public during the year under review.

Corporate Social Responsibility

Since the Company is continuously incurring losses, no CSR policy has been devised.

Related Party Transactions

There was no contract or arrangements made with related parties as defined under section 188 (1) of the Companies

Act, 2013 during the year under review.

Research & Development (R&D)

The information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 with respect to R&D are not applicable to your Company.

Particulars of Loans, guarantees or investments made under section 186 of the Companies Act, 2013

There were no loans, guarantees or investments made by the company exceeding the limits specified under Section 186 of the Companies Act, 2013 during the year under review and hence, the said provision is not applicable.

Unsecured Loan

The unsecured loan amounting to Rs.160.73 Crores as on 30.06.2024 is from related party i.e. holding company, has been taken on long term basis without any stipulation for repayment and other terms.

Information under section 197 of the Companies Act, 2013 read with rule 5(2) of the companies (appointment and remuneration of managerial personnel) rules, 2014 regarding employee's remuneration

Information as per Section 197 of the Companies Act 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not applicable to your company as there is no employee on the rolls of the Company. Accordingly, there was no employee of the Company who received remuneration in excess of the limits prescribed under of the Companies Act.

Statement under section 134(3)(p) of the Companies Act, 2013, regarding formal annual evaluation made by board of its performance and that of its committees and individual directors

In terms of the notification dated 05.06.2015 issued by Ministry of Corporate Affairs, the company has been exempted from the above provision and hence the disclosure is no longer required.

Information under section 134(3)(n) of the Companies Act, 2013 concerning development and implementation of risk management policy

The company's operations are completely stopped, only limited assistance being given by the holding company, which has a well-defined risk management policy. Your company has not developed and/or implemented the Risk management policy on its own.

Details of application made or proceeding pending under Insolvency and Bankruptcy Code 2016

During the year under review, there were no applications made or proceedings pending in the name of the company under the insolvency Bankruptcy Code, 2016.

Details of difference between valuation amount on one time settlement and valuation while availing loan from banks and financial Institutions

During the year under review, there has been no one time settlement of Loans taken from Bank.

Vigil Mechanism under section 177(9) of the Companies Act, 2013.

Your Company is in process of making the Whistle Blower Policy/ vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of your Company's Code of Conduct. Adequate safeguards are provided against victimization to those who avail of the mechanism will be provided soon.

Auditors

In terms of Section 139 of the Companies Act, 2013, the

Comptroller and Auditor General of India (CAG) had appointed M/s. V Narayanan & Co, Chartered Accountants as the Auditors of the company for the year 2024-25 at a remuneration of Rs.1,00,000/- besides reimbursement of traveling and out-of-pocket expenses at actual, subject to the other items and conditions as specified by the CAG.

Independent Auditor's Report

Clarification on Auditors observations is given below:

Basis for Adverse Opinion

(a) We draw attention to Note 1(II)(a) & 31 which describes that the Company's financial statements have been prepared using the going concern assumption of accounting. However, the Company's accumulated losses of Rs.2,20,02,137 Hundreds (including other Comprehensive Income) (Previous year Rs.2,05,42,224 Hundreds) has eroded the Net Worth of the Company, indicating the existence of material uncertainty that may cast a doubt about the Company's ability to continue as a Going Concern. The Company has not operated its factory since 2017 and NO sales effected for more than five years. It is also pertinent to note that power connections in the factory were not enabled up to 31.03.2024. Further, as represented by the company, the machinery would involve major overhauling cost to resume operations and the company is also unable to obtain support for supply of major raw material required for manufacture from its supplier. Also, the company has not bagged any new orders to substantiate the going concern assumption. Though the company had received a bid for granting of lease of the manufacturing facilities and factory premises in Maraimalai nagar, and issued Letter of Award to the leasee, the lessee had not taken over the premises and the lease income has not generated yet.

Hence, considering the cumulative effect of the factors detailed above, we conclude that the Going Concern assumption of the management in preparation of financial statements is inappropriate.

(b) The Company has not recognized the following financial liability /asset at fair value in terms of Ind AS 109 (including comparative figures as on 31 March 2023) and Impact of the same on the financial statements is not ascertainable: i. Amounts due to M/s.Fujikura Limited amounting to Rs.2,07,991 hundreds (Previous Year- Rs.2,06,756) (In hundreds) (Note No 16) ii. Trade Receivables (considered good) amounting to Rs.4,67,200 hundreds (Previous Year- Rs. 6,09,541) (In hundreds) (Note No 5) iii. Unsecured Trade payables amounting to Rs.3,60,457 hundreds (Previous Year-Rs.3,42,963) (In hundreds) (Note No 15).

Emphasis of Matter

1) We draw attention to Note No. 48 of the other explanatory notes to the financial statements which states the reason for non-recognition of amounts due to the holding Company viz., Telecommunications Consultants India Limited amounting to Rs.1,57,85,738 hundreds (Previous Year Rs.1,46,41,843 hundreds) at Fair Value in accordance with Ind AS 109. Our opinion is not modified in respect of this matter.

2) Attention is invited to Note Nos. 5,7,9,15,16 & 17 of the notes to financial statements, where the balances carried in the Trade receivables, Other Financial

Assets, Other Current assets, Trade payables, Other Current Financial liabilities, and Other Current Liabilities are subject to confirmation from all parties (other than Telecommunications Consultants India Limited) as stated in Note No. 29. Our opinion is not modified in this respect.

3) Attention is invited to Note No. 45 of the other explanatory notes to the financial statements which states that the Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. Our opinion is not modified in this respect.

Company's Reply to Basis of Adverse Opinion Para 1 of Going Concern Assumption.

The accounts of TTL are drawn up on the basis of going concern concept since the company and the promoters of the company are taking various efforts for revival of TTL. One of the proposals is monetization of TTL premises including vacant land along with diversification of business. TTL total 9.78 acres of land in Maraimalai nagar, near Chennai. Factory area is 4.27 acres with a framed structure built up area of 53265 Sq.ft and vacant land area is 5.51 acres. In this regard a Request for Proposal (RFP) for has been floated for Grant of Lease of the Manufacturing Facilities and Premises of Tamilnadu Telecommunications Factory located in Maraimalai

Nagar, near Chennai, Tamil Nadu.

The tender (RFP) TTL/RFP/22-23/CHENNAI/02 dated 15/03/2023 was placed on the website of TCIL /TTL and tender advertisement was widely published in leading newspapers, Business Standard (All India English Edition) & Dinamani (Chennai Tamil Edition) on 5.01.2022. Only one bid was received. Letter of Award /Acceptance has been issued to the party on 24th May 2023 and LOA amendment on 25.08.2023 for Grant of Lease of the Manufacturing Facilities and Premises of Tamilnadu Telecommunications Limited located in Maraimalai Nagar, near Chennai, Tamilnadu, on lease cum revenue sharing model basis for Rs.25.43 crs for the total lease period of 9 years and eleven months.

Operations could not commence due to non-availability of electricity in the factory. The HT electricity connection has been completely restored on 21st of April 2024. The Lessee is expected to start the renovation factory building, repair/ upgradation of the existing machineries after the hazardous materials are disposed off. The cable manufacturing expected to commence within 9 months.

It is pertinent to mention that the promoter (TCIL) has agreed to support TTL by giving preferential orders for supply of OF cables to TCIL at L-1 rate (ie. Promoter TCIL will give first right of refusal to TTL for supplying the required product /quantity). This will also enable to get the future orders for TTL /business of the company.

State-run telco BSNL has floated a tender worth 65,000 crore to implement the third phase of the BharatNet project. It is expected to complete the process of offering the tender by June-2024. The tender is part of the Rs 1.39-lakh crore revamped BharatNet project, cleared by the Cabinet in August 2023. The tender aims to connect and upgrade existing 164,000-gram panchayats and connect around 47,000-gram panchayats under the new model and there is a huge requirement of optical fiber cable more than 4,60,000 KMs.

In view of the above proposal of revenue sharing and lease rental, considering the huge scope of Optical Fiber cable supply during the immediate future due to implementation of BharatNet project and with the support of promotors, the accounts are prepared on going concern basis for this financial year 2023-24.

As mentioned in our financials, TTL is regularly borrowing from our holding company TCIL for its raw material support and working capital support for running day to day operations.

The balances of current liabilities and trade payable pertaining to related party /our holding company TCIL as on 31/03/2024 are given below:

Amounts due to Fujikura Limited amounting to Rs.2,07,991/- hundreds

Trade Receivables (considered good) amounting to Rs.4,67,200/- hundreds Unsecured Trade Payables amounting to Rs.3,60,457/- hundreds

This is to state that the above items are reviewed and monitored on day to day basis in both TTL and TCIL. The balances are periodically reconciled with TCIL and also approved by board isof directors of TTL.

It may not be out of place to mention that all the realizations from TTL clients are routed through Escrow account which is auto credited to TCIL's Account for which standing instructions have been given to bank. Moreover, charge has been created in favour of TCIL against fixed assets and current assets of TTL for all the TCIL loans, advances and liabilities towards raw material supply. The loans are repayable on demand basis.

Ind AS 109 requires all financial assets /liabilities to recognised initially at fair value and subsequently at amortised cost it satisfies the criteria with reference to Ind As 32 Para 11 and para 4.2.1 of Ind As 109. Since these financial assets/ liabilities are current in nature, there is immaterial finance income involved, therefore, as a general practice, demand deposits are carried at cost and not at fair value /amortised cost.

In view of the commitment to pay to TCIL, the holding company/ related party on demand basis, and the company is taking a conservative approach, management assume book value of current liabilities at a amortized cost i.e instead to book profit by discounting liabilities the company prefers to go and disclose liabilities with full amount under law of prudence. Company's Reply to Para 2 of Emphasis of Matter regarding balances carried in the debtors, creditors, advances & deposits payable /recoverable are subject to confirmation from all parties (other than Telecommunications Consultants India

Limited)

Wherever possible the Company is getting confirmation.Since TTL does not have fund to pay to the Creditor including M/s. Fujikura, the company does not ask for balance confirmation from any Creditors which will trigger to make payment.

Company's Reply to Para 3 of Emphasis of Matter regarding

Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006.

As stated in Notes to Accounts No.19, the Company has not received information from the vendors regarding their status under the Micro, Small and Medium Enterprises Development

Act, 2006.

Cost Auditors:

As per the provisions of the Companies (Cost Records and

Audit) Rules, 2014, the operation of the company is not falling within the scope of cost audit. Hence cost auditor was not appointed for the financial year 2023-24.

Secretarial Audit Report

Clarification on Secretarial audit observations is given

Point No (i) The Company is Joint sector Govt. Company with

49% of its shares held by TCIL, a Govt. of India Enterprise and 14.63% held by TIDCO, a Govt of Tamilnadu Enterprise. Being a Govt. Company, action has already been taken for induction of Independent Directors Constitution of Audit Committee as per 18 (1) and Constitution of Nomination and Remuneration Committee as per regulation 19(1) of SEBI LODR and separate Independent Directors Meeting as per 25 (3) of SEBI LODR shall be conducted after appointment of required number of Independent Directors by the Ministry of Telecommunications.

Acknowledgements

The Directors wish to place on record their sincere appreciation for the encouragement, assistance, support and co-operation given by Government of India, Government of Tamilnadu and the Promoters. The Directors appreciate your whole hearted efforts during the year and solicit your continued support and co-operation. Your directors acknowledge the continued trust and confidence you have reposed in this company.