Idea Chairman Speech-09.Pmd
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IDEA CELLULAR LIMITED ANNUAL REPORT 2008-09 Mr. G. D. Birla and Mr. Aditya Birla, our founding fathers. We live by their values. Integrity, Commitment, Passion, Seamlessness and Speed The Chairman’s Letter to Shareholders Dear Shareholders, The Indian mobility sector witnessed robust growth during the year. The total mobility subscribers, as on March 2009, stood at 392 million, registering an annual growth of around 50%. The low cost of entry and service, coupled with the deeper penetration of the network, have been the main drivers of the sector growth. Your Company had an excellent year, with consolidated revenue crossing the Rs. 100 billion mark. Its revenue at Rs. 101.54 billion, is up by 51% over that of the previous year. Even after the exclusion of revenue from the new service areas of Mumbai and Bihar, and from the joint ventures Spice and Indus, the annual revenue growth from older service areas is around 46%. This growth, coming on the back of the earlier year’s revenue growth of 54%, marks IDEA as India’s fastest growing major telco over the last two years. The net profit, for the year, stood at Rs. 8,816 million. Your company, during the financial year 2009-10, launched services in Orissa, Tamil Nadu (including Chennai), Jammu & Kashmir, Kolkata and West Bengal. With the imminent launch of services in Assam and North East service areas, your Company, alongwith its subsidiary and joint venture, will become a Pan India operator, befitting its stature and potential. Among other accolades, your company has been selected by the Economic Times as the ‘Emerging Company of the Year’ for 2009. The calendar year 2009, has seen overcapacity hitting the Indian telecom sector, largely due to the investment decisions of 2007-08, both from cross-over licensees and new licensees. This has inevitably lead to a phase of hyper competition. Your company has anticipated and prepared itself for this phase. Your company is strongly placed in its established service areas, while the approach for some of the new service areas is measured. I believe based on this well-crafted strategy, advantage of spectrum and scale, sophisticated management processes, brand strength, human capital and strong balance sheet, your Company will emerge even stronger through this phase. The Aditya Birla Group: In Perspective prides itself in having a course completion ratio of 90%, Today, we manage multinational teams – 1,30,000 which is a world benchmark. employees, comprising 30 nationalities, across 25 As perhaps many of you may be aware we track the countries, anchor our US$ 29.2 billion meritocratic organisational climate every two years. We use the conglomerate. Our values – Integrity, Commitment, Organisational Health Survey (OHS), as the barometer of Passion, Seamlessness and Speed, is the thread that strings employee engagement at work. It is conducted by Gallup. us together. Over 22,000 executives, across 17 businesses, spanning Post our Group being declared the “Best Employer” in 2007 25 countries and 750 cities/interiors participated in the by the Hewitt / Economic Times / Wall Street Study, our OHS6. The participation level at 94%, according to Gallup, brand as an employer continues to grow strongly. More than is a benchmark. 83% of the employees surveyed in the OHS6 8,000 leading professionals from India and globally have said that they are proud to be an employee of the Aditya teamed up with us. Birla Group and get professional satisfaction working here. 67% of our management employees have clearly Our rigorous assessment process, inclusive of Development emphasized their confidence in the ability of the leaders at Assessment Centres, assesses our people early in their various levels to successfully manage the emerging career on their potential to hold leadership roles. This way, challenges that the Group is facing. Almost three-fourths we have ensured that we have a robust bench strength of of our employees (73%) have stated that they would talent. We also use short term secondments and long term definitely advocate our Group as a place to build a assignments to develop the capability of our people to work meaningful career. across borders. This year over 1,700 colleagues have been job rotated. Going forward, I would like to emphasize that the brand of leadership that we seek to build combines the virtues of Over 80% of our businesses have participated in a professionalism with the commanding power of the mind, compensation benchmarking exercise this year and we have heart and soul. The mind which has the intellect to perceive taken significant corrective and proactive measures to stay the right from the wrong, the heart which has an emotional competitive and attractive. This positioning will further help bond with the organisation that cannot be severed, and a us to attract and retain the right talent. soul that is indomitable. Our biggest strength has been an emotional bonding that our employees have with the Group We lay great emphasis on continuous learning through our that makes the paradigm of duty truly boundaryless. in-house learning university – Gyanodaya. This globally benchmarked institution leverages resources from around the world to meet the development needs of our people. Best Regards, Over a 1,000 executives have taken courses this year. Additionally, more than 14,000 employees spread across the world, from Farmington Hills in USA to Giza in Egypt to Perth in Australia and Renukoot in Uttar Pradesh have used Gyanodaya’s E-learning platform called GVC. GVC Kumar Mangalam Birla Table of Contents 1 Corporate Information 3 Performance Highlights 5 Management Discussion and Analysis 8 Directors’ Report 16 Report on Corporate Governance 26 Auditors’ Report 30 Balance Sheet 31 Profit and Loss Account 32 Schedules to the Accounts 54 Cash Flow Statement Consolidated Financial Statements 57 Auditors’ Report 58 Consolidated Balance Sheet 59 Consolidated Profit and Loss Account 60 Schedules to the Consolidated Accounts 81 Consolidated Cash Flow Statement 83 Statement relating to Subsidiary Companies Corporate Information Board of Directors Mr. Kumar Mangalam Birla Chairman Mrs. Rajashree Birla Non Executive Director Dr. Rakesh Jain Non Executive Director Dr. Shridhir Sariputta Hansa Wijayasuriya Non Executive Director Mr. Biswajit Anna Subramanian Non Executive Director Mr. Arun Thiagarajan Independent Director Mr. Gian Prakash Gupta Independent Director Mr. Mohan Gyani Independent Director Ms. Tarjani Vakil Independent Director Mr. R.C. Bhargava Independent Director Mr. P. Murari Independent Director Mr. Sanjeev Aga Managing Director Chief Financial Officer Mr. Akshaya Moondra Company Secretary Mr. Pankaj Kapdeo Auditors Deloitte Haskins & Sells Chartered Accountants 706, B Wing, ICC Trade Tower, Senapati Bapat Road, Pune – 411 016 Registered Office Suman Tower, Plot No. 18, Sector No. 11, Gandhinagar – 382 011 Gujarat Corporate Office Windsor, 5th Floor, Off CST Road, Near Vidya Nagari, Kalina, Santacruz (East), Mumbai – 400 098 Registrar and Share Transfer Agents M/s. Bigshare Services Private Limited E/2 Ansa Industrial Estate, Saki Vihar Road, Saki Naka, Andheri (East), Mumbai – 400 072 Website http://www.ideacellular.com 1 Performance Highlights at a glance Gross Revenue EBITDA INR bn INR bn 28.4 120 30 101.5 100 25 22.7 80 20 67.4 14.9 60 15 43.9 10.9 10 8.4 40 29.9 22.7 20 5 0 0 FY 05 FY 06 FY 07 FY 08 FY 09 FY 05 FY 06 FY 07 FY 08 FY 09 Net Profit Cash Profit INR bn INR bn 12 28 10.4 23.3 24 10 8.8 19.8 20 8 16 6 11.7 5.0 12 7.6 4 8 2.1 5.2 2 0.8 4 0 0 FY05 FY06 FY07FY08 FY09 FY05 FY06 FY07FY08 FY09 3 Annual Report 2008-09 Management Discussion and Analysis Report Sector growth institutions/banks in the event of default committed by the UAS licensee company. The Indian mobility sector witnessed a growth of around 50% in subscriber terms during the financial year 2008-2009. The Implementation of Mobile Number Portability (MNP) sector reported 392 mn subscribers as of March 31, 2009. The DoT, on August 1, 2008, issued guidelines for the MNP Expanding telecom networks, falling tariffs and continued license. As per the guidelines, the country has been divided in reduction in handset costs, remained the key drivers for this two MNP zones for grant of licenses, with 11 licensed service growth. With wireless penetration level at 34%, the Indian areas in each zone. On March 20, 2009, the DoT signed the wireless market offers an attractive growth opportunity. The MNP operator license with M/s. Syniverse Technologies (Zone I) subscriber base under brand !dea, increased from 24 mn as of and M/s. MNP Interconnection Telecom Solutions (Zone II), end March 2008 to 43.02 mn as of end March 2009, a growth giving six months for MNP implementation in Metro service of around 79%, taking its national market share to 11%. areas and Category ‘A’ service areas, and one year for other Regulatory service areas. The DoT on May 6, 2009 has issued amendments to all CMTS/ UASL/ NLDOs/ ILDOs seeking implementation of Major regulatory developments for the period are: MNP in all Metro/ Category ‘A’ service areas latest by September DoT amendment on Intra Circle Roaming 20, 2009, and the other service areas latest by March 20, 2010. However, on September 3, 2009, DoT has extended the time On June 12, 2008, the DoT amended license terms, allowing a frame for implementation of Mobile Number Portability by licensee to enter into agreements with other service providers 3 months. The new date for implementation of Mobile Number within the same service area for the purpose of intra-circle Portability for Metro and Category ‘A’ service areas is roaming.