EXHIBIT 8
(VSNL LOGO)
Rishabh Nath Aditya
Assistant Company Secretary
HQ/CS/CL.24B/10179
29 October 2003
SUB. : MINUTES OF 17TH ANNUAL GENERAL MEETING
Sir,
Pursuant to Clause 31(d) of the Listing Agreement, please find sent
herewith the Minutes of the 17th Annual General Meeting held on 2 September
2003.
Thanking you,
Yours faithfully,
For Videsh Sanchar Nigam Limited
Rishabh Nath Aditya
Asst. Company Secretary
To :
1. Security Code 23624, The Stock Exchange, Mumbai, Corporate Relationship
Department, 1st Floor, New Trading Ring, Rotunda Building, Phiroze Jee Jee
Bhoy Towers, Dalal Street, Mumbai - 400 001. Fax No.(22) 2722061, 2721072.
2. The Secretary, Madras Stock Exchange Limited, Post Box No.183, 11, Second
Line Beach, Chennai - 600 001. Fax No.(44) 524 48 97.
3. Security Code 32149, The Secretary, Calcutta Stock Exchange Assn. Ltd, 7,
Lyons Range, Calcutta - 700 001. Fax No.(33) 220 25 14/28 37 24.
4. Security Code 22064, The Secretary, Delhi Stock Exchange Assn. Limited,
3/1, Asaf Ali Road, New Delhi - 110 002. Fax No.(11) 329 21 81.
5. Security Code 5251, The Asst. Manager (Listing), National Stock Exchange of
India Limited, Capital Market - Listing, Exchange Plaza, Bandra Kurla
Complex, Bandra (E), Mumbai - 400 051.Fax Nos. : (22) 6598237/38.
6. National Securities Depository Ltd., Trade World, 4th Floor, Kamala Mills
Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013. Fax Nos. :
497 29 93.
7. Mr. Anish Kumar, The Bank of New York, Express Towers, 13th Floor, Nariman
Point, Mumbai - 400 021. Fax No.204 49 42.
8. Head Office : M/s. Sharepro Services, Satam Estate, 3rd Floor,Above Bank of
Baroda, Chakala, Andheri (E), Mumbai - 400 099 Ph. 821 5168 / 820 2108 /
820 2114, FAX 837 5646
9. Ms.Caroline Yap, Managing Director, International Client Services, New York
Stock Exchange. No. :+1 2126565071
10. Shri Hitendra Patil, Vice President (Operations) Central Depository
Services (India) Limited Phiroze Jee Jee Bhoy Towers, Dalal Street, Mumbai
- 400 023. Fax : 267 3199
11. Mr. Pavithra Kumar, Corporate Finance, for SEC filing requirements, Fax
1195.
VIDESH SANCHAR NIGAM LIMITED
The Seventeenth Annual General Meeting of Videsh Sanchar Nigam Limited was held
at Birla Matushri Sabhagar, New Marine Lines, Mumbai 400020 on Tuesday, the 2
September 2003 at 11.00 A.M.
The following Directors were present:
Mr. Ratan N. Tata (Chairman)
Mr. S.K. Gupta
Mr. Srinath Narasimhan
Mr. Rakesh Kumar
Mr. Y.S. Bhave
Mr. Subodh Bhargava
Mr. Suresh Krishna
Mr. Ishaat Hussain
Mr. Kishor A. Chaukar
Mr. Vivek Singhal
Dr. Ashok Jhunjhunwala
Mr. F.A. Vandrevala
302 shareholders were present in person and 10 were represented by proxy. Mr. S.
Mani, Director (SU), Department of Telecommunications, being a representative of
President of India, was also present.
The Chairman welcomed the shareholders to the meeting. He suggested that with
the concurrence of the members present, the Notice and the Annexure to the
Auditors' Report would be taken as read. The members agreed. The Chairman
requested the Secretary to read the Auditors' Report.
The Company Secretary read the Auditors' Report. The Chairman introduced the new
Directors on the Board of VSNL i.e. Mr. Vivek Singhal, Dr. Ashok Jhujhunwala and
Mr. F.A. Vandrevala to the shareholders.
The Chairman, thereafter, briefly addressed the Meeting as follows:
Last year (2002-03) has been a year of considerable change for VSNL. It was the
year in which the exclusivity of VSNL ended with the introduction of two private
International Long Distance (ILD) players; considerable negotiations took place
in terms of the new revenue sharing arrangement with BSNL/MTNL; tariffs were
dramatically reduced; settlement rates for foreign carriers came down. The ratio
of the revenue share with BSNL/MTNL was earlier on a one-to-one basis, but the
Company was obliged to accept a revenue share at one to five basis.
That is, five times what VSNL earlier kept, was kept by BSNL/MTNL. So, during
the year, total revenues dipped by 32%, to a great extent because of the tariff
drop. Profit After Tax (PAT) fell by 45%, both in terms of the reduction in
tariffs as also the reduction in revenue share. Given this situation, the Board
decided on a dividend of Rs.8.5 per share, which of course is not to be compared
to the previous year where there was an interim dividend of Rs.75/- declared per
share paid before privatization and a final dividend of Rs.12.50 per share
declared in August, post divestment.
During the year, the Company made major efforts to protect its ILD business and
to protect its market share. In doing so, in the new environment, undoubtedly it
has to be competitive in terms of rates and
what emerged is a new environment, which would not have the margins that were
there during the monopoly. Indeed, the Company will need to look at expanding
other lines of business so as to build VSNL into a viable company, as its main
line of business (ILD) has diminished. VSNL has been establishing a long
distance backbone in the country, which is a necessary investment. VSNL has
established a network of 3500 kms between Delhi, Mumbai, Hyderabad, Bangalore
and the 1400 kms network between Amritsar, Delhi, Mysore and Ernakulam would be
completed by December. During the year, the Company also made a strategic
investment in TTSL with a view to integrating the telecom operations and
realizing that VSNL, which had only one customer i.e. BSNL/MTNL, must in fact
own some customers and its associations with other access providers (not just
TTSL), is a must.
The performance of the first quarter, which has already been released, also
reflects the changed circumstances. The total income in the first quarter was
down to Rs.926 crores as against Rs.1400 cores in the same quarter last year.
The PAT for the first quarter was down actually to Rs.65 cores against Rs.261
crores last year, but that contains almost Rs.39 crores of Voluntary Retirement
Scheme (VRS) payment during that quarter. Close to fifty crores will be
reflected in the next quarter for the VRS, which has been an unfortunate but
necessary step that the Company had to take to right size itself. The Board and
the Management appreciates the Unions for the understanding of the situation as
VRS was done without any disharmony amongst the community of VSNL.
VSNL has undertaken to focus on the corporate and retail customers to build a
better customer base and has tried to integrate all its services under the TATA
Indicom brand name. VSNL made investments in call centres and back office
support for customers and tried to upgrade the infrastructure and legacy systems
in the Company. In trying to upgrade the billing systems, there was a major
teething problem and temporarily the quality of Internet service deteriorated
rather sharply. This has been rectified and VSNL will now be able to restore the
level of service with a better billing system and better feedback system rather
than several disparate systems as in the past. The Chairman apologised for the
inconvenience the Internet users have had.
During the year, VSNL also acquired the assets of a company in the US called
Gemplex, which was an Internet protocol and virtual private network provider.
VSNL also launched a MPLS based IP network and has seen the ISP subscriber base
growing by 20% during the year. One new initiative VSNL has taken, is to focus
on marketing services in terms of leased lines and managed networks to corporate
customers. During the year, VSNL has also moved into Sri Lanka to expand its
operations by forming VSNL Lanka Limited, which will be an ILD operator in Sri
Lanka. VSNL formed VSNL America Inc. for taking o ver the network assets of
Gemplex and offer services from that point. VSNL has a joint venture called
United Telecom Limited formed with MTNL, TCIL and the local partner from Nepal
to provide services in Nepal.
Clearly, looking forward, VSNL has a major challenge as its major business will
no longer remain its major business and will certainly no longer provide the
income flow as in the monopoly days. It was not something the Tatas did not
realize while acquiring the company, but the removal of the exclusivity and the
change in the market scene has happened much faster than one would have
expected. During the last year, a great deal of management time and effort was
spent in trying to recoup what VSNL could in this business (ILD) that suddenly
disappeared. What VSNL needs to do in the coming years is to build a company in
several robust areas, be it Internet, be it Corporate Services or other
facilities and integrate VSNL into an end-to-end telecom operation in order to
be a meaningful telecom player.
The issue of being a predominantly ILD supplier standing alone without customers
is a doomsday task for VSNL. VSNL needs to own customers and needs to look at
the skills and the capabilities that this
Company has, to look at the telecom business and the service providing business
that it can do effectively. VSNL has a great deal of strengths all of which are
visible only in the ILD area with only one customer, which will no longer be
there. VSNL does have customers in the Internet area, which has been secondary;
but it needs to make those kinds of customers its main focus. What Tatas have
done is to approach the Government and mention that Tatas will be willing to do
one of two things - to offer VSNL's infrastructure to BSNL/MTNL rather than
those companies creating a new infrastructure post 2004 so that a national
resource will not have to be recreated; or, alternatively to outsource their ILD
operations on a captive basis so that the infrastructure that has been built by
the Government (and not by the new Strategic Partner), is used and does not
become totally redundant. This proposal is before the Government for its
consideration. If it were to be accepted, at least a major part of business
remains intact and VSNL can continue to make it more optimum and focus on the
new businesses. If it is not accepted, then VSNL has a major task on hand i.e.
to look at the asset base and resource base, which will be predominantly
redundant. VSNL has also formally gone to the Government and sought a review of
the compensation that the Government had promised at the time of preponement of
the monopoly and sought a review of the quantum and the manner in which the
compensation was offered. VSNL has raised issues on how the compensation package
was thrust on the shareholders for their approval and this also, is before the
Government for consideration. These moves have been made and these are in fact
under the consideration of the Government. These proposals have neither been
accepted nor rejected by the Government.
Another issue on the ILD front has been the dramatic increase in the grey market
traffic in the country and in the ILD area, fuelled greatly by the substantial
access deficit charge of Rs.5/-, which has been imposed for receipt of calls.
This has created a fair amount of grey market traffic. The grey market traffic
is one in which an illicit operator brings an international call in on an
international carrier, receives it in a clandestine establishment and presents
it to BSNL or any other provider as a local call and therefore avoids the Rs.5/-
charge. This has denied the access providers in the field around Rs.500 crore of
revenue. This is something the Government does need to address and create
punitive steps on something that is taking the resources away from this country.
To end, the Chairman stated that the coming years will be a major challenge.
VSNL will have to change its mindset in terms of how it looks at the future. He
hoped that this would indeed take place. He stated that VSNL needs to build new
businesses, which will in fact be the future businesses of the Company and not
the continuation of the past businesses. VSNL will have to accept that it is now
working in a competitive environment and will have to build a customer base,
which it did not have. This is the challenge that the Company will face and the
Board is alive to the needs to do this. VSNL is now in a new business-building
mode to build this Company into what it can be. The strengths of VSNL are that
it has a tremendous resource of trained and capable people in all levels. It
needs to be ensured that they have the motivation and excitement in the year to
come and VSNL needs to draw on the skills that there are and generate the
excitement that a company like VSNL should have. From the total strength of
around 3,000 people, the VRS scheme has reduced almost 900 people i.e. almost a
third of the people have been reduced. Therefore, VSNL is not a tremendously
flabby company and has the capability of being a company that can direct itself
into the exciting telecom field in the future. The Chairman stated that he would
like to make a commitment that the Board will actively and vigorously pursue
making VSNL a company in a new field that will be alive to the times that face
it. Therefore, while it may be disappointing for shareholders to look at VSNL
from the monopoly days, the shareholders will need to be somewhat accommodating
while VSNL builds a new business and new thrust for the Company. The Chairman
expressed confidence that VSNL will not disappoint the shareholders in what it
does in the coming years.
The Chairman then invited the shareholders to raise any queries. The following
shareholders participated:
1. MR. T. M. DAVAR
Mr. Davar:
o Stated that quite a number of shareholders did not receive the annual
report.
o Stated that the status of directors whether independent or not should be
given on the first page of the annual report.
o Asked why the meeting is held late and not by June.
o Asked for the projections and Capex.
o Asked as to how 130 years of experience is possible as mentioned in the
Annual report while this is the 17th AGM of VSNL.
o Wanted to know the status of investment in TTSL.
At this point, the Chairman clarified that VSNL would invest up to Rs.8.35
billion in TTSL's equity over a seven year period. The Chairman stated that so
far, VSNL has invested around Rs.300 crores. A committee was created in order to
meet the Government's desire at that time. It was not that the Government did
not permit the investment, as this was not an area of Government approval. It
was decided in order that the results of TTSL do not jeopardize the financials
of VSNL, the investment in TTSL should not exceed 20%.
Mr. Davar, thereafter:
o Suggested that some discounts on Internet should be given to the
shareholders.
o Felt the annual report becomes complicated due to various abbreviations like
CAC, NVPI, IUC etc.
o Referring to page 15, on international initiates in VSNL America and VSNL
Lanka, wanted to know the extent of viability of the enterprises and amount
of investment.
o Regarding VRS, wanted to know whether it was VRS or CRS. Asked whether VSNL
would be functional with the reduced staff. Asked about the future wage bill
and annual saving minus 950 employees. Asked what the payment outgo in the
VRS is and what the savings in future will be.
o Wanted to know the legal status of Mr. S.K. Gupta as it is stated that Mr.
Gupta is on deputation from Tatas and why Mr. Gupta cannot continue as
employee of VSNL.
o Stated that the printing of the Annual Report is bad.
o Felt that the termination of the monopoly and the compensation package was
an unfair stand taken by the Government because this was the basis on which
the Strategic Partner offered to buy at Rs.202/- per share. Stated that
though Government is giving some packages for this, from the opening
statement of the Chairman it is felt that this is not sufficient to offset
the income VSNL was supposed to get.
Wanted to know the legal status of what the Government has done and whether
VSNL can press for the monopoly to continue till 2004. Stated that this has
hurt the sentiments of the shareholders.
o Wanted clarifications on the shareholding pattern given on page 29.
o Wanted to know whether the Tatas would be taking a 51% stake.
o Wanted to know whether the government is proposing divestment of 26%.
o Wanted to know whether ADRs are at a discount or a premium.
o Wanted to know why the US GAAP accounts are down as compared to Indian GAAP.
o Wanted to know why the shareholder value has eroded.
The Chairman clarified that the Company should not be blamed for the erosion of
the shareholders' value. This was because undoubtedly when the monopoly was
eliminated earlier, it was passed by the
shareholders because of the might of the ownership that the government had then.
So the shareholders were aware before the Strategic Partner came into the
picture that what was approved at the EGM in May 2001 would have some effect on
the company. The issue of what compensation package was promised at that EGM is
being taken up with the Government.
Mr. Davar:
o Wanted to know why the land of the Company was left out to be demerged and
how this benefit is going to be distributed.
o Stated that none of the executives of VSNL were available for discussions
before the meeting.
o Wanted to know why the words "A Tata Enterprise" are not printed on the
Annual Report.
o Wanted to know why Tata Share Registry is not the Registrar and Transfer
Agent of VSNL.
o Stated that there is a big fall in income.
o Stated that dividend outgo from Rs.2,483 crores has come down to Rs.273
crores.
o Referring to page 46, under the Balance Sheet asked why there is a big jump
in advertising and publicity from Rs.44 crores to Rs.116 crores.
o Asked why donations are nil.
o Regarding provision for diminution in the value of fixed assets, it has
increased from Rs.5 crores to Rs. 21 crores.
o Wanted to know why there is a difference between accounts under Indian GAAP
and US GAAP.
o Wanted to know whether merger of TTSL and VSNL is on the cards.
2. MR. ARVIND VYAS
Mr. Arvind Vyas:
o Referring to page 19, wanted to know the status of the IPO of Intelsat.
o Wanted to know the status of the IPO of Inmarsat.
o Regarding TVCL, wanted to know status of the write off in TVCL investment.
o Regarding VSSL, wanted to know the status of the winding up of VSSL.
o Regarding demerger of surplus land, what is the status of the shares to the
shareholders.
o Regarding call centers, when the call centers will be commissioned at other
places like Gujarat.
o After VRS, wanted to know the status of employees.
o About Gemplex, wanted to know how much VSNL will be able to earn in the US
venture. The Chairman at this point informed Mr. Vyas that it will be
difficult to answer each of his questions at that point of time as many of
his questions required either explanations or minute subdivisions of the
Company's costs on which he will have to talk to the management to get the
information.
3. MRS. ASHALATA MAHESHWARI
Mrs. Ashalata Maheshwari:
o Congratulated Mr. Satish Ranade and his staff for informative and
transparent presentation of the Annual Report.
o Wanted to know what growth the Company is expecting in income and
profitability due to increased competition due to de-regulation.
o Wanted to know the status of representations regarding the compensation
package for de- monopolisation made to the Government. Stated that the
Government should compensate the Company at the earliest.
o Complimented the move to offer all services under the common brand "Tata
Indicom".
o Wanted to know the status of demerger of surplus land.
o Supported the decision of the Company to invest in TTSL.
o Wanted to know whether there would be another VRS.
4. MR. SANGHAVI
Mr. Sanghavi:
o Suggested that extra copies should be provided to the speaking shareholders
who did not receive the annual report.
o Wanted to know whether VSNL will export its technical know-how abroad.
o Wanted to know what investment VSNL is doing in long distance.
o Wanted to know whether any discounts on Internet would be given to the
shareholders.
5. MR. UPENDRA SHAH
Mr. Upendra Shah:
o Stated that some shareholders waste the time of the house, by asking
questions, the answers of which are already present in the annual report.
o Suggested that the shareholders who have a lot of clarifications can write
to the Company before the meeting and seek clarifications.
o Stated that he had written a letter to Mr. Ranade, which was duly replied
to.
o Complimented the Secretary and Secretarial Department for preparing an
excellent Annual Report.
o Referring to page No. 9, under table 1, wanted to know how the company
expects to recover the losses.
o Referring to page no. 15, wanted to know about TBEM initiative in the
company.
o Referring to page No. 14, asked what would be advantage of the ICICI VSNL
tie-up.
6. DR. M.G. JOSHI
Dr. M.G. Joshi:
o Based his talk on the theme as to how Tatas have imparted Tata Culture.
o Stated that the Company should have taken adequate steps early.
o Stated that the value of the Company is sliding.
o Presented an analysis based on certain ratios worked out by him.
At this point, the Chairman responded to the queries raised by Dr. Joshi.
Referring to the point of Dr. Joshi that the Company did not take steps early,
the Chairman stated that analyzing history is somewhat easier than making
history. He stated that the Tatas took over the Company in 2002 and the
readjustment of finances of a Company whose major business is under pressure,
takes time. The Chairman stated that one year in a Company is too short a period
for such analysis. It does take some time to readjust the finances and to look
at where one could draw the resources from. The Chairman asked Dr. Joshi how is
it possible for a Company, which occupied a monopoly position, to readjust its
finances in a short time after a substantial change occurs in its position and
the environment. The Chairman stated that the shareholders should in fact
compliment this Company for not going to zero but upholding the company at
Rs.800 crores of income. He stated that VSNL is fighting a battle to replace its
prime business with some other business and derive value to its shareholders.
After this, the Chairman replied to the questions of the shareholders who had
already spoken.
Response to Mr. Davar's questions:
On the query as to why the Meeting was delayed, the Chairman stated that after
the finalisation of accounts under Indian GAAP, the accounts are then finalised
under US GAAP, which takes time.
Capex: The Chairman stated that the Capex for the year would be around Rs.1,200
crores of which about Rs.200 crores would be required to establish bandwidth
capabilities. He also stated that VSNL is setting up a national long distance
network for about Rs.245 crores, the undersea cable capacity at almost Rs.600
crores, investment in TTSL will be R s.205 crores in the current year, voice
circuits about Rs.36 crores and other capex would be around Rs.150 crores.
The Chairman stated that the description of directors (whether independent or
nonindependent) will be added in the next year's annual report.
Regarding 130 years experience: VSNL began as a private Company then it became
OCS and then VSNL as a successor of OCS took over in 1986. Therefore, this is
the 17th AGM of VSNL. TTSL: The Chairman clarified that he had already responded
regarding TTSL. Whether Company would be debilitated due to VRS: The Chairman
pointed out that VSNL has a wide spectrum of technical people. He stated that
Mr. S.K. Gupta will not be debilitated due to the VRS that took place. He also
clarified that it was not a CRS but was VRS.
Cost of VRS: The Chairman stated that the cost of the VRS to the Company would
be around Rs.94 crores and the savings would be around Rs.40 crores a year.
Status of Mr. Gupta: VSNL had a retirement age of 60 years and Tatas did not
wish to change that. Therefore, Mr Gupta was placed on the payroll of the Tatas
and was deputed to VSNL, so that he can provide the continuity to the Company.
Use of Tata Enterprise: The Chairman stated that VSNL is still awaiting
clearance from the Government on use of the by-line "A Tata Enterprise". He
further stated that VSNL still has Government as a 26% shareholder and there are
various understandings and commitments, which should be adhered to. Increase
shareholding in VSNL to 51%: The Chairman stated that the Tatas have the right
to go to 51% and do have the creeping acquisition as a route. But due to SEBI's
Insider Trading Rules, Tatas cannot trade in shares of the Company at all times.
This has been a great deterrent in the period of time available to Tatas to
undertake the acquisition. Demerger of surplus land: This was an item present in
the shareholders Agreement signed between the Government and the Tatas as part
of the disinvestment. In other words, this has been done so that Tatas do not
avail of the surplus land. In addition to this, the Tatas had to assure those
shareholders who sold shares under the open offer to the Strategic Partner that
they would be recognized for the sharing of the demerger profits. The reason for
this particular exercise not going forward is that there are questions of both
tax, and capital gains and stamp duty on the land, which are yet to be resolved.
Since VSNL is a company listed on the New York Stock Exchange, some issues are
being explored between the US attorneys. One of the reasons why this land was
not given to the Strategic Partner is that the government had given this land to
VSNL at very low prices and the Company should not be saddled with a huge
capital gain.
Difference with US GAAP and Indian GAAP: Under Indian GAAP, the profit is Rs.780
crores and the profit under US GAAP is Rs.740 crores. ADRs and bonus issue: The
ADRS presently are 10% and not 20% of the total share capital. There was bonus
issue of 2:1 earlier.
Investment in TVCL and VSSL: VSNL is writing-off Rs.9.2 million as investment in
TVCL. VSSL would be wound up by end of this year.
Intelsat IPO: The Chairman stated that the IPO of Intelsat has not yet taken
place; VSNL is still the shareholder there with lack of liquidity in the
process.
How profit can be same next year: VSNL is going through a transition phase and
this will take time.
How long the Government will be a shareholder: There has been a talk that
Government is willing to divest its stake in VSNL. There are some discussions on
this issue from the Government's side.
Compensation package: The Chairman stated that VSNL is engaging the dialogue on
that with the Government. He stated that the Tatas did know that the monopoly
would cease in the year 2004 but the Tatas did not know what did happen in the
year 2002 i.e. the preponing of the
ending of VSNL's monopoly in the year 2002, and the effect of this on the
tariff, the introduction of the two new private players, the new rates and the
revenue share that was thrust upon us.
The Chairman appreciating what Mr. Upendra Shah had said in his remarks,
welcomed the suggestion of Mr. Shah on the time to be allotted to each
shareholder to speak at the AGM. Plans to improve profit: The Chairman stated
that such plan would evolve better by end of the current year. The Chairman
further stated that last year was literally spent in trying to keep VSNL's head
above the water in the instantaneous change that took place after July.
TBEM : The Chairman stated that it is a scorecard that is created in the Tatas.
It has its genesis in the Malcolm Baldridge Award. It sets parameters and goals
and methodology to operate to add value to the enterprise. The TBEM worked quite
well in the Tata companies and has raised the performance of Tata Steel, Telco
and all the companies to which TBEM was applied.
ICICI Bank: VSNL is in cooperation with ICICI Bank is to the extent that
customers can pay for their Internet usage through ICICI bank facilities and the
Internet card is mailed to the customer. Dr. Joshi - The Chairman stated that
all the queries of Dr. Joshi have been responded to. He stated that any analysis
should not be made in isolation but should take the environment also into
account.
7. BRIG. VIRMANI
Brig. Virmani:
o Having lost 100% monopoly, wanted to know what is the market share of VSNL
as of date.
o Wanted to know the status of the Government Directors on the Board.
Government Directors: The Chairman clarified that presently the Government
has the right to nominate two directors and two independent directors. Mr.
Y.S. Bhave and Mr. Rakesh Kumar are the Government Directors.
Brig. Virmani:
o Felt that the Government nominees should not exercise any undue influence on
the Board. Stated that the shareholders had vehemently opposed the
resolution to finalise the compensation package at the EGM held in 2001.
After one week, there was a report in the press that overwhelmingly the
resolution was passed at the EGM, which was not the actual sense of the
house. The minutes of the meeting did not reflect the actual sense of the
house.
o He expressed his fear that with the VRS, two things may happen. One is that
this year if you do not amortise the Rs.94 crores we will be worse off in
this year. Please try to amortise that amount over a period. Otherwise
giving dividend of Rs.8.5 per share will be difficult in the current year.
The Chairman clarified that the amount cannot be amortised.
Brig. Virmani:
o Wanted more charts in the Annual Report.
o Was happy that the financial ratios are the best that he has come across.
o Wanted to know why the figures in the Annual Report are given in millions
and billions and not in lakhs and crores.
The Chairman clarified that the figures are in millions due to US GAAP
requirements.
o Wanted to know to know whether there were any employees entitled or eligible
under Section 217 of Companies Act, 1956. He wanted to know whether Mr.
Srinath is paid by VSNL and if so, does he not fall under the Section 217.
The Chairman clarified that Mr. Srinath is on the rolls of VSNL. Last year
there was no commission paid to Mr. Srinath and so it did not come in the
category.
o Brig. Virmani expressed his fear that this year may be worse than the last
year. He stated that in his personal experience when he had a technical
problem with VSNL's Internet e-mail, the concerned person stated that they
did not have a field force. He stated that by VRS the essential staff should
not be sacrificed. He wanted to know who on the technical side should be
contacted when he has a technical
problem with his Internet. He ended by stating that he was sure that VSNL
will improve, maybe in 2 years or 5 years.
The Chairman advised Brig. Virmani to get in touch with Ms. Madhu Lele,
Chief, Customer Services of VSNL, then present in the Meeting.
8. MR. JHUNJHUNWALA
He suggested that the Chairman's speech be sent to shareholders along with the
dividend warrants to all shareholders who are not present in the AGM so that
they learn more about the Company. He stated that the theme of the Chairman's
speech is to change the mind set and that applies to even shareholders. His
response to the three shareholders who complained about non-receipt of the
annual report was that they should go and get the Annual Report from the
Registered Office. He did not agree with the statements made by some
shareholders that the security in VSNL is so strict that it does not allow
shareholders to get inside. He stated that during the last year, he has visited
VSNL at least 5 times and he had free access to the office and felt that Mr.
Ranade's office is a shareholder friendly one. He also stated that he had sent
his questions to Mr. Ranade in advance and they were received 72 hrs before the
AGM and that he was very satisfied with the replies. Therefore, he will not
dwell on accounts per se. He stated that in Tata Elxsi balance sheet, in the
Management Discussion and Analysis (MDA) section, justification was given on
every item of balance sheet wherever there was an increase or decrease.
Therefore, he suggested that VSNL should have a re-look at its MDA. He stated
that unless Tata Share Registry (TSRL) proves itself on a cost basis, the status
quo of the present registrars should be maintained. He stated that the present
contract with the R&T agents is expiring in the year 2004 and requested that it
should be renewed unless TSRL proves itself on cost basis. He stated that even
if VSNL pays 0% dividend next year, he is prepared to face such a situation
without grudges. He stated that he uses VSNL Internet as well as Internet access
provided by others. He felt that all of them fail sometimes and that VSNL only
failed for a moment and for this the Chairman may not have to apologize. He also
stated that the marketing executives were also available to him and he did not
suffer at any time when technical help was required from VSNL.
9. MRS. MASCARENHAS
She stated that she also did not receive the Balance Sheet in time and called
Sharepro Services who arranged to send a copy to her. She also stated that she
personally went to VSNL and collected the Balance Sheet and there were no
hassles in going to VSNL. She requested that Mr. Ishaat Hussain should be
included in the Investor Grievance Committee. She thanked the Company for giving
a generous dividend. She:
o Asked what will be the future dividend policy.
o Asked what is VSNL's roadmap and market share.
o Asked when VSNL's prepaid calling card will be launched.
o Wanted more explanation on the revenue assurance function.
o Wanted to know the location of the customer assistance call centre in
Mumbai.
o Wanted to know whether there are separate call centres for corporate and
retail customers and by how many people they are manned.
o Wanted to know details of additions made in land and building.
o Stated that legal and professional charges have gone up.
o Requested the inclusion of two charts, one for rupee earned and another for
rupee spent.
10. MR. JANAK MATHURADAS
Mr. Janak Mathuradas:
o Stated that Tatas have paid a very big price for acquiring VSNL.
o Stated that due to incoherent policy of GOI, it is difficult to predict
telecommunication policy.
o Wanted to know the names of the two more ILD players.
o Wanted to know the arrangements made with cellular operators and the revenue
that it will bring to VSNL.
o Wanted to know whether any of the ADR holders have come out with a case
against the Government.
o Wanted separate figures on freehold and leasehold lands on page 41.
o Stated that VSNL services are slow as compared with other Internet access
providers.
o Wanted an increase in the number of ads for Tata Indicom.
o Wanted to know the role of VSNL in Tata Indicom.
11.MR. J. JHAVERI
Mr. Jhaveri:
o Stated that shareholders' value has fantastically come down.
o Asked whether proper valuation of VSNL was made during the acquisition.
o Expressed his doubts whether the American subsidiary is a good idea.
o Stated that TSRL should be VSNL's registrars.
o Stated that registered office of the Company should be strictly controlled
by security.
o Suggested that the registered office should be shifted elsewhere.
o Felt that the Cabinet has given a very raw deal to VSNL as far as
compensation is concerned.
The Chairman clarified that between BSNL and MTNL, they have approximately 50
million subscribers or customers. All the other private telecom players add up
to about 13 or 15 million subscribers. Next year, BSNL have the right to operate
ILD themselves. The impact of BSNL entering the ILD sector needs to be fully
digested. According to him, the best way to understand VSNL's market position is
to segment our business. VSNL's market share in the ILD business presently with
the private players is about 66%. In Internet, VSNL has about 37% and in
corporate data about 50%. The 66% share in the ILD sector is also under
challenge unless VSNL can find a way to move forward.
The Chairman stated that from next year there will be graphs and charts in the
Annual Report.
The Chairman informed that there is no criticality arising due to the VRS.
Mr. Jhunjhunwala - The Chairman appreciated what Mr. Jhunjhunwala had said in
his remarks. He stated that Mr. Jhunjhunwala's point on Tata Elxsi was well
taken. The Chairman stated that he would also look at the dividend waiver issue.
The Chairman stated that he had seen the questions raised by Mr. Jhunjhunwala
vide his letter and also the reply issued.
Mrs. Mascarenhas - The Chairman stated that the roadmap for the future will be
best described along with VSNL's next financials. The Chairman pointed out that
the corporate call centre is at Churchgate and the retail call centre is at
Andheri and is manned by about 75 people. Regarding the rise in the legal and
professional fees - the Chairman pointed out that the rise is basically for
employment of business consultants, the main consultant being Boston Consultancy
Group engaged to study how VSNL can grow new businesses and the US Counsel fees
for bankruptcy and other cases. Regarding the additions made to land, the
reference is to the stamp duty paid on three acres in Bandra-Kurla complex.
Mr. Mathuradas & Mr. Jhaveri: The Chairman stated out that the Tatas paid
Rs.202/- per share for VSNL. He pointed out that the ruling price at that time
was around Rs.176/- and obviously, when one makes a bid and hopes to win; one
cannot make a bid which is Rs.2 or 4 above that price. The Chairman further
added that the Tatas paid for management control resulting in payment of premium
on that share price. If they paid too much it is Tatas' loss and if they paid
too little it was Tatas' gain. It is the challenge for the Tatas as the new
Strategic Partner to turn this Company around. The Chairman requested the
understanding of the shareholders on this.
The Chairman endorsed the view that the telecom policy has been inconsistent and
the telecom situation in the country is somewhat fluid. He hoped that in the
present context, there would be a fair amount of consistency and rationalisation
would be brought in the policy. According to him, it was extremely unfortunate
that the industry is choosing to fight amongst itself. The Chairman said that
one must recognise that some of the noise being made relates to people not
wanting new players to enter the field. He stated that it is the same issue of
vested interest that are now governing the turbulence that one sees in the
industry. He hoped that these various controversies are rationalised, but all
the noise made about public interest etc., he thought, was hypocritical more
than actual. According to him, the concern of some of the existing players is
not to allow full roaming so that they have competition. He felt that it should
not be on unfair basis to them. However, if there is a payment to made or if
there is a level field to be established that should be the basis on which we
move forward.
Regarding how it will pan out in terms of intense competition, high levels of
advertising, he stated that since we have over a billion people in this country,
we are undertaking several modes of connectivity. We are building roads to
connect our country physically. He stated that Telecommunication and Internet
are our virtual roads. They will connect the country and it is necessary for the
prosperity of the country. He believed that there is room and scope for various
players to exist. According to him, the schemes, handsets, discounts after a
little while will disappear, and it will be only quality of service which will
differentiate one provider from another. He felt that everyone will all be a
party to the turbulence but eventually there will just be genuine growth in the
industry and there will be considerable consolidation in how we move forward.
Regarding the names of the two ILD players, the Chairman stated that last year
the new ones were Bharti and Data Access and now there will be Reliance and next
year there will also be BSNL. He added that as pointed out before BSNL with MTNL
have about 50 million customers. So there is going to be quite a substantial
change in the ILD scene unless we can find a way to participate. Regarding the
question about liability and who will take that liability as and when it occurs,
the Chairman stated that he cannot answer that question but thinks the fair
place where the liability needs to rest is with the Government, but this is
something which is yet to be resolved.
Regarding the role VSNL will play in Tata Indicom, the Chairman stated that
VSNL's role to provide end-to-end service is something we are trying to define.
Tata Indicom is not just mobile activity but also includes Internet, long
distance, international long distance, corporate services, and all this will be
integrated into one common marketing platform. According to the Chairman, the
role that VSNL can play under Tata Indicom is a major role.
Tata Teleservices outlook - The Chairman stated that the prospects of TTSL are
good despite the competition, because there is tremendous scope for connectivity
in the country and we have a large population. The Chairman expressed his belief
that communications through Internet and Telephony will be one of the biggest
growth areas in this country in the years to come. He further added that at
present, it looks terrible, but it will become a hi-tech business with
sophisticated services in the time to come.
Regarding Worldcom, the Chairman stated that VSNL does not have any outstandings
with Worldcom. He stated that the issue of Worldcom dues is more hype than
anything else. He clarified that there was a give and take relationship with
Worldcom. VSNL owed them money and they owed VSNL money. He stated that there
was no problem and in fact, Mr. Gupta very quickly changed the ratio so that
VSNL started to owe them more money so that VSNL could equalize very fast.
There being no more queries coming from the floor, the Chairman turned to the
business of the Meeting.
I. The Chairman then proposed the following Resolution no.1, which was seconded
by Mr. Vyas:
"RESOLVED THAT the audited Profit and Loss Account for the period from 1 April
2002 to 31 March 2003 and the Balance Sheet as at 31 March 2003 along with the
Schedules and Notes thereon and the Directors' Report for that year be and are
hereby approved and adopted."
The resolution was put to vote and was passed unanimously.
II. Mr. Davar then proposed the following Resolution no.2, which was seconded by
Mr. Vyas:
"RESOLVED THAT as recommended by Directors a final dividend at the rate of
Rs.8.50 (Rs. Eight and paise fifty) per share of Rs.10/- (Rs.Ten) each, out of
the profits of the year on 285 million (Two Hundred & Eighty Five million)
equity shares of Rs.10/- (Rs.Ten) each amounting to Rs.2422.5 million (Rupees
Two thousand Four hundred & Twenty Two and Half million) be approved and the
said dividend be paid in accordance with Section 205 and other applicable
provisions of the Companies Act, 1956:
(i) to those shareholders whose names appear on the Company's Register
of Members after giving effect to all valid share transfers in physical
form lodged with the Registrar & Transfer Agents (R&T Agents) of the
Company on or before Thursday, 14 August 2003(15 August being a public
holiday).
(ii) in respect of shares held in electronic form, to those "deemed
members" whose names appear in the statements of beneficial ownership
furnished by National Securities Depository Limited (NSDL) and Central
Depository Services (India) Limited (CDSL) as at the end of business on
Thursday, 14 August 2003 (15 August being a public holiday). In respect
of shares held in demat mode, the dividend will be paid on the basis of
beneficial ownership as per details to be furnished by NSDL and CDSL
for this purpose."
The resolution was put to vote and was passed unanimously.
III. Mrs. Maheshwari then proposed the following Resolution no.3, which was
seconded by Mrs. Mascarenhas:
"RESOLVED THAT Mr. Ratan N. Tata who retires by rotation at this Annual General
Meeting and being eligible offers himself for reappointment, be and is hereby
appointed as Director liable to retire by rotation."
The resolution was put to vote and was passed unanimously.
IV. Mr. Jhunjhunwala then proposed the following Resolution no.4, which was
seconded by Mrs. Maheshwari:
"RESOLVED THAT Mr. Subodh Bhargava who retires by rotation at this Annual
General Meeting and being eligible offers himself for reappointment, be and is
hereby appointed as Director liable to retire by rotation."
The resolution was put to vote and was passed unanimously.
V. Mr. Davar then proposed the following Resolution no.5 as a Special
Resolution, which was seconded by Brig. Virmani:
"RESOLVED THAT pursuant to Section 224 A and other applicable provisions, if
any, of the Companies Act, 1956, M/s S.B. Billimoria & Co., Chartered
Accountants be and are hereby appointed Statutory Auditors of the Company to
hold office from the conclusion of this Annual General Meeting until the
conclusion of the next Annual General Meeting and to examine and audit the
accounts of the Company for the financial year 2003-2004 on such remuneration as
may be mutually agreed upon between the Board of Directors and the Auditors,
plus reimbursement of service tax, travelling and out of pocket expenses."
"RESOLVED FURTHER THAT the Auditors of the Company be and are hereby authorized
to carry out (either themselves or through qualified associates) the audit of
the Company's accounts maintained at all its branches and establishments
(whether now existing or acquired during the financial year ending 31 March
2004) wherever in India or abroad."
The resolution was put to vote and was passed with requisite majority.
VI. Mr. Jhunjhunwala then proposed the following Resolution no.6 as a Special
Resolution, which was seconded by Mrs. Mascarenhas:
"RESOLVED THAT the Company do take steps so as to delist the shares of the
Company from The Delhi Stock Exchange Association Limited, The Calcutta Stock
Exchange Association Limited and The Madras Stock Exchange Limited in accordance
with the provisions of the Securities and Exchange Board of India (Delisting of
Securities) Guidelines, 2003."
The resolution was put to vote and was passed unanimously.
VII. Mr. Shah then proposed the following Resolution no.7, which was seconded by
Mr.Mathuradas:
"RESOLVED THAT pursuant to the provisions of Sections 269, 198 and 309 and other
applicable provisions, if any, of the Companies Act, 1956, (the "Act") read with
Schedule XIII thereto, subject to the provisions of the Memorandum and Articles
of Association of the Company, and subject to such approvals, if any, as may be
necessary, approval of the Company be and is hereby accorded to the
reappointment of Mr. Shailendra Kumar Gupta as the Managing Director of the
Company on deputation from M/s. Tata Services Limited for a period of up to two
years from 1 October 2002 on the terms and conditions as set out in the
explanatory statement attached to this notice and hereby approved, with liberty
to the Board of Directors to revise the terms as to remuneration, from time to
time within the limits prescribed under the provisions of Schedule XIII or any
amendment thereto for the time being in force."
"RESOLVED FURTHER THAT where in any financial year during the tenure of Mr.
Shailendra Kumar Gupta as the Managing Director of the Company as above, the
Company has no profits or the profits are inadequate, the Company shall subject
to the provisions of Sections 198, 269 and 309 of the Act pay basic salary,
perquisites and allowances as mutually agreed between the Company and Mr. Gupta
and specified in the explanatory statement."
The resolution was put to vote and was passed unanimously.
VIII. Brig. Virmani then proposed the following Resolution no.8, which was
seconded by Mr.Jhaveri:
"RESOLVED THAT Mr. Vivek Singhal who holds office only up to the date of this
Annual General Meeting and in respect of whom a notice under the provisions of
Section 257 of the Companies Act, 1956 has been received by the Company from a
member signifying his intention to propose Mr.Vivek Singhal as a candidate for
the office of director, be and is hereby appointed as Director liable to retire
by rotation."
The resolution was put to vote and was passed unanimously.
IX. Mrs. Maheshwari then proposed the following Resolution no.9, which was
seconded by Mr. Vyas:
"RESOLVED THAT Dr. Ashok Jhunjhunwala who holds office only up to the date of
this Annual General Meeting and in respect of whom a notice under the provisions
of Section 257 of the Companies Act, 1956 has been received by the Company from
a member signifying his intention to propose Dr. Ashok Jhunjhunwala as a
candidate for the office of director, be and is hereby appointed as Director
liable to retire by rotation."
The resolution was put to vote and was passed unanimously.
X. Mrs. Maheshwari then proposed the following Resolution no.10, which was
seconded by Mrs. Mascarenhas:
"RESOLVED THAT Mr. F.A. Vandrevala who holds office only up to the date of this
Annual General Meeting and in respect of whom a notice under the provisions of
Section 257 of the Companies Act, 1956 has been received by the Company from a
member signifying his intention to propose Mr.F.A. Vandrevala as a candidate for
the office of director, be and is hereby appointed as Director liable to retire
by rotation."
The resolution was put to vote and was passed unanimously.
XI. After the Vote of Thanks to the chair, the Chairman declared the proceedings
as concluded.
Place : Mumbai. Approved
Dated : 29.09.2003