ITI : Transcript of 71st Annual General Meeting

Transcript of the 71st Annual General meeting of ITI Limited held on Wednesday, 10th November 2021 through Video Conferencing and Other Audio Visual Mode commenced at 11.40 a.m. IST and concluded at 12.45 p.m. IST

Company Secretary:

Good morning, one and all, on behalf of ITI Limited, I welcome the shareholders for the 71st Annual General Meeting of the Company.

We will raise ourselves for the National Anthem please.

At the outset, I would like to go through the basic points for conduct of AGM through Video conference / Other Audio Visual means.

• The Company has organised e-voting facility in compliance with circulars issued by Ministry of Corporate Affairs and SEBI.
• The facility of participation at the AGM through VC/OAVM will be made available to at least 1000 members on first come first served basis.
• All the shareholders shall be put on mute by default to avoid any disturbances and to ensure smooth conduct of the meeting
• Once the Q&A session starts, the names of the speakers (who have registered themselves) will be announced one by one.
• The audio of the speaker will then be unmuted by the moderator
• Before speaking the member is requested to click his video button on.
• If the member is unable to the join in Video for any reason, he can join through audio mode
• Members are requested to have good lighting facility, head phones and internet connectivity to mitigate any kind of technical glitches
• In case of disturbance at the speaker end, we may allow the next speaker to proceed with his questions
• The shareholders who have not registered as speaker may raise queries through chat boxes.

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• During the AGM, if the member faces any technical problem he may contact the helpline number mentioned in the notice of the AGM.
• Since the physical presence of shareholders is not required and in compliance with the circulars issued by MCA & SEBI, the requirement of appointment of proxies are not applicable.
• Members who have not cast their vote through remote e-voting earlier, can cast their vote during the course of the meeting through e-voting facility.
• Live streaming of this AGM is being webcast on CDSL website.

Now I would request the Chairman and Managing Director, Shri Rakesh Mohan Agarwal to address the meeting.

Chairman and Managing Director:

A very Good Morning to you all. I am happy to be with you for the 71st Annual General Meeting of your Company being held through Video Conferencing.

As the requisite Quorum is present and I call the meeting to order.

We are for the second time conducting the AGM through video conference and it is in compliance with the circulars issued by the Ministry of Corporate Affairs and SEBI.

The information and documents to be made available for inspection during the meeting are available and any shareholders wishes to inspect the same can send an email to [e-mail].

So let me	Introduce	the	participants	here on	the dais to my left is
Shri Rajeev Srivastava, Director (Finance), Shri Rakesh Chandra Tiwari, Director
(Marketing)	and to my	right	is Smt S	Shanmuga	Priya, Company Secretary,

Shri V Madhavan, Statutory Auditor all participating from Bengaluru physically.

Shri D Venkateswarlu, Director (Production) is participating from Bengaluru through Video Conferencing.

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Dr Rajesh Sharma, Government Director & DDG-SU, Ministry of Communications and Chairman, Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee, is participating through VC from New Delhi

Shri D Venkateswarlu, Scrutiniser for the 71st AGM is participating from Bengaluru through VC.

The Company has received 2 authorised representatives viz., Dr Rajesh Sharma Authorised representative of President of India representing 90.06% of the paid up share capital and Smt Nethraprabha M Dhayapule, Authorised representative of Governor of Karnataka representing 0.03% of the paid up share capital.

The Annual Report including the notice of meeting have been circulated to the Members, with the permission of the members present, the notice convening the meeting be taken as read.

There are certain qualifications in the Auditor's Report, Company Secretary would now read out the observations of the Statutory Auditor on the accounts and Secretarial Auditor for the year ended 31st March, 2021 in their report.

Company Secretary:

The following are the observations of M/s. GRSM & Associates, Statutory Auditor's in their Standalone & Consolidated Audit Report:

1. The Company is carrying an amount of ₹5,847.90 lakhs as receivable from C-DOT towards rent from premises leased out to them up to the period ended 31-3-2011. The Company has not made a provision for credit losses in respect of this amount which is doubtful of recovery. The Company has also not recognised any rent for further period due to uncertainty of collection
2. The Company has not made provisions for credit losses in respect of the following items included under Current Financial Assets-Loans, which are also doubtful of recovery:
3. 1. Recoverable from HCL Infosystems Limited of ₹1690.20 lakhs as compensation on account of excess amount spent by the Mankapur Unit of the Company based on the agreement between ITI, HCL and Alcatel.

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1. Recoverable from Himachal Futuristic Communications Ltd of ₹1049.41 lakhs

towards Liquidated Damages

Accordingly, if provision for credit losses were made by the Company, the profit for the year and the net current assets would have been reduced by Rs 8587.51 lakhs.

• Replies by the management to the observation have been covered in the Directors'
  Report in page no. 37.

The following are the observations of Comments of Comptroller & Auditor General

Comments on Profitability:

1. Other Expenses (Note No.30)- Rs.11091.58 lakh
   It was seen that during FY 2019-20, the Company set off expenditure of Rs.1363.39 lakh towards withdrawn public offer against the Securities Premium Account instead of charging it the Profit & Loss Account in contravention of the provisions of Sec 52 of the Companies Act 2013. During the FY 2020-21, out of Rs.1363.39 lakhs, an amount of Rs.165.51 lakh was been reversed as excess expenses booked and so the final expenditure on FPO charged to the account is Rs.1197.88 lakh
   Since the FPO was not done and was withdrawn, it is not an Issue of Shares for which the Share Premium Account could not be used. Secondly, the Share premium balance is very old and previous issued shares of the Company was utilised, whereas the Companies Act says that the expenses of only those shares which have been issued can be charged to the Share Premium Account.
   This has resulted in overstatement of profit and understatement of Security Premium Account by Rs.1197.88 lakh. The Company may take a considered view to treat and charge off this expenditure in Accounts as Deferred Revenue expenditure over a defined period of time.

Comment on Financial position:

2) Unbilled Revenue (Note No.9a)- Rs.171118.91 lakh

The Current Assets of ITI Limited include Rs.9771 lakhs as Unbilled Revenue booked by the Company during the year 2017-18 and 2018-19 without raising regular invoices

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• Bills. The Company has not taken any action in this regard in Financial year 2020- 21 also and hence the item cannot be vouched as safe to be included as a Financial / Current Asset.

Comments on Disclosures:

1. Interest payable on loans Rs.300 crore received by the Company from Government of India has not been provided in the books of accounts as the issue of repayment of loan and interest thereon is under correspondence with the Ministry.
2. M/s. Mindarray, a vendor of ITI Lt for Bharat Net phase II in Gujrat discounted a LC provided by ITI Ltd against proforma Invoice of Rs.1207 lakh, by providing suspected fraudulent acknowledgement on behalf of the Company. The Company has initiated legal action for filing a case in court of law for recovery of money and lodged a complaint with Police authorities against M/s. Mindarray.
3. There are unreconciled claims on account of Input Tax Credit (ITC) on GST expenses amounting to Rs.300.67 lakhs which the Company has assured that they will be reviewed in the next financial year and take appropriate action either to capitalize or take them to Profit and Loss account.
4. The Company has not provided for the property tax payable to BBMP for the period from 2018-19 to 2020-21. Out of the total demand of Rs.3375.88 lakh by BBMP (including interest and penalty payable on the pending property tax claims), the Company has paid Rs.850.35 lakh under protest. Management has contested that since it has considered the demand on higher side, it is taking steps to self-assess the property tax and adjust further amount payable on this account. The Company may compute the liability on this account based on the demand raised by the Corporation and specifically disclose in in the books of accounts.

• Replies to the observation have been covered in the Directors' Report in page no. 201

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