Management Discussion and Analysis

Forward looking statements

Statements in this Management Discussion and Analysis of Financial Conditions and Results of Operations of the Company describing the Company's objectives, expectations or brdictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of the future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those exbrssed in the statements. Important factors that could influence the Company's operations include interconnect usage charges, determination of tariff and such other charges and levies by the regulatory authority, changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements are brpared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the Act) and comply with the Accounting Standards notified under Section 133 of the Act. The management of Reliance Communications Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect, in a true and fair manner, the state of affairs and loss for the year.

The following discussions on our financial conditions and results of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the Annual Report.

Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "Reliance", "RCOM", "RCOM Group" or "Reliance Communications" are to Reliance Communications Limited and its subsidiary companies, Joint ventures and associate companies.

Macroeconomic Overview

Indian Economic Environment

India's GDP improved to 7.3% in financial year 2014-15 from 6.9% in financial year 2013-14, indicating recovery in economic growth and building the base for an optimistic outlook. For the calendar year 2014, China's economy grew 7.4%. This portends that India's economic growth might soon overtake that of China. It is further validated by the fact that data released by India's statistics office suggests that for the quarter ended March 2015 India's GDP grew 7.5%, ahead of China's 7%.

Various surveys, including the Reserve Bank of India's Industrial Outlook Survey, show that business confidence has started to rebuild in a significant manner. A moderate paced recovery is likely to shape up in the current as well as next few financial years, with support from rural demand and turnaround in the overall investment cycle. Among the BRIC countries, India has a comparatively better outlook as a result of stronger governance, market-friendly policy environment and benign commodities prices. The investment flows have also improved significantly with higher foreign capital flows in the equity and debt markets.

GDP Growth

Investment-friendly policies initiated by the Government have put the Indian economy on a buoyant path of recovery last year. The Chief Economic Advisor of India expects the economy to do much better in the current fiscal and has forecasted 8.1-8.5% growth. Gross fixed capital formation, a proxy for investment, and private final consumption expenditure, which reflects demand in the economy, are indicating upward trends.

The latest data shows that though construction, mining and farm sectors underperformed, manufacturing and financial services picked up reasonable pace. Gross value added for manufacturing sector rose 7.1% in financial year 2014-15 compared with 5.3% in the brvious year, giving a timely impetus to the government's 'Make in India' plan.

Exchange Rate Outlook

Current Account Deficit (CAD) during financial year 2014-15 at 1.3%, was lower than financial year 2013-14 levels of 1.7% due to the various initiatives to contain trade deficit. On a cumulative basis, the overall Balance of Payment (BoP) during financial year 2014-15 showed improvement over the brceding year. The foreign exchange reserves have increased to US$342 billion at the end of financial year 2014-15. The RBI stated that US$61 billion was added to the foreign exchange reserves in financial year 2014-15, compared to US$16 billion in the brvious fiscal, due to higher portfolio investments. With reducing CAD, higher foreign exchange reserves and attractive foreign currency investment inflows, INR is expected to have a more stable outlook depending on US$ movements and comparative dynamics among the emerging markets / BRICS currencies. A key risk is in the normalisation of monetary policy by the US Fed which may spark off capital flows back into the US treasuries and may spur apbrciation of the US dollar.

Interest Rate Outlook

India's central bank has cut interest rates in 2015 to bring the rate at 7.5%. With a benign inflation outlook, interest rates should show a declining trend. This would result in lower domestic interest rates by banks on corporate loans. A benign interest rate environment would also improve disposable income levels among the consumers, benefiting the Company's business outlook.

Indian Telecom Industry

A. Industry Trends

a. Indian Telecommunications Industry

India has the second largest number of mobile cellular subscriptions in the world according to statistics published by the International Telecommunications Union, World Telecommunications ICT Development Reported database and World Bank Estimates ("ITU"). However, mobile cellular subscriptions (mobile cellular penetration) are relatively low at 70.8% (Source -ITU).

b. Subscription growth from rural subscribers

Among the top countries, India has recorded the highest compounded annual growth rate (CAGR) in the number of mobile cellular subscriptions during the five-year period from 2008-2013. India's CAGR of  20.6% compares to the next two highest, Indonesia, at 16.7%, and Nigeria at 15.1%. The high growth in mobile cellular subscriptions has been largely driven by the increase in rural wireless subscribers (Rural subscribers at 414 million and Urban subscribers at 556 million on March 31, 2015 - Source - TRAI).

c. Growth in data consumption

Wireless is the primary form of data access in India, as the reach and quality of the wireline networks are relatively poor compared to wireless networks, and the base of wireline subscribers is also very small and declining. According to TRAI data, there were 267.4 million Internet subscribers in India as of December 31, 2014, 248.5 million, or 92.9% of whom, were wireless internet subscribers. Following the successful auctions of spectrum for 3G and broadband wireless access by the DoT in 2010, wireless operators have rolled out 3G networks and improved the data handling capacity of their 2G networks. As a result, there has been a substantial increase in data usage across the wireless networks.

According to Cisco's Annual Global Visual Networking Index ("Cisco VNI"), Mobile Forecast Highlights, 2013-2018, Indian mobile data traffic is projected to grow 24-fold between 2013 and 2018 to reach 1.2 exabytes per month, rebrsenting a CAGR of 88%. Indian mobile data traffic is expected to grow two times faster than Indian fixed IP traffic during the same period. Indian mobile data traffic growth between 2013 and 2018 is projected to lead China (15-fold at a CAGR of 73%), the Asia Pacific region (13-fold at a CAGR of 57%) and globally (11-fold at a CAGR of 61%).

d. Reduced wireless competition and increase in usage and revenue per user

In addition to the increase in rural penetration, and wireless data usage, a reduction in the number of competing operators has also positively influenced industry revenue growth. The Indian telecommunications market is geographically divided in 22 Circles, and operators receive telecommunications access licenses and wireless spectrum for individual Circles. Prior to 2012, India's telecommunications market was highly fragmented with approximately 12 operators per circle, which has come down to approximately 8 operators per circle now.

The reduction in competition has been accompanied by an increase in the average MoU and monthly ARPU, as set out in the table below:

 e. Government's 'Digital India' initiative

The Government's vision of 'Digital India' is centered on three key areas: Digital infrastructure as a utility to every citizen, Governance and services on demand, and digital empowerment of citizens. RCOM, with its pan-India, next generation, integrated (wireless and wireline), convergent (voice, data and video) digital network capable of supporting best-of-class services spanning the entire communications value chain, covering over 21,000 cities and towns and over 4,00,000 villages, large data center footprint of 11,00,000 sq ft and proven expertise in large-scale communications projects; is uniquely positioned to play the key role of 'Solutions Integrator' bringing the 'Digital India' vision alive. Some areas that RCOM is well positioned to collaborate on are digital wallet, digital certification, Single Sign-On (SSO), smart cities, national infrastructure backbone and centralised cloud for state data centers (SDCs).

B. Industry Update

a. Wireless and Wireline

1. Numerical Statistics

i. The number of telephone subscribers in India increased to 996.5 million at the end of March, 2015 (Wireless and Wireline) as against 933 million as at March, 2014.

ii. Wireless subscribers increased to approximately 969.9 million in March, 2015 as compared to 905 million in March,2014.

iii. The wireless tele-density stood at 77.3% as compared to 73.0% in brvious year.

iv. The share of private sector in wireless connections touched 91.68% as of March, 2015.

2. Given the fact that the government is likely to notify Spectrum Sharing and Trading Guidelines soon, the financial year 2015-16 is expected to lead to more realistic opportunities for consolidation in the telecom industry.

b. Internet and Broadband

1. As of December 31, 2014, the total internet and broadband subscriber base (Wireline and Wireless) increased to 267 million from approximately 252 million at the end of March 2014.

2. In the past fiscal year, we have witnessed tremendous growth in our broadband subscriber base in terms of quality. Given the fact that the brsent day consumers are demanding more and more bandwidth, RCOM is augmenting its capacity firstly to meet the demand and secondly, to provide better customer experience. However, despite data services growing at a healthy rate during the last fiscal, voice still dominates overall revenue from Telecom services. With voice business attaining maturity, it is estimated that in the next few years, the industry will witness very high data revenue growth.

3. The industry expects that data would spearhead the next phase of growth. Multiple governmental initiatives like 'Digital India', 'Smart Cities', 'Bharat Net' (erstwhile NOFN) and projects for provisioning free WiFi are anticipated to be the growth drivers for proliferation and mass scale adoption of data services especially in the semi-urban and rural areas.

C. Regulatory Developments

1. Auction of spectrum in 800/900/1800/2100 MHz bands:

a. Auction was conducted during March 2015 wherein DoT fixed the Reserve Price per MHz of 800 MHz, 900 MHz, 1800 MHz and 2100 MHz as Rs. 3,423 crore (20 circles), Rs. 3,399 crore (17 circles), Rs. 1,425 crore (15 circles) and Rs. 3,511 crore (17 circles) respectively.

2. Guidelines on Spectrum Sharing:

On July 21, 2014, TRAI released its recommendations on spectrum sharing as below (though the final guidelines are awaited):a. All access spectrum i.e.800/900/1800/2100/2300/2500 MHz will be share-able provided that both the licensees are having spectrum in the same band. Leasing is not allowed.

b. If any one of the two licensees, sharing their spectrum, has administratively assigned spectrum in that band then after sharing, they will be permitted to provide only those services which can be provided through administratively held spectrum.

c. If both the licensees are sharing the auctioned spectrum (year 2010 or afterwards), or on which the licensee has already paid the brscribed market value to the Government, they can offer services using all those technologies namely GSM, CDMA, WCDMA, LTE etc, which they can independently provide through their own spectrum holding.

d. For applying the brscribed market cap i.e. (25% of the total spectrum assigned and 50% in the band), 50% of the spectrum held by the other licensee shall be counted as additional.

e. The SUC rate of each of the licensees post sharing shall increase by 0.5% of AGR.

3. Spectrum Trading:

On January 28, 2014 TRAI recommended the working Guidelines on Spectrum Trading as below, though the final guidelines are awaited:

a. Only outright transfer of spectrum is permitted.

b. Spectrum trading will be permitted only on LSA (Licensed Service Area) basis and it will not alter the original validity period of spectrum assignment.

c. Only CMTS / UASL / UL (AS), UL licensees shall be eligible to participate in trading.

d. The entire spectrum held by the licensee in a particular spectrum band within an LSA should be tradable. The Spectrum should have been either assigned through an auction in 2010 or afterwards, or on which the licensee has already paid the brscribed market value to the Government.

e. A TSP will not be permitted to trade any spectrum in the spectrum band in which it has acquired any spectrum through trading (or auction), for a period of 2 years from the effective date of transfer of such spectrum (or effective date of assignment).

f. Trading fee: 1% of the transactional amount or 1% of the brscribed market price, whichever is higher

4. Microwave spectrum Recommendations:

On August 29, 2014 TRAI issued its recommendations on "Allocation and Pricing of Microwave Access 

 i. 800 MHz: RCOM completed its footprint of 5 MHz PAN India except Rajasthan (where no auction was conducted). 

(MWA) and Microwave Backbone (MWB) RF carriers as below:

a. MW carrier allocation directly proportional to the total spectrum being held by each operator.

b. Linear charging for MWA carriers.

c. Link by link basis allocation of MWB carriers with charges of Rs. 1 3,900 per Km.

5. Spectrum Usage Charges:

I n continuation of its earlier order dated October 31,

2014 regarding SUC for 900/1800/2100 MHz and BWA spectrum, DoT issued order dated February 5,

2015 for defining SUC including 800 MHz as below:

a. Spectrum acquired in March, 2015 auction shall bear SUC charges at 5% of AGR for 800/900/1800/2100 MHz bands.

b. In case of combination of existing spectrum in 800/900/1800/2100 MHz bands and spectrum acquired through auction, the weighted average SUC shall be calculated as equal to (a) sum of spectrum held prior to auction held during March, 15 multiplied by applicable rates as per order dated February 25, 2010 and October 31,2014 and SUC rates as per NIA dated February 25, 2010 and (b) spectrum acquired through auction held during March, 15 multiplied by five and then the sum of (a) and (b) divided by total spectrum holding.

c. Licencees, who have not acquired spectrum in February, 2014/ March, 2015 shall continue to pay SUC at the applicable slab rate as per the order dated February 25, 2010.

d. BWA acquired in 2010 auction shall continue to be charged SUC at 1% of AGR from services using this spectrum.

6. Revised Roaming charges:

Special roaming tariff plan will also be continued for brpaid and postpaid customers.

7. Regulation on Review of IUC (February 23, 2015):

TRAI has reduced the domestic mobile termination charges to 14 Paisa per minute from the earlier charges of 20 Paisa per minute, w.e.f.  March 1, 2015. TRAI has also mandated zero termination for all the national calls originated or terminated on Land line. International termination charges has been increased to 53 Paisa from the earlier charges of 40 Paisa per minute and carriage charges have been reduced to 35 Paisa from the earlier ceiling of 65 Paisa per minute.

8. MNP implementation:

i On November 3, 2014, DoT notified the implementation of Full Mobile Number Portability (FMNP). Service Providers were given six months time to implement the Full MNP from the date of issuance of this notification i.e. November 3,2014.

ii On February 25, 201 5 TRAI notified sixth amendment to the Mobile Number Portability Regulations, 2009 to facilitate Full MNP Implementation.

9. Revised ceiling for Domestic leased circuits (July 14, 2014):

TRAI through the TTO (57th Amendment), 2014, has brought about the following changes in the tariff regime for DLCs:

b. Tariffs for VPNs have been kept under forbearance.

10. DTH Business:

i. TRAI notified Tariff Order brscribing provisions for Commercial Subscribers (July 16, 2014)

ii. TRAI notified tariff Order brscribing a framework for commercial inter-operability of Customer Premise Equipment (CPE) offered by the DTH operators (April 1, 2015)

iii. TRAI issued Recommendations for a new DTH licensing Regime (July 23, 2014).

iv. TRAI issued recommendations on Regulatory framework for platform services (November 19,2014). 

D. Outlook

a. Telecom - Pivotal for future growth

Telecommunication, as a key infrastructure service, is pivotal to the socio-economic development of the country. On a global basis, the telecommunications industry is witnessing a fundamental change from being a voice dominant service to an innovative data usage service through mobile devices. The focus has shifted from standard handsets and feature phones to smartphones, phablets and tablets in different shape, size, and pricing buckets, all using telecommunications as service delivery vehicle to give users a powerful experience right in their hands more conveniently. New network standards like 3G, 4G / LTE aim at faster data connectivity, quick video streaming with high resolution, and rich multimedia applications. With the availability of large number of applications from games, social networking to online shopping, a new wave of demand for telecommunication services, away from the standard voice business to non-voice business, is getting crafted. We, at RCOM, are fully geared to address this shift and are in position to service our customers with these evolving trends and requirements.

b. Telecom as a Catalyst

Telecommunications is one of the main catalysts of the accelerated growth and progress for different segments of the economy by narrowing access gaps and removing barriers to information. Our enhanced network capabilities and global footprint make us the brferred carrier choice amongst other players.

c. Broadband penetration

India's broadband penetration is among the lowest in the Asia-Pacific with only 15.5 million wireline broadband subscribers and 83.7 million wireless broadband subscribers using above 512 kbps as of March, 2015. This can be attributed mainly to low personal computer penetration due to its high cost, and lack of widesbrad 3G and BWA services. Now with the proliferation of 3G & HSD services, and availability of a variety of smartphones, phablets and tablets at affordable pricing levels, broadband penetration is expected to increase at a much faster rate.

Company

A. Overall review

We are a leading integrated and converged telecommunications operator in India and, through our international subsidiaries, we are also a leading global data communications service provider. In India, we own and operate a nationwide telecommunications network through which we offer a full range of telecommunications services to retail and enterprise customers, including mobile and fixed-line services, national and international long-distance connectivity, broadband services and enterprise solutions. We also provide tower infrastructure services to other telecommunication operators. Internationally, we provide retail and wholesale voice connectivity and through our subsidiary, Global Cloud Xchange (GCX), we provide a wide range of products and services which enable enterprise customers to create, manage and connect across global data networks.

We have established a pan-India, integrated (wireless and wireline) and convergent (voice, data and video) digital network capable of supporting services spanning the entire telecommunications value chain, and covering over 21,000 cities and towns and over 400,000 villages. We provide 3G services across 13 Circles covering 334 cities, including the metropolitan Circles of Mumbai, Delhi and Kolkata. Additionally, we deliver 3G services in the five Circles of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Uttar Pradesh (East) through ICR arrangements, thus increasing our 3G coverage to 18 Circles. We provide wireless broadband services on our own network in 1,624 cities and towns and offer Internet connectivity in over 19,000 towns across India. Our more than 43,000 telecommunications towers are used for both CDMA and GSM mobile networks and service multiple mobile service providers, including ourselves. These towers are located in all 22 Circles in India and are supported by an OFC network of around 190,000 Km. We hold UASL and 3G spectrum licenses as well as licenses for the provision of NLD and ILD services. Our ten data centres in four cities, make us one of the largest data center players in the country with a total capacity of approximately 1.1 million square feet (including one data centre under construction). These networks are monitored on a round-the-clock basis for quality, repairs, maintenance and troubleshooting through two network operating centres, including our disaster recovery network operating centre in Hyderabad.

RCOM offers Nationwide Direct-To-Home (DTH) service through its wholly owned subsidiary, Reliance Big TV Limited, in approximately 8,350 towns across the country. Reliance Big TV was the first Company to introduce High Definition DVR. Using the state-of-the art MPEG 4 technology, it offers close to 269 channels in HD like quality. The Company also offers 4 exclusive movie channels and 4 interactive services. A unique combination of High Definition content and digital voice / picture quality delivers a vastly superior viewing experience to its subscribers.

As at March 31, 2015, we had a customer base of over 118 million customers, including 109.5 million wireless customers (including 33.7 million data subscribers, of which 17.4 million were 3G subscribers), 1.2 million wireline customers, over 2.6 million overseas retail customers and 4.9 million DTH customers. Our enterprise clientele includes over 39,000 Indian and multinational corporations, including SMEs and over 290 global, regional and domestic carriers. Our enterprise customers include over 900 prominent enterprises in India.

Our Global Operations comprise the provision of voice, data and Internet network and services, and the lease of submarine cable infrastructure and metropolitan city networks. We have approximately 650 enterprise customers throughout developed markets such as the United States, the United Kingdom, the Netherlands and Singapore. We own and operate a widesbrad submarine fibre optic cable network spanning 68,698 Km and connecting North  America, Europe, the Middle East and Asia through 46 landing points in 27 countries. The total installed capacity of our five subsea cable systems is over 21 Tbps. We also have owned and leased metropolitan networks in 27 cities across 13 countries. We are one of the leading managed Ethernet service providers in the United States and have an established position in the global enterprise data market.

From an operational perspective, our business is organised into two strategic segments: the India Operations and the Global Operations. We conduct a substantial portion of our business through our subsidiary companies, including, GCX,RTL, RCIL, Reliance Infratel and Reliance Big TV.

B. Business Strategy

a. Spectrum-based "Go To Market" strategy

We intend to continue to focus on offering 2G services in all 22 Circles covered by our network, and 3G services in the 13 Circles in which we have been allocated 3G spectrum and the five Circles where we have 3G services through ICR arrangements. In forthcoming auctions, we may look to augment our 3G spectrum in circles where we do not hold the same. We have adopted a "Circle as a Country" growth strategy, whereby we intend to customise our expansion and market intervention strategies according to peculiar characteristics of each Circle, and various micro-markets and subscriber classes within each Circle.

b. Focus on Data-based Services

We will continue to increase our data subscriber base, including mobile and wireline subscribers, and revenues by focusing on improving our data service offerings, such as introducing more affordable price plans that provide customers 3G data access speeds at 2G rates. There are five components of our GSM data strategy: (1) focus on affordability by pricing our anchor 3G data plan at the same price as the 2G data plan of other service providers; (2) aggressive 2G positioning to popularize Internet further; (3) free social networking with data plans to drive brference among young subscribers; (4) bundling contextual content for driving Internet adoption; and (5) key device partnerships.

Further, we believe that CDMA technology is well suited for high speed data-based services, before our full progression into LTE using the 800 / 850 MHz band. We intend to focus on increasing our market share in the large screen (computers) connectivity market through our CDMA offerings and the small screen device market through 3G services in the 18 Circles where we provide such services. We have formulated separate CDMA data strategies for metropolitan Circles, category A towns and smaller towns which are emerging data markets. Our bundled-sales business strategy is aimed at:

• offering large and faster data network and providing coverage at attractive pricing;

• bundling products through combining value service plans; • strategic segmenting through customized upgrade plans and specific SME/enterprise offering; and

• offering a multi-mode device ecosystem, including through smart devices and universal mode Internet devices.

With respect to our global enterprise data business, we intend to focus on increasing our market share in the finance, legal and healthcare sectors in the United States and grow revenues from our existing multinational customers. We have rebranded Reliance Globalcom as Global Cloud Xchange (GCX) with the objective of focusing on developing the network infrastructure, data centre and managed services spaces and delivering an integrated cloud ecosystem. We intend to integrate our key international assets with a focus on Internet protocol and cloud services.

c. Continue to Focus on Offering New Products and Services

We aim to expand our revenue streams through the expansion of our portfolio of service offerings and launching specific sales and marketing initiatives aimed at increasing our customer base. Such efforts include (i) offering a wider range of wireless and wireline services, such as video on demand, online gaming and video chat and conferencing; (ii) further expanding our distribution network of retail stores and developing them into one-stop shops for retail customers; and (iii) providing wireless broadband data services through both our CDMA and 3G mobile networks. In addition, we intend to focus on cross-selling and bundling of our products and services, including bundling of free social networking applications with data packages, through our various partnerships with device manufacturers and application developers. This enables us to introduce more attractive categories of tariffs and product combinations that can cater to different markets, demographics and customer needs, and in turn, benefit our customers from the greater value brsented by our product offerings.

d. Focus on Reduction of Operating Costs

In line with our growth, we also focus on cost management and margin expansion through various measures to reduce our operating costs and achieve cost optimisation. We have entered into long-term outsourcing agreements with end-to-end network managed service providers aimed at reducing our costs, benefitting from economies of scale and delivering superior customer experience.

e. Manage our Assets Effectively

We aim to achieve better and more profitable management of our portfolio of assets, including the passive infrastructure that we build and use and also make available on a shared basis to other wireless and communications service providers. Our aim is to pursue expansion at a reduced cost to achieve increased shareholder returns, improved cash flows, higher operational efficiency and increased network  coverage with better quality. We are also exploring monetization of our assets to reduce our debt levels and increase profitability, thereby achieving greater returns and value for our shareholders.

C. New Initiatives

a. One India, One Rate plan

RCOM launched One India, One Rate Plans, a first-of-its-kind free National Roaming offer for post-paid and br-paid GSM customers. Under this innovative offer, there will be no difference between Local, STD and Roaming charges and customers will be charged only their Home Plan tariffs, even while roaming anywhere in India.

b. RCOM offers free unlimited access to social networking sites

RCOM, as a strategy to drive smartphone penetration and data adoption, has created a compelling proposition for GSM brpaid customers by featuring free unlimited social networking access (Facebook, WhatsApp and Twitter) with data plans. These plans are a very strong proposition for our younger customers, who find great value in unlimited access to these social networking apps and would drive growth in our data consumption.

c. Launch of "Free Facebook Fridays"

RCOM launched a true value proposition of 'Free Facebook Fridays' for Reliance GSM brpaid customers. Reliance customers can now access Facebook and Facebook Messenger for full day of Friday without any data charge or data pack, every Friday. For customers having a data pack and accessing Facebook, the data quota won't deplete.

d. Launch of "Reliance MyStore" up-sell portal

Reliance MyStore is a unique offering on USSD platform for brpaid GSM subscribers. The portal brsents a very simple user interface and the customer can purchase an offer from the brpaid balance then and there without having to step out to any Reliance outlet. This Customer Lifecycle Management platform has very attractive offerings across voice, data & SMS. The offers are available against three segments; '9 Store', 'Only For You' and 'Flavor of the Month'.

e. RCOM unveils 'TalkLoan' facility to ensure uninterrupted calling, surfing for its customers

RCOM unveiled an innovative TalkLoan service for its br-paid customers. With the TalkLoan service, customers with a low br-paid account balance can simply dial a toll-free number and get an instant 'TalkLoan' recharge, for both voice and data services. The TalkLoan service provides the customers with an instant loan of Rs. 5 or Rs. 10, when the balance dips below Rs. 10. The talk-time given through the TalkLoan loan facility does not have any validity constraints, and customers can use it anytime they want. The 'loan amount' is recovered by the Company over subsequent recharges, with a nominal transaction fee.

f. Launched Revolutionary Cloud Ecosystem

GCX launched Cloud X, our new transformational global Cloud ecosystem. Cloud X nodes are operational in Palo Alto, Hong Kong, London New York, Mumbai with additional installation in other key global locations underway. We expect to complete more than 20 nodes in the second half of 2016. As part of the Cloud X portfolio, GCX also introduced Cloud X Fusion, offering enterprise grade connectivity with direct access into several public cloud platforms. With Cloud X Fusion, customers can use Ethernet or MPLS VPN to securely connect their on-brmises network, data center or any other network resources via GCX's private network directly to Google Cloud Interconnect, AWS Direct Connect as well as into and from Equinix data center cloud exchanges from major locations worldwide including Los Angeles, New York, Amsterdam, London, Hong Kong and Tokyo. Besides offering connectivity, the Cloud X platform allows customers to move VMs and date between Cloud X and public clouds.

g. Subsea Cable Expansion

I n financial year 2014-15 GCX explored options for the construction of its new ICX subsea cable which will provide transport from east of India to the rest of Asia and PCX, from east of Asia to the west coast of the United States. The completion of these two systems will allow us to span the globe with our own subsea cable systems and allow us to realize further economies of scale and savings in network costs.

In addition, GCX significantly enhanced its global infrastructure by adding more than 480G capacity in Asia between Hong Kong and Japan; 600G on Trans­Atlantic route and 500G on the Middle East to Europe route. The company also refreshed the IP PoPs with new equipment at 12 locations across the US and Europe.

h. GCX Brand/ Website Development

To further enhance our public image, GCX also went live with a new "Window to the World." Our newly deployed corporate website delivers a unique user-experience, differentiating ourselves from competitors through creative visuals, responsive design for mobile devices and video case studies on global customers. The site has been launched in multiple languages including English, Chinese (simplified and traditional), Dutch, French, German, Italian, Japanese, Arabic. Korean language will be available in FY 2015-16.

i. Enterprise Services

During financial year 2014-15, RCOM's combrhensive B2B portfolio found further fillip through the 'collaborative innovation' route. The Company launched several new services in partnership with leading global technology providers. These include Cloud Video Intelli-Surveillance (with Panasonic), Business Booster (with Google) and addition of several new Cloud services to the company's portfolio in partnership with IBM and HITACHI. With the addition  of several new Cloud offerings, RCOM, primarily known for ushering in the third party data center business in India, strengthened its position as a leading cloud service provider with a diverse multi-brand portfolio.

j. Customer Service

In 2014-15 we have taken various initiatives for Customer, Channel and Employee Empowerment. We refreshed both the Channelcare App for retailers and Instacare App for our Customers. We moved to FOFO (Franchisee Owned and Franchisee Operated) Reliance Mobile Stores. These new stores enabled us to take service closer to the customer. The core call centre technology was revamped by launching hosted ACD model and state of the art IVR solution. This technology will take the customer self service to a completely new level.

On the process side, we overhauled the entire collections process for post paid customers and back office processes for customer complaint management. We used Internet, Videos and Digitization to empower our team by revamping our Learning Management System focusing on self-learning and assessments.

D. New Partnerships

a. RCOM and Reliance Jio Infocomm Ltd. announced the signing of a Master Services Agreement for sharing of RCOM's extensive intra-city optic fiber infrastructure

Under the terms of the agreement, Reliance Jio Infocomm will utilize RCOM's nationwide intra-city fiber network for accelerated roll-out of its 4G services across the country. The agreement is based on arm's length pricing at brvailing market prices. RCOM's intra-city optic fiber network extends to nearly 500,000 fiber pair kilometers, across the top 300 cities and towns in India.

This 3rd agreement further strengthens the combrhensive framework of business co-operation between Reliance Jio Infocomm and RCOM, following the inter-city optic fiber sharing agreement signed in April, 2013, and the nationwide telecom towers infrastructure sharing agreement signed in August, 2013.

b. RCOM partners with Facebook to sbrad internet inclusion in India

RCOM entered an industry-first partnership with Facebook to offer free data access to useful websites to its customers through Internet.org portal.

These services are available for Reliance customers in the telecom circles of Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Chennai, Tamil Nadu and Kerala. Customers can now explore what the Internet is all about, and how it can help them in daily life, without having to worry about data charges. These set of services also come with free Facebook access.

c. Non-stop 3G Roaming Across India

RCOM announced strategic Inter-Circle roaming partnerships with other leading telecom companies to offer non-stop and best-in-class pan-India 3G services to its GSM customers while roaming. With this innovative alliance, all existing and new 3G customers of RCOM will be able to access high-speed pan-India 3G services while roaming outside the Company's own 3G circles.

RCOM is the first operator to offer 3G national roaming to its customers in partnership with other telecom firms having state-of-the-art 3G networks. These alliances will further consolidate RCOM's position as the leading data operator in the country and will help the Company improve its post-paid and corporate customer market share.

The 3G GSM partnership, therefore, opens up a significant market opportunity for RCOM, as all its 3G customers will now be able to access best-in-class data services on a pan-India basis.

d. Partnerships in the Enterprise business

I n the B2B segment, RCOM's endeavor has been to look at collaborative innovation wherein the Company forges partnerships with global technology leaders and bring market leading innovations to customers. In financial year 2014-15, the Company announced several such partnerships:

• Partnerships for enhancing Cloud portfolio

RCOM, through its subsidiary Reliance IDC Ltd.,entered into agreement with IBM for Desktop as a Service (DaaS) offering, IBM SoftLayer for Infrastructure as a Service (IaaS) offering and HITACHI for Data Storage and Protection. These partnerships have substantially enhanced RCOM's Cloud portfolio.

RCOM, through its subsidiary Global Cloud Xchange entered into Global Interconnect Partnerships (Cloud X Fusion) with Google Cloud Platform, Equinix and Amazon Web Services.

• Partnership with Panasonic

RCOM developed an integrated Cloud based Surveillance offering (Cloud Video-Intelli Surveillance) the first of its kind in India, in association with Panasonic, combining the strength and reach of our network with Panasonic's world-leading Video Analytics platform.

• Partnership with Google

We have partnered with Google to offer the benefits of digital brsence and promotions to small businesses, helping them garner continual leads for their business through the 'Business Booster' platform.

• Multiple Partnerships for Intelligent Telephony

RCOM has worked with several technology partners to develop an Intelligent Telephony Platform with the ability to integrate with the client organisation's databases, applications and  processes and add enormous efficiencies to business processes using simple telephony. Using this platform, three distinct services, viz., Insta CallBack, Smart CallThrough and AutoCall Notifier have been launched.

e. New relationship with leading handset manufacturers

RCOM has developed relationship with leading handset manufacturers to bring their flagship Smartphones under our newly launched "Zero Plan" scheme. With these tie-ups, the Company is also trying to penetrate GSM + CDMA handset in the market to make CDMA handset ecosystem more accessible and affordable.

• RCOM launches further models in dual-sim smartphone

RCOM has achieved a breakthrough with 4 new handsets in the lowest price range of Rs. 6,000 to Rs. 12,000 under Lava and Haier brands. The phones are available in 4", 4.5" and 5" screen size and run on the latest Android OS. This is a niche category in dual-sim smartphones with a universal primary slot capable of providing high speed data on both technologies (CDMA / GSM).

• RCOM becomes launch partner of Samsung Z1 Smartphone

Samsung Z1 is first ever Smartphone built using Samsung's proprietary Tizen OS for the mass customers. RCOM is offering this smart-phone at a very attractive price point along with promotional data offer, which makes it an extremely attractive proposition for customers looking at entry level 3G smart-phone.

• RCOM becomes launch partner of Amazon to offer ZTE Grand 2 Smartphone

ZTE Grand S2 is first ever multimode smart-phone under Rs. 14,000 supporting Rev B technology offering 14.7 Mbps speeds. With the objective to acquire more data customers who are choosing entry level Rev B Smart-phones, RCOM is offering this smart-phone at an attractive price point along with promotional data offer.

• Partnership with Huawei for open market 3G Wi-Fi dongles and Mi-Fi devices

RCOM announced new open market partnership with Huawei, the world's leading mobile broadband device manufacturer. This partnership will bring new portfolio of mobile broadband devices such as 3G Wi-Fi dongles (21.6 Mbps) and Mi-Fi devices (21.6 Mbps) for Reliance 3G customers and address the demand for high speed services.

The new 21.6 Mbps Wi-Fi dongle can connect up-to 10 devices simultaneously and the new 21.6 Mbps Mi-Fi device with in-built battery can support up-to 10 devices simultaneously and has 4 hours of battery back-up.

E. Key Developments in the Company

a. RCOM QIP Programme and Preferential issue

I n the largest ever private sector QIP in the history of corporate India, the Company raised Rs. 4,808 crore in its maiden QIP issue during the year under review. This reflects the confidence of institutional investors in our company. The Promoters also subscribed to equity securities of the Company for Rs. 1,300 crore. The proceeds of QIP offering and the brferential allotment have been utilised primarily for repayment of debt and de-leveraging the balance sheet.

b. Global Cloud Xchange raised Rs. 2,100 crore (US$350 million)

Global Cloud Xchange successfully debuted in the Global Capital Market by raising US$350 million fixed rate notes maturing in 2019. The notes were priced at 100% and with a coupon and yield of 7%. US$250 million of the proceeds was used to refinance the existing bank loan facility entered into by Reliance Globalcom B.V., and the rest of the proceeds will be used for Capex and general corporate purposes. The bonds are listed and traded on the Singapore Stock Exchange.

c. Foreign currency Notes raised Rs. 1,909 crore (US$300 million)

During the current year, the Company issued and allotted foreign currency Notes amounting to US$300 million. The Notes have a tenor of years due in 2020 and carry a coupon rate of 6.5% per annum, payable semi annually. The bonds are listed and traded on Singapore Stock Exchange.

d. March, 2015 Spectrum Auction Update

In the recently concluded spectrum auctions in March 2015, we were successful bidders for spectrum for a period of 20 years (up to 2035) in the following Circles: 

In the seven circles operated by RTL, where spectrum is coming up for renewal, we were successful bidders for spectrum in four Circles — 5 MHz each in 900 MHz in two circles and 5 MHz each in 1,800 MHz in two circles. RTL holds 3G spectrum in all these seven Circles. We have existing ICR arrangements to ensure uninterrupted service to our customers across all these Circles. We also intend to continue to focus on transition of 2G customers in the remaining three Circles to 3G services.

After this round of spectrum auctions, we believe that our spectrum portfolio is equipped to service our business strategy. We were the successful bidder for the 800/850 LTE band spectrum in 11 circles,which is recognised as one of the most powerful spectrum bands in the sub-1 GHz spectrum category. We invested approximately 50% of our total outlay for acquiring spectrum in this band. We now hold 5 MHz or more in this spectrum band in 21 Circles (an increase from 12 Circles earlier), the only Indian telecommunication service provider to do so. We believe this gives us the unique capability to launch LTE services in an efficient manner. The total cost for the acquisition of spectrum in this round of auctions is Rs. 42,905 million, with an upfront payment of Rs. 11,041 million. The balance payment is required to be made on a deferred basis over 10 annual installments after a moratorium of two years.

e. RCOM Upgrades Data Network

RCOM has upgraded its data network to include many more metro cities. This enables high speed data services to customers with speeds up to 14.7 Mbps. This will also help the Company to launch Wi-Fi dongles and standalone Wi-Fi Routers which will offer rich data experience up to 20 connected devices simultaneously. RCOM is enhancing availability of these services in many more circles through ICR arrangements.

f. Completed Operational Merger Under GCX

In financial year 2014-15, Global Cloud Xchange (GCX) completed the operational merger of our 3 key global assets: FLAG, Vanco and Yipes into one company.

g. GCX Network Expansion And Collaboration

During the year, we continued to expand the GCX global network coverage and business collaborations to further strengthen our market position. We established network interconnection with China Mobile in Shanghai to offer customers seamless and cost-effective MPLS VPN connectivity across 340 cities in mainland China. GCX increased Capacity on its IP/MPLS and Transmission networks on major routes in line with increase in demand especially in the "emerging markets corridor" of the Middle East and Asia.

To further leverage our ability to deliver leading edge solutions across key routes in the world's fastest growing economies, GCX announced direct interconnection with UAE-IX, a carrier neutral Internet traffic exchange platform in Dubai, to optimize Middle East network performance. In addition, GCX expanded its brsence with a new PoP at Datamena in Dubai, another carrier neutral data center and connectivity, platform supporting enhanced coverage and increased diversity options for the Middle East. Also in financial year 2014-15, GCX's collaboration with the Tokyo Stock Exchange opened up new opportunities for the company in providing end to end solutions across our global subsea network for financial customers worldwide.

F. Awards and Recognitions

During the year under review, the Company received national level recognition and awards as follows:

1. Nielsen's Corporate Image Monitor (CIM) 2014­15 survey - RCOM was among the top 10 most reputed companies in India according to the Nielsen CIM 2014-15 survey. Some of the parameters for the study included transparency, trust, demonstration of vision and leadership, perceptions of company product and services, financial performance, workplace environment.

2. Economic Times India's Most Exciting Brands -Reliance in Top 14: Reliance ranked 14th among the top 20 most exciting brands 2015 according to Nielsen's survey exclusively for Brand Equity shows. The survey provides a great insight into the brands and categories that teens and twenty something youth find exciting.

3. Woman Leader in IT by Interop: Interop, a leading independent technology conference forum that showcases the most powerful innovations and solutions in the industry, has awarded "Woman Leader in IT" to IT-CIO of RCOM for business strategic focus in Technology.

4. CIO 100 by IDG Media: IDG Media has conferred this award on RCOM for its information security project viz. Deployment of Anti-DDOS (Distributed Denial of Service). This deployment supports business in improving Customer Service by ensuring better availability of services.

5. Economic Times HR Excellence Award, 2014: The award recognises organisations which are trend setters in the various domains of HR. RCOM has received this brstigious award for its exemplary HR Practices. Initiatives in the areas of Learning and Development, Talent Management and Talent Acquisitions were identified as progressive and noteworthy in the industry.

6. Telecom Leadership Award 2015 - CIO of the Year from CyberMedia Group for being a Catalyst of Change, Out-of-Box Solutions, and Contribution in International Telco landscape and Innovative Strategies in managing with agility Premier Telco's IT.

7. IT Edge Award 2014: UBM has conferred this award on RCOM for being one of the finest business technology innovators. It has been awarded for readiness in plug-n-play in integrating OTTs into the overall customer experience.

8. Managed Video Conferencing Service Provider of the Year - RCOM received this brstigious title at the 2014 Frost & Sullivan India ICT Awards in recognition of RCOM's industry leading expertise and experience in conceptualising and delivering Video Conferencing services to the Indian corporate sector. 

G. SCOR Analysis

Strengths

• Presence in an industry withgrowth potential

• Integrated portfolio of services covering voice, data and video

• Large customer base with leadership in data subscribers

• Annuity-like recurring revenue streams

• Combrhensive domestic andinternational network

• Extensive distribution and service network

Opportunities 

• Potential in voice to add over 200 mn new subscribers

• Mobile broadband to be the next frontier of growth

• Significant growth in smartphone adoption

• "Digital India" mission of the new government

• Demand for passive infrastructure services

• DTH digitisation 

 Challenges

 • High input cost

• Downward brssure on tariffs

• Continuously evolving technological changes

• Extensive regulations

• Churn in the mobile telecommunications industry

Risks 

• Rapid technological changes mayincrease competition

• Changes in regulations like lowering of roaming tariffs may affect revenue growth

• Change in the competitive landscape like consolidation, entry of a new player etc.

• Currency exchange rate fluctuations 

 Strengths

a. Presence in an Industry with Growth Potential

We believe we can capitalise on the growth potential brsented by the telecommunications industry as a result of our established brsence and our combrhensive range of products and services in India and globally.

The Indian telecommunications industry has attractive growth prospects that are mainly a result of factors such as: (i) relatively low rural penetration; (ii) rapid growth in data consumption from a low data consumption levels; and (iii) reduced competitive intensity resulting in improved pricing power for existing operators.

Furthermore, we believe that the global data communications industry has attractive growth prospects driven by various factors, which include: (i) rapid increase of Internet users, particularly in emerging markets; (ii) consumer demand for faster broadband speeds; (iii) the increase in the number of connected devices, such as smartphones, tablets and other Internet of Everything gadgets; (iv) growth in demand of data-intensive applications, such as social networking, video, online gaming, file sharing and remote file storage; and (v) the development and widesbrad implementation of cloud computing technologies that require high bandwidth and low latency global networks.

b. Large Customer Base with Leadership in Data Subscribers

We have a large customer base in India. As on March 2015, we reported 110.7 million total subscribers, of whom 109.5 million were wireless subscribers (including 33.7 million data subscribers, of which 17.4 million were 3G subscribers). We are the fourth largest wireless operator in India, as measured by the number of wireless subscribers, with a market share of 11.3%  and 12.4% on a VLR basis. We have generated more than 100 billion MoU per quarter for the last 12 quarters. We also have a strong market position in data subscribers, including 3G subscribers.

c. Annuity-like Recurring Revenue Streams

We believe our revenues have higher stability and brdictability, due to annuity-like recurring revenue streams across our various businesses. In the wireless business, we have acquired long-term customers through bundled sales and post-paid services, which lead to lower churn rates and longer customer life cycles. We experience low churn rates for our enterprise clientele of multinational corporations and SMEs, ensuring annuity-like recurring revenue. In our carrier business, we have recurring revenues from various customers, including other carriers. Our Global Operations revenues mostly are through long-term carrier and IRU contracts and are recurring in nature. In our tower infrastructure business, we have long-term contracts with other service providers and also have further capacity to enhance tenancies.

d. Combrhensive Domestic and International Network

We have a nationwide, convergent digital network capable of providing a combrhensive suite of products and services to our customer base. As at December 31, 2014, our wireless network included 86,792 owned and leased sites which provide coverage to over 21,000 cities and over 400,000 villages across all 22 Circles. Our global network is distinguished by its geographical coverage and ability to provide subsea and terrestrial connectivity to major telecommunications hubs. These include hubs in the developed markets in the U.S. and Europe and key emerging markets in the Middle East and Asia.

e. Ample, Long Validity Period Wireless Spectrum

We are the only telecommunications operator in India with allocation of CDMA spectrum (800 MHz) and GSM spectrum (900 MHz and/or 1800 MHz) in all 22 telecommunications Circles. In addition, we have won 3G spectrum (2100 MHz) in 13 Circles in the 2010 auction. Most of our spectrums have long validity periods — our CDMA spectrum is valid until 2021 or later in 19 Circles, our GSM spectrum is valid until 2021 or later in 14 Circles, and our 3G spectrum is valid until 2030 in all 13 Circles. We believe that our diversity of spectrum provides us with significant advantages. In particular, our CDMA spectrum allows us to provide high-quality data services through dongles and smartphones in a capital-efficient manner, since the lower frequency requires fewer sites for similar coverage, and CDMA technology allows for more efficient combrssion and transmission of data.

f. Extensive Distribution and Service Network

We maintain an extensive distribution and service network covering all 22 telecommunications Circles in India. We have recently adopted an initiative to launch full-service franchise owned and operated retail outlets offering a full suite of services, including innovative  self-care options, to our customers. As at March 31, 2015, we had 956 franchised Reliance Mobile exclusive stores sbrad across 152 cities and towns, offering customer activation and after-sales services. We also intend to increase these retail outlets to other cities. Our third-party retailer brsence includes more than 680,000 outlets. Reliance Digital TV is available at over 35,850 outlets across approximately 8,350 cities and towns in the country. As at March 31, 2015, our GCX operations had sales and support staff across 28 locations and engineering and operational service staff across 18 countries.

Challenges

a. High Input Cost

The Industry is facing high inflationary cost brssure on account of high input cost for spectrum, increasing fuel and electricity charges, increasing employee expenses, etc. This has created tremendous brssure on profitability in the industry. RCOM has taken various initiatives including converting more number of sites on State Electricity Grids to reduce fuel expenses, rationalisation of manpower to check employee expenses and focus on quality acquisition to reduce churn and hence reduce customer acquisition cost.

b. Downward Pressure on Tariffs

Some of the telecom operators in the market have resorted to aggressive tariffs leading to intensified competition and downward brssure on prices. Our well planned capital investments, backed by a world class network, put us in a competitive position to meet these challenges.

c. Extensive regulation may adversely affect our ability to do business

The Government along with TRAI regulates many aspects of the telecommunications industry in India. The extensive regulatory structure under which we operate constrains our flexibility to respond to market conditions, technological developments, competition or changes in our cost structure. In addition, we are required to obtain a wide variety of approvals from various regulatory bodies.

d. Churn in the mobile telecommunications industry in India is high

The Indian mobile telecommunications industry has historically experienced a high rate of churn. This high churn rate has been a consequence of increasing competition and resultant promotional tariffs for new connections. Churn rates are especially high among br-paid subscribers, who constitute a significant portion of the subscriber base of the Indian telecommunications industry.

Opportunities

a. Voice Business

During fiscal years 2011 and 2012, the Indian Wireless industry's revenue had double digit annualised growth rate of 12% and 16% respectively. In the financial years 2013 and 2014, the industry revenue growth tapered down to single digit at 9.1% and 9.5% respectively. However, in the fiscal year 2015 the industry grew in double digits, by 10.9%. Voice still remains the bread and butter for the industry. Currently, industry has approximately 725 million unique users after accounting for 15% dual SIM holders. With VLR penetration of 88.9% and rural

India penetration still under 50%, the industry has the potential to add nearly 200 million new subscribers during the next 3-4 years.

b. Mobile Broadband to be the Next Frontier of Growth for the Industry

Indian mobile broadband market in FY 2015-16 will continue to have stronger growth compared to mobile broadband market in developed geographies. According to the research firm IDC, India's mobile broadband service is expected to reach US$7 billion (~Rs. 42,000 crore) by 2017 from US$4 Billion in 2014 with a CAGR 19.3%. 3G subs will grow faster than any other mobile technology, at five-year CAGR of 68%. This is mainly due to more 3G services coverage across the country, especially beyond the big cities. IDC attributes the growth of data revenue to three key areas i.e. smart-phones penetration with affordable prices, rollout of 3G and 4G licenses; and favorable consumer behavior towards 'Over-The-Top-Players' (OTTP) services.

c. Significant Growth in Smartphone Adoption

A major chunk of incremental industry revenues are attributable to data with nearly 50% or more incremental revenues for operators being driven solely by data. We are right in the midst of the data led revolution. This data growth is being fuelled by broad based smartphone adoption and consequent spurt in demand

Smartphone shipments reached 21.6 Million in the quarter ending December, 2014, a staggering annual growth of 90%. 64% of smartphone shipments in the third quarter of the fiscal were in the price band of less than Rs. 12,000, underlining device affordability as one of the key strategic drivers of mass adoption.

The overall smartphone base in the country in December 2014 stands at nearly 140 Million and with over 863 million active mobile users as of March

2015 in the country, we believe that it is still early days for the data surge story and huge headroom exists for even more explosive growth.

d. "Digital India" is High Priority Agenda for the New Government

The new Central Government has clearly exbrssed its intention to steer in the next telecom revolution, so we do expect certain policies, which will ensure a healthy profitable growth for the sector. The focus areas for the government to promote "Digital India" include Broadband connectivity at village level, improved access to services through IT enabled platforms, and greater transparency in Government  processes. National Rural Internet and Technology Mission is being launched to provide internet services in villages and schools and also training in IT skills. E-Kranti aims to transform the e-governance in the country by enabling all government services through electronic delivery to citizens and other stakeholders.

e. Passive Infrastructure

Nation-wide brsence, long term contracts with all telecom service providers, strategic location of towers and fibre connectivity makes subsidiary RITL as one of the leading Passive Infrastructure provider in India.

In Telecommunication Industry, next wave of growth is going to be driven by data services. Deployment of networks enabling high speed data services like 3G and 4G new technologies like LTE by operators is likely to create an additional boost for Passive Infrastructure Services.

Risks and Concerns

a. Operating licenses are subject to regulatory compliance

Some of the operating licenses are subject to regulatory compliance under the terms and conditions of licenses granted over different parts of the world. The rules and regulations, issued by the respective governments and regulatory authorities, having jurisdiction over the Company's operations and licenses, require it to meet specified conditions, network build-out requirements and tariff fixation. However, the Company does not perceive any risks on this account as it is in a position to comply with these regulations.

b. Rapid technological changes

Rapid technological changes may increase competition and render the Company's technologies, products or services obsolete. Our facilities are tuned to the next generation latest technology and we do not foresee any risk of obsolescence at brsent.

c. Currency Exposure

We have currency exposures related to our revenues, expenditures and financing in currencies other than the local currencies in which we operate. Our Company also has significant borrowings in currencies other than Rupees. Further, we also import various equipment for our India operations for which we make payment in foreign currencies. We report our results of operations in Rupees. The Company manages this risk through prudent treasury management initiatives as per its internal policies and procedures.

d. High Capital Expenditure

The telecommunication services industry is capital intensive. Capital Expenditure (Capex) on adaptation to the latest technology may put brssures on deliverables. However, the Company is constantly assessing such technological challenges and taking requisite remedial steps through timely and optimal Capex plans.

e. Increased commoditisation

The traditional plain connectivity solution is likely to see increased commoditisation. However, our unique solution capabilities and innovations are set to turn this challenge into an advantage for us, by differentiating ourselves from our competition. We have launched several innovative solutions for our customers last year. Going forward, we plan to launch innovative products even more aggressively in the market. Several such solutions are at final stages of development.

A lot of customers are adopting SIP trunking for voice connectivity. We intend to provide various VAS services to customers in order to increase the wallet share. Cloud telephony is another area where we intend to launch several innovative solutions to increase our share of voice revenue from VAS services.

H. Financial Performance - Overview

The Company's standalone financial performance is disclosed in detail under the head 'Financial Performance' in the Directors' Report. The consolidated performance of the Company is given below:

Revenues and operating expenses

On a consolidated basis, the Company earned total revenues of Rs. 22,098 crore (US$3,536 million). The net profit after tax recorded by the Company was Rs. 620 crore (US$99 million). Our total operating expenditure stood at Rs. 14,580 crore (US$2,333 million).

Operating profit before finance charges, debrciation and amortisation, exceptional items and provision against fixed assets (EBITDA).

The Company earned EBITDA of Rs. 7,518 crore (US$1,203 million). The EBITDA margin for the year was 34.02%.

Debrciation and amortisation

The Debrciation and amortisation charges were Rs. 3,817 crore (US$611 million).

Profit before / after tax

The profit before tax was Rs. 946 crore (US$151 million). The provision for taxes was to the tune of Rs. 114 crore (US$18 million) and the Company has recognised Deferred Tax Liabilities (net) of Rs. 212 crore (US$34 million). The net profit after tax was Rs. 620 crore (US$99 million).

Balance Sheet

As at March 31, 2015, the Company had total assets of Rs. 91,284 crore (US$14,605 million). Stakeholders equity was Rs. 37,936 crore (US$6,070 million), while net debt (excluding cash and cash equivalents) was Rs. 37,1 50 crore (US$5,944 million), giving a net debt to equity ratio of 0.98 times. 

I. Segment wise Review

1. India Operations

Overview

Our India operations segment comprises the following businesses: (i) wireless telecommunications services to retail customers through CDMA and GSM technology-based networks across India, including 3G services in 18 Circles, which also include the metropolitan Circles of Delhi, Mumbai and Kolkata. We provide a diverse array of mobile and fixed wireless voice, data, and value-added services in our wireless telecommunications business; (ii) voice, long-distance services and broadband access to enterprise customers; (iii) managed Internet data centre services; and (iv) DTH business. Additionally, our company Reliance Tech Services (RTS) is a complete end to end IT and Technology solution provider to RCOM Business units through delivery and operational excellence.

Revenues and Profit

The revenues for the financial year ended March 31, 2015 were Rs. 19,103 crore (US$3,056 million). The EBITDA during the same period was Rs. 6,774 crore

(US$1,084 million), while the EBIT (Earnings before

Interest and Tax) was Rs. 3,325 crore (US$532 million).

2. Global Operations

Overview

The Global Business Unit offers the most combrhensive portfolio of Enterprise, IT infrastructure and International long distance voice, video and data network services on an integrated and highly scalable platform across the globe. Our business segments comprise Carrier, Enterprise and Consumer Business units. We provide carrier's carrier voice, carrier's carrier bandwidth, enterprise data and consumer voice services.

Revenues and Profit

The Revenues for the financial year ended March 31, 2015 in this segment were Rs. 4,610 crore (US$738 million). While the EBITDA was Rs. 744 crore (US$119 million), the EBIT was Rs. 376 crore (US$60 million).

J. Strategic Business Units

1. Reliance Communications Infrastructure Limited(RCIL)

RCIL, a wholly owned subsidiary of the Company, offers Internet services and Broadband data services.

Operations

Revenues and Operating Expenses

RCIL earned total revenues of Rs. 2,333 crore (US$373 million) during the year as compared to Rs. 2,890 crore (US$482 million) for the brvious year. RCIL incurred total operating expenses of Rs. 1,306 crore (US$209 million) as compared to Rs. 2,973 crore (US$496 million) in the brvious year.

Net Profit / (Loss)

The net Profit after tax recorded by RCIL was Rs. 120 crore (US$19 million) as compared to loss Rs. 276 crore (US$46 million) in the brvious year.

Balance Sheet

As on March 31, 2015, RCIL had total assets (net) of Rs. 5,034 crore (US$806 million) and shareholders' fund amounting to Rs. 922 crore (US$148 million).

2. Reliance Telecom Limited (RTL)

RTL, a wholly owned subsidiary of the Company, offers GSM services in Madhya Pradesh, West Bengal, Himachal Pradesh, Orissa, Bihar, Assam, Kolkata and North East service areas.

Charge Sheet filed by CBI in 2G matter

As reported in brvious Annual Report, consequent to the investigations by an investigative agency (CBI) in relation to the entire telecom sector in India, certain brliminary charges have been framed by a Trial Court in October, 2011 against the Company and three of the executives of the Group. The charges so framed are brliminary in nature based on investigations only, and the executives named are brsumed to be innocent, till their alleged guilt is established after a fair trial. These brliminary charges have no impact on the business, operations, and / or licenses of RTL and RCOM and are not connected in any manner to any other listed group companies.

Operations

During the year, RTL expanded its network, specifically at the areas in the eastern region.

Revenues and Operating Expenses

RTL earned total revenues of Rs. 3,486 crore (US$558 million) during the year as compared to Rs. 3,739 crore (US$624 million) in the brvious year. RTL incurred total operating expenses of Rs. 2,864 crore (US$458 million) as compared to Rs. 3,286 crore (US$548 million) in the brvious year.

Net Profit / (Loss)

The net loss after tax recorded by RTL was Rs. 143 crore (US$23 million) as compared to net loss of Rs. 260 crore (US$43 million) in the brvious year.

Balance Sheet

As on March 31, 2015, RTL had total assets of

Rs. 5,691 crore (US$911 million) and shareholders' fund amounting to Rs. 721 crore (US$115 million).

3. Reliance Infratel Limited (RITL)

RITL, subsidiary of the Company, is in the business to build, own and operate telecommunication towers, optic fiber cable assets and related assets at designated sites and to provide these passive telecommunication infrastructure assets on a shared basis to wireless service providers and other communications service providers under long term contracts. These customers  use the space on our telecommunication towers to install their active communication-related equipment to operate their wireless communications networks. The customers can also use our optic fiber network to connect the sites to the core network and the connectivity between circles.

Revenues and Operating Expenses

RITL earned total revenues of Rs. 5,916 crore (US$947 million) during the year as compared to Rs. 7,792 crore (US$1,301 million) in the brvious year. The Company incurred total operating expenses of Rs. 3,518 crore (US$563 million) as compared to Rs. 3,977 crore (US$664 million) in the brvious year.

Net Profit / (Loss)

The net loss after tax recorded by RITL was Rs. 964 crore (US$154 million) as compared to Rs. 105 crore (US$18 million) in the brvious year.

Balance Sheet

As at March 31, 2015, RITL had total assets of

Rs. 13,412 crore (US$2,146 million). Shareholders' fund was Rs. 6,635 crore (US$1,062 million).

4. Global Cloud Xchange (GCX)

Revenues and Operating Expenses

GCX earned total revenues of Rs. 2,938 crore (US$470 million) during the year. The Company incurred total operating expenses of Rs. 2,256 crore (US$361 million).

Net Profit / (Loss)

The net profit after tax recorded by GCX was Rs. 231 crore (US$37 million).

Balance Sheet

As at March 31, 2015, GCX had total assets of

Rs. 7,175 crore (US$1,148 million). Shareholders' fund was Rs. 2,650 crore (US$424 million).

Adequacy of Internal Control and Systems

The Company has enhanced its systems of internal controls aimed at achieving efficiency in operations, optimum utilisation of resources, effective monitoring and compliance with all the applicable laws. The internal control mechanism comprises of a well defined organisational structure, documented policy guidelines, br-determined authority levels and processes commensurate with the level of responsibility. The Management Audit Team undertakes extensive checks, process reviews and also conducts internal audits at locations / NSHQ through external firms of Chartered Accountants, who provide independent and professional observations. The Audit Committee of the Board reviews major findings in the internal audit reports as well as the adequacy of internal controls.

Risk Management Framework

The Company has instituted a self-governed Risk Management framework based on identification of potential risk areas, evaluation of risk intensity, and clear-cut risk mitigation policies, plans and procedures both at the enterprise and operating levels. The framework seeks to facilitate a common organisational understanding of the exposure to various risks and uncertainties at an early stage, followed by timely and effective mitigation. The Audit Committee of the Board reviews the risk management framework at periodic intervals.

Corporate Governance

The Company's "Code of Conduct" policy which has set out the systems, process and policies conforming to international standards are reviewed periodically to ensure their continuing relevance, effectiveness and responsiveness to the needs of investors both local and global and all other stakeholders. We maintained the highest standards of corporate governance principles and best practices.

Human Resource and Employees Relations

The key focus areas:

a. Driving Employee Engagement

b. Creating Performance Driven Organization

c. Attracting and Retaining Talent

d. Building Leadership Bandwidth

A series of employee communication and engagement events have been organized involving employees and their families to create an 'Engaged People Organisation'. It has been also the Company's endeavour to make its policies, processes and procedures more transparent, employee friendly and relevant, in line with the best industry practices. During the year, the Company has successfully met the manpower skill requirements emerging from our expanding and evolving business. The manpower as on March 31, 2015 was 9,111 across all businesses.

Corporate Social Responsibility

We at RCOM, driven by our mission and the guiding philosophy, focus on our corporate social commitment as an integral part of our business which is embedded in to the business strategy and its policies.

Our aims at RCOM is "to be a socially responsible corporate entity with a thrust in the area of Education, Employability, Economic Empowerment, Environment and Technology based social development through sustained business conduct."

To strengthen the mandate further, a CSR Policy was adopted by the RCOM Board framed in consonance with the CSR Rules, 2014 of the Companies Act 2013.

In the last one year RCOM has undertaken several initiatives to support inclusive growth and equitable development for social and economic betterment of the community through several CSR programs and active participation from enthusiast employee volunteers. 

Below are key endeavours undertaken by RCOM during the year 2014-15.

a. Volunteering Initiative for Developing Young Aptitude (VIDYA)

Project VIDYA, is an educational program initiated by RCOM with a mission to create a platform to support effective learning and improve the literacy levels in the community. Focused on establishing a learning environment for developing reading skills and literacy skills in primary and secondary school children Project VIDYA in 2014-15,launched six VIDYA Centers across India, in the state of Maharashtra, Jharkhand, Odisha, Andhra Pradesh and Rajasthan reaching out to more than 7,500 children.

b. Support to Technology Education:

Inspired by the vision of our founder, RCOM has instituted a Reliance Communication Scholarship for the deserving students and promote research and development in the field of Computational Sciences in India at DA-IICT- the renowned educational institution based at Gandhinagar, Gujarat.

c. Providing Grassroots Advancement to Youth Aspiring Growth (PRAYAG):

PRAYAG is an endeavour extending employment based employability skills to unemployed or under employed youth from semi-urban and urban slum in India. This is a platform designed to empower school and college dropout youths in the areas adjoining the company's operations. PRAYAG has reached out to 4846 beneficiaries across 7 PRAYAG Centers across 7 states.

d. Cyber Woman - a Digital Literacy Programme:

Project 'Cyber Woman' promotes digital internet literacy for women from underprivileged communities. Initiated in 2013-14, till now, the Cyber Woman programme has reached to 1600 beneficiaries from Bihar, Jharkhand, West Bengal and Karnataka.

e. Project Swawlamban:

Project "Swawlamban" focuses on creating a pool of self-reliant and empowered women members through a series of interventions in the area of skill building, livelihood, awareness on women specific issues etc. from its training centre located in West Bengal.

f. Project Reliance ASHA

Reliance ASHA is an economic empowerment initiative undertaken by RCOM, to create combrhensive rehabilitation opportunities for individuals with disabilities, with an agenda to facilitate their integration into the mainstream of the society. Based out of Northern India, the project has been enabling employability skills and promoting livelihood platforms for differently- abled youth in partnership with ASHA and Army Wives Welfare Association (AWWA) a social arm of ARMY.

g. Women Empowerment

Run for Women Empowerment (RfWE) is part of the larger agenda at RCOM to focus on and cater to the various facets of empowerment through deployment of focused social endeavours.

Held at Ranchi, Jharkhand on March 14, 2015 the Run witnessed more than 600 women from across the socio-cultural realms participated to champion the cause on Women empowerment, and pledged their support in creating and shaping better India. Athletic Championship was also held to promote young budding women athletes. Ten women from the field of sports, art and culture were extended citations for their contribution and commitment towards the society.

h. Launch of Project Young Energy Savers (YES)

Young Energy Savers (YES) was conceptualized to sbrad awareness in the society to promote awareness on conserving natural resources and motivating the individuals to adopt measures to reduce, reuse and recycle natural resources. The project focused on 10 Schools by creating awareness on saving energy and making kids take up this cause and reduce carbon footprint by reducing the energy consumption at their homes. More than 1 500 students from Navi Mumbai Municipal Corporation (NMMC) schools participated in the same.

i. Blood Donation Campaign

As a tribute to our Founder Chairman, Shri Dhirubhai H Ambani and recognizing the paucity of blood supply to patients, Reliance as a group has been organizing blood donation campaigns across the country by encouraging employees for voluntary blood donation and by creating a voluntary donor base to support the community. As a group, we have contributed 1.4 lakh units of blood over the last few years.

j. Social Awareness campaign

As part of our larger mandate, we have been initiating awareness drives on social issues across our customer base in India. The focus has been on Health, Girl Child, Women Empowerment, Environment etc. Partnerships with Ministry of Health and Family Welfare and other government bodies helped us further our mandate to bridge the communication gaps.

k. Employee Volunteering Day

Every year 11th February is celebrated as "Employee Volunteering Day" all across RCOM to acknowledge and honour the contributions by the employees towards the CSR initiative undertaken by the organisation.