19th Annual Report of MTS

Sistema Shyam TeleServices Limited
Chairmans Letter
Dear Members,
I am glad to be addressing you allour distinguished stakeholders.
I am writing to you at a time when the Indian General Election 2014 is over and the new Indian Government
is already in place. It is a general feeling that after rather continuous period of policy paralysis, the regulatory
environment is likely to undergo a significant change, further boosting business prospects across Indias key
industry sectors.
The Indian telecom market I believe, is a major pillar and growth driver for the countrys economy. The
telecom revolution and in particular, the mobility revolution is sweeping across India, touching and transforming
the lives of citizens across the metros, tier 1 and 2 cities as well as the rural area. Cell phones are now
ubiquitous and internet access through mobiles is becoming the norm, leading to greater inclusion and more
opportunities for the marginalized.
This is the reason why the telecom industry in India, despite the sluggish economic environment, continued
to remain upbeat during last year, creating greater optimism for the year ahead. Most segments of the telecom
industry witnessed growth during FY 2013-14 and the hope is that these will gain further momentum in FY
2014-15.
During FY 201314, the wireless industry saw its subscriber base jump by 35 million, increasing to 903 million
by February, 2014. The voice business witnessed strong growth as most operators raised their tariffs in an
attempt to drive revenue growth. This segment, however, faces a threat from OTT services such as WhatsApp,
Viber and Skype that could cannibalize SMS and voice revenues.
FY 2013-14 saw the broadband business pick up pace with subscriptions reaching 55 million (including
40.7 million wireless broadband users) at the end of December, 2013. Broadband subscribers now account
for a significant proportion of internet users in India and this segment of the wireless industry is expected to
grow exponentially over the next few years. Severe under-penetration of the market, falling PC prices,
introduction of newer devices and the desire of customers to be connected while on-the-move will catalyze
the expansion of this domain.
During the year, telecom operators additionally received some regulatory clarity on a number of issues
including M&A, spectrum trading, spectrum sharing and policy with regard to future allocation of spectrum.
The government completed auctions of 900 MHz in metros and 1800 MHz. Most of the spectrum in the
auctions was acquired by incumbents, resulting in virtual consolidation in the sector. The spectrum allocated
through these auctions meanwhile is liberalized and in the future, there is a possibility of 4G\LTE rollouts on
different bands currently being used exclusively for voice services.
I am glad to share that your Company viz. Systema Shyam TeleServices Ltd. (generally known also as MTS
India), after successful participation in March, 2013 in spectrum auction, by the middle of last financial year
had purchased extended frequency resourses (3 carriers in every operating circle) and received new
universal licenses in nine service areas.
2
Post the auctions, our new footprint covers 40 percent of the population and 60 percent of the data
market potential in India. Effectively, the Company managed to retain almost 75 percent of its pre-auction
revenues.
Clearly, with the Indian telecom market growing across all dimensions, the forecast for MTS India is also
promising. We now find ourselves in an environment, that after a tremendous lull and uncertainty, is increasingly
turning stable and positive and assures us of more robust business growth.
During 2013, MTS India has rejuvenated itself, set stringent goals and followed them up assiduously. The
Company has been focusing on rebuilding its business and optimizing it in line with its milestones and new
footprint. One of the biggest achievements of our Company in FY 2013-14 has been the launch of our
3GPLUS network across all nine operating circles, which is truly scaling the experience of our customers and
we feel, will result in high business impact.
Going forward, MTS Indias success will be determined by its ability to further harvest the voice business
through product and device innovations, and by its ability to grow its distribution network and build brand
value and recognition in the market. We have already made strides in some of these areas and despite the
challenges, emerged as a strong, recognizable brand. Today, MTS India is considered as a provider of high-quality
and innovative solutions. The Company has won several industry accolades such as the Most trusted brand
in India in 2013, Indias buzziest brand and has the second highest brand in the data category after Airtel.
MTS India has built a robust connect with Indias generation next, gaining popularity among youth through its
social media engagement initiatives.
The year ahead therefore appears positive, owing to the external environment, as well as the strategic changes
within MTS India, which should enable the Company to achieve its mid-term as well as long term goals. As we
inch forward towards our OIBDA break-even target, we also expect to compete aggressively within our
chosen telecom playgrounds.
I would like to thank each one of youour stakeholders, employees, our banking partners, government
agencies, promoters and holding companyfor helping and staying with us through our exciting, yet difficult
journey. Your support and encouragement have enabled MTS India to deal with the tough times, pull itself out
of the woods and view the future with greater hope and clarity.
Warm regards.
Ron Sommer
CHAIRMAN
September 02, 2014
CEOs Message
Dear Members,
The year 2013-14 has been one of change and revitalization and we are now looking at consolidation
and growth for MTS India over the next 12 months. It is of tremendous importance with our
over-arching goal of achieving OIBDA break-even at the earliest and I do believe we are on target to
cross this milestone.
I am glad to share with you that the uncertainty that marked our agenda for India over the last two years
is behind us and that we have greater clarity now on our future goals and the roadmap to achieve these
targets.
While in the initial part of 2013-14, MTS India continued to witness a lowering of revenues due to a
decline in the customer base (which was impacted by lower gross additions as well as strict control over sales
and marketing expenditures, aggressive tariffs and predatory practices by competition), today, the trend is
reversing.
With the operating environment becoming more stable and spectrum wins backing us, we expect to notch
up higher top and bottomline growth.
As you may know, SSTL won three blocks of 1.25 MHz each in the 800 MHz spectrum band in eight service
areas in the spectrum auctions held by the government in March, 2013. SSTL was allocated third carrier in
October, 2013. After getting the third carrier, we upgraded our network to REV B Phase II services, providing
subscribers speed up to 9.8Mbps.
In the last few quarters, Q4 being the most recent, we have further improved our performance on all operational
parameters. Our consolidated revenues for instance have increased. We have stepped up on ARPU, expanded
data coverage to 550 towns, scaled our subscriber base for data cards and recorded the lowest OIBDA loss
in the last four years.
The highlight of Q4 in fact, was the launch of our revolutionary 3GPLUS network across all nine circles, which
has given us a first-mover advantage in the market and will have a positive impact on our revenues in future.
Today, with a footprint spread across nine circles, the company services 40 percent of the countrys population
and addresses around 60 percent of the data potential.
Also significant is the fact that according to Millward Brown Optimor 2013 Global Brand Value Rankings,
MTS has seen its brand value rise by 11 percent, making it the 82nd most valuable brand in the world.
Specifically looking at telecom brands, MTS is now pegged at the 9th position among the top 10 most
valuable telecom brands globally. It is assets such as these which we are leveraging to take forward MTS
Indias growth story.
In the months ahead, MTS Indias strategic focus will be on its operations in nine circles, where we will build
further scale and efficiencies. Key imperatives will include strengthening the voice and data business through
innovative and competitive products based on Rev B technology, a large, yet comprehensive devices portfolio
and greater penetration of the dongles and smartphones segment.
4
We expect to expand our High Speed Data (HSD) footprint and provide HSD services across 1000 cities and
towns of India. At the end of March, 2014, MTS India had 1.3 million data subscribers, out of a total user base
of 9.1 million.
The pace of growth in data revenues will continue to be much higher than voice growth. The reason for this
is MTS Indias focus on the data business, existing coverage and deployment of Rev B technology, reliable
service, product offerings and time-to-market advantages.
Voice however, will remain on our radar and we will be looking to roll out competitive tariff plans to increase
voice revenues. In order to enhance our voice network, draw more customers and convert existing data
subscribers to voice and data users, we will continue to introduce various customer-centric products like
Always Talk. The proliferation of low-cost smartphones will additionally fuel the demand for mobile data
services.
Going forward, MTS Indias success will be determined by its ability to further harvest the voice
business through product and device innovations and first, grow its distribution network and build
brand value and recognition in the market. We have already made strides in areas such as branding and
the MTS India Born for the Internet campaign, which has greatly improved our visibility in the market,
is a case in point. Our Q4 performance, which marked improvements across all operational parameters
and revenue linesvoice, data and smartphonesfurther leads us to believe that the year ahead will
be marked by optimism.
Our aim in 2014 therefore, is to monetize our voice network (ensuring over 50 percent utilization), be the
Number One CDMA dongle player (with a 50 percent SoGA [Share of Gross Addition]) and acquire over
50,000 new subscribers in the smartphones segment. Our endeavor will also be to rank among the top three
telecom companies in spontaneous brand awareness.
On the regulatory front, our ability to do business and upgrade to future generations of technology will
depend on the spectrum and license. There is still lack of clarity about the future roadmap for the 800 MHz
band and the auction of spectrum in this band. It will depend on the new government to clarify whether
further allocation of spectrum will be contiguous to the earlier allocation.
Clearly, a new horizon awaits us all and we are now looking to strengthen MTS Indias position in the market.
With a passionate team in place and our unwavering focus on delivering a higher customer experience, we
expect to win both mind and market share in the year ahead.
Thanking You,
Dmitry Shukov
Whole Time Director (designated as CEO)
September 02, 2014
5
DIRECTORS PROFILE*
Mr. Ron Sommer studied mathematics at the
University of Vienna, where he earned his doctorate
in 1971. He began his professional career with the
Nixdorf Group in New York, Paderborn and Paris. In
1980 he was appointed as Managing Director of the
German subsidiary of the Sony Group. In 1986 he
became Chairman of the Management Board of Sony
Deutschland and was subsequently appointed
Ron Sommer President and Chief Operating Officer of Sony
Chairman
Corporation of America in 1990. In 1993, Mr. Sommer
served at Sony Europe in the same function. From May 1995 to July 2002 he
served as Chairman of the Management Board of Deutsche Telekom AG. He
has been serving as Chairman of the International Advisory Council of
Sistema JSFC since May 2003. From May 2009 till April 2011 Mr. Sommer
served as First Vice President of Sistema JSFC, Head of Business Unit
Telecom Assets. Presently, Mr. Sommer is serving as Chairman on the
Board of MTS OJSC, Russia, as well as Director on the Board of Tata
Consultancy Services, India and Munich Reinsurance, Germany.
Mr. V. Rozanov did his graduation from the

Lomonosov Moscow State University with a degree
in Economics. He is having rich corporate experience
of more than 20 years, mainly in the field of
Management, Economics and Finance. He has served
many esteemed Multinational Companies in senior
capacity. Before joining the Company he was Vice
President and CFO with Mobile TeleSystems (MTS),
Moscow, another Subsidiary Company of Sistema
V. Rozanov
Dy. Chairman
JSFC. He is a successful professional who made a
significant contribution to consolidating MTSs position in the telecom market.
From August 2008 till May 2013, he held the position of Whole Time
Director designated as President and CEO of SSTL. Presently, he is the Dy.
Chairman of SSTL. He is also the Senior Vice President, Chief Financial
Officer and member on the Management Board of Sistema JSFC. He is on
the Board of telecom company MTS OJSC, oil company Bashneft JSOC,
transport company SG-Trans OJSC and management company Leader-Invest
CJSC.
Mr. Ajay Khanna is a co-promoter of Shyam Group.

He has been instrumental in setting up all India
Distribution Network for Cable TV, which catapulted
Shyam Telecom Limited to become leading player in
the Indian Cable TV equipment Industry. Complete
commercial & operational network of SSTLs Cellular
& Basic Business was set up under his guidance. He
handles the Project implementation, Commercial
operations (Sales, Marketing & Credit control) and
HR activities of Shyam Group. He also handles Public
Relations and liaison with Local Authorities and
Statutory / Regulatory Bodies.
Mr. Andrey Smelkov graduated in 1998 from the

Novgorod State University with a degree with honor
in management and economics. In 2000, Mr. Smelkov
graduated from the University College in Telemak
(Norway) with a degree in economics and business
administration. In 2012, he completed executive
development program in business administration and
management at the Wharton School of Business. In
2002, he began his career as a marketing and advertising
Andrey Smelkov manager of mobile operator Novgorod
Director
Telecommunications (trademark Unicell). From
2004 to 2007, he was head of Vimpelcom (trademark Beeline) operations in
Novgorod. From 2006 to 2008, he served as Regional Development Director
and Deputy CEO in Vimpelcom, Uzbekistan. In 2008-2010, he worked as
CEO of Skymobile in Kyrgyzstan. In 2010- 2013, Mr. Smelkov was CEO,
Chairman of the Management Board of Tele2 in Kazakhstan. He joined MTS
from Tele2 AB, where he served as Senior Advisor to Executive Vice President,
Central Europe and Eurasia. Andrey Smelkov was appointed in October
2013 as a Vice President for Foreign Subsidiaries, Member of the Executive
Board of MTS Group.
Ajay Khanna
Director
Mr. Alok Tandon is a Chartered Accountant by

profession. He looks after all the financial and
commercial activities of the Shyam Group.
Mr. Tandon has experience of more than 17 years in
this field. Under his guidance Shyam Telecom
successfully concluded the IPO in 1994, which was
over subscribed by 25 times. He has been instrumental
in efficiently managing funding and investments for
various group Companies. Mr. Tandon also handles
group relationships with all leading Banks, Foreign
Alok Tandon
and Indian Institutional Investors. With his efforts
Director
Shyam Telecom has been able to smoothly manage
its Equity & Debt funding requirements at the lowest possible cost. He has
been instrumental in closing several important deals of the Shyam Group
which gave group the highest ever per customer valuation of any telecom
operation in the country.
Mr. Andrey Dubovskov graduated in 1993 from Russian
State University of Cinematography named after
S. Gerasimov. From 1993 onwards, he occupied a number
of management positions in such companies as Millicom
International Cellular S.A., Millicom International Cellular
B.V., Regionalnaya Sotovaya Svyaz LLC and CJSC 800, as
well as other companies in Russia Moscow, Nizhny
Novgorod, Ekaterinburg, Perm, Kazakhstan (Alma-Ata)
and Ukraine (Kiev). From 2002 to 2004, Mr. Dubovskov
headed Tele2s operations in Nizhny Novgorod. From
Andrey Dubovskov 2004 to 2006, he was head of MTS branch in Nizhny
Director
Novgorod. From 2006 to 2007, he was the Head of
Macro-region Ural. He joined MTS Ukraine in November 2007 as First Deputy of
General Director and then, since January 2008 he has been the Head of Business
Unit MTS Ukraine. In March 2011 Andrey Dubovskov was appointed as a President
and Chief Executive Officer (CEO) of MTS Group. Presently, he is also member of
the Board of MTS Group, Chairman of the Supervisory Board of MTS Ukraine
PJSC, Chairman of the Board of Directors of Mobile TeleSystems JV (MTS-Belarus)
and MGTS OJSC (Moscow City Telephone Network), as well as member of the
Board of Directors of International Cell Holding Ltd. and Russian Telephone
Company CJSC.
6
Mr. Anton Abugov graduated from the Academy

of National Economy under the RF Government.
From 1995 to 2002 he served as a Director of
corporate finances in United Finance Group. In 2002
he became a Partner of Eurasia Capital Partners. From
2003 to 2006 he held a position of Managing director
of Rosbank. In August 2006 he was appointed as
First Vice President of Sistema JSFC. During 2007 to
2009 he held position of Chairman of the Board of
Anton Abugov
Directors of various companies e.g. CJSC Sky Link,
Director
OJSC COMSTAR-UTS, OJSC Detsky Mir Center,
CJSC RWS. Presently, he is Member of the Management Board of Sistema
JSFC. He is also on the Board of telecom company MTS OJSC, MTS Bank
and Russian media company Sistema Mass Media.
Mr. Bharat V Patel is an Independent Director
of the Company since 13.07.2011. He holds MA
in Economics from the University of Notre Dame,
US and MBA in Marketing from the University
of Michigan, USA. He is the former Chairman
of Procter & Gamble Hygiene and Health Care Ltd.,
and presently in the Executive Committee or Boards
of Indian Society of Advertisers (ISA), World
Federation of Advertisers (WFA), Advertising
Bharat V Patel Standards Council of India (ASCI) and Broadcast
Director
Audience Research Council (BARC). He has over
40 years of varied experience in the field of advertising, marketing, sales,
exports and operations.
Mr. Dmitry Shukov, aged 45 years, a Russian

National, is a young and dynamic Executive.
Mr. Shukov is a Telecommunication Engineer and has
a rich corporate experience of 20 years, mainly in
the field of General Management, Sales and Customer
Service Delivery. Mr. Shukov has had an outstanding
career and is known for his hands-on business
experience, having worked as head of sales in Tele2,
Russias leading mobile operator. Before joining
Sistema Shyam TeleServices Limited (SSTL) he had
Dmitry Shukov
been rendering his services as Managing Director of
WTD (CEO)
FE Uzdunrobita LLC (MTS Uzbekistan). He is a
successful professional who made a significant contribution in consolidating
MTSs position in the telecom market. He is a MTS veteran and was previously
the CEO of MTS Turkmenistan as well.
Mr. Igor Kozlov graduated in 1987 from Air Force
Engineering Higher School with an engineers degree
in Avionics and in 1999 from Air Force Engineering
Academy with a masters degree in Military and
Administrative Management. In 2000 he received an
MA in International Economics from UCLA and in
2006 he received an MBA from Esslingen University
Business School. From 1987 he served as acting
officer on different senior positions in Russian Air
Force till his retirement in 2002 in a colonel rank.
Igor Kozlov
From 2002 to 2004 he served as an International
Director
Programs Director of aircraft manufacturing holding
KASKOL Group. During 2004 to 2006 he held a position of Member of the
Management Board and Corporate Management Director in pipe production
holding - ChTPZ Group. From 2006 to 2009 he held a position of Strategy
and Investments Executive Director in URALSIB Financial Corp. In the end
of 2009 he was appointed as Executive Vice President of Sistema JSFC.
During 2010 to 2012 he held position of Member of the Board of Directors
of various hi-tech companies e.g. Sitronics OJSC, RTI Systems OJSC, SitronicsNANO OJSC, Mikron OJSC. Presently, he is an Adviser of the Russian
Minister of Telecom and Mass Media Communications and Member of the
Board of Directors of Russian biggest telecom operator Rostelecom OJSC
and Russian private equity venture fund Rosinfocominvest OJSC.
Mr. Madhukar holds a Master of Arts degree in
Economics and a Bachelors degree in Law. He did
professional programs in Project Management and
Human Resource Development etc. from IIM
Ahmedabad, IIM Kolkata, IMI New Delhi and he is a
Certified Associate of Indian Institute of Bankers.
Mr. Madhukars banking career spans over 37 years
and covers every major dimension of banking
operations, both in India as well as overseas. From
1990 to 1996 he served as the Managing Director of
Madhukar
Director
the State Bank International Limited, Mauritius. In
1997, he was appointed Senior General Manager at SBI Capital Markets.
From 1998 to 2000, he served as the Chief General Manager, New Delhi
Circle at SBI; and in 2000 to 2001, as Managing Director of State Bank of
Bikaner & Jaipur. In 2003-2004, he was appointed Chairman & Managing
Director at the Industrial Investment Bank of India Ltd. He held concurrent
charge from 2001-2004 as Chairman & Managing Director at United Bank of
India. He has also served as Whole Time Member with Securities and Exchange.
Mr. Madhukar is also currently one of the Arbitrator of Bharat Heavy Electricals
(BHEL), one of the top rated companies of India.
Mr. Rajiv Mehrotra, a telecom industry veteran
and serial entrepreneur, is the founder and Chairman
of Shyam, Indias leading diversified telecommunications group. In a career spanning over
40 years, he has many firsts to his credit. In 1974, as
a young electronics engineer, he pioneered the
manufacture of satellite TVRO systems that brought
cable TV to millions in India. He then launched Shyam
Telecom-a global name in mobile coverage solutions,
Hexacom (GSM services) and Shyam Telelink (now
Rajiv Mehrotra
Sistema Shyam Teleservices Limited). His efforts
Director
established Essel Shyam as the leading name in VSAT services in India. In 2004
he launched VNL (Vihaan Networks Ltd.) with the dream of connecting the
billions of unconnected across the world using sustainable technology to
deliver affordable mobile and broadband services. Under his guidance VNL
has won extensive international acclaim for innovation and is the only Indian
company today that manufactures and exports its own end-to-end mobile
infrastructure solutions to countries in Asia, Africa and Latin America. An
active industry spokesperson, he is a passionate advocate for Indias indigenous
telecom R&D and manufacturing.
Mr. Ram Krishna Agrawal is a qualified chartered

accountant and was the Managing Partner of S R
Batliboi& Co., at the time of his retirement in June,
2013. He has got wide exposure of various industries,
including Steel, Paper, Cement,Telecom,Automobiles,
Real Estate, Milk & Dairy Products, etc. , both in India
and abroad. Shri Agrawal is the past President of the
Institute of Internal Auditors, India and was a member
of the Central Council of the Institute of Chartered
Accountants of India during 1991-1997.Shri Ram
Ram K. Agrawal Krishna Agrawal is connected with various Chambers
Director
of Commerce as the Committee Chairman/Executive
Committee member, permanent invitee etc., and is a past Chairman of CII
(Eastern Region). He was the National Chairman of Direct Tax Sub-Committee
of CII in the year 2013-14.
Mr. Suman Sehgal graduated from the prestigious
St. Stephens College, New Delhi. After graduation
hecompleted two years of practical training in West
Germanywith Fischer & Krecke following which he
took over his family factory producing paper products
in India as Managing Director. He went to Russia in
1983 and acted as consultant to various Indian
companies- Indian Tobacco Company, Godphrey
Phillips, Tata Tea, Nestle, Mcneil & Magor, Rossell and
Printers House India. Mr. Sehgal was instrumental in
Suman Sehgal establishing brands such as Capstan and Four Square
Director
in the USSR. In Post-Soviet Russia, Mr. Sehgal was
the leading Indian exporter of rice & Tea to Russia. Since 2000, Mr. Sehgal has
consulted various Russian Enterprises including JSFC Sistema, Ural Mining &
Metallurgical Company, Sberbank, Hydroenergostroy, Transmash holding &
Novolipetsk Steel. He is on the Board of SSTL since February 2008.
Mr. Vikram Kaushik earned his Masters degree
from St. Stephens College in Delhi and joined
Hindustan Unilever as a Management trainee. He
worked for Unilever for more than 16 years and
got wide exposure to different product categories
both in India and in Asia, Europe and Africa. After a
short stint as Managing Director of a leading
advertising agency he returned to consumer
marketing as Vice President Marketing, Sales and
Vikram Kaushik Exports at Britannia, a joint venture with Groupe
Director
Danone. He moved in 2000 as a Director on the
Board of Colgate Palmolive and was responsible for a major turnaround for
the brand Colgate in India. Thereafter, he served as the MD & CEO Tata Sky
from 2004 till December 2010 and played a pioneering role in establishing
the DTH industry in India. Presently, Mr Kaushik consults with Pricewaterhouse
Coopers and Voltas, a leading Tata Group company and with leading firms in
the Private Equity sector both in India and overseas. He has served on the
Board of Prasar Bharati, Indias public service broadcaster. In 2012-13 he was
nominated by the Government as a member on the Committee on
Restructuring Public Service Broadcasting. He is currently on the Board of
several companies both in India and in the UK. He has travelled widely and
lectures regularly both in India and abroad, including at the Harvard Business
School.
*In alphabatical order except

Chairmans & Dy. Chairmans Profile
D I R E C TO R S R E P O RT
Dear Members,
Your Directors have pleasure in presenting the Nineteenth (19th) Annual Report on the business and operations of the Company
together with Audited Statement of Accounts for the financial year ended 31st March 2014.
FINANCIAL HIGHLIGHTS & PERFORMANCE
(Amount in Rs. Million)
Particulars
Current Year
31st March, 2014
Previous Year
31st March, 2013
11,876
12,043
576
264
12,452
12,307
8,987
9,031
988
1,104
10,065
11,002
20,040
21,752
Operating Loss
7,588
9,445
Finance Expenses
6,670
9,189
Depreciation and Amortization
5,402
4,344
Loss after tax for the year from discontinuing operations
1,068
5,839
20,728
28,817
Income
Revenue (Service and Sale of Goods)
Other Income
Total Income
Expenditure
Cost of Services (and sales)
Others including Revenue Share
Selling, General and Other Operating cost
Total Operating Expenditure
Taxes
Net Loss
Total Income is increased to Rs.12,452 million as against
Rs.12,307 million in previous fiscal, representing year on year
increase of 1% in total income.
Cost optimization measures taken by the Company have resulted
in decrease in sales & marketing expenditure, personnel cost
and other general & administrative expenditure. Accordingly,
total operating expenditure for the year reduced to Rs.20,040
million as against total operating expenditure of Rs.21,752 million
during the previous fiscal year.
Considering the impact of discontinued operations the financial
performance of the Company is as below:
8
(Amt. in Rs. Mn.)

Particulars
31 March 2014
Continued
Operation
Discontinued
Operation
31 March 2013
Total
Continued
Operation
Discontinued
Operation
Total
Total Income
12,452
46 12,498
12,307
3,655
15,962
Total Expenses
32,112
1,114 33,226
35,285
9,494
44,779
Net Loss
19,660
1,068 20,728
22,978
5,839
28,817
Companys operating loss for the year ended 31 March 2014

reduced to Rs.7,588 million as against Rs.9,445 million during
last year and Net Loss for the year reduced to Rs.20,728 million
against Net Loss of Rs.28,817 million during previous fiscal.
DIVIDEND
In view of the losses incurred during the year under review,
your Directors do not recommend any dividend on equity shares.
The BRAND Brand MTS in India scaled new heights in FY 2013-14 by attaining
its highest ever spontaneous awareness score of 56 by the end
of Q4 2013. The positive trend was visible through several other
brand health parameters including significantly improved
Consideration and Intention-To-Purchase scores, and in key
image parameters. Within the datacard category, the equity of
brand MTS has further improved and now stands in second
position in the industry, only behind Airtel.
The consolidation of brand MTS in India was also evidenced
through several industry awards and market recognitions. One
of the most significant was the fact that MTS remained in
Economic Times prestigious list of Brand Equity 50 Most Trusted
Service Brands in India at Rank 37, a remarkable achievement in
the context of a reduced geographical footprint due to which
MTS was not operational in over half the survey centers. The
brand was recognized at several other forums including the ET
Telecom Awards 2013,AEGIS Graham Bell Awards and the OOH
Awards 2014.
Key marketing programs that contributed to the strong growth
of the brand included Always Talk (Voice campaign), 3GPlus/
MBlaze Ultra (Data campaign to launch Rev.B network), MTSMicromax Blaze (smartphone launch campaign), and the Internet
Baby campaign (Corporate/Brand campaign to underline network
superiority). The 3GPlus/MBlaze Ultra campaign targeting heavy
users of the internet was instrumental in leveraging the Rev.B
technology to reposition MTS vis--vis competing 3G brands,
resulting in improved ARPUs and retention. The Internet Baby
campaign targeting digital natives was launched in March 2014,
and has already proved to be the most successful campaign in
the history of MTS India; at the time of publishing this report it
had already become Indias most viewed telecom ad with over 7
million online views, and had received extensive earned media
coverage including PR and social media shares.
FY 2013-14 also saw brand MTS make dramatic strides forward
in its digital presence through a slew of social media, paid media
and e-commerce initiatives. The exponential growth in reach
and engagement in social media has resulted in MTS now having
nearly 2 million Facebook likes and the highest engagement
rate amongst telecom brands, and averaging two nationally
trending hashtags per month on Twitter. Multiple paid media
campaigns for the online shop, smartphones, 3GPlus and MBlaze
Ultra ensured a cumulative reach of over 100 million online
users, including a high impact campaign for 3GPlus that achieved
a reach of 15 million in a single day. The e-commerce store,
www.shop.mtsindia.in, launched in H2 2013, now averages
approximately 1000 sales per month, and is poised to scale up
significantly over the coming financial year.
Brand MTS continued to strengthen its relationship with core
youth audiences in its operating circles through ongoing music
properties designed to manifest the brands core promise discovering and promoting young talent. These included MTS
Rising a college activation program that reached over a million

students across 56 colleges, NH7 Weekender Indias premier
music festival held across four cities, and MTS Discover a
platform for upcoming musicians and bands hosted on
www.mtsdiscover.com.The brand has also ensured local connect
through regional programs run at relevant circles such as the
MTS Durga Puja festival in Kolkata, MTS Onam program in Kerala
and several others.
A slew of other product and marketing programs contributed
to the success of the brand through FY 2013-14, including the
launch of MBlaze Ultra Wi-Fi, MBlaze Chroma dongles (Music,
Gaming and Lifestyle themed datacards bundled with relevant
content and freebies), strategic alliances with Intel, Spice, HP,
Micromax, 10 paise voice product and MBuddy talktime gifting
product amongst others.
LICENCES & SPECTRUM
The Government notified a new Unified License regime to allow
licensees to provide all services under the same license and
also to delink spectrum allocation from the license. In March
2013 spectrum auctions, SSTL won 3 carriers of 1.25 MHz each
in 800 MHz spectrum band in eight circles Delhi, Gujarat,
Karnataka, Kerala, Kolkata, Tamil Nadu, UP (West) and West
Bengal. Under the new licensing regime SSTL was granted
Unified License on October 3, 2013 with an authorization to
provide access services in these eight circles.The Unified License
will enable the company to provide technology neutral telecom
services for a period of 20 years. With this development, SSTL
became the first telecom operator in the country to be a part of
Unified Licensing regime.
SSTL has subsequently applied for authorization to provide
National Long Distance Service under the same license. Once
authorization is received your company will start carrying intercircle traffic which hitherto were handed over to other carriers.
After receiving Unified License, SSTL received the 3rd carrier
amongst 3 carriers which were won in March, 2013 auction. The
allotment of the 3rd carrier was significant as your company
could launch its next generation, REV B Phase II telecom services.
SSTL plans to acquire at least 5 MHz of contiguous spectrum
within the 800 MHz spectrum band for network upgradation as
well as to expand its footprint in the country. Your company
was keen to participate in the next round of 800MHz spectrum
auction for which Government in July, 2013 had sought TRAIs
recommendation on reserve price. TRAI on September 23,
2013 recommended that the auction in the 800 MHz band should
not be carried out and to explore the feasibility of adoption of
E-GSM band within 800 MHz spectrum band. Therefore, 800
MHz spectrum band auction could not take place along with the
auction of 900 MHz and 1800 MHz spectrum bands which was
held in February, 2014.
The Government has since rejected TRAIs recommendation
on 800 MHz and received fresh recommendation on reserve
price for 800 MHz spectrum band which is under consideration
of the Government.
The Government in February, 2014 has notified relatively liberal
merger and acquisitions (M&A) policy but also specified that
9

acquiring company would have to pay to the Government, the
differential between the entry fee and the market determined
price of spectrum for spectrum allocated administratively prior
to auctions starting 2010. The Government is also expected to
shortly announce spectrum trading or sharing guidelines. The
SSTL will explore all options including M&A, Spectrum Trading
or Sharing and spectrum auction to meets its spectrum
requirement.
In March 2013 fresh auction for allotment of spectrum was

conducted by the Department of Telecom, Government of India.
Your company also participated in the said spectrum auction for
800 MHz and won the spectrum for 8 telecom circles - Delhi,
Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, West Bengal
and Uttar Pradesh (West).
During the year under review your Company issued and allotted
3,433,500 0.01% Redeemable Preference Shares of Rs.10/- each
on Private Placement basis to Insitel Services Private Limited at
a premium of Rs. 9,990/- per preference share.
Presently, the Company is in the process of restructuring its

business operations across India pursuant to the issue of fresh
Unified Licenses for the 8 circles for which it had won the
spectrum in the auction held by the Department of Telecom
(DoT). Moreover, the Company is also looking at / focusing on
the developments taking place in respect of second round of
Spectrum Auction of 800 MHz, which is expected to be
scheduled / held by DoT in future.
There has been no change in the issued, subscribed and paid up

equity share capital of the Company. The total paid up share
capital of the Company at the end of financial year 2013-14 is
Rs. 32,033,535,000/-. The breakup of equity share capital along
with Foreign and Indian holding is as under:-
The Company further submits that it is committed to undertake

any action necessary in the best interests of the Company and
its shareholders / investors, however in view of the regulatory
and legal uncertainties in the telecom market, delay in attaining
desired results is unavoidable and beyond control.
SHARE CAPITAL AND COMPLIANCE OF FDI

SECTORAL POLICY
Shareholders
The Company will keep the shareholders informed about the

developments in the matter.
No. of
Equity Shares % of Holding
Sistema JSFC
1810289400
56.68
547312918
17.14
4319340
0.13
Total (Foreign)
2361921658
73.95
Indian Promoters
766575760
24.00
65417818
2.05
831998342
26.05
3193920000
100
Rosimushchestvo
(Federal Agency for State
Property Management of
Russian Federation)
Others
Others
Total (Indian)
Total Equity
Share Capital
The present foreign share holding in Company is within the

sectoral equity cap for foreign equity as approved by Foreign
Investment Promotion Board under FDI policy as in force as on
date.
STATUS OF LISTING OF SHARES AS PER SCHEME
OF ARRANGEMENT
As informed to the shareholders in the past Directors Reports,
the Company has been taking all adequate steps in the matter of
listing in due compliance of the order passed by Honble High
Court to this effect on 07.08.2008. However, post Supreme
Court verdict dated Feb 2, 2012 cancelling the telecom licenses,
the Company was forced to put the IPO plan on hold and it was
decided by the Board of Directors to review the feasibility of
listing through IPO after having complete clarity on the status of
Licenses and other important regulatory issues.
10
AWARDS & RECOGNITION

Your Company was awarded Most Innovative Data Product
Award 2012 for its product Memory on Dongle at the Economic
Times Telecom Awards in September 2013. The Innovative
Product Award recognizes products / services / plans which
have resulted in increase in customer base, increase in revenue
(ARPU) on profitability, reduced customer churn, changed
market dynamics, etc.
For its efforts to collect non-perishable food items for the
underprivileged through a week long food drive, your Company
was recognised at the Foodathon Awards 2013. The Company
was presented two awards Maximum Food collected by a
Corporate and Best internal communication campaign by a
Corporate to promote participation by Sam Pitroda, Advisor
to Prime Minister of India and Randeep Singh Surjewala, Cabinet
Minister, Govt. of Haryana.
Your Company won the Aegis Graham Bell Award 2013 in the
Best Tariff Plan category. The Company was recognized for
technology innovation on the URL based charging platform.Aegis
Graham Bell Awards are one of the most coveted awards in the
area of T.I.M.E. (Telecom, Internet, Media, and Edutainment).
Your Company was also awarded the prestigious Global
Telecoms Business Innovation Award for MTS Digital Hub One Click Application in the Consumer Service Innovation
category. Created by Global Telecoms Business group, Global
Telecoms Business Innovation Awards are presented to the
most exciting and path breaking initiatives in the telecom industry.
Your Company was recognized at the prestigious Express
Technology Senate, held at Abu Dhabi in October, 2013. The
Company was conferred with the Uptime Champions Award
at the conclave, considered to be a premier platform for CIOs,
IT heads and decision makers. The Senate is a forum where the
countrys best and brightest CIOs come together to share
insights and best practices about the deployment of technology,

while also catching up on the latest tech trends that are expected
to reinvent enterprise IT.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on Management Discussion and Analysis on
Telecom Sector Growth, Indian Telecom Market, Regulatory
Developments, Discussion and Analysis of Companys Financial
Statements and Operational Performance, Opportunities, Risks
and Threats, etc., is presented in a separate section and forms
part of this Directors Report.
CORPORATE GOVERNANCE
The basic philosophy of Corporate Governance in the Company
is to achieve business excellence and dedicate itself for increasing
long-term shareholders value. The Company is committed to
maximum transparency in all its dealings and places prominence
on business ethics.
Being an unlisted entity, the legal provisions of Corporate
Governance such as Clause 49 of Listing Agreement are not
applicable to the Company. However, the Company voluntarily
follows the standards of Corporate Governance which are, to
the extent possible, in line with the internationally accepted
standards of Best Practices. The Company is committed to
establish best practices of Corporate Governance and to this
end the Board has already approved the Companys Corporate
Governance Strategy and the same is being implemented in a
phased manner.
Your Company realizes the shareholders right to information
on the performance of the Company and hence, your Company
has voluntarily posted on the website of the Company-the
Annual Reports, Notices and Minutes of the General Meetings,
Memorandum & Articles of Association, Code of Conduct,
Directors profile, Charters of different Committees of the
Directors and updated share holding pattern. The latest
important developments and other information of interest to
the shareholders are also posted in various forms in different
sections of the website of the Company.
In furtherance of its quest for adoption of best corporate
governance practices, your Company has taken initiatives of
voluntarily publishing reports on Corporate Governance and
Management Discussion and Analysis in the Annual Report.These
Reports are annexed and forms part of this Directors Report.
CORPORATE SOCIAL RESPONSIBILITY
Your Company is at the forefront of Corporate Social
Responsibility and acknowledges its responsibility of playing a
key role in building social equity to safeguard the interest of
society in which it operates.The Company believes that emphasis
should not only be on maximization of revenues but also on
improving the efficiency of business processes to minimize the
environmental and social costs.
The Company has adopted Corporate Social Responsibility
Strategy to address the CSR issue effectively and to ensure that
business is conducted with an innate sense of Social
Responsibility. The objective of this strategy is to leverage the
advancement in Information and Communication Technologies
to contribute towards progressive socio-economic change in
the fields of Health and Education.
During the year under review, your Company fur ther

strengthened its partnership with India Unites to End Polio
Now (IUEPN) campaign that aims to create awareness for Polio
eradication amongst the masses. The IUEPN campaign is an
initiative implemented by Aidmatrix Foundation, in partnership
with the Polio Eradication Programme in India, a collaborative
effort between the Ministry of Health and Family Welfare, United
Nations Childrens Fund, World Health Organization, National
Polio Surveillance Project, Rotary International, and the U.S.
Centre for Disease Control. As a part of this initiative, the
Company provided support to Polio awareness campaigns
organised in several Indian states including Delhi NCR, West
Bengal, and Uttar Pradesh. The Company sent millions of SMSs
to its customers, notifying them about the upcoming polio rounds.
The joint efforts of all involved in Polio Eradication have led to
India being declared Polio free in February 2014.
Your Company continued its support to Smile Foundation, a
national level development organization reaching out to more
than 2 Lakh underprivileged children through various education
and health care projects across 22 states of India. Under this
unique initiative, SSTL is providing mobile broadband support
to 23 Mission Education centers across India benefiting over
4200 underprivileged children on an annual basis. Given the
success of the project; the Company has extended its support
to Smile Foundation beyond the initial scope of 2 years.
The Company continued its partnership with India Food Banking
Network (IFBN) to collect non-perishable food items for
underserved sections of the society in 2014. In a week long
drive organised during the Joy of Giving week at Companys
Corporate Office and Delhi Circle offices, the Company
managed to collect more than 4 tonnes of food items. In the
process, your Company became of one of the highest
contributors to the food drive that featured more than 20 Indian
and multinational companies. Your Company was also rewarded
for its efforts during the Foodathon 2013 Awards.
Marking the 64th Republic Day celebrations in January 2013,
your Company partnered with Goonj - one of Indias most
credible NGOs in their Raahat (Relief) campaign. As part of the
campaign, your Company organised a winter clothes collection
drive at its Corporate Office in Gurgaon. Post completion of
the week long collection drive, few SSTL employees also visited
the Goonj facility to handover the collected clothes and also
understood how Goonj uses the contributed items.
In wake of the devastation caused by floods in Uttarakhand in
2013, your Company organised a drive at Corporate Office and
circle offices in Delhi and Uttar Pradesh to collect relief material
for the affected. The proceeds from the collection drive were
handed over to Goonj, one of Indias most credible NGOs as it
was engaged in on-ground relief activities. The Company had
set up special helplines to help people track their friends and
family basis the cell tower locations. Your Company had also set
up Free calling booths in Dehradun for people to call their
friends and family in wake of the calamity.
Your Company partnered with Child Rights & You (CRY) for
ClickRights 2013. As communication partner for the project,
your Company sent out a series of specially designed SMSs to
11

promote the initiative amongst all its 10 million customers.
Additionally, the Company also encouraged its 2000 strong
workforce to be part of the campaign and make CLICK RIGHTS
2013 a success. ClickRights 2013 was a campaign urging people
to use the power of photography and capture various reasons
due to which children are unable to get even basic education.
SUBSIDIARY COMPANY
Shyam Internet Services Limited (SISL), a wholly owned
subsidiary of your Company is having a Category B ISP license
and is providing Internet Service with brand name Infinity in
131 cities in the State of Rajasthan.
As required under Section 212 of the Companies Act, 1956,
Balance Sheet, Profit & Loss Account, Directors Report and
Auditors Report of SISL have been attached with the Balance
Sheet of the Company.
BOARD OF DIRECTORS
Pursuant to Sections 149, 152 and other applicable provisions,
if any, of the Companies Act, 2013, one-third of such of the
Directors as are liable to retire by rotation, shall retire every
year and, if eligible, offer themselves for re-appointment at every
Annual General Meeting. Consequently, Mr. Ron Sommer,
Mr. Vsevolod Rozanov, Mr. Suman Sehgal and Mr. Rajiv Mehrotra
will retire by rotation at the ensuing Annual General Meeting,
and being eligible, offer themselves for re-appointment in
accordance with the provisions of the Companies Act, 2013.
Mr. Alexander Gorbunov and Mr. Andrey Terebenin resigned
from the Directorship of the Company with effect from
September 2, 2014. Consequently, Mr. Andrey Smelkov and
Mr. Vadim Savchenko, Alternate Directors to Mr. Alexander
Gorbunov and Mr. Andrey Terebenin respectively, also vacated
the office of Directors with effect from that date. Further,
Mr. Vasyl Latsanych, also resigned from the position of Alternate
Director of Mr. Anton Abugov with effect from September 2,
2014. Your Directors place on record their sincere and warm
appreciation for their support and guidance during their
association with the Company.
Mr. Igor Kozlov, Mr. Andrey Smelkov, Mr. Andrey Dubovskov and
Mr. Ram Krishna Agrawal were inducted on the Board as
Additional Directors with effect from September 2, 2014. On
the same date Ms. Oxana Tarasenko, Mr. Vadim Savchenko,
Mr.Vasyl Latsanych and Mr. Alexander Gorbunov were appointed
as Alternate Director to Mr. Igor Kozlov, Mr. Andrey Smelkov,
Mr. Andrey Dubovskov and Mr. Anton Abugov respectively.
Mr. Igor Kozlov, Mr. Andrey Smelkov and Mr. Andrey Dubovskov
were appointed as Non-Executive Directors while Mr. Ram
Krishna Agrawal was appointed as Non-Executive Independent
Director. Mr. Igor Kozlov and Ms. Oxana Tarasenko (Alternate
Director) were nominated on the Board by Russian Federation.
Mr. Andrey Smelkov, Mr. Andrey Dubovskov and their alternate
directors as mentioned aforesaid were nominated by Sistema
JSFC, the Holding Company. In terms of the Section 161(1) of
the Companies Act, 2013 additional directors will hold office
upto the date of ensuing 19th Annual General Meeting of the
Company.
Your directors recommend the appointment of Mr. Kozlov,
Mr. Smelkov and Mr. Dubovskov as Non-Executive Directors
liable to retire by rotation. Pursuant to Section 149, your
directors also recommend to appoint Mr. Ram Krishna Agrawal
12
as Non-Executive Independent Director not liable to retire by

rotation for 5 consecutive years for a term upto September 1,
2019. The Company has received written notice from members
under section 160 of the Companies Act, 2013 along with
requisite deposit proposing the candidature of Mr. Kozlov,
Mr. Smelkov, Mr. Dubovskov and Mr. Agrawal for the office of
the directors of the Company. Mr. Agrawal has also given a
declaration to the effect that he meets the criteria of
Independence as provided in Section 149(6) of the Companies
Act, 2013.
Further as per Section 149(5) of the Companies Act, 2013 the
Company is required to appoint Independent Directors under
Section 149(4) within a period of one year from April 1, 2014
i.e. the date of commencement of the said Section and Rules
made thereunder. Since the Company had already appointed
Mr. Vikram Kaushik, Mr. Bharat Patel and Mr. Madhukar as
Non-Executive Independent Directors subject to retirement
by rotation in terms of Companies Act, 1956, the Board of
Directors in their meeting held on September 2, 2014 after due
consideration has recommended to fix the tenure of all the
aforesaid Non-Executive Independent Directors within the
meaning of Section 149 and 152 of the new Companies Act,
2013 read with Schedule IV thereto and Rules made there under,
for a term of 5 (five) consecutive years with effect from the date
of ensuing Annual General Meeting upto the conclusion of
24 th Annual General Meeting of the Company, and such
appointment shall not be subject to retirement by rotation.
Further, with the provisions of Companies Act, 2013 becoming
applicable from April1, 2014, Mr. Suman Sehgal who was
appointed by the Board as Independent Director under the
Companies Act, 1956 ceased to be the Independent Director
from April 1, 2014 as Mr. Sehgal does not fulfil the criteria of
Independence as defined under Section 149(6) of the Companies
Act, 2013. However, Mr. Sehgal continues on the Board as
non-executive director liable to retire by rotation.
With the change in the composition of the Board, the
composition of various committees of the Board has also been
changed effective from September 2, 2014.
Brief profile of Directors proposed to be appointed /
reappointed is annexed to the Notice convening the 19th Annual
General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
As required under the provisions of Section 217(2AA) of the
Companies Act, 1956, the Directors confirm that:
1. In the preparation of the annual accounts applicable
accounting standards have been followed.
2. Appropriate accounting policies have been selected and
applied consistently and judgment and estimates that are
reasonable and prudent have been made so as to give a true
and fair view of the state of affairs of the Company at the end
of the financial year ended March 31, 2014 and of the losses
of the Company for the year ended on that date.
3. Proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities have been taken.

4. The annual accounts have been prepared on a going concern
basis.
AUDITORS
The term of office of M/s. Deloitte Haskins & Sells, Chartered
Accountants as Statutory Auditors of the Company expires at
the conclusion of ensuing Annual General Meeting. The Board
recommends re-appointment of M/s. Deloitte Haskins & Sells,
Chartered Accountants as Statutory Auditor of the Company
from the conclusion of ensuing Annual General Meeting till the
conclusion of next Annual General Meeting.
The Company has received necessary notice from the Auditors
confirming their eligibility and willingness to accept the office of
Statutory Auditors, if re-appointed. The Audit Committee has
also recommended the appointment of M/s. Deloitte Haskins &
Sells, Chartered Accountants as the Statutory Auditors.
AUDITORS REPORT
The comments made by Auditors are self-explanatory and
parawise management response to the observations made in
Auditors Report is stated as under:
1. As regards Para No (x) of the Annexure to the Auditors
Report, the Company is an Infrastructure Company operating
in telecommunication business. As per industry practice, the
company is making cash losses in initial years of operation
and it expects to generate operational profit after the initial
gestation period.
2. As regards Para No (xvii) of the Annexure to the Auditors
Report, the Company has already requested the lender to
waive the condition of charge on license quashed by SC.
COST AUDITORS
In compliance of the Section 233 B of the Companies Act 1956,
the Company has appointed M/s. Sanjay Gupta & Associates as
the Cost Auditors for the Audit of the cost records / accounts
maintained as per the Cost Accounting Records
(Telecommunications) Rules, 2002 for the financial year ending
31 March 2014. The Cost Audit Report for the financial year
2013-14 will be filed on or before the due date.
PARTICULARS OF CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS & OUTGO
Particulars with respect to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo, as per
Section 217(1)(e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars) Rules, 1988 are given
below:
a)
Conservation of Energy
Your Company being a telecommunication services provider
requires minimal energy consumption and every effort has
been made to ensure the optimal use of energy, avoid waste
and conserve energy as far as possible.
b)
Technology Absorption, Adaptation and Innovation

The Company has not imported technical know-how.
Your Company has not established any separate R&D
facilities.
c)
Foreign Exchange Earnings & Outgo

The details of earning and expenditures incurred in foreign
exchange are as under:
(Rupees in Million)
Earning in
March
March
Foreign Currency
31, 2014 31, 2013
(on accrual-basis)
Data Branding
14
International in roaming
11
TOTAL
Expenditure in
Foreign Currency
(on accrual-basis)
Interest
Finance set-up cost
Project Management &
Maintenance Services
Advertisement and marketing
expenses - MTS brand fee
Salaries, wages and bonus
Other Services
TOTAL
25
2
(Rupees in Million)
March
March
31, 2014 31, 2013
1007
174
1,172
781
217
209
13
384
7
1,802
17
27
25
2,231
FIXED DEPOSITS
The Company does not hold or accept any deposits and as such,
no amount of principal or interest on fixed deposits was
outstanding on the date of the Balance Sheet.
PARTICULARS OF EMPLOYEES
A statement of particulars of employees as required in
accordance with the provisions of Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of
Employees) Rules, 1988 as amended from time to time is annexed
hereto and forms part of this report.
ACKNOWLEDGEMENT
Your Directors place on record their gratitude to Bankers,
Financial Institutions, Vendors, Dealers and Business Associates
for the assistance, co-operation and encouragement they have
extended to the Company.
Your Directors also wish to place on record their sincere thanks
and appreciation for the continuing support and valuable
assistance received from Sistema JSFC, the Shyam group and
the Russian Federation as major shareholders in ensuring an
excellent all around operational performance.
The Directors wish to convey their appreciation to all of the
Companys employees for their enormous personal efforts as
well as their collective contribution to the Companys
performance.The Directors are also thankful to the shareholders
for their continued patronage.
For and on behalf of the Board
Place : Gurgaon
Date : September 02, 2014
Sd/CHAIRMAN
13
MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Wireless Market in India
During the financial year 201314 wireless industry witnessed
37 million increase in subscriber base to 905 million on Home
Location Register (HLR) basis. The slow-down in subscriber
addition is driven by stringent new subscriber verification norms
implemented by the regulator and increased focus by operators
to acquire profitable customers. However, during the same
period, the industry added 68 million active subscribers (on
Visitor Location Register basis) taking overall VLR subscriber
base to 791 million. Overall industry VLR% increased from 83.3%
in March 2013 to 87.4% in March 2014.
Number of subscribers (M)
1000
868
873
871
886
905
800
600
400
200
-
Q113
Q213
Q313
Q413
Q114
Industry gross revenue increased 10% y-o-y to INR 426 billion

between Q113 to Q114. During this period Average Revenue
Per User (ARPU) increased by 7% to INR 159 mainly on account
of increase in revenue per minute and better traction in data
business.
Voice business of most operators witnessed strong growth
during the year as most of the operators raised their tariffs
either by increasing headline rates or by cutting down on free
minutes throughout the year. With increase in input costs and
license liability, operators are expected to continue focusing on
tariff increase to drive revenue growth. A key threat to voice
business is cannibalization of SMS and Voice revenues by OTT
services like WhatsApp, Viber and Skype. Bharti, Idea and
Vodafone saw over 25% decline in their non-data VAS revenues
from Mar13 to Mar14. Non-data VAS revenues that contribute
approximately 6-7% of industry revenues is expected to fall
further in the near future.
Broadband subscription reached 55 million at the end of
December 2013, which includes 40.7 million wireless broadband
subscribers. Broadband subscribers now account for significant
proportion of internet subscribers. This segment of the wireless
industry is expected to grow exponentially in the years to come.
Severe under penetration of the market, falling PC prices,
introduction of newer devices and desire to be connected on
the move will be key growth drivers in future.
14
3G services in India started gaining traction during the year

driven by increase in devices penetration and increased
investments from operators to drive 3G business. The 3G
subscriber base almost doubled in 2013 to 35 million 3G
subscriber at the end of December 2013. 3G business momentum
is expected to continue with more investments from operators
and availability of smartphones at lower price points. Currently,
approximately 20% of the entire base tower stations (BTS)
installed in India are 3G enabled. This percentage is expected to
go up significantly in near future.
4G deployments in the sector are still at a nascent stage with
only one large player rolling out its 4G network in few cities.
Management is of the view that another operator will launch
4G services sometime in 2014, however, large scale 4G LTE
deployment will not happen in current year.
The sector witnessed regulatory clarity on a number of issues
including M&A, spectrum trading, spectrum sharing, and policy
with regards to future allocation of spectrum. The government
successfully completed auctions of 900 MHz in metros and 1800
MHz in other circles with total bid from auctions amounting to
USD 10.2 billion. Spectrum allocated through these auctions is
liberalized, which means players are free to use any technology
of their choice. In future, there is possibility of 4G\LTE rollouts
on different bands currently being used exclusively for voice
services. Most of the spectrum in the current auctions was
acquired by incumbents resulting in virtual consolidation in the
sector.
Discussion & Analysis on Financial Statement
Overview
As at 31 March 2014, the Company has created significant
infrastructure across in circles, including high speed data services
in major cities.
On 3 October 2013 the DoT has issued Unified License - Access
Services to the Company for eight telecom circles for 20 years.
On 9 October 2013, the DoT has allotted the right to use
spectrum in eight telecom circles for 20 years as per terms of
auction.
For the year ended 31 March 2014, there is the improvement of
28% in net loss from Rs.28,817 million to Rs.20,728 million
primarily on account of 33% decrease in Cost of Service (and
sales) and 32% decrease in Selling, General and Other Operating
cost.
Key Financial & Operational Highlights for the financial
year 2013-14
In third quarter of FY 2013-14, the Company has rolled out

3GPlus telecom network, powered by Evolution Data
Optimized (EV-DO) Rev. B Phase II technology.
Revenue from operations for operating circles on YoY basis

slightly decreased by 1% but there is increase in revenue
of 6.4% on Q-o-Q basis since REV B services were started
in Q3, 2013. However, there is a decrease of 8% in operating
expenditure, resulting in improvement of EBITDA margin
by 20%.
Data revenue is increased from Rs.2,988 million in 2013 to
Rs.3,211 million in 2014.
ARPU is increased to Rs.97 in 2014 from Rs.81 in 2013.
Comparison of Revenue & Opex

Rs. in million
20648
15000
1.
2. Share Capital
During the financial year 2013-14, the Company issued 3.4 million
(2013 6 million) Non Cumulative Non-convertible
Redeemable Preference Shares (RPS). Till 31 March 2014,
total issued share capital of RPS including premium is Rs.94,335
million.
2.
Secured and Unsecured Loan
The Company has prepaid the term loan amounting to Rs.9,400

million from Indian banks. Loan of Rs.12,491 million from holding
company is also repaid in full during the year.
4.
Deferred Payment Liabilities
Deferred Payment Liabilities of Rs.20,132 million represents

the amount payable to DOT towards the acquisition of Right
to use of Spectrum in eight Telecom Service Areas in the auction
carried out by DoT and Rs.865 million represents vendor
liabilities against network equipment supply, relating to funding
to be arranged by respective vendors and assets acquired on
deferred payment basis.
5.
Tangible and Intangible Assets:
Tangible assets have been increased by Rs.1,000 million due to

EVDO and REV-B up-gradation for MTS 3G plus roll out.
Intangible assets have been reduced due to amortization charge
for the period.
II. Results of Operations
Total income of the Company from operating circles has been
increased by Rs.145 million, an increase of 1% over previous
year and operating loss has been decreased from Rs.9,445 million
to Rs.7,588 million due to cost optimization measures. The
Company has implemented various programs to benchmark and
optimize its costs in the areas of network maintenance,
operations and customer servicing.
11876
5000
As at March 31, 2014, net-worth of the Company is increased

from Rs.2,646 million to Rs.16,253 million.
3.
12307
10000
Net Worth
There has been no change in the equity share capital and as at

31 March 2014 the Company has paid-up equity share capital of
Rs.31,939 million comprising 3,193,920,000 equity shares of
Rs.10/- each.
20040
20000
I. Financial Condition
1.
2013
2014
25000
Revenue
Operating Expenses
Revenues from Telecommunication Services
Revenue from operations for operating circles on YoY basis

slightly decreased by 1% but there is increase of 6.4% on
Q-o-Q basis.
Other Income
Other income is increased to Rs.576 million (previous year

Rs.264 million) mainly due to increase in investments in fixed
deposits.
3.
Operating Expenses
The major operating expenses comprise of the following:

i)
Network Operation costs
Network operation cost is constant in comparison to previous

year as there is very few additions of sites during the year.
ii) Sales and Marketing expenses
S&M expense is reduced by 10% Rs.610 million primarily on
account of reduction in Subscriber Acquisition Costs and Other
Subscriber Acquisition Costs.
iii) Employee Related Expenses
Employee cost is reduced by 13% from Rs.3,947 million to
Rs.3,448 million due to reduction of employee count.
4.
Finance and Treasury Charges
Finance cost is reduced by 27% from Rs.9,189 million to

Rs.6,670 million, this reduction is primarily on account of
prepayment of loans.
5.
Depreciation and amortization
Depreciation and amortization charges increased to

Rs.5,402 million (previous year Rs.4,344 million) due to
amortization of Right to use Spectrum.
6.
Taxes
No provision for current income tax has been made in accounts

as there were no taxable profits for the year.
7. Net Loss
The Companys net loss reduced to Rs.20,728 million for the
year (previous year Rs.28,817 million). Generally, it is not
15
uncommon for large green field infrastructure telecom projects

to incur losses during the initial few years of project
implementation.
Discussion on Operational Performance
SSTL won 3 blocks of 1.25MHz each in 800 MHz spectrum band
in eight service areas in spectrum auctions held in Mar13 and
now has operations in nine service areas. Post auctions, the
new footprint covers 40% of population and 60% of data market
potential in India. Effectively, organization managed to retain
approximately 75% of its pre-auction revenues. Management
believes this reduced footprint gives faster path towards OIBDA
break-even for the business.
The Company after getting the new licenses was initially focused
on optimizing operations in line with new footprint.Then several
different strategies were adopted in order to optimize costs
and selectively grow data business. SSTL was allocated third
carrier which it won in Mar13 auctions in Oct13. After getting
the third carrier it upgraded its network to REV B Phase II
services providing its subscribers speed up to 9.8Mbps.
SSTL continues to have a data centric strategy with dongles and
smartphones as its priority focus areas. In the nine operational
circles, Company continues to expand its HSD footprints, and
now provides High Speed Data (HSD) services in approximately
500 cities and towns. During the year, SSTL launched several
new smartphones and plans to continue expansion of its
smartphones portfolio going forward in 2014. SSTLs subscriber
base as on Mar14 stands at 9.1 million including 1.3 million data
subscribers.
Number of subscribers (M)
14
12.0
12
9.9
10
9.7
9.9
9.1
On customer front SSTL continued on several initiatives like

MBonus for engagement and retention. To harness its Voice
Network the Company launched various customer centric
products like Always Talk.
SSTL continued its focus on building a strong data brand
Continued several campaigns like #AlwaysOn, to reinforce
positive association with target segment; continued association
with music and youth by means of sponsorships to programs
like NH7 weekender. The Company also launched joint
smartphone advertisement campaign with Micromax, Indias
leading mobile phone Company to strengthen its smartphone
portfolio.
In the financial year 2014-15, the companys strategic focus will
be to leverage its operations in nine circles in order to build
further scale and efficiencies. This will require successfully
meeting our strategic imperatives that includes:
Strengthen voice business and build competitive channel

for the same.
Further strengthen data business through competitive

products, expanding devices portfolio and offering
innovative solution on recently launched Rev B technology.
Continue efforts to penetrate in the smartphones segment.
Aggressively focus on cost management and profitability.

Products and Services
Data Business Line

Data business continued to grow and today contributes
significantly to the overall revenue of the Company. The
Company upgraded its network from EVDO Rev-A to EVDO
Rev-B under 3GPlus brand supporting upto 9.8 Mbps speed.
The Company also continued to expand its data footprint and
currently covers over 1080 towns.
The Company enhanced its data portfolio with a launch of many
innovative products and solutions. Key initiatives in data business
include.
8
6
4
A. Products
2
Q113
Q213
Q313
Q413
Q114
MTS 3GPLUS Network: In October 2013, Company

launched the first ever EVDO Rev-B network across all
circles. The REV-B network which was branded as 3GPLUS
network gives customers a better user experience with
Speeds upto 9.8 Mbps. The Coverage also expanded to
over 1080 towns.
Speed Booster Packs For Unlimited Data Plan Customers:

SSTL launched an HTTP based real time Popup Alerts service
for customers at various stages of Bundled High Speed
Usage Consumption. The Popup Alerts are being sent at
80%, 90% and 100% usage. Along with the Popup alerts
customers are also prompted to take optional Speed
Booster Packs which throttle back the Speed to High Speed
Wireless Revenue (INR M)

4000
3384
3000
2810
2743
2823
2976
Q213
Q313
Q413
Q114
2000
1000
Q113
16
for 30 days. Subsequently the sachet variants of 7 day and

15 day validity were also launched. 1Million recharges were
sold within 6 months of launch.
for remaining validity of the month till the additional

bundled usage of Speed Booster Pack.
Roaming Packs: SSTL launched attractive Roaming Packs

for Prepaid Customers and introduced Per MB charging
for Postpaid. Roaming Packs allows customers to enjoy
High Speed Data Access in Non-MTS Circles where the
HSD Network is available.
Free Dongle on IT Channel Sales: Company Launched a
special program for First Time Laptop / Computer Buyers
by offering Free Data Card device along with attractive
Product / Plan options from select IT Channel Partners.
Launch of Surveillance Product: Company launched a
specially focused Product Bundle with Surveillance Camera
and MiFi Dongle. Specially crafted Prepaid Packs have been
designed for the same
Launch of Super Unlimited plans: To drive high ARPU and
heavy user customer segment, Company launched super
unlimited products for both prepaid and postpaid. While in
prepaid the product offering is Rs.999/20GB Unlimited, in
Postpaid the product offering is Rs. 999/40GB unlimited.
B. Devices: The device portfolio moved towards open market

handsets (non-subsidized)
B. Devices
Launch of Wi Fi device: In July 2013, SSTL was the first ever

Company in Indian Data market to launch a MiFi Device.
The Device was EVDO REV-B network ready and was
capable to connect a maximum of 5 devices at any given
point, without a need of a laptop. The device can be
connected to any USB to power itself.
Recharge Rewards Program: An industry first loyalty

program launched in Jan13 end. The program helped to
induce usage for data card users as subscribers had to stay
connected for longer duration to bid for gifts online in the
landing page while accumulating credit points through
recharge of some special tariff vouchers.
Divine Portal: Launched the Devine Portal in Aug-2013.

This is a live as well as recorded web based service covering
all the religions where a data card subscriber can watch
live glimpses from over 51 shrines of India some of them
being Haji Ali, Gurdwara Bangla Sahib etc.
VOICE BUSINESS LINE

Voice business was amply supported by the launch of innovative
products and aggressive market moves. The highlights for the
year included the launch of several new products and market
initiatives.
Two new device categories launched

-
Music at MOP INR 1200 for new acquisition and an

upgrade option for existing subscribers
DUAL SIM (CDMA + GSM) with zero subsidy at MOP

INR 2200 for targeting multiple connection
subscribers and churn GSM subscribers.
Enhanced Voice device portfolio by introducing 8 new

devices in various categories with MOP range of INR 999
to INR 2200.
C. VAS & Roaming
Third Party Consent Gateway (TPCG), seeking double

confirmation on VAS activations, was implemented in July
2013 as per TRAI (Telecom Regulatory Authority of India)
mandate. This led to severe erosion in VAS revenues across
industry. To mitigate risk the VAS vertical did more than 50
product interventions, viz One-stop VAS activation Portal,
Contest Portal, Regional Portal, IVR Info search, FM Gold ,
each one contributing more than 1Million revenue per
month. VAS has been recording positive revenue growth
for last two consecutive quarters. Today MTS has industry
best performance in terms of share of non-data VAS to
overall service revenue.
Voice Roaming Special Tariff Vouchers as well as Data Card

Roaming were launched for the first time, which resulted
into incremental revenues as well as customer delight. Intra
Circle Roaming tie-ups for Tata subcribers as well as
International in-roaming arrangement with Sprint further
added to incremental revenues.
C. VAS: The company launched various innovative VAS services

on Data which enabled better user experience and
stickiness, including:
Launch of Innovative M-Buddy service & 1212 IVR :

The M-Buddy service was launched with innovative features
for MTS subscribers like talk time sharing, gifting an STV to
another MTS subscriber, asking balance from another
subscriber.1212 IVR was launched to offer the subscriber
customized offer as per the subscriber profile.
SMARTPHONE BUSINESS LINE
A.
Products:
The smartphone business line strategy was hinged around a

portfolio of dual-sim devices (GSM + EVDO) that allowed
customers to use EVDO along with GSM technology. MTS Duet
1 & 2 Handsets were test launched in the first half of 2013 along
with unlimited Data & Voice offer for 2 months.
Always Talk : The offer was launched as the most attractive

tariff proposition in the market with Unlimited On-net
and 1000 Local Off-net minutes free at Rs. 199 price point
Subsequently, MTS partnered with Micromax, one of the leading

handset manufactures in India for the launch of the
MTS-Micromax Canvas Blaze MT500 handset.The handset was
17
bundled with attractive Voice and Data benefits.

The smartphone portfolio was further strengthened with the
launch of the 2 new Dual SIM (EVDO+GSM) devices along with
the incredible 100,000 MB offer. Devices launched in FY 201314 included:
1.
T6 (Retailer to HLR activation within 24hrs) and T3 (CAF entry

to employee verification within 8 hrs) were identified as Critical
to quality and activation TAT. Rigorous measurement of these
KPIs has helped to enhance the customer experience.
Critical measures were taken like:
Canvas Blaze MT500 : launched in Dec12
Android 4.1.2 (jelly bean)
Qualcomm 1.0Ghz Dual Core
12.7 cm Touch Screen
RAM 768 MB
Product offer highlights: 2 GB Data, 2 hours of local talk
time & 1000 MTS to MTS minutes applicable per month for
6 months
2.
Blaze 4.0: launched in Feb 2014
Qualcomm 1.2Ghz Dual Core
RAM 512 MB
ROM 4 GB
3.
Unlimited WhatsApp & Viber pack: Was launched in

April at price range of Rs. 50-60 (Circle specific price
points available on MTS website). The Pack allows a
customer to stay connected with their friends through the
interactive message service & Data based voice calls. All
Usage on this application is Free.
Customer Service Operations
18
Increasing Spoke locations at high volume areas
Change in pick-up model for certain circles from

Courier to FoS collection
Realignment of CAF pickup schedule at circles,

Manpower calendaring
Optimum utilization and Focus on Training need

analysis.
49.03%
52.17%
54.52%
Q12013-14
Q22013-14
Q32013-14
60.56%
Q42013-14
97.97%
98.13%
Q12013-14
Q22013-14
98.94%
97.56%
Q32013-14
Q42013-14
In FY2013, with the SSTL focus on Data Card, Team focused on

improving the customer service delivery with the launch of the
below initiatives:
Appellate consolidation at Corporate Center: Pan India

Appellate emails to be handled from corporate center
through in-house off role employees. Savings 38% less cost
compared to cost incurred through decentralized model.
Current SLA > 94%.
Seamless online bill payment through My Account:

Customers can make seamless bill payment through My
Account without redirection and need to remember the
Data Card MDN. Commission saving of 1% which is paid
to distributor for bill collection on all online payment.
Titanium Desk: Identification of high value customers at

IVR and providing seamless customer service. Tenured and
Hand Picked executives to handle customer queries with
The Customer Service Operations Team began the year with a

clearly defined and prioritized strategy to drive premium service
and cost efficacy management.
Post implementation of new guidelines in 2012-13 on activation
policy by Department of Telecommunication (DOT), SSTL made
consistent efforts towards enhancing quality through various
measures.
Quarter wise performance- CAF entry to

employee verification within 8 hours
Besides the introduction of new EVDO+GSM devices, the

smartphone business also saw the launch of disruptive tariffs
and offers by MTS, including:
100,000 MB Data offer: First Recharge 198 was launched
in Feb and is applicable with both Blaze 4.0 & 4.5 devices.
The unheard of offer was another first by MTS. The Product
was designed to engage and attract the new age Smartphone
user. The offer is applicable for 1 year through the balance
carry forward recharge.
Activation model based on Scan CAF
Quarter wise performance- Retailor to Hotline

activation within 24 hours
Blaze 4.5 : Launched in March 2014
Qualcomm 1.2Ghz Quad Core
RAM 1 GB
ROM 4 GB
increased empowerment. Online support of backend team

for quick resolution. Executive Call Back Facility if
executive is unable to provide information / resolution on
the call. Current SL & CQ > 92%
VAS services Activation through IVR: Announcement of VAS

services which are currently activated on customers
account through Voice IVR @ 155.
Call 2 Activate: Support helpline for activation of Data Card

& Smartphone through various alliances.
Additionally, Self help penetration improved enabling customers

to service through My Account & IVR.
Quarterly performance- Self help penetration
73%
70%
67%
65%
Q12013-14
Q22013-14
Q32013-14
Q42013-14
While cost remained a significant focus area for SSTL, below

initiatives helped us in controlling the Cost of Service:
a.
Promotion of self-help options (Website, IVR, My Account)

to the customer
b.
Increase in efficacy of Tele-verification process, to control

inflow of calls at the contact center. Combining Televerification calls with welcome call to provide necessary
details to new postpaid customer.
c.
Streamlining of VAS complaint process, where resolution

empowerment is given at front end.
Quarterly performance- Cost of service per
subscriber (in Rs.)
3.09
3.02
2.77
Q22013-14
Q32013-14
TRAIs metering and billing audit for 2012-2013 was conducted

in accordance with the schedule of the empanelled Telecom
Regulatory Authority of India (TRAI) audit agency, with the scope
including different processes for Sales, Usage and Retention,
Value Added Services, Subscriber Activation, Customer billing
etc.
Post the assessment and analysis, TRAI declared SSTL to be
100 % compliant on financial parameters.The agency did however
make some observations on which appropriate action was taken
and the issues were closed on time and we saved approx
INR 300 million, which otherwise could have been levied as
penalty.
In FY 2013-14, Telecom Regulatory Authority of India (TRAI)
implemented a revised regulation where metering and billing
audit is conducted every quarter along with the yearly audit.
TRAI empanelled agency has conducted the audit till
Q32013-14 and submitted the reports. Post Quarterly
assessment, TRAI has declared SSTL to be 100% compliant on
all financial parameters.
Regulatory Affairs
Unified License
Government has notified the new Unified Licensing regime to
delink assignment of spectrum from the license.The new Unified
License permits licensee to provide any telecom service. In
March 2013 spectrum auctions, SSTL had won 3 carriers of
1.25 MHz each in eight circles Delhi, Gujarat, Karnataka, Kerala,
Kolkata, Tamil Nadu, UP (West) and West Bengal. Under the
new Unified Licensing regime, SSTL has been granted Unified
License on October 3, 2013 with the authorization to provide
access services in these eight circles. The Unified License will
enable SSTL to provide technology neutral telecom services
for a period of 20 years. With this development, SSTL became
the first telecom operator in the country to be a part of Unified
Licensing regime.
SSTL has subsequently applied for authorization to provide
National Long Distance Service under the same license. Once
authorization is received SSTL will start carrying inter-circle
traffic which hitherto was handed over to other carriers.
2.63
Q12013-14
TRAI metering and billing audit
Q42013-14
Several initiatives were taken for Post paid customers which

resulted in the following:
Spectrum
Overall collection maintained at 95% with improvement in

due date collections from 56% in Apr13 to 64% in Mar14.
SSTL received the 3rd carrier in October, 2013 which it had

won in March, 2013 auction. The allotment of the 3rd carrier
was significant as your Company could launch its next generation,
REV B Phase II telecom services.
Provision for Bad Debt decreased from 9% to 6%.
Spectrum Auction
E-bill Penetration increased from 20% in Apr13 to 36% in

Mar14 with the help of a drive to reduce cost and improve
customer satisfaction.
SSTL plans to acquire at least 5 MHz of contiguous spectrum

within the 800 MHz spectrum band to upgrade network to
provide next generation telecom services and also to expand
19
its footprint in the country. Your Company was keen to

participate in the next round of 800MHz spectrum auction for
which licensor in July, 2013 had sought TRAIs recommendation
on reserve price. TRAI on September 9, 2013 recommended
that the auction in the 800 MHz band should not be carried out
and the possibility of adopting the E-GSM band (880-890MHz/
925-935MHz) by taking out 10 MHz from the existing CDMA
800 MHz band and clubbing it with the existing 900 MHz Band
should be explored.
The Government has rejected TRAIs recommendations on EGSM band and again sought its recommendations in December,
2013 on reserve price for 800 MHz band for all the service
areas. The TRAI on Feb 22, 2014 recommended that at least one
chunk of contiguous 5 MHz spectrum (i.e. 4 carriers) should be
carved out in 800 MHz spectrum band for auction by taking
back spectrum from PSUs and reassignment of carriers to the
existing TSPs in the 800 MHz band. TRAI has recommended
reserve price of Rs. 2685 crore for pan-India per MHz spectrum.
These recommendations are under consideration of the
Government.
Spectrum Sharing and Trading
TRAI on January 22nd, 2014 gave recommendations on Guidelines
for Spectrum Trading. As per recommended guidelines outright
transfer of spectrum shall be permitted. The spectrum assigned
through auction in the year 2010 or afterwards or on which TSP
has paid the prescribed market value shall be allowed to be
traded.
In addition to the Spectrum trading guidelines, TRAI is also
formulating guidelines for spectrum sharing i.e TSPs would be
allowed to share spectrum for simultaneous use using a common
Radio Access Network.The TRAI recommendations on Spectrum
Sharing are expected to be issued shortly.
SSTL will explore all options including Spectrum auction,
spectrum trading and spectrum sharing to acquire additional
spectrum within the 800 MHz spectrum band to meet its short
and long term requirements of spectrum for expanding its
footprint in the country and for deployment of next generation
technologies.
During the turbulent period SSTL has remained stable and

continues to attract and retain good talent by providing a
challenging and exciting work environment and growth
opportunities for career seekers.
By working closely together, the business functions and HR
have enabled the Company to meet its staffing requirements
and align its employee engagement and retention through
development activities.
At SSTL, the management supports the HR function in attracting,
developing, engaging and retaining expertise within the company.
Using a participative work approach and fostering a culture of
trust and openness, professional working, freedom to think,
direct communication and performance orientation, the
Company has remained a preferred workplace.
Some of the key initiatives undertaken by SSTL during the year
are grouped around the following key themes:
Talent Acquisition:
During the period April 1, 2013 and March 31, 2014 around 308
people were added to the companys pool of human resources.
During the period April 1, 2013 and March 31, 2014, 54 leadership
positions (Department level & above) were filled through
internal job postings which reemphasizes the organizations
commitment to provide growth to internal talent.
The company hired (external hiring) a mix of junior-level and
higher-level employees.
New Hires Split- OU wise

300
250
240
200
150
100
Human Resources
The major focus for the last financial year for the Company was
on Organization Transformation including organization
restructuring, manpower optimization and rebuilding the
employer brand after closure of 6 operating circles. The
highlights of HR delivery for the financial year were Headcount
and cost optimization through seamless execution of circle
closures, optimal cost of hiring through redeployment of top
talent, enhancement of performance driven culture through
structured performance and talent pool management and
continued focus of HIPO (High Potential) development and
business related training programs.
20
44
50
18
0
Operations
Group
Division
Department &
above
This large talent infusion into the organization was a testimony

to SSTL being an employer of choice. A look at our demographic
profile indicates that we managed to attract highly qualified talent
from both telecom and non-telecom industries, to support our
goal of talent diversity.
Engineers, 4%
Graduation &
MBA, 45%
Others, 51%
objective was achieved through implementation of structured

intervention of Critical Talent Identification and the retention
plan. Total of 305 numbers of Critical Talent were identified
from the closing circles of which 35 incumbents were redeployed
at the Department Level and 45 incumbents were redeployed
at Division, Group and Operations Level. 56% of the total HIPOs
were moved to new roles with higher responsibilities.
Employee productivity was marginally higher against the budget
for the year 2012 - 2013. Revenue per employee was INR 0.51
Million against the target of INR 0.5 Million.
Non Telecom, 12%
Telecom, 88%
The Company has successfully concluded annual performance

assessment for 2012 and bi-Annual performance assessment
cycle for the year 2013. New processes were introduced to
enhance the performance assessment resulting in overall
satisfaction score of 81%. In line with the Companys
organizational philosophy towards building a performance driven
culture, the focus has been on Capability review. There has
been an emphasis on competency assessment as an integral part
of appraisal process due to which the Company has looked
beyond KPI achievement and has focused on competency
demonstrated while performing the job. While the payout of
Performance Linked Incentive is linked to the fulfillment of preapproved KPIs, the decisions on compensation and level
progression (promotions) are closely integrated with the
competencies and capability of the incumbents.
Off Roll Manpower Management:
Talent Development
During the period April 1, 2013 and March 31, 2014, the Company
launched 8 new policies /processes applicable to Outsourced
Manpower along with roll out of strong monitoring framework
on cluster management. New enhanced Recruitment Policy with
introduction of assessment test for Team leaders. Existing DST
policy was revised to drive productivity through attractive
incentive payout. Automation in offroll recruitment approval
mechanism, Data management & attendance management was
introduced during the year.
The focus of Talent development was on increasing employee

efficiency and helps them navigate through uncertain times,
through targeted sessions such as Business Simulations, Change
Management, Business Knowledge Sessions and Strategy cascade.
The majority of sessions were developed and delivered
internally, so that we achieve our objective within the projected
budget. During the reporting period, the Company conducted
no. of training programs and averaged over 2 man-days, against
budget of two man-days. The overall feedback score increased
to an all time high of 4.5 on a scale of 5.
First time the Company introduced online product certification

training course for off roll field employees. There was deliberate
focus on retention of top performers by providing them
opportunity for career growth i.e onroll movement against
vacant position. Total 23 offroll employees were absorbed for
onroll positions internally.
Talent Management:
SSTL underwent the Organization Transformation exercise
during the year 2012 2013 resulting in Organization Design
and manpower optimization exercise resulting in elimination
of the Management layer at the Regional level. This exercise
resulted in reduction of 37% in the headcount numbers and
40%in payroll cost over the period January to December 2013.
In the midst of the Organization Transformation and manpower
optimization exercise SSTLs major challenge was to retain the
critical talent (HIPOs). The objective was achieved successfully
with the overall attrition rate of HIPOs @ 13% against average
overall industry trend of 26% and SSTL attrition of 21.5%. This
Organization Development (include leadership

development)
For the development of a leadership pipeline and retention of
high potential employees, we launched the 2nd phase of the
MTS Leaders of Tomorrow (M-LOT) program. We targeted 5%
of the employee strength as possible HIPOs. The HIPOs
underwent a rigorous Fastrack Program, and were assigned to
projects for their functional development, based on their career
aspirations. A rigorous focus on HIPO retention and engagement
helped us to keep the HIPO attrition within a limit of 13%
(annualized). Focused Mentorship Program for HIPOs was
introduced during the year 2012-2013.
The Company also focused on internal leadership development
by organizing 360 degree individual assessment for the Top
Management Personnel and the feedback workshop, was also
organized for each incumbent.
In order to strengthen the Companys employer branding, an
21
internal brand statement was created.The companys HR policies

were aligned to the Brand Statement and training for managers,
to embed the brand, has been initiated. The focus of the Brand is
to move towards a high performance, aspirational culture, and
HODs were trained on how to create and achieve aspirational
goals through their teams - leading to increased productivity.
Specific interventions on Business Strategy Cascade and
Cluster Heads Development Workshops were conducted
during the year 2013. Total of 2000 employees were covered
for Business Strategy Cascade sessions and 50 cluster heads
were covered through Development Workshops.
In December 2013, SSTL conducted a survey on Employee
engagement to measure employee engagement scores on Say,
Stay and Strive resulting in overall contribution to the
Companys business success. There was overwhelming
participation in the survey with a 95.4% response rate and 71%
score level. The latter is above the engagement scores of the
Telecom Industry of 54%.
Conclusion
This is an extremely critical time for the organization where it
targets to become OIDBDA positive by the end of 2014. The
overall HR strategy is to drive the Company towards becoming
an Employer of Choice by year 2015.
The key challenge facing the company in this scenario of fast
business growth will be on enhancing talent capability, talent
engagement & driving talent productivity.
Therefore, the future agenda of the HR function at SSTL will be
to ensure that the organization remains a great place to work
and develops a strong employer brand. For this purpose, the
Company has planned a series of initiatives such as Creation of
Talent Bench for top management, Critical talent assessment
and development, Capability Building in line with Data Centric
Business Strategy and establishing SSTL as a strong Employer
Brand to Internal & External stakeholders.
Internal Control Systems
The Company has in place systems of internal control designed
to provide reasonable assurance with regard to the effectiveness
and efficiency of operations, reliability of financial reporting and
compliance with applicable laws and regulations.
The in-house Internal Audit department at SSTL is an
independent and objective function performing assurance and
consulting activities designed to add value and improve SSTL
operations. It helps the Company accomplish its objective by
bringing a systematic and disciplined approach to evaluate and
improve the effectiveness of risk management, control and
governance processes. The audit team maintains an independent
status within SSTL at all times.The Head of Internal Audit reports
functionally to the Chairman of the Audit Committee and
administratively to the Chief Executive Officer. The internal
audit function adopts a risk-based audit methodology, which is
aligned with the risk profile of the company to ensure that the
relevant controls addressing those risks are reviewed on a
rotational basis. The scope of audit is extended to all of SSTLs
22
operations and third party service providers. In order to

supplement the audit assurance provided by in-house team; the
Company had also outsourced some of the audit work to two
third-party audit firms for the financial year 2013-14. The
deliverables of appointed audit firm are measured and evaluated
against performance KPIs (Key Performance Indicators)
approved by the Audit Committee to ensure that reasonable
assurance is provided on the end-to-end spectrum of the areas/
processes defined in the agreed scope of work The internal
audit plan is prepared based on methodology similar to the one
adopted by parent company, Sistema JSFC. The methodology
takes in to account factors like company risk profile, company
strategy, top & middle management turnover, influence of
regulators/legislation, vulnerability to fraud, cost materiality and
results of previous audits to ensure all critical processes gets
covered.The final audit plan is approved by the Audit Committee
and Board of Directors of the Company. The Audit Committee
does a regular review of the Audit Reports and also reviews
update on the status of critical audit issues pending for
resolution, which are submitted by the Internal Auditors. In
addition, the Audit Committee performs a half yearly
performance evaluation of internal audit department. The
Committee also meets the Companys statutory auditors to
ascertain, inter alia, their views on the adequacy of internal
control systems in the Company and keeps the Board of
Directors informed of major observations, if any.
The Internal Audit function is also involved in streamlining the
audit methodology, starting from inception, through fieldwork
to final reporting, in order to fit in the COSO (Committee of
Sponsoring Organizations of the Treadway Commission)
framework so that it is no longer incidental to the Companys
processes but provides the foundation for all of the Companys
audit work. Integrating COSO in this manner will add structure
to the audit process, ensure that appropriate criteria are
considered in key phases of each audit, and provide a trail to
support the conclusions reached. Therefore, an Audit
Management Process (AMP) document has been prepared to
bring clarity in terms of activities to be performed during the
conduct of audit to ensure smooth and efficient management of
all SSTL audits. This will help to identify the interfaces between
Outsourced Audit Partner, In-house audit team and SSTL & its
strategic partners at various stages during the audits. All the
seventeen principles and five essential components of control
environment, risk assessment, control activities, information
communication and monitoring of COSO Internal Control
Integrated framework 2013 is considered while defining the
control objective to be audited.
The Company uses a state-of-the-art ERP system to record
data for accounting and management information purposes and
connects to different locations for efficient exchange of
information. In continuation of the Companys effort to create
customer-centric and process-based organization the function
of Business Transformation (BT) has been created. The objective
of the function is to align stake holders and operations for
deriving enhanced synergy, facilitate higher internal effectiveness

and collaborate with functional teams to drive Performance
improvement projects to support Organizations Business
objectives. In order to ensure standardization of processes
across circles and improve their operational effectiveness, an
online activity of best practices across various functions has
been created by BT. A snap shot of process recommendation
implemented and under implementation is published for
monitoring progress.
The Company has also set up a robust enterprise risk
management framework across the organization. This facilitates
identification, assessment, communication and management of
risk(s) in an effective manner. Currently, the enterprise risk
management department is in the process of identification and
quantification of functional risks based on approved policy.
Opportunities
Going forward in the financial year 2014-15, industry subscriber
and revenue growth is expected to be robust. While growth in
subscriber base is expected to be driven by underpenetrated B
& C circles and rural areas, pace of growth in data revenues is
expected to be much higher than voice growth. The Company is
well positioned to gain ground from data revenue growth given
its focus on data business, existing coverage & deployment of
Rev B technology, reliable service, product offerings and timeto-market advantages.
Lot of players in the industry increased tariff for voice services
and they are also cutting down on various benefits given to
consumers in order to increase realized RPM. This provides
unique opportunity for MTS India to provide competitive
tariff plans and increase voice revenue. Company is keeping
close watch on various developments on this front and
already focusing on strengthening voice business in order to
make best of any opportunity that exists in the near future for
the business.
Proliferation of low-cost smartphones is expected to further
fuel the demand for mobile data services.The company is already
focusing on smartphones segment and has launched attractive
devices and offerings in order to attract smartphone users.
Slow 3G network expansion by various operators and launch
of 4G and BWA services by only few players will allow SSTL to
strengthen its already strong position in data market in
operational circles. None of the 3G player has a pan-India
presence and 4G ecosystem is expected to take time to mature.
This situation offers a unique opportunity to sell data on
wholesale basis to other players in operational circles.
Risks and Threats
CDMA ecosystem in entry voice is deteriorating and can
potentially affect Companys voice business prospects in the
long term. Similar challenges exist in the smartphones business
as well; however, management is of the view that there would
be sufficient demand for EVDO smartphones globally. Also,
several global operators are investing in EVDO smartphones
which is a positive for the Company.
Launch of 4G data services and expansion of 3G services is
expected to further expand the overall data market which inturn will benefit the Company. However, it can also intensify
competition in the data market and may even trigger tariff wars
unlike previously seen in the voice market. Several 3G players
have already dropped data prices in order to push for the
adoption of 3G data service in India.
On the regulatory front, Companys ability to do business and
upgrade to future generations of technology depends on the
spectrum and license. There is still lack of clarity about future
roadmap for 800 MHz band and the further auction of spectrum
in this band. Also, there needs to be clarity on how government
will ensure whether further allocation of spectrum is contiguous
to earlier allocation.
The implementation of Companys projects would be materially
affected if debt facilities are not raised in a timely manner and/or
interest rates are raised significantly. Additionally, the Companys
business is dependent on key vendors to supply critical network
equipment and services. Any change in their ability to provide
equipment and/or services also presents a risk.
Finally, while the Company continues to perform and create
value for its customers, shareholders and employees, there is
execution risk involved if projects are not launched or
completed in time. Key risks lie around the Companys ability to
launch innovative products and devices, grow distribution
network especially in new markets and enhance MTS brand
value in the market.
Future Outlook
Indian wireless market continues to be one of the most attractive
markets in the world with VLR penetration of approximately63%
and 4.8 million active wireless subscriber addition per month
(approx.) in financial year 2013-14 (till Feb14). Going forward
growth for voice services will be driven by the underpenetrated
B & C circles and rural areas. In future, demand for mobile data
will grow significantly and Company is well positioned to get
higher shares of this incremental demand. Also, continuous drop
in smartphone prices is expected to result in higher penetration
of these devices which will increase demand for data on small
screen devices.
Number of players in the industry is likely to go down in medium
term. However, it depends on clarity on various M&A norms
from the regulator. Last year, footprint of several players in the
industry has reduced to fewer circles. Also, post finalization of
M&A norms, expectation is that it will pave the way for much
needed consolidation in the sector. New opportunities for
strengthening the market position can arise out of such an
environment.
Cautionary Statement
Statements in the Management Discussion and Analysis Report
describing the Companys objectives, projections, estimates, expectations
may constitute a forward-looking statement within the meaning of
applicable laws. Actual results could differ materially from those
expressed or implied. Important factors that could make a difference
to the Companys operations include economic conditions affecting
demand/supply and price conditions in the domestic markets in which
the Company operates, changes in the Government Regulations, tax
laws and other statutes and other related / incidental factors.
23
REPORT ON CORPORATE GOVERNANCE

GOVERNANCE PHILOSOPHY
Good Corporate Governance is integral to the very existence of a Company. It inspires and strengthens investors confidence by ensuring companys
commitment to higher growth and profits. Generally, Corporate Governance is defined as a set of laws, regulations and good practices and an
application of best management practices to achieve the set goals of the organization as well as to maximize the benefits of all stakeholders.
In pursuit of excellence towards governance, Sistema Shyam TeleServices Limited (the Company) is committed to maintain the
highest standards of Corporate Governance and implements several best Corporate Governance practices as prevalent globally, which
are over and above the statutory requirements. Corporate Governance Strategy of the Company is to comply with not only the
statutory requirements, but also voluntarily formulate and adhere to a set of strong Corporate Governance practices. The Company
believes that sound Corporate Governance is critical to enhance and retain investors trust.
Your Company always makes efforts to develop and improve the processes and procedures, which are part of Corporate Governance
regime in order to gain the confidence of stakeholders and to promote the principles of transparency, integrity and accountability in the
working and culture of the organization and to keep the level of Corporate Governance matching with Industry Standards.
I.
BOARD OF DIRECTORS
The Board of SSTL is broad based and has eminent personalities with different backgrounds. It is managed through an optimum mix of
Executive, Non-Executive and Independent Directors in conformance with the best standards and practices. The Board of Directors of
SSTL comprises of notable professionals possessing unparallel industry experience and knowledge having diverse backgrounds and
expertise in the fields of strategy, technology, finance, economics, entrepreneurship and general management.
The Boards composition, nature of directorship & attendance of the Directors at last Annual General Meeting alongwith the details of
their directorships in other companies during the financial year 2013-14 are given as under:
Name of the
Director
Nature of
Directorship
Date of Joining Attendance At

the Board
the Last AGM
Directorship
In other
Companies
Other Companies
Committee
Member
Committee
Chairman
Mr. Ron Sommer
Director
21.05.09
Yes
Mr. Dmitry Shukov*
Whole-Time Director
01.06.13
Yes
Mr. Vsevolod Rozanov** Director
01.10.08
Yes
Mr. Rajiv Mehrotra
Director
21.09.96
17
Mr. Ajay Khanna
Director
20.04.95
Yes
10
Mr. Alok Tandon
Director
20.04.95
Yes
12
Mr. Madhukar
Independent Director
27.03.09
Yes
Mr. Suman Sehgal
11.02.08
Yes
Mr. Vikram Kaushik
13.07.11
Yes
Mr. Bharat V Patel
13.07.11
Mr. Alexander Gorbunov Director
13.07.12
Mr. Andrey Terebenin
Director
13.07.12
Mr. Anton Abugov^
Director
01.06.13
Mr. Alexey Buyanov^^
Director
13.07.11
*
**
^
^^
Appointed as Whole-Time Director and designated as Chief Executive Officer of the Company w.e.f. June 1, 2013.
Ceased to be Whole-Time Director and has been re-designated as Deputy Chairman w.e.f. June 1, 2013.
Appointed as Additional Director and regularized as Ordinary Director liable to retire by rotation at the 18th Annual General Meeting held
on September 23, 2013.
Resigned w.e.f. May 28, 2013.
Currently, the Board of the Company comprises of 13 members. The Board comprises of 7 Indians and 6 Foreign Nationals; the
combination is in conformity with the Security conditions of Unified Licence and Press Note 3 of 2007.
A detailed profile of each Director is available on the website of the Company at www.mtsindia.in and is also published in this Annual
Report.
24

Board Meetings and Attendance
During the financial year ended March 31, 2014, the Board of Directors met 7 times on the following dates and the maximum time gap
between any two meetings has been less than 3 months. Besides the regular Board Meetings,urgent important issues are decided
through circulation resolutions which are confirmed in the next Board Meeting.
Dates on which the Board Meeting(s) were held:
I.
April 27, 2013
V.
November 8, 2013
II.
May 28, 2013
VI.
December 12, 2013
III.
July 19, 2013
VII.
February 26, 2014
IV.
September 23, 2013
The details of attendance of each Director at the Board Meetings held during the financial year 2013-14 are as under:
Name of Directors
Board Meetings Attended
Name of Directors
Name of Directors
Ron Sommer
Vsevolod Rozanov
Ajay Khanna
Alok Tandon
Rajiv Mehrotra
7*
7**
AndreyTerebenin
Dmitry Shukov
Madhukar
Suman Sehgal
Vikram Kaushik
Bharat Patel
5***
Anton Abugov
Alexey Buyanov^
Alexander Gorbunov
^Resigned w.e.f. May 28, 2013

*One meeting by Alternate Director, Mrs. Larisa Gorbatova
**One meeting by Alternate Director, Mr. Andrey Smelkov
***One meeting by Alternate Director, Mr. Vadim Savchenko
Information availability to the Board

The Company provides all the information in advance related to businesses of each meeting to all the members of Board for their
review and for discussions and decisions at the meeting. Such information is submitted as part of the agenda material of the meetings
well in advance and also by way of presentation during the meeting. All major agenda items are backed by comprehensive background
information to enable the Board to take erudite decisions. The information which could not be circulated in advance is tabled directly
at the meeting. The Board has absolute access to all the relevant information and also the managers of the Company. Apart from the
information made available at the time of meetings, the Board also periodically reviews various reports and information on the
progress of the Company. Such information is supplied to the Board at certain intervals and also on request from time to time.
Advance Planning of the Meetings
Planning of meetings of the Board as well as Boards Committee is done in advance to adjudge and decide the matters and affairs which
are to be placed and reviewed before the members on the basis of priority and importance. Advance planning also provides an aid to
the Board members to schedule and plan their calendar events accordingly. The schedule of meetings also includes the primary agenda
for each meeting. The Board approves such calendar schedules in the last meeting of every calendar year for the Board and Committee
Meetings of next calendar year. To the extent possible and convenient to Board Members, the Board and Committees follow the
calendar schedules approved for Meetings. In addition to the planned calendar meetings, the Company also holds special meetings to
discuss the urgent business issues and the Board Members have also been very indulgent for such special meetings as is evident from
the attendance of Directors in Board Meetings.The agenda ofthe meeting is pre-circulated with presentations,detailed notes, supporting
documents andexecutive summary.
Boards Self Evaluation Process
The Board Self Evaluation Process for the calendar year 2013, was initiated in the month of September 2013 and completed in
December 2013. The process is undertaken on annual basis to determine the effectiveness of the Board. The Boards Self Evaluation
process was initiated by distributing a self assessment questionnaire to each Board Member. Based on the response to questionnaires
received from Board Members, a summary report was prepared including the results of all analyzed criteria, areas of improvement and
a certain action plan for the same. The results of the evaluation process were summarized with complete confidentiality and placed
before the Board for its review and the suggestions for the improvement in the working procedures of the Board of Directors.The
suggestions advised by the Board members are being implemented, to the maximum extent possible, with co-ordination of all
concerned.
II.
DIRECTORS COMMITTEES
In compliance of applicable provisions of the Companies Act, 1956 and to focus effectively on the issues and ensure expedient
resolution of the diverse matters, the Board has constituted Audit Committee, Nomination and Remuneration Committee, Share
Transfer & Investors Grievance Committee, Business Excellence Committee and Corporate Conduct and Ethics Committee.These
25
Committees focus on specific areas and make well-versed decisions within the authority delegated. Each Committee of the Directors
is guided by its well defined Charter, which defines the composition, scope and powers of the Committee. The Chairman of the
Committee in consultation with Company Secretary determines the frequency of the Committee meetings. The Committees also
make specific recommendations to the Board on various matters from time-to time. All observations, recommendations and decisions
of the Committees are placed before the Board for information or for approval. The Board reviews the performance of the Committees
exhaustively on annual basis and imparts necessary directions for improving the performance of the Committees.
Audit Committee
Audit Committee plays an important role in the Companys financial integrity. The Audit Committee was formed in compliance of
Section 292A of the Companies Act, 1956 with qualified members of the Board and reconstituted thereafter from time to time. The
Committee was recently re-constituted w.e.f. May 28, 2013 and presently, it comprises of Mr. Vsevolod Rozanov, Mr. Ajay Khanna,
Mr. Alok Tandon & Mr. Suman Sehgal. Mr. Igor Garshin, Head of Chairman Office, Sistema JSFC is Ex-Officio member. Mr. Vsevolod
Rozanov is the Chairman of the Committee. He has sound financial knowledge as well as several years of experience in the industry.
Mr. Vishal Kohli is the designated Secretary to the Committee.
In Committee Meetings, detailed discussions are held on various matters e.g. financial results, budgets, related party transactions,
internal audit and internal control, etc. The Head of the various functions and other senior management members are invited to present
their reports on the respective issues being discussed in the committee meetings and to have detailed interactions with the
committeemembers on all important issues. The Internal Auditors and Statutory Auditors are also invited to attend the meeting of the
Audit Committee and participate in discussions on their respective issues.
Key responsibilities of the Audit Committee
Financial Reporting and Disclosure process.
Appointment, re-appointment or removal of the Statutory

Auditor, Internal Auditors and Cost Auditor.
Adequacy of the internal control systems and internal audit

function.
Internal Audit and Cost Audit Reports and follow up action.
Annual Financial Statements and all aspects related thereto

including qualification in Draft Auditors Report.
Nature and scope of Statutory Audit.

Related Party Transactions.
Quarterly financial statements and Policies.
Cost Accounting Records of the Company.
Legal/ regulatory matters having significant impact on the

Companys financial statements.
Budgets and Business Plans of the Company and matters

related thereto.
Carrying out any other function as may be related and

important in view of the Audit Committee members.
Audit Committee Meetings and Attendance

During the financial year 2013-14 the Audit Committee met 6 times i.e. on:
I.
May 27, 2013
IV.
November 08, 2013
II.
July 19, 2013
V.
December12, 2013
III.
September 23, 2013
VI.
February 26, 2014
The details of meetings attended by each Committee Member during the financial year 2013-14 are as under:
Members
Status
No. of Meetings Attended
Vsevolod Rozanov*
Ajay Khanna
Alok Tandon
Suman Sehgal
Alexey Buyanov**
Chairman
Member
Member
Member
Member
5^
*Joined the Committee w.e.f. May 28, 2013.

**Resigned w.e.f. May 28, 2013.
^Attended by Alternate Director, Mrs. Larisa Gorbatova.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee of Directors was re-constituted on May 28, 2013 and it presently comprises of
Mr. Ron Sommer, Mr. Vsevolod Rozanov, Mr. Ajay Khanna and Mr. Alexander Gorbunov. All of them are Non-Executive Directors.
Mr. Ron Sommer is the Chairman, Mr. Vishal Kohli, Company Secretary is the Coordinator of the Committee.
Key Responsibilities of Nomination & Remuneration Committee
To shortlist and select nominees on the Board and to recommend their names to the Board of Directors for appointment,
re-appointment as Non Executive Independent Directors.
To shortlist and select candidates for the position of CEO and to recommend their names to Board of Directors for appointment
as CEO along with proposed remuneration.
26
To approve the selection, appointment(s), KPIs, performance, remuneration, promotion, resignation(s), and termination(s) of
personnel for the position of CXOs and Circle COOs.
To review the overall Remuneration structure/ Remuneration policy including Bonus, incentives, PLI (Performance Linked Incentive)
etc. framed for all employees of the Company.
Committee Meetings and Attendance

During the financial year 2013-14 the said Committee met 7 times i.e. on:
I.
April 27, 2013
V.
November 8, 2013
II.
May 27, 2013
VI.
December 12, 2013
III.
July 19, 2013
VII.
February 26, 2014
IV.
September 23, 2013
The details of meetings attended by each Committee Member are as under:

Members
Status
Ron Sommer
Ajay Khanna
Alexander Gorbunov
Vsevolod Rozanov
Chairman
Member
Member
Member
5*
*Two meetings attended by Alternate Director, Mrs. Larisa Gorbatova

Business Excellence Committee
Business Excellence Committee was initially constituted on July 13, 2011 and was re-constituted w.e.f. June 1, 2013. Presently, the
Committee members are Mr. Dmitry Shukov, Mr. Vikram Kaushik and Mr. Bharat V Patel. Mr. Vikram Kaushik and Mr. Bharat V Patel are
Independent Directors and Mr. Dmitry Shukov is the Chairman of the Committee. Mr. Leonid Musatov, Chief Commerce Officer is the
Convener of the Committee and Mr. Vishal Kohli, Company Secretary is the Co-ordinator of the Committee.
The Committee is responsible for review, formulation and implementation of plans, policies and Strategy for Sales and Marketing, CRM
and Product Innovation, and is also responsible for the review of the performance of the sales and marketing, strategy and business
excellence team. The functions of the Committee also involves providing suggestions, guidance, directions & advices to the management
on various matters related to the Sales, Marketing, Strategy and Business Excellence activities of the Company.
Meeting and Attendance Details
During the financial year 2013-14 the said Committee met 12 times i.e. on:
I.
April 27, 2013
VII.
October 17, 2013
II.
May 27, 2013
VIII.
November 8, 2013
III.
June 6, 2013
IX.
December 12, 2013
IV.
July 19, 2013
X.
January 21, 2014
V.
August 14, 2013
XI.
February 26, 2014
VI.
September 27, 2013
XII.
March 5, 2014
The details of meetings attended by each Committee Member during the financial year 2013-14 are as under:
Members
Status
Dmitry Shukov*
Vikram Kaushik
Bharat V. Patel
Vsevolod Rozanov**
Chairman
Member
Member
Member
10
11
10

*Appointed as a member w.e.f. June 1, 2013
**Ceased to be a member w.e.f. June 1, 2013
Corporate Conduct & Ethics Committee
In order to develop an effective corporate conduct system and ethics standards which correspond with international recognized
standards, the Company had constituted a Corporate Conduct & Ethics Committee on October 18, 2011. The Committee
was re-constituted w.e.f June 1, 2013 and thereafter, it comprises of Mr. Suman Sehgal, Mr. Dmitry Shukov and Mr. Ajay Khanna
as its members. Mr. Suman Sehgal is the Chairman of the Committee. Mr. Vishal Kohli, Company Secretary is the Secretary
of the Committee.
27

The Committee is responsible for formulation of proposal and recommendations to Board of Directors for developing and implementing
effective corporate conduct and ethics, Monitoring and supervising of functioning of executive level Disciplinary Committees as well
as disciplinary proceedings conducted by the said committees, Reviewing Code of Conduct for Board members and Senior Management
Personnel and Code of Conduct for employees and Reviewing policies, documents, processes, procedures, strategies, guidelines
relating to corporate conduct, corporate culture, ethics and disciplines. The main function of the Committee is to review the periodical
reports of the respective Executive Level Disciplinary Committee and to provide directions and suggestions thereon.
Meeting and Attendance Details
During the financial year 2013-14, the Corporate Conduct & Ethics Committee met three (3) times.The details of meetings attended
by each Committee Member are as under:
Members
Status
Suman Sehgal
Ajay Khanna
Dmitry Shukov*
Vsevolod Rozanov**
Chairman
Member
Member
Member

*Appointed as a member w.e.f. June 1, 2013
**Ceased to be a member w.e.f. June 1, 2013
Share Transfer and Investor Grievance Committee

The Share Transfer & Investor Grievance Committee of the Directors deals with matters relating to transfer & transmission of shares,
issue of duplicate share certificates, shares dematerialized & rematerialized, redressal of investors grievance and all other matters
related to the shares, share capital and investors complaints.The Board has also assigned the committee special task to examine
demands of minority shareholders and all other related aspects including holding of meetings with the minority shareholders.The
Committee meetings are held on regular intervals to consider the matter pertaining to share transfer and investors grievances.
After reconstitution of the Committee w.e.f. May 28, 2013, Mr. Bharat Patel, Mr. Anton Abugov, Mr. Madhukar, Mr. Alok Tandon and
Mr. Vikram Kaushik are its members. Mr. Igor Garshin, Head of Chairmans Office, Sistema JSFC is Ex-Officio member and Mr. Bharat
Patel is the Chairman of the Committee. Mr. Vishal Kohli, Company Secretary is the Secretary of the Committee.
III. REMUNERATION TO DIRECTORS
The Company is not making any payment to the Non Executive Directors as remuneration except sitting fee i.e. Rs.20,000/- for each
meeting of Board and Committee attended.
The total annual remuneration of Mr. Dmitry Shukov, Whole Time Director designated as CEO for the financial year 2013-14 was
Rs.8.89 Cr as approved by the shareholders at the 18th Annual General Meeting held on 23.09.2013. Any additional payment if paid or
payable to Mr. Dmitry Shukov for the financial year 2013-14 shall be subject to the approval of the shareholders at the ensuing Annual
General Meeting.
IV.
DISCLOSURES
A.
Compliance with Laws

The Company is complying with all applicable laws with due diligence. No penalties or strictures were imposed on the Company
by Ministry of Corporate Affairs or any statutory authority on any matter related to Corporate laws.The Audit Committee
periodically reviews compliance reports of applicable laws as prepared by the management as well as steps taken by the
Company to rectify instances of non-compliance, if any.
B.
Related Party Transactions

The Company is upholding the unique system of getting prior approval of audit committee before executing any related party
transaction. It is an advance reporting of disclosure of related party transactions wherein all the material details of each
proposed related party transactions are placed before the Audit Committee with detailed justificationfor its prior approval.Further,
it is also ensured that the transaction with related parties are on arms length basis with due consideration of various business
exigencies such as synergy in operation and industry specialization, etc.The established processes applicable in the Company for
all kind of procurements are also equally applied to related party transactions.
C.
Code of Conduct
In compliance with the Code of Conduct for Board Members and Senior Management Personnel adopted by the Company, all the
Board Members and Senior Management Personnel have affirmed the compliance with the Code of Conduct for the financial
year ended March 31, 2014 by furnishing a certificate to this effect. A declaration to this effect signed by Mr. Vsevolod Rozanov,
Whole Time Director and Chief Executive Officer of the Company forms part of this report as Annexure - A.
D.
28
Other Disclosures
There is no Inter-se relationship between Directors of the Company.
V.
During the year there are no material financial and commercial transactions of senior management, where they may have
had personal interest, and which had potential conflict with the interest of the Company at large.
The Independent Directors have submitted a declaration confirming that they meet the criteria of independence and do not
have any material pecuniary relationship or transaction with the Company, its Promoters, Directors, Senior Management,
Holding Company or Subsidiary Company.
ENTERPRISE RISK MANAGEMENT (ERM)
All the clauses of Companies Act, 2013 relating to risk management became effective w.e.f. April 1, 2014. Existing Risk Management
Policy is amended to ensure compliance with the new Company Law and the policy is also reviewed and approved by the senior
management of the company. In addition, risk management continued taking new initiatives since re-defining the key risks portfolio
during first half of the year 2013. New risk portfolio is end to end aligned with the business objective of achieving the goal of OIBDA
break even. Key risks as part of the risk portfolio includes the possibility of delay in strategic alliances, uncertain regulatory environment,
fluctuations in foreign currency rates, possibility of non-compliances to regulatory requirements, threat of Cyber-crime, churn of high
ARPU customers etc. During the year ERM team continued reporting the ERM framework and its progress in various committees /
meetings i.e. BoD, Management Committee and Risk management Committee which in turn performed a detailed review and approval
of the key risks profile, risk mitigation plan for the key risks.
In addition, during the financial year 2013-14, Risk Management continued assisting in coordinating across functions for strengthening
controls, ensuring increased level of regulatory compliances and adding in analysis of key business risks. This resulted in strengthening
the risk and control framework and hence reducing the overall risk impact. Risk management team continued monitoring of various key
parameters reflecting increase / reduction of risk impact and also reported the results in Management Committee and BoD meetings.
In 2014-15, Risk management is planned to continue focus on risks which may threaten the existence of the organization in addition to
coordinating for mitigation of other key risks. it is also working towards automation; to further improve the accuracy and efficiency of
data analysis and predictive modeling in order to identify risks more precisely before its occurrence. ERM team is also consulting
various renowned external consultants to advice on methodology to be adopted to improve the Risk management at SSTL in general
and risk assessment in specific.
VI.
TRAINING OF BOARD MEMBERS
The Company believes that the Board must be continuously empowered with the knowledge of the latest developments in the
Companys business and the external environment affecting the industry as a whole.To this end, the Directors were given reports/
information/ presentations on the global business environment, as well as all business areas of the Company including business
strategy, risks and opportunities. Directors are also updated on changes / developments in the domestic / global corporate and industry
scenario including those pertaining to statutes / legislation and economic environment. Additionally, all new directors inducted into the
Board from time to time are given an orientation to familiarize them with the Operations, Financial Performance, Organizational
structure, Board Procedures, Code of Conduct and Process for Boards Self Appraisal.
VII. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs (MCA) released the Voluntary Guidelines on Corporate Governance in December 2009 and the
suggestions recommended in these Guidelines have been drawn from best practices. Your Company is always proactive in corporate
disclosures and statutory compliances; it is already compliant with some of the sections of these Guidelines. Regular efforts are made
by your Company to comply with the suggestions recommended in the guidelines to the extent possible.
VIII. CEO AND CFO CERTIFICATION
The CEO and CFO Certificate on the Annual Accounts and Internal Controls of the Company for the financial year ended March 31,
2014 is appended as Annexure B and forms an integral part of this Report. The requirement of obtaining and publishing this certificate
is applicable only for listed companies, however in its quest for establishing fair and transparent best practices the Company has
voluntarily taken this initiative.
IX. SHAREHOLDER AND GENERAL INFORMATION
A.
Means of Communication
Good Governance can only be achieved by timely disclosure of consistent, comparable, relevant and reliable information on corporate
financialperformance. The Company has established systems and procedures to disseminate relevant information to all its stakeholders.
The primary source of information regarding the operations of the Company is the corporate website: www.mtsindia.in. All official
press releases are posted on the Companys website. An analysis of the various means of dissemination of information in the year
under review is produced hereunder:
29
Quarterly Financial Results
Highlights of its quarterly financial results are published in all major news papers for the
knowledge and information of the shareholders. The press releases are also published on the
corporate website: www.mtsindia.in.
Press Releases
All press releases concerning the business operations of the Company and other media news
are also displayed on the corporate website: www.mtsindia.in.
Corporate Website
The corporate website www.mtsindia.in provides comprehensive information about the

Company. Apart from the press release, the following information are also uploaded on the
website of the Company and updated from time to time:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Annual Report
B.
Details of Shareholders
Shareholding Pattern
Profiles of Directors
Annual Reports
Corporate Governance Report
Code of Conduct for Board and Senior Management Personnel.
Boards Self Evaluation Process.
Memorandum & Articles of Association
Charter of Audit Committee
Notices of General Meetings
Minutes of General Meetings
Annual Reports are circulated to all the members and others like Auditors, Debenture Holders,
etc. The Annual Report is also available on the website of the Company.
Details of last 3 General Meetings

(i) Annual General Meetings
Year
Date & Time
Venue
Special Resolution Passed
2010-11
05.09.2011
11:00 A.M.
Hotel Marriott, Ashram Marg,

Near Jawahar Circle, Jaipur.
2011-12
28.09.2012
10.00 A.M
Hotel Fortune Select Metropolitan,

Near Nehru Sahkar Bhawan,
C-Scheme Bais Godam Circle, Jaipur
No Special Resolution was passed.
2012-13
23.09.2013
10.00 A.M

Near Nehru Sahkar Bhawan,
C-Scheme Bais Godam Circle, Jaipur
Appointment of Mr. Anton Abugov, as Director liable

to retire by rotation.
Appointment of Mr. Dmitry Shukov, as Director liable
to retire by rotation.
Appointment of Mr. Dmitry Shukov as Whole Time
Director Designated as Chief executive Officer and
approval of his remuneration.
Approval of payment of Long Term Incentive (LTI) to
Mr. Vsevolod Rozanov for the year 2011 & 2012.
Approval of payment of Performance Linked Incentive
(PLI) to Mr. Vsevolod Rozanov for the year 2012 and
for 5 months of 2013 (from January 2013 to May
2013).
30
Alteration in Main Object Clause of Memorandum of

Association of the Company.
Alteration in Articles of Association of the Company.
Increase in payment of Sitting Fee payable to
Independent Directors for attending the Board and
Committee Meetings.
Appointment of Relative of Director on an office/place
of profit.
Restoration of terms and conditions of remuneration
of Mr. Vsevolod Rozanov, Whole Time Director and
approval for payment of LTI.

ii) Extraordinary General Meetings
Year
Date & Time
2008-09
22.01.2009
10:30 A.M.
Venue
Special Resolution Passed

th
Hotel Pink Pearl 10 Mile, Mahapura,

Ajmer Road, Jaipur
2009-10
10.12.2009
11:00 A.M.

Near Nehru Sahkar Bhawan, C-Scheme
Bais Godam Circle, Jaipur.
2011-12
30.03.2012
11:00 A.M.
Hotel Marriott, Ashram Marg,

Near Jawahar Circle, Jaipur.
C.
Change in the name of the Company from Shyam

Telelink Limited to Sistema Shyam TeleServices Limited.
Appointment of Mr. Vsevolod Rozanov as Whole Time
Director of the Company and fixation of his
remuneration.
Offer, issue and allotment on preferential allotment
basis upto 22,85,94,900 equity shares to existing
promoter companies.
Offer, issue and allotment on preferential allotment
basis upto 66,27,45,100 to Federal Agency for State
Property Management (Rosimushchestvo) of Russian
Federation.
Alteration in Articles of Association of the Company to
incorporate the power to issue Preference Shares.
Authorisation to the Board to issue upto
6,000,000,000 preference shares.
Details of ensuing Annual General Meeting

Day: Tuesday; Date: September 30, 2014; Time:10:00 AM.
Venue: Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur 302006, Rajasthan, India.
D.
Financial Calendar
Accounting Year: April 01, 2013 to March 31, 2014.
E.
Share Capital
During the year ended March 31, 2014, the Board of Directors of your Company has allotted 3,433,500 0.01% Non Convertible
Non Cumulative Fully Redeemable Preference Shares to INSITEL Services Private Limited of Rs. 10/- each at a price of
Rs.10,000/- each (at a premium of Rs.9,990/-). As on March 31, 2014, the total Preference Share Capital of the Company consists
of 9,433,500, 0.01% Non Convertible Non Cumulative Fully Redeemable Preference Shares of Rs.10/-each.The allotment of
Preference Shares was done by the Directors at the meetings of Share Allotment Committee held from time to time, duly
authorised in this behalf.
F.
Shareholding Pattern as at March 31, 2014

EQUITY SHARE CAPITAL
Shareholding
Indian vs Foreign Shareholding
PREFERENCE SHARE CAPITAL
31

G.
Distribution of Shareholding as on 31.03.2014

A. Equity Share Capital
Category (Shares)
No. of Shareholders
% of Total Shareholders
No. of Shares
% of Total Shares
1 - 100
1317
7.29
57620
0.00
101 - 500
3797
21.01
1199340
0.04
501 - 1000
6072
33.60
4728888
0.15
1001 - 5000
5225
28.91
11280562
0.35
5001 - 10000
802
4.44
5671893
0.18
10001 - 20000
409
2.26
5573347
0.17
20001 - 30000
148
0.82
3551296
0.11
30001 - 40000
87
0.48
3001729
0.09
40001 - 50000
35
0.19
1572043
0.05
50001 - 100000
92
0.51
6458976
0.20
100001 - 500000
64
0.35
12963572
0.41
500001 and above
25
0.14
3137860734
98.24
18073
100.00
3193920000
100.00
% of Total Shareholders
No. of Shares
% of Total Shares
TOTAL:
B. Preference Share Capital

Category (Shares)
H.
No. of Shareholders
1 - 9433500
100
9,433,500
100
TOTAL
100
9,433,500
100
Categories of Shareholders as on 31.03.2014

A. Equity Share Capital
Category
(A)
(B)
(C)
PROMOTERS
Indian Promoters
Foreign Promoters
Federal Agency of State Property Management of Russian
Federation (Rosimushchestvo)
NON-PROMOTER
FIIs/NRIs/ Foreign Banks/OCBs
FIs/Mutual Funds/UTI/Banks/Body Corporates
Others
TOTAL
No. of Shares
766575760
1810289400
24.00
56.68
547312918
17.14
4224328
10086677
55430917
3193920000
0.13
0.32
1.74
100.00
B. Preference Share Capital

Category
(A)
Body Corporate (Indian)

INSITEL Services Private Limited
TOTAL
32
No. of Shares
9,433,500
100.00
9,433,500
100.00

I.
Physical Holding vs. Holding in Dematerialized Form:

As on 31st March, 2014, 99.96% of Shares are held in dematerialized form and the rest 0.04% in physical form. The Break-up
Physical vs. Demat shares is as listed below:
Category
No. of
Shareholders
PHYSICAL
% of total
Shareholders
No. of
Shares Held
% of
Shareholding
1,158
6.41
1,202,464
0.04
NSDL
12,559
69.49
3,174,119,329
99.38
CDSL
4,356
24.10
18,598,207
0.58
Total
18,073
100.00
3,193,920,000
100.00
DEMAT:
J.
International Security Identification Number (ISIN)

Security
ISIN
EQUITY SHARES OF RS. 10/- EACH
K.
INE159D01010
Address for Correspondence for Share Related Matters:

Karvy Computershare Private Limited (Registrar & Transfer Agent)
L.
Delhi Office:
Hyderabad Office:
Karvy Computershare Pvt. Ltd.

305, New Delhi House,
27 Barakhamba Road,
Connaught Place, New Delhi-110001
Tel No. : 011-43681700
Fax No. : 011-46381710
E-mail ID: delhi@karvy.com
Karvy Computershare Pvt. Ltd.

Plot No. 17-24, Vittal Rao Nagar,
Madhapur, Hyderabad-500081
Tel No. : 040- 44655000
Fax No. : 040-23420814
Toll Free No. : 1-800-3454001
Contact person : Mr. M. Murali Krishna
E-mail ID : einward.ris@karvy.com
Address for Investors Correspondence:

Company Secretary and Compliance Officer
Corporate Office:
Registered Office :
MTS India Towers, 334,
MTS Tower, 3, Amrapali Circle,
Udyog Vihar, Phase IV,
Vaishali Nagar,
Gurgaon -122001, Haryana
Jaipur-302021, Rajasthan
Email : cs.sstl@mtsindia.in
Email : cs.sstl@mtsindia.in
Ph : 0124-4812500
Ph : 0141-5100343
Fax No. : 0124-4812825
Fax No. : 0141-5100390
Note: The Corporate Governance Report states the facts/figures as of March 31, 2014.
33
ANNEXURE - A
ANNUAL DECLARATION BY CEO ON ADHERENCE TO THE
SSTLS CODE OF CONDUCT
I, Dmitry Shukov, Chief Executive Officer of Sistema ShyamTeleServices Limited (the Company) hereby confirm that the Company
has adopted a comprehensive Code of Conduct (Code) for its Board members and Senior Management Personnel and the Code is
available on the Companys website.
I hereby confirm that all the Board Members and the Senior Management Personnel of the Company have affirmed compliance with the
Code of Conduct of the Company for the financial year ended 31stMarch, 2014 by submitting Annual Compliance Certificate as
required in terms of the Code of Conduct adopted by the Company.
Sd/Dmitry Shukov
Chief Executive Officer
Place: Gurgaon
Date: September 2, 2014
ANNEXURE - B
CEO & CFO Certification
We, Dmitry Shukov, Chief Executive Officer and Sergey Savchenko, Chief Financial Officer of the Sistema Shyam TeleServices Limited
hereby certify that:
1.
We have reviewed the Financial Statements and Cash Flow Statement for the year ended 31st March, 2014 and to the best
of our knowledge and belief :
a)
these statements do not contain any materially untrue statement or omit any material fact or contain statements
that might be misleading;
b)
these statements together present a true and fair view of the Companys affairs and are in compliance with existing
Accounting Standards, applicable laws and regulations.
2.
To the best of our knowledge and belief, no transactions entered into by the Company during the year ended 31st March,
2014 are fraudulent, illegal or violative of the Companys code of conduct.
3.
We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated
the effectiveness of internal control systems of the Company pertaining to financial reporting.
4.
There has not been any significant change in internal control over financial reporting during the year under reference;
5.
There has not been any significant change in accounting policies during the year requiring disclosure in the notes to the
financial statements; and
6.
We are not aware of any instance during the year of significant fraud with involvement therein of the management or any
employee having a significant role in the Companys internal control system over financial reporting.
Sd/Dmitry Shukov
Chief Executive Officer

Place: Gurgaon
Date: September 2, 2014
34
Sd/Sergey Savchenko
Chief Financial Officer
ANNEXURE TO DIRECTORS REPORT

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended and forming part of the Directors Report of Sistema
Shyam TeleServices Limited for the Financial Year ended March 31, 2014
S.
No.
Name
Age
(in
years)
Designation
Annual Gross
Earnings (Rs.)
Qualification
Experience
Date of
Commencement
of Employment
Previous
Employment
PART A : Particular of Employeees who are in employment for whole year and in receipt of Annual Remuneration of Rs. 60.00 lacs or more
Yudhbir Singh
51
Head, Network Operations &
7,675,755
B.Sc
30
1-Apr-00
Shyam Communication Ltd. In
Deployment Department
2
T Narasimhan
60
Deputy CEO, Head Of Regulatory
49,212,060
PGDMM
35
1-Jan-08
Vihan Networks Ltd
Keshhav Tiwary
48
Head, Sales & CSD Operations
12,821,522
B.Sc./ M.B.A.
22
10-Jul-08
Reliance Communication Ltd
Neera Sharma
41
Head of Legal
MBA
17
16-Jul-08
Dishnet Wireless Ltd
Nikhil Shrivastava
39
10,910,853
B.E. ( Elect. & Tel Comm)
19
22-Aug-08
Nokia Siemens Networks
15,870,369
B.Sc
13
10-Dec-08
OJSC MTS
PhD in Economics, MBA
31
5-Sep-08
Financial Group Aton
Head, Network Operations &
8,093,781
Deployment Department
6
Elena Peretrukhina
38
Head, Business Reporting and

MIS Department
Sergey Savchenko
56
Deputy CEO, Chief Finance Officer
101,799,444
Leonid Musatov
42
Chief Commerce Officer
72,036,394
Degree in Ecomonics & Marketing/BMM
20
12-Jan-09
RVH. UK
Igor Kondaratskov
52
Advisor to CEO
21,113,695
B.E
29
10-Dec-08
LUKOM Agency
10
S Balagopal
55
Head, Supply Chain Management Department
PGDBA
31
9-Jan-09
Indo Rama Synthetics Ltd
11
S Suresh Kumar
45
Chief Operating Officer
12,670,439
MBA
22
9-Feb-09
Bharti Airtel Ltd
12
K V Ramachandra
52
13,163,390
B.Com, Masters of Management
30
6-Mar-09
Subhiksha
PGDEE
22
12-May-09
Ericsson India Pvt Ltd.
8,796,453
Studies
13
Bijender Singh Yadav
43
Head, Network Planning & Quality Department
8,390,206
14
Ashwani Kumar Khillan
45
Chief Technology Officer
15,136,058
B.E, MBA
24
19-May-09
Huwaie Technologies
15
Rajeev Batra
46
Chief Information Technology Officer
21,160,082
BE-Electronics/ B.Sc./ P.G.D.C.A.
22
1-Jul-09
RSB Consulting
16
Sandeep Yadav
43
Head, Data & Voice Business Line
12,008,740
BHM/DHM
21
22-Sep-09
Idea Cellular Ltd.
17
Akshay Lamba
36
Head,Enterprise Architecture & Business
PGDBA
15
23-Sep-09
AL-FUTTAIM TECHNOLOGIES
6,447,247
Enablement Dept
18
Tarun Katyal
45
Chief Human Resource & Admin Officer
19
Viraj Chouhan
40
Head, Corporate Communication
DUBAI UA
7,131,861
MBA
21
2-Feb-10
ADITYA BIRLA RETAIL LTD.
B.Sc./ P.G.Diploma in
16
22-Sep-10
COCA COLA INDIA
PGDIT
25
30-Sep-10
RELIANCE COMMUNICATIONS
6,256,633
MBA
20
12-Nov-10
UNINOR
11,888,437
MBA
24
5-Jan-11
Vodaphone (Srilanka)
10,844,143
Business Administration
20
Manoj Shrivastava
46
Head, Integrated Technology Department
8,244,723
21
NRKS Chakravarthy
40
Head, Business Transformation Department
22
Shankar Bali
48
23
Amitesh Krishna Rao
41
Head, Brand & Media Department
9,594,775
MBA
18
17-Jan-11
REDIFFUSION Y &R
24
Sandeep Marwaha
46
9,410,958
MBA
22
18-Jul-11
VODAFONE ESSAR SOUTH LTD
25
Ashish Dindayal Bhatia
43
9,098,085
MBA
21
1-Aug-11
TATA TELE SERVICES LTD
26
Sai Venkatakrishnan
46
Head, Marketing Department
6,768,375
PGDMM
22
30-Sep-11
RELIANCE COMMUNICATIONS
27
Ranjan Banerjee
44
Head, Strategy Function
13,813,345
PGDMM
19
21-Dec-11
TATA TELESERVICES LTD
28
Hitender Kumar
43
Acting Chief Operating Officer
5,813,143
EMBA
17
10-Jan-12
Vodaphone
29
Aasheesh Verma
48
7,896,682
BE
27
1-Mar-12
30
Radhakrishnan KV
46
Chief Operating Officer, Kerala
6,634,513
B.Sc
24
26-Mar-12
31
Ateev Chadda
38
Head, Business Development Department
10,141,123
MBA
13
1-Aug-12
RENAISSANCE CAPITAL
35
S.
No.
Name
Age
(in
years)
Designation
Annual Gross
Earnings (Rs.)
Qualification
Experience
Date of
Commencement
of Employment
Previous
Employment
PART B : Particular of Employeees who are in employment for part of the year and received monthly Remuneration of Rs. 5.00 lacs or more
1
Vsevolod Rozanov
43
President & CEO
Kozlov Valer y
58
Chief RE & Admin Officer
126,879,447
27,047,322
Degree in Economics
20
1-Oct-08
MTS Russia
MBA, Moscow Electrotechnical
34
1-Jul-08
MTS, Comstar
Institute of Communication
Elena Sidorina
45
Head, CEOs Office
12,705,701
MBA
21
27-Jan-09
Mobile TeleSistems
Pankaj Sharma
47
Regional Network Head
13,005,009
B.E/ME
24
10-Nov-08
Reliance Communication
Vladislav Pozdyshev
44
Chief OE & CE Officer
60,430,353
Degree in Economics/MBA
20
20-Jan-09
MTS Russia
Atul Joshi
51
Regional Chief Operating Officer
24,545,927
MA, MBA
28
9-Feb-09
Subhiksha
Vladimir Antimonov
35
Head, Project Office
33,521,498
Master in Finance
13
21-Apr-09
Filikiovlya LLE
Maxim Shafeev
41
Head, Financial Planning &
23,427,902
MBA
17
1-Jun-09
MTS Russia
25,459,125
L.L.B.
27
20-May-09
Reebok International Ltd
M.A.
18
12-Aug-09
VODAFONE ESSAR
Controlling Department
Arkady Kochetkov
53
Chief Legal & Corporate Governance Officer
10
Tapan Tripathi
37
Head, Voice Business Line
8,828,625
DIGILINK LIMITED
11
Srinivasaraghavan Seshadri
44
16,402,229
B.Tech, MBA
17
24-Sep-09
MOTOROLA INC
12
Kamal Kandoi
33
Head, Accounting & Tax Department
8,343,820
C.A.
13
9-Nov-09
FAIR ISAAC
13
Ajay Kapila
51
Head, MTS Retail Business Line
10,214,859
MBA
27
15-Mar-10
Samastha Business Dev Solution
14
Sunil K
43
Head, Smartphone Business Line
2,375,908
MBA
19
6-Apr-10
ETISALAT DB INDIA
15
Arvind Kumar
53
12,806,970
B.Com./ P.G.D.M.S.M
28
27-Aug-10
Reliance Communication Ltd.
16
Ashoo Sethi
44
10,492,785
B.Sc./ Diploma in Management/
22
21-Sep-10
VODAFONE
P.G.Diploma in Busin
17
Birinder Singh Jolly
46
Head, Regional Finance Department
6,417,540
MBA
24
1-Aug-11
SELF EMPLOYED
10,438,537
MBA
22
16-Aug-11
BHARTI AIRTEL LTD
6,950,578
C.A.
20
15-Nov-11
Aircel Ltd
2,016,673
PGDBA
23
14-Jun-12
INNOVASPHERE INFOTECH
25
17-Sep-12
D.S Holdings Moscow RU
22-Apr-13
OJSC MTS Counselor Department
(N&E Region)
18
Harpreet Singh Syali
47
Head, Enterprise Business Line
19
Rajkumar Bose
46
Head, Regional Finance Department

(S&W Region)
20
Aravind Santhanam
48
21
Maxim Gorokhov
49
Deputy Chief Executive Officer
18,715,979
B.TECH
22
Dmitry Shukov
45
CEO, MTS India
39,903,770
A.D.M.
of Foreign Subsidiary
23
Vijayakumar Raju
39
Head, Technology Strategy Department
2,940,035
M.Sc
16
10-Jul-13
24
Alexey Velts
44
Advisor
6,017,739
BE
10
5-Aug-13
RUS AUTO LLC MOSCOW RU
25
Konstantine D F Hionides
43
Head,Partnership & Innovation Department
7,135,726
MBA
17
1-Nov-13
Consultant
26
Timur Biktimirov
26
Head, Cyber Division
3,098,571
B.I.T
2-Dec-13
MTS Russia
Note:
1. All appointments are/were contractual in accordance with terms and conditions as per Company rules.
2. None of the above employees is a relative of any Director of the Company.
36
I N D E P E N D E N T A U D I TO R S R E P O RT
To
Opinion
The Members of SISTEMA SHYAM TELESERVICES

LIMITED
In our opinion and to the best of our information and according

to the explanations given to us, the aforesaid financial statements
give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
Report on the Financial Statements

We have audited the accompanying financial statements of
SISTEMA SHAYAM TELESERVICES LIMITED (the
Company), which comprise the Balance Sheet as at 31st March,
2014, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.
(a)
in the case of the Balance Sheet, of the state of affairs of

the Company as at 31st March, 2014;
(b)
in the case of the Statement of Profit and Loss, of the

loss of the Company for the year ended on that date; and
Managements Responsibility for the Financial

Statements
(c)
in the case of the Cash Flow Statement, of the cash

flows of the Company for the year ended on that date.
The Companys Management is responsible for the preparation

of these financial statements that give a true and fair view of the
financial position, financial performance and cash flows of the
Company in accordance with the Accounting Standards notified
under the Companies Act, 1956 (the Act) (which continue to
be applicable in respect of Section 133 of the Companies Act,
2013 in terms of General Circular 15/2013 dated 13th September,
2013 of the Ministry of Corporate Affairs) and in accordance
with the accounting principles generally accepted in India. This
responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair
view and are free from material misstatement, whether due to
fraud or error.
Report on Other Legal and Regulatory Requirements
Auditors Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the Institute
of Chartered Accountants of India. Those Standards require
that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the financial
statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers
internal control relevant to the Companys preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness
of the Companys internal control. An audit also includes
evaluating the appropriateness of the accounting policies used
and the reasonableness of the accounting estimates made by
the Management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
1.
As required by the Companies (Auditors Report) Order,

2003 (the Order) issued by the Central Government
in terms of Section 227(4A) of the Act, we give in the
Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.
2.
As required by Section 227(3) of the Act, we report that:
(a)
We have obtained all the information and explanations

which to the best of our knowledge and belief were
necessary for the purposes of our audit.
(b)
In our opinion, proper books of account as required by

law have been kept by the Company so far as it appears
from our examination of those books.
(c)
The Balance Sheet, the Statement of Profit and Loss, and

the Cash Flow Statement dealt with by this Report are
in agreement with the books of account.
(d)
In our opinion, the Balance Sheet, the Statement of Profit

and Loss, and the Cash Flow Statement comply with the
Accounting Standards notified under the Act (which
continue to be applicable in respect of Section 133 of
the Companies Act, 2013 in terms of General Circular
15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs).
(e)
On the basis of the written representations received

from the directors as on 31st March, 2014 taken on
record by the Board of Directors, none of the directors
is disqualified as on 31st March, 2014 from being
appointed as a director in terms of Section 274(1)(g) of
the Act.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firms Registration No. 015125N)
Place : Gurgaon
Date : June 26, 2014
Sd/Vijay Agarwal
Partner
Membership No: 094468
37
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report of even date)
Having regard to the nature of the Companys business/activities/

result during the year, clauses (xiii) and (xiv) of paragraph 4 of
the Order are not applicable to the Company.
to the information and explanations given to us, there

are no contracts or arrangements that needed to be
entered in the Register maintained in pursuance of
Section 301 of the Companies Act, 1956.
(i) In respect of its fixed assets:

(a)
The Company has maintained proper records showing

full particulars, including quantitative details and
situation of fixed assets.
(b) The Company has a program of verification of fixed

assets to cover all the items in a phased manner over
a period of three years which, in our opinion, is
reasonable having regard to the size of the Company
and the nature of its assets. Pursuant to the program,
certain fixed assets were physically verified by the
Management during the year. According to the
information and explanations given to us, no material
discrepancies were noticed on such verification.
(c)
(ii)
The Company is providing telecom services and does

not hold any inventories. Accordingly, clauses (ii)(a),
(ii)(b) and (ii)(c) of the Order are not applicable to the
Company.
The Company has neither granted nor taken any loans,
secured or unsecured, to/from companies, firms or
other parties covered in the Register maintained under
(iv)
In our opinion and according to the information and

explanations given to us, having regard to the
explanations that some of the items purchased are of
special nature and suitable alternative sources are not
readily available for obtaining comparable quotations,
there is an adequate internal control system
commensurate with the size of the Company and the
nature of its business for the purchase of fixed assets
and for rendering of services. There are no purchase
of inventories and sale of goods during the year and
during the course of our audit we have not observed
any continuing failure to correct major weaknesses in
such internal control system.
38
According to the information and explanations given

to us, the Company has not accepted any deposit from
the public during the year.
(vii)
In our opinion, the internal audit functions carried out

during the year by firms of Chartered Accountants
appointed by the Management have been
commensurate with the size of the Company and the
nature of its business.
(viii)
We have broadly reviewed the cost records maintained

by the Company pursuant to the Companies (Cost
Accounting Records) Rules, 2011 and prescribed by
the Central Government under Section 209(1)(d) of
the Companies Act, 1956 and are of the opinion that,
prima facie, the prescribed cost records have been made
and maintained. We have, however, not made a detailed
examination of the cost records with a view to
determine whether they are accurate or complete.
(ix)

to us, in respect of statutory dues:
The fixed assets disposed off during the year, in our

opinion, do not constitute a substantial part of the
fixed assets of the Company and such disposal has, in
our opinion, not affected the going concern status of
the Company.
(iii)
(v)
(vi)
To the best of our knowledge and belief and according
(a)
The Company has generally been regular in depositing

undisputed statutory dues, including Provident Fund,
Employees State Insurance, Income-tax, Sales Tax,
Wealth Tax, Service Tax, Customs Duty, Cess and other
material statutory dues applicable to it with the
appropriate authorities. We are informed that Excise
Duty is not applicable to the Company and the
Companys operations, during the year, did not give
rise to any liability for investor education and
protection fund.
(b) There were no undisputed amounts payable in respect

of Provident Fund, Investor Education and Protection
Fund, Employees State Insurance, Income-tax, Sales
Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Cess and other material statutory dues in arrears
as at March 31, 2014 for a period of more than six
months from the date they became payable.
(c)
Details of dues of Income-tax, Sales Tax, Wealth Tax

and Service Tax which have not been deposited as on
March 31, 2014 on account of disputes are given below:
Name of the Statute
Nature of
Dues
Period to which the

amount pertains
Amount (Rs in
Million)
Forum where the dispute

is pending
Income Tax Act, 1961
Income Tax
2010-11 and 2011-12
41
Commissioner of Income
tax (Appeal)
UP VAT Act, 2008
VAT
2009-10 and 2010-11
Assessing Officer
Kerala Commercial
Tax Act, 2003
VAT
2008-09 and 2011-12
Assessing Officer
Tamilnadu VAT Act, 2006
VAT
2013-14
27
High Court, Madras
Finance Act, 1994

(Service Tax Provisions)
Service
Tax
2008-09, 2009-10
and 2010-11
117
Custom, Excise, Service

Tax Appellate Tribunal
Finance Act, 1994

Service Tax
2011-12
Commissioner, Appeal
The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:
Name of the Statute
Nature of
Dues
Period to which the

amount pertains
Amount (Rs in
Million)

is pending
Income Tax
2008-09 and 2009-10
18
Income Tax Appellate

Tribunal (ITAT)
VAT
2007-08, 2008-09 and

2009-10
Tax Board/Tribunal
Rajasthan VAT Act, 2003
There are no dues of Customs Duty, Excise Duty and

Cess which have not been deposited as on March 31,
2014 on account of disputes.
(x)
The accumulated losses of the Company at the end of

the financial year are not less than fifty percent of its
net worth and the Company has incurred cash losses
during the financial year covered by our audit and in
the immediately preceding financial year.
(xi)

explanations given to us, the Company has not defaulted
in the repayment of dues to banks and interest to the
debenture holders. There is no loan repayment due to
other financial institutions.
(xii)

to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of
shares, debentures and other securities.
(xiii)
(xiv)
(xv)

to us, the Company has not given guarantees for loans
taken by others from banks and financial institutions.
explanations given to us, the term loans have been
applied by the Company during the year for the
purposes for which they were obtained.
explanations given to us, and on an overall examination
of the Balance Sheet of the Company, we report that
funds raised on short-term basis have, prima facie, not
been used during the year for long-term investment.

(xvi)
During the year the Company has not made any

preferential allotment of shares to the parties and
companies covered in the Register maintained under
(xvii)
In respect of debentures outstanding at the end of the

year, the Company has created charge on present and
future movable assets of the Company, however, the
creation of charge in respect of assignment of all Unified
Access Service License (UASL) is not done due to
cancellation of 21 out of 22 UASL. The Company has
requested the Debenture Trustee to waive the
condition relating to creation of charge in respect of
assignment of all UASL.
(xviii)

to us, during the period covered by our audit report,
the Company had not raised money by way of public
issues.
(xix)
To the best of our knowledge and according to the

information and explanations given to us, no fraud by
the Company and no material fraud on the Company
has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
(Firms Registration No. 015125N)
Place : Gurgaon
Sd/Vijay Agarwal
Partner
Membership No: 094468
39
BALANCE SHEET AS AT MARCH 31, 2014

(All amounts in Rupees million, except per share amounts unless stated otherwise )
As at
March 31, 2014
As at
March 31, 2013
3
4
32,033
(15,780)
16,253
31,999
(29,353)
2,646
Non-current liabilities
Long-term borrowings
Deferred payment liabilities
Other long-term liabilities
Long-term provisions
5
5.2
6
7
30,974
20,948
2,536
206
54,664
53,550
21,322
645
180
75,697
Current liabilities
Trade payables
Other current liabilities
Short-term provisions
8
9
10
4,010
7,679
2,012
13,701
84,618
5,464
8,545
1,592
15,601
93,944
11
11
34,412
34,973
86
8
4,847
486
74,812
33,412
36,245
405
8
4,514
896
75,480
399
5,660
3,157
590
9,806
84,618
300
14,128
3,160
876
18,464
93,944
Notes
Equity and liabilities

Shareholders funds
Share capital
Reserves and surplus
TOTAL
Assets
Non-current assets
Fixed assets
Tangible assets
Intangible assets
Capital work-in-progress
Non-current investments
Long-term loans and advances
Other non-current assets
12
13
14
Current assets
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets
15
16
17
18
TOTAL
See accompanying notes forming part of the financial statements
1 - 40
In terms of our report attached

For Deloitte Haskins & Sells
Firm Registration No. 015125N
Sd/Vijay Agarwal
Partner
Place : Gurgaon
40
For and on behalf of the Board of Directors
Sd/Dmitry Shukov
Whole Time Director & CEO
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014
For the Year
ended
March 31, 2014
For the Year

ended
March 31, 2013
19
20
11,876
576
12,452
12,043
264
12,307
21
3,448
988
15,604
20,040
(7,588)
6,670
5,402
(19,660)
3,947
1,104
16,701
21,752
(9,445)
9,189
4,344
(22,978)
(19,660)
(22,978)
(1,068)
(1,068)
(20,728)
(5,839)
(5,839)
(28,817)
(6.16)
(6.49)
(7.19)
(9.02)
(6.16)
(6.49)
(7.19)
(9.02)
Notes
Continuing Operations
Income
Revenue from operations (net)
Other income
Total revenue (I)
Expenses
Employee benefits expense
Revenue share (license fee and spectrum charges)
Other expenses
22
Total expenses (II)

Loss before interest, depreciation, amortisation and tax (I-II)
Finance costs
23
Depreciation and amortisation expenses
Loss before tax
Tax expenses
Current tax
Total tax expense
Loss after tax for the year from continuing operations (A)
Discontinuing operations
Loss before tax from discontinuing operations
Tax expense of discontinuing operations
26
Loss after tax for the year from discontinuing operations (B)
Loss for the year (A+B)
Loss per equity share [of Rs 10 each]
Basic
Computed on the basis of loss from continuing operations
Computed on the basis of total loss for the year
Diluted
Computed on the basis of loss from continuing operations
Computed on the basis of total loss for the year
29
1 - 40

Sd/Vijay Agarwal
Partner
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
Place : Gurgaon
41
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014
For the Year ended
March 31, 2014
For the Year ended

March 31, 2013
(19,660)
(22,978)
(1,068)
(20,728)
(5,839)
(28,817)
5,402
4,344
Cash flow from operating activities

Net loss before tax from continuing operations
Net loss before tax from discontinuing operations
Net loss before tax
Non-cash adjustment to reconcile loss before tax to net cash flows
Depreciation and amortisation on continuing operation
Depreciation and amortisation on discontinuing operation
645
1,142
Unrealised foreign exchange loss, net
16
32
Amortisation of finance set up charges
755
1,327
72
35
Loss on sale of fixed assets, net

Write-off of assets
Interest expense and other finance charges
Interest Income
Operating loss before working capital changes
68
539
5,695
7,592
(574)
(8,649)
(340)
(14,146)
(1,469)
(1,320)
28
239
Movements in working capital

Increase/(decrease) in trade payables
Increase/(decrease) in long-term provisions
Increase/(decrease) in short-term provisions
420
391
(828)
(219)
Increase/(decrease) in other long-term liabilities
(73)
(73)
Decrease/(increase) in trade receivables
(98)
316
(288)
(2,372)
19
1,944
155
(10,783)
(150)
(10,933)
(206)
(15,446)
(50)
(15,496)
(2,203)
(272)
36
16
532
1,370
(2,609)
(1,329)
31
15
318
(1,370)
(4,261)
5,872
1,090
(3,857)
2,203
(6,598)
Increase/(decrease) in other current liabilities
Decrease/(increase) in long-term loans and advances

Decrease/(increase) in short-term loans and advances
Decrease/(increase) in other current assets
Cash used in Operations
Direct tax paid
Net cash flow used in operating activities (A)
Cash flow from investing activities
Purchase of fixed assets, capital work in progress
Purchase of intangible assets
Proceeds from sale of intangible assets
Proceeds from sale of fixed assets
Interest received
Margin money deposit
Bank balances not considered as cash and cash equivalents
-Placed
-Matured
Net cash flow from/ (used in) investing activities (B)
42
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014
For the Year ended
March 31, 2014
For the Year ended

March 31, 2013
34,335
60,000
1,775
12,814
(27,794)
(12,468)
Proceeds from short-term borrowings
1,195
Repayment of short-term borrowings
(26,011)
(173)
(850)
66
(3,786)
4,357
(5,486)
(7,731)
27,015
4,921
9,019
3,533
4,098
9,019
Cash on hand (refer note 36)
Cheques/ Drafts on hand
Balances with banks in current accounts
62
348
Balances with banks in deposit account:
3,469
3,533
8,667
9,019
Cash flow from financing activities

Proceeds from issuance of preference shares
Proceeds from long-term borrowings
Repayment of long-term borrowings
Payment of finance setup cost

Release of debt securitisation reserve from bank
Interest paid
Net cash flow from financing activities (C)
Net increase in cash and cash equivalents (A+B+C)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
Components of cash and cash equivalents
Total cash and cash equivalents (note 16)

1 - 40

Sd/Vijay Agarwal
Partner
Place : Gurgaon
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
43
Notes to financials statements for the year ended 31 March 2014

(All amounts in Rs million, except per share amounts unless stated otherwise)
1.
Background
(a)
Corporate Information
Sistema Shyam TeleServices Limited (the Company or SSTL), was incorporated on 20 April 1995.During financial year 200708, Joint Stock Financial Corporation SISTEMA (SISTEMA) of Russia acquired the controlling stake in the Company and the
Company became subsidiary of SISTEMA. During 2010 - 11, the Company had allotted 547,312,918 equity shares on preferential
basis to The Federal Agency for State Property Management (Rosimushchestvo) of Russian Federation. As at 31 March 2014,
SISTEMAs shareholding is 56.68% and continues to be the holding company of SSTL.
The Company had entered into a license agreement with OJSC Mobile Tele Systems, to use MTS brand in India. The Company
commenced commercial operations on 26 March 2009 under the MTS brand name.
(b)
Licence and Spectrum

The Company was awarded Basic Telephony Service License by Department of Telecommunications (the DoT) on 4 March
1998 for the Rajasthan service area. In accordance with the DoT guidelines on Unified Access (Basic and Cellular) Services
License (UAS) dated 11 November 2003, the Company migrated to the UAS with effect from 14 November 2003. Further, on
12 December 2007, DoT allotted GSM spectrum in Rajasthan Circle under the original terms of the UAS agreement.
On 25 January 2008, the Company acquired UAS for 21 telecom circles, thus becoming licensee to provide its services across
the country.
The Honble Supreme Court vide its judgment dated 2 February 2012 cancelled 21 licenses allotted to the Company in January
2008. The Company participated in Spectrum Auction conducted by DoT in March 2013 and won the Right to Use of
Spectrum in eight Telecom Circles of India namely Delhi, Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, Uttar Pradesh (West)
and West Bengal for a period of 20 years at a bid price of Rs 36,395. The DoT has allowed set-off of the License Entry Fees
of Rs 16,263 paid by the Company in 2008 as upfront payment against the bid price and allowed the balance amount of Rs 20,132
to be paid in accordance with deferred payment plan opted by the Company as per terms and conditions of the auction.
On 3 October 2013 the DoT has issued Unified License - Access Services to the Company for eight telecom circles for
20 years. On 9 October 2013, the DoT has allotted the right to use spectrum in eight telecom circles for 20 years as per terms
of auction.
(c)
Scheme of arrangement
On 18 May 2006, the Honble High Court of Rajasthan had approved the Scheme of Arrangement between Shyam Telecom
Limited (STL), Shyam Telecom Manufacturing Limited (STML), SSTL and Shyam Basic Infrastructure Projects Private Limited
(SBIPL) (petitioner Companies) (hereinafter referred to as the Scheme).
As per the Scheme, on 26 October 2006, the Company had transferred the equity shares held in the Company by STL. Further
the Scheme envisaged SSTL to be listed in the Bombay Stock Exchange and National Stock Exchange (the stock exchanges).
The Honble High Court of Rajasthan, vide its order dated 7 August 2008, ordered that the Company shall within a maximum
period of 18 months from the date of the order initiate the process of listing the shares representing the issued capital of the
Company by adopting such route as may be permissible in law and shall carry out such compliance as may be required in law
including that of offering a specified percentage of the shares to the Public, for subscribing thereto, through book building
process, in the manner provided for under SEBI (DIP) Guidelines, 2000 and upon such steps being taken, BSE may issue such
order that may be required in law and as may be necessary for securing the said listing.
In the Board of Directors meeting held in December 2009, the Company has formed an IPO and Listing Committee to review
the progress, accord necessary approvals, provide guidance and directions in the matter of the listing of equity shares of the
Company and to initiate such further steps pursuant to directions issued by the Honble High Court of Rajasthan on 7 August
2008 as may be necessary. Further, the Board of Directors in the meeting held on 11 March 2010, has approved the appointment
of agencies recommended by the management of the Company as first merchant bankers for IPO purposes.
On 2 February 2012, Honorable Supreme Court of India had ordered to cancel 21 licenses of the Company acquired in January
2008. On 5 March 2012, the Board of Directors of the Company had reviewed the regulatory and legal developments and issues
and its impact on the IPO and listing plan of the Company and decided to continuously monitor the situation and review the
matter as and when the regulatory environment on telecom licenses and spectrum is clear and stabilized. After the fresh
spectrum auction held in 11 March 2013, the Company has acquired the right to use spectrum for 8 telecom circles. Pursuant
to the acquisition of fresh Unified Licenses for the 8 circles, the Company is in the process of restructuring its business
operations across India. Though the Company had initiated process of listing but since the listing of the shares is also driven by
market forces and business conditions as well as procedural factors, the same may result in unavoidable delay(s) which is
beyond the control of the Company.
44
2.
Basis of preparation
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles
in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956
(Accounting Standards) Rules, 2006 (as amended) (the Act) (which continue to be applicable in respect of Section 133 of the
Companies Act, 2013 (the 2013 Act) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of
Corporate Affairs) and the relevant provisions of the Companies Act 2013, as applicable. The financial statements have been
prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the previous year.
Based on the nature of activities of the Company and the normal time between acquisition of assets and their realization in cash
or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets
and liabilities as current and non-current.
2.1)
Summary of significant accounting policies
(a)
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles in India requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these
estimates are based upon managements best knowledge of current events and actions, actual results could differ from these
estimates.
(b)
Tangible assets
Tangible assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price
including taxes and duties (net of cenvat credit) and any attributable cost of bringing the asset to its working condition for its
intended use. Capital spares / standby equipment are capitalised as part of the respective main assets, to which they relate to.
Any expenditure on upgradation of existing assets resulting in increase in their capacity and the benefits expected there from
beyond its previously assessed standard of performance is capitalised. All expenditure including capital inventory are shown as
capital work-in-progress until the assets are ready for commercial use. Capital work-in-progress is stated at cost less
provisions for slow moving / obsolete items, if any.
In respect of accounting periods commencing on or after 7 December 2006 exchange differences arising on reporting of the
long term foreign currency monetary items at rates different from those at which they were initially recorded during the
period, or reported in the previous financial statements are added to or deducted from the cost of the asset and are
depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable fixed asset.
Provision for slow moving and obsolescence related to capital work-in-progress is made based upon the ageing of the
capital assets and a periodic technical evaluation undertaken by the Company.
(c)
(i)
Depreciation
Tangible assets are depreciated pro rata from the date on which the asset is ready for commercial use on a straight line method,
based on the following estimated useful economic lives of assets:
(ii)
Useful Life (in years)

Leasehold land
Over the period of the lease
Leasehold improvements
Over the period of the lease or 10 years, whichever is lower
Building
20
Plant and equipment
3 to 20
Optical fibre and copper cable network
20
Network interface units
1 to 3
Computers
3
Furniture and fixtures
6
Office equipment
6
Vehicles
5
(iii)
Depreciation rates derived from the above are not less than the rates prescribed under Schedule XIV of the Companies Act,
1956.
(iv)
Depreciation on the amount capitalised on upgradation of existing assets is provided over the remaining useful lives of the
original assets.
(v)
Fixed assets individually costing less than Rs 5 thousand are fully depreciated in the year of acquisition.
45
(d)
(e)
(f)
(g)
(h)
(i)
(ii)
(iii)
(i)
46
Intangible assets
Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. At initial recognition, the
separately acquired intangible assets are recognised at cost. Following initial recognition, the intangible assets are carried at
cost less any accumulated amortisation and accumulated impairment losses, if any.
Indefeasible right to use (IRU) is amortised on straight line basis over the period of the agreement.
Software, which is not an integral part of hardware, is treated as an intangible asset and is amortized over its useful economic
life of 5 years.
The License entry fee has been recognized as an intangible asset and is amortised over the remainder of the license period of
20 years from the date of commencement of commercial operations. Fees paid for migration of the original licenses to the UAS
is amortised over the remainder of the license period of 20 years from the date of migration to UAS.
Licence fee paid for use of GSM spectrum under the existing UAS licence has been amortized over the remainder of the original
licence on straight line method.
The Right to Use Spectrum is recognized as an intangible asset and is amortised over the period of 20 years from the date of
allocation of spectrum.
Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal
and external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value at the pre-tax discount rate. After impairment, depreciation
is provided on the revised carrying amount of the assets over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the
carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation
if there was no impairment.
Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments;
all other investments are classified as long-term investments. Current investments are carried at lower of cost and fair market
value. Long-term investments are carried at cost, except the cost of investments acquired or partly acquired by the issue of
shares or other securities, which is the sum total of the fair value of the securities issued and other acquisition costs. Provision
for diminution in value of long-term investments is made to recognize a decline other than temporary in the value of the
investments.
Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and cash in hand and short term
investments with an original maturity of three months or less.
Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and nonmonetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using
the exchange rates that existed when the values were determined.
Exchange difference
Exchange differences, in respect of accounting periods commencing on or after 7 December 2006, arising on reporting of longterm foreign currency monetary items at rates different from those at which they were initially recorded during the period, or
reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, are added to
or deducted from the cost of the asset and are depreciated over the balance life of the asset.
Exchange differences arising on the settlement of monetary items or on reporting such monetary items of the Company at
rates different from those at which they were initially recorded during the year, or reported in previous financial statements,
are recognized as income or as expenses in the year in which they arise.
Finance set up costs
Finance set-up cost, including financial fees and cost of arranging and restructuring loans, is amortized over the period of the
(j)
(i)
(ii)
(iii)
(k)
(i)
(ii)
(iii)
(iv)
(l)
loan or five years, whichever is lower, commencing from the date of the first draw-down of the related loan, on a straight-line
basis.
Revenue recognition and receivable
Service revenue
Service revenues are recognized as services are rendered and are net of discounts and waivers. Unbilled revenues resulting
from Unified Access Services provided from the billing cycle date to the end of month is recorded based on billing system
reports. Revenue from the sale of prepaid cards is recognised when the customer uses the services or the card expires,
whichever is earlier. Payment received from customers for sale of prepaid cards in excess of revenue recognised is deferred.
Processing fees on recharge coupons on introduction of new prepaid products, is being recognized over the estimated
customer relationship period or coupon validity period, whichever is lower.
Revenue from infrastructure services is recognized as services are rendered, in accordance with the terms of the related
contracts.
Indefeasible right of use contracts are accounted for as operating lease and revenue is recognized over the term of lease.
Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head other income in the statement of profit and loss.
Provision for doubtful debts
Receivables are stated net of provision for doubtful debts. The Company provides for entire outstanding net of security deposit
for active subscribers whose outstanding is more than 90 days, deactivated customers or in specific cases, where management
is of the view, that the amount for certain customers are not recoverable.
For receivables due from other operators on account for lease line revenue, infrastructure revenue and interconnection usage
revenue, the Company provides for amount outstanding for more than 180 days from the date of billing net of any amounts,
payable to the operators, or in specific cases, where management is of the view that the amounts for these customers are not
recoverable.
Retirement and other employee benefits
Short-term employee benefits
Short term employee benefits are recognized in the year during which the services have been rendered.
Long-term employee benefits
Defined contribution plan
Provident fund and employees state insurance schemes
All employees of the Company are entitled to receive benefits under the provident fund, which is a defined contribution plan.
Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employees basic
salary. These contributions are made to the fund administered and managed by the Government of India. In addition, some
employees of the Company are covered under the employees state insurance schemes, which are also defined contribution
schemes recognized and administered by the Government of India.
The Companys contributions to both these schemes are expensed in the statement of profit and loss. The Company has no
further obligations under these plans beyond its monthly contributions..
Other long term employee benefit
Compensated absences
The Company has provided for the liability at year end on account of unavailed earned leave as per the actuarial valuation as per
the Projected Unit Credit Method.
Defined benefit plan
Gratuity
The Company provides for gratuity obligations through a defined benefit retirement plan (the Gratuity Plan) covering all
employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment
based on the respective employee salary and years of employment with the Company. The Company provides for the gratuity
plan based on actuarial valuations in accordance with Accounting Standard 15 (revised), Employee Benefits. The Company
makes annual contributions to the Life Insurance Corporation of India (LIC) for the gratuity plan in respect of its employees.
Actuarial gains and losses are recognized in the Statement of profit and loss as and when incurred.
Borrowing costs
Borrowing costs attributable to the acquisition or construction of those fixed asset which necessarily take substantial period
to get ready for their intended use, including interest attributable to the funding of license fees with respect to new circles up
47
(m)
(n)
(o)
(p)
(q)
(i)
(ii)
(r)
(s)
48
to the date of commencement of commercial operations, are capitalized as a part of the cost of that asset. Other borrowing
costs are recognized as an expense in the period in which they are incurred.
Asset Retirement Obligations (ARO)
Asset retirement obligations are provided for when it is probable that an outflow of resources will be required to settle the
obligation and a reliable estimate of the amount can be made.
License Fees Revenue Share
The Revenue-share fee on license is computed as per the licensing agreement at the prescribed rate and is expensed as
incurred.
Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Income Tax Act 1961. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be realized. If the Company has carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognized only if there is virtual certainty that such deferred tax assets can
be realized against future taxable profits. Unrecognized deferred tax assets of earlier years are re-assessed and recognized to
the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax
assets can be realized.
Earning per share
The earnings considered in ascertaining the Companys Earnings per Share (EPS) comprise the net profit / loss for the year.
The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year. The
weighted average number of equity shares outstanding during the year are adjusted for event of bonus element in a rights issue
to existing shareholders.
The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for
deriving basic earnings per share, and also the weighted average number of shares, if any which would have been used in the
conversion of all dilutive potential equity shares.
Leases
Where the Company is lessee
Leases under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating
leases. Lease payments under operating leases are recognized as an expense in the Statement of profit and loss on a straightline basis over the lease term.
Where the Company is lessor
Assets subject to operating leases are included in fixed assets. Lease income on operating lease is recognised in the Statement
of profit and loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the
Statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the
Statement of profit and loss.
Segment reporting
Identification of segment
The Companys operating business is organised and managed according to the nature of services. The analysis of geographical
segment is based on the area in which the Company operates.
Provisions and Contingencies
A provision is recognised when the company has a present obligation as a result of past event, it is more likely than not that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the
current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present
obligation that is not recognised because it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Information on
contingent liabilities is disclosed in the notes to the financial statements, unless the possibility of an outflow of resources
embodying economic benefits is remote.
3.
Share Capital
Authorised shares
6,000,000,000 [2013 - 6,000,000,000] Equity Shares of Rs. 10/-each
6,000,000,000 [2013- 6,000,000,000] Preference Shares of Rs. 10/-each
Issued, subscribed and fully paid-up shares
3,193,920,000 [2013-3,193,920,000] Equity Shares of Rs. 10/- each
9,433,500 [2013 - 6,000,000] 0.01% Redeemible Non Convertible Non
Cumulative Preference Shares of Rs 10/- each
a)
31 March 2014
31 March 2013
60,000
60,000
60,000
60,000
31,939
31,939
94
32,033
60
31,999
Shares held by holding company and fellow subsidiaries:

Out of equity and preference shares issued by the Company, shares held by its holding company and its subsidiaries are as
below:
31 March 2014
31 March 2013
SISTEMA JSFC, the holding company

1,810,289,400 [2013- 1,810,289,400] equity sharesof Rs 10 each
18,103
18,103
INSITEL Services Private Limited, subsidiary of the holding company
9,433,500 [2013 - 6,000,000] 0.01% Redeemable Non Convertible Non
Cumulative Preference Shares of Rs 10 each
b)
60
Details of shareholders holding more than 5% shares in the Company
Name of the Shareholders

Equity shares of Rs. 10/- each fully paid
Sistema JSFC, the holding company
Russian Federation
Intell Invofin India Pvt. Ltd.
A T Invofin India Pvt. Ltd.
Cellphone Credit & Securities India Pvt Ltd.
Name of the Shareholders

0.01% Redeemable Non Convertible Non
Cumulative Preference Shares of Rs 10/- each
INSITEL Services Private Limited
c)
94
31 March 2014
No.
% holding
millions
in the class
1,810
547
350
175
175
57
17
11
5
5
31 March 2014
No.
% holding
millions
in the class
100
31 March 2013
No.
% holding
millions
in the class
1,810
547
350
175
175
57
17
11
5
5
31 March 2013
No.
% holding
millions
in the class
100
The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity Shares is entitled
to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares
held by the shareholders.
d)
Reconciliation of the shares outstanding at the beginning and at the end of the reporting period.
Equity Share
At the beginning of the year
Issued during the year
Outstanding at the end of the year
31 March 2014
No.
Rs.
millions
millions
3,194
31,939
3,194
31,939
31 March 2013
No.
Rs.
millions
millions
3,194
31,939
3,194
31,939
49
Preference Shares
e)
31 March 2014
31 March 2013
No. millions
Rs. millions
No. millions
Rs. millions
At the beginning of the year
60
Issued during the year
34
60
Outstanding at the end of the year
94
60
Terms of redemption of Non Cumulative Non-convertible Preference Shares

During the year ended 31 March 2014, the Company issued 3,433,500 (Previous year 6,000,000) Non Cumulative Nonconvertible Redeemable Preference Shares (RPS) of Rs 10 each fully paid-up at a premium of Rs 9,990 per share in multiple
tranches. Non Cumulative Non-convertible Preference Shares carry non-cumulative preferential dividend @ 0.01% p.a.
The RPS are redeemable upon the completion of ten years from the date of issue at the redemption premium as mentioned
below:Tranches amount (Rs)
Redemption premium (p.a)
43,900,000,000
9.77%
30,888,000,000
9.63%
4,074,300,000
9.80%
15,472,700,000
9.87%
Further, any variation (extension or reduction) in the tenure is subject to the mutual agreement of both parties and extension
shall not exceed twenty years from the date of issue.
On 3 March 2014 the Company has filed an application for increasing the foreign direct investment in the Company beyond 74%
and is awaiting approval from Foreign Investment Promotion Board (FIPB) for the same.
INSITEL Services Private Limited has given consent to convert the above preference shares into equity shares of the Company
at the option of the Company. The terms and conditions shall be agreed subject to seeking necessary approvals and fulfilling
other compliance requirements,
4)

Capital reserve (refer note 36)
Security premium account
Balance as per last financial statements
Additions during the year
Closing Balance
Deficit in the statement of profit and loss
Balance as per last financial statements
Loss for the year
Net deficit in the statement of profit and loss
Total reserve and surplus
31 March 2014
31 March 2013
81,455
34,301
115,756
21,515
59,940
81,455
(110,808)
(20,728)
(131,536)
(15,780)
(81,991)
(28,817)
(110,808)
(29,353)
Debenture redemption reserve

As required by Section 117C of the Companies Act, 1956, read together with General Circular No. 9/2002 dated 18 April 2002
issued by the Ministry of Corporate Affairs, Government of India, the Company has not created Debenture Redemption
Reserve due to insufficiency of profit during the year.
50
5.
Long-term borrowings
Particulars
Non-Current Portion
Current Maturities
31 March 2014
31 March 2013
31 March 2014
31 March 2013
12,800
12,800
1
18,173
30,974
21
9,400
18,838
12,491
53,550
20
4,332
4,352
59
3,926
3,985
12,801
18,173
-
12,821
40,729
-
20
4,332
(4,352)
59
3,926
(3,985)
30,974
53,550
Debentures
15.75% Redeemable, 1,280 Non-Convertible
Debentures of Rs. 10,000,000 each (Secured)
Term Loans
Indian Rupee loans from Others (Secured)
Indian Rupee loans from Banks (Unsecured)
Foreign Currency loans from Banks (Unsecured)
Foreign Currency loans from Holding Company (Unsecured)
Total
Above amounts include:
Secured Borrowings
Unsecured Borrowings
Amount disclosed under the head Other Current Liabilities
(Refer note 9)
Net amount
5.1
Long-term loans
a)
15.75% Secured, Redeemable, Non-Convertible Debentures are redeemable at par as follows:

Period of Redemption
4 equal quarterly
day from the 5th
4 equal quarterly
day from the 6th
4 equal quarterly
day from the 7th
b)
c)
d)
e)
f)
Amount to be Redemmed
installments commencing from 90th

anniversary from date of allotment
25% of the face value of Debentures

The Company has an option to redeem all of the Debentures earlier than the above stated dates; however no redemption will
take place before the end of fifth year from the date of allotment i.e. 4 January 2012. These Debentures are secured by first
priority pari passu charge and hypothecation over all of the present and future movable assets of the Company and all of the
Companys estate, rights, title, interest, property, benefit, claim and demand in, to, under and in respect of, such movable assets
other than those covered in (b) below. The Debentures were to be further secured by way of assignment of all the Unified
Access Service Licenses (UAS Licenses) issued by the DoT. However, while the said assignment was pending, 21 out of the
22 UAS Licenses of the Company were quashed by the judgment of the Honble Supreme Court of India (Refer Note 1 (b)
above). Consequently, the Company has requested to the Debenture Trustee to waive the condition and is confident to receive
the same. (Refer note 4 for Debenture Redemption Reserve due to insufficiency of profit.)
Secured Indian rupee loan from others is secured against first and exclusive charge of the assets financed by the lender and is
repayable in five years in equal quarterly installments from their respective disbursement date.
Foreign currency loans from banks carries interest @ 6 months LIBOR plus mark up from 1.25% p.a. to 3.50% p.a. All the
foreign currency loans are secured by corporate guarantee of Sistema JSFC, the holding Company and are repayable after
moratorium period ranging from thirty to thirty six months from the first utilization date / respective facility agreement date
in ten to twelve equal half yearly installments.
Unsecured foreign currency loan from the holding company which was carrying interest @ 3 months LIBOR plus mark up of
2.50% p.a. has been prepaid in full in March 2014.
Unsecured Indian rupees loans have been prepaid during the year. Out of these, one loan of Rs 4,600 was carrying interest
@13.25% p.a. while other loan of Rs 4,800 was carrying interest @ 13% p.a.
Summary of Repayment Terms
Particulars
Secured
1 to 2 years
1
Loan repayable in
3 to 5 years
8,960
After 5 years
3,840
Unsecured
4,586
12,020
1,567
51
5.2

Amount disclosed under Other Current Liabilities (Refer Note 9)
31 March 2014
20,997
(49)
20,948
31 March 2013
21,369
(47)
21,322
a)
During March 2013, the Company acquired Right to Use of Spectrum in eight Telecom Service Areas in the auction carried out
by DoT. As per the terms of the auction, the Company opted for deferred payment option for payment of the final bid price.
After adjusting upfront payment, the Company has recorded the balance amount payable over the deferred payment period as
deferred payment liability. The Company is required to pay interest @ 9.75% p.a. over the balance amount. There is a
moratorium of 2 years for payment of balance amount which shall be payable in 10 equal annual installments commencing from
the third anniversary of the scheduled date of first payment. As per the terms of the deferred payment option, the Company has
issued financial bank guarantee to DoT equal to one annual installment of Rs 3,904 to secure the annual installment. The amount
payable to DoT as at 31 March 2014 is Rs 20,132 (2013 20,132).
b)
The Company had entered into contracts with certain vendors for supply of network equipment and rendering of services on
deferred payments terms. On transfer of title and risk of the supplies and rendering of services as per the terms of the
respective vendor contracts, the Company has recorded the liabilities payable over the respective deferred payment period as
Deferred Payment Liabilities (DPL). As per the arrangement with the vendors supplying network equipment, DPL to the extent
of Rs 816 (2013 Rs 1,188) shall be paid through the buyers credit facilities arranged by the vendors. DPL in respect of vendor
payment do not carry any interest until converted into buyers credit. The amount payable to the Vendors as at 31 March 2014
is Rs 865 (2013 Rs 1,237).
6)
Other long-term liabilities

Unaccrued revenue
Interst accrued but not due
Lease equilisation reserve
Other employee benefits
Others
7)
31 March 2014
78
1,990
86
381
1
2,536
31 March 2013
80
27
140
397
1
645
31 March 2014
177
29
206
31 March 2013
149
31
180
Long-term provisions
Compensated absences
Asset retirement obligation
Employee Benefits:
Defined Benefit Plans
The employees gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value
of obligation is determined based on actuarial valuation using Project Unit Credit Method (PUC). The plan liability is the
actuarial present value of the projected accrued benefits as of the beginning and end of the period for active members.
Net gratuity expense recognized for the year ended 31 March 2014 and 31 March 2013 are as follow:
Particulars
Current service cost
Interest cost
Expected Return on plan assets
Actuarial (gain) / loss
Net Cost
Actual Return on Plan Assets
Actual Rate of Return on Plan Asset
52
31 March 2014
36
9
(8)
(1)
36
8.75%
31 March 2013
38
6
(6)
(3)
35
7
9.53%
Long term employee benefits:
Compensated absences expense recognized in salaries, wages and bonus for the year ended 31 March 2014 and 31 March 2013
are as follow:
Particulars
31 March 2014
31 March 2013

52
58
Interest cost
13
10
Actuarial loss
28
15
Net Cost
93
83
i)
The assumptions used to determine the benefit obligations are as follows:
(a) Gratuity
31 March 2014
8.00%
8.40%
9.25%
Discount Rate
Expected Rate of increase in compensation levels
Expected rate of return on assets
Retirement age (Years)
Mortality table
Ages
Up to 30 Years
From 31 to 44 years
Above 44 years
(b) Compensated absences
Particulars
Discount rate
Expected rate of increase in compensation levels
ii)
31 March 2013
8.00%
8.00%
9.25%
58
58
IALM (2006 - 08)
Withdrawal Rate (%)
Withdrawal Rate (%)
3.00
3.00
2.00
2.00
1.00
1.00
31 March 2014
8.00%
8.40%
31 March 2013
8.00%
8.00%
Retirement age (Years)

58
58
Mortality table
IALM (2006 - 08)
Ages
Withdrawal Rate (%)
Withdrawal Rate (%)
Up to 30 Years
3.00
3.00
From 31 to 44 years
2.00
2.00
Above 44 years
1.00
1.00
The principal assumptions are discount rate and salary growth rate. The discount rate is generally based upon the market
yields available on Government bonds at the accounting date with a term that matches the liabilities and the salary growth
rate takes account of inflation, seniority, promotion and other relevant factors on long term basis.
The expected rate of return on plan assets was based on the average long-term rate of return expected to prevail over
the next 15 to 20 years on the investments made by the LIC. This was based on the historical returns suitably adjusted for
movements in long-term government bond interest rates. The discount rate is based on the average yield on government
bonds of 20 years.
Reconciliation of opening and closing balances of obligations and plan assets
(a) Gratuity
Particulars
Change in Projected Benefit Obligation (PBO)
PBO at beginning of year
Interest cost
Benefits paid
Actuarial (gain) / loss
Projected benefit obligation at year end
Change in plan assets:
Fair value of plan assets at beginning of year
Expected return on plan assets
Actuarial gain / (loss)
Employer contribution
Claim paid from Fund
Fair value of plan assets at year end
Net funded Status of the plan
Net amount recognised as liability - current
31 March 2014
31 March 2013
116
36
9
(13)
(9)
139
78
39
6
(5)
(2)
116
83
8
(8)
9
(13)
79
60
60
71
5
(2)
7
(1)
74
42
42
53
Experience history - amount for the current and previous four years are as follows:
Gratuity
31 March
31 March
31 March
2014
2013
2012
Defined benefit obligation
139
116
78
Plan assets
79
74
67
Deficit
(60)
(42)
(11)
Experience adjustments on plan liabilities
17
3
10
Experience adjustments on plan assets
(8)
(2)
(2)
(b) Compensated absences
Particulars
iii)
iv)
31 March
2011
57
20
(37)
(2)
(1)
31 March 2014
31 March
2010
52
(52)
(3)
-
31 March 2013
Change in Projected Benefit Obligation (PBO)

PBO at beginning of year
164
127
53
91
Interest cost
13
10
Benefits paid
(73)
(46)
Actuarial loss
28
15
Projected benefit obligation at year end
185
196
Net funded Status of the plan
185
196
Net amount recognized
185
196
The Company made annual contributions to the LIC of an amount advised by the LIC. The Company was not informed by
LIC of the investments made by the LIC or the break-down of plan assets by investment type.
Estimated contributions to be made in next financial year for gratuity is Rs 50 (2013- Rs 53) and for compensated absences
Rs 50 (2013- Rs 70).
Bifurcation of PBO at the end of year
31 March 2014
31 March 2013
Current liability
8
47
Non-current liability
177
149
Total PBO at the end of year
185
196
Gratuity
The major categories of plan assets as a percentage of the fair value of total plan assets are as follow:
8)
Investment with LIC

Trade payables
Sundry creditors
- For expenses (other than acceptance)
9)
54
31 March 2014
100%
31 March 2013
100%
31 March 2014
31 March 2013
4,010
5,464
4,010
5,464
According to the records available with the Company, dues payable to entitles that are classified as Micro and Small Enterprises
under the Micro, Small and Medium Enterprises Development Act, 2006 during the year is Rs nil (previous year Rs nil).Accordingly,
disclosures relating to amounts unpaid as the year end together with the interest paid/ payable as required under the said Act
are not applicable. Further no interest has been paid or was payable to such parties under the said Act in the previous year.
Dues to Micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis
of information collected by the management. This has been relied upon by the auditors.
31 March 2014
31 March 2013
Current maturities of long-term borrowings (refer note 5)

4,352
3,985
Current maturities of deferred payment liabilities (refer note 5.2)
49
47
Unaccrued revenue
733
728
Interest accrued but not due
181
274
Book overdraft
460
583
Gratuity
60
42
Sundry creditors for capital goods
738
1,092
Deposits from customers
151
153
Employee benefit
645
1,435
Statutory dues
150
173
Others - Interest accrued
159
32
- Others
1
1
7,679
8,545
a)
Rs 45 (2013 - Rs 48) included under deposits from customers, represents refundable security deposits received from subscribers
on activation of services and are repayable on disconnection and security deposits received from channel partners.
b)
Unaccrued revenue includes advance revenue received for dark fibre given to customers on IRU basis , unaccrued prepaid and
post-paid revenue for services yet to be availed by the customers.
10)
Short-term provisions
31 March 2014
2,004
8
2,012
Provision for contingencies*

Provision for employee benefits - compensated absences (refer note 7)
31 March 2013
1,545
47
1,592
*Net of Rs 555 paid (2013 Rs 484)

11) (a) Tangible assets
Tangible assets
Freehold Leasehold
Leasehold
Plant and Optical fibre
Network
Furniture
Office
land
land
improvements Building equipment and copper interface units Computers and fixtures equipment Vehicles
Total
Gross block
At 1 April 2012
34
80
887
449
39,469
2,712
445
427
129
338
47
Additions
17
21
4,008
33
35
13
4,135
Disposals
256
1,189
35
14
36
86
14
1,632
47,520
At 31 March 2013
45,017
34
80
648
470
42,288
2,714
443
448
97
265
33
Additions (refer note 36)
5,647
15
5,675
Disposals (refer note 36)
49
1,499
19
15
1,592
34
80
600
470
46,436
2,722
458
431
88
252
32
51,603
At 31 March 2014
Accumulated depreciation
At 1 April 2012
269
34
6,956
1,214
415
278
66
113
30
9,377
Charge for the year
99
23
4,849
137
43
91
16
55
5,321
98
376
28
12
21
43
12
590
At 31 March 2013
270
57
11,429
1,351
430
357
61
125
25
14,108
Charge for the year
68
24
4,203
137
19
54
11
41
4,561
27
1,420
16
1,478
At 31 March 2014
311
81
14,212
1,488
449
395
66
158
27
17,191
At 31 March 2013
34
77
378
413
30,859
1,363
13
91
36
140
33,412
At 31 March 2014
34
76
289
389
32,224
1,234
36
22
94
34,412
Net Block
(b) Intangible assets

Intangible assets
Software
License entry fees
Right to use spectrum
Indefeasible right to use
472
24
Total
18,037
1,437
19,946
35,163
75
35,262
Gross block
At 1 April 2012
Purchase
Disposal of assets
17,392
593
17,985
496
645
35,163
919
37,223
Purchase
81
212
293
Disposal of assets
92
92
496
726
35,163
1,039
37,424
3,277
At 31 March 2013
At 31 March 2014
Amortization
At 1 April 2012
470
2,620
187
Charge for the year-Addition
64
96
165
Charge for the year-Deletion
2,361
103
2,464
475
323
180
978
67
1,355
58
1,486
At 31 March 2013
Charge for the year-Addition
Charge for the year-Deletion
13
13
481
390
1,355
225
2,451
At 31 March 2013
21
322
35,162
740
36,245
At 31 March 2014
15
336
33,808
814
34,973
At 31 March 2014
Net block
55
i)
ii)
iii)
iv)
v)
vi)
12)
13)
Plant and equipment includes loose tools of Rs 139 (2013 - Rs 132).

Addition to plant and equipment includes adjustment of Rs 3,909 (loss) (2013 - Rs 2,421 (loss)) on account of exchange
differences on long term foreign currency monetary items during the year. The total unamortized balance of foreign exchange
differences capitalised as at 31 March 2014 is Rs 6,800 (2013 Rs 3,816).
License entry fee with the gross carrying amount of Rs 322 (2013- Rs 322) are subject to first charge and assignment to secure
the Companys debentures. The Company has requested the Debenture Trustee to waive the condition and is confident to
receive the same (refer note 5.1(a)).
The Company participated in spectrum auction conducted by the DoT in March 2013 and won the Right to Use of Spectrum
in eight telecom circles of India namely, Delhi, Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, Uttar Pradesh (West) and West
Bengal for a period of 20 years at a bid price of Rs 36,395. The DoT has allowed set-off of the License Entry Fees of Rs 16,263
earlier paid by the Company in 2008 as upfront payment against the bid price and allowed the balance amount of Rs 20,132 to
be paid in accordance with deferred payment plan opted by the Company as per terms and conditions of the auction.
The Company has created a first charge on pari passu basis on all of its tangible moveable assets including movable machinery,
machinery spares, tools and accessories, furniture, fixtures, vehicles, all other movable assets and current assets, both current
and future, under a non-fund based facility arrangement of Rs 7,670 million (2013 Rs 7,670 million) with a bank. In addition to
this, a second and subservient charge over all the present tangible movable assets of the Company has been created under a
non-fund based facility arrangement of Rs 1,500 million (2013 Rs 1,500 million) with another bank.
Due to continues losses, during the year, the Company has conducted an impairment analysis for its tangible and intangible
assets, based on estimated future cash flow projections, approved by the board of directors of the Company. This review
supported the carrying value of assets and indicated that no impairment is required.
Non-current investments
Trade investments valued at cost
Unquoted in subsidiary company
750,000 [2013 - 750,000] Equity shares of Rs 10 each,
fully paid up in Shyam Internet Services Limited
Long- term loans and advances

Unsecured, considered good
Advance for capital goods
Security deposits
Prepaid expenses
Advance income tax
Balances with customs, excise and other authorities
31 March 2014
31 March 2013
31 March 2014
31 March 2013
12
428
8
288
4,111
4,847
24
548
1
231
3,710
4,514
14)
Other non-current assets

Finance set up cost
Non-current bank balances (refer note 16 and note 36)
31 March 2014
486
486
31 March 2013
896
896
15)
Trade receivables
Debts outstanding for a period exceeding six months
from the date they are due for payment
Secured and considered good
Unsecured and considered good
Unsecured and considered doubtful
31 March 2014
31 March 2013
17
462
479
(462)
17
18
15
398
431
(398)
33
13
369
68
450
(68)
382
399
17
250
76
343
(76)
267
300
Less: Provision for doubtful debts

(A)
Debts outstanding for a period less than six months
from the date they are due for payment
Secured and considered good
Unsecured and considered good
Unsecured and considered doubtful
Less: Provision for doubtful debts
(B)
Total (A + B)
56
16)

Particualrs
Non-current
31 March 2014 31 March 2013
Cash & cash equivalents

Balances with banks:
On current accounts
Deposits with original maturity of less than three months
Cheques/Draft on hand
Cash on hand (refer note 36)
Other bank balances

Deposits with maturity of more than 3 months
but less than 12 months
Margin money deposit (refer note 36)
Amount disclosed under non current assets
Total
(0)
(0)
Current
31 March 2014 31 March 2013
62
3,469
2
0
3,533
348
8,667
3
1
9,019
367
1,760
2,127
5,660
120
4,989
5,109
14,128
Margin money deposits:

Margin money deposits of Rs 1,760 (31 March 2013 Rs 4,989) are given as security under the terms of non fund facilities availed
by the Company from banks.
17)

Advances recoverable in cash or kind or for value to be received:
Unsecured, considered good
Unsecured, considered doubtful
Balances with customs, excise and other authorities
Prepaid expenses
Assets held for sale (plant and equipment)
Advance against equity in Shyam Internet Services Limited
Advance income tax
Provision for doubtful advances
18)

Interest accrued on fixed deposits
Unbilled revenue
Finance set up cost
19)
Revenue from operations

Service revenue
20)
Other income
Interest
Miscelleneous income
21)

Contribution to provident and other funds
Staff welfare expenses
31 March 2014
31 March 2013
991
1,729
196
143
1
97
3,157
3,157
838
1
1,838
169
309
1
5
3,161
(1)
3,160
31 March 2014
114
132
344
590
31 March 2013
72
287
517
876
31 March 2014
11,876
11,876
31 March 2013
12,043
12,043
31 March 2014
574
2
576
31 March 2013
260
4
264
31 March 2014
3,191
130
127
3,448
31 March 2013
3,663
149
135
3,947
57
During the year, the Company has recognized the following amounts in the statement of Profit and Loss
Defined Contribution Plans
Particulars
Employers Contribution to Provident Fund #
Employers Contribution to ESI # (refer note 36)
# Included in contribution to provident and other funds.
22)
31 March 2014
3,060
84
192
130
31 March 2013
2,747
89
190
122
108
156
137
174
12
9
3,769
904
14
10
3,808
1,218
858
24
114
1,163
1,226
250
912
582
141
659
392
234
85
6
123
70
62
279
15,604
828
23
111
1,048
1,678
234
1,010
642
195
583
433
357
368
9
109
220
17
327
16,701
31 March 2014
31 March 2013
3,574
2,063
262
755
16
6,670
7,605
104
130
1,327
23
9,189
Finance costs
Interest on:
- Term loans
- Others
Bank charges and commission
Amortisation of finance setup costs
Net loss on foreign currency transaction and translation
24)
31 March 2013
142
-
Other expenses
Interconnect usage charges
Port charges and other network related costs
Power and fuel Network
Others
Rent
Network
Others
Insurance
Network
Others
Infrastructure sharing expenses
Lease line expenses
Repair and maintenance
Network
Building
Others
Advertisement and marketing expenses
Sales commission and incentives
Sales promotion expenses
Device subsidy
Other subscriber acquisition cost
Travelling and conveyance expenses
IT support and services expenses
Customer service and call centre expenses
Legal and professional fees
Rates and taxes
Auditors remuneration (refer note 35)
Provision for doubtful debts/ advances
Provision for contingencies
Loss on sale of fixed assets
Miscellaneous expenses
Total
23)
31 March 2014
97
-
Provision for contingencies and other provisions :-
The following table sets forth the movement in the provisions: The Company makes contingency provision for any
unanticipated regulatory liabilities that may arise subsequent to the year end.
Description
58
Financial Year
Opening
Additions
Adjustment
Closing
Provisions for contingencies
2014
2013
1,545
1,476
530
796
(71)
(727)
2,004
1,545
Asset retirement obligation (refer note 36)
2014
2013
31
45
(2)
(14)
29
31
25)
26)
27)
(i)
(ii)
Income taxes
Deferred tax
During the year ended 31 March 2014, the Company has incurred book loss of Rs 20,728 (2013 - Rs 28,817), aggregating to
accumulated losses of Rs 131,536 (2013 - Rs 110,808), resulting into carry forward of tax losses. Though the management is
confident of generating profits in the future, in the absence of convincing evidence of virtual certainty, the Company has not
recognized any deferred tax assets resulting from the carried forward tax losses and unabsorbed depreciation. Further, no
deferred tax liabilities on account of temporary timing differences have been recognized as it would be set off against these
deferred tax assets.
Discontinuing operation:
The Company on 21 February 2013 closed telecom services in ten Telecom Circles namely Assam, Andhra Pradesh, Bihar,
Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab and on 11 March 2013 in three
telecom Circles namely Mumbai, Maharashtra and Uttar Pradesh (East) The closure of telecom services has been done in
consequence of the Order(s)/ judgment of Honorable Supreme Court of India of 2 February 2012 and 11 March 2013. The
Company is in the process of redeployment / disposal of assets and settlement of contractual obligation and liabilities of these
thirteen Telecom Circles.
The following statement shows the revenue and expenses of discontinuing operations:
31 March 2014
31 March 2013
Revenue*
46
3,655
Expenses
-Others**
388
8,277
-Loss on sale of fixed assets
10
18
Loss from discontued operations

(352)
(4,640)
Finance costs
71
57
Depreciation and amortization
645
1,142
Loss before tax

(1,068)
(5,839)
Income-tax expense
Loss after tax

(1,068)
(5,839)
*The Service revenue in discontinued operations is on account of services provided during the period 1 April 2013 till date of
closure i.e. 10 April 2013 in three circles Mumbai, Maharashtra and UP (East).
** For certain parties, the Company has reached settlement or negotiations are at final stage and accordingly, on the best
estimates, amounts have been paid/adjusted/provided for in the financial statements.
Note: The above statement does not include common corporate expenses such as marketing costs, interest on loans that are
not allocated to discontinued circles.
The carrying amounts of total assets and liabilities of discontinuing operations are as follows:
31 March 2014
31 March 2013
Total Assets#
4,630
10,079
Total Liabilities
1,645
3,970
# Include fixed assets of Rs 4,038 (2013 Rs.7,410), where the Company is in the process of re-deployment. Fixed assets redeployed during the year in active circles have been re-classified.
The net cash flows attributable to the discontinued operations are stated below:
31 March 2014
31 March 2013
Operating activities
330
(4,535)
Investing activities
(331)
27
Financing activities (refer note 36)
(0)
(0)
Net cash inflows / (outflows)
(1)
(4,508)
Related party disclosures
In accordance with requirement of Accounting Standard (AS) 18 Related Party Transaction, the names of related parties where
control exists and / or with whom transactions have taken place during the year and description of relationships as identified
and certified by the Management are:
Name of related party where control exists
Relation
Name of the related party
Holding company
Sistema JSFC
Subsidiary company
Shyam Internet Services Limited (SISL)
Names of other related parties with whom transactions have taken place during the year
Key management personnel:
Relation
Name of the related party
Key management personnel

-Vsevolod Rozanov (till 31 May 2013)
- Dmitry Shukov (from 1 June 2013)
59
(iii)
List of fellow subsidiaries is as below :

- OJSC Intellect Telecom
- Sitronics Telecom Solutions
- OJSC Mobile Telesystems
- JSC Sitronics Telecom Solutions
- Sitronics Intracom India Private Limited
- Sitronics India Private Limited
- Insitel Services Private Ltd
Transactions with related parties

Particulars
Car hire charges

(recovered)
Loan taken
Interest on Loan
(Grossed Up)
Loan repayment
(excluding foreign exchange
loss of Rs.1,591)
Internet charges
(service taken)
Leaseline revenue
(received)
Maintenance services
Professional fees
Equipments/software
purchase
IT services taken
Brand fees
Managerial remuneration
Issuance of redeemable
preference shares
Sale of assets (refer note 36)
Provision for doubtful debts
Holding Subsidary
Co
Co
Sistema
SISL
OJSC
JSFC
Intellect
Telecom
Nature of relationship
Fellow subsidaries
Sitronics
Telecom
Solutions
KMP
OJSC
JSC Sitronics
Sitronics
Mobile
Telecom
Intracom
Tele Systems Solutions
India Pvt Ltd
Sitronics
India
Pvt. Ltd.
Insitel
Services
Pvt Ltd
Vsevolod
Rozanov
Dmitry
Shukov
2
(2)
(12,482)
445
(114)
12,482
-
(2)
-
5
(5)
23
(23)
25
-
3
(8)
-
39
(165)
104
(86)
-
12
(17)
-
(12)
-
67
(72)
-
8
(7)
2
(1)
21
(18)
-
34,335
(60,000)
0
(0)
-
127
(130)
-
37
-
(Figure in bracket are for previous year)
Balance outstanding as on 31 March 2014

Particulars
Loan outstanding
Holding
Co
Sistema
JSFC
(12,482)
Interest outstanding
(87)
Trade receivables (net of
provision) (refer note 36)
(0)
Investment including
advance against equity
Trade payable
(Figure in bracket are for previous year)
Subsidary
Co
SISL
(43)
9
(9)
1
-
Nature of relationship
Fellow subsidaries
OJSC
Intellect
Telecom
Sitronics
Telecom
Solutions
OJSC
Mobile
Tele Systems
JSC Sitronics
Telecom
Solutions
Sitronics
Intracom
India Pvt Ltd
Sitronics
India
Pvt. Ltd.
Insitel
Services
Pvt Ltd
(94)
5
(6)
29
(15)
1
(5)
The remuneration to the key managerial personnel (KMP) does not include the provisions made for gratuity, compensated
absences as they are determined on an actuarial basis for the Company as a whole. Bonus is included in KMP remuneration only
when amount became due for payment on fulfilling certain conditions.
JSFC Sistema, holding company, has given corporate guarantee to lenders for various fund and non fund facilities availed by the
Company.
60
28)
Lease commitments
a)
Where the Company is a lessee

The Company has entered into various lease agreements for leased premises, which expire at various dates over the next
fifteen years. Lease rental expense for the year was Rs 279 (2013 - Rs 397).
Future lease payments under operating leases are as follows:
31 March 2014
31 March 2013
Payable not later than one year

234
295
Payable later than one year and not later than five years
569
901
Payable later than five years
183
288
986
1,484
The escalation clause includes escalation at various periodic levels ranging from 0 to 15 percent includes option of renewal
from 0 to 15 years and there are no restrictions imposed on lease arrangements.
Where the Company is a lessor
Indefeasible Right to Use (IRU)
The Company has entered into Indefeasible Right of Use contract for use of optical fiber with telecom operators for a period
of 15 years. The gross carrying amount and accumulated depreciation of the optical fiber is Rs 244 (2013- Rs 238) and Rs 130
(2013 - Rs 118). The income and depreciation recognised in the Statement of profit and loss for the year is Rs 13 (2013 -Rs 13)
and Rs 12 (2013 Rs 12) respectively.
Future minimum lease receipts under operating leases are as follows:
b)
(i)
31 March 2014
31 March 2013
14
13
55
51
23
29
92
93
The Company has also entered into an agreement to give optical fiber in exchange on IRU basis for a period of 15 years. Due
to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated
depreciation of the asset given on operating lease as at 31 March 2014 and accordingly, disclosures required by AS 19 is not
given.
Recoverable not later than one year
Recoverable later than one year and not later than five years
Recoverable later than five years
(ii)
29)
30)
Earnings per share (EPS)

Particualrs
Net loss after tax as per statement of profit and loss
Weighted average number of equity shares in calculating basic and diluted EPS
Loss per Share (equity shares, par value of Rs 10 each) Basic and diluted (in Rs)
Net loss after tax as per statement of profit and loss from continuing operations
Weighted average number of equity shares in calculating basic and diluted EPS
Loss per Share (equity shares, par value of Rs 10 each) Basic and diluted (in Rs)
31 March 2013
(28,817)
3,193,920,000
(9.02)
(22,978)
3,193,920,000
(7.19)
Particulars of unhedged foreign currency exposure as at 31 March 2014

Particulars
Import creditors
Loans
Interest payable
Trade receivables (refer note 36)
Total
31)
31 March 2014
(20,728)
3,193,920,000
(6.49)
(19,660)
3,193,920,000
(6.16)
31 March 2014
Amount in Rs
Amount in USD
794
13
22,504
376
175
3
4
0
23,477
392
31 March 2013
Amount in Rs Amount in USD
1,406
26
35,255
649
266
5
1
0
36,928
680
Capital commitments
Estimated value of contracts remaining to be executed on capital
account and not provided for (net of advances)
For lease commitments, refer note 28
31 March 2014
31 March 2013
553
291
The Company has other commitments for purchase orders which are issued after considering requirements as per operating
cycle for purchase of services, employee benefits. The Company does not have any long term commitment or material noncancelable contractual commitments/contracts which might have a material impact on the financial statements.
61
32)
Contingent liabilities
-Income tax matters
-VAT and entry tax
-Service tax matters
-DoT demands (refer note 32 (a) below)
-Demand from operators (refer note 32 (b) below)
-Demand for compensation (refer note 32 (c) below)
-Others
31 March 2014
97
43
139
2,271
190
612
168
3,520
31 March 2013
52
9
132
783
190
167
1,333
The management believes that the outcome of these contingencies will be favorable and that a loss is not probable.
(a)
DoT demands
These primarily include disputed demands raised for contentious matters relating to computation of license fees and spectrum
charges on account of differences in the interpretation of definition of revenue as per Telecom License and alleged non
compliance of other licensing conditions.
(b)
Demand from operators

During financial year 2008-09, the Company received demands from telecom operator aggregating to Rs 190 on account of
revision of access charges for the period from June 2001 to May 2003. On 27 April 2005 Honble TDSAT has struck down the
unilateral revision in the rates of access charges by telecom operator. Telecom Operator has preferred an appeal in Honble
Supreme Court against the order of TDSAT. Considering that the final decision is pending with the Honble Supreme Court,
the Company has disclosed the amount under dispute of Rs 190 as contingent liability.
(c)
Demands for compensation

During the previous year ended 31 March 2013, certain passive infrastructure vendors (the Vendors) has raised demands for
compensation of Rs 612 due to premature termination of the respective contracts by the Company as a result of discontinuation
of operations in the thirteen telecom circles in pursuance of the Order issued by the Honble Supreme Court of India related
to cancellation of Companys Telecom Licenses (Also refer Note 1(b)). The Vendors have served notice in term of the dispute
resolution mechanism as defined in the contracts during the year. The Company, based on independent legal opinion, believes
such demands to be untenable, since the discontinuance of operations is a Force Majeure Act and not the act of the Company.
The Company had executed certain contracts (the contracts) with an equipment vendor (the vendor) for the supply of
network equipment and services for the turnkey implementation of the basic telephone service project in Rajasthan. Under the
contracts, the vendor was obliged to ensure a total financing solution for the project, including credit enhancement support
from the vendors sponsors As the vendor defaulted in its contractual obligations in providing a total financing solution for the
project, the vendor executed an agreement (the agreement) with the Shyam Group of Companies to subscribe to warrants
of the Group Companies aggregating 50 per cent of the value of supplies of equipment and services by the vendor to the
Company. Disputes have arisen between the Company and vendor with respect to fulfillment of obligations under the contracts
and the agreement. The Company and the vendor are in the process of resolving their differences. The management of the
Company believes that the default under the contracts and the agreement primarily lies on the part of the vendor and thus the
Company does not bear any liability under the same. The matter is under process for resolution with the Arbitral Tribunal /
Honble High Court.
(d)
33)
Expenditure in foreign currency (on accrual basis)

Interest
Finance setup costs
Project management and maintainance services
Advertisement and marketing expenses - MTS brand fee
Other services
34)
31 March 2013
1,172
781
209
17
27
25
2,231
31 March 2014
14
11
25
31 March 2013
Earning in foreign currency (on accrual basis)

Data branding (refer note 36)
International inroaming
62
31 March 2014
1,007
174
217
13
384
7
1,802
35)
Payment to auditors (excluding service tax)

Statutory audit
Other services
Reimbursement of out of pocket expenses (refer note 36)
36)
31 March 2014
4
2
31 March 2013
4
4
1
Details of rounded off amounts

The financial statements are presented in Rs million. Those items which are required to be disclosed and which are not
represented in the financial statements due to rounding off to nearest million are given as follows:
Note Description
31 March 2014
0.006
31 March 2013
0.006
Additions
0.418
Disposal
0.009
0.001
0.232
0.159
0.114
Capital Reserve
11
Fixed Assets
- Building - Cost or valuation
- Depreciation - disposal
-Optical fibre and copper
-Network interface units - Cost or valuation
Disposal
-Furniture and fixtures - Cost or valuation
Additions
14
Non-current bank balances
0.196
0.098
16
Cash and cash equivalents - cash on hand
0.464
16
Other bank balances - margin money deposit
0.196
0.098
21
0.144
0.249
24
Asset retirement obligation
0.150
26
Discontinued operations Financing activities
(0.027)
(0.017)
27
Related party transactions

-
0.200
JSFC Sistema - Trade receivable (net of provision)
37)
0.306
Insitel Services Private Ltd - Sale of assets
0.279
0.158
30
Particulars of unhedged foreign currency - Trade receivables
0.059
0.018
34
Earning in foreign currency
0.295
35
Payment to auditors
0.250
Segmental reporting
The primary segment reporting format is determined on the basis of business segment. The Company has only one business
segment, which is providing unified access services. Accordingly, the amounts appearing in these financial statements relate to
this primary business segment. The secondary segment reporting format is determined on the basis of geographical area in
which the Company provides services. The Company operates only in one geographical segment namely, India.
63
Name of the Statute
Nature of
Dues
Period to which the

amount pertains
Amount
(Rs in Million)

is pending
Income Tax
2010-11 and 2011-12
41
Commissioner of Income
tax (Appeal)
UP VAT Act, 2008
VAT
2009-10 and 2010-11
Assessing Officer
Kerala Commercial
Tax Act, 2003
VAT
2008-09 and 2011-12
Assessing Officer
Tamilnadu VAT Act, 2006
VAT
2013-14
27
High Court, Madras
Finance Act, 1994

Service
Tax
2008-09, 2009-10
and 2010-11
117
Custom, Excise, Service

Tax Appellate Tribunal
Finance Act, 1994

Service Tax
2011-12
Commissioner, Appeal
The following matters have been decided in favour of the Company, although the department has preferred appeals at higher levels:
Name of the Statute
Nature of
Dues
Period to which the

amount pertains
Amount
(Rs in Million)

is pending
Income Tax
2008-09 and 2009-10
18
Income Tax Appellate

Tribunal (ITAT)
VAT
2007-08, 2008-09 and

2009-10
Tax Board/Tribunal
Rajasthan VAT Act, 2003
38)
Details of dues of Income-tax, Sales Tax, Wealth Tax and Service Tax which have not been deposited as on March 31, 2014 on
account of disputes are given below:
There are no dues of Customs Duty, Excise Duty and Cess which have not been deposited as on March 31, 2014 on account
of disputes.
39)
Value of imports calculated on CIF basis

31 March 2014
1,173
Import of capital equipment and spares

40)
31 March 2013
527
Previous years comparatives

Previous years comparatives have been reclassified/regrouped where necessary to conform with current years presentation.
The previous year figures have been audited by another firm of Chartered Accountants.
Place : Gurgaon
64
Sd/Dmitry Shukov
DIN - 06577078
Sd/Alok Tandon
Director
DIN - 00027563
Sd/Sergey Savchenko
Sd/Vishal Kohli
Company Secretary
STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO

SECTION 212 OF THE COMPANIES ACT, 1956
1.
Name of the Subsidiary Company
Shyam Internet Services Limited
2.
Financial Year of the Subsidiary Company ended on
31st March 2014
3.
Financial Year of Holding Company ended on
31st March 2014
4.
Holding Companys Interest as on 31.03.2014
100%
5.
Net aggregate amount of profit / (loss) of the Subsidiary
Holders of the entire issued, subscribed & paid up
Company so far as it concerns the members of Sistema Shyam
Equity share capital of 750000 shares of Rs 10 each.
TeleServices Limited.
(a) Not dealt with the accounts of Sistema Shyam TeleServices
Limited.
(i) For the subsidiarys financial year ended on 31.03.2014
Rs 494,255
(ii) For the previous subsidiarys financial year of
Rs (41,124,099)
subsidiarys since it became Subsidiary of Sistema

Shyam TeleServices Limited.
(b) Dealt with the accounts of Sistema Shyam TeleServices
Nil
Limited.
(i) For the subsidiarys financial year ended on 31.03.2014
Nil
(ii) For the previous subsidiarys financial year of

subsidiarys since it became Subsidiary of Sistema
Shyam TeleServices Limited.
6.
Material
changes
which
have
occurred
between
Nil
the end of financial year of the Subsidiary Company

and the end of the holding companys financial year in
respect of :
(a) Fixed Assets (including capital work in progress of the
subsidiary company)
(b) Investment of subsidiary company.
(c) Money lent by subsidiary company.
(d) Money borrowed by Subsidiary company for
any purpose other than that of meeting current
liabilities.
65
D I R E C TO R S R E P O RT
Dear Members,
th
Your Directors are pleased to present the 14 Annual Report

on the Business and the Operations of the Company together
with the Audited Annual Accounts for the Financial Year ended
31st March, 2014.
CORPORATE REVIEW
The total income of your Company for the year under review is
Rs. 409.48 lacs as against Rs. 335.71 lacs for the previous financial
year and it represents a considerable increase of approx. 22%
in total income on year to year basis. Your Company has earned
a net profit of Rs.4.94 lacs during the current financial year.
Your Company provides internet services with the brand name
of Infinity and is one of the reputed and well known internet
services providers providing high quality internet services in
the State of Rajasthan. The Company is having a Category B ISP
License and currently providing internet services in 131 cities
of Rajasthan. The Company is equipped with world class
infrastructure, with dedicated Optic Fiber Cables, Digital
Modems, Fully Automated Helpdesk, a Users-to-Lines Ratio
conforming to global standards, and the promise of a Multi
flavored Internet Access. Your Company is operating its services
across Rajasthan powered by its state of the art data center
commissioned at Jaipur consisting of latest of Routers, Servers,
Firewalls and fully redundant architecture.
As earlier reported, your Company has applied for category-A
ISP license for providing Internet services on different
technologies on All India basis.
iii. Proper and sufficient care for the maintenance of adequate

accounting records in accordance with the provisions of
the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities have been taken.
iv.
PARTICULARS OF EMPLOYEES
There was no employee as per the provisions of Section 217
(2A) of the Companies Act, 1956, getting a remuneration
aggregating Rs. 60,00,000/- or more per annum if employed
throughout the year and Rs. 5,00,000/- per month or more if
employed for a part of the year.
PARTICULARS OF CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS & OUTGO
Particulars with respect to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo, as per
Section 217(1) (e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars) Rules, 1988 are given
below:
a)
DEPOSITS
Your Company has not accepted deposits from public under
Section 58A of the Companies Act, 1956
AUDITORS AND AUDITORS REPORT
M/s. Mehra Goel & Co., Chartered Accountants, retiring Auditors
of the Company, expressed their willingness to continue as
Auditors, if reappointed at the ensuing Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of the provisions of Section 217(2AA) of the
Companies Act, 1956, your Directors confirm as under that.
i.
In the preparation of the annual accounts, the applicable

accounting standards have been followed.
ii.
66
Appropriate accounting policies have been selected and

applied consistently and judgment and estimates that are
reasonable and prudent have been made so as to give a
true and fair view of the state of affairs of the Company at
the end of the financial year ended March 31, 2013 and of
the Loss of the Company for the year ended on that date.
Conservation of Energy
Your Company, a telecommunication service provider,
requires minimal energy consumption and every effort has
been made to ensure the optimal use of energy, avoid
waste and conserve energy as far as possible.
b)
DIRECTORS
In terms of the provisions of the Section 152 of the Companies
Act 2013, Mr. Leonid Musatov retires at the ensuing Annual
General Meeting and being eligible offers himself for
reappointment.
The annual accounts have been prepared on a going concern

basis.
Technology Absorption, Adaptation and Innovation

The Company has not imported technical know-how. Your
Company has not yet established any separate R&D
facilities.
c)
Foreign Exchange Earnings & Outgo

During the year under review, the Company has not earned
any foreign currency but has incurred expenditure of
Rs. 2,73,202/- during the financial year 2013-14.
COMPLIANCE CERTIFICATE
The Company has obtained a Compliance Certificate from
Practicing Company Secretary, pursuant to provision of section
383A of the Companies Act, 1956.
ACKNOWLEDGEMENT
Your Directors acknowledge with gratitude the assistance, cooperation and support received by the Company from the
Department of Telecommunication, various State and Central
Government Authorities and the Banks.
For & on behalf of the Board of Directors
Place : New Delhi

Sd/T. Narasimhan
Chairman of the Meeting
DIN : 00041112
INDEPENDENT AUDITORS R E P O R T
To the Members of Shyam Internet Services Limited
Opinion
Report on the Financial Statements
In our opinion and to the best of our information and according

to the explanations given to us, the aforesaid financial statements
give the information required by the Companies Act,1956, in
the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
We have audited the accompanying financial statements of the

Shyam Internet Services Limited, which comprise the Balance
Sheet as at 31st March, 2014, the Statement of Profit and Loss
and the cash flow statement for the year then ended and a
summary of significant accounting policies and other explanatory
information.
Managements Responsibility for the Financial
Statements
Management is responsible for the preparation of these
financial statements that give a true and fair view of the
financial position, financial performance and cash flows of
the company in accordance with accounting principles
generally accepted in India including Accounting Standards
referred to in Section 211(3C) of the Companies Act, 1956
(the Act) read with the General Circular 15/2013 dated 13
September 2013 of the Ministry of Corporate Affairs in
respect of section 133 of the Companies Act, 2013. This
responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation
of the financial statements that are free from material
misstatement, whether due to fraud or error.
(a) in the case of the Balance Sheet, of the state of affairs of

the Company as at 31st March, 2014;
(b) in the case of the Statement of Profit and Loss, of the
Loss for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of cash flows for
the year ended on that date.
Report on Other Legal and Regulatory Matters
1.
2.
As required by the Companies (Auditors Report) Order,

2003 (the Order) issued by the Central Government of
India in terms of Section 227(4A) of the Act, we give in the
Annexure a statement on the matters specified in paragraphs
4 and 5 of the Order.
As required by Section 227(3) of the Act, we report that:
(a)
we have obtained all the information and explanations

which to the best of our knowledge and belief, were
necessary for the purpose of our audit.
(b)
in our opinion, proper books of account as required

by law have been kept by the Company so far as appears
from our examination of those books.
(c)
the Balance Sheet and Statement of Profit and Loss

Account dealt with by this report, are in agreement
with the books of account and the returns.
(d)
In our opinion, the Balance Sheet, Statement of Profit

and Loss and Cash Flow Statement comply with the
Accounting Standards referred to in sub-section (3C)
of section 211 of the Companies Act, 1956 read with
the General Circular 15/2013 dated 13 September 2013
of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013.
(e)
On the basis of the written representation received

from the directors and taken on record by the Board
of Directors, none of the directors is disqualified as
on 31st March, 2013 from being appointed as a director
in terms of clause (g) of subsection (1) of section 274
of the Companies Act, 1956.
Auditors Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India. Those Standards
require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Companys
preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in
the circumstances but not for the purpose of expressing an
opinion on the effectiveness of the entitys internal control.
An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the
accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
For Mehra Goel & Co.

FRN: 000517N
Place : New Delhi

Sd/R.K. Mehra
Partner
M.No.: 6102
67
ANNEXURE
(Referred To In Paragraph 3 of Our Report of Even Date)
I.
The Company has maintained proper records showing
the register maintained under section 301 of the
full particulars, including quantitative details and situation
companies act, 1956
of fixed assets. The fixed assets covering significant value

have been physically verified by the management during
VI.
the year, which in our opinion is reasonable, having regard
information and explanations given to us, the Company
to the size of the Company and the nature of its assets.
has not accepted any deposits covered under Section 58
On the basis of the information and explanations given
A and 58 AA of the Companies Act, 1956.
by the management, no material discrepancies have been

noticed on such verification.
VII.
To the best of our knowledge and as per the information

and explanations given to us, the Company has a
II.
No substantial part of fixed assets has been disposed off
reasonable internal audit system commensurate with its
during the year, which has affected the going concern.
size and nature of its business.
The company is in the business of providing
VIII.
As per information and explanations given to us, the
internet services. Accordingly clause 4 (ii) relating to
company is not required to maintain cost records as
physical verification of inventory is not applicable on the
prescribed under sec 209 (1) (d). Accordingly the
company.
provisions of clause 4 (viii) of the order are not applicable

to the company.
III.

IX.
has not taken/granted any loans, secured/unsecured from/
to companies, firms or other parties listed in the register
is generally regular in depositing undisputed statutory
maintained under Section 301 of the Companies Act,
dues namely Investor Education and Protection fund,
1956.
Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess

and any other statutory dues, where applicable with the
IV.
appropriate authorities. There were no arrears of
explanations given to us, there are adequate internal
outstanding statutory dues at the last day of financial
control procedures commensurate with the size of the
year for a period of more than six months from the date
Company and the nature of its business for the purchase
they became payable.
of machinery, equipment and other assets and for the
V.
68
provision of the services, inventory, fixed assets and with
Further according to the information and explanations
regard to services rendered. During the course of our
given by the management, there were no disputed dues
audit, no major weakness has been noticed in the internal
of sales tax, income tax, custom duty, wealth tax, excise
controls.
duty and Cess as on the balance sheet date.
X.
The companys accumulated losses at the end of the
explanations given to us, there are no transactions made
financial year are more than fifty percent of its net worth.
in pursuance of contracts or arrangements entered in
Further the company has incurred cash losses during
the financial year and in the immediate preceding financial
XVII. According to the Cash Flow Statement and other
year.
records examined by us and information and explanations

given to us, on an overall basis, funds raised on short
XI.
In our opinion, the Company has not defaulted in
term basis have, prima facie, not been used during the
repayment of dues to Financial Institutions or banks or
year for long term investment.
debenture holders.
XVIII. According to the information & explanations given to
XII.
On the basis of verification of accounts and records
us, the Company has not made any preferential allotment
maintained by the Company and to the best of
of shares during the year to parties and companies
our knowledge & belief, the Company has not
covered in the Register maintained under Section 301 of
granted any loans and advances on the basis of security
the Companies Act, 1956.
by way of pledge of shares, debentures and other

securities.
XIX. According to the information & explanations given to

us, the Company has not issued any debentures during
XIII.
In our opinion, and to the best of our information and
the year.
according to the explanation by the management, we are

of the opinion that the company is neither a chit fund
XX.
According to the information & explanations given to
nor a nidhi /mutual benefit fund/ society. Therefore the
us, the Company has not raised any money by Public
provisions of the clause 4 (xiii) of the order are not
Issue during the year.
applicable to the company.

XXI. Based upon the audit procedure performed and
XIV.
To the best of our knowledge and according to
information and explanations given by the management,
information given to us, the Company is not dealing or
we report that no fraud on or by the company has been
trading in shares, securities and other investments.
noticed or reported during the year.
Accordingly the provisions of clause 4 (xiv) or the order

are not applicable to the company.
XV.

FRN: 000517N

information and explanation given to us, the Company
has not given any guarantee for loans taken by others
from Banks / Financial Institutions.
Sd/R.K. Mehra
Partner
M.No.: 6102
XVI. To the best of our knowledge and according to the

information and explanations given to us, Company had
not taken any term loan during the previous year.
Place : New Delhi

69
BALANCE SHEET AS AT 31ST MARCH, 2014

(All amounts in Rupees, unless stated otherwise)
NOTES
As at
March 31, 2014
(Rupees)
As at
March 31, 2013
(Rupees)
EQUITY AND LIABILITIES

SHAREHOLDERS FUNDS
Share capital
7,500,000
7,500,000
(40,629,844)
(33,129,844)
(41,124,099)
(33,624,099)
Trade payables
44,030,687
46,269,089
6,189,129
50,219,816
17,089,972
10,102,699
56,371,788
22,747,689
761,758
782,482
3,000
7,64,758
3,000
785,482
Trade receivables
5,208,909
9,975,392
10
3,364,408
5,367,492
11
53,500
12
7,751,897
16,325,214
17,089,972
6,565,823
21,962,207
22,747,689
CURRENT LIABILITIES
TOTAL
ASSETS
NON-CURRENT ASSETS
Fixed assets
Tangible assets
Long-term loans and advances
CURRENT ASSETS
TOTAL
Background
The accompanying notes are an integral part of financial statements.

As per our report of even date
Sd/R.K. Mehra
Partner
Membership No: 6102
Place : New Delhi
70
For and on behalf of the Board of Directors of Shyam Internet Services Limited
Sd/T. Narasimhan
Director
Sd/Neera Sharma
Director
STATEMENT OF PROFIT & LOSS ACCOUNT FOR THE YEAR

ENDED 31ST MARCH, 2014
For the Year

Ended
March 31, 2014
(Rupees)
40,557,416
For the Year

Ended
March 31, 2013
(Rupees)
32,834,385
14
390,989
40,948,405
736,753
33,571,138
Network operating expenses
15
37,242,222
33,707,644
Administrative and other expenses
16
2,434,909
1,502,939
Sales and marketing expenses
17
717,552
40,394,683
553,722
38,743
378,619
35,589,202
(2,018,064)
19,018
20,724
494,255
32,160
(2,069,242)
494,255
(2,069,242)
0.66
(2.76)
0.66
(2.76)
Revenue from operations (net)
NOTES
13
Other income
Total revenue (I)
Expenses
Total expenses (II)

Earnings before license fee, interest, tax, depreciation (I-II)
Finance costs
18
Depreciation and amortisation expenses
Loss /(Loss) before tax

Tax expenses
Profit/(Loss) for the year
Earnings per equity share [nominal value of
share Rs 10 (31 March 2013 Rs 10)]
19
Basic
Diluted
Background
The accompanying notes are an integral part of financial statements.

Sd/R.K. Mehra
Partner
Membership No: 6102
Sd/T. Narasimhan
Director
Sd/Neera Sharma
Director
Place : New Delhi

71
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2014
A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax and before prior period/ extra ordinary items
Adjustment for :
Depreciation
Provision for Doubtful debts
Interest Received
Creditors Written Back
Operating profit before working capital change
Adjustment for :
(Increase)/ Decrease in Short term loan and advances
(Increase)/ Decrease in Trade Receivables
(Increase)/ Decrease in Other current assets
Increase /(Decrease) in Trade Payable
Increase /(Decrease) in Other Current Liabilities
Sundry balances written off
Cash Generated from operations
Direct Taxes refund/(paid) (Inclusive of TDS)
Net Cash (used in)From Operating Activities (A)
B CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Investment/sale of Investment
Interest Received(Net of TDS)
Net cash (used in) / from investing activities (B)
Net increase/(Decrease) in cash and cash equivalents (A+B)
Cash and cash equivalents at beginning of the Period
Cash and cash equivalents at the end of the Period
Notes : 1
For the Year

Ended
March 31, 2014
(Rupees)
For the Year

Ended
March 31, 2013
(Rupees)
494,255
(2,069,243)
20,724
1,776,748
(184,841)
(168,331)
1,938,555
32,160
682,110
(209,994)
(526,759)
(2,091,726)
53,500
2,989,735
168,331
(2,238,402)
(3,931,522)
(1,019,803)
(1,168,122)
(2,187,925)
54,100
(8,096,755)
(54,223)
5,832,962
4,578,433
526,759
749,550
(1,042,343)
(292,793)
322,310
184,841
507,151
(1,680,774)
2,917,805
1,237,031
(209,994)
209,994
(292,793)
3,210,598
2,917,805
Cash flow statement has been prepared following the indirect method except in case of dividend paid/received, purchase
and sale of investment and taxes paid which have been considered on the interest paid/received basis of actual
movements of cash,.
Purchase of fixed assets includes movement of Capital Work-in-progress between the beginning and end of the Year.
Cash and cash equivalents represent cash balance , bank balance as well as short term deposits.
Auditors Report
Sd/R.K. Mehra
Partner
Membership No: 6102
Place : New Delhi
72
Sd/T. Narasimhan
Director
Sd/Neera Sharma
Director
Notes to financials statements for the year ended 31 March 2014

(All amounts in Rupees unless otherwise stated)
1.
Background
The main object of the company is providing internet services. The Company has been granted Category B on 18th December
2003 by the department of Telecommunication for a period of 16 years for providing internet services in the State of Rajasthan. The
Company was granted LOI and has applied for Category A license for all India operation on 10th December, 2008. The Company
is a wholly owned subsidiary of Sistema Shyam Teleservices Limited.
2. Significant Accounting Policies

2.1
Presentation of Financial Statements :

The financial statements have been prepared in compliance to the requirements of the Companies Act 1956, applicable
Accounting Standards and the requirements of Part-I & II of Schedule-VI (revised).
2.2
Basis of preparation:
The Financial statements have been prepared under the historical cost convention, in accordance with applicable Accounting
Standards and provisions of the Companies Act, 1956 as adopted consistently by the Company except for defined benefit
pension/other funds obligations that have been measured at fair value. The carrying value of certain monetary items
denominated in foreign currency is translated at the exchange rates applicable on the date of balance sheet.
2.3
Use of Estimates :
The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of
asset and liabilities on the date of the financial statements and the reported amount of the revenue and the expenses during
the reporting period. Difference between the actual results and estimates are recognized in the period in which the results
are known / materialized.
2.4
Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price
including taxes and duties (net of cenvat credit) and any attributable cost of bringing the asset to its working condition for
its intended use. Capital spares/ standby equipment are capitalised as part of the respective main assets, to which they relate
to. Any expenditure on upgradation of existing assets resulting in increase in their capacity and the benefits expected
therefrom is capitalised.
2.5
Depreciation/Amortisation
(i) Fixed assets are depreciated on written down value method at the rates and in the manner prescribed in Schedule XIV
to the Companies Act, 1956.
(ii) Fixed assets individually costing less than Rs 5 thousand are fully depreciated in the year of purchase.
2.6
Impairment of Assets
Carrying amount of cash generating units/Fixed assets are reviewed for impairment, if events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable. The excess of recoverable amount over the carrying value
of the asset is charged, as an impairment loss to the statement of profit & Loss.
2.7
Intangible Assets
All expenditure on intangible items are expensed as incurred unless it qualifies as an intangible asset as defined in Accounting
Standard 26. The carrying value of intangible asset is assessed for recoverability by reference to the estimated future
discounted net cash flows that are expected to be generated by the asset. Where this assessment indicates a deficit, the
assets are written down to the market value or fair value as computed above.
2.8
Cash and Cash Equivalents

Cash and cash equivalents for the purpose of cash flow statements comprise cash at bank and cash in hand and short term
investments with an original maturity of three months or less.
2.9
Foreign Currency Transactions

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of
transactions. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate
applicable on the date of Balance Sheet. Non-monetary items denominated in foreign currency are valued at the exchange
rate prevailing on the date of transaction. Any income or expenses on account of exchange difference either on settlement
or on translation is recognized in the profit and loss account.
73

2.10
Revenue Recognition and Receivable

(i) Revenue: Revenue in respect of INTERNET access services is recognized over the period in which the related services
are rendered.
(ii) Provision for doubtful debts: Receivables are stated net of provision for doubtful debts. The Company provides for
outstanding in specific cases, where management is of the view, that the amount for certain customers are not
recoverable..
2.11 Tax Expenses

Current tax is provided after taking credit for allowance and exemptions using the tax rates and laws that have been enacted
or substantially enacted by the Balance Sheet date. In case of matters under appeal due to disallowance or otherwise,
provision is made when the said liabilities are accepted by the company.
Deferred tax is provided on all temporary differences at the Balance Sheet date between the tax basis of assets and liabilities
and their carrying amounts for financial reporting purposes. Deferred tax asset arising from temporary differences are
recognized to the extent there is virtual certainity of realization of asset in future.
2.12
Earning per Share

Basic Earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted
earning per share comprises the weighted average shares considered for deriving basic earning per share, and also the
weighted average number of shares, if any which would have been used in the conversion of all dilutive potential equity
shares.
2.13 Provisions
A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the
obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best
estimates.
3.
Share Capital
31 March, 2014
31 March, 2013
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
Authorised
7,50,000 Equity Shares of Rs. 10/- each
Issued, Subscribed and Paid Up*

7,50,000 (P.Y. 7,50,000) Equity Shares of Rs. 10/- each fully paid up
* 100% shares held by Sistema Shyam Teleservices Ltd.
a)
Terms/rights attached to Equity Shares:

The Company has only one class of Equity Shares having a par value of Rs. 10 per share. Each holder of Equity shares is
entitled to one vote per share.
b)
Reconciliation of the Equity Shares outstanding at the beginning and at the end of the Reporting Period
Particulars
Outstanding at the beginning of the year
Issued during the period
Outstanding at the end of the period
c)
750,000
750,000
7,500,000
7,500,000
31 March, 2013
No. of Shares
Amount (Rs.)
750,000
750,000
7,500,000
7,500,000
Detail of Shareholders holding more than 5% share capital as on the balance sheet date
Particulars
Sistema Shyam Teleservices Ltd.
74
31 March, 2014
No. of Shares
Amount (Rs.)
31 March, 2014
No. of Shares
% of Holding
750,000
100.00
31 March, 2013
No. of Shares
% of Holding
750,000
100.00

d)
Shares in respect of each class held by its holding company:Out of equity shares issued by the company, shares held by its holding company are as below:
Name of Shareholders
31 March, 2014
No. of Shares
750,000
Holding Company
4.

Surplus
Opening Balance
Add:- Net Profit/(Loss) for the current Year
Closing Balance
5.
31 March, 2013
No. of Shares
750,000
31 March, 2014
31 March, 2013
(41,124,099)
494,255
(40,629,844)
(39,054,857)
(2,069,242)
(41,124,099)
Trade payables*
31 March, 2014
31 March, 2013
Other than Micro and Small Enterprises

44,030,687
46,269,089
44,030,687
46,269,089
*Under the Micro, Small and Medium Enterprises Development Act, 2006, certain disclosures are required to be made relating
to dues to Micro, Small and Medium enterprises. Based on the information available with the Company, there are no parties
who have been identified as micro, small and medium enterprises based on the confirmations circulated and responses received
by the management.
6.

31 March, 2014
94,750
775,104
1,466,020
3,090,170
763,085
6,189,129
Security Deposit from customers

Advance received from customers
Application money received and due for refund
Unaccured Revenue
Other payables
7.
31 March, 2013
270,841
266,991
1,466,020
7,352,715
746,132
10,102,699
FIXED ASSETS
ASSET
S. Particulars
No.
GROSS BLOCK
ACCUMULATED DEPRECIATION
NET BLOCK
As at
01 Apr 13
Additions
Deletions/
Adjustment
As At
31 Mar 14
As at
01 Apr 13
For
the Year
Deletions/
Adjustment
As at
31 Mar 14
As at
31 Mar 14
As at
31 Mar 13
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
(Rs.)
14,709,598
14,709,598
13,958,263
8,892
13,967,155
742,443
751,335
218,485
218,485
187,338
11,832
199,170
19,315
31,147
TOTAL
14,928,083
14,928,083
14,145,601
20,724
14,166,325
761,758
782,482
Previous Year
14,928,083
14,928,083
14,113,441
32,160
14,145,601
782,482
814,642
Tangible Fixed Assets

1
Plant & Machinery
Computer
8.
Long-term loan and advances

(Unsecured, considered good)
Security Deposit
31 March, 2014
3,000
3,000
31 March, 2013
3,000
3,000
75

9.
Trade receivables
(Unsecured, considered good unless otherwise stated)
Considered Doubtful
Outstanding Due Debts for a period Exceeding Six Months
Less: Provision for Doubtful Debts
Total (A)
Outstanding Due Debts for a period Less than Six Months (B)
Total (A+B)
10.
31 March, 2013
1,235,564
1,467
2,915,946
1,859
2,127,377
3,364,408
2,449,687
5,367,492
31 March, 2014
31 March, 2013
53,500
53,500
31 March, 2014
31 March, 2013
105,685
3,992,837
3,597,135
56,240
7,751,897
98,746
3,985,885
2,429,013
52,179
6,565,823
31 March, 2014
40,557,416
40,557,416
31 March, 2013
32,834,385
32,834,385
31 March, 2014
184,841
37,817
168,331
390,989
31 March, 2013
209,994
526,759
736,753
Other income
Interest on deposits
Interest on 1. Tax Refund
Miscellaneous Income
76
31 March, 2014
Revenue from operations

Revenue from internet services
14.
1,614,341
1,614,341
9,975,392
9,975,392

Prepaid Expenses
Cenvat Recoverable
Advance tax (net)
Other Recoverable
13.
2,930,806
2,930,806
5,208,909
5,208,909
Short-term loan and advances

Security Deposit
12.
31 March, 2013
Cash and bank balance

Cash and cash equivalents
Balances with Banks
-In Current Account
Cash on hand
Other bank deposits (including interest accrued)
Fixed Deposits having maturity period :- 3 to 12 Months
11.
31 March, 2014

15.
Network operating expenses

Bandwidth Charges
License Fee
I.P. Charges
Software Expenses
16.
31 March, 2013
15,968
100,000
40,000
60,000
92,600
52,016
210,600
7,350
71,257
12,244
1,776,748
2,434,909
100,000
40,000
60,000
365,600
148,620
5,565
77,305
7,771
682,110
1,502,939
31 March, 2014
717,552
717,552
31 March, 2013
378,619
378,619
31 March, 2014
21,608
17,135
38,743
31 March, 2013
1,883
17,135
19,018
31 March, 2014
494,255
750,000
1,466,020
146,602
896,602
0.66
0.66
10
31 March, 2013
(2,069,242)
750,000
1,466,020
146,602
892,602
(2.76)
(2.76)
10
Financial cost
Interest on TDS
Bank Guarantee Charges
19.
31 March, 2014
12,094
Sales and marketing expenses

Incentive
18.
31 March, 2013
32,815,186
677,056
214,620
782
33,707,644
Administrative and other expenses

Insurance Expenses
Auditors Remuneration:
-Audit fee
-Tax Audit fee
-Others
Legal & Professional Charges
Office Rent
Outsource Activity
Printing & Stationery Expenses
Office Expenses
Bank Charges
Provision for Doubtful Debts
17.
31 March, 2014
36,980,818
261,404
37,242,222
Earnings per share

Profit After Tax
Weighted average number of equity shares
Advance received for Equity shares
Dilutive Potential equity shares
Number of equity shares used to compute
Basic Earning (Loss) Per Share (Rs.)
Diluted Earning Per Share (Rs.)*
Nominal Value of Equity Shares (Rs.)
*Diluted Earning Per share is same as Basic Earning Per share due to decrease in loss per share after allotment of fresh equity
share.
20.
The accumulated losses of the company exceed the paid-up capital. In view of the assurance from the parent company of
financing the operations, the going concerns status has been adopted.
77

21.
Holding company has provided its infrastructure facilities, sharing of manpower and customer care facility for providing
internet services by the company for which no cost has been incurred by the company.
22.
Expenditure in foreign currency

Particulars
31 March 2014
2,73,202
Registration and Annual Fees

23.
31 March 2013
2,27,419
Deferred Taxes
The company has carried forward losses of Rs. 3,86,89,618 as on 31.03.2014 as per Income tax act. Though the management is
confident of generating profits in the future, however currently there is no virtual certainty with convincing evidence that the
company would reverse the tax loss carry forward. Accordingly, the company has not recognized any deferred tax assets
resulting from the carry forward tax losses.
24.
25.
The company has no dealings with Micro, Small and medium Enterprises Accordingly, the information required under the said
Act is not applicable
Business Segments
The company is engaged in providing internet services, which in the context of Accounting Standard (AS-17) is considered the
only primary business segment.
26.
Employee Benefits
The company has not provided retirement benefits as the company has on its rolls less than 20 persons, the minimum for
applicability of P.F. and Gratuity. The provisions of AS-15 (Revised) 2006 as notified under Companies Accounting Standard Rules
(2006) are not applicable. Hence the information & disclosures required under the said AS have not been furnished.
27.
Related Party Disclosures

Name of
RelatedParty
Relations
Nature of
Transactions
Transaction
(Rs.)
Outstanding
31March 2014
Outstanding
31 March 2013
Sistema Shyam
TeleservicesLimited
Holding Company
Revenue
54,03,123/(46,41,761/-)
2,33,50,860/(2,32,28,100/-)
4,37,01,430
Payable
4,71,90,362
Payable
Bandwidth
Charges
*Figures in bracket are for previous year
28.
29.
Previous Period figures have been regrouped and reclassified to make them comparable wherever considered necessary.
Other information pursuant to Revised Schedule VI to the Companies Act, 1956 are NIL/ Not Applicable to the company.
For MEHRA GOEL & CO.

Firm Registration No: 0517N
Sd/R.K. Mehra
Partner
M. No. : 6102
Place: New Delhi
Date: June 23, 2014
78
Sd/T. Narasimhan
Director
Sd/Neera Sharma
Director
NOTICE OF 19TH ANNUAL GENERAL MEETING

Notice is hereby given that the 19th Annual General Meeting of the Members of Sistema Shyam TeleServices Limited will be
held at 10:00 A. M. on Tuesday, the 30th day of September, 2014 at Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur
302006, Rajasthan, India, to transact the following businesses:
ORDINARY BUSINESS
1.
To receive, consider and adopt the Audited Balance Sheet as at 31st March 2014 and the Profit and Loss Account for the year ended
on that date together with the Directors Report and the Auditors Report thereon.
2.
To appoint a Director in place of Mr. Ron Sommer (DIN: 00621387), who retires by rotation and being eligible, offers himself for
re-appointment.
3.
To appoint a Director in place of Mr. Vsevolod Rozanov (DIN: 02356528), who retires by rotation and being eligible, offers himself
for re-appointment.
4.
To appoint a Director in place of Mr. Rajiv Mehrotra (DIN: 00035766), who retires by rotation and being eligible, offers himself for
re-appointment.
5.
To appoint a Director in place of Mr. Suman Sehgal (DIN: 00571220), who retires by rotation and being eligible, offers himself for
re-appointment.
6.
To appoint Statutory Auditors to hold office from the conclusion of this Annual General Meeting till the conclusion of the next
Annual General Meeting and to authorize the Audit Committee / Board of Directors to fix their remuneration. M/s. Deloitte
Haskins & Sells, Chartered Accountants (Registration No. 015125N) the retiring Auditors of the Company, being eligible, offer
themselves for re-appointment
SPECIAL BUSINESS
7.
To consider and, if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:
RESOLVED THAT Mr. Igor Kozlov (DIN: 06955901) who was appointed as an Additional Director of the Company by the
Board of Directors w.e.f. September 02, 2014 and who holds office until the date of this Annual General Meeting, and in respect
of whom the Company has received from a member a notice in writing under Section 160 of the Companies Act, 2013 proposing
the candidature of Mr. Igor Kozlov for the office of the Director of the company, be and is hereby appointed as Director of the
Company whose period of office shall be liable to determination for retirement by rotation.
8.
RESOLVED THAT Mr. Andrey Smelkov (DIN: 06748395) who was appointed as an Additional Director of the Company by the
Board of Directors w.e.f. September 02, 2014 and who holds office until the date of this Annual General Meeting, and in respect
of whom the Company has received from a member a notice in writing under Section 160 of the Companies Act, 2013 proposing
the candidature of Mr. Andrey Smelkov for the office of the Director of the company, be and is hereby appointed as Director of
the Company whose period of office shall be liable to determination for retirement by rotation.
9.
RESOLVED THAT Mr. Andrey Dubovskov (DIN: 06963762) who was appointed as an Additional Director of the Company by
the Board of Directors w.e.f. September 02, 2014 and who holds office until the date of this Annual General Meeting, and in
respect of whom the Company has received from a member a notice in writing under Section 160 of the Companies Act, 2013
proposing the candidature of Mr. Andrey Dubovskov for the office of the Director of the company, be and is hereby appointed as
Director of the Company whose period of office shall be liable to determination for retirement by rotation.
10.
RESOLVED THAT pursuant to the provisions of Sections 149, 152 read with Schedule IV and all other applicable provisions
of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory
modification(s) or re-enactment thereof for the time being in force), Mr. Ram Krishna Agrawal (DIN: 00416964), who was
appointed as an Additional Director of the Company by the Board of Directors w.e.f. September 02, 2014 and who holds office
until the date of this Annual General Meeting, and in respect of whom the Company has received from a member a notice in
79
writing under Section 160 of the Companies Act, 2013 proposing the candidature of Mr. Ram Krishna Agrawal for the office of the
Director of the Company, be and is hereby appointed as a Non-Executive Independent Director of the Company, not liable to
retire by rotation and to hold office for 5 consecutive years for a term upto September 1, 2019.
11. To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
modification(s) or re-enactment thereof for the time being in force), the tenure of Mr. Bharat Patel (DIN: 00060998) who is a NonExecutive Independent Director of the Company be and is hereby fixed for a term of 5 consecutive years, not liable to retire by
rotation, with effect from date of this Annual General Meeting upto the conclusion of 24 th Annual General Meeting of the
Company.
modification(s) or re-enactment thereof for the time being in force), the tenure of Mr. Vikram Kaushik (DIN: 00020529) who is a
Non-Executive Independent Director of the Company be and is hereby fixed for a term of 5 consecutive years, not liable to retire
by rotation, with effect from date of this Annual General Meeting upto the conclusion of 24th Annual General Meeting of the
Company.
modification(s)
or
re-enactment
thereof
for
the
time
being
in
force),
the
tenure
of
Mr. Madhukar (DIN: 00558818) who is a Non-Executive Independent Director of the Company be and is hereby fixed for a term
of 5 consecutive years, not liable to retire by rotation, with effect from date of this Annual General Meeting upto the conclusion
of 24th Annual General Meeting of the Company.
RESOLVED THAT pursuant to the provisions of Section 197 and 198 of the Companies Act, 2013 read with Schedule V of the
Companies Act, 2013, as amended up to date, approval of the members of the Company be and is hereby accorded for the payment
of excess PLI of Rs. 2,263,333/- (Total PLI - Rs. 25,596,664/-) to Mr. Dmitry Shukov, Whole Time Director designated as CEO of
the Company, for the year 2013, which is in excess of maximum amount of upto 100% of his Gross Fixed Salary as approved by
the shareholders at their meeting held on September 23, 2013.
RESOLVED FURTHER THAT any of the Directors and Mr. Vishal Kohli, Company Secretary of the Company, be and are
hereby severally authorized to sign, execute, authenticate and file necessary forms, application, declarations and to take all other
necessary steps and actions for and on behalf of the Company as may be required and as may be deemed fit and appropriate to give
effect to the aforesaid resolution.
15. To consider and, if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:
RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013
and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the
time being in force), the Cost Auditors, M/s. Sanjay Gupta & Associates (Registration No. 00212) appointed by the Board of
Directors of the Company to conduct the audit of the cost records of the Company for the financial year ending 31st March 2015,
be paid a remuneration of Rs. 8.00 lakhs (Rupees Eight Lakhs) per annum all inclusive.
RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorized to do all such acts,
matters, deeds and things as may be necessary to give effect to the above resolution.
By Order of the Board
For Sistema Shyam TeleServices Limited
Place : Gurgaon, India

80
Sd/Vishal Kohli
Company Secretary
NOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND TO VOTE
ON POLL INSTEAD OF HIMSELF. THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. A BLANK FORM OF PROXY IS
ENCLOSED HEREWITH AND, IF INTENDED TO BE USED, IT SHOULD BE RETURNED DULY COMPLETED AT THE REGISTERED
OFFICE OF THE COMPANY NOT LESS THAN FORTY EIGHT HOURS BEFORE THE SCHEDULED TIME OF THE COMMENCEMENT
OF 19TH ANNUAL GENERAL MEETING.
A PERSON CAN ACT AS PROXY ON BEHALF OF MEMBERS NOT EXCEEDING FIFTY IN NUMBER AND HOLDING IN THE
AGGREGATE NOT MORE THAN 10% OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYINGVOTING RIGHTS. HOWEVER,
A MEMBER HOLDING MORE THAN 10% OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING VOTING RIGHTS MAY
APPOINT A SINGLE PERSON AS PROXY AND SUCH PERSON SHALL NOT ACT AS PROXY FOR ANY OTHER PERSON OR
SHAREHOLDER.
Every member entitled to vote at the meeting, or on any resolution to be moved thereat, shall be entitled during the period
beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting,
to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days notice in
writing of the intention to inspect is given to the company.
The relevant explanatory statement pursuant to Section 102 of the Companies Act, 2013 in respect of item no. 7 to 15 of the
notice set out above is annexed herewith.
(A). Members holding shares in physical form are requested to notify/send the following to the Registrar & Transfer Agent (RTA)
of the Company viz. M/s. Karvy Computershare Pvt. Ltd.:
i)
their email id, in case the same have not been sent earlier, for the purpose of receiving the communication electronically,
ii) any change in their address with PIN Code.
(B). Members holding shares in dematerialized form are requested to notify their Depository Participant:
i)
their email id, in case the same have not been sent earlier, for the purpose of receiving the communication electronically,
ii) all changes with respect to their address.
Members/Proxies are requested to produce the enclosed attendance slip duly signed as per the specimen signature recorded
with the Company for admission to the meeting hall. Members, who hold shares in Dematerialized Form, are requested to bring
their Client ID and DP ID numbers for easier identification of attendance at the meeting.
Corporate Members are requested to send a duly certified copy of the Board Resolution authorizing their representative(s) to
attend and vote at the Annual General Meeting.
Members desirous of getting any information from the Company are requested to send their queries addressed to Company
Secretary at Registered Office of the Company well in advance so that the same may reach at least 7 days before the date of the
Meeting to enable the management to keep the required information readily available at the Meeting.
As a measure of economy, copies of the Annual Report shall not be distributed at the Meeting. Members are requested to bring
along their own copies to the meeting.
Members are requested to:
i)
note that due to strict security reasons mobile phones, brief cases, eatables and other belongings are not allowed inside the
Auditorium/Hall.
ii) note that no gifts/coupons will be distributed at the Annual General Meeting.
All the documents referred to in the accompanying Notice are open for inspection at the Registered Office of the Company on all
working days between 11.00 am to 1.00 pm up to the date of Annual General Meeting and shall also be available at the venue of the
Meeting.
The Register of Directors and Key Managerial Personnel and their shareholding, maintained under Section 170 of the Companies
Act, 2013, will be available for inspection by the members at the AGM.
In case of joint holders attending the Meeting, only such joint holder who is higher in order of the names will be entitled to vote.
Annual Report is available at the website of the Company at www.mtsindia.in in the Investor relations section.

Sd/Vishal Kohli
Company Secretary
81
ANNEXURE TO NOTICE
EXPLANATORY STATEMENT UNDER SECTION 102 OF THE COMPANIES ACT, 2013
Item No. 7,8 and9
Mr. Igor Kozlov, Mr. Andrey Smelkov and Mr. Andrey Dubovskov were appointed on the Board as Additional Directors at the
meeting of the Board of Directors of the Company held on September 02, 2014.
Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 the tenure of Mr. Kozlov, Mr. Smelkov and Mr. Dubovskov
as an Additional Director expires at the date of this Annual General Meeting.
The Company has received a written notice from members under Section 160 of the Companies Act, 2013 along with requisite
deposit proposing the candidature of Mr. Kozlov, Mr. Smelkov and Mr. Dubovskov for the office the directors of the Company.
The Board also considers it desirable that the appointment of Mr. Igor Kozlov, Mr. Andrey Smelkov and Mr. Andrey Dubovskov as
Directors be regularized by their appointment as Ordinary Directors under Section 152 of the Companies Act, 2013 liable to
retire by rotation.
Mr. Igor Kozlov, Mr. Andrey Smelkov and Mr. Andrey Dubovskov are not disqualified from being appointed as a Director in terms
of Section 164 of the Companies Act, 2013 and has given their consent to act as Director of the Company.
In view of vast experience, expertise and knowledge possessed by the proposed directors, it is in the interest of the company that
Mr. Kozlov, Mr. Smelkov and Mr. Dubovskov be appointed as Directors of the Company.
Further, in the opinion of the Board, Mr. Igor Kozlov, Mr. Andrey Smelkov and Mr. Andrey Dubovskov fulfils the criteria and the
conditions as prescribed under the Companies Act, 2013 for appointment as Director and therefore, your Directors recommend
the resolution proposed at Item No. 7,8 and 9 for the approval of shareholders.
Mr. Igor Kozlov, Mr. Andrey Smelkov and Mr. Andrey Dubovskov are interested in the resolutions set out respectively at Item Nos.
7, 8 and 9 of the Notice with regard to their respective appointments.
Except as mentioned above, none of the Directors, Key Managerial Personnel or their relatives, is concerned or interested in the
proposed resolutions.
Item No. 10
Mr. Ram Krishna Agrawal was appointed on the Board as Additional Director at the meeting of the Board of Directors of the
Company held on September 02, 2014.
Pursuant to the provisions of Section 161(1) of the Companies Act 2013 the tenure of Mr. Agrawal as an Additional Director
expires at the date of this Annual General Meeting.
The Company has received a written notice from a member under section 160 of the Companies Act, 2013 along with requisite
deposit proposing the candidature of Mr. Agrawal for the office Independent Director of the Company.
The Board also considers it desirable that the appointment of Mr. Agrawal as Director be regularized by his appointment as an
Independent Director under Section 149 of the Companies Act, 2013. Pursuant to said Section 149, an independent director can
hold office for a term up to 5 (five) consecutive years on the Board of a company and he shall not be included in the total number
of directors for retirement by rotation.
Mr. Ram Krishna Agrawal is not disqualified from being appointed as a Director in terms of Section 164 of the Companies Act,
2013 and has given his consent to act as Director of the Company. He has also given a declaration to the effect that he meets the
criteria of Independence as provided in section 149(6) of the Companies Act, 2013.
In view of vast experience, expertise and knowledge possessed by the proposed director, it is in the interest of the company that
Mr. Agrawal be appointed as Director of the Company.
Further, in the opinion of the Board, Mr. Agrawal fulfils the criteria and the conditions as prescribed under the Companies Act,
2013 and rules made thereunder for the appointment of Independent Director and is also independent of management, therefore,
your Directors recommend the resolution proposed at Item No. 10 for the approval of shareholders.
A copy of the draft letter of appointment setting out the terms and conditions of appointment of Mr. Ram Krishna Agrawal is
available for inspection, without any fee, by the members at the Companys registered office during normal hours on working days
up to the date of the Annual General Meeting.
None of the Directors, Key Managerial Personnel or their relatives, except Mr. Agrawal to whom the resolution relates, is
concerned or interested in the proposed resolution.
Item No. 11, 12 and 13
The Company had appointed Mr. Bharat Patel, Mr. Vikram Kaushik and Mr. Madhukar as Independent Directors of the Company.
In accordance with Section 149 read with 152 and Schedule IV of the Companies Act, 2013 that have come into effect from 1 April
2014 and subsequent notification by the Ministry of Corporate Affairs vide its General circular no.14/2014 dated 9 June 2014, the
Company is required to appoint Independent Directors in accordance with the provisions of the Companies Act, 2013 within I
year from the date of commencement of Companies Act, 2013 i.e. on or before 31st March 2015. Further, pursuant to the above
provisions, the term of such Independent Directors is not liable to determination by rotation.
82

Accordingly, it is proposed to appoint Mr. Bharat Patel, Mr. Vikram Kaushik and Mr. Madhukar as Independent Directors of the
Company in accordance with Section 149 of the Companies Act, 2013, not liable to retire by rotation for a term of 5 consecutive
years with effect from date of this Annual General Meeting upto the conclusion of 24th Annual General Meeting of the Company.
The Company has received from each of Mr. Bharat Patel, Mr.Vikram Kaushik and Mr. Madhukar a declaration to the effect that the
individual meets the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013.
In view of vast experience, expertise and knowledge possessed by the proposed directors, it is in the interest of the company that
Mr. Bharat Patel, Mr. Vikram Kaushik and Mr. Madhukar be appointed as Directors of the Company.
Further, in the opinion of the Board, Mr. Bharat Patel, Mr. Vikram Kaushik and Mr. Madhukar fulfil the criteria and the conditions as
prescribed under the Companies Act, 2013 and rules made thereunder for the appointment of Independent Director and is also
independent of management, therefore, your Directors recommend the resolutions proposed at Item No. 10, 11 and 12 for the
approval of shareholders.
A copy of the draft letter of appointment setting out the terms and conditions of appointment of Mr. Bharat Patel, Mr. Vikram
Kaushik and Mr. Madhukar is available for inspection, without any fee, by the members at the Companys registered office during
normal hours on working days up to the date of the Annual General Meeting.
Mr. Bharat Patel, Mr. Vikram Kaushik and Mr. Madhukar are interested in the resolutions set out respectively at Item Nos. 10, 11
and 12 of the Notice with regard to their respective appointments.
Except as mentioned above, none of the Directors, Key Managerial Personnel or their relatives, is concerned or interested in the
proposed resolutions.
Item No. 14
The shareholders, at their meeting held on September 23, 2013 approved the appointment and remuneration of Mr. Dmitry
Shukov as Whole Time Director designated as Chief Executive Officer of the Company. In terms of the said shareholders
approval, Mr. Shukov is entitled to Performance Linked Incentive (PLI) of maximum up to 100% his Gross Fixed salary, i.e. up to
Rs. 40,000,000/- (Rs. Four Crore) per annum.
In terms of the above shareholders approval, Mr. Shukov is entitled to maximum PLI of Rs. 23,333,331/- for the year 2013.
However, the Board of Directors, at their meeting held on April 17, 2014 approved the PLI payment of Rs. 25,596,664/- to Mr.
Shukov for the year 2013 subject to the approval of shareholders. The payment of above mentioned PLI of Rs. Rs. 25,596,664/- to
Mr. Shukov was recommended by the Nomination and Remuneration Committee at its meeting held on April 17, 2014.
The proposed PLI payment of Rs. Rs. 25,596,664/- for the year 2013 is in excess of the limit approved by the shareholders and,
therefore, it will amount to increase in the remuneration of Mr. Dmitry Shukov and, hence, requires the approval of the
shareholders under the provisions of the Companies Act, 2013.
In terms of Section 197 and 198 of the Companies Act, 2013 and rules made thereunder read with Schedule V of the Companies
Act, 2013 as amended up to date, the payment of PLI for the year 2013 to Mr. Dmitry Shukov is in excess of his annual gross fixed
salary (Excess Amount of PLI Rs. 2,263,333/-) and hence, requires the approval of the shareholders by means of a special
resolution to be passed at the general meeting.
Your Directors, therefore, solicit the approval of the members for payment of excess PLI of Rs. 2,263,333/- for the year 2013 to
Mr. Shukov and recommend the resolution proposed at Item No. 13 for the approval of shareholders by way of a Special
Resolution.
None of the Directors, Key Managerial Personnel or their relatives, except Mr. Dmitry Shukov, to whom the resolution relates,
is concerned or interested in the proposed resolution.
Item No. 15
The Board, on the recommendation of the Audit Committee, has appointed, M/s. Sanjay Gupta & Associates as Cost Auditors of
the Company at a remuneration of Rs. 8.00 lakhs (Rupees Eight Lakhs) per annum all inclusive, to conduct the audit of the cost
records of the Company for the financial year ending 31st March 2015.
In accordance with the provisions of Section 148 of the Companies Act, 2013, read with the Companies (Audit and Auditors)
Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company.
Accordingly, consent of the members is sought for passing an Ordinary Resolution as set out at Item No. 14 of the Notice for
ratification of the remuneration payable to the Cost Auditors for the financial year ending 31st March 2015.
None of the Directors, Key Managerial Personnel or their relatives is concerned or interested in the proposed resolution.
Sd/Vishal Kohli
Company Secretary
83
Details of Directors retiring by rotation seeking re-election and appointment as Directors at

this Annual General Meeting:
Name of Directors
Brief Profile
Mr. Ron Sommer
Mr. Ron Sommer studied mathematics at the University of Vienna, where he earned his doctorate in
1971. He began his professional career with the Nixdorf Group in New York, Paderborn and Paris. In
1980 he was appointed as Managing Director of the German subsidiary of the Sony Group. In 1986 he
became Chairman of the Management Board of Sony Deutschland and was subsequently appointed
President and Chief Operating Officer of Sony Corporation of America in 1990. In 1993, Mr. Sommer
served at Sony Europe in the same function. From May 1995 to July 2002 he served as Chairman of the
Management Board of Deutsche Telekom AG. He has been serving as Chairman of the International
Advisory Council of Sistema JSFC since May 2003. From May 2009 till April 2011 Mr. Sommer served
as First Vice President of Sistema JSFC, Head of Business Unit Telecom Assets. Presently, Mr.
Sommer is serving as Chairman on the Board of MTS OJSC, Russia, as well as Director on the Board
of Tata Consultancy Services, India and Munich Reinsurance, Germany.
Mr. Vsevolod Rozanov
Mr. V. Rozanov did his graduation from the Lomonosov Moscow State University with a degree in
Economics. He is having rich corporate experience of more than 20 years, mainly in the field of
Management, Economics and Finance. He has served many esteemed Multinational Companies in
senior capacity. Before joining the Company he was Vice President and CFO with Mobile TeleSystems
(MTS), Moscow, another Subsidiary Company of Sistema JSFC. He is a successful professional who
made a significant contribution to consolidating MTSs position in the telecom market. From August
2008 till May 2013, he held the position of Whole Time Director designated as President and CEO of
the SSTL. Presently, he is the Dy. Chairman of the SSTL. He is also the Senior Vice President, Chief
Financial Officer and member on the Management Board of Sistema JSFC. He is on the Board of
telecom company MTS OJSC, oil company Bashneft JSOC, transport company SG-Trans OJSC and
management company Leader-Invest CJSC.
Mr. Rajiv Mehrotra
Mr. Rajiv Mehrotra, a telecom industry veteran and serial entrepreneur, is the founder and Chairman
of Shyam, Indias leading diversified telecommunications group. In a career spanning over 40 years, he
has many firsts to his credit. In 1974, as a young electronics engineer, he pioneered the manufacture
of satellite TVRO systems that brought cable TV to millions in India. He then launched Shyam Telecoma global name in mobile coverage solutions, Hexacom (GSM services) and Shyam Telelink (now
Sistema Shyam Teleservices Limited). His efforts established Essel Shyam as the leading name in VSAT
services in India. In 2004 he launched VNL (Vihaan Networks Ltd.) with the dream of connecting the
billions of unconnected across the world using sustainable technology to deliver affordable mobile
and broadband services. Under his guidance VNL has won extensive international acclaim for innovation
and is the only Indian company today that manufactures and exports its own end-to-end mobile
infrastructure solutions to countries in Asia, Africa and Latin America. An active industry spokesperson,
he is a passionate advocate for Indias indigenous telecom R&D and manufacturing.
Mr. Suman Sehgal
Mr. Suman Sehgal graduated from the prestigious Saint Stephens College, New Delhi. After graduation
he completed two years of practical training in West Germany with Fischer & Krecke following which
he took over his family factory producing paper products in India as Managing Director. He went to
Russia in 1983 and acted as consultant to various Indian companies- Indian Tobacco Company, Godphrey
Phillips, Tata Tea, Nestle, Mcneil & Magor, Rossell and Printers House India. Mr. Sehgal was instrumental
in establishing brands such as Capstan and Four Square in the U.S.S.R. In Post-Soviet Russia ,
Mr. Sehgal was the leading Indian exporter of rice & Tea to Russia. Since 2000 , Mr. Sehgal has consulted
84
various Russian Enterprises including J.S.F.C Sistema, Ural Mining & Metallurgical Company,
Sberbank, Hydroenergostroy, Transmash holding & Novolipetsk Steel. He is on the Board of SSTL
since February 2008.
Mr. Andrey Dubovskov
Mr. Andrey Dubovskov graduated in 1993 from Russian State University of Cinematography named
after S. Gerasimov. From 1993 onwards, he occupied a number of management positions in such
companies as Millicom International Cellular S.A., Millicom International Cellular B.V., Regionalnaya
Sotovaya Svyaz LLC and CJSC 800, as well as other companies in Russia Moscow, Nizhny Novgorod,
Ekaterinburg, Perm), Kazakhstan (Alma-Ata) and Ukraine (Kiev). From 2002 to 2004, Mr. Dubovskov
headed Tele2s operations in Nizhny Novgorod. From 2004 to 2006, he was head of MTS branch in
Nizhny Novgorod. From 2006 to 2007, he was the Head of Macro-region Ural. He joined MTS
Ukraine in November 2007 as First Deputy of General Director and then, since January 2008 he has
been the Head of Business Unit MTS Ukraine. In March 2011 Andrey Dubovskov was appointed as a
President and Chief Executive Officer (CEO) of MTS Group. Presently, he is also member of the
Board of MTS Group, Chairman of the Supervisory Board of MTS Ukraine PJSC, Chairman of the
Board of Directors of Mobile TeleSystems JV (MTS-Belarus) and MGTS OJSC (Moscow City Telephone
Network), as well as member of the Board of Directors of International Cell Holding Ltd. and Russian
Telephone Company CJSC.
Mr. Andrey Smelkov
Mr. Andrey Smelkov graduated in 1998 from the Novgorod State University with a degree with honor
in management and economics. In 2000, Mr. Smelkov graduated from the University College in Telemak
(Norway) with a degree in economics and business administration. In 2012, he completed executive
development program in business administration and management at the Wharton School of Business.
In 2002, he began his career as a marketing and advertising manager of mobile operator Novgorod
Telecommunications (trademark Unicell). From 2004 to 2007, he was head of Vimpelcom (trademark
Beeline) operations in Novgorod. From 2006 to 2008, he served as Regional Development Director
and Deputy CEO in Vimpelcom, Uzbekistan. In 2008-2010, he worked as CEO of Skymobile in Kyrgyzstan.
In 2010- 2013, Mr. Smelkov was CEO, Chairman of the Management Board, of Tele2 in Kazakhstan. He
joined MTS from Tele2 AB, where he served as Senior Advisor to Executive Vice President, Central
Europe and Eurasia. Andrey Smelkov was appointed in October 2013 as a Vice President for Foreign
Subsidiaries, Member of the Executive Board of MTS Group.
Mr. Igor Kozlov
Mr. Igor Kozlov graduated in 1987 from Air Force Engineering Higher School with an engineers
degree in Avionics and in 1999 from Air Force Engineering Academy with a masters degree in Military
and Administrative Management. In 2000 he received an MA in International Economics from UCLA
and in 2006 he received an MBA from Esslingen University Business School. From 1987 he served as
acting officer on different senior positions in Russian Air Force till his retirement in 2002 in a colonel
rank. From 2002 to 2004 he served as an International Programs Director of aircraft manufacturing
holding KASKOL Group. During 2004 to 2006 he held a position of Member of the Management Board
and Corporate Management Director in pipe production holding - ChTPZ Group. From 2006 to 2009
he held a position of Strategy and Investments Executive Director in URALSIB Financial Corp. In the
end of 2009 he was appointed as Executive Vice President of Sistema JSFC. During 2010 to 2012 he
held position of Member of the Board of Directors of various hi-tech companies e.g. Sitronics OJSC,
RTI Systems OJSC, Sitronics-NANO OJSC, Mikron OJSC. Presently, he is an Adviser of the Russian
Minister of Telecom and Mass Media Communications and Member of the Board of Directors of
Russian biggest telecom operator Rostelecom OJSC and Russian private equity venture fund
Rosinfocominvest OJSC.
85
Mr. Ram Krishna Agrawal Shri Ram Krishna Agrawal is a qualified chartered accountant and was the Managing Partner of S R
Batliboi & Co., at the time of his retirement in June, 2013. He has got wide exposure of various
industries, including Steel, Paper, Cement, Telecom, Automobiles, Real Estate, Milk & Dairy Products,
etc. , both in India and abroad. Shri Agrawal is the past President of the Institute of Internal Auditors,
India and was a member of the Central Council of the Institute of Chartered Accountants of India
during 1991-1997. Shri Ram Krishna Agrawal is connected with various Chambers of Commerce as
the Committee Chairman/Executive Committee member, permanent invitee etc., and is a past Chairman
of CII (Eastern Region). He was the National Chairman of Direct Tax Sub-Committee of CII in the
year 2013-14.
Mr. Bharat Patel
Mr. Bharat V Patel is an Independent Director of the Company since 13.07.2011. He holds MA in
Economics from the University of Notre Dame, US and MBA in Marketing from the University of
Michigan, USA. He is the former Chairman of Procter & Gamble Hygiene and Health Care Ltd., and
presently in the Executive Committee or Boards of Indian Society of Advertisers (ISA), World
Federation of Advertisers (WFA),Advertising Standards Council of India (ASCI) and Broadcast Audience
Research Council (BARC). He has over 40 years of varied experience in the field of advertising,
marketing, sales, exports and operations.
Mr. Vikram Kaushik
Mr.Vikram Kaushik earned his Masters degree from St. Stephens College in Delhi and joined Hindustan
Unilever as a Management trainee. He worked for Unilever for more than 16 years and got wide
exposure to different product categories both in India and in Asia, Europe and Africa. After a short
stint as Managing Director of a leading advertising agency he returned to consumer marketing as Vice
President Marketing, Sales and Exports at Britannia, a joint venture with Groupe Danone. He moved
in 2000 as a Director on the Board of Colgate Palmolive and was responsible for a major turnaround
for the brand Colgate in India. Thereafter, he served as the MD & CEO Tata Sky from 2004 till
December 2010 and played a pioneering role in establishing the DTH industry in India. Presently,
Mr. Kaushik consults with PricewaterhouseCoopers and Voltas, a leading Tata Group company and
with leading firms in the Private Equity sector both in India and overseas. He has served on the Board
of Prasar Bharati, Indias public service broadcaster. In 2012-13 he was nominated by the Government
as a member on the Committee on Restructuring Public Service Broadcasting. He is currently on the
Board of several companies both in India and in the UK. He has travelled widely and lectures regularly
both in India and abroad, including at the Harvard Business School.
Mr. Madhukar
Mr. Madhukar holds a Master of Arts degree in Economics and a Bachelors degree in Law. He did
professional programs in Project Management and Human Resource Development etc. from IIM
Ahmedabad, IIM Kolkata, IMI New Delhi and he is a Certified Associate of Indian Institute of Bankers.
Mr. Madhukars banking career spans over 37 years and covers every major dimension of banking
operations, both in India as well as overseas. From 1990 to 1996 he served as the Managing Director
of the State Bank International Limited, Mauritius. In 1997, he was appointed Senior General Manager
at SBI Capital Markets. From 1998 to 2000, he served as the Chief General Manager, New Delhi Circle
at SBI; and in 2000 to 2001, as Managing Director of State Bank of Bikaner & Jaipur. In 2003-2004, he
was appointed Chairman & Managing Director at the Industrial Investment Bank of India Ltd. He held
concurrent charge from 2001-2004 as Chairman & Managing Director at United Bank of India. He has
also served as Whole Time Member with Securities and Exchange. Mr. Madhukar is also currently one
of the Arbitrator of Bharat Heavy Electricals (BHEL), one of the top rated companies of India.
86
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SISTEMA SHYAM TELESERVICES LIMITED

Regd. Office: MTS Tower, 3 Amrapali Circle, Vaishali Nagar, Jaipur, Rajasthan-302021. Tel: 0141-5100343, Fax: 0141-5100390
CIN: U64201RJ1995PLC017779; Website: www.mtsindia.in; Email: cs.sstl@mtsindia.in
ATTENDANCE SLIP
(Please complete this attendance slip and hand it over at the entrance)
Name of the Member/Proxy
Folio No.
DP ID No.
Client ID
I / We hereby record my / our presence at the 19thANNUAL GENERAL MEETING of SISTEMA SHYAM TELESERVICES LIMITED to be held at 10:00 A.M.
on Tuesday, the 30thSeptember 2014, at Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur-302006, Rajasthan, India.
Note:
1. Only Member1Proxyholder can attend the Meeting.
2. Member1Proxyholder should bring his1her copy of the Annual Report for reference at the Meeting.
If Member sign here
If, Proxy Sign Here
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------SISTEMA SHYAM TELESERVICES LIMITED

Regd. Office: MTS Tower, 3 Amrapali Circle, Vaishali Nagar, Jaipur, Rajasthan-302021. Tel: 0141-5100343, Fax: 0141-5100390
CIN: U64201RJ1995PLC017779; Website: www.mtsindia.in; Email: cs.sstl@mtsindia.in
PROXY FORM (FORM No. MGT-11)
(Pursuant to Section 105(6) of the Companies Act. 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014)
Name of the member(s) :
Folio No. / DP ID-Client ID No. :
Registered address :
E-mail Id :
I/we being the member(s) of _________________________ shares of Sistema Shyam TeleServices Ltd. hereby appoint:
1.
Name: ____________________________________________Address: ________________________________________________

________________________________________________ Email Id: _________________________________________________
Signature: _______________________________________________
2.
or failing him
Name: ____________________________________________Address: ________________________________________________

________________________________________________ Email Id: _________________________________________________
Signature: _______________________________________________
3.
or failing him
Name: ____________________________________________Address: ________________________________________________

________________________________________________ Email Id: _________________________________________________
Signature: _______________________________________________
or failing him
th
as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 19 Annual General Meeting of the Company to be held at
10:00 A.M. on Tuesday, the 30thSeptember 2014, at Hotel Hilton, Plot No. 42, Geejgarh House, Hawa Sadak, Jaipur-302006, Rajasthan, India and at any
adjournment thereof in respect of such resolutions as are indicated below:
Ordinary Business
(8)
(1)
(9)
(2)
Adoption of Audited Financial Statements, Report of Auditors and

Directors thereon.
Re-appointment of Mr. Ron Sommer who retires by rotation.
(3)
Re-appointment of Mr. Vsevolod Rozanov who retires by rotation.
(11)
(4)
Re-appointment of Mr. Rajiv Mehrotra who retires by rotation.
(12)
(5)
Re-appointment of Mr. Suman Sehgal who retires by rotation.
(13)
(6)
Appointment of M/s Deloitte Haskins & Sells, Chartered Accountants

as Auditors and to fix their remuneration.
Special Business:
(7)
(10)
(14)
(15)
Appointment of Mr. Andrey Smelkov as ordinary Director

liable to retire by rotation.
Appointment of Mr. Andrey Dubovskov as ordinary Director
liable to retire by rotation.
Appointment of Mr. Ram Krishna Agrawal as Independent
Director for 5 years not liable to retire by rotation.
Fixing the tenure of Mr. Bharat Patel, Independent Director
for 5 years not liable to retire by rotation.
Fixing the tenure of Mr. Vikram Kaushik, Independent Director
for 5 years not liable to retire by rotation.
Fixing the tenure of Mr. Madhukar, Independent Director for 5
years not liable to retire by rotation.
Approval for excess payment of PLI to Mr. Dmitry Shukov,
Whole Time Director of the Company.
Approval of Remuneration of M/s. Sanjay Gupta & Associates,
Cost Auditors for the FY 2014-15
Appointment of Mr. Igor Kozlov as ordinary Director liable to retire

by rotation.
Signed on ___________________________________ day of ____________________________________________, 2014

Signature of Shareholder: __________________________________ Signature of Proxy holder: _______________________
Affix
Revenue
Stamp
Notes:
1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company not less than 48
hours before the commencement of the meeting.
2. A Proxy need not be a member of the company.

19th Annual Report of MTS

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Sistema Shyam TeleServices Limited

Sistema Shyam TeleServices Limited

Sistema Shyam TeleServices Limited

Sistema Shyam TeleServices Limited

Sistema Shyam TeleServices Limited

Mr. V. Rozanov did his graduation from the

Mr. Ajay Khanna is a co-promoter of Shyam Group.

Mr. Andrey Smelkov graduated in 1998 from the

Mr. Alok Tandon is a Chartered Accountant by

Mr. Anton Abugov graduated from the Academy

Sistema Shyam TeleServices Limited

Mr. Dmitry Shukov, aged 45 years, a Russian

Mr. Ram Krishna Agrawal is a qualified chartered

*In alphabatical order except

Sistema Shyam TeleServices Limited

Depreciation and Amortization

Loss after tax for the year from discontinuing operations

(Amt. in Rs. Mn.)

Companys operating loss for the year ended 31 March 2014

Sistema Shyam TeleServices Limited

Rising a college activation program that reached over a million

Sistema Shyam TeleServices Limited

In March 2013 fresh auction for allotment of spectrum was

Presently, the Company is in the process of restructuring its

There has been no change in the issued, subscribed and paid up

The Company further submits that it is committed to undertake

SHARE CAPITAL AND COMPLIANCE OF FDI

The Company will keep the shareholders informed about the

The present foreign share holding in Company is within the

AWARDS & RECOGNITION

Sistema Shyam TeleServices Limited

During the year under review, your Company fur ther

Sistema Shyam TeleServices Limited

as Non-Executive Independent Director not liable to retire by

Sistema Shyam TeleServices Limited

Technology Absorption, Adaptation and Innovation

Foreign Exchange Earnings & Outgo

Sistema Shyam TeleServices Limited

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry gross revenue increased 10% y-o-y to INR 426 billion

3G services in India started gaining traction during the year

In third quarter of FY 2013-14, the Company has rolled out

Sistema Shyam TeleServices Limited

Revenue from operations for operating circles on YoY basis

Comparison of Revenue & Opex

Secured and Unsecured Loan

The Company has prepaid the term loan amounting to Rs.9,400

Deferred Payment Liabilities

Deferred Payment Liabilities of Rs.20,132 million represents

Tangible and Intangible Assets:

Tangible assets have been increased by Rs.1,000 million due to

As at March 31, 2014, net-worth of the Company is increased

There has been no change in the equity share capital and as at

Revenues from Telecommunication Services

Revenue from operations for operating circles on YoY basis

Other income is increased to Rs.576 million (previous year

The major operating expenses comprise of the following:

Network Operation costs

Network operation cost is constant in comparison to previous

Finance and Treasury Charges

Finance cost is reduced by 27% from Rs.9,189 million to

Depreciation and amortization

Depreciation and amortization charges increased to

No provision for current income tax has been made in accounts