ITI : Annual Report 2021

ANNUALREPORT2020-21

CHAIRMAN'S MESSAGE

Dear Shareholders,

Warm Welcome to the 71st Annual General Meeting of ITI Ltd. The Notice related to this Meeting, Director's Report, Audited Annual Accounts together with the Auditor's Report, Comments of the Comptroller and Auditor General of India on the accounts of the Company are already with you and with your permission, I shall take them as read. Further, I am pleased to inform you that the Company has complied with the guidelines on Corporate Governance for CPSEs. On behalf of ITI and the Board of Directors, it is indeed an honour and a privilege to share my thoughts with you through the Annual Report 2020-21.

The Financial Year 2020-21of the Company has been a year of phenomenal success despite challenges due to the pandemic. Your Company has registered profit for the fourth consecutive year and the Company's performance for the financial year 2020-21 has been remarkable as the Company has clocked a turnover of Rs. 2578 Crore, which is the highest in last 11 years, with a Profit After Tax of Rs. 11 Crore. Despite the severe problems posed by the Pandemic which affected material supply, manpower scarcity and transportation hazards, the Company could still make a growth of more than 7%. Most important achievement is the Networth of the Company stands now at Rs. 2420 Crore. I am happy to announce that your Company is making continuous efforts to be competitive, win the tenders and re-claim market dominance to be a strong player in the Telecommunications sector of the country. As on date our orderbook is around Rs. 9820 Crore. The above parameters truly indicate the positive Networth & development of the Company. Sustaining the growth in the last 4 years is a rare milestone scaled by the Company. This should be a game changer for the Company, and is expected to lead the Company towards total turnaround.

Dear Shareholders, despite problems in this financial year, Company has been successful in winning couple of prestigious orders. ITI signed contract with Ministry of Defence to execute ASCON Phase IV project which is worth Rs. 7796 Crore. This is a great feat of the Company as this is the biggest ever order won in the history of the Company. As you all are aware, the first 3 phases of this project have been successfully executed by the Company. The Proof of Concept of the project is being monitored closely for early completion. We have also signed a contract with Indian Air Force for upgradation of their IT facilities which is worth Rs. 414 Crore including AMC. We intend to complete this project in 10 months. We have another Bharat Net project from BBNL worth Rs. 37 Crore to provide optical broadband network in the Andaman & Nicobar Islands. We have also bagged advance purchase order for a package in TANFINET project worth around Rs. 498.52 Crore and PO is expected shortly. For the first time in the history of the Company, we have received an order from a private operator for FTTH rollout worth around Rs. 55 Crore. We are aggressively participating in the tenders from defence forces for the 5G technology network implementation and have also addressed RFP for setting up a 5G test bed.

The trio mega projects of ITI are reaching their completion stage. Gujnet project execution has been almost completed. NFS project is planned to be completed by the year end. We are making all out efforts to see that Maha Net project is also closed at the earliest. It is very important that we aggressively participate in the forthcoming tenders to further strengthen our orderbook which now stands at Rs. 9820 Crore.

The infrastructure that has been upgraded from the CAPEX funds have been planned for capacity utilization. We are very proud that the products for which the infrastructure was established recently are being used for the projects executed by ITI - exemplifying AatmaNirbharta. We have already supplied 10433 KMs of HDPE duct manufactured in our plant for the BharatNet project being executed by the Company. We have also manufactured nearly 9,000 KMs of HDPE for the ASCON Phase IV project which is under inspection by the customer. Further, we have also manufactured 20,000 solar panels for the MahaIT project. OFC supplies for ASCON Phase IV project is also being planned from in-house manufacturing. We are planning to see that the manufacturing facilities of HDPE, OFC, Solar Panels, Wi-Fi Access Points are made operational 24 X 7 basis by exploring more business leads for these products. We are also focusing on initiatives for marketing ITI products like Micro PC, Smart Banking Cards, SPDS (Smart Parcel Delivery Systems), UVDS(Ultra Violet Disinfection Systems), Digital Mobile Radio (DMR), Anti Drone Systems, IRNSS Receivers, E/V Band Radios, EVM etc. The synergy between ITI and the other organizations under Ministry of Communications like C-DoT, Department of Posts is also being explored and new flavor of products are planned.

In order to position Company in the new technology trends, Company has been exploring in the areas of 4G/5G, Cyber Security, AI, Smart Devices, Cloud Services etc. Company has tied up with TCS for addressing the 4G Tender of BSNL. We have already participated in the EoI for PoC and the same is being carried out at Ambala, Haryana. We are taking up manufacturing of 4G Radios and the infrastructure for the same is being positioned. We have plan afoot in setting up a Security Operations Centre (SoC) out of our Data Centre. Partners for the same are under finalization. We also have plans to offer Cloud Services from the ITI Data Centre which is augmented with additional capacity. We have tied up with a startup which has AI based solution for testing infectious diseases including COVID and also Blockchain based solution for Electronic Medical Record System. We plan to launch this solution to augment the National Health Mission initiative of the Government of India. Through partnerships with Indian companies, the Company is trying to reduce dependency on import of Telecom equipment and also build a native strategic platform for networks including defense communication. A PSU joining hands with leading private sector companies shows the commitment of ITI towards the AatmaNirbhar Bharat initiative of Government of India.

Company has established 120-seaterStart-up hub at ITI Bangalore plant and plans to expand it to 1000-seater capacity. Many start-ups working in the areas of IoT devices, Medical Electronics, Home Automation, Aeronautics are operational from this hub. EMI/EMC & Safety Labs set up in collaboration with TEC are operational. Further, establishment of Security Lab is also planned. ITI has created Six Training Centers (TCs) at all the plants of ITI including a Smart Skill Development Centre at Srinagar Plant to promote the Skill India Mission. The expanded Data Centre of ITI is ready to launch the Cloud based services and would help many companies to store data in a secure manner. Your Company has taken number of initiatives on improving business prospects by transformed strategy for manufacturing, marketing and management of projects.

Dear Shareholders you would appreciate that human resource is the foundation for the success of any Company. In order to motivate we have introduced several employee welfare measures. On the personnel development & motivation, there has been paradigm shift in PRC which has been revamped with 3 stage process for the first time in the history of the Company. The entire procedure will be firmed up to accommodate more eligible candidates in the promotion process. We expect that all these incentivization will encourage each employee to add more value and contribute more towards the growth of the Company.

Even during the lockdown period, the business continuity of the Company kept going. During this turmoil, the Company has manufactured more than 2 million Face Shields and supplied to many organisations. Through collaboration with DRDO, Company has also developed and manufactured Ultra Violet Disinfection System (UVDS) useful in disinfecting the hospitals and office spaces. During the lockdown, Company has also distributed grocery kits to more than 2000 needy families.

Though we have made profit in the last four years, our financial problems are still not completely addressed. Unless we enhance our bottom line in all the projects & products, sustenance in the coming days may turn out to be tough. We have to aggressively change our attitude, choose appropriate strategy, and march ahead to stay in the game

Dear Shareholders, the current scenario as well as the future plans of ITI look very bright, as we have strong orderbook as on date. We have orders in pipeline also. Thus our orderbook position for next two to three years is encouraging and Company should never look back. We have built up and strengthened the Company in the last 4 years. We are emerging as a new leader in the telecom sector. Our optimism and resolute efforts will definitely lead us towards enshrined goal of complete revival of your Company. With that, I assure you that, your Company shall continue to make best efforts in sustaining the growth and thereby ensure sustained returns to its stakeholders. With the support of DoT and Government of India, we shall launch the Company towards market leadership & financial sustenance.

I am grateful to the Government of India, Ministry of Home Affairs, Ministry for Rural Development, Ministry of Defense, Department of Telecommunications, Telecom Commission, BSNL MTNL, BBNL, Defense, TCIL, Indian Railways, all departments of Central and State Governments and other valued customers, depositors, banks, financial institutions, overseas collaborators, Auditors, Committee on Public Undertakings [COPU], Standing Committee on Information Technology, and Standing Conference of Public Enterprises [SCOPE] for their continued co-operation and support. I also take this opportunity to extend my thanks to all the employees and Shareholders for their support and understanding.

Thank you

Place: Bengaluru

R M Agarwal

Chairman & Managing Director

NB : This does not purport to be a record of the proceedings of 71st Annual General Meeting.

3

ANNUALREPORT2020-21

VISION, MISSION and VALUES

VISION

"To lead India's transformation towards self-reliance in the domain of Telecommunications, Electronics, and ICT products, services and solutions that change lives for better"

MISSION

"To provide in-house developed convergence solutions, products and services to our clients in the area of Telecommunications, Electronics, Defence system, Space Technologies and smart connected technology"

VALUES

We aspire to achieve our goal by focusing on Innovation, continuous improvement and collaborating with strategic market players (partner /alliance) in transparent and responsible manner.

• Innovation:

There is a constant want for Innovation through facilitation, resource provisions, encouragement & recognitions that drive our growth.

• Continuous Improvement:

We focus on continuous improvements which leads to more sophisticated and overall more economically competitive offerings.

• Collaboration with Strategic Partner:

We just don't do business but help our customers and other stakeholders to transform the lives we touch.

• Transparency:

We will be fair, honest and ethical in our conduct; everything we do must stand the test of scrutiny.

• Responsible Manner:

We will integrate environmental and social principles in our businesses, ensuring that what we generate goes back to the stakeholders.

4

ANNUAL REPORT 2020-2021

CONTENTS

Description	Page No
Board of Directors………………………............	06
Management…………………………….............	06
Notice…………………………………….............	07
Ten Year Digest.…………………………...........	15
Figures at a glance………………………..........	17
Directors' Report…………………………..........	19
Standalone Financial Statements
* Significant Accounting Policies…...………….	81
* Balance Sheet………………………........……	88
* Statement of Profit and Loss……………........	91
* Cash Flow Statement……………………........	92
* Notes to Financial Statements…………........	93
* Auditor's Report………………..........…………	129
Consolidated Financial Statements
* Significant Accounting Policies………........…	143
* Balance Sheet……………………............……	150
* Statement of Profit and Loss…...........………	153
* Cash Flow Statement…………............………	154
* Notes to Financial Statements…............……	155
* Auditor's Report……………….............………	191
Comments of the C & AG of India.................	197

5