1 Corporate information:

ITI Limited is a Public Limited Company incorporated under the provisions of the Companies Act, 1956. The Company is primarily engaged in the business of Manufacture, sale and servicing of Telecommunication equipments.

2 An amount of '16500 Lakhs has been received from the government towards payment of wage revision arrears during 2014-2015. An Amount of '15493.72 lakhs has been paid towards payment of wage revision arrears and remaining amount of '1006.28 lakhs kept under Other Current Liabilities.

3 Balances in the accounts of creditors, advances from customers, debtors, claims recoverable, loans & advances, materials with fabricators , subcontractors/ others, material in transit, deposits, loans, and other payables/receivables such as Sales Tax, VAT, Excise Duty, Cenvat, Service Tax, GST, TDS etc., are under confirmation/reconciliation. Adjustments, if any will be made on completion of such review / reconciliation / receipt of confirmations. However, in the opinion of the management, the Trade Receivables, current assets and loans and advances are realisable in the ordinary course of the business.

4 The Company is primarily engaged in business of manufacturing, trading and servicing of telecommunication equipments and rendering other associated / ancillary services and there are no other reportable segments. The Company is primarily operating in India, which is considered as a single geographical segment. The company is also engaged in Defence projects. The MCA vide its notification dt.23.02.2018 has exmpted companies engaged in the Defence production from the requirement of Segment Reporting.

i) Claims against the company not acknowledged as debt includes ' 16700.00 Lakhs calimed by M/s Alphion Corporation, Company has to recover' 17096 Lakhs from BSNL on a back to back basis contract related to GPON.

ii) The Company has received a demand for property tax from BBMP for the years from 2008-09 to 2022-23 based on revised rates along with interest and penalties totalling to Rs 7938.21 lakhs. The company has paid/ provided for the property tax at the rates at which the taxes were paid in the past and contested the revision of the property tax by filing a writ petition before the High Court of Karnataka on the ground that the Company is a sick industry under a revival plan sanctioned by the BIFR and are eligible for an exemption from such revision.

(iii) The company has received notices levying penalties amounting to Rs 18.20 from BSE/ NSE for not having sufficient number of independent directors/ women directors. However, on a request to BSE/ NSE stating the reason for non-compliance being a public sector undertaking, the penalties have been waived till the second quarter of FY 2022-23. The company is confident that the subsequent levies would also be waived. Hence, no provision has been made for these penalties.

(iv) The claims amount includes claim by HFCL of Rs 1485.60 lakhs towards Liquidated Damages and confirmed by the Arbitrator. However, the Company has filed an appeal against the said claim in the High Court of Delhi.

(v) The claims against the company includes claim of balance amount by RECAP Ventures Pvt Ltd of Rs 615.13 lakhs from the due date till the filling of petition for providing CCMS boxes under EESL tender .

vi. ) Due to the financial crunch, there have been delayed remittance of some of the statutory dues including contribution to the provident fund. The company has provided interest for the delay on an estimated basis as the actual amount of interest/penalty payable is unascertainable.

vii. ) The company has disclosed a contingent liability of' 5,915.37 lakhs (Previous Year' 14,139.51 Lakhs) towards additional central sales tax liability for non-collection/submission of C/D forms for the past years on the estimated basis. The actual liability may vary based on the collection and submission of the statutory forms and adopting the applicable tax rate at the time of tax assessments.

viii. ) Out of the claims against the company not acknowledged as debt of' 26,800.10 Lakhs which includes ' 16700.00 Lakhs towards M/s Alphion Corporation, Company has to recover' 17096 Lakhs from BSNL on back to back basis contract related to GPON.

(ix) Interest and penalties on arrears of all overdue statutory liabilities (including undisputed) could arise as and when assessed and determined by the respective authorities.

(x) One employee has filed case against the company for claiming interest on 39 months wage revision arrears for' 28.28 Lakhs and the case is pending in High Court.

(b) Other litigations

(i) Claim Recoverable - (inland) - '1049.41 lakhs due from M/S Himachal futuristic communications on account of Liquidated Damages. The Company has filed a legal case and the matter is pending before Delhi High court.

(ii) Bruhat Benguluru Mahanagara Palike (BBMP) constructed road in ITI land in Krishnarajapuram without permission of ITI which is used by general public despite the stay order from High court of Karnataka.

ITI Limited filed a complaint in the Magistrate Civil Court dated 18.05.2022 in furtherance of acting against M/s Mind array Systeme Private Limited. The case is under city commercial court Bengaluru.

ITI Limited supplied LED Street Light to Infos park , the realsation for the same is pending. ITI has filed a case against M/s Infos Park for the cheque which was dishourned by the bank.

Karnataka Power Transmission Corporation Limited is using 5 Acres of Land and no lease agreement has been entered for the same.

Karnataka General Labour Union has filled a case for non payment of lockdown wages for VUSS & Muss amounting to Rs 248.17 lakhs.

13 Accretion/Decretion to stock-in-trade is arrived at after considering due adjustment to difference in excise duty element in respect of opening stock.

14 The Company is a Sick Company as per provisions of the Sick Industrial Companies Act (SICA), 1985 and is currently under a revival plan after it was referred to the Board for Industrial and Financial Reconstruction (BIFR). The Cabinet Committee on Economic Affairs (CCEA) approved financial assistance of '415679 lakhs in February 2014 for the revival of the Company under the Rehabilitation Scheme.

As a part of the approved financial assistance, until the beginning of the financial year 2022-23, an amount of Rs 94556 lakhs have been received towards Capital Grant and Rs 189279 lakhs towards revenue grant. Shares have been allotted to the President of India towards the Capital Grant received, on various dates in accordance with the BIFR order dated 08.01.2013 at prevailing market price or average share price for three months prior to the date of allotment, whichever is lower. Of the revenue grant, Rs 15500 lakhs was towards a VRS scheme of which an amount of Rs 11003.58 lakhs has been disbursed to the employees towards VRS and the remaining amount is lying in the account.

Further to the above, the company received a capital grant of Rs 18700 lakhs during the FY 2022-23. Of this, towards '8,000.00 lakhs grant amount 77,33,204 shares @ Rs 103.45 per share have been allotted on 28.09.2022 (each Rs 10 fully paid up at premium of Rs 93.45 per share) and the balance of '10700.00 lakhs has been accounted in the books as share application money pending allotment. The total financial assistance received till the balance sheet date amounts to Rs 302535 lakhs.

15 Land proposed to be leased to Bangalore Metropolitan Transport Corporation, BMTC , measuring 12.15 acres is in possession of the BMTC. Pending Government of India approval for the lease, lease terms and agreement yet to be finalised. Lease rental will be recognised on finalisation of the terms. An amount of '285 lakhs received earlier from the BMTC under an agreement to sell is held under deposits.

16 During the period under Audit, the DoT had not agreed with the proposal of the Company to provide VRS to employees on Medical ground out of VRS Grant in Aid. Hence VRS expenses on Medical ground which was paid during FY 2019-20 and adjusted against the Grant in Aid is now recognised as expense.

17 Lease agreement with ESIC has expired in the month of July 2016 and renewal lease agreement has not been entered, as the revised lease rent is not settled with ESIC.

19 Rent from C-DoT, Government of India aggregating ' 5847.90 lakhs has not been realised for the years 2005-06 to 2010-11. Due to uncertainty of realisation, recognition of gross rental revenue aggregating ' 11,779.92 lakhs for the financial years 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2018-19, 2019-20,2020-21,2021-22 & 2022-23 on accrual basis is deferred, which is in conformity with Ind AS.

20 Southern Railways were paying rent for 1.83 acres of land used as access road to their facilities, without any written lease agreement till June 1990. However, since the approach road was being used by the public and the residents of the locality, Southern Railways stopped paying rent. Presently, the land is used by the public as right of way.

21 The title deeds of all the immovable properties , as disclosed in Note 1 and Note 3 to the financial statements are held in the name of the Company except those mentioned below:

(i) Land Measuring 77 Acres at Palakkad valuing ' 19470 Lakhs (Carrying Value) have been resumed by the Govt of Kerala and under adjudication of the Apex Court. The value of Land as shown in the Balance Sheet includes the value of Land resumed by the Govt of Kerala pending decision by the Apex court.

(ii) ITI Complex land 174.69 acres valuing ' 9282 lakhs (Carrying Value) was handed over to Naini Unit by District Industrial Officer in 1969 which is not in the name of the Company.

(iii) Transfer of title of 196.37 acres of land (factory area) valuing ' 11620 Lakhs (Appx) acquired against Gazette No 10574(1) . SHA.U/18.II.666/Bha-72 dated 09.01.1973 pertaining to Villages Ballapur, Chhajlapur & Malikmau Aima, Raebareli transfereed by Industries Department , Raebareli dated 12.11.1973 is pending due to non submission of proof of compensation paid by ITI Limited to the land owners at the time of land acquirement

22 An amount of Rs 2144 lakhs is receivable from M/s.Karvy Data Management Services Limited and M/s.Telva Systems, which is overdue. The company has not made any provision for bad debts in this case as the corresponding liability of similar amount to vendors (back-end partners) is payable only upon recovery of this amount. Provision is made for Rs 242 lakhs being the difference between the amount receivable and payable.

23 No loans or advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person that are (a) repayable on demand or (b) without specifying any terms or period of repayment.

24 No proceedings has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act 19488 (45 of 1988) and the rules made thereunder.

25 The Company has borrowings from Banks on the basis of security of current assets. The Stock and Debtors Statement filed by the Company with banks are in agreement with the books of accounts

26 The Company has not been declared as a Wilful Defaulter by any banks or other Financial Institutions or other lenders

27 As per the information available with the management , the Company does not have any transactions with Companies stuck off under Section 248 of the Companies Act 2013 or Section 560 of the Companies Act 1956, in respect of Investments in Securities, Receivables, Payables, Shares held by Stuck off Company and other outstanding balances.

28 The Company does not have any charges or satisfaction of charges which is yet to be registered with ROC beyond the statutory period

29 The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year

30 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company

to or in any other person or entity, including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

31 The Company does not have any transactions not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act 1961

32 The Company has not traded or invested in Crypto or Virtual Currency during the Current or Previous year.

33 The borrowings obtained by the Company from banks and financial institutions have been applied for the purpose for which such loans are taken

36 ITI Limited, being a Public Sector Undertaking, the Directors on the Board of the company are appointed by the order of Government of India. The composition of Board of Directors is not as per provisions of SEBI Listing Regulations due to insufficient number of Independent Directors. However, the proposal for the appointment of requisite number of Independent Directors on the Board of the company is under process with the Administrative Ministry. The company also does not have the Company Secretary as on 31st March 2023.

37 Finance Cost includes interest on delayed remittances of statutory dues of provident fund (Rs 3006.98 Lakhs) at the year end.

38 Pending approval from the concerned ministry on the finalisation of the lease terms and agreement, rental income on the land the newly constructed building leased out to NIFT by the Raebareli Unit has not been recognised.

39 Previous period's figures have been regrouped and reclassified wherever necessary to conform to current period's classification.

40 Figures in brackets indicated in the Accounts reflect negative balances.