The Directors' are delighted to present the 21st Annual Report on the business & operations of the Company together with the Audited Financial Statements & Accounts for the year ended 31st March, 2013.

1. FINANCIAL HIGHLIGHTS

The previous financial year of the Company was of 18 months ending September 30, 2012. Consequently the current financial year of your Company was of 6 Months from October 1st, 2012 to March 31st, 2013 and accordingly the figures for the period under review is for a period of 6 months ended on March 31st , 2013; hence not comparable with the last year's figures.

Your Company has recorded overall revenue of Rs. 935.54 Crores for the year (6 months period). Your Company has been facing tough times due to the current economic slowdown & unfavourable market conditions which has globally affected industries especially in the Telecom Industry. Increased competition & rising interest costs have further added to the profitability. Your Company recorded a net loss of Rs. 742 Crores during the six months ended March 31, 2013. However the cumulative retained profits still remains out to Rs. 340.13 Crores & the Company hopes to do well & recover from the hurdles faced in past. A brief of the financial highlights with comparison of previous year are as follows:

                                                         (Rs. In Crs)

Particulars                                   2012-13       2011-12

Total Revenue                                  938.54      4,062.51

Total Operating Expenditure                    961.59      2,960.07

Profit Before Tax                             (777.86)       489.67

Profit/(Loss) after Tax                       (742.00)       433.21

Cumulative Retained Profits                    340.13      1,082.14

The MDAR for the year under review, as stipulated under Clause 49 of the listing agreement with the stock exchanges in India, on the Company's performance, industry trends and other material changes with respect to the Company and its subsidiary, wherever applicable, is presented in a separate section forming part of this Annual Report.

The register of members and share transfer books shall remain closed from Wednesday, September 25, 2013 to Monday, September 30, 2013 both days inclusive.

2. CORPORATE DEBT RESTRUCTURING

Tulip Telecom Limited established in 1992, has emerged as a leading enterprise service provider catering to the Information Technology and data connectivity requirements in recent years. The business portfolio of Tulip includes three segments: Enterprise Data Connectivity (EDC), Managed Services and Network Integration. The Company has established itself as a major EDC player with significant asset base in the form of fibre optic and wireless network. However, the Company was facing liquidity problems which ultimately resulted in a stress in its ability to service its debt obligations. A brief portrayal of reasons for the stressful phase is as under:

1. Due to the current economic slowdown, many enterprises have started cutting down their IT and telecom spending, impacting the revenue growth of your Company. In order to retain customers, Tulip had to resort to pricing discounts that had impacted the profitability, particularly in the past quarters.

2. Your Company has undertaken a number of Government projects involving high capex/upfront investment while the revenue is realized over a longer period. The aforesaid model of upfront investments and staggered revenue has resulted in blockage of current assets and liquidity constraints.

3. Rising interest cost has impacted the operating cash flows significantly.

4. On account of insufficient internal accruals and due to unfavorable capital market conditions your Company was not able to tie up external funds. While your Company expected conversion of FCCB into equity, which would have substantially improved the gearing, however, a steep decline in share price has led to a situation where the same remains as unpaid debt in Company's books.

5. Targeting high value added revenue segments and the revenue potential with respect to the fibre optic cable network, your Company has made investments in setting up the required infrastructure. However, the payback period of these investments is significantly longer than the average tenure of the loans raised to fund these investments (~5years). Most of the repayments were bunched up in next 2 years resulting in severe liquidity crunch.

Cash flows were not sufficient to meet debt obligation as high capex, increasing receivables, worsening revenue and profitability and high interest expenses have resulted in decline in the cash generation which is insufficient to meet the existing debt liabilities and payment obligations to the lenders.

In view of the problems faced, your Company has made reference to the Corporate Debt Restructuring (CDR) Cell of RBI on December 31, 2012 which was supported by ICICI Bank as the Monitoring Institution. The Flash Report was discussed in CDR meetings dated January 21, 2013, February 15, 2013 and March 7, 2013. Relying on the strong belief on the revival of the Company the lenders have acceded their approval to the CDR proposal.

Your Director's are pleased to inform that the Company has received a formal Letter of Acceptance for its proposal for the restructuring of its debt by the Empowered Group of the CDR Cell dated May 8, 2013 & subsequently signed the Master Restructuring Agreement (MRA), the salient features of which are as under:

a) A12 year door-to-door repayment plan;

b) Reduction in Interest Rates;

c) 1.5 year moratorium on Interest and 2.5 year moratorium on Principal Repayment;

d) Infusion of approximately Rs. 60 Crores by the Promoter under CDR requirement.

As mandated by the CDR package terms, the Promoters have infused the necessary contribution by way of unsecured loans.

3. DIVIDEND & TRANSFER TO RESERVES

In the event of loss your Directors express their inability to declare any Dividend for the Six months financial year ended March 31, 2013.

Debenture Redemption Reserve

The Company has maintained Debenture Redemption Reserve (DRR) of Rs. 93.72 Crores during the period for Non Convertible Debentures (NCDs), amounting to Rs. 560 Crores outstanding as on March 31st, 2013.

4. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)

During the Financial year 2007-08, your Company has raised Zero Coupon Foreign Currency Convertible Bonds (FCCBs) aggregating to USD 150 Million with a maturity period of 5 years, i.e. 26th August 2012. The company has bought back Zero Coupon Foreign Currency Convertible Bonds (FCCBs) aggregating to USD 52.99 Millions during F.Y. 2008-09 & 2009-10, resulting in outstanding FCCB liability to USD 97 Million as on the March 31, 2013

The company has defaulted in repayment of aforesaid unsecured Foreign Currency Convertible bonds (FCCB) amounting to approx. USD 145 million (Rs. 785 Crores approx.). The FCCB were due for redemption in August, 2012.

Pursuant to the Master Restructuring Agreement approval of CDR lenders has been accorded to the restructuring of the FCCB's. In order to redeem aforesaid FCCB, the management is actively pursuing various options which includes raising of additional finance in the form of debt and other various options.

Discussion on each of these options is in process and the management is confident that the company will be able to arrange the required funds for its redemption shortly.

5. DEBENTURES & EXTERNAL COMMERCIAL BORROWINGS NON CONVERTIBLE DEBENTURES (NCD's)

During the period under review there has been no issue of the NCD's and there amount remains constant to previous financial year, to the tune of Rs. 560 Crores.

EXTERNAL COMMERCIAL BORROWINGS

During the year, the External Commercial Borrowings (ECB) stands unvarying for USD 42.5 Million (approx. Rs 331.09 Crores) similar to the previous year.

6. SUBSIDIARY COMPANIES

Your Company has four, wholly Owned Subsidiary and a Fellow Subsidiary, namely:

1. Tulip IT Services Singapore Pte. Ltd.

2. TulipTelecomlnc.,USA

3. Tulip Swan IT Services Ltd.

4. Tulip Data Centre Services Pvt. Ltd.

5. Sada IT Parks Pvt. Ltd.

In accordance with the General Circular No: 2/2011 dated 8th February 2011, issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies.

7. BOARDOF DIRECTORS

In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Mr. Chandrahas Kutty & Mr. Rajesh Gulshan will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend their appointment/ re-appointment at the ensuing Annual General Meeting.

The present term of appointment of Mr. Deepinder Singh Bedi, Whole-Time Director of the Company had expired on March 31, 2013. The Board on the recommendation of the Remuneration committee had recommended his re-appointment for a further term of 3 (three) years to the members, who accorded their approval on June 14, 2013 vide Postal Ballot.

Further in the event of losses faced during the period under review, the remuneration of whole-time directors, as recommended by members earlier had exceeded the limits prescribed under Schedule XIII, consent is sought from the members for waiver of excess remuneration & payment of existing remuneration to the whole-time directors for the remaining term of their appointment. Details of aforesaid directors are more particularly mentioned in the notice of the meeting & explanatory statement annexed thereto.

Brief resume/details of the Directors, who are to be appointed /re-appointed as mentioned herein-above have been furnished along with the Explanatory Statement to the Notice of the ensuing Annual General Meeting. The Board recommends their re-appointment/appointment at the ensuing Annual General Meeting.

The Constitution of Board of Directors remains properly constituted in compliance with clause 49 of the Listing Agreement and as per provisions of the Companies Act, 1956.

8. AUDITORS

Pursuant to the covenants of the Master Restructuring Agreement the Company was suggested by the CDR Monitoring Committee to appoint Statutory Auditors as recommended by the CDR lenders. The Board of Directors in their meeting held on August 12, 2013 had considered and recommended for the appointment of M/s. T.R.Chadha & Co., Chartered Accountants, as Statutory Auditors, and considered M/s. R.Chadha & Associates, Chartered Accountants, the retiring auditor of the Company, to act as joint auditor of the company, after considering the recommendation of Audit Committee. Further the Company has received a certificate from M/s. T.R.Chadha & Co., Chartered Accountants and from M/s. R. Chadha & Associates, Charterd Accounts, to the effect that their appointments, if made, would be in accordance with Section 224(1 B) of the Companies Act, 1956 and they are not disqualified in terms of Section 226 of the Companies Act, 1956 from being appointed as Statutory Auditors of the Company.

Your Directors recommend their appointment.

9. COST AUDITORS

Pursuant to the notification issued by the Ministry of Corporate Affairs (MCA) and based on the recommendation of the Audit Committee, your Board has, subject to the approval of the Central Government, approved the appointment of M/s H. Tara & Co., Cost Accountants, as the Cost Auditor of the Company for the financial year 2013-14. Your Company has filed application with the Central Government for necessary approval in this connection. Further as per the Cost Audit Rules your Company has submitted the Cost Audit Report for the Financial Year 2011-12.

10. EMPLOYEE STOCK OPTION SCHEME

During the year under review your Company has not issued & allotted any Stock Options under the ESOS Scheme. Total no of shares covered under the Scheme pursuant to stock split remains constant as 50,00,000 Shares. Out of the 13,32,500 Options outstanding as on previous financial year ended on September 30, 2012; Employees of the Company who were granted options aggregating 3,50,000 have left the services of the Company before any options could vest with them. Hence the total options granted as on March 31, 2013 are 9,82,500.

Further, the disclosures as required under Clause 12 of SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 are furnished as Annexure A, forming part of this Report.

A Certificate from M/s. R. Chadha & Associates, Chartered Accountants, Statutory Auditors, with respect to the implementation of the Company's ESOS Scheme, would be placed before the Shareholders at the ensuing Annual General meeting, and a copy of the same shall be available for inspection at the registered office of the Company.

11. HUMAN RESOURCES MANAGEMENT

Your Board believes that Employees are vital to the Company. Your Company has created a favorable work environment which encourages innovation and meritocracy. The Company has also set up scalable recruitment and human resource management process which would enable us to attract and retain high caliber employees. The employee strength of the Company as on March 31, 2013 is 2647.

12. DIRECTORS' RESPONSIBILITY STATEMENT

In terms of and pursuant to section 217 (2AA) of the Companies Act, 1956, your Directors, in relation to the Annual Statement of Accounts for the Six months financial year ended March 31, 2013, state and confirm that:

(i) the Accounts had been prepared on a ' going concern' basis and in such prepara- tion, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Accounting Policies have been selected and applied and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period and of the Profit of the Company for that period ;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 as amended, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

13. LISTING WITH STOCK EXCHANGES

The Equity Shares of the company are listed with The BSE Ltd. (BSE) & National Stock Exchange of India Limited (NSE).

Zero Coupon Convertible Bonds (FCCBs) which were listed on Singapore Stock Exchange (SGX - ST) have been due for redemption during the previous financial year. Company is evaluating all possible ventures for the restructuring of its FCCB's.

The Secured Redeemable Non Convertible Debentures (NCDs) are listed on WDM segment of The BSE Ltd (BSE).

The annual listing fee for the year 2012-2013 have been paid within the scheduled time to BSE, NSE, NSDL & CDSL (the Custodian's) respectively.

14. CONCURRENT AUDIT

The CDR lenders have recommended the appointment of a Concurrent Auditor for the effective implementation of the restructured loans and other indebtedness of the Company.

Pursuant to their recommendations M/s S.S.Kothari Mehta & Co., Chartered Accountants have been appointed as the Concurrent Auditors of the Company for the financial year 2013-14 which was duly approved by the Audit Committee of the Company. The scope of work of concurrent auditors includes inter-alia:

- the review of inventories;

- the review of fixed assets;

- the review on financing, legal & regulatory risk management;

- the review of existing management information and reporting system including accounting procedures fol lowed by the Company & suggest changes, if any to improve the effectiveness.

16. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

As per Clause 49 of the Listing Agreement, report on Corporate Governance together with Management Discussions and Analysis report and Certificate from Company's Statutory Auditor are annexed elsewhere in this report.

17. PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposits under the provisions of Section 58A of the Companies Act, 1 956 and Rules made there under.

18. AUDIT COMMITTEE RECOMMENDATION

During the year, there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence there is no need for the disclosure of the same in this Report.

19. PARTICULARS ON CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Your Company, being a service provider organization, most of the information as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 as amended from time to time, are not applicable. However, the information as required has been provided in Annexure B to this Report.

20. QUALITY INITIATIVES

Reinforcing its commitments to high standards of quality, your Company was successfully assessed for its ISO certifications by BSI Global for the following:

- QMS (Quality Management System) as per ISO 9001: 2005 for providing system Integration , Network Integration, VPN Services and Managed Services.

- ITSM ( Information Technology Service Management System) as per ISO 20000-1: 2005 covering the delivery of managed services to its customers for Network Operation Centre at Mumbai Premises & Data Centre & Network Operations Centre at New Delhi premises within the technical & organizational boundaries of your Company.

- Company was recertified for TL 9000 within the scope of provisioning and providing customer service by TUV-SUD

21. PARTICULAR OF EMPLOYEES

Information required to be furnished in terms of section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is required to be set out in the Annexure to this Report. However, in terms of section 219(1 )(b)(iv) of the Companies Act, 1956 , the Report and Accounts are being sent to members excluding aforesaid Annexure. Any member interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company. None of the employees except Lt. Col. H.S. Bedi, VSM, Chairman & Managing Director and Mr. Deepinder Singh Bedi, Executive Director, listed in the said Annexure are related to any Director of your Company.

22. ACKNOWLEDGEMENTS

Your Directors would like to express their gratitude for the co-operation and support received from Members, Bankers, Department of Telecommunications (DOT), Telecom Regulatory Authority of India (TRAI), Wireless Planning Commission (WPC), Government of India, other Regulatory Bodies, Customers and other business constituents during the period under review.

Your Directors place on record their deep appreciation for exemplary contribution of the Employ- ees at all levels. Their dedicated efforts and enthusiasm has been integral to your Company's impressive growth.

                              For & on behalf of the Board of Directors 

                                               S/d-

New Delhi                              Lt.Col.H.S.Bedi, VSM

August 30,2013                     Chairman & Managing Director