Netplus Broadband

May-Jun'20 Internal Audit

Review

IA Report | Corporate review

28 t h September 2020
C ontents

I.I Process improvement journey - Netplus 04

I.II Detailed observations - Netplus 13

I.I Netplus Broadband Services Private Limited
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Observation Team
Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr ’20 May’20 Jun’20
1A Strengthen controls around updating collecti ons to
L B O kitty/ Crestel (Postpaid)
► Weak process around update to kitty/ Crestel post
realisation leading to undue service credit due to
negative kitty/ Crestel balance. Further, action plan not
defined to identify old negative balances. Finance
► No process to perform a periodic 3 way reconciliation and 10.73% 3.77% 0.88% 0.40% 0.37% 1.10% 0.70% 0.52%
of Kitty/ Crestel with Books of accounts and Bank Operations
Statement/ PG settlement
► Absence of a process to monitor allocation of L B O
credits to customer accounts.
(Exception % basis: Incorrect credits in Kitty/ Crestel as % of
overall postpaid collections for the month)

1B Strengthen controls around updating collecti ons to

L B O kitty/ Crestel (Prepaid)
► Weak process to perform a periodic 3 way
reconciliation of Kitty/ Crestel with books of accounts Finance
and - 1% 2% 0.2% 1% 3% 3% 2%
and bank statement/PG settlements reports
Operati ons
(Exception % basis: Incorrect credits in Kitty/ Crestel as % of
overall prepaid collections for the month)
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Observation Team
Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr ’20 May’20 Jun’20
2A Improve control over monitoring for recovery of cheque
bounce cases
► Follow-up mechanism over recovery of bounced Finance
cheques and monitoring of repeat defaulters needs and - - - - - 10% 6% 10%
further strengthening Operations
(Exception % basis: Cheques pending to be recovered as a % of total no.
of cheques bounced)

2B Improve control over monitoring of recovery of splicing

cheques and cheque bounce penalty
► Weak follow-up mechanism over recovery of splicing
Finance - - - 72% 69%
cheques and cheque bounce penalty.
and
Operations
2 C (Exception % basis: Cheques pending to be recovered as a % of total no. of
bounced cheques)

Improve controls around levy of cheque bounce charges

- - - 21% NA NA 28% 4%
► Absence of a process to reconcile whether cheque
bounce charges are levied in all cases as per the policy.
No
process to obtain exceptional approval in case of non-
levy

Finance
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Obs e rvati on Team Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr ’20 May’20 Jun’20
3 Improve control over collection of OTC and advance rental
through E-KYC portal
► Weak process to reconcile advance rental recovery in
case of non collection of OTC
► Absence of process to analyse CAF generated in E- Operations NA NA NA NA 0.25% 1.11% 2.71% 2.66%
KYC but docket not created
► Weak process to recover OTC from Upcountry LBO

(Exception % basis: No. of activations without collection of OTC/

advance rental as a % of total no. of activations)

4 Improve controls around analysis of L B O outstanding for

subscripti on revenue Finance
and - - - - - - - -
► Absence of a process to perform an ageing analysis
Operations
for
amount outstanding from LBOs and follow-up for
5A Strengthen
recoverycontrols around computation and credit of L B O
commission in Kitt y (Postpaid)
► Absence of a maker checker control to review credit of
commission prior to updating commission amount in 5% 4% 1% 5% 2%
Finance - 4% 7%
kitty
► No process to perform a periodic reconciliation of
comm. credited to kitty to ensure completeness &
accuracy

(Exception % basis: Exceptions noted as a % of total commission credited)

 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Observation Team Feb’20 Mar’20 Apr ’20 May’20 Jun’20
Nov’19 Dec’19 Jan’20
5B Strengthen controls around computation and credit of L B O
commission in Kitt y (Prepaid)
► Absence of a maker checker control to review credit of
commission prior to updating commission amount in Finance 4% 4% 3% 5% 4% 8% 5% 3%
kitty
► No periodic reconciliation of commission credited in
Kitty to ensure completeness and accuracy.
(Exception % basis: Exceptions noted as a % of total commission credited)
6 Strengthen controls around computation of L B O partner
investment
► Process to review various adjustments made to the Data not
Finance 0.87% 1.15% 6.07% 0.01% 4.04% 1.93% 2.58%
LBO investment needs further strengthening.
provided
(Exception % basis: Exceptions noted as a % of net adjustments for
the month)

7A ► Absence of a process to perform an ageing analysis for

amounts outstanding from enterprise customers. Further, E B S Team - - - - - - - -
no defined dunning policy/ procedures.
7B Improve control over billing of enterprise customers

► Independent review of billing computation for

E B S Team - 0.80% - - 0.04% 0.14% 0.06% 0.16%
enterprise customers needs further strengthening.
(Exception % basis: Exceptions noted as % of total enterprise billing for
the month)
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Observation Team Feb’20 Mar’20 Apr ’20 May’20 Jun’20
Nov’19 Dec’19 Jan’20
7 C Improve control over recording of collection of enterprise
customers
► Process of performing reconciliation of collection
E B S Team 12% 0.94% 4% 1% 2% 3% 0.40% -
recorded in books of accounts with bank statement
has been implemented.
(Exception % basis: Incorrect collections recorded as a % of
total collections during the month)

8A Strengthen control over monitoring of unidentified receipts

► Absence of a maker checker control over entries posted
through unidentified receipts accounts. Further, perform Finance NA NA NA NA 3% 11% 14% 21%
reco. of Kitty/ Crestel with books to identify such
receipts.

8B (Exception % basis: Anomalies noted as a % of total unidentified receipts)

Strengthen control over monitoring of PG sett lements
► Weak control over reconciling PG collections with
Finance NA NA NA 2% 1% 0.02% - 0.19%
LBO accounts leading to reduction in LBO
outstanding.
(Exception % basis: Excess collection credited to LBO accounts as a %
of actual collection received through PG during the month)
9A ► No process to review whether no collections DP
customers identified and sent to operations team were
Operations 16% 14% 9% 14% 16% 6% 6% 4%
actually downgraded or not.
(Exception % basis: DP customers not downgraded for non payment as a
% of total DP customers)
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Observation Team
Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr ’20 May’20 Jun’20

9B
► Process to perform independent review of customer
(DP) re-activations against short/ no collections needs
further strengthening. Operations NA 14% 1% 3% 2% 6% 2% 2%

(Exception % basis: DP customers re-activated in case of non payment as

a
% of total DP customers)
10A ► System errors noted in broadband customer
billing generated from Crestel (Postpaid)
Operati ons 0.08% 0.02% 0.05% 0.03% 0.08%
(Exception % basis: Exceptions noted as a % of total postpaid billing for 0.01% 0.01% 0.15%
the month)

10B ► System errors noted in broadband customer

billing generated from Crestel (Prepaid)
Operati ons 0.13% 0.08% 0.06% 0.04% 1.36%
(Exception % basis: Exceptions noted as a % of total prepaid billing for the
0.26% 0.21% 0.01%
month)

11 ► Absence of a master to perform reconciliation of add-

ons activated/ deactivated in server with Crestel leading
to mis-match. Operations 0.5% 2.2% 4.6% 2.1% 2%
1.1% - 0.6%
(Exception % basis: Amount not billed/ excess billed to customers as a %
of total add-on billing)
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Observation Team Feb’20 Mar’20 Apr ’20 May’20 Jun’20
Nov’19 Dec’19 Jan’20
12 Improve controls around material management
► Non-compliance to defined procedures and weak
monitoring over timely return of material/
providing utilization of material.
► No process to include material not returned/ utilization
not provided as a part of recovery against full and
Technical - - - 0.79% - 0.61% - 2.27%
final sett lement in case of separated splicers. Further,
no process to deacti vate and sett le account of splicer
in material management portal.
► Absence of a system control to restrict capturing of
material utilization/ return greater than issuance.
(Exception % basis: Amount of exceptions noted as a % of total
material issued)

13 ► Weak process to obtain confirmation from

concerned departments for validating waivers, prior
to updating waiver in Crestel Operations 28% 48% 49% 37% 47% 85% 94% 86%
(Exception % basis: No. of waivers provided to customers without any
ticket as a % of total count of waivers provided to customer in the
month)
14 ► Anomalies noted in incentive pay-out
computation 0.07% - - 0.44% 0.51%
Operations - 0.30% 0.14%
(Exception % basis: Anomalies noted as a % of total incentive paid
during the month)
 Legend
Weak/ Absence of a process

Journey so far: Process Improvement Needs further improvement

Implemented

Excepti on %
Obs e rvati on Team Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr ’20 May’20 Jun’20

15A ► Recovery of CPEs from churned Enterprise

customers needs further escalation.
E B S Team NA 55% 38% 24% - 28% - 23%
(Exception % basis: CPEs pending to be recovered as a % of total
churned enterprise customers)

15B ► No defined process/ policy consisting of timelines and

procedures to recover CPEs from churned DP
customers DP Team NA 45% 45% 44% - 43% - 53%
(Exception % basis: CPEs pending to be recovered as a % of total
churned DP customers)

16 ► Weak monitoring around acknowledgement on the

installation reports for enterprise customers
Technical 20% 32% 39% 100% 89% - - 35%
(Exception % basis: No. of pending installation reports as a % of
total samples raised for enterprise links for the month)

► Monitoring of acti vati on timelines for broadband

17
customers
Technical 2% 2% 2% 2% 2% 2% 2% 2%
(Exception % basis: No. of activations that are outside of defined
TAT as a
% of total activations in the month)
I.II. Detailed observations: Netplus (May-Jun’20)
1 A . Strengthen controls around updati ng collecti ons to L B O kitty/ Crestel (Post- paid)

► Process of performing periodic 3 way reconciliation of Kitty, Books of accounts, Crestel and Bank Statement/ PG settlement report needs
strengthening. A review process was started in Feb’20, however, no documented reconciliations were available to us for our review.
► Collections updated in Kitt y reviewed as on 31 s t Jul’20, 31ST Aug’20 and 30th Sep’20 are highlighted as :
JULY AUG SEP Oct ‘20 NET Recti fi cati on
PARTICULARS IMPACT pending as
# AMT(in # AMT(in # AMT(in # AMT(in on 31-Aug-
lakhs) lakhs) lakhs) lakhs) 20
5
Kitty credited but amount not realised as per 2.43 0.018 - - 2.45
1
bank statement/ payment gateway
30 13
Kitty credit given multiple times to LBOs 6.27 1.98 3.40 - - 1.165
11
against same payment, not reversed
1 5
Cheques bounced not reversed up-to 24/0/17 0.02 1.84 0.48 - - 2.34
2
days for July/Aug/Sep
Incorrect credit updated in KITTY resulting in short 3 9.96
credit to LBOs (Cash) 0.14 6 9.82

Total
1A. Strengthen controls around updating collecti ons to L B O kitty/ Crestel (Post-
paid)
► Collections updated in Crestel reviewed as on 31 s t Jul’20, 31st Aug and 30th Sep highlighted:

JUL AUG SEP Recti fi cati on

Net pending
Parti culars Impact
# Amt (In Lacs) # Amt (In Lacs) # Amt (In Lacs)

Collection updated in Crestel through 0.12

5
customer cheques not realised
Customer cheque bounce not reversed in 0.05 0.21
3 7
Crestel
0.22 0.04
Double cheques updated in crestel 4 2

Collection received through PG updated

in Crestel, however neither realised, nor
reversed (up-to 95 days)

Collection received from customer but

not credited in crestel

Amounts updated in Kitty, however not

realised and recorded in books in that
month, hence not appearing as
reconciling items in BRS
Total
1B. Strengthen controls around updating collecti ons to L B O kitty/ Crestel (Pre-
paid)
► Process of performing periodic 3 way reconciliation of Kitty/ Crestel, books of accounts and bank statement/ PG Settlement needs
strengthening. Collections updated in Kitt y and Crestel reviewed as on 30 t h Jun’20 for May’20 and as on 31 s t Jul’20 for Jun’20
highlighted:
Nov’19 to Jan’20 Feb’20 to Apr ’20 May’20 Jun’20 Recti fi cati on
Net impact pending as on
Parti culars Amount Amount Amount Amount (INR lacs) 11-Aug-20
# (INR lacs) # (INR lacs) # (INR lacs) # (INR lacs) (INR lacs)

Kitty credited, however amount not realised 0.81 1.98 1.58 1.84 6.21 3.60 (58%)
14 21 8 12
as per bank statement/ payment gateway (1%) (2%) (3%) (3%) (1.91%)

Kitty credit given multiple ti mes to LBOs 0.40 0.20 0.60 0.60 (100%)
- - - - 4 3
against same payment, not reversed (1%) (0.3%) (0.18%)

Collection received via PG, updated

0.12 0.29 0.27 0.25 0.93 0.57 (61%)
either multiple times in Crestel or not 7 25 27 21
(1%) (1%) (2%) (1%) (1.25%)
realised (Direct Online collection)
Collection received however, credit not given 0.04 0.76 0.19 0.23 1.22 0.85 (70%)
5 93 22 29
to LBOs/ customers in Pre-paid Kitty/ (0.04%) (0.5%) (0.3%) (0.3%) (0.31%)
Crestel
Total 26 0.89 139 1.51 61 2.06 65 2.06 6.52 3.92 (60%)

Refer Annexure 1B.1.1 to

1B.4.2
1 A & 1B. Strengthen controls around updating collecti ons to L B O kitty/ Crestel
(Post-paid)
Management Acti on Plan

1A. May’20 and Jun’20

► Incorrect/ Double/ Cheque bounce credits not reversed – Credits have been reversed
► Delay in Kitt y update – We have implemented a new (semi-automated portal) for recording collections and updating Kitty and Books
of accounts keeping in mind the challenges faced by the team.
► Customer cheques not realised/ bounces/ updated twice in Crestel – Management comment pending
► Online credits not realised – Management comment pending
► Cheque not updated in tally and bank reconciliation statement – Management comment pending
Acti on plan: We will define timelines for review and reversals of Crestel and Kitty credits on a monthly basis. We have implemented a new
(semi- automated portal) for recording collections and updating Kitty and Books of accounts keeping in mind the challenges faced by the
team.

1B. May and J u n - 2 0

► Management comments pending to be received.
Head – Finance; Timelines:30-Sep-20
2A. Improve control over monitoring of recovery of cheque bounce cases
► Follow-up mechanism over recovery of cheque bounce (subscription) needs further strengthening. 9% (INR 31.66 lacs) of the
cheques bounced (INR 3.49 cr.) during Nov’19 to June’20 are pending to be recovered up-to 268 days as on 31-Jul-20. Refer
annexure 2A.1
Recovery pending as on 30-Apr-20 Additional instances Net cheque bounce recovery pending
(for cheques bounced during Nov’19 Recovered as on 31-Jul-20
to Apr ’20) till 31-Jul-20 (Bounced during Nov’19 to Jun’20)
May’20 Jun’20

INR 44 lacs INR 26.97 lacs INR 35.13 lacs INR 74.44 lacs INR 31.66 lacs
Break-up of pending recovery as on 31-Jul-20

Pending recovery
Ageing Instances LBOs Amount (INR lacs)
0 to 50 days 5 6 2.67 (8.40%)
50 to 100 days 4 6 2.39 (7.60%)
101 to 150 days 4 6 2.24 (7.10%)
151 to 200 days 2 2 1.22 (3.90%)
> 200 days 10 14 23.13 (73.10%)
Total 25 - 31.66 (100%)
2B. Improve control over monitoring of recovery of cheque bounce cases
► Weak monitoring over recovery of bounced splicing cheques and cheque bounce penalty for subscripti on and splicing cheques: Below is
the cheque bounce recovery pending as on 31-Jul-20:

May’20 Jun’20 Net impact

Pending recovery type (Pending to be recovered
as on 31-Jul-
Cheques Amount (INR) Cheques Amount (INR) 20)

Splicing cheques bounced 24 1.3 lacs (79%) 20 1.2 lacs (86%) INR 2.5 lacs (82%)

Penalty for splicing cheques bounced 30 0.60 lacs (100%) 24 0.48 lacs (100%) INR 1.08 lacs (100%)

Penalty for subscription cheques bounced 26 0.56 lacs (49%) 23 0.56 lacs (41%) INR 1.12 lacs (45%)
Refer annexure 2B.1 to
2B.5
2C. Improve control over levy of cheque bounce charges
► Weak process to review levy of cheque bounce charges to LBOs: Our review of levy of cheque bounce charges during May-
Jun’20
highlighted:
Nov’19 to Jan’20 Feb’20* May’20 Jun’20 Recti fi cati on
Net impact pending as on
Observation Amount Amount Amount Amount (INR lacs) 11-Aug-20
Cheques (INR lacs) Cheques (INR lacs) Cheques (INR lacs) Cheques (INR lacs) (INR lacs)

Cheque bounce charges

not charged to LBOs. 130 12 29 3 2.46
1.38 0.36 0.60 0.12 (30.1%) NIL
No exceptional (40%) (21%) (24%) (4%)
approval available
Cheque bounce charges
short charged to LBOs. 4 0.05
- - - - 0.05 - - (0.6%) NIL
No exceptional approval (3.3%)
available
130 12 33 3 2.51
Total (40%) 1.38 (21%) 0.36 (28%) 0.65 (4%) 0.12 (30.7%) NIL
Refer Annexure 2C.1 to 2C.3
* Cheque bounce charges were not applicable during Mar-20 and Apr-20.
2A , 2 B & 2C. Improve control over monitoring of recovery of cheque bounce cases
and levy of cheque bounce charges
Management Acti on Plan

► Cheque Bounce Recovery (Subscripti on) – Management comments pending

VP-Collecti ons; Head-Finance

► Cheque bounce recovery (Splicing) – Management comments pending

VP- Operati ons; Head-Finance

► Cheque bounce penalty recovery – Management comments pending

VP-Collecti ons

► Cheque bounce penalty – We have implemented a monthly review mechanism wherein the internal audit team will review the cheque
bounce charges levied by 10 t h of the subsequent month and in case of any gaps, the charges not levied will be sent to zonal finance for
rectification.
Head-Finance
3. Improve control over collection of OTC and advance rental through E-KYC portal
► Non-compliance to activation under advance rental policy: Per the policy, all activations are required to be put on hold at CPC stage to
verify realization of advance rental in cases where OTC is not charged. Noted:
 Absence of a system control to levy advance rental in case of non-collection of OTC amount. Further, no process to reconcile recovery of
advance rental in case of non-collection of OTC at CPC stage. Review of customers activated under ‘0’ OTC during Mar-Jun’20
highlighted:
(Amount in INR lacs)
July’20 Aug ’20 Sep’20 Jun’20
Total Pending on
Observation impact 20 t h Aug-20
# of cases Amount # of cases Amount # of cases Amount # of cases Amount

Advance rental not recovered in cases

where OTC amount was neither collected
nor charged to LBOs (i.e., OTC ‘0’
selected)

Wrong Plan activated at the time of 119 0.76

activation/plan changed on the basis of
rental received
Wrongly 10 +2 selected instead of 5+1
3 0.07
Scheme

Advance rental settled through previous

kitty balance rather than upfront
collection leading to non-compliance of
policy
Total

► No process to analyse C A F generated in E-KYC portal, however, docket not created in Crestel: During Mar’20 to Jun’20, noted 943 CAFs
(2%) that were generated in E-KYC portal, however, were not converted to docket stage ranging from 29 to 120 days (avg. 59 days).
3. Improve control over collection of OTC and advance rental through E-KYC portal
(contd.)
► Weak process to recover OTC from upcountry LBOs: Currently, OTC is collected by LBOs from customers in upcountry regions and at
month end recovery of OTC collected during the month is made from these LBOs. Our review of OTC collected against customers activated
between Mar’20 and Jun’20 highlighted short recovery of INR 7.39 lacs (38%) as on 7-Aug-20:
(Amount in INR lacs)
Net short recovery
Apr ’20 May’20 Jun’20 Jul’20 as on 7-Aug-20
Recovered
Zone till
To be To be To be To be 7-Aug-20
collected Collected Net O/s collected Collected Net O/s collected Collected Net O/s collected LBO s Amount
(A) (B) (C=A-B) (D) (E) (F=C+D-E) (G) (H) (I=F+G-H) (J)

Haryana 1.93 1.45 0.48 2.02 1.38 1.12 0.14 0.63 0.63 6.62 3.35 21 3.89 (36%)
Bathinda 1.01 0.47 0.54 1.15 1.09 0.61 0.75 0.27 1.09 0.68 0.67 17 1.10 (31%)
Ludhiana 0.47 0.12 0.35 0.07 0.05 0.36 0.13 0.08 0.41 0.70 0.24 27 0.87 (64%)
Jalandhar 0.17 0.01 0.16 0.02 0.08 0.10 0.01 0.05 0.06 0.41 - 11 0.47 (77%)
Patiala 0.22 0.13 0.10 0.16 0.08 0.18 0.15 0.08 0.25 0.31 0.10 17 0.46 (55%)
Amritsar 0.22 0.01 0.21 0.04 0.08 0.17 0.14 0.06 0.25 0.20 0.18 10 0.27 (45%)
Chandigarh 0.56 0.22 0.35 0.08 0.23 0.19 0.16 0.16 0.20 0.19 0.16 7 0.23 (23%)
Uttar Pradesh - - - - - - - - - 0.12 - 1 0.12 (100%)
Himachal 0.21 0.21 - 0.10 - 0.10 - 0.10 - 0.37 0.37 - -
Total 4.78 2.61 2.17 3.62 2.98 2.81 1.46 1.41 2.86 9.59 5.06 111 7.39 (38%)

Refer annexure 3.5

3. Improve control over collection of OTC and advance rental through E-KYC portal
(contd.)
Management Acti on Plan

► Advance Rental/ OTC not recovered – We have floated the pending cases to the zones for recovery. Further, going forward,
maximum payments will be routed online and a weekly review will be conducted for the cases pending recovery.
► Advance rental short collected – We have floated the pending cases to the zones for recovery and will be recovered by end of Aug-
20.
► Advance rental OTC paid through Kitt y – We have instructed the zones and LBOs not to route advance rental and OTC payments from
Kitty or update excess amount (over and above subscription revenue) for kitty transfer. Further, we have floated the amount pending to
be recovered to the LBOs and zones and will be done by end of Aug-20.
► C A F reconciliation – Going forward we will implement a process to reconcile the CAFs generated against the dockets created in Crestel
to ensure the payment received is correctly reconciled and each CAF generated in the portal is converted into a potential case.
► Upcountry OTC recovery – Many upcountry LBOs have requested to be shifted to 44% model during Jul-20 and hence we are in the
process of shifting them to 44% commission model. Further, INR 7 lacs is pending to be recovered which will be recovered with the next
collection cycle.
V P Operati ons; 31 s t Aug-20
4. Strengthen control over follow-up on L B O outstanding

L B O - Subscripti on billed Pending

Opening balance (Apr’20) (May’20 to Jul’20) L B O - Recovered/ waived off (Jul’20)

INR 7.17 crores*** INR 30.40 crores INR 31.25 crores INR 6.32 crores

Break-up of pending amount as on

July ’20

Status # Amount
Active* 959 (91%) 6.16 (97%)
Inactive (Not billed in last 3 months) * * 100 (9%) 0.16 (3%)
Total 1,059 (100%) 6.32 (100%)

* Needs documented dunning policy and procedures to strengthen the recovery process.
* * Define a plan for recovery from inactive LBOs.
* * * Outstanding amounts exclude amount pending from Direct Points.
4. Strengthen control over follow-up on L B O outstanding (contd.)
► Noted 125 (13%) active LBOs having O/s to billing ratio > 3 times contribute 38% (INR 2.37 crores) of total LBO outstanding (INR
6.16 crores) as on 31-Jul-20:
(Amount in INR crores)
L B O outstanding balances (Acti ve LBOs)
Billing - INR 50,001 to Billing INR 1,00,001 to
Billing < INR 50,000 1,00,000 2,00,000 Billing > INR 2,00,000 Total
O/s to Billing
Rati o
# of # of # of # of
Amount LBOs Amount LBOs Amount LBOs Amount LBOs Amount # of L B Os

< 1 time 0.31 334 0.37 139 0.41 84 0.27 27 1.36 (22%) 584 (61%)
1 to 3 times 0.45 152 0.71 60 0.61 26 0.68 12 2.44 (40%) 250 (26%)
3 to 6 times 0.34 57 0.37 14 0.28 5 0.14 1 1.13 (18%) 77 (8%)
6 to 12 times 0.35 31 0.13 3 0.31 3 - - 0.80 (13%) 37 (4%)
> 12 times 0.11 9 0.15 1 0.18 1 - - 0.44 (7%) 11 (1%)
Total 1.55 583 1.73 217 1.80 119 1.09 40 6.16 (100%) 9 5 9 (100%)

Refer Annexure 4.1 and

4.3
4. Strengthen control over follow-up on L B O outstanding (contd.)
► Revisit monthly collection cycle to escalate monthly recoverable amount from LBOs: Refer annexure 4.4 and 4.5
Recovery cycle for May’20 billing (INR crores) Recovery cycle for Jun’20 billing (INR
crores)

Amount recoverable
Recovered Recovered Pending Amount recoverable
Recovered Recovered Pending from L B O
(23 r d to (1 s t to (as on from L B O
(23 r d to
(1 to
st (as on
31-May-20) 25-Jun-20) 25-Jun-20) 30-Jun-20)
25-Jul-20) 25-Jul-20)
5.21 3.27 (63%) 1.13 (22%) 0.81 (15%) 5.09 3.95 (78%) 0.66 (13%)
0.48 (9%)
(60% of total recoverable*) (57% of total recoverable*)
Recovered Recovered Pending as
Amount (23 r d to Zone
(1 s twise
to break-uponof pending amount at the end of
Zone Recoverable 31-May-20) 24-Jun-20) each collecti on cycle
25-Jun-20

Ludhiana 1.04 0.56 (53%) 0.20 (20%) 0.28 (27%)

Chandigarh 0.50 0.21 (41%) 0.19 (38%) 0.10 (21%) Recovered Recovered Pending as
Amount (23 r d to (1 s t to 24- on
Patiala 0.45 0.27 (61%) 0.10 (22%) 0.08 (17%) Zone Recoverable 30-Jun-20) Jul-20) 25-Jul-20
Jalandhar 1.04 0.45 (43%) 0.47 (45%) 0.12 (12%)
Other Zones 0.32 0.19 (59%) 0.08 (24%) 0.05 (17%) Ludhiana 1.00 0.46 (46%) 0.34 (34%) 0.20 (20%)
Bathinda 0.58 0.43 (74%) 0.08 (14%) 0.07 (12%) Chandigarh 0.48 0.34 (71%) 0.06 (12%) 0.08 (17%)
Amritsar 1.28 1.16 (90%) 0.01 (1%) 0.11 (9%) Patiala 0.45 0.32 (71%) 0.01 (2%) 0.12 (27%)
Total 5.21 3.27 (63%) 1.13 (22%) 0.81 (15%) Jalandhar 1.02 0.87 (85%) 0.14 (13%) 0.01 (1%)
Other Zones 0.31 0.25 (82%) 0.03 (9%) 0.03 (9%)
Bathinda 0.59 0.54 (92%) 0.05 (8%) 0.01 (1%)
Amritsar 1.24 1.16 (94%) 0.05 (4%) 0.03 (3%)
* Total recoverable is 86% of total billed amount for the Total 5.09 3.95 (78%) 0.66 (13%) 0.48 (9%)
months
Exposure to the company on monthly subscription renewals will accumulate (36% in May and 22% in June) if collection cycle of highlighted zones (exposure
4. Strengthen control over follow-up on L B O outstanding (contd.)

Management Acti on Plan

► L B O Outstanding: Management comment pending to be received

► Collecti on cycle for Netplus: The weak zones mentioned in the above observations have been highlighted and we have appointed 3
new collection agents for Ludhiana Zone to improve the collections for each month.
Head-Finance and VP-Collections; 31st Aug’20
5A. Improve control over computation and credit of L B O commission in Kitt y
(post-paid)
► Weak process around review of commission computation. Further, no maker checker control prior to updating commission amounts in
Kitty. Review of commission credited in Kitty for May’20 and Jun’20 highlighted:
Post-paid:
JUL’20 AUG’20 SEP’20 Recti fi cati on
Net pending as on
PARTICULARS impact (INR lacs)
# of Amt # of Amt (INR # of Amt (INR lacs)
LBOs (INR lacs) LBOs lacs) (INR lacs)
LBOs

Commission credited on short

realisation of INR 0.32 lac in May’20
and INR 0.64 lac in Jun’20
Incorrect commission updated in
38 5.91 3 0.51
LBO Kitty:
 Excess commission cases

Incorrect commission updated in

42 4.31 4 0.322
LBO Kitty:
 Short commission cases

Double commission credited in Kitty 2.22 0.72

12 3 15 4.88
not reversed up-to 25//21 days for
Jul/Aug/Sep
Commission not credited in Kitty after 3.08 1.41 10.83
76 76 139
realization of due amount

Refer Annexure 5A.1 to

5A.5
5B. Improve control over computation and credit of L B O commission in Kitt y (pre-
paid)
P re-paid:
Nov’19 to Jan’20 Feb’20 to Apr ’20 May’20 Jun’20 Recti fi cati on
Net impact pending as on
Observati ons Amount Amount Amount Amount (INR lacs) 11-Aug-20
LBO s (INR lacs) LBO s (INR lacs) LBO s (INR lacs) LBO s (INR lacs) (INR lacs)

Excess commission credited due to 1.36 1.43 0.27 3.06 3.06

12 14 12 - - (2.01%) (100%)
non deduction of TDS (4%) (3%) (1%)
Excess commission credited due to 0.12 0.13 1.20 0.01 1.46 1.46
3 5 2 1 (0.96%) (100%)
incorrect collection considered for the (0.34%) (0.3%) (3%) (0.03%)
LBO
Double commission credited in kitty not 1.27 1.27
0.21 0.99 0.07
reversed up-to 132 days (avg. - 63 - - 4 38 3 (0.83%) (100%)
(0.4%) (3%) (0.22%)
days) as on 13-Jul-20

0.07 0.55 0.05 0.68 0.68

Short commission credited 4 5 5 - - (0.45%) (100%)
(0.20%) (1%) (0.14%)
Commission not credited in Kitty 0.18 2.58 0.60 1.02 4.37 4.37
8 35 9 18 (2.87%) (100%)
for collection received (1%) (5%) (2%) (3%)
►Total
Noted 27
that direct online collections received 1.23
from(3%) 6 3 were
customers (1.36)
not(3%) 6 6 for
considered 1.81 (5%)
computing 2commission
2 (0.94) (3%) 0.74
since inception 0.74 (100%)
(Jan’19).
Noted
commission of INR 6.77 lacs was recorded in May’20 with a delay ranging from 13 to 437 days. Our review of this commission highlighted:
 Commission not credited to 64 LBOs – INR 14.02 lacs
 Commission short credited to 24 LBOs – INR 2 lacs
Refer annexure 5B.1 to 5B.8
5 A & 5B. Improve control over computation and credit of L B O commission in Kitt y
(contd.)
Management Acti on Plan

Post-paid Commission
► Commission credited on short realisation: These were erroneous entries updated basis short payment received. We will review each
entry before entering the same in Kitty from now onwards.
► Excess/ Short commission credited in Kitt y: These entries have now been rectified in Kitty.
► Double commission credited in Kitt y: We have now reversed these entries.
► Commission not credited in Kitt y for LBOs:

Pre-paid commission
► Excess commission on non-deduction of TDS: We have reversed these cases in Aug’20 and will prepare a maker checker control before
posting the commission from now on in the pre-paid Kitty.
► Excess commission: We have now reversed these entries in Pre-paid Kitty.
► Double commission credited: These entries have now been reversed in Kitty.
► Commission short/ not credited: Short commission was due to calculation error and will be rectified.
► Commission on online/ other modes direct payments not credited: We have credited the pending amounts in Aug’20. Going forward we
have developed a monthly closing calendar which will incorporate the crediting commission in prepaid kitty for the monthly on a timely
basis.
Head-Finance; Oct’20
6. Strengthen controls around computation of L B O partner investment

► Weak process around review of computation of adjustments made in investment entered into with LBOs: On review of the partner
investment for the period Nov-19 to May-20*, we noted the following anomalies:
Amount Annexure
Issue category Issue Instances (INR) #

1,453 cases 35.33 lacs

Base transfers not recorded from inactive LBOs 6.1
Customer base shift not (18 LBOs) (0.67%)
charged to new L B O
Customers transferred to new LBO, not added to the investment of 859 cases 20.80 lacs
6.1
new LBO (54 LBOs) (0.40%)
Excess 30% recoverable amount appearing in investment sheet 1.79 lacs
30 LBOs 6.2
Incorrect deduction to 30% (DOCSIS investment) (0.03%)
recovery from LBOs
Short 30% recoverable amount appearing in investment sheet 0.21 lac
90 LBOs 6.3
(DOCSIS investment) (0.01%)
45 cases 1.17 lacs
Activations not charged to LBO under provisioning cost 6.4
Incorrect provisioning cost (24 LBOs) (0.02%)
charged to L B Os
16 cases 0.41 lac
Activations excess charged to LBO under provisioning cost 6.5
(14 LBOs) (0.01%)
Incorrect modem recovery 3 cases 0.05 lac
deducted from investment Modem recovery deducted twice for the same customer 6.6
(3 LBOs) (0.01%)
Net impact to partner investment 58.52 lacs

*Partner investment for Jun’20 not finalised and provided to us for our
review.
6. Strengthen controls around computation of L B O partner investment (contd.)

On review of the upcountry investment for the period Nov-19 to Jun-20 as on 14 t h Aug’20, we noted the following
anomalies:
► Weak review mechanism over material issue summary prepared by SCM and provided to Finance:
Observation Instances Inventory value Annexure

Incorrect details of material issued to JV partners, provided by SCM to Finance leading to

22 INR 2.56 lacs 6.7
under recording of material issued in the books of accounts.
Incorrect details of material returned from JV partners provided by SCM to Finance leading to
26 INR 4.09 lacs 6.8
under recording of return in the books of accounts

► Absence of maker checker control at the time of recording of issue/ return of material to/ from J V partners in the books of accounts:

Category Observation Instances Inventory value Annexure

Issue of Short recording of material issued to JV partners in the books of accounts 7 INR 0.37 lac
material Excess recording of material issued to JV partners in the books of accounts 3 INR 0.29 lac
6.9
Return of Excess recording of return of material from JV partners in the books of accounts 4 INR 0.60 lac
material Short recording of return of material in the books of accounts 1 INR 0.02 lac

► Weak controls around inclusion of each LB O in the partner investment: On review of the partner investment review, we noted
material
issue was not charged to 1 LBO in the upcountry investment. Material value issued from Nov’19 to Jun’20 amounted to INR 9.58 lacs.
Refer annexure 6.10
6. Strengthen controls around computation of L B O partner investment (contd.)

► Noted 4 LBOs (<1%) that were shifted to 44% model, however INR 18.36 lacs was pending to be recovered from them at the time of shifting
of LBO model. No exceptional approval was provided to us for our review. Refer annexure 6.11
► Non-compliance to policy around recovery of amount due against distribution material issued to LBOs. Per the policy, 25% of material
issued is collected at the time of issue and remaining in 11 monthly instalments. However, noted INR 1.37 crores (14%) was pending to
be collected for more than 1 year from 35 upcountry distributors. Refer annexure 6.12

Management Acti on Plan

Main city and Docsis Investment:

► Incorrect adjustments (Except base transfer): We have now rectified these entries in the partner investment.
► Base Transfers not considered in investment: We are looking to device a methodology going forward wherein the base transfers will not be
missed in future months. This will be discussed with the operations team and closed by 30 t h Sep’20
Upcountry capex receivables:
► LB O not considered in either of the partner investments: We have now charged the LBO (in upcountry investment) with material value on
INR
9.58 lacs and will going forward prepare a reconciliation to cover each LBO in the partner investment.
► Distribution material O/s: These areas are disputed where recovery of amount are slim. We have now defined a policy wherein material will
be issued to the upcountry LBOs only on receipt of the amount upfront.
► Incorrect material recorded in books of accounts: These entries were erroneously missed, we will adjust the material value in the month of
Jul’20. Further, we have categorised the material issue/ return location (in Oracle) into periphery towns and main city to ensure no such
entries are missed in future.
GM-Finance
7A. Improve follow-up for outstanding from Enterprise customers

Amount billed Pending

Opening balance (Apr’20) (May’20 to Jul’20) Recovered/ waived off (Jul’20)

INR 1.52 crores INR 1.51 crores INR 1.83 crores INR 1.20 crores

► 5% customers have >3 bills (INR 12.71 lacs – 15% of total outstanding) pending as on 31-Jul-20. Ageing of the amount pending to
be collected:

Subscripti on revenue – Outstanding amount

Acti ve Customers Inacti ve Customers
Total outstanding
# of Bills pending Amount Amount (INR lacs)
# of customers (INR lacs) # of customers (INR lacs)

< 1 bill 206 (59%) 17.04 (19%)

1 to 3 bills 122 (35%) 59.69 (67%) 30.91
227 (26% of 120.35*
3 to 5 bills 15 (4%) 11.24 (13%) total
5 to 7 bills 4 (1%) 1.47 (2%) outstanding)

Refer annexures 7A.1

*Details of waivers and TDS receivable not adjusted in the books of accounts not provided for
review.
7B. Improve control over billing of Enterprise customers
► Anomalies noted in manual computation of enterprise billing to customer. Our review of the enterprise billing for the months of May-
Jun’20 highlighted:
Nov’19 to Jan’20 Feb’20 to Apr ’20 May'20 Jun'20 Recti fi cati on
Net pending as on
Observation impact 11-Aug-20
Amount Amount Amount Amount (INR lacs)
# of links (INR lacs) # of links (INR lacs) # of links (INR lacs) # of links (INR lacs) (INR lacs)

0.62 0.62
Active customers not billed 6 - - - - - - NIL
(0.23%) (0.1%)
0.27 0.03 0.30 0.19
Active customers short billed - - 3 1 - -
(0.1%) (0.06%) (0.05%) (63%)
0.40 0.40 0.05
Excess billing generated for customers - - 2 - - - -
(0.15%) (0.06%) (13%)
Actual bandwidth/ utilization greater than 0.10 0.10 0.10
- - - - - - 8
billed/ agreed leading to under billing (0.15%) (0.02%) (100%)
Delay in billing by 30 days in May’20 - - - - 1 - - - - -
0.62 0.13 0.03 0.10 0.24
Total 6 (0.23%) 5 (0.05%) 2 (0.06%) 8 (0.15%) 0.62 (39%)
Refer annexures 7B.1 to
7B.4
8A. Strengthen control over monitoring of unidentified receipts

► Weak controls around application of collection to LB O accounts posted through unidentified receipts: On our review of the unidentified
amounts in the BRS we noted the following:

Mar’20 to Apr ’20 May-20 Ju n - 2 0 Recti fi cati on

Net eff ect pending as on
Observation Amount Amount Amount (Amount) 11-Aug-20
Cases (INR) Cases (INR) Cases (INR) (INR lacs)

Amount recorded in unidentified accounts applied twice to 8 1.17 1.17 lacs

- - - - NIL
LBO accounts (2%) lacs (2%)
Amount not recorded in unidentified receipts account, however, 3 0.41 0.41 lacs
- - - - NIL
re-applied to the LBO accounts (0.64%) lacs (0.64%)
Realisation and cheque bounce entries posted in
2 0.08 0.08 lacs
unidentified receipts account, however, only realisation - - - - NIL
(0.04%) lacs (0.04%)
entries applied to LBO accounts
Credit recorded against LBO in kitty, however, still posted 1 0.19 0.19 lacs
Refer annexure 6.1 to - - - - NIL
in unidentified receipts ledger (0.21%) lacs (0.21%)
6.2
Unidentified amounts updated in Crestel (i.e, applied against
17 33 1.71 1.96 lacs
customers tagged to LBOs), however not applied against - - 0.25 lac 1.96 lacs
(14%) (21%) lacs (18%)
LBO accounts in the books of accounts

Refer annexure 8A.1 and

8A.3
8B. Strengthen control over payment gateway reconciliation

► Weak process to review accuracy of collecti ons applied to L B O s through Payment gateways: Our review for the months of May’20-Jun’20
highlighted:

Nov’19 to Jan’20 Feb’20 to Apr ’20 May'20 Jun'20 Recti fi cati on

Net pending as on
Issue Noted impact 11-Aug-20
# of Amount # of Amount # of Amount # of Amount (INR lacs)
entries (INR lacs) entries (INR lacs) entries (INR lacs) entries (INR lacs) (INR lacs)

536 9 13.76
Excess amount applied to LBOs - - 13.47 - - 0.29 NIL
(30%) (0.5%) (0.44%)
4 21 3.28
Short amount applied to LBOs - - 1.57 - - 1.71 NIL
(0.23%) (1.2%) (0.10%)
540 30 17.04
Total - - (30.23%) 11.90 - - (1.7%) 1.42 (0.54%) NIL

Refer annexure 8B.1

8 A & 8B. Strengthen control over monitoring of unidentified receipts and
recording of payment gateway reconciliation (contd.)
Management Acti on Plan

► Weak controls around application of collection to LB O receipts updated in crestel: We have now prepared an in-house portal basis which
amounts will be updated in Kitty and Crestel. Further, we will prepare a monthly calendar wherein we will perform a reconciliation with
Crestel to identify amounts updated in Crestel by the Billing team however not updated in the books of accounts to clear unidentified
balances standing in the BRS.
► Collecti on via Payment gateway applied to LBO: Necessary rectification entries have been posted in books of accounts on 5 t h Aug’20 for
short and excess collections credited to LBO.
Head-Finance; Sep’20
9A. Strengthen control over DP customer suspension/ re-acti vati ons in case of
no/ short collection
► No process to review whether no collection DP customers identified and sent to operations team were actually downgraded or not: Noted
1,238 (8%) customers in May’20 and 834 (5%) customers in Jun’20 were not downgraded against short collection. Below is an ageing of
customer plans not suspended/ downgraded (for customers not converted from L B O to DP):

May-20 Ju n - 2 0
Issues Ageing (Days) No. of Outstanding as on 31-May-20 No. of Outstanding as on 30-Jun-20
customers (INR lacs) customers (INR lacs)

0-30 347 2.63 117 0.63

31-60 39 0.40 8 0.09
61-90 14 0.39 5 0.05
Non Collection
91-120 10 0.09 5 0.12
121-150 9 0.13 - -
>150 6 0.08 - -
Short Collection - 508 3.46 514 5.21
Total 933 7.20 649 6.10

Refer annexure 9A.1 and

9A.2
9B. Strengthen control over DP customer suspension/ re-acti vati ons in case of no/
short collection (contd.)
► Absence of a process to perform independent review customers (DP) re-acti vati ons against short/ no collecti ons: Currently, central
operations team has access to re-activate customers in Crestel. Noted 362 (2%) and 323 (2%) customers re-activated during May’20
and Jun’20 respectively against short/ no collection of INR 4.50 lacs and INR 2.75 lacs. Refer table below for details.
Nov’19 to Jan’20 Feb’20 to Apr ’20 May'20 Jun'20

Customer Type Pending Pending Pending Pending

No. of amount No. of amount No. of amount No. of amount
Customers (INR lacs) Customers (INR lacs) Customers (INR lacs) Customers (INR lacs)

100 150 67 47
Converted to DP 2.16 3.32 1.58 0.66
(0.48%) (0.40%) (0.41%) (0.3%)
1,237 295 276
Not Converted 1,428 (7%) 28.69 12.33 2.92 2.09
(3.30%) (1.8%) (1.6%)
1,528 1,387 362 323
Total (7.48%) 30.85 (3.70%) 15.65 (2.21%) 4.50 (1.8%) 2.75

Refer annexure 9B.1 to

9B.2
Management Acti on Plan

GM-Collections & HOD-Direct Point; 30-June-20

12. Strengthen control over material management
► Non-compliance to defined procedures and weak monitoring over timely return of material/ providing utilization of material. Our review
of material issued, returned and utilized as on 6 t h Aug-20 highlighted:

Nov-19 to J a n - 2 0 Feb-20 to Apr-20 May-20 to J u n-2 0

Observation # of Amount # of Amount # of Amount Annexure #
Splicers (INR lacs) Splicers (INR lacs) Splicers (INR lacs)

Material utilization pending to be provided

1.30 0.81 2.31
(ranging 12 to 76 days in May-Jun’20; avg. – 181 158 107 12.1
(0.27%) (0.09%) (0.15%)
26 days)

Account not settled and utilization not provided 3.87 0.25 0.72
33 6 7 12.2
by separated employees (94%) (43%) (21%)

Material issued against separated employee IDs 2.43 0.27

- - 5 5 12.3
post last working date (35%) (14%)

2.44 4.86 9.46

Negative stock appearing against splicers 108 202 259 12.4
(0.51%) (0.52%) (0.60%)
Usage recorded against splicers with no prior 12.03
- - - - 181 12.5
issuance of material (0.76%)
12. Strengthen control over material management (contd.)

Management Acti on Plan

► Acti on Plan: We have now defined a process to monitor the pending utilization on a daily basis and informed the zones not to give
clearance on separated employees before settlement of their material accounts.
► Delay in providing material utilization: Pendency has been cleared as on 8 t h Aug-2020.
► Utilization not provided by separated employees: Salary for the separated employees have been put on hold till utilization is provided.
► Material issued against separated employees: Management comment pending
► Usage recorded with material issuance: Management comment pending
Head-Technical; Head-SCM; 31 s t Aug ’20
13. Strengthen control over waivers allowed to customers
► Weak process around validation of reasons from concerned department prior to updati ng waivers in crestel: Our review of waivers
provided to customer for the period May’20 and Jun’20 (total waiver amount INR 27.70 lacs to 8,633 customers) highlighted
following:
Nov’19 to Jan’20 Feb’20 to Apr ’20 May'20 Jun'20
Net Impact
Observation Reasons for waiver Amount Amount Amount Amount (INR lacs)
Cases (INR lacs) Cases (INR lacs) Cases (INR lacs) Cases (INR lacs)

448 1,197 391 312 4.69

Technical 0.92 2.43 0.72 0.62
(42%) (44%) (71%) (49%) (51%)
95 314 1,667 2,199 11.23
Absence of Plan change issues 0.25 0.79 4.36 5.83
61%) (29%) (96%) (49%) (70%)
complaints/ No tickets
raised by customers 42 1,819 2,968 435 13.26
Billing issues 0.30 2.60 8.46 1.90
for waivers (88%) (97%) (97%) (82%) (93%)
84 531 75 199 1.14
Add on services 0.23 0.61 0.09 0.21
(66%) (60%) (78%) (92%) (77%)
Safe custody charges
17 710 3.19
waiver provided wherein - - - - 0.05 3.14
Waivers provided to (0.33%) (16%) (12%)
safe custody plan not
customer for
activated
invalid reasons
OTC waiver provided
1 2 0.02
where OTC not charged to - - - - 0.01 0.01
(0.02%) (0.04%) (0.07%)
customers
Reasons not tagged 1,581 4 19.89
- 19.87 0.02 - - - -
for waiver (27%) (0.01%) (33%)
2,250 3,861 5,119 3,857
Total 21.57 6.45 13.69 11.71 53.42
(39%) (48%) (94%) (86%)
Refer Annexure 13.1 to
13.2
13. Strengthen control over waivers allowed to customers (contd.)

Management Acti on Plan

► We have implemented a policy effective Oct-20 wherein waivers will not be given to the LBOs customers without a ticket at the call
centre. Policy for the waivers posted is yet to be shared for review. Policy pending to be shared with the auditors.
VP-Collecti on; GM-Collections
14. Computation of sales incentive pay-out needs further strengthening
► Weak controls around process to review Incentive Payout computation. Our review of sales incentive pay-out during May-Jun’20
highlighted:
Nov’19 to Jan’20 Feb’20 to Apr ’20 May'20 Jun'20 Recti fi cati on
Net Impact pending as on
Observation Amount Amount Amount Amount (INR lacs) 11-Aug-20
# of Cases (INR lacs) # of Cases (INR lacs) # of Cases (INR lacs) Cases (INR lacs) (INR lacs)

Excess sale incentive pay-out due to

0.14 0.19 0.33 0.33 (100%)
incorrect sales type categorisation NA NA NA NA 56 82
(0.44%) (0.46%) (0.09%)
(leads/ new sales)
Clawback clause not applied 0.03 0.02 0.02 0.08
5 4 - - 10 NIL
for FOS/Telecaller (0.02%) (0.02%) (0.05%) (0.02%)
Clawback amount for churn customers 0.05 0.05
26 - - - - - - NIL
not considered as per incentive rate (0.03%) (0.01%)
0.03 0.03
Incentive paid for VIP customers 11 - - - - - - NIL
(0.02%) (0.01%)
0.11 0.02 0.14 0.21 0.49
Total 42 (0.06%) 4 (0.02%) 69 (0.44%) 92 (0.51%) (0.13%) 0.33 (67%)
Refer Annexure 14.1 to
14.3
Management Acti on Plan

► Excess Incentive Payout: Excess incentive pay-out will be reversed. New guidelines have been floated for computation of incentive.
Going forward leads converted post 2 months period from lead generation will be considered as new sales.
► Clawback clause note applied: These cases were missed. We will deduct the clawback charges for these cases with Jul’20 incentive pay-
out.
VP-Operati ons; Aug ’20
15A . Strengthen control over CPE’s recovery (EBS)
► Absence of defined policy consisting of timelines/ procedure for recovery of CPE for DP and Enterprise customers.
► On review of CPE’s recovery status of Enterprise customers terminated till Jun’20, noted 185 CPEs (out of 790; ~23%) not recovered till
03- Aug-20. Below is the updated CPE recovery status:

No. of pending customers Addition- Recovered- Pending as on

Churn Period Reason for pending C P E recovery as on 12-Jun-2020 May’20 & Ju n '2 0 Jun'20 & Jul'20 03-Aug-2020

Client closed 91 - - 91(49%)

Visit pending 64 - 28 36 (19%)
Till Apr'20
Client denied and legal notice sent 40 - 2 38 (21%)
Client misplaced ONT 15 - - 15 (8%)

May'20 Visit pending NA 1 - 1 (1%)

Client closed NA 1 (1%)

Jun'20 32 28
Visit pending NA 3 (2%)
Total 210 33 58 185

Refer Annexure 15A.1

15B. Strengthen control over CPE’s recovery (DP)
► On review of CPE’s recovery status of DP customers terminated till Jun’20, noted 2,940 FTTH CPEs (out of 5566; ~53%) not recovered
till
04-Aug-20. Below is the month wise CPE recovery status: Refer annexure 15B.1
Pending as on # of customer churned CPE 's Recovered Pending as on
Churn Period 12-Jun-20 May-20 & Ju n - 2 0 Jun'20 & Jul-20 04-Aug-20

Till Apr'20 2,952 NA 360 (12%) 2,592 (88%)

May'20 NA 274 76 (28%) 198 (72%)
Jun'20 NA 249 99 (39%) 150 (61%)
Total 2,952 523 535 2,940

Pending CPE’s for customers churned up-to C P E s pending as

Reasons for C P E s pending to be recovered on 4-Aug-20
Apr'20 May'20 Ju n - 2 0

Calling/Visit pending 1,265 107 83 1,455 (49%)

Modem submitted as per customer but not traceable 684 27 36 7 4 7 (25%)
Recovered but GRN Pending 255 14 8 2 7 7 (9%)
Modem lost by customers 101 12 1 1 1 4 (4%)
Customer denied due to billing issue/ refund Issue 97 21 8 1 2 6 (4%)
Customer shifted to another place 71 7 4 8 2 (3%)
Customer already using connection 34 2 5 4 1 (1%)
Recovered and GRN done 29 4 3 3 6 (1%)
Customer want to reactivate 24 3 - 2 7 (1%)
Legal notice sent 23 - - 2 3 (1%)
Customer out of station 5 1 2 8 (0.3%)
Client closed 4 - - 4 (0.1%)
Total 2,592 198 150 2,940
1 5 A & 15B. Strengthen control over CPE’s recovery ( E B S and DP) (contd.)

Management Acti on Plan

► C P E Recovery of Churned Enterprise customers: We have sent legal notices to 52 customers and release notices to further, 22
customers by end of the week, 12 CPEs have been recovered and for the balance 99 cases we will attempt a visit by 7 t h Sep’20.
Head – Enterprise (ILL); 15-Sep’20
► C P E Recovery from DP customers: We have deployed a new agency for the recovery of models from Aug’20 onwards. We will be
arranging visits to the churned customers for recovery of ONUs and implement a policy around timelines for visit after customer churn.
We have rolled out legal notices to 102 customers and will float the balance notices in Oct’20.
VP-Operations; 15-Sep’20
16. Miscellaneous Issues
► Weak monitoring around acknowledgement on the installation reports for enterprise customers: Our review of the installation reports for
May’20 and Jun’20 enterprise customer activations highlighted the following:
Recti fi cati on
Nov’19 Dec’19 Jan’20 Feb’20 Mar’20 Apr ’20 May’20 Jun’20 pending as on
Observation (# of links) (# of links) (# of links) (# of links) (# of links) (# of links) (# of links) (# of links) 31-Aug-20
(INR lacs)

Installation reports not 5 8 7 11 13 7

- - 17 (33%)
made available for review (20%) (32%) (39%) (73%) (72%) (35%)
1 1
Client stamp not available - - - - - - 1 (50%)
(7%) (6%)
Commissioning date not 3 2 NIL
- - - - - -
mentioned in the installation (20%) (11%)
report
Total 5 (20%) 8 (32%) 7 (39%) 1 5 (100%) 1 6 (89%) - - 7 (35%) 1 8 (31%)
Refer Annexure 16.1 to
16.2
Management Acti on Plan

► Some reports are pending as the authorized personnel were not available in the office when technician installed the connection at
customer’s site and now the client is closed due to COVID-19 crisis. We are in touch with the customers and will get the installation reports
cleared when the customers re-open.
Manager – Technical; 30-Sep’20
17. Improved process acti viti es
► Timelines for customer activation from docket creation: Our review of 32,030 customer activations for the period May’20 and
Jun’20
highlighted that ~5 % and ~3 % activations were out of TAT. Below is a snapshot of customer activations:
Nov’19 to Jan’20 Feb’20 to Apr ’20 May-20 Ju n - 2 0
Ageing (Days)
Main City Upcountry Main City Upcountry Main City Upcountry Main City Upcountry

1,708 1,781 4,136 3,425 408 1,878 1,100 2,530

Same Day activation
(10%) (21%) (22%) (35%) (5%) (4%) (14%) (29%)
13,757 4,980 9,563 3,806 3,837 2,584 4,140 2,638
Within 1 day
(77%) (60%) (50%) (39%) (51%) (33%) (51%) (31%)
1,616 1,083 4,519 2,264 2,805 2,774 2,522 3,012
2-7 Days
(9%) (13%) (24%) (23%) (37%) (35%) (31%) (35%)
555 418 433 223 139 262 139 219
8-10 Days
(3%) (5%) (2%) (2%) (2%) (3%) (2%) (3%)
122 105 137 73 122 146 98 134
10-15 Days
(1%) (1%) 1%) (1%) (2%) (2%) (1%) (2%)
200 71 193 186 70 94
>15 Days - -
(1%) (1%) (3%) (2%) (1%) (1%)
Total 17,758 8,367 18,988 9,862 7,504 7,830 8,069 8,627