Bharti Airtel

1.  We have audited the attached Balance Sheet of Bharti Airtel Limited
 (‘the Company’) as at March 31, 2009 and also the Profit and Loss
 account and the Cash Flow Statement for the year ended on that date
 annexed thereto. These financial statements are the responsibility of
 the Company’s management. Our responsibility is to express an opinion
 on these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor’s Report) Order, 2003 (as
 amended) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i. We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii. In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the balance sheet, profit and loss account and cash
 flow statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of section 211 of the
 Companies Act, 1956;
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2009;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date
 
 Re: BHARTI AIRTEL LIMITED
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The capitalised fixed assets are physically verified by the
 management according to a regular programme designed to cover all the
 items over a period of three years. During the year, the management had
 also designed a plan to physically verify capital work in progress.
 Pursuant to the above, a portion of fixed assets and capital work in
 progress has been physically verified by the management during the
 year, which in our opinion is reasonable having regard to the size of
 the company and nature of its assets. As informed, no material
 discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The inventory (other than stocks with third parties) has been
 physically verified by the management during the year. In our opinion,
 the frequency of verification is reasonable.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.  Accordingly,
 clauses (iii) of the Companies (Auditor’s Report) Order, 2003, as
 amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 are
 not applicable to the Company for the current year.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business for the purchase of inventory, fixed assets
 and for the sale of goods
 
 and services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 (v) According to the information and explanations provided by the
 management, there are no transactions pursuant to contracts or
 arrangements referred to in section 301 that are required to be entered
 in the register maintained under section 301 of the Companies Act,
 1956.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Companies Act, 1956 and the
 rules framed there under.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of accounts maintained by
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1) (d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained. We have not,
 however, made a detailed examination of records with a view to
 determine whether they are accurate or complete.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including provident
 fund, investor education and protection fund, employees’ state
 insurance, income-tax, sales- tax, wealth-tax, service tax, customs
 duty, cess and other material statutory dues applicable to it though
 there has been delays in few cases. The provisions relating to excise
 duty is not applicable to the Company.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, employees’
 state insurance, income-tax, wealth-tax, service tax, sales-tax,
 customs duty, cess and other undisputed statutory dues were
 outstanding, at the year end, for a period of more than six months from
 the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty and cess
 on account of any dispute, are as follows (also refer Note 3(b) on
 Schedule 21):
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial years.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has given guarantee for loans taken by others from banks and
 financial institutions, the terms and conditions whereof in our opinion
 are not prima-facie prejudicial to the interest of the Company.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 overall examination of the balance sheet of the Company, funds
 amounting to Rs. 32,149,875 thousand raised on short-term basis
 (primarily represented by capital creditors) have been used for
 long-term investment (primarily represented by fixed assets).
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) The Company has created security or charge in respect of
 debentures outstanding at the year end.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) According to the information and explanations furnished by the
 management, which have been relied upon by us, there were no frauds on
 or by the Company noticed or reported during the course of our audit
 except few cases of fraud by employees estimated at Rs. 13,095 thousand
 and by external parties Rs. 150,516 thousand detected by the management
 for which appropriate steps were taken to strengthen controls and Rs.
 6,100 thousand, out of such estimated amounts, has been recovered by
 the Company during the year.
 
 
 
 
                                   For S.R. BATLIBOI & ASSOCIATES 
                                            Chartered Accountants
                                             per Prashant Singhal
                                                          Partner
                                            Membership No.: 93283
 
 Place  :    New Delhi
 Date   :    April 29, 2009