1. CORPORATE INFORMATION
Bharti Airtel Limited (''the Company'') incorporated in India on July 7,
1995, is a company promoted by Bharti Telecom Limited (''BTL''), a
company incorporated under the laws of India. The Company''s shares are
publicly traded on the National Stock Exchange (''NSE'') and the Bombay
Stock Exchange (''BSE''), India. The Registered office of the Company is
situated at Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase
- II, New Delhi - 110070.
The Company is a leading telecommunication service provider in India
providing telecommunication systems and services.
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The financial statements have been prepared to comply in
all material respects with the accounting standards notified under the
Companies (Accounting Standards) Rules, 2006, (''as amended'') and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared under the historical cost convention on
an accrual basis except in case of assets for which revaluation is
carried out. The accounting policies have been consistently applied by
the Company and are consistent with those used in the previous year,
except for the change as explained in note 2.1 (a) below.
3. INFORMATION ABOUT BUSINESS SEGMENTS-PRIMARY
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets.
Mobile Services - These services cover voice and data telecom services
provided through GSM technology in India. This includes the captive
national long distance networks which primarily provide connectivity to
the mobile services business in India.
Telemedia Services - These services cover voice and data communications
based on fixed network and broadband technology.
Airtel Business - These services cover end-to-end telecom solutions
being provided to large Indian and global corporations by serving as a
single point of contact for all telecommunication needs across data and
voice (domestic as well as international long distance), network
integration and managed services.
a. Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 5
per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividend in Indian rupees. The
dividend proposed by the Board of Directors is subject to approval of
the shareholders in the ensuing annual general meeting.
During the year ended March 31, 2012, the amount of dividend per share
recognized as distributions to equity shareholders was Rs. 1.00 (March
31, 2011 Rs. 1.00).
a. ''Others'' under secured loans represent vehicle loans from bank
which are secured by hypothecation of vehicles of the Company.
b. Details on analysis of borrowings i.e. Maturity profile, interest
rate and currency of borrowings
c. The borrowings of Rs. 94,058 Mn outstanding as of March 31, 2012 is
repayable in 338 half yearly installments (borrowings of Rs. 91,331 Mn
outstanding as of March 31, 2011 includes borrowings of Rs. 84,996 Mn
repayable in 388 half yearly instalments and borrowings of Rs. 6,335 Mn
repayable in 2 bullet instalments).
b. MAT credit includes income of Rs. 333 Mn (March 31, 2011 Rs. 345 Mn)
relating to earlier years and current tax includes income of Rs. 29 Mn
(March 31, 2011 Rs. 13 Mn) relating to earlier years.
c. During the year ended March 31, 2012, the Company has changed the
trigger date for earlier years for certain business units enjoying
Income tax holiday under the Indian tax laws. Accordingly, income tax
credit of Rs. 903 Mn pertaining to earlier years has been recognized
during the year ended March 31, 2012.
a. ''Others'' include rent equalization reserve of Rs. 10,692 Mn as of
March 31, 2012 (Rs. 8,333 Mn as of March 31, 2011).
b. Security deposit Rs. 5,091 Mn (March 31, 2011 Rs. 2,755 Mn) included
under ''Security deposit received'', represents refundable security
deposits received from subscribers on activation of connections granted
thereto and are repayable on disconnection, net of outstanding, if any
and security deposits received from channel partners. Trade receivables
are secured to the extent of the amount outstanding against individual
subscribers by way of security deposit received from them.
The Company uses various premises on lease to install the equipment. A
provision is recognized for the costs to be incurred for the
restoration of these premises at the end of the lease period. It is
expected that this provision will be utilized at the end of the lease
period of the respective sites as per the respective lease agreements.
The movement of provision in accordance with AS-29 Provisions,
Contingent liabilities and Contingent Assets'' notified under Companies
(Accounting Standards) Rules, 2006 (''as amended'') , is given below:
a. Freehold Land and Building includes Rs. 226 Mn (March 31, 2011 Rs. 368
Mn) and Rs. 559 Mn (March 31, 2011 Rs. 594 Mn) respectively, in respect of
which registration of title in favour of the Company is pending
b. Building includes building on leashold land:
Gross Block Rs. 1,872 Mn (March 31, 2011 Rs. 1,838 Mn)
Depreciation charge for the year Rs. 237 Mn (March 31, 2011 Rs. 233 Mn)
Accumulated depreciation Rs. 947 Mn (March 31, 2011 Rs. 710 Mn)
Net book value Rs. 925 Mn (March 31, 2011 Rs. 1,128 Mn)
c. Reclassification/Adjustment includes reclass of assets between
category of assets. During the year ended March 31, 2011, Rs. 3,866 Mn
and Rs. 1,149 Mn gross block and accumulated depreciation respectively,
has been reclassified from tangible assets to intangible assets.
d. Capital work in progress includes goods in transit Rs. 785 Mn (March
31, 2011 Rs. 1,174 Mn).
e. Refer note 9, 38 and 46 for ARO, jointly owned assets and assets
given on operating lease.
a. The remaining amortisation period of licence fees as at March 31,
2012 ranges between 3 to 13 years for Unified Access Service Licences,
10 years for Long Distance Licences, 18.4 years for 3G spectrum fees.
b. Licences includes Net Block of 3G spectrum fees of Rs. 116,106 Mn as
on March 31, 2012 (March 31, 2011 Rs. 105,795 Mn).
c. Capitalised borrowing costs
The borrowing cost capitalised during the year ended March 31, 2012 was
Rs. 1,565 Mn (March 31, 2011 Rs. 4,314 Mn). The Company capitalized this
borrowing cost in the intangible assets under development. The amount
of borrowing cost included in intangible assets under development is Rs.
2,293 Mn (March 31, 2011 Rs. 1,269 Mn).
d. Reclassification/Adjustment includes reclass of assets between
category of assets. During the year ended March 31, 2012, Rs. 1,380 Mn
and Rs. 241 Mn gross block and accumulated depreciation respectively, has
been reclassified from intangible assets to capital advances (refer
note 17 Long-term loans and advances) in respect of deactivated
band with links (March 31, 2011, Rs. 3,866 Mn and Rs. 1,149 Mn gross block
and accumulated depreciation respectively, has been reclassified from
tangible assets to intangible assets).
4. CONTINGENT LIABILITIES
(i) Total Guarantees outstanding as at March 31, 2012 amounting to Rs.
27,158 Mn (March 31, 2011 - Rs. 25,140 Mn) have been issued by banks and
financial institutions on behalf of the Company.
Corporate Guarantees outstanding as at March 31, 2012 amounting to Rs.
481,376 Mn (March 31, 2011 - Rs. 452,314 Mn) have been given to banks,
financial institutions and third parties on behalf of Group Companies
at no cost to the latter.
(ii) Claims against the Company not acknowledged as debt (Excluding
cases where the possibility of any outflow in settlement is remote):
Unless otherwise stated below, the management believes that, based on
legal advice, the outcome of these contingencies will be favorable and
that a loss is not probable.
Post the Hon''ble Supreme Court Judgement on October 11, 2011 on
components of Adjusted Gross Revenue for computation of License fee,
based on the legal advice, the Company believes that the realized and
unrealized foreign exchange gain should not be included in Adjusted
Gross Revenue (AGR) for computation of license fee thereon.
Accordingly, the license fee on such foreign exchange gain has not been
provided in these financial statements. Also, due to ambiguity of
interpretation of ''foreign exchange differences'', the license fee
impact on such exchange difference is not quantifiable and has not been
included in the table above.
b) Sales tax
The claims for sales tax as at March 31, 2012 comprised the cases
i. the appropriateness of the declarations made by the Company under
the relevant sales tax legislations which was primarily procedural in
ii. the applicable sales tax on disposals of certain property and
iii. lease circuit/broadband connectivity services;
iv. the applicability of sales tax on sale of SIM cards, SIM
replacements, VAS, Handsets and Modem rentals;
v. In the State of J&K, the Company has disputed the levy of General
Sales Tax on its telecom services and towards which the Company has
received a stay from the Hon''ble J&K High Court. The demands received
to date have been disclosed under contingent liabilities. Based on the
Company''s evaluation, it believes that it is not probable that the
claim will materialise and therefore, no provision has been recognised.
c) Service tax
The service tax demands as at March 31, 2012 relate to:
i. cenvat claimed on tower and related material,
ii. levy of service tax on SIM cards,
iii. cenvat credit disallowed for procedural lapses and inadmissibility
iv. disallowance of cenvat credit used in excess of 20% limit, and
v. employee talk time.
d) Income tax demand under appeal
Income tax demands under appeal mainly included the appeals filed by
the Company before various appellate authorities against the
disallowance of certain expenses being claimed under tax by income tax
authorities, non-deduction of tax at source with respect to
dealers/distributor''s margin and non-deduction of tax on payments to
international operators for access charges etc. The management believes
that, based on legal advice, its tax positions will be sustained and
accordingly, recognition of a provision for those tax positions will
not be appropriate.
e) Custom duty
The custom authorities, in some states, demanded Rs. 2,198 Mn as at March
31, 2012 (March 31, 2011 - Rs. 2,198 Mn) for the imports of special
software on the ground that this would form part of the hardware along
with which the same has been imported. The view of the Company is that
such imports should not be subject to any custom duty as it would be an
operating software exempt from any custom duty. Based on the Company''s
evaluation, it believes that it is not probable that the claim will
materialise and therefore, no provision has been recognised.
f) Entry tax
In certain states an entry tax is levied on receipt of material from
outside the state. This position has been challenged by the Company in
the respective states, on the grounds that the specific entry tax is
ultra vires the constitution. Classification issues have also been
raised whereby, in view of the Company, the material proposed to be
taxed not covered under the specific category. The amount under dispute
as at March 31, 2012 was Rs. 2,624 Mn (March 31, 2011 - Rs. 2,521 Mn)
included in Note 25 (ii) (a) above.
g) Access charges (Interconnect Usage Charges)/Port charges
Interconnect charges are based on the Interconnect Usage Charges (IUC)
agreements between the operators although the IUC rates are governed by
the IUC guidelines issued by TRAI. BSNL has raised a demand requiring
the Company to pay the interconnect charges at the rates contrary to
the guidelines issued by TRAI. The Company filed a petition against
that demand with the Telecom Disputes Settlement and Appellate Tribunal
(''TDSAT'') which passed a status quo order, stating that only the
admitted amounts based on the guidelines would need to be paid by the
The management believes that, based on legal advice, the outcome of
these contingencies will be favourable and that a loss is not probable.
Accordingly, no amounts have been accrued although some have been paid
In another proceeding with respect to Distance Based Carriage Charges,
the Hon''ble TDSAT in its order dated May 21, 2010, allowed BSNL appeal
praying to recover distance based carriage charges. On filing of appeal
by the Telecom Operators, Hon''ble Supreme Court asked the Telecom
Operators to furnish details of distance-based carriage charges owed by
them to BSNL. Further, in a subsequent hearing held on Aug 30, 2010
Hon''ble Supreme Court sought the quantum of amount in dispute from all
the operators as well as BSNL and directed both BSNL and Private
telecom operators to furnish CDRs to TRAI. The CDRs have been furnished
to TRAI. The management believes that, based on legal advice, the
outcome of these contingencies will be favourable and that a loss is
In another issue with respect to Port Charges, in 2001, TRAI had
prescribed slab based rate of port charges payable by private operators
which were subsequently reduced in the year 2007 by TRAI. On BSNL''s
appeal, TDSAT passed it''s judgment in favour of BSNL, and held that the
pre-2007 rates shall be applicable prospectively from May 29, 2010. The
management believes that, based on legal advice, the outcome of these
contingencies will be favourable and that a loss is not probable.
h) DoT Demands
i) The Company has not been able to meet its roll out obligations fully
due to certain non-controllable factors like Telecommunication
Engineering Center testing, Standing Advisory Committee of Radio
Frequency Allocations clearance, non availability of spectrum, etc. The
Company has received show cause notices from DoT for 14 of its circles
for non-fulfillment of its roll out obligations and these have been
replied to. DoT has reviewed and revised the criteria and there has
been no further development on this matter since then.
ii) DoT demands include demands raised for contentious matters relating
to computation of license fees and spectrum charges
iii) DoT demands also include the following contentious matters :-
a) In respect of subscriber verification norms and regulations
including validity of certain documents allowed as Proof of
Address/Identity in a mobility circle
b) In respect of invalid calling line identification (CLI) appearing in
calls made to BSNL for certain promotional business calls in a mobility
c) In respect of alleged non compliance to certain license conditions
related to renting/transfer of sim cards in a mobility circle
d) In respect of provision of IPLC services to a non-licensed entity
which has directly sold the same to a customer located in India in
Airtel Business segment.
The above stated matters are being contested by the Company and the
Company, based on legal advice, believes that it has complied with all
license related regulations as and when prescribed and does not expect
any loss relating to these matters.
Others mainly include disputed demands for consumption tax, disputes
before consumer forum and with respect to labour cases and a potential
claim for liquidated damages.
The management believes that, based on legal advice, the outcome of
these contingencies will be favourable and that a loss is not probable.
No amounts have been paid or accrued towards these demands.
j) Bharti Mobinet Limited (''BMNL'') litigation
Bharti Airtel is in litigation in various proceedings at various stages
and in various forums with DSS Enterprises Private Limited (DSS) (which
had 0.34 per cent equity interest in erstwhile Bharti Cellular Limited
(BCL)) on claims of specific performance in respect of alleged
agreements to sell the equity interest of DSS in erstwhile BMNL to
Bharti Airtel. In respect of one of the transactions with respect to
purchase of 10.5% share of DSS in Skycell by Bharti, Crystal
Technologies Private Limited (''Crystal''), an intermediary, initiated
arbitration proceedings against the Company demanding Rs. 195 Mn
regarding termination of its appointment as a consultant to negotiate
with DSS for the sale of DSS stake in erstwhile BMNL to Bharti Airtel.
The Ld. Arbitrator partly allowed the award for a sum of Rs. 31 Mn, 9%
interest from period October 3, 2001 till date of award (i.e May 28,
2009) and a further 18% interest from date of award to date of payment.
The Company appealed against the award. The Single Judge while
dismissing the appeal reduced the rate of interest from 18% to 12%. The
matter was appealed thereafter to Division Bench and finally to Supreme
Court wherein the matter has been admitted on the condition that the
amount as per Single Judge Order shall be secure in the SC, which has
been done. The matter will now come up in due course.
DSS has also filed a suit against a previous shareholder of BMNL and
Bharti Airtel challenging the transfer of shares by that shareholder to
Bharti Airtel. The matter is to be reheard.
DSS has also initiated arbitration proceedings seeking direction for
restoration of the cellular license and the entire business associated
with it including all assets of BCL/BMNL to DSS or alternatively, an
award for damages. An interim stay was granted by the Delhi High Court
with respect to the commencement of arbitration proceedings. The stay
was made absolute.
The liability, if any, of Bharti Airtel arising out of above litigation
cannot be currently estimated. Since the amalgamation of BCL and
erstwhile Bharti Infotel Limited (BIL) with Bharti Airtel, DSS, a
minority shareholder in BCL, had been issued 2,722,125 equity shares of
Rs. 10 each (5,444,250 equity shares of Rs. 5 each post split) bringing the
share of DSS in Bharti Airtel down to 0.14% as at March 31, 2012.
The management believes that, based on legal advice, the outcome of
these contingencies will be favorable and that a loss is not probable.
Accordingly, no amounts have been accrued or paid in regard to this
k) During January, 2012, DoT has issued a show cause notice to the
Company for alleged short payment of Licence Fee of Rs. 2,920 Mn
including interest for the year 2006-07 and 2007-08. The Company has
submitted its reply against the same and is confident that there will
be no amounts payable in this regard.
5. CAPITAL AND OTHER COMMITMENTS
a) Estimated amount of contracts to be executed on capital account and
not provided for (net of advances) Rs. 32,252 Mn as at March 31, 2012
(March 31, 2011 - Rs. 22,484 Mn).
b) Under the IT Outsourcing Agreement, the Company has estimated
commitments to pay Rs. 17,452 Mn as at March 31, 2012 (March 31, 2011 - Rs.
20,717 Mn) comprising of assets and service charges. The amount
represents total minimum commitement over the unexpired period of the
contracts i.e. between 2-10 years, since it is not possible for the
Company to determine the extent of assts and services under the
contract over the unexpired period. However, the actual charges/
payments may exceed the above mentioned minimum commitment based on the
terms of contract.
c) Bharti Airtel has obtained licenses under the Export Promotion
Capital Goods (''EPCG'') Scheme for importing capital goods at a
concessional rate of customs duty against submission of bank guarantee
Under the terms of the respective schemes, the Company is required to
export goods of FOB value equivalent to, or more than, five times the
CIF value of imports in respect of certain licenses and eight times the
duty saved in respect of licenses where export obligation has been
refixed by the order of Director General Foreign Trade, Ministry of
Finance, as applicable within a period of eight years from the import
of capital goods. The Export Promotion Capital Goods Scheme, Foreign
Trade Policy 2004-2009 as issued by the Central Government of India,
covers both manufacturer exporters and service providers. Accordingly,
in accordance with Clause 5.2 of the Policy, export of
telecommunication services would also qualify.
Accordingly, the Company is required to export goods and services of
FOB value of Rs. NIL as at March 31, 2012 (March 31, 2011 Rs. 2,404 Mn) by
November 24, 2018.
6. The Company has undertaken to provide financial support, to its
subsidiaries and associates Bharti Airtel Services Limited, Bharti
Airtel (USA) Limited, Bharti Airtel (Hongkong) Limited, Bharti
Telemedia Limited, Airtel M Commerce Services Limited, Bharti Airtel
Lanka (Pvt) Limited and Bharti Airtel International (Netherlands) B.V.
including its subsidiaries and associates, Alcatel-Lucent Network
Management Services India Limited and Bharti Teleports Limited.
7. NEW OPERATIONS
a) The Company had invested Rs. 201 Mn in Bharti Airtel International
(Mauritius) Limited, during the year ended March 31, 2012 and holds
100% of the total shareholding as on March 31, 2012.
b) The Company had invested Rs. 211 Mn in Bharti International
(Singapore) Pte Limited, during the year ended March 31, 2012 and holds
50.91% of the total shareholding as on March 31, 2012.
c) The Company had invested Rs. 480 Mn in Airtel M Commerce Services
Limited during the year ended March 31, 2012, out of which equity
shares of Rs. 20 Mn were acquired from Bharti Airtel Services Limited and
Rs. 280 Mn have been invested during the quarter ended March 31, 2012.
The Company currently holds 100% of the total shareholding as on March
d) On April 5, 2011, Airtel DTH Services Congo (RDC) S.p.r.l. had been
incorporated as a wholly owned subsidiary of Bharti Airtel DTH Holdings
B.V. (a wholly-owned subsidiary of Bharti Airtel Africa B.V.).
e) On April 5, 2011, Airtel Mobile Commerce Madagascar S.A. had been
incorporated as a wholly owned subsidiary of Airtel Mobile Commerce
B.V. (formerly known as Zap Mobile Commerce B.V., a wholly owned
subsidiary of Bharti Airtel International (Netherlands) B.V.). Airtel
Mobile Commerce B.V. had invested Rs. 0.05 Mn in the newly incorporated
f) On April 5, 2011, Congo RDC Towers S.p.r.l. had been incorporated as
a wholly owned subsidiary of Africa Towers N.V. (a wholly owned
subsidiary of Bharti Airtel International (Netherlands) B.V.).
g) On May 17, 2011, Gabon Towers S.A. had been incorporated as a wholly
owned subsidiary of Africa Towers N.V. (a wholly owned subsidiary of
Bharti Airtel International (Netherlands) B.V.). Africa Towers N.V. had
invested Rs. 1 Mn in the newly incorporated company.
h) On May 26, 2011, Airtel DTH Services Gabon S.A. had been
incorporated as a wholly owned subsidiary of Bharti Airtel DTH Holdings
B.V. (a wholly-owned subsidiary of Bharti Airtel Africa B.V.). Bharti
Airtel DTH Holdings B.V. had invested Rs. 0.7 Mn in the newly
i) On June 26, 2011, Bangladesh Infratel Networks Limited had been
incorporated as a wholly owned subsidiary of Airtel Bangladesh Limited
(a subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd). Airtel
Bangladesh Limited had invested Rs. 0.06 Mn in the newly incorporated
j) On July 8, 2011, Aero Ventures Limited had been incorporated as a
wholly owned subsidiary of Network i2i Limited (a wholly-owned
subsidiary of Bharti Airtel Limited). Network i2i Limited had invested
Rs. 48.93 towards subscription of 1 share of USD 1 in the newly
incorporated company. During the year Network i2i Limited had made
further investment of Rs. 2,410 Mn. On March 20, 2012, Network i2i
Limited has sold its entire equity stake in Aero Ventures Limited to
Malaysian Jet Services Sdn. Bhd., Malaysia for a total consideration of
Rs. 2,543 Mn (USD 50.6 Mn).
k) On August 15, 2011, Bharti Airtel Cameroon B.V. (formerly known as
Bharti Airtel Rwanda Holdings B.V.) had been incorporated as a wholly
owned subsidiary of Bharti Airtel Africa B.V. (a wholly-owned
subsidiary of Bharti Airtel International (Netherlands) B.V.). Bharti
Airtel Africa B.V. had invested Rs. 1.15 Mn in the newly incorporated
l) On September 2, 2011, Airtel Rwanda Limited had been incorporated as
the wholly owned subsidiary of Bharti Airtel Cameroon B.V. (formerly
known as Bharti Airtel Rwanda Holdings B.V., a wholly owned subsidiary
of Bharti Airtel Africa B.V.). Subsequently on September 15, 2011,
Bharti Airtel Cameroon B.V. had transferred 100% of its holdings in the
newly incorporated company to Zebrano (Mauritius) Limited (formerly
known as Zain (IP) Mauritius Limited) (a wholly- owned subsidiary of
Bharti Airtel Africa B.V.).
m) On September 8, 2011, Africa Towers Services Limited had been
incorporated as the jointly owned entity of Africa Towers N.V. (a
wholly-owned subsidiary of Bharti Airtel International (Netherlands)
B.V.) and Bharti Airtel International (Netherlands) B.V.
n) On September 12, 2011, Rwanda Towers Limited had been incorporated
as the wholly owned subsidiary of Africa Towers N.V. (a wholly owned
subsidiary of Bharti Airtel International (Netherlands) B.V.).
o) The Company has invested Rs. 98 Mn for its proportionate share in
Bharti Teleports Limited, during the quarter ended March 31, 2012 and
continues to hold 49% of the total shareholding as on March 31, 2012.
p) During the year ended March 31, 2012, the Company has completed the
launch of 3G services in all its eligible licensed circles in India.
d) The expected rate of return on plan assets was based on the average
long-term rate of return expected to prevail over the next 15 to 20
years on the investments made by LIC. This was based on the historical
returns suitably adjusted for movements in long-term Government bond
interest rates. The discount rate is based on the average yield on
Government bonds of 20 years.
e) The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
f) The table below illustrates experience adjustment disclosure as per
para 120 (n) (ii) of Accounting Standard 15, ''Employee Benefits''
8. INVESTMENT IN JOINT VENTURES/JOINTLY OWNED ASSETS Jointly owned
a) The Company has participated in various consortiums towards supply,
construction, maintenance and providing long term technical support
with regards to following Cable Systems. The details of the same are as
Joint Ventures Entity
b) The Company entered into a Joint Venture with 9 other overseas
mobile operators to form a regional alliance called the Bridge Mobile
Alliance, incorporated in Singapore as Bridge Mobile Pte Limited. The
principal activity of the venture is creating and developing regional
mobile services and managing the Bridge Mobile Alliance Programme. The
Company has invested USD 2.2 Mn, amounting to Rs. 92 Mn, in 2.2 Mn
ordinary shares of USD 1 each which is equivalent to an ownership
interest of 10.00% as at March 31, 2012 (March 31, 2011 USD 2.2 Mn, Rs.
92 Mn, ownership interest 10.00%).
9. As at March 31, 2012, Bharti Airtel Employee''s Welfare Trust (''the
Trust'') holds 2,456,750 equity shares (of face value of Rs. 5 each)
(March 31, 2011 2,964,623 equity shares) of the Company, out of which
1,792,383 equity shares were issued at the rate of Rs. 25.68 per equity
share fully paid up and 664,367 equity shares (of face value of Rs. 5
each) are purchased from open market at average rate of Rs. 354.57 per
10. Loans and advances in the nature of loans along with maximum
amount outstanding during the year as per Clause 32 of Listing
Agreement are as follows:
(a) Loan and advance in the nature of loan bearing nil interest given
to Bharti Telemedia Limited Rs. 31,060 Mn (March 31, 2011 Rs. 24,969 Mn).
(b) Loan and advance in the nature of loan given to Bharti Airtel Lanka
(Private) Limited is Rs. 11,047 Mn (March 31, 2011 Rs. 9,697 Mn at LIBOR
4.5% interest rate). Effective February 10, 2012, no interest has been
charged with an option for equity conversion.
(c) Loan and advance in the nature of loan given to Bharti Airtel
International (Netherlands) B.V at LIBOR 1.7% interest rate is Rs.
50,686 Mn (March 31, 2011 Rs. 11,654 Mn).
(d) Loan and advance in the nature of loan given to Alcatel-Lucent
Network Management Services India Limited at SBI PLR 1% interest rate
is Rs. 90 Mn (March 31, 2011 Rs. 90 Mn).
(e) Loan and advance in the nature of loan given to Bharti Teleports
Limited at 13% p.a. interest rate is Rs. 332 Mn (March 31, 2011 Rs. 210
(f) Loan and advance in the nature of loan given to Bharti Airtel
International (Mauritius) Limited at LIBOR 1.7% interest rate is Rs.
9,428 Mn (March 31, 2011 NIL).
(g) Loan and advance in the nature of loan given to Bharti
International (Singapore) Pte Limited at LIBOR 1.7% interest rate is
Rs. 24,939 Mn (March 31, 2011 NIL).
(h) Loan and advance in the nature of loan given to Bharti Airtel
Services Limited at nil interest is Rs. 56 Mn (March 31, 2011 Rs. 56 Mn).
(i) Loan and advance in the nature of loan given to Bharti Airtel (USA)
Limited at 7.33% interest rate is Rs. 53 Mn (March 31, 2011 Rs. 45 Mn).
11. RELATED PARTY DISCLOSURES
In accordance with the requirements of Accounting Standards (AS) -18 on
Related Party Disclosures, the names of the related parties where
control exists and/or with whom transactions have taken place during
the year and description of relationships, as identified and certified
by the management are:
Name of the Related Party and Relationship :
(i) Key Management Personnel
Sunil Bharti Mittal
(ii) Other Related Parties
(a) Entities where control exist - Subsidiary/Subsidiaries of
Bharti Hexacom Limited
Bharti Airtel Services Limited
Bharti Telemedia Limited
Bharti Airtel (USA) Limited
Bharti Airtel Lanka (Private) Limited
Bharti Airtel (UK) Limited
Bharti Airtel (Canada) Limited
Bharti Airtel (Hongkong) Limited
Bharti Infratel Limited
Network i2i Ltd
Bharti Airtel Holdings (Singapore) Pte Ltd
Bharti Infratel Lanka (Private) Limited (subsidiary of Bharti Airtel
Lanka (Private) Limited)
Bharti Infratel Ventures Limited (subsidiary of Bharti Infratel
Airtel M Commerce Services Limited
Bharti Airtel (Japan) Kabushiki Kaisha (subsidiary of Bharti Airtel
Holdings (Singapore) Pte Ltd)
Bharti Airtel (France) SAS (subsidiary of Bharti Airtel Holdings
(Singapore) Pte Ltd)
Bharti Airtel International (Mauritius) Limited
Bharti International (Singapore) Pte Ltd
Airtel Bangladesh Limited
(subsidiary of Bharti Airtel Holdings (Singapore) Pte Ltd)
Bharti Airtel International (Netherlands) B.V.
Bangladesh Infratel Networks Limited (incorporated on June 26, 2011) *
Aero Ventures Limited (incorporated on July 8, 2011) (ceased to be a
subsidiary on March 20, 2012) *
Bharti Airtel Africa B.V. (Subsidiary of Bharti Airtel International
Other subsidiaries of Bharti Airtel Africa B.V. :
Africa Towers N.V.
Africa Towers Services Limited (incorporated on September 8, 2011) *
Airtel (Ghana) Limited
Airtel (SL) Limited
Airtel Burkina Faso S.A.#
Airtel Congo S.A#
Airtel DTH Services (K)
Airtel DTH Services (Sierra Leone) Limited
Airtel DTH Services Burkina Faso S.A.
Airtel DTH Services Congo (RDC) (incorporated on April 5, 2011) *
Airtel DTH Services Congo S.A.
Airtel DTH Services Gabon S.A (incorporated on May 26, 2011)*
Airtel DTH Services Ghana Limited
Airtel DTH Services Madagascar S.A.
Airtel DTH Services Malawi Limited
Airtel DTH Services Niger S.A.
Airtel DTH Services Nigeria Limited
Airtel DTH Services T.Chad S.A.
Airtel DTH Services Tanzania Limited
Airtel DTH Services Uganda Limited
Bharti DTH Services Zambia Limited
Airtel Madagascar S.A.
Airtel Malawi Limited
Airtel Mobile Commerce (SL) Limited (Formerly Zap Trust Company (SL)
Airtel Mobile Commerce B.V. (Formerly Zap Mobile Commerce B.V.)
Airtel Mobile Commerce Burkina Faso S.A. (Formerly Zap Mobile Commerce
Burkina Faso S.A.) *
Airtel Mobile Commerce Ghana Limited (Formerly Zap Trust Company
Airtel Mobile Commerce Holdings B.V.(Formerly Zap Holdings B.V.)
Airtel Mobile Commerce Madagascar (S.A.) (Formerly Airtel Money Mobile
Commerce Madagascar) *
Airtel Mobile Commerce Malawai Limited (Formerly Zap Trust Company
Airtel Mobile Commerce Tanzania Limited (Formerly Zap Trust Company
Airtel Mobile Commerce Tchad SARL (Formerly Zain Mobile Commerce Tchad
Airtel Mobile Commerce Uganda (Formerly Zap Trust Company Uganda
Airtel Money Niger (Formerly Zap Niger S.A (Niger)
Airtel Money (RDC) S.p.r.l *
Airtel Networks Kenya Limited #
Airtel Networks Limited
Airtel Rwanda Limited (incorporated on September 2, 2011) *
Airtel Tanzania Limited #
Airtel Towers (Ghana) Limited
Airtel Towers S.L. Company Limited
Airtel Uganda Limited
Airtel (Seychelles) Limited (Formerly Telecom Seychelles Limited)
Bharti Airtel Acquisition Holdings B.V.
Bharti Airtel Burkina Faso Holdings B.V.
Bharti Airtel Cameroon Holdings B.V.
Bharti Airtel Chad Holdings B.V.
Bharti Airtel Congo Holdings B.V.
Bharti Airtel Developers Forum Limited (Formerly Zain Developers
Bharti Airtel DTH Holdings B.V.
Bharti Airtel Gabon Holdings B.V. #
Bharti Airtel Ghana Holdings B.V. #
Bharti Airtel Kenya B.V. #
Bharti Airtel Kenya Holdings B.V.
Bharti Airtel Madagascar Holdings B.V. #
Bharti Airtel Malawi Holdings B.V. #
Bharti Airtel Mali Holdings B.V.
Bharti Airtel Niger Holdings B.V. #
Bharti Airtel Nigeria B.V. #
Bharti Airtel Nigeria Holdings B.V.
Bharti Airtel Nigeria Holdings II B.V.
Bharti Airtel Cameroon B.V. (Formerly Bharti Airtel Rwanda Holdings
Bharti Airtel RDC Holdings B.V.
Bharti Airtel Services B.V.
Bharti Airtel Sierra Leone Holdings B.V. #
Bharti Airtel Tanzania B.V. #
Bharti Airtel Uganda Holdings B.V. #
Bharti Airtel Zambia Holdings B.V. #
Burkina Faso Towers S.A.
Celtel (Mauritius) Holdings Limited
Celtel Cameroon SA
Celtel Congo RDC S.a.r.l. #
Celtel Gabon S.A.
Celtel Niger S.A.
Celtel Tchad S.A. #
Celtel Zambia plc
Channel Sea Management Co Mauritius Limited
Congo (RDC) Towers S.p.r.l. (incorporated on April 5, 2011) *
Congo Towers S.A.
Gabon Towers S.A. (incorporated on May 17, 2011) *
Indian Ocean Telecom Limited
Kenya Towers S.A.
Madagascar Towers S.A.
Malawi Towers Limited
Mobile Commerce Congo S.A.
Mobile Commerce Gabon S.A
MSI-Celtel Nigeria Limited
Niger Towers S.A.
Partnership Investments Sprl
Rwanda Towers Limited (incorporated on September 12, 2011) *
Societe Malgache de Telephonie Cellulaire Sa
Tanzania Towers S.A.
Tchad Towers S.A.
Towers Support Nigeria Limited
Uganda Towers Limited
Zambian Towers Limited
Zap Trust Company Nigeria Limited
Zebrano (Mauritius) Limited (Formerly Zain (IP) Mauritius Limited)
ZMP Limited (Zambia)
(b) Associates/Associate of subsidiary
Alcatel-Lucent Network Management Services India Limited
Bharti Teleports Limited
Tanzania Telecommunications Limited (Associate of Bharti Airtel
(c) Joint Ventures/Joint Venture of Subsidiary
Forum I Aviation Limited (Joint Venture of Bharti Airtel Services
Indus Towers Limited (Joint Venture of Bharti Infratel Limited)
Bridge Mobile Pte Limited
(d) Entities where Key Management Personnel and their relatives
exercise significant influence/Group Companies
Beetel Teletech Limited
Bharti Airtel Employees Welfare Trust
Bharti Axa General Insurance Company Limited
Bharti Axa Investment Managers Private Limited
Bharti Axa Life Insurance Company Limited
Bharti Enterprises Limited
Bharti Realty Holdings Limited
Bharti Realty Limited
Bharti Retail Limited
Bharti Softbank Holdings Pte Limited *
Bharti Wal-Mart Private Limited
Centum Learning Limited
Comviva Technologies Limited
Fieldfresh Foods Private Limited
Guernsey Airtel Limited
Indian Continent Investment Limited
Jersey Airtel Limited
Nile Tech Limited
(e) Entities having significant influence over the Company
Singapore Telecommunications Limited
Bharti Telecom Limited
* Refer note 35 above for details of new operations during the year.
# Transactions of similar nature with such subsidiaries have been
dubbed and shown under the head ''Other African Subsidiaries'' as their
contribution to total transaction value is less than 10%.
Operating Lease - As a Lessor
i) The Company has entered into a non-cancelable lease arrangement to
provide approximately 108,860 fiber pair kilometers of dark fiber on
indefeasible right of use (IRU) basis for a period of 18 years. The
lease rental receivable proportionate to actual kilometers accepted by
the customer is credited to the statement of profit and loss on a
straight - line basis over the lease term. Due to the nature of the
transaction, it is not possible to compute gross carrying amount,
depreciation for the year and accumulated depreciation of the asset
given on operating lease as at March 31, 2012 and accordingly,
disclosures required by AS 19 are not provided.
12. EMPLOYEE STOCK COMPENSATION
(i) Pursuant to the shareholders'' resolutions dated February 27, 2001
and September 25, 2001, the Company introduced the Bharti
Tele-Ventures Employees'' Stock Option Plan (hereinafter called the
Old Scheme) under which the Company decided to grant, from time to
time, options to the employees of the Company and its subsidiaries. The
grant of options to the employees under the Old Scheme is on the basis
of their performance and other eligibility criteria.
(ii) On August 31, 2001 and September 28, 2001, the Company issued a
total of 1,440,000 (face value Rs. 10 each) equity shares at a price of Rs.
565 per equity share to the Trust. The Company issued bonus shares in
the ratio of 10 equity shares for every one equity share held as at
September 30, 2001, as a result of which the total number of shares
allotted to the trust increased to 15,840,000 (face value Rs. 10 each)
(iii) Pursuant to the shareholders'' resolution dated September 6, 2005,
the Company announced a new Employee Stock Option Scheme (hereinafter
called the New Scheme) under which the maximum quantum of options was
determined at 9,367,276 (face value Rs. 10 each) options to be granted to
the employees from time to time on the basis of their performance and
other eligibility criteria.
The volatility of the options is based on the historical volatility of
the share price since the Company''s equity shares became publicly
traded, which may be shorter than the term of the options.
(viii)The Company has granted stock options to the employees of the
subsidiaries i.e. Bharti Hexacom Limited, Bharti Infratel Limited (BIL)
and Bharti Airtel International (Netherlands) B.V. and the
corresponding compensation cost is borne by the Company. Further BIL
has also given stock options to certain employees of the Company and
the corresponding compensation cost is borne by BIL.
13. FORWARD CONTRACTS & DERIVATIVE INSTRUMENTS
The Company''s activities expose it to a variety of financial risks,
including the effects of changes in foreign currency exchange rates and
interest rates. The Company uses derivative financial instruments such
as foreign exchange contracts, option contracts and interest rate swaps
to manage its exposures to interest rate and foreign exchange
The Company has accounted for derivatives, which are covered under the
Announcement issued by the ICAI, on marked-to- market basis and has
recorded reversal of losses for earlier period of Rs. 82 Mn (including
losses of Rs. 156 Mn towards embedded derivatives) for the year ended
March 31, 2012 [recorded losses of Rs. 126 Mn for the year ended March
14. a) The Board of Directors, in its meeting held on May 5, 2011,
recommended a final dividend of Rs. 1.00 per equity share of Rs. 5.00 each
(20% of face value) for financial year 2010-11, which was duly approved
by the shareholders of the Company in the Annual General Meeting held
on September 1, 2011
15. During the year ended March 31, 2012, a fire incident had occurred
at one of the premises of the Company. The insurance company has been
notified about the loss and a preliminary survey has been carried out.
The Company is in the process of completing the necessary documentation
for claiming the insurance amount. The Company is confident of
recovering the full value of the loss amount from the insurer.
16. Details of debt covenant w.r.t. the Company''s 3G/BWA borrowings:
The loan agreements with respect to 3G/BWA borrowings contains a
negative pledge covenant that prevents the Company to create or allow
to exist any Security Interest on any of its assets without prior
written consent of the Lenders except in certain agreed circumstances.
17. Previous year figures have been regrouped/reclassified where
necessary to conform to current year''s classification.