Idea Cellular

The Directors are pleased to present their Thirteenth Annual Report
 together with the Audited Accounts of your Company for the fnancial
 year ended March 31, 2008.
 
 Financial results
 
 Financial highlights of the consolidated Statement of Operations of
 your Company for the year 2007-08 are as under:
 
                                                   (Rs. in Million)
 
 Particulars                             2007-08             2006-07
 
 Income from Services                     67,200              43,664
 
 Other Income                                174                 209
 
 Total Revenue                            67,374              43,873
 
 Operating Expenses                       44,682              29,011
 
 EBITDA                                   22,692              14,862
 
 Depreciation and Amortisation             8,768               6,718
 
 EBIT                                     13,924               8,144
 
 Interest and Financing charges            2,776               3,051
 
 EBT                                      11,148               5,092
 
 Taxes                                       725                  70
 
 Net Profit after Tax                     10,423               5,022
 Balance brought forward from
 previous year                           (24,502)            (17,088)
 Accumulated Losses acquired on
 amalgamation of subsidiaries &
 Leave provisions for earlier years due
 to revised AS-15                            -               (12,437)
 
 Cumulative Losses                       (14,079)            (24,502)
 
 Overview
 
 During the year ended March 31, 2008, consolidated revenue grew by 54%
 to Rs. 67,374 million from Rs. 43,873 million for the year ended March
 31, 2007. Your Company registered a net profit of Rs. 10,423 million
 against a net profit of Rs. 5,022 million in 2006-07.
 
 Dividend
 
 As your Company is yet to recoup the accumulated losses, your Directors
 have not recommended any payment of dividend for the year.
 
 Review of Consolidated Operations
 
 Your Company recorded an increase of 71% in its subscriber base from
 14.01 million as of March 31, 2007 to 24.00 million as of March 31,
 2008. Your Company has increased its market share from 8.6% in 2006-07
 to 9.4% in 2007-08 on a national basis. The total Minutes of Usage
 increased from 46 billion minutes in 2006-07 to 86 billion minutes in
 2007-08, showing an increase of 86%. Your Company has expanded its
 network from 4432 cities and towns at the end of FY 2006-07 to 13308
 cities and towns at the end of FY 2007-08.
 
 Capital Expenditure
 
 Your Company continues its aggressive pursuit of network expansion
 along with an improved quality experience to the customers. Your
 
 Company has incurred a capex of Rs. 54,994 million and had cash outfows
 of Rs. 55,726 million during FY 2008.
 
 Employee Stock Option Scheme
 
 Shareholders of the Company had approved the Employee Stock Option
 Scheme – 2006 (“ESOS – 2006”) by way of postal ballot in the month of
 November 2007. Further, the ESOS Compensation Committee granted
 19,931,000 options to the eligible employees of the Company on December
 31, 2007. Each option is convertible into one Equity Share of the
 Company upon vesting. These options will vest in 4 equal annual
 instalments after one year of the grant and shall be exercisable within
 a period of 5 years from the date of the vesting.
 
 Details of the options issued under ESOS – 2006, as also the
 disclosures in compliance with Clause 12 of Securities and Exchange
 Board of India (Employees Stock Option Scheme) Guidelines 1999, are set
 out in the Annexure ‘A’ to this Report.
 
 Human Resources
 
 Your Company continuously invests in fostering people development,
 identifying and grooming management talent and has the culture of
 harnessing employees’ potential to the maximum.
 
 Significant corporate developments
 
 - In October 2007, your Company entered into a Long Term Financing
 Arrangement for an additional amount of Rs. 32,000 million with the
 IDBI led consortium. The facility is mainly for capital expenditure
 requirement for Company’s existing operations and launch of services in
 Mumbai and Bihar.
 
 - In February 2008, your Company has received the Unified Access
 Services Licences for the telecom service areas of Punjab, Karnataka,
 Tamilnadu including Chennai, North East, West Bengal, Kolkatta, Jammu &
 Kashmir, Orissa and Assam. This makes your Company a Pan India License
 holder.
 
 - In December 2007, your Company announced the formation of Indus
 Towers, a joint venture with Bharti and Vodafone to provide passive
 infrastructure services in India to all operators on a non
 discretionary basis. Your Company will hold around 16% stake in Indus
 Towers.
 
 New products and initiatives
 
 Your Company has made extensive progress on the marketing front by
 introducing various unique and innovative products and services across
 all service areas of operation. Some of the major initiatives are:
 
 - Your Company has become part of Asia Mobility Initiative’ (AMI)
 Alliance - Asia’s premier regional international roaming alliance.
 This alliance, will give IDEA customers an assured and seamless roaming
 experience along with great value in terms of support for best
 practices in the global telecom industry and access to products and
 services across all the represented countries.
 
 - Your Company has tied up with Southern Biotechnologies Ltd. for
 provision of bio-diesel for operating IDEAs gensets at all towers in
 the Andhra Pradesh region. The bio-diesel thus procured will be blended
 in a ratio of 2:8 with ordinary petro-refnery diesel to yield a 20%
 bio-diesel blend. Usage of this 20% blended bio-diesel can reduce
 pollution emissions by up to 40%, making your Company the first telecom
 operator in the country to adopt this environment friendly fuel.
 
 - Your Company has launched Idea Radio’, a truly differentiated mobile
 music service for its customers in collaboration with Geodesic, an
 innovator in communication, collaboration and entertainment
 applications on mobile and Internet platforms. For this service,
 Geodesic has extended its technological expertise to your Company, to
 develop and support the customized mobile internet radio service that
 is available to more than 24 million IDEA subscribers.
 
 Subsidiaries
 
 Three new subsidiaries have been formed during FY 2007-08 namely, Idea
 Cellular Services Limited (ICSL), Idea Cellular Infrastructure Services
 Limited (ICISL) and Idea Cellular Tower Infrastructure Limited (ICTIL).
 ICSL and ICISL are wholly owned subsidiaries of Idea Cellular Limited
 whereas ICTIL is wholly owned subsidiary of ICISL.
 
 The main purpose of ICSL is to provide manpower services to Idea
 Cellular and ICISL & ICTIL are meant for hiving off Idea’s passive
 infrastructure network.
 
 The statement of your Company’s interest in the above subsidiaries as
 at March 31, 2008, prepared in accordance with the provisions of
 Section 212 (3) of the said Act, is attached to the Balance Sheet.
 
 Fixed deposits
 
 Your Company does not accept or hold any deposits and, as such, no
 amount of principal or interest on fixed deposits was outstanding on
 the date of the Balance Sheet.
 
 Corporate Governance
 
 Your Directors reaffirm their continued commitment to good corporate
 governance practices. Your Company adheres to all major stipulations
 laid down in this regard, as provided in Clause 49 of the Listing
 Agreement with the Stock Exchanges which relates to Corporate
 Governance. A detailed report on Corporate Governance, together with, a
 certificate from Statutory Auditors forms part of this report.
 
 Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings & Outgo
 
 The particulars as required to be disclosed pursuant to Section 217(1)
 (e) of the Companies Act, 1956 read with the Companies (Disclosures of
 Particulars in the Report of Board of Directors) Rules, 1988, are given
 in the Annexure forming part of this Report.
 
 Particulars of Employees
 
 The particulars of employees as required under Section 217(2A) of the
 Companies Act, 1956, and the Companies (Particulars of Employees)
 Rules, 1975, as amended, forms part of this report. However, in
 pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, this
 report is being sent to all the shareholders of the Company excluding
 the aforesaid information and the said particulars are made available
 at the registered office of the Company. The members interested in
 obtaining such particulars may write to the Company Secretary at the
 registered office of the Company.
 
 Directors’ Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors,
 based on the representations received from the Operating
 
 Management, confirm that:
 
 a) in the preparation of the annual accounts, the applicable accounting
 standards have been followed and that there are no material departures;
 
 b) they have, in the selection of the accounting policies consulted the
 Statutory Auditors and have applied them consistently, and, made
 judgements and estimates that are reasonable and prudent, so as to give
 a true and fair view of the state of affairs of the Company at the end
 of the fnancial year and of the profit of the Company for that period;
 
 c) they have taken proper and sufficient care, to the best of their
 knowledge and ability, for the maintenance of adequate accounting
 records, in accordance, with the provisions of the Companies Act, 1956,
 for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 
 d) they have prepared the annual accounts on a going concern basis.
 
 Board of Directors
 
 In accordance with the Articles of Association of your Company, Mrs.
 Rajashree Birla, Mr. M.R. Prasanna and Mr. Arun Thiagarajan retire from
 office by rotation, and being eligible, offer themselves for
 re-appointment at the ensuing Annual General Meeting of the Company.
 Brief resumes of the Directors proposed to be re-appointed as required
 under Clause 49 of the Listing Agreement are provided in the Notice of
 the Annual General Meeting forming part of the Annual Report.
 
 Auditors
 
 M/s. Deloitte Haskins and Sells, Chartered Accountants retire as
 Statutory Auditors of the Company at the conclusion of the ensuing
 Annual General Meeting. The Statutory Auditors’ have confirmed their
 eligibility and willingness to accept the office on re-appointment.
 
 Auditors’ Report
 
 The Board has duly reviewed the Statutory Auditors’ report on the
 accounts. With regard to Note 4 of the Auditors’ Report, it is being
 clarified that the procedural amendment to the license agreements
 incorporting the name of the Company in place of the erstwhile Idea
 Mobile Communications Limited, BTA Cellcom Limited and Idea
 Telecommunications Limited, following the amalgamation, will be
 received shortly from Department of Telecommunications.
 
 Acknowledgements
 
 Your Directors wish to convey their appreciation to all subscribers,
 promoters, lenders, trading partners, suppliers and the Government for
 their invaluable support and look forward to continued support in the
 future. Your Directors wish to place on record their appreciation to
 employees at all levels for their hard work, dedication and commitment,
 which has enabled the Company to march ahead.
 
 
                                     For and on behalf of the Board
 
 Date : April 24, 2008               Kumar Mangalam Birla
 Place: Mumbai                       Chairman