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-0.37 (-4.36%)
-0.4 (-4.71%) | Notes to Accounts | Year End : Mar '12 |
Note 1: Corporate Information Tata Teleservices (Maharashtra) Limited (the Company), was incorporated on March 13, 1995. The Company is licensed to provide basic and cellular telecommunication services. The Company presently holds two Unified Access (Basic and Cellular) Service Licenses, one for Mumbai Service Area and another for Maharashtra and Goa and provides telecommunication services using Code Division Multiple Access (CDMA) technology/ Global System for Mobile Communications (GSM) technology under the aforesaid licenses. The Company also holds the National Internet Service provider - Internet Telephony license. The Company during the previous year had succeeded in winning the bid for 3G spectrum in Maharashtra and Goa circle (excluding Mumbai) (Also refer Note 24.12). The Company is a subsidiary of Tata Sons Limited, (the ultimate holding company) Notes: i) Stipulated securities for the loans are either one or more of the following as per terms of the arrangements with respective banks: - by first pari pasu charge on the assets of the Company, - by pledge of shares held by Tata Teleservices Limited in the Company, - by assignment of the proceeds on sale of network in the event of cancellation of the telecom license, - by assignment of telecom license, - by assignment of insurance policies and material project contracts, - by sponsor support undertaking of Tata Sons Limited (the Ultimate Holding Company). ii) Terms of repayment a) Long-term loans are repayable in 36 quarterly instalments ending on January 1,2019. b) ECB loans are repayable in 3 annual installments commencing from March 31,2020. 1.1 Contingent liabilities: i) Claims against the company not acknowledged as debt Telecom Regulatory Matters* (Refer notes below) 208.90 223.69 Others 159.84 146.50 * Amounts are net of provision for contingencies made aggregating to Rs 198.88 Crores (previous year Rs. 185.60 Crores) (Also refer note 24.18) Notes: Contingent liabilities in respect of Telecom Regulatory Matters include: a) Bharat Sanchar Nigam Limited (BSNL) issued demand notices to pay Access Deficit Charge (ADC) aggregating to Rs.166.90 Crores, including interest, for the period November 14, 2004 upto February 28, 2006, the date after which ADC is payable on Net Adjusted Gross Revenue Basis. The demands stated that ''fixed wireless'' services provided by the Company under the brand name WALKY had mobility features and should be treated as mobile services for the purpose of Interconnect Usage Charges Regulations and ADC was payable on such calls. The Company filed an appeal to the Hon''ble Telecom Dispute and Settlement Appellate Tribunal (TDSAT) in this regard, wherein the TDSAT negated the Company''s appeal. The Company further filed an appeal before the Hon''ble Supreme Court (SC) who vide order dated April 30, 2008 confirmed that ADC was payable and since there were claims and counter-claims between the Company and BSNL, the SC directed that quantification of amounts payable to each other be made by TDSAT. The Company had filed a review petition in SC which was rejected. The Company filed a petition in TDSAT to determine I reconcile amounts payable to each other and Hon''ble Telecom Dispute and Settlement Appellate Tribunal (TDSAT) vide its order dated August 12, 2008 held that BSNL and the Company should exchange relevant information and reconcile the differences. However, on April 15, 2010, TDSAT confirmed BSNL demands for period up to August 25, 2005 and has given BSNL liberty to lodge its claim for a further period up to February 28, 2006. The Company filed an appeal before SC against the aforesaid TDSAT order dated April 15, 2010. The SC vide its order dated July 23, 2010 admitted the appeal but no stay has been granted. The SC had asked for details/break up of demands which have been filed. The Company has also filed stay application in the SC. Out of the aforesaid Rs.166.90 Crores, the Company, has, till date, provided for amounts aggregating to Rs.30.14 Crores pertaining to ADC for the period from August 26, 2005 upto February 28, 2006. The balance amounts aggregating to Rs.136.76 Crores have been disclosed as Contingent Liability under ''Telecom Regulatory Matters'' as the Company is of the view that these demands include amounts relating to ''wireline'' services and ADC. The Company during the year has made an on account payment to BSNL of Rs.35.95 Crores; aggregating payments made till year end Rs.110.95 Crores (previous year - Rs.75 Crores) in relation to the above. b) The Company had received a demand letter dated March 1 7, 2008 from Department of Telecommunications (DoT) for Rs.8.38 Crores, being a demand for spectrum charges for the period from April 1, 2005 to February 29, 2008. This demand was subsequently revised to Rs.184.69 Crores by DoT, vide its demand letters dated July 3, 2008, for the period from October 1, 1998 to June 30, 2008 which was further increased to Rs. 266.00 Crores vide letter dated February 28, 2009. The amount was again revised to Rs.259.70 Crores vide letter dated November 25, 2009 for the extended period till November 30, 2009. The Company had represented to the Wireless Planning Commission (WPC) various items of differences mentioned in the demand orders, vide letter dated September 24, 2008. Though the Company has now received a revised demand of Rs. 71.39 Crores from DoT on August 5, 2011 the reconciliation process with WPC is in progress. Hon''ble TDSAT vide its order dated August 25, 2010 has held that the Company should be given credit for all payments made on producing proof and no penalty should be levied and only simple interest should be charged. The Company has been following up the matter with WPC and had also filed an execution petition before Hon''ble TDSAT on April 27, 2012. TDSAT has asked the Company to file the application as a Misc. Petition which the Company will do. c) The definition of Adjusted Gross Revenue (AGR) does not specifically include capital gain from sale of shares/securities and does not specifically allow exemption for bad debts in computation of License Fees (LF) payable to the Government. The TDSAT had vide its'' Order dated August 30, 2007, held that income from sale of securities is not related to licensed activity and hence should not attract LF and that bad debts written off, waivers and discounts are actual monies lost by service providers and hence should be deducted from AGR. The DoT had filed an appeal in SC against the aforesaid TDSAT Order. The Company has considered Rs.154.36 Crores, being the LF on profit on sale of investment and bad debts written off during the previous year, as contingent liability and has also made payment of the same to DoT under protest. (Also refer * under Note 24.3 above).The SC vide its'' Order dated October 11, 2011 has set aside the Order passed by TDSAT and has given leave to the licensees to approach TDSAT in case if specific demands have been raised by DoT not in accordance with the Licence Agreement. Prior to the aforesaid judgment, the Company had received provisional assessment orders from DoT, against which applications have now been filed with the TDSAT in line with the aforesaid judgement. The Company has not received any further demands on this matter and hence no accounting treatment for the said order is considered necessary in the books of account, at this stage. v) The Company has imported certain capital equipment under Export Promotion of Capital Goods Scheme of the Central Government at a concessional rate of Customs Duty. The Company has undertaken export obligation to the extent of USD 100.8 million (Rs. 404.41 Crores) to be fulfilled during a period of 8 years commencing from the January 29, 2003, failing which the Company will be liable to pay the differential customs duty, together with interest and penalties, if imposed. Up-till the end of the period, the Company has fulfilled the export obligation to the extent of Rs.65.53 Crores (previous year Rs.52.79 Crores). The Company has received extension of time for fulfilling the obligations in respect of certain licenses. Besides, the Company has also filed a writ petition in Bombay High Court regarding interpretation of term ''group company''. vi) The Company in 2002 had filed a petition before Hon''ble TDSAT claiming refund of Rs.50 Crores recovered by DoT in 1999 alleging failure to sign basic services license agreement for Karnataka circle after accepting Letter of Intent (Lol). DoT during the proceedings before TDSAT claimed from the Company Rs.303 Crores towards loss of (opportunity to earn) license fee and Rs.351 Crores as interest till October 31, 2002. TDSAT allowed refund of Rs.50 Crores to the Company with interest of 17% p.a. and dismissed the counter-claim based on a law point (i.e.TDSAT had no jurisdiction) and facts. DoT appealed to the Hon''ble Supreme Court which without commenting on the merits of the counter-claim confirmed that TDSAT had jurisdiction and remanded the matter to TDSAT for fresh adjudication. DoT had filed with TDSAT a counter- claim of Rs.2,015 Crores which includes Rs.303 Crores towards loss of (opportunity to earn) license fee and interest of Rs.1,712 Crores calculated up to March 31, 2008. The matter has been argued on merits and TDSAT on July 11, 2011 dismissed DoT counter-claim. TDSAT also dismissed TTML claim of refund of Rs.50 Crores. DoT has recovered Rs.50 Crores from the Company. vii) During the year, the Company has received show cause notice (SCN) from DoT based on special audit conducted for the financial years 2006-07 and 2007-08, towards alleged short payment of license fees and interest thereon aggregating Rs.49.38 Crores. The Company has replied to DoT against the SCN in the last quarter of the current year. viii) As regards disputes and claims referred to above against the Company, appropriate competent professional advice is available to the Company based on which, favorable outcomes are anticipated and no liability is expected to accrue to the Company. 1.2 Information regarding the total outstanding dues of Micro Enterprises and Small Enterprises in Note 9 is given to the extent the same is available with the Company. 1.3 The Central Government, vide notification dated March 31, 2009, amended AS 11 on The Effect of Changes in Foreign Exchange Rates'', whereby, companies have been given an option to account for exchange differences arising on reporting of long-term foreign currency monetary items (assets/liabilities) in so far as they relate to acquisition of a depreciable capital asset, to be added/deducted from the cost of the asset and for others to be accumulated in a separate reserve to be amortized over the balance life of the asset/liability but not beyond March 31, 2011. The aforesaid option is effective with retrospective effect in respect of accounting periods commencing on or after December 7, 2006. Accordingly, the Company opted to exercise this option during the year ending March 31, 2009 and had given the effect of the same in the accounts upto financial year 2010-11, the date upto which the Company had exercised the same. The Central Government, vide notification dated May 11, 2011, has extended the applicability of the earlier notification upto March 31, 2012 and vide notification dated December 29, 2011, has further extended the applicability of the aforesaid notification upto March 31, 2020. Accordingly, pursuant to the aforesaid extension of the notification, the Company continued to exercise the option and has adjusted the exchange loss aggregating to Rs.258.67 Crores for the year from April 1, 2011 to March 31, 2012 (Previous year Rs.6.81 Crores) against the carrying value of fixed assets. The balance amount, based on aforesaid adjustments, of Plant and Machinery to be amortized, as at the year-end, aggregates to Rs. 247.54 Crores (Previous year Nil). ii) The mark to market loss of outstanding derivative contracts as at the year-end aggregate to Rs 0.71 Crores (Previous year - Rs. 1.92 Crores) iii) The foreign currency exposure that are not hedged by derivative instruments: 1.4 The Company during the previous year, succeeded in winning the bid for 3G spectrum in Maharashtra circle (including Goa and excluding Mumbai). The bid price paid towards the related spectrum fees aggregating to Rs.1,257.82 Crores have been capitalised under License under Fixed Assets. In accordance with the accounting policy followed in this regard, the Company commenced amortization of the aforesaid payment in the previous year, on commencement of 3G operations and the same is being amortized over a period of 20 years in-line with the Unified Access services (UAS) License agreement, as amended. The borrowing costs attributable to the aforesaid aggregating Rs. Nil (Previous year Rs.62.82 Crores) have been capitalized during the year in accordance with AS 16 on ''Borrowing Costs''. 1.5 The Company is engaged in providing Telecommunication Services under Unified Access License. These, in the context of Accounting Standard 17 on Segment reporting, are considered to constitute a single reportable segment. ii) Details of all Related Parties and their relationships A Holding Company Tata Sons Limited B List of Fellow Subsidiaries 1 Tata Teleservices Limited 2 Tata Internet Services Limited 3 Tata Business Support Services Limited 4 Tata Consultancy Services Limited 5 Tata Housing Development Company Limited 6 Tata Realty & Infrastructure Limited 7 Tata AIG Life insurance Company Limited 8 Tata AIG General Insurance Company Limited 9 Tata Sky Limited 10 CMC Limited 11 Tata Asset Management Limited 12 Tata Securities Limited 13 Infiniti Retail Limited 14 e-Nxt Financials Limited 15 Tata Consulting Engineers Limited 16 Tata Petrodyne Limited 17 Computational Research Laboratories Limited 18 Tcs E-Serve Limited 19 TC Travel And Services Limited 20 Tata Capital Limited 21 Tata Investment Corporation Limited 22 Ewart Investments Limited 23 Tata Trustee Company Private Limited 24 Tata Advanced Systems Limited 25 Viom Networks Limited (Formerly known as Wireless TT Info Services Limited) 26 Drive India Enterprise Solutions Limited 27 Viom Infra Networks (Maharashtra) Limited (Formerly known as 21st Century Infra Tele Limited) 28 Tata International Limited C Kev Management Personnel (Managing Director) 1 Mr. N.Srinath 1.6 No provision for current income-tax has been made in the accounts, since the Company estimates that there will be no taxable profits for the year. Deferred Tax charges/ credits have not been recognized in view of the tax holiday enjoyed by the Company and on considerations of prudence as set out in AS 22 on Accounting for Taxes on Income. a. Figures pertaining to the previous year have been disclosed in brackets. b. Provision for contingencies are primarily towards the outstanding claims / litigations against the Company relating to DoT and other parties. 1.7 The Company in an earlier year had entered in to a share purchase agreement with Viom Networks Limited for selling its stake in its wholly owned subsidiary viz. 21st Century Infra Tele Limited. The Company had, accordingly, accounted for profit (net of related expenses) on the aforesaid sale aggregating to Rs.834.93 Crores during the previous year, on completion of the necessary formalities. 1.8 During the last quarter of the previous year, the Company re-estimated the balance useful life of certain items of plant and machinery considering up-gradation of equipment on account of enhancement of technology and the consequent enhanced pace of planned replacement. As a result the depreciation charge for the previous year was higher by Rs. 184.81 Crores. 1.9 The accumulated losses of the Company at the close of the year have exceeded its paid-up capital and reserves due to the high operation costs and on account of the industry being inherently capital intensive. However, the Company is consistently making operating cash profits over the past few years. The Company has successfully launched services using GSM technology in an earlier year and 3G services more recently in the previous year with added focus on acquiring revenue earning subscribers. The Company has also introduced measures for operational efficiency to enable optimal use of facilities and resources. The Company has already tied up and is utilizing sanction limits from banks besides availing additional long term funding through External Commercial Borrowings (ECBs) to support the ongoing expansion plans. Accordingly, based on the aforesaid considerations, the Company is confident of its'' ability to continue its'' business as a going concern and the accounts have been prepared on that basis. 1.10 The figures of the previous year have been regrouped wherever necessary to correspond with those of the current year in-line with the Revised Schedule VI to the Companies Act, 1956. |
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| Source : Dion Global Solutions Limited | |
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