idea ar 0708 10thcut 25 aug - care.ideacellular.com · 79 idea cellular services limited 89 idea...
TRANSCRIPT
CMYK
CMYK
CMYK
CMYK
Mr. G. D. Birla and Mr. Aditya Birla, our founding fathers.
We live by their values.
Integrity, Commitment, Passion, Seamlessness and Speed.
The Chairman’s Letterto shareholders
Dear Fellow Shareholders,
India continues on its growth trajectory. Since the year
2003-04, our GDP growth has exceeded 8% year on year.
Today we can take justifiable pride in having joined the ranks of
the US$ trillion economies of the world. I do believe India will
continue its momentum despite some strong headwinds. For
instance inflation – where the Government is trying to pull out
all stops to stem it. Additionally we have to contend with the
hardening interest rates and the volatility in global financial
markets, consequent to the sub prime crises.
That despite these adverse factors enveloping the business
environment, India continues to grow is a validation of the
inherent fundamental strengths of our economy.
The Indian mobility industry is expanding at an aggressive
pace, with total mobility subscribers at 256 million by March
2008. The reduced low cost entry into the sector and
expanding coverage remain the growth drivers. The wireless
penetration level today stands at around 24%. So the growth
potential is indeed high.
Your Company's performance has been very impressive.
Its consolidated revenues stood at Rs. 67,374 million up by
54%. Its net profit at Rs. 10,423 million reflects a 108% growth.
Let me apprise you of some of the recent developments which
position your Company into a totally different league.
I am pleased to share with you that your Company is the fastest
growing telecom service provider in the country with more than
28 million customers across 11 operational circles. Your
Company has an additional 10 licenses, of which spectrum has
been allotted in Bihar, Orissa and Tamil Nadu, which will all be
operational before the end of the financial year. With the
proposed merger of Spice, your Company's footprint will then
cross 90% of the national mobile telephony market. Mumbai
has just become the 12th service area to form part of your
Company's expanding reach.
Other highlights include Idea through its subsidiary becoming
one of the founder shareholders of the passive infrastructure
JV Indus Towers, and TMI recently coming in as a significant
shareholder. The association with TMI will provide synergies in
roaming, value-added services and other areas. Today your
Company boasts of a strong balance sheet with a sharply
reduced net debt.
Regardless of these heartening developments, your
management is deeply conscious of the task ahead as the
mobile telephony sector changes and mutates. To keep in step
with the changes in technology and customer needs, there are
profound stirrings of change in your Company as well.
We are sharpening our perspective and redesigning the
business model.
Currently Idea is among the top 25 telecom companies
in the world. We expect to step up our position in the
foreseeable future.
CMYK
CMYK
I believe our people – our human capital is our key resource and
we owe a large part of our success to them. We have thought
leaders across the Company. A majority of our people tap into
each others knowledge-base and collaborate effectively to
achieve a shared vision.
The Aditya Birla Group : In Perspective
We are moving in sync with our vision to be a premium global
conglomerate with a clear focus at each business level. Our
Group is now a US$ 28 billion meritocratic Corporation, with a
market cap in excess of US$ 31.5 billion, and a 100,000 strong
human capital belonging to 25 nationalities, spanning 20
countries across 5 continents. Our values – Integrity,
Commitment, Passion, Seamlessness and Speed bind us all
together regardless of geographies and nationalities.
Our HR strategy ongoingly focuses on enhancing stakeholder
value through superior organisation and people capability.
Today, more than ever before, talent is at a premium, thanks to
globalisation and the multi-polar world, both of which afford
unique opportunities. At our Group attracting the best talent
and engaging them continues to be a key priority. We have
made huge investments in not only attracting but developing
and retaining our human capital over the long-term.
To arrive at an employee proposition that would draw more
talent to our Group, we conducted an in-depth research aimed
at finding out what is our DNA as an employer and what does
our employer brand connote. Apart from trust and admiration
for the Group as a professional values-driven organisation,
what also emerged strikingly was the fact of our diversity – the
number of countries and businesses in which we are engaged,
that is an enduring characteristic of our Group.
We have therefore positioned ourselves as an employer that
offers “a world of opportunities”, other factors being a given in
our case. I am happy to share with you that our employer brand
has attracted more than 50 top-notch professionals from India
and across the globe. To provide cross-functional,
cross-cultural and cross-country agility and learnings, as well
as to strengthen our leadership pipeline, more than 100
colleagues from middle management to senior management
have been job-rotated.
A Performance Management Centre at our Group's
Headquarters has been set up with dedicated resources to
sharpen our high performance culture. This team's sole
responsibility is to assist in Institutionalising world-class
performance framework and leadership processes.
As in the past our high-calibre Management talent has been
put through our Development Assessment Centres and their
professional development plans drawn up. Gyanodaya, our
Institute of Management Learning continues to provide a good
base for new learnings for our people, and honing
competencies. Up until now more than 4,500 colleagues have
participated in its programmes.
We had said last year that we would introduce ESOP schemes
during the course of the year. In this year, we covered 700
employees under ESOP schemes, a significant move, for the
first time in the history of our Group. We will cover many more
from now on.
Going forward in the next five years, I see our workforce mix
expanding to over 100 nationalities and our senior
management team becoming even more global. I visualise a
multi-generational workforce able to overcome generational
barriers, and effectively, feeding on each one's core offerings of
experience, raw energy, risk taking and organisational
knowledge. Enhancing our attractiveness as an employer also
calls for creating a workspace that accepts and encourages the
existence of a sharp sense of individual identity, even within the
strong organisational brand and cultural fabric. We want to
create top-notch leaders on virtually an assembly-line scale.
And lastly, we want to be in that enviable position where the
best talent globally wants to join us, just as much as we
seek them.
Best regards,
Kumar Mangalam Birla
CMYK
CMYK
Table of Contents1 Corporate Information
2 Performance Highlights
3 Management Discussion and Analysis
6 Directors' Report
10 Report on Corporate Governance
19 Auditors' Report
22 Balance Sheet
23 Profit and Loss Account
24 Schedules to the Accounts
42 Cash Flow Statement
45 Consolidated Financial Statements
65 Statement pursuant to Section 212
66 Aditya Birla Telecom Limited
79 Idea Cellular Services Limited
89 Idea Cellular Infrastructure Services Limited
98 Idea Cellular Towers Infrastructure Limited
106 Swinder Singh Satara & Co. Limited
Subsidiary Accounts
CMYK
CMYK
CMYK
CMYK
Corporate InformationBoard of Directors
Chief Financial Officer
Company Secretary
Auditors
Registered Office
Corporate Office
Registrar and Share Transfer Agent
Website
Mr. Kumar Mangalam Birla Chairman
Mrs. Rajashree Birla Non-Executive Director
Mr. Arun Thiagarajan Independent Director
Mr. Gian Prakash Gupta Independent Director
Mr. Mohan Gyani Independent Director
Ms. Tarjani Vakil Independent Director
Mr. Biswajit A. Subramanian Non-Executive Director
Mr. M.R. Prasanna Non-Executive Director
Mr. Saurabh Misra Non-Executive Director
Mr. Sanjeev Aga Managing Director
Akshaya Moondra
Pankaj Kapdeo
Deloitte Haskins and Sells
Chartered Accountants
706, B Wing, ICC Trade Tower,
Senapati Bapat Road,
Pune - 411 016
Suman Tower,
Plot No. 18, Sector - 11,
Gandhinagar – 382 011, Gujarat
Windsor, 5th Floor,
Off CST Road, Near Vidya Nagari,
Kalina, Santacruz (East),
Mumbai – 400 098
M/s Bigshare Services Private Limited
E/2 Ansa Industrial Estate,
Saki Vihar Road, Saki Naka,
Andheri (East),
Mumbai – 400 072
http://www.ideacellular.com
CMYK
CMYK
1
CMYK
CMYK
Performance Highlightsat a glance
Subscriber Base
25
20
15
10
5
0Mar 04 Mar 05 Mar 06 Mar 07 Mar 08
2.7
5.1
7.4
24.0
14.0
No. Mn.
Robust Growth in Top Line
70
60
50
40
30
20
10
0Mar 04 Mar 05 Mar 06 Mar 07 Mar 08
13
23
30
67
44
Rs. Bln.
Robust Growth in EBITDA
25
20
15
10
5
0Mar 04 Mar 05 Mar 06 Mar 07 Mar 08
4
8
11
23
15
Rs. Bln.
Robust Growth in Net Profit
12
10
8
6
4
2
0
-2
-4Mar 04 Mar 05 Mar 06 Mar 07 Mar 08
(2.0)
0.8
2.1
10.4
5.0
Rs. Bln.
CMYK
CMYK
2
CMYK
CMYK
�A N N U A L R E P O R T 2 0 0 7 - 0 8
Management Discussion and Analysis
Industry growth
The Indian mobility industry continued its fast pace during the Financial Year (FY) 2008 with the growth rate at around 58%. The total mobility subscribers stood at 261 million as of March 31, 2008. The key drivers attributable to this growth remained the reducing cost of handsets along with falling tariffs. With wireless penetration levels still at around 28%, the Indian wireless market offers an attractive growth opportunity. The Company’s growth in terms of net subscriber additions has been better than the Industry average and has increased its subscriber base from 14.01 million as of end March 2007 to 24.00 million as of end March 2008, witnessing a growth of around 71%.
Regulatory Environment
Major regulatory developments for the period are as follows:
Regulation on Domestic leased circuits
In September 2007, TRAI issued a Regulation on Domestic Leased Circuits (DLC), a framework aimed to bring in transparency and to allow provision of DLC/local lead in a non-discriminatory manner. These regulations would benefit both customers and the service providers since it may lead to greater competitiveness in this segment and allow consumers a wider choice of service providers at more reasonable prices. For service providers these regulations open up the possibility of meeting customers’ demand for end-to-end leased circuits by obtaining DLC or Local Lead from other service providers if such need arises.
DoT Press Release on review of license terms & conditions
On October 19, 2007, DoT issued a press release accepting TRAI recommendations, specifically on expansion of network using alternative technologies by existing Unified Access Services Licensees i.e. CDMA players eligibility to use GSM to expand and vice versa on payment of license fees. The TRAI proposed subscriber linked criteria for spectrum allocation was also accepted, subject to Telecom Engineering Centre (TEC) committee clearance.
TRAI Directive on VAS consent
On October 30, 2007, TRAI issued a directive that any offer to the customer needs to be presented in such manner so as to ensure that the customer understands the implications of such offer by the service provider before giving his explicit consent for the value added services offered and such explicit consent should be verifiable with reference to records maintained by the service provider.
DoT Press Release on Guidelines for 3G services
In November 2007, DoT issued a press release on guidelines for 3G services specifying that 3G spectrum would be permitted in 2.1GHz spectrum and would be granted through e-auction. Besides one time entry fee, the successful service provider would have to pay an additional recurring spectrum charge of 0.5% of AGR for the first three years after allocation of spectrum post which, this recurring spectrum charge would increase to 1% of AGR. There would be stiff roll-out obligations. Mergers and trading/reselling of spectrum would not be allowed in the initial five year period.
DoT Press Release on Broadband Wireless Access services
In November 2007, DoT issued a press release on guidelines for BWA services specifying that BWA services would be permitted in 2.5 GHz band for UAS licensees & Category A ISPs. 3G spectrum would be permitted in 2.1 GHz spectrum. Each service provider would be permitted 2*10 MHz spectrum in 2.5 GHz band for use in FDD/TDD mode. BWA services would be granted through an e-auction and base price for auction would be 25% of the value derived from 3G e-auction. Besides the one time entry fee, the successful service provider would have to pay an additional recurring spectrum charge of 0.5% of AGR for first three years after allocation of spectrum, post which this recurring spectrum charge would increase to 1% of AGR. There would be stiff roll-out obligations. Mergers and trading/reselling of spectrum would not be allowed in the initial five year period.
DoT Press Releases on Subscriber base criteria for spectrum allotment
On January 9, 2008, DoT had issued a press release through WPC for subscriber base criteria for allotment of GSM/CDMA spectrum which was silent regarding allocation of spectrum beyond 7.2 MHz for GSM and 5 MHz for CDMA players. The criteria given in this press release was revised vide a press release dated January 17, 2008 wherein DoT has issued revised criteria for spectrum allotment upto 15 MHz to GSM players and 7.5 MHz to CDMA players.
DoT Press Release on issue of Letter of Intent
On January 10, 2008, DoT issued a press release for issue of Letter of Intent (LoI) to all the eligible applicants who had applied for UAS Licences upto September 25, 2007. DoT has been implementing a policy of first come first serve basis for grant of UAS Licences under which an initial application which is received first will be processed first and thereafter if found eligible will be granted LoI and then whosoever complies with the condition of LoI first, will be granted UAS Licences.
Guidelines on Active infra sharing
In April 2008, the Department of Telecommunications has formulated guidelines on active infrastructure sharing among the Service Providers and Infrastructure Providers. Sharing will be limited to antenna, feeder cable, Node B, Radio Access Network (RAN) and transmission systems only. Sharing of the allocated spectrum will not be permitted.
Curb Unsolicited Commercial Calls
TRAI on March 17, 2008 vide Amendment to the Telecom Unsolicited Commercial Communications (UCC) Regulations, 2007 decided to make service provider liable to pay for unsolicited commercial communication an amount not exceeding Rs. 5,000/- for the first non-compliance and an amount not exceeding Rs. 20,000/- in case of second or subsequent such non-compliance. Also to discourage the registered telemarketers from sending Unsolicited Commercial Communications, the Telecommunication Tariff Order, 1999 is also being amended simultaneously so as to provide for Rs. 500/- payable as tariff for each such first unsolicited communication and Rs. 1,000/- for every subsequent unsolicited commercial communication.
� I D E A C E L L U L A R L I M I T E D
Phasing Out of ADC
TRAI, on March 27, 2008 vide ninth amendment to the Interconnection Usage Charges (IUC) regulation, which deals, among other things, with the Access Deficit Charge (ADC) payable by private service providers to BSNL, has decided to phase out the ADC. The ADC as it exists today has two parts. The service providers pay 0.75% of their Adjusted Gross Revenue (AGR) and the International Long Distance Service Providers also pay Re. 1 per minute on international incoming calls to BSNL respectively. Through the instant amendment the Authority has decided to phase out ADC as a percentage of AGR from April 1, 2008. Thus, all domestic calls have been made free from the incidence of ADC with effect from April 1, 2008. The component on the international incoming calls stands reduced to a rate of Rs. 0.50 (paise fifty only) for the period from April 1, 2008 to September 30, 2008, subsequent to which this component of ADC would also be phased out. BSNL to get a subsidy of Rs. 2,000 crore per annum from the USO fund for a period of 3 years from April 1, 2008.
Discussion on Financial and Operational Performance
Subscriber Base
As on March 31, 2008, the Company had an aggregate of 24.00 million GSM subscribers representing an increase of 71% compared to the base of 14.01 million as on March 31, 2007.
Service and Sales Revenues
During the year ended March 31, 2008, service revenues grew by 53.6% to Rs. 67,374 million from Rs. 43,873 million for the year ended March 31, 2007. Value Added Services accounted for about 8.2% of the service revenues for the year, and revenues from National Long Distance services accounted for approximately Rs. 3,537 million, which stood eliminated during the course of inter segment consolidation.
Other Income
Other income decreased by 16.3% from Rs. 209 million for FY 2007 to Rs. 175 million for the FY 2008.
Operating Expenses
During the year ended March 31, 2008, the Company incurred Operating Expenses of Rs. 44,662 million representing 66.3% of service revenues. The chief contributors to the total Operating Expense of 66.3% were, Roaming and Access Charges 16.8%, Subscriber Acquisition and Servicing Expenses 9.6%, Network Operating Expenses 15.5%, Personnel Expenditure 5.1%, License and WPC charges 10.2%, Advertisement & Business Promotion expenditure 4.8% and Administration and Other expenditure 4.3%.
Profit before Interest, Depreciation and Amortisation
For the year ended March 31, 2008, the Company had a Profit before Interest, Depreciation and Amortisation of Rs. 22,713 million; a growth of 52.8% compared to the year ended March 31, 2007. The operating profit margins for 2007-08 and 2006-07 stood at 33.7% & 33.9% respectively.
Depreciation, Amortisation and Finance Charges
During the year ended March 31, 2008, the Company had depreciation & amortisation expenses of Rs. 8,768 million. While the net finance and treasury charges decreased by 9% due to increase in treasury
income vis-à-vis 2006-07, finance charges on borrowings during the year was Rs. 4,592 million against Rs. 3,293 million for the year ended March 31, 2007. This increase is attributable to increased borrowings in lieu of the aggressive capital expenditure by the Company as well as the hardening of the domestic interest rates.
Profits and Taxes
The profit before tax for the year was Rs. 11,169 million, an increase of 119.4%, as compared to the year ended March 31, 2007. The tax charge for the current year is at Rs. 725 million mainly attributable to the Deferred Tax Liability. The net profit for the year ended March 31, 2008 was Rs. 10,444 million resulting in a net profit margin of 15.5%. The cash profit from operations for the year ended March 31, 2008 was Rs. 19,863 million, an increase of 69.1%, as compared to the year ended March 31, 2007.
Capital Expenditure
During the year ended March 31, 2008, the Company incurred capital expenditure of Rs. 51,209 million.
Balance Sheet
The carried forward closing debit balance of the Profit and Loss Account is Rs. 14,065 million as at March 31, 2008 after taking into account the net profits earned by the Company during FY 2008. The Gross Tangible Block stood at Rs. 110,120 million and Net Tangible Block including Capital Work in Progress (CWIP) stood at Rs. 88,293 million as at March 31, 2008. Unamortised License Fee was Rs. 17,303 million as at the March 31, 2008. The decrease in net current assets amounting to Rs. 13,694 million is largely due to the decrease in deposits of IPO proceeds along with increase in creditors for Capital Expenditure.
Human Resources
The Company through its participative work environment, skill development activities and values of commitment, integrity, passion, seamlessness and speed ensures a healthy relationship with its employees. During the year, it has also undertaken sharing of value creation by granting employee stock options to eligible employees. The findings of Organisation Health Study (OHS) conducted yearly are analysed, and concern areas suitably addressed. The employee strength grew by 31% during FY 2008 and stood at 6,107 as on March 31, 2008.
Risk Management
The Risk management framework of the Company ensures compliance with the requirements of Clause 49 of the Listing Agreement. The framework establishes risk management across all service areas and functions of the Company and has in place, procedures to inform the Board Members about risk assessment and minimization process. These processes are periodically reviewed to ensure that the management of the Company controls risks through a proper defined framework. The various risks including the risks associated with Economy, Regulations, Competition, Foreign Exchange, Interest rate etc. are monitored and managed in an effective manner.
Internal Control Systems
The Company has appropriate internal control system for business processes, with regards to efficiency of operations, financial reporting, compliance with applicable laws and regulations etc. Clearly defined
�A N N U A L R E P O R T 2 0 0 7 - 0 8
roles and responsibilities down the line for all managerial positions have been institutionalized. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The audit committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control system and suggests improvement for strengthening them, from time to time.
Opportunities, Risks, Concerns and Threats
The Indian telecommunication industry is poised to continue its growth backed by strong growth in GDP. The Indian wireless arena has been acknowledged as the fastest growing and one of the most attractive markets in the world today. Being still an under-penetrated market, the potential is vast. The Company is well poised to exploit this opportunity.
In a growing competitive environment, churn continues to be a threat as well as an opportunity with respect to changes in market share.
The Company operates in an Industry which is highly competitive and faces intense competition from other operators including some of the state-owned enterprises which are controlled by the Government and thus enjoy certain advantages. With the issue of 120 new UAS Licences the Company may face additional competition from new players. Competition from alternative or new mobile technologies cannot be ruled out. However, the Company being an incumbent player in most of the important service areas it operates in, is poised to withstand the additional competition.
The Company requires certain approvals, licenses, registrations and permissions for operating its business. In addition, regulators may impose conditions in relation to the grant of licenses and approvals and any such requirements could have a material adverse effect on Company’s business.
The Company however is confident that the regulatory changes will ensure a level playing field for all service providers.
The Company’s business is dependent on a limited number of vendors to supply critical network and other equipment and services. Besides this, its ability to provide a quality mobile network and expanding the areas of operations is also dependent on the Spectrum allocation. To ensure smooth supply of network equipments, the Company has entered into medium term contracts with equipment providers.
The Company believes that its success is substantially dependent on the expertise and skill of its managerial personnel and places considerable emphasis on development of leadership skills and building employee motivation. As a retention strategy, an Employees’ Stock Option Scheme has been implemented by the Company.
Outlook
We believe the mobile telecom sector is poised for continued high growth, and the Company is attractively placed to benefit from this. We aim to strengthen our operations in existing service areas and expand to new service areas. The Company aims to maintain and build upon its strong brand identity and the quality services it provides to its subscribers.
Cautionary Statement
Statements in the management discussion and analysis describing the Company’s objectives, projections, estimates, expectations may be “forward-looking statement” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed on implied. Important factors that could make a difference to the Company’s operations include economic conditions affecting demand/supply and price conditions in the domestic markets in which the Company operates, changes in the Government Regulations, tax laws and other statutes and incidental factors.
� I D E A C E L L U L A R L I M I T E D
Directors’ ReportDear Shareholders,
The Directors are pleased to present their Thirteenth Annual Report together with the Audited Accounts of your Company for the financial 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 outflows 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 IDEA's 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-refinery diesel to yield a 20% bio-diesel blend. Usage of this 20% blended bio-diesel can reduce pollution emissions by up to 40%, making
7A N N U A L R E P O R T 2 0 0 7 - 0 8
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 financial 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 BirlaPlace: Mumbai Chairman
8 I D E A C E L L U L A R L I M I T E D
Particulars pursuant to the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rule 1988 are furnished hereunder:
A. CONSERVATION OF ENERGY : Not Applicable
B. RESEARCH & DEVELOPMENT (R & D) : Not Applicable
1. Specific areas in which R & D is carried out by the Company : Not Applicable
2. Benefits derived as a result of the above R & D : Not applicable
3. Future Plan of action : Not Applicable
4. Expenditure on R&D: a) Capital b) Recurring c) Total d) Total R & D expenditure as percentage of total turnover
: Nil: Nil: Nil: Nil
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1. Efforts in brief towards technology absorption, adaptation and innovation : Development of a skilled team of engineers in the area of radio engineering, installation of base station and operation of mobile telecom services.
2. Benefits derived as a result of the above efforts : Cost of installation of base station reduced due to better network planning and designing. Achieved better coverage and high quality of reception.
3. Particulars of imported technology in the last five years a) Technology imported b) Year of import c) Has the technology been fully absorbed? If not fully absorbed areas where this has not taken place, reasons
thereof and future plans of action
: Not applicable: Not applicable: Not applicable
4. Foreign exchange earnings and outgo (Outgo includes CIF value of imports)
: Earnings: Rs. 790.26 million: Outgo: Rs. 16,342.50 million
For and on behalf of the Board
Kumar Mangalam BirlaChairman
Date: April 24, 2008Place: Mumbai
Annexure to the Directors’ Report
�A N N U A L R E P O R T 2 0 0 7 - 0 8
Annexure A to the Directors’ ReportDisclosure pursuant to the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme) Guidelines, 1999
Nature of disclosure Particulars
a) Options granted 19,931,000
b) The pricing formula The exercise price was determined by averaging the daily closing price of the Company’s equity shares during 7 days immediately preceding the date of grant and discounting it by 15%. Exercise price : Rs. 112.57 per option
c) Options vested NIL
d) Options exercised NIL
e) The total number of shares arising as a result of exercise of options
NIL
f) Options lapsed 264,000
g) Variation of terms of options NIL
h) Money realized by exercise of options NIL
i) Total number of options in force 19,667,000
j) Employee wise details of options granted:
i) Senior managerial personnel Mr. Sanjeev Aga (Managing Director) : 1,712,000
ii) Any other employee who received a grant in any one year of option amounting to 5% or more of options granted during that year
NIL
iii) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant
NIL
k) Diluted Earnings Per Share N.A.
l) Difference between the employee compensation cost, computed using the intrinsic value of the stock options and the employee compensation cost that shall have been recognised if the fair value of the options were used
The impact of this difference on profits and on EPS of the company
Rs. 100.93 million
The effect of adopting the fair value on the net income and earnings per share for 2007-08 is as presented below:
Particulars Rs. in Million
Net Income 10,443.62
Add: Intrinsic value compensation cost 37.59
Less: Fair Value Compensation Cost 138.52
Adjusted Net Income 10,342.69
Earnings Per share (Rs.) Basic Diluted
As reported 3.96 3.96
As adjusted 3.96 3.92
m) Weighted-average exercise prices and weighted-average fair values of options whose exercise price is less than the market price of the stock on the grant date
Weighted average exercise price of option : Rs. 112.57Weighted average fair value of option : Rs. 68.99
n) A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information:
(i) risk-free interest rate (%)(ii) expected life (No. of years)(iii) expected volatility (%)(iv) dividend yield (%)(v) the price of the underlying share in market at the time of option
grant
7.786 years 6 months40.00NilRs. 139.10
10 I D E A C E L L U L A R L I M I T E D
Corporate Governance ReportGovernance Philosophy
The Aditya Birla Group is committed to the adoption of best governance practices and its adherence in the true spirit, at all times. Our governance practices are self-driven, reflecting the culture of the trusteeship that is deeply ingrained in our value system and reflected in our strategic thought process. The principles of Corporate Governance in Idea Cellular Limited are based on five basic tenets:
• Board accountability to the Company and shareholders;
• Strategic guidance and effective monitoring by the Board;
• Protection of minority interests and rights;
• Equitable treatment of all shareholders;
• Superior transparency and timely disclosure.
In line with this philosophy, Idea Cellular Limited is striving for excellence through adoption of best governance and disclosure practices. Your Company is fully compliant with all the provisions of Clause 49 of the Listing Agreement of the Stock Exchanges. The details of the compliance are as follows:
1. BOARD OF DIRECTORS
Composition of the Board
The Board of your Company consisted of 10 Directors as on March 31, 2008, comprising of a Non-Executive Chairman, a Managing Director, 4 Independent Directors and 4 Non-Executive Directors with considerable experience in their respective fields. The Board is headed by a Non-Executive Chairman and the number of Independent Directors exceeds one-third of the total strength of the Board, the composition of the Board is in conformity with Clause 49 of the Listing Agreement entered with the stock exchanges.
None of the Directors on the Board is a Member on more than 10 Committees or a Chairman of more than 5 Committees (as specified in Clause 49), across all the companies in which he/she is a Director. The necessary disclosures regarding committee positions have been made by the Directors.
The composition of the Board of Directors as on March 31, 2008 is as follows:
Name of Director Category No. of Outside Directorship(s) Held1 Outside Committee Positions Held2
Public Private Member Chairman/ Chairperson
Mr. Kumar Mangalam Birla Non-Executive 10 12 – –
Mrs. Rajashree Birla Non-Executive 6 12 – –
Mr. M.R. Prasanna Non-Executive 9 4 – –
Mr. Saurabh Misra Non-Executive 2 1 – –
Mr. Biswajit A. Subramanian Non-Executive – – – –
Mr. Arun Thiagarajan Independent 11 4 6 1
Mr. G.P. Gupta Independent 12 1 5 4
Mr. Mohan Gyani Independent – – – –
Ms. Tarjani Vakil Independent 5 1 1 4
Mr. Sanjeev Aga Managing Director 7 – – –
1. Excluding Directorship in foreign companies and companies under Section 25 of the Companies Act, 1956.
2. Only two Committees viz. Audit Committee and Shareholders’/Investors’ Grievance Committee are considered.
Non-Executive Directors’ Compensation and Disclosure
Apart from sitting fees that are paid to the non-executive directors including independent directors for attending Board/Committee meetings, no other fees/commission were paid during the year. No significant material transactions have been made with non-executive Directors vis-à-vis your Company.
Board Meetings and Procedure
The Company has a well-defined process of placing vital and sufficient information before the Board pertaining to the matters to be considered at each Board and Committee meetings, to enable the Board to discharge its responsibilities effectively.
The Company Secretary in consultation with the concerned person in the senior management finalises the agenda, which is distributed to the Board members in advance of the meetings.
The Board Meetings are generally held at least once in a quarter. During the year 2007-08, the Board met six times on April 25, 2007, July 24, 2007, September 10, 2007, October 11, 2007, October 25, 2007 and January 19, 2008. The time gap between two meetings was not more than four months. The Board Meetings are generally held in Mumbai.
The attendance of Directors at Board Meetings held and at the last Annual General Meeting is as under:
Name of Director No. of Board Meetings held during the tenure
AttendedLast AGM
Held Attended
Mr. Kumar Mangalam Birla 6 4 No
Mrs. Rajashree Birla 6 5 No
Mr. M.R. Prasanna 6 5 No
Mr. Saurabh Misra 6 5 No
Mr. Biswajit A. Subramanian 6 4 No
Mr. Arun Thiagarajan 6 4 No
Mr. G.P. Gupta 6 6 Yes
Mr. Mohan Gyani 6 1 No
Ms. Tarjani Vakil 6 5 No
Mr. Sanjeev Aga 6 6 Yes
11A N N U A L R E P O R T 2 0 0 7 - 0 8
Code of Conduct:
The Board of Directors play an important role in ensuring good governance and have laid down the Code of Conduct for all Board members and senior management of the Company. The code is also posted on the website of the company (www.ideacellular.com). All Board members and senior management have confirmed compliance to the Code of Conduct. A declaration signed by the Managing Director regarding affirmation of the compliance with the Code of Conduct by the Board and senior management of the Company is appended at the end of this report.
2. COMMITTEES OF THE BOARD
A. Audit Committee
Composition, Meetings and Attendance
The Company has an Audit Committee at the Board level with the powers and the role that are in accordance with Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956. The Committee acts as a link between the Management, the Statutory and Internal Auditors and the Board of Directors and oversees the financial reporting process. All the members of the Audit Committee including the Chairman are Independent Directors. The majority of the Audit Committee members have accounting and financial management expertise. The Managing Director and the Chief Financial Officer of the Company are permanent invitees of the Audit Committee and representatives of the Statutory Auditors and Internal Auditors of the Company are also invited to the Audit Committee Meetings. The Company Secretary acts as Secretary to the Committee.
During the year 2007-08, the Audit Committee met six times on April 25, 2007, July 24, 2007, October 11, 2007, October 25, 2007, January 19, 2008 and February 29, 2008.
The composition of the Audit Committee as on March 31, 2008 and the attendance of the members at the meetings held are as follows:
Name of Director Category No. of Meetings held
during the tenure
No. of meetings attended
Mr. G.P. Gupta (Chairman)
Independent 6 6
Mr. Arun Thiagarajan Independent 6 5
Ms. Tarjani Vakil Independent 6 5
Terms of reference
The broad terms of reference of Audit Committee include the following as mandated in Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956:
a) Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
b) Recommending to the Board, the appointment, re-appointment and if required, the removal of external auditor, determination of audit fee and also approval of payment for any other services;
c) Reviewing with the management, the annual financial statements before submission to the Board, with particular reference to:
• Changes in accounting policies and practices;
• Major accounting entries based on exercise of judgement by the management;
• Qualifications in Draft Audit Report;
• Significant adjustments made in financial statements arising out of audit findings;
• The Going Concern assumption;
• Compliance with Accounting Standards;
• Compliance with listing and other legal requirements concerning financial statements;
• Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of Company at large;
• Matters required to be included in the Directors’ Responsibility Statement, in terms of Section 217 (2AA) of the Companies Act, 1956.
d) Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, cover-age and frequency of internal audit;
e) Discussion with internal auditors on any significant findings and follow up thereon;
f) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
g) Reviewing with the management, the performance of external and internal auditors, and the adequacy of internal control systems;
h) Discussion with external auditors before the audit commences on the nature and scope of audit as well as having post-audit discussions to ascertain any area of concern;
i) Reviewing with the management, the quarterly financial statements before submission to the Board for approval;
j) Reviewing the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
k) Review of Management Discussion and Analysis of financial condition and results of operations;
l) Review of Management Letters/Letters of Internal Control Weaknesses issued by the Statutory/Internal Auditors;
m) Reviewing of functioning of ‘Whistle Blower Mechanism’ in case the same exists; and
n) Carrying out any other function as and when referred by the Board.
B. Remuneration Committee
The Company has constituted a Remuneration Committee comprising of three Non-Executive Directors, of which two are Independent Directors. Presently, the Committee comprises of Mr. Arun Thiagarajan, Ms. Tarjani Vakil and Mr. M.R. Prasanna. During the year, the Remuneration Committee met once on September 10, 2007 and all the three members attended the said meeting.
Terms of reference
The broad terms of reference of Remuneration Committee include the following:
a) Review of remuneration payable to Directors and senior officials of the Company;
b) Reviewing and advising the Board over the remuneration policies of the Company generally; and
12 I D E A C E L L U L A R L I M I T E D
c) Such other matters as may be decided by the Board from time to time.
C. Shareholders’/Investors’ Grievance Committee
The Shareholders’/Investors’ Grievance Committee oversees the redressal of shareholders’/investors’ complaints/grievances like transfer of shares, non receipt of annual report, dividend payment, issue of duplicate share certificates, transmission of shares and other related complaints.
The Committee also monitors dematerialisation, rematerialisation, splitting and consolidation of shares and debentures issued by the Company.
During the year 2007-08, the Shareholders’/Investors’ Grievance Committee met three times on October 19, 2007, January 21, 2008 and March 29, 2008.
The composition of the Shareholders’/Investors’ Grievance Committee as on March 31, 2008 and the attendance of the members at the meetings held are as follows:
Name of Director Category No. of Meet-ings held during the
tenure
No. of meetings attended
Mr. Sanjeev Aga Executive 3 3
Mr. Saurabh Misra Non-Executive 3 3
Mr. M.R. Prasanna Non-Executive 3 2
Compliance Officer
Mr. Pankaj Kapdeo, General Manager (Legal) & Company Secretary, acts as the Compliance Officer of the Company. The Compliance Officer can be contacted at:
“Windsor”, 5th Floor,Off CST Road, Near Vidya Nagari,Kalina, Santacruz (E),Mumbai – 400 098Tel: +91-22-66820106Fax: +91-22-66820499Email: [email protected]
D. Compensation Committee
A Compensation Committee known as (“ESOS Compensation Committee”) has been constituted in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for formulation of an Employee Stock Option Scheme. The Committee oversees the implementation of the Scheme, its administration, supervision, and formulating detailed terms and conditions in accordance with SEBI Guidelines.
The Compensation Committee comprises three Non-Executive Directors, of whom two members are Independent Directors of the Company. Presently, the Committee comprises of Mr. Kumar Mangalam Birla, Mr. Arun Thiagarajan and Ms. Tarjani Vakil.
During the year, the Committee met once on September 10, 2007 and all the three members attended the said meeting.
E. Finance Committee
The Company has constituted a Finance Committee to approve matters relating to availing of financial facilities. The Committee comprises of three Directors of whom two are Non-Executive Directors. Presently,
the Committee comprises of Mr. M.R. Prasanna, Mr. Saurabh Misra and Mr. Sanjeev Aga.
During the year, five meetings of the Finance Committee were held.
F. IPO Committee
The IPO Committee of the Company was constituted to give effect to the Initial Public Offering of the Company. The Committee comprises of three Directors of whom two are Non-Executive Directors. Presently, the Committee comprises of Mr. M.R. Prasanna, Mr. Saurabh Misra and Mr. Sanjeev Aga.
During the year one meeting of the IPO Committee was held.
3. SUBSIDIARY COMPANIES
The Company does not have any material non-listed Indian subsidiary, whose turnover or net worth (i.e. paid-up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the Company.
4. DISCLOSURES
a) Disclosure on materially significant related party transactions
The related party transactions are placed before Audit Committee on a quarterly basis. For the financial year ended March 31, 2008, there were no transactions of material nature with related parties which are not in the normal course of business. The related party transactions have been disclosed under Note 27 of Schedule 22B of the Balance Sheet forming part of the Annual Report.
b) Disclosure of Accounting Treatment
There is no deviation in following the treatments prescribed in any Accounting Standard in preparation of financial statements of the Company during the year.
c) Details of non-compliance with regard to the Capital Market
The Company has complied with all the requirements of the stock exchanges as well as the regulations and guidelines prescribed by the Securities and Exchange Board of India. There were no penalties or strictures imposed on the Company by stock exchanges or SEBI, or, any statutory authority on any matter related to capital markets during the last three years.
d) Board Disclosures - Risk Management
The Company has an integrated approach to managing the risks inherent in the various aspects of business. The Audit Committee of the Board is regularly informed about the business risks and steps taken to mitigate the same.
e) Proceeds from Public Issue
The Company discloses to the Audit Committee, the uses/applications of proceeds/funds raised from Initial Public Offering as part of quarterly review of financial results.
The status of utilisation of IPO proceeds upto March 31, 2008 has been disclosed under Note 2 of Schedule 22B of the Balance Sheet forming part of the Annual Report and a detailed statement has been placed before the Audit Committee meeting held on April 24, 2008.
1�A N N U A L R E P O R T 2 0 0 7 - 0 8
f) Remuneration of Directors
i) Remuneration paid/payable to the Executive Director for the financial year ended March 31, 2008 is given as under:
The remuneration package of Executive Director i.e. Mr. Sanjeev Aga, Managing Director comprises of a fixed salary component and a performance linked bonus. The remuneration package as recommended by the Board has been approved by the shareholders in the Annual General Meeting held on December 12, 2007.
Executive Director Relationship with other Directors
Business relationship with the Company, if
any
Remuneration during 2007-08
All elements of remuneration package i.e.
salary, benefits, bonuses,
pension etc.
Fixed component & performance
linked incentives, along with
performance criteria
Service Contract,
notice period,
severance fee
Stock Option details, if any
Mr. Sanjeev Aga _ Managing Director Rs. 40.64 Million See note (a) See note (b) See note (c)
a) Mr. Sanjeev Aga was paid a sum of Rs. 14.40 Million towards performance incentive linked to achievement of targets.b) The appointment is for a period of five years w.e.f. November 1, 2006. The appointment is subject to termination by three months notice on
either side. No severance fees is payable to the Managing Director.c) During the year 2007-08, the Company granted 17,12,000 Stock Options at an exercise price of Rs. 112.57 per option to the Managing
Director. 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.
ii) Remuneration paid/payable to the Non-Executive Director for the financial year ended March 31, 2008 is given as under:
The Non-Executive Directors are not paid any remuneration except sitting fees for meeting of the Board and Committees, if any, attended by them. The sitting fees, as determined by the Board, are presently Rs. 20,000/- and Rs. 10,000/- for each meeting of the Board and other Board Committees respectively. The details of the sitting fees paid to Non-Executive Directors are as under:
Name of the Non-Executive Director Sitting Fees (Rs.)Mr. Kumar Mangalam Birla 90,000
Mrs. Rajashree Birla 100,000
Mr. M.R. Prasanna 120,000
Mr. Saurabh Misra* –
Mr. Biswajit A. Subramanian 80,000
Mr. Arun Thiagarajan 150,000
Mr. G.P. Gupta 180,000
Mr. Mohan Gyani 20,000
Ms. Tarjani Vakil 170,000
* Mr. Saurabh Misra has expressed his unwillingness to accept sitting fees. He is not being paid any sitting fees for attending the meeting of Board of Directors of the Company.
iii) Details of Shareholding of Directors are given as under:
Name of the Director No. of Equity Shares
Mr. Kumar Mangalam Birla 233,333
Mr. M.R. Prasanna 1,873
Mr. G.P. Gupta 4,192
Ms. Tarjani Vakil 147
Mr. Sanjeev Aga 142,868
5. MANAGEMENT
A detailed Management Discussion and Analysis forms part of the Directors’ Report.
No material transaction has been entered into by the Company with the Promoters, Directors or the Management, their
subsidiaries or relatives etc., that may have a potential conflict with the interests of the Company.
6. SHAREHOLDERS
i) Disclosure regarding appointment or re-appointment of Directors
The Company has provided all the details of the Directors seeking appointment or re-appointment in the AGM Notice enclosed with this Annual Report.
ii) Communication to Shareholders
The Company’s quarterly financial results, investor updates, official news releases and other general information about the Company are posted on the Company’s website (www.ideacellular.com). The quarterly financial results of the Company are generally published in The Economic Times and Western Times (a regional daily published from Gujarat). At the end of each quarter, we organise an earning call with analysts and investors and the transcripts are posted on the website thereafter.
iii) General Body Meetings
The last three Annual General Meetings were held as under:
Financial Year
Date Time Venue
2006-07 December 12, 2007 2:00 p.m. Emerald Hall, Haveli Arcade, Hotel Haveli, Sector 11,Gandhinagar - 382 011
2005-06 September 30, 2006 11:30 a.m. Suman Tower, Plot No. 18, Sector 11,Gandhinagar - 382 011
2004-05 September 22, 2005 11:30 a.m. Suman Tower, Plot No. 18, Sector 11,Gandhinagar – 382 011
Special Resolutions passed at the last 3 AGMs
a) 2006-07 – Annual General Meeting held on December 12, 2007
• Increase in Remuneration of Managing Director • Consider enhancement of Authorised Share Capital • Proposal to amend the Articles of Association of the
Company
1� I D E A C E L L U L A R L I M I T E D
b) 2005-06 – Annual General Meeting held on September 30, 2006 No Special Resolution was passed
3. Book Closure Date : September 19, 2008 to September 29, 2008 (both days inclusive)
4. Dividend Payment Date : Not Applicable (Since no dividend is proposed for the Financial Year 2007-08)
5. Registered Office : Suman Tower, Plot No. 18, Sector-11, Gandhinagar – 382 011 Gujarat (India) Tel: +91-79-66714000 Fax: +91-79-23232251
6. Listing Details
The Equity Shares of the Company are listed on:
National Stock Exchange of India Limited“Exchange Plaza”, Bandra-Kurla Complex,Bandra (East), Mumbai – 400 023
Bombay Stock Exchange LimitedPhiroze Jeejeebhoy Towers,Dalal Street,Mumbai - 400 001.
The Company’s payment of Listing Fees is up-to-date.
7. Stock Codes
Stock Code Reuters BloombergBombay Stock Exchange,
532822 IDEA.BO IDEA IN
National Stock Exchange
IDEA IDEA.NS NIDEA IN
ISIN INE669E01016
7. CEO/CFO CERTIFICATION
As required by Clause 49 of the Listing Agreement, the CEO/CFO certification is given elsewhere in the Annual Report.
8. REPORT ON CORPORATE GOVERNANCE
This Corporate Governance Report forms part of the Annual Report. The Company is fully compliant with all the provisions of Clause 49 of the Listing Agreement of the Stock Exchanges of India.
9. COMPLIANCE
A Certificate from the Statutory Auditors of the Company, confirming compliance with all the conditions of Corporate Governance, as stipulated in Clause 49 of the Listing Agreement of the stock exchanges is annexed to the Directors’ Report and forms part of the Annual Report.
GENERAL SHAREHOLDERS’ INFORMATION
1. Annual General Meeting
Day and Date : Monday, September 29, 2008Time : 2.00 p.m.Venue : Emerald Hall, Haveli Arcade, Hotel Haveli, Sector 11, Gandhinagar-382 011 (Gujarat)
2. Financial Calendar for 2008-09 (Tentative)
Financial reporting for the quarter endingJune 30, 2008 : End July 2008Financial reporting for the quarter endingSeptember 30, 2008 : End October 2008Financial reporting for the quarterending December 31, 2008 : End January 2009Financial reporting for the quarterending March 31, 2009 : End April 2009Annual General Meeting for the year 2008-09 : July/August 2009
c) 2004-05 – Annual General Meeting held on September 22, 2005
• Consider fresh issue of shares
• Consider enhancement of Authorised Share Capital
iv) Special Resolution through Postal Ballot
During the year, consent of the members of the Company was sought by Special Resolution, through Postal Ballot Notice dated September 10, 2007. The results of the Postal Ballot were declared on November 5, 2007.
Particulars of Postal BallotNo. of valid Postal
Ballot Forms receivedVotes Cast
For AgainstSpecial Resolution under Section 81(1A) of the Companies Act, 1956 and SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for approval of the Employee Stock Option Scheme – 2006 and issue of equity shares under the Employee Stock Option Scheme to employees including Managing / Whole Time Director(s) of the Company.
9758 1,537,145,249 6,902,273
Special Resolution under Section 81(1A) of the Companies Act, 1956 and SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for extending benefit of the Employee Stock Option Scheme to employees including Managing / Whole Time Director(s) of subsidiary companies of the Company.
9758 1,537,052,230 6,934,806
Mr. Umesh Ved, Practicising Company Secretary, Ahmedabad was appointed as Scrutinizer for conducting postal ballot voting process for the above resolutions.Accordingly the said Resolutions were approved by the shareholders, with requisite and overwhelming majority of 99.55%.
1�A N N U A L R E P O R T 2 0 0 7 - 0 8
8. Market Price Data
Month Bombay Stock Exchange Limited National Stock Exchange of India LimitedHigh
(in Rs.)Low
(in Rs.)Close
(in Rs.)Avg. Vol. (in Nos.)
High (in Rs.)
Low (in Rs.)
Close (in Rs.)
Avg. Vol. (in Nos.)
April – 07 119.95 91.00 114.50 2,694,339 120.25 91.00 114.20 7,187,747
May – 07 129.95 112.00 126.10 2,354,117 129.45 112.10 125.85 6,919,907
June – 07 128.60 110.60 124.60 1,723,202 128.10 110.00 124.50 5,910,342
July – 07 135.55 118.00 129.55 1,831,384 135.40 118.05 129.60 5,558,878
Aug – 07 134.00 104.95 122.70 1,441,097 129.10 104.75 122.75 4,172,595
Sept – 07 129.10 104.75 119.20 3,911,221 132.00 118.50 125.15 1,407,271
Oct – 07 161.00 121.05 135.20 2,926,255 160.90 121.15 135.15 8,302,535
Nov – 07 137.80 110.00 122.40 974,033 138.80 115.10 122.65 2,549,041
Dec – 07 142.85 123.50 138.70 1,541,771 150.10 123.50 139.10 5,085,604
Jan – 08 148.90 99.00 123.65 1,405,185 149.50 96.10 123.45 4,015,083
Feb – 08 129.30 100.20 110.15 508,733 129.50 100.35 108.80 1,702,657
Mar – 08 108.00 89.00 102.75 625,224 108.00 88.00 102.65 3,609,854
9. Stock Performance
a) Comparison of the Company’s share price with BSE Sensex
100
105
110
115
120
125
130
135
140
145
Mar
200
8
Feb
200
8
Jan
2008
Dec
200
7
Nov
200
7
Oct
200
7
Sep
200
7
Aug
200
7
Jul 2
007
Jun
2007
May
200
7
Ap
r 200
7 13000
14000
15000
16000
17000
18000
19000
20000
21000
Idea Share Price BSE Sensex
100
105
110
115
120
125
130
135
140
145
Mar
200
8
Feb
200
8
Jan
2008
Dec
200
7
Nov
200
7
Oct
200
7
Sep
200
7
Aug
200
7
Jul 2
007
Jun
2007
May
200
7
Ap
r 200
7 4000
4500
5000
5500
6000
6500
Idea Share Price NSE Sensex
100
105
110
115
120
125
130
135
140
145
Mar
200
8
Feb
200
8
Jan
2008
Dec
200
7
Nov
200
7
Oct
200
7
Sep
200
7
Aug
200
7
Jul 2
007
Jun
2007
May
200
7
Ap
r 200
7 13000
14000
15000
16000
17000
18000
19000
20000
21000
Idea Share Price BSE Sensex
100
105
110
115
120
125
130
135
140
145
Mar
200
8
Feb
200
8
Jan
2008
Dec
200
7
Nov
200
7
Oct
200
7
Sep
200
7
Aug
200
7
Jul 2
007
Jun
2007
May
200
7
Ap
r 200
7 4000
4500
5000
5500
6000
6500
Idea Share Price NSE Sensex
b) Comparison of the Company’s share price with NSE Nifty
1� I D E A C E L L U L A R L I M I T E D
10. Registrar and Share Transfer Agents
Bigshare Services Private Limited
E/2 Ansa Industrial Estate,
Sakivihar Road, Saki Naka, Andheri (East)
Mumbai – 400 072
Tel: +91-22- 28470652
Fax: +91-22- 28475207
11. Share Transfer System
Transfer of shares in physical form are processed within a period of 12 days from the date of the lodgement subject to documents being valid and complete in all respects. There have been no instances of transfer of shares in the physical form during the financial year 2007-08.
12. Investor Services
The status of investors’ complaints as on March 31, 2008 is as follows:
No. of complaints as on April 1, 2007 680
No. of complaints received during the financial year 2007-08
25612
No. of complaints resolved upto March 31, 2008 26286
No. of complaints pending as on March 31, 2008 6
All these complaints/queries have been resolved.
13. Distribution of Shareholding
The distribution of shareholding of the Company as on March 31, 2008 is as follows:
Number of EquityShares held
Number of Share-
holders
% to total Share-
holders
No. ofShares
held
% to total
Share-holding
Upto 5000 332,087 95.95 48,054,151 1.82
5001 – 10000 8,075 2.33 6,364,795 0.24
10001– 20000 2,930 0.85 4,359,739 0.17
20001– 30000 940 0.27 2,387,620 0.09
30001– 40000 407 0.12 1,430,132 0.05
40001– 50000 419 0.12 1,974,719 0.08
50001–100000 656 0.19 4,627,352 0.18
100001& above 576 0.17 2,566,162,031 97.37
Total 346090 100.00 2,635,360,539 100.00
14. Shareholding Pattern
The shareholding pattern of the Company as on March 31, 2008 is as follows:
Category No. of Shares
% Share-holding
Promoters 1,520,445,714 57.69
Foreign Institutional Investors 203,215,148 7.71
Non-Resident Indians/Overseas Corporate Bodies 750,585,790 28.48
Mutual Funds, Insurance Companies Financial Institutions and Banks 68,638,300 2.60
Bodies Corporate 11,489,673 0.44
Resident Indians 80,985,914 3.08
15. Dematerialisation of Shares and Liquidity
The Shares of the Company are compulsorily traded in dematerialised form. The shares of the Company are admitted for trading under both the Depository Systems in India – NSDL and CDSL. A total number of 2,635,353,145 Equity Shares of the Company constituting over 99.99% of the issued and subscribed Share Capital were in dematerialised form as on March 31, 2008.
16. Outstanding GDRs/ADRs etc.
No GDRs/ADRs/Warrants or Convertible Instruments are outstanding as on date of this report.
17. Investor Correspondence
In order to facilitate quick redressal of the grievances/queries, the Investors and Shareholders may contact at the under mentioned address for any assistance:
Mr. Pankaj Kapdeo General Manager (Legal) & Company Secretary “Windsor” 5th Floor, Off CST Road, Near Vidya Nagari, Kalina, Santacruz (East), Mumbai – 400 098 Tel: +91-22-66820000 Fax: +91-22-66820499
E-Mail: [email protected]
17A N N U A L R E P O R T 2 0 0 7 - 0 8
Declaration
As provided under Clause 49 of the Listing Agreement with the Stock Exchange(s), it is hereby declared that all the Board Members and Senior Management personnel of the Company have affirmed the compliance with the Code of Conduct for the year ended March 31, 2008.
Sanjeev AgaDate : April 24, 2008 Managing DirectorPlace : Mumbai
CEO/CFO CertificationWe, Sanjeev Aga, Managing Director and AJS Jhala, Chief Financial Officer certify that:
a) We have reviewed the financial statements and cash flow statements for the year ended March 31, 2008 and to the best of our knowledge and belief:
i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;
ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing Accounting Standards, applicable laws and regulations.
b) To the best of our knowledge and belief, no transactions entered into by the Company during the year ended March 31, 2008 are fraudulent, illegal or violative of the Company’s code of conduct.
c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting. We have disclosed to the Auditors and the Audit Committee, deficiencies in the design and operations of such internal controls, if any, of which we are aware and steps have been taken to rectify these deficiencies.
d) We have indicated to the Auditors and the Audit Committee:
i) Significant changes in the internal control over financial reporting during the year;
ii) Significant changes in the accounting policies during the year and that the same has been disclosed in the notes to the financial statements; and
iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or any employee having a significant role in the Company’s internal control system over financial reporting.
Sanjeev Aga AJS Jhala Managing Director Chief Financial Officer
Date : April 24, 2008Place : Mumbai
CertificateTo the Members ofIdea Cellular Limited
We have examined the compliance of conditions of Corporate Governance by Idea Cellular Limited, for the year ended on March 31, 2008, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the conditions of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No:38019
Date: April 24, 2008Place: Mumbai
18 I D E A C E L L U L A R L I M I T E D
List of persons constituting “Group” as required under Clause 3 (1)(e)(i) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
1. BGH Exim Limited
2. Birla TMT Holdings Private Limited
3. Essel Mining & Industries Limited
4. Heritage Housing Finance Limited
5. IGH Holdings Private Limited
6. Infocyber (India) Private Limited
7. Mangalam Carbide Limited
8. Mangalam Services Limited
9. Naman Finance & Investments Private Limited
10. Pilani Investment and Industries Corporation Limited
11. Surya Abha Investments Pte Limited
12. Surya Kiran Investments Pte Limited
13. Surya Viniyog Pte Limited
14. Calyx Investments Pte Limited
15. Kiran Investments Pte Limited
16. Indogenious Holdings Pte Limited
17. Abha Investments Pte Limited
18. Big Banyan Investments Pte Limited
19. Blue Bucks Investments Pte Limited
20. Trapti Trading & Investments Private Limited
21. Turquoise Investments and Finance Private Limited
22. Umang Commercial Company Limited
List of Persons constituting “Group” under SEBI Takeover Regulaltions
19A N N U A L R E P O R T 2 0 0 7 - 0 8
Auditors’ ReportTo the Members ofIdea Cellular Limited
1. We have audited the attached Balance Sheet of Idea Cellular Limited (‘the Company’) as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto (together referred to as ‘financial statements’). 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, (‘the said Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, on the basis of such checks of the books and records of the Company as we considered necessary and appropriate, and according to information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Attention is invited to Note 12 of Schedule 22 B of the Financial Statements. As detailed in the said note, pending the transfer of Telecom licences of the erstwhile Idea Mobile Telecommunications Limited, BTA Cellcom Limited and Idea Telecommunications Limited in the name of the Company, the Company has given effect to the scheme of Amalgamation with effect from April 1, 2006. Implications if any, in the event of non transfer of the licences are not ascertainable at this stage.
5. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
a) 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;
b) 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;
c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
d) 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 so far as they apply to the Company;
e) on the basis of the written representations received from the directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed
as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
f) subject to what has been stated in paragraph 4 above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date: April 24, 2008Place: Mumbai
Annexure to the Auditors’ Report
(Referred to in paragraph 3 of our report of even date)
1. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b) Fixed Assets have been physically verified by the management according to the regular programme of periodical verification in phased manner which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed.
c) During the year the Company has not disposed off substantial part of the fixed assets.
2. In respect of its inventories:
a) The inventories, except for those lying with the third parties, have been physically verified by the management at the year-end. In our opinion, the frequency of such verification is reasonable.
b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
c) On the basis of our examination of the records of inventory and according to the information and explanations given to us, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed
20 I D E A C E L L U L A R L I M I T E D
on verification between the physical stock and the book records were not material.
3. According to the information and explanations given to us, the Company has not granted/taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
4. In our opinion, and according to the information and explanations given to us, having regard to explanation that major capital goods and spares thereof purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in such internal controls systems with regard to purchase of inventory and fixed assets and for the sale of goods and services.
5. In our opinion and according to the information and explanations given to us, there were no contracts, particulars of which needed to be entered in the register maintained under Section 301 of the Companies Act, 1956 and hence provisions of paragraph 4(v)(b) of the said Order relating to reasonableness of price having regard to prevailing market price is not applicable to the Company.
6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are applicable.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of telecommunication activities and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.
9. In respect of statutory dues:
a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and any other statutory dues as applicable with the appropriate authorities.
b) According to the information and explanations given to us, no undisputed amount payable in respect of provident fund, employees’ state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and any other statutory dues applicable to it were in arrears, as at March 31, 2008 for a period of more than six months from the date they became payable.
c) According to the information and explanations given to us, there are no dues of Excise duty, Wealth tax, Customs duty, Employees’ State Insurance which have not been deposited on account of any dispute. The dues of Income tax, Service tax and Sales tax as disclosed below have not been deposited by the Company on account of disputes.
Name of the Statute Nature ofDues
Period to which theamount pertains
Amount (Rs. Million)
Forum where thedispute is pending
Andhra Pradesh General Sales Tax Act, 1957 Sales Tax 1997-98 2.89 Andhra Pradesh High Court
Uttar Pradesh Trade Tax Act, 1948 Sales Tax 2004-05 0.05 Joint Commissioner (Appeals)
Delhi Sales Tax Act, 1975 Sales Tax 2003-04 2.65 Additional Commissioner (Appeals)
Delhi Sales Tax Act, 1975 SalesTax 2004-05 90.10 Additional Commissioner of Sales Tax (Appeals)
Gujarat Sales Tax Act, 1969 Sales Tax 1998-99 to 2001-02 7.04 Sales Tax Tribunal
Gujarat Sales Tax Act, 1969 Sales Tax 2006-07 0.83 Deputy Commissioner of Commercial Tax, (Appeals)
Chhattisgarh Commercial Tax Act, 1994 Sales Tax 2001-02 to 2003-04 1.30 Deputy Commissioner (Appeals)
Madhya Pradesh Commercial Tax Act, 1994 Sales Tax 2003-04 0.79 Deputy Commissioner (Appeals)
Chhattisgarh Commercial Tax Act, 1994 Sales Tax 2000-01 0.31 Appellate Board
Kerala Sales tax Act, 1963 Sales Tax 1997-98 to1998-99 15.36 Kerala High Court
Kerala Sales tax Act, 1963 Sales Tax 1998-99 0.06 Deputy Commissioner Sales tax
Kerala Sales tax Act, 1963 Sales Tax 1997-98 0.40 Sales Tax Appellate Tribunal
Uttar Pradesh Trade Tax Act, 1948 Sales Tax 2003-04 0.22 Joint Commissioner (Appeals)
Uttar Pradesh Trade Tax Act, 1948 Sales Tax 2007-08 0.58 Allahabad High Court
Income Tax Act, 1961 Income-tax 1997-98,1998-99 & 2000-2001 1.90 Assessing Officer (TDS)/ITAT
Income Tax Act, 1961 Income-Tax 2004-05 3.98 Commissioner of Income Tax (Appeals)
Income Tax Act, 1961 Income-Tax 2002-03 2.61 Income Tax Appellate Tribunal, Hyderabad
Income Tax Act, 1961 Income-Tax 2000-01 6.00 Commissioner of Income Tax (Appeals)
Finance Act, 1994 (Service Tax provisions) Service Tax 2003-04 0.75 Commissioner Appeal, Central Excise
Finance Act, 1994 (Service Tax provisions) Service Tax 2004-05 & 2005-06 2.45 Central Excise, Service Tax Appellate Tribunal
Finance Act, 1994 (Service Tax provisions) Service Tax 2004-05, 2005-06 & 2006-07 19.12 Central Excise, Service Tax Appellate Tribunal
Finance Act,1994 (Service Tax provisions) Service Tax 2004-05 & 2005-06 5.54 Commissioner (Appeals), Central Excise
Finance Act, 1994 (Service Tax provisions) Service Tax 2004-05 & 2005-06 15.57 Central Excise, Service Tax Appellate Tribunal
Finance Act, 1994 (Service Tax provisions) Service Tax 2004-05, 2005-06 & 2006-07 209.45 Central Excise, Service Tax Appellate Tribunal
Finance Act, 1994 (Service Tax provisions) Service Tax 2004-05, 2005-06 & 2006-07 503.24 Commissioner Central Excise
21A N N U A L R E P O R T 2 0 0 7 - 0 8
10. The accumulated losses of the Company are less than fifty percent of its net worth and the Company has not incurred cash losses during the current financial year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions and banks.
12. According to the information and explanations given 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.
13. The Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of paragraph 4(xiii) of the said Order are not applicable to the Company.
14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments.
15. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interest of the Company.
16. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised to the extent utilised.
17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information
and explanations given to us, as at the balance sheet date funds amounting to Rs. 8,845.90 million raised on a short-term basis have been used for long-term purpose.
18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the year.
19. The Company has not issued any debentures during the year.
20. The management has disclosed the end use of money raised by public issue and the same has been verified by us.
21. During the course of our examination of the books of account, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any incidence of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date: April 24, 2008Place: Mumbai
22 I D E A C E L L U L A R L I M I T E D
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi G.P. Gupta Arun Thiagarajan Sanjeev AgaPartner Director Director Managing DirectorMembership No.: 38019
Date: April 24, 2008 AJS Jhala Pankaj KapdeoPlace: Mumbai Chief Financial Officer Company Secretary
Balance Sheet as at March 31, 2008
Schedules As at March 31, 2008
As at March 31, 2007
SOURCES OF FUNDSShareholders’ FundsShare Capital 1 26,353.61 25,928.60
Outstanding Employee Stock Options 37.59 Reserves and Surplus 2 23,134.00 20,371.49
49,525.20 46,300.09 Loan FundsSecured 3 54,544.33 35,397.68
Unsecured 4 10,603.26 7,107.36 65,147.59 42,505.04
Deferred Tax Liability(Net) (Refer Note B 31 to Schedule 22) 661.85 10.55
TOTAL 115,334.64 88,815.68 APPLICATION OF FUNDSFixed Assets
Gross Block (At Cost) 5A 110,119.82 70,466.21
Less: Depreciation 31,238.26 26,305.48
Net Block 78,881.56 44,160.73
Intangible Assets (Net) 5B 17,792.38 11,763.58
Capital Work-in-Progress 9,411.27 5,065.15 106,085.21 60,989.46
Investments 6 5,699.31 138.31 Current Assets, Loans and AdvancesCurrent AssetsInventories 7 276.15 179.10
Sundry Debtors 8 1,985.93 1,524.77
Cash and Bank Balances 9 4,970.55 18,197.28
Other Current Assets 10 520.66 757.40
Loans and Advances 11 7,986.73 4,040.57 15,740.02 24,699.12
Less : Current Liabilities and Provisions 12 26,254.84 21,519.77 Net Current Assets (10,514.82) 3,179.35 Profit and Loss Account 14,064.94 24,508.56 TOTAL 115,334.64 88,815.68 Significant Accounting Policies and Notes to the Accounts 22
(Rupees in Million)
23A N N U A L R E P O R T 2 0 0 7 - 0 8
Profit and Loss Account for the year ended March 31, 2008
Schedules For the year ended
March 31, 2008
For the year ended
March 31, 2007
INCOMEService Revenue 67,199.83 43,500.16
Sales of Trading Goods 0.07 163.84
Other Income 13 174.55 209.29 TOTAL 67,374.45 43,873.29 OPERATING EXPENDITURECost of Trading Goods Sold 14 0.06 51.73
Personnel Expenditure 15 3,417.82 2,608.46
Network Operating Expenditure 16 10,469.53 5,335.72
Licence and WPC Charges 17 6,851.03 4,487.01
Roaming and Access Charges 18 11,334.41 7,320.96
Subscriber Acquisition and Servicing Expenditure 19 6,469.63 5,643.27
Advertisement and Business Promotion Expenditure 3,224.29 2,006.20
Administration and other Expenses 20 2,895.03 1,560.31 44,661.80 29,013.66
PROFIT BEFORE FINANCE CHARGES, DEPRECIATION, AMORTISATION & TAXES 22,712.65 14,859.63
Finance and Treasury Charges (Net) 21 2,776.42 3,051.06
Depreciation 5 A 7,568.52 5,636.66
Amortisation of Intangible Assets 5 B 1,199.10 1,081.39 PROFIT BEFORE TAX 11,168.61 5,090.52
Provision for taxation – Current 425.33 –
– Deferred 651.30 10.55
– Fringe Benefit Tax 73.69 59.36
– MAT Credit (425.33) –PROFIT AFTER TAX 10,443.62 5,020.61 Balance of Loss brought forward from previous year (24,508.56) (16,738.39)
Accumulated Losses acquired on amalgamation – (12,668.11)
Leave Encashment Provision for earlier years – (122.67)BALANCE OF LOSS CARRIED FORWARD TO BALANCE SHEET (14,064.94) (24,508.56)
EARNINGS PER SHARE (in Rupees) (Refer Note B 30 to Schedule 22 )
Basic 3.96 2.19
Diluted 3.96 2.15 Significant Accounting Policies and Notes to the Accounts 22
(Rupees in Million)
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi G.P. Gupta Arun Thiagarajan Sanjeev AgaPartner Director Director Managing DirectorMembership No.: 38019
Date: April 24, 2008 AJS Jhala Pankaj KapdeoPlace: Mumbai Chief Financial Officer Company Secretary
24 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Accounts
(Rupees in Million) As at
March 31, 2008 As at
March 31, 2007
SCHEDULE 1SHARE CAPITALAuthorised (Refer Note B 1 (a) to Schedule 22)4,275,000,000 (Previous year 3,775,000,000) Equity Shares of Rs.10 each 42,750.00 37,750.00 1500 (Previous year 500) Redeemable Cumulative Non Convertible Preference Shares of Rs.10 million Each 15,000.00 5,000.00
57,750.00 42,750.00 Issued, Subscribed and Paid-UpEquity Share Capital (Refer Note B 1 (b) to Schedule 22)2,635,360,539 (Previous year 2,592,860,539) Equity Shares of Rs. 10 each fully paid up 26,353.61 25,928.60
26,353.61 25,928.60 SCHEDULE 2RESERVES AND SURPLUSAmalgamation ReserveOpening Balance 643.57 998.41 Less: Adjustment on Amalgamation of Subsidaries – (354.84)
643.57 643.57 Capital Reserve 1,414.56 1,414.56 Share Premium AccountPremium on issue of Equity Shares 18,313.36 21,666.66 Less: Share Issue Expenses – (620.04)Less: Premium on redemption of Preference Shares – (2,733.26)Add: Preimum on issue of shares under GSO (Refer Note B 1(b) to Schedule 22) 2,762.51
21,075.87 18,313.36 23,134.00 20,371.49
SCHEDULE 3SECURED LOANSTerm Loan (Refer Note B 7 (a) to Schedule 22)Foreign Currency Loan – From Banks 5,658.20 –Rupee Loan – From Banks 41,480.20 29,170.50 – From Financial Institutions 7,099.70 6,029.50
(Loan Repayable within one year Rs. 1,425.20 million, Previous year Rs. 880.00 million)Vehicle Loan (Refer Note B 7 (b) to Schedule 22) 306.23 197.19 (Loan Repayable within one year Rs. 103.08 million, Previous year Rs. 47.98 million)Working Capital Loan – From Banks – 0.49
54,544.33 35,397.68 SCHEDULE 4UNSECURED LOANSTerm LoanFrom Others (Refer Note B 11 to Schedule 22) 1,757.36 1,757.36 Short Term LoanFrom Banks 8,845.90 5,350.00
10,603.26 7,107.36
25A N N U A L R E P O R T 2 0 0 7 - 0 8
Sche
dule
s for
min
g pa
rt o
f the
Acc
ount
s
SCH
EDU
LE 5
A –
FIX
ED A
SSET
S (R
efer
No
te B
7 t
o S
ched
ule
22)
(Ru
pee
s in
Mill
ion)
Gro
ss B
lock
Dep
reci
atio
nN
et B
lock
Part
icul
ars
As
atA
pri
l 1, 2
007
Ad
dit
ions
fo
rth
e ye
ar e
nded
Mar
ch 3
1, 2
008
Sale
/Ad
just
men
t fo
r th
e ye
ar e
nded
Mar
ch 3
1, 2
008
As
atM
arch
31,
200
8A
s at
Ap
ril 1
, 200
7A
dd
itio
ns f
or
the
year
end
edM
arch
31,
200
8
Sale
/Ad
just
men
t fo
r th
e ye
ar e
nded
Mar
ch 3
1, 2
008
As
atM
arch
31,
200
8A
s at
Mar
ch 3
1, 2
008
As
atM
arch
31,
200
7
Land
68.
20
9.5
6 –
77.
76
––
––
77.
76
68.
20
Leas
ehol
d L
and
190
.01
19.
98
– 2
09.9
9 5
8.52
9
.41
– 6
7.94
1
42.0
5 1
31.4
9
Build
ing
653
.69
10.
51
44.
97
619
.23
204
.54
30.
82
44.
94
190
.42
428
.82
449
.15
Plan
t & M
achi
nery
68,
110.
95
41,
866.
28
2,6
82.3
6 1
07,2
94.8
8 2
5,18
3.29
7
,275
.34
2,5
59.8
1 2
9,89
8.82
7
7,39
6.05
4
2,92
7.65
Furn
iture
& F
ixtu
re 5
24.5
7 2
36.5
9 1
0.28
7
50.8
8 3
32.8
6 6
8.81
4
.69
396
.98
353
.89
191
.71
Offi
ce E
qui
pm
ent
563
.00
96.
90
13.
02
646
.88
430
.10
76.
23
12.
20
494
.13
152
.75
132
.90
Veh
icle
s 3
55.7
9 2
01.5
4 3
7.12
5
20.2
1 9
6.16
1
07.9
0 1
4.10
1
89.9
6 3
30.2
4 2
59.6
3
TOTA
L 7
0,46
6.21
4
2,44
1.36
2
,787
.75
110
,119
.82
26,
305.
48
7,5
68.5
2 2
,635
.74
31,
238.
26
78,
881.
56
44,
160.
73
Prev
ious
Yea
r 3
1,66
3.73
*
38,
922.
16
119
.68
70,
466.
21
11,
510.
04
**
14,8
97.9
2 1
02.4
8 2
6,30
5.48
4
4,16
0.73
* In
clud
es a
dd
ition
s on
acc
ount
of a
mal
gam
atio
n Rs
. 16,
280.
33 m
illio
n.**
In
clud
es a
dd
ition
s on
acc
ount
of a
mal
gam
atio
n Rs
. 9,2
54.8
9 m
illio
n &
Rs.
6.3
7 m
illio
n on
acc
ount
of P
re-o
per
ativ
e ch
arge
cap
italis
ed.
No
tes:
1.
Exch
ange
Diff
eren
ce o
f Rs.
Nil
(Pre
viou
s ye
ar G
ain
Rs. 5
1.75
mill
ion)
bei
ng g
ain
on fo
reig
n ex
chan
ge fl
uctu
atio
n re
latin
g to
acq
uisi
tion
of fi
xed
ass
ets
has
bee
n ad
just
ed to
rele
vant
fixe
d a
sset
s.2.
A
s p
er th
e A
S-11
on
“The
Effe
cts
of C
hang
es in
For
eign
Exc
hang
e Ra
tes”
, dur
ing
the
curre
nt y
ear e
xcha
nge
diff
eren
ce a
mou
ntin
g to
Rs.
515
.63
mill
ion
bei
ng g
ain
on fo
reig
n ex
chan
ge fl
uctu
atio
n re
latin
g to
ac
qui
sitio
n of
fixe
d a
sset
s ha
s b
een
char
ged
to P
rofit
and
Los
s A
ccou
nt.
3.
Plan
t & M
achi
nery
incl
udes
ass
ets
held
for d
isp
osal
- G
ross
Blo
ck R
s. 1
,988
.03
mill
ion
and
Net
Blo
ck R
s. 4
5.00
mill
ion.
4.
Plan
t & M
achi
nery
incl
udes
Gro
ss B
lock
of a
sset
s ca
pita
lised
und
er fi
nanc
e le
ase
Rs. 9
75.0
1 m
illio
n (P
revi
ous
year
Rs.
Nil)
and
cor
resp
ond
ing
Acc
umul
ated
Dep
reci
atio
n b
eing
Rs.
134
.43
mill
ion
(Pre
viou
s ye
ar R
s. N
il).
SCH
EDU
LE 5
B –
INTA
NG
IBLE
ASS
ETS
(Ru
pee
s in
Mill
ion)
Gro
ss B
lock
Am
ort
isat
ion
Net
Blo
ck
Part
icul
ars
As
atA
pri
l 1, 2
007
Ad
dit
ions
fo
rth
e ye
ar e
nded
Mar
ch 3
1, 2
008
Sale
/Ad
just
men
t fo
r th
e ye
ar e
nded
Mar
ch 3
1, 2
008
As
atM
arch
31,
200
8A
s at
Ap
ril 1
, 200
7A
dd
itio
ns f
or
the
year
end
edM
arch
31,
200
8
Sale
/Ad
just
men
t fo
r th
e ye
ar e
nded
Mar
ch 3
1, 2
008
As
atM
arch
31,
200
8A
s at
Mar
ch 3
1, 2
008
As
atM
arch
31,
200
7
Entry
/Lic
ence
Fee
s 2
0,70
6.72
6
,845
.90
– 2
7,55
2.62
9
,255
.12
994
.53
– 1
0,24
9.65
1
7,30
2.97
1
1,45
1.60
Com
put
er -
Softw
are
764
.82
383
.66
26.
05
1,1
22.4
3 5
36.8
6 1
98.1
6 1
8.37
7
16.6
5 4
05.7
8 2
27.9
6
Band
wid
th 8
8.03
6
.03
– 9
4.06
4
.01
6.4
0 –
10.
41
83.
65
84.
02
TOTA
L 2
1,55
9.57
7
,235
.59
26.
05
28,
769.
11
9,7
95.9
8 1
,199
.10
18.
37
10,
976.
71
17,
792.
40
11,
763.
58
Prev
ious
Yea
r 1
4,84
5.45
#
6,7
14.1
2 –
21,
559.
57
6,8
24.7
8 ##
2,9
71.2
0 –
9,7
95.9
8 1
1,76
3.59
# In
clud
es a
dd
ition
s on
acc
ount
of a
mal
gam
atio
n Rs
. 432
3.93
mill
ion.
##
Incl
udes
ad
diti
ons
on a
ccou
nt o
f am
alga
mat
ion
Rs. 1
867.
38 m
illio
n &
Rs.
22.
43 m
illio
n on
acc
ount
of P
re-o
per
ativ
e ch
arge
cap
italis
ed.
No
tes:
1.
Com
put
er –
Sof
twar
e in
clud
e G
ross
Blo
ck o
f ass
ets
cap
italis
ed u
nder
fina
nce
leas
e Rs
. 38
.28
mill
ion
(Pre
viou
s ye
ar R
s.N
il) a
nd c
orre
spon
din
g A
ccum
ulat
ed D
epre
ciat
ion
bei
ng R
s. 4
.88
mill
ion
(Pre
viou
s ye
ar R
s.N
il).
2.
The
rem
aini
ng a
mor
tisat
ion
per
iod
of l
icen
ce fe
es a
s at
Mar
ch 3
1, 2
008
rang
es b
etw
een
7 to
20
year
s b
ased
on
the
resp
ectiv
e Te
leco
m S
ervi
ce L
icen
ce p
erio
d.
26 I D E A C E L L U L A R L I M I T E D
As at March 31, 2008
As at March 31, 2007
SCHEDULE 6INVESTMENTSLong-term Trade Investment (Unquoted)Investments in Shares of SubsidiariesAditya Birla Telecom Limited 100.00 100.00 10,000,000 fully paid equity shares of Rs. 10 eachIdea Cellular Infrastructure Services Limited (Refer Note B 3 to Schedule 22) 0.50 –50,000 fully paid equity shares of Rs. 10 eachIdea Cellular Services Limited (Refer Note B 3 to Schedule 22) 0.50 –50,000 fully paid equity shares of Rs. 10 eachSwinder Singh Satara & Company Limited 38.31 38.31 50,000 fully paid equity shares of Rs. 10 eachCurrent InvestmentInvestments in Units of Mutual Funds (Refer Note B 19 to Schedule 22) 5,560.00 –(Includes unutilised Initial Public Offer proceeds of Rs. 4,885.90 million)
5,699.31 138.31 SCHEDULE 7INVENTORIES(At lower of cost or estimated realisable value)Trading Goods 0.45 0.45 Sims and Other Cards 275.70 178.65
276.15 179.10 SCHEDULE 8SUNDRY DEBTORSDebts outstanding for over six monthsUnsecured – Considered good 95.31 26.39 – Considered doubtful 2,356.33 2,081.18
2,451.64 2,107.57 Other DebtsUnsecured – Considered good 1,890.62 1,498.38 – Considered doubtful 106.80 144.54
1,997.42 1,642.92 Less: Provision for doubtful debts 2,463.13 2,225.72 TOTAL 1,985.93 1,524.77 Sundry Debtors include certain parties from whom Security Deposits of Rs. 225.77 million(Previous year Rs 161.12 million) have been taken and are lying with the Company
SCHEDULE 9CASH AND BANK BALANCESCash and Cheques on Hand 296.92 229.22 Balances with Scheduled Banks – in Current Accounts 1,179.81 998.40 – in Deposit Accounts 3,493.82 16,969.66 (Includes unutilised Initial Public Offer proceeds of Rs.3,150.00 million, Previous year Rs.15,504.50 million) and Rs. 71.90 million (Previous year Rs. 108.70 million) as margin money)
4,970.55 18,197.28 SCHEDULE 10OTHER CURRENT ASSETSUnbilled Revenue 476.82 640.15 Interest Receivable on Deposits with Scheduled Banks
43.84 117.25 520.66 757.40
(Rupees in Million)
Schedules forming part of the Accounts
27A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts
(Rupees in Million) As at
March 31, 2008 As at
March 31, 2007
SCHEDULE 11LOANS AND ADVANCES(Unsecured, considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received – Considered good 6,286.75 3,284.12 – Considered Doubtful 90.75 90.84 Less: Provision for doubtful advances 90.75 90.84
6,286.75 3,284.12 Deposits with Subsidiaries 272.16 47.62 Deposits and Balances with Govt. Authorities 241.10 109.83 Deposits with others 609.58 382.34 Advance Income Tax (Net of Provision of Rs. 425.33 million) 151.81 210.67 MAT Credit Entitlement 425.33 –Advance Fringe Benefit Tax (Previous year Net of Provision of Rs. 87.46 million) – 5.99
7,986.73 4,040.57 SCHEDULE 12CURRENT LIABILITIES AND PROVISIONSCurrent LiabilitiesSundry Creditors (Refer Note B 20 to Schedule 22) 16,854.57 16,108.74 Book Bank Overdraft 2,255.71 665.03 Advances from Customers 4,054.32 2,565.34 Deposits from Customers 557.44 570.08 Other Liabilities 1,621.88 1,054.58 Interest accrued but not due 92.71 17.61
25,436.63 20,981.38 ProvisionsGratuity (Refer Note B 25 to Schedule 22) 23.38 29.41 Leave Encashment 315.28 255.72 Site Restoration Cost (Refer Note B 32 to Schedule 22) 473.58 253.26 Provision for Fringe Benefit Tax (Net of Advance of Rs. 174.66 million) 5.97 –
818.21 538.39
TOTAL 26,254.84 21,519.77
28 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Accounts
For the yearended
March 31, 2008
For the year ended
March 31, 2007
SCHEDULE 13OTHER INCOMELiabilities/Provisions no longer required written back 139.73 174.94
Gain on Sale of Fixed Assets/Asset disposed off – 1.92
Miscellaneous Receipts 34.82 32.43 174.55 209.29
SCHEDULE 14COST OF TRADING GOODS SOLD (Refer Note B 18 to Schedule 22)
Opening Stock 0.45 0.22
Add: Opening Stock acquired on amalgamation – 12.19
Add: Purchases (net of consumables) 0.06 40.60
Less: Consumption – 0.83
Closing Stock 0.45 0.45 0.06 51.73
SCHEDULE 15PERSONNEL EXPENDITURESalaries and Allowances etc. 3,022.78 2,253.45
Contribution to Provident and Other Funds 147.41 127.15
Staff Welfare 158.57 133.72
Recruitment and Training 89.06 94.14 3,417.82 2,608.46
SCHEDULE 16NETWORK OPERATING EXPENDITURESecurity Service Charges 777.55 559.57
Power and Fuel 2,244.04 1,094.57
Repairs and Maintenance - Plant and Machinery 1,330.28 1,170.32
Switching and Cellsites Rent 829.38 495.58
Lease Line and Connectivity Charges 2,268.96 1,382.78
Network Insurance 26.50 17.47
Other Network Operating expenses 2,992.82 615.43 10,469.53 5,335.72
SCHEDULE 17LICENCE AND WPC CHARGES Licence Fees 4,150.85 2,777.79
WPC and Spectrum Charges 2,700.18 1,709.22 6,851.03 4,487.01
SCHEDULE 18ROAMING AND ACCESS CHARGESRoaming Charges 1,017.89 974.09
Access Charges 10,316.52 6,346.87 11,334.41 7,320.96
(Rupees in Million)
29A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts(Rupees in Million)
For the yearended
March 31, 2008
For the year ended
March 31, 2007
SCHEDULE 19SUBSCRIBER ACQUISITION AND SERVICING EXPENDITURECost of Sim and Other Cards 532.97 268.59
Commission and Discount to dealers & recharge expenses 4,561.69 4,392.65
Customer Verification Expenses 192.86 178.72
Collection and Telecalling Expenses 1,121.32 749.91
Customer Retention and Customer loyalty Expenses 60.79 53.40 6,469.63 5,643.27
SCHEDULE 20ADMINISTRATION AND OTHER EXPENSESRepairs and Maintenance – Building 17.18 16.59
– Others 961.78 56.24
Other Insurance 21.02 21.47
Non Network Rent 341.57 146.78
Rates and Taxes 87.11 94.66
Electricity 110.44 82.55
Printing and Stationery 62.88 57.28
Communication Expenses 124.20 90.42
Travelling and Conveyance 407.60 277.13
Provision for bad and doubtful debts/advances 244.94 368.17
Bank Charges 97.31 106.71
Directors Sitting Fees 0.91 0.60
Legal and Professional Charges 171.18 101.28
Audit Fees (Refer Note B 13 to Schedule 22) 22.00 14.31
Loss on Sale of Fixed Assets/Asset disposed off 8.89 –
Miscellaneous expenses 216.02 126.12 2,895.03 1,560.31
SCHEDULE 21FINANCE AND TREASURY CHARGES (NET)Interest
– On Fixed Period Loan 4,348.77 3,048.92
– Others 32.48 171.60
Financing Charges 211.02 72.58 4,592.27 3,293.10
Less:
Interest Received (Gross of Tax) 849.52 170.76
Profit on Sale of Current Investments 431.79 81.25
Gain/(Loss) on Foreign Exchange Fluctuation 534.54 (9.97) 2,776.42 3,051.06
30 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Accounts
SCHEDULE 22
A. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Preparation of Financial Statements:
The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these financial statements.
2. Fixed Assets:
Fixed assets are stated at cost of acquisition and installation less accumulated depreciation. Cost is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use.
Site restoration cost obligations are capitalised based on a constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Such costs are depreciated over the remaining useful life of the asset.
3. Expenditure during pre-operative period of licence:
Expenses incurred on Project and other charges during construction period are included under pre-operative expenditure (grouped under Capital Work in Progress) and are allocated to the cost of Fixed Assets on the commencement of commercial operations.
4. Depreciation and amortisation:
Depreciation on fixed assets is provided on straight-line method (except stated otherwise) on the basis of estimated useful economic lives as given below:
Tangible Assets YearsBuildings 9 to 30
Network Equipments 10 to 13
Optical Fibre 15
Other Plant and Machineries 5
Office Equipments 3 to 9
Computers 3
Furniture and Fixtures 3 to 10
Motor Vehicles upto 5
Leasehold improvements Period of lease
Intangible Assets are amortised on straight-line method as under:
i) Cost of Rights and Licences including the fees paid on fixed basis prior to revenue share regime is amortised on commencement of operations over the period of licence.
ii) Software, which is not an integral part of Hardware, is treated as Intangible asset and is amortised over their useful economic lives as estimated by the management between 3 to 5 years.
iii) Bandwidth/Fibre taken on Indefeasible Right of Use (IRU) is amortised over the agreement period.
5. Inventories:
Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis.
6. Foreign currency transactions:
Transactions in foreign currency are recorded at the exchange rates prevailing at the dates of the transactions. Gains/losses arising out of fluctuation in exchange rates on settlement are recognised in the profit and loss account.
Foreign currency monetary assets and liabilities are restated at the exchange rate prevailing at the Period end and the overall net gain/loss is adjusted to the profit and loss account.
In case of Forward Exchange Contracts, the difference between the forward rate and the exchange rate at the date of transaction is recognised in the profit and loss account over the life of the contract.
7. Taxation:
a) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.
b) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.
8. Retirement Benefits:
Contributions to Provident and pension funds are funded with the appropriate authorities and charged to the profit and loss account.
Contributions to superannuation are funded with the Life Insurance Corporation of India and charged to the profit and loss account.
Liability for gratuity as at the year end is provided on the basis of actuarial valuation and funded with Life Insurance Corporation of India.
Provision in accounts for leave benefits to employees is based on actuarial valuation done by projected accrued benefit method at the period end.
9. Revenue Recognition and Receivables:
Revenue on account of mobile telephony services and sale of handsets and related accessories is recognised net of rebates, discount, service tax, etc. on rendering of services and supply of goods respectively. Recharge fees on recharge vouchers is recognised as revenue as and when the recharge voucher is activated by the subscriber.
Unbilled receivables, represent revenues recognised from the bill cycle date to the end of each month. These are billed in subsequent periods as per the terms of the billing plans.
Debts (net of security deposits outstanding there against) due from subscribers, which remain unpaid for more than 90 days from the date of bill and/or other debts which are otherwise considered doubtful, are provided for.
Provision for doubtful debts on account of Interconnect Usage Charges (IUC), Roaming Charges and passive infrastructure sharing from other telecom operators is made for dues outstanding more than 180 days from the date of billing other than cases when an amount is payable to that operator or in specific case when management is of the view that the amount is recoverable.
31A N N U A L R E P O R T 2 0 0 7 - 0 8
10. Investments:
Current Investments are stated at lower of cost or fair value in respect of each separate investment.
Long-term investments are stated at cost less provision for diminution in value other than temporary, if any.
11. Borrowing Cost:
Interest and other costs incurred in connection with the borrowing of the funds are charged to revenue on accrual basis except those borrowing costs which are directly attributable to the acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use. Such costs are capitalised with the fixed assets.
12. Licence Fees – Revenue Share:
With effect from August 1, 1999 the variable Licence fee computed at prescribed rates of revenue share is being charged to the profit and loss account in the period in which the related revenue arises. Revenue for this purpose comprises adjusted gross revenue as per the licence agreement of the licence area to which the licence pertains.
13. Contingent Liability:
Disclosures for contingent liabilities are considered to the extent of notices/demands received by the Company.
14. Leases:
a) Operating: Lease of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under an operating lease are recognised as expense in the profit and loss account, on a straight-line basis over the lease term.
b) Finance: Leased assets acquired on which significant risk and reward of ownership effectively transferred to the Company are capitalised at lower of fair value or the amounts paid under such lease arrangements. Such assets are amortised over the period of lease.
15. Earnings Per Share:
The earnings considered in ascertaining the Company’s EPS comprises the net profit after tax, after reducing dividend on Cumulative Preference Shares for the Period (irrespective of whether declared, paid or not), as per Accounting Standard 20 on “Earning Per Share”, issued by the Institute of Chartered Accountants of India. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.
16. Impairment of Assets:
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is higher of the asset’s fair value less costs to sell vis-à-vis value in use. For the purpose of impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
17. Provisions:
Provisions are recognised when the Company has a present obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
18. Issue Expenditure:
Expenses incurred in connection with issue of equity shares are adjusted against share premium.
19. Employee Stock Option:
In respect of stock option granted pursuant to the Company’s Employee Stock Option Scheme, the intrinsic value of the option is treated as discount and accounted as employee compensation cost over the vesting period.
B. NOTES TO ACCOUNTS
1. Equity Share Capital
a) Increase in Authorised Share Capital: At the Annual General Meeting held on December 12, 2007, members of the company passed a resolution to increase Authorised Equity Share Capital from Rs. 37,750.00 million to Rs. 42,750.00 million and Authorised Redeemable Cumulative Non Convertible Preference Share capital from Rs. 5,000.00 million to Rs. 15,000.00 million
b) Issue of shares under Green Shoe Option (GSO)
On April 5, 2007, the Company issued 42,500,000 Equity Shares of Rs. 10 each amounting to Rs. 3,187.50 million under Green Shoe Option. Share Premium account stands increased by Rs. 2,762.51 million on issue of the above shares.
2. The status of utilisation of IPO proceeds and Green Shoe amount up to March 31, 2008 is as under:
(Rupees in Million)
Activity To be financed through
the issue proceeds
Actual Utilisation
up to March 31,
2008Building strengthening and expanding network and related services in the New Circles 9,708.00 8,121.98
Capital expenditure for NLD operations 808.00 –
Roll out for services in Mumbai Circle 6,470.00 828.12
Redemption of Preference Shares # 7,563.26 7,563.26
Issue Expenses # 620.04 620.04
General Corporate purpose ** 3,018.20 3,018.20Total 28,187.50 20,151.60
# On completion of these activities, the balance unutilised amounts have been added to General Corporate purpose object following clearance from the monitoring agency.
** Including repayment of short–term loans.
As of March 31, 2008, the unutilised balance of IPO proceeds is lying in fixed deposits with Banks and Mutual Funds.
3. Investments in new subsidiary companies
During the year ended March 31, 2008 three new 100% subsidiary companies, Idea Cellular Services Limited (ICSL), Idea Cellular Infrastructure Services Limited (ICISL) and Idea Cellular Tower Infrastructure Limited (ICTIL), a subsidiary of ICISL, have been formed with a paid–up capital of Rs. 0.50 million each.
32 I D E A C E L L U L A R L I M I T E D
ICSL provides manpower services in the areas of subscriber acquisition and servicing required by the mobility circles of the Company. ICISL and ICTIL are formed to roll–out and provide Passive Infrastructure services in specified licence areas of the Company.
4. Joint Venture agreement with Indus Towers Limited (Indus):
A joint venture agreement consisting of the Company and its 100% subsidiary ICISL along with Bharti Airtel Limited and Vodafone Essar Limited and their subsidiaries has been entered into effective December 8, 2007. The 16% equity shareholding in Indus Tower Limited is held by ICISL. Indus Towers Limited is a company formed to develop and provide passive infrastructure services.
5. New Licences
On January 10, 2008, the Company deposited Rs. 6845.90 million following receipt of Letter of Intent (LoI) for the telecom service areas of Assam, Jammu & Kashmir, Karnataka, Kolkatta, North East, Orissa, Punjab, Tamil Nadu and West Bengal (including Chennai service area) for which the Company had applied for Licences. On February 28, 2008 DoT granted the UASL licences making the Company a pan India Licence holder.
6. The Company was allotted 4.4 Mhz spectrum in the Mumbai and Tamil Nadu (including Chennai) telecom service areas on January 11, 2008 and April 22, 2008 respectively.
7. Term Loans
a) Foreign Currency and Rupee Loans
Foreign Currency Loans amounting to Rs. 5,658.20 million (Previous year Rs. Nil) and Rupee Loans amounting to Rs. 48,579.90 million (Previous year Rs. 35,200.00 million) are secured by way of first charge/assignment ranking pari-passu interse the lenders, as under:
i. First charge by mortgage on all the movable and immovable properties of the Company,
ii. A first priority charge over all intangible assets of the Company,
iii. Assignment of the rights, titles and interest, on deposits, investments, bank accounts, book debts, insurance covers, other general assets, letters of credit and guarantee or performance bond, provided in favour of the Company.
b) Vehicle Loan
Vehicle Loan amounting to Rs. 306.23 million (Previous year Rs. 197.19 million) is secured by hypothecation of Vehicles against which the loans have been taken.
8. Interest from Department of Telecommunications
The Company had recognised an income of Rs. 802.27 million during the year ended March 31, 2003 being refund of excess interest charged by DoT on the licence fee payable by the Company pursuant to the judgement dated April 9, 2002 of Telecom Disputes Settlement and Appellate Tribunal (TDSAT). During the previous years, DoT arbitrarily acknowledged an amount of Rs. 758.76 million against Company’s claim of Rs. 802.27 million The Company has represented this matter with DoT. The Company has not provided for the difference of Rs. 43.51 million, as in the opinion of the management, the amount is recoverable from DoT.
The Company is also entitled to interest on the amount of the refund so accrued in terms of the Supreme Court Judgement; the recognition of revenue on account of the same has been postponed pending acceptance in this respect by DoT. As of March 31, 2008, this case is pending before the Hon’ble Supreme Court.
9. Contingent Liabilities
a) On March 2, 2006, the Honourable Supreme Court passed an order adjudicating that providing of telecommunication
services cannot be termed as ‘Goods’ under the Sale of Goods Act. In view of the above judgment, demands raised for Sales Tax on Activation of new connections, Rentals and Airtime by Sales Tax Authorities stand extinguished. As of March 31, 2008, Sales Tax demands of Rs. 60.22 million (Previous year Rs.931.40 million) are required to be yet formally vacated by the authorities.
b) Export obligation under EPCG (Export Promotion Credit Gurantee) Scheme is Rs. 301.06 million (Previous year Rs. 301.06 million). Failure to meet this export obligation within the stipulated time frame as per Foreign Trade Policy 2004-2009 would result in the payment of the aggregated differential duty saved amounting Rs. 37.72 million (Previous year Rs. 37.72 million) along with interest thereon. The Company is confident of meeting the obligations based on its current international in-roaming revenue trends.
c) During the financial year 2006-07, the WPC Wing of the DoT had raised demands towards monthly compounded interest on WPC charges for the period upto the financial year 2002-03 in respect of the telecom service areas of the erstwhile IMCL and BTA Cellcom Ltd.
Telecom operators had paid WPC Royalty and licence fees towards GSM frequency, access and back-bone frequency charges on circle area basis as provided in the licence terms from inception till financial year 2002-03 while the DoT demands were on city basis. The above matter was disputed by the operators and contested in TDSAT. DoT proposed a change in the basis of levy of spectrum charges based on revenue share vide their letter dated April 18, 2002 on the condition of its acceptance in entirety and withdrawal of all legal proceedings by the operators. Vide their letter dated March 26, 2002, DoT had also given time to the operators to deposit the earlier principal demands by April 15, 2002. The operators accepted the offer of change to revenue share basis on August 23, 2002. The interest demand now raised by WPC wing of DoT for the period before April 15, 2002 is contrary to the DoT proposal in 2002.
The Company is therefore in the process of taking suitable remedial action on these demands including a notice to the erstwhile promoter of Idea Mobile Communication Limited for Rs. 348.79 million (refer Note 11 below).
d) Other Matters not provided for (Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Income Tax Matters not acknowledged as debts
18.75 98.38
Sales Tax & Service Tax Matters not acknowledged as debts
1,254.06 313.83
Other claims not acknowledged as debts
1,117.18 505.36
e) Estimated amount of contracts (net of advance) remaining to be executed on capital account and not provided for.
(Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Estimated amount of contracts (net of advance)
17,555.13 10,177.57
33A N N U A L R E P O R T 2 0 0 7 - 0 8
10. Details of guarantees given (Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Bank guarantees given to DoT including performance guarantees of Rs. 2,370.00 million (Previous year Rs. 1,140 million) 7,995.67 3,807.39Bank guarantees given to BSNL 261.07 241.64Bank guarantees given to Others 1,611.52 278.01Corporate Guarantee given to others on behalf of Subsidiary Company 2,820.00 70.00
11. In accordance with an assignment agreement entered between the original promoters of the amalgamated subsidiary Idea Mobile Communications Limited (IMCL) i.e. Escorts Ltd. and First Pacific Company Ltd., IMCL had issued interest free unsecured Bond of Rs. 1,757.36 million to Escorts Limited vide a Loan agreement dated January 15, 2004. This bond was in lieu of the loans from the original promoters and included accrued interest of Rs. 857.36 million on June 10, 2004. This Bond is repayable on January 15, 2014 and carries a put option for Escorts Limited for a period of thirty days commencing on January 15, 2010 to redeem the entire amount or part thereof at a price which would have been payable by the Company had the Company opted for an early redemption in accordance with the terms of the said agreement. The Company is entitled to pre payment and set off against certain contingent liabilities that may crystallise after June 10, 2004.
On the request of Escorts Ltd, the Company on July 21, 2006 has consented to release the redemption proceeds of the above loan to UTI Bank on the same terms and conditions, as mentioned in the above Loan agreement.
12. Transfer of Licences
The Company’s application to Department of Telecommunication (DOT) for transfer of telecom licenses held in the name of the erstwhile subsidiaries (which stands merged with the Company) i.e. Idea Mobile Communications Limited, Idea Telecommunications Limited and BTA Cellcom Limited in the name of the Company is pending. The Company meets the licencing condition laid down for transfer of licenses in case of amalgamation and expects to receive this procedural approval in the ensuing period.
13. Auditor’s Remuneration (exclusive of service tax) :(Rupees in Million)
Particulars For theyear ended
March 31, 2008
For theyear ended
March 31, 2007
Statutory Audit Fees 20.00 8.50Audit Fee to erstwhile subsidiary auditors
– 4.66
Tax Audit Fees 2.00 1.15Certification and other matters (incl. in legal and professional charges) 1.50 5.58Out of Pocket Expenses (incl. in misc. expenses) 0.40 1.35Total Remuneration 23.90 21.24
Previous year figures excludes Rs. 12 million paid to Statutory Auditors included under issue expenses forming part of Share Premium Account.
14. CIF Value of Imports:(Rupees in Million)
Particulars For theyear ended
March 31, 2008
For theyear ended
March 31, 2007
Capital Goods (including Spares) 16,030.04 9,265.67
15. Expenditure in Foreign Currency (on remittance basis):(Rupees in Million)
Particulars For theYear ended
March 31, 2008
For theYear ended
March 31, 2007
Interest 25.06 56.15Travel 8.48 5.44Professional and Consultancy Fees 53.58 25.59International Roaming Services 136.99 61.48Others 88.35 84.26
16. Earning in Foreign Currency (on receipt basis):(Rupees in Million)
Particulars For theyear ended
March 31, 2008
For theyear ended
March 31, 2007
International Roaming Services* 789.08 725.90Others 1.18 2.14
* On accrual basis Rs. 863.27 million for current year and Rs. 891.61 million for previous year.
17. Managerial Remuneration under section 198 of the Companies Act, 1956 paid or payable during the financial year is as under:
(Rupees in Million)
Particulars For theyear ended
March 31, 2008
For theyear ended
March 31, 2007
A] Salary including perquisites 23.59 11.26B] Contribution to provident
and other fund 2.65 1.02C] Performance Incentive 14.40 3.17Total 40.64 15.45
The above remuneration excludes gratuity & leave encashment amounts as the same is been provided based on actuarial valuation.
18. Quantitative details of goods tradedParticulars For the year
endedMarch 31, 2008
For the year ended
March 31, 2007Handsets/Data Cards Nos. Value
(Rs. Million)Nos. Value
(Rs. Million)Opening Stock 108 0.45 234 0.22Addition on amalgamation of Subsidiaries – – 87 0.99Purchases (Net of Returns) 13 0.06 5 0.08Handsets Capitalised/written off – – 218 0.82Sale 13 0.06 – –Closing Stock 108 0.45 108 0.45
34 I D E A C E L L U L A R L I M I T E D
19. (a) During the year, the Company has purchased and sold following units:
Particulars During the year ended March 31, 2008 During the year ended March 31, 2007
Qty. in‘000
Rs. inMillion
Qty. in‘000
Rs. inMillion
Qty. in‘000
Rs. inMillion
Qty. in‘000
Rs. inMillion
UnitsPurchased
Purchase Value
UnitsSold
SaleValue
UnitsPurchased
PurchaseValue
UnitsSold
SaleValue
ABN AMRO Cash Fund – IP – Growth 203,736 2,050 203,736 2,051 – – – –
ABN AMRO Money Plus IP Fund – Growth 129,650 1,500 129,650 1,510 – – – –
Birla Cash Plus – I P – Growth 194,831 4,030 180,701 3,724 – – – –
Birla Cash Plus – Institutional Premium Plan – Growth 2,416,417 30,384 2,338,918 29,441 838,536 9,855 838,536 9,878
Birla Floating Rate Fund – LTP – Growth 158,499 2,050 158,499 2,064 – – – –
Birla SunLife Cash Manager – I P – Growth 433,326 5,613 433,326 5,623 200,954 2,478 200,954 2,481
Birla Sunlife Interval Income Fund – Monthly Plan – Series I 122,503 1,250 73,929 755 – – – –
Birla SunLife Liquid Plus – IP – Growth 440,485 6,605 374,793 5,644 – – – –
Birla Sunlife Monthly Interval Fund – Series 2 122,373 1,250 – – – – – –
Birla Sunlife Quarterly Interval Fund – Series 8 50,000 500 – – – – – –
Canliquid Institutional Plan – Growth – – – – 15,529 200 15,529 200
DBS Chola Liquid Fund – Institutional Plus – Growth – – – – 34,861 510 34,861 511
DBS Chola Liquid Fund – Super IP – Growth 144,256 1,540 144,256 1,542 – – – –
DSP ML Cash Plus Fund – IP – Growth 14,811 150 14,811 151 – – – –
DSP ML Liquid Plus Fund – IP – Growth 13,590 150 13,590 150 – – – –
DSP ML Liquidity Fund – IP – Growth 13,103 150 13,103 150 70,110 735 70,110 736
DSP Ml Liquidity Fund – Regular – Growth – – – – 4,031 70 4,031 70
DWS Insta Cash Plus Fund – IP – Growth 310,745 3,783 310,745 3,787 111,194 1,270 111,194 1,271
DWS Money Plus Fund – IP – Growth 123,236 1,335 123,236 1,349 – – – –
Fidelity Cash Fund – IP – Growth 940 10 940 10 – – – –
Fidelity Cash Fund – Super IP – Growth 18,167 200 18,167 200 – – – –
Fidelity Liquid Plus Fund – Super IP – Growth 19,348 200 19,348 200 – – – –
HDFC Cash Mgmt Fund – Call Plan – Growth 11,042 150 11,042 150 – – – –
HDFC Cash Mgmt Fund – Savings Plan – Growth 9,110 150 9,110 150 – – – –
HDFC Cash Mgmt Fund – Savings Plus – Growth – – – – 3,208 50 3,208 50
HDFC Liquid Fund – Premium Plan – Growth 65,745 1,050 65,745 1,051 – – – –
HSBC Cash Fund – I P – Growth 11,577 150 11,577 150 – – – –
HSBC Cash Fund – Institutional Plus – Growth 414,559 5,064 414,559 5,069 89,022 1,020 89,022 1,021
HSBC Liquid Plus Fund – IP Plus – Growth 109,735 1,180 109,735 1,187 – – – –
ICICI Prudential Flexible Income Plan – Growth 334,388 4,917 317,623 4,718 – – – –
ING Vysya Liquid Fund – IP – Growth 135,933 1,660 135,933 1,662 77,991 900 77,991 901
ING Vysya Liquid Fund – Super IP – Growth 415,780 4,840 415,780 4,847 29,005 320 29,005 320
ING Vysya Liquid Plus Fund – IP – Growth 110,565 1,150 110,565 1,154 – – – –
JM High Liquidity – I P – Growth 34,577 450 34,577 451 26,510 320 26,510 320
JM High Liquidity – Super I P – Growth 289,658 3,577 289,658 3,582 44,326 505 44,326 505
JM Money Manager Fund – Super Plus Plan – Growth 290,147 3,181 290,147 3,213 – – – –
Kotak Flexi Debt Fund – Growth 65,862 809 65,862 818 – – – –
Kotak Liquid – Inst Premium Plan – Growth 135,828 2,128 135,828 2,130 207,746 3,065 207,746 3,068
Kotak Liquid – IP – Growth – – – – 3,503 50 3,503 50
LIC MF FMP Series 30 150,000 1,500 150,000 1,533 – – – –
LIC MF Liquid Fund – Growth 279,375 3,930 279,375 3,936 147,334 1,955 147,334 1,960
Lotus India Liquid Fund – Institutional Plus – Growth 14,076 150 14,076 150 – – – –
Lotus India Liquid Fund – IP – Growth 95,846 1,050 95,846 1,051 – – – –
Lotus India Liquid Fund – IP Plus – Growth 39,963 430 39,963 430 – – – –
Lotus India Liquid Fund – Super IP – Growth 131,110 1,440 131,110 1,441 – – – –
PRINCIPAL Cash Mgmt Fund LO– I P – Growth 8,758 110 8,758 110 12,160 145 12,160 145
PRINCIPAL Cash Mgmt Fund LO – Inst Prem. Plan – Growth 314,170 3,800 314,170 3,803 147,434 1,700 147,434 1,702
PRINCIPAL Floating Rate Fund – FMP – IP – Growth 62,486 770 62,486 773 – – – –
Prudential ICICI Interval Fund II Quarterly Interval Plan – B 100,000 1,000 100,000 1,021 – – – –
Prudential ICICI Liquid – I P – Growth 21,110 400 21,110 401 5,658 65 5,658 65
Prudential ICICI Liquid – Inst Plus – Growth 43,606 850 43,606 852 13,012 195 13,012 195
35A N N U A L R E P O R T 2 0 0 7 - 0 8
Particulars During the year ended March 31, 2008 During the year ended March 31, 2007
Qty. in‘000
Rs. inMillion
Qty. in‘000
Rs. inMillion
Qty. in‘000
Rs. inMillion
Qty. in‘000
Rs. inMillion
UnitsPurchased
Purchase Value
UnitsSold
SaleValue
UnitsPurchased
PurchaseValue
UnitsSold
SaleValue
Prudential ICICI Liquid – Super IP – Growth 815,170 9,416 815,170 9,441 350,653 3,825 350,653 3,841
Prudential ICICI Monthly Interval Fund – Series 1 47,126 500 – – – – – –
Reliance Liquid Fund – TP – IP – Growth 53,070 1,030 53,070 1,031 – – – –
Reliance Liquid Plus Fund – IP – Growth 146,585 1,562 123,681 1,326 – – – –
Reliance Liquidity Fund – Growth 198,705 2,361 198,705 2,363 – – – –
SBI Magnum Inst. Income – Savings Plan – Growth – – – – 11,192 130 11,192 130
SBI Magnum Insta Cash – Cash Plan 39,967 700 39,967 701 195,026 3,255 195,026 3,265
SBI Magnum Insta Cash Fund – Liquid Floater Plan – Growth 49,511 660 49,511 660 – – – –
SBI Premier Liquid Fund – Super IP – Growth 43,591 550 43,591 551 – – – –
Standard Chartered Liquidity Manager Fund – Growth 13,889 150 13,889 150 107,531 1,150 107,531 1,151
Standard Chartered Liquidity Manager Fund Plus – Growth 472,939 5,280 472,939 5,283 115,737 1,215 115,737 1,216
Tata Fixed Income Portfolio Fund – A3 49,607 500 49,607 504 – – – –
Tata Liquid Fund – HIP – Growth 207,452 2,670 207,452 2,672 12,047 145 12,047 145
Tata Liquid Fund – RIP – Growth 5,462 100 5,462 100 – – – –
Tata Liquid Fund – SHIP – Growth 225,051 3,210 225,051 3,216 135,515 1,830 135,515 1,833
TATA Liquidity Management Fund – Growth 59,224 650 59,224 651 128,712 1,345 128,712 1,348
Templeton India TMA – IP – Growth 157,603 1,940 157,603 1,942 5,141 60 5,141 60
Templeton India TMA – Super IP – Growth 276,475 3,180 276,475 3,186 13,548 150 13,548 150
UTI Liquid Fund – Cash Plan – IP – Growth 122,293 1,580 122,293 1,585 118,697 1,429 118,697 1,433
UTI Money Market – Growth 52,293 1,130 52,293 1,132 14,365 290 14,365 291
Grand Total 11,661,031 145,806 11,195,969 140,678 3,290,288 40,232 3,290,288 40,313
(b) As at March 31, 2008 the closing balance in units are as follows:
Particulars As at March 31, 2008 As at March 31, 2007
Qty. in ‘000 Closing Units
Rs. in Million Closing Value
Qty. in ‘000 Closing Units
Rs. in Million Closing Value
Birla Cash Plus – I P – Growth 14,129 310 – –
Birla Cash Plus – Institutional Premium Plan – Growth 77,499 1,000 – –
Birla SunLife Liquid Plus – IP – Growth 65,692 1,000 – –
ICICI Prudential Flexible Income Plan – Growth 16,765 250 – –
Reliance Liquid Plus Fund – IP – Growth 22,905 250 – –
Birla Sunlife Interval Income Fund – Monthly Plan – Series I 48,574 500 – –
Birla Sunlife Quarterly Interval Fund – Series 8 50,000 500 – –
Birla Sunlife Monthly Interval Fund – Series 2 122,373 1,250 – –
Prudential ICICI Monthly Interval Fund – Series 1 47,126 500 – –
Total 465,063 5,560 – –
20. As per the requirement of Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006 following information are disclosed :
(Rupees in Million)
a) (i) The principal amount remainingunpaid to any supplier atthe end of accounting year included insundry creditors. 3.08
(ii) The interest due on above. NilThe total of (i) & (ii) 3.08
b) The amount of interest paid by the buyer in terms of Section 16 of the Act. Nil
(Rupees in Million)
c) The amount of the payment made to the supplier beyond the appointed day during the accounting year Nil
d) The amounts of interest accrued and remaining unpaid at the end of financial year Nil
e) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the due date during the year) but without adding the interest specified under this Act. Nil
36 I D E A C E L L U L A R L I M I T E D
21. In accordance with the provisions of Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“SEBI Guidelines”) the Company has instituted ESOS–2006 as formulated by ESOS committee for its employees and as approved by the Board of Directors vide circular resolution dated December 31, 2007.
19,931,000 options have been granted to the eligible employees as on December 31, 2007. Each option when exercised would be converted into one equity share of Rs. 10/- each, fully paid up, of the Company. The options vest 25% each on a specified date in 4 subsequent years from the date of grant. The maximum period of exercise is 5 years from the date of vesting.
The compensation costs of stock options granted to employees have been accounted by the Company using the intrinsic value method.
Summary of Stock Option
Particulars No. ofStock
OptionsOptions Outstanding as on April 1, 2007 NilOptions Granted during the year 19,931,000Option forfeited/lapsed during the year 264,000Options exercised during the year NilOptions Outstanding as on March 31, 2008 19,667,000
Personnel cost includes Rs. 37.59 million (Previous year Rs. Nil) being the amortisation of intrinsic value for the period ending March 31, 2008.
Had the compensation cost for the Company’s stock based compensation plan been determined in the manner consistent with the fair value approach (calculated using Black & Scholes Option Prising Model), the Company’s net income would be lower by Rs. 100.93 million (Previous year: Rs. Nil) and earnings per share as reported would be lower as indicated below:
(Rupees in Million)
Net profit after tax but before exceptional items 10,443.62 Add: Total stock–based employee compensation expense determined under intrinsic value base method 37.59 Less: Total stock–based employee compensation expense determined under fair value base method 138.52 Adjusted net profit 10,342.69Basic earnings per share (in Rs.) – As reported 3.96 – Adjusted 3.93 Diluted earnings per share (in Rs.) – As reported 3.96 – Adjusted 3.92 The fair value of each warrant is estimated on the date of grant based on the following assumptions:Dividend yield (%) Nil
Expected life 6 years 6
monthsRisk free interest rate (%) 7.78%Volatility (%) 40.00
22. Accelerated Depreciation amounting Rs. 132.89 million (Previous year Rs. Nil) on specified network assets not having vendor support has been charged during the year ended March 31, 2008.
23. The pre-operative expenses incurred, capitalised and balance amounts forming part of CWIP is as under:
(Rupees in Million)
Particulars For theyear ended
March 31, 2008
For theyear ended
March 31, 2007
Salaries and Allowances 162.90 92.73Contribution to Provident and other funds 1.60 0.23Security Service Charges 100.63 30.01Power and Fuel 17.47 4.83Repairs and Maintenance – Plant & Machinery 2.93 2.38Insurance 6.07 1.97Rent 208.01 28.60Travelling & Conveyance 15.52 8.50Miscellaneous Expenses 75.26 0.83Operational Vehicle Running Expenses 21.88 10.66Interest 147.47 –Total 759.74 180.74Add: Balance brought forward from previous year 22.78 14.80Add: Addition on amalgamation of Subsidiaries – 0.35Less: Capitalised during the period 207.49 173.11Balance carried forward 575.03 22.78
24. Details of foreign currency exposures:
a) Hedged by a derivative instrument: (Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Foreign Currency Loan*Foreign Currency Loan in USD 30.00 –Foreign Currency Loan in JPY 12,630.73 –The Equivalent INR of Foreign Currency Loans 5,658.20 –
*Fully hedged for interest and principal repayments
b) Not hedged by a derivative instrument or otherwise:
(Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Sundry Creditors:Sundry Creditors in USD 48.78 103.42Sundry Creditors in EURO 0.42 2.18Sundry Creditors in GBP – 0.02The Equivalent INR of sundry creditors in Foreign Currency 1,976.23 4,636.13Sundry Debtors:Sundry Debtors in USD 4.56 5.20Sundry Debtors in EURO 0.03 –The Equivalent INR of sundry debtors in Foreign Currency 184.16 226.72Bank Deposits:Bank Deposits in USD 6.79 –The Equivalent INR of Bank Deposits in Foreign Currency 271.48 –
37A N N U A L R E P O R T 2 0 0 7 - 0 8
25. Provision for Gratuity:
The following table sets out status of the gratuity plan as required under Accounting Standard – 15 on “Employee Benefits”.
Reconciliation of opening and closing balances of the present value of the defined benefit obligation. (Rupees in Million)
Sr.No.
Particulars Policy MP. No.509245
Policy MP. No.634757
Policy MP. No.109254
Policy MP. No.304606
1. Assumptions : As on March 31, 2008 Discount Rate 8.00% 8.00% 8.00% 8.00%
Salary Escalation 5.00% 5.00% 7.00% 5.00%2. Table showing changes in present value of obligations Present value of obligations as at beginning of year 7.21 45.42 5.38 23.96
Interest cost 0.54 3.41 0.43 1.80
Current Service Cost 1.08 6.37 2.68 6.80
Benefits Paid 0.55 5.39 1.18 1.53
Actuarial (Gain)/Loss on obligations (3.60) (10.13) 3.01 (0.76)
Present value of obligations as at end of year 4.68 39.67 10.31 30.263. Table showing changes in the fair value of plan assets Fair value of plan assets at beginning of year 3.46 21.99 3.68 32.67
Expected return on plan assets 0.42 2.26 0.49 2.90
Contributions 1.35 8.90 4.88 5.99
Benefits paid 0.55 5.39 1.18 1.53
Actuarial Gain/(Loss) on Plan assets NIL NIL NIL NIL
Fair value of plan assets at the end of year 4.68 27.77 7.86 40.024. Table showing fair value of plan assets Fair value of plan assets at beginning of year 3.46 21.99 3.68 32.67
Actual return on plan assets 0.42 2.26 0.49 2.90
Contributions 1.35 8.90 4.88 5.99
Benefits Paid 0.55 5.39 1.18 1.53
Fair value of plan assets at the end of year 4.68 27.77 7.86 40.02
Funded status NIL (11.90) (2.46) 9.76
Excess of Actual over estimated return on plan assets NIL NIL NIL NIL
(Actual rate of return = Estimated rate of return as ARD falls on March 31)5. Actuarial Gain/Loss recognised Actuarial gain/(Loss) for the year – Obligation 3.60 10.13 (3.01) 0.76
Actuarial (gain)/Loss for the year – plan assets NIL NIL NIL NIL
Total (gain)/Loss for the year (3.60) (10.13) 3.01 (0.76)
Actuarial (gain)/Loss recognised in the year (3.60) (10.13) 3.01 (0.76)6. The amounts to be recognised in the balance sheet and statements of
profit and loss Present value of obligations as at the end of year 4.68 39.67 10.31 30.26
Fair value of plan assets as at the end of the year 4.68 27.77 7.86 40.02
Funded status NIL (11.90) (2.46) 9.76
Net Asset/(liability) recognised in balance sheet NIL (20.92) (2.46) NIL7. Expenses Recognised in statement of Profit and Loss Current Service cost 1.08 6.37 2.68 6.80
Interest Cost 0.54 3.41 0.43 1.80
Expected return on plan assets 0.42 2.26 0.49 2.90
Net Actuarial (gain)/Loss recognised in the year (3.60) (10.13) 3.01 (0.76)
Expenses recognised in statement of Profit and Loss (2.40) (2.62) 5.63 4.94
38 I D E A C E L L U L A R L I M I T E D
Primary Business Information (Business Segments) for the year ended March 31, 2008.(Rupees in Million)
Particulars Business Segments Elimination Total Mobility NLD
Revenue External Revenue 67,199.90 – – 67,199.90Inter-segment Revenue – 3,536.67 (3,536.67) –Total Revenue 67,199.90 3,536.67 3,536.67 67,199.90Segment result 13,220.23 724.80 – 13,945.03Interest and financing charges (Net) – – – 2,776.42Profit before Tax – – – 11,168.61Provision for tax (Net) – – – 724.99Profit after tax – – – 10,443.62Other information Segment assets 117,539.17 1,402.16 (1,120.93) 117,820.40Unallocated corporate assets – – – 9,704.14Total assets 117,539.17 1,402.16 (1,120.93) 127,524.54Segment liabilities 91,996.79 520.60 (1,120.93) 91,396.46Unallocated corporate liabilities – – – 667.82Total liabilities 91,996.79 520.60 (1,120.93) 92,064.28Capital expenditure 54,023.05 0.02 – 54,023.07Depreciation and amortisation 8,766.37 1.25 – 8,767.62
Primary Business Information (Business Segments) for the year ended March 31, 2007. (Rupees in Million)
Particulars Business Segments Elimination Total Mobility NLD
Revenue External Revenue 43,873.29 – – 43,873.29 Inter-segment Revenue – 778.96 (778.96) – Total Revenue 43,873.29 778.96 (778.96) 43,873.29 Segment result 7,984.80 156.78 – 8,141.58 Interest and financing charges (Net) – – – 3,051.06Profit before Tax – – – 5,090.52 Provision for tax (Net) – – – 69.91Profit after tax – – – 5,020.61Other information Segment assets 68,338.36 234.39 (209.09) 68,363.66 Unallocated corporate assets – – – 17,463.23 Total assets 68,338.36 234.39 (209.09) 85,826.89 Segment liabilities 64,156.29 77.61 (209.09) 64,024.81 Unallocated corporate liabilities – – 10.55 Total liabilities 64,156.29 77.61 (209.09) 64,035.36 Capital expenditure 27,951.20 25.00 – 27,976.20 Depreciation and amortisation 6,717.61 0.44 – 6,718.05
26 Segment Reporting
1. Primary Segments:
The Company operates in two business segments: a) Mobility Services b) National Long Distance (NLD)
2. Secondary Segment:
The Company caters only to the needs of Indian market representing a singular economic environment with similar risks and rewards and hence there are no reportable geographical segments.
39A N N U A L R E P O R T 2 0 0 7 - 0 8
27. Related Party Transactions
As per Accounting Standard–18 on “Related Party Disclosure” issued by the Institute of Chartered Accountants of India, related parties of the Company are disclosed below:
A. List of related Parties:
Promoters
Hindalco Industries Limited Grasim Industries Limited Aditya Birla Nuvo Limited (formerly known as Indian Rayon and Industries Limited) Birla TMT Holdings Pvt. Limited
Subsidiaries
Swinder Singh Satara & Co. Limited Aditya Birla Telecom Limited Idea Cellular Services Limited Idea Cellular Infrastructure Services Limited Idea Cellular Towers Infrastructure Limited
Key Management Personnel
Mr. Sanjeev Aga, MD Mr. AJS Jhala, CFO
B. Transactions with Related Parties(Rupees in Million)
Particulars Nature of Relationship
Promoters Subsidiaries Key
Management Personnel
Hindalco Industries
Limited
Grasim Industries
Limited
AdityaBirla Nuvo
Limited ABTL ICSL ICISL SSS & Co.
ICDs Placed – – –(100.00)
– – – –
Interest on ICDs Placed – – – –(2.76)
– – – –
Repayment of ICDs Placed
– – – 40.00(60.00)
– – – –
Remuneration – – – – – – – 61.48(31.43)
Purchase of Shares – – –(100.00)
– – – – –
Purchase of Fixed Assets – 0.13 –(5.39)
– – – – –
Investments – – – – 0.50 0.50 – –
Purchase of Service – – – – 51.02 – – –
Sale of Service – – – – – – – –
Employee Expenses 0.08 – – – – – – –
Unsecured Loans given – – – 253.03(4.87)
37.34–
0.79–
– –
Expense incurred by Company on behalf of
– – –(0.01)
– – – – –
Expenses incurred on Company’s behalf by
3.93–
2.00–
0.18(1.71)
– – – – –
Rent Paid – – – – – – 2.70(2.70)
–
(Figures in bracket are for the period ended March 31, 2007)
40 I D E A C E L L U L A R L I M I T E D
C. Outstanding as on March 31, 2008 (Rupees in Million)
Particulars Nature of Relationship
Promoters Subsidiaries Key
Management Personnel
Hindalco Industries
Limited
Grasim Industries
Limited
Aditya Birla Nuvo
Limited ABTL ICSL ICISL SSS & Co.
ICDs Placed – – – –(40.00)
– – – –
Unsecured Loan taken – – – – – – 2.47(0.80)
–
Unsecured Loan given – – – 260.60(7.63)
10.77–
0.79–
– 8.00(8.00)
Remuneration Payable – – – – – – – 24.20(7.51)
Accounts Payable 0.08 – –(0.13)
– 22.91 – – –
Corporate Guarantee – – – 2,820.00(70.00)
– – – –
(Figures in bracket are as of March 31, 2007)
D. Disclosures of amounts at the year end and the maximum amount of loans and advances outstanding during the year.
(Rupees in Million)
Name of Subsidiary Outstandingas on
March 31, 2008
Maximumoutstanding
during the year
Aditya Birla Telecom Limited 260.60 260.60
Idea Cellular Service Ltd. (ICSL) 10.77 26.87
Idea Cellular Infrastructure Service Ltd. (ICISL) 0.79 0.79
28. The Company has entered into non–cancellable operating leases for periods ranging from 36 months to 261 months. For the current year, total minimum lease payments amounting to Rs. 264.63 million are included in the rental expenditure head.
The future lease payments in respect of the above are as follows.
(Rupees in Million)
Particulars Not later than
one year
Later thanone year but
not later than five years
Later than
five years
Minimum Lease payments
313.24(162.39)
1,120.97(592.48)
902.12(Nil)
(Figures in bracket are as of March 31, 2007)
29. During the year the Company has entered in to a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets and liabilities are recorded at the fair value of the lease assets at the time of receipt and depreciated on the stated useful life applicable to similar assets of the Company.
As at March 31, 2008 the amounts towards the supply of fixed assets during the year stands fully paid and there are no minimum lease payments outstanding as at the year end.
30. Basic and Diluted Earnings Per Share
For the year ended
March 31, 2008
For the year ended
March 31, 2007
Nominal value of Equity Shares (Rs.) 10/- 10/-
Profit after Tax (Rs. million) 10,443.62 5,020.61
Less Preference Share Dividend (Rs. million) – –
Profit attributable to equity shareholders (Rs. million) 10443.62 5,020.61
Weighted average number of equity shares outstanding during the period 2,634,896,058 2,291,992,960
Basic Earnings Per Share (Rs.) 3.96 2.19
Dilutive effect on weighted average number of equityshares outstanding during the year 4,83,044 42,500,000
Weighted average number of diluted equity shares 2,635,379,102 2,334,492,960
Diluted Earnings Per Share (Rs.) 3.96 2.15
41A N N U A L R E P O R T 2 0 0 7 - 0 8
31. Deferred Tax
As of March 31, 2008, the Company has deferred tax liability of Rs. 1,663.20 million and deferred tax asset of Rs.1,001.36 million as under:
(Rupees in Million)
Particulars As atMarch 31,
2008
As atMarch 31,
2007Deferred Tax Liability:Depreciation of Fixed Assets 1,588.36 742.05
Amortisation of Entry & Licence Fee (Net)
74.84 78.69
Total Deferred Tax Liability 1,663.20 820.74Deferred Tax Asset:Provision for Doubtful Debts 837.22 756.52
Expenses allowable on pay-ment basis 64.30 53.67
Others 99.84 –Total Deferred Tax Asset 1,001.36 810.19Net Deferred Tax Liability 661.84 10.55
32. The movement in the Site Restoration Cost is set out as follows:(Rupees in Million)
Particulars For the year ended
March 31, 2008
For the year ended
March 31, 2007
Opening Balance 253.26 6.70
Addition on amalgamation of Subsidiaries
– 115.91
Additional Provision 220.32 137.35
Payment/ Reversal/ Expenses – 6.70
Closing Balance 473.58 253.26
33. Previous year’s figures have been regrouped/rearranged wherever necessary to conform to the current period grouping.
For and on behalf of the Board
G.P. Gupta Arun Thiagarajan Sanjeev AgaDirector Director Managing Director
AJS Jhala Pankaj KapdeoChief Financial Officer Company Secretary
Date: April 24, 2008Place: Mumbai
42 I D E A C E L L U L A R L I M I T E D
Cash Flow Statement for the year ended March 31, 2008
For the year ended March 31, 2008
For the year ended March 31, 2007
A) Cash Flow from Operating ActivitiesNet Profit after tax 10,443.62 5,020.61
Adjustments For
Depreciation 7,568.52 5,636.66
Amortisation of Intangible assets 1,199.10 1,081.39
Interest charge and Forex 4,592.27 3,051.06
Profit on sale of current investment (431.79) (81.25)
Provision for Bad & Doubtful Debts/Advances 244.94 368.17
Employee Stock Option Cost 37.59 –
Provision for Gratuity, Leave Encashment 53.53 153.54
Provision for Fringe Benefit Tax 73.69 59.36
Provision for Deferred Tax 651.30 10.55
Liability no longer required written back (139.73) (174.94)
Interest received (849.52) (170.76)
(Profit)/Loss on sale of fixed assets/assets discarded 8.89 (1.92) 13,008.79 9,931.86
Operating profit before working capital changes 23,452.41 14,952.47
Changes in Current Assets and Current Liabilities
(Increase)/Decrease in Sundry Debtors (706.10) (590.08)
(Increase)/Decrease in Inventories (97.05) (69.97)
(Increase)/Decrease in Other Current Assets 163.33 27.79
(Increase)/Decrease in Loans and Advances (3,585.68) (2,043.67)
Increase /(Decrease) in Current Liabilities 6,223.50 3,871.52 1,998.00 1,195.59
Cash generated from operations 25,450.41 16,148.06
Tax paid (including FBT & TDS ) (428.20) (96.97)
Net cash from operating activities 25,022.21 16,051.09
B) Cash Flow from Investing ActivitiesPurchase of Fixed assets & Intangible assets (including CWIP) (55,506.36) (22,815.17)
Proceeds from sale of Fixed assets 150.80 19.12
Payment for purchase of Shares (1.00) (100.00)
Sale/(purchase) of Other Investments (5,128.21) 81.25
Interest and Dividend Received 922.93 63.91
Net cash from/(used in) investing activities (59,561.84) (22,750.89)
(Rs. in Million)
43A N N U A L R E P O R T 2 0 0 7 - 0 8
Cash Flow Statement for the year ended March 31, 2008
For the year ended March 31, 2008
For the year ended March 31, 2007
C) Cash Flow from Financing ActivitiesProceeds from issue of Share Capital 3,187.52 25,000.00
Share Issue Expenses – (620.04)
Repayment of Preference Share Capital – (4,830.00)
Premium on redemption of Preference Shares – (2,733.26)
Proceeds from Long Term Borrowings 14,968.89 35,397.20
Repayment of Long Term Borrowings (1,480.44) (15,690.05)
Proceeds from Short Term Loan 22,120.90 17,874.66
Repayment of Short Term Loan (18,625.00) (27,958.54)
Proceeds from Foreign Currency Loan 5,658.20 –
Interest Paid (4,517.17) (3,039.25)
Net cash from/(used in) financing activities 21,312.90 23,400.72
Net increase/(decrease) in cash and cash equivalent (13,226.73) 16,700.92
Cash and cash equivalent at the beginning 18,197.28 1,290.91
Add: Cash and Cash Equivalents acquired on account of amalgamation
– 205.45
Cash and cash equivalent at the end 4,970.55 18,197.28
Notes to Cash flow Statement for the year ended March 31, 2008
1. Cash and cash equivalent includes
Cash and Cheques on Hand 296.92 229.22
Balances with Scheduled Banks
– on Current Accounts 1,179.81 998.40
– on Deposit Accounts 3,493.82 16,969.66 4,970.55 18,197.28
2. The above cash flow statement has been prepared under the indirect method as set out in Accounting Standard – 3 on Cash Flow Statement issued by Institute of Chartered Accountants of India
3. Previous year’s figures have been rearranged/regrouped wherever necessary.
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi G.P. Gupta Arun Thiagarajan Sanjeev AgaPartner Director Director Managing DirectorMembership No.: 38019
Date: April 24, 2008 AJS Jhala Pankaj KapdeoPlace: Mumbai Chief Financial Officer Company Secretary
(Rs. in Million)
44 I D E A C E L L U L A R L I M I T E D
Balance Sheet Abstract and Company’s General Business ProfileI. REGISTRATION DETAILS Registration No. State Code Date
Date Month Year Balance Sheet Date
II. CAPITAL RAISED DURING THE YEAR (Rupees in Thousand) Public Issue Rights Issue
Bonus Issue Private Placement
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUND (Rupees in Thousand) Total Liabilities Total Assets
SOURCES OF FUNDS Paid-up Capital Reserves and Surplus
Secured Loans Unsecured Loans
APPLICATION OF FUNDS Net Fixed Assets Investments
Net Current Assets/(Liability) Miscellaneous Expenditure
Accumulated Losses
IV. PERFORMANCE OF COMPANY (Rupees in Thousand) Turnover Total Expenditure
+ – Profit/(Loss) Before Tax + – Profit/(Loss) After Tax
+
(Please tick appropriate box + for profit - for loss)
Earnings Per Share in Rs. Dividend Rate (%)
V. GENERIC NAMES OF THE THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (As per monetary terms) Item Code No. (ITC Code)
Product Description
0 4
3 1 0 3 2 0 0 8
4 2 5 0 0 0
N I L
N I L
+
N A
T E L E C O M S E R V I C E S
N I L
1 1 5 3 3 4 6 4 0 1 1 5 3 3 4 6 4 0
2 6 3 5 3 6 1 0 2 3 1 3 4 0 0 0
5 4 5 4 4 3 3 0 1 0 6 0 3 2 6 0
1 0 6 0 8 5 2 1 0 5 6 9 9 3 1 0
1 0 5 1 4 8 2 0 N I L
1 4 0 6 4 9 4 0
6 7 3 7 4 4 5 0 5 6 2 0 5 8 4 0
1 1 1 6 8 6 1 0 1 0 4 4 3 6 2 0
1 4 0 3 1 9 9 5 3 0 9 7 6
3 . 9 6 0 0+
For and on behalf of the Board
G.P. Gupta Arun Thiagarajan Sanjeev AgaDirector Director Managing Director
AJS Jhala Pankaj KapdeoChief Financial Officer Company Secretary
Date: April 24, 2008Place: Mumbai
45A N N U A L R E P O R T 2 0 0 7 - 0 8
Auditors’ Report on the Consolidated Financial Statements
To the Board of Directors ofIdea Cellular Limited
1. We have audited the attached Consolidated Balance Sheet of Idea Cellular Limited (‘the Company’), and its subsidiaries (the Company and its subsidiaries constitute ‘the Group’) as at March 31, 2008 and also the Consolidated Profit and Loss account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto (all together referred to as “the consolidated financial statements”). These financial statements are the responsibility of the Company’s management and have been prepared by the Management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
2. We conducted our audit in accordance with the 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 prepared, in all material respects, in accordance with an identified financial reporting framework and 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 the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. a) We did not audit the financial statements of Aditya Birla Telecom Limited and Idea Cellular Infrastructure Services Limited (consolidated with its subsidiary and joint venture) whose financial statements reflect total assets (net) of Rs.373.04 million as at March 31, 2008, total revenue of Rs.0.20 million and net cash outflow from operating activities amounting to Rs.68.52 million for the year ended on that date as considered in the consolidated financial statements. These financial statements and other financial information have been audited by other qualified auditor whose reports have been furnished to us by the Management of the Group, and our opinion, is based solely on the reports of the other auditor.
b) As mentioned in note 4 b of Schedule 22 B, the consolidated financial statement of Idea Cellular Infrastructure Services Limited includes total assets of Rs.1.89 million, total revenue of Rs. Nil and net cash flow of Rs.0.29 million of Indus Towers Limited, joint venture of Idea Cellular Infrastructure Services Limited. The auditor of Idea Cellular Infrastructure Services
Limited have reported that financial statement of Indus Towers Limited are certified by the Management which are subject to consequential adjustment, if any arising out of their audit.
4. We report that the consolidated financial statements have been prepared by the Company’s Management in accordance with the requirements of Accounting Standard 21 ‘Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India.
5. Attention is invited to Note 12 of Schedule 22 B of the Consolidated Financial Statements. As detailed in the said note, pending the transfer of Telecom licences of the erstwhile Idea Mobile Telecommunications Limited, BTA Cellcom Limited and Idea Telecommunications Limited in the name of the Company, the Company has given effect to the scheme of Amalgamation in the financial statements with effect from April 1, 2006. Implication if any, in the event of non transfer of the licences are not ascertainable at this stage.
6. Based on our audit and on consideration of reports of other auditor on separate financial statements and on the other financial information of the components, and to the best of our information and explanations given to us, subject to what has been stated in paragraph 3b and 5 above, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:
a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2008;
b) in case of the Consolidated Profit and Loss Account, of the profits of the Group for the year ended on that date; and
c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date: April 24, 2008Place: Mumbai
46 I D E A C E L L U L A R L I M I T E D
Consolidated Balance Sheet as at March 31, 2008
Schedules As at March 31, 2008
As at March 31, 2007
SOURCES OF FUNDSShareholders’ Funds
Share Capital 1 26,353.61 25,928.60
Outstanding Employee Stock Options 37.59 –
Reserves and Surplus 2 23,134.00 20,371.49 49,525.20 46,300.09
Loan FundsSecured 3 54,548.75 35,397.68
Unsecured 4 10,605.28 7,107.36 65,154.03 42,505.04
Deferred Tax Liability (Net) (Refer Note B 23 to Schedule 22) 661.02 10.55 TOTAL 115,340.25 88,815.68 APPLICATION OF FUNDSFixed Assets
Gross Block (At Cost) 5A 110,141.03 70,473.30
Less: Depreciation 31,242.16 26,306.03
Net Block 78,898.87 44,167.27
Intangible Assets (Net) 5B 17,892.38 11,863.58
Capital Work-in-Progress 10,371.52 5,069.03 107,162.77 61,099.88
Goodwill on Consolidation 61.20 61.20
Investments 6 5,560.00 12.32 Current Assets, Loans and AdvancesCurrent AssetsInventories 7 276.15 179.10
Sundry Debtors 8 1,985.93 1,524.77
Cash and Bank Balances 9 4,974.51 18,199.40
Other Current Assets 10 520.76 757.50
Loans and Advances 11 7,742.16 3,999.56 15,499.51 24,660.33
Less: Current Liabilities and Provisions 12 27,022.42 21,520.34 Net Current Assets (11,522.91) 3,139.99 Profit and Loss Account 14,079.19 24,502.29 TOTAL 115,340.25 88,815.68 Significant Accounting Policies and Notes to the Accounts 22
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi G.P. Gupta Arun Thiagarajan Sanjeev AgaPartner Director Director Managing DirectorMembership No.: 38019
Date: April 24, 2008 AJS Jhala Pankaj Kapdeo Place: Mumbai Chief Financial Officer Company Secretary
(Rupees in Million)
47A N N U A L R E P O R T 2 0 0 7 - 0 8
Consolidated Profit and Loss Account for the year ended March 31, 2008
Schedules For the year ended March 31, 2008
For the year ended March 31, 2007
INCOMEService Revenue 67,199.83 43,500.16
Sale of Trading Goods 0.07 163.84
Other Income 13 174.56 209.29
TOTAL 67,374.46 43,873.29
OPERATING EXPENDITURECost of Trading Goods Sold 14 0.06 51.73
Personnel Expenditure 15 3,463.57 2,608.71
Network Operating Expenditure 16 10,470.11 5,335.72
Licence and WPC Charges 17 6,851.03 4,487.01
Roaming and Access Charges 18 11,334.41 7,320.96
Subscriber Acquisition and Servicing Expenditure 19 6,424.23 5,643.27
Advertisement and Business Promotion Expenditure 3,224.86 2,006.20
Administration and other Expenses 20 2,913.58 1,557.84
44,681.85 29,011.44
PROFIT BEFORE FINANCE CHARGES, DEPRECIATION, AMORTISATION AND TAX 22,692.61 14,861.85
Finance and Treasury Charges (Net) 21 2,776.20 3,051.18
Depreciation 5 A 7,569.01 5,636.77
Amortisation of Intangible Assets 5 B 1,199.10 1,081.39
PROFIT BEFORE TAX 11,148.30 5,092.51
Provision for taxation - Current 425.93 0.42
- Deferred 650.47 10.55
- Fringe Benefit tax 74.13 59.36
- MAT Credit (425.33) –
PROFIT AFTER TAX 10,423.10 5,022.18
Balance of Loss brought forward from previous year (24,502.29) (17,087.74)
Accumulated Losses acquired on amalgamation – (12,314.06)
Leave Encashment Provision for earlier years – (122.67)
BALANCE OF LOSS CARRIED FORWARD TO BALANCE SHEET (14,079.19) (24,502.29)
EARNINGS PER SHARE (in Rupees) (Refer Note B 22 to Schedule 22)
Basic 3.96 2.19
Diluted 3.96 2.15
Significant Accounting Policies and Notes to the Accounts 22
(Rupees in Million)
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi G.P. Gupta Arun Thiagarajan Sanjeev AgaPartner Director Director Managing DirectorMembership No.: 38019
Date: April 24, 2008 AJS Jhala Pankaj Kapdeo Place: Mumbai Chief Financial Officer Company Secretary
48 I D E A C E L L U L A R L I M I T E D
As at March 31, 2008
As at March 31, 2007
SCHEDULE 1SHARE CAPITALAUTHORISED
(Refer Note B 1(a) to Schedule 22)4,275,000,000 (Previous year 3,775,000,000) Equity Shares of Rs.10 each 42,750.00 37,750.00 1500 (Previous year 500) Redeemable Cumulative Non Convertible Preference Shares of 15,000.00 5,000.00 Rs.10 Mn each
57,750.00 42,750.00 ISSUED, SUBSCRIBED AND PAID-UPEquity Share Capital (Refer Note B 1(b) to Schedule 22)2,635,360,539 (Previous year 2,592,860,539) Equity Shares of Rs. 10 each fully paid up 26,353.61 25,928.60
26,353.61 25,928.60 SCHEDULE 2RESERVES AND SURPLUSAmalgamation ReserveOpening Balance 643.57 998.41 Less: Adjustment on Amalgamation of Subsidaries – (354.84)
643.57 643.57 Capital Reserve 1,414.56 1,414.56 Share Premium Account Premium on issue of Equity Shares 18,313.36 21,666.66 Add: Premium on issue of shares under GSO (Refer Note B 1(b) to Schedule 22) 2,762.51 –Less: Share Issue Expenses – (620.04)Less: Premium on redemption of Preference Shares – (2,733.26)
21,075.87 18,313.36 23,134.00 20,371.49
SCHEDULE 3SECURED LOANSTerm Loan Foreign Currency Loan– From Banks 5,658.20 –Rupee Loan – From Banks 41,480.20 29,170.50 – From Financial Institutions 7,099.70 6,029.50 (Loan Repayable within one year Rs. 1,425.20 Mn, Previous year Rs. 880.00 Mn)Vehicle Loan 310.65 197.19 (Loan Repayable within one year Rs. 104.83 Mn, Previous year Rs. 47.98 Mn)Working Capital Loan– From Banks – 0.49
54,548.75 35,397.68SCHEDULE 4UNSECURED LOANSTerm Loan– From Others (Refer Note B 11 to Schedule 22) 1,757.36 1,757.36 Short Term Loan– From Banks 8,845.90 5,350.00
– From Others 2.02 – 10,605.28 7,107.36
Schedules forming part of the Consolidated Accounts
(Rupees in Million)
49A N N U A L R E P O R T 2 0 0 7 - 0 8
SCH
EDU
LE 5
A –
FIX
ED A
SSET
S (
Rup
ees
in M
illio
n)
Gro
ss B
lock
Dep
reci
atio
nN
et B
lock
Part
icul
ars
As a
tAp
ril 1
, 200
7Ad
ditio
nsdu
ring
the
Year
Sale
/Ad
just
men
tdu
ring
the
Year
As a
tM
arch
31,
200
8As
at
April
1, 2
007
Addi
tions
durin
g th
e Ye
arSa
le/
Adju
stm
ent
durin
g th
e Ye
ar
As a
tM
arch
31,
200
8As
at
Mar
ch 3
1,
2008
As a
tM
arch
31,
200
7
Land
68.
20
9.5
6 –
77.
76
––
––
77.
76
68.
20
Leas
ehol
d L
and
190
.29
19.
98
– 2
10.2
7 5
8.52
9
.41
– 6
7.93
1
42.3
4 1
31.7
7 Bu
ildin
g 6
60.5
0 1
1.62
4
4.97
6
27.1
5 2
05.0
9 3
1.01
4
4.94
1
91.1
6 4
35.9
9 4
55.4
1 Pl
ant &
Mac
hine
ry 6
8,11
0.95
4
1,86
6.36
2
,682
.36
107
,294
.95
25,
183.
30
7,2
75.3
4 2
,559
.82
29,
898.
82
77,
396.
13
42,
927.
65
Furn
iture
& F
ixtu
re 5
24.5
7 2
36.8
9 1
0.28
7
51.1
8 3
32.8
6 6
9.08
4
.69
397
.25
353
.93
191
.71
Offi
ce E
qui
pm
ent
563
.00
103
.44
13.
02
653
.42
430
.10
77.
81
12.
20
495
.71
157
.71
132
.90
Veh
icle
s 3
55.7
9 2
07.6
3 3
7.12
5
26.3
0 9
6.16
1
09.2
3 1
4.10
1
91.2
9 3
35.0
1 2
59.6
3 SU
B-TO
TAL
70,
473.
30
42,
455.
48
2,7
87.7
5 1
10,1
41.0
3 2
6,30
6.03
7
,571
.88
2,6
35.7
5 3
1,24
2.16
7
8,89
8.87
4
4,16
7.27
Le
ss :
Pre-
oper
ativ
eCh
arge
Cap
italis
ed–
––
––
2.8
7 –
––
–TO
TAL
70,
473.
30
42,
455.
48
2,7
87.7
5 1
10,1
41.0
3 2
6,30
6.03
7
,569
.01
2,6
35.7
5 3
1,24
2.16
7
8,89
8.87
4
4,16
7.27
Pr
evio
us Y
ear
47,
939.
60
* 2
2,65
3.38
1
19.6
8 7
0,47
3.30
2
0,76
4.72
*
* 5,
643.
79
102
.48
26,
306.
03
44,
167.
27
*
Incl
udes
ad
diti
ons
on a
ccou
nt o
f am
alga
mat
ion
Rs. 1
1.53
mill
ion.
**
Incl
udes
ad
diti
ons
on a
ccou
nt o
f am
alga
mat
ion
Rs. 0
.65
mill
ion
& R
s. 6
.37
mill
ion
on a
ccou
nt o
f Pre
-op
erat
ive
char
ge c
apita
lised
. N
ote
s:1.
Ex
chan
ge D
iffer
ence
of R
s. N
il (P
revi
ous
year
Gai
n Rs
. 51.
75 m
illio
n) b
eing
gai
n on
fore
ign
exch
ange
fluc
tuat
ion
rela
ting
to a
cqui
sitio
n of
fixe
d a
sset
s ha
s b
een
adju
sted
to re
leva
nt fi
xed
ass
ets.
2.
As
per
the
AS-
11 o
n “T
he E
ffect
s of
Cha
nges
in F
orei
gn E
xcha
nge
Rate
s”, d
urin
g th
e cu
rrent
yea
r exc
hang
e d
iffer
ence
am
ount
ing
to R
s. 5
15.6
3 m
illio
n b
eing
gai
n on
fore
ign
exch
ange
fluc
tuat
ion
rela
ting
to
acq
uisi
tion
of fi
xed
ass
ets
has
bee
n ch
arge
d to
Pro
fit a
nd L
oss
Acc
ount
.3.
Pl
ant &
Mac
hine
ry in
clud
es a
sset
s he
ld fo
r dis
pos
al –
Gro
ss B
lock
Rs.
1,9
88.0
3 m
llion
and
Net
Blo
ck R
s. 4
5.00
mill
ion.
4.
Plan
t &
Mac
hine
ry i
nclu
des
Gro
ss B
lock
of
asse
ts c
apita
lised
und
er fi
nanc
e le
ase
Rs.
975.
01 m
illio
n (P
revi
ous
year
Rs.
Nil)
and
cor
resp
ond
ing
Acc
umul
ated
Dep
reci
atio
n b
eing
Rs.
134
.43
mill
ion
(Pre
viou
s ye
ar R
s.N
il).
SCH
EDU
LE 5
B –
INTA
NG
IBLE
ASS
ETS
(Ru
pee
s in
Mill
ion)
G
ross
Blo
ckA
mo
rtis
atio
nN
et B
lock
Part
icul
ars
As
atA
pri
l 1, 2
007
Ad
dit
ions
dur
ing
the
Year
Sale
/A
dju
stm
ent
dur
ing
the
Year
As
atM
arch
31,
20
08
As
atA
pri
l 1, 2
007
Ad
dit
ions
dur
ing
the
Year
Sale
/A
dju
stm
ent
dur
ing
the
Year
As
atM
arch
31,
20
08
As
atM
arch
31,
20
08
As
atM
arch
31,
20
07
Entry
/Lic
ense
Fee
s 2
0,80
6.72
6
,845
.90
– 2
7,65
2.62
9
,255
.12
994
.53
– 1
0,24
9.65
1
7,40
2.97
1
1,55
1.60
Co
mp
uter
- S
oftw
are
764
.82
383
.66
26.
05
1,1
22.4
3 5
36.8
6 1
98.1
6 1
8.37
7
16.6
5 4
05.7
8 2
27.9
6 Ba
ndw
idth
88.
03
6.0
3 –
94.
06
4.0
1 6
.40
– 1
0.41
8
3.65
8
4.02
TO
TAL
21,
659.
57
7,2
35.5
9 2
6.05
2
8,86
9.11
9
,795
.98
1,1
99.1
0 1
8.37
1
0,97
6.71
1
7,89
2.40
1
1,86
3.58
Pr
evio
us Y
ear
18,
383.
38
# 3
,276
.19
– 2
1,65
9.57
8
,515
.79
## 1
,280
.19
– 9
,795
.98
11,
863.
59
#
Incl
udes
ad
diti
ons
on a
ccou
nt o
f am
alga
mat
ion
Rs. 8
86.0
0 m
illio
n.##
In
clud
es a
dd
ition
s on
acc
ount
of a
mal
gam
atio
n Rs
. 176
.37
mill
ion
& R
s. 2
2.43
mill
ion
on a
ccou
nt o
f Pre
-op
erat
ive
char
ge c
apita
lised
N
ote
s:1.
Co
mp
uter
- S
oftw
are
incl
ude
Gro
ss B
lock
of a
sset
s ca
pita
lised
und
er fi
nanc
e le
ase
Rs. 3
8.28
mill
ion
(Pre
viou
s ye
ar R
s.N
il) a
nd c
orre
spon
din
g A
ccum
ulat
ed D
epre
ciat
ion
bei
ng R
s.4.
88 m
illio
n (P
revi
ous
year
Rs.
Nil)
2.
The
rem
aini
ng a
mor
tisat
ion
per
iod
of l
icen
se fe
es a
s at
Mar
ch 3
1, 2
008
rang
es b
etw
een
7 to
20
year
s b
ased
on
the
resp
ectiv
e Te
leco
m S
ervi
ce L
icen
se p
erio
d.
Sche
dule
s for
min
g pa
rt o
f the
Con
solid
ated
Acc
ount
s
50 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Consolidated Accounts
(Rupees in Million) As at
March 31, 2008 As at
March 31, 2007
SCHEDULE 6INVESTMENTSUnquoted
Units of Mutual Funds (Current) (Refer Note B 15 to Schedule 22) 5,560.00 12.32
(Includes unutilised Initial Public Offer proceeds of Rs. 4,885.90 Mn, Previous Year Nil) 5,560.00 12.32
SCHEDULE 7INVENTORIES(At lower of cost or estimated realisable value)
Trading Goods 0.45 0.45
Sim Cards and Others 275.70 178.65 276.15 179.10
SCHEDULE 8SUNDRY DEBTORSDebts outstanding for over six monthsUnsecured – Considered Good 95.31 26.39
– Considered Doubtful 2,356.33 2,081.18 2,451.64 2,107.57
Other DebtsUnsecured – Considered Good 1,890.62 1,498.38
– Considered Doubtful 106.80 144.54 1,997.42 1,642.92
Less: Provision for doubtful debts 2,463.13 2,225.72
Total 1,985.93 1,524.77
Sundry Debtors include certain parties from whom Security Deposits of Rs. 225.77 Mn.(Previous Year Rs. 161.12 Mn) have been taken and are lying with the Company
SCHEDULE 9CASH AND BANK BALANCESCash and Cheques on Hand 297.01 229.29
Balances with Scheduled Banks
- in Current Accounts 1,181.98 999.25
- in Deposit Accounts 3,495.52 16,970.86
(Includes unutilised Initial Public Offer proceeds of Rs. 3,150 Mn., Previous Year Rs. 15,504.50 Mn) and Rs. 71.90 Mn (Previous Year Rs. 108.70 Mn) as margin money
4,974.51 18,199.40 SCHEDULE 10OTHER CURRENT ASSETSReceivable Others – 0.09
Unbilled Revenue 476.82 640.15
Interest Receivable on Deposits 43.94 117.26 520.76 757.50
51A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Consolidated Accounts
(Rupees in Million) As at
March 31, 2008 As at
March 31, 2007
SCHEDULE 11LOANS AND ADVANCES(Unsecured, considered good unless otherwise stated)
Advances recoverable in cash or kind or for value to be received
– Considered good 6,295.25 3,284.13
– Considered Doubtful 90.75 90.84
Less: Provision For Doubtful Advances 90.75 90.84 6,295.25 3,284.13
Deposits and Balances with Govt. Authorities 242.50 109.83
Deposit with others 620.56 383.80
Advance Income Tax 158.52 215.81
MAT Credit Entitlement 425.33 –
Advance Fringe Benefit Tax (Previous Year Net of Provision of Rs. 87.46 Mn.) – 5.99 7,742.16 3,999.56
SCHEDULE 12CURRENT LIABILITIES AND PROVISIONSCurrent LiabilitiesSundry Creditors (Refer Note B 13 to Schedule 22) 17,598.80 16,108.53
Book Bank Overdraft 2,272.97 665.03
Advances from Customers 4,054.32 2,565.34
Deposits from Customers 557.44 570.08
Other Liabilities 1,626.87 1,055.36
Interest accrued but not due 92.71 17.61 26,203.11 20,981.95
ProvisionsGratuity (Refer Note B 17 to Schedule 22) 23.38 29.41
Leave Encashment 316.09 255.72
Site Restoration Cost (Refer Note B 24 to Schedule 22) 473.58 253.26
Provision for Fringe Benefit Tax (Net of Advance Tax of Rs. 174.72 Mn) 6.26 – 819.31 538.39
TOTAL 27,022.42 21,520.34
52 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Consolidated Accounts
For the year ended March 31, 2008
For the year ended March 31, 2007
SCHEDULE 13OTHER INCOMELiabilities/Provisions no longer required written back 139.73 174.94 Gain on Sale of Fixed Assets/Asset disposed off – 1.92 Miscellaneous Receipts 34.83 32.43
174.56 209.29 SCHEDULE 14COST OF TRADING GOODS SOLDOpening Stock 0.45 0.22 Add: Opening Stock acquired on amalgamation – 12.19 Add: Purchases (net of transfer to consumables) 0.06 40.60 Less: Consumption – 0.83 Closing Stock 0.45 0.45
0.06 51.73 SCHEDULE 15PERSONNEL EXPENDITURESalaries and Allowances etc. 3,060.62 2,253.66 Contribution to Provident and Other Funds 150.40 127.15 Staff Welfare 158.66 133.72 Recruitment and Training 93.89 94.18
3,463.57 2,608.71 SCHEDULE 16NETWORK OPERATING EXPENDITURESecurity Service Charges 777.67 559.57 Power and Fuel 2,244.04 1,094.57 Repairs and Maintenance - Plant and Machinery 1,330.33 1,170.32 Switching & Cellsites Rent 829.70 495.58 Lease Line and Connectivity Charges 2,269.05 1,382.78 Network Insurance 26.50 17.47 Other Network Operating expenses 2,992.82 615.43
10,470.11 5,335.72 SCHEDULE 17LICENCE AND WPC CHARGES Licence Fees 4,150.85 2,777.79 WPC and Spectrum Charges 2,700.18 1,709.22
6,851.03 4,487.01 SCHEDULE 18ROAMING & ACCESS CHARGESRoaming Charges 1,017.89 974.09 Access Charges 10,316.52 6,346.87
11,334.41 7,320.96
(Rupees in Million)
53A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Consolidated Accounts
(Rupees in Million)
For the year ended March 31, 2008
For the year ended March 31, 2007
SCHEDULE 19SUBSCRIBER ACQUISITION & SERVICING EXPENDITURECost of Sim and Other Cards 532.97 268.59 Commission and Discount to dealers & recharge expenses 4,516.29 4,392.65 Customer Verification Expenses 192.86 178.72 Collection & Telecalling Expenses 1,121.32 749.91 Customer Retention & Customer loyalty Expenses 60.79 53.40
6,424.23 5,643.27 SCHEDULE 20ADMINISTRATION & OTHER EXPENSESRepairs and Maintenance – Building 17.22 16.59 – Others 961.80 56.24 Other Insurance 21.02 21.47 Non Network Rent 339.68 144.08 Rates and Taxes 93.60 94.73 Electricity 110.50 82.55 Printing and Stationery 62.98 57.28 Communication Expenses 124.34 90.42 Travelling and Conveyance 414.25 277.17 Provision for bad and doubtful debts/advances 244.94 368.17 Bank Charges 97.35 107.03 Directors Sitting Fees 0.91 0.60 Legal and Professional Charges 176.98 101.36 Audit Fees 22.33 14.33 Loss on Sale of Fixed Assets/Asset disposed off 8.89 –Miscellaneous expenses 216.79 125.82
2,913.58 1,557.84 SCHEDULE 21FINANCE AND TREASURY CHARGES (NET)Interest – On Fixed Period Loan 4,348.77 3,048.92 – Others 32.58 172.06 Financing Charges 211.02 72.58
4,592.37 3,293.56 Less:Interest Received (Gross of Tax) 849.62 171.03 Profit on Sale of Current Investments 432.01 81.32 Gain/(Loss) on foreign exchange fluctuation 534.54 (9.97)
2,776.20 3,051.18
54 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Consolidated AccountsSCHEDULE 22
A. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Preparation of Financial Statements :
The Consolidated Financial Statements of Idea Cellular Limited (“the Company”), its subsidiary companies and Joint Ventures (together referred to as the “Group”) have been prepared in accordance with Accounting Standard 21 on “Consolidated Financial Statements” and Accounting Standard 27 on “Financial Reporting of Interests in Joint Ventures” issued by the Institute of Chartered Accountants of India (“ICAI”). The Consolidated Financial Statements are prepared under historical cost convention on accrual basis. The mandatory applicable accounting standards have been followed in preparation of these financial statements.
2. Principles of Consolidation:
The basis of preparation of the Consolidated Financial Statements is as follows:
The Financial Statements (The Balance Sheet and the Profit and Loss Account) of the Company, its subsidiaries and joint venture have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances, transactions and the resulting unrealised profit or losses.
The Financial Statements of the subsidiaries used in the consolidation are drawn upto March 31, 2008, the same reporting date as that of the Company.
The differential with respect to the cost of investments in the subsidiaries over the Company’s portion of equity is recognised as Goodwill or Capital Reserve, as the case may be.
The Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances except where stated otherwise.
The list of subsidiaries, which are included in this Consolidated Financial Statements along with Company’s holding therein, is as under:
No. Name of the CompanyVoting Power % as at
March 31, 2008
March 31, 2007
1. Swinder Singh Satara and Co. Limited 100.00 100.00
2. Aditya Birla Telecom Limited 100.00 100.003. Idea Cellular Services
Limited 100.00 –4. Idea Cellular Infrastructure
Services Limited 100.00 –5. Idea Cellular Towers
Infrastructure Limited 100.00 –All the above subsidiaries are incorporated in India.The Joint Venture, which is included in this Consolidated Financial Statements along with Company’s holding therein, is as under:
No. Name of the CompanyVoting Power % as at
March 31, 2008
March 31, 2007
1. Indus Towers Limited 16.00* –
* entire shareholding is held by Idea Cellular Infrastructure Services Limited
3. Fixed Assets:
Fixed assets are stated at cost of acquisition and installation less accumulated depreciation. Cost is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use.
Site restoration cost obligations are capitalised based on a constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Such costs are depreciated over the remaining useful life of the asset.
4. Expenditure during pre-operative period of licence:
Expenses incurred on project and other charges during construction period are included under pre-operative expenditure (grouped under capital work in progress) and are allocated to the cost of fixed assets on the commencement of commercial operations.
5. Depreciation and amortisation:
Depreciation on fixed assets is provided on straight line method (except stated otherwise) on the basis of estimated useful economic lives as given below:
Tangible Assets YearsBuildings 9 to 30
Network Equipments 10 to 13
Optical Fibre 15
Other Plant and Machineries 5
Office Equipment 3 to 9
Computers 3
Furniture and Fixtures 3 to 10
Motor Vehicles Upto 5
Leasehold improvements Period of lease
Intangible Assets:
i) Cost of Rights and Licences including the fees paid on fixed basis prior to revenue share regime is amortised on commencement of operations over the period of licence.
ii) Software, which is not an integral part of hardware, is treated as intangible asset and is amortised over their useful economic lives as estimated by the management between 3 to 5 years.
iii) Bandwidth/Fibre taken on Indefeasible Right of Use (IRU) is amortised over the agreement period.
6. Licence Fees – Revenue Share:
With effect from August 1, 1999 the variable Licence fee computed at prescribed rates of revenue share is being charged to the profit and loss account in the Period in which the related revenue arises. Revenue for this purpose comprises adjusted gross revenue as per the licence agreement of the license area to which the license pertains.
7. Inventories:
Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis.
55A N N U A L R E P O R T 2 0 0 7 - 0 8
8. Foreign currency transactions:
Transactions in foreign currency are recorded at the exchange rates prevailing at the dates of the transactions. Gains/losses arising out of fluctuation in exchange rates on settlement are recognised in the Profit and Loss account.
Foreign currency monetary assets and liabilities are restated at the exchange rate prevailing at the Period end and the overall net gain/loss is adjusted to the Profit and Loss account.
In case of Forward Exchange Contracts, the difference between the forward rate and the exchange rate at the date of transaction is recognised in the Profit and Loss account over the life of the contract.
9. Leases:
a) Operating: Lease of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under an operating lease are recognised as expense in the profit and loss account, on a straight-line basis over the lease term.
b) Finance: Leased assets acquired on which significant risk and reward of ownership effectively transferred to the Company are capitalised at lower of fair value or the amounts paid under such lease arrangements. Such assets are amortised over the period of lease.
10. Taxation:
a) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.
b) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.
11. Contingent Liability:
Disclosures for contingent liabilities are considered to the extent of notices/demands received by Idea group.
12. Retirement Benefits:
Contributions to Provident and pension funds are funded with the appropriate authorities and charged to the profit and loss account.
Contributions to superannuation are funded with the Life Insurance Corporation of India and charged to the profit and loss account.
Liability for gratuity as at the period end is provided on the basis of actuarial valuation and funded with Life Insurance Corporation of India.
Provision in accounts for leave benefits to employees is based on actuarial valuation done by projected accrued benefit method at the period end.
13. Revenue Recognition and Receivables:
Revenue on account of mobile telephony services and sale of handsets and related accessories is recognised net of rebates, discount, service tax, etc. on rendering of services and supply of goods respectively. Recharge fees on recharge vouchers is recognised as revenue as and when the recharge voucher is activated by the subscriber.
Unbilled receivables, represent revenues recognised from the bill cycle date to the end of each month. These are billed in subsequent periods as per the terms of the billing plans.
Debts (net of security deposits outstanding there against) due from subscribers, which remain unpaid for more than 90 days from the date of bill and/or other debts which are otherwise considered doubtful, are provided for.
Provision for doubtful debts on account of Interconnect Usage Charges (IUC), Roaming Charges and passive infrastructure sharing from other telecom operators is made for dues outstanding more than 180 days from the date of billing other than cases when an amount is payable to that operator or in specific case when management is of the view that the amount is recoverable.
14. Investments:
Current Investments are stated at lower of cost or fair value in respect of each separate investment.
Long-term investments are stated at cost less provision for diminution in value other than temporary, if any.
15. Borrowing Cost:
Interest and other costs incurred in connection with the borrowing of the funds are charged to revenue on accrual basis except those borrowing costs which are directly attributable to the acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use. Such costs are capitalised with the fixed assets.
16. Earnings Per Share:
The earnings considered in ascertaining the Group’s EPS comprises the net profit after tax, after reducing dividend on Cumulative Preference Shares for the Period (irrespective of whether declared, paid or not), as per Accounting Standard 20 on “Earning Per Share” issued by the Institute of Chartered Accountants of India. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the Period. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.
17. Impairment of Assets:
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is higher of the assets fair value less costs to sell vis-à-vis value in use. For the purpose of impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
18. Provisions:
Provisions are recognised when the Group has a present obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
19. Issue Expenditure:
Expenses incurred in connection with issue of equity shares are adjusted against share premium.
20. Employee Stock Option:
In respect of stock option granted pursuant to the Company’s Employee Stock Option Scheme, the intrinsic value of the option is treated as discount and accounted as employee compensation cost over the vesting period.
56 I D E A C E L L U L A R L I M I T E D
Schedules forming part of the Consolidated Accounts
SCHEDULE 22
B. NOTES TO ACCOUNTS
1. Equity Share Capital
a) Increase in Authorised Share Capital: At the Annual General Meeting held on December 12, 2007, members of the Company passed a resolution to increase Authorised Equity Share Capital from Rs. 37,750.00 million to Rs. 42,750.00 million and Authorised Redeemable Cumulative Non Convertible Preference Share capital from Rs. 5,000.00 million to Rs. 15,000.00 million.
b) Issue of shares under Green Shoe Option (GSO)
On April 5, 2007, the Company issued 42,500,000 Equity Shares of Rs. 10 each amounting to Rs. 3,187.50 million under Green Shoe Option. Share Premium account stands increased by Rs. 2,762.51 million on issue of the above shares.
2. The status of utilisation of IPO proceeds and Green Shoe amount up to March 31, 2008 is as under:
(Rupees in Million)
Activity To be financed through the
issue proceeds
Actual Utilisation up to
March 31, 2008Building strengthening and expanding network and related services in the New Circles 9,708.00 8,121.98Capital expenditure for NLD operations 808.00 –Roll out for services in Mumbai Circle 6,470.00 828.12Redemption of Preference Shares # 7,563.26 7,563.26Issue Expenses # 620.04 620.04General Corporate purpose** 3,018.20 3,018.20Total 28,187.50 20,151.60
# On completion of these activities, the balance unutilised amounts have been added to General Corporate purpose object following clearance from the monitoring agency.
** Including repayment of short-term loans.
As of March 31, 2008, the unutilised balance of IPO proceeds is lying in fixed deposits with Banks and Mutual Funds.
3. Investments
During the year ended March 31, 2008 three new 100% subsidiary companies, Idea Cellular Services Limited (ICSL), Idea Cellular Infrastructure Services Limited (ICISL) and Idea Cellular Tower Infrastructure Limited (ICTIL), a subsidiary of ICISL, have been formed with a paid-up capital of Rs. 0.50 million each.
ICSL provides manpower services in the areas of subscriber acquisition and servicing required by the mobility circles of the group. ICISL and ICTIL are formed to roll-out and provide Passive Infrastructure services in specified licence areas of the group.
4. Indus Towers Limited (Indus)
a) A joint venture agreement consisting of the Company and its 100% subsidiary ICISL along with Bharti Airtel Limited and Vodafone Essar Limited and their subsidiaries has been entered into effective December 8, 2007. The 16% equity shareholding in Indus Towers Limited is held by ICISL. Indus Towers Limited is a company formed to develop and provide passive infrastructure services.
b) The financial results of Indus for the period ending March 31, 2008 which has been used for consolidation are unaudited.
5. New Licences
On January 10, 2008, the Company deposited Rs. 6,845.90 million following receipt of Letter of Intent (LoI) for the telecom service areas of Assam, Jammu & Kashmir, Karnataka, Kolkata, North East, Orissa, Punjab, Tamil Nadu, and West Bengal (including Chennai service area) for which the Company had applied for Licences. On February 28, 2008 DoT granted the UASL licences making the Company a pan India Licence holder.
6. The group was allotted 4.4 Mhz spectrum in the Mumbai & Bihar (including Jharkhand) telecom areas on January 11, 2008 and in Tamil Nadu (including Chennai) telecom area on April 22, 2008.
7. Term Loans
a) Foreign Currency and Rupee Loans
Foreign Currency Loans amounting to Rs. 5,658.20 million (Previous Year Rs. Nil) and Rupee Loans amounting to Rs. 48,579.90 million (Previous Year Rs. 35,200.00 million) are secured by way of first charge/assignment ranking pari-passu interse the lenders, as under:
i. First charge by mortgage on all the movable and immovable properties of the group,
ii. A first priority charge over all intangible assets of the group,
iii. Assignment of the rights, titles and interest, on deposits, investments, bank accounts, book debts, insurance covers, other general assets, letters of credit and guarantee or performance bond, provided in favour of the group.
b) Vehicle Loan
Vehicle Loan amounting to Rs. 310.65 million (Previous Year Rs. 197.19 million) is secured by hypothecation of Vehicles against which the loans have been taken.
8. Interest from Department of Telecommunications
The Company had recognised an income of Rs. 802.27 million during the year ended March 31, 2003 being refund of excess interest charged by DoT on the licence fee payable by the Company pursuant to the judgement dated April 9, 2002 of Telecom Disputes Settlement and Appellate Tribunal (TDSAT). During the previous years, DoT arbitrarily acknowledged an amount of Rs. 758.76 million against Company’s claim of Rs. 802.27 million The Company has represented this matter with DoT. The Company has not provided for the difference of Rs. 43.51 million, as in the opinion of the management, the amount is recoverable from DoT.
The Company is also entitled to interest on the amount of the refund so accrued in terms of the Supreme Court Judgement;
57A N N U A L R E P O R T 2 0 0 7 - 0 8
the recognition of revenue on account of the same has been postponed pending acceptance in this respect by DoT. As of March 31, 2008, this case is pending before the H’ble Supreme Court.
9. Contingent Liabilities
a) On March 2, 2006, the Honourable Supreme Court passed an order adjudicating that providing of telecommunication services cannot be termed as ‘Goods’ under the Sale of Goods Act. In view of the above judgment, demands raised for Sales Tax on Activation of new connections, Rentals and Airtime by Sales Tax Authorities stand extinguished. As of March 31, 2008, Sales Tax demands of Rs. 60.22 million (Previous Year Rs.931.40 million) are required to be yet formally vacated by the authorities.
b) Export obligation under EPCG (Export Promotion Credit Gurantee) Scheme is Rs. 301.06 million (Previous Year Rs. 301.06 million). Failure to meet this export obligation within the stipulated time frame as per Foreign Trade Policy 2004-2009 would result in the payment of the aggregated differential duty saved amounting Rs. 37.72 million (Previous Year Rs. 37.72 million) along with interest thereon. The group is confident of meeting the obligations based on its current international in-roaming revenue trends.
c) During the financial year 2006-07, the WPC Wing of the DoT had raised demands towards monthly compounded interest on WPC charges for the period upto the financial year 2002-03 in respect of the telecom service areas of the erstwhile Idea Mobile Communication Limited (IMCL) and BTA Cellcom Ltd.
Telecom operators had paid WPC Royalty and license fees towards GSM frequency, access and back-bone frequency charges on circle area basis as provided in the licence terms from inception till financial year 2002-03 while the DoT demands were on city basis. The above matter was disputed by the operators and contested in TDSAT. DoT proposed a change in the basis of levy of spectrum charges based on revenue share vide their letter dated April 18, 2002 on the condition of its acceptance in entirety and withdrawal of all legal proceedings by the operators. Vide their letter dated March 26, 2002, DoT had also given time to the operators to deposit the earlier principal demands by April 15, 2002. The operators accepted the offer of change to revenue share basis on August 23, 2002. The interest demand now raised by WPC wing of DoT for the period before April 15, 2002 is contrary to the DoT proposal in 2002.
The Company is therefore in the process of taking suitable remedial action on these demands including a notice to the erstwhile promoter of Idea Mobile Communication Limited for Rs. 348.79 million (refer Note 11 below).
d) Other Matters not provided for (Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Income Tax Matters not acknowledged as debts
18.75 98.38
Sales Tax & Service Tax Matters not acknowl-edged as debts
1,254.06 313.83
Other claims not acknowl-edged as debts
1,117.18 505.36
e) Estimated amount of contracts (net of advance) remaining to be executed on capital account and not provided for.
(Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Estimated amount of contracts (net of advance)
20,390.42 10,177.57
10. Details of guarantees given
(Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Bank guarantees given to DoT including performance guarantees of Rs.2,370.00 million (Previous Year Rs. 1,140 million)
7,995.67 3,807.39
Bank guarantees given to BSNL 261.07 241.64
Bank guarantees given to Others 1,706.81 278.01
11. In accordance with an assignment agreement entered between the original promoters of the amalgamated subsidiary Idea Mobile Communications Limited (IMCL) i.e. Escorts Ltd. and First Pacific Company Ltd., IMCL had issued interest free unsecured Bond of Rs. 1,757.36 million to Escorts Limited vide a Loan agreement dated January 15, 2004. This bond was in lieu of the loans from the original promoters and included accrued interest of Rs. 857.36 million on June 10, 2004. This Bond is repayable on January 15, 2014 and carries a put option for Escorts Limited for a period of thirty days commencing on January 15, 2010 to redeem the entire amount or part thereof at a price which would have been payable by the Company had the Company opted for an early redemption in accordance with the terms of the said agreement. The Company is entitled to pre payment and set off against certain contingent liabilities that may crystallise after June 10, 2004.
On the request of Escorts Ltd, the Company on July 21, 2006 has consented to release the redemption proceeds of the above loan to UTI Bank on the same terms and conditions, as mentioned in the above Loan agreement.
12. Transfer of Licences
The Company’s application to Department of Telecommunication (DOT) for transfer of telecom licenses held in the name of the erstwhile subsidiaries (which stands merged with the Company) i.e. Idea Mobile Communications Limited, Idea Telecommunications Limited and BTA Cellcom Limited in the name of the Company is pending. The company meets the licensing condition laid down for transfer of licenses in case of amalgamation and expects to receive this procedural approval in the ensuing period.
58 I D E A C E L L U L A R L I M I T E D
13. As per the requirement of Section 22 of The Micro, Small and Medium
Enterprises Development Act, 2006 following information are disclosed:
(Rupees in Million)
a) (i) The principal amount remaining unpaid to any supplier at the end of accounting year included in sundry creditors. 3.08
(ii) The interest due on above. Nil The total of (i) & (ii) 3.08
b) The amount of interest paid by the buyer in terms of section 16 of the Act. Nil
c) The amount of the payment made to the supplier beyond the appointed day during the accounting year Nil
d) The amounts of interest accrued and remaining unpaid at the end of financial year Nil
e) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the due date during the year) but without adding the interest specified under this Act.
Nil
14. Accelerated Depreciation amounting Rs. 132.89 million (Previous Year Rs. Nil) on specified network assets not having vendor support has been charged during the year ended March 31, 2008.
15. As at March 31, 2008 the closing balance in units are as follows:
Particulars As at March 31, 2008 As at March 31, 2007
Qty in ‘000 Rs. in Million Qty in ‘000 Rs. in Million Closing Units Closing Value Closing Units Closing Value
Birla Cash Plus – I P – Growth 14,129 310 – –
Birla Cash Plus – Institutional Premium Plan – Growth 77,499 1,000 – –
Birla Cash Plus – Institutional Premium Plan – Daily Dividend – – 1,230 12.32
Birla SunLife Liquid Plus – IP – Growth 65,692 1,000 – –
ICICI Prudential Flexible Income Plan – Growth 16,765 250 – –
Reliance Liquid Plus Fund – IP – Growth 22,905 250 – –
Birla Sunlife Interval Income Fund – Monthly Plan – Series I 48,574 500 – –
Birla Sunlife Quarterly Interval Fund – Series 8 50,000 500 – –
Birla Sunlife Monthly Interval Fund – Series 2 122,373 1,250 – –
Prudential ICICI Monthly Interval Fund – Series 1 47,126 500 – –
Total 465,063 5,560 1230 12.32
16. Details of foreign currency exposures:
a) Hedged by a derivative instrument:(Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Foreign Currency Loan*Foreign Currency Loan in USD 30.00 –
Foreign Currency Loan in JPY 12,630.73 –
The Equivalent INR of Foreign Currency Loans 5,658.20 –
*Fully hedged for interest and principal repayments
b) Not hedged by a derivative instrument or otherwise:
(Rupees in Million)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Sundry Creditors:Sundry Creditors in USD 48.78 103.42
Sundry Creditors in EURO 0.42 2.18
Sundry Creditors in GBP – 0.02
The Equivalent INR of sundry creditors in Foreign Currency 1,976.23 4,636.13Sundry Debtors:Sundry Debtors in USD 4.56 5.20
Sundry Debtors in EURO 0.03 –
The Equivalent INR of sundry debtors in Foreign Currency 184.16 226.72Bank Deposits:Bank Deposits in USD 6.79 –
The Equivalent INR of Bank Deposits in Foreign Currency 271.48 –
59A N N U A L R E P O R T 2 0 0 7 - 0 8
17. Provision for Gratuity:
The following table sets out status of the gratuity plan as required under Accounting Standard– 15 on “Employee Benefits”.
Reconciliation of opening and closing balances of the present value of the defined benefit obligation.
Sr.No.
Particulars Policy MP. No.509245
Policy MP. No.634757
Policy MP. No.109254
Policy MP. No.304606
1. Assumptions : As on March 31, 2008 Discount Rate 8.00% 8.00% 8.00% 8.00%
Salary Escalation 5.00% 5.00% 7.00% 5.00%2. Table showing changes in present value of obligations As on March 31, 2008 Present value of obligations as at beginning of year 7.21 45.42 5.38 23.96
Interest cost 0.54 3.41 0.43 1.80
Current Service Cost 1.08 6.37 2.68 6.80
Benefits Paid 0.55 5.39 1.18 1.53
Actuarial (gain)/Loss on obligations (3.60) (10.13) 3.01 (0.76)
Present value of obligations as at end of year 4.68 39.67 10.31 30.263. Table showing changes in the fair value of plan assets As on March 31, 2008 Fair value of plan assets at beginning of year 3.46 21.99 3.68 32.67
Expected return on plan assets 0.42 2.26 0.49 2.90
Contributions 1.35 8.90 4.88 5.99
Benefits paid 0.55 5.39 1.18 1.53
Actuarial Gain/(Loss) on Plan assets NIL NIL NIL NIL
Fair value of plan assets at the end of year 4.68 27.77 7.86 40.024. Table showing fair value of plan assets As on March 31, 2008 Fair value of plan assets at beginning of year 3.46 21.99 3.68 32.67
Actual return on plan assets 0.42 2.26 0.49 2.90
Contributions 1.35 8.90 4.88 5.99
Benefits Paid 0.55 5.39 1.18 1.53
Fair value of plan assets at the end of year 4.68 27.77 7.86 40.02
Funded status NIL (11.90) (2.46) 9.76
Excess of Actual over estimated return on plan assets NIL NIL NIL NIL
(Actual rate of return = Estimated rate of return as ARD falls on March 31)5. Actuarial Gain/Loss recognized As on March 31, 2008 Actuarial gain/(Loss) for the year – Obligation 3.60 10.13 (3.01) 0.76
Actuarial (gain)/Loss for the year – plan assets NIL NIL NIL NIL
Total (gain)/Loss for the year (3.60) (10.13) 3.01 (0.76)
Actuarial (gain)/Loss recognised in the year (3.60) (10.13) 3.01 (0.76)6. The amounts to be recognised in the Balance Sheet and statements of
Profit and LossAs on March 31, 2008
Present value of obligations as at the end of year 4.68 39.67 10.31 30.26
Fair value of plan assets as at the end of the year 4.68 27.77 7.86 40.02
Funded status NIL (11.90) (2.46) 9.76
Net Asset/(liability) recognised in balance sheet NIL (20.92) (2.46) NIL7. Expenses Recognised in statement of Profit and Loss As on March 31, 2008 Current Service cost 1.08 6.37 2.68 6.80
Interest Cost 0.54 3.41 0.43 1.80
Expected return on plan assets 0.42 2.26 0.49 2.90
Net Actuarial (gain)/Loss recognised in the year (3.60) (10.13) 3.01 (0.76)
Expenses recognised in statement of Profit and Loss (2.40) (2.62) 5.63 4.94
60 I D E A C E L L U L A R L I M I T E D
18. Segment Reporting
1. Primary Segments:
The group operates in two business segments:
a) Mobility Services (Mobility) b) National Long Distance (NLD)
2. Secondary Segment:
The group caters only to the needs of Indian market representing a singular economic environment with similar risks and rewards and hence there are no reportable geographical segments
Primary Business Information (Business Segments) for the year ended March 31, 2008.(Rupees in Million)
Particulars Business Segments Elimination Total Mobility NLD
Revenue External Revenue 67,199.90 – – 67,199.90Inter–segment Revenue – 3,536.67 (3,536.67) –Total Revenue 67,199.90 3,536.67 (3,536.67) 67,199.90Segment result 13,199.70 724.80 – 13,924.50Interest & financing charges (Net) – – – 2,776.20Profit before Tax – – – 11,148.30Provision for tax (Net) – – – 725.20Profit after tax – – – 10,423.10Other information Segment assets 118,664.46 1,402.16 (1,120.93) 118,945.69Unallocated corporate assets – – – 9,337.79Total assets 118,664.46 1,402.16 (1,120.93) 128,283.48Segment liabilities 92,770.52 520.60 (1,120.93) 92,170.19Unallocated corporate liabilities – – – 667.28Total liabilities 92,770.52 520.60 (1,120.93) 92,837.47Capital expenditure 54,993.54 0.02 – 54,993.56Depreciation & amortisation 8,766.86 1.25 – 8,768.11
Primary Business Information (Business Segments) for the year ended March 31, 2007.(Rupees in Million)
Particulars Business SegmentsElimination TotalMobility NLD
Revenue External Revenue 43,873.29 – – 43,873.29 Inter-segment Revenue – 778.96 (778.96) – Total Revenue 43,873.29 778.96 (778.96) 43,873.29 Segment result 7,986.91 156.78 – 8,143.69 Interest & financing charges (Net) – – – 3,051.18Profit before Tax – – – 5,092.51 Provision for tax (Net) – – – 70.33Profit after tax – – – 5,022.18Other information Segment assets 68,513.67 234.39 (209.09) 68,538.97Unallocated corporate assets – – – 17,294.76 Total assets 68,513.67 234.39 (209.09) 85,833.73 Segment liabilities 64,156.86 77.61 (209.09) 64,025.38 Unallocated corporate liabilities – – – 10.55 Total liabilities 64,156.86 77.61 (209.09) 64,035.93 Capital expenditure 27,955.10 25.00 – 27,980.10 Depreciation & amortisation 6,717.72 0.44 – 6,718.16
61A N N U A L R E P O R T 2 0 0 7 - 0 8
19. Related Party Transactions
As per Accounting Standard-18 on “Related Party Disclosure” issued by the Institute of Chartered Accountants of India, related parties of the group are disclosed below:
A. List of related Parties: Promoters Hindalco Industries Limited Grasim Industries Limited Aditya Birla Nuvo Limited (formerly known as Indian Rayon and Industries Limited) Birla TMT Holdings Pvt. Limited
Key Management Personnel Mr. Sanjeev Aga, MD Mr. AJS Jhala, CFO
B. Transactions with Related Parties during the year ended March 31, 2008 (Rupees in Million)
Particulars Nature of RelationshipPromoters
KeyManagement
Personnel
Hindalco Industries Limited
GrasimIndustries Limited
AdityaBirla Nuvo
LimitedICDs Placed – – – –
Interest on ICDs Placed – – – –
Repayment of ICDs Placed – – – –
Remuneration – – – 61.48(31.43)
Purchase of Shares – – –(100.00)
–
Purchase of Fixed Assets – 0.13–
–(5.39)
–
Investments – – – –
Purchase of Service – – – –
Employee Expenses/Deposits 0.08 – – –
Unsecured Loans given – – – –
Expense incurred by group on behalf of – – –(0.01)
–
Expenses incurred on group’s behalf by 3.93–
2.00 –
0.18 (1.71)
–
(Figures in bracket are for the year ended March 31, 2007.)
Outstanding as on March 31, 2008(Rupees in Million)
Particulars Nature of RelationshipPromoters
KeyManagement
Personnel
Hindalco Industries Limited
Grasim Industries Limited
AdityaBirla Nuvo
Limited Remuneration Payable – – – 24.20
(7.51)
Accounts Payable 0.08–
– –(0.13)
–
Unsecured Loans – – – 8.00(8.00)
(Figures in bracket are as of March 31, 2007)
62 I D E A C E L L U L A R L I M I T E D
20. The group has entered into non-cancellable operating leases for periods ranging from 36 months to 261 months. For the current year, total minimum lease payments amounting to Rs. 264.63 million is included in the rental expenditure head.
The future lease payments in respect of the above are as follows.
(Rupees in Million)
Particulars Not later than
one year
Later than one year but not later than
five years
Later thanfive years
Minimum Lease payments
313.24(162.39)
1,120.97(592.48)
902.12(Nil)
(Figures in bracket are as of March 31, 2007)
21. During the year the Company has entered in to a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets and liabilities are recorded at the fair value of the lease assets at the time of receipt and depreciated on the stated useful life applicable to similar assets of the company.
As at March 31, 2008, the amounts towards the supply of fixed assets during the year stands fully paid and there are no minimum lease payments outstanding as at the year end.
22. Basic & Diluted Earnings Per Share
Particulars For the Year ended
March 31, 2008
For the Year ended
March 31, 2007
Nominal value of Equity Shares (Rs.) 10/- 10/-
Profit after Tax (Rs. Million) 10,423.10 5,022.18
Less Preference Share Dividend (Rs. Million) – –
Profit attributable to equity shareholders (Rs. Million) 10,423.10 5,022.18
Weighted average number of equity shares outstanding during the period 2,634,896,058 2,291,992,960
Basic Earnings Per Share (Rs.) 3.96 2.19
Dilutive effect on weighted average number of equity shares outstanding during the year 483,044 42,500,000
Weighted average number of diluted equity shares 2,635,379,102 2,334,492,960
Diluted Earnings Per Share (Rs.) 3.96 2.15
23. Deferred Tax
As of March 31, 2008, the group has deferred tax liability of Rs. 1,663.38 million and deferred tax asset of Rs.1,002.36 million as under:
(Rupees in Million)
Particulars As at March 31, 2008
As at March 31, 2007
Deferred Tax Liability:Depreciation of Fixed Assets 1,588.54 742.05
Amortisation of Entry & Licence Fee (Net) 74.84 78.69Total Deferred Tax Liability 1,663.38 820.74Deferred Tax Asset:Provision for Doubtful Debts 837.22 756.52
Expenses allowable on payment basis 64.60 53.67
Others 100.54 –Total Deferred Tax Asset 1,002.36 810.19Net Deferred Tax Liability 661.02 10.55
24. The movement in the Site Restoration Cost is set out as follows:
(Rs. in Million)
Particulars For theyear ended
March 31, 2008
For theyear ended
March 31, 2007
Opening Balance 253.26 6.70
Addition on amalgamation of Subsidiaries – 115.91
Additional Provision 220.32 137.35
Payment/ Reversal/ Expenses – 6.70
Closing Balance 473.58 253.26
25. Previous year’s figures have been regrouped / rearranged wherever necessary to conform to the current period grouping.
For and on behalf of the Board
G.P. Gupta Arun Thiagarajan Sanjeev AgaDirector Director Managing Director
AJS Jhala Pankaj KapdeoChief Financial Officer Company Secretary
Date: April 24, 2008Place: Mumbai
63A N N U A L R E P O R T 2 0 0 7 - 0 8
(Rupees in Million) For the year ended
March 31, 2008 For the year ended
March 31, 2007A) Cash Flow from Operating ActivitiesNet Profit after Tax 10,423.10 5,022.18 Adjustments For
Depreciation 7,569.01 5,636.77
Amortisation of Intangible assets 1,199.10 1,081.39
Interest charge and Forex 4,592.37 3,051.18
Profit on sale of current investment (432.01) (81.32)
Provision for Bad & Doubtful Debts/Advances 244.94 368.17
Employee Stock Option Cost 37.59 -–
Provision for Gratuity and Leave Encashment 54.34 160.23
Provision for Current Tax 425.93 0.42
MAT Credit entitlement (425.33) -–
Provision for Deferred Tax 650.47 10.55
Provision for Fringe Benefit Tax 74.13 59.36
Liability no longer required written back (139.73) (174.94)
Interest Income (849.62) (171.03)
(Profit)/Loss on sale of fixed assets/assets discarded 8.89 (1.92) 13,010.08 9,938.86
Operating profit before working capital changes 23,433.18 14,961.04
Changes in Current Assets and Current Liabilities(Increase)/Decrease in Sundry Debtors (706.10) (590.08)
(Increase)/Decrease in Inventories (97.05) (69.97)
(Increase)/Decrease in Other Current Assets 163.42 27.70
(Increase)/Decrease in Loans and Advances (3,380.55) (2,030.59)
Increase/(Decrease) in Current Liabilities 6,241.72 3,861.03 2,221.44 1,198.09
Cash generated from operations 25,654.62 16,159.13
Tax paid (including FBT & TDS ) (430.52) (101.82)Net cash from operating activities 25,224.10 16,057.31
B) Cash Flow from Investing ActivitiesPurchase of Fixed assets & Intangible assets (including CWIP) (55,726.29) (22,819.05)
Proceeds from sale of Fixed assets 150.79 19.12
Sale/(purchase) of Other Investments (Net) (5,115.67) (101.83)
Interest and Dividend Received 922.94 145.49 Net cash from/(used in) investing activities (59,768.23) (22,756.27)
Consolidated Cash Flow Statement for the year ended March 31, 2008
64 I D E A C E L L U L A R L I M I T E D
(Rupees in Million) For the year ended
March 31, 2008 For the year ended
March 31, 2007C) Cash Flow from Financing Activities
Proceeds from issue of Share Capital 3,187.52 25,000.00
Share Issue Expenses – (620.04)
Repayment of Preference Share Capital – (4,830.00)
Premium on redemption of Preference Share Capital – (2,733.26)
Proceeds from Foreign Currency Loan 5,658.20 –
Proceeds from Long Term Borrowings 14,973.81 35,397.20
Repayment of Long Term Borrowings (1,480.94) (15,690.05)
Proceeds from Short Term Loan 22,120.90 17,874.66
Repayment of Short Term Loan (18,622.98) (27,958.54)
Interest Paid (4,517.27) (3,039.37)Net cash from/(used in) financing activities 21,319.24 23,400.60 Net increase/(decrease) in cash and cash equivalent (13,224.89) 16,701.64 Cash and cash equivalent at the beginning 18,199.40 1,492.53
Add: Cash and Cash Equivalents acquired on account of amalgamation – 5.22
Add: Cash and cash equivalents taken over on acquisition – 0.01 Cash and cash equivalent at the end 4,974.51 18,199.40
Notes to Cash flow Statement for the year ended March 31, 20081. Cash and cash equivalent includes
Cash and Cheques on Hand 297.01 229.29
Balances with Scheduled Banks
– on Current Accounts 1,181.98 999.25
– on Deposit Accounts 3,495.52 16,970.86
4,974.51 18,199.40
Consolidated Cash Flow Statement for the year ended March 31, 2008
As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi G.P. Gupta Arun Thiagarajan Sanjeev AgaPartner Director Director Managing DirectorMembership No.: 38019
Date: April 24, 2008 AJS Jhala Pankaj KapdeoPlace: Mumbai Chief Financial Officer Company Secretary
2. The above cash flow statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash Flow Statement issued by Institute of Chartered Accountants of India.
3. Previous year’s figures have been rearranged/regrouped wherever necessary.
65A N N U A L R E P O R T 2 0 0 7 - 0 8
Statement pursuant to Section 212 of the Companies Act, 1956, related to Subsidiary Companies
Particulars Aditya Birla Telecom Limited
Idea Cellular Services Limited
Idea Cellular Infrastructure Services Limited
Idea Cellular Towers Infrastructure Limited
Swinder Singh Satara & Company Limited
1. Financial year of the Subsidiary ended on March 31, 2008 March 31, 2008 March 31, 2008 March 31, 2008 March 31, 2008
2. Shares of the Subsidiary held by the Company on the above date :
(a) Number & face value
(b) Extent of holding
10,000,000 Equity Shares of Rs.10 each
100%
50,000 Equity Shares of Rs.10 each
100%
50,000 Equity Shares of Rs.10 each
100%
50,000 Equity Shares of Rs.10 each
*100%
50,000 Equity Shares of Rs.10 each
100%
3. Net aggregate amount of profits/(losses ) of the subsidiary so far as they concern members of Idea Cellular Limited:
(a) For the financial year of the subsidiary (i) Dealt within the accounts of the
Company for the year ended March 31, 2008 (Rs. Mn)
(ii) Not dealt with the accounts of the Company for the year ended March 31, 2008 (Rs. Mn)
(b) For the previous financial year of the subsidiary since it became a subsidiary
(i) Dealt within the accounts of the Company for the previous financial year ended March 31, 2007 (Rs. Mn)
(ii) Not dealt with the accounts of the Company for the previous financial year ended March 31, 2007 (Rs. Mn)
NIL
(13.02)
NIL
(24.26)
NIL
(1.97)
#
NIL
(0.10)
##
NIL
(0.64)
###
NIL
1.67
NIL
1.90
* Indirect wholly owned subsidiary of Idea Cellular Limited. Shares held through Idea Cellular Infrastructure Services Limited.# Incorporated on October 3, 2007## Incorporated on October 3, 2007### Incorporated on December 3, 2007
For and on behalf of the Board
G.P. Gupta Arun Thiagarajan Sanjeev AgaDirector Director Managing Director
AJS Jhala Pankaj KapdeoChief Financial Officer Company Secretary
Date: April 24, 2008Place: Mumbai
66 A D I T YA B I R L A T E L E C O M L I M I T E D
Directors’ Report of Aditya Birla Telecom Limited
Dear Shareholders,
Your Directors have pleasure in presenting the Third Annual Report together with the Audited Accounts of your Company for the year ended March 31, 2008.
Performance Review
Your Company has been allotted Spectrum in the 1800 Mhz GSM Band from WPC Wing of the Ministry of Communications and IT on January 11, 2008. The Company is in the process of rolling-out services in the Bihar Service area.
During the year ended March 31, 2008, your Company earned a total income of Rs. 2,16,535/- by investing funds not required for immediate use. After accounting for all the expenses it has incurred a net loss of Rs. 1,30,18,002/- during the year.
Dividend
Since the Company has not earned any profit for the year ended March 31, 2008, the Directors do not recommend any dividend for the said year.
Deposits
Your Company has not accepted any public deposit during the year ended March 31, 2008.
Particulars of Employees’ Remuneration
The Company has no employees on its payroll. Accordingly the provisions of Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975, are not applicable.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:
• In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
• The Directors have selected such accounting policies and 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 Financial Year and of the profit or loss of the Company for that period;
• The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities;
• The Directors have prepared the Annual Accounts on a going concern basis.
Directors
Mr. Adesh Gupta, Director of your Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Auditors
The Statutory Auditors of the Company, M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting of the Company and being eligible hereby offer themselves for re-appointment. Your Directors recommend their re-appointment and authorise the Board to fix their remuneration.
Auditors’ Report
The observations made in the Auditors’ Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.
Conservation of Energy & Technology Absorption & Foreign Exchange Earnings and Outgo
The particulars required by the Companies (Disclosure of Particulars in Report of Board of Directors) pursuant to Section 217(1)(e) with regard to Conservation of Energy and Technology Absorption are not applicable since there was no manufacturing activity during the period under review.
There is no earning or outgoing in foreign exchange during the period under review.
Appreciation
Your Directors wish to place on record their appreciation for the support extended by the lenders, suppliers and Government authorities and look forward to continued support in the future.
For and on behalf of the Board
Date: April 21, 2008 AJS Jhala Sanjeev AgaPlace: Mumbai Director Director
67A N N U A L R E P O R T 2 0 0 7 - 0 8
Auditors’ ReportTo the Members,Aditya Birla Telecom Limited
We have audited the attached Balance Sheet of Aditya Birla Telecom Limited as at March 31, 2008 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.
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.
As required by the Companies (Auditors’ Report) Order, 2003 (hereinafter referred to as the Order), issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956 (hereinafter referred to as the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 Section 211 (3C) of Act.
(v) On the basis of written representations received from the directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of Clause (g) of sub–section (1) of Section 274 of the Act.
(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 the affairs of the Company as at March 31, 2008;
b) in case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and
c) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
For Khimji Kunverji & Co.Chartered Accountants
Shivji K. VikamseyPartnerMembership No.: 2242
Date: April 21, 2008Place: Mumbai
Annexure to the Auditors’ ReportAnnexure referred to in para 3 of our Auditor’s Report of Aditya Birla Telecom Limited of Even Date
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed asset have been physically verified by the management at reasonable interval. As informed, no material discrepancies were noticed on such verification.
(b) The Company has not disposed off a substantial part of its fixed assets during the year.
(ii) The Company does not hold any stock in trade, hence Clause 4(ii)(a), 4(ii)(b) and 4(ii)(c) of the Order are not applicable to the Company.
(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms, and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Hence Clause (iii)(b),(c) and (d) are not applicable to the Company.
(b) The Company has not taken any loans, secured or unsecured from companies, firms, and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Hence Clause (iii) (f) and (g) are not applicable to the Company.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets. During the year the Company has neither purchased any inventory nor sold any goods or services, hence, the question of an adequate internal control system commensurate with the size of the Company and the nature of its business for the areas does not arise.
(v) Based on the Audit procedures applied by us, and according to information and explanations provided by the management, there are no contracts or arrangements referred to in Section 301 of the Act need to be entered into the register maintained under the Section. In view of this Clause (v) (b) is not applicable.
(vi) The Company has not accepted any deposit from the public in terms of the provisions of Sections 58A, 58AA or any other relevant provisions of the Act. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any Tribunal.
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
(viii) The Company is not required to maintain any cost records prescribed by the Central Government under clause (d) of sub-section (1) of Section 209 of the Act.
(ix) (a) The Company is regular in depositing undisputed Income tax and there are no arrears thereof as at March 31, 2008 for a period of more than six months from the date they become payable. During the financial year under review, there were no employees on the rolls of the Company. Personnel from IDEA group of companies have been deployed for rolling out the Cellular-Mobile Network in Bihar Circle and expenses thereon have been accounted for on the basis of reimbursement claimed
68 A D I T YA B I R L A T E L E C O M L I M I T E D
by Idea Group of companies. Accordingly Provident Fund is paid by respective Idea Group companies. We are informed that Investor Education and Protection Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, and other statutory dues are not applicable to the Company. There were no arrears as at March 31, 2008 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no disputed Income Tax, dues which had not been deposited.
(x) Since the Company is registered for less than five years, the provisions of Clause 4(x) of the Order, not applicable to the Company.
(xi) The Company has not taken any loans from financial institutions or banks. Therefore, the provisions of Clause 4(xi) of the Order, not applicable to the Company.
(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 any 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 Order, are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debenture and other investment. Accordingly, the provisions of Clause 4(xiv) of the Order, are not applicable to the Company.
(xv) According to information and explanations given to us the Company has not given any guarantee for loans taken by others
from banks or financial institutions. Accordingly, the provision of Clause 4(xv) of the Order is not applicable to the Company.
(xvi) According to the information and explanations given to us, the Company has not raised any term loans during the year. Accordingly, the provision of Clause 4(xvi) of the Order is not applicable to the Company.
(xvii) According to the information and explanations given to us and on the overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised any money through a public issue during the year.
(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
For Khimji Kunverji & Co.Chartered Accountants
Shivji K. VikamseyPartnerMembership No.: 2242
Date: April 21, 2008Place: Mumbai
69A N N U A L R E P O R T 2 0 0 7 - 0 8
As per our report of even date attached For and on behalf of the Board
For Khimji Kunverji & Co.Chartered Accountants AJS Jhala Sanjeev AgaShivji K. Vikamsey Director DirectorPartner
Date: April 21, 2008 Anurag UpadhyayaPlace: Mumbai Company Secretary & Manager
Balance Sheet as at March 31, 2008
(Amount in Rupees) Schedules As at
March 31, 2008 As at
March 31, 2007 SOURCES OF FUNDSShareholders' FundsShare Capital 1 100,000,000 100,000,000
100,000,000 100,000,000
Loan FundsSecured 2 4,417,031 –
Unsecured 3 260,452,512 40,000,000
264,869,543 40,000,000
TOTAL 364,869,543 140,000,000
APPLICATION OF FUNDSFixed AssetsGross Block (At Cost) 4 11,597,361 –
Less: Depreciation 3,132,683 –
Net Block 8,464,678 –
Intangible Assets 5 100,000,000 100,000,000
Capital Work-in-Progress 594,724,904 3,875,988
703,189,582 103,875,988
Investments 6 – 12,321,266
Current Assets, Loans and AdvancesCurrent AssetsCash and Bank Balances 7 420,897 12,287
Loans and Advances 8 71,666,235 5,653,941
72,087,132 5,666,228
Less: Current Liabilities and ProvisionsCurrent Liabilities 9 449,064,545 7,502,854
449,064,545 7,502,854
Net Current Assets (376,977,413) (1,836,626)
Profit and Loss Account 38,657,374 25,639,372
TOTAL 364,869,543 140,000,000
Significant Accounting Policies and Notes to the Accounts 15
The Schedules referred to above form an integral part of Accounts
70 A D I T YA B I R L A T E L E C O M L I M I T E D
Profit and Loss Account for the year ended March 31, 2008
As per our report of even date attached For and on behalf of the Board
For Khimji Kunverji & Co.Chartered Accountants AJS Jhala Sanjeev AgaShivji K. Vikamsey Director DirectorPartner
Date: April 21, 2008 Anurag UpadhyayaPlace: Mumbai Company Secretary & Manager
(Amount in Rupees) Schedules For the
year ended March 31, 2008
For the year ended
March 31, 2007INCOMEOther Income 10 216,535 332,964
TOTAL 216,535 332,964
OPERATING EXPENDITUREPersonnel Expenditure 11 3,671,676 254,634
Network Operating Expenditure 12 580,274 –
Advertisement and Business Promotion Expenditure 574,716 –
Administration and other Expenses 13 7,985,017 156,887
12,811,683 411,521
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX (12,595,148) (78,557)
Interest and Financing Charges 14 65,152 22,917,135
Depreciation 4 271,805 –
PROFIT/(LOSS) BEFORE TAX (12,932,106) (22,995,692)
Provision for taxation - Current – 1,267,000
- Fringe Benefit tax 85,896 – PROFIT/(LOSS) AFTER TAX (13,018,002) (24,262,692)
Balance brought forward from previous year (25,639,372) (1,376,680)
BALANCE CARRIED FORWARD TO BALANCE SHEET (38,657,374) (25,639,372)
EARNINGS PER SHARE (Refer Note B-9 to schedule-15)
Basic and Diluted (1.30) (2.43)
Significant Accounting Policies and Notes to the Accounts 15
The Schedules referred to above form an integral part of Accounts
71A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts
As at March 31,
2008
As at March 31,
2007
SCHEDULE 1SHARE CAPITALAuthorised75,000,000 Equity Shares of Rs. 10/- each 750,000,000 300,900,000
1,000 Redeemable Preference Shares of Rs.100/- each
100,000 100,000
750,100,000 301,000,000
ISSUED, SUBSCRIBED AND PAID-UPEquity Share Capital10,000,000 Equity shares of Rs.10/- each fully paid-up
100,000,000 100,000,000
(The entire paid up Equity Capital is held by the holding Company , Idea Cellular Limited and its nominee. Till February 27, 2007 the entire paid up equity capital was held by the erstwhile holding Company Aditya Birla Nuvo Limited)
100,000,000 100,000,000
SCHEDULE 4 - FIXED ASSETS (Amounts in Rupees ) Particulars Gross Block Depreciation Net Block
As atApril 1, 2007
Additionsduring the
Year
Sale/Adjustmentduring the
Year
As atMarch 31,
2008
As atApril 1, 2007
For the Year
Sale/Adjustment during the
Year
As atMarch 31,
2008
As atMarch 31,
2008
As atMarch 31,
2007
Land – – – – – – – – – –
Leasehold Land – – – – – – – – – –
Building – 1,107,064 – 1,107,064 – 72,795 – 72,795 1,034,269 –
Plant & Machinery – – – – – – – – – –
Furniture & Fixture – 293,801 – 293,801 – 269,370 – 269,370 24,431 –
Office Equipment – 4,417,581 – 4,417,581 – 1,478,432 – 1,478,432 2,939,149 –
Vehicles – 5,778,914 – 5,778,914 – 1,312,084 – 1,312,084 4,466,829 –
TOTAL – 11,597,360 – 11,597,360 – 3,132,682 – 3,132,682 8,464,678 –
Previous Year – – – – – – – – –
SCHEDULE 5 - INTANGIBLE ASSETS (Amounts in Rupees)Particulars Gross Block Amortisation Net Block
As atMarch 31,
2007
Additions during the
Year
Sale/Adjustment during the
Year
As atMarch 31,
2008
As atApril 1, 2007
For the Year
Sale/Adjustment during the
Year
As atMarch 31,
2008
As atMarch 31,
2008
As atMarch 31,
2007
Entry/Licence Fees 100,000,000 – – 100,000,000 – – – – 100,000,000 100,000,000
Computer - Software – – – – – – – – – –
TOTAL 100,000,000 – – 100,000,000 – – – – 100,000,000 100,000,000
Previous Year – 100,000,000 – 100,000,000 – – – – 100,000,000 –
As at March 31,
2008
As at March 31,
2007
SCHEDULE 2SECURED LOANSRupee Loan - From Banks (Loan repayable with in one year Rs.1,745,805/-, previous year Nil)
4,417,031 –
4,417,031 –
SCHEDULE 3UNSECURED LOANSTerm LoanFrom Idea Cellular Limited 260,452,512 40,000,000
260,452,512 40,000,000
(Amount in Rupees) (Amount in Rupees)
72 A D I T YA B I R L A T E L E C O M L I M I T E D
Schedules forming part of the Accounts
As at March 31,
2008
As at March 31,
2007
SCHEDULE 6INVESTMENTSCurent Investment - UnquotedBirla Cash Plus Institutional Premium plan daily dividend
– 12,321,266
– 12,321,266
SCHEDULE 7CASH AND BANK BALANCESCash and Cheques in Hand 2,610 –
Balances with Scheduled Banks
- in Current Accounts 12,287 12,287
- in Deposit Accounts 406,000 – 420,897 12,287
SCHEDULE 8LOANS AND ADVANCES(Unsecured, considered good unless otherwise stated)
Advances recoverable in cash or kind or for value to be received
- Considered good 57,257,330 12,600
- Considered Doubtful – –
Less: Provision for doubtful advances – – 57,257,330 12,600
Deposits and Balances with Govt. Authorities
1,402,191 –
Deposits with others 8,014,770 655,000
Advance Income Tax (Net of Income Tax Provisions)
4,991,945 4,986,341
71,666,235 5,653,941
SCHEDULE 9CURRENT LIABILITIES AND PROVISIONSCurrent LiabilitiesSundry Creditors 431,703,324 84,180
Book Bank Overdraft 17,260,867 –
Other Liabilities 100,354 4,865,786
Interest accrued but not due – 2,552,888 449,064,545 7,502,854
(Amounts in Rupees)For the
year ended March 31,
2008
For the year ended
March 31, 2007
SCHEDULE 10OTHER INCOMEDividend on current investment 216,535 332,964
216,535 332,964
SCHEDULE 11PERSONNEL EXPENDITURESalaries and Allowances etc. 3,438,320 211,319
Contribution to Provident and Other Funds
136,020 –
Staff Welfare 16,071 –
Recruitment and Training 81,265 43,315
3,671,676 254,634
SCHEDULE 12NETWORK OPERATING EXPENDITURESecurity Service Charges 116,556 –
Repairs and Maintenance - Plant and Machinery
52,622 –
Switching & Cellsites Rent 317,374 –
Lease Line and Connectivity Charges 93,722 –
580,274 –
SCHEDULE 13ADMINISTRATION & OTHER EXPENSESRepairs and Maintenance - Building 41,258 –
- Others 9,563 –
Other Insurance 1,472 –
Non Network Rent 528,408 –
Rates and Taxes 6,077,177 –
Electricity 63,788 –
Printing and Stationery 60,333 –
Communication Expenses 140,339 –
Travelling and Conveyance 716,040 44,872
Bank Charges 8,937 810
Legal and Professional Charges 98,726 –
Audit Fees 20,000 75,000
Miscellaneous expenses 218,976 36,205
7,985,017 156,887
SCHEDULE 14INTEREST AND FINANCING CHARGESInterest
- On Fixed Term Loan 71,152 50,509,945
Interest Received (Gross) (6,000) (27,837,789)
Profit on Sale of Current Investments – 244,979
65,152 22,917,135
(Amounts in Rupees)
73A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts
SCHEDULE 15
A. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention
The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these financial statements.
2. Investments
Current Investments are stated at lower of cost or fair value in respect of each separate investment.
Long-term investments are stated at cost less provision for diminution in value other than temporary, if any.
3. Expenditure during pre-operative period of license
Expenses incurred on Project and other charges during construction period are included under pre-operative expenditure (grouped under Capital Work in Progress) and are allocated to the cost of Fixed Assets on the commencement of commercial operations.
4. Fixed Assets
Fixed assets are stated at cost of acquisition and installation less accumulated depreciation. Cost is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use.
5. Depreciation and Amortisation
Depreciation is provided on straight line method (except stated otherwise) for tangible assets on the basis of estimated useful life as given below:
a) Tangible Assets Years
Leasehold Improvement Primary Period of lease
Network Equipment 10 to 13
Computers 3
Furniture and Fixture 5 to 10
Office Equipments 5
Motor Vehicles Up to 5
b) Intangible Assets
Cost of Rights and entry fee paid for telecom licenses is amortised on straight line basis on commencement of operations over the remaining period of licence.
6. Revenue Recognition
Dividend income on investment is accounted for when the right to receive the payment is established.
7. Leases
Operating: Lease of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under an operating lease are recognised as expense in Profit and Loss Account, on a straight-line basis over lease term.
8. Borrowing Cost
Interest and other costs incurred in connection with the borrowing of the funds are charged to revenue on accrual basis except those
borrowing cost which are directly attributable to the acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use. Such costs are capitalised with the fixed assets.
9. Provisions
Provisions are recognised when the Company has a present obligation as a result of past events, it is more likely that an outflow of resources will be required to settle the obligation, and amount has been reliably estimated.
10. Taxation
a) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.
b) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.
11. Contingent Liability
Disclosure for contingent liabilities is considered to the extent of notices/demands received by the Company.
12. Impairment of Assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is higher of the asset’s fair value less costs to sell or value in use. For the purpose of impairment, assets are grouped at the lowest levels for which there are separate identifiable cash flows.
B. NOTES TO ACCOUNTS
1. Contingent Liabilities not provided for (Amount in Rupees)
As onMarch
31,2008
As onMarch
31,2007
Bank Guarantees given to Sales Tax/Bank/ Financial Institution
95,279,375 70,000,000
2. Estimated amount of contract remaining to be executed on Capital Account and not provided for (net of advance) Rs.728,886,355, (Previous year Rs. Nil).
3. CIF value of Imports:(Amount in Rupees)
Particulars As onMarch 31,
2008
As onMarch 31,
2007Capital Goods (Including Spares)
141,047,982 –
74 A D I T YA B I R L A T E L E C O M L I M I T E D
4. Loans & Advances include:
Amount Receivable from companies under the same management within the meaning of sub-section (1B) of Section 370 of the Companies Act, 1956
Balanceas on
March 31, 2008
Maximum amount due at
any time during the year
ended onMarch 31, 2008
Balanceas on
March 31, 2007
Maximum amount due at
any time during the year
ended onMarch 31,2007
Birla Global Finance Company – – – 60,000,000
5. Employee Expenses:
During the financial year under review, there were no employees on the rolls of the Company. Personnel from IDEA Cellular Limited have been deployed for rolling out the Network. Expenses (including retirement benefits) towards such personnel have been accounted for on the basis of reimbursement claimed by Idea Cellular Limited.
6. Deferred Tax assets on account of timing difference towards brought forward business loss are not recognised, as there is no reasonable certainty that sufficient future taxable income will be available to realize the deferred tax assets.
7. Capital Work in Progress includes equipment and machinery in stock, advances for construction and erection work, expansion project and the following pre-operative expenses pending allocation (Net):
(Amount in Rupees)
Particulars For theyear ended
on March 31, 2008
For theyear ended
on March 31, 2007
Personnel Expenses 30,253,800 2,537,404
Travelling Expenses 4,876,621 254,275
Rent, Office & General Expenses 27,909,354 1,084,309
Network operating expenses 789,923 –
Depreciation 2,162,158 –Total 65,991,856 3,875,988
8. Disclosure in respect of Related Parties pursuant to Accounting Standard - 18:
List of Related Parties as on March 31, 2008
Promoters of holding company
Hindalco Industries Limited Grasim Industries Limited Aditya Birla Nuvo Limited (ABNL) Birla TMT Holdings Pvt. limited
I. Holding Company
Idea Cellular Limited (ICL)
II. Fellow Subsidiaries
- Swinder Singh Satara & Co. Limited - Idea Cellular Infrastructure Services Limited (ICISL) - Idea Cellular Towers Infrastructure Limited - Idea Cellular Services Limited
III. Key Management Person
Mr. Anurag Upadhyaya (w.e.f. February 28, 2008)
IV. During the year following transactions were carried out with the related parties in the ordinary course of business.
Related Party Transaction Holding Co. (ICL)
Fellow Subsidiaries
(ICISL)
Holding Co. (ABNL) (Upto
28/02/2007)
Fellow Subsidiaries
of ABNLInterest IncomeLaxminarayan Investment Limited –
(116,986)
Alpha Garments Limited –(243,288)
Madura Garments Exports Limited –(133,698)
Birla Global Finance Co.Limited –(3,615,443)
Interest Expenses Aditya Birla Nuvo Limited –
( 30,271,870)
Transwork Information Services Limited –(1,665,812)
Idea Cellular Limited –(2,761,918)
(Amount in Rupees)
75A N N U A L R E P O R T 2 0 0 7 - 0 8
Related Party Transaction Holding Co. (ICL)
Fellow Subsidiaries
(ICISL)
Holding Co. (ABNL) (Upto
28/02/2007)
Fellow Subsidiaries
of ABNLInvestment Sale of Shares of IDEA Cellular Limited –
(6,863,313,870)
Inter Corporate Deposits givenBirla Global Finance Co. Limited –
( 60,000,000)Inter Corporate Deposits ObtainedAditya Birla Nuvo Limited –
(6,791,100,000)
Transworks Information Services Limited –(378,350,000)
Idea Cellular Limited 300,452,512 (100,000,000)
ICD Repaid Aditya Birla Nuvo Limited –
(6,791,100,000)
Transwork Information Services Limited –(378,350,000)
Idea Cellular Limited 40,000,000(60,000,000)
Loans and AdvancesLoans and advances given 50,708,777
–Inter Corporate Deposits given Received backBirla Global Finance Co. Limited –
(60,000,000)
Laxminarayan Investment Limited –(10,000,000)
Madura Garments Exports Limited –(10,000,000)
Alpha Garments Export Limited –(10,000,000)
Outstanding Balance as on March 31, 2008Unsecured Loan 260,452,512
–
Advances – (40,000,000)
50,708,777–
Sundry Creditors 150,926 (4,865,786)
Interest Payable –(2,552,888)
Notes: 1. Figures in brackets represent corresponding amount of previous year.
2. No amount in respect of the related parties has been written back/off is provided for during the year.
3. Related party relationship have been identified by the management and relied upon by auditors.
76 A D I T YA B I R L A T E L E C O M L I M I T E D
9. Earnings per Share (EPS) is calculated as under:
(Amount in Rupees)
Particulars For the year ended
March 31, 2008
For the year ended
March 31, 2007
Nominal Value of Equity Share 10/- 10/-
Profit After Tax (13,018,002) (24,262,692)
Profit Attributable to Equity Shareholders (13,018,002) (24,262,692
Weighted average Number of Equity Share outstanding during the year (Nos.) 10,000,000 10,000,000
Basic Earnings Per Share (1.30) (2.43)
As per our report attached of even date For and on behalf of the Board
For Khimji Kunverji & Co.Chartered Accountants AJS Jhala Sanjeev AgaShivji K. Vikamsey Director DirectorPartner
Date: April 21, 2008 Anurag UpadhyayaPlace: Mumbai Company Secretary & Manager
10. During the year the holding company i.e. Idea Cellular Limited has set up a fellow subsidiary Idea Cellular Infrastructure Services Limited (ICISL) for rolling out passive infrastructure in specified states.
11. Information pertaining to para 3 and 4C of part II of Schedule VI of the Companies Act, 1956 is not given since the same is not applicable to the Company during the year.
12. No amounts are payable to Micro, Small and Medium Enterprises (SMEs) within the meaning of the Micro, Small and Medium Enterprises Development Act, 2006.
13. Previous year’s figures have been regrouped, rearranged wherever necessary.
77A N N U A L R E P O R T 2 0 0 7 - 0 8
Cash Flow Statement for the year ended March 31, 2008
Year ended March 31, 2008
Year ended March 31, 2007
A) Cash Flow from Operating Activities:Net profit/(loss) before tax (13,018,002) (24,262,692)Less Adjustments for:Profit on sale of investments (244,979)Income from Investment - Dividends (216,535) (332,964)Add Adjustments for:Depreciation and amortisation 3,132,683 – Interest and finance charges 65,152 22,672,156 Operating profit before working capital changes (9,820,167) (2,168,479)Adjustments for changes in working capital :(Increase)/decrease in other receivables (57,244,730) (12,600)(Increase)/decrease in deposits (8,761,961) 59,353,992 (Increase)/decrease in taxation (5,604) (5,146,371)Increase/(decrease) in trade and other payables 10,093,473 7,490,579 Cash generated from/(used in) operations (65,738,988) 59,517,121 Net cash from/(used in) operating activities (65,738,988) 59,517,121
B) Cash Flow from Investing Activities:Purchase of fixed assets/ CWIP (170,978,059) (3,875,988)Entry Fee – (100,000,000)Sales/ Redemption/ (Purchase) of investments 12,104,731 25,842,806 Dividend Received 216,535 332,964 Profit on sale of investment – 244,979 Net cash from/(used in) investing activities (158,656,793) (77,455,239)
C) Cash Flow from Financing activities:Proceeds from fresh issue of Share Capital – – Receipt from long term borrowings 264,869,543 100,000,000 Repayments of long term borrowings (40,000,000) (60,000,000)Interest and other financial charges paid (65,152) (22,672,156)Net Cash from/(used in) Financing activities 224,804,391 17,327,844 Net increase in cash and cash equivalents (A+B+C) 408,610 (610,274)Cash and cash equivalents at the beginning of the year 12,287 622,561 Cash and cash equivalents at the end of the year 420,897 12,287
Cash and cash equivalents compriseCheques in hand – – Cash in hand 2,610 – Balances with scheduled banks - Current account 12,287 12,287 Balances with scheduled banks - Deposit accounts 406,000 –
420,897 12,287 Note: Figures in brackets indicate cash outflow
As per our report attached of even date For and on behalf of the Board
For Khimji Kunverji & Co.Chartered Accountants AJS Jhala Sanjeev AgaShivji K. Vikamsey Director DirectorPartner
Date: April 21, 2008 Anurag UpadhyayaPlace: Mumbai Company Secretary & Manager
(Amount in Rupees)
78 A D I T YA B I R L A T E L E C O M L I M I T E D
I. REGISTRATION DETAILS Registration No. State Code Date
Date Month Year Balance Sheet date
II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand) Public Issue Rights Issue
Bonus Issue Private Placement
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousand) Total Liabilities Total Assets
SOURCES OF FUNDS Paid-up Capital Reserves and Surplus
Secured Loans Unsecured Loans
APPLICATION OF FUNDS Net Fixed Assets Investments
Net Current Assets/(Liability) Miscellaneous Expenditure
Accumulated Losses
IV. PERFORMANCE OF COMPANY (Amount in Rs. Thousand) Turnover Total Expenditure
(*includes other income) (*Includes prior period adjustments)
+ – Profit/(Loss) Before Tax + – Profit/(Loss) After Tax
–
(Please tick appropriate box + for profit - for loss)
Earnings Per Share in Rs. Dividend Rate (%)
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (As per Monetary Terms)
Item Code No. (ITC Code)
Product Description
1 1
3 1 0 3 2 0 0 8
N I L
–
– 1 . 3 0 – –
3 6 4 8 7 0 3 6 4 8 7 0
1 0 0 0 0 0
4 4 1 7 2 6 0 4 5 3
7 0 3 1 9 0 N I L
– 3 7 6 9 7 7
3 8 6 5 7
2 1 7 1 3 1 4 9
1 2 9 3 2 1 3 0 1 8
1 1 – 1 5 8 9 0
N I L
N I L
N I L
N I L
N I L
N O T A P P L I C A B L E
T E L E C O M S E R V I C E S
For and on behalf of the Board
AJS Jhala Sanjeev AgaDirector Director Anurag Upadhyaya Company Secretary & Manager
Date : April 21, 2008Place : Mumbai
2 0 1 2 2 0 0 5
Balance Sheet Abstract and Company’s General Business Profile
79A N N U A L R E P O R T 2 0 0 7 - 0 8
Directors’ Report of Idea Cellular Services Limited
Dear Shareholders,
Your Directors have pleasure in presenting the First Annual Report together with the Audited Accounts of your Company for the period commencing from October 3, 2007 to March 31, 2008.
Incorporation
Your Company was incorporated on October 3, 2007 and it received the Certificate of Commencement of Business on October 24, 2007.
Performance Review
Your Company was incorporated on October 3, 2007 with the objective to provide manpower services in the areas of subscriber acquisition and servicing required by the mobility circles of Idea Cellular Limited, the holding company.
During the period ended March 31, 2008, your Company earned a total income of Rs. 4,54,12,864/- and incurred a net loss of Rs. 19,71,783/-. It has fully amortised preliminary expenses of Rs. 45,500/-.
Issue of Capital
Idea Cellular Limited and its nominees were subscribers to the Memorandum and contributed the entire paid up capital of Rs. 5,00,000. Consequent to the allotment, your Company became a wholly owned subsidiary of Idea Cellular Limited.
Dividend
Since the Company has not earned any profit for the period ended March 31, 2008, the Directors do not recommend any dividend for the said period.
Deposits
Your Company has not accepted any public deposit during the period under review.
Particulars of Employees’ Remuneration
The Company does not have any employee to whom the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particular of Employees) Rules, 1975 are applicable for the financial year 2007-08.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:
• In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
• The Directors have selected such accounting policies and 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 Financial Year and of the profit or loss of the Company for that period;
• The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities;
• The Directors have prepared the Annual Accounts on a going concern basis.
Directors
Mr. M.R. Prasanna, Mr. Sanjeev Aga and Mr. AJS Jhala were appointed as first Directors of the Company and holds office upto the date of First Annual General Meeting.
The Company has received due notices from member proposing the appointment of Mr. M.R. Prasanna, Mr. Sanjeev Aga and Mr. AJS Jhala as Directors of the Company.
Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai were appointed as first auditors of the Company and their term of office expires at the ensuing Annual General Meeting and being eligible hereby offer themselves for appointment. A certificate under Section 224(1B) of the Companies Act, 1956 has been obtained from them.
Information as per Section 217(1)(e) of the Companies Act, 1956
The Company is not engaged in any manufacturing activity and therefore there are no particulars to be disclosed under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 pursuant to Section 217(1)(e) with regard to Conservation of Energy and Technological Absorption.
There is no earning or outgoing in foreign exchange during the period under review.
Acknowledgement
Your Directors place on record their appreciation of efforts of employees in contributing to the performance of the Company. They would also like to place on record their sincere appreciation for the continued co-operation and support provided by the Bankers, Central and State Government departments and Local Authorities.
For and on behalf of the Board
Date: April 21, 2008 AJS Jhala Sanjeev AgaPlace: Mumbai Director Director
80 IDEA CELLULAR SERvICES LIMITED
Auditors’ ReportTo the Members of Idea Cellular Services Limited
1. We have audited the attached Balance Sheet of Idea Cellular Services Limited as at March 31, 2008 and the related Profit and Loss Account for the period October 3, 2007 to March 31, 2008 and Cash Flow Statement for the period ended on that date both annexed thereto (together referred to as ‘financial statements’). 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, (‘the said Order’) 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 in paragraph 3 above, we report that:
(a) 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 ;
(b) 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;
(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the 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;
(e) On the basis of written representations received from the directors, as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon, 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;
(ii) in the case of the Profit and Loss Account, of the loss of the Company for the period from October 3, 2007 to March 31, 2008; and
(iii) in the case of the Cash Flow Statement, of the Cash Flows of the Company for the period ended on that date.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date : April 21, 2008Place : Mumbai
Annexure to the Auditors’ Report(Referred to in paragraph 3 of our report of even date to the members of Idea Cellular Services Limited on the accounts for the period ended March 31, 2008)
(i) In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b) As informed and represented to us, fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification.
c) According to the information and explanations given to us, the Company has not disposed off any fixed assets during the year and accordingly the paragraph 4 (i) (c) of the said order relating to going concern being affected are not applicable.
(ii) In our opinion, the Company is not dealing in any inventories. Accordingly the provisions of paragraphs 4 (ii) (a) to 4 (ii) (c) of the said order relating to physical verification, frequency of verification, procedures of physical verification and maintenance of inventory records are not applicable to the Company.
(iii) According to the information and explanations given to us, the Company has not granted/taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the paragraphs 4 (iii) (b) to 4 (iii) (d) and 4 (iii) (f) and 4 (iii) (g) of the said order are not applicable to the Company.
(iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets. During the current year, the Company had no transactions of purchase of inventory and sale of goods.
(v) In our opinion and according to the information and explanations given to us, there were no contracts, particulars of which needed to be entered in the register maintained under Section 301 of the Companies Act, 1956 and hence provisions of paragraph
81A N N U A L R E P O R T 2 0 0 7 - 0 8
4 (v) (b) of the said Order relating to reasonableness of price having regard to prevailing market price is not applicable to the Company.
(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder.
(vii) The provisions of paragraph 4 (vii) of the said order relating to internal audit system are not applicable to the Company, since the Company is not a listed Company, neither does its paid up capital and reserves exceed Rs. 50 Lakhs as at the commencement of the financial period concerned. The condition relating to average annual turnover in excess of five crore rupees for the period of three consecutive financial years is not applicable, as current financial period is the first financial year of the Company.
(viii) The Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the activities of the Company and accordingly, the provisions of paragraph 4 (viii) of the said order are not applicable.
(ix) In respect of Statutory Dues
(a) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues applicable to it with the appropriate authorities during the period. The Company was not required to deposit any amounts with the Investor Education and Protection Fund.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess outstanding as at March 31, 2008, for a period of more than six months from the date they became payable.
(c) According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise duty and Cess which have not been deposited on account of any dispute.
(x) The Company has been registered for a period less than five years. Accordingly, the provisions of paragraph 4 (x) of the said order are not applicable.
(xi) The Company has not borrowed any funds from financial institutions or banks or debenture holders and accordingly, the provisions of paragraph 4 (xi) of the said order relating to default to such parties are not applicable.
(xii) According to the information and explanations given 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 and accordingly, the provisions of paragraph 4 (xii) of the said order relating to maintenance of documents and records are not applicable.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of paragraph 4(xiii) of the said Order are not applicable to the Company.
(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4 (xiv) of the said order are not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore, the provisions of paragraph 4 (xv) of the said order are not applicable to the Company.
(xvi) The Company has not taken any term loan during the period. Therefore the provisions of paragraph 4 (xvi) of the said order relating to usage of such funds are not applicable to the Company.
(xvii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis have not been used for long term purposes.
(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.
(xix) In our opinion and according to the information and explanations given to us, the Company has not issued any debentures during the period. Accordingly, the provisions of paragraph 4 (xix) of the said order relating to creation of securities or charges in respect of debentures are not applicable to the Company.
(xx) The Company has not raised any money by way of public issues during the period covered by the audit report.
(xxi) During the course of our examination of the books of account, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any incidence of any material fraud on or by the Company, noticed or reported during the period, nor have we been informed of any such case by the management.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date : April 21, 2008Place : Mumbai
82 IDEA CELLULAR SERvICES LIMITED
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & Sells Chartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date : April 21, 2008Place : Mumbai
Balance Sheet as at March 31, 2008
(Amount in Rupees)
Schedules As at March 31, 2008
SOURCES OF FUNDS Shareholders’ FundsShare Capital 1 500,000
Reserves and Surplus – 500,000
Loan FundsUnsecured 2 10,769,478
10,769,478 TOTAL 11,269,478 APPLICATION OF FUNDSFixed Assets
Gross Block 3 1,981,181 Less: Accumulated Depreciation 92,205 Net Block 1,888,976
Deferred Tax Assets (Net) 830,000
830,000 Current Assets, Loans and AdvancesCurrent AssetsSundry Debtors 4 22,910,524 Cash and Bank Balances 5 140,666 Loans and Advances 6 1,548,533
24,599,723
Less: Current Liabilities and Provisions 7 18,021,004 Net Current Assets 6,578,719 Profit and Loss Account 1,971,783 TOTAL 11,269,478 Significant Accounting Policies and Notes to the Accounts 10
83A N N U A L R E P O R T 2 0 0 7 - 0 8
Profit and Loss Account for the period from October 3, 2007 to March 31, 2008
(Amount in Rupees)
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & Sells Chartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date : April 21, 2008Place : Mumbai
Schedules For the period October 3, 2007 to
March 31, 2008
INCOME
Service Revenue 45,404,789
Other Income (Notice Pay Recovery) 8,075
TOTAL 45,412,864
OPERATING EXPENDITURE
Personnel Expenditure 8 41,565,593
Administration & other Expenses 9 6,205,537
47,771,130
PROFIT/(LOSS) BEFORE DEPRECIATION AND TAXES (2,358,266)
Depreciation 3 92,205
PROFIT/(LOSS) BEFORE TAX (2,450,471)
Provision for taxation - Current –
- Deferred (830,000)
- Fringe Benefit tax 351,312
PROFIT/(LOSS) AFTER TAX (1,971,783)
BALANCE CARRIED FORWARD TO BALANCE SHEET (1,971,783)
Earnings Per Share (Refer Note B8 to Schedule 10) (39.44)
Significant Accounting Policies and Notes to the Accounts 10
84 IDEA CELLULAR SERvICES LIMITED
Schedules forming part of the Accounts
(Amount in Rupees)
As at March 31, 2008
SCHEDULE 1SHARE CAPITAL
Authorised50,000 Equity Shares of Rs.10 each 500,000
500,000 Issued, Subscribed and Paid-Up
Equity Share Capital50,000 Equity Shares of Rs. 10 each fully paid up 500,000 (The entire share capital is held by Holding Company - Idea Cellular Limited) 500,000
(Amount in Rupees)
(Amount in Rupees)
Gross Block Depreciation Net Block
Particulars Additionsduring the
period
Deductionsduring the
period
As atMarch 31,
2008
For theperiod
Deductionsduring the
period
As atMarch 31,
2008
As atMarch 31,
2008
Land – – – – – – –
Leasehold Land – – – – – – –
Building – – – – – – –
Plant & Machinery – – – – – – –
Furniture & Fixture – – – – – – –
Office Equipment 1,981,181 – 1,981,181 92,205 – 92,205 1,888,976
Vehicles – – – – – – –
TOTAL 1,981,181 – 1,981,181 92,205 – 92,205 1,888,976
SCHEDULE 3 : FIXED ASSETS
As at March 31, 2008
SCHEDULE 4SUNDRY DEBTORSDebts outstanding for less than six months
Unsecured - Considered good 22,910,524 22,910,524
SCHEDULE 5CASH AND BANK BALANCESCash and Cheques on Hand 16,362 Balances with Scheduled Banks
- on Current Accounts 124,304 140,666
As at March 31, 2008
SCHEDULE 2UNSECURED LOANSShort Term LoanFrom Holding Company 10,769,478
10,769,478
As at March 31, 2008
SCHEDULE 6LOANS AND ADVANCES(Unsecured, considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received 9,900 Advance Income Tax 1,538,633
1,548,533 SCHEDULE 7CURRENT LIABILITIES AND PROVISIONSCurrent LiabilitiesSundry Creditors (Refer Note B2 to Schedule 10) 12,809,851 Other Liabilities 4,105,831
16,915,682 ProvisionsLeave Encashment 814,010 Provision for Fringe Benefit Tax (Net of Advance of Rs.60,000) 291,312
1,105,322 18,021,004
(Amount in Rupees) (Amount in Rupees)
85A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts
(Amount in Rupees)
For the Period October 3, 2007 to
March 31, 2008
SCHEDULE 8
PERSONNEL EXPENDITURE
Salaries and Allowances etc. 34,401,884
Contribution to Provident and Other Funds 2,846,644
Staff Welfare 69,658
Recruitment and Training 4,247,407
41,565,593
SCHEDULE 9
ADMINISTRATION & OTHER EXPENSES
Rates and Taxes 82,400
Printing and Stationery 14,318
Communication Expenses 1,500
Travelling and Conveyance 5,886,849
Bank Charges 23,250
Legal and Professional Charges 131,593
Audit Fees 50,000
Miscellaneous Expenses 15,627
6,205,537
SCHEDULE 10
A. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Preparation of Financial Statements:
The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable Accounting Standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these Financial Statements.
2. Fixed Assets:
Fixed Assets are stated at cost of acquisition and installation less accumulated depreciation. Cost is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use.
3. Depreciation and Amortization:
Depreciation on Fixed assets is provided on straight-line method on the basis of estimated useful economic lives as given below:
Tangible Assets Years
Buildings 10 to 30
Office Equipments 3 to 9
Computers 3
Furniture & Fixtures 3 to 10
Intangible Assets
Software, which is not an integral part of Hardware, is treated as Intangible asset and is amortised on straight-line basis over their useful economic lives, estimated by the management between 3 to 5 years.
4. Taxation:
a) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.
b) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.
5. Retirement Benefits:
Contributions to Provident and pension funds are funded with the appropriate authorities and charged to the Profit and Loss Account.
Liability for gratuity as at the year end is provided on the basis of actuarial valuation and charged to the Profit and Loss Account.
Provision in accounts for leave benefits to employees is based on actuarial valuation done by Projected accrued benefit method at the Period end.
6. Revenue Recognition:
Revenue on account of Manpower Services rendered is recognised as services are rendered based on agreements/arrangements.
7. Investments:
Current Investments are stated at lower of cost or fair value in respect of each separate investment.
Long-term investments are stated at cost less provision for diminution in value other than temporary, if any.
8. Borrowing Cost:
Interest and other costs incurred in connection with the borrowing of the funds are charged to revenue on accrual basis except those borrowing costs which are directly attributable to the acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use. Such costs are capitalized with the fixed assets.
9. Contingent Liability:
Disclosures for contingent liabilities are considered to the extent of notices/demands received by the Company.
10. Impairment of Assets:
Assets that are subject to impairment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is higher of the assets fair value less costs to sell and value in use. For the purpose of impairment, assets are grouped at the lowest levels for which there are separately identified cash flows.
11. Provisions:
Provisions are recognised when the Company has a present obligation as a result of past events; it is more likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
86 IDEA CELLULAR SERvICES LIMITED
Schedules forming part of the AccountsB. NOTES TO ACCOUNTS
1. Auditors’ Remuneration (exclusive of service tax): (Amount in Rupees)
Particulars For the period October 3, 2007 to
March 31, 2008Statutory Audit Fees 50,000
2. a) There is no outstanding amount due to Small Scale Industries (SSI) at the period end.
b) There is no outstanding amount due to Micro, Small & Medium Enterprises defined under The Micro, Small, Medium Enterprises Development Act, 2006.
3. Provision for Gratuity
Since none of the employees of the Company has completed six months of service, there is no accrual of gratuity liability as March 31, 2008.
4. Provision for Leave Encashment
The Company had provided for the leave encashment as per the actuarial valuation till March 31, 2008 as required then by Accounting Standard-15 on “Accounting for Retirement Benefits in the Financial Statements of Employers”.
5. Segment Reporting
The Company operates in only one business segment. In the circumstances, segment information required by Accounting Standard–17 issued by the Institute of Chartered Accountants of India, has not been furnished.
6. Related Party Transactions
a) As per Accounting Standard–18 on “Related Party Disclosure” issued by the Institute of Chartered Accountants of India, related parties of the Company are disclosed below:
List of related Parties: Holding Company Idea Cellular Limited (100% Holding Company of Idea
Cellular Services Limited) Fellow Subsidiaries Aditya Birla Telecom Limited Swinder Singh Satara & Co. Limited Idea Cellular Infrastructure Services Limited Idea Cellular Towers Infrastructure Limited Key Management Personnel Mr. Sanjeev Aga, Director Mr. AJS Jhala, Director
b) Disclosure in respect of Related Parties:
During the period ended March 31, 2008 following transactions were carried out with the related parties in the ordinary course of business.
(Amount in Rupees)
Particulars
Nature of RelationshipHolding Company
(Idea Cellular Limited)Transactions
Issue of Shares 500,000Sale of Services (Inclusive of Service Tax of Rs. 5,612,032/-)
51,016,821
Unsecured Short Term Loan Taken
26,865,075
Outstanding Balance as on March 31, 2008 (Amount in Rupees)
Particulars
Nature of RelationshipHolding Company
(Idea Cellular Limited)Transactions
Sundry Debtors 22,910,524Unsecured Short Term Loan Taken
10,769,478
7. Deferred Tax(Amount in Rupees)
Particulars As at March 31, 2008
Deferred Tax Liability:
Depreciation of Fixed Assets 171,000Total Deferred Tax Liability 171,000Deferred Tax Asset: Brought Forward Loss 95,000 Preliminary Expenses 12,000 Provision for Leave Encashment 276,000 Provision for Bonus 618,000Total Deferred Tax Asset 1,001,000Net Deferred Tax Asset 830,000
Deferred Tax assets on account of timing difference are recognised, as there is a reasonable certainty that sufficient future taxable income will be available to realise the deferred tax assets.
8. Earnings Per Share is calculated as under:
(Amount in Rupees)Particulars For the period
October 3, 2007 to March 31, 2008
Net Profit/(Loss) as disclosed in Profit and Loss Account (1,971,783) Number of Equity Shares (Nos.) 50,000Nominal value of Shares 10/-Basic and Diluted Earnings per Share (39.44)
9. Estimated amount of Contract remaining to be executed on Capital Account and not provided for (net of advance) Rs. Nil.
10. There is no other additional information pursuant to para 3, 4C, 4D, of part II of Schedule VI of the Companies Act, 1956.
11. Previous Year Figures are not applicable as the Company started its operation from October 3, 2007.
For and on behalf of the Board
AJS Jhala Sanjeev Aga Director Director
Date: April 21, 2008Place: Mumbai
87A N N U A L R E P O R T 2 0 0 7 - 0 8
Cash Flow Statement for the period October 3, 2007 to March 31, 2008
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date: April 21, 2008Place: Mumbai
(Amount in Rupees)
For the period October 3, 2007 to March 31,2008
A) Cash Flow from Operating Activities Net Profit/(Loss) after tax (1,971,783)
Adjustments for: Depreciation 92,205
Provision for Fringe Benefit Tax 351,312
Deferred Tax Provision (830,000)
Operating Profit/(Loss) before Working capital Changes (2,358,266) Adjustments for: (Increase)/Decrease in Sundry Debtors (22,910,524)
(Increase)/Decrease in Loans and Advances (9,900)
Increase/(Decrease) in Current Liabilities 15,748,511 (7,171,913)
Cash generated from/(used in) operations (9,530,179)
Tax(paid)/Refund (Including FBT & TDS) (1,598,633) Net cash from/(used in) operating activities (11,128,812)
B) Cash Flow from Investing Activities –
C) Cash Flow from Financing Activities Proceeds from Issue of Share Capital 500,000
Proceeds from Unsecured Short Term Loan 10,769,478
Net Cash From/(Used in) Financing Activity 11,269,478
Net increase/(decrease) in cash and cash equivalent 140,666
Cash and cash equivalent at the beginning –
Cash and cash equivalent at the end 140,666
Notes:1. Cash and cash equivalent inclues :
Cash and Cheques on Hand 16,362
Balances with Scheduled Banks
- on Current Accounts 124,304
140,666
2. The above Cash Flow statement has been prepared under the indirect method as set out in Accounting Standard–3 on Cash Flow statement issued by the Institute of Chartered Accountants of India.
88 IDEA CELLULAR SERvICES LIMITED
I. REGISTRATION DETAILS Registration No. State Code Date
Date Month Year Balance Sheet date
II. CAPITAL RAISED DURING THE YEAR (Rupees in Thousand) Public Issue Rights Issue
Bonus Issue Private Placement
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Rupees in Thousand) Total Liabilities Total Assets
SOURCES OF FUNDS Paid-up Capital Reserves and Surplus
Secured Loans Unsecured Loans
APPLICATION OF FUNDS Net Fixed Assets Investments
Net Current Assets/(Liability) Miscellaneous Expenditure
Accumulated Losses
IV. PERFORMANCE OF COMPANY (Rupees in Thousand) Turnover Total Expenditure
Profit/(Loss) Before Tax Profit/(Loss) After Tax
(Please tick appropriate box + for profit, – for loss)
Earnings Per Share in Rs. Dividend Rate (%)
V. GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (As per monetary terms) Item Code No. (ITC Code)
Product Description
3 1 0 3 2 0 0 8
M A N P O W E R S E R V I C E S
N I L N I L
1 9 7 2
4 5 4 1 3
1 1 2 6 9 1 1 2 6 9
5 0 0 N I L
N I L 1 0 7 6 9
1 8 8 9 N I L
6 5 7 9 N I L
4 7 8 6 3
- 1 9 7 2- 2 4 5 0
- 3 9 . 4 4 0 0
For and on behalf of the Board
AJS Jhala Sanjeev AgaDirector Director
Date : April 21, 2008Place : Mumbai
Balance Sheet Abstract and Company’s General Business Profile
N O T A P P L I C A B L E
0 5 1 8 8 1 0 4
N I L 5 0 0
0 3 1 0 2 0 0 7
89A N N U A L R E P O R T 2 0 0 7 - 0 8
Directors’ Report of Idea Cellular Infrastructure Services LimtedDear Shareholders,
Your Directors have pleasure in presenting the First Annual Report together with the Audited Accounts of your Company for the period commencing from October 3, 2007 to March 31, 2008.
Incorporation
Your Company was incorporated on October 3, 2007 and it received the Certificate of Commencement of Business on October 24, 2007.
Performance Review
Your Company was incorporated on October 3, 2007 with the objective to roll out the passive infrastructure requirements in various telecom service areas.
Further, on April 3, 2008, your Company received IP-I registration from the Department of Telecommunications to provide passive infrastructure services as part of its business objectives. Companies registered as IP-I can provide assets such as Dark Fibre, Right of Way, Duct space and Tower.
During the period ended March 31, 2008, your Company earned a total income of Rs. 2,850/- and incurred a net loss of Rs. 1,03,199/-. It has fully amortised preliminary expenses of Rs. 45,500/-. Further the Consolidated total income is Rs. 2,850/- and incurred a net loss of Rs. 71,79,466/-
Issue of Capital
Idea Cellular Limited and its nominees were subscribers to the Memorandum and contributed the entire paid up capital of Rs. 5,00,000. Consequent to the allotment, your Company became a wholly owned subsidiary of Idea Cellular Limited.
Dividend
The Board of Directors have not declared any dividend during the year.
Deposits
Your Company has not accepted any public deposit during the period under review.
Subsidiary
During the period under review, your Company formed a wholly owned subsidiary namely, Idea Cellular Towers Infrastructure Limited (ICTIL) on December 3, 2007 to house the passive infrastructure for certain service areas of Idea Cellular Limited, the holding Company. The entire paid up equity capital of ICTIL comprising of 50,000 equity shares of Rs. 10/- each is held by your Company along with its nominees.
Joint Ventures
During the period under review, your Company alongwith Vodafone Essar Limited, Bharti Airtel Limited, Bharti Infratel Limited and Idea Cellular Limited formed a joint venture Company namely Indus Infratel Limited to conduct the business of building, operating and maintaining new and existing passive infrastructure in various telecom service areas and provide passive infrastructure services to telecommunications service providers.
Particulars of Employees’ Remuneration
The Company has no employees on its payroll. Accordingly the provisions of Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975, are not applicable.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:
• In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
• The Directors have selected such accounting policies and 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 Financial Year and of the profit or loss of the Company for that period;
• The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities;
• The Directors have prepared the Annual Accounts on a going concern basis.
Directors
Mr. M.R. Prasanna, Mr. Sanjeev Aga and Mr. AJS Jhala were appointed as first Directors of the Company and holds office upto the date of First Annual General Meeting.
The Company has received due notices from member proposing the appointment of Mr. M.R. Prasanna, Mr. Sanjeev Aga and Mr. AJS Jhala as Directors of the Company.
Auditors
M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai were appointed as first auditors of the Company and their term of office expires at the ensuing Annual General Meeting and being eligible hereby offer themselves for appointment. A certificate under Section 224(1B) of the Companies Act, 1956 has been obtained from them.
Information as per Section 217(1)(e) of the Companies Act, 1956
The particulars required by the Companies (disclosure of particulars in report of Board of Directors) pursuant to Section 217(1)(e) with regard to Conservation of Energy and Technological Absorption are not applicable since there was no manufacturing activity during the period under review.
There is no earning or outgoing in foreign exchange during the period under review.
Acknowledgement
Your Directors wish to place on record their appreciation for the guidance and support extended by government authorities.
For and on behalf of the Board
Date: April 21, 2008 AJS Jhala Sanjeev AgaPlace: Mumbai Director Director
90 I D E A C E L L U L A R I N F R A S T R U C T U R E S E R V I C E S L I M I T E D
Auditors’ ReportTo The Members ofIdea Cellular Infrastructure Services Limited
We have audited the attached Balance Sheet of Idea Cellular Infrastructure Services Limited as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow statement for the Period 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.
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.
As required by the Companies (Auditors’ Report) Order, 2003 (hereinafter referred to as the Order), issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956 (hereinafter referred to as the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.
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 Section 211 (3C) of Act.
(v) On the basis of written representations received from the directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of Clause (g) of sub–section (1) of Section 274 of the Act.
(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 the affairs of the Company as at March 31, 2008;
b) in case of the Profit and Loss Account, of the Loss of the Company for the period ended on that date; and
c) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
For and on behalf of Khimji Kunverji & Co.Chartered Accountants
Shivji K. VikamseyPartnerMembership No.: 2242
Date : April 21, 2008Place : Mumbai
Annexure to the Auditor’s ReportAnnexure Referred to in Para 3 of our Auditor’s Report
(i) The Company does not hold Fixed Assets during the year, hence Clause 4(i)(a), 4(i)(b) and 4(i)(c) of the Order are not applicable to the Company.
(ii) The Company does not hold any stock in trade, hence Clause 4(ii)(a), 4(ii)(b) and 4(ii)(c) of the Order are not applicable to the Company.
(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms, and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Hence Clause (iii)(b),(c) and (d) are not applicable to the Company.
(b) The Company has not taken any loans, secured or unsecured from companies, firms, and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Hence Clause (iii) (f) and (g) are not applicable to the Company.
(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets. During the year the Company has neither purchased any inventory nor sold any goods or services, hence, the question of an adequate internal control system commensurate with the size of the Company and the nature of its business for the areas does not arise.
(v) Based on the Audit procedures applied by us, and according to information and explanations provided by the management, there are no contracts or arrangements referred to in Section 301 of the Act need to be entered into the register maintained under the section. In view of this Clause (v) (b) is not applicable.
(vi) The Company has not accepted any deposit from the public in terms of the provisions of Sections 58A, 58AA or any other relevant provisions of the Act. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any Tribunal.
(vii) The Company did not have a formal Internal Audit system during the year.
(viii) The Company is not required to maintain any cost records prescribed by the Central Government under Clause (d) of sub-section (1) of Section 209 of the Act.
(ix) (a) The Company is regular in depositing undisputed Income tax and there are no arrears thereof as at March 31, 2008 for a period of more than six months from the date they become payable. During the financial year under review, there were no employees on the rolls of the Company. Personnel from IDEA group of companies have been deployed for rolling out the passive infrastructure requirements in various states of India and expenses thereon have been accounted for on the basis of reimbursement claimed by Idea Group of companies. Accordingly Provident Fund is paid by respective Idea Group companies. We are informed that Investor Education and Protection Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, and other statutory dues are not applicable to the Company. There were no
91A N N U A L R E P O R T 2 0 0 7 - 0 8
arrears as at March 31, 2008 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no disputed Income-Tax, dues which had not been deposited.
(x) Since the Company is registered for less than five years, the provisions of Clause 4(x) of the Order, not applicable to the Company.
(xi) The Company has not taken any loans from financial institutions or banks. Therefore, the provisions of Clause 4(xi) of the Order, not applicable to the Company.
(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 any 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 Order, are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debenture and other investment. Accordingly, the provisions of Clause 4(xiv) of the Order, are not applicable to the Company.
(xv) According to information and explanations given to us the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, the provision of Clause 4(xv) of the Order is not applicable to the Company.
(xvi) According to the information and explanations given to us, the Company has not raised any term loans during the year. Accordingly, the provision of Clause 4(xvi) of the Order is not applicable to the Company.
(xvii) According to the information and explanations given to us and on the overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised any money through a public issue during the year.
(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
For and on behalf of
Khimji Kunverji & Co.Chartered Accountants
Shivji K. VikamseyPartnerMembership No.: 2242
Date : April 21, 2008Place : Mumbai
92 I D E A C E L L U L A R I N F R A S T R U C T U R E S E R V I C E S L I M I T E D
Balance Sheet as at March 31, 2008
Schedules As at March 31, 2008
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital 1 500,000
500,000
Loan Funds
Unsecured 2 51,500,497
51,500,497
TOTAL 52,000,497
APPLICATION OF FUNDS
Investment 3 690,470
Capital Work-in-Progress 365,529,902
Current Assets, Loans and Advances
Current Assets
Sundry Debtors 4 2,850
Cash and Bank Balances 5 499,382
Loans and Advances 6 1,315,939
1,818,171
Less: Current Liabilities 7 316,141,245
Net Current Assets (314,323,074)
Profit and Loss Account 103,199
TOTAL 52,000,497
Significant Accounting Policies and Notes to the Accounts 10
(Amount in Rupees)
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the Board
For Khimji Kunverji & Co.Chartered Accountants
Shivji K. Vikamsey AJS Jhala Sanjeev AgaPartner Director Director
Date : April 21, 2008Place : Mumbai
93A N N U A L R E P O R T 2 0 0 7 - 0 8
Profit and Loss Account for the period ended March 31, 2008
(Amount in Rupees)
Schedules For the period ended
March 31, 2008
INCOME
Sales of Trading Goods 2,850
TOTAL 2,850
OPERATING EXPENDITURE
Cost of Trading Goods 8 2,531
Administration and other Expenses 9 103,518
106,049
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX (103,199)
PROFIT/(LOSS) BEFORE TAX (103,199)
Provision for taxation - Current –
- Deferred –
- Fringe Benefit tax –
PROFIT/(LOSS) AFTER TAX (103,199)
Balance brought forward from previous year –
BALANCE CARRIED FORWARD TO BALANCE SHEET (103,199)
Basic Earnings Per Share (2.06)
Significant Accounting Policies and Notes to the Accounts 10
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the Board
For Khimji Kunverji & Co.Chartered Accountants
Shivji K. Vikamsey AJS Jhala Sanjeev AgaPartner Director Director
Date : April 21, 2008Place : Mumbai
94 I D E A C E L L U L A R I N F R A S T R U C T U R E S E R V I C E S L I M I T E D
Schedules forming part of the Accounts
As at March 31,
2008
SCHEDULE 1SHARE CAPITALAuthorised50,000 Equity Shares of Rs.10 each 500,000
500,000 Issued, Subscribed and Paid-UpEquity Share Capital50,000 Equity Shares of Rs. 10 each fully paid up 500,000 (The entire paid-up share capital is held by the holding company, Idea Cellular Ltd. and its nominees)
500,000
SCHEDULE 2UNSECURED LOANS From Idea Cellular Limited 791,720 From Aditya Birla Telecom Limited 50,708,777
51,500,497
SCHEDULE 3INVESTMENTInvestments (Long Term) (Unquoted)
Trade Investment
Indus Towers Limited 190,470 (19,047 equity shares of Rs.10/- each fully paid)
Investment in Subsidiaries
Idea Cellular Towers Infrastructure Limited 500,000 (50,000 equity shares of Rs.10/- each fully paid)
690,470
SCHEDULE 4SUNDRY DEBTORSDebts outstanding for over six monthsUnsecured - Considered good – - Considered doubtful –
– Other DebtsUnsecured - Considered good 2,850 - Considered doubtful –
2,850 Less: Provision for doubtful debts – TOTAL 2,850
(Amount in Rupees)
As at March 31,
2008
SCHEDULE 5
CASH AND BANK BALANCES
Balances with Scheduled Banks
- in Current Accounts 499,382
499,382
SCHEDULE 6
LOANS AND ADVANCES
(Unsecured, considered good unless otherwise stated)
Advances recoverable in cash or kind or for value to be received 1,267,589
Deposits with Subsidiaries 48,350
1,315,939
SCHEDULE 7
CURRENT LIABILITIES
Sundry Creditors 316,141,245
316,141,245
For the period ended March
31, 2008
SCHEDULE 8
COST OF TRADING GOODS SOLD
Opening Stock –
Add: Purchases 2,531
Less: Closing Stock –
2,531
SCHEDULE 9
ADMINISTRATION AND OTHER EXPENSES
Bank Charges 618
Legal and Professional Charges 2,400
Audit Fees 50,000
Miscellaneous expenses 50,500
103,518
(Amount in Rupees)
95A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts
SCHEDULE 10
A. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention
The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these financial statements.
2. Investments
Current Investments are stated at lower of cost or fair value in respect of each separate investment.
Long-term investments are stated at cost less provision for diminution in value, other than temporary, if any.
3. Expenditure During Pre-operative Period Of Licence
Expenses incurred on Project and other charges during construction period are included under pre-operative expenditure (grouped under Capital Work in Progress) and are allocated to the cost of Fixed Assets on the commencement of commercial operations.
4. Fixed Assets
Fixed assets are stated at cost of acquisition and installation less accumulated depreciation. Cost is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use.
5. Revenue Recognition
Revenue is recognised on rendering of services.
Dividend income on investment is accounted for when the right to receive the payment is established.
6. Provisions
Provisions are recognised when the Company has a present obligation as a result of past events, it is more likely that an outflow of resources will be required to settle the obligation, and amount can be reliably estimated.
7. Taxation
Current Tax: Provision for current tax is made on the taxable income using the applicable tax rates and tax laws.
Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.
8. Contingent Liability
Disclosure for contingent liabilities is considered to the extent of notices/demands received by the Company.
B. NOTES TO ACCOUNTS
1. The Company was incorporated on October 3, 2007 as a 100% subsidiary of Idea Cellular Limited to roll out the passive infrastructure in various states of India.
During the year, the Company and its holding Company along with Bharati Airtel Limited and Vodafone Essar Limited and their subsidiaries have entered into a joint venture agreement with Indus Towers Limited.
2. Contingent Liabilities not provided for:
a) Estimated amount of contract remaining to be executed on Capital Account and not provided for (net of advance) Rs.2,106,404,489.
3. Employee Expenses:
During the period, there were no employees on the rolls of the Company. Personnel from Idea Cellular Limited have been deployed for rolling out the Network. Expenses (including retirement benefits) towards such personnel have been accounted for on the basis of reimbursement claimed by Idea Cellular Limited.
4. Deferred Tax assets on account of timing difference towards business loss are not recognised, as there is no reasonable certainty that sufficient future taxable income will be available to realise the deferred tax assets.
5. Capital Work in Progress includes equipment and machinery in stock, advances for construction and erection work, expansion project and the following pre-operative expenses pending allocation (Net):
(Amount in Rupees)
Particular For the period ended March
31, 2008Employee Cost 6,651,719Travelling & Conveyance 1,953,044Administrative and General Expenses 1,521,862Network Expenses 6,527,205Total 16,653,830
6. Disclosure in respect of Related Parties pursuant to Accounting Standard – 18:
List of Related Parties as on March 31, 2008
Promoters of holding company Hindalco Industries Limited Grasim Industries Limited Aditya Birla Nuvo Limited Birla TMT Holdings Pvt. Limited
Holding Company Idea Cellular Limited (ICL)
Subsidiaries Idea Cellular Towers Infrastructure Limited (ICTIL)
96 I D E A C E L L U L A R I N F R A S T R U C T U R E S E R V I C E S L I M I T E D
Fellow Subsidiaries of ICISL Aditya Birla Telecom Limited (ABTL) Swinder Singh Satara & Co. Limited Idea Cellular Services Limited (ICSL)
Joint Venture
Indus Towers Limited (w.e.f. December 8, 2007)
During the year following transactions were carried out with the related parties in the ordinary course of business:
(Amount in Rupees)
Related PartyTransaction
Holding Co.
(ICL)
Fellow Subsidiaries
(ABTL)
Subsidiaries (ICTIL)
Joint Venture
(Indus Tower)
Loan taken 791,720 50,708,777 – –
Investment in – – 500,000 190,470
Outstanding Balance as on March 31, 2008 791,720 50,708,777 – –
7. Earnings per Share (EPS) is calculated as under:
(Amount in Rupees)
Particulars For the period October 3,
2007 to March 31, 2008
Nominal Value of Equity Share 10
Profit/(Loss) after Tax (103,199)
Profit/(Loss) attributable to Equity Shareholder (103,199)
Weighted Average No of Equity Share outstanding during the Year (Nos.) 50,000
Basic Earnings Per Share (2.06)
8. Information pertaining to para 3 and 4C of part II of Schedule VI of the Companies Act, 1956 is not given as the same is not applicable to the Company during the period.
9. No amounts are payable to Micro, Small and Medium Enterprises (SMEs) within the meaning of the Micro, Small and Medium Enterprises Development Act, 2006.
10. This being the first year of the Company, previous period figures are not applicable.
Cash Flow Statement for the year ended March 31, 2008
Particulars Year ended March 31,
2008A. Cash flow from operating activities:
Net profit/(loss) before tax (103,199)Add Adjustments for:Depreciation and amortisation – Interest and finance charges – Operating profit before working capital changes (103,199)Adjustments for changes in working capital:(Increase)/ decrease in sundry debtors (2,850)(Increase)/decrease in other receivables (1,315,939)Increase/(decrease) in trade and other payables 2,531 Cash generated from operations (1,419,457)Net cash from/(used in) operating activities (1,419,457)
B. Cash flow from Investing activities:Purchase of fixed assets (49,391,188)Investments (690,470)Net cash from/(used in) investing activities (50,081,658)
C. Cash flow from financing activities:Proceeds from fresh issue of Share Capital 500,000 Receipt from long term borrowings 51,500,497 Interest and other financial charges paid – Net cash from/(used in) financing activities 52,000,497 Net increase in cash and cash equivalents (A+B+C) 499,382 Cash and cash equivalents at the beginning of the year
–
Cash and cash equivalents at the end of the year
499,382
Net increase in cash and cash equivalents 499,382
Cash and cash equivalents compriseBalances with scheduled banks - Current account 499,382 Balances with scheduled banks-Deposit accounts –
499,382 Note: Figures in brackets indicate cash outflow.
As per our report of even date attached For and on behalf of the Board
For Khimji Kunverji & Co. Chartered Accountants
Shivji K Vikamsey AJS Jhala Sanjeev AgaPartner Director Director
Date: April 21, 2008Place: Mumbai
(Amount in Rupees)
97A N N U A L R E P O R T 2 0 0 7 - 0 8
I. REGISTRATION DETAILS Registration No. State Code Date
Date Month Year Balance Sheet Date
II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand) Public Issue Rights Issue
Bonus Issue Private Placement
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUND (Amount in Rs. Thousand) Total Liabilities Total Assets
SOURCES OF FUNDS Paid-up Capital Reserves and Surplus
Secured Loans Unsecured Loans
APPLICATION OF FUNDS Net Fixed Assets Investments
Net Current Assets/(Liability) Miscellaneous Expenditure
Accumulated Losses
IV. PERFORMANCE OF COMPANY (Amount in Rs. Thousand) Turnover Total Expenditure
+ – Profit/(Loss) Before Tax + – Profit/(Loss) After Tax
–
(Please tick appropriate box + for profit - for loss)
Earnings Per Share in Rs. Dividend Rate (%)
V. GENERIC NAMES OF THE THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (As per Monetary Terms)
Item Code No. (ITC Code)
Product Description
0 4
3 1 0 3 2 0 0 8
N I L
–
– 2 . 0 6 – –
5 2 0 0 0 5 2 0 0 0
5 0 0
N I L 5 1 5 0 0
3 6 5 5 3 0 6 9 0
– 3 1 4 3 2 3
1 0 4
3 1 0 6
1 0 3 1 0 3
0 5 1 8 8 0
N I L
N I L
N I L
N I L
N I L
N O T A P P L I C A B L E
0 3 1 0 2 0 0 7
I N F R A S T R U C T U R E S E R V I C E S
Balance Sheet Abstract and Company’s General Business Profile
For and on behalf of the Board
AJS Jhala Sanjeev AgaDirector Director
Date : April 21, 2008Place : Mumbai
98 I D E A C E L L U L A R T O W E R S I N F R A S T R U C T U R E L I M I T E D
Directors’ Report of Idea Cellular Towers Infrastructure LimitedDear Shareholders,
Your Directors have pleasure in presenting the First Annual Report together with the Audited Accounts of your Company for the period commencing from December 3, 2007 to March 31, 2008.
Incorporation
Your Company was incorporated on December 3, 2007 and it received the Certificate of Commencement of Business on March 12, 2008.
Performance Review
Your Company was incorporated on December 3, 2007 with the objective to roll out and provide the passive infrastructure requirements in various telecom service areas.
The Company is yet to commence its operations and hence there is no income during the period ended March 31, 2008. Your Company incurred a net loss of Rs. 63,968/- after amortising preliminary expenses of Rs. 42,150/-.
Issue of Capital
Idea Cellular Infrastructure Services Limited and its nominees were subscribers to the Memorandum and contributed the entire paid up capital of Rs. 5,00,000. Consequent to the allotment, your Company became a wholly owned subsidiary of Idea Cellular Infrastructure Services Limited.
Dividend
The Board of Directors have not declared any dividend during the year.
Deposits
Your Company have not accepted any public deposit during the period under review.
Particulars of Employees’ Remuneration
The Company has no employees on its payroll. Accordingly the provisions of Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975, are not applicable.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:
• In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
• The Directors have selected such accounting policies and 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 Financial Year and of the profit or loss of the Company for that period;
• The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities;
• The Directors have prepared the Annual Accounts on a going concern basis.
Directors
Mr. M.R. Prasanna, Mr. Sanjeev Aga and Mr. AJS Jhala were appointed as first Directors of the Company and holds office upto the date of First Annual General Meeting.
The Company has received due notices from member proposing the appointment of Mr. M.R. Prasanna, Mr. Sanjeev Aga and Mr. AJS Jhala as Directors of the Company.
Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai were appointed as first auditors of the Company and their term of office expires at the ensuing Annual General Meeting and being eligible hereby offer themselves for appointment. A certificate under Section 224(1B) of the Companies Act, 1956 has been obtained from them.
Information as per Section 217(1)(e) of the Companies Act, 1956
The particulars required by the Companies (disclosure of particulars in report of Board of Directors) pursuant to Section 217(1)(e) with regard to Conservation of Energy and Technological Absorption are not applicable since there was no manufacturing activity during the period under review.
There is no earning or outgoing in foreign exchange during the period under review.
Acknowledgement
Your Directors wish to place on record their appreciation for the guidance and support extended by government authorities.
For and on behalf of the Board
Date: April 21, 2008 AJS Jhala Sanjeev AgaPlace: Mumbai Director Director
99A N N U A L R E P O R T 2 0 0 7 - 0 8
Auditors’ ReportTo The Members ofIdea Cellular Towers Infrastructure Limited
1. We have audited the attached Balance Sheet of Idea Cellular Towers Infrastructure Limited (‘the Company’) as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the period from December 3, 2007 to March 31, 2008, annexed thereto (together referred to as ‘financial statements’). 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, (‘the said Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, on the basis of such checks of the books and records of the Company as we considered necessary and appropriate, and according to information and explanations given to us during the course of the audit, 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 in paragraph 3 above, we report that:
a) 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;
b) 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;
c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
d) 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 so far as they apply to the Company;
e) on the basis of the written representations received from the directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of Clause (g) of sub-Section (1) of section 274 of the Companies Act, 1956; and
f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;
(ii) in the case of the Profit and Loss Account, of the loss of the Company for the period from December 3, 2007 to March 31, 2008; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period from December 3, 2007 to March 31, 2008.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date: April 21, 2008Place : Pune
Annexure to the Auditors’ Report(Referred to in paragraph 3 of our report of even date to the members of Idea Cellular Towers Infrastructure Limited on the accounts for the period ended March 31, 2008)
(i) The Company did not have any fixed assets during the period ended March 31, 2008. Accordingly the provisions of paragraphs 4 (i) (a) to 4 (i) (c) of the said order relating to maintenance of fixed asset records, frequency of physical verification, and disposal of substantial part of fixed assets affecting the going concern are not applicable to the Company.
(ii) In our opinion, the Company is not dealing in any inventories. Accordingly the provisions of paragraphs 4 (ii) (a) to 4 (ii) (c) of the said order relating to physical verification, frequency of verification, procedures of physical verification and maintenance of inventory records are not applicable to the Company.
(iii) According to the information and explanations given to us, the Company has not granted/taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the paragraphs 4 (iii) (b) to 4 (iii) (d) and 4 (iii) (f) and 4 (iii) (g) are not applicable to the Company.
(iv) In our opinion, and according to the information and explanations given to us, during the current year, the Company had no transactions of purchase of inventory, fixed assets and sale of goods and services. Accordingly provisions of paragraph 4(iv) of the said Order relating to adequacy of internal control procedures is not applicable to the Company.
(v) In our opinion and according to the information and explanations given to us, there were no contracts, particulars of which needed to be entered in the register maintained under Section 301 of the Companies Act, 1956 and hence provisions of paragraph 4 (v) (b) of the said Order relating to reasonableness of price having regard to prevailing market price is not applicable to the Company.
100 I D E A C E L L U L A R T O W E R S I N F R A S T R U C T U R E L I M I T E D
(vi) In our opinion and according to the information and explanations given to us, 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 thereunder.
(vii) The provisions of paragraph 4 (vii) of the said order relating to internal audit system are not applicable to the Company, since the Company is not a listed Company, neither does its paid up capital and reserves exceed Rs. 50 lakhs as at the commencement of the financial period concerned. The condition relating to average annual turnover in excess of five crore rupees for the period of three consecutive financial years is not applicable, as current financial period is the first financial year of the Company.
(viii) The Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the activities of the Company and accordingly, the provisions of paragraph 4 (viii) of the said order are not applicable.
(ix) In respect of statutory dues:
a) According to the information and explanations given to us and the records of the Company examined by us, during the period there were no undisputed statutory dues including those under Provident Fund, Investor Education Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues; hence the question of whether the Company was regular in depositing undisputed statutory dues does not arise.
b) According to the information and explanations given to us, there were no undisputed amount payable in respect of Provident Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess outstanding as at March 31, 2008 for a period of more than six months from the date they became payable.
c) According to the information and explanations given to us, there are no dues of Sales tax, Income-Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute.
(x) The Company has been registered for a period less than five years. Accordingly, the provisions of paragraph 4 (x) of the said order are not applicable.
(xi) The Company has not borrowed any funds from financial institutions or banks or debenture holders and accordingly, the provisions of paragraph 4 (xi) of the said order relating to default to such parties are not applicable.
(xii) According to the information and explanations given 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 and accordingly, the provisions of paragraph 4 (xii) of the said order relating to maintenance of documents and records are not applicable.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of paragraph 4(xiii) of the said Order are not applicable to the Company.
(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4 (xiv) of the said order are not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore, the provisions of paragraph 4 (xv) of the said order are not applicable to the Company.
(xvi) The Company has not taken any term loan during the period. Therefore the provisions of paragraph 4 (xvi) of the said order relating to usage of such funds are not applicable to the Company.
(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the company, funds raised on short-term basis have not been used for long term purposes.
(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.
(xix) In our opinion and according to the information and explanations given to us, the Company has not issued any debentures during the period. Accordingly, the provisions of paragraph 4 (xix) of the said order relating to creation of securities or charges in respect of debentures are not applicable to the Company.
(xx) The Company has not raised any money by way of public issues during the period covered by the audit report.
(xxi) During the course of our examination of the books of account, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any incidence of fraud on or by the Company, noticed or reported during the period, nor have we been informed of any such case by the management.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date: April 21, 2008Place: Pune
101A N N U A L R E P O R T 2 0 0 7 - 0 8
Balance Sheet as at March 31, 2008
Schedules As at March 31, 2008
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital 1 500,000
Loans
Unsecured Loan from holding company 48,350
TOTAL 548,350
APPLICATION OF FUNDS
Fixed assets –
Gross block (At Cost) –
Less: depreciation –
Net block –
Current Assets, Loans and Advances
Current Assets
Cash and bank balances 2 499,382
Loans and advances –
499,382
Less: Current Liabilities and Provisions 3 15,000
Net Current Assets 484,382
Profit and Loss Account 63,968
TOTAL 548,350
Significant Accounting Policies and Notes to Accounts 5
(Amount in Rupees)
The Schedules referred to above form an integral part of accounts.
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date: April 21, 2008Place: Mumbai
102 I D E A C E L L U L A R T O W E R S I N F R A S T R U C T U R E L I M I T E D
Profit and Loss Account for the period December 3, 2007 to March 31, 2008
The Schedules referred to above form an integral part of accounts.
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date: April 21, 2008Place: Mumbai
Schedules For the period December 3, 2007to March 31, 2008
INCOME –
TOTAL –
EXPENDITURE
Administration and Other Expenes 4 63,968
63,968
Profit/(Loss) before taxes (63,968)
Provision for tax –
Profit/(Loss) after tax (63,968)
Balance Carried to Balance Sheet (63,968)
Basic and Diluted Earnings per Share (1.28)
Significant Accounting Policies and Notes to Accounts 5 –
(Amount in Rupees)
103A N N U A L R E P O R T 2 0 0 7 - 0 8
Schedules forming part of the Accounts
As atMarch 31,
2008
SCHEDULE 1SHARE CAPITALAUTHORISED50,000 Equity shares of Rs.10 each 500,000
500,000 ISSUED, SUBSCRIBED AND PAID-UPEquity Share Capital50,000 Equity shares of Rs. 10 each fully paid up 500,000 (All the shares are held by the holding company-Idea Cellular Infrastructure Services Limited)
500,000 SCHEDULE 2CASH AND BANK BALANCESCash on hand – Balances with scheduled banks
– on Current accounts 499,382 – on Fixed Deposits –
499,382 SCHEDULE 3CURRENT LIABILITIES AND PROVISIONSCurrent LiabilitiesSundry Creditors 15,000
15,000
SCHEDULE 5
A. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Conventions:
The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis. The accounts are prepared on historical cost basis as a going concern.
B. NOTES TO ACCOUNTS
1. Deferred Tax
Company has followed prudence concept for the recognition of Deferred Tax, hence no Deferred Tax Asset is created.
2. Segment Reporting
As company has not started its operations, there is no reportable segment as per Accounting Standard -17 on “Segment Reporting”.
3. Related Party Disclosure:
As per Accounting Standard -18 on “Related Party Disclosure” issued by The Institute of Chartered Accountants of India, related parties of the group are disclosed below:
Holding Companies:
1) Idea Cellular Infrastructure Services Limited
2) Idea Cellular Limited
Fellow Subsidiaries:
1) Aditya Birla Telecom Limited
2) Swinder Singh Satara & Co. Limited
3) Idea Cellular Services Limited
Transactions with Related Party
During the year following transaction were carried out with the related parties in the ordinary course of business:
1) Issue of Shares to Idea Cellular Infrastructure Services Limited (Holding Company) Rs. 500,000
2) Payment for expenses made by Idea Cellular Infrastructure Services Limited (Holding Company) on behalf of the Company amounted to Rs. 48,350.
4. Basic and Diluted Earnings Per Share:
(Amount in Rupees)
Particulars For the period December 3,
2007 to March 31, 2008
Nominal value of Equity Share 10/-
Profit/(Loss) attributable to equity shareholders
(63,968)
Weighted average number of equity shares outstanding during the year (Nos.)
50,000
Basic and Diluted Earnings Per Share (1.28)
5. Contingent Liability:
Since there are no contingent liabilities identified for the year, no disclosure is required as per Accounting Standard -29 on “Contingent Assets Liabilities and Provisions”.
6. There is no other additional information pursuant to para 3, 4C, 4D of part II of Schedule VI of the Companies Act, 1956.
7. Previous year figures are not applicable as the Company started its operations from December 2007.
For and on behalf of the Board
AJS Jhala Sanjeev Aga Director Director
Date: April 21, 2008Place: Mumbai
For the period December 3, 2007 to March 31, 2008
SCHEDULE 4ADMINISTRATION AND OTHER EXPENSESBank charges 618 Legal and Consultancy charges 1,200 Other Expenses 5,000 Preliminary expenses 42,150 Audit Fees 15,000
63,968
(Amount in Rupees)
104 I D E A C E L L U L A R T O W E R S I N F R A S T R U C T U R E L I M I T E D
Cash Flow Statement for the period December 3, 2007 to March 31, 2008
March 31, 2008A) Cash Flow from Operating ActivitiesNet profit/ (loss) after tax (63,968)Adjustments for:DepreciationOperating Profit before Working capital Changes (63,968)Adjustments for:(Increase)/Decrease in Other Current Assets –
(Increase)/Decrease in Loans and Advances –
Increase/(Decrease) in Current Liabilities 15,000 15,000
Cash generated from/(used in) operations (48,968)Tax(paid)/Refund – Net cash from/(used in) operating activities (48,968)B) Cash Flow from Investing ActivitiesNet cash from/(used in) investing activities – C) Cash Flow from Financing ActivitiesIssue of Share Capital 500,000 Proceeds from Short Term Loan 48,350 Net Cash from/(used in) Financing activity 548,350Net increase/(decrease) in cash and cash equivalent 499,382 Cash and cash equivalent at the beginning – Cash and cash equivalent at the end 499,382
Notes:
1. Cash and cash equivalent includes balance with scheduled banks in current accounts Rs. 499,382/-.
2. The above cash flow statement has been prepared under the indirect method as set out in Accounting Standard – 3 on cash flow statement issued by the Institute of Chartered Accountants of India.
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Place: MumbaiDate: April 21, 2008
(Amount in Rupees)
105A N N U A L R E P O R T 2 0 0 7 - 0 8
I. REGISTRATION DETAILS Registration No. State Code Date
Date Month Year Balance Sheet Date
II. CAPITAL RAISED DURING THE yEAR (Rupees in ‘000) Public Issue Rights Issue
Bonus Issue Private Placement
III. POSITION OF MOBILISATION AND DEPLOyMENT OF FUNDS (Rupees in ‘000) Total Liabilities Total Assets
SOURCES OF FUNDS Paid-up Capital Reserves and Surplus
Secured Loans Unsecured Loans
APPLICATION OF FUNDS Net Fixed Assets Investments
Net Current Assets/(Liability) Miscellaneous Expenditure
Accumulated Losses
IV. PERFORMANCE OF COMPANy (Rupees in ‘000) Turnover Total Expenditure
Profit/(Loss) Before Tax Profit/(Loss) After Tax
(Please tick appropriate box + for profit, – for loss)
Earnings Per Share in Rs. Dividend Rate
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANy (As per monetary terms) Item Code No. (ITC Code)
Product Description
3 1 0 3 2 0 0 8
S E R V I C E S
N I L N I L
N I L 5 0 0
N I L
1 5 4 9 9
5 0 0
N I L 4 8
N I L
4 8 4 N I L
6 4
– 6 4– 6 4
– 0 1 . 2 8 0 0
For and on behalf of the Board
AJS Jhala Sanjeev AgaDirector Director
Date : April 21, 2008Place : Mumbai
5 51 7 1 0 0 6 0 3 1 2 0 7
Balance Sheet Abstract and Company’s General Business Profile
N O T A P P L I C A B L E
N I L
N I L
N I L
106 S W I N D E R S I N G H S A T A R A & C O . L I M I T E D
Dear Shareholders,
Your Directors have pleasure in presenting the Annual Report of your Company together with the Audited Financial Statements for the year ended 31st March, 2008.
Financial Results
Your Company is yet to commence operations in its principal line of business. The financial results for the year ended 31st March, 2008 is as set out below:
(Amount in Rupees)
Particulars 2007-08 2006-07
Gross Income from operations 2,802,025 2,786,989
Profit/(Loss) Before Depreciation & Taxation 2,386,154 2,366,500
Depreciation 110,967 110,967
Taxation 600,861 358,360
Net Profit/(Loss) for the year 1,674,326 1,897,173
Profit/(Loss) C/f to Balance Sheet 10,099,370 8,425,044
Dividend
The Board of Directors has not declared any dividend during the year.
Fixed Deposits
Your Company has not accepted any fixed deposits during the year under review.
Particulars of Employees
The Company does not have employees to whom provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended apply.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/Outgo
The Company is not engaged in any manufacturing activity and therefore there are no particulars to be disclosed under Section 217(1)(e) of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, related to conservation of energy and technology absorption.
There is no Foreign Exchange Earnings and Outgo during the year.
Directors’ Report of Swinder Singh Satara and Co. Limited
Directors’ Responsibility Statement
In relation to financial statements for the year ended 31st March, 2008, the Board of Directors state that:
1. The applicable accounting standards have been followed in preparation of the financial statements and there are no material departures from the said standards;
2. Reasonable and prudent accounting policies have been used in the preparation of the financial statements, that they have been consistently applied and that reasonable and prudent judgements and estimates have been made in respect of the items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March , 2008 and of the profit/(Loss) for the year ended 31st March, 2008;
3. Proper and sufficient care has been taken for 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; and
4. The financial statements have been prepared on a going concern basis.
Directors
Mr. AJS Jhala, Director of the Company retires by rotation, and being eligible offers himself for re-appointment.
The Board recommends his re-appointment.
Auditors
The Statutory Auditors of the Company, M/s. Deloitte Haskins and Sells, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting of the Company and being eligible hereby offer themselves for re-appointment. Your Directors recommend their re-appointment and authorise the Board to fix their remuneration.
Acknowledgements
Your Directors wish to place on record their appreciation for the excellent support received from the State Government Authorities, Bankers and Consultants in the working of the Company.
For and on behalf of the Board
Date: April 21, 2008 Sanjeev Aga AJS JhalaPlace: Mumbai Director Director
107A N N U A L R E P O R T 2 0 0 7 - 0 8
Auditors’ ReportTo the Members ofSwinder Singh Satara & Co. Limited
1. We have audited the attached Balance Sheet of Swinder Singh Satara & Co. Limited (‘the Company’) as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto (together referred to as ‘financial statements’). 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, (‘the said Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, on the basis of such checks of the books and records of the Company as we considered necessary and appropriate, and according to information and explanations given to us during the course of the audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
a) 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;
b) 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;
c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
d) 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 so far as they apply to the Company;
e) on the basis of the written representations received from the directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartnerMembership No.: 38019
Date: April 21, 2008Place: Pune
Annexure to the Auditors’ Report(Referred to in paragraph 3 of our report of even date to the members of Swinder Singh Satara & Co. Limited on the accounts for the year ended March 31, 2008)
1. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b) As informed and represented to us, fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification.
c) According to the information and explanations given to us, the Company has not disposed off any fixed assets during the year and accordingly the para 4 (i) (c) of the said order relating to going concern being affected are not applicable.
2. In our opinion, the Company is not dealing in any inventories. Accordingly the provisions of paragraphs 4 (ii) (a) to 4 (ii) (c) of the said order relating to physical verification, frequency of verification, procedures of physical verification and maintenance of inventory records are not applicable to the Company.
3. According to the information and explanations given to us, the Company has not granted/taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of the paragraphs 4 (iii) (b) to 4 (iii) (d) and 4 (iii) (f) and 4 (iii) (g) of the said order are not applicable to the Company.
4. In our opinion, and according to the information and explanations given to us, during the current year, the Company had no transactions of purchase of fixed Assets. Accordingly provisions of paragraphs 4(iv) of the said Order relating to adequacy of internal control procedures is not applicable to the Company. The activities of the Company do not involve purchase of inventory and sale of goods and Services.
108 S W I N D E R S I N G H S A T A R A & C O . L I M I T E D
5. In our opinion and according to the information and explanations given to us, there were no contracts, particulars of which needed to be entered in the register maintained under Section 301 of the Companies Act, 1956 and hence provisions of paragraph 4 (v) (b) of the said Order relating to reasonableness of price having regard to prevailing market price is not applicable to the Company.
6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder.
7. In our opinion the Company has an internal audit system commensurate with the size and nature of its business.
8. The Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the activities of the Company and accordingly, the provisions of paragraph 4 (viii) of the said order are not applicable.
9. In respect of statutory dues:
a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing with appropriate authorities undisputed income tax dues. During the year, there were no undisputed statutory dues including those under Provident Fund, Investor Education Protection Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues; hence the question of whether the Company was regular in depositing undisputed statutory dues does not arise.
b) According to the information and explanations given to us, there were no undisputed amount payable in respect of Provident Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess outstanding as at March 31, 2008 for a period of more than six months from the date they became payable.
c) According to the information and explanations given to us, there are no dues of Sales tax, Income Tax, Custom Duty, Wealth Tax, Service tax, Excise duty and Cess which have not been deposited on account of any dispute.
10. The Company does have any accumulated losses at the end of the financial year and has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financial year.
11. The Company has not borrowed any funds from financial institutions or banks or debenture holders and accordingly, the provisions of paragraph 4 (xi) of the said order relating to default to such parties are not applicable.
12. According to the information and explanations given 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 and accordingly, the provisions of paragraph 4 (xii) of the said order relating to maintenance of documents and records are not applicable.
13. The Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of paragraph 4(xiii) of the said Order are not applicable to the Company.
14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4 (xiv) of the said order are not applicable to the Company.
15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore, the provisions of paragraph 4 (xv) of the said order are not applicable to the Company.
16. The Company has not taken any term loan during the year. Therefore the provisions of paragraph 4 (xvi) of the said order relating to usage of such funds are not applicable to the Company.
17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the company, funds raised on short-term basis have not been used for long-term purposes.
18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the year.
19. In our opinion and according to the information and explanations given to us, the Company has not issued any debentures during the year. Accordingly, the provisions of paragraph 4 (xix) of the said order relating to creation of securities or charges in respect of debentures are not applicable to the Company.
20. The Company has not raised any money by way of public issues during the year.
21. During the course of our examination of the books of account, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any incidence of any material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.
For Deloitte Haskins & SellsChartered Accountants
Hemant M. JoshiPartner
Date: April 21, 2008 Membership No.: 38019Place: Pune
109A N N U A L R E P O R T 2 0 0 7 - 0 8
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Balance Sheet as at March 31, 2008
Schedules As at March 31, 2008
As at March 31, 2007
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital 1 500,000 500,000
Profit & Loss Account 10,099,370 8,425,044
TOTAL 10,599,370 8,925,044
APPLICATION OF FUNDS
Fixed assets
Gross block (At Cost) 2 7,090,635 7,090,635
Less: depreciation 665,801 554,834
Net block 6,424,834 6,535,801
Current Assets, Loans and Advances
Current Assets
Cash and bank balances 3 2,108,930 2,108,930
Loans and advances 4 2,846,177 1,060,884
4,955,107 3,169,814
Less: Current Liabilities and Provisions 5 780,571 780,571
Net Current Assets 4,174,536 2,389,243
TOTAL 10,599,370 8,925,044
Significant Accounting Policies and Notes to the Accounts 7
(Amount in Rupees)
110 S W I N D E R S I N G H S A T A R A & C O . L I M I T E D
Profit and Loss Account for the year ended March 31, 2008
Schedules For the year ended
March 31, 2008
For the year ended
March 31, 2007
INCOME
Rental Income 2,700,000 2,700,000
Interest Income 102,025 86,989
TOTAL 2,802,025 2,786,989
OPERATING EXPENDITURE
Administration and Other Expenses 6 415,871 420,489
Depreciation 110,967 110,967
526,838 531,456
Profit/(Loss) before taxes 2,275,187 2,255,533
Provision for tax [net off Rs. Nil excess provision written back (Previous year Rs. 176,370)]
600,861 358,360
Profit/(Loss) after tax 1,674,326 1,897,173
Balance Carried forward from previous year 8,425,044 6,527,871
Balance Carried to Balance Sheet 10,099,370 8,425,044
Earnings per Share (Basic and Diluted)
No. of equity share of Rs. 10 each outstanding 50,000 50,000
Weighted no. of equity Share of Rs. 10 each outstanding 50,000 50,000
Basic Earnings per Share 33.49 37.94
Significant Accounting Policies and Notes to the Accounts 7
The Schedules referred to above form an integral part of Accounts
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date: April 21, 2008Place: Mumbai
(Amount in Rupees)
111A N N U A L R E P O R T 2 0 0 7 - 0 8
As atMarch 31,
2008
As atMarch 31,
2007
SCHEDULE 1SHARE CAPITALAuthorised50,000 Equity shares of Rs.10 each 500,000 500,000
500,000 500,000 ISSUED, SUBSCRIBED AND PAID-UPEquity Share Capital50,000 Equity shares of Rs. 10 each fully paid up 500,000 500,000
(All the shares are held by the holding company-Idea Cellular Limited) 500,000 500,000
Schedules forming part of the Accounts
SCHEDULE 2
FIXED ASSETS
Gross Block Depreciation Net Block
Particulars As atApril 1,
2007
Additionsduring the
year
Sale/ Adjustmentduring the
year
As atMarch 31,
2008
As atApril 1,
2007
For theYear
Sale/ Adjustmentduring the
year
As atMarch 31,
2008
As atMarch 31,
2008
As atMarch 31,
2007
Leasehold Land 282,859 – – 282,859 – – – – 282,859 282,859
Building 6,807,776 – – 6,807,776 554,834 110,967 – 665,801 6,141,975 6,252,942
TOTAL 7,090,635 – – 7,090,635 554,834 110,967 – 665,801 6,424,834 6,535,801
Previous Year 7,090,635 – – 7,090,635 443,867 110,967 – 554,834 6,535,801 –
As atMarch 31,
2008
As atMarch 31,
2007
SCHEDULE 3CASH AND BANK BALANCESCash on hand 68,707 68,707
Balances with scheduled banks
- on Current accounts 840,223 840,223
- on Fixed Deposits 1,200,000 1,200,000
2,108,930 2,108,930
SCHEDULE 4LOAN AND ADVANCES(Unsecured, considered good)
Prepaid Expenses 90,988 90,988
Advance income tax (net of provision) 179,288 157,821
Interest Receivables 103,248 11,731
Adjustable Security deposit 2,472,653 800,344
2,846,177 1,060,884
(Amount in Rupees)
(Amount in Rupees) (Amount in Rupees)As at
March 31, 2008
As atMarch 31,
2007
SCHEDULE 5CURRENT LIABILITIES AND PROVISIONSCurrent LiabilitiesOther liabilities 780,571 780,571
780,571 780,571
For the year ended
March 31, 2008
For the year ended
March 31, 2007
SCHEDULE 6ADMINISTRATION AND OTHER EXPENSESBank charges – 57 Rates and taxes 320,383 319,380 Legal and consultancy charges 67,398 67,344 Audit Fees 28,090 33,708
415,871 420,489
(Amount in Rupees)
112 S W I N D E R S I N G H S A T A R A & C O . L I M I T E D
SCHEDULE 7
A. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Conventions:
The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis. The accounts are prepared on historical cost basis as a go-ing concern.
2. Fixed Assets:
Fixed assets are stated at cost of acquisition / construction less depreciation.
3. Depreciation and amortisation:
Depreciation on fixed assets is provided on straight-line basis as per rates prescribed in Schedule XIV of the Companies Act, 1956.
4. Deferred tax Assets
The provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.
Deferred tax arising on account of timing difference and which are capable of reversal in one or more subsequent periods, is recognized using the tax rates and tax laws that have enacted or substantively enacted.
Deferred tax assets are not recognised unless there is sufficient assurance with respect to the reversal of the same in future years.
B. NOTES TO ACCOUNTS
1. There are no deferred tax assets or liabilities as at March 31, 2008.
2. Previous Year’s figures have been regrouped wherever necessary so as to make them comparable with previous year.
For and on behalf of the Board
Date: April 21, 2008 AJS Jhala Sanjeev Aga Place: Mumbai Director Director
113A N N U A L R E P O R T 2 0 0 7 - 0 8
Cash Flow Statement for the year ended March 31, 2008
For the year ended March 31, 2008
For the year ended March 31, 2007
A) Cash Flow from Operating Activities Net profit/ (loss) before tax 2,275,187 2,255,533 Adjustments for: Depreciation 110,967 110,967 Operating Profit before Working capital Changes 2,386,154 2,366,500
Adjustments for:
(Increase) / Decrease in Other Current Assets – –
(Increase) / Decrease in Loans and Advances (1,785,293) (903,063)
Increase / (Decrease) in Current Liabilities – (800,707) (1,785,293) (1,703,770)
Cash generated from / (used in) operations 600,861 662,730
Tax(paid)/Refund (600,861) 87,799 Net cash from / (used in) operating activities – 750,529 B) Cash Flow from Investing Activities Net cash from / (used in) investing activities – –
C) Cash Flow from Financing Activities Net cash from / (used in) financing activities – –
Net increase / (decrease) in cash and cash equivalent – 750,529 Cash and cash equivalent at the beginning 2,108,930 1,358,401
Cash and cash equivalent at the end 2,108,930 2,108,930
Notes:1. Cash and cash equivalent includes balance with scheduled banks in current accounts Rs. 840,223 (Previous year Rs. 840,223)
2. The above cashflow statement has been prepared under the indirect method as set out in Accounting Standard 3 on cash flow statement issued by the Institute of Chartered Accountants of India.
3. Previous year’s figures have been regrouped/rearranged wherever necessary.
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & SellsChartered Accountants
Hemant M. Joshi AJS Jhala Sanjeev AgaPartner Director DirectorMembership No.: 38019
Date: April 21, 2008Place: Mumbai
(Amount in Rupees)
114 S W I N D E R S I N G H S A T A R A & C O . L I M I T E D
I. REGISTRATION DETAILS Registration No. State Code Date
Date Month Year Balance Sheet date
II. CAPITAL RAISED DURING THE YEAR (Rupees in Thousand) Public Issue Rights Issue
Bonus Issue Private Placement
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Rupees in Thousand) Total Liabilities Total Assets
SOURCES OF FUNDS Paid-up Capital Reserves and Surplus
Secured Loans Unsecured Loans
APPLICATION OF FUNDS Net Fixed Assets Investments
Net Current Assets/(Liability) Miscellaneous Expenditure
Accumulated Losses
IV. PERFORMANCE OF COMPANY (Rupees in Thousand) Turnover Total Expenditure
Profit/(Loss) Before Tax Profit/(Loss) After Tax items
(Please tick appropriate box + for profit, – for loss)
Earnings Per Share (Rs.) Dividend Rate (%)
V. GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (As per monetary terms) Item Code No. (ITC Code)
Product Description
3 1 0 3 2 0 0 8
S E R V I C E S
N I L N I L
N I L N I L
N I L
2 8 0 2
1 0 5 9 9 1 0 5 9 9
5 0 0 1 0 0 9 9
N I L N I L
6 4 2 4 N I L
7 8 0 N I L
5 2 6
+ 1 6 7 4+ 2 2 7 5
+ 3 3 . 4 9 0 0
For and on behalf of the Board
AJS Jhala Sanjeev AgaDirector Director
Date : April 21, 2008Place : Mumbai
5 51 6 5 1 7 1 2 0 9 1 9 8 3
Balance Sheet Abstract and Company’s General Business Profile
N O T A P P L I C A B L E
This Annual Report is printed on 100% recycled paper as certified by the UK-based National Association of Paper Merchants (NAPM). The paper complies
with strict quality and environmental requirements and is awarded international eco-labels such as the Nordic Swan, introduced by the Nordic Council of
Ministers; the Blue Angel, the first world-wide environmental label awarded by the Jury Umweltzeichen; and the European Union Flower.
CMYK
CMYK
Corporate Office: 5th Floor, Windsor, Off CST Road, Near Vidya Nagari, Kalina, Santacruz (E), Mumbai - 400 098.
Registered Office: Suman Tower, Plot No. 18, Sector - 11, Gandhinagar - 382 011, Gujarat.
CMYK
CMYK