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Auditor Report of Bharti Airtel Ltd.

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Bharti Airtel Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, its profit, and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to Note 26(ii)(g)(vii) to the standalone financial statements which, describes the uncertainties related to the legal outcome of Department of Telecommunications' demand with respect to One Time Spectrum Charge. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of section 164 (2) of the Act;

(f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements – Refer Note 26(ii)and Note 53(b) to the standalone financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – Refer Note 51 to the standalone financial statements;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure 1

Annexure referred to in paragraph 1 of 'Report on other Legal and Regulatory Requirements'

Re: BHARTI AIRTEL LIMITED ('the Company')

(i) (a) The Company has maintained proper records showing full particulars with respect to most of its fixed assets, however, is in the process of updating quantitative and situation details with respect to certain fixed assets in the records maintained by the Company.

(b) The capitalised fixed assets are physically verified by the management according to a regular programme designed to cover all the items over a period of three years. Pursuant to the programme, a portion of fixed assets and capital work in progress has been physically verified by the management during the year, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. The Company is in the process of reconciling the quantitative and situation details of the physical verification results with the records maintained by the Company and as informed to us, the impact is not expected to be material.

(ii) (a) The Inventory (other than inventory with third parties) has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has neither granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, Clause 3(iii) of the Order is not applicable to the Company for the current year and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of proprietary nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have neither observed nor have been informed of any major weakness or continuing failure to correct any major weaknesses in the aforesaid internal control system.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, duty of customs, value added tax, cess and other material statutory dues applicable to it. The provisions relating to duty of excise are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, sales-tax wealth-tax, service tax, duty of customs, value added tax, cess and other material undisputed statutory dues were outstanding as at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, duty of customs, value added tax and cess on account of any dispute, are as follows:

Name of Statutes Nature of the Amount Period to which Dues Disputed it relates (in Rs. Mn)

Andhra Pradesh VAT Act Sales Tax 41 2005-10

Andhra Pradesh VAT Act Sales Tax 46 2010-13

Bihar Value Added Sales Tax Act Sales Tax 34 2007-08

Bihar Value Added Sales Tax Act Sales Tax 31 2006-13

Bihar Value Added Sales Tax Act Sales Tax 29 2005-08

Gujarat Sales Tax Act Sales Tax 1 2006-07

Himachal Pradesh Value Added Tax Act Sales Tax 1 1999-02

J&K General Sales Tax Sales Tax 34 2004-07

Karnataka Sales Tax Act Sales Tax 291 2005-06

Karnataka Sales Tax Act Sales Tax 1 2001-06

Kerala Sales Tax Act Sales Tax 1 2011-12

Kerala Sales Tax Act Sales Tax 1 2005-13

Kerala Sales Tax Act Sales Tax 11 2005-06

Kerala Sales Tax Act Sales Tax 0 2009-13

Kerala Sales Tax Act Sales Tax 2 2002-05

Kerala Value Added Tax Act Sales Tax 5 2005-06

Kerala Value Added Tax Act Sales Tax 71 2006-07

Kerala Value Added Tax Act Sales Tax 20 2007-09

Madhya Pradesh Commercial Sales Sales Tax 24 2007-12 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 0 2005-07 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 0 2004-08 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 2 2008-13 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 22 1997-04 Tax Act

Maharashtra Sales Tax Act Sales Tax 9 2003-04

Maharashtra Sales Tax Act Sales Tax 0 2003-04

Orissa Value Added Tax Act Sales Tax 1 2006-07

Punjab Sales Tax Act Sales Tax 0 2009-10

Punjab Sales Tax Act Sales Tax 30 2003-04

Punjab Sales Tax Act Sales Tax 1 2002-03

Punjab Sales Tax Act Sales Tax 1 2008-10

UP VAT Act Sales Tax 21 2002-12

UP VAT Act Sales Tax 21 2002-05

UP VAT Act Sales Tax 2 2005-10

UP VAT Act Sales Tax 6 2008-11

UP VAT Act Sales Tax 1 2003-04

UP VAT Act Sales Tax 12 2005-07

West Bengal Sales Tax Act Sales Tax 0 1996-97

West Bengal Sales Tax Act Sales Tax 0 1995-96

West Bengal Sales Tax Act Sales Tax 9 2005-06

West Bengal Sales Tax Act Sales Tax 3 1997-12

Sub Total (A) 787

Finance Act, 1994 (Service tax Service Tax 301 2004-08 provisions)

Finance Act, 1994 (Service tax Service Tax 7 2000-07 provisions)

Finance Act, 1994 (Service tax Service Tax 1 2003-06 provisions)

Finance Act, 1994 (Service tax Service Tax 23 2002-07 provisions)

Finance Act, 1994 (Service tax Service Tax 5 1995-97 provisions)

Finance Act, 1994 (Service tax Service Tax 10,230 1995-12 provisions)

Sub Total (B) 10,566

Income Tax Act, 1961 Income Tax 6 2002-04

Income Tax Act, 1961 Income Tax 11,685 1996-97; 2001-02; 2004-10

Income Tax Act, 1961 Income Tax 17,240 2003-11

Income Tax Act, 1961 Income Tax 19,603 1995-2003; 2004-14

Income Tax Act, 1961 Income Tax 1,392 1994-95; 1996-98; 2004-15

Sub Total (C) 49,926

Custom Act, 1962 Custom Act 4,128 2001-06

Custom Act, 1962 Custom Act 126 2006-10

Sub Total (D) 4,254

Name of Statutes Forum where the dispute is pending

Andhra Pradesh VAT Act Tribunal

Andhra Pradesh VAT Act Deputy

Commissioner,Commercial Taxes, Punjagutta

Bihar Value Added Sales Tax Act Assistant Commissioner

Bihar Value Added Sales Tax Act Joint Commissioner, Appeal

Bihar Value Added Sales Tax Act Tribunal

Gujarat Sales Tax Act Assistant Commissioner

Himachal Pradesh Value Added Tax Act Additional Commissioner

J & K General Sales Tax High Court , Jammu & Kashmir

Karnataka Sales Tax Act Assistant Commissioner

Karnataka Sales Tax Act Commercial tax Officer

Kerala Sales Tax Act Commercial tax Officer

Kerala Sales Tax Act Commercial tax Officer

Kerala Sales Tax Act Deputy Commissioner, Appeal

Kerala Sales Tax Act Intelligence Officer Squad

Kerala Sales Tax Act Tribunal

Kerala Value Added Tax Act Deputy Commissioner, Appeal

Kerala Value Added Tax Act High Court of Kerala

Kerala Value Added Tax Act Assistant Commissioner, Spl Circle III, Ernakulam

Madhya Pradesh Commercial Sales Tax Act Appellate authority

Madhya Pradesh Commercial Sales Tax Act Assistant Commissioner

Madhya Pradesh Commercial Sales Tax Act Commercial tax Officer

Madhya Pradesh Commercial Sales Tax Act Deputy Commissioner

Madhya Pradesh Commercial Sales Tax Act Deputy Commissioner, Appeal

Maharashtra Sales Tax Act High Court, Mumbai

Maharashtra Sales Tax Act Joint Commissioner, Appeal

Orissa Value Added Tax Act Additional Commissioner

Punjab Sales Tax Act Commissioner

Punjab Sales Tax Act High Court

Punjab Sales Tax Act Jt. Director( Enforcement)

Punjab Sales Tax Act Tribunal

UP VAT Act Assessing officer

UP VAT Act Assistant Commissioner

UP VAT Act Commercial tax Officer

UP VAT Act High court

UP VAT Act Joint Commissioner Appeal

UP VAT Act Tribunal

West Bengal Sales Tax Act The Deputy Commissioner of Commercial Taxes

West Bengal Sales Tax Act Commercial tax Officer

West Bengal Sales Tax Act Revision Board

West Bengal Sales Tax Act Tribunal

Finance Act, 1994 Supreme Court

Finance Act, 1994 Commissioner Adjudication

Finance Act, 1994 Commissioner Appeal

Finance Act, 1994 High court

Finance Act, 1994 Supreme Court

Finance Act, 1994 Tribunal

Income Tax Act, 1961 Supreme Court

Income Tax Act, 1961 High Court

Income Tax Act, 1961 Income Tax Appellate Tribunal

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 Assessing Officer

Custom Act, 1962 Supreme Court

Custom Act, 1962 Tribunal

The above mentioned figures represent the total disputed cases without any assessment of Probable, Possible and Remote, as done in case of contingent liabilities.Of the above cases, total amount deposited in respect of sales tax is Rs. 291 Mn, Service tax is Rs. 330 Mn, Income tax is Rs. 10,115 Mn and Custom Duty is Rs. 2,138 Mn.

d) There were no amounts which were required to be transferred to the investor education and protection fund by the Company in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.

(viii) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(x) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from banks or financial institutions, the terms and conditions whereof, in our opinion, are not prima- facie prejudicial to the interest of the Company.

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For S. R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration No: 101049W

per Nilangshu Katriar

Partner

Membership No: 58814

Place: New Delhi

Date: April 28, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Bharti Airtel Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to 26(ii)(g)(vii) to the financial statements which describe the uncertainties related to the legal outcome of Department of Telecommunications'' demand with respect to One Time Spectrum Charge. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, 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 purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs;

(e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 of ''Report on Other Legal and Regulatory Requirements'' our report of even date

(i) (a) The Company has maintained proper records showing full particulars with respect to most of its fixed assets, however, is in the process of updating quantitative and situation details with respect to certain fixed assets in the records maintained by the Company.

(b) The Company has physical verification program of covering all fixed assets over a period of three years. Pursuant to the program, during the year, a substantial portion of planned physical verification of fixed assets and capital work in progress has been conducted which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, Clause (iii) of the Companies (Auditor''s Report) Order, 2003, (as amended) is not applicable to the Company for the current year and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of proprietary nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have neither observed nor have been informed of any major weakness or continuing failure to correct any major weaknesses in the aforesaid internal control system.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of Clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and cess and other material statutory dues applicable to it. The provisions relating to excise duty is not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute, are as follows:

Name of Statutes Nature of the Amount Dues Disputed (in Rs. Mn)

Andhra Pradesh VAT Act Sales Tax 26

Andhra Pradesh VAT Act Sales Tax 4

Andhra Pradesh VAT Act Sales Tax 1

Bihar Value Added Sales Tax Act Sales Tax 34

Bihar Value Added Sales Tax Act Sales Tax 20

Bihar Value Added Sales Tax Act Sales Tax 16

Bihar Value Added Sales Tax Act Sales Tax 11

Gujarat Sales Tax Act Sales Tax 1

Himachal Pradesh Value Added Tax Sales Tax 1 Act

J&K General Sales Tax Sales Tax 34

Karnataka Sales Tax Act Sales Tax 291

Karnataka Sales Tax Act Sales Tax 1

Kerala Sales Tax Act Sales Tax 5

Kerala Sales Tax Act Sales Tax 2

Kerala Sales Tax Act Sales Tax 11

Kerala Sales Tax Act Sales Tax 0

Kerala Sales Tax Act Sales Tax 2

Madhya Pradesh Commercial Sales Sales Tax 6 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 0 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 0 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 18 Tax Act

Madhya Pradesh Commercial Sales Sales Tax 22 Tax Act

Maharashtra Sales Tax Act Sales Tax 9

Maharashtra Sales Tax Act Sales Tax 0

Orissa Value Added Tax Act Sales Tax 1

Punjab Sales Tax Act Sales Tax 0

Punjab Sales Tax Act Sales Tax 30

Punjab Sales Tax Act Sales Tax 1

Punjab Sales Tax Act Sales Tax 1

UP VAT Act Sales Tax 21



Name of Statues Period to which Forum where the dispute it relates is pending

Andhra Pradesh VAT Act 2007-10 Commercial tax Officer

Andhra Pradesh VAT Act 2006-07 Deputy Commissioner

Andhra Pradesh VAT Act 2005-06 Deputy Commissioner, Commercial Taxes

Bihar Value Added Sales Tax Act 2007-08 Asst Commissioner

Bihar Value Added Sales Tax Act 2006-08 Commissioner

Bihar Value Added Sales Tax Act 2012-13 High court

Bihar Value Added Sales Tax Act 2005-07 Tribunal

Gujarat Sales Tax Act 2006-07 Assistant Commissioner

Himachal Pradesh Value Added Tax Act 1999-02 Additional Commissioner

J&K General Sales Tax 2004-07 High Court, Jammu & Kashmir

Karnataka Sales Tax Act 2005-06 Assistant Commissioner

Karnataka Sales Tax Act 2001-06 Commercial tax Officer

Kerala Sales Tax Act 2005-06 Commissioner (Appeals)

Kerala Sales Tax Act 2005-13 Commercial tax Officer

Kerala Sales Tax Act 2005-06 Deputy Commissioner, Appeal

Kerala Sales Tax Act 2009-13 Intelligence Officer Squad

Kerala Sales Tax Act 2002-05 Tribunal

Madhya Pradesh Commercial Sales Tax Act 2008-11 Appellate authority

Madhya Pradesh Commercial Sales Tax Act 2005-07 Assistant Commissioner

Madhya Pradesh Commercial Sales Tax Act 2004-08 Commercial tax Officer

Madhya Pradesh Commercial Sales Tax Act 2006-10 Deputy Commissioner

Madhya Pradesh Commercial Sales Tax Act 1997-04 Deputy Commissioner, Appeal

Maharashtra Sales Tax Act 2003-04 High Court, Mumbai

Maharashtra Sales Tax Act 2003-04 Joint Commissioner, Appeal

Orissa Value Added Tax Act 2006-07 Additional Commissioner

Punjab Sales Tax Act 2009-10 Commissioner

Punjab Sales Tax Act 2003-04 High Court

Punjab Sales Tax Act 2002-03 Jt. Director ( Enforcement)

Punjab Sales Tax Act 2008-10 Tribunal

UP VAT Act 2002-12 Assessing officer



Name of Statutes Nature of the Amount Dues Disputed (in Rs. Mn)

UP VAT Act Sales Tax 21

UP VAT Act Sales Tax 2

UP VAT Act Sales Tax 6

UP VAT Act Sales Tax 1

UP VAT Act Sales Tax 12

West Bengal Sales Tax Act Sales Tax 0

West Bengal Sales Tax Act Sales Tax 0

West Bengal Sales Tax Act Sales Tax 11

West Bengal Sales Tax Act Sales Tax 1

Sub Total (A) 624

Finance Act, 1994 (Service tax Service Tax 301 provisions)

Finance Act, 1994 (Service tax Service Tax 25 provisions)

Finance Act, 1994 (Service tax Service Tax 1 provisions)

Finance Act, 1994 (Service tax Service Tax 22 provisions)

Finance Act, 1994 (Service tax Service Tax 5 provisions)

Finance Act, 1994 (Service tax Service Tax 9,720 provisions)

Sub Total (B) 10,074

Income Tax Act, 1961 Income Tax 6

Income Tax Act, 1961 Income Tax 2,330

Income Tax Act, 1961 Income Tax 17,337

Income Tax Act, 1961 Income Tax 5,491

Income Tax Act, 1961 Income Tax 12,977

Sub Total (C) 38,141

Custom Act, 1962 Custom Act 4,329

Custom Act, 1962 Custom Act 134

Sub Total (D) 4,463

Name of Statues Period to which Forum where the dispute it relates is pending

UP VAT Act 2002-05 Assistant Commissioner

UP VAT Act 2005-10 Commercial tax Officer

UP VAT Act 2008-11 High court

UP VAT Act 2003-09 Joint Commissioner Appeal

UP VAT Act 2005-07 Tribunal

West Bengal Sales Tax Act 1996-98 Assistant Commissioner

West Bengal Sales Tax Act 1995-96 Commercial tax Officer

West Bengal Sales Tax Act 2005-08 Revision Board

West Bengal Sales Tax Act 2011-12 Tribunal

Sub Total (A)

Finance Act, 1994 (Service tax provisions) 2004-08 High Court

Finance Act, 1994 (Service tax provisions) 1999-07 Commissioner Adjudication

Finance Act, 1994 (Service tax provisions) 2003-06 Commissioner Appeal

Finance Act, 1994 (Service tax provisions) 2002-07 High court

Finance Act, 1994 (Service tax provisions) 1995-97 Supreme Court

Finance Act, 1994 (Service tax provisions) 1995-10 Tribunal

Sub Total (B)

Income Tax Act, 1961 2002-04 Supreme Court

Income Tax Act, 1961 1996-97; 2001- High Court 02, 2003-10

Income Tax Act, 1961 2003-04 to Income Tax Appellate 2009-11 Tribunal

Income Tax Act, 1961 1995-2003; Commissioner of Income 2004-13 Tax (Appeals)

Income Tax Act, 1961 1994-95; 1996- Assessing Officer 98; 2005-13

Sub Total (C)

Custom Act, 1962 2001-06 Supreme Court

Custom Act, 1962 2006-10 Tribunal

Sub Total (D)

The above mentioned figures represent the total disputed cases without any assessment of Probable, Possible and Remote, as done in case of contingent liabilities. Of the above cases, total amount deposited in respect of sales tax is Rs. 227 Mn, Service tax is Rs. 54 Mn, Income Tax is Rs. 11,199 Mn and Custom Duty is Rs. 2,138 Mn.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima- facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 105,265 Mn raised on short-term basis (primarily represented by capital creditors, network cost payable, deferred revenue and trade creditors) have been used for long-term investment (primarily represented by fixed assets and investment in it''s subsidiaries).

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For S. R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration No: 101049W

per Nilangshu Katriar

Partner

Membership No: 58814

Place: Gurgaon Date : April 29, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Bharti Airtel Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 26(ii)(h)(vi) to the financial statements which describe the uncertainties related to the legal outcome of Department of Telecommunications'' demand with respect to One Time Spectrum Charge. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, 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 purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 of our report of even date

Re: BHARTI AIRTEL LIMITED (''the Company'')

(i) (a) The Company has maintained proper records showing full particulars with respect to most of its fixed assets, however, is in the process of updating quantitative and situation details with respect to certain fixed assets in the records maintained by the Company.

(b) The Company has physical verification programme of covering all fixed assets over a period of three years. Pursuant to the programme, during the year, a substantial portion of planned physical verification of fixed assets and capital work in progress has been conducted by the management which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The inventory (other than inventory with third parties) has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, Clause (iii) of the Companies (Auditor''s Report) Order, 2003, (as amended) are not applicable to the Company for the current year and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have neither observed nor have been informed of any major weakness or continuing failure to correct any major weaknesses in the aforesaid internal control system.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of Clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and cess and other material statutory dues applicable to it. The provisions relating to excise duty is not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, saLes-tax, weaLth-tax, service tax, customs duty and cess on account of any dispute, are as foUows:

Name of the Statutes Nature of the Amount Dues Disputed (in Rs. Mn)

Andhra Pradesh VAT Act Sales Tax 26

Andhra Pradesh VAT Act Sales Tax 5

Bihar Value Added Sales Tax Act Sales Tax 34

Bihar Value Added Sales Tax Act Sales Tax 20

Bihar Value Added Sales Tax Act Sales Tax 16

Bihar Value Added Sales Tax Act Sales Tax 0

Bihar Value Added Sales Tax Act Sales Tax 11

Gujarat Sales Tax Act Sales Tax 1

Himachal Pradesh Value Added Sales Tax 1 Tax Act

J&K General Sales Tax Sales Tax 34

Karnataka Sales Tax Act Sales Tax 291

Karnataka Sales Tax Act Sales Tax 1

UP VAT Act Sales Tax 2

UP VAT Act Sales Tax 12

West Bengal Sales Tax Act Sales Tax 0

West Bengal Sales Tax Act Sales Tax 11

West Bengal Sales Tax Act Sales Tax 1

Sub Total (A) 601

Finance Act, 1994 (Service tax Service Tax 25 provisions)

Finance Act, 1994 (Service tax Service Tax 1,911 provisions)

Finance Act, 1994 (Service tax Service Tax 0 provisions)

Finance Act, 1994 (Service tax Service Tax 1 provisions)

Finance Act, 1994 (Service tax Service Tax 0 provisions)

Finance Act, 1994 (Service tax Service Tax 309 provisions)

Finance Act, 1994 (Service tax Service Tax 1 provisions)

Finance Act, 1994 (Service tax Service Tax 5 provisions)

Finance Act, 1994 (Service tax Service Tax 4,015 provisions)

Sub Total (B) 6,267

Income Tax Act, 1961 Income Tax 6

Income Tax Act, 1961 Income Tax 235

Income Tax Act, 1961 Income Tax 45,677

Income Tax Act, 1961 Income Tax 3,980

Income Tax Act, 1961 Income Tax 527

Income Tax Act, 1961 Income Tax 2,298

Sub Total (C) 52,723

Custom Act, 1962 Custom Act 4,329

Custom Act, 1962 Custom Act 134

Sub Total (D) 4,463

Name of the Statutes Period to Which it Forum where the dispute is Relates pending

Andhra Pradesh VAT Act 2007 - 10 Commercial tax Officer

Andhra Pradesh VAT Act 2005 - 07 Deputy Commissioner

Bihar Value Added Sales Tax Act 2007 - 08 Assistant Commissioner

Bihar Value Added Sales Tax Act 2006 - 08 Commissioner

Bihar Value Added Sales Tax Act 2012 - 13 High Court, Patna

Bihar Value Added Sales Tax Act 2007 - 08 Joint Commissioner, Appeal

Bihar Value Added Sales Tax Act 2005 - 07 Tribunal

Gujarat Sales Tax Act 2006 - 07 Assistant Commissioner

Himachal Pradesh Value Added Tax Act 1999 - 02 Additional Commissioner

J & K General Sales Tax 2004 - 07 High Court , Jammu & Kashmir

Karnataka Sales Tax Act 2005 - 06 Assistant Commissioner

Karnatak Sales Tax Act 2001 - 06 Commercial tax Officer

UP VAT Act 2003 - 04, 2008 - Joint Commissioner, Appeal 09, 2009 - 10

UP VAT Act 2005 - 07 Tribunal

West Bengal Sales Tax Act 1995 - 98 Assistant Commissioner

West Bengal Sales Tax Act 2005 - 08 Revision Board

West Bengal Sales Tax Act 2011 - 12 Tribunal

Finance Act, 1994 1999 - 09 Additional Commissioner

Finance Act, 1994 2002 - 12 Commissioner

Finance Act, 1994 1997 - 07 Commissioner, Appeal

Finance Act, 1994 2000 - 08 Deputy Commissioner

Finance Act, 1994 2004 - 06 Deputy Commissioner, Appeal

Finance Act, 1994 2002 - 08 High Court, Mumbai

Finance Act, 1994 2006 - 08 Joint Commissioner

Finance Act, 1994 1995 - 97 Supreme Court

Finance Act, 1994 1994 - 09 Custom, Excise, service tax Appellate Tribunal

Income Tax Act 1961 2002-04 Supreme Court

Income Tax Act 1961 1996-97; 2006-09 High Court

Income Tax Act 1961 2001-02; 2003-04 Income Tax Appellate Tribunal to 2009-11

Income Tax Act 1961 1994-2002; 2004-12 Commissioner of Income Tax (Appeals)

Income Tax Act 1961 2008-09 Dispute Resolution Panel

Income Tax Act 1961 1994-95; 1996-98; Assessing Officer 2004-12

Custom Act, 1962 2001 - 06, 2005-06 Supreme Court

Custom Act 1962 2006 - 07, 2009-10 Tribunal

The above mentioned figures represent the total disputed cases without any assessment of Probable, Possible and Remote, as done in case of contingent liabilities. Of the above cases, total amount deposited in respect of sales tax is Rs. 231 Mn, Service tax is Rs. 54 Mn, Income Tax is Rs. 9,293 Mn and Custom Duty is Rs. 2,222 Mn.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 114,045 million raised on short-term basis (primarily represented by capital creditors, short term borrowings from one of it''s subsidiary, deferred revenue and trade creditors) have been used for long-term investment (primarily represented by fixed assets and investment in it''s subsidiaries).

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For S. R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration No: 101049W

per Nilangshu Katriar

Partner

Membership No: 58814

Place: New Delhi

Date: May 2, 2013


Mar 31, 2012

1. We have audited the attached balance sheet of Bharti Airtel Limited ('Bharti Airtel' or 'the Company') as at March 31, 2012 and also the statement of profit and loss and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. The balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2012;

b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of our report of even date

Re: BHARTI AIRTEL LIMITED ('the Company1)

(i) (a) The Company has maintained proper records showing full particulars with respect to most of its fixed assets, however, is in the process of updating quantitative and situation details with respect to certain fixed assets in the records maintained by the Company.

(b) The Company has physical verification program of covering all fixed assets over a period of three years. Pursuant to the program, during the year, a substantial portion of planned physical verification of fixed assets and capital work in progress has been conducted by the management. The Company is in the process of reconciling the quantitative and situation details of the physical verification results with the records maintained by the Company.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The inventory (other than inventory with third parties) has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clause 4(iii) of the Companies (Auditor's Report) Order, 2003 (as amended) is not applicable to the Company for the current year.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and cess and other material statutory dues applicable to it. The provisions relating to excise duty is not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute, are as follows:

Name of the Statutes Nature of Amount Period to Forum where the dispute is pending the Dues Disputed Which it (in Rs. Mn) Relates

Andhra Pradesh VAT Act Sales Tax 31 2000-02; Deputy Commissioner, Commercial 2005-08; Taxes, Punjagutta 2009-10

Gujarat Sales Tax Act Sales Tax 1 2006-07 Assistant Commissioner of Sales tax

West Bengal Sales Tax Act Sales Tax 0 1996-97 The Deputy Commissioner of Commercial Taxes

West Bengal Sales Tax Act Sales Tax 0 1997-98 The Deputy Commissioner of Commercial Taxes

West Bengal Sales Tax Act Sales Tax 9 2005-06 Revision Board, Sales Tax

West Bengal Sales Tax Act Sales Tax 12 2006-09 Appelate Authority

West Bengal Sales Tax Act Sales Tax 1 2006-09 Sales Tax Tribunal

UP VAT Act Sales Tax 16 2002-05, Assessing Officer 2006-10

UP VAT Act Sales Tax 22 2003-04, Assistant Commissioner Trade Tax 2004-05, 2008-10

UP VAT Act Sales Tax 11 2002-03 Commissioner of Trade Tax

UP VAT Act Sales Tax 18 2006-07, High Court of Judicature - Allahabad 2008-10

UP VAT Act Sales Tax 14 2005-07, Joint Commissioner Appeals

2008-10

UP VAT Act Sales Tax 1 2006-07 Sales Tax Tribunal

Haryana Sales Tax Act Sales Tax 3 2002-2004 Sales tax Officer

Himachal Pradesh Value Added Tax Act Sales Tax 2 2007-09 Sales Tax Tribunal

Himachal Pradesh Value Added Tax Act Sales Tax 0 2004-05 Assessing Officer

Punjab Sales Tax Act Sales Tax 1 2001-02 Jt. Director (Enforcement)

Punjab Sales Tax Act Sales Tax 30 2003-04 Punjab & Haryana High Court

Punjab Sales Tax Act Sales Tax 1 2008-10 Deputy Excise & Taxation Commissioner Appeals Patiala

Madhya Pradesh Commercial Sales Sales Tax 22 1997-01 & Deputy Commissioner Appeals Tax Act 2003-06 & 2007-08

Madhya Pradesh Commercial Sales Sales Tax 15 2006-08 Appellate Authority Tax Act

Maharashtra Sales Tax Act Sales Tax 0 2003-04 Bombay High Court

Kerela Sales Tax Act Sales Tax 2 2009-11 Intelligence Officer Squad No. V, Palakkad

Bihar Value Added Sales Tax Act Sales Tax 45 2005-08 Assistant Commissioner

Bihar Value Added Sales Tax Act Sales Tax 20 2006-07; Commissioner 2007-08

J&K General Sales Tax Sales Tax 34 2004-07 High Court

Karnataka Sales Tax Act Sales Tax 0 2005-06 High Court

Name of the Statutes Nature of Amount the Dues Disputed (in Rs. Mn)

Karnataka Sales Tax Act Sales Tax 291

Tamil Nadu General Sales Tax Act Sales Tax 1

Sub Total (A) 603

Finance Act, 1994 (Service tax provisions) Service Tax 1,941

Finance Act, 1994 (Service tax provisions) Service Tax 0

Finance Act, 1994 (Service tax provisions) Service Tax 0

Finance Act, 1994 (Service tax provisions) Service Tax 14

Finance Act, 1994 (Service tax provisions) Service Tax 2,438

Finance Act, 1994 (Service tax provisions) Service Tax 255

Finance Act, 1994 (Service tax provisions) Service Tax 2

Finance Act, 1994 (Service tax provisions) Service Tax 1

Finance Act, 1994 (Service tax provisions) Service Tax 1

Finance Act, 1994 (Service tax provisions) Service Tax 5

Sub Total (B) 4,657

Income Tax Act, 1961 Income Tax 15,540

Income Tax Act, 1961 Income Tax 192

Income Tax Act, 1961 Income Tax 4,339

Income Tax Act, 1961 Income Tax 7

Income Tax Act, 1961 Income Tax 2,139

Sub Total (C) 22,217

Customs Act-1962 Custom Act 2,289

Sub Total (D) 2,289

Name of the Statutes Period to Forum where the dispute is pending Which it Relates

Karnataka Sales Tax Act 2004-05 ACST, Bangalore, Karnataka

Tamil Nadu General Sales Tax Act 2004-05 Assistant Commissioner, Sales Tax

Finance Act,1994 (Service tax provisions) 1997-2009 Customs, Excise and Service Tax Appellate Tribunal

Finance Act,1994 (Service tax provisions) 1997-98; Commissioner (Appeals)

2000-07

Finance Act,1994 (Service tax provisions) 2004-06 Deputy Commissioner Appeals

Finance Act,1994 (Service tax provisions) 2004-08 Commissioner of Central Excise

Finance Act,1994 (Service tax provisions) 2004-09 Commissioner, adjudication

Finance Act,1994 (Service tax provisions) 2001-11 Commissioner of Service tax

Finance Act,1994 (Service tax provisions) 2002-03 High Court of Madras, Chennai

Finance Act,1994 (Service tax provisions) 2000-01; Deputy Commissioner of Service Tax 2008-09

Finance Act,1994 (Service tax provisions) 2006-07 Joint Commissioner of Service Tax

Finance Act,1994 (Service tax provisions) 1995-97 Commissioner of Service tax

Income Tax Act,1961 1994-2011 Commissioner of Income Tax (Appeals)

Income Tax Act,1961 1994-1995; High Court

1996-97;

1999-00;

2003-05

Income Tax Act,1961 2006-07 Dispute Resolution Panel

Income Tax Act,1961 1996-97; Assessing Officer 2005-10

Income Tax Act,1961 1997-98, Income Tax Appellate Tribunal 2000-01 to 2006-07

Customs Act-1962 2005-07; Customs, Excise and Service Tax Appelate 2009-10 Tribunal

The above mentioned figures represent the total, disputed cases without any assessment of Probable, Possible and Remote, as done in case of Contingent Liabilities. Of the above cases, total amount deposited in respect of Sales Tax is Rs. 228 Mn, Service Tax is Rs. 25 Mn, Income Tax is Rs. 3,316 Mn and Custom Duty is Rs. 83 Mn.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, funds amounting to Rs. 39,491 million raised on short-term basis (primarily represented by capital creditors) have been used for long-term investment (primarily represented by fixed assets).

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company had created security or charge in respect of debentures outstanding at the beginning of the year and has released such security on repayment of debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations furnished by the management, which have been relied upon by us, there were no frauds on or by the Company noticed or reported during the course of our audit except few cases of fraud, primarily in the nature of unauthorized use of Company's services/assets, on the Company by employees and external parties estimated at Rs.16.2 million and Rs.55.4 million, respectively, as detected by the management for which appropriate steps were taken to recover the amount and Rs. 0.7 million out of such estimated amounts, has been recovered by the Company.

For S.R. BATLIBOI & ASSOCIATES

Firm Registration No. 101049W

Chartered Accountants

per Prashant Singhal

Partner

Membership No.: 93283

Place: New Delhi

Date: May 2, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Bharti Airtel Limited ('Bharti Airtel' or 'the Company') as at March 31, 2011 and also the Profit and Loss account and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial 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 signifi cant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. The balance sheet, Profit and loss account and cash fl ow 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 fl ow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualifi ed as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011;

b) in the case of the Profit and loss account, of the Profit for the year ended on that date; and

c) in the case of cash fl ow statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 4 of our report of even date Re: BHARTI AIRTEL LIMITED ('the Company')

(i) (a) The Company has maintained proper records showing full particulars with respect to most of its fixed assets, however, is in the process of updating quantitative and situation details with respect to certain fixed assets in the records maintained by the Company.

(b) The capitalised fixed assets are physically verifi ed by the management according to a regular programme designed to cover all the items over a period of three years. Pursuant to the programme, a portion of fixed assets and capital work in progress has been physically verifi ed by the management during the year, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. The Company is in the process of reconciling the quantitative and situation details of the physical verifi cation results with the records maintained by the Company.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The inventory (other than inventory with third parties) has been physically verifi ed by the management during the year. In our opinion, the frequency of verifi cation is reasonable.

(b) The procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clause 4(iii) of the Companies (Auditor's Report) Order, 2003 (as amended) is not applicable to the Company for the current year.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees fi ve lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and cess and other material statutory dues applicable to it. The provisions relating to excise duty is not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth- tax, service tax, customs duty, cess and other material undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute, are as follows:

Name of the Statutes Nature of Amount Disputed the Dues (in Rs. Mn)

Andhra Pradesh VAT Act Sales Tax 4,661.28

Gujarat Sales Tax Act Sales Tax 0.93

West Bengal Sales Tax Act Sales Tax 0.40

West Bengal Sales Tax Act Sales Tax 0.01

West Bengal Sales Tax Act Sales Tax 0.28

West Bengal Sales Tax Act Sales Tax -

West Bengal Sales Tax Act Sales Tax 324.85

West Bengal Sales Tax Act Sales Tax 1,095.80

UP VAT Act Sales Tax 2.93

UP VAT Act Sales Tax 9.18

UP VAT Act Sales Tax 0.88

UP VAT Act Sales Tax 0.50

UP VAT Act Sales Tax 22.71

UP VAT Act Sales Tax 9.45

UP VAT Act Sales Tax -

UP VAT Act Sales Tax 4.36

UP VAT Act Sales Tax 0.54

Haryana Sales Tax Act Sales Tax 2.80

Haryana Sales Tax Act Sales Tax 1.35

Haryana Sales Tax Act Sales Tax 1.80

Punjab Sales Tax Act Sales Tax 0.61

Madhya Pradesh Commercial Sales Tax Act Sales Tax 22.08

Madhya Pradesh Commercial Sales Tax Act Sales Tax 15.44

UP VAT Act Sales Tax 1.13

Karnataka Sales Tax Act Sales Tax 3,449.57

Kerala Sales Tax Act Sales Tax 0.80

Bihar Value Added Sales Tax Act Sales Tax 11.33

Bihar Value Added Sales Tax Act Sales Tax 19.87

Delhi Value Added Tax Act Sales Tax 12.75

J&K General Sales Tax Sales Tax 28.85

Karnataka Sales Tax Act Sales Tax 0.15

Tamil Nadu Sales Tax Act Sales Tax 634.28

Sub Total (A) 1 0,336.88

Finance Act, 1994 (Service tax provisions) Service Tax 1,458.99

Finance Act, 1994 (Service tax provisions) Service Tax 46.81

Finance Act, 1994 (Service tax provisions) Service Tax 0.45

Finance Act, 1994 (Service tax provisions) Service Tax 231.02

Finance Act, 1994 (Service tax provisions) Service Tax 19.77

Finance Act, 1994 (Service tax provisions) Service Tax 334.52

Finance Act, 1994 (Service tax provisions) Service Tax -

Finance Act, 1994 (Service tax provisions) Service Tax 5.56

Finance Act, 1994 (Service tax provisions) Service Tax 0.97

Finance Act, 1994 (Service tax provisions) Service Tax 1.17

Finance Act, 1994 (Service tax provisions) Service Tax 3.66

Sub Total (B) 2,102.91



Name of the Statue Period to Which Forum where the dispute is it Relates pending

Andhra Pradesh VAT Act 2000-02; 2005-08; High Court of Andhra Pradesh 2009-10

Gujarat Sales Tax Act 2006-07 Commissioner (Appeals)

West Bengal Sales Tax Act 1996-97 DCCT - Appellate Stage

West Bengal Sales Tax Act 1997-98 DC Appeals

West Bengal Sales Tax Act 1995-96 The Commercial Tax Officer

West Bengal Sales Tax Act 2004-05 West Bengal Taxation Tribunal

West Bengal Sales Tax Act 2005-06 DCCT Appeal

West Bengal Sales Tax Act 2006-08 Appellate Authority

UP VAT Act 2004-05; 2006-08 Assessing Officer

UP VAT Act 2002-10 Reviewing authorities

UP VAT Act 2009-10 Additional Commissioner Appeals

UP VAT Act 2003-04 Joint Commissioner Appeals

UP VAT Act 2003-07; 2009-10 Joint Commissioner Appeals

UP VAT Act 2006-07; High Court of Judicature at 2010 Allahabad, Lucknow Bench

UP VAT Act 2008-09 Assistant Commissioner of Sales tax

UP VAT Act 2006-07; 2008-09 Commercial Taxes Tribunal

UP VAT Act 2005-06 Appellate Authority

Haryana Sales Tax Act 2002-2004 Joint Commissioner

Haryana Sales Tax Act 2009-10 Assessing Officer

Haryana Sales Tax Act 2007-09 Finance Commissioner (Appeal)

Punjab Sales Tax Act 2001-02 Joint Director (Enforcement)

Madhya Pradesh Commercial Sales Tax Act 1997-01 & 2003-06Deputy Commissioner Appeals & 2007-08

Madhya Pradesh Commercial Sales Tax Act 2007-08 Appellate Authority

UP VAT Act 2002-05 Assistant Commissioner

Karnataka Sales Tax Act 2002-09 Tribunal

Kerala Sales Tax Act 2009-11 Intelligence Offi cer Squad No. V, Palakkad

Bihar Value Added Sales Tax Act 2005-07 Joint Commissioner Appeals

Bihar Value Added Sales Tax Act 2006-07; 2007-08 Assistant Commissioner

Delhi Value Added Tax Act 2005-06 Sales Tax Department

J&K General Sales Tax 2004-07 High Court

Karnataka Sales Tax Act 2005-06 High Court

Tamil Nadu Sales Tax Act1996-2001 Commercial Tax Officer

Sub Total (A)

Finance Act, 1994 (Service tax provisions)1997-2009; Customs, Excise and Service Tax 2010-11 Appellate Tribunal

Finance Act, 1994 (Service tax provisions)1999-00, 2002-08 Commissioner (Appeals)

Finance Act, 1994 (Service tax provisions)2004-06 Deputy Commissioner Appeals

Finance Act, 1994 (Service tax provisions)2000-01 & Suppdt. of Mohali 2005-08

Finance Act, 1994 (Service tax provisions)2004-07 Commissioner of Excise

Finance Act, 1994 (Service tax provisions)2004-08 Commissioner of Service Tax

Finance Act, 1994 (Service tax provisions)2006-07 Joint Commissioner of Central Excise

Finance Act, 1994 (Service tax provisions)2001-02; Deputy Commissioner of Service

2005-06 Tax (Appeals)

Finance Act, 1994 (Service tax provisions) 1994-95 Additional Commissioner of Service Tax

Finance Act, 1994 (Service tax provisions) 1994-95; Assistant Commissioner of 2003-04 Service Tax Finance Act, 1994 (Service tax provisions) 2006-07 Joint Commissioner of Service Tax

Sub Total (B)

Name of the Statutes Nature of Amount Disputed the Dues (in Rs. Mn)

Income Tax Act, 1961 Income Tax 2,884.73

Income Tax Act, 1961 Income Tax 5.95

Income Tax Act, 1961 Income Tax 7,958.59

Income Tax Act, 1961 Income Tax 1,602.90

Income Tax Act, 1961 Income Tax 1,296.30

Sub Total (C) 13,748.46

Customs Act-1962 Custom Act 2,167.15

Customs Act-1962 Custom Act 31.19

Sub Total (D) 2,198.35

Name of the Statue Period to Which Forum where the dispute is it Relates pending

Income Tax Act, 1961 1994-2011 Commissioner of Income Tax (Appeals) Income Tax Act, 1961 1994-1995; High Court 1996-97; 1999-00; 2003-05

Income Tax Act, 1961 2006-07 Dispute Resolution Panel

Income Tax Act, 1961 1996-97; 2005-10 Assessing Officer

Income Tax Act, 1961 1997-98, 2000-01 Income Tax Appelate Tribunal to 2006-07

Sub Total (C)

Customs Act-1962 2001-04; 2007-08 Commisioner of Customs

Customs Act-1962 2005-06 Customs, Excise and Service Tax Appellate Tribunal, Chennai

Sub Total (D)

The above mentioned figures represent the total disputed cases without any assessment of Probable, Possible and Remote, as done in case of Contingent Liabilities. Of the above cases, total amount deposited in respect of Sales Tax is Rs. 1,024 Mn, Service Tax is Rs. 15 Mn, Income Tax is Rs. 1,572 Mn and Custom Duty is Rs. 74 Mn.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefi t fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or fi nancial institutions, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, funds amounting to Rs. 40,796 Mn raised on short- term basis (primarily represented by capital creditors) have been used for long-term investment (primarily represented by fixed assets).

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has created security or charge in respect of debentures outstanding at the year end.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations furnished by the management, which have been relied upon by us, there were no frauds on or by the Company noticed or reported during the course of our audit except few cases of fraud, primarily in the nature of unauthorized use of Company's services, on the Company by employees and external parties estimated at Rs. 5 Mn and Rs. 63.7 Mn, respectively, as detected by the management for which appropriate steps were taken to recover the amount and Rs. 2.8 Mn out of such estimated amounts, has been recovered by the Company.

For S.R. BATLIBOI & ASSOCIATES Firm Registration No. 101049W

Chartered Accountants

per Prashant Singhal

Partner

Membership No. 93283

Place: New Delhi Date: May 5, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Bharti Airtel Limited (Bharti Airtel or the Company) as at March 31, 2010 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 Companys 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 (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii.The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on March 31,2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

b) in the case of the profit and loss account, of the profit for theyear ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on thatdate.

Annexure referred to in paragraph 4 of our report of even date Re: BHARTIAIRTEL LIMITED (the Company)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation with respect to most of its fixed assets and is in the process of updating quantitative and situation details with respect to certain fixed assets i.e. office equipments, in the records maintained by the Company.

(b)The capitalized fixed assets are physically verified by the management according to a regular programme designed to cover all the items over a period of three years. Pursuant to the programme, a portion of fixed assets and capital work in progress at warehouses has been physically verified by the management during the year, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during theyear.

(ii) (a) The inventory (other than inventory with third parties) has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b)The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (iii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company for the currentyear.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in theaforesaid internal control system.

(v) According to the information and explanations provided by the management, there are no transactions pursuant to the contracts or arrangements referred to in section 301 that are required to be entered in the register maintained under section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii)We have broadly reviewed the books of accounts maintained by Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income- tax, sales-tax, wealth-tax, service tax, customs duty and cess and other material statutory dues applicable to it. The provisions relating to excise duty is not applicableto the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute, are as follows:

Name of the Statues Nature of Amount Disputed Period to the dues (in Rs000) which it Relates

Andhra Pradesh Value Added Tax Act Sales Tax 3,063,609 2000-02; 2005-08

Gujarat Sales Tax Act Sales Tax 928 2006-07

West Bengal SalesTaxAct Sales Tax 402 1996-97

West Bengal SalesTaxAct Sales Tax 14 1997-98

West Bengal Sales TaxAct Sales Tax 280 1995-96

West Bengal Sales Tax Act Sales Tax 48,268 2004-05

West Bengal Sales Tax Act Sales Tax 324,846 2005-06

UP VAT Act Sales Tax 15,356 2003-10

UP VAT Act Sales Tax 500 2003-04

2003-04;

UP VAT Act Sales Tax 20,290 2005-07;

2009-10

UP VAT Act Sales Tax 7,600 2006-07

UP VAT Act Sales Tax 33 2008-09

UP VAT Act Sales Tax 170 2006-07

Haryana SalesTaxAct Sales Tax 2,797 2002-2004

Punjab Sales Tax Act Sales Tax 611 2001-02

Madhya Pradesh Commercial Sales TaxAct Sales Tax 21,720 1997-01;

2003-05

UP VAT Act Sales Tax 1,125 2002-05

Karnataka Sales Tax Act Sales Tax 290,920 2005-06

Kerela Sales Tax Act Sales Tax 541 2009-10

Bihar Value Added Sales Tax Act Sales Tax 11,330 2005-07

Delhi Value Added Tax Act Sales Tax 12,755 2005-06

J&KGeneral Sales Tax Sales Tax 18,434 2004-05

Karnataka SalesTaxAct Sales Tax 153 2005-06

Tamil Nadu SalesTaxAct Sales Tax 634,279 1996-2001

Sub Total (A) 4,476,961

FinanceAct, 1994 (Service tax provisions) Service Tax 1,419,854 1997-2009

FinanceAct, 1994 (Service tax provisions) Service Tax 46,844 1999-00;

2002-07

FinanceAct, 1994 (Service tax provisions) Service Tax 445 2004-06

FinanceAct, 1994 (Service tax provisions) Service Tax 231,020 2000-01;

2005-08

FinanceAct, 1994 (Service tax provisions) Service Tax 19,773 2004-07

FinanceAct, 1994 (Service tax provisions) Service Tax 334,519 2004-08

FinanceAct, 1994 (Service tax provisions) Service Tax 5,564 2002-03

FinanceAct, 1994 (Service tax provisions) Service Tax 966 1995-96

FinanceAct, 1994 (Service tax provisions) Service Tax 1,166 2004-05

FinanceAct, 1994 (Service tax provisions) Service Tax 3,657 2007-08

Sub Total (B) 2,063,807



Name of the Statue Forum where the dispute is pending



Andhra Pradesh Value Added TaxAct High Court of Andhra Pradesh

Gujarat Sales TaxAct Commissioner (Appeals)

West Bengal SalesTaxAct DCCT-Appellate Stage

West Bengal SalesTaxAct DCAppeals

West Bengal SalesTaxAct The Commercial Tax Officer

West Bengal SalesTaxAct West Bengal Taxation Tribunal

West Bengal SalesTaxAct DCCT Appeal

UP VAT Act Assessing Officer

UP VAT Act Joint Commissioner Appeals

UP VAT Act Joint Commissioner Appeals

UP VAT Act High Court of Judicatureat Allahabad, Lucknow Bench

UP VAT Act Assistant Commissioner of Sales tax

UP VAT Act Commercial Taxes Tribunal

Haryana SalesTaxAct Joint Commissioner

Punjab SalesTaxAct Jt. Director (Enforcement) Madhya Pradesh Commercial Sales TaxAct Deputy Commissioner Appeals

UP VAT Act Assistant Commissioner

Karnataka SalesTaxAct Tribunal

Kerela SalesTaxAct Intelligence Officer Squad No. V, Palakkad

Bihar Value Added SalesTaxAct Asst. Commissioner

Delhi Value Added TaxAct Sales Tax Department

J&KGeneral SalesTax High Court

Karnataka SalesTaxAct High Court

Tamil Nadu SalesTaxAct Commercial Tax Officer



Sub Total (A)

FinanceAct, 1994 (Servicetax provisions) Customs, Excise and Service Tax Appelate Tribunal

FinanceAct, 1994 (Servicetax provisions) Commissioner (Appeals)

FinanceAct, 1994 (Servicetax provisions) Deputy Commissioner Appeals

FinanceAct, 1994 (Servicetax provisions) Suppdt. Of Central Excise, Mohali

FinanceAct, 1994 (Servicetax provisions) Commissioner of Excise

FinanceAct, 1994 (Servicetax provisions) Commissioner of Service Tax

FinanceAct, 1994 (Servicetax provisions) Deputy Commissioner of Service Tax (Appeals)

FinanceAct, 1994 (Servicetax provisions) Additional Commissioner of Service Tax

FinanceAct, 1994 (Servicetax provisions) Assistant Commissioner of Service Tax

FinanceAct, 1994 (Servicetax provisions) Joint Commissioner of Service Tax

Name of the Statues Nature of Amount Disputed Period to the dues (in Rs000) which it Relates

Income TaxAct, 1961 IncomeTax 1,987,175 2001-10

Income TaxAct, 1961 IncomeTax 5,950 2002-04

6,420 1997-98

Income TaxAct, 1961 IncomeTax 3,622,088 2005-06

Income TaxAct, 1961 IncomeTax 102,786 2001-05;

2006-07

Sub Total (C) 5,724,420

Customs Act-1962 CustomAct 2,167,154 2001-04;

2007-08

Customs Act-1962 CustomAct 31,194 2005-06

Sub Total (D) 2,198,348



Name of the Statue Forum where the dispute is pending

Income TaxAct, 1961 Commissioner of Income Tax (Appeals) Income TaxAct, 1961 High Court Assessing Officer Income TaxAct, 1961 Dispute Resolution Panel Income TaxAct, 1961 Income Tax Appelate Tribunal

Sub Total (C)

Customs Act-1962 Customs, Excise and Service Tax Appelate Tribunal, Bangalore

Customs Act-1962 Customs, Excise and Service Tax Appelate Tribunal, Chennai

Of the above cases, total amount deposited in respect of Sales Tax is Rs 914,162 thousand, Service Tax is Rs 5,484 thousand, Income Tax is Rs 847,803 thousand and Custom Duty is Rs 57,725 thousand.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial years.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In ouropinion, theCompany is nota chitfund ora nidhi/ mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Com pany.

(xv) According to the information and explanations given to us, theCompany has given guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of theCompany.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, funds amounting to Rs 6,449,385 thousand raised on short-term basis (primarily represented by capital creditors) have been used for long-term investment (primarily represented by fixed assets).

(xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has created security or charge in respect of debentures outstanding attheyear end.

(xx) The Company has not raised any money by public issues during theyear.

(xxi) According to the information and explanations furnished by the management, which have been relied upon by us, there were no frauds on or by the Company noticed or reported during the course of our audit except few cases of fraud by employees estimated at Rs 115,105 thousand and by external parties Rs 20,255 thousand detected by the management for which appropriate steps were taken to strengthen controls and Rs 12,519 thousand out of the such estimated amounts, has been recovered by the Com pany.

ForS.R. BATLIBOI & ASSOCIATES

Firm Registration No. 101049W Chartered Accountants

perPrashantSinghal

Partner

Membership No.93283

Place: Gurgaon Date: April 28,2010

 
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