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Notes to Accounts of Idea Cellular Ltd.

Mar 31, 2017

1. USE OF ESTIMATES, ASSUMPTIONS AND JUDGMENTS

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require an adjustment to the carrying amount of assets or liabilities in future periods. Difference between actual results and estimates are recognized in the periods in which the results are known / materialize.

The Company has based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

i. Share-based payments

The Company initially measures the cost of equity-settled transactions with employees using Black & Schools model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 52.

ii. Taxes

The Company provides for tax considering the applicable tax regulations and based on reasonable estimates. Management periodically evaluates positions taken in the tax returns giving due considerations to tax laws and establishes provisions in the event if required as a result of differing interpretation or due to retrospective amendments, if any.

The recognition of deferred tax assets is based on availability of sufficient taxable profits in the Company against which such assets can be utilized. MAT (Minimum Alternate Tax) is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax and will be able to utilize such credit during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset, the said asset is created by way of a credit to the Statement of Profit and loss and is included in Deferred T ax Assets. The Company reviews the same at each balance sheet date and if required, writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will be able to absorb such credit during the specified period.

iii. Defined benefit plans (gratuity benefits)

The Company s obligation on account of gratuity and compensated absences is determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter subject to frequent changes is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables in India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

Further details about gratuity obligations are given in note 53(A).

iv. Allowance for Trade receivable

The Company follows a simplified approach (i.e. based on lifetime ECL) for recognition of impairment loss allowance on Trade receivables (including lease receivables). For the purpose of measuring lifetime ECL allowance for trade receivables, the Company estimates irrecoverable amounts based on the ageing of the receivable balances and historical experience. Further, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. Individual trade receivables are written off when management deems them not to be collectible.

v. Useful life of Property, Plant and Equipment

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

vi. Impairment of Non-financial assets

Non-financial assets are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

vii. Provision for decommissioning

In measuring the provision for ARO, the Company uses technical estimates to determine the expected cost to dismantle and remove the infrastructure equipment from the site and the expected timing of these costs. Discount rates are determined based on the risk adjusted bank rate of a similar period as the liability.

viii. Operating lease commitments Company as lessee

The Company has entered into lease agreements for properties and cell sites, where it has, on the basis of evaluation of the terms and conditions of the arrangement determined that the significant risks and rewards related to the assets and properties are retained with the lessons. Accordingly, such lease agreements are accounted for as operating leases. Further details about operating lease are given in Note 45.

ix. Provisions and Contingent Liabilities

Provisions and contingent liabilities are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

2. FIRST TIME ADOPTION OF IND AS

The Company had prepared its financial statements in accordance with the Accounting Standards (AS) notified under section 133 of the Companies Act, 2013 (Previous GAAP) for and including the year ended March 31, 2016. The Company has prepared its first Ind AS (Indian Accounting Standards) compliant Financial Statements for the year ended March 31, 2017 with restated comparative figures for the year ended March 31, 2016 in compliance with Ind AS. Accordingly, the Opening Balance Sheet, in line with Ind AS transitional provisions, has been prepared as at April 1, 2015, the date of Company s transition to Ind AS. The principal adjustments made by the Company in restating its Previous GAAP financial statements as at and for the Financial year ended March 31, 2016 and the balance sheet as at April 1, 2015 are as mentioned below:

A. EXEMPTIONS APPLIED

Ind AS 101 on First Time Adoption of Ind AS allows first-time adopters certain voluntary exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

I. Ind AS 103 on Business Combinations has not been applied to acquisitions of businesses that occurred before April 1, 2015. Use of this exemption means that assets and liabilities acquired under a business combination and eligible for recognition under Ind AS will be the Previous GAAP carrying values on the acquisition date. Ind AS 101 requires recognition of all assets acquired and liabilities assumed in a past business combination except,

(i) Certain financial assets and liabilities that were derecognized and that fall under the de recognition exception, and

(ii) Assets and liabilities that were not recognized in the acquirer s balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquiree.

Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the Ind AS opening balance sheet. The Company has not recognized or excluded any previously recognized amounts as a result of Ind AS recognition requirements.

II. There is no change in the functional currency of the Company and accordingly, it has elected to continue with the carrying values for all of its property, plant and equipment and intangible assets as recognized in its Previous GAAP financial statements as the deemed cost at the transition date subject to the adjustments for decommissioning liabilities. As per the exemption under Ind AS 101, decommissioning liability was measured in accordance with Ind AS 37 at the date of transition to Ind AS. To the extent the liability was within the scope of Appendix-A of Ind AS 16, estimated liability that would have been included in the cost of related asset when the liability first arose by discounting the liability to that date using best estimate of the historical risk adjusted discount rate over the intervening period. Accumulated depreciation was calculated on that amount as at the date of transition to Ind AS on the basis of the current estimate of the useful life of the asset, using the depreciation policy adopted by the Company in accordance with Ind AS.

III. Ind AS 102 on Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before the date of transition to Ind AS.

IV. Appendix C to Ind AS 17 requires the Company to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all relevant arrangements for classification of leases based on facts and circumstances existing at the date of transition to Ind AS.

V. The Company has decided to continue with its policy of capitalising exchange differences arising from translation of long-term foreign currency monetary liabilities outstanding in the financial statements as on March 31, 2016 as per AS 11 of the Previous GAAP.

VI. In accordance with the exemption given in Ind AS 101, the Company has recorded investment in subsidiaries at deemed cost i.e. Previous GAAP carrying amount.

B. EXCEPTIONS APPLIED

Ind AS 101 specifies mandatory exceptions from retrospective application of some aspects of other Ind ASs for first-time adopters. Following exception is applicable to the Company:

Use of Estimates

The estimates at April 1, 2015 and March 31, 2016 are consistent with those made for the same dates in accordance with Previous GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Previous GAAP did not require estimation:

Impairment of financial assets based on Expected Credit Loss (ECL) model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015, the date of transition to Ind AS and as of March 31, 2016.

Explanatory notes to the reconciliations

i) Lease Equalization Reserve (LER)

Under Previous GAAP, the lease payments under operating leases were recognized as expense on a straight line basis over the lease term. As per Ind AS 17, lease payments are not recognized on a straight line basis if payments to the less or are structured to increase in line with expected general inflation to compensate for the less or s expected inflationary cost increases. Hence, LER pertaining to operating lease agreements has been reversed and credited to Equity as on transition date. This has resulted to an increase in equity on the transition date by Rs, 5,124.07 Mn. and on March 31, 2016 by Rs, 6,197.02 Mn. The profit before tax for the year ended March 31, 2016 has increased by Rs, 1,072.94 Mn.

ii) Revenue Equalization Reserve (RER)

Under Previous GAAP, the lease payments receivable under operating leases where the Company was a less or were recognized as income on a straight line basis over the lease term. As per Ind AS 17, lease payments are not recognized on a straight line basis if payments to the Company are structured to increase in line with expected general inflation to compensate for the Company s expected inflationary cost increases. Hence, RER pertaining to such agreements has been reversed and debited to Equity as on transition date. This has resulted to a decrease in equity on the transition date by Rs, 44.57 Mn. and on March 31, 2016 by Rs, 173.13 Mn. The profit before tax for the year ended March 31, 2016 has decreased by Rs, 128.56 Mn.

iii) Financial Assets - Deposits

Under Previous GAAP, the Company accounted for deposits at transaction value. Under Ind AS, the deposits with inherent significant financing element are initially recorded at fair value with the difference between transaction value and fair value being treated as prepaid expenses. The deposits are subsequently measured at amortized cost and deferred rent is amortized over contract period on a straight line basis. This has resulted to an increase in equity on the transition date by Rs, 217.20 Mn. and on March 31, 2016 by Rs, Nil. The profit before tax for the year ended March 31, 2016 has decreased by Rs, 217.20 Mn.

iv) Derivative instruments

The fair value of foreign exchange forward contracts and interest rate swap contracts is recognized under Ind AS, which was not recognized under Previous GAAP. Consequently, the unamortized forward premium recognized under Previous GAAP has been derecognized. The corresponding adjustment has been credited to Equity as on the transition date. This has resulted to an increase in equity on the transition date by Rs, 1,740.60 Mn. and on March 31, 2016 by Rs, 2,261.53 Mn. The profit before tax for the year ended March 31, 2016 has increased by Rs, 520.93 Mn.

Hedged foreign currency borrowings have been restated at the spot rate on the transition date. This has resulted to an increase in equity on the transition date by Rs, 634.41 Mn. and on March 31, 2016 by Rs, 634.41 Mn. Further, as the Company has decided to continue capitalization of exchange differences arising from translation of long term foreign currency monetary liabilities outstanding as on March 31, 2016, an additional amount of Rs, 1,742.60 Mn. has been capitalized in FY 2015-16.The additional depreciation charged due to additional capitalization has led to a decrease in profit before tax by Rs, 279.30 Mn. for the year ended March 31, 2016.

v) Investments in Mutual Funds

Under Previous GAAP, the Company accounted for investments in mutual funds as financial instruments measured at lower of cost or fair value. Under Ind AS, the Company has designated such investments at fair value through profit and loss which are to be measured at fair value at each reporting date. The difference between the fair value of these instruments and Previous GAAP carrying amount has been adjusted in equity as on the transition date. This has resulted to an increase in equity on the transition date by Rs, 68.43 Mn. and on March 31, 2016 by Rs, 7.46 Mn. The profit before tax for the year ended March 31, 2016 has decreased by Rs, 60.97 Mn.

vi) Borrowings

Under Previous GAAP, transaction costs incurred in connection with borrowings were disclosed as prepaid expenses and charged to statement of profit and loss on a systematic basis. Under Ind AS, borrowings are recorded initially at fair value less transaction costs and are subsequently measured at amortized cost as per the Effective Interest Rate (EIR) method. This has resulted to an increase in equity on the transition date by Rs, 411.60 Mn. and on March 31, 2016 by Rs, 206.03 Mn. The profit before tax for the year ended March 31, 2016 has decreased by Rs, 205.57 Mn.

vii) Share-based payments

Under Previous GAAP, the cost of equity-settled employee share based payments was recognized based on intrinsic value of the options as at the grant date over the appropriate vesting period. Ind AS requires expense on such share based payments to be recognized based on fair value as at grant date using an appropriate pricing model over the appropriate vesting period. The change does not affect total equity (except for Rs, 0.91 Mn. being the differential in value of options granted to employees of 100% subsidiaries),but there is a decrease in retained earnings on the transition date by Rs, 343.53 Mn. and on March 31, 2016 by Rs, 639.88 Mn. The profit before tax for the year ended March 31, 2016 has decreased by Rs, 296.35 Mn.

viii) Employee Benefits

In Previous GAAP, actuarial gains and losses were recognized in Statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of net defined benefit liability/asset which is recognized in other comprehensive income in the respective periods. The change does not affect total equity but there is an increase in profit before tax for the year ended March 31, 2016 by Rs, 205.48 Mn.

ix) Asset Retirement Obligation (ARO)

Under Previous GAAP, provision for ARO was measured at the best estimate of the expenditure required to settle the obligation at the Balance Sheet date without considering the effect of discounting. Under Ind AS, provision for ARO is measured at present value of the expenditure expected to be incurred to settle the obligation. The difference between the present value of ARO provision and Previous GAAP carrying amount of ARO, net of depreciation effect has been adjusted to retained earnings as on the transition date. This has resulted to an increase in equity on the transition date by Rs, 37.14 Mn. and on March 31, 2016 by Rs, 31.81 Mn. The profit before tax for the year ended March 31, 2016 has decreased by Rs, 5.33 Mn.

x) Dividend including dividend distribution tax

Under previous GAAP, dividend payable including dividend distribution taxes was recorded as a liability in the period to which it relates. Under Ind AS, dividend to holders of equity instruments is recognized as a liability in the period in which the obligation to pay is established. Hence, proposed dividend recognized under Previous GAAP as at the transition date is reversed and credited to Equity. This has resulted to an increase in equity on the transition date by Rs, 2,598.17 Mn. and on March 31, 2016 by Rs, 2,600.09 Mn.

xi) Deferred tax

Under Previous GAAP, deferred tax was accounted using the income statement approach as per timing differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the balance sheet approach as per temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of balance sheet approach as per Ind AS 12 has resulted in recognition of deferred tax on new temporary differences which was not required under Previous GAAP. On the date of transition, the net impact on deferred tax liability on new temporary differences is debited to Equity. This has resulted to a decrease in equity on the transition date by Rs, 3,721.62 Mn. and on March 31, 2016 by Rs, 3,719.09 Mn. The deferred tax charge for the year ended March 31, 2016 is lower by Rs, 2.53 Mn.

In addition, the various transitional adjustments led to temporary differences as on the transition date. The net impact on deferred tax liabilities on the transitional adjustments is debited to Equity. This has resulted to a decrease in equity on the transition date by Rs, 2,833.71 Mn. and on March 31, 2016 by Rs, 3,146.02 Mn. The profit after tax for the year ended March 31, 2016 has decreased by Rs, 312.31 Mn.

xii) MAT Credit

Under Previous GAAP, MAT credit was disclosed under noncurrent assets. In accordance with Ind AS 12, deferred tax asset shall include any carry forward unused tax credits. Hence, MAT credit entitlement has been included in deferred tax asset. This has resulted to a decrease in Non-current assets and deferred tax liabilities on the transition date by Rs, 5,841.49 Mn. and on March 31, 2016 by Rs, 12,267.58 Mn. The MAT credit entitlement of Rs, 6,426.09 Mn. for the year ended March 31, 2016 has been presented with deferred tax.

xiii)Deposits from Customers

Under Previous GAAP, there was no specific Accounting Standard on Presentation of Financial Statements. The Institute of Chartered Accountants of India had issued FAQ on Schedule VI of the Companies Act, 1956 which prescribes general instructions for preparation of financial statements. In accordance with the FAQ, certain Deposits from Customers were classified as non-current based on the commercial practice in the industry. Ind AS 1 on Presentation of Financial Statements does not have any such option and therefore, the deposits from customers have been classified as current since these deposits are repayable on demand. This has resulted to a regrouping change from non-current financial liabilities to current financial liabilities as on the transition date by Rs, 2,013.53 Mn. and on March 31, 2016 by Rs, 2,126.02 Mn.

3. STANDARDS ISSUED OR MODIFIED BUT NOT YET EFFECTIVE UP TO THE DATE OF ISSUANCE OF THE COMPANY S FINANCIAL STATEMENTS

The amendments to standards that are issued, but not yet effective up to the date of issuance of Company s financial statements are discussed below. The Company intends to adopt these standards, if applicable, when they become effective.

a) Amendments to Ind AS 7 Statement of Cash Flows

(Effective from accounting period starting on or after April 1, 2017)

i. An entity shall provide certain additional disclosures for changes in liabilities arising from financing activities on account of non-cash transactions to enable users of financial statements evaluate changes in liabilities arising from financing activities.

ii. To the extent necessary to satisfy the requirement, an entity shall disclose the following changes in liabilities arising from financing activities:

Changes from financing cash flows;

Changes arising from obtaining or losing control of subsidiaries or other businesses;

The effect of changes in foreign exchange rates;

Changes in fair values; and

Other changes

b) Amendments to Ind AS 102 Share-based payments

Ind AS 102 has been amended to include clarity on the following areas :

Measurement of cash-settled share-based payments;

Classification of share-based payments settled net of tax withholdings; and

Accounting for a modification of a share-based payment from cash-settled to equity-settled

The above changes do not impact the Company as the Share based payments made by the Company are neither cash-settled share-based payment nor do they have any net settlement feature .

Footnotes:

1. Plant and machinery includes gross block of assets capitalized under finance lease Rs, 9,880.58 Mn (March 31, 2016: '' 7,443.08 Mn, April 1, 2015: Rs, 4,408.63 Mn) and corresponding accumulated depreciation being Rs, 5,918.69 Mn (March 31, 2016: Rs, 3,048.65 Mn, April 1, 2015: Rs, Nil).

2. Foreign exchange (Gain)/loss amounting to Rs, (661.69) Mn (March 31, 2016: Rs, 3,515.65 Mn ) (recapitalized) / capitalized during the year

3. Depreciation charge for the year includes Rs, 296.40 Mn (March 31, 2016: Rs, 572.48 Mn, April 1, 2015: Rs, 5,450.45 Mn) due to change in estimated useful life of certain fixed assets.

4. Disposals/Adjustments includes assets reclassified from held for sale to PPE due to termination of agreement/intention to sell.

Footnotes:

1. Computer - software includes gross block of assets capitalized under finance lease Rs, 2,932.09 Mn (March 31, 2016: Rs, 1,845.27 Mn, April 1, 2015: Rs, 357.10 Mn) and corresponding accumulated amortization being Rs, 1,289.50 Mn (March 31, 2016: Rs, 507.02 Mn, April 1, 2015: Rs, Nil).

2. The remaining amortization period of license/ spectrum fees as at March 31, 2017 ranges between 4 to 20 years based on the respective telecom service license / spectrum validity period.

3. Intangible asset under development includes interest amounting to Rs, 2,330.41 Mn (March 31, 2016: Rs, 3,727.15 Mn, April 1, 2015: Rs, 2,689.88 Mn).

a) Secured Loans are covered by:

Term Loans including current maturities are secured by way of first charge / assignment ranking pari-passu interse the lenders, as under:

i. First charge on all the movable and immovable properties (including intangible assets) of the Company excluding

a) Spectrum and Telecom Licenses;

b) Vehicles up to Rs, 250 crores; and

c) Passive Telecom Infrastructure.

ii. Rupee Loan amounting to Rs, 31,500.00 Mn. (March 31, 2016: Rs, Nil, April 1, 2015: Rs, Nil) are secured by way of first charge on all the movable fixed assets and immovable properties (including intangible assets) of the Company excluding

a) Spectrum and Telecom Licenses;

b) Vehicles; and

c) Passive Telecom Infrastructure.

iii. Foreign Currency Loan amounting to Rs, Nil (March 31, 2016: Rs, 5,092.32 Mn., April 1, 2015: Rs, 5,803.22 Mn.) has additional security as first priority charge over certain Telecom Licenses.

iv. NCDs amounting to Rs, 3,960.00 Mn. (March 31, 2016: Rs, 3,960.00 Mn., April 1, 2015: Rs, 3,960.00 Mn.) have pari passu charge only on the tangible fixed assets excluding passive telecom infrastructure and Rs, 10,000.00 Mn (March 31, 2016: Rs, Nil, April 1, 2015: Rs, Nil) have pari passu charge on movable fixed assets of the company excluding :

a) Spectrum and Telecom Licenses

b) Vehicles up to Rs, 250 crores and

c) Passive Telecom Infrastructure.

v. Vehicle Loans amounting to Rs, 353.28 Mn. (March 31, 2016: Rs, 519.37 Mn., April 1, 2015: Rs, 508.98 Mn.) is secured by hypothecation of Vehicles against which the loans have been taken.

b) Repayment Terms of outstanding long term borrowings (excluding current maturities) as on March 31, 2017

Repayment Terms for Secured Foreign Currency Borrowings

Facility 1 (Rs, 4,095.05 Mn.) - Balance amount is repayable as follows:

Tranche 1 - Balance amount is repayable in 4 equal half yearly installments starting April, 2018

Tranche 2 - Balance amount is repayable in 2 equal half yearly installments starting April, 2020

Facility 2 (Rs, 3,583.19 Mn.) - Balance amount is repayable in 7 equal half yearly installments starting May, 2018

Facility 3 (Rs, 4,165.33 Mn.) - Balance amount is repayable as follows:

Tranche 1 - Balance amount is repayable in 9 equal half yearly installments starting July, 2018

Tranche 2 - Balance amount is repayable in 7 equal half yearly installments starting July, 2018

Facility 4 (Rs, 3,737.75 Mn.) - Balance amount is repayable in 7 equal half yearly installments starting June, 2018

Facility 5 (Rs, 4,519.62 Mn.) - Balance amount is repayable as follows:

1. 3 equal half yearly installments starting September, 2018

2. 6 equal half yearly installments starting August, 2018

Repayment Terms for Secured INR Borrowings

Facility 1 (Rs, 31,500.00 Mn.) - Balance amount is repayable as follows:

1. 8 equal quarterly installments of 1.25% each of the total drawn amount starting June, 2019

2. 12 equal quarterly installments of 3.75% each of the total drawn amount starting June, 2021

3. 8 equal quarterly installments of 5% each of the total drawn amount starting June, 2024

4. 2 equal quarterly installments of 2.5% each of the total drawn amount starting June, 2026.

Facility 2 (Rs, 10,000.00 Mn.) - Repayable in 20 equal quarterly installments starting September, 2021.

Facility 3 (Rs, 3,500.00 Mn.) - Repayable in 20 equal quarterly installments starting September, 2021.

Redeemable Non-Convertible Debentures (NCDs) (Rs, 13,960.00 Mn.) -

1. 9.45% NCDs (396) of Rs, 10 Mn. each - Rs, 3,960.00 Mn. is repayable in October, 2019 (Out of the 1,000 NCDs issued in FY 2013, the Company has re-purchased 604 NCDs of Rs, 10 Mn. each, aggregating to Rs, 6,040.00 Mn. with an option to re-issue the same in future)

2. 8.12% NCDs (10,000) of Rs, 1 Mn. each - Rs, 10,000.00 Mn. is repayable in February 2024.

Vehicles Loans are repayable in equal monthly installments over the term of the loan ranging from 2 to 4 years. Repayment Terms for Unsecured Foreign Currency Borrowings Facility 1 (Rs, 2,569.23 Mn.) - Balance amount is repayable as follows:

1. 5 equal quarterly installments of 4.125% each of the total drawn amount starting April, 2018

2. 4 equal quarterly installments of 4.75% each of the total drawn amount starting July, 2019.

Facility 2 (Rs, 4,668.38 Mn.) - Balance amount is repayable in June, 2018.

Facility 3 (Rs, 3,378.85 Mn.) - Balance amount is repayable in 11 equal half yearly installments starting April, 2018.

Repayment Terms for Unsecured INR Borrowings

Redeemable Non-Convertible Debentures (NCDs) (Rs, 60,000.00 Mn.) -

1. 7.57% NCDs (15,000) of Rs, 1 Mn. each - Rs, 15,000.00 Mn. is repayable in December, 2021

2. 7.77% NCDs (15,000) of Rs, 1 Mn. each - Rs, 15,000.00 Mn. is repayable in January, 2022

3. 8.04% NCDs (20,000) of Rs, 1 Mn. each - Rs, 20,000.00 Mn. is repayable in January, 2022

4. 8.03% NCDs (5,000) of Rs, 1 Mn. each - Rs, 5,000.00 Mn. is repayable in January, 2022

5. 8.03% NCDs (5,000) of Rs, 1 Mn. each - Rs, 5,000.00 Mn. is repayable in February, 2022

Repayment Terms for Deferred Payment Liability (DPL)

DPL for Spectrum won in November 2012 (Rs, 9,404.62 Mn.) - Balance amount and interest thereon is repayable in 6 equated annual installments starting December, 2019.

DPL for Spectrum won in February 2014 (Rs, 69,533.84 Mn.) - Balance amount and interest thereon is repayable in

8 equated annual installments starting March, 2019.

DPL for Spectrum won in March 2015 (Rs, 224,033.26 Mn.) - Balance amount and interest thereon is repayable in

9 equated annual installments starting April, 2019.

DPL for Spectrum won in October 2016 (Rs, 60,809.90 Mn.) - Balance amount and interest thereon is repayable in

10 equated annual installments starting October, 2019.

DPL for Partial Spectrum (Rs, 3,567.65 Mn.) - Balance amount and interest thereon is repayable in 10 equated annual installments starting September, 2019.

c) During the year, the Company has re-financed Loans worth Rs, 4,317.34 Mn. (Previous year Rs, 10,586.48 Mn.).

39. The Department of Telecommunications (DoT) conducted auctions for frequency blocks in the 700, 800, 900, 1800, 2100, 2300 and 2500 MHz spectrum bands in October 2016. The Company successfully bid for its spectrum requirements at a total cost of Rs, 127,979.80 Mn. as under:

- 54.6 MHz of 1800 MHz spectrum in the 12 service areas of Maharashtra, Madhya Pradesh, Gujarat, Haryana, Punjab, Uttar Pradesh (West), Bihar, Rajasthan, Himachal Pradesh, West Bengal, Assam and Jammu & Kashmir

- 20 MHz of 2100 MHz spectrum in the 4 service areas of Rajasthan, Mumbai, Bihar and Uttar Pradesh (East)

- 30 MHz of 2300 MHz spectrum in the service areas of Maharashtra, Madhya Pradesh and Kerala

- 170 MHz of 2500 MHz spectrum in the 16 service areas of Maharashtra, Madhya Pradesh, Kerala, Andhra Pradesh, Gujarat, Uttar Pradesh (West), Uttar Pradesh (East), Haryana, Bihar, Rajasthan, West Bengal, Orissa, Assam, Himachal Pradesh, Jammu & Kashmir and North east service area.

The validity of the above spectrum will be for a 20 year period starting from the spectrum assignment date. The entire spectrum except 2 MHz of 1800 MHz spectrum in Maharashtra service area has been assigned on November 10, 2016. As per the payment options available, the Company has chosen the deferred payment option. The upfront payment amount of '' 63,989.90 Mn. under the deferred payment option was paid on October 20, 2016, the due date for payment.

The above has resulted in an addition to the Intangible Assets (including intangible assets under development) during the year by Rs, 121,619.80 Mn. along with corresponding Deferred Payment Liability of Rs, 60,809.90 Mn. which is reflected under Long term Borrowings. An amount of Rs, 3,180 Mn. paid towards the upfront payment for the unassigned spectrum in Maharashtra service area is included in Capital Advances and the deferred payment obligation of Rs, 3,180 Mn. along with accrued interest of Rs, 132.07 Mn. is disclosed under Capital Commitments.

4. On March 20, 2017, the board of directors of the Company approved the scheme of amalgamation of Vodafone India Ltd (VIL) and its wholly owned subsidiary Vodafone Mobile Services Ltd (VMSL) with the Company subject to necessary approvals of shareholders, creditors, SEBI, Stock Exchanges, the Competition Commission of India, the Department of Telecommunications (DoT), the Foreign Investment Promotion Board, the Reserve Bank of India, other governmental authorities and third parties as may be required.

On the scheme of amalgamation becoming effective, the Company shall issue an aggregate number of equity shares of the Company (credited as fully paid up) to VIL equal to 47% of the post issue paid up capital of the Company on a fully diluted basis. Immediately thereafter, on the amalgamation of VIL with the Company, the shares issued to VIL pursuant to amalgamation of VMSL shall stand cancelled and, post such cancellation, the Company shall issue an aggregate number of equity shares of the Company (credited as fully paid up) equal to 50% of the post issue paid up capital of the Company to the shareholders of VIL.

Existing shareholders of VIL (VIL promoters) will own 45.1% of the combined company after transferring a 4.9% stake to the Aditya Birla Group for an agreed consideration concurrent with completion of the merger. The Aditya Birla Group will then own 26.0% of the combined Company and the Company s other shareholders will own the remaining 28.9%.

The Aditya Birla Group has the right to acquire up to 9.5% additional stake from VIL promoters under an agreed mechanism with a view to equalizing the shareholdings over time. Until equalization is achieved, the additional shares held by VIL promoters will be restricted and votes will be exercised jointly under the terms of the shareholders agreement. The combination will be jointly controlled by VIL promoters and the Aditya Birla Group.

5. During the year, the Company had entered into a business transfer agreement to transfer its Tower infrastructure undertaking to its wholly owned subsidiary ICISL on a going concern basis w.e.f. August 1, 2016.

Basis the agreement, the transfer of undertaking consisting of Telecom towers along with other assets and liabilities, including human resources deployed has been effected for the book value of undertaking of Rs, 4,864.58 Mn. against which ICISL has issued 10,000 equity shares of face value of Rs, 10 each to the Company.

6. Capital and other Commitments:

Estimated amount of commitments are as follows:

- Spectrum won in auctions Rs, 3,312.07 Mn. (Previous year: Rs, Nil, Transition date: Rs, 282,025.25 Mn.)

- Contracts remaining to be executed for capital expenditure (net of advances) and not provided for are Rs, 20,097.43 Mn. (Previous year: Rs, 19,815.03 Mn. Transition date: Rs, 27,661.71 Mn.)

- Long term contracts remaining to be executed including early termination commitments (if any) are Rs, 17,600.26 Mn. (Previous year: Rs, 14,800.13 Mn. Transition date: Rs, 17,866.22 Mn.)

7. Contingent Liabilities:

A) Licensing Disputes:

i. One Time Spectrum Charges:

In Financial year 2012-13, DoT had issued demand notices towards one time spectrum charges

- For spectrum beyond 6.2 MHz in respective service areas for retrospective period from July 1, 2008 to December 31, 2012, amounting to Rs, 3,691.30 Mn., and

- For spectrum beyond 4.4 MHz in respective service areas effective January 1, 2013 till expiry of the period as per respective licenses amounting to Rs, 17,443.70 Mn.

In the opinion of Company, inter-alia, the above demands amount to alteration of financial terms of the licenses issued in the past. The Company had therefore, petitioned the Hon ble High Court of Bombay, where the matter was admitted and is currently sub-judice. The Hon ble High Court of Bombay has directed the DoT, not to take any coercive action until the matter is further heard. No effects have been given in the financial statements for the above.

ii. Other Licensing Disputes - Rs, 58,318.18 Mn. (Previous year: Rs, 30,501.90 Mn., Transition date: Rs, 35,520.91 Mn.):

- Demands due to difference in interpretation of definition of adjusted gross revenue (AGR) and other license fee assessment related matters. Most of these demands are currently before the Hon ble TDSAT, Hon ble High court and Hon ble Supreme Court.

- Disputes relating to alleged non-compliance of licensing conditions & other disputes with DoT, either filed by or against the Company and pending before Hon ble Supreme Court / TDSAT.

- Demands on account of alleged violations in license conditions relating to amalgamation of erstwhile Spice Communications Limited currently sub-judice before the Hon ble TDSAT.

- Demand with respect to upfront spectrum amounts for continuation of services from February 2, 2012 till various dates in the service areas where the licenses were quashed following the Hon ble Supreme Court Order.

B) Aditya Birla Telecom Limited ("ABTL") has an obligation to buy the equity shares of Indus held by P5 Asia Holdings Investments

(Mauritius) Limited (P5) at fair value if:

i. ABTL sells its stake in Indus before P5 and P5 is not able to find a buyer for their stake in Indus, or

ii. Aditya Birla Group companies collectively cease to be the single largest shareholder of the Company before P5 is able to sell its stake in Indus.

In the event ABTL is not able to fulfill its obligation, the same will devolve on the company.

i. Income Tax Matters

- Appeals filed by the Company against the demands raised by Income Tax Authorities which are pending before Appellate Authorities include mainly disputes on account of incorrect disallowance of revenue share license fee, disputes on no applicability of tax deduction at source on prepaid margin allowed to prepaid distributors & roaming settlements, disallowance of interest proportionate to interest free advances given to wholly owned subsidiaries etc.

- Appeal filed for tax demand on difference between revalued figures of Investment in Indus held through a wholly owned subsidiary and book value of Passive Infrastructure assets transferred to step down subsidiary through a High Court approved scheme.

ii. Sales Tax and Entertainment Tax

- Sales T ax demands mainly relates to the demands raised by the VAT / Sales T ax authorities of few states on Broadband Connectivity, SIM cards etc. on which the Company has already paid Service Tax.

- Demand of tax for non-submission of Declaration forms viz. C forms & F forms in stipulated time limit.

- In one State entertainment tax is being demanded on revenue from value added services. However, the Company has challenged the constitutional validity of the levy.

- Amounts in respect of Jammu & Kashmir General Sales Tax Amnesty scheme pending clarification / notification.

8. Share-based Payments

Employee stock option plan

The Company has granted stock options under the employee stock option scheme (ESOS) 2006 and stock options as well as restricted stock units (RSU s) under ESOS 2013 to the eligible employees of the company and its subsidiaries from time to time. These options would vest in 4 equal annual installments after one year of the grant and the RSU s will vest after 3 years from the date of grant. The maximum period for exercise of options and RSU s is 5 years from the date of vesting. Each option and RSU when exercised would be converted into one fully paid-up equity share of Rs, 10 each of the Company. The options granted under ESOS 2006 and options as well as RSUs granted under the ESOS 2013 scheme carry no rights to dividends and no voting rights till the date of exercise.

The fair value of the share options is estimated at the grant date using Black and Scholes Model, taking into account the terms and conditions upon which the share options were granted.

The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The volatility is based on the historical share price over a period similar to the expected life of the options.

9. Employee Benefits A. Defined Benefit Plan (Gratuity)

General description and benefits of the plan

The Company operates a defined benefit final salary gratuity plan through a trust. The gratuity benefits payable to the employees are based on the employee s service and last drawn salary at the time of leaving. In case of employees retiring from the company, the Company s scheme is more favorable as compared to the obligation under Payment of Gratuity Act, 1972 depending on the period of continuous service. The benefit is payable on termination of service or retirement, whichever is earlier. The employees do not contribute towards this plan and the full cost of providing these benefits are borne by the Company.

Regulatory framework, funding arrangement and governance of the Plan

The gratuity plan is governed by the Payment of Gratuity Act, 1972 (Gratuity Act). The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the income tax act and rules. The Company is bound to pay the statutory minimum gratuity as prescribed under Gratuity Act. There are no minimum funding requirements for a gratuity plan in India. The Company s philosophy is to fund the benefits based on its own liquidity and tax position as well as level of underfunding of the plan vis- -vis settlements. The trustees of the trust are responsible for the overall governance of the plan. The trustees of the plan have outsourced the investment management of the fund to insurance companies which in turn manage these funds as per the mandate provided to them by the trustees and applicable insurance and other regulations.

The Company operates its gratuity and superannuation plans through separate trusts which is administered and managed by the Trustees. As on March 31, 2017 and March 31, 2016, the contributions towards the plans have been invested in Insurer Managed Funds.

Inherent risks

The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Company that any significant change in salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future.

The following tables summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for gratuity:

(c) Deferred tax assets are recognized to the extent that it is probable that taxable profit will be against which the deductible temporary differences, carry forward of unabsorbed depreciation and tax losses can be utilized. Accordingly, in view of uncertainty the Company has not recognized deferred tax assets in respect of temporary differences arising out of effects of assessments and unused tax losses/credits of Rs, 4,612.09 Mn., Rs, 3,738.82 Mn. and Rs, 3,442.47 Mn. as of March 31, 2017, March 31, 2016 and April 1, 2015 respectively.

*As the company has incurred loss during the year, dilutive effect on weighted average number of shares would have an anti-dilutive impact and hence, not considered.

10. Related party transactions

The related parties where control and significant influence exists are subsidiaries and associates respectively. Key Management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any Director whether executive or otherwise.

List of subsidiaries

Relationship Related Party

Aditya Birla Telecom Limited Idea Cellular Infrastructure Services Limited Subsidiaries (Subs) Idea Cellular Services Limited

Idea Mobile Commerce Services limited Idea Telesystems Limited Apart from the above, the company has transactions with the below related parties Relationship Related Party

Associate Aditya Birla Idea Payments Bank Limited

Joint Venture of ABTL (JV) Indus Towers Limited

Aditya Birla Capital Advisors Private Limited

Aditya Birla Finance Limited

Aditya Birla Financial Services Limited

Aditya Birla Financial Shared Services Limited

Aditya Birla Health Insurance Company Limited

Aditya Birla Housing Finance Limited

Aditya Birla Insurance Brokers Limited

Aditya Birla Money Limited

Aditya Birla Money Mart Limited (ABMML)

Aditya Birla Nuvo Limited Entities having significant influence Axiata Group Berhad

Axiata Investments 1 India Limited

Axiata Investments 2 India Limited

Birla Institute of Technology and Science Company

Birla Sun Life AMC Limited

Birla Sun Life Asset Management Company Limited

Birla Sun Life Insurance Company Limited

Birla TMT Holdings Private Limited

Dialog Axiata PLC- Sri Lanka

Grasim Industries Limited

Hindalco Industries Limited

Ultratech Cement Limited

Smt. Rajashree Birla

Mr. Kumar Mangalam Birla

Ms. Alka Bharucha (Effective December 26, 2016)

Mr. Akshaya Moondra Mr. Arun Thiagarajan Mr. Himanshu Kapania Key Management Personnel (KMP) Mr. Mohan Gyani

Mr. P. Murari

Mr. R.C. Bhargava

Mr. Sanjeev Aga

Ms. Madhabi Puri Buch

Ms. Tarjani Vakil

Agora Advisory Private Limited

Bharucha and Partners

Oth Breach Candy Hospital and Research Centre

Citec Engineering India Private Limited G.D. Birla Medical Research & Education Foundation Svatantra Microfin Private Limited ICL Employee s Group Gratuity Scheme Trust* ICL Employee Superannuation Scheme Spice Communications Limited Employee Superannuation Scheme * Refer note 53 for information on transactions with post-employment benefit plans mentioned above.

*Represents contribution to provident and superannuation funds. As Gratuity expense is based on actuarial valuations, the same cannot be computed for individual employees and hence not included.

11. Disclosure as per the requirement of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015: The amounts at the year end and the maximum amount of loans & advances outstanding during the year ending March 31, 2017 is Rs, Nil (Previous year Rs, Nil)

12. The Company is one of the members of Aditya Birla Management Corporation Private Limited, a Company limited by guarantee, which has been formed to provide common pool of facilities and resources to its members with a view to optimize the benefits of specialization and minimize cost to each member. The Company s share of expenses incurred under the common pool has been accounted for at actual in the respective heads in the Statement of Profit & Loss.

13 Financial Instruments

a) Financial Instruments by Category: The following table provides categorization of all financial instruments at carrying value except non-current investments in subsidiaries and associates (including advance given for purchase of shares) which are carried at cost.

iv. The carrying amounts of the following financial assets and financial liabilities are a reasonable approximation of their fair values. Accordingly, the fair values of such financial assets and financial liabilities have not been disclosed separately.

a) Financial Assets

- Trade Receivables

- Security Deposits and deposits with body corporate

- Loans to Employees

- Cash and Cash equivalents

- Bank balances other than cash and cash equivalents

- Interest Receivable

b) Financial Liabilities

- Trade Payables

- Payable for capital expenditure

- Security Deposits

*Includes Deferred Payment Liability, NCD and others.

c) Valuation Technique used to determine fair value

Fair value of quoted current investments in Mutual Funds is based on price quotations at the reporting date.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between knowledgeable and willing parties, other than in a forced or liquidation sale. The valuation techniques used to determine the fair values of financial assets and financial liabilities classified as level 2 include use of quoted market prices or dealer quotes for similar instruments and generally accepted pricing models based on a discounted cash flow analysis using rates currently available for debt on similar terms, credit risk and remaining maturities.

14. Financial risk management objectives and policies

The Company s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support the Company s operations. The Company s principal financial assets comprise investments, cash and bank balance, trade and other receivables. The Company also enters into derivative transactions such as foreign forward exchange contracts, Interest rate swaps as a part of Company s financial risk management policies. It is the Company s policy that no trading in derivatives for speculative purposes may be undertaken.

The Company is exposed to various financial risks such as market risk, credit risk and liquidity risk. A team of qualified finance professionals with appropriate skills and experience provides assurance to the management that financial risks are identified, measured and managed in accordance with the Company s policies and risk objectives

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include borrowings, bank deposits, investments and derivative financial instruments. The sensitivity analysis as shown below relates to the position as at March 31, 2017 and March 31, 2016.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2017 and March 31, 2016.

a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company s exposure to the risk of changes in market interest rates relates primarily to the Company s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. At March 31, 2017, after taking into account the effect of interest rate swaps, approximately 88.06% of the Company s borrowings are at a fixed rate of interest (Previous year: 92.62%, Transition date: 51.59%).

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

b) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company s exposure to the risk of changes in foreign exchange rates relates primarily to the Company s operating activities (when revenue or expense is denominated in a foreign currency).The Company s foreign currency risks are identified, measured and managed at periodic intervals in accordance with the Company s policies.

When a derivative is entered into for the purpose of hedging any foreign currency exposure, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure.

At March 31, 2017, the Company hedged 21.14% (Previous year: 34.91%, Transition date: 52.72%), of its foreign currency loans. This foreign currency risk is hedged by using foreign currency forward contracts.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency rates, with all other variables held constant. The impact on the Company s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives and embedded derivatives. The Company s exposure to foreign currency changes for all other currencies is not material.

The derivatives have not been designated in a hedge relationship, they act as a hedge and will offset the underlying transactions when they occur.

c) Other price risk

The Company invests its surplus funds in various debt instruments and debt mutual funds. These comprise of mainly liquid schemes of mutual funds (liquid investments) and fixed deposits.

Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments. However due to the very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk.

On the duration investment balance, an increase/ decrease of 25 basis points in market yields (parallel shift of the yield curves), will result in decrease/increase in the marked to market value of the investments by Rs, Nil and Rs, 0.28 Mn as on March 31, 2017 and March 31, 2016, respectively.

d) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade and other receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

- Trade receivables

Customer credit risk is managed in accordance with the Company s established policy, procedures and controls relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on 15 to 30 days credit terms. Outstanding customer receivables are regularly monitored.

The Company follows a simplified approach (i.e. based on lifetime ECL) for recognition of impairment loss allowance on Trade receivables (including lease receivables). For the purpose of measuring lifetime ECL allowance for trade receivables, the company estimates irrecoverable amounts based on the ageing of the receivable balances and historical experience. Further, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. Individual trade receivables are written off when management deems them not to be collectible.

- Other financial assets and cash deposits

Credit risk from balances with banks is managed by the Company s treasury department. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counter party. Counterparty credit limits are reviewed by the Company s Treasury Department on an annual basis, and may be updated throughout the year. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty s potential failure to make payments.

The Company s maximum exposure to credit risk for the components of the balance sheet as at March 31, 2017, March 31, 2016 and April 01, 2015 on its carrying amounts as disclosed in notes 10, 15, 16 and 17.

e) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company monitors its risk of a shortage of funds using a liquidity planning tool.

The Company s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases. Approximately 6.20% of the Company s debt will mature in less than one year at March 31, 2017 (Previous year: 11.44%, Transition date: 38.45%) based on the carrying value of borrowings reflected in the financial statements. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

15. Capital management

For the purpose of the Company s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using the debt-equity ratio, which is net debt divided by total equity. The Company includes within net debt, interest bearing loans and borrowings less cash and cash equivalents, Bank balance other than cash and cash equivalents and investment in liquid mutual funds.

In order to achieve this overall objective, the Company s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to call the consequences attached with the same.

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2017 and March 31, 2016.

16. During the year ended March 31, 2017, the Company paid / accrued remuneration amounting to Rs, 100.46 Mn. to its Managing Director, Mr. Himanshu Kapania. As the Company did not have profits in the financial year ended March 31, 2017, an amount of Rs, 30.54 Mn. is in excess of the limits specified in section 197 of Companies Act, 2013 (the Act) read with Schedule V thereto. The Company is in the process of complying with the statutory requirements prescribed to regularize such excess payments, including seeking approval of shareholders / central government, as necessary.

17. The Company is engaged in providing mobility and long distance services which is included in the definition of infrastructure and accordingly, the provisions of Section 186 of the Companies Act, 2013 relating to loans made, guarantees given or securities provided are not applicable to the Company. Refer Note 9 for investments made by the Co


Mar 31, 2015

1. CORPORATE INFORMATION

Idea Cellular Limited ('the Company'), an Aditya Birla Group company, is currently the third largest pan India telecom service provider in India. The Company is engaged in the business of Mobility and Long Distance services.

2. Rights attached to Equity Shares:

The Company has only one class of equity shares having par value of Rs. 10/- per share. Each holder of equity shares is entitiled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Secured Loans are covered by:

Term Loans including current maturities are secured by way of first charge / assignment ranking pari-passu interse the lenders, as under:

i. First charge on all the movable and immovable properties of the Company respectively,

ii. First charge over all intangible assets (excluding Telecom Licenses and Spectrum) of the Company,

iii. Assignment of the rights, titles and interest, on deposits, investments, bank accounts, book debts, insurance covers, other general assets, letters of credit and guarantees, provided in favour of the Company.

Out of the above Loan, Foreign Currency Loan amounting to Rs. Nil (Previous year Rs. 51,938.56 Mn.) additionally have pledge on 60% shareholding of Indus Towers Limited held by wholly owned subsidiary. Further Foreign Currency Loan amounting to Rs. 5,803.22 Mn. (Previous year Rs. 6,764.01 Mn.) & Rupee Loan amounting to Rs. Nil (Previous year Rs. 8,182.25 Mn.) included above, have additional security as first priority charge over certain Telecom Licenses also. NCD amounting to Rs. 3,960.00 Mn. (Previous year Rs. 4,710.00 Mn.) have paripassu charge only on the tangible fixed assets of the Company.

Vehicle Loans including current maturities is secured by hypothecation of Vehicles against which the loans have been taken.

4. Repayment Terms of outstanding long term borrowings (excluding current maturities) as on March 31, 2015 Repayment Terms for Secured Foreign Currency Borrowings

Facility 1 (Rs. 8,928.05 Mn.) -

Tranche 1 - Balance amount is repayable in 7 equal half yearly installments starting September, 2016 Tranche 2 - Balance amount is repayable in 10 equal half yearly installments starting August, 2016 Facility 2 (Rs. 6,084.71 Mn.) - Balance amount is repayable in 11 equal half yearly installments starting June, 2016 Facility 3 (Rs. 4,674.75 Mn.) - Balance amount is repayable in 15 equal half yearly installments starting April, 2016 Facility 4 (Rs. 7,111.12 Mn.) -

Tranche 1 - Balance amount is repayable in 8 equal half yearly installments starting April, 2016 Tranche 2 - Balance amount is repayable in 2 equal half yearly installments starting April, 2020

Facility 5 (Rs. 5,816.05 Mn.) - Balance amount is repayable in 11 equal half yearly installments starting May, 2016 Facility 6 (Rs. 6,584.21 Mn.) -

Tranche 1 - Balance amount is repayable in 13 equal half yearly installments starting July, 2016 Tranche 2 - Balance amount is repayable in 11 equal half yearly installments starting July, 2016 Facility 7 (Rs. 4,944.03 Mn.) - Balance amount is repayable as follows:

1) 13 equal quarterly installments of 4.13% each of the total drawn amount starting July, 2016

2) 4 equal quarterly installments of 4.75% each of the total drawn amount starting July, 2019 Repayment Terms for Secured INR Borrowings

Facility 1 (Rs. 4,025.00 Mn.) - Balance amount is repayable in 4 equal quarterly installments starting June, 2016 Facility 2 (Rs. 9,600.00 Mn.) - Balance amount is repayable in 8 equal quarterly installments starting June, 2016 NCDs (Rs. 3,960.00 Mn.) - Repayable in October, 2019

Vehicle Loans are repayable in equal monthly installments over the term of the loan ranging from 2 to 4 years Repayment Terms for Unsecured Foreign Currency Borrowings Facility 1 (Rs. 4,506.54 Mn.) - Balance amount is repayable in June, 2018 Repayment Terms for Deferred Payment Liability (DPL)

DPL for Spectrum won in November 2012 ( 13,454.82 Mn.) - Balance amount and interest thereon is repayable in 9 equated annual installments starting December, 2016.

DPL for Spectrum won in February 2014 (Rs. 80,086.69 Mn.) - Balance amount and interest thereon is repayable in 10 equated annual installments starting March, 2017.

5. The Department of Telecommunications (DoT) conducted auctions for frequency blocks in the 800, 900, 1800 and 2100 Mhz spectrum bands in March 2015. The frequency blocks that were put to auction in the 900 and 1800 Mhz band in 17 service areas included the blocks that are currently held by existing licensees whose licenses for the respective service areas are due to expire during financial years (FY) 2015-16 and 2016-17. The Company successfully bid for its requirements in the nine service areas of Maharashtra, Madhya Pradesh, Kerala, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka and Uttar Pradesh (West) where its licenses are due to expire during FY 2015 - 16 / 2016-17 and also additional spectrum at a total cost of Rs. 301,375.25 Mn as under:

* 54 Mhz of 900 Mhz spectrum in the 9 service areas of Maharashtra, Madhya Pradesh, Kerala, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka and Uttar Pradesh (West)

* 20.4 Mhz of 1800 Mhz spectrum in the 6 service areas of Karnataka, Uttar Pradesh (West), Orissa, Tamilnadu, Himachal Pradesh and North East

* 5 Mhz of 2100 Mhz spectrum in Kolkata service area.

The validity of the above spectrum will be for a fresh 20 year period starting from the effective date as mentioned in the Letter of Intent (LOI) when issued, which, in case of spectrum blocks currently held by the existing licensees, should be the date of expiry of existing licenses. As per the payment options available, the Company has chosen the deferred payment option. The upfront payment amount under the deferred payment option due on or before April 9, 2015 was Rs. 77,341.99 Mn. of which Rs. 19,350.00 Mn. was paid on March 31, 2015 and the balance amount of Rs. 57,991.99 Mn. was paid on April 9, 2015. Pending completion of subsequent formalities as per the Notice Inviting Applications (NIA) for the auction and any orders that may be passed by the Hon'ble Supreme Court in related and connected matters currently before it, the amount paid as on March 31, 2015 has been disclosed as Capital Advances and the balance amount of Rs. 282,025.25 Mn. has been disclosed under capital commitments.

6. During the year, the Company has issued and allotted 223,880,597 Equity Shares of face value of Rs. 10/- each to eligible Qualified Institutional Buyers at a price of Rs. 134/- per Equity Share, including a premium of Rs. 124/- per Equity Share, aggregating Rs. 30,000 Mn. The Company also issued and allotted 51,838,540 Equity Shares of face value of Rs. 10/- each to Axiata Investments 2 (India) Limited on a preferential basis at a price of Rs. 144.68 per Equity Share, including a premium of Rs. 134.68 per Equity Share, aggregating Rs. 7,500 Mn.

7. Contingent Liabilities:

(i) In Financial year 2012-13, DoT had issued demand notices towards one time spectrum charges

* for spectrum beyond 6.2 Mhz in respective service areas for retrospective period from July 1, 2008 to December 31, 2012, amounting to Rs. 3,691.30 Mn., and

* for spectrum beyond 4.4 Mhz in respective service areas effective January 1, 2013 till expiry of the period as per respective licenses amounting to Rs. 17,443.70 Mn.

In the opinion of Company, inter-alia, the above demands amount to alteration of financial terms of the licenses issued in the past. The Company had therefore, petitioned the Hon'ble High Court of Bombay, where the matter was admitted and is currently sub-judice. The Hon'ble High Court of Bombay has directed the DoT, not to take any coercive action until the matter is further heard.

(ii) The Company has a contingent obligation to buy compulsorily convertible preference shares issued by Aditya Birla Telecom Limited (ABTL), a subsidiary of the Company, from the holder at a mutually agreed consideration based on the fair value, in the event the holder exercises exit rights.

(iii) Other Matters

Rs. Mn

Particulars As at As at March 31, March 31, 2015 2014

Income Tax Matters not 66,566.75 25,563.22 acknowledged as debts (see a below)

Sales Tax and Entertainment Tax Matters not acknowledged as debts (see b below) 994.34 973.59

Service Tax Matters not 1,364.22 1,538.93 acknowledged as debts (see c below)

Entry Tax and Customs Matters not 386.57 294.76 acknowledged as debts (see d below)

Licensing Disputes (see e below) 5,520.91 19,943.82

Other claims not acknowledged 2.370.12 2,322.46 as debts (see f below)

8. Income Tax Matters:

* Appeals filed by the Company against the demands raised by Income Tax Authorities which are pending before Appellate Authorities include mainly disputes on account of incorrect disallowance of revenue share license fee, disputes on non applicability of tax deduction at source on pre-paid margin allowed to prepaid distributors & roaming settlements, disallowance of interest proportionate to interest free advances given to wholly owned subsidiaries etc.

* Appeals filed for tax demand on the net value of assets and liabilities vested with the company consequent to High Court approved de-merger of telecom undertaking from its wholly owned subsidiary.

* Appeal filed for tax demand on difference between revalued figure of Investment in Indus held through a wholly owned subsidiary and book value of PI assets transferred to stepdown subsidiary through a High Court approved scheme.

9. Sales Tax and Entertainment Tax:

* Sales Tax demands mainly relates to the demands raised by the VAT/Sales Tax authorities of few states on Broadband Connectivity, SIM cards, etc. on which the Company has already paid Service Tax.

* In one state Entertainment tax is being demanded on revenue from value added services. However, the Company has challenged the constitutional validity of the levy.

10. Service Tax:

Service Tax demands mainly relates to the following matters:

* Interpretation issues arising out of Rule 6(3) of the Cenvat Credit Rules, 2004.

* Denial of Cenvat credit related to Towers, Shelters and OFC ducts.

* Disallowance of Cenvat Credit on input services viewed as not related to output service.

11. Entry Tax:

In certain states, Entry Tax is being demanded on receipt of material from outside the state. However, the Company has

challenged the constitutional validity of the levy.

12. Licensing Disputes:

* Demands due to difference in interpretation of definition of Adjusted Gross Revenue (AGR) and other license fee assessment related matters. Most of these demands are currently before the Hon'ble High court. On 23rd of April, 2015, the Hon'ble TDSAT has issued its judgment setting aside demands which were before it and directed the DoT to re-compute basis principles laid down.

* Disputes relating to alleged non compliance of licensing conditions, EMF procedural norms & other disputes with DoT, either filed by or against the Company and pending before Hon'ble Supreme Court / TDSAT.

* Demands on account of alleged violations in license conditions relating to amalgamation of erstwhile Spice Communications Limited currently sub-judice before the Hon'ble TDSAT.

13. Other claims not acknowledged as debts:

Mainly include consumer forum cases, miscellaneous disputed matters with Local Municipal Corporation, Electricity Board and others.

14. Details of Guarantees given:

Bank Guarantees given Rs. 86,472.12 Mn. (Previous year Rs. 42,004.11 Mn.)

15. Capital and other Commitments:

Estimated amount of commitments as on March 31, 2015 towards:

* Spectrum won in auctions Rs. 282,025.25 Mn (Previous year Rs. Nil)

* Contracts remaining to be executed for capital expenditure (net of advances) and not provided for are Rs. 27,661.71 Mn.

(Previous year Rs. 16,874.82 Mn.)

* Long term contracts remaining to be executed including early termination commitments (if any) are Rs. 17,866.22 Mn.

(Previous year Rs. 18,376.07 Mn.)

16. Segment Reporting:

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services: providing GSM based mobile and related telephony services.

b) International Long Distance (ILD): providing international long distance services.

Transactions between segments are accounted on agreed terms on arm's length basis and have been eliminated at the company level.

17. Related Party Transactions:

As per Accounting Standard 18 on "Related Party Disclosures", related parties of the Company are disclosed below: A. List of related parties:

Promoters

Hindalco Industries Limited (Hindalco)

Grasim Industries Limited (Grasim)

Aditya Birla Nuvo Limited (ABNL)

Birla TMT Holdings Pvt. Limited (Birla TMT)

Subsidiaries

Idea Telesystems Limited (ITL)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Mobile Commerce Services Limited (IMCSL)

Joint Venture of Subsidiary (JV)

Indus Towers Limited (Indus)

Entities having significant influence

Axiata Investments 1 (India) Ltd. (AI1)

Axiata Investments 2 (India) Ltd. (AI2)

Axiata Group Berhad (AGB)

Key Management Personnel (KMP)

Mr. Himanshu Kapania, MD Mr. Akshaya Moondra, CFO

18. The Company is one of the members of Aditya Birla Management Corporation Private Limited, a Company limited by guarantee, which has been formed to provide common pool of facilities and resources to its members with a view to optimise the benefits of specialisation and minimize cost to each member. The Company's share of expenses incurred under the common pool has been accounted for at actuals in the respective heads in the Statement of Profit & Loss.

19. The Company has a composite IT outsourcing agreement where in fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value at the time of receipt and depreciated on the stated useful life applicable to similar IT assets of the Company.

20. The Board of Directors has recommended a dividend at the rate of Rs. 0.60 per share (Previous Year Rs. 0.40) of face value of Rs. 107- aggregating Rs. 2,598.17 Mn. including Rs. 439.46 Mn. Dividend Distribution Tax (Previous Year Rs. 1,553.52 Mn., including Rs. 225.67 Mn. Dividend Distribution Tax) for the year ended March 31, 2015. The payment of dividend is subject to the approval of the shareholders at the ensuing annual general meeting of the Company.

21. Previous year's figures have been regrouped/rearranged wherever necessary to conform to the current year grouping..


Mar 31, 2014

1. CORPORATE INFORMATION

Idea Cellular Limited (''the Company''), an Aditya Birla Group company, is one of the leading national telecom service providers in India. The Company is engaged in the business of Mobility and Long Distance services.

2. The Department of Telecommunications (DoT) conducted auction for the 900 and 1800 Mhz spectrum in February 2014. The Company successfully bid for its requirements in the 11 service areas of Maharashtra, Madhya Pradesh, Kerala, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka, Mumbai, Delhi and North East in the 1800 Mhz band and for Delhi service area also in the 900 Mhz band at a total cost of Rs. 104,242.15 Mn. As per the payment options available as part of the auction, the Company has chosen the deferred payment option by making an upfront payment of Rs. 31,436.07 Mn. and balance amount is recognized as "Deferred Payment Liabilities towards Spectrum" under Unsecured Loans. This spectrum which is yet to be earmarked and allotted to the company as on March 31, 2014 is for a twenty year period.

3. In the pending matter of transfer of licenses for service areas of Punjab & Karnataka, pursuant to amalgamation of erstwhile Spice Communications Limited with the Company, DoT has transferred these licenses in the name of the Company upon submission of an undertaking as directed by Hon''ble Supreme Court in its order dated January 29, 2014.

4. Contingent Liabilities:

i) DoT has issued demand notices towards one time spectrum charges

- for spectrum beyond 6.2 Mhz in respective service areas for retrospective period from 1st July 2008 to 31st December 2012, amounting to Rs. 3,691.30 Mn. and

- for spectrum beyond 4.4 Mhz in respective service areas effective 1st January 2013 till expiry of the period as per respective licenses amounting to Rs. 17,443.70 Mn.

In the opinion of Company, inter-alia, the above demands amount to alteration of financial terms of the licenses issued in the past. The Company had therefore, petitioned the Hon''ble High Court of Bombay, where the matter was admitted and is currently sub-judice. The Hon''ble High Court of Bombay has directed the DoT, not to take any coercive action until the matter is further heard.

ii) The Company has a contingent obligation to buy compulsorily convertible preference shares issued by Aditya Birla Telecom Limited (ABTL) a subsidiary of the Company, from the holder at fair market value plus agreed consideration in case ABTL is not able to redeem the same.

iii) Other Matters

a) Income Tax Matters:

- Appeals filed by the Company against the demands raised by Income Tax Authorities which are pending before Appellate Authorities include mainly disputes on account of incorrect disallowance of revenue share license fee, disputes on non applicability of tax deduction at source on pre-paid margin allowed to prepaid distributors & roaming settlements, disallowance of interest proportionate to interest free advances given to wholly owned subsidiaries etc.

- Appeals filed for tax demand on the net value of assets and liabilities vested with the company consequent to High Court approved de-merger of telecom undertaking from its wholly owned subsidiary.

b) Sales Tax and Entertainment Tax:

- Sales Tax demands mainly relates to the demands raised by the VAT/Sales Tax authorities of few states on Broadband Connectivity, SIM cards etc. on which the Company has already paid Service Tax.

- In one state entertainment tax is being demanded on revenue from value added services. However, the Company has challenged the constitutional validity of the levy.

c) Service Tax:

Service Tax demands mainly relates to the following matters:

- Interpretation issues arising out of Rule 6(3) of the Cenvat Credit Rules, 2004.

- Denial of Cenvat credit related to Towers, Shelters and OFC ducts.

- Disallowance of Cenvat Credit on input services viewed as not related to output service.

d) Entry Tax:

In certain states, Entry Tax is being demanded on receipt of material from outside the state. However, the Company has challenged the constitutional validity of the levy.

e) Licensing Disputes:

- 3G Intra Circle Roaming Arrangements (ICR) – The Company had entered into roaming arrangements with other operators to provide 3G services in service areas where it did not win 3G spectrum. DoT has sent notices to stop the 3G services in these service areas and also imposed penalty for providing 3G services in select service areas under roaming arrangements. The matter is currently pending before the Hon''ble TDSAT.

- Demands due to difference in interpretation of definition of Revenue and other license fee assessment related matters.

- Disputes relating to alleged non compliance of licensing conditions, EMF procedural norms & other disputes with DoT, either filed by or against the Company and pending before Hon''ble Supreme Court/TDSAT.

- Demands on account of alleged violations in license conditions relating to amalgamation of erstwhile Spice Communications Limited currently sub-judice before the Hon''ble TDSAT (Refer Note 30).

f) Other claims not acknowledged as debts:

Mainly include miscellaneous disputed matters with Local Municipal Corporation, Electricity Board and others.

5. Details of Guarantees given:

- Bank Guarantees given Rs. 42,004.11 Mn. (Previous year Rs. 25,832.11 Mn.)

- Corporate Guarantee given to Bank for limits sanctioned in a subsidiary Rs. 550.00 Mn.

6. Capital and other Commitments:

Estimated amount of commitments as on March 31, 2014 towards- - Contracts remaining to be executed for capital expenditure (net of advances) and not provided for are Rs. 16,874.82 Mn. (Previous year Rs. 17,495.40 Mn.)

- Long term contracts remaining to be executed including early termination commitments (if any) are Rs. 18,376.07 Mn. (Previous year Rs. 18,076.12 Mn.)

7. Personnel Expenditure includes Rs. 43.07 Mn. (Previous year Rs. 0.32 Mn.), being the amortisation of intrinsic value of ESOPs for the year ending March 31, 2014.

8. Segment Reporting:

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services: providing GSM based mobile and related telephony services.

b) International Long Distance (ILD): providing international long distance services.

Transactions between segments are accounted on agreed terms on arm''s length basis and have been eliminated at the company level.

2. Secondary Segment:

The Company caters only to the needs of Indian market representing a singular economic environment with similar risks and rewards and hence there are no reportable geographical segments

Primary Business Information (Business Segments) for the year ended March 31, 2014

9. Related Party Transactions

As per Accounting Standard-18 on "Related Party Disclosures", related parties of the Company are disclosed below: A. List of related parties:

Promoters

Hindalco Industries Limited (Hindalco)

Grasim Industries Limited (Grasim)

Aditya Birla Nuvo Limited (ABNL)

Birla TMT Holdings Pvt. Limited (Birla TMT)

Subsidiaries

Idea Telesystems Limited (ITL)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Cellular Towers Infrastructure Limited (ICTIL) (upto June 11, 2013)

Idea Mobile Commerce Services Limited (IMCSL)

Joint Venture of Subsidiary (JV) Indus Towers Limited (Indus)

Entities having significant influence

Axiata Investments 1 (India) Ltd. (AI1) (Formerly known as TMI Mauritius Ltd)

Axiata Investments 2 (India) Ltd. (AI2)

Axiata Group Berhad

Key Management Personnel (KMP)

Mr. Himanshu Kapania, MD

Mr. Akshaya Moondra, CFO

10. The Company is one of the members of Aditya Birla Management Corporation Private Limited, a Company limited by guarantee, which has been formed to provide common pool of facilities and resources to its members with a view to optimise the benefits of specialisation and minimize cost to each member. The Company''s share of expenses incurred under the common pool has been accounted for at actuals in the respective heads in the Statement of Profit & Loss.

11. Operating Lease: As a Lessee

The Company has entered into non-cancellable operating leases for offices, switches and cell sites for periods ranging from 36 months to 240 months.

Operating Lease: As a Lessor

The Company has leased certain Optical Fibre Cables (OFC) on Indefeasible Rights of Use ("IRU") basis under operating lease arrangements. The gross block, accumulated depreciation and depreciation expense of the assets given on IRU basis is not separately identifiable and hence not disclosed.

Rental income of Rs. 260.79 Mn. (Previous year Rs. 191.49 Mn.) in respect of such leases has been recognized in the Statement of Profit and Loss during the current year.

12. The Company has a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value at the time of receipt and depreciated on the stated useful life applicable to similar assets of the Company.

13. The Board of Directors has recommended a dividend at the rate of Rs. 0.40 per share (Previous year Rs. 0.30) of face value of Rs. 10/- aggregating Rs. 1,553.52 Mn. including Rs. 225.67 Mn. Dividend Distribution Tax (Previous year Rs. 1,163.28 Mn., including Rs. 168.98 Mn. Dividend Distribution Tax) for the year ended March 31, 2014. The payment of dividend is subject to the approval of the shareholders at the ensuing annual general meeting of the Company.

14. Previous year''s figures have been regrouped/rearranged wherever necessary to conform to the current year grouping.


Mar 31, 2013

1. CORPORATE INFORMATION

Idea Cellular Limited (''the Company''), an Aditya Birla Group company, is one of the leading national telecom service providers in India. The Company is engaged in the business of Mobility and Long Distance services.

2. The Department of Telecommunications (DoT) conducted auction for the 1800 Mhz spectrum in November 2012 as required by the Hon''ble Supreme Court''s judgment dated 2nd February 2012, quashing the licenses granted to private operators on or after 10th January 2008 pursuant to two press releases issued on 10th January 2008 and subsequent allocation of spectrum to the licensees. As the Company was impacted by the said judgment in seven operating licenses, the Company participated in the said auction and was successful in winning back the spectrum for these impacted service areas at a price of Rs. 19,848.80 Mn. DoT then adjusted Rs. 6,845.90 Mn. paid by the Company for licenses applied in 2008 and as per the payment options available as part of the auction, the Company has chosen the deferred payment option for the balance amount.

DoT has issued LOI''s earmarking the spectrum won in these seven service areas and award of unified licenses. The Company has applied to DoT for the issue of new licenses in these seven service areas and paid the license fee on the basis of LOI''s. While services in these seven service areas continue, the effects provided in these financial statements for the year ended 31st March 2013 are:

a) Out of the above Rs. 6,845.90 Mn. adjusted by DoT,

- License fee amounting to Rs. 3,260.10 Mn. paid for the seven operational licenses has been de capitalized.

- License fee amounting to Rs. 3,585.80 Mn. paid earlier for overlapping licenses which was impaired in FY2009-10 and set off by withdrawal of an equivalent amount from the Securities Premium Account has been credited to Securities Premium Account.

b) Reversal of accumulated amortization on the seven operational licenses amounting to Rs. 482.30 Mn., thereby the current year amortization charge stands reduced to that extent.

c) Capitalisation of the the new licenses and earmarked spectrum.

3. The Division bench of Hon''ble Delhi High Court, vide its Order dated 13th July 2012, reaffirmed amalgamation of erstwhile Spice Communications Limited (Spice) with the Company. The said order also re-vested unto the Company the telecom licenses which were transferred to and vested unto DoT pursuant to order dated 4th July 2011, passed by single Judge of Hon''ble Delhi High Court. Vide a separate order dated 13th July 2012, the said Division bench also directed the DoT to decide on transfer of licenses to the Company within a period of 3 months and dispute if any, between the Company and DoT relating to such transfer should be referred to Hon''ble TDSAT for resolution. Vide its letter dated 28th September 2012, DoT requested the Company to submit a fresh application to consider transfer of licenses, which the Company has since complied. Meanwhile the DoT made an application to the said division bench of Hon''ble Delhi High Court to extend the period of three months, which expired on 12th October 2012, by a further period of four months. The division bench of Hon''ble Delhi High Court, vide its order passed on 17th October 2012 gave further time to the DoT till 11th November 2012 to take final decision on transfer of licenses. Thereafter, DoT again filed another application, to further extend the period by three months. The said application of DoT was disposed off by Hon''ble Delhi High Court vide order dated 11th December 2012, wherein DoT was directed to convey the final decision by 5th January 2013. The final decision of the DoT in the matter is awaited.

4. Contingent Liabilities:

i. DoT has issued demand notices towards one time spectrum charges -

- for spectrum beyond 6.2 Mhz in respective service areas for retrospective period from 1st July 2008 to 31st December 2012, amounting to Rs. 3,691.30 Mn., and

- for spectrum beyond 4.4 Mhz in respective service areas effective 1st January 2013 till expiry of the period as per respective licenses amounting to Rs. 17,443.70 Mn.

In the opinion of Company, inter-alia, the above demand amounts to alteration of financial terms of the licenses issued in the past. The Company therefore, petitioned the Hon''ble High Court of Bombay, which directed DoT to respond and not to take any coercive action until next date of hearing, which is scheduled for 6th May 2013.

ii. The Company has a contingent obligation to buy compulsorily convertible preference shares issued by ABTL from the holder at Rs. 21,548.16 Mn. (Previous year Rs. 20,982.50 Mn. ).

iii. Other Matters -

a. Income Tax Matters:

- Appeals filed by the Company against the demands raised by Income Tax Authorities which are pending before Appellate Authorities include mainly, disputes on account of incorrect disallowance of revenue share license fee, disputes on non applicability of tax deduction at source on pre-paid margin allowed to prepaid distributors & roaming settlements, disallowance of interest proportionate to interest free advances given to wholly owned subsidiaries etc.

- Appeals filed for tax demand on the net value of assets and liabilities vested with the company consequent to High Court approved de-merger of telecom undertaking from its wholly owned subsidiary.

b. Sales Tax:

Sales Tax demands as at 31st March 2013 mainly relate to the demands raised by the VAT/Sales Tax authorities of few states on Broadband Connectivity, SIM cards etc. on which the Company has already paid Service Tax.

c. Service Tax:

Service Tax demands as at 31st March 2013 mainly relate to the following matters:

- Interpretation issues arising out of Rule 6(3) of the Cenvat Credit Rules, 2004.

- Denial of Cenvat credit related to Towers, Shelters and OFC ducts.

- Disallowance of Cenvat Credit on input services viewed as not related to output service.

d. Entry Tax:

In certain states, Entry Tax is being demanded on receipt of material from outside the state. However, the Company has challenged the constitutional validity of the levy.

e. Licensing Disputes:

- 3G Intra Circle Roaming Arrangements (ICR) - The Company had entered into roaming arrangements with other operators to provide 3G services in service areas where it did not win 3G spectrum. DoT has sent notices to stop the 3G services in these service areas and also imposed penalty for providing 3G services in select service areas under roaming arrangements. The matter is currently pending before the Hon''ble High Court of Delhi.

- Demands due to difference in interpretation of definition of Revenue and other license fee assessment related matters

- Disputes relating to alleged non compliance of licensing conditions & other disputes with DoT, either filed by or against the Company and pending before Hon''ble Supreme Court / TDSAT.

f. Other claims not acknowledged as debts:

Mainly include miscellaneous disputed matters with Local Municipal Corporation, Electricity Board and others.

5. Capital and other Commitments:

Estimated amount of commitments as on 31st March, 2013 towards -

- Contracts remaining to be executed for capital expenditure (net of advances) and not provided for are Rs. 17,495.40 Mn. (Previous year Rs. 10,467.51 Mn.)

- Long term contracts remaining to be executed including early termination commitments (if any) is Rs. 18,076.12 Mn. (Previous year Rs. 7,439.13 Mn.)

6. Personnel Expenditure includes Rs. 0.32 Mn. (Previous year Rs. 35.88 Mn.), being the amortisation of intrinsic value of ESOPs for the year ending 31st March 2013.

Had the compensation cost for the Company''s stock based compensation plan been determined as per fair value approach (calculated using Black & Scholes Option Pricing Model), the Company''s net income would be lower by Rs. 38.44 Mn. (Previous year Rs. 115.23 Mn.) and earnings per share would be as indicated below:

7. Segment Reporting:

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services: providing GSM based mobile and related telephony services.

b) International Long Distance (ILD): providing international long distance services.

Transactions between segments are accounted on agreed terms on arm''s length basis and have been eliminated at the company level.

2. Secondary Segment:

The Company caters only to the needs of Indian market representing a singular economic environment with similar risks and rewards and hence there are no reportable geographical segments.

8. Related Party Transactions:

As per Accounting Standard-18 on "Related Party Disclosures", related parties of the Company are disclosed below:

A. List of related parties:

Promoters

Hindalco Industries Limited (Hindalco)

Grasim Industries Limited (Grasim)

Aditya Birla Nuvo Limited (ABNL)

Birla TMT Holdings Pvt. Limited (Birla TMT)

Subsidiaries

Idea Telesystems Limited (ITL)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Cellular Towers Infrastructure Limited (ICTIL)

Idea Mobile Commerce Services Limited (IMCSL)

Joint Venture of Subsidiary (JV)

Indus Towers Limited (Indus)

Entities having significant influence

TMI Mauritius Ltd

Axiata Investments 2 (India) Ltd.

Axiata Group Berhad

Key Management Personnel (KMP)

Mr. Himanshu Kapania, MD

Mr. Akshaya Moondra, CFO

9. Operating Lease: As a Lessee

The Company has entered into non-cancellable operating leases for offices, switches and cell sites for periods ranging from 36 months to 240 months.

10. During the financial year 2007-08, Company had entered into a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value at the time of receipt and depreciated on the stated useful life applicable to similar assets of the Company.

11. Asset Retirement Obligation:

The Company installs equipments on lease premises and lays down optical fibre cables (OFC) to provide seamless connectivity to its customers. In certain cases, the Company may have to incur some cost to remove such equipment and OFC. Estimated costs to be incurred for restoration is capitalised along with the assets. The movement of provision as required in AS-29 "Provisions, Contingent Liabilities and Contingent Assets" is given below:

12. The Board of Directors has recommended a dividend at the rate of Rs. 0.30 per share of face value of Rs. 10/- aggregating Rs. 1,163.28 Mn. (including Rs. 168.98 Mn. Dividend Distribution Tax) for the year ended 31st March 2013. The payment of dividend is subject to the approval of the shareholders at the ensuing annual general meeting of the Company.

13. Previous year''s figures have been regrouped / rearranged wherever necessary to conform to the current year grouping.


Mar 31, 2012

A) Secured Loans are covered by:

Term Loans including current maturities are secured by way of first charge/assignment ranking pari-passu interse the lenders, as under:

(i) First charge on all the movable and immovable properties of the Company respectively,

(ii) First charge over all intangible assets (excluding Telecom Licenses) of the Company,

(iii) Assignment of the rights, titles and interest, on deposits, investments, bank accounts, book debts, insurance covers, other general assets, letters of credit and guarantees, provided in favour of the Company.

Out of the above Loan, Foreign Currency Loan amounting to Rs 43,698.74 Mn (Previous year Rs 18,349.02 Mn) & Rupee Loan amounting to Rs 21,506.00 Mn (Previous year Rs 40,531.98 Mn) additionally have pledge on 60% shareholding of Indus Towers Limited held by wholly owned subsidiary. Further Foreign Currency Loan amounting to Rs 8,660.71 Mn (Previous year Rs 8,733.34 Mn) & Rupee Loan amounting to Rs 21,506.08 Mn (Previous year Rs 40,531.98 Mn) included above, have additional security as first priority charge over Telecom Licenses also.

Vehicle Loans including current maturities is secured by hypothecation of Vehicles against which the loans have been taken.

b) Repayment Terms of outstanding long term borrowings (excluding current maturities) as on March 31, 2012 Repayment Terms for Secured Foreign Currency Borrowings:

Facility 1 (Rs 1,541.14 Mn) - Balance amount is repayable in 2 equal annual installments starting August, 2013

Facility 2 (Rs 316.08 Mn) - Repayable in April, 2013

Facility 3 (Rs 11,320.23 Mn) -

Tranche 1 - Balance amount is repayable in 13 equal half yearly installments starting September, 2013

Tranche 2 - Balance amount is repayable in 16 equal half yearly installments starting August, 2013

Facility 4 - (Rs 3,992.35 Mn) - Balance amount is repayable in 17 equal half yearly installments starting June, 2013

Facility 5 (Rs 8,745.94 Mn) -

Tranche 1 - Balance amount is repayable in 14 equal half yearly installments starting April, 2013

Tranche 2 - Balance amount is repayable in 2 equal half yearly installments starting April, 2020

Facility 6 (Rs 6,959.75 Mn) - Balance amount is repayable in 17 equal half yearly installments starting May, 2013

Facility 7 (Rs 897.00 Mn) -

Tranche 1 - 19 equal half yearly installments starting July, 2013

Tranche 2 - 17 equal half yearly installments starting July, 2013

Facility 8 (Rs 4,966.90 Mn) - Balance amount is repayable as follows:

1) 9 equal quarterly installments of 1.25% each of the total drawn amount starting April, 2013

2) 16 equal quarterly installments of 4.13% each of the total drawn amount starting July, 2015

3) 4 equal quarterly installments of 4.75% each of the total drawn amount starting July, 2019

Repayment Terms for Secured INR Borrowings:

Facility 1 (Rs 15,902.21 Mn) - Balance amount is repayable as follows:

1) 8 equal quarterly installments of 6.25% each of the total drawn amount starting April, 2013

2) 4 equal quarterly installments of 5.00% each of the total drawn amount starting April, 2015 Facility 2 (Rs 16,000.00 Mn) - Balance amount is repayable as follows:

1) 8 equal quarterly installments of Rs 400 mn each starting June, 2013

2) 4 equal quarterly installments of Rs 800 mn each starting June, 2015

3) 8 equal quarterly installments of Rs 1,200 mn each starting June, 2016

Repayment Terms for Unsecured Foreign Currency Borrowings:

Facility 1 (Rs 6,762.30 Mn) - 5 years from drawdown date ending October, 4, 2015

Facility 2 (Rs 2,370.90 Mn) - Balance amount is repayable as follows:

1) 35% of the total drawn amount in February, 2014

2) 35% of the total drawn amount in February, 2015

Facility 3 (Rs 6,112.32 Mn) - Balance amount is repayable as follows:

1) 20% in June, 2013

2) 20% in June, 2014

3) 60% in June, 2018

Vehicles Loans are repayable in equal monthly installments over the term of the loan ranging from 2 to 4 years.

1. Plant & Machinery includes assets held for disposal- Gross Block Rs 66.09 Mn (Previous year K 175.98 Mn) and Net Block Rs 1.29 Mn (Previous year Rs 1.16 Mn).

2. Plant & Machinery includes Gross Block of assets capitalised under finance lease Rs 7,046.64 Mn (Previous year K 5,194.53 Mn) and corresponding Accumulated Depreciation being Rs 4,664.16 Mn (Previous year K 3,055.16 Mn).

3. Exchange loss amounting to K 5,635.25 Mn(Previous year exchange gain Rs 75.54 Mn) capitalised as per transitional provisions of notification under AS-11, issued by the Ministry of Corporate Affairs.

4. Depreciation charge for the year includes accelerated depreciation of Rs 149.13 Mn due to change in estimated useful life of certain fixed assets.

1. Computer - Software include Gross Block of assets capitalised under finance lease K 1,965.26 Mn (Previous year X 1,751.21 Mn) and corresponding Accumulated Amortisation being Rs 1,311.98 Mn (Previous year K 758.81 Mn).

2. The remaining amortisation period of license/ spectrum fees as at March 31, 2012 ranges between 4 to 19 years based on the respective Telecom Service License period.

2. The revised Schedule VI as notified under the Companies Act, 1956, has become applicable to the Company for presentation of its financial statements for the year ending March 31, 2012. The adoption of the revised Schedule VI requirements has significantly modified the presentation and disclosures which have been complied with in these financial statements. Previous year figures have been reclassified in accordance with current year requirements.

3. The Hon'ble Supreme Court, while pronouncing its judgment dated February 2, 2012 in the Writ Petition filed, inter alia, by the Centre for Public Interest Litigations & others, quashed the Press Release dated January 10, 2008 issued by the Department of Telecommunications and consequent grant of 122 licenses including operational licenses held by the Company for 7 (seven) service areas and 6 (six) non operational licenses, (four out of the said six non operational licenses having been granted to erstwhile Spice Communications Limited) and allocation of related spectrum. This directive of the Hon'ble Supreme Court, which was originally to have come into effect after four months from February 2, 2012 has now been further extended till September 7, 2012 pursuant to the order dated April 24, 2012 passed while disposing off the clarificatory applications filed, inter alia, by the Union of India. As part of the judgment of February 2, 2012, the Hon'ble Supreme Court had directed TRAI to make fresh recommendations for grant of license and allocation of spectrum in 2G band in 22 service areas by auction as was done for allocation of spectrum in 3G band. The Hon'ble Supreme Court has on April 24, 2012, further directed the DoT to ensure that the auction is necessarily finalized on or before August 31, 2012. The Company is committed to take all necessary steps to safeguard its interests in this matter. As the impact, if any, on the operations in the said seven service areas and on the carrying values of these licenses as on March 31, 2012 amounting to Rs 2,777.8 Mn is dependent upon the steps to be taken by the DoT and outcome of the auction, operations in these seven service areas continue and accordingly the financial statements include the operational results of these service areas on a going concern basis.

4. The Company has challenged, along with other Telecom Operators, the order of DoT dated December 23, 2011, ordering Telecom Operators to stop provision of services under 3G Intra Circle Roaming Agreements where it has not won 3G Spectrum. The Hon'ble Telecom Dispute Settlement Appellate Tribunal (TDSAT) has passed a "no coercive action" order till the time the dispute is decided. The final hearing on the matter has concluded and final judgment is awaited.

5. The erstwhile Spice Communications Limited (Spice) was amalgamated with the Company effective March 1, 2010 pursuant to sanction of the Scheme of Amalgamation by Hon'ble High Court of Gujarat and Hon'ble High Court of Delhi. However, upon an application made by the DoT on March 30, 2011 for recall of the order dated February 5, 2010, sanctioning the above scheme, the Hon'ble High Court of Delhi while pronouncing its judgment on July 4, 2011, reaffirmed the amalgamation of Spice with the Company. However, the said judgment transferred and vested unto the DoT, the six licenses granted to erstwhile Spice along with the spectrum (including the two operational licenses for Punjab & Karnataka service areas), till the time permission of DoT is granted for transfer thereof upon an application from the Company to that effect.

The Company then filed an appeal, before the Appellate Bench of the Hon'ble High Court of Delhi, challenging the above judgment of July 4, 2011. The final judgment in the said matter has been reserved. Meanwhile, the position under interim orders, passed on various dates by the Appellate Bench remains as follows:-

(i) DoT has been directed to accept the License Fee from the Company without prejudice, as the Company is continuing to operate the licenses for Punjab & Karnataka service areas granted to erstwhile Spice;

(ii) DoT to maintain status quo in relation to the aforesaid two operating licenses and not to take any coercive steps in relation to any demand pertaining to the four non operating licenses.

Pending the final disposal of the appeal, the consequential financial impact, if any, cannot be ascertained.

6. Contingent Liabilities:

Rs Mn

Particulars As on As on March 31, 2012 March 31, 2011

Income Tax matters not acknowledged as debts (see i below) 1,332.16 765.09

Sales Tax matters not acknowledged as debts (see ii below) 2,757.84 3,124.01

Service Tax matters not acknowledged as debts (see iii below) 4,241.74 3,906.72

Entry Tax and Customs matters not acknowledged as debts (see iv below) 390.19 353.91

Licensing Disputes (see v below) 4,760.08 5,038.58

Other claims not acknowledged as debts (see vi below) 2,011.54 1,388.03

(i) Income Tax Matters:

The appeals which are pending before various Appellate Authorities include mainly, the appeals filed by the Company against the demands raised by various Income Tax Authorities on account of non deduction of tax on discount allowed to prepaid distributors, non deduction of tax on roaming charges etc.

(ii) Sales Tax:

The Sales Tax demands as at March 31, 2012 mainly relate to the demands raised by the VAT/Sales Tax authorities of few states on Broadband Connectivity, SIM cards etc. on which the Company has already paid Service Tax.

(iii) Service Tax:

The Service Tax demands as at March 31, 2012 mainly relate to the following matters:

- Interpretation issues arising out of Rule 6(3) of the Cenvat Credit Rules, 2004;

- Denial of Cenvat credit related to Towers, Shelters and OFC ducts.

- Disallowance of Cenvat Credit on input services viewed as not related to output service.

(iv) Entry Tax:

In certain states, Entry Tax is being demanded on receipt of material from outside the state. However, the Company has challenged the constitutional validity of the levy.

(v) Licensing Disputes:

Disputes relating to alleged non compliance of licensing conditions & other disputes with DoT, either filed by or against the Company and pending before Hon'ble Supreme Court/TDSAT.

(vi) Other claims not acknowledged as debts:

Mainly include miscellaneous disputed matters with Local Municipal Corporation, Electricity Board and others.

7. The Company has a contingent obligation to buy compulsorily convertible preference shares issued by ABTL, from the holder at the original issue price of Rs 20,982.50 Mn.

8. Capital and other Commitments:

Estimated amount of commitments as on March 31, 2012 towards:

- Contracts remaining to be executed for capital expenditure (net of advances) and not provided for is Rs 10,467.51 Mn (Previous year Rs 20,246.02 Mn)

- Long term contracts remaining to be executed including early termination commitments (if any) is Rs 7,439.13 Mn

9. Personnel Expenditure includes Rs 35.88 Mn (Previous year Rs 150.34 Mn) being the amortisation of intrinsic value of ESOPs for the year ending March 31, 2012.

10. Segment Reporting:

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services: providing GSM based mobile and related telephony services.

b) International Long Distance (ILD): providing international long distance services.

2. Secondary Segment:

The Company caters only to the needs of Indian market representing a singular economic environment with similar risks and rewards and hence there are no reportable geographical segments

11. Related Party Transactions:

As per Accounting Standard-18 on "Related Party Disclosures", related parties of the Company are disclosed below: A. List of related parties:

Promoters

Hindalco Industries Limited (Hindalco)

Grasim Industries Limited (Grasim)

Aditya Birla Nuvo Limited (ABNL)

Birla TMT Holdings Pvt. Limited (Birla TMT)

Subsidiaries

Idea Telesystems Limited (ITL) (Formerly known as Swinder Singh Satara & Co. Ltd.)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Cellular Towers Infrastructure Limited (ICTIL)

Idea Mobile Commerce Services Limited (IMCSL)

Joint Venture

Indus Towers Limited (Indus)

Entities having significant influence TMI Mauritius Ltd.

Axiata Investments 2 (India) Ltd. (AI2) (Formerly known as TMI India Ltd.)

Axiata Group Berhad Key Management Personnel (KMP)

Mr. Himanshu Kapania, MD Mr. Akshaya Moondra, CFO Mr. Sanjeev Aga, MD (Upto March 31, 2011)

12. Operating Lease: As a Lessee

The Company has entered into non-cancellable operating leases for offices, switches and cell sites for periods ranging from 36 months to 240 months.

Operating Lease: As a Lessor

The Company has leased under operating lease arrangements certain Optical Fibre Cables (OFC) on Indefeasible Rights of Use ("IRU") basis. The gross block, accumulated depreciation and depreciation expense of the assets given on IRU basis is not separately identifiable and hence not disclosed.

Rental income of Rs 107.45 Mn (Previous year Rs 56.45 Mn) in respect of such leases has been recognized in the statement of Profit and Loss during the current year.

13. During the financial year 2007-08, Company had entered into a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value of these assets at the time of receipt and depreciated on the stated useful life applicable to similar assets of the Company.

14. Previous year's figures have been regrouped / rearranged wherever necessary to conform to the current year grouping.


Mar 31, 2011

1. The company successfully bid for 11 service areas in the 3G Spectrum auction held by the Department of Telecommunications (DoT) during the year for a total cost of Rs. 57,685.90 Mn Spectrum in the 2100 MHz band has been allotted to the Company for a period of twenty years in the 11 service areas, viz. Maharashtra, Gujarat, Andhra Pradesh, Kerala, Punjab, Haryana, Uttar Pradesh (East),

Uttar Pradesh (West), Madhya Pradesh & Chattisgarh, Himachal Pradesh and Jammu & Kashmir.

As of 31st March, 2011, the Company has launched 3G services in select towns in the service areas of Gujarat, Himachal Pradesh, Madhya Pradesh & Chattisgarh, Haryana, Maharashtra and Uttar Pradesh (West). In the service areas of Andhra Pradesh, Kerala and Uttar Pradesh (East), 3G services in select towns have been launched in April, 2011.

In the Punjab service area, the Company has not been given clearance for commercial use of the allotted spectrum band. The Company had approached Hon'ble TDSAT for direction to DoT to allow commercial use of the allotted 3G spectrum band. The Hon'ble TDSAT has directed the Company to approach it again, if required, upon the final disposal of the matters mentioned in point 2 below by the Appellate Bench of Hon'ble High Court of Delhi.

2. The erstwhile Spice Communications Limited (Spice) was amalgamated with the Company effective 1st March, 2010 pursuant to sanction of the Scheme of Amalgamation by Hon'ble High Court of Gujarat and Hon'ble High Court of Delhi. However, upon an application made by DoT on 30th March, 2011 for recall of the order dated 5th February, 2010, sanctioning the above scheme, the Hon'ble High Court of Delhi while pronouncing its judgment on 4th July, 2011, reaffirmed the amalgamation of Spice with the Company. However, the said judgment transferred and vested unto the DoT, the six licenses granted to erstwhile Spice along with the spectrum (including the two operational licenses for Punjab & Karnataka service areas), till the time permission of DoT is granted for transfer thereof upon an application from the Company to that effect.

The Company then filed an appeal, before the Appellate Bench of the Hon'ble High Court of Delhi, challenging the above judgment of 4th July, 2011. Through interim orders, Appellate Bench has directed DoT to :- (i) Accept the License Fee from the Company without prejudice, as the Company is continuing to operate the licenses for Punjab & Karnataka service areas granted to erstwhile Spice;

(ii) Till the next date of hearing, maintain status quo in relation to the aforesaid two operating licenses and no coercive steps in relation to any demand pertaining to the four non operating licenses.

Pending the final disposal of the appeal, the consequential financial impact, if any, cannot be ascertained.

3. Secured Loans

a) Foreign Currency and Rupee Loans

Foreign Currency Loans amounting to Rs. 20,776.22 Mn (Previous year Rs. 14,048.96 Mn) and Rupee Loans amounting to Rs. 56,531.97 Mn (Previous year Rs. 42,606.41 Mn) are secured by way of first charge / assignment ranking pari-passu interse the lenders, as under:

i. First charge by hypothecation / mortgage on all the movable and immovable properties of the Company respectively,

ii. A first priority charge over all intangible assets (excluding Telecom Licenses) of the Company,

iii. Assignment of the rights, titles and interest, on deposits, investments, bank accounts, book debts, insurance covers, other general assets, letters of credit and guarantee or performance bond, provided in favour of the Company.

Out of the above Loan, Foreign Currency Loan amounting to Rs. 18,349.02 Mn (Previous year Rs. 11,791.96 Mn) & Rupee Loan amounting to Rs. 40,531.98 Mn (Previous year Rs. 42,106.41 Mn) additionally have pledge on 60% shareholding of Indus Towers Limited held by wholly owned subsidiary. Further Foreign Currency Loan amounting to Rs. 8,733.34 Mn (Previous year Rs. 8,782.34 Mn) & Rupee Loan amounting to Rs. 40,531.98 Mn (Previous year Rs. 42,106.41 Mn) included above, have additional security as first priority charge over Telecom Licenses also.

b) Vehicle Loan

Vehicle Loan amounting to Rs. 292.20 Mn (Previous year Rs. 309.05 Mn) is secured by hypothecation of Vehicles against which the loans have been taken.

4. Contingent Liabilities

a) Due to the DoT's alleged contention that the acquisition of erstwhile Spice Communications Limited and its subsequent amalgamation with the company violates certain license conditions/ guidelines, the company has received the following demands / notices:

(i) Demand notices dated 24th February, 2011 and 1st June, 2011 of Rs. 500 Mn each in respect of UAS licenses for Punjab and Karnataka service areas respectively held by erstwhile Spice Communications Limited.

Demand notices dated 1st June, 2011 of Rs. 500 Mn each in respect of CMTS licenses of Delhi, Andhra Pradesh, Haryana and Maharashtra service areas held by the company.

The above demands were challenged by the Company before the Hon'ble TDSAT and stay has been granted.

(ii) Show Cause notices for termination of six UAS licenses issued in 2008, which have not been rolled out;

i. Dated 24th February, 2011 and dated 1st June, 2011 for violation of license conditions in respect of Punjab & Karnataka service areas respectively granted to the Company.

ii. Dated 1st June, 2011 for violation of license conditions in respect of Delhi, Maharashtra, Haryana and Andhra Pradesh service areas granted to erstwhile Spice Communications Limited, which have not been rolled out.

iii. Dated 11th May, 2011 for termination due to non fulfillment of rollout obligations in respect of UAS license for Karnataka service area granted to Company and for Andhra Pradesh service area granted to erstwhile Spice Communications Limited.

The Company had challenged the show cause notice dated 24th February, 2011 above before Hon'ble TDSAT. The same has been disposed off by Hon'ble TDSAT, terming it as premature with a liberty to approach the Hon'ble TDSAT afresh, in case the company is aggrieved by any final orders of DoT in this matter.

(iii) Demands for liquidated damages amounting to Rs. 276.50 Mn for non fulfillment of roll out obligations in respect of UAS licenses issued in 2008 to the Company for Punjab and Karnataka service areas and to the erstwhile Spice Communications Limited for the service areas of Maharashtra, Haryana and Andhra Pradesh.

The company has filed appropriate petitions before the Hon'ble TDSAT for quashing these demands. Vide interim orders dated 8th June, 2011, the Hon'ble TDSAT has directed the Company to deposit 60% of the amount within a week for securing interest of both the parties without prejudice to their respective rights and contentions, which the Company has since complied with.

b) During the financial year 2006-07, the WPC wing of DoT had raised demands towards monthly compounded interest and penalty on WPC charges for the period upto financial year 2002-03 in respect of the telecom service areas of the erstwhile Idea Mobile Communication Limited, BTA Cellcom Limited and Spice Communications Limited amounting to Rs. 844.88 Mn, which were deposited under protest and reflected as advances. Following the favourable decision of TDSAT on petition No. 123 of 2008, these amounts have been adjusted against spectrum dues as of 31st March, 2011. Subsequently, DoT has filed an appeal in Hon'ble Supreme Court.

i. Income Tax matters:

The appeals which are pending before various Appellate Authorities includes mainly the appeals filed by the company against the demands raised by various income tax authorities on account of non deduction of tax on discount allowed to prepaid distributors, non deduction of tax on roaming charges etc.

ii. Sales Tax:

The Sales Tax demands as at 31st March, 2011 mainly relates to the demands raised by the VAT/Sales Tax authorities at few states on SIM cards, prepaid cards and recharge coupons, airtime revenue etc. on which the Company has already paid service tax.

iii. Service Tax:

The service tax demands as at 31st March, 2011 mainly relates to the following matters:

- Interpretation issues arising out of Rule 6(3) of the Cenvat Credit Rules, 2004;

- Denial of Cenvat Credit related to Towers & Shelters

- Disallowance of Cenvat Credit on input services viewed as not related to output service.

iv. Entry Tax:

In certain states entry tax is being demanded on receipt of material from outside the state. However, the Company has challenged the constitutional validity of the levy.

v. Other claims not acknowledged as debts:

Mainly include matters appealed by BSNL in Hon'ble Supreme Court, commitments under EPCG, miscellaneous disputed matters with DoT and other consumer court cases.

5. The Company has a contingent obligation to buy compulsory convertible preference shares issued by ABTL, from the holder at the original issue price of Rs. 20,982.50 Mn.

6. During the year, under ESOS 2006, 2,524,500 options have been granted as 'Tranche IV' to the eligible employees as on 24th January 2011. Each option when exercised would be converted into one equity share of Rs. 10/- each, fully paid up, of the Company. The options will vest in 4 equal annual installments after one year of the grant. The maximum period of exercise is 5 years from the date of vesting.

The compensation costs of stock options granted to employees have been accounted by the Company using the intrinsic value method.

7. Segment Reporting 1. Primary Segment:

The Company operates in two business segments:

a) Mobility Services: providing GSM based mobile and related telephony services.

b) Long Distance (LD): providing national and international long distance services.

8. Related Party Transactions

As per Accounting Standard - 18 on "Related Party Disclosures", related parties of the Company are disclosed below:

A. List of Related Parties: Promoters

Hindalco Industries Limited (Hindalco) Grasim Industries Limited (Grasim) Aditya Birla Nuvo Limited (ABNL) Birla TMT Holdings Pvt. Limited (Birla TMT)

Subsidiaries

Swinder Singh Satara & Co. Limited (SSS & Co)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Cellular Towers Infrastructure Limited (ICTIL)

Idea Mobile Commerce Services Limited (IMCSL) (Formerly known as Carlos Towers Limited)

Joint Venture

Indus Towers Limited (ITL)

Spice Communications Limited (SCL) ( Upto February 28th, 2010)

Entities having significant Influence

TMI Mauritius Ltd TMI India Ltd (TMI) Axiata Group Berhad

Key Management Personnel (KMP)

Mr. Sanjeev Aga, MD

Mr. Akshaya Moondra, CFO

9. During the financial year 2007-08, company had entered into a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value of these assets at the time of receipt and depreciated on the stated useful life applicable to similar assets of the company.

As at 31st March, 2011, an amount of Rs. 1,195.18 Mn towards the supply of fixed assets during the year stands outstanding and will be paid during financial year 2011-12.

10. Previous year's figures have been regrouped / rearranged wherever necessary to conform to the current year grouping. Figures for the current year are not comparable with that of the previous year due to merger of Spice Communications Limited during the previous year.


Mar 31, 2010

1. Merger of telecom business of Aditya Birla Telecom Limited (ABTL)

During the year, a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 was filed with an appointed date of 1st April 2009 with the Honble High Courts of Gujarat and Mumbai to de-merge into the Company the telecom operations including Unified Access Services License of Bihar (including Jharkhand) Service area of ABTL, a wholly owned subsidiary along with certain assets and liabilities without any consideration. The said Scheme approved by the respective courts became effective on 1st March 2010 and has been given effect to in these financial statements.

As per the scheme, the Company has recorded the assets and liabilities forming part of the de-merged undertaking vested in it at their respective book values as appearing in the books of accounts of ABTL at the close of the business immediately preceding the appointed date, and credited Rs. 20,694.54 Mn to General Reserve being the net value of these vested assets and liabilities.

Had the scheme not mandated the above accounting treatment, the balance in the Amalgamation Reserve would have been higher and General Reserve would have been lower by Rs. 20,694.54 Mn

ABTL continues to remain the wholly owned subsidiary of the Company.

2. Amalgamation of Spice Communications Limited (Spice)

The scheme of amalgamation of Spice (which provides telecommunication services in Punjab & Karnataka service

areas and also has long distance operations), with the Company was approved by the Honble High Court of Gujarat and the Honble High Court of Delhi and became effective on 1st March 2010, being the last of the dates when the sanctioned scheme was filed with the Registrar of Companies at Ahmedabad and Delhi.

(a) As per the Scheme, the amalgamation has been given effect to under the "Pooling of Interest method" in accordance with the applicable Accounting Standard, pursuant to which, assets, liabilities and reserves of Spice has been recorded in the books of the Company at their carrying values at the close of business immediately preceding the effective date.

In line with Clause 12.1 of the Scheme, balances lying in the Amalgamation Reserve Account and Capital Reserve Account of the Company has been transferred to the General Reserve Account and the shortfall, between the debit to the General Reserve Account as detailed below and the transfers from Amalgamation Reserve Account and Capital Reserve Account has been withdrawn from the Securities Premium Account and credited to General Reserve Account.

The debit to the General Reserve Account is equal to total of (i) & (ii) reduced by (iii) as under:

i) Investment in Spice amounting to Rs. 22,041.87 Mn made by the Company for acquiring 41.09% of the total issued and paid-up equity share capital of Spice,

ii) Equity shares amounting to Rs. 1,991.53 Mn allotted to the shareholders of Spice (other than the Company) in terms of clause 11 of the Scheme,

iii) The amount of the share capital of the Spice being cancelled and extinguished.

Out of the total 689,925,000 shares of Spice, 283,489,350 shares held by the Company stand cancelled and the shareholders of Spice (other than the Company) have been issued 49 shares of the company for every 100 shares of Spice held by them, totalling to 199,153,469 shares, the face value of which is Rs. 1,991.53 Mn.

(b) In line with Clause 12.2 (b) of the Scheme, the value of impairment loss provided by Spice on licenses which overlap with those of the Company and included in the balance of accumulated loss being added to the Profit & Loss account of the Company on amalgamation has been adjusted by withdrawal from General Reserve. An equivalent amount has been withdrawn from Securities Premium account and credited to General Reserve.

(c) In line with Clause 12.2 (c) & (d) of the Scheme, an amount of Rs. 1,000.00 Mn has been withdrawn from Securities Premium account and transferred to Business Restructuring Reserve and an amount of Rs. 831.32 Mn has been withdrawn from Business Restructuring Reserve and transferred to Profit and Loss account for setting off the following effects.

i. Legal charges & other scheme related expenses - Rs. 111.68 Mn

ii. Impairment loss on Fixed Assets - Rs. 719.64 Mn

(d) Further, in line with the Accounting Standard Interpretation – 11, Accounting for Taxes on Income in case of an Amalgamation, deferred tax asset on amalgamation amounting to Rs. 171.71 Mn has been adjusted to the accumulated losses on amalgamation of Spice.

(e) The scheme of de-merger of overlapping UAS licenses of Punjab & Karnataka held by the company not becoming effective, an impairment loss amounting to Rs. 3,585.80 Mn (being the cost of these licenses) is debited to the Profit & Loss Account and set off with a corresponding equivalent amount withdrawn from the Securities Premium Account in line with Clause 12.2 (a) of the Spice amalgamation Scheme.

Had the scheme not mandated the above accounting treatment, the balance in Securities Premium account would have been higher by Rs. 24,506.42 Mn, Business Restructuring Reserve lower by Rs. 168.67 Mn, the profit for the year lower by Rs. 4,417.13 Mn and the debit balance of the carried forward Profit and Loss account higher by Rs. 24,337.75 Mn.

3. During the year under review, the Company became a pan India operator following the roll out of services in the remaining service areas of Orissa, Tamilnadu (including Chennai), Jammu & Kashmir, West Bengal, Kolkata, North East and Assam.

4. Secured Loans

a) Foreign Currency and Rupee Loans

Foreign Currency Loans amounting to Rs. 14,048.96 Mn (Previous year Rs. 8,548.14 Mn) and Rupee Loans amounting to Rs. 42,606.41 Mn (Previous year Rs. 46,754.71 Mn) are secured by way of first charge / assignment ranking pari-passu interse the lenders, as under:

i. First charge by hypothecation / mortgage on all the movable and immovable properties of the Company respectively,

ii. A first priority charge over all intangible assets (including Telecom Licenses) of the Company,

iii. Assignment of the rights, titles and interest, on deposits, investments, bank accounts, book debts, insurance covers, other general assets, letters of credit and guarantee or performance bond, provided in favour of the Company,

iv. Pledge on 60% shareholding of Indus Towers Limited held by wholly owned subsidiary.

b) Vendor Finance

Vendor Finance amounting to Rs. 2,921.66 Mn is secured by first charge by a way of hypothecation over all the equipments supplied by the vendor and enforceable under the said hypothecation deed.

c) Vehicle Loan

Vehicle Loan amounting to Rs. 309.05 Mn (Previous year Rs. 346.47 Mn) is secured by hypothecation of Vehicles against which the loans have been taken.

5. In accordance with an assignment agreement entered into at the time of acquisition between the original promoters of the amalgamated subsidiary Idea Mobile Communications Limited (IMCL) had issued interest free unsecured Bond of Rs. 1,757.36 Mn to Escorts Limited vide a Loan agreement dated 15th January, 2004. This bond was in lieu of the loans from the original promoters and was repayable on 15th January, 2014. In terms of the said agreement, Escorts Limited approached the Company for pre-payment. After adjusting the settlement amount and related contingencies, the surplus of Rs. 316.94 Mn has been recognised in the Profit and Loss account.

6. Interest from Department of Telecommunications (DoT)

The Company had recognised an income of Rs. 802.27 Mn during the year ended 31st March, 2003 being refund of excess interest charged by DoT on the license fee payable by the Company pursuant to the judgement dated 9th April, 2002 of Telecom Disputes Settlement and Appellate Tribunal (TDSAT). During the previous years, DoT arbitrarily acknowledged an amount of Rs. 758.76 Mn against Companys claim of Rs. 802.27 Mn The Company has represented this matter with DoT. The Company has not provided for the difference of Rs. 43.51 Mn, as in the opinion of the management, the amount is recoverable from DoT.

The Company is also entitled to interest on the amount of the refund so accrued in terms of the Supreme Court Judgment; the recognition of revenue on account of the same has been postponed pending acceptance in this respect by DoT. As of 31st March, 2010, this case is pending before the Honble Supreme Court.

7. Contingent Liabilities

a) During the financial year 2006-07, the WPC wing of DoT had raised demands towards monthly compounded interest and penalty on WPC charges for the period upto financial year 2002-03 in respect of the telecom service areas of the erstwhile Idea Mobile Communication Limited, BTA Cellcom Limited and Spice Communications Limited amounting to Rs. 846.20 Mn, which were deposited under protest and reflected as advances. Following the favourable decision of TDSAT on petition No. 123 of 2008, these amounts are being adjusted against subsequent spectrum dues after 31st March 2010.

b) Under Export Promotion Credit Guarantee Scheme, Company had saved aggregated differential duty amounting to Rs. 37.72 Mn against which company had export obligation amounting to Rs. 301.06 Mn The company has fulfilled its export obligation and is awaiting formal acknowledgement from Director General of Foreign Trade for the same.

8. The Company has a contingent obligation to buy compulsory convertible preference shares issued by ABTL, from the holder at the original issue price of Rs. 20,982.50 Mn.

9. During the year, under ESOS 2006, 6,918,750 options have been granted as ‘Tranche III to the eligible employees as on 22nd December 2009. Each option when exercised would be converted into one equity share of Rs. 10/- each, fully paid up, of the Company. The options will vest in 4 equal annual installments after one year of the grant. The maximum period of exercise is 5 years from the date of vesting.

Further, the ESOS Compensation Committee of the Company also modified the exercise price of Stock Options under Tranche I and Tranche II from Rs. 112.57 / Rs. 84.30 to Rs. 39.30 / Rs. 45.55 per option respectively. The compensation costs of stock options granted to employees have been accounted by the Company using the intrinsic value method.

10. Segment Reporting

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services

b) Long Distance (LD)

2. Secondary Segment:

The Company caters only to the needs of Indian market representing a singular economic environment with similar risks and rewards and hence there are no reportable geographical segments.

11. Related Party Transactions

As per Accounting Standard-18 on "Related Party Disclosure", related parties of the Company are disclosed below:

A. List of related Parties:

Promoters

Hindalco Industries Limited (Hindalco) Grasim Industries Limited (Grasim) Aditya Birla Nuvo Limited (ABNL) Birla TMT Holdings Pvt. Limited (Birla TMT)

Subsidiaries

Swinder Singh Satara & Co. Limited (SSS & Co)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Cellular Towers Infrastructure Limited (ICTIL)

Carlos Towers Limited (with effect from 1st March 2010)

Joint Venture

Spice Communications Limited (SCL) (up to 28th February, 2010) Indus Towers Limited (ITL)

Entities having significant Influence

TMI Mauritius Ltd TMI India Ltd (TMI) Axiata Group Berhad

Key Management Personnel (KMP)

Mr. Sanjeev Aga, MD

Mr. Akshaya Moondra, CFO

12. During the financial year, pursuant to the change in agreements, certain sites taken under Finance Lease have been reclassified into operating lease. Consequently, net fixed assets amounting to Rs. 1,863.35 Mn against these sites has been de-capitalised, finance lease liability & related provisions amounting to Rs. 2,209.50 Mn have been reversed and difference of Rs. 346.15 Mn has been recognised in the Profit & Loss account under the head Liabilities / Provisions no longer required written back.

13. During the financial year 2007-08, company had entered into a composite IT outsourcing agreement wherein fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value of these assets at the time of receipt and depreciated on the stated useful life applicable to similar assets of the company.

As at 31st March, 2010, an amount of Rs. 531.72 Mn towards the supply of fixed assets during the year stands outstanding and will be paid during financial year 2010-11.

14. Previous years figures have been regrouped / rearranged wherever necessary to conform to the current period grouping. Figures for the current year are not comparable with that of the previous year due to merger of telecom business of ABTL and Spice Communications Limited.

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